Biggest Show

A milling, jostling, sweating crowd choked the corridors of the Senate Office Building. Men in white linen suits, women with hats askew and hair straggling damply into their eyes, fought to get into a stifling room long since jammed to the doors. The room was that of the Senate Committee on Banking & Currency. Within was beginning the Biggest Show of its kind in recent memory: not only the public examination of the House of Morgan, but the personal appearance of the almost legendary figure who is its chief-- John Pierpont Morgan.

The Show was as much as, and more than the crowd had bargained for. Through a barrage of questions and cross-questions the crowd was unable to put together a sensible balance sheet of the House of Morgan. However, it did snatch from the crackling atmosphere various unrelated facts & figures, fascinating to an insatiably curious public:

P: The capital of the House of Morgan $53,194,000.

P:Assets were $703,909,405.69 on Jan. 2, 1931; $424,708,095.66 on Dec. 31, 1932. On the latter date the company's cash was $33,800,000; call loans. $7,300,000; securities, $224,000,000.

P: Deposits at the end of last year were $340,000,000.

P:In 1930, 1931, 1932 neither Banker Morgan nor any other Morgan partner paid income tax.

P:Between Dec. 30, 1930 and Jan. 2, 1931 Banker Morgan reported an income loss of $21,000,000, although he admitted that the loss might not have been incurred precisely within those few days.

Banker Morgan's inquisitor was swarthy Lawyer Ferdinand Pecora, counsel for the Committee. At his side, prompting him continuously, was his own chief counsel, courtly, white-crowned John William Davis, onetime Democratic nominee for President. Ranged about the room were various of the 20 Morgan partners, Thomas W. Lamont, George Whitney, S. Parker Gilbert, many another. And against the wall, guarding the trunkful of records, stood dapper junior members of the House of Morgan.

Seated at the committee table beneath a brilliantly lighted chandelier which blazed down upon his white-fringed pate, Banker Morgan fiddled with a heavy gold watch chain, beamed upon the committee as the show began. At the opening he was permitted to read a prepared statement. For about 15 minutes he read rapidly a definition and defense of private banking. A ring on his finger glinted gold. Only direct allusion to his own company was the fact that he has always been "averse to his partners' holding directorships in other banking institutions but he consents because "the only way people can be helped is the way they wish to be helped." Said he in conclusion: "I state without hesitation that I consider the private banker a national asset and not a national danger." Then Mr. Pecora asked innocently: "What is your occupation. Mr. Morgan?"

With a look of astonishment the witness replied: "Private banker." The audience tittered appreciatively. Then began in earnest the questioning, questions which soon led to objections by Mr. Davis and heated protests by Virginia's peppery little Senator Carter Glass that Mr. Pecora was unduly "badgering" Mr. Morgan.

The first conflict came when Mr. Pecora tried to spread on the record one more subject of intense curiosity, the articles of copartnership in the House of Morgan, showing exactly how responsibility and profits are divided. Mr. Davis insisted the articles were "strictly private." The issue was dropped for the moment but later in executive session the committee decided to demand to see the articles.

For long periods Banker Morgan took his ease, answering routine questions for the record. Yes, Drexel & Co. in Philadelphia was a Morgan affiliate and yes, there were two houses abroad, Morgan & Co. in Paris, Morgan, Grenfell & Co. in London. Yes, Morgan & Co. always paid interest on demand deposits and yes, he supposed the private banks would profit from provisions in the Glass bill forbidding national banks to do the same thing. The rate of interest on deposits in the Morgan bank had been as high as 2 1/2%, now is about one-half of one percent, conforming to the New York Clearing House rate. No. the firm does not pay interest on deposits under $7,500 and no, it does not receive deposits of less than $500. There was even time for a chuckling comment about the daily (except Saturday) meetings of Morgan partners. Mr. Pecora wanted to know if there were minutes of the meetings. No, said Banker Morgan, "when my father was head of the firm it was decided not to keep minutes of the meetings. He never got down early enough to attend a meeting."

But such pleasantries were soon over, when Mr. Pecora, abetted by Michigan's Senator Couzens brought the question around to income taxes and the $21,000,000 loss of 1930-1931. At no time did Lawyer Pecora openly point to any impropriety in the action of Banker Morgan or his partners but evidently aware of the impression the questions & answers would make on the courtroom crowd and in next days' headlines, he assumed his best prosecuting attorney manner.

Mr. Pecora: Was there a write-off of securities? . . . Did you sign for Jan. 1 and Jan. 2? ... Who signed the 1930 income tax returns? . . . Didn't examiners go over them? . . .

Mr. Morgan: I do not know. ... I don't know. ... I really don't know a thing about income tax returns. . . . Yes, I believe 1931 is now being examined.

Senator Couzens: They also examined Charles E. Mitchell.

And so on until Senator Glass angrily pounded the table and exclaimed: ''I can see no use in this badgering of Mr. Morgan!"

Later Mr. Pecora resumed the role of accuser:

Q. Did you pay income tax in 1931?

A. No.

Q. In 1932?

A. No.

The crowd loved it, loved the whole Big Show. Newshawks were on hand by the score, noting every detail of Banker Morgan's dress and demeanor. With delight they reported his Anglicisms -- how, when he brought down upon himself a lecture on finance from Senator Glass he listened patiently and then remarked : "I am sorry I started such a hare"; how he once referred to an employee as a "confidential clark."

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