COMPARISON AND SECURITY CLEARANCE
331
Inclusion of Loaned and Borrowed Stocks.—In an earlier
chapter it was pointed out that a broker is able to deliver to
the purchaser stock which he has sold short by borrowing it
from some other broker in exchange for a loan of money
equivalent to the market value of the stock borrowed. Such
loans and borrowings of stock and their money equivalents are
included in the clearance sheet, exactly as if they were sales
and purchases. If, for example, Jenkins & Co. had borrowed
200 shares of Crucible Steel from some broker and loaned 100
shares of Union Pacific to another broker, the 200 Crucible
would appear with stocks to receive on the left side of the
clearance sheet, and the 100 Union Pacific on its right side,
with stocks to deliver. The money equivalents or cash exten-
sions of these items would appear after them on the sheet, just
as with stocks bought or sold.
Exchange tickets are exchanged for such loans of stock
just as in the case of sales of stock. Even though such loaned
or borrowed stocks create a stock balance to receive or to
deliver which is settled at clearing house prices, the broker’s
check or draft automatically adjusts any inequalities in money
arising between the actual price at which the money loan was
made, and the delivery price. Indeed, for all we can tell, some
of the stocks to deliver on Jenkins & Co.’s sheet may really be
loans of stock and some of its stocks to receive may be borrow-
ings of stock. Similarly, cleared stocks which have been bor-
rowed are afterwards returned through the stock clearance
system; in addition the account of a customer may be trans
ferred through it from one Stock Exchange firm to another.
‘Economies Obtained by the System.—The tremendous
saving in time, labor, and money effected by the clearance of
stocks can be illustrated in no more concrete way than by
reference to just such a clearance sheet as the above. On the
given day the firm has bought 2,100 shares for $209,362.50
from eleven different firms, and sold 2,200 shares for $233,-
"15 See Chapter VII, p. 187
