The Penn's Grove record., 1919-09-05

company. All this stock, however,
was held subject to an option permit
ting the German company to acquire
it at par, and there was an oral undef-
standing that no dividends exceeding
6 per cent should be paid. The bal
ance of the profits, which were con-
siderable, was distributed according
to an arbitrary scale arrangement ny
Mr.. Kuttroff from time to tlme
among the chief officers Of the com
pany. The company was dissolved IN
1917 and a new corporation organized
under the name of Kuttroff q PICK
hardt Qnc.), which %ostensibly TOOK
over only the physical stock IN trace
of the old company and its officers;
The stock of this new company is neld
substantially in the same proportions
by the same persons who held the
stock of the Badische Co. of New
York.
1t will thus be seen that the obsten-
sible stock ownership of this agency
remained unchanged from 1909 until
after our entrance into the war. IL
has thus been so arranged thaG no
change was necessary IN order 70
avoid the Sherman-law suits, nor IN
order to escape the attentions OF the
Alien Property Custodian on causal
examinations Of the books. lndeea,
the true facts were only ascertalned
after a most elaborate analysis OF the
books by highly skilled accountants
and of the available correspondence
and intercepted cables by trained law
yers. Suspicion of the company was
prevalent, but the first definite evl-
| dence was derived from correspon-
dence obtained by the British authorl-
ties, which demonstrated that the New
York company had been in the habit
of asking for the decision OF the Ger
man house on even such intimate
questions of domestic policy as the IN
crease or decrease of minor salaries
of the staff. This correspondence IN
dicated a degree of control far beyond
that which was attributable to the
mere power to stop supplies. 1t was
then ascertained by the accountants
that the original $4,000 paid into the
Treasury of the company for the first
issue of S25, 900 of stock came out OF
the moneys of the German house IN
the Continental Co. at the time OF the
liquidation of the latter concern. An
intricate analysis also showed that at
a time when the original capital stock
of the New York Badische Co. was de-
creased the sums paid out went not to
the ostensible stockholders but to the
German house. Finally it appeared
that on three separate classes OF tran
sactions large sums out Of the earn
ings of the New York house were
transmitted to the German house when
there was no possible obligation to do
so, and this was done by the personal
direction of MI. Kuttroff without con-
sultation with the directors or stock
holders. For example: During the
years of 1915 and 1916 the sum of
SOL, 944.3 was credited on the books
of the German house and subsequently
RENTED under the head of indian
threne royalties. The company had
been selling for the German house for
years its high-grade indanthrene dyes
which it received from the German
house at fixed prices which did not in
clude the sums described is royalties.
AS the goods were manufactured in
Germany and nothing was done to
them here, no royalty, properly speak
ing, could possibly be due. If any
was payable, it must have been mere
ly as an enhancement of the price.
There was no understanding between
the companies to any such effect.
Obviously, then, if the companies
had been really Independent, the pres
ident of the New York concern would
never have dared to deprive his own
stockholders of any such sum without
legal obligation and without even con-
sulting them beforehand. In like
manner, in 1914, the sum of $477,100
was credited and RENTED ostenslbly
as a return of advances made years
before by the German house for ex-
penses of the New York concern.
Here, again, there was no previous
understanding or present authorize
ton requiring or permitting anything
of the kind. At the time the alleged
advances were made by the German
house the New York company was OPP
Grating merely as an agency on com
mission. There was no conceivable
reason why a part of the agency's eX-
penses should not have been met by
the principal in the usual way. Yet,
dSdlH, MlI1lOuO NOllSOlCliiS olyOiSt 49,
Kuttroff caused these large sums to
be taken out of the hands of the os-
tensible stockholders and put in those
of the real owners of the company.
Finally, in the case of the goods re-
ceived by the submarine Deutschland,
the same process was carried on.
These goods when originally received
were entered on the books like all
other shipments of the German house
on a sales basis; that is to say, they
were treated as the property Of the
New York house and the German
house was credited with the price, ap-
proximately 100000. Settlements
with the custom-house appear to have
been made on this basis. Some months
afterward a profit of about 100000
had been realized. The book entries
were then reversed so as to bring the
transaction to a consignment basis in
which the German house would be en-
titled to all these profits except a com
mission. This change was made by
Mr.. Kuttroff without the authority of
the stockholders or directors, and &C
cordinolv a sum nearly $4,000 was