Evening Star Newspaper, June 8, 1933, Page 4

SENATE APPROVES MOREAN TAX QU Yan Sweringen Brands Such Procedure as “Terrifically Destructive.” (Continued Prom First Page.) tice and the Internal Revenue Bu- eau to proceed as may be required.” | Erie common at $12,900.000. for a total | | paid to Vaness by the Alleghany of | | $22,413,952. as that paid directly?” “My record shows it direct.” | | On the same day, Van Sweringen also | sald, the Alleghany paid to O. P. and | | M. J. Van Sweringen $9,600,000 for 96,000 | | shares of Buffalo, Rochester & Pitts- | burgh common and $4,300,000 for 43.000 sheres Buffalo, Rochester & Pitsburgh preferred, or a total of $13,900,000. “Was that payment direct?” Van Sweringen testified that the value | of the securities the Alleghany Corpo- | ration issued coincident with its forma- | tion was $82.950,000. | Roughly, he said, this came through | the sale of $32.575.000 in bonds; $25.- | 000.000 in 515 per cent preferred stock; $375000 in non-detachable warrants and $25,000,000 from 1,250,000 shares of common. Gets New Morgan Loan. THE EVENING | ‘Cmmts, Va. Her father, during thet was improving steadily. | | residence in New Jersey, became a close “Let me mention monthly earnings friend of Walt Whitman and in later | for one of our roads not yet published.” years Mrs. Walker wrote a number of | articles : : i Van Sweringen then said business he said. “We estimated a net of | $1,400,000. I find that will be $2,000,000. I see that same thing all the way, through. Some of our roads are earning a little more than this time last year, I think. I see improvement all the way through. After his remark describing investiga- | tions as “terrifically destructive.” Van Sweringen listened intently as Fletcher said these investigations are showing that wealth rests on the soil and not | “on inflated stock values.” | “1 want to amend my statement about | the investigation,” Van Sweringen said. | “Perhaps, I shouldn’t have said what I did. I didn't mean investigations, but, of course, to investigate and to know is desirable, but through the press the public gets the idea that something is wrong. That drift is there. I realize STAR. W THUR Vi 1l a young woman Mrs. Wal- | ker came to Washington on a visit and she first obtained what she de- | F ); ul idea of the 50 that today I have the farmer Rev. Thomas D. Windiate| Said to Have Failed to Program to Aid Roads. DALE HEIGHTS, Md., June 8 ial).—I. W. Bucklin, Washington : o entertainer, will be featured in ReDort Accident. a vaudeville at the Riverdale Heights —_ — | frencuse Saturday night. The per- Thomas D. Windiate of Ken- | formance is being staged to raise road funds. | Rev. sington, Md., dean of the Northern Con- vocation of the Episcopal Diocese of Washington, today faced charges of AHA MAN WILL FACE EMBEZZLEMENT CHARGE By the Assoclated Press. WOBURN, Mass, June 8 —Allanson B Warren, 53, of Omaha, Neb., presi- dent of the McCord-Brady Wholesale Grocery Co. of that city, started back to Omaha yesterday to face charges of embegzling $8.000 from his company. Warren arraigned in District Court charged with being @ fugitive from justice, weived extradition pro- ceedings and agreed to return to the Nebraska city in company with L. C. Greene, a private detective who had trailed him here. The fugitive charge then was dismissed. Warren arrested in Winchester | yesterday while went | Samuel Lauphan, also of Omaha. The | to Winchester to confer with a zeal d been aroused | estate agent in regard to the purchase | suspicions of police ha by two private detectives and a reporter | of a house in company With ho were trailing Warren as h STIEFF SILVER You'll Save Mark of Distinction that all you are trying to do is to see and know and be helpful. | failing to report the accident in which r"We want, to prmewm the tecitence | Mrs Susan Hunter Walker, prominent of some of the things that have hap- e 3 e in bt paty ideator Adame | Awiculiure Doparcment edi Democrat, of Colorado, said. tally injured May 30. Mrs Van Sweringen nodded and said the who was 59, died Tuesday at Emerge; market values of today are not the true | Hospital. values, adding he felt market prices| A warrant for the clergyman’s arrest much too low in many instances. | was obtained late vesteraay from Jus- ‘Take the Missouri Pacific,” he sald.