Iron County register. [volume] (Ironton, Iron County, Mo.) 1867-1965, 1914-09-24
IRONTON. MO, THURSDAY, SEPTEMBER "a 1914 NUMBER


cial condition was created, which
made fictitious value for the COM
pany's stock.
The audit discloses the Company's
books, on May IL, 1914, showed assets
of s6,S11, ,O69.36 The appraisers re-
port showed that in their opinion the
assets were overvalued SLIPS. .239. .92,
making the actual value of the assets
81, ,0S5, ,828.05. The appraisers also re-
ported that the company had liabili-
ties aggregating $697 ,527 80 more. than
the liabilities shown on the books.
The auditors reported it was impos-
sible to tell from the books of the
trust company the amount the COM
pany had invested in the San Antonio,
Uvalde & Gulf railroad. The COM
pany said the amount was so, 1872
1851. The auditors also reported
that there were many details of the
business which were not
revealed by the books.
The audit shows that of the SO, 3,00O,-
600 ofrailroad bonds held by the com
pany at a valuation of $2,4OO,0 900, it
has pledged for loans, bonds to the
par value amount of $2,771 900 and
that of these bonds, 1929, 900 par value
are unpledged.
Of it's total securities, including
bonds and notes, amounting to Sc, ,675,-
860.65, the audit shows the company
has pledged for money borrowed $5-
020,219.72 The appraisers figured the
total assets at only $5,085, ,82S.05.
Franklin and Marsh are out Of the
city and it was Impossible for re-
porter to obtain statements from
them. Franklin is with his family
at his home in Colorado Springs.
Mr.. Franklin has since sent a state
ment to the Post-Dispatch denying
every allegation Of wrong doing. His
statement, published in Sundays is
sue, is, in part, as follows:
'sI have just read the articles in the
Post Dispatch criticising the Bankers
Trust Co., and its management.
"As to the charge that / sold some
of the stock after the first of May,
when the company was in financial
trouble, this is absolutely false. The
stock of mine that was sold was held
as collateral and was sold by order of
the banks that held this collateral and
against my protest.
''As to the charge that the manage
ment of the Trust Company paid un-
earned dividends this is based upon
the alleged imitation of book values or
bank stocks held by the Bankers Trust
Go. As matter offact, there was no
imitation Of these bank stock values.
SIT was the rule with the manage
ment of the trust company to carry
the bank stocks of the company at
book value. Banks do not pay all
their earnings in dividends, but retain
more or less of these earnings in sur
plus and undivided profit. We put
into our profit account the dividends
year revised the book values of these
stocks by adding in the earnings for
the year that haS noRbeen paid oGt In
dividends. These are the various en-
tries criticised as infiations of book
values and these were entirely legitit- |
mate and proper, as any banker viii
concede.
1.-THE fact that the appraisement of
these stocks by Messrs. billiard,
Clarkson & Hubbard at a somewhat
less amount than they were carried
on our books arises from the fact that
one of the banks in which we held
stock namely, the State National
Bank of Little Rock, had been closed
for liquidation by action of it's direc-
tors and this committee marked them
off as loss the entire amount at
which we were carrying this stock,
also reduced the value of the stocks
of some of our banks that held re-
discounts of the State National Bank.
The Comptroller of the Currency later
held that the State National Bank was
solvent and it is being liquidated now
under the superintendent of it's
Board of Directors.
eThat some of these bank stocks
have been sold recently at less than
book value is not surprising, consid-
ering that they were forced sales and
at a time so unfavorable to the sale of
any property. AS a matter of fact,
the entire list of bank stocks held by
the Bankers Trust 90. could have
been sold In April at higher value
than we we're carrying them, and |
personally favored selling these
stocks, but was opposed by some of
our directors.
"Another criticism was that 81 ,600,-
900 was added to surplus account
without any assets to show therefor.
This is entirely erroneous, as the
report of Westermann & Trader show;
for this entry was more than Offset
by the value Of subsidies and dona-
tions received on account of the con-
struction Of the San Antonio, Uvalde
& Gulf Railroad. The fact that
the management of the trust company
made mistake in undertaking the
construction of this railroad is frankly
admitted. This did not seem to be
the case at the time the deal was un-
dertaken and it is only the unfavorable
course of events, that could not be
foreseen, that has made this under,
taking so unfortunate for the Bankers
Trust 90.
1T is this railroad construction that
has caused all our trouble and ! am
wholly to blame for undertaking it,
for ii was on my recommendation
that the board Of directors of the
trust company approved the under
taking. 1t was an error of judgment
which / greatly deplore. have suf-
fered greater financial loss than any
one else, but at the same time the
losses of my friends and others who
were stockholders in the Bankers
Trust %. have worried me more than
my own losses,
s'The most thorough investigation,
however, will not show any NAL
feasance on the part Of the MANAGE
ment Of the Bankers Trust Company
or it's board of directors.n
Statistics.