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The New York herald. [volume] (New York, N.Y.) 1920-1924, March 15, 1922, Image 7

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FAIL, OWING $34,000
Three Members of Graf & Co.
Previously Accused of 'Wash
Sales,' Say Creditors.
Kardos & Burke Attorney In
sists Firm Can Pay Dollar
for Dollar in Time.
Creditors of Graf * Co., stock brokers
ot ltt Liberty street, who were forced
Into bankruptcy Monday, pointed out
yesterday that the three members ot
the firm?Henry Spitz, James M. Oral
mid Herman Wltkowskl, also Known as
William Herman?had been arrested
previously charged with making "wash"
files. They were arraigned March <i
before Judge Craln In General Sessions
and released under $7,500 ball each.
Judge Mack in United States District
Court appointed Jesso W. Ehrlch re
ceiver for the Arm, against which three
creditors' claims aggregate more than
J:t4,00?. It was alleged that the de
fendants were In a conspiracy to de
fraud their credltora The creditors
who signed the petition are Lenox &
Montford, C. B. Whltaker & Co. and
"Walter P. McCaftery.
The case of three broUcrs charpre<?
with "bucketing," which hf1
for yestedya, was not cai..
cral Sessions duo to a clerical crro.
on the court calendar. It will bo callcd
To-day and will be the second among
the many that have resulted from the
District Attorney's Inquiry Into "bucket
The defendants are George Markel
pon of 883 Riverside Drive, Isadore
Friedman of 1865 Hast Fourth street.
Brooklyn, and Samuel AI. Small of 1625
President street, Brooklyn. Tho stock
brokers are alleged to have swindled
about a quarter of a million dollars
from clients of their firm, which was
purchased recently by Alphonse Des
t hatnpn of 191 Fairfield avenue, Hart*
l'ord. Conn., the complainant.
Liabilities of the brokerage house of
Kardos & Burke of 32 Broadway, which
failed recently, are estimated at $1,453,
000 by fRofcert IP. Stephenson, receiver.
i Any estimate of assets, ho said last
night, would be "highly speculative."
Arthur Leonard Ross of 256 Broadway,
attorney for the firm, previously an
nounced the same figure for liabilities
and put asrets at $1,808,300.
Mr. Ross in a new statement said the
firm expect* to settle for 100 cents on
/he dollar, partly in cash and partly In
notes which will not bear interest. He
said the firm expected to reenter the
stock and bond field, and already had
plans under way for a reorganization
If acceptable to creditors. Several cred
itors1, he said, had already offered to
lend funds to help effect a rehabilita
"As soon as the consent of all cred
itors Is In," said Mr. Ross, "and the
court approves our composition we will
open our doors for business. The money
offered by some of the creditors will
enable lis to start with a fair amount
of capital."
?Meetings have been arranged between
T\fr. Ross and creditors In the various
cltlea in which the company had branch
o f flees.
S. L. Cromwell Says Public Is
Often Careless.
Fprrial Dispatch to Thb N?w Tobk Hrbai.d
Boston. March 14.?Two principal
reasons why bucket shops and stock
swindlers have been able to opcrato
so safely In the past arc the ease with
which they obtain political Influence and
gilt-edged bank references, said Sey
mour L. Cromwell, president of the New
York Stock Exchange, here to-day In
?n address before the members of tho
Boston Stock Exchange.
Mr. Cromwell asserted that In some
of the recent flagrant failures of bucket
chops, men who had held public office
were partners or directors in the Anns
involved. Somo of tho most activo de
fender* of tho most offensive bucket
chops, he added, have been men in pub
lic life who have "sought through their
political and legal Influence to prevent
tho stock exchange from exercising its
powers to shut off quotations from
Bank references, Mr. Cromwell went
on. are not always conclusive evidence
cither of the character of a customer or
or a firm. Some bucket shops in the
fitreot, ho asserted, have been able to
obtain tho finest kind of bank refer
ences, and prominent men have been
Inveigled Into giving introductions to
practically chanco acquaintances and
in many ?*acs these references have
been utilized to promote swindling In
the Street and out of It
"No Habitltste far Character."
