Evening star., 1933-11-01
Declares McGarrah Inactive.

Declares McGarrah Inactive.
Before answering Pecora'S questions
about the account. Wiggin made a brief
statement with reference to yesterdays
disclosure that several bank officers were
directors Of his personal companies.
He explained that None was a
stockholder in the companies and that
Gates w. McGarrah. former chairman
Of the New York Federal Reserve Bank,
one Of the directors, had been very in
active for several years.
Wiggin testified Sherman put up ST.
125, 900 in the Sinclair account. The
Sherman Corporation granted Sub
participation" to dozen companies and
individuals, chiefly officials of the Chase
Securities Corporation.
Out of its profits, more than a quar-
ter of million was paid to these sub
participants, Wiggin said.
He described them as "key men" In
the Chase Securities Corporation. who
were not receiving large salaries, but
whom he wanted to make money.
Wiggin said he followed that practice
frequently.
These sub-participants, the banker
said, performed no service and in some
cases the Chase Securities Corporation
advanced money to cover their par
ticipation.
Companies Invited by Affiliate.
Wiggin agreed his companies were
frequently given participation in stock
accounts by the Chase Securities Corpo-
ration, an affiliate of the bank, but
asserted in most cases they paid the
same as other clients of the securities
corporation.
Such participations were extended to
Virgins companies he said. by the ex-
ecutive of the Chase Securities Cor
opration.
The officers who granted these par
ticipations were H. D. Freeman, Frank
Callahan, Robert L. Clarkson and Muir
ray Dodge, it was testified.
Pecora pointed out Freeman. Dodge
and Callahan were indebted to Wig
gins companies and some were granted
the profitable participation In the Sin
clair account
Had a system developed whereby
executive officers of the Chase Secufl-
ties Corporation gave your family cor
porations participation in Chase Securi-
ties Corporation syndicate accounts and
you gave them participation in accounts
of your companies?" Pecora asked.
Occasionally" Wiggin replied.
WAS it sort of log rolling scheme?'
mo" the banker replied
Pecora asked if it was good thing"
for officers of financial institutions to
be engaged in private matters.
Understand" Wiggin replied, this
wasn't heads I win, tails you lose
proposition. They took the risk in the
participation in my companies"
Pecora pointed out Wiggin himself
received both salary and bonus and had
other interests.
DO you think the magnitude of your
private interests initiated against the
service you could give the bank?" Pc
cora asked.
mo sir" wiggin replied "The bank
had all my time. Everything did out
side the bank was to help the bank
they were merely bookkeeping arrange
mentS.
did the three private corporations
take any Of your time?" Pecora asked.
mot a Bit Wiggin replied. He
agreed a moment later, however, he
guided the destinies" Of the corpora
tionS.
Pecora then turned to the subject of
advice to clients on their income taxes.
He placed in the record the letter of
August II, 1882, to William Mitchell
Kendall a client, from an officer of
the Chase. Harris, Forbes Corporation,
a Chase affiliate.
Wiggin Repudiates Letter.
It said a memorandum was inclosed
In which the corporation was pointing
out to customers how to establish losses
for income tax purposes.
Wiggin said he had never seen the
letter and that it was probably a
salesmans plan Of getting customers"
Pecora then complained that his
agents had been unable to get a copy
of the memorandum that accompanied
the letter.
Martin Conboy, Wiggin counsel, said
the files had been turned over to the
committee, but that he would try to
get copy of the memorandum.
The income tax letter. addressed to
Kendall at 101 Park avenue, New York,
said:
Enclosed is a memorandum telling
the story of what we are trying to do
to help our customers establish certain
losses which can be deducted from their
income tax payments.
THE law passed by the last Congress
has made it very difficult to establish
losses this year because losses through
the sale of so-called taxable securities
can be established only as an offset
against gains, and, of course, very few
people have made any profits which
can be used against losses on taxable
securities.
Signed r. w. M.
Provision has been made, however,
which makes it permissible to establish
losses through the sale Of municipal