New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1873-10-25

The result was more cheerful feeling and a reae-
ton an prices, TO the extent OF the loss
-
RUMOR BUSY WITH LAKE SHORE.
AmARKEp DECLINE FOLLOWED BY REAcTioN-F"-
PIlATIC CONTRADICTION or THE ALLEGED DEFAL-
CATION AND THE USE OF OVER TWO MILLIONS IN
BONDS FOR SPECULATIVE PURPOSES.
Rumor charged in addition to what has already
been published, that the $2,25O,OOO of Lake Shore
bonds were transferred by the Executive Commit
fee of the road consisting of Horace f. Clark, James
IL Banker and Augustus Schell, to GrinneIl d Co.
as margin in their gigantic manipulation OF the
stock market; that the operations originally prom
ised success, but when the panic came they
lost the margin and more beside; that the
Lake Shore Company never received any compensa-
ton for these bonds and further, that heavy de-
falcaton by officers of the Company had been dis
covered and its finances were IN precarOus condi-
ton These rumOrs, doubted at first gained cTedence
when taken in connection with the formal transfer
of 100000 more Of property, by James H. Banker,
to Commodore Vanderbilt. Owing TO these rumors
and 20 heavy sales Of stock, there very marked
decline in Lake Shore the prce dropping from 65 at
the opening to O. amid considerable excitement and
apprehension. Later, however it reacted to 60.
Efforts to obtain official information were not very
successful owing 10 the reicence of nearly all the
officials and the brusqueness of some of them. Com
modore Vanderbilt, when questioned, said that lie
knew nothing about the Lake Shore transactions
during the lifetime of Mr. Clark. The transfer OF
property by Mr.. Banker was not to make good the
loss of any bonds by the Lake Shore Company. Fur
ther than this he could say nothing
Mr.. Schell was very retcent, saying that lac did
not purpose to answer newspaper attacks upon him.
He would only say that the bonds were properly
issned and properly applied, and that ali transao-
tions in regard to them were perfectly satisfactory
to the managers Of the Lake Shore Company.
MT. Grinnell of George Bird Grinnell & Co. sand
that the bonds in question transferred TO the
firm by Messrs. Clark Schell and Banker, the Exec
utive Committee of the Lake Shore COMPANY, col
lateral for purchases of Lake Shore stock Whether
these purchases were made for private interests OF
for the benefit of the Company he was unable to say
but he supposed the latter to be the object.
L. c. Worcester, Acting Treasurer Of the Lake
Shore Railroad and Secretary Of the New-York Cen
trial Railroad Company, said that he had been acting
rs Treasurer since the departure Of James II.
Banker the actual Treasurer, for Europe, about a
year or more ago, on business for the Vanderbilt
roads. When MIR. Banker returned he had ac-
eumulatiOn OF other business to attend to, and
latterly there were even greater interests which
CURED attention, so that he had been unable
10 attend to the details of the Office. Mr. Worcester
had therefore continued to perform the duties.
Speaking from knowledge therefore, Mr.. Worcester
said that there was no truth in the statements of
the embezzlement of $2250,0O0 Of bonds. These
bonds he'd been regularly paid for and the receipts
turned into the treasury of the Lake Shore Com
pany, and the transaction regularly closed long
since. Their transfer had been stopped simply be-
cause of the peculiarly delicate nature of affairs
when the Company was served with the notice in
the Grinnell bankruptcy case. A question had
arisen as to the legality of the transfer when such
proceedings were pending, and the Company had de-
cded TO await judicial construction of the matter
which would be had to-day. as the case
had been set down for argument in the
morning. As to the defaleation in the Treasury
of the Lake Shore Company, if current rumors were
TO be believed, there was very little money in the
treasury. There had been no embezzement OF de-
falcaton. Fortunately or unfortunately, as the
case might he. the Lake Shore Company had entered
upon a series of improvements designed TO benefit
the road, and this for the time had required their
available cash. Ii was for this purpose that the
loan from the Union Trust Company had been OBJ
tanned. This loan would have been met in time
from the earnings of the road which were ample.
Some misapprehensjon existed as to The precise
character of the negotiations in regard TO the loan
of - 10000 An impression appeared TO prevail
that Commodore Vanderbilt had assumed the obi
cation because the Lake Shore Railroad was unable
10 meet 1t. This was not the ease. The Lake Shore
Railroad could very well pay n. and would do so in
the regular course of business. but of course the
roady money was not obtainable Immediately. Com
m0dore Vanderbilt, however desired 10 see the
Trust Company resume busiDess and propoaed 20
facilitate its resumption. Tie therefore had made
the arrangements noted elsewhere
COMMODORE VANDERBnT's sRTTIFMyNrS
With respect 10 Commodore Yanderbilts position
in the matter Of the Lake Shore loan and the stock
jobbing accounts on the books of Grnnell d Co.
various statements are made One story IA that
when Commodore Vanderbilt accepted the Presi
dency of Lake Shore, made vacant by the death If
Horace L. Clark he discovered that a large amount
Of money had been appropriated for the purchase
Of Lake Shore stock and for the account of the
Company. He asked what that for
and when told. expressed his dsapproval and in
sisted that the Clark estate and Messrs. schel
and Banker should assume the load themselves
which they were obliged 10 do. Another story re
latng 30 the Lake Shore loan TO the effect thai
the Commodore said that he had not incurred that
obligation hut he would settle 10 IN his own way
He nroposed 10 give. not the cash, but his notes
secured bv Harlem at 90. at three, six, and nine
months. and declared that he would save thai
amount Of money out OF the earn
ings Of the Lake Shore Company dnrnt
the next year He insisted however, that ne shonio
be secured for advances made IN stock speeuIauons
on behalf of James II. Banker his son-n-law. II
was for this purpose that James IL. Banker mahs
the tfaDsfst noted in Yesterdays TRIBUNE, and