Evening Star Newspaper, May 24, 1933, Page 4

- MORGAN OPPOSES * BANK'SINSPECTION Declares Private House Must Act Confidentially for Clients. ‘(Continued From First Page. —Con e e e e should regard the conduct of your bank as detrt:e'nm to the public interest, couldn't the A»em!‘)g’pun & law to {nvestigate or supervise?” Morgan nodded, and Glass said, “It Jooks to me that we are including New York State in this inquisition.” Morgan revealed to the committee that his firm takes new partners with- out requiring them to furnish new capital. Place Names in Record. The committee counsel opened the hearing today by addressing Morgan: “You were asked yesterday whether your firm had'made any loans to in- dividual officers or directors of com- mercial banks.” Morgan nodded. The counsel then recited that the committee had decided to put the list on record. After Morgan had identified it by saying, “I am informed it is correct,” the list went into the record Pecora read the names and the jwit- ness identified their banks. The record showed that Dawes and Taylor had paid off their loans. Mitchell, former chairman of the National City Bank, now on trial for income tax evasion, has disclosed that the loan to him has $6,000,000 out-| standing, though it was larger at first. One loan was listed to a joint ac- count participated in by Harvey D.| Gibson, Mortimer N. Buckner and/ Artemus L. Dates. It was marked as| still unpaid. Morgan testified they were connected with the New York Trust Co., but no date of the advance was given. Pecora asked about the loan to Davis, now Ambassador-at-large in Europe. “I can't say,” Morgan answered, *“I'm not familiar with it.” George Whitney. a partner in the firm, commented that it was a “very Doesn’t Know Details. 1In turn Pecora asked about details of other loans outstanding, . mentioning F. C. Dumaine of the First National Bank of Boston, and the loan to Mitchell. Morgan said “I don’t know.” He suggested that Whitney be called and smiled as Pecora continued down the loan list. “I have to give you the same answer to all those tions about details of Joans outstanding,” he said. Another clash occurred between com- mittee members over the course of .the inquiry. Senator Glass was again protesting, but Chairman Fletcher insisted the in- quiry should go on as a basis for bank n. “With respect to chartered banks,” ‘Pecora asked, “you are familiar with the limits or the ‘amount of loans to & individual?” = “] am roughly familiar with it,” rgan said. ‘Do you approve of the principle of | such a limitation? “I don't know enough about it. It is a'‘matter of legislation which muat"be conformed to by commercial banks. “You have no opinion of its reason- ableness?” | “] have no opinion. I have no| opinion on the reasonableness of the law.” Senator Glass interrupted to say that | for 40 vears Congress had held the opinion such loans should be’limited to 10 per cent, “and I don't believe an opinion of Mr. Morgan would alter Con- gress’ opinion. Relations Confidential. “Have you any opinion of the wisdom of &pplying such limitations to private banks?” Pecora asked. “My opinion is it wouldn't ‘be neces- sary,” Morgan replied. . Pecora asked if J. P. Morgan & Co. had opposed New York State legislation for more extensive examination of pri- vate banks. “I don't know of my own knowledge.” “Is the failure of your firm to adver- tise as a bank intended to avoid exami- nation?” “That is the natural conclusion.” . “Why do you object to this investiga- tion which is given commercial banks?” “I object because our relations with our clients are much more confidential than the relations between a commercial bank and its customers can be,” Mor- gmn said. As to putting private banks under the same legal regulation as commercial banks, Pecora asked of Glass whether he had overlooked that “such legisla- tion has been opposed and tbhat Con- gress might want to do something on its own account?” Glass commented that he “didn’t think Congress had authority for such legislation.” Fletcher broke in to say that banks | did an {memuu business, and he didn’t | doubt that Congress had authority. | Glass said nothing had been done, and Fletcher then