GAMBLING IN STOCK AND PRODUCE

Dominion, Volume 1, Issue 91, 10 January 1908, Page 6

GAMBLING IN STOCK AND PRODUCE

. A... NOTEWORTHY suggestion is put forward by tlie " Saturday Review," which is never so sane or so worthy .of attention -as when it discusses the difficult problems constantly arising out of the complexities of modern commerce. Discussing 1 the financial unrest of 1907, which' was "an almost unbroken series of crises and slumps and crashes on the bourses of New York, London, Berlin, Amsterdam, and Pai?s," the " Saturday Review " is not 'satisfied that the wild fluctuations of the share, metal and ipi'oduce markets, are fully accounted for by the antecedent diminution of the world's available loan-fund by war loans, the over-production by sanguine traders, and the', reduction, ; .of profits through tlie increased cost of production, Oh the contrary, our contemporary, thinks that the most potent cause of . the disturbances, and their ruinous effects upon the public,, was the gambling of speculators in stocks and produce. ."It hardij' requires explaining nowadays that the t bulk ,of. tlie transactions on the bourses of Europe,' England and America are entirely speculative, and are as alien to genuine , contracts between a man who has some-, thing to sell, and a man who .wants to buy- that something, as are investmentsupon the totalisator. The "Saturday lteview " points out! that stock exchange gambling, although- infinitely more productive of ruin than racing and cards, is not considered disreputable. Governments do not legislate agfiinst: it; the anti-gambling enthusiasts seein not to consider _it as coming within the orbit of their aggressive enthusiasm. But the peculiar quality that makes speculation on tlie bourses of the world a vicious tiling is its capacity for 'ruining innocent people all over the world. If stock exchange gambling- affected, only the actual gamblers, few of the outside public would be greatly Concerned. Unfortunately the case is ruinously otherwise, and, as we are.taught afresh every few months, the "bulls" and "bears" of Amsterdam or London may cause famine in Italy or bank■uptcies in Sydney. , All this is the repetition of a twenty-;imes-told tale, but the " Saturday

Review" proposes a remedy. Naturally, a distinction. must be drawn Between future bargains, in commodities and those ia stocks and _ shares and between genuine dealings in,commoditise and bogu's dealings in them. _ The remedy must not confound the innocent with the guilty.. A merchant may buy wheat or cotton or wool or rulibor or copper months ahead for sound business reasons: he may desire to take advantage oi n. favourable market, or he may be anxious to make certain of his supply. These are legitimate speculations. But the greater number of the transactions, even in

commodities during 1907, were carried out between buyers who had no desire to accept what they nominally purchased, and sellers who never dreamed of actually delivering what they sold. With respect to stocks and shares, the case is different. As the " Saturday Review" puts, it,'a man who has bought, say, Canadian Pacific shares, " either means to take them or does not. In the first case there is no point in postponing delivery; in the second it is obviously a gamble in differences." The remedy suggested is the pronouncement by the judges of the High Court that "every case, in which the evidence proves that the purchase and sale were, fictitious, shall be deeined a wager within the existing Act." Juries, which always decide that a gamble in differences does not come within the Gaming Act, would then be required only to say whether the evidence proved that there was intention to accept and deliver the subject of tho contract. If this plan were adopted, stock-brokers, knowing that they could not recover in a court of law, would be verv careful in requiring "cover" from clients, and, although gambling would not be stopped, it might be minimised. In New Zealand there is no necessity, of course, for any such method, for the evil a) which it is directed does not exist' here. But any repression of stock exchange gambling abroad would meet with warm approval. We showed the other day how

our " export values " had been lowered by the American. crisis and how the', crisis had affected the , ; money market; and, indeed, so long as the foreign speculators can convulse the money markets of the world, New Zea-, lane} will always be liable to suffer grievdus and unmerited injury. ■