"Certainly Not"

"Will you state your full name please?"

"John Pierpont Morgan."

When J. P. Morgan was called to testify at the famed Pecora investigation of 1933, a midget suddenly perched on his lap, embarrassing the famed banker mightily but making the whole proceeding so ludicrous that public opinion swung to the Morgan side. Last week when Banker Morgan and his son, Junius Spencer Morgan, went to the SEC offices in Manhattan to tell what they knew of the Richard Whitney case, the only embarrassment was the blinding flicker of photographers' bulbs. Eyes closed in resignation, J. P. Morgan took the stand for half an hour. Respectfully treated by SEC Lawyer Gerhard Gesell and evidently serene as to his position, Banker Morgan spoke with such aplomb that he even allowed a couple of mild witticisms to creep into his testimony. Excerpts:

Q. Do you know Richard Whitney?

A. I knew him, yes; not well.

Q. Did you ever talk to your partner, George Whitney, about loans which he was making to his brother?

A. Not until December of last year. . . . He had borrowed from Mr. Lament a large sum which was larger than he could displace without consulting me about it, from the firm assets, so he asked me whether it was all right to take it and he explained that he told me at that time-- let me see--I want to get this right. As I understand it, he said, "Dick has got into an awful jam in November, and I went to Tom Lament when you were not here and he loaned me the money and so I want to pay him, and will you let me take it out? ..." I said "Certainly," and it was all done.

Q. Did you ask what kind of a jam he was in?

A. No, I did not ask him anything about that. It was his lookout; it was his money.

Q. What sort of a jam did you think he was in? ... You did not think it had anything to do with women or horses? . . .

A. Oh no, I did not think so.

Q. It definitely related to his business?

A. The sum was too big for anything else.

Q. You did not feel that this matter was a matter which you should have called to the attention of the authorities of the Exchange in any way?

A. Certainly not. The Exchange has all of the machinery; it keeps watch of its members, is supposed to see their statements and all that sort of thing and I presume I naturally did assume that the Exchange was defending itself. . . .

Mr. Gesell then asked Banker Morgan whether he would have told the Exchange had he known that the "jam" involved misuse of securities belonging to the Stock Exchange. Mr. Morgan made three answers, pausing between each for reflection: "Well," he said at first, "I would not have carried the facts to the Exchange authorities if I understood the authorities knew them all and understood them." Then he added: "I should say not, anyhow." Finally he said flatly: "No."

Banker Morgan was followed by his son, who revealed a number of hitherto unpublished figures about the House of Morgan's business. During 1937 Morgan's bought and sold $849,000,000 in Government bonds. Of this, $709,000,000 was for the firm and partners, $139,000,000 for clients. Transactions in "other bonds" totaled $185,000,000. In stock transactions, Morgan's handled 2,738,000 shares, 140,000 of them for the firm and partners, rest for clients.

Next day SEC finally found someone who had thought it best to warn the Exchange of Richard Whitney's condition-- none other than his lawyer, Randolph Mason. Fortified with written permission from Richard Whitney in Sing Sing to divulge anything relating to the case, Lawyer Mason said he had asked Stock Exchange Governor E. H. H. Simmons on February 16 for an immediate audit of Richard Whitney & Co. "I said to Mr. Simmons that I was very much concerned about Dick Whitney; that I did not know whether he was solvent or insolvent, but I felt there was very grave risk. . . . He asked me if I knew about the events of November. I said that I did. He asked me if I had talked to George Whitney about it. I said that I had. Then he mentioned the unfortunate episode of Greer [a broker who was declared mentally incompetent last year]. He said, 'It is difficult to know whom to trust.' . . ."

Q. Did you feel from your conversation that Mr. Simmons knew of the improper conduct in November?

A. Frankly my inference from the reference to Greer, which was a case of which I had heard--if you ask me what I thought, it was that he knew of the events of November in the same sense that I did.

Mr. Simmons has put himself on record, however, as having "no suspicion of any dishonesty, illegality or criminal practice" until the Exchange accountants went into the Whitney firm at the end of February.

Lawyer Mason's next revelation put SEC itself on the spot. Telling of a conference with Roland Redmond, counsel for the Exchange, a few hours before Richard Whitney & Co. was suspended. Lawyer Mason said: "Redmond said that the attitude of the SEC was that this situation should not be allowed to break and that a Commissioner Hanes was here in New York with the idea that the SEC was ready to cooperate, with the idea of continuing the firm in business for some time, with the idea that some orderly liquidation could be effected."

Hustling to the stand, SECommissioner John W. Hanes was asked: "Was any suggestion ever made of delaying the charges against Richard Whitney or continuing his firm?"

Mr. Hanes: "Absolutely none."

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