The work of the Stock Exchange

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Monograph

Identifikator:: 1831284952

URN:: urn:nbn:de:zbw-retromon-225876

Document type:: Monograph

Author:: Meeker, James Edward http://d-nb.info/gnd/126597340

Title:: The work of the Stock Exchange

Edition:: Revised edition

Place of publication:: New York

Publisher:: The Ronald Press Company

Year of publication:: [1930]

Scope:: XVI, 720 Seiten; Illustrationen, Diagramme

Digitisation:: 2022

Collection:: Economics Books

Usage license:: Get license information via the feedback formular.

Chapter

Document type:: Monograph

Structure type:: Chapter

Title:: Chapter VII. Credit transactions in securities

Collection:: Economics Books

CREDIT TRANSACTIONS IN SECURITIES 201 Similar English legislation later adopted to prevent short sell- ing of bank stocks has also been more honored in the breach than in the observance. Such, too, has been the experience of France. Napoleon 1 was dissuaded from forbidding it only by his Finance Minister ; later on, the French did legislate against the practice only to repeal the law after its futility and harmfulness were clearly shown. The state of New York has tried the same experiment and with the same result; it prohibited short sales early in 1812, only to remove the ban against them in 1858. Last but not least is the example of Germany. In 1896 a stringent regula- tion of the Berlin Boerse (or Stock Exchange) was under- taken by the government and again short selling was forbidden, to be reinstated by the repeal of this legislation in 190g. But a famous American economist has stated 2 Finally, the effect of interference, increased cost, and legal un- certainty (entailed by this restriction of stock transactions) was to drive business to foreign exchanges and diminish the power of the Berlin Exchange in the field of international finance. The number of agencies of foreign houses increased four or fivefold, and much German capital flowed to other centers, especially London, for invest- ment and speculation. This in turn weakened the power of the Berlin money market, so that even the Reichsbank has at times felt its serious effects. So long as optimists are more popular than pessimists, buy- ing on margin will doubtless seem to many people a more bene- ficial operation than short selling. So long as men think on the money rather than the goods side of sales, short selling will doubtless remain more mysterious to the public than margin purchasing. So long as the fallacious benefits of inflation can claim a popular following, whatever tends to lift prices above values will continue to be generally judged preferable to what- ever may depress them below values. And thus, while perhaps human nature will always condemn the short sale, genuine economic utility will invariably favor its employment. # Emery in “Regulation of the Stock Exchange,” p. 828.

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