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

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Document type:: Monograph

Structure type:: Chapter

Title:: Chapter II. Organized security markets and their economic functions

Collection:: Economics Books

ORGANIZED SECURITY MARKETS 43 the stock market on the New York Stock Exchange is already organized and is ready at all times to absorb your buying or selling orders. The usefulness of this quality of marketability which stock exchanges confer upon their listed securities has often been demonstrated by the very different behavior of the organized and unorganized security markets during a crisis. The latter type are “fair weather” markets, which do well enough per- haps while rosy optimism reigns, but which have a disconcert- ing way of vanishing almost completely when the pressure of heavy selling appears. During a drastic decline in security prices, the loosely organized security markets for the time being simply cease to function. The issues ordinarily marketed there are rendered practically unsalable. Under the circumstances, the banks naturally hesitate to lend funds on such non-negotia- ble security collateral. But on the Stock Exchange, though prices may fall sharply, security holders can always sell at a price, and furthermore they are more quickly furnished with actual sales prices by which to judge the current value of their holdings. At such times, however, many security holders are apt to sell their Stock Exchange securities to protect their unsalable non-listed securities, and in this way the organized market is forced to bear the brunt of the whole selling move- ment in all securities. One important reason for this continued negotiability of listed securities arises from the “short sale,” as will be pointed out in more detail.’ At times, the only buying power in the stock market consists of the so-called ‘‘short-interest.” No one, as a rule, sells short in an unorganized market because of the difficulty of borrowing stock to deliver, and as a result in such a market holders are not protected in a crisis by the existence of a “short interest.” As a rule, also, the superior quotation service of a stock exchange more quickly draws the attention of bargain-hunting investors to securities whose price has 6 See Chaoter VIL. o. 198.

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