Another obstacle in the way of sup
pressing irregular practices in the Street,
it was said, is tho willingness of the
public to buy securities through Irre
sponsible dealers. The licensing of
brokers, he declared, will not meet the
difficulty, for, he asserted, there Is no
substitute for high character and stand
ing In matters of credit and business.
The stock exchange, said Mr. Crom
well. ha* most rigid rule* stipulating
conditions under which socurities may
be listed, but the exchange jiot In any
manner whatever regulate the prices
at which purchases or salep shall b<f
mad?. The rules of the New York Stock
Exchange attempting to curb the evil of
foisting worthless securities on the pub
lic ho characterized as "ahead of the
laws of the State and of the nation."
The recent wholesale failure of broker
age houses engaged In bucketing prac
tices was taken up by Mr. Cromwell.
.Against this practice, he said, the whole
force of tho New York Stock Exchange
effort has been exerted for many years.
"Xaftfnarda Sometime* Kail."
"It Is the business of a brokerage flrm
to accept legitimate accounts and to do
business for Its clients," said Mr. Crom
well. "It is the rule of our members to
know the character of men or Arms for
which they deal, but from time to time
It has been revealed that despite the fact
that customers have been accepted on
what appeared to he substantial refer
ence, thero have been disclosed In a
little while facts which tended to show
t-"TOt they were In some way connected
or related to concerns doing an illegal
business and Qiaybe to bucket shops.
"What Is needed primarily is vigorous
enforcement of existing laws. The pub
lic and all reputable dealers in seeurl
tles and all exchanges which aro not
niaxklng fraud under seeming respec
tnhllltj- should associate themselves with
officials who may now recognize their
duty In cleaning up this condition. The
New York Stock Exchange will, as it
hss always In the past, cooperate to the
Pseudo Scientist of Thirty Years Ago Baffled the
Most Skeptical by His Jargon Until Thomas A.
Edison Called His Bluff and Ended His
$5,000,000 Scheme.
This is the third article of a series supplementary to the revela
tions of the general crookedness of the backet shops which Tax
New Yobk Hebald has published recently. These articles will set
forth the operations of some of the famous swindlers and give de
tails of swindling schemes of the past. How these men preyed on
the public should not be forgotten. Another article in the series
will be published at an early date.
Whatever itjs-as that made th^ Keely motor go, it was but a trifling
circumstance compared with the mysterious force its inventor used to
lure more than a million dollars out of the pockets of the public. When
John Ernest Worrall Keely died In 1893 his gravity defying motor died
with him and the hopes he raised-in the minds of those who had believed
that perpetual motion was to be had by mechanically reversing the New
tonian law died too.
Keely founded a $5,000,000 corporation on pure hokum. He had men
and women fighting to buy shares in the Keely Motor Stock Company.
Later on the same men and women fought to sell the stock. They had
bought it for $50, which waB its par value, and clamored tor it when it
soared to $200. In the end they were willing to sell their shares for a
dollar each?in fact, for anything. The majority of them or their heirs
still have it. ?
In the light of the facts set forth by The New York Herald in its
recent series of articles on the present day bucket shop, It does not seem
[ too much to say that were a Keely'
,r> appear to-day with such a con*
'.ion as the Philadelphia "sclen
handed to the public thirty
years ago he would have to call on
the police to keep the suckers in line.
Keely was something of an Alex
ander Dowle of science. He had the
skeptics baffled before they bad a
chance to open their mouths. He was
huge, ponderous, dignified and .en
dowed with a vocabulary fllltrtl with
unattached, detached and wholly Ir
relevant technical words and phrases.
Scientists Were Toncnetled.
