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

SECURITY COLLATERAL LOAN MARKET 30I The general function of stock market loans, as we have seen, is, by promoting security distribution and facilitating new security flotations, to finance the establishment of new produc- tive equipment, and thus to assure industrial and commercial progress. Without a mechanism in its leading money market for making security loans, it would be impossible for any modern country to engage in wholesale or mass production with low costs and high wage levels. It is no mere coincidence that America, which has so conspicuously excelled in these economic achievements, should possess in the New York call loan market the broadest and most highly organized security loan market in the world. N evertheless, existence is an even more fundamental need than progress, and thus commercial loans in general deserve the preference which is accorded to them by bankers here and in other countries. Both forms of loan are, however, vitally necessary to continued national pros- perity, and therefore both are suitable investments for our commercial banks and also for rediscounting at a central bank of issue, After the angry attacks which have been made on our banking system for allowing funds which are alleged to be needed very desperately in our fields and factories to be “wasted in the stock market,” it may surprise the layman that in reality stock market loans do not to any important extent compete for the money supply with commercial loans, that only the excess funds which bankers cannot safely lend in com- mercial loans are loaned in stock market loans, that usually the latter bear a lower rate of interest than the former, and that as far as “waste” is concerned there is no record of a lender’s money being actually lost when loaned to a Stock Exchange house on listed security collateral. Senate Document 262, 66th Congress, 2nd Session (PP. 9-10) states: “The rates of call money do not determine and have not exerted an important influence on the rates for commercial borrowings.” In respect to this alleged tendency of the New York call loan market to draw away from interior centers funds needed

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