shot at hi “Yes, a banking subcommittee has | vision had changed the banking situ: J. P. Morgan (left), head of the gi mittee. “Do you get a financial statement of | & new partner?” | “No,” Morgan said with a chuckle. | “We know them pretty well before we get them in.” In reply to Glass, Morgan said he wanted Gilbert in.the firm because of his expert knowledge, especially of the foreign field. Whitney testified that some members of the firm were indebted to it, but he gave no names. As to the loan to Mitchell, placed at $10,000,000, Whitney said it was made to aid him in maintaining a parity be- tween National City Bank stock and stock of the Corn Exch: Bank, with which it was being merged. The merger was never consummated, however. ‘The cutstanding portion of this loan, $5,800,000, is now “undercollateralized, it was asserted, but reserves have been set up against it. F Whitney’s testimony was given while | he stood back of Morgan, the formal | witness. i On some members of the firm being indebted to it, he said he ¢ould not give the amounts or names withcut checking the books. Whitney said he also could not recall whether the loans were backed by collateral, but said these were deducted from the net worth of the Whitney testified the firm had set up $1 053.000 in reserves to cover “un- n reply questions, Morgan said he.had not “found Government super- tion much. I still hear of banks on the edge, the examination seems to make little difference.” ‘The whole room broke into laugh- ter when he said, “No, we would not,” when asked if Chairman Fletcher could come to his company unintroduced and sought to deposit $10,000. “Then I suppose I couldn’t borrow $10,000,” Fletcher commented. “No, not unless you werfe introduced, Senator,” Morgan aid. . ‘The financier' said f® firm did not o LTI “How about the on home of Charles E. Mitchell?” Senator Bulkley, Democrat of Ohig, asked. “That was additional security, called for later,” Morgan said. “Straight banking” was given by him | as the largest part of company'’s | business and “underwritings are the less | profitable part.” % Pecora asked if the firm’s time loans of $34,836,000 and demand loans D(‘ $47.869.164 were fully “collateralized.” | ‘Whitney said not all of them; and| examination on the Mitchell loan pro-| ceeded with Senator Glass asking sud- | denly, “Why did you make this loan?” Standing, Whitney said “it was made | in the Fall of 1929, in tober. As | you recall the stock market slump hap- pened then. We were participating with other banks in an effort to main- tain order. | “There were merger negotiations be- | tween the National City Bank and the| Corn Exchange Bank. In the first few | days of the panic, National City Bank | stock sold below the equity of the ton-‘[ tract with the Corn Exchange. | “Mitchell expressed concern over the | price of his bank stock. He asked that we lend him funds t6 support. We! thought he was trying to do something | constructive.” | “What I want to know “is whether you made thaf loan with the idea that the House of Morgan might acquire control of the National City Bank.” | “No, no, absolutely not” Whitney blen trying to frame legislation for two years, but it hasn't done anything.” | Glass heads the subcommittee which | has been framing banking legislation. | He flushed and looked over his spec- | tacles at Fletcher. Pecora resumed his questioning. { “I think the chief reason why our | relation to our depositors is more con- | fidential than those of a commercial | bank,” Morgan said, “is that we have no board of directors, no shareholders we can work swiftly, do what we want | Lots of people don’t want Tectors to know their private affairs.” | “I think many bank directors don't | know anything about their depositors’| affairs.” Couzens commented dryly. Leaning over the table, Pecora rested his square chin on his hand and smiled whenever there was dispute between committee members. “So you think the chief difference between the relation of a commercial and private bank is their depositors | and that the latter have no directors and shareholders?” Pecora asked. | “Well, they have certain limitations | by law and get certain privileges,” Mor- | gan said. | He submitted a prepared statement as to the differences and that was pul.