Mr. RESOR. Right.

Mr. PECORA. During the month of March the number of borrowers was 92, and the daily average amount of the loans was $75,359,000. During the month of April the number of borrowers was 102, and the daily average of the loans was $79,736,000.

During the month of May the number of borrowers was 89, and the daily average of loans was $76,857,000.

In the month of June the number of borrowers was 89, and the daily average of the loans was $79,853,000.

In the month of July the number of borrowers was 91, and the daily average of the loans was $83,838,000.

In the month of August the number of borrowers was 94, and the daily average was $85,788,000.

In the month of September the number of borrowers was 96, and the daily average of the loans was $86,650,000.

In the month of October the number of borrowers was 89, and the daily average of the loans was $79,157,000.

In the month of November the number of borrowers was 25, and the daily average of the loans was $16,372,000.

In the month of December the number of borrowers was 19, and the daily average was $20,049,000.

The average number of borrowers per day for the entire year was 79, and the daily average of the loans for the year was $69,304,000. The CHAIRMAN. That was not the regular business of the corporation, was it, to make these loans?

Mr. RESOR. We have always kept surplus funds on the street in that way.

The CHAIRMAN. These were surplus funds you were loaning?

Mr. RESOR. These were surplus funds that we might need any moment in the operation of our business, and represent funds of other companies which are deposited with the parent company for

their use.

The CHAIRMAN. Were these funds derived from earnings and income, or sale of stock, or what?

Mr. RESOR. Not from sales of stock-from earnings, income, and payment of bills to us.

Senator KEAN. They might be derived by a reduction in your inventory, might they not?

Mr. RESOR. Yes, somewhat.

Senator KEAN. In other words, at times you carry a very large amount of oil on hand.

Mr. RESOR. Correct.

Senator KEAN. And at other times you dispose of that oil, and therefore you have surplus funds.

Mr. RESOR. Yes. That is particularly true in the foreign business, where inventories are built up against certain seasonal demands. Mr. PECORA, Mr. Resor, can you give the committee the aggregate amount of all these call loans that your company made during the year 1929 ?

Mr. RESOR. Your office called up day before yesterday and put the amount at 17 billions odd. That agrees with this figure, Mr. Pecora, but it did not mean anything to us, for the reason that if we had had one million dollars out every day of the year for the year 1929, we

would certainly not have had $365,000,000 in the market. We would only have had one million.

Mr. PECORA. What I am trying to find out, and what our office tried to find out, was the aggregate amount of all these loans during the year 1929. We recognize the fact that that amount would not represent anything but loans made, collected and reloaned-that is, reinvestments, you might say.

Mr. RESOR. It totals something like seventeen billion.

Mr. PECORA. The total of those loans would be something over $17,000,000,000.

Mr. RESOR. As recorded in these figures.

The CHAIRMAN. In other words, you received the interest on $17,000,000,000?

Mr. RESOR. No.

Mr. PECORA. Oh, no.

Mr. RESOR. If you had $1,000,000 out for the year, you would not get interest on $365,000,000. You would get it only on $1,000,000. Mr. PECORA. Mr. Resor, the fact is, according to your own figures, that the average daily amount throughout the year, or, rather, the outstanding call loans, all the call loans made by your company, were $69,304,000, approximately.

Mr. RESOR. Right.

Mr. PECORA. Do you know on what date in the year 1929 your company had outstanding the largest amount in dollars and cents of these call loans?

Mr. RESOR. September 9; $97,824,000.

Mr. PECORA. On September 9 the peak amount was $97,824,000; is that right?

Mr. RESOR. That is right.

Mr. PECORA. Under whose direction or supervision were those call loans made that year?

Mr. RESOR. Mine.

Mr. PECORA. Will you describe to the committee very briefly the mechanism that you used, or the procedure that you followed in the making of these call loans?

