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In the interval before dark we walked with Mr. Burroughs down the road, past the old home where he was born, and on up the hill to the turn where a few old stones almost hidden by the tall grass marked an ancient burying ground. It was here that the boy Burroughs-filled with the memory of the ghost stories of his grandfather Kelly, who served with Washington at Valley Forge-used to run by when he passed at dusk, not daring to stop until his breath gave out. From this spot we watched the sun set while Mr. Burroughs pointed to the scenes of his boyish exploits, which seemed always uppermost in his mind. Here in the glow of the sunset I began to understand the secret of the influence of this valley on the man whose impressionable years had been spent in its shelter, and I realized why the great river at West Park had no deep and abiding place in his life. A feeling of peace and contentment crept over me. Nature seemed to have finished her work here. The hills were broadbacked and smoothly rounded; the stone walls piled in place by farmers whose blood was quickened by the news of the Declaration of Independence, the cleared fields, and here and there a little white farm-house, all served to give the impression that here man had dwelt for ages in harmony with nature, and that the great protecting hills had many of the attributes of a father and mother to the inhabitants of the fertile valley. So I understood when Mr. Burroughs said, with a sweep of his hands, "Here I am at home, and these mountains stand in place of father and mother to me."

The sun set, the trees in the old sugar bush became only a blur on the side of "Old Clump," and as we passed the "Old Home " the lamps had been lit and a small member of the Burroughs family waved to us as he was carried off to bed.

How one does sleep when out of doors in the mountains! All feeling of weariness disappears; there is no desire to lie abed and mentally doze. While it was yet dark we heard the call of the bobolink floating down from the heights as the birds sped past on their way south. With the sunrise we woke up refreshed and alert for whatever the day might bring. At Woodchuck Lodge we retire early and breakfast at seven. How I wished I had the moving-picture camera as Mr. Burroughs went to the garden to pick some corn and beans and then to the woodshed to split some sticks for the range!

After breakfast, market-basket on his arm, he started forth to work. Not, however, as do his neighbors, for in the basket are pages of manuscript, with perhaps a red apple or two. What a picture he made as he climbed the hill back of the house, up the well worn path to the Brush Camp! Formerly his writing was done on a packing-box in the barn, facing the great open door, but in the Brush Camp he is nearer to nature. The dry leaves rustle in the breeze with a woodsy sound. He is in the middle of an old apple orchard that was in its prime a century ago. The wild life ebbs and flows about him. Sometimes a woodpecker or nuthatch seeks for grubs on the trees a few feet away, giving only a glance at the quiet figure in the shelter of the boughs; or in the distance a woodchuck sits up to survey the country for possible enemies or perhaps a fallen apple. Whenever the philosopher of nature looks up from his desk, consisting of a box and a plank, he has a beautiful outlook over cultivated valleys and wooded hilltops. On a shelf within easy reach are a few books needed for reference. Just now they are chiefly books on geology and evolution and chemistry, subjects about which Mr. Burroughs has been pondering deeply. His writing is done in the morning, when his faculties are at their best.

Woodchuck Lodge lives up to its name. The reason for its being so called is apparent on all sides, and is never lost sight of. Woodchuck holes are visible everywhere. Mr. Burroughs-looking at woodchucks from the farmer's standpoint-considers them vermin and legitimate prey. The hunting instinct seizes every one at the Lodge, and when a brown object is seen in a distant field or orchard, Mr. Burroughs seizes his rifle and creeps toward the railing of the porch. Usually the woodchuck, understanding conditions perfectly, notes the movement even if a hundred yards away and disappears into his hole. If, however, he is seen over the barrel of the gun-it usually means one woodchuck less. One day I saw Mr. Burroughs dispose of five of the rodents with six shots. This warfare does not tend toward extermination, for notwithstanding it the woodchucks are as numerous as ever.

So, whether trying his skill as a marksman on woodchucks, contemplating nature, or thinking and writing about the new discoveries in chemistry and the new conceptions of matter, the best days of the year for Mr. Burroughs are those spent at Woodchuck Lodge.

A MONTHLY ARTICLE BY THEODORE H. PRICE

THE PRACTICE OF "SHORT" SELLING

IS IT JUSTIFIABLE IN THE LIGHT OF RECENT STOCK EXCHANGE EXPERIENCE?

T

HE time has arrived when Americans can commence to study some of the lessons to be drawn from the problems of the war that have either solved themselves or have been solved by conscious and painstaking effort on the part of those called upon to deal with the unprecedented emergencies of the financial situation.

One of the most important and interesting of these problems was that which had to do with the business of the stock and commodity exchanges of the United States.

