FAVORED BY BANKS

Gisborne Times, Volume LXXIII, Issue 11955, 27 May 1933, Page 5

FAVORED BY BANKS

JUQttGAN'S SELECT CLIENTS

CONCESSIONS TO PROMINENT MEN. SEVERAL EXPLANATIONS. (U.P.A, by Elec. Tel. Copyright) WASHINGTON, May 25. At the investigation into the affairs of tile J. P. Morgan banking company, it was revpaled that among 60 prominent men who had secured, loans from the firm immediately after stock collapse in 1929 wa s Mr. Norman Davis, American delegate at the Geneva conference. It was also revealed that select clients were allowed to purchase certain stock Boated by the Morgans, at 20 dollars, the price to the public being 35 dollars, and that among them was the Secretary ol State, Mr. Woodin. Senator Robinson, an Indiana Republican, expressed the opinion in the Senate that “the usefulness of Mr. Woodin a s Secretary of the Treasury lias ended,” as a result of the linking of his name with the stock offerings of the Morgan firm. The name of the former President, Mr. Calvin Coolidge. w as also contained in the list of favored purchasers. Senator Ale Ado o told the committee that he had had only three transactions with the Morgan Company, in (which ho lost £713.

Mr. Newton Baker, former Secretary of War, whose name appeared on the select list of Morgan purchasers, said to-day that bo had not made any profit. Ho added that the only preference granted by the banking firm was the sale of stock at no profit to tliemelves. An investigation was ordered today bv the House Ways and Means Committee into the gain s and losses provisions of the income tax laws, with a view to correcting, by a olauso ‘to b c inserted in the Public Works Industrial Control Bill, the conditions, which permitted the .1P. Mo rgan Company to avoid income tax payments in the last tw o year* A sub-committee was appointed to draft the clause.

MR. DAVIS' EXPLANATION MONEY SPENT FOR COUNTRY NOT BEEN REPAID. GENEVA, May 25. Mr. Norman Davis admitted, ni an interview that lie had borrowed £IO,OOO from the Morgan company on ample security. ' About £2OOO was still owing.

“I have no apology to offer regarding the affair,” be said, ‘lfe

debt- is due entirely to the fact that L have been spending my own money in the - country’s service, and have not been reimbursed.

HOW governments are

HELPED SYSTEM OF REVOLVING FUNDS (Received May 20, 11.45 p.m.) WASHINGTON, May 25. Mr Whitney, one of the partners in Morgans, testified that among lorcign and financial arrangements was the provision of revolving funds for governments and l banks, the leading item being two hundred million dollars lor Great Britain, for which Morgans received 11,9-10 dollars, their share of the one per cent, commission, and 500,000 dollars lor arranging the transaction. The Bank of Rome revolving fund totalled 25 million dollars and £5,000,000 in sterling. Tho commission was li per cent, and Morgans received -j per cent, for managing the credit . The Bank of Spain got fifty-eight rnlliou dollars and tho Yokohama Specie Bank twen. ty-five million dollars on terms similar to those in respect to Britain. The immense ramifications of the underwriting activities of idle firm were disclosed by Mr Whitney. Since 1919, lio said. -6,021,000,000 dollars in stocks and bonds had been floated 1 , 2,232,000,000 dollars of iwhieh were foreign obligations. It was interesting to note that, while of foreign securities to date only 13 per cent, were below issue price and there had been no defaults, the principal domestic issues, namely railroad bonds, totalling 1,845,000,000, showed one-third depreciation and seven per cent. of defaults.

Mr Morgan, during the day, issued a statement that, under English law, be bad paid £7OOO income taxes in 1930 and 1932, but he explained that, *:f tho English rates and the system had been the same as the American, he would have been compelled to pay much 1 less taxes in America in 1929-