The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.
STOCK EXCHANGE PRACTICES
HEARINGS
BEFORE THE
COMMITTEE ON BANKING AND CURRENCY
UNITED STATES SENATE
SEVENTY-THIRD CONGRESS
SECOND SESSION
ON
S. Res. 84
(72d CONGRESS)
A RESOLUTION TO INVESTIGATE PRACTICES OF STOCK
EXCHANGES WITH RESPECT TO THE BUYING AND
SELLING AND THE BORROWING AND LENDING
OF LISTED SECURITIES
AND
S.Res. 56 and S.Res. 97
(73d CONGRESS)
RESOLUTIONS TO INVESTIGATE THE MATTER OF BANKING
OPERATIONS AND PRACTICES, TRANSACTIONS RELATING TO
ANY SALE, EXCHANGE, PURCHASE, ACQUISITION, BORROWING, LENDING, FINANCING, ISSUING, DISTRIBUTING, OR
OTHER DISPOSITION OF, OR DEALING IN, SECURITIES OR
CREDIT BY ANY PERSON OR FIRM, PARTNERSHIP, COMPANY,
ASSOCIATION, CORPORATION, OR OTHER ENTITY, WITH A
VIEW TO RECOMMENDING NECESSARY LEGISLATION, UNDER
THE TAXING POWER OR OTHER FEDERAL POWERS
PART 20
Exhibits Cleveland Banking Investigation (continued)
MAY 3 AND 4, 1934
Printed for the use of the Committee on Banking and Currency
175541
UNITED STATES
GOVERNMENT P R I N T I N G O F F I C E
WASHINGTON : 1934
COMMITTEE ON BANKING AND CURRENCY
DUNCAN U FLETCHER, Florida, Chairman
CARTER GLASS, Virginia
ROBERT F. WAGNER, New York
ALBEN W. BARKLEY, Kentucky
ROBERT J. BULKLEY, Ohio
THOMAS P. GORE, Oklahoma
EDWARD P. COSTIGAN, Colorado
ROBERT R. REYNOLDS, North Carolina
JAMES F. BYRNES, South Carolina
JOHN H. BANKHEAD, Alabama
WILLIAM GIBBS McADOO, California
ALVA B. ADAMS, Colorado
PETER NORBECK, South Dakota
PHILLIPS LEE GOLDSBOROUGH, Maryland
JOHN G. TOWNSEND, JR., Delaware
FREDERIC C WALCOTT, Connecticut
ROBERT D. CAREY, Wyoming
JAMES COUZENS, Michigan
FREDERICK STEIWER, Oregon
HAMILTON F. KEAN, New Jersey
WILLIAM L. HILL, Clerk
R. H SPARKMAN, Acting Clerk
SUBCOMMITTEE ON STOCK EXCHANGE PRACTICES
DUNCAN U. FLETCHER, Florida, Chairman
CARTER GLASS, Virginia
ALBEN W BARKLEY, Kentucky 1
EDWARD P COSTIGAN, Colorado
ALVA B. ADAMS, Colorado
PETER NORBECK, South Dakota 2
JOHN G. TOWNSEND, JR , Delaware
JAMES COUZENS, Michigan
1 Alternate, Thomas P Gore, Oklahoma
2 Alternate, Phillips Lee Goldsborough, Maryland.
CONTENTS
OF
PARTS 19 AND 20
ORDER OF PRESENTATION
PART
19
1. Guardian Trust Co.
Financial history
Financial condition, 1929-33
Window dressing
Loans to officers and directors
Loans to officers of other banks
Loans to Eaton interests
Membership on board and management committees
Compensation paid to officers
Employees' retirement fund
Trust practices
Corporate history, Guardian Trust Co. and subsidiaries
Stock-market activities of the Guardian Securities Co
Examinations
Commingling of funds
Hotel Hollenden Co. and DeWitt Hotels Co
Loans from R.F.C
Financial history
Financial condition, 1929-33
Pages
8269-8356
8442-8452
8452-8468
8468-8499
8499-8512
8513-8515
8516
8516-8533
8533-8559
8559-8587
8587-8636
8636-8652
8664-8667
8664-8667
_ _ __
8667
9236-9274
2. Union Trust Co.
8667-8713
8713-8738
PART 20
Consolidated list of officers and directors
Compensation to officers
Loans to directors
Loans to officers, directors of other banks
Loan to J. P. Harris
Loans to William G. Mather, director, Union Trust Co
Loans to K. V. Painter, director, Union Trust Co
Van Sweringen loans
Window dressing
Corrigan-McKinney Steel Co
United Milk Products Corporation
Trust accounts
Union Cleveland Corporation
Tax evasion
Activities in Trust Co. stock
Loans from the R.F.C
8739-8740
8740-8746
8746-8770
8770-8785
8786-8799
8799-8825
8825-8850
8850-8976
8976-9036
9036-9081
9081-9129
9129-9130
9131-9192
9192-9217
9218-9235
9275-9296
EXHIBITS
PART
19
I. The Guardian Trust Co., Cleveland, Ohio
1. G-4-2
2. G-4-3 to G-4-50, inclusive
3. G-6a-l to G-6a-12a, inclusive
8269-8355
8356-8442
8443-8452
in
IV
CONTENTS
I. The Guardian Trust Co., Cleveland, Ohio—Continued
f Pages
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
J4.
15.
16.
G-8-la to G-8-36, inclusive
G
G-5b-ato G-5b-40, inclusive
G-5c-l to G-5c-29, inclusive
G-5e-7 to G-5e-15, inclusive
G-ll-1 to G-ll-15, inclusive
G-9-1 to G-9-15q, inclusive
10-2-Ato 10-22-A, inclusive
G-3-1 to G-3-17, inclusive
G-12-1 to G-12-16, inclusive
G-17-la to G-17-9, inclusive
G-6-3 to G-6-13, inclusive
18-1-A to 18-4-A, inclusive
8452-8468
Faces
8468
8468-8499
8499-8512
8513-8515
8516-8533
8533-8558
8559-8583
8587-8636
9236-9274
8636-8652
8653-8664
8664-8667
II. The Union Trust Co., Cleveland, Ohio
17.
18.
19.
20.
21.
22.
23.
24.
25.
26.
27.
28.
29.
30.
31.
U-96a to U-97, inclusive
U-103 to U-108, inclusive
U-109
U-110
U-llla
U-112 to U-112a, inclusive
U-83 to U-85, inclusive
U-86 to U-89a, inclusive
U-90 to U-90g, inclusive
U-91 to U-91c, inclusive
U-93 to U-93a, inclusive
U-94 to U-95, inclusive
U-97
U-98 to U-101, inclusive
U-5-16 to U-5-20, inclusive
8668-8671
8671-8676
8677
8678
8678
8678
8679-8691
8692-8704
8705-8708
8708-8710
8710
8711-8712
8671
8712-8713
8714-8738
32.
33.
34.
35.
36.
37.
38.
39.
40.
41.
42.
43.
44.
45.
46.
47.
48.
49.
U-B to U-B-2, inclusive
U-17-1 to U-17-10, inclusive
The Union Trust Co. loans to directors
U-6-54ato U-6-94, inclusive
U - l l - 1 to U-ll-13, inclusive
U-22-1 to U-22-16, inclusive
U-6-1 to U-6-53, inclusive
U-4-1A to U-4-25, inclusive
U-2-1 to U-3-12, inclusive
Institute cup
U-9-1 to U-9-34, inclusive
U-15-lato U-15-71, inclusive
U-13-1 to U-13-35, inclusive (U-13-16a-e are omitted)
U-12-6 to U-12-32b, inclusive
U-16-la to U-16-31, inclusive
U-14-la to U-14-17, inclusive
U-18-la to U-18-12, inclusive
U-19-la to U-19-7, inclusive
PAKT 20
8739-8740
8740-8747
8746
8747-8770
8770-8783
8784-8799
8799-8825
8825-8850
8850-8975
Faces
8976
8976-9036
9036-9081
9081-9129
9129-9169
9169-9192
9192-9217
9218-9235
9275-9296
SCHEDULE OF DIKECTORS AND OFFICERS, YEARS
1929-1933, INC.
UNION TRUST COMPANY
UNION CLEVELAND CORPORATION
(Exhibit U-A faces this page)
EXHIBIT
U-B
Page 929
THE UNION TRUST COMPANY
Meeting of Board of Directors January 14, 1931
The following committees of the Board were thereupon proposed and were
named by the Board:
Auditing Committee.—R. C. Norton, Ralph T. King, E. P. Lenihan.
Branch Bank Committee.—W. J. Crawford, Jr., F. W. Daykin, F. B. Fretter,
George Gund, Herman Moss, Thos. P. Robbins.
Finance Committee.—E. R. Grasselli, Otto Miller, Thos. P. Robbins, F. P. Root,
Allard Smith.
Executive Committee.—F. H. Ginn, E. R. Grasselli, W. A. Harshaw, W. S.
Hayden, Emil Joseph, John A. Kling, E. J. Kulas, Wm. G. Mather, Otto Miller,
Kenyon V. Painter, Thos. P. Robbins, F. P. Root, Allard Smith, Windsor T.
White.
Industrial Committee.—George Bartol, Alexander C. Brown, F. B. Fretter,
W. H. Gerhauser, Thos. M. Girdler, Geo. C. Gordon, Geo. H. Hodgson, Adrian D.
Joyce, E. J. Kulas, E. A. Langenbach, Bascom Little, P. A. Myers, C. N. Osborne,
N. G. Richman, Thos. P. Robbins, Samuel Lewis Smith, Whitney Warner,
R. W. Woodruff.
Addition to Industrial Committee, July 14, 1931: W. A. Harshaw, F. H.
Haserot, J. E. Rogers.
Trust Committee.—W. P. Belden, F. H. Ginn, G. W. Grandin, T. S. Graselli,
W. S. Hayden, Emil Joseph, Bascom Little, Wm. G. Mather, Allard Smith,
Samuel Lewis Smith, Andrew Squire, Windsor T. White.
EXHIBIT
U-B-l
Page 1010
THE UNION TRUST COMPANY
Meeting of Board of Directors January 13, 1932
The following committees of the Board were thereupon proposed and were
named by the Board:
Auditing Committee.—R. C. Norton, Ralph T. King, E. P. Lenihan.
Branch Bank Committee.—W. J. Crawford, Jr., F. W. Daykin, F. B. Fretter,
George Gund, Herman Moss, Thos. P. Robbins.
Executive Committee.—F. H. Ginn, E. R. Grasselli, W. A. Harshaw, W. S.
Hayden, Emil Joseph, John A. Kling, E. J. Kulas, Wm. G. Mather, Otto Miller,
Kenyon V. Painter, Thos. P. Robbins, F. P. Root, Allard Smith, Windsor T.
White.
Industrial Committee.—George Bartol, F. B. Fretter, W. H. Gerhauser, Thos.
M. Girdler, George C. Gordon, W. A. Harshaw, F. H. Haserot, Geo. H. Hodgson.
Adrian D. Joyce, E. J. Kulas, E. A. Langenbach, Bascom Little, P. A. Myers,
C. N. Osborne, N. G. Richman, Thos. P. Robbins, Jos. E. Rogers, Samuel Lewis
Smith, Whitney Warner.
Addition to Industrial Committee, September 13, 1932: T. W. Miller.
Trust Committee.—-W'. P. Belden, F. II. Ginn, G. W. Grandin, T. S. Grasselli,
W. S. Hayden, Emil Joseph, Bascom Little, R. C. Norton, Allard Smith, Samuel
Lewis Smith, Andrew Squire, Windsor T. White.
8739
8740
STOCK EXCHANGE PRACTICES
EXHIBIT
U-B-2
Page 1105
THE UNION TRUST COMPANY
Meeting of Board of Directors January 11, 1933
The following committees of the Board were thereupon proposed and were
named by the Board:
Auditing Committee.—R. C. Norton, Ralph T. King, E. P. Lenihan.
Branch Bank Committee.—F. W. Daykin, F. B. Fretter, George Gund, Herman
Moss, Thos. P. Robbins.
Executive Committee.—F. H. Ginn, E. R. Grasselli, W. A. Harshaw, W. S.
Hayden, Emil Joseph, John A. Kling, E. J. Kulas, E. P. Lenihan, Wm. G. Mather,
Otto Miller, R. C. Norton, J. R. Nutt, Thos. P. Robbins, F. P. Root, Allard Smith,
Windsor T. White.
Industrial Committee.—George Bartol, F. B. Fretter, W. H. Gerhauser, Thos.
M. Girdler, George C. Gorden, W. A. Harshaw, F. H. Haserot, Geo. H. Hodgson,
Adrian D. Joyce, E. J. Kulas, Bascom Little, T. W. Miller, C. N. Osborne, N. G.
Richman, Thos. P. Robbins, Jos. E. Rogers, Whitney Warner.
Trust Committee.—W. P. Belden, F. H. Ginn, G. W. Grandin, T. S. Grasselli,
F. H. Haserot, W. S. Hayden, Emil Joseph, Laurence H. Norton, J. R. Nutt,
Allard Smith, Andrew Squire, Windsor T. White.
THE UNION TRUST COMPANY—COMPENSATION TO OFFICERS—M. J. LAPADULA
UNITED STATES SENATE
MEMORANDUM
U-l7-6-7-8-9 refer to photostatic copies of annual reports.
EXHIBIT U-17-1
The officers pay roll tax return for 1928
C. W. Carlson
John H. Caswell. _ __
Thomas J. Champion.
Wm. H. Freytag
George Q. Hall
Elmer E. Creswell
Charles E. Farnsworths
William A. Hartford..
Chas. Heil
M. B. Koelliker
John P. Kraus
D. Y. LeFever
H. J. McGinness
W. R. Park
Ralph B. Pettit
John Sherwin, Jr
W. G. Stuber
J. L. Wadsworth
Ralph Williams
J. P. Harris
Van R. Purdy
A. C. Coney
C. B. Lincoln
Arthur F. Reed
J. C. Armstrong
C. S. Bechberger
E. C. Genee
EXHIBIT
Joseph P. Hance
Wm. A. Hiles
H. D. Messick
Chas. A. Morgan
U-
$9. 000. 00
6, 500. 00
14, 000. 00
5, 500. 00
3, 600. 00
21, 000 00
25, 000. 00
5, 220 00
5, 000 00
8, 400 00
6, 000. 00
7, 200. 00
5, 400. 00
4, 200. 00
7, 000. 00
9, 000 00
11,400.00
7, 200 00
6, 000. 00
30, 000. 00
6, 000. 00
20, 000. 00
17, 500. 00
13, 000. 00
5, 700. 00
9, 000. 00
6, 300. 00
17-la
$10,
5,
25,
5,
000. 00
500. 00
000. 00
730. 00
Joseph C. Royon
L. H. Stofer____
Jos. H. Thompson
W. A. Gibson
Lewis C. Gilger
G. H. Hull
W. J. O'Neill
Geo. N. Sherwin
H. L. Brown
C. J. Fairbanks
A. E. Mason
W. H. Kinsey
Harry F. Pratt
J. G. Geddes
W. O. Stromberg
Fred W. Cook
Geo. P. Steele
F. D. Williams
Barton A. Bruce
A. B. Marshall
Horace R. Sanborn
Clara Dombey
Chas. B. Anderson
EXHIBIT
W. M. Baldwin
Geo. A. Coulton
Robert S. Crawford
Harry E, Hills
Roger C. Hyatt
Joseph R. Kraus
Alden W. Lewis
J. R. Nutt
$18, 000. 00
7, 800. 00
5, 500. 00
6, 000. 00
5, 400. 00
12, 000. 00
21, 000. 00
21, 000. 00
8, 400. 00
4, 500 00
4, 500. 00
6, 000. 00
4, 800. 00
15, 000. 00
6, 000. 00
4, 000. 00
20, 000. 00
12, 000. 00
5, 500. 00
15, 000. 00
4, 800. 00
3, 180. 00
12, 000. 00
U-17-
lb
$45,
50,
30,
18,
30,
45,
7,
50,
000. 00
000. 00
000. 00
000. 00
000. 00
000. 00
200. 00
000. 00
STOCK EXCHANGE PRACTICES
8741
The officers pay roll tax return for 1928—Continued
C. L. Bethel
$4, 500. 00
0
John Sherwin
__
3, 300. 00
$35, 000. 00 Geo. W. Falkner
Allard Smith
7, 200. 00
4, 800. 00 Charles J. Hodous
C. L. Tewksbury
5, 800. 00
12, 000. 00 Frank L. Frey
P. S. Wiseman
9, 000. 00
4, 800. 00 P. T. Harrold
Ernest Wagley
5, 200. 00
7, 500. 00 C. D. Hajek
John E. Washer
4, 500. 00
4, 800. 00 C. J. Jindra
F. W. Hoyer
5, 800. 00
8, 700. 00 H. B. Chappell
J. H. Clark
3, 230. 00
5, 266. 00 Bruce Peter
S. D. James
5, 100. 00
5, 000. 00 C. C. Morgan
John R. Geary
7, 500. 00
A. L. Moler
EXHIBIT
U-17-ld
15, 000. 00
William Tonks
$3, 762. 00
7, 700. 00 J. B. Monda
J. C. Anderson
3, 300. 00
6, 000. 00 Theodore V. Bastel__ _
W. A. Pfeiffer
5, 200. 00
6, 500. 00 J. H. Lackamp
Donald S. Knowlton__
4, 900. 00
4, 800. 00 T. J. Eline
George Brauer
10, 000. 00
25, 000. 00 John G. Armstrong. _James Dunn, Jr
3, 000. 00
4, 500. 00 John C. Zamecnik
C. G. Stark
3, 800. 00
4, 185. 00 Frank Kakes
Armin Boethelt
Joseph Kakes
4, 500. 00
EXHIBIT U-17-lc
J. B. Lackamp
4, 800. 00
8, 000. 00
$4, 800. 00 H. Piwonka
Don Girgor
3, 600. 00
M. S. Halliday
10, 125. 00 J. L. Tekesky
4, 800. 00
John V. Holecek
3, 950. 00 Edson L. Twerell
18, 000. 00
4, 450. 00 J. C. Sanders
Paul Kowallek
8, 000. 00
3, 950. 00 G. A. Spear
J. E. Mazach
5, 980. 00
4, 650. 00 W. H. Cool
Carl Orlikowski
8, 000. 00 F. J. Woolworth
5, 250. 00
James L. Paton
3, 780. 00
Chas. Piwonka
11, 750. 00 H. H. Herbert
4, 500. 00
Ernest J. Simak
3, 300. 00 Roy W. Irwin
5, 000. 00
16, 000. 00 Grover H. Culver
P. J. Slach
25, 000. 00 Joseph Hollander
2, 875. 00
O. M. Stafford
4, 908. 00
Joseph Ranft
6, 000. 00 J. W. McHaffie
3, 600. 00
4, 080. 00 E. M. Coen
Arnold Chimo
6, 200. 00
3, 660. 00 Geo. Wickerlings
Gus Rozman
L. H. Fisher
13, 500. 00
G. M. Kovachy
7, 750. 00
1, 304, 409. 00
Earl F. Grow
5, 100. 00
EXHIBIT U-17-2
Information return for calendar year 1929, the Union Trust Company
$36, 000. 00
$9, 600. 00 J. P. Harris. _6, 000. 00
6, 500. 00 Van R. Purdy_
6, 569. 22
15, 000. 00 Peter Ball
9, 000. 00
EXHIBIT
U-17-2a
22, 000. 00
$13, 333. 36
25, 000. 00 A. C. Coney
11, 666. 72
5, 700. 00 C. B. Lincoln
3, 500. 00
3, 600. 00 Henry Ranft
4, 324. 00
5, 400. 00 C. E. Regester.__
3, 166. 00
5, 137. 00 L. J. Roeder
6, 000. 00
4, 000. 00 J. C. Armstrong. _
10, 000. 00
4, 750. 00 C. S. Bechberger_
5, 354. 00
9, 000. 00 Grove H. Culver.
6, 600. 006, 000. 00 E. C. Genee
10, 800. 00
7, 200. 00 Joseph P. Hance..
6, 000. 00
5, 400. 00 Wm. A. Hiles
3, 250. 00
4, 390. 00 Joseph Hollander.
27, 000. 00
7, 000. 00 H. D. Messick
6, 600. 00
12, 000. 00 Chas. A. Morgan_
20, 000. 00
5, 100. 00 Joseph C. Roy on _
8, 400. 00
7, 200. 00 L. H. Stofer
6, 000. 00
7, 200. 00 W. A. Gibson
C. W. Carlson
John H. Caswell
Thomas J. Champion.
J. H. Clark
Elmer E. Creswell
Charles E. Farnsworth.
Wm. H. Freytag
George Q. Hall
William A. Hartford. _
Chas. Heil
Homer H. Herbert
W. R. Irwin
M. B. Koelliker
John P. Kraus
D. Y. LeFever
H. J. McGinness
W. R. Park
Ralph B. Pettit
W. G. Stuber
Ernest Wagley
J. L. Wadsworth
Ralph Williams
8742
STOCK EXCHANGE PRACTICES
Information return for calendar year 1929, the Union Trust Company—Con.
$11, 750. 00
$6, 000. 00 Chas. Piwonka
Lewis C. Gilger..
16, 000. 00
13, 500. 00 P. J. Slach
G. H. Hull
4, 800. 00
21, 000. 00 Joseph Ranft
W. J. O'Neill-.-.
4, 080. 00
21, 000. 00 Arnold Chimo
Geo. N. Sherwin.
4, 012. 00
9, 000. 00 Gus Rozman
H. L. Brown
15, 000. 00
4, 500. 00 L. H. Fisher
C. J. Fairbanks..
7, 750. 00
4, 800. 00 G. M. Kovachy
A. E. Mason
5, 100. 00
6, 000. 00 Earl F. Grow.l
W. H. Kinsey...
4, 800. 00
4, 800. 00 C. L. Bethel
Harry F. Pratt..
3, 397. 00
15, 000. 00 Geo. W. Falkner
J. G. Geddes
7, 200. 00
5, 166. 00 Charles J. Hodous
J. W. McHaffie—
P. T. Harrold
9, 600. 00
EXHIBIT U-17-2b
George S. Jones
3, 030. 00
W. O. Stromberg
$7, 200. 00 C. J. Jindra
4, 800. 00
Fred W. Cook
4, 000. 00 J. E. Mazach...
4, 100. 00
Geo. P. Steele
21, 500. 00
EXHIBIT U-17-2d
Barton A. Bruce
5, 500. 00
$5, 800. 00
A. B. Marshall
14, 000. 00 H. B. Chappell
3, 360. 00
Horace R. Sanborn. _ .
3, 600. 00 Bruce Peter
5, 106. 00
F. D. Williams
9, 000. 00 C. C. Morgan
3, 900. 00
Clara Dombey
3, 180. 00 J. B. Monda
3, 600. 00
Chas. B. Anderson
13, 200. 00 Theodore V. Bastel..5, 600. 00
W. M. Baldwin
48, 333. 00 J. H. Lackamp
2, 750. 00
Geo. A. Coulton
50, 000. 00 W. J. Bauknet
5, 200. 00
Robert S. Crawford...
30, 000. 00 T. J. Eline
10, 000. 00
Harry E. Hills.
20, 000. 00 John G. Armstrong...
3, 352. 00
Joseph R. Kraus
48, 333. 00 D. D. Scott
3, 037. 00
Alden W. Lewis
8, 400. 00 John C. Zamecnik
6, 200. 00
Ladimer Lustig
5, 448. 00 George Weckerling
3, 900. 00
J. R. Nutt
50, 000. 00 Frank Kakes
4, 500. 00
Allard Smith
37, 500. 00 Joseph Kakes
J.
B.
Lackamp
5, 100. 00
C. L. Tewksbury
4, 800. 00
8, 000. 00
P. S. Wiseman
13, 000. 00 H. Piwonka
3, 600. 00
John E. Washer
7, 500. 00 J. L. Tekesky
8, 000. 00
F. W. Hoyer
4, 800. 00 G. A. Spear
2, 323. 00
S. D. James
5, 500. 00 E. M. Coen
4, 020. 00
John R. Geary
5, 000. 00 Walter Forsythe
4, 500. 00
A. L. Moler
8, 333. 00 R. Z. Mickey
3, 900. 00
William Tonks
18, 000. 00 Henry Lange
3, 900. 00
J. C. Anderson
8, 000. 00 Paul Glove
3, 360. 00
Fred Hart
4, 500. 00 Herbert Zdara
Elmer W. Schacht
3, 390. 00
EXHIBIT U-17-2C
H. W. Black
3, 500. 00
W. A. Pfeiffer
$6, 300. 00 Win. J. Adamson
4, 750. 00
Donald S. Knowlton__
7, 200. 00 J. H. Benes
4, 000. 00
George Brauer
4, 800. 00
EXHIBIT
U-17-2e
James Dunn, Jr
25, 000. 00
$3, 525. 00
C. G. Stark
4, 500. 00 Richard Bosworth
2, 741. 00
Armin Boethelt
4, 320. 00 C. D. Hajek
16, 666. 00
Don Grigor
5, 100. 00 O. M. Stafford
9, 000. 00
M. S. Halliday
12, 000. 00 J. C. Sanders
5, 775. 00
John V. Holecek
4, 200. 00 Jos. H. Thompson
_
22, 500. 00
Paul Kowallek
4, 600. 00 Roger C. Hyatt
1, 200. 00
Carl Orlikowski
4, 800. 00 Edson L. Twerell
Ernest J. Simak
3, 480. 00
James L. Paton
8, 000. 00
1, 345, 901. 08
EXHIBIT
U-17-3
Tax return reported for 1930 The Union Trust Company
J. H. Benes
J. P. Harris
Van R. Purdy__.
C. W. Carlson._.
John H. Caswell.
$4, 200. 00
36, 000. 00
6, 000. 00
10, 200. 00
7, 000. 00
Thomas J. Champion .
J. H. Clark
Elmer E. Creswell
Charles E. Farnsworth.
Chas. B. Gleason
$15, 000. 00
9, 000. 00
22, 000. 00
25, 000. 00
18, 124. 00
8743
STOCK EXCHANGE PRACTICES
Tax return reported for 1930 The Union Trust
Geo/Q. Hall
Wm. A. Hartford
Chas. Heil
Homer H. Herbert
W. R. Irwin
M. B. Koelliker
John P. Kraus
Henry Lange
D. Y. LeFever
H. J. McGinness
W. R. Park
Ralph B. Pettit
W. G. Stuber
J. L. Wadsworth
Ernest Wagley_ _
Ralph Williams _ _ __
J. G. Geddes
$3, 600.
6, 000.
5, 600.
4, 500.
4, 800.
9, 000.
6, 000.
4, 200.
7, 450.
5, 400.
4, 500.
7, 000.
13, 000.
7, 200.
6, 000.
8, 400.
16, 500.
00
00
00
00
00
00
00
00
00
00
00
00
00
00
00
00
00
$5, 366.
7, 200.
6, 000.
11, 200.
4, 500.
6, 900.
12, 000.
6, 300.
3, 900.
27, 000.
4, 800.
7, 200.
22, 00U.
9, 000.
6, 000.
6, 000.
7, 000.
13, 500.
21, 000.
21, 000.
9, 000.
4, 500.
4, 800.
6, 000.
5, 000.
4, 000.
22, 500.
5, 500.
00
00
00
00
00
00
00
00
00
00
00
00
00
00
00
00
00
00
00
00
00
00
00
00
00
EXHIBIT U-17-3d
00
00 Herbert Zdara
$3, 780.
_
00 C. L. Bethel
5, 000.
Geo. W. Falkner
3, 480.
Chas. J. Hodous__
7, 200.
00 P. T. Harrold
10, 000.
00 George S. Jones __ ._
3, 420.
00 Elmer W. Schacht
3, 480.
00 C. J. Jindra
5, 400.
00 J. E. Mazach_
4, 500.
00 H. W. Black
3, 720.
00 H. B. Chappell
6, 000.
00 Bruce Peters
3, 460.
00 C. C. Morgan
5, 400.
__
00 J. B. Monda
3, 900.
00 Theodore V. Bastel_._
3, 900.
00 J. H. Lackamp_
6, 000.
00 W. J. Bauknet
6, 000.
00 T. J. Eline
5, 400.
00 John G. Armstrong
11,000.
EXHIBIT U-17--3a
J. W. McHaffie
W. 0 . Stromberg
J. C. ArmstrongC. S. Bechberger
Walter M. Forsythe
E. C. Genee
Joseph P. Hance
Wm. A. Hiles
Jos. Hollander
H. D. Messick
R. Z. Mickey
Chas. A. Morgan
Joseph C. Royon_> - L. H. Stofer
Grove H. Culver
W. A. GibsonLewis C. Gilger
G. H. Hull
W. J. O'Neill
Geo. N. Sherwin
H. L. Brown
C. J. Fairbanks
A. E. Mason
W. H. Kinsey
Harrv F. Pratt
Fred W. Cook
Geo. P. Steele
Barton A. Bruce
EXHIBIT U-17-3b
A. B. Marshall
Horace R. Sanborn
F. D. Williams
P. S. Wiseman
Clara Dombej^
W. J. Adamson
Chas. B. Anderson
W. M. Baldwin
Geo. A. Coulton
Robert S. Crawford
Wm. H. Freytag.
Harry E. Hills
Joseph R. Kraus
Alden W. Lewis
J. R. Nutt
Company—Continued
$12, 000.
3, 600.
4, 800.
4, 100.
3, 180.
5, 400.
14, 000.
50, 000.
50, 000.
30, 000.
6, 000.
21, 000.
50, 000.
10, 000.
50, 000.
Allard Smith __
C. L. Tewksbury
Richard W. Bosworth
John E. Washer
F. W. Hover
Ladimer Lustig_
S. D. James_
John R. Geary
A. L. Moler_
William Tonks
J. C. Anderson
Ed. M. Coen
Fred Hart
$40, 000. 00
4, 800. 00
4. 699. 00
8, 100. 00
5, 000. 00
5, 500. 00
5, 700. 00
5, 000. 00
8, 916. 00
19, 000. 00
9, 000. 00
3, 900. 00
5. 000. 00
EXHIBIT U - 1 7 - 3 C
W. A. Pfeiffer
Donald S. Knowlton__
George Brauer
James Dunn, Jr_
C. G. Stark
Armin Boethelt
Don Grigor
M. S. Halliday
Peter Ball
Unionf
A. C. Coney
CleveC. B. Lincoln- l a n d ]
Henry Ranft__ Cor-]
C. E. Regester poraL. J. Roeder__ tion. I
Paul Glove
John V. Holecek__
Paul Kowallek
Carl Orlikowski
Ernest J. Simak
James L. Paton_
Chas. Piwonka
P. J. Slach
Joseph Ranft
Arnold Chimo
Gus Rozman.
L. H. Fisher
G. M. Kovachv
Earl F. Grow
_
$6, 600. 00
7, 800. 00
4, 800. 00
25, 000. 00
4, 500. 00
4, 500. 00
5, 400. 00
13, 500. 00
13, 058. 00
20, 000. 00
17, 500. 00
5, 600. 00
9, 946. 00
5, 000. 00
4, 147. 00
4, 400. 00
4, 800. 00
5, 000. 00
3, 600. 00
8, 000. 00
12, 000. 00
16, 500. 00
3, 000. 00
4, 260. 00
4. 200. 00
16, 500. 00
7, 750. 00
5, 400. 00
00
00
0C
00
00
00
00
00
00
00
00
00
00
00
00
00
00
00
00
8744
STOCK EXCHANGE PRACTICES
Tax return reported for 1930 The
$3, 900. 00
D. D. Scott
6, 200. 00
George Weckerling
4, 000. 00
Frank Kakes
4, 800. 00
Joseph Kakes
5, 400. 00
J. B. Lackamp
EXHIBIT
Union Trust Company—Continued
$8, 000. 00
H. Piwonka...
3, 600. 00
J. L. Tekesky.
8, 000. 00
G. A. Spear...
1, 296, 132. 00
U-17-4
The Union Trust Company—Salaries reported to the Government for the year 1931
J. H. Benes
J. P. Harris
Van R. Purdy
C. W. Carlson
John H. Caswell
Thomas J. ChmapionJ. H. Clark
Elmer E. Creswell
Charles E. FarnsworthCharles B. Gleason- - .
George Q. Hall
William A. Hartford. _
Charles Heil
Homer H. Herbert
W. R. Irwin
M. B. Koelliker
Henry Lange
D. Y. LaFever
Dave Lewis
H. J. McGinness
W. R. Park
Ralph B. Pettit
W. G. Stuber
J. L. Wadsworth
Ernest Wagley
Ralph Williams
J. G. Geddes
J. W. McHaffie
W. O. Stromberg
J. C. Armstrong
C. S. Bechberger
Walter M. Forsythe__
E. C. Genee
Joseph P. Hance
Wm. A. Hiles
Joseph Hollander
H. D. Messick
R. Z. Mickey
Chas. A. Morgan
Joseph C. Roy on
L. H. Stofer
Grove H. Culver
W. A. Gibson
Lewis C. Gilger
G. H. Hull
W. J. O'Neill
George N. Sherwin
H. L. Brown
C. J. Fairbanks
A. E. Mason
W. H. Kinsey
Harry F. Pratt
Fred W. Cook
George P. Steele
$4, 200. 00
36, 000. 00
6, 000. 00
10, 200. 00
7, 000. 00
15, 000. 00
9, 000. 00
22, 000. 00
25, 000. 00
25, 000. 00
3, 600. 00
6, 000. 00
5, 600. 00
4, 500. 00
4, 800. 00
9, 000. 00
4, 200.00
7, 500. 00
4, 600. 00
5, 400. 00
4, 500. 00
7, 000. 00
13, 000. 00
6, 200. 00
6, 000. 00
8, 400. 00
16, 500. 00
5, 400. 00
7, 200. 00
6, 000. 00
11, 200. 00
4,500.00
6, 900. 00
12, 000. 00
6, 300. 00
3, 900. 00
27, 000. 00
4, 800. 00
7, 200. 00
22, 000. 00
9, 000. 00
6, 000. 00
6, 000. 00
7, 000. 00
13, 500. 00
21, 000. 00
21, 000. 00
9, 000. 00
4, 500. 00
4, 800. 00
6, 000. 00
5, 000. 00
4, 000. 00
22, 500. 00
$5, 500. 00
Barton A. Bruce
3, 000. 00
John P. Kraus
11, 000. 00
A. B. Marshall
3, 600. 00
Horace R. Sanborn
3, 600. 00
F. D. Williams
3, 180. 00
Clara Dombey
2, 925. 00
W. J. Adamson
14, 000. 00
Chas. B. Anderson
50, 000. 00
W. M. Baldwin
50, 000. 00
Geo. A. Coulton
30, 000. 00
Robert S. Crawford
6, 600. 00
Wm. H. Freytag
21, 000. 00
Harry E. Hills
50, 000. 00
Joseph R. Kraus
10, 000. 00
Alden W. Lewis
50, 000. 00
J. R. Nutt
40, 000. 00
Allard Smith
4, 550. 00
C. L. Tewskbury
5, 000. 00
Richard W. Bosworth_
3, 712. 00
John E. Washer
5, 000. 00
F. W. Hoyer
5, 500. 00
Ladimer Lustig
5, 700. 00
S. D. James
5, 000. 00
John R. Geary
9, 000. 00
A. L. Moler
19, 000. 00
William Tonks
9, 000. 00
J. C. Anderson
3, 900. 00
Ed. M. Coen
5, 000. 00
Fred Hart
6, 600. 00
W. A. Pfeiffer
7, 800. 00
Donald S. Knowlton__
4, 800. 00
Beorge Brauer
25, 000. 00
James Dunn, Jr
4, 500. 00
C. G. Stark
4, 500. 00
Armin Boethelt
5, 400. 00
Don Grigor
13, 500. 00
M. S. Halliday
12, 000. 00
Peter Ball
20, 000. 00
A. C. Coney
C. B. Lincoln__ 66,100.00. 17, 500. 00
5, 600. 00
Henry Ranft
6, 000. 00
C. E. Regester.
5, 000. 00
L. J. Roeder
4, 200. 00
Paul Glove_ _
4, 400. 00
John V. Holecek
4, 800. 00
Paul Kowallek__
5, 000. 00
Carl Orlikowsky.
Ernest J. Simak.
3, 600. 00
James L. Paton_
7, 833. 00
Chas. Piwonka..
12, 000. 00
17, 500. 00
P. J. Slach
Joseph Ranft
Arnold Chimo__.
Gus Rozman
2, 400. 00
4, 260. 00
4, 200. 00
8745
STOCK EXCHANGE PRACTICES
The Union Trust Company—Salaries reported to the Government for the year 1931 —
Continued
L. H. Fisher
G. M. Kovachy
Earl F. Grow
Herbert Zdara
C. L. Bethel
George W. Falkner
Charles J. Hodous
P. T. Harrold
Henry Knepper
Elmer W. Schacht
C. J. Jindra
J. E. Mazach
H. W. Black
H. B. Chappell
Bruce Peter
C. C. Morgan
$16, 500. 00
7, 750. 00
5, 400. 00
3, 780. 00
5, 000. 00
3, 480. 00
7, 200. 00
10, 000. 00
4, 500. 00
3, 660. 00
5, 400. 00
4, 500. 00
3, 720. 00
6, 000. 00
3, 460. 00
5, 400. 00
$3, 900. 00
3, 900. 00
6, 000. 00
6, 000. 00
5, 400. 00
11, 000. 00
3, 900. 00
3, 616. 00
3, 941. 00
4, 775. 00
5, 400. 00
6, 716. 00
3, 575. 00
6, 083. 00
J. B. Monda
Theodore V. Bastel___
J. H. Lackamp
W. J. Bauknet
T. J. Eline
John G. Armstrong
D. D. Scott
George Weckerling
Frank Kakes
Joseph Kakes
J. B. Lackamp
H. Piwonka
J. L. Tekesky
G. A. Spear
1, 2867 910. 00
EXHIBIT U-17-5
Report made to the Government for the year 1932 salaries paid to the following officers
H. L. Brown
C. J. Bairbanks
A. E. Mason
Harry F. Pratt
George P. Steele
Barton A. Bruce
A. B. Marshall
Horace R. Sanborn. _ _
F. D. Williams
Chas. B. Anderson
W. M. Baldwin
George A. Coulton
Robert S. Crawford-Win. H. Freytag
George R. Herzog
Harry E. Hills
Joseph R. Kraus
Alden W. Lewis
Allard Smith
C. L. Tewksbury
Richard W. Bosworth_
F. W. Hoyer
Ladimer Lustig
S. D. James
John R. Geary
William Tonks
J. C. Anderson
Fred
Hart
Wr. A. Pfeiffer
Donald S. Knowlton__
Armin Boethelt
Don Grigor
M. S. Halliday
A C. Coney
C. B. Lincoln
Henry Ranft
_ _
L. J/Roeder
Paul Glove
John V. Holecek
Paul Kowallek
Carl Orlikowski
Ernest J. Simak
James L. Paton
$7, 875. 00
4, 087. 00
4, 360. 00
4, 391. 00
20, 312. 00
3, 925. 00
6, 000. 00
2, 200. 00
2, 400. 00
12, 416. 00
44, 166. 00
40, 916. 00
25, 750. 00
5, 995. 00
3, 633. 00
18, 625. 00
44. 106. 00
9, 083. 00
33, 333. 00
3, 600. 00
4, 541. 00
4, 391. 00
4, 770. 00
5, 112. 00
3, 716. 00
16, 258. 00
7, 575. 00
4, 391. 00
5, 725. 00
6, 566. 00
3, 787. 00
4, 065. 00
11, 187. 00
12,083.00
8,458.00
4, 466. 00
3,941.00
3, 695. 00
3, 756. 00
1, 146. 00
4, 341. 00
3, 110 00
5, 600. 00
Chas. Piwonka
P. J. Slach
Joseph Ranft
J. H.TBenes
C. W . Carlson
John H. Caswell
Thomas J. Champion.,
J. H. Clark
Elmer E. Ores well
James Dunn, Jr
Charles E. Farnsworth
Charles B. Gleaaon
William A. Hartford
Charles Heil
Homer H. Herbert
$9, 866 00
14, 645. 00
2, 400. 00
3, 815. 00
8, 200. 00
5, 783. 00
12, 875. 00
7, 875 00
12, 999. 00
17, 708. 00
21, 458. 00
17, 333. 00
5, 450. 00
5, 086. 00
4, 087 00
EXHIBIT U-17-5a
W. R. Irwin
Henry Knepper
M. B. Koelliker
Henry Lange
Dave Lewis _
H. J. McGinness
W. R. Park
Ralph B. Pettit
Van R. Purdy
W. G. Stuber
Ernest W^aglcy
Ralph Williams
J. G. GeddesW. O. Stromberg
J. C. Armstrong
C. S. Bechberger
George Brauer
Walter M Forsytbe___
E C Gencc../
Joseph P. Hance
Wm. A. Hiles
Joseph Hollander
H. D. Messick
R. Z. Mickey
Chas. A. Morgan
Joseph C. Royon
$4,360.00
4, 087. 00
7, 875. 00
3, 815. 00
4, 178. 00
4, 725. 00
4. 087. 00
6, 208. 00
5, 295. 00
11, 458. 00
5, 450. 00
7, 630. 00
12, 874. 00
5, 766 00
5, 450 00
9, 633. 00
4, 360. 00
4, 087. 00
6,267 00
10, 000. 00
5, 722. 00
3, 542. 00
22,750.00
4, 360. 00
6, 540. 00
19, 083. 00
8746
STOCK EXCHANGE PRACTICES
Report made to the Government for the year 1932 salaries paid to the following officers—•
Continued
L. H. Stofer
Grove H. Culver
W. A. Gibson
Lewis C. Gilger
G. H. Hull
W. H. Kinsey
W. J. O'Neill
Geo. N. Sherwin
Arnold Chimo
Gus Rozman
L. H. Fisher
G. M. Kovachy
Earl F. Grow
Herbert Zdara
C. L. Bethel
Charles J. Hodous
D. Y. LaFever
D. D. Scott
Elmer W. Schacht
C. J. Jindra
J. E. Mazach
H. W. Black
H. B. Chappell
Bruce Peter
J. B. Monda
J. H. Lackamp
$7, 575 00
5, 300. 00
5, 300. 00
6, 208. 00
11,624.00
5, 300. 00
18, 625. 00
14, 499. 00
3, 715. 00
3, 815. 00
14, 375. 00
6, 589. 00
4, 905. 00
3, 431. 00
4, 541. 00
6, 220. 00
6, 812. 00
3, 542. 00
3, 330. 00
4, 905. 00
3, 987. 00
3, 380. 00
5, 183. 00
3, 139. 00
3, 542. 00
5, 450. 00
$5, 450. 00
4, 905. 00
9, 591. 00
4, 905. 00
4, 188. 00
4, 785. 00
5, 118. 00
4, 749. 00
W. J. Bauknet
T. J. Eline
John G. Armstrong
C. C. Morgan
Joseph Kakes
J. B. Lackamp
H. Piwonka
G. A. Spear
U-17- •5b
EXHIBIT
$22, 916. 00
15, 500. 00
4, 332. 00
4, 583. 00
2, 166. 00
1, 348. 00
750. 00
2, 050. 00
4, 062. 00
1, 724. 00
J. R. Nutt (Kyear)._
Jos. P. Harris
Peter Ball
P. T. Harrold
C. E. Register
Ed. M. Coen
Jos. L. Wadsworth
J. W. McHaffie
Leslie O. Carr, Jr
C. G. Stark
1, 1044, 051. 00
35, 446. 00
Deduct,
1, 008, 605. 00
i Union Cleveland Corp •
A C Coney
C B Lincoln
Henry Ranft
L. J. Roeder
Peter Ball
C; E. Regislis
35, 446. 00
EXHIBIT U-17-10
Union Trust Company—Officers Salary $25,000.00 and over
1928
Chas E Farnsworth
J. P Harris
H D Messick
W M Baldwin
Geo A Coulton
Roberts Crawford
Roger C Hyatt
Jos. R Kraus
J R. Nutt
Allard Smith
Jas Dunn, Jr
O M Stafford
Chas B Gleason
Number employed
-.
$25, 000
30, 000
25, 000
45, 000.
50, 000
30, 000
30,000
45, 000
50, 000
35, 000
25, 000
25, 000
1930
1929
00
00
00
00
00
00
00
00
00
00
00
00
$25,000
36, 000
27, 000
48,333
50, 000.
30, 000
22, 500
48,333
50, 000
37, 500
25, 000
16, 666
00
00
00
00
00
00
00
00
00
00
00
00
1931
$25,000
36, 000
27, 000
50, 000
50, 000
30, 000.
00
00
00
00
00
00
50,000
50, 000
40, 000
25, 000
$25,000
36, 000.
27, 000
50, 000
50, 000.
30, 000
1932
00
00
00
00
00
00
$21, 458
15, 500
22, 750
44,166
40, 916.
25, 750
00
00
00
00
00
00
00
00
00
00
50,000.00
50, 000 00
40, 000. 00
25,000.00
44,166
22,916
33,333
17, 708.
00
00
00
00
25, 000 00
17, 333. 00
$15, 000 00
416, 332 00
383, 000 00
408,000.00
305,996 00
12
12
10
11
11
THE UNION TRUST COMPANY LOANS TO DIRECTORS—M. J. LA PADULA
UNION DIRECTORS' LOANS 40%
PAID
ONLY 15 OF 32 ON NOTES STILL OWE; PAY OFF IN YEAR $2,033,295
(By John W. Vance)
Directors of the defunct Union Trust Co., in the year since the bank closed,
have repaid $2,033,295.70 of the large sums they had borrowed, Oscar L. Cox,
liquidator, disclosed yesterday.
8747
STOCK EXCHANGE PEACTICES
Excluding the sums owed by Kenyon V. Painter, other directors had borrowed $5,232,787.06 on Feb. 25, 1933, and on Feb. 17, 1934, they still owed
$3,201,712.61. The bank has thus collected approximately 40 per cent of what
is due.
The reason for excluding the $2,930,000 of principal which Painter owes is
that the Painter loan is not in the same process of collection as the others, since
the Union and other creditors have already foreclosed all Painter's available
assets.
A year ago 32 of the 53 directors owed money. At the present time only
15 of them rstill owe and all but two of the largest loans show reductions in the
amount ow ed. More than half the directors who owed the bank money have
paid off in full.
Of three large loans, one for $707,539.06 has not been reduced, but the bank
has succeeded after long negotiation, in getting additional collateral behind it
which gives the bank a margin of $200,000 excess collateral. The loan will be
paid off in the next year by the sale of this collateral, Cox said. On another
loan which was not so large and which the bank originally thought would be a
loss, it now appears that very substantial payments will be made, he said.
The third large loan, for $860,482.27, has not been reduced since the bank
closed, but this also is a situation where collateral and other factors have delayed
a satisfactory arrangement.
Some of the loans which were completely paid off were very large, the largest
being for $371,530.70. The amounts of the loans of other directors who have
paid in full were $8,000, $1,000, $10,000, $10,000; $83,612.50, $7,194.25, $40,350,
$100,000, $3,850, $90,000, $17,250, $15,300, $3,680, $350,000, $110,050 and $8,700.
On the larger loans where payment could not be made in full, some heavy payments were made. For instance, a loan of $312,000 was reduced by $106,064.25
to present a balance of $206,935.75. Another loan of $984,387.50 was reduced
by 241,113.99 to a balance of $743,273.51. A third loan of $321,000 has been
reduced by $290,059.38 until only $30,940.62 is still owing. The remaining
larger loan of $562,853.70 has been reduced by $164,111.18 to $398,742.52.
The remaining smaller unpaid loans have all been reduced by varying amounts,
with generally a good ratio of payment to the size of the loan. These payments
were $10,032". 17, $645.84, $1,350, $9,085.02, $35,795.30, $20,214.11, $1,301.44,
$7,311.67 and $10,864.20.
EXHIBIT U-6-54a
Oscar L. Cox, deputy superintendent of banks in charge of the liquidation of The
Union Trust Company, Cleveland, Ohio
DIRECTORS' LIABILITY AT THE CLOSE OF BUSINESS FEB. 25, 1933, AND FEB. 17, 1934
February 25, 1933
Direct
Liability
Baldwin, W. M
Barkwill, E S
B artel, George
Belden, W P
Comey, Geo P
Corning, Henry W_
Coulton, Geo A
Dalton, H G
„
Fretter F B
Gerhauser, W. H . . .
Ginn, F. H
Girdler, T M .
Gordon, Geo C
Grandm. G W
Grasselli E R
Grasselli, Thomas
S
Gund, George
Contingent Liability
12,500 00
32,000.00
20,865.89
10, 000.00
10,000.00
312, 000 00
371, 530 70—
Total
Liability
None
8,000.00
None
12, 500 00
32,000.00
None
None
20,865.89
8,666 66
1,000 00
February 17, 1934
Direct
Liability
11,150.00
31,354.16
16,833. 72
None
1,000.00
10,000 00
10, 000 00
None
312,000.00 206, 935. 75
None
371, 530 70
None
Contingent Liability
-
Total
Liability
Date paid
None
None fi-94-33
None.
11,150 00
31,354 16
None
None
10,833. 72 Joint with
Wm. G
Mather et
al.
None
None 8-16-33
None 7-29-33
None 5-3-33
None
206,935 75
None
None 5-8-33
None
8748
STOCK EXCHANGE PRACTICES
Oscar L. Cox, deputy superintendent of banks in charge of the liquidation of The
Union Trust Company, Cleveland, Ohio—Continued
DIRECTOKS' LIABILITY AT THE CLOSE OF BUSINESS FEB. 25, 1933, AND FEB. 17, 1934—
Continued
February 17, 1934
February 25, 1933
Direct
Liability
Contingent Liability
Total
Liability
Hadden, John A_.
Hanna, H M
Harshaw, W A__.
33, 900 00 6, 595. 30
15, 280 00
None
40,495 30
Haserot, F H . . .
Hayden, W. S.__
83,612 50
None
83,612 50
15, 280 00
None
None
841 50
205 71
194 25
None
None
None
343 44
40, 350 00
Hodgson, George H.
Joseph, Emil
708,841 50
Joyce, Adrian D
29,205. 71
King, Ralph T
Klmg, John A
7,194. 25
Kraus, J R
Kulas, E J
Lenihan, E P
37,343 44 152,000 00
Little, Bascom
40,000.00
350 00
Mather, Philip R__.
Mather, Wm G___. 20,865 89
857,833 39
836,967. 50
Miller, Otto.
83,612 50
Direct
Liability
17,250 00
15,300 00
290,000 00 31,000.00
Tremmel, H. G
Wade, J H , Jr
Warner, Whitney,.
3,680 00
3,680.00
350,000 00
350,000 00
562,853
70
9,925. 20 552,928. 50
White, F r e d R
White, Thomas H_.
White, Windsor T .
110,050 00
Less Duplications
Account of Joint
Liability
8, 700 00
110,050 00
None
8,700.00
6,294 98
None
4, 700.00 6-17-33-D irect L i ability of
33,900
None
None 4-24-33-Joint
None
with Otto
Miller on
Hayden
Miller &
Co.
None
None
707,539 06
707, 539 06
8,991. 60
8,991 60
None 7-31-33
None
None
None
35,750.61146,281.16 182,031 77
None 7-28-33
None
None
Joint with
10,833.72
W m . G.
Mather et
al
860,482.27 See special
849,648. 55
report
4-24-33-Joint
None
with W. S.
Hay den on
Hayden
Miller &
Co.
743, 273 51
None 743, 273 51
None
9, 276. 37
9,276 37
None 12-20-33
None
None
None 4-7-33
None 7-6-33
2,926, 778. 75 See special
report.
None
None
None
None 9-20-33
None 8-8-33
30,940 62 30,940.6: 7-12-33-Direct Liability
290,000.
None 7-7-33
None 2-2-34
398, 742. 52 398, 742. 52 12-26-33-Direct Liability
9,925 20
None 4-8-33
None
None 8-14-33
7, 403, 730.83 863, 533 628, 267, 264.45 5, 549, 384. 41 589,940.67 6,139,i, 325 08
104,477.39
10,833. 72
8,162, 787 08
Date paid
4, 700 00
None
None
None
17,250 00
15,300 00
321, 000 00
Total
Liability
6, 294.98
830,000 00 70, 775.00 984,387 50
None
Miller, T . W
Moss, Herman
20,140 57 20,140 57
100, 000 00
Norton, Laurence 100,000.00
H
None
Norton, Robert O-.
3,850 00
Nutt, J. R
3,850 00
90, 000 00
90,000 00
Osborne, Carl N —
2, 930,000 00 2,926, 778. 75
Painter, Kenyon V. 2,930,000.00
Richman, N G.._..
Robbms, Thomas
P.
Rogers, Jos E
Root, F P
Smith, Allard
Squire, Andrew
Contingent Liability
6,128,491. 36
EXHIBIT U-6-56
EXHIBIT U-6-56a
EXHIBIT U-6-57
w«'wn
......
»25,616.76
I W I MS«
3
Cash
Lc
/
¥&/
'A
. '14. .• Vl"
€/ . t'-s y
(
li.
/
^
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sV '. - ^
l-r
*4.
', •<
,'f
j
»25,616.7e Offlci i.1 Uhee •cs conv ort8d\<jJ bo Fedsrs 1 r-ur.ds
payable to The *•constru otion F ir.ance w
2/20/33
u
EXHIBIT U-6-57a
-,••
«oe«
• M i l l er,
0
0k
IN ERtST
MM
L
JL
c,A>
**
C-,
•
at) i
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if/'
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'
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fo~ * f
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•
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EXHIBIT U-6-58
3,0009hs
ihe Glidden Co. C
#CA4767/76 a t l
fCA4559/79 a t l
en Miller %• Co
on MillerfcC
?be Otis Steel Co. Prior Pref.
;fC47£/8 at lOOshs e« n/o Otto Mill«r
6
,-.0
t S»H -69-,-GGO,i m ^Q-jOttQ.
-9i-,-000,-iOiyOOGfliX 105,000
.
The Allegheny Corp. 15yr Coll Tr Conv Sjt due 2 / ; ; ••.
#26460/67 #26433/44 #9922/26 a t 1,000 ea due
2/1/44 #28643 #88646 #5230 a t 1,000 ea.
i
#7865''#21877''#3423l/83^#26269"#2863B/40X
#25595'#1733 #23223 #26268' #17492' #2627o"#19695
#31374" #34629' #23937* #22690*' #968' #82004*'
#6326'#7681'#31494" #19577'#5331' #33232'#18712^
#21638' #1855Cr #21571' #30317'#3315l/53" #16851/52'
#9986"#2003Cr #30041" a t 1,000 each
#19673/76 #2997 #28252 #5892 #12552 #1866
,#1867/68 a t 1,000 ea . #291/92 #3323/29 # 6 2 i l / l 2
ff9912 #19072 W26499 #27440 -731956-1,000 ea
#23792/301-1,000 ea #13769 »14 #25445 #8192-1,000
EXHIBIT U-6-58a
,A
ft
'*>
•Miller,^
'V
\ , o
v
•
•• "''
'•
*J /
1250 Union Trust Eldg.
S PR'iNCIPAc'.
INTEREST
v/.'<
W3S
I*
i
'
.
i
. *_
4
•7 v " f 14 ji-'+v/t^
M
• £
^
>*>
4 ? ~ o
s- TT3-X
/U't 1^-71
,,*4,
EXHIBIT U-6-59
1900rhs
The Rlchman Brothers Co. COT.
#31337 a t 300shs $37119 a t lOOshs
- ?33164/78 a t lOOsha 8a n/o Otto " M l e r
ft.SltUTfr' QtttaiMl Oh»»lt« Vht «ni&n Trust Co. — •
Ci,00(>O'.s The Chesapeake Corcn Com •*
•
>f• j ^ ~ — /-GW*»VC22t32 a t lOOshs ea n/o Hayden - I l l e r !t
u-f^ZJi
£H3S&~*' •*<*•
••
f/
*~—~r ' yf
l.lOOshs The Firestone Tire 3c Rufcter Co. 6i CUTI Pfd. «/*
ICP1108/1.3 a t lOOshs ea n/o Otto Miller,
#CP1360/M a t lOOshs ea n/o Kavden Miller J- Co.
/rui't«-«,j./uw a u i.w/>uB e n J I / U n n j d o n f i l l e r
500shs
^'
Co.
The Union Carbide i Carton Corpn Com '
* *& <A.
;?A8816S/69 a t lOOshs ea n/o Hayden Miller <• Co.
EXHIBIT U-6-59a
?&i
EXHIBIT U-6-60
EXHIBIT U-6-61
EXHIBIT U-6-62
EXHIBIT U-6-63
EXHIBIT U-6-64
EXHIBIT U-6-65
•
r
•
<
•
OTTO
JttL'
1
MILLE
•
< M rvi
3
i ADDRESS
DIRECT
:
OLD
BALANCE
DATE
:
NO.
M A K E R
.
1
)
13OND
.
OEB.T
87 000 00 7-2 4-S6 12 &2
w
5 DEM
10 000 00 9-21-26
PA'D
5 C 0 ° CC 1-b-29
97 000 00* 7 -
8-19-26
ft? 000 0 0
10 000 00•a-19* 26
^ ^
u
Ig -) *5{J c 1
^ ^
6 DEW
!
6 DEM
i
17 492 50 6-28-2 9 55927
!
i
17 985 CO7-10-3
? ^— '
-
. j
-
5C2 50
•7-1013 487 DO
23 512 0 * 7"9O^
»5
^
bC2 50
24 015 CO
505
PA 517 -C
0
,X234 975 00 11-25- 29
?19 0C0 CO 14-27- 29
• __ »
«
F
»; n f> (\ f\ C C
15 975 00* 8 - 16- 29
j 975 Q(J
175 OCC CO 6 - 2 fe- sC
r/>t
rmf\ , i n
i
72 753
.1
j
805 CGC CH 8-15-2 2
1
1
5415
. .
•
_
234 97 5 00 • 1 1 - 2 2 - 29
219 000 00*11-?5 - 2 9
100 CCO CO»i'i-27 • 2 9
. 1 ' '
1' 9U 9 C
1 I ~ I c™*
805 C^C CC 1 1 > J 9
75 CCC CO
75 000 00
4- 7-
JC
is ccc c%
175 000 00• 12-9- 29
250 COO CC
• 3-26- 30
|
•JDt'f
i Let
6 DCM
8C5 C t t CC 4-17
.
84 CCC CO
35,OCC OO
305 975 00• 1 C - 2 1 r-29
95 COC CO
• 11-1,? . g9
2< 9 975 CO
ii
6 DEMj
5f DtM
ii
804 963 30 9 - ? - 3 '
11-12-29
11-27- 29
°3C C C CO 11-25-29
11-27-29
!
if*
o
* & - 1 0 - ^9
25 773 75
I
•
O
- »
,
1 256 25
•
100 000 00 12-9-2 9 6367 6
175 CCO CO3-28-: C 68 526
I
y
6 PF"
29
;
1
17 985 00• 6-?8- 29
6 ob«
;
- 0 - * 1 - 5- Zp
• 5-4-an
502 50
r..
?69 975 00 1 1 - / 1 2 - 29
'•
6 OEM
6 DEM
29 617 31
1 5
16 980 0 0 6-11-2
*
25 7". 75 8-16-t >9
75 975 CC
r
9 798 75
15 975 0 0
1
• € - 2 1 - : ?9
17 48? 50
n*
-
•
15 976 CO 8-16-29
!
1 1-25-29
1 005 00
.-
502 50
6 DEM
• 24 517 50 8- 10-2 9 57816
• A
* '. -
pn< 1_ 4_ ^<?
u ri r» i
6 D$M
t ZV
•
•
i> 0 30 " 1
1
C^" OC
]
16 980 00 6-21-2 9 55597
7
1-4-29
1-5-29
i
15 975 00 ( >-1 1-2,? 35022
as
-0- •9-21-
•
'"9
3 4 - • 26
10 0 0 0 0 0
1-4-21
^^^^
\
DAT.
CHEP.T
10 000 00 9-2V26
j
. IJ
!
97 000 00 8- 19-26 955f1 X
1
COLLATERAL LOANS
INDIRECT
E N OO IISCH
o« COLLATE!*U
33C CCC CC * 1-13-32
2i!f 009 CC .
36 70
P-15-3 2
4-17-33
2io occ o n
• 3 P 7C
50:
COC 0(
•C
805 OffO 00 • II" 1 i '-
25 516 75 804 963 30 • 8 - 1 5 - : 12
©.I. > - ^ * _ *
* 9- -i. 3
SOE COO CC
y
779 4 8 3 25 • 4 - 1 7 - : J3
•
EXHIBIT U-6-66
.
STOCK EXCHANGE PRACTICES
8749
U.S. Senate Committee on Banking & Currency:
This two page report has been prepared at your request from the records of
The Union Trust Co. Cleveland, Ohio and the Superintendent of Banks in charge
of the Liquidation and is correct to the best of my knowledge and belief.
O. C. MORTON,
(For Oscar L. Cox, Deputy Superintendent of Banks
in charge of the Liquidation of The Union Trust Co.)
EXHIBIT U-6-55
INTERVIEWS AND COMMITMENTS AFFECTING LOANS—OFFICIAL INSTRUCTIONS
TO CREDIT DEPARTMENT—COMMENTS ON FINANCIAL STATEMENTS—ESSENTIAL CREDIT INFORMATION
For exclusive use of Credit Department
APRIL 13, 1933
OTTO MILLER
Mr. Cox invited me into an interview with Otto Miller, relative to Mr. Miller's
collateral loan of $805,000, demand notes, with a present collateral value of
$298,140.75. Of this loan of $805,000, $595,000 is located here and $210,000 is
pledged at the R.F.C.
Mr. Miller said that he could only meet this note in full by:
1. Market appreciation of collateral.
2. Money earned by Hayden, Miller & Co., which has been somewhat handicapped by the death of Mr. Hayden; Mr. Williams' resigning to be the Government's agent for the Federal Reserve Bank of Cleveland; and Mr. Fleek's retirement.
Mr. Miller also owes the Society for Savings and they recently asked him
questions. He wrote them a letter under date of April 12, copy of which is
attached to this report.
Mr. Miller also said that the payment of the loan in full would depend a good
deal upon the action of the market value prices on Alleghany Corporation and
Richman.
Another handicap which Mr. Miller would have to meet is the double liability
on the stock of The Union Trust Company.
Income from securities and from the business is not sufficient to service the
loan.
Mr. Miller's source of income at present is a trust in the Union Trust Company,
which has little income now and that is necessary for living purposes.
Mr. Miller said he could do nothing now, and he answered in the affirmative
when Mr. Cox said the bank at present could not look upon it as a loan, but simply
owning the securities.
Part of the collateral on the loan is cash $25,516.75, which was kept in that
form for reinvestment. Now that the bank is in charge of a Conservator, Mr.
Miller could see that reinvestment would not be permitted, and he will write us
a letter authorizing application of the cash to the loan.
WILLIAM TONKS, Assistant Conservator
Letter of April 12 attached.
Copy to Mr. Oscar L. Cox, Conservator.
(Exhibits U-6-56 through U-6-66 face this page)
oo
EXHIBIT U-6-67
NAME
ADDRESS
O
T3,-,XTTJ
B0ND
Direct
( Indirect
Old balance
Date
$799,483 25
7-22
731,935. 71
7-24
726,995 71
726, 920 71
7-31
1-18
Collateral loans
Maker
No.
96536
Continued
Endorser or collateral
Rate Due date
Debit
Date
paid
7-22-33
7-24-33
7-31-33
1-18-34
1-24-34
Date
Credit
Balance
$47,547 54
4,940.00
75 00
7, 722 00
925 20
$731,935. 71
*7-22-33
726,995 71
*7-24-33
726,920 71
719,198 71
718,273 51
*7-31-33
1-18
1-24
o
a
W
x
a
W
3>
o
H
O
W
STOCK EXCHANGE PRACTICES
8751
EXHIBIT U-6-68a
APR 3 11, 10 AM 1933
Credit file Adrian Joyce,
file
THE GLIDDEN COMPANY,
ADRIAN D. JOYCE,
President
1963 Union Trust Building,
Cleveland, Ohio, January 26, 1933.
Mr. J. R. KRAUS,
Chairman, The Union Trust Company,
Cleveland, Ohio.
DEAR MR. KRAUS: I am attaching statement of my assets and liabilities as
taken from my books.
In this connection I would call your attention to the fact that while I have
listed my investment in Land Syndicates—which, as you know, are Newcomer
Syndicates—at $298,070.64, the value of this investment is problematical.
Concerning the Real Estate at Chicago, this is the sound value according to
the appraisal, and I believe Mr. Wilbur Baldwin has a copy of the appraisal.
The investment in the Joyce Realty Company is after depreciation.
You asked me to give you a list of the securities pledged with the various
Banks, and I am pleased to give this information as follows:
Central United National Bank:
12, 971 shares Glidden Common
716
"
Glidden Prior Preferred
500
"
Distillata Company Common
500
"
Leach Securities Corporation Pfd.
1, 000 "
Western Reserve Investment Co. Units
250
"
Kennecott Copper Corporation
$20, 000 P.V. Pacific Western Oil Co. Bonds
1, 000 shares Wood Chemical Products Co. Common
Midland Bank:
12, 000 shares
800
"
325
"
2, 000
"
$20, 000 P.V.
Glidden Common
Union Trust Company Common
Central United National Bank
Wood Chemical Products Co Common
Lautaro Nitrate Co. Ltd. 6's
EXHIBIT U-6-68b
You have a list of the securities which are pledged as collateral with The
Union Trust Company and I am not, therefore, giving you this information.
Concerning my life insurance, The Union Trust Company has as security a
policy for $150,000.00; in addition to this I carry life insurance of $545,000.00.
The Glidden Company carries insurance of $1,000,000.00 payable to the Company on my death, and the Wood Chemical Products Company carries insurance
of $200,000.00.
Trusting this is the information you desire, I am
Yours truly,
ADRIAN D. JOYCE
EXHIBIT U-6-69
MARCH 24, 1930.
Mr. ADRIAN D. JOYCE—file
1263 Union Trust Building
Cleveland, Ohio.
MY DEAR MR. JOYCE: This is to inform you that from this date until further
notice, interest on your demand collateral loans will be computed at the rate of
5% per annum.
Very truly yours,
Vice President.
WMB D
175541—34—PT 20——2
8752
STOCK EXCHANGE PRACTICES
EXHIBIT U-6-70
MAY 10TH,
1932
Mr. RALPH WILLIAMS
Asst. Vice President
DEAR SIR: Please note that I have agreed to make the rate of interest on
loans of Adrian D. Joyce and Anna Page Youce 5}£% from and after April 1st,
1932. The question of the unpaid balance of interest due April 1st is to be held
in abeyance for a few days longer.
Very truly yours,
President.
WMBrEMS
(Exhibits U-6-71a through U-6-75b face this page)
EXHIBIT U-6-76
Keceived L.A C.
Cordrey
INTERVIEWS AND COMMITMENTS AFFECTING LOANS—OFFICIAL INSTRUCTIONS
TO CREDIT DEPARTMENT—COMMENTS ON FINANCIAL STATEMENTS—ESSENTIAL
CREDIT INFORMATION
For exclusive use of Credit Department
October 16, 1933.
Collateral Loan Dept.: Crawford, Wm. J. Jr.
Loan: $57,997.24
Dated: 7-1-23 due demand.
Security: 76 shs Degnon Contracting Co.
53 shs Degnon Realty & Terminal Improvement Co.
85 shs Jordan Motor Car Co., Inc. Pfd.
50 shs Cleveland Realization Co. Cap.
925 shs Crawford Realty Co. Com.
300 shs Union Carbide & Carbon Corp. Cap.
100 shs Union Oil Co.
20 shs Equity Savings & Loan Co.
35000 Crawford Realty Co. Deb. 6s notes due 12-31-31.
Market Value: $15,200.00 as of 10-11-33.
Transfer of Property:
Date: Sept. 23, 1933
Williard J. Crawford Jr., Extr. of Estate of Bessie Crawford, to
Georgia G. Cannon, si 383, 80 ft. Woodmere Dr., Cleve. Hts.,_. $19, 000. 00
VINCENT J. HANNON.
EXHIBIT U-6-77
INTERVIEWS AND COMMITMENTS AFFECTING LOANS—OFFICIAL INSTRUCTIONS
TO CREDIT DEPARTMENT—COMMENTS ON FINANCIAL STATEMENTS—ESSENTIAL
CREDIT INFORMATION
For exclusive use of the Credit Department
NOVEMBER 1,
1933.
W. J. CRAWFORD, JR.
Meeting referred to in memo of October 25 was held today, all those present
except E. E. Barker (who substituted for C. C. Sigmier) having been at former
meeting.
Mr. Crawford submitted a report relative to the Estates of W. J. Crawford,
his father, Bessie Crawford, his mother, and Randall C. Crawford, his brother,
in which he has an interest. This report was made so that we might arrive at
some idea as to the value of the interest of W. J. Jr., listed in his financial statement submitted at October 25 meeting.
}i Residuary interest in Estate of W. J. Crawford.
}i Residuary interest in Estate of Randall Crawford.
Entire residuary interest in Estate of Bessie Crawford which includes }i
of the residuary interest in the Estate of W. J. Crawford and % of the
residuary interest in the Estate of Randall Crawford.
EXHIBIT U-6-71a
ft. F.-C.
The Warnei^Bllleries Co.
660 Union m a t Sldg.
No. 6
DUE
End. by W. ' H. Warner ,, t Co. k
t h e J ;. U. War A [Coal Co.
UMH
#97631
N a i
9755
No. 2
No. 9
out 1/30/23
DUE
HE
•
No 8
DUE
DUE
NO. 11
/
MEMO.
1KT.
INTEREST Ofl OISCOUNT
INTIM11
O«II
TO
OHIT
n lc]~l71H,/>Vf$i*/<>-f9'44l
/£>-/-3
~> f 'too/ e A 5^-/*
" **" ' r
(v
U
(,.
'•• < t j
.
-
EXHIBIT U-6-71b
•
- /1$ til fv
X*
7*?7shs
The Panda Steamship Co.
975shs
'i'ha Ohio Rivsr iidison Coal Co. Cap
ie Bar-Mar Coal C o . Cap
!
.53 a t 238shs #59 i t SJWBb? .-65
Whitney Warner
2 _ SEE O P S : EE: E BKFO RE KKL HAiI.\O
i EW30 RSK'! SHI ON UKSKC
•" ""' HO1B COLL•i'i'Eh AL '£&:
LOAN TO 0
HIO RI ER E^ISOK COAL CO. G P . S IBELB
^
EXHIBIT
?
>
N.
out.* i i V j
,
*
- ? ' >*
OUEA=
,'*!
DUE / / " -?C
jSQ
DUE /2- "**
/
,, ' V ^
INTEREST OH DISCOUNT'
U-6-71C
Vni t y V. 8^Jj i r n e r 5c Co.. ••
/
The ' . H. ^B-nsr Coal C o .
•ADOREM ,60 Cnlon .Trust B l d g .
DUE/ /
& - ,
'
35
•
3
.
0U£J*'-'/' * nut'/ f? -•*--
N^»
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/
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•
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;
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/ojk,fft *.«/
/>. i / / ^
y*j fit > /it*
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i
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I
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i
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/ i ?•/•
•
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t
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1
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31 • *
foAf'f*
4
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iKOV 3 » tVM
MOV
7J-'
) ti T832 A'3ffo
i
OtC 3 C 1*32/0 3 ?-/o
i 1
EXHIBIT U-6-72a
•i
•
j
1%
t
The Pocah onta s Do/nest 1?. C
fZ 01
244shs
anri c«
^«*—
• ifafc
,£33-«.1 UPT^shi • •TVO
The Ma her Col li*ri« C o .
TT/O
<?nnnfY<i
Thfi
'
3
251/lOOOths
125,000
Q -
*^j)t 1 >'•
f M-r»/o SFhaa -K .
'• '
•<J
1 Co.
riri»)n ? r •
a t If h e».
rr*ttr?r
Tr ust Cartif icate of r a r t Owners hip.The
Youphioeh eny Coal Tru st £ B4
IOO/IOC: ths ea
#89 at 51/100 Oths
v The TJeKae spor t Coal !c Cok 9 Co. Ss cond '-itcr
CM Cpn Ed ,? ,4,6,3,10,18 , 1 4 ,10,18,20,22, £4 ,£6
#23 ,30,32 ,34, 36,33,40 ,42, 4 4 .41 ,48 ,50,52,5 4 ,56,53
#60 ,62,64 f ^ ^ » 68,70,72 ,74, 7 6 ,78,90 ,9?l84 ,86.88,90,
fQ2 ,94,96 ,93, 100,102, 104, 10 6,10?, 110,112, 114,116,
6 , 1 2 0 , 122, 184 ,126, 12B, 13 0,132, 134,136, 13=5,140
m
/•14 2,144, 146, 143,150, 152, 15 4,156, 158,160, 162,164,
#16 6 , 1 6 3 , 170, 172,174, 176, 173,130, 132,134, 136,13B
£19 0,192, 194, 196,193, 200, 20 2.E04, 206,20=, 210,212
p p n OOP
830,832,
#21 4.210,
§t24 %
t 1,000
memf§z!y
s
¥MM
/ *t
fk
. "J.
1
EXHIBIT U-6-72b
EXHIBIT
U-6-72C
}
EXHIBIT U-6-72d
The V. H. Sarner Coal Co. Cap
#54 at 72shs #39 at 201shs #43 at 5shs ;?44 at
20shs #48 at 371shs .:-'ll at 2.4shs * 16 at 3.6shs
#19 at 6shs #26 at 5shs n/o V . H. 7,:arner
#55 at 72sha #41 at llOshs #43 at 12shs .#49 at
14shs #50 at E86shs #17 at 3.6sh"s #12 at 2.4shs
Warner. #40 at 127sh
#46 at lS3shs #47 at 130ahs n/o Elizabeth C. '...
#42 at llOshs #52 at 104shs #61 at 94ahs n/o "
Florence S. Warnar.
The Erady Earner Coal ^orpn Ctf of Deposit 1st
1$ S/F Gd Bd #188 dueP/l/42 "ji W<&'/tj+~."*~C.
191shs j, / The H>w V o l a t i l e Coal Co. Com
#229- K $*V ^ * ~ * ^ .
15008ha
v
The *cKeesport Coal 5c Coke Co. Com
#113 a t 500shs #100 at 12j>shs #98 at 6?ishs
at 50shs #1 a t 125shs jjt/o Whitne* ?('arner
#S04 a t iSshs #97 a t . 6 2 | s h s #101 at l i f s h s
#102 at 500shs #75 a t 125shs #195 at 85sh3
#196 a t 15shs n/o I . H. Warner
EXHIBIT U-6-72e
lOOOshs
fSr
- *
M«RKtT U » ^
"• The McKeesport Coal & Co ke Co. Pfd.
#1 a t 250sha #188 at 25shs #115 a t 100 sha
#114 a t 185sha #/o Whitney Warner #219 a t 20shs
#91 a t 250shs #209 a t 50shs #113 at 12 5shs
#210 a t 30shs #123 i t 25sha n/o W.H. T a m e r
81,520.90
Notes of «*c Keesport Cos 1 .& Coke Co. due Demand
3 i 25,000 1 a t 6520. 90
Declaration of Trust bv and between D. B . Davis
and The Tt. H..Earner Coal C o . , " . A. Dav i s %Co.
under which D. R. Davi s holds t i t l e t o c ertain
t r a c t s of coal and surfa ce lands in Vers ailla«
and North Versailles Tow nship, Allstrhany County,
Penna.
Dated Oct. 26,1628
The W. H. Earner Coal CO . interest asslpned t o
Tha Union Trust Co. J un<? 25,1928.
,_HOLD-- SEE 0. P. STSE I E .
'ACCOUNT ENDORSED B<a ES IARKKB COLLI BRIF S CO.,
OHIO RIVER EOISOK COAL CO.
ai
EXHIBIT U-6-72f
EXHIBIT U-6-73a
MtOWII
EXHIBIT U - 6 - 7 3 C
EXHIBIT U-6-73d
EXHIBIT U-6-73e
Whltworth,\rf. B. TSid , by Whitney Farrier*)
660 Union Trust Bldg,
INTEREST
1
A.
/f4^ —
iff iO£ —
i
'
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tn A • »
JUL
1 - ,VS
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MX
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-
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2*7*
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1 •
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L H--1-V.
EXHIBIT U-6-74a
EXHIBIT U-6-74b
,
.
,
f
' ' « <
f
f
It ' '
EXHIBIT U - 6 - 7 4 C
2906 Weybridgo Rd. S. H,
-/• }f J •
/t - *-pi
N « 3 o 1932
EXHIBIT U-6-75a
SEE WMB,GPS,OK CEF^EFOHE
* 360shs
RSLKAS ING AhY COLL.
CIM •
The National defining C o . Com
llS- -*'€-*TOe-*-tr - i
-
K 25shs
The Triton Steamship Co. <
jjf^t-
A 75aha
x
400shs
t
1
* l $
0 •'• •• 1 ->
,.7
i'he Pioneer Steamship Co.
#•34-5/6- trt-g&she-wsr ttaa i
^POo 2 6 3! 3 . ,
* 82shs
f.4J_.
«B07 i.0 s h s n / o J
ion ^r-in
in',-
HOLD FOR EHDORSSrai 01 COMEY & JCKKSCK CO
GE LOA 1
EXHIBIT U-6-75b
'•••
i i r?
j
*he National hefining Co. Pfd.
'#il23-*t-0O»h8-#i08&-*t-e lOahs-* V90S-*t-i^*hB
#ii8i-"a'fc-&sh* C6532 r-/o Ji a
ihe Union Trust Co,,(Ne*) •25.00 ea Cap
#1167/69 at lOOshs ea {1170/1 a t 5Oshs ea
RECE1VEO
//«
><
STOCK EXCHANGE PRACTICES
8753
The large liability of W. J. Crawford's Estate, amounting to $299,072.16, in
connection with an Agreement of the stockholders of The Cuyahoga Valley
Realty Company seems to eliminate any value that may have remained after
distribution to the heirs.
The Estate of Bessie Crawford is possibly subject to a charge of $20,000. for
creation of a trust fund for the benefit of grandchildren and assessment with
respect to 100 shares Cuyahoga Valley Realty Company stock.
Randall Crawford's estate will in all probability be consumed by the trust he
created for the benefit of his widow and children. It is also subject to assessment on 75 shares of Cuyahoga Valley Realty Co. stock.
Since all of the above are dependent primarily on real estate there is at this
time very little, if any, value, although further administration proceedings may
produce some if certain property can be sold even at tax value.
It was agreed by the representatives of the interested banks that W. J. Crawford, Jr. was in a better position to work out his own affairs than any of the
members present. They did feel, however, that the Union Trust Company, the
Society for Savings and the Cleveland Trust Company should each appoint a
representative to counsel with Mr. W. J. Crawford, Jr. regarding any major or
important move, the banks so represented to act without any commitment as to
time allowed and free to withdraw at will. The banks' representatives are to
consult with Mr. Crawford regarding his personal requirements and it would
seem only proper that a monthly statement of receipts and disbursements should
be required so that some plan could be adopted whereby his liabilities could be
reduced.
EXHIBIT U-6-78
Oscar L. Cox, Conservator
Excerpt for credit file re:
Name: W. J. Crawford, Jr. (Director). Amount of loan $61,400.00.
(This name and amount are listed in the report of the Audit Committee of the
Board of Directors, dated February 3, 1933, under the following):
"Loan Schedule I
Loans to Directors—Under-Secured
Now on Non-Accrual Basis"
Committee Comment: While these loans should be among the best loans in
the bank and be predicated upon the highest type securities, in some cases the
reverse is true and the bank now finds itself with loans greatly under-secured or
secured by other items for which there is no market whatsoever. Further, some
of these loans have necessarily been placed on a non-accrual basis.
The Committee knows that in some cases, even though our loan is still undersecured, the borrower has come forward and offered such other security as he may
have had and such action is highly commended. However, there are other loans
on which we should bring pressure to get a mortgage on their homes and insist
that they arrange for the payment of delinquent interest and reduction of the
principal.
The Committee also comments that these are on nonaccrual basis.
Inserted and filed by Conservator
By us.
EXHIBIT U-6-79a
Nov. 14, 1933.
NATIONAL CITY BANK
Cleveland, Ohio
Attention Mr. L. B. Dcvine.
Re: Parmely W. Herrick
GENTLEMEN: Among our collateral loans pledged to }^our bank is one of Parmely W. Herrick for $755,189.63, accrued interest to November 1, 1933, $57399.44.
This loan is secured by the following:
10, 525 Shs.
Union Carbide & Carbon Corporation
50 "
Sun Investing Company Preferred
1, 000 "
Atlas Utilities Company Preferred
1, 000 "
Atlas Utilities Company Warrants
$6, 000
Missouri Pacific 5s 1977
Burkam-Herrick Publishing Co. Ctfs.
8754
STOCK EXCHANGE PRACTICES
In September 1932 Mr. W. M. Baldwin, Mr. Rollin A. Wilbur and Mr. John H.
Dexter were appointed a committee to take charge of certain assets and liabilities
of Mr. Parmely W. Herrick. The Union Trust Company was designated as
trustee. The agreement between the committee and the creditors provided
amongst other things that all proceeds derived from the trust estate, either from
income or principal, were to be held for the pro rata benefit of the creditors under
the agreement, in the proportion which the amount of their indebtedness in excess of the value of the security held may bear to the aggregate of like indebtedness by the other creditors under the agreement. These creditors originally
were:
The Union Trust Company, The Society for Savings, Estate of James Parmely,
The Midland Bank, Burkham Herrick Publishing Company. (By supplementary agreement): The Oliver C. Schroeder Drug Company, The Cuyahoga
EXHIBIT U-6-79b
Company, and The Harriman National Bank were included among the creditors.
The standstill feature of this agreement expired Nov. 1, 1933, after which an}r
creditor has the right to sell the collateral specifically pledged under its loan.
The present trustees, R. A. Wilbur, John Dexter and H. F. Burmester, along
with Parmely W. Herrick, Harold Clark and George Webster, met Nov. 3, 1933
for the purpose of considering a further extension of six months of the standstill
feature of the trust agreement. In view of the fact that The Union Trust Company is in liquidation, it was the concensus of opinion of those present that the
interest of our depositors and creditors would be best served by the Liquidator
agreeing to a six months' extension, having in mind that in the interim a definite
liquidating program would be put into effect.
The prime consideration for requesting the six months' extension was that the
investment in Union Carbide, which is the principal holding, had. reasonable
prospects within that time to make a good showing, in which case it is the intention of the committee to sell substantial amounts. It was also felt that inasmuch
as considerable tax would be involved in the sale of Union Carbide stock that by
granting the extension Mr. Herrick would be in a position from a tax standpoint
to offset certain possible losses that may be definitely established in the fore part
of the coming year. It was also felt that the sale of certain real estate now under
negotiation might be closed.
It is the writer's opinion that the interest of all concerned would be best served
by granting the six months' extension requested. We are therefore requesting
your approval of the Second Supplementary Agreement enclosed.
For your further information we are enclosing a balance sheet of Parmely W.
Herrick as of August 31, 1933, which we would ask that you kindly return as
soon as it has served your purpose.
Yours very truly,
HB
H. F. BURMESTER, Agent.
Approved:
NATIONAL CITY BANK, CLEVELAND,
By C. B. REYNOLDS
RECONSTRUCTION FINANCE CORPORATION,
CLEVELAND LOAN AGENCY
By M. W. DAVIES
Acting Assistant Manager.
EXHIBIT U-6-80a
JANUARY 11, 1934.
Mr. PARMELY W. HERRICK,
Cuyahoga Building, Cleveland. Ohio.
DEAR SIR: We wish to advise you of credits totaling $39,745.72 to your loan
account, proceeds of the sale of:
1000 shs Atlas Utilities Corp., $3 pfd, Series A.
8755
STOCK EXCHANGE PRACTICES
As the certificates pledged were in the name of The Herrick Company they
were not good delivery and we accordingly enclose an itemized statement.
The unpaid principal balance on your loan is $709,253.71.
Yours very truly,
I. J.
FULTON,
Superintendent of Banks.
OSCAR L. COX,
Special Deputy Superintendent.
By R. J. RUTENBECK,
Agent.
RJRiEJR
EXHIBIT U-6-80b
JANUARY 11, 1934.
Itemized statement of sale of 1000 shs Atlas Utilities Corporation
Broker
Shares
Price
Amount Commission
Jackson & Curtis
100
40
$4,000
$15 00
Chas Qumcey & Co
Hornblower & Weeks
Livingston & Co
Dyer, Hudson & Co
Post and Flagg
E A Pierce & Co
Curtiss, House Co
_.
100
100
100
100
200
100
100
40
40
40
40
40
40
40
4,000
4,000
4,000
4,000
8,000
4,000
4,000
15 00
15.00
15 00
15 00
30 00
15 00
15 00
Salomon Bios & Hutzler_
100
40
4,000
15 00
Interest
borrowing
tax
3.86
borrowing
tax
55
Tax
Postage
Total
.25
$3,971. 75
9 00
9 00 "~".~25~
.21
9 00
.24
9 00
.25
18 00
.20
9.00
.25
9.00
4 00
3,976 00
3,975 75
3, 975. 79
3,975 76
7,951 75
3,971 94
3,971 75
$9 00
4 00
9 00
.22
3,975 23
$39, 745 72
EXHIBIT U-6-81a
AUGUST 2, 1933
Mr. SIDNEY B. CONGDON,
President National City Bank
Cleveland, Ohio
Re: Parmely W. Herrick
DEAR MR. CONGDON: Mr. Herrick is indebted to us as of July 7, 1933, in the
amount of $786,987.47 On our collateral sheet we listed without value certificates of deposit on the Winters National Bank and Trust Company of Dayton,
Ohio, No. 15265 for $40,000, No. 15415 for $40,000, and No. 15416 for $5,387.52,
or a total of $85,387.52, which certificates were deposited in escrow with our
Estates Trust Department under receipt dated February 23, 1933.
This deposit in escrow was occasioned by a claim that had been exercised on
total certificates of deposit held by us in the amount of $105,000 by the trustees
for the Estate of James Parmelee, in which the Trust Department of The Union
Trust Company and Rollin Wilbur act jointly. The occasion for the assertion
of this claim developed because in our individual capacity we had at one time
loaned to Parmely W. Herrick in substantial amounts on a secured basis, and
on September 30, 1931, made further demand on riim for additional collateral
under nis loan and received at that time the certificates of deposit above referred
to, as well as several hundred shares of Harriman National Bank stock. Later,
in December, we received an additional few hunored shares of Harriman National
Bank stock, all of which stock subsequently became of no value. The bank
had been appointed a joint executor and trustee early in May of 1931, and made
the demand for additional collateral a few months later as indicated above.
In ttie assets of the estate there appeared a certain obligation of Parmely W.
Herrick in the amount of $248,083.09, secured by questionable collateral. About
a year and a half later the trustees for the estate learned for the first time that
the bank had, upon demand, received the additional collateral referred to above,
and thereb}^ had preferred itself while acting in a dual capacity.
We now learn that the law is very strict in interpreting the responsibilities of
a trustee, particularly in the District of Columbia, where this estate is being
probated. From a credit viewpoint it is difficult to reconcile oneself to the
8756
STOCK EXCHANGE PRACTICES
fact that we did other than the proper thing. However, our attorneys, Trust
Department officers, and Special Counsel Laylin agree that we would have
difficulty in sustaining our position in court. Consequently, in a meeting Friday
EXHIBIT U-6-81b
with the trustees and their counsel, it was agreed to accept trustees' prior claim to
this collateral to tne extent of $81,248.07.
At the time of accepting tnis adjustment we did not realize that you might
have assigned some value to this escrow, as we for ourselves had never considered
it of any collateral value after we had allowed it to go into escrow. Consequently, today, when endeavoring to send some of the certificates of deposit
through for collection, we learned for the first time of your interest, at which
time I immediately phoned you to advise you of the circumstances.
Our counsel advise us that we were indeed fortunate to be able to make this
adjustment as favorable as it is, as there was good probability that the court
might easily have well sustained a position that the bank should turn over to
the estate all of the $105,000 in certificates of deposits and the accrued interest,
as well as some part of the value of the Harriman National Bank stock as of
the date we received it as additional collateral. Under the terms of the adjustment the matter is being presented to the court in the District of Columbia,
and approval of the court is expected momentarily.
At the present time we are holding among our collateral of Parmely W. Herrick
certificate in face value of $20,000, which has been pledged to you along with
his other collateral. We are withdrawing this certificate of deposit under trust
receipt, and, together with the $85,387.52 in certificates originally held in escrow,
are sending them to the Winters National Bank and Trust Company at Dayton
for payment in the amount of $55,000, and a redivision of the balance of $50,000
into certificates proportionate to the interest of The Union Trust Company and
the Estate of James Parmelee. Normally, the certificates would immediately
be converted into cash, and the distribution of $81,248.07 would be made to the
estate. However, same is deemed inadvisable at the moment, and the bank
has expressed itself as preferring to pay $55,000 at tnis time and the balance at
the rate of $15,000 per montn until all the certificates of deposit are liquidated.
