Evening star., 1933-10-13
James V. ForrestaI Tells
Senate Probers of Com
pany in Canada.
SAYS HE DID NOT PAY
ON S864,000 PROFITS
New York Banker Explains
Financing Methods Through
Personal Corporation.
BULLETIN.

A loan by Dillon, Read & Co. Of
100000 to Harvey Couch, director
of the Reconstruction Finance Cor
poration, of which half was noted
as still outstanding, was disclosed
today to Senate Investigators.
By the Associated Press
A Dillon, Read & Co. member told
Senate investigators today how he paid
no income tax in 1929 on a stock
profit of s864,00O by means of setting
up personal company in Canada.
James v. Forrestal, the banker, testi-
fed between puffs on a pipe, that the
tax would have been far in excess Of
$685. if he had made the sales direct.
Questioned closely by Ferdinand Pc
cora, committee counsel, Forrestal said
he had made an income tax return on
the Canadian company this year after
disclosures before the Inquiry Commit
tee in the investigation of other
bankers.
As a result, he said, tax of $4,000
was paid and another levy of $4,000
was under consideration.
Methods Attacked.
The witness testified at length about
various transactions with the Cana
dian company, including an $500 ,o10
loan, and then Senator Couzens, Re-
publican, of Michigan, said:
In effect all these transactions were
doing business with yourself, weren't
they?"
Certainly for myself" the witness
replied.
Just shifting money from one
pocket to another" Couzens added.
L hadn't thought of 1t as such"
the witness replied.
In 1929, after he had transferred
some OF his stock holdings to the Can
adam company, Forrestal said he paid
and Federal. He testified he did not
know how much it would have been
If the company had not been organized.
Not long before testimony was given
the committee that Forrestal sold 16, 788
shares Of stock for $50 a share which
he had acquired for less than a dollar
each.
Tells Of Deal.
Relating how he had formed a pri-
vate company for tax purposes which
was controlled by himself and Mrs.
Forrestal, he said he had obtained 81
600 shares of U. S. and Foreign stock.
Dillon, Read & Co. investment trust.
He testified he bought 1900 at 20
cents share, 1900 at IS cents and
the remainder at $40, a total of sl39,-
250-one-seventh of what he obtained
for the 1878 shares.
Meanwhile Fecora served notice that
unless the New York Stock Exchange
agreed today to circulate a QUESTIONABLE
to its members to obtain details on pools
and other operations, he would sub
poena officers and members of the ex-
change with their books.
simultaneously, he summoned before
the Investigating Committee under sub
poena. H. c. Hopson, vice president of
the Associated Gas & Electric Co.,
whom committee agents spent weeks
trying to locate and whose books they
have not yet obtained
Pecora has been negotiating with
Richard Whitney, president Of the New
York Stock Exchange, about the ques-
tionnaire, and announced yesterday
most disagreements had been straight
ened out.
Questioned on Beekman Deal.
Pecora questioned Forrestal first
about formation of the Beekman Cor
poration, Ltd. of Canada, in 1928 or
1929.
He said he held 70 per cent of the
capital stock and his wife 80 per cent
In the Beekman Co. of Delaware, which
owns the Canada company.
Questioned by Pecora, Forrestal said
he obtained $1,000 shares of U. S. &
Foreign, Dillon, Reed & Co. investment
trust.
In July and August 1929, he testi-
fed, he transferred 10000 shares of the
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