Evening star., 1925-11-26
Dangerous Stock Gambling.

Prosperity prevails throughout the
United States. Business is thriving
the people are. with few exceptions
employed at high rates of compensa-
ton. Industry is active. y great
volume of currency is in active circu-
. lation. Conditions generally are fa-
vorable to a long period of good
times There is on the economic, in
dustrial and business horizon no sign
of adversely.
One element, however, is today
menacing the stability of national
prosperity, and that is peculiarly the
product of that same prosperity. n
gambling spirit prevails, manifeSting
itself in speculation in the securities
of corporations on all of the local
Suck exchanges, particularly that in
New York, the center of the coun-
try's financial transactions.
This orgy of speculation has for
some time past been sending security
prices soaring to figures by no means
Justified by intrinsic values. Quite re
Gently a recession of the market has
occurred, and observers of financial
conditions are hopeful that the period
of excessive stock gambling is ap
preaching an end. For there is great
danger that if this speculative spirit
Is not moderated business and indus
Wv will suffer a serious setback. from
which it will be long in recovery.
- speculative movement in the
stock market carrying prices far be-
yrnnd the value points is certain even
tually TO lead to a collapse. A sud
den, sharp, severe reaction not only
Injuries those who have been caught
in the recession, but it reacts quickly
and unfavorably upon business, which
Is founded upon confidence. the shak
ing or withdrawal Of which Is likely
to lead TO serious depression.
In this recent speculative move
ment the booming Of prices has been
carried on without regard for intrinsic
values. In many cases these ad-
vances have been far beyond the most
optimistic appraisal of present or even
prospective worth. Some Of this stock
buying has been for investment. but
the greater part has been specula tive
gambling. This has called for enor-
nous sums of money for margins. and
for outright payments in full, largely
borrowed from the banks, and thus
withdrawn from the reach of borrow
ers requiring cash for their business
purposes.
This speculative spirit has prevailed
all over the country. Banks in all
the cities have been sending cash or
cash credits to New York for call
loan use. The Federal Reserve banks
have begun to note this condition, and
for the sake of financial stability are
in certain regions advancing redis-
count rates in the hope of checking
the gambling process. 1t is time that
such measures were adopted, for, at
the present rate, or, rather, the rate
that prevailed until the recent setback
occurred in the stock exchange. dis
aster is certain to come.
Business is never too sound to be
affected by adverse money conditions
or to be seriously shaken by stock
market reactions and slumps. The
stock gamblers, by their speculative
buying and selling, requiring a vast
amount Of money for their tranac.
tions, money which should be used in
other channels. have been undermin-
ing the foundations of the country's
prosperity. The initiation of values
for speculative purposes. the with
drawal Of cash from legitimate uses,
the blowing Of stock bubbles that are
certain to burst, are evils that menace
the business Of the country through
the collapse of confidence incident to
sharp and sudden reversal in the
market. Therefore. it is hoped that
this present movement is a sign of an
'ebb of the tide of speculation, and
that the ordinary traffic in securities
at real, and not fictitious. values will
be resumed.