Newspaper Page Text
THE SUN, SATURDAY, MARdH 1, 1913.
PUJO BILLS HIT AT MONEY TRUST Continued from I'tnt Vngt. tions conducted under tho cumulatlc sis-,'1"" tcm of otlnc ' - ,,t.i.i ..( .11..... i i.a,b ilmiiM l,.. ,,,u- i.r.itill.iicil itom be- . ,,!,,,. ,...,.;.ii,.,i l.M ii..ii.ii,i,.rs In unv nii,r m,r,,,i,iimi lonlee i, L-i ermi' iiIm or! arrungements assuring that the toeit or . . . . nucIi other loiporatlon sliall always be owned by the same persons or Minsian tlally tho same persons who own tho stock of the bank or that tho manage tnenls shall be substantially the wime. "Interstate ml pot ations should not be Ipcrmllted to enter Into any agreements mr other arrangements constituting any bank, banl.rr or trust company their solo fiscal agent lo dispute of their security Msurs. I "Interstate corporations should not be .pel milted to deposit their funds with un supervised, unregulated private bankers Iwho do not disclose their lesoiirces or lla ibllllles. who keep no reserve and are free to Invest their depositors' motley as thc see tit , "National banks should be prohibited from dlKctly or Indirectly engaging In any promotion, guaranty or underiv ru ng Involving the puichase, sale, publlr offering or Issue or other disposition of the securities of any corporation. "National banks should bo expressly Authorized lo Invest tier cent, of their capital and surplus in the obligations of States, cities, .'(unities, or other municipal siihdlvlsloiis and In mortgage bonds of oorpoiaiions on which interest has been iegul.nl paid for live cars, or In case of new Issues when the earnings of the corporation within tho pctlod weio suffi cient to have paid such interest. Ilallroail Jlrform. "The method of reorganizing Insolvent ralltoaiN should bo reformed by adopt ing in MibkMnco tho system provided by tho companies' act of (ireat Htitaln. whe!ch, briefly stated, the plan ami procedure on leorgatilzntlon uro placed under the direction and control of the ourt, the recelyer is elected by the votes of tl)o"e Interested In the property, no sale Is Involved, a single shareholder can de feat an unjust plan. "The Interstate Commerce Commission t-hoiild be empovvdered, subject to review !i the courts, to supervlso anil review pla'ts for the tcorgaiilzatlon of Interstate, lalhoad.x und the Ismic of securities there tinder "The security Issues generally of Inter state rallroails shouhl he placed under the stiiM-i'lislou and control of the Interstate Commerce Commission "It should also le required that la the itiosltion of such Issues competitive bids, public or private, b Invited. "IJorrovv Ings, dlrectl.v or Indirectly, by iui officer of a national bunk from the Ij; hank of which lie Is such officer, and all oiner irans.n nous iifiween mem oi a financial character, should be rigidly pro hibited I liecU on Until I. nan. "Bon owing, directs or indite. tl, by a director of a national bank or by any firm of which he Is a member or any cor poration of the stock of which lie holds Upward of ." per cenl from the bank of which ho Is such director, should only bo liermlttcd on luudition that notice shall have been given to his codiiectors and that a full statement of the transaction shall Ihi entered upon the nilnutcb of the meeting at wliieli such loan was au thorized, and upon the further condition that In his annual report tho Coniptrollu' of the Currcncv shall givn full publlcltv to every buch loan, lu lading the name of tlte borrower "Loans by ti national bank to or In the Interest of officers of other national banks or of fritate banks or trust companies should lo subject to the same conditions us loans to its-own directors. "Iauiis or other transactions with a. national haul: in the Interest of or for liio eventual benefit of an officer or ili r'.'tor of a national bank, cither alone or with others, should bo requited to be made or done in the name of deli officer or itlfeefol 'Officers and ilircet'iis ol national banks should U prohibited from partici pating in pjndicattt. promutions, or un dei'ivritings of securities in which titelr baukb ate oi may becomo interested ns undervv rltet s in owners or as lendeis thereon. Mops ftcitnrl for l.oana. It should lie made a crime for officers or directors of national banks to accept mi compensation, commission, or other foim of reward whatsoever, for making. Uiris'tlng, voting for. or otherwise, pro. noting any loan of the bank's funds; and l should also be made u irime to offer ai such induicmcut "The number of diieitors of national banks should lie limited to not less than flvo nor more than thirteen "National banks should be irmilreil to open to public Inspection schedules of their ashcts other than the names of hnr. rowers, and to inaku lists of their stock holders public." Itcuolslrs Mock llirhancr, I lore are tho committee's recommen dations for tho regulation of the New York .Stock Kxcbange: . That tho piesent lates of commission n ud limitation of membership lie not now disturbed. "That Congress prohibit the transmls slon by tho malls or by telegraph or tele, phone fiom one Slate to another of onlers to buy or sell or quotations or other In formation concerning transactions on any stock exchange, and also prohibit national banks fiom buying or selling or lending tion the security