New-York tribune., 1920-10-16
Travis Says
He Squeezed
Broker i'm Deal
Moral Obligation Sale Cost
Fanshawe, Bond Traders
Associate, 500, 900; State
Lost Considerably More
Comptroller Regrets Act
Describes Heartrending In
terview. With Head of Se-
curity Firm Over Price

The "moral obligation sale" to the
state OF bonds to the par value OF
S2,013,000, as a result of which W. S.
Fanshawe, broker and business asso-
ciate of Albert L. Judson, is alleged
to have lost 100000, while the loss to
the state was considerably in excess of
that sum, was taken up yesterday when
Comptroller Eugene NJ. Travis again
took the stand in the John Doe inquiry
being conducted into the affairs Of his
Office
Mr.. Travis told Assistant District
Attorney Pecora, who is conducting the
investigation. that the circumstances
surrounding the so-called moral obi
CATION sale" marked the only blot on
his administration as Comptroller of
the State of New York.
II feel that | squeezed Fanshawe in
that deal until | rubbed skin off his
nose, and I am not at all proud of the
part I played in it. | felt sorry for
him after a heartrending interview
we had at my New York Office. He
declared that the failure of the state
agreed upon entailed a loss to hin,
of more than $4,000" said the witness
Deal in City Bonds
In describing the transaction the
Comptroller said:
"Judson called at my Office in Octo-
Der or November of 1916 ana said that
as the market looked good he would
like to sell me couple of million dol
lars worth of New York City bonds
told him that we had no money but
would probably have available funds
about January !, at which time we
would takc the bonds. The securities
at that time were quoted at ga or &C.
think.
"The sale was not put through at
the time agreed upon and kept drag
ging along for months and months
Finally I did what have been ashamed
of ever since. No written contract had
been signed, so | took advantage of the
seller and squeezed him for $1O0,000
That act l consider the one blot on my
administration.
"The market dropped to around "a
in November, 1917 and one day LIE Roy
Baldwin, president OF the Empire Trust
Company, Informed me that his bank
was carrying the bonds for Fanshawe.
He said that the bank was calling for
more collateral on the bonds and that
he did not believe that Fanshawe was
in position to put it up. | told him
that would have to take advantage OF
the absence of a written contract and
squeeze Fanshawe and Judson and take
the bonds at the best figure I could
get, although | knew 7 was morally
obligated to pay 941a This is the only
time | ever made moral agreement
with a man that l failed to keep
Mr.. Travis then described the
"heartrending' intervey he had with
Fanshawe, during which the two hag-
gled over the price the state was to
pay for the securities.
"The bonds were then quoted at "a,
he said. "and during our conference,
which I can tell YOU was d heart
rending one, Fanshawe worked me UP
to S9ie and there [ stopped. Tanshawe
declared that the transaction at that
figure entailcd a loss OF more $58 900
and indicated that this might ruin
him."
you felt sorry for him, didn't you p
asked Mr.. Pecora.
81 felt that was squeezing him very
hard and I still feel that the deal is
nothing to be proud Of"
"Don't you know asked the prose
cutor, chat the bonds at that time
could have been purchased in the open
market for about 50 ard that in taking
them at 891a you incurred loss tc
the state of about $140,00O?"
"They were selling at that price fol-
small OTIS but not for block of the
size we had agreed to take" answered
the witness.
Obligations in Transactions
Justice Kernochan, before whom the
inquiry is being conducted, asked Mr.
Travis if he had believed that he was
legally as we'll as morally obligated
to take the $2,Ol3Oo0 worth of bonds
at price approximately $4,000 above
the market. The witness replied tha
he saw no difference between beinl
morally and legally obligated. HI
added that if the transaction had beer
private one he would certainly hav,
bought the bonds at the agreed fgur
Of ga, but being a public officer he fel
it his duty to save the state as mucl
as possible.
"Then you believed that you wer
legally obligated to take the bonds a
81 ?" asked Justice Kernochan.
Il certainly did" replied Mr.. Travis
Asked if he had thought of putting
the matter up to the State Attorne
General for an opinion, the witnes
said that he had not regarded this a
necessary, as there were a number 0
lawyers in the Comptroller's Office an
they were of the opinion that tn
states obligation in the matter was
legal one.
Mr.. pecora again made persisten
efforts yesterday to show that tn
Comptroller had purchased bond
through Judson at prices above tn
market The witness reiterated hi
statements of Thursday to the effec
that he never bought bonds at fie
ure in excess of the market rate fo
large blocks, and insisted that the quo
tations referred to by Mr. Pecora wer
for samu lots of from two to te
bonds