Consequently, in order to adhere to that plan and to share proportionately in
any cash proceeds, it was agreed that we wauld snare the proceeds of any cash
on the basis of 77.09457 to the Estate of James Parmelee and 22.0543 to ourselves.
As soon as the items are returned to us from Dayton, you will receive our
proportion of the $55,000 in cash, as well as the three certificates for $3,435.81
EXHIBIT U - 6 - 8 1 C
each and one certificate for $3,653.99, or a total of $13,961.42, details of which
are explained in the attacned copy of letter to the Winters National Bank, dated
August 2, 1933.
Will you please give your approval to this settlement?
Yours very truly,
0. L. Cox,
Special Deputy Superintendent of Banks,
By H. F. BURMESTER,
Agent.
HFB:R
(Exhibits U-6-83a through U-6-83k face this page)
U QjTY
AODREM
o*ga *•
t Bldg.
JJnio,,
M
No. 9
I
niuo Principal due in Installments a s follows:
' $50,005 due J uly 1, 1934 $2e•,000 due July
25,000 due Jan. X, 1335 2E ,000 due Jan.
1
j
/->-1-33
/-
*«5 t $
;o
150,000 due July 1, 1936
i3,000 du» J«),jINJ
t I ! «1.
1
EXHIBIT U-6-83a
EXHIBIT U-6-83b
1
is ~i
V
I
j;
1
'
131-83 >oi "IB ><lt-
EXHIBIT
U-6-83C
Standard Oil Co of ;;«•* J-re»v
SODshs
The Arthur S.H0K90 & 06. Ola
f 0334/33-100sh3 set
# 7 4 8 y h , Wiitfiia
-S»*in»g.A TrusV-Co.
EXHIBIT U-6-83d
EXHIBIT U-6-83e
Ti!* Union BarbM* i Carbon Corp. Cap.
#273310/11-SOslia aa n/o Curti33 Itouae I Co.
lOOshj
Tha Anerican Telephone t Tale.yaph Co.Oap.
#!J..4714l/42-50sha ea n/o Curtiaa, House 4
at deted Aufjist 2C, 1953 , by and b«twe«
Qrandin and Ira J.Fulton, iupt. of Banks of the Stats of
Ohio, In ohargB of liquidation of The Union Trust 5o. of
Cleveland, Ohio.
The Standard Oil Co of California Cap.
)^«l/lll92394/96-100«h» ea ffi.i/C233329-S0
4174 r.1: 90 s h s . , /i:40fifiA »t 100
shs Tha p . Lorilisrd Co. Con »xoh for now $10 Par
EXHIBIT U-6-83f
EXHIBIT U-6-83g
—^™
«•
140ah.
'iho "tchison 'i'oj oka & oanta i'e buy Uo. Uoa
,, A4^OS64-4Osha
.
** 1
aopgha
2c0s)is
Tho Auericcui ix>c op.ot.ivo Co.Cosi.
»C44810/11-lOOah s ea^ #C011BS62-90»hi
^l! - J
_18Oshs
The liomieoott Co ppor Corp.
j?C210897- lOOshe D«27S057-808h8
ff269368-100shs
V
'?'•*#
•
n
33
12O8hs
•
-,! ,
The I.oranda Mine 8, Ltd. Cap.
j^JjC17782-100shs r!iiE10265-20ah8
/'/
f «•<
26O»h.
Ihe Phsips Uodge Corp. Cap.
#54244/45-100sha ea ;^)410n5-503hs
W ^
"•
f
J
LL3'-
lTOahs
Iho Goodyear Tit o & .-.ubber Co. CCBU
HJ64047-100«h» J010660fi-70*h»
^/ tfl
**
'""'
XXOshs
Ihe b.w.Industri al Alcohol Co. Co...
#7O044-XOOsh8 fA122576-X0ah8
fit
U
Lio«
...
2003}-3
Ihe Chryaler Cor p. Con.
irJi28775 |fS2885S
EXHIBIT U-6-83h
i>C
A >• iL
C'
llvoo
EXHIBIT TJ-6-83i
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7
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«
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1
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80216894-lliw
>fgll8844-10O«h»
m 2 • wr
;
>: 3 t9»
5T t $ «*f
M8shsllSshg
Tho Taxes Sulph Sulphur Co A c .
•|C1OTO>"O -lOOsh a 'F21?374-lSsha
3?shs
Th8 Sroat "fast® rn
rfKY/o/4881S
3us*&i* Co. C«n,
rouplna Ulnos, Ltd,, Cap. J5 wtr
oosha
•fKl/F/13973
lOOshs
T h Q Xl&ffl$iGt%l'fc H i t !
!ap.
OJt- ^
#823274
ST * • !<H#
R
! 1933
48Os5is
6£T J. i 53JJ
40shs
Cap.
''••-':
The ><ripht-Har?
,yB31410/n-lOOa hs «a fBSZOOS/7-10Oshs e» af>B32OO8-6Oah»
-7
The Drfted Stat «s Smolting, iiefin:in S & XiTiing C O . C O B / 4 h i
*>T/O7724S
M^ds f Btd. Cap. $1 par
lOPshs
'^h
#
^ :
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•'
V
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1
#M7002
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EXHIBIT U-6-83J
_2_
_
100 aha
ITnion Pacific Rallroec* Cor.pany
#414813 n/o Curtiaa KO'JSO & Co. -
7 2/5ths shs The Cache La Poudre Co., Cap.
fO 2000 et 7 ahs., #2-S-73 at 2/5tK
T>Oa>is
50«h«
Th» K a t i o m l Power & L i g h t C o . C o ! .
#HY/0/l65287 n/o ( i urtis« House i C
Tn« Intematiorml Harveater C0.COH
|FK169537 n/o Curtis* House ft Co.
EXHIBIT U-6-83k
EXHIBIT U-6-85a
EXHIBIT U-6-85b
>, 637jshs
The Cro
lstruetlon i-o. C«r>.
Littlft Construction Co pfc
tJ, . L-.^i*
yiCnA-U 6#i&>y.-/.*.'6.^6
EXHIBIT U - 6 - 8 5 C
EXHIBIT U-6-87a
EXHIBIT U-6-87b
STOCK EXCHANGE PRACTICES
8757
EXHIBIT U-6-84
Status of loans to directors, February 25, 1934
Total Liability
Special Report:
Wm. G. Mather
K. V. Painter
$6, 139, 325. 08
$860, 482. 27
2, 926, 778. 75
3, 787, 261. 02
$2, 352, 064. 06
Made up as follows:
W. P. Belden
G. P. Comey
H. G. Dalton
G. W. Grandin
J. A. Hadden
W. A. Harshaw
A. D. Joyce
R. T. King
B. Little
O. Miller
H. Moss
A. Squire
W. Warner
$11, 150. 00
31, 354. 16
10, 833. 72
206, 935. 75
6, 294. 98
4, 700. 00
707, 539. 06
8, 991. 60
182, 031. 77
743, 273. 51
9, 276. 37
30, 940. 62
398, 742. 52
$2, 352, 064. 06
(Exhibits U-6-85a through U-6-85C face this page)
EXHIBIT U-6-86
INTERVIEWS AND COMMITMENTS AFFECTING LOANS OFFICIAL INSTRUCTIONS
TO CREDIT DEPARTMENT, COMMENTS ON FINANCIAL STATEMENTS, ESSENTIAL
CREDIT INFORMATION
Oscar L. Cox, Conservator.
For exclusive use of Credit Department.
MAY 16, 1933.
BASCOM LITTLE, Director, 1600 Shares.
Mr. Little's attorney, John A. Hadden, called today at the above's request,
stating that Mr. Little is seriously ill and greatly concerned about his obligations.
His total debt is somewhere in excess of $450,000, and with his endorsements will
exceed a half million dollars. It is understood that all of his securities are
pledged, with no income at the present time other than his securities. It is also
understood that he has two pieces of encumbered property, with values undetermined at the moment. It is our understanding that Mrs. Little has an income
of $24,000 per year, in addition to owning some real estate.
Mr. HADDEN is preparing a report for us of the above's entire debt, together
with his assets, and will submit them to us. The whole matter will be delayed
until June 1, during which time Mr. Hadden will have further conference with
Mr. Little as soon as he is able to discuss his business affairs with him.
It appears that he is owing The Cleveland Trust Company some $57,000
secured by Union Trust stock and life insurance. Mr. Hadden is endeavoring
to obtain Mrs. Little's endorsement or collateral; otherwise it will no doubt
mean a compromise or bankruptcy.
H . F . BlJRMESTER.
Noted: Mr. Tonks, W. T., Mr. WILLIAMS, WM.
(Exhibits U-6-87a through U-6-87b face this page)
OO
EXHIBIT U-6-88a
Liability of officers & directors
Examiner's Report, Dept. of Banks, State of Ohio, January 20,1933.
Shares
Meetings
Director's name
248 Barkwill, E. S
860 Bartel, George
105 Belden, W P
420 Comey, George P
88 Corning, Henry W
700 Dalton, H. G
586 Fretter, F. S
100 Gerhauser, W. H
1,100 Gmn, F. H
100 Girdler, T. M
1,700 Gordon, George C
500 Grandin, G. W
196 Grasselli, E. R
1,196 Grasselli, Thos. S
6,450 Gund, George __.
25 Hadden, John A
1,000 Hannah, H M
550 Harshaw, W. A
_
—
_.
Address
Unsecured
23 Cleveland, O.
26
11
8
12
6
15
24
17
15
13
24
21
17
5
16
Collateraled
2,936. 64
1,000 00
10,000. 00
421,336 95
15,345.00
7,400.00
2, 500. 00
89,000.00
20,956.40*
20,000. 00
61,843.44
250
2,500
Mather, Philip R
Mather, Wm. G
23
11
39,926.30
838,435.82
*
$6, 775. 00
1,981.75
33,900. 00
19
25
14
1,510
21
27
19
14
$10,000.00
312,000. 00
483
1,000
1,600
4,000
3,312
825
1,588
Secy. Cleve. Bldrs. Supply Co.
Ch of Ex. Com , Otis Steel Co.
Belden, Young & Veach.
12,600.00
82,000.00
19
20
12
12
Occupation
$8,000.00
Haserot, F. H.
_
Hayden, W. S
" Partner Hayden, Miller
& Co.
Hodgson, Geo. H
Joseph, EmiL
_
Joyce, Adrian D
King, Ralph T
Do Hunting Valley Syndicate.
Kling, John A_
Kulas, E. J
Lenihan, E. P_
Little, Bascom
3,660
2,010
Indirect
709,500. 00
36,205.71
9
Pickands, Mather & Co.
Pres. Natl. Refining Co.
Pres Amer. Ship Bldg. Co.
Telles, Hogsett & Ginn.
Bernon, M
Ch of Bd. & Pres. Republic Steel.
Pres. Park Drop Forge Co.
Secy. Missouri Lumbering & Mining Co.
Dir Grasselli Chemical Co.
Pres
"
"
"
Gund Realty Co.
Travelers L/C
Andrews, Hadden & Burton.
Ch. of Bd. M. A. Hanna Co.
Beatrice C. Walsh
United Restaurant Pres. Harshaw Chemical Co
Inc.
Pres. Haserot Co
Hayden, Miller & Co.
Discounts
Ch. of Bd. Cleve. Worsted Mills Co.
Pres. Glidden Co.
V. P. The Realty Inv. Co.
6,105.00 Bergen..
Pres. The Cleve. Bldrs. Supply.
1,089. 25 Lithoma Granite Co._
Pres. Midland Steel Prod. Co.
42, 000. 00 Euclid Apts. Inc.
110, 000. 00 Crowell & Little
Constr. Co.
350. 00 F. P. Kane
Lenihan & Co.
Crowell & Little Constr. Co.
Pickands Mather & Co.
Pres Cleve. Cliffs Iron Co.
Zfl
H
O
O
X
O
O
H
M
o
w
3,630
2,000
170
20
1,200
6,700
120
23, 440
160
800
510
600
1,350
],405
6,572
20
Miller, Otto._
Do.
P artner Hayden Miller & Co.
Miller, T. W
Moss, Herman...
Norton, Laurence H.
Norton, Robert G
Nutt, J. R
Osborne, Carl N
Painter, Kenyon, V__
Richman, N. G
Robbms, Thomas P..
Rogers, Jos. E
Root, F. P
Squire, Andrew
Tremmel, Henry G_.
Wade, J. H., Jr
Warner, Whitney
14
68,500.00
20, 956.40*
17,500.00
6,136.12
998.44
7, 248. 78
876. 74
6,057. 51
Z. A. Moss.
Wm. Klarsfield
R. B. Hunter
J. D. Shepherd
Stalney H. Watson,
3,850. 00
Starr-
100,000.00
90,000.00
2,930,000. 00
370.00
775.00
290, 000. 00
3,680. 00
350, 000. 00
9,925. 20
17, 511. 63
2, 000. 00
120,000. 00
300, 000. 00
9, 875. 00
20,000.00
103,980. 00
1,290
40
2,272
Do. Partner ,W. H. Warner & Co.
White, Fred R
White, Thomas H._
White, Windsor T
Do. Hunting Valley Syndicate.
Less Duplications*.
Miller, Elsa~
Discounts
830,000.00
89,000.00
Travelers check.
F. P. Root Co.
Odenkirk
Ohio River Edison
Coal Co.
Warner Collieries Co_
Whiteworth
Smith
W. H. Warner Coal
Co.
Hayden Miller & Co.
Ch. of Bd. Faultless Rubber Co.
Gen. Agt. Equit. Life Ass. Soc.
Oglebay, Norton & Co.
Treas. M. A. Hanna Co.
The Richman Bros. Co.
Pres. Cleveland Hardware Co
Pres. Addressograph Multigraph Co.
Pres. F. P. Root Co.
Squire, Sanders & Dempsey.
Pres. North American Fibre Co.
Wade Realty Co.
W. H. Warner & Co.
W
>
a
Baker, R. & L. Co.
8,700. 00
54,200. 00
61,750.00
7, 549, 637. 55
89,000. 00
899, 443. 02
20,956.40
61,750.00
7,460,637.55
878,486.62
Laitinen.
H
O
o
W
O
35,452.49
110, 050.00
xn
3
O
H
O
C7I
CO
00
EXHIBIT U-6-88C
Liability of officers & directors
o
[Examiners Reports, Dept. of Banks State of Ohio, January 20, 1933]
Shares
2,200
2,500
1,000
366
Officers
Kraus, J. R
Coulton, Geo. A
Baldwin, W. M
Smith, Allard
Farnsworth, C. E
Steele, Geo. P
Crawford, R. S
Anderson, C B
Anderson, J. C
Armstrong, J C
Carlson, C. W
Champion, T. J
Clark, J H___
Creswell, E. E
Fisher, L. H
Geddes, J. G___
_
Halhday, M. S
Hills, H E
Hull, Grover, H
Lewis, A. W
Messick, H. D
O'Neill, W. J
Paton, James L
Piwonka, Charles
Royon, J. C_ __
Sherwm, Geo. N
Slach,
J G
Stuber,P.W.
Tonks, Wm...
_.
Williams, R. I
Pettit, R. B
_
Bechberger, C S
Brown, H. L
Caswell, J. H
Freytag, W. H
Hance, J. P
-
Meetings
Title
C ti. of Bo ard (D) of Directors,
Bd.of
Dir. (D
Pi esident (D)
^^"ice-President
E:tec.
(D)
E]tec. Vic 3 Pres
E;tec. Vic B Pres
. ._
E^tec. Vic a Pres. & Secy.
V]ce Pres dent
<
V] ce Chairmanof
i
25
Address
Unsecured
Collateraled
Cleveland,
Ohio.
19
27
$15,300.00
150.00
11, 575.00
2,000. 00
24, 750.00
*84,225 00
__
500. 00
7,690 00
Ti•easurer
As>st. Vice> President
_.
It
U
a
None
3,400.00
-
*8,450 00
3,870 00
7,400. 00
1,900 00
5, 680. 00
15, 000 00
200 00
15, 520. 00
Occupation
Ch. of Bd Union Tr. Co.
Vice Ch. of Bd. Union Tr.
President Union Tr. Co.
Exec. V.P. Union Tr. Co.
23
2, 280.00
12,000. 00
13, 607. 51
1, 200. 00
21,393 00
2,750 00
*14, 250 00
* & Cr. Mgr __
Indirect
$100 00 Travelers check
$18,500 00 Hull, Ehz
$850 00 Nolan
a
a
u
«
u
«
«
u
u
a
a
u
u
«
«
«
«
u
u
a
u
u
«
u
u
u
u
«
u
O
O
w
O
W
Q
w
>
a
M
o
Heil, C. F
Herbert, H H.._
Hodous, Chas. J_
Jmdra, C. J
Koelliker, M B_.
Kovachy, G. M_.
Lackamp, J H__.
LaFever, D. Y...
Pfeiffer, W. A_._.
Purdy, Van R__.
Stromberg, W. O.
Wagley, E. N.__.
Armstrong, J. C .
Chirao, ArnoldFairbanks, C. J..
Forsythe, W. M_
Genee, E C
Gibson, W. A___.
Gilger, L. C
Hiles, W. A
Holecek, John V_
Kakes, Joseph
Kmsey, W H___.
Mason, A E
Mazach, J. E
Mickey, R. Z
Morgan, C. A
Piwonka, H
Rozman, G
Bastel, T. V
Bauknet, W J__.
Benes, J H
Bethel, C. L
Black, H. W
Boethelt, A R...
Chappel, H. B...
Eline, T J
Glove, Paul
Gngor, D. D
Grow, E F
Hart, Fred A
Hartford, W. A..
Irwm, W. R
James, S. D
Kowallek, Paul..
Lackamp, J B._.
Lang, Henry
Lewis, Dave
Lustig, Ladimer.
McGmness, H. J.
Asst. Vice President.
G, 190 00
11,770 00
27,000. 00
Cleveland, 0.
«
«a
Asst. Secretary.
Asst Treasurer _.
u
u
a
u
u
a
u
u
a
u
a
a
a
a
a
a
a
a
a
a
a
u
u
a
a
a
a
a
a
u
a
u
u
a
a
u
u
a
a
a
u
u
u
None.
7, 715.00
19,250 00
1, 280 00
14, 530 00
6,660.00
1, 200 00
1, 460 00
3, 755 00
8, 540. 00 $800 00 Brockwood C o
5,900 00
7,050 00
5, 790.00
6, 300 00
1,350. 00
28, 500.00
6, 000 00
9,770 00
2, 350 00
3, 720 00
55 00
5, 450 00
10,135 00
3
O
Q
w
a
o
W
>
23,565 00
4, 252 50
1, 640 00
1,490 00
3,550 00
3, 330 00
269 93
O
4,575 00
980 00
4, 200 00
5,643.00
440 00
3, 540 00
10,280.00
oo
00
Liability of officers & directors—'Continued
Shares
Officers
Monda, J B
Morgan, C. C
Orhkowski, Carl
Park, W R
Peter, B. L
Schacht, E. W
Scott, D D._
Simak, E. J
Spear, G A__
Zdara, H E____
Pratt, Harry F
Culver, G H_
Knowlton, D. S
Hoyer, F W
Cordrey, L. A
Ginther, P. C
Brauer, George
Stofer, L H
Hollander, J. R
Bosworth, R. W_
61 employees
Title
Asst. Treasurer
Address
Unsecured
Cleveland,O.
_.
Collateraled
Occupation
Indirect
fcO
None.
$9,650.00
1,700 00
4, 705. 00
6, 200. 00
3,890.00
H
O
8,900.00
Mgr. Safe Deposit Dept_
Asst. Estates Trust off.
Publicity Mgr
Purchasing Agent
Asst. Credit Mgr
Less Duplications..
Meetings
o
5,705.00
16,710.00
1,000.00
5,040 00
O
Tax consultant
Real Estate Officer
Asst. Real Estate Off..
Mgr. Statistical Dept..
$1,964.93
2,400. 00
8,230. 00
W
6,880. 00
132,207.00
Q
A
756,788. 01
14, 200. 00
$20, 250. 00
742,588.01
20,250.00
>
o
H
i—i
O
8763
STOCK EXCHANGE PRACTICES
EXHIBIT U-6-89a
(Copy of a longhand statement taken from the personal files of Joseph R. Nutt)
Loans to directors of the Union Trust Company
Barkwill, Ernest S.—$10,000.00
100 shares Canfield Oil Co. Pfd
100 " Midland Steel Products, Pfd
51 " M. A. Hanna Co., Pfd
Belden, William P.—$13, 400.00
5 shares First National Bank of Newark Valley, N.Y.__
5
Gwinn State Springs Bank, Gwinn, State Mich_
10
Youngstown Sheet & Tube, Pfd
274
Alabastine Co., Pfd
64
Cliffs Corp., Com
80
Cleveland Cliffs Iron, Pfd
15
M. A. Hanna Co., Pfd
10
Calumet & Arizona Mining Co., Cap
35
Republic Steel Co., Pfd
Comey, Geo. P.—$32,000.00
360 shares National Refining Co., Com
25 " Triton Steamship Co. of Del., Cap__
75 " Pioneer Steamship Co. of Del., Cap.
82 " National Refining Co., Pfd
400 " Union Trust Co
Crawford, W. J. Jr.—$59, 100. 00
76 shares Degnon Contracting Co.
Degnon Realty & Terminal Imp. Co.
53
Jordan Motor Car In., Pfd.
85
Cleveland Realization Co., Cap.
50
Crawford Realty Co., Com.
925
Union Carbide & Carbon Corp., Cap.
300
Union Oil Co
100
Equity Savings & Loan Co
20
35000 Crawford Realty Co. 6s—31
Gershauser, W. H.—$1,000.00
2000 Trumbull Cliffs Furnace 6—43
Girdler, T. M.—$10,000.00
400 shares Goodyear Tire & Rubber Co., Com_
80 " Union Trust Co., Cap
Collateral Value
$7, 500. 00
3, 200. 00
1, 887. 00
12, 587. 00
250. 00
1, 096. 00
448. 00
2, 000. 00
555. 00
150. 00
280. 00
4, 779. 00
1, 440. 00
9, 000. 00
5, 740. 00
5, 600. 00
21, 780. 00
5, 100. 00
900. 00
8, 000. 00
14, 000. 00
1, 760. 00
3, 200. 00
1, 120. 00
4, 320. 00
Gordon, Geo. C—$13,000.00
38000 U.S.A. 3 ^ L . L
38, 000. 00
EXHIBIT U-6-89b
Grandin, G. W.—$345,000.00
500 shares Standard Oil of N.J
10000 Tokyo Elec. Lt. 6s—53
500 shares Arthur G. McKee & Co_
Richman Bros. Co., Cap
98
Glidden Co., Com
6299
White Motor Co., Cap
1531
Louisiana Central Lumber Co.
950
United Milk Products, Pfd
600
25000 Clark Randolph Bldg. Site_
30000 Northwestern Bldg. Site
1400 units Western Reserve Investing Corp
1400 shares Western Reserve Investing Corp. Com.
865 " Grandin Coast Lumber Co., Cap.
$11, 500. 00
3, 600. 00
000. 00
658. 00
25, 196. 00
12, 248. 00
\i
9, 000. 00
11, 250. 00
21, 900. 00
14, 000. 00
140, 352. 00
8764
STOCK EXCHANGE PRACTICES
Loans to directors of the Union Trust Company—Continued
Grasselli, T. S.—$372,630.70
7700 shares E. I. DuPont de Nemours & Co
600 " Ohio Oil Co., Cap
20000 Federal Land Bank Bonds 4^—55
25000 Federal Land Bank Bonds 5s—41
420 shares American Rolling Mill Co., Com
300
F. E. Myers Co., Com_
200
Ohio Brass " B " .
180
Youngstown Sheet & Tube Co., Com_
1176
Union Trust Co., Cleveland, Cap
100
Proctor & Gamble Co., Pfd
Collateral Value
$207, 900. 00
"4, 200.00
17, 200.00
23, 000.00
2, 100. 00
3, 600.00
1, 200.00
1, 440.00
17, 640. 00
9, 200.00
287, 480.00
Hadden, Jno. A.—$18,440.00
40 shares General Electric Co., Com
10 " Atchison Topeka Santa Fe Rwy, Com.
200 " White Motor Co., Cap
10 " U.S. Steel Corp., Com
400 "
Missouri Kansas Texas, Com
20 " Alleghany Corp., Pfd
80 "
Marshall Mortgage Co., Cap.
2000 European Elec. Corp. Ltd. 6^
32 shares Cleveland Builders Realty Co
16 " Cleveland Builders Supply Co
17 " Lamson & Sessions Co., Com
Harshaw, W. A.—$15,000.00
700 shares Harshaw Chemical Co., Pfd.
Hayden, W. S.—$45,000.00
200 shares Halle Bros. Co., Pfd
150 " Cleveland Elec. Ilium. Co., Pfd
150 " White Motor Securities
50 " Chase Brass & Copper Co., Pfd
10/1350ths Interest Land Trust Ctf. Northwestern Bldg.
Site
10/5750ths Interest Land Trust Ctf. Cleveland Terminal
Tower
520. 00
280. 00
1, 600.00
270. 00
1, 000.00
40. 00
840. 00
192. 00
240. 00
68. 00
5, 050. 00
9, 800. 00
14, 100. 00
11, 100. 00
3, 150. 00
7, 000. 00
5, 000. 00
50, 150. 00
EXHIBIT U - 6 - 8 9 C
Herrick, Parmely W— $808,800.00
Option Warrant to Purchase 1,000 Atlas Utilities Com
1000 shares Atlas Utilities Corp., Pfd
10525 " Union Carbide & Carbon Corp., Cap
800 " Harriman National Bank, N. Y
58000 "
National Hotel of Cuba 6s-59
500 " International Products Corp., Pfd.
600 " New York Joint Stock Land Bank
50 " Sun Investing Co., Pfd
1350 " Headley Emulsified Products "A"
6000 " Missouri Pacific R.R. 5-77
40/900ths Int. L/H Ctf. Property at Euclid & E. 105
105,387.52 Ctf. of Deposit Winters National Bank, Dayton,
Ohio
1, 500. 00
34, 000. 00
178, 925. 00
1, 040, 000. 00
18, 000. 00
950. 00
1, 560. 00
8, 000. 00
105, 387. 00
1, 388, 322. 00
STOCK EXCHANGE PRACTICES
Loans to directors of the Union Trust
8765
Company—Continued
Joyce, Adrian D.—$711,500.00
100 shares Bank of America
200 " Halle Bros., Com
80 " Mullins Mfg., Pfd
100 " Cleveland Graphite Bronze
32 " Commonwealth Securities, Pfd.
104 " Commonwealth Securities, Com.
500 " National Acme Co., Com
750 " Standard Oil of Indiana
343 " Glidden Co., Prior Pfd
120 " Cleveland Quarries
Assignment of Real Estate held by Chicago Title & Trust__
10 shares Midland Bank, Cap.
500 " Hanover Fire Insurance
300 " Standard Textile Prod., Pfd
300 " Bac Ohio Corp
900 " Richman Bros. Co., Com
350 " Interstate Equities Corp., Pfd
300 " Interstate Equities Corp., Com.
5940 " Wood Chemical Prod., " B "
10000 " Shell Union Oil Corp., 5
7000 " Glidden Co., Com
1000 " U.S. Elec. St. & Pr. Shares " A "
3400 " Glidden Co., Com
1000 units Western Reserve Investing Co
14000
Chemical & Pigment 6s
5000
Cleveland Discount Co. 6s
5000
Denver & Rio Grande Western 5s
11000
M. A. Hanna 6s
2400
Industrial Fibre 8s
10000
Loew's Ohio Theatres 6s
2000
Sinclair Cons. Oil 7s
300 shares Ahumada Lead
100 " American Multigraph, Com
100 " Chemical Prod. Co., Cap.
200 " The Fair
1839 " Glidden Co., Com
410 " Glidden Co., Com
100 " Joyce Realty Co
8519 " National Radiator & Mfg.
15 " Otis Steel Co., Com
200 " Standard Textile Prod., Com.
100 " Standard Textile Prod., Pfd
Collateral Value
$3, 100. 00
800.00
1, 120. 00
1, 400. 00
1, 000. 00
13, 500. 00
13, 720. 00
6,480. 00
100, 000. 00
10, 000. 00
1, 500. 00
4, 500. 00
16, 200. 00
4, 200. 00
5, 940. 00
7, 000. 00
28, 000. 00
12, 000. 00
13, 600. 00
10, 000. 00
13, 300. 00
3, 000. 00
1, 600. 00
9, 680. 00
2, 304. 00
3, 800. 00
1, 600. 00
1, 800. 00
1, 200. 00
7,336.00
16, 400. 00
200, 000. 00
60. 00
500. 00
EXHIBIT U-6-89d
100 shares State Street Investing
100 sub shares Texas Pacific Land Trust
85 shares United Milk Prod., Pfd
($150,000.00 Life Insurance)
Ralph T. King—$77,000.00
100 shares Guardian Savings & Trust Co., Cap
200 " F. W. Woolworth Co., Cap
100 " American Tel. & Tel. Co., Cap
200 " General Elec. Co., Com
200 " Proctor & Gamble, Com
200 " Union Carbide & Carbon, Cap
3, 600. 00
500. 00
850. 00
521, 590. 00
11, 000. 00
6, 000. 00
9, 500. 00
2, 600. 00
5, 600. 00
3, 400. 00
38, 100. 00
Lenihan, E P.—$40,000.00
Trust Agreement.
8766
STOCK EXCHANGE PRACTICES
Loans to directors of the Union Trust
Company—Continued
Little, Bascom—$43,000.00
378 shares Wyoming Pocahontas Coal & Coke Co., Pfd.
910 " Wyoming Pocahontas Coal & Coke Co., Com.
1000
Women's City Club 6s-37
Collateral Value
121/1920th Euclid E. 13th Chester L/H Trust Ctf
$24, 200. 00
25000
Associated Gas & Elec. 5s-50
5, 000. 00
29, 200. 00
Mather, Philip R.—$47,000.00
700 shares Cleveland Cliffs Iron Co., Pfd
165 " Standard Tool Co., Cap.
1300 " Youngstown Sheet & Tube Co., Com
2080 " Interlake Iron Corp., Com
682 " Interlake Steamship Co., Cap
70 « Linde Air Products Co., Pfd
17, 500. 00
11, 700.
5, 720.
9, 268.
4, 200.
00
00
00
00
48, 388. 00
Mather, Wm. G.—$800,000.00
31,253 shares Cleveland Cliffs Iron Co., Pfd
8,000 " Cliffs Corp., Com
781, 325. 00
56, 000. 00
837, 325. 00
Miller, Otto—$805,000.00
1000 shares Sparks Withington Co., Com
1578 " Malvern Land Co., Com.
3299 " Iroquois Securities Inc., Cap.
1000 " Bucyrus Erie Co., Com
200 " Kansas City Southern, Com
1000 u
Bucyrus Erie Co., Conv., Pfd
300 " Midland Steel Prod., Com
3000 " Sparks Withington Co., Com
12000
Chicago & Eastern 111. Co. 5s-51
1200 shares Alleghany Corp., Pfd., $40 Warrant
2250 " Alleghany Corp., Pfd., $30 Warrant
600 " Alleghany Corp., Pfd
1, 500. 00
2,000.00
1, 000. 00
4, 000. 00
900. 00
4, 500. 00
1, 440. 00
2, 400. 00
4, 500. 00
1, 200. 00
EXHIBIT U-6-89e
1900 shares Richman Bros. Co., Com
Chesapeake Corp., Com
Firestone Tire & Rubber Co., Pfd
Chesapeake & Ohio Rwy., Com
Union Carbide & Carbon, Com
White Motor Co., Com
Glidden Co., Com
Otis Steel Co., Pfd
Faultless, Com
5500
1100
1000
500
1000
3000
700
533
Mitchell, R. V.—$15,400.00
3340 shares Harris Seybold Potter, Com
105 " R. V. Mitchell & Co., Com
Norton, Lawrence H.—$100,000.00
5400 shares Union Carbide & Carbon Corp., Cap. (Has 1/3
Int. in Trust Account that will cover)
Osborne, C. N.—$90,000.00
200 shares M. A. Hanna, Pfd
_
4350 "
M. A. Hanna, Com
500 " National Steel Corp., Cap
•
36, 100. 00
44, 000. 00
52, 800. 00
14, 000. 00
8, 500. 00
7, 000. 00
12, 000. 00
2, 800. 00
10, 127. 00
210, 767. 00
91, 800. 00
7, 400. 00
7, 500. 00
14, 900. 00
8767
STOCK EXCHANGE PEACTICES
Loans to directors of the Union Trust
Company—Continued
Painter, K. V.—$2,930,000.00
1747 shares Union Trust Co
Title to Real Estate Agreement dated July 13, 1931
10000 Note of State Road Land Co
8000 shares Akeley Camera Inc., Com
750 Note of A. R. Corlett
700 Note of Chas. H. Clark
200 shares Niagara Shore Corp
Warrants to subscribe for 20 shares Niagara Shore Corp
258,130.48 Note of the Van Sweringen Co
9300 shares Manufacturers Trust Co., N.Y
9300 " Huron Holding Corp., Cap
Smith, Allard—$16,250.00
35 shares Owners Apartment Co., Cap
Smith, Samuel Lewis—$65,378.75
30000
U.S.A. Treas. Bonds 3}£—49
._
5000
U.S.A. 1st 3/ 2 L.L
10000
Dodge Bros. 6s—40
5000
Nugent Realty 6s—44
5000
B. F. Keith 6s—46
50 shares New York, Chicago & St. Louis R.R., Pfd_
300 "
Cleveland Elec. Ilium. Co., Com
270 "
Union Carbide & Carbon Co., Cap
50 "
Ohio Public Service Co., Pfd
5000
Twin City Rapid Transit 5s—52
Collateral Value
$24, 458. 00
200. 00
186, 000. 00
210, 658. 00
27,
5,
7,
2,
2,
900. 00
000. 00
000. 00
750. 00
000. 00
150. 00
7, 200. 00
4, 590. 00
3, 400. 00
1, 500. 00
EXHIBIT U-6-89f
50 shares Commonwealth & Southern, Pfd.
5000
International Match 5s—41
5000
Missouri Pacific 5—81
5000
American Tel. & Tel. 5s—65
5000
White Motor 6s—34
10000
Baltimore & Ohio R.R. 6s—95-..
Squire, Andrew—$290,000.00
15500 shares Union Carbide & Carbon, Cap.
200
2000
500
500
Guardian Trust Co., Cap_
Kelley Island Lime & Transport Co_
Wellman Seaver Morgan, Pfd
W. S. Tyler Co
2, 150. 00
1, 300. 00
4, 900. 00
4, 600. 00
3, 900. 00
78, 340. 00
263,
20,
20,
37,
500. 00
000. 00
000. 00
000. 00
340, 500. 00
Wade, J. H. Jr.,—$350,000.00
2968 shares Medusa Portland Cement, Com
Cliffs Corp., Com
9007
American Tel. & Tel. Co., Cap
500
Goodyear Tire & Rubber Co., Com_
2000
U.S. Steel Corp., Com
1000
Cleveland Cliffs Iron, Pfd
1500
Sherwin Williams Co., Pfd
90
Great Lakes Towing Co., Com
600
Guardian Trust Co., Cap
171
Lehigh Portland Cement, Com
1000
National Refining Co., Com
1400
National Refining, Pfd
__
241
American Ship Bldg., Com
—
200
Chrysler Corp., Com
_
1000
Eaton Mfg
2000
General Motors Corp., Com
300
Addressograph Multigraph, Com
1680
Standard Oil of Calif
1000
Republic Steel, Pfd
>600
Montreal Mining Co., Cap
1000
175541—34—PT 20——o
23, 744.
63, 049.
47, 500.
18, 000.
27, 000.
37, 500.
7, 470.
30, 000.
17, 100.
4, 000.
5, 600.
16, 870.
3, 000.
000.
000.
3, 000.
16, 800.
18, 000.
4, 200.
125, 000.
00
00
00
00
00
00
00
00
00
00
00
00
00
00
00
00
00
00
00
00
8768
STOCK EXCHANGE PRACTICES
Loans to directors of the Union Trust Company—Continued
Wade, J. H. Jr.,—$350,000.00--Continued.
1500 " Ohio Chemical & Mfg. Co
500 " International Nickel
120 " Guarantee Title & Trust Co., Cap
90 " Canadian Oil Companies, Pfd
Collateral Value
$2,500.00
8, 400. 00
494, 733. 00
Warner, Whitney—$9,925.20
300 shares Warner Collieries Co., Com
98 " Dragon Coal Co., Cap
White, Fred R.—$157,292.50
1000 shares Drug Inc., Cap
2050 " Standard Oil of Indiana
1809 " E. I. DuPont de Nemours & Co
30000
U.S.A. 3% Trea. Bonds
10000
Note of The Van Sweringen
34, 000.
34, 850.
48, 843.
27, 600.
00
00
00
00
145, 293. 00
Total loans to directors
$8, 291, 117. 15
EXHIBIT U-6-89g
(Copy of a longhand statement taken from the personal files of Joseph R. Nutt)
LIABILITY OP DIRECTORS OF THE UNION TRUST COMPANY
Commercial loans
Ginn, F. H.: Guarantor 28,500 note of The Cleveland Orchestra.
Hayden, W. S.: Hayden Miller & Co., $91,265.00.
Herrick, Parmely W.: Endorser note of Thos. Young Nurseries for $4,000.00.
Kling, John A.: Endorser $1,380.27 note of Lithonia Granite.
Little, Bascom: Endorser $45,000.00 Note of Euclid Apartments; Guarantor
$130,000.00 Note of Crowell & Little Const. Co.
Mather, Philip R.: Joint with T. E. Borton note of $200.00; Guarantor $375.00
note of Florence P. Kane.
Moss, Herman: Guarantor:
R. B. Hunter
$7, 047. 14
J. D. Shepherd
1, 180. 88
S. H. Watson
6, 268. 84
W. Klansfield
975. 66
P. A. Moss
5, 157. 50
Myers, P. A.: Guarantor C. C. and D. B. Cahoun for $3,500.00.
Root, F. P.: Endorser $19,879.17 note of F. P. Root Co.
Warner, Whitney: W. H. Warner & Co., $136,773.39.
Miller, Otto: Hayden Miller Co., $91,265.00 (duplication, see W. S. Hayden).
Total liability of directors, commercial loans, $481,502.85.
EXHIBIT U-6-89h
Collateral loans
Ginn, Frank H.: $10,000.00 Guarantee on loan of Maurice Bernon.
Kling, John A.: Endorsement on $6,105.00 note of Edna M. Bergen.
Miller, Otto: Endorsement on $100,000.00 note of Edsa W. Miller.
Nutt, J. R.: Guarantor $4,000.00 note of Ella M. Starr.
Warner, Whitney: Endorsement on $20,000.00 note of Ralston Fox Smith;
Endorsement on 9,875.00 note of K. B. Whitworth; W. H. Warner & Co.,
$59,380.29; W. H. Warner Coal Co., $103,980.00; Warner Collieries, $300,000.00.
White, Windsor T.: Guarantor $35,000.00 note of James A. Harris, Jr.
Total liability of directors, collateral loans, $648,340.29.
Direct Collateral Loans
$8, 291, 117. 15
Endorsers or Guarantor on Collateral Loans
648, 340. 29
Endorsers or Guarantor on Commercial Loans
481, 502. 85
9, 420, 960. 29
STOCK EXCHANGE PRACTICES
8769
EXHIBIT U-6-90
DIRECTORS' LOANS
THOMAS S. GRASSELLI
On January 20, 1933, date of last examination by Ohio State Banking Department, Mr. Grasselli was indebted to the bank in the amount of $371,530.70. In
commenting on the loan the examiner stated:
"T. S. Grasselli—$371,530.70. Collateraled by various listed securities having
a present estimated market value of $375,000.00. Collateral includes 1,176
shares of Union Trust Company stock, which was appraised at $10.00 per share.
On February 25, 1933, Mr. Grasselli owed $371,530.70:
Paid as follows:
March 22, 1933
April 12, 1933
April 14, 1933
April 19, 1933
April 21, 1933
April 22, 1933
$8,516.40
3, 983. 20
8,066. 40
28, 582. 40
12,399.60
129,096.00
.
May 9, 1933
.._
-_.
$290, 644. 00
180,886.70
$371, 530. 70
December 31, 1933, Loan Paid.
EXHIBIT U-6-91
DIRECTORS' LOANS
J. H. WADE, JR.
On January 20, 1933, the date of the last examination by Ohio State Banking
Department, J. H. Wade, Jr., was indebted in amount of $350,000.00. We quote
from the bank examiner's report:
" / . H. Wade, Jr.—$350,000.00 Collateraled by listed stocks worth $265,000.00
together with 1,000 shares Montreal Mining Co. and 1,500 shares Ohio Chemical
& Mfg. Co. It is believed that the latter stocks have sufficient value to protect
loan."
On February 25, 1933, Mr. Wade owed $350,000.00, and on December 31, 1933,
$11,736.83, this amount was paid on February 2, 1934.
EXHIBIT U-6-92
DIRECTORS' LOANS
LAURENCE H. NORTON
On January 20, 1933, the date of the last examination by Ohio State Banking
Department, Laurence H. Norton was indebted in amount of $100,000.00. We
quote from the bank examiner's report:
"Laurence H. Norton.—$100,000.00 Amply collateraled."
EXHIBIT U-6-93
DIRECTORS' LOANS
ANDREW SQUIRE
On January 20, 1933, the date of the last examination by Ohio State Banking
Department, Andrew Squire was indebted in amount of $290,000.00. We quote
from the bank examiner's report:
"Andrew Squire.—$290,000.00 Loan is amply collateraled by marketable stocks
which include 15,500 shares Union Carbide & Carbon Company, which have a
present market value of $418,000.00.
8770
STOCK EXCHANGE PRACTICES
EXHIBIT U-6-94
LOANS TO DIRECTORS
UNDER-SECURED
Feb 25,
1934
Wra P Belden..
Oeo P Coraey..
T M Girder . . .
G W Grandin..
T. S Grasselli ._.
John A H^dden.
W S Haydeo,..
Adrian D Io\ce.
Ralph T King—
Bascom Little ...
R V Mitchell . .
C N Osborne __
Whitney Warner.
Total
$12, 700
82, 000
10, 000
311,000
371. 5'-$0
16 839
90, 900
709, 500
38, 743
37. 343
15 400
90 000
149,143
00
00
00
00
70
00
00
00
64
44
00
00
20
$1,937,099
98
Open
Paid
Open
piid
Open
Paid
Open
Paid
Open
T H E UNION TRUST COMPANY LOANS TO OFFICERS & DIRECTORS OTHER BANKS—
WALTER H. SEYMOUR
EXHIBIT U - l l - 1
Schedule of loans to officers, directors and employees of The Union Trust Company
and other banks as of January 20, 1933
Inform, obtained
from Exhibits.
U-5-3
Page 16
U-5-3
Page 15
Total Loans of Every Nature
$95,825, 231. 2 *>
Loans to Officers, Directors and Employees of The Union
Trust C o m p l y
$8,266,940.49
Liability as Endorser Union Trust Co
898,736 62
Total Union Trust Company
Per cent to total loans..
Loans to Companies in which Officers or Directors are
interested Union Trust Co.
Secured Loans
Unsecured Loans
Total Uhion Trust Company
Per cent to total loans
Loans to Officers, Directors and Employees of other
Cleveland Banks*
Guardian Trust Company
Cleveland Trust Company
Federal Reserve Bank
Society for Savings.
National City Bank
Morris Plan Bank
Central Unitel National Bank
Lorain Street Savings & Trust Co
9,165 677.11
.096
15,467,431 03
5,043,189 40
20,510,620.43
. 214
1,845.725 26
2,374,495 18
154 395 00
239,200 00
200 000 00
49,000 00
287,650 00
43,150 00
Total other Cleveland banks
Percent to total loans
Loans to Officers, Directors and Employees of Out-ofTown Banks
_
5,193,615.44
.054
1,318,499 54
Per cent to total loans
. 013
Total All Loans to Officers, Directors and Employees of Banks or to
Companies in which they are interested
_
36,188 412 52
Per cent to total loans
377
Total All Other Loans
_ 59,636,818 70
Per cent to total loans
Grand total loans
Per cent to total loans
_.
_.
623
95,825, 231. 22
100 0
STOCK EXCHANGE PUACIICES
8771
EXHIBIT U - l l - 2
Loans to Officers & Directors of Other Banks
Name
Chas. E. Adams
Chas. K. Arter
A L. Assmus
Wm. Bailey
R. H. Bishop, Jr
I. C.Bolton
R. J. Bulkley
E.S. Burke, Jr
Amount
$5,700. 00
136,464. 60
14,200.00
Director,
Guardian
Trust Co., Cleveland, O
32,500. 00 Director, Morris Plan
Bank, Cleveland, O.
Central
40, 000.00 Director,
United N/B, Cleveland, O.
* 13,550. 00
93,750.00
H. S. Black
50,000. 00
G. C. Beck
1,300.00
575.00
C. F. Buchwalter
1,000 00
92,000. 00
A. Carlin
11,400.00
(Examiners
Report,
Dept of Banks, State
of Ohio, January 20,
1933.)
Director, Mansfield
Sav. Bk & Tr. Co.,
Mansfield, O.
Pres. & Director,
Farmers Sav. & Tr.
Co , Mansfield, O.
Asst. Vice President,
Cleveland Trust Co,
Cleveland, O.
Cashier, First National Bank, Dalton, O.
Asst. Secy. & Treas ,
Scciity fcr Savings,
Cleveland, O.
Director,
Central
United N/Bk, Cleveland, O.
Director,
Guardian
Trust C o , Cleveland, O
Other Collateral & comments
Amply collateraled.
Director, Cleveland
Tr. Co , Cleveland,
O
Director,
Guardian
Trust Co., Cleveland, O.
Vice President, Cleveland Trust C o ,
Cleveland, O.
Vice President, Farmers Bank, Spencerville, O.
Guradian
1,180,184 80 Director,
Trust Co., Cleveland, O.
160,000.00
Geo S. Case
Shares
of own
bank
pledged
Listed stock, value $240 M.
Quoted stocks worth $900 00.
120 sh. Cleve Punch & Shear,P
100" Crane & Engineering.
Believed covered
7 M U S. Treasury 4}4%-52.
7,000.00
F. B. Black
F E. Burdett
Bank Connection
Samuel Mather signs joint on all
loans.
918 M is a participation in loan of
$3,274 M held by Guardian
Trust Co , Trustee. Balance
in unsecured form. See comments in "Lean Schedule "
Jt. P. E. Bliss & C J. Stillwell.
(25 sh Warner & Swasey Co.
Guar by "
"
100 Other collateral worth $1,800 00.
Reducing.
0 $40 M ncte F . L. Swetland
secured by agreement covering
sale of real estate.
* Bepre ( ents proportionate liability in Hunting Valley Syn<
dicte.
Amply collateraled.
Amply collateraled.
Collateral sufficient.
30
Book value $180 00.
Collateral value $2,700.00.
Collateral value $160 M
Last sale $50 00.
EXHIBIT U-ll-2a
H. T. Clark.
Carl E. & Maud B.
Congdon.
Ben R. Conner
B. G. CopeEdward M Ooan
$10,000.00
12, 250.00
Trustee, Society for
Savings, Cleveland,
\j.
Vice Pres. & Pres. respectively, Orrville
Savings Bank, Orrville, O.
1,000.00 Pres. First Nat. Bank,
Ada, O., & Director
Federal Reserve
Bank.
7,500. 00 Director, Orrville Savings Bank, Orrville,
Ohio.
1,825.00 Asst. Auditor, Cleveland Trust C o ,
Cleveland, O
0
Amply collateraled.
130 Various quoted securities estimated market value $13,000.00
0
Unsecured.
0
10 M U.S. Treasury 3 3/8%.
7
Other collateral worth $300.
8772
STOCK EXCHANGE PRACTICES
Loans to Officers & Directors of Other Banks—Continued
Name
Amount
Shares
of own
bank
pledged
$9, 400. 00 Director, Geneva Sav.
& Tr. Co , Geneva,
Ohio
8, 400. 00 Asst. Vice President,
Cleveland
Trust
Co , Cleveland, O.
National
200, 000 00 Director,
City Bank, Cleveland, Ohio.
R. H. Cowdery
Homer D Cozad
J. S. Crider
20, 650. 00 Vice President, Cleveland Trust C o ,
Cleveland, O.
E. S. Curtiss
Robert C. Dougherty.
120. 00 Employee,
1, 650. 00
H. A.Daniels
Ernest C. Dempsey
84, 750. 00
S. D. Dodge
13, 450. 00
Q. B. Durell
180,000.00
34,600. 00
J o h n T . Feighan
Horatio Ford.
Bank Connection
__.
B. A. Foskett
19, 500. 00
3, 500.00
Examiners
Report,
Dept of Banks, State
of Ohio, January 20,
1933.
Federal
Reserve Bank,
Cleveland, O
Lorain Co. Sav. &
Trust Co , Elyna,
Ohio
Trustee, Society for
Savings, Cleveland,
Ohio.
Trustee, Society for
Savings, Cleveland,
O.
Director, Guardian
Trust Co., Cleveland, O.
Vice President, Cleveland, Trust Co,
Cleveland, Ohio.
Director, Cleveland
Trust Co., Cleveland, Ohio
Cashier, Central Bank
Co., Lorain, Ohio.
0
40
Other Collateral & comments
Collateral value $10 M .
Also $5 M life insurance, no cash
value
50 4,200 sh. Union Carbide
1,265 " Dow Chemical
Present market value insufficient
to cover. Believe will work
out.
40 11 M market value various
quoted stocks. E s t i m a t e d
shortage $5 M . Reducing regularly.
Unsecured
Other collateral worth $100.
Amply collateraled.
Stocks worth $2,300.00 and $7 M
second mortgage.
0 American Fork & Hoe Co. stocks,
value sufficient.
166
110
0
Other collateral worth 1 M .
Estimated 15 M short. Reducing.
Other collateral worth $8,200.
Believed covered.
Collateral value $4,600 00.
EXHIBIT U-ll-2b
I. F» Freiberger..
$15,000.00
J. E Galvm
40,000.00
W. R Green
6,350.00
E. B. Greene
219,000 00
John M. Gundry
271,210.00
F, J Heffner
D. R. Hanna, Jr
1, 525. 00
31,906.86
Chas. G. Heer
12,950 00
Donald D Held
32,936.08
H. E. Held
33, 289.17
F. H. Hobson
55,100.00
F. H H o u s t o n
1,800.00
Vice President, Cleveland Trust C o ,
Cleveland, O.
Director, Federal Reserve Bank, Cleveland, O.
Vice P r e s i d e n t ,
Guardian
Trust
Co., Cleveland, O.
Chanman of Board,
Cleveland T r u s t
Co., Cleveland, O
Vice Pres. & Director,
Cleveland T r u s t
Co , Cleveland, O.
Asst. Trust Officer,
Cleveland T r u s t
Co., Cleveland, O.
Director,
Guardian
Trust Co, Cleveland, O.
Director,
Guardian
Trust Co.
Vice Pres. & Director,
Exchange B a n k ,
Canal Fulton, O.
Director,
Exchange
Bank Canal, Fulton, O.
Vice President, Cleveland Trust Co,
Cleveland, O.
Vice President, Cleveland Trust Co.,
Cleveland, O.
Collateral covers.
20 sh. Nivlag Corp. Holding
Company for personal assets.
See loan schedule.
Collateral value $6,300.00.
183
Various listed & unlisted securities, value sufficient.
946
Total collateral value estimated
at $150 M . See loan schedule.
0
Collateral value nominal.
$50 00 per month.
Pays
50
Other unlisted collateral, value
Delieved sufficient
5
Other collateral worth $5 M .
Reducing.
Collateral value nominal. Very
doubtful loan.
18
Same comments.
147
Other collateral worth $3 M.
Estimated 35 M short,
loan schedule
Collateral worth $3 M .
STOCK EXCHANGE PRACTICES
8773
Loans to Officers & Directors of Other Banks—Continued
Name
J. A. House
Amount
-
Shares
of own
bank
pledged
Other Collateral & comments
$68,000.00
President & Director,
Guardian Trust Co ,
Cleveland, O.
0
7,900 00
Vice President, Cleve-
45
No other collateral.
2
Collateral sufficient.
0
Collateral sufficient.
A. F. Humel
Cleveland, O.
Treasurer,
155 00 Asst
Guardian Trust Co ,
Cleveland, O.
6,000.00 President & Director,
Peter Janicki
Jos. JettinghofE
Thos. H. Jones
Bank Connection
58,000.00
Delphos, Ohio
Director, Cleveland
Trust Co, Cleve-
Listed stocks worth $13 M together with 500 sh. M. A.
Hanna Co. common, book
value $30 00. See loan sched-
25
Collateral value about $45 M.
Reduced.
49
Other listed stocks worth 12 M
and 24 M life insurance. Reducing
Other listed stocks worth $1 M.
Examiners Report,
Dept. of Banks,
State of Ohio, January 20,1933.
EXHIBIT U - 1 1 - 2 C
Geo. Q. Keeley
$36,800.00
5,400.00
CarlR. Kimball
H. D. King, Trustee
(Syndicate of Cleveland Trust Officers
& employees )
M. J. Ludwig
A. A. McCaslin
6,900. 00 Asst. Secretary, Cleveland Trust Co,
25
Other collateral worth $1 M.
Makes monthly reductions.
Secretary,
3,350. 00 Asst
Guardian Trust Co ,
20
Other collateral worth $1 M.
Pays $40 00 per month.
77
Other unlisted stock, value believed sufficient
15
Other collateral, value sufficient.
5
Other collateral worth $900. Reduces regularly.
0
Estimated value of collateral is
$32 M Has no additional collateral to pledge. Doubtful.
Collateral worthless President
of Sherwm Williams Co. Good
earning capacity.
Various unlisted stocks value
believed sufficient.
850. 00
5, 050 00
R. A. Malm.._
M. J. Mandelbaum
Making regular reductions. O/a
$115 M.
17,700.00
H. P. Mclntosh III_...
109,812. 68
G. A. Martin
50, 000 00
S. L. Mather.
112,000 00
E. B. Merrell
6,700 00
Severance A. Milliken.
40,000 00
W. S. Miller
19,162 19
t \ E. Monks
18,000 00
M. W. Mountcastle—.
J. D. Myer
(Examiner's
Report,
Dept. of Banks, State
of Ohio, January 20,
1933.)
60
300
71,127. 50
J. J. Luthi
Director, Cleveland
Trust Co, Cleveland, O
Cashier & Director,
Exchange
Bank
Madison, O.
550 00
5,870.00
Vice President, Cleveland Trust Co,
Cleveland, Ohio
Asst.
Treasurer,
Guardian Trust Co ,
Cleveland, O
Vice President, Cleveland Trust Co,
Cleveland, O.
Director, Cleveland
Trust Co, Cleveland, O.
Director, Cleveland
Trust Co , Cleveland, O.
Director, Cleveland
Trust Co, Cleveland, O
Vice President, Cleveland Trust Co ,
Cleveland, Ohio
Director, Cleveland
Trust Co, Cleveland, O
Director, Loram Co
Sav. & Tr. Co,
Elyna, Ohio.
Vies Pres & Director, Guardian Trust
Co , Cleveland, O.
Asst.
Treasurer,
Cleveland Trust
Co., Cleveland, O
Asst. Mgr. Invest
Dept. Cleveland
Trust Co, Cleveland, O.
0
600
25
Other collateral, value sufficient.
56
Various other listed and unlisted
securities, value believed sufficient
Book value $60 per share
360
0
11
0
Unlisted stock and 1st mortgage
on real estate.
Collateral covers.
Collateral value $1,900 00. Can't
reduce. Doubtful.
8774
STOCK EXCHANGE PRACTICES
EXHIBIT U - l l - 2 d
Loans to Officers & Directors of Other Banks—Continued
Name
Amount
Guy C. Myers
$50,000.00
J. C. Myers
185,000.00
Bank Connection
Shares
of own
bank
pledged
Director, First National Bank, Ashland, O.
Director, First Na-
0
Other Collateral & comments
100 M U S. Treas. 4H%.
0 213 M First L L. Bonds.
finnol
A CVI
110031 "RQTIIT'
JDailK, iVoil-
Percy Neubrand
28,349.50
Harry Nicholl
43,445.00
L. H. Norton
100,000.00
J. W. O'Leary
84,500.00
Stanley J. Olstyn
4,100 00
A. J. Perfler
Henry Pirtle
775.00
_
400.00
A. J. Plocher
1,675.00
E . Rice
6, 550 00
Edward B. Roberts
T. R. Roberts
T . C. Rose
20,250.00
715 00
2,300.00
W. L. Robinson
34,500 00
W. T. Rossiter
68,864.00
F. B. Russell
5,100.00
land, O. & Director,
President
Bank of Berea Co.,
Berea, O.
Vice, Pres & Director,
iNationai x>anK 01
Commerce, Loram,
Trustee, Society for
Savings, Cleveland,
O.
Vice
tral Chairman,
Rep. Bk. &CenTr.
Co , Chicago, 111.
Vice
President,
Guardian Trust Co ,
Cleveland, O
Asst. Trust Officers,
Cleveland T r u s t
Co , Cleveland, O.
Asst Trust Officer,
Cleveland T r u s t
Co , Cleveland, O.
Vice Pres & Tr. Officer, Lorain Co Sav.
& Tr. Co , Elyna,
O.
Vice
Pres St
& Director,
Loram
Sav &
Tr. Co , Cleveland,
Trust Officer, Cleveland Trust Co ,
Cleveland, O
Asst
Secretary,
Guardian Trust Co ,
Cleveland, O.
Cashier & Director,
Farmers Nat. Bank,
Canfield, O
Director, Cleveland
Trust C o , Cleveland, O
Director,
Guardian
Trust C o , Cleveland, O
Cashier, Farmers Nat.
Bk. & Tr Co , Ashtabula, O.
0
Collateral value $8,500.00. Balance doubtful.
0
Collateral covers.
0
Collateral covers.
Other listed and unlisted stock1?.
Value insufficient. Doubtful
loan.
30 $10 M life insurance, C.V. $900,
Reducing.
126
0
First mortgage.
1 Other collateral. Value
cient.
36
suffi-
Book value $60.
50 No other collateral. 2 months
delinquent in interest.
100 5 M life insurance. Reducing
regularly.
5
55
1 M life insurance.
Other collateral worth $250.
141 Other collateral worth $16 M .
Under-collateraled $2 M.
0
Collateral value $25 M. Has no
other worth. Doubtful.
40
Other collateral worth $1,500.
Reducing.
(Examiners Report, Dept. of Banks, State of Ohio, January 20, 1933 )
EXHIBIT U-ll-2e
Carl W. Schaefer.
$36,600.00
Trust Officer & Dtr ,
Loram St Sav &
Tr. Co., Cleveland,
80 Other listed and unlisted stocks,
value probably sufficient.
O. A. Schuele..-.
35,500.00
163 Other collateral worth $1,500.00,
Reducing regularly.
F. A. Scott
26,980.00
A. A. Searle
2,500.00
A. H. Seibig
37,500.00
Director, Cleveland
Trust Co., Cleveland, O.
Director, Cleveland
Trust Co., Cleveland, O.
Secy-Treas. & Director, Geneva Savings
Bank C o , Geneva,
O
President & Director,
Central United Nat
Bk, Cleveland, O
p.
165 Other collateral worth 1 M.
Additional collateral coming.
50 No other collateral.
1,700
No other collateral,
value $20,400 00.
Market
STOCK EXCHANGE PRACTICES
Loans to Officers & Directors of Other
Name
Amount
Bank Connection
8775
Banks—Continued
Shares
of own
Other Collateral & comments
pledBed
J. L. Severance.
Belden Seymour
2,199
Director, Cleveland
Trust
Company,
Cleveland, O
16,500 00 Vice Pres & Director, Morris Pten
Bank, Cleveland,
Ohio
8,975.00 Pres & Director, Sav.
Deposit Bank Co ,
Medina, O.
5,500.00 V P & Director, Loram Co Sav & Tr.
Co , Elvna, O
17,050 00 Vice President, Cleveland Trust Co ,
Cleveland, O
14,700 00 Vice Pres & Director,
Dollar Sav Bank
Co , Niles, O
39,000.00 Ch of Board, Central
United Nat B k ,
Cleveland, O.
212,000 00 Pres & Director, Loram Co Sav & Tr
Co , Elyria, O.
90
37,320.00
H. E. Small
E. B Spitzer.
Director, Cleveland
Trust Co , Cleveland, O
$1,000,000 00
_.
S. H. Squire__
C. W. Stansbury
Wm. H. Stevens
C. E. Sullivan
A. B. Taylor
E. G. Tillotson
14, 500.00
0 . C. Topky..._
5,000.00
Director,
Guardian
Trust Co, Cleveland O
Director, Marine Sav
Bank Co , Ashtabula, O
28
Other listed and unlisted stocks,
estimated value $367 M and
title to real estate. See loan
schedules
Other collateral worth $1,600 00.
Estimated shortage 25 M.
Depends on collateral
Other collateral worth $5 M.
Estimated shortage $6 M.
Depends on collateral.
91
No other collateral.
100
No other collateral.
60
0
Other collateral worth $5 M.
Reducing.
Collateral value $13 M.
1,050
Other unlisted stocks and securities, value undetermined.
800
Other collateral worth $55 M.
Estimated $120 M short Very
doubtful loan. See loan schedules.
Other collateral worth $1,700.
Reducing each renewal.
21
0
$6 M.L L. Bonds.
0
Collateral covers.
0
Collateral $60 M. Reducing.
0
Collateral value $2,700 00
ance doubtful.
0
Collateral worth $231 M plus
second mortgage.
6
Other collateral worth $350
(Examiners
Report,
Dept
of Banks,
State of Ohio, Jan.
uary 20, 1933)
EXHIBIT U-ll-2f
Jos. H. Thompson
L. H. Wallace & J. L.
Wallace.
L. B. Walters
Myron A. Wick
K. Brice Wiggins
Harry Williams,
$3,500.00
Vice President, Cleve-
Cleveland, O
65,600 00 Both Directors, Central United Nat.
Bk , Cleveland, O.
7, 275 00 Vice Pres & Director,
Pamesville N/B &
Tr Co , Painesville,
296,000. 00 Director, Union National
Bank,
Youngstown, O
Treasurer,
685. 00 Asst
Guardian T r u s t
Co , Cleveland, O
12,000. 00 Ch of Board, First
Central Tr. Co.,
L. B Williams
101, 775.00 Vice Chairman, Federal Reserve Bank,
Cleveland, O.
John Williams.-
5, 517. 60 Pres & Director,
Citizens Banking
Co , Salineville, O.
13,500.00 Vice
President,
Guardian Trust Co ,
Cleveland, O.
A. F. Young
200
Bal-
Other collateral worth $7,600 00.
Reducing.
Personal
$6,000
Liab. in Hunting Valley
Syndicate
6,775
Liab. as partner in
Hay den Miller & Co._ 89,000
75
101,775
No other collateral. Has worth
in real estate.
119
Other collateral nominal value.
Reducing.
8776
STOCK EXCHANGE PRACTICES
Loans to Officers & Directors of Other
Name
Amount
Bank Connection
Banks—Continued
Shares
of own
bank
pledged
$30,000 00 Trustee, Society for
Savings, Cleveland,
O
11,500.00 Deputy Governor,
F. J. Zurlinden
._
Federal Reserve
Bank, Cleveland,
O
6, 512,114.98
(Examiners Report,
Dept of Banks, State
of Ohio, January 20,
1933)
J. B. Zerbe
Other Colloteral & comments
Unlisted stock, value believed
sufficient.
Listed and unlisted stocks value
sufficient.
(Exhibits U-ll-3a through U-11-3C face this page)
EXHIBIT
U-ll-4
INTERVIEWS AND COMMENTS AFFECTING LOANS—OFFICIAL INSTRUCTIONS TO
CREDIT DEPARTMENT—COMMENTS ON FINANCIAL STATEMENTS—ESSENTIAL
CREDIT INFORMATION
For exclusive use of Credit Department.
JANUARY 8, 1934.
J. A. HOUSE
The list of Guardian Trust Co. stockholders published in the newspapers in
the fall of last year indicated that the subject held three thousand eight hundred
sixtv-six (3,866) shares of Guardian Trust Co. stock, which would mean a double
liability of $386,600.
GRH:M
Noted:
LAC LAC.
G. R. HERZOG.
1-25-34.
Value
Loan:
Principal Interest
Collateral 62,840.40 3,259.80 (1-1) 15,100 (1-22)
Comments:
Mr. House 'phoned me today relative to my letter of recent date regarding an
insurance premium that is due and he would like very much if we would cancel
the insurance and allow the amount we are deducting from his dividends to carry
it to be applied against the principal of his loan.
He is rather indignant about our having sold the Industrial Rayon stock,
which he claims caused him a loss of approximately $5,000 and asked that in the
future before we sold any of his securities to get in touch with him at Main 4047.
He made it very plain that he expects the collateral we hold to pay his obligation but is afraid if we continue to sell at distress prices, there will be nothing left
for us to do but take judgment against him, in which event he would be forced to
go into bankruptcy, as he states the liability in connection with his holdings of
Guardian Trust stock is more than he can ever pay.
I told Mr. House that we would be glad to cooperate as far as we are able but
that he could not expect us to go as far with him as a bank that was not in liquidation. He said that the Cleveland Trust loan to him is secured entirely by
Guardian stock and that his loan in New York with the Chemical is also undercollateralled, but that institution permitted him to make a switch in his securities
in order that he could buy some Industrial, inasmuch as he was a member of the
Executive Committee of the latter company. Our action in selling the Industrial
Rayon caused him considerable embarrassment. The Chemical bank cancelled
$20,000 of a total of $50,000 insurance they were carrying on his life. I told Mr.
House I would discuss his insurance feature with our Committee and advise him
accordingly.
J. A. HOUSE
Noted by: HFB HFB
LAC:A
L. A. CORDREY.
EXHIBIT U-ll-3a
*
l,OOOshs
The Continental Shares, I n c . ;.*p.
;NY/C7371 n/o Charles R. Seeks :.
Clark, Jcd;;o V C O. "KY/'C12';71 , ; / C
#jnr/C136«O KY/C1S664 n / o ^ . E . K u t
., KY/C12415 R/O A.E. . I s e l i n 8c CO.
^Ky/C136££ / o Logai) & Bryan §W£/
Goldman - a c h s •.- >-o, jrKY/Cl462i n,
EXHIBIT U-ll-3b
A
SOaha
< The F i r s t n a t i o n a l Bank .f Boston
• #16135
; /....,. • -,._ I
t
r'Oshs
• The Stone k *8bstor I n c . Oap. .
f
4OOshs
Jt
lOOshs
X
lOOshs
-•
500shs
f
lOOshs
•*
80,000"
.
The Inland I n v e s t o r s , I n c . C-ap.
Ot
ifeie*V*3--!re3£l-i<'*>shse*~-' #C1606/9-lD0sha ea
n/o Jason Oraln
The i:.--'.Hanna Co. S7 Cu.^ Pfd.
V/.
-. The I n d u s t r i a l Kayon Corp. Cap.
The .i.^.tjanna Co. Com.
iC&*Z*Q*n»-ir&i&-llQsHie
, '•
#0463 at 390sia ,#C464 at llOsha
r./o Jason Srain
• The C i t i e s Service Co. Cora.
e^J-- 3
~JM22XTJ»
#Xii2&696 n/o Jtson Groin
Life Insurance P o l i c y . The Hone Life I n s . Co.
J405894
U-11-3C
8777
STOCK EXCHANGE PRACTICES
For WALTER H. SEYMOUR, Representative of U.S. Senate Committee on Banking
& Currency: This is not a part of the records of The Union Trust Co. It is an
internal memo by a junior member of the staff of the undersigned. It has not
been verified as to facts. Any opinions or conclusions are personal to the member
of the staff preparing this memo.
OSCAR L. COX,
Deputy Superintendent of Banks, State of Ohio.
EXHIBIT
U-ll-5
LIQUIDATION OF THE UNION TRUST CO.
CLEVELAND, OHIO, January 23, 1934.
Mr. J. A. HOUSE,
1801 Terminal Tower Bldg.,
Cleveland, Ohio.
DEAR SIR: We have received notice from the Home Life Insurance Company
of New York that there is premium of $207.40 due January 19th on policy
#405 894.
Will you kindly advise whether or not you will be in a position to pay this
premium before the grace period expires?
Very truly yours,
O. L. Cox,
Special Deputy Superintendent of Banks.
By L. A. CORDREY.
LAC: A
MY DEAR MR. CORDREY: I regret to advise that I am at present unable to pay
the premium due on the policy in question. I have heretofore explained my
situation to you, namely that I am unemployed. All of my securities are pledged
to various loans at different banks, and all dividends and income are impounded.
On my loans at your bank you are collecting dividends on all dividend paying
stocks.
I thank you for your continued consideration & remain
Sincerely
J. A. HOUSE.
1/25/34.
EXHIBIT U-ll-6a
Mr. CORDREY
Loan of J. A. House
Amount—$62,885.
Interest—FsAd to February 1, 1933. Accrued to August 1, 1933—$1,653.15
Secured by
80Shs
400
100
100
Marketable
First National Bank of Boston
Stone & Webster, Inc , Capital
_
Inland Investors, Inc , Capital
M A. Hanna Company $7 Cum Pfd
Cities Service Company, C o m m o n -
Market
8-24-33
Value
Rate
$2,160
960
4,400
8,200
300
$16,020
Income
$160
.50
200
700
$1,060
UNMARKETABLE
500 Shs. M. A. Hanna Company, Common
1,000 " Continental Shares, Inc.
$20,000 " Home I ife Insurance Co. life insurance policy
Ratio of Marketable Collateral to Amount of Loan (Prin. & Int.)
25%
Deficiency—Basis of Marketable Collateral only—$48,517
Status of Borrower:
Mr. House, formerly president of The Guardian Trust Company, appears to
be in a hopeless financial condition. His obligations are in excess of $800,000,
8778
STOCK EXCHANGE PRACTICES
and all of his assets are pledged thereunder. He is not able to make interest
payments, nor even to keep up insurance premiums on policies pledged with
various institutions.
Recommendations:
We recommend no sales at this time. The two most doubtful items are Stone
& Webster capital and Cities Service common, but so little could be realized from
the sale of either or both of these that we fail to see the desirability of disposing
of them at this time We are suggesting that the Hanna preferred be sold at a
price of 95- 100, and that the position of Inland Investors be reviewed again when
and if the stock reaches a price of 15—18. The Hanna common, while unmarketable, has a real value of at least $10 per share. It would be of considerable assistance to us in followvnq this holding if Mr. House could obtain for us an up-to-date
libt of the company's investments.
EXHIBIT U-ll-6b
Comments on Securities:
First National Bank of Boston—Capital
This is the largest bank in Boston, with total assets of $647,000,000 at the
year end Cash, governments securities and acceptances of other banks totaled
$276,000,000, as against a deposit liability of $551,000,000. The capital stock
($20 par) is outstanding in the amount of $44,500,000, and has a book value of
about $34 per share. Dividends of $3.20 were paid on the $20 par-shares from
the time of their issuance in 1929, through April 1, 1932. They were reduced
to $2 annual rate beginning with the following payment. The stock ranged
from 19 to 42 in 1932, 32 to 86 in 1931, and 65 to 132 in 1930. The bank enjoys
an excellent reputation for good management, and probably has been less affected
by recent banking difficulties than institutions in most other sections of the
country. We do not believe the shares should be sold now.
For Walter H. Seymour, Representative of U.S. Senate Committee on Banking
& Currency: This is not a part of the records of The Union Tru<4 Co. It is an
internal memo by a junior member of the staff of the undersigned. Tt has not
been verified as to facts. Any opinions or conclusions are personal to the member
of the staff preparing this memo.
OSCAR L.
COX,
Deputy Superintendent of Bznks, State of Ohio.
Stone & Webster, Inc.—Capital
Earnings
1930
1931 .
1932
1933 (1st 6 Mos )
Per Share
$3 08
1 56
.72
. 14 Def.
Dividends
Price Range
$5 00
3 00
XT'
3 7
113 -377
54^- 9 A
^
None.
19H- 5% (To date)
The company functions primarily as a consulting engineer, manager financing
medium, and holding company and investment trust for the public utility industry. Its principal asset consists of 91% of Engineers Public Service Company
stock, which is a public utility holding concern. Stone & Webster's capitalization consists solely of 2,104,500 shares of no-par-capital stock. However, its
balance sheet, on a consolidated basis, shows prior obligations consisting of subsidiary funded debt, preferred stocks and minority interests in the aggregate
amount of $282,000,000. Consequently, it is probable that the shares of Stone
& Webster represent an extremely thin equity at the present time. Engineers
Public Service recently passed its common dividend, so that earnings of the
parent company will be less than in 1932. Its other principal sources of income
consist of that derived from its construction business and its investment business.
The building industry has been slow to respond to the general inprovement in
business conditions, while activities of security houses—particularly in the underwriting end—have been almost at a standstill, due in no small part to the
recently enacted Federal Securities Law. These several factors do not make a
particularly bright picture; at the same time, the stock has a tremendous leverage and could respond readily to favorable developments, while the shareholders
stand to lose relatively little at these prices.
8779
STOCK EXCHANGE PRACTICES
For Walter H. Seymour, Representative of U.S. Senate Committee on Banking
& Currency: This is not a part of the records of The Union Trust Co. It is an
internal memo by a junior member of the staff of the undersigned. It has not
been verified as to facts. Any opinions or conclusions are personal to the member of the staff preparing this memo.
OSCAR L COX
Deputy Superintendent of Banks, State of Ohio.
Inland Investors, Inc.—Capital
Per Share
Net Profit
Earnings*
$62,
195,
245,
885,
297,
1932
1931
1930
1929
1928
294
959
266
851
032
Dividends
$0 62
1 95
2 45
8 85
2.97
$0
2
2
2
1
Liquidating
70
20
55
65
50
Value
$9 91
14 24
34.22
52 27
57.29
EXHIBIT U-11-6C
This locally managed investment trust has a well diversified list of common
stocks, many of which are of very good quality. Capitalization is simple, consisting solely of 100,000 shares of no-par common stock. Thus, there is no
leverage and the shares should move pretty closely with the general market.
In view of the fact that they are selling well under their liquidating value—
which was $14.40 per share as of June 30, 1933—we recommend holding for a
better price.
M. A. HANNA COMPANY $7 CUMULATIVE PREFERRED & COMMON
Capitalization:
6% Debentures, due August 1, 1934
$4, 200, 000
$7 Cumulative Preferred (136,422 Shs.)
*13, 642, 200
No-Par Common (1,016,961 Shs.)
12,712,012
Surplus
19, 311, 687
For Walter H. Seymour, Representative of U.S. Senate Committee on Banking
& Currency: This is not a part of the records of The Union Trust Co. It is an
internal memo by a junior member of the staff of the undersigned. It has not
been verified as to facts. Any opinions or conclusions are personal to the member of the staff preparing this memo.
OSCAR I Cox
Deputy Superintendent of Banks* State of Ohio.
Earnings:
Net In-
Earnings per Sh.
Pfd.
1928
1929
1930
1931
1932
1933 (1st 6 Mos )
i Deficit.
NOTE —Present preferred not issued until 1930.
$2, 231, 221
3, 698. 524
2, 226, 814
1,377, 925
722, 892
394, 910
$19 92
26 03
16 20
9.96
5 30
2.92
Com
Price
Range—
Pfd
$2 20
2.66
1.26 98 -85
.40 94 -67
1.24 70 -33
1.08 2 8314-45^
2 To date
Income of this company is derived from dividends on its investments, from
earnings of subsidiary companies, and from the ore and coal management and
brokerage enterprises. In 1929 it transferred certain of its iron ore reserves and
blast furnaces properties to National Steel Company, receiving in exchange therefor 542,250 shares of National Steel stock, most of which is believed to be still
in the company's treasury. Its investment account also includes substantial
blocks of high-grade common stocks, shares of Standard Oil and tobacco companies, although the extent and nature of these holdings have not been publicly
divulged. The common is closely held, and has no open market. However, on
June 1st the company, itself, offered to take over up to 50,000 shares of its own
stock at $10 per share. Book value of this stock at the year end was around $17
per share, taking investment account at the market. Since then a very substantial appreciation has occurred in the market value of its investments, this amounting to about $16 per share on Hanna common. This calculation is somewhat
i Includes 10,322 shares of Preferred held m the Treasury.
8780
STOCK EXCHANGE PRACTICES
conjectural, inasmuch as we do not know what changes may have occurred in
the company's investment account since our last information concerning it.
Assuming, however, that the holdings have been kept intact, their present value
would be in excess of $32,000,000, which, together with net working capital,
would be sufficient to pay off all funded debt and preferred stock at par and leave
a balance of about $18 per share on the common. Income from investments
alone this year is not likely to vary greatly from last year's total. National Steel
has increased its dividend from 50£ to $1, but total payments for the year will
probably be only 87%$, as against 750 in 1932. The Company, however, is
EXHIBIT U - l l - 6 d
probably earning more through its operating subsidiaries, net for the first six
months of this year being $395,000 as against $292,000 in the like period of 1932.
On an earnings basis, the preferred has never looked particularly attractive,
nevertheless, because of its substantial equity in marketable investments, it is
well protected and might conceivably sell at a better price than it ever has heretofore. In our opinion, position of the company is much superior to what it was
prior to 1929, but because of the unmarketable nature of the common, we will
probably never be able to sell it for what might appear to be its full value. Nevertheless, we think there is a reasonably good chance of realizing as much as 20-25
a share for it within the next year or so.
J. D. T. .
8-25-33.
MFK
For WALTER H. SEYMOUR,
Representative of U.S. Senate Committee on Banking <$r Currency:
This is not a part of the records of The Union Trust Co. It is an internal
memo by a junior member of the staff of the undersigned. It has not been verified as to facts. Any opinions or conclusions are personal to the member of the
staff preparing this memo.
OSCAR L. COX,
Deputy Superintendent of Banks, State of Ohio,
(Exhibit U-ll-7a faces this page)
EXHIBIT U - l l - 7 b
Date
Par or
shares
2/23/33
Description of collateral
Market Basis
Amount
Continued.
Parcel # 9.
S/L #10 in The Seltzer Round
Co's Monticello Subd #2 City
of Cleveland Heights County
of Cuyahoga.
Parcel #10
S L #11 in Seltzer Round Co's
Monticello Subd #2 City of
Cleveland Heights County of
Cuyahoga.
Parcel #11:
S/L #12 m The Seltzer Round
Co's Monticello Subd #2 City
of Cleveland Heights County
of Cuyahoga.
Parcel #12
S/L #13 in The Seltzer Round
Co's Proposed Monticelo Subd
#2 City of Cleveland Heights
County of Cuyahoga.
No appraised value.
Appraissd land bldgs, no.
Received.
By
Assignment Recorded, yes
Insurance Held, no.
Ctf. of Title Held.
Ctf. of Title Examined.
Notify to Pay Here.
Received from T H E UNION TRUST COMPANY CLEVELAND, Collateral Securities and all
other papers in connection with above described loan.
DATE
p C.
•Monks, ThO8. E
KQ3 Eu Olid A v«
*DC'*C$SHi < 3 1
H K OL
M.«
•
DUE
..10
M»
DUE
N
;
/
?
<
-
(_
5 fee
t • -
^
».7 (
s,
••
DUE
DUE
9
j Jt,
-
t
/?
j ui i
/> .'.' /
ff
//«(•
f
/g 0^0
'6 £> o c
/
<& a o e
/f f/t 0 •
-
• \
•
#•"'
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O^O-Sb
MEMO.
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EXHIBIT U-ll-7a
»•
It/)
'7 f f / ' /
-
8781
STOCK EXCHANGE PEACTICES
EXHIBIT U - 1 1 - 7 C
Par or
shares
Date
FB 28 1931....
Description of collateral
Market Basis
Amount
165 shs.. The Detroit and Warren Road Co
Cap #26 n/o Allen Holding Co
38,812 Note <fe 1 Mtge Jos A Ward to The
Seltzer Round Co. dated 11-29-29.
Parcel #1:
S/L #2 in The Seltzer Round Co's
proposed Monticello Subd #2
City of Cleveland Heights
County of Cuyahoga. part of
Orig Euclid Twps. Lot #52.
Parcel #2:
S/L #3 in The Seltzer Round Co's
Monticello Subd #2 City of
Cleveland Heights County of
Cuyahoga.
Parcel #3:
S/L #4 m Seltzer Round Co's
Monticello Subd #2 City of
Cleveland Heights County of
Cuyahoga.
Parcel #4:
S/L #5 in The Seltzer Round Co's
Monticello Subd #2 City of
Cleveland Heights County of
Cuyahoga.
Parcel #5:
S/L #6 in The Seltzer Round Co's
Monticello Subd #2 City of
Cleveland Heights County of
Cuyahoga.
Parcel #6
S/L #7 in the Seltzer Round Co.'s
Proposed Subd #2 City of
Cleveland Heights County of
Cuyahoga.
Parcel #7
S/L #8 in The Seltzer Round Co's
Proposed Monticello Subd #2
City of Cleveland Heights
County of Cuyahoga.
Parcel #8
S/L #9 in Seltzer Round Co's
Monticello Subd #2 City of
Cleveland Heights County of
Cuyahoga (Continued).
Received.
Received from T H E UNION TRUST COMPANY CLEVELAND, Collateral Securities and all
other papers in connection with above described loan.
DATE
•.
EXHIBIT U - l l - 8
INTERVIEWS AND COMMITMENTS AFFECTING LOANS—OFFICLAL INSTRUCTIONS
TO CREDIT DEPARTMENT—COMMENTS ON FINANCIAL STATEMENTS—ESSENTIAL CREDIT INFORMATION
For exclusive use of Credit Department.
OCTOBER 9,
1933
THOS. E. MONKS
Collateral Loan $17,998.21—Interest to 10/1/33 $778.84
Secured by 165 shs The Detroit and Warren Road Co. Cap.
$38,812. Note and 1st Mtge. Jos. A. Ward to
The Seltzer Round Company
Mr. Monks, former Vice President of The Guardian Trust Company, called in
response to our demand for discussion of his loan.
He states he is without immediate funds to make payments at this time as he
has been without employment since the closing of the bank, and income from his
real estate investments is practically nil.
His attention was called to the necessity for filing financial statement which was
requested under date of August 26. He has taken additional blank forms and
promised to file these statements within the next several days.
8782
STOCK EXCHANGE PRACTICES
Besides our loan, he is owing a considerable sum to The Guardian Trust
Company and the Society for Savings which, he stated, will be paid within a
reasonable length of time. He has every reason to believe that we may anticipate
payment in full of his loan on or about February 1. He did not care to divulge
the source of the funds to be used. He says all of his obligations will be paid
with the exception of the double liability assessment on 391 shares The Guardian
Trust Company stock.
Mr. Monks states further that he hopes to complete arrangements for a new
connection within the next several weeks which will afford a remuneration
enabling him to make payments on the delinquent interest.
R. H. KASTNER
RHKILMF
(Exhibits U-ll-9a through U-ll-9i face this page)
For WALTER H. SEYMOUR,
Representative of U.S. Senate Committee on Banking & Currency
This is not a part of the records of The Union Trust Co. It is an internal memo
by a junior member of the staff of the undersigned. It has not been verified as to
facts. Any opinions or conclusions are personal to the member of the staff preparing this memo.
OSCAR L. COX
Deputy Superintendent of Banks, State of Ohio
EXHIBIT U-ll-10
INTERVIEWS AND COMMITMENTS AFFECTING LOANS—OFFICIAL INSTRUCTIONS
TO CREDIT DEPARTMENT—COMMENTS ON FINANCIAL STATEMENTS—ESSENTIAL CREDIT INFORMATION
For exclusive use of Credit Department.
AUGUST 4, 1933.
BELDEN SEYMOUR
Loan—$36,813.09
Market value—$10,450.00
Mr. Seymour is in the real estate and general insurance business, and stated
there was nothing he could do at this time Hopes that increase in business by
fall will enable him to start paying on the loan. The interest has been delinquent
since April, 1932. His attention was called to this, and he will make every
endeavor to pay something each 30 days, beginning October 1st.
When questioned as to pledging life insurance, he refused, stating this is
primarily for his wife.
Inquiries made as to the status of the Gates Mills property—he stated the
Cleveland Trust Company were holding first mortgage and that due to obligations
with relatives, a second mortgage was given them, there remaining very little, if
any, equities Title in wife's name.
He was given financial statement to file supporting the above.
R. H. KASTNER, Agent.
OCTOBER 10, 1933
Collateral Loan $36,813.09—Interest to October 1, $3,410.64
Collateral Value $8,370.00.
Mr. Seymour called at our request. He stated he is still unable to make payments, but his insurance business has picked up considerably and he has hopes
of selling three unencumbered lots within the next short while and that we will
receive our proportionate share of the net amount realized. He has previously
refused to give us mortgages on these lots or the assignment of any life insurance.
Request for individual financial statement is being made in order that we may
aid Mr. Crane of the Insurance Department in determining the advisability of
placing some of our insurance with Mr. Seymour, applying the commissions for
credit of his note.
R. H. KASTNER
RHK:LMF
EXHIBIT U-ll-9a
EXHIBIT U-ll-9b
EXHIBIT U-11-9C
EXHIBIT U-ll-9d
EXHIBIT U-ll-9e
EXHIBIT U-ll-9f
EXHIBIT U-ll-9g
EXHIBIT U-ll-9h
»+• » 90sha The Cleveland Trust Co
#3005-60shs ,f5446-30shs
5,500 The Tru-.bu
#M817B/9 12277 at 1,000 ea #0202^500
EXHIBIT U-ll-9i
TIME LOAN
ADnntss
- vandelbaum, K. J . *.--•
n o b Swatland Eid .
No. 6
DUE
N».
9
No. 7
DUE
No. 13
h, . ' "i!
N»2 " ' ^ f 2
I "**"?
No. 3
OUE
DOE? 3"? 3 > 0UE/'3/- 3 3
D'JE
OUE
Ko» 5
DUE
. . . .
DEBIT
1
?'A-3J
CKOIT
BALANCE
<*
i *>%
a. i.
- . -,
\t\r
"'• ^ ; . ' - .' ')i Tl'93 •
" ! • VoW
<\ \
LLi-i.i'4 ^-JVX-LniU
'• ft*
i
EXHIBIT U-ll-lla
EXHIBIT U-ll-llb
J
Jo-is
EXHIBIT U-ll-llc
EXHIBIT U-ll-lld
STOCK EXCHANGE PRACTICES
8783
(Exhibits U-il-lla through U-ll-lld face this page)
For WALTER H. SEYMOUR,
Representative of U.S. Senate Committee on Banking & Currency
This is not a part of the records of The Union Trust Co. It is an internal
memo by a junior member of the staff of the undersigned. It has not been verified as to facts. Any opinions or conclusions are personal to the member of the
staff preparing this memo.
OSCAR L. COX
Deputy Superintendent of Banks, State of Ohio
EXHIBIT U - l l - 1 2
MAY
31, 1932.
Mr. G. B. BLISS,
Manager, Credit Department, The Canadian Bank of Commerce,
New York, N.Y.
DEAR SIR: Moses J. Mandelbaum, subject of you letter of May 26, has been
known to this institution and its predecessors for many years. In years past
Mr Mandelbaum and his firm, Mandelbaum-Wolf & Lang, were extensively
interested in financing chiefly public utility operations. He is a director of The
Cleveland Trust Company and a man of high moral standing. Such loans as
we have extended Mr. Mandelbaum have been on a collateral basis, consequently
we are not closely informed regarding his financial affairs. Confidentially, we
are of the opinion that he, like other large investors, has felt very keenly the
present condition of the securities market.
Inasmuch as you did not mention the purpose of your inquiry, our reply must
necessarily be general in character.
Very truly yours,
Vice President
WT:E-6
EXHIBIT U - l l - 1 3
INTERVIEWS AND COMMITMENTS AFFECTING LOANS—OFFICIAL INSTRUCTIONS TO
CREDIT DEPARTMENT—COMMENTS ON FINANCIAL STATEMENTS—ESSENTIAL
CREDIT INFORMATION
For exclusive use of Credit Department.
AUGUST 2, 1933.
M. J. MANDELBAUM
Loan: $102,812.68 Market—$23,205.00 Int. delinquent since November 2,
1932
Loan: $7,000.00 Market—plus value Int. delinquent since March 20, 1933.
Mr. Mandelbaum reported that there is no change in the status of affairs since
our last memo of April 10, 1933. He is broke, but in spite of his age has determination for staging a come back through a partnership, the nature of the business
being investment and business analysis service. He is unable to do anything at
this time, and this loan will be a slow workout. I believe our only salvation is
through enhancement on 273 shs. of Cleveland Trust Company capital stock
pledged.
