The Saint Paul globe., 1902-10-30

The disastrous relations between
William r. Merriam, former Republic
an governor of Minnesota, and Jasper
3. Tarbox, by which the Merchants
National bank lost many thousands of
dollars, while Mr.. Tarbox was left
about $4,000 to the bad, were told in
detail yesterday in the Sharood- Jor-
dan trial before Judge Kelly. The mar
rators We're Mr.. Tarbox himself and
Kenneth Clark, who was made presi-
dent of the bank when the ex-governor
left.
The substance of this story is that
Merriam and TarboX, about 1895, en-
gagged to establish a shoe factory at
the Indiana state prison at Jefferson
vile; that Tarbox agreed to be respon-
sible for the management of the con-
cern, and Merriam to finance it with
funds loaned on notes of the Jefferson
vile corporation, which was named the
Merchants Shoe and Leather COM
pany; that these notes were indorsed
by TarboX personally, and that Mer-
riam got one-haf Of the stock of the
company in return for his liberality,
with S51, 1,000, which constituted the sole
capital Of the Indiana concern.
What the Bank Lost.
When the directors of the Merchants
National bank forced Merriam out. Of
the presidency in June, 1899, the orig
inal loan had been reduced to some
$4,000, notes for which were then in
the bank with the Endorsement of Tar
box. Mr.. Clark, the new president,
sent for Tarbox and demanded better
security. A new note for the amount
named was executed by the firm of
Tarbox, Schliek & Co.
This note had been reduced by
monthly payments to $4,000 by May,
1900, when the firm of Tarbox, Sehliek
& Co. went to the wall.
The committee of their creditors, on
Aug. of that year, made a further
payment of $5,937. This left an unpaid
balance that, with interest, amounted
to some S17,S00 on Nov. Z, 1901, when
President Clark, deeming that any
price was, as he said, better than
nothing for a dead horse" sold the
note to H. r. Lyon, a connection Of
Tarbox, for the sum of 500. Thus the
net loss to the bank was at least $17,-
700.
Neither Put Up Any Cash.
Merriam and I went into this busi-
ness at Jeffersonville without either Of
us putting up any cash" said Mr.. Tar
box yesterday, in answer to questions
by Humphrey Barton, attorney for
Charles K. Sharood, trustee of the
Co. Mr.. Sharood is suing for an ac-
counting of the profits made by w. B.
& w. g. Jordan through their pur-
chase of the bankrupts stock and plant
at a gross undervaluation.
- I'VE found we could get the contract
for the employment of the convicts at
the Jeffersonvil1e prison, and on the
basis of that valuable privilege we
planned to build up a business. We
organized the Merchants Shoe and
Leather company, and at first intended
to get 100000 Of the banks money for
our working capital, but only $51 900
of this was paid in. The conpany'S
notes were indorsed by me. Merriam
used the banks money, but paid Moth
ing himself for the company'S stock,
one half of which was made out to
him. He gave up nothing but money
that did not belong to him. The in
dorsement of Tarbox, Schliek & Co.
on the note for $4,000 was without
consideration. Altogether I lost about
$4,000 getting in and getting out of
the JeffersonviIle business. Merriam
lost nothing, but the bank is short some
$17,000'
Clark Confirms Statement.
Mr.. Clark confirmed this testimony
in essentials, and told of the sale of the
note for the sum Of $780, The story,
as related yesterday, is not wholly new,
inaSmuch as the substance of it has
been put in evidence in the proceed
ings before the bankruptcy referee, F.
G. IngerSoll MeSsrs. Clark and Tarbox
both testified before the referee, but
their testimony has not hitherto been
made public.
Mr.. TarboX was cross examined yes
terday afternoon by Warren III. Mead,
attorney for H. r. Lyon, who is made
one of the defendants by reason of his
claim that he holds an assignment of
TarbOx's alleged interest in the firm of
the Jordans. Under the guidance of
Mr.. Mead the witness cleared up some
points in his previous testimony as to
the undervaluation of the assets of
Tarbox, Schliek & Co. by which the
Jordans have profited.
There was some $4,000 to our cred
it in st. Paul banks at the time the
assets were turned over to the pur-
chasers," he said. "This money went
with the rest of our assets into the
hands of the Jordans Of course was
willing it should go there, instead of
to the creditors, because believed the
Jordans' promises that was to have a
share in their business. In addition to
this bank deposit, the firm of Tarbox,
Schliek & Co. had on it's books bills
receivable amounting to about $S2, 000I
These were gilt-edged accounts, and
most of them were paid up by the fall
of 1902
Undervalued by 100000.
The invoice referred to by the wit