Speculation and Brokers’ Loans 223 
of which brokers’ loans constituted 7 per cent during 
the five years ended with 1928. But during the 
first nine months of 1929, brokers’ loans rose by 
$1,700,000,000, or by about 20 per cent of the value 
of new issues, of which the total was $8,419,000,000. 
Here was a striking increase in loans from 7 per 
cent of new security issues during the five years pre- 
ceding 1929, to 20 per cent during the first three 
quarters of 1929. 
Overextension of Credits 
On the assumption that national income during 
these three quarters was $58,500,000,000, Mr. Kent 
finds that an abnormal amount of this national in- 
come went into brokers’ loans. He figures that 915 
per cent of income is the normal amount available 
for new securities and increased saving deposits, and 
that $5,557,500,000 was “all that could be utilized 
for investment purposes.” But the new security is- 
sues during the first three quarters of 1929 amounted 
to $8,419,000,000, or $2,811,000,000 more than 
this $5,557,500,000 available from income. More- 
over, $2,884,000,000 was involved in the “rights” 
for the total of new securities issued during this in- 
terval, swelling the total to $11,303,000,000 for the 
first nine months of 1929, or 20 per cent of the 
national income during that period. Inasmuch as 
brokers’ loans rose by $1,700,000,000, Mr. Kent 
estimates that the balance must have come from 
abroad and from the addition which brokers’ loans 
made against securities.