{ into the record. | { | | | Most of the committee members lis- tened without joining in_the question- ing, but Glass and Fletcher frequently interrupted. ‘Whitney occasionally intervened to help his chief answer questions. Morgan would sit motionless and ex- | pressionless while his associate spoke | from behind him, as though he were | not even listening. | Pecora asked Morgan if his firm ever | had given a depositor a statement of its position, | “A depositor could have had one,! but nobody ever asked for one,” Mor- gan replied. “My father made that| statement before on the stand in the Pujo investigation.” He added that this investigation was “the only public statement we ever| made about anything.” Barkley, ° Democrat, of Kentucky, asked if, when a new partner comes into the firm as S. Parker Gilbert did on January 2, 1931, he puts in any cash Some Members in Debt. “Not necessarily,” Morgan replied. “He is assigned & portion of the profis |. and losses in the ssme proportion. There is no capital.” “There is nothing standing to the new partner’s credit?” ‘Barkley asked. “Not until profits come, in.” “If there are no profits?’ Couzens asked. u‘sn-n he is assigned a loss and works \ said quickly, gesturing for emphasis. “We did it solely to assist i a difficult | situation.” 5 “The merger between thé National City Bank and the Corn: Exchange didn't go through?” Pecora fnquired. “No,” Whitney answered. He was an- swering questions quickly and with oc- casional touches of impatience. He added that he felt the Corn Exchange agreed but the National City Bank re- used. Pecora said he felt it was the “other way round.” Whitney Takes Chair. Asked how much has been set up out of reserve to cover loans not fully se- cured by collateral, Whitney said about | $18,000,000, but added that $53,000,000 surplus given in the balance sheet as of December 31, 1932, did not include this $18,000.000. To questions of McAdoo about the reserve against losses, Whitncy said the figure fiuctuates to make each indi- vidual loan “a sound loan.” “On December 3 we were 80 per cent liquid.” he said. i Pecora esked if there was any state- ment to indiczte the extent of an in- dividual partner’s liabilities against possible losses. e never seen one.” Whitney said. “Of course, w= know a good deal about each cther “Are eny pertners indebted to the firm?” Pecora asked. e “How many?” “I don't know, “A partner mizght be indebted bv rea- son of withdrawals against his ac- | count?” asked Byrnes. Ye: Whitney finally took a chair beside | Morgen, | “Is the indebte’ness of the partners shown on the balance sheet?” Pecora asked | “No.” Whitney said. “but they are deducted from the figure net worth.” Pecora acked if there was a break- | | down of the balance sheet available. “We are having an audit of our books,” Whitney said. “The audit was | started before we heard of this sum- | mons.” “When can the committee get a copy of this audit?” “It can be expedited if the cummittee wishes it.” Hold Seats on Exchange, Whitney told Bdrkley he was a brother of Richard Whitney, president of the | Stock Exchange. Byrnes asked if Mitchell's was the largest loan on the list of advances to bankers. \ gantic banking house of that name, as he left the Capitol yesterday after testifying before the Senate Banking Com- —Underwood & Underwood Photo. “Yes, sir,” Whitney replied. “That was a special occasion.” | not charging that is done, s firm’ 1933. Had Enough Loss. “Three or four million dollars” of the $21,000,000, he said, was deducted from profits in 1931—a year in which " parners paid no 3 Lhev%s of tm:”sn.ooo.ooo de- ducted in 1932?” asked Senator Adams, "Democrat, of Colorado. “No, s Keyes replied. “You did not need that?” ‘No, 3 ou had loss enough?” Adams con- 1932 revenue act would prev:n:nt}l:le;; duction for tav purposes oOf of the rem:égln( $18,000,000 loss from 1933 ts. 