276 THE WORK OF THE STOCK EXCHANGE 
us dependent upon foreign imports and our lack of home con- 
sumptive power upon exports abroad, bill transactions occurred 
in the New York market. But as soon as our railways crossed 
the Alleghanies into the great Mississippi valley, America faced 
westward and began the tremendous economic conquest of its 
vast interior regions. This new effort naturally brought about 
an ever-increasing succession of new security flotations to build 
railways, open mines, and develop industries, and a decreasing 
dependence upon foreign trade. In the New York money 
market, these basic economic factors produced a keen need for 
constant security loans as an inevitable facility for floating new 
capital issues, while the business in bills there practically van- 
ished. For many decades thereafter, London regularly financed 
our foreign trade through its broad bill or discount market, 
and generally at rates of interest lower than the return on 
qomestic investments which American capital could and did 
~btain. 
Thus by 1850 American bankers were compelled to seek in 
the New York security collateral loan market that safe, liquid, 
and flexible outlet for their funds, and that centralization of 
money rates, which abroad was mainly provided by the bill 
markets. Owing essentially to this need of the lenders, the 
New York Stock Exchange adopted a cash instead of a term 
or future settlement syste, and security distribution came to 
be financed principally by “call” or demand loans. In 1836 
Congress refused to recharter the second United States Bank, 
and for many decades thereafter America suffered under the 
worst banking system existing in any great country of the 
world. The lawless epoch of state banking was succeeded by 
our inflexible and decentralized national bank system. Mean- 
while, as a natural effect of the irrepressible banking and eco- 
nomic needs of the country, the New York “call loan” market 
in securities was privately and extensively organized. With 
improved means of communication, out-of-town banks became 
accustomed to send balances to their New York banking corre- 
spondents to lend “on the Stock Exchange.” Such demand