Martinsburg herald. [volume] (Martinsburg, W. Va.) 1881-1920, 1909-06-19
SAY SPECULATION
STEADIES PRICES
Report Of Committee Which
Investigated Exchanges.
PLAN TO LIMIT GAMBLING
No Presentment Against Short Selling,
Which Sometimes Has a Beneficial
Effect on Observation-Disclosures Mar.
gin Of 20 Per Cent Suggested.

GIN OF 70 Per Cent Suggested.
New York, June 1.-THE report OF
the committee appointed by Governor
Hughes to investigate speculation in
securities and commodities and the
organizations used In dealings therein
has 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
looking to improvement Of existing
conditions we're made at length by
the committee.
The most drastic finding is that af-
fecting the Mercantile and Metal Elk
changes, as follows: Under present
conditions. we are of the opinion that
the Mercantile and Metal Exchanges
do 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be repealed"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 1t may be
wholly legitimate, pure gambling. or
something partaking of the qualities
of both. that in some form 1t is a
necessary incident of productive oper-
atoms; that 1t tends to steady prices
and that for the merchant or manu-
facturer the Spectator performs a
service which has the effect of insur-
Rnce.
'In law" says the report. "specula-
ton becomes gambling when the trad
ing which it involves does not lead,
and Is not intended to lead. to the
actual passing from hand to hand of
the property that is dealt in.
1.-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 effect of
much speculation, in 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
to steady prices. 1t 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 eth
err improper means to induce specula-
ton.
The Stock Exchange.
Taking up the New York Stock Elk
change, the volume of transactions
thereon is referred to as making it
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 a measure that its proper reg
ulation is a matter OF transcendant
Importance"
CAS- to the character OF the trans
actions the committee declares 1t is
unquestionable that only small part
of them is of investment character; a
substantial part may be characterized
as virtually gambling. Yet we are un-
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 Tire
plenary power over members and their
operations. could provide correctives.
Buying on Margin Legitimate.
Purchasing securities on margin is
as legitimate transaction as 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
hibited."
Pyramidlng-that is, the use of pa
per profits as margin for further com
mitments - should be discouraged
says the committee.