Evening star., 1933-06-06
DROP TAX PHASE
Of MORGAN PROBE
Senators Seek New Powers
to Inquire Into Returns
of Partners.
Continued From First Page. }

p.ua.. with o. p. Van sweringen agar
testifying.
Contrary to the practice on previou.
6ays the early arriving spectators hao
not been permitted to gather in the
hearing room to await the public ses'
sion
In order to keep the room as cool as
possible, special police held the crowo
outside in the corridors for a while.
A lengthy queue OF spectators soon
was stretching from the hearing room
door down a long corridor Armed police
were on the alert as usual.
The committee room doors were
opened shortly after 10. Women out
numbered men. two to one.
George Whitney and Stanley were
the first of the Morgan partners to ar
rive. They sat down before one OF the
electric fans whirring over the commit
tee table.
Resolution Is Read.
AS the hearing started Chairman
Fletcher read the resolution.
The. words should it be deemed nee
essary"' were added at the END In MS
version.
These words were not in the formal
text given out to newspaper men py
committee aides.
Morgan rose to his feet and leaned
forward to hear the resolution. Russell
C, Leffingwell a partner, also rose, as
did several others in the group.
Morgan exchanged glances with those
around him, but his face did not change
expression.
Senator Barkley (Democrat) OF Ken
tucky and Fletcher were the only COM
mittee members in the room.
Pecora put into the record map
showing the Van Sweringen lines.
Refers to Vaness Loan.
He referred to an advance by the
Vaness Goa security holding COM
pany of the Van Sweringen's-to the
Nickel Plate Securities Co. OF 81, 70000
In 1928. Testimony yesterday showed
the s1,700,000 was used to buy 5,ooo
shares of Chesapeake & Ohio stock.
"The money was paid In reductlon Oh
an open account existing between these
two companies" Van Sweringen said.
Yesterday YOU said it was a loan
from the Vaness Co. to the Nickel Plate
Securities Co." Pecora recalled.
"The record should have said in re-
duction of an open account between
the companies" Van Sweringen repeat
when was the open account Great
ed? What were the circumstances?
Pecora asked.
Hesitating. Van Sweringen drummed
on the table with his fingers. He nnal-
ly said: ct don't know"
Pecora then asked half dozen ques-
tions about the open account" and .
series of ''I don't knows followed.
FreuueutIv Consults Lawyer.
Before replying, Van sweringen, rs
he did on Yesterday, frequently talked
with Frank II. CHM, Cleveland lawyer,
and member Of his stan.
The committee counsel kept asking
Gbout the open account"
The records speak for themselves, .
Van Sweringsen said. It turned out that
the records Of the Vaness company were
not at the hearing.
Van Sweringen said he was testifying
however, from "a memo furnished me
By my associates"
You said yesterday you would tel
where the Vaness company got the
d, 100 ,0o0," Pecora said.
The Vaness company at about that
time got o loan from the Guaranty
Trust Co. Of about 100000" Van
Sweringen said.
4ICu tAuS klo11Cy AOH bfC ~. ~ ~
vas borrowed money" Pecora said. "lt
was not your own money"
'sIt was borrowed"
Where did the money come from
for buying the $4,000 shares Of c. & o.
Van Sweringen Retells Story.
Van Sweringen conferred with his
aides and then retold the story Of the
S1,700 900 Of Vaness money.
Pecora said he wanted to know about
the entire s7,300,000 used to buy C. d
O. Stock.
I'm still right" Van Sweringen in
sisted. There were two parts, one Of
$500, 900 and one Of $1,700 ,000."
Have you any recollection of fur
nishing any money out of your means?'
Pecora demanded.
1--WE provided the 81 TOO 900 out OF
the Vaness Co.." Van Sweringen said.
But didn't you just say the $1,000
900 of the Vaness Co. was borrowed?' p
"But we supplied it Just the same" Van
Sweringen insisted, I'VE and our as
sociates put up the collateral"
There was a lengthy exchange after
Pecora asked:
did you and your associates, Brad
ley, Mutt and others whom you could
not name, furnish the 81 1,700,000 which
was turned over to the Nickel Plate
Securities Corporation"
Bradley and Mutt were previously
identified as c. L. Bradley and ]. r
Mutt, both of Cleveland.
Spectators Amused.
Van sweringen asked to have the
It previously.
kindly pay attention and answer the
last questions I asked" Pecora sale
tartly.
There was a delay while Van Swerin-
gen asked the stenographer to read the
question.
Spectators laughed.
After repetition of the question, Var
Sweringen said the money was "ou,
OF our means, but it was the proceeds
of a loan from the Guaranty Trust Co.
At one point, Pecora appealed te
Senator Barkley, presiding, to require
the witness to answer.
Barkley warned Van Sweringen thai
the investigation was not "crimina
proceeding"
AS to the loan, apparently impatient
with the hesitation, he broke in:
Who was responsible for the loan
Was it made to you or to the Vanes'
Co. as a corporate entity?"
Van Sweringen told the Kentucky
Senator it was borrowed by the Vanes'
company, but that I'VE" owned thu
Vaness company. and that having
borrowed the money it was ours"
Turns to Equipment Deals.
Pecora then turned to the equipment
purchases the c. g. o. made in 1872:
and 1924 with the proceeds OF $25.'
600 900 in loans from J. P. Morgan
& Co.
Van Sweringen said the 1928 LOAF
was spent for locomotives, steel gon
dolas and other railroad equipment
and that among the firms it was bough
from we're the American Locomotive
Co., the Standard Steel Co. and tn
American Car g. Foundry Co., will
which Woodin was associated befor
he became Secretary of the Treasury
Woodin's former firm also sold equip