America 1919

Chapter 1583 578: The Much-Anticipated Hearing (Part 2)

Sometimes he would even use his cigar to point at Jack Morgan.

Following John Davis's advice, Jack Morgan did not confront Ferdinand Pecora.

He smiled nervously, addressing Ferdinand Pecora as "Mr. Pecora," and at this moment, Jack Morgan seemed nothing like a magnate who swallowed the world whole.

He neither lost his temper nor flew into a rage.

The public saw a figure well-known to his friends and colleagues but unfamiliar to the public—a straightforward, amiable, yet shy and gentle banker.

"I would like to remove the part of my stammering from my answer to that question."

After answering a question, Jack Morgan made this request, "I'm not used to this form of inquiry, Mr. Pecora, and I often find it hard to express myself clearly!"

In the face of Jack Morgan's strategic retreat, Ferdinand Pecora was unmoved.

He maintained his own rhythm of judgment.

Just like at the hearing with Charles Mitchell, Ferdinand Pecora focused on the status of the Morgan Consortium—it was known as the bankers' bank.

Jack Morgan did not see anything wrong with Morgan partners serving on the boards of the Guaranty Trust Company and the Bankers Trust Company.

Nor did he consider it a disgrace that Morgan Bank had loaned money to over 60 officers and directors from other banks, including Charles Mitchell of Citibank, Seward Prosser of the Guaranty Trust Company, and William Porter of the Bankers Trust Company.

Jack Morgan denied that this brought any special benefits to Morgan.

Jack Morgan said, "They are our friends, and we know they are reliable, stable, and upright individuals."

Jack Morgan did not feel guilty about Morgan's role as Wall Street's club; rather, he was proud to provide a neutral place for private banks to "meet and discuss matters of general concern without hostility and competition."

When both sides reached a stalemate, Ferdinand Pecora demanded Jack Morgan produce the partnership agreement of the company.

"I object!" John Davis, as Jack Morgan's lawyer, expressed an objection for the first time during the hearing.

"These contracts contain confidentiality clauses, and I object on behalf of my client to making such agreements public!"

"Is it that you don't want to show them publicly, or is it that you simply can't present them?"

Ferdinand Pecora snorted coldly.

Then he produced a beautiful handwritten agreement by Jack Morgan, which even many Morgan partners had never seen!

This agreement indicated that Jack Morgan had the absolute authority to arbitrate disputes between banks within the Wall Street Club, allocate undistributed profits, and even dissolve a bank!

When this handwritten agreement appeared, the whole audience was in an uproar.

The usually modest and humble Jack Morgan's face changed.

Café Jackson, somewhat surprised, asked Donnie, "Boss, did you know about this agreement?"

Tang Fei smiled and said, "Of course I knew. Jack Morgan wanted me to sign the contents earlier, but I didn't agree!"

If this agreement were signed, it would mean being subordinate to Morgan, which Donnie was certainly unwilling to do.

This agreement also helped many puzzled Americans answer a question that had long confused them.

What kind of bank exactly is Morgan?

In the U.S., which values marketing culture, Morgan, as a private bank, never advertises, does not actively seek deposits from the general public, nor does it pay interest on deposits less than 7,500 US Dollars.

Everyone only knew that having an account at Morgan was like being accepted as a member of a distinguished country club!

So what kind of people would have accounts at Morgan?

This curiosity was soon further clarified by Ferdinand Pecora.

Ferdinand Pecora listed a series of companies that deposited 1 million US Dollars each in Morgan Bank, such as the American Telephone and Telegraph Company, Sealands Corporation, Dupont Corporation, General Electric Company, General Mills Company... there were dozens of such companies.

These companies' managers often also chose Morgan as their personal bank to open accounts.

Ferdinand Pecora illustrated with charts that Morgan partners held 126 directorships in 89 companies with assets totaling 20 billion US Dollars.

Ferdinand Pecora claimed, "The extent of this private power is unprecedented in our entire history."

Jack Morgan explained that only at "the sincere request of the company" would partners participate in their board meetings.

Not only Ferdinand Pecora but also everyone at the scene had doubts about this.

However, at this moment, everyone couldn't help but look at Donnie's position.

It was now generally acknowledged throughout America that Morgan was the second largest bank in the nation, with Venus Bank being the largest.

If Morgan was so huge, then to what heights had Venus Bank scaled?

In these people's minds, there was simply no correct concept.

They could only ascertain one thing: that Venus Bank was unimaginably massive!

Facing these gazes, Donnie remained calm and composed.

The biggest difference between him and Jack Morgan lay in this.

Donnie also held power beyond commerce.

And this power was enough for Donnie to clearly tell these people.

The old man's commercial empire is indeed vast, but you have no way to deal with it!

These issues were not sufficient to topple Jack Morgan.

Therefore, Jack Morgan could nonchalantly state that these companies begged Morgan to be their director.

And these companies would undoubtedly provide affirming responses.

So Ferdinand Pecora unleashed his final trump!

Income tax!

Ferdinand Pecora revealed that Jack Morgan had not paid income tax in 1930, 1931, and 1932, and all 20 of Morgan's partners paid nothing in 1931 and 1932, yet Jack Morgan paid taxes in the United Kingdom during these years.

Ferdinand Pecora further disclosed that due to Parker-Gilbert becoming a partner on January 2, 1931, instead of the customary December 31, 1930— the company declared a 31 million US Dollar asset loss in 1931.

When these questions were raised, Jack Morgan's defenses finally cracked.

He began stammering, claiming he couldn't recall the details of tax payments.

Such matters, he said, were unclear to him, understandable to his partners, yet raised deep suspicion among the public, and though Jack Morgan and most partners did not break the law, but merely wrote off a large part of their income through stock losses, not paying taxes during the Great Depression was politically explosive.

At that time, exploiting loopholes in tax law wasn't a pastime Americans enjoyed, moreover, the government desperately needed money.

Therefore, when these questions arose, and Jack Morgan could not provide an answer,

the entire venue turned into chaos.

Morgan's partners began roaring, believing they were being framed.

The reporters at the scene frantically took photos and even wished to replace Ferdinand Pecora to ask questions.

Donnie very much disliked such inquiries.

Because all these people were doing basically the same things as Jack Morgan.

They were all using their methods to legally avoid U.S. income tax.

If this matter continued to be delved into, it would not just be a trial against Jack Morgan, it would spread to the entire super-wealthy class.

Donnie whispered softly to a senator next to him.

After receiving Donnie's instructions, the senator immediately spoke to maintain order at the scene and requested that the journalists stop using glaring flashlights.

At the same time, the senator also asked Ferdinand Pecora to pose questions regarding illegal actions, rather than speculating on issues without substantial evidence.

Everyone knew that this senator was Donnie's spokesperson.

But at this moment, even Ferdinand Pecora understood that Donnie was looking out for them.

Ferdinand Pecora certainly didn't want to become the thorn in the side of America's super-rich.

And Jack Morgan also appreciated Donnie for halting his embarrassing behavior at that moment!