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WOODIN; MADOD 'ONNEW PROBE LIST! Shares:Sold by Morgan Firm at $7,000,000 Below Market Price. {Continued From First Page.) have the committee know where the | eoynsel ‘was heading. Howard, the president of United Cor- poration, was called as the first wit- ness. He was on the stand when the committee recessed last week. Morgan moved forward to sit beside George Whitney, back of the witness. Nearly all the committee members Were around the table as Pecora began the questioning. Senator Glass was next to Pecora Pecora_inquired about the members | ®f ‘the United Corporation Board. Identifies Directors. Howard said Floyd L. Carlisle, mem- | bet of United, was director and chair- man of the Board of Consolidated Gas of New York and also of Niagara} Hudson In addition, he said, Carlisle is an official of Columbia Gas & Electric Cotporation, United Gas Improvement Co., Mohawk-Hudson and New York Power & Light B. C. Ccbb, of the United Board, is #n official of the Commonwealth and | $outhern, Columbia Gas & Electric, | and Mohawk-Hudson, Howard testified in a clear, sharp Woice, conferring frequently with aides seated nearby. He leaned back into a corner of the chair, as he faced Pecora, frequently smiling. Continuing with identifying director- ship affiliations of the United Corpor- ation’s Board members, questions by | Pecora_and answers by Howard listed the following: Philip G. Gosler—United Corporation, | #iso United Corporaticn of New York,| and Columbia Gas & Electric. Edward Hopkinson, jr—United Cor- ration, United Corporation of New York, United Gas Improvement Co., partner J. P. Morgan & Co., Philadel- phia Electrical Corporation, United Eogineers & Construction Corporation. | Harold -Stanley—Columbia Gas & Electric, _Niagara-Hudson, Mohawk- Hudson, United Corporation of New Nork, partner J. P. Morgan & Co. Langdon K. Thorn—Commcenwealth snd Southern, Niagara Hudson, Mo- hawk-Hudson, Public Service of New | Jersey, Bonbright & Co. John E. Zimmerman—Niagara-Hud- #on; Mohawk-Hudson, United Gas Im- rovement, Philadelphia Electric, Pub- | ic Service of New Jersey and United | Engineering & Construction Corpora- | L | | Testimony Retraced. After several minutes, Glass rose and went out of the room after jovially thumping Senator Adams, Democrat, of Colorado, in the back. Pecora retraced steps detailed last Friday whereby Morgan & Co. and Bon- | zfllhl & Co. formed United Corpora- on. Howard said he was a member of a Jaw firm at the time he was approached by a “Mr. Thorn” of Bonbright, and ‘Whitney of the Morgan firm and asked | whether he would be witing to head | Uhited: ‘Howard sald he acquired 200.000| shares of common stock and 100,000 in | option warrants, which entitled him to exercise an option to purchase 100,000 | additional ‘shares of common stock for | $500,000. 1 The counsel then went inj ement by which Morgan and Bon- bright acqitired many sharés of stock and option’; warrap(s for ‘$10,000,000 *For $10,000,000 cakh,” Pecora asked, “Morgan & Co. received 400,000 shares of United Common and 1,000,000 option warrants?” “Yes.” “You_said. last week the issuance of option warrants without time limita- tigns was a common practice?” “I think the history of some seven | or eight years preceding would show many cases,’ Howard said. “I can't eite an instance at this moment.” “When was a statute passed to au-| thorize such an issuance?’ “I don't know.” “Didnt you know that Delaware rmd such a statute in March, 1929, jwo' months after incorporation of the | United?" “I did not” Press Release Cited. | “Did you not know that at the time | of issuance of the option warrants there was no statute to authorize it?” “I did not.” “Each of the option warrants en- titled the holder to buy one share of common for $27.50?" Nes™ Howard then voluntarily returned %o the option warrants, saying option warrant was a contract and that gontract was good under the law.” “Who so advised you?” Howard said he had discussed it with | warious attorneys, including a lawyer in the office of John W. Davis. “Did the stockholders know of the ‘Wwarrants?” asked Couzens. “Yes, there was & public announce- ment at the time, I believe,” Howard said “Were the terms of the warrant issue " Pecora asked. then brought forward a fnmed press release dated January 9, 929, which stated in part: “The Dnited Corporation has been organized under Delaware laws by Messrs. J. P. Morgan & Co., Drexel & Co., and Bonbright & Co.. Inc., and the ar- has made arrangements to acquire cer- | tain minority interests in the United Gas Improvement Co.; the Public Serv- fce Corporation of New Jersey, and the Mohawk Hudson Power Corporation held by the organizers and the American Bug;rncwr Corporatjon. “The capitalization of the corporation §s'as follows: 0 be pres- Authorized. ently issued Shares Shares. referr ol 1.000.000 2.000.000 10,000,000 None. 044187 3,810,863 First s ed stock “no ar value) . SO There will also be presently issued purchase at any time without limit not in excess of 4,000,000 shares of common (4,000,000 shares will be reserved Bgainst exercise of option warrants.) be Messrs. Thomas S. Gates, Alfred L. Loomis, Landon K. Thorne and George Pecora read the list. No Public Offering. iment that & memorandum he had be- fore him showed a “discrepancy” in the January 11 newspaper release. Davis, Morgan counsel, suggested that Called, Whitney said it was because | there had been “additional” transactions | reference stock option warrants entitling holders to stock at $27.50 per share. “The Qifectors of the corporation will Whitney. Senator Adams interrupted to com- amount of stock as compared to the Whitney be allowed to “explain.” | between the time of the newspaper | yelease and the memorandum & !ewl days later. “The memorandum was sent to all those who subscrived to the stock,” Whitney ‘said. “And to them ulone?” “Yes. “Was the subscription public Pprivate?” “We made no public offering of this stock.” Pecora picked up the list of sub- seribers. “Who prepared the list?” “We did, along with Bonbright or Morgan’s Favored Clients Those Allowed Corporat: By the Associated Press. ‘The list of persons sold stock by J. P. Morgan & Co. for $75 a unit in Jan- uary, 1929, when it was listed publicly at $99—as made public today in the Senate investigation—follows: Mrs, Helen B. Achelis, 300; W. H. Nl THE EVENING Secretary Woodin and Norman H. Davis Among to Buy United ion Issue. | Keyes, 200; Kidder, Peabody & Co., |2,200; Roy Kinnier, 10; Kuhn, Loeb & | Co., 5000; H. R. Kurrie, 100; A. C. | Lange, 10; Lapondos Corporation, 250; ‘Auzustln Legoretta, 500; Lee, Higginson | & Co., 3.000; Charles A. Lindbergh, 300; | Dr. Harley P. Lindsay, 60; Stoughton | B. Lynd, 100. Henry E. Machold, 3.000; C. Mac- Aldridge, 1.000; A. M. Anderson, 2,000 | Veagh, 25; Mrs, Louis Pugh Macy, 500; Joseph Andrews, 100; Mrs. Irma D.| Manufacturers & Traders People’s Trust Ashmead, 50; 1. C. R. Atkin, 100; the | Co, 1,000; E. H. Manville, 1,000; Marine Atlantic ‘Merrill Oldham Corporation, | Trust Co., 1,000; Isabel S. Marsh, 250; 1.000; J. Howland Auchincloss, 300: | Charles J. Martin, 1,000; Dorothy Mar- C. A. Austin, 500; Mrs. Isabel Vllle; tin, 100; R. C. O. Matheny, 100; W. G. Austin, 200; Gaspar G. Bacon and| McAdoo, 250; T. N. McCarter, 750; Uxal George Whitney trustees, 500; MIs.| H. McCarter, 750; J. J. McCloy, 50; Hope Norman Bacon, 1,000; Priscilla T.| Hall P. McCullough, 200; R. B. Mellon, Bacon, George Whitney and G. G.|3,000. T. F. Merseles, 1,000; Stephen Bacon, trustees, 500; George F. Baker, | Merselis, 100; Albert G. Milbank, 500. 5.000; Donald C. Bakewell. 160; Bank- | Edward G. Miner, 1,000; C. H. Miner, ers’ Co. of New York, 5000; Charles 1000; Minsch, Monell & Co., Inc., 1,000; H. Barnes, 30; Sosthenes Behn, 1000: | William A. Mitchell, 100; Daniel J. | Moran, 500; Alexander Perry Morgan, ;| 100; D. M. Morgan, 10; Morgan Gren- C. N. Bliss, 2,000: Blyth & Co., 1.500:1 Amy W. Board, 25; Bonbright & Co. | 81,262; Bonbright & Co. 121.668;) Nicholas F. Brady, 3,000; Charles S. | Brewer, 1,000; Bradford Brinton, 300; Brown Bros. & Co., 3.000: George F. Brownell, 200; Matthew Brush, 1,000; Roger H. Bullard, 50; George Burgess, 50: W. E. Burnet, 200. ‘Ward M. Canady, 1,000: W. C. Can- non, 300; George W. Carpenter, 400; Mrs. Kathryn R. Carpenter, 5; W. L. Carson, 100; Dr. Alfred H. Clark, 50 E. H. Clark, 500; Clark, Dodge & C 5,000, Leon R. Clausen, 500; E. C.| Congdon, 160; Continental National Bank & Trust Co., 3,000; Clinton H. Crane, 500; S. M. Crocker, 100; Mrs. P. E. Crowley, 500. George Dahl, 40; Arthur V. Davis, 1,000; A. B. Davis, 10; Henry G. Davis, 100; John W. Davis, 500; Norman H. Davis, 250; Donald K. David, 200; Lewis C. Dawes, 300; D. Debevoise, 10; Moreau | Delane, 1,000; William F. Delany, 20; Edward Dibrell, 250; D. J. Dimock, 50; Dominick & Dominick, 5,000; Camille Dreyfus, 300; J. A. M. Desanchez, 25; Drexel & Co. 82,000; Drexel & C 5,000. W. Echtermeyer, 10: F. H. Ecker, 1.000; Mrs. Cornelia Cousins Egan, 200; Dean Emery, 500: Robert W. Emmons, 3d, 100; Miss Alwens G. Evans, 5; Evans, Stillman & Co. 500; William Everdell, 150: George B. Everitt, 500; | Corporation, 2,000: John Oldham, 200; | Prentiss, 1,000; Seward Prosser, 7,00 | Phillips Exeter Academy, trustees, 500; fell & Co., 15,000; H. S. Morgan et al, 500: J. J. Morgan, 100; Morgan & Cie, 12,000; J. P. Morgan, No. 2 account, 1.200; J. P. Morgan. 500; Dwight W. Morrow, 2,000; Frederick K. Morrow, 1,000; Charles Munroe, 1.000; J. A. Murray, 400; “the National City Co., 5,000; Newmont Mining Corporaticn, 10,000: Northern Trust Co.; 1,000; J. D. Northrup, 50; Nosivad Corporation, 3,000; N. O'Connor, 10; Miss Ruth Ogg, 10; C. E. Mitchell, 7.000; Old Colony Robert E. Olds, 500. Gen. John J. Pershing, 250; Harry Peters, 500; Frank L. Polk, 500 W. Jullus _Polk, 200; Daniel E. Pomeroy, 250; W. C. Potter, 7.000; John W. Mrs. D. Y. Ranson, jr, 300; John J. Raskob, 2,500; Laosing P. Reed, 500 S. W. Reyburn, Lord & Taylor, 500 Miss Ester S. Rich, 5; Edgar Rickard, 400; Mrs. Rose M. Ricketts, 10; J. Henry Roraback, 1,000; Charles S. Ruffner, 1,000 Salomon Bros & Hutzler, 1,000; A. H. Sanford, 50; Herbert L. Satterlee, 1 500; Franz Schneider, 1,000; Schoell- kopf, Hutton & Pomeroy, Inc., 1,500; | Mrs, Florence S. Schuette, 1,000; Robert | Meridith Serale, 1,000; Charles Sey- mour, 160; Malcolm D. Simpson, 25; A. P. Sloan et al, 3,500; Matthew S. Sloan, 1,000: Harvey H. Smith, 40. | "'F. 5. Smithers & Co, 1000; N. L. J. V. Ewing estate, 300; William Ewing, special. 100. G. F. Accioli, 80; Eliot Farley, 1,000; Mildred Farwell, 200: Dr. E. Ross Faulkner, 500; William C. Finley, 500; First Chicago Corporation, 2,000; Max C. Fleischmann, 1.000; Carl Flach, 5 | Snow, 200; A. H. Springer, 25; Mrs. | Edith’ T. Staniey, 400; Gilbert Stanley, | 1,200; State Street Investment Corpora- | tion, 2,000; John A. Stephens, jr., 250. | Edward R. Stettinius, 250; Spencer Trask & 1,000; Mrs. E. R, Stet- H. A. Fortington, 500; Albert Foster, jr., 30;. Terese Fowler, 10; Harry Fraas, 10; P. A. S. Franklin, 1,000; W. E. Frew, 1,000; Giovanni Fummi, 500; G.!