R. II. KASTNER, Agent.
WT
Burmester
WM
M. J. Mandlebaum owed Standard Tr when it closed 28 M on Weinburger
Drug & Gabriel Snubber Stocks.
For Walter H. Seymour, Representative of U.S. Senate Committee on Banking
& Currency.
This is not a part of the records of The Union Trust Co. It is an internal
memo by a junior member of the staff of the undersigned. Tt has not been
verified as to facts. Any opinions or conclusions are personal to the member of
the staff preparing this memo.
175541—34—PT 20
OSCAR L. COX
4
Deputy Superintendent of Banks, State of Ohio
8784
STOCK EXCHANGE PRACTICES
EXHIBIT U-22-1
Minutes of a meeting of the Finance Committee of The Union Trust Company
held on Friday December 19, 1930, at twelve 'clock noon at the main office.
The following were present:
Messrs. Otto Miller
W. M. Baldwin
J. G. Geddes
Thos. P. Robbins
Allard Smith
R. S. Crawford
F. P. Root
Mr. W. M Baldwin acted as Chairman and Mr. R. S. Crawford as Secretary.
Minutes of the meeting of December 18, 1930, were read and approved.
Current loans submitted were approved.
Loans made at the main office under date of December 18, 1930, as described
below, were approved:
Commercial Loans Nos. 22547 to 22589 inclusive, aggregating
$186, 299. 68
Bills of Exchange Nos. 72545 to 72600
"
"
96, 438. 08
Collateral Loans (Banks and Brokers)
Nos. B 5217 to B 5223
"
"
148,170.00
Collateral Loans Nos. 80419 to 80477
"
"
250,489. 85
Real Estate Loans Nos. 21652 and 21653
10, 980. 00
A schedule showing real estate loans approved by the Real Estate Loan Committee under date of December 19, 1930, aggregating $8,000.00 was submitted
and the loan appearing thereon approved.
A schedule showing our Acceptances sold and outstanding, Acceptances of
other banks sold and outstanding, and Acceptances of other banks held by us for
account of Banking Department under date of December 18, 1930, identified by
the signature of J. G. Geddes, Vice President, was approved.
A schedule showing securities bought by the Securities and Investments [R.s.c.J
Department under date of December 18, 1930, aggregating $188,327.50, and
securities
EXHIBIT U-22-la
sold aggregating $284,125.00, certified correct by the signature of Van R. Purdy,
Assistant Vice President, was submitted for information.
It was agreed to loan J. P. Harris $263,000.00 secured by collateral.
ADJOURNED.
W. M. BALDWIN, Chairman
R. S. CRAWFORD, Secretary
EXHIBIT U-22-2
Minutes of a meeting of the Finance Committee of The Union Trust Companyheld on Tuesday December 23, 1930, at twelve thirty o'clock p.m. at the main
office. The following were present:
Messrs. E. R. Grasselli, Otto Miller, Thos. P. Robbins, F. P. Root, George A.
Coulton, J. R. Kraus, W. M. Baldwin, C. E. Farnsworth, Geo. P. Steele, R. S.
Crawford.
Mr. J. R. Kraus acted as Chairman and Mr. R. S. Crawford as Secretary.
Minutes of the meeting of December 22, 1930, were read and approved*
Current loans submitted were approved.
Loans made at the main office under date of December 22, 1930, as described
below, were approved:
Commercial Loans Nos. 22657 to 22728 inclusive, aggregating. _ $4, 084, 257. 94
Bills of Exchange Nos. 72688 to 72735
"
"
283, 119. 12
Collateral Loans (Banks and Brokers)
Nos. B 5241 to B 5249
"
"
296,570.00
Collateral Loans Nos. 80553 to 80635
"
"
1,643,036.49
Real Estate Loans Nos. 21656 to 21658
19677
"
"
20.128.15
A schedule showing Real Estate Loans approved by the Real Estate Loan
Committee under date of December 23, 1930, aggregating $7,540.00 was submitted and the loans appearing thereon approved.
A schedule showing Commercial Letters of Credit issued, Acceptances against
Letters of Credit and our Acceptances held by us under date of December 22,
1930, identified by the signature of J. G. Geddes, Vice President, was approved.
DEMAND COLLATERAL LOAN REGISTER
THE UNION TRUST COMPANf—OJEVttAND, OHIO
ii A
5 /
h /
.
EXHIBIT U-22-3
CLEVELAND, OHIO.
£>n Dfuwnb, FOR VALUE RECEIVED^
(__/
PROMISE TO PAY TO THE ORDER or
THE UNION TRUST COMPANY
AT ITS OFFICE IN THE CITV OF CLEVELAND. OHIO, WITH INTEREST AT THE RATE OF
' ' '' '-..
PER CENT PER ANNUM, PAYABLE QUARTERLY ON THE 1st DAYS OF JANUARY, APRIL, JULY AND OCTOBER.
UNTIL PRINCIPAL 13 PAID.
,
/
The undersigned h*
„
deported with ««d hereby pledget and assigns to laid company a s collateral aecurlty for
to or to become due. of which may hereafter be contracted or existing, and whether the $2rne may have been or ehall be
the following property, ¥|_:
So
.
i\
•
/X
J
of mM Compmur, M w A w to tke undctsiimd or in w h M th« aixlenitiMd k urnnlnur™t,
lnur™t, t m r
itlM to it» MU«f««tkm opon it« domtsd i «lto txt^by jiviiw u » utU Comp«iiT • li
lien ((or UM
iwd to mM Cow»p»ojr »|Mm « j | oroiwrty or w*urfttes wfakh sow »r« or m»y twr««fur b* ptalc«4 with *mid
l e m t . ' O s U » Boo-iKrformuite of a i 4 e n w b *
t l x »<«>-|wyt>wnt of i n r of n U IKbllitim, or apog tke » • ! ! » • or U » a m h n i l M a ffflrtkwlth to l i m U aataTaXorT editltioul wjuritj o s
M tbe opUoo of aaU Conpujr, t i b oMIcatioa «h»l) bacone tmm«di»My due ajid payable. «ad a i d CoBpanr w hereky tivra [oil sower to
oetteet. K H aa»J«» and deliver Of wbola «( « l U aecuritfes or o n / part Uwreof or w anbititiiUia therefor, or addition* thereto, tkrouth any atoek
< u t e u « . broker'. koar4. or broker or a t privau aale without adnttisenxat or nntiee, th« MOK bein» kereby e x p n m l i waived; or n l Conpuir "
its optfim »>«:
otrltlo or Jiropxrtir M |>iiMie tale, upon noUea nodlirtma once i s any newtpaoer printed in t i n
City of Ctev^l&ii*) «ot less* tltaa tee (19) ««jr« prior to aoea ww«, at whlcfc publk sate said Company may purchase »akl ee«urltk« or property or any
part thereof frs« from any rlrtt of rwfcmptioo on Jlw part of tbe imderalmied. which i» hereby esprewly waived and relested. Upon any toell tele,
after dt&Kling aU ewta and ezpettM» of every k i o 4 aaM Company may apply the residue of the pruceeda of aueb sale at it ahaJl deem proper toward
U » payment of any one or more or all of the llabitHiet of Uw uaderatgned to a«id Company whether due or not doe. returning tbe ovcrplua to the
• M n w n x l . Any holdei of this note shall lliewtas have alt of the aforeaaM rinhta and powert with r « i e c t to Mvurtty end additional xeurltjr for
thi» lwt« and tlw » i
roeee4i th»»«f.
f e e und*er»iBned hereby authorUea any attoriwy-at-law in the State of Ohio or any other S u t e or Territory of the United Statet. at any tinm
after the above turn become* due to appear for tbe understated la any Court in the SUte of Obio or any other State or Territory of the Unhed
Statat. end to waive the ftouittg and aervioe of j>roce*t and eonfeaa iud^ment against the undersigned ia favor of the payee or any holder of tbia aota
it* the amount appearing due and the cost* of tutt and thereupon to release all errors and waive all right* of appeal and ttsy of execution. The
ankers of thi* sole, when more than one, anall he jointly and «ever»Uy liable hertoa.
©
EXHIBIT
U-22-4
8785
STOCK EXCHANGE PRACTICES
EXHIBIT U-22-2a
A schedule showing securities bought by the Securities and Investments Department under date of December 22, 1930, aggregating $22,190.00. certified
correct by the signature of Van R. Purdy, Assistant Vice President, was submitted for information.
It was agreed to loan Messrs. J. L. Laird, Frank M. Laird, O. C. Topky, W. S.
Dudley, E. H. Burrill, E. S. Miller, and Robert Locke, $65,000.00 secured by
1000 shares of stock of the Marine Savings Bank Company of Ash tabula, Ohio.
It was agreed to loan the Conewango Refining Company $10,000.00, which is
our portion of a total of $25,000.00 of which the Guardian Trust Company is
taking $10,000.00 and the Midland Bank $5,000.00.
ADJOURNED.
J. R. KRATJS,
Chairman.
R. S. CRAWFORD,
Secretary.
(Exhibits U-22-3 and U-22-4 face this page)
EXHIBIT U-22-4a
For valuable consideration, all persons, firms and corporations, whose names
now appear or are hereafter written below, (who, if two or more in number, shall
be jointly and severally bound), absolutely and unconditionally guarantee
the
payment in full of the within note and any extension thereof, in wThole or any
part, when due, and hereby waive presentment, demand, protest and notice of
protest and non-payment, and consent by any extension or extensions in whole
or in part, without notice thereof.
The persons, firms and corporations, whose names are written below, hereby
authorize any attorney-at-law in the State of Ohio or any other State or Territory in the United States at any time after the sum of the within note becomes
due, to appear for the undersigned, in any court of record in the State of Ohio,
or any other State or Territory of the United States, and to waive the issuing
and service of process and confess judgment against the undersigned in favor of
the payee or any holder of this note for the amount appearing due and the costs
of suit, and thereupon to release all errors and waive all right of appeal and stay
jof execution.
I. J. FULTON, Superintendent of Banks,
in charge of the liquidation of
THE UNION TRUST CO.
Cleveland, Ohio.
By T. J. Eline,
Special Deputy Superintendent of Banks.
THE UNION TRUST CO.,
R. S. Crawford, Secretary.
Date
JAN 2 - 1931
INTEREST PAID TO
1 1931..
INTEREST PAID TO
1 1931..
INTEREST PAID TO JUL 1 1931...
INTEREST PAID TO
1 1931..
Interest 6% as of 1-1-32
INTEREST PAID TO
• 1 1932..
INTEREST PAID TO APR 1 1932..
INTEREST PAID TO JUL 1 1932...
INTEREST PAID TO OCT 1 1932..
Inerest paid to Jan 1 - 1933
Interest paid to Apr 1 - 1933
Payment Balance
2,000
261,000
8788
STOCK EXCHANGE PRACTICES
EXHIBIT U-22-5
DEPOSIT TICKET
THE UNION TRUST COMPANY
CLEVELAND, OHIO, 12-2
Credit: J. P. Harris
1930
on this office will be credited conditionally. If not found good at
close of business they may be charged back to depositors. Checks on other
city banks and other offices of this Bank may be carried over for presentation
through the Clearing House, Federal Reserve Bank, or direct on the following
day and charged back if not found good.
In receiving and forwarding items payable elsewhere than in Cleveland, this
bank assumes no responsibility for the negligence or default of any direct or
indirect collecting agents, and shall be held liable only when proceeds in actual
funds or solvent credits shall have come into its possession, otherwise, items
previously credited may be charged back to depositors. Iteps lost in transit
may be charged back to depositor's account pending receipt of duplicates.
Unless otherwise instructed, items may be mailed to drawee banks.
Unpaid items may be returned by mail at depositor's risk. In making deposits
the depositor hereby assents to the foregoing conditions.
Amount
263
Interest
000
Discount
Exchange
00
Bennett
(The Union Trust Co , Coll Loan Dec. 22, 1930, Mam Officer )
EXHIBIT U-22-5a
THE UNION TRUST COMPANY, CLEVELAND
Name
Address
Savings No.
J. P. Harris
Checks in detail
1,421.35—
15.00264, 344. 52—
15 00—
50 00—
15 00—
365.28—
15 00—
1.70—
20.00—
345.00—
750.00—
150.00-
2,000. 00—
100.00—
15.00—
4 00—
10 50—
12.00—
8.70—
7.50—
10.00—
16.00—
5 00—
17.50—
6.00—
Date
1930
16 '30
16 '30
17 '30
18 '30
22 '30
22 '30
22 '30
23 '30
24 '30
26 '30
29 '30
29 '30
29 '30
30 '30
31 '30
1931
2 '31
2 '31
2 '31
2 '31
3 '31
5 '31
5 '31
6 '31
6 '31
6 '31
7 '31
8 '31
8 '31
Dec
Dec
Dec
Dec
Dec
Dec
Dec
Dec
Dec
Dec
Dec
Dec
Dec
Dec
Dec
Jan
Jan
Jan
Jan
Jan
Jan
Jan
Jan
Jan
Jan
Jan
Jan
Jan
Deposits
90.00
35 00
800 00
263,000 00
(Exhibit U-22-S faces this page)
800 00
240 00
2,902 50
Date
Dec 16 '30
Dec 16 '30
Dec 17 '30
Dec 18 '30
Dec 22 '30
Dec 22 '30
Dec 22 '30
Dec 23 '30
Dec 24 '30
Dec 26 '30
Dec 29 '30
Dec 29 '30
Dec 29 '30
Dec 30 '30
Dec 31 '30
1931
Jan
Jan
Jan
Jan
Jan
Jan
Jan
Jan
Jan
Jan
Jan
Jan
2 '31
2 '31
2 '31
3 '31
5 '31
5 '31
6 '31
6 '31
6 '31
7 '31
8 '31
8 '31
Balance
2,081.05
659. 70
694. 70
679. 70
1,479. 70
264,479. 70
135.18
120.18
70 18
55.i8
855 8
144. 90
129.90
128.20
108 20
2,350. 70
350. 70
233. 20
218. 20
214. 20
203 70
191. 70
183 00
175. 50
159. 50
143. 50
138. 50
DEPOSITED WITH
THE UNION TRUST COMPANY
CLEVELAND, OHIO
TOR CREDIT TO THE ACCOUNT OF
g > < H C W W n > < ornci "lit «l cntoiT.ocowotT.OHii.tT ir aot louao I K X W I T u o u v H W H l l ,
I*M ACTVM. PUHDS O« SOLVE NT ClkCDfTSftMAU.H*Vt C 4 « t >1T«
c r PUASE UST EACH ITEM SEPARATELY
CHECKS OM THIS BANK
DOLLARS
CCHTS
K
DOLLARS
CENTS
DOLLARS
OUT or TOWN
CLEVELAND
_
ON THIS BANK
CURRENCY
SILVER „ _ _
COUPONS
TOTAL
EXHIBIT U-22-6
CCNT*
STOCK EXCHANGE PRACTICES
8787
EXHIBIT U-22-7
11/7/33
Memorandum—Re: Loan to J. P. Harris
On October 30, 1929 I personally loaned to Mr. J. P. Harris one thousand
shares of F. E. Myers & Bro. Company common stock, with permission to use this
as collateral to his personal loans, Mr. Harris stating to me that he had a life
insurance trust at The Union Trust Company that would amply protect me.
On June 19, 1930 I loaned Mr. Harris an additional five hundred shares Myers
stock, making a total of 1,500 shares, and at that time he made a formal assignment of his life insurance trust at Union Trust Company for my protection.
On December 22, 1930 I loaned Mr. Harris an additional five hundred shares
of Myers stock, making a total of 2,000 shares F. E. Myers & Bro. Company
common stock, at that time selling on the market at about 41J4 In other
words, a market value of about $83,000.
Dec. 22, 1930 Mr. Harris used this stock as part of his collateral for a loan at
The Union Trust Company, this loan having been first approved by the Finance
Committee at its meeting on December 19th. According to statement furnished
me at the time, the market value of the collateral was $304,850 against a loan of
$263,000, it being understood that a payment of $2,000 would be made on Jan.
1st, 1931, reducing the loan to $261,000. This was done.
In addition to assignment of Mr. Harris' life insurance trust, I took also an
assignment from him of his equity in the collateral in his loan at The Union
Trust Company.
I never directly or indirectly received a dollar of the proceeds from Mr. Harris7
loan nor guaranteed it in any way. The only thing I did was to lend Mr. Harris,
my friend, the above stock.
In addition to the above I loaned Mr. Harris on May 1, 1929 $10,000.00 on
his demand note unsecured.
All of the above loans are still outstanding at this date.
This memorandum obtained from Mr. J. R. Nutt.
WALTER HUPNOW.
Feby. 13, 1934.
EXHIBIT U-22-8
JOSEPH PORTER HARRIS,
12546 CEDAR ROAD,
Cleveland, May 1, 193S.
Mr. OSCAR L. COX,
Conservator The Union Trust Company
Cleveland, Ohio.
DEAR MR. COX: In line with our conversation this morning, and in obedience
to your request, I am very glad to jot down a few comments in regard to my
loans at the Union Trust Company.
As I now recall the situation, I believe the larger of these loans originated with
the United Milk deal some years ago. I happened to be the unfortunate purchaser of some 1,500 shares of United Milk Common and 500 shares of Preferred,
which originally were taken up through loans at the Cleveland Trust, although,
perhaps, a portion was carried in one or another of my brokerage accounts. When
United Milk stock suffered severe declines in market value I let go the most of
my Common stock at a severe loss, but still carried a unit of 500 Preferred and
500 Common, in the hope of recouping at least its original cost. In this, of
course, we were all disappointed, and when my loan at the Cleveland Trust became impaired I had it transferred to my brokerage account at Hornblower &
Weeks, where I had sufficient equity to take care of it by combining the two
accounts, and thus the entire liability became lodged with Hornblower & Weeks,
who carried it for a period of time. When values began to suffer after the crash
of 1929, Mr. Nutt very kindly loaned me additional Common stock of F. E.
Myers & Bro. Company, and later when values still continued to decline, and the
account became a source of deep concern to me, Mr. Nutt very kindly suggested
that the loan be taken over by the bank, and in order to have it fully covered he
loaned me additional Myers stock in an aggregate amount, all told, of 2,000
shares.
As I told you this morning, I have no certain knowledge as to the thoughts of
the bank officers and directors in taking this action in my behalf, but I have
always had a feeling that they may have been mindful of certain services which
8788
STOCK EXCHANGE PRACTICES
it had been my privilege to render, not only to the Union Trust but to the
Cleveland Trust and the Guardian, as well, in connection with the salvage of
upwards of $5,000,000 invested in various interurban properties in Northern
Ohio, including also the Fox River Division of the Aurora, Elgin & Chicago.
These very large investments tied up in interurban properties had been regarded
as all but worthless, but it was my good fortune to recover for the three banks in
EXHIBIT U-22-8a
question substantially the entire investment involved, including back interest,
and while I dislike to evaluate my own services, it may not be improper to remark
that in a conversation, a few months ago, with Mr. Howard Hopson, head of the
Associated Gas & Electric Company, Mr. Hopson stated that he was personally
familiar with every major public utility deal in America during the last two
decades, and that he wanted to say to me that what I had been able to accomplish
for the Cleveland banks had not been duplicated anywhere in America in the
last ten years. As I say, I do not know that these considerations motivated the
directors in any way, but I have always thought that possibly they might have
done so, or, perhaps, the directors may have had in mind, also, the fact that my
department in the bank had for a period of nearly fifteen years contributed
consistently between 15% and 20% of the total earnings of the institution.
These considerations, however, in no way affect my own attitude toward the
loans in question. It is my determination to pay the loans in full, and I ask
only due consideration at the hands of the Conservator in order that I may work
to that end. It is inevitable, of course, that the collateral securing the loans
will in due time give me a measure of assistance in accomplishing this result,
but in my own calculations I am not taking account of that possibility at all,
but rather am I setting my program to liquidate the loans out of my earnings,
regardless of the collateral. My profession, of course, for the last twenty-five
years or more has been the handling of securities, and I have every expectation
that whereas I have met with a measure of success in the past I shall be able to
accomplish in operations for my own account a proportionate success. Indeed,
it is my hope that I shall be able to place the loans on a current basis, so far as
interest is concerned, in the not distant future, and with the return of better
conditions in the market, supported, as I hope, by a reviving industry, I would
expect, within a reasonable time, to begin making substantial reductions in
principal also. As I stated to you, all my own resources are pledged against the
loans, but I have been handling an account for Mrs. Harris, out of which I
have every reason to believe that sufficient profits will accrue in due time to
accomplish the purpose I have in mind, and in the meantime if I am fortunate
enough to find a new job, of course, the process will be speeded accordingly. In
this latter connection I may say that my numerous friends in New York, as well
as here, are actively on the lookout for a suitable opening which, they assure
me, must certainly be found in due time.
In closing this brief statement, let me express to you my great appreciation of
the very courteous treatment which you showed me in our conference this morning, and also my great pleasure in meeting you personally.
Very truly yours,
J. P. HARRIS.
JPH:LRA
EXHIBIT
U-22-9
STATE OF OHIO, Cuyahoga County, ss.
In the court of common pleas. No. —, Equity.
State of Ohio, ex rel., I. J. Fulton, Superintendent of Banks of the State of Ohio,
in charge of the liquidation of The Union Trust Company, Plaintiff, vs. Joseph
R. Nutt, 2285 Coventry Road, Cleveland Heights, Ohio, Defendant. Petition.
Now comes the plaintiff and says that he is the duly appointed, qualified and
acting Superintendent of Banks of the State of Ohio, and as such he did, on the
15th day of June, 1933, take possession, for the purpose of liquidation, of the
business and property of The Union Trust Company, a bank theretofore organized under the laws of Ohio and engaged in transacting a general banking business
with its principal place of business in Cleveland, Ohio; that in the property and
assets of the said The Union Trust Company (hereinafter styled the "bank"),
there is included the claim against the defendant hereinafter described.
STOCK EXCHANGE PEACTICES
8789
The plaintiff, for his cause of action against the defendant, says: that, continuously, from about October 1, 1928, until the 30th day of June, 1932, the
defendant was the chairman of the board of directors of the bank and one of its
principal executive and loaning officers; that one Joseph P. Harris was a vicepresident of the bank from its organization until about May 2, 1932; that, at the
time the loan hereinafter described was made by the bank to the said Harris,
and for many years prior thereto, the established and recognized practice, custom
and routine of the bank in making loans to individual borrowers in any substantial
EXHIBIT U-22-9b
amount was as follows: upon the application for the loan being made by the prospective borrower to the bank, it was, in the first instance, if considered satisfactory, approved by one of the bank's principal executive and loaning officers;
if the loan was approved by such officer, it was then presented to the finance
committee of the bank for its action thereon, such committee being advised that
the loan had, in the first instance, been approved by one of the bank's principal
loaning officers; if the committee was favorable to making the loan, it, as a
matter of general practice, expressed first its agreement so to do, and later its
approval thereof, and, in some instances, some time thereafter, the action of the
finance committee was approved by the executive committee of the bank, and
the action of that committee, at a still later date, was called to the attention of
the bank's board of directors; it was a well established and almost universal
practice and custom of the bank's finance committee to agree to make and
approve any loan which was in the first instance approved by one of the bank's
principal loaning officers, and in many instances, the promissory note of the
borrow er was actually accepted by the bank and the proceeds of the loan paid to
him before any final action was taken by the finance committee, the action of
that committee, in agreeing to make or approving the loan, and any subsequent
action by the executive committee or by the board of directors, respectively, of
the bank being wholly perfunctory in character, with the result that the act of
the principal loaning officer, who approved the loan in the first instance, was, in
fact, the act of the bank itself and binding upon it; that the defendant was thoroughly familiar with the custom and practice of the bank as hereinbefore described,
and was fully aware of the fact that any loan approved by him in the first instance
would be made by the bank; that on December 22, 1930, and for some time prior
thereto, the said Harris had been carrying an account with the brokerage firm
of Hornblower & Weeks of Cleveland, which account he used for the purpose of
buying and selling stocks and other securities, the account being secured by the
deposit by the said Harris of various securities as collateral thereto; that, among
EXHIBIT U-22-9a
the securities so deposited, and as a part of the said collateral, were fifteen hundred (1500) shares of the common capital stock of the F. E. Myers & Bros. Company, which was the property of the defendant, and which he had loaned to the
said Harris; that, shortly before the 22nd day of December, 1930, the firm of
Hornblower & Weeks, believing that the account of the said Harris was not sufficiently secured by collateral, and in fear that it was about to sustain a loss thereon,
advised the said Harris, that, unless he forthwith paid and closed his said account
in full, it would be compelled to close the account and to sell the collateral deposited as security thereto, including the shares of the common capital stock of
the F. E. Myers & Bros. Company, which, as hereinbefore averred, were the
property of the defendant; that, if such sale had been made, the defendant would
have sustained a substantial pecuniary loss to himself in that the securities belonging to him, as aforesaid, would have been sold at a sacrifice; that, thereupon, the
defendant, with full knowledge of all the facts aforesaid, and with an intent and
purpose upon his part to protect his own securities against being sold at a loss to
himself, suggested to the said Harris the plan of having the bank loan to him, the
said Harris, a sum sufficient to take up and pay his account with Hornblower &
Weeks and thus prevent the sale of the collateral deposited with said firm,
including the securities which were owned by the defendant, as hereinbefore
described; that in carrying such plan into effect, the defendant, acting as a prin*
cipal executive and loaning officer of the bank, and intending to firmly bind the
bank, approved, in behalf of the bank, a loan to the said Harris in the sum of
Two Hundred and Sixty-Three Thousand Dollars ($263,000.00) secured by all,
or substantially all, of the collateral which had theretofore been deposited by the
said Harris with Hornblower & Weeks, and five hundred (500) additional shares
8790
STOCK EXCHANGE PRACTICES
of the common capital stock of the F. E. Myers & Bros. Company which was
owned by the defendant; that thereafter, said loan approved by the defendant,
as hereinbefore set forth, was caused to be presented by him to the bank's finance
committee, which, on or about the 19th day of December, 1930, agreed to the
EXHIBIT U - 2 2 - 9 C
making of said loan as a collateral loan; that, on the 22nd day of December, 1930,
the demand note of the said Harris in the sum of Two Hundred and Sixty Three
Thousand Dollars ($263,000.00), was accepted by the bank and the proceeds
thereof were delivered to him, and immediately applied by him in payment of his
account with Hornblower & Weeks; that, on the 23rd day of December, 1930, the
finance committee took action expressing its approval of the loan aforesaid, this
he ng done after the proceeds thereof had been paid by the bank to the said Harris
and by him applied upon his account with Hornblower & Weeks, as hereinbefore
set forth; that the action of the bank in making the loan to said Harris was caused
and induced by the defendant himself for his own use, benefit and profit, and in
order to protect himself against the pecuniary loss which he would have suffered
if Hornblowrer & Weeks had closed the account it was carrying for the said Harris
and sold the securities deposited as collateral thereto; that the action of the bank's
finance committee in agreeing to make the loan, and in expressing its approval
thereof, was wholly perfunctory in character and was induced and controlled by
the fact that the defendant had, in the first instance, as a principal loaning officer
of the bank, approved the loan; that the defendant at no time disclosed to the
bank that he had a direct personal and pecuniary interest in the loan aforesaid
to the said Harris, or that Hornblower & Weeks were about to close the account
of the said Harris and sell the securities deposited as collateral thereto, including
securities belonging to the defendant, or that his object and purpose in approving
and causing the bank to make the said loan was to protect himself against the loss
which he would have suffered had the proceeds of the loan made by the bank to
Harris not been made available for the purpose of paying his account with Hornblowxer & Weeks; that the said Harris wras not of sufficient financial worth or
responsibility to pay said note, and the collateral securing the same was insufficient and inadequate, having a market value, at that time, so slightly in excess
of the amount of the loan itself, as to put the collectibility of said note in continuous jeopardy, all of which the defendant well knew; that the loan made by the
EXHIBIT U-22-9d
bank to the said Harris, as hereinbefore alleged and described, was loan made
indirectly to the defendant, who, at the time it was made, was an officer of the
ban, to-wit, chairman of its board of directors, and said loan, so indirectly made
to the defendant, was not authorized or approved by the bank's directors, nor
was such authorization or aproval recorded in the records of the proceedings of
such board of directors, all of which the defendant well knew; that, after due
demand upon the said Harris for the payment of his note and his failure to pay
the same, and, after duly selling the collateral securing said note at public sale
in accordance with the provisions of said note, and crediting the net amount,
realized from said sale as a payment thereon, the plaintiff obtained a judgment
against said Harris in the Court of Common Pleas of Cuyahoga County, Ohio,
on the 20th day of January, 1934, for the sum of $165,056.61 as the balance due
on said note, said amount being the unpaid principal thereof plus interest to the
date of said judgment; that the plaintiff caused an execution to be issued on said
judgment, which execution has been duly returned by the sheriff of said county
endorsed, "no money made"; that the said Harris has filed a voluntary petition
in bankruptcy in the United States District Court for the Northern District of
Ohio, Eastern Division, same being numbered 30745, in bankruptcy, in which he
asserts that his liabilities are far in excess of his assets; that the action of the
defendant in causing or permitting said loan of $263,000.00 to be made by it
bank to the said Harris, as hereinbefore described, was wrongful, and in breach of
the trust and duties imposed upon him by reason of his relation to the bank as
chairman of its board of directors and one of its principal executive and loaning
officers, and constituted a fraud upon the bank; that, by reason of the facts
aforesaid, the bank has lost the sum of $165,056.61 less whatever amount is paid
to it out of the estate of said Harris now being administered by the bankruptcy
court and which amount is not now knowrn or ascertainable; that the defendant
has refused, upon demand, to pay to the bank the amount it has lost by reason
of the transactions hereinbefore described; that, by reason of the premises, the
defendant should account to the plaintiff for the amount of the loss suffered by
STOCK EXCHANGE PRACTICES
8791
EXHIBIT U-22-9e
the bank as and when the same is fixed and ascertained.
Wherefore, the plaintiff, I. J. Fulton, as Superintendent of Banks of the State
of Ohio, prays the Court to make and enter a judgment and decree fixing and
determining the amount of money which the bank has lost by reason of the wrongful acts of the defendant, Joseph R. Nutt, as hereinbefore described; and that,
upon the amount of such loss being determined, judgment be rendered by this
Court in said amount in favor of the plaintiff and against the defendant herein;
and the plaintiff prays for such other and further relief as may be just and equitable in the premises.
Attorney General of the State of Ohio.
Special Counsel for the Attorney General.
No verification required by the provisions of Section 348 of the General Code of
Ohio.
EXHIBIT U-22-9f
IN THE COURT OF COMMON PLEAS.
No.
Equity.
STATE OF OHIO
Cuyahoga County, ss:
STATE OF OHIO, ex rel. I. J. FULTON, Superintendent of Banks of the
State of Ohio, in crarge of the liquidation of The Union Trust Company,
Plaintiff, vs. JOSEPH R. NUTT, 2285 Coventry Road, Cleveland Heights,
Ohio, Defendant. Precipe
To the Clerk:
Please issue summons, directed to the sheriff of Cuyahoga County, Ohio, for
the defendant, Joseph R. Nutt, 2285 Coventry Road, Cleveland Heights, Ohio;
endorse same, "Action for Accounting and Money Judgment; Equitable Relief
Prayed for".
Attorney General of the State of Ohio.
Special Counsel for the Attorney General.
EXHIBIT U-22-10
THE UNION TRUST COMPANY,
Cleveland, Ohio, January 11th 1928.
Mr. J. R. NUTT,
The Union Trust Company,
Main Office.
DEAR MR. NUTT: I hereby acknowledge receipt from you of your check for
$10,000, which is to be used in our joint account as discussed in our conversation
this morning.
Very truly yours,
J. P. HARRIS.
(Taken from J. R. Nutt's ersonal
files.
, 2/16/34.)
EXHIBIT U-22-11
JOSEPH PORTER HARRIS
CLEVELAND
BLUE HILL, M E . , July 22, 1928.
DEAR MR. NUTT: Wagley writes me that you are eager to sell some of our
securities and has sent me a list of suggestions for my comment or recommendation. Of course, if we are pressed for funds we must sell, but I earnestly hope
8792
STOCK EXCHANGE PEACTICES
that we shall not be called upon to liquidate anything in this market. In my
judgment it would be verv foolish to do so, for I am sure that this money flurry
is only a temporary affair and that inside of 60 or 90 days we shall see cheaper
money reflected in substantially better prices for bonds. You, of course, are the
Doctor, but my opinion is that we should not sell a thing, even though we have
EXHIBIT U-22-lla
plenty of stuff that snows a profit.
Wagely tells me that he has placed a selling order on $300,000 Chesapeake's
@ 98. 1 wtu'dn't do this if it were left to me for it is certain that in a reasonably
short time you'll get 99 or better for this block. What does that mean? A 1
point rise on this 5% bond in 90 days means 0% (per annum) on your money and
you can't hope to get that in the call market. That's only an example, and I
earnestly hope that nothing will be done with our list at least until my return.
I am planning to leave here on the morning of July 31st and shall be at my
EXHIBIT U-22-llb
Gesk on Monday, August 6th, if not on Saturday, the 4th. In the meantime I
nave been in close touch wit*i market conditions and I think my perspective is
much better than when I was so close to it.
My vacation has given me a good rest and I feel much inproved as a result.
All the family are very well and having a good time.
I have written to Mr. Copley and am quite sure that he will come through.
Margaret joins me in warmest greetings and best wishes, as ever.
JOE.
Taken from J. R. Nutt's personal file. MMM, 2/16/34.
EXHIBIT U-12-12
Otto Miller-
Thos. P. Robbins__
F. P. Root.
W M. Baldwin.
/AT RE J. P. HARRIS LOAN
Did any members of the com- If the members of the comitmittee have any knowledge
tee had known Mr. Nutt was
that Mr. Nutt was interested
interested in the loan, would
in the collateral?
they have made further inquiry as to the nature of that
interest before approving the
loan, and might the question
of their approval or disapproval of the loan have been
affected by the fact that Mr.
Nutt was interested therein?
Mr. Miller feels it was a matter Did not know Mr. Nutt already
had collateral at risk prior to
of common knowledge that
making of the loan, and canMr. Nutt had supplied Mr.
not say what the effect on his
Harris with considerable coljudgment would have been if
lateral, but he does not
he had known, as it would
remember whether the matdepend upon other collateral
ter was or was not known to
facts.
him or other members of the
committee at the time the
loan was made.
Mr. Robbins7 memory is that
it was known to the committee a substantial part of the
collateral was F. E. Myers
Common Stock supplied by
Mr. Nutt.
Not to his knowledge or mem- Do not think they would. It
ory.
would not have been of any
interest if the collateral was
there.
The memorandum I have recites the fact
that the loan was made on December 22,
1930, in the sum of $263,000.00 to J. P.
Harris "upon the O.K. of Mr. Nutt".
I would like to know what effect upon
the action of the Finance Committee, in
passing on loans of this character, the
approval in advance of any officer of the
bank such as was Mr. Nutt, generally
had.
The committee gave weight to the approval of the recommending officer in
considering a loan, but was not governed
thereby.
O
O
X
>
Where a loan was recommended by a
senior officer, the committee's action was
confirmatory, rather than investigational.
If any officer recommended a loan and said
the collateral was all right, we would be
very apt to pass it, although we might
inquire as to what the collateral was.
Do not remember what was done in this
case.
Knew he had supplied some (on The loan was passed upon the Considered on basis of collateral. Of
course, the recommendation of senior
value of the collateral, not
letter) F. E. Myers & Bro.
officers would carry weight.
the question of who owned
Com. Stock.
it.
>
o
H
i—i
Q
02
00
CO
J. G. Geddes.
R. S. Crawford _
Mr. Geddes attended the Fi- It would be purely supposition... It was not the policy of the committee to
nance Committee meetings
examine closely in all cases the details of
as a member without portloans that were recommended by senior
folio, that is, no vote. His
officers.
memory is that no mention
was made at the time that
Nutt was interested in the
collateral.
That I do not know. Nothing I would rather not express an Loans were usually presented at the offion my records to indicate he
cers' meetings in the morning and apopinion.
had any interest in it.
proved there. When the loan was presented to the Finance Committee with
the approval of the officers, very seldom
such a loan was declined by the committee. My records of the officers' meetings do not indicate that this was ever
submitted to the officers' committee.
00
H
O
O
Q
O
o
H
M
o
STOCK EXCHANGE PRACTICES
8795
EXHIBIT U-22-13
ANNUAL REPORT OF THE F. E. MYERS & BRO. COMPANY, ASHLAND, OHIO, FOR
THE YEAR ENDED OCTOBER 31ST, 1933
DECEMBER 15TH,
1933.
To the Stockholders:
Your Directors submit herewith a condensed balance sheet showing the financial condition of The F. E. Myers & Bro Company, with a statement of the
operating results and an analysis of Income and Surplus Account at the close of
the fiscal year, October 3lst, 1933.
During the fiscal year> the Board of Directors voted to retire $500,000 of the
Preferred Stock, thus reducing the outstanding Preferred Stock to 10,000 shares
which is shown in the accompanying statement
The Company's deposit in the Union Trust Company, Cleveland, amounted to
$93,195 39 at October 31, 1933. The amount that will ultimately be realized
on this deposit cannot be determined at this time; however, in order to be conservative, your management has provided a reserve of $70,000.00 by a charge
against operations for the last quarter of the vear ended October 31, 1033.
Effect has been given in the annexed balance sheet to an appraisal of the Company's permanent assets by independent appraisers as of February 1, 1933. It
has been the policy of \'our Companv to provide for depreciation on a liberal
scale each year; however, changes affecting economic and other conditions have
made it advisable to revalue the plant assets to conform more nearly with current
conditions. The appraisal disclosed that conservative utility values were $372,443.83 less than book values and the Board of Directors have authorized a charge
of that amount to capital surplus
Depreciation has been provided for at the same rates as heretofore, but the
reduced valuations have been used as a basis subsequent to February 1,1933.
The provision for depreciation decreased from $131,994.79 in the preceding year
to $90,944.80 in the current fiscal year as a result of the revaluation of plant
assets.
Because of the continuance of the depression during the current year, this has
been another difficult year for our industry due to disturbed and uncertain market conditions, curtailment in the volume of business, increased burden of sales
and overhead expensis and unsatisfactory operating results.
Problems confronting us have been squarely met and adjustments and .plans
made to meet existing and probable conditions an i requirements so that we may
continue to improve and change our line of products in harmony with present
day needs and still hold our position of outstanding quality and service.
All of our employees have shown a wonderful spirit of loyalty and co-operation, thus exhibiting an appreciation of the difficulties encountered for which
they have earned the grateful recognition of the Board of Directors.
Respectfully submitted.
JOHN C. MYERS, President.
BALANCE SHEET T H E F. E. MYERS & BRO COMPANY, ASHLAND, OHIO, AS OF
THE CLOSE OF BUSINESS OCTOBER 31, 1933
ASSETS
Current:
Cash on Hand and on Deposit
U.S
Government Securities (at cost)
(Indicated Market Value
$918,562.50)
Accrued Interest
Notes Receivable-customers
$38, 778. 66
Accounts
Recaivable—customers
245,682.13
•
Less: Reserve
._
$166, 946. 68
$920, 250. 00
11, 812. 50
932,062. 50
$284, 460. 79
47, 578. 60
236, 882. 19
Inventory (Valued at lower
of cost or market)
797, 454. 60
_ _ _ _ _ $ 2 , 433, 345. 97
8796
STOCK EXCHANGE PBACTICES
BALANCE SHEET THE F. E. MYERS & BRO. COMPANY, ASHLAND, OHIO, AS OF
THE CLOSE OF BUSINESS OCTOBER 31, 1933—Continued
ASSETS—continued
Other Assets:
Deposit in liquidating bank.
$93, 195. 39
Less: Reserve
70, 000. 00
$23, 195. 39
Real Estate not used in
operations, Gas Wells,
Pipe Lines
Miscellaneous
Notes &
Acc'ts. Receivable, etc
__
5, 609. 56
_____
4,912.54
$33, 717. 49
Permanent:
As appraised
by West
Brothers, Inc. as of February 1, 1933 with subsequent additions at cost
and less allowance for
Depreciation to October
31, 1933:
Land
Buildings, Machinery,
Equipment, etc
$1, 649, 326. 04
Less: Reserve for Depreciation
531, 037. 14
$107,854.25
1, 118, 288. 90
1, 226, 143. 15
Deferred:
Inventory of Supplies and Prepaid Expenses
30, 988. 19
$3, 724, 194. 80
LIABILITIES
Current:
Accounts Payable for Purchases, Expenses,
Unpaid Pay Roll, etc
Accrued Taxes
_
$61, 936. 66
61,250.00
$123, 186. 66
Reserve:
For Contingencies
_ ___
Nominal:
Capital Stock:
Preferred—6% Cumulative:
Authorized and Issued 10,000
Shares
$1, 000, 000. 00
Common-without Par Value:
Authorized 300,000 Shares
Issued 200,000 Shares
Stated Capital
$200, 000. 00
Capital Surpl us
430, 930. 14
Profit & Loss Surplus., 1, 955, 078. 00 2, 586, 008. 14
15,000.00
3, 586, 008. 14
$3, 724, 194. 80
NOTE A.—The Company was reported contingently liable at October 31, 1933
on Foreign Drafts discounted in the amount of $5,474.26.
NOTE B.—This balance sheet is subject to the comments contained in the
annexed "Certificate".
STOCK EXCHANGE PRACTICES
8797
INCOME AND EXPENSE AND SURPLUS ACCOUNTS, THE F. E. MYERS & BRO.
COMPANY, ASHLAND, OHIO, FOR THE YEAR ENDED OCTOBER 31, 1933
INCOME AND EXPENSE
Manufacturing profit after deducting Cost of Sales, including
Materials, Labor and Manufacturing Expenses, but exclusive of Depreciation
Administrative, Selling and General Expenses
Operating Profit before depreciation
Depreciation on Plant and Equipment
Reserve provided for deposit in liquidating
bank
Other charges
Less: Interest Earned and Other income
$933, 370. 60
496, 688. 86
$436, 681. 74
$90, 944. 80
70, 000. 00
36, 945. 49
$197, 890. 29
52, 484. 80
Profit Before Providing For Federal Income Taxes
Provision for Federal income Taxes
145, 405. 49
$291, 276. 25
48, 500. 00
Net Profit
$242, 776. 25
NOTE.—Depreciation subsequent to February 1, 1933 is based upon revised
plant values as of that date.
SURPLUS
Capital Surplus:
Balance October 31, 1932
Less: Adjustment of value of plant and
equipment to independent appraisal by
West Brothers, Inc., as of February 1,
1933
$803, 373. 97
372, 443. 83
Balance October 31, 1933
Profit and loss surplus:
Balance October 31, 1932
$1, 912, 301. 75
Net Profit for the year ended October 31,
1933
242, 776. 25
$430, 930. 14
$2, 155, 078. 00
Less: Dividends Paid:
Preferred, 6%__ $75, 000. 00
C o m m o n , 50
cents per share 100, 000. 00 $175, 000. 00
Premium on 5,000 shares of
Preferred Stock retired
25, 000. 00 200, 000. 00
Balance October 31, 1933
Total
$1, 955,078. CO
_
$2,386,008.14
DECEMBER 7,
1934.
The F. E. MYERS & BRO. CO.,
Ashland, Ohio.
GENTLEMEN: We submit the annexed balance sheet of The F. E. Myers &
Bro. Co., Ashland, Ohio, as of the close of business October 31, 1933, and statement of income and expense and surplus account for the fiscal year then ended.
Cash funds, U.S. Government securities, and notes receivable were accounted
for by us. U.S. Government securities, consisting of first Sy2% liberty bonds, are
stated at cost which was $1,687.50 in excess of the indicated market value at
October 31, 1933. Accounts receivable were proved as to total by trial balance
but we did not verify the accounts by direct correspondence. Based upon our
analysis of certain of the accounts and other information obtained, it is our
opinion that the reserve provided for doubtful notes and accounts, rebates, etc.,
is sufficient. Merchandise inventory is valued at the lower of approximate cost
8798
STOCK EXCHANGE PRACTICES
or market value, and was certified to us by officials of the Company as to quantities, salability and prices used. The mathematical accuracy of computations
and method of valuation were tested by us, but we made no verification of
quantities.
Deposit in liquidating bank was confirmed by the liquidator and a reserve for
possible loss in realization has been provided by the management.
Permanent assets are shown as appraised by West Brothers, Inc., as of February 1, 1933, with subsequent additions at cost and less allowance for depreciation
to the date of this balance sheet.
Provision has been made for all obligations of the Company at October 31,
1933, disclosed by the records examined and information obtained by us.
Subject to the foregoing, we hereby certify, that we have examined the books
of account and record of The F. E. Myers & Bro. Co., Ashland, Ohio, as of the close
of business October 31, 1933, and that, in our opinion, based upon the records
examined and information obtained by us, the accompanying balance sheet sets
forth the financial position of the Company as of the close of business October 31,
] 933, and the relative statement of income and expense reflects the results from
operations for the year then ended.
Very truly yours,
ERNST & ERNST,
Certified Public Accountants.
OFFICERS AND DIRECTORS, THE F. E. MYERS & BRO. COMPANY,
OHIO, OCTOBER 31, 1933
ASHLAND,
OFFICERS
J. C Myers, Ashland, Ohio, President; Guy C. Myers, Ashland, Ohio, First
Vice President; A. N. Myers, Ashland, Ohio, Second Vice President; G. D. Myers,
Ashland, Ohio, Third Vice President; F. B. Kellogg, Ashland, Ohio, Secretary and
Treasurer; J. C. Frentz, Ashland, Ohio, Assistant Secretary; M. G. Miller, Ashland, Ohio, Assistant Treasurer.
DIRECTORS
J. C. Myers, Ashland, Ohio; Guy C. Myers, Ashland, Ohio; A. N. Myers, Ashland, Ohio; G. D. Myers, Ashland, Ohio; T. W. Miller, Ashland, Ohio; F. B.
Kellogg, Ashland, Ohio; E. A. McDowell, Ashland, Ohio; J. R. Nutt, Cleveland,
Ohio. (One vacancy at October 31, 1933.)
EXHIBIT U-22-14
EXCERPT TAKEN FROM THE STATE BANK EXAMINER^ REPORT DATED JANUARY
20, 1933
/ . P. Harris, $284,000.00.—Maker a former vice president of the bank and is
now unemployed. The loan is collateraled by various listed stocks worth
$54,000.00 at the present market prices. Other collateral held is 356 shares of
the Georgian Apartment Company. Value undetermined. Payment depends
entirely on the collateral held and on the future ability of the borrower to earn.
For the purpose of this investigation $100,000.00 has been classed as a loss and
an additional $120,000.00 has been classed as doubtful.
EXHIBIT U-22-15
MAY 16th, 1933.
In re: J. R. Nutt and J. P. Harris.
At my request, Mr. Nutt called today.
1. 1 referred to his letter of April 13th to R. S. Crawford in reply to a reference in the report of the Audit Committee of the Board of Directors, and told
him we had investigated the matter, as he requested, and had not found evidence
of his guarantee, as he said did not exist.
2. This investigation had disclosed that the loan when made had little if any
actual realizable margin;
3. That the making of the loan protected the sale of the collateral by Hornblower and Weeks, including 1,500 shares of the F. E. Meyers & Brother stock
in Mr. Nutt's name and said both by Mr. Nutt and Mr. Harris to belong to Mr.
Nutt.
STOCK EXCHANGE PKACTICES
8799
4. Accordingly, the loan appei^ed to have bsen unwarranted by banking
practice, and as one in the making of which he had substantial interest in the
protection of his O\vn securities Therefore, it appealed a proper request, and
I was now so making, that he shoald take up the obligation. This he declined
to do.
Mr. Nutt stated definitely today that the pledge on life insurance was given
to him by Mr. Harris at the time this loan was male. He did not say who had
handled the making of the loan for the bank, b it mentioned that Mr. Harris
had pressed him to see that it was made I told Mr. Nutt no more than is
specified in Nos 1, 2, and 3, above
tf -Mr. Nutt said the F. E. Meyers & Brother company is in splendid shape and
plans to pay dividends this fall. It should accordingly be tickled up by the loan
clerk for inquiry and transfer thirty days ahead of the quarterly dividend dates
of June 30th, September 30th, December 31st and M *rch 31st, and the transfer
effected if dividends are to be paid.
OS^AR L. Cox, Conservator.
OLC M
EXHIBIT U-22-16
SEPTEMBER 12th,
1933.
Mr. J. R. NUTT,
2512 Terminal Tower, Cleveland, 0.
R,e: J. P. Harris Loan in the approximate amount of $284,000.00.
DEAR MR. NUTT: On May 16th the writer expressed to you the opinion that
the circumstances surrounding this loan were such that he felt it proper to ask
you to pay the item in full, which you declined to do
In the ordinary course of business we have submitted the matter to our counsel,
and are now in receipt of advices of concurrence in the view that you are properly
liable for any loss which we may sustain in connection with this obligation.
Accordingly this will constitute confirmation and renewal of our request that
you take up the obligation, and advice that if you still continue your declination
to do so, we will take such steps as we deem necessary for the adequate protection
of the bank.
If you or your counsel feel further negotiations in the matter should be had,
we shall be glad to meet your convenience, and will await your advices in ths.t
connection at some early day, addressed either to the writer, or to our counsel in
this transaction, Mr. Luther Day.
Very truly yours,
OSCAR L. COX,
Special Deputy Superintendent of Banks.
OLC.S
Dictated in Mr. Day's presence and copy sent to Mr. Luther Day before
mailing.
THE
UNION TRUST COMPANY—LOANS TO DIRECTORS, WILLIAM G. MATHER—
M. J. LA PADULA AND T. A. DONALDSON
EXHIBIT
U-6-1
COLLATERAL TRUST INDENTURE
Dated for convenience the 7th day of July, 1932, but
This indenture, V (Sgd. W. G. M. 10/4/32) made this 21st day of July, 1932,
between WILLIAM G. MATHER, of Bratenahl, Cuyahoga County, Ohio, Party of
the First Part, (hereinafter called "First Party")* and THE UNION TRUST COMPANY, an Ohio corporation, of Cleveland, Ohio, (hereinafter sometimes called the
"Trustee"), Party of the Second Part;
Whereas, First Party has borrowed money from banks, trust companies and
others, and to evidence the indebtedness thereby incurred, has executed his
promissory notes to the payees, in the principal amounts, drawing interest at the
rates per annum, bearing the dates, having the maturities, and being secured,
respectively, as follows:
175541—34—PT 20
5
8800
STOCK EXCHANGE PRACTICES
Type A indebtedness
Principal
amount
Payee
The Union Trust Company
$450,000
350,000
Interest rate
Date
6% quarterly
6% quarterly
March 9, 1932
March 9,1932
Maturity
Demand.
Demand.
secured by promissory note of The Cleveland-Cliffs Iron Company in the amount
of $200,000 issued under, and secured by, Trust Agreement dated March 23, 1932,
between said Company and The Union Trust Company, and Collateral Trust
Indenture of the same date between the same parties; promissory note of The
Cleveland-Cliffs Iron Company in the amount of $2,000 secured by Pledge Agreement dated June 23, 1932; 31,253 Preferred shares of The Cleveland-Cliffs Iron
Company and 8,000 Common Shares Voting Trust Certificates of The Cliffs Corporation.
The Cleveland Trust Company
$125,000
6% quarterly in
advance.
July 5, 1932 October 3, 1932
secured by promissory note of The Cleveland-Cliffs Iron Company for $125,000
issued under, and secured by, Collateral Trust Indenture between said Company
and The Union Trust Company, dated March 23, 1932; promissory note of The
Cleveland-Cliffs Iron Company in the amount of $1,250 secured by Pledge Agreement dated June 23, 1932; 2,000 Preferred shares of The Cleveland-Cliffs Iron
Company, 2,208 Common shares of The Union Trust Company, and 550 shares of
The Guardian Trust Company.
Central United National Bank of
Cleveland.
$250,000
6% quarterly
May
29,1931
Demand
secured by 10,000 Preferred shares of The Cleveland-Cliffs Iron Company.
The Guardian Trust Company
$348,031.39
6% quarterly
March 15,1932
Demand
secured by 10,000 Preferred shares of The Cleveland-Cliffs Iron Company, 11,219
Common shares Voting Trust Certificates of The Cliffs Corporation, 1,000 shares
of Common stock of Lake Superior & Ishpeming Railroad Company, 1,934 Preferred shares of The Kelley Island Lime & Transport Company, 476 shares of
Common stock of The Interlake Steamship Company, 390 Common shares of The
Great Lakes Towing Company.
Payee
Miners National Bank, Ishpeming, Michigan.
Irvmg Trust Company, New
Vnrlr
The Cleveland Cliffs Iron Company.
Principal
amount
Interest rate
Date
Maturity
$5,000
7,500
5,000
2,500
10,000
10,000
10,000
5% quarterly
5% quarterly
5% quarterly
5% quarterly
5% quarterly
5% quarterly
5% quarterly
August 1, 1931
September 1, 1931
October 1, 1931
October 1, 1931
November 1, 1931
December 1, 1931
January 1, 1932
Demand
Demand
Demand
Demand
Demand
Demand
Demand
9,000
5% quarterly
June 4, 1932
4,250
5% quarterly
October 20,1896
September 2,
1932
Demand
Also joint and several note of First Party and M. C. Rosenfeld to The Guardian
Trust Company in the amount of $100,000, bearing interest at 6% per annum,
payable quarterly, dated October 1, 1926, due on demand, secured by 959 shares
of Preferred stock of Interstate Foundries, Inc., pledged by First Party and 45
shares of capital stock of The Pioneer Steamship Company and 1010 common shares
of The Grabler Manufacturing Company, pledged by M. C. Rosenfeld.
8801
STOCK EXCHANGE PRACTICES
And whereas, First Party is liable either contingently or with others upon obligations represented by notes or instruments in the manner and to the extent stated
below:
TYPE B INDEBTEDNESS
Promissory note of Trinity Cathedral to The Guardian Trust Company in the
principale r amount originally of $30,000 and now of $16,576.80, bearing interest at
5K% P annum, payable quarterly, dated January 18, 1925, due on demand,
endorsed by First Party and C. F. Brush.
Promissory note of Wisconsin Shale Products Company to The Guardian Trust
Company in the principal amount of $10,000, bearing interest at 6% per annum,
payable quarterly, dated April 10, 1931, due April 10, 1932, endorsed by First
Party and Ethel S. Gregg and Wells K. Gregg.
Promissory note of T. J. Sullivan to First National Bank, Alger County, Michigan, in the principal amount of $12,500, bearing interest at 7% per annum, payable quarterly, dated August 9, 1931, due February 9, 1932, payment of which is
guaranteed by First Party, and which note is secured by the mortgage of certain
timber lands in Alger County, Michigan.
Contract between The Union Trust Company and William G. Mather, et al.,
dated November 26, 1921, on which there is due the sum of $22,164.09, and
which bears interest from June 1, 1932 at 6% per annum, payable quarterly,
for the payment and performance of which First Party and fourteen other individuals are jointly and severally liable.
And whereas, First Party has executed the following secured note for a benevolent purpose, but represents that the same was upon a valid consideration, so
that it has become a legal obligation of First Party:
TYPE CINDEBTEDNESS
Payee
Principal
amount
Trinity College
$60,000
Interest rate
6% quarterly
Date
Maturity
April 4,1932... Demand.
secured by 5,000 Preferred shares of The Cleveland-Cliffs Iron Company.
And whereas, First Party has executed notes to colleges and institutions for
educational, charitable or benevolent purposes, but represents that the same
were upon valid considerations, so that they have become legal obligations, as
follows:
TYPE DINDEBTEDNESS
Payee
Trinity College...
Kenyon College
Diocese of Marquette, Mich..
Musical Arts Association
Western Reserve University.
Cleveland Museum of Art.__
Principal
amount
$75,000
50,000
25,000
21,000
200,000
16,000
3,265
Date
Maturity
June Jan 1, 1925 . . .
July 1, 1925
June 11, 1929
October 1, 1924
February 23, 1929. __
October 1, 1926
July 12, 1922
July 1, 1948, i 1943.
July 1, 1945.
June 1, 1932
January 1, 1934.
March 1, 1933, i 1932.
Interest rate
6% quarterly
6% quarterly5% quarterly
6% quarterly
5% quarterly
6% quarterly
6% quarterly
Demand.
Demand.
i (Sgd. W G. M. 9/22/32)
And whereas, First Party has also executed his promissory notes to individuals
and corporations in the manner and to the extent listed below:
TYPE EINDEBTEDNESS
Payee
Katharine L. Mather
Marian S. Bower
The Union Trust Company..
Principal
amount
$7,000
4,000
15,000
10,000
100,000
10,000
Interest rate
6% quarterly... .
6% quarterly
6% quarterly
6% quarterly
6% quarterly. ...
7% quarterly
Date
March , 1894..
October 8, 1898
June 6, 1903
July 1, 1909
May 1, 1929
March 14, 1923
Maturity
Demand
Demand.
Demand.
Demand
May 1, 1949.
March 14, 1943.
8802
STOCK EXCHANGE PEACTICES
And ivhereas, said William G. Mather is desirous of borrowing during the term
of this Collateral Trust Indenture additional sums which shall be secured by,
and constitute a first lien upon, all the stocks and securities pledged under this
instrument, (including, but subject to the prior pledges thereof, stocks and
securities heretofore pledged to secure Type A and Type C Indebtedness), and
The Union Trust Company, The Cleveland Trust Company, The Guardian
Trust Company and Central United National Bank of Cleveland, all of Cleveland, Ohio, have agreed, subject to the condition that there shall then be no
default under this Indenture, to make such new loans to First Party at such times
and in such amounts as required by First Party, doing so in the proportion which
their respective existing loans hereinbefore set forth and included in Type A
Indebtedness respectively bear to the total of their said existing loans, to-wit:
The Union Trust Company 49.29%, The Cleveland Trust Company 7.70%, The
Guardian Trust Company 27.61%, Central United National Bank of Cleveland
15.40%, such new loans being hereinafter referred to as "New Indebtedness"
and being in each year not in excess of the following aggregate amounts:
During the calendar year 1932 $50,000;
During the calendar year 1933 $85,000;
During the calendar year 1934 $85,000;
During the calendar year 1935 $85,000;
such New Indebtedness to be evidenced by notes of First Party executed to the
respective loaning banks at the time of each such new loan, bearing interest at
the rate of 6% per annum, payable quarterly, the principal thereof to be payable
on or before January 1, 1936, and such notes to be in substantially the following
form:
PROMISSOKY NOTE
$
^
On or before January 1, 1936, I promise to pay to the order of
19__
at its office
Dollars,
for value received, with interest at the rate of six (6) per cent, per annum, payable quarterly on the 1st days of January, April, July, October in each year,
unpaid installments of interest to draw interest at the same rate as the principal.
Now, therefore, this indenture witnesseth:
That said William G. Mather, Party of the First Part, in consideration of the
premises and for the benefit of the holders of the Indebtedness to be incurred and
the holders of indebtedness now existing as hereinabove set forth, who shall
become parties hereto and entitled to the benefits hereof as hereinafter provided,
hereby pledges, assigns, transfers and sets over unto the Trustee, and its successors
in trust, and its and their assigns, the following fully-paid and non-assessable
shares of stock and the following securities and property:
FREE STOCKS AND SECURITIES
65,756 Preferred shares of The Cleveland-Cliffs Iron Company;
81,386 Common shares Voting Trust Certificates of The Cliffs Corporation;
151 Common shares The Guardian Trust Company;
292 Common shares The Union Trust Company;
58 Common shares Union National Bank, Marquette, Michigan;
60 Common shares First National Bank, Negaunee, Michigan;
25 Common shares Miners National Bank, Ishpeming, Michigan;
281 Common shares First National Bank, Alger County, Michigan;
55 Common shares Gwinn State Savings Bank;
388 Common shares Irving Trust Company;
388 Common shares Presque Isle Transportation Company;
620 Common shares Lake Superior & Ishpeming Railroad Company;
381 Preferred shares The Munising Paper Company;
717 Common shares Commercial Investment Trust Corporation;
180 Common shares Republic Steel Corporation;
300 Preferred shares Republic Steel Coxporation;
417 Preferred shares Vlchek Tool Company;
250 -Ceraeieft Preferred (Sgd. W. G. M. 9/30/32) shares The Youngstown
Steel Company;
80 Common shares White Motor Company;
6,000 Common shares The Otis Steel Company;
STOCK EXCHANGE PRACTICES
8803
3,219 Preferred shares The Otis Steel Company;
(65,000 shares thereof represented by Voting Trust Certificates)
V 74,053 Common shares Continental Shares, Inc.; V (Sgd. W. G. M. 9/22/32}
442 Common shares Medusa Cement Company;
68 Preferred Shares Wheeling Steel Corporation;
$4,000 First Mortgage 6% Gold Bonds The Piqua Handle & Mfg. Co., due
October 1, 1931;
5,000 Second Mortgage Series "A" 6% Bonds Troop A Armory Company,
due September 30, 1943;
15,000 First Mortgage Sinking Fund 6% Bonds The Otis Steel Company.
SPECIAL PROPERTY
All right, title and interest of First Party in, to and under a certain memo
randum dated July, 1923, initialed by M. C. Rosenfeld, relative to the obligation
of said Rosenfeld to pay 67.112% of the principal and interest of the obligation
later represented bv the above mentioned note of First Party and M. C Rosenfeld
to The Guardian Trust Company in the amount of $100,(300, dated October 1,
1926, together with all right, title and interest of First Party in and to 500 shares
of the capital stock of The Grabler Manufacturing Company, pledged by M. C.
Rosenfeld to First Party as security for said obligation of said Rosenfeld.
All rights of exoneration or contribution now or hereafter existing in favor of
First Party against any or all other parties to the Type B Indebtedness.
STOCKS AND SECURITIES SUBJECT TO SENIOR PLEDGE
Promissory note of The Cleveland-Cliffs Iron Company in the amount of
$200,000 issued under, and secured by, Trust Agreement dated March 23, 1932,
between said Company and The Union Trust Company, and Collateral Trust
Indenture of the same date between the same parties;
Promissory note of The Cleveland-Cliffs Iron Company in the amount of
$2,000, secured by Pledge Agreement dated June 23, 1932; *
31,253 Preferred shares of The Cleveland-Cliffs Iron Company;
8,000 Common shares Voting Trust Certificates of The Cliffs Corporation;
all subject to the prior pledge thereof to The Union Trust Company to secure
the Type A Indebtedness of First Partv to said Trust Company above listed.
Promissory note of The Cleveland-Cliffs Iron Company for $125,000 issued
under, and secured by, Collateral Trust Indenture between said Company and
The Union Trust Company, dated March 23, 1932;
Promissory note of The Cleveland-Cliffs Iron Company in the amount of
$1,250, secured by Pledge Agreement dated June 23, 1932.
2,000 Preferred Shares of The Cleveland-Cliffs Iron Company;
2,208 Common shares of The Union Trust Company;
550 shares of The Guardian Trust Company;
all subject to the prior pledge thereof to The Cleveland Trust Company to secure
the Type A Indebtedness of First Party to said Trust Company above listed.
10,000 Preferred shares of The Cleveland-Cliffs Iron Company, subject to the
prior pledge thereof to Central United National Bank of Cleveland to secure the
Type A Indebtedness of First Party to said bank above listed.
10,000 Preferred shares of The Cleveland-Cliffs Iron Company;
11,219 Common shares Voting Trust Certificates of The Cliffs Corporation;
1,000 shares of Common stock of Lake Superior & Ishpeming Railroad Company;
1,934 Preferred shares of The Kelley Island Lime & Transport Company;
476 shares of Common stock of The Interlake Steamship Company;
390 Common shares of The Great Lakes Towing Company;
all subject to the prior pledge thereof to The Guardian Trust Company to secure
the Type A Indebtedness of First Party to said Trust Company above listed.
5,000 Preferred shares of The Cleveland-Cliffs Iron Company, subject to the
prior pledge thereof to Trinity College to secure the Type C Indebtedness of
First Party to said College above listed.
To have and to hold all said shares of stock and securities (subject, however,
to any senior pledges thereof hereinabove specified) and also all other property
of any kind, including cash, which, by virtue of any of the provisions of this
Indenture, shall hereafter become subject hereto, to the Trustee and to its successors in trust and assigns, but in trust nevertheless:
First. For the equal and proportionate benefit and security of all holders of
notes representing New Indebtedness, prior to any benefit or security to holders
8804
STOCK EXCHANGE PEACTICES
of other Indebtedness hereinbefore set forth (without intending by this clause to
imit the rights of any holders of Types A and C Indebtedness in the stocks and
securities heretofore pledged therefor).
Second. For the benefit and sacurity, subject to the limitations hereinafter set
forth, of all present and future holders of Types A, B, C, D and E Indebtedness
hereinabove listed; provided, however, that the share of the respective holders of
Type A, Type B and Type C Indebtedness in such benefit and security shall be
only with respect to the deficiency upon such Indebtedness, held by them respectively, after the due application thereon of all the security specifically pledged,
mortgaged or held in trust therefor.
It is agreed that the Trustee shall have the rights, powers, privileges and immunities, and that the property pledged hereunder is so pledged upon the terms,
conditions and covenants, hereinafter set forth:
SECTION 1. The holders of all the Indebtedness hereinabove listed who become
parties hereto agree, subject to the provisions of this Indenture, to extend the
time of payment of the principal of the Indebtedness held by them until January
1, 1936 (in event the same matures prior to that date), and the holders of Type D
and Type E Indebtedness becoming parties hereto agree, subject to the provisions
of this Indenture, to postpone and defer until January 1, 1936, the payment of
interest on the notes held by them respectively.
SECTION 2. First Party will duly and punctually pay, or cause to be paid, interest on each of the notes representing New Indebtedness and Type A Indebtedness, at the rates and times thereby provided, and will duly comply with his
obligations with respect to interest and taxes under the terms of the Type B
Indebtedness, and on or before January 1, 1936, or on any earlier date on which
this agreement may be terminated, First Party will duly pay, or cause to be paid,
all accrued and unpaid interest on the Types C, D and E Indebtedness.
On or before January 1, 1936 First Party will duly and punctually pay, or
cause to be paid, the entire principal amount of the notes then outstanding, representing New Indebtedness, plus smy accrued and unpaid interest thereon.
At the time of issuance of each note representing New Indebtedness, First
Party will file a copy thereof with the Trustee.
SECTION 3. So long as First Party shall not be in default hereunder, he shall be
entitled to receive all dividends upon the stocks, and all interest on the securities,
pledged hereunder, and to vote such stock.
SECTION 4. So long as any of the Indebtedness hereinbefore referred to shall be
outstanding, First Party will not, during the term of this Indenture, sell, mortgage or otherwise dispose of his residence property located in Bratenahl on Lake
Shore Boulevard, including all real estate owned by him in connection therewith,
situated on both sides of said Boulevard, without the written consent of three of
the four following officers of banks and trust companies, namely:
The then President of The Union Trust Company,
The then President of The Cleveland Trust Company,
The then President of The Guardian Trust Company,
The then Chairman of the Board of Directors of Central United National
Bank of Cleveland,
all of Cleveland, Ohio, and in case of the sale of said property or any part thereof
the net proceeds shall be paid to the Trustee and shall be applied first in discharge
of unpaid interest on the notes representing all the Indebtedness, except Types
C, D and E Indebtedness, and second, to the payment of the principal of the New
Indebtedness pro rata, and third to the payment of all other Indebtedness (except
Type B Indebtedness) pro rata, including accrued and unpaid interest on Types
C, D and E Indebtedness.
SECTION 5. First Party will furnish to the Trustee from time to time, upon request, true and correct statements and accounts of his income and expenditures.
SECTION 6. In case the holder or holders of any of the notes representing Type
A or Type C Indebtedness shall at any time, during the term of this Indenture,
desire to sell any of the collateral held under prior pledge for the security of such
note or notes, such holder or holders shall, before selling the same, make application to and secure the written consent of at least three of the four above specified
officers of banks and trust companies located in Cleveland, Ohio.
In the event such request is refused, such collateral shall not be then sold.
SECTION 7. In case First Party shall default in the due observance or performance
of any of the covenants or conditions herein undertaken by him, and such default
shall continue for thirty (30) days after written notice thereof shall shave been
given to him by the Trustee, or in case a Receiver shall be appointed for all or a
substantial portion of the property of First Party and the order appointing such
Receiver shall not be vacated within thirty (30) days after the entry thereof, or
STOCK EXCHANGE PRACTICES
8805
in case First Party shall be adjudicated a bankrupt, or file a petition in voluntary
bankruptcy, or make a general assignment for the benefit of creditors, or consent
to the appointment of a Receiver of all 01 a substantial portion of his property,
or in case three of the four above-specified officers of banks and trust companies
located in Cleveland, Ohio, shall determine that it is imperative for the protection
of the holders of Indebtedness that the same become immediately due and payable (which determination shall be communicated to the Trustee and by it to the
First Party) and First Party shall fail to pay the entire Indebtedness hereinabove
listed or referred to, with all accrued and unpaid interest thereon, within thirty
(30) days after receiving notice of such determination from the Trustee (which
failure shall be treated as a default hereunder), then the Trustee may in its discretion, and upon request in writing by the holders of thirty-five (35) per cent
in principal amount of the Indebtedness hereinabove listed or referred to, shall
declare the principal of all said Indebtedness to be forthwith due and payable
and upon such declaration the same shall become due and payable immediately.
In event of any default hereinabove referred to, or in event First Party shall
not on or prior to January 1, 1936, pay in full the principal amount of all the notes
representing New Indebtedness, with all interest thereon, then the Trustee may
in its discretion proceed to sell at one time, or from time to time, either as an
entirety, or in such parcels as the Trustee may determine, all of the property held
by it in pledge hereunder. Any such sale or sales may be made upon ten (10)
days' notice in writing from the Trustee to First Party; or any such sale may be
made at public auction at such place in the City of Cleveland, Ohio, and at such
time and upon such terms, as the Trustee may fix. A notice of any such sale
at public auction, containing a brief description of the property to be sold and
stating the time and place of sale, shall be published once a week for two (2)
successive weeks prior to such sale in a daily newspaper of general circulation
published in the City of Cleveland, Ohio, and a copy of said notice shall also be
sent by registered mail, postage prepaid, addressed to First Party, 1460 Union
Trust Building, Cleveland, Ohio, at least ten (10) days prior to the date of
sale. At any such sale, the Trustee and/or any holder or holders of Indebtedness
hereby secured may become the purchaser or purchasers, First Party hereby
waiving any equity of redemption as to any such purchase. Upon any such sale
of the property pledged hereunder, or upon any sale thereof pursuant to a judgment or decree of a court, the entire principal amount of all the notes and instruments representing all the Indebtedness hereinabove listed or referred to, as
well as any unpaid interest, shall become and be forthwith due and payable.
Upon any sale of such property, either at public auction or pursuant to a judgment or decree of a court, any purchaser shall be entitled, in making payment of
the purchase price, after paying in cash so much of the price as may be necessary
to cover the cost and expenses of the sale and of the proceeding incident thereto,
as well as the compensation of the Trustee and its expenses, to appropriate and
use, toward the payment of the remainder of the purchase price, any of the Indebtedness hereinabove listed or referred to and interest due and unpaid, including unpaid taxes required to be paid by First Party under the terms of any item
of Type B Indebtedness, reckoning the Indebtedness and interest (including
taxes), so appropriated and used, at such sum as shall be payable thereon out
of the net proceeds of the sale.
All rights of action under this Indenture may be enforced by the Trustee without the possession of any of the notes or instruments representing Indebtedness
hereinabove listed or referred to or the production thereof on any trial or other
proceeding relative thereto, it being agreed that the records of the Trustee as to
the amount of such Indebtedness shall be accepted in lieu of such production.
All rights to, and provisions for, an appraisal of the property to be sold are
hereby waived by First Party.
All monies collected by the Trustee for the benefit of the holders of Indebtedness
shall be applied in the order following:
1st. To the payment of the costs and expenses, including reasonable compensation to the Trustee, its agents, attorneys and counsel.
2nd. To the payment of the whole amount then owing and unpaid upon the
notes representing New Indebtedness for principal and interest, without preference or priority of principal or interest, either over the other, ratably to the
aggregate of such principal and interest.
3rd. To the payment of the whole amount then owing and unpaid upon the
notes and instruments representing all other Indebtedness hereinbefore listed, for
principal and interest (including taxes required to be paid by First Party under
the terms of any item of Type B Indebtedness), without preference or priority
of principal or interest (including such taxes), either over the other, ratably to
8806
STOCK EXCHANGE PRACTICES
the aggregate of such principal and interest (including taxes); provided, however,
that as to the respective items of Types A, B and C Indebtedness, the foregoing
provisions of this sub-section shall apply only to the unpaid deficiency of principal
and interest thereof (if any) remaining after the due application thereon of all
security specifically pledged, mortaged or held in trust for such respective items.
4th. To the payment of the surplus, if any, to the First Party, his legal representatives or assigns.
The holders of not less than seventy-five (75) per cent, in principal amount of
the Indebtedness hereinabove listed or referred to, upon first furnishing to the
Trustee, to its reasonable satisfaction, if so requested by it, security and indemnity to the Trustee against all costs, expenses and liabilities that may be incurred
therein or thereby, shall have the right from time to time, by instrument in
writing delivered to the Trustee, to determine the remedy to be adopted by the
Trustee and to direct the method and place of conducting all proceedings to be
taken under the provisions of this Indenture for the enforcement thereof or of
the Indebtedness.
In order to promote and to protect the rights of every holder of Indebtedness
hereinabove listed or referred to, and to avoid multiplicity of suits, it is expressly
covenanted and agreed that no holder of any such Indebtedness shall have any
right to institute any action at law or in equity for the enforcement of the security
pledged as a first pledge under this Indenture, or of the interest pledged hereunder in and to security which is subject to prior pledge, unless and until the
Trustee shall refuse and neglect to institute proper proceedings within a reasonable time after the request of the holders of thirty-five (35) per cent, in principal
amount of the Indebtednews hereinabove listed or referred to, with offer of
indemnity to the reasonable satisfaction of the Trustee against all costs, expenses
and liabilities that may be incurred therein or thereby.
SECTION 8. In event First Party shall, on or before January 1,1936, pay in full the
principal amount of all outstanding notes, representing New Indebtedness, together with any and all unpaid interest thereon, and pay in full all unpaid interest
on the Types A, C, D and E Indebtedness and comply with all his unfulfilled
obligations (if any) with respect to interest or taxes under the Type B Indebtedness, then this indenture shall become void, and the lien hereof upon the stocks
and securities pledged liereunder shall cease and determine; otherwise, this
Indenture shall remain in full force and effect. In event of the termination of
this Indenture as hereinabove provided, all the terms and provisions of the notes
and instruments, representing outstanding Indebtedness hereinbefore listed, and
specific pledges of security therefor, made other than by this Indenture, shall be
and continue in full force and operation.
SECTION 9. The proper expenses of the Trustee, including its compensation,
shall be paid by First Party as they are incurred.
All representations herein are made by the First Party and not by the Trustee.
The Trustee shall be under no obligation to do or refrain from doing any act
pursuant to the request or demand of any person or persons, firm or corporation,
holding Indebtedness hereinabove listed or referred to, until such person or persons, firm or corporation, shall have indemnified the Trustee, to its satisfaction,
against any and all costs, expenses and outlays, counsel fees and other proper
disbursements, and any other libaility growing out of the compliance by the
Trustee with such request or demand.
The Trustee shall be liable only for gross negligence or wilful or intentional
default in the execution of any duty or trust under this Indenture.
The Trustee may advise with counsel to be selected and employed by it at
the expense of First Party, and shall be fully protected in respect of any action
under this Indenture, taken or suffered in good faith by the Trustee in accordance
with the opinion of councel.
In case at any time the Trustee, or any successor Trustee, shall resign or for
any cause a vacancy shall occur in the office of Trustee, a successor Trustee or
Trustees may be appointed by the holders of seventy-five (75) per cent, in
principal amount of the Indebtnedess secured hereby, by an instrument or concurrent instruments in writing signed by such holders or by their attorneys in
fact thereunto duly authorized; but until a new Trustee shall be appointed by
the holders of Indebtedness as herein authorized, First Party, by written instrument, may appoint a Trustee to fill such vacancy. First Party shall give notice
of any such appointment by him made to the holders of the Indebtedness, but any
trustee so appointed by First Party shall immediately and without further act
be superseded by a new trustee appointed by the holders of the Indebtedness.
SECTION 10. The Trustee may treat the indicated holder of each item of the
Indebtedness hereinbefore described as the owner and holder thereof, and the
STOCK EXCHANGE PRACTICES
8807
amount hereinbefore indicated as due thereon as the amount due thereon, for
all purposes under this Indenture, until there shall have been filed with the
Trustee evidence to its reasonable satisfaction as to any change in interest therein
or ownership thereof, and as to the name and address of such successor in interest
or ownership and as to any change in the amount due thereon.
To be entitled to the benefits hereof any successor in interest in, or ownership
of, any of the Indebtedness hereinabove listed or referred to shall forthwith on
receipt of any note or instrument representing the same, or on acquisition of an
interest in any such Indebtedness, file with the Trustee evidence to its reasonable
satisfaction of such receipt, acquisition or interest. The Trustee may treat any
note or instrument corresponding to the description thereof, hereinbefore contained, or filed with the Trustee as hereinabove provided, as one of the notes or
instruments representing Indebtedness secured hereby, and the amount appearing
thereby to be due thereon as the actual amount due thereon, and may treat the
endorsee, or if it shall be endorsed in blank, the bearer, of any such note as the
owner thereof, for all purposes of this Indenture, any notice to the contrary notwithstanding.
SECTION 11. While First Party shall not be in default hereunder, the Trustee
may from time to time release from the lien of this Indenture any of the property
pledged hereunder, provided Firsi; Party shall simultaneously pledge and deposit
hereunder, in lieu thereof, other property which, in the judgment of the Trustee
(based upon the certificate of a competent and disinterested person, firm or corporation, selected by the Trustee and paid by First Party) has a value at least as
great as the value of the property so released. Any cash so deposited shall be
distributed by the Trustee in accordance with the provisions hereinabove set
forth relative to the distribution of any proceeds of any sale of First Party's real
property in Bratenahl, Ohio.
SECTION 12. This Indenture may be amended by the concurrence of First Party,
the Trustee and the holders of eightv (80) per cent, in principal amount of the
Indebtedness hereinabove listed or referred to.
SECTION 13. Wherever in this Indenture reference is made to consent, request
or similar action by the holders of a stated percentage in principal amount of the
Indebtedness hereinabove listed or referred to, the same shall refer to and mean
the principal amount of the Indebtedness hereinabove listed or referred to, the
holders of which or their predecessors in interest shall have become parties hereto
in the manner hereinafter provided, exclusive of the Type B Indebtedness.
SECTION 14. The holders of the Types A and B Indebtedness may become
parties hereto by endorsing hereon their consent to the provisions hereof, or by
executing and filing with the Trustee a separate instrument consenting to the
provisions hereof. The holders of Types C, D and E Indebtedness may become
parties hereto by forwarding the notes or instruments held by them respectively,
evidencing Indebtedness intended to be secured hereby, to the Trustee for the
indorsement thereon of the following:
" This note (or instrument) is entitled to the benefits, and is subject to the terms
and conditions, of a certain Collateral Trust Indenture, dated July 7, 1932, executed by Wm. G. Mather to The Union Trust Company, of Cleveland, Ohio."
Notes and instruments so forwarded shall be promptly endorsed and returned
by the Trustee.
No holder of Indebtedness hereinabove listed or referred to who shall fail to
become a party hereto in the manner hereinabove provided shall be entitled to any
benefit or security under this Indenture.
In witness whereof, First Party has signed this Indenture and The Union Trust
Company has caused this Indenture to be executed in its corporate name and
acknowledged by its President or one of its Vice Presidents, and its corporate seal
to be hereunto affixed and attested by its Secretary or one of its Assistant Secretaries, all on the day and year first above written.
(Sgd.)
WM. G. MATHEK,
Signed, sealed and delivered by William G. Mather in the presence of:
(Sgd.) CHAS. G. HEEK,
(Sgd.) D. R. FORREST,
THE UNION TRUST COMPANY,
By GROVER H. HULL, (Sgd.)
Vice President.
Signed, sealed and delivered by The Union Trust Company in the presence of:
R. W. PRITCHARD,
EDNA GENTRY.
Attest:
[SEAL]
L. C. GILGER, (Sgd.)
Assistant Secretary.
8808
STOCK EXCHANGE PRACTICES
STATE OF OHIO
\
CUYAHOGA COUNTY / "
Before me, a Notary Public in and for said County and State, personally appeared the above named William G. Mather, who acknowledged that he did sign
the foregoing instrument and that the same is his free act and deed.
In testimony whereof, I have hereunto set my hand and official seal at Cleveland,
Ohio, this 21st day of July, 1932.
(Sgd.) D. R. FORREST,
Notary Public, [SEAL]
D. R. FORREST
STATE OP OHIO
1
CUYAHOGA COUNTY J
Before me, a Notary Public in and for said County and State, personally appeared the above named Grover H. Hull, Vice President, and L. C. Gilger, Assistant Secretary of The Union Trust Company, a corporation, who acknowledged
that as such officers, duly authorized in the premises, they did sign and affix the
corporate seal of said corporation to the foregoing instrument for and on behalf
of said corporation by the authority of its Board of Directors; that the same is the
free act and deed of such officers and the free corporate act and deed of said The
Union Trust Company.
In testimony whereof', I have hereunto set my hand and official seal at Cleveland,
Ohio, this 30th day of September, 1932.
R. W. PRITCHARD, Notary Public, [SEAL]
The undersigned assent to and accept the recitals and provisions of the foregoing Collateral Trust Indenture.
Dated July September 30, 1932.
The Union Trust Company, by W. M. Baldwin (Sgd.), Vice President;
The Cleveland Trust Company, by E. B. Greene (Sgd.), Chairman
Exec. Com.; Central United National Bank of Cleveland, by
H. Schlundt (Sgd.), Vice President; The Guardian Trust Company, by H. P. Mclntosh, Jr. (Sgd.), Vice President; Miners
National Bank, by C. H. Moss (Sgd), Cashier; Irving Trust Company, by Nolan Harrigan (Sgd), Asst. Vice President; The Cleveland Cliffs Iron Company, by S. L. Mather (Sgd.), Vice President;
First National Bank of Alger County, Michigan, by O. E. Brown
(Sgt.), Cashier.
(Exhibits U-6-2 through U-6-3a face this page)
EXHIBIT U-6-2
EXHIBIT U-6-2a
due 4/24/33 se
1/23/33 I * « *
Clovoland Cliffs Iron CoT-asTed ^'8*^33
aue ayi^/33 secured by Exter.sior. Agreement dated
1/23/33 ansended by apreerne'.t dated 4/20/^33
nofodo
do
• j p a y m e n t Of discount)
g
feftt dated 4/£0/83
(payment of disco
discount notes 5,3,0^3.33 & $75.84
EXHIBIT
U-6-2C
EXHIBIT U-6-2d
EXHIBIT U-6-2e
EXHIBIT U-6-3
EXHIBIT U-6-3a
STOCK EXCHANGE PRACTICES
EXHIBIT
WM. G.
8809
U-6-4
MATHER
Statement of estimated receipts & disbursements to December 31, 1932, and for
'"33-4-5
June 1 to
D e c 31, 1932
Cash on Hand *
Estimated Receipts:
Salary:
Cleveland-Cliffs Iron Co
Corrigan, McKinney Steel Co
Lake Superior & Ishpeming R.R
Interest:
C C. I. Co. on Loans ($325,000)
Dividends:
Kelley Island Lime & Trans. Co
Guardian Trust Co
Union Trust Co
Irving Trust Co
First Natl Bank, Negaunee
Gwinn State Savings Bank
Commercial Investment Trust
Interlake Steamship Co
Ohio Steel Co. Bonds
_._
_
Total disbursements
i Cash on Hand as of June 1, 1932, is as follows.
Guardian Trust Co
Union Trust Co
Irving Trust Co
First National Bank of Alger County
Gwmn State Savings Bank
193f
11,666 00
8, 750 00
1, 500 00
$20,000 00
15,000 00
1, 500 00
$20,000 00
15, 000 00
1, 500 00
$20,000.00
15, 000.00
1, 500.00
12, 750 00
19, 500 00
19, 500 00
19, 500.00
1,934 00
2, 804 00
2, 500 00
620 80
720 00
480 00
1, 454 00
476 00
900 00
1,934 00
2, 804 00
2, 500 00
620 80
720 00
480 00
1, 434 00
476 00
900 00
1,934.00
2,804.00
2, 500 00
620.80
720. 00
480.00
1,434.00
476 00
900.00
67, 868 80
67, 888 80
67, 868 80
23
00
00
00
00
102,221 28
3,391 00
16,025 00
2,102 00
3,000.00
102,221 28
3, 391.00
16,025 00
2,102 00
3,000 00
5,000. 00
7, 500 00
300.00
292 00
180 00
420.00
600 00
1, 000 00
65.00
250 00
150 00
600 00
5,000 00
7, 500 00
300 00
292 00
180.00
420 00
600 00
1,000 00
65 00
250 00
150.00
600 00
5, 000 00
7, 500 00
300.00
292 00
180 00
420 00
600 00
1, 000 00
65 00
250 0G
150.00
600 00
967
1,402
1,250
310
360
240
717
238
450
00
00
00
40
00
00
00
00
00
64,997 47
Total short
Add: For Miscellaneous & Possible Contingencies
Total as Above
1934
$24,397.07
Total receipts
Disbursements:
Interest to Banks
Automobile Expense
House Expense
Club Expense
Personal Expense
Matheriana Expense
Taxes—Real Estate
"
Ohio Intangibles
"
Miscellaneous.
Pew Rent
Books & Magazines
Cliffs Cottage Expense
Virginia Bramhall
Mary F. Bolles
Insurance
Clothing
Expense a/c Timber Lands
Donations
1933
72,487 19
1,856 00
9,117.00
1, 219 00
1,500 00
700 00
2,460 94
9,965.69
175 00
146.00
100 00
245.00
350 00
750 00
1,815 00
200 00
150 00
375 00
102,221
3,391
16,025
2,102
3,000
103,609.82
143,090 28
143,090 28
143,090 28
38,612 35
75, 221 48
75, 221 48
75. 221. 48
11,387. 65
10,000 00
10, 000 00
10, 000 00
$50,000.00
85,221 48
85,221 48
85, 221. 48
_
7,301 26
--. 6,236 81
...
578 52
3,285 20
__ . 6,995.28
24,397 07
EXHIBIT
U-6-4a
00
OO
Wm. G. Mather
Statement showing notes payable as of June 13, 19B2, detailing interest rates and net amount per annum payable by Mr. Mather; also detail of
collateral given with same
To
Date given
March 9, 1932..
Notes to banks:
Union Trust Co
_
a/c Loans to C C.I. Co
Continental Shares Stock _
a/c Interstate Fdnes
a/c Personal Loans
April 6, 1932
Cleveland Trust Co
a/c Loan to C.C.I. Co
May 29, 1931
Central United Nat. Bank
a/c Continental Sh. Stock
a/c Personal Loans.Guardian Trust Co.
a/c Interstate Fdries
a/c Personal Loans
March 15, 1932
Oct. 1, 1926
Aug. 1,1931 to June
1, 1932.
June 4, 1932
Nov. 26, 1921.
Jan. 18, 1925.
Due date
Collateral
Demand-
.
200,000.00
200,000 00
174,000.00 ,
226, 000 00 !
July 5, 1932..
-L
.
.
-
' Demand
. .
j - - ..
j Demand
.1 Ucmand
..
j 125. 00 00
' '25,000 00
'
323,031.39 |
25,000 00
8000 Cliils Corp Common
81253 Sh. C C.I. Co Pfd.
Cleveland-Gil "s Iron Co. Note
$200,000 00
550 Sh. Guardian Trust Co.
2208 Sh. Union Trust Co.
2000 Sh. Cieve C Iron Pfd.
Cleveland-Ci. «* lion Co. Note
$125, ( 1 00
O
Q
10000 Sh. Cleve
i on Pfd
1934 Sh. Kelley LJ L
Tr Pfd.
10000 Sh. Cleve. C ir r 0 Pfd.
11219 Sh. Cliffs Cor - Ption
1000 Sh Lake Sup oc Ish R R.
390 Sh Gt Lakes Towing Co Com.
.476 Sh. Interlake S S. Co
S
Guardian Trust Co •
a/c Interstate Fdries
Miners Natl. Bank
Demand.
Demand-
8203 Sh. Interstate Fdry P*l.
None
Irving Trust Company..
Demand.
None
Contingent liabilities*
Union Trust Co. Bratenahl Land ContractGuardian Trust Company
a/c Trinity Cath. Dean's R—.
Demand .
Mr. Mather jointly & severally
liable with 14 other guarantors.
