Senator JOHNSON. It credited him with some four hun some odd thousands of dollars, and you paid out that four and some odd thousands of dollars upon either his perso or his personal request?

Mr. BRECK. Correct.

Senator JOHNSON. The account I assume is closed to-da is, there is no credit due him to-day, is there?

Mr. BRECK. I think not.

Senator JOHNSON. Tell me the names of the other prom were engaged in obtaining this loan.

Mr. BRECK. Mr. Harold Bolster

Senator JOHNSON. Who is Harold Bolster?

Mr. BRECK. Harold Bolster is now dead. He was the i who went to Peru in the first instance and interested F. & Co. in Peruvian financing. He met Juan Leguia down it was through Mr. Bolster that Mr. Juan Leguia came financing.

Senator JOHNSON. Who else?

Mr. BRECK. S. A. Maginnis.

Senator JOHNSON. And he, you say, is in

Mr. BRECK. A lawyer in New York, I believe.

(Letter received from Mr. Frederick Strauss, J. & W. & Co.:)

Hon. REED SMOOT,

Chairman of Committee on Finance,

NEW YORK, January

United States Senate, Washington D. C. MY DEAR SENATOR: There is one thing I should like to mentio that is to correct an implication which might possibly be draw testimony of Mr. Breck on page 868 of the transcript, that Mr. S. was ever a member of the original group of promoters through Lisman & Co. came in contact with the Peru business. Mr. M not associated with them in any way but was, as Mr. Breck state page 859 of the transcript, our own representative whom we sent to in 1927 to negotiate with the President of Peru the details of t tobacco loan, the general outlines of which had already been agreed interchange of cables between ourselves and F. J. Lisman & President of Peru. The terms of Mr. Maginnis's employment by u that his compensation was dependent upon the successful consumm negotiations in which he was our representative; that is, he was commission if we succeeded, as a result of his negotiations, in co the business. He was not, however, in any way associated with group of promoters, whose relation to the Peru business through & Co. is set forth elsewhere in our testimony. Will you kindly ha going read into the record?

Yours sincerely,

Senator JOHNSON. Who else?

Mr. BRECK. Mr. Salt.

Senator JOHNSON. What is his first name?

Mr. BRECK. T. V. Salt.

Senator JOHNSON. Anybody else?

Mr. BRECK. No.

Senator JOHNSON. No others?

Mr. BRECK. No.

FREDERICK

Senator JOHNSON. Have you accounts on your books Bolster, Mr. Maginnis, and Mr. Salt in relation to these lo

d and ndred check

That

rs who

lividual Lisman ere, and into the

Seligman

12, 1932.

now, and from the Maginnis whom F. J. ginnis was earlier on Lima arly he so-called

upon 'n an Co. and the were such ation of the

to be paid a nsummating the original F. J. Lisman ve the fore

K STRAUSS.

Is with Mr.

loans?

Senator JONES. Will you have him state who Mr. Salt is?
Senator JOHNSON. Who is Mr. Salt?

Mr. BRECK. He was an employee of F. J. Lisman & Co. who went to Peru after Mr. Bolster first went and made the arrangement with Mr. Juan Leguia to give Mr. Juan Leguia a commission.

Senator JOHNSON. Was this commission all to Mr. Juan Leguia that was to be paid?

Mr. BRECK. No; it was to be paid in various amounts to the names I have given you.

Senator JOHNSON. How much did you pay Mr. Salt?

Mr. BRECK. $10,000.

Senator JOHNSON. How much did you pay Mr. Bolster?
Mr. BRECK. $67,373.

Senator JOHNSON. How much did you pay Mr. Maginnis?

Mr. BRECK. $40,000.

Senator JOHNSON. And Mr. Juan Leguia-let us get his amount accurately, please.

Mr. STAHL. $415,000.

Senator JOHNSON. That was the syndicate, then, of promoters who obtained the loan for you and to whom you were obligated to pay this commission, is it?

Mr. BRECK. Correct.

Senator JOHNSON. Do you know why it was that you paid Mr. Juan Leguia $415,000 against about $100,000 to the other members? Mr. BRECK. That was the arrangement inter se.

Senator JOHNSON. Among themselves?

Mr. BRECK. Yes.

