Newark evening star and Newark advertiser., 1912-12-13
4SHORT SALE" OF |
. STOCK GAMBLING,
ADMITS BROKER
Former n. Y. Stock
Exchange Head
Tells of Practise.
DIRECTORS HAVE NEVER
RULED UPON MATTER
Witness Says 1t Is Not His Duty
to Reform the Com
H1unity.

meyer. counsel for the money trust
Investigators, Frank K eturgis, 3
New York stock broker and former
president of the Stock Exchange q
that City, admitted that the short
selling Of stocks by brokers was
gambling. Short sales Is the dis
posing of stocks which q person does
not own in the hope OF purchaBine
later at a lower price, filing tss
order and realizing the differences be-
tween the purchasing and selling
prices as profit
Three members of the COMMITTEES
were on hand when the session
began
Mr. Unterneyer endeavored 10
draw from Mr. Stugis an estimafe Of
the amount of business done on the
New York stock exchange annually.
but was unsuccessful. The lawyer
read from the answers furnished be
the exchange to questions Of the
Hughes Commission, an estimate ez
years business amounting to 1es :
100000 shares of stock. Mr. Sturg.e
said he believed the figures to Be
about right
Now. on that 1ss.O00.00o shares the
brokers doing the trading receive
twenty-five cents a share in commits.
sion. 12ik cents on each side Of the
transaction, do they not2r asked Mr..
Untermeyer.
mo, because some of that specu-
lation is by brokers for themselves.
and on that there is no c0mmiseion.t
answered Mr.. Sturgis.
Mr.. Sturgis said that about ons-
third Of the trading was done b
brokers.
Then about 1s1. 100000 shares ars
bought and sold by the publirg7
Yes about that
Dir. sturgis said that there wees
abou 400 or 500 active brokers IS
tsIe exchange.
I Commissions. he said. were charged
on the par value Of stock. withoHf
regard TO the market price
Questioned Regarding .shorf seIfine.e
Mr.. Untermyer took up the question
/ of short sales" The witness ex-
planned that short selling" was the
practise of selling stock not owned
by the seller. and in order to buy {
in later at a lower price.
"The object is to make money on ,
break in the market by selling what {
you have not got, isn't that SOP
Yes replied Mr. Strugis
Mr.. Sturgis said that he believed Il :
proper for a broker in times Of panie
J TO protect himself by short sales. e
| he were holding another line Of stociz
for which there was no market
do you believe short selling justifi- s
able in a normal market2s
That is a question between every
man and his own conscienee
DO you personally approve shert
selling in a normal market"
Personally, do not
'The stock exchange does not dls-x
courage short sellingg7
1t takes no position in the matter =
HAS the exchange ever under-2
taken to promulgate regulation
against short selling2''
No"
Would not such regulation be ar
practicable as a regulation fixing the
rate of commissions"
Mr.. Sturgis said it would be impos-
sible to differentiate between long and
short stocks on a brokers' books Hex
never had urged such reguIation1
among his fellow members of the goxz
erning board of the exchange.
1T is not part of my duty to urge
moral reforms on the community, be-
said
! Mr.. Untermyer reviewed the areu~
ments in favor of short selling as a'|
balance on a rising market, and Il
steadying a general market situaz
tion.
s.Taa,,t+ 49, sl,;.,l- -, ..-...t .t.t.-. F.
of such a transaction outweighs ana
argument in its favor?7
Transaction Is Gambling.
Yes, do. personally"
"As matter of fact that is gamb<
ling. pure and simple?
Eyes. very largely" answered AfrI
4 Sturgis.
The question of the moral duty "a
the stock exchange to the public n
volved Mr.. Sturgis and the lawyer ID
a heated argument.
'The exchange as such has nd
duty toward the public" said M
4 Sturgis, except to maintain a piacz
to do business and to surround tha
business with proper safeguards
The witness said that he did no
believe the stock exchange was gkflt1
of misleading banks as to the palu1
of securities manipulated On ihi<
+ point he argued at length. Mr. Unief
myer endeavoring TO secure the "a
mission that the stock exchanez
should make dealings on the door
the exchange, dealings IA the ren
value Of stocks. that the securitle.
might be quoted at price represent
f...- r....l Va Inc