608
APPENDIX
from their weak or worthless assets. Mr. C. J. Furlonger, a London
dealer in bank shares, also testified that 1864-65 had seen a great and
unhealthy rise in bank shares; that the subsequent price-collapse in
these shares was due to the unjustified extent of this rise rather than
to short sales; that the short sales of sound bank shares only resulted
in losses to the sellers; that bank failures were due to poor manage-
ment of the banks themselves rather than to short sales; that the
Leeman Act all through this period had been utterly disregarded;
and that had the Act been enforced, it would only have rendered bank
shares practically unsalable. Evidence of similar character .in regard
to the short sale was furnished by the Economist in 1922 when the
London Stock Exchange resumed its term settlement, and thereby
practical facilities for short selling, for the first time since the out-
break of the war in 1914.
French experience closely resembles that of England. Napoleon's
able financial minister, Tallien, for a while succeeded in dissuading
his imperial master from forbidding short sales on the Bourse, although
this was finally done early in the 19th century, but repealed in 1883
when its harmful nature was realized. The limitation upon French
short sales already alluded to has, however, been retained in the
French statutes. Italian legislation in this respect has imitated the
French precedent.
Germany provides the classic case of the futility and harm of anti-
short sale legislation; this has been extensively alluded to throughout
the present study. Most fruitful sources are H. C. Emery’s articles:
“Ten Years’ Regulation of the Stock Exchange in Germany” (Yale
Review, May, 1908, and reprinted in “Regulation of the Stock Ex-
change,” p. 822); and “Should Speculation be Regulated by Law ?—
Lessons from German Experience,” ibid., p. 830-838). There is also
a large German controversiab literature on this whole subject, from
1893 to 1910.
In regard to the experience of New York State, it was stated in
“Regulation of the Stock Exchange” (p. 801): “The legislation of
the State of New York on the subject of short selling is significant.
In 1812 the legislature passed a law declaring all contracts for the
sale of stocks and bonds void unless the seller at the time was the
actual owner or assignee thereof or authorized by such owner or
assignee to sell the same. In 1858 this act was repealed by a statute
now in force, which reads as follows:
“‘An agreement for the purchase, sile, transfer, or delivery of a
certificate or other evidence of debt, issued by the United States, or by
any State, municipal or other corporation, or any share or interest in
