The sun., 1918-08-17
STOCK IS DENIED
CLEARING RIGHTS
Exchange Drops General Mo.
TORS Common From Clear
ing House List.
ACTION A REPRIMAND
Authorities Say Shares Are
Not Sufficiently Well
Distributed. t-i.

The committee on clearing house of
,ho New York Stock Exchange an
,ounced yesterday that after to-day II
will not permit the common stock OF the
General Motors Corporation to be
cleared.
This action was accepted In the IMAM
rial district as an intimatlon by the New
York stock Exchange OF its dissat.sfac-
tim with the extraordinary price fluctu-
atoms of the stock tho last year due TO
an unusually restricted supply OF the
shares. ,.s
In announcing its decision. the com
nlt,ee on clearing house said It was Of
the opinion that the common stock OF
the General Motors Corporation 10 not
widely enough distributed to warrant its
continuance on the list of stocks cleared"
The clearing house committees action
was considered In Wall Street to be an
animation that the Stock Exchanges au-
thorit.es believe something In the nature
OF A corner" exists In the stock q. this
time -. --.''' 1"f.'
brokers' declared that tho dropping
Of the stock from tho Clearing House
list will make 1t more difficult for pro-
fessional traders to deal in abe shares,
thus removing one OF the influences that
result In a wide range Of prices.
The common stock OF the General
Motors Corporation has for moro than
year been q source OF much specula-
ton and the rapid advances and de-
clines in its quotation have elected much
criticism In the Wall Street district. At
times the activity Of the issue has been
50 mysterious as to result in rumors that
the Stock Exchange authorities contem-
plated taking some drastic action that
would curb the speculation. Notwith-
standing that the movements OF the
stock were unusually wide they have al
ways been unaccompanied by reasons
Mat would warrant the heavy specula-
Inn and because OF this reason spec
XA,ors frequently sold large amounts Of
the stock short on the expectation that
the price wruld collapse. Inasmuch as
the stock Oas closely held by the in
sders, these professionals always found
it exceedingly difficult to repurchase the
shares they had sold except at sharp ad-
vance In price. The professional traders
a, times were forced to take heavy
losses but many Of them persisted in
continuing sales as the stock rose to
higher levels.
Speculation on the short side Of the
issue became so heavy in recent months
and the borrowing demand for the
shares became SO urgent that persons
lending 1t would only do no for q con-
s.deration. At one time II was said that
the amount OF stock sold by people who
did not own ii amounted to about 10000
shares. As the borrowing demand in.
creased the premium asked by lenders Of
the stock advanced until recently as high
as $3.50 day was charged for the loan
0: 100 shares, and in one instance Il was
said that one Spectator had to pay $500
per 100 shares daily as premium
, cnarges.
In 1917 the price Of the issue sold as
low as T4ia and as high as 1861. In
January Of this year the stock changed
lands a s low as 1864. while last July It
rnse 10 1859. Advances and declines of
five points became a daily occurrence
and people caught short of the issue
complained bitterly but persisted in
staying short, although in February II
VAS announced that e. I. du Pont & Co.
and William C. Durant have secured suf-
acient stock to give them a controlling
Interest
The pressure against the shorts be-
came greatest IN July and most of the
Professionals found their position 30 un.
tenable that rather than continue paying
The heavy premium to borrow the stock
they went into the market and repur-
chased what they had sold. 1t was this
buying that caused the rise last month
70 1853, The losses suffered by the
SPECTATORS we're extremely large and
were the subject of much comment in
me Wall Street district, but inasmuch
as the Stock Exchange months ago had
passed resolutions that short selling
would be considered unpatriotic during
DE war the authorities refrained from
fH'ng any action.
The inability of the shorts to borrow
me stock except at a high premium was
cue 10 the fact that the Chevrolet Motor
Company held $4,000, 900 OF the total
hsN73'Ooo par of common stock out
sanding and the large Individual share-
Noloers refused to sell their stock. Up
70 March OF this year the authorized
sommon stock amounted to $50, SOC. 900
w. No.I2IOOO of this WAS unissued
March of this year the shorts
Houeht they saw a loophole through
Nheh they could escape when the Gen.
cal Motors announced that 1t would is
rue s2s,26s,400 par of additional COM
a. stock in exchange for the assets of
chevrolet, exclusive of the General
MOTORS stock held by the Chevrolet. This
announcement led the shorts to expect
ia. THIS additional stock would be sold
me market by the Chevrolet and
,dused the traders to increase their short
es This expectation, however, was
~. realized, with the result that the
nsesure was increased on the shorts and
"sy were forced 10 take large lo&ses.
me GENERAL Motors stockholders about
n'ee months ago authorized an increase
. 81 me common stock from $4,000, 900, to
'm.sUo9o'ooO. They also authorized an
,s IRA In the preferred shares from
,..VVooOOO to $4,000. 900, but none OF
ktt '0'o INV 'i'e mar
me action taken by the committee on
Sns house OF tho Stock Exchange
es not prevent the common stock of
Wv A'' General Motors from being traded In
S \. .he moor OF the exchange, but yeaer-
~, rGIlng is expected In some quar-
' 70 De the forerunner OF further ac-