The Saint Paul globe. (St. Paul, Minn.) 1896-1905, 1898-03-23
1t All Bears the Signature
of J. H. Southall, Former
Government Officer.
HE REFUSES TO SAY a THING,
HAS BEEN THE SILENT PARTNEu
OF SMITH, HUGHES d. CO.,
COMMISSION FIRM.

Used on All the bogus PaDer af
HIS Home in st. Anthony Park
Says He Is Not Under Arrest
PinkertOns Deny Any KnowIedg.
of the Case, and United Statef
Officers Say They Know Nothing
About 1t.
The failure of the United States gov
ernment to pay it's workmen in cash.
but to issue to them time checks or
promissory notes for their labor. has
enabled somebody connected with the
engineering department in st. Paul to
commit a gigantic fraud by which a
number of local banks, brokers and
private individuals have been swindIed
of thousands Of dollars. Financial in
stitutions in Eastern cities as well
have fallen victims and 1t cannot be
known how much money has been OBJ
tanned or from whom until an investi-
cation of the books Of the department
for years back has been made.
The discovery of the frauds has re-
suited in suspicion being cast on James
II. Southall, of the brokerage firm of
Smith, Hughes & Co. in the Endi-
| colt Arcade. Mr.. Southall is at his
| home at 1852 Bourne avenue, St An
thony Park. He is the person who Is
suspected of having issued the fraud
ulent time checks, and while 1t was
| reported yesterday that Mr.. Southau
h1pr
gentleman denied So, too, did the coun-
| ty authorities, the United States au-
| thorities and the Pinkertons, who are
supposed to look after bank cases.
I'VE have nothing to do with it,"
was Supt. Webers reply
An Associated Press dispatch, how
| ever, coupled Mr.. Southalrs name with
! the fraud.
Mr.. Southall is one of the best known
men in st. Paul. He is about forty-five
| years Of age, and with his wife and
| daughters has moved in the best So
| c1ety. For fifteen years he was clerk
In the engineering department having
| charge Of the Mississippi river work
between Rock Island and st. Paul. AS
chief clerk it was his duty to sign all
| time checks issued to laborers as GER
| tificates of debt for work performed for
| contractors, but for which the govern
ment had no money to pay. These
! checks were sold by the recipients for
| cash to spectators at a discount and
| in that way found their way to banks
and other financial institutions. where
| they were deposited by their holders
as collateral for loans. AS they ma
tured they were taken up. In this
way Mr.. Southall's signature in course
of time became as familiar to business
men as that of the president, and was
! considered quite as valuable, for it was
backed up by the government. No
! United States bond was regarded with
greater confidence than a time check
bearing Mr.. Southall's Endorsement
Process Was Simple.
1t is not known when these fraudulent
time checks with Mr.. Southalrs sigma
ture began to be sent out, but it is
| thought to have begun a long time ago.
/ The ease with which the checks were
converted into money and the possibil-
tiles which the system opened up for
getting money fraudulently are believ-
ed to have suggested the scheme which,
it is alleged, was put into operation.
1t is very simple
| All that was necessary was a dummy
pay roll. Checks were issued by the
wholesale in favor of fictitious persons
and the paper was f1oated. 1t had al
ways been good. and the speculators
eagerly bought it, and the banks dc-
cepted it without question. The sue
cess of one experiment Determined
whoever started it to keep up the
practice and SO for a unmber of years,
it is supposed Mr. Southalrs signature
was used to deceive the government
and the business community.
Mr.. SouthalPs signature is supposed
to have realized for whoever used it
hadsome returns from the fraudulent
time checks.
Mr.. Southall was very fond Of the
stock market and of the wheat pit, and
| a year ago he resigned from the en-
gineering department and went into
speculation. He did not, however. no.
tify his friends that he was no longer
connected with the government.
Smith, Hughes & Co.
On the 1st of October last SouthaIl
and Sterling S. Smith organized the
firm of Smith, Hughes & Co., brokers,
in the Endicott Arcade. They took into
partnership with them Lucius A.
Hughes. an expert telegraph operator.
| They agreed to give Mr.. Hughes a
quarter interest in the concern and a.
| guarantee of a certain amount each
week. Southall was to put $4,000 into
the firm and the business was to be
| conducted as a straight, legitimate
! concern.
| At the same time Mr.. Southall, 1t was
reported, backed the commission house
of Gibbons & Co., in the basement OF
! the same building.
While Mr. Southall had changed his
business, the time checks bearing his
| name continued to be issued and to be
| foated about the city. They were ac-
cepted by bankers and business men
without question. The checks were
made out for several months and unless
| inquiries were made their fraudulent
| character would not be detected
But week or two ago a Hartford
Conn, banker who had received a num-
ber of time checks in the course Of
| business became suspicious. He
| thought there were more checks af1oat
| than was covered by the appropria-
| tion for the work which they purported
! to represent. He inquired of the Of
] ficials in Washington and an inyesti.