of stocks or bonds listed on any stock exchange unlets such ex change shall "1 lie a body corporate of the State or Territory In which it Is located. Itequlre corporations whose securi ties it lists to mako a complete disclosure of their atfalis, In particular any commis sions paid to piomotera, middlemen or bankets out of any such secuilty Issue or tin' proci i ds thereof "3. Iliqulie a maigin of not less than 20 pei cent on all puicliases of stock. To Prevent I'lni'l untlons. "t Prohibit ns far as possible the i-xe-cut ion of simultaneous or substantially simultaneous onbiH pioeiriling fiom the same, person oi poison to buy it ml sell tho Hiime secuilty for the purpoc ot cieatlng an uppcniaiicc of activity then in and any onlers tT.e purpose of wnir.i is to Inflate oi depress th price of any sccurlt) Prohibit ineinbeis fiom pledging se curities purchased and cairled for !t run lomer for an amount gieater than the. un paid portion of the purchase price, whether without such customers' consent. "6. Piobililt inemlxrn fioni lending to other mcmbciB sei iirltles carilnl by tho fonner for custunn rs, winther with or Willi or without sin h customers' consent. "7. Statu in Its chaiier tlm condition on which Issues of securities shall lie admitted or lemovul from the ttadlug list, mid pio vlilo lor a Judicial levleiv of Its notion In this rcgind. "i. hetp books of account, shoivlng the actual names and tiaiisactlous of cus. turners, and give nccesa thento lo the Poatiniistcr-Cicneral." ienrlliic llonaes, Thn following am liio I'omnntteo'.s recommendations In rrgnrd to tin regu latlon of clearing house associations: "Clearing house associations of uhhh national banKs uro inenibeiH should be ie. qulrod to becomn boilles coiporalo of the States In which they aio respectively lo oated, and every solvent and ptojieriy managed bank or trust company should rjavo tho right, enforceable at law, to lie. conio und remain a member. "The exclusion of sound and well man ,iged bunks simply bis'iiu-e thei me small ill slzn ijlollld bo piohlblted but it shouhl ... ... ,v.i ...... .. ,.m ni ..inn ba pe-mlsslUa tc ico.uliu every applicant for udmlcslon to have a capital not la J than the inltilmum capital required of n' llotmi bank in tne khiiia locality. ' HcRUlar periodical examination or mrmhriB by ft committee of (hp nvHa. lion kIiiiuIiI b ('Inhibited, HM'l lliMcud lilt audi examination hould lo conducted by ' public iiiiiliiulili's. j "Such aoclatlon should b prohibited fnnn IkmiIiik certlllciite on tl' security of ! their iiif-mlnTH usacts, except for circula hiikwk iii-tnt a to pay balance t "l" ''IcihIiik hoiiff, and In thai cae only Ion condition that both the Issuance and re- i tlreinonl of such certificates shall bo under ! governmental control, "'"lirt prnctlco now so general among ut.j.l. ti.u....ln, ...la rr 1. 1. .111..-. ....... II. ..-. " ,,' ', i " "... i, . A V-Vrl. ' under pain of expulsion, to charge pre scribed rates for collecting out ot town checks should bo prohibited, "Such associations should b further prohibited from prescribing rates of In terest or discount, rutes of Interest allowed on deposlls, lates of exchange, or ny other regulation not appropriate to lis function of Instrumentality for tho collec tion of check by banks of the same com munity one from another." I'roof of Money Trnnt. The (.'oiiiiulttee'H report consists of 146 j i'lrst National Hank and the Old Colony printed pages, and attached to It are Trust Company having alout two-thirds charts and illagrams Illustrating the'" the total resources ..f all the Hostott document. About one-third of tho re port Is taken tip with an elaborate re view ami discussion of tho evidence In- fended to show the relations of tho clearing houses und stock exchanges to file 1 nunc al svstem of tic country. I financial svstem of the country. nuln pnrt of tho report, however, ...... t I..- ;u. ,i,. I. i-Noteil to proving that there s The m Is i a deflnltu combination having for Its purpose the control of money and credit On this subject tho committee's report says In pnrt: "Your committeo is satisfied from the proofs submitted, even In the absence of data from the banks, that there Is an established atnl well defined Identity and community of Interest between a few leaders of finance, created and held to. gether through stock ownership, Inter locking directorates, partnership and Joint account transactions, and other forms of domination over banks, trust companies, railroad and public service and Industrial corporations, which has resulted In a great and rapidly growing concentration of the control of money and credit in the hands of these few men, "The hulk of the oral and documentary evidence, taken before our committeo was directed toward ascertaining whether. In current phrase, there Is a money trust. Combination tlrflned. "If by such n trust Is meant a com bination or arrangement created and ex isting pursuant to a definite agreement between designated persons with the avowed and accomplished object of con centrating unto themselves the control of money and credit, vvu nre unable to say that the existence of a money trust has been established In that broad bald sense of the term, although tho committee re grets to find that evn adopting that ex treme definition