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Show MONEYTRUST 'DOES EXIST Powers Should Be Curbed Curb-ed By Stringent Federal Fed-eral Laws Washington March 1 That a mon-1 ey frusi does exist and that Its pow- ' crs should be curbed by stringent federal fed-eral regulations as to the conduct of! national hanks, clearing houses, and stock exehanges wore the findings of the house money trust committee set forth in the majority report of its Investigations In-vestigations filed in the house late today. The report, signed by Chairman' Pujo and the six other Democratic) members ol 'ho sub-committee which conducted the monev trust piobc. StUi accompanied by two bills, one to regulate reg-ulate stock exchanges through for- 1 bidding the malls to exchanges which j do not comply with federal regulations, regula-tions, and the other to regulate clearing clear-ing hoi;e associations through forbidding for-bidding national banks to join Bitch associations unless federal regulations are obsened In the latter bill, pro-poeed pro-poeed an amendment to the national banking act, the conduct of national i jbank officers and directors ia closely 1 restricted Detailed Report. On the question of the existence of I a money trust, the report Is specific land detailed. I "H would rf course be absurd," .eairi the rejiort. to suggest that con-Itrol con-Itrol of the hulk of the widely distributed dis-tributed wealth of a great nation can be corralled any sot of men. f 'that is what is meant by gentlemen I who deny the existence of a money I trust, your commitlee agrees with jthem. it is not, however, necessary that a group of men shall control dl-Iroctlv dl-Iroctlv the small savings in the banks , nor the scattered resources of the I country in order to monopoly the I great financial transactions or to he 'cble to dictate credits to be extended or withhold from business enter-I enter-I pi if-es " Banks Handle Vast Issues. The great hank or banker "with ac. 'cess to the mainsprings of the concentrated con-centrated resources of other peoples money," the report declares, can handle han-dle the vast issues of securities now ' demanded bj the commercial and industrial in-dustrial development of the country, but the bank reserve system It Is fur-Ither fur-Ither contended, concentrates a Inrge j part of the funds of the smaller banks In New York, where a croup I of men have strengthened their interest in-terest in the various hanking institutions, institu-tions, the report said: "If therefore, by a money trust' is meant an 'established and well-defin. ed identity and community of Inter-1 i est between a few leaders of finance .which has been created and held together to-gether through stock holdings, inter-j ileieking directorates an, other forms, I of domination over banks, trust com-j Ipanles, railroads, public service and industrial corporations and which has resulted in a vast and growing concentration con-centration of the control of money and credit in the hands of a comparatively compara-tively men. your committee has no hesitation in asserting that the; condition thus described exists in this countrv todav Domination of Big Group. ' To sav that the domination of this group over the money aud credit of the country rontrolled by our largest financial Institutions and that is available for financing large securit Issues for the current needs of our principal interstate corporations and of the individuals conducting great enterprises and for stock exchange loans is at least as effective as for instance. Is the control of the I'nited States Steel corporation over the steel industry, Is an undei -statement of the situation although the methods by which this control is effected and held together are of course essen-tialU essen-tialU different and of 8 more loose and intangible character." Accepting this as Hie long sought mone trust." the committee outlined outlin-ed the membership as follows: 1 The parties to thi combination or understanding our community of interest in-terest by whatever name It may be colled, ma be comcnlcniK classified, classi-fied, for the purpose of different! -j tion into four separate groups. Morgan Company. The first, which we will call the inner group, consists of J. P. Morgan & Co.. the recognized leaders and fleorge F Baker and Tames Stlllman in their Individual capacities and in their joint administration and control of the First National bank, the National Na-tional City bank, the National Bank of Commerce, the Chase National bank, the puaranty Trust company and the Rankers Trust companv. with total known resources. In these corpora-tioha corpora-tioha .