The Indianapolis times. [volume] (Indianapolis [Ind.]) 1922-1965, 1934-04-30
YOU CAN'T WIN,
STOCK MARKET
DEBATE THEME
House to Spend Week in
Effort to Educate
Investing Public.
BY RUTH FINNEY
Times Special Writer

can't win
With this as its theme, the house
of representatives is going to spend
this whole week educating the coun-
try in the tricks Of the stock mar
ket and the dangers of speculation.
One of the most protracted de-
bates in recent history of the house
has been arranged in order TO make
sure that the reasons for stock mar
ket regulation shall be dinned into
the ears of the investing public. If
there's a man in the country who
doesn't know at the end of the week
Just how and why he lost when he
dabbled in the market and just how
and why he will lose again unless
the government steps in to protect
him. it won't be the fault of admin
istration leaders.
Although they run some risk of
having the bill amended by throw
ing the debate wide open. They
have decided to take that risk in or
der to get the whole story across.
A year ago, the Roosevelt plan for
regulating exchanges probably would
have had little chance of adoption.
At that time. promises of self-regu-
lation on the part of the exchanges
would have carried considerable
weight. It was supposed, also, that
the investing public had learned its
lesson and was unlikely to lend it
self to building up new speculative
booms.
Recent Events Recalled
Today the administration quotes
events of the past few months to
answer both these points.
Last July, there were violent
fluctuations in repeal stocks. The
New York Stock Exchange. clamor-
ing for the right to regulate itself,
investigated and reported that
there were no material deliberate
improprieties." The senate banking
committee then investigated and
reports definite proof that security
prices were manipulated, that pool
operations took place in which cor
porate officers participated and
anu llAdD AAAoc1 WI III az
tees" we're uncovered in listing of
securities.
The speculative boom of the sum-
mer of 1888 is the answer to the
second point. The administration
argues that such booms not only
must end with the usual diSas-
trous results to investors" but also
impede progress toward prosperity
so directly that they must not be
permitted to occur in the future.
These are the tricks hackers of
the bill will list during the weeks
debate to show the get-rich-quick
public how it has been parted from
its dollars.
Pools Manipulate Prices
In order to send the price of a
certain stock upward, broker may
buy and sell large blocks back and
forth to and from himself. An in
stance was found in which broker,
operating a syndicate account in
copper stock, cause the syndicate
to sell So 900 shares while member
of the syndicate bought it back.
The stock went up from $l92 to
s195
Operations of this sort enable a
syndicate to unload stock on the
public. OF course. when the mani
pulatlng is over the price slumps
These are wash sales
Prices are manipulated easily
through pools. A group participating
in a radio stock pool was able to
boost the stock from 913, to 1901
in four days. The men iii the pool
made big profits. They pulled out
and three days later the stock had
dropped to 87i4.
Some financial writer's were found
by congressional investigators to be
in the pay of market operators.
They mentioned a stock favorably
in their columns and they got
rake-off on the traders profits.
Margin Trading Under Fire
Trading in options has been
abused to aid pool operations. Di-
reotors and officers of corporations
have specialized in the stock of
their own companies on the basis
of information not available to
others. Occasionally they have
caused payment of dividends not
justified by earnings in order to help
make the operations of pool sue
ceSSful.
The practice of trading on mar
gins will come in for the heaviest
attack of all in the weeks debate.
The fact that it makes widespread
speculation possible is blamed in the
Pecora report for the depression.
AS to the personal effects, testi-
mony before the committee indicat-
ed that margin trading, making pos
sible widespread speculation, direct
" was responsible for most of the