asked particular details as to the sacrifice which we may have taken in defaulted interest and bonds, fees which we might have paid, whether we were advised about or received any accounting upon any judgment obtained by court proceedings in any securities in which we might have been involved, and whether we were dependent for our information on one source or several sources concerning the bonds. Like particulars were asked respecting Citrus County bonds which we had reported as having bought. A further request was made for papers. We quote from our response concerning the Panama City bonds.

"Concerning the Panama City bonds. First, as to the interest. These were originally 6% bonds, and for a period, from the time of default to July 1, 1937, we realized 2% per annum less $30.00 in fees, this being at the rate of $10.00 on each $1,000.00 bond.

"Then from the period July 1, 1937, to February 1941 we had a yield of 3% per annum, and from that date to the issuance of the new bonds at the rate of 6% per annum.

"These yields were the result of our having sold these coupons at various prices as the various negotiations respecting refunding seemingly were much impeded by the refunding operations and litigation incident thereto of Bay County.

"We suffered no loss in the principal inasmuch as the new bonds are dollar for dollar.

"We had advice from time to time from numerous sources as to progress of litigation and negotiation. This information came to us from numerous bond houses, some of it in the form of quotations for bonds, coupons and offers to buy, some of it in the form of various creditors' committees, and some from public officials of Panama City."

To this date we have had no further communications from the Postoffice Inspection Service.

However, in December 1943 or January 1944, Alexander J. Brown, Jr., who showed his credentials as an agent of the Securities and Exchange Commission, called at our office, accompanied by a man who was of a like position but whose name does not appear in our files, and asked to inspect the records of our transactions with the Brown-Crummer Company and R. E. Crummer & Company. He was not specific at first as to the particular issues in which he was interested. I refused to give him access to any of our records. I stated in effect that our dealings with the companies in question, and with the particular security issues mentioned, were entirely satisfactory, and that we would not show our records except upon a proper summons from an authorized source. On January 13, 1944, a subpoena duces tecum was served upon me as treasurer of the Helmers Manufacturing Company, by Alexander J. Brown, Jr., calling for certain papers in transactions between the Helmers Manufacturing Company and the Brown-Crummer Company and R. E. Crummer Company, on Citrus County and Panama City, Florida, bonds. This summons was returnable on the 14th of January 1944 and I appeared in response thereto. I asked the privilege of having my attorney present at the hearing. This was denied. I asked the privilege of having a stenographer present to take a transcript of the hearing. This was denied. I requested at the time that I be furnished a copy of the transcript which was prepared by the stenographer who attended the examiners, stating that I would pay any cost involved. This was denied. I later again asked for a photostatic copy of the transcript, agreeing to pay the cost, and that was denied. Numerous papers, involving in the one instance three exhibits, in the other ninety-two exhibits, and in another instance a check, were taken from my records, and are still retained by the Securities and Exchange Commission, although I have repeatedly asked that they be returned to me.

I was subjected to a very exhaustive examination extending over a period of several hours. The examination took such a form as to convince me that an attempt was being made to establish some improper action on the part of the Brown-Crummer Company, R. E. Crummer & Company, Mr. R. E. Crummer, and several of their associates.

Efforts were continually being made to plant into my testimony the idea that conceit and misrepresentation were used to influence my judgment, not only in the Citrus County and Panama City bonds, which were the only bonds which were mentioned in the subpoena, but in the instance of other transactions involving refunding of Florida bonds, and I drew the impression that the intent

96270-47-pt. 2- -24

and desire of the examiners was not to develop a statement of facts, but a particular state of facts which might indicate dereliction.

I have made repeated efforts to have the various documents indicated as exhibits returned to me, but as hereinbefore indicated, without success, although apparently the Securities and Exchange Commission, and the Government, have no intention to use these documents as evidence, as indicated by the fact that I was not called as a witness before the grand jury.

