Evening star., 1933-06-09
LAMONT AND EWING
RELATE HOW SALES
CUT THEIR INCOMES
Former Sold Stocks to Wife,
Allowing Loss of $114,8O7,
Late in 1880.
SECOND PARTNER MADE
SHORT SALES DURING 1928
Senate Morgan Investigators Re-
view Tax Payments by Members
of Banking House.
By the Associated Press.

By the Associated Press.
Stock transactions whereby partners
in j. P. Morgan & Co. greatly reduced
their income tax payments were re-
viewed today by the Senate Investigating
Committee.
First Thomas S. Lamont and then
William Ewing detailed the means by
which losses were recorded against their
taxable incomes.
The former, in statement prepared
after the committee had met a chal-
lenge of its authority by getting wider
power, told how he and his wife had
exchanged stocks both directly and in
directly. allowing a s114,807 loss for
him in 1880.
Later he repurchased the stocks at
about the same prices Mrs Lamont had
paid.
Ferdinand Pecora, committee coilri-
sci, estimated the deals reduced the
young Morgan partners tax liability
that year by $4,000.
Davis UphoIds Action.
"I don't believe it could possibly
have been as much as that" Lamont
commented, while j. P. Morgan and
John w. Davis-Morgan counsel-paid
close attention in the uncomfortably
warm and sparsely flied hearing room.
Davis read statement upholding the
legality of the Lamont transactions, de-
claring "in all the revenue acts from
1918 to 1882, individuals have been al
lowed unlimited deductions from their
incomes on account of losses actually
sustained on the sale of securities or
other property"
Lamont testified that the repurchase
Of the stocks from his wife on April 8,
1881, was direct.
He added that he tore up his wife's
note at the time and that he paid her
no cash.
"The market price at the time
bought these shares back he said,
was within 500 or $500 of the price
she paid for them
Ewing revealed that in 1928 he made
short sales on behalf of trust accounts
for his children.
AS trustee, he sold 1850 shares of
Johns Manville stock-making delivery
by borrowing 1900 shares from his
Pecora planned some time today to
introduce the last list of selected clients
who were sold stock at cost by the
Morgan banking house. This list was
regarded by investigators as more sig
n1flcant than those previously placed in
the record, because it contained two
groups, those who bought at cost and
others who paid little more.
Pccora was not sure whether he
could wind up by evening or whether
the Morgan study would have to ex--
tend into next week
Explains Stock Sales.
Before Lamont began to testify Davis
announced he would not interfere with
the questioning.
Davis said his clients desired to testify
with the utmost frankness."
Mr.. Lamont is ready he continued.
Pecora thereupon prcpounded the
same question which drew a challenge
last week from Davis.
he asked If Lamont remembered SELL
ing IN December, 1890, block of more
than 5000 shares of assorted stocks.
Lamont explained the deals and said
complete information en- these was given
the Internal Revenue Bureau and he
mad received no complaint from the
Government.
There was no understanding, he said.
that he would repurchase the stock.
=, l was advised" he said, that under
these circumstances I was fully within
my rights in deductirg from my income
return for the year 1880 the amount of
less sustained"
He said he was informed that even
II the deductions from the direct sales
were eliminated it would result in an
additional tax of S1,44O.29 for him and
$595.57 for his wife.
Lamont read his statement In a
steady, even voice, and said he had
prepared it.
sitting a few feet away, Morgan
mopped his face. Davis sat just behind
the witness.
Ihe loss sustained from the stock
(COQtiQued On paua roI1,x,,,- a =