The individual guarantee being
one fourteenth
None endorsed by Wm. G. Mather
and C. F. Brush.
w
X
O
W
o
H
i—i
O
w
EXHIBIT U-6-5
,..o.».»,, y
ft
—=• ^ £
•
• _
W
™ .
L
.
-
m
- r ^¥ A
=E= 1
-*
W\
Trot Indenture Dated 7/21/32 between
Collateral
•illlam G.Mather and The Union Trust C o ., as Tn
stee
notify Corporate Trust Dipt.
1
Copy of Indenture In Vault.
Promissory Note
1
19
On or before January 1, 1936, I promise to
pay to the order of
at i t s office
for value received, with interest at the rate o:
6% par annum, payable quarterly on the 1st days
of January, April, July and October In each yeai
unpaid installments of interest to draw lnteresi
at the same rate as the principal.
'
-
•
|
L_
Received from THE UNION 1RUST COM AfiY-ClXVEl AND. OHIO. Ceiiatwal Securities and all cth*r p«p*rs in ronr^ctkm wtth *bov» d*ScHb«d t6l».
EXHIBIT U-6-5a
NAME
w
MF Math.r, UllUm 0.
AOOM" »
Vy/", cA
C_ . .
^*,.i
,
Nd.lt
OUt
DUE
CUE
NO.?
N«. 9
No. 10
No. 11
DUE J.J.38
14918
No. 2
No. 3
No.«
No. 5
OUl
DUE
DUE
DUE
DUE
DUE
DUE
Jt
g£
* JT
MEMO
INTCBES' OR DISCOLNT
1™ M C * I T
j I«T. Kicr.il
i wr. n u n
!. .
: 1
mnnsr TO
O«TI FA!D
»«Tt
OATC
r' 'fc/-^-Ja| ;
/Co Co
i
/otfTf-i/
1
!
1
I
1
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i
1
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1
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EXHIBIT
'•"»»»"""
^ /
U-6-6
•OMimoai or COLL«TI««l
| ^ J
•
....
Coll»t«r*l Truet i.tj «ntur« D«tod 7/21/52 b i t n t n n i l i t a
Bather and Ih» Union Trust Co., *« Tru8t««i.
1
i
i
Hotify Corporate Trust P»pt.
Copy of I:id»ntur« In vault.
Promistory Not*
1
»
On or b»for« January 1, 1926, I pramis* to
p«y to th« ord«r of
at i t t pffio«
!
|
for valu* r«o»ivtd, *itfa iiitarrat at tho rmto et 8% par
annum, payabl* quarterly on th« first dayi of Jftmarr,
April, July and October in «»oh yoar, unpaid lnatallncntl
of intoroat t o draw intaraat at th« latw rat« a* tho prir olpal,
I
j «»
•
•
:
« « * v « l r o » T H E UNION TRUST COMPANY.aEVEUND. OHIO. Cmataal S«uri«M n o •» « * • ! M » r > In UKtnKIIOII»W|«tMmdnerltadMM,
EXHIBIT
U-6-6a
EXHIBIT U-6-7
M l 0 * fKAJttf 2
^ ^
DfKIHFTIOH OF COlLATfftAL
^ ^
| HA1UC7
CpllatereA Trtist Indenture Datear7/2l/32 betwea: 1
William 0.Mather and the Union Trust Co., as TP iatee
V*
r
•
Notify Corporate Trust Dept.
Copy of Inde nture In Vault.
Promissory Note
$
19
On or before January 1, 1936, I premiee to pi y
to the order of
at i t s office
for value received, *ith Interest atvthe rate o)
6% per annum, payable quarterly on the 1st days
of January, April, July and October in each yeai
unpaid installJMnta of interest to draw interes'
at the same rate as the principal
IICIIVIO
>
EXHIBIT
U-&-7a
«i
Ma*,her, William 0.
|ij MA.)
EXHIBIT
U-6-8
r\
: Collateral Trust Indenture Dated fjdl/zs between
<William 0.Mather and The Union Trust Co.,aa Trustee
; Kotiff Corporate Erust Dept.
Copy of Indenture la Vault.
Promissory Mote
*
19
:
On or before January 1, 1936, I promise to
pay to the order of
at Its office
for value received, with Interest at the Pate of
6ji per tmnws, payatle quarterly on the 1st days
of January, April, July, and October in oach year,
unpaid installments of Interest to draw interest
at the same rate as the principal.
EXHIBIT
U-6-8a
EXHIBIT
U-6-9
Sotlf^ CorportVta xrust Sept.
Copy oi" iiidsmturs ia Vault
efore January 1, 1886, 1.precise to pay to
for value received, »ith iot»r»at at kl
ajiiiUB, payable quarterly on the first t
April, J u ly, uotottr in «»ch year, unp«
of interest to draw interest at th* «ai
EXHIBIT
U-6-9a
/ ^ :OCT**198S
t«*.|
EXHIBIT U-6-10
EXHIBIT U-6-10a
EXHIBIT U-6-11
EXHIBIT U-6-lla
EXHIBIT U-6-llc
EXHIBIT U-6-lld
oa
EXHIBIT U-6-lld
EXHIBIT U-6-lle
EXHIBIT U-6-llf
EXHIBIT U-6-llg
EXHIBIT U-6-12
EXHIBIT U-6-12a
EXHIBIT U-6-12b
EXHIBIT U - 6 - 1 2 C
EXHIBIT U-6-12d
EXHIBIT U-6-12e
EXHIBIT U-6-13
EXHIBIT U-6-13a
EXHIBIT U-6-13b
EXHIBIT U - 6 - 1 3 C
EXHIBIT U-&-13d
«.....«„
;
!^Jr8*T65o
^to..
9
m
The interstate foundries Inc . 1st -itpe. S./P 7jS
#511/700 due 7-1-30 g pn.s due Jap l s t 19£5
attached
*./>/
(j^A.
.#
-•* j »,fc.- (
---i^
5PANV, CoilA!«»a< b«cti!;ties s n c
. . .
^UN^TRU"CO>
EXHIBIT U-6-13e
1
#4
AODSEsa
29351
. Mather, Wm* 6*
^p
"X460 Union T r u s t B l d g .
^)NO.I
•
ouEy/./i>
No.
!
DUE
No.
6
DUE
No.
9
DUE
No.
3
DUE
No.
7
DUE
No.
10
DUE
No.
4
DUE
No.
i
DUE
No.
It
MEMO.
INTEREST OR DISCOUNT
•
EXHIBIT U-&-13f
EXHIBIT U-6-13g
\
^
"... _ ^ .
'
' ; I.J-*fether, Mm. d.
Union 1'rust bldg.
N«. 7
No.«
DUE
"
.
- DUE
Q
'
;
.
No. 10
DUE
No. 11
DUE
^
,.
TIMELOAN
n»r- ' / ' ' : - < " « >
'No.2
**.%
No. 4
'" •
•; . ' • . '
.
/ Z>? 3/
DJE
S-'jf'.tJ
fir. x - - ? ^ - i > / - DUE / . ? * " :J *•'-
f •;,/
/
7
' ///' / «
/?</' 0 1 i
,
y £
i A.
,—,
DUE
*
-
•
# / £
/ft
04 A -
4t 1
•
/ A"'
/•/•/>
t
22
•y j
•
EXHIBIT
U-6-13h
interstate roundriaa ^-ncl^tpe S/F 7%
lS/BO dui 7/4/gfe ,f66/30 due 7/1/26 f 116/130
ue 7/l/i,7 i'lbti/180 due 7/1/28 #£18/850 duo
7/1/29 #476/580 tfte 7/l/30 #581/700 due 7/l/30
EXHIBIT U-6-14a
EXHIBIT U-6-15
EXHIBIT U-6-15a
TIME LOAN
AODRESS
N» r
Slather, V.m. G.
union Trust B l d g .
DUE
No.
\J
«»!
10
DUE
No.
DUE
4
^
Na.S
- 3
J
1.
.
DUE
r..w
INtERESr OR DISCOUNT
RATE
J/3.S
/MA*
A
' . 3 "
^^
^ s ^ i> o o
rfotoo
jj-o aao «c—^>
|
|
i
|
!
EXHIBIT U-6-16
EXHIBIT U-6-16a
; -
EXHIBIT
U-6-17 (front)
I Cleveland C l i f f s T o n Co. P f d .
tPlefil (TP16K >' I,
>sh« <?a ,*F1<526 a t -souOah*
C
P1614 at- iO.OuUsha
, ;
--'
/
f
),OOOeh« The ^ontinontal Sh&raa *nc. Com '.'. l . Ctf.
#K)f/C09£39/4p IHY/C09860/8 /?NY/C0ftK07 a t 5Oshs ea
P ? / C 1 ^ 0 £ 0 / l a t lOOshs e a n / o E. A. Fierce % C<$
ifNY/C4Oi;5/67 n / o - U s % Co. i'NY/C].OO66 » / o J K ' A .
Plfjrce S: Co. ,~NY/C J 001fcr./o Bo«ttoh«r "»*ton & Co.
#KY/Cli'tK6/ftS »KY/C5666/7^ SNY/C 116y*/<) i-NY/C11664
|NY/'C11'tib'„> /GO MY/C 14 86/? // NY/C..,7,S?/S #NVC5737
#Sy/CI486' #KY/Cl0Si<#NY/cn26/7^rKY/C3093 #KY/C9967/73
j*Y/C1220/23 #NY/C3P'.>V'a] ,{>>f/c9964 #C/C469l/4702
#NY/C95!55/7" #KY/C9966 #Wr/c.39S8 #NY/C 1301/8
' #NY/c:'01E/l4 §njC&p%n't ttK/cnO9/lQ #NY/C4O43/4
|KY/C6625/6 /jf»Y/d3003 4;NY/C13«<5/9 P / D Otis * Co
#KY/C1500()/l jgKY/015017/16 n/o E Av Pierce Jr Co.
#C/C4003/L&4c/C40£3/7£; #c/C4637/44 ^»</C10££5/3O
KY/C56Q»fl3 C/C4894/4904IC/C5493/5604 C7S4805/12 / • •
-, OOOstfjr n / t r Hit.- •&-. tattre r
EXHIBIT U-&-17 (reverse)
Apr. 10, 1931
Guardian Trust Co.
a/c Wells K. Gregg
Apr. 10, 1932
Aug. 9, 1931
1st Nat. Bank, Alger County
a/c T. J. Sullivan
Feb. 9, 1932. . .
Jan 1, 1925
July 1, 1925
June 11, 1929
Oct. 1, 1924
Feb. 23, 1929
Oct. 1, 1926
Apr. 4, 1932
July 12, 1932
Notes to institutions.
Trinity College
_.
Kenyon Col, Bexley Hall
Kenyon Col, Faculty End. Fund
Diocese of Marquette
Musical Arts Assn
Western Reserve University
Trinity College a/c Chapel
Cleveland Museum of Art
_
July 1, 1948
July 1, 1945
J u n e l , 1932
. . Jan 1, 1934
Mar. 1, 1933 .
Demand
Demand
Demand
Personal notes*
Katherme L. Mather
Union Trust Co —Burg win
Marian S Bower
Cleveland Cl Iron Co
Less: Items postponed—Excluding
Note Oct 20, 1898.
Grand total...
6%
12, 500 00
7%
6%
6%
5%
6%
5%
6%
6%
6%
875. 00 Note guaranteed by Mr. Mather
& secured by timber lands in
Alger County.
4, 500. 00
3, 000. 00
1, 250. 00
1, 260. 00
10,000 00
960.00
3,600. 00
195. 90
450, 265 00
195.90
< 36,000. 00
10, 000 00
100, 000. 00
4, 250. 00
2,160. 00
700 00
6,000 00
212 50
150, 250 00
Note endorsed by Wm. G. Mather,
Ethel S. Gregg & Wells K.
None
None
None
None
None
None
5000 Sh. Cleve. O. I. Co. Pfd.
None
24, 765.90
24,570. 00
450, 265. 00
Demand
Mar 4, 1943
May 1, 1949
Demand
C.C I Co
75,000 00
50,000. 00
2 25,000. 00
21,000. 00
3 200,000 00
16,000 00
60, 000 00
3, 265. 00
600.00
1,475. 00
61, 240. 89
Less Items postDoned—Excluding Cleve. Museum of Art Note July 12, 1922.
See Below.
Mar. 14, 1923
May 1, 1929
Oct. 20, 1896
10,000.00
6%
7%
6%
5%
None
None
None
None
9,072 50
8,860 00
150, 250. 00
212. 50
2,343, 787. 28
102, 215 28
i This covers a series of notes given Aug. 1, 1931, to Jan 1, 1932, in connection with the construction of Mather Inn at Ishpemmg, Michigan These are as follows:
Aug. 1, 1931
5,000.00
Dec 1,1931
10,000 00
Sept 1, 1931
7,500.00
Jan. 1,1932
10,000 00
Oct 1,1931
5,000 00
Oct 1, 1931
2,500 00
Total
50,000.00
Nov. 1, 1931
_. .10,000.00
2 This note has option of renewal from year to year with payment of interest in advance. (Mr. Mather has written that for this year he will pay neither interest nor principal)
3
This note has option of renewal from year to year. (Mr. Mather has written that for this year he will pay neither interest nor principal).
4
This is covered by notes given as follows:
March 1894
7, 000 00
July 1, 1909
(Balance).. 10,000.00
Oct. 8, 1898
4, 000 00
Jan. 6, 1903
15,000.00
36,000. 00
« This is a joint note signed by Wm. G Mather and Wm. C. Rosenfeld. Wm. G. Mather holds 500 shares Grabler Mfg. Company stock as Collateral for Mr. Rosenfeld's share.
PRF:AZ 6-16-32.
(Exhibits U-6-5 through U-6-17af ace this page)
ui
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8888S88888888888888888888S8888
000000O5O5OiO5O>l-iO5O3O5O5O5O5l—'I—'rf^cOOCnCnOOCnrf^CDOSOSl—'
CO CO CO CO CO CO CO CO CO CO CO CO CO CO CO CO CO CO CO CO CO CO CO CO CO CO CO CO CO CO
888888888888888888888888888888
COCOCOCOCOCOCOCOCOCOCOCOCOCOCOCOCOCOCOCOCOCOCOCOCOCDCOCOCOCO
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DEPOSIT TICKET
.
UNION TRUST COMPANY
CI-KVi-I \NI), OHIO
THE UNION TRUST COMPANY
J
^
"^
DEPOSIT TICKET
CREDIT
CLEVEI<AND,O.
October 30
. . - , - ,
I
.
• .«r,.l nthtt
•i
1460 miOE
TriUST BLDG,
c h e c k e o n t r ••; o f f i c e w i l l c e c r e d i t e d < c n a t i o n a l l y
I? n o t ' . . ' 1 , ' 3 - •
v > - ' • •> • « • • *
t h e y m-ay b e c h a r g e d b e t * !<> < 1 f p o ; . - t . r s
C h e c k s o r . o t t - . « c C y DanKr. ^ - 3 v,hc< o '
fhisBa^kmaybec«riecJove.forpres.eM8t
thr <ghtr.«
,;
,
or d-n-r; on tnc fonowing day. and charged back if not round good.
In receiving atarns payable elsewhere than .n Oevsr-v d tr •-, 6a"H 8 M j m e s
00 responsibility for tr-e n«-g:igerc« Of default of any direct or .nd^ect
. . < - , ' - * •• •> • •• » " & M i i b « h « i d i>ab'e o"iy when proceedsm actual fgr.a
ottienwise items previousry credited maybe J ^ t - -• • " "- deoosi!. «•. • « ^
lost in transit may be charged back t o deposit >r<- > .r\ ; • - • ! • . • • < * . : * '-<' =JP ' <i" ! " 1
Unlesso!
'-ucted items m » be msJed to J',!wi*f ba'.xs
ay be returned by rna.i a'depositors rah In maK;r,g aepcs.te thedepoMOf
Ur,,
hereby assents tc t'«- for«g->:rg to^.dit«.,'-o
CHECKS OX THIS B*NK
CLEVELAND CHECKS
.;QUT OF, TOWN CHECKS
r • '
«? I * ' r
.
EXHIBIT U-6-17a
'
-
.
• >
• •
8813
STOCK EXCHANGE PRACTICES
EXHIBIT U-6-19
Participation
Name:
Address: Otis & Co. New York
Demand loan No. 6000B. $500,000.00
Principal
Interest
BalDate Debit Credit
ance
Interest to
Date paid
Int.
rate
393.25
6 May
May
May
May
393. 25 May 22,1931 May 22,1931
Debit
Date
Credit
Balance
8,1931 170,000
170,000.00
4,632.50 165,367.50
18,1931
1,938.00 163,429.50
21,1931
163,429.50
22,1931
$170,000.00 Union Trust Co.
170,000.00 Cleveland Trust Co.
100,000.00 Guardian Trust Co.
60,000.00 Central United National Bank.
Transferred to New Loan May 22 1931.
EXHIBIT U-6-19a
Date
Description of collateral
Par or share
170,000
Market basis
Amount
Certificate of Participation, Total 500,000 00.
Collateral held m Corporate Trust Dept.
Receives.
Received from The Union Trust Company Cleveland, Ohio Collateral Securities and all other papers
due in connection with the above described loan.
Date
EXHIBIT U-6-20
Participation
Name: R. S. C.
Address: Otis & Co. (New York).
Demand loan No. 5944B. $800,000.00.
Principal
Interest
Date Debit Credit
Balance
Interest to
Date paid
136 00 May 1,1931
632 06
May
2,1931
632 06 May 22,1931
May 22,1931
Transferred to New Loan May 22 1931.
Int.
rate
Date
6 Apr
May
May
May
May
Debit
28,1931 272,000
9,1931
11,1931
20,1931
22,1931
Credit
Balance
272,000
68,000 204,000
85,000 119,000
50, 320 68, 680
68, 680
8814
STOCK EXCHANGE PRACTICES
EXHIBIT U-6-20a
Date
Description of collateral
Par or share
272,000
Market basis
Amount
Certificate of Participation, Total 800,000.00
Union Trust Co. Corporate Trust Dept
Received.
I
Received from T H E UNION TRUST COMPANY Cleveland, Ohio Collateral Securities and all
other papers due in connection with the above described loan.
Date...
-.-
EXHIBIT U-6-21
Demand loan
No. 5105B
2,000,000.00
Name W. M. B.
Address
Interest
Date
Principal
Cred- Balance Interest to
it
Debit
3,385 26
3,450 12
3, 070 58
3,354 09
3, 200 27
2,209 65
* $3,071.16
i 3, 200 14
Jan.
Feb
Mar.
Apr.
May
1,1931
1,1931
1,1931
1,1931
1,1931
Date paid
Jan.
Feb
Mar
Apr
May
Int
rate
3,1931
2,1931
2,1931
1,1931
1,1931
2,209. 65 May 22,1931 May 22,1931
Date
6 Dec.
Dec.
Dec.
Dec.
Jan.
Jan.
Feb.
Mar.
Apr
Apr
May
May
Debit Credit Balance
2,1930 680,000
10,1930
850
12,1930 (2)
1,700
12,1930
1,700
6,1931
9,350
12,1931
221
2,1931
8,500
2,1931
8,500
1,1931
8,500
9,1931
850
1,1931
8,500
22,1931
631,329
680,000
679,150
677,450
675,750
666,400
666,179
657,679
649,179
640,679
639,829
631,329
1 Paid
2 Pay as of 12-11-30.
Transferred to New Loan May 22, 1931.
EXHIBIT U-6-21a
Date
Par or share
Description of collateral
Market
Basis
Amount
680,000 Certificate of participation. Total 2,000,000 00 Union Trust Co., Corporate Trust
Dept.
Received
Received from T H E UNION TRUST COMPANY Cleveland, Ohio Collateral Securities and all other
papers due in connection with the above described loan.
Date
(Exhibits U-6-22 through U-6-25d)
EXHIBIT U-6-23
...-C/CbBOo r:/G Knack t Co. h NY/C 11*5V<>7
fC/C4672/4
VNY/C1476/33 #C/C47U AC,/C?-:-6o/> #MY/C8<*57/«
->KY/C120b0/l #C/C449l/7 #JSY/C1421 #C/C4675/91
#C/C4711 a t lOOshs ea
,
qpi'oourg og.. wg,".
H in To
it
^sbi
an
ft c
1710
«el 4» C». fT.C.aSMl/ 4 n/o &BS1
*.'
* "£3/4 -»/V• Thosisot* * Me Kif>ftor»
f>npg «/A »•- A.Pierce * Co. at lOOabs «a
Mlf
/
/ii
The National City Bank of "en *ork Cap
tjfi'sAQZo at 4olis n/o »arrv K, bueh-<ar. #667875 it
5shs n/o Georpe C Vick »F287"?0 at £Oshs r./o
- a l t e r P. Me Gowan #F2fc449O B/O fcilllar Wertison
#F197239 n/o iieorpe C Tick at lOshs ea ,»'F821671 a t 5shs
' n/o Holt Rose ir Troster #F219682 n/o E H Roth 'c Co.
at lOsha #F?2497I st 5sha n/o Harry ->. F^.ch-nan
EXHIBIT U-6-23a
' - #SR&147 n/o Ed^ap-« * i l l t «
CV200»ha The Nation Wide Securities Co. Trust ^ t f SerleB B
2 r ~ #B29128/35 #B28114/2f. n/o N.P. Hill at lOOshs ea
<rer #B«17157 at 5aha n/o Otia k Co. #B»16931 s t 70ahs
$91*
#8616972 a-t^lOsha *B017339 at 15shs n/o N . P . n l l
#6016917 at Ish n/o 8 t i s * Co. £'B0171B7 at 74Bh«
n/o N.P. Hill #B«12655 a t ISshs n/o Herbert W l a i n s f u r t h e r
#BO16999 at lOshs n/o N.P. Hill #BO13959 *B»14292
#6014384 n/o Q.?. Parkerson #6015991 #8016298
#6016290 #6016070 #B01683S #6017197 ;fB017196
i'B017315/6 a t 50shs ea #B27649/61 #827474/80
#B27280/3 n/o N. P. H i l l fB27398 #B27408/14 n/o
March It Kiraball #B27963/4 n/o S . p . H U #B27405/7
n/o March fr Hmtall #B24357/60 #B25803 #B25302 «/o
Otia i Co. at lOOshs ea
EXHIBIT U-6-23b
EXHIBIT U-6-24
•
•
;
»Bufa<tur ng§&t- i i ^ - a ^ -6OO -ea-#M6»l a t 1,000 du« 19A/36
•'?• ••—
2,000
' •'i'he' 0 t t r r«* <*•»««—&*«••*> of J ' •»««« Wharf * IXo«k
- Bond >jt #199/801 At 1,000 a* Due 7/1/3&
ihe Tillage of <"arm& 5ljJ County of ^uyahoga Series
7 jlue 10/1/23 #83 ""arm Rural
J1929 Imp bd #23
School D i s t r i c t 5 \% School bond due 1 >/\/?>S
•—&,©©& - - •**»• Free Sta ts of ^rueaia •#> S/F•• S«l lid—gxt Loan
J . #03700 1774* a t 1,000 « • Jue 10'Is/og
4:i» "lthniftii i>ay Co Ltd 37 i: hi»y S t . u#v 1 s t yt-K«
• •-6/F Gdfe4#Mi»va/&'/& M50»/»S a t 1,000 ea Due
i
^lg/1/47
%
f. ooO
-A'he V i l l a g e o f f^o
• County of Cuyahoga
— Kas^tori S©«dx* *Ji,»urici. n^f> •id ^Ppop^pty ywT>*5f*B
plala
•#»
608
— P O P t U f r # 3 / & - Se
i / i Haapton •'•lorewood
— S e * e r t>l6t # « b4 #00 Serial f503C #80 Sfii'lal #69^7
~#ftl Serial #&8fi 3 a t I,GOG. ak Qua 10/1/26
t ^ .,
r 4 . . 1 j . TSiKi.1.
- § / * t^^b
.^_-—„ rjj^S <j7 104
1 M H 1&53 S1&4 a t ? ,0*><> « •
^D4«- D133 3130 at-i.00 «a /;Ci.-04/i> a t 100 aa due
9/l/4,i
EXHIBIT U-6-24a
^
~iri000 qa
ached
y
at 1-.00O ea Due 11/1/35
l 1 ^** •atarwoi'ks Bond *tatw of
5i> #8674/76--* t 1.000 »» Duo 2/1/31
ty HrldgeHajxant iatata- of Alabama
^
acurad Sarlaj, tfd p»b—rniit
»-fiu«-4S/l/3&
#1977/79 a t f Araoflea Fourth t/^-
EXHIBIT U-6-24b
EXHIBIT
U-6-24C
- fw if
SS'-f 1
THfl
etis k Co.
INTEREST
PRINCIPAL
mh
v
.i-.'r t o
.7 .
'3
?•/>«
'.-
Y3 oov
/^ *<> 5i
j
>
/
" ' ' • , • < •
\ji(
N
-
|
Tf 0&o
At*,,,.
^»««,
>
& ; *
I
^
MT 1 t
•AY ! .
HAt Z 0
»AY^<1
EXHIBIT U-6-24d
agq of Avon Lake btH aite >oad ^avlug
,?68 Thw-ie/X/39 a t l',04g.8Q #38/40
sacnnr btmgstong"jr~CeTngnt Co" la C "Htge 20yr
B#»ea
1,000
/ /
The Bowman Blltmore Hotels Corp lOyr 1% S/F Secured
Gold Note #M42 due 12/15/34
Blltmore- Hotelo-Gorp l
-Od °<l #M3500 8673 ^C-^
Duo 3/1/31
S / F . BOMSP t Co--Inc
wiBd #B3« da« H A / 3 4
EXHIBIT U-6-24e
sr*» 7> S / F Cd
*
*
•
'
EXHIBIT U-6-24f
EXHIBIT U-6-24g
-Th« Bru»k 4>ore &»i»#papei>e x ne loyr Collateral
• I'rttst S±£ S/? Sold *©t« #M&33/34 a t 1,000 s*
v_ dm 7/1/33
-'"'a.per Co Igt «tg«—
EXHIBIT U-6-24h
EXHIBIT U-6-24i
EXHIBIT U-6-24J
^
!Ki.4Co.
^
5658-0 0
INTEREST
"
.;•
»o. 5 0 8 3 ! J
~ PRTNCIPAL'"""
BALANCE
•
i & r ^ o <?\ ~
%•:- .! -
o
.
••
fan
v»Y 6
MAY « -
I-KY J •
;33'
EXHIBIT
;;
/^*»»
1931
133)
'' -*-' H
- ^ ooo
MAY 14 198J
1
'
m
U-6-25
*
: .
k
///'
6 o *
'3T
'
7$
<s»c(?
/
t
^".^.^
ft' Ace
x*»Ocr
Si 7»O
f/3 ete\
3
j
6,000
Tho Collateral 5«curttlaa
Massachusetts SOyr 6« Od,*
at, 1,800 « • <M*e l / l b / 3 4
7 000 -
.-dte,*>Of!
12,000
Ths P . >'. "oodrleh Co. layr 6* C
«ha Indiana f>lmaston« Co. I5yr 1 s t *tei
Gd/'Ed fM133i!l *M11731 #1*9364 #WKf2fi a t
due 5 / 1 / 4 1
The Kansas "-ity.Ra* »«llov <
' • ti'estftrn u a i l p
1st *t^6 4> Gd °pn Bd #A418/19 # *3Sl/£ »t
#'C330 #CS63 a t 100 aa # D1R5/3 #D135 a t 500
,7>!6£4/S #1656/541 a t 1,000 s a Suo 10/1/47
EXHIBIT U-6-25a
60,000
The ^ake Shore Athletic Cluh »<«ni .«t(?(
ff'M1050/9 #M981/1000 #\!9P4/33 ../M866/BB5 at 1,000
ea due 11/1/40
%« Olenn L. -Hrtln Co. 5yr 6* Conv Od/"otp
#MSSS4/S #M1184 a t 1,000 en duo H / l / 3 4
8,000
*he>otel Fierre 1st «t«e VK 6<1^ S/V
"#l!618e/90 a t 1,000 ea due 4/1/49
mond ''ay-Co. Ltd. 6ti»-
«t 1,000 ear cue
lifl
-7-i'f S/f ^"Tui-ad-^M/fed
EXHIBIT U-6-25b
-fa,/"
Th"
c<t
' / of Shnlrwp MalgJkf- 4it Street -imp-i
a/3 at. BOO O»—#13/03 at-1,000
4,000
'•he Tan Swerlngen Co. 1st "Itge S/F t o l l Tr 6<
*»d Bd #M4£16/17 #M421P/20 at 1,000 en due 9/l/Sfi
?,000
l
1,000
ThB Portace Hotel Co. *-and •'rust
-l&yOOO
" •.".'~
he •'eriilnals % Traasportatlon Corp of America 20yr
1st - t r o 5c Coll Trust S/P 6iri 8d/*d s e r l « s A
#!.»2993/4 a t 1,000 ea due 5/1/47
A
u
t f of Bqultarle
he City National »ank Buildlnc Co. "and "rust " t f
of SqultaVls - wnerahlp #449 n/o " r t ' 4 » i ; Durst I
/fl.105/9 n/o Lesli.9 T Fontaine at 1.000 na #1104 n/c
LeslloTi Fontaine at 10,000
EXHIBIT
U-6-25C
EXHIBIT U-6-25d
o oo
o o
20,418.26 'l'he v l l l a g e of eerea b%% Street Imp °d.
#25/7 due 5/1/35 #22/4 due H / l / 3 4 #28/31 due 11/1/35
#32/4 due 5/1/36 #3&/7due 11/1/36 ]***
#41/3 duell/l/37 #44/6 due 5/l/38 #
#50/1 due 5/1/39 #54/6 due 11/1/39 #57/9 due 5/l/40 '«'•*
#60/2 due H / l / 4 0 at 500 ea #63 at 918.26 due 11/1/40
1,000
The ''esaemer Limestone 4 cem&nt 1st Mtge20yr 6 ^ **" i
OdAd #C134/6 #C138 #C211 at 100 ea #D192 due 2/1/47
at 500
5000
The State of Texas, Bexar Medina AtascoW^tlounties » ;
Water Imp. pist #1 #1777/81 at 1,000 ea due 6/1/61
5,000
The City of Blackfoot 4iniclpal Coupon Refg. Ifaterworks
Bds Series B #161/3 due 1/1/45 #179/80 due 1/1/46
at 1,000 ea 5fc£
1,000
*he ^owman Blltmore a o t e l s Corpn lOyr 7% & / p Seo.Od'Ju' 1.-4
Bd #M42 due 12/15/34
10,000
The S. F. Bowser ic Co. Inc. 1st Mtge lOyr 7% S/F&?#C70/3 #C84 C9S due l l / l / 3 4 at 100 ea #094 #D10O
»KBVEO£D£14 JD314 #D320 #D34.1 #D376 at 500 ea dua s/l/34
#M196/% #511147 ?MlB48/9 at 1,000 ea due 11/1/34
EXHIBIT U-6-27a
8815
STOCK EXCHANGE PRACTICES
EXHIBIT U-6-26
Name R. S. C.
Address
Demand loan
No. 5943B
120,000.00
Otis & Co. {New York) Participation
Interest
Date Debit Credit Balance Interest to
20.40 May
130.31
Principal
Tnt.
Date paid
rate
1,1931 May 2,1931
Date
6
130 31 May 22,1931 May 22,1931
Apr.
May
May
May
Debit
Credit
Balance
28,1931 40,800
40,800.00
9,1931
5,639.19 35,160.81
21,1931
816.00 34,344.81
34,344.81
22,1931
Transferred to New Loan May 22, 1931.
EXHIBIT U-6-26a
Date
Par or
share
Description of collateral
40,800
Market
Amount
Certificate of Participation Total 120,000.00
Union Trust Co. Corporate Trust Dept.
EXHIBIT U-6-27
Name R. S. C. Address: Otis & Co. Union Trust Co.
Demand loan no. 6075B.
Interest
BalDate Debit Credit lance
928 36
Principal
Interest to
Date paid
May 27,1931 May 27,1931
Int.
rate
Date
May
May
May
May
May
May
May
May
Debit
Credit
Balance
22,1931 1, 252, 560
1,252,560.00
952.00 1,251,608.00
23,1931
14,144.00 1,237,464.00
25,1931
302,644. 20934,819.80
25,1931
9,628.80 925,191. 00
25,1931
i 2, 754 00 922, 437. 00
26,1931
35,904 00 886, 533 00
26,1931
886, 533 00
27,1931
i A s of 5-27-31.
Certificate of Participations:
Union Trust Co
Cleveland Trust
Guardian Trust
Central United
Transferred to New Loan.
(Exhibit U-6-27a faces this page)
175541—34—PT 20
6
$1, 252, 560.
$1, 252,560.
$736, 800.
$442,080.
00
00
00
00
$3, 684, 000. 00
8816
STOCK EXCHANGE PRACTICES
EXHIBIT
Name I
Address Otis & Co. Guardian Tr Co.
U-6-28
Interest
Date Debit
Credit Balance Interest to
Principal
Int.
rate
Date paid
6 May
May
May
May
May
May
May
May
546.12 May 27,1931 May 27,1931
Debit
Date
22,1931
23,1931
25,1931
25,1931
25,1931
26,1931
26,1931
27,1931
Credit Balance
560
8,320
178,026
5,664
1
1,620
21,120
521, 490
736,800
736,240
727,920
549,894
544, 230
542,610
521,490
i As of 5-27-31.
Certificate of Participation:
Union Trust Co
Cleveland Trust
Guardian Trust
Central United
$1, 252, 560. 00
1,252, 560. 00
736, 800. 00
442,080.00
$3, 684, 000. 00
Transferred to New Loan.
EXHIBIT
Name I
Address Otis & Co. Cleveland Tr Co.
U-6-29
Interest
BalDate Debit Credit
ance
Interest to
Principal
Date paid
928.36 May 27,1931 May 27,1931
Int
rate
Date
6 May
May
May
May
May
May
May
May
Debit
22,1931
23,1931
25,1931
25,1931
25,1931
26,1931 -----26,1931
27,1931
Credit
Balance
1,252,560.00
952.00 1,251,608.00
14,144.00 1, 237,464.00
302,644.20 934,819.80
9,628.80 925,191.00
1 2,754.00 922,437.00
35, 904. 00 886,533.00
886,533.00
» As of 5-27-31.
Certificate of Participation:
Union Trust Co
Cleveland Trust
Guardian Trust
Central United
Transferred to New Loan.
(Exhibits U-6-29a through U-6-29c faca this page)
$1, 252, 560.
1, 252, 560.
736, 800.
442, 080.
00
00
00
00
$3, 684, 000. 00
EXHIBIT U-6-29a
EXHIBIT U-6-29b
EXHIBIT
U-6-29C
8817
STOCK EXCHANGE PRACTICES
EXHIBIT
Otis & Co.
U-6-30
Central United
Interest
Date Debit Credit
Balance
Principal
Interest to
Date paid
Int
rate
Date
Debit
Credit
Balance
6 May 22,1931
327. 66 May 27,1931 May 27,1931
May
May
May
May
May
May
May
23,1931
25,1931
25,1931
25,1931
26,1931
26,1931
27,1931
336 00
4,992.00
106,815.60
3,398. 40
i 972. 00
12, 672.00
312,894. 00
442,080.00
441,744.00
436,752.00
329, 936.40
326, 538 00
325, 566. 00
312,894.00
i—
i A s of 5-27-31.
Certificate of Participation:
Union Trust Co
Cleveland Trust
Guardian Trust
Central United
$1, 252, 560.
1, 252, 560.
736, 800.
442, 080.
00
00
00
00
3, 684, 000. 00
Transferred to New Loan.
EXHIBIT TT-6-31
INTERVIEWS AND COMMITMENTS AFFECTING LOANS—OFFICIAL INSTRUCTIONS
TO CREDIT DEPARTMENT—COMMENTS ON FINANCIAL STATEMENTS—ESSENTIAL CREDIT INFORMATION
For exclusive use of Credit Department.
MAY
21, 1931.
MEMORANDUM REGARDING OTIS & CO. LOANS
The four Cleveland banks have today agreed to loan Otis & Company up to a
total of approximately $4,182,000.00 secured by collateral which has been valued
at approximately $4,716,968.00. This collateral includes 179,226 shares of
Continental Shares Inc. common valued at $3.00 per share. This total comprises the following loans:
Present Balance
Original Amount
$2,000,000 00
500,000 00
800,000 00
120,000 00
.
Collateral
Value
i $1,856,850.00
i 480,675.00
i 202,000.00
i 101, 014.14
$1,864,000 00
626,000.00
223,468.00
134, 500 00
$2, 640, 539.14
$533,070.00
457, 780. 00
50,000. 00
829, 000. 00
1, 040, 000 00
Additional loan
$3, 681, 389.14
500, 000 00
$4, 716, 968. 00
Total loans
Payment to be presently made
$4,181, 389 14
896,130 00
Out of Town Loans
Direct Cleveland Loans
Guardian Trust Loans (endorsed by Otis & Co.)
$3, 285, 259 14
Thru release of 179,226 shares of Continental Shares
537, 678 00
$4,179, 290 00
1
Now participated—4 banks.
8818
STOCK EXCHANGE PKACTICES
EXHIBIT U-6-32
It is also understood that a further payment of $680,000.00 will be made torelease customers' collateral valued at $850,000.00; also that in addition tocollateral as valued above Otis & Company will pledge to as great an extent as it
is practical for it to do, the equity in its various stock exchange memberships
which is estimated at $200,000.00, and will write us a letter evidencing that
understanding. And further, that all the unsecured accounts of Otis & Company
will be pledged to secure this indebtedness, a satisfactory pledge agreement to be
prepared by counsel.
R. S. CRAWFORD, Secretary.
EXHIBIT U-6-33
MAY
21, 1931.
MESSRS. OTIS & COMPANY,
Cuyahoga Building,
Cleveland, Ohio.
GENTLEMEN: In behalf of myself and my associates, I hereby agree to purchase
from you, and you agree to sell to me, approximately three hundred thousand
(300,000) shares of the fully-paid and non-assessable Common Stock of Continental Shares, Inc., a Maryland corporation, at Five Dollars ($5.00) per share,,
payable as hereinafter provided.
I will deposit with The Union Trust Company of Cleveland, Ohio, at its main
office, the total amount of the purchase price to be paid hereunder.
You will deliver, or cause to be delivered, promptly to said The Union Trust
Company, fully-paid and non-assessable certificates in proper form, duly endorsed in blank and stamped for transfer, representing all the shares of Continental Common Stock covered by this agreement.
I will instruct The Union Trust Company to pay to you or your order, in cash,
for such stock as delivered, at the rate per share above agreed upon.
It is expressly agreed and made a condition hereof that you represent and
warrant that you have good title to, or right to sell, all the shares of Continental
Common Stock covered by this agreement, and to be delivered as aforesaid.
I am writing this letter in duplicate, and if it meets with your approval, please
sign the acceptance endorsed on both drafts and return one of them to me.
Yours truly,
(Signed) WM. G. MATHER,
Accepted this May 21st, 1931
OTIS & COMPANY,
By J. O. EATON
A partner.
EXHIBIT U-6-34
File copy,
As of May 25
MAY
25, 1931.
OTIS & COMPANY
Cuyahoga Building, Cleveland, Ohio.
(Attention Mr. Leslie Fontaine)
GENTLEMEN: This is to advise you that we have today credited upon your
loans $890,130.00 in payment for 178026 shares of Continental Shares Inc.
common stock, pledged as collateral to said loans.
Very truly yours,
RSC D
Secretary*
•
•
OTIS &
Co.
CLEVELAND
May 22, 1931
The Unlcn Trust Co,
Cleveland, Ohio
Attention: Mr. Crawford
Gentlemen:
jn accordance with the arrangement
made with Mr. M. C.Harvey, we have today instructed the Continental Shares, Inc. to deliver to you 32^000 shares of Continental
Shares,inc. Common Stock which will be presented to you today by them, and In exchange
for this collateral, it is our understanding
that you will pay them $250,000.00 and Interest
which is the amount of our no1# with them, and
the balance of $60,000.00 is to be credited to
our checking account. This Is on the basis of
$5.00 per share for the above stock.
We thank you for taking care of this.
Very truly yours
or i s & c r .
L.T.Fontaine:MS
EXHIBIT U-6-38
STOCK EXCHANGE PEACTICES
8819
EXHIBIT U-6-35
MAY
28, 1931.
The UNION TRUST COMPANY
The Cleveland Trust Company
The Guardian Trust Company
Central United National Bank
Cleveland, Ohio
GENTLEMEN: We have today released from the collateral securing $2,921,250.00
loan of Otis & Company, the following securities:
250 shares
1200
"
800
"
$5,000.00
Western Public Service
Continental Shares Inc. Common
Sherwin Williams Common
Joseph & Foics 8^'s of 1943
Payment received $47,000.00.
Disbursement:
The Union Trust Company
The Cleveland Trust Company
The Guardian Trust Company
Central United National Bank
Balance
$15, 630. 00 $968, 296. 20
15, 980. 00
968, 296. 20
9, 400. 00
500, 586. 00
5, 640. 00
341, 751. 00
This amount was transferred through the Federal Reserve Bank for your
account.
Yours very truly,
W. A. HARTFORD.
Ass't Treasurer.
EXHIBIT U-6-36
OTIS & Co,
Cleveland, May 28th, 1931
THE
UNION TRUST COMPANY,
Cleveland, Ohio.
(Attention Mr. Stutts.)
GENTLEMEN: Please accept this as authority for releasing 179,226 shares of
Continental Shares Inc. from our demand loan with you, for which you received
$5.00 per share, and applied payment of $896,130.00 on the above loan.
Yours very truly,
OTIS & Co.
L. T. FONTAINE, Asst. Cashier.
L. T. Fontaine: T
EXHIBIT U-6-37
OTIS & Co.,
1500 Walnut Street,
Philadelphia, Pa., May 22, 1931.
UNION TRUST CO.,
Cleveland, Ohio.
(Attention of Mr. Robert Crawford.)
DEAR SIRS: We have today forwarded to you the following drafts:
Corn Exchange National Bank & Trust Co
10,460 shs. Continental Shares, Inc. Common Stock
Philadelphia National Bank
6,300 shs. Continental Shares, Inc. Common Stock
$52, 300.
$31, 500.
We have also requested the Corn Exchange National Bank & Trust Co. to
send to you today the 2^900 shares Continental Shares Common Stock now held
by them as collateral on account of your loan to Otis & Co.
Very truly yours,
OTIS & Co.
By: JOSEPH SMITH, Office Manager.
Jos. Smith/LC
(Exhibit U-6-38 faces this page)
8820
STOCK EXCHANGE PRACTICES
EXHIBIT
U-6-39
MESSAGE RECEIVED OVER PRIVATE WIRE
THE UNION TRUST COMPANY
CLEVELAND, OHIO
19-
M 45 PM MAY 22, 1931.
Re your wire today we paid Pierce and charged your account $210,070. Delivery
42014 shs Continental Shares in various street names without stamps. Advise
if not satisfactory. We are holding stock
CHASE NATIONAL BANK.
$210,070 42014.
W
Operators initials.
(Exhibits U-6-40 through U-6-40a face this page)
EXHIBIT
NAME.
ADDRESS.
U-6-41
NEWBERRY INVESTMENT CORPORATION
2222
BUHL BUILDING, DETROIT, MICH
Time loan 87130
No. 1 due 8-20-31.
No. 2 d u e
No. 3 due
No. 4 d u e
No. 5 d u e
No. 6 d u e
No. 7 d u e
No. 8 d u e
No. 9 d u e
No. 10 d u e
No. 11 d u e
Principal
Interest or Discount
Date
Dis- Int. Re- Int. Re- Interest
bate
to
count
ce'ble
781 25
8-20-31
Date paid
May 25,1931
Int.
Rate
5
Date
Debit
May 22,1931
Aug. 20,1931
62,500
Credit
62,500
Balance
62,500
EXHIBIT U-6-41a
Date
Par or Shares
25,000 shs
Description of Collateral
The Continental Shares Inc. Com
#C/C01141/42 at 5000 shs ea. #C/C01169/70 at
1000 shs ea. #C/C03387 at 2000 shs. #C/C04355 at
11,000 shs n/o Otis & Co.
Market
3H
Basis
Amount
87,500
Security mailed to Peoples Wayne County Bank, Detroit, Mich., authority
on file.
(Exhibits U-6-42 through U-6-44a face this page)
The Southern Ohio Power Co.
J.5O 1*81 Broad Street, Columbd*. Ohio
EXHIBIT U-6-40
EXHIBIT U-6-40a
W«de, G. G.
(J
oo
v
1850 Union T r u s t Bldg.
=-•£
^
:E= T
^
;ȣ;-_
INTEREST
a»j>.C£
^.TCSEST
:%•
PRI •iCIPAL
KM
cmo_r
M M
/-T Oofl
APR i
1 KAY 9 WS
m?«,4j"/»
OCUcfd-)
/ r »?<? c
looco -
*S-
IOOIL1NQ I«C
EXHIBIT U-6-42
15,000
lOOOshs
The Continental Shares *t». Com ». I.
#KY/C4&22/41"#«¥/Clfi&l/5-at 100aha-»fr~nA>-~0tle -JM?©^ —
#983/6 v-af i •,-08©strs-B«-TrArT7-R. " B i r t e 1 r
(»6 Vo 0. 0. Tinde)
ihe Medusa Poftlsnd Cement Co. Cap
If
I<•
The.National «sfinir.g Co. tti
EXHIBIT U-6-42a
EXHIBIT U-6-43
EXHIBIT U-6-43a
ixn
%»RO«,«MI
C- 2968shs
The J&dusa P o r t l a n d Cement oo
?8©ft-
Com
?ol5 n / o The Union Trust Co.
C90078ha The c l l f f « C o r p Com S h a r e s V o t i n g Tr c t f
^VT0408
6000shs
60U«h«
2000»hs
yVXC1338 n/o The Union Trust Conpsay
% fa
v The ''ontlneutal Shares ^nc. Com
jpHY/C1351/^''j l ni/C1548/)f7 ifHY/C2119/23 v «NY/C2127.
#HY/C354l/43^#NY/C4O4l/2-fNY/C4648-^ r C/C4663v'
#NY/C4773/81^#HY/C5146/7ifinr/C5158/6 -#Ny/C5228^
"rt-»#NY/C8932 ^#Sy/C9008~#NY/C10716^#NY/C10836 ^NY/C2 2 2 6 1 ^
#KY/C X3765^#NY/C1378S/92 -#NY/C13812/l5 At lOOsha ea
n / o O t i s & Co.
American Telephone' 4 Telegraph Co. Cap.
|SQG38O6/9-10ush3 ea n/o The Onion Trust Co.
4
he Goodyear Tire & Kubber Co. Com.
^ 2 6 0 8 / 2 2 ^2626/3O-10Oshs ea n/o The Union Trust Co.
MCEfVEQ
»
EXHIBIT U-6-43b
/
i
i
EXHIBIT U-6-44
4,OOOshs
The u o n t i r . e n t a l Shares J n c . Cc
#C/00C10/a7 #»Y/C7B0,«'HY/C1000/l
#WY/&3.&7Q.r#Nyjjf€134'i/6 |NY/C 134 &/
p / e Otl« fc 0o> /|14 n / o Edward B. G
Corpn CM. . Votirip ir
EXHIBIT U-6-44a
8821
STOCK EXCHANGE PRACTICES
EXHIBIT U-6-45
Daily fluctuations of continental shares from April 15, 1981 to June 80, 1981 as
shown by Cleveland Plain Dealer
Date
High
Low
4/14/31.
4/15/31.
4/10/31.
4/17/31.
4/18/31.
4/20/31.
4/21/31.
4/22/31.
4/23/31
4/24/31
4/25/31.
4/27/31.
4/28/31.
4/29/31.
4/30/31.
5/1/31..
5/2/31..
5/4/31..
5/5/31..
5/6/31..
5/7/31..
5/8/31..
5/9/31. .
5/11/31
Volume
Trading in
Hundreds
10
11
52
171
61
11
30
251
307
92
50
34
86
10
27
47
51
30
50
5
12
Date
5/12/31.
5/13/31.
5/14/31.
5/15/31.
5/16/31.
5/18/31.
5/19/31.
5/20/31.
5/21/31
5/22/31.
5/23/31
5/24/31
5/26/31
5/27/31
5/28/31
5/29/31
6/1/31..
6/2/31..
6/3/31..
6/4/31..
6/5/31..
6/6/31..
6/8/31_.
High
Low
Volume
Trading in
Hundreds
71
18
1 1,950
31
17
34
27
34
67
96
76
50
37
52
24
55
10
22
29
33
48
6
10
EXHIBIT U-6-45a
6/9/31...
6/10/31..
6/11/316/12/31..
6/13/31..
6/15/31..
6/16/31..
6/17/31..
6/18/31..
6/19/31..
» Odd lots.
13
44H
6/20/31.
6/22/31.
6/23/31.
6/24/31.
6/25/31.
6/26/31,
6/27/31.
6/29/31.
6/30/31.
29
118
53
156
37
32
19
8822
STOCK EXCHANGE PRACTICES
EXHIBIT
U-6-46
Daily fluctuations of continental shares from April 15, 1931 to June SO, 1931 as
shown by Cleveland Plain Dealer
Date
High
Volume
Trading in
Hundreds
Low
4/14/31.
4/15/31.
4/10/31.
4/17/31.
4/18/314/20/31.
4/21/31.
4/22/31.
4/23/31.
4/24/31.
4/25/31.
4/27/31.
4/28/31.
4/29/31.
4/30/315/1/315/2/31...
5/4/315/5/315/6/315/7/315/8/315/9/315/11/31.
5
PA
6
5
PA
6
PA
52
171
61
11
30
38
42
69
251
307
92
50
34
86
10
27
47
5
4%
Date
High
Low
5/12/31...
5/13/31...
5/14/31...
5/15/31...
5/16/31...
5/18/31...
5/19/31. .
5/20/31...
5/21/315/22/315/23/315/24/315/26/315/27/315/28/315/29/316/1/31—
6/2/31—
6/3/31...
6/4/31—
6/5/31...
6/6/31—
6/8/31—
Volume
Trading in
Hundreds
71
18
11,950
31
17
34
27
34
67
96
76
50
37
52
24
55
10
22
29
33
48
6
10
EXHIBIT U-6-46a
6/20/31
6/22/31
6/23/31.
6/24/31.
6/25/31.
6/26/31.
6/27/31.
6/29/31.
6/30/31.
6/9/31-.
6/10/31-.
6/11/31..
6/12/31..
6/13/31..
6/15/31..
6/16/31..
6/17/31..
6/18/31..
6/19/31..
29
118
53
156
37
32
19
fi
i Odd lots.
EXHIBIT
TAKEN
FROM
EXAMINERS
U-6-47
REPORT, DEPARTMENT
MARCH 27, 1931.
Otis & Company
OF
BANKS,
STATE
OF OHIO,
Otis & Co. (Participation)
$649, 179. 00
This loan was a participation in a loan to the above company in the amount
of $2,000,000.00. The collateral on same was practically unappraisable. All
the other loans to Otis & Co. were covered. Since the examination, the bank
has made a loan to Otis & Co. in the amount of $3,946,000.00 which was reduced
on May 25, 1931, $854,000.00 to the amount of $3,092,000.00 with collateral
having a value of $3,950,000.00 covering same. The loan was reduced by the
sale of Continental Shares, Inc. Com. In the above loan the four major banks of
Cleveland participate in the following percentages; Union Trust Co. 34%, Cleveland Trust Co. 34%, Guardian Trust Co. 20% and the Central United National
Bank 12%. This new loan is a consolidation of all the loans of Otis & Co. in all
banks.
STOCK EXCHANGE PRACTICES
8823
EXHIBIT U-6-48
JUNE 30th, 1930
Mr. WM. G. MATHER
Union Trust Building
Cleveland, 0.
MY DEAR MR. MATHER: We are pleased to advise you that effective July 1st,
1930, we are reducing the rate of interest to 5% on your demand loan of
$125,000.00.
Very truly yours,
President.
WMB.EMS
EXHIBIT U-6-49
INTERVIEWS AND COMMITMENTS AFFECTING LOANS
OFFICIAL INSTRUCTIONS TO CREDIT DEPARTMENT
COMMENTS ON FINANCIAL STATEMENTS
ESSENTIAL CREDIT INFORMATION
For exclusive use of Credit Department.
JULY 5, 1933.
WM. G. MATHER
Note dated April 18 in the amount of $12,322.50, in payment of interest to July
1 on the collateral loan of $800,000 of Wm. G. Mather, is at present held in our
vault. Apparently this was not sent to the R..F.C. because our letter to them
dated May 18, over Mr. Cox's signature, requested their advice as to whether
we should accept the interest note.
I talked today to Mr. Minke, in charge of some department at the R.F.C.
He talked to Mr. Callendar, and Callendar says that Washington has not yet
agreed to permit us to accept this note; therefore, the R.F.C. cannot take the
note, and I suppose, since our loan is pledged to them, we should not apply the
note on our collateral loan card, which would necessitate showing interest paid
to July 1.
I think the above is equivalent to sajang that we should not accept a note for
the quarter's interest beginning July 1 until the other matter is settled.
A. L. MOLER
A. L. M.
MOLER: On what basis are they delaying taking this paper.
1st they have the original note & "agreement."
2nd This interest note is a perogative of the agreement.
3rd We are losing a positiln but not taking the note by a preferred position.
A. L. M.
A. L. M
EXHIBIT U-6-50
(COPY)
OTIS & Co.,
Cleveland, May 22, 1931.
The UNION TRUST CO.
Cleveland, Ohio.
(Attention Mr. Crawford.)
GENTLEMEN: In accordance with the arrangement made with Mr. M. C.
Harvey, we have today instructed the Continental Shares, Inc. to deliver to you
62,000 shares of Continental Shares, Inc. common stock which will be presented
to you today by them, and in exchange for this collateral, it is our understanding
that you will pay them $250,000.00 and interest which is the amount of our
note with them, and the balance of $60,000.00 is to be credited to our checking
account. This is on the basis of $5.00 per share for the above stock.
We thank you for taking care of this.
Very truly yours,
OTIS & Co.
L. T. Fontaine: MS
Signed L. T. FONTAINE, Ass't. Cashier
8824
STOCK EXCHANGE PRACTICES
EXHIBIT
U-6-51
CORN EXCHANGE NATIONAL BANK AND TRUST COMPANY,
Philadelphia, May 22, 1931.
1510-21 Chestnut Street
Central city branch
UNION TRUST COMPANY,
Cleveland, Ohio.
(Attention Mr. Robert S. Crawford.)
GENTLEMEN: In accordance with your instructions sent us by wire today, we
have charged your account today, $52,300.
Enclosed please find 10460 shares of Continental Share Incorporated, Common,
registered in name of Otis and Company, which Otis and Company have requested
us to send you upon payment of the above amount.
Listed below are the numbers of the certificates of the Continental Shares,
Incorporated, Common:
NYC4513 to 21 incl.
NYC5979 to 83 incl.
NYC279, 280, 282, 283, 284.
NYC5985
NYC4588 to 96 incl.
NYC4507 to 12 incl.
NYC4573-74.
NYC274 to 278 incl.
NYC3502 to 10 incl.
NYC4597-98
NYC4300-4301
NYC4500 to 06 incl.
NYC4305- to 4312 incl.
NYC285 to 291 incl.
NYC5862-63
NYC4575-76
NYC4586-87
NYC4497 to 99 incl.
NYC2895 to 98 incl.
NYC4583 to 85 incl.
NYC3491 to 3501 incl.
all for 100 shares each, and NYC0770 for 60 shares.
Very truly yours,
H. A. SINZHEIMER,
Ass't Vice President.
JG.BVY
Please address reply to Central City Branch 1510-12 Chestnut Street.
Name: O. & Co.
#1
Address: Otis & Co.
Demand loan No. 6075B.
EXHIBIT
U-6-52
Control card
Date Debit Credit Balance
Interest to
Date paid
2,730.50 May 27,1931 May 27,1931
Transferred to New Loan.
Principal
Int.
Interest
Rate
Date
Debit
Credit
Balance
3,684,000
6 May 22,1931 3,684,000
2,800 3,681,200
May 23,1931
41,600 3, 639,600
May 25,1931
890,130 2,749,470
May 25,1931
28,320 2, 721,150
May 25,1931
8,100 2, 713,050
May 26,1931 as of
5-27-31
105,600 2,607,450
May 26,1931
2,607,450
May 27,1931
8825
STOCK EXCHANGE PRACTICES
Name: O. & C.
Address: Otis & Co.
Demand loan No. 6070B.
EXHIBIT U-6-53
Int.
Interest
Date Debit Credit Balance
Interest to
Date paid
Principal
Rate
May 22,1931 May 22,1931
Date
May 22,1931
May 22,1931
Debit
500,000
T H E UNION TRUST COMPANY: LOANS, K. V. PAINTER—WALTER
Credit
Balance
500,000
500,000
H.
SEYMOUR
EXHIBIT U-4-1A
SPECIAL REPORT IN RE KENYON V. PAINTER ET AL UNION TRUST COMPANY,
CLEVELAND, OHIO
(Volume I)
Submitted the Robert Morris Huston, Special Deputy Superintendent of Banks.
CLEVELAND, OHIO, September 18, 1933.
Honorable IRA J. FULTON,
Superintendent of Banks, Columbus, Ohio.
SIR: In accordance with your instructions I have directed a complete and
exhaustive investigation of the books and records of The Union Trust Company.
Cleveland, Ohio, for the purpose of obtaining information and data bearing upon
certain alleged irregularities in the management and conduct of the affairs of
the above named institution. I now have the honor of submitting the following
special report in relation to the loans of one Kenyon V. Painter, a former director
and member of the executive committee of The Union Trust Company.
Kenyon V. Painter is sixty-six years of age and has been a director of The
Union Trust Company for approximately ten years. He has also been a member
of its executive committee for about the same period of time. From the evidence
at hand it appears that Painter has never seriously recognized the responsibilities
of a bank director but has construed his official position with The Union Trust
Company as one of unusual and irregular liberties and privileges. I t further
appears that both Wilbur M. Baldwin and Charles W. Carlson, President and
Vice President, respectively, of the Union Trust Company had the same mistaken
idea regarding the duties of their respective positions as well as the courtesies
and privileges due a director.
Wilbur M. Baldwin is fifty-eight years of age and has been a director of The
Union Trust Company for approximately ten years. March 25th, 1930 Baldwin
was elected to the Presidency of The Union Trust Company and continuously
served in that capacity until the early part of this year.
Charles W. Carlson is about forty-eight years of age and was a Vice President
of the Union Trust Company from January 11th, 1928 to the date of failure.
Carlson was never a director of the bank nor was he ever considered a senior
loaning officer or a member of any important committee.
At the date of failure of The Union Trust Company, Painter was indebted
to that bank to the enormous amount of $2,930,000.00, only a small fraction of
which sum was adequately or properly secured. Our investigation discloses that
virtually all of this indebtedness resulted from unlawful collusion between
Painter, Baldwin, and Carlson for the purpose of wilfully misapplying the monies,
funds, and credits of the bank for the direct use, benefit, and advantage of Painter
and indirectly for the use, benefit, and advantage of Baldwin and Carlson.
In substance the general scheme of operation was as follows: Painter would
convey to the bank certain real estate holdings, leaseholds, and real estate
equities together with certain unlisted and unknown stocks of doubtful worth,
all to be held by the bank in trust as collateral security for future borrowings.
Subsequently, Painter would execute his demand promissory note, or notes, for
sums averaging about $300,000.00 each. These notes would not immediately
8826
STOCK EXCHANGE PRACTICES
be recorded on the bank records for their face amounts and like credits passed
to Painter's account, but instead would be withheld by Baldwin or Carlson and
used only at such times and in such amounts as would be necessary to avoid an
overdraft in Painter's personal account.
By this arrangement each note was recorded as constituting a series of loan
transactions rather than as one independent borrowing. Furthermore, such
irregular procedure was decidedly beneficial to Painter in view of the fact that
at no time was he required to pay interest on any unused portion of his loans.
He also enjoyed a preferential interest rate on his loans being charged a lesser
rate of interest than other customers of the bank were required to pay.
Our investigation covers the period from March 1st, 1928 to date of failure but
for the purpose of this report my discussion will be confined to transactions
occurring subsequent to October 6th, 1930.
On that date, October 6th, 1930, Painter was indebted to The Union Trust
Company to the amount of $607,000.00 evidenced by two demand promissory
notes as follows:
One note dated July 1st, 1930 for the principal sum of $950,000.00, signed in
the name of "K. V. Painter" on which there was a balance due of $500,000.00;
and, one other promissory note dated August 13th, 1930 for the principal sum
of $300,000.00, signed in the name of "K. V. Painter" on which there had been
advanced to Painter's credit the sum of $107,000.00.
As security for this indebtedness the bank held the following collateral:
Real Estate Properties Pledged Under Agreement of May 1, 1926 and Remaining as Collateral in the Year 1930.
1. Equity (if any) in University Hall Apartments, subject to a first mortgage
of $80,000.00. (10838 Deering Ave.)
2. Equity (if any) in Boulevard Apartments, subject to a first mortgage of
$70,000.00. (10310 W a d e P a r k A v e -)
3. Equity (if any) in Bay State Apartments, subject to a first mortgage of
$75,000.00. (10716 Carnegie Ave.)
4. Sub lots, numbers 527, 528, and 529 of The J. A. Wigmore Cedar Brook
Allotment (11 stores), location, south east corner of Meadowbrook and Lee.
5. Sub lots, numbers 19A and 20 in The Meadowbrook Land Company's ReSubdivision of part of original Warransville Township Lot No. 2. Location,,
north west corner of Meadowbrook and Lee.
6. Sub lots, numbers 336 and 337 in The J. A. Wigmore Company's Cedarbrook Allotment of part of original Warrensville Township Lots Nos. 2 and 3.
Location, Tallamore and Lee.
8. Sub lots, numbers 376 and 377 at the southerly 15 feet front and rear of
sub lot #375 in The Cleveland Heights Realty Company's Forest Hill Allotment
No. 2. Location, Yorkshire and Lee.
9. Kelsey Parcel (commercial property) known as 1956 East 66th Street.
10. Bovnton Parcel (Residence) known as 1961 East 66th Street.
11. Child's Property (Residence) known as 1856 East 63rd Street.
12. Lease on property known as 1964 East 66th Street. (Pope property.)
13. Lease on property known as 4300 Euclid Avenue. (Brook's property,,
commercial.)
14. Lease on property known as Sub lot No. 448 in a Re-Subdivision of part of
Forest Hill Allotment of part of original Euclid Township lot No. 49. (Westgate property, 11 stores.)
OTHER COLLATERAL
$16,059.95 Land Trust Certificate on property leased to Terminal Building
Company #38 in the name of Maude Wyeth Painter.
$22,807.78 Note of State Road Land Company secured by first mortgage deed
due August 23rd, 1929. (Held in Corporate Trust Department) Balance due,
$18,181.12.
8,000 shares Akeley Camera Corporation, Inc., Common stock.
200 shares Niagra Shares Corporation of Maryland, Common.
20 Warrants Niagra Shares Corporation of Maryland, Common.
$2,200. Note of W. M. Green.
$750.
"
" A. R. Corlett.
$700.
"
" Charles H. Clark.
Your attention is directed to the fact that none of the above described collateral
could be considered as readily convertible into cash in the event of default on the
part of Painter. It may be possible that such collateral had a potential liquidaing value over a period of time in excess of the amount of Painter's indebtedness,
yet, at the same time, such collateral cannot be considered as adequate, bankable,
STOCK EXCHANGE PRACTICES
8827
or proper as security for the repayment of demand indebtedness. Real estate
loans should be granted after proper appraisal and title search and carried in the
Real Estate Mortgage Loan Department under some plan of amortization.
Despite the irregular condition of Painter's loan account, the bank continued
to advance funds for his credit without restriction until October 1st, 1931 at
which time he was indebted to The Union Trust Company to the amount of
$3,100,000.00. Later in the year 1931 certain payments were made through
the sales of collateral reducing his indebtedness to $2,930,000.00, which amount
remained without change until the date of failure. As of April 1st, 1933, Painter
was further indebted by reason of delinquent interest to the amount of $224,411.55.
For your better understanding of the transactions creating this debt, each
and every item will be discussed under separate heading in subsequent paragraphs
of this report. In order that the intent and purpose of these transactions may
be fully understood, I am submitting herewith and incorporating herein, copies
of correspondence between Painter, Baldwin, and Carlson and will refer to each
letter as part of my detailed discussion.
October 6th, 1930 the bank advanced $20,000.00 to the credit of Painter's
account and recorded such advance as part of a note for $300,000.00, dated
August 13th, 1930. (See letter Carlson to Painter, October 6th, 1930 and letter
from R. L. Williams, Assistant Vice President, to Painter dated October 6th, 1930.
October 14th, 1930 the bank advanced $100,000.00 to the credit of Painter's
account and recorded such advance as part of a note for $300,000.00, dated
August 13th, 1930. (See letter Painter to Carlson, October 13th, 1930 and
Carlson's reply October 14th, 1930.)
October 23rd, 1930, the bank advanced $40,000.00 to the credit of Painter's
account and recorded such advance as part of a note for $300,000.00 dated
August 13th, 1930. (See letter Carlson to Painter, October 23rd, 1930.)
Oetober 31st, 1930 the bank advanced $33,000.00 to the credit of Painter's
account and recorded such advance as part of a note for $300,000.00 dated
August 13th, 1930. (See letter Carlson to Painter, October 31st, 1930, and letters
Baldwin to Painter, November 8th, 1930 and November 13th, 1930.)
November 14th, 1930 bank advanced $100,000.00 to the credit of Painter's
account and recorded such advances part of a note for $400,000.00. (See letters
Painter to Baldwin, November 14th, 1930.)
November 18th, 1930 the bank advanced $40,000.00 to the credit of Painter's
account and recorded such advance as part of a note for $400,000.00. (See letter
Carlson to Painter, November 18th, 1930 and letters Baldwin to Painter, November 18th, 1930 and November 19th, 1930.)
November 21st, 1930 the bank advanced $10,000.00 to the credit of Painter's
account and recorded such advance as part of a note for $400,00.00. (See letters
Baldwin to Painter and Carlson to Painter, November 21st, 1930.)
November 22nd, 1930 the bank advanced $50,000.00 to the credit of Painter's
account and recorded such advance as part of a note for $400,000.00. (See
letters Baldwin to Painter, November 22nd, 1930; Painter to Baldwin, November 23rd, 1930; Baldwin to Painter, November 24th, 1930; Baldwin to Painter,
November 26th, 1930.)
November 28th, 1930 the bank advanced $20,000.00 to the credit of Painter's
account and recorded such advance as part of a note for $400,000.00. (See
letters Carlson to Painter, November 28th, 1930; Baldwin to Painter, December
1st, 1930; Painter to Baldwin, December 2nd, 1930.)
December 10th, 1930 the bank advanced $30,000.00 to the credit of Painter's
account and recorded such advance as part of a note for $400,000.00. (See letter
Carlson to Painter, December 10th, 1930.)
December 11th, 1930 the bank advanced $50,000.00 to the credit of Painter's
account and recorded such advance as part of a note for $400,000.00. (See letter
Carlson to Painter, December 11th, 1930.)
December 17th, 1930 the bank advanced $30,000.00 to the credit of Painter's
account and recorded such advance as part of a note for $400,000.00. (See letter
Baldwin to Painter, December 17th, 1930.)
December 17th, 1930 the bank advanced $50,000.00 to the credit of Painter's
account and recorded such advance as part of a note for $400,000.00. (See
letters Carlson to Painter, December 17th, 1930; Painter to Baldwin, December
18th, 1930; Baldwin to Painter, December 19th, 1930 and Baldwin to Painter,
December 20th, 1930.)
December 22nd, 1930 the bank advanced $40,000.00 and recorded such advance as two loans, $20,000.00 as part of a note for $400,000.00, and $20,000.00
as part of a note for $300,000.00. (See Letters Painter to Baldwin, December
8828
STOCK EXCHANGE PEACTICES
22nd, 1930; Baldwin to Painter, December 22nd, 1930; Carlson to Painter,
December 22nd, 1930; Baldwin to Painter, December 23rd, 1930.)
December 24th, 1930 the bank advanced $20,000.00 to the credit of Painter's
account and recorded such advance as part of a note for $300,000.00. (See
letters Carlson to Painter, December 23rd, 1930; Baldwin to Painter, December
29th, 1930 and December 30th, 1930.)
December 31st, 1930 the bank advanced $20,000.00 to the credit of Painter's
account and recorded such advance as part of a note for $300,000.00. (See
letters Baldwin to Painter, December 31st, 1930; Carlson to Painter, December
31st, 1930; Baldwin to Painter, January 2nd, 1931; Baldwin to Painter, January
6th, 1931; Baldwin to Painter, January 14th, 1931.)
January 15th, 1931 the bank advanced $10,000.00 to the credit of Painter's
account and recorded as such advance as part of a note for $300,000.00. (See
letter R. L. Williams to Painter, January 15th, 1931, and letter of same date
Baldwin to Painter.)
It has been shown on page four of this report that The Uuion Trust Company
held a note of W. M. Green in the amount of $2,200.00 as part collateral to
Painter's indebtedness. January 17th, 1931 this note was surrendered to
Painter without any consideration being paid therefor nor any payment made
on Painter's indebtedness.
January 21st, 1931 the bank advanced $30,000.00 to the credit of Painter's
account and recorded such advance as part of a note for $300,000.00. (See
letters Baldwin to Painter, January 20th, 1931 and January 21st, 1931; letter
Carlson to Painter, January 21st, 1931; letters Baldwin to Painter, January
22nd, 1931 and January 23rd, 1931.)
January 26th, 1931 the bank advanced $10,000.00 to the credit of Painter's
account and recorded such advance as part of a note for $300,000.00. (See
letters Baldwin to Painter and Carlson to Painter, January 26th, 1931.)
January 27th, 1931 the bank advanced $15,000.00 to the credit of Painter's
account and recorded such advance as part of a note for $300,000.00. (See
letter Carlson to Painter, January 27th, 1931 and letter Baldwin to Painter,
January 29th, 1931.)
January 30th, 1931 the bank advanced $10,000.00 to the credit of Painter's
account and recorded such advance as part of a note for $300,000.00. (See
letters Baldwin to Painter and Carlson to Painter, January 30th, 1931.)
February 2nd, 1931 the bank advanced $40,000.00 to the credit of Painter's
account and recorded such advance as part of a note for $300,000.00. (See
letters Baldwin to Painter, February 2nd, 1931; Carlson to Painter, February
2nd, 1931; Baldwin to Painter, February 5th, 1931; and Baldwin to Painter,
February 6th, 1931.)
February 9th, 1931 the bank advanced $20,000.00 to the credit of Painter's
account and recorded such advance as part of a note for $300,000.00. (See
letters Carlson to Painter, February 9th, 1931; Baldwin to Painter, Februarv
9th, 1931; Baldwin to Painter, February 13th, 1931; Carlson to Painter, February 13th, 1931; Baldwin to Painter, February 14th, 1931; L. C. Gilger to
Ralph Williams, February 16th 1931; L. C. Gilger to Painter, February 16th,
1931.)
February 18th, 1931 the bank transferred $200,000.00 to the New York Trust
Company of New York City to apply as payment on Painter's loan with that
bank. In consideration of that payment, the New York Trust Company released a certain note executed by the Van Sweringen Company in the amount
of $261,336.00 which note would be due and payable February 21st, 1931 and
was held by the New York Trust Company as collateral to Painter's indebtedness. Your attention is here directed to a certain letter from L. C. Gilger,
Assistant Secretary of the Union Trust Company, to Painter as of January 30th,
1931; letter from Painter to Baldwin, February 11th, 1931; letter from Baldwin
to New York Trust Company, February 13th, 1931; letter L. C. Gilger to Mr.
Ralph Williams February 25th, 1931; and letter L. C. Gilger to Painter, March
2nd, 1931. From this correspondence it is evident that The Union Trust Company loaned Painter $200,000.00 for one year, secured by a note of the Van
Sweringen Company for $261,336.00 payable February 21st, 1932. In other
words, Painter's obligation would be retired if, as, and when the Van Sweringen
Company paid the collateral note which has not as yet been done.
February 26th, 1931 the bank advanced $20,000.00 to the credit of Painter's
account and recorded such advance as part of a note for $300,000.00. (See
letters Baldwin to Painter, February 25th, 1931 and February 26th, 1931; and
two letters Carlson to Painter, February 26th, 1931.
STOCK EXCHANGE PRACTICES
8829
March 2nd, 1931 the bank advanced $60,000.00 to the credit of Painter's
account and recorded such advance as part of a note for $300,000.00. (See
letter Carlson to Painter, March 2nd, 1931.)
March 5th, 1931 the bank advanced $45,000.00 to the credit of Painter's
account and recorded such advance as two loans, $25,000.00 as part of a loan
for $300,000.00 and $20,000.00 as part of a note for $50,000.00 dated March
5th, 1931. (See two letters of Carlson to Painter, March 5th, 1931 and letters
Baldwin to Painter, March 10th, 1931, March 12th, 1931, and March 16th, 1931.)
March 27th, 1931 the bank advanced $30,000.00 to the credit of Painter's
account and recorded such advance as part of a note for $50,000.00 dated March
5th, 1931. (See letters Baldwin to Painter, March 24th, 1931, March 26th,
1931, March 27th, 1931; and letter Carlson to Painter, March 27th, 1931.
April 2nd, 1931 the bank advanced $10,000.00 to the credit of Painter's account and recorded such advance as part of a note for $300,000.00. (See letters
Baldwin to Painter, March 28th, 1931, March 30th, 1931, and March 31st, 1931;
Painter's receipt for 1585 shares of stock in The Union Trust Company; letters
Carlson to Painter, April 1st, 1931 and April 2nd, 1931.)
April 6th, 1931 the bank advanced $20,000.00 to the credit of Painter's account and recorded such advance as part of a note for $300,000.00. (See letter
Carlson to Painter, April 3rd, 1931; letter Baldwin to Painter, April 4th, 1931;
letters Carlson to Painter, April 6th, 1931; and letter Baldwin to Carlson, April
6th, 1931.) This last mentioned letter is especially valuable as evidence of
collusion between Baldwin, Carlson, and Painter, to use the funds of The Union
Trust Company for purpose of speculation in the stock of that bank.
April 15th, 1931 the bank advanced $70,000.00 to the credit of Painter's
account and recorded such advance as part of a note for $300,000.00. (See
letters Carlson to Painter, April 7th, 1931, April 9th, 1931, April 10th, 1931,
April 13th, 1931, April 15th, 1931, and a second letter of the same date.)
April 28th, 1931 the bank advanced $50,000.00 to the credit of Painter's
account and recorded such advance as part of a note for $300,000.00. (See
letters Carlson to Painter, April 28th, 1931; Baldwin to Painter, April 29th,
1931.)
May 1st, 1931 the bank advanced $50,000.00 to the credit of Painter's account
and recorded such advance as part of a note for $300,000.00. (See letters Baldwin to Painter, May 1st, 1931; Carlson to Painter, May 1st, 1931; Baldwin to
Painter, May 4th, 1931; and Carlson to Painter, May 5th, 1931 and two letters
May 6th, 1931.)
May 7th, 1931 the bank advanced $20,000.00 to the credit of Painter's account
and recorded such advance as part of a note for $300,000.00. (See letters Carlson to Painter, May 7th, 1931, May 8th, 1931, May 11th, 1931, May 12th, 1931,
three letters)
May 13th, 1931 the bank advanced $20,000.00 to the credit of Painter's account and recorded such advance as part of a note for $300,000.00. (See letters
Carlson to Painter, May 13th, 1931 and May 14th, 1931, two letters.)
May 16th, 1931 the bank advanced $100,000.00 to the credit of Painter's
account and recorded such advance as two loans, $60,000.00 as part of a note
for $300,000.00 and $40,000.00 as part of a note for $500,000.00. (See letters
Baldwin to Painter, May 4th, 1931; Carlson to Painter, May 16th, 1931; May
18th, 1931, May 19th, 1931—two letters—and May 20th, 1931.)
May 21st, 1931 the bank advanced $20,000.00 to the credit of Painter's account and recorded such advance as part of a note for $500,000.00. (See letters
Carlson to Painter, May 21st, 1931.)
May 22nd, 1931 the bank advanced $10,000.00 to the credit of Painter's account and recorded such advance as part of a note for $500,000.00. (See letters
Carlson to Painter, May 22nd, 1931.)
May 26th, 1931 the bank advanced $25,000.00 to the credit of Painter's account
and recorded such advance as part of a note for $500,000.00. (See letters Carlson
to Painter, May 26th, 1931 and Painter's receipt dated May 26th, 1931 for 1187
shares of Union Trust Company Capital stock.)
May 29th, 1931 the bank advanced $20,000.00 to the credit of Painter's
account and recorded such advance as part of a note for $500,000.00. (See
letters Carlson to Painter, May 28th, 1931 and May 29th, 1931—two letters.)
June 1st, 1931 the bank advanced $100,000.00 to the cred it of Painter's account
and recorded such advance as part of a note for $500,000.00. Of this amount,
$30,000.00 was used in payment of the option price on the Pope property on East
66th Street the leasehold of which property was held by the bank as collateral
to Painter's indebtedness as recited on page four of this report. (See letters
L. C. Gilger to Painter, June 1st, 1931; two letters Carlson to Painter, June 1st,
8830
STOCK EXCHANGE PRACTICES
1931; and letters Carlson to Painter, June 2nd, 1931, June 3rd, 1931, June 4th,
1931, June 5th, 1931, June 6th, 1931, June 8th, 1931—two letters )
June 9th, 1931 the bank advanced $20,000.00 to the credit of Painter's account
and recorded such advance as part of a note for $500,000.00. (See two letters
Carlson to Painter, June 9th, 1931.)
June 10th, 1931 the bank advanced $20,000.00 to the credit of Painter's account
and recorded such advance as part of a note for $500,000.00. (See letters Carlson
to Painter, June 10th, 1931—three letters; June 15th, 1931, June 16th, 1931,
June 17th, 1931—three letters, June 18th, 1931, and June 19th, 1931.)
June 20th, 1931 the bank advanced $245,000.00 to the credit of Painter's
account and recorded such advance as part of a note for $500,000.00. Of that
amount, $198,000.00 was used to pay the option price for the Brook's property
at 4300 Euclid Avenue, the leasehold of which property was held by the bank as
collateral to Painter's indebtedness as recited on page four of this report. (See
letters L. C. Gilger to Painter; June 18th, 1931 and June 20th, 1931; Carlson to
Painter, June 20th, 1931, June 22nd, 1931—two letters, June 23rd, 1931, June
25th, 1931, and June 26th, 1931.)
June 29th, 1931 the bank advanced $20,000.00 to the credit of Painter's account
and recorded such advance as part of a note for $300,000.00. (See letters Carlson
to Painter, June 18th, 1931, June 29th, 1931—two letters.)
July 1st, 1931 the bank advanced $30,000.00 to the credit of Painter's account
and recorded such advance as part of a note for $300,000.00. (See letters Carlson
to Painter, July 1st, 1931, July 6th, 1931—two letters, and July 11th, 1931.)
July 13th, 1931 the bank advanced $15,000.00 to the credit of Painter's account
and recorded such advance as part of a note for $300,000.00 The proceeds of
this loan were used to pay the interest on Painter's note for $575,000.00 at the
New York Trust Company of New York City.
July 13th, 1931 the bank advanced $575,000.00 to Painter by means of a transfer of that amount to the New York Trust Company of New York Cit}T to be used
in payment of Painter's note for $575,000.00 held by that bank. The collateral
to that obligation was forwarded by the New York Trust Company to the Union
Trust Company to be held by the last named institution as additional collateral
to Painter's indebtedness to that bank. (See letters Painter to Baldwin, July
9th, 1931; Painter to Harvey D. Gibson, President, The Manufacturers Trust
Companv, New York City, July 9th, 1931; Painter to Union Trust Company,
July 13th, 1931; R. L. Williams to Painter, July 13th, 1931; and H. J. Stroh,
Assistant Treasurer of The New York Trust Company to Baldwin, July 13th,
1931.)
On this same day, July 13th, 1931, Painter executed a new agreement pledging
real estate under his present and future loans, which agreement included the
real estate theretofore pledged with the bank under the agreement of May 1st,
1926, as well as certain other properties not previously included. Full description
of this real estate is set forth in the pledge agreement, copy of which 13 submitted
herewith.
With this pledge agreement Painter submitted a partial financial statement
showing his estimated value of his holdings. Copy of this statement is presented
for your attention and consideration.
Evidently certain officers of The Union Trust Company doubted the accuracy
of Painter's valuations. The files of the bank show that one M. G. Lutsch of the
Mortgage Loan Department, appraised certain of these properties on or about
June 1st, 1931, certain other properties June 22nd, 1932, and one P. A. Frye reappraised each of these properties on or about July 28th, 1932. In order that
you may appreciate the exaggerated valuations by Painter, there is submitted
herewith a comparative statement of the Painter, Lutsch, and Frye appraisals.
Your attention is again directed to Painter's partial financial statement as a possible violation of Section 13105-1 of the General Code of Ohio.
In addition to the real estate properties pledged under the agreement of July
13th, 1931, the bank held certain stocks and securities as collateral to Painter's
indebtedness, a more pa 1 titular description of which said stocks and securities is
as follows:
Balance due on note of State Road Land Company $11,901.64
8000 shares Akeley Camera Inc.
Balance due on note of A. R. Corlett $750.00
Balance due on note of Chas. H. Clark $700.00
200 shares Niagra Share Corporation of Maryland
20 warrants "
Balance due on note of The Van Sweringen Co. $261,336.00
STOCK EXCHANGE PRACTICES
8831
22,500 shares Manufacturers Trust Co. of New York
6,684
"
Glidden Company Common
2,000
"
White Motor Company Capital
1,100
"
Chesapeake & Ohio Ry. Common
600
"
Midland Steel Products Co. Common
400
"
Gillette Safety Razor Company
100
"
Midland Steel Products 8% Cumulative Preferred
100
"
American Chicle Company Common
800
"
Richman Bros. Company
200
"
Missouri Pacific Ry. Preferred
100
"
U. S. Steel Common
100
"
Goodyear Tire & Rubber Company Common
400
"
Chesapeake Corporation
100
"
N. Y. N. H. & H. Ry.
500
"
United Corporation Common
100
"
New York Central Ry. Capital
You will notice in Painter's financial statement he values the 8,000 shares of
Akley Camera stock at $138,00 per share or a gross valuation of $1,104,000.00.
We have not been able to obtain any definite information regarding the financial
condition of this company as of July 13th, 1931, but the files of the bank do contain an unsigned financial statement as of December 31st, 1931, which statement
shows the capital stock to have had a book value of about $12.08 per share, or a
total valuation of Painter's stock of $96,608.00. Copy of this financial statement is submitted herewith.
Baldwin claims to have had no knowledge of these property values or the
appraisals of Lutsch and Frye. In that connection your attention is directed to
a certain letter from L. C. Gilger to Ralph Williams dated July 13th, 1931.
July 16th, 1931, the bank advanced $5,000.00 to the credit of Painter's account
and recorded such advance as part of a note for $300,000.00. (See receipt dated
July 13th, 1931 signed by Painter; letter R. L. Williams to Painter, July 13th,
1931; letter Painter to Baldwin, July 13th, 1931; Painter to Carlson, July 14th,
1931; Painter to Baldwin, July 16th, 1931; Carlson to Painter, July 16th, 1931.)
August 20th, 1931 the bank advanced $30,000.00 to the credit of Painter's
account and recorded such advance as part of a note for $300,000.00. (See
letters Carlson to Painter, August 19th, 1931; August 20th, 1931—two letters.)
August 24th, 1931 the bank advanced $40,000.00 to the credit of Painter's
account and recorded such advance as part of a note for $300,000.00. (See
letters Carlson to Painter, August 21st, 1931—two letters; August 24th, 1931—
two letters.)
August 25th, 1931 the bank advanced $20,000.00 to the credit of Painter's
account and recorded such advance as part of a note for $300,000.00. (See
two letters Carlson to Painter, August 25th, 1931.)
August 26th, 1931 the bank advanced $5,000.00 to the credit of Painter's
account and recorded such advance as part of a note for $300,000.00. (See two
letters Carlson to Painter, August 26th, 1931.)
August 27th, 1931 the bank advanced $20,000.00 to the credit of Painter's
account and recorded such advance as part of a note for $300,000.00. (Spe
letter Carlson to Painter, August 27th, 1931.)
August 28th, 1931 the bank advanced $10,000.00 to the credit of Painter's
account and recorded such advance as part of a note for $300,000.00. (See
letter Carlson to Painter, August 28th, 1931.)
August 29th, 1931 the bank advanced $15,000.00 to the credit of Painter's
account and recorded such advance as part of a note for $300,000.00. (See
letter Carlson to Painter, August 29th, 1931.)
August 31st, 1931 the bank advanced $15,000.00 to the credit of Painter's
account and recored such advance as part of a note for $300,000.00. (See letter
Carlson to Painter, August 31st, 1931.)
September 1st, 1931 the bank advanced $25,000.00 to the credit of Painter's
account and recorded such advance as part of a note for $300,000.00. (See
letter Carlson to Painter, September 1st, 1931.)
September 2nd, 1931 the bank advanced $10,000.00 to the credit of Painter's
account and recorded such advance as part of a note for $300,000.00. (See
letters Carlson to Painter. September 2nd, 1931 and September 3rd, 1931 and
Painter's receipt dated September 11th, 1931.)
September 16th, 1931 the bank advanced $50,000.00 and recorded such advance as two loans, $40,000.00 as part of a note for $300,000.00, and $10,000.00
as part of a second note for $300,000.00 dated August 31st, 1931. (See letters
Carlson to Painter September 15th, 1931 and September 16th, 1931.)
175541—34—PT 20
7
8832
STOCK EXCHANGE PEACTICES
September 22nd, 1931 the bank advanced $25,000.00 to the credit of Painter's
account and recorded such advance as part of a note for $300,000.00 dated
August 31st, 1931. (See letters Carlson to Painter, September 18th, 1931 and
September 22nd, 1931.)
September 25th, 1931 the bank advanced $10,000.00 to the credit of Painter's
account and recorded such advance as part of a note for $300,000.00 dated August
31st, 1931. (See letters Carlson to Painter, September 23rd, 1931, September
24th, 1931—two letters, and September 25th, 1931.)
September 30th, 1931 the bank advanced $10,000.00 to the credit of Painter's
account and recorded such advance as part of a note for $300,000.00 dated August
31st, 1931. (See Painter's receipt September 28th, 1931 and letters Carlson to
Painter, September 28th, 1931 and September 30th, 1931—two letters.)
September 30th, 1931 the bank conveyed to Mrs. Painter (Maud Wyeth
Painter) 6 parcels of real estate which had therefore been pledged as collateral
to Painter's indebtedness under the pledge agreement of July 13th, 1931. No
consideration was received by the bank for this conveyance nor was any payment
made on Painter's indebtedness. (See letter L. C. Gilger to Painter, September
30th, 1931.)
October 1st, 1931 the bank advanced $10,000.00 to the credit of Painter's
account and recorded such advance as part of a note for $300,000.00. (See letter
Carlson to Painter, October 1st, 1931.)
The above transaction completes the list of advances made to Painter on
account of notes signed by him. As of October 1st, 1931 he was indebted to the
bank to the amount of $3,100,000.00. A large portion of the funds represented
by these advances was used for the purchase of Union Trust Company Capital
stock as evidenced by the correspondence previously submitted. Our investigation discloses that during the priod under condiseration (October 6th, 1930 to
October 1st, 1931) he purchased 13,680 shares of Union Trust Company stock
at a total cost of $870,808.72, all of which amount is included in the advances
hereinbefore discussed.
October 3rd, 1931 the bank released a large block of listed securities as collateral
to Painter's indebtedness without consideration or payment on his undebtedness.
These securities were, in substance, the same as those securities received from
the New York Trust Company July 13th, 1931 at the time Painter borrowed
$575,000.00 from the Union Trust Company with which to pay a note in that
amount held by the New York Trust Company. We have caused these securities to be valued as of October 3rd, 1931 by the Direcotrs Research Association,
Inc., of Cleveland, Ohio, located in the Federal Reserve Bank Building.
