The sun. [volume] (New York [N.Y.]) 1833-1916, 1878-11-03
AUG. .SCHELLIN WALL STREET
WAS s3.OOO. 900 IN LAKE SHORE BONDS
UNLIHFULLY USED IN 1887

Tho Act for which james IT. Bnnlser.
T1unity Guilty with the Kings Candidate
for Mayor. WINS Compelled TO Hcsign
Nicc-Presidcut OF the bank OF New York.
To THE EDITOR or THE SUN Sir There
seems TO be n disposition on tho pnrt OF
the public TO look lcniontly upon tho record Of
the IN I'm. Augustus Schcll. .Tnmmany' g candidate
for Mhyor. 1t Ia said. why. Mr. Schcll hns
mover stolen anything He undoubtedly has
bcen lax IN his management ns trustee but not
criminally 40. He never took any u tho money
personally that slipped away whio under his
care"
There never was n moro mistaken idea The
Lake Shore Railroad Company Is now paying
over 100000 interest every year upon bonds
which were lost in Wall street speculation 10y
pool composed Of three men. Horace T. Clark.
James H. Bankcr. and the Hon. Augustus
Schcll These gentlemen wcro prominent Of
ficials IN tho management Of the Lake Shore
Railroad. IA we'll IA the Union Trust Company.
In 1873. and some tlmo previous to that dato
formed n pool to put up tho price Of Lake Shore
stock Tho capital ofthe company Is jO.0o0.000.
and IA II required n worry large amount Of
money to buy enough stock TO advance the price
materially. these thrcc gentlemen conceived the
idea OF issuing the Lake Shore bonds IA mar
Gin 30 put up the price of the sharer. Tho bonds
could be easily marketed at round figures and
did quito as woll ns cash for margin with Stock
Exchange brokers. The firm OF Geo. Bird
Grinncll & Co.. was selected 70 carry out
tho schemes OF tho pool. and almost
every afternoon the mombcrs would moe, thero
and put in their orders TO buy moro stock.
People generally knew that the price WAS
fictitious. not based on value. md improved
the opportunity to soil out. The pool took
/ A..
tations advanced. until in 1879 the price
touched 9eb. Clark schcll and Banker hy-
| pothecatcd great deal cf stock with their
personal friends, at from ten 10 twenty per cent.
below the market price. and the difference wus
| mado up 10y them In Lake Shore bonds.
1t is proper here t. say that these bouds be-
| longed to Tho Lake Shore Company. TO u alone.
| aud these gentlemen had no moro right g. u-o
| them for their priyato PURPOSES ihah We lrrsi-
| dent OF a national bank has TO speculate with
| tho funds Of hs depostQrs.
| Whom the price Of Lake shore had advanced
to 20 tho pool hcl! q AZ yery large part q tae the
| bonds had been put up In tho street as margin.
1t wqs at this time that the panic Of 1873 began
| tu prick y all street bubbles The Lake Shore
| pool held up the price OF tho stock as long as
| possible. butt haq tQ succumb finally; and. as
The quotations Of Lake shore declined. the
| impcrllcd. Mr.. Horace y. Clark died. and tho
| other two members Of the pool. Nossrs Schell
| and Banker were unable to stem the downward
| tide 0oorge Bird, Grinnell h Co. failed and
| the entire story came out. The bonds were sold
| b. make up the losses on the stock. and then
| came tho attempt to get back the equivalent
| from Schcll and Banker Commodore Wander.
| bilt was elected President OF Lake shore. and
he did his best. apparently. To Obligc Schcll and
| Banker TO reimburse the rond for its losses
| Mr.. Banker turned over real estate. from which
| several hundred thousand dollars wero derived
by the company. Mr. Schcl. however. had his
| property where II could not be touched. and as
he was n particular crony Of tho Commodore
the matter was allowed 20 die out; Although q
| criminal prosecution could have been brought
| against Meesrs. Schell and Bankor. no steps
| were taken in that direction.
Lake shore was simply saddlcd with debt ol
| $1,000 900. upon which It has paid s,vcn JeI
| cent interest ever since. AMI for which II has
| received no cauiVRleut Whatever.
When the story came out IN wall street IN
| 1873 there was "a sharp and heavy decline In
| the stock, and II has hccn looked upon with dis
| fnvor over since as being too heavily handi
| capped with debt
| These bonds could not have hecn uscd excep
with the conniVance u Mr.. Sehell. who rs act
pnny, knew TO whom and for what purpose thei
we're transferred TO Wall street brokerage firms
The loss Of these bonds Intensified the panic
and thousands of families nro destitute to-dal
on account Of the action Of these men, OF cours'
all improvements upon the Lake Shore Hail
rund were storped. aud with rctronchment came
tho inevitable discharge OF great numbers o
lahoring men and the consequent distress .
those dependent upon them.
| Still the Hon. Augustus Schell figures ms
| director in the Union Trust Company. ana as
| director and the Nicc-PTcsidcnt OF IN" Lax
| Shore Railroad. SIiRADoUT.