Evening star., 1955-01-23
LEGISLATORS Want to Know
How BuIIish the Market Is
BY Herbert Brotter


the Senate committee was washing
Wall Streets laundry In daily hear
ings before an astounded public. The
inquiry was bringing to Washington
the titans Of finance, men on whom
ordinary mortals rarely laid eyes.
They had their amusing moments,
as when q circus publicist sat a
female midget on the lap Of j. p.
Morgan himself. Where do you
live?" the fnancier asked the little
lady. In a tent. sir" was the reply.
No Tex for Rich
The replies the sdnanciers gave to
the Senators and counsel were more
startling. They showed for instance
that the richest men were, quite
legally under the then laws, paying
no income taxes In the U. S. A
although Mr.. Morgan paid tax In
England. They got away with this
by setting up various fancy personal
and family corporations or by trad
ing with their wives. Charles 2.
Mitchell, head OF the National City
Bank. testified how it was done.
Dillon, Read & Co., the hearings
showed. were past masters at max
ing millions of personal profit with
other peoples money. A vice pres
ident. James v. Forrestal, later Sec
retary Of the Navy. avoided income
tax on $864,000 through the device
of q Canadian corporation. Dillon,
Read formed an investment trust
United States and Foreign Securities
Corp.-and ran its common stock
up from q value of "$l 100000 less
than nothing" in 1924 to $72 share
by 1929. In 1881 the market price
was $1Hs per share.
Prominent MoIefoctors
Those were the days when In
siders could manipulate stock mar
ket quotations pretty much at will.
operating pools. engaging in wash
sales, matched sales and the like.
j. p. Morgan & Co.. when bringing
out new issues Of stock in the '20s.
would put their friends in on some
of it at bargain prices. It was ex-
actly the same as giving those
friends q gift.
Recipients of this largess included
dozens Of prominent financiers.
politicians and other public figures
the hearings Notwithstanding
prominent Republican and Demo-
cratic leaders. Lindbergh, Gen.
Pershing, ex-President Coolidge,
Charles E. Mitchell, and Richard E.
Whitney, brother of a Morgan
partner and head of the New York
Stock Exchange. Whitney was later
sent to Sing Sing for his use Of
his customers and Stock Exchange
funds for personal speculation.
On the preferred lists, also, were
william Woodin. who later became
Franklin D. Roosevelt's Treasury
Secretary; and William Gibbs Nc
Adoo, Treasury chief under Wood
row Wilson and, in 1898. member
of the Senate committee holding the
hearings! Such gifts enabled Morgan
& Co. to exercise an influence in
side the Nations largest corpora
tions and in political circles as well.
Some of the worst fenagling of the
fabulous '20s, the years Of what the
chief of the Chase National Bank,
Albert H. Wiggin. called God
given Market" was done by Halsey.
Stuart & Co. There were then no
Walter Winchell markets in the '20s,
but the radio was already Of age
and Halsey, Stuart employed q
popular. mellow-voiced broadcaster
called ''the Old Counsellor" to bring
in the dupes with their money, This,
too. the 1893 hearings exposed.
OF Wiggin himself. the Senate
committee counsel later said: 1T is
doubtful if there was another IN
stance OF corporate executive who
so thoroughly and successfully used
his official and fiduciary position for
private profit"
Investors Quirks
II the present stock market Is
acting like 1929 it is not because
the abuses and corruption Of that
time have again come to life. Con-
gresSional inquiries ahead are
prompted rather by an interest in
the economics Of the situation.
Congressmen realize that not even
100 per cent stock market margins,
such as We had in l946-7, can
eliminate speculation. The Ameri-
can likes to gamble. as witness
Reno, one-armed bandits, horse
racing. the numbers" and bingo
Both optimism and pessimism are
contagious. Excelling the wonders
Of nature. the speculating and In
vesting public every few years
changes from bulls into bears and
back again. as the outlook for
economic and financial conditions
changes