US Politics - Government

Mellon: Did He Make Shadow Sales to Coalesced and Ascalot?: When Andrew Mellon began his battle to clear his name of income tax evasion charges in Pittsburg a fort-night ago, two big hand trucks trundled piles of ledgers and other records into the court room. From these the former Secretary of the Treasury hoped to proved that the government owed him a 39, 045 refund on his 1931 tax. From the same records, the government hoped to show that the 79-year-old financier owed, 080, 261 in taxes and penalties. Last week the hearings developed these highlights: As Secretary of the Treasury, Mr. Mellon approved a rule requiring listing of tax-exempt securities on income tax returns. But he failed to list his own tax-exempt holdings. Howard M. Johnson, Mellon's financial secretary, testified the financier scarcely glanced at his income tax report when signing at his income tax report when signing it Mar. 14, 1931. That day the financier was preparing to sail for England to become Ambassador to the Court of St. James's. His office resembled a three-ring circus. An office force of several bookkeepers and accountants help Mr. Mellon fill out his annual tax returns. Lawyers also lend a hand. Frank J. Hogan, Mellon's chief counsel, brought out that in December, 1931, two years after the 1929 market crash, Mr. Mellon's wealth totaled about 00, 000, 000. The following year he gave his son and daughter a fortune in stocks, but continued to receive the dividends. The government contended Mr. Mellon evaded taxes by deducting losses on shadow sales of securities to personal holding companies controlled by his son and daughter. In 1931 one of these firms, the Coalesced Company, bought from Mr. Mellon 123, 000 shares of Pittsburgh Coal Co. common stock. On that sale, the financier reported a loss of more than, 000, 000. In court Mr. Johnson insisted his employer had no knowledge of who bought the stock. The hearing produced its note of comic relief. The government's staff of lawyers from Washington were surprised to learn that Mr. Mellon owned the hotel at which they were stopping, the Pittsburgher

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