The New York herald. [volume] (New York, N.Y.) 1920-1924, 1920-10-30
FanshaWe DisclOses Letter
Shedding Light on $2,013,-
500 City Bond Purchase.
WRITTEN BY WENDELL
latter Quoted Comptroller
as Denying Moral Obliga-
ton in Transaction.
BROKER HAD $4,000 LOSS
Grand Jury Held Over to Take
Action on Results Of
Investigation.
WRITTEN BY WENDELL
BROKER HAD $4,000 LOSS

The John Doe inquiry into the way
State Comptroller Eugene NJ Travis
bought bonds for the State sinking
fund took new turn yesterday when
William s. Fanshawe of the brokerage
firm of William S. Fanshawe & Co.,
after volunteering to resume the stand,
disclosed the existence of important
letters throwing light on the mys-
terious moral obligation" purchase of
$2,013,500 worth of New York city
bonds at several points above the mar
ket rate.
At the same time Moses r. Rytten-
berg, Assistant District Attorney, OBJ
tanned the consent of Judge John F.
Mcintyre of General Sessions to hold
for another month the additional
Grand Jury that had just completed
its investigation of motor vehicle
traffic conditions in the city, on the
ground that matters of great impor-
tance to the people of the State Of
New York will be brought before it"
Mr. Ryttenberg explained that the No
vember grand juries, which are to be
sworn in on Monday, may be called on to
consider much of the testimony revealed
by Senator Lockwoods housing investi-
cation committee. and consequently the
additional jury will be needed for time
To newspaper men Mr. Ryttenberg said
he had the bond deals investigation In
mind when he made his request.
Evidence I'm n Letter.
Fanshawe's newly discovered evidence
was letter to him dated October %,
1917, from James A. Wendell, Deputy
state Comptroller, which was shown to
Ferdinand Pecora, Assistant District At
torney. who is conducting the inquiry.
for the first time just before the days
session opened From this letter 1t APP
peared that month before the sale final
ly was accomplished on November 10,
1917. after almost a year of dickering,
Wendell quoted Mr.. Travis as denying
his obligation to accept the bonds at any
time although Mr.. Travis, when on the
stand. asserted he was obliged both
morally and legally to accept the bonds
at stated price, even though the mar
ket rate had declined.
startling feature OF Mr.. Fanshawe's
voluntary testimony was his assertion
that the return to the State Comptroller
OF all correspondence between his office
and Fanshawe and Albert l.. Judson for
whom Fanshawe was acting. was part of
the agreement upon which the sale was
finally made.
Only three letters of this correspon-
dence were In the files of the State
Comptroller's office that were introduced
earlier in the hearing, Mr.. Pecora pointed
at. and both Mr. Wendell and Mr..
Travis swore that the three constituted
all the correspondence there was regard
ing the moral obligation" deal.
This other letter indicates clearly 10
me that Fanshawe was framed TO bear
the loss Of this deal because of the drop
in the market" the Assistant District
Attorney stated, "and that some one in
the Comptroller's office had part in IT,
Fanshawe's loss on the deal amounted
10 $4,000, which he claims Judson owes
him. The letter which he produced fur
Their contradicts the testimony of Mr..
Wendell. who maintained he merely per-
formed the mechanical end OF the bond
deals. by showing that Mr.. Wendell him
self wrote letters to Fanshawe designed
20 aid the broker in having the bonds
held for him by the Empire Trust Com
pany without advancing any collateral.
Variance OF Testimony.
The testimony or Mr.. Fanshawe served
further TO complicate the versions al
ready given of the moral obligation
sale" and caused Justice Frederic Ker-
nochan 70 remark about the peculiar
business methods employed, saying that
no two of the six witnesses who had
testified regarding that transaction had
agreed about the details
MI. Fanshawe agreed to take the
stand again this morning and amplify
as much as possible what he said yes
tcrday. The Comptrolers office was
asked to produce again the files Of the
Fanshawe correspondence. A representa-.
tive Of Mr.. Traviss counsel said he
would try TO be on hand 20 make ex-
plantations but Il was uncertain whether
the Comptroller would DE there
Justice Kernochan's attention was
called yesterday 20 a statement alleged
20 have come from the state Republican
headquarters at khany alleging that
District Attorney Swami appealed with
out success TO every other Justice TO
preside NJ the investigation, and that
Justice Kernochan finally accepted be-
cause OF his ambition TO become District
Attorney. This Justice Kernochan de-
MED, and stated his belief that he was
the first Justice approached by Mr.
Swami. and that he always was willing
TO preside at John Doc Investigations
II told Judge Swami at the time"
Justice Kernochan said, that this pro-
ceed.ng VIII be ono whore Ill be damned
IL do and I'll be damned Il / don't"
To-davs testimony expected 70 wind
up the inquiry.