Evening star., 1933-06-09
LAMONT AND EWING.
EXPLAIN THEIR TAX.
Deals to Reduce Incomes De-
scribed by Two Partners
in Morgan Firm.
Continued From First Page.)

sales, S114s0735, was deducted as loss
from taxable income.
The half dozen Senators on hand
listened without interrupting.
Lent Stock to Self.
Questioned about the trust accounts
set up for his children, Ewing testified
four were created BY Mrs Ewing in
1925 and 1926. with him as trustee.
In 1928. he as trustee sold for the
accounts 1850 shares of Johns-Mans-
vile stock which the accounts did not
possess.
Mrs. Ewing loaned to the trust 1900
shares, and he personally loaned 2,550.
The stock was sold for S654,476, di-
vided equally between the four accounts.
Describing short SALE" the COM
pactly built, ruddy-faced witness said
he and his wife got the 1854 476.
you lent the stock to yourself as
trustee?"
Ewing nodded, explaining that "the
lender of stock in short sale gets
the proceeds of the sale as security
until the stock borrowed is returned.
The money was divided between
myself and nv wife in proportion to
the shares of stock we put up. as lent"
After some consultation, Ewing said
they had paid AL for the stock.
Pecora figured that made the total
cost of the stock to Mr.. and Mrs.
Ewing $2o6, ,625.
so at the time you sold this stock.
it was sold for S447 900 more than the
cost price to you and your wife indi-
vidually?"
Ewing agreed
do you call that a proft?" F1et-
cher asked
mo there want any sale" Ewing
replied noting that the stock only had
been loaned to the trust account.
The short sales were made between
August and December, 1928. starting at
$127, and the last were $200.75.
THE total, as / have said he ex-
planned, "was $654,476."
Profits to Trusts.
Ewing disclosed that in October and
| November, 1929, he, as trustee, bought
500 shares Of johns Evansville at S120
to $125 and that in May, 1881, he
bought 500 other shares as trustee at
S4750.
The original shares were returned to
himself and his wife, and he returned
$126,872 so to the trusts. He placed the
profits to- the trusts at S44,634.
Ewing said he had not covered any
more of the short sales, and the prin-
cipal reason was income taxes.
He added that the short sales could
have been covered at any time up to
the present with a profit
Questioned further, he said he and
his wife had received the S654,000 as
security for the stock they loaned the
trust accounts.
by this process" Pecora asked,
haven't you and Mrs Ewing enjoyed
all the benefits of outright sales?"
"All can say" Ewing replied, 'is
that this was carried out as a regular
short sale. The only difference was
that the stock was borrowed from Mrs.
Ewing and me-"
Has the Morgan firm policy on
short sales?" Pecora asked.
Yes" Ewing said slowly, ''the part
ners are not supposed to sell stock
short"
Did you depart from that policy
when the trust sold 4,350 shares of
Johns Evansville Co. short?"
Ewing answered promptly, ''No."
1T was done for the trusts" he said.
''I acted as trustee"
Fletcher asked why Ewing had not
covered the short sales and reaped the
profit for the trusts.
Il thought it would go still lower, "
Ewing replied.
He was reminded that the low for
Johns Evansville was 1914 in March
of this year.
why didn't you sell them" Pecora
asked
Ewing said he would have reaped a
| big profit for the trusts, but added
Judgment is not infallible."
Il don't think the trusts have any
kick coming thus far" he said.
Made Large Profit.
Yesterday Pecora finished questioning
o. P. Van Sweringen railroad operator,
disclosing that the Van Sweringen group
made millions in the organization OF
the Allegheny Corporation in 1929 and
had paper profits of almost 500, 600
The Allegheny holding company was
set up by the Van Sweringens with the
financial aid of j. P. Morgan and Co
to control their several railroads in uni
fed fashion.
Van Sweringen, who had proved a
poor witness on the first two days and
then turned around to show remark
able recovery of memory during the
last two readily agreed he and his
associates had made 100000 from
the formation of the holding company
He testified that in return for turn