Arizona daily citizen., 1901-05-29
STOCK MARKET ETHICS.

the manner in which the Northern Pacific episode is
treated by the American Banker 1t has two notable
articles on tho subject, by John R. Dos Passos,
the New York lawyer and the other editorial Mr..
Dos Passos points out that stock speculation selling
Shorts entirely legal in New York. While it |
has been condemned gambling in some other States
by the Courts and prohibited by the Legislatures
New York is n different footing The present
statute of that State, which passed in 1897, and
is practically re enactment of the statute of 1858
follows:
An agreement for the purchase, sale, transfer or
delivery of certificate other evidence of debt is
sued by the United States by any other State or
municipal or other corporation of any share in
terest in the stock of any bank corporation, joint
stock association incorporated organized under the
laws of the United States of any State is not void
vodable for the want of consideration or because
of the payment of consideration or because the
vendor, at the time of making such contract is not
the possessor of the certificate certificates
or other evidence of debt, share or interest
The New York Courts have uniformly sustained
this law and Mr.. Dos Passos ridicues the idea that
the junction applied for could be sustained or that
any suspension of settlement could be legally en-
forced by anybody. On the former proposition he
urges that conspiracy combination to defraud
could be shown because the peculiar market was the
result of the antagonstic efforts of rival parties On
the latter he says:
If the rules have been observed (as they were in
these short sales) how the stock exchange inter
fere in affecting the result without breaking their
own rules2 They have nothing to do with the re-
suits of stock TRANSACTIONS but they have everything
to do in seeing that official transactions are rigidly
upheld. The rights of third persons subordina-
ted to the rules OF the exchange, but when the |
rules of the exchange have been complied with, |
the third person has the right to insist that
contracts made for his benefit shall be carried out
Introduce sentiment intosock exchange transactions
and you will soon have very lively time there y
The sight of two wealthy competitors seek
ing to get control of railroad in open market is
an unusual one. 1t was thrilling and dramatic in
this instance, because it accompanied by shear
panic in that stock, and to make the scene more
spectacular bull panic being enacted in the
other shares Like the circus, there were three per-
formances going on at the same time. There is only
one remedy which can be applied in these cases. and
that is to close the exchange If you do not the |
rules which regulate the dealings in stocks must be
: adhered to. We must not confound sentiment and
morals with law and business.
The Banker, editorialy, ridicules the press of
the country for its condemnation OF the affair." and
while it does not expressly ndorse stock gambling
it usti6es the movements that caused the panic and
apparently regards the victims as culprits It's
estimate OF the affair is as follows:
"As a matter of fact the corner developed from
the competition of two extremely rich groups of
capitalists to get the control of the stock The
in"iA AoNluS ooou UouSHt up Dy LuoSe, the CTOWu
of spectators following the path blazed by the
great capitalists found themselves obliged to deliver
thousands of shares which could not be procured
The Spectators got more than they deserved, and
it 30, how can the competing capitalists be blamed
for the ssue9 II is said that the fight for control
should not have occurred; that the outsiders had no
business to attempt to the majority interest
in the Northern Pacific property. This s nonsense
Their object to protect their interests in Union
Pacific Property, which the reinforcement of the
Northern Pacific advantage by the Burlington con-
nection was putting in jeopardy. If they judged
correctly then it their duty to take measures to
prevent the consummation of these ends In such
cases men often resort to deception and trickery
This should not be, of course. 1t cannot be
justified by any civilized code of morals. But it is
inevitable. All ethical rules are dissolved by COM
mon and spontaneous impulse among a group of
drowning men struggling for the possession of sim
gle lite preserver. Human conditions being imper-
feet. conduct is bound to be so Evil is fought with
evil as men fight fire with fire.
And yet the Banker does see some possible evil
in il all. II thinks that if the Northern Pacific
people were trying TO injure the Union Pacific peo
pie there was no justification for it, because all rail
way interests ought to be "harmonized" and "dis-
affected elements ought to be bought on an eauit
able basis The reason for this position is that
should public confidence in the aims of the vast
capitalistic enterprises going on weaken, the
danger OF ill-dvised legislation becomes imminent"
an other words, the trusts and combines should main
tain paternalisc attitude, lest the public revolt
And another evil s in the great banks that are
being developed TO bank financial operations rather
shan 70 conduct legitimate banking business, which
grant credits not on evidences Of actual wealth. but
% the security OF corporations in process of form
- -
Controlled BY financial magnates of unparalleled
resources these institutions are able to make or