CO129-250 - Acting Governor Barker - 1891 [6-8] — Page 678

The

Daily Press.

HONGKONG, JULY 23RD, 1890.

7 closure 4.

THE principle of the Bill introduced into the Legislative Council by the Hon. J. J.. KESWICK for the regulation of the sale of shares in joint stock companies will, we think, be universally approved. Under this Bill contracts for the sale for forward deli. very of shares which the seller does not possess at the time of the making of the contract are made null and void. Such a provision, if it did not put an end to time bargains in unidentified sbares altogether, would at all events very greatly curtail that class of busi- ness and diminish the bulling and bearing operations of the effect of which we have during the past year had such an unfortunate experi- ence in Hongkong. To what extent the Bill if passed will attain the object aimed at will: depend partly on the view taken of it by the brokers and general dealers in shares. Bets are not legally recoverable as debts, but they are generally paid, and in the same way if people wish to gambie in time bargaine on the stock exchange possibly they may find buyers or sellers ready to accommodate them. LEEMAN's Act, on which Mr. Kes- WICE's Bill is modelled, refers only to the shares of joint stock banks, and although no doubt extremely useful in limiting the extent to which the market can be rigged, it is wholly disregarded within the London Stock Exchange, as, indeed, are many other re- quirements of the law. According to the rules of that institution no member is permitted to resort to legal proceedings to compel another member to perform a contract, and in cases of dispute the only resort is to the Com- mittee. Legal requirements are conies quently thought lightly of. On this point we may quote the following passage from a useful ittle handbook on the London Stock Exchange:-"But though the members amongst themselves may and do defy the law with impunity, as soon as a transaction gets out of the charmed circle and affects any one who is not a member the law cores into force, regardless of its agreement or otherwise with the rules and customs within. And any member who is prepared to sacrifice his position as such is legally entitled to proceed at law against any other member, the rules and customs notwithstanding. The courts will not entertain for a moment any

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rule or custom not recognised by them. Such a course is very rare and very extreme, and must always be of questionable advan- tage to the member so choosing to act; but his legal right to such action is unquestion- able, though in most such cases he will be finally expelled."

But although the requirements of LEE- MAN's Act may not be complied with by the members of the Stock Exchange it is no doubt effective in preventing the discredit- ing of banks to which Mr. KESWICK referred in his speech on Monday. In the same way the proposed local Ordinance, even although it might be disregarded to some extent. would have a wholesome influence in pre- venting the undue inflation or depression of of certain stocks by operators without re- gard to their intrinsic values. The Acting Attorney-General said "If the measure is contrary to public opinion, or in advance of public opinion, we may see the spectacle of this legislature having passed a law which is being openly violated every day, and I think that would have a very demoralising effect." We cannot quite follow the hon. gentleman here. The effect of the law would simply be to place time bargains in shares unidentified by their registered num bors in the same category as gambling contracts. If the parties to the bargain chose to carry it out there would be nothing in that of a more demoralising effect than under existing conditions. If the unsuccess- ful party were unable to do so he would not be placed wholly at his creditor's mercy, as is now the case, and forced into bankruptcy or crime, though he would of course be treated as a defaulter and be refused credit in the future. People would necessarily be much more careful as to whom they dealt with when debts of this description ceased to be recoverable at law than they are at present with imprisonment as a means of enforcing their claims. The Ordinance, therefore, even if it fell somewhat short of its intention, would still be attended with very great ad- vantages, which, so far as we can see, are not conater-balanced by any disadvantages what- In the absence of any Stock Exchange rules enforcing contracts not recognised by law we are inclined to think Mr. KuswICK'S Bill would practically put a stop altogether

ever.

to time bargains except in cases where the particular shares bought and sold can be identified by their numbers.