Evening star. [volume] (Washington, D.C.) 1854-1972, 1931-09-27
CONGRESS MAY ACT
/. TO N.STOCK AND
GRAIN SHORT SALES
Senate Leaders View Action
as LikeIy-BiIIs Are
Prepared.
VETO OF LEGISLATION
BY HOOVER IMPROBABLE
Trend Of Feeling Here Is Revealed
by Watson-Defenders of
System Are Few.
BY G. GOULD LINCOLN.

Investigation of the New York Stock
Exchange by congressional commit
tee, particularly with reference to
short selling and its effect on the
securities market, when Congress re-
assemblies is looked for by responsible
leaders of the Senate.
Furthermore, there will be a drive
in the coming Congress for legislation
to put curb on short selling, either OF
securities or of grain. Several members
of Congress already have prepared bills
for such a purpose and will introduce
them
There has been no indication from
the administration what its attitude
would be toward legislation designed to
prohibit or to curb largely short selling
1t would be difficult, however, for the
President of the United States to veto
such a measure if it ever came to him
Nor has there been anything to snow
that the President would oppose efforts
to curtail the short selling in the STOCK
and grain exchanges.
Spoke AgalHSS DedAS.
Mr.. Hoover not long ago saw fit to
say to the country that certain interests
in the country were manipulating the
market for wheat through short sell
ing. About year ago, when there was
also an oItcry against the bears" in
the stock market, the President had the
principal officials of the New YORK
Sto,k Market at that time come tc
the White, House for conference with
him.
Senator James e. Watson, Republican
leader sof the Senate, said last night
he had not the slightest doubt that
demands would be made when the
Senate meets for an investigation OF
the New York Stock Exchange. Thi1
does not mean that the Republican
leader plans to offer a resolution OF
investigation. 1t does mean that he Is
reasonably certain that other Senators,
both Republican and Democratic. arc
planning such resolutions. Nor does
there seem to be much grcund Tor be-
lieving that, once such a resolution
were launched in the Senate, 1t would
be defeated
Immediately following the announce
ment by the British government that
Great Britain was temporarily abandon
ing the gold standard, the controlling
body of the New York Stock Exchange
issued an order that short selling should
be suspended. Whether this order was
responsible or not, the market was
frrner and gains were made, and GER
tainly the order would not have been
issued had it not been for the fact that
there was fear short selling would In
juriously affect prices of securities all
along the line. For two days this order
was in effect Then came the an
nouncement of wage cuts by the United
States Steel Corporations and General
Motors and several other big concerns.
The market reacted favorably to these
announcements and wide gains were
made, ranging from l to IA points. But
these gains were just for the dav, in
the main, and slump in prices quick
followed.
Decline Follows Repeal.
At the same time the stock market
was booming after the wage cuts, the
New York Exchange reScinded the order
against short selling. 1t has been ar
gued that short selling had nothing to
do with the subsequent decline in prices
on the market, and that the declines
we're due to the foreign exchange situa-
ton But that is something it is hard
to make members of Congress believe
today
Furthermore, the opinion has been
advanced that the Stock Exchange re-
scinded its order against short selling SO
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