surprisingly many of the elements of such a combination exist. "It would, of course, be absurd to sug gest that control ot tho bulk of the widely distributed wealth of a great nation can be con ailed by any set of men. If that Is what Is meant by gentlemen who deny tho existence of a money trust, your committee agrees with them, Such a thing would, of course, bi Impossible and Its suggestion Is ridiculous. "It Is not. however, necessary that a group of men shall directly control the small savings In the banks or the scat tered resources of the country In order to monopolize tho great financial transae tlon or to be ublo to dictate the credits that shall lie extended or withheld from the more important and conspicuous busi ness enterprises. Tills is substantially what has been accomplished, and fairly represents the existing condition. Control aat Sam. "ruder our system ot issuing ami di. trtbutlng corponite securities, the invest ing public does not buy directly from he corporation. The securities travel from the issuing house through middlemen to tho investor. It Is only the great bank or bunker with access to the mainsprings of the concentrated resources made up of outer peoples money m the banks, trust companies and life Insurance comuanles ami with control of the machinery for creating markets and distributing securi ties who can underwrite or guarantee tho sale of largo scale security Issues. The men who through their control over tho funds of our railroad and In - dustrlal coniKinles are able to direct , . ,,,.. , i it . , . . .. i-uiu iuiiub piinu oo Kepi huh inus to create theso great reserolrs of the people's money aie the ones who are In position to tap those reservoirs for the ventures In which they are Interested and to prevent their being tapjied for pur poses of which they do not approve. The latter Is quite as important a factor as the former. It Is the controlling con sideration in it effect on competition In the railroad and Industrial world. ' When we consider also In this connec tion that into these reservoirs of money and credit thete flow a large part of the r scives of the banks of the country, that they are also the agents and correspond ents ot the out of town banks in the loan ing of their surplus funds in the only pub lic money market of the country and that a small group of men and their partners j.md associates have now further strength ened their hold uikui the resources of these institutions by acquiring large stockhold- ng therein, tiv representation on their boat ds and thtough valuable patronage, we begin to icallze something of tho ex tent to which this practical and effective domination and control over many of our gieatest financial, railroad and Indus- tnai coiporatlons has developed, largely within the past five years, and that It is ft aught with peril to the welfare of the country Find I'oiiiiiiiinli) f Interest. "If therefore b a 'money trust' Is meant 'an establish) d and well defined Identity and community of interest lie. tweeii a f. w leaileis of flnnnco which has been created and Is held together through stoik holdings. Interlocking directorate and other forms of domination over batiks, trust companies, railroad, public servico und Industrial corporations and which has resulted in a vast and growing concentra tion of tho conttol of money and credit in the bunds of a comparatively few men' Your committee, a befom stated, lias no hesitation In asserting as the icsult of Its Investigation up to this time that the condition thus described exists in tills country to-uay. "To say that the domination of this group over tho money ami credit of the country controlled by our latgest finan cial Institutions and that Is av-allublo for llnanclng large security Issues for tho cur rent needs of our principal Intel stale c or lorutlon and of tlm Individuals conduct ing great enterprises and for stock ex change loans Is ut least as effective as. for Instance, Is tho control of the United States Steel Corporation over tho steel In dustry I an understatement of tho situa tion, although the methods by which tills control Is effected and held together aio of course essentially different and of a iiioio loose and Intangible character. "Some of tlm endless lamltlcatlons of this power havn been traced und pre sented, ami It Is upon theso that wo havo buHd our findings. Many others can bo fully dlscoveied and analyzed only after u close scrutiny or the Internal affairs of the great national banks that will dlscloso the wa;.a In which their tesources uro used, in whom their funds aro loaned, what securities they havn been buying and selling and how their vast piotlts havo been em nod. "Willie jour committee has been denied access lo till iliilii suftkicnt has been burned to icveal the relations of theso banks and of Hie Statu banks and trust companies and Hie use that bus been mado of them In upbuilding a power over our tlnanclHl system, and in consequence! over our lallioads anil greater Industrie, that penults ieal cumpiitltlon op u largo scale III til" various fields of cnleinilun ; inil.v l Hiilfi iance. If ut all. I "inn panics to tin combination or ! understanding or community ot Interest, by whatever name It may bo culled, may corporation within the pnt year nmount- practice that hav been