| L. Gagan, 10; Mary B. Gammack, 10 Thomas H. Gammack, 200; George H. Gardiner, 500; Thomas Garrett, jr., 100; Miss Lydia K. Garrison, 20; Mrs. Philip McKim Garrison, 60; David L. George, 100; F. Gibbons, 10; Harvey D. Gibson, | 1,$$$: Mrs. S. Parker Gilbert, 250: J. Gindorf, 10; Rudolph Goepel, 100; | Philip G. Gossler, 2,000; Guaranty Co. of New York, 5,000; Guggenheim Bros., ,000. R. A, Hallett, 10: Hambleton & Co. Inc, 500; Henry Hamill, jr, 10; C. Hamilton, 1,000; P. T. Hanscom, 1,0 Mrs. Hebe Harris, 500: Walter P. Ha: kell, 10; Chester W. Hawkins, 5; Charles Hayden, 5,000; T. C. Hill, 250; William Hill-Wood, 100: Charles D. Hilles, 1,000; George C. Hitchcock, 300; Hitt, Farwell & Co., 500; William E. son, 500; Frederick Ewing, 500: First National Corporation, 2,000; First Se- curity Co., 15,000; Laurence P. Fisher, 2,000. Arthur Curtis James, 2,000; P. H. Johnson, 1,000; A. N. Jones, 50: W. J. Jones, 10; Kean, Taylor & Co., 500; Dr. John J. H. Keating, 200; Daniel Kelleher, 250; Cornelius F. Kelley, 1,- 000: A. J. Kennedy, 50; Leonard A. tinius, 1,000; George D. Stewart, 500; Stockholms Enskilda Bank, 1,000; Cor- nelius J. Sullivan, 500; E. S. S. Sun- derland, 400; Sutro Bros. & Co., 1,000; Miss Katharine Taylor, 20; Myron C. | Taylor, 5,000; Walter C. Teagle, 1,500; 100; George Mrs. Elizabeth S. Trippe, 250; William H. Thurston, 400; Union Trust Co., 1,000; the Union Trust Co. of Pitts- burgh, 3,000; O. P. Van Sweringen, 5,000; Edmund N. Wakelee, 750. Miss Anna Walsh, 10; Cornelius J. Walsh, 10; Allen Wardwell, 400; Mrs, Marle Watkins, 100 N. A. Weathers, | 1,500; F. C. Weems, ‘West, 10: John D. Ryan, 1,000; Rol White, 500; J. G. White & » - 1,000; ‘White, Case & Co., 2,000; George Whitney, agent, 10,000; Martha B. Whitney, 100; trustees for Martha B. Whitney, Robert L. Bacon, Gaspar G.! Bacen & Georgé Whitney, 400. Margaret S. Whitney, 200; RicHard Whitney & Co. 20; Richard Whitney | | & Co., 4,200; Richard Whitney & Co., {2,000; Ira Wight, 1,000; A. H. Wilson, | 25; A. H. Wiggin, 4,000; T. R. Williams, 300; Joseph Wilshire, 1,000; Garrard ‘Winston, 500; Wood, Low & Co.. 1,000 Wood Struthers & Co., 1,500; Willi ‘Woodin, 1,000; A. H. Woods, 250; C! ence M. Woolley, 1,000; J. M. Young, | 50; Percy S. Young, 750; L. Edmund | Zacher, 500; William Ziegler, jr. 200. | | i | { list of nemes suggested by Morgan during the recess. Almost hidden by counsel and mem- | bers of his stafl, Morgan sat behind a | table several feet from the committee table. He rested his cheek on his arm | and listened intently. | Pecora asked if there was any break- down of the 87,000 units of United | that went to Drexel & Co. I thought that had been furnished; I'm sorry,” Whitney said. “On what terms were tl invited to subscribe?” | Whitney said they were sold one unit | at $75, a unit consisting of one share of $3 preference stock at its liquidating value of $50 and one share of common at $25, “the price of the common to us.” He gave the Spring of 1928 as the date when J. P. Morgan & Co. decided to enter “the general utility field.” Pecora brought him back to the sale to J. P. Morgan & Co. for $10,000,000 of 400,000 shares of United common and 11,000,000 warrants. Offered Simultaneously. “We and Bonbright & Co. made the and it was hese persons | same offer simultaneously accepted,” Whitney said. Questioning Whitney, Pecora brought out that the private offering was made between January 9 and January 14 “And it was previously testified by | Mr. Howard,” Pecora said, “that on | January 21, the stock was selling in !the over the counter market at $99 |2 unit” “Yes” Whitney nodded. He leaned forward with his elbows {on the table, while Pecora sat back | in_bis chair | By this time, half of the committee | table was unoccupied, as Senators left | to_attend the Senate session | The committee Toom was hot again, and perspiration stood out on Whitney's face. Members of the committee interrupt- ed Pecora less frequently than usual, | apparently satisfled with his explana- | tion of his program earlier. “Was $75 the actual cost of these units to you?” Pecora inquired. “Yes,” Whitney replied. “But the units were set up on your book at no consideration.” Whitney said this was & bookkeeping matter, but insisted that $75 was the actual cost of Morgan & Co. “the | common cost $25 a share and the | preferred $50." “But you gav option warrants. a bonus?” “We did not.” Whitney rejoined, “but | we_did not think them proper assets | to be carried on the books of the bank- |ing firms as such.” “Well, they proved very eventually?” “Well, they went up.” “What did they rise to?” “To about $40, I think.” “Wasn't it about $47.502" “I don’t know.” e no value to these You treated them as valuable said “may refresh your memory.” It was from Thomas S. Lamont to Whitney and the date was July 23, 1929. The letter said “53,000 shares” of the option warrants were sold “‘as planned,” and added that 3,800 later were sold and that the 50,000 shares sold from 4515 to 46%;. The 3,800 sold from 46% to 467. “Did you_sell these shares for the account of Morgan & Co.?” Whitney said “Yes” after consuiting data. ‘The Morgan firm sold 28,450 on July he said, “and about 200,000 shares were sold during the next two months.” “What was the low?” and was told it was around 40.53. & Co” “How meny names were suggested by _you?” can’t answer that off hand. I e i % “the Pecora brought out that between July 123 and September 20 Morgan & Co. ml-ll 200,000 'lfl'“ ‘l;l‘fil for $8,490,046. e could ‘sold the-1, l(m warrants distributed to them on De- Pecora produced a letter which he | cember 19 at $1 each, at ‘“very sub- stantial prices” for a long time after that. “We have them,” Whitney said. “It | is a question of speculation as to what | we might have sold them for. The warrants still are quoted on the Curb | at $2 by people who still think it is a privilege to pay $2 for the right to pay $27.50 for a stock sellirig at about | $9. I can't understand it.” | “You could have sold them at $40?” Pecora asked. | “Ye” Pecora brought out that the con- | version privilege had been exercised to | | the extent of $6,000.000. | “Was this your first experience mi option warrants?” Couzens asked. h “Yes. We had much experience in conversion bonds.” “What was the idea behind 1t?” “There were many motives. It was a customary form of equity financing in public utilities. It had been done| | previously by the Mohawk Hudson | Power Co.” “Were they unlimited options?” “I'm told some of them were. 