Evening star., 1933-10-11
'AD00 IS NAMED I
IN STOCK INQUIRY \
Identified as Attorney for
Dillon, Read in Bond
Issue of 1921.
Continued From First Page.)

Continued From First Page.)
have Richard Whitney, president of the
exchange. back on the stand before the
end OF the inquiry He was the first
| witness when the investigation opened
year and half ago. but the Senators
were not prepared at the time to ques-
tlon him on the basis OF actual eyi-
dence of operations.
| AloeS OF PecOra are now cOnferring
with Whitney over the Stock Exchange
questlonnaire, some points of which are
IN disagreement.
Rail Deal Under Query.
Pecora began today's hearing by
questioning Clarence Dillon about Dill
ION: READ q Co.'S sales of Rock Island
& Frisco stock to the investment trusts
In November, 1929 on which the trusts,
to WHICH the public had turned over
S75,OOG0.0 .0C0. lost heavily
Dillon presented a formal statement
listing 81 corporations in which the
United States and foreign trust in
vested, with which none of its directors
were connected
No members of Dillon, Read & Co.,
the witness said, had any official con-
nection with the companies.
The list included such companies as
Ralt'-n - & Ohio, American Can,
American Telephone & Telegraph
american Tobacco. General Foods.
Southern Pacific and Union / ccific
Dillon said he could not tell off hand
whether most Of the trusts investments
were in stock with which directors had
no connection.
Transactions Explained.
pannro
the joint trading account between Dill
Ion. Read & Co. and the International
Trust in 1929. through which the rail-
road stocks In question, and others,
were acquired.
The counsel pointed out the largest
transactions through the pool were
acquisition OF So, 700 900 of Rock Island
and $4,100,O0J of Frisco Railroad
stock
Dillon agreed that directors of the
two trusts were represented on the
boards OF the two roads. F.. H. Ecker
was on the board of Frisco and Charles
Hayden, chairman of the Rock Island
board
Undoubtedly I discussed the various
stocks with the board" Dillon said. re-
ferring to purchases by the pool.
Dillon interrupted the crosS-examina-
ton to file list of almost 80 corpora
tiOns in which the United States and
International Trust invested He said
none Of its directors was connected with
them.
The witness testified the pools total
investments. amounted to little more
than $l4,000,000. all in the railroad
stocks
When the pool was dissolved in No.
vember. 1929, he said, Dillon, Read &
Co. took half the stock and paid half
the cost, little over 100000.
On behalf Of the trust, Dillon added.
his firm paid $4,000 to the Chase
National Bank and $3,35O.0OO to the
Central Hanover Bank. This was the
way in which it paid the trust for the
stock purchased in the pool
Later Sale Revealed.
Pecora pointed out the record showed
that two days later Dillon. Reed & Co.
sold its acquisitions in Frisco g. Rock
Island to the foreign trust
1t was his judgment at the time.
Dillon said. that the stocks were good
investments.
Pecora asked why Dillon. Read & Co.
after joining the pool to buy the stock.
turned around two days later and
sold it.
1T looked like these stocks would be
long-term investments" Dillon said.
Our firm is interested in short-term in
vestmentS 1t was bad sale for the
firm. as We could have obtained better
prices later"
Pecora turned to purchases of about
50 600 0C0 in Seaboard Airline through
the 1929 pool
He asked Dillon if he was aware at
the time that the Interstate Commerce
Commission had reported the roads
stock and outstanding obligations to-
tailed $l9O00O, 900. or about S1OO. .OOO.-
600 more than its reproduction cost, less
depreciatiOns.
Dillon said he did not recall whether
he was aware of that report.
Describes Firms Procedure.
He told of his firms first under
writing of the reorganization Of the
road and its disappointment that the
stockholders took up only one-seyenth
Of the new issue Of stock
Dillon. Read &, Co, he said formed
syndicate to underwrite the new issue
The International Trust was a member
Of the syndicate.
This was largely in the nature Of
business gamble. wasn't it?' Pecora
asked
Il don't know what you mean" Dill
great future"
That is why I called it a gamble,
because it had no successful record
in the past" said Pecora.
Senator Couzens asked if the I. c. c.
report on the reorganization OF the
road was unanimous.
Will Check on Report.
Dillon said as far as he knew. it was
Pecora then said he would find out.
Il wish you would" Couzens replied
to Pecora, because if it was .unani-
nous, the l. c. c. ought to be inves-
tigated."
Peoora asked Dillon if investment
new enterprise and reorganized COM
panies. or established industry with
assured income.
Dillon replied that trusts were
formed to invest in money making en-.
terprise, to go into any field that is
profitable"
Although Dillon, Read & Co. were the
bankers for Seaboard, Dillon said the
International Trust purchased $1,470.-
900 of its stock in January. 1890. just II
months before the road went into re-
ceivership.
He denied. however, that bankers for
his firm foresaw the receivership.
Right up to the eve of the receiver
ship" he said, I'VE were hoping it would
not be necessary. This thing came on
very quickly Railroad traffic disap-
peared rapidly during 1880.
MY Judgment is not infallible. I
wish it were"
Chairman Fletcher asked if it would
not be wise for Congress to consider
regulation of the big corporations.
"Some of these corporations are get
ting so tremendous" Fletcher said.
they are run by handful of men
without regard to the stockholders.
Shouldn't Congress undertake some reg
ulation to correct the evils We have
founu to exist?"
1.-The situation may be corrected"
rlofo 1al