-Caveat Lector- an excerpt from: America’s Sixty Families Ferdinand Lundberg The Vanguard Press©1937 & 1938 The Citadel Press New York, NY 578 pages Out-of-print --[Eb]-- WHO CONTROLS THE PRESS? Editor and Publisher, which represents American newspaper publishers, in two reviews of America's 60 Families (January 22 and February 5, 1938), concentrated upon the chapters dealing with American journalism. But, it is instructive to see, it, too, was mainly preoccupied, like the aforementioned critics, with the idea of concentrated ownership and control. In the face of the bare facts given in the book, Editor and Publisher denied that the press is controlled by the individual members of the plutocracy. Very diligently Editor and Publisher went to the trouble of tabulating the newspaper properties owned by the wealthy families as given in America's 60 Families. It reported that "42 are found to have no press connections whatever." In doing so it conveniently assumed that there had been an exhaustive cataloguing of all the press connections of the faction of great wealth, whereas there had been only a suggestive outlining of a great many of these connections. The Editor and Publisher "breakdown" showed that America's 60 Families accounted for the press connections of approximately 30 per cent of the wealthy families. Triumphantly, Editor and Publisher listed the wealthy families to which Americ a's 60 Families attributed no explicit press connections. Editor and Publisher, however, carefully avoided saying that these families had no press connections whatever; it said only that America's 60 Families did not connect them with any publishing property. Now, selectivity is necessary in writing any book conceived as less voluminous in scope than an encyclopedia, and the author of America's 60 Families obviously could not list every press connection of the plutocrats. But let us see what comfort there is for Editor and Publisher in the judicious omissions by the author of America's 60 Families. Editor and Publisher pointed out that no press connection is given for the Flagler (Standard Oil) family. The author has evidence, however, which shows that at one time virtually every important newspaper in Florida was under the late Henry M. Flagler's thumb, owned, subsidized, or controlled. Today the Louisville Courier-Journal and the Louisville Times are owned by the family of Robert Worth Bingham, who married Flagler's widow and principal heir; this ownership and connection is set forth in America's 60 Families, although Edito r and Publisher ignored it. Editor and Publisher also pointed out that no press connection is given for the Pratt (Standard Oil) family. The author, however, has documentary evidence showing that the Pratts had an interest in the Brooklyn Daily Eagle a s of 1937- The family of James J. Hill is also cited as one for which no journalistic connection is given. In 1896 James J. Hill bought the St. Paul Globe and at different times owned various newspapers throughout the Northwest, where his railroad operated. The. Huntington family was also pointed out by Editor and Publisher as one having no press connection, yet the late Collis P. Huntington owned many newspapers, including the old New York Advertiser as well as Pacific Coast publications. The Gould family has no press connection established in America's 60 Families, Editor and Publisher said. Yet Jay Gould, through his dominance of the Western Union Telegraph Company, for many years exerted an extraordinary influence over newspapers and news-distributing agencies, as was testified by Charles Francis Adams, according to the memoirs of Clarence W. Barron. Adams, president of the Union Pacific Railway, told Barron how Gould would undermine the position of a rival by planting rumors in the press of the nation reflecting upon the rival's credit. Editor and Publisher, in short, disliked the thesis that the Amer-ican press is ruled, owned, and dominated by the plutocracy, and to combat the argument, tried to take advantage of the fact that America's 60 Families is not a catalogue of plutocratic press con-nections. The argument, however, stands, supported by the exten-sive evidence cited in the book and by equally extensive evidence retained by the author for the further confirmation of his thesis. Editor and Publisher claimed, erroneously, that William Randolph Hearst and Frank E. Gannett had been left out of the plutocratic circle of press control in America's 60 Families. The book, how- ever, places Hearst among a secondary group of ninety large pro-prietor families that share in control of the press, and it shows that Gannett has been financed by the International Paper Company (Mills, Reid, et al.). Now, although it can be easily shown that a decisive majority of the families of wealth in America have or have had some significant connection with the journalistic enterprises of America, this was not, indeed, the argument at all in America's 60 Families. Editor and Publisher, apparently thinking it safe to do, shifted the argument after stating the thesis of the book with respect to journalistic enterprises. This thesis was, briefly, this: "The journalism of the United States, from top to bottom, is the personal affair-bought and paid for-of the wealthy families. There is little in American journalism today, good or bad, which does not emanate from the family