| tice of the Peace Alired Wilson at “We can do 30 per cent less business Bethesda by Corpl. G. A. Wollenburg Both of these agencies already are | 3 s i iy it | pauied (ORENON ENIAC PR Bt the “Morgan pariners paid any in- | tie Vaness Co. made from the sale of Some tax atter 1930 and that all 20 securities amounting to $22.413,000. Paid only $48,000 that year. And it was Vi werin; 5 hispered isclosed today the Justice Department e Buwrign, Afie 5 . MEpm Isclosed today e e ot some | conference with assoclates, said he Bf the evidence would have to furnish htat later The Senate also adopted today the Pecora commented that records Costigan resolution giving the commit- | showed that at the time of the seriec fec n additional appropriation of | of transactions, the Vaness Co. got over By Purchasing Your Silver Now As yvou know, prices are on the up grade and it will be but a very short time before our prices must go forward, so we urge you to buy WA SIEe, Z FOOT-JOY SHOES DOBBS HATS $100.000 to carr its investigation $36.000,000 in cash in addition to se- through to the next session of Congress and covering other private banks such as Kuhn Loeb & Co. and Dfllon Read Rail Set Up Explained. When the hearing opened O. P. Van Sweringen was called to the stand for the fourth day to explain the compli- cated set up he and associates used in gaining control of a 25000-mile rail system With the Senate voting the;extended power of the committee, it was de- Veloped from-Van Sweringen that over $13,000.000 represented the increased market value of 255000 shares of Chesapsake & Ohio stock on whieh the Van Sweringens secured tax exemption by creating a special transfer corpora- | gion. He had agreed yesterday that had an intermediate corporation not been formed the diffexence between the cost of the shares to the Vaness Co. and the price at which it'was put on Chesa- peake Corporation books would have been taxable To secure tax exemption the General Becurities Corporation was formed. Van Sweringdn said today the 255.000 shares cost the Vaness Co. $31,128.235. They were put on the Chesapeake books &t $174.75 a shaie or over $44,000,000. Taxable Stock Transferred. curities. | Some indebtedness of the Van Swerin- gcns was satisfied out of this, Van | Sweringen said. | He could not give the total amount owing, but said on February 15, 1929, | the Vaness Co. paid Morgan & Co. $2.,196,000 on a $27,500,000 loan made in 1927. A new loan of $10,194.277 was ob- tained from Morgan on the same day. Peccra placed the total investment on the Alleghany up to March 31, 1929, | at $139,004,000, asking, “Was it bought in the open 1iarket?” Van Sweringen said most of it was. The operator, who became & director of Missouri Pacific in May. 1930, was asked If between the end of March, 1929, | and May, 1930, the Alleghany Corpora- | l;‘nkhad acquired more Missouri Pacific stock. | “We did,” he said, adding that when | he became a director a majority of the | outstanding stock and about one-half | the debenture notes, valued at about $46,000,000 plus, had been obtained. Denies “Consolidation.” At times Morgan became more inter- | ested and leaned forward to hear. Most of the time, however, he sat back smoking. Pecora asked why the Alleghany Cor- poration -bought Missouri-Pacific stock. Van Sweringen repeated it was be- their gigantic railroad network. than we did in 1929 and under present conditions we will have a net capital | account equal to 1929. We have had | some losses, of course, that reflects itself | s in debt. but if we go on upward, as we | are going now, I'm confident that will | be taken care of and things will be all | right.” Tax Dodging Disclosed. The hearing yesterday moved on for a further development of the methods t - which the Van Sweringen brothers lly got around paying income taxes eral steps in the formaticn of The committee heard O. P. Van Sweringen, whose sudden recovery of memory yesterday enabled the investi- gators to learn how the brothers avoided showing a profit frcm the sale of & $44.000,000 block of stock Pecora wanted completed the story Van Sweringen had begun of the forma- tion of the Alleghany Corporation, which now controls the Van Sweringen | group of roads. J. P. Morgan and the other members of his firm squirmed impatiently in their chairs while Pecora led the rail- road operator through a maze of com- plicated transactions. Finally the counsel