Evening Star Newspaper, May 25, 1933, Page 3

FAVORED CLENTS Former President on List of Buyers-Below-Market From Morgan. (Continued From First Page.) of 7,000 pounds and approximately similar amounts for 1931 and 1932. The English income tax includes a tax on the rental value of property owned which the owner uses and which would | have increased his income had he rented it. “It does not include any capital gains and losses.” After concluding the written part, Morgan added: “I take great pains and have all my life to pay all the taxes I am called upon to pay by the various govern- ments—not to underpay and not to overpay.” “Then the fact that you paid no in- come tax here in 1931 and 1932 is be- cause your losses were greater than your income,” he was asked. “That’s it,” Morgan replied, losses were greater than my income.” He added with a chuckle: “I'm not responsible for these figures. I view them with great regret when I go_to pay them.” The financier’s last remark referred spparently to his British payment. “If the English law had held here you would have paid income taxes in 1931 and 1932?” asked Pecora. “To quite a considerable amount,” Morgan replied, “but I wouldn't have paid as much in 1928 and 1929.” “The tax paid over there has no relation to the tax in the United States?” “None at all,” Morgan said. Senator McAdoo, Democrat, of Cali- fornia, on the list of favored investors revealed yesterday, formally denied at the opening of the inquiry that he was & “preferred client” of Morgan. He submitted figures to show he had lost $2,565 on three purchases he had invited to make by the Morgans, although he disclosed a $4,900 profit on the 500 shares of Alleghany stock he had been allowed to buy. The hearing today was transferred from the Banking Committee room to the huge caucus room in the Senate Office Building, and spectators thronged | 3% these expansive quarters as readily as they had the first. Will Rogers, humorist, had a chair back of the press tables. Just behind him was Mrs. Eugene Meyer, wife of the former governor of the Federal Reserve Board. Senator McAdoo opened the hearing ;eith his prepared statement, in which id: “When the United States entered the ‘World War, in 1917, I selected Russell C. Leffingwell of New York to be counsel for the Liberty Bond issues. “He was a member of a prominent law firm in New York, versed in these particular matters. “I had known him as a young man— his family and mine having lived across gm Ya'.reet from each other at Yonkers, “Subsequently, because of Mr. Lef- fingwell's ability, I made him an As- sistant Secretary of the Treasury, a place he filled with great ability and distinction. “When I left the Treasury in 1918, Mr. Lefingwell remained with my suc- cessor, Mr. Carter Glass, and also I zl!eve with Mr. Glass’ successor, Mr. vid F. Houston. “After leaving the Treasury, he be- came & p-rctger of the firm of J. P. l(ogl.n & tary.of retary the before ¥ became & United States Sena- tor from California, Mr. Leffingwell of- fered me the opportunity of making :hree investments through his firm, | B: , and four years Morgan & Co.: “1. Pebruary, 1929, 500 shares of the stock of the Alleghany Corporation, which I paid for in cash and which I sold at a net profit of $4,900. “2. January, 1929, 250 shares of com- mon and 250 shares of preferred stock of the United Corporation, which was sold at a loss of approximately $400. “3. September, 1929, 1,000 shares of Standard Brands, which was sold at a loss of $7,065. “The net loss on these three trans- actions was $2,565. | “I have mnever been a ‘preferred| client’ of J. P. Morgan & Co. “The participations to which I have| reference came to me solely through my friendship with Mr. Leffingwell. Prior to this time I had never had a transaction with the firm of J. P. Morgan & Co., nor have 1 had any transaction with that firm siace. “I have never borrowed from J. P. Morgan & Co., and therefore, have never owed them anything.” No Strings Attached. ‘When he concluded, Pecora questioned Whitney about the sale of the Alleghany stock to a special list, including McAdoo and Woodin. . There was so much noise in the hall | that Chairman Fletcher shouted: “Keep quiet or get out. All these chairs scraping makes it sound hkg # @ railroad train going through the hall. Pecora asked Whitney whether Morgan and Co. had any list of “the names o close friends who were given an oppor- tunity to subscribe to various issues.” “No, sir,” Whitney said. He then asked permission to “clear SPECIAL NOTICES. 7 “THE GEORGETOWN GASLIGHT CO.” WASHINGTON. D. "C. The anpual meeting of {he Stockholders of ““The Georgetown Gaslight Company.” for $he election of directors and the transac- tion of such other business as may properly ecme before the meeting, will be held at the office of the company. 