While I have no way of knowing the circumstances which led to the making of your inquiry, our very large interests in the State of Florida have given me the opportunity of becoming acquainted with business deals wherein some Florida concerns and individuals, in_competition with The Crummer Company, may have "come out on the small end of the horn." Because of my satisfactory association with the Crummer organizations I have been inclined to think that dissatisfaction on the part of other Florida dealers or individuals has been due primarily to the astuteness of the Crummer people and the lack thereof in some others. Perhaps I have gone beyond the requirements of your questionnaire, but I thought you might be interested in the foregoing. Very truly yours, DAWB: jb D. A. W. BANGS. Mr. SOURWINE. I have here also 6 unsolicited letters with regard to this matter which have come to the committee addressed to the chairman, one from Mr. James C. Titus of Los Angeles, Calif., one on the letterhead of the First National Bank of Chicago, one from the Fourth National Bank in Wichita, Kans., one from Kimlick Ranch, Reno, Nev., one from Helmers Manufacturing Co., Kansas City, Mo., and one from the Guarantee Mutual Life Co. of Omaha, Nebr., and I submit them for your consideration as to whether or not they should be made a part of the record or the appendix. The CHAIRMAN. I have seen some of these, have I not? Mr. SOURWINE. I believe you have seen them all. The CHAIRMAN. I think they should all go in the record, they are all pertinent to the subject matter of the inquiry. It is so ordered. (The letters are as follows). JAMES C. TITUS, 325 Rimpan Boulevard, Los Angeles, Calif., November 19, 1945. Hon. PAT MCCARRAN, Chairman, Judiciary Committee, Senate Office Building, Washington, D. O. DEAR SIR: I am a resident of the State of California, having moved here with my family in 1921. Prior to that time we resided in Wichita, Kans., for quite a few years, and before then I had, for a period, resided in the State of Florida. During the years I lived in Kansas, I became a very substantial investor in municipal bonds, practically all of which I purchased from the Brown-Crummer Company, an investment house with head offices in Wichita, and of which Mr. R. E. Crummer was the president. My dealings were conducted exclusively with Mr. Crummer personally. At the time we moved to California, probably 90% of our holdings were in Kansas, Oklahoma, and Texas bonds in which States I think the Brown-Crummer Company was principally operating at the time. I think it was during the years 1925 and 1926 that I began to receive recommendations from Mr. Crummer suggesting that I dispose of certain of my holdings and reinvest the proceeds in Florida municipal bonds, where the existing rates were higher and the collateral appeared substantially as strong. As I had unlimited faith in Mr. Crummer's integrity, as well as in his judgment, coupled with my familiarity with the State of Florida, I began to follow this procedure, with the result that within a comparatively short period of time I found myself practically out of Kansas, Oklahoma, and Texas securities, and quite a heavy holder of Florida bonds. Then came the hurricane and collapse of the Florida real-estate boom, followed by the general depression. Fortunately, owing to the good advices of Mr. Crummer, most of my holdings in Florida were of the better grade. I began to hear of defaults in various issues, and made a trip to Florida to ascertain for myself just what was the real situation. The picture was anything but rosy. The credit of the State had deteriorated to a positively chaoic condition. Bond defaults of both interest and principal payments were general throughout the State-in some instances, an actual tax strike existed, which at times I felt was abetted by the public officials. Mr. Crummer, however, was very positive in his advice to me to hold all of my securities stating that he proposed to devote his entire personal time and efforts to bettering the situation. I was well aware of his tremendous store of energy and of the tenacious manner in which he pursued his objectives, and felt that if anyone could bring order out of chaos, R. E. Crummer was that man. One of the first steps taken toward the working out of the tremendous problem which confronted both the taxing units of the State of Florida and the holders of the outstanding defaulted public debt was the legislation sponsored by the Crummer organization at the 1929 and 1931 sessions of the Florida Legislature, which resulted in the passage of the Gasoline Tax and State Board of Administration Acts. I followed Mr. Crummer's advice to hold all of my securities, with one exception. In that particular instance, I sold one block of bonds in 1933 for $11,400.00, for which I had paid $30,000.00 in 1926, sustaining a loss of $18,600.00 by the transaction, which demonstrates very clearly what had happened to the price of Florida bonds market-wise. Our stake in the welfare of Florida was so great that I decided to make periodical trips there, the better to keep myself informed as to existing conditions, which policy I followed up until the past two or three years. During these trips. I became very familiar with the refunding plan developed by Mr. Crummer with its extension of the maturities of principal and lowering of the current interest rates. As it had become very apparent to me that the taxpayers would not, and in most cases could not, meet their outstanding obligations, I became convinced that the Crummer