The $200,000 Deal

The story of how Franklin Delano Roosevelt helped his son Elliott get a $200,000 loan, and then arranged for it to be settled at 2-c- on the dollar, was presented to Congress this week.

The testimony came out through a House Ways & Means Committee inquiry into a tax question: should the lender, John A. Hartford, president of the Great Atlantic & Pacific Tea Co., be permitted a $196,000 income-tax deduction for his loss on the loan? By a strict Democratic majority, the committee voted not to challenge the deduction. Minority Republicans dissented. They also carefully noted the history of the loan, as described in testimony before the Bureau of Internal Revenue, and thereby recorded one of the most unusual chapters in the history of the 31st President of the U.S.

The Contact. Hartford had told how Elliott Roosevelt, struggling to finance his Texas State Network, Inc., a radio chain, came to him in 1939 and wanted to borrow the $200,000. He testified that Elliott came at the President's suggestion. To prove it to A. & P.'s Hartford, Elliott got the President on the telephone. Testified Hartford:

"I said 'Hello, Mr. President,' and I heard a familiar voice, a voice I had heard over the radio many times, say 'Hello, John'; and I told him that Elliott was in my apartment, and asked him what did he think about this $200,000 loan Elliott wanted to make in connection with the radio business, and the President said that he was entirely familiar with it, that it looked good and gave assurance to me that it was a sound business proposition and a fine thing. He said he would appreciate anything I could do for him.

"I then told Elliott, T am going to make the loan,' and that the only reason I was making the loan was that his father practically asked me to make the loan, and I further told Elliott that I was not interested in radio and that I was not asking any favors. . . ."

On the Spot. "After the President was so enthusiastic about it, I felt that I was on the spot and I had to make a decision right then and there, and I did not want to do anything to incur the enmity of the President."

Three years later, when Elliott was off at war and wanted to settle up his tangled financial affairs at home, President Roosevelt got into the deal again, by the minority's account; he sent the stalwart Texan Democrat. Jesse Jones, to settle the loan, on which no payments, either of interest or principal, had been made. Jones gave Hartford $4,000 and got back the Texas State Network stock that had been security for the loan.

The record, according to the minority, showed that the loan was made at a time when Congress was considering a chain-store tax that would cost A. & P. $6,625,000 annually. And it was settled by Jesse Jones at a time when the ailing Texas State Network was beginning to flourish, with signs that the stock might some day be worth the full $200,000. As it turned out, the radio chain is now a prosperous company, with Elliott's exwife, Texas-bred Mrs. Ruth Googins Roosevelt Eidson, as its president. (She and their children got all of his stock.)

Elliott, an ex-brigadier general without a job, living in a friend's house in Beverly Hills with wife Faye Emerson, was preparing last week for a new venture--probably in radio again. He told a Variety reporter: "If I fathered a flop in the Texas Network I would like to have another one like it right now."

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