The CHAIRMAN. That being all of the data to be presented at this time, the committee will now go into executive session.

(Thereupon, at 10:55 a.m., Wednesday, Apr. 18, 1934, the open session was adjourned and the committee proceeded to consider the national stock exchange bill in executive session.)

STOCK-EXCHANGE PRACTICES

TUESDAY, MAY 1, 1934

UNITED STATES SENATE,

SUBCOMMITTEE OF THE COMMITTEE ON

BANKING AND CURRENCY,

Washington, D.C.

The subcommittee met at 10:30 a.m., following adjournment on Wednesday, April 18, 1934, in room 301 of the Senate Office Building, Senator Duncan U. Fletcher, presiding.

Present: Senators Fletcher (chairman), Barkley, Costigan, Townsend, and Couzens.

Present also: Ferdinand Pecora, counsel to the committee; David Saperstein, associate counsel to the committee; Frank J. Meehan, chief statistician to the committee; Roland L. Redmond, counsel to the New York Stock Exchange; William A. Lockwood, counsel to the New York Curb Exchange.

The CHAIRMAN. The subcommittee will come to order, please. This is a meeting of the subcommittee on stock exchange practices, and we have met to receive a report from the counsel to the committee, Mr. Pecora.

STATEMENT OF HON. FERDINAND PECORA, COUNSEL TO THE

COMMITTEE

Mr. PECORA. Mr. Chairman, for the completion of the record I now offer certain papers. At a prior hearing of the committee I introduced in evidence the returns made by the New York Stock Exchange as a separate entity to a questionnaire that was addressed in behalf of this committee to that exchange. The documents composing the return to that questionnaire were heretofore offered in evidence, as will appear at page 7288 of the printed proceedings of this committee. I now want to offer in evidence the original questionnaire itself addressed to the New York Stock Exchange in behalf of the committee.

Senator COSTIGAN. Mr. Pecora, I do not find any date upon this questionnaire you have just offered in evidence being a copy of an original sent out by you. Do you know the date of it?

Mr. PECORA. That was sent out last October.

The CHAIRMAN. The questionnaire addressed on behalf of this committee to the New York Stock Exchange in October 1933 will be received in evidence and appropriately marked by the committee reporter.

(The questionnaire addressed to the New York Stock Exchange as a separate entity, in October of 1933, was received in evidence and marked "Committee Exhibit No. 1, May 1, 1934 ", and is as follows:)

COMMITTEE EXHIBIT NO. 1-MAY 1, 1934

QUESTIONNAIRE TO THE NEW YORK STOCK EXCHANGE

A. Give the following data for a current date:

1. Number of members of the New York Stock Exchange..

2a. Estimate the number of members considered as acting primarily as traders for their own account.

2b. Estimate the number of members considered as acting primarily as floor brokers.

2c. Estimate the number of members present on the floor.

2d. The number of members who do not maintain regular representa-tion on the floor of the Exchange, giving the names and addresses.. 2e. Number of registered firms carrying margin accounts for customers and number of memberships held by such firms.

2g. Names of all member houses engaged exclusively in handling, odd. lot transactions.

C. Obtain from all odd lot houses the number of shares bought and the number of shares sold by them during the period April 1, 1933, to July 31, 1933, inclusive.

K. 1. Give the names of all members who acted as specialists on October 1,. 1929, and July 1, 1933. Give the names of the securities assigned to each. K. 2. Furnish copies of all provisions in the constitution and by-laws of the New York Stock Exchange relating to specialists in effect on December 31, 1929, and copies of all amendments subsequent thereto up to. August 31, 1933. K. 3. Give names of all specialists who have been subjected to formal warn-ing, trial, or disciplinary action of any nature or character whatso-ever by any committee or governing body of the Exchange for the period from January 1, 1928, to September 1, 1933. In each case state the date, the nature of the alleged violation and the disposition. thereof.

L. Give the following data for each of the years from 1929 to 1933, inclusive :: L. 1. Number of persons employed by Committee on Publicity of the New York Stock Exchange.

