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MONEY TRUST INVESTIGATION
INVESTIGATION
OF
FINANCIAL AND MONETARY CONDITIONS
IN THE UNITED STATES
UNDER
HOUSE RESOLUTIONS NOS. 429 AND 504
BEFORE THE
SUBCOMMITTEE OF THE COMMITTEE ON
BANKING AND CURRENCY
PART 6
WASHINGTON
GOVERNMENT PRINTING OFFICE
1913
SUBCOMMITTEE OP THE COMMITTEE ON BANKING AND CURRENCY,
HOUSE OF REPRESENTATIVES.
ARSANE P. PUJO, Louisiana, Chairman.
WILLIAM G. BROWN, West Virginia.
GEORGE A. NEELEY, Kansas.
ROBERT L. DOUGHTON, North Carolina.
HENRY McMORRAN, Michigan.
HUBERT D. STEPHENS, Mississippi. •
EVERIS A. HAYES, California.
JAMES A. DAUGHERTY, Missouri.
FRANK E. GUERNSEY, Maine.
JAMES F. BYRNES, South Carolina.
WILLIAM H. HEALD, Delaware.
R. W. FONTENOT, Clerk.
A. M. MCDEBMOTT, Assistant
n
Clerk.
MONEY TRUST INVESTIGATION.
SUBCOMMITTEE OF THE
COMMITTEE ON BANKING AND CUBRENCY,
HOUSE OF REPRESENTATIVES,
New York, N. T., Thursday, June 13,1912.
The subcommittee met at 11.15 o'clock a. m. in room 328, Customhouse Building.
Present: Messrs. Pujo (chairman), Brown, Stephens, Daugherty,
Byrnes, Neeley, Guernsey, and Heald.
Present also: Samuel Untermyer, Esq., of New York, N. Y., and
Edgar H. Farrar, Esq., of New Orleans, La., counsel for the subcommittee.
TESTIMONY OF ME. JAMES B. MABON—Continued.
Mr. UNTEEMTEH. Will you be good enough to describe the method
of the exchange—its machinery—as to the listing of bonds and securities other than stocks ?
Mr. MABON. The method is for an application to be made to the
stock list committee, Mr. Martin, may I have those requirements ?
Mr. UNTERMYER. I would like, if you please, to have the printed
list of requirements as to the bond listing and the debenture listing
and note listing.
Mr. MABON. I have them here, yes.
Mr. UNTERMYER. Please produce the printed list of requirements.
The witness produced the paper requested, which was offered in
evidence by Mr. Untermyer, and marked "Exhibit 30£, June 13
1912," and is here printed in the record, as follows:
EXHIBIT NO. 30J, JUNE 13,
1912.
COMMITTEE ON STOCK LIST,
New York Stock Exchange, March 2, 1998.
This committee will meet every Monday at 3.30 p. m. in the room of the
committee.
An application signed by an executive officer of a corporation must be fil^d
with the secretary of the exchange, and on notice from him six additional
printed or typewritten copies must be filed on or before the Wednesday prior
to date set for its consideration.
Every application must be accompanied by a check for $50 for each $1,000,000
or portion thereof of the par value of each class of security. Check should be
drawn to the order of " Treasurer of the New York Stock Exchange," and will
immediately become the property of the exchange.
413
414
MONEY TRUST INVESTIGATION.
KEliCIHtMEXTS FOB ORIGINAL LISTINGS.
RA1LEOAD CORPORATIONS.
Application for an original listing of the securities of a railroad company
shall recite the title of the company, date of organization and authority for
same, amount of authorized capital stock and amount issued, par value, rate of
dividend; voting power: if full or partly paid; if personal liability attaches to
ownership; if preferred stock is authorized whether cumulative or noncumulative, and nature of preference as to dividend, voting power, and distribution
of assets: location and route of road; description of property and total mileage
in operation; contemplated extensions: total equipment; amount of mortgage
lien, date of maturity, and rate of interest; amount of other indebtedness or
liability, jointly or severally, for leases, guarantees, rentals, and car trusts, and
terms of payment thereof; distribution of securities; disposition of proceeds
of sale; name and location of transfer agent and registrar; address of main
office of company, list of officers and directors {classified), date of annual meeting, end of fiscal year; agreement with the exchange to publish annual reports,
to maintain a transfer office in New York City, and to give at least 10 days'
notice in advance of the closing of the books for any purpose.
BONDS.
Application must recite the full title of the bonds, denominations, amounts of
authorized and outstanding issue, date and maturity; amount applied for and
numbers, with a full description of the bonds, names of trustees, rate of interest, when and where payable; whether the bonds are subject to redemption by
sinking fund or otherwise; terms of exchange or convertibility, if any, into
other securities; whether issued in coupon or registered form, or both, and if
the latter, whether they are interchangeable; if coupon bonds only are issued,
whether they have privilege of registration as to principal; purposes of issue
and disposition of proceeds; terms of issue of additional amounts as provided
for in the mortgage or trust deed. Special clauses in the mortgage reciting
terms of issue and redemption, and restrictions or limitations of unusual
character should be outlined.
A tabulated statement must be furnished with the list of properties owned,
acquired, and operated by the company, showing those covered by the mortgage
or other indenture under which the bonds are issued; those covered by prior
liens; bonded indebtedness of acquired or operated companies with details;
whether such companies are owned in fee or by ownership of bonds and stocks,
and the amount of such bonds and stocks owned, authorized, and Issued; also
certified copy of action of stockholders and directors authorizing the reservation
of stock equal to amount of convertible bonds.
Opinion of counsel should approximate the following form:
" We have examined the mortgage, dated
,
, made by the
Company to the
Trust Company of
as trustee, to secure an issue
of
— bonds of said company to an amount uot to exceed $
. We are
of opinion that the actions of the directors and stockholders in respect to this
mortgage were in conformity with the laws of the State of
and are iu
accordance with the laws of all States in which the property <?o mortgaged is
situated, and that the mortgage and bonds therein referred to are in all respects
valid and binding obligations of said company."
When bonds are intended to replace one or more prior issues, the comnuttee
will require evidence of the satisfaction of prior liens.
A copy of the mortgage must be furnished with a copy of certificate from the
county clerk in each county in which the mortgaged property is located that
the mortgage has been recorded in such county. Should the laws of the State
not require a record to be made in the several counties, a copy of certificate of
the secretary of the State, showing the legal record, shall be filed. This copy
of the mortgage must be certified by the trustee to be a true copy.
When a trust indenture provides that bonds may be issued in coupon and
registered form, each registered bond issued thereunder shall declare that it is
issued in lieu of, or in exchange for, coupon bonds whose numbers are distinctly
stated in, or are indorsed upon, said registered bond, and that said numbered
coupon bonds are not contemporaneously issued and outstanding.
When any coupon bond or bonds shall be surrendered in exchange for registered bonds, there shall be issued a like amount of registered bonds bearing
MONEY TBUST INVESTIGATION.
415
statement therein, or indorsed thereon, of the serial number or numbers borne
by the coupon bonds so surrendered for exchange/which coupon bonds shall be
immediately canceled by the trustee.
In each case of transfer of a registered bond, the bond Issued because of such
transfer shall have recorded therein, or indorsed thereon, the same serial numbers of coupon bonds as are recited in the surrendered bond as being specially
reserved Tor said surrendered bond.
In any exchange of registered bonds for coupon bonds, the numbers of the
coupon bonds so issued shall correspond with those stated in the surrendered
registered bond.
PAPERS TO BE FILED WITH APPLICATIONS.
For listing stocks:
Seven copies of the charter or articles of Incorporation, one copy to be
attested by the secretary of state in which the company Is incorporated.
Seven copies of by-laws, one copy to be attested by secretary of company.
Seven copies of leases and special agreements, one copy of each to be attested
by the secretary of the company.
Seven copies of income account, covering at least one year of actual operation of the company, and seven copies of the balance sheet at the end of said
year, one copy of each to be certified by an authorized public accountant or
the auditor of the company.
One copy of resolutions of stockholders authorizing issue, and of the action of
the directors thereunder, attested by secretary of the company.
Opinion of counsel as to legality of authorization and issue of securities.
Certificate of registrar as to amount of securities registered at date of application.
Certified copy of agreement to publish annual reports, to maintain a transfer
office in New York City, and to give at least 10 days' notice in advance of the
closing of the books for any purpose.
Report of a duly qualified civil engineer covering the actual physical condition
ut the property as of recent date.
Map of the road and contemplated extensions.
Full set of specimens of securities of the company.
In addition to the foregoing, for listing bonds:
Six additional copies of the mortgage or trust deed.
Opinion of counsel shall cover (a) as to organization, (6) as to validity of
issue, (c) as to real estate in fee.
Trustees' certificate shall cover (a) as to acceptance, (6) as to issuance
under the terms of the mortgage, (c) as to securities held, (d) as to cancellation or cremation of underlying and unissued securities, prior liens, etc.
CORPORATIONS OTHEB THAN BAILBOADS.
Application for an original listing of securities of corporations other than
railroads must recite the title of the company, date of organization and
authority for same; amount of authorized capital stock and amount issued,
par value, rate of dividend; voting power; if full or partially paid; if personal
liability attaches to ownership; • if preferred stock is authorized, nature of
preference as to dividends, whether cumulative or noncumulative, voting power
and distribution of assets: whether an original organization or a consolidation
of several previously existing firms or corporations; if a consolidation, a concise
history of its organization, and the names and locations of constituent companies ; whether the constituent companies are owned in fee or otherwise, and
amounts of authorized, issued, and owned stocks of same; a full description of
the property, real, personal, and leased: if real estate is owned in fee, the
acreage thereof and the character of buildings thereon: nature and character of
product: business proposed to be transacted; duration of charter and charters
of subsidiary companies; statement of special rights and privileges conveyed
to the company under its charter or to its directors under the by-laws; agreement with the exchange by which the company binds itself to the following;
That it will not dispose of its interest in any constituent company or allow
any of said companies to dispose of its interests in other companies, except on
direct authorization of stockholders.
That it will not speculate in its own or constituent companies' securities or
permit similar speculations by any of its constituent companies.
416
MONEY TBUST INVESTIGATION.
That It will publish at least once in each year and submit to the stockholders,
at the annual meeting of the company, a detailed statement of its physical and
financial condition, an income account covering the previous fiscal year, and a
balance sheet showing assets and liabilities at the end of the year; also income
account and balance sheet of any subsidiary company.
Papers properly attested, as set forth in list to be filed with applications of
railroad companies, must also be filed.
REORGANIZED CORPORATIONS.
Application to list securities of a corporation which has been insolvent or has
been reorganized must contain a concise history of the corporation and of its
predecessor, together with a statement of the reason for ita reorganization;
history of proceedings if property was sold under foreclosure; amount and
description of all securities which have been authorized and issued by the new
company; amount of those issued in lieu of, or exchanged for, any of the preceding issues; purposes and terms in detail under which additional securities
of the reorganized company may be issued; amount and description of the
various securities which have been retired, canceled, deposited, or otherwise
held, or are still outstanding.
The following papers must be filed, in addition to those previously referred to:
Certified copies of legal proceedings and order of court confirming sale.
Income account of the predecessor company for a period of at least one year
prior to reorganization, and final balance sheet; also a balance sheet of the new
company at date of reorganization, all of which shall be certified by an authorized public accountant or the auditor of the company.
Opinion of counsel that the proceedings have been in conformity with legal
requirements, that the title to the property is vested in the new corporation,
and is free and clear from all liens and incumbrances, except as distinctly
specified.
Certificate of cancellation, deposit, or holding of prior issues.
•Certified copies of new mortgages or deeds of trust
ADDITIONAL AMOUNTS OF LISTED SEOUBITIES.
State amount and character of such additional issues, public distribution, and
disposition of proceeds of sale; amounts covered by prior applications for listing
to which reference should be made by giving numbers and dates of appiicaticns;
amount, description, and disposition of securities exchanged for new issues;
describe additional property acquired and its present physical condition; file
attested copies of resolutions of stockholders and action of directors as to issuance of the additional securities, and opinion of counsel as to validity of issue;
if authorized capital stock is increased, a certificate of such increase from the
secretary of state; certified copies of income account and balance sheet of recent
date.
The registrar shall not register any additional stock until notified by the
committee that such stock has been duly listed.
Thirty days' notice of any proposed increase of capital stock of a corporation
shall be given to the exchange before such increase will be eligible for listing.
When the capital stock of a corporation is increased through conversion of
convertible bonds, already listed, the issuing corporation shall give immediate
notice to the exchange, and this committee may thereupon authorize the registration of such shares and add them to the list.
The governing committee may suspend dealings in the securities of any corporation previously admitted to quotation upon the exchange, or it may summarily remove any security from the list.
TRUSTEES OF MORTGAGES.
The committee recommends that a trust company or other corporation be
appointed trustee of each mortgage or trust deed; when a State law requires
the appointment of a local individual trustee, that a trust company or other
corporation be appointed as cotrustee.
The committee will not approve of an officer of an applicant corporation as a
trustee of securities issued by it, nor will it regard such ofllcer or director as
qualified to give opinion as counsel on any legal question affecting the corporation.
MONEY TBUST INVESTIGATION.
417
In all cases where two or more liens hare been placed upon the same real
property of a corporation, each lien must be represented by a trustee or trustees
entirely separate and distinct from those to whom any other liens upon the
same real property, either in art or in entirety, have been intrusted.
The trustee must present a certificate acknowledging the acceptance Of the
trust and giving the numbers and amount of bonds executed in accordance with
the terms of the mortgage; if the trust deed requires the deposit of collateral
as security for the mortgage, the trustee shall certify to the deposit of such
collateral, specifying it in detail. In the matter of additional issues of bonds
the trustee must certify that such increase has been made in conformity with
the terms of the trust deed, and that the lien of the mortgage has been duly
recorded against any new property acquired, or that the required additional
collateral has been duly deposited.
TBAHSFEB AND BEGISTBY.
A corporation is required to maintain a transfer agency and a registry office
in the city of New York, Borough of Manhattan. Both the transfer agency and
the registrar must be acceptable to the committee on stock list; the registrar
must file with the secretary of the exchange an agreement to comply with the
requirements of the exchange ir regard to registration.
A trust company or other agency or individual shall not at one and the same
time act as transfer agent and registrar of a corporation.
When a company has its stock transferred at its own office, a transfer agent
or transfer clerk shall be appointed by authority of the board of directors to
countersign certificates, who shall be an individual other than an officer authorized by the by-laws of the company to sign certificates of stock.
The entire amount of the capital stock of a corporation listed upon the
exchange must be directly transferable at the transfer office of the company in
the city of New York.
When a corporation also makes transfer of its shares in other cities, the
certificates issued therefrom shall be interchangeable and be identical in form
and color with the New York certificates, except as to the names of the transfer
agent and the registrar.
Certifications of registry shall provide for the signature of an executive officer of the corporation acting as registrar, i. e., an officer having general powers
to sign for the corporation.
A change in the form of certificate, or of the transfer agency, or the registrar,
or of the trustee of bonds, shall not be made without the approval of this
committee.
ENGBAVED CERTIFICATES REQUIRED.
Every bond, coupon, or certificate of stock must be printed from steel plates
which have been engraved in the best manner and which have such varieties
of work as will afford the greatest security against counterfeiting.
For each document or instrument there must be at least two steel plates,
viz, a face plate containing the vignettes and lettering of the descriptive or
promissory portion of the document, which should be printed in black or in
black mixed with color; also a tint plate, from which should be made a printing in .in antiphotographie color, so arranged as to underlie important portions
of the face printing.
These two printings must be so made upon the paper that the combined
effect of the whole, if photographed, would be a confused mass of lines and
forms, and so give as effectual security as possible against counterfeiting by
any scientific or other process. The imprint of each denomination of bonds
must be of such distinctive appearance and color as to make it readily distinguishable from other denominations and issues. It is required for each class
of stock Issued that there shall be a distinctively engraved plate for 100 shares,
with said denomination engraved thereon in words and figures; for certificates
issued for smaller amounts there shall be a similar plate, distinctive in design
and color, for each issue; there shall be engraved thereon some device whereby
the exact denomination of the certificate may be distinctly designated, also
conspicuously the words " Certificate for less than 100 shares."
It is recommended that the terms of redemption by sinking fund or otherwise, and of conversion into other forms of securities, be shown in the text of
bonds; also that the terms of preference or other privilege in the Issues of
stocks be stated on the face of the certificates.
418
MONEY TRUST INVESTIGATION.
All certificates should bear upon their face the following:
" This certificate is not valid until countersigned by the transfer agent and
the registrar."
It is required that a specimen of each issue of stocks or bonds shall be referred to the committee for acceptance as to form, character, and workmanship, prior to application for their listing; no form of stock certificate or bond
will be accepted unless it has been engraved by some bank-note engraving
company whose work this committee has been authorized by the governing committee to pass upon.
The name of the engraving company must appear upon the face of each bond
and certificate of stock and also upon the face of each coupon and the title
panel of the bond.
The committee will object to any security upon which an impress is made by
a stamp.
A power of attorney Indorsed upon a certificate of stock must be irrevocable
with a bill of sale and power of substitution. The following form is suggested:
" For value received
hereby sell, assign, and transfer unto
shares of the capital stock represented by the within certificate ind do
hereby irrevocably constitute and appoint
attorney to transfer
the said stock on the books of the within named company with full power of
substitution in the premises.
" Dated
, 19—.
" In presence of—
it
it
CERTIFICATES OF DEPOSIT I N TBTTST.
Institutions, firms, or corporations, depositaries of securities under plans of
reorganization, protective or associate action, are requested to accept on deposit
only such securities as are a delivery in the exchange; provided, that in any
case where said depositaries find it necessary to accept securities which are not
a delivery, they shall issue therefor a distinctive certificate which will indicate
the irregularity. Agreements for deposit of securities for protective or associate action must be limited to a specified time for continuance, within which a
plan of reorganization or adjustment will be presented to the certificate holders
for acceptance, or in default thereof such holders will be granted opportunity
to withdraw the securities represented by their certificates and terminate their
agreement. Penalty for delay in depositing securities under any agreement
should not be imposed until all holders of such securities have bad reasonable
opportunity for depositing, after the listing of the certificates of deposit.
When bonds are deposited with institutions, firms, or corporations which are
depositaries under plans of reorganization, protective or associate action, certificates therefor will be considered as representing the deposit of coupon
bonds. Certificates issued for deposit of registered bonds or bonds not a delivery in the exchange must bear on their face evidence of such fact. Certificates
of deposit for securities, whether for reorganization, protective, or associate
action, or for voting trustees, must bear the countersignature of some institution as registrar, in same manner as certificates for stock.
ANNUAL BKPOBTS.
The exchange requires of all corporations whose securities are admitted to
the stock list that they shall print, publish, and distribute to stockholders, at
least 15 days prior to annual meetings, a full report of their operations during
the preceding fiscal year, complete and detailed statements of all income and
expenditures, and a balance sheet showing their financial condition at the close
of the given period. The exchange requests that stockholders of corporations
take such action as may be necessary to make this requirement effective.
WM. W. HEATON, Chairman.
GEORGE W. ELY, Secretary.
MONEY TRUST INVESTIGATION.
419
COMMITTEE ON STOCK LIST.
New York Stock Exchange, July 1, 1912.
This committee will meet on Mondays at 3.30 p. m.
An application signed by an executive officer of a corporation must be filed
with the secretary of the stock exchange, and on notice six additional printed
or typewritten copies must be filed on or before the Wednesday prior to date
set for consideration.
Every application must be accompanied by a check for $50 for each $1,000,000
or portion thereof of the par value of each class of security. Checks should
be drawn to the order of " Treasurer of the New York Stock Exchange."
REQUIBEMENTS TOB OBIGINAL LISTINGS.
EAILBOAD CORPOBATIONS.
Application for an original listing of the capital stock of railroad corporations shall recite the title of the corporation, date of organization, and authority
for same; special rights or privileges under charter; amount of capital stock
authorized, issued, and applied for; par value; rate of dividend; voting power;
whether capital stock is full paid and nonassessable; whether personal liability attaches to ownership; whether preferred stock authorized, whether
cumulative or noncumulative; preference as to dividends nnd distribution of
assets; location and route of road; description of property and total mileage
in operation: contemplated extensions: total equipment: amount of mortgage
lien, amount of other indebtedness or liability, jointly or severally, for leases,
guarantees, rentals and car trusts, and terms of payment thereof; distribution
of securities; application of proceeds; income account for one year and balance
sheet of recent date; name and location of transfer agent nnd registrar; address of main office of corporation; list of officers and directors (classified);
date and place of annual meeting: end of fiscal year.
Application for bonds shall recite in addition the full title; denominations;
amount authorized, outstanding, applied for, with numbers, and authority for
issue: date ;;nd maturity; rates of interest, when and where payable: distribution : names of trustees; redemption by stating fund or otherwise: terms
of exchange or convertibility into other securities; whether issued only in
coupon form, registerable as to principal, or fully registered, or both, and if the
latter, whether interchangeable; purposes if issue and application of proceeds;
terms of issue of additional amounts; trustees' obligation to declare principal
and Interest due and payable in event of default, and restrictions or limitations
of unusual character: a tabulated list of properties owned, leased, and operated, showing those covered by the mortgage or other indenture under which
the bonds are issued: those covered by prior liens; indebtedness of leased companies or companies controlled by ownership of bonds and stocks, and the
amount of such bonds and stocks owned, authorized, issued, assumed, siuaranteed. or deposited as collateral.
If bonds are convertible into stock, file certified copy of the action of stockholders and directors authorizing issue and reservation of stock to be held
specifically for such conversion.
When bonds are issued to replace other liens, the committee will require
evidence of the satisfaction of such liens or a certificate of trustee that prior
lien bonds are held under the terms of the mortgage or indenture.
A copy of the mortgage or indenture must be furnished, including a certificate from the county clerk in each county in which the mortgaged property is
located, that the mortgage or indenture has been recorded in such county.
Should the laws of the State not require a record to be made in the several
counties, a copy of certificate of the secretary of the State, showing the legal
record, shall be filed with the copy of mortgage or indenture. This copy must
be certified by the trustee to be a true copy.
When a mortgage or indenture provides that bonds may be issued interchangeably in coupon and registered form, each registered bond issued thereunder shall bear a legend reciting the number or numbers of the coupon bond
or bonds reserved for exchange of such registered bond in substantially the
following form:
" The within bond is issued in lieu of or in exchange for (a coupon bond(s),
numbered
, for $1,000 (each, none of) which bond(s) is (not) conleinporaneously outstanding, and (a) coupon bond(s) bearing the said serial number (s) will be issued in exchange for this bond upon its surrender nnd cancellation."
420
MONEY TBTJST INVESTIGATION.
A registered bond not interchangeable shall bear the following:
" The within bond is issued in lien of or in exchange for (a) coupon bond(s),
numbered
. for $1,000 (each, none of) which bond(s) is (not) contemporaneously outstanding."
The committee recommends that when fully registered bonds are to be
issued, they shall be made interchangeable with coupon bonds.
When mortgages or indentures provide for the issuance of coupon bonds of
the denomination of $100 the committee recommends that any 10 such bonds
be exchangeable into coupon bonds for $1,000 each, and that each unit consisting of ten $100 bonds bear a number, together with an affix letter (A to J ) ,
representing a $1,000 bond reserved for exchange, and that each $100 bond
bear the following legend:
" For this bond and nine other bonds of the same denomination and serial
number, bearing affixed letters A to J, a coupon bond for $1,000 is held in reserve and is not contemporaneously outstanding, and on the surrender and
cancellation of ten $100 bonds of said series a coupon bond for $1,000 will be
issued in exchange therefor bearing the lowest serial number reserved for each
purpose."
When bonds are to be denominated in foreign moneys the committee recommends that the standard of value in United States gold coin be stated, and
that the text of all such bonds be in the English language, with the foreign
text in a parallel column. The English text shall govern the interpretation in
all such issues.
(For papers and agreements to be filed, see pp. 3 and 4.)
CORPORATIONS OTHEB T H A N RAILROADS.
Application for an original listing of securities of corporations other than
railroads shall recite the title of the corporation, date of organization and
authority for same; amount of capital stock authorized, issued, and applied
for; par value; rate of dividend; voting power; whether capital stock is full
paid and nonassessable; whether personal liability attaches to ownership;
whether preferred stock is authorized, whether cumulative or noncumulative;
preference as to dividends and distribution of assets, and redemption: whether
an original organization or a consolidation of several previously existing firms
or corporations; if a consolidation, a concise history of its organization, and
the names and locations of constituent companies owned in entirety or otherwise, and amounts of authorized, issued, and owned stocks of same; full description of the property, real, personal, and leased; real estate owned in fee,
acreage and location, and the character of buildings thereon; nature and character of product; business to be transacted: duration of charter and charters
of subsidiary companies; special rights and privileges conveyed to the corporation under its charter, or to directors under by-laws; income account for one
year and balance sheet of recent date; name and location of transfer agent and
registrar: address of main office of corporation: list of officers and directors
(classified) ; date and place of annual meeting; end of fiscal year.
For bond listings the requirements are substantially the same as for bonds of
railroad corporations, page 1.
(For papers and agreements to be filed, see pp. 3 and 4.)
MINING COEPOBATIONS.
Application to list securities of mining corporations shall recite details of
original organization and authorized capitalization; amount of shares outstanding, amount applied for, amount of shares remaining unissued, and options
or contracts on such shares: whether capital stock is full paid and nonassessible; par value; voting power; whether personal liability attaches to ownership;
whether preferred stock is authorized, whether cumulative or noncumulative;
preference as to dividends and distribution of assets and redemption; bonded
indebtedness, if any, with date of issue, maturity, and rate of interest; list
and numbers of patented and unpatented claims: full description of mineral
and other lands, leases, and water rights, smelting and concentrating plants,
timber and fuel supply, owned or controlled: a geological description of the
country in which the mines are located showing the character of the ore produced, the proper method of treatment, a description of the ore bodies, average
values, and probabilities on further exploration.
MONEY TEXJST INVESTIGATION.
421
A history of the property giving prior workings of mine, results obtained, and
production each year, with statement of receipts and expenditures, and disposition of income; location of mines and proximity to railway or other common carrier; cost of mining, transportation, milling, or smelting; balance sheet
showing assets and liabilities; if a mining development and an income account
not available, guarantee of an amount to complete development and afford
working capital; statement of ore reserves compared with reserves of previous years and an estimate by a competent mining expert of the probable life
of the mine: a balance sheet of all companies owned or controlled by stock
ownership or otherwise; name and location of transfer agent and registrar;
address of main office of corporation; list of officers and directors (classified);
date and place of annual meeting; end of fiscal year.
For bond listings the requirements are substantially the same as for bonds
of railroad corporations, page 1.
(For papers and agreements to be filed, see pp. 3 and 4.)
EEOEGANIZED COBPOKATIONS.
Application to list securities of a corporation, which has been insolvent, or
has been reorganized, shall recite a concise history of the corporation and of
its predecessor with a statement of the reason for its reorganization; history
of proceedings if property was sold under foreclosure; description and amount
of all securities authorized, issued, and applied for by the new corporation;
tabulated statement of securities issued in lieu of, or exchanged for any of the
preceding issues; purposes and terms in detail under which additional securities of the reorganized corporation may be issued; amount and description of
the various securities which have been retired, canceled, deposited, or otherwise held, or are still outstanding; income account of the predecessor corporation for a period of at least one year prior to reorganization and final balance
sheet; also a balance sheet of the new corporation at date of reorganization;
income account for one year and balnnce sheet of recent date; name and location.
of transfer agent and registrar; address of main office of corporation; list of
officers and directors (classified); date and place of annual meeting; end of
fiscal year.
(For papers and agreements to be filed, see pp. 3 and 4.)
CKRTIFICATES OF DEPOSIT I N TBTJ8T.
Institutions, firms, corporations, depositaries of securities under plans of
reorganization, protective or associate action or voting trusts, are requested to
accept on deposit only such securities as are a delivery on the stock exchange,
provided that in any case where said depositaries find it necessary to accept
securities which are not a delivery they shall issue therefor a distinctive certificate which will indicate the irregularity. Agreements for deposit of securities for protective or associate action must be limited to a specified time for
continuance, within which a plan of reorganization or adjustment will be presented to the certificate holders for acceptance, or in default thereof such holders will be granted opportunity to withdraw the securities represented by their
certificates and terminate their agreement. Penalty for delay in depositing
securities under any agreement should not be imposed until all holders of such
securities have had reasonable opportunity for depositing after the listing of
the certificates of deposit.
Certificates of deposit will be considered as representing the deposit of coupon,
registered, or interchangeable registered bonds. Certificates issued for deposit
of noninterchangeable registered bonds or bonds not a delivery on the stocfe
exchange must bear on their face evidence of such fact. Certificates of deposit
for securities, whether for reorganization, protective or associate action, or
for voting trusts, must bear the countersignature of some institution as registrar in same manner as certificates for stock.
(For papers and agreements to be filed, see pp. S and 4.)
ADDITIONAL AMOUNTS OF LISTED SECTTBITIES.
Application to list additional amounts of listed securities shall refer to
previous applications by number; state character and amount of additional
issues and amounts applied for; whether issued for cash, property, or otherwise; distribution; application of proceeds; amount, description, and disposi
422
MONEY TRUST INVESTIGATION.
tion of securities exchanged for new issues; additional property acquired and
present physical condition; furnish income account and bnlance sheet of recent
date; attested copy of resolutions of stockholders tiud action of directors as
to issuance of the additional securities, and opinion of counsel as to validity
of issue; trustee's certificate of issue of additional bonds under terms of the
mortgage or indenture; certificate from the secretary of state or other authority
for increase in capitalization.
Thirty days' notice of any proposed increase in the authorized capital stock
of a corporation shall be given to the stock exchange before such increase shall
be eligible for listing.
The registrar shall not register any listed stock until authorized by this
committee.
When the capital stock of a corporation is increased through conversion of
bonds already listed, the issuing corporation shall give immediate notice to the
stock exchange and this committee may thereupon add said stock to the lisi
and authorize its registration.
(For papers and agreements to be filed, see pp. 3 and 4.)
PAPERS TO BE FILED WITH APPLICATIONS.
For listing stocks:
Seven copies of the charter or articles of incorporation, one copy to be attested
by the secretary of state in which the corporation is incorporated.
Seven copies of by-laws, one copy to be attested by secretary of corporation.
Seven copies of leases and special agreements, one copy of each to be attested
by the secretary of the corporation.
One copy of resolution of stockholders authorizing issue :\nd of che action of
the directors thereunder, each attested by secretary of the corporations.
Opinion of counsel (not an officer or director of the corporation) as to legality
of authorization and issue of securities.
Certificate of proper authority for issue.
Certificate of registrar as to amount of securities registered at date of application.
Report of a duly qualified engineer covering the actual physical condition of
the property as of recent date.
Map of the property and contemplated extensions.
Specimens of all securities applied for.
In addition to the foregoing, for listing bonds;
Six additional copies of the mortgage or indenture.
Opinion of counsel shall cover (a) as to organization, (6) as to validity
of issue.
Trustees' certificate shall cover (a) as to acceptance. v6> as to issuance
under the terms of the mortgage or indenture with numbers and amount of
bonds issued, (c) as to securities held. (<J) as to cancellation or cremation or
deposit of underlying securities, prior liens, etc.
Also, with applications for reorganized corporations:
Certified copies of legal proceedings and order of court continuing sale, or
other authority for reorganization.
Certified copy of plan of reorganization.
Opinion of counsel that the proceedings have been in conformity with legal
requirements, that the title to the property is vested in the new corporation and
is free and clear from all liens and encumbrances, except as distinctly specified.
Certificate of cancellation, deposit, or holding of prior issues.
Certified copies of all mortgages or indentures.
AGREEMENTS.
Every corporation applying to list securities must agree—
That it will not dispose of its interest in any constituent company, or allow
any of said companies to dispose of its interests in other companies, except on
direct authorization of stockholders of the holding company.
To publish at least once in each year and submit to the stockholders, at least
15 days in advance of the annual meeti'ic of the corporation, a detailed statement of its physical and financial condition, an income account covering the
previous fiscal year, and a balance sheet showing assets and liabilities at the
end of the year; also naturally an income account and balance sheet of all subsidiary companies.
MONEY TRUST INVESTIGATION.
423
To maintain a transfer office or agency in the Borough of Manhattan, city of
New York, where all securities shall be directly transferable and the principal
of all securities with interest or dividends thereon shall be payable.
To give at least 10 days' notice in advance of the closing of the books or the
taking of a record of stockholders for any purpose. The committee recommends
that a date be fixed as record for dividends, allotment of rights, and stockholders" meetings without an extended closing of the transfer books.
