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Mr. PECORA. I have a copy of them before me.

Mr. ALTSCHUL. And they indicate the reasoning just about I think as I have outlined it to you, the reasoning behind that action.

Now, with regard to the lend-or-sell letters, which I take it was part of your question

Mr. PECORA. Yes.

Mr. ALTSCHUL. Before leaving the other question, may I say that this is the only case in my experience in which this action has been taken, so I do not think we could describe it under any question of a general policy, other than a sort of a general disposition to try and see that the stockholders were protected in this situation where there was anything that we could do to help them.

In other words, the lend or sell letters; that is a fairly usual precaution that we take. When the distribution sheets indicate to us that there is a very heavy concentration of holdings, but still not a concentration so heavy that it would act as a bar to the listing altogether, then we are in the habit of asking the large stockholders to give us these lend or sell letters which will allow us to call upon them to lend or sell the stock on the floor at our request in the event that a situation develops in the market to make that necessary. Those lend or sell letters we get very often. We have hundreds of them on file. They are all there merely as a protection against untoward developments, and in my recollection we have never had occasion to use them. I mean they are taken just as a precaution, but it is a precaution which we have never had occasion to use.

Mr. PECORA. Well, as a precaution against what?

Mr. ALTSCHUL. That is a precaution against an untoward development in the way of a corner in the stock.

The CHAIRMAN. Was this application granted?
Mr. ALTSCHUL. The application was granted, sir; yes.

Mr. PECORA. And one of the thoughts underlying this condition that was virtually imposed as a condition to the granting of the listing application was that there would be stock available to meet ordinary market requirements in a manner that would keep a close market on the stock?

Mr. ALTSCHUL. Yes; I think that is substantially correct. Well, I don't think there is anything—the discussion in the minutes, which I take it you are going to incorporate in the record, sir, will give all the circumstances in back of that. I think your statement is substantially correct. I would not take exception to it in any way.

Mr. PECORA. I have what purports to be a photostatic copy of the minutes of the meeting of the committee on stock list held on February 6, 1933, at which action was taken on this application to list the class A and class B shares of the Kelsey-Hayes Wheel Co. Will you identify that as being true and correct copy of such minutes ?

Mr. ALTSCHUL. I so do, sir.

Mr. PECORA. I will offer that in evidence, but on account of its voluminous character I ask that it be not spread in full on the minutes.

The CHAIRMAX. Let it be admitted, under those conditions.

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(Minutes of meeting of Feb. 6, 1933, of committee on stock list was designated “Committee Exhibit No. 82, Feb. 22, 1934 ", filed among the records of the committee, but not incorporated in this record in full.)

Mr. Pecora. This was virtually calling upon the sponsors of the stock to make stock available for permanent requirements if the necessity should arise ?

Mr. ÅLTSCHUL. Calling upon the sponsors, and as we understand, the reorganization managers.

Mr. PECORA. I notice that there is no statement embodied in the listing application in the final form of it with regard to this condition for the creation of this joint trading account that has been referred to here. Is there any reason why that was not made public!

Mr. Altschul. I did not participate in the discussions, but if I had participated I would have urged that it not be made public, and I suppose the same reasons would have guided me that guided the committee. Mr. PECORA. What was that? Mr. ALTSCHUL. Because the matter was one of relative unimportance. It was merely a request to keep a normal, natural market in there during the time of the transition period from the old—I don't remember whether it was bankruptcy-but anyway, the old reorganized company and the new company, and to give publicity to the fact that two important banking firms were under agreement which provided for doing certain things might have had a connotation in the minds of the public that was quite unwarranted. It might have provided the incentive-it might have provided the basis for conclusion that would have had no justification. It would have given the transaction an importance that it did not have in our minds. I will put it differently: I think it would have had an importance in the minds of the public that it certainly did not have in ours, and I felt that it more dangerous to disclose--that it might be dangerous to disclose it, and there would be no harm in the arrangement as it was concluded without publicity.

Mr. PECORA. Except whatever activity the stock had in the market through the operation of this joint trading account would be misleading the public, in that the public would thereby be able to assume that this was public trading?

Mr. ALTSCHUL. We would never have assumed that this trading account, so-called, would have led to any added activity in the market that would not have taken place anyway. We would have assumed that such activity as originated on the part of a buyer or a seller would have found a counterpart that would have given a fair execution of his order.

