Evening star., 1933-05-23
M0RGAN'S FINANCE.
AGENCY OF NATIONS.
Government Has Turned to
Firm in Past Years for
Assistance.
BY G. GOULD LINCOLN.

BY G. GOULD LINCOLN.
The House of Morgan" the rock Of
Wall Street, today came under the mi
croscopic investigation into the Ameri-
can financial system conducted by the
Senate Banking and Currency Commit
tee.
]. Pierpont Morgan, head Of J. p.
Morgan g. Co. since the death Of his
father in 1918, was the first representa-
tive of this famous banking house to be
called before the committee.
For the better part Of two years the
Senate committee has been nammering
away at the banking doors of New York,
to learn what was wrong with the sys-
TEN, & system under which between
four and five thousand banks have fall
ed throughout the country in the last
three or four years. Today 1t storm
ed the very citadel.
Mr.. Morgan, who represents the
greatest private banking institution In
the world today, incidentally was call
ed before the committee at the very
f~~~
the Steagall banking bill containing
provision denying to private banks,
along with others, the right to be banks
Of deposit and also investment banks.
banks engaged in the business OF float
ing huge security issues, and at time
when the Glass bank reform bill Is the
unfinished business Of the Senate, the
bill on which the Steagan bill has been
patterned.
Mr.. Morgan, the senior partner Of
the great firm which bears his name,
when he first took the stand made to
the committee statement giving his
views of the duties and uses OF private
bankers. It was, in effect. the Morgan
code. code which has carried his firm
to its present high position. Mr.. Nor
gan summed up that code, at the con-
clusion of his statement, as follows:
IT state without hesitation that I con-
slider the private banker a national
asset and not national danger. As to
the theory that he may become too
powerful, 1t must be remembered that
any power which he has comes not
from the possession Of large means, but
from the confidence OF people in his
character and credit, and that that pow
er, having no force back Of 1t, would dis
appear at once If people thought that
the character had changed or the credit
had diminished-not financial credit,
but that which comes from the respect
and esteem of the community"
Mr. Morgan reminded the committee
that the private banker is member of
a profession which has been practiced
since the Middle Ages. He said that
in the process of time there has grown
up code of professional ethics and Gus
toms, on the observance of which de-
pends his reputation. his fortune and
his usefulness to the community In
which he works.
Mr.. Morgan said that some private
bankers are not as observant OF this
code as they should be- II any private
banker disregards this code, he sacri-
fees his credit. which is his most valu-
able possession. Mr.. Morgan said. He
told the committee that the Morgan
firms idea was to do only frst-class
business in a firSt-claSs way.
The head of the Morgan Co.. big
man physically, carries his 66 years
well. His hair is thinning out. He
wears q thick, close cropped, gray
mustache and a healthy tan, evidence of
outdoor life, give token Of good health.
When Mr.. Morgan's examination was
begun by members Of the Senate COM
mittee and by its counsel, Ferdinand
Pecora. Mr. Morgan answered the
questions frankly and readily. He fire.
quently turned to some of his partners
for information. among them George
Whitney of Philadelphia, partner In
Drexel & Co., which Is a Morgan f1rm,
and to his counsel, John w. Davis, the
Democratic presidential candidate in
1924.
Occasionally q quick smile spread
Rv ~ hA
swered questions propounded to him
by the Senators, and he seemed GER
tainly at this first session, to be en-
joying himself. The committee room
in the Senate Office Building was
jammed with spectators almost to the
point of suffocation In the corridors
outside several hundred men and worn-
en- waited patiently through the MORN
ing in hope they would have an op-
portunity to get into the committee
room to hear the financier testify.
Mr.. Morgan warned the committee
that they must not lose sight Of the
fact that the steady supply OF capital
for industry Is an essential for the In
dustrial system, and that an attack on
the private banks at this time might
needlessly hinder the flow Of such sup
ply. At the present time. he said, there
Is no demand for capital for industry.
This condition, he predicted, will pass,
and he added: I'VE should not, by any
means. force the organization for dis
tribution of securities out Of business,
lest, when there Is again legitimate
demand for capital, 1t be found that the
machinery Of distribution has disap-
peared.
No private banker, whether he Is (as
VIE are) q wholesale merchant Of Sc
c1rities, or whether he deals directly
with the ultimate investor, could con-
tinue in the business If he had no other
sort of business to fall back on in such
times as the present"
So Mr.. Morgan answered the pro-
posal in the Glass bank reform bill to
compel private bankers who do q de-
posit business to give up the investment
banking business. or vice versa.
Mr.. Morgan In his statement and
testimony before the committee sought
to convey the idea that in private bank
ing. as In other business, honesty Is the
best policy. And certainly the Morgan
firm, as shown by Mr.. Morgan himself,
has made that policy pay by their mil
lions Of dollars. It was very clear from
not for the faith which the Morgan
clients have in that firm 1t would not
have been possible to build up q private
banking business with deposits running
into the hundreds of millions Of dollars.
The head Of the house Of Morgan
was treated politely, II not deferentially,
by the members Of the committee. They
fired questions at him, however, calcu-
lated to bring out the details Of his
business and the manner in which 1t Is
transacted.
Occasionally, Mr.. Pecora, counsel for
the committee, was extremely per
sistent in his questions. This, however,
did not rufie Mr.. Morgan, who was
overheard to remark to his counsel,
Mr.. Davis, that he rather liked that
fellow"
Senator Carter Glass, author Of the
bank reform bill, became more restive
under the reiteration of questions by
Mr.. Pecora than did Mr.. Morgan and