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.

Chapter

Document type:: Monograph

Structure type:: Chapter

Title:: Chapter XV. The commission house

Collection:: Economics Books

THE COMMISSION HOUSE 429 to. This can be determined only by first imagining that his account has been completely closed—that is, that all his long stocks have been sold and all his short stocks bought in. Let us suppose that this is done on August 31, when Atchison gen- eral 4s are selling at 9o, Pennsylvania at 70, Reading at 115, Baltimore & Ohio at 130, and Pan-American Petroleum at 58. At these prices we find that Blank’s 390 shares of long stock (counting the five $1,000 bonds as the equivalent of 50 shares) possess a market value of $37,600. In the interest of simplicity, the account here considered as an example contained no short stock at the end of the month. In case Mr. Blank had—let us say—carried over 100 shares of Steel short, a somewhat more complicated situation would have arisen, the complete consideration of which would lead us deep into the philosophy not only of bookkeeping practice but also of stock market behavior. It is of course true that such short stock should be represented by a credit money item, as far as the customer is concerned. On the other hand, the broker may be unwilling to reduce his customer’s debit balance by the full market value of the short stock carried over, since he cannot always be sure that the stock could certainly be purchased at so satisfactory a price. Accordingly, different firms in their book- keeping methods handle this situation in different ways; some firms go so far as to maintain two separate accounts for the customer—one for his long and the other for his short com- mitments, and require adequate margin upon each. Of course, much depends upon the character of the particular security or securities carried for a customer, long or short, as well as upon the trend of the stock market at the time. It may be—and often has been—argued that full credit for short stock should be offset against debits on long stock, on the theory that such a short commitment was really a sort of “hedge” and would provide more credit as declining prices created a greater debit on the long account. Unfortunately, however, the stock market does not always exhibit such uniformity of movement. and

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