The New York herald. [volume] (New York, N.Y.) 1920-1924, 1920-10-16
DEAL TO SAVE
STATE 100000
RUED BY TRAVIS
Disregarded Moral Obliga-
ton With Fanshawe, He
Says, Almost in Tears.
BLOT ON ESCUTCHEON'
Pecora Says Greater Heart
lessness Meant $4,000
More for Taxpayers.
----
Tits AT HEARING AGAIN
Comptroller Explains Rejec-
ton Of Some Bonds Was Be-
cause Of Maturities.
BLOT ON EsCUTCHEON'
TILTS AT HEARING AGAIN

Eugene NJ Travis. State Comptrol-
Ter. testifying yesterday In the John
Doe inquiry into the manner in which
he bought bonds for the State sink
ing funds, told almost with tears In
his eyes how he had disregarded a
moral obligation" In order to save
100000 for the State. The transac-
ton involved the purchase OF a block
OF $2,013,500 par value municipal
bonds. His failure to carry it out as
first agreed made him positively
ashamed of himself he testified, and
ne felt the transaction would always
he a blot on his escutcheon."
Il was brought up in business
where you always paid tho price
agreed upon" he said, land / would
have discharged anybody who sug-
sested doing otherwise
Had the Comptroller been Just little
more heartless. according to Ferdinand
Pecora, Assistant District Attorney, who
was questioning him. he could have
saved the State $4,000 more on the
was offered orally to the Comptroller in
November or December 1916. by William
). Fanshawe. lie testified. The Comp
troller agreed then to buy the bonds
the following January at 941a, and
thought he was making favorable bar
sain for the State, as the bond market
was then rising.
But instead the market sdumped
When January came, Mr. Travis said, he
did not feel justified in concentrating the
purchase In view of the falling market !:
also the funds then available were in
sufficient. He "jollied" Fanshawe along
he testified. finally closing the deal in
November 1917, at 1914.
Bought Above the Market.
This figure was several points above
the market quotations for small blocks
at that time he admitted, but he still in
sisted that Ii was no unreasonable for
such large block. 1t saved the State
800. 900 on what II would have had to
pay had the deal been closed at 941h he
pointed out. Had he sought the rock
bottom figure instead OF compromising
Mr.. pecora contended. the total saving
TO the State would have been S240,000.
Fanshawc in his testimony declared
he lost SSs.000 on the transaction. In
the deal Fanshawe appears as principal
but previous testimony showed he was
merely acting for Albert l.. Judson. bond
dealer, whose total profits from sales to
the State were $S50,000
Comptroller Travis related in answer
to a series of questions that Judson
frequently called at his Office In the
spring of 1917 urging him to go on with
the deal. Leroy w. Baldwin. president
of the Empire Trust Company. which
shawe-Judson account. revived nesotia-
that the bank couldn't carry the bonds
any longer without further collateral.
and wasn't 1t time TO drive the hard
bargain" to an end?
II came to the conclusion that I'd
be the ruin of the man IL / didn't take
the bonds" Mr.. Travis related OF this
conversation with Baldwin. 'Fanshawe
was called over and l told him In sub
stance that l acknowledged II was
hard bargain, and I'm ashamed OF It.
He asked me to consider what l could
do and the following week had con-
ference in my New York Office with
Wendell and Boardman, my deputies
Judson and others.
II believe Boardman thought the State
was in honor bound to take the bonds
al the figure we agreed on for January.
1917. Judson insisted on the original
price. The others thought we should
take full advantage Of the situation
MY position was that Fanshawe was
entitled to the original price or there
nhouts. but i cbuldn't afford TO have
such criticism as there would have been
II had paid the original price. Neither
did l believe the people of the state
wanted me to ruin Fanshawe by sQueez-
ing him for the last drop of 1t.
Next day I had a conference with
Fsnshswe in the Empire Trust office.
He had heartrending tale Of how much
money he was losing. I assumed from
what Baldwin said he was In n bad way.
= finally compromised on soy. though
wanted to settle at from So to 81.
You've got both ends OF the stick and
the middle, too, so I must agree TO ac-
capt your offer he told me.
Il think I squeezed him too hard. It's
not transaction / feel proud OF. feel
as sorry for him as IL l took all the skin
off his nose"
80 you peeled Off $4,000 worth of
skin from the State and grated II on
Fanshawe's nose7" Pecora interjected.
That started another of the frequen.
tits between prosecutor and witness
that marked the examination ana
brought sharp rebuke from Chief Jus
tice Frederic Kernochan OF Special SEES
sions who is sitting an Magistrate. The
Justice took the questioning here into
his own hands for a while.
Early In yesterdays examination Mr..
Pecora read letter OF Harris, Forbes
q Co. In which a large sized block OF
bonds was offered to the Comptroller.
the introduction being designed TO re
flute Mr.. Travis's Insertions that few
others than Jrdson ever had blocks
large enough to merit the States atten-
ton. Mr.. Travis declared the offer was
rejected because the maturities of the
bonds offered were too short to mako
the investment worth while.
The inquiry will be resumed Monday
morning. with James A. Wendell, Dep
uty Comptroller, on the stand