dynasties. The press lords of America are actually to be found among the multimillionaire families." (Page 244.) This is somewhat different from arguing that every wealthy family has a journalistic connection, which is not nearly so important as saying that few journalistic enterprises are unconnected with the wealthy families. But even with the twist given to the thesis for its own convenience Editor and Publisher is refuted by the facts. The thesis of America's 60 Families concerning journalism remains unshaken. No group that has come to economic power has been without direct or indirect press representation. Newspapers are instruments, like educational institutions, of economic, social, and political class control. Every publication in the world, of whatever nature, represents some interest, usually some privileged group. It is only a question of searching to find the interest. Having discovered what it considered a great deficiency in America's 60 Families, Editor and Publisher went on to detect wholesale alleged errors. For the most part it flatly contradicted many 'statements set down as facts about newspapers, although, peculiarly enough, the files of Editor and Publisher were the main source of the author for the questioned facts! Editor* and Publisher, in other 'Words, on the spur of the moment, merely denied the truth of news articles it had printed. There is no "proof" in America's 60 Families of the assertion that the small daily and weekly press is dependent upon political revenues, said Editor and Publisher, yet it had noticed that Frank Kent, political editor of the Baltimore Sun and probably one of the -keenest practical journalistic experts on American politics, is cited as authority. However, no single authority for this statement is really needed, for it is a clearly established fact on the record (much of which is cited in America's 60 Families) that a large proportion of political campaign funds is siphoned into newspapers. Editor and Publisher, with deceptive ingenuousness, took this to mean payment for political advertising, but this was neither said nor implied; -what was meant was secret, lump payments for editorial policy and not for avowed advertising. What was meant was flat subsidy, paid over the counter and not entered upon the books. It would take up too much space here to cite even the recorded instances of such payments. In addition to crude secret payments given the "county" press, there are subsidies available in more generalized forms. One of these politically-invoked press subsidies is the low second-class mailing rate for newspapers and magazines, which, for newspapers and magazines, according to Ti me, January 17, 1938, page 32, cost the government a little more than $40,006,000 for the year ended June 30, 1937. As this deficiency is recurrent, the loss in revenue to the government in twenty-year cycles is now at the rate of nearly $1,000,000,000. Another politically-created press subsidy was until recently the Federal tax law which permitted newspapers owned by complicated holding structures to charge off losses in one division against huge profits in another, thereby making possible low Federal tax payments. The New Deal knocked over this gravy bowl. Editor and Publisher, seeking to create the impression that the book was replete with errors, questioned the statement that 1,000 newspapers have been discontinued in the United States since the war. It said that this statement could not refer to dailies, as fewer than 600 daily newspapers had been discontinued. The figure, how.ever, clearly referred to bi-weeklies and tri-weeklies as well as dailies, so there is not much point to Editor and Publisher's carping in this connection. LEGITIMATE CRITICISM? An example of how Editor and Publisher unwittingly questioned the authentic data given by its own back numbers was provided when it denied that the Hanna family has an interest in the Cleveland Plain Dealer, as stated in America's 6 0 Families. Editor and Publisher, October 8, 1932, itself related that the Cleveland Newshad been merged with the Cleveland Plain Dealer, through the agency of the newly formed Forest City Publishing Company. The Hanna newspaper interest was retained through this company. But in its January 22, 1938, review of America's 60 Families, Editor and Publisher erroneously said that the two newspapers in Cleveland owned the Forest City Publishing Company! A gross misunderstanding by the Editor and Publisher reviewer led him to believe that the subsidiaries owned the holding company! What the object of such an anomalous arrangement might be was not explained. What Editor and Publisher was doing here was to cover up the fact that the same interests owned a Republican and a Democratic newspaper, giving them two-thirds of the daily newspapers in Cleveland, where there is only one other newspaper, the Scripps-Howard Press. Editor and Publisher also perversely took the author to task for saying the Baltimore Sun, unlike many other newspapers, was not owned by finance capitalists but by its leading executives. It then went on to demonstrate that it did not understand finance capitalists to mean bankers, which is what the term actually means. Editor and Publisher indicated that it thought finance capitalists meant simple business men. It said the majority stockholder of the Sun was Harry C. Black, chairman of its board of