New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1900-01-15
STATE TRUSTS LOANS.
PRESIDENT JOHNSTON CALLS THE
Killing CHARGES A RAID"

Killing CHARGES A RAID"
The revelations which have followed upon the
official examination of the affairs of the State
Trust Company a fruitful of con
versation in the clubs, the hotels, and all other
places in this city where of affairs met
yesterday. Financiers laid particular stress
upon the proportion which one or two OF the
company's loans bear to it's capital and surplus
or discussed the ethics and the statutes which
relate any lending institution advancing
moneys to other concerns in which its own drec
tors deeply interested; but the talk of the
politicians seemed to centre mostly about the
loan Of S435000 which the State Trust Company
made TO Louis T. Payn. the State Superintend-
ent of Insurance, and to its probable effect upon
his efforts to obtain denomination from the
Governor. Abram King, who instigated the
examination, calls the securities which Mr.. Payn
put up for this loan unstable industrials of
uncertain and doubtful value" Mr.. Payn de-
clares they are gilt edged dividend payers"
and says he is willing and ready to take the
loan up at any moment the trust company de-
mands it.
PRESIDENT JOHNSTON EXPLAINS.
Walter S. Johnston, president of the Trust
Company while characterizing the charges
against his company raid" says 1t has
done the institution harm. He declares that
Mr. Payn's loan is amply secured by collaterals
that earn @ per cert on the loan, that the loan
of S412,S00 to Mr.. Sheehan is under contract
10 be paid on January II by the strongest gas
company in the United States outside of New
York city, and that the securities deposited for
the loan of 100000 to Daniel H. Shea would
bring at any moment $35000O0 Moore &
Schley, who got the loan of 100000, say it
has been protected at all times by a % per cent
margin and often by a 40 per cent margin
They say W. C. Whitney has nothing to do
with it.
Mr. Killing charged that the 81, 100000 loan
to Moore & Schley made indirectly to Mr..
Whitney, director of the State Trust; that the
100000 loan to Shea was really loan to
Mr. Whitney, Thomas F. Ryan, P. A. B. Wild
ener and A. n. Brady, and that the loan Of
$4,000 to Mr.. Sheehan really for the
benefit of R. A. c. Smith, another director.
SAYS CHARGES WERE KEPT FROM HIM
Mr.. Johnston said last night that there was
significant and extraordinary spectacle pre-
scented in the proceedings against his company,
adding:
The first opportunity that 1 have had, though
am the president Of the ny 6nd the to
anime the King charges carefully and in detail,
ing When l asked Mr. Kilburn on Saturday to
permit me TO copy the King petition he said the
Department invariably regarded such cOmmunca-
tons as confidential and this one having been dis
Necessary for me 10 have it. And yet every news
some tRe Mere e p haa s for p SGpy a ne %
the assaied company had had no opportunity even
Ser espT from the 6l4 not get
from conspirators who. doubtless ascertaining that
established TO the satisfaction of the authorities
ma ieTf resort puOShed this false and hbeOuS
After all, Of the several matters which have been
called TO the attention of the Banking Department
there is only one that could be distorted as to
100000 to syndicate. AS to this loan there is
no safer in any trust company or bank in New;
that the collateral behind it, If put upon the mar
the collateral Would bring at any moment t'4 not
less than $35OO0oO. 1t was and is the best Sc
were 10000 of good bonds and 81 10000 Of pre-
Superintendent had no tdifie1ity in finding and
stating as he has that the loan was amply Sc
over average deposits came to the trust company
profitable business.
IN EXCESS OF THE LIMIT.
When Mr.. KiIburn looked into this transaction
he at once conceded the entire sufficiency of the
amount Of tbs loan was in excess of the statutory
loan 70 maximum Of 81 10000 and that three Of
our directors were interested That interest was
feFred 10 at once offered to draw their checks and
loan within the limit, but the superintendent pre-
ferred TO have the transaction stand it was for
loan By 6a2k tS an as5oeiatiSn q persons y
nnder the circumstances of this transaction does
not fall within the statutory prohibition any more
rector OF this company should be a stockholder.
There is Just possible criticism Of this trans
action-that the loan. having been really made TO
six persons, 1 should have divided the loan. But
that is not one which affects it's soundness II
was, I repeat, good and safe loan any bank
or trust company show, and the utter ire
sponsiblIity Of the petitioner in this and of
the persons behind him is revealed In the false
statement about this loan.
There loans to which Superintendent Kill
burn did not think IL necessary 10 refer in his
statement but upon which the King petition seeks
place totally false Interpretation. One the
loan OF. 1912 500 W. F. Sheehan. Mr.. Sheehan Is
counsel for and represents the partnership which
purchased the securities that collateral for this
loan. They are first mortgage bonds and dividend
paying stocks of the most valuable gas properties
In Connecticut, and worth twice the of
the loan at market prices. This loan is under a
written contract be paid January IL by the
strongest gas company In the United States outside
Of NeW-YOrk City.
by good collateral that earn in dividends enough
70 pay per interest the loan
This raid however, has furnished the occasion
for US 70 exhibit 10 the Superintendent of Banks
personally the exact condition OF the company and
10 receive from him personally his official indorse-
ment OF financial strength and stability.
MR.. ScHLEY's STATEMENT
Grant B. schIey of the firm of Moore &
Schley, said:
Our time loans at the State Trust Company to
fetal Of 100000 wers made in the regular