638
APPENDIX
of their accounts to others were in practice unfounded. The signal
services of the stock clearance during the panic of 1893 and the
boom of 1901 clinched the arguments in favor of the practice.
The legal aspect of the new stock clearing system had .yet to be
clearly established, since few if any direct precedents for such a prac-
‘ice existed—at least in New York State. Objections to security clear-
ance on legal grounds were always based upon misconceptions, how-
ever, and have gradually died out as the principles of clearance have
vecome more familiar in other lines of financial and commercial
business.
The evolution of the Stock Clearing Corporation has been de-
scribed passim in the text, but its outstanding stages can be briefly
chronicled here. On April 26, 1920, the Corporation inaugurated its
Day Branch operations, which at first were confined to a money
clearance and settlement of the cash extensions of its members’
Night Branch share balances, and after March 22, 1921, of Liberty
Bond balances. Gradually, however, the Day Branch began to per-
form a similar money clearance and settlement with securities not
sleared in the Night Branch—on September 15, 1922, with non-
cleared shares, on December 8, 1922, with non-cleared foreign bonds,
and on June 5, 1923, with all other non-cleared bonds. By this last
date, all securities traded in upon the Stock Exchange were cleared
and settled as to their money amounts by the Day Branch, except for
lots of less than 100 shares or $1,000 par value of bonds.
The clearance of members’ security collateral loans was inaugu-
rated by the Day Branch on March 22, 1921. Also, almost from its
inception the Day Branch has conducted special clearances, especially
in “when issued” securities. The Transfer department was estab-
lished May 31, 1923, to handle the assignable transfer receipts; on
September 20, 1926, the similar employment of exchange receipts
began, and shortly afterwards the use of the temporary exchange re-
ceipts. Settlement of commission bills through the Stock Clearing
Corporation was inaugurated July 16, 1927. The Central Delivery
Department first opened for operation on April 18, 1929.
During the post-war period, clearances in active bonds had been
held—oparticularly in U. S. Liberty Loans and foreign government
bonds. This was discontinued when these issues became inactive in
the market. But on November 26, 1929, clearances of active bonds—
particularly convertible issues—were resumed On June 3, 1930,
machine clearance for cleared bond contracts was inaugurated.
(XIIb) The following excerpts, taken from Chapter II of the
Constitution and Rules, relate to comparisons :
