The Leavenworth weekly times., 1876-08-03
RAtsT0N's RUIN.
The Newspaper Libel Suit in San
Francisco, Cal.
How RaIston Managed the Bank Of
California, and Conducted Outside
SpecuIations, Etc.

SAN FRANCISCO, Cal, July 29.-In the
"Bulletin-Alta" libel suit, further testimony,
that of Michael Reese and D. o. MILL, was
taken b:fore the Third District Court Com
missioner yesterday. Reese testified TO the
following effect The failure of the Bank
of California was caused by Ralston's TAX
ing money from it to expend on outside
affairs. Ralstou vas the architect OF the
job to sell the Spring Valley Water Works
and the Calvaras Valley scheme to the city
at profit of about SS,O0O,OOO. l helped
him, furnishing large amounts to buy up
stocks. / advanced between three and four
million dollars, and he had the whole man
agement of it. He expected to make
enough ont of the bank TO save il from
failure. 1t was the last thing to do to
save it. Ii the scheme had been carried out
don't think the bank would have failed.
Ralston took the funds of the bank to carry
on the water scheme, the Palace Hotel, the
Kimball Mandatory, the Mission Woolen
Mills, and other outside enterprises. No
ODc lie tdhC hloHCN ouC W
siockholders. | thought it was his own
fortune that he was operating with. paid
in 500, 600 exchange one day to make good
the account OF Leland Stanford at the
bank. a, the latter's request. After the fail
ure, | found that the amount had not been
credited on the BOOKS, but Ralston had ta-
ken it. i got 4 guarantee from Ralston
that the amount should go to Stanford's
credit, but received no certificate of deposit,
but took as security bonds Of the Southern
Pacific Railroad, which Stanford had de-
posted with the bank as security for his
oyerdrafts.
ID. o. Mills, referring to the charge in the
Alta, Of September q, 1875, that the pro-
prietors of the Bulletin and Coll remitted
money to Simonton, of New York, to specu-
late in stocks; that they strove TO make the
panic as disastrous as possible, and were in
| a conspiracy to break the bank he testified:
81 know Of ne effort of those parties TO af,
feet the stock values, or to break the bank,
or cause the public to lose confidence in it
The cause Of the failure Of the bank was
| that Ralston used its funds for his own pur.
pose, and did not replace them. This he
did surreptitiously, irregularly, and without
| the knowledge of the Directors. The larg-
| est deficit was found in the refinery sc.
count, amounting to about g, ,000, 900. The
refinery was a separate corporation, but un'
der the control Of the bank. The books Of
the bank contained debit to the re.
fnery account of upw ard OF two million
dollars, which was fictitious and manu- ac-
tured by Ralston, who had evidently used
the money for his own purposes. We also
| found instances in which certificates of de.
posit had been issued on which the money
had never come into the bank. One in.
stance was that OF Carpenters certificate
for over half a million. Ralston's total
Indebtedness was over four millions oi
dollars. You may call it what you like
it was q misappropriation. As to the over
issue of stock, made no examination OF
that until after the bank resumed. l am
credibly informed that there was an over.
issue to large amount, but that it had
been retired, and the stock stood all right
when l took the books in hand
The witness evaded the question by
whom such stock was retired, and
the point was not pressed. 81 judge il
was retired in the interest of the Ralston
estate. Before the suspension of the bark
there were Overtures imade by persons
interested in the bank TO 90 into some
arrangement with Flood and O'Brien, by
which that firm were TO take the bank and
carry it on, the parties making the propo-
siiion Offering to become responsible to the
amount of SlOOO,OOO, if the assets OF the
bank were not sufficient was a party to
that. l do not know of any false news
published in the Call and the Baaetia at
that time. After the failure had an in
teryiew with the proprietors Of those papers
and suggested that the newspaper contro-
versy, then going on upon the subj-c was
detrimental to the prospects of the bank
resuming. They said the controversy had
placed them in false light. They were
charged with doing things they were not
guilty Of, but on my informing them that
We were doing onr best to resume, they, to
forward that result, agreed, in effect, to
drop the controversy and stop defending
themselves. 1t was admitted On all hands
that it would be for the interest OF the
community, and that they would do moth
ing to impede us in the work of resuming.
l think they afterwards did all that was
possible to assist us"