'l"he‘ perpetusl warrant seemed more attrac-, tive. With the experience since, we might be led not to make them per- petual.” Couzens wanted an “explanation” of | the reason for the option warrants. | “We had faith in ‘United,’ " ‘Whitney | | answered. “This was the first holding, | company we ever organized, We felt| | that the options we took would insure | our continued interest in ‘United.’ We | felt a measure of responsibility for it.” In No Hurry to Buy. “Did that give you control?” Couzens| asked. “No,” the witness told him. He then | detailed the highest amount of stock| holding that Morgan held in United at | any time—about 20 per cent. | The Michigan Senator wanted to' “know why Morgan & Co, didn't exercise ' all the option warrants at a time when | they were selling at $40 to $45. | “You could have obtained the stock for $27.50?" Couzens asked. “Yes. “Well why didn't you exercise the‘ option.” Whitney laughed. “I don't know definitely. It may have seemed that we should have during the peak.” | “We thought the options valuable over a long period. We were in no | hurry to get it into our hands. We were in no hurry to get rid of it.” Whitney said United had paid dividends steadily n its preferred and there were dividends also on the common. | “Expenses were low,” he sald. “We | tried to keep them low. That might | have been the reason why the books | were kept in our office.” | “What was Howard's salary?” Chair- | man Fletcher asked. +$75,000.” “Now isn't this practice of issuing | these option warrants equivalent to stock watering?” Fletcher inquired. “Absolutely not,” Whitney said. “You have to pay money to exercise the op- tion. It was known that these option warrants were out at the time of the formation of ‘United.’ " Pecora rested while Couzens and Fletcher questioned. Glass, who had returned, interjected: | “There is one thing I want cleared | up. Who owns and controls the various i utility companies in which the United Corporation has holdings? Take, for instance, the 0.67 per cent you hold in the common stock of one of these util- ity companies (Electric Bond & Share). Do you call that ownership and con-: trol?” Don’t Have Control. “We don't have any measiire of con- trol,” Whif said. “The con interest in these by the public. The ive officers of | able of sharing the risk.” | shares around wouldn't influence people STAR, WASHINGTO IDEMANDS MORGAN | CUTU.S. INTEREST Senator Bone Calls on Bank- er to Exchange Bonds at Lower Rate. i By the Assoclated Press. + Terming it a “patriotic duty,” Sen- ator Bone, Democrat, of Washington,\ yesterday, in the Senate, called upon J. P. Morgan & Co. to exchange its Government bonds for new obligations, bearing & lower rate of interest. The Senator said the bankers should “share the sacrifices we must all make if this republic is to be preserved.” He aserted the Government owed $240,- 000,000 to the House of Morgan last Winter. “I here and now publicly call upon J. P. Morgan & Co. =s the foremost financiers and money lenders in Amer- ica,” he said, “to be the first to under- take this new Liberty Loan drive. I publicly call upon them, who. have profited most out of the needs of this republic, to be the first among the economic rulers of this country to rec- ognize the need for & new deal—a new Democracy. | { “I call upon them publicly, voluntarily | - to turn their bonds into the Treasury of the republic, with the announce- ment that they are not, indeed, as many have heatedly asserted, mere Shylocks, but are willing to take less interest| than the bond stipulates. “This interest is the common burden of all of us. The Government can, and does, by taxation, destroy industry, destroy the workef, destroy the farmer, in order to take from them the money with which this interest must be paid. “I make this call upon J. P. Morgan, because his name is now in the public prints as one who during the past two or three years, in the darkest hours of this republic, contributed little to the common need.” these companies have remained sub- stantially unchanged since the United was formed. We've joined with the existing management and watched the companies from the point of view of substantial stockholders.” “Do these options enable you to con- trol or coerce the management of these companies?” Glass asked. “They have nothing to do with the United’s holdings in these constituent companies,” Whitney said. “If you acquired these warrants, could you acquire an interest enabling you to own or control?” Glass asked. “Certainly not,” Whitney replied, “it would not change the percentage of stock ownership in the United.” “It has been suggested that inter- locking directorates would enable you | to control,” Glass remarked. “In my judgment it isn’t s0,” Whitney sald. “The United has a substantial but minority interest. The various | members of the United Corporation are | executive heads of these corperations | in which we own interest. { “But there is no interlocking director- | ate. These companies operate in differ- | ent secticns of the country. They are | regulated by public commissions in dif- ferent sections of the country.” Not All Morgan Policies. Costigan said it had been suggested | 12 per cent of the stock ownership would enable the holder to direct poli- | cles. “As to what ownership might mean | in executive control, if you wanted to use it, I don’t know,” Whitney said.