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73. Letter dated May 3, 1932, from Seton Porter, president National

Distillers Products Corporation, to Redmond & Co ----

6257

74. Letter dated April 28, 1933, from National Distillers Products Cor-

poration to William B. Levis----

6262

75. Letter dated April 28, 1933, from Seton Porter, president National

Distillers Products Corporation, to Illinois Glass Consolidated

Corporation.-----

6263

76. Letter dated April 28, 1933, from Seton Porter, president National

Distillers Products Corporation, to Redmond & Co---

6263

77. Copy of draft of letter, April 27, 1933, National Distillers to Red-

mond & Co., 6274--

(*)

78. Copies of options given to Redmond & Co., 1929 to 1933, 6281... 6290

79. Letter dated August 4, 1933, from Goldman, Sachs & Co. to secre-

tary committee on Business Conduct, New York Stock Exchange - 6283

80. Application of Kelsey-Hayes Wheel Co., dated February 1, 1933, to

committee on Stock List, New York Stock Exchange, 6284--

(*)

81. Letter dated February 7, 1933, from Goldman, Sachs & Co., and

Lehman Bros. to committee on stock list, New York Stock Ex-

change---

6285

82. Minutes of meeting of February 6, 1933, of committee on stock

list, 6289----

(*)

83. An excerpt from the monthly letter on economic conditions to the

executive committee of Henry L. Doherty & Co. for December

1928_

6310

84. Printed document entitled “ Confidential. Monthly Letter on Eoco-

nomic Conditions to the Executive Committee, Henry L. Doherty

& Co., January 1929" 6312..

(*)

85. Paper entitled “Further Developments in Brokers' Loans

6314

86. Letter dated November 1, 1933, from W. A. Jones to Ferdinand

Pecora, together with accompanying data, 6319----

6359

87. Letter dated November 9, 1933, from A. C. Ray, treasurer Electric

Bond & Share Co., to Ferdinand Pecora, counsel, Committee on

Banking and Currency, 6328_

6359

88. Letter dated November 9, 1933, from A. C. Ray, treasurer American

& Foreign Power Co., Inc., to Ferdinand Pecora, counsel Com-

mittee on Banking and Currency, 6329-

6361

89. Copy of communication, November 3, 1933, Teagle to Pecora, 6332-- 6362

90. Statement entitled “ Interest on Jesup & Lamont deposit account

for the year 1929 ", 6335----

6365

91. Answers made by the Consolidated Oil Corporation to the ques-

tionnaire sent by the committee, 6339--

6366

92. The recapitulation made by members of the investigating staff of the

committee, entitled “ Total number and amount of street loans

made by private corporations for the year 1929 in the call money

market of New York City ", 6342---

6370

93. Answer of the American Can Co. to the committee's question-

naire, 6342----

6370

94. Answer made by the Anaconda Copper Mining Co. to the commit-

tee's questionnaire, 6342--

6371

95. Answer by the Auburn Automobile Co. to the committee's question-

naire, 6342-

6373

96. Answer by the Bethlehem Steel Corporation to the committee's

questionnaire, 6343

6374

97. Answer by the Chrysler Corporation to the committee's question-

naire, 6343-----

6375

98. Answer of the General Foods Corporation to the committee's ques-

tionnaire, 6343

6376

99. Answer of the General Motors Corporation and subsidiaries to the

committee's questionnaire, 63.43-

6378

100. Return made by the International Nickel Co. of Canada, Ltd., 6343-. 6380

101. Return made by the Pan American Petroleum & Transport Co. to the

committee's questionnaire, 6343_---

6382

102. Return made by the Radio Corporation of America to the committee's

questionnaire, 6344-

6383

* Not printed because of length or for reasons given in text.

Page

103. Answer submitted by the Radio-Keith-Orpheum Corporation to the

committee's questionnaire, 6344------

6385

104. Return made by the Tri-Continental Corporation to the committee's

questionnaire, 6344--

6386

105. Answer made by the United Corporation to the committee's question-

naire, 0344--

6387

106. Answer made by the United Gas Improvement Co. to the committee's

questionnaire, 6344-----

6388

107. Return to questionnaire, dated November 6, 1933, from L. H. Seagrave,

president American Founders Corporation, to Ferdinand Pecora,

counsel, Committee on Banking and Currency, and supplemental

return from L. H. Seagrave to Ferdinand Pecora, dated February

21, 1934, 63.46_-

6389

108. Constitution, rules, together with amendments thereto, of the New

York Stock Exchange, 6348-

(*)

109. Statement (copy of) entitled “ Schedule C, Committee on Publicity

1929 to 1933, both inclusive, 6355.-

6389

110. Copy of letter, February 14, 1934, Whitney to Stock Exchange

members, 6402-

(**)

111. Copy of letter, February 14, 1934, Whitney to member corporations,

6405----

(**)

112. Copy of undated, unsigned, memorandum in re effect of National

Securities Act, 6405-

(**)

113. Document entitled "Answers Submitted by the New York Stock Ex-

change to the Questions Asked of It by Counsel for the United States

Senate Committee on Banking and Currency, 6416----

114. Letter dated November 27, 1933, from Charles E. Hudson, president

San Francisco Mining Exchange, to Ferdinand Pecora, together

with accompanying data, 6416---

6417

115. Document purporting to be statement of Mr. Richard Whitney before

the House Committee on Interstate and Foreign Commerce, 6419--- (**)

116. Document purporting to be final proof of statement or proposal of Mr.

Richard Whitney before the House Committee on Interstate and

Foreign Commerce, 6419----

(**)

* Not printed because of length or for reasons given in text.
(**) Éxhibits No. 110-116 appear in vol. 15.

