The work of the Stock Exchange

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Monograph

Identifikator:: 1831284952

URN:: urn:nbn:de:zbw-retromon-225876

Document type:: Monograph

Author:: Meeker, James Edward http://d-nb.info/gnd/126597340

Title:: The work of the Stock Exchange

Edition:: Revised edition

Place of publication:: New York

Publisher:: The Ronald Press Company

Year of publication:: [1930]

Scope:: XVI, 720 Seiten; Illustrationen, Diagramme

Digitisation:: 2022

Collection:: Economics Books

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

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Document type:: Monograph

Structure type:: Chapter

Title:: Chapter V. The dangers and benefits of stock speculation

Collection:: Economics Books

138 THE WORK OF THE STOCK EXCHANGE not only to its customers but also to the other houses with whom it has concluded contracts on the Exchange. Even if the customer escapes with a slight loss, he is apt to blame his misfortune on his broker, whose goodwill suffers thereby. The Stock Exchange takes what precautions it can to pro- tect margin customers against loss. It enables the margin surchaser to place a stop-loss order in the market to limit a possible loss. It exercises great care in the securities which are listed in its market. Furthermore, it expressly provides in its Rules (Chapter XII, Sec. 1): The acceptance and carrying of an account for a customer, whether » member or a non-member, without proper and adequate margin may ~onstitute an act detrimental to the interest and welfare of the Exchange. If, then, the Stock Exchange has not hitherto adopted a Aat minimum amount of margin, it is not because its members 1o not wish to see reckless dealing prevented, but because such an inflexible margin rule would prove impractical and useless. For one thing, as the chairman of the Hughes Commission pointed out,*® “the right of one private person to extend credit to another is simply the right to make a contract, which, under the Federal Constitution, cannot be impaired by any State Legislature.” Moreover, such a uniform and absolute require- ment regarding margin would make no allowance either for the personal nature of all credit, or the vast difference between the price movements of different securities. Most Exchange houses would willingly execute orders from well-known customers on smaller margins than they would accept from a stranger. Simi- larly, there are many bonds and some preferred stocks which could be purchased with relative safety on a slight margin, while other securities, particularly high-priced common stocks, would be a riskier purchase on a 50-point margin. The “questionnaire” system adopted by the Exchange in 1922, compelled member firms to possess capital adequate to eee aoe Wie. “The Hughes Investigation.” Journal of Political Economy,

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