permitted, will bo conveniently classified for tho purpo lug to J30,f00,000 havInK been purchufed be Riven new confidence In It when It Is of differentiation Into four separate , by Miwm. .Morgan & :o. were, tho groatcr . under lenal iuporvlslon. eroun. I part of them, Immediately resold lit a "Notwithstanding these facts. It con- "First. The first. which for convenience ' profit to Iee, llljRlmoti A Co. unit Kissel. I tends thnt It should bo permitted to con of stiitemenl we will call tho Inner grutip, 1 Kltiulctlt & Co. ( Davison It. 1833-1848), tlnun its voluntary organization with the conslstH of .1. t Morgan & Co., tho toe- when, so far its iipponi. the corporation privileges and freedom of action of u osnlzf-d leader, and tleorpn linker ciaild readily have saved this Intermediate private club and should nnt tie made sub and Jhiiicj) Wllltniiti. In their Individual ptollt or commission by helms permitted Jcrt to legislative or Judicial control or capacities and In tholr Joint udmliilMra- to deal directly with the banking bouses supervision, and that It ta not amenable tlon And control of tho I'lrst National which purclinscd tho securities for dls-lto Federal regulation In Its use of tho Hank. th National City Hank, the Na-i trlbtitlon. . malls, telegraph and telephone In Inter- tlonal ItmiU of Commerce, tho ITiiihi) National Hank, tho (inaratitv Ti list Company and the Hankers Truit I'ompniiy, with total known lesouiers , In these corpoiatloiiH alone In e.x-I cess of ? 1,3110,000,1)00, and of a number of smaller but Important tlnanclal Insti tutions. This takes no account of the personal fot tunes of these gentlemen. Powerful llonses Atlleil. "Second. Closely allied with this Inner or primal y group, and Indeed related to them ptnetlcally as partmus In innuy of their larger financial cntcrpt Iscs. ate the powctfiil International banking bouses of l.ee. lllacltisoti & Co. and Kidder, I'ea- body & Co., with three affiliated banks 111 I Itoston the Natlonnl Shavvmlit Hank, the hanks ; also with Interests and represent:! tlon In other Important New Kngland financial Institutions. Third. In New York city the Inter- imtlonul banking house of Messrs. Kuhn. I,oeb & Co., with Its large foreign clientele unci connections, niumi omy quuiiiiruu unci connections, niumi omy quuiiiiruu 1!1,,J with the Inner group, Tt through Its r ose re at ons with tho National City 1)nnk Nu(lolH, Hll,lk (lf cm. inercc and other tlnanclal institutions, with which It has recently allied Itself, has'miiuv Interest In common, conducting large Joint account transactions with them, especially III recent yeais, und having what virtually amounts to nn iindet stand ing not to compete, which Js defended as a principle of 'banking ethics." Together they have with a few exceptions pre empted tho banking business of the Im portant laltwavs of the country. Connections In Other Cllles. fourth. In Chicago this Inner group associates with and makes Issues of se curities In Joint account or througli under writing participation iniiimrlly vvitii the First National Hank ami the Illinois Trust and Savings Hank, and has more or less friendly business relations with the Lontl liental and Commercial National Hank, which participate in th underwriting of security Issue by the Inner gioup. These are the three largest financial institutions In Chicago, with combined resources i Includ ing the two afmlated and controlled Stale institutions of the two national banks) of t5tH.UK0.0u0. Klfth. Had at ng from these principal groups und closely affiliated with them aro smaller but Important banking houses, such us Kissel. Klnnlcut & Co, White. Weld A Co.. ami Harvey hsk Sons, who receive large and lucrative pat ronage from the dominating group and are used by tbu latter a Jobber or dis tributor" of securities the Issuing of which they conttol but which for reasons of their own they prefer not to have Is BUed or distributed under their own names. Messis Ue. lilggltison & Co, be sides being part nets with ttio Inner group, arc also frequently utilized In this ser vice because of their facilities as dis tributors of securities. "Sixth. Heyond these inner groups and bub-groups nie batiks and banker throughout the country who cirat with them In undei writing or guarantee ing the sale of securities offered to' the public and who also act as distributors of ucb securities It was lmoihk lo learn tho Identity of these eorKir.itlous owing to the unwillingness of the mem ber of tho Inner group to disclose the names of their underwriters, but suffi cient appears to Justify the statement that there are at least hundreds of them and that they extend Into the principal cities throughout this and foreign coun tries. Patronage of rrat A alar. "The patronaf thus proceeding from the inner groups and Its sub-groups is of groat value to these banks and hankers who are thus tied by self-interest to the great issuing houses and may be re garded as a part of this vast financial organization Such patronage yields no inconsldeiable part of the income of these banks and bankers and without much risk on account of the facilities of tho principal groups for placing issues of so curlttes througli their domination of . preat banks and trust companies and their '.,.. a ....i.. ..miiu.i,.. ,i ihoie