New-York tribune., 1905-05-30
Mr.. KlLBURN EXON GRATED
Gouernor Dismisses Charges in Mer-
chants Trust affair.

dismissed the charges made by George Won
IJtassy, of New-York City, against Superin-
tendent KIlburn of the State Banking Depart
ment for the failure of the latter to close the
Merchants Trust Company. Of New-York City,
two years ago. The Governor took this action
after the receipt from Superintendent Kilburn
of a statement answering the charges. The
Governor made this statement;
Reading Superintendent Kilburn's statement
in connection with the charges, and after con-
sultation with the Attorney General and the
counsel TO the Governor on the legal questions
involved. l have decided that the Superintendent
of Banks acted in the matter in accordance win
law and exercised proper judgment and pru
dence in so doing. The charges against MIN
are hereby dismissed.
superintendent Kilburn filed with the Gov
ernor the following reply to the charges:
In January 1908 report was made to me by
examiners Of the banking Department, from
which it appeared that the Merchants Trust
Company OF the city Of New York. had loaned
S4.O4S,OOO upon securities OF a class which
might be termed SLOW assets.
He here gives the list heretofore published.
l at once entered upon the task TO have the
company relieved of these loans and securities.
which, in my opinion much wiser course
than an attempt a. that time TO put the COM
pany in the hands Of receiver. l gave, and
have continued to give. the matter my earnest
personal attention, with the result that have
succeeded in having the trust company relieved
of 81, 10 173 of the Virginia cOmpany's loans
and securities, and $9S.S34 of the $52OOOO OF
various other loans. making an aggregate of
S2,219.OOO Of loans retired. l have also had
the trust company relieved OF its guarantee or
SEoO,OOO, above mentioned. making a total OF
nearly $3.OO00OO
At the time the report OF examination was
made to me there was not. in my opinion, sufh-
clent ground TO conclude that the company was
insolvent nor that its capital was impaired, for,
while these securities which l have referred to
were not readily marketable, 1t was yet claimed
o
beyond question the solvency OF the trust com
pany. Had any step then been taken to throw
the company into a recevership, 1t would un-
doubtedly have resulted in a sacrifice of these
securities and in great loss to the depositors.
Such a course was not IN my opinion Justih-
able, although. so far as l was concerned, II
would have relieved of further
responsibility and anxiety. I believed it to be
my duty to save the company, If possible, and,
If not, TO at least save everything possible out
Of 1t, and to that end l have given It's affairs
my unremittns and anxious attention.
At the time OF the examination the Obligs-
tions of the trust company to depOsitors were
trihe less than $5.25O.0OO. while at the present
time 1t owes depositors about $2,OOO,0OO. The
SLOW assets" consist at the present time in the
main of bonds of the Hudson Valley Railway
Company. and of certain power, street railway
and lighting companies in Rutland, VT. These
securities have substantial value. and it is
pected that the receivers will ultimately obtain
for them sufficient to pay depositOrs in full The
detailed figures relating to these securities, as
we'll to other transactions matters Of
record on file in my Office
The statute clothes me with discretion in de-
termlning when lit is unsafe and ineXpedient for
such corporations to continue business" and the
facts and results show that l have exercised my
judgment and discretion wisely, and in the in
terestS or the trust company and its depOSitoTS.
Neither at the time of the examination at
any time since have had sufficient grounds in
my opinion, TO report to the Attorney General
that the company was insolvent
Ever since the Richmond securities were
taken out it has been my constant endeavor to
have the company relieved of the Hudson Valley
Railway and Rutland securities. Negotiations
have been pending looking to the sale of these
securities, and especially those of the Hudson
valley Railway Company, and strong assur
ances have been repeatedly given that efforts in
this direction would be successful. What
amounted substantially to offers to purchase
these securities were made, but did not reach
figures which the trust company felt justified
In accepting, and when 1t appeared that an ex-
peditious sale could not be made at a proper
sum, 1t seemed to to be in the interests of
the depositors of the trust company that a
receiver should be appointed, and therefore ex-
ercising to the best OF my Judgment the dIscre-
ton conferred upon me by law 1 reported to
the Attorney General that 1t was unsafe and
ineXpedient for the trust COmpanv 10 longer
continue business.
l most emphaticauy deny each and every
charge contained in the communication ad-
dressed TO you, and l respectfully submit thar 7
have acted prudentIy and wisely In the matter
Throughout and entirely within the law.
Otto T Barnard. president OF the New-York
Trust Company and co-receiver with Douglas Rob
inson of the failed Merchants Trust COMPANY
was disincned yesterday to comment upon his re-
cent inspection OF the street railway and other
properties at Rutland, Vt, upon which the Mer-
chants Trust Company had made heavy loans, be-
yOnd remarking that Of the plants were in
excellent condition.
w. B. Ellison. counsel for the trust company, and
several OF the other men interested in the efforts
to rehabilitate it were out OF town yesterday and
in their absence no information could be obtained
regarding the that syndicate had been
formed TO take the Merchants Trust Com
panys interests in the Rutland and Hudson Valley
railway properties at about 80, and reorganiZe the
company. 1t is estimated by Merchants
Trust Company interests that about 80 cents on the
dollar representing in all about A,0ooC0O, can prob
ably be realized the Rutland and Hudson Val
ley loans. If this expectation shall prove well
founded. the stockholders will probably be called
upon for little contribution under their 100
per cent liability