| “There has never been any wish on our ;- part to control.” Costigan asked if he remembered any | instances where J. P. Morgan & Co.s | advice was disregarded by these utility companies. “I think I do” Whitney said. “I think I cculd name several. I don't| mean there were any knock-down, drag- ' out fights. In the final analysis it was left to the management. It hasn't always been J. P. Morgan & Co. poli- cles adopted, by a long shot.” Whitney agreed with Senator Adams, Democrat, of Colorado that with the; present big diversification of stock| ownership among the general public, a consolidated minority of stockholders often controlled policies. “Are any of these executive officers who control these various companies held by United personally indebted to your firm?"” Whitney said he thought not, but Glass asked him to go down the list “to make sure.” “List the percentages that United holds in these companies also,” he said. When Whitney reached the United Gas Improvement Co. of Philadelphia he asked to be allowed to ‘“‘check.” Then he whispered with those around him and said that “Mr. Zimmerman was indebted to our firm.” He promised to obtain the amount. “Well, I'm curious to know how you could control these companies,” Glass said after Whitney had finished. “I {frankly don't know,” Whitney said. “Our advice is asked, we sit on the boards. We try to aid in_the em::em conduct of the business. That is all.” Not Competing Companies. “Are any of these companies in; which ‘United’ has an interest com- peting companies?” Pecora asked. “No,” Whitney said. “I dont think Couzens intervened to say that 8. Z. Mitchell of Electric Bond & Share was on the “Standard Brands, Inc., preferred list” for 3,000 shares. Whitney protested mildly at the use| of “preferred list.” | “I didn't ccin the word,” Couzens said tartly. “Wouldn’t that suggest to Mitchell that he should return the favor?” Couzens asked. “We offered him the stock on June 24, 1929, at $32 a share,” Whitney said. It was about $33 on the market. He took some risk with us. The stock might go up or go down. He was a man of large means and perfectly cap- | “I just wonder if spreading these who aske Whitney then explained circumstances ( surrounding the issue of the three lists | brought out and the two yet to come. “They were not ‘preferred lists’” Whitney said. “They were definitely | 30! them to reciprocate?” Couzens legitimate business transactions. These genator Couzens through most of the | dition improved and he was taken to people shared an equity risk with us. | {1t is & very old practice and we it long before the boom days. It was and is & common practice in England to have underwriters. That was what these lists were. These men aided us in underwriting an issue which we did | not want to sell publicly. You must remember that we did not offer them to the public We didn't want to carry all the stock ourselves. We got people to aid us in underwriting it.” “Raskob was grateful for being on | one of these lists,” €ouzens said. “Could ' he have suggested that others be put on 1t?” “He didn't,” Whitney said. ! “If the chairman of the Republican National Committee had suggested that you let the Michigan Senator in, he might have gotten on the list,” com- mented Glass. { He was referring, he afterward said, | to J. R. Nutt, treasurer of the Repub- lican National Committee, who was on one of the select lists. “I know of cases” Couzens said,! “where men who owned only 2 or 3 per | cent of a firm's stock controlled it be- | cause of inside or outside influence.” Glass Asks Meaning. " Whitney said. the papers that he o . M. on earth is 1t and inasmuch as I'm now regarded as D. C, 2 Investigation into J. P. Morgan & Co. goes on after Ferdinand Pecon.' WEDNESDAY, MAY 31, 1933. counsel for the Senate Banking Committee, had complied with demands by Senator Glass, Virginia Democrat, to know exactly what Pecora intended to bring out. Photo shows them sitting together today at the committee table as the Morgan Quiz resumed. —A. P. Photo. weren't you come to me? “I'm afrald we just didn’'t think of it,” Whitney said, as he and all his assoclates smiled. “You must have been poor business men,” Glass said, “I don't see how you made your money. “To what Republican friend of mine did you refer?” Couzens demanded of Glass. “Weli, there are so few Republicans now and they've dropped so far out of sight I don't remember his name,” the Virginian returned. ‘When he was identified as Joseph R. Nutt, Couzens said: “I want it to go on record that he's no friend of mine.” Whitney several times objected to terming the lists of clients as ‘“pre- | ferred.” Pecora asked how he would designate them. “We've mnever attempted to define them,” Whitney said. “They are lots of people we know who are competent | financially and mentally to undertak the risk.” “You call them selected lists?” | “Many of these people were at the derelict not to have him | Morgan Sold Stock $7,000,000 Below Market on Issue By the ‘Associated Press. ‘The men on today’s list of spe- cial clients of J. P. Morgan & Co. bought units of stock in United Corporation for a total of mere than $7,000,000 below the open market price. The Morgan firm on January 21, 1929, sold 315,070 units of the stock to 291 individuals at $75 a unit, consisting of one share of preferred stock and one share of- common, which were selling on the Philadelphis exchange for $99. On the - same date, 202,930 shares were sold through Bon- bright & Co., and 82,000 through Morgan’s affiliate, Drexel & Co., at the $75 figure. Purchasers of the entire block of 600,000 units obtained it for | suggestion of others,” Whitney said. $14,400,000 less than the then Subscribed Below Market. listed price. “On all occasiohs when they were | invited to subscribe at the cost price on record as saying that Mr. Pecora wasn't it below the market?” Ptcon" was one of the very few in the confi- asked. | dence of the late Col. Roosevelt, who | was being_ handled by Morgan & Co., | market—the answer is definitely ‘No,"” | reparations. “There were no public offerings at the time the subscriptions were made. With the possible exception of Johns- Mapville the public market was nof existing at the time the securities were offered,” was Whitney's position. Pecora asked about the letter intro-| duced citing the market