188 THE WORK OF THE STOCK EXCHANGE 
customers are regularly financed. Some mornings as early as 
0:45 A.M., the “loan crowd” assembles on the floor, and 
within it the loaning and borrowing of stocks may go on inter- 
mittently till 1:30 P.M. ; no loans are made between 1:30 P.M. 
and 3:00 p.M.; most if not all of the day’s loans are made 
between 3:00 P.M. and 3:30 P.M. 
This loan crowd is composed of Exchange members who 
wish to borrow or loan stocks. White & Co.’s Board member 
—i.e., the particular partner in the firm who is a member of 
the Exchange and who handles its business on the floor—there- 
fore seeks out Green, a broker with 100 shares of Corn Prod- 
acts to lend. To obtain the loan of Green’s stock, White & Co. 
usually have to agree to lend Green a sum of money equal to 
its market value. If, for example, Corn Products closed that 
day at 100, Green will obtain a loan of $10,000 in return for 
the loan of the stock which he makes to White & Co. It is 
understood between such lenders and borrowers of stock that 
the amount of this money loan must be kept at a figure equiva- 
lent to the market value of the stock in question. Should Corn 
Products rise from 100 to 105, White & Co. would have on 
his demand to loan to Green an additional $500 upon it; while 
if the stock should decline from 100 to 95, Green would have 
on their demand to return to White & Co. $500 of the original 
loan of $10,000. 
Thus Green borrows White & Co.’s money and White & 
Co. borrow Green’s stock. But the money still belongs to 
White & Co., and the stock to Green. For this reason, Green 
must normally pay interest on the money borrowed from White 
& Co. On the other hand, White & Co. must pay to Green 
such dividends as may be declared upon the stock borrowed 
from him.” Of course, Thompson, as a principal, must in turn 
repay these dividends to his agents, White & Co. 
This necessity of the short seller to pay for dividends in 
this way, which often puzzles inexperienced traders and in- 
7 See Chapter XV. p., 427.