Evening Star Newspaper, June 5, 1933, Page 2

7 B NORGAN AD IVEN TOVMNSHERNGENS Formation of Huge Dominion; of Brothers Outlined at Senate Inquiry. om_PFirst_Pa Cleveland we wanted to use a part of the Nickel Plate.” i Having bought the road. the brothers decided “to make the most of it.” The move for rail consolidation was un- | derway by 1920. The Van Sweringens thought fast, figured there should be , four Eastern rail systems and started | to consolidate one. In 1922, they pur- chased stock control of the Toledo, St.| Louis & Western and the Lake Erie & | ‘Western, consolidating them with Nickel | Plate. Along came the chance to ac-| quire a major interest in the Chesa- peake & Ohio. The Morgans “felt it wasn't the time for us to make the expenditures. We were going to have, to have some money. We took their TR o But “a year or so” later the Van Sweringens were back at 23 Wall street “This time the Morgan firm agreed with us and we closed the deal, the Nickel Plate buying 70,000 of the Huntington shares, the total of which ‘was 73,000.” They had to pay more than the market so the Nickel Plate bought only a portion of the shares, the Van Swer- ingens with associates personally hold- ing the rest, themselves paying all that had to be paid above market price for the entire 70,000. This block was not control so they went after more. The road was in difficulities but they be- lieved they.could put it on its feet. ..“When we went into -the manage- ment of it, we conferred with Morgan & Co. #s to those improvements we felt should be made, and through their aid financed a large purchase of new equip- ment. * * * We were correct in our be- Jief It is the one railroad that has earned and paid its. full dividend throughout the period of this de- ression.” p.“.We ‘were on gur vn&: nbsg;ed Valn Sweringen at this point, goi on to tell how they then eyed the Erier Rail- road, and won the co-operation of the latg George F. Baker, so that together t ‘wound with half the common and much of the Erie's preferred. They needed new outlets for coal, so bought into the Pere Marquette. It was 1925, apd the brothers went to the I. C. C. ‘with their first plan for the Nickel Plate unification. “-The plan was rejected. but since the . C._regarded the C. & O. as logical ckbone of their system they built a link through Ohio to give it a contin- wous line from Newport News, Va. to ‘Toledo. Holding Company Appears. ere & red ‘the first of the hold- g pifi:e C. & O, was to be now i Post-Gatty. N. Y. to Harbor Grace, Newfoundland, 1.132 miles; 6 hours 52 minutes. On ground, 3 hours 40 minutes. To Chester, England, 2.195 miles. Cumulative elapsed time, 26 hours 49 minutes. hours 49 minutes. To Berlin, 15¢ miles; 34 hours 34 minutes. minutes. To Novo-Sibirsk, 1,579 miles; 76 hours 36_minutes. To- Irkutsk. 1,055 miles; 91 hours 59 minutes To~ Blagovestchensk, 1,009 miles; 99 hours 59 minutes. 34 minutes. To Solomon, Alaska, 2,500 miles; 160 hours 49 minutes. To Fairbanks, Alaska, 520 miles; 166 ! hours 29 minutes. * To Edmonston, Canada, 1,450 miles; 182 hours 43 minutes. To Cleveland, 1,600. miles; 204 hours 19 minutes. 51 _minutes. | associates, including J. R. Nutt, now treasurer of the Republican National ucleus of the consolidation and Plate was a E‘ 'srt:ckhownex;hla prospective paren! change | still keep the Nickel Plate’s C. & O. shares ‘in_the group, Chesapeake Cor- poration was created and its shares ex- changedl Jor the C. & O.'s Nickel Plate. The Van Sweringens’ own C. & O. hold- | ‘wenk into the pot “upon the same Yook money. ¥Chesapeake Corporation went toJ. P. | Morgan & Co. for this financial aid and realized it by the sale to them in the Spring of 1927 of $48,000,000 of 20-year 1 { Committee, obtained 25,032 shares of first preferred stock in the road, 62,750 | of second ' preferred and 62400 of common. “Did you borrow $2,000,000 to pay cash?” Van Sweringen said as he recalled the money was provided by the forma- tion of the Nickel Plate Securities Cor- poration and the sale of the stock. “Did you get a loan of $2.000,000 from the Guardian Savings & Trust Co. of Cleveland?” “We got an interim loan from that bank while the Securities Corporation June 23-July 2, 1931: Roosevelt Field, ‘ To Hanover, Germany, 534 miles; 31 | ‘To Moscow, 991 miles; 54 hours 84‘ To Khabarovsk, 361 miles; 117 hours | To New York, 394 miles; 207 hours THE EVENING STAR, WASHINGTON, Progress of Mattern Flight" HOW THE LOGS COMPARE Jimmie Mattern. Saturday, June 3—4:20 a.m., hoj from Floyd Bennett Field, New York. Sunday, June 4—4:15 a.m., lands at Jomfrauland, an island off south coast of Norway; 9:00 p.m., took off for Oslo (about 70 miles). Monday, June 5—12:40 a.m., took off from Oslo for Moscow; 7:57 a.m. ar- rives in Moscow. (Flying time from New York, 51 hours 37 minutes.) (Time is Eastern standard.) MATTERN IN MOSCOW | AHEAD OF RECORD IN ROUND-WORLD FLIGHT ___(Continued From First Page) Norway, I thought it was Scotland,” sald Mattern. “But finding later that it was Nor- way, 1 foljowed the South coast, in the hope of making Oslo, but I didn’t know just where that city was situated. “Seeing what I thought was a sandy shore. I circled around and made a | landing on a stony beach. The land- ing was rather difficult, but I broujht the machine to earth satisfactoriiy on a little island, inhabited by 20 persons.” After an hour's sleep the airman at- tended to his plane and flew off to Oslo. He landed at the military airdrome an hour later. After his papers had been