Evening star., 1933-05-24

mittee.
do you get financial statement o
a new partner?"
| NO" Morgan said with q chuckle
I'VE know them pretty well before w
get them in"
In reply to Glass. Morgan said hi
wanted Gilbert in the firm because o
his expert knowledge, especially of th'
foreign field.
l. Whitney testified that some member!
of the firm were indebted to 1t, but h
| gave no names.
AS to the loan to Mitchell, placed al
| $4,000 900, Whitney said it was made
to aid him in maintaining a parity be-
tween National City Bank stock anc
stock of the Germ Exchange Bank with
which it was being merged. The merger
was never consummated. however.
The outstanding portion of this loan
SIS, 800 900, Is now ''undercollateralized,
it was asserted, but reserves have beer
set up against it.
Whitneys testimony was given while
he stood back of Morgan, the forma
| witness.
/ On some members Of the firm beine
indebted to 1t, he said he could not give
the amounts or names without checking
the books. Whitney said he also coulc
not recall whether the loans were
backed by collateral, but said these were
| deducted from the net worth of the
firm.
Whitney testified the firm had sci
up $4,000, 900 in reserves to cover "un.
der collateralized" loans
In reply to questions, Morgan said
he had not found Government super
vision had changed the banking situa-
tion much. still hear of banks on
the edge, the examination seems tc
make little difference"
The whole room broke into laugh
ter when he said, mo. we would not.
when asked if Chairman Fletcher could
| come to his company unintroduced and
sought to deposit $4,000.
4 Then I suppose I couldn't borrow
$10,000," Fletcher commented.
mo, not unless you were introduced
Senator" Morgan said.
The financieri said his firm did no
make loans on real estate.
How about the mortgage on thu
home of Charles E. MITCHELL" Senator
Bulkley. Democrat of Ohio. asked.
That was additional security. called
| for later" Morgan said.
Straight banking" was given by him
as the largest part of his company's
business and ''underwritings are the less
! profitable part
Pecora asked If the firms time loans
| of $34,836, 900 and demand loans Of
| SAT. 1866, 1874 were fully "collateralized.
Whitney said not all OF them; anc
| examination on the Mitchell loan pro.
| ceeded with Senator Glass asking sud.
denly, why did you make this loan?'
Standing. Whitney said "it was made
in the Fall of 1929, in October. Al
you recall the stock market slump hap
pened then. We we're participating
| with other banks in an effort to main
| tain order.
There were merger negotiations be-
| tween the National City Bank and the
| Corn Exchange Bank. In the first few
DAYS of the panic, National City Bank
stock sold below the equity of the con-
! tract with the Corn Exchange.
Mitchell expressed concern over the
price of his bank stock. He asked thai
we lend him funds to support. We
thought he was trying to do something
! constructive"
what l want to know" Glass asked
'is whether you made that loan witt
the idea that the House of Morgan
/ might acquire control of the Nationa
City Bank"
mo, no, absolutely not.r Whitney
said quickly gesturing for emphasis
I'VE did it solely to assist in difficult
situation"
The merger between the Nationa
| City Bank and the Corng Exchange
didn't go through" Pecora inquired.
No" Whitney answered. He was an.
swering questions quickly and with oc-
casional touches of impatience. HI
added that he felt the Corn Exchange
agreed but the National City Bank re-
fused.
Pecora said he felt it was the "othel
way round"
Whitney Takes Chair.
Asked how much has been set up ou,
of reserve to cover loans not fully Sc
cured by collateral, Whitney said about
$4,000 600, but added that $53 ,00t
surplus given in the balance sheet a.
of December 81, 1882. did not include
this Sl8,000.000.
To questions of McAdoo about the
| reserve against losses Whitney said the
figure fiuctuates to make each indi-
vidual loan "a sound loan"
"On December we were 30 per cen,
liquid" he said.
Pecora asked if there was any state
ment to indicate the extent OF an IN
| QlVlOuaI par JIieI lidoilitico osShAo
possible losses.
I've never seen one" Whitney said
"Of course. We know a good deal about
each ether"
Are any partners indebted to th'
firm?" Pecora asked.
Yes"
How many?'
Il don't know"
"A partner might be indebted bv rea
son of Withdrawals against his ac
count?" asked Byrnes,
Yes"
whitney finally took chair besid
Morgan.
rs the indebtedness of the partner
shown on the balance sheet?" Pecor'
asked
mo" whitney said. but they ar
deducted from the figure net worth.
Pecora asked If there was a break
down of the balance sheet available.
I'VE are having an audit OF ou
books" Whitney said. The audit wa
started before we heard of this sum
mons"
when can the committee get cop
+. OF this audit?"
1T can be expedited If the COMMITTEE
: wishes it,"
Hold Seats on Exchange.
Whitney told Barkley he was brothe
of Richard Whitney, president OF tn
S Stock Exchange.
Byrnes asked if MitchellPs was tn
S largest loan on the list Of advances 7