466 THE WORK OF THE STOCK EXCHANGE 
authorities, and their ability to provide in some cases quite 
novel but effective remedies for the often very unusual prob- 
lems of that trying period. 
Enforcement of Discipline.—A less fortuitous but perhaps 
even graver danger which would result from incorporating the 
Stock Exchange, would be that its present morale and its strict 
discipline over the conduct of its members would be profoundly 
shaken and impaired. We have seen that the regulations of the 
Stock Exchange relating to the business conduct of its mem- 
bers go even beyond the common law in the earnest attempt 
to maintain “just and equitable principles of trade,” and that 
these regulations are immediately and thoroughly enforced. 
From the inherent nature of the transactions which take place 
in an organized securities market, such a high and ethical spirit 
of legislation is necessary. The general recognition of this 
necessity by Exchange members, in fact, is responsible for the 
severe and instant punishment to which they have voted to 
make themselves liable. 
Under a legislative charter the terms of membership and the 
relations of the members to the governing body of the Exchange would 
be subject to legislative control, whereas they are now a matter of 
contract. The present disciplinary power of the governing body is 
based on this contractual relationship. Under the contract fixing the 
terms of membership every member agrees to observe the rules of the 
Exchange and submits him8elf to the jurisdiction of the Board of 
Governors to punish any violation of the rules by fine, suspension, 
or expulsion, as the case may be. The most effective of these rules 
are couched in the broadest language to bring within their sweep not 
only acts that are wrongful from a legal point of view, but also acts 
that are inconsistent with fair dealing and in any way detrimental to 
the Exchange as a great market for securities.®® 
As Mr. Horace White, chairman of the Hughes Commis- 
sion, expressed it, “Forcing upon the Exchange an act of incor- 
poration would impair this disciplinary power and involve the 
Exchange in extensive litigation at heavy costs without any 
36 See “Regulation of the Stock Exchange,” p. 557.