Evening star., 1932-02-20
Everybody's
Business
New Short Selling Curb
Effective April /. Held
Doubtful Way to Aid
DEPRESSED Trading.
BY DR.. MAX WINKLER.

NEW YORK, February 20 On. A.
N. A).-Yielding to the demand made
upon it by Congressman and certain
business interests. the New York Stock
Exchange will put into effect restric-
tions designed to curtail the activities
of shorts-that is, of speculators for
the decline.
Beginning April l the exchange will
require specific written authorization
from brokerage house customers for
loans of stocks by customers. Hereto
fore loans of stocks carried in long &C
count were permitted on the same basis
as the pledging of customers stocks at
the banks as security for loans.
While 1t Is true that the above action
by the exchange will oblige shorts to
cover their commitments. thereby bring
ing about an advance in the price OF
shares of corporations affected, the
question may we'll be asked as to what
will take place in the affairs OF the
company to warrant the maintenance
of such price levels. Quotations rise
or fall in accordance with actual de-
velopments OF favorable or adverse
nature. Manipulation, OF course. plays
a very important part, but only tempo
rarily. In the long run fundamentals
determine price movements.
Spectators Get Blame.
Ever since the collapse Of securitie-
prices in the Fall of 1929 it has been
held that the shrinkage in values would
not have been quite so pronounced were
it not for the activities of spectators
for the decline and that it was mere
handful of professionals who were con-
spring from time to time to depress
quotations to their own advantage and
the detriment Of the country at large.
In the course Of the recent hearings
relative to short selling a former New
York banker intimated that the number
Of such bear operators was 20, without,
of course, naming them specifically. 1t
Is these mysterious 20 men who regu-
late the movement Of prices. 1t is they
who are in position to defy economic
laws and developments in the field of
finance and politics, both domestic and
foreign. The market responds to their
whims and acts in accord with their
wishes. The witness would have per
formed a real service had he named
these 20 men who are possessed of such
unusual talent and extraordinary skill.
However, short selling-that is. SELL
ing for future delivery-was and is not
confined to q relatively small number.
It has become new industry In the
United States.
Short Selling Popular.
In days gone by, when the Nation was
still young, and little was known of new
era doctrines, short selling was indulged
in chiefly by few important stock mar
ket operators. Today even the small
fry tries its hand at 1t. The odd-lot
trader from Maine to California and
from the northernf1ost part OF the
United States to the Gulf of Mexico has
He Just sells and covers at lower figures.
The why and wherefore interest him
not. The profit alone counts. The way
of achieving 1t is irrelevant to him.
Two and half years ago he bought
and profted If he knew enough to
realize on his holdings. In nine cases
out of ten he did not. He was caught
in the crash of 1929 He now seeks SAL
vation by pursuing the diametrically op-
posite policy.
the events Of 1929? Hardly. He will
succumb now as he succumbed then.
one satisfaction Is afforded him. He
Is credited With unusual powers. Peo-
pie naively believe him capable Of sway
ing the market. He Is held responsible
| unpleasant consequences which lower
quotations entail He Is pointed out as
q menace to society, and those whose
holdings decline In price, even If not
in value, shout from the housetops that
justice must be rneted out to him. The
law Il invoked against him. Legislators
are impressed and give serious Thought
| to the enactment Of bills which will
put a stop to the public enemy.
One maryeb at the naivete Of the
attacks. This Is hardly necessary. II