The daily sentinel., 1909-06-17
INTERESTING REPORT MADE
CONTINUED from rage onel

NCOnllnueu llOrn age ollti
manufacturer the speculator per-
forms a service which has the effect
OF Insurance.
I'm law" says the report, "specu-
lation becomes gambling when the
trading which it involves does not
lead to the actual passing from, hand
to hand of the property that is dealt
in.
"The rules of all the exchanges
forbid gambling as defined by this
opinion; but they make so easy
technical delivery of the property
contracted for, that the practical eff
feet of much speculation. in point of
form Legitimate, is not greatly differ
ent from that of gambling"
The committee makes no present
ment against short selling, but de-
clares the tendency of such selling
is to steady prices. II is recommend
ed that the minimum margin should
be 20 per cent. and strong disap-
proval is expressed of branch broker
age offices which supply liquor and
resort to other improper means to in
duce speculation.
Taking up the New York Stock Ex-
change, the volume of transactions
thereon is referred to as making it
cial institution in the world, its
enormous business affecting the
financial and credit interests of the
country in so large measure that
its proper regulation is matter of
transcendent Importance.
Patrons of the exchange are divid-
ed by the committee into five groups,
namely investors who pay for what
they buy; manipulators of prices;
a
ing capital and experience. and "in-
experienced persons who act on in
terested advice, tips. advertisements
in newspapers or circulars sent by
mail or take flyers in absolute ig-
norance and with blind confidence in
their luck. Almost without excep-
tion they eventually lose" AS to the
character of the transactions the
committee declares it is unquestiona-
BILE that only a small part of them
is of Investment character; Sub
stantial part may be characterized as
virtually gambling. Yet we are un-
able to see how the state could dis
tinguish by law between proper and
improper transactions, since the
forms and mechanisms used are
identical. Rigid statutes directed
against the latter would seriously in
terfere with the former. The expert
|ence of Germany with similar legisla-
tion is Illuminating. But the ex-
change. with the plenary power over
members and their operations, could
provide correctives, as we shall show
Purchasing securities on margin
is as Legitimate transaction as
purchase of any other property in
which part payment is deferred. We
therefore see no reason Whatsoever
for recommending the radical change
suggested that margin trading be
prohibited
Insofar as losses are due to in
sufficient margins, they would be ma
terially reduced if the customary per-
centage of margins We're increased.
In preference to recommending legis-
lation. we urge upon all brokers to
discourage speculation upon small
margins and upon the exchange to
use its influence, and, if necessary,
its power, to prevent members from
soliciting and generally accepting
business on less margin than 20
per cent"
The committee continues at great
length to deal with the New York
Stock Exchange and the other ex-
changes
The committee closes with review
of the experience of Germany in re-
stricting exchanges and points out
the unfavorable results of the Ger
man legislation. There is an adden-
DUN concerning the complaint of the
New York Bank Note Company that
the stock exchange prevents any
company except the American Bank
Note Company from engraving any
securities dealt in on that exchange.
After a discussion of this complaint.
and the answer of the stock exchange
thereto, the committee says: at
would seem that other considerations
than the goodness of the work and
carefulness in guarding the plates
are here operative. and that the stock
exchange has not rid itself of the
evils of monopoly
The report is signed by the mem
bers of the committee