In my testimony before the examiners I testified with all the vehemence possible, and as frequently as possible, that our relations and dealings with the Brown-Crummer Company, R. E. Crummer & Company, and the associates in this company, had been entirely satisfactory to us in the instances in question during a long period of years, and that we were currently dealing with them. As respects Florida securities which we now own, we feel that the agitation respecting Florida municipal securities has impaired the value of those securities, that is it has impaired the ability of Florida municipal divisions in their ability to borrow, that it has removed an element of competition in the creation of a broad market, both for issued and prospective issued Florida municipal securities, and tended to create a monopoly in the later flotation of Florida municipal securities, all greatly to the detriment of the holders of these securities and to the issuing municipal authorities.

It occurs to me that inasmuch as my experience in the examination by the representative of the Securities and Exchange Commission is probably typical of the methods used by them in the examination of other clients of R. E. Crummer & Company, that the committee would profit by a careful scrutiny and examination of the transcript of that examination, a study of which has been denied me. I am confident that your committee will arrive at the same conclusions which were forced upon me by the activities and conduct of the SEC investigators, namely, that Congress never remotely contemplated the enactment of any laws to authorize such abuses and unwarranted attacks upon those engaged in legitimate and constructive enterprise and, above all, the investing and taxpaying public.

We respectfully submit this statement for your earnest consideration.
Yours very truly,

Chairman Senate Judiciary Committee, Washington, D. C. DEAR SIR: It is our understanding that your good committee is about to conclude its investigation of certain transactions involving the purchase, sale, and refunding of various taxing units in the State of Florida. This letter is written for the purpose of commenting on our experience in such transactions, all of which were very ably handled by R. E. Crummer & Company and its predecessors, the Brown-Crummer Company.

Attached is copy of letter relating to this subject written by our Mr. Barth on April 18, 1944, to Senator Wherry. This is self-explanatory.

We want you to know that on April 5, 1944, we wrote to the Chicago office of the SEC telling them that a statement dated February 1, 1944, prepared by their agent, George Reutell, and signed by our Mr. Mulligan at Mr. Reutell's request, contained inaccuracies and details which might readily be subject erroneous interpretation, and we requested the return of that statement for correction. We were advised by a Mr. Hart that he and a Mr. Brown would come to Omaha to discuss this statement and we made an appointement for a meeting with those gentlemen but were forced to cancel the appointement because of illness. We made another appointment which was later canceled by Mr. Hart because he was unexpectedly called out of the city.

Much to our surprise, the next thing we learned was that the Guarantee Mutual Life Company had been named as a defrouded party in an indictment returned by a Federal grand jury at Topeka against several former officers and employees of the R. E. Crummer & Company involving the very transaction referred to in

the above-mentioned inaccurate statement of February 1, 1944. Our Mr. Mulligan was subpoenaed and gave testimony before the grand jury on July 20.

The bonds referred to in the inaccurate statement mentioned above were Citrus County, Florida 4% bonds due from November 1, 1959 to 1968. We had bought $100,000 of these bonds in August and December of 1941 at a total cost of $108,846.19, which was a basis yielding us 3.30% and 3.50% to maturity. We amortized these bonds in the regular way and our book value when we sold the bonds on November 7, 1945, was $107,862.21. The sale price was $124,860.00, so that in the period of four years we obtained a book profit of $16,997.79, in addition to having experienced a good yield on our investment during the time we owned the bonds; certainly this is ample proof that instead of being a victim of fraud we were the beneficiary of a very valuable investment service. This was without a doubt one of our most satisfactory and profitable investment transactions. We of course are delighted that the Justice Department has directed a dismissal of the indictments. We were confident this action would be taken. Certainly this removes all suspicion from the activities of the R. E. Crummer & Company. In our opinion, however, the actions of the SEC investigators have not been without serious consequences to the State of Florida and its political subdivisions. We say this because R. E. Crummer & Company are not the same service organization they were, nor do we believe any other Florida investment firm will soon approach the quality of service rendered by that company.

In November of 1945 we sold some $2,000,000 Florida municipal bonds which took us out of Florida completely. Our decision to do this was reached after considering the large profits obtainable, coupled with the reduction in the service performance by the R. E. Crummer & Company. Until we are able to find an organization in whom we can have like confidence, the likelihood of our investing further in Florida securities is quite remote, and it is our opinion that other investors are thinking in the same terms.

