New Britain herald., 1930-11-08
DISCt SSiNG VALUE, OF SHORT SELLING

Df SHOR1 SELLING
 snort selling is The goat after all major declines in the stock market. Consequently 4 number Of bills to leculatc or prohibit short selling arc expected at tho forthcoming session O Congress.
 The tc,er to prevent short selling indeed, started in tho first 10o sessions Of the last Congress. In these il was proposed that postal. telephone, telegraph and radio fla cilities he denied 10 persons selling or offering 10 sell securities not actu- ally in their possession. as well as 10 brokers handling such transac- tlors. Senator Glass offered an amendment to the tariff bill impos- ing a lax of five per cent on stock transfers where tho stock had not been held at least So days before
 the sale. And senator Brookhart
 introduced bill making short sell
 ing ot securities or agricultural pro- ducts a felony.
 But the defense for short selling
 is that It stabilIzos security prices. One has only 10 refer 10 the report
 of the committee appointed in 1908 by Governor Charles E. Hughes Of New York 10 investigate the New
 York Stock Exchange. Short sell ing" said his report, tends 10 produce steadlness in prices, which
 IS an advantage 10 the community" And only last January. E. II. II, simmons, then president Of the Ncu York Sock Exchange. dcclsr-
 \ e.opr.' as soon as he has sold, Incomes a compulsory buyer oI -tocN 8, somc limc in the future. shorts are in tunes Of financial distress the backbone ot The markr, When prices decline sharply and most investors and margin spectators delay buy ing. it is the short sellers who become the buyers. Some economists believe that one of the reasons why the break last Autumn vas so sc- were was ;hc absence of short in- tcrost adequate 10 absorb the great torrent Of liquidation, The amount 0 total short interest at the rlose of one ot the worst days ot the panic vas found 10 he ex- IF. ordinarily small constituting only about one-seycnth ot one per cent Of the total listed shares.
 Zen later than ,ha.. on Oclo- Der h. President Whitney, the ne,r nrosiden, oe the stock exchange. dc arorod himself or the following oo- serva1ons
 < contract 10 deliver somo- 'hInC in the future which person does not own is common 10 many types Of business.
 When builder contracts 10
 build a s1yscrapcr, h. js llr-
 crally short Of every hit Of material and the lahor tha, must % mo the building. Tba, i. inc case for shor.-sell- i ing I, 1s necessary that the public
 which in due umc will read O crj- | ,icisms m Congress against tho pracuec. should know both sides of i Tho o.c-uon. and mos, particularly should hnow that short selling has
 aoma advantages along with is ! dizadvantaece. Wc think the state mont o. former President simmons O ,r ~-o~k .>.hau-e is most tooroush-~oioG. H. says definitely
 that lad there been 4 pronounced short interest at the time O inc
 stock crash the drop would not have bcoa remotely as severe. The Cact that short selling racn-
 etccrs exist proves little; they should bc hunted out and properly punished, r. must not he oycrlook-
 cd. too. that there arc plenty ol l rachctccrs in the woods when the
 market is ha7inG an upswing.