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

306 THE WORK OF THE STOCK EXCHANGE from individual or corporate thrift rather than from banking operations, and only to a partial extent can banks control its flow, increase or decline. Credit, which represents a temporary substitute for wealth, is created mainly by banks and can there- fore be controlled and reduced by them. Both capital and credit naturally flow into the surplus capital market for security loans to the extent that they are not needed elsewhere for commercial loans and the like, and the more abundant they are, naturally the greater security loans tend to become. The limits upon credit expansion naturally consist in banking sol- vency and the maintenance of the gold standard. The chief limits to the creation of capital are the earning power and thrift of the nation, rather than any mechanical feature of our banking or currency system. In respect to the demand or security side of the question, security loans tend to increase as the amounts of new security flotations become larger, as old securities become more nego- tiable through listing on a stock exchange, as wealth itself tends to become more negotiable by being expressed in the form of securities, as securities rise in price and thus require more funds to carry the same number of bonds or shares in the floating supply, and as resales of securities from investors back to market traders tend to increase the proportion of outstanding securities carried in the market floating supply. “Brokers’ Loans,” 1926-29.—Borrowings of New York Stock Exchange members increased from $3,513,174,154 on February 1, 1926 (when the Exchange began to collect and publish these statistics) to a “peak” of $8,549,383,979 on October 1, 1929, and thereafter declined to $3,084,768,065 on February 1, 1930. This expansion during 1926-29 gave rise to a controversy concerning ‘brokers’ loans” of almost national scope, which at this writing has not altogether sub- sided. During this period the demand for the loans arose principally from rising share prices, large flotations of new securities. expansion of listings on the New York Stock Ex-

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