Evening Star Newspaper, June 2, 1933, Page 4

MORGAN &CO MADE PROFIT IN' GRASK Whitney Describes How | Bankers Sought to Halt | Fall of Prices. - (Contifiued From First Page) ' o (Cofiifgued Frof = ] under supervision of Thomas W. mont, Morgan partner. Chairman Fletcher and Morgan, sit- ting back of him, were both smoking eigars as usual Senator Glass, Democrat, of Vir- ginia, former critic of the inquiry, was not on hand. Other morning developments &t the earing included: th'.eglatlon of - list of officers and @irectors of corportions to whom per- sonal loans were extended from 1027} inclusive, by J. P. Morgan & 1t named E. W. Marland, now tative from Oklahomn; Robert former State Department of- d Frank W. Stearns, friend of a former President Coolidge, ong others. Nr{)sx;‘)als by Whitney that some of the lbargain price stock offered to clients by J. P. Morgan & Co. went o British soyalty and French politicians. -, ‘Senator Reynolds, Democrat, of North Carolina, asked ebout disposition of bar- gain price_stock allotted to Morgan's Paris and London offices. “Have you heard that to your London office was members of royalty?” ) e “I mever heard i‘ehdM suggestion be- re.” Whitney yephed; ’o' ‘Have you gwfrgl ome was distributed o politicians in 0e?” > f never ‘:tfid jt*and T am confident 4t is not s0,” Whitney said smiling. Questioned further, Whitney said he d not hedrd.-that some of the stock ing Albert of Belglum. ed ;how and again. to ponfer with Leonard Keyes, ‘the Morgan Pffice manager, Who sat near Morgan. Another List Expected. At oné point Whitney told the com- fmittee the share of bargdin price stock allotted by the Morgan house to John W. Kephart, Pennsylvania Supreme Court justice, was paid for by his wife. ~Gov. Gifford Pinchot, who has de- nanded Kephart's tesignation, tele- graphed ‘Pecora yesterday saying the judge depfed accepting the stock for Wwhich he had been listed. He questioned Whitney about it at the outset. of the hearing today and the Morgan partner said he understood Mrs, Kephart had paid for the stock. A list of real insiders among the thousands of selected clients of J. P. Morgan & Co. is expected to be revealed in later- testimony. These names were of person who avere -¢0ld stocks $10 below the price aid by another list of men Who bought ?rom the Morgans in the manner al- yeady disclosed on-previous issues. The operation involving two separate | lists' of customers was a distribution of Johns-Manville stock in June, 1927. Those classed by the investigators as yeal insiders obtained 343,750 shares at 47'%, the Morgans' purchase ce. Others bought 56,200 shares at 57%. ‘Amang the latter were understood to be many of the prominent men named on previous lists, Secretary of the Treas- ury Woodin among them. Asked More Units. At the outset of today's hearing Senator Reynalds asked his question about the 15,000 units of United Cor- tion which went to the London r:wh of Morgan, Grenfell & Co. Those units were included in one of the favored customer lists. Whitney said in answer to questions that the 15,000 units represented $1,- 225,000, : “Did you aliok. these units to_the ZLondon office &t their Tequest?” Rey- nolds asked. “No,” Whitney said. 3 . “Did they request additional units? ynolds inquired. m‘;«'mmcy aid ::me:d rteh-d é{,‘“’ lmgm ord_yesterday showi at the - e i daditional units if they the allotment distributed to #were available “Do you knqwtwhat disposition was made of the units which went to the ZLondon office?” the Senator inquired. Whitney shook his head and then conferred with Keyes. e “I don’t knows the disposition,’ he %\thitn(y quoted from a cable lh‘l{ Morgan & Ce. sent to London saying “We are reserving” 15000 units. He said he thought & similar cable was sent | to the Paris house. Reynolds asked if Whitney had knowledge of the distribution of the Yondon end Paris participation. “We have not,” Whitney said. ::We have never endeavpred to secure it. After it was denied that some of the Jondon shares wemt to some ‘members of royalty and politiclans in France, Reynolds asked if Whitney would fur- nish the committee the allotment of the shares that went to France and England “Certalnly,” Whitney replied. Conditions Diftered in 1929. John W. Davis interrupted to com- ment that the London and Paris branches might have “something