The Sun TUESDAY, FEBRUARY 4, 1930 GAMBLERS STRONGER THAN THE LAW

Sun (Auckland), Volume III, Issue 888, 4 February 1930, Page 8

The Sun TUESDAY, FEBRUARY 4, 1930 GAMBLERS STRONGER THAN THE LAW

A FEW days ago in Canada several millionaire gamblers were ejected from different Stock Exchanges and put in gaol because of alleged fraudulent dealings in stocks and shares. Before the national sensation over their arrest had reached the peak, however, they had to he ejected from prison and sent back to operate on Change in order to avert a calamitous financial panic. This_ extraordinary situation has been described mildly as an amazing drama of finance. It was given a touch of comedy in what may be termed at the moment the political act; a hectic gambling “play” closed “with the Government leaders realising that some business sometimes is too big to be disciplined without far-reaching and unexpected results.” In that fact there may be some reason for cynical amusement, but there is no cause for gloating over the release of the arrested magnates throughout Canada and the abrupt retreat and unprecedented surrender of the Great Dominion’s highest authorities. It is a serious position for any nation when its richest financiers and leading business brokers, may, by the sheer extent of practices whieli challenge legal redress and punitive measures, place themselves as above the law. To say the least, the situation does not enhance the merit or raise the standard of commercial morality. Of course, it has to be conceded that the Canadian State Governments involved in the sordid business were compelled, against their better judgment, to spare millionaires and other wealthy principals of sharebroking firms the shock of severe punishment for fraud in order to save a multitude of small investors, traders and producers from ruin. National panic may have been averted, but it cannot he disputed that, in the process of averting financial disaster, principle has been battered and soiled. In any case llatry, the convict, might well envy several Canadians with great possessions—men whose alleged law-breaking was so extensive as to shatter the law to a condition of dangerous impotence. The so-called drama in Canada has been on the stage for the past twenty months. It began in June, 1928, when the investing public of the Dominion went mad (as the vernacular phrases it) on mining shares. Billions of dollars changed hands, mostly to the advantage of “bucketing” brokers, who have scores of offices all over the country taking full advantage of the innocence and ignorance of the new type of small investor which has sprung up with mushroom-like growth in many lands since the war. After the boom in mining shares had burst, the mania for gambling on ’Change leaped into the bottomless well of oil. For months, everybody talked oil, dreamed of oil, and staked their money on oil. The wells gushed dividends only for those investors who knew that there was more money to he made out of the faith of small investors than was ever likely to be extracted from natural petroleum bowsers. The exhaustion of public confidence in mining and oil did not exhaust the resources of the brokers and share boosters. They diverted their attention and alert ability to a great national gamble in wheat. And it was the wheat-mad boom that finally led to a revelation of huge frauds, and a nation-wide drive against financial conspirators and share-market trimmers.

It is unlikely that the sensation in Canada will end with the release of millionaire brokers as a Gilbertian method of preventing a national panic. The Governments concerned must do something to protect the public even from its own foolishness. In recent years l nothing has been more remarkable than the immense expansion of small investors in commercial and industrial finance. The worker has discovered the Stock Exchange, and sharebrokers have learnt that the shilling share, if multiplied sufficiently by numbers of investors, can be as profitable, often much more profitable than pound shares. More “mugs” are lured into the financial arena, and the apparent necessity for investors exercising wisdom and cimcumspection convinces the small man that gambling in shares is not as foolish as betting on horses. And thus the mania ortun ? s easily has become almost pandemic. Nations will have to rewrite their company laws and also may need to inquire more closely into the methods of brokers and financiers. There must be safeguards for innocent investors.