Evening star., 1933-10-25
Stock Quiz Reveals $780,
100000 Returned to Cred.
itOrS as Public Waited.
PEC0RA SAYS PUBLIC
"PAID THE FREIGHT"
Outside Investors Had to Wait.
Counsel Discloses-0ther Options
Obtained in Juggling"
By the Associated Press.

By the Associated Press
Evidence was presented to Senate IN
vestigators today that, faced with finan-
cial difficulties in Cuba in 1880, the
Chase National Bank sold $40 600 900 in
bonds to the public to retire the island
republics obligations to the bank.
This followed an earlier statement by
Chase National Bank officials before the
Senate Stock Market Committee that In
retiring $50 100000 in Cuban serial GER
tihcates, bankers who held $4,000 900
worth were paid of before the public.
which held the remainder, although tfl>
banks holdings had later maturity
dates
Proceeds Of the bond issue were used
to retire almost s4O,0OO,0oO Of Cuban
obligations held by the bankers.
New Credit Advanced.
At the same time, the bankers ad-
vanced another credit to Cuba of $40
900 1000, in return for which the bankers
got an option on an additional $40, ,ooo,-
900 bond issue.
The securities held by the bankers in
cluded the $50 ,000, 900 of serial certifi-
Gates. Bankers involved were Chase
Blair & Co. Equitable Trust Co., and
the Continental Illinois National Bank
g. Trust Co. of Chicago.
Shepard Morgan, vice president of
the bankers and public were the same
except for the maturity dates.
called the negotiations a plan to "un-
load" on the public, but the banker said
he believed the public would have
bought the certificates even If informed
of conditions in Cuba.
But under the plan finally adopted.
Pecora said. "the one that paid tbs
freight was the public"
Figures Challenged.
| Senate investigators also challenged
today figures used by the Chase Bank
in offering $4,000, 900 Of Cuban bonds
| to the public in 1929 which showed
| Cuba's revenues exceeded expenditures
over the previous six years by $23, ,000,-
600.
Pecora pointed to listing application
| fled by the bank with the Stock Ex-
change in 1880 showing Cuba's ex-
penditures exceeded revenues by $4000,-
900 over the previous four-year period.
Morgan testified the figures were not
comparable because they covered differ
ent periods. He also contended the
100000 favorable balance covered
only ordinary revenues and expenditures,
while the other figures included all reve-
nue. and expenditures.
Morgan read letters from the Cuban
secretary of the treasury on which the
| S23 .0O0.0 estimate was made.
Pecora asked if any study had been
made to check the Cuban officials
figures. Morgan said he was not con-
nected with the bank at that time,
but added his associates said such a
study had been made.
Proof of Figures Argued.
Pecora read a memorandum from
Chase files in 1881 saying Cuban ex-
penditures had exceeded revenues by
S21 900, 900 over five years
You are taking the word OF the
Secretary of the Treasury as proof"
Pecora asked.
Cuba is a sovereign government" ,"
Morgan replied. Are we to go behind
the Secretary of the Treasury S
figureS?"
What proof did you have that his
figures were c0rrect?" Pecora asked.
Morgan agreed the Secretarys letter
was the basis for the statement in
the prospectus to the public.
Pecora complained to Chairman
Fletcher once that Morgan was not
answering his questions. Fletcher di-
rected him to reply.
Then if the secretary of the treas
ury of Cuba told you the moon was
made of green cheese, you would be-
lieve him without further proofs?
Pecora asked
Certainly not" Morgan replied
Turns to Certificates.
Morgan said he could not show any
evidence that the Cuban secretary's
figures were checked by the Chase
Bank.
Pecora then turned to the payment
of the $50,000 900 serial certificates is
sued in 1923 and 1929.
Morgan, after saying the $50 900 00G
Continued on Page 2, Column 81