COMPARISON AND SECURITY CLEARANCE 343
amount cleared about 50% represented intermediate contracts
which (under the old “Clearing House of the New York Stock
Exchange” or the present Night Branch) could be cleared without
the need of banking accommodation. Since the banking
accommodation needed by Stock Exchange members to settle
their daily purchases and sales is in practice obtained by them
on unsecured “day loans” at the banks, the operations of the
security clearance system have greatly reduced the amount of
these day loans regularly required, and therefore the amount
of certified checks in which the day loans were employed by
the brokers.
Secondly, the security clearance system has effected a vast
saving of time, not only through its settlement of intermediate
contracts but also in the direction which it has given to the
deliveries of stock balances, and the simplification it has produced
in money payments through its use of “settlement” or
“delivery” prices. In the large stock markets since 1900, it
would have been impossible without the security clearance system
to have maintained the “daily settlement system” on the
New York Stock Exchange, whereby deliveries are to be completed
by 2:15 the first full business day after the date of
contract. Stock clearance has prevented breakdowns in the
stock market, just as bank clearance has prevented breakdowns
in the money market.
A third service rendered by security clearance is the huge
economies it has effected in labor. Indeed, the whole process
of clearing and settling security contracts is from one standpoint
simply a great labor-saving device, as Stock Exchange
members would instantly appreciate were the Night Branch
operations suddenly suspended. As in other branches of American
business, the security market has been able to pay its
employees more because it has as far as possible eliminated the
purely mechanical tasks which do not require special intelligence
and aptitude—such as messenger service and routine
clerical work. In addition, the security clearing system per-
