THE DISTRIBUTION OF SECURITIES 103 
as that it may amount to a manipulation of prices at which 
sales are made. Scale orders cannot be used without fixing 
upon some one figure above which the syndicate will sell and 
below which it will purchase. This of course tends to confine 
the price approximately to this figure, since, if heavy selling 
orders come into the market, they will meet the syndicate’s 
scale buying orders and thus prevent the price from declining 
severely, while heavy buying orders will similarly meet the 
syndicate’s scale selling orders and prevent a sharp rise in price. 
[f the figure around which the syndicate tends temporarily to 
confine the movement of prices is a fair one and in accord with 
the real value of the security, no economic harm is done. On 
the other hand, should the price set by the syndicate be higher 
than the inherent value of the security warrants, the possibility 
of causing ultimate losses to investors arises. 
Practical Power of Syndicates in the Market.—But it 
must not be forgotten that the syndicate manager is, after all, 
dealing in a national market. He has given publicity to the 
essential details of the equity and earning power behind the 
new security. Sales of it made on the Exchange are instantly 
reported all over the country. Any disparity between price and 
value immediately makes speculative profits possible. If, there- 
fore, he attempts to stabilize its price at a figure in excess of its 
inherent value, the new issue will at once become a target for 
speculators from every corner of the nation. Against the com- 
bined pressure which they can quickly exert, no syndicate could 
hope to hold its ground for any length of time. 
In consequence of this irresistible and immediate corrective 
force which national speculation exerts, the power of syndicates 
to do harm by attempting to stabilize prices is reduced to a 
minimum, although it is not wholly eliminated. On the other 
hand, the stimulation of activity and stabilization of price is a 
temporary but inevitable practical necessity in the case of newly 
listed securities. In this connection, it is interesting to recall 
that in 1917 the United States Treasury Department, in coop-