Evening star., 1932-03-02
Curb Placed ON Short Selling.
Meets With Public Approval

Action by officials of the New York
Stock Exchange curbing the operations
OF those who engage In short selling
arouseS much favorable comment.
While maintaining the Importance of
free action in the market as a means
of establishing true values, most OBJ
servers state that the bears have fire.
quently abused their privileges. The
new order Is to be effective April l, and
1t Is pointed out that 1t Immediately
had an effect on the market. Pro-
ceedings in Congress and the ipterven-
tion Of President Hoover are also dis
cussed.
THE more ethical nature of the new
order will appeal to millions OF men
and women as substantial better
ment," says the Boston Transcript.
Observing that popular dislike OF the
old state Of affairs has centered very
largely on the feature that customers S
own purchase could be used against
him without his specific assent" the
Transcript suggests: mo doubt the
governors of the New York Exchange
were we'll aware that this was the
weakest point in their defensive armor
against legislation now pending In
Congress. which, if passed, might place
short selling under an extreme ban"
THE Stock Exchange is wise in adopt
ing the rule" according to the Duluth
Herald. but its position would have
been far better If it had not waited
until the threat of legislation against
short selling forced it to stop this bane-
full and unjust practice Of using spec
ulator's holdings to defeat his purpose
in buylng them" The Pasadena Star
News declares that mo group or ele-
ment in the speculative arena should
have the power to put the speculative
pistol at the head OF the buyer OF stocks
on margins and command Deliver and
proceed to take everything" The Lin
coin State Journal remarks: THE Gov
ernment is not in a position to act
quickly when bear raid Is in progress.
The exchanges are, and it Is time they
took the hint. If they cannot regulate
themselves, the Government Is likely to
make the attempt, and that would not
be satisfactory to any one The New
London Day is impressed by the fact
that. with "a definite, strictly enforced
rule" it is probably that fewer 'plung-
ers' buying on margin will be left dan
Cling high and dry when a strong stock
suddenly slumps.'
Prospects of complete elimination Of
short selling from the commodity
markets and its severe regulation In the
security markets by Federal agencies
are pointed out by the South Bend
Tribune, which records that measures
will be favorably reported to the
House by the Agriculture and Judiciary
Committees" The Tribune empha-
sizes the fact that stock market tiuc-
tuations do not affect permanent values.
Of course. but speculation which in
creaSeS psychological depression does
become intolerabie," and also suggests
that 1T looks as II stock exchange and
commodity market directors are going
to have difficulty convincing Congress
that drastic legislation is unnecessary"
"It is important and encouraging" In
the opinion Of the Philadelphia Evening
Bulletin, Ito know that there is vigil
ance and determination in this drive at
Washington for prosperity" The Eve
ming Bulletin also comments: The new
requirements in the loan Of stock are
not absolutely prohibitiye OF short
selling. They leave room for legitimate
and reasonable transactions on the
borrowing will be q substantial handi-
cap for speculative bear undertakings
by making it more difficult to cover.
and to that extent will aid the national
restoration"
THE Street." comments the Newark
Evening News, may overestimats The
effect of the new rule in figuring it
will reduce short selling so per cent,
but the rule takes from brokers the OPP
portunity TO back professional shorts
without regard TO the wishes and in
terests of their clients on the long side.
That its effect will be real, in the judg-