Hon. J. MARK WILCOX, TALLAHASSEE, FLA., November 16, 1935. Congressional Bondholders Investigation Board, West Palm Beach, Fla.: Noting your investigation of bondholders' activities, I would respectfully suggest that perhaps a vast amount of information may be available up here as to such activities through the records of the board of administration of this State. Am sure that any investigation you may desire to make here will receive the whole-hearted cooperation of the board of administration, and we invite you to make such investigation. Regards, DAVE SHOLTZ, Governor. I also have the names of those attorneys and those accountants you suggested that I will submit to you at this time. (The list of attorneys, accountants, and investigators is as follows:) LIST OF ATTORNEYS, ACCOUNTANTS, AND INVESTIGATORS WHO HAVE RENDERED VOLUNTARY SERVICE TO THE SELECT COMMITTEE TO INVESTIGATE BONDHOLDERS' REORGANIZATIONS Attorneys: CHICAGO Arthur Abraham, 39 South La Salle Street. J. Kentner Elliott, 160 North La Salle Street. Leo Hana, 111 West Washington Street. William N. Leonard, 175 West Jackson Boulevard. B. W. Rosenstone, 39 South La Salle Street. I. F. Sweeney, 141 West Jackson Boulevard. Accountants: William B. Ackerman, 11 South La Salle Street. M. R. Beeman (Paul Pettingil & Co.), 1 North La Salle Street. Charles Freedman & Co., 11 South La Salle Street. John V. McGovern, 6012 Cermak Road. Adam Serwat, 6012 Cermak Road. Carleton M. Tower, 105 West Adams Street. William H. Ball & Co., 1960 National Bank Building. J. Lee Boothe & Co., 1355 Book Building. David Koretz, 2055 Taylor Street. William B. Marker, appraiser. PHILADELPHIA ST. LOUIS, MO. Attorneys: Rudolph K. Schurr, 705 Olive Street. Bryan Purteet, 705 Olive Street. James E. Carroll, Boatmen's Bank Building. Hyman G. Stein, 722 Chestnut. Sam B. Jeffries, Ambassador Building. Paul F. Plummer, Ambassador Building. Arthur E. Simpson, Ambassador Building. Accountants: Paul Dougherty, 4287 Margaretta. Joseph I. Epstein, 5644 Enright. Investigator: John D. McCutcheon, Boatmen's Bank Building. Attorneys: BOSTON Peter C. Borre, 53 State Street. Lawrence Mason, 14 Clements Road (Newton, Mass.). Paul Mahoney, 33 Broad Street. W. Wallace Currie, 53 State Street. Theodore A. Molinari, 421 Wintrop Street (Medford, Mass.). LOS ANGELES Joseph F. Freeman, investigator, Hollywood, Calif. PORTLAND, MAINE Wilfred I. Diamond, 303 United States Court House. Mr. MICHENER. You mean those are the voluntary attorneys? Mr. MICHENER. I want those in the record. Mr. SABATH. I might say that the names of those gentlemen who have given just a week or 10 days here and there I did not put in because we gave them credit at the hearing. But these other men have devoted a great deal of time. Here is a telegram from the Press Club thanking the committee for saving the Press Building for them. (The telegram is as follows:) ADOLPH J. SABATH, WASHINGTON, D. C., October 4, 1935. Chairman, Select Committee on Real Estate Bondholders Reorganizations, Old House Office Building: Congratulations and thanks for the splendid services rendered by your committee in the matter of the National Press Building Corporation reorganization. Due in great part to your aid your committee's forceful and fair persuasion, agreement was reached by all parties in interest several days ago and the plan of reorganization was approved yesterday by Judge Luhring. Again may we thank you, and will you please extend these thanks to Messrs. Blaustein, Comer, and Thomas for their intelligent handling of this difficult matter. BASCOM N. TIMMONS, Chairman, Building Reorganization Committee, Mr. MICHENER. They are thanking the committee for the work you have done, but have they endorsed this bill? Mr. SABATH. Most of the suggestions on their part are embodied in this bill, although I will not say all. They all claim that it is impossible for them to perform the duties and to perform so that it will be well done. They claim we impose a great many responsibilities and duties upon them but do not give them any aid under 77B to enable them to perform the duties. Mr. MICHENER. What I am personally interested in is this, to use a common expression which is very suggestive. We all want to get to heaven but we want the proper route. These judges want some relief, if possible, but do they say that the bill which you have suggested here is a proper route? Mr. SABATH. I would say that we have done that as far as we could, with the exception that we have provided placing the receivers and others who have been on the fee system on a salary basis. Perhaps some of the judges did not approve of that. There is no unanimity among the judges. But we followed the advice of most of the judges who had the most experience in bankruptcy proceedings and under 77B. I am going to ask that Mr. Garsson be permitted to explain every provision of the bill and, at the same time, the recommendations that have been made to us. I also want to say that nearly every provision in this bill has been recommended by the three prior committees, namely, the committee of 1930, the Senate committee, the Fletcher committee, and those that have been embodied in the Hastings bill in 1932. All of these things