1339 Wisconsin avenue “northwest. Wasnifsion, D C. on Monday. JUnG REDERICK K. HEUFEL. Secretary. _ i I BE RESPONSIBLE FOR ANY elf. ~EVERETT MESSICK, 712 Hamlin | FUI E REPAIRED AND UPHOLSTER- ed in your home: A-. ferences; free mates.”_Address , Star office. CONGRESSIONAL COUNTRY_CLUB ACTIVE mémbel’lhm, $125. Address Box 240-J. Star ofice. s LONG-DISTAKCE_ MOVING BETW, stern points. “Service since 180 Fons Pranster & Storags Co.. NA. 0860 AL L m7 n b §lfly %{‘r!fluced rates. Call Baltimore, Pl or _prices. LOAD WANTED TO BALfii%'dE DR. W, H. WALDO, DENTIST, HAS MOVED from the Westory Blds. to 406 Ct ado Bidg.. n.e. corner 14th & G. _Phone NA. 2913, SPECIAL RETURN-LOAD BATES ON FULL fill:'fcnlfl. Joads to all points within 1.000 miles;: padded vans; guaranteed service: lo- cal moving also Phone NA. 1460. NAT. PELTASSOC.. INC., 1317 N. Y. ave. Remember the Roof! on’t let rust destroy the tin. Our fa- mafll Prnle‘c-Tm ROD{ltlel pl;n]‘iplsl qrg'o%- —1lasts for years. us al — 1 SR ’ROOP!ND 3V St. NW. COMPANY_ AUCTION SALESZFUTURE. _ & SON, AUCTIONEERS. NW. THOS. J. OWEN THOS. J. QU3i E¥E BT. TEES SALE OF TWO-STORY BRICK TR ELLING, KNOWN A8 14, | pw 26, 1931, am Tecorded M e "District. of Columbia. and at uest of the party secured thereby, the undersigned trustees will sell at public on AD. i s Pancy” and “Ould’s ‘as per plat recorded in the office ryeyor for the District of Colum- bis. in Liber 79, at folio 156; subect to the covenants of record rms: rior deed of it for of Yhien win the 3 ariclpe sing e, SR S days. otherwise deposit forfeited lns Ay be sdvertised and resol s ke Jr. ES | holdings,” he said. d | gled with the scraping of J. P. Morgan, central figure of the Senate Banking Committee's investigation of the stock market, shown entering and leaving the hearing and conferring with John W Davis, his counsel. up some of the things I said yesterday.” He said that the trading in Alleghany Corporation stock before February 15, 1929, was a “when jssued basis.” “The stcck was selling around 35, I think,” Whitney said, “but it wasn't listed till February 15.” Pecora asked if any restrictions were placed by Morgan and Co. on the Alleghany stock sold its favored clients. “There were no strings,” Whitney said. “Then these purchasers, could have taken advantage of that market to make a substantial profit?” Pecora ked. “They could have on that market,” Whitney said. . “But in the great and accepted before any market existed at all” “But it was much more iemptingo‘lln the letter to Secretary Woodin,” - zens commented. Then ensued a sharp tilt between Davis and Pecora on correspondence re- lating to favored customers. Davis said he thought the examiners, in the “three months they went through these files, got what they wanted.” Pecora said he had asked the Morgan firm to produce letters which his ex- aminers had been unable to get. “The firm of Morgan & Co. denied us permission to remain in their offices until 12 o'clock—the only firm which denied us this privilege,” the counsel asserted. “What is wanted?” Senator Byrnes, Democrat, of South Carolina, asked. “All letters relating to offers of par- ticipation in the Allegheny Corporation issue, the General Motors issue, Stand- ard Brands and Johns-Manville,” Pe- cora said. “The Alleghany list has been made public but the others have not gone into the record.” Will Furnish What Is Wanted. Davis disputed Pecora's interpretation rs after T resigned as Sec- | of the examination of the Morgan files vigorously. “We will furnish what is wanted, if we are told what it is,” he said. “The files are too bulky?™ asked es. yfl"’.“mtly"‘ Davis said. “The investi- gators of Mr. Pecora had all these files. If the committee wants all col |- ence files re.ating to tiis subject, they will be produced. But I feel the request ought to come from the chairman of the committee " “T don’t think the implication should remain on the record that Morgan & Co. withheld any records,” Glass said. “I think Pecora should submit a list of the correspondence wanted,” Couzens said. Pecora_charged fhat because of the time limitation imposed on his investi- gators by Morgan & Co. “they weren’t able to make the kind of investigation the examiners wanted to make.” ‘The committee counsel caused a Bro- test by Davis when he said “someti days elapsed before we would get a photostatic copy of correspondence de- sired, though the photostatic machine was right in the office.” “That calls for a reply from me,” said the Morgan counsel, adding that the firm had supplied complete answers to a list of 23 questions submitted by Pecora. “When his investigators came into