Business: Free Riders Derailed

In Wall Street jargon, a "free rider'' in Government bonds is a speculator who buys into a new issue of Governments—often on margins as low as 5%—and hopes they will rise a point so that he can get out with a quick killing. The big advantage is that he can put up only $5,000 to get $100,000 worth of bonds; if the bonds advance a point—as they often do shortly after issue—the free rider can sell at a profit of $1,000. The danger is that the bonds also can go down. Last week the Government bond market suffered its worst...