New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1912-12-13
Money Trust Committee Learns
Some of the Methods of
High Finance Which
StartIe Members.
MANIPULATION OF MARKETS
Brokers Tell of Being Forced
Out of One Institution or
Another by the New
York Stock Ex-
change Rules.
From The Tribune BureauI

From The Tribune Bureau
Washington, Dec. 12.-The Pujc
money trust" investigating committee
turned its searchlight to-day on the
inside management of the New York
Stock Exchange and learned several
things regarding high finance which
seemed to startle the probers.
Frank X. Sturgis. chairman Of the
law committee of the exchange, was
the star witness. He was asked If he
could Justify the practice Of the ex-
change In tscitly allowing its members
to buy and sell stocks at the same
time. thereby creating an artificial ap-
pearance of market activity and fore
ing prices up or down. After some
hesitation. Mr. Sturgis said he thought
tho practice was justifiable and frankly
added:
You arc asking ne a moral dues-
ton; | am giving you a Stock Ex-
change answer
Samuel Untermyer. counsel for the
House committee, remarked that the
stock Exchange viewpoint isn't the
moral viewpoint" and Mr.. Sturgis
agreed that this might he true.
The Pujo committees attorney asked
Mr.. Sturgis why the Goulds and Rocke-
felers were anxious TO keep seats on
the exchange. although they were not
actively engaged in business.
Il suppose they think they viii save
commissions. Perhaps their loyalty 70
the institution Is also factor said
the witness.
No Increase in Membership.
The testimony OF Mr.. Sturgis brought
out the fact that the membership Of the
stock Exchange had not been increased
since 1869, when IL was fixed at 1.l00.
Since then the business done and the
securities listed on the exchange had
increased about fifty times over. Mr..
Sturgis declared that an increase In
membership was unnecessary, for the
present membership was well able to
handle the business Of the public.
In a dozen recent failures. MIR. Stur-
gIs admitted, Stock Exchange houses
had carried with them stock owned In
mart by their customers, but hypothe-
Gated by the brokers for more than the
renl ownership of the broker. In such
cases the proceeds OF the sale of the
bankrupt brokers' seat on the exchange
went not TO his customers. but 10 his
creditors inside the exchange. Mr.
Sturgis thought this was fair and just.
as II was a regulation subscribed to by
the members OF the exchange and rec
ognized by the public.
Stock Exchange brokers usually used
the stock owned In part by their Gus
toners as collateral TO support their
own loans. Mr.. Sturgis said, rehypothe-
eating the securities for a greater
amount than was represented In the
debt of the customer on the stock. Hs
added that the governors Of the ex-
change would welcome any suggestion
that would put a stop to the practice.
Witness disagreed with a scheme
proposed by MIR. Untermyer that would
force brokers to mark on loan en-
velopes" 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, through a grilling, de-
tailed examination, insisted that the
Stock Exchange could not prevent
of the market by pools
and syndicates. He said IT could not
go behind a transaction to discover a
buyer or sellers motives.
on this point Mr.. sturgis and coun-
sci for the committee had a spirited
argument.