Daily Kennebec journal. [microfilm reel] (Augusta, Me.) 1870-1975, 1910-03-01

value, IIcNNI huu oiy SChSioi iit0BhSt
value. and would never have been pur-
chased by any banking institution at
any figure approximating the price
paid for them except as personal
favor to some one then influential in
the bank.
About 1900 there occurred COM
plete change in the control of the
bank. The report for that year gives
E. j. Lawrence as president. and Mr..
Lawrence and S. A. Nye as two of the
seven members of the executive board
who passed on loans. The following
year Mr. c. W. Davis also became
member of this board. giving the
syndicate hereinafter described three
representatives of the board of seven
which approved the loans. while five
members of the syndicate held posi-
lions on the general beard OF directors.
Mr. Lawrence continuing as prcsi-
dent. 1t so continued until the be-
ginning Of the present year, except
that Mcs.rs. Nyc and Davis ceased to
be members Of the board in 1908.
About the time this influence Sc
cured control of the bank there APP
peared an association described by one
of its members as the Railroad Syndi-
cate composed of Lawrence. Davis,
Soule, Page. Gerald and S. a. Nyc.
Some of the members of this synd-
cate and their business associates be-
came extensively interested in western
mining operations and other enter
prises of character that should have
made bank directors very cautious in
the matter of extending loans either to
the enterprises or their promoters.
These men and those of their
friends who were extensively interest
Jed in their ventures soon began to use
the funds Of the bank for financing the
enterprises in which they were con-
cerned. Had the influence which then
predominated in the bank been as wise
in granting the loans in which it had
personal interest as in those to
strangers, it is safe to say that there
would have been no failure.
Il made my first official examination
|of this institution August "a, 1906.
within five weeks after I assumed
office. I had previously learned that
Mr.. Timberlake had been endeavoring
to prevent the continuation of these
excessive loans. although there was
then no law regulating them.
Il found the total loans and dis
counts to be $1.125.57S.04. more than
one-half of which was loaned either
to members of the above syndicate or
to men who l believed to be closely
associated with some of it's influential
members in mining and other enter
prises. l found the syndicates repre-
SentativeS on the managing board Of
the trust company represented on it's
paper as makers or endOrsers in the
following aggregates.-E. J. Law
renee. s4O9.4S6.3S; c. W. Davis, s449.-
222.59; S. A. Nye, $270,529. A large
proportion of this was paper on which
two or all then appeared together. but
1t necessarily represented net total
in excess of the largest of these three
items.
Il Immediately called for signed
statements of their individual assets
and liabilities. These statements were
desired as basis on which to arrive
at a fair valuation of the company's
stock and to determine whether it was
probable that it would escape serious
loss from these loans, which never
should have been granted in any such
volume, which would not have been
granted to persons not represented on
the board of directors, and which
probably would not have been granted
even to them if any member of the
board had made a vigorous protest
against it. And the members OF the
board who were not personally inter-
ested in these enterprises were under
the same obligation to guard the in
terests of the bank as those for whose
direct benefit the loans were made.
"The statements showed net worth
as follows:
Railroad Syndicate, slaOa40 "a
Cyrus w. Davis, 30 10g Sc
Henry M. Soule, DIG 704 %
S. A: Nye Mfg Co (above
capital stock 56.O5lOo
>. A. Nye, 50, 90
A. F. Gerald. (ahovc mscel-
laneOus items on which he
fixed no value). $4,000
r. j. Lawrence. 800, 49,. 81
A. b. Page, 19S. J02. 90
Total s1.437, 100. II
These figures were given in signed
statements purporting to show the &C
tual net worth of the individuals
named. While 1 felt that MANY of
tuclT IlOlulHSS we're CONSIDERABLY over
valued. had no reason to doubt that
their statements were made in good
faith. The members of the syndicate
continually insisted that all they re-
quired was time to work out their in
vestments and showed me from time
to time reports of experts who were
examining the mines and other evil
dcnces of their activity along that line
With the exception of Mr.. Nye they
maintained this position even through
the year 1908. and we'll into 1909 when
it became apparent that they were to
obtain no further extension from their
creditors. Their holdings We're of such
a nature that they We're in much bet
ter position to fix their value than any
other person could possibly be.
HAD these assets worked out as the
individual holders believed they would.
the Trust Company would at no time
have been in danger of losses sufficient
to impair it's capital even. because the
losses on Calais Street Railway bonds
and the Moore loans would easily have
met from the surplus and the account
for vault. furniture and fixtures had
already been charged down to rea-
sonable basis for an active concern
Assuming the good faith of the signed