After the usual closing time July 30, business was indefinitely suspended on the New York Stock Exchange and all the other stock exchanges of the country. The New York and New Orleans Cotton Exchanges followed suit at 11:15 on the morning of July 31. The Chicago Board of Trade, the New York Produce Exchange, and the other great grain markets of the country remained open and have conducted an active business during the period that the stock and cotton exchanges were closed.

The prices of grain were advancing, those of securities and cotton were declining; and the closing of the exchanges upon which declining values were recorded, while those upon which advancing quotations were registered remained open, has led some to question whether the machinery of the exchanges ought under any circumstances to be made available to those who would “operate for a decline."

It is generally admitted that great losses and many failures in the security market were averted by the simple expedient of closing the Stock Exchange and making short sales impossible. It is equally true that the closing of the cotton exchanges permitted those who held the comparatively small supply of cotton then in existence to market it deliberately at prices much higher than they could have obtained if the "bears" had been permitted to compete by offering to sell cotton for future delivery which they did not own, in the hope of later on buying at a lower price from bona-fide holders.

When the exchanges reopened, the wisdom

of restricting short selling was again recognized in the rules prohibiting sales at below certain minimum prices.

In previous crises some way has generally been found to prevent short sales. It is said, and generally believed, that during the panic of 1907 the late J. Pierpont Morgan used his almost omnipotent power to check the selling of stocks by those who did not own them; and in the Russo-Japanese War the great French bankers who were large holders of Russian bonds induced the Paris Bourse to adopt a rule which compelled the would-be seller of Russian securities to declare the serial number on the certificates representing such securities concurrently with the offer to sell. This made it impossible to " borrow " the securities after they had been sold, which is the method usually used to consummate short sales in the stock market.

Quite reasonably, therefore, many people are now asking whether, if it is wise to prevent short selling when conditions are abnormal, it is not also wise to prevent it altogether, and who shall be the judge as to the degree of abnormality in financial conditions that justifies the suspension of operations for the decline.

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In a recent editorial under the caption Bridling the Bears" the New York "World" says:

The New York Stock Exchange is now wide open for business as before the war, but with a minimum-price line throughout the trading list.

This line closely follows the low prices established by the panic which closed the Exchange on July 30. It is well below the general estimate of the values of these securities. "Short " selling or selling of "long" stocks may proceed without limit above this line. Below the line they cannot proceed at all on the floor of the Exchange or through any of its members.

This is a notification to the country that the Exchange cannot be used as an agency for unlimited bear raids having no other purpose than by purely artificial means to cause a wreckage of prices and of other interests for the profit of a few daring plungers. It is a notification to Europe that this country cannot be forced to take back the ownership of its foreign-held

securities in any amount and at any time Europe pleases.

Short selling runs through all business and has its wholesome uses. It also has its abuses, and they have nowhere been more flagrantly or injuriously practiced than on the New York Stock Exchange. This is now admitted by the governors of the Exchange in their minimum-price restriction. It has been admitted before in the fact, still a boast of Wall Street, that during the height of the Civil War short selling of Government bonds was ruled against for patriotic

reasons.

If a minimum-price restriction on bear-raiding now, why not all the time? It is recognized as a practical and effective restraint. Changing the minimum price to suit changes in the evident value of securities, it would provide an elastic restriction which would automatically

rule out the short-sale abuses.

There exists over the country a strong sentiment for the legislative prohibition of short selling on all exchanges. If it were practicable, it would not be wise. The uses are to be recognized. The abuses only are to be aimed at.

The question thus raised is exceedingly complex. That it should be raised at all is significant of the growing disposition to insist upon a consideration of the ethical quality of many practices formerly regarded as entirely legitimate.

It is only by contrasting the written and unwritten commercial laws of twenty-five years ago with those which prevail to-day that we realize the progress that has been made in applying the Golden Rule to business.

Within the period named the legal doctrine of caveat emptor (let the buyer beware) has almost been abandoned in its application to the larger affairs of business, and even in the retail trade it is now generally recognized that any effort to sell goods at more than their intrinsic value is commercially unmoral, if not immoral.

In the matter of railway rebates and pricecutting, there is to be observed the same quickening of conscience with regard to the rights of competitors and the public. The statutes which make such practices illegal could not have been enacted or enforced without the support of a public sentiment the existence of which connotes a recognition of the Eleventh Commandment " that would have been inconceivable to the generation of men who acquiesced with the late Senator Ingalls in his description of the Decalogue as an iridescent dream."

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The idealist likes to believe that the change marks the advance of altruism, and the man

who calls himself "practical" grudgingly admits that it expresses a broader application of the maxim that "honesty is the best policy;" but every one agrees that the accepted social philosophy of the day, however it may be described, compels a more searching inquiry than previously into the effect of our own acts upon the rights and interests of others.

