New-York tribune., 1922-04-08
Exchange Will
Keep Tab on
Firms Finances
c.,r,our L. Cromwell, Pres
;dent, Announces a New
Plan to Check Opera
lions of Broker Members
gau.on Assails Program
n;.,rict Attorney Insists
Public Regulation Is Need
ed to Protect Investors

s.rrcur l.. Cromwell. president OF
-. New York Stock Exchange, in an
.isr.ss outlining the new creed of the
.,chanre for tightening up the rules
,.s,rusrding the small investor. an
,onneed a plan for closer supervision
~ members. Mr. CromWeil was the
r,incipal speaker at an aii-day session
!, the board of governors room, wnere
symposium of views on 'he sl9!eet oil
Greater protection for 'he poo''c was
presented. ,.. roroa,os
A,ms with a membership. IN the New
|, york Stock Exchange Will DC required
n take of trial balances once a mohth'
and will be compelled to anS"eI cues
tionnaires twice year "nich Wi't Gus
cio.e the relevant tacts feSa'u'hg
th.ir financial condition. ihese changes
renresent the response OF .ne govern
ing board TO the demand 'haV s.eps DC
taken to give customers greater as
ass-.. chat member brokers are solv-
W.. II this connection, Mr.. Cromwell
..lI.d attention to the fact that out of
.sa scores of brokerage failures in re-
..,t months only three of the bank
s,.t. bad membership in the New ork
stock Exchange.
Urges Public Regulation
district Attorney Banton, when asked
a comment on Mr.. Cromwell's declara-
INN At faith, urged the need Of public
rsgulation Of the exchange, and eX-
,,ss.ed lack Of confidence IN the
willingness Of the organization to carry
ont its expression Of purpose.
The District Attorney declared that
;nsoa, nractices revealed by recent
broSsraee failures could not have oc-
cn,rsd # the firms had been licensed
snd under the supervision of an ap-
nronriete bureau or department.
aThe same specious arguments which
az. made by Mr.. Cromwell" he con-
tinued, were made by those who op-
nosed putting banks and insurance
rsmnanies, and later private bankers,
nnder the supervision Of the state, but
m one will argue or even claim that 1T
has hurt the banking business to have
banks supervised or that any bank
uhch had become insolvent could con
tinue in business for any period of
time =,
o'clock in the morning, Mr.. Cromwell
analysed the proposals for reform by
legislation and answered the types OF
criticism frequently levied. Jerome
Simmons, who as assistant district at
torney handled the bucketshop investi-
gaton for District Attorney Banton,
smoke in the afternoon, and warned the
brokers' that unless they educated the
public ard took the public into their
confidence they would be ruthlessly
regulated. Herbert S. Houston, of the
l,,h pf
World, urged the need of vigorous, in
tellIgent, honest advertising to break
down the popular prejudice against
Wall Street.
Other speakers were George P. Mel
l.k, of the Stock Exchange firm of
Carlisle. Mellick & Co, who outlined
ia, problem of dealing in odd lots for
tn, investor of small means, and James
A. Emery, counsel of the National As
sociation Of Manufacturers, who
showed the relationship between the
Stock Exchange and industry
Ore of the chief problems now con-
fronting the exchange, Mr.. Cromwell
said, is how to circumvent the plans by
which bucketshops induce people Of
small means to speculate. He declared
it to be his belief that any attempt by
broker to do a partial payment bust
ness is not in the interests of himself
or his customer, as the commission
broker, in order to earn his expenses,
must develop certain percentage of
spectators from among his partial
payment investors.
Partial Payments
"Let US leave the small investor
strictly to his investing habits warned
Mr.. Cromwell Don't let us prosti-
tute this important and vital element
in the security business. A tentative
plan has been developed, which may
prove that the small investor can buy
good stocks or bonds in partial pay
ments, but 1t can only be operated at a
personal sacrifice on the part of the
broker or the investment house or the
bank or trust company that adopts
this method.
II the small man persists in acquir-
ing his stock according to this plan, l
would ask houses to purchase the stock
AZ the market and to carry the stock
at that same price, without charge ex-
eept for interest, until it is entirely
paid for"
The head of the exchange charged
mat for several weeks past delib-
crate attempt has been made to de-
TNe the public concerning the Stock
k1ehange's attitude in the matter of
kgislatlon. He expressed regret that
B'srict Attorney Banton in his zeal
Ef The punishment of fraud, "appears
T. nave developed the conviction that
We evils of the brokerage business
.sn be cured only by licensing brokers
enn incorporating the exchange"
,helerrlng to continent in favor of
ppasorporat!ng the Stock Exchange,
resident Cromwell expressed his op-
position as follows:
,.u .he exchange were incorporated
=. power effectively to discipline it's
unnefs ;.,efs would be gone. A member
~ '..ea we IN improper conduct could de-
., tne execution of sentence while he
spsaseo ,seo from court to court. The
s,n.i ,a,n OF the exchange to deal with a
van',' nef' sucn as the corner in Stutz
ls. la'c be taken away Its power to
~ It's quotations out of the hands
kn.tose ttaose who would use them for
.ssAe'shop .ss purposes would be at an
rss., and its power to meet an emer-
r.. IKE that of the outbreak Of
great war would no longer exist.
Opposes Licenses
4 an. Inc trouble with licensing is that
.ssnS.st ss.snt prevent sellers of fraudulent
can. 'Mes We. from doing business. You
hc.n,ss' s'op those fellows from getting
II .s' There is no form of practice
Of aneetlon saan with the issue and sale
ec.Ileit'es that could not be eff
bill reached under the Martin
Minis. sceiVely and vigorously ad
"Thro,t