Evening star. [volume] (Washington, D.C.) 1854-1972, 1904-10-06
HIGH PRIcE-H1GH QUALITY.
How Wall Street Manipulators Mark
UP Stocks.
From the wall Street journal.

From the Wall Street Journal
A butter merchant bought two firkins
of butter from a farmer. The butter was
all Of the same quality, made by the same
hands, from the same milk. But the mer-
chant displayed the two firkins for sale,
putting over one the sign 10 cents
pound" and over the other 20 cents a
pound Soon after a woman entered and
asked the price of butter, IT haYe some
here" said the merchant, "of excellent
quality for 80 cents a pound" r
But" replied the woman II see you
have some for 80 cents pound. always
buy the best Give me a pound of that
And the merchant, who had paid only ~
cents a pound for the butter, pocketed
with a chuckle of delight the 80 cents
profit which he had obtained for butter
that he had been willing to sell for 10
cents profit.
This is no fable. 1t is a true story. and
it illustrates great truth. The price has
become a certificate of quality. If ayhigh
price is attached to an article 1t Is re-
garded as evidence Of its superiority. The
butter merchant in putting a 5O-cent
price on 30-cent butter robbed HIS GUS
toners. He lied just as much as II he had
actually said to them that this butter is
much better than the other, when, in fact,
both are Of the same quality. ~
In Wall sreet there is a constant EFFORT
made by market manipulation to put 9
5O-cent price on the o3O-cent article, and
there can be no doubt that it is dishonest.
An ancient philosopher once said that the
value of thing depended on what an
other man Is willing to pay for 1t, and In
a sense this is economically true. But
practically the selling of an article for
high price may be dishonest even If there
are not merely one but hundreds OF per-
sons eager to pay that price for 1t:
A new issue of securities is to be mar
keted or some one has big block Of an
old issue that he wishes to get rid of. A
-. ALL y,n
ceeds to make market for it. He uses
this method and that, and by wash sales
or clever advertising and adroit exploitation
he succeeds in establishing quotation for
the security that invites attention. The in
weston says to himself THAT stock Is ad-
vancing; 1t is selling above par. 1t must be
a good thing l will buy some"
The quotation has thus been a recon-
mendation of quality. The investor has
been victimiZed as much as the woman was
in paying 80 cents for 30-cent butter. It is
true that the seller did not drag the buyer
into the market and force him to purchase.
1t is true that the investor ought to have
tested the value of the security, just as the
woman ought to have tested the quality of
the butter. But testing requires expert
knowledge, and the majority of people are
guided in their judgments by the price.
1t cannot be doubted that the reputation
of Wall street has from time to time suf-
fered severely by reason of its manipulation
of prices. OF course, in the long run. the
stock market accurately measures true
value. Manipulation, after all, is tempo
rary. 1t is powerless to establish an en-
during price But during the time that its
power is effective it inflicts many losses on
innocent investors.
The only remedy for this is publicity.
There is nothing which the manipulation
breads more than the. fearless, independent
organ of publicity. H4e1 strives hard to con-
troll it, and. failinglinV that. he tries to de-
ceive it. and thus the public which it serves.
Wall street should deal sternly with all
w diSnlaV the @sy0raAt sign ahOua be
cent article. Thereds mo place in the world
where the adage. Honesty is the best pol
ICY" would pay beforehand where publicity
would achieve more than in Wall street.
A big western merchant has this for his
motto: 81 b.
Under Observation-Disclosures will
this house sanction amy word or deed of
any employee designed to mislead a pur-
chaser" 0i =
That would be good sign to hang out In
Wall street-and liye up to-.