The citizen-Republican. (Scotland, Bon Homme County, S.D.) 1???-19??, 1909-05-13
GOVERNMENT ANSWERS
WALSH'S CLEMENC Plea

Chicago. May 11.-Arguments of the
government in opposition to the att
tempt of John r. Walsh, under sem
tence of five years imprisonment for
alleged misapplication of the funds Of
his bank, the defunct Chicago National,
to obtain freedom on appeal to the
United States circuit court of appeals,
are contained In h brief filed today
by Assistant District Attorney Dobyns
In reply to h brief filed by the counse
for the defendant a month ago.
The Walsh banks, the Chicago Ma
tionaI, the Equitable Trust
and the Home Savings, closed their
doors December is. 1905. Walsh was
indicted two years later on 1913 counts.
A year later the case came to trial in
the United States district court and a
verdict finding the defendant guilty ON
% counts was returned.
Judge Anderson sentenced Walsh to
i've years at Fort Leavenworth. The
appeal followed.
Oral argument will be heard by
Judges Grosscup, Baker and Seaman
the last week in the month.
1t ts said the Walsh failure caused
losses to himself, stockholders and 9TH
ers a~ggregating SIS, 900, 900.
Counsel for Walsh commended in their
brief that the loans made by Walsh and
his purchase OF bonds of his own rail-
roads with the banks money were
legitimate transactions, made for the
benefit of the bank and without loss to
the bank.
That counsel should seriously make
sucn statement of fact to this court"
recftes the government brief. can be
explained only by the necessities OF
the case. We contend that the follow
ing facts were established by the over
whelming weight of the evidence.
Bank Mas l%nsoivent.
That on December 16, 1905, the Chi
~ pr Nafjnnol no II rive ~ -,
while paying dividends at the rate of
10 per cent annually although it was
not earning them; that the notes nade
the subject of criminal charges were
or a kind absolutely unknown to hon
est banking; that they were secured
by bonds that were u~nmarketable and
or little or no intrinsic value; that they
We're never paid; that they belonged to
a class of transactions that was a
chief factor in the destruction of the
bank and in causing a loss to the
stockholders OF the entire value Of
their stock; that these loans were made
In utter disregard to the interests OF
the bank for the sole benefit and adj
vantage of Mr.. Walsh and his personal
enterprises; that the proceeds Of these
dictment; that the bond purchases
which are the subject Of criminal
charges were not made in the usual
course of business; that these bonds
were unInafKetaDle n worthless as
bank assets: that they contributed d.
rectly to the destruction Of the bank
and to the loss to the stockholders"
Walsh's Methods.
"Mr. Walsh says the brief, was
engaged in the promotion of a large
number Of struggling enterprises which
were in desperate need Of funds. Cen
orally speaking, his mode Of procedure
was: He would learn Of some enter
prise that was bankrupt or about to
so into bankruptcy and he would
purchase it at a low price. He would
then organize a corporation and sell
the enterprise to this corporation, talk
ing in payment the capital stock OF
the new corporation and a sufficient
number of ponds which at their face
value would more than reimburse him
for the price originally paid for the
property. If the enterprise was sue
cessful Mr.. Walsh made the profit and
the bank got its interest on the bonds.
If the enterprise did fail, Mr.. Walsh
lost nothing n the bank lost the
amount of the investment.
"Whe the banks closed Mr.. Walsh
had taken about SIG, 900, 600 OF their
funds for his personal speculation, yet
his name appeared nowhere upon the
books as debtor or borrower. and the
true state of affairs was not discovered
until the exhaustive examination was
made by the experts who were put in
control of the affairs of the banks by
thn my ~ yn1lor ne fIN