fr,r. UIIOJI uuiiirmn; iii.iiinHwno m,i,, iiivii u. - elgn connections. "The underwriting commissions on Is sues mado by this inner group are usually easily earned and do not ordinarily In volve the underwriters In the purchase of the underwritten securities. Their In terest in the transaction is generally ad justed, unless they choose to purchase part of the securities, by tho payment to them of a commission There are, how eviT, occasions on which thlB Is not the case The underw liter are then required to take the securities. Hankers and brokers nre so anxious to be permitted to participate In these transactions under tho lead of the inner group that, as a rule, they Join whenever Invited to do so regardless of their approval of the par ticular business, lest by lefusliig htey should thereafti r cease to bo Invited. "It can hardly lie expected that tho banks, trust companies anil other Insti tutions that are thus seeking participa tions from this inner group would bo likely to engage In business of a character that would be di'pieaslng to the latter or that would Interfere with their plans or prestige And so the protection that can be offered by the members of tills Inner group constitutes thu safest lefuge of our great Industrial combinations and rail road systems against future competition. The powerful grip of these gentlemen Is upon the throttle that controls the wheels of credit, and upon their signal those wheels will tutn or stop, Your Committeo Is ' convinced that however well founded may be th assur mice of good Intentions by those now holding the place of power which have been thus cteatid, the situation I fraught with too great peril to our Institutions to be tolerated " Control of Secnrlty .Market. In regard to tho control exercised by the so-called money trust over the se curity market, the report ay.s: "Througli their powr and domination over so inntiv of the largest financial In stitution, which, ns buyer, underwriter:'. distributors, or Investors, constitute the """s iiuouuion 10 iniers aie una in principal first outlet for securllv Usues. 1 "' "'" telegraph companies for large tho inner gioup and It uUle havo draw n 1 ims of money and scatters It broadcast to themselves practically tho sole nn,r. ''' r the country througli the tiewspupW. ketln of the Issue of the irreatrr nl. ' "t,r ,h" telephone and telegraph, but lltiilVy Vorporulion, which In consV, ue co "'"? , '"'" T rf"r "e havo no open market lo which to a ppeal; : m'Knnlzatlon nnd methods of our corpora nnd lrom thin position of vantage, forth ""K !""' bo ultimately worked out fled by tho control exerted bv them ' """"ugh the power wielded by tint stock through voting trusts, representation i r)il'lm"K0 ovcr the listing of securities, dlrestoriitf. Htock holding. Ilscnl agencies 1 Mm''1 "f "10 confusion and many of the and other relation, they have been able ' 'Mevm In corporate regulation due to lu turn to direct tho deposit nrd other ith" '"rHUy "f 'S"'B luWM Hnd ,u t,le patronagn of Much corporations to theso ' 'ddillng of tho .States against ono another same financial Institutions, tlieiebv1'' laxity of administration In order to strengthening the instrument through !,mn"'1 corporations within their borders which they work may bo corrected und uniformity of "No rai'lioad hytlem or Industrial cor- methods introduced through tho listing poriitlon for vvhl"h cither ot tlei houses department of thcexchanfe, named ha u t d pi banker coild smr; .. ..... ,. ,. . II business fiom one to another. Wlieie, I'nbllclly May Br l.uforced. ono ha mado an Issue of sovuilHes lor ,i "Thus complete publicity as to all the corporation the oilier will not hid for affairs of u coiporatlon may be Uniformly subseijuent Issue or tlio H.ftie cotporiilloii. Their fr ..toil and extensive .-i-.latlons in tho Joint Issue of hccurltlo huu mado such a modus vlvcnril Inevitable, I'rer lo Kxart llirn Terms "Thl Inner group nnd allies thu havo no competition, cither fiom others i)r among themselves, for these wecurlty Issues, and ure uccordingly free to exact their ownterms In most cases. Your committee ha no evidence that IIiIh power 1 being used oppressively, and no means of ascertaining the fact ho long a their pnillt an. iindlaclosed. ii niiuuni mi iiuicu, iiowovcr. nun ihhiics of subsidiiirlea 0f the Hiltcd UtaUs titctl It is artnuitcd that .Messrs. morgan leaned u in ollt on these Issues. Act they tierforined no service, so far as wo have been ublo to learn. T hey neither rorineu tho syndicate nor did they lend their name to the Issues. If they wanted to market tho securities, we. assume that It vvu their prlvllego to do so as fiscal agents of the corporation. Otherwise, was It not their duty, situated a they were with regard to the Steel Corporation, us the supremo power therein, without whoso approval no director could be named, to seo to It that the best possible bargain for tho corporation should be made, and not leservo to themselves ii profit without risk or service? Destroys Liberty of Action. "Thorn are said to be about 180,000 shareholders In tho Steel Corporation. This Illustrates tho vice of allowing Interstate corporations to conatltuto exclusive fiscal agents to control their finances from which they are able to secure large revenues without perfo" mlng