All dividends for which transfer books close during said time, go with the stock. Expires April 6th, 1934 2:45 p.m. A. BLANK, Broker. Delivery on C. H. Sheet of N. Y. S. E. or next day according to S. E. usage. Endorsed by a New York Stock Exchange firm PUT (b) A put entitles the purchaser to deliver a specified amount of stock at a stipulated price on or before a specified date. This contract must be presented to the cashier of the firm it is endorsed by, before the expiration of the exact time limit. It will not be accepted after it has expired and cannot be exercised by telephone. NEW YORK, March 7, 1934. -(100) shares of For value received, the bearer may deliver me on one day's notice except last day when notice is not required one hundred. the common stock of the U.S. Steel Corp‒‒‒‒‒‒ dollars per share ($51.00), any time in thirty--- All dividends for which transfer books close during stock. Expires April 6th, 1934 2:45 p.m. at fifty-one.... ---days from date. A. BLANK, Broker. Delivery on C. H. Sheet of N. Y. S. E. or next day according to S. E. usage. Guaranteed by a New York Stock Exchange firm APPENDIX No. 2 COURT DECISIONS The attitude of the courts towards put and call transactions is shown in the following court decisions: In Biglow v. Benedict, 70 N.Y. 202, the defendant, in consideration of a payment of $250, agreed to receive from the plaintiff at any time within six months a certain quantity of gold coin at a specified price. The defendant refused to carry out the contract and set up the claim that the transaction was a gamble. The court held that the contract was legal in spite of the element of hazard involved. It was pointed out that the same element of chance occurred in every optional contract when one of the parties binds himself to sell or receive property at a future time at the election of the other. The court said: # "Mercantile contracts of this character are not infrequent and they are consistent with the bona fide intention on the part of both parties to perform them. The vendor of goods may expect to purchase or acquire them in time for a future delivery, and while wishing to make a market for them is unwilling to enter into an absolute obligation to deliver, and therefore bargains for an option, which, while it relieves him from liability and assured him of a sale in case he is able to deliver, and the purchaser may in the same way guard himself against loss beyond the consideration paid for the option in case of his inability to take the goods. There is no inherent vice in such a contract." Story v. Solomon, 71 N.Y. 420, involved the question of a double option where the seller agreed either to receive or deliver 100 shares of Western Union stock within a certain time at a certain price. The court said: "There is always an element of speculation and uncertainty as to that, and yet it had never been supposed that there is any betting by such contracts. Here the option to buy or sell was put in the same contract. On the face of the contract the plaintiff provided for the contingency that on that day he might desire to purchase the stock, or he might desire to sell it, and in either case there would have to be a delivery of the stock or payment of damages in lieu thereof. We should not infer an illegal intent unless obliged to. Such a transaction, unless intended as a mere cover for a bet or wager on the future: price of the stock, is legitimate and condemned by no statute; and that it was so intended was not proved. If it had been shown that neither party intended to deliver or accept the shares, but merely to pay differences according to the rise or fall of the market, the contract would have been illegal." In Irwin v. Willear, 110 U.S. 499, the question arose as to whether a contract covering grain futures was a gambling contract. The defendant contended that he never intended to take delivery. The court said: "It makes no difference that a bet or wager is made to assume the form of a contract. Gambling is none the less such because it is carried on in the form or guise of legitimate trade. It might therefore be the case that a series of transactions such as that described in the present record might present a succession of contracts perfectly valid in form, but which on the face of the whole taken together and in connection with all the attending circumstances, might disclose indubitable evidence that they were mere wagers." It was held, however, that it was not sufficient to show that one party intended that delivery should not be made. "The proof must go further and show that this understanding was mutual-that both parties so understood