price of Alle- hany Corporatioh. “But they were only two letters out of some 200 subscribers,” Whitney said. “In the great majority no market ex- d. “At the time of the formation of these lists there existed no market on which a sensible business man would look with any assurance whatever.” Pecora cited sales of United on the Philadelphia Exchange January 21, 1929, at $99 and counter trading in New York on January 16 at $92 to $94. “But we made the offers from Jan- uary 9 to 14, which still was two days earlier than any record of sales you were able to find,” Whitney said. } Knew Stock Would Be Listed. Senator Barkley, Democrat, of Ken- tucky, said it was “one thing” to finance a portion of the stock and an- other to “manipulate the exchange so the public would come in and use that as an inducement to sell what you had distributed.” “We knew in a general way the stock would be listed,” Whitney said. “But | I can say definitely that J. P. Morgan | & Co. had nothing to do with creating a market for the stock.” Barkley said a lot of people would go into the market just because a stock | | and asked: “Was it bought and sold by you to put the price up ond down?” “We knew generally of the listings of the stock, but as to the creation of any Whitney said. Couzens asked if S. Parker Gilbert was a partner when his wife was sold stock at cost. “No,” Whitney replied. “In 1929 he was agent general of He had had an account | with us for many years. Employs No Salesmen, “Does your company have & corps of ‘high-pressure salesmen’ such as it| was developed the National City Bank | had?” Glass asked. “J. P. Morgan & Co. has no sales- men and has never employed any high- | pressure salesmanship,” Whitney re- | plied. “You pick your own clients?” “Yes, sir.” “With some degree of human nature you pick people with money to invest and who won't throw their holdings | immediately on the market and de-| moralize it?” Glass asked. ‘ “Exactly s0.” | “I'm not asking as counsel of Mor- | gan & Co..” Glass commented, “though if you get rid of John W. Davis I| might try to qualify as a lawyer.” No Limit on Pecora. The decision for Pecora to outline the course of his questions was agreed | to by the committee yesterday at the | request of Senator Glass. Chairman Fletcher announced after yesterday's meeting that the purpose of the report was in no way aimed at restricting or limiting Pecora’s work. There was no dissension within the committee, Fletcher said, and the agree- ment to Glass’ request was unanimous. “Senator Glass asked that the com- mittee hold a meeting and ask Mr. Pe- cora to appear and outline what evi- dence he proposes to offer and the sub: jects to be considered at the inquiry,” Fletcher said. “It simply means that Senator Glass | wants to know the line of inquiry and where it leads. It doesn't mean the | committee will limit what the counsel | transformed into a hospital room. does. That is not involved.” Pecora will be without the support of | remainder of the inquiry, as the Mich; igan Senator plans to leave Washing: ton Friday or Saturday for Detroit, preparatory to sailing for London as & | delegate to the World Economic Con- ference. Couzens said that neither J. C. Hack. ett nor the unnamed administration of: ficial whom he sald was attacking Pe- cora had yet submitted to him proof | of tneir charges. The Michigan Senator has charged | often expressed his admiration for Mr. Pecora’s honesty, ability, and as Col. Roosevelt once 5o aptly put it, ‘ighting qualities as clean as a hound’s tooth. “He also enjoyed the warm personal | triendship of Charles Sumner Bird, who ran for Governor of the State of Massa- chusetts; Bainbridge Colby, Amos Pin- chot, and the late Mayor Mitchell, un- der whom he served. “To my personal knowledge, Mr. Pecora’s record since that time has only confirmed Col. Roosevelt’s own state- ment that he (Col. Roosevelt) was rarely mistaken in his estimate of a man.” Pecora meanwhile predicted the Mor- gan case would be completed by the end of this week, but said the inquiries into Kuhn, Loeb & Co. and Dillon, Read & Co. would have to be postponed for a few days. They were previously scheduled to begin June 6 and 9, respectively. Revelations uncovered in the Mor- gan inquiry were the subject of debate in the Senate yesterday. This discus- sion circled -about a possible successor for Secretary. Woodin, who has been disclosed as having been on a list of those who were sold stock by the Mor- gan Company at reduced prices several years before he took the post as head of the Treasury, Senator Long, Democrat, of Louisiana, told the Senate selection of Lewis Douglas, Director of the Budget, to succeed Woodin would be like “going out of the frying pan into the fire.” ALABAMA POWER (0. SUES ON VALUATION Asks D. C. Supreme Court to Over- turn Figure That Was Al- tered by $4,000,000. The Alabama Power Co. today filed i whether, if John J. HOW FAR DO LISTS BAR PUBLIC MEN IS QUESTION OF PROBE| (Continued From First Page.)’ Lamont, son of a partner of Morgan & | Co., and a brother of Mr. Douglas are members of the board of directors of this company. Senator Long went so far as to say that the Phelps-Dodge | Co. was one of the corporations con- trolled by the House of Morgan and that he would- prefer to keep Mr. Woodin as Secretary of the Treasury rather than substitute Douglas for him in _that office. | So far, none of the men in public life whose names have been brought into the Senate hearings in connection with the Morgan investigation has re- tired from office, notwithstanding the Senate debate or the demand of Gov. Gifford Pinchot of Pennsylvania that two Pennsylvania judges immediately resign because their names were in the list of preferred clients of the Morgan Senate Might Object. | One member of the Senate Banking Committee said today that if it were | known that a man has been on the | Morgan list of preferred clients or has | been & heavy borrower from Morgan's | bank, it might be extremely difficult to | get him confirmed by the Senate for | public office. Just how much effect, such a connec- tion with the House of Morgan or any other big banking concern will have on aspirants for public ‘office in the future | ‘remains to be secn. Probably a good deal of the present antagonism to such | appointees is due to public clamor and | hysteria. | It was not many years ago that the late President Calvin Coolidge prevailed upon & member of the firm of J. P. Mor- gan & Co, the late Dwight W. Morrow, to become American Ambassador to Mex- ico, an office which Mr. Morrow filled Igrntly to the benefit of this country. i Later, Mr. Morrow was nominated and |elected as Senator from New Jerse | His Morgan connection certainly at that |time was considered no drawback. In- deed, had Mr. Morrow lived he might have eventually become a candidate for an even higher office. Many of his {friends were pressing him for the pres- idency or the vice presidency. Glass Asks About List. At the Senate hearing today, which began following an executive session, of the Banking Committee in which Mr. Pecora explained what his line of in- vestigation was intended to develop, Senator Carter Glass of Virginia, who has been at odds over the investigation with Mr. Pecora, entered the room fol- lowing the introduction of the list to whom Morgan & Co. offered the United Comporation stock. # I ask if my name was on that list?” asked the Virginia Senator, who, of course, knew that it was not. Senator Glass was answered that no menwslolxll of his ‘l;ame had been made. “Well,” he said, “a good many people have been induced to believe that it was.” This statement by Senator Glass was made with reference to the widespread suggestion since the hearing began that he has been a defender of the house of Morgan, Apparently Sepator Glass was satis- fied with the report of Mr. Pecora to the committee this morning as to what his line of investigation would be. Storm Clouds Dispersed. At any rate, the storm clouds which hung- over the committee When it ad- journed last Saturday with Senator @lass and Mr. Pecora violently clash- ing had at least temporarily been dis- rsed. pe'l‘he Morgan hearing in the Senate Office Building today drew even larger crowds than it has in the past. The Banking Committee has moved into the huge marble caucus room on the third floor of the office building, capable of holding several hundred spectators as well as the committee, witnesses and the representatives of the press. Every seat was taken long before the committee filed in 'Inl' the lhzlfln(d» Standing room was at a premium, ant scores lined the walls. Loudspeakers have been installed so as to carry the voices of the committee counsel and the witnesses on the stand to the farthest corners of the room. first witness today George H. Howard. president of United Corporation, and part of the time he had on the stand George Whitney, partner of the Morgan ahead in his effort, to link the Morgan firm with the public utilities of the country and to prove that it was a dominating influence in the policies of | turt the public utilities. o Senator Glass at one point asked Mr. Whitney whether any one denied that J. P. Morgan & Co. is one of the most powerful financial factors in the United States. Mr. Whitney admitted his firm was regarded as such a factor. Senator Couzens asked Mr, Whitney Raskob, then chair- suit in District Supreme Court to over-| man of the Democratic National Com- turn the valuation fixed by the Federal Power Commission on the Mitchell Dam project, which lopped more than $4,000,000 off of the investment clatmed by the company. The development was completed 10 years ago, and after extensive study :l;: co:!mh:m;llfixfl‘,my fixed the aver- [ a ,646,056.76, as against $6,173,576.82 claimed by the com;::ly.s This valuation is the heart of the {‘t:):tmt')u g;-up, and it is this figure ie Government us: - capture base. S . WILLIAM L. SIMRELL, 70, INSURANCE MAN, DEAD Secretary of Mutual Life Buccumbs in New York to Heart Attack. By the Associated Press. NEW YORK, May 31.—William Le Grand Simrell, since 1924 secretary of the Mutual Life Insurance Co., died to- day of heart ailment. He was 70 years old. Simrell, who was born in Great Bend, Pa., was seized with a heart attack elght days ago while at his desk. Doc- tors said his condition was too grave for him to be moved immediately to a hospital and his private office was Co. Under constant treatment of doctors and nurses for 36 hours, Simrell's con- the Brooklyn Hospital, where he passed away after suffering another heart at- tack early today. Simrell entered the employ of the Mutual Life in 1893 and was rapidly promoted through the various depart- ments of the company. He was admit- ted to the New York State bar in 1902, although he did not actively practice the profession. His home was in Brooklyn. He is survived by his widow, the for- | ing Pecora and lauding his character. that the attacks are part of a “subtle campalign” to discredit Pecora. Hackett, in a letter received by Glass yesterday, severely criticized Couzens’ attitude in the inquiry. Meanwhile. Couzens made public & letter from Frank C. Cunniffe of New York, who said he was secretary to the late Francis W. Bird, chairman of the Progressive party during Theodore Roosevelt's campaign, warmly defend- | mer Matie Elizabeth Bishop, and three | children, Mrs. Alma Idell Selkirk, Mrs. | Helen Marion Young and | Grana simrell, o ¢ Wi T | Funeral arrangements have not yet been completed. L | HORSE NIPS TIRES DENVER, Colo, May 31 (#).