208 " THE WORK OF THE STOCK EXCHANGE
insolvency. No other loan in this country, and perhaps in any
country, has behind it as many protective features as our
security call loans.
For many years—even in the panic of 19o7—there has
never occurred a case when Stock Exchange brokers with good
collateral were actually unable to obtain the funds they needed.
No brokerage firm in Wall Street with good security collateral
has ever failed for lack of banking accommodation. On the
other hand, even in the long memory of the oldest lending
institutions in Wall Street, there is no record of any unpre-
ventable loss by a lender on call loans made to a Stock Ex-
change member on listed collateral. This sweeping yet justi-
fiable statement attests the unique safety of properly made and
managed call loans to the lenders.
The supreme test of the safety of call loans was witnessed
during the 1929 panic, when total borrowings on security col-
lateral by New York Stock Exchange firms declined from
$8,549,383,079 on October 1 to $4,016,598,769 on December
—a liquidation of over $4,500,000,000 in two months—
without the loss of a penny to a single lender. Such a liqui-
dation is impossible to parallel in the history of the world’s
money markets, either in amount or percentages.
The safety of call loans has proved of very great benefit to
country bankers particularly, since their business is often sub-
ject to wide seasonal fluctuations between a shortage and a
surplus of good local investments. Time and again, wisely
managed country banks have saved themselves from a wave
of local banking insolvency, by investing their funds largely
in safe and liquid call loans. The Florida land crash a few
years ago is only the most recent of many similar cases of this
kind which could be cited. While it is true that call loans
might be “frozen” by an enforced closing of the Stock Ex-
change, this extreme eventuality has occurred only twice since
1817, and from causes which presumably would not cause a
similar closing today.
