Evening star. [volume] (Washington, D.C.) 1854-1972, 1905-07-02
INSIDE OF WALL STREET
Reflections tn. Short Memory Of the Pubc-Ma nipuaon by
@Insd.rs' Crime Yet Untouched by Law-Ths Need
OF Better Men in High Financial Places.
BY EDWIN LEFEvRE.



The Improvement In prices in the stock
market In the past fortnight 1t must be
admitted by the most optimistic students OF
the situation, did not reflect proportion
ate Improvement in sentiment The public
may not be prejudced against wall
street and It's methods as some of the
shrewdest Of the big men" not long ago
were beginning to fear. but there Is no
widespread clamor to be allowed to
gamble I'm stocks That the gam
bling procIivities Of the people of this
country cannot be vlsibly subdued by
any exposures or arrangements of the
unfair practices of some of the great imam
ciers IS perfectly obvious. II the English.
with their temperament can gamble insane
~ at times, as during the Kaffir boom. not
to go back to the South Sea bubble, what
can't the Americans. with their tempera-
ment, do? And as for insiders practices,
even granting that these are as pad as
the AmaIgamated Copper crowd is said TO
have been, do not people who wish TO gam
BILE often play against professional gamblers
and ignore. with eyes wide open; me
houses percentage in It's favor? II the
Equitable Life affair did make the Stock
buying pause and If the market because OF
II and other things became very dull that
did not mean that the public would never
again look longingly at the ticker-tape.
The greater part of the recent improve
ment has been due to manipulation, but
this does not mean that new crime
is In process of execution against
short-memoried public. There was
bull market that did not begin with
what the financial writer's call "manipuia-
ton 1t is the only way the whole manu-
facturers have discovered of marketing
their wares The injured expressions of
those views did not coincide with the mar
ket opinions exigencies of the manfpu-
lators, therefore they are not worth consld-
ering seriously. The striking point OF any
decided upward movement at this moment
would be the shOrtneSS of the public MEM
ory 1t is the one thing that the big profess
SIGNALS of Wall Street can bank on. 1t has
never failed them in the past 1t has per-
mitted the spread of the aforementioned
inside practices.
II is of no use to philosophise on the
"ethics" of insiders, or the conditions pre-
vailing in the financial districts or the
apathy and Indifference OF the people that
tolerate the abuse Of position and breach
of trust. The law does not allow the mis-
use OF corporations funds, but 1t allows
the misuse of information, of knowledge
obtained by virtue of a position as an ofi-
Ger or a director of a corporation. And II
such practices as those with which the in
side clique in the Equitable Lie, known as
James II. Hyde and associates, are iden-
tilted. common and reprehensible and SO
considered. probably even by the parucl-
pants there are others every whit as COM
mon and ethically not much better, yet
practices which are not considered wrong
or even improper by those who constantly
profit by them. Wall Street cynically calls
il human nature for man TO take advan- |
tage of what is convertible into dollars, no
matter whom the dollars come from--pro- |
~l..r1f Of N.ar1l-
Tertiary does not hang over him as he
works.
1t seems a little matter, but at this mo-
ment l recall only one instance when an
important change in the dividend rate of
an important stock was not preceded by a
decided change In the quotations of the
stock affected and that was at the time
the Union Pacific dividend was made
per cent. Mr.. Schin expressed the
opinion for publication, though ms
name was not mentioned, that the
road doing so well and seemed |
so certain of continuing TO do well that he
thought the stockholders were entitled to
per cent. 1t his opinion as stock |
holder as a director and as a conservative
business man. This was as good as an Of
fetal declaration. so far as the stock mar
ket was concerned. And yet when Mr..
Schih spoke. the stock for weeks had been
fiuctuating within such narrow range that
il was evident the insiders had not been
acquiring large speculative line in anuc1pa-
ton of what they insiders knew would |
happen. Perhaps they had as much as they |
cared TO carry, but even II that were so the
public had every chance to buy as cheaply |
as the insiders themselves. OF course. the |
stock went up, but It went up with every |
body-insiders and utsiders-knowing why. |
In all the other recent instances, before the |
street knew or suspected anything, the tape
always told the news first, always before |
off told
II because, when the street saw
otherwise unexplained buying, II wise
ly concluded that the insiders were
"disCOunting" their own action. The
man who didn't know and had the stock
and saw the rise was tempted to sell out, |
and sold. You may say that nobody forced
him to sell; that the price was satisfactory
TO him and that any complaints against
such Inside" practices must be prompted
by anger at selling too quick 1t is not SO.
and IL IS easy TO see how an injustice is done
TO other people than stock ''traders'-to say
nothing of the fact that the directors should
not be elected directors in order to specu-
late in their own stock. but to promote the
prosperity Of their corporation in behalf of
the stockholders. all the stockholders ana
nobody but the stockholders.
By virtue OF their position directors are
similarly enabled to learn long before The
mob any turn for the worse in the affairs of
their companies and to unload. That pro-
cedure Is not yet punishable with fine or I'M
prtsonment or both. 1t is a question COM
plicated by the fact that it Is not good bust
ness sense to inform competitors that all is
not well with you. Publicity is probably
the real and only remedy for the trust evil
and for the inevitable abuse of inside infor-
nation. But to be fair It must be made to
apply to all stock corporations large and
small
The Equitable Life. # Is. of course wei
known, Is not the only institution which has
been run though il were the personal
property of a family or clique There are
few large railroads in the United States
that have not had saddled upon them at
one time by the insiders smaller lines
purchased cheap and sold dear-Iittle roaos
that the selling insiders called feeders but
which the late Addison Commack. the most
NH lll..l H.