The Waterbury Democrat., 1938-03-21
WHITNEY GIVEN i LOAN OF MILLION |
Personal Aid Given Ex- Stock Head By Brother
 Last November

New YOrk, MATCH z1.-(URD.- Richard Whitney, former Stock Ex- change president who is awaiting sentencing for thefts of securities entrusted to his now bankrup brok- craze firm, disclosed today that his brother, George, a partner h J. P. Morgan & Co.,, came to his aid last November with personal loan of $1,082, ,000.
 This disclosure was made for the first time at an open hearing be- fore Assistant Attorney General Ambrose V. Mccall, chief of the state securities bureau.
 Whitney last week pleaded guilty to two grand larceny charges fol- lowing the failure of his firm, Rich ard Whitney & Co. He will be sen fenced March 28 by Gener Sessions Judge Owen w. Bohan. : Mccall questioned Whitney about the firms condition in November, 1887, when the Stock Exchange made a demand upon Whitney for return of securities belonging to the Exchanges gratuity fund. It had previously been brought out that Whitney used $2O0000 of gratuity fund securities as collateral for a loan.
 Whitney testified that he encoun- tered certain difficulties in getting the bonds back for the Stock Ex- change"
 Did you have to borrow the mOney?" Mccall asked,
 That's right" Whitney said.
 Mccall then showed Whitney photostatic copy of letter direct ing the Corn Exchange bank to de- liver the gratuity fund securities.
 "It appears that you directed the Corn Exchange bank to deliver the securities to J. P. Morgan & Co.," Mccall said.
 That is true," Whitney said, be cause I borrowed the money from my brother. I borrowed $l,082, 2,000."
 Whitney said that the loan was personal and was mot reflected in the financial statement of Whit ney & Co.,"
 This was the first detailed exam ination of the troubles of Whitney, who was president of the exchange from 193O to 1885 and was called Wall streets white knight" during the depression years. Previously, at his appearances in court, he had merely pleaded guilty to the larceny charges and read brief statement.
 Whitney, well-groomed in a gray suit, answered McCalls questions politely in a calm voice. He ap- peared unmindful of the flashlights oe newspaper photographers which occasionally punctuated his testi- mony. The hearing was held in a small room in which about 50 re- porters were damned. An ante-room opening onto the hearing room was damned with persons straining to hear the financier's statements.
 Mccall began his cross-examina- ton with routine questions as to Whitney's addresses and the history of Richard Whitney & Co.
 Whitney testified that he served on many stock exchange committees and had devoted much om his time to the institution.
 Mccall asked Whitney who was in charge of the brokerage firm while he was serving as president of the Stock Exchange. Whitney said that teh late John A. Hays and F. K. Rodewald, a Whitney partner, were in charge at various times, but "al- ways with reference to me-"
 Mccall then questioned Whitney about a control account" opened by the firm on Feb. 16, 1887. This account was part of the mechanics of Whitney'es manipulations.
 Whitney said that it was opened "on order to transfer to that &C., count certain securities from other accounts"
 Mccall brought out that securities placed in the control account add ed to the firms capital and Whit ney admitted that it was improper bookkeeping"
 Mccall asked whether anyone else connected with the firm had any, thingfi to do with the control ac- count. Whitney insisted that he alone was responsible.