"Commonly Abusing"

Commodore William A. W. Stewart of the New York Yacht Club last week made the following dry announcement: "Mr. DeCoursey Fales has been appointed treasurer of the club to fill the vacancy."

As everybody knew, the vacancy was left by Richard Whitney, onetime president of the New York Stock Exchange, who was caught last fortnight stealing his customers' securities (TIME, March 21). Other sequels to the Whitney scandal last week included: 1) his expulsion forever from the Stock Exchange; 2) suspension for three years of his floor partners, Edwin D. Morgan Jr. and Henry D. Mygatt, because Exchange custom demands such a penalty even though they were exonerated of any knowledge of the criminal acts; 3) filing of bankruptcy petitions by Partners Mygatt and F. Kingsley Rodewald; 4) a plea of guilty by Richard Whitney to a second indictment for grand larceny, this one brought by New York Attorney General John J. Bennett Jr. for pledging $109,000 worth of New York Yacht Club securities for his own loans; 5) revelation by Richard Whitney that his brother, Morgan-partner George Whitney, loaned him $1,082,000 in cash last November.

Because talk was blossoming in reform circles of need for a new legislative purge of Wall Street as a result of the Whitney scandal, Assistant Attorney General Ambrose V. McCall took occasion as Richard Whitney finished his guilty plea to declare: "On the contrary, the Whitney case is the result of regulation that is stopping a practice that was apparently widespread in pledging customers' securities."

To back up this assertion, Lawyer McCall read a list of such cases all but the first of which have been turned up by SEC since the market crash gave many brokers the choice of crockery or failure--Richard J. Daly, who pleaded guilty to hypothecating $150,000 in customers' securities last June; two partners of Jesse Hyman & Co. convicted of grand larceny together with William F. Enright, who had charge of the security box of Winthrop, Mitchell & Co., after this reputable firm discovered Enright had lent some $2,000,000 of its customers' funds to the Hyman partners; the floor partner of Thomas & Griffith, suspended from dealing on the Exchange for three years because the firm had over-hypothecated customers' funds, but not prosecuted because it was able to return the securities. To cap his list, Mr. McCall had a new case last week--Campagnoli & Co., a house dealing in over-the-counter securities for a highly reputable clientele. Last week suave President Hugo Campagnoli and two associates pleaded not guilty to 28 counts for practices almost identical with Richard Whitney's. When Broker Whitney did it, Wall Street quaked and the press howled. But Broker Campagnoli had never been president of the Exchange and newspapers last week gave him scant attention. Circulated by cynical Wall Streeters, meanwhile, was one of the definitions in Samuel Johnson's dictionary: "Brokers, who, having no stock of their own, set up and trade with that of other men; buying here, and selling there, and commonly abusing both sides, to make out a little paultry gain."

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