to say sbout that.” “In view of the conflict over the dol- Jar, the value of the pound and the general turmoil prevailing” Reynolds | said, “do you think it wise to distribute this stock in European countries in view of the fact that Morgan & Co. had wide investments there and that these countries owed large sums to the United States?” Whitney said the stock wasn't dis- tributed to “European countri and that conditions in 1929 were quite “dif- now.” European countries in ’29 were in- Gebted to the United States to the ex- tént of $11,000,000,000,” Reynolds sid. Whitney said that was true, but he! could seen no relation between that and | the allotment of the 27.500 units to the London and Paris branch of Morgan Reynolds asked the witness if he be- lleved the allotment was detrimental: “to American Welfare.” “No,” Whitney replied “Have you heard that King Albert of Belgium participated in the distribu- tion of the stock that went to the E S ranth?” Whitney said. ou heard that any of the} to King George of England ers of his family?” o, I'm sure it did not.” e you heard that some of it went to an official of the Italian govern- ment—T am not sure about the pro- nunciation of his name. Sometimes I zzoline’ and sometimes head. | #a! ni2* y laughed and shook his Morgan Debtors Listed. Pecora then put in the list of of- ficers and directors of corporations with loans from Morgan & Co. Next| he turned to the “special suspense ac- count,” telling of J. P. Morgan & Co. operations in the October, 1929, market anic Whitney said the meeting was called because of “chaos,” whole “liquidation” and that the situation was gone over thoroughly on the aftéguoon of October 24, 1920, % > Whitney said the stock purchased at | this time was boight jointly, but paid for- individually by the partners. “On the first day of chaos the vice president of the New York Stock Ex- change and several bank heads came to us,” Whitney seid. “We decided on the account in the hope of preserving order ity the financial commum!{. x He Hoatifed that there was no fornial it that the emergency i 4t y that Bll 37 stgeks dealt in by the pool were ymmnfim which your firm or Ss" meeting: brou Morgan Personal Loans List of Officers and Direc Borrowed Funds Senate By the Associated Press. Here is the list of personal loans made by J. P. Morgan & Co. and af- filiates to officers and directors of cor- porations, as made public today in the Senate investigation: (Amounts of the loans were not given.) Charles E. Andrew, jr. president and director, First National ~Bank, New Bethlehem, Pa.; president and director Sligo National Bank, Sligo, Pa.; ;ru-— ident and director First National K, Rimersburg, Pa.; president and direc- tor various investment and trust com- panies, lumber companies; paid off Feb- ruary 1, 1927. . G. G. Bacon, not listed in Poor’s, paid off January 4, 1929. George T. Bowdoin, partner George Kemper Bowdoin; pal Lainer & Co., 49. Wall street, New York; vice president and director, Winslow Lainer International Corporation, paid oft April 14, 1831. . Robert E. Broome (unidentified) paid Off August 25, 1932 Louis H. Brown,-president and mem- ber Executive Committee and director of Johns-Manville Corporation; chair- man of board and director Johns-Man- ville Sales corporation; president and director various asbestos, wood, shingle companfes and Pohns-Manville sul sidiaries (blank). Paul Dudley Childs, president Childs, Jeffries & Co., 50 Congress street, Bos- ton, and 48 Wall street, New York; pres- ident Chain Store Investment Corpora- tion; -director . and president various stores and companies, paid off Decem- ber 19, ISS&J M ik i J. Armory Jegries, vice presi , sec- retary and director Childs, Jeffries & Co., Inc., Boston and New York; vice president, secretary and director Chain Stores Investment Corporation and various chain stores subsidiarfes, paid off December 19, 1930. William B. Nichols, vice president and director Boston Consolidated Gas Co., paid off December 39, 1930. Charles Walker Clark, president and director United Verde Cop) Co., in New York; president and T Va- rious copper and public utilities (blank). Leon R. Clausen, president and di- | rector J. I. Case Machine Co., Racine, Wis.; president and di- rector American Trades & Savings Bank, paid off May 14, 1930. Samuel