To notify the srock exchange in the event of the issuance of any rights of
subscriptions to or allotments of its securities and afford the holders of listed
securities a proper period within which to record their interests, and that all
rights, subscriptions, or allotments shall be transferable, payable, and deliverable in the Borough of Manhattan, city of New York.
REMOVALS OB SUSPENSIONS IN DEALINGS OF LISTED SECURITIES.
Whenever it shall appear that the outstanding amount of any security listed
upon the stock exchange has become so reduced as to make inadvisable farther
dealings therein, this committee may direct that such security be taken from
the list and further dealings therein prohibited.
The governing committee may suspend dealings in the securities of any corporation previously admitted to quotation upon the exchange or may summarily
remove any security from the list.
TRUSTEES OF MORTGAGES.
The committee recommends that a trust company or other corporation be
appointed trustee of each mortgage or indenture, but when a State law requires
the appointment of a local individual as trustee that a trust company or other
corporation be appointed as cotrustee.
The committee will not accept as trustee for securities an officer or director
of the applying corporation, nor a corporation as a trustee in which an officer
of the applying corporation is an executive officer.
The committee will not accept the opinion of an officer or director of an applying corporation, nor of a firm in which the officer or director is a member,
as counsel on any legal question affecting the corporation; nor will it accept
the opinion of an officer or director of a guarantor corporation on any legal question affecting the issuance of guaranteed securities.
Each mortgage, indenture, or deed of trust made by a corporation or constituting a lien on property of the corporation should be represented by a separate trustee.
The trustee shall present a certificate accepting the trust giving the numbers
and amount of bonds executed in accordance with the terms of the mortgage or
indenture, and certifying that the lien has been recorded, that collateral has
been deposited, and that prior obligations, if any. have been canceled, when
required by the terms of the mortgage or indenture. The trustee holding
securities for which listed certificates of deposit are issued must notify the
stock exchange if the deposited securities are changed or removed for uuy
reason. For additional issues of bonds the trustee must certify that such
increase has been made in conformity with the terms of the mortgage or indenture; that the lien has been recorded against any new property acquired;
that the required additional collateral has been deposited: and that prior
obligations, if any. have been canceled when so required. The trustee shall
notify the stock exchange of the holding, cancellation, or retirement of bonds
by redemption IT through the operation of the sinking fund or by purchase.
TKANSFER AMD REGISTRY.
Every corporation is required to maintain a transfer agency and a registry
office in the Borough of Manhattan, city of New York. Both the transfer agency
and the registrar must be acceptable to this committee; the registrar must file
with the secretary of the stock exchange an agreement to comply with thf
requirements in regard to registration.
Certifications of registry must be dated and must bear the signature of n
duly authorized officer of the corporation acting as registrar.
424
MONEY TBUST INVESTIGATION.
The registrar shall not register any listed stock until authorized by this
committee.
A trust company or other agency shall not at the same time act as transfer
agent and registrar of a corporation.
When a company has its stock transferred at its own office a transfer agent
or transfer clerk shall be appointed by authority of the board of directors
to countersign certificates, and shall be an individual other than an officer
authorized by the by-laws of the company to sign certificates of stock.
The entire amount of the capital stock of a corporation listed upon the stock
exchange must be directly transferable at the transfer office of the corporation
in the borough of Manhattan, city of New York.
When a corporation makes transfer of its shares in other cities, the certificates issued therefrom shall be interchangeable and identical with the New
York certificates, except as to the names of the transfer agent and the registrar, and the combined amounts of stocks registered in all cities shall not
exceed the amount listed.
Interchangeable certificates must bear a legend indicating the right of transfer in New York and other cities.
A change in the form of certificate, of the transfer agency, of the registrar,
or of the trustee of bonds shall not be made without the approval of this
committee.
The committee recommends that the text of bonds and certificates of stock
shall provide for direct transfer without reference to the books of the corporation.
ENGRAVED CEBTITICATES
KEQUIBED.
Every bond, coupon, or certificate of stock must be printed from steel plates
which have been engraved in the best manner and which have such varieties of
work as will afford the greatest security against counterfeiting.
Certificates of deposit of trust companies, banks, or firms for securities deposited under reorganizations, voting trusts, or agreements for legal action
must be engraved and printed from steel plates with engraved border and
engraved underlying tint.
For each bond, coupon, certificate of stock, and certificate of deposit there
must be at least two stleel plates, viz, a face plate containing the vignettes and
lettering of the descriptive or promissory portion of the document, which should
be printed in black or in black mixed with a color, and a tint plate, from
which should be made a printing in color underlying important portions of the
face printing. The impressions from these two plates must be so made upon
the paper that the combined effect -of the whole if photographed would be a
confused mass of lines and forms, and so give as effectual security as possible
against counterfeiting by any process.
The imprint of each denomination of bonds must be of such distinctive appearance and color as to make it readily distinguishable from other denominations and issues. It is required for each class of stock issued that there shall be
a distinctively engraved plate for 100 shares with said denomination engraved
thereon in words and figures; for certificates issued for smaller amounts there
shall be a similar plate, distinctive in color, for each issue; there shall be
engraved thereon some device whereby the exact written denomination of the
certificate may be distinctly designated by perforation: also conspicuously the
words " Certificate for less than 100 shares."
The terms of redemption by sinking fund or otherwise and of conversion into
other forms of securities should be recited in the text of bonds.
Certificates of stock should recite ownership, par value, and whether shares
are full paid and nonassessable: terms of redemption, preference as to dividends,
voting power, or other privilege, including distribution of assets in the event
of dissolution of the corporation; certificates for common and preferred stock
each shall recite preferences of the preferred; also the following legend:
" This certificate Is not valid until countersigned by the transfer agent and
registered by the registrar."
A power of attorney upon the reverse of a certificate of stock must be irrevocable with a bill of sale and power of substitution. The following form is
required:
" For value received
hereby sell, assign, and transfer unto
,
shares of the capital stock represented by the within certificate,
and do hereby irrevocably constitute and appoint
attorney to
MONET TBDST INVESTIGATION.
425
transfer the said stock on the books of the within-named company, with full
power of substitution in the premises.
" Dated
, 19—.
" In presence of—
" NOTICE.—The signature to this assignment must correspond with the name
as written upon the face of the certificate in every particular without alteration
or enlargement or any change whatever."
This committee will object to any security upon which an impress is made by
a hand stamp, except for a date or power of substitution.
No stock certificate or bond will be accepted unless it has been engraved by
some engraving company whose work this committee has been authorized by the
governing committee to pass upon.
The name of the engraving company must appear upon the face of each bond
and certificate of stock and upon the face of each coupon and the title panel
of the bond.
WM. W. HEATON, Chairman.
GEOEGE W. ELY, Secretary.
Mr. UNTERMTEE. It is necessary for every corporation that wants
its bonds or other securities listed to submit to the exchange the
form of the security, is it not ?
Mr. MABON. It is; yes, sir.
Mr. UNTERMYER. Where the
issue of bonds is secured by mortgage, what is the custom and the requirement as to submitting the
entire mortgage and its text to the committee?
Mr. MABON. A certified copy is always required.
Mr. UNTERMYER. In practice, how does this operate? Are the
documents all submitted "before they are executed, so as to obtain the
approval of the exchange ?
Mr. MABON. Usually not; in fact, not at all. Copies of the mortgage are submitted as finally executed—certified copies.
Mr. UNTERMYER. DO you not know that if the mortgage as finally
executed contains any provisions that are objectionable to the exchange, the bonds are denied a listing?
Mr. MABON. That does not follow.
Mr. UNTEEMYER. What happens, then?
Mr. MABON. The committee on stock list makes a particular note
in the application form, showing the provisions of the mortgage.
If there is an unusual provision in the mortgage it is especially called
attention to in the listing.
Mr. UNTERMYER. Suppose there is an objectionable provision in
the mortgage; for instance, suppose it does not provide for the proper
trustee, or for the proper method of paying interest, or for the proper
transfer agent, or register, such as is designated by the exchange
rules, then what happens?
Mr. MABON. That matter has never come to the attention of the
committee. All the bond applications to list which have been made
always have the provisions that are required by the exchange.
Mr. UNTERMYER. YOU mean the corporation that wants its securities
listed sees to it that the requirements of the exchange are observed
in the preparation of those securities, and in their execution ?
Mr. MABON. It is usual for them to submit to the requirements of
the stock-list committee; yes, sir.
Mr. UNTERMYER. Where you are listing stocks, do you also require that the form of the certificate should be approved by the
committee ?
426
MONEY TBI7ST INVESTIGATION.
Mr. MABOX. Yes, sir.
Mr. UNTERMYER. In the
sale of large issues of bonds of these great
interstate corporations, the New York Stock Exchange listing is
considered valuable, if not essential, is it not \
Mr. MABON. By whom, sir?
Mr. UNTERIIYER. By the public; by the brokers and bankers who
buy and underwrite the securities, and by those who distribute them
among their customers.
Mr. MABOX. I could not answer that question. There are large
issues of bonds that are not listed on the exchange.
Mr. UXTERMYER. Will you name any large issue of interstate
bonds of any prominent corporation in the last five years that is
not listed on the exchange?
Mr. MABOX. Erie bonds. Erie notes are not listed.
Mr. UXTERMYER. What issue of Erie notes is that which is not
listed?
Mr. MABOX. The recent issue of Erie notes.
Mr. UNTERMYER. When was it issued?
Mr. MABOX. I am not sure whether it was issued in 1910 or 1911.
Mr. UNTERMYER. HOW large an issue of notes was it?
Mr. MABON. My impression is it was about $10,000,000.
Mr. UXTERMYER. Short-term notes?
Mr. MABOX. I think they are for two years. That is my impression, but I am not sure.
Mr. UNTEBMYER. YOU know that all the other Erie notes and bonds
are listed, do you not?
Mr. MABON. I do not.
Mr. UNTERMYER. DO you know of any that are not ?
Mr. MABON. I do not.
Mr. UNTERMYER. Was any application made to list these
notes ?
two-year
Mr. MABON. NO.
Mr. UNTERMYER. YOU know, do you not? that where an obligation
is a short-term obligation, such as that, with only two years to run,
the usual rule as to the value of marketability would not apply to
such a security, do you not?
Mr. MABOX. I do not understand that question, Mr. Untermyer.
Mr.,UxTEKiiYER. The Erie two-year notes were taken by a few
bankers, were they not?
Mr. MABON. I do not know.
Mr. UNTERMYER. Were they not taken by one banking house ?
Mr. MABON. I do not know.
Mr. UNTERMYER. They have not been distributed, have they ?
Mr. MABON. I do not know anything about it.
Mr. UNTEEMYER. Can you name, in the entire list of bonds of interstate corporations, any great issue of bonds, ordinary-term bonds,
or notes, intended for general sale and circulation, that has not been
listed on the New York Stock Exchange ?
Mr. MABON. I have mentioned the Erie. I have not given the
matter any thought.
Mr. UNTERMYER. Can you name any other?
Mr. MABON. I think there has been a recent issue of St. Louis
Southwestern bonds which has not been listed on the stock exchange.
MONEY TEUST INVESTIGATION.
427
Mr. UNTEBMYEB. YOU think there has been?
Mr. MABON. Yes.
Mr. UNTEEMYEE. Are you
Mr. MABON. Yes.
Mr. UNTEBMYER. YOU are
bonds, are you not?
not a bond broker?
largely engaged in buying and selling
Mr. MABON. Yes.
Mr. UNTERMYEE.
But you do not know whether there has been
such an issue recently?
Mr. MABON. I am quite sure there has been, but I do not know of
my personal knowledge.
Mr. UNTEBMYER. HOW long ago?
Mr. MABON. I should say within six months.
Mr. UNTEEMYEE. YOU know that has not had time to be listed, do
you not?
Mr. MABON. NO ; I am asking
Mr. UNTERMYEE. I say, you know it has not had time ?
Mr. MABON. Yes.
Mr. UNTERMYEE. Then
why did you tell us it had not been listed,
when you knew it could not possibly be listed within that time ?
Mr. MABON. I do not know that it could not possibly have been
listed in that time?
Mr. UNTEBMYEE. DO not the bonds have to be engraved ?
Mr. MABON. The bonds are engraved.
Mr. UNTERMYER. DO they not have to be engraved ?
Mr. MABON. Yes.
Mr. UNTERMYER. And how many months does that take?
Mr. MABON. It depends on the size of the issue, I should say.
Mr. UNTERMYER. HOW big an issue was it?
Mr. MABON. I do not remember.
Mr. UNTERMYER. YOU know they are to be listed, do you not ?
Mr. MABON. I do not.
Mr. UNTERMYEE. DO you know whether any application has
been
made?
Mr. MABON. I do not. I imagine not.
Mr. UNTERMYER. I do not care much about your imagination.
Mr. MABON. I do not know.
Mr. UNTERMYEE. What did you say was the size of this issue?
Mr. MABON. I do not remember the size of the issue.
Mr. UNTERMYER. About how large was it? Was it publicly advertised ?
Mr. MABON. I think it was; yes, sir.
Mr. UNTERMYER. And you, a bond dealer and banker, do not know
how large an issue this was ?
Mr. MABON. I think it was about two to five million; I do not remember.
Mr. UNTERMYEE. YOU do not call that a large issue of bonds of an
interstate railroad corporation, do you?
Mr. MABON. Mr. Untermyer, I understood your question to be,
did I know of any bonds.
Mr. U>TEEMYEE. How many hundreds of millions of bonds, notes,
and like obligations of interstate corporations have been listed in the
last year in the New York Stock Exchange ?
G0241—I'T 6—12
2
428
MONEY TEUST INVESTIGATION.
Mr. MABON. A very large amount.
Mr. UNTERMYER. HOW many hundreds of millions?
Mr. MABON. I do not know.
Mr. UNTERMYER. Many hundreds of millions ?
Mr. MABON. I should say so; yes, sir.
Mr. UNTERMYEH. Those are the only two instances of which you
can tell us in which bonds have been listed?
Mr. MABON. I have no doubt there are many more.
Mr. UNTERMYER. YOU can not tell us of any more, can you ?
Mr. MABON. Not at the present time.
Mr. UNTERMYER. DO you not know that in selling these bonds—in
advertising their sale—the bankers, who have them for sale, advertise that application will be made to list them on the New York
Stock Exchange?
Mr. MABON. That is usual; yes.
Mr. UNTERMYER. And that is an element of value to the bond, is
it not?
Mr. MABON. I presume it is; yes, sir. I do not know, Mr. Untermyer, whether it is or not.
Mr. UNTERMYEH. YOU have bought many bonds, have you not ?
Mr. MABON. Yes.
Mr. UNTERMYER. And you have sold many bonds?
Mr. MABON.- Yes.
Mr. UNTERMYER. And you are doing it all the time, are you not?
Mr. MABON. Yes.
Mr. UNTERMYER. And you do not know whether it is regarded as
an element of value to a bond to have it listed on the New York Stock
Exchange ?
Mr. MABON. I presume it is an element of value, I say.
Mr. UNTERMYER. YOU know it is ?
Mr. MABON. There are so many conditions that might surround
a case of that kind that I can not answer a question of that kind.
Mr. UNTERMYER. If it is not an element of value, why do the banks
always advertise that as an inducement to the purchase of the
bonds?
Mr. MABON. I can not answer as to what is in the minds of the
bankers or banks.
Mr. UNTERMYER. DO you not advertise it that way ?
Mr. MABON. I do not advertise.
Mr. UNTERMYER. DO you not send out circulars when you have
an issue of bonds to sell, offering them for sale?
Mr. MABON. NO.
Mr. UNTERMYER. DO
you not send out any sort of an inducement
or suggestion that you have certain bonds for sale ?
Mr. MABON. Very rarely.
Mr. UNTERMYER. YOU do at times, do you not ?
Mr. MABON. I have done so.
Mr. UNTERMYER. When these bonds are listed on the stock exchange do you not say so?
Mr. MABON. Yes, sir.
Mr. UNTEBMYER. YOU
do that because you regard that as adding
to their value?
Mr. MABON. I do it as a matter of information.
MONEY TKUST INVESTIGATION.
429
Mr. UNTEBMYER. AS a matter of information for inducing people
to buy the bonds ?
Mr. MABON. That is not the purpose I have in mind.
Mr. UNTERMYER. When you send these circulars inviting people
to buy the bonds, do you not do it for the purpose of inducing them
to buy them?
Mr. MABON. Yes.
Mr. UNTEBMTER. And you put in such information as you believe
will induce their purchase, do you not?
Mr. MABON. I try to give them all the information regarding the
bonds.
Mr. UNTERMYER. YOU try to give them all the information that
will induce them to buy the bonds, do you not—truthful information ?
Mr. MABON. Yes.
Mr. UNTERMYER.
Who is it in the stock exchange who reads over
these voluminous corporation mortgages given to secure issues of
bonds and notes?
Mr. MABON. The members of the stock-list committee.
Mr. UNTERMYER. They do it personally, do they, or through the
secretary ?
Mr. MABON. They do it personally.
Mr. UNTERMYER. Does the secretary have any relations with that
part of the business?
Mr. MABON. We have a special clerk who has charge of that part
of the business.
Mr. UNTEKMYER. Then he first goes over these documents, does he?
Mr. MABON. Yes.
Mr. UNTEBMYEB.
And then he reports them to the stock-list committee ?
Mr. MABON. He sends to the various members of the stock-list
committee copies of the mortgages, of the application and all the
papers relating to the application. There are usually seven copies
of each paper that is presented to the committee.
Mr. UNTERMYEB. DO you know of any instance in the history of
the exchange when any of the great interstate corporations that have
made large bond and note issues, secured by mortgage, have declined
to comply with the conditions imposed by the exchange on listing
their securities?
Mr. MABON. Within my own knowledge, you mean?
Mr. UNTERMYEK. Within your personal knowledge. You have
been all these years on the stock-list committee.
Mr. MABON. Eight years. I know of none; no. I do not remember any.
Mr. UNTERMYER. Mr. Chairman, I would like, if I may, to withdraw Mr. Mabon temporarily. I asked Mr. Cortelyou to come here,
and he has arrived. I promised him that he might get away soon.
He has come without subpoena.
The CHAIEMAN. Very well.
Mr. Mahon temporarily left the witness stand.
430
MONEY TBUST INVESTIGATION.
TESTIMONY OF GEORGE B. COBTELYOTJ.
Mr. Cortelyou was sworn by the chairman.
Mr. TJNTEBMYER. YOU reside in the city of New York, Mr. Cortelyou ?
Mr. CORTELYOU. I do;
sir.
Mr. UNTEHMTEB. What is your present occupation?
Mr. CORTELYOU. I am president of the Consolidated Gas. Co. of
New York.
Mr. UXTERMYER. Are you connected with any financial institutions
in the city ?
Mr. CORTELYOU. I am not.
Mr. UNTERMYEH. YOU are not an officer in any of them ?
Mr. COETELYOU. No, sir.
Mr. UXTERMYER. Or in any life insurance companies?
Mr. CORTELYOU. NO, sir.
Mr. UNTERMYEB. YOU were formerly a member of
Eoosevelt's Cabinet, were you not?
President
Mr. CORTELYOU. I was.
Mr. UNTEBMYEE. In what positions ?
Mr. COETELYOU. In the positions of Secretary of Commerce and
Labor. Postmaster General, and Secretary of the Treasury.
Mr. UXTERMYER. In what years were you Secretary of the Treasury of the United States?
Mr. CORTELYOU. From about March 5, 1907, until March 18, 1909.
Mr. UXTERMYER. Have you a very active recollection of the events
connected with the panic of 1907 ?
Mr. CORTELYOU. I think I have a normal recollection of things that
happened five years ago.
Mr. UNTEEMYER. Have you a particularly active recollection of
events of that time—of the panic of 1907 ?
Mr. CORTELYOU. I would have to sav that I have. Many of the
events of that time were indelibly fixed in my mind.
Mr. UXTERMYER. They were very exciting and very unusual?
Mr. CORTELYOU. They were.
Mr. UXTERMYER. DO you remember when the disturbance commenced ?
Mr. CORTELYOU. In a general way, in the latter part of October.
Mr. UNTEEMYER. In 1907?
Mr- COETELYOU. 1907.
Mr. USTERMYER. Did you come to New York in connection with
the financial troubles at "that time ?
Mr. CORTELYOU. I did.
Mr. UXTEEMYEB. Did you come in response to an invitation?
Mr. CORTELYOU. I did not.
Mr. UXTERMYER. When did you reach here?
Mr. CORTELYOU. I reached here, I think, on the evening of October
ber 22.
Mr. UNTEEMYEE. Where did you go to stop?
Mr. CORTELYOU. At the Hotel Manhattan.
Mr. UXTERMYER. Did you that evening have any conferences with
respect to the situation?
Mr. COETELYOU. I did.
Mr. UNTEBMYEE. Where?
MONEY TBUST INVESTIGATION.
431
Mr. COETELYOU. At that hotel.
Mr. UNTERMYER. With whom?
Mr. CORTELYOU. With a number of gentlemen; Mr. Morgan, Mr.
Stillman
Mr. UNTERMYER. Mr. James Stillman?
Mr. CORTELYOU. Mr. James Stillman; Mr. Hepburn, Mr. Cannon,
Mr. George F. Baker, Mr. Vanderlip, Mr. Perkins, and two or three
others whose names I do not recall.
Mr. UNTERMYER. Mr. Perkins was then a member of the firm of
J. P. Morgan & Co.?
Mr,. CORTELYOU. He
was.
Mr. UXTERMYER. Was this meeting by appointment?
Mr. CORTELYOU. When I reached Jersey City, as I recall it now,
Mr. Fish, who was then Assistant Treasurer in this city, and whom
I had either telephoned or wired to meet me upon my arrival at
Jersey City, advised me that a number of gentlemen wanted to get
into communication with me as soon as I reached the city, and
asked if I would be willing to meet them. I told him that I was
going to the Hotel Manhattan and that I should be there, of course,
all the evening and all that night, and that I would meet any gentlemen who wished to see me, there.
Mr. UNTERMYER. How did they know you were going to be in the
city?
Mr. CORTELYOU. It is a difficult matter, in a time of excitement,
for a member of the Cabinet to leave Washington for New York
and not have his movements known.
Mr. UNTERMYEB. If you do not remember how these gentlemen
knew you were to be here, be kind enough to say so, Mr. Cortelyou.
Mr. CORTELYOU. I have made a statement in answer to your question which fully answers it.
Mr. UNTERMYER. Had you notified them you were coming?
Mr. CORTELYOU. I had
not.
Mr. UNTERMYER. Had you notified your assistant to tell them you
were coming?
Mr. CORTELYOU. I had notified Mr. Fish that I was coming; not
to tell anybody I was coming, as far as I know.
Mr. UNTERMYER. And he was in New York?
Mr. COHTELTOU. He was Assistant Treasurer here.
Mr. UNTERMYER. You told him when you were coming and when
you would be here?
Mr. CORTELYOU. Naturally, if I expected him to meet me.
Mr. UNTERMYER. YOU had arranged to have him meet you on your
arrival, had you?
Mr. CORTELYOU. I suggested that I was to be here at a certain
time, and that I would like to see him, because I wanted to get some
first-hand information.
Mr. UNTERMYER. Had you been in communication with him as
to the situation?
Mr. CORTELYOU. Oh. yes; right along.
Mr. U>TTER3IYER. How long did that conference last that evening?
Mr. CORTELYOU. Several hours. I do not know just how long.
Mr. UNTERMYER, AS the result of it. did you agree to help out the
situation ?
432
MONEY TBUST INVESTIGATION.
Mr. CORTELYOU. I asked those gentlemen, first, to give me their
views individually on the situation. I wanted all the information
I could get. I then said what I had said before leaving Washington,
in a statement from the Treasury Department, that the department
would help in every proper and feasible way the general situation.
I repeated that to them when I talked with them at the hotel.
Mr. UNTERMYER. AS a result of that conference, did you agree or
consent to give any specific help in any specific form ?
Mr. CORTELYOU. Sot at that conference, I think. I think that was
a matter that was determined later.
Mr. UNTERMYER. Did you then arrange for a further conference?
Mr. CORTELYOU. I do not recall whether a further conference was
arranged or not.
Mr. UNTERMYER. Did you have a further conference ?
Mr. CORTELYOU. I think that depended entirely upon the developments of the next day.
Mr. UNTERMYER. Did you have a further conference the next day ?
Mr. CORTELYOU. We had several conferences; I do not recall at just
what time.
Mr. UNTERMYER. During the next day?
Mr. CORTELYOU. I think more likely the next evening; because during the day we were all busy downtown.
Mr. UNTERMYER. Then your present recollection is that on the day
of the 23d you had no conference with any of these gentlemen ?
Mr. COKTELYOU. I do not recall any. It would all be set forth in
the response that I made to the Senate resolution. I think every
little detail is set forth there very fully.
Mr. UNTERMYER. YOU do not now recall any conferences that you
had during the next day—the 23d of October ?
Mr. CORTELYOU. I do not recall anything that you could call a
conference, in the sense of a number of gentlemen seeing me at any
one time. I was in the office in the subtreasury there, and I saw anybody who came in.
Mr. UNTERMYER. Did you see Mr. Morgan the next day ?
Mr. CORTELYOU. I did not, so far as I recall. I may have seen
him, if you mean by the next day the next evening.
Mr. UNTERMYER. NO ; I mean the next day—before the evening.
Mr. CORTELYOU. I do not recall that I did. I do not recall about
that.
Mr. UNTERMYER. YOU had a conference the next evening, did you;
the evening of the 23d?
Mr. CORTELYOU. I think so; but I would have to refer to the record
in the case to know precisely. I am very sure we had a conference
every evening.
Mr. UNTERMYER. Was the conference the next evening also at the
Manhattan Hotel?
Mr. CORTELYOU. Yes, sir; the conferences in which I took part
were all at the Manhattan Hotel.
Mr. UNTERMYER. YOU had other talks, meantime, down at the Subtreasury, with some of the gentlemen that came along and discussed
the subject.
Mr. CORTELYOU. Yes; they came along with many hundreds of
others.
MONEY TBTJST INVESTIGATION.
433
Mr. UNTERMYER. Who was present at the conference on the evening of the 23d of October?
Mr. CORTELYOU. I do not recall, particularly. I imagine most of
the gentlemen who took part in the first conference, with some additions. I do not recall, particularly, who was there at that time.
Mr. UNTERMTER. Were you told, then, of the very panicky condition of the stock market, particularly, and that money was ruling
very high ?
Mr. CORTELYOU. I kept advised of that through my own agencies.
I was right at the Subtreasury all that day long.
Mr. UNTERMYER. What is your recollection as to the condition at
the close of the market that day ?
Mr. CORTELYOU. Just as you have described it—very unsettled and
panicky—a condition of extreme stringency.
Mr. UNTERMYER. DO you remember what the call rate for money
was at the close of that evening ?
Mr. CORTELYOTT. I do not know about that evening. My general
recollection is that call money finally went to something about 100,
or over; may be 120, or something like that. That was the information, as I recall.
Mr. UNTERMYER. Was all this discussed at the conference?
Mr. CORTELYOU. I can not say just what was discussed. I imagine
the more important features of the disturbance were discussed.
Mr. UNTERMYER. AS a result of that conference did you agree that
the Government should aid the situation ?
Mr. CORTELYOU. AS a result of the information obtained from that
meeting and from all other sources available to me, I felt that the
Government should lend whatever assistance it could.
Mr. UNTEHMYER. Yes. Did you then consent or agree to lend any
specific assistance?
Mr. CORTELYOU. I do not recall doing that at the conference, particularly; but after the conference had adjourned, I issued a statement in which I spoke of several features of the disturbance and concluded with the statement that, as an evidence of the Government's
determination to do everything in its power, it held itself ready to
deposit $25,000,000 in the'national banks of the city.
Mr. UNTERMYER. Had that been discussed at the meeting?
Mr. COHTELYOU. I do not know whether that particular figure had
been discussed, or what figure had been discussed. I think I outlined about the extent to which the Treasury Department could go
in the matter of help; and that I would go as far as I could.
Mr. UNTERMYER. Mr. Morgan was present with these other gentlement at this second interview, on the 23d of October?
Mr. CORTELYOU. I can not say positively whether he was or not.
I think he was.
Mr. UNTERMYER. I am speaking of the conference on the night
of the 23d.
Mr. CORTELYOTT. I understand.
Mr. UNTERMYER. Was there any discussion there as to the particular form in which this $25,000,000 should be used to assist the
situation ?
Mr.
CORTELYOU. NO, sir.
Mr. UNTERMYER. Was there anything said as to the banks in
which it should be deposited at that interview that night ?
434
MONEY TEUST INVESTIGATION.
Mr. CORTELYOU. I do not recall anything in particular, except
that, at the first conference, I had stated that I would not deposit
a dollar of the Treasury money except for the relief of the community generally, and for whatever relief it afforded the country.
Mr. UNTERMYER. What do you mean by the relief of the community generally? As distinguished from the relief of the stock
market ?
Mr. CORTELYOU. No: I do not differentiate the stock market from
the community generally. I think it is a very integral part of the
community.
Mr. UNTEHMYER. YOU think that to relieve the brokers who were
carrying margin stocks was just as important as to relieve the
stringency on the part of the commercial community ?
Mr. CORTELYOU. I do not undertake to answer that question particularly: but as to any relief afforded the commercial community.
I want to have go in the record here, as it is in the record already
submitted to Congress, that on the day I left Washington I deposited $6,000,000 in what are strictly commercial banks in this
city—$1,000,000 in each of six banks doing entirely a commercial
business.
Mr. UNTERMYER. That was on the 22d, was it ?
Mr. CORTELYOU. I think that was on the 22d.
Mr. UNTERMYER. What banks were they?
Mr. CORTELYOU. I do not recall particularly, except I think you
will find them in the record. I would not undertake to say from
memory.
Mr. UNTERMYER. Was the bank of Commerce one of them 1
Mr. CORTELYOU. I do not recall.
Mr. UNTERMYER. YOU do not recall any of them ?
Mr. CORTELYOU. It would be largely guesswork, because it was
done hurriedly before I left Washington, as I was taking the train.
I felt that the commercial banks here needed the first assistance that
could be given.
Mr. UNTEKMYER. Will you get that information for us from this
book, so that we can put it into the record here ?
Mr. COHTELYOU. Yes.
Mr. UNTERMYER (continuing).
Showing what banks were helped
ith $1,000,000 each?
Mr. CORTELYOU. I might possibly have to refer to the records of
the Treasury Department in order to do that. I think it is in there.
I think practically everything that occurred is in that book which
you have in your hand.
Mr. UNTERMYER. If it is, let me find it so that we may not have to
guess about it [handing book to witness].
Mr. CORTELYOU. It would be rather unfair to have to include two
or three of these banks and not include the others. I may have
difficulty in doing that.
Mr. UXTEHMYER. If it is not in that record, you could probobly
furnish it at the recess?
Mr. CORTELYOU. If it is not there I would be very glad to secure
it for you. [ftAer examining the book.] I do not find it here
in any statement issued, but it is probably in the statistical tables.
It would take a lot of time, however, to find it there. I shall be glad
to furnish it for you.
MONEY TBXJST INVESTIGATION.
435
Mr. UNTERMYER. We do not find it there, Mr. Cortelyou; but if
you will produce it and put it in the record, that is all we care about.
Mr. CORTELYOU. I will produce it if it is available, and I think
it is.
In line with what I have just testified in regard to the efforts of
purely commercial institutions
Mr. UNTERMYER. Mr. Cortelyou, we must ask you to answer our
questions, if you will do so. We were inquiring as to the events of
the evening of the 23d of October. I would like to know whether
there was anthing said at that conference as to the banks in which
this $25,000,000 was to be deposited?
Mr. CORTELYOU. I do not recall anything particularly said.
Mr. UNTERMYER. Was there anything generally said as to where it
was to go ?
Mr. CORTELYOU. It would naturally have to go, Mr. Untermyer, to
the national banks that could the most quickly put up proper
collateral.
Mr. UNTERMYER. That is not what I asked.
Mr. CORTELYOU. NO ; but that is the answer to the question.
Mr. UNTERMYER. Please read the question, Mr. Stenographer.
The reporter repeated the question as follows:
Was there anything generally said as to where it was to go?
Mr. CORTELYOTJ. I have already answered that I did not recall.
Mr. UNTERMYER. Was anything said by anybody as to the condition of the stock market, and if so, what was said ?
Mr. CORTELYOU. I do not recall anything said about the stock
market.
Mr. UNTERMYER. By anybody at that conference?
Mr. CORTELYOU. I do not recall a word; no.
Mr. UNTERMYER. There was no mention of the fact—no reference
to the fact—that call-money rates had closed around 100 per cent,
or 125 ?
Mr. CORTELYOU. Quite probably there was. I do not recall particularly about it. I would not recall it as being said at the conference, because I was informed through my own agencies as to just
what the conditions were.