the office,” Whitney broke in, “they were furnished with a commcdious room for work. Our staff was occupied at night satisfying additional requests made every day by Mr. Pecora. “I told him it would be unfair to our men assigned to assist him to have them work with his investigators up until midnight and then work the rest of the night fulfilling his other re- quests. “It was reported to me that his com- plaint about the photostats had no real foundation. In my humble judgment, the co-operation with the examiners could not pcssibly have been exceeded.” Explains Stock Dealings. Questioned by Senator Barkley, Whitney explained his participation in the Alleghany issue. He said he ac- quired 14,260 shares at a cost of $285,500. “I sold about 6,000 shares in July, 1929,” he said, “and 2,000 in September. “This profited me about $229,000. The average price was about 48. “In 1930 I sold about 4,000 shares and later 2,000 more, and I still hold about 115 shares. My gross profit was $146.250 ‘Then Whitney discussed the Morgan Co. relations with the Van Sweringens, who formed the Alleghany corporation. He said the Van Sweringens, railroad operators, were trying to consolidate Eastern roads. “They first formed the Chesapeake Corporation,” he said, “and acquired the Chesapeake & Ohio. The wisdom of this has becn shown by the fact that the Chesapeake & Ohio is still one of the roads that is paying dividends. “We believe the consolidation in the public interests. We had been bankers for the Van Sweringers for many years. We had no interest in any of the stocks they acquired in railroads, with one minor exception.” acquired the Pere Marquette after the Morgan firm had helped sell bonds of the Chesapeake Corporation. “They desired to consolidate their “They decided to form the Allegheny Corporation for this Morgan and Davis, sitting direc behind Whitney, followed his mmntl}; closely, with Thomas W. Lamont, an- other partner, behind them. The scraping of chairs on the marble floor made a continuous squeaking ac- companiment to the testimony. Morgan scanned a copy of the statement which Whitney read. “Put it in the record, we are wasting too much time,” Glass broke in. Whitney wanted to “read two more paragraphs.” “I've no objection,” the Virginia Senator said. “But your voice is min- these chairs. Wemlxhtuw:ubetnlnumdw “When the idea of forming the ghany Corporation -id.z‘v.hwynnd\- structure.” the majority of cases the offer was made |, He added that the Van Sweringens | hi —A. P. Photos. Secretary of Treasury Woodin (right) and -Senator McAdoo of California, himself a Secretary of the Treasury in the Wilson administration, greet each other after leaving the White House yesterday. Both Wocdin and McAdoo were on the preferred list hearing yesterday. of Morgan customers made public at the Senate committee -Associated Press Photo. London Is Stirred By Quiz of Morgan On Tax Payments By the Associated Press. LONDON, May 25.—The ques- tioning of J. P. Morgan in the Washington investigation stirred great interest today in the British press, rivalling the attention given the Geneva disarmament erisis. ‘Whether Mr. Morgan referred to his personal income tax re- turn in testifying that he had paid his income tax in England, or whether he meant the Morgan Co. returns, was not clear in re- ports received here. An income tax authority said individual . returns under the British law take no account of either profits or losses in such transactions as stock exchange deals. Income tax returns are confi- dential and there are no means of lmowlngM here how much in- come tax Mr. Morgan has id in England. e As yet the British press has not commented on the Morgan testi- mony. voice how the Van Sweringens had turned in their holding accepted common stock. “With :&),000.000 of obligations above them.” Didn’t Sell to Public. “We sold $35,000,000 of bonds for which we believed there was a substan- tial base,” Whitney said. “The guar- anty company took $25.000,000 of pre- ferred, We bought $25,000,000 of the common stock. “We believe in the future of the firm but did not consider it good banking to keep $25,000,000 of common stock in our portfollo. So we offered it to men of financial judgment that they might make a profit over a long period as we hoped to do, but not just with the idea :: throwing it on the market the next y. ““These lists were formed of people we knew well enough to know what they were doing. We handle what we cail sound security. We don’t think com- mon stock ought to be sold to the pub- lic by Morgan & Co., because we are afraid it might get into the hands of geoph who don’t know what they are otng Whitney emphasized that Morgan dealings with the Van Sweringens were confined to raflroads and did not in- clude “any real estate in Cleveland.” Whitney declared that J. P. Morgan & Co. employ no bond salesmen and “have never adopted any methods of gh-pressure salesmanship.’ “We have distributed these securities through syndicates or selling groups consisting in cases of the largest issues of as many as 1,100 or 1,200 retail and distributing houses, large and small, scattered out the country. These houses were invited by us to join in the &5’3‘" of these securities use of distributing and their ‘e have believed in this of distribution and have con- “How could he reci] ite,” te?” Pecora he did not know whether he was treas- urer at the time. “The difference was that he was of- fered 3,000 instead of 2,000, Senator Byrnes commented. Will Rogers at that point left the role of spectator long enough to in- terject loud enough for committee members to hear: “Too bad there wasn't a chairman of the Progressives. Hope They Made Profit. “T never heard of anybody so altru- istic,” Couzens commented. “It was not a question of aitruism,” Whitney rejoined. “You hoped past pleasant relations would continue by giving these men a profit?” Couzens asked. “T wouldn’t want to say we tried to make them unfriendly,” Whitney said. “Perhaps my first answer strcng. We wanted to continue our relationship. That list shows that many were just personal friends. Whether it made them more friendly or less friendly—well, I hope they all made & profi Pecora asked who suggested Raskob for the list. . “I think I did,” Whitney said. “Did you write to him about partici- pating?” Pecora asked. “My recollection is that I telephoned.” “?idmynu receive an acceptance?” oI did” Pecora then read what was identi- fied as a copy of Raskob’s letter to Whitney. It was dated February 4, 1929, at Palm Beach, Fla, and began: “Dear George." ‘The letter expressed “many thanks” to Whitney for his “trouble” in “kindly remembering me.” It said a check for $40,000 was inclosed and that Raskob accepted “the many opportunities offered to me by you and your partners.” Pecora went down the list naming C. N. Biiss as a “former treasurer of the Republican National Campaign Com- mittee,” and Charles D. Hilles, New York Republican leader. “Whose friend was Hilles?” ‘All the older partners,” the witness (8% answered, “particularly Dwight Mor- Tow. “I find Charles Francis Adams on this list,” Pecora commented. “Yes,” Whitney nodded. Byrnes asked about Charles A. Lind- bergh’s participation in stock purchases. ‘Whitney said he was introduced by Dwight W. Morrow, later his father- in-law. ‘We have advised him on his af- fairs since,” Whitney said. Objects to Poiitical Links. One of the next names Pecora asked about was Michael G. Herbert, and Whitney identified him as the son of the former Ambassador from Great Britain. Senator Goldsborough, Republican of Maryland, objected once to lnking names on the list to political parties. “We are not engaged in a political vaudeville,” Goldsborough said from his place next to Fletcher. “I am one who would like to find out whether J. P. Morgan and Co. is m up with political parties,” Couzens regulation bill. “I didn't know it” Whitney said. In the testimony as to issusnce of in excess of the profit that we made from these offerings. “In° the case of securities of rail- road operating companies and public utility operating companies the price paid to the obligor is a matter of public record. “In the case of the foreign issues of- fered by us since January 1, 1920, the price pald to the obligor was made public by us in the testimony submitted to the Senate Finance Committee in December, 1931. “In the case of all issues during the five-year period from January 1, 1927, to January 1, 1932, the spread between the price paid to the obligor and the offering price to the public has been given in the detailed record which we have furnished the com- mittee. “As to the group of bonds which have shown the greatest decline, namely railroad and railroad holding companies, it may be pertinent to point out that in the case of the railroad issues every issue of bonds of a railroad operating company issued after June 27, 1920, was authorized by the Interstate Commerce ( Commission as being in the interest of the public and a minimum price fixed at which these bonds could be so'd. “In the case of the railrcad hol company issues, which were all col- | lateral trust issues secured by stocks or bonds or obligations of railroad operat- ing companies, the collateral behind the bonds at the time of the issue and the financial strength of the company mak- ing the issue seemed to afford more than ample security.” Adams Letter Offered. Dealing with the Alleghany stock purchase former Secretary of the Navy Adams was allowed to make at a bar- gain figure, Pecora read a copy of a letter dated February 13. 