Evening Star Newspaper, June 6, 1933, Page 4

T A4 DR TAX PRASE OF MORCAN PROBE Senators Seek New Powers to Inquire Into Returns of Partners. (Coptinued .m., with O. P. Van Sweringen again ying. Cmg"l‘ry to the practice on previous days, the early arriving spectators had not been permitted to' gather in the hearing room to await the public ses- In order to kleep lt‘:e ;Do]:l :: ooo}, ':; possible, specia e hel e Cr outside in '::cw comdol's for a while. A lengthy queue of spectators soon ‘was stretching from the hearing room door down & long corridor. Armed police ‘were on the alert as usual. ‘The committee room doors were opened shortly after 10. Women out- numbered men, two to one. George Whitney and Stanley were the first of the Morgan partners to ar- rive. They sat down before one of the electric fans whirring over the commit- tee table. Resolution Is Read. As the hearing started Chairman | Pletcher read the resolution. ‘The- words “should it be deemed nec- essa) were added at the end in his wversion. . These words were not in the formal text given out to newspaper men by committee aides. Morgan rose to his fect and leaned forward to hear the resolution. Russell C. Leffingwell, a partner, also rose, as did several others in the group. Morgan exchanged glances with those Her Testimony Barred BANKER'S WIFE STOPPED BY JUDGE FROM TAKING STAND. around him, but his face did not change expression. xgennwr ‘Barkley (Democrat) of Ken- tucky and Fletcher were the only com= mittee members in the room. Pecora put_into the-record 8 map showing the Van Sweringen lines. Refers to Vaness Loan. He referred to an advance by the Vaness Co.—a security holding com- iy of the Van Sweringen's—to the mkel Plate Securities Co. of $1,700,000 in 1923. Testimony yesterday showed the $1,700,000 was used to buy 3,000 shares of Chesapeake & Ohio stock. “The money was paid in reduction of an open account existing between these two companies,” Van Sweringen said. H “Yesterday you said it was a loan from the Vaness Co. to the Nickel Plate Becurities Co.,” Pecora L * “The record should have said in_ re- duction of an open account. between the companies,” Van Sweringen repeat- “When was the open account creat- ed? What were the circumstances?” asked. Hesitating, Van Sweringen on the table with his fingers. 1 drummed He final- tions about the “open series of “I don't knows” followed. Frequently Consults Lawyer. Before replylng, Van Sweringen, a8 he did on yesterday, frequently talked ‘with Prank H. Ginn, Cleveland lawyer, and member of his staff. committee 1 kept asking " | stock at the same time we were,” m he was testifying, furnished me die for buying the 73,000 shares of C. & 0.” Van Sweringen Retells Story. Van Sweringen conferred with his #ddes and then retold the story of the $1,700,000 of Vaness money. Pecora said he wanted to know about the entire $7,300,000 used to buy C. & ©. Stock. “I'm still right,” Van Sweringen in- sisted. “There were two parts, one Of $5,600,000 and one of $1,700,000.” “Have you any recoliection of fur- nishing any money out of your means?” Pecora demanded. “We provided the $1700,000 out of the Vaness Co.” Van Sweringen said. “But didn’t you just say the $3,000.- 000 of the Vaness Co. was borrowed?” “But we supplied it just the same,” Van Sweringen insisted, “we and our as- sociates put up the collateral.” There was a lengthy exchange after Pecora asked: “Did you and your associates, Brad- ey, Nutt and others whom you could not name, furnish the $1,700,000 which was turned over to the Nickel Plate Becurities Corporation?” Bradley and Nutt were previously identified as C. L. Bradley and J. R. Nutt, both of Cleveland. Spectators Amused. Van Sweringen asked to have the question reread, saying he had answered it previously. “Kindly pay pttention and answer the Jast questions I asked,” Pecora sald tartly. There was & delay while Van Swerin- gen asked the stenographer to read the question. Spectators laughed. After repetition of the question, Van Sweringen said the money was “out of our means, but it was the proceeds of a loan from the Guaranty Trust Co.” At one point, Pecora appealed to Senator Barkley, presiding, to require the witness to answer. Barkley warned Van Sweringen that the investigation was not a “criminal yroeeedlng" As to the loan, apparently impatient with the hesitation, he broke in “Who was responsible for the loan. Was it made to you or to the Vaness | Co. as a corporate entity?” Van Sweringen told the Kentucky Senator it was borrowed by the Vaness company, but that “we” owned the Vaness company, and that ‘“having | borrowed the money it was ours.” Turns to Equipment Deals. Pecora then turned to the equipment | purchases the C. & O. made in 1923} and 1924 with the proceeds of $25.