Evening star. [volume] (Washington, D.C.) 1854-1972, 1914-03-10
GR|[[S
SENATE WITNESS
Samuel Untermyer Asked to
Explain Certain Stock
Market Deals.
CHARGES THAT SENATOR
WOULD BECLOUD ISSUE
Spirited Hearing Before Committee
on Bill for Regulation of Stock
Exchanges.

The capacity in which Samuel Inter
myer, the New York attorney. has ap-
peared before the Senate banking and
currency committees on the pending
stock exchange regulation bill was
sharply questioned by Senator Hitchcock
of Nebraska today when hearings on the
bill We're resumed.
Mr.. Untermyer, Senator Hitchcock said.
had refused to answer questions as to
his connection with the sale of certain
stock o. the kanawha and Michigan
| railroad, either for himself or for some
other person. If Mr.. Untermyer appeared
as witness, Senator Hitchcock insisted
that he should be subject to cross-exami-
nation and should not take to himself
the capacity of counsel to the committee
unless the committee had voted to en-
ploy him.
Senator's Motives Questioned.
IF some one questions his motives in
pressing this bill. that is matter that
should be probed," said Senator Hitch
cock. Mr.. Untermyer has written me
letter practically questioning my mo-
tives in asking questions as to this trans
action, and ! want it explained
Mr.. Untermyer said he believed the
matter was brought up to obscure the
issues involved in the pending bill, but
welcomed the chance to lay the whole
matter before the committee. He de-
clared the charges that he or his clients
had been involved in an improper trans
action in the stock named had been in
spired by the publicity department of the
New York Stock Exchange Although he
roEs1 Tor. fpny nhn I
sci of the exchange, denying this, Mr..
Untermyer insisted he had not changed
his opinion and that Mr.. Milburn had
been misled by members of the exchange.
You mean that he has been lied to?''
asked Senator Weeks.
Yes. since you raise that ISSUE Mr..
Untermyer answered
Promises All the Facts.
Senator Hitchcock Interrupted the read
ing of clipping from newspaper which
Mr.. Untermyer produced with questions
as to the transactions of which it pur-
ported to tell.
''You will get all the facts now" Mr.
Unternlyer replied.
do not worry, the questions you asked
were offensive The story put out at
this transaction was an outrageous libel
perpetrated by your paper. / don't be-
ueVe you uaQ any Olner mOtlVe Gnan 10
get out information in asking those ques-
tions but your information was incor-
rect
ST have some very pertinent questions
to ask said Senator Hitchcock.
Explains Stock Transactions.
Mr.. Utermyer made a long explana-
ton of the Kanawha and Michigan trans
action. saying it occupied about ten years
ago when he represented protective
committee" of stockholders who refused
to sell their holdings to the majority
stockholders until the stock had been
dropped from the list of the New York
exchange. They then sold it, he said, at
$17O or thereabouts a share, and he ad-
mitted under questioning by Senator Hich-
cock that the majority holders had paid
only so share, or less for the other
stock they had bought in by means Of
which the line passed to the Hooking
Valley road and was finally absorbed by
the Chesapeake and Ohio. He denied that
the committee held out its holdings for
purposes of market manipulation. how
ever. The clipping he had read charged
that such had been the purpose of the
minority transaction.
Senator Reed of the committee began a
lengthy cross-examination of the witness
as to the effect Of dropping a stock
from exchange lists when only a small
portion Of the stock is outstanding. The
pending bill, drafted by Untermyer as an
outgrowth of the Pujo money trust in
vestigation in which he was employed
by the committee. would establish a
right OF court review of the action Of
an exchange in cutting such stocks from
It's lists. The argument was in progress
when the committee adjourned at noon.
Exclusion From the Mails.
Mr.. Untermyer said that instead of the
bill "Russianizing the press" as claimed
by Senator Hitchcock. Mr.. Untermyer
declared it merely empowered the Post
master General to exclude from the mails
any publication containing the quotations
Of an exchange not incorporated in ac-
cordance with state law.
Permit me to say that the power and
momentum of the press are increasing at
such a rate that the danger is that the
press may Russianize the people," said
Mr.. Untermyer.
Mr.. Untermyer further declared that
opponents of the bill had been forced to
admit that federal regulation of stock
exchanges was necessary. For state in
proposed in the Senate bill, the oppo-
nents had failed to point out an effective
alternative. he said.
"Mr. Milburn, speaking for the New
York Stock Exchange. suggests that a bill
similar to that under which lotteries were
suppressed that would deny the use of the
mails and telegraph for the distribution
of fictitious and unlawful transactions
would answer the purpose" continued
Mr.. Untermyer.
Difficult of Detection.
ITO me it is manifest that it would be
about as valuable as a blank piece of
pauer. Anybody can detect a lottery
ticket, but Mr.. Milburn fails to explain
how fraudulent or fictitious or manipu-
lated quotations are to be detected unless
some machinery is to be supplied for the
purpose of safeguarding the mails against
being used for their dissemination"
Mr.. Untermyer stated that prevention
and punishment Of manipulations were
the chief aims of the bill, and that 1t did
not seek to prohibit speculation.
mo matter how complete may be the
disclosures made of the affairs of a cor
poration," Mr.. Untermyer declared. 'the
public may be preyed upon if every un-
scrupulous stock operator or combination
of speculators and every pool or syndi-
cate may freely manipulate the securi-
ties of that corporation and exploit the
public through the unrestrained use of
the mails and telegraph unless the pub
lie is protected at the crucial point at
which the securities are being marketed y