SECURITY COLLATERAL LOAN MARKET 279
on the minimum requirements of the security market. This
arrangement continued until 1919,
Out of this period of war regulation, however, came two
permanent improvements in the security loan market. Pre-
viously, call money had been bid for like shares at a certain
post on the Stock Exchange floor.® But more effectually to
regulate and stabilize the market, the money desk system,
presently to be described, was installed.” Also, the Federal
Reserve Bank of New York began in 1917 to compile statistics
as to the funds loaned on security collateral by its member
banks, and in 1918 the New York Stock Exchange began a
similar compilation of the borrowings on securities made by
its members. The Reserve Bank has continued its compilation
ever since, while the Exchange discontinued its figures at the
end of 1922, but began them again at the beginning of 1926
on a monthly basis. On the latter occasion, the Reserve system
and the Exchange simultaneously adopted the policy of pub-
lishing these figures regularly.® In this way an increasing
knowledge of the security loan market and a reasonably precise
measure of its outstanding amounts, is regularly made avail-
able to everyone.
The Time Loan.—There are two distinct types of loans
made upon security collateral—time and call loans. The time
loan, as its name implies, is made for a definite period of time
—three, six, nine, or sometimes twelve months—at a fixed rate
of interest which does not change during the life of the loan.
To secure the loans there are deposited as collateral with the
lender, securities whose value exceeds the amount of the loan
by a minimum of 20% to 30%. The lender is also protected
by the agreement (Figure 20) that if the market price of the
security collateral declines, the borrower must put up addi-
tional securities as collateral. For if during a falling market
® For details of the prewar methods of lending money on the Stock Exchange floor,
see testimony of J. H. Griesel, Money Trust Investigation, Vol. I, p. 742 et seq., and
also Appendix Xid.
7 Jee testimony of Governor Strong, “Stabilization” hearings, p. 353 ef seq.
81bid., p. 360 et seq.; also testimony of Governor Roy Young in La Follette
Resolution hearings, p. 68.
