The San Francisco call., 1898-03-23
Holders of Paper Suffer Through Overconfi-
 dence in a Clerk.
Thousands of Dollars More Paid Out Than Uncle Sam
 Has Appropriated.
Easy Manner in Which Southall Ac- cun1ulated Large Fortune
 Through Manipulations.
Special Dispatch to The Call.

ST. PAUL, Minn., March 22.-Just how great the loss through the Gov ernment time-check fraud may prove to be cannot be known until an exam ination of the books of the engineering department has shown which checks are good and which false. About three weeks ago the local banks, which first became interested through some Hart ford, Conn, holders of the paper, began an investigation and became satisfied that the amount of checks out was far in excess of the money appropriated by the Government to carry on the work of the upper Mississippi River. After several interviews with SouthalI, in which 1t is claimed he tried to prove that there was nothing in the claims, 1t is said that he finally admitted that fully 25 per cent of the checks that are now outstanding are worthless.
 To protect themselves, the banks at once took the stand that the Govern ment, having adopted a scheme for the payment of the workmen employed by it that enabled an employe to defraud the banks and other innocent pur- chasers of the paper, should be com pelled to stand the loss. The filing of the claims of the banks of the pay
 
 was made in Washington, with the re- suit that the matter became public.
 J. H. Southau has been employed by the Government for a period of more than fifteen years up to six months ago. At that time he resigned the position of chief clerk of the engineering depart ment in this city, being succeeded by J. D. Dushane. It was given out at the time that Southall retired from the po- sitiOn of clerk that he had made consid- erable money in speculation in corn. and that he intended in the future 10 devote his entire time to the stock mar ket His duties while he was acting as clerk were to keep the time as turned in by the foremen and to pay them off in these time checks. The time checks were often bought up in large numbers by SpeCulatOrS were caShed by banks and were held until the Gov ernment was prepared to meet the bills, when SOuthal would receive a remit tance direct from Washington and would then deposit the money in his own name and take up the checks with his individual checks. By doing this for a period of fifteen years, his signature became perfectly known to all the banks in this vicinity, and his credit with the Government back of the pa per that he issued was considered as good as a Government bond. Of the $500 900 or $400, 900 worth of time checks known to be outstanding, probably less than One-fourth was held by banks, and some of these were held by them for individuals. Two local banks, which failed five months age, held over $20,- 00O and nearly as much more was held by a Hartford (Conn.) bank. One man in Wisconsin, whose name could not be learned to-day, had bought $64,000 worth of these checks, and $40O00 more have been taken as a good personal in- vestment by a St. Paul capitalist. In smaller amounts the time checks are understood to be held all over the coun- try, and it will be some time before the full amount can be learned.