Bear Hunt (Cont'd)

In hope of catching a great big Democratic bear with its paws all sticky with short-selling honey, Senator Peter Norbeck's Banking & Currency Committee last week resumed its investigation of buying & selling practices on U. S. stock exchanges (TIME, April 25, et seq.). John Jacob Raskob was on the witness stand. Witness Raskob quietly sought to prove that his principal business is "trying to make good Democrats out of misguided Republicans," not being a big bad Bear.

Smoldering political tinder blazed frequently. Democratic Senator Glass immediately demanded of Counsel William A. Gray: "Are you calling any prominent Republicans?"

Senator Norbeck: If Senator Glass will name them we will gladly call them.

Senator Glass (shouting): It isn't my place to call them!

Counsel Gray: If I'm directed to proceed no further with Mr. Raskob because he is chairman of the Democratic National Committee, I'll go no further.

Senator Glass: Oh, no, I was just wondering. . . .

To exonerate himself Witness Raskob produced itemized statements of all his dealings in shares of General Motors Corp. (of which he is a director but no longer an officer) since 1927. He maintained with his brokers two accounts, one of which was usually long more stock than the other was short. In Regent Corp., his personal holding company, he had always had at least 100,000 shares. Further heavy commitments were represented by his interest in General Motors' Managers Securities Co. Twice he had been "technically short" on balance between his two brokerage accounts, once for 2,204 shares, which he covered by market purchases once for 10,000 shares which he delivered out of his Regent Corp.'s holdings. Though Witness Raskob had actually liquidated about 80,000 shares of General Motors in the four years in order to "diversify his holdings," he never "sold against the box."

Counsel Gray wanted to know why Witness Raskob had bought & sold stocks. Senator Couzens, a onetime motor stock investor (Ford) objected to the question, said he could not see "where we are drifting." Witness Raskob said he could not see either. But he explained "for personal reasons ... for income tax purposes to establish a profit or loss." Though readily admitting participation in the Radio pool (TIME, May 30), and a few other bull operations, he emphatically denied any part in General Motors syndicates.

Senator Glass marveled that Witness Raskob had lost so much money by retaining his holdings: "Was this money all yours?"

"All my own," replied Witness Raskob gravely.

Gently reminding the Committee, now generally sympathetic, of its objective, Witness Raskob observed: "I have always been long of stocks. . . . Nevertheless, I think that short-selling is a perfectly legitimate thing, though it may have been terribly abused. And I believe that if the American people had been more familiar with it ... during the boom our conditions would not have become so bad. Short-selling has its place and a very good place, too."

Anaconda. Long a loquacious critic of Board Chairman Charles Edwin Mitchell of National City Bank, Senator Glass beamed when Chairman Mitchell admitted that National City Co.'s dealings in common stock were illadvised, that its sale of 300,000 shares of Anaconda Copper to customers at about $125 (now $4) a share had not "created any good will and had created ill will." But he denied that high-pressure methods had been utilized. He disclaimed all knowledge of National City's Directors Percy Avery Rockefeller and Dairies Alexander Stillman participating in an Anaconda pool. He agreed with Senator Glass that if true it was not proper.

So apathetic to Counsel Gray's inquisition had the Senators become that next day only Senators Norbeck & Townsend listened to further Anaconda revelations from Chairman John D. Ryan. With Harry Frank Guggenheim, he had acquired blocks of Chile Copper and other copper companies before they were absorbed by Anaconda through an exchange of stock. At one time Chairman Ryan said he had a profit of $1,250,000 on his Chile operation, but the Anaconda received in exchange now showed him a large loss. Smart Harry Guggenheim sold out, made $404,000. President Cornelius Francis Kelley of Anaconda, no witness, interrupted: "Mr. Gray is trying to ride the witness for the benefit of the gallery."

Senator Norbeck pointed out that there was no gallery, threatened to put President Kelley on the witness stand. President Kelley kept quiet.

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