1929 from Adams in Boston and ada.:- >d to his son-in-law, Henry S. Morgan, accept- ing his allotment of Alleghany stock. It began “My Dear Henry” and said “As you probably know, I have already signed on.” It added that “I don't see why this should interfere with this investment,” and inclosed a check. “What do you think he meant by this?” Pecora asked. “I assume he meant he had accepted an invitation to be Secretary of the Navy,” Whitney replied. “Who suggested Newton D. Baker?” “I assume the Van Sweringens. He was long their attorney.” “Matthew Brush?” “No idea.” “E. G. Buckland?” “It might have been any one of us.” After Pecora introduced the list of favored purchasers of “Standard Brands, Inc.” he said that in formation of the organization, Morgan & Co. deposited 430,000 shares of common and 18305 shares of preferred stock in Flei: an Co. Morgan & Co. entered the Stand- ard Brands contract in July, 1929. Whitney said the list of purchasers for 724,000 shares of Standard Brands stock was seiected in “much the same way” as the Alleghany list. “They're not the same men?” Pecora was too | asked. “It was entirely different type of com- pany,” Whitney said. “At whose suggestion was Calvin Coolidge included?” “I assume Mr. Thomas Cochran, one of our partners. He was a clcse per- sonal friend of Mr. Coolidge and advised him on his investments after he left the ‘White House.” Pecora brought out that the cost of the Standard Brands stock to Morgan & Co. was $32 a share and that this was the price of its sale to the selected customers’ list. Trading in the stock opened at 40% on September 6, 1929, ;end ;gu quated at 43% on Septem- r 10. + Probers Leave Hearing. “Who recommended that an invita- tion to subscribe to Standard Brands at 32 be extended to Bernard M. Baruch?” Pecora asked. 'uw;ilt:lz't‘sk:-;:m X wmmeryi' replied. e present price?” Senate Goldsborough l&’l’(ed. n o “About 19,” the witness replied. wen“tfi‘iown to about 11.” “Who recommended Normaj Davis be invited to share?” P asked, resuming the questioning. 1 don't know,” the witness said o . “Who is F. H. Ecker?” “President of the Metropolitan Life :mrmce Co., I think he 5"” at that “yp H. Pecora “His company 1s a v of securities ltylll t:m:ar"v h"vy. e ““IL has been for many years.” ‘Did that influence the recommenda- MO‘FI !{ml he“be mvl‘d'.:d to subscribe?” now it wouldn't,” Whitney sald emph.t&:nlly, b “Don’t you think it woul desire to reciprocate?” . - “No, sir,” Whitney replied smiling. nlé you knew hlml as well as I do, I sure you would agree with wouldn't influence hll:f" o By this time many members of the ;r:.n;"eemh:d left to go over to the Which was due t Gl,}a; L, due to take up the le Marland Ofl Co. entered th probe after Senator Gore, Democrat, o:’ Oklahoma, had informed Whitney he g!them was in public office, “that the firm of Morgan has never tried to influence any company to bor- row money that it didn't need in the conduct of its business.” The Oklahoma Senator said he had “one concrete case in mind,"—that of | the Marland Oil Co. in 1927. | It was then headed by Re ta- | tive Marland, Democrat, of Oklahoma. | Gore continued that he had been “informed” that when Marland retired from the firm in 1929, that $22,000,000 c:p;.-h& :lfio?goo& loan was still on de e Morgan company.” “I'm told,” Gore said, “that the Mar- land firm never got the rest of the| money butepaid interest on it just the | o “I'm certain the firm got the money,” Whitney smiled. “I remember that there was some difficulty and that Marland retired from the firm. I'm sure, however, that when we lend money we make it available to the bor- r:wm. I believe the record will so show.” Price Wasn't Fixed. Pecora suggested during the ques- | tioning of Whitney that in selling | Alleghany Corporation stock to a spe- cial list at $20, the firm lost $8,623,000 based on current prices. Whitney dissented, saying the de- cision to sell at $20 was before the market price was set. He said he would not_furnish evidence of that, however. “You agreed to offer this stock at $20 a share,” Fletcher said. “You must | have agreed at sometir-e to dispose of a certain number or you might have sold twice as many shares.” Pecora asked if there was ever a partners meeting at which it was de- cided what individuals were invited to | subscribe. “To the best of my knowledge and belief there was not.” “Yeu don't throw dice to determine it>” asked Fletcher as spectators laughed. “The partners converge on a list,” | Whitney said. “We make suggestions| and they are graduaily brought together. | Probably it starts with a number of