Evening star., 1933-10-18
S90,0)Q,ODO BANK ]
STOCK DEAL SHOWN
Pecora Reveals Chase Sub
sidiary Handled Huge Stock
Transactions.
Continued From First Page)

stockholders for $1,250,000.
The banker said he could not re-
member why the $l,000,0O was allo-
Gated to reserves-but agreed it might
have been to allow for mark downs
without impairing capital.
Another 81 ,000,0 900 was added to CAPT.
tai in 1925 by the issuance Of 100000
shares. Virgins testified.
The 1926 financing, he said, was to
effect merger with the Mechanics &,
M~tals' National Bank.
$4,15O,oOO In Dividends.
Cash dividends Of $4.15O,OOO were paid
between 1917 and 1925, inclusive, from
net profits Of $l1 100000.
Another issue Of 100000 shares In
100000 and added $150,000 to sur
plus.
This provided for formation of the
Mutual Consolidation Corporation, since
liquidated.
To provide for new business. Wiggin
said. 100000 shares were issued in 1928.
raising additional capital Of $4,000, 900
Another issue of 10000 shares was
made in 1929, he added, to increase by
$75O,000 the capital for acquisition of
the Garfield National Bank.
The Garfield National Corporation
was formed at this time for holding as
sets they didn't want the bank to
take"
Later in 1929, Wiggin continued,
shares in the bank were split five for
one, and 950,000 shares Of the Securi-
ties Corporation issued.
This raised $38,000000 for capital
$1O,879, 900 for surplus and $l,834, 600
for reserves.
This transaction was in connection
with the purchase Of the American Ex-
press Co., Wiggin explained.
Par value of the bank stock was re-
duced from 500 to $40 when the split
was made, Wiggin said, and the market
price dropped from $3.50 . share to
$l95.
The bank stock was taken OF the
New York Stock Exchange list in jan
uary, 1928, Wiggin said in reply to q
question from Pecora.
1t was taken of, together with other
bank stocks, because fluctuations down.
ward are sometimes harmful to bank
standing, he added.
AN inactive stock can have very
serious fluctuations" he explained.
Increased Trading Volume.
Wiggin said volume of trading In
creased materially when 1t was sold
over the counter" after being taken
of the exchange.
Pecora asked if the bank wanted to
be able to control the price range.
I'VE did want to protect it for the
good of the institution" Wiggin said.
is it possible to sell securities short
IN the over-the counter market?" Pecora
asked.
IT think So" Niggin replied.
did the bank deal in its own stock?'
Fletcher asked.
No" the banker replied.
Returning to the capital structure OF
the Chase Securities Corporation. Pecors
developed $2,500,000 was transferred
from surplus to capital by 1912 pei
cent stock dividend in August, 1929, and
in the same month 10000 shares were
issued to add S3.750 900 to capital and
50 ,903 900 to surplus.
Wiggin said $3,75O,O00 was added te
capital to have round amount" anc
added the rest to surplus.
After discussion as to how the Chase
Securities Corporation had dealt in the
bank stock through the Metropolitan
Co., Pecora turned back to the capita
structure Of the Security Corporation.
Wiggin said 2.150000 shares were IS.
sued in 1890. adding s22 900, 900 to capt.
tai and $4,853 900 to surplus.
The Equitable Corporation was or
was merged with the Chase National
Bank in this transaction.
The Interstate Trust Co. also was in.
cluded in the merger. together with the
Interstate Corporation.
Evidence Creates Stir.
The subject of rescue parties came
to the fore at the end Of the first day
of inquiry into the Chase Bank and 1t.
affiliate, after series Of rapid-breakine
developments that created the biggest
stir in the hearing room since the In
vestigation of J. P. Morgan & Co.
Then last night Pecora announced
subpoenas had been served on six ol
the 1875 New York Stock Exchange
members to appear before the commit
tee Friday.
testimony yesterday included:
The Chase Bank paid Wiggin sal
ary running as high as $250,000 yeal
and bonuses up to 100000. while NJ
was active. and retired him with 6
salary Of 100000 q year ior nIe
despite heavy losses by the bank.
Wiggin also received large sums a.
director of other companies, including
SAC, 900 q year from Armour d co. anc
$40 900 from the Brooklyn n-Manhattar
Tr..nsit Co.
Small Collateral Given.
While he was receiving this COM
pensation from the BIN. T., It's cnan-
man, Gerhard Dahl, secured arg, gS
loans from the bank and In June, iS2a 2
his loan account debt was 3,lS3' 100
which was covered by collateral ap'
praised at only $6l5,O00. =,
Similar large loans were mace v
A. R. Graustein, head OF tne 1a.ei e;,
national Paper & Power Co; WHICH RS,. s,.
Wiegin $4,000 q year as director. o coo ~, -,
hanS wrote of more than 50 ,OO0.Oo0 OF
loans to the paper company heao Il
Those summoned from the New ?orl
stock exchange for the hearing Frioa.
were: John p. Duncan OF w. =: HutVu.
=, 70 frank Murphy Of Jules >. 6ach' !
A. co. saver Dominick Of 'Domlnick
1onoinick: Edward A. Pierce OF =. a
p,erce 4, Co: Louis j. Dreves OF Erlcl
q, Dreves. and John M. Prentice o
Hornblower g. Weeks. Lawn,
pacora said all are members OF laIg'
commission houses. 49,. nv
The decision to subpoena the eh, ex
| change members followed refusal OF TN
stock Exchange to circulate a cues
% tionnaire among its members whic {;
asred detailed information on tneI
stock transactions. Pecora said M las
night his only alternative was 10 iSsu
subpoenas to all 1,,s75 members.
Opposed by Whitney.
Richard Whitney. president OF 9n
stock Exchange, took the position, re
cora said, that it would be an imposi
ton ton on the exchange members becaus.
Of OFT the e. length Of time and cost 1t woul' a,,
take them to compile the informatio'
The Committee counsel said othe
! ! suhnoenas would be served probably be
fore Friday and that 10 or IL exchang'
members were expected to appear FIJI
day. .u.o-,.,
I.-..,I.,, ~, ofRcio1S 0f the Buffalo ant