Eureka daily sentinel. [volume] (Eureka, Nev.) 1871-1887, 1876-07-28
Defeat of General LeschJoum.
PACIFIC COAST DISPATCHES.
FROM CALIFORNIA.
Michael Reese's Testimony About
the Bank OF California.

SAN FRANCISCO, July II.
In the Buttetin-Attn libel suit further
of Michael Reese and ID. o.
Mills was taken before the Third Dis
Court Commissioner yesterday.
Reese testified to the following effect:
The failure of the bank was caused by
Ralston's taking money from it to ex-
pend in outside affairs. Ralston WAS
the architect of the job to sell the
Valley Water Works and the
Calaveras scheme to the city at a
profit of about eight millions.
l helped him, furnishing large
amounts to buy up stock. | adj Vanced
set three and four millions. and
he had the whole management of it.
He expected to make enough out of
the job to ave the bank from failure.
1t was the best thing to do to save it.
If the scheme had been carried out ]
don't think the bank would have failed.
RalstOn took funds of the bank TO
carry on the water scheme, the Palace
Hotel, the Kimball mandatory, Mis-
sion wooden mills, and other outside
enterprises. No one thought he would
take money due the stockholders. ]
thought it was his own fortune he was
operating with. i paid in three hun
tuOuSdId uoti6io StpiiliiS VA
change one day to make good the ac-
count of Leland Stanford at the bank,
at the latter's request. After the fail
ure l found the amount had not been
credited on the books, but Ralston had
taken it.. l got a guarantee from Kali
ston hat the Inoun should go To
Stanford's credit, but received no Ger
titicate of deposit, but took as security
bonds of the Southern Pacific Railroad
which Stanford had deposited with the
bank as security for his over-drafts.
ID. q. Mills, referring to the charge
in the alta of September 81, 1875, that
the proprietors of the Bulletin aud
cal remitted money to Simonton, in
New York, to speculate in stocks; that
they strove to make the panic as dis
as possible, and were in con-
spiracy to break the bank, testified: II
know of no effort of these parties to
affect stock values, or to break the
bank, or cause the public to lose con-
fidence in it. The cause of the failure
of the bank was that Ralston used its
funds for his w purposes and did
not replace them. This he did surrep.
titiously, i~rregularly and without the
knowledge of the directors. The larg-
est deficit was found in the refinery
accounts, amounting to 81, 900, 900. The
refinery was a separate corporation,
but under control of the bank. Tho
books Of the bank contained a debit
to refinery accounts OF upwards of
81, 000, 900 which was fictitious, manu-
featured by Ralston, who had evil
IDENTIFY used the money for his W
purposes. We also found instances in
which certificates of deposits had been
issued on which the money had never
come into the bank. One instance was
that of Carpenters for over half "A
million. Ralston's total Indebtedness
was over four millions. You may call
it what you like, it was a misappro-
priation. AS to the Over-issue of the
stock, / made no examination of that
until after the bank resumed. | am
credibly informed there was an over-
issue to a large amount, but it had
been retired and the stock stood
all right when l took the books in
hand. Witness evaded the question by
whom such stock was retired. and the
point was not pressed. Ijudge it was
retired in the interest of the Ralston
estate. Before the suspension of the
bank there were overtures made by
persons interested in the bank to go
into some arrangement with Flood IL
O'Brien, by which that firm was TO
take the bank and carry it, the parties
making the proposition offering to be-
come responsible To the amount of
81, 0OO, 900, if the assets of the bank were
not sufficient. 1 was a party to that.
Do not know of any false news pub.
lished by the call and Bdletin at that
time. After the failure | had an inter-
view with the proprietors of these pa
pers. l suggested that the newspaper
controversy then going on upon the
subject was detrimental to prospects
of the bank rcsuming. They said the