Guaranteed Indictments

New Yorkers were suddenly reminded one day last week that they once (1911-17) had a U. S. Senator named James A. O'Gorman. The kindly, white-bearded old gentleman spent a quarter hour before a grand jury, trying to stall off an indictment of the executive committee of defunct New York Title & Mortgage Co. for allegedly issuing false and deceptive statements in connection with the sale of guaranteed mortgages. Now 74, a trustee of New York University, Mr. O'Gorman emerged from the grand jury chamber with tears in his eyes. A little later he and ten of his fellow directors were formally charged with a misdemeanor on two counts.

The onetime Senator was in good company. Reporters did not have to dig in their morgues for paragraphs like these:

"William Averell Harriman, 42, son of the Railroad Builder Edward H. Harriman, director of 30 banking, railroad and steamship companies, noted polo player, now special assistant to General Hugh S. Johnson."

"John Stewart Baker, 40, chairman of the second oldest private bank in New-York, $502,000,000 Bank of the Manhattan Co. Like his father Stephen before him he was president of the bank at 34, and his great-grandfather helped Aaron Burr outwit Alexander Hamilton by chartering the bank as a water company in 1799. Mr. Baker's Manhattan Co. owned New York Title until December 1932 when it was divorced from the parent holding company. Mr. Baker is not related to George Fisher Baker Jr., also a well-known Wall Street banker."

Typical of the frauds alleged was an item listed among New York Title's assets at the end of 1932--$30,000,000 of mortgages "available for sale." Fact was said the prosecution, $12,000,000 of these mortgages were pledged for an RFC loan, and others "in amount unknown to the grand jurors" were in default as to taxes, hence not available for sale.

The indictment of Messrs. Baker, Harriman, O'Gorman et al. was the first wholesale action against any of the big Manhattan guaranteed mortgage companies since the Moreland Act investigation began (TIME, Feb. 5). While hundreds of old people who had lost their all in this type of investment took to the streets as pickets demanding action. District Attorney William Copeland Dodge lately dropped all his other duties to be free to prosecute the guaranteed mortgage cases.

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