192 THE WORK OF THE STOCK EXCHANGE 
of Steel rises he obtains a profit, and if it declines he takes a 
loss. But in becoming long of stock, he has also gone short of 
money. Consequently, if the value of money advances he will 
tend to suffer a loss; while if it declines he will tend to profit. 
In the first case, the rising interest rate on call and time loans 
may make Jones’s transaction too expensive to be profitable, 
and he will probably “liquidate,” as it is called, by selling out 
his stock for what it will bring. Usually, the result of such 
liquidation by many margin purchasers will be to force down 
in turn the price of the stock itself. 
On the other hand, if the interest rate declines, it will assist 
the margin purchaser to obtain a profit, ‘since he will be directly 
responsible for smaller interest charges on his loan (which 
often may be offset by dividends paid on his stock) and since a 
lower “call rate” will often induce greater margin buying by 
others, which in turn tends to raise the price of the stocks he 
has purchased. 
Twofold Aspects of Short Sales.— Short sales of securi- 
ties are in the same way subject to a loss or a profit, both on 
the money and the stock side of the transaction. We have seen 
that Thompson obtained a profit if Corn Products declined 
in price, and stood to lose if it advanced. But conditions 
in the money market may also mean a profit or a loss to him, 
since in going short of stock ‘he has also gone long of money. 
An advance in the call rate of money is, therefore, favorable 
to him, since his broker White can often obtain from Green a 
higher interest rate on the money loaned to the latter in return 
for the loan of his stock. Also, as has been pointed out, a 
rising rate in call loans is apt, through forcing liquidation by 
margin purchasers, to depress the price of stocks, by which 
development Thompson, of course, profits. On the other hand, 
a declining interest rate may result in the interest on White's 
loan of money to Green becoming smaller than the dividends 
which Thompson must pay on the stock Green loaned to White, 
and since a declining call rate is also apt to result in rising stock