CREDIT TRANSACTIONS IN SECURITIES 189 
vestors, has been likened to the case of farmer X who loans his 
cow to farmer Y. If in the course of this loan the cow has a 
calf, it naturally belongs to X, the owner of the cow, and not 
to Y, who is simply the borrower of the cow. 
Loans Made “Flat” or “at a Premium.”—While the above 
arrangement between the borrower and the lender of stock is 
typical, its details may vary considerably because of conditions 
connected with the supply of and demand for the stock in ques- 
tion in the “loan crowd.” If Corn Products shares grow 
scarce, Green will demand and obtain a low rate of inter- 
est on his loan of money, or he may get the loan of money 
“flat”’—that is, without having to pay any interest on it at all. 
In cases of extreme scarcity of stock he may even obtain, in 
addition to his loan of money without interest, a cash premium 
from the borrower of his stock. Of course, this premium is in 
turn charged by the borrowing broker to his customer who has 
cone short of the stock in question.® 
Returning to our example, White & Co. deliver the 100 
shares of Corn Products borrowed from Green to their pur- 
chaser, Brown. The latter in turn pays to White & Co. 
their selling price of $10,000. Broker Brown, therefore, 
having paid his money and received his stock, is now out of the 
transaction. There remain involved in it Thompson (who owes 
White & Co., his brokers, the 100 shares of stock), White & 
Co. (who owe Thompson his margin of $3,000 and $10,000— 
the selling price of the stock—and who owe Green the 100 
shares of stock), and Green (who owes White & Co. $10,000, 
and who is owed the 100 shares of stock by White & Co.). 
Green is protected for his loan of stock by the money he bor- 
rows from White & Co.; White & Co. are protected in their 
debt of stock owed to Green by Thompson's debt of stock to 
them and his margin. Thus, since Thompson alone can make 
8 Ibid., p. 427.