examined, he flew on towards Moscow. Mattern revealed that he had slight- |ly damaged a wing on landing. Girls |on the little island on which he alight- (ed wrote their names on the plane’s | wing. | Mattern appeared very tired. Apart from oranges he had had nothing to eat since leaving New York. He brought two bottles of tea along, but | both of them were broken. INCOME TAX SNAG ISHIT BY INQUIRY Morgan Probe Committee Frankly Puzzied by Legal Question. BY G. GOULD LINCOLN. ‘The Senate Banking Committee’s in- vestigation of J. P. Morgan & Co. hit a snag today which slowed it down at least temporarily. under the law to investigate and make public the individual income tax re- | turns of the partners of the Morgan company. Another tough nut for the commit- tee. lies in determining how far it wishes to go in this whole matter of investigating income tax returns made | by bankers. Some members of the com- mittee feel that if they start in on the income tax returns of the Morgan part- ners they may be compelled to begin on the investigation of a large and un- limited number of other bankers—for example, the members of Kuhn, Loeb & Co., Dillon, Reed & Co. and other banking concerns. They feel that such an inquiry might be almost endless. Let Question Ride. The Senate committee today, after listening to John W. Davis, counsel for the Morgan firm, and Ferdinand Pe- cora, counsel for the committee, on the question of Iits rights and powers in this matter of investigating and making | public the individual income tax re- turns, voted 10 to 2 to let the question ride until tomorrow morning. At that time, the committee will meet again be- i hind closed doors to determine what { shall be done. ‘The details of the vote in committee by which decision regarding the investi- gation of individual income tax returns was postponed were not made public, except that the two votes cast in the negative were those of Senator Fletcher, chairman, and Senator Couzens of Michigan, who is on his way to the Economic Conference in London as a delegate, but who left his proxy with Senator Costigan of Colorado. Senator Costigan himself was reported to have withheld his vote. In the meantime, the members of the committee will seek to inform them- selves more fully regarding the law, which declares that individual income tax returns shall be treated as confi- dential. It is the committee’s hope, too, that counsel for the Morgan and the committee counsel will be able to reach some agreement regarding the facts in the income tax return of T. S. Lamont, youthful member of the firm jof Morgan, and of other members of that firm, without an actual public hearing on the matter with these gen- tiemen on the stand. Will Relieve Committee. If such a stipulation of facts can be agreed to by counsel and submitted to the committee, members of the com- mittee will heave a sigh of relief. Some of them are not at all satisfled that the resolution under which they are con- ducting their investigation gives them the right to go into individual income tax returns. If John W. Davis, how- ever, stands out in his denial of the The membsrs of the committee ad-| mitted they were frankly puzzied as to| how far the committce was entitied | was being formed,” Van Sweringen an- swered. 5 cent bonds.” fie Chesapeake & Ohlo asked then for Interstate Commerge Commission permission to acquire control of the Efie and Pere , Was_granted tHe latter, but not Sweringens, faced Has Poor Memory. The operator displayed a poor mem- | ory in recalling details of the 1916, transaction. - | Pecora showed some impatience. | anne 8 The witness conferred so frequently News of his landing took Norway by | right of the committee to make public surprise. The military airdrome is 15 |any of these income tax returns, the miles from Oslo and many outlying | committee will have to make up its telephones were not working because | mind one -way or the other tomorrow of the Whitsunday holiday. what shall be done. Nlnhl:gtln'.l.;;lhe little island and jorwegian m pilots helped Mat- | committee—and counsel is supported tern repair his plane, which had suf- | Chairman Fletcher in its p%':&ouun—bz fered & rent a yard long on the under | that the committee is entirely justified The contention of ccunsel for the | y poration, the im: inte objective of the z;lncnt investigatitn. H ~Into their holdings, he ? it they pmt said, taking comfion stock enly in ex- change. Here Van Sweringen's state- ment made no reference to the Morgans, no mention of the flotation which already has figured in the investigation through distribution of Alleghany shares | at cost to a Morgan-selected list of | customers. He pointed out that in 1932 the Inter- state Commierce Ccmmission handed down a four-system consolidation plan fi:gdml with their structure and | “We are still expecting to get these | railroads together, physically and finan- cially speaking, in spite of the many difficuties we have encountered.” The brothers were looking westward for expansion, desiring, said O. P, to secure diversification of freight, since their Eastern business was so largely coal. Unification of a transcontinental system, he insisted, was pot the aim. They picked on the Missouri Pacific system and bought by 1930 a majority of its shares through Alleghany Cor- poration. They thought themselves strong enough financially to swing it, but the depression came and “wrought its accompanying havoc to investments -1nd its violence to Alleghany Corpora- tion.” Yet, he predicted