The Indianapolis journal. [volume] (Indianapolis [Ind.]) 1867-1904, 1901-08-02
No Criminal Irregularities FOund in
the Books, but Numerous Mis-
takes Discovered.
STATEMENT OF AN ATTORNEY
EVERY TRADE MADE BY MIR. PHIL
LIPS FULLY PROTECTED.
Now at Work Attempting
to UnraveI the Tangle-Cus-
toners Asked to Assist.

CHICAGO, Aug. board of Trade and
business circles generally were startled to
day by the announcement that the George
A. Phillips Company. which became famous
in the pool operations in the Chicago corn
pit during the past year, had transferred
all its open trades to McReynolds & Co.
1t was at first lumored that a large de-
falcation had been discovered in an exami-
nation of the books, but this proved untrue,
having its only foundation in the fact that
one of the head bookkeepers was confined
TO his home by illness
Lack of facilities for the proper clerical
needs Of the concern, which had acquired
an enormous commission trade was, ac-
cording to a statement given by Attorney
John ). Goodwin, who, as a representative
of the law firm of Black & Goodwin, has
taken charge of the companys affairs the
sole reason for temporarily suspending
business. The tangled condition of the
books became apparent some time ago,
when the Board of Trade directors ruled
that the Phillips Company should furnish
to each member of the May corn pool de-
tailed account of the entire transaction.
large force was then put to work on the
books and, in their efforts to disentagle the
multitudinous trades, it became apparent
that every trade on the company's books
since November, 1900, would have to be
checked over, entailing an enormous
amount of work. AS the firms business
kept increasing at a remarkable rate, the
machinery of the house was found made
quate, and at midnight on July 81 it was de-
cided TO simply transfer all trades, and,
for the time being, throw the business of
the house into other hands until a COM
plete new set of books shall have been COM
piled.
Mr.. Phillips. while regretting the neces-
slty or this action, said IL was absolutely
the only course open to him. 'This does
not mean we are quitting business" he
said "On the contrary, we shall execute
all orders, but will have to ask that the
usual margins accompany all orders until
our books are checked over.
Following. is a statement given by Attor-
ney Goodwin for Mr.. Philhps 1.-The COM
pany was incorporated in November, 1900,
with capital of $4,000. The business grew
so SO rapidly that, IN the spring OF 1T tins year;
the capital was increased 10 S250,0O0, and
with that increase came still additional
increase in business so that the office force
simply overwhelmed. We have been
doing the largest commission business of
any house in the world, but il had recently
come to the attention of the firm that the
records of the transactions were not being
kept in the proper shape for such deals.
About week ago expert accountants were
put to work on the books. L have gone over
the legal end of the firms affairs and have
found it absolutely correct The expert
accountants found that il would be abso-
lutely necessary to make a new set of
books, dating from Jan. l, 1900 and check
ing every item of the immense business
The errors were, apparently, made without
partiality, credits being debited. and vice
versa. But, up to y. m. yesterday, after
q 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 the firm cut off, however.
all old business at midnight last night-the
last day OF the month, and transferred all
its open trades to McReynolds; and every
trade of the house is proteced, and every
trade made yesterday was made at a profit
for the customers. We are sending out a
circular asking all our customers to send
us statement of their claims against the
company, so that we may have them audit
ed and use them in preparing a new set of
books with the expectation that unless
something happens, which does not seem
probable. we shall take care of every claim
fore. The accountant so far has found no
evidence whatever of criminal irregularitv
but simply mistakes due to the Immense
amount of business handled with made
quate facilities for caring therefor"
The effect of the suspension was not an
parent in the Board of Trade corn market
till near the end of the session. The pro-
feSSonal element, it developed. had sold
short during the forenoon. IN anticipation
of liquidation for the Phillips account This
selling failed TO nsaterialiZe, and when
shorts attempted to cover September corn
the market shot from 553sc, the low point
to 5Sc, and closed at that price, 23sn21ac
higher than yesterdays close.