Mr. UNTERMYER. But do you not recall whether that was the
subject of very earnest discussion there?
Mr. CORTELYOU. I do not recall it as being the subject of very
earnest discussion.
Mr. UNTEEMYER. Or any discussion?
Mr. CORTELYOU. I will not say that, because I do not recall particularly. It was a conference lasting several hours, a great variety
of topics were taken up. and I do not recall any particular emphasis
on any one feature.
Mr. UNTERMYER. DO you not recall any discussion as to what
would be the effect of there being no call money the next morning?
Mr. CORTELYOU. Quite probably that was discussed.
Mr. UNTERMYER. Have you no recollection about that?
Mr. CORTELYOU. I have no particular recollection of its occurring
in this conference, because I was virtually in conference with hundreds of people all day long.
436
MONEY TBUST INVESTIGATION.
Mr. UNTERMYER. Did you have any discussion with any of the
gentlemen who were at that conference during that day on the subject of the effect on the stock market of not getting any relief?
Mr. CORTELYOU. I may have done so.
Mr. UNTERMYER. DO you remember?
Mr. CORTELYOU. No: I will not say I remember, because I do not.
Mr. UNTERMYER. Then, as I understand, you can not give us the
substance of anything that took place that dav between you and
any of the gentlemen whom you have named, either during that day
or that evening, with respect to the effect on the stock market of
the failure to get relief ?
Mr. CORTELYOTJ. I have already stated that I saw a great many
people. I do not know how many hundred people saw me in the
Subtreasury; a great many people of prominence in the banking
business, though; and I could not attach to any one particular individual any particular bit of information, or any particular suggestion.
Mr. UNTERMYER. Read the question.
The stenographer repeated the question, as follows:
Then, as I understand, you can not give us the substance of anything that
took place that day between yon and any of the gentlemen whom you have
named, either during that day or that evening, with respect to the effect on
the stock market of the failure to get relief?
Mr. UNTERMYER. And the answer " No " ?
Mr. CORTELYOU. The answer is as I have already stated.
Mr. UNTERMYER. That is not quite an answer. Can you, or can
you not, give us the substance of any talk with anybody.that day,
of the gentlemen you have named, concerning the question of the
relief that the stock market needed?
Mr. CORTELYOU. Mr. Untermyer. there are many questions you will
ask here that can not properly, in justice to me. be answered by
"Yes" or "No."
You know perfectly well that there are many questions that can
not be answered by mere " Yes " or " No." I have a right to make
an explanation of my position, and I propose to exercise that right
here. [Applause.]
The CHAIRMAN. We will have order in the room, gentlemen. This
is not a theater.
Mr. Cortelyou, you have that right. The chairman is presiding
over the committee, and any matters submitted to him will be determined by the committee strictly according to the rules governing
congressional proceedings, applying legal rules in so far as they are
applicable. Your rights, and the rights of any witness, will be protected before this committee, whenever they may be infringed upon.
[Applause.]
Gentlemen. I request order. "We are a committee from the Congress of the United States, and you are citizens of this Government.
We are endeavoring to obtain facts. The gentlemen who are called
to this stand are men of high prominence and experience and ability,
and they can protect their rights without applause from the audience.
and if it occurs again I will will call upon the custodian of the
building to eject those who interfere with these proceedings.
MONEY TBTTST INVESTIGATION.
437
Mr. COHTELYOU. Mr. Chairman, in view of what you have said,
may I ask just one word ? I am very sorry that an innocent reply of
mine should be the cause of any embarrassment to the committee.
I already have had occasion, as Secretary of the Treasury, to make
extremely voluminous responses to the Senate and House touching,
I think, upon every phase of the Government's relation to the
financial disturbance of 1907. If I ask the privilege of occasionally
adding a word or two of explanation in answering a question, it is
with the sole desire of giving the committee the facts as I saw them.
The CHAIRMAN. Mr. Cortelyou, under the rules adopted by the
committee for the orderly and intelligent conduct of this inquiry,
we have determined that a witness must answer a question " Yes " or
" No"; or if he does not know, he can say so. Then, if he has an
explanation to make which is germane to the question, he has a right
to make that explanation. But he can not, under the guise of making
an explanation, diverge and go into collateral matters, and bring
up subjects that are not brought up for consideration.
Mr. CORTELYOU. May I ask, then, if the witness feels that in answer
to a question he can not answer " Yes " or " No " without doing himself an injustice he may state " I can not answer that by ' Yes' or
' No.'" and immediately proceed to explain ?
The CHAIRMAN. He may do so provided the explanation is germane
to the question.
Mr. CORTELYOU. I have no other consideration to ask, of course.
Mr. UNTERMYER. Mr. Cortelyou, there is no disposition to do anything except conduct this investigation on the lines that are recognized in congressional investigations; but we can not wander outside into all sorts of explanations. Let the question be read again,
The stenographer repeated the question, as follows:
Mr. TNTEBMYER. Can you or can you not give us the substance of any talk
with anybody that day, of the gentlemen you have named, concerning the
question of the relief that the stock market needed?
Mr. UNTEEMYEH. That would seem to be a question you could answer
by " Yes " or " No," without any explanation at all, Mr. Cortelyou.
Mr. CORTELYOU. I can not, because of the explanation I have
already given.
Mr. UNTERMYER. Surely you can tell us whether or not you remember talking upon that subject with any of the people you have
named, during that day ?
Mr. CORTELYOU. Whom do you mean when you say people I have
named ? I have only named those who took part in the original conference—the first conference.
Mr. UNTERMYER. The question is whether you recall having talked
with any of those same people the next day on any matter connected
with the condition of the stock exchange or its protection ?
Mr. CORTELYOU. I will answer that I quite probably did, but I can
not recall which ones.
Mr. UNTERMYER. That is a perfectly satisfactory answer. During
the conference, on the evening of the 23d, you say you do not recall
that there was any discussion as to the banks in which this money
was to be put?
Mr. CORTELYOU. No; I do not.
Mr. UNTERMYER. When was the
money deposited in the banks?
438
MONEY TBUST INVESTIGATION.
Mr. CORTELYOU. I think my statement was issued that night about
a quarter before 1—that is, a quarter before 1 on the morning of
October 24—concluding with the
Mr. UXTERMYEH. The question was, When was the money deposited
in the banks ?
Mr. CORTELYOU. I am leading up to the answer to the question.
Mr. UNTERMYER. I object to your leading up to the answer. I
think I am entitled to hare you tell me when that money was deposited in the banks. That is all I asked you.
Mr. CORTELYOU. Mr. Untermyer. do you recall the fact that you
asked me to appear at this hearing less than two hours ago I
Mr. UXTEEMYEB. Yes: but if you do not know. Mr. Cortelyou. it
is perfectly natural you should not know.
Mr. COBTELYOU. I am not going to undertake to state what I am
forced to remember in the short space of a couple of hours.
Mr. UNTERMYEH. DO you not remember when the money was deposited in the banks ?
Mr. CORTELYOU. I am here, having disarranged plans, to my very
serious inconvenience, in order to get here. I was notified less than
two hours ago and I came here; and I must not be asked to remember too particularly, particularly if I do not remember.
Mr. UNTERMYEH. Mr. Cortelyou. I am asking you questions and
you are answering them or trying to, I hope. What I want to know
is when this money was deposited in the banks. Was it on the 24th
of October?
Mr. CORTELYOU. If I hesitate a little in answering your question it
is only that I am trying to refresh my memory in the short time you
have accorded me.
Mr. UXTERMYEB. Take all the time you please, but answer me.
Mr. CORTELYOU. I think it certainly was on the 24tb of October.
Mr. UNTERMYEH. Have you any means of telling us at what time
on the 24th of October it was deposited; about what time ?
Mr. COBTELYOU. I should think as promptly as possible after the
opening of business downtown.
Mr. UXTERHYER. You think, then, before noon, probably ?
Mr. CORTELYOU. Oh, yes; I should say so.
Mr. UXTEHMYER. Were the checks drawn by you at the subtreasury, or signed by you there ?
Mr. CORTELYOU. AS fast as the collateral was deposited in the subtreasury the banks which were able to put up the collateral received
whatever deposits I felt justified in allotting to them.
Mr. UNTERMYER. NOW. will you be good enough to tell us in what
banks you deposited this money on the 24th of October. 1907. and in
what amounts?
Mr. CORTELYOU. It would be impossible for me to do that I
would have to refer you to the record. It is all set out in detail.
Mr. UNTERJIYER. I would like to see where it is set out in detail.
Will you please show it to us ? I am referring to the deposits on the
24th of October. 1907—the amount deposited in each bank. If
you have it there, we will put that in the record.
Mr. CORTELYOU. I doubt very much whether it would show what
was deposited on that particular day. I think we would have to
go to the records in the Treasury Department.
MONEY TEUST INVESTIGATION.
439
Mr. UNTERMYEE. That is what I supposed, and that is the reason
I have been asking you. There is not any record there or in the
Senate proceedings showing what amount of money was deposited
in each of these banks on the 24th of October. 1907, is there?
Mr. COBTELYOU. I have an idea there is.
Mr. UNTERMYEH. Where is it ?
Mr. CORTBLYOXT. I would not undertake to go through a voluminous record of this kind after five years and put my hand on everything in it.
Mr. UNTERMYER. Take your time, Mr. Cortelyou.
Mr. COKTELYOU (after reference to book). I find this, which is not
a precise answer to your question: For instance, on page 56 of the
response of the Secretary of the Treasury to Senate resolution 33,
statement No. 1. showing the balance of public moneys held by the
several national banks in each State, designated as depositories of
the United States on the date specified. The dates are September 30,
October 5, October 12, October 19. October 31, November 9, and so
on for several successive periods. Between October 19 and October
31, you take the various New York banks in which deposits were
made, and you can see the difference in the amount of deposits.. For
the specific amounts, you will simply have to get them, I suppose,
from the Treasury records.
Mr. UNTERMYER. Do you seriously think that is an answer 1
Mr. COKTELYOU. It is certainly all the answer I can give you.
Mr. UKTERMYER. IS it any kind of an answer to the question as
to where you deposited this $25,000,000 on the 24th of October, 1907?
Mr. CORTELYOU. Certainly. It is the best answer I can give you.
Mr. UNTERMYER. Where did you deposit it, if you have it there?
Mr. COKTELYOU. I have answered that by saying I have not the
statement here in my hand, but I refer vou to the Treasury records,
which is a pretty good place to find evidence.
Mr. UNTERMYER. You mean in the office of the Treasury here ?
Mr. CORTELYOU. I mean the Treasury Department at Washington.
Mr. UNTERMYER. I do not want to be referred to the Treasury
Department at Washington. I want the information from you as
to where you deposited that money on that day; in what banks, and
in what amounts. Mr. Cortelyou?
Mr. CORTELYOU. I would not undertake to answer that question, except by referring you to the records.
Mr. UNTERMYER. YOU mean to the deposit stub books of the department? How would I get access to those?
Mr. CORTELYOT:. I suppose your committee has access to the records
of the Treasury Department, or any other.
Mr. UNTERMYER. We are not calling witnesses for that purpose,
exactly; we are calling them to know what they know.
Mr. CORTELYOU. I know you will find that record in the Treasury
Department.
Mr. UNTEKMYER. IS there no other way in which you can refresh
your memory so you can give this committee any idea of how you distributed that $25',000,000 on the 24th of October. 1907; in what banks
in the city of New York?
Mr. CORTELYOU. I have already tried to answer that by saying
that they were usually the national banks which could most quickly
put up the collateral.
440
MONEY TRUST INVESTIGATION.
Mr. UNTERMYER. I do not want to know what was usually done;
I want to know what you did in this particular case.
Mr. CORTELYOTJ. My answer is that undoubtedly I gave it to the
national banks which could furnish the necessary collateral.
Mr. UNTERMYER. I do not care so much for conjecture as I want
to know if you have no recollection whatever as to any bank, or any
of the banks, in which you deposited that money that day; the name
of the bank and the amount deposited?
Mr. CORTELYOU. I would not undertake to go into specific details
of that kind.
Mr. UNTERMYER. Not as to any one of them ?
Mr. CORTELYOU. Well, yes; I could say one; but I do not think it
is fair to state one without mentioning the rest.
Mr. UNTERMYER. Please state one, if you remember one.
Mr. CORTELYOU. I have not any doubt I deposited it in banks of
the character of the Hanover National, the First National, the Bank
of Commerce, the National City—any of the prominent national
banks that were then ready and had the collateral.
Mr. UNTERMYER. That will not do, either, Mr. Cortelyou. We
must know, so far as you know, not what you have not any doubt
about, but what you did. The question now is, in what banks did
you deposit that money on that day ? Either you know or you do not
know, or you do not remember.
Mr. CORTELYOU. I would not undertake to remember all the banks.
Mr. UNTERMYER. DO you remember any of them?
Mr. CORTELYOU. I have given you the list of some of them.
Mr. UNTERMYER. YOU remember those, do you?
Mr. CORTELYOU. I say I undoubtedly did deposit in banks of that
character.
Mr. UNTERMYER. DO you remember the fact that you did deposit
on that day part of this $25,000,000 in the National City Bank?
Mr. CORTELYOU. NO, I do not.
Mr. UNTERMYER. Or how much, if anything, you deposited ?
Mr. CORTELYOU. I do not.
Mr. UNTERMYER. Or whether you deposited any part of that money
in the First National Bank?
Mr. CORTELYOU. I do not.
Mr. UNTERMYER. Or how much?
Mr. CORTELYOU. I do not.
Mr. UNTERMYER. Or how much you deposited in the Bank of
Commerce?
Mr. CORTELYOU. I do not.
Mr. UNTERMTER. Your memory is an entire blank
Mr. CORTELYOU. It is not a blank.
Mr. UNTERMYER (continuing). Upon all those facts?
Mr. CORTELYOU. It is not a blank; I have stated the extent to
which it is not a blank.
Mr. UNTERMYER. If there is any extent to which it is not a blank,
so far as concerns the name of the bank and the amount deposited
that day, give us the name and the amount?
Mr. CORTELYOU. At that time, or shortly after ?
Mr. UNTERMYER. On that day—on the 24th of October, 1907?
MONEY IEUST INVESTIGATION.
441
Mr. CORTELYOU. At that time, or shortly thereafter, there was from
two hundred and forty to two hundred and fifty millions of dollars
of Government deposits in the national banks of the country, and I
would not undertake to say what was in any one bank.
Mr. UNTERMYER. I am"not asking you that, Mr. Cortelyou, and
you know, I think, that I am not. We are trying to get down to the
events of the 24th of October, 1907, and we will stay there until we
have exhausted your recollection.
Mr. CORTELYOU. GO right ahead, sir.
Mr. UNTERMYER. I want to know whether you have any recollectionMr. CORTELYOU. I have given you some of my recollection.
Mr. UNTERMYER (continuing). As to any bank in which you deposited part of that $25,000,000 on the 24th of October, 1907"?
Mr. CORTELYOU. I would not undertake to specify any particular
bank as having received a deposit on that day.
Mr. UNTERMYER. But you do remember that on that day you did
deposit $25,000,000 in national banks in the city of New York?
Mr. CORTELYOU. I do.
Mr. UNTERMYER. But you can not specify one, or give the amount ?
Mr. CORTELYOU. I would not undertake to.
Mr. UNTERMYER. By that you mean you can not do it?
Mr. CORTELYOU. Certainly, if I would not undertake it.
Mr. UNTERMYER. Have you the means at hand here of getting
that information for us?
Mr. CORTELYOU. I have the same means that is open to your committee.
Mr. UNTERMYER. Have you any means, Mr. Cortelyou? That is
a plain question.
Mr. CORTELYOU. Certainly I have.
Mr. UNTERMYER. Have you means of getting it in New York City?
Mr. CORTELYOU. I suppose so.
Mr. UNTERMYER. At the Subtreasury?
Mr. CORTELYOU. I should think so.
Mr. UNTERMYER. Might we ask you to do so during the recess ?
Mr. CORTELYOU. If I may be allowed, Mr. Chairman, I should
think the committee, with its authority, would be a better agency to
obtain that than a private citizen.
Mr. UNTERMYEE. We want you, Mr. Cortelyou, to refresh your
recollection. We are examining you as to the events of that day,
and your recollection seems to be indistinct Can you not refresh it?
Mr. CORTELYOU. YOU want the facts, as I understand, not my
recollection.
Mr. UNTEEMYER. YOU have now given us, have you not, whatever
recollection you have as to this transaction of the 24th of October,
1907?
Mr. CORTELYOU. All that I recall at the moment.
Mr. UNTEEMYER. Were there more than $25,000,000 deposited that
day in the national banks of the city of New York?
Mr. CORTELYOU. I think there was something more than that; I
do not recall just how much.
Mr. UNTERMYEE. I think it says thirty-six millions.
Mr. CORTELYOU. Thirty-six millions were deposited during the
entire four days.
442
MONEY TRUST INTESTIGATIOK.
Mr. UNTEKMYEH. I am referring to that oue day.
Mr. CORTELYOU. You referred to thirty-six millions, and I thought
you referred to those days.
Mr. UNTERMTER. HOW were these deposits made, Mr. Cortelyou?
Were the checks sent from the Subtreasury to the various banks ?
Mr. CORTELYOU. I imagine that was the process in some cases—in
the majority of cases—because in the time of panic what the banks
wanted at once was money.
Mr. UNTEKMYER. I mean on this particular occasion.
Mr. CORTELYOU. I do not recall just how that transaction was carried out.
Mr. UNTERMYER. Was there any discussion, before these checks
were deposited, with any of the gentlemen connected with the banks
in which they were deposited, as to this money being put into their
banks ?
Mr. COKTELYOU. Not that I recall.
Mr. UXTERMYER. You do not remember any at all?
Mr CORTELYOU. I do not.
Mr. UNTERMYER. Did you
have any discussion with Mr. Hepburn
as to the amount that would go to the Chase Bank ?
Mr. COHTELYOU. I do not recall having a word with him on the
subject.
Mr. UNTERMYER. Did part of this money go to the Chase Bank on
the 24th ?
Mr. CORTELYOU. I have not any doubt some part of it went there.
Mr. UNTERMYEH. DO you not recall it did?
Mr. CORTELYOU. I can not go any further than to say I have no
doubt it did.
Mr. UNTERMYER. Did some of it go to the First National ?
Mr. CORTELYOU. I do not recall the amount that went to the First
National.
Mr. UNTERMYER. Did you have any talk with anybody connected
with the First National as to the amount that was to go there ?
Mr. CORTELYOU. I do not recall, particularly, at this time.
Mr. UNTERMYEB. YOU do not remember?
Mr. COETELYOU. No.
Mr. UNTERMYER. Then, you can give us no information as to
whether or not there was any understanding with any of these gentlemen as to the amounts their respective banks would get ?
Mr. CORTELYOU. I know appeals were made to me from all sides.
Mr. UNTERMYER. That is not the question.
Mr. CORTELYOU. It is in order to answer properly what you have
asked.
Mr. UNTEHMYER. The question is whether, so far as you recollect,
there was any understanding with any of these gentlemen who got
the money as to whether they would get it that day and the amount
they would get?
Mr. CORTELYOU. SO far as I recollect, I discussed it with a number
of gentlemen, who undoubtedly later got the money in the banks.
Mr. UNTERMYEK. And you told them how much yon were going to
give them ?
Mr. CORTELYOU. Very likely.
Mr. UNTERMYER. AS to each bank?
MONEY TBUST INVESTIGATION.
443
Mr. COKTELYOU. As to the banks concerning which the individuals
saw me.
Mr. UNTERMYEE. Was there any talk with any of the gentlemen in
whose banks this money was deposited as to how it was to be used?
Mr. CORTELYOU. Not particularly; no, sir.
Mr. UNTEHMYER. What is that?
Mr. CORTELYOU. I do not recall any particular conversation.
Mr. UNTEEMYER. Was there any talk as to its being used to relieve the stock market?
Mr. COETELYOU. NO ; I recall nothing of that.
Mr. UNTERMYEB. YOU do not recall whether that took place or not ?
Mr. CORTELYOU. NO, sir.
Mr. UNTEBMYEE. YOU considered
it important to relieve the stock
market, did you not ?
Mr. COHTELYOU. Yes; I felt it was important that the stock market
should be relieved.
Mr. UNTERMYER. Do you not know, Mr. Cortelyou, that this money
was used to lend out that afternoon to brokers in order to relieve the
stock market ?
Mr. COETELYOU. I have understood since that time that considerable of the money was so used.
Mr. UNTEBMYEE. Was it not all so used by Mr. Morgan ?
Mr. COETELYOU. I do not understand so.
Mr. UNTEBMYEE. By whom was it used?
Mr. COETELYOU. I have not any idea.
Mr. UNTERMYER. YOU do not know by whom it was used ?
Mr. CORTELYOU. I only know I dealt with the national banks, and
I suppose the money found its way from the national banks into
other channels.
Mr. UNTERMYER. What was Mr. Morgan's relation to this transaction ? Was he the president of any national bank ?
Mr. CORTELYOU. Mr. Morgan's relation to it was that, by the consensus of opinion, he was regarded as the leading spirit, I think,
among the business men who joined themselves together to try to
meet the emergency.
Mr. UNTERMYER. He was the representative of the banks, was he,
in a sense?
Mr. CORTELYOU. He was the representative of the general business
of the community.
Mr. UNTEEMYER. But his relation to it, then, was that of a representative of other interests than his own ?
Mr. CORTELYOU. I imagine he also represented some of his own interests.
Mr. UNTERMYER. What interest did he have in the banks?
Mr. CORTELYOU. He had a very great interest in the general financial and business situation.
Mr. UNTERMYER. Just as every merchant has and every banker
has, I suppose ?
Mr. CORTELYOU. TO a greater or less extent.
Mr. UNTERMYER. That is the onlv interest you have in mind, is
it not ?
Mr. COETELYOU. That is all I have.
60241—PT &—12
3
444
MONEY TKUST INVESTIGATION.
Mr. UNTERMTEH. YOU know, do you not, that this $25,000,000 that
was deposited, and was afterwards distributed or loaned to help out
the stock-exchange situation, was so loaned under his direction ?
Mr. CORTELYOU. I do not understand, and did not at the time, that
the twenty-five or more millions deposited by the Treasury Department was the twenty-five millions loaned to the stock exchange, or to
help out the stock exchange.
Mr. UMTEEMTEE. Was not the money that was loaned to help out
the stock exchange loaned out by the banks with which you had
deposited ?
Mr. CORTELYOU. I do not know what the banks—I do not know to
whom they loaned their money, except on the general understanding
with me that it should be loaned to relieve the general situation.
Mr. UNTERMYER. And was not that understanding kept?
Mr. CORTELYOU. It was, so far as I have ever ascertained.
Mr. UNTERMYER. In what way was it kept ?
Mr. CORTELYOU. It was kept to the extent that the panic was
stayed.
Mr. UNTERSIITER. In what way was the promise kept, so far as it
concerned the use of that particular money by lending it out on the
stock exchange at stated times ?
Mr. CORTELYOU. Would you permit me to answer that question at
considerable length?
Mr. UNTERMYER. Certainly; any way you please.
Mr. CORTELYOU. At the first conference at the Hotel Manhattan,
among the subjects discussed was the necessity of some organization
among the trust companies similar to the organization that existed
among the national banks, so that in rendering assistance those who
were in a position to assist might deal with a responsible agency.
The trust companies had nothing in the nature of a clearing house,
nor had they any organization among themselves whereby they
could get together for conference, and with which organization others
in a position to help could deal. It was determined then, and
I strongly urged, that such an organization be completed as soon as
possible.
I believe the very next morning a meeting was called of certain of
the representatives of the trust companies. When that organization
was perfected the national banks were in a position to deal with a
responsible agency, whose business it should be to relieve the trust
companies generally. I believe Mr. Edward King, president of the
Union Trust Co., was president of that temporary organization. He
has since died—a representative trust company
president. I believe
I stipulated that of the money deposited1 by "the Treasury Department, $10,000,000 should go to the immediate relief of the trust companies, to be distributed according to the best judgment of the gentlement constituting this temporary trust company committee.
Mr. UNTERMYER. That is not part of this twenty-five million, is it ?
Mr. CORTELYOU. But I am leading up to that.
Mr. UNTERMYER. That is another fund, is it not?
Mr. CORTELYOU. YOU have given me a little latitude in answering
your cjuestion, and I can not answer it properly unless I lead up to it
by this explanation.
Mr. UKTERMYEH. Then, go on.
MONEY TBUST INVESTIGATION.
445
Mr. COETELYOU. That was in line with a stipulation I made when
I came here, that whatever funds the Government should deposit
must be used for the relief of the general situation. And as evidence of my insistence upon that, the first funds so used were used
for the relief of the trust companies.
Before I left Washington, as I have already stated, I deposited
$6,000,000 in certain commercial banks. Now, following the deposit
of that $6,000,000 upon leaving Washington, and $10,000,000 to go to
the relief of the trust companies, the understanding was, and that
promise was kept so far as I have known, that whatever was deposited
by the Treasury should be for the benefit of the general situation, used
among the banks or the merchants or anybody else in business here
or throughout the country, so far as the national or other banks here
could relieve the situation.
Mr. UNTEKMYER. IS that all you care to say on the subject?
Mr. CORTELYOU. No; I would like to say something more, Mr.
Untermyer.
Mr. UNTERMYER. Well, go on.
Mr. COHTELYOTJ. I would like to say this, as evidence of the position
of the Treasury Department throughout this entire matter, that
back as early as the latter part of August, 1907, I issued a statement, which you will find in this book here, from my home on Long
Island, that beginning with the next week I would" deposit weekly
in banks throughout the country—not in the big cities, but throughout the country—such sums as would tend to relieve the probable
fall stringency." Those funds were deposited in 46 States and Territories of the United States, to the extent of $28,000,000, and those
deposits must be taken into account to get any fair idea of the
Treasury's relation to the handling of the panic here in October.
Mr. UNTERMYER. DO you understand that we are criticizing the
action of the Government?
Mr. CORTELYOU. NO; I do not understand that you are criticizing
the action of the Government, but I understand that you want the
facts and in order to give you the facts I am obliged to make certain
explanations of matters that are not as familiar to you as they are
to me."
Mr. UNTERMYER. We have wandered from the subject.
Mr. CORTELYOU. Not very much.
Mr. UNTEHMYER. I think we have wandered very much.
Mr. CORTLYOU. Not very much, because you have asked me a question, and in order to answer it I want to show that the understanding
with me that the general business situation should be relieved was
kept.
Mr. UNTERMYER. Mr. Cortelyou, let us see. This money of which
we are now talking, this twenty-five millions
Mr. CORTELYOU. Approximately that: it may have been a little
more. I do not recall.
Mr. UNTERMYER. This twentv-five millions you have said was deposited about, on the 24th of October, 1907. in certain banks which
you can not name, in amounts that you can not give, on a promise
that it would be used to relieve the situation?
Mr. CORTELYOU. On an understanding with me.
Mr. UNTERMYER. Yes. Now. that included the stock exchange
situation, did it not?
446
MONEY TEUST INVESTIGATION.
Mr. CORTELYOU. It included anything.
Mr. UNTERMYEB. Will you not answer my question ?
Mr. COBTELYOU. Yes. Any sore spot in the situation, I presume.
Mr. UNTERMYEB. I would like to get an occasional answer.
Mr. CORTELYOTJ. You have gotten several.
Mr. UNTERMYEB. YOU understood, then, did you, that when that
money was deposited, all of it would be used to relieve the stock exchange situation, or only part of it ?
Mr. CORTELYOU. No sucn inference is to be drawn from anything
I said, and I certainly did not.
Mr. UNTEEMYER. I asked you the question, did you understand
that all or part of it was to be used in that way ?
Mr. CORTELYOU. I did not understand that any part of it was to
be used for any specific purpose other than the relief of the general
situation.
Mr. UNTEBMYER. YOU know how it was used, do you not ?
Mr. COBTELYOU. I know pretty well; yes.
Mr. UNTEBMYEB. Was not all the twenty-five millions used by
being loaned to brokers that afternoon to relieve the impending
panic ?
Mr. COBTELYOU. I do not understand so at all.
Mr. UNTERMYER. HOW much of it was so used ?
Mr. CORTELYOU. I do not know, and do not pretend to say.
Mr. UNTEBMYER. DO you not know that the banks which, under
Mr. Morgan's guidance, that afternoon loaned this money out on the
stock exchange through brokers, loaned it in the proportion in which
you had deposited it with them that day ?
Mr. COBTELYOU. I do not know; I have never known anything of
the sort.
Mr. UNTERMYEB. YOU never have inquired about it, have you?
Mr. COBTELYOU. I never have; no.
Mr. UNTEBMYER. Do you not know that it was the agreement that
they were to make that use of the money, and that they did therefore make that use of it ?
Mr4 CORTELYOU. Whose agreement ?
Mr. UNTERMYEB. The agreement between the banks that received
it?
Mr. CORTELYOU. And whom?
Mr. UNTEKMYER. Between them, with Mr. Morgan.
Mr. CORTELYOU. I was getting at the other end of the agreement.
Mr. UNTERMYER. DO you not know anything about it?
Mr. COBTELYOU. I do not.
Mr. UNTEBMYER. And you never inquired?
Mr. COBTELYOU. I do not recall
Mr. UNTERMYEB. Were you not interested
in knowing, as Secretary of the Treasury, Mr. Cortelyou, what use was actually made of
the money deposited under those conditions ?
Mr. CORTELYOU. Oh, yes.
Mr. UNTEBMYEB. But had
you sufficient interest in knowing that
to investigate to ascertain what use actually was made of the money?
Mr. CORTELYOU. Yes.
Mr. UNTEBMYEB. Did you investigate it?
Mr. CORTELYOU. I did. I made inquiries from
time to time.
MONEY TBUST INVESTIGATION.
447
Mr. UNTERMYEH. HOW soon after the 24th of October, 1907, did
you make inquiries, and from whom did you make them?
Mr. CORTELYOU. I was making inquiries at that time
Mr. UNTERMYEH. HOW soon after?
Mr. CORTELYOU. I do not remember how soon.
Mr. UNTERMYER. Did you remain here until the next day ?
Mr. CORTELYOU. I remained here until the 26th, I think it was;
I am not sure. Saturday night, I think it was.
Mr. TJNTERMYER. YOU noticed the next day that the market bceame
easier, did you not?
Mr. CORTELYOU. I did.
Mr. UNTERMYER. DO you
know at what rates these banks loaned
out in the stock exchange this money that the Treasury had deposited with them?
Mr. CORTELYOTJ. I can answer that very definitely. I understand
the National City Bank loaned at 6 per cent, and I also understand
that several of the other banks did the same thing. I do not know
anything beyond that.
Mr. UNTERMYEK. HOW much were they paying the Government for
the money?
Mr. CORTELYOU. They did not pay the Government anything at
that time.
Mr. UNTERMYER. NO interest?
Mr. CORTELYOU. Not at that time.
Mr. UNTERMYER. SO that whatever interest was earned on that
money was earned by them ?
Mr. CORTELYOU. The Government was not
Mr. UNTERMYER. I say they earned whatever interest there was ?
Mr. CORTELYOU. Yes. The Government could not charge any interest at that time,
Mr. UNTERMYER. DO you know whether Mr. Morgan, or the firm
of J. P. Morgan & Co., loaned any of their own money on the stock
exchange on the 24th of October, 1907 ?
Mr. CORTELYOU. I do not know anything about it.
Mr. UNTERMYER. There was another measure adopted by the
Treasury Department for the relief of the panic situation, was there
not?
Mr. CORTELYOU. There were several others; yes, sir.
Mr. UNTERMYER. Was this the first of the series of measures^ or
was this later than the others ?
Mr. CORTELYOU. What do you mean?
Mr. UNTERMYER. The $25,000,000 transaction?
Mr. CORTELYOU. I have already stated that I deposited $6,000,000
before leaving Washington; I think, the day I left Washington.
And this must be remember, that of the $28,000,000 deposited during
the previous week, a small amount came into New York banks; a
small fraction, only a very small fraction—a negligible fraction of it.
Mr. UNTERMYER. I think you said you would furnish us with a
list of the names of the companies or banks with which you deposited
that $6,000,000.
Mr. CORTELYOU. I will try to do that, certainly.
Mr. UNTERMYEK. That was on the 22d of October ?
Mr. CORTELYOU. I think it was. It was either that day or the day
before. My recollection is it was on that day.
448
MONEY TRUST INVESTIGATION.
Mr. UNTERMYEH. Then, there was another deposit of $10,000,000,
was there not, in aid of the trust-company situation ?
Mr. CORTELYOU. I do not recall just what amount was deposited.
