New-York tribune., 1919-07-12
Stock Exchange
Decides Against
Term Settlements
European Method Is Not
Adapted to Use Here;
Stock Clearing Corpora
ton Ready by November

Although the Federal Reserve Board
in its latest utterance concerning
stock market speculation states that
fiurries in call money rate are inevi-
table so long as the present methods of
financing and settling speculative
transactions are persisted in there is
no present intention on the part of
the Stock Exchange Immediately to de-
part from the present system of daily
settlements.
3. f. STREET, chairman Of the special
committee on clearances which was
appointed late in 1918 to work out a
plan involving the formation of a
STOCK clearing corporation, said yester-
oay 'hat 1t would be physically impos-
slblo to adopt here at this time the
term settlements in vogue on the Euro
pean bourses. va '''o Lulu
-, 1he question of term settlements in
sne Ne" YORK market to-day" Mr.. STREET.
explained, come down to one practica !
Iact, and that is its impossil;lity un-
der present conditions. The New York
6anks and members Of the New York
STOCK Exchange, on the present average
pus1ness OF daily settlement, are hav-
ing their resources strained to the
utmost to take care of the delivering
OF and the paying for stocks traded in.
We have million and three-quarter
share days, and if 1t gets the last sheet
IN the Clearing House at 8 o'clock that
night 1t is ali the banks can do to
get cleaned up.
''If wa had n 4arp, co4%1o,,o,A - .
fortnightly basis you would have ton
business days. At tho end of the tenth
day settlements would have to be made.
1t would not be ten times the amount
Of one days settlement, but three times
that amount. This statement is con-
irmed by actual figures secured in
London, Paris, Berlin and Vienna.
Consequently the Stock Exchange,
and especially the committee on clear
ances, of which l am chairman. have
proposed plan which we believe will
relieve the congestion on the part Of
the banks and the congestion in
brokerage offices so that we can handle
economically and in q practical way
the transactions on the daily settle
ment basis. AS has been stated by mo
previously, the banks by the new clear
ing plan will be relieved Of about IS
per cent Of their certifcations to
brokers.
of this is successful and if we do
find ourselves able to relieve the pres
ent congestion then the New York
Stock Exchange will be willing to dis
cuss the question Of term settlements.
am not prepared to discuss it now
and to say whether they are desirable
or undesirable. But l do deprecate,
as does the Stock Exchange, the dis
cussion of term settlements from
practical standpoint now, when under
present conditions it is out of the ques-
ton" :.
Mr.. Strit said that the new stock
clearing corporation would probably be
ready for operation in November. In
reference to it's activities he con-
tinued:
eve are preparing pne of the big
gest steps toward improving business
methods on the Stock Exchange since
the Inauguration Of the present clear
ing houses system. IT is very big
step and involves a great many prob
lens. We think we have solved them,
but nobody can tell until the plan is
in operation. We will be able to handle
three times the volume of business
>that we now have in one day"