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Monthly Meeting, Thursday, March 6, 1913.

A regular monthly meeting of the Chamber of Commerce was held in the Hall of the Chamber on Thursday, March 6, 1913, at half past twelve o'clock, P. M.

PRESENT.

John CLAFLIN, President.
JAMES Talcott,

Vice-Presidents.
Frank K. STURGIS, )
SERENO S. PRATT, Secretary.

And two hundred and twenty other members of the Chamber.

MR. MARCUS WALLENBERG of Sweden occupied a seat on the dais by the side of the President.

The minutes of the regular meeting of February 6th and the adjourned meeting of February 13th were read and approved.

REPORTS OF STANDING COMMITTEES.

JAMES G. CANNOx, Chairman of the Executive Committee reported the following named candidates for membership and recommended their election :

FOR RESIDENT MEMBERS.

JOHN ASPEGREN,
ROBERT Low Bacon,
TURNER A. BEALL,
Isaac W. ('OKEFAIR,
CLARENCE W. ECKARDT,
MACOMB G. FOSTER,
CHARLES H. HOLLAND,
WILLIAM T. NOONAN,
CARL L. VIETOR,

Nominated by

Seconded by
WILLIAM H. DOUGLAS, FRANK A. FERRIS.
ROBERT BACON,

HENRY P. DAVISON.
WM. Willis MERRILL, WELDING Ring.
FRED B. DALZELL, J. HENRY DEEVES.
ALFRED E. MARLING, Noah C. ROGERS.
SANEL W. FAIRCHILD, WM. HULL WICKHAM.
('ECIL F. SHALLCROSS, EDMUND DWIGHT.
ADRIAN ISELIN, JR., SAMUEL WOOLVERTON.
Thomas F. VIETOR, HENRY A. CAESAR.

FRANK W. JESUP and CHARLES T. GWYNNE being appointed tellers a ballot was taken, resulting in the election of these candidates for membership.

PROPOSED STOCK EXCHANGE LEGISLATION.

JOSEPH FRENCH JOHNson on behalf of the Committee on Finance and Currency, presented the following report and moved its adoption :

To the Chamber of Commerce :

Your committee has examined the twelve bills affecting the business and organization of Stock Exchanges which are now pending in the Legislature. The committee is in sympathy with their general purpose, in so far as they constitute an attempt to remedy abuses which may exist, although there are objectionable features in many of them. Your committee is, however, of the opinion that three in particular should receive immediate consideration by the Chamber of Commerce of the State of New York. Of these one extends the law of usury to call loans secured by collateral, another provides for the compulsory incorporation of all Stock Exchanges, and a third increases the tax on sales of stocks from two cents to four cents per $100.

The bill relating to usury makes void and usurious any contract for the loan of money upon demand at a rate of interest exceeding 15 per cent. per annum. We are in hearty sympathy with the purpose aimed at in this bill, namely, a more stable call loan market in New York City, but we are convinced that the legislation here proposed would aggravate rather than ameliorate existing conditions. The wide fluctuations of the call loan rate of interest in this city are the product of forces and circumstances not subject to regulation or correction by the Legislature of this or any other state. Until Congress shall amend the banking system of the United States, in some such manner as was urged by the Chamber in 1906, and make possible the creation of a market for the rediscount of liquid banking assets, the New York money market must remain liable to abnormal credit conditions. Any law limiting the rate of interest that may be charged for advances to protect endangered property in times of stress would cause serious loss to investors and be otherwise harmful.

The stock transfer tax law enacted in 1905 is notoriously unsound in principle and unjust in its incidence, and was unqualifiedly disapproved by the Chamber in a resolution unanimously adopted on April 6, 1905. This tax is collected almost exclusively from New York City; for the Comptroller's office, not being adequately equipped for the inspection of corporation books throughout the state, is compelled to rely on the co-operation of the Stock Exchanges and large corporations having transfer offices in New York City. We believe that the proposal to double the rate of tax is a serious menace to the commercial and financial supremacy of New York City :

First. It will still further lessen that legitimate trading on the Stock Exchange which is absolutely essential to the existence of a broad, reliable and receptive market for securities.

Second. It will stimulate the development of Stock Exchange business in rival cities at the expense of New York.

Third. It will cause many foreign corporations to protect their shareholders by opening transfer offices in other cities.

Fourth. It will have the effect that many orders for the purchase of securities which normally would be consummated here, will be executed in other cities, including London.

Fifth. Because of the narrowing of the stock market in this city and the lessened activity in trading, banking capital will be inevitably attracted to other cities, to the detriment of local business interests.

In view of such sinister considerations as the foregoing, even though it be granted that they indicate tendencies and possibilities rather than demonstrable actualities, we submit that only a most serious emergency could justify the Legislature in subjecting the financial and business interests of New York City to additional and undeserved hazard.

Furthermore, we believe that as a revenue measure the proposed doubling of the tax rate would be disappointing. Since it would certainly reduce the volume of sales on the Exchanges and of transfers on the books of foreign corporations in this city, its net effect might even be a reduction of the state's revenue from this tax.

