COMPARISON AND SECURITY CLEARANCE 345
they did not result in such direct deliveries of securities and
payments of money. Even in the narrower and legal aspect of
the matter, however, the courts have held that contracts which
show an intent to deliver are legal. That cleared contracts in
Stock Exchange securities show such an intent to deliver is at
once obvious to anyone who will read a typical clearance sheet
with its exchange deliver and receive tickets. An authority in
economic matters has said :2°
There is no such thing known on any of the reputable exchanges
as a contract under which delivery is waived: one obstacle to an under-
standing of this lies in the way in which transactions are cleared
through the Clearing House; but an attempt to prove the legitimacy
of the method of clearing would be useless to one who does not under-
stand the way in which bank transactions, for instance, are cleared.
It is as ridiculous to say that the clearing of many contracts for
delivery on the Stock Exchange, and the settlement of these trans-
actions by a payment of balances, both of stocks and cash, indicates
that such transactions are not of a perfectly genuine nature as it is
to assert that because the Clearing House for the New York banks
arranges for an offset of checks and the payment of only a small
balance of cash, therefore, the banking business in New York is not
concerned with legitimate business. Speculation could continue without
a Clearing House, and in fact, the New York Stock Exchange was
very late in adopting this device. Nothing as to the legitimacy or
illegitimacy of transactions can be determined from the mere adoption
of an up-to-date business method.
The clearance of security contracts must, therefore, be
looked upon as one of the great financial developments of the
past century, effecting as it does an economy of time, labor,
and capital in the major market places of the modern world.
For all its technical terminology and its clerical detail, it is
based on the simplest common-sense principles. Without the
employment of these principles by the banks and the security
and wholesale commodity markets, the conduct of modern pro-
duction and distribution with the present ease, safety, and
pee C Emery, “Should Speculation be Regulated by Law?” in Journal of
