Crime of 1933

CONGRESSIONAL RECORD - BOUND EDITION

2. May 5, 1933

Volume and Section: Vol. 77, Part 3 - Senate

Pages: 2910-2961

The reason for bringing about the panic of 1907, the

methods of conducting it on the New York Stock Exchange,

and the disastrous results of it to the whole country constituted such a :flagrant crime against society that the

United States Senate in 1908 started an investigation of

"wash sales"; that is, of bogus sales made for the purpose

of misleading and defrauding the people. Abuses along this

line were so palpable, and the evidence so indisputable, that

the representatives of the New York Stock Exchange appeared before the Senate committee and agreed to prevent

the continuance of that abuse. The investigation was

therefore stopped and no record kept of the matter. But

after 24 years the same practice in a different form, true

enough, was, in the evidence produced before the Senate

committee of the Seventy-second Congress U932) under

the chairmanship of Senator NORBECK, shown still to exist

on a very large scale. 

Should this bill slip through with the " joker " undetected, it

is my prediction that section 14 in later years will be known as the " crime of 1933 "-for it was in some similar manner, if my

reading of history ls correct, that the Congress 60 years ago was led to demonetize silver, now known as the "crime of 1873." A great responsibility rests upon the few Members of the House

and Senate who are able to discern the meaning of this proposal

to turn all American financing over to Wall Street. If they can make the majority understand what section 14 means, they. will

save this country from a great catastrophe.

I hope you and your assaciates will be able to make this situation clear and prevent the enactment of legislation that will en- courage fraud, penalize all investors, and make the New York

Stock Exchange (a private club of rather unsavory reputation) an actual part of the Government of the United States.

Most sincerely, LEON STARMONT.

SPOKANE, WASH., April 13, 1933.

The honorable SAMUEL B. Hn.L,

House of Representatives, Washington, D.C.

DEAR JUDGE: I wrote you at some length yesterday discussing,

among other things, the open invitation to fraud which the Federal securities bill presents by exempting stocks already issued. In one of the newspapers publishing Paul Mallon's National

Whirligig feature I note this sentence:

"The clause making old securities subject to Federal scrutiny

will probably be eliminated. Wall Street kicked up too much

fuss." 

If you can get the Members from the West, South, and Middle

West to understand that section 14 makes Wall Street the absolute dictator of national financing, you can kill this bill. Mallon

is beginning to see the light. If the New York Stock Exchange can do as it pleases, of course, Wall Street is going to welcome

this bill, while making some public pother about "accepting" its

restrictions.

Nothing is restricted, as the bill now stands, except honest

business. The stock crooks and racketeers can get away wit!l

murder. The financial underworld will reign supreme.

Sincerely, LEON STARMONT.

Mr. RAYBURN. Mr. Chairman, I ;'7ield 5 minutes to the

gentleman from Wisconsin [Mr. REILLY].

Mr. REILLY. Mr. Chairman, I shall vote for the pending

bill, because I believe it to be a step in the right direction.

Wisconsin, the State that I have the honor to represent in

part on the floor of this House, had a blue sky law for

many years. The fact of the matter is Wisconsin was one

of the pioneer States in the Union to attempt by legislation

to protect her citizens from being imposed upon through the

sale of unsound and worthless securities. 

Mr. MOTT. Will the gentleman yield?

Mr. BLACK. No; I do not have time.

I think we are doing the usual thing when we do not want

to enforce laws. We pass another one. I say it will do the

country more good and restore the confidence of the people

quicker than any statute if this Congress would appropriate

a large sum of money to organize a :flying squad for the

prosecution of every· case under the mail-fraud section

where the amounts involved are large. Let the Attorney

General get a special crew of lawyers; let the Post Office

Department assign to them a special crew of post-office inspectors and take the information they get from the Senate

committee and go out and indict and convict them. We

will not need this law to restore confidence. There have

been plenty of violations of the mail-fraud section already

evidenced before the Senate committee. The men who have

done those things are men of high-sounding names.

They are men responsible for the crash. I said from the

beginning you would not restore confidence in the banks,

you would not restore prosperity in this country, until the

men who have been leading the financial situation of the

country, who have been involved in violations of law, are

convicted of crimes. You will not convict them by passing

new laws. Let the Attorney General be directed to enforce

all the present laws and not take up the time of Congress

in passing a new ·law as is usµally done when they do not

want to enforce the laws on the statute books. Take some

of the big bankers from behind the bank cages ~nd put them

in others. 

