The Washington times., 1933-06-01
DRY TESTIMONY
BORES SENATE
COMMIT

George WnlCney, j. +. morgan
partner, was called to the stand
again at today's hearing before
the Senate Banking Committee.
Pecora opened with barrage OF
questions designed to bring out the
total profits accruing to the Nor
gan firm from its United Corpora,
ton transactions. He showed first
that had the MorganS held the
Mohawk Hudson, United Gas I'm
provement Company, and Public
Service Corporation of New Jer,
sey, which they poured into
United in January, 1929, until the
following July, profit of $57.387,'
379 could have been realized.
Then the counsel asked for a
breakdown to show that the
United Corporation securities &C.
quired by the Morgan interests
would have yielded in profits. Said
Whitney:
81 don't know about the
profits generally. You said yes
terday the 100000 option war
rants we acquired could have
brought in S6S,OOO,OOO."
Pecora observed:
"YOu did sell 100000 war
rants for $8,49O,O45. That left
1,514,2OO warrants in your
hands,"
The counsel brought out here
that the 100000 shares of COM
mon stock in United which the
Morgans got, along with an equal
number of So preference stock
and the warrants for $10,00O,000
in January, 1929, sold as high as
$75 share at one time.
Whitney replied:
81 don't deny that"
John w. Davis, chief of Nor
gan counsel, frequently whispered
to Whitney. j. P. Morgan sat a
dozen feet away, calmly smoking
a cigar.
Reveals Transactions
Whitney revealed that his firm
has traded in United Securities
sporadically since 1929. In Oc-
tober of that year, he said, the
firm bought United at from SAT
to $24.5O. In November it sold
at from $35 to $36. Again in
November it bought at from $27
to $33.
In 1890, said Whitney, the firm
bought some 3,100 shares at
$22.375 and sold at $22.5 Again
in 1918 the firm sold at from
$24 to $31.125 and later bought
at $34.
In 1892 the firm bought 300
United shares at $9.625 and in
January of this year sold at $3.50
George H. Howard, president OF
the United Corporation, sat along
the wall-ten yards from the COM
mittee table.
Pecora delved into the action of
Morgan's company in giving the
United Corporation $64,0O0,0OO of
utility securities in exchange for
United stock valued at $50 900, 900.
$14,OOO,OOO Differential
Howard had testified the United
got the utility securities from
Morgan at $12,0OO,OO0 less than
their market value. Whitney fixed
the differential at $4,000, 900,
saying:
"The Morgan firm received
100000 shares of preferred
United stock, 100000 shares of
common, and 714,2OO option
warrants, valued at $5O,0OO,OOO.
If United had taken the stock
we put in at $64, 4,OOO, 900, Obvi-
Ously the Morgan firm would
have received $64,OOO,OOO in
United securities. The whole
financial set up of United was
based on these prices"
Leonhard A. Keyes, Morgan Of
flee manager and the firms
statistical expert, moved up be-
hind Whitney. Thus far, Keyes
had had the answer to every
question asked him by the part
ners. Said Pecora:
But the securities were
valued on the United Corpora
tiOn books at $5O,OOO,OOO."
EYES,"
"And that was intended to
fix the cost of the securities
to the United Corporation,
wasn't it?"
eyes"
"And the market value of
those securities was S64,-
OOO,OOO?"
Whitney nodded assent.
"NOw that means a profit of
$14,OOO,OOO to the corpOratiOn?"
"NO-the answer is no."
Suppose statement of its
financial condition had been
made then. Wouldn't the Sc
curities be valued at $64,OOO,-
900 in the listing of the corpora
tons aSSetS?"
Whitney protested, explaining
that a financial statement had
been issued by the corporation
shortly after it's formation and
the securities were listed at $780,
100000.
Senator Carter Glass CD of
Virginia who ended his feud with
Pecora yesterday, failed to attend
the opening of today's session.
He told a newspaper man he
had "other business to transact" ."
Asked About Methods
Pecora asked about the cor
poration's method of listing the
optional warrants. Whitney ap-
pealed to Keyes. The Morgan Of
flee manager explained the war
rants were valued at 81 each