-.lone, in e. pcs of $1,200,000,000 and of a number of smaller hut Important Im-portant financial institutions. This takes no account of the personal for-i for-i irir ., nf -hesp gentlemen Closely allied with this inner group and Indeed related to them practically a partners jn many of their larger financial enterprises, are the powerful international banking houses of I.ee. Higglnson and com-pany, com-pany, and Kidder. Peahody and eom-pac eom-pac . with three affiliated banks in loston Kuhn, Loeb &. Company "Tn New York City the international internation-al banking house of Messrs Kuhn. I.oeh & Co , with its large foreign clientele and connections, whilst only quallfledly allied with the inner group, vol through Its close relations with th National City bank and the National Na-tional Bank of Commerce and other financial institutions with which it has recently allied itself, has many interests in common, conducting large joint account transactions with them especially In recent vears. and having what virtually amounts to an understanding under-standing not (o compote, which is defended as a principle of banking ethics' Together they have with a few exceptions preempted the banking business of the important railways of the count o in Chicago this inner group associates asso-ciates with and makes Issues of securities se-curities in joint account, or through underwriting participations primarily with the First National bank and the Illinois Trut & Savings bank, and has more or less friendly business relations with the Continental and '"onimercial National bank, which participates in the underwriting of security issues by the inner group These are the three largest financial institutions in Chicago, with combined resources of $561,000,000 Power of Smaller Banks. "The patronage thus proceedings ! from the Inner group and its subgroups sub-groups is ot great alue to these i banks and bankers, who are thus tied j by self Interest to the great issuing bouses and may le regarded as a part Of this vasi financial organizations " Concluding its findings as to the existence of a money truJt, the committee com-mittee said: "Your are conxineed that, however well founded may be the assurances i good intentions b those now holding hold-ing the places of power which have been thus created, the situation is Iraught with too great peril to our institutions to be tolerated." Control Issues on Securities Discussing the control of Issues on securities by this so-called money trust, the report said "Through their powei and domination domina-tion over so manv of the large-t financial fi-nancial Institutions, which, as buyers, buy-ers, underwriters, distributors, or Investors, In-vestors, constitute the principal first outlets for security issues, the inner group and its allies have drawn to themselves practically the sole marketing mar-keting of the issues of the greater i Iroad producing and trading, and publii utility corporations, which in i oi sc.; 1 1 n r .- have no open market in which to appeal, and from this position posi-tion of vantage, fortified by the con- 1 trol exerted by them through voting, trusts, representation in directorates.' stock holdings, lical agencies, and Other relations they have been abl I in turn to direct the deposits and oth-: e patronage of such corporations to these same financial institutions,! thereby strengthening the lnstruj nients through which they work." Interlocking Directorates. i The repon con temned interlocking directorates and consolidations aud I devoted constelerable space to a slate, nient showing the development of control through these agencies in New York institutions "It Is manifestly Improper," said the report, "and repugnant to the thcorv land practice of competition that the I same person or members of the same firm shall undertake to act in such inconsistent in-consistent capacities" Voting Trust Condemned The report condemns the use of voting trusts In the control of financial finan-cial Institutions, and criticizes private lhaukers in the capacitv of depositaries deposi-taries for Interstate corporations The recommendations of the com-jmittee, com-jmittee, as set forth in the report, and . embraced in the bills accompanying accompany-ing the report, urged the following reforms Reforms Urged. Clearing house association oi which national banks are members should he required to become, bodies corporate of the states in which they arc loated and every solvent and properly managed bank or trust company com-pany should have the right, enforceable enforce-able at law, to become and remain a mcmlitr. 'Regular periodical examinations of j member? by a committee of the clear Ing house association shodd be pro-hinted pro-hinted and iDstead all such exani- ! Inaticms should be- conducted by pub- ' 11c authorities." The committee would give- the gov. 