by selling short. To sacrifice a portion of his property and lose a dollar or two on each of his 1,000 shares in the hope of making twenty or thirty dollars on each of the other 2,000, does that deserve to be stigmatised as playing with loaded dice? Is it not a perfectly legitimate use to make of his wealth, his position, and his credit? Every person who takes up the position of a bear to raa ap shares and afterwards run them dowo, must be a wealthy man; no man does it who is not; and nothing in this Bill will stop that man or any man in his position from doing what has been done in the past. Nothing in the Bill will pre- vent those, whether young or old, who are infect- ed with the gambling spirit and who are inclin- ed to deal in shares in the hope of making a profit on the result, entering into contracts. Therefore the argaments we put before the Council are these. Admitting that there has been a great evil in the past that the principle of rash speculation and gambling is and has been rife in the Colony, admitting it is most desirable in the interests of the general trade of the place and of individual prosperity to put an end to that speculation, our contention to the Council is this that this Bill will not in the least interfere with it, that gambling and speculation will go on the same, and any man who calmly and dispassionately looks not at the general results bat at the details of sbare speculation in Hong kong will see that in ninety-nine cases out of every hundred that coonr this Hill it it were law 'to-day would not have any operation whatever and would not interfere in the slightest degree to stop speculation. There is only one evil it atrikes at, short selling, and it is contrary to all experience that the selling of what a mau has not got has been the canse of all this gambling, speculation, and serious loss. That we respect- fully deny. No man acquainted with share and stock dealing can assert it to be true in the vast majority of oases, and our submission to this hon. Connoil is this that the Bill can do no possible good, cannot in any way prevent or remedy the evil at which it is aimed. If it cannot remedy the evil that alone is sufficient, I should think, to disiaoline this hon. Council to pass it. But there is another argament, and we submit it for the consideration of the Council that not only will the Bill do no good, not only will it not interfere with the spirit of speculation and gambling, not only will it not deprive the gamblers of their implements, but it will do mischief. Without providing the necessary means to remedy the evil, it will do substantial mischief by tying the hands of many honest and respectable dealers ia shares. It will place an impediment in the way of honest and straightforward busi- ness, which I think I am entitled to assume it is not the wish or intention of this Council to place. I must apologise for the indefiniteness of the language I am using ba- eanse in one sense it is almost impossible to dafine what is legitimate dealing in shares, what is legitimate speculation in shares, and where you are to draw the line between such speculation and gambling. But may I be permitted to remind this hon. Council of the character of companies limited and their shares. Since the institution of those companies enormous works have been begun and carried out, enormous aggregates of capital collected for industrial purposes which an dor the old system of private partnerships would never have been brought together. There were certain inconveniences under the old law which this limited liability has enabled the company to obviate. One great difficulty was that there could only be a few partners. Each part ner was supposed to take an active partin the basi- ness; they entered into partnership because they had knowledge of each other and confidence in each other, and if one partner went out the frm had to be wound up and reconstituted. If that had continued none of the great works of modern times could have been carried out. Therefore the Company Law was introduc d and after all these companies are partnerships People were invited to put their money in them and take shares, one,
hundred
or half a million, according to the magnitude of the company and his owa means. Every man could have a share in the profits of thesa great enterprises and one of the greatest induce- ments to a poor man was the knowledge that he could at any moment sell those shares and get bsok the money and possibly more than the money which he had invested. It was that very freedow
conferred by law on these shares that en bled these companies to do as much as they have done. Now a free market for the sale of abares is essential to the maintenance of this system of companies and companies law, and anything that interferes with that free- dom is a disadvantage and will interfere to a greater or less r extent with the prosperity of these companies, and it is a consideration where you are proposing to legislate for the protection of shareholders that you should do nothing that shall interfere with or depreciate the value of the property of the holders of those shares. I think I need hardly say that the tendency of this Bill now bafora Connoil is seriously to interfere with the market for hares in Hongkong and that it has gone a long way already to doll that market by render- ing people unwilling to enter into transac tions and purchase shares which they do not know whether they will be able to sell or not. It has had a certain effect while it has ben here before the Council, and it will hava a Fary
verv
TH
grave effect on the market ! if it is passed. It will involve a considerable amount of trouble, extrá trouble, ou every dealer in shares, avery broker and bank clark. If this Bill is passed. a man wanting to sell bis shares must end to the Bank and find out the numbers, Then these must be inserted in the contract, and perhaps by this time he has lost the chance of lling. Or he may have a lot of shares in the Bank and kave sold a number of them on orders for delivery, but through some carelessness the wrong shares are delivered and when a contract omes to be fulfilled, he finds the shares to fulfil it are
gone and he must go and purchase particular sha es to fulfil this contract. Or again. a man has plenty of capital, he mits home and buys shares on the Lob- don market. A good market for them occurs here and he wants to sell those shares, but he cannot do so nautil he has got hold of the num- bers of them, to put them in the contract, and in the interval he loses the market, With regard to legitimate share aling and lexitimate share transactions it will be the cause of additional delay, of additional and many times of very serious loss. It will prevent many legitimato transactions which would in the absence of¦ the Bill be put through and carried out. No man, as
I have said before, who is acquainted with the details and methods in which the shore market is carried on will deny that it will involve additional trouble and addi tional expense to every person concernet in the transaction. It will interfere seriously with business, as any man with experience wil tell you. It is an absolute fact that in the Buuks and other institutions of business here, so grout is the pressure on their tims, that many im- Iportant precautions which should be taken in the transaction of business are not taken. I have brought to me early every day. I may say, cases in which when the facts are laid before me I say, "If you had done so-and-so this could not have occurred." "We have no time" they say, "business is so brisk, we have to risk it." Well, I can only tell them, "You have taken the risk and you mast bear the loss." Every one knows that many of the most ordin- ary precautions are neglected because the pressure is so grest in these banks and offices. It is precisely the same in the share business. There is no doubt, small as it may appear in detail, in the aggrerate the amount of trouble, confusion, and delay that will ba caused to legitimate share business, dating that legitimate share business how you please, will be very great if this Ordinance is passed. If the Ordinance won'd provent or seriously impede share speculation if it could prevent a min buy- ing for the rise or provide him with money to meet a loss when it occurs, no one could com- plain, but all that diffoulty is put on bim and yet this Ordiusoon could affect so good in opping rash or hazardous speculation in shares it may be said and probably will be said that short selling causes vr violent fluctuat ons in the value of shares. that no man can know accurately what he is doing, Again I say it is not short selling. Short selling cannot be proved to exist beru. Selling on time Buares that a mau posseses or has control of, although he may not be able to give the numbers of the shares, does exist. plenty of it, but! selling what a man dose not possess or has not control of or has not abundant means of get- ting, there is very little of that. The evil arises
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