The Waterbury Democrat., 1940-05-04

was supposed TO 60 10 the Canadian
McKessons was being taken by Con-
necticut. Phillips said In response
TO his attorney yesterday that he
had often during the eight years
above mentioned considered asking
for an accounting with regard To the
Canadian company, but was In
formed by Atty. Jonathan Circuit, q
Bridgeport lawyer, that such action
would be unwise.
The United States McKessons,
Atty. Corbin drew from Phillips, had
control OF the limited company and
inasmuch as there was no signed
. contract could cause much trouble
or II they wanted 10 liquidate the
Canadian Arm.
Phillips then testified that he had
no definite proof that the Canadian
company was being "gypped".
But you had the idea", asked
Atty. Corbin many times and each
time Phillips replied, "Yes".
Phillips also testified that he never
kept his idea that the Canadian
company was being "gypped" TO
himself and told many people.
One OF the points emphasized by
the government In the cross exam.
nation OF Phillips was the alleged
omission from stock circular Is.
ued In 1925 In connection with the
taking into the McKesson setup OF
Girard and Co., which figures prom.
inently In the alleged conspiracy
that In three OF the FIVE years before
the 0irard deal the earnings Of Nc
kessons were not impressive.
Phillips stated yesterday that he
was not In favor Of putting this In
formation In the circular for the
reason that such information would
be misleading and would not show
the real picture. Phillips pointed TO
the fact that the circular did not
set forth the fine earnings Of 0irard
and Co. The circular, he said, was
for tho purpose OF setting forth
what excellent profits were thought
possible by the combination Of the
two Arms.
Phillips stated that he never with
held from prospective purchasers the
information that the New York Nc
Reasons was not too strong and he
stated as q matter OF fact nc wrote
several people and told them about
".
As proof OF this point Atty. Cor
bin read 10 the jury q letter writ.
ten by Phillips to Mrs. Eunice
Mitchell OF South Britain in which
he told the woman that McKessons
OF New York had not been as sue
cessful rs II should have been due
TO mismanagement.
"You wrote many other similar
letters, didn't your" asked Atty. Cor
bin.
certainly, many Of them" replied
Phillips.
Phillips then testified that the
circular contained an estimate OF
what the combined companies should
make and that the combined Arms
made almost double the amount es-
timated In the circular.
Phillips then testified that every.
body had faith In Coster. the al
legged master swindler In the case,
who committed suicide. He said that
he regarded Phillips, as he previous
" testified many times, lone Of the
ablest and most capable business
men In the world.
In response to another question
from Atty. Corbin as to whether he
was conscious-stricken as q result
OF his failure to set forth all the
facts In the circular, Phillips said
he most certainly was not" and
felt that there was no reason why
he should apologize for 1t.
The next point taken up by Atty.
Corbin was that stressed by U. s.,
Atty. Kaufman, that Phillips on five
different occasions had voted Nc
Kesson dividends. when the balance
sheets OF the company did not show
cash on hand, at the time the votes
we're taken, to meet the dividends.
Phillips stated that he thought at
the time he voted favorably on
the dividends the cash was on hand.
In response to another question
from Corbin. Phillips said that II
the cash was not on hand the day
the dividend was voted, 1t was on
hand the Gay the dividend was to
be paid.
Phillips next stated that he did
not think IL was necessary to have
cash on hand at the time a divi-
dend was voted and that he never
heard of a law which made this
compulsory
Phillips said that dividends con-
stituted a division Of profits, but
that he never understood that the
profits had to be in actual cash. He
said that no big business keeps Its
profits entirely In cash and that 1t
would be considered mighty poor
business to do so.
He then stated that several COM
panies, which are making big money
often borrow cash to pay dividends.
Atty. Corbin next developed the
statement that Mr.. Phillips always
wanted to be clear and above board
In his business dealings. and has
been In this case. giving the govern.
ment any and all data II sought,
willingly. and had never tried 70
conceal anything.
The question Of Bookkeeping was
next brought up and Phillips claimed
he considered IL ~0ne e. the evils
OF prohibition. He denied emphat-
ically that he was conspirfng With
Coster 10 promote bootieggine
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