Senator COUZENS. What security did you have for that? Mr. COVINGTON. I had 500 shares of group stock. Later I gave them my home. Mr. PECORA. That is, you gave them a mortgage on your home? Mr. COVINGTON. I had a mortgage on my home, but it had been paid down, Mr. Pecora, and I gave them the equity in my home, which has since been sold, and applied on the note. Senator COUZENS. It is now down to what? Mr. COVINGTON. It just happened the other day that my house was sold, and I have not a record of it. Do you want this, Mr. Pecora? [Handing paper to Mr. Pecora.] Mr. PECORA. Yes. I offer in evidence the letter produced by the witness. The CHAIRMAN. Let it be admitted. (Letter Oct. 23, 1933, Mott to Covington, was received in evidence, marked "Committee's Exhibit No. 94, Jan. 18, 1934 ", and the same was subsequently read into the record by Mr. Pecora.) Mr. PECORA. The letter just received in evidence as Committee Exhibit No. 94, of this date, written on the letter-head of Charles Stewart Mott, 1400 East Kearsley Street, Flint, Mich., is as follows: Mr. HARRY COVINGTON. % Bitting, Inc., 20 Exchange Place, New York City, N.Y. OCTOBER 23, 1933. DEAR SIR: I hold your demand note, dated December 14, 1932, for $240,000, given in purchase of 30,000 shares of Guardian Group stock. Please take this as formal demand for payment, with interest, and advise me promptly in regard to same. Very truly yours, C. S. MOTT. And in handwriting, in ink, is the following inscription on the foot of the letter: Received by hand from Mr. Mott between 10:30 and 11 a.m., Wednesday, November 1, 1933, at Sugar Co.'s New York manager's office. Mr. COVINGTON. It is "H. S. C." H. C. Mr. PECORA. Yes, H. S. C. Is that handwritten inscription in your handwriting? Mr. COVINGTON. Yes, sir; I wrote that. Mr. PECORA. And it was placed by you there on the date you received the letter from Mr. Mott? Mr. COVINGTON. Yes, sir. Mr. PECORA. I notice this letter is addressed to you care of Bitting, Inc., 20 Exchange Place, New York City. Is that the Mr. Bitting whose name has been mentioned before this committee in the last 2 days, I think during the testimony given by Mr. Blair, as someone that he met in connection with a transaction with Goldman, Sachs & Co., or the Goldman-Sachs Trading Corporation? Mr. COVINGTON. I think so; yes, sir. Mr. PECORA. Did you know Mr. Bitting when Mr. Blair had that transaction with him? Mr. COVINGTON. Yes, sir. Mr. PECORA. Did you have anything to do with that transaction, Mr. Covington? Mr. COVINGTON. I do not recall, Mr. Pecora. I read a part of that testimony, and I don't recall Mr. PECORA. You mean that you read a part of Mr. Blair's testimony given before this committee? I Mr. COVINGTON. I just read that part of it. I don't recall whether Mr. Bitting is the one that he referred to there, or who he was. spoke to Mr. Blair, and I have a hazy remembrance of the early part of that. I spoke to Mr. Blair about the fact that Goldman-Sachs were buying an interest in some banks. It came to my attention in some way. And then Mr. Blair went to New York, and, as he testified here, the event took place. Mr. PECORA. You met Mr. Blair in New York at that time in connection with that transaction, didn't you? Mr. COVINGTON. I either went down on the train with him or met him. Mr. PECORA. You had breakfast with him in the Hotel Biltmore on the occasion that he testified about here, didn't you? Mr. COVINGTON. No, sir. I was not at that breakfast. Mr. PECORA. Were you in any way an intermediary between Goldman, Sachs & Co., or their representative, and Mr. Blair, or anyone representing the company that Mr. Blair was an officer of, in connection with that transaction? Mr. COVINGTON. I don't know what your definition of "intermediary" is, but Mr. PECORA. Well, did you help in the negotiations that had for their purpose the acquisition Mr. COVINGTON. No, sir. Mr. PECORA. Of a large block of stock of the group, by Goldman, Sachs & Co.? Mr. COVINGTON. I was with Mr. Blair, not with Goldman, Sachs & Co. Mr. PECORA. I know that you were with Mr. Blair. And did you have any part in the negotiations that had for their