Evening star., 1923-07-23
BY IL. n. TREVOR.

Powerful pool aggregations have time
and again in the past been able to con-
duct market campaigns in curb stocks
on scale far more spectacular than
they could achieve in operati tions in
stocks listed on the New York Stock
Exchange. The reason for this is the
fact that no such widespread distribu-
tion has been required under curb regu-
lations for a stock in the curb market
as is required for a stock which is listed
on the big board
Officials Of the New York Stock
Exchange have very stringent re-
quirements regarding the extent to
which stock must be distributed,
and the character of the distribu-
ton. before they permit the listing
of the stock on the exchange. These re-
order to lessen the danger of a few men
acquiring control OF the floating supply
of a stock and effecting a squeeze" of
shorts of too vigorous a sort. The idea
in this, 1t is stated. is not to protect the
shorts, but to prevent an advance in a
stock to heights far beyond what Its
value entities 1t to, or an advance so
wild as to upset the general stock
market.
When Control Is Easy.
Naturally, when a stock is distributed
among many scattered holders, pool
active in the stock will not have things
so much its own way" as will a pool
that is handling a stock, the floating
supply of which may be controlled by
escrow agreement or otherwise. over a
certain period covering the time in
tended for the operation of the pool
campaign. In other words. a stock
whose floating supply is controlled can
he nd I'd O. hv
a pool than a stock whose floating sup
ply is In the hands of many people. any,
or most, of whom are apt to sell at a
time when the pool may find such SELL
ing a handicap to its operations.
The regulations on the curb market
have always been much less exacting
regarding the extent or distribution of
stock than are those with regard to
stocks listed on the New York Stock
Exchange. In fact, the curb market Is
a market for which the initial distribu-
tion for many stocks is intended Since
the curb market went indoors and its
activities all came under the super
vision of the New York Curb Market
Association, there has been a growing
tendency to make the requirements for
listing more exacting as regards dis
tribution. There has been a spread of
the idea that some fair-szed distribu-
ton of a stock should be effected before
trading in the stock Is inaugurated on
the curb market.
Pools Seize Advantage.
Some of the powerful pools Of the
I915-1916 period took full advantage
of these conditions and, assisted by
some of the most important banking
interests of the country, they spon-
sored and promoted stocks which rep
resented various lines of war acttvi-
ties that would attract the popular
speculative fancy of the time, and sky
rocketed these stocks of limited dis
tribution to prices ridiculously high
as compared with the real values OF
the securities. Some of these stocks
made their appearance in curb trad
ing following a public subscription
Offering, some simply following a
pool underwriting.
The wild imitation which these
prices represented was, of course, ap-
parent to the sponsors for these
stocks-it would be an insult to their
years of experience with securities
values to state that it was not. 1t
was all too apparent. also, to the
keen statiSticianS of investment
houses who were constantly warning
the public of the danger of these In
flated prices. But the investors who
nor factors In that market. The spon-
sors for these stocks knew that they
were dealing, not with investors, but
with people carried away by the fer
vor of speculative orgy, and they
made the most of it.
But in the war shares market of
1915-1916, embraced in the period
when the curb market was outdoors
and when heavy curb trading could
be effected in a stock whether the
issue was or was not listed by the
Curb Market Association Gin the
rather weak form in which that or
ganization then existed). promoters
of a stock did not have to concern
themselves with the question of ef-
fecting any distribution whatsoever
before inaugurating trading. In fact,
there were many stocks the very first
sales of which were effected in curb
trading.
Naturally. with the bars down in
this way, it was possible for even
weak pools to take hold of curb
stocks which had little or no distri-
button and manipulate them upward
in such spectacular manner as to en-
courage extensive public buying
for, as has been noted before, 1t Is
on a rising market that the public
buys. With weak pools able to ac-
complish big results. it can be real
lied what strong pool aggregations
were able to accomplish.
The wild period of new promotions
sponsored by these powerful interests
began with the flotation of the shares
of the Midvale Steel and Ordnance
Company, with its early trading at
one and half times par, followed