Trader & Trial

Two names that were once big in two big cities made news last week as the result of Federal proceedings against them. In Manhattan the lawyers of elderly Joseph Wright Harriman were doing their utmost before a judge and jury to keep their client from going to jail on a charge of misapplying some $2,000,000 of his defunct Harriman National Bank & Trust Co. In Chicago the lawyers of wiry, lean-lipped Arthur William Cutten were doing their utmost before a Federal referee to keep their client from being barred from the Chicago grain pit and all other U. S. contract markets.

Trader Cutten was charged with misreporting or failing to report his long and short positions in excess of 500,000 bu. under the Grain Futures Act (TIME, April 23). He did not attend his own hearing in the walnut-paneled, air-conditioned courtroom in the Federal Appraisers' Stores building. But a band of Texas farmers trooped in when the hearings began fortnight ago to see if they could find out "what becomes of our wheat and why we got 25-c- a bushel." They heard that: 1) Trader Cutten had been 11,000,000 bu. short of wheat in one day in 1926; 2) although the Government was not prepared to say Trader Cutten's activities had depressed the market, still when Trader Cutten had gone short 7,000,000 bu. in June 1930, wheat dropped from $1.03 to 92-c- per bu.; 3) Trader Cutten operated 34 accounts in eight brokerage houses through the familiar device of numbers and symbols such as "No. 7," "Mrs. No. 7" (his wife). "E. M. L." (his sister), "R. J. C." (his brother). On the transactions in these dummy accounts, charged the Government, he had on 319 days given inadequate reports.

Mr. Cutten's lawyers steadfastly maintained that every time one of his accounts ran over 500,000 bu. it was duly reported. He and his lawyers had not interpreted the Act to mean that he must add all his little accounts together and report them if they totaled more than 500,000 bu. But that was the Government's interpretation. When the hearings were concluded last week the testimony was forwarded to the Grain Futures Administration in Washington for hearings in October.

In his Manhattan trial Defendant Harriman was quoted as saying to his subordinates in 1932: "I'll stand behind everything I told you boys to do."

What the "boys'' had done was neatly and conveniently marked by a red envelope in the bottom of a filing case. In and out of this envelope during 1929-32, according to Government evidence, had passed some $5,000,000 which the bank's officers had used to peg the price of Harriman National's stock.

Of this $1,713,000 had been illegally borrowed from 14 depositors in 1931 and 1932, said the Government. Harriman counsel maintained in court that the false entries by which these unauthorized borrowings were concealed had been "curious and stupid" mistakes committed by Mr. Harriman's underlings without his knowledge, "like a college prank played upon a teacher."

The courtroom perked up last week when Constance Talmadge and Peggy Hopkins Joyce took the stand as Government witnesses. They were among the 14 depositors from whom the bank had allegedly appropriated money. Constance Talmadge Netcher, now the wife of a Chicago department store owner, arrived in black & white, her face deeply tanned, her mouth crimson with lipstick. It took her seven minutes to declare that she had authorized no borrowings for the purchase of bank stock, had known nothing about the transactions until a Government agent called upon her. The judge smiled indulgently, the jury gossiped in whispers as she stepped from the stand. Defendant Harriman pretended to be asleep. Blue-eyed Peggy Hopkins Joyce, four times married, arrived with a maid and her lawyer. A society editor noted ecstatically that her eyelashes were tinted with blue cosmetic. Her testimony, substantially the same as Miss Talmadge's, delivered in an amiable socialite voice, lasted four minutes. Mr. Harriman managed to keep awake.

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