Evening star., 1933-05-29
The Political Mill
By C. Could Lincoln.

No congressional investigation has so
stirred public interest in this country
for years as has the Senate Banking
Committees inquiry into the House Of
Morgan. The vastness of the Morgan
interests, the veil of privacy which has
kept the public gaze from the opera
tions of this great banking house and
has whetted the curiosity Of the outsid-
| ers would under any circumstances ac-
count for much of the interest in the
present investigation But it happens
also that the banking situation in the
country today has developed a tre-
mendous interest among the people
They want to know all they can about
the banks. And they wish above all
things to be sure that the banks are
safe. The restoration of confidence in
the financial institutions of the coun-
try is all important to business recov-
cry. In some quarters the inquiry into
the firm of j. P. Morgan & Co. Is criti-
cized on the ground that it will further
destroy confidence. That seems par
ticularly stupid way of looking at the
matter.
II X
In the first place, j. P. Morgan g. Co.,
judging from the testimony so far pre-
| sented, has been shown a bulwark of
financial strength. Despite the depres-
sion, the House Of Morgan apparently
has not been shaken. 1t has had its
losses, huge losses, but seemingly it is
still entirely sound In the second place,
the people are entitled to know some
thing of the operations of such f1nan-
cial institutions which reach into every
phase of American life, through not
only the banks, but all the great indus
tries. If there are faults in the system,
| II there Is too great Capitalization of
power in the hands of a few men, why
keep 1t covered up?
* **
There is always the question whether
change in the system will make for
the better of the great number Of peo-
pie affected. What can be offered as
a substitute? The House of Morgan
has undertaken to finance and to or
ganiZe great industries in this coun-
try; to come to their assistance when
hard pressed. 1t has come to the aid
of this and other governments in the
past Only the fullest information to
the people regarding its operations can
help. And apparently the members of
| the firm are cooperating to give this
information. They realize that the
great private banks are under fire. The
opening statement at the hearing by
]. P. Morgan himself, the senior part
ner of the firm, was a defense of the
private banking system. They are as
much interested as any one in the
country in the outcome Of the investi-
cation.
The investigation is to be pressed to
- "a
to choke 1t off or not there seems not
the slightest doubt now that the Sen
ate committee and its counsel, Ferdi-
nand Pecora, are going through to the
end. It has been charged that Pecora
Is engaged in this hearing merely for
the sake Of publicity and what it may
bring him. Attempts to discredit the
committees counsel have been made.
But after all those things are beyond
and outside the real purpose Of the
investigation. The instruments through
which the workings of the system are
revealed are Of far less importance than
the revelations themselves.
X X r.
The Senate and the House already
have passed the ss-Steagall banking
bill, designed to reform the banking
system of the country. The bill is in
the conference stage and Is expected to
become law, despite opposition. So far
as this measure affects J. p. Morgan
&, Co. and other private bankers soon
to be brought before the Senate COM
mittee, it is exceedingly far reaching.
Senator Glass wrote into the bill a
provision which would prevent partners
of the Morgan firm from holding places
as directors in commercial and indus
trial corporations. The 20 partners OF
the firm held more than ITO directorates
on the controlling boards of many of
the greatest industrial corporations IN
the country. The firm has fioated since
1919 and the close Of the World War
more than $4,000 100000 in securities,
domestic and foreign, and has reaped
many millions of dollars IN profits
thereby. Under the terms of the Glass
bill, the Morgan banking firm must de-
eide whether it is to give up its security
investment business or its business as
a bank of deposit. There is a provision
in the bill which declares that it must
conflne itself either to commercial
banking or to investment banking. And
If it chooses to continue as bank Of
deposit, then it will be subject to an
nual examinations by the authorities.
Heretofore, the Morgan firm has been
subject to no examination by either
Federal or State bank examiners.
** x X
It Is a. strange situation, almost a
paradox that the man who has been
responsible for these clauses in the
bank reform bill, Senator Glass, should
now be widely heralded as the defender
of the Morgan firm at the hearings
before the Senate Banking Committee.
Senator Glass has criticized. inter.
rupted and ridiculed the conduct OF
the investigation by Pecora. He has
maintained that it is show" a
circus" without direction and with
out useful aim, and that it has been
subversive Of the dignity CT the Senate
the Senate would have so undertaken
to browbeat and check the counsel OF
the investigation committee. except
perhaps Senator Couzens cf Michigan,
if the latter had mind to do so. But
it happens that Senator Couzens IS at
present intent upon having the investi-
CATION as conducted by Pecora carried
forward to the end. Senator Glass pays
little attention to what is popular or
to politics He has his own ideas of
ethics, and of what is proper and how
far the private affairs of the individual
citizen should be held up to the public
gaze without the consent of the in
dividual.
y X X
One result the investigation OF the
Morgan firm has been almost imme-
diate. When it was testified that none
of the twenty partners of j. P. Morgan
& Co. paid any income taxes during
the years 1881 and 1882, and that col
lectively they paid only $4,000 in 1880.
the country gasped. The section of
the income tax law that permitted
writing off capital losses was response
BILE. The Mosyan partners had merely
availed themselves of the provisions OF
the law. Undoubtedly they did no
more than many other wealthy men
had done. The House Ways and Means
Committee overnight wrote into the
tax provision of the public works and
industries bill a provision to check such
orerationc fhat coy,itoI 1ocSpc NAV