Evening star., 1933-06-08
SENATE APPROVES
MORGAN TAX QUIZ
Van SWeringen Brands Such
Procedure as "TerrificalIy
Destructive"
Continued From First Page

Justice and the Internal Revenue Btu
reau to proceed as may be required
Z Both of these agencies already are
studying previous testimony that none
of the Morgan partners paid any in
come tax after 1880 and that all 20
paid only $4,000 that year. And 1t was
disclosed today the Justice Department
has asked for original copies OF some
of the evidence.
The Senate also adopted today the
Costigan resolution giving the commit
tee an additional appropriation OF
100000 to carry its investigation
through to the next session OF Congress
and covering other private banks such
as Kuhn Loeb & Co. and Dillon Read
Rail Set Up Explained.
When the hearing opened o. P. Van
Sweringen was called to the stand for
the fourth day to explain the compli-
Gated set up he and associates used in
gaining control of a 25,000+mile rail
system.
With the Senate voting the. extended
power uf the committee it was de-
yeloped from Van Sweringen that over
$4,000 900 represented the increased
market value of 255.000 shares OF
C1eS1DsdkS SlllO SOOth Oii "AiASAA VA
Van SWeringens secured tax exemption
bv creating special transfer corpora
tion.
He had agreed yesterday that had an
intermediate corporation not been
formed the difference between the cost
of the shares to the Vaness Co: and
the price at which it was put on Chesa-
peake Corporation books would have
been taxable.
To secure tax exemption the General
Securities Corporation was formed:
Van Sweringan said today the 255. .000
shares cost the Vaness Co. $3l, la, 235.
They were put on the Chesapeake DOCKS
at STATS share or over S44 uoo.
Taxable Stock Transferred.
Van Sweringen previously had agreed
that the $4,000 900 difference would
have been taxable except for creation
nf the General Securities Corporation
to accomplish the transfer.
Pecora asked why Van Swermgen
esSociates subscribed to stock of the
AIleqhany Corporation from Morgan d
Co instead of acquiring 1t from the
block of 2,250.o00 shares which the
Vaness Co. Van Sweringen holding
company, held.
BrTQieV. VAN oWCA nfSOAA oo0oSAooSS SA~AS~
1919. in this connection
This witness replied that be and his
associates wanted the Vaness Co. 70
hold TIN, 2.250000 shares. 4.
"What was the initial transaction
that the\ VanesS Co. had with the Al
leghany Gorporation?"".
van Swaringen said in return for
the $50 oO, shares of Allegheny Cor
noration and 1,725, 900 of its option
warrants. that the Vaness Co. gave
440. .386 shares of Chesapeake Corpora
ton stock and 10000 shares OF Nickel
Plate common. =.
Pecora learned. the 100000 shares OF
Nickel Plate had been set up on Allie
ohanv CORPORATION books at SIS OBS, $50
and 440. 1886 shares of Chesapeake Cor
poratlon at s34, 7lS ,4s5, for total value
Of S47,754,o55.
"Was the transfer direct to the Al
leghany from the Chesapeake Corpor,
alton or through third corpoEaflon?
1T was through the General Sc
curities Corporation" .,
For the same reason of econpmy?''
"As I outlined 1t yesterday"
"The Principal Economy"
"And the principal economy was
avoidance of the tax?"
It can't 60 quite that far"
How far can you goF'
Van Swearingen read again his
statement of yesterday which said the
General Securities Corporation was
medium of exchange so as 10
avail of the income tax exemptions
provided by Congress in corporate re-
Organization"
What other transactions did the
Naness Corporation have at about the
time the Allegheny was foFmed?" Pc
cora asked.
Van Sweringen said that February
ls 1929. the Allegheny bought from the
Vaness Co., for cash, the following
shares:
Fifty-one thousand seven hundred
and fourteen of Chesapeake Corporation
common at $4Ol9,747.
Twenty-six thousand one hundred OF
chesapeake e. Ohio common at S.
1421 POS.
TWO hundred and fifteen thousand OF