Evening star., 1935-03-02
MELONS STOCK
DEALS DEFENDED
Two Contrasting Pictures
of FinanCier Drawn From
Same Witness.
BY the Associated Press.

BY the Associated Press.
PITTSBURGH, March From
the same witness two markedly con-
trasting pictures are being drawn OF
Andrew w MELONS millions and how
he managed them in far-flung trans
actions affecting the destinies of giant
corporations.
With the multi -millionaire's income
tax hearing in recess over the week
end, counsel for the Government and
for Mellon worked doggedly today
over thousands of words of technical
testimony, preparing for the coming
week and new witness.
Howard NJ Johnson. after a brisk
and pointed redirect examination. in
which his testimony brought out that
Melons personal fortune in early
December, 1881. was s20O,000,000, and
that what the Government called
shadow sales" of stock had nothing
to do with Melons income affairs,
was still testifying at the recess, but
is expected to leave the stand soon.
U. S. Claims s3,Oss,ooo.
The Internal Revenue Bureau Is in
sisting before the Tax Board of Ap-
peals that Mellon should pay $685.
900 on his 1881 income. but the for
mer Secretary of the Treasury claims
there should be a $4,000 refund.
Frank j. Hogan, Melons chief
counsel, picked up interrogation OF
johnson, Melons confidential secre-
tary, where Government men left OF
and attempted to draw entirely differ
ent differences from those the Gov
ernment sought to make in Johnson's
testimony
The mild-mannered, middle-aged
secretary has been witness for eight
days, and through it all Government
counsel pointed its major artillery at
three big matters-the Coalesced Co.,
Mellon family holding corporation;
the Ascalot Co., personal holding firm
of MELONS daughter. and Joint ac-
count" held by A. w. Mellon and his
brother, the late r. B. Mellon.
The Government has accused the
elderly flnancier of making wash
sales" to Coalesced and Ascalot to
dodge income taxes.
Hogan, by disclosing contract be.
tween A. W.. r. B. and w. l.. Mel
lon with Coalesced to secure a $780,
600 900 issue of Union Gulf Co. bonds
in 1881, attempted to show that An
drew w. Mellon himself was not
the dominant factor" in Coalesced.
The firm was reorganized late in
1881. The common stock is held by
his children, Paul Mellon and Mrs.
Ailsa Bruce, and the former Treas
ury Secretary holds the $20,000,000
preferred stock.
Testifies on Bond Deal.
In all, it was brought out in john
sons testimony, the MELONS agreed
to guarantee up to $78,000,000 the
bond issue of Union Gulf, a pipe line
concern. When, in 1881, securities
posted for the issue deprecated, A. w.
Mellon then went to CoaleSced and
entered into a contract for securities
to bolster the bond security, it was
testified. Through this contract Ho-
gan attempted to show the financier
did not operate Coalesced at will.
The S60,000,000 bond issue even
tually was retired and every bond
holder paid, johnson said.
Hogans examination, which en-
livened a week devoted largely to
poring over thousands Of ledger en-
tries, further drew the statement that
the Mellon children as voting stock
holders of Coalesced could, by paying
SIS premiums on each 500, buy in
the $20,0O0,0O0 preferred stock owned
by their father by selling some of
the concerns assets. It's surplus was
listed as Sal, 5000 in 1882, $71,771,-
900 in 1888 and ST., 1,772,000 in 1884.
Gave Million to Children.
For Christmas of 1881, johnson
testified, Mellon made gifts to his
children of between $68, 100000 and
S100, 100000, which helped to reduce
the multimillionaire's wealth to an
estimated s97,000,000. The Govern
ment claims much Of the securities
were only "purported gifts"
johnson also testified the holdings
of the brothers in the joint account
totaled s20,O00,00O in 1881. He also
said 1913 900 shares of Pittsburgh Coal
Co. common stock held by the brothers
was not a voting majority, because the
100000 shares of preferred stock also
had voting power.
The stock which cost Mellon $6,-
600, 900 was sold to the Union Trust
Co. for $500,000 and he claimed an
income tax loss of more than $5,000,-
900 in 1881. Some months later
Coalesced bought the stock for s517,-
900. Government counsel charged the
sale was made merely to escape income