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APPENDIX

consciously try to bring on a corner in order to extort very high prices
from traders who are short of the stock. In this case they will usually
wish to halt lending of the stock, and indeed purchase further amounts
of it at exaggerated figures in order to secure the corner. The Stock
Exchange has several methods of proceeding in such cases provided
by its Constitution, including the deferring of deliveries on sales and
the power of establishing settling prices. But in extreme cases, it
can always strike the stock from its list, on the basis that the “free
and open market” for the issue has effectually been destroyed and that
further Exchange trading in it would represent only manipulation
and unfairness.
In the early history of the New York stock market corners were
fairly frequent phenomena—mainly because stock issues at that time
were generally so small. Like money shortages, corners have become
infrequent with the passage of time, which has brought with it larger
issues and better market organization. Probably the most famous
corner in the history of the market occurred in Northern Pacific in
1901. So famous was this episode that details concerning it need
not be repeated here.
Since the war there have been only two serious corners on the
Exchange—that in Stutz Motors in 1920, and that in Piggly Wiggly
Stores in 1923. A brief résumé of each will be given here.
The Stutz Motor Car Co. in 1920 had 100,000 shares of capital
stock, which were listed on the New York Stock Exchange. The
Business Conduct Committee, noting the character of trading in this
stock, called before it Mr. Allan A. Ryan of the Stock Exchange firm
of Allan A. Ryan & Co. Mr. Ryan stated that he owned 80,000 shares
of Stutz, and that he and his family, friends and associates owned or
had contracts calling for tht delivery to them of stock aggregating
110,000 shares—or 10,000 shares more than the company’s total capital
stock. The Committee informed Mr. Ryan that he alone was in a
position to put an end to this corner, and must take whatever steps
were necessary to do so. Subsequently Mr. Ryan stated prices at
which he was willing to settle, varying from $500 to $1,000 a share.
Since the Committee knew that a corner existed in the stock (which
the public did not necessarily know), and that a free and open market
for the stock no longer existed on the Exchange, to protect the public
it followed its usual procedure in such cases and suspended dealings
in the stock on the Exchange. This suspension of dealings did not
of course affect the legal rights of the parties under any existing contracts.
 Settlement of these contracts occurred outside the machinery