Window Dressers

On Sept. 29, 1931 Oris Paxton Van Sweringen, older and wiser of Cleveland's bachelor brothers of railroading, called at No. 23 Wall Street to transact some business with J. P. Morgan & Co., his biggest bankers. As he chatted in an inner office someone summoned him to an adjoining room. There he found an old friend, Joseph R. Nutt, Cleveland banker. After a brief conversation Mr Nutt produced a document. He beamed while Mr. Van Sweringen signed it.

Last week, on the basis of that meeting and that document, a county grand jury in Cleveland indicted Messrs. Nutt and Van Sweringen for fraudulently deceiving the public.

The agreement Mr. Van Sweringen signed was for the sale of $10,000,000 in government bonds from Van Sweringen Corp. to Union Trust Co., of which Joseph R. Nutt was chairman. The bonds were on deposit with J. P. Morgan & Co. against a Van Sweringen loan and were bound by indenture to stay there. But, said the grand jury, the Trust Company used its right of purchase to "window dress" its statement of financial condition in September, making it appear that saleable assets were higher than they really were. That was not all. Mr. Nutt had persuaded Mr. Van Sweringen to leave on deposit in Union Trust the $10,000,000 he had been paid (on paper) for the bonds. Thus the Union Trust was able to add $10,000,000 to its statement of deposits. A week later it "sold" the bonds back to the Van Sweringens at the same price. Net result of these two transactions, according to the grand jury, was that the depositors and stockholders had been fraudulently deceived by the bank's statement. The jury slapped indictments not only on Mr. Nutt, who was once treasurer of the Republican National Committee, but on Union Trust's onetime President Wilbur M. Baldwin, who was indicted three weeks ago for misapplication of Union Trust funds in another connection. Mr. Van Sweringen was named as an aider and abettor.

The Nutt-Van Sweringen transactions were first discovered last year after Union Trust Co., which failed to reopen after the bank holiday, was taken over by liquidators. The State Senate had spent most of the summer raking over the muck left by Union's failure and the failure of another large Cleveland bank, Guardian Trust Co. But Cleveland businessmen raised their eyebrows skeptically over the rash of bank indictments that followed, including one against Guardian Trust's homely, church-loving President James Arthur House. They were ready to listen ast week to the explanations of Messrs. Mutt and Van Sweringen who swore that their deal was a perfectly routine business transaction in which the bonds happened to be bought one week and sold the next. Said Mr. Van Sweringen: "These were open and shut purchases and sales of properties for cash. Now perfectly simple transactions are being construed as having Deen part of something claimed to have been done unlawfully. . . ."

Said Mr. Nutt: "Not a word was said ,bout the repurchase of the bonds at the ime of the original transaction. . . ." Next day Messrs. Nutt and Van

Sweringen pleaded not guilty, were each released on $7,500 bail. To President Baldwin's previous bail of $7,500 the court added $1,000 when he also pleaded not guilty.

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