Albuquerque citizen. [volume] (Albuquerque, N.M.) 1907-1909, 1909-06-17
METAL EXCHANGE
DECLARED HARMFUL
Mercantile Exchange Also Comes
In For CondemndtiOn-All
Stock Exchanges We're
Carefully In
Sp6Cted.

OF the committee appointed by Gov
ernor Hughes to investigate specula-
ton i'm securities and commodities
and the organizations used in deal
ings therein was made public today.
The New York Stock. the Consoli-
dated Stock, the Cotton. the Produce,
the Coffee. the Mercantile, andt the
Metal Exchanges and the Curb Mar
ket were thoroughly investigated and
recommendations looking to improve
ment of existing conditions were
made at length by the committee.
The most drastic finding is that af-
fecting the Mercantile and Metal ex-
changes, as follows: Under present
conditions we are of the opinion
that the Mercantile and Metal eX-
changes do actual harm to producers
and consumers, and that their cha--
ters should be repealed
Concerning speculation In general,
the committee declares tnat it may
be wholly legitimate, pure gambling,
or something partaking of tine quail
ties of both, that in some form it is
a necessary incident of productive
operations; that it tends to steady
prices and that for the merchant or
manufacturer the speculator per-
forms a service which has the effect
of insurance. I'm law" saws the re-
port. ''speenlation becomes gambling
when the trading watch 1t 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.
The rules of all the exchanges
forbid gambling as defined by this
opinion; but they make so easy d
technical delivery of the property
contracted for, that the practical eff
feet of much speculation, in point
of form legitimate, is not greatly diff
ferent from that of gambling"
The committee makes no present
ment against short selling out 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
exp essed OF branch brokerage Of
fees which supply liquor and resort
10 other improper means to induce
speculation.
New York stock Exchange.
Taking up the New York Stock ex-
change, the volume of transactions
probably the most important dnan-
cial institution in the world, lis
enormous business affecting the fl
nancial and credit interests of the
country in so large a measure that
its proper regulation is a matter of
transcendent Importance" 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 inexperienced per-
sons who act on interested advice.
tips. advertisements in neWspa pes.
or circulars sent by mail. or take
flyers in absOluta ignorance and
with blind confidence in their luck.
Almost without exception they event
ually lose" As to the character OF
the transactions the committee de-
ClarcS it is unquestiOnable that only
a small part of them is of investment
character, substantial part may be
characterized as virtually gambling.
Yet We are unable to see how the
state could distinguish by law be-
tween proper and improper transac-
tionS, since the forms and mechan-
isms used are Identical. Rigid stat
utes directed against the latter would
seriously interfere with the former.
The experience of Germany with sim
liar legislation is Illuminating. But
the exchange, With the plenary power
over members and their operations,
could provide correctives. as we shall
show.
purchasing securities on margin
is az legitimate a transaction as
purchase Of any other property IN
which part payment is deferred We
therefore see no reason whatsoever
for recommending the radical change
suggeSed, that margin trading ne
prohibited.
insofar as losses are due to in
sufficient margins, they would be ma
terially reduced If the customary per-
Centage Of margins We're increased
In preference to recommending leg
islation, we urge upon all brokers
TO discourage speculation upon small
margins and upon the exchange TO
use its influence, and if necessary. its
power, to prevent members from So