Evening star., 1935-02-26
MELONS FAMILY
GIFTS UNDER FIRE
Financiers' Holdings Traced
Through Two Companies
in Tax Hearing.
BY the Associated Press.

PITTSBURGH, February 26.-Gov-
ernment counsel tried to prove today
from Andrew w. Melons own records
that he never lost control of millions
of dollars worth of securities which he
bestowed as gifts within his family.
The legal route traversed by the
stocks and bonds after Mellon gave
them away was traced by Howard
M. johnson, Melons secretary, under
questioning by Attorney Robert II.
jackson at Melons $3000,0O0 in
come-tax inquiry.
Jackson, representing the Bureau
Of Internal Revenue, brought out that
within two months after the gifts
were made the stocks reached the
portfolios of the CoaleSced Co., hold
ing concern for the Mellon family.
Gave Children SI3,061, 900.
johnson said that early in 1882 the
three times Secretary of the Treasury
gave his children stocks costing Sl3,-
O6l 900 and that this was transferred
to the books of the Coalesced Co. with
their value computed at $2l ,944, 900.
The Government claims this transac-
tion occurred shortly before the gift
tax went into effect.
Testimony previously disclosed Mel
Ions gifts to his children or the
Coalesced Co. exceeded S50,000,000,
based on the estimated value of stocks
and securities.
jackson questioned johnson as to
whether the gift stocks, after being
placed within Coalesced, were kept in
the same safety deposit box with other
Mellon securities, and the witness re-
piled he was not sure.
Another Firm Scrutinized.
"Now, when the gifts were made
who had the stocks certified and tC
whom were they turned over?" querieo
jackson.
II probably received them" said
johnson, who is the treasurer of the
Coalesced.
Another Mellon family corporation
the Ascalot Corp.-win undergo the
Government miscroscope after com.
pletion of the inquiry concerning
Coalesced.
That firm is a holding company
which owns the personal securities o1
Mrs Ailsa Bruce, the flnancier'
daughter. David K. E. Bruce, MELONS
son-in-law. is listed as president ol
Ascalot. Bruce has attended the ses-
sions, sitting beside the elderly multi
millionaire, and is expected to testify
before the case ends.
Joint Account" to Be Probed.
A Joint account" which jackson
said included joint activities of the
former Treasury Secretary and his
was to be taken up for more questions
by the Government counsel before he
finished with johnson.
The secretary then will testify on re-
direct examination by Frank j. Hogan
Melons chief counsel. After John.
son, said Hogan, will come A. H
Phillips, senior Mellon employe. who
is custodian of Melons strong box
and president of the CoalSced Co.
Millions Given to Kin.
The Coalesced was mentioned many
times by johnson as yesterdays ques-
tioning brought out gifts of millions
Of dollars in bank and capital stock
from Mellon to his son, Paul Mellon
and Mrs. Bruce. II has been testi-
fled that Coalesced common, or vot-
ing stock, is owned by the son and
daughter and the preferred stock by
A. w. Mellon.
The Government claims the hold
ing firm is a "taX-dodging scheme
Jackson, in questioning Johnson. in
troduced records of loans made to
Mellon by Coalescec in 1882 and 1888
dates subsequent to 1881, the year in
question at the hearing.
It was brought out that Coalesced
was reorganiZed in December, 1881
being more or less inactive before that
time. Jackson also produced a con-
tract by which Coalesced agreed to
loan Mellon any securities it owned
Some Securities Not Reported.
The questioning of johnson also
brought forth statements that S9,-
$4,000 in tax-free municipal and
Federal Farm Loan bonds were not
reported in Melons 1881 income-tax
return. The secretary insisted such
q report was not necessary.
BY other Interrogation, Jackson
claimed to have established that Mel
Ion personally directed activities OF
his financial empire in 1881 and that
any action Johnson took himself was
along lines of policy laid down by the
financier himself.
In this connection records were in
troduced to show that Mellon, while
still Secretary of the Treasury, had
a brokerage marginal account, which
in January, 1882, held a balance of
S601,5 for the coverage of a total
OF 100000 in stock purchases.