SECURITY COLLATERAL LOAN MARKET 367
change and on other American stock markets, and the accumu
lation of a large “floating supply” or stock market inventory
of securities held by dealers on credit rather than by investors.
The funds employed in these loans came not only from Amer-
ican and foreign banks, but also (particularly during 1929)
from American cotporations, finance companies and individual
investors; this latter group was designated “‘other lenders.”
Owing alike to the rise in the loan totals and the restrictive
credit policies of the Federal Reserve system, call loan interest
rates rose in the spring of 1929 to 20%. The high rates,
however, only drew into the loans more funds from “other
lenders,” and thus resulted in increases rather than decreases
in the loan totals. In September, 1929, the stock market
declined gradually, yet heavy flotations of new securities led to
further expansion in the loans. The stock market panic broke
out on Thursday, October 24, when reported sales totaled
more than 12,000,000 shares, and reached its height Tuesday,
October 29 when reported sales of 16,400,000 shares (or,
counting in odd-lots and other non-reported sales, over
23,000,000 for the day). After a rally, there was a further
slump during early N ovember ; by November 14 the panic was
over. During the critical week of October 23-30, “brokers’
loans” (according to Federal Reserve statistics) declined
$1,095 millions: but, whereas “other lenders’ ”’ loans fell
$1,381 millions, and loans by out-of-town banks $707 millions,
loans by New York banks increased $993 millions. Thus New
York banks during the crisis not only did not call their loans,
but courageously took over about a billion of loans which
other lending parties had called. The loans were, however,
liquidated by the borrowing brokers so rapidly that this addi-
tional advance by New York banks to the stock market was
retired in the next few weeks,
The call loan situation in 1929 afforded a strong contrast
to that prevailing during the crisis ten years before. In
1919-20, the United States suffered from an acute shortage
of credit which caused high call rates, and a liquidation of the