objective the purchase by Goldman, Sachs & Co. at that time of 30,000 shares of stock of the group? Mr. COVINGTON. I was at the first and second meeting; yes, sir. Mr. PECORA. What part did you have in those negotiations? Mr. COVINGTON. I was in the room. Mr. Blair conducted those negotiations. Mr. Sanger was with Mr. Blair, and as I recall it that was at the second meeting with Goldman-Sachs, and Mr. Blair and Mr. Sanger conducted mainly the negotiations. Mr. PECORA. Why was your presence in New York rendered necessary at that time in connection with those negotiations? Mr. COVINGTON. I suppose Mr. Blair felt he wanted me with him. Mr. PECORA. Was that all? Just because Mr. Blair felt he wanted you with him? Mr. COVINGTON. That is the only reason I know of. I sat, as any man will, in the room, and listened to the deal being made, and if I have any ideas I suggest them. Mr. PECORA. You know that eventually Goldman, Sachs & Co. acquired 30,000 shares of the group stock, don't you? Mr. COVINGTON. It is my understanding that they did. Mr. PECORA. As a result of those negotiations. Mr. COVINGTON. It is my understanding that they did. Mr. PECORA. And do you know from whom Goldman-Sachs people acquired those 30,000 shares of group stock? Mr. COVINGTON. I think it was Keane-Higbie; from them, through them. Mr. PECORA. Through Keane, Higbie & Co. ? Mr. COVINGTON. Yes, sir; I think so. Mr. PECORA. And it was shortly after Keane, Higbee & Co.'s capital stock was purchased by the group? Mr. COVINGTON. I think it was during that time, but I don't know. Mr. PECORA. Do you know that shortly after Goldman, Sachs & Co. so acquired those 30,000 shares of group stock, they sold them again? Mr. COVINGTON. I understand that they did; yes, sir. Mr. PECORA. Do you recall to whom they sold them? Mr. COVINGTON. I don't know. Mr. PECORA. You say you don't know? Mr. COVINGTON. I don't know. Mr. PECORA. You never heard? Mr. COVINGTON. I don't know. Mr. PECORA. Do you know what profit Goldman, Sachs & Co. made in that transaction? Mr. COVINGTON. I don't. I only know from just-well, the price, as I recall it, at which they sold, which according to my memory was around 184 or 185. That figure came into the Mr. PECORA (interposing). You have no independent recollection that it was 184? Mr. COVINGTON. I don't know. I saw it yesterday in Mr. Blair's testimony. Mr. PECORA. Do you know for what price they bought those 30,000 shares? Mr. COVINGTON. I believe it was around 120. Mr. PECORA. That is right. Did you get any commission of any kind as a result of that transaction, from anybody? Mr. COVINGTON. No, sir. Mr. PECORA. Did you get any moneys at all, whether by way of fees, commissions, or for any service whatsoever as a result of that transaction? Mr. COVINGTON. No, sir. I received no money. Mr. PECORA. Did you receive property of any kind or of any value whatsoever? Mr. COVINGTON. No, sir. Mr. PECORA. Did anybody else, to your knowledge? Mr. COVINGTON. I don't know of any. Mr. PECORA. What was that answer? Mr. COVINGTON. No, sir. Mr. PECORA. Who handled that transaction in behalf of Goldman, Sachs & Co.? Was it your friend Mr. Bitting? Mr. COVINGTON. No, sir. Mr. PECORA. Who, then? Mr. COVINGTON. Mr. Weinburg, as I recall it, was in the room with Mr. Blair and Mr. Sanger. Mr. PECORA. What part did Mr. Bitting play in the transaction or in the negotiations that culminated in the transaction? Mr. COVINGTON. I don't think he played any important part, or not that I know of. Mr. PECORA. Well, whether an important part or not, what part did he play? Mr. COVINGTON. I do not recall him playing any part of any consequence in it. Mr. PECORA. Didn't you and Mr. Blair and Mr. Sanger meet him in connection with the transaction in New York? Mr. COVINGTON. I don't believe we met Mr. Bitting; no, sir. I have no recollection of meeting him there. Senator COUZENS. You said a while ago it came to your attention that Goldman, Sachs & Co. were buying some banks or bank stocks. Did that come to your attention from Mr. Bitting? Mr. COVINGTON. It might have, but I cannot recall definitely, and so I cannot say. Senator COUZENS. You do