The Indianapolis journal. [volume] (Indianapolis [Ind.]) 1867-1904, 1896-12-24
PLANS PARTLY SUCCESSFUL
HOW THE LOANS on CALUMET ELEC-
TRIO STOCK WE'RE MADE.
To Have Been i'm the Deai-Mr.
Pages Explanation.

second vice presi lent of tho bank. who has
been charged with pulling the wool over the
eyes of the directors OF the defunct insti-
tuition. would not talk to-day when seen in
his palatial homo in Evanston. Through
an intimate friend. however he made a
statement which is calculated to inculpate
several OF the directors. as we'll as two or
three men who are not connected with the
bank. The Post makes the above state
ment this evening and gave the following:
wv. a. Hammond is to be made the scape-
goat of the failure of the National Bank
of Illinois, said the friend. Hammond is
a broken man to-day. but he is not any
more to blame for the amount OF money
loaned on Calumet securities than are the
members of the finance committee OF the
bank and its directors. Ii was necessary
TO the purposes of man connected with
the South Chicago City Railway and AN
officer of one OF the best known banks OF
this city TO depreciate the Calumet electric
roads stocks. and to this end these two
men brought about the wrecking of the
National Bank of Illinois. OF the banks
funds s.. $4,000 had been loaned on the Cali
umet securities. The plan for wrecking
was brilliant: cause an investigation. depre-
ciate Calumet stock and buy it, then COM
miles of new track. equipment and fran
chise with the South Chicago railway,
eventually combining with the Chicago
City Railway and make fortune OF mil
lions within five or ten years. The truth Of
the matter is. members of the finance COM
mittee and certain directors of the National
Bank of Illinois have known the amount
OF the Calumet loan and had hoped TO make
individual fortunes on the success of the
venture. Four years ago w. v. Jacobs.
who started the Calumet road. borrowed
$4,000 and paid it urSin full. After that
road passed into other hands a loan was
made on the securities with the full knowl-
edge of the finance committee OF the bank
and by President Schneider himself This
loan was too large. but it had been sup
posed TO he for few weeks only and the
bank, finding itself involved either had TO
take the loss, ruin enterprise 90
ahead
y BRILLIANT IDEA
The loan was increased with the full
knowledge OF members of the finance COM
mittee and later on was made known TO
the directors. Members OF the finance
committee and officers of the bank were
given stock and the purpose of the idea
was to sell the road and besides paying the
banks $ loan make good round sum for
the directors There has been severe con-
test between the General Electric and
South Chicago city railway TO secure con-
troll of the bonds OF the Calumet road and
the stocks which go with them and II was
thought that the road could finally be sold
at something like s3OOO.Voo or a-oOO,OO IL
was q brilliant idea for "A man connected
with the South Chicago City Railway 10
wreck the bank and the men who had been
| backing the Calumet through the bank.
\ hos .fan Hsad an A.
! that the Calumet electric will be sold 10 the
| South Chicago City Railway man and his
| friend. the banker. who lent his name to
| the scheme TO make good pot out of the
| deal himself. The part the banker took In
| the matter was safe one. He called the
| attention OF the bank examiner TO the fact
| that Calumet securities had disappeared
somewhere. intimating that the National
Bank of Illinois had a good share of them
| the bank. finding that the bank examiner
| was hot on their trail. began TO push the
transactions they had on foot for the sale
| of the securities and the clearing house
became alarmed. Could the matter have
been delayed thirty or sixty days the Calu-
| met Electric securities would not have been
! found among the banks assets. The sale
would have been effected possibly at a
| loss TO the bank. but without disturbances
of the bank. But this course would not
| suit the purpose of persons trying 10 con-
/ troll the Calumet Electric road.
Three years ago l.. ;. Dreyer alone
owed the bank 81, 100000 and for three years
Mr.. Hammond has been trying 10 reduce
that Ii was reduced one-half when the
TO Vice President Hammond that this was
| accomplished. IL the securities for the
have disappeaded. they disappeared
| Saturday. That point may come out later.
| One director in the bank who has been
| talking a great deal since the condition OF
the concern became public. took $1,000 out
/ of the bank Saturday afternoon. There
was no excuse for Justification OF accounts
1 ror sI, q "A n
Calumet loan. You can't cover up a 81. .oo0,-
| 600 loan I'm bank where directors do their
| duty"
DIRECTOR PAGES STATEMENT.
Never did see on the book kept for the
purpose of informing the directors of the
bank as to who were applicants for loans
the name of the Calumet Electric Rail-
way" This statement was brought about
! in a conversation with Director Page. OF
the defunct bank. to-day. TO how such
| large loans were made by the bank and
| ostensibly given with the sanction OF the
| directors Mr.. Page went to explain
how the business OF the bank as far as the
! directors were concerned. was conducted
Said he: The directors appointed from
| among themselves what you might term,
for convenience sake. an auditing commits
| tee. The plan was TO let one director drop
| out each month and some other one take
his place. Each day the committee would
meet at the bank. its business being TO pass
| on the applications for loans A record OF
these applications was kept ia "a book de-
signed for the purpose. In this book was
| also kept opposite the name OF each APP
/ picant a record of the collateral offered to
| effect the loan. When the committee was
/ ready for business President Schneider
! would come into the room. bringing with
! him this book and with IL another book
I'm which was recorded the daily balance
| of the would-be borrower and also record
! of how much he had previously borrowed %
You say that MIR. Schneider used TO
| bring this in?'
Almost invariably. seldom was Mr.
! Hammond before 'hc committee. At odd
| times he would be called I'm 10 answer some
| questions as TO the applicants business or
10 clear up "a point about some collateral
| offered. hut Captain SCHNEIDER was almost
! always the bearer OF the books. The COM
! mittee would look over the books carcful-
| IN and. i'm some instances. refuse 10 sane
| ton q loan. i'm others the loan asked for
| would be cut down and cases where tha
| applicant and security was all right. the
| accommodation was. OF course. granted
! ..Did the committee never ask 10 see TIA
| actual collateral offered or did II nlmH1w
take the word Of Mr.. Schneider q GO