-| 000,000 in loans from J. P. Morgan & Go Van Sweringen said the 1923 loan was spent for locomotives, steel gon- dolas and other railroad equipment, and that among the firms it was bought from were the American Locomotive , the Standard Steel Co. and the Foundry Co., with Woodin was associated before he became Secretary of the Treasury. Woodin's former firm also sold equip- ment to the C. & O. in 1924. Pecora had asked about stock in- vestments that the late George F. Baker, banker, made in Erie stock. In 'his statement yesterday, Bweringen said Baker owned some Van RS. ELIZABETH M was called to the stand, but was stopped REND MITCHELL, wife of Charles E. Mitchell, former president of the National City Bank, on trial charged with having | evaded payment of more than $850,000 in 1930, as she arrived at the Federal Court, New York, to appear in her husband’s defense. Mrs. Mitchell, to whom her husband is alleged to have made a fake stock sale so he could escape income tax payment in 1929, ruled “neither the Government nor the defense can call the wife of a defendant. income taxes in 1929 and by Judge Henry W. Goddard, whi much additional investment. Mr. Baker made in the Erie?” Pecora asked. “Any snswer would have to be the one just made” Van Sweringen sald. “It is the most definite answer I can give.” “Then what prompted you to say yesterday he increased his holdings to & very considerable extent?” “I have already answered.” ‘Have you any knowledge that Mr. Baker increase his holdings?” “I'm confident he was absorbing Erie “Have you any personal knowledge that the late Mr. Baker increased his holdings?” “I'm very confident that he did.” “Have you any knowledge of it?” “I feel sure that he did.” Thinks Holdings Were Increased. “Apart from your belief, have you any knowledge of 1t?” | “I'm afraid my answer will have to Test” “Please answer.” “I talked with him about it and Im; confident he did increase his holdings.” “Have you any knowledge of that?” ‘m confident he did.” “Have you any knowledge of it?” Pecora repeated in an exasperated tone. | “I'm confident that he did.” Pecora then appealed to Barkley. “Did_Mr. Baker increase his hold- | ings?” Barkley asked. “I think he did.” “Did he say he did?” Barkley asked. “I don't want to put words in the mouth of & man who has passed away,” Van Sweringen said. “We are not trying a criminal case,” Barkley said. “What knowledge have you of it?” - “From my talks with Mr. Baker I'm confident he did.” “After he told you that he intended to increase his holdings did he tell you ater that he had?” Barkley inquired. “I don’t think I can say what he may have told me. I'm sure he did.” Pecora recalled that in his prepared | statement yesterday Van Sweringen had said Baker “later did to a very con- siderable extent” increase his Erie holdings. Reason For Statement Asked. “That’s an unqualified statement,” Pecora said. “I think you should tell why you made it.” “It is my conviction that the state- ment is correct, but if the point has arisen, my statement will have to stand qualified es given here today,” Van Sweringen said. “Is your modification of the official statement induced by anything that has happened since yesterday?” Barkley asked “I thought I could find it from the | books,” Van Sweringen said, “but I couldn’t. But T am confident Mr. Baker did increase his holdings.” | Pecora then abandoned this line of questioning. He asked when the Van Sweringens finished buying their Erie| stock | “We started buying in November, 1923, and it covered a 15-month period to_January, 1925." | “How many shares of Erie stock did | you buy?” | “Our holdings at the finish were | 387,000 shares of common, 24,700 of first preferred and 52,600 of second | preferred. “You made the purchases in the | PALAIS -ROYAL CandyShop Wednesday Specials! 29¢ Ib. 39¢ Ib. Caramels Almonds stock in Erie and that he acquired mmore after the Van Sweringens begau $0 scquire common stock. Quizzed on Baker Investment. “How much did Mr. Baker increase his investment in Erie?” Pecora In- quired. Van Sweringen replied the “books did not sho “} don’t know,” he answered in re- sponse to further questions, “althougn think Mr. Baker was buying—I think hat at the of the buying our in- is were about half the Brazils 39¢ bb. Malted Milk Balls 39¢ b, Delicious candies, fresh and wholesome . and so in- expensive! name of the Vaness compan ::!:n;d:n't recall but aggregate $11,200,0002" | Pecora raised yesterday as to how the Vaness Co? company raised the $11,200,000. | Van Sweringen said it was a long, \ invoived transaction covering 15 months, | Posited behind that loan practically He sald brokers were given orders to everything you had? buy the stock and they “bought.” | “But my question,” said Pecora im- patiently, which the Vaness company money. ,_ “T ean’t answer it from the informa- | Under-collateralized” by the Autumn tion I have here,” the witness replied, | °f 1931 Guard for Morgan Records Withdrawn For Hunt of Gold By the Associated Press. Records of the Senate Bank- ing Committee investigating J. P. Morgan & Co. were without & Government guard today for the first time, because of the Jus- tice Department’s drive against gold hoarders. ‘Thé special agent who has been assigned to guard the valuable evidence was withdrawn to aid in the widespread hunt for gold. Protests of the committee were without avail. yo" that they were.” consideration was | Long, Involved Transaction. then repeated & question “relates to the manner in got the | Two Forced Landings Made. NEW YORK, June 6 (%) —Two Cleve- | land passenger planes made a forced —The first public meeting of the newly landing at Floyd Bennett Alrport at|formed Prohibition Emergency Com- 3:40 a.m. today, both being unable to|mittee for Prince Georges County will find Newark Airport because of fog.| One of the planes carried 10 passengers, the other 7. v;l;hey proceeded on to Newark lt} D 7 MITCHELL DENIES CHANGING RETURN Says He Did Not Change Fil- ing Office When U. S. Agent Was Moved. (Continued From First Page.) vised {ll‘n regarding the sale of 8,300 shares of National City Bank stock to Mrs. Mitchell in 1929 for tax purposes, had told him the sale of' copper stock to Thornton would be a legal way of recording losses on his tax return for 1930. Ryan, Mitchell said, anxious to keep the copper stock from being thrown on the market, volunteered to find &/ private buyer. Mitchell told of calling the J. P. Morgan Co., at Ryan's suggestion, and asking the Morgans to lend $229,000 to Thornton for the purchase of the stock. “Mr. Ryan was in my office, sitting at my desk, when I called George Whit- ne); and asked about the loan,” Mitchell seil “Mr. Whitney called me back, after looking Mr. Thornton up, and said the Morgans would be glad to lend me the money. At Mr. Ryan’s suggestion I drafted a letter for Mr. Thornton to flln. making formal application for the oan.” Mitchell said Ryan first suggested ‘Thornton borrow from the National City Bank the money to buy the stock. To this proposal, Mitchell said, he re- Pl 'No, John: I can't do that. T've made it a practice never to allow the bank to make a loan on any uransaction 1 which I am even remotely interested. “Mr. Mitchell, in all this transaction,” Steuer asked, “did you ever in any way nbu(l"fc yourselfl to repurchase that stock?” “Absolutely not.” Mitchell replied. “It,_ never entered my mind.” Q. Did you know Mr. Ryan had loaned Mr. Thornton the 2,500 shares of Anaconda as part of his collateral? A. Absolutely not. I thought it was Mr. Thornton’s stock. Q. During the transaction, did you luv; any conversation with Mr. Thorn- ton' A. No, sir. In , 1931, Mitchell said, Ryan ut;':kd him to buy back his Anaconda s “He said,” Mitchell testified, “ ‘Char- lie, I'd like to loan you some stock to use as collateral.’ I said, ‘John, I dom’t ‘like to do that—I've never borrowed that way in my life.’ Agreed to Purchase. “He kefit urging it on me, however, nd finally I agreed to purchase the | stock through Hornblower & Weeks. 1 thereupon arranged with the Guaranty Trust Co. to borrow $200,000, putting up the 8500 shares and the 2,500 shares Mr. Ryan was lending me as collateral.” “Did you know,” Steuer asked, “that the 2500 shares Mr. Ryan loaned to you had been previously loaned to Mr. Thornton?” A. Certainly not. 3; Did you ever in any conversation with Mr. Ryan or any one else promise ;.o make good any of Mr. Thornton’s losses? A. I certainly did not. Steuer showed Mitchell a memoran- dum indicating Thornton had lost $212 on_the transaction. Q. (By Steuer)—Did Mr. Ryan ever suggest that you were obligated to make good Mr. Thornton’s losses? A. No, sir. Asked about the large gifts he had in' 1930, Mit- made to Mrs. Mitchel chell said: “I was greatly distressed over the large amounts she was putting out in insurance on my life and in interest payments to me. Frankly, I asked my office to prepare a statement showing just where Mrs. Mitchell stood on the ns.” Q. (By Steuer)—Was there actually any money due Mrs. Mitchell from you? A. No, of course—but that didn't mean_anything to me. Q. Did you execute mortgages on your | P. Morgan & ! real estate in favor of J. A. Yes, in March, 1931. Q. 80, by March, 1931, you had de- A. Yes, sir. Q. Did you ever get anything back on any of that stock? A. No, sir. Mitchell said the Morgan loan was Prohibition Group to Meet. RIVERDALE, Md., June 6 (Special). be held Friday at the Masonic Hall in Hyattsville at 8 p.m. Among those who will address the mass meeting is Dr. Earl Taylor of Washington of the Na- tional Prohibition Committee. Ly < FOOT-JOY SHOES Summer Suits —With the Appearance, Comfort and Long Service West Quality Always Assure 2-pc. LINENS 10 2.pc. Seersuckers ... 