directors. Is not this ownership by a leading executive, as America's 60 Families truly states ? Having stigmatized as errors of fact these and other correct statements in Ame rica's 60 Families, Editor and Publisher continued smugly: "The above are a few of the elementary factual inaccuracies noted in a casual reading. We have no doubt that a careful analysis would reveal many more, and innumerable innuendoes and inferences without basis in fact." The author of America's 60 Families could with equal ease proceed to demolish the maladroit theses of other hostile reviewers, but enough has been done in this review to indicate how readily the criticisms collapse. The discerning reader can continue the analysis along similar lines at his own discretion. In doing so he should observe, however, that the hostile critiques have confined themselves in matters of details to fewer than ten pages of the book. Chapters three through six and eight through eleven, dealing with the pecuniary control of the national political apparatus and the corrupt favors obtained through this control, and with the nature of the philanthropies, educational enterprises, and personal expenditures of the wealthy, were not touched upon in any detail at all. The analysis of the New Deal, which accounts for the animosity displayed toward it on grounds other than a nonexistent radicalism, was also gingerly avoided. However, there is a lesson to be learned from these hostile criticisms. The lesson is that these reviewers and the points of interest they represent do not want America's 60 Families to be read. Although it is "significant," deserves "respectful attention," and contains a "mass of facts," it nevertheless contains "nothing new," "nothing that has not been printed before," and nothing that requires. attention. And, despite its heavy documentation, it is false from cover to cover. Why, then, all the excitement? Those who have read the book know, of course, that the daily-newspapers are thoroughly exposed in it for what they are. In general, the sharpest attacks against the book have come from those publications that have been exposed in it. Some publications have, however, refused to review it at all. The reasons for their muteness will not be plain except to those persons that have perused the book A NOTE ON THE WHITNEY AFFAIR On March 8, 1938, the Vatican solemnly announced that J. P. Morgan and Thomas W. Lamont, members of the banking house of J. P. Morgan and Company, had, in recognition of their distinguished works, been made Knights of St. Gregory by the Pope. A few hours later the New York Stock Exchange suspended Richard Whitney and Company for insolvency, and turned over to the Attorney General of New York records betraying gross irregularities in the firm's affairs. Two days later Whitney was unceremoniously indicted for grand larceny. Soon afterward he was again indicted, and was arrested as well by the Attorney General of New York State, who charged him with theft. It transpired that Whitney, described as "haughty" by the New York Times and as "arrogant" by Time Magazine, had made it a regular but surreptitious practice since 1932 to hypothecate for his personal benefit securities belonging to his customers and others, and that his personal speculations in stock of the Distilled Liquors Corporation had gone so badly that he was in the end unable to make good, although he had been generously advanced funds by some of the biggest banks in Wall Street. His shortages, the Attor-ney General's office reported, amounted to at least $6,000,000. Not only this, but Whitney, as treasurer, had taken bonds of the New York Yacht Club from the club's safety deposit vault to pledge as surety against a personal bank loan. Whitney, arraigned, promptly pleaded guilty to all charges and took all blame upon himself, including culpability (even though he admitted he was not an accountant) for having set up a complicated and obscurantic control account in his office. Nobody knew anything about his affairs, said Whitney; he had consulted with no one, he insisted. The suspicion that Whitney was pleading guilty with such eager celerity simply to block thorough investigation was voiced in the New York Times (March 22) when it said, "Richard Whitney was subjected yesterday to the public questioning against which his counsel protested last week, as being forestalled by his pleas of guilty to grand larceny." By acknowledging his guilt Whitney placed himself in jeopardy of a jail sentence of five to ten years, which was duly imposed on April 11, 1938. The truly extraordinary circumstance about the case was this plea of guilty, for it was one of the few times since -the Civil War that a member of the inner financial oligarchy of the United States had ever felt obliged to admit any serious wrongdoing. HOW WAS WHITNEY CONNECTED? But what has Richard Whitney to do with America's wealthiest families? Who was Richard Whitney, whose career should terminate with such a sardonic comment upon itself? Before answering, briefly, the reader may recall that some horrified critics of America's 60 Families have denounced its author as a "muckraker," have described his conclusions as overdrawn, exaggerated, overwrought, or, even though true, as given unwarranted force because they are concentrated within the covers of a single book. The affair of Richard Whitney has come to the