Evening star., 1932-04-18

er with investments make up the mar
kets Of the world
ITO take away one part Of specula-
ton or investment leaves the remainder
like the man with but one leg. He has
lost his equilibrium" -..
Gray asked Whitney if he thought
short selling a part of the investment
market.
mo, I didn't say that" said Whit
ney Il do say it is an integral part
Of the entire market"
Why is short selling an aid to the
market when the market is depressed?"
Il don't say short selling viii pre-
vent the market going down or put the
market up. but without speculation and
investment the market cannot exist.
.Therefo-e, yeu can't take away any
part of it."
whitney added that short selling pro-
vides the market with Its only COM
pulsory buyer" The short seller, he
said, must eventually buy to cover his
trensacticn. #
Gray asked If It wee not true that
short selling did not take pla-e "uasil
there is an indication that ti1e-rr-;;klt11t
IS going down" !" --lA---.
Whitney said. Not necessarily"
Senator Ba~kley. Demoerst, O. Kl-
tucky. inquired hat preporticr1 o. sN2rt
WhftneY .ssid Id did MI knoy
Senator Fletcher. Democtst. Of Florida.
asked if short selling did nat force
liquidation and Whitney r-p,:ed: Il
don't think SC. There is much more
forcing of liquidation by those wno are
liquidating"
Whitney asserted "it is the liquida-
tion of securities that has forced prices
down"
Might Force Liquidation.
Gray asked if members OF the ex-
change had not expressed the opinion
that snort selling has forced Liquidation,
and was told Perhaps"
Don't you know as matter Of fact
that members of the exchange are
against the practice of short selling?"
NO" whitney said, mot that know
Of It may be true there has been dis
cussion whether this or that should be
done in times of emergency, such as
when Great Britain went of the gold
whitney insisted under persistent
questioning by Gray that he knew OF
no exchange members who believed 1t
wise to do away with the short selling.
Gray recalled october. 1893. just be-
fore the collapse of prices, and asked:
Wasn't it true that at the peak. short
orders were practically nil?"
"I am perfectly confident that during
the rise of the market from 1924 10
1929 there we're large short interests
said whitney.
Guesses Always Wrong.
He did not know specifically about the
short Interest in october, 1929. He
said it never had been possible to esti-
mate the short interest before tne
crash of '29.'
whitney said he and others expert
enced in market operation had oiten
guessed at the short interest and had
always been wrong.
Senator Gore, Democrat, OF Okla
homa. expressed the view that the snort
sellers are the professionals.
Tom, Dick and Harry don't know
about short selling" he asserted
Il think the janitor, the waitress,
the school teacher and all went into
the market in 1929 without knowledge
of values and it all drove out the short
interests I think 1t Is too BAD there
were not more shorts in that sky rocket
market"
Whitney agreed.
THE last time there was compila-
ton of short selling" he went on, there
were 1O.763 short accounts in every
State except two and l3 foreign nations.
7O9 Shorts in California.
"There were 709 short accounts In
California" Whitney added. L can't
believe there are 7O9 professional oper-
ators in California"
Senator Fletcher asked If the big
hears" ever got into rising market.
II do not know" smiled Whitney.
''If I knew as much about all this as
am supposed to- would be glad to
tell you.'
Gray repeated this question several
times and each time Whitney insisted
more emphatically, Il don't know" He
reminded the committee also that Il
am bond broker-not stock broker"
Il do know that people selling short
have done SO In a rising market-they
may have been wrong" added the
Stock Exchange president. =
Has Sold Short.
do you ever sell short?" Senator
Couzens, Republican, Michigan, asked.
''I have in the past, Whitney said.
"When?"
"I don't remember-not. in the last
nine months or year, 1 believe"
Does your name appear on the list
of short sellers furnished the commit
tee?" .-
II don't think so. I did some short
ceiling IN the Spring Of 1929 thinking
the market was entirely too high"
The committee laughed as Whitney
added;
II was wrong" Us
Il don't operate on short side" he
added
"A bear may also be a bull?" asked
Senator Couzens
Il presume So"
Gray and Couzens chided Whitney
about his answers, and the Michigan