The San Francisco call. [volume] (San Francisco [Calif.]) 1895-1913, 1909-06-17

common sense IN purchasing pound
of prunes from reputable grocer.
But Wall street is not playing q
square game" the committee finds
and the blame is fixed generally on the
governors of the several exchanges
because they employ idly the tremen-
dous powers for good or evil placed in
their hands
MERCANTILE AND
METAL EXCHANGE
The New York stock. the consol-
idated stock, the cotton, the produce
the coffee, the mercantile and the meta
exchanges and the curb market were
thoroughly investigated and recon-
mendations looking TO Improvement OF
existing conditions were made at
length by the committee. The most
drastic finding is that affecting the
mercantile and metal exchanges. as fol-
lows: Under present conditions we
are of the opinion that the mercantile
and metal exchanges do actual harm tC
:. producers and consumers and that theil
charters should be repealed
Concerning speculation in general
the committee declares that it may be
wholly legitimate, pure gambling ol
something partaking of the qualities
of both: that in some form it is :
necessary incident Of productive opera.
tions: that it tends to steady prices
and that for the merchant or manufac-
turer the speculator performs a service
which has the effect of insurance. "Ir
law" says the report, speculation be-
comes gambling when the trading
which il involves does not lead. and /,
not intended TO lead. TO the actua
passing from hand to hand Of the prop
erty that is dealt in.
The rules Of all the exchanges for
bid gambling as defined by this opin-
ion. but they make so easy a teehnica
delivery OF the property contracted fol-
tLat the practical effect Of such spec.
ulation. in point Of form legitimate, +.
not greatly different from that of gam
bling"
NEW YORK STOCK EXCHANGE
Taking up the New York stock ex-
change. the volume of transaction:
thereon is referred to as making il
probably the most important financial
institution in the world, its enormous
business affecting the financial and
credit interests Of the country in Sc
large measure that its proper regUla-
tion is a matter OF transcendent i'm
portance"
Patrons Of the exchange are divided
by the committee into five groups
pamely, investors who pay for whai
they buy; manipulators Of prices; floor
traders; outside operators having cap
f. and experience. and inexperienced
int 4
tips. advertisements in newspapers OF
circulars sent by mail or take flyers
in absolute ignorance and with BLIND
confidence in their luck. Almost with
out exception they eventually lose"
As 10 the character Of the transac-
tions the committee declares it is un-
questionable that only small part o.
them is of investment character: Z
substantial part may be characterized
As virtually gambling. Yet we are un.
able 10 see how the state could distin.
guish by law between proper and i'm
proper transactions, since the forms an,
mechanisms used are identical Rigic
statutes directed against the latter
would seriously interfere with tn,
former"
PURCHASING ON MARGIN
purchasing securities on margin i.
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 fol-
recommending the radical change sug.
gested, that margin trading be prohib.
tied"
Pyramiding. that is. the use of paper
profits as margin for further commit.
ments. should be discouraged. says the
committee.
I'VE have been strongly urged L
advise the prohibition or limitation Of
short sales.' says the report not onlS
on the theory that it is wrong to agree
to ~ what one does not possess, but
that such sales reduce the market price
Of the securities involved We do not
think that it is wrong TO agree TO sell
something that one does not now pos
sess but expects 10 obtain later. Short