The Washington times., 1938-03-21
whitney ADMITS
FIRM INSOLVENT.
SINCE NOv.,1S37|
Brother Lent Million
To Replace Theft
BY PAUL CALICO

Richard whitney, one-time head
Of an honored brokerage house
bearing his name, publicly ad-
mitted today that Richard Whit
ney & Company was insolvent as
far back as November, 1887, when
a demand of the stock exchange
gratuity fund for return Of its
securities nearly wrecked the firm.
At the time, Whitney had many
Of the securities pledged with the
Corn Exchange Bank as a loan.
FORCED TO BORROW
The gratuity funds demand
forced the former strong boy of
Wall Street" to borrow $1,O82, 900
from his brother, George, a part
ner in the House Of Morgan, to
redeem the securities and-tempo-
rarily-Save the firm from scandal
and ruin.
Whitney was wary under Nc
Calls constant pounding-and ex-
tremely nervous. At times he
drummed incesSantly with his fin
gers on McCall's desk. Then,
again, he took to pulling apart
wire paper clips. But always his
gimlet-like eyes were on his in
terrogator.
Whitney'S appearance today was
in the States attorney generals
office where Ambrose Mccall, as
sistant attorney general, ques-
toned him about the financial
operations that have resulted in
I'd expulsion from the stock ex-
change and other trading martS,
(2) bankruptcy of the firm and
Cd formal guilty pleas by Whit
ney to indictments charging him
with grand larceny of securities
entrusted to him by clients.
ASSUMES FULL BLAME
Today, as on all other public
occasions, Whitney assumed full
blame for hypothecation of his
clients securities. He said:
Nobody in the world had
anything to do with the open
ing of the Richard Whitney
control account, but myself. It
was entirely on my own author
ization that the customers
securities were transferred to
that account"
Whitney was dressed in a grey
suit. brown shoes, the inevitable
stiff rundown collar and black
and white checked tie, and grey
honlburg hat.
He was accompanied by his per.
sorlal attorney, Charles H. Tuttle
and w. K. Pettigrew, attorney for
the bankrupt firm.
WAVES IMMUNITY
He signed a waiver of immunity
and faced storm of flash bulbs
with his calm and sometimes
slightly Sardonic smile.
Mccall tried to get behind the
cause of Whitney's manipulation
Of his customers securities and
asked Whitney whether the trans
fer of these securities from a firm
loan to personal loan was for
the purpose of covering tn failure
Of his house.
Whitney ducked that issue and
held that his use of the securities
at all was wrongful, no matter
what the nl1rpoSe.
Mccall sought to determine
whether Whitney had help or
counsel from anyone to cover the
debts of his firm. Whitney an
swered firmly:
Absolutely no. It was COM
pletely my idea"
ABSOLVES PARTNERS
"Who Of your partners knew
what you were doing?"
'I don't know. Everything I
did was on my own authorize
ton"
When the questioning moved to
the securities of the New York
Yacht Club, for the stealing OF
which Whitney will be sentenced
on March "a, Whitney denied that
he had removed those securities |
from the vault of the Guarantee |
Trust Company as charged.
He said he held them in his
office with the knowledge Of the
yacht club accountant, for the
PURPOSE of clipping the bonds, and |
that he had no knowledge that
these securities were to be kept |
in the vault. He often checked
them, and there were many !
changes made in the nature of the |
securities.