The Washington times., 1933-05-25
NEVER A CLIENT,
PROBERS TOLD
BY SENATOR
Californian Says He Bought
Shares Through Friendship
With LeffingWeII

losing more than $4,000 on stocE
offered him by the firm Of ]. P
Morgan at cut rate.
He said he made a profit OF 81,
900 on the 500 shares of Allegheny
Corporation; lost $400 on sol
shares of United Corporation, anc
lost $7,065 on 1000 shares o.
Standard Brands. He added:
"The net loss on these three
transactions was $685."
PUBLICITY PROTESTED
He protested against publicity
given him when his name was
found on Morgan'S list of pre-
ferred clients. He said he pur
chased the stock through Left
ingwell, who had been an Assist
ant Secretary Of the Treasury
when he headed the Treasury
Department in the war.
McAdoo made his explanation
before Ferdinand Pecora, the com
mittee counsel, made public the
lists of Morgan clients in United
Corporation and Standard Branc
stocks. McAdoo halted the pro
ceedings to make his explanation
He said:
"When the United States en-
tered the World War in 1917,
I selected Russell C. Letting
well, of New York, to be cOun-
sci for the Liberty Bond issues.
He was a member of a prOmi-
nent law firm in New York,
versed in these particular mat
tiers. I had known him as a
young man-his family and
mine having lived across the
street from each other at
Yonkers, N. Y.
ASSISTANT SECRETARY
subsequently, because of Mr..
Leffingwell's ability, made
him an assistant Secretary Of
the Treasury.
"After leaving the Treasury,
he became a partner of the
firm of ]. P. Morgan and Co.
"Ten years after 1 resigned
as Secretary of the Treasury
and four years before 1 became
a United States Senator from
California, Mr.. LeffingwelI
offered me the opportunity of
making three investments
through his firm, ]. P. Morgan
and Co.
"u.) Feb. 1929, 500 shares Of
the stock of the Allegheny
Corporation, which I paid for in
cash and which I sold at net
profit of $4,000.
"(2) January 1929. $50 shares
Of common and $50 shares Of
preferred stock of the United
Corporation, which was sold at
. loss of approximately $4OO.
"(3) September 1929, 1000
shares of Standard Brands,
which was sold at a loss of ST.
O65.OO.
NOT PREFERRED CLIENT
81 have never been a prefer
red client of ]. P. Morgan &
Co. The participatiOns to which
/ have referred came to me
solely through friendship with
Mr.. Leffingwell prior to this
time. I have never had any
transactions with the firm Of
J. p. Morgan & Co., nor have
i had any transaction with that
firm since. / have never bOr-
rOwed from ]. p. Morgan &
Co., and, therefore, have never
owed them anything"
McAdoo later admitted an er
ror in his figures and stated his
net loss as $2,565.
After McAdoo concluded, George
Whitney took the stand. Pecors
asked the Morgan partner whether
there was list of "preferred Gus
toners" which the Morgan firm
''from time to time" offered stock
at prices below the market. Whit
ney said:
"There is no such list"
"When was the application of
the Allegheny Corporation made
to list its stock with the house
Of Morgan? Was 1t prior to
February, 1922"
eyes. 1t was made as soon as
the company was formed, 1 sup
pOSe," said Whitney.
Pointing out that the Morgan
firm might have made a Sub
Stantial profit" on the Allegheny
stock by buying it at the SIC
q share price and selling at the
market, Is points or so higher
Pecora asked Whitney if the Nor
gan firm made "any conditions
in taking the stock to sell. Whit
ney said:
"There were no strings at
tached."
Pecora asked whether the Nor
gan firm wrote other customers
"We're thinking of you" letters
similar to the one sent William
H. Woodin, offering the stock at
$40 a share. Said Whitney:
'T think not"
Pecora was not satisfied with
this answer, however, and asked
Whitney to refer to his files.
Whitney then said that all of
the correspondence files of the
firm were not here.
Mr.. Davis Protests
John w. Davis, Morgan attor-
ney, arose at this point and
called Pecora's attention to the
fact that it would be obviously
impossible" to bring all the files
here. He added that if Pecora
would indicate any specific letter,
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