Grundriß der allgemeinen Volkswirtschaftslehre: Begriff. Psychologische und sittliche Grundlage. Literatur und Methode. Land, Leute und Technik. Die gesellschaftliche Verfassung der Volkswirtschaft

The work of the Stock Exchange

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Identifikator:: 1887156356

Document type:: Multivolume work

Author:: Schmoller, Gustav von http://d-nb.info/gnd/118609378

Title:: Grundriß der allgemeinen Volkswirtschaftslehre

Place of publication:: Berlin [u.a.]

Publisher:: Duncker & Humblot

Year of publication:: 1900-

Collection:: Economics Books

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Identifikator:: 1887156429

URN:: urn:nbn:de:zbw-retromon-236518

Document type:: Volume

Author:: Schmoller, Gustav von http://d-nb.info/gnd/118609378

Title:: Begriff. Psychologische und sittliche Grundlage. Literatur und Methode. Land, Leute und Technik. Die gesellschaftliche Verfassung der Volkswirtschaft

Volume count:: 1.1901

Place of publication:: Berlin [u.a.]

Publisher:: Duncker & Humblot

Year of publication:: 1901

Scope:: XIII, 482 Seiten

Digitisation:: 2022

Collection:: Economics Books

Usage license:: Get license information via the feedback formular.

Document type:: Multivolume work

Structure type:: Contents

Collection:: Economics Books

APPENDIX 602 After the war, the first money shortage since the foundation of the Federal Reserve system occurred in 1919-20, due to congestion of unsold Liberty Bonds in the banks and enormous mercantile and manufacturers’ loans employed to carry huge inventories at high prices. The stock market broke in November, 1919, when even 32% was charged on a few call loans. During subsequent months, call money renewed at rates from 109, to even 15%. During 1928-29 the mounting totals of loans on securities, together with the restrictive credit policies of the Federal Reserve system, led to very high call loan rates. But there was not an actual shortage of credit, owing to the great unused potentialties for expanding credit still possessed by the Reserve system, as indicated by its high reserve ratios. Actually, the 1929 panic broke out when call money had become relatively easy, and during the panic no credit shortage was felt. After the panic, credit at once became extraordinarily easy and interest rates fell to the lowest levels in years. (VIId) Corners, like money shortages, are relative rather than absolute, and sometimes it is difficult to state just where they begin. Most corners are really accidental in origin. If each Stock Exchange commission office (including branches) should at one time sell only too shares of a certain stock short, a total “short interest” of about 1,200,000 shares could thus be created. This imaginary situation also leaves out of all account the large number of non-member firms who are correspondents of Stock Exchange houses. If only 1,000,000 shares of the stock were outstanding or available for delivery on the Exchange, a technical corner would thus be created without any anticipation of it by anyone. This is the reason why very large issues of stock are more immune from corners than small issues. The test of a corner on the Exchange is whether the given stock can be freely borrowed. If so, the free and open market has not been destroyed. The Business Conduct Committee may investigate the case, by calling on Exchange members to report to it at once their several positions and commitments in the issue. If no one is attempt- ing unfairly to exploit the situation to his own advantage, the stock will not be stricken from the list and the situation will as a rule soon right itself by the ordinary course of market purchases and sales. As a general thing, company officials have no desire to see their stock cornered, even if they are nettled by previous price declines due to short sales, and almost always they cooperate fully with the Stock Exchange in maintaining a free market for their issues. Occasionally, however, either persons connected with the manage- ment of a company or operators entirely outside its management may

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