306 THE WORK OF THE STOCK EXCHANGE 
from individual or corporate thrift rather than from banking 
operations, and only to a partial extent can banks control its 
flow, increase or decline. Credit, which represents a temporary 
substitute for wealth, is created mainly by banks and can there- 
fore be controlled and reduced by them. Both capital and 
credit naturally flow into the surplus capital market for security 
loans to the extent that they are not needed elsewhere for 
commercial loans and the like, and the more abundant they 
are, naturally the greater security loans tend to become. The 
limits upon credit expansion naturally consist in banking sol- 
vency and the maintenance of the gold standard. The chief 
limits to the creation of capital are the earning power and 
thrift of the nation, rather than any mechanical feature of our 
banking or currency system. 
In respect to the demand or security side of the question, 
security loans tend to increase as the amounts of new security 
flotations become larger, as old securities become more nego- 
tiable through listing on a stock exchange, as wealth itself 
tends to become more negotiable by being expressed in the 
form of securities, as securities rise in price and thus require 
more funds to carry the same number of bonds or shares in 
the floating supply, and as resales of securities from investors 
back to market traders tend to increase the proportion of 
outstanding securities carried in the market floating supply. 
“Brokers’ Loans,” 1926-29.—Borrowings of New York 
Stock Exchange members increased from $3,513,174,154 on 
February 1, 1926 (when the Exchange began to collect and 
publish these statistics) to a “peak” of $8,549,383,979 on 
October 1, 1929, and thereafter declined to $3,084,768,065 
on February 1, 1930. This expansion during 1926-29 gave 
rise to a controversy concerning ‘brokers’ loans” of almost 
national scope, which at this writing has not altogether sub- 
sided. During this period the demand for the loans arose 
principally from rising share prices, large flotations of new 
securities. expansion of listings on the New York Stock Ex-