plan of refunding was the only possible solution to what was otherwise an absolutely hopeless situation, the result being that I not only participated with all of my own bonds in every instance where the Crummer organization was handling the refunding, but advocated the participation of all other bondholders with whom I came in contact. The record over all these years in which these plans have been operating stands for itself and requires no other testimony from me. However, for the benefit of anyone not familiar with the results obtained from the Crummer plan of refunding the Florida public debt, I go of record by stating that to my mind it constituted the most successful and outstanding piece of refinancing of a defaulted public debt that has ever come to my attention. I had heard of very strong opposition to the Crummer plan of refunding coming from Mr. Edward Ball of Jacksonville, who I understood represented the DuPont interests in Florida and decided that on my next trip to Florida I would endeavor to personally contact Mr. Ball and learn, if I could, why his opposition to a refunding program for Florida defaulted municipal bonds which to me appeared to be so mutually advantageous, both to the municipalities as well as their creditors. I did call on Mr. Ball at his offices in Jacksonville and the subject of the Florida public debt was immediately brought up. Never in all my life have I heard anyone representing such substantial interests make such cold and selfish statements. It was very apparent to me that he preferred the bonds to remain in default, that it suited his purposes better that way, and as far as his participating in the refundings with any bonds under his control, that was simply out. I realized, too, that Mr. Ball was on the ground and, in addition, abundantly able to hire the best legal talent in the furtherance of his plans. This gave me considerable concern, and I felt more convinced than ever that R. E. Crummer was the one guardian of our interests in Florida. I know in a general way of the current investigation of the R. E. Crummer & Company by the Securities & Exchange Commission and of the Post Office Department's activities in the case. From what information I have, it would appear that this matter has been carried far beyond a normal SEC investigation. I have wondered if an effort is not being made to force R. E. Crummer out of Florida. In fact, I have been sufficiently impressed that for the past year and a half I have not purchased a single Florida bond-nor do I intend to do soand, as a mater of fact, I have substantially reduced my holdings in that State. I am quite familiar with the Municipal Bankruptcy Act and with its objectives where the act has been used by any taxing unit in any refunding program sponsored by the Crummer organization, and have been quite willing to consent in accordance with the provisions of the act-however, my present reaction to the developments wherein the SEC agents apparently believe they have the right to question and criticize the actions of either the taxing unit, the bondholders, or the R. E. Crummer Company thereunder, has prompted me to definitely conclude to no longer submit any holdings in which I am interested to the provisions of the act, since it is quite obvious that the SEC agents will or might conduct themselves in a manner which is directly contrary to the objectives of the act. Further, I expect to make this recommendation to any other bondholders soliciting my advice. If the foregoing is of any benefit to you in your investigations and conclusions, I am very glad to have contributed. Sincerely, /s/ James C. Titus, JAMES C. TITUS. THE FIRST NATIONAL BANK OF CHICAGO, Mr. Chairman and Members of the Subcommittee of the United States Senate GENTLEMEN: Mr. R. E. Crummer has asked us to write to you with respect to our relations with him and R. E. Crummer & Company, with particular reference to their activities in refunding the bonds of Florida municipalities. The facilities of our trust department have been used since 1933 in connection with such refundings. They have involved our receiving the new bonds from the municipalities concerned and delivering them in exchange for old bonds on instructions of the respective municipalities or of R. E. Crummer & Company, as fiscal agent; and our receiving the old bonds from their various owners, with instructions from them as to the terms upon which we were authorized to make exchanges. These operations involved more than fifty municipalities and more than one hundred million dollars principal amount of bonds. I am advised by our trust department that their relations with R. E. Crummer & Company and Mr. Crummer, in connection with these exchanges, were uniformly normal and businesslike; that evidences of dissatisfaction or misunderstanding on the part of those involved in the transactions have, considering their volume and duration, been insignificant. In addition to the services mentioned above, we have had a succession of business transactions in the commercial division of the bank over approximately the same period. These transactions, too, have been handled in such a manner as to justify our confidence in the integrity of Mr. Crummer and his Company. In connection with loans exceeding $30,000,000 made on the security of Florida bonds, I have been vitally interested in whatever affected their market value. When the Crummer refunding effort began, in the depth of the depression, they were conspicuously alone in the field. A tremendous amount of preparatory work was