New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1878-04-06
CLEARING HOUSE FOR STOCKS.

HOW TO AVERT DANGERS To WHICH WALL STREET
Is ExposED-sKErCH OF SYSTEM TO MEET
ALL DEMANDS.
To the Editor OF The Tribune.
SIR: The late disclosures have pointed out
q new danger TO which waist. exposed II seems re-
markable that should have yet been devised
TO mitigate IL not wholly avert these dangers, but
only furnishes with another illustration Of the pro
verbal reckessness which familiarity with danger gen.
orally breeds. think. however, that although DO ma
chinery can be invented which will enable brokers,
bankers or anybody else TO dispense with continued
use OF proper precautCn the details OF their business
could be rendered comparatively safe by the ESTABLISH
ment Of a properly constituted clearing house ios
the securities IN which they deal ALTHOUGH
often mooted, such az institution cannot be said
even 10 have been fairly attempted, for 10
Bankers aud Brokers Association. just faiied' a.
though originally started as clearing house. wac ssa
diverted from its legitimate purpose. The CHEF oe~
tions have always come from large operators unwilling
20 have their transactions concentrated in an nstituc1
where their welaid plans, dependent on secrecy fas
success are at the mercy of indsoroct CLERK IA
the plan which submit this danger is obyiated. and
that from theft and forgery reduced 10 MINIMUM y
il car he carried ont brokers will not need 10 ASK aHa
banks will not be tempted 10 grant lergs ovefcefaRe+
ton - ,..,.,.
ton ought 20 be beyond question large siescfiSei
capltaonly partially paid up-wouid be regulate IN.
board OF directors should consist OF stockholders aboui
eue-half OF them members OF the Stock Exchanse ne
Stock Exchange members Furthermore should appoihs
examnine board TO examine regularly the books Of
the institution. This provision would prevent The
t ton Tnn in the interest q any one ma.
The Clearing House should receive. at an appointed ho
every morning. the statements Of brokers' WIN ebten
attached, for differences due. IN stocks that DO 20
balance certain margin should accompany the stiis
This margin should be determined before sleSs
time every morning aud publicly posted In the Cssiat
House and stock Exchange The stats Of the market ana
OF the particular stock az the time VIII guide the mar
ayers in determining this maFgtn go "a 70
make IL sufficiently large 70 cover any psopse.s
prove oppressive AT later hour-Say two O'Clock, w
brokers 20 take up their stocks by paying balance nas
them. Should this latter amount-that % me lesa.
exceed the anou due the Csaring House. the bosey
OF course, weud be entitled TO draw the esisncs c,s
wise ne would have 10 pay up the balance Tas gsssf
though at first sight II may appear comp eatts, IN
work very smoothly, am convinced. aHef 's'"s -
The principals could guard their ncogntc as sssnsS
the clerks OF the Clearing House however Few % ia
Stock Exchange. For instance J. r. Co buy tSSs
shares of Lake Shore, and employ two duereu .sss
and X 10 buy 5000 shares each and clear the svs.
The stock beng bought at 90. and the price n1e1
Clearing Houss being so, each one or the wv M.
wSSd have az TO pay INTO ond in' lead 'i me too ~
IN this rough skeleton OF the system Wv s' eos.
10 siep hal f sad nos s2T arise out
could be easily solved so mach, az least can sA Z, rT
mind without any difficulty. As last resort w. 49,
and selling Of stocks could be done outside on ~, sns
ing House II desirable. am inclined 60 TANK tn ,sl
the Clearing House las been IN operation for ssne ~
I and has gained increased c0nhdencr Operators ~
money-lenders would lind it convenient 10 et ,s
original certificates OF stock. etc. with the mstsr
and be satisfied With lis certificate OF deposit
curi.es only To be drawn cat when particularly Hs ss.
Forgeres aud danger from loss, even fiauoNseh' ss
issues OF any particular security, would thus ~.
practically things Of the past. Borrowers OF hs".
avert risks OF the Meter or Bonner STYLE c0ud VIZ
late that the security be held in the Clearing h9a
! the lender, 10 be drawn only on the join
dOrsemsnt OF both parties 10 inc t rsI ~ IL
One OF the advantages OF clearing honse wOau - ~
convenience for dealers know as au early hour =.
whether nil their contracts were nklnk
instead Of now, having 10 wait until 2'lo y ~ ~
gain this knowledge. This is no small adNan,ass -
would frequently save money, as my eApehie" n
| taught me o. more than one occasion.
| Nelc- York, Feb. 3. 1873.