Wall Street Wars by Richard Farley

Author:Richard Farley
Language: eng
Format: epub
Publisher: Regan Arts.
Published: 2015-10-29T16:00:00+00:00

MR. DAY:

Mr. Kennedy is a capitalist or well-known private citizen.

MR. PECORA:

Do you know what his business is?

MR. DAY:

I don’t think he has a business.

MR. PECORA:

When you say he is a capitalist, does that cover your understanding of what his business is?

MR. DAY:

Well, I do not know. My understanding of a capitalist is somebody who has considerable funds and does not have to work.

MR. PECORA:

I am not a capitalist.

MR. DAY:

Neither am I, sir.123

The Senate hearing room broke out in laughter. No one in the hearing room that day—certainly not Ferdinand Pecora—would have guessed that in a little more than four months, Pecora would be working for Joseph P. Kennedy.

Prior to the formation of the pool, Libbey-Owens Ford was a thinly traded stock. Once the pool commenced operations, trading volume in the stock skyrocketed, with price movements that were difficult to comprehend. This practice, known as “jiggling,” drew attention to a stock. But the pool proved only moderately successful. During the four months of its operation, the stock of Libbey-Owens Ford rose from $27 per share to $37 per share, with resulting profit to the pool of about $7,000,000 in today’s dollars.124

The Repeal stock investigation had accomplished what Fletcher and Pecora had hoped. Whitney’s pronouncements on the efficacy of self-regulation were now openly lampooned. The Senate Banking and Currency Committee was now ready to commence hearings on the Fletcher-Rayburn bill.

On February 21, Senator Fletcher took to the floor of the Senate and harshly criticized Richard Whitney and the New York Stock Exchange’s lobbying campaign against the bill. “The propaganda released by the Exchange officials is intended,” said Fletcher, “to persuade the people that regulation of that Exchange and the other exchanges by the federal government will hurt business. Whose business? Only that of bankers who have lined their pockets by disregarding the interests of their customers. Government regulation certainly will hurt the market operators and speculators who have used the facilities of the stock exchanges of the country to mullet the public out of millions and in sum total out of billions of dollars. But regulation will not hurt the investor or the business man.”

Two days after Fletcher’s floor speech, Whitney gave an exclusive interview to The New York Times to answer the charges. “I think the charge is unfounded,” said Whitney. “I summarized the provisions of the bill and asked the presidents of the corporations having stock listed on the New York Stock Exchange to give the matter their personal consideration. I think every citizen has the right to call to the attention of other citizens the provisions of pending legislation which would affect them. In this case, I feel the Exchange was under a duty to do so. The corporations listed on the Exchange had paid a fee to secure a public market for their securities. The pending bill would destroy this public market and would force many corporations to withdraw from listing. I think we would have been derelict in our duty if we had not called the bill to their attention.

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