any substantial ser vice which, a.iove all, renders the cor porations In question powerless lo secure Hie advantage of competition. When we consider further that the corporation was Hot a fiee agent In thus destioylng Its lib erty of action, the practice becomes Intol erable, "Again, to take one of several similar Instances. It was Impossible for your com mittee to larn vvlmther the prices at which Messis. Morgan & Co. and the First National Hank have fiom rltnc to time purchased the securities of the Southern Hallway (the management of which they absolutely conttol through tho voting trust refeiied to) represented the fair valuo theieof. Assuming that In this case full value was paid, your committee Is of the. opinion that a banking house should not occupy a position where It can determine the prices at which n corporation snan sen security Issues to It. It Is a trustee for tho disfranchised stockholders In ai broad and unqualllted a sense as Is a guardian for his Infant ward, ind should bo under the same disability against dealing with Its cestui que trust. The same principle Is applicable with respect to the trust companies with which Messrs. Morgan and linker stand In like lelatlon under voting trusts and which participate In their ven tures as underwt Iters and purchasers of ."ccuiltles. Accountable to .Morgan. "The suggestion that because these cor porations have iMmnls of directors coin posed of men of standing they are Inde pendent seems to us disingenuous. They are the nominees of the banking house and subject to removal by It at any election. They are not accountable to the sharehold ers but to Messrs. Morgan and Hsker, and are not free agents, no matter bow emi nently iespectnbleand distinguished they may be. "Not only does this domination of great bank and trust companies enable the in tier group and their allies to control the disposition of new s'-curlty issues thtough control of the main outlets therefor, but It also enables them to say what and whose seeutltles shall not be nought and of en forcing the retention In these institutions of securities l-stied by them which an in dependent management might consider It VV Ie to dl?lOSe of. "The puichase of the Kqultahle I.lfe stock liv Mr Itvan ami Mr Morgan In sue cession furnishes an object lesson of the value that lending Hnainieis place on the control of ooipornte assets not belonging to the corporation but btld In trust for other people and a fair criterion rrom which to Judge of the reasons why they have engaged so actively In buying Into banks and trust companies ami In securing (ontiol theieof thtough voting trusts, r.qnltablr Ural Questioned. "If the controlling stock of the Kquit able I.lfe. that yield only T iier cent, on SSI.oufl $3,170 ncr year was worth SI. 000.000 to Mr. Jtyan and JS.000,000 to Mr. Morgan, why did It have that value- Whs it because the life Insuiance com patty held In Its treasury the majority stock of the Mercantile Trust Conipanv which was turned over to the Hanker Trust Company, controlbd by J. I Morgan i. Co. through a voting trust after Mr Morgan bought Mr. Hyatt's stock, and also the stocks of other batiks and trust companies, Includlpg those of tho National Bank of Commerce and the Klfth Avenue Trust Company? The Guaranty Trust Company, likewise con trolled by Morgan & Co, through R voting .,,1,.,,..,,! I l,.,irhi.,l th Fifth Avenue Trust Company, and Messrs. ! Morgan, Haker and Stlllman took over one-half the holdings of the Uqultable and Mutual I.lfe Insurance companies of the Hank of Commerce stock " Of the New York Stock Kxchange tho committee says: "It Is tho market place of the entire country and of foreign countries for sc. cfirltles and tho only public market in the United States where money Is loaned anil borrowed. "The buslnesa transacted by Its mem bers comes to them from almost every corner of the civilized world. Its hall mark as to the genuineness of a certificate of Interest In a corporation passes cur rent everywhere nnd Is rightly supervised with Jealous care nnd at considerable ex pense to the corporations concerned. Prescribes Conditions. "It undettnkes to prescribe the form and conditions of every corporate security In which It authorizes dealings, and It determination Is final tluough Its control over the listing of KUcb, securities. It re serves the right to exact minutest details of the business and nffalrs of the Issuing eorpotatlons. to Impose Its will In the matter of the procedure by which such j THT,? "lVT1 and dividends, and In the matter of trans fer agents and registrar, and as regards endless other details , all this very prop erly on the ground that it is performing a national nubile function. "It Jealously controls the reports as to every transaction on It floor. Isbues und distribute the records of every purchase and sale, or offer of purchase und sale, which It thereby Impliedly represent as an honest and genuine transaction, Courts of Justice, trustees, financial Insti tutions and the public the world over act mi this Information. It exacts compen sation for the service of listing securities, .tlway under It control. 'cnfoiced. 