Evening star. [volume] (Washington, D.C.) 1854-1972, 1934-06-11
'G|VE-AWAY PRICE
FOR MAYFLOWER
PURCHASE DENIED
John Lewis Smith Sets to
Rest Various Hotel Reor-
ganization Rumors.
RECEIVER HOLDS COURT
FIGURE AS MINIMUM
Refutes Replacement of Furnish
ings and Reports of High
Wages.

Various rumors that have cropped
out of the impending reorganization
of the Mayflower Hotel we're set at
rest today by John Lewis Smith, one
of the three receivers, who was re-
called to the witness stand by the
Senate District subcommittee investi-
eating these plans.
Smith at the outset of his testi
mony denied vigorously reports that
the receivers believed the $4,000 900
minimum fixed by the District Su-
preme Court on the sale price of the
hotel would be "a give-away price"
He said the receivers had always re-
garded that figure as a minimum
price.
Denies Requirements.
Smith also denied reports that the
original expensive furnishings of the
hotel had been replaced with cheaper
articles shortly before the receivers
took over its operation in July, 1881.
The receivers, he declared. made a
thorough investigation of those re-
ports and failed to find single incl
dent in which cheaper furnishings
had been substituted for the original.
In contradiction of other reports
that executives and the principal en-
ployes of the Mayf1ower were being
paid high salaries. Smith submitted
to the subcommittee list of the Sala-
ries, but requested that it not be
made a part of the record. He told
the subcommittee, however. the re-
.ceivers had placed the salary scale
on a comparable basis with other lead
ing Washington hotels.
In addition. Smith defended the
$l2,500 annual salary paid each of
the three receivers and declared they
are performing all of the duties of
officers of a $4,000 900 corporation
economically and efficiently. Besides,
he pointed out, the receivers are per-
forming all necessary legal services in
connection with the hotels operation
and "devoting a great deal more time
to the work than involved in the
ordinary duties of receiver"
Il might add this he continued.
"all of the receivers have individual
clients who pay more than the work
involved in the May1ower receiver
ship" ~-
Sale Set for June 10.
With the sale of the hotel scheduled
for June 10. the subcommittee brought
out through further interrogat ton of
Smith that the securities market in
Philadelphia was quite active" in the
purchase of Mayfower first mortgage
bonds.
He also testified that there is gen
eral unrest and dissatisfaction" among
the bondholders with respect to the
reorganization plan.
Questioned by Chairman Kean
about the hotels deposits, Smith said
it had about $4,000 in Riggs Ma
tiona1 Bank and about $40, 600 in the
Franklin National Bank.
Paul E. LeSh, prominent Washing
ton attorney, who represents the ma
jority bondholders committee headed
by Donald A. Henderson of New York,
outlined to the subcommittee the de-
tails of the proposed reorganization
plan. The Henderson committee, to-
gether with the so-called Hardwood
or Chicago committee and the Folger
or Washington committee. he eX-
planned, have on deposit about So
1874 900 of the Mayf1ower's first trust
bonds which represent about 85.4 per
cent of those outstanding. He said
these holdings were segregated as fol-
lows:
Henderson committee. $3.778, 100;
Hardwood committee. 81 ,597 300, and
Folger committee. $998,100
Lesh Defends Plan.
Lesh also defended the plan of re-
orgarization advocated by the COM
mittee he represents and expressed
the hope it would receive the sub
committees approval.
Senator Reynolds. Democrat, of
North Carolina, asked him if he did
not think the so-called Dempsey re-
organization plan would be better be-
cause Dempsey is willing to bid
slo00,0Oo above the minimum 50 ,80o,-
600 price fixed by the court.
Lesh replied he did not think so
and pointed out that $4,000 900 is the
minimum figure and unless an outside
bidder outbids his committee. which
he doubted. he believed his group
would go as high as so per cent of
the face value of the bonds outstand-
ing, or approximately S4,500,000
Reynolds also asked Lesh if he did
not think it would be wise to let the
receivers continue the operation of
the hotel since they were doing it
efficiently and showing a profit.
"Of course. you know you can't let
a receivership go on forever" Lesh
replied. Receivers want to continue
to be receivers and don't want a FORE
closure"