The CHAIRMAN. That is all, Mr. Altschul. We will now take a recess until 10:30 tomorrow morning.

(Accordingly, at 4:32 p.m., an adjournment was taken until 10:30 a.m. on the following morning.)

COMMITTEE EXHIBIT 78-A-FEB. 22, 1934

HAMMONS & Co.,

New York City, August 23, 1933. LEE WARREN JAMES, Esq.,

New York, New York.
DEAR SIR: In consideration of your purchasing 3,000 shares Consolidated
Aircraft Corporation Common Stock at $10.00 per share, we hereby grant you
an option to purchase 14,000 shares of the above-mentioned stock as follows:

5,000 shares at $10.00 per share
4,000 shares at $10.50 per share

5,000 shares at $11.00 per share The above option is good for a period of thirty (30) days from the date of this letter or until the close of business Friday, September 22nd, 1933.

In consideration of your exercising the above option, we hereby grant you an additional option to purchase all or any part of 16,000 shares Consolidated Aircraft Corporation Common Stock as follows:

4,000 shares at $11.50 per share
4,000 shares at $12.00 per sbare
4,000 shares at $12.50 per share

4,000 shares at $13.00 per share good for a period of forty-five (45) days from the date of this letter, terminating at the close of business Saturday, October 7th, 1933.

If the above is in accordance with your understanding, please sign and return duplicate copy of this letter in the space provided below. Yours very truly,

HAMMONS & Co., INCORPORATED,

LESTER W. PELL JR., Secretary. LWP: HMD Accepted :

LEE WARREN JAMES

JUNE 26, 1933. Mr. WARREN JAMES, Syndicate Manager,

New York City. DEAR SIRS : The undersigned, Charles W. Sanford, of New York, confirms his agreement with you as follows:

In consideration of the sum of $1.00 paid by you to the undersigned, receipt whereof is hereby acknowledged, the undersigned has granted to you and others associated with you, on certain terms, options to purchase from the undersigned, shares of the $1.00 par value Common stock of Graham-Paige Motors Corporation, a Michigan corporation, as follows:

Up to

Date

Price

17,500 shares. On or before 3 o'clock p.m., D.S.T. July 26, 1933. 17,500 shares.. On or before 3 o'clock p.m., D.S.T., Aug. 26, 1933. 17,500 shares. On or before 3 o'clock p.m., D.S.T., Sept. 26, 1933. 17,500 shares. On or before 3 o'clock p.m., D.S.T., Oct. 26, 1933.

At $3.00 per share flat.
At $3.50 per share flat.
At $4.00 per share flat.
At $4.50 per share flat.

It is understood that the foregoing options, other than the first option, are respectively conditional upon the full exercise by you within the period specified of the preceding option.

You may exercise the options referred to above from time to time by giving, within the periods above mentioned, notice in writing of your election to purchase such shares to the undersigned at 1877 Broadway, New York City, and the undersigned will deliver or cause to be delivered to you certificates for the number of such shares which you shall so elect to purchase, at your office, No. 48 Wall Street, New York City, within days following the day on which such notice is given, against payment therefor.

It is understood that the undersigned shall be entitled to receive any dividends which may be declared upon any of the shares covered by any of the above mentioned options, which shall be payable to holders of record thereof of a date prior to the purchase by you of said shares, and that you shall be entitled to receive all such dividends which shall be payable to holders of record thereof of a date on or subsequent to the date of purchase by you of such shares.

All the shares of such common stock above referred to are now issued and outstanding and all the shares of such common stock purchased by you hereunder are to be shares listed on the New York Stock Exchange. The certificates for all such shares are to be delivered to you in negotiable form for delivery on the New York Stock Exchange, and the undersigned agrees to pay all requisite stock transfer taxes payable in connection with the sale of any of such shares to you hereunder.

If the foregoing is in accordance with your understanding, will you please confirm your agreement herewith. Yours very truly,

(Signed) CHARLES W. SANFORD.

