New-York tribune., 1922-02-04
Campaign on ''Bucket Shops''
Barred at Exchange Dinner
<'om"eIl Explains to Brokers His Program for
Making Wall Street Safer Place for
Ordinary Investor

seymour l.. Cromwell, president of
the New York Stock Exchange, who has
oeen active IN campaign to clean up
the brokerage situation, last night re
vea'ed to 1000 members of the Asso-
cation of Stock Exchange Firms at
tnelr annual dinner at the Hotel Astor
the program of the board of govern
ors for making Wall Street a safer
place for the ordinary purchaser of
securities
AS one means Of accomplishing the
purposes OF the exchange authorities.
Mr. Cromwell declared that the time
mas come when the members must COL
lectively assure themselves of the con-
ditlon Of one anothcr's affairs, through
the medium Of regular examination
OF their accounts, in addition to the
customary audit that has been con-
Quoted by independent accountants.
There are certain facts which we
must know about these firms who carry
stocks on margin for the public" de-
ciared the head of the worlds leading
security market 1--WE must know the
relation between their free capital and
their commitments; we must know the
obligations which they have entailed
and which may be carried in the banks,
and which might, due to the calling of
loans, suddenly bring them to 4 con-
diton of insolvency; we must know
the character of numbered accounts
so that the Stock Exchange can be as
sured that no members have sold for
their own account the stocks that thew
should be carrying for customers"
To Stop Insolvencies
Stressing the point that these acts
on the part of Stock Exchange mem
bers are Of infrequent occurrence and
are in direct violation of the laws of
the exchange, Mr.. Cromwell br"upbt
his hearers to their feet in loud ap-
plause by saying: 81 shall never be
satisfied until we have carried our ef-
forts for safety so far that insolvon-
cIes caused by improper dealing shall
never occur among Stock Exchange
firms"
Otto II. Kahn, member Of the inter
national banking firm of Kuhn, Loeb &
Co, another of the speakers came out
community to secure increased facili-
ties for the conduct of their industry
He called upon Wall Street to help the
agrlculturists realize tn cir program and
to put its business experience at their
disposal to solve their problems
Mr. Kahn called the present tax law
measure unscientihc. inequitable in
its operation. cum bersomc. vexatious
and intolerably complex. He said he
favored tax limited TO comm odites
and cxempting initial sales Of farm
crops and livestock and further ex-
empting turnovers aggresating annual
~ not exceeding $4,000.
81 am clear in my mind.' the banker
continued, that in order to restore
normalcy to our economic and indus
trial life and industrial activities our
surtaxes must be reduced to the figure
courage ously recommended and CON
vincingly advocated by the Secretary
of the Treasury in his latest report to
Congress, namely, q maximum rate
which. including the normal tax. does
not exceed 33 per cent"
War on Bucket Shop
Referring to the "buc,sct shop" evil,
MIR. Cromwell said that the Stock Ex-
change had waged continuous war for
erage institutions. He explained that
its "clean sheet" has been replaced
by new device against which it has
been difficult to invoke the law.
No Stock EXCHANGE firm. he declared
can evade responsibility for the names
that it places on its books. He pointed
out the difficulty for the exchange to
successfully repudiate the bucket shop
on the outside when some exchange
firms accept the accounts of houses
doing this dishonest business.
THE excuse that they do not know
he said. twill not hold They should
know, and | believe that any houses
taking such accounts with proper dill
rencc would know. Within recent