The herald., 1896-12-24
GREED FOR SUDDEN GAINS
Assigned as Cause of the Bank
Failure
DEPOSlTORS NAY BE PAID
But Their Prospects Daily Grow Less
Promising
DEPOSlTORS NAY BE Pal
Prompt Action by Clearing House and
Bank Examiners Has Minimized
the Effects of the Failure
Associated Press Special Wire

talk today when seen at his palatial
home at Evanston. Through an inti-
mate friend, however, he made a state
ment calculated to inculpate several di-
rectors, as well as two or three men not
concerned with the bank,
''W. A. Hammond is to be made the
scapegoat of the failure of the National
Bank of Illinois," said the friend.
| Hammond is a broken man today, but
not any more to blame for the amount of
| money loaned on Calumet securities
| than other men on the finance committee
| of the bank and it's directors. 1t was
necessary for the purposes of man
| connected with the Sotuh Chicago rail-
! road and an officer of one of the best
known banks in this city to depreciate
| Calumet electric road stocks, and to this
end these two men brought about the
wrecking of the National Bank of Him
ois OF the banks funds 81, ,475,O00 had
been loaned on Calumet securities The
plan is to depreciate Calumet stock and
buy it; then combine this valuable prop
erty, sixty-three miles of new track,
equipment and franchise, with the
South Chicago railroad eventually COM
bining it with the Chicago City railroad,
and make a fortune of millions within
five or ten years.
THE truth of the matter is members of
the finance committee and certain di-
rectors of the National Bank of Illinois
have known the amount of the Calumet
loan and hoped to make individual
fortunes on the success of the venture.
Four years ago w. V. Jacobs, who start
ed the Calumet road. borrowed $115,000
and paid it up in full After that the
road passed into their hands and a loan
was made on the securities with the full
knowledge of the finance committee of
the bank and by President Schneider
himself. This loan was too large, but it
had been supposed to be for a few weeks
only and the bank finding itself involved
either had to take the loss or so ahead"
Capt. Schneider, the president of the
National Bank of Illinois. is 70 years
of age and in rather feeble health When
called upon today by representative
of the Associated Press he said he should
have no statement whatever to make.
and he seemed quite broken by the
calamity which had befallen him. There
is no prospect of the banks resuming
and it is by no means certain that it will
pay its depositors in full, as first stated.
Never did see on the book kept for
the purpose of informing the directors
of the bank as to who were applicants
way"
The above statement was brought
about in conversation with Director
Page of the defunct National Bank of
| Illinois today as to how such large
| loans were made by the bank and os-
| tensibly given with the sanction of the
directors. Mr.. Page went on 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
committee. The plan was to let one
director drop out each month, some
other taking his place. Each day the
committee would meet at the bank, its
business being to pass upon the appli-
cations for loans. A record of these
applications was kept in a book de-
signed for this purpose. In this book
was also kept, opposite the name of
each applicant, record of the collat
| eral offered to effect the loan. When
| the committee was ready for business
Mr.. Schneider would come into the
room, bringing with him this book, and
with it another book in which was re-
corded the daily balance of the would
| be borrower, and also record of how
! much he had previously borrowed"
| Did the committee never ask TO see
| the actual collateral offered, or did it
! simply take the word of Mr.. Schneider
or Mr.. Hammond that the security
was actually in the bank and was what
! it purported to be in the memorandum
| book?'
I'VE had been in business with Mr..
| Schneider and Mr. Hammond. many
| of us, for thirty years. To have made
such demand of them would have been
a personal insult"
| Were not the suspicious of the COM
| mittee ever aroused by the large sums
loaned to the Calumet Electric?"
| Then came the statement referred to
! above: Never did / see the name OF
the Calumet Electric Railway company
| appear on the books as n applicant for
a loan
What have you to say about the pub
ished statements regarding Mr.. Ham,
| mond's connection with the uneXplain-
| ed transactions?"
| They are all true. every one of them.
| The loan was increased with the full
| knowledge of the members of the finance
committee, and later on was made
known to the directors. Members of the
| finance committee and officers of the
bank were given stock. and the pur-
pose of the deal was to sell the roads,
| and besides paying the bank loan. make
a good round sum for the directors
There has been severe contest be-
| tween the General Electric and the
South Chicago City railway to secure
control of the bonds of the Calumet
| road and the stocks which go with
them. and it was thought that the
road could finally be sold at something
like $4,000, 900 or 81, 900 900. 1t was bril-
| liant idea for man connected with the
South Chicago City railway to wreck
the bank, and the men who had bee
backing the Calumet through the bank
1t has succeeded, and the prOba bilities
are that the Calumet Electric will be
sold to the South Chicago railway man
and his friends, 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 mat.
ter was safe one He called the atten-
tion of the bank examiner to the fac
that Calumet securities had disappeared
somewhere, intimating that the Nationa
Bank Of Illinois had good share o
them and probably had them all.
The officers of the bank, finding ou
that the bank examiner was hot on theil
trail began to push the transaction.
they had on foot for the sale of the Sc
curities and the clearing house became
alarmed. Could the matter have beer
delayed thirty or sixty days. the Calume
Electric securities would not have beel
found among the bank assets. The sal,
would have been effected. possibly a
a loss to the bank. but without distur
bance to the public or heavy loss t,
| stockholders of the bank But this cours,
] would not suit the purpose of persons