U. S. Revelations

The curiosity of the U. S. Government about business, long overflowing, last week seemed about to burst the last innermost of business privacy. The number of major Government investigations simultaneously descending on business broke all records.

Brokers. Besides its investigation of Manhattan's Chase National Bank and its investigation of Associated Gas & Electric Co. already afoot, the Senate Committee opened still another investigation. Inquisitor Ferdinand Pecora sent the New York Stock Exchange a questionnaire so exhaustive that it would have required practically a complete audit of the books of all the Exchange's members, a study of some 10,000,000 accounts of customers with brokers. The Exchange refused to answer, saying it had no authority to gather such information. Promptly a dozen prominent brokers were summoned to Washington for questioning and Inquisitor Pecora threatened to subpoena all 1,375 members. The brokers went, told the committee that it would cost $5,000,000 to examine their records for all the data requested, offered to answer a more reasonable questionnaire confined to larger accounts, not requiring a complete re-audit of books for the last five years. Relenting, Mr. Pecora prepared new questionnaires to send to all 1,375 members.

Stock Exchange. Meantime the President had under way his own investigation of the New York Stock Exchange--an investigation conducted by a committee consisting of Professor John Dickinson, Assistant Secretary of Commerce, Undersecretary of the Treasury Dean Acheson, Braintruster Adolf Augustus Berle Jr., and Arthur Dean of the law firm of Sullivan & Cromwell. Their purpose: not to drag scandal to public view but to see how the Exchange's merits balance its demerits, to recommend under what form it should be allowed to continue to exist.

Salaries. The Federal Trade Commission last week began sending out questionnaires to all companies whose capital or assets exceed $1,000,000 and whose shares are listed on the New York Stock Exchange or New York Curb. The questionnaires require information on all salaries and compensation paid to officers and directors during the last five years. Already the Government has this information on personal income tax returns. Evident purpose of the Trade Commission's inquiry, authorized by resolution at the special session of Congress, is to make salaries of all important executives public, perhaps lead to regulation of salaries such as the limit of $60,000 placed on railroad presidents by Railroad Dictator Eastman.

Bankruptcy. A committee of the House of Representatives investigating bankruptcy practices last week got under way in Manhattan with an investigation of Irving Trust Co. which since 1929 has been appointed a standing receiver in bankruptcy in cases arising in the Federal Courts of the Southern District of New York. Representative Celler of New York, setting out to prove this "monopoly," found that since its appointment Irving Trust has paid $3,486,000 in legal fees to 361 lawyers for handling 4,419 bankruptcy cases, that the firm of Cravath, deGersdorff, Swaine & Wood got most ($409,000 for handling eleven cases) ; that four firms got over $1,000,000 of the total; that the bank holds $21,000,000 deposits for bankrupts in liquidation. Irving Trust as trustee for certain bankrupts filed claims of $778,000,000 against itself as trustee for other bankrupts.

Judge John Clark Knox, senior member of U. S. District Court, testified that the conditions of bankruptcy administration before the Irving Trust's appointment were corrupt and disgraceful, "had given the court a black eye," that the judges had asked the Irving Trust to become standing receiver "as a public service." that while the new system might not be perfect, Irving Trust had done a good job, ended a racket.

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