—There ' were & lot of miles as a cart-hauler left | in Deborah, a Denver bread company’s Letter Defends Counsel. The letter, one of many Senators on the committee have received supporting Pegfu. said: mittee, had suggested that Senator Couzens’ name be included in the list of preferred clients, it would have been done, Mr. Whitney merely smiled. Senator Glass wanted to know why the Morgan firm had not called on Mr. Raskob to persuade Senator Glass to leave out the ngislons in his bank re- }m‘z} bill to which the Morgan firm ob- jec “Raskob said he was anxious to re- ciprocate,” said Senator Glass. This brought & laugh from the committee. American Deleénles Have 4 Objectives At London Parley By the Associated Press. American delegates to the ‘World Economic Conference take with them today these major in- ternational objectives: 1. Revive trade by stabilizing monetary exchanges and lowering tariff barriers. 2. Ralse prices of silver, wheat and other basic commodities by international action. 3. Create employment by simul- taneous governmental programs of public works construction. 4. Revive private business and raise prices by central banks’ credit expansion. The INDIVIDUAL the facilities of a SAVINGS BANK with the added feature of offering a plan to HEHH tacking Mr. Pecora, e Y DOUGLAS IS CALLED MORGAN ASSOCIATE Ashurst Defends Budget Di- rector From Attack by Long. By the Associated Press, Reports that Budget Director Lewis W. Douglas is being considered for Sec- | retary of the Treasury in the event Willlam H. Woodin resigns, led to & debate in the Senate yesterday, in which Senator Huey Long, Democrat, of Louisiana, attacked Dcuglas, while Senator Henry F. Ashurst, Democrat, of Arizona, defended the budget director. There has been no hint of an immedi- ate intention on the part of Mr. Woodin to quit. Long touched off the debate by re- ferring to published reports that . | Woodin was about to be replaced by the youthful budget director and for- mer member of the House from Arizona. The nan contended the Doug- las family was “inextricably interwoven” with the Phelps-Dodge Corporation, which he described as a Morgan af- filiate, and added: “If we are going back to the house of Morgan for another Secretary of the Treasury, we'd better keep the man we've got now. 1Infact, I prefer the man we've got now.” Ashurst rose quickly to the defense of Douglas and his family, asserting his record showed he was courageous, honest and unsusceptible to influence. “It would be astonishing news to me,” Ashurst added, “if Mr. Douglas had any connection with a Morgan company. | But even if he were financially inter ested, Mr. Morgan would be impotent and powerless to influence that young man.” Norris Praises Cox. Before the debate ended Senator Norris, Republican, Nebraska, remarked that of dar Ohio,” had declined to accept stock offered at bargain prices to a list of nationally prominent men, including Woodin, by the Morgan house. Although some newspaper dispatches have named Cox as having refused to accept the Morgan offer, Ferdinand Pecora, counsel for the Senate Finance Committee, said the Ohioan was not the one man found by the inquiry to have declined the bargain price offer. Pecora has not yet named the man concerned. “It seems to me,” said Norris, “that if the disclosures of this in put the man out of office who accepted, the President might well put the man in who refused to accept.” . Declaring the country could haye “no better man than Lewis Douglas” ;mdr'«"fflgl goedml hlilnmce;, Ashurst 0] “Cox would be Attorney General if I were Prenden?‘y Long said he had no personal hos- tility toward Douglas, but attacked mc: record in adm! the economy a He said Walter 8. Douglas, whom he described as an uncle of the but director, was a director of the Phelps- Dodge Corporation, with extensive cop- per interests in Arizoma, and that a grandfather had been connected with the corporation. Both Quote Scripture, “It is not only .our duf but to advise the Plfil&n‘ty," said ““We should tell the President to give us a chance to breathe, and-not have : us put under the dictatorship of one member of the (Morgan) family for ¢ while, and when we get rid of him. put us under the wing of another of the family.” 'y e Phel tion?” he asked Ashpu;-s?w Svbe “I do not know that Mr. Douglas any connection with the corporation,” Ashurst said, “but if he did there wouls be nothing improper in it.” “I don’t judge Mr, Pecora put on the stand as his | only by urst: “You don’t have to eat a whole beef to tell it is tainted and you can't make a hen lay the egg of a duck.” Ashurst also quoted from the Scrip- admonishing 3 es, B “ ‘Thou must never bear false witness against thy neighbor.’ member that as we Ashi sald the and tever money was inherited from the family fortunes was spent to build up the estate and in other beneficial ways and not in “riotous living.” U. S. GOLD ACTION HIT BY WORLD TRADE BODY Vienna Session Applauds Speech Denouncing “Immoral Mone- tary Behavior.” By the Associated Press. VIENNA, May 31—“Real business morality” was accepted as a commercial tenet todry by financial and industrial delegates to the Seventh Congress of the International Chamber of Com- ™ They applauded h les ey applauded a speech by Char! Boissevain of Holland, who denounced “the immoral monetary behavior of the United States” and condemned natioms which abandon the gold standard “al- though unquestionably in a position to maintain jt.” ¥ Ira Campbell of New York defended the United States shipping against. what he called an international attempt. to rule it off the seas. The American mer- chant marine cannot exist without a legates showed a burst of en- thusiasm when Prof. T. E. Gregory of Great Britain urged that the nations of the world return to the gold stand- ard. Eliot Wadsworth of Boston, Mass., warned that the gold standard really is “99 per cent confidence and 1 per cent gold.” BANK for the INDIVIDUAL i application— with few excep- tions. 12 months, MORRIS PLAN BANK Under Supervision U. S. Treasury , 1408 H Street N. W.; Washington, Di