brought out testi- mony that a third corporation had been | used in the sale of a huge block of | | vided for the offense. | MacDonald, British prime minister, at- of the Maryland State police. The police reported that Rev. Win- diate, rector of Christ Church, Ken- ngton, failed to make a report after his car skidded on the Garrett Park hill and crashed into a pole, injuring Mrs. Walker. Maryland motorists are required by law to filé & written report with the commissioner of motor vehicles within 24 hours after any accident in which a person is injured. but police | said the first knowledge they had of the Cool . Fitting Fine Quality . LINEN | accident, was when Washington author- ities notified them of the death of Mrs. Walker. Penalties of from $25 to $100, in the discretion of the court, are pro- Rev. Windiate was summoned to ap- pear in Police Court at Rockville June 15 to answer the charges. Mrs. Walker, whose father operated 3 a school in_ Scotland which Ramsay Two-piece Tropical Worsted SUITS 18 tended as a boy, was to be buried late today after funeral services at the |’ Church of the Holy Comforter, Vienna, | Va. Her home here was at 900 Nine- teenth street. ‘ For 12 years Mrs. Walker edited the | DLally Digest, an Agriculture Depart- | ment publication, which is circulated | among agricultural officials, colleges and | experimental stations. Her work was 5o highly regarded by Secretary of Ag- riculture Wallace that he is said to have ordered the Digest to continue. SUITS 510 White Flannel and Striped Serge TROUSERS $7.00 Sidney West, Ine. now. Example of the Modest Cost of Stieff’s Silver In Plain “Betsy Patterson” or “Rose” Design ... $6.00 . 1200 12.00 7.50 6 Teaspoons 6 Knives, med. . Forks, med. Salad Forks . Cr. Soup Spoons 10.50 Butter Knife . 2.00 Child's Spoon .. 1.25 Olive Spoon . 1 Serving Spoon 3.50 Sugar Spoon ........ 150 Complete Price Lists Upon Request R.Haumis &. Co. | | Sweringen previously had agreed | cause of belief in the development of | Chesapeake & Ohio stock in 1927 to| u:;'m the sl:,gooo.gon alfttrence wonld the Southwest and to have diversity. | escape payment of income taxes. Was Native of Scotland. | Iave been takable except for creation | “For instance” he said, “The Mis-| At first the witness was vague as| A mative of Scotland, Mrs. Walker of the General Securities Corporation souri-Pacific carries a lot of oil and | to the reason for transferring the $44,- | came to the United States at an early to accomplish the transfer. Chesapeake & Ohio coal.” 000,000 block of stock from the Vaness| age with her parents, who first settled Pecora asked why Van Sweringen Pecora reminded him he had said | Corporation to the Chesapeake Cor-|in Ne associates subscribed to stock of me’mm was no thought of consolidating | poration through the General Secur- A hechany Corporation from Morgan & | the Missouri-Pacific and the Chess- | ities ration, but after bringing out Aeeatoad of acquiring it from the | Peake & Ohio or of & transcontinental | that the market price of the securities o e ot 2250000 shares which the |Tailroad system by acquiring the Mis- | at the time of the transfer was higher aness Co.. Van Sweringen holdmg‘wflfl-l’aclflc. and the witness assented. | than when they were acquired, Pecora company, held. ‘But in effect the acquisition of the | asked: He mentioned J. R. Nutt and C. L.|Missouri-Pacific consolidated its system | “That profit would have been a tax- | Bradley, Van Sweringen associates since | and your Eastern group, didn't it?” the | able profit, would it not, to the 1915, in this connectian. | counsel put in. i Vaness company?” The witness replied that he and his | No,” was Van Sweringen's return, “If there had been a profit it would | associates wanted the Vaness Co. to|8dding that he had resigned from have been taxable” the witness re- hoid the 2.250.000 % . | Eastern railroad directorships when he | plied. “It was the economical way of | “What was the 1 1 t':ngm:!g:ccmt chairman of the Missouri- hnndlin(dth‘h maiter lawfully from a t the\ Vaness Co. wi e Al- | 3 tax_standpoint.” “‘k:mn\ poration?” They argued back and forth, but Van | ~ “wasn't it because you would have Van \ringen sa‘:(d Am return c;‘:r 5;@3;:; t“e:l:ewp‘;r'fl::’yme two lfWPS‘hndn to pay 8 tax on the resultant| 2,250,001 shares lleghany Cor- | Wer> - | profit to the Vaness company by