The Birmingham age-herald., 1917-11-11
SHORT SELLING OF STOCKS

New York, November 1o.-fSpecial) With this weeks luther collapse in stock market prices, Wall street is now con vinced that mistake was made by the stock exchange officials in it's crusade against short selling. By threatening to
 publish the names Of short sellers the short interest was quickly driven In and
 eliminated. With no outstanding short
 interest, when prices again began to
 crumble this week the stock market
 was left without the shock absorbes"
 which otherwise would have been in evl-
 dence through the covering of short
 sales.
 In his report to Gov. Charles E.
 Hughes, Horace White, chairman of the
 Hughes committee appointed to investi-
 gate the stock exchange, strongly ad-
 vised that no action be taken to stop
 or curtail short selling. MT. White, who enjoyed an international reputation as
 an authority in financial matters, wrote:
 .'Nve have been strongly urged to ad- wise the prohibition or limitation of
 short sales, not only on the theory that
 it Is wrong to agree to sell what one
 does not possess but that such sales re- duce the market price of the securities involved We do not think that 1t is wrong to agree to sell something that one does not now possess, but expects
 to obtain later. Contracts and agree
 u,ents to sell, and deliver in the future.
 property which one does not possess at
 the time of the contract. are common
 in all kinds of business. The man Wno
 has sold short must some day buy in
 order to return the stock which ne mas
 borrowed to make the short sale. snort
 c51a arf prices seem high in order to sell. ana times when prices seem low in order 10 huv their action in bSth cases serving to lessen advances and diminish decnaes of prices. In other words, short seiling tends to produce steadiness In prices which is an advantage to the coinnlu- nity."
 ! Where the stock exchange officials made their mistake last week in sup pressing short selling was In supposilis that the long decline in the stocK ma ket, which began around the miduie oi August was due to bear ralolng. lhs.' @ is n,ainly evident from this weeks fur- thar decline in prices, after short traders had been frightened into inactivity ms vAek,s declines, as well as those wnicn have taken place with few interruptions for the past three weeks, were que to liquidation. M Wali street has proved to it's own sat-
  datior has represented selling or seoeAs ana bonds held here for the account oi sreat Britain. It will be recalled that the Bitish government gave it's own war bonds to English investors in exchanse
 for American securities. the Amerlean se- curities being then shipped here to us used first as collateral against loans ana then soId Then. too Wall street be- ,;evas there has been selling under the trading with the enemy act py our hankers of bonds and stocks held nere for German account. Then there has been heavy liquidation going on TOT tne pase j12 weeks by very rich men Who seo ahead a long drawn out strugsie "ieu Germany. resulting in more government war loans and even heavier war taxes i than have already been imposed. ID what extent liquidation in our stock ,,,a rk eft has been carried on IS reailzeu only by comparing this week low prices with the prices ruling early this year, before this country began to realze what war with Germany meant. TOT lnamy weeks after war with Germany actually hogan some of the ablest Men Tn the financial district here believed eonndent- Nv thai imitation would bring about pull stack market, It was osr August 14 that Wall street first heard that Secretary McAdoo was preparing statenieh. .o show that the cost to tll1s country oi tnc war for the first year would De si'vn, O00. eco Up to that time every one had heen happy in the belief that the sz,"o.- OI0,0O0 just raised in the first liberty loan would last indefinitely. What has nap pened stock marketwise since then IS shown in the following table glVins TOT Ia dozen well season dividend paylns railroad stocks the low price for this year touched this week together with the high
 for 1917, the high price for 1916, the
 low for the panic of 1saI tosetrer with
 the rise that subsequently occurred after | the manic of 10 years ago:
 ~ rnu Itch TIirh Low High