The New York herald., 1922-06-01
CONSOLIDATED SLOW
TOCRUSH BUCKET|NG
Its Associations With Bogus
Brokers Recalled From
Other Years.
LAX PUNISHMENT NOW
MacMasters Suspended Only
a Few Minutes Before
Bankruptcy.
SwINDLERs WORKING YET
How One Big House Keeps
Going on Shady Deals Is
Downtown Mystery.
swINDLERs WORKING YET

I
articles on hop investors seemingly
hare lost moro than $4,000. 900
through bankruptcy OF fioenfy-seven
Consolidated Stock Exchange frms.
What has been printed regarding
the Consolidated Stock Exchange. to-
gether with a study OF the records In
the many bankruptcy proceedings now
going on as a result OF failures OF Its
members. shows that buclSeting was
going on for months. and that. ac-
cording to the accessible records. the
Consolidated did nothing to stop the
practices until the damage was ac-
/ tually done.
the Consolidated and II may be that
this is reflected in the membership.
In 1885 the Consolidated had 2.4o3
members. In 1915 this number had
dwindled to GIL, and the membership
now is in the neighborhood of $50,
| there being 446 members according to
statement Of the president, w. s.
Silkworth last month in answer to the
questionable submitted by THE New
YORK HERALD.
Accused Long Ago.
Prosecutions for bucketing stock
orders in Boston and in the District OF
Columbia several years back showed
that in many instances the firms doing
this sort of business had direct or in
direct connections with the Consolidated.
In fact Boston newspaper. after max
ing a bucket shop investigation fifteen
years ago, referred to "the New York
Consolidated Exchange. which has long
been recognized as clearing house for
bucketed business when the services of
clearing house were required
Later on in this State, when the
Hughes committee made its investiga-
tion, it said regarding the Consolidated ::
ut affords facilities for the most in
furious form of speculation--thatw which
attracts persons of small means" 1t
also reported: 5A
I'VE believe, Furthermore. that ia
many instances bucket shops In other
States conduct their business directly or
indirectly through members of the Con-
solidated Exchange. Our investigation
has indicated lamentable indifference
on the part of the management of the
Consolidated Exchange to the prevalence
of bogus transactions in other States,
facilitated knowingly or otherwise by its
members. This lack of the sense of
responsibility calls for severest criti-
cism."
incidentally this paragraph in the re-
xyh fai in no ~
sent to Gov. Hughes. was not published.
When Mr.. Silkworth was asked wha.
examination was made prior to the
admission of an applicant to membership
the answer was that there was a com
plete business history investigation" 20.
gether with report from an investigat-
ing agency.
Notwithstanding this the firm of Sui
Ivan Bros, the members of which were
convicted in the Nicky Arnstein case.
was admitted. although. according TO
information obtained from a reliable
source by THE NEW YORK HERALD. the
capital of this firm at the time of its
admission consisted of $4,000 of stolen
securities. The houses. of course. went
under later as a result of the Arnstein
case developments.
The point has been made that action
by the Consolidated either Immediately
preceded or Immediately followed the
starting of bankruptcy proceedings
against members.
Quick Work In MacMnsters Case.
An example is r. II. Macafasters &
Co. BY matter of minutes almost the
, suspension of this firm by the Consol-
idated governors was announced TO the
newspapers before the bankruptcy pro-
IA
the Consolidated to the MacMasters
Offices, yet by the time the reporters
walked that distance the brokerage
house staff knew that a petition in bank
ruptcy would be filed as soon as pos
sible. And all this was after the close
of the market for the day.
At the time OF the MacMasters fail
ure Mr. Silkworth announced that. with
a view to aiding the District Attorney.
the Consolidated would conduct an in
vestigation of its members When the
questionable referred to was submitted
20 Mr.. Silkworth he was asked what
results this investigation had brought.
the question being put thus:
Have any firms been disciplined.
What firms? How?
This was the answer written after the
question:
Eugene J. Callahan. Edwin e. Kohn.
II. III. Ma-Masters. Expelled"
Actually the Callahan failure and ex-
pulsion took place long before the an
nouncement OF Mr.. Silkworih and the
expulsion of r. r. MacMasters was
simultaneous with il.
Since Mr.. SillSworth answered the
questionable and since the table OF
failures. printed with the first article
OF this series. was prepared other firms
have been suspended. notably Raynor
Nicholas & Truesdell of az Bro adway
This case has caused considerable com
ment in the financial district where some
OF the more conservative Of the well ir-
formed believe the house was discrim!-
mated against. and that II would have
pulled through the crisis had II had ar
opportunity.
In rumors and gossip the flnan.ial dis
trict. OF course. is the busiest niace H.
the city. II Is freely reported there that
some Of the worst bucketshoos in tbs
city have so far escaped failure and in
vestigation.
There Is another anglo II the bucket
Shop business in whic.i both tho Con-
solidated and the New York stock 1;x-
change figure. though !. must ne sail
that the latter organization has shown
rather more energy than the former In
getting after II. This conrarus tho
traders who are outside both exchanges
and yet carry on large business IN
stocks These firms do business through