| Show PROBE LIFTS MYSTERY FROM HOUSE OF M MORGA CLASH MARKS TENSION OVER MORGAN QUIZ Continued from Pate PAre One 7 1929 under the laws of Delaware and that he became president February February ary 26 1929 A middle aged man with gray thin hair Howard testified in a sharp clear voice oice TELLS OF STOCK DEAL Howard said that about January 1 I 1929 his corporation acquired from rom Morgan Sc Co shares of com common cammon cam cam- mon stock in Mohawk Hudson Power Pow Pow- er of preference stock and in option warrants In addition United corporation got shares of common stock from Morgan in United Gas Improvement company about in Public Service Service Ser Sere vice of New Jersey and also alo In hi cash In return he said the United corporation cor- cor oration gave Jave shares of its it preferred referred stock of its common and nd in option warrants What did you get this stock from i Morgan lorgan for or Pecora asked Howard replied was acquired i at t about less than its marcet market mar mar- mar mar-I. ket value Howard answered Pecora's questions ques- ques ions eagerly as a. tho though gh he were arne I ious ous to explain the whole tr transaction but mt he confined his answers entirely to o the questions What was Wa the market value of the stock tock you received It It wasn't worth the paper it was prInted on in 1929 interjected d Glass Glassl Dem Va the market Howard gave aggregate value alue at I IuIs Is uIs the United corporation a holdIng hold hold- I Ing tug company asked Pecora I Yes These s securities r received iv by the United corporation were those of pubic public pub pub- ic lie utility corporations Yes What stock was the Un United loo corporation corporation corpo- corpo ration authorized to issue A total capital stock of shares lares consisting of first preferred pre pre- terre erred preference sh shares and common ALL MEAT TO MORGAN Howard said no first preferred had hadeen been een issued He said of the preference stock had been issued issued is is- sued and also alo shares of common com corn mon all being taken by Morgan Co The firm also received option op op- op- op tion Uon warrants entitling it to buy that number of ot common stock shares hares at 2750 a share Each share had one vote Howard said Who had control contro Pecora asked J P. P Morgan Co Howard said Where are the books of your YOUL firm irm kept Pecora asked In the th office e of the Morgan company corn corn- pany any said Howard Have uHa they been kept there since United Corporations Corporation's organization Z Yes Who signs the checks Since the last annual meeting meeting meeting-in in February of this year year they they have been signed by myself and Mr Ferguson as treasurer Howard said He commented that the books were under the supervision of Leonard Lenard Keyes eyes office manager for Morgan Co and said that prior to the February February ary ry meeting Keyes signed the checks for or the United Corporation NAMES OFFICERS In answer to the earlier question he ic said that the executive offic officers rs of or orthe the he corporation at atthe the time of its formation for- for mation were George Roberts president president dent ent a Mr Ewing vice president and Keyes treasurer Where is your office In Wilmington Del Howard replied replied re- re plied riled adding there was an office at 80 0 Park place Newark N. N J. J also In whose office is the business of the corporation done asked Pecora All the meetings are are held at 80 Park place Newark How much staff do you have there here Senator Couzens R. R Mich Michi asked An assistant secretary He does all the business Of Of course we have dIsc discussions ions in New York but the business is iJ done at the directors' directors meetings in Newark said aid Howard In whose office would these dis be beheld held Pecora wanted to I now mow In rny riy y office perhaps In Mr Whit Whit- leys You mean in Mr George Whitney's Whitneys Whit Whit- ney's sey's office in J. J P. P Morgan St St. Co Yes Where is your office At 15 Broad street streel It J J. J P P. P Morgan Co Cof cY Yes f. f KEYES KEPT KEPr ENTRIES Howard testified that Keyes kept the he United corporation books and thaile that thai he le did not know who made entries entries' In n those He said he now was out of the legal business Is uIs the Niagara Hudson Power company a subsidiary of United Pecora Pecora Pe Pe- cora asked I I would say rather that the United I has las a large investment in Niagara Howard toward saidA saidA said A majority No Do you control Niagara I dont don't think we control these com corn panics You call all control a majority ownership owner ownerS ship That is legal control You might say we have a You recognize that a majority may exercise a control My con conception eption of othe the United 1 Is that tha we do not want to control There refs is no s sharp p division v Io of p Ordered Acquitted at Ogden I I c I Seven defendants In Inthe Inthe 1 the Ogden liquor conspiracy con T c A ri trial tri were ordered or I dered acquitted Friday C k by Federal Judge Tillman Till Till- z 1 1 man D. D Johnson They are top left to right Mayor 1 Ora Rundy Po Police olice o lice Chief A. A E. E Wilfong- Wilfong Sheriff Amasa M. M Hammon Ham Ham- mon lower loner John W. W and Erastus i Bingham Weber county I deputy sheriffs L. L W. W y 4 Pack