Evening star., 1953-01-03
Senators Report Questions McCunhy's Finances

DOeUACAo eAA1Ou&iOub JIlC COuuIys
among others. were urging decon-
troll of sugar and that Senator Nc
Carthy was a member of the Sem
ate Banking Committee and its
subcommittee on sugar.
It added that Senator Mccarthy
was greatly over-extended in his
loan position" at the Appleton
State Bank from the time of his
election to the Senate in 1946 and
throughout 1947, and the bank was
constantly requiring additional
collateral or reduction Of the loans.
On or about December 5, 1947.
the subcommittee said. Senator
Mccarthy "hurriedly conferred"
with MIR. Arundel ito apprise him
of his financial predicament," &C
cording to testimony the subcom-
mittee said Mr.. Arundel gave at
hearing last June IL. The report
added that Mr.. Arundel indorsed
a $4,000 six-month note for Sem
ator Mccarthy that was used as
collateral for Senator McCarthy's
Appleton bank loans.
Then the subcommittee asked:
"Was it proper for Senator Nc
Carthy, while serving on the Bank
ing and Currency Committee and
its subcommittee on sugar. to seek
and accept the Endorsement on his
bank note for $4,000 by a person
vitality interested in sugar legisla-
tion?
"Was there any relationship be-
tween Arundel's Endorsement of
Senator McCarthy's $4,000 note
on or about December 8, 1947, and
Senator McCarthy's special ap-
|pearance to interrogate the Army
Secretary on December 9. 1947. be-
fore the Committee on Appropria-
tions regarding the Army's pur-
chase Of Cuban sugar. which pur-
chase had been previously criti-
|cized by Pepsi-Cola?
Another Decontr0l Question.
did Senator McCarthy's over
extended debt position with the
Appleton State Bank and the
banks constant demand for
liquidation of the indebtedness or
an increase in his collateral, in
fuence Senator McCarthy's posi-
ton on the sugar decontrol issue
to such an extent that he followed
the Pepsi-Cola line?"
The subcommittee also coupled
it's discussion Of the $4,000 fee
received from the Lustron Corp.
with Senator McCarthy's loan
position with the Appleton bank.
1t said that, at the time. Sena-
tor McCarthy's total bank debt
was $72. .943.96 and that the bank
was pressing for a reduction of
the loan.
But the subcommittee said
Senator Mccarthy did not use
the fee received from Lustron to
reduce the bank indebtedness. In
stead, it added, he used it to pur-
chase additional stock in the Sea-
board Airline Railroad.
1T may or may not be signifi-
can't" the report said, that the
Seaboard Airline Railroad was
also financed by the RFC and.
at the time. Indebtedness to the
RFC in excess of SIS million. Our
inquiry developed that during Oc-
tober of 1948 Senator Mccarthy
purchased $500 shares of Sea-
board common stock at an aver
age price of $22 per share; that
this railroad had been in receiver
ship since 1880. came out of reor-
ganization in 1916 =. and that
the Lustron $4,000 fee was used
to increase his Seaboard holdings
to 1850 shares"
Holdings Pledged on Loans.
The subcommittee said these
holdings were pledged by Senator
Mccarthy to support his Apple
ton bank loans. 1t noted that
Senator Mccarthy had suggested
to others speculation in the Sea-
board stock and added:
Our inquiry developed infor-
nation which reflected that at
the time of Senator McCarthy's
purchase Of Seaboard stock it did
not appear to an outsider or
to the uninformed, to be either
a good investment or speculation.
particularly since no dividend had
been declared since long prior to
the receivership in 1890, and fur
ther because the common stock
was encumbered by a voting trust
agreement"
The report said Senator Nc
Carthy was obliged" to sell ESQ
Shares of his Seaboard stock in
l949 and 1850 at loss because of
the depreciation of the stock
market and its effect upon his
pledged collateral, but that he
resisted the banks suggestion that
the balance be liquidated.
The report said that, on August
25, 1850, he advised the bank that
ne had checked with "some of the
directors mot otherwise identi-
fledD. who advised against the
sale" It added that Senator Me-
|Carthy held 1.700 shares until the
RFC had disposed of it's Seaboard
holdings and that, on September
IL, 1851, he sold 1000 shares for
a net profit of $35,614.75.
Connections Questioned.
In connection with the sale of
the housing booklet to Lustron
and the dealings in Seaboard
shares. the subcommittee asked:
WAS there any connection be-
tween Senator McCarthy's recon-
mendations for Government aid
to pre-fab manufacturer (the re-
port earlier pointed out that Lus-
tron received RFC loans totaling
$37.5 million and that the collapse
of the company will result in a
probable loss of $50 million to the
Government) and his subsequent
contacts with Lustron, which cul-
minated in his receiving $4,000
for the sale of his manuscript?