Stockmarket & Sisto

All Monday, Wall Street was flooded with rumors that a house would fail. Tuesday morning stories of pending insolvencies were thicker, more persistent. At 1:30 President Richard Whitney mounted the rostrum of the Exchange. Trading was supplanted by a tense silence. Then an excited roar greeted the announcement that J. A. Sisto & Co. Inc. were unable to meet their engagements. Selling pressure increased. By the close of the market 34% of the common stocks listed were at least 20% below their old 1929 bottoms, while 59% touched or dipped under that level.

Thus was greeted the first notable failure of the year. On the Curb, from which the company was also suspended, support was practically withdrawn from stocks identified with Sisto. Cosden Oil went from $11 1/2 to $8; Cuneo Press from $31 1/2 to $16; Hygrade Food Products from $6 to $2f; National Rubber Machinery from $8 3/4 to $1 5/8. An investment trust sponsored by the firm last year, Sisto Financial, tumbled from $17 7/8 to $10 and remained pegged at that figure with $2 bid, and a sale at $4 1/8 taking place "under the rule."*

Well known in financial circles is Joseph A. Sisto, founder & head of the firm which bears his name. He was born in Newark, spoke only Italian for ten years. In 1914 he entered the bond department of Hallgarten & Co., in 1920 was made a partner. Two years later, at the age of 32, he formed his own firm.

Although J. A. Sisto & Co. carried a moderate number of trading accounts, it was known chiefly as an investment banking house. It was one of the largest dealers in U. S. pre-War bonds and insular and territory obligations. Likewise it became identified with many enterprises, all of which have been recognized in the Street as good small concerns. In the past, the firm has been identified with Chicago Pneumatic Tool Co., Checker Cab Mfg. Corp., Curtis Publishing Co. and Parmelee Transportation Co. Generally considered to have been the Sisto stumbling block is Cosden Oil Co. which has suffered continued liquidation for many months. Likewise, Sisto Financial Corp., offered at $53 a share last year, and believed to be 40%-owned by Mr. Sisto, has dropped steadily. In the Sisto insolvency there was no question of malpractice, fraud. It was simply the inevitable consequence of over-expansion, then shrinking collateral.

Not only on Wall Street were there repercussions of this failure. Well known throughout Italy is the name of Joseph A. Sisto, a great & good friend of Mussolini. Although some Italian bankers are said to have considered him a trifle too speculative by nature, he has distributed U. S. securities in Italy, sold Italian securities in the U. S., has been considered abroad as a good example of the great power obtain able in the U. S. And the fact that he was in Italy at the moment of his failure caused the financial districts in Rome, Naples, Milan to teem with excitement.

As soon as he heard the news, Mr. Sisto arranged to return to the U. S. In Wall Street where, boyish-looking, genial, he enjoys great popularity, the sympathy that would naturally be felt for him was heightened by the fact that he was known to have left believing all was well. Since a Stock Exchange house must be an indi vidual or partnership with one member on the Stock Exchange, not a corporation (with limited liability) , the bankruptcy of a firm means the bankruptcy of each and every partner.

Market. Although the stockmarket closed weak on the day of the failure, it began the next day with an exuberant show of strength, heightened by short covering. It remained strong even on the following day when the insolvency of a small Curb house. Piperno & Co., was announced, and trading in Rainbow Luminous Products suspended. Although few persons expected the pace to continue, or even thought there would not soon be another recession, sentiment was considerably improved. Among opinions expressed, notable was that of George McClelland Reynolds, 65, chairman of Continental Illinois Bank & Trust Co., most potent of Chicago bankers. Said Banker Reynolds, last week completing his 50th year in banking: "The fact is that while all the worrying is being done over business the improvement is already under way. I should not be surprised if by the middle of December we find conditions considerably improved."

* Transactions "under the rule" are made by the officials of the Exchange when a house cannot complete a deal. Sometimes a house will sell a stock short, cannot make delivery. In this case, the official acting "under the rule," buys the necessary stock in the cash market. If a house buys a stock and then cannot accept delivery, a sale is made "under the rule" as protection to the seller.

This file is automatically generated by a robot program, so reader's discretion is required.