2-pc. Palm Beaches . 2-pc. Mohair Suits . Cascade Cloth Suits ... Coronado Cloth Suits 2-pc. Tropical Worsteds 3-pc. Tropical Worsteds Sidney West, Inc. 14th & G Sts. NGENE C. GOTT, Presiden D. C, TUESDAY GLASS ATTEMPTS TOWINAGREEMENT Makes Final Effort for Bank Bill After Parley With Roosevelt. By the Associated Press. A final attempt to win an agreement on banking reform legislation was un- dertaken today by Senator Glass, Demo- crat, of Virginia, after a conference with President Roosevelt. One of the stumbling blocks between the Senate and the House on the Glass: Steagall bill is the amendment of Sen ator Vandenberg, Republican, of Mich! gan, providing immediate insurance of | deposits up to $2,500. administration is opposed to this and is standing by the original proposal for limited insurance of deposits at the end of one year. President Roosevelt has written let- ters to both Senator Glass and Chair- | man Steagall of the House Banking Committee. | It was believed that Mr. Roosevelt | gave warning in the communication | that if a satisfactory measure could not | be worked out immediately, the legisla- | tion would go over for the regular ses- | sion beginning next January. Senator Glass was uncommunicative | after his talk with the President, re-| turning to Capitol Hill for another | meeting of the Senate and House con- ferees. This emergency Insurance deposit provision is designed to strengthen con- | fidence in the banks without waiting for the permanent insurance section of the Glass measure to take effect a year hence. Opposiion to it is based on the ground that many non-member banks| might not be able to obtain a certificate of solvency to participate and there- h:: woula be forced to close immedi- ately. Senator Vandenberg said in the Sen- ate that Secretary Woodin's opposition was ‘“utterly inconsistent” with the Treasury’s bank loan policy. He added that W had appeared before the Banking Committee and proposed a 100 per cent guarantee in- stead of a limited guarantee as his amendment provides, and to charge “the whole thing on the public Treas- | ury, whereas the Senate plan charges it to the banks.” President Roosevelt last week sent word to congressional leaders that he wanted the deposit guarantee section eliminated. Senator Glass, Democrat, | of Virginia, said today, however, the letter did not threaten a veto. TROUBLES BARED | IN BIG OIL FIELD Letter Discloses Chaotic Conditions, With Small Refineries Dotting East Texas Area. By the Associsted Press. NEW YORK, June 6.—Wall Street has been aware that oil producers in the East Texas fleld were having their trou- bles with over-production, but it didn’t Juppose that conditions were quite as bad as reported by a Dallas citizen in a letter to a broker friend. “They have a field over there,” he wrote, “approximately 400 miles long and 200 miles wide, where it is only necessary to punch a hole in the ground and you have a well that in about three weeks, cost of about $8,000 to $ 000, will from 3,000 to 10,000 bar- rels day. e whole territory is filled with little refineries, and they buy second- hand Scotch marine boilers for $200 and $500 each, good for 40-pound pres- sure and with electric torch make them absolutely tight and use these boilers for stills. “Then they buy a second-hand boiler for about 150-pounds pressure, and it is | THE man’s Summer Sutt style exclusroe with Grosner of 1325 F We didn’t have time to write a good description of the Summer comfort good looks these suits ...so we've made a window of them to shew you what we.mean when we say HERE'S SOMETHING STARTLING IN SUM- MER SUIT VALUE! GROSN of 1325 F Street NO COMPROMISE | Committee last week, will have a chance : | time housing law mentioned ! the basis for a revolving fund, to be f | golng concern value from future valu- JUNE 6, ;1933 Harriman Before Arraignment BANKER PLEADS NOT GUILTY TO MISMANAGEMENT OF FUNDS. J ey OSEPH W. HARRIMAN (left), former chairman of the board of the Harri- man National Bank & Trust Co., pictured with his attorneys before énter- ing Federal Court Buildine, New York. The elderly banker, whose bail was permitted