The Salt Lake herald. [volume] (Salt Lake City [Utah]) 1870-1909, 1909-06-17
GAMBLING, BUT
NECESSARY TO
Do BUSINESS
Report of the Committee APP
pointed by Gov. Hughes to
Investigate Speculation.
MINUTE DETAILS OF
STOCK TRANSACTIONS
MERCANTILE AND METAL Ex-
CHANGES SHOULD BE ABoL-
ISHED BY LAW.

New York, June 16.-The report Of
the committee appointed by Governor
Hughes to investigate speculation in
securities and commodities and the or
carnations used in dealings therein
was made public tonight. The New
York Stock. the Consolidated Stock, the
Cotton, the Produce, the Coffee, the
Mercantile and the Metal exchanges
and the curb market were thoroughly
Investigated and recommendations look
Ing to Improvement of existing cOndi-
tons were made al length by the COM
mittee. The most drastic finding Is that
affecting the Mercantile and Metal ex-
changes, as follows; Under the pres
ent conditions, we are OF the opinion
that the MeTcSntile and Metal ex-
changes do actual harm to producers
and consumers, and that their charters
should be repealed"
Concerning speculation in general,
the committee declares that It may be
wholly legitimate, pure gambling, OF
something partaking of the qualities of
both, that in some form it is a neces-
sary incident Of productive operations;
that it tends 10 steady prices, and that
for the merchant or manufacturer the
speculatOT performs a service which
says the report, speculation becomes
gambling when the trading which it in
wolves does not lead, and is not intend
ed to 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 a technical de-
livery of the property contracted for
that the practical effect Of much spec
ulatiOn, in point of form legitimate, is
not greatly different from that of gam
bling"
The committee makes no presentment
against short selling. but declares the
tendency of such selling is to steady
prices It is recommended that the
minimum margin should be 20 per cent,
and strong disapprOval is expressed of
branch brokerage offices which supply
liquor and resort to other improper
means to induce speculation.
The New York Stock Exchange.
Taking up the New York Stock ex-
change, the volume of transactions
thereon Is referred to as making it
probably the most important financial
institution i'm the world, its enormous
business affecting the financial and
large a measure that its proper reguIa-
ton is a matter Of transcendent impor-
lance Patrons of the exchange are
divided by the committee into five
groups namely, investors who pay for
what they buy; manipUlators of prices;
floor traders; outside operators having
capital and experience. and 'ineXperi-
enced persons who act on interested ad-
vice. tips advertisements in news
papers or circulars sent by mail, or
take flyers I'm absolute ignorance and
with blind confidence in their luck Al
most without exception they eventually
lose As to the character of the trans
actions the committee declares it is I'M
questionable that only a small part of
them IS of investment character: a
substantial part may be characterized
as virtually gambling. Yet we are I'M
able to see how the state could distin-
-uish by law between proper and i'm
proper transactions, since the forms
and mechanisms used are Identical
Rigid statutes directed against the lat
Ter would seriously interfere with the
former. The experience of Germany
with similar legislation is illuminating.
blt the exchange, with the plenary
power over members and their opera
tons, could provide correctives, as we
sHaa snow.
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
lore see no reason whatsoever for rec
2mmeuding the radical change suggest
co. that margin trading be prohibited.
Ll so far q & losses are dine IN iuCuffi-
Continued on Page 6.