surface, however, as living, immediate verification of the truth of the serious accusations made in America's 60 Families against the coterie of big wealth. But there was, in reality, nothing at all fundamentally extraordinary about the Whitney situation. Such peculations are, as America's 60 Families shows, taking place all the time in upperclass circles. True, it is now said that Whitney was not "representative." It was also said, one may remember, that the cases of Charle s E. Mitchell, president of the second largest bank in the country, and Albert H. Wiggin, president of the largest bank, were not representative. Mitchell was acquitted of income tax evasion but the Supreme Court held he was nevertheless to pay the amount in dispute; Wiggin, faced by civil suits, had. to make cash settlements with stockholders. It was argued, too, that Kreuger, working through the old-established house of Lee, Higginson and Company, Insull, Marcus-Singer, et al., were not "representative." Richard Whitney, an active field marshal in the junta of great wealth, one of its subordinate strategists in the gigantic and continuous operation of retaining social, economic, and political control, was of the creme de la creme of America's ruling class. And Richard Whitney was, as the New York Jour nal aptly said, Wall Street's "White Knight." E. H. H. Simmons, a former president of the Stock Exchange, testified about Whitney that "No imagination of the wildest kind would have reached to the thought that Mr. Whitney might do anything wrong. There could not be the slightest suspicion of Mr. Whitney." A good part of this attitude, of course, was sheer snobbery based only on the fact that Whitney carried gilt-edged social passports and was, moreover, closely associated with the Morgan partners. Born in Beverley, Massachusetts, in 1888, Richard Whitney was the son of George Whitney, a Boston bank president whose forebears had emigrated from England on the Arabella, the ship which in 1630 followed the Mayflower to the New World. He was also the nephew of Edward Whitney, a one-time partner of J. P. Morgan and Company. In preparation for his career as a gold-plated anarchist who would operate above all suspicion, he attended the upper-class Groton School and was given his bachelor's degree by Harvard University in 1911 after remaining in graceful residence for three years. The family to which Richard Whitney belonged had, incidentally, no connection with the Whitney group associated with the Standard Oil Company. At Harvard young Whitney was, by reason of his pedigree, one of the campus nabobs. He became a member of the ultra-refined Porcellian Club from which the "Wrong People" are, in observance of a curiously whimsical tradition, rigorously excluded. He was, indeed, wearing the emblematic pig of the lofty Porcellians when he was arrested, fingerprinted, and photographed. . . . Two years after leaving Harvard young Whitney, with a. loanfrom his uncle, bought a seat on the Stock Exchange, prepared to work his way up from the bottom of the ladder. His brother, George, a Harvard-Porcellian man of the class Of 1907, had preceded him to Wall Street, first joining the old-established Boston banking firm of Kidder, Peabody and Company immediately after his graduation, later becoming a Morgan partner. Kidder, Peabody -and Company was closely associated with J. P. Morgan and Company, which only recently reorganized it. In 1916 Richard Whitney married Mrs. Samuel S. Sands, a young widow who was the daughter of George R. Sheldon, New York banker, former president of the Union League Club, business associate of the elder J. P. Morgan, and treasurer of the Republican National Committee; Mrs. Sands was the daughter-in-law of Mrs. William K. Vanderbilt through her earlier marriage to Mrs. Vanderbilt's son by a former husband. Richard's brother George had ,also married well in 1914, when he became the husband of Martha Beatrix Bacon, daughter of Robert Bacon, former Morgan partner, member of the Taft Cabinet, Ambassador to France, and a political agent in general for Wall Street. The Bacons were also Bostonians, Harvardians, etc., although since becoming connected with 1. P. Morgan and Company they have concentrated on New York and national affairs. The elder Bacon at one time was associated with Lee, Higginson and Company. Robert Low Bacon, a son, is today a member of Congress. Gaspar Griswold Bacon, another son, is a lawyer and an overseer of Harvard University. A MORGAN BROKER Richard Whitney and Company was formed in the year of Richard Whitney's marriage. It soon became known as one of the brokerage houses closely affiliated with J. P. Morgan and Company, handling Morgan business. Although he was of conscript age, Richard Whitney did not serve in the armed forces during the World War. By 1928 he had advanced himself so that. he was vicepresident of the Stock Exchange and a member of its board of governors. In recognition of what was regarded as distinguished services during the 1929 panic he was allowed to serve as president of the Exchange from May, 1930, to May, 1935. It is instructive to observe, in connection with the thesis of America's 60 Families that a relatively few closely interrelated families of wealth dominate the financial and economic life of the United States, that through Richard Whitney the firm of J. P. Morgan and Company had as an agent