The following schedule shows the securities released, the amount of each, and
the valuation placed thereon by the Directors Research Association, Inc. as of
October 3rd, 1931;
4800 shares Manufacturers Trust Company of New York
$154, 800. 00
The Glidden Company Common i
34, 250. 50
6684
The White Motor Company Capital
16, 000. 00
2000
Chesapeake & Ohio Ry. Common
28, 600. 00
1100
The Midland Steel Products, Common
4, 500. 00
600
The Gillette Safety Razor Company
4, 450. 00
400
The Midland Steel Products Company 8% Cumulative
100
Preferred
4, 500. 00
100
The American Chicle Company, Common
3, 300. 00
800
The Richman Brothers Company
28, 000. 00
200
The Missouri Pacific Ry. Pref
5, 400. 00
100
U.S. Steel Common
6, 800. 00
100
The Goodyear Tire & Rubber Company Common
2, 100. 00
400
Chesapeake Corporation
6, 800. 00
100
The N. Y. N. H. & H. Ry
3, 600. 00
500
The United Corporation Common
6, 000. 00
100
The New York Central Capital
5, 500. 00
$314, 600. 50
With the exception of 3300 shares of Manufacturers Trust Company stock
and 2684 shares of Glidden Company Common, all of the aforementioned securities were sent to the Chemical Bank & Trust Company of New York City ta
be held by that bank as additional collateral to Painter's note for $305,000.00 to
that bank. (See letter H. S. Gibbons, Assistant Vice President, Chemical Bank
& Trust Company to Baldwin, October 6th, 1931.)
STOCK EXCHANGE PEACTICES
8833
In return for the collateral released, the Union Trust Company received 1747
shares of Union Trust Company stock which was retained as additional collateral
to Painter's indebtedness to the Union Trust Company. (See letter R. L.
Williams to Painter, October 8th, 1931 and Painter's receipt, October 6th, 1931.)
Referring again to the advances previously discussed, your attention is directed
to the fact that at the time these advances ceased there was an unused balance of
$235,000.00 on Painter's note for $300,000.00 dated August 31st, 1931. Evidently
some high authority within the bank was responsible for this abrupt restriction
of credit. We find an unsigned notation attached to the note for $300,000.00
reading as follows; "No more advances". The handwriting on this notation has
been identified as that of one R. J. Rutenbeck, a clerk in the Collateral Loan
Department but Mr. Rutenbeck fails to remember by whose authority such
notation was made.
We are now confronted with a most interesting situation. The bank held an
unused note for $235,000.00 dated August 31st, 1931 and a certain other note
for $300,000.00 signed by Painter as of October 5th, 1931 in Baldwin's possession.
Evidently arrangements had been made for additional advances to the amount
of $535,000.00 but some unknown official interrupted the proceedings.
Therefore, Baldwin arranged a loan for Painter in the amount of $305,000.00
at the Chemical Bank & Trust Company of New York City and agreed to furnish the necessary collateral from that held by the Union Trust Company to
secure previous advances. In accordance with that agreement, the release of
October 3rd, 1931 was made as hereinbefore discussed. Your special attention
is here directed to a letter from Baldwin to Painter, October 8th, 1931.
October 10th, 1931 the bank sold 1000 shares of the Manufacturers Trust
Company Capital stock for $34,630.00 out of the collateral held to secure Painter's
indebtedness to the Union Trust Company. The entire amount was credited to
Painter's commercial account. He was then charged $5,000.00 and that amount
applied as a payment on his indebtedness. No other payment was made on his
loans to account for this sale of collateral.
On the same day (October 10th, 1931) Painter's account was charged with
$30,000.00 and used to pay the option price for the Westgate property, the leasehold of which had theretofore been pledged to the bank as collateral under the
pledge agreement of July 13th, 1931. (See letters Carlson to Painter, October
9th, 1931; Gilger to Painter, October 10th, 1931; and Gilger to Ralph Williams,
October 10th, 1931.)
October 13th, 1931 the bank sold 400 shares of the Manufacturers Trust Company Capital stock for $15,336.00 and applied $15,000.00 of that amount as a
payment on Painter's indebtedness. The remaining $336.00 was used for Painter's
benefit. (See letter Carlson to Painter, October 13th, 1931.)
October 26th, 1931 the bank released 7000 shares of Manufacturers Trust
Company Capital stock to Painter in consideration for a payment of $150,000.00
on his indebtedness. We have caused this stock to be priced by the Directors
Research Association, Inc. as of October 26th, 1931, and have been informed
that it's legitimate valuation at that time was $266,000.00 or $38.00 per share.
Therefore, the bank weakened it's position by this transaction to the amount cf
$116,000.00 for Painter's use, benefit, and advantage. (See letters Baldwin to
the New York Trust Company, October 23rd, 1931; Painter to the Union Trust
Company, October 23rd, 1931; W. J. Birdsall, Assistant Treasurer of the New
York Trust Company to Baldwin, October 24th, 1931; and R. L. Williams to
Painter, October 26th, 1931.)
This concludes the principal transactions relating to Painter's indebtedness to
the Union Trust Company and leaves him indebted to that bank to the amount
of $2,930,000.00 which amount is still unpaid. However, there are some few
transactions regarding interest payments which it might be well to call to your
attention at this time.
Referring again to the letter of R. L. Williams to Painter, dated July 13th, 1931
and relating to interest computations, you will notice that after July 1st, 1931
interest on Painter's indebtedness was to have been computed at the rate of 4}^%.
November 10th, 1931 (after the conclusion of all of the transactions hereinbefore discussed) the interest rate on Painter's indebtedness was arbitrarily increased to 5%. (See letter Baldwin to Painter, November 10th, 1931.)
Following that increase in his interest rate, Painter made but one partial payment of interest due on his obligations. January 6th, 1932 he paid $24,269.87
leaving an unpaid interest balance of $12,000.00 due the bank. Since that time
he has made no voluntary payments of principal or interest whatsoever.
January 1st, 1932 Painter's interest rate was further increased to 6%. With
the exception of the payment noted above, all other interest payments have been
8834
STOCK EXCHANGE PRACTICES
in the form of seizures of dividends on Union Trust Company Capital stock purchased with bank funds for the benefit of Painter.
Painter's attitude toward his creditors is perhaps well illustrated by a transaction of business occurring on June 11th, 1931, between Painter and his wife
(Maud Wyeth Painter) involving their estate on Fairmount Boulevard in the
village of Shaker Heights.
On that date Mrs. Painter conveyed five lots in the village of Shaker Heights
to the Union Trust Company to be held as collateral to Painter's indebtedness.
In exchange therefore, Painter deeded his estate comprising some twenty-eight
acres of land to Mrs. Painter together with all of the buildings and contents
of all buildings located thereon. Creditors residing in New Jersey have recently
filed suit to have this conveyance set aside, claiming it to have been to the fraud
and damage of creditors.
As a final exhibit in this case, I am submitting, herewith an analysis of Painter's
loan account from March 3rd, 1928 to date, showing the details of his loan transactions in condensed form.
In closing this report, I desire to express my appreciation of the service rendered
by Mis. Ralph W. Emerson and John Nihill, both of the State Banking Department. These gentlemen performed the accounting work in this investigation
and are competent to testify concerning all transactions herein discussed.
Copy of this report is being submitted to Honorable Frank Cullitan, County
Prosecutor for Cuyahoga County, Ohio, for his information and consideration.
No attempt has been made to prepare a list of books, documents, and witnesses
necessary for a prosecution in this case, but such list will be prepared upon request
by Mr. Cullitan.
"Ruspectfullv submitted.
(Signed)
R. M. HUSTON,
ROBERT MORRIS HUSTON,
Special Deputy.
EXHIBIT U-4-2A
SPECIAL REPORT IN RE KENYON V. PAINTER ET AL UNION TRUST COMPANY,
CLEVELAND, OHIO
(Volume III)
Submitted by Robert Morris Huston, Special Deputy Superintendent of Banks.
1—University Hall Apartment—Value $225,000.00—Less
$80,000 Mortgage—Net Value
$145, 000. 00
2—Boulevard Apartment—Value $240,000—less $70,000
Mortgage—Net Value
170, 000. 00
3—Bay State Apartment—Value $230,000.00—Less $75,000
Mortgage—Net Value
145, 000. 00
4—SE corner Meadowbrook & Lee—Lots 527, 528, 529—Land
Value $200,000—Building security for leased valued
$110,000
310, 000. 00
5—NW corner Meadowbrook & Lee—Lots 19-A and 20—
Land Value $100,000—Value of buildings $20,000
120, 000. 00
6-7—Lots 336-337 Tallamore & Lee—Value of land $115,000—
Value of Buildings $20,000
135, 000. 00
8— Lots 376-377 Yorkshire & Lee—Value of land $130,000—
Improvements $5,000.00
130, 000. 00
9--Kelsey property, 1956 East 66th St—Value of building
$20,000—Value of land $30,000
50, 000. 00
10—Boynton parcel—1961 East 66th St—Value of building
$18,000—Value of land $32,000
50, 000. 00
11—Childs property—1856 East 63rd St—Value of land
$24,000—Value of buildings $28,000
52, 000. 00
12—Brook's lease, 4300 Euclid Ave— Value of land $200,000—
Value of building $1,091,559
1, 291, 559. 00
13—Westgate lease—Lot 448 Washington and Lee—Value of
land $90,000—Value of building $100,000
190,000.00
14—Pope property—1964 East 66th St.—Value of land
$40,000—Value of building $50,400.00
90, 400. 00
STOCK EXCHANGE PRACTICES
15—Moses property—9301 Euclid Ave—Value of lease and
buildings
State Road land secured by First Mortgage
8,000 shares Akeley Camera Company @ $138 00 per share.
Van Sweringen note due 2-21-32
Estimated approximate value
8835
$78, 350. 00
22, 807. 78
1, 104, 000. 00
261, 336. 00
$4, 345, 452. 78
Title to real estate under agreement dated May 1st, 1926
53.8547 acres
NW corner N. Woodland and Brainard—SW
corner Brainard & Cedar—Approximate
value per acre 5,000
105.7500 acres—West side Lander Rd—East side Brainerd—all
way through—approximate value per acre
3,000
24.9870 acres—West side Lander Road—approximate value
per acre 3,000
217.8000 " —Lander
and
Jackson—corner—approximate
value per acre 2,000
107.3400 " —SW corner S. Kinsman & Giles Rd—approximate value per acre 3,000
45.5950 " —NW corner Lander and Cedar—approximate
value per acre 4,000
33.6700 " —SE corner Brainard & Cedar—approximate
value per acre 4,000
3,5000 " —S. Kinsman and Center
1.3512 " —Giles and S. Kinsman
.1150 " —Twinsburg
269, 272. 50
317, 250. 00
74, 961. 00
435, 600. 00
322, 020. 00
182, 400. 00
134, 680. 00
75, 000. 00
18,512.00
31,500.00
Estimated approximate value title to real estate under
agreement dated May 1st, 1926
$1, 861, 195. 50
% interest in Backus property—2921 Euclid Avenue
720, 000. 00
Lease at corner of East 17th and Euclid—Value of lease
$1,000,000—Value of Building $300,000
1, 300, 000. 00
Estimated total value
Formerly my loans have been as high as $2,235,383.00.
$8, 226, 648. 28
KENYON V. PAINTER
MAY 21ST,
1931
(Signed)
00
00
Comparative appraisals of K. V. Painter properties pledged under agreement July 18', 1981
Location
Description
1. University Hall Apartment Cor. E. 109th St. & DeerJApartment Less Mtge
mg Ave.
2. Boulevard Apartment 10310 Wade Park Ave._
__ Apartment Less Mtge
3.
4
5.
6.
7.
8
9.
10.
11
12
13.
14
15.
16
17.
18
19
20
21
22
23
25
28
32.
33.
Bay State Apartment 10716 Carnegie Ave.. _
2245-65 Meadowbrook Blvd
Lee Rd N.W Cor. Meadowbrook Blvd
Lee Rd cor Tullamore
--Lee Rd. N W. cor. Yorkshire Rd
1956 E 66th St
1961 E. 66th St
1856 E 63rd St
. .
4300 Euclid Ave
Lee Rd N W. cor. Washington Blvd
- .
1964 E 66th St
N.W. Cor North Woodland & Bramard
W. S. Lander Rd E S. Bramard Rd
West Side Lander Rd
.._
Lander & Jackson Corner—-S E cor
S W cor S Kinsman & Giles Rd
S. Kinsman & SOM Center Rd N.W. cor
S. Kinsman, N W. cor Wiltshire Rd
Twinsburg, O Cleveland & E Liverpool Rd
% Interest 2921 Euclid Ave
_
__
Larchmere & Kemper Rd N W cor
Kildare & Goodnor Rds. S.W cor
Township of Bambndge Pettibone Rd
Chillicothe Rd Twp. of Bambndge
Cor. Cedar & Bramard & Cedar & Lander 9301 Euclid
Ave. Lease
Painter's Stated
Value
{$2io'ooo'}net-{ 2*{J ooo}net~
Apartment Less Mtge
j ^ ' Q O O Jnet""
11 Stores
_
Gas Station
Gas Station
._ _
Vacant
Kelsey Property (Commercial)
Boynton Parcel (Residence)
__
Childs Property (Residence)
Brooks Parcel (Commercial)
11 Stores
Pope Property (Vacant)
53 8547 Acres
105% Acres ._.
24 987 Acres -_. 217 8 Acres
102 92 Acres V/i Acres.
1,3512 Acres
Store & Suite
Vacant... __ .
.
Vacant
Vacant
Burnett Property—95 Acres
.
67.808 Acres
_ _.
25 Acres
Taken out of Agreement
Lutsch
Appraisal
6-1-31
Lutsch
Appraisal
6-22-32
Frye Appraisal
7-28-32
Lutsch
Estimated
Value
4-15-33
$145,000.
$79,600.
$75,000.
$57,000.
170,000.
70,300.
70,000.
50,000.
145,000.
310, 000.
120, 000.
135, 000.
130, 000.
50, 000.
50, 000.
52, 000
1, 291, 559.
190, 000
90, 400
269, 272 50
317, 250
74,961.
435, 600
306, 660.
75, 000.
18, 512
31, 500
720,000
72,000.
70,000.
30, 000.
25,000.
16, 500.
26, 700.
13,000.
7, 500.
164, 790.
54, 450.
13, 750.
80, 000.
100, 000.
40, 000.
50, 000.
30, 000.
18, 000.
8,000
6, 000.
200, 000.
50, 000.
5,500.
26,930
53,000.
12, 500
109,000
51, 500.
15,000.
2, 000.
5, 000.
150, 000.
66, 300
1, 500.
9, 500.
6, 700.
12, 500.
50,500.
55, 000.
20,000.
15,000.
8,200.
21,600.
8,100.
5,000.
140, 000.
40,000.
5,000.
10,800.
21,000.
5,000.
43,500
10, 200.
5,000.
400.
2,500
50, 000
20,000.
1, 500.
8,000
3,500.
6, 600.
No Record.
.
$26, 500.
52, 500
12, 500.
108, 500
30,600
7,000
5,800.
2,500
90, 000.
43, 300.
2,000
9,500.
6,800
15, 000.
0
$5,127,714. 50 $643, 590.
$5,127, 714. 50
$412, 500.
643, 590.
0.
0.
$1, 253,930.
$663,400
1,056,090.
221,900.
225,000
$834,190.
$1,028,930.
157,500
$505,900.
Neither Frye nor Lutsch appraised the first three parcels for anything more than the mortgage, Therefore, the sum of these appraisals are deducted from their total appraisal
figures.
CO
O
o
o
W
M
o
W
>
s
Akeley Camera, Inc., balance sheet—December 31, 1931
Assets
Liabilities
CashIn Bank
—
In Office
Notes Receivable
Accounts Receivable
Reserve for Bad Debts (Dr. Bal.)
Inventories
Raw Materials
Work m Process
Finished Stock
Lenses and Prisms
Finished Stock Playmor
Finished Stock sp.—Br
Investments—Akeley Foundry & Patt. Corp
Deferred charges—Prepaid Advertising
Capital assets
Machinery
Less Reserve for Depreciation
Machinery Equipment
Less Reserve for Depreciation
Tools, Dies, and Jigs
Less Reserve for Depreciation
Patterns
Less Reserve for D epreciation
Furniture and Fixtures
Less Reserve for Depreciation
Leasehold Improvements
Less Reserve for Depreciation
Camera Model " C "
Less Reserve for Depreciation
Patents
Patent Royalty
Less Reserve for Depreciation. __
Development Work
Less Reserve for Depreciation.
__
Deposits
_
Total assets
1 Red figures.
$2,936.10
100.00
8,804.20
41,504 32
9,405.64
2,272. 27
2,334 14
577. 74
$3,036.10
38,880 20
25,150.79
392.45
Notes Payable
Accounts Payable
Accrued Salaries
Reserve for Taxes
Dividends Payable
Capital Stock
Capital Surplus
Earned Surplus
Net Profit period ending 12-31-31
$38,301 64
3,715.36
9,545 25
8,075.93
14,500.00
27,500 00
15,891 94
$8, 794 44
—
64> 89g> 3 1
2,902.50
$74,138.18
145,000.00
30,402. 50
3*998 75
512.42
.._
_
$48,563.83
11,895.64 ^ 6 6 g 1Q
$4,365 89
1,152 89 3 2 1 3 oo
$36,362.90
14,949.49 21413 41
$1,106.79
637.06
46Q 7 3
$6,766.58
1,356.24 5 4 1 0 3 4
$7,724 30
1,187. 05 6 5 3 7 2 5
$585 84
543.42
49 49
ifif
$33,695 20
38,301.64 7^995.84
47,378.07
___
21,466.18
7,217.63
.-
X
a
o
H
M
O
m
73,754.34
24
6i8 77
1 4 248
55
' 50.00
$249,540.68
Total liabilities and capital
._. $249,540. 68
OO
8
8838
STOCK EXCHANGE PEACTICES
Kenyon V. Painter—Analysis of loan account
Date
Debit
Total amount borrowed to date secured by
collateral and a real estate agreement dated
May 1, 1926
Apr. 14,1928 Credited to New York Trust Co , N Y , to pay
loan of K. V. Painter. Collateral held by the
Union Trust increased by 2352 shares of
Cleveland Cliffs Iron Co
Apr. 18,1928 Additional
Collateral pledged—$187,500 00
Certificate of participation of New York
Trust Co. loan of $750,000 00 to Fishers Island
Co dated 3-9-28...
Apr. 26,1928 Additional collateral pledged—250% shares
Akeley Camera Inc
Apr. 27,1928 Payment made on State Road Land Co note
held as collateral to K. V Painter loan
credited to his com'l account of $1,750 00
May 24,1928 Proceeds sale of 150,000 Montank Beach Development Co 7's Bonds to the New York
Trust Co., New York
June 20,1928 Credit to com'l account of K V. Painter Funds
used to purchase 400 shares Ches. & Ohio Ry.
Co. Common stock—not pledged as collateral
to loans
July 2,1928 Credit to Corporate Trust Dept for Escrow
deal and acquired the Brainard Cedar parcel
of land from the Brainard Cedar Realty Co..
July 16,1928 Credit to com'l. account of K. V Painter
July 28,1928 Collateral released and no payment made on
loan—250% shares Akeley Camera Inc
Aug. 13,1928 Additional collateral pledged—8000 shares
Akeley Camera Inc. Common stock
Aug. 18,1928 Payment from the com'l. account of K.V.Pamter
Aug. 23,1928
Sept. 5,1928
Sept. 10,1928 Credit to com'l account of K. V. Painter (Fwd )
(Forwarded)
Sept. 11,1928 Proceeds credited to New York Trust Co ,
New York. On 9-15-28 collateral held by
the Union Trust Co. increased by a note for
$429,910 00 dated 8-21-26 signed by the Van
Swermgen Co. due 2-21-29 payable to K. V.
Painter. This note was sent to the Union
Trust Co. from the New York Trust Co ,
New York
Dec. 3,1928 Additional collateral pledged—100 shares
Workers Trust Co Johnson City, N Y
Dec. 10,1928 Credit to com'l. account of K V. Painter
Credit
Balance
Mar. 3,1928
Jan. 2,1929
Jan. 25,1929
Feb. 20,1929
Feb. 21,1929
Mar.
Apr.
May
May
May
May
June
July
July
July
July
26,1929
13,1929
6,1929
9,1929
Proceeds of part payment of Van Sweringen Co.
note due 2-21-29. Taken care of by the Corporate Trust Dept
Proceeds of part payment of Van Sweringen Co.
note due 2-21-29. Taken care of by the Corporate Trust Dept
Proceeds of payment in full of Van Sweringen
Co. note due 2-21-29 of $7373 22 and interest
on note of $1375 67. Taken care of by the
Corporate Trust Dept
Credit to com'l account of K.V. Painter
Additional collateral pledged—12 shares Cleveland Cliffs Iron Co Common stock
17,1929 Additional collateral pledged—200 shares
Marine Union Investors Inc. Capital stock.._
24,1929 Additional collateral pledged—500 shares
F. E. Meyers & Bro. Co. Common stock
19,1929 Additional collateral pledged—2955 shares
Cleveland Cliffs Iron Co Pfd. stock
1,1929 Credit to com'l account of K V. Painter
9,1929 Additional collateral pledged—200 shares
Richman Bros. Co. Capital stock (Forward).
(Forwarded)
22,1929 Additional collateral pledged—200 shares Richman Bros Co. Capital stock 100 shares
Fleischman Co Common stock
25,1929 Collateral sold but proceeds credited to K. V.
Painter's commercial account 300 shares F. E
Meyers & Bro. Co. Common 100 shares
Fleischman Co. Common Sold through Bond
Dept. for $20,807.50
$343,319.12'
$500,000.00
843,319.12
843,319.12
843,319.12
843,319.12
$150,583.34
692,735.78
71,250 00
763,985.78
100,000.00
25,000.00
873, 985. 78
898,985.78
898,985.78
30,000.00
10,000.00
20,000.00
50,000.00
898, 985. 78
868,985.78
858,985. 78
838, 985. 78
888,985. 78
888,985. 78
400,000.00
1,288,985.78
25,000.00
25,000.00
1, 288,985.78
1,313,985. 78
1,338,985.78
15,000 00
55,000.00
80,000.00
$168,829.01
1,170,156.77
253,707.77
916,449.00
8,748.89
907,700.11
922, 700.11
977, 700.11
1, 057, 700.11
1, 057, 700.11
1,057,700.11
60,000.00
1,057,700 11
1,057,700.11
1,117,700.11
1,117,700.11
$1,117,700.11
1,117,700.11
1,117,700.11.
STOCK EXCHANGE PKACTICES
8839
Kenyon V. Painter—Analysis of loan account—Continued
Date
July 26,1929
Aug. 28,1929
Sept. 11,1929
Nov. 13,1929
Dec.
9,1929
Dec. 27,1929
Feb. 18,1930
Feb. 21,1930
Feb. 28,1930
Apr. 25,1930
May 6,1930
May 12,1930
May 19,1930
July 2,1930
July 8,1930
July 18,1930
July 21,1930
July 25,1930
July 26,1930
July 31,1930
Aug. 2,1930
Aug. 13,1930
Aug. 14,1930
Aug. 15,1930
Sept. 25,1930
Sept. 29,1930
Debit
Collateral sold but proceeds credited to K. V.
Painter's commercial account 200 shares F E.
Meyers & Bro Co. Common Sold through
Bond Dept. for $7,547 88
Substitution of collateral pledged. 9600 shares
Sparks Withington Co Common pledged
for the release of 2364 shares of Cleveland Cliffs
Iron Co Common and 2955 shares Cleveland
Cliffs Iron Co Pfd These stocks were taken
to the Society for Savings Bank where K V.
Painter made a loan on 8-29-29 of $350,000 00
from them
Collateral released and no payment made upon
loan—400 shares Workers Trust Co Johnson
City, N Y (Note on 2-18-29 the original
100 shares were exchanged 4 for 1)
Collateral released and no payment made upon
loan- 700 shares Richman Bros Co Capital
and $261,336 00 note of Van Swermgen Co
due 2-21-31 payable to K V. Painter
Additional collateral pledged Note of W M
Green for $2,200 00—Note of A. R. Corlett
for $750 00—Note of Chas. H. Clark for
$700 00
Collateral released and no payment made upon
loan. $187,500 00 Certificate of Participation
of the New York Trust Co loan of $750,000 00
to Fishers Island Co dated 3-9-28 Sent to
the New York Trust Co , New York
Proceeds of part payment of Van Swermgen Co.
note due 2-21-30 Taken care of by the Corporate Trust Dept. (Forward)
(Forwarded)
Collateral released and no payment made upon
loan. Balance due on Van Swermgen Co.
note due 2-21-30 of $214,245.13 which includes
interest. This was credited to K.V. Painter's
commercial account
Collateral released and no payment made upon
loan- Payment of $2,000 00 of note State Road
Land Co due 2-23-28 This was credited to
K V Painter's commercial account
Payments from commercial account K V.
Painter
Credit to commercial account of K V Painter. _ - $100,000.00
50,000 00
100, 000. 00
60, 000 00
Renewal #73308 of previous notes into one loan..
950,000 00
Payment from commercial account K V.
Painter Transferred from New York Trust
Co and credited to K. V Painter's commercial account of $75,000 00
Credit to commercial account of K V Painter.
25,000 00
Funds used to purchase miscellaneous stocks
Collateral exchanged 200 shares and 20 warants
Niagara Share Corp. of Maryland Common
substituted for 200 shares Marine Union Investors Inc Capital stock
40, 000. 00
Credit to commercial account of K. V. Painter.
Transferred from the New York Trust Co ,
New York, to apply on K. V. Painter loan..
Charged to Commercial account of K.V. Painter
Credit to commercial account of K V. Painter
42,000.00
Funds used to partly purchase misc stocks.
Credit to commercial account of K V Painter
Funds used to partly purchase miscellaneous
15,000 00
stocks (Forward)
(Forwarded)
Credit to commercial account of K V Painter
Funds used to partly purchase miscellaneous
$15, 000. 00
stocks
Credit to commercial account of K V. Painter
Funds used to partly purchase miscellaneous
20,000 00
stocks.,Credit to commercial account of K. V Painter
Funds used to partly purchase miscellaneous
15,000.00
stocks
-
Credit
Balance
il, 117,700.11
1,117,700.11
1,117,700.11
1,117, 700.11
1,117,700.11
1,117,700.11
$217,700.11
900,000.00
$900,000.00
900,000.00
900,000.00
260,000.00
950,000. 00
75, 000. 00
640,000 00
740,000.00
790, 000. 00
890,000.00
950,000 00
950,000.00
875,000.00
900,000.00
900,000.00
940,000.00
200,000.00
40, 000.00
740,000.00
700,000.00
742,000.00
757,000.00
757,000.00
772,000.00
792,000.00
807,000.00
8840
STOCK EXCHANGE PEACTICES
Kenyon V. Painter—Analysis of loan account—Continued
Date
Oct.
4,1930
Oct.
6,1930
Oct. 6,1930
Oct. 14,1930
Oct. 23,1930
Oct. 31,1930
Nov. 14,1930
Nov. 18,1930
Nov. 21,1930
Nov. 22,1930
Nov. 28,1930
Dec. 10,1930
Dec. 11,1930
Dec. 17,1930
Dec. 17,1930
Dec. 22,1930
Dec. 24,1930
Dec. 31,1930
Jan. 15,1931
Jan. 17,1931
Debit
Credit
Purchased a cashier's check #D 286561 on the
Union Trust Co. payable to K. V. Pamter
for $1,000,000 00. Check is endorsed and
given to the Society for Savings Bank, City,
to pay the following loans of K. V. Painter
at the Society for Savings.
Dated 6-1-28
$70,000 00
" 4-27-28—80,000.00
«
10-15-28
200,000 00
u
12-12-28
—_
200,000.00
"u 8-29-29
— 350,000.00
11-6-29100,000 00
The following securities were released by the
Society for Savings:
9760 shares Union Trust Bank stock
2364 shares Cliffs Corp.
2955 shares Cleve Cliffs Iron Pfd.
These securities were sent to the New York
Trust Co along with 9600 shares of Sparks
Withington Co Common which was held as
collateral to the K V. Painter loan at the
Union Trust Co. This transaction was taken
care of by R L Williams, Asst. Vice President of the Union Trust Co
$1,000,000.00
Transferred from the New York Trust Co ,
New York, for the account of K. V. Pamter.
(See letter dated 10-6-30 from New York
Trust Co)
$1,200,000.00
20,000 00
Credit to commercial account of K. V. Painter.
Credit to commercial account of K. V. Pamter;
Transferred $50,000 00 to K. V. Painter's
Vickers account and balance used to pur100,000.00
chase miscellaneous stocks
Credit to commercial account of K V. Painter:
Funds used to purchase miscellaneous stocks
40,000.00
(Fwd)
-..
—
(Forwarded)
Credit to commercial account of K V. Pamter
33,000.00
Funds used to purchase miscellaneous stocks.
Credit to commercial account of K V. Pamter
Transferred $75,000 00 to K. V. Painter's
Vickers account and also purchased 150 shares
100,000.00
Union Trust stock
Credit to commercial account of K V. Painter
Transferred $10,000 00 to K. V. Painter's
Vickers account and balance used to pur40,000.00
chase miscellaneous stocks
_.
Credit to commercial account of K. V. Painter
To date has purchased 181 shares of Union
10,000.00
Trust stock
Credit to commercial account of K. V Pamter
To date has purchased 526 shares of Union
50,000.00
Trust stock
Credit to commercial account of K. V. Pamter
To date has purchased 1100 shares of Union
20,000.00
Trust stock
Credit to commercial account of K. V. Painter
30,000 00
Funds used to purchase miscellaneous stocks.
Credit to commercial account of K. V. Painter
50,000.00
Funds used to purchase miscellaneous stocks.
Credit to commercial account of K V. Painter
30,000.00
Funds used to purchase miscellaneous stocks.
Credit to commercial account of K. V Pamter
To date has purchased a total of 1830 shares
of Union Trust stock
50,000.00
Credit to commercial account of K V Painter
To date has purchased a total of 2456 shares
of Union Trust stock
40,000.00
Credit to commercial account of K. V. Painter
20,000.00
Funds used in purchasing miscellaneous
Credit to commercial account of K. V Painter
Funds used to purchase miscellaneous stocks
and Union Trust bank stock To date has
purchased a total of 2541 shares of Union
Trust stock (Forward)
20,000.00
(Forwarded)
Credit to commercial account of K V Painter
To date has purchased a total of 3085 shares of
Union Trust stock
10,000.00
Collateral released and no payment made upon
loan: $2,200 00 note of W. M. Green...
Balance
>•*» I I
807,000.00
607,000.00
627,000.00
727,000.00
767,000.00
767,000.00
800,000.00
900,000.00
940,000.00
950,000.00
1,000,000.00
1,020,000.00
1,050,000.00
1,100,000.00
1,130, 000.00
1,180,000.00
1, 220, 000.00
1, 240,000.00
1,260,000.00
1,260,000.00
1,270,000.00
1,270,000.00
8841
STOCK EXCHANGE PRACTICES
Kenyon V. Painter—Analysis of loan account—Continued
Date
Credit to commercial account of K V Painter.
To date has purchased a total of 3375 shares of
Union Trust stock.
Jan. 26,1931 Credit to commercial account of K V Painter
To date has purchased a total of 3772 shares of
Union Trust stock
Jan. 27,1931 Credit to commercial account of K V Painter.
Jan 30,1931 Credit to commercial account of K V Painter
To date has purchased a total of 3992 shares of
Trust Trust stock
Feb. 2,1931 Credit to commercial account of K V Painter
To date has purchased a total of 4657 shares of
Union Trust stock
Feb. 9,1931 Credit to commercial account of K V. Painter
To date has purchased a total of 4837 shares of
Union Trust stock
Feb. 13,1931 Payment from commercial account of K V
Painter
Feb. 16,1931 Payment from commercial account of K V
Painter Collateral released $16,059 25 Land
Trust Certificate of the Terminal Building Co
released to the Corporate Trust Department-.
Feb 18,1931 Transferred to New York Trust Co , New York,
to apply on K V Painter's loan m New York.
(See letter dated 2-13-31 to New York Trust
Co , New York, by W M Baldwin) On
Feb 11, 1931 K V Painter instructed W M
Baldwin, by his letter, to transfer $200,000 00
to the New York Trust Company and increase
his loan by that much He further stated
that the New York Trust Co. would release
the Van Swermgen note for $261,336 00 due
2-21-31 to the Union Trust Co and when paid
(Forward)
|
(Forwarded)
on 2-21-31, $250,000 00 of it was to be applied
on his obligations at the Union Trust Co The
Van Swermgen note was transferred to the
Union Trust Co but instead of the Van
Swermgen Co paying the note, the due date
was extended to 2-21-33, and is still unpaid
See letter 1-30-31 m Painter's file from Gilger
re Van Swermgen loan
Feb. 26,1931 Credit to commercial account of K V. Painter
To date has purchased a total of 5170 shares of
Union Trust stock
Mar. 2,1931 Credit to commercial account of K V Painter
Funds used to purchase miscellaneous stocks.-_
Mar. 5,1931 Credit to commercial account of K V Painter
Funds used to purchase miscellaneous stocks.__
Mar. 18,1931 Transferred from the Chemical Bank & Trust
Co New York, to apply on K. V Painter's
loan
Mar. 27,1931 Credit to commercial account of K V Painter
To date has purchased a total of 5440 shares of
Union Trust stock
Apr. 2,1931 Credit to commercial account of K V. Painter
Apr. 6,1931 Credit to commercial account of K V Painter
To date has purchased a total of 5978 shares of
Union Trust stock
Apr. 15,1931 Credit to commercial account of K V Painter
Funds sent to the New York Trust Co for the
account of K V Painter To date has purchased a total of 6240 shares of Union Trust
stock
Apr. 28,1931 Credit to commercial account of K V. Painter
Funds sent to the New York Trust Co for the
account of K V Painter
May 1,1931 Credit to commercial account of K V Painter
$25,000 00 of this amount transferred to Painter's
account at the New York Trust Co To date
has purchased a total of 6440 shares of Union
Trust stock (Forward)
(Forwarded)
May 7,1931 Credit to commercial account of K V Painter
To date has purchased a total of 6920 shares of
Union Trust stock
May 13,1931 Credit to commercial account of K V. Painter
To date has purchased a total of 7140 shares of
Union Trust stock
May 16,1931 Credit to commercial account of K V Painter
$75,000 00 of this amount transferred to Painter's
Vickers account To date has purchased a
total of 7350 shares of Union Trust stock
Jan.
21,1931
Debit
Credit
Balance
r c i
i
ft
•*
$30,000 00
$1, 300, 000 00
10,000 00
15,000 00
1, 310, 000 00
1, 325, 000 00
10, 000 00
1, 335, 000 00
40, 000 00
1, 375, 000. 00
20, 000 00
1, 395, 000 00
$20,000 00
1, 375, 000 00
20, 000 00
1, 355,000.00
1, 355, 000 00
1, 355, 000 00
200, 000 00
1, 555, 000 00
20, 000 00
1, 575, 000 00
60, 000 00
1, 635, 000 00
45, 000 00
1, 680, 000 00
350, 000.00
1, 330, 000 00
30,000 00
10, 000 00
1, 360, 000 00
1, 370, 000 00
20, 000 00
1, 390, 000 00
70,000.00
1, 460, 000 00
50, 000 00
1, 510, 000. 00
50,000 00
1, 560, 000. 00
1, 560, 000. 00
20, 000 00
1, 580, 000 00
20, 000 00
1, 600, 000 00
100,000 00
1,700,000 0 0
8842
STOCK EXCHANGE PRACTICES
Kenyon V. Painter—Analysis of loan account—Continued
Date
May 21,1931
May 22,1931
May 26,1931
May 29,1931
June
1,1931
June
9,1931
June 10,1931
June 20,1931
June 29,1931
July
1,1931
July 13,1931
July 13,1931
July 16,1931
Aug 20,1931
Aug. 24,1931
Aug. 25,1931
Aug 26,1931
Aug 27,1931
Aug. 28,1931
Aug 29,1931
Aug. 31,1931
Debit
Credit to commercial account of K. V. Painter
To date has purchased a total of 7842 shares of
Union Trust stock
Credit to commercial account of K V Painter.
To date has purchased a total of 8342 shares of
Union Trust stock
Credit to commercial account of K V. Painter
30,000 00 option price paid for Pope property
on East 66th Street $35,000 00 transferred to
Painter's Vickers account
Credit to commercial account of K V Painter's
To date has purchased a total of 9008 shares of
Union Trust stock
Credit to commercial account of K V. Pamter_
Credit to commercial account of K. V. Painter
$198,000 00 option price paid for Brooks property
at 4300 Euclid Avenue. To date has purchased a total of 9434 shares of Union Trust
stock
Credit to commercial account of K. V. Painter
To date has purchased a total of 10,107 shares of
Union Trust stock
Credit to commercial account of K V. Painter
(Fwd)
(Forwarded)
Credit to commercial account of K V Painter
To date has purchased a total of 10,240 shares of
Union Trust stock
Credit to commercial account of K. V Painter
$590,222 40 transferred to the New York Trust
Co , New York, to pay loan of K V. Painter.
The following securities were sent to the
Union Trust Co and placed as collateral to
K V Painter's loan—(see letter from New
York Trust Co 7-13-31).
22, 500 shares Manufacturers Trust Co. N.Y.
6, 684 shares Glidden Co Common
2, 000 shares White Motor Co
1,100 shares Ches & Ohio R R Common
600 shares Midland Steel Prod Co Common
400 shares Gillette Safety Razor Co
100 shares Midland Steel Prod. Co. 8% Pfd.
100 shares American Chicle Co Common
800 shares Richman Bros Co
200 shares Missouri Pacific R R Pfd
100 shares U S Steel Common
100 shares N Y Central R R
100 shares Goodyear Tire & Rubber Common
100 shares N Y N H & H. R. R.
400 shares Chesepeake Corp
500 shares United Corp Common
1,100 shares Union Trust stock (released to
K V. Painter and not pledged).
Appraised value of collateral and agreement,
$2,544,153 64
Credit to commercial account of K V Painter.
To date has purchased a total of 10,640 shares of
Union Trust stock
Credit to commercial account of K V Painter
To date has purchased a total of 11,313 shares of
Union Trust stock
Credit to commercial account of K V Painter.
(Fwd)
(Forwarded)
Credit to commercial account of K V. Painter.
Credit to commercial account of K V Painter
To date has purchased a total of 12,618 shares of
Union Trust stock
Sept. 1,1931 Credit to commercial account of K V. Painter.
Sept. 2,1931 Credit to commercial account of K. V. Painter
To date has purchased a total of 12,938 shares of
Union Trust stock
Sept 16,1931 Credit to commercial account of K V. Painter
To date has purchased a total of 13,140 shares of
Union Trust stock
Sept 22,1931 Credit to commercial account of K V. Painter.
Sept. 25,1931
Sept 30,1931
Credit
Balance
$20,000 00
10,000.00
25,000 00
1, 720,000 00
1, 730,000. 00
1, 755,000.00
20,000.00
1,775,000.00
100,000 00
1,875,000.00
20,000 00
20, 000 00
1,895,000.00
1,915, 000. 00
245, 000 00
2,160,000 00
20,000 00
2,180,000.00
30, 000 00
2, 210, 000 00
2,210,000.00
15,000 00
2, 225, 000. 00
575,000 00
5,000 00
30,000.00
2,800, 000 00
2,805,000. 00
2,835,000 00
40, 000 00
20, 000 00
5,000 00
2,875,000.00
2,895, 000. 00
2,900,000.00
20, 000 00
10,000 00
15,000.00
2,920, 000 00
2,920,000.00
2.930.000. 00
2,945,000 00
15, 000 00
25, 000 00
2,960,000.00
2,985,000.00
10,000.00
2,995,000.00
50,000
25,000
10,000
10,000
3,045,000.00
3,070, 000.00
3,080,000. 00
3,090,000.00
00
00
00
00
8843
STOCK EXCHANGE PRACTICES
Kenyon V. Painter—Analysis
of loan
Date
Oct. 1,1931
Oct.
3,1931
Oct.
4,1931
Oct. 10,1931
Oct. 13,1931
Oct. 26,1931
Mar. 7,1932
account—Continued
Debit
Credit to commercial account of K. V. Painter
Transfers made to Painter's Vickers account
from 9-18-31 to 9-30-31 amounted to $60,000 00
To date has purchased a total of 13,680 shares
of Union Trust stock
Collateral released, having a market value of
$314,600 50, and no payment made upon loan..
Appraised value of collateral and agreement held
by the Union Trust Company amounted to
$1,832,665 64
Charged to commercial account of K V. Painter
1000 shares of Manufacturers Trust Co sold and
K V. Painter's account credited with $34,630 00. Appraised value of collateral and
agreement, $1,905,290 64
Charged to commercial account of K. V Painter
400 shares Manufacturers Trust Co sold to Witt
Kraus Co for $15,336 00 and credited to K V
Painter's account. Appraised value of collateral and agreement, $1,895,632 64 (Fwd)
(Forwarded)
K. V. Painter's check on New York Trust Co ,
New York, for $150,000 00 for the release of
7000 shares of Manufacturers Trust Co with a
market value of approximately $266,000 00
Substitution of collateral pledged 9300 shares of
Manufacturers Trust Co Capital stock exchanged for 9300 shares of Manufacturers Trust
Co new stock and 9300 shares of Huron Holding Corp. depository certificates
EXHIBIT
Credit
$10,000.00
Balance
$3,100,000. 00
3,100,000.00
3,100,000.00
$5,000.00
3,095,000. 00
15,000.00
3,080,000,00
3, 080,000. 00
$150,000.00
2,930,000. 00
2,930,000. 00
U-4-3
KENYON V. PAINTER
3240 FAIRMONT BOULEVARD
SHAKER HEIGHTS
CLEVELAND
OHIO
Mr. W. M. BALDWIN, President,
NOVEMBER 14, 1930.
The Union Trust Co.,
Cleveland, Ohio.
DEAR MR. BALDWIN: This is to ask you to kindly buy for me 1,000 shares of
Union Trust Company stock @ 68.
This is in addition to the stock you have already bought for me. When said
stock is bought please charge my checking account with the same and have the
stock issued in the name of Kenyon Vickers Painter. I understand 400
shares of this stock have been purchased for my account.
Very truly yours,
K. V. PAINTER.
BMB
Therefore total buying order is for 1400 shares including that already bought.
EXHIBIT
U-4-4
KENYON V. PAINTER
3240 FAIRMONT BOULEVARD
SHAKER HEIGHTS
CLEVELAND
OHIO
Mr. W. M. BALDWIN, President,
NOVEMBER 17, 1930.
The Union Trust Co.,
Cleveland, Ohio.
DEAR MR. BALDWIN: AS I am going to New York tonight for a few days, will
you please buy for me, all of the Union Trust stock that is offered, using your
judgement as to the price to be paid—but at not over $71.00 per share.
I will be staying at the Biltmore Hotel where you can reach me by telephone
at any time.
Very truly yours,
K. V. PAINTER.
BMB
8844
STOCK EXCHANGE PRACTICES
EXHIBIT U-4-5
KENYON V. PAINTER
3240 FAIRMONT BOULEVARD
SHAKER HEIGHTS
CLEVELAND
OHIO
DECEMBER 2, 1930
Mr. W. M. BALDWIN, President,
The Union Trust Co.,
Cleveland, Ohio.
DEAR MR. BALDWIN: Thanks for yours of December 1st advising me that the
rate of interest on my collateral loan has been reduced to 5%.
Referring to my letter of November 23rd, will you please allow this order to
stand and in addition thereto, will you please place an order to buy 1,440 shares of
Union Trust @ 70>i
Will you then please cancel the verbal order which I gave you over the telephone
today to buy 500 shares of Union Trust @ 70.
Thanking you,
Sincerely yours,
K. V. PAINTER.
BMB
12/3/30 K.V.P. to take all stock offered at 70K up to 1440 shares.
EXHIBIT U-4-6
KENYON V. PAINTER
3240 FAIRMONT BOULEVARD
SHAKER HEIGHTS
CLEVELAND
OHIO
DECEMBER 18, 1930.
Mr. W. M. BALDWIN, President,
The Union Trust Company,
Cleveland, Ohio.
DEAR MR. BALDWIN: Confirming my conversation with you over the telephone
this morning about 9 A.M., I asked you to kindly call up New York on Long
Distance and take the 900 shares of Union Trust stock which they were inquiring
about @, 69%. This will be part of a buying order which I am giving you to buy
5,000 shares of Union Trust stock for me @ 69%.
Kindly cancel all previous buying orders which I have given you in Union Trust
stock.
Very truly yours,
K. V. PAINTER.
EXHIBIT U-4-7
COPY
DECEMBER 19th, 1930.
Mr. KENYON V. PAINTER,
3240 Fairmont Blvd.
Cleveland Heights, 0.
DEAR MR. PAINTER: We wish to advise that we have today charged your account $7,080.00 in payment for purchase of 100 Shares Union Trust Company
Stock at 70J4 plus broker's commission.
Very truly yours,
President.
WMB:EMS
P.S. I wish to confirm conversation in which I advised you that yesterday we
purchased 426 Shares of Union Trust at 69% net, which is part of a New York
purchase, and also 5 Shares on the Cleveland Stock Exchange at 69% plus brokers'
Commission.
(Original carbon copy of this letter is in Confidential file in Mr. Cox's Office.)
STOCK EXCHANGE PRACTICES
8845
EXHIBIT U-4-8
KENYON V. PAINTER
3240 FAIRMONT BOULEVARD
SHAKER HEIGHTS
CLEVELAND
OHIO
DECEMBER 22, 1930.
Mr. W. M. BALDWIN,
President The Union Trust Co.,
Cleveland, Ohio.
DEAR
M R . BALDWIN: Confirming my telephone conversation with you at
8:30 this morning, I asked you to please change the buying order which you have
for me in Union Trust to 70}£.
As you have bought 431 shares of the 5,000 which I asked you to buy on December 18th this leaves 4,569 shares to be bought at 70}^.
Very truly yours,
K. V. PAINTER.
EXHIBIT U-4-9
JANUARY 14TH, 1931.
Mr. KENYON V. PAINTER,
3240 Fairmont Blvd.,
Cleveland Heights, 0.
DEAR MR. PAINTER: I take pleasure in advising you that at the organization
meeting of our Board of Directors held today, you were elected a member of the
Executive Committee.
Hoping that it will be possible for you to accept this appointment, I am,
Very truly yours,
President.
WMB:EMS
EXHIBIT U-4-10
[Copy]
JANUARY 14TH, 1931.
Mr. KENYON V. PAINTER,
3240 Fair mount Blvd.,
Cleveland Heights, 0.
DEAR M R . PAINTER: I have today purchased for your account 489 Shares
Union Trust Company at the following prices:
15 Shares @ 70}^ plus brokers' commission
474
" @ 69% "
"
I tried to reach you by telephone today, but was informed that you were
motoring to New York and would not arrive there until late tomorrow night or
Friday morning.
Very truly yours,
President,
WMB.-EMS
Original carbon copy of this letter is in Confidential file in Mr. Cox's office.
8846
STOCK EXCHANGE PRACTICES
EXHIBIT U-4-11
EXCERPTS TAKEN FROM EXAMINERS REPORT, DEPARTMENT OF BANKS, STATE OF
OHIO, JANUARY 20, 1933
K. V. PAINTER, $2,930,000.00
Maker is a director of the bank and is one of the largest owners of real estate
in Cleveland. He is also the largest stock holder in this institution. His worth
was at one time estimated to be in excess of $20,000,000. In passing this loan
at the time of previous examinations, the examiner was always compelled to
rely solely upon verbal information furnished by bank officers. It has never
been possible to obtain anyfiguresas to his worth or the total amount of his debts.
At this time the loan is one year delinquent in interest. The collateral held
consists of title to a number of parcels of real estate, both improved and unimproved, scattered through various parts of the city. Other collateral held is a$258,000 note of the Van Sweringen Co. and 1,747 shares of Union Trust Co.
stock. The market value of all stocks held is estimated at approximately
$293,000. Painter has always been very arbitrary in his dealings with the bank,
and it is apparent that he was allowed to borrow almost any amount he desired
with practically no efforts being made to determine the value of the collateral
which he offered. This line of credit was recently turned over to Vice President
Steele to work out. He immediately had two independent appraisals made of
the properties which are deeded to the bank. As a result of these appraisals it
was discovered that Painter was greatly over-estimating the value of his properties. The bank's appraisers showed a total valuation of approximately
$1,100,000 while Painter's valuation was $5,300,000. Painter is now in Africa
and is apparently taking the attitude of letting the bank hold the bag. A substantial loss is apparent. The examiner has classed $1,000,000 as doubtful and
believes that he is very charitable in this classification.
EXHIBIT
U-4-12
APRIL 26TH, 1933.
IN RE K. V. PAINTER LOAN
Mr. Nutt called this morning at my invitation. Replying in the main to my
inquiries, the following has developed. He apparently spoke with freedom.
1. Painter has always been considered a very rich man, prompt pay, the type
of citizen to whom a bank officer would expect to say "Yes" for any reasonable
requirement.
2. About 1931 the picture changed, as Painter was unable to pay his taxes on
his real estate under the insurance company loan and was under necessity of
giving a second mortgage to the New York Trust Company to provide funds for
debt service and taxes. Mr. Nutt considered at that time that it was generally
recognized that Painter "was under pressure."
3. Mr. Nutt never trusted Painter fully. He told the bank's income tax man
to "watch his step" in preparing Painter's documents in connection with taxes,
and was impelled to this caution because Painter was notoriously a small income
tax payer "paying less than my young son."
4. A. He states definitely that he does not know why the bank loaned Painter
in 1931;
B. With equal definiteness that he knew nothing of Painter's buying of
Union Stock;
C. Never knew anything in connection with appraisals on Painter's loans;
D. Neither made, nor approved any loans to Painter in any capacity;
E. Neither the initials, nor other handwriting on the June 18th.v, 1931,
$300,000.00 note signed by Painter are in Mr. Nutt's handwriting,
neither does he have any memory concerning the loan;
F. He has iio knowledge concerning the release of collateral to Painter,
and did not hear the matter discussed, his permission was not askedr
nor the matter mentioned to him.
STOCK EXCHANGE PRACTICES
8847
5. He states that the Painter transactions were handledfc>yMr. Baldwin and
"the other loaning officers" and specified that this did not include himself.
OSCAR L. COX, Conservator.
OLC. E
CC to Nutt File
CC to Painter File
The above dictated from memory, supported by the attached pencil memorandum made in Mr. Nutt's presence. I asked Mr. Baldwin to call.
Noted: Mr. Rogan
Mr. Laylin
EXHIBIT U-4-13
JANUARY 15TH, 1931.
Mr. KENYON V. PAINTER,
c/o Biltmore Hotel, New York City.
DEAR MR. PAINTER: I am sorry that you went to the trouble of telephoning
me from Palm Beach last night, but when I talked with your house in the afternoon and tried to find out where I could reach you, I understood them to say
that you would not arrive in New York until tonight or tomorrow morning and
that you were motoring and could not be reached by telegraph. I took the
liberty of saying that if by chance they heard from you, I would like to have you
telephone me. I am sorry you were put to so much trouble.
Briefly, my reason for wanting to talk with you was because of the sudden
break in the market price of Union Trust Stock yesterday. There was one lot
of around a thousand shares which came on the market the day before and was
offered at 74, and when it was reported to me I said I knew of no one interested at
that price. Later in the day part of it was sold at 72, and the broker advised me
that was the bottom price on the balance of his order, and I still told him I knew
of no one interested. During the last hour of trading, when I was in our annual
stockholders' meeting, this broker sold the stock at the bid price and it went to
6934, of which I bought for you 474 Shares at that price, and previous to the
execution of that, 15 Shares at 7(% so that yesterday I bought a total of 489
Shares. It is quite apparent to me that this particular holding was some distressed stock and that the owner had to have some money quick.
This morning the market was better, and today I have purchased for you a
total of 75 Shares at 70, and the market closed 70 bid. The low price today was
70 and the high 70/8.
I have charged your account today with $32,966.70, covering the cost of 474
Shares at 69% plus commission.
Unless I hear from you to the contrary, I will continue to buy such amounts
as come out at 70 or better, keeping of course within the limits of the total
amount of stock which you authorized me to buy. My records indicate that at
the close of business today I have authority to buy a total of 3,755 Shares.
Very truly yours,
WMB.EMS
President.
EXHIBIT U-4r-14
[Copy]
JANUARY 20TH,
1931.
Mr. KENYON V. PAINTER,
8240 Fairmount Blvd., Cleveland, Heights, Ohio
DEAR MR. PAINTER: I have today charged your account $1,054.50 covering
purchase 15 Shares Union Trust Company at 70 plus brokers' commission.
I wish to confirm telephone message of this morning in which I advised you
that our brokers yesterday purchased for your account 215 Shares at 70 plus
commission.
We have today purchased 100 Shares for you at 70. The market closed 70%
bid for 6 Shares, and 72 asked.
Very truly yours,
WMB:EMS
President.
Original carbon copy of this letter is in Confidential file in Mr. Cox's oflice*
175541—34—PT 20
8
8848
STOCK EXCHANGE PRACTICES
EXHIBIT
U-4-15
[Copy]
JANUARY 26TH,
1931
Mr. KENYON V. PAINTER
3240 Fairmount Blvd., Cleveland Heights, 0.
I wish to advise that I have today charged your account
$11,740.10 covering purchase of 167 Shares Union Trust Co. at 70 plus brokers'
commission.
There were no sales of Union Trust Stock on the local Exchange today.
Very truly yours,
WMBrEMS
President.
Original carbon copy of this letter is in Confidential file in Mr. Cox's office.
DEAR MR. PAINTER:
EXHIBIT
U-4-16
FEBRUARY 5TH,
1931.
Mr. KENYON V. PAINTER
3240 Fairmount Blvd., Cleveland Heights, 0.
I wish to advise that we have today purchased for your
account 180 Shares Union Trust Company Stock at 70 plus brokers' commission.
Our brokers report total sales of 300 Shares today, the high being 70J^ and
low 70.
Very truly yours,
WMB:EMS
President.
Original carbon copy of this letter is in Confidential file in Mr. Cox's office.
DEAR MR. PAINTER:
EXHIBIT
U-4-17
THE UNION TRUST COMPANY,
Cleveland, Ohio, April 6, 1931.
Mr. CARLSON: I wish you would say to Mr. Painter that I am very glad he
reduced the bid on the remaining block of 193 Shares to 68 H, because I had a
memorandum to talk to him about that this morning, but was not permitted to
come to the office or use the telephone; and for the next week or ten days I would
not feel adverse to having the bid reduced to even 68, and then watch the market
so that if a block of 200 shares or more should be offered, drop the bid a full
point at once and let it stay down for a few days to see if the stock is purchased
elsewhere.
This is just a suggestion which you can talk over with Mr. Painter, but of
course follow his instructions as to any bid at all.
WMB.EMS
W. M. BALDWIN, President.
4/7/1931, Order reduced to 68.
This stationary is for inter-department and inter-office use only
(Exhibits U-4-18 through U-4-19 face this page)
EXHIBIT
U-4-20
GENERAL CODE OF OHIO
SECTION 13105-1
False Statements; penalty.—Whoever knowingly makes or causes to be made,
either directly or indirectly, or through any agency whatsoever, any false statement in writing, with intent that it shall be relied upon, or, knowing that a false
statement in writing has been made by another with such intent, respecting the
financial condition, property indebtedness, means, or ability to pay, of himself or
any other person, firm or corporation, in whom or which he is interested or for
whom or which he is acting, and upon the faith thereof he or some other person
acting for or in collusion with him or with his knowledge, procures in any form
whatsoever, either the delivery of personal property, or chose in action, the
payment of money, the making of a loan or credit, the extension of a credit, the
discount of an account receivable, or the making, acceptance, discount or endorse
v- /
KENYON V PAINTER
Mr.ff.M. Baldwin, President,
Th* Dai on Trust Co.,
Cleveland, Ohio.
:>84O PAIRMONT BWUKVAHD
KHAKCR HI3OHTB
CM5VKLANO
01:10
16, 1*31
Dear Mr, Baldwin:On July 13th I wrote you as follows:"As I am leaving fo? Europe on July 16th, I wish to verify the open
orders whloh you have to purchase additional stock of The Union
Trust Company, sa follows:-
500 shares
100
100
100
100
280
57-3/8 }
57-1/2
57-5/8
57-3/4
59
y
I hereby authorise you during tssj absence to purchase say additional
• amount up to ______ Share* at auoa prices aa you may determine from
time to time.*
,
It has occurred to me that this might be asking you to
assume sere responsibility than you cared to and therefore I will cancel the letter
and also ask you to cancel buying orders in Union Trust and then 4 0 glace the following.
7.1 , . J \
BUT
2,000
2,009
2,000
4,000
3,000
8,000
a:a»'•*"•
Shares Oaion Trust 0 50 f|
«
•
" O 57-£ V •
»
•
" « 57
V
^
Chesapeake k Ohio O 27
NT
Missouri Pacific Preferrod O 56
U. S. Steel O 86 f |
All stocks bought w i l l be held as security u n t i l I return
and i f ay preaent note i s used up, I will sign a^^MV-rnrMxraslgv-^.la any way
satisfactory, i f you haro any suggestions tp^-BSaSe as to the above ceS^ra, plesaa
adriae me.
This letter will receive our atteation.
EXHIBIT U-4-18
30, 1932
Hr* ,.. !,:. Baldwin, Prasi I
*rust Company,
,
fore
ft
sals of
aad the
Fox Corporation, that they will be in the market fcr about
rifty (50) o u t f i t s .
. •
<
' Ve need a l l th-c influence we car. get
try and put over the sale of our
* to them.
Id be of great benefit to me in a financial way, if *
The Banking iat^r&sts represented ii
Fox Film Corpemtl n is I
: ; ank. If they
(1
;' • Fll« Corporation) •
-ched thro
interests, i t would bear g r ^ t Influence in the sale of this
9 M Akeley-equipment stands way ahe*
of any other competitor in quali ty, pr>rfojpaMfire'"S!Krpriced $-.
would greatly appreciate It If yoajurffaupproteh thia »att#r
with tho Chase National Bank taAwsf, without i ibt, 111 be
called upon la connection with (the sas-iS,
Tliis i s importantv
Sincerely,
EXHIBIT U-
EXHIBIT U-4-23(l)
!
•:•
d notif
• I-
or o n
l>« »Utt •»
DATE
PAYMENT
tr SUI
0'
BALANCE
PAYMENT
DATE
BALANCE
i
1.100 1^9 th •'r.Saaj sake i
600 »hs:The 1 4 1 * id Stiel p
400 «ht[Tl» i liii- t i Sk£cty
100 »h»JThe i d 3 «3-,d stWi P
:a l Chldle
" -VXTTfii TKe
aOQ ahs TM 14L9IB BCfil Co
200 shs The
Pioifi
jr
~~xOH thf 1 "T^W""1
'•^ .-if t«
100 »h« The '
...
400
irv>
500
"100
«Ju|Th«
sjnj fY,t 'i4a
a
ah«[The
ShBjTtrr '
f At v/X/vl
o
•
>s
:
•
*\
.
C
>o 9 A
£2
J
hie R^ Co - Coir..
odua £ C o . C ora.
BIM r
oduO (1 C o . I f
" 0 ..
i.a
j
LL
i i
.
rf
M.
' 7
tj
Co. ( am.
I
JT —
ufe *
r.v
i
ilce: Corp
;or|sorat
]
1
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- ' —
c e »ntra
c
t
%:
. JO C O a ,—
i
1
— -
i j
.£
i r
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i
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4-
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;
SI
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:
.
1
L
r
r1
_ 1 Li f
•
f
• *
EXHIBIT U-4-23(2)
i f
T
-4
.i*
STOCK EXCHANGE PRACTICES
8849
ment of a bill of exchange, promissory note or other commercial paper, either
for the benefit of himself, or such person, firm or corporation, shall, if the value
of the thing or amount of the loan, credit or benefit procured is thirty-five dollars
or more, be deemed guilty of a felony, and be fined not more than one thousand
dollars or imprisoned in the Ohio penitentiary not more than six years or both,
or if the value be less than that sum, be deemed guilty of a misdemeanor, and be
fined not more than one hundred dollars or imprisoned in the county jail or
work-house not more than six months, or both.
EXHIBIT U-4-21
THE UNION TRUST COMPANY
CLEVELAND, OHIO, July 13, 1931.
RALPH WILLIAMS, Asst. Vice President,
BANK.
DEAR MR. WILLIAMS: This morning Mr. Painter signed a new agreement
pledging real estate under his present and future loans, and I am enclosing herewith copy of this agreement. I am also returning for your loan files the appraisal
Mr. Painter signed on the 21st of May, 1931, together with some appraisals of
Mr. Stuber and other data Mr. Baldwin handed to me.
Very truly yours,
L. C. GILGER, Assistant Secretary.
LCC G
Encs.
This stationary is for inter-department and inter-office use only
EXHIBIT U-4-22
COPY
THE UNION TRUST COMPANY MAIN OFFICE
CLEVELAND, October 8th, 1931.
Mr. K. V. PAINTER,
3240 Fairmount Blvd.,
Shaker Heights, 0.
DEAR MR. PAINTER: Referring to your letter of October 3rd, I wish to report
that under date of October 6th I arranged a loan at the Chemical Bank &
Trust Company, New York, of $305,000.00, which loan is dated October 6th,
1931, payable April 6th, 1932, with interest at 4% per annum. A copy of the
note which I delivered to them is herewith enclosed, and on the reverse side of the
note you will find a list of the collateral.
I return herewith your note dated October 5th, 1931, for $300,000.00, which
you gave to me to use. I also return your note dated September 18th, 1931, for
$350,000.00, to the Chemical Bank & Trust Company, which was not used.
I also enclose your note dated March 6th, 1931, for an original amount of
$350,000.00, to the Chemical Bank & Trust Company.
I have credited your account with our company $5,000.00, being the additional
principal amount of the loan above referred to. I have charged your account
$644.44, being interest paid the Chemical Bank & Trust Company for the period
September 18th to October 6th, as follows:
September 18th $350,000.00—8 days @ 4%
$311. 11
September 26th
to October 6th 300,000.00—10 " @ 4%
333.33
$644. 44
Kindly acknowledge receipt of the enclosures on the carbon copy of this letter.
Very truly yours,
President.
WMB.EMS
Ends.
10/8/31
Received the above enclosures.
K. V. PAINTER
Please sign and return.
(Exhibit U-4-23 (1) and U-4-23 (2) face this page)
8850
STOCK EXCHANGE PRACTICES
EXHIBIT U-4-25
KENYON V. PAINTER,
3240 FAIRMONT BOULEVARD, SHAKER HEIGHTS,
Cleveland, Ohio, Nov. 23, 1930.
DEAR MR. BALDWIN: We are leaving this morning for St. Joseph. I see
yesterday about 400 Union Trust sold. Would it not be a good thing to lower
our bid?
As I said, I am very glad to try to take up all Union Trust sold—but of course
we do not want to give more than necessary for it.
Say we take
1000 more at 69
1000 more at 68#
1000 more at 68
so on down until we have 5000 shares.
Sincerely
Hope to be back in a few davs.
K. V. PAINTER.
EXHIBIT U-2-1
THE UNION TRUST COMPANY
EXTRACTS FROM REPORT OF LAUBSCHER AND SMITH, ACCOUNTANTS AND AUDITORS
1814 STANDARD BANK BLDG., CLEVELAND.
Loans made by the Union Trust Company to O. P. and M. J. Van Sweringen
and controlled companies. The Vaness Company loan of $2,000,000.00 and
participation of $2,800,000.00 in $9,000,000.00 loan to O. P. and M. J. Van
Sweringen.
NOVEMBER 13, 1933.
Mr. O. L. Cox,
Special Deputy Superintendent of Banks.
DEAR MR. COX: While the report prepared under the direction of Mr. R. M.
Huston, Chief Investigator, does not uncover anything that is new to us, it
provides an excellent summary of the data and information pertaining to certain
loans made by The Union Trust Company.
The report appears to be unusually accurate. It has not been compared with
our records. Here and there I have come upon small inaccuracies which I
have corrected in the margin.
The report is attached.
Very truly yours,
G. R. HERZOG.
GRH:A
CLEVELAND, OHIO, November 8, 1933.
Mr. I. J. FULTON,
Superintendent of Banks, State of Ohio.
Attention: Mr. R. M. Huston, Special Investigator.
DEAR SIR: Pursuant to request we have examined the records of The Union
Trust Company and The Guardian Trust Company, Cleveland, pertaining to
The Vaness Company loan of $2,000,000.00 and participation of $2,800,000.00
by The Union Trust Company in a $9,000,000.00 loan to O. P. and M. J. Van
Sweringen and from our examination we have prepared the accompanying
Comments and Exhibits.
Also contained in this report will be found Comments and Exhibits referring
to loan No. 78311, amount $5,000,000.00 to O. P. and M. J. Van Sweringen, and
loan No. 69434, amount $2,100,000.00 to the Metropolitan Utilities, Inc., details
of which will be covered fully in subsequent reports.
Very truly yours,
(Signed)
LAUBSCHER and SMITH,
Accountants and Auditors.
STOCK EXCHANGE PRACTICES
8851
EXHIBIT U-2-2
COMMENTS
LOANS MADE BY THE UNION TRUST COMPANY
O. P. and M. J. Van Sweringen and controlled companies
The Vaness Company loan of $2,000,000.00 and participation of $2,800,000.00
in $9,000,000.00 loan to O. P. and M. J. Van Sweringen.
Examination of the loan records of The Union Trust Company disclosed that
O. P. and M. J. Van Sweringen and Companies controlled by them, were indebted
to The Union Trust Company on April 1st, 1933 as follows:
The Vaness Company
$304, 183. 75
O. P. and M. J. Van Sweringen
2, 800, 000. 00
"
"
4,100,000.00
1,093,717.46
Daisy Hill Company
487, 000. 00
51,000.00
The Van Sweringen Company
400,000. 00
The Van Sweringen Company
80, 000. 00
The Vaness Company and The Terminal Building Company
557, 000. 00
Cleveland Interurban Railroad Company
45, 000. 00
Metropolitan Utilities Company
2, 100, 000. 00
The Higbee Company
317, 000. 00
Total
12, 334, 901. 21
The Glenvtlle Syndicate:
This syndicate was formed about August 1st, 1913 by W. S. Hayden and J. R.
Nutt. Its purpose was to acquire a large number of parcels of real estate in a
certain district in the City of Cleveland, Ohio at an estimated cost of
$1,500,000.00.
Exhibit showing the "Holders of Certificates of Participation in the Glenville
Syndicate" is included on page
of this report, and shows the total interest
by participants to be $687,500.00 on August 24th, 1922.
Letter dated October 16th, 1913, addressed to the Syndicate and signed by
O. P. Van Sweringen, covers an agreement by the latter to purchase from the
Syndicate "certain property on Hill Street and such property on Pittsburgh,
Broadway, Orange and Ontario, and intersecting streets as the Syndicate may
think it wise to buy."
Pursuant to t*ie above, the Van Sweringen interests purchased the lands acquired by the Syndicate and large profits were realized by the members thereof,
most of whom at one time or another served as directors of The Union Trust Company.
The Vaness Company:
This company was incorporated under the laws of Delaware on January 9th,
1922; same being designed as a personal corporation vehicle for O. P. and M. J.
Van Sweringen and their associates.
Tne original shareholders were as follows:
J. R. Nutt
16,250 shares
C. L. Bradley
16,250 shares
Warren S. Hayden
16,250 shares
Otto Miller
16,250 shares
O. P. and M. J. Van Sweringen
97y500 shares
Total authorized
162,500 shares
An agreement was entered into as of July 15th, 1922 by and between The Union
Trust Company, as Trustee, and each of the above named persons, whereby the
Trustee held as trustee, all the voting common stock for the lives of the six persons
named and for twenty-one years after the death of the last survivor. The Trustee
was required to deliver proxies to vote the stock of the two Van Sweringens, Nutt,
Bradley, Hayden, and Miller for the stock deposited by them respectively during
the life of the agreement regardless of who owned the "certificate of interest."
8852
STOCK EXCHANGE PEACTICES
EXHIBIT
U-2-3
On or about January 11th, 1924 O. P. and M. J. Van Sweringen purchased
the stock held by Warren S. Hayden and Otto Miller making the stock ownership
in The Vaness Company as follows:
J. R. Nutt
16,250 shares
C. L. Bradley
16,250 shares
0. P. and M. J. Van Sweringen
130,000 shares
Total
162,500 shares
A new agreement was drawn between The Union Trust Company, as Trustee,
and each of the aforementioned persons. The provisions of the new agreement
were substantially the same as those contained in the previous agreement.
The trust files of The Union Trust Company, Trustee, indicate that the above
trust agreement was terminated in 1927 at which time options were granted by
J. R. Nutt and C. L. Bradley to Oris P. and Mantis J. Van Sweringen covering
purchase by the Van Sweringens of the interest owned by J. R. Nutt and C. L.
Bradley in the event of their death.
Under General Comments we have set forth information to show relations
between O. P. and M. J. Van Sweringen, J. R. Nutt, Charles L. Bradley, and
others, same being in the form of extracts from the testimony of George Whitney,
a partner of the firm of J. P. Morgan & Company, and of O. P. Van Swreringen,
president of The Vaness Company, given by them at the hearings before the Committee on Banking and Currency, United States Senate, investigating " Stock
Exchange Practices."
On Exhibits M, N, O, and P, attached to and made a part of this report, we
have listed the directors of The Union Trust Company, and members of the
Executive Committees as of July 28th, 1928; November 1st, 1929; May 13th,
1930; and October 30th 1930, same being the dates on which the loan reported
herein was made. The Exhibits referred to list all of the directors of the bank as
of each of the above dates, together with their then direct liability to The Union
Trust Company for loans over $50,000.00 and the direct liability over $50,000.00
of corporations, individuals, etc , in which the directors may have beer interested.
Also designated thereon will be found the directors who were members of the
Executive, Discount, Finance, Securities and Investment, and Trust Committees.
The comments submitted herewith are confined, so far a? is possible, to the
facts relating to the present indebtedness of O. P. and M. J. Van Sweringen
amounting to $9,000,000.00 in which the participation of The Union Trust Company amounted to $2,800,000.00 on April 1st, 1933.
This obligation to The Union Trust Company originated a number of years
prior to July 27th, 1928; however an examination of the books of the bank as of
this date showed five loans unpaid in the name of The Vaness Company as
follows:
Loan
No.
Date
(1)
(2)
(3)
(4)
(5)
December 28, 1927..
February 17, 1928February 20, 1928—
January 14, 1928....
March 1, 1928
26399
29160
29162
27338
29700
Amount
$250,000 00
500,000 00
500,000 00
500,000 00
250,000.00
$2,000,000 00
Total.
The collateral security for the loans was as follows:
EXHIBIT
U-2-4
(1) 3,000 shares New York, Chicago and St. Louis RR Common
(2) 6,000 " New York, Chicago and St. Louis RR Common
(3) 6,000 " New York, Chicago and St. Louis RR Common
(4) 32,600 " The Terminal Properties Co. 1st Preferred
27,300
The Terminal Properties Co. 2nd Preferred
8853
STOCK EXCHANGE PEACTICES
93,300 " The Terminal Properties Co. Common
(5) 3,000 "
New York, Chicago and St. Louis Common
Under date of July 27th, 1928, loan No. 37659, amount $2,000,000.00 was set
up in the name of The Vaness Company. This loan refunded the five aforementioned loans totaling the same amount.
Comparison of the collateral given to secure the loans which were refunded
with that given to secure the new note is stated below:
New York, Chicago and St. Louis RR Common..
The Terminal Properties Company 1st Preferred..
The Terminal Properties Company 2nd Preferred.
The Terminal Properties Company Common
Loans Nos. 26399,
29160, 29162, 27338,
and 29700 By The
Union Trust Co to
The Vaness Co
Total Amount $2,000,000 00
July 27, 1928 Loan No.
37659 By The Union
Trust Co. to The
Vaness Co. Amount
$2,000,000 00
18,000 shares.
32,600 shares.
27,300 shares.
93,300 shares.
0.
32,631 shares.
30,255 shares.
95,600 shares.
The collateral security covering the new note did not include the 18,000 shares
of New York, Chicago and St. Louis RR common which, together with The
Terminal Properties Company stock, was pledged on the refunded loans. The
Nickel Plate shares, having a market value of $2,263,500.00, were released to
The Vaness Company and additional shares of The Terminal Properties Company
stock were substituted as follows:
1st Preferred
31 shares
2955 shares
2300 shares
2nd Preferred
Common
Par Value
Par Value
Par Value
..._
$3,100 00
295, 500 00
230,000 00
$528, 600 00
Total par value
The Terminal Properties Company stock which was pledged as security for
the loan was as follows:
32,631 shares 1st Preferred of which, according to the records examined,
23,044 shares were in the name of The Vaness Company and 9,587 in the name
of M. J. Van Sweringen.
30,255 shares 2nd Preferred of which, according to the records examined,
29,425 shares were in the name of The Vaness Compan}^ and 830 in the name of
O. P. and M. J. Van Sweringen.
95,600 shares Common of which, according to the records examined, 43,620
were in the name of The Vaness Company and 51,980 shares in the name of O. P.
and M. J. Van Sweringen.
The loan and collateral as given were approved by the Finance Committee on
July 30th, 1928, same being recorded on page 2655 of the minutes.
The Terminal Properties Company was incorporated under the laws of Delaware on June 15th, 1915 with authorized capital as follows:
EXHIBIT
U-2-5
1st Preferred 50,000 shares Par Value $100.00 ea. $5,000,000.00
2nd Preferred 35,000 shares Par Value $100.00 ea. 3,500,000.00
Common 100,000 shares Par Value $100.00 ea. 10,000,000.00
The wholly owned subsidiaries of The Terminal Properties Company on July
27th, 1928 were:
The Cleveland and Youngstown Railroad Company
The Terminal Building Company
The Cleveland Terminal Buildings Company
The Terminal Hotels Company
The Van Sweringen Company
The Shaker Company
8854
STOCK EXCHANGE PRACTICES
The records examined also indicate that Building Arts Exhibit, Inc., and The
Huron Fourth Company were also wholly owned subsidiaries. It is not known
whether or not these were owned at July 27th, 1928.
According to information procured from the credit files of The Union Trust
Company, the following shares of The Terminal Properties Company were outstanding on May 31st, 1928:
1st Preferred
32,893 shares
2nd Preferred
35,000 shares
Common
100,000 shares
Accrued and unpaid dividends on the Preferred stock to May 31st, 1928
totalled $5,505,510.00.
On July 27th, 1928 the common stock was held as follows:
The Vaness Company
44,045 shares
O. P. and M. J. Van Sweringen
51,980 shares
Others
3,975 shares
Total
100,000 shares
List in detail is attached hereto on page
Copies of Balance Sheets of The Terminal Properties Company contained in
the credit files of The Union Trust Company are included herewith on pages
Examination of same gives the following information:
(1) They are unsigned and apparently not prepared by Public Accountants,
but were undoubtedly furnished by The Terminal Properties Company as a result
of request for same by The Union Trust Company.
(2) Two statements are dated December 31st, 1927, one of which sets forth
the consolidated condition of The Terminal Properties Company and subsidiaries,
and the other sets forth the condition of The Terminal Properties Company
without consolidation with its wholly owned subsidiaries.
The statement last referred to sets forth a "deficit" of $3,821,930.57 and a net
worth for the First and Second Preferred and Common stock of $12,967,369.43.
However, it will be noted by reference to the consolidated statement that the
actual "deficit" was $19,696,007.16 and the actual book value of the First and
Second Preferred and Common stock on December 31st, 1927 was nothing.
According to the consolidated statement referred to, the assets were $13,356,633.32
and the liabilities $16,263,340.48 on December 31st, 1927.
The same condition existed on December 31st, 1928 when the consolidated
statement of The Terminal Properties Company and wholly owned subsidiaries
shows assets of $21,327,417.28 and liabilities of $22,811,466.10.
EXHIBIT
U-2-6
No statements were found in the files from which to determine the financial
condition of this company at the date of this loan (July 27th, 1928), but the fact
that the statements referred to (December 31st, 1927 and December 31st, 1928)
show liabilities in excess of assets would indicate that this condition existed on
July 27th, 1928, the date of the loan.
No payments were made on the principal between July 27th, 1928 and November 1st, 1929; however on this latter date same was credited in full, and a new
note was made in the same name (The Vaness Company NO. 61949, amount
$2,000,000.00) which note represented a participation by The Union Trust Company in a $9,000,000.00 demand loan to the company which was participated in
by the following:
Cleveland Trust Company
$3, 300, 000. 00
Midland Bank
1, 200, 000. 00
Guardian Trust Company
2, 500, 000. 00
Union Trust Company
2, 000, 000. 00
Total
The collateral securing the $9,000,000.00 note was as follows:
(1) 32,893 shares The Terminal Properties Co
(2) 33,187 shares The Terminal Properties Co
(3) 99,222 " The Terminal Properties Co
(4) 122,000 " The Van Sweringen Company
(5)
100 " The Cleveland Terminals Building Company.
$9, 000, 000. 00
1st Preferred.
2nd Preferred.
Common.
Common.
Common.
8855
STOCK EXCHANGE PBACTICES
The foregoing shares were found to have been issued as follows:
(1) The Vaness Company
$23, 306
M. J. Van Sweringen
9, 587
32, 893
(2) The Vaness Company
32, 357
O. P. and M. J. Van Sweringen
830
33, 187
(3) The Vaness Company
O. P. and M. J. Van Sweringen
C. W. Stage
J. P. Murphy
D. S. Barrett, Jr
47, 233
51,980
3
3
3
99, 222
121,995
(4) The Terminal Properties Company
Unidentified
5
122, 000
(5) The Terminal Building Company
John P. Murphy
1
D. S. Barrett, Jr
M. J. Van Sweringen
O. P. Van Sweringen
Ralph H. Sharpe
C. L. Bradley
EXHIBIT
89
2
2
2
2
1
2
100
U-2-7
Comparison of the collateral given to secure the $9,000,000.00 obligation with
that given to secure the $2,000,000.00 note is set forth following:
1, 1929 Loan No.
July 27,1928 Loan No Nov
61949 By The Union
37659 By The Union
Trust Co. to The
Trust Co to The
Vaness Co $2,000,Vaness Co Amount
000 00 Participation
$2,000,000 00
m $9,000,000 00 Loan
The Terminal Properties Company 1st Prefened
The Terminal Properties Company 2nd Preferred
The Terminal Properties Company Common
The Van Swerm^en Company Common
The Cleveland Terminals Building Company Common.
32,631 shares..
30,255 shares..
95,600 shares..
32,893 shares
33,187 shares
99,222 shares
122,000 shares
100 shares
A study of the above collateral gives the following information:
(1) Increase in par value of collateral pledged to secure the $9,000,000 00 note
was only approximately $681,600.00 in excess to the par value of stock securing
the $2,000,000.00 note
(2) As related hereinbefore, according to consolidated balance sheet of the
company contained in the credit files of The Union Trust Company, the liabilities
of The Terminal Properties Company and wholly owned subsidiaries exceeded
their book assets on December 31st, 1928. No information was available from
which to determine whether or not this condition still existed on November 1st,
1929, the date of this participation note.
(3) It will be noted that in addition to the stock of the Terminal Properties
Company there was also pledged on this participation loan:
The Van Sweringen Company (Common)
122, 000 shares
The Cleveland Terminal Building Company (Common)
100 shares
8856
STOCK EXCHANGE PRACTICES
This stock represented all of the outstanding stock of these companies, which
•companies were wholly owned subsidiaries of The Terminal Properties Company.
Without further information we are unable to see how the addition of the stock of
The Van Sweringen Company (122,000 shares) and The Cleveland Terminals
Building Company (100 shares) as collateral would materially strengthen the
security covering the $9,000,000.00 note inasmuch as the note was also secured
by stock of the parent company (The Terminal Properties Company) as follows:
First Preferred
100% of outstanding
Second Preferred
95% of outstanding
Common
99% of outstanding
Approval of the new loan is recorded on page 5161 of the Finance Committee
minutes under date of November 2nd, 1929.
EXHIBIT
U-2-8
No payments were made on this note from its date to May 13th, 1930; however
on this date same was credited in full and a new note made in the same name
(The Vaness Company) for $2,800,000.00, this being an increase of $800,000.00
over loan No. 61949 which was cancelled.
Examination of the records indicate that this loan (No. 70739, amount $2,800,000.00) covered a further and additional participation in the $9,000,000.00 loan
hereinbefore set forth. Examination of the collateral loan record covering the
loan shows the following pledge to secure same.
(1) 122,000 shares The Van Sweringen Company
Common
(2) 600,000 shares Van Sweringen Corporation
Common
These shares were issued in the name of the following:
(1) The Terminal Properties Company
121, 995
Unidentified
5
122, 000
(2) The Terminal Building Company
600, 000
Comparison of the collateral given to secure the new $9,000,000.00 note with
collateral given on the former $9,000,000.00 and $2,000,000.00 notes is set forth
below:
July 27,1928 Loan No.
37659 By The Union
Trust Co. to The
Vaness Co Amount
$2,000,000.00
The Terminal Properties Co. 32,631 shrs
1st Preferred.
The Terminal Properties Co. 30,255 shrs
2nd Preferred
The Terminal Properties Co 95,000 shrs
Common.
The Van Sweringen Company^
Common
The Cleveland Terminals Building Company Common
Van Sweringen Corporation
Common.
Nov. 1,1929 Loan No.
61949 By The Union
Trust Co. to The
Vaness Co. $2,000,000 00 Participation
m $9,000,000 00 Loan
May 13, 1930 Loan No.
70739 By The Union
Trust Co. to The
Vaness Co. $2,800,000 00 Participation
in $9,000,000.00 Loan
32,893 shrs33,187 shrs..
99,222 shrs....
122,000 shrs-..
122,000 shrs.
100 shrs
600,000 shrs.
Copies of authorization by the other participants in this loan are attached to
this memo and it will be noted by reference thereto, that no mention is made
regarding the release of 32,893 shares of The Terminal Properties Company first
preferred; 33,187 shares of The Terminal Properties Company second preferred;
and 99,222 shares of The Terminal Properties Company common, which shares
had been pledged to secure the loan being refunded, however, consent was given
to the substitution of 600,000 shares of Van Sweringen Corporation common for
100 shares of The Cleveland Terminals Building Company common.
No reasons are given in the Director's minutes of The Union Trust Company
or The Guardian Trust Company for refunding of this loan at this time, or for
the release of the collateral security consisting of The Terminal Properties Company and The Cleveland Terminal Building Company stock, and substitution
therefore of 600,000 shares of Van Sweringen Corporation common stock.
STOCK EXCHANGE PRACTICES
8857
A study of the files of The Guardian Trust Company and The Union Trust
Company indicate the following possible reasons:
EXHIBIT U-2-9
(1) So that a new corporation known as the Van Sweringen Corporation
could be formed, which corporation did acquire the assets of The Terminal
Properties Company and wholly owned subsidiary, The Cleveland Terminals
Building Company.
(2) So that this new corporation (The Van Sweringen Corporation) could issue
$30,000,000.00 five year 6% Gold Notes and attached warrants dated May 1st,
1930 to mature May 1st, 1935, and with 1,744,800 shares of no par value common
stock, and warrants for the purchase of 240,000 additional shares of such common
stock, acquire the assets of The Terminal Properties Company and The Cleveland Terminals Building Company.
(3) On or about May 13th, 1930 The Cleveland Terminals Building Company
(wholly owned by The Terminal Properties Company) caused an entry to be
placed on their books setting up the appraised value of certain building sites
(air rights) in the terminal group at $16,285,000.00, which apparently had not
previously been carried on the books as an asset.
(4) According to Moody's Manual of Investments and according to prospectus
issued by The Guaranty Trust Company in connection with the sale of the
$30,000,000.00 Five year 6% Gold Bonds, 1,744,800 shares of the Van Sweringen
Corporation common stock were issued to the stockholders of The Terminal
Properties Company (1,744,800 X $25.00 = $43,620,000.00) in payment for the
assets acquired, which included The aforesaid asset titled " Building sites (air
rights) and leasehold interests—as appraised at May 13th, 1930, by Brown,
Wheelock: Harris, Vought & Company, $16,285,000.00.
(5) Profits arising from the transactions described above are believed to have
reverted substantially to The Vaness Company, O. P. and M. J. Van Sweringen
and J. P. Morgan & Company.
(6) The stockholders of The Vaness Company were:
O. P. and M. J. Van Sweringen.
J. R. Nutt.
C. L. Bradley.
The collateral released, namely, The Terminal Properties Company and The
Cleveland Terminals Building Co. stock, was valued by the stockholders thereof
at approximately $43,620,000.00 on or about May 13th, 1930, at which time the
assets of the company were sold to the Van Sweringen Corporation.
The value of the collateral substituted (600,000 shares Van Sweringen Corporation common), valued on the same basis, would have been worth $15,000,000.00; however both valuations are arrived at after adding $16,285,000.00
appreciation covering appraised values of "air rights."
To have secured the new loan as fully as the loan which was refunded, there
should have been a pledge of approximately all of the Van Sweringen Corporation shares issued (1,744,800) instead of only 600,000.
EXHIBIT U-2-10
Authorization of the new loan is recorded in the minutes of the Finance Committee, page 6000, under date of May 13, 1930, and formal approval on page
6017 under date of May 14, 1930.
According to information secured, participation in the new note was as follows:
The Cleveland Trust Company
$2, 500, 000. 00
The Midland Bank
1, 200, 000. 00
The Guardian Trust Company
2, 500, 000. 00
The Union Trust Company
2, 800, 000. 00
Total
$9, 000, 000. 00
It will be noted that The Union Trust Company's participation in this note
increased $800,000.00 over its participation in the note of November 1st, 1929,
while the participation of The Cleveland Trust Company decreased in a like
amount.
No payments were made on the principal of this loan from the date it was
made to October 30th, 1930. On this latter date the loan was credited in full
and a new loan set up in the name of O, P. and M. J. Van Sweringen, same being
loan No. 78310, amount $2,800,000.00. This note covered a continued partici
8858
STOCK EXCHANGE PEACTICES
pation in the $9,000,000.00 loan, excepting, however, this new note was signed
by O. P. and M. J. Van Sweringen instead of The Vaness Company.
Collateral security pledged to secure the new note is as follows:
97,500 shares The Vaness Company, common, issued in the name of Winfired
C. Bloom.
Comparison of the collateral security for each of the foregoing loans is set forth
as follows:
July 27, 1928,
Loan No 37659,
By the Union
Trust Co to
The Vaness
Co , Amount
$2,000,000 00
The Terminal Properties Co 1st Preferred.
__.
The Terminal Properties Co 2nd Preferred
The Terminal Properties Co Common.
The Van Sweringen Company Common ___
The Cleveland Terminal Building Co
Common
Van Sweringen Corporation Common
The Vaness Company Common
_
Nov 1, 1929,
Loan No 61949,
By The Union
Trust Co to
The Vaness
Co ,
$2,000,000 00
Participation
in
$9,000,000 00
Loan
Shrs.
32.631
Shrs
32,893
30,255
95, 600
33,187
99, 222
122,000
100
May 13, 1930,
Loan No 70739,
By The Union
Trust Co. to
The Vaness
Co,
$2,800,000 00
Participation
$9,000,000 00
Loan
Oct 30, 1930,
Loan No 78310,
By The Union
Trust Co to
O P. a n d M . J .
Van Sweringen
$2,800,000 00
Participation
in
$9,000,000 00
Loan
Shrs.
Shrs.
122,000
600,000
97,500
EXHIBIT U-2-11
No reasons are given in the corporate minute books of The Union Trust Company and The Guardian Trust Company for the retirement of The Vaness Company note and substitution therefore of a note of like amount signed by O. P. and
M. J. Van Sweringen, or for the release of the stock pledged to secure The Vaness
Company note and substitution of The Vaness Company stock securing the O. P.
and M. J. Van Sweringen note.
In connection with the above we set forth the following information:
(1) On or about October 30, 1930 The Vaness Company borrowed the sum of
$16,000,000.00 from J. P. Morgan and Company. The proceeds of this loan,
according to testimony of O. P. Van Sweringen given in connection with the
recent hearings before the committee on banking, United St ,tes Senate, was used
for the purchase of $10,264,900.49 worth of United States Government securities:
$3,555,992.88 to pay an indebtedness to Paine, Webber and Company; and
$2,179,106.63 cash for general corporate purposes.
(2) On or about October 30, 1930 The Cleveland Terminals Building Company
borrowed $23,500,000.00 from J. P. Morgan and Company. According to testimony of O. P. Van Sweringen, the proceeds were used—$5,000,000.00 for the
purchase of 500,000 shares of Alleghany Corporation common stock: $15,940,331.02 for payment of indebtedness to Paine, Webber & Company; and $2,500,000.00
cash for general corporate purposes.
(3) Copy of letter to Messrs. J. P. Morgan and Company dated October 30,
1930, signed by The Vaness Company by O. P. Van Sweringen, President and by
Charles Stage, Secretary, and also signed by O. P. Van Sweringen, individually
and M. J. Van Sweringen, individually, is set forth following, together with testimony of O. P. Van Sweringen in regard to same, given in connection with the
recent hearings before the Committee on banking and currency, United States
Senate, investigating Stock Exchange Practices.
(Part 2: Pages 740-42)
Mr. PECORA. Have you a letter or copy of a letter which the Vaness Co.
addressed to J. P. Morgan & Co. under date of October 30, 1930?