Missouri Pacific will be “one of the best and most prosperous in this country” once it is through its present receivership reorganization. No Interruptions. i Members listened to Van Sweringen’s | long statement in sllence and withoug | interruption. N Only a few of the Senators were | present, including Senators “Ggldsbor- | ough (republican) of Maryland; Byrns (Democrat), South Carolina; Adams (Democrat) of Colorado and (Kean (Republican) of New Jersey, in addi- tion to Chairman Fletcher. Van Sweringen emphasized his read- ing with mild gestures and smiled when he mentioned the Chesapeake & Ohio and its coal haulage. He said the statement gave an outline of the “purpose” of the Alleghany Cor- poration. “You formed the Alleghany Corpora- tion to acquire control or part control of various railroad lines?” Pecora asked as Van Sweringen completed his state- ment. “That was its purpose, I think,” Van Sweringen said “You invaded the railroad fleld in 19162™ iYes. “Through purchase T of the Nickel Plate? “Yes, we bought Plate.” “Who was as ted with you in this wventure” Pecora asked Brother and Others. “My brother. C. R. Bradley Nutt and quite a few othe: Sweringen repliec. Pecora then asked a series of ques- tions as to who wrote his opening state- ment and who aided Van Sweringen answered in a low | voice. He leaned back in his chair at | end of almost every reply. ! He said he drew the statement. that several in his office aided in framing it and that no one in Morgan & Co. had anything to do with it “Do you submit a copy to them (J P. Morgan & Co.)?” Pecora asked. “I outlined it in a casual way to Mr. Arthur M. Anderson on the telephone.” Repeatedly, the witness conferred with counsel and aides, until Pecora said: “Do you find 1t necessary to confer ‘with any one?” “I only had a subpoena to be here myselt,” Van Sweringen replied. “I had no knowledge of what was wanted. I can't carry the details of years in my head.” The railroad builder testified he and his” associates in 1916 paid $8,500,000 for their original interest in the Nickel Plate, cash $2,000,000, with the balance e def¢ kmum,be.mbrwmrlndmr into the Nickel with sssociates and Pecora finally di- | side of the left wing during the fiight. rected him to “tell us when it is neces- | This damage occurred Saturday night, so_that the record will show it.” Pecora quoted from the report of Dr. W. M. W. Splawn after his railroad in- vestigation for the House Interstate Commerce Committee, which said that $2,000,000 of the $8,500,000 purchase price was paid in cash, while 10 prom- issory notes, each payable one year apart, with the first due in five years, we‘re given for the rest of the payment price. ‘The report further said the purchased Nickel Plate stock was pledged with the Guaranty Trust Co. of New York for the promissory notes. Pecora quoted it also as saying that on July 3. 1916—two days before the Nickel Plate purchase—the Van Swer- ingen's borrowed $2,100,000 from the Guardian Savings & Trust Co. “You obtained that loan two days before the Nickel Plate negotiations were concluded?” Pecora asked, “Seemingly so, yes,” Van Sweringen ,500,000 was used for the cash payment on the Nickel Plate?” “That seems to be so.” “You pledged the stock you were pur- chasing for the 10 promissory notes?” “That we did.” “Then you borrowed all the money to make that $2,000,000 payment to the Nev' York Central?” Pecora asked. “For the moment,” Van Sweringen re- plied. “How was this repaid?” Nickel Plate Securities Corporation,” Van Sweringen replied. Only Fletcher and Adams remained at the table, as Pecora dragged from Van Sweringen the details of the oper- ation. Both Pecora and Van Sweringen were consulting for details of the transac- uterstate Commerce Committee. Pecora Is Methodical. Pecora pursued his questioning with his usual methodical persistence, trac- ing every step and oftentimes asking a question. in several different ways. ‘This apparently held little interest tor the spectators. There were fre- quent yawns, but the listeners re- mained It was testified that the Nickel Plate Securities Corporation was formed - December, 1916, and that the Nickel Plate Securities had additional assets in the form of the Cleveland, Youngs- town Railroad and scme real estate. These and the New York Central stock were pledged by the Van eringens for the capital stock of the securities corporation, Common stock of the corporation had a par value of $12,500,000. The investigation was recessed for lunch shortly before 1 p.m. Stock Covered Loan. Pecora had asked a number of ques- tions regarding whether the Securities Corporation had assumed the $2,100,000 Guardian Saving & Trust debt. “The preferred stock was us-d to take care of the Guardian loan,” Van ringen agreed. In return for your holdings in the Nickel Plate and alse your holdings in the. Cleveland Terminal Co., you got all the common stock value at $12,- 5000002 “Yes." “Au the Securities Corporation also assumed the $2,100,000 Guardian loan?” “With the proceeds cf the preferred stock, the result was that way,” Van Sweringen said., “The preferred offset that loan.” “And you undertook also to get sub- scriptions for the preferred stock?” “And did the securities corporation | agree to pay all the liabilities and obli- gations assumed by you in acquiring the Nickel Plate?” “They did and should.” Van Sweringen conferred with aides before replying to nearly every ques- tion. Progress was slow. $100,000 Yearly Salary. A discl that some members of the