THE ODD-LOT BUSINESS
251
under greater expense in conducting his business than is the
average commission broker. The successful execution of odd-
lot orders, to begin with, calls for a large force on the floor of
the Exchange. One large odd-lot house engages about 40 Ex-
change members first and last to transact its floor business; the
aggregate capital tied upon in Stock Exchange seats alone is
thus very large. In addition, since large numbers of odd-lot
certificates are continually in process of transfer, much capital
of an odd-lot house is regularly tied up in consequence. More-
over, since the odd-lot dealer is a principal and not an agent, he
must himself pay the Federal and New York State transfer
tax on every share he sells, instead of passing this charge
on to the customer, as the commission broker can do
and does.°
In addition to this, the odd-lot house must bear office ex-
pense in some respects far heavier than the average commission
broker. One large odd-lot house is compelled to maintain a
force of about 1,200 clerks, and to occupy half-a-dozen floors
in a large and expensive office building in the Wall Street dis-
trict. The necessity for constantly splitting 100-share cer-
tificates into odd-lot certificates, and vice versa, alone demands
a large and competent clerical force in the transfer department
of an odd-lot house. Furthermore, since only 100-share trans-
actions, or multiples of 100, are cleared through the Stock
Clearing Corporation, the odd-lot house must handle all its own
clearances itself—an even greater task.®* The bookkeeping in
odd-lot houses, too, must cover thousands of small items, and
must be kept rigorously up to the minute.
When these items of risk and heavy overhead expense are
remembered, it is obvious that only a firm with unusually large
financial resources, efficient management, well-trained help, and
a large volume of the small orders in which it specializes, can
hope to engage successfully in the odd-lot business. In the
fifty odd years in which the odd-lot houses have been an impor-
Se Chanter ba b. i, Appendix VIIIb; and Chapter XV, p. 426.
