The Montgomery advertiser. [volume] (Montgomery, Ala.) 1885-1982, 1909-06-17

new socuElIkes, ana snCOuu tuht Wntct
| 10 designed to serve merely specula-
profit as the result of fluctuations
which have been planned in advance.
| The report then says:
The first kind of manipulation has
certain advantages. and when not ac-
companied by matched orders 10 un-
Questionable per se. 1t IL essential TO
the organization and carrying through
1 of important enterprises. such as large
corporations, that the organizers should
be able to raise the money necessary
to complete them. This can be done
| only by the sale of securities.
THE second kind OF manipulation
mentioned is undoubtedly open to
serious criticism. 1t has for its object
either the creation of high prices for
particular stocks, In order to draw In
the public as buyers and to unload upon
them the holdings of the operators, or
to depress the prices and induce the
public to sell There have been In
| stances of gross and untustiftable
| manipulation Of securities, as in the
case of American Ice stock. While we
have been unable to discover any COM
plete remedy short OF abolishing the
Stock Exchange itself, we are convinced
that the Exchange can prevent the
worst forms of this evil by exercising
its influence and authority over the
members to prevent them. When con-
tinued manipulation exists II Is patent
to experienced observers"
| Severe condemnation Of matched
orders" is expressed
| I'VE refer the report says, ito that
class OF transactions engineered by
some manipulation. who sends a number
of orders simultaneously to different
brokers, some to buy and some to
sell Since they are legal and binding.
we find a difficulty In suggesting a
| legislative remedy. But where the
activities of two or more brokers In
certain securities become SO extreme
as to indicate manipulation rather than
genuine transactions, the officers of the
exchange would be remiss unless they
exercised their influence and authority
upon such members in way to cause
them to desist from such suspicious
/ and undesirable activity.
| The subject of corners in the stock
market has engaged our attention.
The Stock Exchange might properly
adopt a rule providing that the COVER
| nors shall have power to decide when
| a corner exists and to fix settlement
price, so as to relieve innocent per-
sons from the injury or ruin which may
result therefrom. The mere existence
of such q rule would tend to prevent
corners"
The Board of Governors of the Stock
Exchange should improve present con-
ditions with regard to failures Of
brokers, according to the committee.
It is suggested that the books Of MEM
| bers of the Exchange should be sub
ject to periodic examination under rules
to be prescribed by the Exchange. 1t
is declared further that when broker
sells a customers securities for his
own benefit, he should be held guilty
! of larceny and statute to that effect
is recommended. 1t is set forth also
that rules should be made to prevent
dealing for any clerk or subordinate
employe of a bank or other moneyed
corporation. More stringent require
ments for the listing of securities on
| the Stock Exchange are advocated,
among them that the Exchange should
exact a statement showing how much
of the stock of the company has been
| issued for cash and also showing what
commission has been paid to the pro-
moters The unlisted department ex-
cept for temporary issues, should be
abolished, says the committee. 1t is In
the unlisted department that stocks of
certain companies which have not sup
piled all information desired by the
| Exchange are traded in. The passage
of statute Is advocated providing that
| in case any purchase or sale by
broker was not actual and bone fide,
the customer shall recover three times
| the amount of the loss he su9tained
thereby. Preservation of the sheets of
the Exchange Clearing House for six
years is recommended. 1t Is also
| recommended that trading on the Ex-
change be done on the basis of a
reasonably small unit, say 100 shares
of stock and that a bidder for more
than 100 shares be required to accept
| d. ho
1t is held, would tend to prevent
matched orders.
The Committee does not favor the in
corporation of the Stock Exchange
holding that under existing condi-
lions, being a voluntary organization,
1t has almost unlimited power over
the conduct of it's members, and 1t can
subject them to instant discipline for
wrong doing, which it could not exer-
else in a summary manner If it were
an incorporated body. This commit
tee, in refraining from advising the in
corporation of the Exchange, does so
| in the expectation that the Exchange
will in the future take full advantage
of the powers conferred upon 1t by its
voluntary organization, and will be
active in preventing wrong-doing such
as has occurred in the past. Then we
believe that there will be no serious
criticism of the fact that 1t is not in
corporated. If, however, wrong-doing
recurs, and it should appear to the pub
| lie at large that the Exchange has been
derelict in exerting its powers and
authority to prevent it, we believe that
the public will insist upon the incor-
poration of the Exchange and its sub
lection to state authority and super
vision"
Investigation shows that on one
active day So per cent of the total
] transactions apparently originated in
New York City and 4S per cent in other
| localities.
The Consolidated stock Exchange.
The committee describes the Consol-
| dated Exchange as a secondary mar
| ket of no mean proportions, its sales
| averaging about 100000 shares per
| annum. OF this exchange the COM
| mittee says:
"The fact that its members make a
specially of broken dots namely
| transactions in shares less than the
! 100 unit, is used as a ground for the
claim that 1t is a serviceable institu-
| tion for investors Of relatively small
| means. But 1t is obvious that its util-
! ity as a provider of capital for enter
! nrtses is exceedingly limited: and that
| il affords facilities for the most intu-
rious form Of speculation-that which
attracts persons of small means"
COgnate Subjects.
Under the heading, "Cognate Sub
| iects." the committee discusses holding
Companies, receiverships. the money
market and the usury law. It sug-
9ests that stockholders of a subsidiary
Company should have the right to ex-
anime the books of the holding COM