The New York herald. [volume] (New York, N.Y.) 1920-1924, 1922-06-10
UNTERMYER DECIDES
/ new STEEL MERGER
MAY BENEFIT PUBLIC
Lockwood Committee Has
No Recommendations to
Make, Says Counsel.
DENOUNCES GAMBLING
Boy Broker 6,354 Shares
Short on Unissued North
American Securities.
DENOUNCES GAMBLING
CURB MARKET ON GRILL
Broker Disputes Schiff, Say
ing Kuhn, Loeb & co. Sent
Trading. Orders to Him.

Although denouncing the methods of
the curb market and the practice of
bankers and brokers generally in try
ing to create a market for a new stick
issue by simultaneous execution of
buying and selling orders. Samuel IN
termyer, as counsel for the Lockwood
housing committee, yesterday endr.l
His examination of the Midvale-Re-
public Inland Steel companies merger
and announced that from his exami-
nation the capitalization of the new
company-the North American Steel
Corporation = appeared conservative,
and that the committee lad no recon-
mendations to make. Mr.. Untermyer
added that If the merger had the Of
feet of reducing the differential en-
poraton TIE result would be public
benefit.
A feature of yesterdays develop
ments was testimony that was re-
garded as directly contradictory to
that given by Mortimer L. Schiff ot
Kuhn, Loeb & Co. last Saturday Mr..
Schiff testified that he had no knowl-
edge whatever of how his firm pro-
posed to market the North American
Steel stock bought in by the syndi-
cate handling the consolidation.
One broker testified yesterday that
before the stock was admitted to trad
ing on the curb he had orders from
Kuhn. Loeb & Co. to buy. 1t was
understood that other brokers present
but not called. would give similar testi-
mony. Still another broker told of 60
ing over 5000 shares short on the stock
before even the financial statement OF
the consolidation was published on
Thursday.
Curb Methods Scrutinixed.
The latter part of yesterdays session
of the inquiry developed into virtual
investigation of the New York curb
market. Winding 1t up after he had
characterized trading in issues like
North American Steel in advance OF
company organization and on when
issued basis as an aggravated form
of gambling in which the public plays
the role of sucker. Mr.. Untermyer
made three specific suggestions. They
were, in brief:
That the Federal Trade Commits
sion have its power increased to
stop mergers that they believe will
encourage unfair competition. or
eliminate il altogether.
That trading shall be prohibited in
any stock exchange. curb or con-
solidateG. where the stock sought
to be dealt in Is made the subject
OF pool or syndicate transaction.
unless the pooling agreement Is filed
with the exchange and notice given
from the rostrum.
That 1t shall be made unlawful
for any exchange to deal In securi-
ties subject to their being issued. .
or in any securities not In existence
or represented by property.
Mr.. Untermyer's recommendations for
the reform of the curb market were
put into the record after testimony had
been bought out from several curb
brokers concerning the activity In North
American Steel-the name OF the three
merged companies under Investigations
following the beginning of trading
Friday, June 2. Testimony was given
that orders to buy the stock came by
wire from Chicago ard were executed
fifteen minutes after notice was put
up that the stock had been admitted
to the curb list on a when issued
basis.
The most sensational piece OF testi-
mony was an admission drawn from
I.Et tyYfnW .l.A~ n.
New York Curb Exchange. that i'm
mediately before trading in North
American began he received orders over
private telephone from Kuhn. Loeb <
Co., managers of the syndicate swinging
the merger, to buy 5000 shares Mt so
y short time after. the witness said, he
received orders to buy a similar Let. He
did not know what individual In
Kuhn. Loeb & Co.'S Office sent the order
Recalls schin's Testimony.
The foregoing testimony was regarded
as important by the committee ir view
Of that given by Mortimer L. Schiff OF
the banking firm, who Is in active man.
agement of the syndicate. He then wa
asked how the syndicate proposed tc
market the 5o5.o0o shares OF COMMON
stock acquired by II. He replied:
Il
we are going to do. but you may DC surs
of one thing, we are not giving any
wash orders. That Is your inference.
haven't the faintest idea what brokers
we are going TO employ for any purpose
whatsoever
Philip J. Levi OF the Stock Exchange
firm OF Miller & Co., and also n ember
of the curb market, told of ar order
from a man named Rotnschild In Chicago
to buy 5000 shares of North American
Steel during the first two hours OF rs
,radng. Probably dozen more curb
brokers' who bought North American
Steel since last Friday were present
under subpoena. and although 1. was
understood that counsel to the cemmit.
tee expected to trace the transactions t
the syndicate they were not called.
What Mr.. Untermyer and members OF
the committee regarded as revelation
Continued on Page Four