HEARINGS BEFORE THE COMMITTEE ON BANKING AND CURRENCY UNITED STATES SENATE SEVENTY-THIRD CONGRESS SECOND SESSION ON S.Res. 84 (72d CONGRESS) À RESOLUTION TO INVESTIGATE PRACTICES OF STOCK AND S.Res. 56 and S.Res. 97 (73d CONGRESS) RESOLUTIONS TO INVESTIGATE THE MATTER OF BANKING OPERATIONS AND PRACTICES, TRANSACTIONS RELATING TO ANY SALE, EXCHANGE, PURCHASE, ACQUISITION, BORROWING, LENDING, FINANCING, ISSUING, DISTRIBUTING, OR OTHER DISPOSITION OF, OR DEALING IN, SECURITIES OR CREDIT BY ANY PERSON OR FIRM, PARTNERSHIP, COMPANY, ASSOCIATION, CORPORATION, OR OTHER ENTITY, WITH A VIEW TO RECOMMENDING NECESSARY LEGISLATION, UNDER THE TAXING POWER OR OTHER FEDERAL POWERS PART 16 National Securities Exchange Act (continued) Printed for the use of the Committee on Banking and Currency CONTENTS Page Backus, Edward W., Minneapolis, Minn. 7645 Black, Eugene R., Hon., Governor of the Federal Reserve Board, Washington, D.C___ 7415 Butcher, Howard, Jr., president of the Philadelphia Stock Exchange, 7455 Chinlund, Edwin F., representing Controllers Institute of America, New 7491 Cotton, H. H., Los Angeles, Calif., representing the Investment Bank of Los Angeles_-_. 7413 Gibbons, George B., president George B. Gibbons & Co., Inc., municipal bond dealers, New York, N.Y_ 7441 7587 Healy, Robert E., chief counsel Federal Trade Commission, Washington, Redmond, Roland L., attorney for the New York Stock Exchange--- Smith, Tom K., Assistant to the Secretary of the Treasury, Washington, Thompson, Eugene E., president of the Associated Stock Exchanges, Untermeyer, Samuel, attorney at law, New York City-. 7539 7441 7470 7524 7703, 7731 7479, 7537 EXHIBITS Telegrams to Senator William Gibbs McAdoo--- 7411, 7412 Telegrams to Senator Phillips Lee Goldsborough_ 7413 7437 7437 Telegram to Mr. George B. Gibbons from Morris S. Tremaine, State comptroller__. 7445 Letter to Senator Hamilton F. Kean from Edward B. Smith & Co., 15 7467 Letter to Hon. Duncan U. Fletcher from Richard Whitney_. Memorandum concerning the power of Congress, under the commerce clause, to regulate security exchange_-. 7634 Letter to Duncan U. Fletcher from National Retail Dry Goods Association_ 7642 7646 7647 Document entitled " Supplementary List of Addresses Not Shown in Paper entitled "Curtiss-Wright Corporation, First Supplementary Re- Document entitled 'Wright Aeronautical Corporation Capital Stock, Document entitled "Aviation Corporation of Delaware, First Supple- Petition on behalf of the specialists of the New York Stock Exchange_. Petition on behalf of floor traders of the New York Stock Exchange.. Copy of Whitney substitute stock exchange bill, draft no. 6--- Letter, Richard Whitney to Senator Phillips Lee Goldsborough. 1 Retained in the committee's files. (1) STOCK EXCHANGE PRACTICES FRIDAY, MARCH 23, 1934 UNITED STATES SENATE, COMMITTEE On Banking AND CURRENCY, Washington, D.C. The committee met at 10:30 a.m., pursuant to call of the chairman Following adjournment on Friday, March 16, 1934, in room 301 of the Senate Office Building, Senator Duncan U. Fletcher presiding. Present: Senators Fletcher (chairman), Bulkley, Gore, Costigan, McAdoo, Adams, Goldsborough, Townsend, Carey, Couzens, Steiwer, and Kean. Present also: Senator King, of Utah. Present also: Ferdinand Pecora, counsel to the committee; Julius Silver and David Saperstein, associate counsel to the committee; Frank J. Meehan, statistician to the committee; Roland L. Redmond, counsel to the New York Stock Exchange. The CHAIRMAN. The committee will come to order, please. Senator McADOO. Mr. Chairman, before you start the hearing may I present some telegrams received from California in regard to the bill now under consideration, and ask that they may be made a part of the record and returned to me? The CHAIRMAN. The committee reporter will make them a part of the record and return the original telegrams to you for your purposes. (The telegrams are as follows:) WILLIAM GIBBS MCADOO, LOS ANGELES, March 22, 1934. Senate Office Building, Washington, D.C.: Amended Fletcher-Rayburn bill is improvement over the original. Still think it ambiguously worded and little thought given to margin provisions which ahe inflexible and unworkable and places all stocks in same category regardless of earnings, dividends record, and market history. Present bill continues to vest potential power in Federal Trade Commission to control and dominate industry and business which is fundamentally un-American. Sections relating to odd-lot dealers, specialists, and segregating functions of broker and dealer poorly worded, and present wording would destroy functions of stock exchanges and hinder marketability of odd lots of stock held by small investors, who comprise the majority of investors. Bill so technical only you in Washington can comprehend. Public continues to be misled in the belief that only excessive speculation and brokers affected. You must know this is not the case; on the contrary, think bill in present form would be extremely deflationary. FREDERICK A. SPEIK, |