EXCHANGE SPECULATION.

Auckland Star, Volume XXVIII, Issue 21, 26 January 1897, Page 4

EXCHANGE SPECULATION.

A REMAKK-.XS!-* law game into operation in Germany on the first of this month. Unde| pressure from the agraiian party, the State has undertaken to check gambling speculation oa the Exchanges. This does not apply only to transactions in ordinary stocks, bub also to dealings in agricultural products, especially grain. The law prohibits the establishment of an Exchange without the authority of the Government, which will maintain constant supervision over, its actions and dealings. Those who havo any knowledge of the inquisitorial operations of the semi-military state bureaucracy in Germany will be able to form some idea of the crucial character of thi3 oversight. A court of honour is constituted for the trial of oflences against the law, and power is given to expel persons from the Exchange. Bankrupts will be excluded for ab leasb six months, and permanently if tbe bankruptcy was fraudulent.

When application is made for the listing of stocks or bonds at ao Exchange, the matter is to be referred to a Committee, which will make a searching investigation into all the circumstances affecting the securities, and decide as to their admission. Eat before this is done a prospectus ruu»6 have been published giving all the essential particulars relating to the stocks cr bonds. !Mor will stocks bo listed until one year after entry in a commercial register, nor before the publication of a balance sheet for the previous year. Another important feature of the new law renders all the porsons who have signed a prospectus legally liable for the statements it contains, and *o make good any loss or damage to subscribers, resulting from false, misleading, or insufficient statements. Moreover, if Chore is any element of wilful fraud in a prospectus, the promoters who have signed it are liable to a criminal prosecution by the State.

All dealings with futures or on term at the Exchange are prohibited, unless tho parties la che transaction are entered in the register, the entries in which are open to public inspection, and ore published in the '• Imperial Gazette" and the local official papers, at the expense of the 'parties. A full, corrected list of the names is also printed onc«i a year in the "Gazette." Persons who omit fo have thoir names entered in the Exchange register have no claim ngainsb each other by reason of term transactions, which are regarded in the light of gambling debts. Ail sei-m business or dealing in futures on the Exchange in mining stocks, shares in manufacturing companies, or securities oc grain or similar products, is absolutely forbidden; and anyone who habitually and for selfish purposes induces inexperienced oer6ons to speculate in such articles as are outside of their sphere of business will be liable to punishment by imprisonment or fine not exceeoing £75. A majority of the German press, in criticising the new law, express the opinion that it will operate beneficially in checking speculative dealings in stocks on term, but as to term transactions in merchandise, graip and market produce, the remedy may prove of doubtful efficacy. The produce Exchanges were originally created to facilitate the handling and distribution of agricultural products after harvest. But, unfortunately, as the institution developed, gambling speculation crepb in, to the serious injury of farmers and consumers. As tbe law will prevent dealers buying grain, except "on spot." it is believed that it will have a depressing effect on the markets, and by diminishing Germany's influence in the international Exchanges cause hor capital to move to foreign countries.

The law will probably resulb in tha complete abolition of secret gambling on the Exchanges by private individuals, because the latter cannob afford to havo their names exposed on the gambling register, nor can a doaior venture to do business with a person against whom he cannob legally enforce a claim. Even a deposit will nob protect the eeller. He cannot touch ib, having no redress against a speculator. Naturally, tho dealers aro

bitterly opposed to a law which deprives them of the opportunity to shear the iambs. They arguo that withoub fcbe epeculativoelement it will bo difficult to dispose of large crops, and a depressing effect" will be caused upon prices. But, on tho other, hand, it will be a distinct benefit to protect. innocent outsiders from the demoralising influences of Exchange gambling.

In the present state of this ainti-gamblmp law it is feared that the ingenuity of the speculators will discovor various modes of evasion. The lambs will probably carry their wool to other markets, London, Paris, 1 or Vienna, instead of allowing tho Germaa shearers to do tho clipping. The general opinion therefore is that the law will need to be considerably modified, in order to prevent the evils resulting from its operation becoming more serious than those ii in intended tp remedy. At all events, tbg operation of the system will be keenly watched in other countries, where practically/little State restrictions exist against) speculativo dealings, tho relations of buyer and aellor being matters for mutual agreement, while borious breaches of honesty.and fair dealing aro relegated to a committee, independent of the Government, and composed of men of probity and repute.