Wall Street Week

P: Robert Albert Haughey (pronounced Hoy) went neither to Groton nor Harvard, but did put in "a few years" at Muhlenberg College. He plays poor golf, does not ride to hounds, has no relatives at J. P. Morgan's. At 27 he has been in Wall Street barely long enough to learn the ropes with his Uncle Harold at Hoppin Bros. Last week young Broker Haughey found himself scheduled to get Richard Whitney's seat on the New York Stock Exchange.. He had not asked for it, had merely filed a bid of $59,000. Since this was $7,000 above the previous sale, which had set a 20-year low, the Exchange quickly accepted it. With Dick Whitney just leaving for Sing Sing (see p. 37), his seat was the one Broker Haughey got. Dick Whitney paid $65,000 for it in 1912.

P: In 1792, when 24 brokers got together under a buttonwood tree at what is now 68 Wall Street, a "seat" meant a seat in the trading hall. But as the Exchange expanded, seats became valuable less as certificates of participation in the tangible assets of the Exchange than as indications of the earning power and condition of the market. Seats were first offered for sale in 1868 when membership stood at 500. During the '70s they sold at about $5,000. By 1929 membership was up to the present 1,375, price of a seat reached $625,000. For his $59,000 Robert Haughey gets no seat, merely a letter signed by the secretary of the Exchange notifying him that he has been elected a member. He will then sign the constitution of the Exchange, may hang in his office an etching of the Exchange signed by the president. From 1930 to 1935 Richard Whitney signed about 2,000 such etchings. By last week the Exchange had quietly recalled 200 of them, substituted the name of the present president, Charles R., Gay.

P: The New York Attorney General's office last week began hearings on the dealings of the Wall Street firm of Prentice & Brady, which began voluntary liquidation on April 1. Partners Sartell Prentice and Jerome C. Brady refused to testify, but their cashier stated that the firm had been guilty of "over-hypothecation" of customers' securities, that no customer had sustained a loss.

P: SEC last week scheduled public hearings to question Morgan Partners George Whitney, Francis Bartow and Harry Davison on their knowledge of Richard Whitney's failure. Called to the stand meanwhile was Dick Whitney's predecessor as president of the Exchange, Edward H. H. Simmons, who testified that he knew last November that Dick Whitney had been using the Stock Exchange Gratuity Fund improperly but had not reported it to his fellow Exchange governors because George Whitney made good the deficit. Asked if he considered this the full measure of his duty, he remarked: "It is easy to see now that one's error in judgment might be criticized. But knowing Richard Whitney as I knew him, it seemed then he was above any criticism. That was the basis of my action ... I am still stunned."

P: Filed with President Gay last week, but not made public, was a report of a committee appointed to recommend some way to bond officers or insure market accounts against failure of a firm.

P: Three months ago a Stock Exchange committee headed by Chairman Carle Conway of Continental Can Co. recommended a complete reorganization of the Exchange, the hiring of a paid president (TIME, Feb. 7). Last week, in accord with this new formula, the nominating committee of the Exchange nominated 28 brokers as its slate for the new board of governors to be elected May 9. Since nomination is practically tantamount to election, Wall Street buzzed when it discovered that only 13 of the present governing committee were on the list, that President Gay and onetime President Simmons were unmentioned, that all the "Old Guard" dominance was dissipated. Nominated for chairman was 31-year-old William McChesney Martin Jr., son of the governor of the Federal Reserve Bank of St. Louis. A 1928 Yale-man, bespectacled Broker Martin is a partner of A. G. Edwards & Sons, the youngest Wall Streeter ever slated for such an important Exchange job, a liberal.

P: "Any realistic approach to the problems confronting exchanges must soon meet the question as to whether the exchanges should attempt to provide a livelihood for their present huge memberships. In short, are the exchanges attempting to feed too many mouths?" So wondered SEC Chairman William O. Douglas last fall in his blast at the New York Exchange (TIME, Dec. 6). No. 1 result of that blast was the Exchange's decision to reorganize its management. On the relatively minor point of membership, President Gay two months ago appointed a committee of three "to study the feasibility of formulating a plan for the retirement ... of a substantial number of Exchange memberships." Last week the report was ready.

In 1929, when the membership rose to 1,375, average daily turnover of 3,700,000 shares fed every mouth to bursting. But average daily volume in 1937 was a puny 1,300,000 shares. And last fortnight Commercial & Financial Chronicle revealed that new corporate financing in the first three months of 1938 totaled but $111,000,000 against $388,000,000 in the same period last year, $2,500,000,000 in the same period of 1929. Last week President Gay's committee suggested that membership be reduced by the simple method of buying up seats with money obtained: 1) by a $1,000,000 outright contribution by the Exchange; 2) by a small tax on transactions; 3) by an annual contribution of no more than $250 from each member.

P: The New York Stock Exchange last week cut salaries of all its employes 5% to 12%.

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