STOCK EXCHANGE PEACTICE8 MONDAY, MARCH 12, 1934 UNITED STATES SENATE, COMMITTEE ON BANKING AND CURRENCY, Washington, D.C. The committee met at 10:30 a.m., pursuant to adjournment on Triday, March 9, 1934, in room 301 of the Senate Office Building, Senator Duncan TJ. Fletcher presiding. Present: Senators Fletcher (chairman), Adams, Bulkley, Golds- borough, Townsend, 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; and Koland L. Eedmond, counsel to the New York Stock Exchange. The CHAIRMAN. The committee will come to order, please. Will Mr. Whitney please come up to the committee table ? STATEMENT OP RICHARD WHITNEY, PRESIDENT OP THE NEW YORK STOCK EXCHANGE—Resumed The CHAIRMAN. Mr. Whitney, Mr. Pecora wants to ask you some questions in connection with the additional data to be submitted to the committee this morning. Mr. PECORA. Mr. Whitney, as to the additional data you expected to receive from the members of the New York Stock Exchange in reply to a questionnaire you addressed to them a week ago Saturday, that is, on March 3, 1934, respecting transactions in the so-called " aviation stocks ", have you that data here now? Mr. WHITNEY. Yes, sir. We have the originals right here on the table before you. I might explain that we have brought in both the originals and duplicates of the originals. Mr. PECORA. Mr. Chairman, I wish that they might be received in evidence but need not be spread on the record of the committee's hearings. The CHAIRMAN. All right; they will be received in evidence and marked for identification. Senator KEAN. Mr. Chairman, I suggest that Mr. Whitney file with the committee a copy of the questionnaire that he sent out to the members of the New York Stock Exchange. Mr. PECORA. That has already been made a part of the record of the committee's hearing, Senator Kean. Senator KEAN. All right. Mr. WHITNEY. Yes, sir; that is a part of your record as of March 3, 1934, I believe. 7211 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis 7212 STOCK EXCHANGE PRACTICES Mr. PECORA. Have you a tabulation of these returns made by the members of the exchange, Mr. Whitney? Mr. WHITNEY. If I might explain? Mr. PECORA. Certainly. Mr. WHITNEY. We are handing you the original answers made by the members of the New York Stock Exchange to the questionnaire, and you will find those originals m the packages here on the table before me. And we have duplicates of these original answers in our hands. I wish to apologize, perhaps, for the condition of some of these original answers made by members of the exchange, because they have been worked on, and check marks have been made upon them in order to get the compilations of the purchases and sales in the case of each one of these, I believe, seven so-called " aviation stocks." There were some sixty-odd thousand tickets which had to be written up from these original returns, and sorted by names as well as by stocks. I have also here one of these compilations made of all trades from December 1, 1933, to February 9, inclusive, in United Aircraft & Transport Corporation stock. I have some 10 copies of this compilation for the use of the members of the committee, which we will also make available to you. The balance of the trades, m the case of the other so-called " avia- tion stocks ", we will have ready for you just as soon as they can be made available. Mr. PECORA. Could you give us some idea when that will be? Mr. WHITNEY. I think by Thursday or Friday of this week all will be ready to be submitted to you. The CHAIRMAN. Does that apply to one company, and do you mean that you will have the same compilation made as to the other stocks ? 1 Mr. WHITNEY. Yes, sir. This applies as to a compilation for one company, being the United Aircraft & Transport Corporation stock; and we will get the other compilations ready for you on Thursday or Friday of this week. You have here on the committee table the original answers, and also there are duplicates that we have made, having made up individual tickets for each trade made during that period of a little over 2 months, and they have been sorted, as I say, by names and by stocks; and from that data com- pilations have been made and are now being made. But the com- pilation is only available this morning as to the one company. This has been a stupendous task, as you may well imagine. Senator ADAMS. I hope, Mr. Whitney, you are not purposing to render a bill to the committee of the cost to you of this work. Mr. WHITNEY. Would you be good enough to permit me to do so ? Senator ADAMS. I am afraid the chairman would not permit that. Senator GOIDSBOROUGH. Will these compilations cover all of the several corporations ? Mr. WHITNEY. Yes, sir. We have a compilation for but one com- pany here this morning, but when we complete the work the com- pilations will cover all of the companies as to which request was made for information. The CHAIRMAN. That material may be received in evidence and marked for identification. And the subsequent material as it comes Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis STOCK EXCHANGE PBACTICES 7213 in may be likewise received in evidence and marked for identifica- tion. (The several volumes of original replies submitted, being answers received from members of the New York Stock Exchange in re- sponse to its questionnaire under date of Mar. 3, 1934, was marked *• Whitney Exhibit No. 7 for identification, Mar. 12, 1934 ", and the data is to be turned over to Mr. Pecora.) The CHAIRMAN. NOW the question arises: What will the committee do with this data? It seems to me that all of this data ought to be referred to Mr. Pecora, general counsel to the committee, for his examination and report. And it is now for the committee to decide whether this material should be made public or await a report on it from our general counsel. Senator KEAN. I move that it be made public. Senator GOI*DSBOROTJGH. I see no objection to it. The CHAIRMAN*. We haven't the data in shape to be made public. Mr. PECORA. This portion now introduced represents the returns made by the members of the New York Stock Exchange as to trans- actions in United Aircraft & Transport Corporation stock. There are seven other issues involved. 1 see no objection to making this public, Mr. Chairman. The CHAIRMAN. Very well, this will be made public. Mr. WHITNEY. Mr. Pecora, I have forgotten whether there were seven or eight requested, but we have and will have whatever they are. Mr. PECORA. I believe there were eight different issues, but two of them referred to securities of one company. Mr. REDMOND. TWO of them were Curtiss-Wright issues. Mr. PECORA. There were seven companies, but a total of eight stock issues. Mr. WHITNEY. What I want to say is, that whatever your request was, you will receive compilations covering those stocks, this com- pilation now presented being only for the one stock. Mr. PECORA. It would be a matter of great convenience to me if I might have two copies of this compilation instead of one, so that I might send one to New York to be worked on by the committee's staff up there. Mr. REDMOND. Here is another copy of the compilation for you, Mr. Pecora. Mr. PECORA. I find there are eight corporations, with two issues in the case of one corporation, being the Curtiss-Wright Corpora- tion, making nine issues in all. Mr. REDMOND. Very well. Whatever the questionnaire shows I am sure is right. Mr. PECORA. All right. If this may now be marked. The CHAIRMAN. That will be received in evidence and appropri- ately marked for identification. (The compilation for the United Aircraft & Transport Corpora- tion stock was marked " Whitney Exhibit No. 8 for identification, Mar. 12, 1934 ", and the data was turned over to Mr. Pecora.) Mr. PECORA. NOW, Mr. Whitney, have you the minute books of the various committees of the New York Stock Exchange called for about a week ago ? Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis 7214 STOCK EXCHANGE PRACTICES Mr. WHITNEY. Mr. Redmond says they are here. Mr. PECORA. May they now be produced and marked for identifi- cation, and made available to me so that I may examine them ? Mr. WHITNEY. I wish to stress again, Mr. Chairman, the very confidential nature of some of the matter contained in these minute books, relating to outsiders as well as to members of the New York Stock Exchange. I therefore desire very earnestly to request that that fact be fully realized. Mr. PECORA. I am going to say, Mr. Whitney, that full heed will be given to the situation you have in mind and now call the atten- tion of the committee to. That is why I am now asking that these records may merely be marked for identification and not actually placed in evidence. I will go over them with the members of my staff, and we will only utilize for the committee record such portions thereof as are pertinent to the inquiry.