New-York tribune., 1901-08-02
" CORN KING" INFOL WE'D.
GEORGE II. PHILLIPS, THE CHICAGO
OPERATOR. TRANSFERS HIS BUSI-
NESS-DOESN'T KNOW If HE is
WORTH ANYTHING.
WORTH ANYTHING.
Lnr rELEGRArH TO THE rRIBrxE.l

IDY TELEGRAPH TO THE TRIBUNE.1
Chicago Aug 1.-Notice sent out by the
George H. Phillips Company this morning that
il had transferred its trad to McReynolds &
l.Co. This was a surprise to Board of Trade peo-
pie for although il had beea taken for granted
that Phillips had been out of step with the
market of late. there no idea his risks had
been large or his losses great. The notice was
satisfactory in regard The transfer to a
rich house meant the Board of Trade people
would make no loss. Phillips himself declared
he owed nothing to his bank and nothing to
the Board of Trade houses. Whatever he owes
is to customers.
There was a formal announcement that the
house was solvent. but in private conversation
Phillips and those interested with him said their
books were in such tangle they did not know
where they stood and had been compelled TO
stop in order TO find out. The experience is an
illustration of tn deceptveness of surface signs
in the matter of speculation The Phillips
Germ had been doing an enormous commission
business. earning at the rate of $4,000 a
month 1t had a capital only recently an
nounced as S2SI,G00 yet Phillips said to-
day: Il do not know whether l have anything
left or not. / thought l was rich man when
went to New-York a few weeks ago. but it is
possible now l have nothing"
Those conversant with the affairs of the firm
say customers owe it S347 900. money that prob
ably will never be collected. as result of fail
ure to call margins. Those who are Interested
in the May corn deal were overpaid to the ex-
tent of 100000 a result OF poor bookkeeping
Phillips had a talent for getting business, but
no talent for running the office end Of the busl-
ness and evidently he had one associated
with him to supply his lack. There We're TWEEN
ty-seven clerks employed in the Phillips ONCE
and yet Phillips. when he came PACK 10 New
York a fortnight ago, found his affairs were In
an inextricable tangle.
As the firms business kept increasing at
remarkable rate the machinery Of the house
was found inadequate and at midnight on July
81 IL 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 of this
action said It was absolutely the only course
open to him This does not mean we are quit
ting business" he said. "on the contrary we
shall execute all orders, but viii have TO ask
that usual margins accompany all orders until
our books checked over.
The following is the statement given out by
Mr.. Goodwin for Mr.. Phillips:
The company was in ,orpurated in November.
1900 with a capital Of $4,000. The business
grew sn rapidly that in the spring Of this year
the capital was increased to S2.DVpD. and with
f that increase came sun au0luOnai increase III
business that the office force was simply
/ overwhelmed. We have been doing the largest
commission business of any house in the world.
bCt il had recently come - the attention or the
firm that the records OF the transactions were
not being kept in the proper shape for such
deals. Ahont O week ago expert accountants
were put 10 work the books. / have gone
the legal end OF the firms affairs. and have
found 1t absolutely correct. The expert account
ants found that IL would he absolutely necessary
to make a new set OF books, dating from Janu-
airy l. 1900, ard checking off every item OF the
immense business. The errors were apparently
made without partality, credits being debited
and vice versa. But up to p. m. yesterday
after a weeks work. and after all errors had
been corrected up that time the books showed
the firm to be absolutely solvent. On my advice
they cut off. however. all Old business at mid
hight last night. the last day Of the month. and
. transferred all their open trades to McReynolds
and every trade Of the house is protected and
every trade made yesterday made at a
profit for the customers.
We sending out a circular asking all our
customers to send q statement of their
claims against the company, that may
have them audited and them in preparing
new set Of books. with the expectation that
unless something happens. 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 evidence what
ever OF criminal irregularity, but simply mis-
taxes due 10 the immense amount of business
handied with inadequate facilities for caring
therefor.
The announcement of the turn of affairs
caused scarcely ripple in the Board of Trade
{ markets. Corn eased about three-uuarters of a
cert, but soon regained the loss The wheat
market was only slightly affected, and oats fol-
lowed the course Of the corn market. About the
only excitement visible was the unusual scurry
cf settling 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 professional element
IL developed had sold short in the forenoon in
anticipation Of liquidation for the Phillips ac-
count This selling failed to materalze and
when shorts attempted to cover September shot
up from 1o& cents to JS cents. and closed at
that price
Brokers at the Produce Exchange yesterday mani
Tested interest in the report from Chicago that the
George H. Phillips Company in trouble II
was said that in the deal which eliminated
on May lG Phillips carried nearly l5 100000 bushels
FOR the pool he had formed The pool at one time
had q paper profit OF about 20 a 5ushel on
the deal but the attempt 10 sell out At the top price
broke the market and the pool realized only about
six cents a bushel. There said to bS about
two hundred members of the pool.
FIFTY-NINTH-ST "MAYOR" ACCTSFD