The stock market crash - and after

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Monograph

Identifikator:: 1815583320

URN:: urn:nbn:de:zbw-retromon-204544

Document type:: Monograph

Author:: Fisher, Irving http://d-nb.info/gnd/118533541

Title:: The stock market crash - and after

Place of publication:: New York

Publisher:: Macmillan

Year of publication:: 1930

Scope:: XXVI, 286 S.; graph. Darst

Digitisation:: 2022

Collection:: Economics Books

Usage license:: Get license information via the feedback formular.

Chapter

Document type:: Monograph

Structure type:: Chapter

Title:: Chapter V. Plowed-back earnings

Collection:: Economics Books

46 The Stock Market Crash—dAnd After can Acceptance Council in New York, November 11, 1929. Mr. Kent found one valid cause in the fact that margins were not sufficiently large to protect borrowers: : “If the base value of securities upon which mar- gins are figured had been at a point slightly below attractive investment prices measured by the interest value of current earnings against prices, is it not probable that the tragedy of those who were sold out would have been avoided?” Although there were stocks selling below even these margin require- ments, this plan would have helped, since it would have meant larger margins and better technical posi- tion of the market. But it should be borne in mind that margins were actually higher than before in the history of Wall Street, during this inflation period. Paradoxically, the situation was helped during the crash by reducing margins to 25 per cent of the market value of stocks. An economist who has made a special study of the subject says: “Stock Exchange mem- ber margins were actually very ample. Statistics covering the first six months of 1929 showed that the average Stock Exchange house was maintaining 40 per cent margins on customers’ securities carried, 65 per cent margins on customers’ debit balances, and the members’ collateral loans were margined with excess collateral to the extent of about 50 per cent. Naturally, no margin can protect the borrower from the price declines. The purpose of a margin is, of course, to protect lenders rather than borrowers.

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