I>et the ordinary scientist approach
and inquiro in the simplest terms Just
one thing and Keely would launch
forth on a pseudo-sclentlflo Jargon
that left the plain scientist dum
founded and tonguetied. Of course the
torrent of explanation was pure bun
combe and of course the scientist left
the presence so .convinced.
But such was Keely's masterfulness
that he would send inquiring scientists
away afraid to protest*. They were
mere physicists or electrical engineers
or whatever it was they hight happen
to be. As such they were still stu
dents. Hero they had met a be
whlskered dignitary who talked like
a madman, but who had forced them
to the defensive. What did they think
of this now motor?this new force?
Ah, they would not care to say. Maybe i
it was good and maybe It was Just
Just one American scientist scared
Keely, and ho was Thomas A. Edison.
Mr. Edison asked Keely to let him
inspect this revolutionary machine.
Keely hurriedly locked all the doors
and windows, pulled down the shades
and let it be known that Mr. Edison
would have to step over his prostrate
form to get near the Keely motor. In
vain-did the New Jersey scientist seek
a view. He told Keely that he would
post any bond desired to guarantee
Keely agninst the loss of any part of
his secret. All that Mr. Edison wanted
was the right to survey the new ma
chine and assist Keely In applying Its
marvelous force. /
It Is probable that Keely's fright
when Mr. Edison sought Information
started his downfall. He was never
"exposed" in the commonest sense of
the word. In 1888 he was committed
to Jail for contempt of court when he
refused to explain to a group of scien
tltt;;/- men the fundamentals of hla
great discovery. His sojourn in a cell
was brief.
He applied for no patents on hla
contraption. He explained! nothing
that any person could understand.
His heirs, being without the secret,
stored the wheels and magnets In the
parrot, and thus ended the Keely
Motor craze that had set America and
Europe by the ears.
Keely was a Philadelphia^. His
early life was devoted to the study of
resonance, music, and (to quote
Keely) "fho sympathetic forces as
associated with the mental organism
in its control over the physical." He
always talked like that. For almost
ten yearB he tinkered on the mech
anism that later was to be a myste
rious sensation. Every so often he
Issued statements to the newspapers
prophesying the coming of the marvel.
In time he had legitimate scientists
believing him, and a number of tbem
predicted that this man would relegate
Thomas A. Edison to the archaic.
A typical seance was that held on
January 17, 18D6. Keely's laboratory
was In North Twentieth street, Phila
delphia, and the inventor was making
a mighty struggle to revive the inter
est that had waned when ho refuaciJ
to let any one look behind the scenes.
Thousands of dollars' worth of stock
had been sold, but at this particular
time it was far below par. Keely had
once traveled with a circus and was
pretty clover at sleight of hand tricks.
His seances always suggested the
magician show. But at this seance
there were present a number of pros
pects and two well known scientists?
Prof. Brinton of the University of
Pennsylvania and Prof. W. A. McAn
drew of Pratt Institute.
Had Spiritualist Alibi.
"T am always a great deal disturbed
when I begin one of these demonstra
tions," began Kecly, "for sometimes, if
an unsympathetic person is present,
the machine will not work."
How was that for an alibi? He re
peated this several time*, thereby
dampening the ardor of the audience.
They began to discuss the possibilities.
Think of a locomotive, equipped with
a Keely motor, passing through a
town where the unsympathetic lived,
or suppose the train should receive an
unsympathetic passenger. Mra Bloom
field Moore of Philadelphia wasKeely*s
patron saint, and it was her money
that helped him bring his machine to 1
that etage where he made it pay.
Mrs. Moore was at this seance and'
she talked simultaneously with Keely. |
She assured the audience that what
Keely actually had discovered and
harnessed was "the will of God."
"Watch him closely," she urged.
?Tie can simply stand there and look
at that globe or speak to it and make
it go fast or slow according to his
Then Keely proceeded to define his
discovery as a polar-depolar sym-1
pathetic force?simply that and noth
ing more. He was standing near a
pedestal topped with a glass plate.