required, such as the collection of statistical data relating to the financial history and condition of Florida taxing Bodies. The first efforts to bring municipal obligors and holders of their bonds into agreement found debtors and creditors mutually unfriendly and proceeded against prolonged opposition in and out of court. The success of the Crummer refunding program in spite of these early discouragements has been a notable achievement. Twice in the last few years I have visited in Florida rather extensively and have met many of the officers of municipalities with which Mr. Crummer and his Company have done business. I have not been unaware of the fact that Mr. Crummer and his Company have been the objects of complaint and of bitter attack, but the amount of it which has come to my attention has seemed insignificant in relation to the magnitude of their operations. It is my opinion that the activities of the Crummer Company and Mr. Crummer were largely responsible for the spectacular improvement in the credit standing of Florida municipalities which has occurred in the last decade. Respectfully yours, WKH: IH /s/ W. K. HARRISON, Vice President. THE FOURTH NATIONAL BANK IN WICHITA, In re investigation of certain activities of the Securities and Exchange Commission and the Post Office Department. Mr. Chairman and Members of the Duly Authorized Subcommittee of the Senate Committee on the Judiciary: DEAR SIRS: I am informed that your subcommittee has heretofore been authorized and directed by the United States Senate to make a full and complete 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 the activities of said agencies, through their representatives, are crippling, hampering or rendering ineffective the Municipal Bankruptcy Act, as amended, and 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. I am also informed that the chairman of the subcommittee has requested what he termed "reasonable, well-informed creditors and financial institutions having intimate knowledge of such matters" to furnish the subcommittee such facts as are deemed pertinent in the pending investigation. Based upon the above information, and prompted by the desire to inform the subcommittee of my dealings as a creditor of several of the taxing units of Florida, the following is respectfully submitted: My name it H. H. Heimple. I am a resident of the State of Kansas, engaged in the banking business, being at this time vice president of the Fourth National Bank in Wichita, Kansas. During the five-year period beginning in 1922 and 1923, I purchased a large volume of municipal bonds issued by taxing units of the State of Florida. Practically all of such bonds were purchased from the investment house generally known as the Brown-Crummer Company of Wichita, Kansas. Beginning in the year 1930, many of the municipal bonds of the taxing units of Florida held by me were in default in interest or principal, or both; in fact, in such an alarming percentage of the volume held that I was compelled to become actively interested in the apparent financial collapse of Florida's taxing units. This I did. Personal inquiries were made by me, including, quite naturally, an inquiry of the Brown-Crummer Company. I was greatly relieved and highly impressed by the information received from time to time from Mr. R. E. Crummer of that company, who assured me that every possible effort was being made and would continue to be made by his company to protect my holdings. I learned that, in this connection, Mr. Crummer had taken the active lead in enactment of legislation during the 1929 sesion of the Florida Legislature to provide collectible additional revenue for the support of the road and bridge bonds of the taxing units of Florida, and that energetic efforts were being made to sustain the validity of such legislation which was under attack in the courts by interests opposed thereto. The 1929 legislation, sponsored primarily by Mr. Crummer, was held unconstitutional, in part, by the Supreme Court of Florida. However, at the 1931 legislative session bills were introduced to meet the court's objections to the 1929 act. The 1931 legislation was likewise attacked by the same formidable opposition which opposed the 1929 act, but this time the Florida Supreme Court held the legislation constitutional in toto. Mr. R. E. Crummer was on the scene and rendered invaluable assistance in the fights on both the 1929 and 1931 enactments, and in the litigation which ensued. Subsequently, during the year 1932, Mr. Crummer presented to the investing public and the governing authorities of Florida taxing units a plan designed to protect the obligations in distress, and to relieve the taxing units of a portion of the existing debt service charge, which, as had become apparent to every fair individual. could not be met. This plan soon became generally recognized throughout the Nation as the Crummer refunding plan. The Crummer refunding plan was submitted to me. I examined it carefully and reached the conclusion that in principle and purpose it was sound. Moreover, such plan appeared to me to be the solution of the financial problem. Therefore, I approved the plan and unqualifiedly recommended it to many other holders of original bonds of Florida taxing units. The Crummer refunding plan was activated in 1933 and was adopted and used extensively by the taxing units of Florida from 1933 through 1938. I closely observed the reaction of bondholders and governing authorities of taxing units operating under the plan. I came in contact with many holders