COMPARISON AND SECURITY CLEARANCE 313 
“comparison.” Second, a security clearance may or may not 
occur, depending primarily on whether it is an active or inac- 
tive security. Third, the security (or, if cleared, the security 
balance) must be delivered. Fourth, a clearance of the money 
value of security deliveries occurs. Fifth and finally, the 
money settlement must be made. 
It is somewhat difficult to describe these several processes, 
for the New York Stock Exchange clearance and settlement 
system has grown up section by section, is in part optional 
with members, sometimes differentiates in its methods between 
different classes of securities or different individual security 
issues, is still rapidly expanding, and has as yet by no means 
reached the end of its possible and even probable future evolu- 
tion. In principle, stock exchange clearing and settling systems 
are no different than bank clearing houses or the Gold Settle- 
ment Fund of our Federal Reserve system. They are, how- 
ever, much more complex, for where a bank clearing house 
handles only the one commodity of bank funds, or the Gold 
Settlement Fund the one commodity of gold, a stock clearing 
house must handle both money and securities, and often many 
completely different issues of securities too. In addition, stock 
clearing systems sometimes perform for their members other 
important functions beside simply the clearance and settlement 
of their sales contracts with each other. In this and the 
following two chapters the attempt will be made to describe 
these several related functions as clearly as possible, and at 
the same time as nearly as possible in their actual sequence. 
The Pre-Stock Clearing Corporation Days.—The first 
complete system of stock clearance was inaugurated at Frank- 
furt, and the important economies which it effected soon led 
to the development of similar systems in London, Paris, 
Vienna, Berlin, Hamburg, and other European centers. Today, 
only Amsterdam of the important financial stock exchanges 
has no clearing and settling system. In America, the first