the senior officer of the Stock Exchange. Similar associates of the wealthy families are found strewn about in strategic financial, political, academic, journalistic, judicial, commercial, and public administrative posts of every conceivable type. Some have been humbly born, but have married well; others are to the manor born but are poor relations of rich stockholders or the relatives-by-marriage of successful business partners. from the lower classes. As a member of the board of governors of the Stock Exchange, Richard Whitney did not object to the listing of Van Sweringen stock before the market crash of 1929, although a warning had been written by a technical expert of the Stock Exchange that the issue was not above suspicion as contrary to the public interest; Richard Whitney was one of the governors whose names appeared on the Morgan "stock favor" list as a recipient of some of this same Van Sweringen stock at a price substantially below the market price. These facts were adduced in Senate investigations of Wall Street against which the controlled newspapers of Wall Street protested as blows to "public confidence" in business and businessmen, by which they merely meant the small coterie of the richest beneficiaries of the business system rather than business and businessmen in general. There were further Whitney connections with the reigning family groups. Whitney testified at the public hearing of the Securities and Exchange Commission about his case that he had obtained unsecured loans of $100,000 each from Harold S. Vanderbilt and the late George F., Baker II, and a loan of $50,000 from Marshall Field III. As the privileged field marshal of great wealth he had also obtained large unsecured loans from lesser figures of the Wall Street community like Frank Crocker, J. A. Sweetzer, Herbert Wellington, Otto Abraham, J. W. Prentiss, George H. Bull, ).4 B. Mabon, and E. A. Pierce. Most of these latter we're prominent brokers. Richard Whitney and Company, although not well known to the public, did a large and, until recently, lucrative business owing to its intimate relationship with J. P. Morgan and Company. As pointed out by District Attorney Thomas E. Dewey in a memorandum handed up to the Court of General Sessions before Whitney was sentenced, the Whitney brokerage firm had over a period of years handled an average of more than 10 per cent of the entire bond transactions on the New York Stock Exchange and its customers had included some of the largest banks. Whitney leaped to national prominence as an ostensible public savior at 1:30 P.m. on October 24, 1929, the blackest moment of "Black Thursday," when he placed a dramatic order for 10,000 shares of U. S. Steel common at 205. In the next hour and a half, darting ostentatiously around the floor of the Stock Exchange, he showed the stuff of which heroes are made by placing bids for a score of stocks in similar huge lots. His orders aggregated in all an estimated $20,000,000 to $30,000,000. It was informally reported that he was acting for J. P. Morgan and Company, and the report was not denied. In the next five years Whitney achieved even greater prominence by defying investigators of the Senate Committee on Banking and Currency in 1933 and fighting vehemently against the enactment of effective restrictive and regulative provisions in the Securities and Exchange Act. It was, poetically, the increased regulation inaugurated and stimulated by the New Deal of Franklin D. Roosevelt that entangled the erring Whitney in its net. From 1932 onward Whitney made bellicose speeches before business groups in many parts of the country against government "interference" with Wall Street or the Stock Exchange, which he termed a "perfect" institution. As the Stock Exchange was one of the central mechanisms for controlling the money and credit of the country, there was ample reason for alarm on the part of Whitney and his associates. Whitney, in short, was an ardent anti-New Dealer. As a big figure in Wall Street, with a brother believed to be the coming direc ting influence of J. P. Morgan and Company, Richard Whitney became treasurer of the New York Yacht Club, director of the Corn Exchange Bank (not a Morgan institution as the term Is understood in Wall Street), and master of the Essex Fox Hounds at Far Hills, New Jersey, where he had an extensive estate, a twenty-seven-room house, and palatial stables filled with blooded steeds; in New York City he owned a $210,000 town house. His corporate directorates were, however, confined for the most part to small semi-speculativc personal enterprises in which he was the dominant factor. The only "Morgan" directorate he held was in the Morris and Essex Railroad, a subsidiary 'of the Delaware, Lackawanna and Western Railroad (Morgan). His brother, however, held many important corporation posts. The exalted social position of George Whitney is, however, perhaps best indicated by pointing to the fact that he is a member of the small and select financial coterie that sits as overseers of Harvard University. Richard Whitney was, ironically, a member of the visiting committee in the economics department of Harvard University, under the chairmanship of Walter Lippmann. Richard Whitney's illegal practices had been going on, it was fully demonstrated, even while he was president of the Stock Exchange and even while he was freely advising the