Evening star., 1933-05-25


in excess of the profit that we made
from these offerings.
I'm the case of securities Of rail-
road operating companies and public
utility operating companies the price
paid to the obligor is matter Of public
record.
I'm the case Of the foreign issues Of
fered by us since January l., 1920, the
price paid to the obligor was made
public by us in the testimony submitted
to the Senate Finance Committee in
December, 1881.
I'm the case of all issues during
the five-year period from January l..
1927, to January /. 1882, the spread
between the price paid to the obligor
and the offering price to the public
has been given in the detailed record
which we have furnished the COM
mittee.
"As to the group of bonds which have
shown the greatest decline, namely
railroad and railroad holding companies,
1t may be pertinent to point out that
in the case of the railroad issues every
issue of bonds of railroad operating
company issued after June 27, 1920, was
authorized py the Interstate Commerce
Commission as being in the interest OF
the public and minimum price fixed
at which these bonds could be sod.
"In the case Of the railroad holding
company issues, which were all col
lateral trust issues secured by stocks or
bonds or obligations Of railroad operat-
ing companies, the collateral behind the
bonds at the time of the issue and the
financial strength of the company max
% a.
than ample security"
Adams Letter Offered.
Dealing with the Allegheny stock
purchase former Secretary of the Navy
Adams was allowed to make at a bar
gain figure, Pecora read copy OF
letter dated February u 1929 from
Adams in Boston and ado.~- I'd to his
-in-law, Henry S. Morgan. accept
ing his allotment Of Allegheny stock.
1t began MY Dear Henry" and said
"As you probably know. I have already
signed on"
It added that IT don't see why this
should interfere with this investment" !"
and inclosed check.
What do you think he meant by
this?" Pecora asked.
IT assume he meant he had accepted
an invitation to be Secretary OF the
Navy" Whitney replied.
who suggested Newton D. Baker?'
IT assume the Van Sweringens. He
was long their attorney"
Matthew Brush?"
mo idea"
"E. G. Buckland?"
"It might have been any one Of us. :"
After Pecora introduced the list Of
favored purchasers Of STANDARD Brands,
Inc.," he said that in formation Of the
organization. Morgan g. Co. deposited
430, shares of common and 18,305
shares Of preferred stock in Fleishrhan
Co. Morgan g. Co. entered the Stand
ard Brands contract in July, 1929.
Whitney said the list of purchasers
for 724,000 shares Of Standard Brands
stock was selected in much the same
way" as the Allegheny list.
They're not the same men?" Pecora
asked.
at was entirely different type of COM
pany." Whitney said.
"At whose suggestion was Calvin
Coolidge included?"
II assume Mr.. Thomas Cochran, one
Of our partners. He was close per-
sonal friend Of Mr.. Coolidge and advised
him on his investments after he left the
White House"
Pecora brought out that the cost of
the Standard Brands st3ck to Morgan
g. Co. was $32 share and that this
was the price of its sale to the selected
customers list. Trading in the stock
opened at 40Is on September g. 1929,
and was quoted at 43b on Septem-
Der 10.
Probers Leave Hearing.
who recommended that an invita-
ton to subscribe to Standard Brands at
80 be extended to Bernard M Baruch?"
Pecora asked.
II don't know" Whitney replied.
What is the present price?" Senator
Goldsborough asked
About 49," the witness replied. "It
went down to about H."
Who recommended Norman H.
Davis be invited to share?" Pecora
asked, resuming the questioning.
Il don't know" the witness said
who is F. H. Ecker?"
President of the Metropolitan life
Insurance Co.. think he was at that
time"
His company is very heavy buyer
OF securities at all times?"
1t has been for many years"
DID that influence the recommenda-
ton that he be invited to subscriber"
I know 1t wouldn't" Whitney said
emphatically.
Don't you think it would awaken a
desire to reciprocate?"
mo. SIR" Whitney replied smiling.
II you knew him as we'll as I do, I
am sure you would agree with me 1t
wouldn't influence him
BY this time many members of the
10 of -
Senate which was due to take up the
Glass bank bill.
The Marland Oil Co. entered the
probe after Senator Gore, Democrat, of
Oklahoma, had informed Whitney he
had been told there have been occas-
sions when members Of your firm have
used their influence as members Of the
board OF directors Of corporations to
have these industrial corporations bor-
row from Morgan q Co. and leave the
money on deposit on call. They were
paying interest for money they didn't
have in their. hands and yet Morgan
80