The New York herald., 1922-05-31

this hearing will bring out information
signed to keep closer watch on the
activities OF member houses.
Perhaps this move came a little late
with twenty odd failures to the Consoli-
dated's discredit and the market turned
to position unfavorable for bucketing.
But nevertheless the system of keeping
tabs on brokers is to be changed and
that Is an Acknowledgements that the
system last year was not found suffi-
cent
There are other provisions in the by
laws aimed to stop bucketing and similar
practices. and also forbidding members
doing business with outside bucket
shops or with expelled members. The
board Of governors has the power. too,
to call members and their partners be-
fore it and also to examine the books
Of any firm.
In fact, generally speaking. the by
laws give the Consolidated about every
power and right necessary to punish
illegal acts by members. but the situa-
tion that has arisen indicates that it is
committing "acts detrimental for
months without being found out.
All to File on Same Form.
The new system referred to may. at
ieast in a measure. prevent this. BY II,
members will be required to file quar-
terly statement of Their business on
form especially devised to show
whether there has been any bucketing
or other prohibited practice. The form
has only recently been worked out by
accountants.
The reports will have to be submitted
for the current quarter and Mr.. SILK
worth is authority for the statement that
when the reports are submitted they will
be sent to the same accountants who
will then check up the business of each
member and report to the board of
governors whether there has been any
thing questionable In the dealings Of
any firms. -
Mr.. Silkworth asserts that II will be
impossible for a member either TO do
business illegitimately and hide II. or
to fill out a report so as to conceal
actual operations.
Firms Shift Rapidly.
Sometimes the rapldity OF movement
among the newer class of brokers. espe-
cially the smaller variety. Is such that
1t is only with difficulty that the rela
tions of bucket shop or failed concern
can be traced. For instance. the firm
of Higgins & Dias appeared in the list
which was printed with the first of this
series Of articles. Yet the membership
list Of the Consolidated failed to reveal
the name of such a frnl. The name
Higgins was not TO be found anywhere
and the only Dias mentioned was Sam
uel II. Dias OF collins & Dias.'
Higgins & Dias. which firm had Of
fices at 55 Broadway until 1t failed. was
known as Collins & Dias a few months
previously. Two of the partners had
seats on the Consolidated for a time, but
Immediately before the smash the only
Consolidated member was Samuel II.
Dias. Collins & Das took over the busi-
ness OF p G. Mason e. Co. In 1920 after
Mason had been expelled.
This case ia mentioned because It in
dicates the difficulty investigators and
perhaps sometimes the Consolidated Of
ficials may have In keeping track OF
members. In fact, the printed member
ship directory which bore all corrections
up to November J. when the printer
turned II out. has now to be interlned
with many changes, additions and sub
fractions" due to failures.
Another thing that makes the check
ing up of the business OF members diff
ficult IA the fact that small houses are
none too particular about balancing
their books. The Consolidated has a by
law requiring members TO balance books
at least once a month. but the rule Is,
perhaps. more honored in the breach.
It is in this respect that the small brok-
erage house Is so markedly In contrast
with the larger houses.
All Dislike stamp Tax.
There has been some question raised
about the honesty OF Consolidated houses
In the use Of the stock transfer tax
stamps. both state and Federal. In the
preparation of this series of articles con-
siderable attention was paid 10 this
phase since firms which failed TO use
the proper number OF stamps would not
only be robb,ng the Government. but
would also be robbing their customers.
to whom. as the law requires. the tax is
passed along
AT the office OF the state Tax Dc
partinent in the Woolworth Building IL
was learned that the brokers in all mar
kets have come to accept the stamp tax
as a necessary evil. The check kept on
them by the State officials Is close and
if IL reveals a discrepancy due TO fall
ure to stamp a sales ticket the discrep-
ancy has to be made good. According
to Frank MacCaffrey. In charge OF this
part OF the states taxation system. the
percentage of collections is high and in
creasing. when comparison is made with
the actual sale of stocks.
While II has no obligation to the
state in the matter. the Consolidated
like other exchanges. requires. by its
clearing house rules. the proper stamp
ing Of sales and purchase slips. That
there is now and then an evasion OF the
law probably no one doubts. but these
are few. as far as can be learned.
1.-THE fourth OF these articles dp-
pedrs to-morroC III THE NEW YORK