H. Curran (unidentified) (blank). R. S. Davenport (unidentified) paid off Jl.nul%?b, 1930. Donald Kirk Davis, president and di- rector American Maigze Products Co.; president and director Standard Brands, Inc.; trustee Bowery Savings Bank: vice president, president and director in va- rious companies, also vice president and director R. H. Macy & Co., (blank). Daniel G. Dlwgs (unidentified), paid | off January 2, 1931. Walter Farwell (unidentified), paid off January 2, 1932, Ernest B. Pilsinger, director foreign sales, Royal Baking Powder Co., paid off April 1, 1831, Paul W. Flelschmann, first vice presi- dent and director the Flelschmann Co., New York, paid off September 11, 1929. Harold A, Fortington, financial sec- rétary and general attorney Royal In- surance Co., Ltd., New York; president and director 150 William Street Cor- poration, New York; financial secre- tary and general attorney numerable British_insurance comj (blank). Charles Henry Hodges, chairman board and director Detroit Lubrication Co., Detroit; first vice president and member Executive Committee and di- rector of American Radiator Co.; di- rector Union Trust Co. and various trust and investment corporations, paid off February 10, 1930. ‘Wetmore Godges (unidentified) blank. Richard Irvin, owner Richard Irvin & Co., Pittsburgh; owner Irwin Ramps, partner Lusterite Co. of Pittsburgh, paid off December 19, 1930. J. J. Keating (unidentified), paid off April 19, 1930. William Klusmeyer (unidentified), bl ank. Alfred Knight, vice president and di- rector, the Fleischmann Co., New York, and various subsidiaries, paid off Sep- tember 11, 1929. Joseph Lee (unidentified), paid off September 11, 1929. Anthony C. Lemkaw, secretary and director, Royal Baking Powder Co.; as- sistant secretary and director, Stand- ard Brands, Inc.; assistant secretary and assistant treasurer, Fleischmann Corporation; assistant secretary and as- sistant treasurer, Standard Brands, Inc., of New Jersey (blank). . Leonor Fresnel Loree, president, membe: board of managers and chair man of Executive Committee of Dela- ware & Hudson Co. in New York; president and director innumerable railways and transportation companies and utilities; director Chase National Bank of the City of New York; Presi-| dent’s Conference Committee, Federal | valuation of railroads in the United | States; chairman Eastern group; paid| off February 18, 1927. Leonor Fresnel Loree, (same name listed twice), vice president of the Guaranty Trust Co. of New York; di- rector Guaranty Co.; director various foreign banks. T. B. McCauley (unidentified), paid off February 17, 1931. | John Markle, director Phillips Pe- troleum Co.; director Wilkes-Barre & Hazelton Railroad; paid off May 2, 1927. John Markle 2d, Allentown, Pa. (a | npote was inserted in the official list at this point, saying, “it was not known which ‘Markle’ was meant, and that both were listed for that reason), dis- rtner - Winslow | | August 5, 1931, HE EVENING STAR, WASHINGTO tors of Corporations Who Placed Record. in trict traffic su) dent Bell Tele- phone Co. of Pennsylvania, Allentown, Pa.; various Pennsylv-~I1 railways and transportation companies. E. W. Marland, chairman of board, E. W. Marland & Co., Inc., Ponea City, Okla.; chairman of board and director Southland Royalty Co.; paid off Novem-~ ber 6. 1930. H. C. McCsughan, vice president and director Erie Trust Co. Erie, Pa. Paid off June 13, 1930. A. C. Monagle, vice president Stand- ard Brands, Inc.; vice president and di- rector Royal Baking Powder Co.! (Blank). D. J. Moran, president, member of executivé committee and director Conti- nental Ofl Co., Ponca City, Okla.: presi- dent and director Continental Pipé Line Co.; president and director numerous gas and oil companies and several ma- tional banks. Paid off September 29, 1932, H. R. Newcomb, vice president Stand- ard ?ar;ndl, Inc, Paid off September 13, 1932. George Nichols, partner Minot Hooper & Co., New York and Boston; partner Dwifi)t ‘Manufacturing Co. - (Blank). Jobn B. Noone, president William R. | Noone. Paid off September 13; 1932.. A. J. G. Murray-Graham (unidenti- fled). Paid off January. 