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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. Í 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 2542 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. PECORÁ. According to exhibit no. 89 in evidence, which is the return to the questionnaire we ad iressed 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 exces. sive, 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 CHAIRMAX. 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.

if

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, 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.

Mr. RESOR. That is what they loan in every case.

Mr. PECORA. I think that is all of this witness. Have you any statement you would like to make to the committee, or information to convey to the committee, without being questioned !

Mr. RESOR. I would like just to make this plain, Mr. Pecora. I came to New York in 1908, and we were loaning money then. Probably it had been the practice of the company for years before that. We are loaning it today, and that is a practice not because of the speculation that brought more money in 1929 out into the market, but it is our practice to always keep a large line of call money out so that we can have it any minute we want it.

The CHAIRMAN. How is the demand today?
Mr. RESOR. It is not so high.
Mr. PECORA. It is not nearly so high.

Mr. RESOR. I have no objection to telling you that we have only about $11,000,000 out today.

Mr. PECORA. As compared with a daily average of $69,000,000 in 1929.

The CHAIRMAN. What interest do you get today?
Mr. Resor. One percent, less commission, and sometimes less.

The CHAIRMAN. It was the higher interest that made these loans attractive to you at that time?

Mr. RESOR. But, Senator, we keep it out at the low rates, as I say, because it is just a matter of principle to us, to have money available when we can get it at any minute.

Mr. PECORA. I think that is all of this witness.
The CHAIRMAN. You may be excused.
(Witness excused.)

Mr. PECORA. There are other witnesses, Mr. Chairman, but the usual hour of recess has arrived. I suggest that we take a recess at this time.

The CHAIRMAN. The committee will now take a recess until 2 o'clock.

(Whereupon, at 1 p.m., Friday, Feb. 23, 1934, a recess was taken until 2 p.m., of the same day.)

AFTERNOON SESSION

The committee resumed at 2 p.m. at the expiration of the recess.
The CHAIRMAN. The committee will please come to order.
Mr. PECORA. Mr. Sinclair.
Mr. SINCLAIR. Do you wish me to be sworn ?

Mr. PECORA. No; you have heretofore been sworn and are now being recalled.

TESTIMONY OF HARRY F. SINCLAIR, GREAT NECK, LONG ISLAND,

N.Y., CHAIRMAN OF THE EXECUTIVE COMMITTEE OF CONSOLIDATED OIL CORPORATION, NEW YORK CITY-Resumed

Mr. PECORA. Mr. Sinclair, you have heretofore testified before this committee, and in connection with the testimony then given by you it appeared that you were connected with a corporation known as the Consolidated Oil Corporation, I believe.

Mr. SINCLAIR. Yes, sir.

Mr. PECORA. Now, during the year 1929 what was the corporate name of that corporation ?

Mr. SINCLAIR. Sinclair Consolidated Oil Corporation.

Mr. PECORA. You were connected with that corporation that year, were you?

Mr. SINCLAIR. Yes, sir. Mr. PECORA. In what capacity ? Mr. SINCLAIR. Chairman of the board. Mr. PECORA. Now, in the year 1929 did the Sinclair Consolidated Oil Corporation make call loans to brokers in New York City? Mr. SINCLAIR. They did.

Mr. PECORA. Did the Corporation make such loans generally throughout that year?

Mr. SINCLAIR. They did.

Mr. PECORA. I show you what purports to be a statement in writing signed by Mr. G. T. Stanford, general counsel of the Consolidated Oil Corporation, entitled:

Questionnaire propounded by the Honorable Ferdinand Pecora, Counsel to the Committee on Banking and Currency, to Consolidated Oil Corporation, and answers thereto by said Corporation.

Will you look at it, Mr. Sinclair, and tell me if you can identify it as a correct statement or answers to the questions propounded in this questionnaire, that was submitted to your corporation ? Mr. SINCLAIR (after looking at the papers). I do. Mr. PECORA. Mr. Chairman, I now offer these papers in evidence. The CHAIRMAN. Let them be admitted.

(The answers made by the Consolidated Oil Corporation to the questionnaire sent by the committee, marked " Committee Exhibit No. 91, February 23, 1934 ", will be found at the end of the day's proceedings.)

Mr. PECORA. The document has been received as committee exhibit no. 91 of this date and will be spread in full on the record of the hearings. I want to point out that, according to this exhibit, and the schedule attached thereto and forming a part thereof, the Sinclair Consolidated Oil Corporation, as it was called during the year 1929, and its affiliated and subsidiary corporations named therein, made call loans during the year 1929 aggregating in amount $211,000,000. Those loans were made through various commercial banks, the names of which are set forth in this exhibit or the schedule annexed to it and made a part thereof; and that such loans were made in behalf of and by the Sinclair Consolidated Oil Corporation, Sinclair Automobile Service Corporation, Sinclair Pipe Line Co., Sinclair Crude Oil Purchasing Co., and the Venezuelan Petroleum Co.

Now, Mr. Sinclair, do you know the highest amount of such call loans outstanding on any one day during that year that were made by or on behalf of those corporations? Mr. SINCLAIR. On October 9, $17,600,000.

Mr. PECORA. What was the daily average amount of those loans made by your companies during the year 1929 ?

Mr. ŠINCLAIR. It was $12,595,636. Mr. PECORA. Were they made at the call-money rates that were prevailing at the time?

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