Charles & Elizabeth

Max Steuer, counsel for the defense, might have been better pleased if the jury had not been that rarity--a New York jury without a Jew. He turned to his client, Banker Charles Edwin Mitchell, with a hand half-raised: "Look. Are they satisfactory?" Mr. Mitchell murmured grimly: "Satisfactory -- perfectly satisfactory." They were mostly men of the comfortable, educated middle class. The court adjourned; Mr. Steuer patted Mr. Mitchell's muscular shoulder, ending the first act of an historic trial.

Act II begins with two eloquent monologs. Both Mr. Steuer and U. S. Attorney Medalie tell the jury the same story. But according to Lawyer Steuer, the onetime boss of National City Bank is a man who was "inspired in every act . . . only by the highest, noblest motives." And, according to Lawyer Medalie, he is a fraud, a cheat, a sanctimonious swindler.

This is not primarily a trial of fact but of intent. And at law Intent is notoriously difficult to prove.

Scene follows scene in which the nailing of facts is secondary to building a picture of Mr. Mitchell and his motives. The principal witnesses, all Wall Streeters, are the Government's but their sympathies are with Mr. Mitchell, a fact of which Mr. Steuer elaborately reminds the jury.

J. P. Morgan & Co.'s plump, bespectacled office manager, Leonard A. Keyes, climbs on the stand with a big leather-backed ledger in his arms. From it he reads the story of how Banker Mitchell's $30,000,000 fortune was wiped out. On a wild stockmarket day in October 1929, Mr. Mitchell turned to the House of Morgan for a $12,000,000 loan to support the market for National City Bank stock. By the spring of 1930 the loan had been cut to $6,000,000 but the stockmarket had hardly begun its great decline. Thereafter every few months Mr. Mitchell would dig more stock certificates from his strong box, send more fat bundles to the House of Morgan to bolster the loan. Into the Morgan vaults, batch by batch, went tens of thousands of shares. When his strong box was clean he turned over mortgages on his three homes. Last week he still owed J. P. Morgan & Co. $5,852,538.38 which the collateral fails to cover by about $1,000,000. Mr. Steuer makes the point that because of an unselfish effort to avert a disastrous crash in City Bank shares his client is a ruined debtor.

But Mr. Medalie uses the story of the Morgan loans for a quite different purpose. If, says he, if the husband-to-wife sale had been a real sale, Mr. Mitchell would have notified J. P. Morgan & Co. of the changed ownership of the collateral for his loan. Mr. Mitchell did not so notify the House of Morgan.

Edward F. Barrett is a reluctant witness. He got his start as Mr. Mitchell's private secretary. Mr. Mitchell made him a National City vice president. He has handled Mrs. Mitchell's financial affairs for twelve years. Mr. Steuer complains that his opponent is "feeding poison in the most unwarranted way to the jury." Mr. Medalie observes that his opponent "seemed unduly disturbed." Snaps Mr. Steuer: "Anytime you get Steuer unduly disturbed you may hang that up as an additional trophy. ... I object to this continued insistence that Mr. Steuer is excited, Mr. Steuer is alarmed, Mr. Steuer is disturbed. Let Mr. Steuer take care of himself and let Mr. Medalie take care of himself. . . ." The audience, jammed with lawyers, loves the byplay. It is good showmanship.

From Witness Barrett the battling lawyers draw an amazing story of how Mr. Mitchell made money for his wife. Whenever he bought a good stock, joined a pool or participated in a promising syndicate, he would cut her in. Only once did she lose. Often she was member of a big underwriting syndicate headed by such firms as Kuhn, Loeb or Dillon, Reed. Sometimes he did not even trouble to notify his wife until he mailed a check for her share of the profits. When he did, it was always with a formal letter starting "Dear Elizabeth," and filled with the cool, redundant cliches of the market place and signed, "Very truly yours, C. E. Mitchell." And always she acknowledged them with an equally informal letter starting, "Dear Charles" and ending "Very truly yours, Elizabeth R. Mitchell."

In all this, there is a good point for the defense. The dubious sale was made by just such a "Dear Elizabeth-Dear Charles'' exchange of letters. It was the Mitchells' way of doing business, the way they had always done it, and it had always been perfectly legal.*

But Prosecutor Medalie is quick to dynamite this line of defense. At the time of the husband-to-wife bank stock sale, Mrs. Mitchell's fortune stood at about $900,000 (having been run up from a $250,000 inheritance from her coal-dealing father). To cause her to purchase $3,800,000 of bank stock was to force upon her a huge investment with only a 25% margin --hardly, as Mr. Medalie points out, the act of a wise banker or considerate husband. If Mr. Mitchell had not repurchased the stock later, she would owe J. P. Morgan $3,000,000 today and she, as well as he, would today be ruined. Indeed, Mrs. Mitchell did not have sufficient income to pay even the interest on the loan to carry this stock she had "bought" but had not paid for.

But in these revelations lay a point for a defense that must prove no intent to defraud. It was not so much the sale as the repurchase at the same price that aroused the U. S. Government's suspicions. By repurchasing the stock he sold her, Mr. Mitchell got his wife's small fortune "out of hock," whereas he became merely a little more in debt to the House of Morgan than he was before. Was his motive, then, prudence rather than tax-evasion? Elizabeth Rend Mitchell is not in the courtroom. A large matronly woman with two grown children, she cannot be made to testify against her husband, may not be called to testify for him. Long an amateur pianist she once orchestrated a Chopin Polonaise for a Philharmonic-Symphony Concert in Manhattan's Lewisohn Stadium. In a Press interview two years ago she diffidently admitted that she and her friends were trying "to make music a part of life again."

*The fact that no sales tax stamps were attached to the first letter was merely an underling's oversight, according to the defense.

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