The Birmingham age-herald., 1917-02-01

exchange members This is what the banker said:
 Short sellers are born, not made. But if there were not people born who sell short, they would almost have to be in- vented. Short selling has a legitimate place in the scheme of things economic. It acts as a check on undue optimism. it tends to counteract the danger of an upward runaway market, it supplies a sustaining force in heavily declining market at times of unexpected shock or panic. 1t is a valuable element in pre- venting extremes of advance and decline. The practice of short selling has been sanctioned by economists from the first Napoleons minister of finance to Hor- ace White in our day. While laws have at various times been enacted to pro- hibit that operation, 1t is noteworthy fact that in every instance I know of those laws have been repealed after a short experience of their effects"
 But, while there Is no question of mor- als concerned in short selling. appartly there Is something which keeps some men from selling borrowed stocks
 ''Why have you never sold stocks short?" was asked of MT. Kahn, in a conversation the day he returned from testifying before the leak committee at Washington.
 'I was in hopes I would be asked that question when I was on the stand, was his reply From the moral viewpoint, l can see no difference between buying stocks for rise or selling them short for decline. As 1 see it. it is purely a question of mental attitude. Personally, I could get no satisfaction or pleasure out of selling stocks short. I do not have to make money that way, and feel that if were ever tempted to sell short I would constantly have before me a mental picture of person who was suf- fering for my gain. It is simply condi- ton of mind. I do not like to be bear that is, to look on the gloomy side of lfe-and could get no pleasure out of money made at the expense of some one else.
 "And then there Is another side to short selling" the banker continued. When traders start out to sell stocks short-that is, to bear the market-all kinds of harmful untruths of a depress- ing character are likely to be circulated, such as those now being told about the part prominent men took in the alleged leak scandal. A man who sells stocks short cannot make profit unless others subsequently, sell thus causing prices to further decline. In order to frighten others into selling, professional traders are likely to circulate all klndS or VICIOUS and harmful rumors. That is another reason why have never cared to take any part in the short side of the stock market"
 As chairman of the Hughes committee, which investigated the stock exchange, the late Horace White pointed out that it would be serious and harmful mis- take to do away with short selling Un- termyer said exactly the same thing in his money trust report. Those experts. after careful investigation of the history of speculation, both here and on the va rious exchanges of Europe, both ex- pressed the belief that short selling acted as a safety valve'-that is, prevented the market from, running away, as it would do if there were only one side, the long side. There was no short selling back in the sickening collapse when the crash finally came, both White and Untermyer agreed, that what was needed was not the elimination of short selling, but the elimination of harmful manipulation As Mr. White explained in his report Ma nipulation which is designed to serve merely speculative purposes in the en- deavor to make a profit, as the result of fluctuations which have been planned in advance, has been trying to determine with the help of able counsel, Is whether or not profits were made by government officers or prominent Wall street men by selling stocks short in campaign planned in advance" R. L. B.