the transaction." To the same effect: Hentz v. Miner, 58 Hun 428; Zeller v. Leiter, 189 N.Y. 361; Springs v. James, 137 App. Div. 110, affd. 202 N.Y. 603; In Lewis v. Wilson, 50 Hun 166, the plaintiff sought to enjoin his suspension by the Consolidated Exchange where a claim was made that he failed to perform an agreement to accept stock under a put contract. The defendant claimed the contract was illegal. The court said: * * to render agreements of this description illegal and void, it must appear affirmatively that they were entered into as gaming contracts and not as real transactions for the purchase and sale of property Embrey v. Jemison, 131 U.S. 236; ACTIVE MEMBERS OF THE NEW YORK SECURITY DEALERS ASSOCIATION Allen & Co., Charles Allen, Jr., 20 Broad Street, New York, N.Y. Clokey & Miller, Gerald Clokey, 50 Broadway, New York, N.Y. T. C. Corwin & Co., T. C. Corwin, 25 Broad Street, New York, N.Y. Doty, Fay & Co., A. C. Doty, 15 William Street, New York, N.Y. Dillon, Throckmorton & Shantz, Howard D. Shantz, 115 Broadway, New York, N.Y. Chas. E. Doyle & Co., Frank Y. Cannon, 20 Pine Street, New York, N.Y. Dunne & Co., Frank Dunne, 40 Wall Street, New York, N.Y. Joseph Egbert, 2 Rector Street. New York, N.Y. Elliot & Wolfe, George A. Elliot, 115 Broadway, New York, NY. Englander, Birnbaum & Co., Gustave L. Birnbaum, 30 Broad Street, New York, N.Y. Clinton Gilbert & Co., Clinton Gilbert, 120 Broadway, New York, N.Y. Fred H. Hatch & Co., Inc., Arthur C. Madeau, 63' Wall Street, New York, N.. Lasser Brothers, Maurice Lasser, 70 Pine Street, New York, N.Y. W. Wallace Lyon & Co., L. B. O'Meara, 40 Wall Street, New York, N.Y. Outwater & Wells, H. Prescott Wells, 15 Exchange Place, Jersey City, N.J. J. K. Rice, Jr., & Co., Richard C. Rice, 120 Broadway, New York, N.Y. Simons, Blauner & Co., Isidore B. Kraut, 25 Broadway, New York, N. Y. Sirota, Rosen & Co., Nathan Rosen, 42 Broadway, New York, N.Y. Carroll M. Swezey, 42 Broadway, New York, N.Y. Hart Smith & Co., H. Hart Smith, 52 William Street, New York, N.Y. Spielmann, Shea & Co., Henry Spielmann, 111 Broadway, New York, N.Y. P. J. Steindler & Co., Percival J. Steindler, 11 Broadway, New York, N.Y. Tweedy & Co., F. B. Tweedy, 15 William Street, New York, N.Y. C. E. Unterberg & Co., Chas. E. Unterberg, 48 Wall Street, New York, N.Y. Ward & Co., Bertram A. Seligman, 120 Broadway, New York, N.Y. STOCK EXCHANGE PRACTICES THURSDAY, MARCH 8, 1934 UNITED STATES SENATE, COMMITTEE ON BANKING AND CURRENCY, Washington, D.C. The committee met at 10:30 a.m., pursuant to adjournment on yesterday, in room 301 of the Senate Office Building, Senator Duncan U. Fletcher presiding. Present: Senators Fletcher (chairman), Adams, Bulkley, Goldsborough, Carey, Townsend, and Kean. Present also: Ferdinand Pecora, counsel to the committee; Julius Silver and David Saperstein, associate counsel to the committee; and Frank J. Meehan, chief statistician to the committee; Roland L. Redmond, counsel to the New York Stock Exchange; R. E. Desvernine, counsel to Association of Stock Exchange Firms; William A. Lockwood, counsel to the New York Curb Exchange. The CHAIRMAN. The committee will come to order, please. Mr. Grubb, I believe you are already at the committee table. Mr. GRUBB. Yes, Mr. Chairman. STATEMENT OF E. BURD GRUBB, SUMMIT, N.J., PRESIDENT OF THE NEW YORK CURB EXCHANGE The CHAIRMAN. Mr. Grubb, will you please state your name, residence, and occupation? Mr. GRUBB. My name is E. Burd Grubb. I reside at Summit, N.J., and I am president of the New York Curb Exchange, a securities exchange located in New York City. The views of my exchange in respect of the bill will be presented by Mr. William A. Lockwood, of New York City, who for the last 14 years has been counsel to the exchange. However, before introducing Mr. Lockwood, who will make a rather extended statement in regard to the bill, I desire to offer for the record a formal statement which I have prepared; also a further statement in respect of trading in unlisted securities, and giving the unlisted requirements of the Curb Exchange. I will not take up your time attempting to read these somewhat lengthy statements, as they will be explained orally by Mr. Lockwood, but I should like to give you a résumé: The New York Curb Exchange is the second largest security exchange in the United States. It occupies exclusively for its own uses a 14-story building running from Trinity place to Greenwich Street in New York City. It has two classes of membership, regular and associate. The regular members number 550, the associate members 420. In the year 1927 the total number of transactions in stocks on |