636
but no serious effort was made until July, 1882. By this time, New
York banks had become alarmed at the large totals to which certification
 of checks to stock-brokers required by current stock market activity
 had reached. Accordingly, some system for obviating unnecessary
certification became more and more desirable. A new system planned
by a Mr. Osterburg was sponsored by several large brokerage houses
and embodied in the “New York Stock Clearing House Association”’—
an organization entirely independent of the Stock Exchange, capitalized
 at $200,000, and to be supported by fees paid by its users. Nevertheless
 only 85 out of the 1,100 Stock Exchange members could be
persuaded to employ the new service, and the effort to maintain it
was speedily abandoned.
The next attempt was made by the Stock Exchange itself, and the
‘Auditing Department of the New York Stock Exchange” was established
 in 1885 at 14 Broad Street for the weekly settlement of Exchange
 contracts; its employment remained voluntary, however, and
was so little resorted to that the effort soon failed.
Meanwhile the volume of Stock Exchange sales continued to grow,
to cause congestion in member offices, and to put an undue strain on
the New York money market. During the whole period of these unsuccessful
 attempts to establish a security clearing system in New
York, certain Stock Exchange brokerage firms had become accustomed
in a limited way to clear contracts for fellow-members on payment
of a clearance fee. This practice dates back before 1880, was continuously
 followed till 1892, and is indeed still in vogue to some extent.
The usual charge before 1892 for such service was $1 for each 100
shares both received and delivered, but if stock was carried overnight
the charge was $3.12 (or “three and a shilling” as it was called)
accompanied by adequate margin. Only minor economies were effected
by this practice. In 1888 ag attempt was made to “centralize” this
clearing practice by appointing the Manhattan Trust Company as a
clearing house under control of a Stock Exchange committee; again
‘his plan was made voluntary for Exchange members, and again
‘nsufficient interest was aroused to lead to success.
Thus, for over 30 years every attempt to inaugurate a security
clearing system had ended in failure, owing primarily to the disinclination
 of Stock Exchange members to expose the facts and figures
of their business to the scrutiny of others, and perhaps the additional
clerical work entailed. For these reasons, the use of the various
clearing systems was never made compulsory by the Exchange for
its members, and voluntary systems failed to attract sufficient support
to achieve success.

APPENDIX