Evening star. [volume] (Washington, D.C.) 1854-1972, 1930-02-28
STOCK POOL USED
MILLIONS IN PANIC
Bankers Had Stake of $500, !.
100000 to Avert Market
Disaster.
special pispatch to The STAR.

! Special Dispatch to The Star.
NEW YORK, February 2S.-Since the
dissolution of the bankers pool q few
days ago efforts have been made to
discover when stocks in this pool were
liquidated, following the purchase OF
approximately $100,O000O0 of various
issues in the October and November
breaks.
From information received from
sources identified with the pool 1t may
be said that more than one-half of the
stocks held-and these we're notably
United States Steel, General Motors
General Electric, American Telephone
e. Telegraph and Anaconda-waS re-
distributed before the end of December
The high average of stock prices be-
tween the day when the pool started
buying and when it began to liquidate
was reached on December T. Around
that time the greater part of the stocks
which the pool owned came back into
the market. BY the end of December
it had sold about $6o,000,000 of the
total of 500, 10000 purchased.
Owing to unfavorable market condi-
tons liquidation was suspended during
the first half Of January, as it was in
this period that average prices went
well below those of December. There
was considerable fear then that they
might duplicate those Of November ID
With better business conditions, how
ever. the market began to rise from
about January 1S and moved upward
with but little check for nearly month
This afforded opportunity to the pool to
liquidate the remaining $40,00000 OF
stocks held. The final selling came
about coincident with the new high
average top for industrial and railroad
stocks two weeks ago.
No oflcial figures on the amount Of
the fund placed at the disposal of the
pool managers, j. P. Morgan & Co.
last Fall have ever been made public
But unofficial estimates by well in
formed bankers indicate that the tota
was not far from 5000, 900 900. It also
is known that the pool never drew upor
more than one-half of the maximum
amount pledged by the members of the
pool.
In other words, the actual stake o.
the pool In the stock market at no time
got above $100,000,000. This was 6
small sum compared with the vast turn.
over in the market.
The only other comparable pool or.
ganized in Wall Street was the $780,.
600, 900 gold pool created in 1907 under
the sponsorship of the elder Morgan
to stay the worst bank panic New Yorl
had experienced in years. Those were
pre-Federal Reserve days, when EN-.
barrassed institutions had no centra
bank to fall back on if cash was needed
in hurry. The Morgan gold pool wa.
an unofficial central bank for the mo.
ment
The Morgan pool of 1929 was mo-
only larger than that of 1907, but Il
was organized for a different purpose
There was no question last October o.
the liquidity Of New York banks; they
were in sound condition. The panic
was in the stock market The Morgan
pool was organized to stabilize the mar.
ket and so end the disturbance. THAI
1t did. Probably the psychological eff.
feet of knowledge that the pool existed
helped to restore confidence, but what
more than anything else effected ulti.
mate sterilization was the actual buy.
ing Operations of the pool. 1t was moi
organized for profit, but to minimize
alarm and encourage investment buy.
ing"
(Copyright. 1907