My stipulation was that the first $10,000,000 deposited after I arrived here should go to the trust companies.
Mr. UNTERMYER. But was there not another deposit made in connection with that situation to relieve the trust companies ?
Mr. CORTELYOTJ. Well, the deposits were made from time to time
as they were needed.
Mr. UNTERMYER. DO you not remember the situation of the Trust
Co. of America ?
Mr. CORTELYOU. I do; distinctly.
Mr. UNTERMYER. DO you remember when that broke loose ?
Mr. CORTELYOU. Yes, sir.
Mr. UNTERMYER. Was it before
the 24th of October, 1907?
this trouble on the stock exchange,
Mr. CORTELYOTJ. Yes, sir.
Mr. UNTERMYER. About how long before ?
Mr. CORTELYOU. I do not recall just how
many days. It was a
short time—a comparatively short time.
Mr. UNTERMYER. A few days, was it not ?
Mr. CORTELYOU. A few days, I should say. I do not remember
particularly.
Mr. UNTERMYEH. Were you over here in connection with that
trouble ?
Mr. CORTELYOU. I was over here in connection with the general
financial disturbance here.
Mr. UNTERMYER. When had you last been to New York, preceding
the 22d of October?
Mr. CORTELYOU. I had been over here a considerable part of the
summer, on Long Island.
Mr. USTERMYER. I do not mean that. I mean after this financial
difficulty arose in 1907, when had you been here next before your
visit of "October 22?
Mr. CORTELYOU. I was trying to explain to you, Mr. Untermyer.
I spent most of that summer on Long Island, and came in two or
three times a week to my office in this building.
Mr. UNTERMYER. From the early part of October you were mostly
in New York, were you, prior to the 22d?
Mr. CORTELTOU. I was here frequently. I do not remember how
frequently. I would have to look that up.
Mr. UNTERMYER. DO you not remember having had conferences
with Mr. Morgan and others on the difficulties arising out of the
closing of the Knickerbocker Trust Co. and the run on the Trust
Co. of America?
Mr. CORTELYOU. I think those conferences were on the evening of
the 22d. I had none before that.
Mr. UNTERMYER. There had been a run prior to that, had there
not?
Mr. CORTELYOU. Yes; but I did not get here until the 22d.
Mr. UNTERMYER. Did you deposit an additional sum of ten millions, besides these twenty-five millions, within those three or four
davs?
MONEY TBtJST INVESTIGATION.
449
Mr. CORTELYOU. I deposited altogether, I think, about $36,000,000
here during the disturbance.
Mr. UNTERMYER. That was during three or four days, was it not?
Mr. CORTELYOU. That was during three or four days; yes.
Mr. UNTERMYER. And that was between the 22d of October and
the 26th of October?
Mr. CORTELYOU. I think it was; yes.
Mr. UNTERMYER. And of that $36,000,000 there was $10,000,000
applicable to the relief of the trust companies, was there not?
Mr. CORTELYOTT. I believe so; yes.
Mr. UNTERMYER. HOW was it figured that $10,000,000 might be
needed to relieve the trust situation?
Mr. CORTELYOU. I believe in discussing the matter with the committee they organized, they felt they must have approximately that
sum. I have said ten millions. It may be it was eight or ten;
approximately eight or ten million dollars.
Mr. UNTERMYER. Was there any arrangement between the trust
companies as organized that Mr. Morgan was to direct the disposition of that money ?
Mr. CORTELYOU. I do not recal what arrangement they had among
themselves.
Mr. UNTERMYER. Did you not know of that arrangement?
Mr. CORTELYOU. I knew of an understanding whereby the responsible national banks dealt with this trust-company committee.
Mr. UNTERMYER. Which were those responsible national banks
that dealt with this trust company committee ?
Mr. CORTELYOU. Practically all the national banks in the city, I
believe.
Mr. UNTERMYEB. IS that your understanding, or was it your understanding that the clearing-house committee——
Mr. CORTELYOU. I think probably the clearing-house committee
had quite a little to do with it.
Mr. UNTERMYEK. They had charge of it?
Mr. CORTELYOU. I do not know whether they had charge of it.
Mr. UNTERMYER. Under Mr. Morgan's directions?
Mr. CORTELYOU. I will not say the clearing house acted under
Mr. Morgan's directions.
Mr. UNTERMYER. He was the general in charge of the situation,
was he not?
Mr. CORTELYOU. He was generally looked to for guidance and
leadership.
Mr. UNTERMYER. And the banks acted under his directions and
took his instructions?
Mr. CORTELYOU. For the time being, I suppose that is true.
Mr. UNTERMYER. Where was this $10,000,000 deposited?
Mr. CORTELYOU. I would not undertake to say, at this late date,
just what banks received that.
Mr. UNTERMYER. The entire $36,000,000 went into the national
banks, did it not ?
Mr. CORTELYOU. I could only deal with the national banks.
Mr. UNTERMYER. I know. It all went into the national banks?
Mr. CORTELYOU. Oh, yes.
_ Mr. UNTERMYER. That thirty-six millions added to the six millions that had been previously deposited by the Treasury on the
450
MONEY XKUST INVESTIGATION.
22d of October made a total of forty-two millions that were deposited by you in certain national banks within four or five days?
Mr. COKTELYOTJ. I think so; yes, sir.
Mr. UNTERMYER. The money that was used to help out the Trust
Co. of America, then, was part of the money that you had put here
for that purpose—the purpose of helping out the trust companies?
Mr. CORTELYOTT. I should think so.
Mr. UNTERMYER. SO far as you know, none of it was Mr. Morgan's money, or the money of J. P. Morgan & Co., was it ?
Mr. CORTELYOU. I would not attempt to segregate it.
Mr. UNTERMYER. In so far as you know, was it ?
Mr. CORTELYOU. In so far as I know; no. I do not know what
these other gentlemen did with their money, or what the banks did
with theirs. I imagine a great deal
Mr. UKTERJIYER. YOU know what you put the money here for,
though ?
Mr. CORTELYOU. Yes; but I also know a great deal more money
was used than I put here.
Mr. UNTERMYER. Let us see how that is. Do you know how much
money was used to help through the Trust Co. of America ?
Mr. COURTELYOU. I know they paid out over their counter about
$34,000,000.
Mr. UNTERMYER. DO you not know they had assets of more than
100 cents on the dollar of their debts ?
Mr. CORTELYOU. I do not know, particularly.
Mr. UNTERMYER. DO you not know their stock was at 375; and
sold at that?
Mr. CORTELYOU. I would not undertake to go into those matters.
Mr. UNTERMYER. DO you not know the stock of the Trust Co. of
America has been absorbed by the Bankers' Trust Co. at the price
of 375?
Mr. CORTELYOU. I read that the trust company had been absorbed;
I did not follow the price at which one took over the other.
Mr. UNTERMYER. Were you not told by these bankers that the
Trust Co. of America was entirely solvent ?
Mr. CORTELYOU. I do not recall being told particularly as to its
solvency. I know it was in dire straits.
Mr. UNTERMYER. YOU were not ready to help out a bank or trust
company that was not solvent?
Mr. CORTELYOU. I suppose not. A bank may be solvent and yet
have a run on it that threatens to ruin it.
Mr. UNTERMYER. We understand that. But having a run on it,
you would help it out if it was a solvent bank; and if it was an
insolvent bank you would not?
Mr. CORTELYOU. Well, I would not have deposited the Government's money in any dangerous place.
Mr. UNTERMYER. YOU would not deposit the Government's money
on the understanding it would be used to help out an insolvent
institution ?
Mr. CORTELYOU. Certainly I would not.
Mr. UNTERMYEH. SO there was no question, when the Trust Cot
of America was being helped out, as to its entire solvency?
MONEY T3UST IHVESTIGATION.
451
Mr. COETELYOU. I did not go into that matter, except to the
extent that I believed it to be solvent, of course.
Mr. UNTEEMYEE. Otherwise you would not permit the money to be
used in that way?
Mr. COBTELYOU. I did not undertake to dictate where the money
should go after it was deposited in the national banks. I dealt
solely with the national banks.
Mr. UNTEBMYEB. YOU say the Trust Co. of America paid out
thirty-four millions to depositors. Do you know how much of that
it paid out of its own assets?
Mr. COETELYOU. I do not.
Mr. UNTEBMYEB. DO you
know whether it ever received a single
penny of help except where it deposited collateral fully covering
the amount advanced to it?
Mr. COETELYOU. I should imagine not.
Mr. UNTEBMYEB. It was the Equitable Trust Co. that absorbed
the Trust Co. of America, was it not; and not the Bankers' Trust
Co.?
Mr. COBTELYOU. T do not recall particularly. I remember reading
at the time.
Mr. UNTEEMYEK. YOU have no recollection of the amount or the
extent of the assistance that was given to the Trust Co. of America,
have you?
Mr. COETELYOU. MO ; I have not.
Mr. UNTEBMYEB. Out of this $10,000,000? Was any of the money
used to help out other trust companies during this stringency?
Mr. COBTELYOU. Yes; I believe so.
Mr. UNTEEMYEB. What others were helped cut with those funds?
Mr. COBTELYOU. There were several.
Mr.'UNTEBMYEB. Was the Lincoln Trust Co. one?
Mr. COBTELYOU. I believe there was some help there. I do not
recall, particularly. I know several were thought to be in need of
help at the time.
Mr. UNTEBMYEK. And that was your purpose in putting the money
here?
Mr. COBTELYOU. Yes,
sir.
Mr. UNTEEMYEE. Have you stated now, Mr. Cortelyou, as fully as
you remember at this time, all you know about the banks in which
this money was deposited during those four days—the amounts, and
the manner in which it was disposed of, and the arrangements on.
which it was deposited?
Mr. COBTELYOU. I could not say that.
Mr. UNTEEMYEB. If you have not, go on and state anything else
that you know on the subject. We want all of the transactions of
that "particular period with respect to this particular fund of
$42,000,000.
Mr. COETELYOU. I do not want to unduly take your time or seem
to pad out an answer, or give you anything but as direct an answer
as I can to your question. I have already replied, while in the
Treasury Department, to resolutions of the Senate, a resolution of
the House, and two or three other minor resolutions, in which replies
I spread before Congress in minute detail the transactions of the
Treasury Department during that entire period—every deposit made
452
MONEY TRUST INVESTIGATION.
in every national bank, the amount of deposits, the relation of the
department to the banks and of the comptroller's office to the banks,
even to the extent of publishing the correspondence we had with
the national banks. That is all set forth in detail. Now, in going
into it in such minute detail, I naturally at the time dismissed a
great many of those facts and circumstances from my mind, because
subsequent to the panic I had to deal with the ordinary routine of
the Treasury Department in large transactions, and many of them;
and so when you ask me to be specific about some of these matters
to-day, I do not undertake to remember in detail what I tried to
dismiss from my mind at the time they occurred—a process of dealing with business which I think would appeal to the average business man.
Mr. UNTERMYER. IS that all you care to say? I have been asking
you concerning the events of those four or five days, and I would
like you to tell this committee where you have made any reports to
the Senate or the House, any published report or other report, to
which you can point, that will show the specific amounts of money
you deposited in specific banks between those dates. That is what
we want. The rest of it, Mr. Cortelyou, does not interest us. You
never did any such thing, did you ?
Mr. COETELTOU. As I recall
Mr. UNTERMYER. NOW, did you do any such thing?
Mr. COKTELYOU. Yes; I think I did.
Mr. UNTERMYEK. Where ? In what report ?
Mr. CORTELYOU. It would take quite a length of time to point it
out. because if you take a book of several hundred pages to find any
isolated items may take quite a little time.
Mr. UNTERMYER. May we have this understanding, that if you can
find anywhere in any record of any department, or in any published
record of Congress, any statement of or reference to the amounts you
put in these different banks in New York City on those five days,
separating this $42,000,000—days and dates and banks and amounts—
that you will furnish us with that?
Mr. COKTELYOU. Why do you limit it to a report to Congress?
Mr. UNTERMYER. YOU have been telling us here repeatedly that
you have made specific and detailed reports to the Senate, and also
of the particular things that we have been asking you about, and I
am asking you to point to any report that you have made—any published report—as to the disposition of these $42,000,000. that specifies the banks in which it was put, the amounts, and the dates, either
to the Senate, or anywhere else?
Mr. COKTELYOU. That is there now [indicating book].
Mr. UNTERMYER. YOU never did, did you?
Mr. COKTELYOU. Yes.
Mr. UNTERMYER. Where?
Mr. CORTELYOU. In the report.
Mr. UNTERMYER. What report?
Mr. COKTELYOU. In the reports I made—voluminous.
Mr. UNTERMYEK. What report?
Mr. CORTELYOU. Eeports in this book. If you will study
it a little
more carefully you will find it.
Mr. UNTERMYER. Oh, no; that sounds, well, but it will not do.
MONEY TKXJST INVESTIGATION.
453
Mr. CORTELYOU. Just like some of your questions to me, Mr.
Untermyer.
Mr. UNTEEMYEH. I want to be shown in that book, or any other
book, or any publication, any reference to what you did with those
particular $42,000,000, giving the names of the banks in which you
put them, the dates, and the amounts. That is all I want.
Mr. CORTELYOU. NOW you are not limiting me. Before, you limited me to what I reported to Congress. What I reported to Congress was full and complete. There were complete replies given by
me as Secretary of the Treasury. You ask if I can find this information in any book. Of course I could find it in the books of
record in the Treasury?
Mr. UNTERMYEE. DO you mean your private records ?
Mr. CORTELYOU. Oh, no; the public, official records of the Treasury
Department.
Mr. UNTERMYER. But I have referred to a published report.
Mr. CORTELYOU. Why do you limit me to that? You want the
facts. If you can find the facts as to what was done, whether they
are in an official report or my report or anything else, I would not
think would make any difference.
Mr. UNTERMYER. I am asking you simply to fortify and prove your
statement that what we have asked you for here is in any published
report. Now, Mr. Cortelyou, we may as well be perfectly frank with
one another. Is there any published statement anywhere showing
the disposition of those $42,000,000, separately stated as to the banks
in which it was deposited, the dates, and the amounts ?
Mr. CORTELYOU. There are many official records of the Treasury
Department that are not published. Why do you say published?
Why do you not say " any record " ?
Mr. UNTERMYER. Are they not published?
Mr. CORTELYOU. Why do you say " published " ?
Mr. UNTERMYER. Because I want an answer. Is there or not?
Mr. CORTELYOU. I understand that much of the information you
are seeking is published in this book here [indicating].
Mr. UNTERMYER. If there is any such information as I have asked
for—giving the dates and the amounts of this specific $42,000,000 and
the banks in which it was deposited—please produce it and we will
put it in the record.
Mr. CORTELYOU. Well, I will have to produce the whole answer
to the resolutions. Most of it is there in very extensive detail.
Mr. UNTERMYER. I would like you to point it out
Mr. CORTELYOU. I have already pointed it out.
Mr. UNTERMYER. IS that what you mean? Do you mean the sum
totals of deposits in a month ?
Mr. COETELYOU. That is some information on the subject. You
have asked for some.
Mr. UNTERMYER. NO ; that is not what I want. I want to find out
the specific institutions in which this $42,000,000 was deposited and
the dates of deposit. Now, that is not there, is it?
Mr. COETELYOU. Am I at liberty to make a suggestion in that connection? You are asking me as a private citizen now to go to a
Government department and get information which your committee
can easily get.
Mr. UNTERMYER. NO. Is it there? That is what we are asking.
454
MONEY TBTJST INVESTIGATION.
The CHAIRMAN. We have conferred on this matter and we would
waive the question of sending you as a private citizen. It seems to
me that you can answer the counsel's question whether or not there
are published reports.
Mr. CORTELYOU. My recollection is that much of the information
Mr. Untermyer asks is contained here [indicating]. It would take
too much of the time of the committee to point out every individual
item. I think much of it is there.
Mr. UNTERMYER. I will ask the reporter to repeat the question.
The reporter read as follows:
I want to find out the specific institutions in which this $i2,000,000 was
deposited, and the dates of deposit Xow, that is not there, is it?
Mr. CORTELYFU. I would not undertake to answer that until I
had examined the entire response that I made.
Mr. UNTERMYER. Will you not please look at the book and point out
the information, if it is there?
Mr. CORTELYOU. If the committee will relieve me of the responsibility of unduly taking its time.
Mr. UNTEHMYEH. Certainly.
Mr. COBTELYOU. I feel that I have answered the question once.
I will not undertake to answer your question any further than to
allude to the reference I have made, where a statement is made showing deposits in New York City national banks as of October 19
and as of October 21. Certainly some comparison can be made as
to the increase in individual banks during the period between those
two dates. As to the precise information as to when and what
deposits were made in individual New York banks, the official records
of the Treasury Department, and probably the subtreasury here,
will undoubtedly show.
Mr. UNTEBMYER. That is not the question. The question is whether
or not there is any published report showing the amounts in which
these $42,000,000 were deposited in different banks in New York
City, the names of the banks, and the dates of the deposits of those
specific funds. You can say yes, no, or that you do not know whether
there is any such published'report.
Mr. CORTELYOU. If I answer that by saying that I do not recall,
will you regard it as an answer?
Mr. UNTERMYER. Certainly. Is that your answer?
Mr. CORTELYOU. I think it is.
Mr. UNTERMYER. That is all, Mr. Cortelyou. We thank you.
Witness excused.
Thereupon, at 1.50 o'clock p. m., the subcommittee took a recess
until 2 o'clock p. m.
AFTERNOON SESSION.
The subcommittee reconvened at 2 o'clock p. m., Hon. A. P. Pujo
(chairman) presiding.
MONEY XBXTST INVESTIGATION.
455
TESTIMONY OF MB. CHARLES STEELE.
The witness was sworn by the chairman.
Mr. UNTERMYER. YOU are a partner in the firm of J. P. Morgan
& Co., are you not ?
Mr. STEELE. I am.
Mr. UNTERMYEK. And have been for how many years?
Mr. STEELE. Upward of 10 years.
Mr. UNTERMYER. YOU understand, Mr. Steele, that the
committee
is not now taking testimony upon what we call the main branch of
the inquiry, but upon certain collateral branches, so that we will
examine you at this time only upon this one question, as to the events
of the 24th of October, 1907, the panic. You remember those events,
do you not?
Mr. STEELE. I have a very general recollection of them; yes, sir.
Mr. UNTEHMYER. YOU remember the occasion of the distribution
of the moneys on the afternoon of that day with which to relieve the
stringency on the stock exchange?
Mr. STEELE. I recollect such a thing was done: yes, sir.
Mr. UNTEEMYER. Will you be good enough to tell us how it was
done; in what way the money was loaned to the brokers?
Mr. STEELE. AS nearly as I can recollect, after the arrangement
had been made—as to just how it was made I really do not know—
several of the loan brokers on thefloorof the exchange were instructed
that they might loan certain amounts of money.
Mr. UNTERMYER. Instructed by whom ?
Mr. STEELE. The instructions probably came from our office, but
by whom they were given I do not know. You are probably familiar
with the methods of loaning money on the exchange. As I understand
it—I have never been there myself, but I am told this is the way
they do it—the borrower and the broker are both there, and either
the broker offers money or the borrower bids for money. At any
rate, the loan is there made, the name of the lender is supplied later,
and the borrower then sends to the lender his note with the collateral
which he is to put up for the loan, and the loan is completed in that
way. On this occasion, as nearly as I can recollect, a number of
loan brokers were authorized to go on the exchange and lend money.
Mr. UNTERMYER. Authorized through J. P. Morgan & Co. ?
Mr. STEELE. I am not sure of that, but I presume that is so, as the
arrangements started there. They went on the exchange, and in the
ordinary course of business different brokers borrowed money from
them. When the loans were completed in that way these brokers who
borrowed the money were instructed where to go to get the money.
Mr. UNTEEMYER. Instructed from where?
Mr. STEELE. That I am not sure of, but I imagine it was through
our office. Either through our office, or through the banks, possibly;
I am not sure about that. At any rate, they were informed where they
could get the money—that is to say, what bank would make the loans
which they had already negotiated on the exchange. Then, as I
understand it, each man went to the bank which was to lend him the
money, got his money and gave his notes and his collateral. That is
the way the transaction was completed.
456
MONEY TBTJST INVESTIGATION.
Mr. UNTERMYER. IS the paper I show you a list you have made up of
the banks to which these various brokers were referred as the banks
that would loan them the money [handing witness paper] ?
Mr. STEELE. That is correct: yes, sir.
Mr. UNTERMYER. There are no amounts there, Mr. Steele. Will
you furnish the amounts to the committee during the afternoon, if you
can?
Mr. STEELE. I do not know whether I can or not. If I can, and
there seems to be no objection to it from the point of view that it is
a confidential transaction, I shall be glad to do so, as far as we are concerned.
Mr. UNTERMYER. Is there any objection on the part of counsel for
Mr. Steele to his furnishing the" amounts that were loanable by each
of the banks ?
Mr. STETSON. Your letter did not ask for that—your letter that
you sent me.
Mr. UNTEKMYEK. Impliedly, it did.
Mr. STETSON. I think not. The letter will speak for itself. At all
events, it does not clearly and explicitly ask, and I did not so understand.
Mr. UNTERMYEK. IS there any objection to furnishing it?
Mr. STETSON. That I want to consider. I do not think there is.
I am not prepared to sav there is; but I want to consider it.
Mr. UNTERMYER. Will you consider it, then, and let us know before
you leave ?
Mr. STETSON. Probably.
Mr. UNTERMYER. I offer that list in evidence.
The paper referred to was marked "Exhibit No. 31, June 13, 1912,"
and is printed in the record, as follows:
EXHIBIT NO. 31, JTJNE 13, 1912.
Loans, October H, 1907.
First National Bank.
Hanover National Bank.
National Bank of Commerce.
American Exchange National Bank.
Corn Exchange Bank.
Chase National Bank.
National Park Bank.
I Manhattan Co.
] National City Bank.
, Fourth National Bank.
Bank of America.
Importers & Traders National Bank.
, Mechanics National Bank.
i Chemical National Bank.
Mr. UNTERMYER. That is all, except that we would like to have the
amounts loaned by each bank, ana that it was arranged the bank
should loan.
Mr. STETSON. Supposing they did not loan all they agreed to ?
Mr. STEELE. I think that would be very difficult. It is possible,
if the banks do not object to it, that we could get from the banks the
amounts that they loaned; but I do not think there was anv—there
is no use my saying I do not think; I do not know whether there was
any agreement or not.
The statement above referred to was furnished later and was marked
"Exhibit No. 34, June 13, 1912," and is printed in the record following the testimonv of this witness.
MONEY TRUST INVESTIGATION.
457
Mr. UNTEEMYER. DO you not know, Mr. Steele, on that day there
were certain amounts of money deposited in each of these banks by
the Treasury Department ?
Mr. STEELE. \ O ; I do not.
Mr. UNTEBMYEE. Then you
do not know how the loanable amount
of each of these banks was fixed ?
Mr. STEELE. I do not.
Mr. UNTERMYER. YOU
action ?
were not personally a party to that trans-
Mr. STEELE. I was not.
Mr. UNTERMYEE. Who had
more particular charge of that, in your
firm?
Mr. STEELE. My recollection is, Mr. Perkins.
Mr. UNTERMYER. In conjunction with Mr. Morgan ?
Mr. STEELE. I do not think Mr. Morgan had anything to do with
the details of a thing like that. 1 think Mr. Perkins probably arranged
that.
Mr. UNTEEMYER. But under the direction of Mr. Morgan, I suppose?
Mr. STEELE. Generally; yes.
Mr. UNTERMYEE. It appears here in evidence, by Mr. Thomas's
testimony, that Mr. Morgan did direct Mr. Perkins as to the distribution of this money, in a general wav ?
Mr. STEELE. AS to that I have no definite knowledge.
Mr. UNTEEMYEE. I think that is all.
Witness excused.
EXHIBIT NO. 34, JUNE 13,
1912.
Loans, Oct. 24, 1907.
Chase Vational Banlc
National Park Bank
Chemical National Bank
Total
Agreed to
loan if
necessary.
Loaned.
S4,000,000
1,500,000
;,600,ooo
1,000,000
1,500,000
1,000.000
1,000,000
500,000
8,000,000
1.000,000
500.000
500.000
300,000
250,000
83,680,000
1,355,000
1,730,000
910,000
1,340,000
1,000,000
1,000,000
350,000
ti, 330,000
900,000
400,000
450,000
200,000
300,000
23,550,000
IS,945,000
TESTIMONY OF ME. CHAEIES A. HANNA.
The witness was sworn by the chairman.
Mr. UNTERMYER. YOU have been called a little out of order, Mr.
Hanna, because we wanted your testimony in connection with the
clearing-house branch of this subject, which we have passed for the
moment. You are now employed where ?
458
MONEY TKUST INVESTIGATIOH".
Mr. HANNA. By the New York Clearing House.
Mr. UNTERMYER. In what capacity ?
Mr. HANNA. AS examiner.
Mr. UNTEHMYEK. How long have you been in the employ of the
New York Clearing House as examiner ?
Mr. HANNA. Since the 1st of August, 1911.
Mr. UNTEBMYER. Prior to that what was your employment ?
Mr. HANNA. National-bank examiner.
Mr. 17NTEHMYEK. How long had you been in the employ of the Government as a bank examiner up to the time you went into the employ
of the New York Clearing House Association?
Mr. HANNA. Since 1899.
Mr. UNTEEMYER. YOU were a bank examiner during the panic of
1907, were you not?
Mr. HANNA. Yes,
sir.
Mr. UNTERMYER. And your duties during that panic were in connection with the New York banks, were they not ?
Mr. HANNA. Yes, sir.
Mr. UNTERMYER. YOU
were very actively concerned with the
Bank of North America and the New Amsterdam Bank, were you not ?
Mr. HANNA. I acted as receiver for both banks after they were
closed.
Mr. UNTERMYEK. Prior to your appointment as receiver you had
examined the banks on behalf of the Government, had you not ?
Mr. HANNA. Yes, sir.
Mr. UNTEEMYER. The
Bank of North America paid all of its depositors in full, did it not ?
Mr. HANNA. It has, I believe; or has funds to pay them.
Mr. UNTERMYER. DO you not know it has paid its depositors and
paid a dividend on its stock ?
Mr. HANNA. All the claims that have been presented have been
paid.
Mr. UNTEEMYEE. The claims have been advertised for in due
course, have they not?
Mr. HANNA. Have been advertised for ?
Mr. UNTEEMYER. Yes; advertisements have been inserted for
claims ?
Mr. HANNA. Yes.
Mr. UNTERMYER.
And every claim that has been presented has
been paid, has it not ?
Mr. HANNA. And they have money in the hands of the comptroller to pay any other "deposits that have not been presented.
Mr. UNTEEMYEE. SO that the debts have been cleared up long
ago?
Mr. HANNA. The debts have been cleared up.
Mr. UNTERMYER. HOW much was paid to the stockholders ?
Mr. HANNA. That I do not know.
Mr. UNTERMYER. The bank still has a large amount of assets on
hand, has it not ?
Mr. HANNA. It has, yes.
Mr. UNTERMYER. IS it not
the fact that it has more than 100 cents
on the dollar on the stock in assets still remaining, in addition to the
dividend it has paid on the stock ?
MONEY XBTJST INVESTIGATION.
459
Mr. HANNA. That is a matter of opinion. It all depends on the
values.
Mr. UNTEBMYEK. YOU had it appraised, did you not, as receiver %
Mr. HANNA. I do not remember whether I had or not.
Mr. UNTEEMYEE. DO you remember when the Bank of North
America closed its doors ?
Mr. HANNA. January 25, 1908.
Mr. UNTEBMYEB. January 25 or 261
Mr. HANNA. The 25th. It closed them on Saturday at noon, and
it never opened them after that.
Mr. UNTEEMYEB. All the banks close on Saturday at noon, do they
not?
Mr. HANNA. Yes.
Mr. UNTEEMYEE.
And it closed with the other banks, and in no
other way than the other banks 1
Mr. HANNA. Yes; it closed in a different way from the other banks.
Mr. UNTEEMYEE. Did it ? Did it announce its failure on the 25th.
Mr. HANNA. It was in my charge, when it closed, as examiner.
Mr, UNTEBMYEB. Yes; but that is frequently so as to a solvent
bank that is being examined, is it not ?
Mr. HANNA. I would not say that that bank was not solventMr. UNTEEMYEE. Did not Mr. Morse, shortly after the closing of the
bank, offer to pay all the depositors in full 1
Mr. HANNA. I do not know.
Mr. UNTEEMYEE. YOU do not know, or do not remember ? Did he
not offer you ?
Mr. HANNA. I have no recollection of that.
Mr. UNTEEMYEE. Did he not ask you for a list of depositors and
the amounts of their claims, and present to you a form of of letter
that he proposed to send to the depositors announcing that they
would be paid in full?
Mr. HANNA. I do not remember about the announcement that they
would be paid in full.
Mr. UNTEEMYEE. Did he not tell you where he had raised the
money ?
Mr. HANNA. Not at that time.
Mr. UNTEEMYEB. Who is Mr. J. F. Kane ?
Mr. HANNA. I do not know him. Thomas P. Kane, I think, you
mean.
Mr. UNTEBMYEE. Yes.
Mr. HANNA. He is the Deputy Comptroller of the Currency.
Mr. UNTEEMYEE. He was your superior, was he not ?
Mr. HANNA. Yes.
Mr. UNTEEMYER. Just look at this copy of correspondence and
see
if that refreshes your memory as to the occurrences at that time, one
letter being written by Mr. Morse and the other being a copy of a letter from the comptroller, in June, 1908.
Mr. HANNA. I understood you said shortly after it closed.
Mr. USTEBMYEB. That was only a few months after it closed.
Mr. HANNA. In June.
Mr. UNTEBMYEK. Prior to that Air. Morse had been discussing with
you
60241—FT 6—12
i
460
MONEY TBUBT INVESTIGATION.
Mr. HANNA. Mr. Morse asked me for a list of the depositors, I
think in February or March, 1908, with a view to—I do not really
know what he wanted it for; I have forgotten just what he did want
it for; and a list of the assets, I think with a view to seeing if he
could get anybody to advance money on them.
Mr. UNTERMYER. YOU did not give him a list of the depositors,
did you ?
Mr. HANNA. That I do not know.
Mr. UNTEEMTER. DO you not see from the correspondence that
you referred it to the comptroller and he refused to give him a list ?
Mr. HANNA (referring to letters). Yes; the deputy comptroller •
says:
You are advised that this office declines to furnish you with a list of depositors,
nor can the receiver lend you any assistance.
Mr. UNTERMYEK. Yes; I am going to put the letters in, Mr. Hanna,
so that you need not read them. But that refreshes vour memory,
does it, so that you are able to say that the list was refused him ?
Mr. HANNA. Yes.
Mr. UNTERMYEK.
I offer these two letters in evidence, one from Mr.
Morse to the Deputy Comptroller of the Currency, June 15, 1908, and
the reply of June 16, 1908, from the Deputy Comptroller of the Currency to Mr Morse.
The letters referred to, marked "Exhibits Nos. 32 and 33," were
offered in evidence and were read by Mr. Untermeyer in full, as
follows:
EXHIBIT NO. 32. JUNE 13, 1912.
CHARLES W. MORSE,
1 Nassau Street, New York, June IS, 1908.
Hon. J. P. KANE,
Deputy Comptroller of the Cvcrrency, Washington, D. C.
DEAR SIR: Having made the proper arrangement, I propose to send to the depositors of the National Bank of North America a notice, of which the following is a
copy:
"JUNE 15, 1908.
"DEAR SIR: I am pleased to inform you that I have arranged matters so that you
can get the amount of your deposit in the National Bank of North America if you
will call at this office and see me, bringing with you your receiver's receipt or certificate.
" I remain, yours, very truly,
."
Mr. Hanna, the receiver of the bank, has been requested to allow me to use his
mailing list. He has no objection to doing BO, but thinks he should receive the
consent of the comptroller's department.
Will you kindly instruct him at once, so that each one of the depositors can promptly
receive the amount of the deposit due him?
Yours, very truly,
C. W. MORSE.
EXHIBIT NO. 33, JUNE 13, 1912.
TREASURY DEPARTMENT,
Washington, June 16, 1908.
Mr.
CHARLES W. MORSE,
1 Nassau Street, New York, N. Y.
SIR: Your lettei of the 15th instant, requesting that Mr. Charles A. Hanna, receiver
of the National Bank of North America, be instructed to allow you to use his mailing
list of depositors, for the purpose of sending notice to each of them that he can get
the amount of his deposit by calling at your office with the receiver's receipt, or
certificate, is received.
MONEY TBUST INVESTIGATION.
461
You are advised that this office declines to furnish you with a list of depositors,
nor can the receiver lend you any assistance in your effort to settle with the depositors.
