The Washington times., 1905-09-20
Kilburn, or State Superintendent of In
surance Hendricks. or their predeces-

Kilburn, or State Superintendent of In
surance Hendricks. or their predeces-
sors.
But what is regarded as one OF the
most astounding features of the revela-
tions made by Mr.. Morton is the fact
that after the Equitable Society, which
really had nothing TO do with the deal
primarily. had been protected from loss
by the guarantees of Hyde. Hartley and
their associates, James w. Alexander,
who succeeded Hyde as president of the
Equitable. gave to these guarantors in
the name of the society, release from
their guarantees and saddled upon the
Equitable Society the whole responsible
ity for the bad investment
This included S113.055 of absolutely
worthless bonds and stocks taken from
Young by the Western National Bank:
in which the Equitable Society owned
less than n two-fifthS interest
Mr. Morton. while disclosing only part
Of the facts and concealing the remain
der. announced he ned instructed
Wallace Macfarlane. special counsel for
the society to insist that the SIS, 30
paid by the society into the scheme
funded by the Mercantile Trust Com
pany. with interest.
Will Sue if Necessary.
Mr.. MacFarlane was instructed also TO
bring suit TO recover the money If the
trust company should refuse 70 make
restitution voluntarily. and to take steps
to protect the society against further
loss because of the Alexander releases.
In the course of the explanation of the
remarkable deal. Mr.. Morton said yes
terday:
I'm November, 1894 this society held
s 2sl shares. or a little less than two
ffths of the capital stock of the West
ern National Bank Before the society
became interested in this bank the latter
had made certain loans upon collateral
as follows:
ITO John w Young-Salt Lake and
Fort Douglass Railroad Company bonds
and stock. Salt Lake and Eastern Rail-
Company stock, Deming. Sierra Madre,
and Pacific Railway Company stock
amount. $l13 .o55. to Kentucky Mineral
and Timber Company-Contracts for the
purchase of certain lands in southeast
ern Kentucky. s25s. 1894; TO Amity Land
and Irrigation Company-Represen a
controlling interest In certain irrigation
s264, ,599 Total $685. 04S. and with interest
70 November IS. 1894, s25.44S. Total
Loans Not Paid.
These loans were not paid. and the
bank had taken over the collateral
which, however. the bank examiner had
objected to as an asset. Henry B. Hyde.
president of the society. and also a
director in the bank, arranged to trans
fer the collateral to the Mercantile
Trust company. The collateral was first
assigned by the bank TO George V.
Turner. secretary TO Louis Fitzgerald,
then president of the Mercantile Trust
company.
Turner. on the security of the col
lateral, obtained from the trust COM
pany loan of S66l, ,491 (the exact amount
that the collateral stood at on the
books of the bank), evidenced by his
note dated November IL. 1894 This
amount was turned over TO the bank on
payment for the collateral which II had
assigned to Turner.
Upon Turner's note there was in
dorsed a guaranty OF payment by Mar
cellus Hartley. John z. Searles. Louis
Fitzgerald, W y; Coler. Jr, and n B.
HYDE. Upon all renewals the same
guarant was indorsed-
These men were all directors Of The
Western Nfficnal Bank, and held cen
siderable amounts of its STOCK Nj
Hyde was also president OF this society
Mr.. Fitzgerald was president of the
Mercantile Trust Company ard a di-
rector of this society and chairman OF
dir.ct"r of this society and a member
OF its finance committee.
Sealed Agreement.
'11 addition to these Endorsements
the same guarantors. on March. q. 1895
executed a scaled agreement of guarant,
covering the original amount Of the loal
and sums advanced by the Mereantil,
Trust Company UP 10 that date in at
tempts to develop the collateral. Or
November 9. 1896. a further scale,
agreement OF guaranty was executed b,
ali the original guarantors covering III
amount 10 which the loan had the
grown. s1.276. As. and all future ad
yances that should be made in accord
ance with the guaranty
Soon after the Mercantile Trust Com
pany assumed these loans in November
lsSf. II was found that the collateral 70
the loan 10 John w Young was who'll
worthless; but IL was decided to attemp
TO develop the other security known q
the Kentucky property and the Col
orado property.
Enormous sums were expended, wit
the result that on July /. 1905 the cos
of the Kentucky property stood on tn
books OF the trust company at s6ls O6
and the cost OF the Colorado property
at 2,s09. 633. The cost OF the 'Colorad
property was assumed by the CONNER
clai Trust Company to the extent {
10000. by the Western National Bar
(now the National Bank OF Commerc,
TO the extent OF 100000. and by til
tnow the Equitable Trust Company
tie extent of 100000, on certificates
participation issued by the Nercanti
Trust Company on January q, I9O
Agreements were executed by Turn,
and The guaSantors consenting to Il
certificates and agreeing that the co
lateral should apply TO them. equal
with the notes held by the Mercanti
Trust
CAPTAIN HATVILLE'S