Boston Bubble

At 4 o'clock one April morning a tall, square-jawed man sat hunched over a table in his Winchester, Mass. home, writing a note. "Howard W. Lang," it read. "You told me that you would keep after me until you got me. Now you can take full credit for my death."

The pen scratched to a halt. The man lifted his pen again, boldly signed his name: Bowen Tufts. He slipped the note into his pocket.

Outside it was still pitch dark. Bowen Tufts slipped into his overcoat, put on his hat, stepped out of doors. He walked across the lawn and entered the garage, shutting the doors tight behind him. When the motor of his Packard sedan settled down to a quiet hum, he climbed out of the front seat, walked to the rear of the garage. Carefully taking off his hat, he lay down on the cement floor, a foot from the purring exhaust. At seven in the morning the maid found the motor still running. Bowen Tufts was dead.

His suicide shocked all Boston. In State Street he had been counted one of Massachusetts' prime financiers. Starting as an obscure office boy, he had become manager, vice president and director of C. D. Parker & Co. Inc., investment bankers, an officer or director in as many as 60 companies at once. He had lived a normal, hard-working life, belonged to several good clubs, painted water colors for fun. What had driven this sane, hard-headed Yankee to take his life?

Middlesex County authorities promptly turned to Howard Lang. Bushy-browed Mr. Lang offered little light. His quarrel with Bowen Tufts dated back a dozen years to a personal feud arising out of a reorganization of Mr. Lang's real estate firm. He was questioned closely, absolved of all blame. Next Attorney General Paul A. Dever, a young, ambitious Irishman eight years out of law school, plunged into the case side by side with the Securities Division of the Massachusetts Public Utilities Commission. Slowly, day by day, they began unraveling the business affairs of Bowen Tufts, so complicated that by last week only the barest outline of events was possible. Their findings to date:

C. D. Parker & Co., founded in the last century, specialized in public utilities controlling the management of more than a dozen small ice, electric and water companies. In 1929 Parker & Co., at the inspiration of Bowen Tufts, founded an investment trust called Seaboard Utilities Shares. After the market crash some $1,500,000 in cash was transferred from Seaboard's treasury to the Parker treasury--a transfer easily effected because the treasurer of both firms was the same man. Bowen Tufts and associates, according to the testimony of one witness, dumped this cash into the market in a vain attempt to recoup Parker & Co.'s stock losses. Eventually Seaboard Utilities was stripped of nearly all its cash.

In the same year (1929) Bowen Tufts founded another investment trust, Railroad Shares Corp., which was to buy stocks & bonds of U.S. and Canadian railroads. Parker & Co. bought all the stock of Railroad Shares (800,000 shares), giving in payment its own note for $8,000,000 Parker & Co. sold the shares to the public, reducing its note to $3,323,000. As in the case of Seaboard Utilities, Parker officials were the managers of Railroad Shares, and Parker & Co. availed itself of the opportunity to "borrow" $1,100,000 in cash.

Between them the two investment trusts sold $21,000,000 worth of securities to the public. Last week it was revealed that less than $100,000 was left. For six years the two firms had avoided the suspicion of the State Securities Division by listing their holdings at cost instead of at depreciated market value.

Meanwhile C. D. Parker & Co. itself, despite heavy borrowings, was rapidly sinking into insolvency. It, too, had hoodwinked the complacent State Securities Division by listing securities at cost. In March 1934 it claimed to have stocks & bonds worth $3,504,233. Not until February 1935 did the Securities Division write to inquire whether the figure represented market value or cost. When Parker & Co. replied that the securities were listed at cost, the Securities Division called the answer "evasive," asked for an estimate of the market value. Five weeks later Bowen Tufts committed suicide. Last week it was revealed that Parker & Co.'s assets were $1,275,000, its liabilities nearly $4,000,000.

Last week Seaboard Utilities and Railroad Shares were in receivership. Parker & Co.'s brokerage license had been revoked. And Boston was dismally surveying the worthless wreckage of one of its worst smashes in years.

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