STOCK EXCHANGE. 583 STOCK EXCHANGE. creditor's bill in some jurisdictions. Thus, it will be seen that the courts do not assume to proceed against the seat itself, but attain the desired end through their power over the debtor. The United States Supreme Court has held that the rights of a member to his seat in an e.- change pass to his assignee in banlvru])tey, and the Latter may take such steps as may be neces- sary to compel the bankrupt to procure a transfer of his seat subject to the rules of the exchange. By the rules of probably all exchanges the claims of members must be first satisfied upon the sale of a seat. A seat cannot be bequeathed or de- vised by will, nor is it strictly descendible, as the person to whom it might be thus given or descend might not be acceptable to the exchange; but the rules generally provide for the sale of a seat on the ileath of a member, an application of the proceeds to any claims the other members may have against the deceased, and a distribu- tion of the proceeds to his personal representa- tives. The courts are loth to interfere with any reasonable rules and regulations of a stock ex- change and with any action it may take to maintain discipline or enforce its rules, and their aid could jirobably only be invoked in cases of gross fraud or imposition upon a member. Discipline. Strict discipline over the conduct of members is maintained bj' all the larger ex- changes. The penalty is suspension from the privileges of the exchange for a given period or expulsion in the case of serious offense. On the New- York Stock Exchange these penalties may be imposed for fictitious sales, for trilling bids, for acceptance of smaller commissions than those prescribed by the Exchange, and for 'obvious fraud.' Jlore recently discipline has been exercised for dealing with a rival exchange contrary to the regulations of the member's own exchange, and for questionable business conduct outside of the exchange. In London the same penalties are made applicable on the general ground of failure to comply with the commit- tee's decision or of dishonorable and disgraceful conduct. The rules of the Paris Bourse prescribe penalties in case the member "does not confine himself strictly to his duties" or "introduces in- jurious innovations." Curb Tb.ding. An institution which has grown to considerable proportions in recent years has been the so-called 'curb trading,' so named because the transactions are usualfy conducted on the street outside the entrance to the stock exchange. In London. Paris, and New York this trading has at times reached very large proportions, though the system which it repre- sents is radically different in the three cities. In London curb trading is utilized for the sake of dealing in foreign shares whose home market is open after the official closing of the London Exchange. For example, trading in American securities is conducted in Shorter's Court, behind the London Stock Exchange, frequently until 6 P.M. or later, the Xew Y'ork Stock Exchange, on account of the five hours' difference in time, being actively at work at that hour. In Paris tlie curb market, under its French title of the 'Coulisse.' has had a longer history. It has represented -irtually a rival exchange, not sub- ject to the numerous and rather vexatious lim- itations of the older Bourse. The Coulisse has frequently been suppressed by law, but has in- variably revived, and has probably conducted a larger total business than the Bourse itself, ex- cept, perhaps, in Government securities. At present the Coulisse conducts its operations on the portico of the Bourse and is a recognized institution. In New York curb trading devotes itself exclusively to securities which have not been admitted to the list of the Stock Exchange. In this category are comprised many very im- portant enterprises, including shares of the Standard Oil Company and of the various banks. The curb also provides a market for newly or- ganized enterjuiscs which have not reached a stage where they can apjdy for a place on the Stock Exchange list, and it gives an opportunity for fixing values of a forthcoming security be- fore the share or bond certificates are formally issued. In the conversions of the United States Steel Corporation stock, for instance, the shares and bonds were bought and sold 'when, as, and if issued' on the curb, and on these terms their values fiuctuated in some cases 14 or 15 points before the security itself ever legally existed. There is no restriction of the right to deal in the 'curb' market, but in practice its privileges are limited to regular and responsible parties, whose position or credit is known to the other party to a bargain. Stock Exch.vnge Cle.ring House. In recent years the system of 'clearing' stock exchange transactions, on the plan of the bank clearing- house, has been generally adopted by stock ex- changes. As introduced on the New Y'ork Ex- change in 1802, the system provides for the offsetting of securities which a broker has con- tracted to deliver by an equivalent amount of the same securities which he may have contracted to receive. Thus, if broker A has sold 1000 Kew Y'ork Central shares to B and bought 1000 of the same shares from C, the two transactions are settled by the delivery of 1000 shares by C to B. The price may be different in the two transactions, but such differences are adjusted by the clearing house, to which the broker is 'debtor' or 'creditor' on his daily sheet. The same principle is followed even where the amounts bought and sold do not agree. Thus A, in the above case, may have sold only 500 shares to B and bought lOO'o from C. In 'that case C delivers 500 shares to A and 500 to B, and pay- ment is made accordingly. The economy consists in the lessening of the numlier of individual checks which must be drawn for settlement, and against which bank balances must be maintained. Supposing the price of New Y'ork Central, in the transactions last described, to have been 100, the old plan of individual deliveries would have necessitated drawing of checks, for settlement, in the total amount of $1.50.000. The clearing- house plan requires only $100,000. The aggre- gate saving in checks drawn, during an ordinary year, has exceeded $.500,000,000. The plan was adopted by the Frankfort Stock Exchange in 1867. at Berlin in 1869. at Ham- burg in 1S70. at Vienna in 1873. at London in 187G. and bv various American stock exchanges between 1880 and 1887. Stock Excii. ge Terms. The stock exchange has a dialect or slang of its own. many of the terms in which had their origin at the time of the South Sea speculation in 1720. A 'bull' is a buyer of stocks which he hopes to sell at higher prices. He may buy altogether with his own capital ; but if he is merely a stock exchange
