The Daily Missoulian. [volume] (Missoula, Mont.) 1904-1961, 1909-06-17
WOULD ELIMINATE EVILS
OF THE STOCK EXCHANGE
Investigating Committee Appointed by Gov
ernor Hughes Makes Report of
Its Findings.
ABOLISH MERCANTILE AND METAL EXCHANGES
Commission Finds That Speculation in General May Be
Wholly Legitimate, Pure Gambling, May Parake
a Little of Both, but in Some Form Is Necessary
Incident to Productive Operations.
ABOLISH MERCANTILE AND METAL EXCHANGES

New York June l6.---The report of
the committee appointed by Governor
Hughes to investigate speculation in
securities and commodities and the
organizations used in dealing therein,
was made public tonight. The New
York stock, the Consolidated stock,
the cotton, the produce, the coffee,
the mercantile and the metal ex-
changes and the curb market were
thoroughly investigated and recon =
mendatons looking to Improvement
of existing conditions We're made at
length by the commit<ae. The most
drastic finding is that affecting the
mercantile and metal exchanges as
follows: "Under present conditions
we are of the opinion that the mer-
camille and metal exchanges do actual
harm to producers and consumers and
that their charters should he re-
pealed."
Concerning speculation in general,
the committee declares that it may be
wholly legitimate, pure gambling, or
something partaking of the qualities of
both, but in some form it is a neces-
sary incident Of productive opera :
tions; that it tends to steady prices
and that for the merchant or mannfac-
turer the speculator performs service
which has the affect Of insurance.
"m law" says the report, Speculation
which it involves docs not lead and is
not truly intended to lead, to the ac-
tuaI passing from hand TO hand Of the
property that is dealt in
'"rhe rules of all the exchanges for
bid gambling as defined by this
opinion, but they make 50 easy 4 tech
nical delivery of the property con-
tracted for, that the practical effect
Of much speculation, in point of
form legitimate, is not greatly diff
ferent from that of gambling.'
steadies Prices.
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
90 per cent and strong disapproval is
expressed of branch brokerage offices
which supply liquor and resort to
lation.
The New York Stock Exchange.
Taking up the New York stock ex-
change the volume of transactions
thereon is referred to as making it
probably the most important financial
institution in the world, it's enormous
business affecting the financial and
credit interests of the country in so
large a measure that it's proper regu-
lation is a matter of transcendant i'm
pOrtance." 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 'in-
experienced persons who act on in
terested advice tips advertisements
in newspapers or circulars sent by
mail or take flyers in absolute ig-
norance and with blind confidence in
their luck. Almost without exception
they eventually lose" AS to the char
acter of the transactions the committee
declares it is unquestfonable that only
a small part of them is of investment
character; "a substantial part may be
characterized as virtually gambling
Yet we are unable to see how the state
could distinguish by law between
proper and improper transactions,
since the forms and mechanisms used
are identical. Rigid statutes directed
against the latter would seriously in
terfere with the former The expert
nf eli
lation is illuminating. But the ex-
change with the plenary power over
members and their operations, could
provide correctives, as we shall show
On Margin.
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.
insofar as losses are due to insult
ficient margins, they would be ma :
terially reduced if the customary per-
centage of margins were increased. In
preference to recommending legisla-
tion, we urge upon all brokers to dis
courage speculation upon small mar
gins and upon the exchange to use its
influence and if necessary, it's power
TO prevent members from soliciting
and generally accepting business on a
less margin than 20 per cent"
Manipulation.
Manipulation of priecs is divided by
The committee into two classes: First
that which is resorted to for the pur-
nose of making q market for issues O1