mings from his securities in 1928 and in 1929, after the crash, his curities were worth between $20,000,000 and $30,000,000. The hers did not do quite as well as that, but quite well I would say. ey all made very substantial earnings, and the potentialities were me $54,000,000.

Senator HUGHES. By way of manipulation?

Mr. STERN. Yes. There was a second method of making profits d that method was by just shifting from one company to another. think that might best be shown by way of illustration, and while is not the most important instance yet it is one of the most fantastic. Mr. Chairman, I should like to also have this chart in the record; Senator WAGNER (Chairman of the subcommittee). The chart you ve heretofore been using, as well as that chart, may be made a art of the record.

(The chart entitled "Performance and Control of the Principal ompanies of the United Founders Corporation Group" and the hart headed "Intercompany Transactions in International Securities orporation of America, Class B, Common Stock" and the chart eaded "Intercompany Transactions in United States Electric Power orporation.)

Senator WAGNER (chairman of the subcommittee). You may proeed now with your statement.

Mr. STERN. If you will look at this chart you will find American Founders Corporation had purchased securities of International Seurities Corporation of America. It had those securities at $8.62. t sold some to Second International Securities Corporation, which hen sold later to United Founders Corporation. It sold some to United States and British International Co., Ltd., which then sold ater to United Founders Corporation. Second International sold some to Investment Trust Associates, which sold to United Founders Corporation. So that by this whirligig method they all were sold, n this way.

Originally those stocks were on the books at $8.62 a share. At the and of this transaction, which took several months, they were back in American Founders at 35. Of course they were not profits at all. The sum of $600,000 went to inflate the income account of these different companies by this process. Sometimes they were a little bit more complex in their technique, as is shown by this second smaller chart which I believe has been made a part of the record.

Senator WAGNER (chairman of the subcommittee). Yes; that was ordered made a part of the record along with the other two charts. Mr. STERN. In this second chart the technique was a little bit more devious. There the United States Electric Power Corporation-and, Senators, if I go too fast stop me, because this was a rather complex transaction, both in the way it was handled and in the way it was recorded.

The American Founders Corporation held certain stocks of United States Electric Power Corporation. It gave rights to purchase those stocks to its stockholders. Among those stockholders was United Founders Corporation. United Founders Corporation had then rights to buy some 990,000 shares. Those rights it waited with until the very last day on which rights could be exercised and then sold them to an affiliate for $5,000,000. Then the affiliate exercised the rights, as you can see by the broken line on the chart; it subscribed for the

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