New-York tribune., 1909-06-17
HUGHES COMMITTEE IS
SUES REPORT.
Indorses Speculation, Recommends
Larger Margins and Suggests
Many Changes.

ject of Wall Street methods was mace PuOIl0
yesterday.
The report contains discussion of the theory
of speculation and detailed description Of the
machinery of trading on the exchanges IN this
city with many recommendations looking TO the
removal of various existing evils and to the re-
duction of the volume of speculation OF the
gambling type. through either the enactment OF
new laws or action on the part Of the managers
Of the several exchanges.
Most of the suggestions have as their OBJECT
the correction of abuses connected with tradihg
on the New York Stock Exchange the volume OF
transactions on which. the report says. 'indi-
Gates that the exchange is to-day probably the
most important financial institution in the
world" The exchange itself is not seriously
criticised and it's mechanism is referred to as
SO nicely adjusted that the transactions are
carried on with the minimum of friction
Speculation as a principle is not condemned
by the committee, but is recognized as OF NaIue
as tending to steady prices. The COMMITTEES de-
clines to recommend the prohibition OF mar
gnal trading which it says is entirely Ieglu-
mate but suggests that the exchange ooIlSe us
members not to accept business on less margin
than % per cent. which compares Win 'ii9 ~
per cent now CUSTOMARY
HOW TO STOP CORNERS
The nractice Of "pvramiding' IT is suggested,
agree to value collateral at the average price OF
the previous two or three months, instead OF the
current price As deterrent to corners. II Is
said. the Stock Exchange might adopt rule
giving the governing committee power 10 oe-
eide when a corner" exists and to fix settle
rnent price
on the subject Of failures. statute IS recon-
mended making 1t a misdemeanor for broker
70 accept ash or securities from a customer on
account Of new business. or TO do any trahlns
,or bts ov,n account, after he has become in
solvent Examination Of the books OF all mem
bers of the exchange. under state authority IS
-. ea,.orad. ,it the committee thinks that the
hool,e and accounts should be examined from
49,, 20 time n,Irsuant TO rules to be prescribed
~, the exchange the result 70 he suhmltteo 10
The governing committee. The sale by a or'hel
or securities paid for in part OF IN "hoie pS
customer. except upon the latters oelaul- -
rronounced larceny, and a law TO that ene't 10
recommended ,,,
It Is also advised that the rule forolooine a"
excban9e member to do business for an EN-
rIove Of another member be EXTENDED 10 preEe"'
des1.pS for account of any subordinate enploye
NJ any financial institution or banker II ~
accommodated that the exchange oblige tne cor
norations represented on its traoihs he' =" 'ie
(reouent and full statements OF conditon aiio
that the investing public be allowed 10 inspect
these papers; that in future listings many points
ro+ now rAouired to be covered be insisted upon
ar,opr them a statement of commissions palo 10
,,,.o.are or vepders and that the unlisted
dona-+,ent" except for temporary issues. De
abolished -
statute is recommended providing that upon
trial and proof Of a charge against broker OF
having made a fictitious purchase or SAFE the
customer shall recover three times the amount
Of his loss As a means OF preventing mdIcheu
= ID and nffn
for large amounts. call or none" he forbidden
the bidder TO be required TO take all stock offered
a. tho lower price before bidding for the larger
1o+ at a higher price. Clearing sheets. the COM
noittee says should he preserved for at least six
wears The aboshing. or at least the serious
ard effective regulation" of branch Offices is
suggested
HOLDING COMPANIES CONDEMNED
Passing 10 A consideration Of "cognate sub
tects' the committee discusses the opportunities
for manipulation Of the stocks Of various COM
panies by their management. and especially
critcises the device of the holding company,
suggesting that the shareholders OF subsidiary
companies be allowed TO examine the books and
accounts Of the holding company voting trust.
A division of opinion exists to the advisa-
bIIitv of Incorporation OF the Stock Exchange.
majority being against it. 1t is recommended
that the Stock Exchange should make and en-
force rules for the regulation Of the Curb market
and that the Curb should be ''decenty housed"
The committee suggests an amendment TO the
Penal Code to provide for the punishment of
persons advertising statements which they know
70 be false or do not have reasonable grounds
for believing to be true. or promises predic-
tions which they cannot reasonably justify; and
for the punishment Of newspapers accepting
such advertisements unless accompanied by a
signed statement from the advertiser.
II Is recommended that the bucket shop law
Of 1908 be amended TO require brokers to fur
nish to their customers in all cases the of
brokers from whom stock bought to
whom it was sold. 1t is also recommended that
laws be passed enabling telegraph companies to
refuse to furnish stock quotations mere sus-
picion that they were to be used IN bucket shops
The abolition Of the mining stock department
of the Produce Exchange is recommended. and
it is suggested that the management of the Cot
ton Exchange take measures to restrain spec
ulation of the gambling type" Repeal of the
charters of the Mercantile and Metal exchanges
is counselled.
Describing the functions of speculation. the re-
port says:
In some form 1T Is a necessary incident id Of pro
with either commodiTlsS lies or securities II tends TO
facturer the speculator performs service which
has the effect OF insurance.
In law. speculation becomes gambling when the
trading which It involves does not lead. and is not
intended TO lead. TO the actual passing rrom hand
to hand Of the property that is dealt In
SPECULATION AND GAMBLING.
Reference is made to the case of Hurd agt.
Taylor recently decided by the Court of Appeals.
and the report continues:
The rules of all the exchanges forbid gambling as
defined by this opinion: but they make easy
! 10 ip3li delivery o.