Source congress.gov

CONGRESSIONAL RECORD - BOUND EDITION

1. January 16, 1939

Volume and Section: Vol. 84, Part 1 - Senate

Pages: 349-382

:Mr. SHEPPARD. Mr. PresidentThe VICE PRESIDENT. Today being the anniversary of

the adoption of the eighteenth amendment, the Chair recognizes the Senator from Texas [:Mr. SHEPPARD] on ''the crime of

1933."

Mr. LOGAN. Mr. PresidentThe VICE PRESIDENT. Does the Senator from Texas

yield to the Senator from Kentucky?

Mr. SHEPPARD. I yield for morning business, although

I will hold the floor.

EXPANSION OF CREDIT AND CURRENCY-LETTER FROM EUGENE E.

GREESON

:Mr. LOGAN. Mr. President, early in the present session

I introduced a bill to amend the Federal Reserve Act. A few

days later the Wall Street Journal published an editorial criticizing the bill. A gentleman by the name of Eugene E. Greeson wrote a letter to the Wall Street Journal criticizing the

editorial. I ask unanimous consent to have a copy of that

letter inserted in the RECORD as part of my remarks.

There being no objection, the letter was ordered to be

.printed in the RECORD, as follows:

WASHINGTON, D. C., January 11, 1939.

WALL STREET JoURNAL,

New YOTk, N. Y.

(Attention Mr. Woodlock)

DE. .. R MR. WooDLOCK: In the Wall Street Journal's editorial The

Cart and the Horse of January 7 appears a criticism of a bill introduced by Senator M. M. LoGAN, former attorney general of Kentucky and chief justice of the Kentucky Court of Appeals. The

editorial suggests that he is putting the cart before the horse in

advocating an annua1 expansion of 4 percent of credit and cur- . rency over the amount outstanding the preceding year to supply

the country with an amount of money equal to the normal expansion of the capacity of the country to produce. You assert that

bank credit (demand bank deposits) follows production and does I not precede it.

The tables of the Department of Labor repeatedly put in the

hearings before the Banking and Currency Committee of the House , of Representatives demonstrate that within from 30 to 60 days factory employment and factory wages rise as the volume of money

rises and fall as the volume of money falls. In these tables the volume of money is indicated by the all-commodity index, some- ' times called the price level. This all-commodity index is based 1 upon a fixed volume of 784 commodities multiplied by the average

price, severally, of each commodity, giving a total volume of money , so employed in 1926 of $54,700,000,000 as a basis of comparison with

later years. The present all-commodity index of 77, approximately, means that the total amount of money required to buy th,e same volunie of commodities as in 1926 at the prices of 1938 was 77 per- cent of $54,700,000,000. The price level merely represents the vol- ume of money actually employed in the manner described in any one year as compared to the standards of 1926.

It is obvious that you do not understand this and do not know

the facts; otherwise you could not conscientiously make the state- ment that the Logan proposal puts the cart before the horse, when

your edit orial does just that. 

Your statement that the banks do not create credit is contra- dicted by Marriner Eccles, Chairman of the Board of Governors of

the Federal Reserve System. All informed bankers now know this,

and it is too late to attempt to contradict it.

For your information I call your attention to page 126 of the

hearings before the House Committee on Banking and Currency on H. R. 7230, where the facts to which I refer are established from

the evidence of the Department of Labor and from the files of the

Federal Reserve Board. I am sending you a copy of the hearings

under separate cover. It has been a lack of the general knowledge of these facts that accounts for the disaster which has taken place in America in the

depressions which have invariably followed the contraction of the

money supply by the banks contracting loans to industry and com- merce. Loans were contracted from $41,600,000,000 in June 1929 to $21,200,000,000 by December 31, 1932, a contraction of over $20,- . 000,000,000. This contraction of $20,000,000,000 resulted in the

depression which has afflicted us and the suspension of all the

banks in March 1933.

Yours respectfully,

EUGENE E. GREESON.

Source congress.gov

Crime of 1965, removing silver content of coinage.

Crime of 1971, Richard Nixon closing the Gold Window.