Evening star., 1932-05-11
GLASS PROMISES
BANK HIRE PROOF
Repeats Charge in Senate
After Britten HurIS Lie
in House.
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Continued From FlrSt Pagel
money 1t may be influenced by friend
ship. or society or by editorials, but
never by money and never by hiring
Congressmen," he went on.
Representative Blanton, Democrat,
of Texas said that the reference applied
to a man now dead.
Il resent the implication of the gen.
tleman from Texas to impugn the repu-
tation Of the late Martin B. Madden as
TO any Implication impugning my repu-
tation." Britten said.
He added that any man who mace
such remarks about him, has got TO
account to me-" and asked the House:
Are we going to sit here and take
this without challenging the state
ments?"
Britten concluded with the shout:
Its a damn lie
Later Blanton took the floor and said,
IT want to indorse what Mr.. Britten
said about Martin B. Madden. I don:
think there was enough money in the
world to influence Martin B. Madden.
Earlier at today's Senate session,
the hitherto unpublished opinion pre-
pared by Solicitor General Frederick w.
Lehman in 1911, holding that national
bank "afiliates" are illegal, was made
public by Senator Glass, who previously
had charged it was suppressed.
The opinion, which Glass placed in
the Congressional Record, was ad-
dressed to the then Attorney General,
George w. Wickersham.
It dealt specifically with a New York
bank and its affiliate. the names OF
which were eliminated by Glass In
placing the matter in the Record.
Perform Nom banking Functions.
National bank afiliates are corpora
tions created to perform non banking
functions such as the marketing of
securities.
The lehman opinion said in part:
"You (the Attorney GeneraD advise
me that the President desires that
there shall be submitted to him
a fuller discussion of the question Of
the legality of the agreements and ar
rangements existing between the -
Bank of New York and the -- COM
pany, a corporation of the State of
New York.
"On August /, 1911, submitted to
you an opinion in which you concurred
that the agreements and arrangements
in question were means of enabling the
bank to carry on business and exercise
powers prohibited to it by the national
banking act.
Both Violated Law.
"I have reconsidered the question with
the care demanded by its Importance
and have reached the conclusion that
both the bank and the company,
whether considered as affiliated or as
unrelated are in violation Of the law"
After reviewing at length the pur-
rNoeae of the oofionaI hanki0o the
opinion quoted the agreement drawn
up between the bank and its affiliate
as having said:
Opportunities and facilities for max
ing desirable investments, other than
those which are possible in the ordinary
course of the banking business, are,
from time to time presented to the Of
f1cers Of the bank, which they desire
to make available TO the shareholders
of the bank"
Mr.. lehman, in his opinion, then
observed:
Here is the declared purpose to do
something, make investments, not with
in the scope Of the banks powers. That
the officers and shareholders OF the
bank as individuals may make such in
vestments is conceded, but that the
bank, or its officers or shareholders, as
officers and shareholders, may do so; in
other words, that the powers and facil-
tiles granted by the national banking
act may be used for purposes outside
the ordinary course Of banking business
is denied.
Scope Is Discussed.
cit is not within the scope of the
banks powers to have part or lot in
such an agreement for the simple rea-
AIz14 49,. # Sv-,r1 fy,r
company under State corporation laws,
is not the conduct of banking under ma
tional laws. And what is true of the
bank is true Of its ofncers and share
holders acting as such.
No person can be an officer or di-
rector of the company unless he is an
officer or director of the bank
That is not all. The company has
no independence Of action. 1t has no
control or authority over its own af-
fairs.
IF these institutions are twain in
the substantial sense indicated, then
the arrangement which places the con-
troll of the company so absolutely and
1rrevocably under trustees appointed by
the bank and subject to change only by
the corporate action of the bank Of
fends the fundamental law that no
servant can serve two masters
Holds Power Exceeded.
"If, however, the mission of the bank
and the mission Of the company are
alike then the bank involved is
conducting business beyond its
chartered powers.
Il am constrained to conclude that
as to the bank the agreement violates
the law, in its details. because it i'm
pairs and limits the right of transfer of
shares and because it assumes to bind
the bank beyond the possibility of re-
lease by the majority action Of its share
holders and directors. and its general
plan and scope because it er1barks the
bank in business and ventures beyond
its corporate powers.
Il conclude the - Co. in its hold
ings Of national bank stocks is in
usurpation of Federal authority and in
violation of Federal law"
Senator Glass said yesterday in the
Senate that although Lehmann's opin-
ion was concurred in by the then At
torney General Wickersham, 1T was
not acted on"
Senator Walcott, Republican, Of
Connecticut, told the Senate that "a
very notable case of abuse Of a afili-
ates, is the Bank OF United States, in
New York. which crashed with great
loss to depositors.