The bill providing for the incorporation of Stock Exchanges seems to us to be based upon a false conception of the nature and functions of Stock Exchanges. These bodies are voluntary associations of individuals organized by agreement for the purpose of facilitating trade in securities. The Exchange itself transacts no business that requires governmental inspection or control. It merely provides a meeting place for its members and enforces the observance of such ethical standards as generations of experience have proved most equitable and expedient. All the business of public interest done on the floor of a Stock Exchange is transacted by members individually, and no one of them because of his Stock Exchange membership can claim immunity in the slightest degree from the laws of state or nation. We

e are therefore, unable to discover any advantage which can accrue to the public from the incorporation of Exchanges.

We find, on the contrary, reasons for believing that such incorporation would be prejudicial to the interests of both the public and the New York Stock Exchange. This exchange is one of the greatest security markets in the world. Transactions on its floor are given the widest publicity. The members are liable to instant discipline if they violate the code of honorable conduct which they themselves have created. As a result its record of members' transactions is accepted without question throughout the world. In our judgment it is most important that the present high standing of the exchange should not be endangered. We, therefore, condemn the proposal that it be incorporated, for as a corporate body its internal organization, its ethical standards and its discipline of members would be subject to continual review by the courts and revision by the legislature, with the result

that litigation would be encouraged, the disciplinary authority of the exchange weakened, and its standard of business behavior debased.

We, therefore, submit the following preamble and resolutions :

Whereas, The bill to amend the usury law of this state being No. 638 in the Senate and No. 863 in the Assembly, is economically unsound, and in times of financial stress would result in serious loss to investors and be otherwise harmful; and

Whereas, The bill to double the tax on stock sales, being No. 983 in the Senate and No. 1229 in the Assembly, is without justification in principle or in expediency as a revenue producing measure, and would hamper if not positively check the commercial and financial growth of New York City; and

Whereas, The bill providing for the compulsory incorporation of Stock Exchanges, being No. 833 in the Senate and No. 1068 in the Assembly, is unwise and unjust, and could only result in crippling the management and lowering the tone of Stock Exchanges; therefore be it

Resolved, That the Chamber of Commerce of the State of New York opposes these bills for the reason that they fall in the class of that “ill considered legislation which Governor SULZER, in his message relating to Stock Exchange affairs, declared "might result in serious harm to the financial supremacy of the state, have a tendency to drive capital away from New York and might disorganize the large operations of legitimate business now centered in this state to the detriment of its citizens and the commonwealth generally ”; and be it further

Resolved, That copies of this report and accompanying preamble and resolutions be sent to the Governor of the State and the members of the Legislature.

GEORGE B. CORTELYOU,
JOSEPH FRENCH JOHNSON,
FRANCIS L. HINE,
ALBERT H. WIGGIN,
MORTIMER L. SCHIFF,

Of the

Committee on Finance and Currency.

NEW YORK, March 4, 191.3.

Dr. Johnson in presenting the report suggested that a vote be taken on each of its three recommendations. This course was adopted, the votes resulting in the adoption unanimously of that portion of the report relating to the usury bill, and in the adoption with only one dissenting vote of the parts relating to the stock sales bill and the incorporation of Stock Exchanges.

ONE CENT LETTER POSTAGE.

SAMUEL W. FAIRCHILD, Chairman of the Committee on Internal Trade and Improvements, presented the following report and moved its adoption :

To the Chamber of Commerce :

In a report submitted to the Chamber by the Committee on Internal Trade and Improvements and unanimously adopted March 2, 1911, the establishment of a parcels post in connection with the rural free delivery was urged; and the hope was expressed that as soon as the annual deficit in the postal receipts was wiped out, one cent letter postage should be instituted.

Since the adoption of that report the parcels post bas been established, and the deficit in Post Office Department has been removed. In the fiscal year, ending June 30, 1911, the postal revenues were $237,879,823.60 leaving a surplus over disbursements of $219,118.12.

In the fiscal year ending June 30, 1912, the revenues were $246,744,015.86 but this was not quite sufficient to meet expenditures. The deficit, however, was only $1,785,523.10 and Postmaster General HITCHCOCK, to whose administration is due the credit of the great achievement of making the Post Office Department self supporting, says, that the deficit was due to the large revenue losses resulting from the exceptionally large mailings of franked matter in the political campaign of last year. Moreover, these losses were merely temporary, and during the past few months the Post Office income has again outstripped its expenses. This result has been attained in spite of the fact that a great loss is sustained in the handling of second class mail.

The burden of carrying the second class mail at one cent a pound is practically thrown upon the first class mail, which is now carried at two cents an ounce. The latter yields a big surplus of income; the former involves a big loss, the extent of which is indicated by the report of the special commission headed by Justice HUGHES, which investigated this subject, and reported that the cost of transporting second class mail was approximately six cents a pound. The recommendation that the rate be increased from one to two cents a pound was therefore reasonable and just. In view of these facts your committee believes that the time has come for a reduction of letter postage to one cent per ounce. While the Post Office Department should not be operated year after year at a loss, the carrying of the mails is not a commercial enterprise, and there is no reason why it should be a source of profit to the country. The revenue from first class mail in the fiscal year 1911 amounted to $162,000,000 of which $62,000,000 was estimated profit, so that the letter postage has been very profitable to the department, which profit as already shown has been absorbed by the excess expenditures incurred in the carrying of other classes.

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