The news & observer., 1905-12-19

the method or conducting the affairs
Of the bank. The comptroller took
exception TO the large loans made by
the bank TO the private enterprise of
Mr.. Walsh, and declared that por-
ton of them must be called in. AS
sufances were given, the comptroller
declares, that this would be done, but
the promises We're not kept.
Finally the incentive to a close
crutiny of the affairs of the Chicago
National and the Home Savings
banks was given by a banker in New
York. who had been requested to take
part in a syndicate to furnish a loan
of S6,000000 TO Mr. Walsh for furth-
er expenditures on the Southern In
diana Railroad The bonds of the
company, however, did not sell as
rapidly as was expected and State and
National bank examiners were ap-
prised of the failure of the loan. Up
to this time the banks had been eX-
amined separately. which enabled
them to transfer securities back and
forth. 1t was decided that the State
examiner and the National examiner
should make a simultaneous inVeStf-
cation. This Showea that the inSti-
tutions had lent a large amount, esti
mated all the way from $4,000. 600
to SIG, 900, 600 on the securities OF the
railroads that were owned almost en-
tirely by Mr.. Walsh 1t is said that
the paper for these loans was signed
by clerks, and that they were sub
stantiated by the bonds of Mr. Walsh's
railroads, the Southern Indiana, the
Chicago Southern, the latter an ex-
tension of the Southern Indiana, and
the Wisconsin and Michigan.
When the examiners had concluded
their report MIR. Walsh asked for time,
saying that he could raise the money
to straighten out everything. He was
not as successful in this as ne hoped
to be. When Comptroller Ridgeley
was informed of the situation, he
came at once to Chicago.
Ridgeley Takes "a Hand.
Comptroller Ridgeiey called a meet
ing of the members of the Chicago
Clearing House and informed them OF
the situation. The meeting was held
in the office of the President of the
rIrsI National Bank and continued
from three o'clock Sunday afternoon
until five O'Clock this morning. II
was then announced by the comp
troller that the banks had suspended
and that all depositors would be paid
in full by the other banks of the
city. A statement to the same effect
"
Clearing House.
Mr.. Ridgeley's statement says:
'"rhe action of the clearing house
banks makes it absolutely certain that
all the creditors OF the three institu-
tions will receive their money imme-
diately, and should thus relieve any
apprehension on the part of the pub
lie in regard to financial troubles in
Chicago. The critical situation in
which these three concerns have been
placed has been due to the large loans
made to the railroad, coal mining and
other enterprises owned and controlled
by John r. Walsh. This again en-
phasiZes the danger of the managing
officers of banks being interested in
outside institutions requiring large
amounts on money. The comptroller
office has for some time been CRITICS
ing the condition of the Chicago Ma
tional Bank and calling on its Off
GERS and directors TO reduce the
amount of these loans and the invest
ments in the bonds of Mr.. Walsh'S
corporations. In spite of repeated
promises that this should be done
these items have been continued in
the bank. and in order TO prevent
further encroachments it was neces
sary for the comptroller to take radi-
cdI dcllOn. Inc coHplrOlef OIllce
has for some time been endeavorins
to make an examination of the Chi
cago National Bank simultaneously
with an examination of the State in
stitutions by the State bank examiner
but was not able to bring this abou
until a few days ago. The result OF
these examinations revealed such {
serious condition that it was neces
sary to take immediate action"