captain of detectives detectives detec detec- tives tires and Marion Marlon L L. 44 I Christensen detective j I Ogden police depart depart- ir- ir ment a 9 lL l- l L 1 k I I I 3 4 I Mif I MI S w c b 47 J Ion on in the management of ot these com com- panIcs asked Barkley D. D Ky Everything is harmonious Howard divulged that companies in which the United have an interest do 22 2 per cent of ot the nations nation's gas and electric business on onan an output basis and nd Pecora placed i in the record sta aLa showing the companies served an n area with more than of population How large is your own office staff aff Pecora asked A secretary office bo boy and Mr Ferguson Howard replied Pecora had Howard enumerate the corporations in which the United holds stocks and the shares held and Couzens also obtained the percentages of f the total What do you mean by large I ence-I nce I think you said you ou had large influence in many of at these concerns a. a as di distinguished d from irom c complete legal control Howard was wat asked Howard answered that since the holding company left tle operations ot of f its gu subsidiaries free n. n cases eases nd that it did not hold a controlling amount mount of stock that it was evident it t did not have complete control E ENTERS DISCUSSIONS He said however that the holding company company participated in discussions ot of f policy and arid that it U naturally was listened to Your advice is usually followed Senator Costigan D. D Colo Cole asked In some cases Many of the companies In Jn which your our corporation holds stock arc are known mown a. a as Morgan companies are they not noU Couzens inquired Yes Then followed a discussion about a I map purporting to show sections in which the he United Corporation power affiliates operate Howard said he had never seen it and George Whitney Whitney Whitney Whit Whit- ney Morgan partner also added he tailed failed to recognize it Pecora said it came ame from Morgan Co and was procured there by his investigators Showing the map o of eastern United States with various areas of the states tales colored Pecora asked What percentage of the electrical output in these hese eastern states do th these sc united companies supply I Howard elaborated that companies in n which United has a large interest supplied from 22 to 23 per cent of ol I the he central stations electrical energy in the country He said this did id not include the Electric Bond and Share company I On lOOn gas 1 It is about 22 per cent he said aid POPULATION LISTED He was Wa unable to give the I I tion ion served but Pecora presented a photostat photostat from from Morgan and company dated September 20 1929 and putting the he population served at distributed in New York New Jersey Connecticut Pennsylvania Delaware Ohio Michigan Illinois Tennessee Mississippi Alabama and Georgia Have you had a n survey made since Pee Pec Pecora ra asked At some time I asked someone in Bonbright and company to make a l tabulation but I dont don't know where i it itis itis Is Howard said Was no one in the United corporation corporation corporation corpora corpora- tion competent to make such a survey survey sur vey lORe Really ally there i is not We have no engineers Pecora brought out th that t of ot the United's 11 directors three Harold three Harol Stanley George Whitney and Edward Hopkinson were Hopkinson-were were Morgan partners and two were members of Bonbright and company S How many are a quorum of directors directors tors tars Four How many stockholders Twenty five per cent QUORUM CHANGED It had been a majority the witness witness wit wit- ness said but the laws by-laws were changed to make it easier to get a Is J. J E. E Zimmerman on the board of directors of United Corporation Howard nodded and said other directorships and offices in utilities companies held by Zimmerman were listed as as in Mohawk Hudson Power Public Service of N. N J J. J United Gas Improvement company PhIladelphia Electric company United Engineers Engineer and Constructors Constructor and Niagara Hudson Hudson Hud Hud- son Power In answer to Pecora Howard sai saihe said he held directorships in New York United Corporation United Gas Improvement Im Im- Im provement Public Service of New Jer Jer- sd iCY scy Mohawk Hudson Power Niagara I 1 r lT Hudson Power Frontier company F st. st t. t Laurence Securities company Electric Bond and Share New York Power Jower and Light Atlas corporation Commonwealth and Southern Colum Comm bla bia ia Gas and Electric and Central Hudson Gas and Electric How much cash did the United receive in exchange for its capital stock when it was formed Pecora asked Howard said he had already told of from Morgan and arid company Howard later testified ed that on the options granted Morgan for purchase of f United stock the price set et for the million nillion units at a dollar a piece was waso to o allow purchase of the stock common cornmon com corn mon for tor 2750 Less than a month later Howard saId aid the stock sold for from to SOLD OLD AT HIGHER PRICE Under the transaction January 11 1029 Morgan got cot the options and nd shar shares of common stock fOr al allocating 2250 to th let common stock and 1 to the op op- Ions The stock stack opened January 23 at 99 99 together with an option for each share hare Senator Glass again