The Bismarck tribune. [volume] (Bismarck, N.D.) 1916-current, 1933-05-29
MILLIONS MADE BY
M0RGAN'S BANK IN
INCOME LOSS YEARS
Failure to Pay Federal Taxes
Offset BY Profits From
Security Sales
INDICATES BIG DEDUCTIONS
Figures Show Dep r . s s. 0 n
Years Better Than 1929
in Some Respects
Copyright, 1888, By the A. FL

Washington, May 29-(AP)-J. p.
Morgan and company's reports to SEN
ate investigators show the firm made
nearly ten million dollars on sale and
underwriting Of securities in 1880 and
1881. years in which the banks part
ners paid only $4,000 in,ome tax to
the United States.
This startling evidence. brought out
while the banking committee investi-
CATION Of the Morgan house remained
in recess until Wednesday, gave hint
Of the amounts the 20 partners must
have been able to deduct from their
income tax returns under the law per-
hitting capital losses to be subtracted
from profits. From these earnings also
were deducted the running or over
head expenses Of the firm.
Almost as surprising was evidence
that the great banking house made
more on sale OF securities and its un-
oerwriting business, in each Of these
two depression years" than they had
made in the boom year 1929, when
they paid an income tax Of $l1 900 900.
The total for the three years, in
Guiding the Morgan and company and
Drexel and company, its Philadelphia
affiliate, in round figures were:
1929-$2,936000.
l930-$6,7 100000.
l931-$3,13l,0 900.
1892 Profits Not Listed
Morgan officials testified in the in
vestigation last week that all together
they paid only $4,000 income tax II.
1880 and none in 1881 or 1882. Profits
for 1882 were not included in the fig
ures presented by Ferdinand Pecora.
counsel for the investigators.
Demands for changes in the income
tax laws have echoed in congress since
the revelation that the Morgan part
ners have escaped payments during
the last two years.
The house in passing new tax bill
last week eliminated the carry-over
loss provision of the law and Rep
resentative Vinson (Dem., KY an
nounced that the ways and means
committee, of which he is member,
will soon begin an investigation to
| find and close other "loOp-holeS" In
the statute.
In addition to their profits from the
sale and underwriting of securities
the Morgan partners reported to the
committee profits running into the
millions from operations in joint ac-
counts or syndicates. but the total was
untabulated. In 1880, they reported a
profit of $l,853,959 from one Of these
operations alone. in Proctor and
Gamble stock.
Still Retain Some Stock
!; Also the profits from underwriting
ventures were not complete, because
| in many cases the firm retained blocks
of stock which were not estimated In
cash.
The records, drawn from hitherto
secret Morgan files, disclosed that in
1929 the firm made $l,272,000 from
issues it managed; and $774,000 from
issues managed by others. Drexe.
made $l95, 900 from issues it managed
S43 900 from issues managed by others
| and $652,0O from undertakings.
In 1880 Morgan made $4,074, 000
from issues it managed: $4,000 from
tissues managed by others, and 81 49,
! 600 from undertakings. Drexel made
1854 900 from issues 1t managed and
$267 900 on issues originated by others
The figures for 1891 showed these
profits respectively for Morgan as
81, 26l 900; $4,000 and $4,000 and
Drexel as 81, 1881 900 and $l54,000.
| While these figures we're coming
out, Pecora and his staff were in New
York preparing for resumption OF the
open investigation Wednesday.
The reports now before the commit
tee show three more favored client
! lists were sold stock at bargain prices
by the Morgan firm, besides the two
already made public, which included
some Of the nations best-known fig.
ures.