the ;‘;mon ane’ 1,725,000 of its option ‘But your associates remained as di- | direct exchange?” Pecora finally asked. | poration A\t the Vaness Co. gave |Tectors ‘and officials of the Eastern | = Yes” 440,386 shares) of Chesapeake (im'porkli | ;l;g:& Peroca said and Van Sweringen tion stock 100,000 shares of Nickel | 38reed. s gm,’ cm‘,‘,f,':j You don’t deny the Alleghany has| Later Van Sweringen said the Geneva Beora jearned. the 100,000 shares of | management control of the Eastern| Corporation was used for the same | Nickel Plate had been set up on Alle- | ETOUP through stock ownership?” Pe- | purpose in forming the Alleghany Cor- ghany Corporation books at $13,035,560 |.COT% lll:mi % poration in 1929, =z and 440,386 shares of Chesapeake Cor- t has the right to elect directors | Pecora then had questioned him poration at $34,748.495, for a 1 value | from its stock holdings as provided in about a $48,000,000 issue of bonds for of $47.754,055. corporate charters,” Van Sweringen re- | the Chesapeake Corporation through J. s the transfer direct to the Al- |Plied. ~“Management control comes| P. Morgan & Co. and the Guaranty leghany from" the Chesapeake Corpor- | {rom the directors. Co. in connection with the Chesa- ation or through a third corpomation?” Missouri-Pacific Control. peake holding concern in 1927. “It was throughi the Genersl Se- “Ypu don't deny you control the | He developed that under a cnllalenli curities Corporation.” Missouri-Pacific through your chair- agreement the Vaness company agreed “For the same reason of econtmy?” | manship?” to pay the bankers $240,000 if the “As I outlined it yesterday.” “That might be 50.” :;n’x: ‘were t.;onsummlud and $480,000 » ~ g - ‘was nof “The Principal Economy. .hfi‘?’wyw are president of the Alle-| ™ .y}, %aid the Vaness company make “And the principal economy Was |~ “Yes this agreement?” Pecora asked. “Did avoidance of the tax?” “Then you are established in the | the bankers ask for this agreement or “I can't go quite that|far.” tion of controlling policies or of | did Vaness offer it?" “How far can you go?” aving a strong influence on roads not| ‘It is & safe bet it was a conces- Van Swearingen read again his:| only in the West and Southwest, but | sion on our part” the witness replied statement of yesterday which said the | also in the East?” Further questioning developed that | General Securities Corporaion “Was & | “I can agree partly to that. At least | the collateral posted for the bonds was medium of exchange * * * 50 8 10T hope it's s0.” already partially pleged on a loan of 2vail of the income tax exemptions | Though it was- bought in ‘at 1929 | $33000,000 by the Morgan house to provided by Congress in corporate re- | prices, the operator said he doubted the Vaness company. organization.” “iwe paid more for the Missouri-Pacific | About $15.000,000 of that debt was “What other transactions did the |than it is worth; we were not blind | paid from the bond issue, the testi- Naness Corporation have at about the | to the fact that the Missouri-Pacific | mony showed. time the Alleghany was formed?” Pe- | had a top-heavy financial structure. “So the ent Vaness company.” ‘eora asked. “We intended to cure that. We in- | Pecora remarked, “took care of its Van Sweringen said that February |tended to transfer more dollars to the | child, the Chesapeake Corporation, by 5, 1929, the Alleghany bought from the | stock side and reduce the dollar on the | transferring to it a part of the in- Yaness Co., for cash, the following debt side.” debtedness which the loving father | shares Chairman Fletcher, who came in|owed Morgan & Co.?” Fifty-one thousand seven hundred!during the discussion, referred to the| “Yes, sir, it did have that effect,” pnd fourteen of Chesapeake Corporation | “more than $45,000,000,000 drop in | Van Sweringen replied. common at $4.019,747. value of securities” during the de-| Early testimony yesterday revealed Twenty-six thousand one hundred of | pression. that the Van Sweringen brothers had Chesapeake & Ohio common at 85| “Yes, Van Sweringen said, “we had | founded their gigantic rail empire on a to sell, some things we did not want | ".sh:eutrtng" start of only $1,000,000 to sell.” cas| F St.at 11th Phone DlIstrict 0916 Jewelers and Diamond Merchants for Over Half a Century 14th & G Sts. 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