24, 1930. . R. E. Olds, chairman of board Reo Motor Car .Co.; president and director | Capital National Bank (Detroit); presi- dent and difector various trust and in- vestment companies; director Guardian t Co., Detroit. Paid off February 1, 1928, Hugo A. Oswald, secretary-treasurer and director Flieschmann Co.,, New York, and varioi subsidiaries, paid off September 10, 1929, Clendedin J. Ryan, general superin- tendent, part owners and director Hutchinson Coal Co,, Fairmount, W. Va.; director Empire ' National Bank, paid off February 5, 1932. Isidore .Scherer (unidentified), paid Off November 14, 1930. Theodore Sedlmayr, vice president Fleischmann Co., New York and of one subsidiary, paid off September 11, 1929. W. R. Selgle, chairman board and di- rector Jchns<Manville Corporation, and of numerous affiliated companies. lilmx ‘T, Skelding (unidentified), paid off October 24, 1932. Robert 8. Smith (unidentified), paid off October 27, 1930. T. L. Smith, first vice president Standard Brands, Inc.,, N. Y., and sub- sidiaries (blank). W. W, Stanley (unidentified) (blank). F. W. Stearns, chairman board R. H. Stearns Co., Boston. Provident Institu- tions for Savings, paid off May 2, 1930. E. R. Steeinius, jr., (unidentified) paid off January 3, 1930. Arthur R, Suckley (unidentified) paid off July 11, 1932, E. L. Swearinger, president First Na- tional Bank, Louisville, Ky. Director Louisviile Branch of Federal Reserve Bank of St. Louis, banks and indus- 213;71 corporations, paid off February 25, W. D. Thornton, president Greene Cananea Copper Co., New York; other copper companies, paid off May 4, 1931. James R. Trowbridge, president and trustee the Pranklin Savings Bank, New York; director Tenafly Trust Co., paid ofl‘Alp‘rfl 1, 1929, . M. Vorhees (unidentified, d off April 3, 1981, e Ernest C. Wagner, president and di- rector Discount Corporation of New Yn‘r,kt, ?Wml\pm 18, 1932, . J. (unidentified), d off February 17, 1928. o Samuel Arthur Williams, vice presi- dent and director Johns-Manville Cor- poration, (blank). Joseph Wilshire, president and di- Trector Standard Brands, Inc., 10 sub- sidiaries, (blank). Gerrard B. Winston, director Na- tional City Co., New York, paid off No- vember 1, 1928, TnAL::ha\le Wood.ll,o( h‘imcwr Bankers’ nd several T companies, oflDaDre“celmbEr 21, 1931. i rad s el P. Woolley, vice president f?d:;};;nnnn Co., paid off September J. E. Zanett! (unidentified), January 14,"1921, i Loans made by Drexel amitate, were: # Coupiaen | Dr. Thom: G. Ashton, direetor, Baldwin Locomotive Works, f November 21, 1931, A3 i . M. Atkinson, chairman of board of directors, Georgia Power Co., At- lanta, paid off July 16, 1931, Charles T. Bach = (unidentified), (bg‘nl;;. ichard L. Binder, president and di- r;fim; hlggtxnls rco-unn? Co. of Amengn. ladelphia; foreign subsidiaries; oflA Novenébear 9, éli:l'!l, el v ugust S. Blagdén (unidentified) ; off May 26, 1931, il eon S, Bord i o rden (unidentified), Edwin M. Chance Ppaid off August 30, 1930, Charles M. Coover ' (unidentified) paid off Pebruary 9, 1928. : J. H. R. Cromwell, president and di- rector, Delaware Oil Products, New York, ‘paid off September 23, 1931. | George W. Davis, Massachusetts, di- rector, Pearson Erhard Co. (blank). John C. Dunn (unidentified), paid off (unidentified), William du Pont, jr. (unidentifi paid off January 31, 11 31. i Joseph Ewing, Sin Life Insurance . of Montreal, Canada (I - vu;:y,’mlank». s njamin West Frazler, director, Traylor Engineering & Manuf. ; Co. (biank). . i participants were interested through stock holdings or financing?” Whitney replied that would be an accurate statement if confined to the 25 stocks in which there was most trading. “But that had nothing to do with the selection of the securities,” he added. “They were among the most prominent stocks on the market and were pivotal or key stocks. We were trying to make order out of chaos.” He was smoking more constantly and was answering some questions almost before they were uttered. The senlor Morgan partner now and again leaned forward, his eyes jamping | back d forth between Pecora and ‘Whitney. Pecora asked if between October 24 and November 11, 1929, there were “violent fluctuations” in the market. “Fluctuations downward in & succes- sion of breaks,” Whitney said as the audience laughed. Often Morsln seemed to approve | Whitney's swift replies with a paternal smile. “There were & number of precipitate drops?” Pecora asked. “That is very accurate,” Whitney said. “We ht to overcome a ‘no- bid’ market. n those days we had come to look for the hours of 11:15 and 2:15—the times when brokers check margin accounts—with a great deal of anxiety.” Whitney said the ‘accounts’ orders to buy were placed by his brother, Richard, and Warren B. Nash, treas- urer of the exchange. “They distributed it to the brokers in their discretion,” Whitney said. Lamont Is Called. Pecora asked if any Morgan partners were directors in any of .the security, companies participating in the opera- tions. “No, sir.” Questioning brought out that Morgan partners were on the boards cf the Guaranty Trust and the Trust, whose security affliates were in- volved. Whitney said that about the time of the tions, brokers' Joins exceeded $8,000,000,000. “The bulk of this was to the ‘account ~of others’" he explained. “These out-of-town sources began to withdraw their loans. In most in- Bankers' | stances the New York banks took over | | the withdrawals. These loans to ‘ac- | | counts of cthers’ were the most danger- | “We didn't have a large Investment | ourselves in the call market. Many | | other houses did. I think today they | | are not sure they will do it again.” | |, “Participants in the suspense opera- | tions ascumed & big risk?” Pecora asked. | “Yes, sir. But I think the belief held | by every thoughtful person in New York Yas that if some action was not taken i osses would have been | the risk involved. Eroater oy | Pecora had detailed to Whitney the stocks in which the account tradeq and asked whether Morgan had any interest | in each one. He asked the same ques- tion with regard to other participants | in_the account. He named American Smelting & Re- fining, American Telephone & Tele- graph, United States Steel, Anaconda, Santa Fe, Baltimore & Ohio, Bethle- hem Steel, Chesapeake Corporation and Columbia Gas & Electric among others, Whitney had sad his firm was con- | nected with some and that it would be “unusual” if some of these banking| houses did not have relations one way | or the other with the stocks traded in, “The fact that the participants in the operation also had an interest in these 37 corporations was purely a co-incidence in the matter of their selection of stocks used in the ac-| count?” Pecora inquired. “‘Colncidence’ is not the descriptive word at all,” Whitney replied. “There was no effort made to buy stocks with which there was no relation nor was there any effort to buy with which there was 8 relation. They were chosen purely as the most effective way of doing the operation.” “When did the liquidation end?” believe in March.” ‘Were values maintained at that time?” “At a low level. The panic was stopped.” ““The market dropped again after you completed obligations in the suspense accounts?” Pecora asked. |from the price on the market at the ous thing of all. |1 | objected. |to the fullest extent possible, “Yes, some twp months after.” "tYou fl:l\v'tm been 'd'e'pmlurilu '!‘er quite, s few fore raments, Bave. rmi"{ wnun replied, & “A few,” ney rep) 3 “Are those nme.gr demand “Both,” the witness said, DEMOCRATS LEAD ON MORGAN LISTS Exceed Republicans in Num- ber on Rosters of Pre- ferred Clients. BY G. GOULD LINCOLN. In the Senate investigation of the House of Morgan two facts have stood out in the public mind as startling, sensational revelations. One of these was the practice of the Morgan firm by which large blocks of stock were sold at “ground floor” prices to se- lected lists of investors. These lists Included men prominent in business and politics, dubbed “preferred clients” by investigators and observers. ‘The other fact which struck the public right in the eye was the dis- closure that none of the 20 partners of the Morg: firm id any income taxes in 1931 and 1932, and that their combined payment of income taxes in 1930 was only $48,000. The Morgan partners, and particu- larly George itney, who has been on the stand longer than any of the other witnesses, including J. P. Mor- gan himself, have their explanations makes out all their income tax returns, Leonard Keyes, have told the Senate committee that the firm sustained huge capital losses ai under the income tax law, were entif to write off these losses agalnst their income. This has been the practice of big business men and small business men. It just hap- pens that the Morgan partners are bil ‘men, men