The Detroit times. [volume] (Detroit, Mich.) 1903-1920, 1909-06-18
CONDEMNS PLOTS
TO LOOT PUBLIC
Committee Appointed By Gov.
Hughes 10 probe Stock Exchange
Methods Makes Report.

NEW YORK. June 1.-THE big in
terests N Wall-st are pleased today
with the report OF the committee APP
pointed by Gov. Hughes 10 investigate
speculation in securities and commodi-
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
service which has the effect OF in
surance
The report says in law speculation
becomes gambling when the trading
I Which IL Involves does not lead, and is
not intended 10 lead. 10 the actual
/ passing from hand 10 hand OF the
property that Is dealt in. The commit
tee declares that short-selling OF
stocks has a tendency 10 steady
prices. IL is recommended that the
minimum margin should be 20 per
cent.
The committee takes a drastic step
in regard 10 the mercantile and metal
exchanges, II says under present con-
ditions the investigators are OF the
opinion that these two exchanges do
actual harm TO producers and con
sumers and that their charters should
be repealed.
Taking up the New York stock ex.
change, the volume OF transactions
thereon is referred TO as making It
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;
manipulaters 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 10 the character OF the transac- /
tons the committee declares IL is un- (
questionable that only a 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
distinc;ish 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 Il
Purchasing securities on margin e.
rs legitimate a transaction as a pur
chase OF any other property in which
part payment is deferred. We there
lore see no reason whatsoever for
the radical change
suggested, that margin trading be
prohibited.
"In so far as losses are due TO in. /
sufficient margins. they would be ma
terially reduced IL the customary per.
centage of marsihs 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 its object, the report says, either 1
the creation of high prices for partic- |
ular stocks. so as 10 draw in the pub |
lie as buyers and 70 unload on them |
the holdings Of the operators or to /
depress the prices and induce the /
public TO sell The manipulation OF /
the American Ice stock is referred to- |
The committee recommends that the \
exchange prevent this kind OF trad /
ing
The committee condemns the
that the exchange officials examine
the books Of brokers TO prevent so
many failures.