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Che Daily Press.
HONGKONG, JULY 4TH, 1891.
HONGKONG LEGISLATIVE COUNCIL.
A meeting of the Legislative Council was held yesterday afternoon. There were present:-
HIS EXCELLENCY THE ACTING GOVERNOR, Major-General G. DIGBY Barker, ( B.
Hon. W. M. GOODMAN, Acting Colonial Se- cretary
Hon. A. J. LEACH, Aeting Attorney-General. Hon J. H. STEWART-LOCKHART, Registrar- General.
Hon, N. G. MITCHELL-INNEs, Colonial Trea-
Burer.
Hou. S. BROWN, Surveyor-General.
Bon. P. FRIA.
Fon. Ho KAL
Hon. J. J. KESWICK
Hou, T. . WHITEHEAD.
Mr. A.M. THOMSON, Acting Clerk of Councila
THE SHARE BALES REGULATION BI The ACTING COLONIAL SECRETARY -Tho next item on the paper appears to be the Bill entitled "An Ordinance to amend the lay in respect of the sale of shares in Companies re- gistered under the Companies Ordinanoo: 1965 to 1880 and in other joint stock companies." It will be in the recollection of the Council that on the last occasion when this dill - me before it I moved the adjournmen of the debate and as movor of that adjournment it falls to me to make some few remarks on it to-day. I would like first to point out the exact position of this Council towards this Bill at the present time. The motion befora the Council is that the Bill be read a second time, and that motion was proposed by Hon. J. J. Keswick and seconded by the hon. member on my right (Hon. P. Ryrie). We bad on the last occasion the advantage of hearing an able spench from counsel; we had the advantage of hearing the opinions of all the unofficial members tben present in Council. I then stated that tis Excellency was most anxious to give due consideration to this Bill and that we should like some littla time in order that the members of the Government might come to some con- clusion as to the proper attitude they should adopt towards this Bill which in itself, although public Bill, was introduced apart from the Government by a private member. Now first let us consider what this Bill really is, because it appears to me from the loose way it is spoken of that there is some misconception as to its nature, a misconception arising from not looking very closely at the Bill itself. If bon, members of Council examine the Bill they will find that the recital states that "Whorens it is expedient to make provision for the prevention of contracts for the sale and purobase of shares and stooks in joint stock companies of which the sellers are not possessed or over which they have no con- trol." Now this does not make the contracts of the short seller illegal. It does not make it an offance for the short seller to sell short, for the bear to sell shares which he does not possess or which posibly he does not intend actually to possess, although in theory he may have to ac- quire them before settling day. It simply says that all contracts, agreements and tokens of sale or purchase of the kind mentioned shall be null and void to all inteu' and purposes unless the numbers of the shares are put in, or where the numbers cannot be put in, the names of the person in whose name the stock stands as the re ristered proprietor. Now,
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I think it is necessary that we shou'd sp- preciate the difference between rodering a transaction illegal and simply rendering it null and void. What is the actual transaction of a bear who sells what he has not got, expoot- ing that he will be able to buy again later on al lower price and then supply, if asked to supply at all, that which, although not having it at the time, he has sold? What is that transaction P I take it it is neither more nor less than abot. He bets, say for instance, that Bank shares, we need not mention any names, will be ten points lower on a certain date than at the time he undertakes to sell them, thinking that when the time comes for settlement, will be able to bay ten points cheaper or that the role matter may be a question of difference and that no shares will pass at all, but that pro- bably a sum of money will go into his poc tet. Now what is that transaction? Is it not practical- ly a bet as to whether the shares will go up or down by a certain date ? That is perfec ly li gal. If instead of selling shares ono gentleman says to another if shares go up ten points t such date you pay. Mo muck or if y go down I will pay yon so much, that is not an illegal transaction, but the agreem mb le uu}} Rud vil so far as the law courts are cou- cerne! If you win a bet and the man refuses to pay you cannot go iuto a law court and waste the time of the court in seeking to recover it. The judge at once says, "No; this is a bot and you cannot enforce it." This is all that this Hill says about these short sales. It says that the nature of such a transaction is essentially a bet and recognising the nature of the transae- bion it relegates it to the region of betting and gives the same effect to such a transaction so fur as the law courts are concerned as to a bet. I wish to make this quite clear, because it appears from what some gentlemen have said to me that they think there would be some terrible poualty inflicted on people who after the pass- ing of this Bill sell shares without giving the number or the name. If that idea is now cleared away I think we may look A little fartber into the mattor. Now, the learned counsel who addressed the house on the last occasion made certain admissions, admissions which cus would only expect from a gentleman of such ex- perience. I noticed that he admitted that great evil Aid exist in this Colony due to the ex- cessive speculation in streks and shares. I noticed that he admitted again that it was de- sirable to put an end to this state of affairs, Then he stated that this Bill as it stands will probably do a great deal to prevent short selling, but that this Bill will not interfere with or abate the gambling and speculation, because it was not the bars but the bulls that bad brought the rain on the colony. But you must rem w- ber that you cannot buy anything unless some- body sells it to you. Each travsaution of sale means a transaction of purchase, and vice verse. If those who have bought for a rise bave besu ruined as stated by the learned couusel. where has the money gone to? Surely into the pockets of the bear, the seller. Therefore, if you I can do anything to check short selling and to check bearing in its most objectionable form, where the seller does not hold any of those shares that he sells, it does seem to me that you put a checkon buying. It will not be so ea y for a man to ruin himself by buying if he can oly buy shares which exist, which are owned by somebody and specified by nams and number. I do not say that this Bill is perfect, but for my own part I approve of the principle of the "Bill" I do think that the state of things in this colony is disreputable, and has been even more A0 thau it is now, as regards the stock mar- kat. I do not say anything against indivi- dual members. We all have the honour of the ac