Should you be willing at any time to place with the receiver sufficient money to
pay the depositors, their claims can be settled by that method.
Respectfullv,
J. P. KANE,
Deputy and Acting Comptroller.
Mr. UNTERMYER. HOW much of the stock of the bank did Mr.
Morse own ?
Mr. HANNA. I do not recall; quite a substantial block of it.
Mr. UNTERMYER. About 60 per cent, was it not ?
Mr. HANNA. Possibly. I could tell you definitely later.
Mr. UNTERMYER. YOU are familiar with the affairs of the Bank of
North America, are you not 1
Mr. HANNA. I was at the time.
Mr. UNTERMYER. It has not all gone out of jour memory, has it ?
Mr. HANNA. The amount of his stock owning has.
Mr. UNTERMYER. YOU were active in the prosecution of Mr.
Morse, were you not ?
Mr. HANNA. NO.
Mr. UNTERMYEK. YOU were a witness, were you not ?
Mr. HAXNA. I identified the books.
Mr. UNTERMYER. Were you not a witness on that stand ?
Mr. HANNA. NO; that was all in the hands of another examiner.
Mr. UNTERMYER. DO you not know that Mr. Morse had a clear
control of the stock of the bank ?
Mr. HANNA. I did not ascertain that.
Mr. UNTERMYER. Your impression is that he did, is it not ?
Mr. HANNA. Not as to control; and yet he may have owned t.he
control.
Mr. UNTERMYER. Did you ask Mr. Kane for any explanation as to
why he would not allow a man who owned control or substantial control of a bank, and wanted to pay its depositors in full, to see a list of
who the depositors were, so that he could pay them ?
Mr. HANNA. No; I do not recall that I did.
Mr. UNTERMYER. When were the depositors paid in full ?
Mr. HANNA. I think about the 28th of October or the 31st of
October.
Mr. UNTERMYER. 1908 ?
Mr. HANNA. Yes. That
is, the receivers' certificates had nearly
all been bought up by the Assets Kealization Co. and by Mr. Morse
during the summer.
Mr. UNTERMYER. DO you not know that after the comptroller
refused to allow Mr. Morse to see a list of the depositors so he could
pay the creditors, Mr. Morse went to work with the Assets Realization
Co. to get them to go around and buy up the claims of the depositors
as best they could Be found ?
Mr. HANNA. Yes.
Mr. UNTERMYER. DO you
know why the Government official should
have taken any such course of duty when somebody came forward
with a responsible company like the Assets Realization Co. back of
them, and wanted to pay every depositor, and thus made them wait
four months for their money ?
Mr. HANNA. I presume that was the precedent of the office.
Mr. UNTERMYER. YOU do not know the reason?
462
MONEY TBUST INVESTIGATION.
Mr. HANNA. NO.
Mr. UNTERMYER. YOU
know Mr. Kane has been asked to appear
here?
Mr. HANNA. Yes.
Mr. UNTEBMYEB. He is not here ?
Mr. HANNA. NO.
Mr. UNTEBMYEB. He telephoned that
he could not come. He is an
official of the Government, is he not ?
Mr. HANNA. He is in the same position he was in then.
Mr. UNTEBMYEE. YOU have never heard any explanation of this
action of his, have you ?
Mr. HANNA. If I have I have forgotten it.
Mr. UNTEBMYEE. YOU had been how many years in the employ of
the department ?
Mr. HANNA. Since 1899.
Mr. UNTERMYEB. And all that time as an examiner, had you ?
Mr. HANNA. Yes.
Mr. UNTEEMYEE. YOU saw no objection to a man interested in the
bank knowing who its depositors were, did you ?
Mr. HANNA. I believe it is the rule of the department to give out no
information to anyone when a bank is in the hands of a receiver.
Mr. UNTEEMYEE. DO they not have to make public reports of their
doings?
Mr. HANNA. I think not.
Mr. UNTEBMYEB. AS receiver?
Mr. HANNA. I think not.
Mr. UNTEEMYEB. DO you understand that there is any such rule
applicable to a man who owns the control of the stock and therefore
is interested in the depositors being paid ?
Mr. HANNA. I do not know. You would have to get that from the
department.
Mr. UNTERMYEB. DO you not see that in this letter it is stated that
you see no objection to his getting the list.
Mr. HANNA. I saw no objection.
Mr. UNTEBMYEB. Then, you did not know of any rule that prevented it ?
Mr. HANNA. NO. That was my first receivership, I think.
Mr. UNTEBMYEB. Was that the first tune you had examined a
bank that was closed ?
Mr. HANNA. YOU mean was that the first bank I had exemined
that had closed ?
Mr. UNTEBMYEB. Yes.
Mr. HANNA. NO.
Mr. UNTEBMYEE. Did you
have close association with the New
Amsterdam Bank at that time?
Mr. HANNA. Yes.
Mr. UNTERMYEE. When did that close ?
Mr. HANNA. Following the announcement of the closing of the
North America. That started a run on the New Amsterdam National
Bank.
Mr. UNTEBMYEE. That was also a so-called Morse bank?
Mr. HANNA. Yes.
Mr UXTERMYER. Has
Mr. HANXA. It has.
that paid its depositors in full?
MONEY TRUST INVESTIGATION.
463
Mr. UNTERMYER. When did it pay its depositors in full?
Mr. HANNA. I think the latter part of 1908 or the early part of
1909.
Mr. UNTBRMTEB. DO you know how much it has paid on the
stock ?
Mr. HANNA. Something around 40 to 45, I think.
Mr. UNTERMYEE. $45 on the stock. How much assets has it left ?
Mr. HANNA. I understood that the assets had been sold to the
Assets Realization Co.
Mr. UNTERMYER. DO you not know that the Assets Realization Co.
still has an equity that is distributable ?
Mr. HANNA. Possibly; yes.
Mr. UNTERMYER. HOW much it is you do not know ?
Mr. HANNA. NO.
Mr. UNTERMYEB. YOU
1908, were you not?
were in New York on the 25th of January,
Mr. HANNA. Yes.
Mr. UNTERMYER. DO
you remember the occasion of the publication in the newspapers on that day of the fact that the clearinghouse committee had called in the certificates of four banks?
Mr. HANNA. NO ; I had forgotten that until it was brought out in
the papers in an account of the evidence given here.
Mr. UNTEKMYER. On January 25, 1908, the panic was over, was it
not?
Mr. HANNA. Yes.
Mr. UNTERMYER. And things were mending ?
Mr. HANNA. Yes.
Mr. UNTERMYER. DO you know what precipitated
the closing of
those three solvent banks, the Oriental, the Bank of North America,
and the New Amsterdam Bank ?
Mr. HANNA. I do not think anybody knows, but I have an idea.
Mr. UNTERMYER. DO you not know that it was the publication in
the papers of the fact that their certificates had been called and not
paid?
Mr. HANNA. I knew that had not anything to do with it. I know
that was not the cause.
Mr. UNTERMYER. YOU had to do with the Oriental Bank, too, had
you not ?
Mr. HANNA. NO, sir.
Mr. UNTERMYER. DO
in the papers ?
you know that there was such a publication
Mr. HANNA. I do not.
Mr. UNTERMYER. YOU do not know whether there was or not ?
Mr. HANNA. I do not.
Mr. UNTERMYER. DO you
know that there was a run on the
Oriental Bank?
Mr. HANNA. Following the closing of the Bank of North America?
Mr. UNTERMYER. NO; following the announcement on the 25th
of January, do you know that there was a run on the Oriental Bank ?
Mr. HANNA. NO ; I did not know that.
Mr. UNTERMYER. YOU do not know anything about these facts 1
Mr. HANNA. I know what caused the closing of the Bank of North
America, now.
464
MONEY TBTJST INVESTIGATION.
Mr. UNTEBMYER. I am asking you about the Oriental Bank now.
Mr. HANNA. NO. I know nothing about the Oriental Bank.
Mr. UNTEBMYEB. From whom do you know what caused the closing
of the Bank of North America ?
Mr. HANNA. Mr. Havemeyer, the president, asked me to take charge
of it about the 22d or 23d of January.
Mr. UNTEBMYEB. Mr. Havermyer had been put in by the clearinghouse committee instead of the former president, had he not ?
Mr. HANNA. I do not know.
Mr. UNTEBMYEB. Were you not in communication with the clearing-house committee ?
Mr. HANNA. Just casually. While I was in sympathy with them,
I had not any particular communication with them.
Mr. UNTEEMYEB. DO you know of what bank Mr. Havemeyer was
a director before he became the president of the Bank of North
America ?
Mr. HANNA. The National Bank of North America.
Mr. UNTEBMYEB. NO ; of what other bank.
Mr. HANNA. NO; I do not.
Mr. UNTEBMYEE. Which Mr. Havemeyer was it ?
Mr. HANNA. William F.
Mr. UNTEBMYEE. Who nominated him for that place, if
Mr. HANNA. I do not know.
Mr. UNTEBMYEB. DO you not know that he was picked
clearing-house committee ?
you know.
out by the
Mr. HANNA. NO.
Mr. UNTEBMYEB. Mr. Hanna, you know something about that, do
you not?
Mr. HANNA. I have forgotten. I have looked at the minute book
of the Bank of North America, and that would show; but I have
forgotten just what it does show.
Mr. UNTEBMYEB. Was he not a director in the City Bank ?
Mr. HANNA. I do not think he was. I never knew it.
Mr. UNTEBMYEB. DO you not know that he was a director in one
of the large banks represented on the clearing-house committee ? I
forget which one it was now.
Mr. HANNA. I am quite sure he was not a director in the City
Bank.
Mr. UNTEBMYEB. YOU have how many examiners under you, now,
in the employ of the clearing-house committee ?
Mr. HANNA. About a dozen.
Mr. UNTEBMYEB. Are you sworn officers ? Do
you take an oath %
Mr. HANNA. I have taken a pledge of secrec}T.
Mr. UNTEBMYEB. Have you taken any oath?
Mr. HANNA. TO the clearing house %
Mr. UNTEBMYEB. Yes.
Mr. HANNA. NO.
Mr. UNTEBMYEB. Nor your subordinates ?
Mr. HANNA. They have taken a pledge of secrecy.
Mr. UNTEBMYEE. A pledge given to whom'?
Mr. HANNA. TO me.
Mr. UNTEBMYEB. And your pledge is given to whom ?
Mr. HANNA. TO the chairman of the clearing-house committee.
Mr. UNTEBMYEB. TO which individual did you give your pledge?
MONET TBUST INVESTIGATION.
465
Mr. HANNA. Mr. Nash.
Mr. UNTEBMYEB. YOU take your employment from that committee,
do you not 2
Mr. HANNA. Yes,
Mr. UNTEBMYEB.
sir.
And are responsible to that committee for the
performance of your duty ?
Mr. HANNA. Yes.
Mr. UNTEEMYEE.
At the time when you were employed by the
clearing-house committee you were then with the Government, were
you not ?
Mr. HANNA. Yes,
sir.
Mr. UNTEEMYEE. YOU received an offer from the committee and
went out of the Government employ and accepted that offer?
Mr. HANNA. Yes.
Mr. UNTEKMYER.
With whom did you have negotiations for your
employment ?
Mr. HANNA. Mr. Nash and Mr. Hine.
Mr. UNTEEMYEE. Mr. Hine is the president of the First National
Bank, is he not ?
Mr. HANNA. Yes,
sir.
Mr. UNTEEMYEE. YOU and your 12 assistants are constantly
engaged in examining banks and trust companies in the clearing
house, are you ?
Mr. HANNA. Yes.
Mr. UNTEEMYER.
Mr. HANNA. Yes.
Mr. UNTEBMYEE.
It takes all your time?
Does not the Government make examinations of
the national banks that are in the clearing house ?
Mr. HANNA. Yes.
Mr. UNTEEMYEE. HOW often 3
Mr. HANNA. Twice a year.
Mr. UNTEEMYEE. DO you make
The CHAIEMAN. My recollection
them any more frequently 1
is that the statute requires them
four times a year.
Mr. HANNA. NO; they can not get around oftener than twice a
year.
The CHAIEMAN. But my recollection is that that is the requirement
under the statute—four times a year.
Mr. HANNA. I think not.
Mr. UNTEEMYEE. DO you and your assistants get around among
the banks of the clearing house any more frequently than the Government officials do ?
Mr. HANNA. Not as frequently.
Mr. UNTEEMYEE. DO you think your examination is any more
thorough than the Government examination ?
Mr. HANNA. AYe spend more time at a bank, I think, than the
Government examiner can, and we have a larger force.
Mr. UNTEEMYEE. DO you see the Government examinations?
Mr. HANNA. NO.
Mr. UNTEEMYEE. YOU
Mr. HANNA. NO.
Mr. UNTEEMYEE. YOU
examiners, are you not ?
have no access to them ?
are in communication with the Government
466
MONEY TBTTST INVESTIGATION.
Mr. HANNA. I confer with the Government examiners, both State
and national.
Mr. UNTEEMYEB. YOU confer with them in respect to their examination of banks, and your examination of the same banks ?
Mr. HANNA. Yes. We act in cooperation so far as we can, consistently with the law.
Mr. UNTEBMYEB. YOU compare notes, to some extent ?
Mr. HANNA. AS to values.
Mr. UNTEEMYEE. Then, as to the State banks that are in the
clearing-house association, how often are they examined by the
State banking department?
Mr. HANNA. Most of them, I think, are examined twice a year.
Some of the larger ones perhaps do not get to be examined more than
once a year. I think the savings banks
Mr. UNTERMYEB. I am speaking of members of the clearing-house
association. That is twice a year?
Mr. HANNA. I think it is.
Mr. UNTEBMYEB. And you compare notes with them, do you ? Do
you examine the State institutions that are members of the clearing
house any more frequently than the State banking department ?
Mr. HANNA. NO.
Mr. UNTEEMYEE. Your examination is also more thorough and
more in detail than is theirs.
Mr. HANNA. I would not say that. They have a larger force than
the national examiners, and perhaps more time than the national
examiners do. They have very thorough examinations.
Mr. UNTEEMYEB. DO you think they are as thorough as yours ?
Mr. HANNA. In some respects they may be, and in some respects
they are not.
Mr. UNTEBMYEB. In what respects are they not as thorough as
yours?
Mr. HANNA. I do not think they spend as much time in looking
up values as we do.
Mr. UNTEBMYEB. YOU mean values of collateral to loans ?
Mr. HANNA. Values of collateral, and credit.
Mr. UNTEEMYEB. YOU do not think they go into as much detail
in checking collateral as do your examiners 1
Mr. HANNA. I think they check collateral just the same as we do.
Mr. UNTEEMYER. I mean in checking values ?
Mr. HANNA. Yes.
Mr. UNTEBMYEB.
They do not make the same thorough investigation into values; is that what you mean?
Mr. HANNA. I would not make any invidious comparisons at all.
Mr. UNTEEMYEB. I do not think it is assumed to be invidious.
Mr. HANNA. I do not think they take as much time as we do to
arrive at the actual condition of the bank.
Mr. UNTEBMYEB. In addition to your examinations, do the members of the clearing house also make weekly reports to the clearing
house committee ?
Mr. HANNA. Yes.
Mr. UNTEEMYEE.
These weekly reports are in rather general terms,
are they not ? They do not contain the details ?
Mr. HANNA. Yes; they are just the totals.
MONEY TRUST INVESTIGATION.
467
Mr. UNTEEMYEE. The total loans and discounts and assets, grouped
in that way ?
Mr. HANNA. Yes.
Mr. UNTERMYEB.
Your examination is for the purpose of valuing
and checking the details?
Mr. HANNA. NO; the primary object of the examination is for the
solvency of the bank, and the incidental object is for the benefit of the
directors, to gather the details and present them to the directors.
Mr. UNTERMYEB. DO you also examine nonmembers of the clearing
house that clear through the clearing house ? That is all under your
jurisdiction, is it not?
Mr. HANNA. That is according to my discretion. If I have time
to go around and examine all the members, then I presume I examine
some of the nonmembers.
Mr. UNTEEMYEB. Have you not examined some of the nonmembers ?
Mr. HANNA. Yes; I have.
Mr. UNTERMYEB. Have you examined practically all of them ?
Mr. HANNA. Very few of them. I find it takes so long a time to
get around to the members that I have not time to examine the
nonmembers.
Mr. UNTERMYEE. Have you a list of the banks that you have
examined ?
Mr. HANNA. Yes.
Mr. UNTERMYER. Will you let me look at it ? I think you prefer
that it should not be made public. Is that right ?
Mr. HANNA. Yes.
Mr. UNTERMYEE. And
you object also to your reports being made
public, do you not?
Mr. HANNA. I do, because of their confidential nature.
Mr. UNTERMYER. Very well. We shall not press that.
I see from this list that you have examined 30 member banks, 10
member trust companies, and 6 nonmembers. Some of these examinations, however, I see are yet incomplete.
Mr. HANNA. TWO are still in progress.
Mr. UNTERMYER. Have you examined some of these more than
once?
Mr. HANNA. NO.
Mr. UNTEEMYER. And you have been in office how long ?
Mr. HANNA. AS a clearing-house examiner 1
Mr. UNTERMYEB. Yes.
Mr. HANNA. Since August 1, 1911.
Mr. UNTERMYER. Ten months; and you have not got
all the members vet ?
Mr. HANNA. $ O .
MI. UNTERMYER.
around to
And inasmuch as the Federal department and
th« Statt department succeed in making two examinations a year,
how is that going to help the clearing-house banks, to have a department that can not get around once a year ?
Mr. HANNA. Well, that is for the clearing house to say.
Mr. UNTEBMYEB. That is for them ? It is only for us to say in
trying to find out what the purpose of this department is. I think
that is all, Mr. Hanna.
Mr. HANNA. Would you permit me to make a statement ?
468
MONEY TBXJST INVESTIGATION.
Mr. UNTERMYEE. If it bears on anything I have asked you.
Mr. HANNA. In regard to the Bank of North America.
Mr. UNTEBMYEB. Why, certainly.
Mr. HANNA. Mr. Havemeyer called me up on the telephone about
the night of January 22 and asked me to come to his house.
Mr. UNTEEMYEE. No; I do not think that the talk you had with
Mr. Havemeyer would be very material or very proper.
Mr. HANNA. Mr. Flagler and the other directors of the Bank of
North America were there.
Mr. UNTERMYEB. Mr. Havemeyer was put in there, was he not, by
the clearing-house committee ?
Mr. HANNA. I do not know.
Mr. UNTERMYEE. Mr. Morse had been the vice president of the
bank?
Mr. HANNA. Yes.
Mr. UNTERMYER. Was
not Mr. Morse's resignation demanded at
the time when the Bank of North America took out clearing-house
certificates in the same way that other banks took out clearing-house
certificates i
Mr. HANNA. I do not know about that, except the newspaper
reports at the time said that that was so.
Mr. UNTEEMYEB. He did resign 1 You were in the bank as examiner, and do you not know that his resignation was demanded 1
Mr. HANNA. The minute book states that he resigned.
Mr. UNTERMYER. Did you not advise that he should resign 3
Mr. HANNA. I did not have anything to do with his resignation.
Mr. UNTERMYER. YOU had been reporting to the directors the result
of your examination 1
Mr. HANNA. NO. I reported to the comptroller.
Mr. UNTERMYEE. Did you not give the comptroller information ?
Mr. HANNA. The comptroller gave the directors information from
my reports.
Mr. UNTEEMYEE. Were you not in constant communication with
them?
Mr. HANNA. YOU mean after the panic ?
Mr. UNTEEMYEE. I mean before the bank closed I
Mr. HANNA. I was in there between the panic and the time the bank
closed.
Mr. UNTEEMYEE. And during that time you were in communication
with the directors, were you not 1
Mr. HANNA. Yes.
Mr. UNTERMYEE. SO
that you knew, did you not, that Mr. Morse's
resignation was being demanded ?
Mr. HANNA. My impression is that he resigned shortly after the
panic—that is, in October, or the 1st of November.
Mr. UNTEEMYEE. DO you not know that when the Bank of North
America applied, in common with other banks in the clearing house,
for the issue of clearing-bouse certificates, the clearing-house committee demanded Mr. Morse's resignation as vice president, and that
he then resigned in October, 19071
Mr. HANNA. I do not know the details of it, because I had nothing
to do with the clearing house at that time.
Mr. UNTERMYEE. Were you not in communication with the clearing-house committee before it closed the doors of the Bank of North
America.
MONEY TBUST INVESTIGATION.
469
Mr. HANNA. Yes.
Mr. UNTEBMYER. And
you were advising them as to its affairs;
as to the affairs of the bank; as to what youhadfound?
Mr. HANNA. NO; I do not know that I was. I do not recall that.
Mr. UNTEEMYEE. What were you in communication with them
about ? I am speaking of the clearing-house committee.
Mr. HANNA. Just about general conditions.
Mr. UNTEEMYEB. The general conditions of what ?
Mr. HANNA. With the banks, and of the bank of North America.
Mr. UNTEEMYEE. Were you not in communication and conference
with the directors of the Bank of North America before it closed, as
to the results of your examination of that bank ?
Mr. HANNA. f made the examination of that bank in December.
Mr. UNTEKMYEE. I am not speaking of December; I am speaking
of the time of the panic, in October, 1907.
Mr. HANNA. Yes, I was in almost every day at the time of the
panic.
Mr. UNTEEMYEE. And before they closed ?
Mr. HANNA. Yes.
Mr. UNTEEMYEB. Were
you not advising the directors in respect^
of the affairs of that bank before it closed, and after advising the"
clearing-house committee ?
Mr. HANNA. I advised the directors to collect their money and get
their reserve up.
Mr. UNTEEMYEE. Were you not telling them what you had ascertained ?
Mr. HANNA. What I had ascertained ?
Mr. UNTEBMYEE. Yes.
Mr. HANNA. I presume
if I ascertained anything that was of importance to them, I told them about it.
Mr. UNTEEMYEE. And were you not telling the clearing-house
committee what you had ascertained as to the bank ?
Mr. HANNA. The clearing house examined the bank itself.
Mr. UNTEEMYEE. Did you not tell the clearing-house committee
the result of your examination before the bank closed ?
Mr. HANNA. I do not remember of it. It is possible.
Mr. UNTEEMYEE. Did you not tell them it was entirely solvent ?
Mr. HANNA. I think I told them that, because I considered it so
Mr. UNTEEMYEE. I understand. I think that is all.
Mr. HANNA. Then you do not want the statement ?
Mr. UNTEEMYEE. That is all.
Mr. HANNA. YOU do not care for the statement ?
Mr. UNTEEMYEB. NO.
Witness excused.
Mr. UNTEKMYEE. We will state that the list in question consists of
13 national banks, 15 State banks, 10 trust companies, and 6 nonmembers examined between August 6, 1911, and May 29, 1912, with
2 examinations still uncompleted.
Is anyone here from the Treasury Department or the subtreasury ?
There was no response.
Now, Mr. Mabon, will you be good enough to resume ?
470
MONEY TBUST INVESTIGATION.
TESTIMONY OF JAMES B. MABOff—Eesumed.
Mr. UNTERMYEK. I think you were describing the process of listing
securities and the requirements at adjournment.
Mr. MABON. Yes, sir.
Mr. UNTERMYER. Did
you get some data that you want to submit
on that subject ?
Mr. MABON. NO; this is the same paper that you have.
Mr. UNTERMYER. YOU remember the panic period in 1907, do you
not, Mr. Mabon^
Mr. MABON. I do; yes,
sir.
Mr. UNTEKMYER. DO you remember whether or not the beginning
of the panic had been preceded by a period of very wild speculation
and inflation; very high prices of securities?
Mr. MABON. YOU mean the panic of October, 1907 ?
Mr. UNTEKMYER. Yes; just before that.
Mr. MABON. That was not my impression. I thought there had
been a preceding small panic in the spring of that year; that was my
impression.
Mr. UNTERMYER. DO not remember in August, 1907, securities were
very high ?
Mr. MABOX. I do not remember.
Mr. UNTERMYER. YOU do not remember that ?
Mr. MABON. NO, sir.
Mr. UNTERMYER. I want
to call your attention to your testimony
of yesterday concerning the produce exchange, and in that connection to call your attention to Article XXVII, and ask you whether
you care to correct your testimony on that subject after having your
attention called to Article XVII. Section 4 of Article XVII of the
constitution of the New York Stock Exchange reads as follows:
Any member who shall be connected directly, or by a partner, or otherwise, with
any organization in the city of New York which permits dealings in any securities or
other property, admitted to dealing in any department of this exchange, shall be liable
to suspension for a period not exceeding one year, or to expulsion, as the governing
committee may determine.
Mr. MABON. What was my testimony, Mr. Untermyer ? I have not
read it over.
Mr. UNTEBMYER. I may not have correctly understood it, but I
understood you to say that the stock exchange had taken no action
inimical to the attempt of the produce exchange to deal in securities
that are dealt in on the stock exchange.
Mr. MABON. The effort of the produce exchange, as I remember it,
was distinctly to trade in securities that are not admitted in the list
on the New York Stock Exchange, and it was on that basis I made
my reply.
Mr. UNTERMYER. DO you not know that any member of your
exchange who remained a member of the produce exchange, if he
undertook to deal in any security that is dealt in on your exchange,
would be liable to expulsion from your exchange ?
Mr. MABON. Yes; but they did not attempt to deal in securities
that are dealt in on our exchange.
Mr. UNTERMYER. Are you not mistaken about that 1
Mr. MABON. That is my impression, Mr. Untermyer. If I am
mistaken, I certainly will change it.
MONET TEXJST INVESTIGATION.
471
Mr. UNTEBMYEE. At any rate, it would not be possible for the
produce exchange to deal in any security dealt in on your exchange
without your requiring every member of your exchange to resign
from the produce exchange ?
Mr. MABON. Yes.
Mr. UNTEEMTER. That is so, is it not?
Mr. MABON. That is true, yes, sir.
Mr. UNTERMTEE. And how many members
of your exchange are
also members of the produce exchange ?
Mr. MABON. I think a very small number, compared with the
membership of the produce exchange.
Mr. UNTERMTEE. What proportion would you say? Twenty-five
per cent or more ?
Mr. MABON. I should say, without knowing at all and without
having any means of knowing, that there probably were not more
than 60 or 70 members of the produce exchange, if as many as that,
who are members of the New York Stock Exchange; and I understand the membership of the New York Produce Exchange is a very
large one.
Mr. UNTERMYER. YOU never have made any investigation of the
subject ?
Mr. MABON. I have not.
Mr. UNTERMYER. All the bankers and brokers who deal in cotton
are members of the produce exchange, are they not ?
Mr. MABON. I should say all the bankers and brokers who deal in
cotton are members of the cotton exchange.
Mr. UNTERMYER. And are they not nearly all members of the produce exchange also ?
Mr. MABON. I should say not, although I do not know.
Mr. UNTEEMYER. YOU know what the curb is, do you not ?
Mr. MABON. In a general way.
Mr. UNTERMYEE. Have you never dealt on the curb ?
Mr. MABON. Personally, no.
Mr. UNTERMYER. YOU have given plenty of orders for securities
dealt in on the curb, have you not?
Mr. MABON. I have given some orders; yes, sir.
Mr. UNTEEMYEB. And that is part of your regular business, is it
not?
Mr. MABON. A very small part of it.
Mr. UNTEEMYER. What ?
Mr. MABON. A very small part. I presume you are asking about my
personal business ?
Mr. UNTEEMYEE. The business of your firm.
Mr. MABON. My firm almost wholly deals in bonds that are listed
on the New York Stock Exchange.
Mr. UNTERMYEE. But vou deal in new bonds, too, do you not ?
Mr. MABON. Very rarefy.
Mr. UNTERMYER." You mean you do not deal hi any new issues
at all?
Mr. MABON. New issues occasionally, but not to any large extent
Mr. UNTEEMYEE. New issues are dealt in on the curb before they
can be listed on the stock exchange, are they not ?
Mr. MABON. Yes.
472
MONEY 1EUS1" INVESTIGATION.
Mr. UNTERMYER. SO that you are familiar with the business of the
curb?
Mr. MABON. Oh, yes; in that respect.
Mr. UNTEEMYEE. There is nothing to prevent a stock-exchange
member from dealing on the curb, is there s
Mr. MABON. NO.
Mr. UNTEEMYEE. And many of them do, do they not ?
Mr. MABON. Yes; I imagine so.
Mr. UNTERMYER. But the curb is not allowed, is it, to deal in any
security that is dealt in on the exchange ?
Mr. MABON. NO.
Mr. UNTERMYEE.
And the curb is not allowed to get under roof,
is it 3
Mr. MABON. I can not answer that question.
Mr. UNTEEMYEE. YOU are a member of the governing committee,
Mr. Mabon, and you can tell us whether or not the stock exchange
does not prohibit the curb from taking shelter under roof ?
Mr. MABON. I can not.
Mr. UNTEEMYEE. DO you
not know that the subject has been up
for discussion ?
Mr. MABON. I know it has been up for discussion.
Mr. UNTEEMYEE. DO you not know the curb has organized into an
association ?
Mr. MABON. I understand so from the papers.
Mr. UNTEBMYEB. DO you not know the subject of discussion has
been whether the stock exchange shall allow the curb brokers to
go in out of the rain, and have a roof over their heads ?
Mr. MABON. Not for some time.
Mr. UNTEEMYER. When was that discussed ?
Mr. MABON. I should say two years ago.
Mr. UNTEEMYEE. What did the stock exchange then decide ?
Mr. MABON. I think they made no decision.
Mr. UNTERMYEE. DO you not know they told them they could not
doit?
Mr. MABON. I do not.
Mr. UNTEEMYEE. DO you
doit?
not know that is the reason they do not
Mr. MABON. I do not.
Mr. UNTEEMYEE. What
other reason is there for their dealing in
the rain ?
Mr. MABON. I do not know.
Mr. UNTERMYER. What is the point of the objection to the curb
getting into a building, provided it observed the rule not to deal in
securities that are dealt in on the exchange ?
Mr. MABON. I do not know, Mr. Untermyer.
Mr. UNTERMYER. YOU are a member of the governing committee,
are you not ?
Mr. MABON. I am.
Mr. UNTERMYER. And
cussion?
Mr. MABON. Yes.
Mr. UNTEEMYEE. YOU
you know the subject has been under dis-
know there has been an application by a
committee of the curb, do you not ?
Mr. MABON. NO ; I do not know that there has been.
MONEY TEUST INVESTIGATION.
473
Mr. UNTERMYER. YOU never heard of it, did you ?
Mr. MABON. NO.
Mr. UNTEBMYEE. Nothing of the kind ?
Mr. MABON. NO.
Mr. UNTEKMYEH. HOW did it come up for discussion ?
Mr. MABON. I do not remember how it did come up for discussion.
Mr. UNTERMYEE. Did it not come up through a committee of the
curb calling on the committee of the stock exchange for the purpose of
procuring such permission?
Mr. MABON. I do not know.
Mr. UNTERMYER. DO you know anything about it ?
Mr. MABON. I do not."
Mr. UNTEEMYEE. Who would know ?
Mr. MABON. I suppose the records of the exchange would
Mr. UNTEEMYEE. IS there anybody here with them ?
Mr. MABON. Mr. Martin, have you any records bearing
tell.
on that
subject ?
Mr. MAETIN. I have the governing committee minutes.
Mr. UNTERMYER. Will you get them, please ? What is the membership of the curb ?
Mr. MAHON. I do not know.
Mr. UNTERMYER. What would be the effect of an attempt on the
part of the curb brokers to deal in a security that was dealt in on the
exchange ?
Mr. MABON. What would be the effect on the stock exchange of
the action ?
Mr. UNTERMYER. Yes.
Mr. MABON. I suppose
the exchange would act under the provisions
of the constitution, and I do not know how they would apply in that
particular instance.
Mr. UNTERMYER. DO you not know they would apply so that the
man who continued to have anything to do with a curb broker would
be suspended or expelled from the exchange ?
Mr. MABON. I assume so.
Mr. UNTERMYER. Are any of the members of the stock exchange
members of the curb?
Mr. MABON. I do not know. Presumably, yes.
Mr. UNTERMYER. The curb is a regular organization, is it not?
Mr. MABON. I understand so, Mr. Untermyer, from the papers.
That is all I know.
Mr. UNTERMYER. It has been incorporated, has it not ?
Mr. MABON. I doubt it very much.
Mr. UNTEEMYEE. It has a membership, and has initiation fees and
yearly dues, has it not?
Mr. MABON. I do not know.
Mr. UNTERMYER. YOU do not know anything about it?
Mr. MABON. I do not know anything about it. The only thing I
have seen has been the newspaper statements some time ago.
Mr. UNTERMYEE. And you see it before your eyes in operation
every day, do you not ?
Mr. MABON. I do not.
Mr. UNTERMYEE. Where is your office ?