government and the public what the country really needed to make it prosperous. The plain fact is that Whitney was against regulation because it made it difficult for him to function improperly, as the upper circles of Wall Street have been, in various ways, functioning for decades, according to the official findings of numerous governmental investigating bodies. Although J. P. Morgan and Company may not have been fully cognizant of Richard Whitney's affairs, it knew a good deal more about them than Richard Whitney admitted at public hearings, according to the memorandum of District Attorney Dewey. Ac-cording to this memorandum, "As early as the Spring of 1931 Francis D. Bartow, a partner of J. P. Morgan and Company, who was also a director of the Corn Exchange Bank Trust Company, noticed that the bank had made an unsecured loan to the defendant in the sum of $300,000. At that time the defendant was president of the New York Stock Exchange and was also a director of the Corn Exchange Bank Trust Company. The impropriety whereby the defendant, who was in the securities business, procured an unse- cured loan from a bank of which he was a director was called by Mr. Bartow to the attention of the defendant's brother, Mr. George Whitney, who was also a partner of J. P. Morgan and Company. "Mr. George Whitney agreed that, in view of the defendant's position, the transaction was improper. On June 29, 1931, the de-fendant borrowed from J. P. Morgan and Company the sum of $500,000, which, to the extent Of $300,000, was used to liquidate the Corn Exchange Bank loan to the defendant. This loan by J. P. Morgan and Company was subsequently reduced to $474,000 and remained unpaid at the date of the failure on March 8, 1938, after successive renewals." J. P. MORGAN AND COMPANY TO THE RESCUE J. P. Morgan and Company, in other words, bailed Richard Whitney out of an improper loan. "The records of the Corn Exchange Bank Trust Company," continued the Dewey memorandum, "disclose that as early as June 6, 1932, shares of the stock of the Corporation Trust Company were unlawfully pledged by the defendant as collateral for an overnight loan of Richard Whitney and Company in the amount of $200,000. . . . Similarly from April 29, 1936, until. November 26, 1937, the same stock was pledged by the defendant with the Corn Exchange Bank Trust Company as part security for a loan of Richard Whitney and Company in the amount of $200,000. During this period Central Hanover Bank and Trust Company, as co-trustee of the Sheldon estate, had requested the defendant to surrender custody of the-securities constituting the corpus of the trust in conformity with the regulations of the State Banking Department. "After some discussion and correspondence the defendant categorically refused to comply with this request on the ground that the securities in question were just as safe in his custody as in that of the bank. . . " The inner meaning of this is that a broker closely associated with J. P. Morgan and Company, his head kept above water only by a Morgan loan, was able successfully to defy a big bank that is not a Morgan institution. "In December, 1936," said the Dewey memorandum, "the unwholesome condition of the defendant's business affairs first came to the attention of his brother, Mr. George Whitney, who then discovered that the defendant had borrowed substantial sums from various friends . . . and that he had used securities belonging to .others.' Although these transactions had apparently been authorized by the owners of the securities so utilized, Mr. George Whitney advised the defendant that they were detrimental to his credit and created an undesirable situation in view of the defendant's prominent position in financial circles and his business relations with the firm of J. P. Morgan and Company.- "Accordingly, at Mr. George Whitney's request, the defendant furnished a memorandum of his financial condition which was reviewed by Mr. George Whitney and also by Henry P. Davison, another partner of J. P. Morgan and Company. On January 8, 1937, Mr. George Whitney made a personal loan to the defendant of $650,000 for the purpose of repaying the money the defendant had borrowed from Mr. Baker and of releasing the securities belonging to the other three individuals." George Whitney insisted at this point on having an audited statement of Richard Whitney and Company. He was given a false financial statement, apparently not independently certified by accountants. "Mr. George Whitney questioned his brother at length concerning the solvency of the firm, to which questions the defendant now concedes that he gave 'untruthful answers,"' according to the Dewey memorandum. "Mr. George Whitney states that he was finally satisfied, as a result of the defendant's representations, that Richard Whitney and Company was solvent . . ." On the afternoon of March 5, 1938, after his brother George had left for Florida unaware that the Stock Exchange felt impelled by some "obscure" reason, according to Dewey, to push ahead with the case, Richard Whitney informed Mr. Bartow of the true state of affairs, according to the Dewey report. "Mr. Bartow said that he could not offer any advice or assistance, but agreed to confer with counsel," said the Dewey report. From then until the failure, according to the Dewey memorandum, Mr. Bartow consulted with J. P. Morgan and the Morgan