The Sentinel=record., 1912-12-13
GOTHAM FINANCiER GIVES SOME INSIDE INFORMATION OF
 STOCK EXCHANGE.
NOT ALL A BED OF ROSES
Consolidated Stock Exchange the Par ticular Thorn-"MoraI Questions" are Given Stock Exchange
 Answers" by Witrese.

Washington, Dec. 12.-The high ways and byways of finance as tray ersed by operators on the New York stock exchange, were mapped out be- fore the house banking and currency committee today in it's money trust inquiry.
 Frank K Sturgis of the brokerage firm of Strong, Sturgis & O., former prs sident and member of the board of governors of the stock exchange, told the committee at length about the ways of the street"
 The examination of Mr Sturgis by Samuel Untermyer. counsel for the committee, bristled with technical discussions and involved digTessions. Mir Sturgis at times insisted on leng- thy explanations in answering ques- tions, and once flatly declined to an swer His counsel, John c. Milburn, interfered to preserve the calm dig nifty of the occasion.
 The testimony of Mir Sturgis brought out that the membership Of the stock exchange has not been in- creased since 1869. when it was fixed at HOO. Since then the business done and the securities listed on the ex- change have increased about fifty times over.
 Mir. Sturgis declared an increase in membership was unnecessary for the present membership was we'll able to handle the public's business.
 Ina, .lf gis admitted. stock exchange houses had carried with them stock owned in part by their customers but hypo- thecated by the brokers for more than the real ownership of the brok- CT In such cases the proceeds of the sale of the bankrupt brokers seat on the exchange goes, it was explain ed, not to his customers but to his creditors inside the exchange Mir. Sturgis thought this was fair and just as if was regulation subscribed to by the members in the exchange and recognized by the public.
 Stock exchange brokers usually use the stock owned in part by their GUS toners as collateral to support their own loans. MT, Sturgis said re-hypo- thecating the securities for a greater amount than is represented in the debt of the customer on the stock. He added that the dgovernors of the exchange would welcome any sug- eestion that would put stop to the practice. He disagreed with scheme proposed by MT UntermyeT tha. would force brokers to mark on loan envelopes" containing their collateral the amount for which they were all ready held as security by the brokers that the bank might make it's loan to the broker on that basis This scheme MT. StuTgis contended would entail an almost prohibitiye amount of bookkeeping.
 Mir Sturgis, through grilling de tailed examination, insisted that the stock exchange could not prevent manipulation of the market by pools and syndicates He said they could not go behind a transaction to dis cover buyer or sellers motives.
 On this point Mir. Sturgis and coun- sel for the committee had spirited argument.
 Tt is legitimate for member ot the exchange to give an order to sell certain amount of stock to one broker and an order to buy the same amount of the same stock to another broker?" asked Mir UntermyeT.
 "So long as there is no collision and the commissions are paid, 1t is illegi- innate" said Sturgis.
 The important point is that the ii,roikefi- commission De paid" ?" asked the lawyer.
 Yes"
 You know that the object of that sort of 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 Mir. Sturgis his view of the position of the trading public in such transaction with the stock at a fictitious figure and finally objected to the form of the witnesses answers.
 You are asking me moral ques ton and am answering a stock ex. change question: said Mir Sturgis with smile. and the committee laughed. The witness insisted that these transactions were beyond tho power of the exchange for discipline
 The relations of the stock exchange and the consolidated stock exchange came in for share of Mir. Sturgis attention after the examination ol half a dozen members of the ConsoIi- lan..a Ic.ct.nnrro ,,.hf, Annlarad flaai fh1