The Bennington evening banner. (Bennington, Vt.) 19??-1961, 1904-01-04
KILBURN
REPORTS
Reckless Business of Trust
Company Shown Up.
OFFICIALS TRANSGRESS
Loans Made Without Good Security
-SOIvenCy of Corporation
in Danger.
OFFICIALS TRANSGRESS

ALBANY, N. Y, Jan. 4. - Drastic
comment 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 ID. Kilburn of the state bank
department, just made public. Upon
the first inimation that the trust COM
pany had made unusual commitments
in the case" says Mr.. kilburn, "a spe-
clal inquiry was instituted by me to as
certain the facts, and | was amazed to
find that undertakings had been en-
tered 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 collat-
eral other than shipbuilding stock and
securities, one Of them to Mr.. Dresser,
the president of the company, and TO
Mr.. Nixon for nearly a million and
three-quarter dollars. 1t had, besides,
guaranteed loans made by other insti-
tutions TO Mr.. Dresser and Mr.. Nixon
amounting to 100000. | required,
under the alternative that the company
be referred at once to the attorney gen
eral for proceedings in insolvency to be
instituted against it, that there be some
very thorough Strengthening out of the
trust company's affairs. The direct
loan to MIR. Dresser and TO Mr. Nixon
was excessive under the law regardless
of Mr. Dresser's official relation TO the
company, and TO him it was more than
ten times the amount that could law
fully be loaned
"Under my insistence half million
Of it was soon repaid, the loans for s.
0OO GOO guaranteed to other institutions
were taken up, and later the balance of
the Dresser and Nixon note to the Trust
Company of the Republic was paid In
full. This seemed to me n far better
proceeding than to refer the company
to the attorney general summarily, for
II recovered nearly $4,OO0,0O0 that in
the other alternative might have proved
n loss. Moreover. one plan for reorgan-
lzing the shipbuilding trust would have
involved loss of 5000 900 to the trust
company if carried through, which,
however was objected TO and finally
abandoned.
ut was impossible, however, to avert
ali Of the consequences of the i'll judged
and reckless commitments in which the
company had become involved. and it
preserved its solvency only by cutting
its capital in two. Its losses on ac-
count OF investments in the shipbuild-
ing folly and from loans upon ship
building collateral aggregated nearly
100000 and. with other minor losses
and depreciation in investments, wiped
out the cOmpany's entire surplus and
necessitated the sacrifice by stockhold-
ers OF One-half of their holdings. Over
a million dollars was charged to profit
and loss"
The report made by Attorney General
Cunneen showed to the entire satisfac-
ton of Superintendent Kilburn that the
company, which was the largest build
ing ana loan association in the state,
If not In the United States, was hope
lessly insolvent and was conducting its
affairs with SO great extravaganza and
upon plan 20 utterly false and vicious
in principle that it could not hope to
improve its condition, but must inev.
itablS go from bad to worse"
Numerous other Irregularities were
established as well as an lntolerable
extravaganza in management and, in
short, the company had reached con-
ditiOn who're 1t must be manifest to
any impai al mind that 1t had become
hOpelessy iusolvent.