HEARINGS BEFORE THE COMMITTEE ON BANKING AND CURRENCY SEVENTY-THIRD CONGRESS A RESOLUTION TO SECOND SESSION ON S.Res. 84 (72d CONGRESS) INVESTIGATE PRACTICES OF STOCK EXCHANGES WITH RESPECT TO THE BUYING AND AND S.Res. 56 and S.Res. 97 (73d CONGRESS) RESOLUTIONS TO INVESTIGATE THE MATTER OF BANKING PART 17 AVIATION STOCKS, APRIL 18, 1934 AND ANSWERS TO QUESTIONNAIRE, MAY 1, 1934 Printed for the use of the Committee on Banking and Currency STOCK EXCHANGE PRACTICES WEDNESDAY, APRIL 18, 1934 UNITED STATES SENATE, COMMITTEE ON BANKING AND CURRENCY, Washington, D.C. The committee met at 10:30 a.m., following adjournment on Thursday, April 5, 1934, in room 301 of the Senate Office Building, Senator Duncan U. Fletcher (chairman) presiding. Present: Senators Fletcher (chairman), Glass, Wagner, Barkley, Bulkley, Gore, Byrnes, Bankhead, Adams, Goldsborough, Townsend, Walcott, Couzens, Steiwer, and Kean. Present also: Ferdinand Pecora, counsel to the committee; Julius Silver and David Saperstein, associate counsel to the committee; and Frank J. Meehan, chief statistician to the committee. The CHAIRMAN. The committee will come to order, please. Before proceeding with our executive session I will say that Mr. Pecora is ready to make some report in connection with the aviation stocks. He will now make a statement about that and we will let the material go into the record to be printed. Mr. PECORA. In regard to the trading in certain aviation companies' stocks on the New York Stock Exchange, December 1, 1933, to February 9, 1934, we have reviewed the exchange's reports of transactions in the nine aircraft stocks covered by the Senate committee's resolution, to ascertain, primarily, whether or not there was extensive "short" selling of those stocks prior to formal announcement of cancelation of the air-mail contracts. The reports submitted to us by the exchange would be of assistance in enabling us to ascertain whether any sales were made by persons who may have had advance information that the contracts would be canceled, only in so far as the reports show individuals, et cetera, who sold large blocks of shares. Interrogation of the sellers of the stocks would be necessary to ascertain, for the record, just why they sold stock during this period. The stocks under review were: Aviation Corporation, Inc. (Delaware), common stock. Curtiss-Wright Corporation, class A stock. Curtiss-Wright Corporation, common stock. National Aviation Corporation, capital stock. North American Aviation, Inc., capital stock. United Aircraft & Transport Corporation, common stock. Wright Aeronautical Corporation, capital stock. "Odd-lot" transactions-that is, purchases and sales of less than 100 shares-were not required to be reported; however, the unit of |