firm . P. Morgan & Co. are paid a -!rl."hz salary of $100,000 a wishes “Through the sale of the stock in the | tion the data gathered by the House | gay. sary to confer with those about you, Wwhich, the aviator said, seemed like a | year. He declared the weather was | bad and the plane was badly buffeted. | "I thought I never would reach land ;mm." Mattern ‘said. “Once I ran | into a thunderstorm and then ice | forming on my machine forced me | down from 6,000 feet almost into the sea. | The airman was somewhat down- | hearted at losing 10 hours by going lout of his course. His charts were | faulty, he sald, and he was unable | | to navigate along the Norwegian coast map. | He had good going until he got 600 | miles out from Newfoundland, when | he was forced to leave his course be- | cause of bad weather. | Residents of Jomfruland who wit- | nessed his landing said it was a mar- | velous performance. He struck stones | instead of the sandy beach he had ex- pected to find. Stones whirled around | him, but the pilot was not hit and the | plane was not damaged. | The islanders were very helpful to | Mattern. Two horses and 10 men | helped drag his machine 1,000 yards from the beach over stony ground to a field where, once repairs had been | effected, he was able to take off. | | brothers and sisters to me,” Mattern |exclaimed. “It grieved me not to be | able to reward them at the moment, but {1 had no money of any account with The islanders were not worrying, b ever, and were glad that they could be of assistance to the American avaitor. “I hope to beat the Post-Gatty record | and be back in New York next Sunday,” i he said. l — |year was made authoritatively yester- | Members of the Inquiry Committee {slhl today that the deleted part of the Morgan partnership agreement, | which was withheld from publication, showed that in addition to having a small interest in the profits of the |great banking house some the | younger members also received salaries. | This fact may have a bearing on | the question raised by the investigators |as to whether the partnership agree- | ment is actually that or an employ- {ment contract. | Senator Costigan raised this point | when the closely guarded agreement | was made public, showing the domi- nant position” occupied in the partner- ship by the senior partmer, J. Morgan. Costigan said at the time it {might have an important bearing on | | the tax question. | Preparing Wind-Up. Pecora and his staff spent the week |end in Washington preparing to wind | | “The people of Jomfruland were like | in exposing to public view the personal income tax returns of the Morgan part- It is pointed out that a partner- ship like that of the Morgan company files an income tax return omly for in- formation and not for the purpose of paying a tax. As the law now stands, the individual partners file their indi- vidual 1eturns for the purpose cf tax- ation. If the committee is to get any- thing out of its investigation and make recommendations for legislation dealing with income taxes, then, it is insisted, it must go into the individual income tax returns, ners, Semator Glass’ Stand. | Senator Carter Glass of Virginia and | Banking Committee contend that the | Banking Committee has nothing to do with the income tax laws anyway; that any change in those laws must come originally from the House Ways and Means Committee, and when it reaches the Senate must be handled by the Senate Finance Committee, not the Banking Committee. Banking Committee members are wondering, too, whether they should | not leave this matter of investigating income tax returns to the Bureau of Internal Revenue, which has full juris- diction in the matter. If the committee believes thdt an inquiry by the Internal Revenue Bureau is not sufficient, then & lawyer from the Department of Justice could be assigned to check up on such an inquiry. In this way, it was argued by one member of the com- mittee today, that the Government could save a lot of money since it would cost far less than to have the Senate committee carry on investiga- tions of individual income tax returns. Didn’t Go Into Mitchell Tax. The present trial of Charles E. Mitchell, former president of the Na tional City Bank of New York, for eva- sion of his income taxes, grew out of the Senate Banking Committee's in- vestigation, but it was instituted by the authorities of the Internal Revenue Bu- reau and the Department of Justice. The Banking Committee did not go into Mitchell's income tax itself, it was said today by members of the committee, as it is now proposed to go into the indi- vidual income tax returns of the Mor- gan _partners. The Senate committee is in & hot spot, however. If it determines not to | go ahead with the investigation of the income tax returns of Mr. Lamont and others at the public hearings there will | be & public clamor and perhaps charges P. | that it is favoring the Morgan partners. Directs Complete Probe. ‘The resolution under which the com- mittee is making its present investiga- tion directs the committee %0 make a | complete invest'gation of the operation by any person, firm or corporation as the business of banking, financing and | some of the other members of the | up the spectacular inquiry with the ' extending of credit and the business of bringing out of fresh evidence. He issuing, offering or selling securities. hopes to conclude the inquiry into the \ Morgan firm by tomorrow night. ' Pecora hes ready to publish a final list of selected stock clients of the Mor- gan House, more revealing than any heretofore offered. It contains two groups, an inner circle which was sold | stocks at cost, and another group which | paid a little more. i | As a result of evidence presented as | to the extent of Morgan holdings in the : | power and gas flelds, members of the committee already are studying possible legislative limitations upon the concen- tration of financial power in the hands of & few. Possibility that the inquiry may not be concluded this' week ‘arose yesterday when Costigan suggested it should be kept open for future developments. “I hope the investigation will not be closed yet,” Costigan said. “There are such large aspects to this subject that it would be regrettable to conclude the inquiry without going more deeply into some of these problems.