The Saint Paul globe. (St. Paul, Minn.) 1896-1905, 1901-08-02
PHILLIPS SUSPENDS
CAGO FINDS HIMSELF IN
DEEP WATER
HIS ACCOUNTS BADLY TANGLED
Impossible to Ascertain His Exact
Financial Condition Without
Much OYerhaUIiHS of Books
Bulge I'm Corn

CHICAGO, Aug. Board of trade and
| business circles generally were startled
today by the announcement that the
| George H. Phillips firm which became
famous through its pool operations in the
| Chicago corn pit during the past year,
! had transferred all it's open trades TO
McReynolds d Co. 1t was at first
rumored that a large defalcation had
| been discovered in an examination of
the books, but this proved untrue, having
it's 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 the Asso-
ciated Press by Attorney John S. Good
win, who is a representative of the law
firm of Black & Goodwin, has taken
charge of the company's affairs, was 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 refuse
to each man of the corn pool detailed
account of the whole transaction
large force was then put to work upon
the books IN their efforts to audit the
books, the enormous amount of trade
made it impossible to get every trade on
the books, entai.ing an enormous amount
OF work As the firms business kept in
creasing at a remarkable rate, the ma
cninery of the house was found made
quate and, at midnight on July 81 it
was decided to simply transfer all trades
and for the time being throw the bust
ness of the house into other hands, until
a complete new set of books shall have
been compiled. Mr.. Phillips, while re-
GREETING the necessity of this action, said
it was absolutely the only course open
to MIN. This does not mean we are quit
ting business he said. ION the con-
trary, we shall execute all orders, but
will have to ask that usual margins &C
company all orders until our books are
checked over"
Following is a statement given the As
ISOLATED Press by A. -orney Goodwin for
Mr. Phillips: 1.-The company was in
corToi ated in November, 1900, with a
capital of $4,000 The business grew so
rapidly that, in the spring of this year,
the capital was increased to $3.50, 900 and
with that increase, came still additional
increase in business, so that the office
force was simply overwhelmed. We have
been doing the largest commission bust
ness Of any house in the world, but it
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 a 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 account
ants found that it would be absolutely
necessary to make a new set of books
dating from Jan. l, 1909, and checking
every item of the immense business.
The errors were, appare ntly, made with
out partially, the credits being debited
terday after 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, however, all old business at mid
night last night-tne last day of the
month-and transferred all their open
trades to McReyno-ds; and, every trade
of the house is protected and every
trade made yesterday was made at a
profit for the customers. We are sending
out a circular aaking all our customers
to send US a statement of their claims
against the company so that we may
have them audited and use them in pre-
pairing a. new set of books, with the ex-
peCtation that unless something hap
pened, which. does not seem probable,
we shall take care of every claim and
proceed with the business as heretofore.
The accountant, so far, has found no evil
dence, whatever, of criminal irregulari-
ties, but, simply mistakes due 70 the
immense amount of business handed
with inadequate facilities for caring
therefor"
The announcement of the above turn
of affairs caused scarcely a ripple on the
board of trade markets. Corn eased
about &C. but soon regained the loss.
The wheat market was but slightly af-
fected and oats followed the course of
the corn market.
About the only excitement visible was
the unusual scurry of clerks, hurrying
about checking up open trades
The after effect of the suspension was
not apparent in the corn market until
near the end of the session. The profess
sional element it developd had solo
short during the forenoon in anticipation
of liquidation of the Phillips account
This selling failed to materialize and
when shorts attempted to cover Sep
| TENDER shot up from 5S3s to 5Sc and closed
at that price.