Mr. VAN SWERINGEN. I have a copy of that letter.
Mr. PECORA. Well, I have what purports to be a photostat copy of it furnished
to me by J. P. Morgan & Co., and, as I read it, will you follow me with your copy?
Mr. VAN SWERIGEN. I will.
STOCK EXCHANGE PRACTICES
Mr. PECORA (reading):
8859
T H E VANESS COMPANY,
TERMINAL TOWER, CLEVELAND,
New York, N.Y., October 30, 1930.
EXHIBIT U-2-12
Messrs. J. P. MORGAN & Co.,
23 Wall Street, New York City.
DEAR SIR: In entering into our agreement with you of even date, we have
discussed with you our understanding as to future commitments of companies
hereinafter named, owned or controlled by the Vaness Co. and the stock of which
will be security either directly
Mr. VAN SWERINGEN. Pardon me just a minute.
Mr. MURPHY. YOU have there two letters of the same date.
Mr. VAN SWERINGEN. There are two letters of that date. Yes, sir. Pardon me.
Mr. PECORA. Have you got it now?
Mr. VAN SWERINGEN. I have.
Mr. PECORA. I will start again. (Reading:)
DEAR SIRS: In entering into our agreement with you of even date, we have
discussed with you our understanding as to future commitments of companies
hereinafter named, owned or controlled by The Vaness Company and the stock
of which will be security either directly or indirectly for the advances you are
agreeing to make, viz, Van Sweringen Corporation. The Cleveland Terminals
Building Company, The Van Sweringen Company, The Shaker Company, and
The Terminal Building Company.
Mr. VAN SWERINGEN. That corresponds with this.
Mr. PECORA. That corresponds. (Continuing reading:)
While the Van Sweringen Corporation is solely a holding company, the other
companies are operating companies controlling and developing important real
estate properties.
We are glad to confirm the understanding between us, which is as follows:
That, except by mutual agreement, so long as the loans to be made pursuant
to said agreement of October 30, 1930, are outstanding, The Vaness Company
will not and the undersigned will not suffer or permit any of these subsidiary
companies to incur any substantial liabilities or commitments for capital purposes,
including the purchase of securities or the acquisition or construction of additional
properties. By the term "substantial" we mean expenditures or commitments
for any one company, other than the Van Sweringen Corporation which would
aggregate more than $1,000,000. In the case of the Van Sweringen Corporation, we
confirm the understanding that without your approval, it will incur no further obligations, except such as may be necessary to meet interest on its indebtedness, taxes,
or other current expenses. Nor will The Vaness Company pledge or permit any
subsidiary to pledge any book account or obligation owing to The Vaness Company or any subsidiary, as the case may be, from any other subsidary company.
It is also understood that, except by mutual agreement, no important assets of
any of the subsidiary companies above named will be. transferred to any other
company owned or controlled by any of the undersigned. However, it may be
desirable to effect consolidations of one or more of the subsidiaries named or the
acquisition by one of the entire assets of the other, but before taking any such
steps we will be glad to advise with you and will not permit such action to be
EXHIBIT U-2-13
taken if, in your opinion, it would in any way prejudice the security of your loans.
It is also understood that you have agreed to the transfer or exchange of certain real estate or real estate interests between The Terminal Building Co., subsidiaries of Metropolitan Utilities, the Nickel Plate, and The Cleveland Terminals
Building Company, pursuant to plans now under discussion, to effect the delivery
of an easement from The Cleveland Terminals Building Company to The Cleveland Union Terminals Company for the latter's East Approach, which transfer
or exchange will not decrease the values behind your advances by more than
Three Million Dollars ($3,000,000.00). In general, we, of course, will conduct
the business of this company and its subsidiaries to the end that the equities
which are security for the advances you are making shall not be impaired, and we
shall be pleased to keep you currently fully advised of any plans or any development with respect to The Vaness Company or its subsidiaries which might result
in any material change in its or their assets, liabilities, or income.
Very truly yours,
THE VANESS COMPANY,
By O. P. VAN SWERINGEN, President.
By CHARLES STAGE, Secretary.
8860
STOCK EXCHANGE PRACTICES
And then the letter is also signed by—
And O. P. Van Sweringen, individually, and M. J. Van Sweringen, individually.
Mr. PECORA. NOW didn't you virtually agree in this letter that you would be
guided entirely in the financial operations of the Vaness Co. by the bankers?
Mr. VAN SWERINGEN. That is not quite the way to put it.
Mr. PECORA. Isn't that the gist of this letter?
Mr. VAN SWERINGEN. We agreed to certain restrictions that would involve the
credit that they were extending to us at that time. These were protective features to conserve that security.
Mr. PECORA. Weren't you doing something more than that? Weren't you
definitely committing yourselves to make no further—to do no further financing
except where necessary in their judgment?
Mr. VAN SWERINGEN. We were making a covenant not to expand or to weaken
what we had pledged. That is done in bond issues in general terms right and
left. You can pick up hundreds of them and find covenants of this character.
Mr. PECORA. Who prepared this letter?
Mr. VAN SWERINGEN. Why, I could not tell you where that originated.
Mr. PECORA. Have you a full and complete copy of it before you?
EXHIBIT U-2-14
Mr. VAN SWERINGEN. I have a copy of it.
Mr. PECORA. Has the Vaness Co. and office in New York, or did it have in
October 1930?
Mr. VAN SWERINGEN. NO. But at that time I was in New York.
Mr. PECORA. YOU notice that this letter is written on the letterhead of The
Vaness Company, giving its Cleveland address, but that the letter itself is dated
New York, N.Y., October 30, 1930?
Mr. VAN SWERINGEN. Yes, sir, that is true. In other words, it is on our
stationery and seemingly written in New York, and I am quite sure it was.
Mr. PECORA. At what place in New York? Whose office?
Mr. VAN SWERINGEN. Why, I do not know. It may have been drafted at the
hotel, or it may have been drafted at the time—probably—well, that is guess
work. It may have been drafted there or it may have been drafted right at the
Morgan's while we were trying to complete these arrangements.
Mr. PECORA. Well now——
Mr. VAN SWERINGEN. Just a minute
Mr. Murphy tells me that it was.
Mr. PECORA. Drawn in the office of J. P. Morgan & Co.?
Mr. VAN SWERINGEN. Yes. Written there.
(4) On the same date as the forgoing letter and agreement mentioned therein,,
the Vaness Company was relieved of its liability to the Cleveland Banks on the
$9,000,000.00 participation note, and the collateral (122,000 shares Van Sweringen
Company and 600,000 shares Van Sweringen Corporation) securing same was
released.
(5) As of this same date (October 30, 1930) the new note for $9,000,000.00 was
given and the collateral consisting of 97,500 shares of the Vaness Company stock
was posted as security for payment of same.
(6) On this date, or on a subsequent date, or dates, The Vaness Company was
permitted to pledge practically all of its assets, together with the assets of its
subsidiaries, to secure the loans of J. P. Morgan & Company.
Contained in the assets of The Vaness Company at October 31st, 1930 were
listed securities having a market value, at the time, of $13,857,504.10 and contained in the assets of The Cleveland Terminals Building Company (wholly
owned by The Vaness Company) were listed stocks having a market value as of
September 30th, 1930 of approximately $38,059,684.88. These securities, together with other assets, were removed from the portfolios of The Vaness Company and its subsidiary and pledged to secure the notes of J. P. Morgan & Company.
Even though The Union Trust Company, as trustee for the participants in the
$9,000,000.00 loan, held 60% of the outstanding stock of The Vaness Company
as collateral for the note due them, The Vaness Company made the pledge as
described hereinbefore, thus causing the security of the participants to be junior
to that of the New York bankers.
According to the records examined, no payments have been made to date on
the principal of the $9,000,000.00 loan. Unpaid interest accrued by The Union
Trust Company on their $2,800,000.00 participation totaled $391,774.64 at
September 1st, 1933.
STOCK EXCHANGE PKACTICES
EXHIBIT
8861
U-2-15
GENERAL
It is also noted that as of this same date (October 30, 1930) other "Van
Sweringen" loans were refinanced and collateral security substitutions were made,,
details of which will be covered in subsequent remarks; however the records of
The Union Trust Company give the following information in regard to The
Vaness Company loan: Demand loan No. 78311, amount $5,000,000.00, was set
up in the name of O. P. and M. J. Van Sweringen which loans refunded demand
loan No. 61739 for the same amount in the name of The Vaness Company.
Collateral security for the cancelled note (61739-Vaness Company) is listed
following, together with the estimated values based, by us, on market values as
of October 30, 1930 which were furnished us by the Statistical Department of
The Union Trust Company.
Midland Bank, 8,260 shares @ 295
$2, 436, 700. 00
Cleveland Railway Company, 32,000 C. of D. @ 77
2, 464, 000. 00
United Corporat TQ, 6,000 shares @ 22%
132, 750. 00
Western Reserve Investing Corporation, 3,000 units @ 85
255, 000. 00
Total estimated values October 30, 1930
$5, 288, 450. 00
Collateral given on the new note (Loan #78311, O. P. and M. J. Van Sweringen)
as follows:
Listed Securities:
United Corporation Common, 6,000 shares @ 22%
$132, 750. 00
Western Reserve Investing Corporation Com., 3,000 units
@ 85
255, 000. 00
Newton Steel Common, 1,400 shares @ 20%
28, 175. 00
Niagara & Hudson Power Corporation, 4,000 shares @ 12%__
48, 500. 00
Peerless Motor Car Corporation, 33,000 shares @ 3%
123, 750. 00
Standard Brands, Inc., 5,000 shares @ 1634
81, 250. 00
Total
$669, 425. 00
Van Sweringen Controlled Companies:
Shares
Trustees of Calumet Trust Company
17, 999%
Vaness Company Preferred
9, 000
Vaness Company Common
16, 250
Metropolitan Utilities
10, 296
And equities in shares of stock also pledged on Loan by The Union Trust Company, Amount $1,422,500.00 (Participation in $3,100,000.00 Loan) to Metropolitan Utilities, Inc. as follows:
Shares
Traction Stores, Common
Cleveland Traction Terminal Common
Cleveland Interurban Railroad Common
Cleveland and Youngstown Railroad Common
these are also so-called "Van Sweringen Controlled."
100
100
1, 465
5, 800
EXHIBIT U-2-16
The $5,000,000.00 O. P. and M. J. Van Sweringen loan as outlined above was
merely a conversion of the existing $5,000,000.00 Vaness Company loan.
Included in the collateral which the bank held as security for the cancelled
Vaness Company loan were securities estimated to have a market value at
October 30th, 1930 of $4,900,700.00 which securities were surrendered and are
believed to have been used as a pledge by The Vaness Company or The Cleveland Terminals Building Company to secure loans totaling $39,500,000.00 from
J. P. Morgan & Company.
In place of the above mentioned collateral, the bank accepted securities having
an estimated market value of $281,675.00 and stocks of several "Van Sweringen
Controlled" holding companies together with purported equities in shares of
stock of other "Van Sweringen Controlled" companies which the Union Trust
Company already held as collateral for other loans.
8862
STOCK EXCHANGE PRACTICES
PARTIAL TRANSCRIPT OF TESTIMONY OF GEORGE WHITNEY AND O. P. VAN SWERINGEN
GIVEN AT HEARING BEFORE THE COMMITTEE ON BANKING AND CURRENCY,
UNITED STATES SENATE, INVESTIGATING STOCK EXCHANGE PRACTICES
The following extracts of testimony were taken from the testimony of Mr.
George Whitney, a partner of the firm of J. P. Morgan & Company, and of 0 . P.
Van Sweringen, president of The Vaness Company, given by them at the present
hearings on Stock Exchange Practices before the United States Committee on
Banking and Currency. This is submitted to show relations between 0 . P. and
M. J. Van Sweringen, J. R. Nutt, Charles L. Bradley, and others.
(Part 1—pages 176 and 177)
Mr. PECORA. NOW, Mr. Whitney, at about the same time was a similar invitation extended to Mr. Joseph Nutt to subscribe for shares of Alleghany common
stock at $20 per share?
Mr. WHITNEY. Let me look at the list.
Senator TOWNSEND. He is on the list.
Mr. WHITNEY. Yes, I am sure he is, Mr. Pecora, because you all know Mr.
Nutt has been associated with the Van Sweringens in this thing for a great many
years, and probably was put on there at their suggestion. There were various
other names on there that were put on at the Van Sweringen's suggestion,
various friends who were interested with them.
Mr. PECORA. Mr. Nutt at that time was treasurer of the Republican National
Committee, wasn't he?
Mr. WHITNEY. I don't know.
Mr. PECORA. YOU don't know about that?
Mr. WHITNEY. I don't deny it, but I don't know it.
Senator BYRNES. Mr. Whitney, you did offer Mr. Nutt 3,000 shares as against
the 2,000 you offered Mr. Raskob?
Mr. WHITNEY. That is right, Senator. [Laughter in the room.]
Senator GORE. YOU say you are a Republican?
Mr. WHITNEY. Yes, sir. But I didn't suggest Mr. Nutt
The CHAIRMAN. Didn't Mr. Nutt take the shares?
Mr. WHITNEY. Oh, I assume so, if he is on the list, because I don't think this
list represents any of those who were the final subscribers.
EXHIBIT U-2-17
The CHAIRMAN. Are you an officer of Johns-Manville, Mr. Whitney?
Mr. WHITNEY. I am a director; yes, sir.
The CHAIRMAN. HOW long have you been?
Mr. WHITNEY. I think it is '27; since 1927.
Senator COUZENS. Why would Mr. Nutt have to buy through your company
when he was so close to the Van Sweringens?
Mr. WHITNEY. I don't know, sir. I just don't know.
(Part 2, page 569)
O. P. VAN SWERINGEN. Mr. Pecora, I have given you an outline of the purpose
of the Alleghany Corporation as we saw it, and the nature of the other, the
Chesapeake Corporation, as we saw it, step by step, in a chronological way, and
their general operation in a way that I thought might be helpful to you.
Mr. PECORA. Mr. Van Sweringen, the purpose of the organization of the
Chesapeake Corporation, and also of the Alleghany Corporation, was essentially
to acquire control through the medium of stock ownership of various railroad
lines.
Mr. VAN SWERINGEN. That is right, or portions of them in some instances.
Mr. PECORA. NOW, according to this prepared statement that you have just
read into the record, you invade the railroad field, so to speak, back in the year
1916. Is that correct?
Mr. VAN SWERINGEN. Our first undertaking was in 1916.
Mr. PECORA. That was in connection with you acquisition of the Nickel
Plate Road.
Mr. VAN SWERINGEN. That is true.
Mr. PECORA. Who was associated with you in that acquisition?
Mr. VAN SWERINGEN. My brother, Mr. C. L. Bradley, Mr. J. R. Nutt, and
quite a few local people there had portions of that investment.
STOCK EXCHANGE PEACTICES
8863
Mr. PECORA. Let me digress for just a moment to ask you: Who prepared
this statement which you have read into the record?
Mr. VAN SWERINGEN. I did.
Mr. PECORA. Did you confer with any other individuals who collaborated
with you in the preparation of this statement?
Mr! VAN SWERINGEN. Oh, yes; I submitted it to our people, in our office,
to have it checked as to its accuracy, and had several thoughts expressed to me,
not all of which I followed. Frankly, I kept it pretty much as I had it.
Mr. PECORA. TO whom did you submit it?
Mr. VAN SWERINGEN. TO our local counsel, and to Mr. Bradley and others
in our office who might have to do with various portions of it.
Mr. PECORA. Can you mention the name of such others?
Mr. VAN SWERINGEN. I do not have anyone outstanding in that matter in
mind. Just the general discussion throughout the office.
Mr. PECORA. DO you mean that you cannot recall the names of any other
individuals with whom you conferred in connection with this statement and
before this statement was given final form?
Mr. VAN SWERINGEN. Only in a very genera] way did I do that, make any
inquiries.
Mr. PECORA. Will you give the names of all other individuals with whom
you say you conferred, or whom you consulted?
EXHIBIT U-2-18
Mr. VAN SWERENGEN. Whom did I name, Mr. Bradley and Mr. Nutt?
Mr. PECORA. Mr. Bradley and Mr. Nutt.
Mr. VAN SWERINGEN. Yes, I named Mr. Bradley and Mr. Nutt.
Mr. PECORA. Yes. Anybody else?
Mr. VAN SWERINGEN. Mr. Murphy, Mr. Bernet, T had him verify it.
Mr. PECORA. I did not hear you.
Mr. VAN SWERINGEN. Mr. Bernet, and Mr. Ginn and Mr. Barrett.
(Part 2, page 571)
Mr. PECORA. Well, didn't you anticipate that you were going to be questioned
about the very matters that you have embodied in this statement that you have
read into the record?
Mr. VAN SWERINGEN. I anticipated that that might be so. But I had no
knowledge that it was so.
Mr. PECORA. Well, I might say to your credit that you had the vision of a
seer in that respect. [Laughter.] Of course, you have anticipated it correctly.
Now, you say in this prepared statement of yours as follows:
"We had heard that the Nickel Plate Stock control might be acquired; that is,
that the New York Central interests might be willing to dispose of it."
When you say "we" in that respect, to whom do you refer?
Mr. VAN SWERINGEN. In that instance I would have to have in mind my
brother and myself and probably our immediate associates.
Mr. PECORA. Well, who are your immediate associates?
Mr. VAN SWERINGEN. Why, the men I have just named here; Mr. Bradley
and Mr. Nutt, at that time.
(Part 2, page 597)
Mr. PECORA. Then 37ou say in your prepared statement as follows:
" I n the meantime the Nickel Plate was prospering and was accumulating
money under the able management of Mr. J. J. Bernet, whom we had engaged
as President when we first acquired the Nickel Plate * * * "
Whom do you mean by " w e " in that part of your statement?
Mr. VAN SWERINGEN. Those interests that I have described.
Mr. PECORA. Who are they?
Mr. VAN SWERINGEN. The same ones that we have just alked about here this
morning.
Mr. PECORA. That is, you, your brother, Mr. Bradley, Mr. Nutt, and other
gentlemen whom you have not yet named?
Mr. VAN SWERINGEN. Yes; that is it.
Mr. PECORA. IS that right?
Mr. VAN SWERINGEN. That is right; yes.
Mr. PECORA. But you individuals did not then actually own the stock of the
Nickel Plate Road, did you?
175541—34—PT 20
9
8864
STOCK EXCHANGE PRACTICES
Mr. VAN SWERINGEN. Individuals, did you say?
Mr. PECORA. That stock was then owned by the Nickel Plate Securities
Corporation, was it not?
Mr.
VAN SWERINGEN.
Yes.
Mr. PECORA. But you, and your associates, meaning the gentlemen whom you
have named, and some of whom you have not yet named, controlled the Nickel
Plate Securities Corporation, did you not?
Mr. VAN SWERINGEN. Yes,
sir.
Mr. PECORA. Through stock ownership?
EXHIBIT U-2-19
Mr. VAN SWERINGEN. Yes, sir.
That is what is meant by "we."
(Part 2, Page 600)
Mr. PECORA. NOW, tell us about this Vaness Co. When was the Vaness Co.
organized?
Mr. VAN SWERINGEN. I have got to get that. [After conferring with assoc
dates.] The charter is dated January 9, 1922, I am told.
Mr. PECORA. Did you and your associates cause it to be organized?
Mr.
VAN SWERINGEN. We
did.
Mr. PECORA. Did you and your associates own all of its capital stock.
Mr. VAN SWERINGEN. All of its common stock. [After conferring with
associates.] All of its capital stock.
The CHAIRMAN. That was a holding company, was it?
Mr. VAN SWERINGEN. Well, it was a company which did hold it; Yes, sir.
Hold these assets.
Mr. PECORA. YOU say it was organized in January, 1922? Is that the date,
sir?
Mr. VAN SWERINGEN. That is what I am told here. [After conferring with
associates.] That is the date of the charter.
Mr. PECORA. Yes. And all of its capital stock was issued to you and your
associates.
Mr. VAN SWERINGEN. That is the way it is in my mind.
Mr. PECORA. NOW, you only had two associates besides your brother in that
transaction, did you not? That is, Mr. J. R. Nutt and Mr. C. L. Bradley?
Mr. VAN SWERINGEN. I think for a time we had two other associates whom
we bought out.
Mr. PECORA. NOW, what kind of business was conducted or transacted by this
Vaness Co.?
Mr. VAN SWERINGEN. It was originally formed to hold and to own securities
and other assets that principally surrounded the ownership of O. P. and M. J.
Van Sweringen.
(Part 2, Page 602)
Mr. PECORA. NOW, what was the financial set-up of the Vaness Co. when it
was organized in 1922?
Mr. VAN SWERINGEN. I might add right in there that it was originally designed
as our own personal basket. It took a little different form as time went on.
Mr. PECORA. It was designed as a personal corportaion vehicle for you and
your associates; is that a fair statement?
Mr. VAN SWERINGEN. Yes, that is a very fair statement
(Part 2, Page 605)
Mr. PECORA. At $80. Now, Mr. Van Sweringen, at that time who held the
capital stock of the Nickel Plate Securities Corporation?
Mr. VAN SWERTNGEN. Our interests, as I have described them heretofore.
Mr. PECORA. What is that?
Mr. VAN SWERINGEN. Our interests, as I have described them heretofore.
Mr. PECORA. Well, by your interests, whom do you mean?
Mr. VAN SWERINGEN. 1 mean my brother and myself and Mr. Bradley and
Mr. Nutt and a few other holders that were close.
Mr. PECORA. Were there any stockholders oth?r than your own immediate
group or interest?
Mr. VAN SWERINGEW In the small percent that I have just noted.
STOCK EXCHANGE PEACTICES
8865
EXHIBIT U-2-20
(Part 2, Page 608)
Mr. PECORA. Well, the transaction, as I gather it from your explanation, was
briefly this: That the Nickel Plate R.R. Co. purchased 70,000 of these shares for
$5,600,000, which moneys it raised through the sale of mortgage bonds to the
public, and then the other 3,000 shares were purchased by the Nickel Plate
Securities Corporation for $1,700,000, which it obtained as a loan from the Vaness
Co. Wherein in that operation did you and any of your associates put up any
of your own cash?
Mr. VAN SWERINGEN. Through the Vaness Co. operation we either had to
put up collateral or cash before we got money at any stage of the game, or credit,
one or the other.
Mr. PECORA. Can you tell us
Mr. VAN SWERINGEN (interposing). And we owned that corporation.
Mr. PECORA. YOU owned the Vaness Co.?
Mr. VAN SWERINGEN.
Yes.
Mr. PECORA. The Vaness Co. in its original set-up merely acquired some shares
of the Securities Co., the Nickel Plate Securities Co., and in return for capital
stock which you and your associates received; is that right?
Mr. VAN SWERINGEN. NOW, you are back to the place where I could not
answer before, because you pick a date as to that transaction and then skip over
for more than a year without the intervening transactions. It is as to those
intervening transactions that I want the information, and that is what I promise
to give you when I can get it.
Mr. PECORA. Can you now recall any moneys that you and your associates
actually took out of your pocket to enable the Nickel Plate Railroad and the
Nickel Plate Securities Corporation to acquire these 73,000 shares of the capital
common stock of the Chesapeake & Ohio?
Mr. VAN SWERINGEN. YOU are trying to have me answer without the facts
again, Mr. Pecora.
Mr. PECORA. I am trying to have you answer on the basis of your best recollection.
Mr. VAN SWERINGEN. I haven't any best recollection. That is my trouble.
The record is the best thing I can get you, and we will have that in the morning
or tonight.
Mr. PECORA. Have you any recollection at all of you and your associates having
furnished out of your own means any of this consideration of $7,300,000 for the
73,000 Chesapeake & Ohio shares?
Mr. VAN SWERINGEN. YOU will have that answer in the morning.
(Part 2, Pages 635 and 636)
Mr. PECORA. Was Mr. J. Arthur House one of your associates in these various
Van Sweringen enterprises.
Mr. VAN SWERINGEN. Mr. House was a director of the Nickel Plate. That is
the only association that I recollect.
Mr. PECORA. When you say "The Nickel Plate" do you mean the operating
company, the railroad, or the Securities Company?
Mr. VAN SWERINGEN. The Railroad Co.
Mr. PECORA. YOU mean the Railroad Co.
Mr. VAN SWERINGEN. Yes, sir.
Mr. PECORA. Was he also at the time the president of the Guardian Savings &
Trust Co. of Cleveland?
EXHIBIT U-2-21
Mr. VAN SWERINGEN. Oh, yes; and for a great many years.
Mr. PECORA. Isn't it a fact that either the Nickel Plate Railroad or the holding
company known as the Nickel Plate Securities Corporation, and the Vaness Co.
from time to time obtained large loans from the Guardian Savings & Trust Co.
of Cleveland?
Mr. VAN SWERINGEN. I cannot be quite as comprehensive as that, but some
of the companies with which we had to do did a banking business there, and it
might well be true that they borrowed money from time to time. I know I
testified about one loan that was made in the course of these proceedings.
Mr. PECORA. Have you any failure of recollection about the names of the
banks from whom your companies from time to time borrowed moneys?
8866
STOCK EXCHANGE PRACTICES
Mr. VAN SWERINGEN. That is very awkwardly put, if you don't mind. [Laughter.] I wouldn't attempt from recollection to undertake to give you the transaction for loans of the different interests in the different place. I think that you
will appreciate that that is difficult to do.
Mr. PECORA. Did any of the companies with which you and your associates
were in any way identified, and which are commonly referred to as the Van
Sweringen interests, borrow moneys from time to time from the Guardian Savings
& Trust Company of Cleveland?
Mr. VAN SWERINGEN. Yes. There is no doubt but what some of them did.
We did business there for a great many years, or some of the companies did.
Mr. PECORA. Did some of the companies borrow money also from time to
time from the Union Trust Company of Cleveland?
Mr. VAN SWERINGEN. They did.
Mr. PECORA. YOU have already told us that Mr. Joseph R. Nutt was one of
the gentlemen who was associated with you and your brother in these various
enterprises.
Mr. VAN SWERINGEN. Yes, sir.
Mr. PECORA. He was one of the group which you called your associates, wasn't
he?
Mr. VAN SWERINGEN. Yes; he was one of the stockholders of the Vaness Co.
Mr. PECORA. And of other companies with which your interests were identified.
Mr. VAN SWERINGEN. He undoubtedly was. But you might be more comprehensible there.
Mr. PECORA. At the time of the obtaining of loans from the Union Trust
Company of Cleveland was Mr. Joseph R. Nutt the president and chairman of
the board of that trust company?
Mr. VAN SWERINGEN. Pardon me, but I missed the first part of that question.
Mr. PECORA. The committee reporter might read it to you. [Which was done.]
Mr. VAN SWERINGEN. He might have been.
(Part 2—pages 642 and 643)
Mr. PECORA. NOW you referred to a Mr. Ginn as counsel for you in attendance
at this hearing. Was not Mr. Ginn or his law firm the attorney for the Union
Trust Co. of Cleveland at the time that the Vaness Co. and others of your companies obtained loans from that trust company?
Mr. GINN. May I answer that question, Mr. Chairman?
Mr. PECORA. I would rather have the witness answer it first.
EXHIBIT U-2-22
Mr. GINN. I prefer to answer it first, if I may, Mr. Chairman.
Mr. PECORA. L3t the witness answer it first, and if your recollection varies
from his answer you may state.
Mr. GINN. AS counsel
Senator ADAMS. IS this one of the counsel?
Senator BARKLEY. Let the witness give his recollection, and then you can
answer.
Mr. VAN SWERINGEN. Mr. Ginn, I think, can answer that better than I can.
Senator BARKLEY. DO you know whether that is true?
Mr. VAN SWERINGEN. I think he had better answer that.
Mr. PECORA. DO you know whether it is the fact?
Mr. VAN SWERINGRN. I have understood he was counsel for them in some
matters.
Mr. PECORA. Counsel for the trust company?
Mr. VAN SWERINGEN. But he will have to confirm it.
Mr. PECORA. Counsel for the trust company?
Mr. VAN SWERINGRN. He will have to confirm that. I cannot.
Mr. PECORA. If Mr. Ginn wTants to answer that, very well.
Senator BARKLEY. If Mr. Ginn desires to answer the chairman will permit
him to do so.
Mr. GINN. The witness has answered the question as I would have answered
it. At the time that you mentioned our firm was counsel for the Union Trust
Company in certain matters. We had no retainer of any kind or character from
the Union Trust Co.
Senator BARKLEY. Well, why was there any hesitation about giving that
information at the start?
Mr. VAN SWERINGEN. I did not hesitate. I commented that I thought he
could answer for himself better than I could, being right here.
STOCK EXCHANGE PRACTICES
8867
Senator BARKLEY. Yes; but you-
Mr. VAN SWERINGEN. And then when you asked me I told you that I had
understood that he had been counsel in several matters.
Senator BARKLEY. Your offer to let him answer it was after he had arisen
and asked that he might answer it. Until that time you seemed to display no
recollection on the subject.
Mr. VAN SWERINGEN. Pardon me; I think he arose rather quickly when the
question was asked.
Mr. PECORA. Was Mr. Ginn or his law firm, or any law partner or associate
of his, counsel for the Vaness Co. at any time in the past?
(Mr. Van Sweringen conferred with his associates.)
(At this point there was some disturbance and laughter in the room.)
Mr. VAN SWERINGEN (After conferring with associates). Many times.
Senator BARKLEY. The congregation will please be in order.
Mr. VAN SWERINGEN. YOU got the answer to that?
Mr. PECORA. YOU think he was at many times?
Mr. VAN SWERINGEN.
Yes.
(Part 2—pages 702 and 703)
Mr. PECORA. NOW, it was also testified to heretofore that a number of the
persons who were invited by J. P. Morgan & Co. to subscribe for Alleghany
Corporation common shares at $20 per share, were suggested by the Van Sweringen interests. Can you tell us who those persons were?
EXHIBIT U-2-23
Mr. VAN SWERINGEN. I can tell you some of them.
Mr. PECORA. Will you please do so?
Mr. VAN SWERINGEN. I think I will start first with Mr. Nutt, Mr. J. R. Nutt r
and Mr. Barrett—if I had a list of the shareholders I could tell you better.
Mr. Fitzpatrick, Mr. Harahan, Mr. Bradley——
Mr. PECORA (interposing). Now, possibly for your convenience, Mr. Van
Sweringen, let me turn over to you a printed copv of the testimony to which I
have alluded, printed for the use of this committee, pages 138 and 139 of part 1
thereof. Will you just look at the names shown on that list on those two pages,
and just go dow^n the list, and when you come across a name that was recommended
by the Van Sweringen interests, will you indicate that name to tl e Committee?
Start at the beginning.
Mr. VAN SWERINGEN. This is going to be a little bit of a memory test for me
again.
Mr. PECORA. Well, we will hope for good results.
Mr. VAN SWERINGEN. I will try to do better. I have already mentioned Mr.
Barrett, and I think Mr. Baker, but I am not sure. He wTas an attorney in the
proceedings at the time.
Mr. PECORA. DO you mean Newton D. Baker?
Mr. VAN SWERINGEN. Yes, sir.
Mr. PECORA. And Mr. Barrett, do you say?
Mr. VAN SWERINGEN. Yes, sir.
Mr. PECORA. What is his name?
Mr. VAN SWERINGEN. D. S. Barrett, Jr., Mr. Bernet, Mr. Charles Bradley,
Mr. Herbert Fitzpatrick—but I did give his name, did I not? Mr. Michael
Gallagher, Mr. Harahan, I did mention, I think.
Mr. PECORA. Mr. W. J. Harahan?
Mr. VAN SWERINGEN. Yes, sir. And Henry A. Marting.
Mr. PECORA. Henry A. Marting?
Mr. VAN SWERINGEN. Yes, sir. And Mr. Murphy—Mr. John P. Murphy,
pardon me. W. L. Ross, John Sherwin, Sr. And the record shows G.D., but
I suspect it was K.D., Steere.
Mr. PECORA. Was he one of the partners of the brokerage firm of Paine, Webber
& Co.?
Mr. VAN SWERINGEN. Yes, sir. And he used to be in our organization. Subject to any inaccuracies of recollection I would say that that was in general it-
8868
STOCK EXCHANGE PRACTICES
(Part 2—page 706)
Mr. PECORA. Who were the directors of the Alleghany Corporation at the
outset?
Mr. VAN SWERINGEN. I was its president, and——
Mr. PECORA (interposing). You were its president?
Mr. VAN SWERINGEN. Yes, sir. And Mr. C. L. Bradley, Mr. J. R. Nutt,
Mr. M. J. Van Sweringen and Mr. D. S. Barrett, Jr.
Mr. PECORA. NOW, they were all persons associated with you, commencing
back in 1916, weren't they?
Mr. VAN SWERINGEN. Yes, sir. With the exception of my brother who commenced quite a number of years sooner.
EXHIBIT U-2-24
Mr. PECORA. NOW, Mr. Van Sweringen, were any of these option warrants
offered to the public?
Mr. VAN SWERINGEN. In the sale of preferred stock there are some warrants.
(Part 2—pages 714 and 715)
Mr. PECORA. All right. Thank you. Now, Mr. Van Sweringen, you have
stated that upon the organization of the Alleghany Corporation the Van Sweringen
interests acquired 2}{ million shares of the common stock thereof at $20 per
share, in addition to 1,725,000 option warrants at a cost price of $1 per warrant.
You also testified, as I recall it, that J. P. Morgan & Co. at the same time acquired
a large block of common stock of the Alleghanv Corporation, also at $20 per share,
and that they invited certain persons whom you named on yesterday to subscribe
for some of those shares, at the same price of $20 a share. Now, among the persons
you say you recommended to J. P. Morgan & Co. that this invitation to subscribe
at $20 per share should be extended, were Mr. Nutt and Mr. Bradley, two of your
associates. What was the occasion for your making that recommendation to
J. P. Morgan & Co in view of the fact that the Van Sweringen interests, which
included these two gentlemen, had acquired 2}i million shares directly at $20 a
share?
Mr. VAN SWERINGEN. SO that they might themselves have those individually,
apart from the Vaness Co.
Mr. PECORA. Couldn't they have had those out of the 2J4 million shares of the
Van Sweringen interests?
Mr. VAN SWERINGEN. Well, we, as I have heretofore testified, had a desire at
that time to have the number of shares that I have indicated, for the Vaness Co.
Mr. PECORA. Couldn't that desire have been fulfilled or satisfied out of the 2*4
million shares which the Vaness Co. got?
Mr. VAN SWERINGEN. Well, as a matter of fact, it was not satisfied.
Mr. PECORA. What is that?
Mr. VAN SWERINGEN. It w^as not satisfied out of the 2% million shares, that is
true.
Mr. PECORA. But, couldn't those individual desires that you have referred to
have been satisfied out of the stock which the Van Sweringen interests acquired
from the Alleghany Corporation, just as w^ell as out of the stock which J. P. Morgan
& Co. acquired from that corporation?
Mr. VAN SWERINGEN. I do not like to treat that as desires that had to be satisfied, although it was our thought that it would be nice if they could have those
shares.
Mr. PECORA. Why couldn't you have given them those shares out of the 2){
million shares which you acquired?
Mr. VAN SWERINGEN. Well, that could have been done, I suppose, but it was
not done.
EXHIBIT U-2-25
Mr. PECORA. DO you know of any reason why it was not done in that way?
Mr. VAN SWERINGEN. Prompted by what I have heretofore said, that we
wanted the number of shares that we got as we then saw it.
Mr. PECORA. Well, now, Mr. Nutt and Mr. Bradley each had a very large
interest in the Vaness Co., didn't they?
Mr. VAN SWERINGEN. They did.
Mr. PECORA. Why was it necessary to enable them to acquire those additional
blocks of stock at $20 per share which they acquired through J. P. Morgan & Co.
Mr. VAN SWERINGEN. It wasn't compulsory.
STOCK EXCHANGE PRACTICES
8869
Mr. PECORA. Well, why was it done, Mr. Van Sweringen? I am trying to find
out why it was done in that way.
Mr. VAN SWERINGEN. We thought it was a desirable thing to do.
Mr. PECORA. For what reason?
Mr. VAN SWERINGEN. That they would appreciate having the shares and being
able to buy them at that time, because we were all looking forward to the future.
Mr. PECORA. Well, couldn't they have gotten those shares from the Vaness
Company at the same terms?
Mr. VAN SWERINGEN. In view of the fact that we four had all the common
stock of the Vaness Co. I suppose that could have been done.
Mr. PECORA. Was there any reason why it was not done in that way?
Mr. VAN SWERINGEN. It was not material as to their being had at all, as a
matter of fact.
Mr. PECORA. Had they asked you
Mr. VAN SWERINGEN (continuing). I mean out of the shares that we got.
Mr. PECORA (continuing). To get the right to subscribe for those additional
shares from J. P. Morgan & Co. instead of from the Vaness Co.
Mr. VAN SWERINGEN. Had they asked me?
Mr. PECORA. Yes.
VAN SWERINGEN.
Mr.
I do not really know. I don't remember.
COMMENTS RELATIVE TO THE MINUTES OF MEETINGS OF THE DISCOUNT COMMITTEE,
EXECUTIVE COMMITTEE, AND THE BOARD OF DIRECTORS AT WHICH MEETINGS
LOAN NO. 37659 BY THE UNION TRUST COMPANY TO THE VANESS COMPANY,
DATE JULY 27, 1928, AMOUNT $2,000,000.00 WAS RATIFIED.
Discount Committee, July 30, 1928
Present: Otto Miller, Director—Executive Committee—Discount Committee;
Thomas P. Robbins, Director—Executive Committee—Discount Committee;
G. A. Tomlinson, Director—Executive Committee—Discount Committee;
Whitney Warner, Director—Executive Committee—Discount Committee; J. R.
Kraus, Director—Executive Committee—Discount Committee; J. G. Geddes,
Vice President; John Sherwin, Jr., Vice President; Geo. P. Steele, Vice President;
W. Tonks, Vice President—Credit Manager; R. S. Crawford, Vice President—
Secretary.
EXHIBIT U-2-26
Executive Committee, August 6, 1928
Present: Otto Miller, Director—Executive Committee—Discount Committee;
Thomas P. Robbins, Director—Executive Committee—Discount Committee;
Whitney Warner, Director—Executive Committee—Discount Committee; J. R.
Kraus, Director—Executive Committee—Discount Committee; J. R. Nutt, Director—Executive Committee—Discount Committee; W. M. Baldwin, Director—
Executive Committee—Discount Committee; Emil Joseph, Director—Executive
Committee; E. J. Kulas, Director—Executive Committee; Windsor T. White,
Director—Executive Committee; C. E. Farnsworth, Vice President; J. P. Harris,
Vice President.
Board of Directors, August 14, 1928.
Present: Thos. P. Robbins, Executive Committee—Discount Committee; J.
R. Nutt, Executive Committee—Discount Committee; W. M. Baldwin, Executive Committee—Discount Committee; Geo. A. Coulton, Executive Committee—
Discount Committee; Geo. Bartol, W. P. Belden, Alexander C. Brown, E. F.
Carter, Geo. P. Comey, Henry W. Corning, F. B. Fretter, W. H. Gerhauser,
Thomas S. Grasselli, Geo. H. Hodgson, David L. Johnson, Emil Joseph, Executive
Committee; Robert C. Norton, E. J. Siller, Fred R. White, Windsor T. White,
Executive Committee; Allard Smith, Vice President; R. S. Crawford, Vice
President—Secretary.
It will be noted that five out of ten members of the discount committee were
present at the Discount Committee meeting, at which meeting this loan was
ratified. There were also present five officers of the bank who (according to the
By-laws in effect at that time) were not qualified to act as members of the committee, and who were not directors; therefore three votes were sufficient to ratify
the loan.
8870
STOCK EXCHANGE PRACTICES
EXHIBIT
U-2-27
The Executive Committee met on August 6th, 1928 and approved the Minutes
of the Discount Committee meeting of July 30, 1928 and ratified all loans approved
by that Committee to August 1, 1928, including the Vaness Co. loan.
According to the Executive Committee minutes, there were present nine members out of twenty-three which (according to the by-laws in effect at the time)
constituted a quorum. Included in the nine qualified to vote were four members
who had acted upon the loan as members of the Discount Committee and J. R.
Nutt who wasfinanciallyinterested in the borrower. In addition to the members
above named there were also present C. E. Farnsworth and J. P. Harris, both
Vice-Presidents of the bank who were not qualified to act as members of the committee and who were not directors.
The Board of Directors met on August 14th, 1928 at which meeting the minutes
of the Executive Committee meeting of August 6th, 1928 were read and upon
motion were approved and confirmed.
According to the director's minutes there were present at the meeting twenty
directors out of sixty-four which number (according to the by-laws then in effect)
was thirteen less than required to make a quorum.
It is also noted that at the following Director's meeting held on August 28th,
1928, although there was not a quorum present, the minutes of the Executive
Committee meetings of August 20th, 1928 and August 27th, 1928 were read and
upon motion were approved and confirmed.
At the Director's meeting of September 11th, 1928, a quorum being present
(thirty-five out of sixty-four) the following resolution was made:
"Upon motion duly made, seconded, and unanimously carried it was
RESOLVED that the minutes of the meetings of June 26, 1928, July 24th,
1928, August 14th, 1928, and August 28, 1928 at which quorums were not present,
are hereby ratified, adopted and confirmed as the actions of this Board."
An analysis of the directors present at the meetings set forth in the above
resolution gives the following information:
Seven of the directors who voted on September 11th, 1928 for the above resolution were not present at any of the four meetings which actions they ratified.
Fourteen of the thirty-five directors who voted for the foregoing resolution
were not present at the meetings held on July 10th and July 24th, 1928.
Twenty-one out of thirty-five of the directors who voted for the resolution on
September 11th, 1928 covering ratification of the actions of the Board on August
14th, 1928, were not present at the meeting of August 14th, 1928.
U-2-28
The fourteen who were present at both the Director's meetings (August 14th
and September 11th, 1928) are as follows: J. R. Nutt, Executive Committee—
Discount Committee; Geo. A. Coulton, Executive Committee—Discount Committee; W. M. Baldwin, Executive Committee—Discount Committee; Thomas
P. Robbins, Executive Committee—Discount Committee; E. F. Carter, Geo. P.
Comey, F. B. Fretter, Geo. H. Hodgson, Emil Joseph, Robert C. Norton, E. J.
Siller, Henry W. Corning, W. P. Belden, Alexander C. Brown.
EXHIBIT
COMMENTS RELATIVE TO THE MINUTES OF MEETINGS OF THE DISCOUNT COMMITTEE,
EXECUTIVE COMMITTEE, AND THE BOARD OF DIRECTORS AT WHICH MEETINGS
LOAN NO. 61949 BY THE UNION TRUST COMPANY TO THE VANESS COMPANY, DATED
NOVEMBER 1, 1929, AMOUNT $2,000,000 (PARTICIPATION IN $9,000,000.00) WAS RATIFIED:
Finance Committee, November 2, 1929.
Present: Geo. A. Coulton, Director—Executive Committee—Finance Committee; J. R. Krause, Director—Executive Committee—Finance Committee;
Thomas P. Robbins, Director—Executive Committee—Finance Committee*
F. P. Root, Director—Executive Committee—Finance Committee; E. R:
Grasselli, Director—Executive Committee—Finance Committee; C. E. Farnsworth, Vice President; Wm. Tonks, Vice President—Credit Manager; R. S.
Crawford, Vice President—Secretary.
Executive Committee, November 4, 1929.
Present: J. R. Nutt, Director—Executive Committee—Finance Committee;
G. A. Coulton, Director—Executive Committee—Finance Committee; J. R.
Krause, Director—Executive Committee—Finance Committee; W. M. Baldwin,
STOCK EXCHANGE PRACTICES
8871
Director—Executive Committee—Finance Committee; Thomas P. Robbins,
Director—Executive Committee—Finance Committee; F. P. Root, Director—
Executive Committee—Finance Committee.
F. H. Ginn, Director—Executive Committee; W. A. Harshaw, Director—
Executive Committee; W. S. Hay den, Director—Executive Committee; Emil
Joseph, Director—Executive Committee; Kenyon V. Painter, Director—Executive Committee; C. E. Farnsworth, Vice President.
EXHIBIT U-2-29
Board of Directors, November 12, 1929.
Present: George A. Coulton, Executive Committee—Finance Committee;
J. R. Krause, Executive Committee—Finance Committee; J. R,. Nutt, Executive
Committee—Finance Committee; W. H. Baldwin, Executive Committee—
Finance Committee; Thomas P. Robbins, Executive Committee—Finance
Committee; F. P. Root, Executive Committee—Finance Committee; E. R.
Grasselli, Executive Committee—Finance Committee; F. H. Ginn, Executive
Committee; W. A. Harshaw, Executive Committee; W. S. Hay den, Executive
Committee; Emil Joseph, Executive Committee; Kenyon V. Painter, Executive
Committee; George Bartol, E. F. Carter, George P. Comey, Henry W. Corning.
W. J. Crawford, Jr., F. B. Fretter, George C. Gordon, George Gund, F. H,
Haserot, George H. Hodgson, David L. Johnson, Adrian D. Joyce; E. J. Kulas,
Executive Committee; E. P. Lenihan, Bascom Little, H. V. Mitchell, Herman
Moss, Laurence H. Norton, Robert C. Norton, Carl N. Osborne, Samuel Lewis
Smith, Andrew Squire, Whitney Warner, Fred R. White.
There were present five of the eight members of the Finance Committee
together with three officers of the bank who (according to the by-laws in effect
then) were qualified to act as alternates to sit instead of the absent members
EXHIBIT U-2-30
The Executive Committee which met on November 4th, 1929 unanimously
approved and confirmed the minutes of the Finance Committee meeting of
November 2nd, 1929. There were present at this meeting eleven out of fourteen
members. Four of the eleven present acted on the loans as members of the
Finance Committee whose votes, together with the vote of J. R. Nutt (who was
interested in the borrower,) and the vote of W. M. Baldwin, constituted a majority. In addition to the above there was also present C. E. Farnsworth, Vice
President, who was not qualified to act on the Committee.
The Board of Directors met on November 12th, 1929 at which meeting the
minutes of the Executive Committee meeting of November 4th, 1929 were read,
and upon motion duly made, seconded, and unanimously carried were approved
and confirmed.
Under date of January 9th, 1929, by action of the Board of Directors, the
Code of By-laws of the Union Trust Company were amended in several respects,
one of which was as follows:
Article II, Section 8, to read as follows:
CERTAIN LOANS. NO loan shall be made to an officer of the bank, or to a syndicate or partnership in which an officer is a participant or a partner unless first
approved by the Executive or Finance Committee. When a loan is applied for,
or has been currently made, by or to a corporation in which an officer has a substantial interest, it shall be the duty of that officer to state immediately the fact
of his interest therein to the Executive or Finance Committee.
There is nothing contained in the minutes of the Finance Committee, Executive
Committee or Board of Directors to indicate that the by-laws as above set forth
were complied with.
COMMENTS RELATIVE TO THE MINUTES OF MEETINGS OF THE FINANCE COMMITTEE,
EXECUTIVE COMMITTEE, AND THE BOARD OF DIRECTORS AT WHICH MEETING LOAN
NO. 70739 BY THE UNION TRUST COMPANY TO THE VANESS COMPANY, DATED MAY
13, 1930, AMOUNT $2,800,000. (PARTICIPATION IN $9,000,000.00) WAS RATIFIED:
Finance Committee, May 14, 1930.
Present: J. R. Krause, Director—Executive Committee—Finance Committee;
W. M. Baldwin, Director—Executive Committee—Finance Committee; Otto
Miller, Director—Executive Committee—Finance Committee; Thomas P. Rob
8872
STOCK EXCHANGE PRACTICES
bins, Director—Executive Committee—Finance Committee; F. P. Root, Director—Executive Committee—Finance Committee; C. E. Farnsworth, Vice President; H. E. Hills, Vice President; George P. Steele, Vice President; William
Tonks, Vice President—Credit Manager; R. E. Crawford, Vice President—
Secretary.
EXHIBIT U-2-31
EXECUTIVE COMMITTEE, MAY 19, 1930
Present: G. A. Coulton, Director—Executive Committee—Finance Committee; W. M. Baldwin, Director—Executive Committee—Finance Committee;
Thomas P. Robbins, Director—Executive Committee—Finance Committee;
F. P. Root, Director—Executive Committee—Finance Committee; F. H. Ginn,
Director—Executive Committee; W. S. Hay den, Director—Executive Committee; Emil Joseph, Director—Executive Committee; John A. Kling, Director—
Executive Committee; E. J. Kulas, Director—Executive Committee; Kenyon
V. Painter, Director—Executive Committee; J. P. Harris, Vice President.
BOARD OF DIRECTORS, MAY 28, 1930
Present: G. A. Coulton, Executive Committee—Finance Committee; W. M.
Baldwin, Executive Committee—Finance Committee; Thomas P. Robbins,
Executive Committee—Finance Committee; F. P. Root, Executive Committee—
Finance Committee; E. R. Grasselli, Executive Committee—Finance Committee; F. H. Ginn, Executive Committee; W. S. Hay den, Executive Committee;
Emil Joseph, Executive Committee; John A. Kling, Executive Committee;
E. S. Barkwill, W. P. Belden, George P. Comey, Henry W. Corning, W. J.
Crawford, Jr., Thomas S. Grasselli, George Gund, J. A. Hadden, W. A. Harshaw,
F. EL Haserot, Parmely W. Herrick, Geo. H. Hodgson, David L. Johnson,
Adrian D. Joyce, Ralph T. King, Herman Moss, P. A. Myers, Laurence H.
Norton, Robert C. Norton, Carl N. Osborne, Samuel Lewis Smith, Andrew Squire;
J. P. Harris, Vice President.
EXHIBIT U-2-32
It will be noted that five of the eight members of the Finance Committee were
present at the meeting on May 14th, 1930, also five officers of the bank, three of
whom were qualified under the amended by-laws to act as alternates for the
absent members.
At the Executive Committee meeting held May 19th, 1930, there were present
ten of the seventeen members and J. P. Harris, Vice President.
The minutes of the Executive Committee were read and unanimously approved
by the directors at their meeting held on May 28th, 1930, at which meeting
there were present thirty-one of the sixty directors and J. P. Harris, Vice President.
COMMENTS RELATIVE TO THE MINUTES OF MEETINGS OF THE FINANCE COMMITTEE,
EXECUTIVE COMMITTEE, AND THE BOARD OF DIRECTORS AT WHICH MEETINGS
LOAN NO. 78310 BY THE UNION TRUST COMPANY TO O. P. AND M. J. VAN SWERINGEN, DATED OCTOBER 30, 1930, AMOUNT $2,800,000.00 (PARTICIPATION IN $9,000,000.00)
WAS CONSIDERED AND APPROVED
Finance Committee, October 28, 1930
Present: Geo. A. Coulton, Director—Executive Committee—Finance Committee; J. R. Kraus, Director—Executive Committee—Finance Committee;
W. M. Baldwin, Director—Executive Committee—Finance Committee; E. It.
Grasselli, Director—Executive Committee—Finance Committee; Otto Miller
Director—Executive Committee—Finance Committee; Thomas P. Robbins,
Director—Executive Committee—Finance Committee; F. P. Root, Director—
Executive Committee—Finance Committee; C. E. Farnsworth, Vice President;
C. B. Gleason, Vice President; J. P. Harris, Vice President; Geo. P. Steele,
Vice President; R. S. Crawford, Vice President-Secretary.
Finance Committee, October 31, 1930
Present: Geo. A. Coulton, Director—Executive Committee—Finance Committee; J. R. Kraus, Director—Executive Committee—Finance Committee;
Allard Smith, Director—Executive Committee—Finance Committee; Thomas
P. Robbins, Director—Executive Committee—Finance Committee; F. P. Root,
Director—Executive Committee—Finance Committee; C. E. Farnsworth, Vice
President; J. G. Geddes, Vice President: H. E. Hills, Vice President.
STOCK EXCHANGE PRACTICES
8873
EXHIBIT U-2-33
George P. Steele, Vice President; R. S. Crawford, Vice President and Secretary.
EXECUTIVE COMMITTEE, NOVEMBER 3, 1930
Present: G. A. Coulton, Executive Committee—Finance Committee; Allard
Smith, Executive Committee—Finance Committee; Thomas P. Bobbins, Executive Committee—Finance Committee; F. P. Root, Executive Committee—
Finance Committee; Otto Miller, Executive Committee—Finance Committee;
E. R. Grasselli, Executive Committee—Finance Committee; F. H. Ginn, Director—Executive Committee; W. S. Hay den, Director—Executive Committee;
Emil Joseph, Director—Executive Committee; John A. Kling, Director—Executive Committee; E. J. Kulas, Director—Executive Committee; Kenyon V.
Painter, Director—Executive Committee; Windsor T. White, Director—Executive Committee; J. P. Harris, Vice President.
EXECUTIVE COMMITTEE, NOVEMBER 10, 1930
Present: J. R. Nutt, Executive Committee—Finance Committee; G. A*
Coulton, Executive Committee—Finance Committee; W. M. Baldwin, Executive Committee—Finance Committee; Otto Miller, Executive Committee—
Finance Committee; Thos. P. Robbins, Executive Committee—Finance Committee; F. P. Root, Executive Committee—Finance Committee; W. A. Harshaw,
Director—Executive Committee; W. S. Hay den, Director—Executive Committee; Emil Joseph, Director—Executive Committee; John A. Kling, Director—Executive Committee; E. J. Kulas, Director—Executive Committee;
Kenyon V. Painter, Director—Executive Committee; Windsor T. White,
Director—Executive Committee.
EXHIBIT U-2-34
BOARD OF DIRECTORS, NOVEMBER 12, 1930
Present: G. A. Coulton, Director—Executive Committee—Finance Committee; W. M. Baldwin, Director—Executive Committee—Finance Committee;
J. R. Kraus, Director—Executive Committee—Finance Committee; Otto Miller,
Director—Executive Committee—Finance Committee; Thos. P. Robbins, Director— Executive Committee—Finance Committee; F. P. Root, Director—
Executive Committee—Finance Committee; Allard Smith, Director—Executive
Committee-—Finance Committee; F. H. Ginn, Executive Committee; Emil
Joseph, Executive Committee; Kenyon V. Painter, Executi\e Committee;
Windsor T. White, Executive Committee; Geo. P. Comey, Henry W. Corning,
W. J. Crawford, Jr., W. H. Gerhauser, Tom M. Girdler, *Geo. C. Gordon, Geo.
Gund, F. H. Haserot, Parmely W. Herrick, Geo. H. Hodgson, Adrian D. Joyce,
E. P. Lenihan, Herman Moss, Laurence H. Norton, Robert C. Norton, Carl N.
Osborne, Samuel Lewis Smith, Andrew Squire, Whitney Warner, Fred R. White,
J. P. Harris.
Details of agreement of the Finance Committee covering loans to O. P. and
M. J. Van Sweringen, The Vaness Company, and the Metropolitan Utilities, Inc.
contained in the minutes of October 28th, 1930 is shown on Exhibit E-l of this
report and Finance Committee minutes of October 31st, 1930 contain the approval
of the committee covering the loans.
Minutes of the Executive Committee of November 3rd, 1930 contain the committee's unanimous approval of the minutes of the Finance Committee Meetings
from October 27th, 1930 to November 1st, 1930. Minutes of the Executive
Committee under date of November 10th, 1930 contain approval of all loans as
of November 5th, 1930.
EXHIBIT U-2-35
Board of Directors meeting of November 12th, 1930 contains their unanimous
approval and confirmation of the minutes of the Executive Committee meetings
held on November 3rd, 1930 and November 10th, 1930.
8874
STOCK EXCHANGE PRACTICES
EXHIBIT A
CLEVELAND, OHIO, May 12th, 1930.
THE
UNION TRUST COMPANY,
Cleveland, Ohio.
GENTLEMEN: Reference is made to The Vaness Company loan in the amount
of $9,000,000.00, in which we have a participation. The collateral under this
loan was as follows:
100 shares of The Cleveland Terminals Building Company common stock,
122,000 shares of The Van Sweringen Company common stock,
32,893 shares of The Terminal Properties Company first preferred stock,
33,187 shares of The Terminal Properties Company second preferred stock,
99,222 shares of The Terminal Properties Company common stock.
On May 10th, we agreed to the substitution of 600,000 shares of Van Sweringen
Corporation common stock in place of 100 shares of The Cleveland Terminals
Building Company common stock, and we hereby agree to a new loan to be made
by The Vaness Company, in the amount of $9,000,000.00 to be dated May 13,
1930, the collateral under which loan is to be as follows:
600,000 shares of Van Sweringen Corporation common stock,
122,000 shares of The Van Sweringen Company common stock.
Our participation in this new loan is to be $1,200,000.00
Very truly yours,
THE MIDLAND BANK.
By JOHN SHERWIN, JR. (Signed)
Pres.
EXHIBIT B
THE
GUARDIAN TRUST COMPANY,
Cleveland, Ohio, January 23, 1933.
Mr. W. J. O'NEILL,
Vice President, The Union Trust Company,
Cleveland, Ohio.
DEAR MR. O'NEILL: Referring to your letter of January 18th and to our telephone conversation pertaining to it on Friday of last week, the stock held by
you in The Vaness Corporation, as Trustee for the participants in the NineEXHIBIT U-23-6
Million-Dollar loan, represents sixty percent interest of the entire capital of
The Vaness Company.
It seems to me that owing to the fact that the Trustee has such a large stock
interest he should be represented in some manner in a corporation setup for 1933,
especially in view of the fact that no payments are being made upon the interest
or principal of the participated loan.
I am aware of the fact that most of the securities in the Vaness portfolio,
upon which we depended when we made the loan, have been shifted to New York.
Whether or not the pledging of these securities was done with or without the
knowledge of the Trustee I am not advised but, irrespective of that, it may be
that in the future some policy may be taken by the Vaness management which
would be harmful to our interests and I feel that the banks should have someone
representing them on the Board who would know in advance of the establishment of any policy which might affect our loan one way or another and advise
the interested banks promptly in reference thereto.
It is for the purpose of having this matter discussed that I feel disposed to
withhold our consent to the proxy requested.
I would like to know what you think about the suggestion and how The Cleveland Trust would feel about it also.
With kind regards, I am,
Very truly yours,
(Signed)
H. C. ROBINSON,
Executive Vice President.
HCR-CT.
STOCK EXCHANGE PRACTICES
8875
EXHIBIT C
JANUARY 26,
1933.
Mr. H. C. ROBINSON, Executive Vice President, The Guardian Trust Company,
Cleveland, Ohio.
(RE: O. P. and M. J. Van Sweringen Loan Proposed proxy on Vaness Company
Stock)
DEAR MR. ROBINSON: Referring to the suggestion in your letter of the 23rd
instant as to the pledging of Vaness Company stock in New York, it appears that
on or about October 30, 1930 the note of The Vaness Company for $9,000,000.,
representing a loan in which the banks had participated, was canceled and the
collateral surrendered, and there was substituted therefor the note of O. P. and
M. J. Van Sweringen, with 97,500 shares of stock of the Vaness Company as
collateral, and certificates of participation in this new loan were issued to the
banks. Therefore, the banks, as participants in this loan, would not be in a
position to object to the pledge made by The Vaness Company in New York,
and it is my understanding that all of the local banks knew at that time that
the New York pledge was being made.
In this connection it is interesting to note that on November 6th, 1930 notes
of Metropolitan Utilities, Inc., representing its loan, participated in by the Cleveland banks, which note bore the guaranty of the Vaness Company, were surrendered, and notes of Metropolitan Utilities, Inc., bearing the guaranty of
O. P. and M. J. Van Sweringen were substituted, and that at this time the old
EXHIBIT U-2-37
certificates of participation were taken up and new certificates showing the
change in the guaranty, were issued. On November 20th, 1930 new notes were
again substituted, bearing the guaranty of The Vaness Company instead of
the guaranty of O. P. and M. J. Van Sweringen. While the writer does not
know it, it appears to him likely that between the dates of November 6th, 1930
and November 20th, 1930 the New York pledge was made, and it seems likely
also that the New York creditors required that there be no substantial outstanding liability of The Vaness Company, even a contingent liability such as it&
guaranty on the Metropolitan Utilities, Inc. loan, at the time when the New
York pledge was being made.
We have now received the consent of the Cleveland Trust Company and The
Midland Bank to the giving of the proxy requested by the Vaness Company
management. At our request the annual meeting of the Vaness Company was
postponed for one week. This will give the banks an opportunity to consider
whether or not they wish to have representation on the new Board.
Very truly yours,
Vice President.
WJO'N-e
EXHIBIT D
THE
CLEVELAND TRUST COMPANY,
December 7, 1932.
Mr. J. R. KRAUS, Chairman of Board
The Union Trust Company, Cleveland, Ohio.
DEAR MR. KRAUS: I have been advised by J. P. Morgan & Company that they
are holding enclosed list of collateral on the loan to the Vaness Company as of
close of business December 3, 1932.
Very truly yours,
JOHN SHERWIN, JR.
(Signed)
Vice President W (?)
JSJnW
LIST
The Vaness Company
1,350,000 Shs. Alleghany Corp. $30 Warrants
655,892 " Alleghany Corp. Com.
765 a Alleghany Corp. Pfd. Ex Warrants
2,400 " Alleghany Corp. Pfd. $30 Warrants
1,230 " Alleghany Corp. Pfd. $40 Warrants
8876
40,393
10,900
3,000
3,300
5,000
8,260
1,244,580
122,000
17,000
STOCK EXCHANGE PRACTICES
Shs. Cleveland Railway Co. Com. C/D
" Erie R.R. Co. 2nd Pfd.
" Missouri Pacific R.R. Co. Com.
" Chesapeake Corp.
" Otis Steel Co. Com.
" Midland Bank of Cleveland
" Van Sweringen Corp. Com.
" Van Sweringen Company
" Terminal Building Co.
EXHIBIT U-2-38
250 Shs. Huron Fourth Co.
196 " Long Lake Co.
$270,000.00 Cleveland Terminal Building
$1,250,000.00 Higbee Co. 5% Notes due 10-30-32 (carried as past due)
$13,787,000.00 Van Sweringen Corp. 5 year 6% Notes due 5-1-35
$71,000.00 Participation in Higbee Co. Note
$817,460.36 Long Lake Co. Notes
$170,430.29 Terminal Hotels Co. Note
$6,261,697.59 Van Sweringen Co. Notes
$554,103.00 Metropolitan Utilities, Inc. Notes
$207,176.60 Terminal Building Co. Notes
$2,595,398.85 Van Sweringen Corp. Note
$3,833.54 Cash in Special Deposit
*See footnote below for an uncorrelated collateral reference.
EXHIBIT E
UNION CLEVELAND CORPORATION
CLEVELAND, OHIO, June 3, 1933.
Mr. O. L. Cox, Conservator,
The Union Trust Company, Cleveland, Ohio.
DEAR MR. COX: In our recent conversation you requested that we determine,
if possible, the relative position of The Union Trust Company and J. P. Morgan
& Company toward the Van Sweringen enterprises. We hand you herewith a
notebook containing the statements submitted by Mr. Anzalone, Assistant Treasurer of the Vaness Company, an analysis of these statements insofar as possible,
and an analysis of the various Union Trust Company loans.
It is our opinion that J. P. Morgan & Company and any banks who may have
participated, benefitted at the expense of The Union Trust Company through the
transfer of marketable collateral in October 1930 in the following manner:
In October 1929 The Union Trust Company loaned Vaness Company $5,000,000
secured by collateral having a market value at that time of approximately
$7,295,750. Of this total market value, approximately $6,522,500 represented
local securities having a relatively limited market (See Schedule " B " under
"Union Trust Interests" in note-book.) At about the same time The Vaness
Company borrowed substantial sums from J. P. Morgan & Company, the Midland
Bank of Cleveland, and through O. P. and M. J. Van Sweringen from the Chemical
National Bank of New York. Proceeds of these loans were paid to Paine Webber
& Company where the Van Sweringens had a margin account. In the spring of
1930 all of these loans, except the Union Trust loan and Misland loan, were paid
off. In October 1930, when the Morgan interests advanced $39,500,000 to the
Van Sweringens, collateral having a market value of $4,936,000 was taken from
the Union Trust $5,000,000 loan and deposited as collateral to the Morgan loans.
In exchange the Union Trust received other marketable collateral having a value
of only $538,700, and the common stock of a number of holding companies,
which had no market and were junior to such an amount of indebtedness as to
EXHIBIT U-2-39
make their value questionable. At the same time the obligation of the Vaness
Company was converted into one of O. P. and M. J. Van Sweringen, who had
already guaranteed $39,500,000 of notes payable to Morgan.
Inasmuch as J. P. Morgan & Company and various New York banks had had
financial dealings with the Van Sweringens over a considerable period of time,
and had secured substantial profits through the building up and financing of
* Thus not3 secured by 1400 shares of 1277 Euclid Realty Co stock which is also held as collateral to another
note for $250,000.00.
STOCK EXCHANGE PEACTICES
8877
various holding companies (such as Chesapeake Corporation, Alleghany Corporation anci Van Sweringen Corporation,) it seems that the obligation of these
New York interests to the Van Sweringen enterprises was certainly as great, if
not greater, than that of the Cleveland banks. While there may have been some
excuse for the New York interests taking a prior position to the Cleveland bank
loans, made for the development of the local real estate projects, there certainly
was no excuse for taking the marketable collateral from the Union Trust Company $5,000,000 loan. There is no information in our files to indicate why
The Union Trust Company permitted the New York interests to take this collateral from the $5,000,000 loan, to which they were not entitled, nor why the
Union Trust Company permitted the other banks referred to above to be paid
in the spring of 1930 without having its own loan paid.
We are not making any comment at this time on the $2,800,000 loan to O. P.
and M. J. Van Sweringen, inasmuch as we believe this loan should be approached
from a different angle. Details as to the origin and changes in this loan, however,
are included in the report. You will note in going through the report that we
have not covered the various railroad holding and operating companies controlled
by the Van Sweringen interests.
Very truly yours,
C. C. MERRIFIELD
(Signed),
Assistant Treasurer.
EXHIBIT
E-l
INTERVIEWS AND COMMITMENTS AFFECTING LOANS—OFFICIAL INSTRUCTIONS TO
CREDIT DEPARTMENT—COMMENTS ON FINANCIAL STATEMENTS—ESSENTIAL
CREDIT INFORMATION
For exclusive use of Credit Department
OCTOBER 28, 1930
O. P. & M. J. VAN SWERINGEN, VANESS COMPANY, METROPOLITAN UTILITIES
INC.:
It was agreed to accept participation of $2,800,000 in a loan of $9,000,000.00
to O. P. and M. J. Van Sweringen, to be secured by 60% of the entire issue of
common stock of the Vaness Company. The other participants in this loan are
The Cleveland Trust Company, The Guardian Trust Company and The Midland
Bank.
EXHIBIT U-2-40
It was agreed to loan O. P. and M. J. Van Sweringen $5,000,000 to be secured
by collateral—
9,000 shares Vaness Company preferred
1,400 shares Newton Steel Company common
4,000 shares Niagara & Hudson Power Corp.
33,000 shares Peerless Motor Car Corp. common
5,000 shares Standard Brands, Inc.
6,000 shares United Corporation common
3,000 shares Western Reserve Investing Corporation common
3,000 units Western Reserve Investing Corporation pfd. and common
17,999)4 shares Calumet Trust
16,250 shares Vaness Company common
10,296 shares Metropolitan Utilities, Inc.
and—
100 share Traction Stores common
100 shares Cleveland Traction Terminal common
1,465 shares Cleveland Interurban Railroad common
5,800 shares Cleveland and Youngstown Railroad common previously pledged
to secure loan of $3,100,000.00 of Metropolitan Utilities, Inc.
the above two loans being accepted in lieu of similar amounts now loaned to the
Vaness Company.
It was agreed to accept the personal guarantee of O. P. and M. J. Van Sweringen
in lieu of the present guarantee of the Vaness Company on participation of
$1,422,500.00 in a loan of $3,100,000 to Metropolitan Utilities, Inc.
FINANCE COMMITTEE
R. S. CRAWFORD,
Secretary.
RSC (initialed in pencil)
WMB
8878
STOCK EXCHANGE PRACTICES
EXHIBIT F
CLEVELAND, OHIO, May 10th, 1930.
The UNION TRUST COMPANY,
Cleveland, Ohio.
GENTLEMEN: Reference is made to The Vaness Company loan in the amount
of $9,000,000.00, in which we have a participation. The collateral under this
loan is now as follows:
100 shares of The Cleveland Terminals Building Company common stock
122,000 shares of The Van Sweringen Company common stock,
32,893 shares of The Terminal Properties Company first preferred stock,
33,187 shares of The Terminal Properties Company second preferred stock,
99,222 shares of The Terminal Properties Company common stock
We hereby agree to the substitution by The Vaness Company of 600,000 shares
of Van Sweringen Corporation common stock in place of the 100 shares of The
Cleveland Terminals Building Company common stock, and further agree
to your delivery to The Vaness Company of said 100 shares of The Cleveland
EXHIBIT II-2-41
Terminals Building Company common stock when they have delivered to you
the 600,000 shares of Van Sweringen Corporation common stock.
Very truly yours,
T H E GUARDIAN TRUST COMPANY.
By J. A. HOUSE
(Signed),
President.
Participation $2,500,000.00.
MIDLAND BANK,
pec
Bv E. E. BARKER (Signed),
Viice ~President.
Participation $1,200,000.00.
T H E CLEVELAND TRUST COMPANY
By HARRIS CREECH (Signed),
President.
Participation $3,300,000.00.
"5-10-30 approved by Mr. Nutt for Union Trust Co. W. J. O'N." (In
pencil)
EXHIBIT G
CLEVELAND, OHIO, May 10, 1930.
Received of The Union Trust Company Certificates for an aggregate of one
hundred (100) shares of the common stock of The Cleveland Terminals Building
Company, released as collateral from the $9,000,000.00 loan of the undersigned,
evidenced by its note to The Union Trust Company, dated November 1st, 1929,
upon substitution therefor of Certificates Nos. X4 and X5 for five hundred
thousand (500,000) and one hundred thousand (100,000) shares respectively of
the common stock of Van Sweringen Corporation, in the name of the Terminal
Building Company, with the consent to hypothecate and blank endorsements.
Said certificates of The Cleveland Terminals Building Company stock are accompanied by certificates of authority to pledge signed by the respective stockholders
and also received herewith, and said certificates are issued in the following names
and endorsed in blank-—
Certificate number
2
4
7
8
In name of
John P Murphy
D S Barrett, Jr
M J Van Sweringen
O P Van Sweringen
Number
of shares
2
2
2
2
Certificate number
9 Ralph H Sharpe
The Terminal Building Co.C L Bradlev
I?
THE VANESS COMPANY,
By J. J AXZALO^E (Signed),
"5-10-30 Rec'd the substitute collateral described above.
The Union Trust Co.
By W. J. O'Neill, V.P." fin ink)
Number
of shares
In name of
Ass't. Treas.
1
89
2
STOCK EXCHANGE PRACTICES
EXHIBIT
8879
TJ-4
SEPTEMBER 17, 1931.
Mr. O. P. VAN SWERINGEN
Terminal Tower Cleveland, Ohio.
MY DEAR MR. VAN SWERINGEN: In accordance with our telephone conversation, we have issued Certificate of Deposit for $350,000.00 payable to The Union
Trust Company, Trustee under agreement dated October 25th, 1923, among the
Clover Leaf Company, Walter L. Ross, and the Union Trust Company. The
certificate is payable March 15th, 1932, and is to draw interest from September
15th, 1931, at the rate of 2l/2% per annum.
Inasmuch as the Alleghany Corporation is interested in this matter, our
attorney thinks it would be proper for the Alleghany Corporation to write us a
letter approving the above deposit and, if this is agreeable to you, will you
kindly have such a letter written to us in due course.
Very truly yours,
—.
President.
?
WMB:EMS
Business extension has copy of this letter.
EXHIBIT U-5
December 16, 1930.
Mr. G. A. COULTON,
Vice Chairman of the Board
BANK
Re: O. P. & M. J. Van Sweringen $5,000,000 Collateral Loan
DEAR MR. COULTON: Following up my talk with you yesterday I checked up
the Collateral Loan Department files and find that there is no evidence in the
files of authority to O. P. and M. J. Van Sweringen to pledge stock of The Cleveland Interurban Railway Company, Cleveland Traction Terminals and Traction
Stores Company. Outside of the qualifying shares of Directors all of this stock
stands in the name of Metropolitan Utilities, Inc.
I talked to Mr. Murphy on the telephone last night and he said that the Van
Sweringens had borrowed the money on our $5,000,000 loan and others, to
enable the Vaness Company to pay off certain obligations. He mentioned specifically one obligation of $4,000,000. He also said that he thougnt this action
warranted the Vaness Company in allowing the Van Sweringen's to pledge the
stock in question for the $5,000,000 loan. Even this does not show what warrant
there is for using the assets of Metropolitan Utilities, Inc., which is a subsidiary
of The Vaness Company.
Mr. Murphy said that the transactions showing the authority of Metropolitan
Utilities to permit the pledge of its assets bj^ the Van Sweringens had not been
spelled out on the corporate records but as soon as he returns from New York
he will go into the matter and try to furnish us writh the desired evidence.
It seems to me that this ought to be followed closely and that we ought to be
sure that the corporate records are in proper shape.
Very truly yours,
Vice President.
WJO'N-c
EXHIBIT
U-6
FEBRUARY 29,
1928.
The VAN SWERINGEN CO ,
Marshall Building, Cleveland, Ohio
GENTLEMEN: We have today received from Mr. K. V. Painter and are enclosing
herewith two copies of a certain agreement that Mr. Painter advises us he entered
into with your company on October 21, 1926, for the sale of certain premises. The
agreement, we note, is in memorandum form and we are forwarding the enclosed
copy to you at Mr. Painter's suggestion
Yours very truly,
L. C. GILGER, Asst. Secretary.
LCG:HK
175541—34—pr 2010
8880
STOCK EXCHANGE PRACTICES
EXHIBIT
U-7
OCTOBER 27,
The
1928.
VAN SWERINGEN COMPANY,
Terminal Tower, Cleveland, Ohio.
Attention—Mr. T. W. Boutall
GENTLEMEN: Enclosed we are handing to you the old note of The Cleveland
Interurban Railroad Company payable on demand, dated July 30, 1925, for
$1,776,303.00, payable to the order of The Van Sweringen Company and endorsed
in blank.
Kindly acknowledge receipt of this note on the accompanying copy of this
letter.
Yours very truly,
L. C. GILGER, Assistant Secretary.
LCG:HW
Enc.
EXHIBIT
U-ll
COPY OF DATA SUBMITTED TO CLEVELAND NEWSPAPERS BY MR. FALKENSTEIN
ON SUNDAY, SEPT. 10,
1933
THE VAN SWERINGEN
SWITCH IN COLLATERAL
An incomplete statement was made by Edward J. Falkenstein, accountantexaminer for the Special Banking Committee of the State Senate, at its hearing
Friday respecting the switch in collateral behind the Van Sweringen loans a t The
Union Trust Company. Because of the unusual interest which Cleveland has
in the activities of the companies involved the Senate Committee wishes to make
a complete statement, and to clear up any misconceptions respecting this important testimony.
The history of these loans and the collateral switches is rather involved, b u t
will be traced as thoroughly as is necessary to gain a clear picture. Market
values ar accepted from notation made in the files of the Union Trust Co.
Any letters quoted were found in the same place.
On October 29, 1929 The Union Trust Co. loaned The Vaness Company
$53000,000.00, secured by
10_29_29 m a r k e t v a l u e
32,000 shs. Cleveland Railway Co
@ 100
$3, 200, 000
6,500 " Midland Bank
465
3,022,50
30,000 " Alleghaney Corp., Com
20%
618,750
6,000 " United Corporation Com
25%
154, 500
3,000 units Western Reserve Inv. Corp. 6%Pfd_ * 100
300, 000
$7, 295, 750
On June 20, 1930 an additional 1760 shares of Midland Bank (market @340
—total $598,400) were substituted for the 30,000 shares of Alleghaney Corporation (market was 19%—total market value $585,000)
$5,972,400
On October 14, 1930 an added 50,000 shares of Van Sweringen Corporation
common (no market) were pledged as additional collateral to the same loan
$5, 089, 810
On October 30, 1930 the loan was paid with a new loan of $5,000,000 to O.P.
and M. J. Van Sweringen secured by collateral having a market vale of $672,200.:
4,000 shs. Niagara Hudson Power Corp.
10-30-30 market value
Com
@12%
50,000
5,000 "
Standard Brands Inc. Com
16%
81,250
3,000 units Western Reserve Inv. Corp. Corn.
85
255, 000
1.400 shs. Newton Steel Co., Com
20%
28,700
33,000 "
Peerless Motor Car Corp. Com___
3%
123, 750
6,000 "
United Corp. Com
22%
133, 500
9,000 "
Vaness Company Pfd
no market
16,500 "
"
"
Com
"
3,000 "
Western Reserve Inv. Corp
"
17,999% "
Calumet Trust Ctfs
"
10,296 "
Metropolitan Utilities Inc. Com___ "
"
$672, 200
* No market.
FRASER
Digitized for
Indicated value $100.
STOCK EXCHANGE PEACTICES
8881
and equity in the following, subject to a previous pledge under Metropolitan
Utilities Inc. $3,100,000 loan:
100 shs. Traction Stores Co. Com
no market
5,800 " Cleveland & Youngstown R.R. Com. "
"
100 " Cleveland Traction & Terminal com. "
1,465 " Cleveland Interurban R.R. Co.Com_ "
EXHIBIT U - l l a
At this time there was releaseed from collateral held behind this loan the following securities:
market value 10-30-30
32,000 shs. Cleveland Railway Co
8,260 " Midland Bank
@ 77
300
$2, 464, 000
2,478,000
$4, 942, 000
50,000 " Van Sweringen Corp. Com
no market
Thus the original obligation of $5,000,000 of the Vaness Co. was paid off by
an obligation of the same amount by O.P. and M. J. Van Sweringen. The collateral released had a market value of approximately $4,936,000 as of Oct. 30,
1930 and the new collateral having a value as above noted of $672,200.
Another set of loans had been made by the Union at the same time. The
first of these was $9,000,000 loan participated in by four Cleveland banks as of
Nov. 1, 1929. The participations were as follows:
Union Trust Co
$2, 000, 000
Guardian Trust Co
2, 500, 000
Midland Bank
1, 200, 000
Cleveland Trust Co
3,300,000
$9, 000, 000
The following collateral was held in trust for the participants by The Union
Trust Co.:
32,893 shs. Terminal Properties, 1st Pfd
no market
33,187 " Terminal Propertes, 2nd Pfd
"
"
99,222 " Terminal Properties, Common
"
"
122,000 " Van Sweringen Company Com
"
"
100 " Cleveland terminal Building Co. Com_ "
On the 13th of May, 1930 The Union Trust's participation was increased by
$800,000, and The Cleveland Trust's participation decreased by the same amount.
A release of 100 shares of The Cleveland Terminal Building Co. Com., was agreed
to and was replaced by 600,000 shares of Van Sweringen Corporation common.
On October 30, 1930 the first participation note for $9,000,000 made by the
Vaness Co. was paid off and collateral released. The payment was made through
a loan to O. P. and M. J. Van Sweringen for $9,000,000, and the collateral accepted
was: 97,500 shares of Vaness Co. Com. This represented 60% of the issue of
common stock of this corporation. The participation remained the same as of
May 13, 1930.
In the two transactions the banks of Cleveland had suffered in realizeable
values as to collateral. The substitution on the $5,000,000 loan had resulted in
a loss to The Union Trust of collateral having market value approaching $4,270,EXHIBIT U - l l b
000. The substitution on the $9,000,000 participation resulted in a loss to the
four participants of collateral having no market value, but holding a senior
position to the collateral received as far as earnings was concerned.
Correspondence and notations in the Union exist to prove that the collateral
having immediate market value was sent to New York to J. P. Morgan & Co.
where it was deposited against the $39,000.00 loans made by that institution to
the Van Sweringens.
Following is an excerpt from a communication made within the Union to one
of its officials:
" I n October 1930, when the Morgan interests advanced $39,500,000 to the
Van Sweringens, collateral having a market value of $4,936,000 was taken from
the Union Trust $5,000,000 loan and deposited as collateral to the Morgan loans.
8882
STOCK EXCHANGE PRACTICES
In exchange the Union Trust received other marketable collateral having a value
of only $672,200, and the common stock of a number of holding companies,
which had no market and were junior to such an amount of indebtedness as to
make their value questionable. At the same time the obligation of the Vaness
Company was converted into one of O. P. and M. J. Van Sweringen, who had
already guaranteed $39,500,000 of notes payable to Morgan.
Inasmuch as J. P. Morgan & Co. and various New York banks had had financial dealings with the Van Sweringens over a considerable period of time, and
had secured substantial profits through the building up and financing of various
holding companies (such as Chesapeake Corporation, Alleghaney Corp. and Van
Sweringen Corp) it seems that the obligation of these New York interests to the
Van Sweringen enterprises was certainly as great if not greater than that of the
Cleveland Banks. While there may have been some excuse for the New York
interests taking a prior position to the Cleveland bank loans made for the development of the local real estate projects, there certainly was no excuse for taking
the marketable collateral from The Union Trust Company $5,000,000 loan.
There is no information in our files to indicate why The Union Trust Company
permitted the New York interests to take this collateral from the $5,000,000
loan, to which they were not entitled, nor why The Union Trust Company permitted the other banks referred to above to be paid in the spring of 1930 without
having its own loan paid."
EXHIBIT
U-12
In the testimony of Edward J. Falkenstein before the Senate Committee on
Banking reference was made to a so-called "switch" in collateral permitted by
the officers of The Union Trust Company in respect to certain Van Sweringen
loans. This was further elaborated by statements given by Mr. Falkenstein to
the newspapers and by them published shortly after he testified before the Committee. In his memorandum in regard to this matter filed with the Committee
it is stated that "the Committee wishes to clear up any misunderstanding
regarding this important testimony."
The following statement is submitted with the desire of giving the Committee
more complete information regarding this subject, and to present more accurately the information which was before the officers of the bank, and which
entered into their decision in approving this transaction.
On October 30, 1930, The Vaness Company had a demand loan of $5,000,000
at the bank, secured by the following collateral:
32,000 shares Cleveland Railway Company
8,260 shares Midland Bank
6,000 shares United Corporation Common
3,000 units Western Reserve Investment Corporation, Preferred and
common
50,000 shares Van Sweringen Corporation, Common
The Vaness Company at this time was a company owning chiefly the interests
of the Van Sweringens in their various real estate and railroad undertakings.
Mr. O. P. Van Sweringen as President of The Vaness Company came to us and
advised that the Company was faced with certain commitments which must be
financed in order to preserve these interests intact. He advised further that
arrangements had been made with New York bankers for the raising of $39,500,000 to meet these necessities by a five-year funded loan with interest at 6%.
It was then that Mr. O. P. Van Sweringen proposed that he and his brother,
Mr. M. J. Van Sweringen, become personally responsible for our Vaness Company loans, giving their own notes in payment and pledging their own collateral
together with certain of the collateral then securing these loans. It should be
remarked that Messrs. O. P. and M. J. Van Sweringen did not owe these obligations and were not even endorsers of them.
It was apparent to the officers of the bank that the stock of the Cleveland
Railway and of the Midland Bank, being salable only on the local stock exchange
would not under the then conditions realize the quoted prices, and that the proposed arrangement with the New York banks which contemplated the use of
certain of the collateral then pledged under The Vaness Company loan and the
payment of this loan by the personal note of O. P. and Mr. M. J. Van Sweringen
had the advantage of the personal responsibility of O. P. and M. J. Van Sweringen, which we considered very substantial as well as the additional collateral
offered to back up this note, which included all of that then securing The Vaness
Company loan except the 32,000 shares of Cleveland Railway stock, the 8,260
shares of Midland Bank stock and 50,000 shares of Van Sweringen Corporation
stock, the latter being an unlisted security and entirely held by The Vaness
STOCK EXCHANGE PRACTICES
8883
Company. Accordingly, The Vaness Company note was discharged by the
new loan to O. P. and M. J. Van Sweringen for $5,000,000 secured by new collateral as follows:
4,000 shares Niagara and Hudson Power Corporation Common
5,000 shares Standard Brands, Inc., Common
1,400 shares Newton Steel Company, Common
33,000 shares Peerless Motor Car Corporation, Common
9,000 shares Vaness Company, Preferred
16,250 shares Vaness Company, Common
3,000 units Western Reserve Investment Corporation, Common
17,999 y2 Calumet Land Trust Certificates
10,296 shares Metropolitan Utilities, Inc., Common
and also equities in certain securities previously pledged, as set up in
EXHIBIT U-12a
Mr. Falkenstein's statement. Of the collateral for the old loan, the following
was included in the security for the new loan:
3,000 units Western Reserve Investment Corporation Preferred and
Common
6,000 shares United Corporation, Common.
Of the old collateral, giving it the market value ascribed to it in the Falkenstein
report, the following were withdrawn:
32,000 shares Cleveland Railway Company, at 77
$2, 464, 000
8,260 shares Midland Bank, at 300
2, 478, 000
50,000 shares Van Sweringen Corporation Common, No market value
Total
$4,942,000
The Vaness Company is a holding company, and the value of its stock is not
difficult to estimate. A complete financial statement of The Vaness Company
as of September 30, 1930, was before us at the time of the decision to make the
new loan. Based upon this statement, adjusted to October 30, 1930, the net
worth of its shares pledged as collateral to this loan, exclusive of the value of
Metropolitan Utilities, Inc., stock, also pledged to this loan, would have been as
follows:
9,000 shares Vaness Company, Preferred
$900, 000
16,250 shares Vaness Company, Common
6, 372, 000
Total
$7,272,000
This does not take into account, as stated, the value of Metropolitan Utilities,
Inc., of which The Vaness Company owned all the stock of 10,296 shares, all of
which was pledged on this loan. At that date the total book value of the properties owned by Metropolitan Utilities, Inc , through its ownership of all the
stock in its subsidiaries, was $6,784,821. In this value the $10.00 per share
paid to owners of Cleveland Railway stock is not included, although the cost
thereof was $3,105,580, and the rights acquired through the payment of this
$10.00 are valuable.
Although the stock of The Vaness Company pledged on this loan was not
listed, it was considered to have substantial value at the time in excess of
$7,272,000 above stated. The Calumet Land Trust Certificates, representing
ownership in valuable Chicago real estate, also had substantial intrinsic value,
although no market quotations were available because it was not listed on any
exchange.
The listed stocks taken in as new collateral on this loan, not including the
Western Reserve Investment Corporation units and the United Corporation
stock, which were also collateral for the old loan, had a then market value of
$283,700, according to the Falkenstein figures. There was thus a demonstrable
value of over $7,500,000 of collateral against this loan, ignoring entirely some
very substantial values behind some of the unlisted collateral. From the standpoint of collateral alone, as is evident from the information just given, this socalled "switch" of collateral not only did not destroy the security, but instead
bettered it.
As has been stated, the foregoing resume of information then existing and
before the officers of the bank shows what factors entered into the decision of
the officers at the time. The action taken was not the result of individual decision or action of one or two officers, but was the decision of the Finance Com-
8884
STOCK EXCHANGE PRACTICES
mittee of the bank held in due course with all the foregoing information before
them. It was the belief of this committee that the intrinsic value of the collateral
received in this exchange was of a value equal to if not greater than that of the
securities surrendered.
EXHIBIT
U-12b
It is also proper to state that the Van Sweringen interests had for several
years been among the bank's largest depositors and most profitable customers.
It was in line with the general banking policy of the committee not only to
continue but to anticipate profitable business and to extend credit to old customers whose operations, capabilities and resources had long been familiar to the
officers of the company.
In considering a comparison of the collateral under the new loan to that under
the old loan we have taken into account the 50,000 shares of Van Sweringen
Corporation common which were under the old loan and not under the new. As
this was the property of The Vaness Company, it has been considered in arriving
at the liquidating value of the Vaness stock pledged under the new loan, but for
the purposes of comparison only it must be apparent that the collateral accepted
for the new loan was justifiably worth at the time at least $1,000,000 more than
the collateral surrendered, and that in addition thereto there was the personal
responsibility of O. P. and M. J. Van Sweringen, who had a very substantial net
worth.
Of course the officers of the bank acted in the light of information then existing
and of conditions as they then were, but if we consider the matter from the standpoint of present conditions of the collateral which was removed, the 32,000 shares
of Cleveland Railway common have a present market value of about $1,156,000,
and the Midland Bank stock has no present market value. The listed collateral
which did not appear under the new loan therefore, has suffered a market
depreciation of $3,686,000.
Of the new collateral, the listed stocks then worth $283,700, were, as of
September 8, 1933, worth $306,659, and the pledged stock of The Vaness Company as of July 15, 1933, had a net worth on the same basis as above mentioned,
which does not include the value of Metropolitan Utilities, Inc., of $4,820,000.
