New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1912-12-11
Miuht Have Aided Rise of the
Bankers Trust, Walter {.
FreW Finally Admits.
WITNESS Anglers COUNSEL
Money for Stock Speculation
Stays in New York, No Mat
ter What Outside De-
mand, Is Brought Out.
From The Tribune Bureau ]

over banks and constant sparring between
witness and counsel were the chief FEAT
ures to-day Of a fve-hour session or the
House committee investigating the S'
+ called money trust
Walter T. Frew. chairman OF the Ne"
York. Clearing House Committee snc
president of the Corn Exchange BANK
was the. only witness, and ne was an u"-
willing zone Late to-day Samuel Ohtel-
nver. counsel for the Pujo committee
3 finally. persuaded MIR. Frew to admit that
the paDbo OF 1900 was precipltated by the
closing OF the Knickerbocker Trust COM
+ panv. and that the principal reason 1or
the closing was the. refusal OF the No
/ tionai Bank OF Commerce OF New YORK 10
clear for IL. .....
Mr.. T-nterfnyer sought repeatedly to set
: the witness 10 acknowledge that j. T.
Morgan fostering interest was the cause
s OF the great growth OF the deposits or the
Bankers Trust company, whose deposits
have risen from 100000 to Sl6SOOoo" III
the last nine years. The witness. pro-
Tossing little knowledge Of the so-cailed
Morgan institutions. objected TO MI
I-ntermyer's line OF questioning and the
lawyer grew bitter.
The apparent reluctance OF Mr.. Frew to
answer questions in the manner desired
bv Mr.. I'ntermyer led to frequent clashes
between the two. and to-days eXamina-
lion Of the witness which was almost
futile for practical purposes, VIII be re-
sumed tomorrow.
Morgan Dominance Not Conceded.
Mir EreSv said that he mad never heard
how much share the Bankers Trust
Company had paid Tor the stock OF the
Manhattan Trust Company and the Mer-
camille Trust Company. which institutions
the former absorbed Through Mr.. Frew
Mr. I-ntermyer put INTO the record evil
dence OF the voting trust agreements
under which. II was alleged. the banking
interests of Morgan & 90. dominate both
the Bankers and the Guaranty Trust
companies with aggregated deposits OF
nearly Sij6OooO00 but the witness declined
10 commit himself TO the proposition that
the Morgan interests weIe dominant
Mr.. Untermyer finally pinned the wit
ness down TO the admission that the
Morgan influence" might have aided the
Bankers Trust Company The Bankers
Tfnst. Mr.. Frew said. WAS controlled by
u. j. Dawson. George b. Case and Daniel
6 Reid. the Guaranty company by ii. =.
DAWSON George +. Baker and William +.
Porter These men hold and vote all Of
the stock OF the companies except enough
10 allow board of directors to qualify,
and under the trust agreements have alb
solute authority over the affairs Of the
companies. even TO tue acquisition by
merger Of other institutions
Mr.. Untermyer, after many verbal eN-
changes. succeeded in securing from Mr..
Frew an admission that no matter what
might be the demand in the interior OF
the country the Wall Street banks were
able 10 keep money in New York TO
finance stock speculatims.
Mr.. Frew described the method by
which money was attracted to New York
, when small country merchants and farm
ers demand funds for the moving OF crops
or the accommodation Of their business
affairs. MIR. Frew said that the money
was needed on the New York Stock Elk
change Tor speculative purposes; chat
country banks kept large sums on deposit
IN New York. and that when the home
demand for money became strong the
country banks, in orGer TO gain the big
iinteres charges. put their money out in
call loans on the New YORK Stock Elk
,cbange. AL Of these loans are based on
stock exchange collateral. 1t was brought
out.
Corn Exchange Bank Profits.
Mr.. Untermyer, returning to the topic OF
line New York Clearing House, asked Mr.
Frew H. prior TO the Inauguration OF the
rulc enforcing a charge for out-ol-town
Injections. his bank had made money.
iqr,o witness said the bank at that time
,.-s dividends Of from 4 10 u per cent.
"A ~ present time. he said, the bank
pa, 81 per cent.
"a. Cd. intricate examination Mr.. Inter
lm,tr Iroisht out that the surplus Of the
Corn Exchange Bank at this time lnclud-
ed 81. 10000 Of accumulated profits. This
WAS in addition TO regular dividends.
M Uutermyer examined Mr.. Frew
rather sharply as TO how he CLASSIFIED the
cost OF collecting out-of-town checks. MI.
Frew said It was loss but the lawyer
insisted upon calling it an expense
What YOU want to do is TO make the
customer pay the expense Of conducting
ypur business after he has given you the
us. OF his money" he observed
sfRsw do you justify the interference
with the liberties Of the individual bank
which is involved in this rule?" he de-
manded.
The banks sssented to It," replied Mr..
Frew.
How
BY their vote.
"But how did the twenty-five non-mem-
her banks. which have no power to vote,
vote assent
They passed resolutions in their
Boards of directors
A cross-examination brought out that
,be Clearing House committee required
the non-member banks to pass such
resolution under penalty of losing their
right of clearance.
DO YOU think that Is entirely just
and right" asked Untermyer.
Yes" returned Mr.. Frew.
well. then, why shouldn't you charge
each customer pro rata for all the ex-
pepses Of the banking business asked
Untermyer.
.erhey would go 10 the other banks
outside OF the Clearing House Associa-
ton"