contracts and legal proceedings which followed were designed to effect a repudiation in part of preexisting financial obligations. A du Pont attorney was prominently identified with the litigation. The holders of the original bonds sustained an unjustified loss, commercially and otherwise, in excess of one-half million dollars. The du Pont satellites emerged with fat and unreasonable profits; and, this experience alienated many investors who had previously cooperated in all constructive debt solutions. Impartial governmental super vision under proper regulation would have prevented these schemes. Individuals with less perspicacity than the distinguished members of the Subcommittee would probably consider the foregoing account tainted with personal invective. It is not so intended, and with few exceptions, I have deliberately refrained from giving my personal opinions. The main difficulty has been to keep the statement within the limits of these pages, for the complete story would require volumes. It must be that the activities of the SEC and Post Office Department, through their representatives and agents in the conduct of this investigation, are unprecedented in the annals of their governmental agency. Agents, turned loose as they were, armed with the power of subpena and possessing only the scantiest knowledge of the subject matter, harassing the investing public (transmitted with this letter, as exhibit A, is a folio of documents from investors and others), disrupting the orderly functioning of business institutions, questioning their business judgment, ignoring Federal court decrees, criticising the judgment of elected public officials, insulting members of the bar, intimidating employees of the employer being investigated, a vacuous SEC accountant saying no one can honestly make over $10,000 a year, usurping the prerogatives of the Department of Justice, and invading the sanctity of American homes-doing all this in a mad hunt to find a criminal, or, failing, to create one. If this procedure were to be condoned by the Congress and later duplicated it will, as I see it, become a serious menace to government, to the spirit of free people, to the enjoyment of free enterprise, and to the liberty of the individual. I hope "history will not repeat itself." I believed the two agents of the Atlanta regional office of the SEC when they said they wanted to make a "routine" investigation and our turn had come. This was in 1941. But when it became evident that all the machinery of the SEC had been set in motion, when word reached me that SEC agents and a Post Office inspector were conferring with Mr. Ball and his attorney, when civil suits bearing the tag of Ball influence were filed, when my attorney and I, with an appointment previously made, were unable to confer with a member of the SEC although we traveled to Philadelphia for that purpose, when hearings requested by my associates were denied, when the agents avoided interviewing bondholders who were in a position to know the facts and had sought to tell them, and, finally, when the criminal indictments were found, I knew that back of all of it there was a great issue "Crummer must leave Florida." There is not a man so blind, prejudiced, or bigoted to believe that this great effort was made for any less stake. In this the someone back of it all has succeeded. A few desks, typewriters and wastebaskets constitute the remains of R. E. Crummer in Florida. The du Pont interests have gained the dominant position in the field of municipal finance, but at the cost of the taxing units. Their credit has been unfairly undermined, for they have lost the protection and aid of a substantial portion of the most economical source of credit represented by thousands of investors. Real competition, for all effective purposes, is nonexistent, and the effectiveness of the Federal Municipal Bankruptcy Act, as amended, is greatly impaired. It has been said that, "Hindsight is a splendid quality" but unfortunately, it cannot be put in reverse action. If I could have known in 1929 that the BrownCrummer Investment Company and R. E. Crummer & Company would have been compelled to either prosecute or defend over one thousand law suits in support of their efforts to protect their investor-customers, and to aid the many governing authorities of Florida taxing units who desired to restore solvency and confidence, I probably would have followed the withdrawal course of the forty-odd other investment dealers who participated in the original purchase and distribution of $500,000,000 par value of bonds. However, to have had a part in the most remarkable recovery ever recorded in the history of municipal finance in America, which was achieved despite the constant opposition of the Alfred I. du Pont fortune, and to have met many of the fine Florida people, does in some degree compensate. Respectfully submitted, REC'T R. E. CRUMMER. Plant Port St. Joe, Florida. Honorable ED LARSON [Copy of letter referred to on p. 2] ST. JOE PAPER COMPANY, Florida Securities Commission, Tallahassee, Florida. DEAR SENATOR LARSON: We have observed that the R. E. Crummer Company is being dissolved, though we are advised that there is litigation now pending in the State of Florida, in which this company is involved. We have further noted that a new company has been organized-we believe the name is the Crummer Company-with much the same personnel as the R. E. Crummer Company, except it is alleged that Mr. R. E. Crummer will be connected with the new company only in an advisory capacity, instead of the chief administrative officer, as in