™ Meanwhile Pecora is ready to ahead during the week .with the in- quirles into Kuhn, Loeb & and Dil- Read & Co, if thy' committee It is aiso directed to make a complete investigation of the business conduct of the Stock Exchange and members thereof and of the practices of buying and selling, borrowing and lending of securities, and of the values of lt-i curities. ‘The resolution does not anywhere specifically authorize or direct the com- mittee to inquire into income tax re- turns or the law relating to income taxes except it mentions the desirability of the exercise of the taxing powers of the United States with respect to the stock exchange business and any se- curities offered for sale The Banking Committee, however, has ‘brought out, as a carollary of its investigation into the Morgan firm that none of the partners of J. P. Morgan paid any income taxes during the years 1931 and 1932, the firm’s losses being wril off in the individual income tax returns of the . The immediate effect of this dis- closure has been a proposal to amend the income tax laws, first by the House and more recently by Senator Harrison, chairman of the Senate Finance Com- mittee. Senator Harrison proposes write into the tax clause of the admin- istration’s industrial recovery bill pro- hibition against partnership losses be- D. C. MONDAY, SPOTTED FEVER FUNDS SLASHED BY DOUGLAS AS CASES INCREASE special need of it because the men must work in the forests where ticks are abundant. It make it necessary to promulgate stringent regulations that the men be examined daily for ticks, it was explained. Practically all the Rocky Mountain spotted fever work is carried on at the Public Health Service laboratory at Hamilton, Mont. This was the property of the State of Montana, with Public Health Service officers detailed for ser- vice there, until last year spurred by the outbre in the East and lge spread of disease In the West— Montana obtained an appropriation by which the laboratory was purchased by the PFederal Government and new buildings provided for. The buildings | are now underway. With a fully equip- | ped plant it was expected that produc- | tion of the vaccine could proceed at a | greatly increased rate, until the Pub- | lic Health Service was confronted with the appropriation cut. The superin- tendent of construction of the new buildings, according to word received today, has just been taken sick with spotted fever. Production Speeded. ‘The production has been speeded up. Dr. Thompson explained, from 12.8 liters in 1828 to 175 liters in 1933. But this is not enough even to meet the demands of the Rocky Mountain area. It is far from sufficient, Dr. Thompson sald, to permit general vaccination even in the badly infected areas in the West and must be reserved for persons es- pecially liable to tick infestation who are unable to adequately examine them- range and employes of the United sms Forest Service who must go alone into the national forests. It is also used where there has been a definite outbreak of spotted fever in some limited locality. Although it could 1ll be spared, a little has been allotted to_the Eastern area. Rocky Mountain spotted fever has been dealt with solely by the Public Health Service since its discovery as & clinical entity about 30 years ago. The vaccine was developed, at the cost of several lives, in 1928. It is made from the ground-up bodies of infected ticks. Its manufacture is so difficult. costly and dangerous that nobody else will undertake the job and the Government has the sole supply. Problem Is World-Wide. The decrease in the appropriation comes just as Rocky Mountain spotted fever is being found to be a world-wide problem. It has been found in Brazil and along the Mediterranean. The first case has just been reported from Paris. | Dr. E. Brumpt, celebrated French med ical entomologist, visited the Mon laboratory this Spring. He was vac- cinated, but give only one dose because of the infected ticks back to Paris with him for study, but soon came down with the disease. He is making a good recovery, but has appealed for vaccine for his laboratory workers. ‘The reduction in the funds allotted to epidemic work also means that the guard set up against the introduction into California of bubonic plague, the black death of the Middle Ages, must suffer. The funds have been reduced more than 50 per cent. It is known that the black death virus is present in California ground squirrels, but it has been kept back by a rigid hunt against these. The plague is present in Hawail. The news that the epidemic preven- tion appropriation has been cut comes simultaneously with the meeting here of the health officers of the United States and Canada, who