The Waterbury Democrat., 1933-05-24

Morgan paid no income taxes IT 1930. 1891. or 1882
 The big-boned banker testified that neither Morgan and Company nor Drexel and Company, of Phil adelphia, an affiliated partnership in which all the Morgan partners participated, showed net taxable income in 1881 and 1882. In 1880, the partnerships registered an az. gregate of $4S.000 for income tax ation.
 It was explained that the part nerships submit returns to the treasury, but that the partners themselves assume the actual pay ments, if any, dividing the burden among themselves.
 Morgan complained privately to members of the committee that Pecora was seeking to put crim- inal aspect on income tax deduc- tions which were in accord with the law.
 A transcript of testimony bear ing on the tax matter is being sent to the Department of, Justice for study. Officials decline to fore- cast whether any action would be
 taken. Attorney-General Cum mings was out of the city.
 Leonard Reyes, Morgan office manager, was permitted to in- terrupt the financier's testimony to explain circumstances of d two-day write-off of more than $21,000.000 on January 1, and 2. 1881. Part of the loss was de- ducted for income tax purposes in 1882. The rest may be de- dueted for this year.
 Reyes explained that S. Parker Gilbert was admitted to member ship on January 2, 1881, and that that was the reason why a separ- ate income tax return had been filed for the two days of Janu loss, and another return for the rest of the year. He said 1t was the partnership and reconstitute it on admitting a new member. In selling the assets of the. old partnership to the new partner ship the $21,000,000 loss was tablished.
 A report by Newell c. Sheild. described by Pecora as q federal agent, was read into the record. It commented that Morgan and Company, from the inception of the income tax Jaw, had termi- mated it's partnership on December 31, of each year. Sheild said the first deviation from that procedure was in 1890.
 Pecora pointed out that if the partnership had been reorganized on December 31, 1880, instead of January 2, 1881, the $21,000,000 loss could not have been deducted. He said Gilbert could just as well have been brought into the part nership two days earlier.
 Senator Glass. democrat, Va. pecked at Pecora continually dui- ing the income tax questions.
 Blistering under talkie camera Kleig lights and suffering with al; others present from the discom- forts of a crowded room, Morgan. who detests photographers and publicity, maintained almost unin- terrupted composure under trip hammer questioning. He smiled. chuckled and shifted position easily.
 At his elbow sat Lawyer John w. Davis, counsel for the Morgan firm. He was less complacent. He was on his feet often to object to publication of information sought by Pecora. The articles of part nership of the famous firm had not been brought to Washington and Morgan protested he did not want to produce them. The com mittee doubts it's own authority to compel revelation of that master secret of the Morgan files, which would show how the profits are df- vided among the 20 partners.
 Morgan and his lawyers also baked at revealing the names of bank officials to whom the firm has loaned money In the last fivo years. A list of GO men. nationally known financiers. manyl