Since the armistice these causes have been augmented by the increased volume and velocity of transactions hi securities generally. Before examining the figures, it should be explained that the amount of call money employed by the securities market fluctuates according to the amount of other funds available for this purpose, i.e., customers' money invested and tune money borrowed, and also as the volume of business varies.
Volume. The volume of money outstanding on call is more or less constant, fluctuating only over relatively long periods, and the amount which is loaned from day to day is but a small proportion of this constant volume.
The constant volume of outstanding call loans bears a rate of interest which is determined daily and is known as the renewal rate. The daily borrowings, either in replacement of loans called for payment or representing new money borrowed, are made at rates which may or may not be the same as the renewal rate and which frequently vary during the same day.
Turning to the figures, it appears that over a period of years during the prewar period the volume of all money, both time and call, employed hi the securities market was estimated at about $1,000,000,000, of which the average on call was about 60 per cent and the average on tune about 40 per cent, or a normal volume of call money, say, of $600,000,000. The daily turnover in call money, i.e., old loans called for payment, loans made hi replacement thereof, and new money borrowed, ranged from $15,000,000 to $30,000,000, and averaged about $20,000,000. The daily Turnover during the year 1919, however, ordinarily ranged from $25,000,000 to $40,000,000, and averaged about $30,000,000. Moreover, it is important to notice there has been a disproportionate increase in the amount of call loans, as distinguished from time money, with the consequence that the former, it is now estimated, constitute about 75 per cent of the total money employed hi the securities market. At a time of such heavy credit requirements as the present the greater volume of borrowings, not only in the aggregate but in the day-today demands, naturally often results in high rates for the money loaned. Indeed, so reluctant have the bankers been during the past few months to supply the large demand for credit based on securities that the occasional loaning of relatively small amounts of money at veryhigh rates often represents a desire not to secure the high rate quoted but to prevent the rate from going very much higher with the consequent demoralization which might result....
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