The Washington herald., 1913-03-01
PUJO committee
ON MONEY TRUST

Photo by National Photo %.

continued 1rO" rage one.
of competition with ii. which is defend
ed as principle Of banking ethics"
1. The combination between tn" inner
group and the three big banking houses
of Chicago, namely the First National
Bank. the Illinois Savings and Trust
mercial National Bank, all participating
in the underwriting of securities by the
inner group.
.. Radiations from the principal
groups. including such banking houses
as KisScl. kinnicut & Co. Harvey FISK
4 Sons. tho latter receiving large al
lotmcnts of patronage from the dOminat-
ing group.
6 Thoso banks and bankers within the
groups and sIIbGroups who cooperate
with them In til" guarantee and sale OF
securities.
1T was impossible to learn the iden-
tity of these corporations" says the re-
port. owing to the unwillingness Of the
members of the inner group TO disclose
the names Of their underwriters. but suf-
fiCient appears to justify the statement
that there are at least hundreds of them
and that they extend into the principal
cities throughout this and foreign coun-
tries
SlII rates &ohtFoiHus
The charge is made that Morgan &
Co, absolutely dominate the rates
at which call loans are made on the
New York Stock Exchange. the commit
tee adds:
I'VE recommend that interlocking d.
rectorates in potentially competing hnan-
cial institutions be abolished and pro-
hibited in so far as lies in the power "f
Congress to bring about that result, with
the possible qualification that where a
member of a partnership Is a director
in a national bank his partner may be
director in a state trust company.
A law making it impossible for any
part of the stock of national bank
to be controlled by voting trust Is
I'VE recommend" the committee says.
that II be made impossible for the
interests or any part of the
stock of a national bank to be dealt with
in that way. The action in respect 10
the trust companies in question is not
within our province. but we venture TO
express the hope and expectation that
the voting trust in which their stock is
held will be dissolved
stock Exchange SugErstions.
The New York Stock Exchange and
the other stock exchanges of the Coun-
try. according TO the plan of the COM
mittee, will be denied the use of the
malls and the privilege to use inter
state telephone and telegraph means OF
communication and transaction of bust
ness. unless the exchanges shall con.
form to the following eight rules:
!. Be body corporate of the State or
Territory in which the exchange is To-
Gated.
2 An exchange must require corpora
tions whose securities IL lists to make
a complete disclosure of their affairs IN
particular any commissions paid to pro-
moters. middlemcn, or bankers out of
any such security issue or the proceeds
thereof
3. Require a margin OF 20 per cent on
all purchases OF stock.
l. Prohibit. as far as possible tho exc
cution of simultaneous orders proceeding
from the same person TO buy and sell
the same security for the purpose of
creating an apparent activity. common
ly known in exchange parlance as max
Ing a MARKET
.. Members must be prohibited from
plcdging securities purchased and car
ried for a customer for an amount great
er than the unpaid portion Of the pur-
chase price. whether with or without the
t'ils' III VI tIG 'uslOIUtT.
6. Members must not lend to other
members securities carried by the for
mer for customers
I. Charter must state the conditions on
which issues Of securities shall be ad-
nitted or removed from the trading list,
a provision being included that will pro-
vide for judicial review
& Must keep books Of accounts. show
ing the actual names and transactions
Of customers. and give access thereto
to the Postmaster General
Concerning Clearing Houses.
The committee holds that there are
many important abuses in connection
with the system of clearing houses now
In operation in most of the cities of the
Clearing house associations. the COM
mittee holds. of which national banks
are members. should be required to be- |
come bodies corporate of the States in |
which they are respectively located, and |
every solvent and properly managed |
bank or trust company should have the |
Fight enforceable at law TO become and |
remain a member. The exclusion OF |
sound and well-managed banks merely
or the ground that they are small in |
size should be prohibited Regular Pc
riodical examination of members of n |
corporation by privately constituted
committee should be barred. and the ex-
animation made instead by public au-
fhorities The associations should not ba |
allowed to issue certificates on the Sc
curity of their members assets, except
Tor circulation among members to pay
ba lances at the clearing house The
also favors a han on the reg
rlation by the associations OF rates for
collecting out of town checks and rates
Of discount and interest on deposits.
To Prevent Concentration.
To prevent the further concentration Of
he control of money and credit the COM
nittee also makes the following recon-
nendations:
That banks shall not be allowed to
unless with the approval of
he Comptroller of tbe Currency.
Prohibition of interlocking stockhold-
ngs among banks.
Discontinuance of the practice of se-
companies as adjuncts OF
anks.
National banks TO be prohibited from
ngaging in underwriting syndicates.
Prevention Of interstate corporations '