COMMITTEE EXHIBIT 78-C

SANDERSON & PORTER, ENGINEERS,

52 William Street, New York, May 8, 1933. Mr. MASON DAY,

Redmond & CO., 48 Wall Street, New York, N.Y. DEAR MR. DAY-This will confirm our understanding of the option given to you on Voting Trust Certificates for Common Stock of the American Water Works & Electric Co., Inc., namely, all or part of 2,500 shares at 16, 2,500 shares at 17, 2,500 shares at 18, 2,500 shares at 19, good through the close of business June 8, 1933. Yours very truly,

SANDERSON & PORTER.

COMMITTEE EXHIBIT 78-D

SANDERSON & PORTER, ENGINEERS,

52 William Street, New York, May 8, 1933. Mr. MASON DAY,

Redmond & Co., 48 Wall Street, New York, N.Y. DEAB MR. DAY:—This will confirm our understanding of the option given to you on Voting Trust Certificates for Common Stock of American Water Works & Electric Co., Inc., namely, all or part of 2,500 shares at 14, 2,500 sbares at 15, good through the close of business June 18, 1933. Yours very truly,

SANDERSON & PORTER.

COMMITTEE EXHIBIT 78-E

SANDERSON & PORTER,

ENGINEERS,

52 William Street, New York, May 16, '1933. Mr. Mason Day,

Redmond & Company, 48 Wall Street, New York, N.Y. DEAR MR DAY:This will confirm our understanding of the option given to you on Voting Trust Certificates for Common Stock of American Water Works & Electric Company, Inc., namely, all or part of 1,500 shares at 20 (called), 1,500 shares at 21, good through the close of business June 15, 1933. Yours very truly,

SANDERSON & PORTER.

COMMITTEE EXHIBIT 78-F

LOUCKS & CULLEN,
Roooms 1505-1510 EQUITABLE BUILDING,

120 Broadway, New York City, N.Y., April 20, 1933. Mr. H. MASON DAY,

c/o Redmond & Co., 48 Wall Street, New York, N.Y.

Re: Barnsdall Syndicate.
MY DEAR MASON :-For your information, the syndicate has a call on Post &
Flagg, dated March 9, 1933, good for sixty days, on

3,250 shares at 472,
3,250 shares at 334,

3,250 shares at 4. If this is exercised, it has an additional call for an additional sixty days on

3,250 shares at 444,
3,250 shares at 412,

3,250 shares at 434. July 7, 1933.
If this is exercised, it has a call for an additional sixty days on

3,250 shares at 5, July 7, 1933.
3,250 shares at 514, July 7, 1933.

3,250 shares at 542. If this is exercised, it has an additional call for an additional sixty days, on lots of 3,250 shares from 534 up to 814, inclusive. The Barnsdall call is the same as to date and all other terms, except the units are 1,750 shares.

We have exercised today on the first call 1,500 shares from Post & Flagg and 1,000 shares from Barnsdall, at 312. The date you want to keep in kind is May 8th as the expiration date of the first call, and our drive, of course, must be to exercise the full 15,000 shares before that date, which makes the call operative for the next sixty days.

Very turly yours, WDL:B.

WM. DEWEY LOUCKS.

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COMMITTEE EXHIBIT 78-G

REDMOND & Co.,

18 Wall Street, New York, August 19, 1931. Messrs. WRIGHT & SEXTON,

30 Broad Street, New York, N.Y. Attention: Charles C. Wright, Esq. DEAR SIRS : We confirm our understanding that we have given you an order (the execution of any part of which is optional with you) to sell for our account all or any part of fifty thousand (50,000) shares of Petroleum Corporation of American Capital Stock in amounts and prices as follows:

5,000 shares at $8.75 per share 5,000 shares at $10.00 per share
5,000
9.00

5,000

10.25
5,000
9.25

5,000

10.50
5,000
9.50

5,000

10.75
5,000
9.75

5,000

11.00 It is understood that the above prices are to be net to us and that this order is to expire at the close of business on Friday, August 28, 1931. Certificates for these shares will be delivered to you or your nominee upon one day's notice and upon payment of the aforesaid prices therefor at our office at #48 Wall Street, New York City.

It is further understood that upon the expiration of this order, as above noted, you will forward to us one half of any profits which you may realize through the sale of these shares and it is also understood that Redmond & Co. shall not be responsible for any loss which may occur through such sales.

This order is in addition to the order given to you under date of August 7. 1931. Yours very truly,

REDMOND & Co. Accepted :

WRIGHT & SEXTON.

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