The Indianapolis journal. [volume] (Indianapolis [Ind.]) 1867-1904, 1904-01-04
DRASTIC COMMENT ON
TRUST FINANCIERING
New York Bank Superintendent
Excoriates the Trust Company
of the Republic.
LOANS TO MIR. DRESSER
Made in fragrant Violation of the
Law-Losses of the Trust
Company.

ALBANY, n. Y, Jan. 3.-Drastic COM
ment on the conduct of the Trust Company
Of the Republic in connection with the at
fairs of the United states Shipbuilding
Company is a feature of the annual report
of Superintendent Frederick ID. Kilburn Of
the State Bank Department, made public
tonight.
Upon the first intimation that the trust
company had made unusual commitment
in the CASE says Mr.. Kilburn, "a special
inquiry was Instituted by me to ascertain
the facts and l was amazed to find that I'M
dertakings had been entered into and LA
5ilities incurred which not only jeopardized
the solvency of the trust company, but
fiagrantly transgressed the law.
1.-The company had made numerous loans
without collateral 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
quarters of dollars. 1t had, besides, guar
anteed to answer demands made by other
institutions on Mr.. Dresser and Mr.. Nixon
amounting TO 100000.
81 required, alternatively, that the af-
fairs of the company be referred at once to
the attorney general for proceedings in in
SolYency to be instituted against 1t, or that
there be some very thorough Strengthening
out of the trust company'S affairs. The
direct loan to Mr.. Dresser and Mr.. Nixon
was eACeSSlNe UlueG the law, IESdIulCSS VI
Mr.. 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
million guaranteed to other institutions
were taken up and later the balance of the
Dresser and Nixon note to the Trust Com
pany of the Republic was paid in full. This
seems to me a far better proceeding than
to refer the case of the company to the
attorney general summarily, for il recovered
nearly 81 100000 that in the other alterna-
tive might have proved a loss. Moreover,
one plan for reorganizing the shipbuilding
trust would have involved a loss of $500, 600
to the trust company, if carried through,
which, however, was objected TO and finally
abandoned.
1T was impossible, however. to avert all
the consequences of the ill-judged and
reckless commitments in which the COM
pany had become involved, and it preserved
It's SolVency only by cutting its capital in
two. It's losses on account of investments
in the Shipbuilding folly and from loans on
~shipbuilding collateral aggregated nearly
100000, and, with other minor losses and
depreciation to investments, wiped out the
company's entire surplus. and necessitated
the sacrifice by stockholders of one-half of
their holdings. Over a million dollars was
charged to profit and loss.
Il notice that Mr.. Dresser emp in
the shipbuilding inquiry to justify or ex-
cuse his borrowings from the Trust Com
pany of the Republic by charging that such
transactions are common, or at least not
in other institutions. The 1nfOr-
nation at my command regarding such al
legged practices warrants absolute contra
diction of Mr.. Dresser on this point. Twice
in each year every trust company is re-
quired to submit a verified report of it's
condition to this department., and one item
in such reports covers the amount of loans,
directly or indirectly to directors. 1t is ex-
tremely unusual for these reports to dis
close any unlawful loan of the character
under consideration"