Evening star., 1932-05-10

should be allowed to govern themselves
and that Congress should not under
take their regulation.
Recommended by Banks.
A year ago we had one of the larg-
est bankers in the country before the
Committee on Banking and Currency.
He admitted in his testimony that he
had recommended the purchase of An
aconda Copper mining stock to the
general public at $l40 per share 1t is
now down to SIS or $40 per share. and
this man wonders now why there isn't
onfidence-confidence in him, conf
dence in his bank, confidenre in Wall
Street, confidence in New York.
Can the public be blamed ;or the lack
of confidence in our mari ,ts. lack of
confidence in our institutions, lack of
confidence in our Cover ment, and
lack of confidence in them selves?
A method must be foun,i to prevent
a repetition of this. Con. ess does not
want to interfere with pr,a aate>":>ltpess.
but Congress may have to Go that yU-r
thing.
The New York market boasts of its
reform rules and there are some that
can fairly be called so, but often they
are traceable to laws enacted by the
State of New York to make certain
practices criminal. The stock market
reform rules come late. and are OBJ
served poorly after they have been
adopted.
I maintain, however that the New
York Stock Exchange does not and can
not reflect the true values of the Sc
curitieS which are traded thereon. AS
long as the natural and normal laws of
doFaord daYNiad nY1d
while a select group of powerful indi-
viduals can influence values to their
own advantage, an honest and equi-
table exchange for the purchase and
sale Of securities cannot exist.
Big Cloud Over Land.
For a generation at least big cloud
has hung over the land-the threat of
centralized wealth. The bulk of the
national income falls in very few
hands. Their income is so enormous
that it gains additional velocity every
year. but no force has been so potent
in the concentration of wealth as the
extreme fluctuations in the stock and
bond market-the boom and the burst
ing of the boom.
It Is not only the stock market and
the bond market. but similar bad prac-
tices exist in the commodity market.
Wheat and cotton often go up or down
without much regard to supply or de-
mand. 1t fluctuates according to the
will of the powerful operators. Trad
ers prefer this kind of q market; they
call it an active market. but it Is some
times so active that the farmer goes
without pay for his labor and the work
ingman pays what the traffic will
bear" The midoleman gets the bulk
of it, but the present investigation Is
of the Stock Exchange. If better mar
ket conditions can be brought about, it
will point the way to certain changes
in the farmers market also.
feel the need of drastic revision of
the Stock Exchange practices! the buy
ing public are entitled to full informa-
ton. They do not have it now.
Rigging the Market.
A pool is formed and a stock issue
is taken on. Various methods are used
in boosting such stock. 1t is misrep
resented in many ways. You are ad
vised that it has large earnings You
read the recommendation Of well known
investment firms You are even told
by your bankers that it Is good
stock to buy You receive market let
ters from New York brokers recon-
mending it highly. 1t rises steadily and
the manipulators profit greatly, but
when they have sold it to the public
they have no more interest in 1t. Their
SUPPORT is withdrawn, the publicity
ceases, the buying end of the slump
starts.
Borrowing Stocks.
It is a common practice for the buyer
IN leave his stock with the broker. The
broker is called upon by bear raider
who wants to break the market. For a
consideration he lends your stock to
the raider. who sells Short-that is, he
sells what he has not got, but he has
borrowed some of it. He has options
on more of it. He is fairly well pro-
tected He starts out to destroy public
confidence and to break its value. He
succeeds and he profits immensely by
that.
Lack of Information.
You will recall the recent Swedish
Match Co. debacle. The firm name
was Kreuger & Toll. 1t was after Kreu-
ger committed suicide that the irregu
larities of the firm were discovered,
among which were forged bonds on
which they had secured credit.
Is it conceivable that all the selling
that took place just before Kreuger's
suicide was done by those who knew
a great deal more about the situation
than the buyer did?
Did they know what was coming?
Did they take advantage OF the un-
suspecting public and sell them that
which they knew to be worthless?
The bear raiders are especially active
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