The Detroit times. [volume] (Detroit, Mich.) 1903-1920, 1909-06-17
CONDEMNS PLOTS
To LOOT PUBLIC
Committee Appointed By Gov
Hughes TO probe Stock Exchange
Methods Makes Report.

NEW YORK. June 1.-THE big In
terests in Wall.st. are pleased today
with the report OF the committee ap
pointed by Gov. Hughes to investigate
speculation in securities and oommodi'
ties and the organizations that are
used in the dealings. The committee
says that speculation tends 10 steady
prices and that for the merchant or
manufacturer the Spectator performs
I a service which has the effect OF in
-s;iFaff>-v
The report says In law speculation
becomes gambling when the trading
which IL involves does not lead, and Is
mot intended to lead. TO the actual
Passing from hand 10 hand OF the
property that Is dealt in. The commit
lice declares that short-selling OF
: stocks has tendency 10 steady
/ prices. IL is recommended that the
minimum margin should be 20 per
cent.
The committee takes a drastic step
In regard 20 the mercantile and metal
exchanges Il says under present con-
ditions the investigators are OF the
opinion that these two exchanges do
sumers and that their charters should
be repealed.
Taking up the New York stock ex.
change the volume OF transactions
thereon is referred 10 as making II
probably the most important fnan.
clal institution in the world.
Patrons Of the exchange are divided
by the committee into five groups
investors who pay for what they buy;
manipulators OF prices: floor traders;
outside operators having capital and
experience, and inexperienced per
sons who act on interested advice.
tips advertisements in newspapers,
or circulars sent by mail. or take fly
ers' in absolute ignorance and with
blind confidence in their luck. Almost
without exception they eventually
lose"
AS 70 the character OF the transac-
tons the com mittee declares II is un-
questionable that only small part
Of them Is OF investment character.
substantial part may be character
lied as virtually gambling. Yet We
are unable 10 see how the state could
distinguish by law between proper
and improper transactions. since the
forms and mechanisms used are iden-
teal Rigid statutes directed against
the latter would seriously interfere
with the former.
Purchasing securities on margin is
as legitimate a transaction as a pur-
chase OF any other property in which
part payment is deferred. We there
fore see no reason whatsoever for
recommending the radical change
suggested, that margin trading be
prohibited.
"ln so far as losses are due 70 IN.
sufficient margins. they would be ma
teriallY- reduced IL the -ettfste4r4ary-prr-
centage OF margins were increased. "
The committee says manipulation
10 make a market for issues OF new
securities has certain advantages,
but manipulation for purely specula-
tive purposes IS condemned. II has
for It's object. the report says, either
the creation OF high prices for partic-
ular stocks. so as 10 draw IN the pub
lie as buyers and 10 unload on them
the holdings e the operators or &C.
depress the prices and induce the
public 10 sell The manipulation OF
the American Ice stock Is referred 70
The committee recommends that the
exchange prevent this kind OF trad
ing.
The committee condemns the
matched order" system and urges
that the exchange officials examine
the books OF brokers 10 prevent 50
many failures.