of great wealth, their failure to pay income taxes when a lot of men of moderate and small means have been paying through nose, caused & roar. Paid $51,538,000 Taxes. The Morgan partners, however, have now finally placed in evidence a state- ment of the amount of income taxes paid by them when days were prosper- ous. During the years beginning with 1917 and en: with 1929 the Morgan partners paid the Federal Government a total of $51,538,000. A great deal of this huge sum was the tax levied on capital gains, as operative for the last seven years. Indeed, in 1929, the in- come tax paid by the partners reached the high mark, a total of $11,000,000. It is quite clear that in flush times, under the income tax laws as they have existed, the Morgan partners were hit harder by the “capital issues” provisions of the laws and compelled to pay larger and larger income taxes. When times became hard, these capital gains fell off and capital losses took their place, first scaling down their income tax pay- ments and finally wiping them out en- tirely, although, of course, Mr. Morgan and his partners continued to own and to receive a lot of money from various sources, Now, as Senator Carter Glass of Vir- ginia has pointed out, the question 1s whether it is more to the advantage of the Government to wipe out the capital issues provision of the income tax laws or to retain it. The Government, Sena- for their method of sale of stock w.g’ Glass sald, has collected the huge selected lists of investors and also of their failure to pay income tax. Mr. Whitney and the other partners fail to see any wrongdoing, any im- propriety, or even any favors, in their method of distributing la"ge blocks of stock. They assert that their stock sales were “good business” and made for business reasons alone, without any idea of influencing government, poli- tics, the courts or the Congress, Selected List Explained. As Mr. Whitney has undertaken to explain to the committee, the sales of stock by private offering were in ef- fect underwriting operations in an ef- fort to distribute some of the risks of business. He said that it was not con- sidered good business by members of the Morgan firm for them to hold large blocks of common stock for the account of the company; that it was not good business for a banking house like Morgan's to continue to hold all of these stocks. Therefore, Mr. Whit- ney explained, they had undertaken to distribute these stocks in large part to a selected list of investors, investors who had several qualifications. First, they were financially able to purchase the securities. Second, they were in- vestors seeking investments rather than speculations and likely to hold on to the stock and not dump it on the m’lr'kl:n rlfi:& away. ese of investors apparently were selected by the 20 directors of the Morgan firm more or less personally. On the lists were a number of finan- cial houses as well as individuals. Another point made by Mr. Whitney in his testimony regarding these lsts was that the contracts for sale or of- ferings to the private investors were made before there was a real market for the stocks offered, although the delivery and payment for the stocks came on dates when tradi in the stocks in the' markets she a con- !ldern'g}et m:irgtnthuf increase in price over that price the Morgans wg!helr uf!coed clients. taa mu. Called “Santa Claus.” It is this difference in price by the selected clients of mepuor'nm nm{ date of actual purchase and delivery that has caused the Morgan firm to be called a “Santa Claus” by Senator Reynolds of North Carolina during the hearing. The Alleghany stock, for ex- figure. But when the deliveries were made the stock was selling on the market for $35 and even $37, Mr. Whitney has insisted that this discrepancy in price ‘must not be con- sidered a “favor” to the selected clients. He argued that it was just one of those | things that happen in business, and | that there was not the slightest obli- gation on the investors to favor the Morgan firm in any way. He left the impression, or trled to leave it, that the selected clients had conferred a f:vn; ox; b“ ulleut had done a good stroke of business for the Morgan firm by subscribing to the stock. ™ No charge has been made that the Morgan partners violated the law when they failed to pay income