to stand at $25,000, pleaded not guilty to an indictment charging mismanagement of the institution’s funds. SENATE MAY ACT ON ALLEYS TODAY| Improvement Bill Has Chance of | Consideration in Upper House. The Capper bill suthorizing & pro- gram for the gradual elimination of inhabited alleys in the District, favor- ably reported by the Senate District | to be considered in the Senate today, | when miscellaneous measures on the| calendar will be taken up for two hours. | In view of the fact that the Mll; merely makes available for this purpose | an unexpended balance of $500,000 | from the funds of the wartime Housing Corporation, it is hoped by supporters of the measure that it can be put| through without opposition. The '1:-; ent of alley conditions in Wash- | ington as one of the objects to be at-| tained after the corporation’s war- time work had been accomplished. This unexpended balance would form | used some agency to be designated later :’y the President, to acquire alley , replat them and bring about the mopmena of such areas for more desirable pt Although the would also have authority to d in these areas, it is expected efforts would be made to have the areas developed on a self-liquidating basis through. loans to limited dividend corporations. The bill to authorize merger of the d wn Gas Light Companies also is on the Senate calen- dar and may be reached today, but this measure faces a controversy. Senator Capper, Republican, of Kansas, has filed 2 minority report advocating an amend- ment under which the companies would have to agree to eliminate the factor of ations in order to obtain legislation. the . merger NEW and offer full 10 SINGLE OR DOUBLE BREASTED WITH QUALITY e S ’CELLIST TO PLAY Mrs. James L. Karrick to Present Program Tomorrow Night. Mrs. James L. Karrick, well known ‘Washington ’cellist, will present a ’cello program in the garden of the Neigh-| borhood Heuse, 470 N street southwest, at 8 pm. tomorrow, accompanied by Mrs. Franklin Ellis. The musicale is one of a series of concerts arranged by Percy L. Atherton, member of the board of the settlement, in line with a policy of affording members of the set- tlement groups a chance to hear bet- ter music. Miss Margaret Fry, who conducts the music school, is co-oper- ating. _—— first airplane to land on ‘The land Isles arrived there rec ing two Scotch business m HAWA MEASURE REVIVED IN HOUSE |Roosevelt Proposal, Defeated Yesterday, to Be Passed Under Special Rule. By the Associated Press. House leaders today completed ar- rangements to speed through tomorrow {or Thursday the bill rejected yester- day to allow the President to appoint & non-resident as Governor of Hawaii. By a strict party vote the Rules Com- mittee approved a resolution makfg the bill in order. The resolution limits debate to one hour but would permit amendments. Leaders took this means of pushing through the measure which the Presi- dent asked after it had been defeated yesterday by three votes when called up under procedure that required a two- thirds majority. Under the new pro- cedure a simple majority would suffice for passage. The vote yesterday was 222 for to 114 against. Charges of “ -bag government,” violation of “solemn treaty obligations™ and “simple patronage request” were hurled the opposition. Proponents replied that conditions in the islands had grompted the President’s request and his judgment in the matter was sufficient grounds for approval. The organic act now requires the naming of a Hawalian resident as Gov- ernor, and the Territorial Legislature, Chamber of Commerce and other insu- lar interests have opposed the change. Delegate McCandless, a Democrat, led the opposition on the floor asking “what justification has Congress for partially disenfranchising the people of Hawaii?” | McCandless argued Congress should | make its own investigation of conditions in Hawail before passing upon such Jegislation. IGNORE MULDOON’S PLEA FOR SIMPLE FUNERAL By the Associsted Press. 6—An litical and sports cel health’ farm, which Muldoon. mdnfledhmlarfflym Burial will Is it hot enough for you?' But you needn’t care how high the temper- ature when_you can keep perfettly cool in the Glenbrook Southern Weaves - The Ideal Tropicals - ' Smart worsteds, etc., light as feathers and. tailored perfectly. 2-piece Glenbrook Tropical Worsted Suits........ 3-piece Glenbrook Tropical Worsted Suits........ccoanniiiveait Imported Flannel Suits— 3-piece . Imported Linen Suits— 2-piece, in two grades Seersucker Suits Serge and Flannel Trousers—plain and striped ........... Sports Coats—as sporty name implies .. 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