APPENDIX 
631 
for renewals and the annual average rate on new loans since 1922 
as follows: 
Year 
[922 
[023 
1024 
1925 
(926 
[927 
(928 
[020 
CE 
“aw 
Pde 
a ® 4 9 ® 9 8 © 
Difference 
¢, 
069 
€ 
co 
0n2 
FL 
Also, when either borrowers or lenders, or both, feel that renewal 
rates do not accurately reflect the fair current price for call money, 
their tendency is greater to call rather than renew, and to attempt to 
make new loans later at more favorable rates. In consequence, the 
volume of turnover at the money desk will increase. Yet it is signifi- 
cant that when this turnover has been proportionately greatest, it 
has amounted to only a negligible fraction of total outstanding call 
loans, thus indicating the high degree of recognized accuracy with 
which renewal rates are made. 
(XIk) The safety of stock market loans to lenders has frequently 
been pointed out by leading financial authorities and students. In the 
La Follette Resolution hearings (February-March, 1928), O. W. M. 
Sprague, Professor of Banking and Finance in Harvard University 
stated (p. 31, ef seq.) : 
“There are at the present time 26,000 banks in the United States. 
Five years ago there were nearly 30,000. Between 3,000 and 4,000 
have failed in that period of five years. It is, therefore, I think, 
pertinent to inquire whether banks have failed because of brokers’ 
loans, and also to inquire whether, if obstacles are placed in the way 
of using funds for brokers’ loans, the number of bank failures might 
be affected, either to increase or decrease them . . . 
“These 26,000 banks are in the main local banks. The rates on 
their local business are in general higher than the rates upon brokers’ 
loans . . . They invest in brokers’ loans primarily because they 
do not find in the local situation a volume of satisfactory loans suffi- 
cient to absorb all of their funds, consistent with safety . . . that 
prevails throughout virtually the entire country . . . 
“During 1920 we had a period of inflation during which prices on 
and and of commodities were rising rapidly, and it was practically 
impossible during that period of abnormal advance in prices for banks 
ro fail: but those banks which put all of their funds into a local situa-