Evening star., 1933-10-23
STOCK PROBE BODY
EYES CUBAN LOANS.
Late Ambassador CroWder
Questioned Legality of
Chase Action.
By the Assc lated Press.
Senate investigator

BY the Assc lated Press.
Senate Investigators received evidence
today the late Enoch Crowder, when ne
was American Ambassador to Cuba.
questioned the legality of loans to Cuba
previous to the extension OF funds by
the Chase National Bank in 1927.
After first expressing ignorance of
the incident, Shepard Morgan-a vice
president of the -bank-identified
memorandum reporting Crowder's atti-
tude to the bank.
The Crowder protest was on re-
ported loan of 100,000,000 in 1926, and
Morgan noted it was never carried out.
He had previously testified, however,
that the bank loaned Sl0,000,000 the
following year. i
Loan for Public Works.
He agreed this loan was for public
works, for which the original 100000
700 had been intended.
Crowder told the banks representa-
tive in Cuba, according to the memo
randum. that he would have to protest
to the State Department.
He called attention to the terms of
the Platt amendment which might
make it illegal, and referred to Cuba's
financial and economic situation as
"deplorable"
Ferdinand Pecora, committee counsel,
pursued this angle in the course of the
inquiry into the Chase Banks loans of
S30,000O00 to the insular republic.
Batchelder Is Called.
The committee first called Charles
F. Batchelder another vice president,
but on his recommendation substi-
tuted Morgan.
Bank officials said no one could
testify about the loans from personal
knowledge, because the man who was
in charge of the negotiations is now
dead.
Senator Gore, Democrat. of Okla
homa, sat in as new member of the
committee.
Batchelder, connected with the Chase
Securities Corporation before becoming
vice president of the bank, said he
did net know he was to be called as
a witness until last night and was
therefore not as well informed on the
Cuban loans as he would like to be-
Summoning of him was a surprise,
as Pecora had announced he would
chairman, about the Cuban loans.
Wiggin at Hearing.
Wiggin sat in back of Batchelder next
to w. w. Aldrich, president of the bank.
Pecora asked if some one was not
present who was familiar with the
Cuban negotiations from personal par
ticipation
A. M Williams one of the bank
counsel, said the late Robert I. Barr
had personally handed the first Cuban
negotiations and that Morgan was the
official most familiar with the negotia-
tionS.
Morgan was called, and said he had
no connection with the original Cuban
loan financing but had been in charge
OF the Cuban financing since 1881.
Bank Credit Organized.
In 1882, he said, it became apparent
the Cuban revenues would not be Suffi-
Cient to meet maturities on its bonds
and banking credit was organized to
assist the republic.
The same procedure was followed on
subsequent occasions.
Participants in the credit were the
Chase Bank, the Chase Securities Cor
poration, the National City Bank and
the Continental Illinois National Bank
g. Trust Co. of Chicago.
He said the banks first loan was
$10,000,000 in 1927; a second was s60.-
100000 in 1928, including the original
$40, 900, and the third was in 1880.
an S80,000,000 operation, including re-
funding the previous issues.
The total external debt of Cuba in
1927, Morgan said, was S79,43l 900.
SSI,25O,OOO Outstanding.
It is now s77,e2e. .7oo in addition to
which there is 8l,250,00O outstanding.
The Cuban situation was brought to
the fore at the request of Aldrich, who
demanded a speedy inquiry following
published reports that Wall Street was
to suppress it.
The Chase Bank managed three loans
to Cuba. aggregating 80,000,0 900, be- |
tween 1927 and 1880, from which it de-
rived profits of S627,927. after allowing
for expenses of S488, 900.
Two of the three, totaling $40 100000,
were made while Jose Emilio Obregon
Y Blanco, son-in-law of the then Presi-
dent Machado, was joint manager OF
the Chase branch in Havana.
Obregon was employed by the bank
as a new business man. or agent, to
obtain new business, at a salary first OF
$l2, 900 year and later $4,000. Chase |
officials told a previous Senate inquiry, |
however, he had little connection with
the transactions.
The committee planned to inquire
fully into the purposes for which the |
money was used, because Of charges 1t
was spent extravagantly on roads and
q capitol building. In the former in
quiry, it was charged some Of the roads
were constructed at cost of more than !
100000 mile.
In statement to the committee last |
week asking for the inquiry, Aldrich |
said every dollar of the loans was paid
directly to construction contractors on |
work certificates approved by the Cuban |
government. |
Machado Got None.
'Not dollar was paid to President |
Machado or any other officer or en-
ploye of the Cuban government or any |
one else, directly or indirectly, by way
of commission or gratuity." Aldrich |
testified.
The Cuban loan inquiry opened the
second week of the committees inevSti- |
cation into operations of the Chase |
Bank and its affiliate, the Chase Sc
curities Corporation. Investigators said /
the case might last another three weeks. |
The Cuban situation was expected by |
them to take two days. They prepared
then to go into the letter written by |
Harvey Couch. director of the Recon-
struction Finance Corporation, to |
Charles G. Mccain, chairman of the
governing board Of the Chase Bank.
Couch has said it dealt only with an
offer for him to take over reorganizs-
ton of certain of the insult companies, |
but investigators said it included men |
ton of certain stock transactions.
The Reconstruction Finance Corpo-