At that date the actual investment in the properties represented by Metropolitan
Utilities, Inc., was $6,906,000, the increase of over $100,000 in this investment
having been by way of improvements in the physical properties of the companies
wholly owned by Metropolitan Utilities, Inc. It therefore must also be equally
apparent that the collateral which was pledged under the new loan is now worth
more than the collateral surrendered by a margin of nearly $4,000,000, although
admittedly not readily realizable under present economic conditions.
(Signed W. M. BALDWIN)
EXHIBIT
U-13
THE UNION TRUST COMPANY,
Cleveland, Ohio, February 7, 1929.
(Officers)
Memorandum to—
Mr. R. S. CRAWFORD
Mr. RALPH WILLIAMS
Referring to letter written by Mr. Nutt yesterday to Mr. M. J. Van Sweringen relative to Mr. D. S. Barrett, Jr. acting as agent for The Union Trust Co. in
securing from us the stocks now held as collateral to the loans of The Vaness
Company and General Securities Corporation, delivering them to J. P. Morgan
& Co. and receiving for us an amount in cash sufficient to liquidate the loans.
Mr. Nutt talked to Mr. M. J. Van Sweringen after Mr. M. J. Van Sweringen
had received the letter referred to above and Mr. Van Sweringen said that it was
not their desire to liquidate these loans entirely, but they would like to continue
part of them and deposit with us as collateral the common stock of the Alleghany
Corporation. Mr. Nutt told Mr. Van Sweringen that The Union Trust Company
wants to do just what they would like in this matter and would accept the Alleghany common stock as collateral to such part of these loans that is not liquidated.
Mr. Nutt telephoned to me the above last evening, and requested me to advise
you.
STANLEY ZEIT, Secretary to Mr. Nutt.
RSM
(This stationery is for inter-department and inter-office use only)
STOCK EXCHANGE PRACTICES
8885
EXHIBIT U-14
THE UNION TRUST COMPANY,
Cleveland, Ohio, February 5th, 1929.
Memorandum (officers):
RE ORGANIZATION ALLEGHANY CORPORATION
Mr. M. J. Van Sweringen requests that we appoint Mr. D. S. Barrett, Jr. as
agent for the Union Trust Company, to take to New York and deliver to J. P.
Morgan & Company all the stock of the New York, Chicago & St. Louis Railroad
Company and the Chesapeake Corporation which we now hold as collateral for
loans of The Vaness Company and the General Securities Corporation. Against
this delivery Mr. Barrett will receive for our account cash sufficient to liquidate
the loans for which this collateral is held.
I told Mr. Van Sweringen this would be satisfactory to us, and we would be
glad to have Mr. Barrett act as our agent. This will probably be done some time
next week.
J. R. NUTT, President.
RSM
(This stationery is for inter-department and inter-office use only)
EXHIBIT U-15
Apr. 12 5 12 p.m. 1933
TERMINAL TOWER,
Cleveland, July 20, 1932.
Mr. R. J. KRATJS,
Chairman The Union Trust Company,
Cleveland, Ohio.
DEAR MR. KRATJS: Herewith is the statement of O. P. and M. J. Van Swerin-
gen as of March 31, 1932. May I ask that this be put in your confidential file
rather than being available for general use? The three copies that I am providing to you, Mr. Greene and Mr. Robinson are the only copies.
If there is any explanation you want about any of it, do not hesitate to let us
know.
Very truly yours,
O. P. VAN SWERINGEN.
EXHIBIT U-15a
The resultant valuation of The Vaness Company common stock shown in the
appended statement is of only the assets owned as of March 31, 1932.
The appended statement does not include the 16,250 shares of The Vaness Company common stock pledged to the loan of $1,200,000.00 shown among the liabilities therein which had a value of:
$2,723,468.00 at December 31, 1931
5,371,140.00 at October 30, 1930
15,138,885.00 at September 30, 1929
EXHIBIT U-15b
APR
12 5 13 PM 1933
O. P. & M. J. VAN SWERINGEN
Performance bond on State Bank & Trust Company property at Broadway
and Ontario dated January 24, 1924; John Connell principal, O. P. & M. J. Van
Sweringen, surety, State Banking & Trust Company, obligee.
AGREEMENTS
Susan Hoehn Agreement: The right to put to Messrs. O. P. & M. J. Van Sweringen in whole or in part $25,000 par value of The Vaness Company 7% preferred stock at par plus interest adjustment.
Albright Trust: Parties to an agreement between John J. Albright, party of the
first part; Edmund Hayes, party of the second part; William H. Gratwick, party
of the third part; and O. P. & M. J. Van Sweringen, parties of the fourth part.
8886
STOCK EXCHANGE PRACTICES
Agreement dated January 15, 1923, made on behalf of The Vaness Company as
undisclosed principal to create a trust in certain securities then consisting of
Terminal Properties Company stocks and certain bonds, which bonds have been
paid. This trust created certain rights in Messrs. Albright and Hayes, which
rights are subject to prior rights in Messrs. O. P. & M. J. Van Sweringen (The
Vaness Company), and the interest of Mr. Hayes has been acquired by The
Vaness Company. The trust is probably not sufficient to pay out the obligations owing to Messrs. O. P. & M. J. Van Sweringen (The Vaness Company),
and consequently the value of the rights of Mr. Albright is probably nothing.
EXHIBIT U - 1 5 C
CONTINGENT LIABILITIES
Guarantee of The Vaness Company $18,250,000.00 note to J. P. Morgan &
Co., dated October 31, 1930, due May 1, 1935.
Guarantee of The Cleveland Terminals Building Company $23,350,000.00
note to J. P. Morgan & Co., dated October 31, 1930, due May 1, 1935.
LEASES AND BONDS
Parties to an agreement between The Union Trust Company and O. P. &
M. J. Van Sweringen dated June 1, 1924, covering purchase of fee to First National parcel, known as 241 Euclid Building, and all of The Union Trust Company's right, title and interest in and to leaseholds on the King, Halle and Price
parcels. Original amount of agreement, $1,400,000; present principal balance
$1,000,000.
Parties to a lease between Siddall, Quail & Henderson, Trustees for Lena and
Helen Hobson, lessor, and O. P. & M. J. Van Sweringen, lessee, dated July 1,
1923 for 99 years, renewable, covering lease of premises at 242-248 Superior
Avenue, known as Schlather parcel. Leasehold rent $18,000 per year. Fee
purchase option $300,000 to July 1, 1933.
Parties to a lease between Sam Keller, lessor, and O. P. & M. J. Van Sweringen,
lessee, dated May 1, 1924, for 99 years, renewable, covering lease of premises at
238 Superior Avenue, known as Keller parcel. Leasehold rent $15,000 per annum. Fee option purchase price $280,000 to May 1, 1939. If option is not
exercised by May 1, 1940, lessor has right to terminate lease or may declare lease
to continue in full force and demand $25,000 cash payment as additional rent.
Rental bond in effect for $15,000; surety, Maryland Casualty Company; principal, O. P. & M. J. Van Sweringen; obligee, Sam Keller.
Parties to a lease between Williamson Company, lessor, and O. P. & M. J.
Van Sweringen, lessee, dated April 1, 1924, for 90 years and 9 months, renewable,
covering lease of premises at 225-239 Euclid Avenue, known as the Williamson
parcel. Leasehold rent $65,000 to May 1, 1934, and $75,000 from May 1, 1934,
on. Rental bond in effect for $250,000; surety, Maryland Casualty Company;
principal, O. P. & M. J. Van Sweringen; obligee, The Williamson Company.
Surety with U. S. Fidelity & Guaranty Company, and Maryland Casualty Co.
on surety bond for $1,000,000 in favor of The Cleveland Union Terminals Company, covering rental of the concession area and traction facilities. Principals—•
The Vaness Company and The Cleveland Traction Terminals Company.
8887
STOCK EXCHANGE PRACTICES
EXHIBIT
U-15d
APR 12, 5 13 PM 1933
O. P. & M. J. Van Sweringen statement March 31, 1932
Book Cost
Value 12-31-31, Value 10-30-30, Value 9-30-29,
3-31-32, $112.28 $167.59 per sh. $330.53 per sh. $931.62 per sh.
(a)
per share
(a)
(a)
ASSETS
The Vaness Company Common stock*i
113,750 shares out of a total of 162,500
shares
_
$12,771,499.87 $19,063,362.50 $37,597,787. 50 $105,971,775.00
Real Estate:
Shaker Lander Participation
340, 275.45
340, 275. 45
340, 275 45
340, 275.45
Other Heal Estate.—
350,400.53
350,400. 53
350, 400. 53
350, 400. 53
Listed Securities (at cost)
20,471.40
20,471. 40
20, 471.40
20,471.40
Accounts Receivable (The Vaness Company).
158,666.43
158,666.43
158,666.43
158, 666. 43
2,090.49
Miscellaneous Assets
_
2,090.49
2, 090. 49
2, 090. 49
17,405.75
17,405. 75
17,405.75
17,405. 75
Cash
Total assets
$13,660,809.92 $19,952, 672. 55 $38,487,097.55 $106,861,085.05
LIABILITIES
$25, 200.00
$25, 200. 00
$25,200.00
$25,200.00
14,686,000.00
423, 638. 04
643,444.33
9, 254. 25
14,686,000.00
423, 638. 04
643,444.33
9, 254. 25
14,686,000.00
423,638.04
643,444. 33
9, 254. 25
14,686,000.00
423, 638.04
643,444.33
9, 254. 25
_ $15, 787, 536. 62 $15,787,536. 62 $15, 787,536. 62
$2,126, 726. 70 $4,165,135.93 $22,699, 560.93
$15,787,536.62
$91,073,548.43
Mortgage Payable (assumed)
Notes Payable ($14,300,000 assumed
from The Vaness Co.)
Accounts payable
Accrued Interest Payable.._
Accrued Taxes Payable
Total liabilities..
Net worth
$13, 660, 809.92 $19,952, 672. 55 $38,487,097.55 $106,861,085.05
Contingent liabilities shown on attached statement.
Held as Vaness Company of Maryland for tax purposes (11,375 shares).
Note (a): The foregoing values for The Vaness Company common stock are based on book values less
adjustments for the following:
Market value of listed securities.
The Long Lake Company appraisal of Berwald-Greenlund.
The Van Sweringen Company appraisal of Berwald-Greenlund,
The Shaker Company vacant land appraisal of Berwald-Greenlund; Building and building sites at cost
Shaker Lander equity based on appraisal of Berwald-Greenlund.
The Terminal Building Company appraisal of Berwald-Greenlund.
Metropolitan Utilities, Inc. payments on Cleveland Railway Company stock deposits deducted.
The Cleveland Terminals Building Company Huron to Eagle land at appraisal of Berwald-Greenlund;
Building and building sites at book cost; The Higbee Company stock at book cost.
June 6th, 1932.
1
EXHIBIT
U-16
THE VANESS COMPANY, O. P. & M. J. VAN SWERINGEN
On or about Thursday, December 28, 1932, Mr. C. W. Carlson submitted to me
a letter from The Vaness Company signed by J. J. Anzalone, Asst. Treas., dated
December 24, 1932, making claim for the dividend payable January 1, 1933, on
certain shares of stock of The Cleveland Railway Company issued part in the
name of The Union Trust Company, and part in the name of employees of The
Union Trust Company as nominees. (A copy of this letter is attached)
Mr. Carlson explained that this stock had been issued in these names since 1929,
and that we had paid the dividends when received upon claims made by the Vans
similar to the letter referred to above without queston. The method of doing
this was to clear the dividend checks and issue an official check for the total
amount. A dividend record kept by Mr. Carlson indicated that during the period
shares of the stock had been issued in his name the dividends had been paid at
various times to O. P. & M. J. Van Sweringen, Paine, Webber & Company,
Metropolitan Utilities, Inc. and The Vaness Company, as instructed in the letter
making claim.
In view of the fact that interest on loans of The Vaness Company to The
Union Trust Company is now in default, the question in Mr. Carlson's mind, and
8888
STOCK EXCHANGE PRACTICES
in mine, too, is have we the right to use the present dividend to apply on interest
due us and now in default. I discussed the matter with Mr. J. R. Kraus, who
was of the opinion that this Cleveland Railway stock was pledged to J. P. Morgan
& Company, and for that reason we could not hold the dividend for ourselves.
This being the case, we were then confronted with the question of our legal right to
pay the proceeds to The Vaness Company when we have knowledge that J. P.
Morgan & Company is pledgee. At Mr. Kraus' suggestion I consulted with
Mr. W. J. O'Neill regarding the matter and it was his opinion that we should have
the consent of J. P. Morgan & Company before making payment to Vaness, and
I so advised Mr. Anzalone. Later Mr. J. P. Murphy called me by telephone and
stated that he had talked by telephone to counsel for J. P. Morgan & Company,
who had suggested that he ask us again to turn the dividend over to Vaness as
there was considerable red tape about getting a letter from J. P. Morgan & Company. (I later learned that it was necessary for J. P. Morgan & Company to
take the matter up with other banks interested as participants in
EXHIBIT
U-16a
loans, or otherwise, before a letter of instructions could be written) Mr. Murphy
also stated that J. P. Morgan & Company had monthly statements showing
receipts and disbursements of Vaness which gave full knowledge to J. P. Morgan &
Company that these dividends were being paid to and being used by Vaness, and
that J. P. Morgan & Company were entirely agreeable to have Vaness use the
money. At the close of this talk I advised Mr. Murphy that we were acting on
advice of counsel and would require consent of J. P. Morgan & Company before
releasing the dividend.
Later Mr. Nutt talked with Mr. Kraus and me in relation to this matter. He
said that Mr. M. J. Van Sweringen had spoken to him about it. He called our
attention to the fact that we had been paying without question for three years
and that we did not take similar precautions in other matters of a similar nature,
and that in his opinion the Vans would consider this an unfriendly act if we persisted in our decision. He also stated that he had been importuning the Vans
to keep the balances of their various accounts with The Union Trust Company
at a high point to help our deposit position. Mr. Kraus then requested me to
take the whole matter up with Mr. F. H. Ginn.
On Saturday morning, December 31, 1932, Mr. A. V. Cannon was in the office
and Mr. Kraus put the matter up to him informally. His judgment was that we
should have consent of J. P. Morgan & Company before paying. I was unable
to see Mr. Ginn until Saturday, (12/31/32) about one thirty p. m. Mr. Ginn,
after hearing my account of the matter, asked for the original instructions under
the terms of which this stock was transferred into the names of The Union Trust
Company and its employees. I was unable to produce these instructions at the
moment so the matter had to go over until Tuesday, January 3, 1933. On Saturday, I asked Mr. Anzalone to furnish copies of the instructions authorizing these
shares to be transferred into the names of the present nominees and we received
these on Tuesday, January 3, 1933, and submitted them to Mr. Ginn who asked
me to state the facts to Mr. Jack Reavis, which I did. Later Mr. Reavis told me
that in their opinion we should have the consent of J. P. Morgan & Company
before making payments to Vaness for two reasons:
EXHIBIT U-16b.
1—That under Ohio law a pledgee is entitled to dividends on stock pledged and
if such dividends come into the hands of a third party, such third party (if he has
knowledge that the stock is pledged) is obliged to hold them for the pledgee.
2—To obviate future criticism which might be brought against us for not using
these dividends against interest due us and now in default. (The consent of
J. P. Morgan & Company would indicate that we had no right to use the money
for ourselves) Mr. Reavis also called attention to the fact that we received no fee
for 'having this stock in our name and in the names of certain of our employees
and consequently there is no reason why we should take any chance in the matter.
After getting this opinion from Mr. Reavis I advised Mr. Anzalone again that
on advice of counsel we require consent of J. P. Morgan & Company before
making payment.
STOCK EXCHANGE PEACTICES
EXHIBIT
8889
U-17
INTERVIEWS AND COMMITMENTS AFFECTING LOANS OFFICIAL INSTRUCTIONS TO
CREDIT DEPARTMENT COMMENTS ON FINANCIAL STATEMENTS
ESSENTIAL
CREDIT INFORMATION
For exclusive use of Credit Department.
VANESS COMPANY
November 27, 1933.
Mr. Baldwin, one of the Department of Justice investigators, asked the writer
about dividends paid on Vaness Company stock. Mr. Barrett supplied the following information:
On July 1, 1931, the last dividend was paid on the common and preferred stocks
of the Vaness Company. The common stock was no par but had been on a basis
of $6 per share per annum for several years. There are 162,500 shares outstanding
and the bank has a record of the holders of these shares.
The preferred stock is on a 7% basis and was paying 7% for some years
There are 75 to 100 preferred stockholders, most of whom are friends of the Van
Sweringens.
GRH:M
G. R. JERZOG.
EXHIBIT
U-18
O. L. COX, 4-8-33
INTERVIEWS AND COMMITMENTS AFFECTING LOANS OFFICAIL INSTRUCTIONS TO
CREDIT DEPARTMENT COMMENTS ON FINANCIAL STATEMENTS
ESSENTIAL
CREDIT INFORMATION
For exclusive use of Credit Department.
APR 21 5 56 PM 1933
April 17, 1933.
I N R E O. P. & M. J. VAN SWERINGEN, THE VAN SWERINGEN CO., THE DAISY
HILL CO., CLEVELAND INTERURBAN CO., METROPOLITAN UTILITIES, TERMINAL
BUILDING CO. AND VANESS COMPANY.
At my request, O. P. Van Sweringen called. He was advised of the necessity
for the arrangement of a constructive program looking toward liquidation and
better security. The desirability of early payment of interest was stressed particularly that on the personal obligations of the two Van Sweringens.
Understanding:
1. That tomorrow he would present what he believed to be a digestible outline
of the borrowers' position.
2. On the following day he would call personally to discuss the matter.
3. That he concurred in principle as to the necessity for a program on the entire
situation, but was not clear that this was possible in view of the distressed and
rapidly changing conditions affecting the railroads, properties, and securities.
OLC.S
OSCAR L. COX, Conservator,
H. F. Burmester: Note.
L
8890
STOCK EXCHANGE PRACTICES
EXHIBIT
U-19
INTERVIEWS AND COMMITMENTS AFFECTING LOANS OFFICIAL INSTRUCTIONS TO
CREDIT DEPARTMENT COMMENTS ON FINANCIAL STATEMENTS ESSENTIAL
CREDIT INFORMATION
For exclusive use of Credit Department.
SEPTEMBER 1, 1933.
VAN ESS COMPANY
O. P. & M. J. VAN SWERINGEN
VAN SWERINGEN COMPANY
ALLEGHANY CORPORATION
DAISY HILL COMPANY
CHESAPEAKE & OHIO RAILROAD
MISSOURI PACIFIC RAILROAD
PERE MARQUETTE RAILROAD
NICKEL PLATE RAILROAD
ERIE RAILROAD
Mr. Darwin S. Barrett, Jr., left the attached memorandum pertaining to a
special account of the Van Sweringen Company with Mr. 0. L. Cox, Special
Deputy Superintendent of Banks. The matter referred to is being handled by
correspondence.
Subsequent to Mr. Barrett's visit, the writer stopped in the office of the Van
Sweringen Company on the 36th Floor of the Terminal Tower Building to talk
to Mr. Barrett respecting the necessity for obtaining affidavits from the individuals concerned. At that time Mr. Barrett gave the writer the following information
as indicated.
Mr. Barrett agreed with the writer in the statement that the ultimate outcome
of the whole Van Sweringen picture depends 75% to 90% upon the railroads,
rather than upon the Van Sweringens' real estate or local operations.
The two chief factors with which O. P. and M. J. Van Sweringen have to contend at the present time in connection with their railroad operations are the
Alleghany Corporation bonds due in 1950 and the Missouri Pacific reorganization. Concerning the former Mr. Barrett said that with the increased dividends
payable by the Chesapeake & Ohio to the Chesapeake Corporation and the possibility of an increase in the disbursements of the Chesapeake Corporation, the
total income in all three issues of the Alleghany Corporation would be sufficient
to take care of necessary charges, provided that the specific income were not held
for specific issues. Under these circumstances he feels that the Messrs. Van
Sweringen will not have much difficulty in borrowing in New York City to pay
the interest on the Alleghany Corporation bonds due in 19£0. Mr. Barrett feels
that the time will be reached in the comparatively near future when the collateral
securing the 44 and 49 issues will be adjudged at 50% of the bonds outstanding
and as a result the income impounded will be released. This would enable the
Alleghany Corporation to pay the funds borrowed with which to meet the interest
on the 50's. Mr. Barrett feels that the longer the reorganization of the Missouri
Pacific can be put off the better will be the position of the equities and it is primarily the equities in which the Messrs. Van Sweringen are interested. It is not
to the advantage of O. P. and M. J. Van Sweringen to endeavor to rush through a
reorganization at this time.
The Chesapeake & Ohio Railroad, as it is known, is doing very well. Mr.
Barrett sees no reason why its prosperity should not continue.
EXHIBIT U-19a
The Pere Marquette ties in very closely with the Chesapeake & Ohio, distributing West Virginia coal to all parts of Michigan.
The Nickel Plate Railroad and the Erie Railroad have been showing gratifying
improvement from month to month.
The Missouri Pacific is the only railroad that promises a serious problem at
this time. As suggested previously, the work of reorganization is going along
slowly. In answer to a direct question, Mr. Barrett mentioned that the Missouri
Pacific or its subsidiaries had fourteen or sixteen oil wells in Texas. The cost
of drilling has been paid by profits from the wells. The wells have an aggregate
capacity of 200,000 barrels per day but under proration are operating at a capacity
of only 1,000 barrels per day. However, the rate received is 85^ a barrel as
compared with 15 to 20f£ a barrel before proration.
STOCK EXCHANGE PRACTICES
8891
Concerning the debts of the Daisy Hill Company, Mr. Barrett explained
voluntarily that sorre years ago the Van Sweringen Company and the Messrs.
Van Sweringen personally were buying property between Warrens ville Center
and the Daisy Hill farm. For the sake of convenience, the property purchased
was placed in the name of B. S. Jenks. Purchase money mortgages were given
in the instance of some purchases and the name of Jenks consequently appears
upon these mortgages. An equitable distribution of this land is in the process
of being worked out at this time. If a distribution is agreed upon, Messrs.
O. P. and M. J. Van Sweringen will give the bank a mortgage on the free land
assigned to them as additional collateral upon the Daisy Hill loan. It was not
thought fair to leave all the land with mortgages upon it in the name of B. S.
Jenks "while the remainder would be transferred and given to us, inasmuch as
there was no intention of saddling a debt upon Mr. Jenks.
In closing, Mr. Barrett mentioned that the Messrs. Van Sweringen were very
conscious of their heavy obligations and working night and day in order to better
the situation.
G. R.
JERZOG,
Loan Collection Department.
EXHIBIT
U-20
SEPTEMBER 11TH,
FILE
1933
O. P. & M. J. VAN SWERINGEN
In view of the current public discussion of Lwo of the so-called Van Sweringen
obligations to The Union Trust Company, it seems appropriate to supply, as
supplementing our inventory already of public record, a schedule of the collateral
held by The Union Trust Coxnpany at various periods under these obligations
and their apparent predecessors. Valuations of the collateral have, of course,
varied fro AX time to time. The schedules are as follows.
EXHIBIT U-20a
(1)
$2,800,000.
DEMAND COLLATERAL LOAN O. P. AND M. J. VAN SWERINGEN
On April 19, 1926, the Vaness Company paid out entirely and was out of debt
to the bank until July 21, 1920, when $225,000 was borowed. Loans increased
gradually, reaching a peak of $2,250,000 on July 1, 1927. On October 4, 1927,
$1,900,000 was paid af&er which loans again increased gradually until thev
reached a peak of $4,350,000 on June 23, 1928.
On July 28, 1928, $2,000,000 of the debt of the Vaness Company (then at
$3,350,000) was revamped.
The following notes, aggregating $2,000,000 were paid:
The Vaness Company dated Jan. 14, 1928
$500, 000
Secured by 32,600 Shs. Terminal Properties, 1st Pfd.
27,300 Shs.
"
"
2nd Pfd.
93,300 Shs.
"
"
Common
The Vaness Company dated Feb. 17, 1928
500,000
Secured by 5,000 Shs. N. Y., Chicago & St. L. R.R. Common
The Vaness Company dated Feb. 20, 1928
500, 000
Secured by 5,000 Shs. N. Y., Chicago & St. L. R.R. Common
The Vaness Company dated Dec. 28, 1927
250,000
Secured by 2,500 Shs. N. Y., Chicago & St. L. R.R. Common
The Vaness Company daled Mar. 1, 1928
250, 000
Secured by 2,500 Shs. N. Y., Chicago & St. L. R.R. Common
2, 000, 000
The proceeds of the following note was used to pay the above mentioned
obligations:
The Vaness Company daced July 28, 1928
$2,000,000
Secured by 32,631 Shs. Terminal Properties, 1st Pfd.
" 30,255 Shs.
"
"
2nd Pfd.
95,600 Shs.
"
"
Common
8892
STOCK EXCHANGE PEACTICES
On November 1, 1929, the $2,000,000 note of the Vaness Company was paid
by our Corporate Trust Department, made possible by che bank's participating
for exactly the same amount ($2,000,000) in a total loan of $9,000,000.
The Vaness Company Participation
$2, 000, 000
Total Loan $9,000,000 secured by:
32,893 Shs. Terminal Properties, 1st Pfd.
33,187 Shs.
"
"
2nd Pfd.
99,222 Shs.
"
"
Common
122,000 Shs. Van Sweringen Company
100 Shs. Cleveland Terminal Bide; Co.
EXHIBIT U-20b
On May 13, 1930, the bank's participation for $2,000,000 was paid out of a new
participation for $2,800,000 in a total loan of $9,000,000.
The Vaness Company Participation
$2, 800. 00Q
Total Loan, $9,000,000 secured by:
122,000 Shs. Van Sweringen Co.
600,000 Shs. Van Sweringen Corp.
following loans were fttee
$205,000
On October 30, 1930, a participation of $2,800,000 in a total loan of $9,000,000
to O. P. & M. J. Van Sweringen was substituted for the participation of $2,800,000
in the total loan of $9,000,000 to the Vaness Company.
O. P. and M. J. Van Sweringen Participation
$2, 800, 000
Total Loan, $9,000,000 secured by:
97,500 Shs. (or 60% Common) Vaness Co.
This balance of $2,800,000 is outstanding today (April 3% ±933}r
EXHIBIT U - 2 0 C
(2) $4,100,000.
DEMAND COLLATERAL LOAN O. P. AND M. J. VAN SWERINGEN
On October 29, 1929, the bank loaned the Vaness Company $5,000,000.
The Vaness Company
$5, 000, 000
Secured by 32,000 Shs. Cleveland Rwy. Co.
6,500 Shs. Midland Bank.
30,000 Shs. Alleghany Corp. Common.
6,000 Shs. United Corp. Common.
3,000 Units TFestern Reserve Inv. Corp.
6% Pfd.
On June 20, 1930, 1,760 additional shares of the Midland Bank were substituted
for the 30,000 shares Alleghany Corporation.
On October 14, 1930, 50,000 shares Van Sweringen Corporation Common were
pledged as additional collateral to the same loan.
On October 30, 1930, the above loan was paid with a new loan of $5,000,000
to O. P. and M. J. Van Sweringen:
O. P. and M. J. Van Sweringen
$5, 000, 000
Secured by 9,000 Shs. Vaness Co. Pfd.
16,250 Shs. Vaness Co. Common
4,000 Shs. Niagara Hudson Power Corp. Common
5,000 Shs. Standard Brands, Inc., Common
3,000 Shs. Western Reserve Inv. Corp. Common
3,000 Units Western Reserve Inv. Corp. Common
17,999}^ Shs. Calumet Trust Certificates
1,400 Shs. Newton Steel Co. Common
33,000 Shs. Peerless Motor Car Corp. Common
6,000 Shs. United Corp. Common
10,296 Shs. Metropolitan Utilities, Inc. Common
and equity in the following held in Corporate Trust Department
STOCK EXCHANGE PRACTICES
8893
100 Shs. Traction Stores Common
5,800 Shs. Cleveland & Youngstown R. R. Common
subject to previous pledged under Metropolitan $3,100,000
loan
100 Shs. Cleveland Traction Terminal Common
1,465 Shs. Cleveland Interurban R.R. Co. Common
EXHIBIT U-20d
On November 20, 1930, a loan of $800,000 was made to the Vaness Company
and the loan of $5,000,00 to O. P. and M. J. Van Sweringen was reduced to
$4,200,000. The following collateral was taken from the $5,000,00 loan and
transferred to the $800,000 loan.
Vaness Company
$800, 000
Secured by 4,000 Shs. Niagara Hudson Power Corp. Common.
5,000 Shs. Standard Brands, Inc., Common.
3,000 Shs. Western Reserve Inv. Corp. Common.
3,000 Units Western Reserve Inv. Corp.
17,999^ Shs. Calumet Trust Certificates.
1,400 Shs. Newton Steel Co. Common.
33,000 Shs. Peerless Motor Car Corp. Common.
6,000 Shs. United Corporation Common.
This left the O. P. and M. J. Van Sweringen loan as follows:
Balance O. P. and M. J. Van Sweringen
. . . $4, 200, 000
Secured by 9,000 Shs. Vaness Co. Pfd.
16,250 Shs. Vaness Co. Common.
10,296 Shs. Metropolitan Utilities, Inc. Common.
Equity in 4 blocks securities as listed previously.
On December 31, 1930, the above loan of $4,200,000 was paid with a new loan
of $4,200,000.
O. P. and M. J. Van Sweringen----$4, 200, 000
Secured by 9,000 Shs. Vaness Co. Pfd.
16,250 Shs. Vaness Co. Common.
10,296 Shs. Metropolitan Utilities, Inc. Common.
On January 24, 1931, $100,000 was paid on the principal of the loan.
The balance of $4,100,000 is outstanding today (Af*41 26y +9S3}
EXHIBIT U-21
INTERVIEWS AND COMMITMENTS AFFECTING LOANS—OFFICIAL INSTRUCTIONS
TO CREDIT DEPARTMENT—COMMENTS ON FINANCIAL STATEMENTS-—ESSENTIAL CREDIT INFORMATION
For exclusive use of Credit Department.
FILE
DAISY HILL CO
O. P. AND M. J. VAN SWERINGEN
METROPOLITAN UTILITIES, INCORPORATED
OCTOBER 27, 1933
Subsequent to the general meeting held on this date to discuss the participating loans of the Van Sweringens, for details of which refer to files on O. P. and
M. J. Van Sweringen and Metropolitan Utilities, Incorporated, Mr. Cox met with
Messrs. O. P. and M. J. Van Sweringen, at which meeting the writer Twas present.
Mr. Cox asked the Messrs Van Sweringen what possibility there w as of obtaining some payments on some of the loans to this bank. He suggested specifically
the payment of salaries to the Van Sweringens by the various railroads they served
which salaries could be used to aid the Daisy Hill Company, etc.
Mr. O. P. Van Sweringen remarked that the chief argument his organization
had in talking to bond creditors, mortgage creditors, or other creditors of the
various Van Sweringen enterprises, was the statement that the two Van Sweringen
brothers received not one cent in salary from any of the companies. He furthermore explained that neither he nor his brother had been permitted to serve on
interlocking railroad directorates As a result, they placed themselves upon the
8894
STOCK EXCHANGE PRACTICES
boards of weaker railroads so that they could watch the situation more closely,
and the railroads were really not in a position to pay any salaries worth while.
The thought of servicing the debt of the Daisy Hill Company through the
Vaness Company was suggested by Mr. Cox and Mr. O. P. Van Sweringen,
thinking it a good idea because the indebtedness really was a Vaness Company
indebtedness taken over by the Daisy Hill Company after it had been transferred
to O. P. and M. J. Van Sweringen, said he would look into the matter and see
what could be done. His remark suggested that the Vaness Company would be
in a position to pay at least interest on the Daisy Hill debt, though he was
inclined to feel that the delinquent interest should be placed in note form. Mr.
Cox did not concur.
The two places where The Union Trust Company may expect some money from
the Van Sweringens in the near future are:
a. The $80,000 mortgage loan to the Traction Stores Company, on the premises
at 2534-2590 Broadway.
b. The $557,000 collateral loan to the Terminal Building Company and Vaness
Company.
The $80,000 loan is placed in the position of an excellent chance for immediate
liquidation due to a sudden turn in events, and Mr. Van Sweringen said that the
same possibility was apt to arise with any number of other loans which this bank
has made to the Van Sweringen companies. The chance for payment on the
EXHIBIT
U-21a
$557,000 obligation lies in the settlement of the dispute between the Nickel
Plate and the New York Central upon which the Nickel Plate should start paying
interest on the indebtedness and possibly also some on principal.
In closing, Mr. O. P. Van Sweringen mentioned that the depression had deferred everything that they had in mind, but that they were working day and
night to restore values. As before, he said that all the information his organization had was at the disposal of any of the banks at any time.
G. R.
EXHIBIT
HERZOG.
U-22
CLEVELAND, January 6, 1933.
Mr.
A. C.
CONEY,
Vice President & Manager.
In accordance with your request, I have secured from records in the accounting
department of the Van Sweringen Company recent and comparative financial
statements of the Shaker Company and the Van Sweringen Company, with
particular reference to the properties securing the issue of Shaker Company First
Mortgage and Collateral Trust 6% Bonds dated October 1, 1928, and information
of interest relative to the issue of Van Sweringen Company First Mortgage and
Collateral Trust 6% Bonds dated October 1, 1928. In the majority of the statements the figures have been rearranged in order to show the picture from the
standpoint of our securities, and the figures are from audited reports only where
indicated.
Inasmuch as it was necessary to go into considerable detail in the reports, I am
summarizing briefly the important points arising from a study of the figures
before going into detailed comment regarding them.
SUMMARY
Operations of the Van Sweringen Company have been at a substantial loss for
at least the past three years, and the Company at the present time has practically
no working capital. There are virtually no current assets to meet over $1,194,000
of accrued taxes and interest, to say nothing of $761,198 of demand notes payable
to banks and individuals, and $2,027,162 of improvement taxes accrued to October
31, 1932, and over $6,400,000 of demand notes pavable, plus accrued interest,
to the Van Ess Company and pledged with J. P. Morgan & Company. Unless
a very substantial amount of unpledged property can be liquidated in the near
future, the financial position of the Company will rapidly become much worse,
and if Van Ess Company should cease to advance working funds the Company
would probably find itself unable to meet even its pay roll. While Van Ess Company had been advancing some money during the year 1932, part of this money
apparently was secured from J. P. Morgan & Company, and it would appear,
therefore, that continuation of a flow of money from Van Ess Company to Van
Sweringen Company for working capital might depend upon a continuation of
STOCK EXCHANGE PRACTICES
8895
advances from the Van Ess Company bankers. Even though working funds to
meet pay roll, etc. are advanced, by Van Ess Company, there is some question as
to whether Van Ess Company is in position to advance sufficient money to take
care of accrued taxes, interest and principal payments on land contracts and mortgages payable of Van Sweringen Company.
Estimated income for 1933 from the assets pledged for the Van Sweringen
Company 6's due October 1, 1938, is as follows:
Funds provided through cash payments on principal of receivables
pledged (See page 20)
1
$51, 229
Interest on mortagages and land contracts pledged
36, 218
Net income from properties mortgaged under Shaker Company 6%
Bonds due June 1, 1938
"_
8, 295
$95, 742
EXHIBIT U-22a
The above income might be increased as a result of any improvement in economic conditions during the current year, causing increase in income from the
properties under the Shaker Company bonds and increase in payments as to
principal and interest on the mortgages and land contracts pledged. At the
same time, none of the above $95,742 may be available for payment of interest
on bonds, inasmuch as the Trustee might reserve it to pay taxes on certain
unsold lands which it might decide to keep and the unpaid taxes on certain
pieces of property on which it holds land contracts and mortgages receivable,
where the maker of the payable has been unable to keep up the taxes. Furthermore, part of this money might be necessary to the continued operations of the
Van Sweringen Company, since income ol that Company is not covering operating expenses.
The fact that the Van Sweringen Company has no working capital, and that
the Shaker Company has a deficit in capital and surplus, makes it of extreme
importance to bondholders that the best use be made of any income from the
collateral pledged back of the bond issue.
Tlfe statements attached to this report include the following:
1. Comparative Income Account of Van Sweringen Company for years ended
December 31, 1929, 1930, 1931, and for the first nine months of 1932. Page 1.
2. Balance Sheet of The Van Sweringen Company as of December 31, 1931 and
October 31, 1932. Pages 2 & 3.
3. Details of certain accounts of above balance sheet. Pages 4, 5, 6 & 7.
4. Estimated Income from Shaker Square Building, Moreland Courts Additions^
and Tavern for 1933. Page 8.
5. Schedule of Leases on Shaker Square Buildings. Page 9.
6. Comparative Summary of Operations of Moreland Courts Additions, Shaker
Square Buildings, and Shaker Tavern for nine months ended September 30, 1931
and 1932. Page 10.
7. Comparative Summary of Operations of Moreland Courts Additions for
first nine months of 1930, 1931 and 1932 (adjusted). Page 11.
8. Comparative Summary of Operations of Shaker Square Buildings for first
nine months of 1930, 1931 and 1932 adjusted for bad debts and tax adjustments.
Page 12.
9. Comparative Summary of Operations of Shaker Tavern for first nine months
of 1931 and 1932. Page 13.
10. Schedule of Bad Debt Charges on Shaker Square Buildings for 1931 and first
nine months of 1932. Page 14.
11. Schedule of Taxes actually paid in 1930 and 1931 on Moreland Courts
Additions and Shaker Square Buildings. Page 15.
12. Audit Reports of Operations of Shaker Company Units for 1930. Page 16.
13. Comparative Operating Statements from audit reports of Shaker Square
Buildings and Moreland Courts Additions for 1930 and 1931. Page 17.
14. Balance Sheet of Shaker Company as of December 31, 1931 and September
30, 1932. Page 18.
15. Details of certain accounts of above balance sheet. Page 19.
16. Estimated Cash Payments for 1988 on Receivables pledged back of Issue of
6% Van Sweringen Company Bonds due 1938. Page 21.
175541—34—PT 20
11
8896
STOCK EXCHANGE PRACTICES
EXHIBIT U-22b
ESTIMATED PAYMENTS ON RECEIVABLES IN 1938
I have segregated the individual accounts on which there have been no defaults
in principal, and also the accounts on which there have been no defaults on interest. As shown on page 21, the accounts on which there are no past due
balances total $249,604.37, and principal payments due on these accounts in
1933 amount to $51,228. While there may be payments on some of the accounts
which heretofore have been delinquent in principal payments, I believe that we
can only count on payments from the accounts where pavments have been kept
up to date, and for that matter, it is possible that some of these principal payments will not be met during 1933. On page 22 I have segregated the accounts
upon which up to December 26, 1932, interest had been paid promptly when
due. The balance due on these accounts totals $254,027.06. In estimating
interest payments on collateral, I have figured 6% on the $249,604 of balances
upon which no principal installments are in default, and upon $254,027 which
as of December 26, 1932, had not defaulted on interest payments. While it is
possible that some interest will be received on some of the accounts which heretofore have been in default as to interest, it is also likely that a number of the
accounts included on pages 21 & 22 will default in interest during 1933. The
most, therefore, that the Trustee could count upon from interest on the receivables and land contracts should be approximate^ $36,218. This amount,
obviously, would be increased by any general improvement in economic conditions and might shrink further if there is no improvement.
To summarize the probable income for 1933 from property pledged back of
the Van Sweringen Company 6's due 1938, income should be in the neighborhood
of $8,295 from the Shaker Company units, $36,218 from interest on receivables
and land contracts pledged with the Trustee, and approximately $51,228 principal payments on these receivables and land contracts. These amounts total
$95,742, which is before making allowance for payment of any unpaid taxes on
unsold land or properties covered by payables pledged with the Trustee.
In conclusion, I wish to comment on the cooperation which Mr. Anzalone and
Mr. Peckham gave me, and their readiness to secure for me any information
which I requested; also as to the excellent condition of their records which permitted them to obtain without delay or trouble details of past operations.
C. C. MERRIFIELD.
CCM.K
EXHIBIT U - 2 2 C
THE
VAN SWERINGEN COMPANY BALANCE SHEET.
(PAGES 2 AND 3)
The Van Sweringen Company Balance Sheet for October 31, 1932, shows the
Company to be almost without working capital, with only $4,502 in cash, and
the only other possible liquid items (outside of special funds amounting to $268,493) consisting of accrued interest on Notes Receivable amounting to $24,277,
and accrue'd interest on mortgages and land contracts (a large part of which are
pledged back of the Company's 6% bond issues due in 1935 and 1938). In contrast to this, current liabilities included the following—(See Page 3):
Accounts Payable
Demand Notes Payable—Secured
Demand Notes Payable—Unsecured
Accrued Interest on Bonds
_
Accrued Interest on Mortgages & Land Contracts payable to Banks
and individuals
1930 Local Taxes
1931 Local Taxes
1932 Local Taxes (Estimated)
Total
$65, 969
718, 921
42, 277
327, 072
218, 465
38,532
296,029
247, 730
$1, 954, 995
The above does not include $2,027,162 of 1930, 1931 and 1932 (estimated to
October 31, 1932) improvement taxes which I understand an attempt will be made
to fund over a period of ten years, nor does it include $6,382,490 of demand
notes payable to Van Ess Company and pledged with J. P. Morgan & Company ^
upon which no interest, as far as I could determine, has been paid since the date
they were pledged. While I did not have access to the statements of the Van
Ess Company, information on the records of Van Sweringen Company notes
pledged with J. P. Morgan & Company indicates that the Morgan loan was originally made in the amount of $16,000,000 in October 1930. Originally the de
STOCK EXCHANGE PRACTICES
8897
mand note of the Van Sweringen Company was given to Van Ess Company in
the amount of $5,134,154. On March 28, 1931 the Van Sweringen Company
executed a note for $96,794 to Van Ess Company which was pledged with Morgan,
and funds covered by this note were a portion of the proceeds of a $600,000 increase in the loan of Morgan, in which the Midland Bank of Cleveland had a
participation. On May 27, 1931 a demand note of the Van Sweringen Company
was executed in the amount of $822,361 and pledged with Morgan as additional
collateral under the loan which on that date had grown to $18,100,000. The
$1,500,000 increase
in the Morgan loan was indicated on the Company's record
of notes as a New7 York Trust Company participation. On August 31, 1931, the
Van Sweringen Company executed a demand note to Van Ess Company for
$122,175 to be pledged under the Morgan loan. Similarly, on December 31, 1931,
a note was executed to Van Ess Company for $86,212 and pledged under the
Morgan loan.
I was advised that Van Sweringen Company did not receive any cash from the
above notes, but that they were given to apply on the account of the Van Sweringen Company with Van Ess Company. Duimg the year 1932 the Van Sweringen Company executed notes which up to October 31, 1932 totalled $120,792
to Van Ess Company for cash. These notes wTere secured by various land contracts, mortgages and land, as indicated on page 4 under the caption "Unsold
Lots, etc." I have been advised recently that on December 1, 1932, the Van
Sweringen Company borrowed an additional $18,000 in cash from Van Ess Company. Mr. Peckham, of the Van Sweringen Company accounting staff, indicated
that the notes executed during the year 1932 to Van Ess Company had not been
pledged back of the Morgan loan, but were held by Van Ess Company in Cleveland. The Morgan loan on December 1, 1932, amounted to $18,250,000, and
on that date accrued unpaid interest amounted to approximately $1,680,000.
Because of the fact that I did not have access to the Van Ess Company books, I
could not definitely determine whether the money which Van Sweringen Company had obtained from Van Ess Company was coming from Van Ess Company
resources or through loans from Morgan during 1932.
EXHIBIT U-22d
In connection with the $4,237,906 of mortgages and land contracts payable
(incurred principally for purchase of farms East of Warrensville Center Road)
approximately $421,440 of these were payable to The Union Trust Company,
$106,050 to The Guardian Trust, and $234,322 to The Cleveland Trust. There
are many of the notes and I did not obtain all the details, but it was my impression that in most instances the amount of these payables had been reducedl/{to
}_, except for those of The Union Trust and Guardian Trust where in most cases
there had been little or no reduction in principal.
The following table indicates the change in the asset and liability accounts of
the Van Sweringen Company from December 31, 1931 to October 31, 1932
Statement of changes in balance sheets of The Van Sweringen Company between
December 31, 1931 and October 31, 1932
PROVIDED
ASSETS DOWN
Cash
__
___
_
Notes Receivable
_
Other Assets
_
_
Special Funds
__
Shaker Company
_
Houses
Unsold Lots___
Taxes & Int. Capitalized. _ _
Permanent __
_
_
_
_
_
_
_
_ _
_
_
_
__
___
_
_
_
_
_
_
_
__
___
_
$27,064
4,730
9,376
97,015
22, 857
22,264
681,379
351,448
5,456
LIABILITIES UP
Notes Payable-. _
Taxes Local
__
Improvement Taxes
Accrued Interest- _ _
Van Ess
_
_
_
_
_
_ _ _ _ _
__
__
________
___
9,301
202,188
732,345
311,815
66,952
$2, 544, 190
8898
STOCK EXCHANGE PRACTICES
Statement of changes in balance sheets of The Van Sweringen Company between
December 31, 1931 and October 31, 1932—Continued
DISPOSED
ASSETS UP
Mortgages & Land Contracts
Deferred
Shaker Lander Participation
$371, 627
624,533
42, 343
LIABILITIES DOWX
Accounts Payable
Mortgages & Land Contracts Payable
Bonds
Deferred
Surplus
4, 618
37, 769
71, 800
33, 330
1,358, 170
$2, 544, 190
VAN SWERINGEN COMPANY OPERATIONS
Comparative operating statements of the Van Sweringen Company for 1929,
1930, 1931 and the first nine months of 1932 are shown on page 1. In none of
these years did the Company operate at a profit, and therefore in this period
operations were financed through liquidation of properties and through borrowing
of working capital. Attention is called to the operating results for 1930 showing
a net loss of $72,362 which should have been $1,035,762 inasmuch as sales included land and right-of-way sold to the Cleveland Interurban Railway for
$963,400 which had been carried at $1.00 on the books of the Company. This
sale did not result in any addition to the cash of the Van Sweringen Company.
It should be remembered that these operating statements include as income
interest and rents accrued, which were not all received in cash.
The comparative operating statements indicate that in spite of a substantial
decline in income in 1931, the Company did not reduce its operating expenses,
although in the first nine months of 1932 considerable progress was made in
reducing these expenses. Taxes and fixed charges (which do not include improvement taxes, as they are capitalized) constitute by far the largest part of expenses,
and are of such magnitude as to make it questionable if the Company can ever
operate at a profit. In other words, it appears reasonable to assume that any
future improvement in the working capital position of the Company will come as
a result of the liquidation of lots and other properties, rather than from profits
EXHIBIT U-22e
from real estate operations. Possibility of cash income from its subsidiary,
the Shaker Company, is covered in the following comment on the Shaker Company. (The Van Sweringen Company also has a lease on the original Moreland
Courts Apartment, which is owned by the Shaker Company, and which is
operated at a loss by the Van Sweringen Company.)
COMMENT
SHAKER COMPANY: BALANCE SHEET PAGE 18
The Shaker Company has had a deficit in capital and surplus since last vcar,
its liabilities exceeding its assets by $244,482 on September 30, 1932. "The
principal changes in the balance sheet since December 31, 1931, consist of an
increase in the deficit in working capital from $16,427 to $107,961, and a decline
in the open account with the Van Sweringen Company from $5,154,915 to
$5,066,721. Details of the cost of the various properties" under the $2,100,000
6% Mortgage Bond issue on page 19 indicate cost of the buildings, exclusive of
land of over $3,000,000, which would indicate that additional capital to the
$2,100,000 from the Shaker Company Bonds had gone into these properties.
Details of the $329,109 of first mortgages payable are shown on page 20. I t
is interesting to note that the interest which was due on the Union Trust loan
on June 30, 1932 was not paid, although interest was paid on that date on the
Society for Savings loan.
OPERATING STATEMENTS
Figures taken from Ernst & Ernst audit reports for the Shaker Square Buildings and Moreland Courts Additions, before depreciation, are shown on pages
16 & 17. We also have a copy of the audit report for the Shaker Company for
STOCK EXCHANGE PRACTICES
8899
the year ended December 31, 1931 in our files, which is not included in this
report. Instead, I have drawn up Comparative Operating Statements of the
Shaker Square Buildings and Moreland Courts Additions for the first nine
months of 1930, 1931 and 1932, and of the Shaker Tavern for the first nine
months of 1931 and 1932.
I have made the comments on operations of these units as concise as possible,
avoiding comments on minor changes in the operating statements. However,
I have in my working papers monthly operating statements for the above properties for the past three years and can supply complete details regarding the
financial statements necessary.
SHAKER SQUARE BUILDINGS, COMPARATIVE OPERATING STATEMENTS
Comparative adjusted operating statements for the first nine months of 1930,
1931 and 1932 are shown on page 12. Rentals and services billed to customers,
less allowance for reductions in rentals, were virtually the same as for 1932 as
1931. Operating expenses, after adjustment for taxes actually paid and allocated to this unit were virtually the same as for 1931, with the exception of a
slight reduction in salaries and wTages, and in cost of steam. However, in 1932
the general overhead and legal expenses which previously had been paid by the
Van Ess Company were prorated to each of the units, and these charges to Shaker
Square Buildings amounted to $2,183 for the first nine months of 1932. The
allowance for bad debts, which amounted to $23,538 in 1931 and which on the
basis of the Company's books, I have prorated between 1930 and 1931 as the
accounts were incurred, are shown on page 14. On the same page is a schedule
of the allowance for bad debts for the first nine months of 1932. Net income for
the first nine months of 1932, after allowance for bad debts but before depreciaation, amounted to $14,009, against $32,414 in 1931. Comparative monthly
reports in our files indicate a steady decline from month to month in income
since February 1932, the total billings for November 1932 being the lowest in
the last two years. Interest on the Shaker Company 6% Bonds dated October
1, 1928, has been arbitrarily allocated between the various properties, and the
amount allocated to the Shaker Square Buildings for nine months in $33,075.
EXHIBIT U-22f
Reference to the Schedule of Present Leases of Shaker Square Buildings will
indicate the concessions which it has been necessary to make in rentals. Considering the large losses for bad debts in 1931 and 1932, some consideration
might properly be given to the advisability of keeping tenants in the buildings
for appearances sake and of making the Square a better shopping center, who
are not only unable to pay their rent but have difficulty in paying the service
charges which their occupation of the premises entail.
MORELAND COURTS ADDITIONS
Operating Statements of Moreland Courts Additions (page 11) for the first
nine months of 1932 show total income of $99,092, after $13,232 allowance for
reduction in leases, against total income of $134,433 in the corresponding period
of 1931. Total operating expenses remained practically unchanged, the reduction in salaries and wages of $2,300 being offset by the increase in the cost of
heating the building and cost of heating water. In this connection, it is interesting to note that the cost of steam and hot water for the Moreland Courts Additions has gone up steadily since 1930, and that for the first nine months of 1932,
on the basis of charges made to various properties, the Central Heating Plant
showed a profit of $12,313, before depreciation. Beginning in November,
however, the charges to various properties for steam have been made at the rate
which the properties would have to pay for steam from the Cleveland Electric
Illuminating Company. These charges in the future, while not representing cost,
will be somewhat less than previous amounts charged.
In each period since 1930 there was a decline in building management and
renting expenses, although the item for general overhead and legal expense
appeared in 1932 (as in the case of the Shaker Square Building) in the amount
of $2,933. Net for bond interest (as prorated) for the first nine months of 1932,
before depreciation, amounted to $36,908, compared with $71,903 in 1931.
Interest for this period amounted to $61,425. It is significant that there have
been relatively no bad debt losses from the Moreland Courts Additions, so that
virtually all of the income billed may be considered cash income.
8900
STOCK EXCHANGE PEACTICES
SHAKER TAVERN
Comparative nine months operating statements of Shaker Tavern for 1931
and 1932 are shown on page 13. While there was a decline in dining room sales
from $62,804 to $37,441, there was a corresponding decline in dining room
expense, so that the loss for the nine months period of 1932 of $7,369 was only
$745 greater than the loss of $6,624 in 1931 Total net income of the Tavern,
before general overhead expenses, amounted to $146 in the first nine months of
1931, and to a loss of $1,630 in 1932. However, there was a substantial increase
in general overhead expenses from $16,600 in 1931 to $19,032 in 1932, which
may be attributed to the failure to reduce overhead salaries, to the increase in
the cost of steam and water, and to the accruing of personal property taxes.
Because of the fact that the properties have been in operation less than three
years, there has been considerable uncertainty about taxes, and because of the
variation between taxes accrued by the Company and shown on the audit reports,
and the amounts actually paid, I have figured taxes in these reports on the basis
of payments actually made. The actual taxes paid for 1930 and 1931 are shown
on page 15. In 1931 the Shaker Company, in its allocation of taxes between
various properties allocated $31,654 of taxes to Shaker Square Buildings and
$27,269 to the vacant land. Of this latter amount, approximately $10,000
represents taxes on the land in the rear of the Shaker Square Buildings which is
being partly used for parking space for tenants and patrons, but which is mortgaged to several banks. During the year 1932 a change was made in accruing
taxes on the properties so that the taxes on this vacant land in the rear of the
Shaker Square Buildings were allocated to the Shaker Square Buildings, thereby
increasing the accruals for taxes to approximately $42,650 per year. In view of
present operating conditions, this re-allocation of taxes might be a matter which
the Trustee for the bonds might wish to question The comparative operating
statements of the Shaker Square Buildings for nine months 1931 and 1932 (page
12) reflect this adjustment made by the Company on its books. If these statements were set up to show taxes on the Shaker Square Buildings alone, the
9 Mos. report for 1931 and 1932 would show approximately $7,800 less expense—
or in other words, $7,800 more income for bond interest.
It should be noted in connection with taxes that no taxes are charged against
operations of the Shaker Tavern, the taxes on this property being absorbed by
the other two units. It is also interesting to note that taxes on the Moreland
Courts Additions in 1931 amounted to $34,453, against $40,220 in 1930. The
decline in taxes on this unit is explained by a reduction in valuation of the property and by an abatement of $3,865.
ESTIMATED OPERATING RESULTS FOR 1933
Combined operations of the three units for the first nine months of 1932 show
net income, before depreciation, available for bond interest of $30,255 against
$94,500 of bond interest for this period. Details of this are shown on page 10.
Net income available for bond interest for the corresponding period of 1931
amounted to $87,863. Inasmuch as the audit report of the Shaker Company
for the year ended December 31, 1931, showed failure to cover fixed charges on
all of its debt (including Shaker Company First Mortgage Leasehold 7% Bonds
on the original Moreland Courts Apartments), and since monthly operating
results during the current year have shown a steady decline, I have attempted
to set up budget operations for the year 1933, based on a study of the monthly
statements of the three units pledged under our mortgage and based on present
leases in effect for the Shaker Square Buildings. This budget is shown on page
8, with foot note explaining the basis upon which the various figures are arrived
at. You will note that I have not attempted to budget the income and expenses
of the Shaker Tavern, inasmuch as monthly statements for the past eighteen
months of this unit indicate considerable variation in income with a constant loss
of between $2,000 and $3,000 per month. r This apparently has been irrespective
of volume of sales in the dining room, w hich incidentally have shown a steady
decline during the current year. Unless radical changes are made in the management of the Tavern during the year 1933, there is no reason to believe that the
loss will be much less than for the year 1932, which I have estimated to be approxmately $27,937 before depreciation. On the basis of the budget prepared, total
income available for bond interest from the properties pledged under the $2,100,000 Shaker Company 6% Bonds dated October 1, 1928, will amount to approxi-
STOCK EXCHANGE PRACTICES
8901
mately $8,295, plus whatever may be realized during 1933 on leases of questionable tenants, as shown on page 9.
The Shaker Tavern presents a very serious problem to the management of
the properties, since it has never been charged its share of the taxes and bond
interest, and in spite of this fact it has shown large losses each year. I asked Mr.
Sharpe what might be the answer to the Tavern situation, and he stated that it
wTas virtually impossible for the Van Sweringen interests to operate the Tavern
at a profit. He felt that if the Tavern were ever to make any money it would
have to be under the management of some other concern and he has been in
active search of a tenant. Inasmuch as the Tavern is obviously absorbing most
of the net income of the other two units, it would appear that definite steps
should be taken sometime in the near future to close the Tavern if no satisfactory
tenant can be found, and if the unit cannot be operated by the Van Sweringen
Company at an even break or a small loss.
EXHIBIT U-23
STATE OF OHIO,
DEPARTMENT OF BANKS,
Columbus, January 3, 1931.
BOARD OF DIRECTORS,
T H E UNION TRUST COMPANY,
Cleveland, Ohio.
GENTLEMEN: This wTill acknowledge receipt of your Examining Committee
Report, same being at close of business November 14th, and on Page 5 of which
we note an excessive line of credit to O. P. and M. J. Van Sweringen. It is set
up as excessive to the extent of $2,249,455, which amount has been reduced since
November 14th in the sum of $2,222,500, leaving $26,955 in excess of the loan
limit or 20% of the Bank's capital and surplus. Will be pleased to learn if this
liability has been adjusted in accordance with law.
Very truly yours,
O. C. GRAY,
Superintendent of Banks.
WMB.
EXHIBIT U-24
EXCERPTS TAKEN FROM EXAMINERS REPORT, DEPARTMENT OF BANKS, STATE
OF OHIO, JANUARY 20, 1933
Daisy Hill Company, $537,558.33.
Interest is delinquent since July 1, 1931. Loan is collateraled by 7,935 shares
Vaness Co. preferred stock. The Daisy Hill Company is a holding company for
the Van Sweringen country estate near Chagrin Falls. This estate is said to
contain 625 acres of land most of which is unencumbered. Definite information
as to the financial worth of the company is lacking. Loan is classed doubtful.
EXHIBIT U-25
INTERVIEWS AND COMMITMENTS AFFECTING LOANS—OFFICIAL INSTRUCTIONS TO
CREDIT DEPARTMENT—COMMENTS ON FINANCIAL STATEMENTS—ESSENTIAL
CREDIT INFORMATION
FOR EXCLUSIVE USE OF CREDIT DEPARTMENT
DAISY HILL COMPANY
NOVEMBER 22, 1933.
Inasmuch as the writer's memorandum of October 9, 1933, respecting the
Daisy Hill Company appears to have been misfiled, the following information
is summarized as a matter of record.
On October 9 Mr. Barrett left with the writer various maps of the property
of the Daisy Hill Company as well as figures indicating the original cost, the
financial condition of the company on August 31, 1933, and income and expense
figures for the eight months ended August 31, 1933. In addition, he gave us a
list of the stockholders of the Daisy Hill Company.
8902
STOCK EXCHANGE PRACTICES
Mr. Barrett mentioned that O. P. & M. J. Van Sweringen never had been
owners of any of the stock of the Daisy Hill Company. Mr. B. L. Jenks had
constructed his home at Kinsman and SOM Center Roads long before the Vans
had any idea of locating in that vicinity. Inasmuch as the relationship between
O. P. & M. J. Van Sweringen on the one hand and B. L. & Louise D. Jenks on
the other hand had always been very warm, i.e., the Jenkses had taken care of
the Van Sweringen boys just as if they were their own sons, O. P. & M. J. Van
Sweringen wished to do something for them. As a result, the properties surrounding their home were purchased and were placed in the Daisy Hill Company.
Furthermore, 24,300 shares of the preferred stock of the Vaness Company were
donated to the Daisy Hill Corporation, a wholly owned subsidiary of the Daisy
Hill Company, with the thought in mind that this stock would endow the Daisy
Hill Company and enable the Jenkses to take care of all expenses incident to the
farm from the income. Of course, the present financial difficulties have made
this impossible.
The B. L. Jenks home is not on property owned by the Daisy Hill Company
but from the chart marked #1 it is apparent that it lies very close to the Daisy
Hill Company holdings. The large residence of O. P. & M. J. Van Sweringen is
in the southern portion of the Luse parcel.
Chart #1 indicates merely the holdings of the Daisy Hill Company. Other
property in the same vicinity is owned by the Van Sweringen Company. The
land colored in green is unencumbered and the land colored in pink is mortgaged
to the Society for Sayings for $34,000.
Mr. Barrett mentioned, that these were numerous other residences upon the
property of the Daisy Hill Company, all of which were in existence when the
various parcels were purchased. These homes have been improved and are at
the present time occupied by the butler, the farm superintendent, the gate
keeper, etc. These occupants own their own furniture but the cost of light, heat,
etc., is taken care of by the Daisy Hill Company. The furniture in the elaborate home of O. P. & M. J. Van Sweringen belongs to the Vans personally but
the home itself is part of the Daisy Hill Company. At the time that the project
was formed and developed it was understood that O. P. & M. J. Van Sweringen
were to have the privilege of living there rent free.
The Daisy Hill Company has been operating at a deficit, which has been
EXHIBIT U-25a
taken care of by Mr. B. L. Jenks out of his personal resources. It is Mr. Barrett's feeling that in another year the income from gross sales will be sufficient
to take care of the cost of sales. Income results primarily from the sale of
nursery stock. Included in the cost of sales are the salaries of those employees
connected with the raising of the nursery stock but the salaries of the employees
keeping up the home are included in general maintenance and expense. The
writer spoke to Mr. Distel of the Society for Savings respecting the mortgage
upon the Daisy Hill property. Mr. Distel stated that the amount of the mortgage was $34,000 and the delinquent interest $1,020.00. The note runs from
B. L. Jenks. The encumbered parcel includes 400 acres, with twelve different
buildings thereon, and on January 2, 1933, the Society for Savings bank appraised
the property at $320,000. Mr. Distel mentioned that the large home of O. P.
& M. J. Van Sweringen was not on the property mortgaged to the Society for
Savings bank but Mr. Barrett insists that it is.
The matter of an appraisal of the property was discussed with Mr. Cox and
Mr. Hills. Inasmuch as the cost would be around $1,000, the idea was dropped.
G. R. J. HERZOG.
GRH:M
EXHIBIT
U-26
EXCERPTS TAKEN FROM EXAMINERS REPORT, DEPARTMENT OF BANKS, STATE OF
OHIO, JANUARY 20, 1933
HIGBEE COMPANY—$317,000.00
Company operates a large department store in the new Terminal development.
All of the common capital stock of the company is owned by the Van Sweringens.
Statement of the company dated Oct. 31, 1932 shows current assets of $3,670,000,
current debts $3,135,000, other debts of $1,500,000 and net worth $3,326,000.
Operations for 11 months show sales $8,989,000 and net loss $1,195,000. It will
STOCK EXCHANGE PRACTICES
8903
be noted that total debt is in excess of net worth. The $1,500,000 of debt mentioned above has been subordinated to the other creditors. The company has
trusteed several parcels of real estate for the prorata benefit of the bank creditors.
This real estate was recently appraised at $1,450,000. Life insurance totaling
$500,000 on the life of Asa Shiverick has also been trusteed. No reductions in
this loan have been made in more than a year. The examiner believes that the
bank creditors are secured but it is very likely that it will take a long time to
work out the loan.
EXHIBIT TJ-27
HIGBEE COMPANY AND SUBSIDIARIES
CONTROL
Entire common stock is held by the Cleveland Terminals Building Company
which is a subsidiary of the Van Sweringen Corporation. Voting control at the
present time, however, is entirely vested in the first and second preferred stock
issues due to the defaults in dividend payments. This voting control is, of course,
subject to the rights of the creditors of the company who are in a position to
dictate policies.
MANAGEMENT
Asa Shiverick
President
W. T. Higbee
Vice President
G. E. Merrifield
Vice President and Treasurer
E. H. Pierce
_
Vice President and Secretary
G. P. Mitchell
Assistant Treasurer
The officers, with the exception of G. E. Merrifield, have been with the concern
for a number of years. Asa Shiverick, the president, has been with Higbee's for
more than 17 year? while W. T. Higbee, a former president, is the son of E. C.
Higbee, one of the founders of the business. G. E. Merrifield became associated
with the company in November, 1932 and has taken charge of financial matters.
He is understood to be a representative of the Morgan interests and has had long
experience in the department store field. His previous associations were with
Franklin Simon & Company and Associated Dry Goods Company.
DIRECTORS
Gardner Abbott, Attorney—Tolles Hogsett & Ginn, representing Van Sweringen interests.
T. E. Borton, Borton & Company—representing preferred stock interests.
G. E. Merrifield, Morgan interests.
E. H. Pierce, W. T. Higbee, Asa Shiverick, management.
HISTORY
The Higbee department store business was originally established in 1860 as a
partnership of John G. Hower and Edwin C. Higbee. The Higbee Company
was incorporated in Delaware in May, 1913 and the charter amended in March,
1929. The company has three subsidiaries, Renee Inc. and Langley Inc.,
organized in December, 1929 and the Twelve Seventy Seven Euclid Realty Company, organized in 1919. The first two concerns were organized to carry on
certain phases of the merchandising business but they discontinued operation
on December 24, 1932 and their remaining assets were transferred to the Higbee
Company.
The Twelve Seventy Seven Euclid Realty Company succeeded to the business
of the Higbee Realty Company on June 9, 1932 by change of name. The Higbee
Realty Company was originally organized in 1919 as a realty holding company,
subsequently constructing a building on leased properties on Euclid Avenue at
13th Street which it in turn leased to the Higbee Company. The lease from the
Higbee Realty Company to the Higbee Company expired Maj^ 31, 1932 and was
not renewed. The lease of the Higbee Realty still has some years to run but that
8904
STOCK EXCHANGE PRACTICES
EXHIBIT IJ-27a
company has no assets other than the store property which it is unable to rent
and has not been in a position to keep its lease in good standing. The holder
of the fee has given notice of its intention to forfeit the lease and can do so at
any time. The name Higbee Realty Company was probably changed to prevent
as much stigma as possible from attaching to the Higbee name by reason of the
default of this subsidiary and the consequent default in the payment of rental
on the Euclid East 13th Chester Leasehold Trust Certificates which at one time
were commonly known as the Higbee Corner Leasehold Trust Certificates.
The Higbee Company has been engaged in a general department store business
and for many years was a direct competitor of Halle Brothers Company with
its store located at Euclid Avenue and East 13th Street. Higbee's did not carry a
complete line of men's furnishings, sport goods and similar lines but specialized
in women's furnishings, household goods and related products. As contrasted
with the Halle Brothers Company reputation for quality of merchandise and
service Higbee's emphasized a combination appeal of price and quality and
used sales forcing methods.
Early in 1929 the Van Ess Company, a Van Sweringen affiliate, purchased
the entire common stock of the company for $7,500,000. The stock was subsequently sold to the Cleveland Terminals Building Company in May, 1930.
This change in ownership was a forerunner of the removal of the Higbee Company from its location on Euclid Avenue to a specially constructed building in
the terminal area where it is now located. The actual shift in location did not
come until September 7, 1931.
In making this change the Higbee Company occupied a store building with
1,000,000 square feet of floor space which compared with about 315,000 square
feet in the Euclid Avenue store. The rental requirements were increased very
substantially as were taxes wiiich are payable by the Higbee Company. In
addition, the occupancy of the larger floor space tended to make a larger personnel and larger inventory necessary. All of these factors combined made it
imperative that the Higbee Company change the character of its business materially. It was necessary to extend the scope of the business with the addition
of the lines of merchandise commonly found in the modern department store,
and in general, to increase the volume of business to the point where the larger
overhead and operating expenses could be carried.
Obviously, the Higbee Company needed additional capital to accomplish its
purposes. Some financing was originally contemplated but it was never carried
through and no capital was provided on a permanent basis.
The capitalization of the company at the present time is nominally as presented
below. Actually the company is being financed by its various classes of creditors
subject to a number of agreements establishing their respective priorities. Everything, however, is on a purely temporary basis pending the consummation of
some plan of reorganization or permanent financing.
Capitalization, March 31, 1933
Term Indebtedness (Due October 20, 1933)
__
_
(Renewable for a period of one year.)
* First Preferred Stock, 7%
_ _. _ _
* Second Preferred Stock, 8% Cumulative
_ ___
Common Stock—100,000 Shares. _____
Profit & Loss Deficit
_ _ _
__ $1, 551, 042
1,140,000
454,900
_ _ 1, 900, 000
3,852,328
* No dividends have been paid on either class of stock since 1931 and at the annual meeting in June
1933, sole voting rights will rest in the preferred stock by reason of the default m dividend payments and
other provisions of the preferred issues
STOCK EXCHANGE PEACTICES
8905
EXHIBIT U-27b
An analysis of the financial condition of this company must of necessity cover a
number of different phases of the situation. We preface this discussion with a
brief statement regarding the concern's physical properties and a study of the
company's operating record in order to give a better basis for understanding the
changes in the financial position. In general, the balance of this report may be
broken down into the following classifications.
1. Physical Properties.
2. Operation.
3. Financial Position.
(a) Current Financial"position.
(b) Significant changes in financial position in recent years.
(c) Discussion of the relationship of the present creditors of the company
who are in effect supplying the capital for the business subject to
several agreements.
4. Current Operations.
Physical properties (See Comparative Balance Sheets—Exhibit "A")
At the end of the 1933 fiscal year the concern had no mvestmerf m buildings
and carried its furniture and fixtures at $473,921 which compares with an original
cost of more than $2,000,030. During the j^ear the entire investment in leasehold improvements at the Euclid Avenue store site was written off and charged
to unearned and earned surplus. (Reconciliation of Surplus—Exhibit "C")«
In addition, the value of Furniture and Fixtures was written down $1,479,694 to
$473,921 which perhaps represents a conservative physical valuation of these
assets. Giving effect to these adjustments, the only permanent assets of the company at that time were the furniture and fixtures. These write-downs, together
with the operating losses, have resulted in the creation of a surplus deficit on the
balance sheet which exceeds the combined common and preferred stock, indicating
that the company is operating almost entirely on borrowed capital. Aside from
the Permanent assets and current assets which will be discussed later, the only
assets listed on the balance sheet are Goodwill—$400,000, Deferred Assets—
$113,547 and Other Assets—$50,608.
The store building which the company occupies is owned by the Cleveland
Terminals Building Company and leased to the Higbee Compaii}T for a period of
25 years at a rental equal to 3% of net sales with a minimum rental of $600,000
per annum. Under the terms of the lease, the Higbee Company is responsible
for the payment of taxes on the property. Of this total, $440,000 is paid to the
Metropolitan Life .Insurance Company as the holder of $8,000,000 Cleveland
Terminals Building Company First Mortgage 5%% bonds secured by a first hen
on the store property. Under the terms of an agreement commented on later, no
rental is being paid by or accrued against the Higbee Company at this time.
Under the terms of the lease, the Higbee Company is responsible for the payment
of taxes on the property.
EXHIBIT U - 2 7 C
Operations (See Comparative Operating Statements—Exhibit " B " ) .
Sales —The most important consideration in studying the sales record is the
effect the shift in the store location and the broadening in the scope of business
had upon the volume of sales obtained. During the year ended January 31, 1932
which contained nearly five months of operation at the new site, sales increased
moderately to $12,683,331. Of this amount, $6,454,617 represented sales in the
new store and $6,145,314 sales at the old site in the first seven months of the
period. This would tend to indicate that the company was able to obtain a
slightly larger volume of business for a time at its new location, although it should
be remembered that the year-end included the busy shopping season. During
1932 the record was not encouraging and the volume of business dropped about
$3,000,000 to $9,662,850
The decline (23%) was perhaps not out of line with
the general experience in the trade but net sales last year were less than at the
Euclid Avenue store in either 1930 or 1929 and compare with a volume of $20,000,000 annually which was estimated as the sales volume necessary to carry the
increased overhead and operating expenses incurred by the move to the Terminal
Area.
The company operated on a lower margin last year than previously with the
cost of sales amounting to 74.9% of net sales compared with 68.3% in the previous year and 67% in each of the years 1929 and 1930. The lower margin may
have been the result of more frequent special sales in an effort to stimulate a
8906
STOCK EXCHANGE PRACTICES
greater volume and may have been due in part to a general declining tendency
in retail prices.
Earnings and Operating Expense Analysis.—The company operated profitably
prior to the change in location for an extended period but operations in the first
five months of operation at the new site were highly unprofitable with a loss incurred in the amount of $546,827. In the full fiscal year 1932 the loss aggregated
$1,508,330 which loss would have been greater if an agreement had not been entered into whereby no rental was accrued or paid after July 1, 1932 and certain
adjustments were made in interest payments as more fully set forth on later pages.
(In addition to the operating loss incurred in this period, extraordinary expenses
in the amount of $597,306 were charged directly to surplus, representing excessive
merchandise markdowns and other unusual expenses incidental to the opening of
the new store.)
With regard to operating expenses, it is impossible to arrive at any definite
conclusions without a more intimate knowledge of the situation. Total expenses
increased sharply during the first month of operation in the new store but have
since been curtailed and controllable expenses in the year just ended such as
salaries and advertising compared very favorably with expenses at the Euclid
Avenue store.
The dollar inventory at the end of January, 1933 was carried at less than 50%
of the inventory at the end of any of the three preceding years. This is a rather
unexpected development in the face of the widened scope of the business and the
larger floor space occupied and tends to indicate that the company has been turning over its merchandise at a more rapid rate than formerly. However, this
development has probably been due more to the financial difficulties of the company than to a change in merchandising methods and perhaps is more the result
of a liquidation of inventories in recent months in an effort to build up cash holdings.
EXHIBIT U-27d
In general, the operating record of the company may be regarded as favorable,
although sales have failed to approach expectations by a wide margin. Actual
operating expenses are not much greater at the Terminal store than they were on
Euclid Avenue. The unsatisfactory part of the situation lies in an increase in
items of expense which cannot be controlled, such as taxes, rents, interest, and
also in the lower gross margin and heavier losses on bad debts which probably
may be attributed to general business conditions. We present below a schedule
of some of the uncontrollable charges as they were prior to the move from Euclid
Avenue, as they would be under the terms of agreement entered into at the time
the move was made and finally giving effect to a special agreement dated July 1,
1932. We also include for the sake of comparison actual charges in the year
just past
Prior to
change in
location
(1929)
Rental Charges
Interest Exuense
Taxes.
$174, 624
___ -
Agreements
originally
entered
into at
the time
of the
move
Actual
charges
Year
Ended
Jan 31,
1933
Present
Charges
under
agreement
dated
7-1-32
$600,000
186,000
293,000
$284,140
120, 589
293, 617
$61,720
293,000
$301, 706 $1, 079, 000
$698, 346
$354, 720
127, 082
From the above figures, it is evident that if the full requirements have been
met last year, the loss would have been nearly $400,000 greater than actually
reported, while on the basis of present arrangements, charges will be some
$344,000 less during the current fiscal period than last year. In any case, it is
apparent that the change in location has not enabled the company to carry
larger charges, such as those listed above. In fact, on the basis of the operating
experience since the company moved to the Terminal area, it would have been
difficult to carry the rental and tax expense at the old site. It is not possible to
determine what the reason for this condition is and it perhaps may be explained
by generally unfavorable business conditions.
8907
STOCK EXCHANGE PRACTICES
Financial position (See appended balance sheets—Exhibit A).
3-31-33
Total Current Assets
Cash
Inventories
Accounts Receivable..
Total Current Liabilities _
Bank Loans
Notes Payable (Rent)
Accounts
Tax Liability
Net Working Capital
Impounded Cash
Term Indebtedness
1-31-33
$2,867, 323 $2, 936, 584
338, 396
257, 272
880, 045
990,955
1,
598, 790
1,499, 744
2, 737, 640
2,906,885
1,
600, 000
1, 600, COO
443,800
443,800
271,
273
447, 795
362, 900
407, 666
198,
944
*39, 562
203, 242
1, 551, 042
1, 500, 000
1-31-32
$4, 641, 615
92, 284
2, 057, 632
2, 384, 096
3, 094, 244
1, 600, 000
1, 307, 790
136, 367
1, 547, 401
1-31-31
1-31-30
$5,101,738 $5,193, 245
6,802
28, 335
1, 817, 997 1, 768, 356
2, 245, 830 2, 284, 201
2,077,952 2,076, 259
1,561,936
172,843
3, 023, 786
1,525,797
203, 924
3,116, 986
1, 500, 000
* Deficit
EXHIBIT U-27e
The current financial position as of March 31, 1933 was very weak. Current
assets were exceeded by current liabilities at that date, although that situation
may be modified to some extent by offsetting the impounded cash against the
bank loans. In view of the obvious need of cash this would not improve but
rather tend to weaken the company's position.
According to the audited report of Ernst & Ernst, approximately $760,000 of
the total receivables of $1,773,790 on January 31, 1933 were receiving special
attention from the collection department. The following summary classifies
these accounts as to date of charge.
n
,
£
r^.
Approximate
Date of Charge:
Prior to January 1, 1932
January, February and March 1932
April, May and June 1932
July, August and September 1932
Subsequent to October 1, 1932
amount
$174, 000
59, 000
93, 000
104,000
330, 000
Total
760,000
We do not have comparable figures for previous periods but according to the
management the reserve of $175,000 which has been set up is adequate. This
reserve is substantially larger than in previous years but compares with losses on
bad accounts of $207,663 in 1932. In general, there has been a closer control
over receivables in recent months than formerly and the amount outstanding has
been reduced. Collections, however, tend to be made more rapidly on the better
accounts and it appears quite possible that the percentage of doubtful receivables
is considerably higher now than formerly particularly in the face of the banking
situation in Cleveland. Under the circumstances a larger reserve probably would
have been justified.
Inventories are valued at the lower of cost or market and the reserve for
anticipated further markdown and cash discount as of January 31, 1931 was
substantially larger than previously. In view of firming commodity prices,
inventory valuations may be regarded as conservative.
SIGNIFICANT CHANGES IN FINANCIAL POSITION
The changes in financial position may be roughly grouped into two classifications. In the first place, there are those which reflect operations, expenditures
for permanent assets and perhaps financing other than on a current basis. In
the second place, there are changes which are the result of a shift among the
current assets or current liabilities, for example, the use of cash to meet current
obligations or to build up inventories. In the case of the Higbee Company
there have been significant changes of both types.
Under the first heading wTould fall the substantial reduction in net working
capital which tpok place primarily as a result of operating losses and extraordinary losses incurred and the expenditure of a substantial amount of money
for permanent assets ($2,000,000). In addition, working capital was affected by
the securing of a loan of $1,500,000 from the Cleveland Terminals Building Com
8908
STOCK EXCHANGE PRACTICES
pany on what amounted to a three-year basis. It is significant to note that the
expenditures for permanent assets exceeded the amount of money paid from the
Cleveland Terminals Building, the net effect being a reduction in working capital.
EXHIBIT U-27f
In the second group would fall the borrowing of money from the banks to take
the place of money owed to creditors, a fact which is not readily apparent and in
general the liquidation of inventories and receivables which has taken place since
January 31, 1932 which has enabled the company to build up its cash resources
to some extent and also effect a further reduction in payables due trade creditors.
There is no definite segregation of funds obtained from the Cleveland Terminals
Building Company and the banks but in a general way it is understood that the
concern was forced to seek bank loans to take care of trade indebtedness incurred
as a result of inventories which were built up at the time of the opening of the new
store in September, 1931. At that time the trade became uneasy because of slow
payments and the lack of working capital and started pressing for payment. The
banks supplied the money to meet a part of this indebtedness and liquidation of
inventories and receivables which has gone on rather steadily since that time has
supplied additional funds to meet accounts payable.
The confidence of the trade in this company has never been completely reestablished but in some respects has grown less and the banks have been left as an
important factor in the company's affairs. Since January 31, 1932 the company
has accumulated a moderate amount of cash through the reduction of inventories
but this increase has been offset largely by the accrual of taxes.
STATEMENT OF SOURCE & APPLICATION
OF FUNDS
On the following page is presented a statement of the source and application
of funds for the three year period from January 31, 1930 to January 31, 1933.
This statement shows in detail the changes which have taken place in this period
some of which have been described above.
In general, it is evident that the company has maintained operations only
through the liquidation of current assets. It is true that money was borrowed
from the Cleveland Terminals Building Company and from a group of banks but
the money obtained from the Cleveland Terminals Building Company was insufficient to take care of the investment in permanent assets and the money borrowed from the banks was applied, for the most part, to a reduction in other
payables. It is true that current liabilities other than the notes payable to banks
and accounts payable have increased but this has not been due to additional
borrowing but is the result of the failure to pay rental charges and taxes and the
consequent accrual of those expenses against the company.
EXHIBIT U-27g
HIGBEE COMPANY AND SUBSIDIARIES
Statement of Source and Application of Funds During the Three Year Period from
January 31, 1930 to January 31, 1933
Funds were obtained from—
Reduction in Current Assets
Decrease in Receivables
Decrease in Inventories
Decrease in U.S. Govt. Securities
$1, 027, 948
Less: Increase in cash
310, 061
Increase in Value of Life
Insurance
34,948
$685, 411
888, 311
682,939 $2,256,661
STOCK EXCHANGE PRACTICES
8909
Statement of Source and Application of Funds During the Three Year Period from
January 31, 1930 to January 31, 1933—Continued
Funds were obtained from—Continued.
Increase in Current Liabilities
Borrowed from Banks (Notes Payable)
__
__
$1,600,000
Borrowed from Clev. Term. Bldg.
Co.—Notes Payable, _ _
443, 800
Borrowed from Clev. Term. Bldg.
Co.—Accts. Payable
19, 012
Accrued Int.—Clev. Term. Bldg.
Co. (term indebtedness)
58,667
Accrued Taxes—
159, 976 $2,281,455
Less: Reduction in Accounts
Payable
" in Divs. Payable and
Other Liab_
1, 273, 536
346, 538 1, 620, 074
Term Indebtedness:
Borrowed from Cleveland Terminals Building Co
Refund of Taxes (Incl. adjustment of
tax reserves)
Increase in Reserves
_ _ _ _ _
$661, 381
1, 500, 000
66,868
7,500
$4, 492, 410
Funds were applied to—
Net Loss
Less Depreciation ___
__.
Extraordinary Losses incidental to reorganization and opening of new store
Dividend Payments
Less Dividends Rescinded-__ _
1,730,750
349,578
414, 980
150,000
1,381,172
616,680
264,980
Investment in Permanent Assets.
Write off of Euclid Ave. Store property__
_
1,940,163
Write down of Furniture & Fixtures
_ __ 1,479,694
Depreciation of Permanent Assets
charged to operations
_
349, 578
Depreciation charged to Unearned
Surplus
_ _
20,066 3,789,501
Less Decrease in Net property accounts.
_
Estimated investment in furniture
andfixtures
Reduction in Preferred Stock
Plus Premium Paid
_ __
Increase in Deferred Assets__
_ _
Increase in Other Assets:
Write-down of investments
Less, reduction in net other assets
(as appearing on the balance
sheets)
Miscellaneous charges (to unearned surplus)
1, 693, 842
__
48, 100
2,118
2,095,659
50,218
41,254
42, 247
23, 330
18,917
23, 530
4, 492, 410
8910
STOCK EXCHANGE PRACTICES
EXHIBIT U-27h
Relationship of creditors
We have previously pointed out the fact that this company is being operated
almost entirely on borrowed money. No attempt has been made as yet to point
out exactly who these creditors are and the terms on which they haye advanced
capital. The following pages are concerned with the identification of these
creditors and a discussion of agreements affecting the credits. The following in
summary form are the principal credits in which we are interested:
Amount
of Notes
(1) Term Indebtedness: C T B Co (renewable to October 20, 1934)
(New York Bank Credit)
(2) Bank Loans
Cleveland Trust Company
Midland Bank
Guardian Trust Company
Union Trust Company
J. P. Morgan & Company
(3) Note Payable to C T.B Co for Rent (Held by Metropolitan Life
Insurance Company)
(4) Government Tax Obligation
(5) Merchandise Creditors
(6) Miscellaneous
Impounded
Cash
Amount
3-31-33
$1, 551, 042
1, 600, 000
$300,000
250,000
200,000
317,000
533, 000
$99, 376
103,866
1, 600,000
203, 242
443,800
407,665
186,168
269,252
The bank notes payable were issued in November, 1931 under a special trust
agreement depositing certain collateral with the Cleveland Trust Company as
Trustee. For the further protection of these notes, another agreement was made
which definitely subordinates the term indebtedness to these credits. These
agreements will be discussed in our separate comments on these loans. In addition to these agreements, there is a special agreement in effect at the present time
which affects the first three credits listed above as well the Cleveland Terminals
Building Company as lessor of the store and the Metropolitan Life Insurance
Company as the party that should ultimately receive the bulk of the rent paid
by reason of its ownership of the $8,000,000 First Mortgage bonds outstanding
against the property. These interests, together with the Cleveland and New
York creditors, the Van Ess Company, and finally the Higbee Company are
parties to this agreement.
Special Agreement dated 7-1-32 renewed and modified February 28, 1933
This agreement provides three things.
(1) That interest on the bank notes and notes payable to Cleveland Terminals Building Company for rent shall be at the rate of 4%.
(2) That no interest shall be paid or accrued on the term indebtedness, and
(3) That no rent shall be paid or accrued.
EXHIBIT U-27i
These provisions are subject to modification in the event the company should
report any earnings and there are definite arrangements for the allocation of such
earnings to the payment of rent, the payment of additional interest on the notes
payable (up to 6%) and finally to the payment of interest on the term indebtedness. The probability of any earnings is so remote that we are not interested in
the detail of these arrangements.
This special agreement is for a period of a year from February 28, 1933 but is
subject to renewal or termination every three months. The next renewal date
on the notes we hold is June 1, 1933.
Term Indebtedness
$1, 551, 042
This indebtedness consists of two notes payable from Higbee Company to
Cleveland Terminals Building Company, one of $258,507 and one of $1,292,535.
These notes were originally due October 20, 1932 but were subject to renewal each
year for a period of two years which in effect makes their maturity October 20,
1934. This money was advanced by Cleveland Terminals Building Company
to Higbee's in 1931 and Cleveland Terminals Building Company in turn took the
notes to New York and used them as part collateral for very substantial loans
made by the New York Bank Credit, a group of banks headed by J. P. Morgan &
Company to the Cleveland Terminals Building Company and the Van Ess Com
STOCK EXCHANGE PEACTICES
8911
pany. The $1,292,535 note bears the endorsement of the Van Ess Company and
is pledged with the New York Bank Credit by that company. The notes have
1400 shares of capital stock of the Higbee Realty Company (now Twelve Seventy
Seven Euclid Realty Company) pledged as collateral. This stock is apparently
without value.
The New York Bank Credit as noted above has a very substantial stake in the
terminal development and probably for that reason an arrangement was entered
into subordinating this loan to the bank notes payable in order to induce the
banks to loan money to the company. This probably also explains the assent of
the New York Bank Credit to the Speical Agreement which provides that no
interest be paid on the Term indebtedness for the present.
The subordination of the term indebtedness is with respect to both principal
and interest and is certified on the notes held by the banks. In substance, the
following is the opinion of Tolles Hoggsett & Ginn with respect to this subordination.
We are of the opinion that said notes (term indebtedness) are duly subordinated
to the bank debt, the subordination having the effect of obligating the holder of
the notes to hold in trust any amounts received in payment of principal (and
interest in cash of insolvency and other events) and to apply same to the extent
necessary to pay any deficiency in the full payment of the $1,600,000 principal
amount of notes payable to the banks.
The subordination of the term indebtedness does not extend to other classes of
creditors aside from the banks.
Bank Loans—6%
$1, 600, 000
Amt of
Notes
Cleveland Trust Company..
Midland Bank
Guardian Trust Company..
Union Trust Company
J P. Morgan & Company _.
$300,000
250,000
200,000
317,000
533, 000
1, 600, 000
Impounded
Cash
$99, 376
103, 866
203, 242
EXHIBIT U-27j
These notes were originally executed November 17, 1931 under the terms of a
trust agreement of that date and are also subject to the terms of the special
agreement dated 7—1—32 which provides for a reduction in the interest rate to 4%.
These notes are subject to renewal every three months—June 1st, September 1st,
December 1st, etc. Each of the notes is a separate instrument, although the
collateral is held for the benefit of all of the banks according to their proportionate
interest. The Cleveland Trust Company is trustee under this agreement.
The collateral pledged as security for these notes is as follows:
(1) $500,000 Life insurance on Asa Shiverick. This insurance has a cash
surrender value of $119,353 at the present time.
(2) The equitable title to the air rights on two parcels of land in the terminal
area. The legal titles to these properties are held by the Union Trust Company
as trustee for the Cleveland Terminals Building Company.
(a) Property fronting 84.8 feet on Superior Avenue and 231 feet on Prospect
west of and adjacent to Hotel Cleveland. This property has an area of 33,330
square feet and while unimproved is carried on the books of the Cleveland
Terminals Building Company at $1,725,000.
(b) Property fronting 291.7 feet on Ontario Street and 109.2 feet on Huron
Road adjacent to and south of the Builders Exchange Building, This property
is unimproved. It has an area of 21,914 square feet and is carried at a figure
of $1,000,000 on the Cleveland Terminals Building Company books.
