The Washington times., 1933-06-03
COMPANY HEAD
OWNS FOURTH
INTEREST
Some of Partners Got Only
I Per Cent of Earnings,
Inquiry DisCIoSeS
CONTINUED from Page y

IIO"N NBS -
Of his stock sales on December
80. 1930-made apparently for
the purpose of reducing his in
come taxes for that year. Sena-
tor Fletcher CD of Florida, chair
man of the investigating commit
tee, frankly announced this was
to be an income tax inquiry.
The revelation of Morgan'S in
tereSt in the great banking house
provoked speculation about his
wealth. The records filed with
the Senate investigating commit
tee shed some light on this sub
ject. For instance, the firm listed
its assets on December 81, 1882,
as $424, 4,708,095. This would make
Morgan'S share worth in the
neighborhood of $100,000,000 if
the partnership were dissolved
now.
$53,194,OOO Is Capital
OF the total assets, only $685.
$4,000 was listed as capital. The
rest apparently constituted un-
divided profits. Morgan would be
entitled to approximately $25 5,000,-
900 of the capital, as his original
investment, and one-fourth of the
undivided profits. His share
might we'll exceed $100.00O,000.
The records disclosed the
firms profits. In 1882 there were
no profits, as the partnership
sustained net loss. In 1881 it
made more than $6,000,000, de-
spite a Shrinkage in investment
values which obviated the neces-
sity of paying income taxes. This
would give Morgan about $685.
600 as his share, while he would
give Morgan about $625,0 as his
leave another 1925, 900 in the un-
divided profits.
In 1880 the firms profits were
around $5,0OO,OOO. Morgan's share
that year was trifle less than
in 1881.
The year 1929 was a profitable
one for the Morgan firm. The
partners paid $11,OO0,0O0 in in
come taxes. For one thing, they
divided $1,514,O0O United Cor
poration stock warrants among
themselves at a time when the
warrants were bringing $43 on
the market, although costing the
firm but 81 each. By this act
the partnership sliced a $63, $685.
00O melon, with Morgan un-
doubtedly getting potential
profit in excess of $15,0O0,OOO.
Other Large Profits
In that year the firm sold
100000 of these warrants to the
public. The sale netted it
profit of $8,29O,OO0. Under the
half-and-half rule. Morgan prob
ably got but $1,000,000 of this,
while another million dollars
went to his credit in undivided
profits.
From 1923 to 1881, the firm
netted $1O,192.OO0 profit from
floating stock and bond issues.
It got $2,877 900 more by com
missions in helping other houses
to float similar issues. Then
there was the item of $4,000,OOO
profits from speculating in stocks
on the market from 1925 to 1881.
This included $17O,OOO profit
from the emergency pool" Gre
ated by New York bankers to
stem the market.
These profits do not reflect the
Morgan firms gains in strictly
investment securities. 1t has
enormous holdings in utility, rail-
road, food product, motor and
building material stocks. From
time to time the partnership sold
some of these investments and
at great profit. A little later
the investigation will show just
how great these profits were,
especially in Johns-Manville Cor
poration stock-which skyrocketed
from 81 to 230.
Gave Away S3O,OOO,OOO
But Morgan gave away pcten-
tial profits through the years.
This was shown by the records
Of the many sales of stocks to
'fpreferred clients" In all, COM
mittee expert estimated, the firm
gave away $3O,0OO,0O0 in poten-
tial profits in just four stocks.
This $30,00O.OOO gift" included
$8,623.500 in Allegheny Corpora
ton stock, sold to favored clients
at $40 when the market was $36;
$8,148,600 in Standard Brands,
Inc, sold at $32 when the market
was $43; about $12,000,00O in
United Corporation units. sold at
$75 against a 500 market; and
$621,500 in Niarxara Hudson
Power units. sold at $25 when
the market was bidding $36
Morgan was given his 25 per
cent interest when the firm reor-
ganiZed in 1916, three years after
the death of the elder j. Pier
pont Morgan. At that time
E. T. Stotesbury. Charles Steele,
Thomas w. Lamont, H. G. Lloyd,
Arthur E. Newbold, William P.
Hamilton, Henry P. Dawson, sr.
E. R. StettiniuS. William H. Por
ter, and the late Dwight Morrow
were the other partners.
Scene Changes Rapidly
Thereafter, each time a part
ner died or withdrew. Morgan's
interest increased perceptibly.
When new partners were taken
into the firm it Shrank little.
In some years partners went in