Mr. RESOR. We have for years done this business through Messrs. Jesup & Lamont. We carry but one account. We did not have during 1929 any brokers on our books except Jesup & Lamont, in a total account for all the loans. We were in close touch with them. because they are at 26 Broadway. If we had surplus funds that we did not use, we merely said, "We have two, three, or four million dollars that we can put out today." It was up to them to loan the money on the floor of the exchange or direct to themselves at times, or over the counter. It is done in three ways. When they took the money down, which they had to do before they got collateral, we gave them a check and took their receipt. Later in the day, after the delivery hour of collateral, they would give us security for the amounts covered by that day.

Mr. PECORA. Can you tell the committee whether or not the call loans made by your company during the year 1929 exceeded in amount those made in any year since you have been identified with the company in any way?

Mr. RESOR. Yes; they did.

Mr. PECORA. Did they greatly exceed those made by the company in any year?

Mr. RESOR. I should think in prior years we might loan up to $30,000,000 to $35,000,000.

Mr. PECORA. A day, as a daily average?

Mr. RESOR. At times, when we had surplus funds.

Mr. PECORA. But in 1929 the daily average of the loans was over $69,000,000?

Mr. RESSOR. Yes.

Mr. PECORA. Were those loans made at what were the prevailing rates of interest for call loans?

Mr. RESOR. They were made at presumably very close rates. Most of them were made at the renewal rates, which are established on the floor of the exchange. We got that, less a commission of one quarter of 1 percent. In other words, if the rate was 6 percent, we would get 534.

Mr. PECORA. You paid Jesup & Lamont a brokerage or commission for their services in placing the loans.

Mr. RESOR. They deducted that when they gave us the interest. Mr. PECORA. Do you recall what the range of rates of interest was during the year 1929 on these call loans?

Mr. RESOR. I think one day it touched 15.

Mr. PECORA. Didn't it go beyond 15 sometime during that year? Mr. RESOR. It may have, on loans that were made late in the afternoon, but I am speaking of the official rates as established on the stock exchange.

Mr. PECORA. What was the range? You have given us the top. Mr. RESOR. Something between 5 and 15. I should say it ran mostly 6, 7, 8, and 9, along in there.

Mr. PECORA. Do you know, Mr. Resor, the total amount received by your company by way of interest on these call loans during that period?

Mr. RESOR. Yes, sir.

Mr. PECORA. Will you give us the figure?

Mr. RESOR. I will [producing paper].

Mr. PECORA (after examining paper). I offer in evidence the typewritten statement produced by the witness in answer to the last question.

The CHAIRMAN. Let it be admitted.

(Statement entitled "Interest on Jesup & Lamont deposit account for year 1929", was received in evidence, marked "Committee's Exhibit No. 90", Feb. 23, 1934, and the same will be found at the conclusion of today's proceedings.)

Mr. PECORA. The statement has been received in evidence as committee's exhibit no. 90, and is entitled "Interest on Jesup & Lamont deposit account for year 1929." It shows the total for the year of $4,945,217.65, divided up into months as follows: January, $403,000. I will merely give the thousands. February, $327,000; March, $526,000; April, $485,000; May, $491,000; June, $455,000; July, $600,000; August, $552,000; September, $565,000; October, $398,000; November, $63,000; December, $74,000.

Senator KEAN. I would like to ask you what average rate that makes for the money.

Mr. RESOR. About 7 percent. You remember I said the rates ran mostly around 6, 7, 8, and 9.

Senator KEAN. So, you received about 7 percent on the amount of money you were loaning on the exchange?

Mr. RESOR. Yes.

Mr. PECORA. That does not include the one quarter of 1 percent which the broker, Jesup & Lamont, received out of the interest paid by the borrower?

Mr. RESOR. That is right. This is net.

Mr. PECORA. That is net to your company?

Mr. RESOR. Yes.

Mr. PECORA. Did the broker receive more than a quarter of 1 percent?

Mr. RESOR. Never.

Mr. PECORA. On what securities exchange is the stock of your company listed?

Mr. RESOR. The New York Stock Echange.

Mr. PECORA. Do you know what the total number of common shares issued and outstanding in the year 1929 was?

Mr. RESOR. It possibly was 23 million or 24 million-[after conferring with an associate]-from 25 to 252 million.

Mr. PECORA. Do do you know the total amount of trading in the market in the common stock of your company in 1929?

