Evening star., 1934-07-16
KENNEDY-PECORA
PEACE REPORTED
Commission Chairman Gets
Proxy. ouieting New Re-
ports OF Feud.
- the Associated Press

~ The Assoeiztee Press.
A proxy served a. symbol Of
peace today within inc Securities
and Exchange Commission, which
rIles the stock markets
Commissioner Ferdinand Pecora, Il
becaue known has given MS proxy 10
Chairman Joseph P. KennedJ per-
mitting Kennedy 10 vote for him in,
several commission meetings.
Thus renewed reports Of a ffud
between the two men we're buried.
The disclosure followed another at
tack on A stock market pool In which
Kennedy former f1nancier, prohied
about a year ago.
The Senate Banking Committee for
which pecora acted as counsel In a
sensational inquiry into Wall Street.
published the first chapter of its re-
port last night Condemnins pools.
II cited as an example the one IN
which Kennedy figured
Pooi in Libby Shares.
peeors brought out evidence about
this pool several months ago II was
reported 10 be the basis OF his obiec-
tions TO Kennedy's selection 10 head
the regulatory commission
The pool waE In The shares OF the
Libby Owens Ford Glass Co. then
known as repeal stock, and
Pecora found its members made 1895,
600 Such pools are now prohibited.
The report said the pool activity
"was materially aided by a popular
delusion that the company was en-
gagins in manufacturing glass bot
ties and was. therefore, to be Classi-
fed as repeal stock. whereas IN fact
IL made no bottles and its business
was in no way enhanced by the re-
peal Of prohibition
II was said on high authority that
there is now no personal anlmOsity
within the commission and that its
work OF organizing is going ahead
efficiently.
Pools came in for general con-
demnation in the report, which found
that their activity creates false
and deceptive appearance of genuine
demand for the security on the part
Va hic anu
persons relying on this misleading ap-
poarance 10 make purchases which
relieve the pool of its holdings in the
end
- Organized Exchanges.
The report discIoses the extent and
Importance OF the new commissions
work. There are "a organized ex-
changes throughout the Nation. On
July 81. 1888, these exchanges listed
6.051 stock issues with q market value
OF sos ,05l ,876, ,295 and 3.798 bond is
sues with value of S49. .080, ,8l9 .993.
or a total of about SI35 900, 900 600
These issues thus represent nearly
half OF the Nations wealth.
The report dismisses regulation
by the exchanges as inadequate and
declares Government curbs necessary.
II covered all phases of stock ex-
change activity and is the first of six
sections in which the various phases
of the investigation are to be treated.
When complete. the report will con-
stitute bulky volume which COM
mlttee members expect to prove a
valuable reference and source book.
The succeeding sections are to be
devoted to investment banking prac-
tices, commercial banking practices,
investment trusts and holding COM
pantes. income tax avoidances and a
summary OF the legislation thus far
enacted in connection with the sub
jeetS involved.
Probe Cost Put at S250.O
The report set the cost of the Sem
ate committee investigation at $780,
o00 and added:
The expenditures. however. have
been justified MANIFOLD by the meal
culable benefits flowing TO the Amer
ican people from the learninRs in the
form OF enlightenment as to practices
which have cost them so dearly in the
past and in the form OF remedial
measures designed to prevent such
practices for all time in the future.
The Federal Government has been
or will be reimbursed many times
over by the receipt of additional in
come taxes or penalties imposed on
the basis of testimony developed AT
the hearings. To date assessments
for deficiencies and penalties have
been levied by the Bureau of Internal
Revenue in a sum exceeding $1,000
900 as direct result of the reVela-
tions before the subcommittee
No estimates are available on the
extent TO which the Treasury has
been or will be enriched as an indi-
rect result of those revelations but it
is certain that a great many returns
have been voluntarily amended and
additional payments made since the
public hearings were held