The Indianapolis times. [volume] (Indianapolis [Ind.]) 1922-1965, 1933-06-02
MITCHELL, AIDS
SPLIT MILLIONS,
RECORDS SHOW
Fascinating Tale of Bank
Profits Is Barred at
N. Y. Trial.
BY SIDNEY b. WHIPPLE
United Press staff Correspondent

L
three-foot stack of red Morocco
bound volumes, the government
traced Thursday the golden flow of
millions in banking profits into the
National City Company's manage
ment fund" and out again to the
individual pockets Of the companys
officers
The fascinating story of unusual
profits, of bank officers who con-
sidered themselves poor because
they had salaries of less than
$4,000, and Of $15O,Oo0 bonuses to
officers for special services" was
spread before federal court jury
in the case Of Charles E. Mitchell.
The former chairman of the Ma
tional City bank is accused of de-
frauding the government of $780,
900 in income taxes.
Recipient of S666,666
Out OF the management fund, it
was shown, Mitchell received 33 1-3
per cent-a total, in one payment,
Of $685., 666.
He failed to include this sum in
his income tax return because the
directors voted to call it an lad
vance" and passed a resolution say
ing that it should be paid back in
the indefinite future.
The story of the management
fund was typical of the flush times
of 1929. 1t was outlined through
questions by United States Attorney
George 2. Medalie, directed to Frank
j. Mcguire, assistant secretary Of the
National City Company.
The National City Company was
an affiliate of the National City
bank. More particularly, it was the
banks agency for dealing in Securi-
ties, pools, syndicates, and stock and
bond hotations.
Business Really Good
In 1927, the directors, at meet
ing attended by Mitchell, found
business so good that they ordered
set aside per cent of all earnings
after taxes and other items were
written off.
This money was to go to the of
ficerS responsible for the develop
ment of the business, and the ex-
ecutive committee was to determine
what percentage each officer should
get.
Mitchelps share, by vote of the
executive committee, was to be SO 1-3
per cent.
The other officers received vary
ing amounts, from 30 per cent,
which sounded to the courtroom
like new beer, to II per cent for
Hugh Baker, president of the COM
pany.
Labeled AS advance"
In 1929, Mitchell received his two
thirds at the Yule Tide splitup of
the fund, and deposited it in the
Guaranty Trust Company.
When his friend Frank w. Black
helped him make out his income tax
for the year, the item was omitted,
because the board of directors, as
an afterthought, the government
contends-or as Medalie puts it,
with sanctimonious hypocrisy
passed a resolution calling the divis-
ion an advance"
In 1882, the directors decided
that the money divided three years
before probably never would be re-
turned to the bank, and consequent
ly wrote off the whole amount at
one dollar" scratching the other
$l,71O,000 (due to be paid if, as, and
when there might be profits to paw
it, off the books.
$4,000 Starvation Wage
Hard times struck the bankers in
1880. according to the evidence in
troduced late Friday afternoon. and
they were so hard pressed to make
both ends meet that the directors
voted to split up $14O938.98 that
remained in the management fund
as undivided profits.
AT this meeting of the board,
Mitchell presented the argument
for the Splitup. The officers sal
aries, he said, met only their bare
living expenses" and only two or
three drew more than $4,000.
In practically every case" he
wrote, Officers have commitments
for living expenses in excess of their
income. The result is a position of
discomfort, from which they now
ask relief"
The relief from this distressing
situation was granted, and of the
$4,000, Mitchell received approx
imately $4,000