Evening star., 1933-05-23

The largest crowd attracted by
room this morning when j. P. Morgan
of the crowded corridor of the Senate
In check.
the amount of deposits of Morgan Co
In the two houses, $3.50. 600, 600. a"
Morgan replied.
He said Lamont handled most OF
the firms foreign security issues.
Pecora asked how often the partners
met.
Every weekday except Saturday."
Us there any written record or mir
utes?"
r'~Only the names OF those who at
tended"
There is no record of the delibera-
tions or conclusions?"
None"
Don't Have to Vote.
Morgan said it was decided not to
keep minutes when the partners, about
go years ago." began their daily
meetings.
at Is not the same as the board Of
o corporation" Morgan explained in
answer to question by Pecora. "They
have to vote We don't"
SIS that the only reason you keep
no minutes?" Pecora inquired.
so far as know"
Pecora then wanted to know how
they decided what had happened at
meetings months back in the event
you want to know"
I'VE Just depend upon our recollec-
tion,' Morgan said.
you find the memories Of the part
ners uniformly good?"
Yes" the banker said with smile.
Then followed questions about the par
ent firm affiliate, Drexel g. Co.. in Phil
adclphia.
Morgan was answering a series of
questions along this line, asserting that
the two were really lone business oper-
ated In different places" when Sena-
tor Glass, Democrat, Of Virginia in
terrupted.
1T want to know" he asked sharply,
whether the committee counsel has
told the members of the subcommittee
what he intends to bring out by this
type Of question. What does he intend
to prove?"
Pecora answered that the questions
about the Philadelphia firm were for
the record and that he had told Chair
man Fletcher In a general way what
he intended to do.
A number of questions were asked
regarding the relationship Of the Nor
gan House in New York and Drexel &
Co. In Philadelphia. Whitney answered
these.
There are 20 partners of Morgan g.
Co. and Drexel &S Co." he said.
Explains Drexel Relation.
'Their liabilities are complete and
undivided.
"In Philadelphia there are four part
ners, who are liable for Drexel & Co.,
but have no connection with Morgan
g. Co" ...
''If J. P. Morgan were sued" asked
Gore, would Drexel & Co. be liable?"
The five resident partners of Nor
gan & Co. would be liable but the four
Drexel partners would not" Whitney
said, they are liable only for Drexel &
Co"
us there a separate capitalization for
Drexel g. Coz" asked Adams. Demo-
crat, Of Colorado.
1T is separate on the books" Whit
ney said
What were the aggregate amount of
deposit accounts at the end Of your
last fiscal year?" asked Pecora.
"On December 81, 1882, they were
$340, 900 000," Morgan said, giving q
figure nearly $100, 900, 900 above his
first reply to this question.
what was the capital?"
"The net worth of the company an
swers for capital" Morgan said. That
was $50, 900. That means the as
sets to partners accounts beyond ha-
bilities"
"You count your deposits as liabil-
ities?" asked Barkley, Democrat, OF
Kentucky.
1--WE do" Morgan said. laughing. II
Senator"
Senator Gore then asked the reserve
the firm carried against deposits. -.
I'VE don't carry any legal reserve"
Morgan reminded He then said the
reserve was $33,800,000 in cash. some
81, 800 900 in call loans and 1924, ,0OO,-
900 in Government securities.
Have Always Paid Interest.
Couzens inquired whether the Glass
banking bill now pending would not
cause deposits to be put in private
banks by prohibiting commercial banks
to pay interest on demand deposits.
Il think So" Morgan replied.
Glass interrupted to say that a pro-
vision in the bill stipulated that private
banks could not receive deposits unless
they separated investment and COM
mercial banking.
At this point there was a discussion
Of the balance sheet Of the Morgan
house from January, 1927. to Decem-
Der 81. 1882, which Morgan put into
the record
Have you always paid interest on
I demand deposits?" the counsel asked.
LAS far as I know" Morgan an
swered, for 40 years at least"
Bulkley asked how the interest rate
| paid by the Morgan firm compared with
that of other banks.
Morgan said the rate had been the
| uniform one of the New York Clearing
House Association, since 1t existed.
II think the average rate Of interest
on the deposits by our bank is about
2 per cent" he answered McAdoo.
! Morgan remained at ease. Questions
were many and fast from the Senators
! and counsel, but he leaned back in
! his chair and replied affably.
He read a list of the co-partners,
also directors or members of the board
Of other banking institutions.
! HAS it ever been in the power OF
the New York banking authorities Ia
inspect your bank?" Pecora asked.
/ It don't know the exact legal status. u
Morgan said. II think the authorities
have the right to look far enough into
| our affairs to see that we keep the
rules that exempt us from examina-
| ton"
Lefiingwell then stood up to answer
questions ahodt examination OF the
bank by governmental authorities.