The Morris County chronicle. [volume] (Morristown, N.J.) 1877-1915, 1904-04-19
METHODS
In FINANCE
Some Illegal Transactions Are
Exposed by Thomas W.
Lawson.
HOW DEALS ARE ENGINEERED

IacI LnaL 1nanclefS undertook THESE
deals without entering into written
agreements, gave an illustration by
telling the inside history of the ia
nous Louisville and Nashville case in
which J. Pierpont Morgan and John
w. Gates were involved says a Bos-
ton dispatch to the Philadelphia Press.
Said Mr.. Lawson:
Mr.. Perkins, of ]. p. Morgan &
Co. went to the Waldorf hotel and
walked John Gates up at 8 o'clock in
the morning He demanded that Gates
should sell to J. 2. Morgan & Co. a
block of Louisville and Nashville stock
which he had just bought. This stock,
if he did not sell it, would have
brought about another crisis similar to
the Northern Pacific corner
'Gates agreed to sell it, provided
they would give him $10,000,00O more
than it had cost him about one week
before. This they were obliged to do,
and they did
Now, if that transaction had been
on the one side simply going to pay a
certain sum out of his pocket to Gates
on the other side, a record could have
been made and given to the public, and
it would not have interfered with the
carrying through of the transaction
But such was not the case.
"Gates was to get more than $10,000,-
- = IT,
because OF what / call a trick of
finance that this was possible. The
$10,000,O00 was not to come from Nor
gan's pocket, but from the public
through Morgan-that is. it was TO
come eventually from the public
through the Louisville and Nashville
railroad and its allied lines, which
were, in one form or another, to be
assessed for it,
Therefore, if the transaction had
been made public on the day following
the night trade, those who were to have
the $10,000,000 taken from them could
have gone to the courts, and the trans
action could have been stopped.
"This brings us to the starting point.
Can man take from others overnight
these enormous sums of money-legal-
"?
II say, If he can, that the men who
are involved in the transaction would
no more think of rislling their share of
the profits by taking the word of their
take the sellers word when he buys
his house for $4,000.
But if this profit comes illegally,
then, of course, those who are to have
it are compelled to make the transac-
ton one such as l have described,
without the scratch of a penp
"These transactions should not be
confounded with such as we have daily
on the Stock Exchange, where one mem
Der enters into contract with another,
in which large sums are involved,
without writing. The latter are en-
tirely different. There the parties have
the guarantee which their code gives
them the rules, the system of the
Stock Exchange. In other words, theiI
Stock Exchange is the equivalent of
the peoples courts of law, and the word
of a member party to contract is the
equivalent OF the writing of the PEG.
pie in their courts of law.
''But the transactions to which we
are referring are not intended by those
who are parties TO them to be subject
to the laws of court or Stock Exchange,
because-yes, because, and why not
say it2-they are illegal transactions.
"That is, ninety nine cases in a
hundred where the enormous profits
are left to the word of one or more
of those taking part in them are out
side of the law as it is on the statute
derstand it and have a right to I'M
derstand it,"
s'AIr Lawson said the interviewer,
"theh you have been associated in
transactions involving the illegal ac-
quirement of huge sums of money!
Il cannot help your inference" he
resumed "Of course, boiled down, it
means modern finance 1t means that
this is the way financial business is
done today, and that any man who is
doing financial business on a large
scale must find himself in the position
l am IN today. or else in what, to my
mind, seems a much worse one-lying
to the public"
Recurring to the specific instance in
which the famous $46,000,OO0 profit
was made, Mr.. Lawson said:
lit stands to reason that it is i'm
possible for set of men who are
entering upon transaction in which
they are going tomake SAG, 900, 900 profit
in very short time to put it on paper
in the old fashioned way. to make an
unalterable record of the transaction
as it is
Il mean that, as society and the law
are constituted, it is an absolute inn
possibility for a few men to make $46,-
100000 profit legally. That's the very
foundation of the question.
''Take the affairs l have mentioned.
More than $46,000,000 profit was made
without putting a single dollar in jeop-
ardy. 1t was made in very, very
short time and it represented between
one and one-half and three times the
a...n cdpitai employed in the trans
ac5ion.n
''And this $46,000000, Mr.. Lawson,
was made illegally?"
Il am not going to mince words"