The free lance. (Fredericksburg, Va.) 1885-1926, 1909-06-19
SAY SPECULATION
STEADIES PRICES
Report Of Committee Which
Investigated Exchanges.
Plan TO LIMIT GAMBlIEs
No Prssentnnent Against short Selling.
Which Sometimes Has n Beneficial
Rneet on Ruslnsss-Mlnlmum Mar.
Gin Of 20 Per Cent Suggested.

Rneet on susinsss-Nlnlmum Mar.
Gin Of 20 Per Cent Suggested.
New York. June 1.-THE report OF
he committee appointed by Governor
Hughes 20 Investigate speculation In
securities and commodities and the
organizations used In dealings therein
aas been made public The New York
stock. the Consolidated Stock. the
Cotton. the Produce. the Coffee. the
Mercantile and the Metal Exchanges
and the curb market was thoroughly
Investigated and recommendations
ooking TO Improvement of existing
conditions were made at length by
he committee.
yhe most drastic finding is that az
'eoting tho Mercantile and Metal Eek
changes. as follows. Under present
he Mercantile and Metal Exchanges
10 actual harm to producers and con
sumers. and that their charters should
be repealed"
When Speculation Is Gambling.
Concerning speculation in general.
the committee declares that Il may be
wholly legitimate. pure gambling. OF
something partaking of the qualities
II both. that In some form II Is a
oecessary incident OF productive oper.
ations; that IL tends 10 steady prices
and that for the merchant OF manu-
,acturer the Spectator performs a
service which has the effect OF insur.
ance.
"Tn Law, .o.-. ~, ,,...-. s.....,
ion becomes gambling when the trad
ing which Il involves does not lead.
and is not intended 20 lead. to the
actual passing from hand 70 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 tech
nical delivery OF the property con
tracted FOR that the practical eject OF
much speculation. Ia point OF form
legitimate. Is not greatly different
from that OF gambling"
The committee makes no present
ment against short selling. but de-
clares the tendency OF such selling Is
10 steady prices. Il is recommended
that the minimum margin should be
20 per cent and strong disapprovaI is
expressed OF branch brokerage Offices.
which supply liquor and resort 20 9th
sr improper means 10 induce specula-
lion.
The Stock Exchange.
Taking up the New York Stock Ex-
change the volume OF transactions
thereon is referred 70 as making Il
probably the most important financial
Institution in the world. its "enor-
nous business affecting the financial
and credit interests OF the country in
so large q measure that its proper reg
ulation Is a matter OF transcendant
Importance
las TO the character OF the trans
actions. the committee declares IL Is
unQuestionable that only a small part
u them is OF investment character: a
substantial part may be characterized
as virtually gambling Yet we are IN
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 lat
ter would seriously interfere with the
former. But the exchange. with the
plenary power over members and their
operations. could provide correctives.
Buying on Margin Legitimate.
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 sug-
gested-that margin trading be pro
hiblted"
Pyramiding-th Is. the use OF pa
per profits as margin for further com
mitments - should be discouraged.
says the committee