Evening star. [volume] (Washington, D.C.) 1854-1972, 1909-12-28
The Rock Island Snasm

Yesterdays sensational activity In Rock
Island common in the stock exchange in
New York is calculated to deepen the
public Impression that that institution is
not as necessary to the financial well
rare OF the country as is claimed by
Its supporters and defenders. It is sup
posed to be market place where GER
tain commodities are offered for sale and
are bought in obedience to the law of
supply and demand. That law unuues-
tlonably governs the operations in the
main. If demand for a stock develops
In excess Of the immediate supply, the
price rises. If there are more offers to
sell than there are, offers to buy, the
price falls. But this law is often manipu-
lated and fictitious demands are voiced
on the exchange and. equally fictitious
offers to sell are made, with the result
OF abnormal movements, giving the i'm
preston of great activity without the
actual. transfer of capital in correspond
ing money.
Mystery surrounds the circumstances of
yesterdays pyrotechnic rise and fall of
ROCK Island common. Immediately after
the opening Of the exchange the stock
began to rise from SON. Within fifteen
minutes it had advanced to 81 and had
fallen to 81. One broker. realizing the
unstable nature of the movement, sold at
the top. and in five minutes had realized
q profit of 10000 on 1000 shares Other
quick-witted operators made profits on
both the rising and. falling of the stock
The public" had no part or share in
the transaction. No lambs were feeced.
1t was entirely little family jar. with
the bulls and bears rending one another.
An investigation has been ordered to as
certain the inspiration Of the movement,
with possible expulsion from the stock
exchange awaiting the man or men re-
sponsible for the spasmodic furry.
The most reasonable theory OF the
street is that the trouble was caused by
the failure OF a broker to whom had
been intrusted a series Of match sales.''
designed for some unknown purpose Of
advertisement or demonstration. to or
ganize the selling side of the bargain to
correspond with his buying bids. This
In one Of the evils of the exchange to
which Gov. Hughes has addressed him.
self in emphatic terms in his comments
on the stock market activities. match
Sales" which are no more nor less than
imitation transactions, with no stock
actually passing and with no permanent
effect on the market price, are prohibited
by the rules of the exchange, but it is
almost impossible to detect them with
such certainty as to warrant penalties.
In one respect the rapidity with which
the situation righted itself yesterday is a
good sign. 1t indicates that it is less
possible than formerly to maintain a
stampede on change. Wall street is I'M
doubtedly on a more substantial business
basis than ever before. The public has
had SO many lessons in the folly of
speculative buying in a game which is
manipulated by q professional element
that 1t is exceedingly difficult to work up
a great support for an unjustified move
ment beyond the plane of real value. OF
course there will always be speculation.
No laws can ever be framed to prevent
that 1t is instructive in men to risk
something in order to get more. The real
problem of Wall street regulation Is to
prevent. as far as possible. the stimula
ton and invitation to speculate afforded
by violent movements In securities with
out substantial reason in actual business
conditions.