memoranda which are thrown into a list. This may sound vague and casual.” “Does it to you?” asked Pecora. “Not a bit.” Morgan was leaning on the back of | ‘Whitney's chair during this testimony. “If this stock had opened at $15 would you have expected these men to carTy out their agreement?” Gore asked. “Yes, sir. They are the type who want to fulfill their obligations.” | of the Treasury, offering him a par- | ment some of the common stock at a | some of our close friends if they would LETTER T0 WOODIN | RESERVED SHARES Alleghany Offering Sold in February, 1929, to Present Official Below Market. By the Associated Press. Here is the text of the letter ad-| dressed by J. P. Morgan & Co. to Wil- liam H. Woodin on February 1, 1929, four years before he became Secretary ticipation in an issue of common stock | of the Alleghany Corporation: “My dear Mr. Woodin: “You may have seen in the papers that we recently made a public offering | of $35000,000 Alleghany Corporation. | 15-year collateral trust convertible 5 peru cent bonds which went off very| well. ‘It this connection, the Guaranty Co. | offered today $25,000,000 of Alleghany Corporation cumulative 5!z per cent preferred stock. There was also a strong demand for this stock. “The Guaranty Co. also sold, private- ly, some of the common stock at $24 a share. Reserved 1,000 Shares. “We have kept for our own invest: cost of $20 a share, and although we are making no offering of this stock, as it is not the class of security we wish to offer ‘publicly, we are asking like some of this stock at the same price it is costing us; namely, $20 a share, “I believe that the stqck is selling| in the market around $35 to $37 a| that people wish to speculate. “We are reserving for you 1,000 shares at $20 a share if you would like to have it. “There are no strings attached to this stock, so you can seil it when- ever you wish. “Por further information regarding this corporation, I am inclosing circular covering the bond issue. “We just want you to know that we are thinking of you in this connection and thought you might like to have Reading from the list of Standard Brand purchasers, “Pecora asked the identity of John Marshall. | “He is now a. partner in Covington, | Burling & Rublee of this city, I under- stand,” Whitney said. | “Isn’t that the firm to which Dean Acheson belonged?” asked Pecora. i “I don't know,” Whitney replied. | Acheson recently was confirmed as | Undersecretary of the Treasury. Pald British Income Tax. The names of many men high in public and business life were put into | the record yesterday in the presentation of the list of preferred Morgan cus- tomers. Among them were Woodin, McAdoo, Adams, Owen J. Roberts, Nutt, Ras- kob and Newton D. Baker. None of however, at the times they were recorded as having been sold stock by the Morgan Co. at preferred prices. Other developments at yesterday’s hearing were: Submission of a list of 60 bank offi- cers and directors who obtained in- dividual loans form the Morgan firm during recent years, some of which have not been paid off, and some of which are undercollateralized. Testimony that members of the Mor- gan firm- paid a total income tax of about $11,000,000 in 1929, though only | $48,000 has been paid since, all in 1930. | Testimony by Whitney, that some Morgan_partners are indebted to the firm. Their names were not disclosed. Disclosure by Whitney that the $5.- 800,000 loan outstanding to Charles E. Mitchell, former chairman of the Na- tional City Bank, is undercollateralized, but is backed by a special reserve an that $18,000,000 is set aside to guard undercol'gterialized loans. Submission of a long list of banks Wx\ which the Morgan house and its afilliate in Philadelphia, Drexel & Co., maintain deposits of more than $30,- 000.000. > The presentation of the list of “fa- vored customes” who obtained stock from the company at less that the market price threw the investigation into an uproar. No eflonpwax made to maintain order in the committee room as Whitney identified a list of people known from one end of the country to the other as |a record of those to whom Allegheny Corporation ‘stock was sold at $20 at a time when it was then selling to the public at fl'ol’rlf $35 to 3:1'; share. It is now selling for around $2. Though the evidence showed ‘Woodin acquired 1,000 shares of the stock in 1929, long before he took office, the dis- closure_immediately drew a statement from Senator Borah, Republican, of Idaho, that the American people “are entitled to a Secretary of the Treasury who like Caesar's wife should be above suspicion.” ‘Asked if he felt Woodin should re- sign, the Idaho Senator told newspaper men “that statement speaks for itself. Woodin himself