The Washington times., 1933-02-23
OFFICIAL SAYS
STOCK WAS
{ . BORROWED
Harry S. Law, Secretary, On
Stand; President of Com
pany Also TestifieS

day drew from Harry S. Law,
secretary of the National City
Banks affiliate, the National City
Co., the reluctant admission that
in 1929 his company borrowed 49,
900 shares Of National City Bank
stock to fill deliveries on sales
already made.
Laws admission came after the
president Of the company, Hugh
B. Baker, had steadfastly refused
to concede that his company sold
the bank stock short.
Law qualified his admission
with the assertion that the trans
action was not, as Ferdinand Pc
cora, committee counsel, charged,
"Short" sale.
He, like Baker, pointed out that
the National City had subscrip-
ton rights to all the stock for
which orders had been taken but
conceded that the company did
not, temporarily, have the stock
on hand.
Law Follows Baker
Law was placed on the stand
after Pecora in half an hour of
questioning, failed to get any
satisfaction from Baker. The Ma
tional City Company president
answered question after question
with the statement:
II don't know the details Of
that"
He knew so few details and his
answers were so slow in coming
that Pecora placed Law on the
stand. He didn't know very much
either and at one point Pecora
asked:
Can you suggest anyone who
can give the details of this
borrowing Transaction"
The witness suggested that
Charles E. Mitchell, chairman of
the National City Bank board,
from whom the stock was Dor.
roWed, might know but that
dldnt satisfy Pecora and he
finally recalled Baker.
Where did you get this
10000 shares of stock to return
the loan to MitcheII?"
Through purchase in the
markets and from other
sources"
did you seek to exercise any
control on the market in Ma
uonal City Bank stOck?"
II wouldn't say that, We
were only very small part Of
the market"
Tell us about the request of
the National City Bank that
the New York Stock Exchange
remove its stock from the ex-
change listing which was done
in 1922"
There had been considerable
trading until late in the fall of
1927. At that time noted
striking differences in Quota
tlOns as the trading continued.
! advised Mr.. Mitchell in a
letter in November, 1927, that
fluctuations in the stock indi.
Gated manipulation"
Pecora got Baker to concede
shat the case in which Baker said
ne noticed the striking fluctua-
TlonS aggregated so shares.
Baker became president of the
National City Company in April.
1929, and before that was vice
president for several years. He
.tlrst became member of the
board Of directors in 1929. His
company deals in investment
securities.
Among the securities sold bv
the company was included the
capital stock of the National
City Bank, Baker told Ferdinand
Pecora, committee counsel. He
said the testimony of Gordon
Rentschler, president of the Ma.
Giona! City Bank, that the Ma.
tlonal City Company dealt in
National City Bank stock as a
principal" was correct. Pecora
asked:
"How many shares Of Ma
tionaI City Bank stock were
sold in 1922"
"The total to dealers and
investors was 1,359,OOO shares"
During the time those sales
were made did your company
have the stock on hand or did
1t go out and buy the stock?"
We bought it,"
"SaleS every business day
were quite large, weren't they?"
II wouldn't say every day"
REMOVED FROM LIST
Pecora developed that National
City Bank stock was removed
from the New York Stock Ex-
change list in January, 1928, at
the request of the bank. The
first time the request was made,
the exchange refused to remove
1T, but finally did so.
did you ever go short of the
stock after April, 1922"
Il think not. There were times
during that year when there
were rights for the stock, and
there were times when we would
borrow some stock because, al
though we didn't have the abSo-
Lutte certificates, we had the
rights" ...
Did you borrow any stock in
A~~sI 100OOO