The curb is very quick in obtaining new classes and groups of securities. Hardly has the public realized that a new industry is becoming important, such as a motor accessory manufacture, before the curb is madly trading in motor accessory stocks by the dozen, as if it had never heard of any other kind of shares. Fashions change rapidly on the curb.
Corporations and undertakings that are passing thru a period of preliminary organization, and have not as yet transacted business, find a market on the curb. In such cases "when issued" securities are dealt in and the deliveries are made when the certifi cates are ready to be distributed. All members of the Curb Association as well as outsiders who, altho not members, are of good financial standing and re sponsible business men, are permitted to participate in these transactions.
Information concerning the amount of capital, the purpose and place of the business, management and other similar facts must be given for listing. In ad dition, after the security is recommended for listing by the proper committee, a fee of $100 is exacted. This safeguards the public from many fraudulent and get-rich-quick schemes and contrivances of the more obvious sort. But it must not be supposed that listed securities on the curb necessarily have value. The curb admits to the list what it calls "prospects," a designation which is fair warning to all the untried character of the enterprise.
On the other hand, before official admission is se cured speculation in risky ventures is fostered. This circumstance is inevitable since there must be some center where trading in short lived enterprises may be carried on. The large exchanges usually require a period of at least a year's business activity and proof of profit-making, before stocks may be listed. Dur ing this period of development a market is open on the curb to aid these enterprises to pass thru a some what checkered career.
If one wants to assume risks and enter into a highly speculative and dangerous territory, he is free to do so, with a vengeance, on the curb. But the curb has gone out of its way to mark off the boundary line and "he who runs may read." The curb serves an excellent purpose in that it makes possible trading in securities the par value of which are as low as ten cents. Mining corporations especially issue stocks ranging from ten cents per share to twenty-five dollars. At present there are many corporations as meritorious as those listed on the larger exchanges, which could find no market if it were not for the curb.
There are many well known and exceedingly valu able stocks that are not listed on any exchange, the liquidation of which could never be effected with the facility that only a central market affords, were it not for the curb. The Standard Oil Company's stocks of fer a splendid illustration of this class. This cor poration has never applied to the New York Stock Exchange or to any other exchange to have its shares listed, simply because the few men in control did not care to have a market. There are many other stocks of similar character which are tightly held and have no market, or at most a narrow one, because the chief owners do not care for one. The facilities which the curb offers make it possible for the small holder to turn such stock into cash, whenever he likes and to record reasonably accurate quotations on these trans actions.
Still another function of the curb may be inferred readily enough from those that have already been mentioned. It is a place of preparation and trying out for the Stock Exchange. If it had no other im portance it would constitute an exceedingly large cog in the financial machine, because it has housed at one time or another a great number of the best known securities, investment and speculative alike, whose ownership has later become widely diffused thru the Stock Exchange.
A definite schedule of commission rates, which mem bers may charge on transactions taking place on the curb, has been adopted. For securities selling at twenty-five cents and under fifty cents the minimum rate is $1 per 100 shares; from fifty cents to one dollar the charge is $2; from $1 to $3 the rate rises to $3.12 per 100 shares ; from $3 to $5 ; from $5 to $10 $6.25; from $10 to $200 or over, one-eighth of 1 per cent or $12.50 per 100 shares. As is the case in all organized markets the rates that are enforceable, at the penalty of expulsion or similar drastic punish ment are the minima. Usually brokers who trade on the curb raise the commission charges above this level on the lowest and highest stages in the scale; that is to say, on securities selling for less than $1 and above $200. On intermediate values the rates are usually uniform because of keen competition between broker and broker. The minimum commission on any trans action is $1.