Iron County register. [volume] (Ironton, Iron County, Mo.) 1867-1965, 1917-12-20
IRONTON. MO, THURSDAY, DECEMBER 20, 1917. NUMBER
the control Of John T. Milliken, q
large holder of St. Louis bank stock.
Tha Rankars, Trnsk IN cnllansed

L
The Bankers Trust Co. collapsed
in May, 1914, after . spectacular eight
year career, during which its stock
was the sensation of the st. Louis
market. Nearly everybody who dab.
bled in stocks had some of it. At one
time it went as high as 295 and, prior
to the rapid decline near the end, it
had never dropped except once, when
the capital Of the company was
doubled.
Organized by Franklin, a country
banker, who moved it to st. Louis
from Fredericktown, Mo-, a field
which the promoter decided was en-.
tirely too limited for his financial
operations, it began in 1906 to spread
out its dealings over the Southwest.
the original business CT the COM
pany was to buy and own stocks in
small banks, some Of which it owned
outright and in some of which it own.
ed a majority, or less, of the stock.
A sort Of endless chain system of
bank buying was conducted, the stock
of M bank being used as collateral
on which to borrow money to buy the
stock of another bank, and so on.
Dividends Of Is per cent per annum
were paid from the beginning, and
several years an extra Christmas
dividend of 4 per cent was paid. The
collapse came after the April, 1914,
quarterly dividend Of 4 per cent had
been passed. This dividend followed
the action of the National Bank OF
Commerce in calling the Bankers
Co. on a loan, which it was unable to
pay.
After the collapse Morrow, a stock
holder, caused an audit to be made Of
the company, and rs a result of the
audit filed a suit against Franklin and
Marsh, the secretary, for S100,000 al
leging he had been induced to pur-
chase stock by representations that
it was worth 5000 a share, when the
facts YER that the company was
bankrupt. He obtained judgment.
Morrow's audit revealed an amaz-
ing system of finance in the manage
ment of the company. 1t vas shown
that during the entire time is and &C
per cent dividends we're declared the
company had not earned as much
money as was paid out in dividends,
in any year. 1t was shown that divi.
dends were paid from money borrow
ed from the Bank of Commerce on the
assets of the company. The value OF
all the bank stocks owned we're APP
preciated, the appreciation being
counted an earning. Thus if a sl0(
share of stock in q country bank own
ed by the trust company earned $40,
the trust company would take $40 In
dividends and would contend that by
leaving the other $40 in the country
bank as surplus the share of stock
was worth S1l0 instead of 500. This
system was followed in virtually all
the stocks 1t owned. Each year theil
value was appreciated, mouey borrow
ed on the appreciation and out of thi'
borrowed money dividends wert
paid.
The audit showed that although
the earnings of the company in eigh'
years were only $3.50, 900, dividends o
nearly s $500, 900 we're paid.
, 1t showed that more than 5000, 00t
of its assets were pledged for debts
aggregating 81 ,513 1897 SIS, many Of tht
securities being bonds Of the San An
> tonic, Uvalde & Gulf Railroad, which
the trust company built and was un'
t able to sell.
franklin Ia in Colorado Springs
where he is said to be living in com
Portable circumstances. The nucleu
q of his beginning Of another fortune i
said to have been $4,000 which HI
I, gave to his wife when he was in thu
! !, height of his prosperity.
}, Marsh IL in Spokane, Wash, work
4 ing as a clerk.