Senator JOHNSON. Was that arrangement made in writing?
Mr. BRECK. Not that I know of.

Senator JOHNSON. Did you ever investigate to ascertain?

Mr. BRECK. We accepted the word of our associates in the business that that was the arrangement.

Senator JOHNSON. There was no investigation at all?

Mr. BRECK. All the members of the group of promoters were agreed that that was the arrangement. Nobody thought otherwise.

Senator JOHNSON. Mr. Juan Leguia you have described as a gentleman who was able to live at the rate of $250,000 or $300,000 a year, and he evidently was having a very delightful time upon that; but upon what theory were you entering into a contract with Juan Leguia, living as he did and knowing what sort he was, the son of the President of the Republic

Mr. BRECK. We entered into no contract with him.

Senator JOHNSON. Evidently you did, because you paid him $415,000. I am not speaking now of a written contract.

Mr. BRECK. Senator, all I mean is that he was a member of the group of promoters who were entitled to a commission approximating one-half of one point on the business which was done. That arrangement was not made with us; it was made with the group of promoters themselves.

Senator JOHNSON. But carried out and paid by you?

Mr. BRECK. Yes; it was paid by us, because the business was charged with that commission when we took it.

Senator JOHNSON. And you knew it before you consumm business?

Mr. BRECK. Correct.

Senator JOHNSON. Let me suggest to you, if I may, with invidious intent at all, that as shrewd, sharp New York ban knew just what you were doing when you paid Juan Leguia did you not?

Mr. BRECK. When we paid him that amount?

Senator JOHNSON. You knew just what you were paying it you not?

Mr. BRECK. I do not exactly understand you, Senator. Senator JOHNSON. You knew that you were paying the s President of Peru that amount to get these loans, did you n Mr. BRECK. We were paying it to this group of promo brought the business to us.

Senator JOHNSON. The rest of the promoters did not a much, as far as getting the loan was concerned. It was Jua who was the big man in getting it, was it not?

Mr. BRECK. I wouldn't say so.

Senator JOHNSON. Of course. So you paid Juan Leguia $ the son of the President of Peru-to get loans from the Go of Peru. Is not that the fact?

Mr. BRECK. No, Senator. I do not think you state it cor Senator JOHNSON. All right. You state it your way. Mr. BRECK. A group of promoters originated a piece of brought it to a New York banking house who brought it to were without knowledge of the group which constituted moters until we were embarked on the negotiations. learned that Mr. Juan Leguia was a member of the group w for that reason discontinue the negotiations. We went thr completed it, having all our dealings with the President himself. We had practically no dealings with Juan Legu time. He was simply, as far as we were concerned, an outs ber of the group of promoters. When the transaction was and the bonds sold we paid out of our own profits to the promoters the sums of money we have already told you.

Mr. JOHNSON. May I ask, Mr. Chairman, if all of the were sworn this morning?

The CHAIRMAN. No; just Mr. Strauss.

Senator JOHNSON. You were not sworn, were you, Mr. I Mr. BRECK. No; but I should be glad to make any of mony under oath.

Senator JOHNSON. I ask it merely because it has been don of the witnesses. I ask that the oath be administered a these other two gentlemen.

The CHAIRMAN. That is perfectly satisfactory to me. Mr. Strauss was the witness.

Senator JOHNSON. The suggestion was made to me. T reason I make it, Mr. Chairman.

(Henry C. Breck and Lionel Stahl, of J. & W. Seligm 54 Wall Street, New York City, were duly sworn by the c Senator JOHNSON. Now, Mr. Breck, you say you had not with Juan Leguia after you began negotiations with the Mr. BRECK. That is correct.

I thought

hat is the han & Co., chairman.) thing to do President?

Senator JOHNSON. Who carried on the negotiations with the President?

Mr. BRECK. Mr. Maginnis, on the tobacco loan, and the various individuals we have named to you, including myself, in connection with other loans.

Senator JOHNSON. Did you carry on in connection with a portion of these loans the negotiations? Did you, personally, with the President of Peru?

Mr. BRECK. I did.

Senator JOHNSON. For how long a period were you engaged in carrying on those negotiations?

Mr. BRECK. We were negotiating at one time or another with the Republic of Peru almost constantly, from the latter part of 1926 until the present time practically.

