Los Angeles herald., 1905-12-19
THREE CHICAGO
BANKS SUSPEND
JOHN R. WALSH IS CAUSE OF
FAILURE
Heavy Loans Made to Him by These
Institutions Cripple Them--oe-
posltors viii BE Paid
In Full
BY Associated Press.

CHICAGO Dec. 1s.--Three Of the
largest financial institutions In the west
the Chicago National bank, the Home
Savings bank and the Equitable Trust
company-all of them controlled by
John r. Walsh of this city and in great
measure owned by him, suspended
operations today. Their affairs will be
liquidated as rapidly as possible and
they will go out of business.
Mr.. Walsh, who was the president of
the Chicago National bank and of the
Equitable Trust company, and all the
other officers and all the directors of
the Chicago National bank have re-
signed. National Bank Examiner G.
III. Bosworth has succeeded Mr.. Walsh
at the head of the Chicago National
bank and the places of the directors
have been filled by men appointed by
the Chicago clearing house. Back of
the new management stand the allied
banks Of Chicago. who have pledged
their resources that every depositor
shall be paid to the last cent and that
no customer of any one of the three in
stitutions shall lose anything by reason
OF the suspension. Had not this action
been taken by the banks of the city n
disastrous panic must have followed I'm
the financial world. As IL was, the
only effect in this city was the decline
on the local stock exchange of 21a in
the price of National Biscuit common
stock, which has employed the Euuit-
able Trust as transfer agent and had
besides dealings with the Chicago Ma
tional bank, but it is not affected by
the failure in the slightest degree. The
closing of the two banks had the effect
&c sl..,NA n
local exchange for bank stocks, none of
them being purchased.
Cause of Collapse
The immediate cause of the collar pse
of the institutions controlled by Mr.
Walsh is said to be the large amount
of money which they have loaned to
various private enterprises of his, not
ably the Southern Indiana railway and
the Bedford Quarries company OF In
diana. Mr.. Walsh claims that ir he
could have had a little more time and
been left untrammeled i'm his operations
he could have saved his banks and made
enormous profits for himself and his
associates.
He bases this statement upon his esti-
mate of the value of the bonds in the
Southern Indiana Railway company.
The comptroller, the state auditor and
the members of the Chicago clearing
house committee place the value of the
bonds at one-half the valuation of Mr..
Walsh, and 1t was their refusal to
accept his valuation that caused the
suspension of the banks.
The liabilities of the three institutions
are estimated in the aggregate at $685.
600, 900. Against this amount the banks
and the trust company have resources
Nt..a s.l
worth $4,000 900. The bonds of the
are estimated by Mr.. Walsh as being
worth $4,000, 600. They are considered
by the comptroller, state auditor and
the clearing house committee to be
worth little more than half that sum
Their value is Il matter to be deter
mined in the future, and the presidents
of the local banks admit that if the
estimate of Mr.. Walsh is found to be
correct the two banks and the trust
company will not only pay all of their
debts but leave a surplus besides. The
directors of the two banks and Mr..
Walsh, who has turned over all his
private property as well as that stand
ing in the name of Mrs Walsh, have
pledged real estate and securities
valued at IS, 900 900, and estimating the
railroad bonds at $s0O0,O0o more. makes
a total of $29,000,000 assets against
S26,00O,OOO liabilities.
Controversy With Rdeely
For some time there has been a diff
ference of opinion between the officers
of the Chicago National bank and
Comptroller Ridgely regarding the
methods of conducting the affairs of
the bank. The comptroller took eX-
in,, To IaA l1I- a hXY hn
bank to the private enterprise of Mr..
Walsh and declared that portion of
them must be called in. Assurances
were given to him, he declared, that
this would be done, but the promises
were not kept. Finally the incentive
to a close scrutiny of the affairs of the
Chicago National and 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 &c. 900 900 to Mr.. Walsh for the pur-
pose of further expenditures on the
Southern Indiana railway. The bonds
of the company, however, did not sell
so rapidly as was expected, and the
state and national examiners were ap-
prised Of the failure of the loan.
Up to this time the banks had been
examined 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 investi-
cation, This showed that the institu-
tion had loaned a large amount, esti-
mated all the way from $10,000,O0O to|
$15 900, 900 on the securities of the rail-
roads that were owned practically by
Mrs. Walsh alone. 1t is said the paper
for these loans was signed by clerks
and that they were substantiated by
bonds OF Mr.. Walsh's railroads. the
Southern Indiana, the Chicago South
ern, which is an extension Of the South
ern Indiana, and the Wisconsin and
Michigan.
When the examiners had concluded
their report, Mr.. Walsh asked for a
little time, saying that he could raise
the money to straighten out everything.
He was not so successful In this as he
hoped to be and when Comptroller
Ridgley was informed of the fact, he
came to Chicago.
AII-Night Meeting
He called a meeting Of the members
of the Chicago clearing house and in
formed them of the situation. The
mating WA q held In the office Of tha