challenged the counsel of ot the Inquiry asking if it any of f the transactions were a violation of f law No uNo Howard replied The Glass challenge brought another an an- other committee row ow in which Sena Sena- tar tor or Couzens asked for lor a ruling from Chairman Fletcher I The chairman held Pecora was carr carrying out instructions of the senate As the controversy became warmer 1 Glass insisted the committee should be e told where the inquiry was VOlS going He declared the committee minutes showed no record of Pecora's employment employ employ- ment mentIn I In leading up to the options deal Howard had told Pecora of being eing obtained from Morgan as cash cashin cashin in n exchange for United capital stock when the latter corporation was formed He added an additional in n cash came from the Morgan company com com- pany any and from Bonbright Electric corporation What did they get In return for this his Pecora had inquired RECEIVED SHARES Morgan and company g got t an additional additional addi- addi lonal shares of common stock and in option warrants Howard said Bonbright got the same thing These option warrants entitled them hem to purchase shares of common stock at any time In the future at a price of 2750 a share Yes Why were these option warrants rights given What advantage if any was it to United corporation Well Howard replied It jt was some advantage to have them them the the option warrants warrants warrants-in in the hands of Various vanous va Va- rious to to pay nay that much addi addi- lonal llona cash into ih the capital structure if the thc company succeeded If the company succeeded Pecora interposed the public buy They And at the market value Pecora asked Howard nodded Assume that United common reached 50 on the market Pecora said Then the holders of the option warrants could demand the issuance of common stock at 2750 a share to them Was that to the advantage o othe of the corporation That would all alt depend Howard said Suppose the real asset value was 2750 Well VeIl an option holder wouldn't wouldn avail himself of that privilege if the market was below 2750 asked P Pecora cora No uNo But if the company needed cash suggested Glass Sit it was was materially to the advantage of the company to have buyers at 2750 Howard agreed GOT MORE 2 WARRANTS Continuing on the option warrants Howard said that on the first transaction transaction tion Morgan Co got option warrants On a later cash arrangement arrange ment Morgan Co got cot more option warrants and BonbrIght Electrical company Pecora read a letter from Morgan Co to the United corporation dated January 9 9 1929 in which it offered to buy shares of common tock F I 1 N W WI WIand and nd option warrants for or 10 and noting a similar sales agreement with Bonbright Electrical L I company Howard said no other option warrants war rants ants were issued at that time When Glass brought up the ques S tion ion of retention of ot the he counsel Peora Pe Pc S corn ora explained the purpose and read the lie resolution authorizing the inquiry in in in- DRAWS APPLAUSE The counsel drew loud applause from Crom rom the spectators by a veiled suggestion sug sug- he would resign l if the committee com corn wanted I have hava examined the minutes am and andI I 1 dont don't find at any time that the employment em- em of Mr Pecora was au an- authorized Glass insisted There is Js no question of the authority au au- au i in ir my mind Costigan D. D Colo Cob put inI inI in inI I found no record of the employment employ employ- ment mem but that is immaterial Glass said aid because I think the committee committees is s satisfied with Mr Pecora's employment employ ment But the senator from Michigan Couzens who always alwa's likes to dig me has challenged my rights This line of examination into the activities operations and securities of the United corporation Pecora said aid comes under that language o ohe of the he senate resolution which directs an investigation into the issuance offering of of- fering ering and selling of securities It already Is shown that this Unit United ed cd corporation issued hundreds o of millions of securities to the investing public The public size and area o ohe of the he operations make it important enough 1 u t to warrant the attention t nt of o mis committee commatee n Jt nas ceen option warrants entitling the holder to buy common stock at 2550 a share were sold to J J. J P. P Morgan Co at 1 each Already it has been shown that a Ol afew afew few days after this Issue prices of the common stock on the exchange were nearly double 2750 These securities were Issued at terms certainly against the he interests of the corporation to the benefit of a small group o of investors WANTED TO KNOW you ou have made this statement to the subcommittee Glass Glas said before beCore this public investigation tion If IOU I was to come to Washington every time time Pecora Pecora began As one member Glass interrupted interrupt interrupt- ed I 1 wanted to know so I wouldn waste time listening to questions ant and answers of no importance to people of any intelligence I submitted a questionnaire to th the committee Pecora said Since then I have received no requests requests requests re re- re- re quests for information from rom any senator senator sen sen- ator or the committee |
