Jams

To the burgeoning history of U. S. financial scandal were last week added four chapters:

P: As SEC relentlessly pushed its investigation of the Richard Whitney failure, the famed name of Thomas W. Lament for the first time entered the case. Testifying in Washington, Morgan-Partner George Whitney revealed that he had borrowed from Morgan-Partner Lamont the $1,082,000 which he loaned his brother Richard last November to enable him to return securities of the Stock Exchange Gratuity Fund. Said he: "I told him [Lamont] that my brother was in a jam. ... I told him the general terms." Thus added to the record was the name of the second Morgan partner who was in a position last fall to warn the Stock Exchange of the insolvency of Richard Whitney. P: After Burco, Inc., an investment trust, used 75% ($725.000) of its funds to acquire a minority interest in an inconspicuous Canadian company called Delta Oil Co., Ltd., the New York Curb Exchange suspended trading in Burco shares. The Curb said it was curious to learn what made Delta so valuable. New York Attorney General John James Bennett Jr. said he was curious to learn what connection there was between the Delta deal and the recent sale of Burco ownership to a group of Canadians. Quiet investigations by Mr. Bennett last week involved questioning men from the big brokerage house of Paine. Webber & Co. and big Guaranty Trust Co. Wall Street broke out with a rash of rumors about other investment trusts.

These were speedily confirmed as Lawyer Arthur Ballantine. trustee for an investment trust named Continental Securities Corp. now in a 776 reorganization, charged through his counsel that a group of unnamed Canadians had bought a controlling interest in the trust last October for approximately $50,000 when its portfolio held securities worth some $3,300.000, and that Continental has since been looted so thoroughly that only $20,000 in marketable securities are left. In the process Continental acquired control of an investment trust named Reynolds Investing Co., which is now being investigated by SEC. Brokerage transactions for both were handled by the firm of Prentice & Brady which began liquidation April first and is now being investigated by the Attorney General's office (TIME, April 25). C. When the ig-year-old firm of Hoagland & Allum went into receivership with a shortage of some $700.000 to $750,000, and only $196 in the till, Chicago had the biggest brokerage failure in 15 years. Hoagland & Allum never belonged to a stock exchange, did belong to the Investment Bankers Association until 1932. That year it went through reorganization and the I. B. A. refused to admit it to membership again. Subsequent operations were rarely successful and the firm got deeper & deeper in the hole, claimed to be engaged in such bizarre business as buying pistols and rifles for British and Chinese syndicates, staved off creditors with talk that Milton Snavely Hershey, the chocolate magnate, was about to give it the job of liquidating a $5,00,000 trust fund.

SEC gets no regular reports from brokerage firms which are not Exchange members ; the Illinois Securities Commission has a staff of only two people. Thus Hoagland & Allum got by for five years until President Joseph V. Moreschi of the International Hod Carriers. Building and Common Laborers' Union of America found himself unable to get back $47.000 of his own money and $64.000 of union money. Just before Hod Carrier Moreschi complained to State's Attorney Thomas J. Courtney last fortnight. Hoagland & Allum Vice President Russell W. Brown was found dead of carbon monoxide poisoning in his garage. The three surviving officers. President George F. Allum, Vice President Olaf Andrew Larsen and Secretary & Treasurer Henry Adolph Engel, went to jail for lack of bail. Few days later the Chicago Stock Exchange took the unprecedented step of advertising "An Open Letter to the Public . . . INVESTIGATE --BEFORE YOU INVEST!"

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