Evening star., 1933-09-06

allowed to carry bonds at Cnelr DOok
value rather than at the price they
would bring in open market.
Under questioning by w. Bisseu
Thomas. attorney for Col. Cooper, he
said this procedure was adopted be-
cause the controller wanted to make
sure that closed banks were absolutely
sound before permitting a reopening
The hearing this morning was on
petition of an injunction filed by Col.
Cooper. If it is denied, the court will
consider for ratification contracts for
sale of the prime assets of the eight
member banks of the Hamilton merger
to the Hamilton.
Mr.. Await followed on the stand ]. F.
T. O'Connor, Controller of the Cur
rency.
Prime Assets Pledged.
Explaining why the controller would
not allow the reopening of the United
States Savings Bank, Mr.. Await said
the bank, by borrowing to the utmost
Of its capacity, could not have obtained
funds to pay more than Is per cent
of its deposits. When the bank holiday
was declared March 6, Mr.. Await said,
the United States Savings was borrow
ing half million dollars from the Re-
construction Finance Corporation and
had pledged as collateral most of its
prime assets.
I'VE took into consideration in de-
Gliding whether bank should reopen"
Mr. Await said, Its condition as shown
by the last examination, general knowl-
edge of the condition of the hank and
our knowledge of what the bank could
borrow in an emergency"
The question facing the controller,
Await said, was. how much more the
United States Savings could borrow It
had only 10 per cent liquidity, he ex-
planned, which could possibly have been
raised to 25 per cent by borrowing
$500 900 additional from the r. F. c.
In addition, he explained. the bank had
been on restricted payment basis since
February %, had had runs on it and
there was considerable doubt in the
mind of the controller that its capital
structure was intact, since information
had been received that the United
States Savings sustained losses in the
Commercial National and also had de-
posts in two Baltimore banks and one
Washington bank which, it was known,
would not reopen.
Throughout his testimony Await
pleaded repeatedly to Justice Jennings
Bailey that the questions proposed were
not relevant to the charge that the
controller had abused his discretion in
refusing to allow the reopening of the
United States Savings after the bank
holiday, and had forced it into the
Hamilton merger in order to make that
project practical possibility.
Savings Needed for Merger.
Await expressed the opinion that 1t
would be impossible to go through with
- 80 y, Dnv, L.
unless the United States Savings Bank
were part of the merger. He said he
previously had been of the opinion that
the new bank could be formed without
this bank, but that he had recently
learned that depositors in the United
States Savings Bank had subscribed for
$51 900 or $53, 900 Of the capital of the
new bank.
It would be impossible, he said to
open the new bank without this sum
unless it could be forthcoming from
somewhere else
Await revealed that Of the $3.50, 900
capitalization Of the new bank 5000, 900
had been put up by depositors IN the
eight closed banks and the balance, or
$3.50, 900, had come from cash subscrip-
tions from persons not depositors.
OConnor Called.
Controller O'Connor was the first
witness
Called by Attorney Thomas. O'Con-
nor said he had taken no personal
part In formation of the proposed new
national bank, but had assigned the
work to subordinates and discussed the
matter with them.
He recalled having seen Col. Cooper
twice and remembered that at one time
Col. Cooper had gone generally" into
the question of reorganizing the United
States Savings Bank but did not recall
that any details had been discussed
On cross-examination later by Roger
Whiteford, attorney for Edwin C. Gra-
bank and one Of the defendants, O'Con-
nor said Cooper's plan involved the re-
lease of the liability of the stockholders |
to the depositors of the bank. It had
been shown previously that Cooper |
owns Sc per cent Of the stock Of the
bank.
$4,000 Subscribed.
In answer to questions by Thomas, |
O'Connor said depositors of the United |
States Savings Bank had subscribed |
$51 900, representing or per cent Of |
their deposits, to stock in the new bank. |
in order to show there was no compul- |
sion for depositors to subscribe up to |
the 10 per cent suggested by promoters |
OF the new bank.
He said he had never asked any one
TO subscribe to stock in the new bank |
and that if any Of his subordinates |
had or If they had employed statesmen |
for the purpose, it was done without |
his knowledge or consent.
He said the first rights considered |
Av hic OfHco ", reoroq nizinC hapkS wero /
those of depositors and that last con-
sidefation was always given for stock !
holders, who usually tried to dodge their |
liability through waiver.
Mr.. Thomas asked him If Col. Cooper |
had told him the Washington Mechanics |
Bank had offered to pay rs per cent |
of the deposit liability of the United |
States Savings Bank as purchase |
price for the bank and that Cooper |
had refused because he said he could |
pay all of his depositors 100 per cent
eventually and IS per cent at once.
O'Connor's answer was that Cooper |
never told him that
There was considerable questioning |
and discussion as to what would hap
pen to a depositor in one Of the |
merged banks who refused to accept
an account in the new Hamilton Bank |
and whether he would have to wait
until six months after the new bank |
was open before he could get so per
cent Of his deposits from the conserva-
tor Of his bank.
Sees Payments Delayed.
Thomas maintained that depoSitor |
who refused to accept a new account |
would be made to wait, whereas George |
p. Barse, counsel for the Treasury, |
held that the conse.vator could pay
him Immediately.
Justice Jennings Bailey, presiding, |
ruled that the answer was question
of Interpretation of the words of the
contract and said the lawyers could
argue that point at later time.
O'Connor testified that except for |
the June 80 statement Of deposits he
had given the public no information
rs to the assets of any Of the closed |