Mr. MABON. NO. 45 Wall Street.
Mr. UNTEEMYEE. And where is the curb ?
474
MONEY TEUST INVESTIGATION.
Mr. MABON. It is in lower Broad Street.
Mr. UNTEBMYER. Right around the corner from you, is it not ?
Mr. MABON. It is in lower Broad Street.
Mr. UNTEEMTEE. YOU say you do not see it in operation ?
Mr. MABON. I do not.
Mr. UNTEEMYEE. YOU never do 1
Mr. MABON. I do not think I have ever seen it in operation.
Mr. UNTEBMYER. HOW can you go from your office in Wall
Street
to Broadway without seeing it in operation ?
Mr. MABON. Mr. Untermyer, I would like you to describe how you
can see it in operation from Wall Street to lower Broad Street. If
you can see it from that distance
Mr. UNTEEMYER. I say how can you go from your office in Wall
Street to Broadway, through Wall Street, without seeing the curb
in operation on Broad and Wall Street.
Mr. MABON. The curb is not on Broad and Wall Streets. It is on
lower Broad Street.
Mr. UNTEEMYER. It is on Broad Street between Wall Street and
Exchange Place, is it not ?
Mr. ^IABON. It is not.
Mr. UNTERMYEB. Where is it ?
Mr. MABON. Lower Broad Street.
Mr. UNTEBMYEB. Between what streets ?
Mr. MABON. Between Beaver Street and Exchange Place.
Mr. UNTEBMYEE. I thought it was opposite the Mills Building. Is
it not?
Mr. MABON. I have just said where it was, Mr. Untermyer.
Mr. UNTEBMYER. It used to be opposite the Mills Building, did
it not?
Mr. MABON. Yes,
sir.
Mr. UNTEEMYEE. It is a railed-in space; that is, it is a space that
is simply confined by ropes and posts, is it not ?
Mr. MABON. I do not know whether there are any ropes or posts
there.
Mr. UNTEEMYEE. YOU do not know anything about it ?
Mr. MABON. XO, sir.
Mr. UNTEEMYEE. HOW often do you have dealings on the curb ?
Mr. MABON. I do not know how often my office has, but very rarely.
Mr. UNTEEMYEE. Have you those references there ?
Mr. MARTIN. I have several of them; yes, sir.
Mr. UNTEEMYEE. I would like to have them. If you will just give
us the numbers, we will read them as we go along.
Mr. MAETIN. Page 232 is the first.
Mr. UNTEEMYER. We will read these references in evidence:
Mr. Sturgis offers the following: "Resolved, That the committee on unlisted securities consider the question of adding to the present list all the more important securities
now dealt in upon the curb, with such regulations as they may deem for the best protection of the stock exchange, if any should be required, and that they report the result
of their deliberation to the governing committee at the earliest possible date." Seconded.
Mr. Maury moved as an amendment that two members of the governing committee
be added to the committee in the matter. Seconded.
Mr. Sturgis accepted the amendment, and it then became a part of the original resolution, which was put to vote and carried.
The president appointed Messrs. Sturgis and Thomas as the additional members.
MONEY TRUST INVESTIGATION.
475
That resolution is dated March. 21, 1906.
That resolution, if carried, would have wiped out the curb and the
curb brokers, would it not ?
Mr. MABON. Not necessarily.
Mr. UNTERMYER. What if the stock exchange undertook to
establish
Mr. MABON. YOU read the resolution.
Mr. UNTERMYER (continuing). All the more important securities
now dealt in on the curb in a department of its own, would it not have
wiped out the curb?
Mr. MABON. I would say not.
Mr. UNTERMYER. What would have been left 3
Mr. MABON. There would have been others left, as I take it from
that resolution.
Mr. UNTEBMYER. Other what ?
Mr. MABON. Securities.
Mr. UNTERMYEE. The curb could have dealt in any that the stock
exchange did not want to put on its list, is that it?
Mr. MABON. Presumably.
Mr. UNTERMYER. And you think they could have lived on that ?
Mr. MABON. There would be new things come on.
Mr. UNTERMYER. And would not the stock exchange take the same
jurisdiction over the new things that it considered important ?
Mr. MABON. That is a matter that I
Mr. UNTERMYER. YOU know perfectly well, do you not, the adoption of that resolution would have wiped out the curb ?
Mr. MABON. I do not agree with you.
Mr. UNTERMYER. And you do not think so ?
Mr. MABON. I do not think so.
Mr. UNTEEMYER. If you took over onto the stock exchange the
more important securities that are dealt in on the curb, it would not
wipe out the curb ?
Mr. MABON. I should say not.
Mr. UNTERMYER. YOU would not have allowed them to deal in those
you took yourself, would you ?
Mr. MABON. NO.
Mr. UNTEEMYEE.
I now read this in evidence:
MAT 12,1909.
Mr. Sturgis for the law committee also presented the following resolution, which was
unanimously adopted: "That the matter of adopting a quotation in this exchange of
securities traded in on the curb be referred to a special committee composed of the law
committee and the committee on unlisted securities with instructions to consider the
subject and to make prompt report thereon to the governing committee."
Mr.
1909:
UNTEEMYER.
I read from the minutes of meeting of May 19,
Special committee composed of the law committee and the committee on unlisted
securities make the following report:
"Resolved, That the governing committee refer back to special committee the following questions for examination and report on or before October 15. 1909:
'"Shall the members of the New York Stock Exchange be prohibited, after a
certain date, say December 31, 1909, from dealing, directly or indirectly, in the
market known as the curb? And further, shall said special committee consider and
report upon any and'all matters connected with this subject?' "
Mr. Stursis moved that the report be received and the resolution adopted.
Seconded and carried unanimously.
60241—PT 6—12
5
476
MONEY TEUST INVESTIGATION.
Meeting of June 27. 1909:
The secretary submitted a communication from E. S. Mendel regarding meetings
on curb, and, on motion of Mr. Groesbeck, said communication was referred to special
committee consisting of the law committee and the committee on unlisted securities.
I offer in evidence from the book of minutes of the governing
committee the meetings of January 19, 1910, resolutions and recommendations with respect to the curb.
I will read the last recommendation:
That the committee on stock list be requested and empowered to examine into
and report upon the desirability of placing upon the floor of the stock exchange, for
dealings under the restrictions provided in section 2 of this report, of any bonds or
shares of stock, either of mining companies or otherwise, that they may deem advisable to recommend, even if such corporations have not made application for listing
to the stock list committee of their own accord, the object of this recommendation
being to bring before the governing committee from time to time the possible advantage of dealing in certain securities now dealt in upon the curb, but which, for some
specific reason, have never applied for or been eligible to the regular list. It is thought
if this course be pursued a gradual system of elimination, in so far as the curb market
is^concerned, will be put. in process, and that it will result in transferring to the exchange from time to time all the real or desirable securities dealt in permanently on
the Street. Your committee realize that an open curb market in some form will
always exist, but they think the course which they have recommended will gradually minimize the evil and convince the community that the governing committee
of the stock exchange are determined to give at all securities as open a market as
may be permissible, or consistent with proper precaution and due security. The
committee believe that there are many securities, both of mining and other nature,
that, by a modification of the commission law in so far as they are concerned, will
seek the exchange floor of their own accord for the transaction of business.
You will note that this last was the recommendation of the special
committee, not acted upon; but it was acted upon to some extent, was
it not, Mr. Mabon ? Mining shares were put upon the stock exchange,
and the commission rate was changed as to them, was it not ?
Mr. MABON. I do not know whether the action of the governing
committee was based upon that particular
Mr. UNTEKMYEB. Mining shares that had been listed and dealt in
exclusively on the curb were placed upon the exchange list, were
they not ?
Mr. MABON. I do not remember whether mining stocks which were
traded in on the curb
Mr. UNTEEMYEE. Let us see. You remember the Utah Copper
Co.?
Mr. MABON. Yes.
Mr. UNTEEMYEB.
Was not that traded in on the curb until it was
put on the list; and was not the Keno, and the Miami Copper Co. 9
Were they not all traded in on the curb until they were put on the
exchange list on the basis of one-sixteenth of 1 per cent commission
where they sold under $10 a share ?
Mr. MABON. Yes.
Mr. UNTEBMYEB.
And they sold for a long time under $10 a share,
did they not ?
Mr. MABON. Some of them.
Mr. UNTERMYEB. All of them, did they not 1
Mr. MABON. I do not know whether the Utah sold under $5.
Mr. UNTEBMYEE. Was not that a $5 per share par value security ?
Mr. MABON. Yes; but the basis of commission is not on the par
value of mining stocks.
Mr. UNTEBMYEB. I know.
MONEY TBUST INVESTIGATION.
477
Mr. MABON. That is what I wanted to bring out.
Mr. UNTEBMYEB. That had been dealt in on the curb, as had these
other mining stocks, until the governing committee changed its
policy and took them in on the stock exchange and allowed members
to deal in them on the basis of one-sixteenth when they were selling
under $10 a share ?
Mr. MABON. Yes.
Mr. UNTEEMYEB.
And in that way they took all that business away
from the curb, did they not ?
Mr. MABON. Not all the business; no.
Mr. UNTEBMYER. All that business, that particular business that
they took unto themselves by listing them on the stock exchange ?
Mr. MABON. Very likely a great deal of that business that was done
on the curb was done by the stock-exchange houses, so that it is quite
unfair to say that stock-exchange houses took business away from
themselves.
Mr. UNTEEMYEE. The stock exchange as a stock exchange took
that business away, did it not ?
Mr. MABON. The stock exchange as a stock exchange listed these
securities.
Mr. UNTERMYEK. And took that business away from the curb,
did it not ?
Mr. MABON. I can not say.
Mr. UNTEEMYEE. Was the
them?
curb ever thereafter allowed to deal in
Mr. MABON. NO
Mr. UNTEEMYEE. DO you not know whilst the curb was allowed
to deal in them anybody could deal in them on the curb; but he did
not have to pay $70,000 to $90,000 for a seat in order to do it, did he ?
Mr. MABON. NO.
Mr. UNTEEMYEE.
When that rule was changed, that business all
disappeared from the men who had previously been permitted to do
it, did it not?
Mr. MABON. TO that extent.
Mr. UNTERMYEE. From time to time you are taking mining stocks
as they apply for admission and for listing and putting them on the
list of the stock exchange, are you not ?
Mr. MABON. Yes, sir.
Mr. UNTEEMYEE. And
all new issues of mining securities that
apply for admission and are respectable you are putting on the stock
exchange ?
Mr. MABON. NO, Mr. Untermyer; that is not quite true.
Mr. UNTEEMYEE. Are you not ? What are you refusing ? Will you
give us the name of one you are refusing ?
Mr. MABON. We have not had any applications, because the requirements
Mr. UNTEEMYEE. I am asking you what you are refusing. I want
my question answered.
Mr. MABON. I do not think we have refused any.
Mr. UNTERMYER. I guess not. Every one you take lessens the
importance of the business of the curb, does it not ?
Mr. MABON. In that respect.
Mr. UNTERMYER. It lessens it, does it not ?
478
MONEY TRUST INVESTIGATION.
Mr. MABON. It lessens it to that extent; yes; but the curb may
lose one to-day and the business increase by something new coming
in to-morrow.
Mr. UNTERMYER. Until they put that on the exchange, and then it
loses that, does it not ?
Mr. MABON. Oh, yes.
Mr. UNTERMYER. I have
not had those resolutions bearing on the
application of the curb for permission to get a place. What was the
date of that application to which you referred in your testimony a
while ago ?
Mr. MABON. I did not say there was any application.
Mr. UNTEEMTEE. Did you not?
Mr. MABON. I said I thought there was not an application.
Mr. UNTERMYEB. I thought you said there had been, about two
years ago.
Mr. MABON. There had been a discussion, I said. This was what
I had in mind.
Mr. UNTEBMYER. Discussion with whom?
Mr. MABON. With this very committee whose resolutions you have
just read.
Mr. UNTERMYER. And a discussion of that committee and any
committee of the curb?
Mr. MABON. I think not.
Mr. UNTERMYER. Or anybody representing the curb ?
Mr. MABON. I think Mr. Mendel did voluntarily appear before the
committee.
Mr. UNTEEMYEE. I did not mean to assume you dragged him there.
Of course he voluntarily appeared; but he appeared on behalf of the
curb, did he not ?
Mr. MABON. I do not remember that he did.
Mr. UNTERMYER. For whom did he appear ?
Mr. MABON. Personally, I believe.
Mr. UNTEEMYER. He was a curb broker, was he not ?
Mr. MABON. Yes.
Mr. UNTERMYEB. And he appeared personally; for what purpose?
Mr. MABON. To discuss the matter of the curb; but I do not remember the details at all.
Mr. UNTERMYER. TO discuss what matters of the curb; the idea of
allowing it to get a place at which to do business ?
Mr. MABON. I do not remember,
Mr. UNTERMYER. And he did not say he appeared for himself and
his associates, did he ?
Mr. MABON. That I do not remember.
Mr. UNTERMYEH. What is the idea of fining a member $50 every
time he deals in any securities on the exchange before 10 in the morning or after 3 in the afternoon ?
Mr. MABON. The object is to have the dealings begin at a specific
time and end at a specific time.
Mr. UNTERMYER. What harm does he do if he wants to work overtime, beyond 3 o'clock?
Mr. MABON. There has to be a definite time for opening and closing
the exchange.
Mr. UNTERMYER. Yes; but this is not a question of opening and
closing the exchange; it is dealing on the exchange.
MONEY TBUST INVESTIGATION.
479
Mr. MABON. There are no dealings on the exchange until the hours
fixed by the committee for dealing in securities.
Mr. UNTERMYER. That refers to making a transaction in the
exchange outside these hours, does it ?
Mr. MABON. I do not understand it so. What is your question ?
Mr. UNTEBMYEE. It only refers to transactions that are made in
the exchange in those hours ?
Mr. MABON. Yes, sir.
Mr. UNTEKMYEE. It does not prevent transactions outside ?
Mr. MABON. Oh, no.
Mr. UNTERMYEE. All the obligations of one member of the exchange
to other members of the exchange, in case of insolvency, take precedence over everybody else's claims against the insolvent member,
do they not ?
Mr. MABON. Yes.
Mr. UNTERMYER.
If a member of the exchange converts stocks
belonging to his customer or practices a fraud upon his customer the
damage to that customer has to wait and be deferred until after that
member has paid his debts to all the other members, does it not ?
Mr. MABON. I never had any personal knowledge of that.
Mr. UNTERMYEE. But that is the rule, and the seat of the member
is sold, and all the proceeds are first applied to the debts to other
members before any outside creditor can get a cent—is not that so ?
Mr. MABON. That is the rule.
Mr. UNTERMYEE. NO matter whether it is a claim for fraud or
anything else ? Is that right.
Mr. MABON. That is the rule.
Mr. UNTERMYEE. SO that, in that respect, the law of your exchange
is contrary to the law of the land, is it not ?
Mr. MABON. I should say not.
Mr. UNTERMYER. YOU think not ?
Mr. MABON. I do not thmk there is anything in that constitution
that is against the law of the land.
Mr. UNTERMYEE. I think there are a great many things. That is
where we may differ. There is a clearing house for securities in the
exchange, is there not ?
Mr. MABON. There is a clearing house; yes.
Mr. UNTERMYER. Are you familiar with the mechanism of that
department ?
Mr. MABON. I am not.
Mr. UNTEEMYER. Who would know of that ?
Mr. MABON. Mr. Doremus, who is the chairman
of the committee,
and Mr. Geddes.
Mr. UNTERMYER. YOU know in a general way, though, what is
required ?
Mr. MABON. In a general way. yes.
Mr. UNTERMYER. What is the machinery, so far as you know?
Mr. MABON. SO far as I know, the buyer exchanges his ticket with
the seller. Those tickets are delivered to the clearing house
Mr. UNTEEMYER. YOU mean at the time of a transaction ?
Mr. MABON. NO ; at the time of the transaction there is nothing.
Mr. UNTERMYER. At the time of a transaction between two members of the exchange, is anything exchanged between them ?
Mr. MABON. NO, sir.
480
MONEY TBUST INVESTIGATION.
Mr. UNTERMYEK. At the end of the day is there anything exchanged
between the buyer and seller 'i
Mr. MABON. NO ; it is done through the offices.
Mr. UNTERMYEK. Through the exchange ?
Mr. MABON. Through the offices of the brokers who make the transaction.
Mr. UNTERMYER. What is done between the offices of those two
brokers ?
Mr. MABON. A ticket is exchanged between the buyer and the
seller.
Mr. UNTEEMYEE. That ticket shows what; that one has sold and
the other has bought ?
Mr. MABON. Yes.
Mr. UNTERMYER.
Mr. MABON. Yes.
Mr. UNTERMYER.
A given stock through a given broker ?
What else is done with that ticket ? Is there any
record made of it in the exchange ?
Mr. MABON. There are no records made in the exchange of any
transactions.
Mr. UNTERMYER. HOW is that transaction cleared, and when ?
Mr. MABON. Through the broker's offices.
Mr. UNTERMYER. I understood there was a clearing house.
Mr. MABON. Oh, yes.
Mr. UNTERMYER. That
transaction has to be closed through the
clearing house, does it not ?
Mr. MABON. Yes; on all stocks that are in the clearing house.
Bonds are not in the clearing house.
Mr. UNTERMYER. Bonds are exchanged directly over the counter
between the members, are they ?
Mr. MABON. Yes.
Mr. UNTERMYER.
Mr. MABON. And
Mr. UNTERMYER.
cleared through the
And many stocks that are listed ?
many stocks that are listed arc not cleared.
Then there is a list of stocks that have to be
clearing house, is there not ?
Mr. MABON. Yes.
Mr. UNTERMYER. Have you that list ?
Mr. MAHON. I have not it here.
Mr. UNTERMYER. HOW is that transaction
dealt with, with respect
to listed stock that has to be cleared through the clearing house?
What is the machinery of that ?
Mr. MAHON. Just as I have described, the tickets are exchanged
and sheets are made up of the various brokers, and the stocks are
cleared in that way.
Mr. UNTERMYER. Mr. Mahon, I want to take up this very important
subject of the removal of stock from the list. There is a regulation in the exchange, is there not, under which a stock that has
been upon the regular list can be removed from that list, and further
dealings in it on the exchange prevented ?
Mr. MAHON. Yes.
Mr. UNTERMYER. Upon the direction of the committee on stock list ?
Mr. MABON. The tock list has the right to remove securities, the
volume of which is so
Mr. UNTERMYER [interposing]. Will you not answer my question ?
Mr. MABON. I am answering it, because there are two methods.
Mr. UNTERMYER. I will ask the stenographer to read the question.
MONEY TBUST INVESTIGATION.
481
The stenographer repeated the question as above recorded.
Mr. UNTERMYER. IS there such a regulation ?
Mr. MABON. I can not answer that yes or no.
Mr. UNTERMYER. I will read it to you. Maybe you will recognize
it then. Do you remember the number of the rule ?
Mr. MABON. I can explain it
Mr. UNTERMYER. YOU know whether there is such a rule, do vou
not?
Mr. MABON. There is a rule, but I can not answer the question yes
or no the way you put it.
Mr. UNTERMYER. YOU will recognize the rule when it is read to
you, will- you not ?
Mr. MABON. Yes. Mr. Martin, can you give me that?
Mr. MARTIN. One is in regard to suspension by the governing
committee, and the other by the stock-list committee.
Mr. MABON. That is what I was pointing out, that one was by the
governing committee, and one as to the stock-list committee.
Mr. UNTERMYER. I call your attention first to page 17 of the constitution, where it says, referring to the committee on stock list:
It shall have power to direct that any such securities or temporary receipts be taken
from the list, and further dealings therein prohibited.
Then, again, at page 64, Article XXXIII, section 4 is as follows:
SEC. 4. The governing committee may suspend dealings in the securities of any
corporation previously admitted to quotation upon the exchange, or it may summarily remove any securities from the Ii3t.
That is part of the constitution, is it not ?
Mr. MABON. Yes.
Mr. UNTERMYER.
Giving the governing committee the power summarily to remove any security from the list. There is a regulation at
page 91, under the head of "Stock list," dated March 27, 1895, &s
follows:
MARCH 27, 1895. Whenever it shall appear to the committee on stock list that the
outstanding amount of any security listed upon the stock exchange has become so
reduced as to make inadvisable further dealings therein upon the exchange, the
said committee may direct that such security shall be taken from the list and further dealings therein prohibited.
That is quite independent of the provision at page 64, that gives the
governing committee the absolute power to summarily remove any
security from the list, is it not?
Mr. MABON. Yes; that is what I was trying to bring out in answering the question.
Air. UNTERMYER. We have brought it out now. The stock-list c<Jmmittee, then, may remove a security from the list under the regulation
of March, 27, 1895, and the governing committee may summarily
remove under Article XXXIII of the constitution. Is that right ?
Mr. MABON. Yes. "Suspend dealings" or "summarily remove."
Mr. UNTERMYER. We have already discussed the privilege of
having the stock on the list, have we not ?
Mr. MABON. Yes.
Mr. UNTERMYER.
And there is no question about its great value
and advantage in the ordinary run of cases. When a security is once
upon the regular list and is an active security, and is being taken as
collateral in the banks, and is therefore readily the subject of loans,
482
MONEY TBUST INVESTIGATION.
it is a severe loss to the investor to have it taken from the list, is
it not ?
Mr. MABON. I should say so.
Mr. UNTERMYER. The stock exchange has in a great many cases
removed securities from the list, has it not ?
Mr. MABON. Yes.
Mr. UNTERMYER.
Does it do that always upon written application
or has it done so without any application ?
Mr. MABON. I do not think that
Mr. UNTERMYER. Tell us, if you know, because it is important.
If you do not know, say so, and we will get somebody else who does
know.
^^
Mr. MABON. What was the question ?
Mr. UNTERMYER. I will ask the stenographer to repeat the question.
The stenographer repeated the question as above recorded.
Mr. MABON. It does it on written information.
Mr. UNTEKMYER. Written information from whom?
Mr. MABON. Usually, in the case of reorganization certificates,
from the depository of those certificates.
Mr. UNTERMYER. We are not at the moment talking about reorganization certificates. Suppose it is a powerful company like the
United States Steel Co., the American Tobacco Co., or the Southern
Railroad Co., does the stock exchange require an application stating
the fact, before it removes that stock from the lists
Mr. MABON. Not always. It gets the information.
Mr. UNTERMYER. Will you not answer my question ?
Mr. MABON. I thought I had answered it.
Mr. UNTERMYER. I simply asked you this: Does it require a formal
application from the company ?
Mr. MABON. NO, it does not.
Mr. UNTERMYER. That is an answer to my question. Now, we will
take up some of these cases in which you nave removed certain
stocks from the list. You remember the formation of the United
States Steel Corporation, do you not ?
Mr. MABON. Yes.
Mr. UNTERMYER. YOU
remember that prior to its formation there
were a number of constituent companies whose stocks were advertised in exchange for stock of the United States Steel Corporation
that were listed on the stock exchange, were there not?
Mr. MABON. Yes.
Mr. UNTERMYER.
Among them was the American Steel & Wire
Co. of New Jersey, was it not?
Mr. MABON. Yes.
Mr. UNTERMYER.
The American Tin Plate Co.; was that another
one?
Mr. MABON. On the regular list ?
Mr. UNTERMYER. The American Steel Hoop Co., the American
Sheet Steel Co.
Mr. MABON. The American Tin Plate Co.'s stock, I think, was
never on the regular list.
Mr. UNTERMYER. Oh, yes; it was.
Mr. MABON. I think not. You may be right.
Mr. UNTERMYER. The trust-company receipts
for preferred and
common stock were on the list, were they not? I am referring to
the American Tin Plate Co.
MOITBY TBTJST INVESTIGATION.
Mr. MABON. Yes.
Mr. UNTEEMYEE. Well, that is the same thing.
Mr. MABON. I want to be correct, and there is a difference.
Mr. UNTEEMYEK. And the American Steel Hoop Co.'s receipts
preferred and common stock were on the list ?
483
for
Mr. MABON. Yes.
Mr. UNTEEMYEE.
And also the American Sheet Steel Co.'s receipts
for preferred and common ?
Mr. MABON. Yes,
sir.
Mr. UNTEEMYEB. And, practically, the constituent companies that
afterwards went into the United States Steel Co. were they not on the
list, or a number of them ?
Mr. MABON. A number of them; yes.
Mr. UNTEEMYER. That answers our purpose. Now, you remember
that the United States Steel Corporation upon its organization
advertised in the newspapers that the holders of the constituents of
these different companies, like the American Tin Plate, the American
Steel & Wire, the Steel Hoop, the National Tube Co., and a number
of other companies, could exchange their securities for United States
Steel Co. stock on a certain basis which was prescribed ?
Mr. MABON, Yes.
Mr. UNTEEMYEE. YOU
Mr. MABON. Yes.
Mr. UNTEEMYEE. And
remember that ?
those who chose to take the basis of exchange that was laid down by the United States Steel Corporation
could make the exchange?
Mr. MABON. Yes.
Mr. UNTEEMYEE. And those who did not could leave it alone ?
Mr. MABON. That is my impression. It is a long while ago.
Mr. UNTEEMYEE. Then the time came, did it not, when the stock
exchange removed from the list all the securities that had been listed,
of these constituent companies ? Answer my question, Mr. Mabon.
They did remove those stocks from the list.
Mr. MABON. The stocks were not on the list at that time. The
trust certificates for the stocks, for instance, of the American Steel &
Wire
Mr. UNTEEMYEE. That is not so at all, as to some of them, is it?
Mr. MABON. I think it is true of all of them.
Mr. UNTEEMYES. Whether they were the trust certificates for the
preferred and common stocks, or whether they were the stocks,
makes no difference 1
Mr. MABON. I think it does.
Mr. UNTEBMYEE. They removed the trust certificates from the list,
did they not i
Mr. MABON. They removed certain of the stocks from the list.
Mr. UNTEEMYEE. Did they not remove all of them from the list ?
Mr. MABON. There was an amount that was not on the list.
Mr. UNTEEMYEE. YOU will have to answer my question. Did they
not remove every single security represented by those constituent
companies from the list and take the entire company and all its dealings in shares from that list ?
Mr. MABON. There was 99 per cent in some cases
Mr. UNTEEMYEE. NO; there was not. Never mind about that,
Mr. Mabon. You can answer my question, and that is all I want you
484
MONEY IBUST INVESTIGATION.
to do. Is it not a fact that those securities were removed from the
list?
Mr. MABON. I can not answer it that way.
Mr. UNTEKMYEE. YOU can answer it.
Mr. MABON. I can not answer it that way.
Mr. UNTERMYEE. There were upon the list the American Tin Plate
Co. preferred and the common stock represented by trust receipts,
were there not ?
Mr. MABON. Yes.
Mr. UNTEBMYEB.
A time came when you remoyed that security
from the list, did it not ? What was that time ?
Mr. MABON. The date that was removed from the list, American
Tin Plate Co. trust certificates for common and preferred stock, May
26, 1901.
Mr. UNTEBMYEE. Did the time come when the same was done with
the other constituent companies ?
Mr. MABON. Yes; the date of removal from the list; yes.
Mr. UNTEBMYEE. DO you remember the fact that the Southern
Railway Co., when it was reorganized, had a voting trust to J. P.
Morgan and two other gentlemen as trustees ?
Mr. MABON. Yes, sir.
Mr. UNTEEMYEB. By
which all the stockholders were required for
five years to put their securities in that voting trust, and those three
gentlemen voted the stock of that company. Do you remember that ?
Mr. MABON. I do; yes.
Mr. UNTEEMYEB. DO you
remember what happened at the time
that five-year limitation of the voting trust expired ?
Mr. MABON. 1902«
Mr. UNTEEMYEE. Yes.
Mr. MABON. I was not a member of the stock-list committee, but I
do remember.
Mr. UNTEEMYEE. DO you remember that in 1902 these three voting
trustees wanted an extension of the voting trust which gave them
control of the property as against the stockholders, and that they
advertised inviting or requestmg stockholders to allow this extension ?
Mr. MABON. May I have the memorandum of the Southern Railway
to refresh my recollection ?
Mr. UNTEEMYEB. Yes; get the memorandum of the Southern Railway.
Whilst we are waiting for this data Messrs. Morgan & Co. have sent
us these figures, which we will have to have put in the record, and
from which it appears that of this twenty-five millions there was
agreed to be loaned, if necessary, by the banks that received the
twenty-five millions on the 24th of October, 1907, 123,550,000, but
there was only actually loaned of it $18,945,000.
Before we read the names of the banks, we will get the representative of the Treasury Department, who I believe is here, to show how
much was deposited in these banks.
We will ask to have marked at the end of Mr. Steele's testimony the
list of the banks, the amount agreed to be loaned if necessary, and the
amount loaned.
485
MONEY TRUST INVESTIGATION.
The paper referred to was marked "JExhibit No. 34, June 13, 1912,"
and is here printed in the record as follows:
EXHIBIT N O . 34, JUNE 13,
1912.
Loam, Oct. £4, Idffl.
National Bank of Commerce
American Kxphange Nfttfo^inl "Rnnir
Chase National Banfc
National Park Bank
Manhattan Co
National City Bank
Fourth National Bank
Chemical National Bank
Total
,
,
,
,
.,,
...
Agreed to
loan if
necessary.
Loaned.
$4,000,000
1,800,000
2,500,000
1,000,000
1,600,000
1,000,000
1,000,000
500,000
8,000,000
1,000,000
500 000
500,000
300,000
250,000
12,680,000
1,356,000
1,730,000
910,000
1,340,000
1,000,000
1,000,000
350,000
6,330,000
900,000
400 000
450,000
200,000
300,000
23,550,000
18,945,000
Mr. UNTEKMTEB. Then we will offer in evidence from the subtreasury a Est of the deposits made by the Treasury Department with
the national banks in Mew York City between October 22, 1907, and
October 30 1907, of $37 697 000.
On October 22. 1907. there was deposited a total of $3 210 000,
of which $1 000 000 was deposited with the First National Bank,
$1,000 000 with the Chase National Bank $210,000 with the Hanover
National Bank and $1,000,000 with the National City Bank.
The next day, October 23, there was deposited by the Treasury
Department $10 017 000. as follows: $3,500 000 with the First
National, $1 000.000 with the Fourth National. $135 000 with the
Hanover National Bank, $4 000 000 with the National City Bank,
and another $382 000 that day with the Hanover Bank, and $1 000 000
with the Chemical National Bank.
On October 24, 1907, there was deposited $5,708 000 of which
$4,750 000 was deposited with the First National Bank. $100 000
with the First National Bank of Brooklyn. $500 000 with the Chase
National Bank. $860 000 with the Park Bank. $4 000 000 with the
National City Bank, $1 000 000 with the Merchants' National Bank.
$4,098 000 with the Hanover National Bank, $100 000 with the
Citizens' Central National Bank of New York. $100 000 with the
Consolidated National Bank of New York $100 000 with the Liberty
National Bank of New York, and $100 000 with the Merchants'
National Bank of New York.
On October 25, 1907, there was deposited $3,367,000—$2,000,000
with the Mechanics' National Bank of New York, $68,000 with the
Hanover National Bank, $100,000 with the Merchants' Exchange
National Bank, $100,000 with the Irving National Bank, $100,000
with the Seaboard Bank, $150,000 with the First National Bank of
Brooklyn, $249,000 with the Chase Bank, $100,000 with the National
Copper Bank, and $500,000 with the National Bank of Commerce of
New York.
486
MONEY TEUST INVESTIGATION.
On October 26, 1907, there was a total of $1,440,000 deposited, as
follows: American Exchange National Bank, 8500,000; Hanover
National Bank. $300,000; Merchants' Exchange National Bank,
1300,000; Mechanics' National Bank, $100,000;' Garfield National
Bank, $100,000.
On October 28, 1907, there was deposited $3,050,000, as follows:
To the Chase National Bank, $1,000,000; to the Mechanics' National
Bank, $1,050,000; and to the National Bank of Commerce, $1,000,000.
On October 29, 1907, there was deposited $630,000, of which
$130,000 was deposited with the Hanover 1STational Bank and $500,000
with the Chase National Bank.
On October 30, 1907, there was deposited $275,000, of which
$135,000 was with the Mechanics' National Bank and $140,000 with
the Park National Bank.
Of the amount agreed to be loaned of this $25,000,000, the First
National Bank agreed to loan $4,000,000 and loaned $2,680,000, it
having received, as I figure it at the moment, $9,250,000 on October
22, 23, and 24.
The Hanover National Bank agreed to lend, if necessary, $1,500,000,
and it lent $1,355,000, having received something over $4,000,000—
between $4,000,000 and $4,500,000.
