Shares of stock are ordinarily represented by certificates 'issued by the corporation, each one of which states on its face how many shares it represents, to whom it is issued, and the legal conditions, if any, under which the shares are issued. These certificates are transferable and negotiable when indorsed in blank by the person to whom they were originally issued. They may pass from hand to hand, be used as collateral for bank loans, and be transferred many times, before being finally sent in to the corporation for transfer - that is, in order that the name of the new owner of the certificate may be entered as a stockholder and a new certificate may be sent to him. This transfer on the books of the corporation is usually attended to before the transfer books are closed in anticipation of a dividend. Inasmuch as dividends are paid to stockholders of record as they are registered in the books of the corporation, it is desirable that the new owner of a certificate should be careful to see that his name is entered promptly.

The larger corporations entrust the issuing, handling, and checking of their certificates of stock to a registrar and a transfer agent, both of which usually are trust companies. It-is the business of the transfer agent to see to it that the record of stockholders is kept up to date, and that old certificates are cancelled and new ones issued as called for. It is the business of the registrar to check the issuance and see to it that no more are put out than have been authorized and issued for property. This practice of having a registrar to check the transfer agent, is an outgrowth of the era of wild speculation on the New York Stock Exchange in the seventies and eighties, when the leaders were Jay Gould, James Fisk, and Daniel Drew. In their operations these men were not trammeled by any legal or moral restraints. If it suited them to set the printing presses going and secretly to put out large new issues of unauthorized securities, they did so, and were able, apparently, to keep within the bounds of the law. To guard against activities such as these and to make their stocks more readily salable, the older and more conservative corporations started the practice of engaging independent registrars.