'liio scuinlalou practices of ofilcers und director In speculutlng upon , inlde and advanco Information a to the action of their corporation may be cur tailed, If not stopped. In short. Its onnortunltlc us un usenev of cornorutn leform uro almost endless, provided Its own practices can bo reformed so as to entitle It to exercise these broad powers. Insteud of tho Investment buslnesa ol the country abandoning the exchange, Is now and ha been the case for some time past, It will become, necessary to the reputation and imlablllty of a securllv 1 1 1 i 1 1 It iiliould bo listed. Tho general public, winch nun grown to look upon tho exchange with dUtruet becauM of tha stale commerce anil in ine dealings or Its members with foreign countries. "To this contention your committee i tillable to agree. It Is Ineonertinu Hint such an institution wielding such power one! equipped to perform such useful and Important functions in our economic sys tem should, be uncontrolled by law. Power lo Herniate Doubled. "It Is doilbtful, however, whether the Federal Government has power generally to regulate stock exchanges. Wo there fore advise no action by Congress to cor rect such local abuses In the operations of the New York Stock Kxchange as Its effort to drive rival exchange. In tho city of New York out of business by tho methods disclosed, Its compulsory uniform com mission law, Its limitation of member ship, preference of members over other creditors and Its refusal to list securities unless engraved by a concern approved by the exchange. "Aa regards the rates of commission enforced by the exchange your committee believes the present rates to be reasonable, except as to Blocks, say, of $25 or less In value, and that the exchange should be protocted In this respect by the law under which It shall be Incorporated against a kind of competition between members that would lower the service and threaten the responsibility of mem ber. A very low or competitive com mission rate would also piomote specula tion and destroy the value of membership. For tho same reason wo arc of opln Ion that the existing limitation of tiiem- bershlp should not bo disturbed nt this time. nut wnetner siocn exchanges in tneir wholly local and Internal relations may be regulated by Congress or not, where! they lend their facilities for transactions Injurious to the public Interest at huge. ' Congress may prevent any Instrumentality under Its control from being used to mul tiply and spread such transactions; and It Is Its obvious duty to do so. Waste and Corruption. It has appeared that sales of stocks on the New York Stock Kxchango average $15,500,000,000 annually; that but a small part of these transactions Is of an Invest- ment character: that while another part represents wholesome speculation, a fan"" ' " rl greater part represents speculation Indls- J tlngulshable In effect from wagering ami hi colleugue have pursued und also more hurtful than lotteries or gambling I tho concltiNlons of the niujorlty. The at the race track or the roulette table three Republicans who Jointly sign a rc because practised on a vastly wider hcale ' ,,ort hold that the testimony ha not ills and withdrawing from productive Indus- .,,11H,i .1,. PXt,.ne,. of unv monev trust try vastly moro capital, that ns un ml Janet of such speculation quotations of securities are manipulated without regard to real values, and false appearances of demand or supply created and that not only without hindrance from, but with the approval of tho authorities of the ex change, provided only the transactions are not purely fictitious. In other words, the facilities or the New York Htock Kxchange nre employed largely for transactions producing moral and economic waste and corruption; nnd It Is fair to assume that In lesser and varying degree this Is true or may come to be truo of other Institutions through out the country similarly organized nnd conducted. Your committee believes, therefore. that Congress has power unconditionally to prohibit the malls, the Interstate tele graph and telephone, the national hank'; nnd all other instrumentalities miner us control from being used In executing, lie- gotiatlng. promoting. Increasing or other wise aiding transactions on such stock exchanges." l'aarltlr Cannot In Chicago. Word reached Assistant District Attorney Embree yesterday that August CNrhwager. a member of the examining board of plumb ers appointed by Mayor (laynor to Issue licenses, had been arrested In Chicago 011 a charge of bribery The arrest w as made on bench warrant issued bv .bulge .Muloiieen Iletirv Slegal of is Kast 115th street a leged that he paid the prisoner IM" for a list or IVTs charged ,Thoihlcl" uger'r.llcredTn ionio f'JU w In a l t,u'wul'tr -,I"iria ln Inauguration Number Have you placed your order ? Following is the table of contents: The Cover in colors, with portrait of President elect Woodrow Wilson. A page of photographs showing the Pilgrim Suf fragettes on their march to Washington. Photographs of types of Mexicans taking part in the civil war now in progress. A page of photographs of picturesque and prom inent figures- on the New York Stage. Wt ? betting $0$. (NEW YORK) and its illustrated SATURDAY MAGAZINE i THE TOP NOTCH u IS A PURE GUARANTEED FOR AGE, ALWAYS FRANCIS DRAZ 85 CO., REPUBLICANS FILE TWO PUJO REPORTS Tliret' in MinorHy Hnvc Doubts ns o Some of Itcmctlirs Siift'gostcd. 