I do not find in this list that up to October 24 the Bank of Commerce had received any of this money. It had agreed to loan
$2,500,000, and had loaned $1,730,000. It received $500,000 on the
25th of October and $1,000,000 on the 28th of October. I do not
find any other amounts.
The Chase National Bank had agreed to lend $1,000,000, and had
loaned $1,000,000; but it had received, between October 22 and
October 24, $1,500,000.
The National City Bank had agreed to loan $8,000,000, and had
loaned $6,330,000. It had received $9,000,000.
I do not think we can go all over this list; it is rather long. That is
the general analysis in an impartial and imperfect way, as far as I
gather the figures, figuring them out at the moment as I read them.
I offer this statement in evidence as having been produced from
the subtreasury from the official books, as I assume.
The paper referred to was marked "Exhibit No. 35, June 13,1912,"
and is here printed in full in the record, as follows:
EXHIBIT NO. 35, JUNE 13, 1912.
October 22, 1907:
First National Bank, New York, N. Y
Chase National Bank, New York, N. Y
Hanover National Bank, New York, N. Y
National City Bank, New York, N. Y
$1,000.000
1,000,000
210,000
1,000,000
October 23, 1907:
First National Bank, New York, N. Y
First National Bank, New York, N. Y
Fourth National Bank, New York, N. Y
Fourth National Bank, New York, N. Y
Hanover National Bank, New York, N. Y
National City Bank, New York, N. Y
National City Bank, New York, N. Y
Hanover National Bank, New York, N. Y
Chemical National Bank, New York, N. Y
2,500,000
1,000,000
500,000
500,000
135,000
1,500,000
2,500,000
382,000
1,000,000
$3,210,000
10,017.000
MONEY TBUSI INVESTIGATION.
October 24, 1907:
First National Bank, New York, N. Y
First National Bank, New York, N. Y
First National Bank, New York, N. Y
First National Bank, Brooklyn, N. Y
Chase National Bank, New York, N. Y
National Park Bank, New York, N. Y
National City Bank, New York, N. Y
National Citv Bank, New York, N. Y
Merchants' National Bank, New York, N. Y
Hanover National Bank, New York, N. Y
Hanover National Bank, New York, N. Y
Citizens' Central National Bank, New York
Consolidated National Bank, New York
Liberity National Bank, New York, N. Y
Merchants' National Bank, New York, N. Y
October 25, 1907:
Mechanics' National Bank, New York, N. Y
Mechanics' National Bank, New York, N. Y
Hanover National Bank, New York, N. Y
Merchants' Exchange National Bank, New York, N. Y..
Irving National Exchange Bank, New York, N. Y
Seaboard National Bank, New York, N. Y
First National Bank, Brooklyn, N. Y
Chase National Bank, New York, N. Y
National Copper Bank, New York, N. Y
National Bank of Commerce, New York, N. Y
October 26,1907:
American Exchange National Bank, New York, N. Y . . .
Hanover National Bank, New York, N. Y
Merchants' Exchange National Bank, New York, N. Y..
Mechanics' National Bank, New York, N. Y
Garfield National Bank, New York, N. Y
October 28, 1907:
Chase National Bank, New York, N. Y
Mechanics' National Bank, New York, N. Y
National Bank of Commerce, New York, N. Y
487
$1,500,000
750,000
2,500,000
100,000
500,000
860,000
2,500,000
1,500,000
1,000,000
3,383,000
715,000
100,000
100, 000
100,000
100,000
-$15,708,000
1,000,000
1,000,000
68,000
100,000
100,000
100,000
150, 000
249,000
100,000
500,000
3,367,000
500,000
360,000
300,000
180,000
100,000
1,000,000
1,050,000
1,000,000
October 29, 1907:
Hanover National Bank, New York, N. Y
Chase National Bank, New York, N. Y
130,000
500,000
October 30,1907:
Mechanics' National Bank, New York, N. Y
National Park Bank, New York, N. Y
135,000
140,000
1,440,000
3,050,000
630,000
275,000
37,697,000
Mr. UNTEEMYER. Will you read the last question to the witness?
The last question was read by the stenographer, as follows:
Mr. UNTBRMYBR. DO you remember that in 1902 those three voting trustees wanted
an extension of the voting trust which gave them control of the property as against
the stockholders, and that they advertised inviting or requesting stockholders to
allow this extension?
Mr. UNTEKMTEE. DO you recall that 1
Mr. MABON. I do not recall that. Mr. Pomroy is here, and he was
a member of the stock-list committee and knows more about it than
I do. I was not a member of the stock-list committee.
Mr. UNTEEMYER. YOU would rather have him testify on that
subject ?
Mr. MABON. I would very much rather
488
MONEY TEUST INVESTIGATION.
Mr. UNTBRMYEK. Very well, then; we will excuse you, Mr. Mabon,
and ask Mr. Pomroy.
Witness excused.
TESTIMONY OF HE1TEY K. POMBOY.
The witness was sworn by the chairman.
Mr. UNTEBMYEB. YOU are a member of the New York Stock
Exchange ?
Mr. POMROY. I am.
Mr. UNTEBMYEB. And of a brokeragefirm?
Mr. POMBOY. Yes.
Mr. UNTEBMYEB. What is your firm ?
Mr. POMBOY. Pomroy Bros.
Mr. UNTEBMYEE. YOU have been president
of the exchange, have
you not ?
Mr. POMBOY. I have.
Mr. UNTEBMYER. In what year were you president 1
Mr. POMBOY. From May, 1904, until May, 1907—three years.
Mr. UNTEBMYEB. You just missed the panic, did you not ?
Mr. POMBOY. NO, sir; I got it.
Mr. UNTEEMYEB. YOU missed being president ?
Mr. POMEOY. Yes.
Mr. UNTEBMYEB. But you were there at the pa nic
Mr. POMBOY. I certainly was.
Mr. UNTEBMYEB. HOW many years have you been
a member of
the exchange ?
Mr. POMBOY. Since January, 1878. You can figure it.
Mr. UNTERMYEB. Were you a member of the committee on stock
list?
Mr. POMEOY. I was from May, 1896, to May, 1904, and from
September 16, 1909, to date.
Mr. UNTEEMYEE. YOU are still a member of that committee ?
Mr. POMBOY. I am still.
Mr. UNTEBMYEB. The governing committee has frequently exercised its power to remove stocks from the list, has it not ?
Mr. POMBOY. Yes, sir; generally on recommendation from the
stock-list committee.
Mr. UNTEBMYEB. We will get to that, Mr. Pomroy.
Mr. POMEOY. I thought I would save you time.
Mr. UNTEBMYEB. That is very good of you, but time does not
matter to me.
Mr. POMROY. It does to me.
Mr. UNTEBMYEB. I have just been asking Mr. Mabon about this
transaction in Southern Railway certificates. You remember that
occurrence, do you not ?
Mr. POMBOY. Oh, yes.
Mr. UNTERMYER. Were
you a member of the committee on stock
list at the time ?
Mr. POMBOY. What was the date 1
Mr. UNTEBMYEB. 1902.
Mr. POMBOY. Yes.
Mr. UNTEBMYEB. I am taking
Mr. POMEOY. Yes, sir.
a few of these cases as illustrative.
MONEY TRUST INVESTIGATION.
489
Mr. UNTERMYER. YOU do not question the great value of a listing
of a stock on the exchange, do you ?
Mr. POMROY. Oh, no, sir.
Mr. UNTERMYER. YOU know it makes it available as collateral 1
Mr. POMROY. Certainly.
Mr. UNTERMYER. And that it gives it salability and a ready market ?
Mr. POMROY. More salability and a more ready market than if it
were not listed on the exchange; yes, sir.
Mr. UNTERMYER. It frequently gives it its only market ?
Mr. POMROY. I should not say that that was correct. Very frequently
Mr. UNTERMYER. HOW ?
Mr. POMROY. NO ; 1 should not say that that was correct.
Mr. UNTERMYER. What market would a stock have except by
private contract, as a rule, if it were not listed on the New York
Stock Exchange t
Mr. POMROY. Oh, there are many stocks that are listed on the
New York Stock Exchange that are listed on other exchanges;
Philadelphia
Mr. UNTERMYER. Not in New York.
Mr. POMROY. Yes; there are some.
Mr. UNTERMYER. This is the country's great market, is it not ?
Mr. POMROY. Yes, sir; absolutely.
Mr. UNTEEMYER. The New York Stock Exchange ?
Mr. POMROY. Yes, sir.
Mr. UNTERMYER. And it is an international market, is it not ?
Mr. POMROY. Yes, sir.
Mr. UNTERMYER. There are vast dealings between New York and
London, for instance 1
Mr. POMROY. Yes, sir.
Mr. UNTERMYER. And
the New York Stock Exchange is to-day
an integral part of the financial system of the country ?
Mr. POMROY. Well, I do not—I want your definition of integral.
Mr. UNTERMYER. An essential part ?
Mr. POMROY. An essential part; yes.
Mr. UNTERMYER. That is integral.
Mr. POMROY. Well, your knowledge of the dictionary" is greater
than mine.
Mr. UNTERMYER. Well, it is an essential part 1
Mr. POMROY. Yes.
Mr. UNTERMYER. YOU know, do you not, that the banks in making
loans on securities take stock-exchange quotations as a basis, where
they are active stocks ?
Mr. POMROY. For such securities as are there listed.
Mr. UNTERMYER. Yes; and the rule is to lend 20 per cent below
the listed price of the stock ?
Mr. POMROY. AS a rule. Sometimes the percentage is greater.
Mr. UNTERMYER. That is the rule, is it not 1
Mr. POMROY. Yes; that is the rule.
Mr. UNTERMYER. YOU heard Mr. Cannon's testimony ?
Mr. POMROY. Certainly.
Mr. UNTERMYER. YOU agree to that ?
Mr. POMROY. Absolutely; so far as that goes, yes, sir.
490
MONEY TBUST INVESTIGATION.
Mr. UNTEBMYEE. And when the quotations change and the stock
goes down on the exchange, why, the custom is for the hanks holding
the collateral to call for more margin ?
Mr. POMEOY. If the broker does not send it before they make the
call.
Mr. UNTEBMYEB. The usual thing is for the broker, when he finds
that a stock is lower, to voluntarily furnish the additional margin ?
Mr. POMEOY. Yes, sir.
Mr. UNTEBMYEB. If a stock
is upon the list and has been an active
stock on the list, you realize, do you not, that its removal from the
list is a great hardship upon the owners of that stock ?
Mr. POMEOY. I do.
Mr. UNTEEMYEE. Keverting
to this incident of the Southern Railway trust certificates, do you recall that in 1902 the voting trust
under which the Southern Railway was reorganized expired 1
Mr. POMBOY. I am sure that was so.
Mr. UNTEEMYEE. It so appears.
Mr. POMBOY. It so appears.
Mr. UNTEEMYEE. DO you remember who the members of the voting
trust were who were mentioned in the reorganization plan 1
Mr. POMEOY. NO; I do not.
Mr. UNTEEMYEE. Mr. Morgan was one ?
Mr. POMEOY. I do not know.
Mr. UNTEEMYEE. YOU know that J. P. Morgan
& Co. control the
road under a voting trust, and have for years ?
Mr. POMEOY. That is my impression.
Mr. UNTEEMYEE. Those voting trust certificates were listed on the
exchange 3
Mr. POMBOY. Yes, sir; the only things that ever were listed up to
that time.
Mr. UNTEEMYEE. It was the only thing that had ever been issued
on the reorganization ?
Mr. POMEOY. That is right.
Mr. UNTEEMYEK. The stock had been put into the voting trust.
The voting trustees held the stock, issued trust certificates, and those
were the things that were listed ?
Mr. POMEOY. I do not know exactly the legal status of it. As I
understand it, Mr. Untermyer, when the road was reorganized the
old security holders who were entitled to stock received voting trust
certificates in lieu thereof.
Mr. UNTEBMYEB. That is, the stock was put with these voting
trustees, who issued certificates in lieu of the stock?
Mr. POMEOY. I presume that would have been the method.
Mr. UNTEEMYEE. DO you remember that upon the termination of
that five-year voting trust the trustees advertised and asked the
stockholders to extend the voting trust for another five years ?
Mr. POMEOY. I remember that they asked for an extension of the
voting trust, but I would not say as to the time. I did know that
they asked the holders of the then voting trust certificates to assent
to a further extension of the voting trust.
Mr. UNTEEMYEB. DO you not remember that when that voting
trust expired what they asked from the stockholders was
Mr. POMEOY. NO; not from the stockholders.
Mr. UNTEEMYEE. From the holders of the voting trust receipts,
who were entitled to get stock for the receipts.
EXHIBIT NO. 1, MAY 16, 1912.
THB COFFEE EXCHANGE OF THE CITY OF NEW YOKE.
[Supplement]
\
Julyl
to
June 30.;
1
/
i
Arrivals of coffee.
Crops.
United States.
All kinds."
Bio and
Santos.
Brazil.
1
1886
1887
1887
1888
1888
1889
1889
1890
1890
1891
1891
1892
1892
1893
1893
1894
1S94
1895
1895
1S96
1896
1897
1897
1898
1898
1899
1899
1900
1900
1901
1901
1902
1902
1903
1903
1904
1904
1905
1905
1900
1906
1907
1907
1908
1908
1909
1909
1910
1910
1911
1911
1912
! •10,420,000
|
' • 6,934,000
' •11,110,000
'
6,078,000
2,734,100
1
Other
kinds.
Total
United
States all
kinds.
Deliveries of coffee.
1
Total
Total
United
Europe all States
and
kinds.
Europe.
1,060,702
3,794,802
7,001,710
United
States.
Europe.
~
7,363,010
July
Jan.
July
Jan.
July
Jan.
July
Jan.
July
Jan.
July
Jan.
July
Jan.
1,1886, 8i
l,1887,13i
l,1887,16i
1,1888,17
l,1888,13i
1,1S89,15|
1,1889,14?
1,1890,17
1,1890,17.
1,1891,17.
1,1891,17]
1,1892,13:
l,1892,12i
1,1893,17
/July,
4,298,845 ' 6,272,688 10,571,633 \Jan.,
July,
4,395,946 6,816,90; 11,212,861 Jan.,
July,
4,339,128 6,803,685 11,142,813 Jan.,
July,
5,088,594 , 7,155,610 12,244,204 Jan.,
6,036,311 8,535,591 14,571,902 July,
Jan.,
July,
5,682,636 7,798,268 13,480,904 Van.,
/July,
6,035,623 8,937,076 14,972,699 Van.,
July,
5,843,883 8,486,042 14,329,925 Jan.,
July,
6,663,569 8,853,094 15,516,663 Jan.,
July,
6,847,877 9,118,621 15,966,498 Jan.,
6,853,056 9,280,651 16,133,707 July,
Jan.,
July,
6,687,673 9,475,680 16,163,353 Jan.,
6,806,883 9,984,332 j 16,741,215 July,
Jan.,
7,042,720 10,502,030 17,544,750 (July,
Jan.,
July,
7,043,595 10,481,823 17,525,418 Jan.,
7,519,659 11,129,943 18,649,602 July,
Jan.,
7,287,400 10,811,074 18,098,474 July,
Jan.,
7,015,321 10,492,532 17,507,853 Julv,
Jan.,
July,
Jan.,
1
3,100,618
2,433,248
2,146,423
2,678,207
3,115,680
3,552,792
2,588,193
4,024,968
3,975,880
6,357,363
5,438,974
6,600,763
6,200,013
7,036,093
5,840,561
7,560,345
6,867,627
10,870,930
11,261,331
13,212,775
11,900,173
13,757,746
12,361,454
13,916,399
11,265,510
12,647,595
9,636,563
14,377,932
16,399,954
16,758,279
14,126,227
15,730,282
12,841,057
16,669,278
13,719,530
14,166,640
11,070,422
13,678,942
Oct.,
Dec.,
July,
May,
Sept.,
May,
July,
July,
June,
Nov.,
July,
July,
Oct.,
May,
Mar.,
Apr.,
Sept.,
Sept.,
July,
July,
Aug.,
Dec,
July,
Dec,
July,
June,
July,
Jan.,
Sept.,
Sept.,
Dec,
Mar.,
Sept.,
July,
July,
May,
1893, sold at 17.75 in Oct., 1893
1894, sold at 12.80 In June, 1894
1894, sold a t 15.75 m July, 1894
1895, sold at 10.45 in Oct., 1894
1895, sold at 15.60 in Aug., 1895
1897, sold at 9.65 in June, 1896
1896, sold at 11.85 in July, 1896
1897, sold a t 6.65 m June, 1897
1898, sold at 7.80 in July, 1897
1897, sold at 4.60 in Nov., 1897
1699, sold at 6.60 in Aug., 1898
1899, sold a t 4.55 in June, 1899
1899, sold at 4.10 in Sept., 1899
1901, sold a t 8.05 in June, 1900
1901, sold at 9.20 in July, 1900
1901, sold a t 5.00 in Apr., 1901
1901, sold a t 4.65 in Aug., 1901
1902, sold a t 8.00 in No*« 1901
1903, sold a t 6.10 in Aug., 1902
1903, sold a t 3.55 in June, 1903
1903, sold at 3.55 in Aug., 1903
1904, sold a t 9.40 in Feb., 1904
1904, sold at 5.80 in July, 1904
1905, sold a t 8.80 in Jan., 1905
1906, sold a t 8.10 in Aug., 1905
1906, sold a t 5.30 in June, 1906
1907, sold at 7.90 in Aug., 1906
1907, sold a t 5.05 in Jan., 1907
1907, sold a t 5.20 in July, 1907
1908, sold a t 6.60 in Oct., 1007
1908, sold at 4.95 in Nov., 1908
1909, sold a t 7.30 in Mar., 1909
1909, sold at 5.10 in Sept., 1909
1910, sold a t 7.25 in Jan., 1910
1910, sold a t 6.65 in July, 1910
1911, sold at 11.84 in Jan., 1911
July
Jan.
July
Jan.
July
Jan.
July
Jan.
July
Jon.
July
Jan,
July
Jan.
July
Jan.
July
Jan.
July
Jan.
July
Jan.
July
Jan.
July
Jan.
July
Jan.
July
Jan.
July
Jan.
July
Jan.
July
Jan.
July
Jan.
1,1893,161 Lowest,
1,1894,181 Highest,
1,1894,16* Lowest,
1,1895,15| Highest,
1,1895,15} Highest,
1,1896,14* Lowest,
1,1896,13 Highest,
1,1897,101 Lowest,
1,1897, 74 Highest,
1,1898, 6 Lowest,
1,1898, 6 Lowest,
1,1899, 6: Highest,
1,1899, 6 Lowest,
1,1900, 7 Highest,
1,1900, SH Highest,
1,1901, 7 | Lowest,
1,1901, 6 Highest,
1,1902, 7 Lowest,
1,1902, 6i Highest,
1,1903, 5 | Lowest,
1,1903, M 1 Lowest,
1,1904, 7 j Highest,
1,1904, 7 , Lowest,
1,1905, S Highest,
1,1905, 7 Highest,
1,1906, 8?, Lowest,
1,1906, 7* Highest,
1,1907, 71 Lowest,
1,1907, 6
Highest,
1,1908, 6 Lowest,
1,1908, 61 Lowest,
1,1909, 6 Highest,
1,1909, 7 Lowest,
1,1910, 8f,I Highest,
1,1910, 8 Lowest,
1,1911,13 Highest,
1,1911,13
1,1912,14
1,938,877
1,295,259
3,234,136
4,944,100
8,178,236
2,163,820
5,888,400
1,440,086
4,343,218
7,210,400
11,553,618
2,658,868
6,589,100
| • 8,430,000
|
1 • 9,323,000
; .11,979,000
|
•11,284,000
4,260,000
2,483,848
1,385,822
3,869,670
6,215,600
10,086,270
2,703,860
6,716,400
5,358,000
2,507,726
1,412,593
3,920,319
5,532,617
9,452,936
2,672,976
6,045,685
7,307,000
3,451,689
1,165,330
4,617,019
6,715,936
11,332,954
4,411,832
6,392,719
6,202,000
3,327,498
955,741
4,283,239
6,987,189
11,270,428
4,398,549
6,547,679
1- 9,401,000
4,309,000
3,057,110
1,128,286
4,185,396
5,685,219
9,870,615
3,380,366
1,267,465
4,647,831
7,211,545
11,859,376
3,017,741
1,147,485
4,165,226
6,701,21G
10,860,442
•13,918,000
8,680,000
4,200,405
1,189,932
5,390,337
7,918,554
13,308,891
^10,OSS, 000 10,462,000
6,085,705
1,251,631
0,337,336
9,648,660
15,985,996
13,730,000
8,771,000
4,741,827
1,278,810
6,020,637
8,136,306
14,156,943
13,801,000
8,959,000
4,509,299
1,134,303
5,643,602
9,111,146
14,754,747
15,100,000
10,927,000
4,983,866
1,132,424
6,116,290
8,583,201
14,699,491
19,735,000
15,439,000
6,738,656
1,107,139
7,905,815
11,107,552
19,013,367
}16,664,000
12,324,000
5,616,934
1,254,093
6,871,027
10,018,813
16,889,840
}l5,083,000
10,408,000
5,819,609
1,810,784
7,430,393
9,622,435 I 17,062,828
}l4,448,CO0
7,665,010 ' 15,444,265
9,9rx8,000
6,423,188
1,356,071
7,779,259
114,792,000 . 10,227,000
4,964,018
1,388,264
6,352,282
9,047,645
15,399,927
23,814,000
19,051,000
5,961,931
1,324,750
7,286,681
13,385,000
20,671,681
14,834,000
10,283,000
5,348,048
1,207,781
6,555,829
13,995,032 , 18,550,861
16,918,000 ! 12,419,000
6,292,972
1,529,755
7,822,727
19,135,000 I 14,944,000
5,404,090
1,169,842
6,573,932
11,276,476 I 17,850,408
10,548,000
5,154,912
1,210,040
6,364,962
8,950,639 | 15,315,491
9,735,763
:
17,558,490
}
i Crops other than Bio and Santos from private sources.
46627—PT 1—VB. (To face page 66.)
Lowest,
Highest,
Highest,
Lowest,
Lowest,
Highest,
Lowest,
Highest,
Highest,
Lowest,
Highest,
Lowest,
Lowest,
Highest,
1886, sold a t 7.55 in July, 1886
1887, sold a t 22.25 in June, 1887
1887, sold at 19.60 in July, 1887
1888, sold a t 9.00 in Mar., 1888
1888, sold a t 9.50 in Aug., 1888
1889, sold a t 18.00 in Mar., 1889
1889, sold a t 13.00 in July, 1889
1890, sold at 18.30 in Mar., 1890
1890, sold at 18.50 in Sept., 1890
1891, sold at 13.10 in Jan., 1891
1891, sold at 17.25 in July, 1891
1892, sold at 10.35 in Oct., 1891
1892, sold a t 11.75 in July, 1892
1893, sold at 17.70 in Feb., 1893
2,903,132
6,605,000
i
Aug.,
Dec.,
Dec,
Dec.,
Oct.,
Dee.,
Aug.,
Mar.,
Sept.,
Dec,
July,
Jan.,
Oct.,
Mar.,
8,827,000
5,476,000
Quotations of Bio No. 7, spot coffee in New
York, on 1st of July and January, together
with highest and lowest prices during each
crop year.
3,985,639
4,323,332
4i
133,854
3' i268
,222
2,329,611
2,868,714
3,679,175
2,764,590
2,384,563
2,388,337
1,909,120
2,701,610
2,865,023
3,106,271
2,671,585
110,377,000
'
Highest and lowest price at which
future contracts sold during corresponding years.
tfuly,
10,034,595 | Jan.,
o8,052,220
MO m ',/July',
{Jai£
/July,
9,247,968 | [Jan.,
(July,
9,420,260 [Jan.,
/July,
8,718,661 Van.,"
(July,
10,804,551 Van.,
(July,
10,946,228 Van.,
10,796,512
(-11,764,000
Total.
World's visible
supply on 1st 0/
July and January.
Highest
and
lowest.
Highest and
lowest for
good second July l
and No. 7
to
in Bio per 10 June 30
Correkilos, export
sponding. duty unpaid.
I
3,033,000
}l4,524,0O0
Bio exchange on
London.
'
1
Aug., 1886, 8J
June, 1887,211
July, 1887,18J
Mar., 1888,10i
July, 1888,12
Mar., 1889,17}
July, 1889,144
Mar., 1890,19
Aug., 1890,191
June, 1891,17
July, 1891,174
May, 1892,12i
July, 1892,12}
Feb., 1893,18}
July, 20J
June, 22J
Aug., 221
Jan., 251
July, 25J
Feb., 281
Oct., 28
Apr., 204
Nov., 24}
May, 161
July, im
June, 109
July, 10}
Oct., 155
July, 2OJ
June, 22}
July, 22|
Mar., 24
Aug., 26}
Mar., 281
Oct., 28
June, 20|
Nov., 24}
May, 161
Sept., 154
Nov., 10J
Oct., 15}
June, lojj
July, 31650
June, 9(650
July, 9(650
Mar., 359O0
Aug., 4*000
Mar., 6(850
Oct., 6(500
June, 83050
Nov., 6(500
May, 9S500
Sept., 6(600
Nov., 11(600
Oct., 93300
June, 15(450
No. 7.
Aug., 1893,15j Aug., 121 Aug., 121 Aug., 12(250
Jan., 1894,18§ Apr., 9A Apr., 9ft Apr., 173360
Oct., 1894,15 Sept.,124 Oct., 12 Oct., 11S250
Mar., 1895,16} May, 9A May, 9ft May, 17(200
Aug., 1895,16i July, HI July, 10ft July, 15(100
Feb., 1896,13 Mar., 8J May, 10ft May, 1O$75O
July, 1896,13 July, 9J Nov., 7j Nov., 12(950
Apr., 1897, 71 Mav, 7 * Apr., l\% Apr., 78600
July, 1897, 7 | Aug., 8ft Nov., 7} , Nov., 7(350
Mar., 1898, 5* May, Stt Apr., 5 $ Apr., 10(900
Oct., 1S98, 5} Nov., m Aug., 7ft Aug., 8(175
D e c , 1898, 7
Nov., 8Ji Nov., 6(000
Sept., 1899, 5ft Mar.,
Nov., 6Jm Sept., 7fS Sept., 5(513
Feb., 1M0, 8r) June, 10H FeT>., 7j Feb., 93810
July, 1900, 9| July, 144 Aug., 10 Aug., 7S71S
Apr., 1901, 6 Sept., 9 Apr., 12y Apr., 3(870
Nov., 1901, 74 July, 9ft Nov., 12ft Nov. 5(400
June, 1902, 51 Dec, 12*1 June, lljj June, 3SS68
Aug., 1902, 6 Feb., lift Aug., 12 Aug., 4S350
June, 1903, 5A May, 12*1 May, 128 May, 3(525
July, 1903, 5J Nov., 11« Aug., 12A Aug., 3S443
Feb., 1904, 9 Feb., 12H Jan., 12H Jan., 6S795
July, 1904, 7 1[ July,
12 Aug., 12ft Aug., 61255
Jan., 1905, 8-8 Apr., 17
Apr., 16H Apr., 3(826
Aug., 1905, 8J 1 Sept., ISA Dec, 163 D e c , 3(870
May, 1S06, 7 1 Apr., 14| Apr., 14H Apr., 4(590
Aug., 1906, 8 July 17 Aug., 16H Aug., 4(590
June, 1907, 6A Apr., 15ft June, 15 June, 2(903
Aug., 1907, 6 | Aug., ISA Sept., 15 Sept., 3(375
Nov., 1907, 5 Feb., 15ft Nov., 15; Nov., 2(903
July, 1908, 6 Oct., 15A Oct., 15ft Oct., 2(993
Mar., 1909, 8 Apr., 15ft Apr., 15ft Apr., 4(590
Sept., 1909, 7 Mar., 15i Aug., 15ft Aug., 3(308
Jan., 1910, 8 June, 16} Feb., 15ft Feb., 4(D8O
July, 1910, 8
July, 16& July, 4(095
Jan., 1911,13 Feb.'iejS Jan., 16tf Jan., 7(223
Up to January, 1891, only Rio and Santos coffee were Included In the United States visible supply and deliveries.
C. B. STEOUD, Superintendent.
1886
1887
1887
1888
1888
1889
1889
1890
1890
1891
1891
1892
1892
1893
1893
1894
1894
1895
1895
1896
1896
1897
1897
1898
1898
1899
1899
1900
1900
1901
1901
1902
1902
1903
1903
1904
1904
1905
1905
1906
1906
1907
1907
1908
1908
1909
1909
1910
1910
1911
1911
1912
MONEY TKUST INVESTIGATION.
491
Mr. POMBOY. They were not stockholders, because they had voting
trust receipts.
Mr. UNTERMYEB. They were entitled to stock ?
Mr. POMBOY. They were entitled to it; yes.
Mr. UNTEBMYEB. DO you not remember that those voting trustees,
then, upon the expiration of that voting trust, asked these people who
were entitled to their stock to extend the voting trust until the common stock should pay 5 per cent ?
Mr. POMBOY. I remember that they asked for an extension. That
further detail I do not remember.
Mr. UNTEBMYEB. They advertised and requested it, did they not ?
Mr. POMBOY. They advertised and requested it by letter.
Mr. UNTEBMYEB. That was done through J. P. Morgan & Co. ?
Mr. POMEOY. My impression is that J. P. Morgan & Co. issued a
circular to that effect, requesting the holders to do it, as they had
been so successful in the management of the property.
Mr. UNTEBMYEB. If there is a circular we will get it, if you think
it is of any importance. Mr. Morgan was one of the voting trustees,
was he not ?
Mr. POMBOY. That I do not know.
Mr. UNTEBMYEB. Subsequent to the issuance of that circular
asking these stockholders not to take their stock, but to leave it
there and to extend the voting trust, the stock exchange removed
those voting trust certificates, the old certificates that had expired,
from the list, did it not ?
Mr. POMBOY. Let me get that.
Mr. UNTERMYEB. The stock exchange removed those original
voting trust certificates from the list at some time, did it not, in 1902 ?
There is not any question about that.
Mr. POMBOY. I just wanted to be sure.
Mr. UNTEBMYEB. This is not news to you, is it ?
Mr. POMEOY. NO ; I am pretty well familiar with the thing, and I
an answering you pretty straight, I think.
Mr. UNTEEMYEB. DO not congratulate yourself until we get
through. [Laughter.]
Mr. POMEOY. Oh, no. I will answer you straight.
Mr. UNTEBMYEB. That is better.
Mr. POMBOY. What was the question? I have lost it.
The stenographer repeated the question, as follows:
Mr. UNTERMYER. Subsequent to the issuance of that circular asking these stockholders not to take their stock, but to leave it there and to extend the voting trust, the
stock exchange removed those voting trust certificates, the old certificates that had
expired from the list, did it not?
Mr. POMEOY. They did.
Mr. UNTEBMYEB. Did the stock exchange then list the new
certificates 1
Mr. POMKOY. Yes; the committee on stock list listed them on
October 8, 1902.
Mr. UNTEBMYEB. The point I make is this: The effect of that was,
was it not, that a man who held the old certificate, which entitled him
to his stock, had no longer any certificate on the list, but the man who
exchanged had a listed certificate; is that right ?
Mr. POMEOY. That is quite true.
60241—PT 6—12
6
492
MONEY TEXJST
INVESTIGATION.
Mr. UNTEBMTEB. And the man who had the old certificate could
go and get Ms stock, could he not ?
Mr. POMKOY. He could.
Mr. UNTEBMYEB. But when he got his stock that was not listed
either, was it 1
Mr. POMKOY. It was not listed; no.
Mr. UNTEBMYEB. SO that he could not borrow either on his old
stock or his old certificate; that is, as a stock-exchange collateral?
Mr. POMBOY. As a stock-exchange collateral he could not. He
could borrow on it.
Mr. UNTEBMYEB. HOW do you know ? Did you ever lend anybody
anything on that class that were not listed ?
Mr. POMBOY. NO, sir; but I lend a great deal of money on securities
that are not listed on the stock exchange.
Mr. UNTERMYEB. I am talking about this particular case. You do
not mean to say that when the new certificates were listed and made
marketable and good for loans, and the old certificates were taken
from the list and the old stock not put on, you know of your own
knowledge that a man who held the old certificates, or who had gotten
the stock, could borrow in the ordinary course of business, do you ?
Mr. POMEOY. I know he could have borrowed.
Mr. UNTEBMYEB. Where ?
Mr. POMBOY. He could have borrowed of me if he wanted it, and at
a great many banks.
Mr. UNTERMYER. Without having it listed ?
Mr. POMROY. Without having it listed.
Mr. UNTEBMYER. Then there was not any use in having it listed,
was there ?
