The sun., 1909-06-17
WALL STREETS PRETTY GOOD
HUGHES COMMISSION SH90S
OFF THE MUCkRAKE MEN.

gin Trading by Requiring 10 Pcr
Cent. Margins. Cut Out Dealings In
Unlisted Securities and Regulate tho
Curb-To Sell = Customers Securities
Should BE Made Criminsl-Branch
Omces In the City Should he Discen.
tinued-short Selling wholesome and
Speculation IL Necessary to Business.
The organization of the New York
Stock Exchange and the more important
Of it's rules: regulations and business
methods are approved in the report Of
the special commission on exchanges
appointed by Gov. Hughes late last year.
The report has just been submitted to
the Governor after an investigation lasting
about six mont1s in which for the first
time books Of Brokers. records Of the
Stock Exchange clearing houses and
all other pertinent sources Of Informs
ton were available to an investigating
body. ..
Other OF the local exchanges do not
fare as we'll. Summary abolition Of ths
Mercantile Exchange and the Metal Ex-
change Is recommended for the reason
that no bona fid. transactions in COM
modities 60 through either. Drastic re-
forms are suggested for the curb market.
The Consolidated Exchange is dismissed
In few sentences as one whose business
would be paralyzed II deprived Of the uss
OF Stock Exchange tickers which 1t now
enjoys upon technical point In q ju-
dicial decision" Little fault 10 found
with the, Cotton Exchange except that
it's officers permit too extensive specula.
ton.
On the three most important criticisns
directed against the Stock Exchange both
before the commission and in various
periodicals in recent years-trading on
margin. short selling and the organiza-
ton OF the exchange as a club rather
than an incorporated company-the conn-
mission finds that the criticisms wers
net we'll founded. The practice in regard
to call loans is also approved. In re-
gard to manipulation OF securities only
that which is designed to deceive the
public is condemned. Otherwise. the
comraission finis. manipulation often
serves a useful purpose. No nors doss
the commission take seriously the crit.
cisms on the Stock Exchange clearing
house, specialists or the plan for State
examination ot brokers. -
But while the commission finds tbs
methods good. 1t makes several s1Eges-
tons OF ways in which they may be
improved. Practically all OF those are
directed 10 the governors OF the Stock
Exchange and only one or two to the
Legislature Several OF them have been
put into effect by the governors sinos
the uns&vory Stock Exchange failures
Of last year lne recommendation are
as follows:
That the Stock Exchange use its in
fiueace and II necessary it's power to
prevent members from soliciting and
generally accepting business on less
margin than 20 p@". cent.
That broSers and banks discourage
-pyrarnidine' Of marginal accounts by
valuing securities for the purpose Of
margin or collateral not at the current
price Of the moment but at the average
lrice OF two or three months. 'f-
That the Stock Exchange use its in
fluence to prevent "unjustifiable' manip-
ulation OF securities by stricter enforce
ment OF it's rules against matched orders
and fictitious or the so-calied washed,
sales.
That the exchange empower its gov
ernors to decide when a corner exists
and to Ak a settlement price. thus elimi-
mating the inducement to corner stock.
That it be made a misdemeanor for .
broker to receive securities or cash from
any customer or to make purchases or
sales for his account after the broker
has become insolvent. that Is. whom the
broker has on his books accounts which
IL liouidated would exhaust his assets -
That the exchange look into the inan-
cial condition of its members before failure
as well as after.
That it be made larceny for a broker
to sell t,curities purchased by a customer
who has paid for them In whole or In part
except upon the customers default F
10 dispose OF them for his own (ths
brokers) advantage. *
That brokers be prohibited from dealing
for the account of any clerk or subors
climate employee OF any bank. trust ootn-
pany, insurance company or other mon:
eyed corporation or banker. -,
That the unlisted department OF the
Stock Exchange be abolished and that
additional information be secured ~!
garding the business Of companies With
securities In the listed department.
That stricter penalties be provided for
bucketing orders
That the sheets OF the Stock Exchange
clearing house be preserved for slx years
and put ut tho disposal OF tho courts In
case Of any dispute.
That all New York city branch ondoss
OF brokerage houses be discontinued. Or
at least subjected To serious and effective
regulation. -.
ARTICULATION" A NECESSITY.
The commission begins Its report1with
an analysis Of speculation. It says:
Speculation consists In forecssting
changes Of value and buying or selling In
order to take advantage OF them; II may DO
wholly le Git innate. pure gambling or some
thing partaking OF the qualities o6 both.
In some form II Ia a necessary incident q
productive operations. When carried on N
connection with either commodities or
securities Il tends to steady their prices.
Where speculation Ia free fluctuations 10
nri,es othery ise violent and disastrous