Senator JOHNSON. For how long a period in 1927 and 1928 were you personally negotiating with the President of Peru?

Mr. BRECK. Four months in 1928 and four months in 1929.

Senator JOHNSON. Did you on any occasion speak to the President of Peru concerning the sums that you were paying to his son? Mr. BRECK. I did not.

Senator JOHNSON. Why?

Mr. BRECK. I was not asked.

Senator JOHNSON. Is that the only reason you can suggest-that you were not asked?

Mr. BRECK. I was not asked and it had nothing to do with the negotiations.

Senator JOHNSON. You told me that you were negotiating for some months in each year with the President of Peru with respect to these loans.

Mr. BRECK. Yes; but the amounts that were paid to a group of promoters had no relation to the negotiations which were being carried on as to the terms of the loan.

Senator JOHNSON. You say it had no relation to it. If you had not got the loans, you would not have paid the sums, would you? Mr. BRECK. That is correct.

Senator JOHNSON. All right. You were negotiating these loans, knowing that you had to pay to the son of the President of Peru something over $400,000 if you got them, and you never mentioned a word to the President of Peru concerning them? Mr. BRECK. Correct.

Senator JOHNSON. Why, I ask you again?

Mr. BRECK. There was no reason to mention it.

Senator JOHNSON. No reason to mention it. Is there nothing that suggests itself to you in relation to a loan you are getting from a republic, concerning which you are paying the son of the president of the republic substantially half a million dollars?

Mr. BRECK. We did not look at it in that way, Senator. We did not look upon this business as being obtained because the son of the president received a certain amount of money. The son of the president was a member of a group of promoters to whom we were obligated to pay money before we went into the business.

Senator JOHNSON. Did you know, when you began your negotiations, that you were obligated to pay this group of promoters, as you term them, this sum of money? Did you know

Mr. BRECK. Not in detail, Senator.

Senator JOHNSON. Did you know the proportion in which you were to pay them?

Mr. BRECK. We did not.

Senator JOHNSON. How did you charge the amount, in the first instance, upon your books?

Mr. BRECK. By the time the loan was completed the details of each person's commission were agreed upon.

Senator JOHNSON. Agreed upon by them.

Mr. BRECK. By them.

Senator JOHNSON. And accepted by you.

Mr. BRECK. Accepted by us.

Senator JOHNSON. Then there must have been an agreement as to percentage originally made, was there not?

Mr. BRECK. An approximate agreement.

Senator JOHNSON. And that approximate agreement as to percentage was what?

Mr. BRECK. We thought it was approximately one-half of 1 per cent on all the bonds. As it turned out, the claims of the various promoters were such that there was more than one-half of 1 per cent in that $15,000,000 tobacco loan, which we finally paid them.

Senator JOHNSON. Did you have any dispute or controversy respecting that?

Mr. BRECK. We thought it was too much.

Senator JOHNSON. You thought it was too much. Why?

Mr. BRECK. Because it is more than the customary, or considerably more than the customary amount. A half of 1 per cent is a fairly high commission to pay for originating business of this kind.

Senator JOHNSON. Is it customary or usual to pay the son of the president of a republic one-half of 1 per cent for a loan?

Mr. BRECK. I think not.

Senator JOHNSON. Did you have any controversy in writing in respect to the particular matter?

Mr. BRECK. No.

Senator JOHNSON. Did you have any communications, or any sort of writing that passed between you and any one of these gentlemen, Bolster, Maginnis, or Salt?

Mr. BRECK. I think not. It was all verbal.

Senator JOHNSON. Were there any letters or communications that passed between you and Juan Leguia in reference to the payment? Mr. BRFCK. No.

Senator JOHNSON. Is the mere payment of five or six hundred thousand dollars, as the case might be, in a matter of this sort, one which you usually conduct without any writing whatsoever?

Mr. BRECK. Frequently commissions are paid upon the receipt of the individual receiving them.

Senator JOHNSON. And without the slightest evidence of a contract in writing between you?

Mr. BRECK. I think that is done.

Senator JOHNSON. It may be. I am not disputing you, but I am asking you, that is all. You think it may be done?

Mr. BRECK. Yes.

Senator JOHNSON. All right. Have you an account on your books with Mr. Bolster?