Press Release of Statement by Senator Harry S. Truman Before the Securities and Exchange Commission

STATEMENT BY SENATOR HARRY S. TRUMAN BEFORE THE SECURITIES AND EXCHANGE COMMISSION, FEBRUARY 6, 1941 FOR RELEASE ON DELIVERY I am pleased, indeed, to state for the record of the Securities and Exchange Commission some facts developed by the Senate Railroad Investigation. That investigation has to date resulted in the publica- tion of 23 volumes of hearings and exhibits, plus 25 or more preliminary and additional reports. * Naturally, I cannot summarize today all the material in the subcommittee!s record pertaining to competitive bidding VS. "continuing banker relationships", as the present practice is some- times described. But I can outline for you a few typical situations as developed in our record. "Continuing banker relationships" have been defended by witness- es before the Senate Railroad Investigation, and perhaps here, too, on the ground that a railroad or other enterprise can "in time of need" turn to its continuing bankers for short-term accommodations or other aid. The incident I have in mind in this connection comes from my own State, the State of Missouri. In testimony at a hearing before the Missouri Public Service Commission, about 1931, it was urged that the Missouri Pacific would benefit by establishment of such a relationship with a New York banking firm. Said one witness: "The Missouri Pacific in times of prosperity can finance its own needs. * * Nevertheless, they have got to negotiate with some bank in order to procure the sale of their securities, and I think the Van Sweringens may be helpful to them in that respect. * % % Having a friend at court, even in a banking house, is much more helpful than detrimental." The Missouri Commission was impressed by that argument. In its later opinion, that Commission declared: "Mr. /John P.7 Murphy Van Sweringen attorney stated that most of the banking business of the applicant /Alleghany Corpora- tion is done with J. P. Morgan & Co., and expressed the opinion that the Missouri Pacific Railroad Co. will be enabled to readily and easily finance its future requirements with this connection. " Thereafter, J. P. Morgan & Co. became continuing bankers for the Missouri Pacific. Less than two years later, the Missouri Pacific, a $500,000,000 railroad, needed $1,500,000 to meet an interest payment, and turned to this banking firm. The bankers refused to make the loan. Thereupon the railroad went to the R. F. C., which agreed to lend the money, but could not do so for 15 days. The bankers then agreed to lend the railroad the $1,500,000 for 15 days, but "only on the basis of the expectation that the R. F. D. will lend you the sum necessary to repay with interest such loan at its maturity", 15 days later. Moreover, the bankers took that occasion -- of making a loan of $1,500,000 for 15 days -- to require the railroad to post $15,500,000 additional collateral for other loans which they and associated bankers held. *Hearings pursuant to S. Res. 71, 74th Congress, and continuing resolu- tions. is NARA