'n'lv‘ecom ):-!ked whether “the date of January 2, 1931, was advisedly fixed as the date of the admission of Mr. Gil- bert into the firm?” " “Yes, sir,” Keyes replied. “It is the partners’ privilege to fix the date of the admission into the firm.” ‘But, he said, there had been other times when revaluation due to a change in partnership had caused his firm to pay a higher income tax. “We had a change in 1927 by the retirement of the late Dwight W. Mor- row,” he said, “and that return was & substantial write-up and an increase in value which had to be included because of the dissolution of the partnership. “What tax did you have to pay that year?” asked Senator Couzens. “Some six or seven million dollars, the total,” Keyes told him. During the long questioning of Keyes Senator Couzens commented: “Well, it is perfectly practicable and perfectly easily done to create a new partnership every year when it is ad- vmmzeous to do,so and sell out to the new partnership if it creates a loss in the interests of the ers. I am but that is “What brokers do you use?” asked:ga very simple procedure.” Fletcher. “Oh, I don't know,” Morgan said. “Dozens.of them. A recent check showed the firm used 32 brokerage houses.” Questioning developed that Morgan and his eldest son held seats on the Stock Exchange and that other firm members held seats on the Boston and Philadelphia Exchanges. Bought in October, 1929. Pecora asked if any members ever had been called on to answer a Stock Exchange questionnaire. “No,” Whitney replied, “because the | questionnaires only go to firms doing 2 marginal business and we do not do a marginal business.” “Is there any loan to a single bor- rower in excess of 10 per cent of your net worth?” asked Pecora. “I don’t recollect any and I don't | think we have,” Whitney said. Gore sald it often had been alleged that Morgan & Co. in 1929 sold stock in order to break the market or “scut- tle a sinking ship.” “I think you'll find our only trans- actions as a firm in October, 1929, were on the buying side,” Whitney said. “It was alleged also there was a com- blnttmn to prop or bolster the mar- ket,” Gore said. “There was an effort to create a market,” Whitney said. “Sg people de- siring to sell could find ' purchasers, but there was no attempt to stabilize. The committee counsel returned briefly to income taxes, and was re- ferred to Leonard Keyes, the Morgan office manager, who sat_near Morgan. Whitney, prompted by Keves, said the partners of the Morgan firm paid in- come taxes of about $11,000,000 for the calendar year 1929, “And practically nothing since then,” commented Pecora. “So I heard yesterday,” Whitney re- plied. Most members of the committee stuck through the long morning session, but the | Pletcher and McAdoo left and Glass took the chairman’s seat beside Pecora at the head of the table. Identified Accounts. Morgan identified a list of banks and trust companies in which his firm has maintained accounts since 1927 and the balances of March 24, 1933. The list embraced nearly a score of active deposits, including the following: Bankers' Trust Co., New York, $2,- 240,563. Chase National Bank, $1411,799. Central Hanover Bank & Trust Co., $1,594,116. Chemical Bank & Trust Co., York, $1,113,180. Corn Exchange Bank, $938,719. First National Bank of New York, $2,431,732. Guaranty Trust Co., $2,609,591. Irving Trust Co.. $1,399,495. National City Bank, $1,265,921. New York Trust Co., $1,251,734, Manufacturers' Trust Co., $355,878. Grace National Bank, $100,000. Pirst National Bank of Boston, $109,993. National Shawmut Bank of $243,508, , 3 Second ' National Bank of $150,437. New England Trust Co. of $14,840. Although the biggest Morgan deposit was the Guaranty ‘Trust Co. account of New Boston, | $2,609,591, Drexel and Co. of Philadel- phia was shown to have a deposit of $8,140,846 in the Philadelphia National Bank. . Eleven other outstanding Drexel ac- counts were listed as follows: Continental Illinois Natfo Trust Co., of Chicago, $8,465. Peoples-Pittsburgn ‘rust Co.. $21,361. Mellon National Bank, Pittsbyrgh, $88,064. Union Trust Co., Pittsbutgh, $84,054. First National Bank, Pniladelphia, $2,760,441. Corn_ Exchange National Bank & Trust Co., Philadelphia, $1.8,736. Fidelity - Phiadelphia Trust Co., Philadelphia, 1 Bank & $363,595. Girard Trust $233,959. The Pennsylvania Co., Philadelphia, $694,769. Integrity Trust Co., $1.087,500. Federal Reserve