Mr. POMROY. I did not say that. It was of great use to have it
listed.
Mr. UNTEBMYER. It had a value, had it not ?
Mr. POMROY. It certainly had a value.
Mr. UNTEBMYER. Let the record show that the new certificates were
issued in October, 1902, and that the old certificates were taken off the
list in March, 1903.
How is a man who has a security that is not listed, or that has been
taken off the list because he has not seen fit to exchange his security
for one that has been put in its place, to know where to get his market
for his security ?
Mr. POMROY. That would depend on what his security called for.
Mr. UNTEBMYEB. HOW is he to know where to get his market for
it; go to the office of the company?
Mr. POMROY. I have answered that.
Mr. UNTERMYEB. The best way you can 1
Mr. POMROY. If the chairman will allow me, I will explain that. I
will explain my answer. I claim the right, under what Mr. Cortelyou
got here. I claim the same right as Mr. Cortelyou had to explain my
answer.
Mr. UNTEBMYEB. I think he is sorry he explained. I do not
know.
Mr. POMROY. We will see whether I am sorry.
Mr. UNTEBMYEB. He would not know where to get his market,
would he ?
Mr. POMROY. Certainly he would.
Mr. UNTERMYER. YOU think he would, do you ?
MONEY TRUST INVESTIGATION.
493
Mr. POMBOY. It would depend on the class of security that he had,
Mr. Untermyer, and I wish to explain what I mean by that answer.
Mr. UNTERMYER. I am going to try to get from you
Mr. POMROY. I request the privilege of stating that now, Mr. Untermyer.
Mr. UNTERMYER. I object, Mr. Chairman. We want to go on and
finish this examination, and it is not proper that the witness should
do anything but answer a question. Is there any ambiguity
Mr. POMROY. I wish a ruling on my request.
The CHAIRMAN. I am going to make a ruling on this question.
Of course you understand, Mr. Pomroy, that the investigation is an
inquiry, not a trial, and in this investigation we have counsel and we
are guided measurably, within our powers and rights, as to the nature
of the examination, by advice of counsel. Under their instructions,
with the approval of the committee, we have announced as a policy
that a witness, when asked a question, must give a categorical answer,
yes or no, or that he does not know, or he does not remember. Then
he is entitled to make an explanation in so far as it is germane to the
question and not any illustrations or matters of that kind.
Mr. POMROY. I claim that this is germane to the question.
Mr. UNTERMYER. YOU are not going to have a-ny difficulty at all
in having the fullest opportunity to explain anything that is germane
to an inquiry put to you. The present inquiry is, How is a man who
has a security that has been removed from the list and another put
in its place to find his market for that security ? You may explain
anything you please about that.
Mr. POMROY. If he has a security calling for the exchange in place
thereof of another security which is already listed on the exchange,
he can exchange his security for the one already listed, and then, having a listed security, he can borrow as on other listed securities. You
understand that ?
Mr. UNTERMYEB. Yes.
Mr. POMROY. That is the first
Mr. UNTERMYER. Let us take
part.
that first, then we will let you go on
to the second. What you mean by that is, that if a man who was
entitled to his stock in the Southern Railway Co. wanted his stock, he
could not take his stock, but he could get a market for his security
by allowing his stock to remain in a new voting trust and not exercising his rights of ownership; is that what you mean ?
Mr. POMROY. NO, sir; that is not what I said.
Mr. UNTERMYER. Yes; you said he could take new security.
Mr. POMROY. YOU misunderstood what I said. I did not make it
plain.
Mr. UNTERMYER. Very well; go ahead and make it plain.
Mr. POMROY. Take the question of a certificate of any of the steel
subsidiary companies.
Mr. UNTERMYER. NO; take the Southern Railway voting trust.
Mr. POMROY. I am illustrating my point, Mr. Untermyer, and you
must allow me to illustrate it.
Mr. UNTERMYER. GO on.
Mr. POMBOY. Take the certificates of deposit for subsidiaries of the
United States Steel Corporation, who are entitled to receive United
States steel stock in exchange for those certificates. If those certificates were stricken from the list, the holder could exchange his cer
494
MONEY TRUST INVESTIGATION.
tificates for stock of the United States Steel Corporation—he was
entitled to nothing else for that certificate—and then he would be
abls to avail himself of the privileges of the stock exchange.
Mr. UNTEHMYEK. YOU mean he could take Steel Corporation stock
on the terms they prescribed ?
Mr. POMROY. On the terms his certificate prescribed.
Mr. UNTERMYER. I am speaking of the holder of, we will say, Tin
Plate certificates, entitling your man to Tin Plate stock.
Mr. POMROY. There was no such certificate listed on the exchange.
Mr. UNTERMYER. Then, Mr. Pomroy, that is not the kind of an
illustration we are talking about.
Mr. POMROY. NO ; I understand that.
Mr. UNTERMYER. And you know what I am talking about, because
you and I talked it over.
Mr. POMROY. YOU interrupted me before I had finished.
Mr. UNTERMYER. GO on.
Mr. POMROY. I have answered
your question as to what a man
could do with a certain class of security.
Mr. UNTERMYER. I do not think you have.
Mr. POMROY. I am sorry that you think so.
Mr. UNTERMYER. GO on and say anything else you like.
Mr. POMROY. AS to this particular instance, coming down to that,
of the holder of certificate of the Southern Railway stock voting
trust, who refused—I will put it as strong as I can—to accept Mr.
Morgan's offer to accept new voting trust certificates, and exchanged
it for stock of the Southern Railway Co. which was not listed on the
exchange; your question, then, is where would a man go to borrow
money on that collateral ?
Mr. UNTERMYER. Or to sell it; to find a market?
Mr. POMROY. Or to sell it or to find a market. That is the idea.
He would not have the same facilities of finding a market or of borrowing money that a man had whose security was listed on the
exchange; there is no question about that. But he could go to a
great many banks in Wall Street, and a great many banking houses
in Wall Street, who would lend him money on that, on the value made
by the voting trust certificates which were listed on the exchange.
Mr. UNTERMYER. HOW do you know that he could ? How do you
know that any banking house would lend him money on a security
which they could not go to their bank and put in as stock-exchange
collateral, so as to make that security
Mr. POMROY. I do not know that.
Mr. UNTERMYER. YOU can not know it.
Mr. POMROY. I think your statement is wrong. How do I know
it? I am only giving you my experiences in Wall Street. I think
so. I do not know it, because I never tried to do it. That is
legal knowledge.
Mr. UNTERMYER. The point I make is this: A man buys a security
that is listed on the exchange.
Mr. POMROY. Yes.
Mr. UNTERMYER. And
is removed from the list.
he wakes up one fine morning and finds it
Mr. POMROY. Yes.
Mr. UNTERMYER. He" may
be thrown out.
Mr. POMROY. He
mav.
have it as collateral for a loan that will
MONEY IEUST INVESTIGATION.
495
Mr. UNTEEMYEK. That action certainly affects its value, does it not ?
Mr. POMKOY. It does. If it is thrown out, it certainly does.
Mr. UNTEKMYER. And that is what is likely to happen to it, is it
not?
Mr. POMKOY. Not necessarily.
Mr. UNTERMYER. It is in a stock-exchange loan, is it not ?
Mr. POMBOY. No, sir. It is possible, but not likely.
Mr. UNTERMYEK. Did you hear Mr. Cannon's testimony on the
subj ect ?
Mr. POMROY. I did.
Mr. UNTERMYER. And
have you not been around in Wall Street
long enough to know that the banks take very limited amounts of
nonlisted securities ?
Mr. POMROY. I have not. Mr. Cannon testified that he was the
president of a commercial bank; that he was not particularly inform e
on Wall Street.
Mr. UNTERMYER. YOU do not think Mr. Cannon knew what he was
talking about ?
Mr. POMROY. I certainly do think he knew what he was talking
about.
Mr. UNTERMYER. He did testify as to the custom with respect to
Wall Street loans, did he not ?
Mr. POMROY. AS practiced by his bank, which is a commercia
bank.
Mr. UNTERMYER. I do not think we want to have a running
argument. I wish you would simply try to answer my questions,
and let us see if we can not get along.
Mr. POMROY. I will answer your questions to the best of my
ability.
Mr. UNTERMYER. YOU will admit that the taking of the securities
from the list injures their value ?
Mr. POMROY. I will, to a certain extent.
Mr. UNTERMYER. And you have furnished us here with a long list
of securities that were thus taken from the list 1
Mr. POMROY. I have; that is, the stock exchange has.
Mr. UNTERMYER. YOU remember the case of the American Tobacco Co. ?
Mr. POMROY. Yes.
Mr. UNTERMYER. Am I right that the facts were substantially as
follows ?
Mr. POMROY. The facts as stated in what we gave you ?
Mr. UNTERMYER. NO, no; I am trying to see whether I am righ i
as to the facts. There was an American Tobacco Co. and there was a
Continental Tobacco Co., was there not ?
Mr. POMROY. There was.
Mr. UNTERMYER. And there came a time when Mr. Ryan and Mr.
Payne and their associates formed a company called the Consolidated
Tobacco Co. ?
Mr. POMROY. I know there was a consolidated company formed.
Mr. UNTERMYER. And you remember that the Consolidated
Tobacco Co. was formed by five or six gentlemen who subscribed the
capital ?
Mr. POMROY. NO; I do not know anything about that.
Mr. UNTERMYER. YOU do not know about that ?
Mr. POMROY. NO, sir.
496
MONEY IBUST INVESTIGATION.
Mr. UNTERMYEE. At any rate the Consolidated Tobacco Co.
offered the American Tobacco Co. stockholders 4 per cent bonds,
collateral trust bonds, of the Consolidated Tobacco Co. for their
stock, at the rate of $200 for the stock ?
Mr. POMEOY. I remember they made an offer. I take it that that
is right.
Mr. UNTERMYEE. And that they offered the holders of stock of
the Continental Tobacco Co. par in -1 per cent bonds of the Consolidated Tobacco Co. ?
Mr. POMKOY. I presume that is right.
Mr. UNTEEMYEK. There came a time, did there not, when application was made to the stock exchange to remove the stocks or the
American Tobacco Co. and the Continental Tobacco Co. from the
list?
Mr. POMBOY. No, sir; no application was made.
Mr. UNTEEMYEE. YOU did it of your own motion ?
Mr. POMEOY. We did it of our own motion.
Mr. UNTERMYER. Have you any documents on which you based
your action ?
Mr. POMEOY. Where are they, Mr. Martin?
Mr. UNTERMYER. Let us have the documents on which you based
that. The effect of that transaction of the Consolidated Tobacco
Co., as to every American Tobacco Co. stockholder that went into
it, was that that stockholder got 4 per cent bonds for his own stock
at a rate of 200 for his stock.
Mr. POMROY. Yes; I presume those were the terms.
Mr. UNTERMYER. And the stock was paying 8 per cent then and
was earning about 30 per cent?
Mr. POMROY. I do not know.
Mr. UNTERMYEE. DO you not know the facts ?
Mr. POMEOY. NO, sir.
Mr. UNTEEMYEE. DO you
not know that the old American Tobacco
Co. stock got to be worth a lot of money ?
Mr. POMEOY. Oh, yes; I saw the quotations in the papers.
Mr. UNTERMYEE. It went to 500 or 600 ?
Mr. POMEOY. It went to a good price, I know.
Mr. UNTEEMYEE. DO you not see that the man who did not choose
to put in his stock for these bonds at 200 by the action of the stock
exchange lost his listing value on his stock ?
Mr. POMROY. What do you mean by his listing value ?
Mr. UNTEEMYEE. His stock was taken from the list and he lost that
value, did he not? Where could he sell his stock after that except
to the company or to insiders ?
Mr. POMEOY. He could sell it
Mr. UNTERMYER. Where could he go 1 What market could he have 1
Mr. POMROY. He would have a market anywhere, and you know it.
Mr. UNTERMYER. I know exactly the contrary; that you drove
every man into selling his stock.
Mr. POMEOY. I do not agree with you.
Mr. UNTERMYER. Then where would he have a market ?
Mr. POMROY. He could have gone to a great many banking houses.
Mr. UNTERMYER. Name one. That stock was taken off the list
and had no loanable value.
Mr. POMROY. AS to this particular stock, I can not say exactly
where.
MONEY TBI7ST INVESTIGATION.
497
Mr. UNTEKMYER. Of course you can not, and you axe making assertions that you can not support.
Mr. POMROY. I am giving you my opinion about it.
Mr. UNTERMYER. Let us see on what your exchange acted ?
Mr. POMROY. NOW you are getting down to business.
Mr. UNTERMYEK. Let us see on what your exchange acted. Have
you those papers here ?
Mr. POMKOY. I have a letter here.
Mr. UNTERMYEK. Let us see it.
The witness produced papers which were examined by Mr. Untermyer.
Mr. UNTERMYER. We would like to offer in evidence, Mr. Chairman,
the correspondence that has been produced here with the Morton
Trust Co., the assistant secretary of the Morton Trust Co., and perhaps
you would be good enough, Mr. Pomroy, to let us have copies instead
of the originals ?
Mr. POMROY. Yes.
Mr. UNTERMYER. Letters
of July 1, 1901, July 8, 1901, July 11,
1901; July 31, 1901, August 12, 1901, September 16, 1901, October
16, 1901, November 20, 1901, and January 20, 1902.
The letters referred to were marked respectively " Exhibits Nos.
36, 37, 38, 39, 40, 41, 42, 43, 44, June 13,1912," and will be found
printed at the end of this hearing.
Mr. UNTERMYER. DO you mean to tell us that was all you had upon
which you based your action in excluding this stock from the list s
Mr. POMKOY. I would not say that is all. It is all that I can recall
at the present moment.
Mr. UNTERMYER. Nothing but assertions of the assistant secretary of the Morton Trust Co., and of the secretary, is that right?
Mr. POMROY. Yes.
Mr. UNTERMYER. Did
Trust Co. ?
you know who was in control of the Morton
Mr. POMROY. NO.
Mr. UNTERMYER. YOU
never heard of that ? You never heard
that Mr. Thomas P. Ryan was in control?
Mr. POMROY. I saw by the letterhead that Thomas F. Ryan was
vice president.
Mr. UNTERMYER. Did you not know that he was the controlling man ?
Mr. POMROY. NO.
Mr. UNTERMYER. YOU
did not know anything about it? How
long did you say you had been in Wall Street ?
Mr. POMROY. Since 1878. And I did not know that.
Mr. UNTERMYER. YOU did not know that ?
Mr. POMROY. NO.
Mr. UNTERMYER. YOU
did not know that Mr. Ryan was the dominating spirit in the Consolidated Tobacco Co. and in the American
Tobacco Co. and the Continental Tobacco Co. ?
Mr. POMROY. NO.
Mr. UNTERMYER. Did you know he was one of them 1
Mr. POMROY. I presume I did. That has been 10 years ago.
Mr. UNTERMYER. That is as much as you want to say, is it ?
Mr. POMROY. That is as much as I say.
Mr. UNTERMYER. It is as much as you want to say ?
Mr. POMROY. What I have said is the truth.
498
MONEY TEUST INVESTIGATION.
Mr. UNTEKMYER. That is not the queston. Is that as far as you
want to go, that you presume you knew he had something to do with
these tobacco companies ?
Mr. POMROY. Yes, sir.
Mr. UNTERMYER. YOU
find nothing upon the record except what
you have produced, do you ?
Mr. POMROY. This is all that we have been able to find, as far as I
know. Is there anything more, Mr. Martin ? I can not answer that.
Mr. MARTIN. The request, I think, was for the original letter from
the company, and that is what I got out.
Mr. UNTERMYER. NO; I want every record upon which you claim
to justify the removal of that security from the exchange.
Mr. POMROY. Then I do not know; this may not be all the record,
but you are in a hurry and so am I. I will grant that these papers
here were the determining factors.
Mr. UNTERMYER. And you concede that it was a distinct injury to
the outstanding stockholder to have his stock removed ?
Mr. POMROY. I concede that it was an injury; yes.
Mr. UNTERMYER. I will read into the record a resolution of January 21, 1902, or, that is, the entry in the minutes of the meeting of
that day.
Letter from the Morton Trust Co. states that there are only 11,357 shares of the common stock of the American Tobacco Co. actually outstanding.
The committee thereupon voted that the stock be stricken from the list on the 27th.
I want you to explain, Mr. Pomroy, as fully as you please, the way
in which the stock exchange justifies itself for removing from the list
a large number of stocks that have been upon the list. It is simply
upon the ground, as I understand, that there is only a small amount
of it outstanding, and that there might be a corner created in the
stock. Is that the justification ?
Mr. POMROY. Will you allow me to explain that1?
Mr. UNTERMYER. Yes. I have asked you to explain it. Your
explanation will apply to all these stocks that have been thus removed,
will it?
Mr. POMROY. Well, generally, yes. There may have been special
reasons in one or two cases, but generally this will apply, I think.
Mr. UNTERMYER. GO on, then.
Mr. POMROY. On the question of the removal of stocks from the
list, the governing committee realizes that the question of removing a security from the list is a very serious one. As I have testified, we realize that it deprives a stock of a certain amount of its
value, and of its borrowing power, and therefore they consider each
case very carefully before the move takes place.
Mr. UNTERMYER. That does not answer the question as to how
you justify it.
The CHAIRMAN. YOU may proceed and answer the question.
Mr. POMROY. I will justify it for the following reasons: That our
experience of many years as governors of the exchange, and the
experience of previous governing committees, is that a small amount
of stock on the list leads to a condition that is dangerous to ourselves and to our customers, the public; and therefore, in order
to obviate that danger, when in our opinion that condition has been
reached we remove the stock from the list or suspend it from dealings.
MONEY TBTJST INVESTIGATION.
499
Mr. UNTERMYER. YOU have not explained in what way it is dangerous; and so dangerous that a man who has bought his stock in
good faith, whenyou have put it on the list for him, is to be deprived
of his listing ? Where is the danger ?
Mr. POMBOY. The danger may arise from two causes. A small
quantity of stock is more easily subject to manipulation than a large
quantity, and by means of manipulation people may be induced to
buy stock at very much greater prices than it is worth. The other
danger, which of course is the greatest one we fear, is the subject of
a corner in the stock, which not only hurts the broker and his customers, but demoralizes the whole country, the Northern Pacific
corner being a case in point.
Mr. UNTEBMYER. Have youfinished?
Mr. POMBOY. I have finished; yes.
Mr. UNTEBMYER. We will take up this question, because it is an
important and serious question.
Mr. POMBOY. Absolutely one of the most serious questions that
confronts the exchange.
Mr. UNTEBMYER. YOU know I have made complaint of it to the
exchange many times 1
Mr. POMBOY. I only remember once.
Mr. UNTEBMYER. In this case, for instance, with 11,000 shares out,
assume that they were worth $500 a share.
Mr. POMBOY. YOU can assume it.
Mr. UNTEBMYEB. That would be five and one-half millions.
Mr. POMEOY. You know that is $50 par.
Mr. UNTEBMYEB. Well, assume that they were worth $2,000,000 ?
Mr. POMBOY. Yes.
Mr. UNTEBMYER.' That
is as much in the total amount as the par
value of some securities that are listed on the exchange ?
Mr. POMBOY. Yes.
Mr. UNTEBMYEB. SO it would be as large as
Mr. POMBOY. We list down to half a million.
Mr. UNTEBMYEB. But it is as large as many that are listed?
Mr. POMBOY. Oh, yes.
Mr. UNTERMYEB. The outstanding stock, I mean ?
Mr. POMROY. Certainly.
Mr. UNTERMYER. YOU say that there is danger that
there may be a
corner in the stock. That means there is danger that some man or
men may sell the stock and not have it; men who have not the stock.
Mr. POMBOY. That is one of the dangers.
Mr. UNTERMYER. A man may sell the stock and he may not have it ?
Mr. POMROY. Yes.
Mr. UNTERMYER. He
may not be able to buy it to deliver. Is that
his danger ?
Mr. POMBOY. That is his danger.
Mr. UNTERMYEB. That he may sell something he has not got and
may not be able to get it ?
Mr. POMEOY. That is it.
Mr. UNTERMYEB. That is a corner ?
Mr. POMROY. Yes.
Mr. UTERMYER. SO, in order to protect a speculator or a gambler
who sells something that he has not got and may not be able to buy,
you think you are justified, do you, in taking from the list the securities of an honest investor who bought his stock when it was listed,
500
MONEY TBUSI INVESTIGATION.
and paid for it, and had nothing to do with your taking it off from the
list, and having him wake up one morning and find that it has lost
its value?
Mr. POMKOY. That was not my statement.
Mr. UTEBMYEB. Does that justify it ?
Mr. POMBOY. My statement is correct as to what justifies it.
Mr. UNTEEMYEB. YOU can keep on saying that.
Mr. POMBOY. I will; yes.
Mr. UNTEBMYEB. But the proposition is that the reasoning in regard
to what you say about the importance of avoiding a corner is that you
want to protect something that the speculator has not got and may
not be able to get. Is not that right I
Mr. POMEOY. I gave as a reason the danger of a corner, and what
the danger of a corner would bring on the country.
Mr. UNTEBMYEB. We are not talking about the country now; we
are talking about how a corner operates. It operates only against
a man who sells something that he has not got and is not able to get.
Mr. POMBOY. That I deny.
Mr. UNTEBMYER. Against whom else does it operate?
Mr. POMBOY. It operates against all person? who are interested in
securities or otherwise that may be affected by the panic which may
ensue.
Mr. UNTEEMYEB. YOU mean by the acts of this speculator ?
Mr. POMBOY. Certainly.
Mr. UNTEBMYEB. Well, can not the stock exchange prevent that
by having a rule to the effect that the man who sells what he has not
got shall be penalized by providing that his contract shall not be
enforced in the exchange ?
Mr. POMBOY. I do not see how you could enforce any such thing.
Mr. UNTEBMYEB. Can not the stock exchange say that a man who
sells what he has not got—that he can not hold the "broker or the man
who buys from him ?
Mr. POMBOY.' He
can.
Mr. UNTEBMYEB. Why do you not do that, and in that way protect
the honest investor against having his property injured or destroyed
or taken from the list ?
Mr. POMBOY. I will tell you.
Mr. UNTEEMYEB. GO ahead and tell me.
Mr. POMBOY. Suppose I go into the market and buy a hundred
shares of stock. Suppose I go in to buy that much stock. You offer
that stock. How am I to know whether you have got it or not ? I
buy the stock. The next day it turns out to be worth 110 or 115, or
whatever it may be. You come to me and say " I did not have that
stock when I sold it, and therefore, under the rules of the exchange,
I must not deliver it to you."
Mr. UNTEBMYEB. Why can you not, then, prescribe the same rule
that you prescribed in the Northern Pacific case, that the governing
committee in such a case shall fix the value that shall be paid for that
stock ? That is what you did there, did you not ?
Mr. POMEOY. I do not remember that we did.
Mr. UNTEBMYEB. Did you not fix it at 150 ?
Mr. POMROY. That was an agreement between
transaction. The exchange had no part in i t
the parties to the
MONEY TRUST INVESTIGATION.
501
Mr. UNTERMYER. DO you not know that all the holders did not
agree; that every stock-exchange member had his differences settled
that way 1 Do you not remember ?
Mr. POMROY. I do not. I do not remember anything about that.
Mr. UNTERMYEE. Well, I think we have argued the question quite
enough.
Mr. POMEOY. I think so.
Mr. UNTEBMYEB. YOU have said all you want to say about it ?
Mr. POMEOY. I think so.
Mr. UNTEEMYER. That is all.
The CHAIRMAN. The presence of the Members is required in Washington for the work of the House. These sessions will accordingly
be suspended for the present, and the committee will now adjourn
sine die. Its future meetings will take place in Washington. The
main line of the inquiry, relating to the concentration of the control
of money and the use of our financial and industrial corporations to
that end, has not yet been touched upon to any extent. That must
await the removal of all questions of the power of the committee by
the passing of the pending bill, and must be followed by months of
preparation and investigation. The inquiries upon collateral branches
relating to the clearing house and stock exchange are also uncompleted. That as to the stock exchange has barely begun. The committee hopes and expects, in the end, with the aid of further power, to
secure the data on which to base permanent constructive legislation.
Thereupon, at 5 o'clock p. m., the subcommittee adjourned.
The letters referred to on page 497 are here printed in full, as
follows:
EXHIBIT NO. 36, JUNE 13,
1912.
MOETON TBTJST CO.,
Neio York, July 1, 1901.
WILLIAM MCCLUBE, Esq.,
Secretary New York Stock Exchange, New York City.
DEAR SIB: Complying with the request contained in your esteemed favor of
even date, we beg to advise you that our trust receipts have# been issued for the
deposit of 969,743 shares of the common stock of the American Tobacco Co.
and 478,735 shares of the common stock of the Continental Tobacco Co. We
are holding for completion of proper legal and transfer papers a large number
of deposits of the American Tobacco Co.'s stock, for which our receipts will be
issued as soon as the papers and revenue stamps are received.
For your further information we beg to advise you that in addition to the
above we have been notified by the holders of more than 65,000 shares of the
common stock of the American Tobacco Co. of their intentions to deposit their
stock under the terms of the exchange offered by the Consolidated Tobacco Co.
as soon as they can arrange to send in their stock certificates, the majority of
these people being at present absent from the city.
You will note from these figures that practically all of the common stock of
the Continental Tobacco Co. has been deposited, and that of the total issue of
1,090,000 shares of the American Tobacco Co.'s stock less than 65,000 shares
remain to be deposited.
Very truly, yours,
J. H. FBANCIS, Secretary.
502
MONEY TEUST INVESTIGATION.
EXHIBIT NO. 37, JUNE 13,
1912.
MORTON TRUST CO..
New York, July S, 1901.
WILLIAM MCCLTTBE, Esq.,
Secretary New York Stock Exchange, New York City.
DEAB SIB : We beg to advise you that we have received for deposit under the
offer of the Consolidated Tobacco Co, for exchange into its 4 per cent bonds
971,423 shares of the common stock of the American Tobacco Co. and 479,190
shares of the common stock of the Continental Tobacco Co.
In addition to these deposits we have been notified by the holders of more
than 70,000 shares of the common stock of the American Tobacco Co. of their
Intention to deposit their stock certificates for exchange. This leaves leas than
50,000 half shares unpledged for deposit out of a total issue of 1,090,000 shares.
We have also been notified by the holders of some 2,000 shares of Continental
Tobacco Co.'s common stock of their intention to deposit, leaving practically
none of this stock outstanding.
Very truly, yours,
H. M. FRANCIS, Secretary.
EXHIBIT NO. 38, JUNE 13,
1912.
MOBTON TRUST CO.,
New York, July 11, 1901.
WDXIAM MCCLUBB,
Esq.,
Secretary New York Stock Exchange, New York City.
DEAR SIB : We beg to advise you that at the close of business this day there
have been deposited with us for exchange into 4 per cent gold bonds of the
Consolidated Tobacco Co. the following shares: American Tobacco Co.'s common stock, 972,429 shares; Continental Tobacco Co.'s common stock, 479,245
shares.
For your information we beg to further advise you that, in addition to the
amount of shares already notified to you as being pledged for deposit, but
stock certificates for which have not yet been received by us on account of absence from town of the owners, we have to-day received advice from the holders
of 14,000 shares of American Tobacco Co.'s stock of their intention to deposit
the same on their return from Canada.
From the list of stockholders furnished us by the transfer agent of the
American Tobacco Co. at the request of that company it appears that there is
standing in the name of the New York Stock Exchange houses some 12,850
shares of American Tobacco Co.'s common stock, which has not been notified
to us for exchange up to this date. The remaining stock stands in the names
of individuals residing all over this country and Europe.
Very respectfully, yours,
H. M. FRANCIS, Secretary.
EXHIBIT NO. 39, JUNE 13,
1912.
MOBTON TRUST CO.,
New York, July Si, 1901.
WILLIAM MCCLUBE,
Esq.,
Secretary New York Stock Exchange.
DEAB SIB: At the close of business this day we have issued our certificates
for the deposit of stocks as follows: American Tobacco Co.'s common stock,
977,169 shares; Continental Tobacco Co.'s common stock, 480,477 shares.
These figures do not Include stock already deposited with us and held by us
for revenne stamps, power of attorney, proper papers, etc., nor is there included
in these figures any account of stock promised for deposit, the holders of which
are, on account of absence from town and other reasons, unable to present
their stock certificates at this time.
Very truly, yours,
H. M. FRANCIS, Secretary.
MONEY TBUST INVESTIGATION.
EXHIBIT NO. 40, JUNE 13,
503
1912.
MORTON TRUST CO.,
New York, August 12, 1901.
WILLIAM MCCLUBE,
Esq.,
Secretary New York Stock Exchange, New York City.
DEAR SIR: At the close of business this day we have issued our certificates
of deposit for stocks of the American and Continental Tobacco Cos., as follows:
American Tobacco Co.'s common stock, 978,819 shares; Continental Tobacco
Co.'s common stock, 480,597 shares.
These figures do not include stock already deposited with us and held for
irregularities, nor is there included in these figures any account of the stock
promised for deposit, the holders of which are, on account of absence from town
and other reasons, unnble to present their stock certificates at this time.
Very truly, yours,
6. L. WILMERDING, Assistant Secretary.
EXHIBIT NO. 41, JUNE 13,
1912.
MORTON TRUST CO.,
New York, September 16, 1901.
WILLIAM MCCLUBE,
Esq.,
Secretary New York Stock Exchange,
New York City.
DEAR SIR : According with your request, we beg to advise you of the following
figures of the deposit of common stocks of the tobacco companies, up to the
opening of business this morning:
Total stock
American
Continental
!
I
!
Shares.
1,090,000
488,446
Total
deposited.
Shares.
991,116
480,886
Total
outstanding.
Share*.
98,884
7,660
Xou will note from the above figures that there is outstanding of the American
Tobacco Co.'s common stock not deposited with us, 98,884 shares, and of the
Continental Tobacco Co.'s common stock, 7,560 shares.
For your information, we beg to advise you that about 70,000 shares of the
American Tobacco Co.'s common stock outstanding is pledged for deposit whenever called for, and about 4,500 shares of the Continental Tobacco Co.'s common
stock is likewise pledged for deposit whenever called for, leaving practically
28,000 shares of American Tobacco Co.'s common stock, and 3,000 shares of Continental Tobacco Co.'s common stock, which is in the hands of the public unpledged for deposit.
Much of this remaining 28,000 shares of American Tobacco Co.'s common
stock and 3,000 shares of Continental Tobacco Co.'s common stock is owned by
people still in Europe, and no doubt a large proportion of it will be forthcoming
on their return to this country. Xou will thus see that there is but about
$1,400,000 of American Tobacco Co.'s common stock out of an authorized issue
of $54,500,000 unpledged for deposit, the par value of American Tobacco Co.'s
common stock being $50 per share.
Tours, very truly,
H. M. FRANCIS, Secretary.
504
MONEY TEUST INVESTIGATION.
EXHIBIT XO. 42, JUNE 13,
1912.
MOBTON TKUST CO.,
New York, October 16, 1901.
WILLIAM MCCLUBE,
Esq.,
Secretary Sew York Stock Exchange, New York City.
DEAB SIB: We beg to state that the total number of shares of common stock
of the Continental Tobacco Co. deposited with us amounts to 486,621 shares, ami
of the American Tobacco Co. 1,005,283 shares.
Very truly, yours,
H. B. BEBBY, Trust Officer.
EXHIBIT NO. 43, JUNE 13,
1912.
MOBTON TRUST CO.,
New York, November BO. 1901.
WILLIAM MCCLCBE,
Esq.,
Secretary New York Stock Exchange, New York City.
DEAB SIB: We beg to state that the total number of shares of the common
stock of the Continental Tobacco Co. deposited with us amounts to 487,588
shares and of the American Tobacco Co. 1,009,693 shares.
Very truly, yours,
G. L. WILXTEBDING, Assistant Secretary.
EXHIBIT NO. 44, JURE 13,1912.
MOBTON TBUST CO.,
yew York, January £0, 1902.
COMMITTEE osr STOCK LIST,
New York Stock Exchange, New York City.
GENTLEMEN : We beg to certify that there have been deposited with this
company, against which there have been fifty-year 4 per cent gold bonds of the
Consolidated Tobacco Co., or our certificates of deposit calling for such bonds,
487.632 shares common stock of the Continental Tobacco Co., 1,056.643 shares
common stock of the American Tobacco Co.
In addition to the above there have been pledged for deposit some 22,000
shares common stock of the American Tobacco Co., which stock, we are informed, is in eoiirse of transmission to us, the parties holding same being out
of town to-day.
Very truly, yours,
G. L. WILMERDING,
Assistant Secretary.
P. S.—This leaves 11,357 shares common stock of the American Tobacco Co
outstanding.
@FedFRASER