are presenting reports on the status of disease-preven- tion work during the depression. They. reported cuts in appropriations in many States, especially for child welfare work. Frank Hubbard 39, of 316 Quacken- bos street, was the first spotted fever victim in the District this year. Mr. Hubbard, a market specialist of the Department of Agriculture, is be- lieved to have received the virus of the mysterious disease about two weeks a while on a visit in Anne Arundel Coun- ty, Md. Returning from s walk he found two dog ticks on his body, but pulled them off and forgot about them. About a week later he suddenly became ill, with all the symptoms spotted fever. He summoned Dr. Frederick H. Morhart, 1704 Sixteenth street, the hml‘xly physician, who made the diag- nos! Mr. Hubbard grew worse rapidly and soon passed into a state of delirium, which ended with death. There is no known cure for the disease and all that can be done is to take measures-to con- serve the victim's strength, hoping that the bedy itself will throw off the inva ing organism. There is no evidence, it is explained by Public Health Service physicians, that there are any virus-carrying ticks in Washington, although they exist in the nearby village of Somerset, Md. No case positively has been established as hav- ing been contracted here, the physicians explain, and it tendency to center in certain limited areas, which it does not transcend dur- ing & season. Thus the famcus Bitter Root Valley in Montana has an ex- tremely virulent type of the disease in one end, while at the other end, only a few miles away, no case ever has been CONSCIENCE IN TRADE | ADVISED GRADUATES Dr. Lenski Tells Southeastern U. Group Country Is Crying for Honest Men. | More conscience in business is the | need today, it was declared yesterday | by Rev. Dr. Gerhard E. Lenski, pastor {of Grace Lutheran Church, in a bac- | calaureate sermon before members of !the graduating classes in law and ac- | countancy of Southeastern University. The country is crying not so much |for experienced business men, dis- tinguished financiers or noted political leaders as it is for honest men, the | minister told the seniors, who are to receive their degrees tomorrow night in Memorial Continental Hall. “Shrewdness and cleverness,” he said, | “without the soul of honor and honesty constitute a new kind of thief running around our national household. It is not enough that our husiness deals’ should be leg: It is not enough that | none can indict us and convict us for fraud or pocket-picking.” Dr. Lenski referred to the late Ivar Kreuger and the collapse by fraud of | his match “kingdom.” “1 do not mean to say that all dis- honest men are going to end as sui- cides,” he said. “or that all honest men will live long and enjoy health at all times. And yet my con- clusion is not so far removed from such & version. “Not ali dishonest men are to be- when— ' A the late Senator Thomas J. Walsh of | selves, such as cowboys alone on thej it made him very sick. He took some | JUNE 5. 1933. LAMSON 0 PLEAD IN SLAYING TODAY Stanford U. Press Sales Manager Accused of Murdering Wife. By the Associated Press. | SAN JOSE, Calif., June 5—Charged with murdering his 28-year-old wife, sweetheart of his college days, David Lamson, | press salesman, appears in court here |today for arraignment. | Allene Thorpe Lamson, mother of his ismall daughter, in their Stanford cam- ! pus home Memorial day. Defense Not Determined. Edwin M. Rea, who yesterday took |over duties of chief defense council from his law partner, Arthur M. Free, isaid he was not prepared to state the :elx‘lct steps he will take in behalf of his client. He said he had not reached any fixed opinion in the case “except, of course, the conviction that Mr. Lamson is in- nocent.” Free has said Mrs. Lamson was killed in an accidental fall in the bath tub, where her body was discov- ered, or was struck on the head by an unidentified intruder in the home. Shooting Held Accident. Lamson’s mother, Mrs. A. B. Lamson, |said a shooting in which her son was |involved in Canadd when he was 13 years old was an accident and he was exonerated. Her statement followed the announcement by Sheriff William Emig the was seeking information on the old tragedy from Canadian authorities. Mrs. Lamson sald a hunting com- panion was killed near Red Deer, Al- berta, by a bullet from her son’s gun. Mrs, Lamson’s brother, Prank Thorpe, jr. who came here from Lamar, Mo., visited his brother-in-law in jail yester- day and talked with him for half an !hour. He had “nothing to say” as he |{came from the jail. 1 ! CHINATOBUYU.S. R. F. C. Arranges $50,000,- 000 Loan Under Roose- velt’s Direction. y the Associated Press. | Under Pjasident Roosevelt's direction; the ReconWriction Finance Corporation has arranged a $50,000,000 loan for China to buy American cotton and wheat, a significant step in the cam- paign for foreign farm markets. This long-sought deal, calculated to lift & big share of the country’s cotton jsurplus at least, was concluded in the recent personal conferences held by the President with Chinese Finance Minis- 30, Staniord University | | 'The complaint accuses him of killing | {“feloniously and with premeditation” | WHEATANDCOTTON = i i | Wave of Vesuvius’ Lava Is Halting at Valley of Inferno By the Associated Press. | NAPLES, Italy, June 5—A lava precipi Inferno today, and as the flow gradually stopped it was believed danger to the town of Terzigno was over. The fireworks display, with shooting flames and rocketing burning stones, still continued. 