taxes in 1931 and 1932 and produced only $48,000 in income taxes in 1930. The Morgan partners and the firm manager, who “How many fowr;mmu are _ou fiscal agents for?” 4 “With the exception of Belgium, PRt on “Back in 1919 we, with the Guar- anty Trust Co., entered into such an arrangement with the Belgian govern- ment. It is ternfinable on 30-day no- tice. We have not acted on it for many years.” Fletcher asked him what responsibil- ity Morgan had toward the public on bonds they sold publicly. “We seek the greatest possible pub- licity, all available information about the ‘issue,” Whitney replied. “We try to see that the conditions under which | the bonds are issued are lived up to.” | Lamont Given Time. Pecora asked if he regarded the law preventing bankers from sitting on the boards o{' railroads they were financing as “wise.’ the witness replied quickly and “No, briefly. “Then you would consider it equally unwise for congress to enact a similar law respecting utllities generally?” “The remson for my answer is that & banker selling securities has a defl- nite responsibility to the people who buy these bonds, and it does no harm to any one if the bankers are allowed to sit on the board as representatives of the security holders.” After Lamont was sworn and said he had been a partner since December 31, 1928, Pecora read a list of stocks and asked Lamont if he had sold them on December 30, 1930. Davis at once “That is not fair,” he said. “No notice was given that the individual transactions of the partners would be gone into. I don't believe it enters the scope of the inquiry.” Pecora said he knew of no fixed pro- cedure and contended the committee | could ask any questions desired. “I don't believe any man in this room could give an accurate reply about such transactions without prior notice,” Davis contended. “We'll give him time to inform him- self,” Pecora sald. “But if you go into the individual transacticns of 20 men we'll be here fintil the snow flies,” Davis protested. “I submit it is not fair play. It was fair to give us notice of the matter wanted and that has been submitted 1 insist cn fair play.” “Does the witness say he cannot answer?” Pecora asked sharply. “This is not an orderly procedure,” Davis said just as sharply. “If the witness can't answer,” Pecora replied, “let him say so. I'm perfectly willing to give hjm an opportunity to inform himself.” Fletcher interposed that “Mr. Davis has a right to object to the question and Mr. Pecora has a right to insist lh]fll he ask it. It's up to the chair to| rule.” | He.then held that Pecora might proceed. Pecora asked the question. “I ‘have no recollection of that," Lamont replied. Pe then suggested ve e witn Hinity e 885 AN un! form himself on mu'g?"m to prfifl to: answer- it fully. was taken. B tal of $1,075,440,000 under this pro- vision of the law, to which the Morgan firm partners have materially con- tributed. The House already since the Morgan revelations has undertaken to repeal in large part the capital issues provision of the income tax law. Issue Before Senate Soon. Senator Glass pointed out that in- vestment bankers all over the country have opposed the capital issues pro- vision of the income tax law for years. And he brought from Mr. Keyes a rec- ommendation that it be repealed now, although it was through this provision that the Morgan partners had escaped income taxes in 1931 and 1932. ‘This is an issue which the Senate, which has soon to pass on the tax pro- visions of the administration’s public works and industries bill, must tackle within & few days. Four lists of “preferred clients,” as the critics of the Morgan firm call them, and of “selected clients,” as the Morgans referred to them, have been made public. Despite the fact that these lists include several hundred names, the members of Congress in- cluded are practically nil. Two_ Sen- ators and no members of the House have been turned up on these lists. Senator McAdoo of California, Demo< crat, was one, and Senator Kean of New Jersey, Republican, was the other. ‘When McAdoo was on the lists he was not & member of the Senate. Senator Kean was not individually on the lists, but his firm, Kean, Taylor & Co., was. The lists include the names of more important Democrats than Republicans, of more Democrats now_in public of- fice