Evening star., 1932-01-08
LOAN PROMOTED
BY LEGU|A'S SON
Banker Saws S415,OO Was
Paid as Commission on
S1OO,OOO,OOO Deal.
BY the Associated Press.

BY the Associated Press.
A New York banker told today of the
payment of a $4l5,000 commission TO
the son OF a Peruvian President for
promoting $l00,o00,00o of loans which
now are in default
He was Frederick Strauss of the j
& w Seligman Co., testifying before
the Senate Banking Committees foreign
securities Investigation.
Strauss said the son of former Presi-
dent Leguia was among a group of pro-
moters who arranged the loans through
his firm.
The Seligman company made gross
profit on the deals OF s5,475,900 and a
net profit of $601 900.
A total of $533,ooO was paid to a
group of promoters in Peru who ar
ranged the deals. This included that
paid to Juan Leguia.
Knows of Prosecution.
Questioned, Strauss said he was aware
that former President Leguia and his
son we're being prosecuted for the
transaction.
This business came to us from people
In New York who wanted commits
sion," Strauss explained, under ques-
tioning by Senator Johnson OF Cali
fornia, sponsor of the inquiry.
I'VE had no knowledge that Leguia
had any connection with II. we ola
not retain his services.
when it did come out we did not
like it, because 1t did not make nice
picture" Strauss said Leguia had AN
ordinary checking account with the
Arm"
Henry Breck, another member of the
banking Arm, said s. A. McGinnis, a
former American Minister to Bolivia,
who was employed by the Seligman
house to negotiate the loans, had dis
covered the Leguia connection with
them.
Henry Breck Testifies.
Strauss sat with his hand to his face,
/ as Breck answered the question.
Most of the money, Breck SAID, was
paid out to tradesmen, including New
York and Paris hotels.
johnson asked whether the loans mao
helped to keep President Legula IN
office. , g.
Breck said the money was used for
nublic improvements, but that the
bankers were not allowed to supervise
the expenditures.
1--WE would have liked to, but we were
told IT would have usurped their SOW
ereipnty" he added.
The division of commission money
was made among the promoters tnem-
selves" he added.
Questioned on Reason.
"On what theory are you paying the
son of the President Of Peru" Johnson
asked. --.-.,-.
group" the witness said.
AS shrewd, sharp, New York bank
ers. YOU knew just what you were 90
ing when you paid Legula?" JohnSor
asked. A.,
we knew we were paying thai
money" Breck replied.
You knew just what you were pay
ing it for?" ,, ,
"You knew you were paying tnen
on1v To the son of the President o.
Peru to get the loan? . the resi- O
the promotion did not amount 10 tnat
It was Leguia who counted.
"I would say So," the banker repheo
Profits revealed to the Senate Com
mittee by New York bankers IN the
sale Of foreign securities now nave
neared the 81 100000 mark.
Strauss testified his firm had made
gross profits of S1.32l 265, and previous
witnesses, representing seven companies
testified 10 total profits OF s82,o9o,oII
to their firms.
Points Out Expenses.
These profits did not include gain
to other banking houses all over the
country through participation In tne
sales.
At the outset of his testimony
Strauss said his firm had made ST.
Oo3 1872 from originating sales OF sl44,-
600, 900. although the company par
ticipated in issues totaling sl,5le,'
| 900, 900. ......'-
A s2,O00,o00 issue for the Province
of Lower Austria was originated by the
Seligman company with spread o.
112 per cent between the cost anc
| sale price.
Senator johnson, Republican, Cali
| fornia, asked why the spread was Sc
| great
Strauss said the expense of selling 6
small loan required a wide spread. He
testified his company made $50, 900 ano
the expense was s87 1000.
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