Bank of Philadel- phia, $47.650. Huge Sum on Deposit. The list showed an account with the Baltimore Trust Co. (Formerly the Na- ticnal Union Bank of Maryland) was closed out Feoruary 19, 1932, Guarantee Trust & Safe Deposit Co. of Philadelphia was balance given as “none.” There was a lull while Pecora exam- ined the list of banks. During it, Barkley chatted with Morgan, who, apparently, was in an even better humor than on yesterday. Co.,, | He laughed heartily several times and | avose and stretched when a luncheon recess was taken until 2 pm. The figures. showed that Morgan and Co. had approximately $18,000,000 on deposit on March 24, last, and Drexel | and Co. of Philadelphia, approximately $13,500,000. The powerful chief of Morgan & Co yesterd>y caused a sensation by testi- fying he paid no income tax in 1931 and 1932, His office manag:r, Leonard Keyes, broadened this statement to include: all the other partners. Only about $48,000 income tax, Keyes said, was paid by all the firm members to- gether in 1930. This return and those of 1931 and 1932 took in all income, whether it was private or within the partncbhip, for the private bank pays no taxes as a unit Keyes testified at Morgan's request after the 66-vear-old financier had oc- cupled the stand nearly four hours. Re- peatedly he has answered “I do not know” to Pecora’s querles about & $21,000,000 loss written off his firm's books on January 2, 1931, in addition to other deductions which’ already. had wiped out taxable income. Finally Morgan insisted® that Keyes speak to “clear the mxur up,” ex- 7 Fault of Tax Law. ° “Weld,” observed Senator Glass, “if that could have been done and should it have been doné and the law per- mitted it to be done, the fault, if any, is in the law and not in any intent on the part of your firm to cheat the Gov- ernment, is that not so?” Keyes agreed. While Keyes was on the stand, Mor- gan sat just behind him. In his own last testimony of the day, Pecora and Morgan had exchanged questions and answers for almost an hour on whether Morgan partners, who hold over 150 business directorships, might xot find that interests of these firms conflicted at times with those of Morgan & Co. The banker insisted he saw “no con- flict,” adding with a smile that business relations wouldn't continue very long if only one side profited. Pecora swung the questioning to “loans to individuals.” “Were any loans, personal loans, made to officers and directors of chartered banks?” “Yes,” Morgan answered,.and Pecora produced a list of such loans and be- gan to read them into the record, but Davis, counsel for Morgan, intervened to point out this invaded privacy of individs citizens. At an executive session later, the committee decided to put the list of loans to bankers into’ the investigation record.” Pecora had contended it would be pertinent to know whether a commercial bank officer might come under influence of a pri- vate bank through such loans. Betore the crowded committee cham- ber was emptied for the day, Pecora also quoted from g report made by Newell Shield, revenue agent, on Oc- tober 15, 1932, in which the tax loss claimed for the first two days of Jan- uary, 1931, was questioned. “By forming & new firm on January 2, 1931, Pecora said, “and recording the losses based on the sale of the assets to the new firm, the loss became a 1931 loss, which, under the then existing law could have been carried forward to apply against 1933 income.” “I never saw that report,” Keyes said, adding he thought Shield erred in fail- ing to mention that the accounting method used in estimating the loss was coupled with a change in co-partnership. v A . e Vigilant Guards 7 ) At Morgan Suites Bar All Intrusion Whole Floor of Carlton‘ With About 40 Rooms Occupied by Party. * J. Pierpont Morgan and his party of approximately 50 persons, here for the Boston, | hearing before the Senate Committee { on Currency and Banking, are vigilant- | | listed, but thel | | ! picious visitors. | glimpse of John W. Davis, Morgan at- | torney, conversing in the hallway, be Boston, | ly guarded, with the third floor of the | Cn}'leton Hotel made almost inacces- sible, ‘The party occuples the entire