East Oregonian : E.O. (Pendleton, OR) 1888-current, 1909-06-18
REPORT ON STOCK
EXCHANGE ABUSE
GOVERNOR HUGHES SPECIAL
COMMITTEE FINDS ABUSES
Says That a Large Part of the Abuse
Grows out of Advertisement OF
Fraud Schemes-Large Part OF the
Transaction are for Gambling Pur-
poses-Newspapers and Officials
are Scored.

New York.-Charging that large
portion of the abuse which have fast
tened themselves to the stock market
grow out of newspaper ADVERTISE
ments OF fraudulent schemes, that
buying securities and commodities on
margins is equivalent to buying prop
erty on the part payment plan. that
the mercantile and metal exchanges
have a tendency to do this through
inside committees, constitute a few
Of the many important features of the
report of the committee appointed by
Governor Hughes to investigate specu-
lation in stocks and commodities and
the organizations carrying on the
business.
The committee also finds that a
large part of the stock transactions
are for gambling purposes, but 1t is
difficult to determine the legitimate
and the illegtimate. That the regu-
lation of the curb market is imperative
and the exchange is largely RESPONSE
BILE for abuses which have grown up.
The committe finds that the selling
of futures in agricultural products is
indispensable, and that the selling of
shorts is beneficial, as it has strong
tendency to steady the market.
Increase Margins on Futures.
Not only does the committee find
abuses which should be corrected, but
ii suggests means of correction and
cure. The recommendation is made
that the minimum margin on stock
purchases be increased from 10 to 20
per cent by order of the exchange;
that a law be enacted making the
crime larceny for a broker to sell for
his own profit the securities or COM
modities of a customer; that clerks
and employees be prohibited from deal
ing in any of the wares Of the ex-
change A law allowing an injured
customer to recover three times the
loss sustained by fake sale or pur-
chase is strongly recommended, as is
also a rigid lew governing the publish
ing of advertisements misleading or
deceptive in character. To prevent
abuses in receiverships, the commit
tee recommends that a time limit be
fixed by law, in which the affairs of
a concern must be closed up. And,
last. the committee strongly recon-
mends that the margin on commoditi-
es be increased from the present rate
of 10 per cent to 20 per cent.
Officials Sharply Censured.
While newspapers are scored for
not closely scrutinizing the advertise
ments offered by stock concerns, the
men who allow their names to be used
as officials without knowing the con-
dition Of stock corporations, are Sc
verely criticised. Another serious
evil" says the committee sis COM
mitted by men who give standing and
prominence to promotions by serv-
ing as directors without full know
ledge of the affairs of the COM
panies."
Relative to corners the committee
says: THE stock exchange might we'll
properly adopt a rule providing that
the governors shall have power to de-
eide when a corner exists and to fix
a settlement price, so as to relieve
innocent persons from the injudy or
ruin which may result therefrom.
The mere existence Of such rule
would tend strongly to prevent cor
ners.