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 VII. Credit transactions in securities

Collection:: Economics Books

CREDIT TRANSACTIONS IN SECURITIES 185 to Jones, minus interest charges, brokerage commissions. and stamp taxes. [f, however, the expected rise in the price of Steel occurs and the stock sells at 165 on the market, Jones's margin has increased by $1,500. But perhaps Jones decides to conclude the transaction and “take his profit.” The broker, on Jones’s instructions, then sells the 100 shares of stock for $16,500 and, after paying off the loan of $10,000, returns to Jones $6,500 minus brokerage commissions, interest charges, and stamp taxes. Thus Jones, in addition to recovering his original margin of $5,000, obtains a profit of almost $1,500 in the transaction. Selling for Deferred Delivery.—Since every sale is simply an exchange of money and goods, it is obvious that the factor of credit can become involved in a sale in two different ways— either through a postponement in the payment of money or in the delivery of goods. Respecting transactions in the stock market, we have briefly considered the practice of deferring the payment of money known as “buying on margin.” We must next examine ‘short selling,” which involves the deferred delivery of stock. The position of the man who sells stock short is funda- mentally identical with that of the farmer who sells his crop before it is planted, or of the publisher who sells his newspapers months before the events which they will chronicle have even occurred. All these three sellers, by employing their credit and deferring the delivery of their goods, sell something which for the time being they do not own, but which they feel confident they can obtain. All three owe goods instead of money, and, to conclude their sales on credit, all three must depend upon obtaining later the articles which they have sold—a task which may be either harder or easier than to obtain an equivalent sum of money. Attention has already been called to the fact that because of our almost universal habit of thinking of sales in terms of

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