The Washington herald., 1913-09-18
BANKERSTESTIFY
ON STOCK DEALS
Dos Passos Advocates Provi-
sion Aimed at Speculative
Transactions.
EXISTING LAW CRITICISED
Fear Expressed that Business May Be
Embarrassed During Change
to New System.

A provision which would prevent stock
brokers from Withdrawing large sums OF
money from the New York banks in Or
der to carry on speculative operations on
the stock exchange was the suggestion
offered the Senate Banking and Cur
rency Committee yesterday by John r.
Dos Passos, who said that he has been
connected with Wall Street interests for
thirty-five years. He charges that finan-
cial panics can always be traced to spec
ulatiye operations in Wall Street.
iIh presenting the committee with a
long printed statement, outlining his
views, Mr.. Dos Passos stated that he is
ar Independent. He added that he was
surprised that the New York Stock EX-
change has not taken the initiative in
changing the existing method of buying
and selling stocks.
Il believe that the first step toward
true banking reform would be to divorce
the transactions OF the stock exchange
from the banks-tO prevent brokers from
using the money of these institutions in
speculative adventures" Mr.. Dos Passos
says in his statement, which he will en-
large on at a hearing to be given him
by the committee on Friday.
Small Percentage Paid.
Mr.. Dos Passos holds that the opera
tions on the stock exchange require the
withdrawal Of vast sums OF money from
the banks through the fact that 50 per
cent of the transactions on the exchange
are speculative and that only 70 per cent
of the purchase price of such stocks is
paid by the broker and the purchaser.
the balance being borrowed from the
banks on the security Of the speculative
stocks.
In addition to this misuse of banking
funds" he adds. the system of &C
tualIy financing each transaction is
great hardship on the corporations. Each
whose stock is actively
dealt in is subjected TO enormous ex-
pense and inconvenience by being COM
piled to furnish and issue fresh certifi-
Gates of stock each day"
He would have the transactions closed
by the payment of differences, or the de-
livery of the securities as the parties
may require. He said that in London
and Paris there never has been a situa-
ton where interest reached the rate Of
three or four hundred per cent. The
benefits of bimonthly settlements, he said.
would be that the funds of the banks
would not be used daily for the specula-
tive purposes of the stock exchange. and
that high and fiuctuating rates of inter
est would not prevail
John CIahin, president of the New
York Chamber OF Commerce, was before
the committee long enough to say that
he is satisfied with the administration
bill in general, but that he fears that
during the process OF changing from the
present banking system TO the new and
Intried system proposed by the bill, there
may be many difficulties which may for
The time embarrass business interest and
trade in general.
A plan 10 utilize the great value repre-
'ented by the Panama Canal as the basis
FOR an emergency currency was sug-
yested by William NJ Berry, collector of
he port at Philadelphia He would issue
ponds secured by the canal as the basis
'or such currency. He also said that
here Is no reason why the banking
should be more profitable than any other
legitimate business, and added that 1t
wouldn't be IF competition was as ac-
i've behind the counter as it is in front"