The work of the Stock Exchange

Bibliographic data

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.

Chapter

Document type:: Monograph

Structure type:: Chapter

Title:: Chapter XV. The commission house

Collection:: Economics Books

128 THE WORK OF THE STOCK EXCHANGE As shown in the illustrating statement, Blank is thus debited with $43.67. These figures, as has been stated, were arrived at on the basis of a 6% rate. But, let us suppose that our example is taken during a period of fairly tight credit, the money which the firm had to borrow for Blank probably cost fully 6%. The exact rate of interest at which he is charged is erived by averaging the rate paid by the house on all of its various loans during that month. Let us suppose that this average rate of interest amounts in this case to 6%. ‘The firm adds 1}5—Ilet us say—as a service or “carrying charge” to compensate it for its trouble, expense, and risk in making these loans for its customers. This means that in addition to the 6% at which the interest was already arbitrarily calculated, a carrying charge of 125% must be made. Therefore, the $43.67 (or interest at 6%) is increased by 25%, giving $54.59 as the total interest and carrying charges. This sum is accord- ingly entered as a debit on the customer’s statement. The Con- stitution of the Exchange®® forbids its member firms from competing unfairly with each other for business by charging “special and unusual rates of interest.” Such a practice is looked upon by the Exchange as tantamount to a breach of its commission law.2® After these interest items are figured in, Blank is shown to have a total debit balance, at the end of the month of $21,- 049.09. In addition, his account shows that he is long of the securities which he originally left with Jenkins & Co. as margin —namely, his five $1,000 Atchison 4s and 40 shares of Penn- sylvania, as well as 100 Reading, the 100 Baltimore & Ohio, and the 100 Pan-American Petroleum B shares, which he hought on margin during the month. Determining the Customer’s Margin.—But what Mr. Blank is principally interested in, is what his equity in the account, or the sum of money belonging to him in it, amounts 3 See Constitution (Rules, Chapter VII, Sec. 9).

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