CHAPTER XI 
THE SECURITY COLLATERAL LOAN MARKET 
Members and member firms of the Stock Exchange play a 
major part in the security collateral loan market, usually as 
borrowers but sometimes also as lenders. The New York 
Stock Exchange itself, however, never borrows or lends such 
funds, and therefore is only indirectly concerned with the 
problems arising from the security collateral loan market. 
Nevertheless, the Stock Exchange Constitution® contains spe- 
cific regulations in regard to the lending or borrowing activi- 
ties of its members, and provides central facilities on its floor 
for them. To students of the Stock Exchange, therefore, the 
subject of security collateral loans is of inevitable interest, 
Evolution of the Market.—The security collateral loan 
market in New York cannot be understood without reference 
to its long and peculiar evolution. As the most highly organ- 
ized section of the New York money market, it has been devel- 
oped far beyond any security loan market abroad. The close 
proximity and economic interdependence of the European 
nations from early times forced a development of foreign 
trade, and the employment of bankers’ bills by which such trade 
can best be financed. Thus the money markets of London 
and to a lesser extent of other European centers also, came 
to be based essentially upon their bill transactions and bil 
markets. ? 
The economic development of the United States has been 
on quite different lines, and has compelled a very different evo- 
lution in the New York money market. Early in the nine- 
teenth century, when our lack of manufacturing facilities made 
age Constitution, pp. 38, 73, 87, 88, 92-94, 99, and 118.