of the originally issued bonds of Florida taxing units. These bondholders were both large and small and lived in many States. The plan, so far as I was able to learn, met with universal support and approval with the exception of Mr. Edward Ball, of Jacksonville, Florida. Mr. Ball, I was informed, was the active head and dominant influence of the vast and far-reaching du Pont-Ball interests. I voluntarily participated in all refunding programs within the State of Florida which were under the Crummer refunding plan, and in which I had creditor interest. I am sure that practically all other creditors with whom I came in contact did likewise. As mentioned previously, there seemed to be a potent influence opposing the entire Crummer program from its inception. Since the program continued to meet the same opposition constantly, and since I recognized the extensiveness of the holdings of this influence, I determined to make the acquaintance of Mr. Ball, whom I learned to recognize as the dominant head of this opposition, in the hope that I could ascertain primarily what he considered wrong with the Crummer refunding plan, and just why his interests continued with such seemingly unmeritorious opposition. I made a trip to Jacksonville, Florida, for this sole purpose in company with Mr. R. J. Flick, of Reno, Nevada, and Mr. J. C. Titus, of Los Angeles, California. Mr. Flick is a very substantial man and was formerly with National Dairy Products Corporation. Mr. Titus is a capitalist of considerable means. We represented not only a substantial amount of bonds owned by us individually, but also numerous other holders of bonds in smaller amounts. We met Mr. Ball and attempted to outline the purpose of our visit. He evinced immediate resentment and was emphatic regarding his opposition. Mr. Ball did practically all the talking. We gathered from his conversation that he had no intention of discussing with us anything concerning the so-called Crummer refunding plan, and that he intended to continue opposing the Crummer refunding plan and would utilize all resources and influences within his command to defeat its effectiveness in Florida.. Mr. Ball also informed us that he had engaged the best legal counsel he knew and that he was at that time opposing the Crummer refunding plan in both Bay and Sumter Counties. The conference came to an abrupt close with the proffered recommendation of Mr. Ball that we either join him or oppose such refunding plan on our own account, stating that if we considered his advice and recommendation sound he would give us the name of his attorney who he felt certain would produce the desired results. After my visit with Mr. Ball I was satisfied that the fate of the taxpayers of Florida and the extent of the recovery of Florida's taxing units, as well as the fate of the vast majority, in volume, of defaulted indebtedness, would depend to a great extent upon the success or failure of the Crummer refunding plan. I concluded that Ball's interests could best be served by keeping the Florida securities in a defaulted state at that time and that we could not except from him anything but violent opposition to the Crummer refunding plan. Through business transactions over a long period of years in the purchasing of securities, I was convinced that R. E. Crummer was endeavoring to preserve the reputation and integrity of his company which was recognized as one of the outstanding and most reliable investment houses in the Middle West. To accomplish this, it was essential that he protect his clients' investments and, at the same time, maintain the good will and cooperation of the taxpayers and governing authorities of the debtor taxing units of Florida. Mr. Ball, on the other hand, did not appear interested in the early restoration of solvency to the taxing units of Florida, but by his conduct and consistent vigorous opposition, it clearly appeared he was actually attempting to keep such outstanding bonds in a defaulted status, thereby resulting in greatly depreciated values of the securities; the imposition, in many instances, of an almost confiscatory tax levy; and a feeling of utter hopelessness and futility among the taxpayers and governing authorities affected. I felt that, with Mr. Ball's policy prevailing, it was reasonable to assume that the value of municipal bonds and the market price of real estate in Florida would continue to be increditably low; in fact, at prices which might attract vast financial resources seeking bargains. The record of what has transpired since that time satisfied me that my conclusions were correct. Such record conclusively shows that by reason of the success of the Crummer refunding plan, administered as it was, voluntarily and under the Federal Municipal Bankruptcy Act, Florida's taxing units, to the extent of at least $170,000,000.00 of their obligations, were restored to solvency. But, along in 1941 and 1942, it became quite generally known that the Securities and Exchange Commission and Post Office Department were conducting an investigation of the activities of Mr. Crummer in Florida and elsewhere. Likewise, the nature and methods of such investigation became known. The then existing source of economic credit which had been throughout the years the most friendly, understanding, and cooperative source for Florida's taxing units, became dubious. This credit numbered in the thousands individuals and institutions who knew Mr. Crummer and had implicit faith and confidence in him. From my knowledge and experience, I knew that Mr. Crummer was being |