the old company. The reason of this letter is that, in our opinion, the conclusions of fact of R. S. Pierce, Jr., special master in the U. S. District Court, in the matter of Bay County, makes findings of facts, if our interpretation is correct, that would probably cause your Commission to revoke the license of R. E. Crummer Company, that is, providing the master's findings were sustained by the court, after due and proper consideration. Judge A. V. Long, district judge, in his findings of fact and conclusions of law, not only adopted and approved the master's findings of fact, but made a few findings of his own. In addition to this matter, certainly the members of the Florida Securities Commission must have heard of numerous other dealings in which the Crummer organization was involved, where it was rumored that irregularities if not worse, took place; therefore, may we request, if your Commission is inclined to issue a license to the same individuals, under the name of the Crummer Company, who were actively engaged in the R. E. Crummer Company, that representatives of this company and possibly other parties may want to appear and present evidence why the issuance of such a license may not be in the public interest. Sincerely yours, ST. JOE PAPER COMPANY, STATE OF FLORIDA, ! County of Orange, ss: Before the undersigned, a notary public, personally appeared R. E. Crummer who, being first duly sworn, says that the above and foregoing statement under date of January 4, 1947, is true and correct to the best of his knowledge, information, and belief; and that the documents contained in the appended folio are true and correct copies or photostats of the originals. R. E. CRUMMER. Sworn to and subscribed before me this 9th day of January 1947. [SEAL] My commission expires June 14, 1947. B. BATTERLIS, Notary Public. Part I: OUTLINE (a) U. S. Senate Resolution No. 35. (b) U. S. Senate Report No. 53. (c) U. S. Senate Report No. 159. (d) U. S. Senate Resolution 112. (e) Letter of chairman Senate Committee on the Judiciary. Part II: (a) Announcement of Securities and Exchange Commission re: Indictment Against Roy E. Crummer et al. (b) Form of inquiry sent to bondholders by Mansfield, post office inspector. Part III: (a) Letter of R. E. Crummer and Company addressed to the holders of Panama City bonds, dated June 12, 1942. (b) Letter of Roy E. Crummer, dated December 28, 1943, with copy of his letter to a purchaser of two (2) bonds of Panama City, Florida. Part IV: 25 Communications from individuals and institutions named in either, one, or both, the Citrus County and Panama City criminal cases, as defrauded creditors. Part V: (a) Statement of former Governor Doyle E. Carlton of Florida showing Roy E. Crummer's assistance in the early stages of the financial collapse of Florida's taxing units. (b) Letter from A-O-U-W of Kansas, a large investor in municipal securities. (c) Letter from E. H. Pringle & Co., an investment dealer. (d) Letter from Robert Pennington, one time attorney for Alfred I. du Pont. (e) Letter of James C. Titus, large investor in municipal securities, adressed to chairman, Committee of the Senate on the Judiciary. Part VI: Eleven additional letters from individuals and institutions interviewed by Federal agents. Part VII: 38 additional letters from invididuals and institutions who were not interviewed by Federal agents. Part VIII: (a) Statement of Frank L. Carson as published in a newspaper of Wichita, Kansas, August 4, 1944, following the return of the indictments. Mr. Carson, his wife, the two Cossmans (whose financial transactions were handled by Mr. Carson), and his bank are alleged to be defrauded creditors. (b) Sample of lease required by Florida National Bank and Trust Company at Miami. PART I (a) U. S. Senate Resolution No. 35. (b) U. S. Senate Report No. 53. (c) U. S. Senate Report No. 159. (d) U. S. Senate Resolution No. 112. (e) Letter of chairman, Senate Committee on the Judiciary. 79TH CONGRESS 1ST SESSION S. RES. 35 IN THE SENATE OF THE UNITED STATES JANUARY 18, 1945 Mr. HILL (for Mr. PEPPER and Mr. ANDREWS) submitted the following resolution; which was referred to the Committee on the Judiciary FEBRUARY 19, 1945 Reported by Mr. MCCARRAN, without amendment, and referred to the Committee to Audit and Control the Contingent Expenses of the Senate FEBRUARY 26, 1945 Reported by Mr. HAYDEN, with amendments; considered, amended, and agreed to RESOLUTION Resolved, That the Senate Committee on the Judiciary or any duly authorized subcommittee thereof, is authorized and directed to make a full and complete 96270-47-pt. 2- -36 study and investigation of the activities of the Securities and Exchange Commission and Post Office Department, or any representative thereof, with a view of determining whether (a) the activities of said agencies, through their representatives, are crippling, hampering, or rendering ineffective the Municipal Bankruptcy Act, as amended, heretofore enacted by Congress; and (b) whether or not the activities of said agencies, through their representatives, are unfairly resulting in undermining the credit of the taxing units of the State of Florida. The commitee shall report to the Senate as soon as practicable and not later than April 2, 1945, the result of its study and investigation, together with its recommendations. For the purpose of this resolution the committee, or any duly authorized subcommittee thereof, is authorized to hold such hearings, to sit and act at such times and places during the sessions, recesses, and adjourned periods of the Seventy-ninth Congress until April 2, 1945, to employ such clerical and other assistants, to require by subpena or otherwise the attendance of such witnesses and the production of such correspondence, books, papers, and documents, and make such investigations, to administer such oaths, to take such testimony, and to incur expenditures as it deems advisable. The committee is authorized to utilize the services, information, facilities, and personnel of the departments and agencies of the Government. The expenses of the committee, which shall not exceed $1,000, shall be paid from the contingent fund of the Senate upon vouchers approved by the chairman of the committee. 