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

196 THE WORK OF THE STOCK EXCHANGE forced to take a long position of stocks in 100s, by purchasing the various odd lots which customers may sell to him at all times, and to take a short position in 100’s by selling customers any number of shares they may wish. Of course the odd-lot dealer ultimately sells in 100-share lots the stock which he has accumulated by his odd-lot purchases, and he ultimately covers his short sale of odd lots by purchasing in 100-share lots. Yet it is obvious that if purchases on credit or short sales were forbidden, the odd-lot dealer could not successfully carry on his considerable and essential business in enabling small investors to sell or purchase readily. Speculative Nature of Margin Purchases and Short Sales. —For all the above instances, however, and many others of a similar nature, it is of course undoubtedly true that the vast majority of both margin purchases and short sales are made purely for the sake of obtaining a speculative profit through buying at a lower and selling at a higher price. The broader aspects of speculation as an economic phenomenon have already been treated.* Speculation will therefore be considered here only in so far as it finds practical everyday expression through the margin purchase and the short sale. Every so often, some native Solon will obtain a half-column in the papers to declare that stock speculation, particularly that of “bears” who sell short in the anticipation of declining stock prices, is injuring the intrinsic value of our railroad and indus- trial companies. Some indignant critics, indeed, openly state that short selling destroys the companies’ property, and picture the “bear raider’ as a sinister villain who delights in the ruin of other men’s goods by some mysterious means in the stock market. The sheer nonsense of such statements is of course apparent to anyone who knows anything at all about stock mar- ket transactions—a knowledge which, paradoxically enough, these critics of stock exchange speculation often hasten to dis- claim at the outset. 14 See Chapter V.

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