L. 3. Number of persons employed by the Department of the Econo-mist of the New York Stock Exchange.

L. 4. Total yearly expenditures by the New York Stock Exchange for all of the above enumerated purposes.

L. 5. Total number of Presidents' addresses or statements, yearbooks, annual reports of the President, and similar publications circulated or distributed by the Exchange or any of its subsidiaries.

L. 6. The titles and dates of all such publications.

L. 7. The number of copies of the two books-" The Work of the Stock

Exchange" and "Short Selling ", written by the Economist of the New York Stock Exchange, which were purchased by the Exchange or any of its subsidiaries and were distributed gratis and the general nature of such distribution.

L. 9. Furnish copies of all the articles, speeches, pamphlets, brochures or writings of Richard Whitney, President of the New York Stock Exchange, published since 1928.

M. Give the following data for each of the years from 1928 to September 1, 1933:

M. 1.

Names of bond issues listed on the New York Stock Exchange which have been in default in the payment of principal and. interest during such period.

M. 2. List of members or member houses of the New York Stock Exchange who were suspended for insolvency.

M. 3. List of members suspended or expelled by the New York Stock Exchange, giving the dates of such suspension or expulsion,. the reasons therefor, and where such members were in partnership, the names of such firms.

N. Give the following information for each of the years from 1928 to 1933, inclusive:

N. 1. All committees of the New York Stock Exchange and the names of the members of each committee.

Mr. PECORA. Now, Mr. Chairman, there was addressed to a number of stock exchanges situated throughout the country other than the New York Stock Exchange, a form of questionnaire in behalf of this committee. I want to put in evidence at this time a copy of that form of questionnaire addressed to such other stock exchanges.

Senator CoSTIGAN (presiding). The form of questionnaire will be received in evidence and made a part of the record, and it will be appropriately marked by the committee reporter.

(A carbon copy of the form of exchange questionnaire addressed to a number of stock exchanges throughout the country other than the New York Stock Exchange, was received in evidence and marked "Committee Exhibit No. 2, May 1, 1934 ", and is as follows:)

COMMITTEE EXHIBIT No. 2-MAY 1, 1934

MISCELLANEOUS EXCHANGE QUESTIONNAIRE

A. Give the following data for a current date or period, specifying the date or period: 1. State the number of members of your Exchange.

2. (a) State the number of registered firms of your Exchange (excluding those which are also members of the New York Stock Exchange) which carry margin accounts for customers and state the number of memberships held by such firms.

(b) State the number of individual members of your Exchange (excluding those who are members of the New York Stock Exchange) who carry margin accounts for customers.

(c) Give the names of all members of your Exchange engaged in handling odd lot transactions.

(d) State the average number of members who are present daily on the floor of your Exchange.

B. 1. Give the names of all members who acted as Specialists on your Exchange on July 1, 1933, together with the names of the active stocks in which they were Specialists respectively. For the purpose of this question the term "active stocks" shall be deemed to include those of which not less than 50,000 shares were traded in during the period from July 1, 1932, to July 1, 1933.

2. Furnish copies of all provisions relating to Specialists in the Constitution and By-Laws of your Exchange in effect on January 1, 1928, and copies of all amendments thereto up to September 1, 1933.

3. Give the names of all Specialists who have been subjected to formal warning, trial or disciplinary action of any nature or character whatsoever by any Committee or governing body of the Exchange for the period from January 1, 1928 to September 1, 1933. In each case, state the date, the nature of the alleged violation and the disposition thereof. C. Give the following data for each of the years from 1929 to 1932, inclusive, and for the period from January 1, 1933 to September 1, 1933:

1. State the number of persons employed by your Exchange or any authorized Committee thereof in publicity and/or public relations activities.

2. Give the total yearly expenditures by your Exchange in connection with publicity and/or public relations activities.

3. State the total number of pamphlets, brochures, printed addresses, articles or writings circulated or distributed by the Exchange or any of its subsidiaries.

4. Give the titles and dates of all such publications.

D. Give the following data for each of the years from 1928 to 1932, inclusive, and for the period January 1, 1933 to September 1, 1933, inclusive:

1. Furnish the names of all bond issues traded in on your Exchange which have been in default in principal or interest during said period.

2. Furnish the names of all members or member firms who were suspended by your Exchange for insolvency.