We cannot overemphasize our dependence on the R. E. Crummer & Company and Brown-Crummer Company, and our gratitude to them for a job well done. It meant thousands and thousands of dollars to our policy owners and it meant millions of dollars, plus the saving of reputation, to the citizenry of Florida. Yours very truly,

JWH: MG

Hon. KENNETH S. WHERRY,

United States Senate, Washington, D. C.

J. W. HUGHES, President.

APRIL 18, 1944.

DEAR KENT: This company has been transacting business with the BrownCrummer Company and R. E. Crummer & Company-which was the outgrowth of the former-for probably twenty-five years, during which time, we believe, ample opportunity has been provided to judge the character and responsibility of those who have determined the policies of the Brown-Crummer Company or R. E. Crummer & Company, since a volume of business amounting to many millions of dollars has been transacted with such firms to the entire satisfaction of the Guarantee Mutual Life Company.

Following the adversities in Florida which became critical during the middle 20's, many of the Florida bond issues owned by the Guarantee Mutual Life Company defaulted, and at one time the Florida bonds owned by the Guarantee Mutual Life Company were considered the most undesirable investment of any classification in its assets. The Guarantee Mutual Life Company. officials, after thorough investigation, became convinced that the efforts of R. E. Crummer & Company which were then being put forth to reestablish the credit of the State and the equities of bondholders should and would succeed if properly supported by the bondholders; therefore, the Guarantee Mutual Life Company consistently and without exception or reservation voluntarily supported each and every refunding operation in which it had any interest, sponsored and recommended by R. E. Crummer & Company.

As a result of the adoption of that policy, the Florida bondholdings now included in the assets of the Guarantee Mutual Life Company are, we believe, one of the most desirable groups of any classification included in our assets. This statement is supported by our appraisal of the value of such bonds as of January 1, 1944, showing that their then market value was in excess of $340,000,000 over the value at which such bonds were carried on our books.

Very recently an investigator for the Securities & Exchange Commission called upon us and apparently made what we assumed was a rather thorough investigation of a certain transaction involving the sale by the Guarantee Mutual Life Company of certain Citrus County, Florida, bonds, and a purchase by the Guarantee Mutual Life Company of certain Citrus County, Florida, bonds, which transaction was, in our judgment, open, above board, not subject to the least criticism or suspicion, and resulted very profitably to the Guarantee Mutual Life Company. The investigator prepared a statement of this transaction which, on its face, did not appear to contain any statements contrary to the facts as recalled by our Mr. Mulligan, who had not, however, carefully examined the actual records with reference thereto, and he, at the request of Mr. Reutell, rather hurriedly signed the statement as prepared. A careful review of the statement by our board of directors disclosed the fact that it contained several references which were recognized as being contrary to the records and actual facts, and which could readily be given erroneous interpretations.

We have been advised that this investigation has been going on for a year or two and conducted in such a manner that should a congressional committee check into the matter it might show that the motives behind the investigation were questionable. (We understand an investigation by the Senate Judiciary Committee is under consideration.) In any event, we repeat that our many substantial transactions with the Crummer organization have been entirely satisfactory and we have the highest regard for the integrity and ability of Mr. Roy Crummer and his associates.

At the request of our board of directors, I am sending you under separate cover two booklets gotten out by the organizations mentioned, which set forth the extent and timely importance of their refunding operations in the State of Florida. We would esteem it a favor to have you examine these publications when you have time so that, in event any congressional investigation is made, you may have some knowledge of the subject matter and be acquainted with our opinions as herein expressed which opinions have been formulated after many years of extensive business dealings with these firms.

I will appreciate very much if you will keep this letter and the matter I send you under separate cover before you in case this matter should be brought before the Judiciary Committee. Wishing you the best of luck, I am,

Yours very truly,

/a/ JOHN W. BARTH.

Mr. SOURWINE. I have no further matters to offer for the record. The CHAIRMAN. Now, as regards the Post Office documents that you have, have you anything there that might yet come up? Shall we close the hearings now?

