STOCK SPECULATION—DANGERS AND BENEFITS 137
became all but impossible there. It is typical of all such attempts
to abolish speculation that afterwards Lenin was forced to
reinstate private speculative trading in fact, however much he
continued to condemn it in theory.
Other more intelligent critics, who realize the inevitable
existence of speculation, have frequently taken the Stock Ex-
“hange to task for the way speculation is conducted by brokers’
customers. Especially the amount of margin required by Stock
Exchange houses!” has been attacked, since so many cases of
loss to customers can be traced to buying stocks on small
margins. Often, it is demanded'® that the Stock Exchange
compel everyone to trade on a given fixed margin.
Stock Exchange Attitude Toward Margins.—The mem-
bers of the Stock Exchange must not for a moment be thought
of as desiring to see their margin customers lose money. It
must be remembered that the commission broker, through
whom the public comes in contact with the Exchange, is not a
dealer but a broker, and the agent of his customer. Far from
making what his customers lose (like a croupier or other kind
of gambler) the broker can derive no possible benefit from his
customers’ losses. = On the other hand, these can frequently do
him no little harm. For one perfectly selfish reason, he loses
the account of that customer and the future commissions it
might otherwise bring him. Between the hundreds of Ex-
change commission houses there is a keen competition for
accounts.
Moreover, the broker may himself become involved in his
customer’s catastrophe, by attempting to “carry him” after his
margin is exhausted. Failures of brokerage houses have often
been due to such overextension of credit to customers, who
may be unable or simply unwilling to respond to margin calls.
And the failure of a Stock Exchange firm may entail losses,
1" See Chapter VII, p. 184. .
'8 ““We urge upon all brokers to discourage speculation upon small margins, and upon
the Exchange to use its influence, and if necessary its power, to prevent members from
Soliciting and generally accepting business on a less margin than 20%.” (Hughes
Report, 1909, in Van Antwerp, p. 420.)