'BITTER FIGHT FACED AS ENGINEERS MEET Progressive Group in Brotherhood Seeks Ousting of Johnston, Grand Chief Since 1928. ! By the Associated Press. | CLEVELAND, June 5.—Amid a set- ting tense with threat of battle, the | Brotherhood of Locomotive Engineers | called their Seventh Triennial Conven- | tion today as a group of “progressives” | prepared to train their fire on Alvaney | | Johnston, grand chief engineer since | 1928. | ‘The most bitter fight in the organi- | | zation’s history was forecast. mdcn; | predicted the convention would continue at least through June, and some ex- pected the 47 days used for the 1930 gathering to be exceeded. Johnston maintains he inherited from | previous administrations the outside financial ventures that occasioned the | attack on him, and since 1927, when, as grand chief engineer, he became the highest officer, he has done all in his power to divorce such ventures from the organization. The 1933 financial report showed that since May, 1930, the Brotherhood of Locomotive Engineers has whittled its external obligations from $5.265.923 to $3,740,966. It also showed, officials said, gradual 'nt from what once was & string of mere than two-score outside financial interests. Between 300 and 400 visiting dele- gates and visiting brotherhood members attended a preliminary meeting at which the move to oyst Johnston was - ANOTHER MERGER OF BANKS RUMORED, BUT MEETS DENIAL (Continued Prom Pirst Page) House Le DEBATE ROOSEVELT BUDGET WARNING aders to Hold Spe- cial Meeting Tomorrow on Veterans. (Continued From Pirst Page.) Rainey said the President is working on a plan to liberalize the cuts on such a basis that no veteran whose disabili- ties resulted directly from service would be cut more than 21 per cent. “That,” said, “would cut the savings $50,000,000 to $75,000,000, but it would not apply to veterans whose | allments are presumed to have orig- inated from service.” The Senate amendment, Rainey con- | tinued. has been interpreted as for- bidding more than a 25 per cent cut, both in directly service connected and presumptive cases, as well as in pen- sions to widows and orphans. Favors Sales Tax. Meanwhile, Representative Crosser (Democrat, Ohic), Chairman of the Democratic Steering Committee, called a meeting of a special committee desig- nated by the party caucus to the economy regulations affecting vet- erans. Representative Lea (Democrat- Cali- fornia), chairman of the Democratic caucus, said he favored a sales tax to raise the $170,000,000 to pay the vet- erans. “I think the budget ought to be balanced,” Lea said, “but at the same time I think we ought to do justice to our soldiers.” Rainey said if the House did approve a limitation on veterans’ cuts, and as | & result had to raise new taxes, “it will | mean a new tax bill and nobody in the House wants to vote for new taxes. “We would have to find a new source. It might have to be a tax cn gross in- comes. We certainl; can’t get any more money out of a ret income tax, and gasoline is giving us about all it can.” Discuss Vet> Possibility. Although certain ihat a majority of Democrats would vote for the Senate limitation, or even one of 15 per cent, House leaders were not so positive that either limitation would be rejected, even if Mr. Roosevelt vetoes the bill. was opposed to “abandoning” the prin- ciple followed so far, that compensa=~ tion should be umm%nt‘o two classes— from One Democratic leader, forbidding the use of his name, told newspaper men “the judicious distribution of a little patronage might be of tremendous he! preferred stock in the reorganized bank, to waive 30 per cent of his deposits in return for which he received “partici- pating certificates,” and to receive, when the bank opens, 60 per cent of his de- posits to be made available in cash, The Frankiin, having obtained agree- a total of about gl}llw'm | ter T. V. Soong, one of the series of international exchanges preparatory to b‘? the London World Economic Confer- ence. It was announced, however, at mid- night last ‘night, which made publica- ]mdmwhmopemihh has a mysterious | pre | good | before this afternoon and therefore de- Iayed foreign reactions, awaited by offi- clals here with considerable interest. Taxes Will Secure Loan. A significant feature of the agree- ment is that the loan will be secured directly by Chinese taxes. It has first call on revenues from tobacco, flour, cotton yarn, match, cement and other taxes on imports, Which netted China $32,000,000 in 1932. Bearing 5 per cent interest, it is three years. It will make possible at present ! Chinese purchase of 900,000 cotton and 12,500,000 bushels of wheat. ' That will put & big dent in the esti- | mated cotton carryover this year of 13,000,000 bales, but be less vital in wheat reduction, since the U. 8. carry~ over is now figured here at 363, bushels, more than half held United States. U. S. Ships to Be Used. Administrators of the new farm act, kee official silence, but privately well pleased at the transaction, showed belief that this outlet for surplus would jent to avoid levying g taxes to finance a general of acreage reduction. There was some fear also that cotton farm- ers have let their hopes of better prices lead them to expand u:re:xe possibly wiping out the benefit the Chinese purc] 3 The cotton and wheat will be moved T e el Bors commodiies pa; reight. are to be purchased in the open mavket over the next six months, but the' Re- construction Finance Corporation ‘re- serves the right to use up Farm Board stocks in the transaction. Money will be advanced as each purchase is made. The bulk of the wheat is to be mfiled before shipment. The cotton, on the other hand, is to move unp: HARRIMAN DENIES GUILT AT HEARING New York Banker's Request for Postponement of Trial Granted. By the Associated Press. NEW YORK, June S5.