Evening star., 1932-04-15
Whitney Tells Senators
Transfer Plan Would Reduce
Trading to Minimum.
DECLARES BUSINESS
MAY GO TO CANADA
Tydings Makes Attack on Proposal
to Insert Petroleum Tariff
in Measure.
BY the Associated Press.

] BY the Associated Press.
| Possible closing Of the New York
Stock Exchange with danger of "a
panic" was pictured before the Senate
Finance Committee today by Richard
Whitney if the proposed stock transfer
tax is imposed.
| The president Of the New York
Stock Exchange said the tax would
reduce security transactions almost to
the vanishing point.
Protesting it, he said the effect not
only would be felt on the exchange.
but would 'devastatingly diminish"
the business done in the country. This
| decrease, he added. would more than
halve the S75,0O0,000 of revenue the
House estimated the tax would bring.
Oil Tariff Assailed.
! He appeared after Senator Tydings.
| Democrat of Maryland, had assailed
the tax on oil imports carried in the
/ bill
Tydings said it would result In a
$500, 600, 0,000-a-year burden on Ameri-
can industry, motorists, farmers and
home owners by raising oil and gaso-
line prices.
The Govesnment, as the country's
| largest user Of all oils, he said, would
have to pay $S,000,0O0 more a year
| for them. The deficit, he said, would
| be increased rather than reduced.
The benefit, he contended, would go
| only to "the 20 major oil companies.
which need no help"
The S300,0O0,00O tribute on the
public will go direct to them" he as
If by taxation" said Whitney "tbe
volume of trading is reduced so that
we cannot retain even the volume nee
| esSary to keep security loans LIQUID.
| then the danger of closing with the
possibility of panic will confront us"
Whitney indicated that imposition
OF the tax might drive security dealings
| to another country.
| The rates in the bill as passed by
the House, he said, are grossly ex-
ceSsive"
! Whitney said the present tax would
be multiplied Is times over by the
new rates and would so greatly reduce
the volume Of trading as to produce
less revenue than 1t now received from
| the stamp tax. The rate now is 2
cents a share.
Emphasizing the function of the
! Stock Exchange in keeping securities
J
months the exchange had been forced
to close, "all collateral loans would
I have become frozen with great peril
| to the entire banking structure OF the
country"
Would Hamper Recovery.
Whitney asserted the proposed tax
would greatly interfere with business
recovery.
He explained that "as a step toward
reconstruction" many reorganizations
of business will have to be effected and
that a heavy tax on the transfers of
stock which would be necessary would
impose a great obstacle.
Whitney attributed the recent market
decline in part to the action of the
House in voting the stock transfer levy.
The exchange president belabored the
proposed tax on bond trading as vlgor-
ously as that on stocks.
1T is tndefensible when the bond
market is so disrupted" he asserted.
There is nothing which would be more
destructive to recovery"
Senator Reed, Republican, Pennsyl-
vania, said he had heard rumor that
since the House action charter had
been taken out in Montreal for an in
ternational stock trading association
and asked Whitney about it.
WHllIley Sdlu Ile kIlSW
mite but had heard rumor that prepa-
rations were being made in Canada to
broaden their facilities to take the
| American business in case this tax goes
through"
Blames State Tax.
Whitney expressed the opinion that
| the decline in Stock Exchange trading
! in March was directly due to an in
/ fI,a tatn
transfer tax, which became effective
March l."
IF so,' he added, "the proposed
Federal tax would reduce security
} transactions almost to the vanishing
, point"
Questioned by Senator Barkley,
Democrat, of Kentucky, Whitney said:
Il contend the effect of this tax
would be to freeze our markets and
make them illiquid and inaccurate"
| He argued that as buying and SELL
: ing securities became less popular in
/ the face of the heavier rate, the in
vestor would find it correspondingly
more difficult to get his money readily
! if he found it necessary to liquidate.
| Even boosting the present rate from
2 to 4 cents share and eliminating
the proposed levy of "a per cent of
value. Whitney said, might be very
detrimental"
| Whitney also opposed the proposed
tax on leased telephone and telegraph
| wires, asserting it might result in
abandonment Of many of the lines
used in the security business.
"A destructive tax on securities would
! be long step toward a further con-
tinued deflation," Whitney said.
Besides affecting the individual in
vestor, he said, the 'illiquidity'' would
prevent American business from Secur-
| ing loans on securities"
The tax, he said, would not be paid
| by brokers, but by the 1000, 900 Amer
| leans who own securities"
In answer to Senator Harrison, DEM
ocrat, Mississippi, Whitney said he be-
lieved the tax would lead to bootleg
ging Of stocks" through bucket shops"
Gradison Joins Protest.
w. D. Gradison of Cincinnati, repre-
senting the Associated Stock Exchanges,
! joined Whitney in opposing the stock
transfer tax.
Philip B. Weld of the New York Cot
ton Exchange objected that the pro-
posed tax on commodity trading is ex-
| cessive and represents a 400 per cent
increase over the present rate.
Edward P. Doyle of the Real Estate
Board of New York opposed the tax on
stock transfers.
He explained he owns 16 buildings
and rents Offices to brokers.
Doyle remarked that they are all va
cant at present, but that he hasn't lost
them because he has Scotch wife and
she won't sign mortgages"