Dillon Conclusion

Ferdinand. Pecora--running for office as District Attorney of New York County on the slate of Joseph V. McKee--last week finished off the Dillon, Read chapter of the U. S. Senate's investigation of bankers. From the investigation of Dillon. Read's investment trusts (TIME, Oct. 16) he went on to two other topics that have become part of the standard program in investigating banking houses: Tax Evasion, James V. Forrestal. Dillon, Read & Co.'s vice president and a financial comet of the 1920's, admitted that in selling for $892,936 stock which he had bought for $28,539, he had done so through a Canadian holding company, thereby avoiding paying personal income tax on the profits. The Government is now-trying to collect $95,000 on this account. Defaulted Bonds, It was brought out that in selling $131,000,000 of Brazilian and Bolivian bonds now in default, Dillon, Read and their associates had made $6,000,000 gross. One issue of Rio de Janeiro bonds bought by Dillon, Read at 89 was sold to the public at $97.75, the spread of 8 3/4 points being split three ways as commission between Dillon. Read as underwriters, the distributing syndicate and the retailers. One bond issue was floated in 1922. for the electrification of the Brazilian state railways, which have never been electrified. Some $5,000,000 from a bond issue was used by Bolivia in 1928 to pay a two-year-old bill for munitions bought from Vickers, Ltd. of London. From these revelations Clarence Dillon took some of the sting by reading into the record on the final day a prepared statement in which he said, "We have calculated that if one man had bought the entire amount of securities sponsored by Dillon, Read & Co. from Jan. 1, 1929, to June 30. 1933, and had sold on the latter date all issues then in default at their then market prices, he would have received on his investment cash income averaging more than 4 1/2% Per annum over the entire period, and, in addition, would have had sufficient cash income to make up the entire capital loss on the sale of his defaulted securities." A point made by the figures developed was the effect of Depression on the assets of Dillon. Read as compared to J. P. Morgan and Kuhn, Loeb: 1929 1931 Decline

Dillon, Read $78,000,000 26,000,000 67 %

Kuhn, Loeb 120,000,000 67,000,000 44%

J.P. Morgan 680,000,000 433,000,000 36%

Next on the Senate Committee's program after Dillon, Read was Chase Securities Corp.. affiliate of Manhattan's Chase National Bank. After that will come certain utility companies. The Dillon, Read chapter was enlivened by the interpolated question, "Where was Howard Colwell

Hopson, vice president, treasurer and the real head of Associated Gas & Electric Co.?" A complex utility holding company now in the process of becoming more complex through a reorganization engineered by mathematically-minded Mr. Hopson, Associated Gas hired Patrick Jay Hurley, ex-Secretary of War, as its attorney. Fortnight ago, after Senator Fletcher told the Press that Inquisitor Pecora's minions had spent a month hunting for Mr. Hopson, Lawyer Hurley bounced down to

Washington, stormed in upon the Committee and swore that he could produce Mr. Hopson at a hat's drop. Mr. Hopson had merely gone to Bowling Green, Ky. in August, had caught intestinal influenza, had then gone to Chicago "to be with his sister." Last week Mr. Hopson, rotund and smiling, appeared before the Senators, blithely announcing that he had brought a "truckload" of papers for examination. Mr. Pecora insisted that the truckload be carted back to Manhattan to be examined in Mr. Hopson's offices.

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