On the plate stood a "copper globe
connected with a smaller copper globe
and decorated with a small edition of
what looked like a gramophone horn.
A fine copper wlr# connected all this
with a wheel that was set up a few
feet away on a separate table. Brushes
somewhat like those within a dynamo
bristled at regular intervals from the
periphery of the wheel and within the
main wheel there was another wheel.
All this sounds vague and may convey
nothing to the reader. It conveyed
nothing to the observer.
Responded to Tnnlnc Fork.
Keely took a large tuning fork and
a zither. He rapped the former against
the globe and almost instantly the
wheels began to revolve over on the
table. Thero was a galvanometer prop
erly attached to the apparatus and no
electricity was registered.
"How does this happen?" demanded
cne of the visiting scientists.
Keely drew himself up to his maxi
mum height. Ho explained. Ills face
took on the look of the tolerant father
setting simple children straight.
"It is simple," he replied, "very sim
ple. Simply the interchange of polar
and depolar sympathy. Is that clear?"
Then Keely attached a silk thread
to a gilded globe mounted on iron rods
and resting on a rrlass* plinth. He
passed the thread through an aperture
in the wall and entered the adjoining
room. He sat himself at the aperture.
Only his head could bo seen by the
audienoe. Tho silk thread passed over
his shoulder. On a shelf in front of
him lay the zither, two pitch pipes and
a mouth organ.
"This will be more astounding," he
announced. "It took me years to mas
ter this."
He tuned up a bit and then asked:
"How many times shall I make
that globe revolve?"
"Twice," aaked one of the Impressed
1 Keely twanged the zither and the
globe turned over twice.
| "Ten times."
The prestidigitator tooted the pitch
pipes and the globe spun ten times.
"Of course, tho engineer of a loco
motive propellod by my motor will not
havo to tako up the zithdt- nor will he
l>e required to whistle like a Pan,"
explained Keely. "All that will be
taken care of by sustained resonance."
Then tho guesits of this scientist
were admitted to a room where a huge
and complicated tangle of wheels and
rods stood. ICoely hummed a couple
of bars of a popular song. The wheels
began to whirr and the rods to click
against each other.
"But what of It?" demanded one of
the scientists.
"This machine will so neutralize the
force of gravity," replied Keely, "that
a child will be ablo to pick It up with
one hand and hold it at arm's length.
Inert, It must weigh tons, as you see."
"But how will it be used?"
"Limitless use." cried Keely. "With
a machine like this, but no bigger than
L your hand, I shall be able to run a
street car crowded to tho roof and the
motor would show no motion."
"When will you be able to do all
"Soon, aoon," said Keely. "I shall
not give the world this machine half
completed. When this scientific mys
tery Is mine beyond peradventure, and
when I am amply protected with
money against theft of my ideas the
world may have It. For fifteen years
I was hindered by an incomplete
hypothesis. Five years ago I struck :
the proper trail. And now you see
'Wore Many Diamond*.
Have a look at this Keely. He wai
quite swarthy, and had a weakness for ;
large and brilliant diamonds, which he |
was wont to display in an open and
generally dirty shirt front His hands 1
were enormous, the knuckles large
and malformed. When not tinkering
wltb his motor he was usually playing
checkers with grimy Angers on a '
filthy board with battered draughts, j
Early in life he was a cabinet maker :
and a musician by turn. In the winter
he worked for a cabinet maker in
Philadelphia. In the summer he con
ducted small orchestras In holiday re
As early as 1874 he announced that
he had mastered the problem of per
petual motion and a number of New
Yorkers engaged a patent attorney in
Philadelphia to examine it and make
report. On November 10 of that year
the first of Keely's demonstrations wax
made. Tho New Yorkers requesting
the Inspection were John J. Cisco, a
banker and at one time United States
Sub-Treasurer In New York; Charles
O. Franeklyn of the Cunard Line;
Charles H. Haskell, author of Has
kell's Tables; Henry S. Sargeant,
president of the Ingersoll Rock Drill
Company; W. D. Hatch and Enos T.
