The Washington times., 1933-06-02

heinz, 1-25.
Whitney listed the net profi
accruing to the Morgan firm a.
$17O,776.78. He said the pool wa!
an emergency proposition" anc
that at first each member was tt
put up $20,000,000, except tht
Guggenheim brothers, who were tt
put up $5,000,000. Later thu
amounts were all doubled, h
added.
In Charge of Account
Whitney said Richard Whitney
then vice president of the New
York Stock Exchange but acting
in charge as the president was
away, and Warren B. Nash, ther
treasurer of the exchange, placed
the buying orders, through such
houses as their discretion die
tated.
He said he supposed" he was
in charge of the account for the
pool.
Pecora asked whether any
Morgan partners were at tht
time directors of the banks par
ticipating in the pool.
Whitney said Morgan partner'
were on the Bankers Trust anc
Guaranty Trust boards at the
time, but not on any of the
others.
Pecora asked:
"NOw these participants as
sumed a very serious risk,
didn't they?"
eyes, sir. But it was thought
that if some such action were
not taken, losses would have
been even more frightfuI than
they we're. 1t seemed to us a
very wise risk to take"
'DO you know what holdings
and participants in this pool
had in the securities in which
the pool Operated?"
':It's quite possible, but I do
know that none of these parti-
cipants sold any of these stocks
during this period"
do you know whether any
participants sold Individually
any of the stocks operated in
by the pool subsequent to No
vember IL, when the pool de-
cisiOn to quit buying was
made?"
81 don't know about the other
firms. 1 do know that the firm
Of Morgan & Co. sold some
minor holdings in Allegheny
stock, at slight profit, but the
Allegheny stock, except the first
day, wasn't among the securi-
ties in which the pool operated.
Its sale was in no sense con-
nected with the pool operation"
The Morgan records disclosed
the firm made a $4,OOO,0OO profit
in Al different stock transactions
The largest profit on this list was
$1,853,959. scored from a joint
account in Proctor and Gamble
COIlIHOn SGOCK III 1879.
$8O3,929 In Allegheny
The second largest profit was
$803,929.20 in Allegheny stock ir
1929. 1t was peculiar trans
action in that it grew out of e
loan by Morgan to G. P. and M
j. Van Sweringen of $9,675,000 il
May, 1929.
The Van Sweringens, in order
to liquidate the loan, gave Nor
gan an option to buy 272,5OC
shares of Allegheny stock al
$29 a share, with the provision
that if Morgan made any profit
from selling the stock they would
participate in it up to 81 a
share. Morgan rolled up a net
profit of $8O3,929.2O on the deal
The pools and joint accounts
ranged through numerous stocks
There were deals in General
Electric, General Motors, Mont
gomery Ward and Company, U
S. Steel, and many of the Nor
gan power subsidiaries.
Morgan lost on only one deal
It was a red ink mark of $90,396
in Celanese Corporation in May
1923.
The Morgan firm wasn't SO
successful in deals handled
through Drexel and Company. II
made a profit of $1O3,874 in six
transactions, but lost $28,268 in
handling Sharp and Dohme, Inc.
stock in March, 1881.
Asked About Financing
Pecora then asked Whitney
whether the Morgan firm had
prior to October, 1929, done any
financing for the companies ir
the stocks of which the poo
operated. Whitney said the firm
had done some financing for the
Allegheny, but not for any of the
others.
The committee counsel brought
out, however, that the Nationa
City Co., had been interested ir
Anaconda Copper, and that the
Guaranty Trust Co.'S security
affiliate. the Guaranty Co.
financed Bethlehem Steel. Both
Bethlehem Steel and Anaconda
stocks were used in the poo
operations.
Pecora then showed indirect
! interests on the part of poo