than Republicans. Indeed, it has been a bit embarrassing for the investi- gators, who have sought to fifd as many Republicans as possible. Whether by design or not, the Morgan lists have included few men actually holding pub- lic office r.t‘ tlhe uge theymwere '“é;n the opportunity get “on the fi',‘,m? floor” with the Morgan firm. may explain the reason there are 50 many Democrats of prominence am them. The Democratic party in 1929 was “out” and at as low an ebb politically as the G. O. P. is today. s look at these comparative po- Titical lists of Morgan clients: Democrats—Senator McAdoo of Cali- BUCKLAND REFUSED OFFER OF MORGAN tne| Chairman of New Haven Board for Ethical Reason Turned Down Proposal. By the Associated Press. E. G. Buckland, chairman of the board of the New York, New Haven & Hart- | ford Railroad, was the man Ferdinand Pecora referred to as refusing for an ethical reason to become a select Mor- gan customer in one issue of stock. Pecora, counsel for the Senate inves- tigating committee, said so today after it had been disclosed yesterday that Buckland had declined a suggestion that he buy United Corporation stock at bargain prices, although his name has appeared on Morgan's_Alleghany and Standard Brands, Inc., lists of fa- vored buyers. . Buckland's Teason for turning down the United Corporation offer was set forth in a letter to Arthur M. Anderson, Morgan partner, on January 16, 1929, The letter follows: “Dear Arthur: “I appreciate very much your tele- phone suggestion that I subscribe for and purchase shares of the new corpora- tion organized to acquire a substantial interest in public utility corporations furnishing electrical energy. “I understood that one of those cor- porations is the Connecticut Light & Power Co., with which my company has a contract. “We are about to open negotiations for future dealings with this company in regard to power requirements, and I feel that I ought not at this time to consider any investment in its securi- ties or in securities of any corporation which may exercise a directing in- fluence. “This may seem to you leaning over backwards, but, excuse the paradox—I feel more comfortable in that posture. Just the same, I appreciate your having brought this to my attention.” fornia, Secretary Willlam Woodin of the Treasury Department, Norman H. Davis, American envoy at the Geneva Arms Conference; Harvey Couch of Ar- kansas, member of the board of the Reconstruction Finance Corporation; Owen D. Young and Newton D. Baker, both of whom were “dark horse” can- didates for the presidential nomination a year ago; John J. Raskob, former chairman of the Democratic National Committee, an office he held in 1929; Frank L. Polk, Undersecretary of State in the Wilson administration. Republicans—The late President Cal- vin Coolidge (after he left office); As- sociate Justice of the Supreme Court Owen D. Roberts (before he was ap- peinted to the bench); Senator-Kean of New Jersey; Charles D. Hilles, Re- publican National Committeeman for New York; Henry W. Roraback, Repub- lican National Committeeman for Con- necticut; W. W. Atterbury, former Re- publican National Committeeman for Pennsylvania; the late Dwight W. Mor- row, Ambassador and Senator, and for- mer Secretary of the Navy Charles Francis Adams. The Morgan partners argue that if they were out to buy favors of men in public office, they might well have included a lot of public men, or po- tential public men, or one or the other whose names are not found at all in the Morgan lists. They were not, they say, looking for public men, but for investors when they made their of- ferings of stock. The BANK for the INDIVIDUAL basis, which emables the borrower to Ilquld.n; his ob- ligation by means of weekly, semi- monthly or MORRIS Loans are pass- ed within a day or two after filing application=— with few excep- tions, MORRIS PLAN notes are usually Under Supervision U. S. Treasury 1408 H Street N. W.; Washington; D. €. wlndfiamin[MnAnfl\lMan&' CUPLETS Makes Delicious Cup Cakes 3 minutes from package to oven! CUPLETS makes cup cakes that are as fluffy, fragrant and delicious as any you ever tasted—yet does away with all the muss and fuss and guess work. No tedious measuring and sift- ing. No tiresome creaming of butter and sugar. 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