Evening star., 1932-06-17
RASK0b IS NAMED
IN FOX STOCK POOL
Kenny, Chrysler and Others
/ Also Mentioned as Short
: Sellers.
(Continued From First Page.)


Shares Stockholder.
The first witness today was Ferdi-
nand Eberstadt, formerly patrner IN
the brokerage firm of Otis g. Co., of
which Eaton was also partner.
No Connection With Shares.
Eberstadt said he was member Of
that firm until 1881, but had no con-
nection with Continental Shares.
Questioned by Gray, he said in the
Fall of 1880 he was asked by M. R.
Burwell president of Continental
Shares, to negotiate loan for the in
vestment company from the Chase Ma
tional Bank.
Gray questioned Eberstadt closely
as to whether the Chase National Bank
in october, 1880, used, to bolster Otis
g. Co.. a large proportion of $780,
100000 loan made by the bank to Con-
tinental Shares.
II do not know it." responded Eber-
stadt, land I do not believe 1t Is
fact"
"At a critical point in the affairs
of Otis g. Co., can you tell us whether
the money required by Otis & Co. was
furnished by Chase Bank?" Gray asked.
IT don't believe it did," Eberstadt re-
olied. Have you any evidence that
Chase furnished money to Otis & Co? p
"Yes," Gray replied. "Plenty-$3o,-
If they did so, they did it with the
consent of officers of Continental
Shares" Eberstadt said.
Gray read a letter from a vice presi-
dent If the Chase Bank to its presi-
dent saying there had been consider
able conversation" about the Otis firm.
It said. Morgan, First National:
Guaranty ay>1 ourselves took this up.
Strikes Back.
Eberstadt struck back at Gray with
the assertion that 'the way this par
ticular subject has been approached Is
more in the sense of prosecution than
an investigation
"I want to ask why this matter was
taken up and why 1t was taken up IN
this way, particularly as 1t is matter
which is the subject of litigation. and
particularly as one of the witnesses who
appeared here is the plaintltf IN that
litigation"
Gray replied that Eaton was given
opportunity to appear, but did not care
to do so. He added that all the charges
made yesterday were admitted In an
answer filed in a suit pending at
Baltimore.
II think a committee OF this promi-
nence," Eberstadt retorted, should not
be made the dupe for those who pro-
mote Investigations OF this character
for their own interest
Leaves Stand.
He added he would be glad to have
GRAY question him further concerning
this statement, but Senator Couzens,
Republican, of Michigan, said such a
matter would best be taken up in eXecu-
tive session and Eberstadt was allowed
to leave the stand.
Gray then asked w. R. Daley, attor-
ney for Eaton. whether he had brought
Daley said he had been unable to pro-
cure them.
Gray remarked that it appeared diff
fcult to get information and Senator
Bulkley, Democrat. of Ohio, cut in
sharply, You know perfectly well you
can get anything else you want"
The counsel reported he knew he
could have Eaton charged with con-
tempt, as he was subpoenaed.
Tells of Organization.
Gray then turned to the Fox cor
porations. He told of their organiza-
ton by Fox, with the theater magnate
holding control Of the voting stock.
Fox Theaters entered contract with
a brokerage firm, Eisele g. King, in 1925
to sell 100000 shares Of non-voting
stock at S25 share, he said.
The brokers were paid 50 a share
commission, Gray said and then en-
tered an agreement with lone Taussig."
Fox, Gray added. had told him that
was his daughter and he said she re-
ceived about SAIL 900.
Later, Gray continued, Fox wanted
to acquire the Wesco chain of theaters
on the West Coast for Fox film.
Plans to Exchange Stock.
Unsuccessful at first, he then con-
ceived the plan of exchanging Fox Film
stock for Wesco stock on the basis of
! for 73-10O, Gray added.
The brokerage firm of Hayden g.
Stone then went out and bought Wesco
at SIS, with the knowledge that
ultimately it could be exchanged for
Fox Film stock at an advantage" Gray
said.
Hayden & Stone was paid S375,Ooo
by Fox Film for underwriting 125,O00
shares without having to do a stroke
of work." Gray testified.
"At the same time Hayden & Stone
were underwriting the stock" he con-
tinued, they started short sale in
Fox Film"
Altogether, Gray said. Fox Film paid
almost ST 900 900 to Hayden g. Stone
for marketing stock.
Operation Disguised.
The short pools, Gray said, were
operated through five houses in order
to camouflage."
Fox bought and sold his own stock
to manipulate the market" Gray said.
IF he were here he would tell you
short selling is a rotten thing, but that
he will do it as long as the exchange
allows It,"
Fox, Gray said, dealt in Loew's stock
in order to get control OF 1t for FOX
Film.
At one time, he added, Fox had &C
cumulated 100000 shares of Loew stock
and the transactions appeared on the
company's books showing he was op-
Grating for the Fox Film Co.
Fox also was dealing in Fox Theater
stock, Gray said, but these transactlons
did not apear on the company's books.
In November, 1929, Gray continued,
Fox had the Fox Theater Co. approve
his dealings in the stock and take
100000 shares off his hands.
The stock cost $6,1 SO 900. Gray said,
and the company took a loss OF So
100000. 1t was bought at an average OF
% 2-1O, and when the company took 1t
over was selling for about 13. he added
Companies Stood Loss.
Gray said his investigators had found
"about six instances" where Fox showed
as loss on his own personal New York
State income tax sums on which his
companies actually stood the loss.
The counsel added that as that num-
ber had been brought to light he be-
lieved there must have been many
more"
AS to the Federal income tax, he said,
no information had been obtained.
Gray said that he asked Fox about
the New York State income tax matter
in questioning him this week in New