New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1905-09-14
70 SHOW WASH SALES"
Dir. CROnWELL EXAMINED
Chance for Manipulation of Syndi-
cate Deals Shozcn.


voIvlng large suns. the credit of the New York
LIE had oeen employed. while half the profit
shared Sy the brokers. who took a half res ponsi-
baity in the transaction and the profit in return
f,- their assistance in marketing the various
stocks. The third, that there had been purchases
sgd sales OF stocks by the New-york Life on the
same day. in operations which Mr.. Hughes sought
10 show were wash sales" and the fourth. that
y the case Of the Mutual Life, the treasurer. Fred
s-ick Cromwell, had shared in syndicates in which
the Mutual Life also participator and that
mart Of the proceeds OF the purchases OF stocks
from the syndicate by the Mutual went his
profits on a pro rata basis Il also shown that
the Mutual Life had used the four trust companies
It controls in syndicate operations,
There was effort in developing this last fact
70 show that M. Cromwell mad ever abused his
office 10 make private gain, but Mr.. Hughes
dearly endesvoring 10 show that such operations
made possible rnanipuations Of a wide character,
Il case officials dishonest. An additional point
vss emphasized by Mr.. Hughes who characterized
certain purchases and sales Of stock by the New
York Life as making money by speculation in the
market.
Nj. Cromwell. who was the chief witness yester-
DAY, supplied an interesting document showing his
profits in certain syndlcates in which the Mutual
Life also party. Their total over five years.
however aggregated only $3.50 Mr.. Cromwell
showed conclusively that the syndicate operations
had been immensely profitable transactions for the
Mutual He said incidentally that the Mutual Life
the largest single stockholder in the Pennsyl-
vania Railroad Company.
Al the outset Of the hearing MT Hughes called
Frederick H shipnan. assistant treasurer OF the
New-York Life, to explain the transaction in To-
routo Hamilton and Buffalo bonds which had
been discussed at length the previous day The
records showed that bonds had been purchased at
81 ana several months later. by q system Of cross
entry that Mr. Hughes was endeavoring 10 make
appear wash sale" raised 10 g. that is. eight
points M. Hughes asked:
o-You acquired the bonds at s12 A.-Yes-
O-TEere
you proceeded 10 close out the account? A-No.
tesoo6 for the syndicate operation as If you had
disposed Of The stock. when as a matter OF fact,
!yv ~ ea4e profit? we credited It. yes
re b6h 2o ee yQ worth g Of in i fe sTfe
Q-yes. but you didn't sell them; the net result
was that you simply raised the price Of the bonds
and took profit not realized What are the bonds
go You DO this in other cases? Al don't
o@was there any particular object? Al don't
II this Toronto deal M shiprnan testified TO q
commission Of 1897 go paid 10 N Gibbs, the for
rner treasurer. but it was refunded later. no
point made Of this
JOINT ACCOUNT TRANSACTIONS
The next question discussed by MI Hughes was
that involving joint account transactions, which
II viii be recalled. were declared to be entirely
different from syndicates by Edmund D Randolph
treasurer OF the NeT-York Life, on TUESDAY. Inc
first Joint azcount considered was one involving
The New-York Life and Goldman. Sachs & Co.
were parties. The New-York Life. as Mr.. Ship
man testified, took the 100000 originally; then the
bankers took half OF II OF their hands. Nj Ship
man first explained the mysterious letters Il L
questioned yesterday as marking $4,000 tenn
norary loan required from Goldman. Sachs & Co
70 cover margins
That was repaidr' Mr.. Hughes asked
Yes"
Il ind two items here marked profit. and ag-
E-egating g T5 @ Does this that for this
sum the New-York Life took the responsibility Of
SOnOo0 for the benefit Of Goldman. Sachs & Coz
The transaction did not turn out as wei as we
expected Mr. shipman explained
NJ. Hughes then took up q second joint account
one involving the purchase and sale OF $4,000 Chi
cage and Northwestern bonds He inquired;
o-ca4 yen explain to ne M Mr. shiPWan Why the
Chicago and Southwestern. and on the same Gay,
for me same tgure so!d mem 70 the ssTa danf
know how 70 explain that as II happened SIX years
Q-Is il fair TO say that the New-York Life fur
niEhed the money with Whieh 20 9qy s96 t6en
divided the profits with the banker tor ms RaEtt
IN conducting the purchase ana SAFE! A--InA'
Q-Is il necessary for the Network Life in buy
q banker? At is necessary In some instances;
joint accounts have better IaclLlles TOT n1aAIs
quick purchases ana sales tnan the insurance coi4-
C-GTanted But why should the New-Yorks Life
put up al the money ana ger ol ny h 1a % oII7
Tor less man one-half OF the profits? Al don't
know Of course, wnat the idea was. 1 only know
thai was the way the joint accounts were con-
had t1-Se6 out TO be loss? Would the banker
EIand his half OF the loss? A--Oh. yes
Mr. Hughes then took up another similar trans
acton II Chicago. Burlington and Quincy tavoIv-
ing bonds OF s555 par value. The broker engag-
ing In the FONT account was ". s Fanshawe,
whose relations with J. P Morgan & Co Mr.
Hughes failed 10 show by testimony
o-Tbere seem 10 be LOT OF these joint accounts.
Is II safe 10 say thar they are all Ike the Chicago
A1G ' ssteTn Ney1t YORK life seek to make
money =. Speculation in the market! a. doT
know. I suppose il Is our duty 70 make al the
money for our stockhotders- I, - -
you distinguish between a joint account and
sy1clca-e2 Yes
Mr. shlpman said that he did not have a record
with hin Of these joint transact-ons and ne was
excused, with The request that he wonIa later
produce this
Edmund D Randolph. treasurer OF the New-York
LIFE, was -aer recalled. and read from the records
authorization Tor one Of these joint account trans
actious involving g. G50oo0 par value in Chicago
Burlington and Quincy bonds handled Win w .
Fenshag we & Co zIr. Randolph then agreed 20 pro
duce q statement Of the authorization Of al these
sl.bsa9tentIv entered into and this subject was
laid aside FOR the time. Before he LETT the SIaho
NJ r ndolph made a brieS declaration es TO MS
osn relations 10 various transactions
81 have never had any speculative interest OF any
kind IN any syndicate" he said. and never made
2 penny out OF the New-York LIE, directly or IN
directly. beyond my 50 airy"
THINKS sYNDICATEs NECESSARY
Frederic Cromwell. treasurer of the Mutual Life,
then took the stand and produced list showing
a. the syndicate transactions Of the company FOR
rhe last nve years He subsequently testified that
the joint account was unknown il the Mutual Be