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 preceding
 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 income
 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 issues
 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. Moreover,
 $2,884,000,000 was involved in the “rights”
for the total of new securities issued during this interval,
 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.