The Birmingham age-herald., 1909-01-24
Entire Wiping Out You'd Work
 Harm
BUT REFORMS ARE NEEDED
The Present Movement of Governor Hughes to Investigate Speculation Methods and Previous Legisla-
 ton First Attempt of Kind.

IS Wnat Will De the consequences. 1neSe are the two questions which naturally arise in connection with the appointment by Governor Hughes of a commission to investigate the famous home of stock spectators, and the general demand throughout the country for some sort of regulation of the stock speculating center of the United States.
 Neither Governor Hughes nor the fed eral authorities of this country, how ever, can pride themselves on the initi- ation of this movement. AS matter of fact action looking to the prevention of stock jobbing began 200 years ago in the reign of King George II, according to the forthcoming number of Appleton magazine, which quotes from the pre- ambe to a bill introduced in the English parliament declaring that Whereas great inconveniences have arisen and do daily arise by the wicked, perniclous and destructive practice of stock Jobbing, whereby many have been and are diverted from pursuing and exercising their lawful trades and vacations to the utter ruin of themselves and their families, to the great Encouragement of Industry and to the manifest detriment of trade and com merce,' and so on.
 This is not the preamble to a bill in- trodueed in the New York legislature says the Appleton article, based upon the findings of the commission of bNlkers, business men and economists recently ap- pointed by Governor Hughes to invest- gate Wall street. but it is the preamble to a bill introduced in the English pai ,a- ment by Sir John Barnard in 1734 short ly after the bursting of the South Sea bubble, designed to prevent the infamous practice of stock jobbing and thus pro- tect the many good subjects of His Maj est King George Il.
 Tt illustrates the age-old exercise of sovereign power in efforts to regulate the working of the delicate and complicated machinery of speculation to accord with public sentiment, and at the same time IL affords a glimpse into a state of public opinion in England nearly two centuries ago which offers a striking parallel with the sentiment which in this country today has shaped the Hughes investigation or Wall street Legislation of a similar character was undertaken In this coun- try in 1872 when the New York leglsla- ture passed an ordinance which was re- peated in 1S5s prohibiting short selling and options
 So after all there is apparently nothing new under the sun, so far as the pro : nosal to abolish Wall street goes. But inc nearly two century old English at tempt to control "stock gambling was without effect, and so there still remains the question as to how it might be ac- complished and most important of all as to what would happen were Wall street abolished-wiped out of existence. Experts on matters pertaining to the stock exchange while readily admitting the need of certain reforms, maintain that to abolish Wall street in it's entirety would be to wreck credits everywhere. One evil of stock exchange management, according to these friendly critics, IS the occasional listing of unsafe and purely speculatiye securities, through which the public may be fieeced. The other IS the method of the admission of members by which men in a supposedly reputable body can AS they have within two years after their admission, apparently change from men entirely acceptable to the member ship committee to those capable or oe- nberately ruinng hundreds of other per sons.
 Tn other words the two evils of the nresent system are characterized as un- desirable securities and undesirable hand lers of them That these two factors will soon be eliminated seems probable. On the other hand financers agree that Tar more serious evils would result II Wal street in all that it represents were act ualy abolished.
 "First of all," among the effects set forth by Appleton's, it is asserted, 1t would mean the subversion of all credit, since Wall street handles those securities on which it is based.
 "yyhile the country was adjusting itself to the new condition, the situation would be interesting. The first effect would un- doubtedly be felt by the Wal street hanks for the 49 national institutions there hold S7O9, ,00O, ,O00 of deposits belong ing to other banks throughout the coun- try while they own outright SIC, 100000 of stock exchange securities and loan no less than $35O, ,000,000 of their money upon such securities. Directly or indirectly these securities have been obtained through the medium of the stock ex- change. the banks having assisted the great distributive institution In marketing securities.
 "Inland banks have also assisted in this work for at times they have had as much as $3O00o0,00O put out in loans in Wall street on stock exchange collateral, and the national banks of the country alone admit outright ownership of $S00, OOOOOO of securities, while all other banks in the United States hold for investment in the same manner $2,144,b3S,O00, and re- port loans secured by half as much as this.
 "The closing of the stock exchange would also lead to the prompt recall of immense sums of money by the inland banks: the New York banks would be un- able to liquidate the loans in which the money was invested and a lookup of funds and blockading of money channels would follow
 "somethng of all this was seen in the October panic of 1907, when the frightened scramble of inland banks for their New York funds put a premium of per cent on real money, and sent $l30,o00,000 hurry ing out of New York within a fortnight. New York banks organized money pools of millions to support the stock exchange and permit gradual liquidation of loans and securities. What could they do If there were no stock exchange to SUD- port?
 "One example will do for all There are . some S,550,000 depositors In the nation savings banks, and these banks hold $602- 224,00U of railroad bonds and stocks and $1 ,000, BIO, SPA of state and other bonds and stocks. The growth is shown by the fact that in 1897 these totals were $121, 1864, 900 and $609, ,5S1 900 respectively Every de- postor is therefore an indirect owner of the securities held.
 "The figures of railroad capitalization and its placement throw clear light upon the relations of the public to corporate enterprise. The interstate commerce com mission recently complied such statistics for the year 1906 and they show that of the total of $9. .342, ,961, 900 of railroad bonds the public held $7,962sO GOO and of the sSSS4, ,234,000 of stock the publics hold ings amounted to s4,795, ,716,00o.