Mr. RESOR. NO; I would not have that figure.

Mr. PECORA. You gave the number of shares?

Mr. RESOR. Twenty-five million shares, approximately.

Mr. PECORA. According to exhibit no. 89 in evidence, which is the return to the questionnaire we addressed to your company, the total number of shares of the capital stock of your company transferred on the books during the year 1929 was 16,828,779.

Mr. RESOR. That is according to the letter.

Mr. PECORA. And the total number of transfers of that stock during the year 1929, made on the books, was 238,770; that is, where stock was transferred from one ownership to another on the books.

Mr. RESOR. Right. I want to call your attention to that paragraph, however, Mr. Pecora, in the split-up of stock, which is very important, and which illustrates that that 16,000,000 shares is very excessive, because in the split-up of stock we have given the total number of transfers, whereas a great many of them were not, in effect, transfers to another name, but merely a split-up of the certificates.

Mr. PECORA. That is part of the record here, because this entire document has been put in evidence, Mr. Resor. I have not read the entire document because of its length.

The CHAIRMAN. Is the stock listed on the New York Stock Exchange?

Mr. RESOR. Yes, sir.

The CHAIRMAN. Are the shares widely distributed or concentrated? Mr. RESOR. Very widely distributed."

Senator KEAN. How many stockholders have you?

Mr. RESOR. I could not say at the present time, Senator.
Senator KEAN. I think it would be important to know.

Mr. SWAIN. It is in excess of 150,000.

Mr. PECORA. You can give the figure approximately, Mr. Resor.

Mr. RESOR. The last I knew was about 140,000. Mr. Swain is probably more nearly correct.

Mr. SWAIN. Can we use the number as of the last day of record? Mr. PECORA. Yes; and if you have in your files or among your records the total amount of trading for the year 1929, we would like to have that.

Mr. SWAIN. We have not that.

Mr. PECORA. We can get that from the stock exchange statistical records.

Mr. SWAIN. I will see if we have that.

Mr. RESOR. Mr. Pecora, that figure is the total as given by the manuals. We can get it for you in any of the newspapers, if you wish it. You want the actual number of shares outstanding? Mr. PECORA. In the year 1929.

Mr. RESOR. And at present?

Mr. PECORA. And at present; and the amount of trading, the number of shares traded in on the exchange during the year 1929. Mr. RESOR. And the number of stockholders.

Mr. PECORA. Yes.

The CHAIRMAN. What is the par value of the stock?

Mr. RESOR. Twenty-five dollars at the present time.

Mr. PECORA, Can you tell the committee, Mr. Resor, the factors and circumstances that led to such very heavy borrowings by brokers in the year 1929, or at least up to the end of October of that year?

Mr. RESOR. I can tell you why we loaned so much money; because there was a demand for it at excessively high rates, over and above what we could get from what we would normally invest in, which are Government securities, municipals, and things of that sort. Mr. PECORA. What caused that great demand?

Mr. RESOR. Speculation in the stock market, of course.

Mr. PECORA. Without the furnishing of credit in the form of these call loans, not only by banks, but by nonbanking corporations and individuals, could that speculation have been sustained?

Mr. RESOR. Persoanlly I think so, Mr. Pecora. I have been loaning money in this way for over 20 years, and if it had not been coming from us, our money would have been in the banks; the money we put into securities would have gone back to the sources where that money comes from, and it would have been secured in just the same way. I do not believe the volume of it would have been decreased if we had not loaned it on the market.

Mr. PECORA. Could that excessive speculation have been maintained without the credits extended to brokers, represented by call loans? Mr. RESOR. No; I doubt it. The point I wanted to make is that I believe if the demand is there, the money will be forthcoming. The money was not there first, to make the demand.

Senator KEAN. I would like to ask a question, if I may, Mr. Chairman. If the money had not come from you, and had not come from the United States, there are other money markets in the world that were sending money into the market to loan, isn't that true?

Mr. RESOR. Absolutely. Foreign funds that were here, Senator, were enormous, of course.

The CHAIRMAN. If the banks had been making the loans, they would have been loaning depositors' money.