The Topeka state journal. [volume] (Topeka, Kansas) 1892-1980, 1901-08-01
Business of ssCorn King" PHIL
lips SO Mixed Up
That He Has Been Compelled to
Shut Up Shop.
TRANSFERRED DEALS.
VIII Do No More Business Until
Books Are Strengthened Out.
Statement Issued Says Concern
Is Perfectly Solvent.

Chicago, Aug. Board of trade and
business circles generally were startled
today by the announcement that the
George H. Phillips company, which be-
came famous through its pool opera
tions in the Chicago corn pit during
the past year, had transferred all its
open trades to McReynOldS & Co 1t
was at first rumcred that a large de-
falcatiOn had been discovered in an ex
animation of the books, but this
proved untrue, having its only founda-
ton in the fact that one of the head
boOkkeeperS was confined to his home
by illness.
Lack of facilities for the proper cler
1cal needs of the concern, which had
acquired an enormous commission
trade was, according to a statement
given the Associated Press by Attorney
John S. Goodwin, who as a representa-
tive of the law firm of Black & Good
win, has taken charge of the com
pany'S affairs, the sole reason for tenn
porarily suSpending business. The
tangled condition of the books became
apparent some time ago when the
board of trade directors ruled that the
Phillips CON pany should furnish to
each member of the May corn pool a
detailed account of the entire transac-
ton. A large force was then put to
work on the books, and in their efforts
it became apparent that every trade
on the company's books since Novem-
Der, 1900 would have to be checked
over. entailing an enormous amount of
work
AS the firms business kept increas-
ing at a remarkable rate, the ma
chinery of the house was found mad
eQuate, and at midnight, on July 81, it
was decided to simply transfer all
trades and for the time being throw the
business of the house into other hands
until a complete new set of books shall
have been compiled. Mr. Phillips.
while regretting the necessity for this
action. said it was absolutely the only
course open to him.
This does not mean we are quitting
business" he said; ION the contrary we
shall execute all orders. but will have
to ask that usual margins accom- pany
all orders until our books are checked.
sociated Press by Attorney Goodwin for
Mr.: Phillips:
vember, 1900, with a capital Of $3.50 The
business grew so rapidly that in the
spring of this year the capital was in
creased to $3.50. CO., and with that increase
came still an additional increase in buSi-
overwhelmed We have been doing the
largest commission business of any house
in the world, but it had recently came to
the attention Of the firm that the records
of the transactions were not being kept
a week ago expert accountants were put
to work on the books have gone over
have found it absolutely correct. The ex-
pert accountants found that it would be
necessary
of books dating from January 1, 1900, and
checking every item of the business. The
errors were. apparently made without
partiality, credits being debited and vice
versa. But up to p m. yesterday, af-
ter a weeks work and after all errors
had been corrected up to that time, the
books showed the firm to be absolutely
solvent. On my advice they cut off, how
ever all old, business at midnight last
night-the last day of the month-and
transferred all their operations to Nc
Reynolds. and every trade of the house
day was made at a profit for the Gus
toners. We are sending out a circular
asking all our customers to send a
statement of their claims against the
company so that we may have them aud
tied and use them in preparing q new set
of books, with the expectation that un-
less something happens. which does not
seem probable, we shall take care of ev-
cry claim and proceed with the business
as heretofore. The accountant, SO far.
has found no evidence whatever of GRIM
inaI irregularities, but simply mistakes.
due to the immense amount of business
handled with inadequate facilities for
caring therefor"
The effect of the suspension was not ap-
parent in the noon market till near the
end of the session. The professional ele-
ment, it developed, was short during the
forenoon in manipulation of liquidation
for Phillips account This selling failed
to materialize and when shorts attempted
to cover September corn the market shot
from 553sc, the low point, to 5Sc. and
closed at that price, 23sQazc higher than