—Joseph W. | Harriman, former chairman of the| gy H. Zepp, vice board of the Harriman National- Bank & Trust Co. pleaded not guilty in Fed- eral Court today to an indictment charging mismanagement of the insti- tution’s funds. Albert M. Austin, vice president of the bank, also pleaded not guilty. ‘The elderly banker's bail was per- mitted to stand at $25,000, the amount fixed upon his arraignment under the original indictment, which charged him only with causing false entries, and Austin was ordered to p-it a $5,000 bond. ‘The indictmeni on which the two entered pleas today were returned last Priday and charged the making of 14 to be repaid in | his Meantime the campaign to sell stock in the new Hamilton National Bank 1a letter urged depositors to subscribe at ileast 10 per cent of their in the District National Bank. be done, he said, “not only in behalf of your own interests, but in that of thou- sands of other depositors, that may be made available at an early date 50 per cent of all deposits. If the Familton National Bank is not organ- ized,” he said, “a receivership may be anticipated, in which event none of your money can be released for months d thes in comparatively small percentages. possiple oRors a° your bepait.” i your 3 the letter. “It is humanly impossible to make actual contact with each and every depositor. Your committee has no wish except to serve you and cannot believe that you are of the opinion that your best interests will be served by a receivership, but, if you are it| seems useless for them to make fur-| ther effort. | “Subscriptions to date are very un- satisfactory and an immediate response this comm"d i earnestly requested.” Opposition to the entry of the United States Savings Bank in the Hamilton merger will come to & head tonight at a meeting of depositors called by Col. Wade H. Cooper, president of the bank and majority stockholder, at a theater on U street, near the bank. The - ing will be held at 8 o'clock. Col.| Cooper will explain his hopes for keep- | ing the bank out of the merger. Official steps to put the United States Savings Bank in the merger have been taken already, however, by sident and con- , who now is rge of the | to join the servator of the ba Government official, in chai institution. He has agreed entry of the United States Savings Bank into the merger, but it has not | budget opsided. cision on what taxes to impose t. ‘The Senate Friday boosted the appro- | priations in the inde] it offices bill from $543,000,000 to $715,000,000, by the veterans' pension funds Douglas, who, with tor Hines and So- increasing by $170,675,607. ‘The Senate's action came after it be- came known that the Veterans' Ad- ministration K on _veterans’ was back power previously given him, he insisted that, by days. gsutuu men, the ported as , A benefit of the doubt thrown out of a hospital without of support. "I‘hhe. tPrelident then put the question of what Congress was going to and how, if it u?:w appar- ently was not o 2 Others at the conferences were Rep- BANKRUPTCY BILL ... IS PASSED BY HOUSE McKeown Measure Designed. to Help Corporations Work, Dut’ Refinancing Plans.’ | 1 ve posed by Col. | e o Teapen the Dak alme.. | e Amechiad Frus. 0 Sie bill to enable corporations to avoid bankruptcy proceedings by getting ccurt approval of reorganization plans subject to the agreement of two-thirds of the creditors and a majority of the stock- holders. AS DELEGATION CHIEF Former French Premier Will Be Active Leader at London After First Few Days. come suicides, but all of them walk|f8lse entries in the bank's books; the in the shadows and they drink from |8bstraction of securities amounting to By the Assoclated P a bitter cup and they face a future that is dark just because it is so dread- fully uncertain. Not so with good men.” The prospective graduates attended the services attired in caps and and were led by Dr. James A. Bell, di- rector of education of the Y. M. C. A., and members of the faculty of the uni- versity. ing written off in the income tax re- turns of individual partners of the Mor- gan firm. He has also that annhlnn be denied the right of writ- ing off security losses under the income tax laws, > $300,600 in value from the bank, and the obtaining by Harriman of $300,000 = Ln; a note to a dw'g:wr W] rned eeds over to - - proce leading The bank was not permitted to reopen after the recent holiday and now is in the hands of a conservator. Counsel for Harriman asked that the case be put over until the July term of the court, but United States Attorney George Z. Medalie suggested that it go on the trial calendar for June 19. Judge ! Henry W. Goddard selected the latter date and said he expected at that time | times finance minister and an Bonnet, to bave attorneys for both sides to ar- Geoitel PARIS, June 5.—Former Premier Jo- | seph Caillaux agreed today to serve as active chief of the French delegation to the World Economic Conference. Appointments to the delegation will be announced by the cabinet tomorrow. ‘The plan is to appoint Finance Min- MGO:IM:‘LHIWMMQM w-mhounm" I t few days of the parley. will go to M. Caillaux, several economic