The free lance. (Fredericksburg, Va.) 1885-1926, 1899-07-25
a Romance Of Banking

a Romance Of Banking.
More than twenty years ago the
Third National Bank of Chicago for
malIy closed its doors and a receiver
was appointed to satisfy the de-
positors. Some Of the stockholl-
ers feared an immediate asess-
ment for the payment OF Liabilities
and offered to give their stock to any
one who would assume its obligations
Today this stock is held at neai :
double It's par vslue, and it is re-
garded as gilt edged security
Within FIVE years, although the bank
has received no deposits, made
no loans, issued no currency,
sold no drafts, it has paid two
dividends to its stockholders and
promises many more. The very
name of the bank has been forgotten
except by few grey'haired men who
are personally interested in its affairs.
Moreover, it is unique in being a
corporation having large assets and
no liabilities beyond the obligation
to its stockholders.
The earliest report on the condr
tion of the bank, made by the re.
ceiver. Col Huntington W. Jackson,
showed that the nominal assets were
81 500, 90. and the debts were nearly
81 00C, 900, leaving nominal $500,
600 to pay the stock liability of $3.50,
600. On paper this looked most en-
couraging, but a close examination
showed that many of the loans Of the
bank, made in flush times, were se-
cured by collaterals of uncertain
value, and real estate scheduled st
boom prices and taken as the orly
available payment for money loaned
There was two much "slow" paper
and not enough short paper.
OF the real estate, one tract of l0C
acres lay on a barren sand ridge near
the lake shore and nea ly ten miles
southeast Of the City Hall, in a
wholly unsettled part OF suburb
Another tract of forty'fye acres
WAS nearly as far to the west of the
city on the bare, fat prairie, whore
there was little prospect Of its ever
being anything more than a cabbage
patch. Still another piece OF prop
erty lay far out in the southwest por
ton Of the city in a region IS yet al
most wholly undeveloped and prom
ising little immediate growth, except
in taxes and special assessments
There was a score of other lots and
parcels of land, some in New Y0ri
city, and q great quantity of paper
much of it more or less doubtful oil
worthless. IN fact, it seemed to some
of the ninety stockholders that il
would hardly pay the bank to re'air
its property and meet the expenses OF
management
By the process known as "squeez
ing" and the sacrifice of some of the
choicey pieces of real estate the re-
ceiver managed to pay before the
close Of 1881, the depositors the face
value of their claims. A year later
they received their interest in full,
and the stockholders were left, nearly
five years after the close Of the bank,
with a score of pieces of expensive
real estate, most of which had
com paratively little present cash
value, and a quantity of doubtful
claims and lawsuits, the legacy OF
the panic.
But Chicago was growing. The
suburb in which the hundred acre
tract was located became part OF
the city. A cable line reached down
aud almost touched it; an electric
line dropped passengers Immediately
in front Of it; an elevated railroad ap-
preached it within half a dozen
blocks. Early in the '9O's the
Worlds Fair found root in Jackson
Park, which adjoined the tract i'm
mediately on the north. A city of
great hotels, apartment houses, and
residences, sprang suddenly into ex-
istence around it. and Chicago was a
city far out beyond the park.
In July, 1891, the receiver called
the stockholders together and laid
before them an offer 81, 100000 for
the despised 100 acres Of land, and
the stockholders, upon mature de
liberation, rejected it, feeling that it
it would be worth much more a few
years later. If the offer had been ac-
cepted it would have paid off not on y
the entire capital stock of $3.50, ,OOO
but it would have left comfortable
$3.50 900 to be divided among the
stockholders for their patience. 10
manner hardly less remarkable
the forty FIVE acre cabbage patch be-
came valuable. Car lines passed it,
the suburb of Oak Park, itself con-
siderable city, grew out around it,
and every year has added thousands
of dollars to its value.
And 30 it happened that in 1893
the receiver was able to pay a divl'
of 10 per cent to the stockholders,
and he followed it in 1895 with a
second dividend of 10 per cent.
And thus, by combination OF
good fortune, shrewd management
and patience, the Third National
Bank now presents the spectacle
probably uuequaled in finance, OF a
business institution for twenty years
defunct, and yet paying dividends on
stock worth nearly twice its par
value.