floor, with half the floor above reserved for attendants, guards and others. Alto- gether they occupy approximately 40 rooms, 10 of them large suites. In the lobby of the hotel, Washing- | ton headquarters detectives are sta- tioned, keeping a sharp eye for sus- The elevator will not stop at the third floor for anybody but members of the Morgan party and those who have appointments. A Star reporter managed to invade the Morgan territory by walking down a temporarily unguarded back stairway from the fifth floor, but only caught a by two fore he was taken in hand the ele- bulky figures and escorted to vator. The hotel manager confirmed the fact that local detectives are keeping a 24-hour watch at the hotel. Halt Milk Delivery by Auto. MONROE, La.—Dairles have reverted to horsepower for milk deliveries. It was explained too much gasoline was wasted by drivers making so many stops at customers’ doorsteps. The Morris Plan Bank offers the INDIVIDUAL the facilities of & SAVINGS BANK with the added feature of offering a plan to make loans on a practical basis, which enables the borrower to liquidate his ob- ligation by means of weekly, semi- monthly or monthlydeposits. It is not neces- sary to have had an account at this Bank in order to borrow. The Dawes, Davis and E. Brooke Lee Are Among Borrowers. (Continued From First Page.) Mortimer N. Buckner, joint account, New York Trust. Guaranty Trust, paid off March 6, 1930. . Harris, Albert H., Guaranty Trust, paid off October 8, 1928. M., paid off April19, 1928. ville, H. E., Pleasantvilie National Leonard, Cliffore Man Bank, paid off December 17, 1931. Marston, Edgar L., Guaranty Trust, paid off October 21, 1929. Merselles, Theodore F., Seaboard Na- tional Bank, paid off April 25, 1929. Milbank, Albert G., Seaboard National Bank, paid-off March 15, 1929. Mitchell, C. E., National City Bank— Morrow, F. K. (unidentified), paid off December 1, 1932. Murphy, G. M. P, Guaranty Trust, i 28. Potter, Willlam C., Guaranty Trust, paid off January 4, 1930. Prosser, Seward, Bankers' Trust— Reed, Lansing P., Guaranty Trust— Reyburn, Samuel W., Guaranty Trust, paid off December 16, 1929. Stevens, H. C., Guaranty Trust— Taylor, Myron Pirst National Bank of New York, paid off March 2, 1933. Tilney, A. A. Bankers’ Trust, paid off Octobey 22, 1928. ‘Whitney, Richard, Corn Exchange— Loans by Drexel & Co. of Philadel- phia, affiliate of Morgan, were listed as follows: Albright. H. 8. paid off April 16, 1929. 19glec:ker. Frank S., paid off January 2, Biddle, Charles J.— Brooks, Robert E., paid off Pebruary 23, 1827, Budd, Edward G.— , Gurwen, Samuel M., paid off October "Dice, Agnew T.— . Dlgg;wr, William H,, paid off August l;fgm{m, Julian L., paid off May 7, ugg'maque. Horace, paid off June 16, Frazier, George H., paid off October 23, 1926. + Griscom, Rodman E., paid off April 23, 1928. 24“;;13 , Charles V., paid off September Higbee, James I, paid off November 25, 1930. Hutchinson, Sydney E— Kennedy, Reid— Lauer, Conrad N., paid off November 25, 1929. Lee, E. Brooke, paid off June 2, 1932. Loomis, Edward E. 1 !\:cAllutu, J. R, paid off March 3, | 1928. McCarter, Thomas W., paid off De- cember 5, 1929. Markle, Alvin— Markle, Alvin, jr— Markle, George B, 3d, paid off April 8, 1932. Martin, John C.— Morgan, F. Corliss, 28, 1932. Morris, Effingham cember 4, 1929, Morris, E. B, jr— O'Neill, Francis ber 10, 1931. Price, William G., jr- Schlacks, Charles H, tember 26, 1929. Statts, Walter J.— paid off December B, pald off De- , paid off Novem- > Paid off Sep- Yarnall, Charlton— Zimmermann, John E— MODERNIZATION ORDERED FOR WASHINGTON PLANT International Business Machines Corp. Action Declared Result of Increased Business. By the Assoctated Press. NEW YORK, May 24.