Evening star. [volume] (Washington, D.C.) 1854-1972, 1930-07-01
BEAR SIDE CALLED
HELP TO MARKET
Bull TempeTS Are Short Now,
but Shorts Are Finding
Some Champions.
b. the Associated Press.

b. the Associated Press.
NEW YORK, July There may be
some geological justification for de-
scribing bear as a pig. but a ref
erence to a bear as a rattlesnake, for
instance, is geological absurdity.
It Is not surprising, nevertheless. that
traders who have been seriously crp
pied in this last stock market flop
should refer more feelingly than sci
entitically to traders who have profitsd
while they lost
1t has been particularly aggravating
to the temper of the bulllshly inclined
during the last few days that the So
called big bears in the market have
declined TO Withdraw from Their short
positions. despite the fact that neces-
SitouS selling appears to have been
completed and stocks have turned up
ward. Brokers say that for the most
part only the little bears have taken
to cover.
Richard Whitney, who may be fig
urativelv described as the keeper OF
Wall Streets speculative 700, and VINO
should be thoroughly familiar with the
vices and virtues of the bears and bulls.
feels that his collection of bears, gloomy
creatures that they are. is one OF the
most valuable groups OF the lou.
Values Bears Highly.
Maxine his first pubic address since
he became president of the New YORK
Exchange. Mr.. Whitney recently stated
that a large bear interest in the stock
market early last Fail would nave
checked the rise and provided CUSHION
Of b1Iving orders on the way down Inc
complete absence of bids was one OF
the gravest aspects Of the Autumn SELL
ing panic. &c tho
Edward MeelSer economist OF the
New, York Stock Exchange. regards tne
practice of short selling as one OF the
essential stabilizing factors in an or
oanized market. In fact, very lew
economists take issue with him on tlls
point r,.o+s
rumors fly about that an enormous,
malevolent, destructive bear pool
GENERATING. One trader who was on the
short side of the market last Fall was
in constant fear of being murdered,
feeling ran so high. AS matter OF
fact. the Stock Exchanges investigation
of short positions disclosed that tne
bear interest was almost lnconSequenIldl
During the latest decline, which mas
carried the general level OF snare prices
close to the November bottom, 1t has
been again rumored that strongly
financed bear pool has been WORKING
AS matter of fact, many large pro-
fessional traders are known to be on
the short side. and bear selling, In view
of the lessened volume of trading has
probably been an important factor In
this last break.
Slump in Spring.
1t has been notable. however, that
when general liquidation has tended 10
dry I'D, bear operations have met Win
1,v@rr III {
the decline can only partially be at
tributed to bears, for in April dlsap-
pointment over the degree of Spring
business recovery became widespread
and trusts which hold stock only Tor IN
vestment were reliably reported 10 De
Tightening their holdings.
The very fact that bears sell snort
when business news IS untavoraoie Is
pointed to as. a practice tending 10
save the market from imitation. Bear
apologists point out that imitation may
he regarded as more dangerous than
def1ation for when stocks are eXces-
Sively priced the investor is tempted TO
purchase stocks when loss Is certain,
whereas, when stocks are too low the
investor who buys them eventually re-
ceives a profit from appreciation, IN ao-
dition to his dividends. They say that
short selling, in the long run, tends TO
keep stocks in line with earnings ana
the ability to pay dividends.
Speculation has been defined as DEAL
ing in fiuctuating values. When 1t rep
resents only dealings in rising values
an essential part Of the process IS lack
ing The stock market was able to rise
to prodigious heights last year probably
because the bearishly inclined during
fine preceding three years of almost
steadily rising markets had been COM
pletely intimidated. The business ac-
tivity trend turned downward last July.
but stocks did not break until October
Bears Explain Position.
When one of the interior markets
first began to reach important proper
tions the practice of short selling was
but partially developed. This market
would experience an unbridled upsWlng,
only to break sharply. This cratic
fuctuation became a source OF worry TO
Wall Street.
But why. at this time, with business
dull and sentiment bad, should profes-
sionel traders be so unprlnclpled as 10
aggravate the situation by depressing
stock prices? is a question frequently
asked Bears point out that based on
practically all indexes of business actlv-
ity, business is now around or below the
levels of December, that is, at the Dot
tom of the decline so far. They main
H.
be around the lows of the movement.
Bears attack the bulls almost as feel
ingly for the violent upbidding Oh
shares in March, as bulls now attack
the bears for their heavy selling.
On the whole, the entire Wall Street
banking fraternity opposes bear mar
ket for it almost paralysis the invest
ment business, halts merger negotia-
ions, and hampers deals OF various sorts.
Even the commission houses that have
some bears among their customers do
less business in falling market 1t IS
notable, however, that the most violent
attacks against short selling come from
outside of Wall street.
Short selling consists of selling say,
100 shares of United States Steel at
$3.50, which the seller does not then
own, to the purchaser, The seller gives
the lender Of the stock his check for
$4,000 the amount received from the
Sale. IF the stock goes down, say IS,
the seller may then buy in the open
market 100 shares at SIS a share, or
$l5500. He delivers the 100 shares Ia
pay back the loan of shares he sold
and the lender returns to him his $l6,-
600, which is $500 more than he used
to buy the stock. or a profit of $500. In
addition, If there is not a considerable
demand TO borrow United States Steel
the lender will pay him interest on his
$4,000.
There are various theories as to the
origin OF the term bear Some say 9
speculative bear is So-called because g
geological bear claws downward An.
other theory attributes it 10 the French
word bias, or low. The same theory at,
tributes the word bull to the French
bouillant, or boiling.
SH0RT-TERM SECURITIES.
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