lawyers, who advised that the banking house or its partners could not "properly" assist in view of Richard Whitney's criminal offenses. Further assistance to Richard Whitney was apparently withheld owing to the danger of assisting someone to escape the consequences of a felony. The SEC learned that a large number of Wall Street people had known for some time that Whitney was in difficulties. T. W. Lamont had contributed to a Whitney loan in November, 1937-. A UNIQUE MALEFACTOR Whitney's case diverged saliently from that of preceding Wall Street malefactors in one important particular that deserves notice: Whitney did not mulct the general public as others have done. His clients were relatives and close associates and big banks, which from the strictly Wall-Street point of view only made his truancy more heinous. The brusque treatment Richard Whitney has been accorded by newspapers and prosecutors, therefore, has been pro-voked not because he cheated the public but because he betrayed a fiduciary responsibility to members of his own class, including his wife, his stepson, a sister-in-law, fellow club-members, partners, and banks. As America's 60 Families makes clear, it is extremely difficult to amass and retain a large fortune by honest methods. It can be done, and it has been done, although the day is gone when it can be done easily. In view of this, those persons who desire to amass and retain much money and power see to it that loopholes exist which they can conveniently utilize in their own interest. The loopholes are especially essential in maintaining discretionary control over "other people's money," which the Richard Whitneys of this world find it so pleasant to use. It was, indeed, the wider implications of the Whitney affair that were the most significant and the most sinister; for it appears, after all, that Whitney had been indulging only in practices that were quite general and that, in his case, led by pure mischance to the abyss. The New Republic (April 6, 1938) touched upon some of these wider implications when it said Wall Street in the Whitney case was trying "to keep the finger of suspicion pointed only at the central figure.... For example, there is the matter of the million, dollar fund created to protect widows and orphans of the Exchange members. Bigwigs of the Exchange are appointed trustees to safe-guard this fund. Government authorities now believe that some, at least, of these trustees have used their power over the fund so as to give themselves commissions, and have rotated the fund from one trustee to another for their personal benefit. This is why, according to a seemingly well-informed article in the Scripps-Howard newspapers, the securities of the fund were in Richard Whitney's hands instead of in a safe place. They should. have been turned over to another man last summer, but he was unable to get them until November. This incident proved, or should have proved, to Ex-change leaders that something was wrong. If they knew, why did they not act? If they did not know, how can they explain their incredible ignorance? "Their ignorance was equally incredible regarding manipulation of a listed stock in which Whitney's firm created a corner.... "Richard Whitney's brother, George, a member of the firm of J. P. Morgan, having already loaned his brother $2,000,000, last November gave him another million. In spite of this, the records do not indicate that he suspected anything was wrong. . . . "The New York Trust Company is a big bank within the sphere of influence of J. P. Morgan and Company., It lent Richard Whitney money on the security of his vast country estate and agreed to conceal the fact that the property was being mortgaged. Did the bank suspect nothing was wrong? If so, what a naive, what an innocent, what a trusting attitude it took!" The New Republic observed in conclusion that the New York Sun, which frequently runs journalistic errands for Morgan's, exonerated everybody else in Wall Street while writing "sob-stories" about Whitney. "Serious as were Richard Whitney's own acts," said 'The New Republic justly, "in our judgment the attitude of others in Wall Street is even more serious." Added point to the observations of The New Republic was given several days later when the report of J. N. Stanislaus, of the Probation Office of the Court of General Sessions, appeared. This report remarked upon an "overanxiety" on the part of Richard Whitney that suggested "he may be shielding some one, but who or for what particular reason are questions yet to be answered." This judgment was based upon the unusually guarded way Whitney discussed his thefts while talking freely about other matters. The case of Richard Whitney, to conclude, is a contemporary, fresh reminder of the thesis in America's 60 Families that hostile and pseudo-friendly critics have tried to conceal from the public: faithless men of great wealth from a small irresponsible group are in control of the levers of society and move these levers in their own wayward interest. pps. 501-533 ----- Aloha, He'Ping, Om, Shalom, Salaam. Em Hotep, Peace Be, Omnia Bona Bonis, All My Relations. Adieu, Adios, Aloha. Amen. Roads End DECLARATION & DISCLAIMER ========== CTRL is a discussion and informational exchange list. Proselyzting propagandic screeds are not allowed. Substance—not soapboxing! 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