Albuquerque morning journal. [volume] (Albuquerque, N.M.) 1903-1926, 1912-12-13
Money Trust Inquiry Brings
Out Story Of Methods En-
p|oyed by Money Kings of
New York City.
RIVAL EXCHANGE is
CAUSE OF BITTERNESS
Frank K. Sturgis Admits That
Chief Requirement is That
Commissions Shall be Paid
Promptly.

(IBy Morning journal Special Leased Wire.)
Washington, Dec 12.--The high
ways and byways of finance, as ira
versed by operators on the New York
stock exchange, were mapped out be-
fore the house banking and currency
commission today in its money trust
inquiry. Frank X. Sturgis, of the
brokerage firm of Strong, Sturgis g.
Co., former president and a member
of the board of governors of the stock
exchange told the committee about
the ways Of the street"
The examination of Mr.. Sturgis ~
Samuel Untermyer, counsel for the
commission. bristled with technical
questions and involved digressions.
Mr.. Sturgis at times insisted on long
explanations in answering questions
and once flatly declined to answer. His
counsel, John G. Milburn, interfered
to preserve the dignity Of the occa-
sion. The testimony of Mr.. Sturgis
brought out the following points.
1.-THE membership of the stock ex-
change has not been increased since
1869, when ii was fixed at 1,100. Since
then the business done and the stocks
listed on the exchange have increased
about fifty times over"
Mr. Sturgis said that an increase in
membership was unnecessary, for the
present membership was well able tol
handle the business of the public.
In a dozen recent failures, Mr.. Stur-
gis admitted stock exchange houses
had carried with them stocG owned
in part by the partners, but hypothe-
Gated by the brokers for more than
III lxa n
such cases the proceeds of the sale
of the bankrupt brokers seat on the
exchange goes, it was explained, not
to the customs but to his creditors
inside the exchange. Mr. Sturgis
thought this was fair and just, as ii
was regulation subscribed to by the
members in the exchange ana recoS- !
nized by the public.
Stock exchange brokers usually use
the stock owned in part by their Gus
toners as collateral to support their
own loans, Mr.. Sturgis said, rehypo- |
thecating the securities for d greater
amount than Is represented in the
debt of the customer on the stock He
added that the governors of the ex-
change would welcome any suggestion
that would put stop to the practice.
He disagreed with a scheme proposed
by Mr.. Untermyer that would force
brokers to mark on loan envelopes
containing their collateral the amount
for which they were already held as
security by the broker in order that
the bank might make its loan to the
broker on that basis. This scheme,
Mr.. Sturgis contended. would entail
an almost prohibitive amount of book
keeping.
Mr.. Sturgis insisted the stock ex
change could not prevent manipula-
ton of the market by pools and syndi-
Gates. He said they could not go be-
hind a transaction to discover buyer
or sellers motives. on this point
Mr.. Sturgis and counsel for the com
mittee had spirited argument.
lis it legitimate for a member of
the exchange to give an order to sell
a certain amount of stock to one
broker and an order to buy the same
amount of the same stock to another
broker?" asked Mr.. Untermyer.
so long as there is no COLLISION
and the commissions are paid it is not
illegitimate,' said Mr.. Sturgis.
THE important point is that the
brokers' commission be paid 20 asked
the lawyer.
Yes that is it.
You know the object of that sort
Of a transaction is to raise or depress
the price of the stock?"
THE object is to create an active
market"
"A market that appears to be active,
YOU mean"
Yes"
Mr.. untermyer sought in vain to get
from Mr. Sturgis view of the position
OF the trading public is such a tran ,
saction with the stock in connection
with fictitious figure and finally OBJ
swers.
You are asking me a moral ques .
tion and I'm answering a stock eX !
change question" said Mr. Sturgis with :
smile and the committee laughed.
The witness Insisted that these tran ,,
sactions were beyond the power of the
exchange for discipline, so long as the
commissions We're paid. The relation
of the New York stock exchange and
the Consolidated stock exchange came
IN for share of Mr.. Sturgis' atten-
tion following the examination of half ,
a dozen members of the Consolidated
exchange who declared the stock ex-
ehahge rules forbid its members To do g
any business with the Consolidated a
"r"kers or any one connected with the v
exchange.
MT Sturgis said that the consoii- y
dated always had been a competitor :,