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- Title
THE RELATION OF CALL MONEY RATES TO STOCK MARKET SPECULATION.
- Authors
Eiteman, Wilford J.
- Abstract
The article focuses on the relation between call money rates and stock market speculation. It is sometimes said that the easy-money policy adopted by the U.S. Federal Reserve Board about the middle of 1927 initiated the stock market speculation that followed, the theory being that low interest rates stimulate marginal purchasing which in turn increases the total of brokers loans. A detailed knowledge of brokerage office routine is prerequisite to an accurate analysis of the nature of a broker's demand for funds in the call money market. In most brokerage offices the function of deciding just how much money is to be borrowed is assigned to the cashier. A case of the cashier's compilation of firms' credits at the Stock Clearing Corp. is included in the article. It has been shown that an individual broker's demand for loans is determined by the excess of his daily disbursements over his daily receipts. The interest charges on brokers' loans are pro-rationed among traders with debit balances.
- Subjects
SPECULATION; STOCK exchanges; MONEY; MONEY market; FINANCIAL markets; BROKERS; SUPPLY &; demand
- Publication
Quarterly Journal of Economics, 1933, Vol 47, Issue 3, p449
- ISSN
0033-5533
- Publication type
Article
- DOI
10.2307/1883980