This new social philosophy is responsible for most of the legislation that has established the regulatory commissions and anti-trust laws. Whether we are in sympathy with it or not, we must admit that it is destined to prevail in a democracy, and that it is at least expedient to act in harmony with its spirit.

Conceding this, let us examine briefly the practice of "short selling" as it is followed on the various exchanges, with the object of ascertaining in how far it ministers or is essential to the economical distribution of commodities or investment securities. It will be admitted that if short selling does not facilitate the distributive processes of commerce and finance, as between productive enterprise and the ultimate consumer or investor, it has no economic or moral justification.

In the popular mind the "short seller," or "bear,” is generally conceived of as a malevolent and pessimistic person who, in the anticipation of trouble or disaster, puts himself in a position to profit by a depreciation in values, and has a direct pecuniary interest in bringing about that depreciation. He is excoriated as the partner of calamity, and his discomfiture is always regarded with satisfaction. "He who sells what isn't his'n

Is sure to lose and go to prison," is a rhyme variously attributed to Daniel Drew and Commodore Vanderbilt, and will probably be repeated as long as the English language survives and bears are forced to cover at a loss in bull markets.

The popular idea as to the essential iniquity of the bear is, however, just as erroneous as the popular idea as to the virtue of the bull.

In an economic sense, it is just as wrong to put prices too high as it is to put them too low, and society has for centuries been trying to find a way to preserve a just mean as between the buyer and the seller. Thus far no better regulator than the law of supply and demand has been discovered, and the question suggested by the recent history of the exchange is: Does short selling assist in the equitable enforcement of the law of supply

and demand, and thereby facilitate distributive commerce in commodities or securities?

If it does not, it should and will be stopped; if it does, it will persist.

Technically, the short seller is one who contracts to deliver property that he does not possess. He can perform his contract only by buying or borrowing the property to be delivered from some one who owns it. This is precisely what is done.

In the commodity markets short sales are generally made for future delivery, and are covered on or before delivery by buying the property to be delivered from some one who has owned it meantime, or has produced it in the interval.

In the stock market securities are generally sold for delivery the day after the sale, and the short seller completes his contract by borrowing the securities sold from some one who owns them, agreeing to return like securities upon demand. If, when return of the securities loaned is demanded, they cannot be borrowed from some one else, then the short seller must cover by buying as best he can. It will at once be evident that all short selling presupposes an ultimate purchase, and this is the defense principally relied upon in support of the practice.

It will also be seen that in the stock market, where securities are sold for immediate delivery, the operations of the short seller are limited by his ability to borrow securities, and that no short sales would be possible except with the acquiescence of some owner of the particular issue of securities sold short.

In so far as the security market is concerned, the stocks through the loan of which short selling is made possible are mostly borrowed from brokers who do not own them, but who by virtue of the advance made on them acquire the right to rehypothecate or loan them.

Under a law of the State of New York, passed some few years ago, written authority must be obtained from the "customer" or beneficial owner of the securities to so loan or rehypothecate them; but most brokers demand this authority in "blanket form" from all customers who trade on margin, and the result is that the mass of securities carried on margin are mostly available for the needs of the short seller.

It is difficult to see how the corporation that issues securities for the money it requires or the investor who supplies that money by buying these securities are benefited by the operations of the short seller. If the securi

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The only argument that can be used to justify the practice of short selling on the Stock Exchange is that it "broadens the market," makes it easier to buy and sell, and increases the confidence with which money is lent upon the security of stocks and bonds, because the lenders can more quickly realize upon the collateral in event of default by the borrower. It is urged that securities thereby become more readily available as collateral, and that the fluidity of credit is increased.

This is, of course, desirable; but that short selling contributes to it would seem to be doubtful in view of the fact that when credit tends to congeal, as it does in panics, the prevention of short selling is one of the means invariably adopted to thaw it out and reestablish confidence.

As a matter of fact, the "active" securities, so called because they are quoted most frequently on the Stock Exchange tape, are those to which the practice of short selling is chiefly confined. They represent a very inconsiderable portion of the invested capital of the country, but the quotations established. for them from day to day, being published in thousands of newspapers, affect the public imagination in a degree entirely out of proportion to their financial importance.

In this respect they are somewhat like the micrometer used in nice mechanical operations. It is an instrument that registers, exaggerates, and makes visible to the human eye a variation of 1-2,000 of an inch, which could not otherwise be perceived.

The National wealth of the United States is estimated at one hundred and thirty-five billion dollars. Of this, about one-half is in the form of Government or corporate securities.

Not more than ten per cent of the $67,500,000,000 so invested is represented by the securities actively traded in on the Stock Exchanges of New York, Boston, and Philadelphia. There is a growing feeling that the erratic fluctuations of this relatively small group of stocks do more to unsettle than to

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