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 XI. The security collateral loan market

Collection:: Economics Books

276 THE WORK OF THE STOCK EXCHANGE us dependent upon foreign imports and our lack of home con- sumptive power upon exports abroad, bill transactions occurred in the New York market. But as soon as our railways crossed the Alleghanies into the great Mississippi valley, America faced westward and began the tremendous economic conquest of its vast interior regions. This new effort naturally brought about an ever-increasing succession of new security flotations to build railways, open mines, and develop industries, and a decreasing dependence upon foreign trade. In the New York money market, these basic economic factors produced a keen need for constant security loans as an inevitable facility for floating new capital issues, while the business in bills there practically van- ished. For many decades thereafter, London regularly financed our foreign trade through its broad bill or discount market, and generally at rates of interest lower than the return on qomestic investments which American capital could and did ~btain. Thus by 1850 American bankers were compelled to seek in the New York security collateral loan market that safe, liquid, and flexible outlet for their funds, and that centralization of money rates, which abroad was mainly provided by the bill markets. Owing essentially to this need of the lenders, the New York Stock Exchange adopted a cash instead of a term or future settlement syste, and security distribution came to be financed principally by “call” or demand loans. In 1836 Congress refused to recharter the second United States Bank, and for many decades thereafter America suffered under the worst banking system existing in any great country of the world. The lawless epoch of state banking was succeeded by our inflexible and decentralized national bank system. Mean- while, as a natural effect of the irrepressible banking and eco- nomic needs of the country, the New York “call loan” market in securities was privately and extensively organized. With improved means of communication, out-of-town banks became accustomed to send balances to their New York banking corre- spondents to lend “on the Stock Exchange.” Such demand

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