The daily morning journal and courier., 1904-01-04
TRUST COMPANY SCORED.
CONDUCT OF REPUBLIC OF NEW
 YORK.
superintendent K,iburn. of the state Bank Department Amazed at It's Com duet in Connection With U. s. ships building co.-Law Declared to Have Been FIagrantly Transgressed.
Been Flazrantly Transgreased.


 Albany, N. Y. Jan. s.-Drastic com ment upon the conduct of the Trust Company of the Republic in connection with the affairs of the United States Shipbuilding company is a feature of the annual report of Superintendent Frederick D. Kilburn, of the state bank department, made public tonight. T was amazed to find" says MT. Kilburn, that undertakings had been entered into and liabilities incurred which not only jeopardized the solvency of the | trust company but hagrantly trans- gressed the law. The company had made numerous loans without collateral other than shipbuilding stock and se- curities, one of them to MT. Dresser the president of the company, and to MT Nixon, for nearly million and three-quarters ot dollars. It had, be- sides, guaranteed loans made by other institutions to MT. Dresser and MT. Nixon amounting to two million dol lars. required, under the alternative that the company be referred at once to the attorney general for proceedings in insolvency to be instituted against 1t, that there be some very thorough straightening out of the trust con- pany's affairs. The direct loan to MT. Dresser and to MT. Nixon was excess sive under the law, regardless of MT. Dresser's official relation to the com pany, and to him it was more than ten times the amount that could lawfully be loaned. Under my insistence a half million of it was soon repaid, the loans for two millions guaranteed to other institutions were taken up and later the balance of the Dresser and Nixon note to the Trust Company of the Re- public was paid in full. This seemed to me a far better proceeding than to refer the company to the attorney gen. eral summariy, for it recovered nearly four million dollars that in the alter native might have proved a loss. More- over, one plan for re-organizing the Shipbuilding trust would have involved a loss of six hundred thousand dollars to the Trust company if carried through, which. however, was objected to and finally abandoned.
 Tt was impossible. however, to avert all of the consequences of the ill-judged and reckless commitments in which the company had become involv- ed and 1t preserved it's solvency only by cutting its capital in two It's losses on account of investments in the ship- building folly and from laons upon ship building collateral, agggregated nearly lnine hundred thousand dollars and with other minor losses and denrecia- ton in investments, wiped out the lcompany's entire surplus and necessi- tated the sacrifice by stockholders of one-half of their holdings. Over mill lion dollars was charged to profit and loss
 T note that Mir. Dresser attempted in the shipbuilding inquiry to justify or excuse his borrowing from the Trust Company of the Republic by charging that such transactions are common or at least no uncommon, in other institu- tions. The information at my command regarding such allegede practices war rants absolute contradiction of Mr. Dresser on this point. Twice In each year every trust company Is required to submit a verified report of it's condition to this department and one item in this lreport covers the amounts of loans, di- lrectly or indirectly, to directors. It is extremely unusual for these reports to disclose any unlawful loan of the char acter under consideration"
 Another unusually emphatic portion of the bank superintendent's report re- lates to the proceedings against the New York Building Loan Banking com pany. which he calls "the sensational anisode of thp vaor,,
 The report of its regular examination, the superintendent says, showed to the entire satisfaction of the superinten- { dent that the company. which was the largest building and loan association in the state of New York, if not in the United States, was hopelessly insolvent. Its equities in the properties by which it's advance to borrowing members were secured, almost exclusively through second. third. or fourth mort- gages, were too slight for expectancy that they could be source of strength in an emergency.
 'The report of the examination of the company in 1902 demonstrated to my mind that withdrawals had so accumu- lated as to -oreshadow the end. for ii was only by the procuring of nek busi- ness-a sort oe endless chain operation that the institution could possibly : live"
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