Throop of the Hatch Lithographic
Company; John S. Smith, manufac
turer of steam heating apparatus, and
William B. Meeker, a banker.
The report of the lawyer?Charles
B. Collier?was well received by these
men and they at once gave Colllei
$10,000 with which to purchase Keely
stock. These men likewise reoelved an
option on $40,000 more stock until Col
lier's favorable report might have fur
ther verification.
In the meantime Mr. Collier had dis
posed of tho New England rights for
an option of $50,000 and the agree
"A Tower
. of ?
Commercial Banking,
Domestic and Foreign
Personal Accounts, Ac
tive and Reserve
Letters of Credit, Com
mercial and Travelers'
Financing of Exports
and Imports
American and Foreign
Documentary credits
payable in all parts of
the world.
A Sound
Financial Policy
For every business enterprise,
but especially for a large one,
the careful planning and or
ganization of its banking con
nections is fundamentally im
portant. It is the part of
wisdom so to plan your bank
ing arrangements that the
resources, services and connec
tions of the several institutions
with which you deal combine
in a way that makes for com
plete banking service and
The Bankers Trust Company has its
place with other strong institutions in
the banking arrangements of many of
the most important enterprises in in
dustrial and commercial lines in all^
parts of the country.
We invite correspondence or interviews
with business men in New York
and elsewhere who are considering the
matter of a banking connection for pres
ent and future financial requirements.
Rankers Trust
Downtown Office: Fifth Ave. Office: 57th St. Office:
16 Wall St. at 42nd St. at Madison Ave.
Paris Office: 3 & 5 Placc Vcndome
nient that the New England conces
sionaires were to raise 1500,000 to In
troduce tho invention. That done,
these same backers were to pour in
another half million.
The first large machine consumed
three years of work and $60,000. Then
il was pronounced a failure. Several
more failures and then the announce
ment that the right combination had
been found. There was a great demon
stration before 300 people and the next
day two groups of capitalists gave
Keely checks for 140,000 and $80,000.
And that started the riot.
.Stock sold all over America and
?ven In London. There were riots.
The police had to be called to quell the
enthualaatic purchasers of stock. There
would be an announcement that only
so much stock would be sold in a
single day. Men and women withdrew
their savings from banks and collided
with each other at the broker's door.
The world seemed ripo for such a
plucking. Songs were written about
the Kecly motor. Terpetual motion
was the universal topic. Electricity
and ."team were about to bo thrown
into disuse. Keely had discovered the
seemingly Impossible.
Machine after machine failed despite
the announcement that the combina
tion had been found. But enthusiasm
faded slowly. Then stockholders de
manded to know the secret. They In
sisted that it be protected by patents
and dragged Into the light. But Koely
looked the doors and refused to come
forth until arrested and taken to
court. He refused to obety the coa^e*'
demand that the secret be told ht*.
was sent to jail.
Keely died of pneumonia in his Phil
adelphia home when he was about sev
enty. The fortune he had collected had
dwindled to nothing except the house
ha died in.
46th. Street
"My Wife Is My Partner
Not My Boss"-- W. L. George
Hp HE above statement of Mr. George,
*? the famous English novelist and
world renowned feminist, shows you
the type of man he is, and gives an inti
mate glimpse of how he handles the
subject of "women."
Mr. George is the acknowledged expert
on the subject of women?he knows
their habits, traits, peculiarities, whims
and petty vices better than any living
soul. He also knows how to write about
them better than any one else.
Every day The Sun will publish on the
Woman's Page an interesting essay by
Mr. George about this much discussed,
though little understood topic?women.
Read These Stories Daily
Starting Next Monday in
t&b# &vm

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