Evening star. [volume] (Washington, D.C.) 1854-1972, 1931-02-21
Passage of Mortgage Fore
closure Legislation Also
Is Urged.
DISTRESS OF INVESTORS
PICTURED IN APPEAL
Declares Bond Business Here in
Some Instances Is Just
"Crumbling She'll"

District of Columbia "is Just shell
and is crumbling," Senator Blaine, Re-
publican, of Wisconsin, today urged the
Senate to take up and act en- the two
bills recommended by the subcommit-
tee which investigated local conditions,
one to regulate the sale of securities
and the other to control the fore
closure of mortgages.
Senator Blaine pictured the dis
tress in which he said many persons,
including widows, have been left who
invested life savings in some of these
securities.
Senator Blaine first asked unanimous
consent to take up the two bills, but
Senator Hole, Republican, OF Maine,
objected. He said he knew nothing
about these bills, but that with the
naval appropriation bill before tha
Senate he would have to object to all
unanimous consent requests to lay that
aside fer other matters.
Moves for Consideration.
Senator Blaine then made a motion
to have the Senate proceed to the con-
sideration of the bill regulating secur-
tiles, and, while that motion was pend
ing, he began detailed narration of
specific cases connected with the work
of his subcommittee.
Senat.r Blaine declared that he re-
garded this legislation as of such i'm
portance to the people, both of the Dis
trict of Columbia and the country, that
he would feel it his duty to stand on
the floor of the Senate for the rest
of the day and outline to the Senate
1.-The distressed condition of many peo-
pie" because of the absence Of adequate
laws to safeguard the sale of securities.
Senator Blaine went over the ground
covered by the Senate subcommittee
which investigated these subjects, and
discussed in detail the reflnancing of
the Wardman properties in 1928, to-
gether with the developments yesterday
in connection with those securities.
Senator Blaine read to the Senate
newspaper advertisements telling of the
formation in New York of two protective
committees, one, he said, for the bond
holders of Wardman Real Estate Prop
critics, Inc, and the other for the de-
benture holders of the Wardman Realty
g. Construction Co.
After reading the announcement of
those forming the Protective Commit
tee for the debenture holders, Senator
Blaine declared:
This Protective Committee now be-
ing organized in New York for the
Wardman Hotel Properties is made up
of people closely connected with Hal
sey-Stuart & Co and other investment
bankers responsible for the issue. /
want this noted, that the chairman of
the committee, that is the Protective
Committee, is an employe or officer of
Halsey-Stuart & Co. I refer to Leonard
L. Stanley"
Senator CouZens, Republican, of Mich
igan asked Senator Blaine whether his
committee made any inquiry as to the
methods used by Halsey-Stuart & Co.
in promoting this issue.
Charges Changing Masters"
eyes" Senator Blaine replied. Il will
disclose that as it occurs in the testi-
mony. Halsey Stuart & Co., before
they entered upon the sale of the stocks
and bonds of the so-called Wardman
Properties-there are quite a number of
properties belonging to that organiza-
ton, Mr.. Wardman having disposed of
his interest in them, understand some
time prior to the issuing of the last
issue of stocks and bonds-had full ac-
cess to Wardman's books before the
bonds were sold. They knew that Mr..
Wardman owed practically all of the
banks In Washington, and it was to re-
lleve the pressure on the banks, which
were threatening to close in on Ward
man Properties, that the bond issue was
conceived.
When the bonds were issued. new
books were opened and the property
was marked up, new valuations were
given to the property, inflated valua-
lions on the new books, over the old
valuations, to the extent of over So
100000, which represented nothing but
water and air. 1t had no value at all.
Yet that 100000 was used as an
asset upon which to base a stock and
bond issue.
"Halsey, Stuart g. Co. knew at the
time it was financing this new arrange
ment that the Wardman Properties had
not been paying carrying charges They
knew that that organization was bound
to fail. They could not help but know
1t. Yet they made representations to
the public that these bonds and secur-
tiles were gilt edged, the very finest
character of investment.
These same inv stment bankers are
now organizing protective committee,
and they ask default of the bonds so
they can tie-up their victims securities
and prevent independent action by
friendly committee, real protective
COMMITTEE, for the bondholders. 1 pause
now to express the hopc-and I hope
my expression will be carried to the
innocent investors-that they will not
deposit single bond or other security
with this So-called protective committee.
They are simply changing masters, that
is all, in new form, but it will still be
Halsey, Stuart & Co. that will have its
hands in the pot"
Bill Pending in House.
A third bill favored by the subcom-
mittee, to regulate and license the real
estate business, passed the Senate at the
last session and is pending in the House
The mortgage foreclosure bill, as re-
ported from committee, contains pro-
visions intended to prevent losses to
investors in mortgage notes through re-
lease of the mortgage instrument with
out payment of the funds loaned by
individual note holders. The bill pro-
Vides that no release by a trustee or
mortgage shall affect the lien of a
note secured by the instrument released
unless the note or other evidence of
Indebtedness is presented to the record
er OF deeds and stamped by him as
Cancelled and released"
The bill further makes 1t unlawful for
any person, firm or corporation, except
bank, trust company or building and
loan association doing business under
the supervision of the controller of the
currency, to act as trustee of trust
mortgage in excess of $25, 900.
The other bill to regulate securities
provides for registration and licensing
OF investment dealers and statesmen and
for the examination of securities to be
exfT Is1 s.xs&~. 90 NlS1s,a