'ON K M KM I! Kit STANDS ALONK l..M ,.r lt..1.i... n.... . I .Ul .Ulll I II II iri -'1 IC lllmi I MMl'3in Atriiinst .Methods I'simI in Inquiry. WA.inisaTo.s Feb. "S. Two minority teport by Kepublleun member of the , PuJo committee were tiled to-night. One report was signed by Representatives, Hayes of California. Heald of Uolawore uml Guernsey of Maine, and the other ,,rt 1)V representative Mc.Mor- ' . ...i- Mr. McMorran uttarks the methods but has shown 11 (Inugeruus concentru tlon of credit In New York city und to some extent In Hoston and Chicago. These Republicans hold iilbo that ninny abuses huvo Iwcn disclosed, es pecially In connection with tho .Stock Kxchange and the New York Clearing House. They believe theo evils could be corrected by tho exchanges and us- sedations themselves If they wero so Inclined. Since this hua not been done t lie three Republican agree with the seven Democrats on the committee that It Ik 1110 iituy ot caen Mine 10 compel mo Inoiirpiirutlon of the exchanges und clearing house . ud to regulate, their management by appropriate legislation. If tho Htutes fall to do Mil the three Republicans bellevo It will then be the duty of Congress to exercise its power and Jurisdiction. "While agreeing substantially with the majority upon many of the abuse to be corrected," say.- the report of the ReiHibllcans. "the undersigned have1 , , . douht as to some of the remedies pro- posed by tho majority." 'the. Republican contend that there Iiiih not Wn sufficient time to digest tl.n imiinunv i.cl ihm ill w n nni i .... .i .v..'.'.. ..n.. ... .u- l ' ..., .-.. . ...... ,., c.-i.ic, wu WrdnPK(lrtV w.hcM MrM. Mc. bill proposed by the majority. Lutighlin s case come up. Boll, sides '" UM """ I""1"'"''1 ' I' .agreed that the car spend the Intervening experience." (hey Miy. "thnt regulation time in a neutral guiagr Z oP-iiu2- T P4E" i 3lISI5KI'JSsS' rSB"i of Entertainment 5M rybodyVery Different; ISSUED TO-DAY A page picture of Miss Florence Noyes, in cos tume of "Liberty," in tht "Votes for Women" tab leaux to be given on even ing of March 3d, on the Treasury steps at Wash ington. "Inauguration Day in Washington," a detailed advance description of what will happen in the Capital on March 4th, when Taft steps out and Wilson steps in, with many interesting illustrations. OF SCOTCH 99 BLENDED QUALITY AND FLAVOR UNIFORM Sole Agents, United States of tho business und tlnanclal affair of the country should be attempted with great cure and should bo curried only fur enough to remedy known existing evil nnd not o fur oh to become. (In structive of any of tho biiHlnc Inter est of tho country. Wo feel that be fore definitely recommending any reme dial legislation testimony should be taken covering more fully tho effect of tho various change In the law that lmvn been auggested." Representative McMorran saya thnt the chitructcr of the Investigation has been different from uny other conducted by Congress. He referred particularly to tho agreement under which no mem ber of tho committee ha been per mitted to Interrogate witnesses. He believe!) a sinister light baa been thrown by the investigation over many banking practice which were not Justi fied by the facts, that "no effort has been made to show the reasonable and com mendable legislation of these practices and that In many cases an Impression ha been given to the country ius to the character and motive of leading bank er which Is altogether unfair." "I feel," hu udd, "that every Ameri can citizen should be proud of the fuel that we have a city like New York, where there Is sufficient capital to handle large enterprise, und we should t.iko pride ulso In the churacter and Integrity of the men who are nt the head of Its large tltuinclul Institutions." ALL DAY WAR OVER AN AUTO. 'Women, lroera Server, Chauftrnr nnd l.anrrr the Contender. Mrs. Susun McLaughlin of SOD West Ninety-seventh street found an uutomo- 1 bile at llroadway and Ninety-sixth street 1 jesterday morning which used to belong , hrr ull(i to whcn hho thought she still 1 find 11 claim. So she Jumueil in. and with I her two women, friends of her, and .process server. When the other owner of tho car. Uenjainln A. l.cvine of 31M West Ninety-sixth Htrrct, camn out lie mado a great disturbance and even went &o far as to call hi lwer The three women, the proces server tho chauffeur, the lawyer und the second owner and two policemen bad It buck Hm forth for an hour. Finally tliey all went to tho police station, where few of them were arrested. Mrs. McLaughlin and her process server wete among these. They wero biouglit before Magistrate Campbell, who put the case over. An automobile broker, who , 1.... 1.. 1 w .. ..i 1 pwiiienun imu iiiuuu mtiioi'ii , luv i'uii wu8 pned $10. . A tho Mugsltrate left lourt he bumped 'into a crowd swaying back and forth In ' front nt machine, llotli factions were at 1 again. This time they kept It up two hours. A truro was finally declared "The President-elect and His Career," a two page article concerning Woodrow Wilson, fully illustrated. A full-page picture of "Lysistrata," the perform ance given in aid of the suffrage cause. A fashion page of new hats and gowns from Paris. Another instalment of the delightful novel, " Everbreeze," with a drawing by Relyea. And many other inter esting features. On All Newsstand BOTH 5C M 1 1 1