declined to comment. The list was presented to the com- mittee by Pecora. McAdo{). who has been attending most of the sessions, was not present when the list was filed. The list was in two parts, one show- ing those who were sold through Mor- gan proper, and the other of those sold through Drexel & Co., the Morgan affi- liate in Philadelphia. Most of the latter were small blocks. Loans to Bankers. Though overshadowed by later devel- opments, the list of loans submitted to tne committee by Pecora at the morn- ing session caused a stir at the time. It showed that among 60 bank direc~ tors and officers who had been extended individual loans during recent years by the House of Morgan were Norman H. Davis, John W. Davis and former Vice President Charles G. Dawes. Dawes’ loan was repaid last year and John W. Davis’ in 1930, but the other was still outstanding, according to the list identified by Morgan. Among the other outstanding loans were those to Mitchell and Richard ‘Whitney, the stock exchange head. When Morgan said he knew little about the loans George Whitney was called to the stand and disclosed that the advance to Mitchell of about $10,- 000,000 was one of the largest made. Norman H. Davis issued a statement in Geneva yesterday saying he had bor- rowed $50,000 from the Morgan com- y on proper collateral and that he d repaid most of it. He added that but for heavy personal expenses in con- nection with his work for the Govern- ment he would have repaid the full | we | of William Ewing, a partner. | placed | addressed to Woodin by Morgan & Co. a little of the stock at the same price e paying for it. 2 “I am sending this to your office, as I understand that you are now ofn your way through the Panama Canal, but this can wait until you return. “Hoping ycu are having & pleasant trip, and with best regards, “Sincerely, yours,” Letter Not Signed. The photostatic copy - of the letter bore nopslmllure. but initials on the | copy were identified by Pecora as those No copy of a reply from Woodin was in the record, but a second letter on February 25 read: “Dear Sir: “We acknowledge with thanks the receipt of your check to our order for $20,033.33 in payment for 1,000 shares ¢f Alleghany Corporation common stock (no par value) at $20 per share plus Interest from February 15 to date. “We have deposited in your account the above stock in temporary form, reg- istered in our nominee’s name.” DAWES EXPLAINS LOAN FROM HOUSE OF MORGAN Says Money Was Borrowed to Pur- chase North American Stock for Personal Investment. By the Associated Press. CHICAGO, May 25—Explanation of a personal loan from J. P. Morgan & Co. to Charles G. Dawes, former Vice President of the United States, men- tioned in the Senate committee hearing at Washington yesterday, was given in a statement issued by Dawes at his bank here. He said: “On October 20, 1931, while at Lon- don, I borrowed from J. P. Morgan & Co. $74,725 on a note payable on or be- fore six months, with interest at 5 per cent, secured by 2,700 shares of North American common stock and 2,000 shares of Murray Corporation stock, with an approximate market value of $120,000. The note was paid in full, with interest, at maturity, April 20, 1932, “The loan was made in order to pur- chase 2,000 shares of North American common stock for investment, which I still hold.” Davis Explains. GENEVA, Switzerland, May 25 (#).— Norman H. Davis, American represent- ative at the Disarmament Conference, yesterday authorized the following state- ment about the mentioning of his name in lh‘s J. P. Morgan inquiry in Wash- ington. “About two years ago I borrowed ap- proximately $50,000 from the Morgan Co. against full collateral. I have been paying it off and the reason why it has not been fully paid is that I have had heavy private expenditures in connec- tion with my work for the Govern- ment.” s BV BAKER DECLARES PROFIT ON STOCKS PASSED UP Only Morgan Preference Was Re- fusal of Usual Charge for Pur- chase, Ex-Secretary Avers. By the Associated Press. CLEVELAND, May 25—Newton D. Baker, former Secretary of War, whose name appeared on J. P. Morgan & Co.’s “selected list” as produced in the Senate hearing, sald ‘“the only preference granted by the Morgan Co. was sale of the stock at no profit to themselves.” Baker was listed as the purchaser of 2,000 shares of Allegheny Corporation stock from the Morgan Co. at a price below the market. He said he was counsel for the Van Sweringen interests at the time the Al eny Corporation was formed and considered the stock a vestment. good in 3 “I still have part of what I bought,” he said. “I never made money on it, I am very sorry to say. Hikers Try New Trick. 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