Wall Street Under Oath

by Ferdinand Pecora [Simon & Schuster, $2.50]
THE author of tills work, now a New York judge, was counsel to the United States Senate Committee which in 1933 and 1934 conducted an ’investigation of stock exchange, banking and security market practices.’ The purpose of Wall Street Under Oath is ’to summarize the essential story of that investigation,’and to serve as a warning against the return of the days before the 1929 collapse. The book purports to tell of the ‘shattering revelations’ of the investigation and takes up the story of about a dozen episodes.
The Senate inquiry showed beyond a doubt that two security affiliates were indulging in reprehensible practices and that one of them, at least in one phase of its activities, was guilty of fraudulent use of the United States mails. In these instances the writer makes his point so thoroughly that the reader wonders why the evidence given before the Senate Committee was not promptly remitted to the Attorney General for action.
But Judge Pecora’s other examples of ‘pernicious activity’ have, with one exception, not the like convincing quality. Thus, his idea that the ’preferred list’ of a certain private banker cloaked dark and sinister purposes is moonshine. Again, tax evasion is not peculiar to certain Wall Street magnates; it is to be found everywhere and apparently at all times. Once more, the retention of control over two investment trusts by majority ownership of the common stock is nothing but an ordinary corporate practice; it is a commonplace of corporate finance, in fact, that the owners of the common stock should bear alike the front-line risk of loss and chance of profits.
In some other instances related, the basic facts were not brought out in the Senate investigation because counsel did not know the ’right questions to ask.’ This occasional inability to discern the vital point is illustrated by the failure to see that what stockholders of investment trusts would most like to know is why the sponsors of these vast corporations should be chronically unable to retain consistently capable professional speculators to handle the constant market trading.
Wall Street Under Oath, though written by an Italian by birth, is remarkable as a vivid echo of the century-old hostility in the United States against finance, the peculiar form which mass economic hatreds have assumed in America among many of the old native stock in small city and on countryside, a tradition whose roots reach deep into social, cultural, even religious sources, which always takes a moral standpoint in its enmities and whose cure for whatever practices it deems to be evil is invariably more laws and more regulations. Despite its animosity, however, the book is entertainingly and sometimes wittily written.