Royalist's Revelations

A sharp, lean, hustling promoter is J. Edward Jones, 41, world's largest dealer in oil royalties. He worked his way through the University of Kansas as a soda jerker, now lives swankily in Scarsdale, N. Y. The intervening years were largely spent in initiating the public into the mysteries of oil royalties. When a landowner leases mineral rights, he retains the right to the royalties--generally one barrel out of every eight. Because he and his clients receive one-eighth of production irrespective of the price of oil, Mr. Jones does not look kindly upon any effort to limit the natural flow.

Last autumn J. Edward Jones publicly implored President Roosevelt to remove Secretary of Interior Ickes from the Oil Administration. President Roosevelt ignored the petition. But J. Edward Jones considered it more than a coincidence that SEC soon began to investigate his business. Upshot was a temporary injunction, which SEC hopes to make permanent as soon as it can prepare its case.

Meantime J. Edward Jones, whose first name is a trade secret, thought he would try to register some of his oil royalty trust certificates even if he could not sell them. Charging that the application contained "untrue statements of material facts," SEC subpoenaed Mr. Jones to appear for a hearing last week. Mr. Jones sent his lawyer. The Commission refused to listen to that gentleman until he asked if he could withdraw the application. Uprose SECounsel John J. Burns to bellow: "You can't go up under the gun of a stop order and then seek to avoid it."

Then the Commission ordered a U. S. marshal to go forth and fetch Mr. Jones in person. The marshal tramped around Washington all day inquiring at every hotel. Mr. Jones was not to be found.

Next day Mr. Jones came suddenly to life. He would, he said, be glad to receive a process server any time, because now he intended to challenge in a New York Federal Court SEC's right to subpoena him or to regulate the issuance and sale of his securities. Cried the blond oil royalist:

"I regard this effort on my part as an excellent opportunity to test out in clean-cut fashion the much-mooted question of the constitutionality of the securities acts and believe, with President Roosevelt himself, that there is very serious doubt as to their legality."

No sooner had J. Edward Jones got that off his chest than there dropped into his lap, unsought and unexpected, an amazing opportunity to put SEC on the spot. One William A. Rabell, a $6,500-a-year assistant chief investigator on the SEC staff who had been working on the Jones case, telephoned Mr. Jones at his Scarsdale home, offering to sell out for $50,000. He promised to reveal how SEC was distorting figures, to show Mr. Jones how he could riddle SEC's evidence, to "play dumb" if necessary, when called as an SEC witness.

Strongly suspecting that this was merely some new and devious trick of SEC itself, Mr. Jones called his lawyers, who advised him to keep the Federal employe on the string until a trap could be sprung. While stalling for time Mr. Jones beat down his price to $27,500. First installment was to be paid on the Sabbath.

Last Sunday morning Investigator Rabell drove over from his home in Pelham, N. Y. to the Jones estate in Scarsdale. Dressed in white linen, the smart, baldish accountant was led into the Jones study, which was fairly crawling with microphones and dictaphones--under the desk, under the couch, in the portieres, behind the radiators and pictures, in the radio cabinet. Upstairs two court stenographers recorded every word, and a platoon of lawyers and officials listened in. Mr. Jones was particularly pleased that SECounsel Burns was on hand.

Having persuaded Investigator Rabell to incriminate himself thoroughly, Mr. Jones passed him a packet of marked bills. When the Investigator opened the study door to depart he was confronted by two Federal agents descending the stairs, guns drawn. He fled into the dining room, tossed the bills behind the door, surrendered.

SEC belatedly revealed that Investigator Rabell had been fired several days before for "general incompetence."

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