79TH CONGRESS, 1ST SESSION, SENATE REPORT NO. 53 INVESTIGATION OF ADMINISTRATION OF THE MUNICIPAL BANKRUPTCY ACT FEBRUARY 19, 1945.-Ordered to be printed Mr. MCCARRAN, from the Committee on the Judiciary, submitted the following REPORT [To accompany S. Res. 35] The Committee on the Judiciary, to whom was referred the resolution (S. Res. 35) relating to the administration of the Municipal Bankruptcy Act, having considered the same, favorably report the resolution to the Senate, without amendment, with the recommendation that the resolution do pass. The Municipal Bankruptcy Act was originally recommended to the Senate by the Committee on the Judiciary because of widespread municipal indebtedness in the State of Florida. The well-known land 'boom in the State of Florida, which was followed by a period of great depression, left taxing units in the State in a most deplorable condition, unable to effectively continue municipal administration. The Municipal Bankruptcy Act afforded an opportunity to all taxing units to refinance their obligations and securities and thus bring stability to the chaotic conditions in bankrupt municipalities. However, it is now clamed that the effective utilization of the Municipal Bankruptcy Act is being impaired and interfered with by certain Federal agencies to the point where refinancing operations under this act are no longer possible. Your committee has been advised that the situation is so serious that a continuing committee has been appointed by the Florida Senate to make an investigation. Because the agencies involved are Federal agencies, the Florida Senate committee will be unable to make a complete investigation, and the United States Senators from the State of Florida have therefore joined in requesting the Judiciary Committee to appoint a subcommittee to cooperate in this investigation. The committee has received the following joint letter from the Florida Senators, reciting some of the more serious allegations with respect to the activity of Federal agencies in the State of Florida. Hon. PAT MCCARRAN, UNITED STATES SENATE, COMMITTEE ON FOREIGN RELATIONS, February 19, 1945. Chairman, Committee on the Judiciary, United States Senate, Washington, D. C. DEAR SENATOR MCCARRAN: There is pending before a subcommittee of the Senate Judiciary Committee Senate Resolution 35, which, you will recall, was introduced upon our joint request. You will likewise recall that the chaotic condition relative to the public debt of Florida taxing units really precipitated the enactment of the Municipal Bankruptcy Act and that we were extremely energetic in obtaining action by the Congress 4 years ago in securing this act's continued existence and its extension to include counties. The conditions sought to be inquired into by Senate Resolution 35 were called to my attention by a past president of the Florida State Senate, who was likewise a member of a State senate investigating committee. This committee found itself unable to adequately cope with the situation because of the fact that Federal agencies are involved. These conditions indicate that the activities of certain agents of the Securities and Exchange Commission and the Post Office Department may have definitely resulted in the following: 1. An impairment of the faith of taxing units, their officials, and creditors in the efficacy of the Municipal Bankruptcy Act as an instrument in solving their mutual problems, and that such act contains adequate safeguards to protect their respective rights and interests. 2. A reluctance on the part of taxing units to avail themselves of the act. 3. An impairment of the value of securities issued by, and of the restored solvency of, taxing units which have heretofore availed themselves of the act. 4. An impairment of the confidence of both debtor with and creditor bondholder in the courts which have been administering the terms and provisions of the act. Because of the vital interest of our State, its various taxing units, and the public officials thereof, we earnestly urge the passage of this resolution and the approval of the nominal appropriation to make it effective, to the end that, if found necessary, adequate legislation may be enacted to cure the conditions which may be found to exist. With best wishes always, I am, Sincerely yours, CLAUDE PEPPER. 79TH CONGRESS, 1ST SESSION, SENATE REPORT NO. 159 AUTHORIZING AN INVESTIGATION OF THE ACTIVITIES OF THE SECURITIES AND EXCHANGE COMMISSION AND POST OFFICE DEPARTMENT APRIL 2 (Legislative day, MARCH 16), 1945.-Ordered to be printed Mr. MCCARRAN, from the Committee on the Judiciary, submitted the following REPORT [Pursuant to S. Res. 35] Senate Resolution 35, Seventy-ninth Congress, agreed to February 25, 1945, provides in part: "Resolved, That the Senate Committee on the Judiciary or any duly authorized subcommittee thereof, is authorized and directed to make a full and complete study and investigation of the activities of the Securities and Exchange Com |