Business: Yaleman

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Assistant U. S. Attorney for the Southern District of New York is hustling young William Maloney. He went to Fordham University and his middle name is Power. Last week William Power Maloney obtained a $4,500,000 mail fraud indictment against three young Yalemen, 49 other individuals and 20 corporations—biggest mail fraud indictment in U. S. history. Smartest of the three Yalemen was Wallace G. Garland, Class of 1925 (Sheffield). Member of a solid Pittsburgh family, he was not a conspicuous undergraduate except as a brilliant student. Even Professor Irving Fisher liked his original notions on business and economics. But Yaleman Garland's notions were far more original than Professor Fisher ever suspected. While still an undergraduate, Yaleman Garland heard about a signal device invented by a "Sheff" engineering professor named Henry A. Haugh. Now widely used, the device automatically changed the traffic lights at highway intersections when cars approached. Two years after graduation Garland organized Automatic Signal Corp., his old friend Professor Fisher putting up a "considerable sum" and becoming board chairman. For the patent the Garland company paid $500 in stock. It was taken into the balance sheet at $7,500. Meantime Yaleman Garland acquired a crony named Arnold C. Mason, Class of 1928 (Sheffield) and a member of a solid St. Louis family. Later a third named David Saylor II joined them, though he never achieved the corporate importance of Messrs. Garland & Mason.

Before Automatic Signal had sold a single light, Yaleman Garland decided to give his heretical business theories a thorough workout. At a pen's stroke he wrote up the value of the patent to a flat $1,000,000. Then he transferred the patent to a new concern of his own, granting the original operating company a manufacturing license, carried on their books at $3,250,000. Affiliates, dummies, acceptance companies, holding companies, securities companies began to sprout like weeds. And the patent was given another boost, this time to $32,500,000.

That was too heretical for even old Professor Fisher, who is a stanch advocate of the commodity ("rubber") dollar. To please his patron, Yaleman Garland revalued the patent at $5,000,000. Automatic Signal prospered modestly, is still a going concern. Still board chairman is spare, white-goateed Professor Irving Fisher. Yaleman Garland withdrew into the mysteries of his 30 new corporations.

What tangible assets these companies had were constantly and dexterously shuffled for the purpose, according to last week's indictment, of lining Yaleman Garland's well-tailored pockets. Directors were young college graduates who were delighted to get $20 each time they went through the motions of a board meeting. The directors were probably quite ignorant of the fact that the Garland collection of corporations was capped by a holding company, named Public Service Holding Corp. for no apparent reason except that it sounded like big Public Service Corp. of New Jersey. Stock in this Garland company was peddled among unwary investors.