Evening star., 1932-04-12
A Whited Sepulcher.


New York Stock Exchange, appearing
yesterday before the Senate Banking
and Currency Committee, painted the
exchange and all its Goings in purest
bear raid" The ru.es of the exchange
according to Mr.. Whitney, are scrupu-
lously observed by all its members. If
there is wild gambling on the Stock Ex-
no means admitted by Mr.. Whitney-it
is due entirely to the public. Well, per-
haps Mr.. Whitney is perfectly right.
CeI Itainly it is the public which has
lost its shirt" in recent years on the
Stock Exchange. And some members
of the public are wondering just where
the shirt has gene. So far that has not
been revealed.
The Stock Exchange was established
for legitimate purpose and has ex-
ceedingly important legitimate functions
to perform. 1t provides a market for
trade In shares of stock In industrial
and other producing concerns, corpora
tions and companies, and a market for
the bonds issued by these same con-
Germs, corporations and companies. But
dealings on the Stock Exchange have
shifted from mere operations for the
purchase of securities for investment,
and even for speculative buying, to out
right gambling. Indeed. for many years
it has been entirely respectable to gam
BILE on the Stock Exchange. Only when
the gambler loses his all. and perhaps
the all Of trusting friends, too, does
the operation become disreputable.
If there are no such things as bear
raids" as indicated by Mr.. Whitney.
then the public has been grossly mis-
informed and a legend of the Stock
Exchange, built up through the years
and fostered by the activities of some
big operators, must fall into the discard.
Undoubtedly Mr.. Whitney intended
that the Senate committee and the
public generally should receive the
impression that no such raids occur or
are possible under the rules of the
Stock Exchange. Mr.. Whitney has been
a stanch defender of short selling"
What broker would not? short
sale" means far more profit for the
broker than a simple sale or purchase
Of shares of stock. Commissions, loans
and more commissions all follow a short
sale, which is not completed until at
least three transactions have been reg
istered, all OF which mean gain for the
broker. Short selling is defended on the
ground that it is check on imitation OF
prices and is valuable when the bulls
are running away with the market. If
it is such a check, it had no perceptible
effect on the bull market in 1929 and
years Immediately preceding.
Again, Mr. Whitney holds that the
public is at fault when it comes to a
bull market. And perhaps he is right.
The operators and brokers and the in
terests which place the securities on the
market, knowing approximately the &C
| tual earning power and the values of
! the companies and corporations issuing
the securities, according to Mr.. Whit
| ney have not acted as "come-on" men.
Yet there have been most alluring ad
vertisements OF these securities.
The Senate committee is ostensibly
! seeking to ascertain whether certain
big operators on the market, as they
are politely called, have entered into
, conspiracies to bear the market down
. or to bull it up. Nothing is more dif-
ficult to prove than a conspiracy, as the
committee is likely to find. Mr. Whit
ney is a most excellent witness for the
Stock Exchange, and it appears that
the operators have nothing to fear from
his testimony.