'ernment supervision of cleAring house. I certificates and would prohibit tho fixing of ratos by clearing houses for I the collection of out-of-town checks, discount or interest on deposits. New York Stock Exchange. "As to the New York Stock ox-cbangw, ox-cbangw, the committee rocommended: "That congress prohibit the transmission trans-mission by th malls or by telegraph or telephone from one state to an-o;her an-o;her of orders to buy or sell or quotations quo-tations or other information concerning concern-ing transactions on anv stock exchange, ex-change, and also provisional banks from buying, selling or lending upon the security of stocks or bonds listed 'on any stock exchange unless such a e-Nchange wre a bodv corporate of tho state or territory in which It Is located. "Require- corporations whose securities se-curities It tthe stock exchange) (lists," the report continues, "to make a complete disclosure of their affairs, in particular any commission paid to promoters middleman or bankers, out of any such securit v interest or the proceeds thereof. Require a margin of not less than 2u per cent on all purchases of stock "Prohibit as far as possible the execution of simultaneous or suh. stantially simultaneous orders pro-eeeeling pro-eeeeling from the same person or persons per-sons to buy or sell the same security for the purpose of creating an appearance appear-ance of activity therein, and anv orders or-ders the purpose of which Is to in flate or depress the price of any so- curity. 'Prohibit members from pU-dgln 5 securities purchased and carried for' a customer for an amount gTcatcr than the unpaid fortune of the purchase pur-chase piiee, whether with or without, the consent of such cuftomei Prohibit members from lending tn ! other members securities t arried by the former for customers, whether woh or without the customer's consent. con-sent. State Conditions in Charter. "State in Its charter tho conditions ,nn which Issues of securities shall be admitted or removed from the trading , 111 t and pro, ide for a judicial review I of It? action in this regard. "Keep books of account, showing thf actual names and transactions of I I customers and give access thereto to! the postmaster general ' Among the recommendations fori the restriction of national banks, the committee et forth twenty-tAo regulations regu-lations These w-ere- Consolidation Prohibited. The prohibition of the eonsollda-lion eonsollda-lion of two or more banks without tho Bpprovad of the comptroller of the currency prohibition of directors serving on the boards of more than j one bank in the same community or locality; forbidding ownership of. stock on one national bank by nn-other nn-other bank or trust eompan for-bidding for-bidding cotini: irusts in the control 1 of banks; providing for cumulative voting in the election of national bank directors; forbidding security holding companies as adjuncts to national banks forbidding interstate corporations corpora-tions from constituting anv banking: establishment their sole fiscal agents: j j forbidding interstate corporations to deposit funds with "unsupervised, un. regulated, private bankers'; forbid- 1 ding national banks from engaging in underwriting syndicates; allowing national na-tional banks to invest twenty-five per cet of their capital in state, city, county or corporation mortgage bonds j If tho corporation Issues have paid Interest regularly for fhe vears, reform re-form of the system of railroad reorganizations reor-ganizations to conform with the; scheme outlined In the British law j which places reorganization under the control of the courts, giving the Interstate In-terstate commerce commission the power to supervise reorganization plans; placing railroad security issues under the control of the commission and providing for competitive bidding I of such issues forbidding officers of national hanks from borrowing from 1 their banks providing for publicity for loans made by a director from his I bank forbidding national bank officers offi-cers and directors from participating In underwrltintr syndicates making It a crime for officers or directors to accept anv compensation for loaninc a bank's funds; limiting the number of directors of national banks to not lesp than flv or more than thirteen. I providing publicity for the assets and j for the stockholding lists of national banks Committee Presents Two Bills, The two bills presented by the com-Imittee com-Imittee deal with the national banks land with slock exchanges. The firrt embodies Hie committees recommendation recommen-dation as to control of clearing houses, hous-es, cumulative voting for directors,' forbidding loans to aid in comblna-I lions to restrain trade, limiting the' 'number of bank directors, regulating' loans by national banks to officers and directors; forbidding Interior king I directorates in banks and nationall banks or officers from participating! In underwriting syndicates, and providing pro-viding a fine of five thousand dollars and imprisonment for two years for vlo'atlon The second bin embodies all of the recommendations of the committee as to rtock exchanges and fixes penalties penal-ties for violation. |