will be explained and the provisions in those bills, if you so desire, by Mr. Garsson. STATEMENT OF HENRY N. GARSSON Mr. GARSSON. Mr. Chairman, I am an analyst connected with the Sabath committee. I have been an accountant industrial engineer. Mr. CHANDLER. Are you a member of the bar? Mr. GARSSON. No, sir; I am not; although I studied law. I am not a practicing attorney. The revised bill which was presented to you this morning contains a number of changes from the original bill that was presented. I will first confine myself to those portions of this bill which are revisions of the old bill in any important way. The most important change will be contained on page 6, of this bill under subsection (b) of the bill. In the original bill provision was made for the appointment by the court of the Conservator as trustee, receiver, or custodian in every 74 or 77B proceedings. However, under the bill that provision is not made mandatory and affects only cases which were begun after the enactment of this act and affects only those cases which are pending where a vacancy has occurred by reason of the death, resignation, or removal of the Conservator, trustee, receiver, or custodian. But even that mandatory provision has been changed so that under this act in event the judge does not determine to continue the debtor in possession, the judge shall appoint as trustee, custodian, or receiver, either the Conservator or an authorized trustee from a panel of trustees qualified for such service to be selected and designated in advance by the Conservator, or in any particular case if it shall be shown to the satisfaction of the court that the Conservator or the panel cannot properly or adequately function because of unusual circumstances peculiar to the case, then some person not authorized may be appointed. That gives a great amount of leeway in these cases and provides that in cases where any objections can be found by anyone there is a means of having qualified himself in post of trustee, receiver, or custodian. In a measure that follows a provision originally contained in section 77, relating to railroad reorganizations. Under that provision originally the panel of trustees was designated in advance by the Interstate Commerce Commission. In this case the Conservator, who throughout this bill acts as sort of an arm of the court, assisting the court by getting information which might not come to the court's attention, looks into the qualifications of various persons who may be designated to act as trustees as a panel of qualified business men who could operate businesses of the kind that would come under 77B or 74. Then in the event this panel does not contain such men the court is given the option to appoint someone else who might be better qualified. Mr. MICHENER. All of these conservators are under the control of the Chief Conservator, who is the Comptroller of the Currency. Mr. GARSSON. That is correct. The Comptroller of the Currency, according to the bill, is appointed Conservator. In this case the conservators may be in the employ of the Comptroller of the Currency acting as Conservator, or the Conservator may be an outsider who because of conditions has to be appointed. And in that case he is under the supervision of the Conservator only to the extent that his actions are watched and audited by the Conservator or report to the court. Mr. MICHENER. Have you conferred with the Comptroller of the Currency? Mr. GARSSON. Yes, sir; we have done that. Mr. MICHENER. Does he want to assume this additional work and liability that is so entirely different from anything to which he is accustomed and so different from any purpose for which his office was originally set up? Mr. GARSSON. Of course, it is not for me to argue on this point. Actually the Comptroller of the Currency's office has been consulted in connection with this provision. The Comptroller of the Currency has had similar functions in connection with reorganization and liquidation of several thousand banks during the past 2 years. I understand they have completed that very smoothly and without much expense, and for less expense than similar proceedings in liquidation of bankrupted estates. Mr. MICHENER. My thought is this: Do you want to put bankruptcy under the Comptroller of the Currency? He is doing a splendid job with banks, but he pretty nearly has his hands full. Mr. CHANDLER. May I interrupt to say that in anticipation of that point I invited the Comptroller of the Currency to send a representative here; which he has done. His representatives are present in the room. Mr. MICHENER. I will not pursue that further at this time. Mr. GARSSON. The next material change is contained in subsection (d). With respect to the original bill which provided that no plan could be affirmed unless the Conservator had made a report on such a plan, the objection was that that might delay the confirmation of any plan until the Conservator got good and ready to make a report. The bill now provides that notice of all proceedings shall be given to the Conservator, who shall have the right to be heard upon all questions with respect to which the debtor, any creditor, or stockholder, or any intervening party, in any such |