not deny that it came to your attention through Mr. Bitting, do you? Mr. COVINGTON. I do not. Mr. PECORA. When it came to your attention did you speak to any officer of the Group about it? Mr. COVINGTON. To Mr. Blair. Mr. PECORA. You spoke to Mr. Blair? Mr. COVINGTON. Yes, sir. Mr. PECORA. Did you succeed in arousing his interest in the matter? Mr. COVINGTON. Yes, sir. Mr. PECORA. And his interest was aroused to the point where the transaction was concluded eventually? Mr. COVINGTON. Yes, sir. Mr. PECORA. Do you know how long Goldman, Sachs & Co. held those 30,000 shares of stock after they had purchased them at $120 a share? Mr. COVINGTON. I don't remember; no. Mr. PECORA. It was a very short period of time; wasn't it? Mr. COVINGTON. I don't remember. I would have to look back in the records in order to find out. Mr. PECORA. Do you know the circumstances under which those 30,000 shares were repurchased from Goldman, Sachs & Co. at $184 a share? Mr. COVINGTON. That is the figure that I take it-or that I saw in the testimony. Mr. PECORA. I asked you: Do you know anything about the circumstances under which those 30,000 shares were purchased back from Goldman, Sachs & Co., for $184 a share? Mr. COVINGTON. I was asked to go down and see Mr. Weinburg, by, I believe, Mr. Blair. They felt that they did not want to have such a large holding in New York, as I recall it. Mr. PECORA. Who felt that way, Mr. Blair? Mr. COVINGTON. A number of people. Mr. PECORA. And who were they? Mr. COVINGTON. I can't remember all of them. Mr. COVINGTON. I could not say. I could not sit here and say that Mr. Blair was one of them; no. Mr. PECORA. Were those people who had that feeling officers or directors of the group? Mr. COVINGTON. Yes, sir. Mr. PECORA. All right. Now you may go ahead and tell us about it. Senator COUZENS. Just one minute, Mr. Pecora. He said he could not remember all of their names. Mr. Covington, can you remember any of them? Mr. COVINGTON. Well, as I recall, it was Mr. Blair and Mr. Higbie. Those are the main ones that I remember. Senator COUZENS. You remember those men as raising the question whether it was desirable to hold as much group stock in New York as was being bought by Goldman, Sachs & Co.; is that right? Mr. COVINGTON. I have a faint recollection, Senator Couzens; and it was back in 1929 I think, or as I recall it. Mr. PECORA. It was in 1930. Mr. COVINGTON. It was in 1930? Mr. PECORA. Yes. Mr. COVINGTON. The early part of 1930?. Mr. PECORA. Not the early part of 1930. It was in the fall of 1930. Mr. COVINGTON. Well, I don't remember it exactly. Senator COUZENS. Did I understand Mr. Pecora to ask the witness if he knew anything about who purchased the stock? Mr. PECORA. I asked him if he knew anything about the circumstances under which the stock was repurchased at $184 a share from Goldman, Sachs & Co. Mr. COVINGTON. I think Mr. Blair would have told me that. Mr. COVINGTON. All that I know about it is, I went to New York at their suggestion. Well, I was going down there anyway, and they asked me if I would ask Goldman, Sachs & Co. if they wanted to sell some of their stock back. I did. Mr. Weinburg was the man who negotiated it, as I recall. Mr. Weinburg said he was interested and that he would do it. There was a call on the telephone, I believe. and they talked either to Mr. Blair or Mr. Higbie-yes; it was Mr. Blair or Mr. Higbie-and he said he would sell it, and that is the way the purchase came about. Senator COUZENS. Sell all of it? Mr. COVINGTON. Sell 25,000 shares, I believe, was the amount, but I am not certain about the amount. Mr. PECORA. You are right; 25,000 shares were purchased back. The CHAIRMAN. Was that repurchased at the market? Mr. COVINGTON. I am confused somewhat, Senator Fletcher, because I saw the price of 184 in the testimony. Whether the price was 180 or 190 or 184, or somewhere in between, I could not testify, because I did not see the transaction completed. The CHAIRMAN. Do you know what the market was for the stock at that time? Mr. COVINGTON. I would have to look that up. I don't remember exactly what the market was then. It was higher than that. |