The sun. [volume] (New York [N.Y.]) 1833-1916, 1876-05-10

The Real Cause q the Disaster 20 the BanL
Of California.


SAN Francisco, May 9.-In the libel suit
OF the Erenino Bulletin against the Alto Cuhfor-
MIA, Mr.. d. .. Mills, long a director and now
President Of the Bank Of California, testified
that the capital of the bank was t5,cp,oOo at tho
date Of the suspension IN August last and It's
surplus as reported on the books was f1,OoNOB
additional by the books the Liabilities OF the
bank at the time OF suspension were ABOUT VA
0op0o. and the nominal assets, good, bad and In
different. were something over t20,000000. Tho
i,ure was considered to have been caused by
the mlsmanagement Of the then President. Mr..
Raiston. From the reports OF the committee
and Board Of Directors, Ralston was large
deptor to the bank. The reports made It not
far from si,OoO.0Oo. The Indebtedness was re-
ported 10 arise from various sources. There was
one iarg, deficiency In the refinery account.
1t amour ed to from two to two and quarter
millions Of dollar. being overdrafts by Mr..
Ralstons checks; This deficiency stood on the
4 he refinery was supposed to owe that mach
money, and the committees rsported that the
money not owing by the rehoery, but had
been used by Mr. Ralston. The bank owned the
most OF the refinery and IT WIS considered to be
under Mr.. Ralston's control Hs President OF the
bank. Other deficiencies arose through certi-
Hcates OF deposit. or what were reported to be
certificates OF deposit, where the money had not
been paid into the bank. These amounted to
$5s0,O00.
moneys had been used 10y MIR. halston for his
own private account. He had signed the certin-
Gates, hut they had not been registered, nor
pa.sed through the books. Inc balance OF the
| Indebtedness was repor ted as having been
mainly carried In The bank on cash tags Of Mr..
Ralston, and before the suspension, accounted
| for other bills discounted. Bulls Unavailable
and endorsed bv Nr. Ralston were considered
part OF hi, Indebtedness; TIE money w r.s sup
waite purposes. Those acts were concealed from
the directors and other officials, aud they did
not appear In the sent annual examinations, In
June and july. The Montgomery Street Extern
sion Association was indebted to the bank.
deotedness by the Kimbau Manufacturing
Company an, and anoths, by the Mission
into a trust deed. of whico j. d. Fry (Iill-
ston's father-in; lawl was trustee. to duidate
ana pSy TIE SanS Tn os as IS noI ne so t
| chief stockholder Of these companies Tue ag-
gregate OF this Indebtedness as IL stands on tho
| books amounts to about $&OIpN These deb "a
! were the result OF discounts mace by the bank ],
or with him (kalstonl in the bank. and stood
| $2JO,0OO is the result OF a compromise made three
years OF more ago. The bank Lost py the com
| promise.
inst nS. 40 you @ SS ns rnS Or s
| than the capital stock and surplus.
In reply to further questions. the witness esti-
mated that there was lett OF the s8.OolDO cant
| tai aud res serve fund from SL0c0DO To tl500,On
Of sssiiaole assets The capit.i was Impaired to
| fund proved to be nominal. The bank sold TO
~: snarJn, since the suspen.ion: upward OF
| aud $4,000 contingent. TDey Appropriated
| the Indebtedness at something over $i,UnuOO,
| and with the concurrence OF the board this in
| dcbtedness was sold TO WIN. Sharon on thu
| terms already Indicated. The contingent $5eO,0Cl
| Is regarded by the bank as only nominal asset.
| The Indebtedness sold to Sharon was ilston' 4
| Indebtedness the bank. The report OF tho
committee and Of the board Of Directors held
| that the failure OF the bank was caused by the
| unauthorized use of its moneys by Mr.. Ralston
for his own pri vate purposes. without the knowl-
| edge OF consent VI the Board VI Trustees.
George ii. Howard trsiined that he was d.
! rector Of the Bank of California in August last,
and Is such still. One cause OF the failure of tho
| bank was the large amount OF money Withdrawn
by Nr Ralston. The committee stated tni!
amount 10 be somewhere IN the neighbOrhood
OF Si.5OO0OO. II was understood that he took
this tor his own private purposes. without tho
| knowledge OF the directors. As other misnan-
| sgenent on the plri Of Dir. Raist N, accounting
for the failure he cited unsecured loans OF large
sums Of money to II. +. Williams and the Hon
| W. NJ. Stewari. here was also a smah loan Il
McCrellL5n Of the Att These unsecured loans
he supposed we're legitimate; they all stood oil
the book Of the bank he witness confirm I'd
| Mr.. Miils's statement that there were moneys
! Withdrawn from the refinery by Mr.. Raiston,
| which the rank had 20 make good.
Aicuaei Reese testified that he had been q
| stock holder IN the Bank OF California Tor two
| years. lie held Zoo shares. Hold 2.l0) shares
! also, as collateral Tor loans Of s60.OJO Nose
Ellis, and Sl50.0Gu to Burng Bro hers. lie sup
pissed when he mate the loans that the stock
peiopget 10 the parties p,eugin2 IL, but after the
bans failed, Burllng said that what he pleig ed
bel nged 10 Mr.. Ralstou. witness said hc knew
the cause OF the o-uk failure. he had occasion
to examine, and found the money all gone. III,
believed ~. ha!ston had used 1t for his owl