The customer of a brokerage house buys, let us say, 1000 shares of St. Paul at 120, on which he deposits a partial payment or margin of $15,000. The bank will loan to the broker 80 per cent. of the market value of the stock, or $96,000, which, added to the $15,000 deposited by the customer, leaves $9000 which the broker supplies from his firm’s capital. The broker gives to the bank, with the securities, a note on one of the bank’s printed forms, which gives the bank absolute authority to sell the collateral whenever the margin shall have declined to less than 20 per cent. This note is so sweeping in its terms, and gives the bank such complete power, that a reproduction of it, in small type, would fill two pages of this book. It empowers the bank to sell as it pleases--if the broker fails to pay the loan on demand, or to keep the margin at 20 per cent.--all the securities in the loan; it authorizes the bank to seize any deposit the broker may have in the institution; the bank may itself purchase all or any part of the securities thus sold, and all right of redemption by the broker is waived and released. This instrument would seem, _per se_, a pretty strong hold on the broker, but the bank’s security does not end there. In making the loan the bank knows that the borrower is a member of the New York Stock Exchange, and that presupposes capital, with at least one Stock Exchange membership, worth to-day about $60,000. It knows, too, that a fundamental rule of all Stock Exchange brokers is to protect the bank at all hazards, not merely because the personal honor of the broker is involved, but because the business could not be conducted otherwise. It is apparent from a consideration of all these elaborate precautions that the lending of funds to stockbrokers is a safe business, indeed in all the criticism directed against Wall Street methods I have not yet heard it questioned. The department of the bank entrusted with such matters watches the tape with vigilance to see that the 20 per cent. margin is not impaired; if it should happen to be impaired, the broker’s messenger is almost always on hand anticipating with his additional collateral the call that the banker will make. So excellent is Stock Exchange collateral, thus secured and thus protected, that the losses resulting from this class of business are infinitesimal. I am not a banker, but I hazard the opinion that it constitutes, in fact, the minimum risk in all the departments of the bank’s business.