Mr. SOURWINE. There are documents in the possession of the Post Office Department which, in my opinion, should be made a part of this record, including specifically two reports by the postal inspector at Jacksonville, the then postal inspector, which have a definite bearing upon the matters we are investigating. Those are among the documents which Mr. Doran, the chief inspector, indicated would not be furnished, the Department did not desire to furnish. I don't know what your wish is with regard to it.

The CHAIRMAN. That is a matter that I have to determine later, so we will not close the hearings at this time.

STATEMENT OF WILLIAM J. NOEL

Mr. NOEL. I am from Chicago, Ill., and I have a statement that I would like to submit.

The CHAIRMAN. This is your signature, Mr. Noel?

Mr. NOEL. Yes, sir.

The CHAIRMAN. Are you-where are you living now?
Mr. NOEL. Chicago, Ill.

The CHAIRMAN. You solemnly swear that the statements made in this letter of January 3, 1947, addressed to the chairman of the subcommittee for the Committee on the Judiciary, United States Senate, and each thereof is true, so help you God?

Mr. NOEL. I do.

The CHAIRMAN. It will be inserted in the record. (The statement is as follows :)

CHAIRMAN,

Subcommittee of the Committee on the Judiciary,

United States Senate.

JANUARY 3, 1947.

DEAR SIR: This statement is presented in connection with your investigation being conducted under authority of Senate Resolution 35, of the 79th Congress. In 1934 I became associated with the Chicago office of R. E. Crummer & Company, occupying a very minor clerical position at a salary of $100.00 per month. By 1941 my earning power had increased to approximately $12,000 annually.

In 1940 or 1941 it was recognized by Mr. C. S. Turner, vice president and general manager of the Chicago office, that this country would very likely become involved in the war, in which event it was his intention to resign his position with the company and offer his services to the country. It was decided at that time that I would be his successor. Mr. Turner's position commanded an income of $24,000 per year, and it was understood that I would not only succeed to his position but, in all probability, his salary. As a consequence of this development, I was instructed to familiarize myself as rapidly as possible with every phase of the business in the eventuality that I would be called upon to take Mr. Turner's place as general manager of the Chicago office.

By midsummer of 1942, the employees of the Chicago office began to suspicion the motives of the SEC investigators who had started their investigation of the records of the Chicago office of R. E. Crummer & Company, due to their questioning and harassment of the employees, and particularly their treatment of Miss Marjorie Shockley which undoubtedly caused her to suffer a nervous breakdown. Sometime in the fall of 1942 several of the SEC investigators were invited into Mr. Crummer's office and advised that several of the most important employees, including Mr. Reichert, Miss Shockley, Mr. Layne, Mr. Osburn, and Mr. Moon would be available at all times for them to make inquiry and examine records under their control pertaining to any transaction handled by the Chicago office. They were further advised that if they were not entirely satisfied with the examination of the records and inquiries directed to these specific employees they then should take the matter up with me, and they would be put in touch with the proper record or employee if I could not supply the desired information myself. By this the investigators would be able to obtain the most accurate facts from the most direct source in the Chicago office. This specific discussion clearly placed the SEC investigators on notice that when they desired to have specific records submitted or employees who might give them the most accurate information or explanation regarding any transaction under inquiry I was the one individual then associated with the Chicago office who, if not personally familiar with the subject, could and would direct them to the most dependable source of information.

The investigators never called on me for the submission of any records or explanation of any transaction which was the subject of their inquiry, but on numerous occasions when my attention was called to the fact that the investigators were apparently unable or unwilling to properly interpret certain records and were actually accusing employees of not properly explaining the records, I attempted to convince the investigators that the records correctly reflected the transactions and that the employee's explanation was correct, and that my understanding and knowledge was in accordance with the records and the employee's explanation. It became most obvious, as the investigation continued and the vicious and prejudiced attitude of the investigators became more generally understood by every employee, that the investigators were studiously avoiding me and apparently resented my repeated efforts to assist them in obtaining the most accurate records and understanding of the facts that could be obtained.

The determination of the SEC investigators to avoid me was most apparent, for they well knew by the many records made available to them in the office that I was the representative of R. E. Crummer & Company who had personally