THE COMMISSION HOUSE 429
to. This can be determined only by first imagining that his
account has been completely closed—that is, that all his long
stocks have been sold and all his short stocks bought in. Let
us suppose that this is done on August 31, when Atchison gen-
eral 4s are selling at 9o, Pennsylvania at 70, Reading at 115,
Baltimore & Ohio at 130, and Pan-American Petroleum at 58.
At these prices we find that Blank’s 390 shares of long stock
(counting the five $1,000 bonds as the equivalent of 50 shares)
possess a market value of $37,600.
In the interest of simplicity, the account here considered as
an example contained no short stock at the end of the month.
In case Mr. Blank had—let us say—carried over 100 shares of
Steel short, a somewhat more complicated situation would have
arisen, the complete consideration of which would lead us deep
into the philosophy not only of bookkeeping practice but also
of stock market behavior. It is of course true that such short
stock should be represented by a credit money item, as far as
the customer is concerned. On the other hand, the broker may
be unwilling to reduce his customer’s debit balance by the full
market value of the short stock carried over, since he cannot
always be sure that the stock could certainly be purchased at so
satisfactory a price. Accordingly, different firms in their book-
keeping methods handle this situation in different ways; some
firms go so far as to maintain two separate accounts for the
customer—one for his long and the other for his short com-
mitments, and require adequate margin upon each. Of course,
much depends upon the character of the particular security or
securities carried for a customer, long or short, as well as upon
the trend of the stock market at the time. It may be—and
often has been—argued that full credit for short stock should
be offset against debits on long stock, on the theory that such
a short commitment was really a sort of “hedge” and would
provide more credit as declining prices created a greater debit
on the long account. Unfortunately, however, the stock market
does not always exhibit such uniformity of movement. and