STOCK EXCHANGE PRACTICES

WEDNESDAY, FEBRUARY 21, 1934

UNITED STATES SENATE,
COMMITTEE ON BANKING AND CURRENCY,

Washington, D.C. The committee met at 10:30 a.m., pursuant to adjournment on yesterday, in room 301 of the Senate Office Building, Senator Duncan U. Fletcher presiding.

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

Present also: Ferdinand Pecora, counsel to the committee; Julius Silver and David Saperstein, associate counsel to the committee; and Frank J. Meehan, chief statistician to the committee.

The CHAIRMAN. The committee will please come to order. Mr. Pecora, who will you have first this morning?

Mr. PECORA. Mr. Brown will resume the stand.

1

TESTIMONY OF RUSSELL R. BROWN, CHAIRMAN OF THE BOARD, AMERICAN COMMERCIAL ALCOHOL CORPORATION, NEW YORK CITY-Resumed

Mr. PECORA. Mr. Brown, during the month of July 1933, was an application filed with the New York Stock Exchange by and on behalf of the American Commercial Alcohol Corporation for a third additional listing of its capital common stock?

Mr. Brown. Yes, sir. Mr. PECORA. Have you a copy of that application? Mr. Brown. No, sir. Mr. Pecora. I show you what purports to be a printed copy thereof, which has been furnished to us by the New York Stock Exchange. Will you look at it and tell me if you can identify it as a true and correct copy of the application in question? Mr. Brown (after looking at the printed form). Yes, sir. Mr. PECORA. Mr. Chairman, I offer it in evidence, but it need not be spread in full on the record of the committee's hearings. The CHAIRMAN. Let it be admitted and appropriately marked.

(An application to the New York Stock Exchange for an additional listing of common stock by the American Commercial Alcohol Corporation, was marked " Committee Exhibit No. 62, Feb. 21, 1934," and will not be spread in full on the record but retained in the files of the committee.)

Mr. PECORA. Mr. Brown, the listing application just referred to has been received in evidence as committee exhibit no. 62 of this date. I want to read into the record the following extracts therefrom, under the caption :

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AUTHORITY FOR AND PURPOSE OF ISSUE

The company proposes to issue, upon due authority of the board of directors, up to 25,000 shares of its common stock, on account of the purchase of assets for which it is now negotiating and which may be acquired in the near future, upon official notice of issuance and payment in full, with the statement of the application of the proceeds for the property acquired.

The shares which it is proposed to issue will be registered with the Federal Trade Commission in compliance with the provisions of the Securities Act of 1933.

And under the caption “Opinion of Counsel ”, the following statement is contained in this application:

The legal details in connection with the said issue are subject to the approval of Messrs. Larkin, Rathbone & Perry, No. 70 Broadway, New York City, who are of the opinion that by reason of the authority provided in the certificate of incorporation of said corporation, and upon due authority of the board of directors, said shares of stock may be issued in the absence of fraud, and in the transaction of the purposes specified above, and for such consideration as may be fixed by the board of directors; and when so issued will be lawfully issued, and will be fully paid and nonassessable, and valid in the hands of holders thereof, and will not be liable to any further call or assessment.

The application itself is dated July 19, 1933, and is for an additional listing of 25,000 shares of the common stock, of $20 par value, of the American Commercial Alcohol Corporation. It sets forth that the total amount of common stock authorized to be issued by the company is 375,000 shares under its charter; that there were previously authorized to be issued, or rather to be listed, 262,761 shares, of which there were outstanding on July 18, 1933, 260,715 shares, and that the total applied for, that is, for listing, is 287,761 shares; and that this application was authorized by the executive committee of the American Commercial Alcohol Corporation on July 19, 1933. The application is signed in behalf of the American Commercial Alcohol Corporation by Cecil Page as secretary thereof. The exhibit, constituting a copy of said application, contains the following:

This committee recommends that the above-mentioned 25,000 shares of common stock, of $20 par value, be added to the list, after final notice of issuance and payment in full with statement of application of proceeds or property acquired, in accordance with the terms of this application, making the total amount authorized to be listed 287,761 shares.

That is signed by Frank Altschul, chairman, and J. M. B. Hoxsey, executive assistant to the committee on stock list. It also shows it was adopted by the governing committee on July 26, 1933, being signed by Ashbel Green, secretary. That which I have last read refers, of course, to the committee on stock list of the New York Stock Exchange, and to the governing committee of the New York Stock Exchange.

Now, Mr. Brown, has any of the stock covered by this application, namely, 25,000 additional shares, ever been issued

Mr. Brown. No, sir. Mr. PECORA. Why not? Mr. Brown. Well, because there were so many delays on the part of the lawyers in the handling of the transaction, that the company was put in a position in the meantime where it handled it by cash; because of the improvement in the business situation it was enabled to handle it by cash.

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