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Many times we are asked to use our own judgment in making a selection of stocks to be bought or sold, and also as to price, but we cannot use our discretion in this as such a proceeding is very apt to result in misunderstanding and ill feeling at one time or another.

REPORTS AND STATEMENTS

Reports of purchases and sales are mailed on the evening of the day on which the transaction is made and statements of accounts are rendered monthly where there has been any change, or as often as the customer may desire.

All of the details of transactions are looked after by the broker. These include borrowing and loaning the stock and borrowing and loaning money to carry on the transaction. All that is required of the customer is to deposit the necessary funds and give orders to buy or sell.

While we do not confine our business to "fractional lot" trading, we will be pleased to accept orders for the purchase or sale of stocks for cash in any amount from one share upward and will carry on margin stocks traded in on the New York Stock Exchange in lots of five shares or more.

BUYING AND SELLING TO SUPPORT THE MARKET 1

"EXHIBIT NO. 1321"

During the course of the Pujo investigation at Washington last December, testimony was submitted showing the stock market operations of the syndicate that was formed to sell $5,000,000 California Petroleum stock, which had been received as a bonus. The following figures were taken from the exhibit, showing the number of shares of California Petroleum traded in by the syndicate managers between October 5, 1912, and October 31, the buying orders being placed to support the market in weak spots until the 50,000 shares were unloaded:

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1 From New York Evening Post of February 8, 1913.

STOCK-POOLING AGREEMENT

Commenting on this stock-pooling agreement, the New York Evening World (issue of January 24, 1910), from which this agreement is printed, says: "The Evening World herewith presents for consideration by the State Legislature the brokers' agreement in the Hocking Valley pool which ended in three failures, carrying liabilities of upward of $7,000,000. For eleven months this pool continued under the eyes of the Stock Exchange governors, who saw a stock which has not paid three per cent. of dividend in its whole corporate existence inflated from $20 to $91.25 a share. How much further the inflation would have been carried had one of the gamblers not played traitor to his pals it is impossible to say. That the expectation of the pool was to jump the stock to par is not denied . . . The number of shares stated in the agreement does not represent the actual total of shares accumulated and controlled by the pool. As a matter of fact, the pool bought 5,000 more shares of the stock than had been issued. The agreement calls for the termination of the pool on September 1, but it was extended through an exchange of mutual pledges until March next. The time for the big public melon cutting had not yet arrived.

The Evening World is enabled to give the names of six of the dozen or more firms in the combination. They are:

Lathrop, Haskins & Co., Roberts, Hall & Cris, A. J. Elias & Co., J. M. Fiske & Co., Day, Adams & Co., Rollins & Co.

The common stock of the Hocking Valley amounts to $6,981,100. On the basis of 20, when the pool came into existence, the market value was $1,396,220. By pool manipulation the value was inflated to more than $5,000,000.

Here are the terms of the agreement:

The undersigned being desirous of purchasing at least 20,000 shares of the common stock of the Columbus and Hocking Coal and Iron Company, do hereby agree to purchase the same, or so much thereof as in the opinion of the hereinafter appointed managers may be deemed advisable in the proportion set opposite the respective names of the said subscribers, and we hereby appoint..

our agent and manager to make such purchases at such time or times before the first day of September, 1909, unless sooner dissolved by the majority of the stock subscribed, in such manner and amount and at such prices as in his judgment shall be to our mutual advantage.

Each one signing this agreement to pay on demand for so much of said purchases as his subscription (as near as may be practicable) bears to the whole amount subscribed, as such agent or manager may require. Also to return the same amount of certificates or part thereof at any time when called for before the first day of September, 1909, on receiving from the manager the amount paid therefor, with interest at 5 per cent. per annum. We further agree on any call from said manager to deliver to the said manager the same certificates theretofore delivered to us by him.

Further we hereby authorize the said agent and manager to sell at his discretion the whole or any part of the certificates purchased and again buy, so buying and selling at his discretion.

It is further agreed that any profits or losses incurred through the purchase and sale of said certificates shall be divided in proportion to the amount subscribed for by each one signing this agreement. No one signing this agreement shall have the right to call for a statement of accounts growing out of transactions herein authorized except on the request in writing of 60 per cent. in amount of certificates subscribed.

We hereby agree to reimburse the said agent and manager for any commissions paid by him to such brokers as he may deem advisable to employ in the execution of the herein authorized purchases and sales and such other expenses as he may incur and which to him may seem for the best interests of all parties to this agreement.

This agreement is not to be binding on the undersigned until certificates for 20,000 shares are subscribed, and thereupon this agreement shall become operative. Subscriptions beyond this amount may be received by the agent and manager up to 30,000 shares.

The original hereof shall be signed by the manager. Counterparts hereof may be signed by subscribers and all shall be taken together and deemed to be one original instrument, and upon the agreement becoming operative the manager shall notify the subscribers.

In witness thereof the parties have signed this agreement as of March 1, 1909.

Manager.

Subscriber.

Address.

No. of Shares.

DEAR SIRS:

PUTS AND CALLS1

We are writing this letter with a view to strongly recommending the purchase at this time of options (either the "Call" or the "Put") on the various American stock dealt in on the London Stock Exchange. which option orders we are prepared to execute through the London Stock Exchange firm of which we are the American representatives. Broadly speaking, our two chief reasons for making this recommendation are: firstly, that we believe that the present time is an exceptionally propitious one for the purchase of options, and of which advantage should now be taken; and second, that the prices of options as now quoted are relatively lower than they have been for a long time past.

Judging from our past experience, we find it very generally the case excepting certain important and shrewd operators, who are experienced in the matter-that the general option buying public, in its eager desire not to buy an option until what it believes is the very eve of a market move, generally misses its best opportunity and does not buy until the market quietly slips away and has already recorded a very substantial advance or decline. Then the relative prices of options are considerably dearer than they were when the market was in a quieter condition, because very naturally the seller of an option is largely governed in the prices he makes for the same by the degree of activity of the stock on which the option is sold.

As a striking example of this situation, we would merely cite the instance that during our entire experience in Wall Street, by far our greatest activity in the purchase of "Calls" on behalf of clients was in U. S. Steel Common, and occurred in the last weeks of the year 1909, when the stock was quoted above 90, and when the "cream" was naturally already off the rise, and at the same time the prices paid for these options were much higher than they had been quoted shortly before the big rise in Steel had even started. Naturally what we say here refers to the general option buying public and not to several important operators who were far seeing enough to buy their options before the rise was under real headway and who made very large profits from the same.

Equally true is the reverse of that situation, for we have generally found that when the public have most desired to buy "Puts," instead of doing so when the market was at a comparatively high level and not unduly excited, they generally refused the opportunity, but have

1 Circular Letter issued by W. & E. Rosenbaum, May 8, 1912.

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