—International Business Machines Corporation an- nounced yesterday that it had ordered modernization of machinery and equip- ment in its plants at Endicott, N. Y.; Dayton, Ohio, and Washington, D. C. Orders have been given to increase inventories of raw materials and other ‘suppllu, and the company's main plant |at Endicott has been placed on a 40- hour weekly basis, operating two 8-hour | shifts in some manfacturing depart- i ments. The International Business Machines Corporation maintains a tabulating !card printing plant at 105¢ Thirty- first street. Harry S. Evans, manager |of the concern’s sales office, at 816 | Fourteenth street, said today that in- | creased business was responsible for | modernization of the plant here. Detailed plans for modernization of | | the machinery and equipment in the | | Georgetown plant have not been worked | out. MORGAN FIRM COMPOSED OF TWENTY PARTNERS Personnel of Banking House's| Members Revealed for Sen- ate Committee. By the Associated Press. | The Morgan firm is composed of 20 | members, headed by J. P. Morgan. The others are Edward T. Stotes- bury, Charles Steele, Thomas W. La- | mont, ~Horatio G.” Lloyd, Thomas | Cochran, Junius _ Spencer Morgan, | George Whitney, Russell Cornell Lef- fingwell, Francis D. Bartow, Arthur M. Anderson, William Ewin, Harold Stan- | ley, Henry ' Sturgis Morgan, Thomas Stilwell Lamont, Henry Pomeroy Da- vison, Thomas Newhall, Edward Hop- | kinson, Jr.; Seymour Parker Gilbert | and Charles Denston Dickey. | e HIRED OWN EXPERTS J. P. Morgan & Co. hired its own shorthand experts to transcribe the testimony of J. P. Morgan before the Senate Banking Committee. Company offieials explained it wasn't | because they didn’t have faith in the committee’s own stenographers—who are sworn by the ghairman before they start work—but cause they wanted & complete tmanscript “quickly.” | BANK for the INDIVIDUAL Loans are pass ed within a day or two after filing application— with few excep- tions. MORRIS PLAN notes are usually made for 1'year, though they may be given for any period of from 3 to 12\months. MORRIS PLAN BANK Under Supervision U. S. Treasury 1408 H Street N. W., Washington, D. C. CHANGES IN LAW Fletcher Sees Action Through Interstate Commerce Provisions. (Continued From First Page.) clients were more confidential than were the relations of a regular commer- cial bank to its clients. His argument was to the effect that it was quite proper for a private bank to have such confidential relations and he said many men to keep their, affairs entirely confidential. Into the record of the committee, Mr. of New York State banks and larger New York private bankers, pre- pared by a representative of his firm. Private banker: this statement showed, are subject to “unlimited -per- sonal liability” of the firm, while na- tional and State banks are limited in liability to capital stock with the further individual lability of stock- holders for the }ur value of, their stock. ‘The comment of the firm representative who prepared the statement was that this liability of stockholders was “un- workable as a practical matter of fact.” ‘While the private bankers are unable to do some of the business which is permitted State and National banks, there are no restrictions on the loans a private banker may make, no restric- tions on ownership of stock of other corporations and no restrictions on the ownership of real estate, nor any par- ticular reserves reduired of private bankers. On the other hand, private banks cannot become members of the Federal Reserve system, may not act as depository of public funds and may not issue currency. System Under Attack. Apparently from the questions de- veloped at the inquiry today, the private banking system is on trial. Just how it is to be reached, whether through legis- lation of the States, in New York State in particular, or through legislation by w' is a question. Already in the reform , which passed the House late yesterday, the private bank- ing system as it has existed' is under severe attack. If that bill is written into law private banks will no longer able to be banks of deposit and at Lansburgh’s | Morgan Can Get $3 Daily for His Capitol Testimony in the Senate investigation of his banking house. The other witnesses called in the inquiry also are allowed $3 a day expense money as long as they are under subpoena. They also get railroad fare, but have o pay their own hotel bill. Daniing pusintes, Bosting huge Quanis ess, iting h inti- ties of securities. s ‘This provision of the proposed new law would be a distinct blow to such private bankers as Morgan. He told the committee the business