Evening star., 1939-12-15
Telephone Firm
Controlled byMorgan,
Monopoly Unit Told
S. E. c. Head Charges
Exclusive Financial
Setup Since 1906
BY the Associated Press.

Leon Henderson, securities and
exchange commissioner, told the
Monopoly Committee today that an
exclusive financial" relationship
had existed between the house OF
Morgan and the American Telo-
phone &, Telegraph Co. since 1906.
Mr.. Henderson said witnesses who
included top-ranking figures in j
P. Morgan IL Co. had been sum-
moned to testify on the lease his
tory" Of the financing of Americas S
largest corporation by America S
leading bankers.
Morgan financing was credited by
Mr.. Henderson for growth of A. T. &
T. from a relatively small enter
prise in 1906 to an organization
that now lists assets in excess of
S. 900 100000 and almost 16.500, 900
telephones"
The securities commissioner said
there was question as to whether
"the capital was provided at the
lowest cost and in a manner most
in the public interest"
From 1906 to 1899, Mr.. Henderson
said, the j. P. Morgan & Co. and
Morgan, Stanley & Co. directed "the
f1otation of almost $4,000, 900 900 of
bonds for the telephone company"
Forty Millions in Commissions.
Among those waiting to testify on
the story of telephone securities were
George Whitney, senior partner in
j. P. Morgan & Co., and Harold
Stanley. head of Morgan, Stanley
& Co., Inc, investment banking firm
established by the House of Morgan
when the 1888 Banking Act required
banks of deposit to quit under
writing securities.
DR.. N. r. Danielian, Harvard Uni
versity economist associated with
the recent Federal telephone in
vestigation, testified that bankers
commissions on telephone securities
since 1906 amounted to between 30
and 40 million dollars"
The witness, now director of re-
search for the Senate Civil Liberties
Committee, testified that prior to
1906 securities of the telephone COM
pany were sold through competi-
tive bidding"
Then, he continued, an agreement
was made with j. P. Morgan g. Co.,
for longtime financing without
open bidding. Mr.. Danielian said
this soon resulted in banker con-
troll Of the telephone company and
its subsidiaries.
Suppressed New Phone.
Mr. Danielian testified this banker
control suppressed the introduction
of the hand telephone, or French
phone" from 1911 until 1926.
Concluding a detailed financial
history of the telephone company,
Mr.. Danielian said "the evidence is
conclusive" that investment bankers
had maintained control over the
telephone system for more than so
years.
Inc cOmmlttee received testimony
yesterday that the House of Nor
gan began preparations more than
a year ago to answer a charge of
monopoly in the investment bank
ing field.
Charles E. Mitchell, gray-haired
veteran of Wall Street, offered this
testimony and at the same time
emphatically denied any such
monopoly existed.
MY long experience in Wall
Street tells me that the investment
banking field is doghght," Mr.
Mitchell told the committee. There
is no monopoly about it,"
Senator O'Mahoney, Democrat, of
Wyoming, chairman, and some other
committee members, indicated they
took a different view of the mass
of evidence about relationships be-
tween syndicates of investment
bankers and the j. P. Morgan In
tereStS
"All this tends to show a certain
amount of concentration in the
corner" Senator OMahoney OBJ
served. Earlier Mitchell had ex-
planned that Wall Street referred
to J. P. Morgan g. Co. as the
corner"