Omaha daily bee. (Omaha [Neb.]) 187?-1922, 1908-08-21
RECEIVER FOR WALSH ROAD
Southern Indiana Line Now Under
Federal Jurisdiction.
ACTION ON CLEARING HOUSE NOTE
Secrecy Maintained in Order to Fore
stall Complications from other
CreditOrs-Carpenter is
Appointed.


CHICAGO. Aug. 0.-Federal jurisdiction
now extends over the Southern Indiana
Railway company through the appointment
of a receiver in the United States circuit
court for the road, which has long been
regarded as the best of what are known
the John r. Walsh railroads.
On a petition presented by counsel for
the First Trust and Savings bank Of Chi
cago. the representative Of the Chicago
Clearing House association. Judge Christian
c. Kohlsaat late last night appointed NJ. ].
Carpenter. formerly president of the Chi.
cago & Eastern Illinois Railroad company,
receiver of the Southern Indiana company.
Failure to meet the interest on tho
bonded Indebtedness of the road was the
proximate cause of the petition and the
court action. For months there have
been rumors that rceriNership was the
only solution of the financial difficulties
of the road which were accentuated by
Industrial depressions, which made 1t diff
ficult to pay operating expenses.
The Southern Indiana road was the first
railroad acquired by John r. Walsh in ex-
tending his banking BUSINESS from banking
lines to wider financial expansion and
the methods employed to develop the road
and finance the other railroad enterprises
formed a large part OF the charges IN the
trial which preceded the conviction Of
the aged banker on a charge OF mIsapply-
ing the funds of the Chicago National
bank, of which he had been president.
ReceIVershIp to BE Extended.
The receivership which now covers the
Southern Indiana road alone, viii probably
be extended to take in the Chicago South
ern Railway company, which was designed
to connect the Southern Indiana road with
Chicago.
A motion asking for the extension of the
receivership has been presented to the
federal court and will be argued Satur-
day.
The Southern Indiana road tapped the
Bedford stone quarries, one of the best
paying ventures held by Mr.. Walsh.
One of the strong points made by the
government attorneys in their arguments
before the jury which convicted the former
banker was that'the Chicago National bank
and the Home Savings bank as we'll as the
Equitable Trust company, which were
practically controlled by John r. Walsh,
have been drained of funds to supply money
with which to develop the railways. Mr..
Walsh on the witness stand declared his
belief that the roads were good business
propositions and that his judgment in in
vestng money in them would be supported.
In the adjustment which followed the
long days of investigation preceding the
trial in the federal court last fall, a num-
ber of notes OF the Southern Indiana road
was given to the Clearing House associa-
tion and these were the basis on which the
| petition for the appointment Of the receiver
is based.
No Reflection on Management.
The petition on which the receiver was
/ appointed contains no reflection on the
/ operation OF the road by John r. Walsh
! and the compainants assert that court
action was necessary to preserve the credit
and resources OF the road, which has suf-
fered from the industrial depression which
| has existed
| The Southern Indiana railway is the
holder OF all of the stock of the Chicago
| Southern Railway company, which was
/ designed to permit the Indiana road to en-
! ter Chicago. The action in Chicago was
simultaneous with the filing of a similar
/ bill in the eastern federal district at Dan
| VILE, ILL.,, and in the district % Indiana at
indianapolis. The appointment of Il. c.
/ Ritcher who has been long retained as
/ counsel for Mr.. Walsh, attorney for the
receiver is pointed to as proof that the re-
| ceivership is satisfactory to Mr.. Walsh and
! his interests as well as the clearing house
| and other creditors.
| An unusual feature of the court proceed
| ings was the secrecy employed. The petit
/ tion on which the receiver was named was
taken late at night TO Judge Kohlsaat's
/ home and a deputy clerk OF the court was
summoned to transcribe the order
| other Creditors FOrestaIled.
! The silence was to forestall any attempt
OF antagonistic creditors to begin fore
closure suits which would hamper the ad-
judication OF the whole properties. Not
until late in the day, when the three
actions in the different judicial districts
were well under way and the interven-
ing petition OF the Chicago Southern road
had been filed. was information given on
the courts order taking over control Of
| the. road
The Southern Indiana road was organized
Continued on Second Pase)