conducted by his firm, that is the busi- ness of receiving deposits and making loans, was the major part of the firm's business and that the floatation of se- curities and investments in such securi- ties was the lesser part. ‘The provision of the bank reform bill, which undertakes to make a pri- vate bank determine whether it is to do merely a banking business or an investment banking business, is in line with another' provision in the bill which compels national banks to sever all connection with their so-called affiliates through which they, too, have been doing an investment banking busj- ness, Others to Be Called. The Senate Committee will have be- fore it for investigation the represen-’| tatives' of other big private banking houses, Kuhn, Loeb & Co., for example. ‘These great private banking houses in the past have financed imdust: in large measure. Whether they will be able to act as distributors of capital for investment on any such scale in the future is problematical. The ques- tion that naturally follows is, if these huge private banking institutjons are restricted in their activities, what method of distribution will be found as a substitute? ‘The questions asked Morgan regard- ing his banking business have been critical of that business and every effort apparently is being made to show that the house of Morgan has sought to dominate commercial and industrial concerns as well as the larger banking institutions of the country, —_— | | ‘The lowest fire loss in 19 years was reported in Cincinnati in 1932. NO CONNECTION WITH ANY OTHER WASHINGTON STORE U The First Ladies of the Land Rally 'Round The First Fashion of the Land! "3 Nfi)’ > DOGWO % e\ 0D Lansburgh’s, as usual, 4 { =) b MAY BAR STOCK. DOUBLE LIILTY Glass-Steagall Bill Passage Seen Applicable to Ham- ilton Bank. Possibility that stock in the new Hamilton National Bank, formed out of the merger of six or more Wash- ington banks, may .not carry double lability, arose today, following m‘fln‘ of the Glass-Steagall bank last night by the House. This bill carries a provision that stock in new national banks, to be or- ganized after enactment of the bill, would not carry double liability. The bill goes to the Senate, where it was predicted in Congressional circles it would be taken up as the next order of business after disposal of the Louder- back trial. If the Senate leaves this provision in the bill, the bank stock 1!11’ lthe new merger would not be assess- able. ‘The Hamilton National is now being organized and stock is being sold, but the chances are that the charter will’ be dated at a time subsequent to the signing of the bank bill by the - dent. The first formal reports on sale of stock by all six member banks were to be made at a meeting this afternoon of the General Subscription Committee at the Federal-American National Bank/ & Trust Co., which is headquarters for' the merger. Other banks in the merger include the District National, the Potomac Savings, the Washington Savings, Northeast Savings and the Woodridge~ Langdon Savings & Commercial Bank. ‘The Industrial Savings Bank, a col- ored institution, which is pushing for- ward & plan to reorganize as a national bank on its own responsibility seperate from the merger, will hold a meeting of volunteer workers in a stock cam- mn tonight at the Twelfth Street ch of the Y. M. C. A. Cheese Specialist to Speak, HERNDON, Va., May 24 (Special).— Prof. William D. Saunders, cheese specialist of the Virginia Polytechnic Institute, will be the principal speaker at a meeting to be held y at 8:30 o’ in Elden Street under the auspices of the Chamber of Commerce. LI, 8™ and E - X =2 Administration - Chiffon NDresses with Reforestati on Prints 50 5 Styles With Silk Crepe Slips Yes, Fashion is keeping up with current events—and keeping up with Fashion! Re- forestation Prints have captured the fresh, cool beauty of the forest, the delicate colorings of woodland blossoms— and they'll capture your heart the moment you see them, in these exquisite, airy, chiffon frocks. The style as well as the patterns seem positively inspired—the sketches can “only suggest their loveliness! Sizes 12 to 20—36 to 42. SECOND MOI—I.AN!IIJIBI'I: