Atlanta Georgian. [volume] (Atlanta, Ga.) 1912-1939, 1912-12-13
STOCK GAMBLING
UPTOEXCHANCE
SAYS WITNESS
Chairman Of Law Committee of
New York Pit Admits 1t Can
Stop Manipulation.

.:+-.7 +O the house money trust lnNes-
.-..4,e. committee today that the eX-
,rs7oe could prevent both short selling
contamination if 1t saw fit to do 50
MI witness said that ne did not per
,fr,. aDprove of short selling and
-.'.,, oo~nered by Samuel Untermeyer,
.o,,n-eI for the committee, as to why ne
,-.f never urged this reform in his 30
adj years of experience on the stock
...ba1ge he said he was not reading
(,,rsr lectures to the other people Of
r1e community"
r-rtermeyer asked him if he knew
+,s average daily transactions of the
.y,bauge. and he said he did not
Did your committee supply the
Hughes commission with data on these
rransactions?" asked Untermeyer.
oT don't remember. We gave them
some data" said Sturgis.
T-ntermeyer pointed out that the fig
mes he had showed about an average
of 10000 shares yearly. Sturgis was
NOT sure that was right
ON all these transactions 20 cents a
share commission was paid to brokers,
was IL not, dShSu ClICIl%SSCA'
Not on all of them. Some Of the
broI<ers may have been acting for them 4
s4Ives. Somewhere between one-quar-
ter and one half Of the dealings were
D.obably for brokers"
About Brokers' Rates.
sturgis said there were about 400 ac-
rive members on the exchange on busy
davs. He admitted that about one
third of the active business was from
brokers. He said the rate of commits
sions varied a good deal, only 50 for 100
shares being paid in commissions on
the floor business. The varying sched-
ule OF commission rates was regulated
bv the exchange. Where the outside
public was on both sides of the trans
be paid to brokers.
rs It not a fact that tho price of
securities has no effect on the size of
the commission"
Excepting mining stock below $40
par value, that is true" said Sturgis.
Untermeyer then took up short SELL
ing.
In the main, short selling is specu-
latfve," said surtgis.
Short selling is practically selling
something you haven't got. isn't it?'
asked Untermeyer.
Yes" said the witness.
lis It legitimateT''
~ think So"
"panIo Makes No Difference"
off panic is raging, do you think
it's right to sell stocks short to depress
the Barket7'
II do not think it's wrong. 1t is
protection for men who have been
caught with a lot OF long securities,
and they are able to repair their cred
its under such conditions
sturgis said his idea Of the defen
sibility Of short selling was based on
the financial necessity of the person en-
gagged in such transaction. He said that
Short selling in a normal market" was
a question Of morals. He did not per-
sonally approve OF It under certain con-
ditions, and said he had never sold a
share Of stock short in his life.
Gould you not regulate short sell"
mgr
ut would not be practicable"
Wouldn't the brokers' books show
the transactions7"
Some times"
Ultimately Sturgis admitted the
brokers' books in New York would re-
veal all short sales. The exchange, by
periodic examinations of the books,
could find out the extent of short sales
and manipulation.
He Never Met Issue.
IF the exchange wanted to forbid
short selling or manipulation, could it
do so?"
THE exchange has never met that
issue"
Have you urged its reform?"
It's not my duty to read moral lee
lures 10 the other people of the COM
munity."
Cntermeyer reviewed the arguments
N favor Of short selling as a balancing
lorce in rising market, but then came
back to the question of gambling.
Don't you think the moral obliquy
Of such a transaction outweighs any
argument in its favor?" he said.
Yes, I do, personally"
As matter of fact. it is mere
gambling, is it not?"
Yes, very likely"
Vntermeyer asked Sturgis if such
transactions as the Hooking pool did
Iot hurt American credit abroad. Tn
IrouDtedly they did, he said. In the
u'lhlng pool case stock exchange firms
VINO took part in it were censured, the
Witness said.
Reckless Firms Suspended.
but they were not suspended, were
=. TWO firms We're suspended because
uisy went beyond their means. They
we're reckless. The others were not
,u, pended because they kept within
mir means"
me witness could not agree with Tn
I'lueEer as to the distinction the ex-
., uaHSe had found between those cen
ru and those suspended"
4termeyer showed Sturgis figures
W. rocking assets. and asked if there
stock. '''oi III 9'i''e ~"
-, mink it was very poor invest
'.Ll' the witness said