These properties undoubtedly have considerable value and they do add to
the security behind the loan. However, it might be difficult to effect their
immediate sale and it is impossible to give an accurate estimate of their present
value.
An important consideration at the present time is the effect that an offset of
the impounded cash in this bank against the principal of the note payable we
hold would have upon the position of the unpaid balance of the note with respect
to the other bank credits. Since the bank notes payable are all separate instruments, although issued under the terms of a trust agreement, this offset would
probably have no effect upon the position of the note holders as general creditors
175541—34—PT 20
12
8912
STOCK EXCHANGE PRACTICES
of Higbee's. Under the trust agreement, provision is made for the pro-rata
distribution of any cash received from the liquidation of collateral and there
may be some question as to our rights with respect to such distributions if our
proportion of the loan is reduced by an offset.
There is also in existence a letter agreement between J. P. Morgan & Company
and Cleveland Terminals Building Company to which the Higbee Company is
a party providing that any payments on the notes shall be pro rata to J. P. Morgan
& Company and to the Cleveland banks collectively in accordance with their
respective participations. There is some question as to whether this agreement
is binding as far as the Cleveland banks are concerned and a receivership, of
course, might materially alter the whole picture. In any case, this whole matter
will have to be referred to our attorneys in case any of these questions come up
as they are likely to, when the matter of renewal is considered.
EXHIBIT U-27k
Government tax obligations
$407, 665
This obligation represents accrued and past due taxes owing to the State,
County and Federal Governments. Taxes are accruing at the rate of about
$293,000 a year which includes real estate taxes of $226,188. It might be noted
that these real estate taxes are subject to a 10% delinquency penalty after the
close of the tax books May 10. After the first year taxes are delinquent, 8%
interest is charged by the Government.
The Higbee Company is liable for the taxes on the store property Under the
terms of a lease from the Cleveland Terminals Building Company. There is,
of course, a normal accrual of these taxes in the ordinary course of business but
since the taxes have become delinquent, the Government unwittingly has become
a substantial creditor of the company and in effect is supplying working capital.
The penalties for the non-payment of taxes are high but the expense is not an
immediate consideration because the actual payment probably can be deferred
for some time.
Merchandise Creditors
__^
_
___ $186,168
These obligations represent payables owing to the trade on account of merchandise purchased. The extremely small amount of these credits reflects the
lack of confidence of the trade in the Higbee company and gives some indication
of the difficulties faced by the company in attempting to do business on its
present capital set-up.
Miscellaneous
$269, 252
These credits, for the most part, represent the normal accrual or float of operating charges incurred in the ordinary course of business. These obligations
are not highly important and we have no reason to expect that they will change
materially.
CURRENT OPERATIONS
Up to this point, only casual mention of developments since the end of the
1932 fiscal year has been made. We have balance sheets and operating statements for the first two months of the 1933 fiscal period and are particularly
interested in the results obtained by the company in these two months because
of the fact that overhead expenses, including rent and interest charges, were
practically at a minimum. Under these circumstances, one might expect to
get some idea of the possibilities of the Higbee Company's working out of its
present difficulties from a study of the operating results of this period.
The following figures present in a condensed form a summary of the operating
results of the period and changes in financial position.
EXHIBIT U-271
During the two months period ended March 31, 1933 there was a reduction
in working capital of $238,507 which may be accounted for as follows:
Net Loss
_-_
Less: Depreciation
Expenditure for Permanent Assets
Increases in Other Assets
Reduction in working capital attributable to operations
$87, 048
17, 000
$70, 048
3, 183
13, 076
$86, 307
8913
STOCK EXCHANGE PRACTICES
These items are the only factors directly concerned with the operation of the
business that affected working capital.
However, there were other developments
as follows:
Reduction in working capital as above
Cash Impounded
Less: Current Liability transferred to term i?idebtedness
86, 307
$203, 242
51, 042
152, 200
x
Reduction in working capital as indicated by balance sheet changes
$238, 507
It is evident that operation continued on an unprofitable basis with a cash
loss of about $35,000 per month.
The cash loss in March was only $31,883
indicating some improvement although this may be attributed primarily to
Easter shopping.
More recent reports indicate that business is running somewhat ahead of last year and that the company is just about breaking even.
It should, of course, be remembered that operations during March were in the
face of the banking situation and some stimulus to buying may be expected with
a release of part of the Union and Guardian Trust Company deposits
R. B. BLYTH.
May 22, 1933
EXHIBIT U-27m
EXHIBIT " A "
The Higbee Company and subsidiaries consolidated balance sheets
1-31-30
1-31-31
1-31-32
$28, 335
1, 027,948
2, 349,172
64, 971
$6, 802
985, 000
2,311,175
65, 345
$92, 284
$338, 396
2, 484, 694
100, 598
1, 773, 790
175,000
2, 284, 201
2, 245, 830
2, 384,096
1, 598, 790
1, 837, 413
69, 057
1, 885,194
67,197
2,142, 642
85, 010
1, 016, 280
136, 235
1, 768, 356
84,405
1, 817,997
96,109
2, 057, 632
107, 643
880, 045
119,353
5, 193, 245
Total Current Assets
73, 938
Othei Assets
400, 000
(rood Will
72, 293
Deferred Assets
Permanent Assets—Furniture & Fixtures Delivery
Equipment (net)
2, 167, 763
Leasehold improvements..
$7, 907, 239
Total Assets..
__
_ _
LIABILITIES
Notes Pavable Banks
Notes Payable Cleveland Terminal Bldg Co
$1 525, 797
Accounts Payable (TotaD
Including (Cleveland Terminal Bldg Co )
203, 921
Acciued Taxes
Acciued Interest on term indebtedness
1,981
Other Accruals
344, 557
Dividends Payable
_
2, 076, 259
Total current liabilities
Term Indebtedness 2
Reserves
1,187, 500
First Preferred
455, 400
Second Preferred
1,900,000
Common Stock No Par 100,000 Shares
1, 341, 223
Surplus Unearned
3 946,857
Profit and Loss Deficit$7,907, 239
Total Liabilities—.
_
Net Working Capital
__
_ __ __ $3,116, 986
5,101, 738
75, 438
400, 000
54,107
4, 641, 645
93, 078
400, 000
116,489
2, 936, 584
50, 608
400,000
113,547
(2, 041,059)
(1,980,564)
$9, 272, 845
473, 921
2,090,900
$7, 722, 182
_ _ ___
$1, 600, 000
$1,561,936
1, 307, 790
(244, 651)
136,307
44, 536
5,551
ASSETS
Cash
Y S Govt Securities
Accounts Receivable
Less Reserve
Net Accounts Receivable
Inventorv.
Less Reserves
Net Inventory .
(ash Surrender Value of Life Insurance
1
2
3
l
172,843
1,981
341,192
2, 077, 952
1,140, 000
454,900
1,900,000
1, 319, 425
3 829,905
$7, 722,182
$3,023, 786
3, 094, 244
1, 500, 000
1,139,900
454, 900
1, 900, 000
1, 297, 628
113,827
$9, 272,845
$1, 547, 401
1-31-33
$3, 974, 660
$1, 600,000
443, 800
271, 273
(19, 012)
363, 900
58, 667
2, 737,640
1, 500,000
7,500
1,139,900
454, 900
1, 900, 000
3, 765,280
$3, 974, 660
$198,944
The life insurance policies of $500,000 face amount are deposited as security for the bank loans
Cleveland Terminal Building Co renewable annually for 2 years from maturity 10-30-32.
Surplus
i The reduction in working capital is subject to modification upon the offset of impounded cash balances
against notes payable
8914
STOCK EXCHAXGE PRACTICES
EXHIBIT
U-27n
EXHIBIT " B "
The Higbee Company and subsidiaries operating statements
(Years ended January 31)
1930
Net Sales
$11, 639, 393
Cost of Sales
Selling & Gen & Admm Expse
_
Operating Profit
Other Deductions (net)..
Incl Depr _. _ _
" Loss on Bad Accts.
Interest Expse
Federal Income Tax Pi ovision
_ __
Net Profit
Sales
%of
Sales
1931
100 0 $10, 960, 940
1932
100 0 $12,683,331
^cof
Sales
%of
Sales
1933
100 0
$9,662,850
100 0
68 3
7, 237, 784
74 9
7,813, 792
67 0
7, 435, 844
67 0
8, 663,149
3, 064, 576
761, 025
26 0
7 0
2, 960, 289
564,807
27 0
5 1
4,149, 839
3,440, 676
32 7
35 6
129, 657 d 1 Od 1,015,610 d 10 5 d
130,811
108, 249
36, 023
1.1
0 9
0 3
200, 726
112,643
65, 357
1 8
1 0
0 6
70, 500
559, 714
0 6
4 8
45, 038
319, 043
0.4
2 9
26 0
$2, 960, 289
525, 719
174, 624
14 8
4 5
1 5
127, 082
1 1
411,807
134, 383
123, 240
48, 894
3
1
1
0
541,464 d
4 2 d 1, 508, 330 d 15 6 d
2
1
0
4
492, 720
102, 552
207, 663
120, 589
5 1
1.1
2 1
1 2
OPERATING EXPENSE
ANALYSIS
Total Expense (Selling,
Gen & Admin Expse). $3, 064, 576
Including the following
important e x p e n s e
items.
Salaries
1, 730, 729
Advertising
.
Rent
Taxes—Real, personal & Corp__ ._
27 0 $4,149,839
32 7
$3,440, 676
35 6
1, 680, 357
517,158
186, 821
15 3
4 7
1 7
2, 227, 318
655,126
391,935
17 5
5 1
3 1
1, 730, 987
512,062
284,140
17 9
5 2
2 9
121, 726
1 1
103, 737
0 8
293, 617
3 0
EXHIBIT U-27O
EXHIBIT
"c"
The Higbee Company and subsidiaries—Reconciliation of surplus
1-31-30
Adjusted Surplus at beginning of year (Combined Profit & Loss & Unearned)
__ $3, 418,869
Add:
Net Profit
559, 714
Federal Tax Prov. adj or Refund
Dividends Rescinded
Deductions from earned surplus*
Dividends*
1, 000, 000
Stock
640, 493
Cash
20, 000
Reorganization Expense
Extraordinary expense (new store)
Write-down of Furniture & Fixtures
Premium on Preferred Stock
8,213
Charge-off of Euclid Ave. Store property
(to earned Surplus) .
Charge-off of Euclid Ave Store property
(portion charged to Unearned Surplus)
Write-down of Investments
Miscellaneous charges to Unearned Surplus.
21,798
Surplus at end of yeari $2,288,080
1-31-31
$2, 288, 080
319, 043
477
1-31-32
$2,149,330
541, 464 d
45, 038
150, 000
1-31-33
$1,183, 801
1, 508, 330 d
21, 354
414, 980
19, 373
597, 306
1, 479, 894
2,118
642, 535
1, 297, 628
42, 247
21, 798
$2,149, 330
21, 798
$1,183, 801
$3, 765, 280 d
STOCK EXCHANGE PRACTICES
8915
EXHIBIT U-27p
HIGBEE COMPANY
SUMMARY AND CONCLUSIONS
The principal interest of the Union Trust Company in this situation is the
commercial loan of $317,000 which is offset by an impounded cash balance of
$103,866. Another consideration, however, is the effect that any action we might
take would have upon the success of the whole terminal development in which w^e
have a substantial interest.
Aside from the Union Trust Company, the principal interests in this situation
are as follows:
Cleveland Terminals Building Company
(a) Owner of entire common stock
(b) Endorser of $1,551,042 paramount of notes of Higbee Company
pledged as security for a loan from the "New York Bank Credit."
(c) Owner of Higbee store building.
Van Ess Company
(a) Endorser of $1,292,535 note (included above) pledged with "New
York Bank Credit".
11
New York Bank Credit"
(a) Owner of Higbee notes pa}*able $1,551,042 endorsed by Cleveland
Terminals Building Company and in part by Van Ess Company.
The New York Bank Credit is a group of banks headed by J. P.
Morgan & Company that has advanced a sum of more than $40,000,000
to the Cleveland Terminals Building Company and the Van Ess Company.
Metropolitan Life Insurance Company
(a) Holder of $8,000,000 First Mortgage 5-}{% Cleveland Terminals
Building Company secured by a first mortgage on Higbee store building.
(b) Owner of $443,800 notes payable of Higbee Company accepted as
payment of interest on the mortgage bonds.
Other Bank Creditors
Cleveland Trust Company
Midland Bank Company 1
Guardian Trust Company
J. P. Morgan & Company
__
$300, 000
250, 000
200,000
533,000
Preferred Stockholders
The voting control of the company will rest in the hands of the preferred stockholders at the annual meeting in June. While the concern
is in effect in the hands of its creditors, the junior interests have certain
rights and if properlyr organized, would have to be considered. The
first preferred stock w as sold publicly and as far as we know, there are
no particularly large holdings of either class of stock.
EXHIBIT U-27-q
The Higbee Company at the present time is not soundly financed but is being
carried along by its creditors. Mr. G. E Merrifield, a representative of the
Morgan interests, was recently made an officer of the company and is now active
in its management. The company has been unable to secure a larger volume
of sales in its new store building and while operating expenses last year were
approximately the same as they were at the old store on Euclid Avenue, a substantial loss was incurred. Working capital is inadequate and further operating
losses if reflected in a decline in working capital might hamper operations to a
serious degree. It appears to be entirely out of the question to expect immediate
payment of our note and under the circumstances, there is a rather vital question
as "to whether the interests of the Union Trust Company would be best protected
by permitting continued operation or by forcing an immediate reorganization
or receivership.
Reorganization.—A reorganization would be desirable only if new capital could
be supplied. None of the present interests appear able or willing to supply
8916
STOCK EXCHANGE PRACTICES
additional capital. A possible source of capital that occurs to us is the former
owners of the common stock who sold out for a price of $7,500,000. In a thorough
reorganization of the company these interests might be induced to provide some
additional capital for the business.
Receivership.—A receivership should be forced at this time only if a liquidation
of the company appears advisable. Even in that event, consideration should be
given to the possibilities of continued operation for a limited period during which
efforts would be made to reduce inventories a ad receivables. The bank creditors
are in a rather strong position due principallv to the subordination of the Term
Indebtedness ($1,551,042) to the Bank Notes Payable. Any estimates of
recovery in liquidation are necessarily very inaccurate but in order to give some
idea of the position of the banks, we present the following figures. These figures
are only approximate and no consideration is given to the expenses of a receivership or the possibility of other creditors establishing priorities. Sixty percent
recovery of current assets is assumed.
Total Indebtedness
Bank Notes Payable
Term Indebtedness
% of Total Debt
Approximate
Amount
*$4, 100, 000
Approximate
Amount
*$2, 750, 000
Total Current Assets
*$1, 280, 000 60% Recovery
1,500,000 Amount applicable
bank debt
2, 780, 000
68%
1, 650, 000
to
1,122,000
The effect of the subordination is to make any payments made or applicable
to the term indebtedness available for the bank debt. Using the above figures,
a 60% recovery on current assets would result in an 87% recovery by the banks.
Actually, the experience would probably not be as favorable due to receivership
expenses, etc., although the entire bank debt might very well be taken care of
eventually by recovery from furniture and fixtures and from the sale of real
estate in the terminal area held as collateral security.
EXHIBIT U-27r
Continued Operation.—Receivership at best is an uncertain proposition and if
the enterprise has any chances of ultimate success, continued operation would be
advantageous. If operation is to be continued there must be some assurance that
further cash losses will not be great and that they will be kept at an absolute minimum. All of the interested parties have cooperated to this end through reductions
and cancellations of interest and rental payments, but it is possible that further
operating economies might be put into effect by eliminating some of the most
unprofitable departments at least temporarily and perhaps through a reduction in
the amount of floor space used. Operation will not be possible without the continued cooperation of all of the creditors and if the other Cleveland Banks are
willing to go along, there appears to be no reason why we should not. There are
interests that have a much larger stake in the terminal development than we have
and any definite improvement in the situation might make it possible for us to
demand payment while in the meantime we should insist on rigid control of inventories and receivables.
The continued operation of the business appears to be the most desirable alternative at the present time, particularly in view of our other interests in the terminal development and also the general importance of that project to the city of
Cleveland.
As somewhat of a side issue in this situation, it is suggested that our attorneys
should investigate what effect an offset of the impounded cash balance against the
note payable we hold would have on the position of the unpaid balance of the note
with respect to the other bank creditors. This may be governed by the various
"agreements" which have been drawn up and which are commented on in the
attached report.
FG
9R.B.B.
5-22-33
* Giving effect to an offset of impounded cash against bank notes and the preferred claim of the banks
against the life insurance cash values (about $120,000)
STOCK EXCHANGE PRACTICES
8917
EXHIBIT U - 2 7 S
HIGBEE COMPANY
Union Trust Company Interests
Commercial Loan {Secured), $317,000
Impounded Cash, $103,866
Estates Trust Department
361 Shares Cumulative 7% First Preferred
44 Shares Cumulative 8% Second Preferred
Trustee
Euclid Thirteenth Chester (Higbee Corner) Leasehold Trust Certificates.
Transfer Agent and Registrar
Cumulative 7% First Preferred Stock
Cumulative 8% Second Preferred Stock
Common Stock
Union Trust Company Bond Department (Union Cleveland Corporation)
Associated in underwriting and public sale of the following securities:
(1922) 8% First Preferred Stock
(1923) 7% First Preferred Stock
(1925) Euclid East Thirteenth Chester Leasehold Trust Certificates.
EXHIBIT
THE
U-28
HIGBEE COMPANY
June 3 1933
Jim 7 4 45 PM 1933
SUMMARY OF AGREEMENT JULY 1, 1932
The parties to this agreement were:
The Higbee Company—Department store operator.
The Cleveland Terminals Building Company—Owner of premises occupied by
The Higbee Company.
The Metropolitan Life Insurance Company—Owner and holder of all the first
mortgage bonds of the Cleveland Terminals Building Company, to which all
rights, rentals and revenues accruing to the Terminals Building Company, under
a lease of which The Higbee Company is lessee, are assigned.
The following banks are holders of notes of The Higbee Company:
The Union Trust Company
_
__
_" _
$317,000
The Cleveland Trust Company.
___
_ __
. __
300,000
Midland Bank. __
_____
_
250,000
The Guardian Trust Company
_ ___
200, 000
J. P. Morgan & Co___
"
___
_
_
533, 000
Total
_ _
_____
$1,600,000
The Van Ess Company—This company is a holder of a note of The Higbee
Company endorsed by the Cleveland Terminals Building Company, dated October
30, 1931, maturing October 30, 1932, in the amount of $1,250,000. This has been
pledged with New York Bank Credit as collateral security for indebtedness of
Van Ess.
The New York Bank Credit—Holder of notes of The Higbee Company as
collateral security in the amount of $1,500,000, being one note of $1,250,000 and
one note of $250,000.
The purpose of the Agreement.
A. Modify terms of rental set forth in leases and provide for settlement of
accrued rent.
B. Provide for substitution for new notes of $1,600,000 to the banks and adjustment of interest thereon.
C. Modify the terms as to interest upon notes of Higbee aggregating $1,500,000
Agreement provided
A. Higbee shall deliver promissory note of $413,000 dated July 1, 1932, maturity
October 1, 1932, to the The Guardian Trust Company, trustee, this to be accepted
by the Metropolitan in settlement of rental to July 1, 1932. Also deliver notes of
$30,800 to Terminals in settlement of rentals to July 1, 1932. Renewals of the
above two notes provided for up to March 1, 1933.
8918
STOCK EXCHANGE PRACTICES
EXHIBIT U-28a
B. From and after July 1, 1932, until termination of agreement, the rental to
be paid by Higbee shall be the portion of net earnings remaining after all operating
expenses, including taxes, interest at 4% on the debt of $1,600,000 and upon the
$443,800 previously referred to, said rental in lieu of rental provided in original
lease.
C. Notes of Higbee outstanding to banks to be surrendered and substituted by
notes due October 1, 1932. Renewal notes provided to be accepted on October 1,
1932 and January 1, 1933. Said renewal notes to have equal security and benefit
with the notes surrendered.
D. Agreement terminable by any of the parties as of December 30 or December 31, 1932, otherwise it expires February 28, 1933. Notice to be given by any
party by mailing notice to the other party not later than December 30 or December 31.
E. Accrued interest on the $1,500,000 of notes previously referred to shall cease
as of July 1 and shall not accrue except out of net earnings as defined in detail
in the agreement.
F. Metropolitan shall procure agreement of Guardian Trust Company, Trustee,
to the terms herein.
G. Higbee agreed to make no payments on its indebtedness herein set forth
except in accordance with provisions of the agreement.
H. Provisions of lease from Terminals to Higbee shall become in full force and
effect upon signing of agreement.
I. This agreement has no effect on the obligations referred to except as specifically modified and only for the terms of the agreement.
J. The termination of the agreement by expiration or by action shall in no
wise effect the validity of any evidence of indebtedness.
EXHIBIT
U-29
MAY
20, 1932
Mr. WILBERT WARD,
Ass't. Vice President,
The National City Bank of New York,
New York, N.Y.
DEAR SIR: This is in reply to your letter of May 18 regarding The Higbee
Company, Cleveland, Ohio.
It is our ppinion that considering the condition of the company's finances, it
should be either discounting trade obligations or paying them when due. It is
true, of course, that the open winter slowed up trade in this section materially
and possible the company's receipts were not what had been expected.
A recent mercantile report contained figures of January 31, 1932, at which
time current assets were listed at $4,600,000 and current liabilities $3,094,000,
of which $1,600,000 was bank debt.
We know of no reason why The Higbee Company should not be considered at
this time as worthy of its mercantile requirements. The present management is
experienced and has always been successful.
Very truly yours,
Vice President.
WT:E-6
EXHIBIT
U-30
JUNE 23,
Mr.
1932.
WM. FEICK,
Vice Pres., Irving Trust Company,
New York City.
DEAR BILL: The Credit Department received a letter under date of the 20th
from your Mr. O'Brien in regard to The Higbee Company. Now, we are not in
a position to give any very pretty picture of The Higbee Company. They started
in last year before the holidays, in the new location. The Van Sweringens bought
the Higbee Company and paid a large price for it, built a building on the public
square and moved the company into it. The rental is too high for any store to
be able to pay and show a profit.
In*'addition to the above, they did not have enough working capital. They
owe the banks $1,600,000, as mentioned in the letter, which has not been extended
until 1933. We are renewing it for a thirty-day period, as requested by them.
STOCK EXCHANGE PRACTICES
8919
Their current position is not a very satisfactory one. Their current liabilities are
$3,018,000, and in addition thereto they have a long-term note of $1,500,000,
which is due October 30, 1932, subject to a renewal to October 30, 1934. This
note is subordinated to the notes to the Cleveland banks. Their quick assets
are approximately $4,000,000, made up of half inventory and half accounts
receivable and cash. In addition thereto, they have a fixture account of about
$2,000,000. The company has lost money ever since they have been in business.
The Metropolitan Life Insurance Company has an $8,000,000 mortgage on the
building which they occupy, which is owned by the Cleveland Terminals Building
Company. This is not what I would call an A-l credit, but they tell me they
are paying their merchandise creditors according to the terms on which the
merchandise is sold, and their accounts payable to the merchandise creditors runs
about $500,000.
I am giving you more than I would give to an outside inquiry, and will ask
you to treat it as confidential.
There must be some re-organization of this company, either by new capital or
a readjustment of their current debt; but how that is to be accomplished I don't
know.
Very sincerely yours,
Vice Chairman of the Boaui.
JEK E
EXHIBIT
U-31
JUNE 25,
Mr.
1932.
C. M. WILSON,
Ass't. Credit Manager,
Chemical Bank & Trust Company,
New York, N.Y.
DEAR MR. WILSON: Your letter of June 23 regarding the Higbee Company
has been referred to the writer for reply in the absence of Mr. Tonks.
It is our opinion that considering the condition of the subject's finances, it
should be either discounting trade obligations or paying them when due. It is
true, of course, that the open winter slowed up trade in this section materially,
and possibly the company's receipts were not what had been expected.
A recent mercantile report contained figures of January 31, 1932, at which
time current assets were listed as $4,600,000 and current liabilities $3,094,000,
of which $1,600,000 was bank debt.
We know of no reason why The Higbee Company should not be considered as
worthy of its mercantile requirements at this time. The present management
is experienced and has always been successful.
Truly yours,
Executive Vice President.
EXHIBIT
U-32
OCTOBER 22,
Mr.
1931.
FRANK M. WILSON,
2400 Ridge Road,
Berkeley, California.
Van Sweringen Company First Mortgage and Collateral Trust Sinking Fund
6% Gold Bonds due August 1, 1935:
They were issued in the amount of $6,500,000 in 1925 and aie now outstanding
in the amount of $3,950,000. (Up until the last two years they had a very good
market and were quoted around 98 to 100.) The collateral securing these bonds
consists of land contracts, mortgages receivable and equities in property in Shaker
Heights owned by the Van Sweringen interests. As payments are made of the
mortgages and land contracts the proceeds are turned over to the Trustee and are
used for retirement of bonds. Similarly, wiien land is sold the cash and land
contracts are given to the Trustee for collateral for the bonds. The fact that
over $2,500,000 of the original amount of bonds have been retired indicates the
extent of liquidation in the collateral held by the trustee.
While sales of land in Shaker Heights at the present time are practically at a
standstill, nevertheless values have been maintained remarkably well consider
8920
STOCK EXCHANGE PRACTICES
ing the changes in values in other sections of the City. In my opinion, the current market for the bonds is not a reflection of the security but rather a result of
the steady liquidation which has been going on in all kinds of securities. In fact
no real estate securities have enjoyed good markets in Cleveland in the last four
of five years, with the exception possibly of the Van Sweringen obligations, and
in the past eight months the bids for these securities have dried up and every
little bit of selling has depressed the market. As conditions in the securities
market improve over a period of time the favorable sinking fund operations
should continue to improve the market considerably for these bonds.
EXHIBIT U-33
CLEVELAND, OHIO, May 10th, 1930.
The UNION TRUST COMPANY,
Cleveland, Ohio.
GENTLEMEN: Reference is made to The Vaness Company loan in the amount
of $9,000,000.00, in which we have a participation. The collateral under this
loan is now as follows:
100 shares of The Cleveland Terminals Building Company common
stock,
122, 000 shares of The Van Sweringen Company common stock,
32, 893 shares of The Terminal Properties Company first preferred stock,
33, 187 shares of The Terminal Properties Company second preferred
stock,
99, 222 shares of The Terminal Properties Company common stock.
We hereby agree to the substitution by The Vaness Company of 600,000 shares
of Van Sweringen Corporation common stock in place of the 100 shares of The
Cleveland Terminals Building Company common stock, and further agree to
your delivery to The Vaness Company of said 100 shares of The Cleveland Termnals Building Company common stock when they have delivered to you the
600,000 shares of Van Sweringen Corporation common stock.
Very truly yours.
Participation $2,500,000.00.
Participation $1,200,000.00.
THE GUARDIAN TRUST COMPANY
By J. A. HOUSE, Presi.
THE MIDLAND BANK,
By E. E. BARKER, Viee President.
Participation $3,300,000.00.
By
THE CLEVELAND TRUST COMPANY
HARRIS CREECH, Pres.
Approved by M. Mutt for Union Mrt. Co.
5/10/30
W.J.O.N.
EXHIBIT U-33a
CLEVELAND, OHIO, May 10th, 1930.
Received of The Union Trust Company Certificates for an aggregate of one
hundred (100) shares of the common stock of The Cleveland Terminals Building
Company, released as collateral from the $9,000,000.00 loan of the undersigned,
evidenced by its note to The Union Trust Company, dated November 1st 1929,
upon substitution therefor of Certificates Nos. X 4 and X 5 for five hundred
thousand (500,000) and one hundred thousand (100,000) shares respectively of
the common stock of Van Sweringen Corporation, in the name of The Terminal
Building Company, with consent to hypothecate and blank endorsements. Said
certificates of The Cleveland Terminals Building Company stock are accompanied
by certificates of authority to pledge signed by the respective stockholders and
also received herewith, and said certificates are issued in the following names and
endorsed in blaok—
8921
STOCK EXCHANGE PRACTICES
Certificate
number
Number
of shares
In name of
John P Murphy__
D S Barrett, Jr_^
. .
M J Van Swermgen_
O P Van Swermgen__
Ralph H. Sharpe
The Terminal Building Co..
C L Bradley
2
2
2
2
1
89
2
THE VANESS COMPANY,
By J. J ANZALONA, Ass't Treas.
5/10/30 Rec'd the substitute collateral described above.
B\
EXHIBIT
THE UNION TRUST CO.,
W. J ORCUIT, V P
U-34
APRIL 13, 1933.
2512 Terminal Tower.
Mr. R. S. CRAWFORD,
The Union Trust Cowpany,
Cleveland, Ohio.
DEAR M R . CRAWFORD I have read the report of the Examining Committee
consisting of Directors E. P. Lenihan, R. C. Norton and Ralph T. King. I find
my name mentioned in connection with four different items as follows:
No. 1, J. P. Harris: "We should get life insurance. Committee was under
impression Mr J. R. Nutt guaranteed this loan, but has not been able to find
such a guarantee on file."
No. 2, Van Sweringen Loans* "These immense loans, we understand, were
sponsored
by Mr. J. R. Nutt, C. L. Bradley and their associates in the Van
Swreringen deals, who, although connected with the bank in an official capacity,
were also prominently connected with the Van Sweringen operations."
No. 3, Daisy Hill Company: "We are informed that the loan of $51,000.00
made at Terminal Office on March 7, 1930, was declined at the Main Office, and
subsequently made through the Terminal Office on the authority of Mr. Nutt."
No. 4, Fayette Title & Trust Bldg.: " I n addition to marketable securities we
hold note of the above company for $475,000.00 dated December 4, 1931, due in
one year, secured by deed of trust conveying title to a eleven-story bank and
office building in Uniontown, Pa., and certain coal and mining rights located in
Marshall and Ohio Counties, W.Va. The building is now being operated by the
trustee, who so far has been able to pay the interest on the loan and make reductions on the principal. This loan was made November 1, 1930, in the amount
of $625,000.00 by Mr. Nutt.
"Committee Comment: Can we get other collateral?"
I desire to make the following comments:
No. 1 I loaned to Mr. J. P. Harris 2,000 shares The F. E. Myers & Bro.
Company stock, at the time selling at $40.00 per share, and I had previously
loaned him $10,000.00 on his unsecured note. The Myers stock was used, with
my permission, by Mr. Harris, as collateral to his loan. As security against my
loan to him he gave me a lien by proper assignment filed in our Trust Department against his life insurance trust. Your Committee had not the slightest
EXHIBIT U-34a
foundation for being "under impression Mr. J. R. Nutt guaranteed this loan",
and was not justified in making such a statement.
No. 2: The understanding of the Committee is not correct. I never sponsored
loans to the Van Sweringen interests. These loans were approved by the Finance
Committee of which Mr. J. R. Kraus is Chairman, (of which I have never been
a member), before being made. At the time the loans were made, the Finance
Committee doubtless considered that they had ample security and that the loans
were good.
No. 3: I believe the statement that the loan of $51,000.00 to the Daisy Hill
Company at the Terminal Office had been declined at the Main Office, is not true.
8922
STOCK EXCHANGE PEACTICES
At least I never heard of it. If Mr. Armstrong at the Terminal Office asked me
about the loan, I doubtless told him I thought it was all right but I do not remember that he ever made any inquiry. Over ten months later, on January 24,
1931, The Daisy Hill Company made a loan of $487,000.00 at the Main Office.
The records of the Finance Committee will show that it was approved by that
Committee, and doubtless they will also show that the $51,000.00 at the Terminal
Office was also approved, as I understand that all large loans made at our branch
offices are approved by the Committee before being made.
No. 4: I recommended the original loan of $625,000.00 to Fayette Title &
Trust Building and the Finance Committee approved it. This loan was reduced
to $459,737.50 at the time of the Examiners' Report. Since that date the following payments have been made:
1933:
January 1st
$3, 757. 50
April 1st
3,000.00
present balance on loan is $453,000.00, interest paid to April 1st. I think this
loan is secure and that it will eventually be paid in full. It is not possible to get
any additional collateral for the reason that the Union Trust Company now holds
everything owned by the Fayette Title & Trust Building.
Will you kindly place this letter with the Examiners' Report and oblige
Sincerely yours,
J. R. NUTT.
(Copy for Mr. Cox.)
EXHIBIT
U-35
EXCERPTS TAKEN FROM EXAMINERS REPORT, DEPARTMENT OF BANKS, STATE OF
OHIO, JANUARY 20, 1933
O. P. and M. J.Van Swennqen, $2,800,000.00, $4,100,000 00.—Former item in
this Bank's participation in a $9,000,000 loan, other participants being the Cleveland Trust Co. and the Guardian Trust Co. The loan is collateraled by 97,500
shares of Vaness Co., common, which is the key company to all of the Van Sweringen operations. Due to the tremendous shrinkage in valuation of the railroad
securities and other companies in which the Van Sweringens are interested, it is
believed that this stock has no value at this time. Its future value is problematical depending entirely on a recovery of business conditions. The latter item
is a direct advance to the individuals and is collateraled by 16,250 shares of Vaness
Co., common, 9,000 shares of Vaness Co., preferred, and 10,296 shares of Metropolitan Utilities Inc. Both loans are delinquent in interest since July 1, 1931.
Thj^ are statutory losses and the examiner has classed the line as an entire los^.
EXHIBIT
U-36
JANUARY 26;
1933.
Mr. H. C. ROBINSON,
Executive Vice President The Guardian Trust Company
Cleveland, Ohio.
Re: O. P. and M. J. Van Sweringen Loan Proposed proxy on Vaness Company
Stock.
DEAR MR. ROBINSON: Referring to the suggestion in your letter of the 23rd
instant as to the pledging of Vaness Company Stock in New York, it appears
that on or about October 30, 1930 the note of the Vaness Company for $9,000,000.,
representing a loan in which the banks had participated, was cancelled and the
collateral surrendered, and there was substituted therefor the note of O. P. and
M. J. Van Sweringen, with 97,500 shares of stock of the Vaness Company as
collateral, and certificates of participation in this new loan were issued to the
banks. Therefore, the banks, as participants in this loan, would not be in a
position to object to the pledge made by the Vaness Company in New York, and
it is my understanding that all of the local banks knew at that time that the
New York pledge was being made.
STOCK EXCHANGE PRACTICES
8923
( In this connection it is interesting to note that on November 6th 1930 notes
of Metropolitan Utilities, Inc., representing its loan, participated in by the Cleveland banks, which notes bore the guaranty of the Vaness Company, were surrendered, and notes of Metropolitan Utilities, Inc., bearing the guaranty of 0. P.
and M. J. Van Sweringen were substituted, and that at this time the old certificates of participation were taken up and new certificates, showing the change in
the guaranty, were issued. On November 20th 1930 new notes were again substituted, bearing the guaranty of the Vaness Company instead of the guaranty
of O. P. and M. J. Van Sweringen. While the writer does not know it, it appears
to him likely that between the dates of November 6th 1930 and November 20th
1930 the New York pledge was made, and it seems likely also that the New York
creditors required that there be no substantial outstanding liability of the Vaness
Company, even a contingent liability such as its guaranty on the Metropolitan
Utilities, Inc. loan, at the time when the New York pledge was being made.
EXHIBIT U-36a
We have now received the consent of The Cleveland Trust Company and The
Midland Bank to the giving of the proxy requested by the Vaness Company
management. At our request the annual meeting of the Vaness Company was
postponed for one week. This will give the banks an opportunity to consider
whether or not they wish to have representation on the new Board.
Very truly yours,
WJO, N-c " "
, Vice President.
EXHIBIT
U-37
JANUARY 18, 1933.
The
CLEVELAND TRUST COMPANY,
Cleveland, Ohio
Attention: Collateral Loan Department.
GENTLEMEN: AS a part of the collateral for the $9,000,000.00 loan to O. P.
and M. J. Van Swreringen, in which you are a participant, there is held, as you
know, a certificate for 97,500 shares of the Common Capital Stock of The Vaness
Company, in the name of our nominee.
Messrs. O. P. and M. J. Van Sweringen have now requested that we execute
and deliver to Mr. Charles W. Stage, Secretary of The Vaness Company, a proxy
for said stock in the following form—
"Know all men by these presents, that I, the undersigned stockholder of
THE VANESS COMPANY, do hereby constitute and appoint CHARLES W.
STAGE, JOHN P. MURPHY and JOHN CONNELL, and each or either of
them, my true and lawful attorneys, in my name, place and stead to vote upon
all capital stock owned by me or standing in my name, as my proxy, at the annual
meeting of the stockholders of said corporation, to be held at 3500 Terminal
Tower, Cleveland, Ohio, on the 24th day of January, 1933, at two o'clock P. M.,
and on such other day as the meeting may be thereafter held by adjournment or
otherwise, according to the number of votes I am now or may then be entitled
to cast, hereby granting to said attorneys or attorney full power and authority
to act for me and in my name at the said meeting or meetings, in voting for
Directors of said Corporation or otherwise, and in the transaction of such other
business as may come before the meeting or meetings, as fully as I could do if
personally present, with full power of substitution and revocation, hereby ratifying and confirming all that my said attorneys or attorney or substitutes or
substitute may do in my name, place and stead.
A majority of said proxies present at said meeting or any adjournment thereof,
shall have the right to exercise the foregoing powers, and if only one proxy is
present, he shall have the rights above vested in said proxies.
EXHIBIT U-37a
In witness whereof, I have hereunto set my hand and seal this — day of January, 1933."
Before delivering said proxy we desire to have your advice as to whether you
approve the giving of it.
Very truly yours,
Yice President.
WJO'N-c
8924
STOCK EXCHANGE PRACTICES
EXHIBIT U-38
THE GUARDIAN TRUST COMPANY,
(Capital and surplus sixteen million dollars)
CLEVELAND, January 23, 1933.
H. C. ROBINSON
Executive Vice President
Member Federal Reserve System 300
Mr. W. J. O'NEILL,
Vice President, The Union Trust Company,
Cleveland, Ohio.
DEAR MR. O'NEILL: Referring to your letter of January 18th and to our telephone conversation pertaining to it on Friday of last week, the stock held by
you in the Vaness Corporation, as Trustee for the participants in the Nine Million
Dollar loan, represents sixty per cent interest of the entire capital of the Vaness
Company.
It seems to me that owing to the fact that the Trustee has such a large stock
interest he should be represented in some manner in a corporation setup for 1933,
especially in view of the fact that no payments are being made upon the interest
or principal of the participated loan.
I am aware of the fact that most of the securities in the Vaness portfolio, upon
which we depended when we made the loan, have been shifted to New York.
Whether or not the pledging of these securities was done with or without the
knowledge of the Trustee I am not advised but, irrespective of that, it may be
that in the future some policy may be taken by the Vaness management which
would be harmful to our interests and I feel that the banks should have some one
representing them on the Board who would know in advance of the establishment of any policy which might affect our loan one way or another and advise
the interested banks promptly in reference thereto.
It is for the purpose of having this matter discussed that I feel disposed to
withhold our consent to the proxy requested.
I would like to know what you think about the suggestion and how The Cleveland Trust would feel about it also.
With kind regards, I am
Very truly yours,
H. C. ROBINSON,
Executive Vice President.
HCR-CT.
EXHIBIT U-39
CLEVELAND, OHIO, May 12th, 1930.
THE UNION TRUST COMPANY,
Cleveland, Ohio.
GENTLEMEN: Reference is made to The Vaness Company loan in the amount
of $9,000,000.00, in which we have a participation. The collateral under this
loan was as follows:
100 shares of The Cleveland Terminals Building Company common stock,
122,000 shares of The Van Sweringen Company common stock,
32,893 shares of The Terminal Properties Company first preferred stock,
33,187 shares of The Terminal Properties Company second preferred stock,
99,222 shares of The Terminal Properties Company common stock.
On May 10th, we agreed to the substitution of 600,000 shares of Van Sweringen
Corporation common stock in place of 100 shares of The Cleveland Terminals
Building Company common stock, and we hereby agree to a new loan to be made
by The Vaness Company, in the amount of $9,000,000.00, to be dated May 13,
1930, the collateral under which loan is to be as follows: (Payable On Demand)
600,000 shares of Van Sweringen Corporation common stock,
122,000 shares of The Van Sweringen Company common stock.
Our participation in this new loan is to be $2,500,000.00.
Very truly yours,
THE CLEVELAND TRUST COMPANY,
By HARRIS CREECH, Pres.
STOCK EXCHANGE PRACTICES
EXHIBIT
8925
U-42
MEMORANDUM
MAY 16, 1933.
Re: Alleghany Corp.
The future of Alleghany Corp. depends upon—
(1) Continuation of Chesapeake Corp. dividends and appreciation in Chesapeake Corp. stock owned by Alleghany.
^2) Release of impounded cash out of the bond issues of 1944-1949 to injure
the payment of interest on the bond issue of 1950 for at least a year from October
1, 1933, during which time it is hoped that Missouri Pacific Railroad will be
reset and either some return will be received from the securities or appreciation
of the same will permit of their disposition and retirement of bonds due 1950.
Looking at the principal asset of Alleghany Corp., i. e., Chesapeake Corp.,
1,248,900 shares of which are owned by Alleghany Corp., the following is a
possibility: If, when and as C. & O. car loadings and earnings for 1933 definitely
cross the 1932 figures and the market continues as favorable as it is, there is
not only a possibility but a probability that C. & O. stock will sell at 50 or slightly
above. This will be more probable if the recapture provision pertaining to the
C. & O. and other railroads is repealed. Chesapeake Corp. owns 4,066,508
shares common stock of Chesapeake & Ohio Railway Co. This is 240,000 shares
in excess of a majority. Unfunded floating debt of Chesapeake Corp. is at this
date $30,500,000. If 240,000 shares of C. & O. were sold at 50, this debt would
be reduced to $18,500,000 and would be secured by 1,357,208 shares C. & O.
common stock on a basis of $14 per share. It should then be possible to
renew this loan for at least a year, and probably longer, at 4% interest. This
stock sale would show a profit of $6,000,000, which would be taxable at 13%%,
equal to $825,500. Consideration should be given to the sale of 27,500 shares
of Pere Marquette Railway common and 69,000 shares of Erie Railroad common
to offset in so far as possible this taxable profit.
EXHIBIT U-42a
Based on 1932 statement, adjusted, the results to the Corporation would be
about as follows:
Income:
Dividend on 3,826,508 C. & O. shares
$9, 566, 270
Other Income
20, 000
Total Income
Expense:
Interest on $43,000,000 bonds @ 5%
" Loans Payable, $18,500,000 @ 4%
" $200,000 Accounts Payable @ 5%
Annual Expense
$9, 586, 270
$2, 150, 000
740, 000
10, 000
60, 000
$2, 960, 000
Net Income Available for Dividends
3 % Dividend on 1,799,745 shares
$6, 626, 270
5, 399, 235
Remainder Available for Other Purposes
$1, 227, 035
If, when and as these changes in Chesapeake Corp. are made, the position of
Alleghany Corp. would be greatly improved. Assume that the various stocks
sell at the following prices:
Chesapeake Corp., @ 60
Missouri Pacific Conv. 5}^% Bonds, @ 25
Missouri Pacific Preferred, @, 10
Missouri Pacific Common, @ 5
Pittston Co., @ 1
Terminal Shares, Inc. Notes, @ 50
Capital Cash Deposited, @ 100
Alleghany 5's due 1944 in the amount of $31,466,000 would have a collateral
appraisal of $48,332,500 against 150% required valuation of $47,199,000. The
impounded income cash, which amounts to $1,251,142.27, would be released.
8926
STOCK EXCHANGE PEACTICES
EXHIBIT U-42b
Alleghany 5's due 1949 in the amount of $21,938,000 would have a collateral
appraisal of $31,709,000 against 150% required valuation of $32,907,000. This
is short of the requirement by $1,198,000 so that the impounded income cash of
$623,539.79 would not be released.
Alleghany 5's due 1950 in the amount of $24,532,000 would have a collateral
appraisal of $11,595,370, slightly less than 50%.
Cash released from Alleghany 5's of 1944
$1, 251, 142. 27
Additional $1 dividend on 756,000 shares Chesapeake Corp. under
Alleghany 5's of 1944
756, 000. 00
3% Dividend on 43,900 shares Chesapeake Corp. Stock under
Alleghany 5's of 1950
121, 700. 00
Available for Interest on Alleghany 5's of 1950
Interest on Alleghany 5's of 1950
$2, 128, 842. 27
1, 226, 600. 00
Available for Annual Purchase of Alleghany 5's of 1950
$902, 202. 27
If, when and as Chesapeake Corp. sold at 65—
Alleghany 5's of 1944 would have $3,780,000 excess collateral which could be
taken down
Alleghany 5's of 1949 would have $1,037,000 excess collateral, including income
cash of $623,539 which could be taken down
Capital cash of $334,000 under Alleghany 5's of 1944 and $152,000 under
Alleghany 5's of 1949 would be available for purchase of securities, probably
Alleghany 5's of 1950.
OTTO MILLER.
OM:EL
EXHIBIT U-43
UNION CLEVELAND CORPORATION,
3Pe© UNION TRUGT COMPANY,
CLEVELAND, OHIO, May 23, 1933.
Jul 1 11 38 AM 1933
Mr. A. C. CONEY,
Vice President & Manager.
Re: Alleghany Corporation.
While the conditions cited in the attached memorandum on Alleghany Corporation are not impossible, I am inclined to believe that they are not likely to
be fulfilled during the current year—that is barring any wild inflation in this
country
1. The memorandum of Mr. Miller lays stress on appreciation in the market
price for Chesapeake & Ohio stock to between 50 and 60 and the sale of 240,000
shares of this stock at 50 to reduce Chesapeake Corporation's indebtedness at
Paine-Webber. The stock is currently selling at 36-37, which compares with
the following ranges:
1933
37 -24%
1932
31K- 9%
1931
46^-23%
1930
51%32%
While it is possible that the market on the stock could be moved to 50 or
above by manipulation, if this were accomplished there is some doubt as to the
likelihood of the Chesapeake Corporation being able to sell 240,000 shares of
the Chesapeake & Ohio stock at that price, for the following reasons:
(a) Chesapeake & Ohio is primarily a coal road and its traffic and earnings
have held fairly stable. Because of this fact, and because of the moderate
amount of leverage through funded debt, the earnings of Chesapeake & Ohio
are not likely to show the rapid increase which might be expected for numerous
other carriers, in the event of further business improvement.
(b) In 1929 the net operating revenue of Chesaspeake & Ohio reached its
peak when earnings reached a total of $5.27 per share of common stock, based
on the present shares outstanding. In the peak of the bull market the old stock
only reached 279%, equivalent on present shares to 70, and in 1930 when earnings
amounted to $4.46 per share the high on the stock in a relatively favorable market
was 51J6.
STOCK EXCHANGE PEACTICES
8927
EXHIBIT U-43a
(c) On the basis of per share earnings of $3.06 in 1932, the price of $50 for
the stock would be 17 times these earnings, and granting an increase in earnings
during the current year the price of 50 would still be 12 to 14 times probable
earnings. Furthermore, at the price of 50, income return would be only on a
5% basis at the $2.50 dividend. It would undoubtedly be difficult to distribute
much stock in the market with this kind of a picture.
2. Missouri Pacific Railroad Securities: In view of the present receivership of
this road and the impending reorganization, it is probable that the unsecured
5%% Debentures, and the preferred and common stocks will be scaled down
drastically, notwithstanding the efforts of Bankers for Alleghany Corporation
to obtain as favorable a deal as possible. While an upturn in general business
during the current year would undoubtedly be reflected in a substantial increase
in Missouri Pacific Railroad earnings and hence improvement in the market
price of its securities, the present debentures and preferred stock are so far
removed from income as to make a guess on their market values futile. Furthermore, their immediate value as collateral to the Alleghany Corporation 5's
is questionable either from an income or a liquidating standpoint.
3. Terminal Shares, Inc., Notes: Sufficient information is not available to
appraise the assets behind these notes, although it is significant that the Reconstruction Finance Corporation is requesting an impartial investigation of participation of the Missouri Pacific in the acquisition and sale of certain assets,
with special reference to the assets of Terminal Shares, Inc.
To my knowledge, the Terminal Shares, Inc. Notes have never had an outside market, and in view of the above considerations, the assumption of a selling
price of 50 for the Notes in the near furure is hardly warranted.
Conclusions:
1. The possibility of Chesapeake Corporation selling 240,000 shares of Chesapeake & Ohio stock at 50 or better during the current year does not appear
likely.
2. Until the unfunded debt of Chesapeake Corporation can be reduced substantially, there is probably little chance of increasing the dividend on Chesapeake Corporation stock.
EXHIBIT U-43b
3. With peak earnings of Chesapeake Corporation of $3.61 per share, 1932
earnings of $3.41 per share, large loans to be funded, and an annual dividend
of only $2.00, there is no present basis for anticipating a market of 60 on Chesapeake Corporation stock during this year, in spite of the fact that if Chesapeake
& Ohio stock were to sell at $50, the liquidating value of Chesapeake Corporation stock would approximate $70 per share.
4. Unless the market on Chesapeake Corporation is moved to considerably
above 60, the market value of the collateral back of the Alleghany 5's due 1944
and 1949 will not amount to 150% of the par amount of bonds outstanding, and
excess cash income from collateral of each issue over interest requirements cannot be released to the 5;s due 1950.
5. Because of default in interest on Missouri Pacific Debenture 5}i's and
Terminal Shares, Inc. Notes, income for Alleghany 5's due 1950 will not be
sufficient to cover coupon rate, and there will probably be at least a partial
default on the coupons of these bonds.
6. There does not appear to be any immediate danger to the interest on
Alleghany Corporation 5's due 1944, providing creditors of Chesapeake Corporation do not demand a further reduction in that Corporation's dividend rate,
pending funding of the loans payable. However, annual income on the Chesapeake Corporation stock pledged as collateral for the Alleghany Corporation
5's due 1949 is not sufficient to cover interest on these bonds, and in view of
the default in interest on other securities pledged back of this issue of bonds,
there is danger of a partial default on the coupon after the impounded cash
held by the Trustee has been consumed.
C. C. MERRIFIELD, Assistant Treasurer.
CCM:K
(This stationery is for inter-department and inter-office use only)
175541—34—PT 20
13
S928
STOCK EXCHANGE PRACTICES
EXHIBIT
U-44
EXCERPTS TAKEN FROM EXAMINERS REPORT, DEPARTMENT OF BANKS, STATE OF
OHIO, JANUARY 20, 1933
Cleveland Interurban R.R. Co., $45,000.00.
Loan is in current condition, interest being paid to January 1, 1933.
collateraled by 500 shares of the Elect. Depot Co., value undetermined.
EXHIBIT
It is
U-45
EXCERPTS TAKEN FROM EXAMINERS REPORT, DEPARTMENT OF BANKS, STATE OF
OHIO, JANUARY 20, 1933
Vaness Co., $304,183.75.
Interest is delinquent since January 1, 1932. The loan is collateraled by
marketable stocks worth $150,000 together with 1,250 shares of the Cleveland
Baseball Co. and 17,999^ shares Trustees of the Calumet Trust. The latter
item represents ownership of valuable Chicago Real Estate adjacent to the
Terminal district. Definite information is lacking and it is impossible to make
an accurate appraisal of the two stocks mentioned. Loan is classed as of undetermined value at this time.
EXHIBIT
U-46
EXCERPTS TAKEN FROM EXAMINERS REPORT, DEPARTMENT OF BANKS, STATE OF
OHIO, JANUARY 20, 1933
Van Sweringen Company, $480,000.00.
Interest is delinquent since July 1, 1931. This company is a holding company
for part of the Van Sweringen real estate holdings chiefly their Shaker Heights
developments. As security to these loans the bank holds title to several parcels
of real estate, value of which cannot be determined at this time. Several years
ago the properties were appraised in excess of $700,000. At the present time
unpaid taxes on the above pledged properties amount to more than $25,000.
The loan appears very doubtful at best and its outcome cannot be determined
at this time. The bank also holds mortgage loans totaling $344,000 which are
carried in the mortgage loan department.
EXHIBIT
U-47
EXCERPTS TAKEN FROM EXAMINERS REPORT, DEPARTMENT OF BANKS, STATE OF
OHIO, JANUARY 20, 1933
Terminal Building Company, $557,000.00.
Loan is signed jointly by the Vaness Co. It matured on July 11, 1932 and interest is unpaid. This company is a holding company for a number of parcels
of real estate in the vicinity of the Terminal developments. The loan is collateraled by title to several parcels of real estate in the vicinity of Pittsburgh
Ave., value of which cannot be determined at this time.
EXHIBIT
U-48
EXCERPTS TAKEN FROM EXAMINERS REPORT, DEPARTMENT OF BANKS, STATE OF
OHIO, JANUARY 20, 1933
J. D. Templeton, End. O. P. & M. J. Van Sweringen, $6,345.83.
No information is available on borrower. Apparently depends entirely on
endorsers.
STOCK EXCHANGE PRACTICES
EXHIBIT
8929
U-49
EXCERPTS TAKEN FROM EXAMINERS REPORT, DEPARTMENT
OHIO, JANUARY 20, 1933
OF BANKS, STATE OP
Metropolitan Utilities Inc., $2,100,000.00.
Note matured on Aug. 15, 1932 and a new note received in the amount of
$2,197,986.90, the difference in amount of the two items representing interest
which was then due and which the company was unable to pay. Metropolitan
Utilities Inc. represents the traction interests of the Van Sweringens. This
loan is a participation in a loan of approximately $4,800,000 which is participated
in jointly with other local banks. The total loan is secured by the following
collateral- 100 sh. Traction Stores Co., 100 shares Cleveland Traction Terminals
Co., 1,465 shares Cleveland Interurban R.R. Co., $4,331,444.72 note of the
Cleveland Interurban R.R. Co. due November 15, 1932, $73,565.95 note-of the
Traction Stores Co. due 11-15-32, and $989,069.86 note of the Cleveland Traction Terminals Co. due 11-15-32, also any equity in 5,800 shares Cleveland &
Youngstown R.R. Co. which is pledged to the N. Y. C. R.R. Co. It is impossible to make any definite appraisal of the collateral held due to lack of sufficient
credit data, and due to the fact that the affairs of the various companies are so
much interwoven. It is apparent that the banks can do nothing to improve their
position and the loan has been classed doubtful pending future developments.
The loan is guaranteed by the Vaness Co.
EXHIBIT
U-50
INFORMATION TAKEN FROM FILE OF METROPOLITAN UTILITIES, INC. AT THE UNION
TRUST COMPANY
METROPOLITAN UTILITIES, INC. (OHIO CORPORATION)
Incorporated March 21, 1929.
Purpose of Incorporation- Has broad general powers in connection with
acquiring, holding and selling securities, evidence of indebtedness, etc., to aid
in any manner any corporation, association, firm, or individual, whose stock or
other evidences of indebtedness are held by the corporation directly or indirectly,
to enter into, assist, promote, conduct, perform, or participate in every kind of
commercial, mercantile, mining or industrial enterprises, etc. in the United
States or any foreign country. For further powers refer to Articles of Incorporation.
Original Stockholders: The Vaness Company; 10,526 shares.
Present Stockholders: The Vaness Companj^; 10,547 shares.
Original Capitalization: Authorized, 15,000 shares, no par value. Issued
10,526 shares, no par value.
Present Capitalization: Authorized, 15,000 shares, no par value. Issued ,
10,547 shares, no par value.
EXHIBIT
U-51
(Information taken from file of Metropolitan Utilities, Inc., at The Union Trust
Company)
FURTHER INFORMATION R E CORPORATIONS CONTAINED IN FOLDER OF DECEMBER
31, 1932 BALANCE SHEETS
The Cleveland Interurban Railroad Company (Ohio Corporation) incorporated
March 24, 1913. Formed for the purpose of constructing, owning, maintaining
and operating a line of street railway for the transportation of passengers, packages, express matter, U.S. mail, baggage and freight, using electricity or other
motive power, other than steam or animal power, etc.
Original stockholders:
W. S. Havden
Otto Miller
J. R. Nutt
W. D. Turner
O. P. Van Sweringen
Shares
1
1
1
1
46
50
8930
STOCK EXCHANGE PRACTICES
Present Stockholders:
B. L. Jenks
John P. Murphy
D. S. Barrett, Jr
C. L. Bradley
Geo. D. McGwinn
Metropolitan Utilities, Inc
Shares
1
1
1
1
1
1, 460
1,465
Original capitalization: Authorized, 50 shares, par value $100 per share.
Issued, 50 shares, par value $100 per share.
Present capitalization: Authorization, 1,500 shares, par value $100 per share.
Issued, 1,465 shares, par value $100 per share.
EXHIBIT
U-52
(Information taken from file of Metropolitan Utilities, Inc. at the Union Trust
Company)
THE CLEVELAND & YOUNGSTOWN RAILROAD COMPANY (OHIO CORPORATION)
Incorporated: July 18, 1911.
Purpose of Incorporation: Formed for the purpose of constructing, acquiring,
owning, leasing, operating and maintaining a railroad, to be operated by steam
or other motive power, having Cleveland, Ohio and Youngstown, Ohio, for its
terminal, and passing in and through counties of Cuyahoga, Geauge, Portage,
Trumbull and Mahoning.
Original stockholders:
O. P. Van Sweringen
M. J. Van Sweringen
C. W. Fuller
John L. Cannon
B. L. Jenks
W. E. Pease
W. D. Turner
Shares
3
2
1
1
1
1
1
10
Present Stockholders: Metropolitan Utilities, Inc.; 5,800 shares.
Original Capitalization: Authorized, 100 shares, par value $100 each.
10 shares, par value $100 each.
Present Capitalization: Authorized, 6,000 shares, par value $1GO each.
5,800 shares, par value $100 each.
EXHIBIT
Issued,
Issued,
U-53
(Information taken from file of Metropolitan Utilities, Inc. at The Union Trust
Company)
FURTHER INFORMATION RE CORPORATIONS CONTAINED IN FOLDER OF DECEMBER
31, 1932 BALANCE SHEETS
The Cleveland Traction Terminals Company (Ohio Corporation) incorporated
January 12, 1921. Formed for the purpose of purchasing or leasing depot
grounds and locating, constructing and maintaining a common or union station
house, etc.
Original Stockholders: The Vaness Company, 100 shares.
Present Stockholders: Metropolitan Utilities, Inc., 100 shares.
Original Capitalization: Authorized, 100 shares, par value $100 per share.
Issued, 100 shares, par value $100 per share.
Present Capitalization: Same.
STOCK EXCHANGE PRACTICES
EXHIBIT
8931
U-54
(Information taken from file of Metropolitan Utilities, Inc. at The Union Trust
Company)
FURTHER INFORMATION R E CORPORATIONS CONTAINED IN FOLDER OF DECEMBER
31, 1932 BALANCE SHEETS
The Traction Stores Company (Ohio Corporation) incorporated March 17,
1922. Formed for the purpose of establishing, maintaining and operating a
chain of stores for the sale of general merchandise, etc.
Original Stockholders: The Vaness Company, 100 shares.
Present Stockholders: Metropolitan Utilities, Inc., 100 shares.
Original Capitalization: Authorized and Issued, 100 shares, no par value.
Present capitalization: Same.
EXHIBIT
U-55
APRIL 21,
1933.
Mr. Nutt called on his own initiative. Mentioned:
1. Personnel as reason for slow sale of First National Stock.
2. That he and his employees had subscribed liberally.
3. Invited the writer to lunch with himself and the Van Sweringens. Circumstances did not permit acceptance.
4. That he had been the endorser of a $4,000.00 note of one of our employees
which he had taken up.
5. That Mr. Baldwin had refreshed his memory as to certain delay in turning
in the $130,000.00 check referred to in the previous memorandum.
6. That he would welcome an investigation of the statements made in his letter.
The writer made no comment on any of the matters, excepting that we would
on our own initiative comply with the request last mentioned above.
O. L. C.
EXHIBIT
U-56
(For Walter H. Seymour, Representative of U.S. Senate Committee on Banking
& Currency: This is not a part of the records of The Union Trust Co. It is
an internal memo by a member of the staff of the undersigned. It has not been
verified as to facts. Any opinions or conclusions are personal to the member
of the staff preparing this memo.—Oscar L. Cox, Deputy Superintendent of
Banks, State of Ohio)
THE UNION TRUST COMPANY
CLEVELAND, OHIO, August 16,
Mr.
OSCAR L.
1933.
COX,
Special Deputy Superintendent of Banks.
DEAR MR. COX: A detailed memorandum of the information obtained from
Darwin S. Barrett, Jr., representative of O. P. and M. J. Van Sweringen, hasbeen inserted in the forepart of your black book on Van Sweringen matters.
By way of summary,
1. At the time the loan of $8,917,800.00 was made by Morgan to the General
Securities Corporation, it was understood that it was to be paid when the Pittston
Company financing was completed.
2. The troubles of the Vans did not being in 1929 but in the fall of 1930. At
that time they needed new money. They were unable to obtain 1 it in Cleveland
and went to New York. They borrowed $39,500,000.00 from Morgan and the
only way in which it could be obtained was by taking some of the collateral which
the Cleveland banks held and giving it to Morgan. This loan has been arranged
upon a five-year basis under an agreement whereby Morgan will not call for
additional collateral. Interest is not being paid and up to the present time
Morgan has been letting the matter ride.
3. The switch of $800,000.00 from the debt of O. P. and M. J. Van Sweringen
to an obligation of the Vaness Company was at the request of the bank. The
Vans owed $7,800,000.00, which was $800,000.00 in excess of the legal limit.
Very truly yours,
G. R. HERZOG,
Me
i Does not mean tried to obtain it in Cleveland. G. R. H.
Loan Collection Department.
8932
STOCK EXCHANGE PRACTICES
EXHIBIT U-56a
MEMORANDUM OF INTERVIEW WITH DARWIN S. BARRETT, JR., REPRESENTATIVE
OF O. P. AND M. J. VAN SWERINGEN
In accordance with instructions from Mr. O. L. Cox, Special Deputy Superintendent of Banks, the writer discussed with Mr. Barrett the sections headed
relative position of Morgan and Union Trust, Union Trust Interest, and Union
Trust Creditor, in the summarized report prepared by C. C. Merrifield.
In the left-hand margin on the sheets in these sections there have been inserted
numbers which refer to the following comments:
1. At the time the loan of $8,917,800.00 was made by Morgan to the General
Securities Corporation it was distinctly understood that the loan was to be temporary in character and to be paid when the Pittston Company financing was
accomplished. The Erie Railroad owned the Pennsylvania Coal Company. It
was badly in need of retail coal outlets in New York Citv. In order to fill this
need it was decided to purchase ten to twelve of the smaller distributors in New
York City who were competitors of Burns Brothers, the aggregate forming an
organization of about the same size as Burns Brothers. Inasmuch as it would
have taken considerable time to have effected the financing which would have
enabled the Pittston Company to make the purchases, O. P. and M. J. Van
Sweringen, who were of course interested in the Erie Railroad Company as large
stockholders, loaned their personal resources through the General Securities Corporation so that the purchases of the ten to twelve smaller distributors could be
made immediately. Morgan underwrote the issue, for details of which see comment 4 pertaining to the payment of the loan.
2. Regarding the loan of $9,000,000.00 to the Vaness Company November 1,
1929, Mr. Barrett stated that it was probably true that a portion of the funds
had been used to pay to Paine Webber & Company.
3. The loan of $6,000,000.00 to the Vaness Company by Morgan was a temporary loan incident to the operations of the Allegheny Corporation similar to
loans that we had made in former years in connection with Allegheny Corporation
operations.
4. Payment of the loan of $8,917,800.00 by Morgan to the General Securities
Corporation was made in accordance with comment #1. The stockholders of the
Erie Railroad Company were given the right to subscribe to 1,000,000 shares of
Pittston stock at $20.00 a share. The issue was very well received. It was underwritten by Morgan and, as a result, Morgan took stock to the extent that the
stockholders of the Erie Railroad did not take stock. Mr. Barrett mentioned that
this amount was comparatively small. This financing made possible the payment
of the loan of $8,917,800.00. As mentioned previously, the financing was in
mind at the time the loan was granted.
General comment.—At this point, Mr. Barrett made mention of the fact that
the difficulties of O. P. and M. J. Van Sweringen really did not commence until
the fall of 1930. It was true, as indicated by the information compiled, that
borrowings in the fall of 1929 had been somewhat heavy. However, the Messrs.
Van Sweringens were not pressed at all and it was only after the further decline
in the last half of 1930 had occurred that they felt themselves hard pressed.
EXHIBIT U-56b
5. To understand the reason why the Van Sweringen Company gave the Vaness
Company its note for $5,134,154.00, which was pledged to the Morgan loan on
November 19, 1930, it must first be understood that this action was one of the
moves which Morgan had insisted upon when it granted the loan of $39,500,000.00
in October, 1930. The only reason that it was not accomplished at the time of
the granting of the loan was that it had been impossible to put everything through
at the same time. The Van Serwingen Company owed a debt to the Vaness
Company of approximately $7,000,000.00 in addition to debts to other creditors.
The note of $5,134,154.00, was evidence of the indebtedness previously existing
and created no new obligations. Morgan had requested, at the time of the
granting of the $39,500,000.00, that the debt of $5,134,154.00 be placed in note
form and pledged to them. Mr. Barrett was absolutely positive that the note
was not additional collateral given subsequently, inasmuch as the $39,500,000.00
advance was on a ba^is of new money given for five vears with the understanding
that no additional collateral would be requested.
6. Respecting the loan of $800,000.00 which was made to the Vaness Company
on November 20, 1930, in order to permit of a payment of $800,000.00 on the obli
STOCK EXCHANGE PRACTICES
8933
gation of O. P. and M. J. Van Sweringen, Mr. Barrett gave the information that
this was made at the request of the bank inasmuch as the loans of the bank to
O. P. and M. J. Van Sweringen were at that time in excess of the legal limit. This
checks with our records. The capital and surplus of The Union Trust Company
at that time totalled $35,000,000.00 which meant a legal limit of $7,000,000.00.
In the fall of 1930, our loans to O. P. and M. J. Van Sweringen were $7,800,000.00.
7. In connection with the switch in the collateral securing the total loan of
$9,000,000.00 to the Vaness Company on May 13, 1930, the Vaness Company
owned 90% of the Terminal Properties Company which in turn owned the Terminal Building Company, the Cleveland Terminals Building Company and the
Van Sweringen Company. It was the desire of O. P. and M. J. Van Sweringen
to segregate their downtown real estate holdings from their suburban properties
held by the Van Sweringen Company. As a result, the Terminal Properties
Company was bought and killed. The switch in the collateral naturally resulted.
Regarding the increase of $800,000.00 in the Union Trust's participation and the
reduction of $800,000.00 in the Cleveland Trust's commitment, Mr. Barrett
stated that this was a matter between the two banks and O. P. and M. J. Van
Sweringen were not concerned with it. [See later memos.]
8. Respecting the release of the $9,000,000.00 note of the Vaness Company
and the substitution of the $9,000,000.00 note of O. P. and M. J. Van Sweringen
on October 30, 1930, Mr. Barrett again called attention to the fact that the
$39,500,000.00 raised from Morgan in October, 1930, was new money. The
Messrs. Van Sweringens were pressed, were unable to raise the needed funds in
Cleveland, and had to go to New York. It was impossible to obtain the money
in New York on the collateral which O. P. and M. J. Van Sweringen had free at
that time. It was agreeable to the Cleveland banks at that time to make the
switches. It was only through the changes made that it was possible to obtain
the funds in New York.
Of the $39,500,000.00, $15,000,000.00 went into governments, as we know, which
were subsequently sold and used to retire $30,000,000.00 notes of the Van Sweringen Corporation at fifty cents on the dollar. The balance was used to pay to
Paine Webber & Company to complete buildings in process and in general operations.
Mr. Barrett mentioned that the $39,500,000.00 loan, as they refer to the advance of $16,000,000.00 to the Vaness Company and $23,500,000.00 advance to
the Cleveland Terminals Building Companv, is not due until October, 1935.
The obligation to the Cleveland Terminals Building Company is guaranteed by
the Vaness Company and both obligations are either guaranteed or endorsed by
O. P. and M. J. Van Sweringen. No interest is being paid on either obligation
and up to the present Morgan has seemed content to ride along.
Mr. Barrett agreed with the statement that the new collateral received had no
present value other than on a warrant or non-marketable basis. The collateral
formerly held, of course, had some market value.
EXHIBIT U - 5 6 C
9. As Mr. Barrett recalls, the new loan of $400,000.00 made on November 31,
1931, to the Van Sweringen Company and the reduction of $400,000.00 in the
advance to the Vaness Company were made in order to increase the security of
The Union Trust Company.
10. The loan to the Terminal Building Company and the Vaness Company of
$557,000.00, according to Mr. Barrett, will be cleaned up when the property,
pledged as collateral, goes to the Nickel Plate in the settlement of the EAST
approach with the Cleveland-Union Terminals Company, controlled by the New
York Central. This is a long story and hinges upon the determination by engineers for both parties upon the amount to be saved at this time through the
non-building of supporting walls in the connection with the east approach.
Payment likewise depends upon the ability of the Nickel Plate to pay at the time
settlement is made.
11. The matter mentioned in the letter of J. A. House, dated October 31, 1930,
again ties into the $39,500,000.00 loan, which would not have been possible without the changes occurring in the collateral behind the loans of the Cleveland banks.
12. The first two pieces of property listed as securing the loan of $400,000.00
to the Van Sweringen Company lie in a section that is being built up industrially
and Mr. Barrett feels that some time the properties will be disposed of at a price
sufficient to pay the loan. By way of indicating the industrial development in
8934
STOCK EXCHANGE PEACTICES
the territory referred to, Mr. Barrett mentioned that the Chase Brass Company
and the American Multigraph Company had both moved into this district.
G. R. HERZOG,
Loan Collection Department.
August 16, 1933.
EXHIBIT U-56d
UNION CLEVELAND CORPORATION,
Cleveland, Ohio, June 3, 1938.
Mr. O. L. Cox,
Conservator, The Union Trust Company,
Cleveland, Ohio.
DEAR MR. COX: In our recent conversation you requested that we determine,
if possible, the relative position of the Union Trust Company and J. P. Morgan
& Company toward the Van Sweringen enterprises. We hand you herewith a
note-book containing the statements submitted by Mr. Anzalone, Assistant
Treasurer of the Vaness Company, an analysis of these statements insofar as
possible, and an analysis of the various Union Trust Company loans.
It is our opinion that J. P. Morgan & Company and any banks who may have
participated, benefited at the expense of The Union Trust Company through
the transfer of marketable collateral in October 1930 in the following manner:
In October 1929 The Union Trust Company loaned Vaness Company $5,000,000
secured by collateral having a market value at that time of approximately
$7,295,750. Of this total market value, approximately $6,522,500 represented
local securities having a relatively limited market (See Schedule "B" under
"Union Trust Interests" in note-book). At about the same time the Vaness
Company borrowed substantial sums from J. P. Morgan & Company, the Midland Bank of Cleveland, and through O. P. and M. J. Van Sweringen from the
Chemical National Bank of New York. Proceeds of these loans were paid to
Paine Webber & Company, where the Van Sweringens had a margin account.
In the spring of 1930 all of these loans, except the Union Trust Loan and Midland
loan, were paid off. In October 1930, when the Morgan interests advanced
$39,500,000 to the Van Sweringens, collateral having a market value of $4,936,000
[includes Midland Bk.] was taken from the Union Trust $5,000,000 loan and
deposited as collateral to the Morgan loans. In exchange the Union Trust
received other marketable collateral having a value of only $538,700, and the
common stock of a number of holding companies, which had no market and
were junior to such an amount of indebtedness as to make their value questionable. At the same time the obligation of the Vaness Company was converted
into one of O. P. and M. J. Van Sweringen, who had already guaranteed $39,500,000 of notes payable to Morgan.
EXHIBIT U-56e
Inasmuch as J. P. Morgan & Company and various New York banks had had
financial dealings with the Van Sweringens over a considerable period of time,
and had secured substantial profits through the building up and financing of
various holding companies (such as Chesapeake Corporation, Alleghany Corporation and Van Sweringen Corporation), it seems that the obligation of these
New York interests to the Van Sweringen enterprises was certainly as great,
if not greater, than that of the Cleveland Banks. While there may have been
some excuse for the New York interests taking a prior position to the Cleveland
bank loans, made for the development of the local real estate pro:ects, there
certainly was no excuse for taking the marketable collateral from The Union
Trust Company $5,000,000 loan. There is no information in our files to indicate
why The Union Trust Company permitted the New York interests to take this
collateral from the $5,000,000 loan, to which they were not entitled, nor why
The Union Trust Company permitted the other banks referred to above to be
paid in the spring of 1930 without having its own loan paid.
We are not making any comment at this time on the $2,800,000 loan to O. P.
and M. J. Van Sweringen, inasmuch as we believe this loan should be approached
from a different angle. Details as to the origin and changes in this loan, however,
are included in the report. You will note in going through the report that we
have not covered the various railroad holding and operating companies controlled
by the Van Sweringen interests.
Very truly yours,
C. C. MERRIFIELD,
Assistant Treasurer.
STOCK EXCHANGE PRACTICES
EXHIBIT
8935
U-57
(For Walter H. Seymour, Representative of U. S. Senate Committee on Banking
& Currency: This is not a part of the records of the Union Trust Co. It is
an internal memo by a junior member of the staff of the undersigned. It
has not been verified as to facts. Any opinions or conclusions are personal
to the member of the staff preparing this memo.—Oscar L. Cox, Deputy
Superintendent of Banks, State of Ohio.)
OFFICERS AND DIRECTORS OF UNION TRUST HAVING IMPORTANT INTERESTS IN
VAN SWERINGEN ENTERPRISES
J. R. Nutt, President of The Union Trust Company—10% owner of Vaness
Company, and also various other interests.
C. L. Bradley, formerly Vice President The Union Trust Company—(Left
January 10, 1928) 10% owner of Vaness Company, and various other interests.
F. H. Ginn, Director of The Union Trust Company—Counsel and also Director
of various Van Sweringen Companies.
T. S. Grasselli, Director of The Union Trust Company—Director of Cleveland
<fc Youngstown Railroad Company.
W. S. Hayden (deceased) formerly Director of The Union Trust Company—
One of the original founders of Vaness Company, and Director at the time of
his death of several Van Sweringen controlled companies.
Otto Miller, Director of The Union Trust Company—Director of numerous
Van Sweringen controlled companies.
P. A. Myers, Director of The Union Trust Company—Family interests in
Van Sweringen real estate syndicates.
Kenyon V. Painter, Director of The Union Trust Company—Interest in Van
Sweringen real estate syndicates.
EXHIBIT
U-58
(For Walter H. Seymour, Representative of U.S. Senate Committee on Banking
& Currency: This is not a part of the records of The Union Trust Co. It is
an internal memo by a junior member of the staff of the undersigned. It has
not been verified as to facts. Any opinions or conclusions are personal to the
member of the staff preparing this memo.'—Oscar L. Cox, Deputy Superintendent of Banks, State of Ohio)
REPORT ON THE VANESS COMPANY AND SUBSIDIARIES
CONCLUSIONS
Virtually all of the obligations of the Van Sweringens and their real estate and
holding companies (excluding railroads) are in default. The Union Trust, in its
position of junior creditor for large amounts, is vitally interested in the following:
1. Seeing, and assisting if possible, the various companies making satisfactory
readjustments on underlying obligations;
2. Keeping the operations of the Terminal Buildings intact, and the Shaker
Heights development (including Cleveland Interurban Railway) intact;
3. Avoiding litigation with trade creditors and avoiding tax suits where possible and if advisable;
4. Determining the attitude and policy of J. P. Morgan and Company, who
are the largest creditors;
5. Securing, if possible, [impossible—no reason for it.—B. J.] a rescramble of
the collateral held by the various creditors, particularly obtaining the Cleveland
Railway stock given up in 1930;
6. To help accomplish these ends, the Cleveland banks, and in particular the
Union Trust, should have closer contact with the affairs of these companies.
SUMMARY
While financial statements in our files of the various Van Sweringen controlled
companies are complete only back to 1929, it is evident that the Van Sweringens
have built up their vast holdings of real estate and securities on borrowed capital,
of which the greater part has been furnished by Cleveland and New York banks,
in addition to securities distributed to the public.
8936
STOCK EXCHANGE PRACTICES
Except for the payment of dividends on Vaness Company stock, the Vans
and their associates appear to have been taken little profit from their real estate
operations other than in salaries, [no] following the policy instead of reinvesting
profits through the acquisition of new real estate and property or railroad securities, by the formation of subsidiary companies organized for that purpose. Because of this fact, it is extremely difficult to evaluate the credit and securities of
any of these subsidiaries at different dates in the past, inasmuch as the assets
consisted of properties and securities acquired over a period of time, the values
of which have been contingent upon a successful continuation of the plans of the
Van Sweringen Brothers. A good example of this is found in the air rights over
the Cleveland Union Terminals Company development. The underlying land
now owned by the Cleveland Union Terminals Company was acquired by Van
Sweringen controlled companies over twenty years ago, for the purpose of utlimately building a terminal for the Cleveland Interurban Railroad and for a
Union Passenger Station. These properties in the Terminal area were carried
by these various Van Sweringen controlled companies until they were sold to
the Cleveland Union Terminals Company at cost plus carrying charges. As a
result, the Terminals Building Company, and subsequently the Cleveland Terminals Building Company, acquired without cost the air rights to certain areas
EXHIBIT U-58a
over the Cleveland Union Terminals development. While these air rights undoubtedly have substantial value, it would be difficult to determine their value
as of a particular date without an appraisal as of that date.
The same situation prevails in the valuation of the securities of Van Sweringen
Company and Shaker Company, where land has been acquired over a period of
time, improvements have been made, and carrying charges have been added on
the books of the Company to the cost of the land held.
The Van Sweringen controlled companies have been almost constant borrowers
from The Union Trust Company since its formation. A summary of the loans
of The Union Trust Company to these companies is shown under section " Union
Trust Creditor". Total loans rarely fell below $1,000,000, and frequently ran as
high as $5,000,000 to $10,000,000 in the aggregate. As far as we have been able
to determine, at the time most of these loans were made financial statements of
the companies were not submitted, or if submitted they were not retained in our
files, and virtually no evidence appears in the Credit files prior to 1930 of the
purpose for which the loans were made. A number of the loans made could
never have been considered satisfactory commercial bank loans, inasmuch as they
were secured in many cases by the equity stocks of real estate holding companies
having large amounts of prior liens ahead of them. Furthermore, as the history
of various loans indicates, there were substitutions of collateral from time to
time which, on the basis of information now available, were not to the advantage
of The Union Trust Company, although in cases of substitution of unlisted securities, it would be necessary, as pointed out above, to make a very thorough
analysis of the various companies extending further back than 1929, as well as
having a number of real estate appraisals made before this could be substantiated.
At the present time all of the loans to the Van Sweringen interests are secured by
collateral having some present value, except the following:
Loan to O. P. and M. J. Van Sweringen, secured
$2, 800, 000
Loan to O. P. and M. J. Van Sweringen, secured
4, 100, 000
Loan to Daisy Hill Company, secured & unsecured
537, 558 33
The loans to O. P. and M. J. Van Sweringen of $6,900,000 probably have no
present value, although there is probably some equity in the loan to Daisy Hill
Company. While the balance of the loans have some value, there is no probability of interest payments on these loans in the near future, inasmuch as all of
the companies have operated at a loss for some time and there is no present indication of profitable operations. Furthermore, proceeds of current liquidation of
assets, if any, are being applied on obligations secured thereby. From the
standpoint of realization, the marketable collateral securing the Vaness Company loan of $304,183.75 could be sold for slightly more than half the face value
of the loan, and probably some of the real estate securing certain other loans
might be sold at a nominal price. However, no attempt has been made in this
report to determine the present sale value of real estate held as collateral to
loans as a result of a conference with Mr. Stuber of our Mortgage Loan Department, who indicated that there was no present market for the properties.
STOCK EXCHANGE PRACTICES
8937
At the present time virtually all of the obligations of the Van Sweringens and
their controlled companies (excluding railroads) are in default, and the deficits
in working capital and current operating losses indicate that a crisis in the affairs
of these companies might come at any time. In view of this situation, and the
large interest of the Cleveland Banks involved, we believe that these banks, and
particularly the Union Trust, should have representation in the management of
these companies.
EXHIBIT U-59
(For Walter H. Seymour, Representative of U.S. Senate Committee on Banking
& Currency: This is not a part of the records of The Union Trust Co. It is an
internal memo by a junior member of the staff of the undersigned. It has
not been verified as to facts. Any opinions or conclusions are personal to
the member of the staff preparing this memo.—Oscar L. Cox, Deputy Superintendent of Banks, State of Ohio)
RELATIVE POSITION OF MORGAN AND UNION TRUST LOANS TO VANESS COMPANY
Oct. 29, 1929: Morgan loaned $8,917,800 to General Securities Corporation,
which was applied on that Corporation's account at Paine-Webber. Apparently
Paine-Webber had purchased control of U.S. Distributing Company stocks
but had not put the charge against General Securities on its books. At any
rate, the stock of U.S. Distributing was given to Morgan by Paine-Webber as
collateral for the loan to General Securities Corporation of $8,917,800, as well
as 350,000 shares of Alleghany common. [See comment 1.]
Oct. 29, 1929: Union Trust Company loaned Vaness Company $5,000,000,
secured by stocks having a market value of $7,295,750. If the $5,000,000,
$4,000,000 was transferred by wire to Paine-Webber of New York through the
First National Bank of New York. $600,000 was transferred to our Terminal
Office, which was paid to Paine-Webber, and $400,000 represented an official
check to the Midland Bank which was uccd to take up 7,529 shares of Cleveland
Railway stock from Paine-Webber.
(This loan obviously was made to protect the Vaness and affiliated companies'
margin accounts as Paine-Webber. It cannot be determined whether the
collateral given to The Union Trust Company came from Paine-Webber or was
held unpledged by the Vaness Company and its subsidiaries, and/or O. P. and
M. J. Van Sweringen).
Oct 29, 1929: O. P. and M. J. Van Sweringen personally borrowed $5,000,000
from The Chemical National Bank of New York, pledging the entire common
stock of The Higbee Company, which Vaness owned, at a cost of $7,500,000.
O. P. and M. J. Van Sweringen turned over the proceeds of the loan to Vaness
Company, and the advance appears on the December 31, 1929, Vaness Company
balance sheet as an account payable.
Nov. 1, 1929: The Cleveland banks loaned $9,000,000 to Vaness Company,
of which $2,000,000 was participation of The Union Trust Company, representing
a renewal loan. The $7,000,000 advanced by the other Cleveland banks was
credited to the various Vaness Company accounts in other banks, and we have
been unable to trace distribution of the proceeds of the $7,000,000 of loans.
While the date of the loan would suggest that part of the money might have
been used for margin at Paine-Webber, Mr. Anzalone has stated that the proceeds from this loan were used by Vaness over a period of time for working capital
and for advances to subsidiaries. [See comment 2.]
Dec. 5, 1929: The Midland Bank loaned General Securities Corporation
(Vaness Company) $1,200,000 secured by 36,000 shares of Otis Steel common
and 500 shares of Continental Illinois Bank stock, having a total market value
on December 31, 1929, of $1,526,000.
Dec. 26, 1929: Morgan loaned $6,000,000 to the Vaness Company, secured
by 50,000 shares of Nickel Plate common, 10,000 shares Erie Railroad second
preferred, and 190,000 shares of Alleghany Corporation common, having a total
market value on December 31, 1929, of $11,782,500. [See comment 3.]
NOTE: The Vaness Company and General Securities Corporation borrowed
from the Cleveland Banks, Chemical National Bank of New York, and Morgan
in the 60 days from October 29, 1929, to December 29, 1929, during the market
crash, $32,117,800.
8938
STOCK EXCHANGE PRACTICES
EXHIBIT U-59a
Dec. 31, 1929: The various loans of Vaness Company, General Securities
Corporation and Geneva Corporation appear as follows:
Union Trust
Midland Bank
Cleveland Banks
Morgan
Morgan
Paine-Webber
O. P. & M. J Van Swermgen
(To Chemical National Bank, N.Y )
i Market Value of AYY [Alleghany] securities
»
Do
3
Do
< Higbee Co. common stock
Amount
of loan
Market
Value
Collateral
$5,000,000
1,200,000
9,000,000
6,000,000
8,917,800
25, 031, 736
5,000,000
$7,018,000
1, 526,000
Unlisted
1 11,782,506
2 14,989,850
3 34, 271,141
* Unlisted
$4,607, 500
8,730,000
16,694,788
7,500,000 (Cost to Vaness)
Jan. 16, 1930: The Morgan loan of $6,000,000 was paid. The Nickel Plate
common stock held as collateral to this loan was acquired by Alleghany Corporation.
Jan. 23, 1930: The Morgan loan of $8,917,800 was paid apparently through
the sale of U.S. Distributing Company stocks to Pittson & Company, which
was formed early in 1930, and the stock of which had been underwritten by
Morgan at $20 per share. (It is impossible to determine from information in our
files whether Morgan took stock in payment for the loan or was paid in cash.)
[Yes, but very small amount.] On January 23, 1930, therefore, the Morgan
loans to Vaness Company, General Securities Corporation and Geneva Corporation had been entirely paid. [See comment 4.]
Apr. 30, 1930: By this date the accounts payable of Vaness, General Securities and Geneva Corporation at Paine-Webber's had increased to $31,250,440,
as against $25,031,736 on December 31, 1929.
May 1930: The Van Sweringen Corporation issued $30,000,000 of 5-Year 6%
Notes, dated May 1, 1930,* which were sold by a syndicate headed by the Guaranty Company (See Union Trust Financing). Proceeds from these notes were
osed for the following purposes:
$7,500,000 advanced to Cleveland Terminals Building for purchase by
that company of Higbee Company stock from Vaness Company.
1,087,000 advanced to Cleveland Terminals Building for purchase of
Country Club notes from Van Swermgen Company.
6,053,000 advanced to Cleveland Terminals Building to retire an issue
of Cleveland Terminals Building Company 3-year Notes,
which were secured by title to the air rights in the Terminal
development (except Tower Building Site and Cleveland
Hotel Site 1 ).
15,360,000 covered by discount on the Notes, retirement of some small
obligations of subsidiaries ($340,500 payable to Union Trust)
and the balance was used for working capital. Details not
furnished by the Company.
By this time the Chemical National Bank loan of $5,000,000 had been paid,
releasing the Higbee Company stock.
i Union Trust held $3,418,000 in its securities Investment Department, and the balance were held by
other Cleveland Banks.
STOCK EXCHANGE PRACTICES
8939
EXHIBIT U-59b
Oct. 1930: Morgan and several New York Banks loaned Vaness Company
$16,000,000, proceeds of which were used to purchase $10,087,000 Government
securities, $3,555,992 was paid to Paine-Webber, and the balance was used for
general corporate purposes. Virtually all of Vaness Company assets were pledged
back of this loan (with the exception of Metropolitan Utilities, Inc. common stock).
At the same time, Morgan and certain New York Banks, including National
City, Guaranty Trust, Chase, First National, and Bankers Trust, loaned Cleveland Terminals Building Company $23,500,000, proceeds of which were used as
follows:
$5,000,000 to purchase 500,000 shares of Alleghany common from Van
Sweringen Corporation.
15,000,000 Paid to Paine-Webber & Company.
3,500,000 Used for corporate purposes.
The above loan of $23,500,000 was secured by all of Cleveland Terminal Building Company's listed and unlisted securities, as well as the advances to and equity
in the Higbee Company.
By means of the two above loans the Van Sweringen Corporation was able to
substitute $15,000,000 of Government securities back of its $30,000,000 note issue
in place of the 500,000 shares of Alleghany common stock, and the accounts payable at Paine-Webber were completely paid off.
At the same time, The Union Trust Company released from its $5,000,000 loan
32,000 shares of Cleveland Railway stock, 8,260 shares Midland Bank stock, and
50,000 shares Van Sweringen Corporation common stock, having an indicated
market value at that time of $4,936,000, which collateral was transferred as
collateral to Morgan loans. In exchange for this marketable collateral, The
Union Trust Company received the entire common stock of the Metropolitan
Utilities, Inc., 9,000 shares of Vaness Company preferred stock, 16,250 shares
Vaness common stock, market stocks having a total market value of $538,700,
and equity in stocks of subsidiaries of Metrolpoitan Utilities, Inc., subject to<
certain prior liens.
In other words, The Union Trust accepted as collateral preferred and common
stock of the Vaness Company after Morgan had taken a lien on virtually all of
the Company's assets, with the exception of Metropolitan Utilities, Inc. common
stock (which already was subject to $4,500,000 of bank loans) giving up marketable collateral having a market value at that time of almost the face value of the
loan. At the same time, Vaness Company was released from the $5,000,000 and
the $9,000,000 loans of the Cleveland banks, and the obligations of O. P. and M. JL
Van Sweringen were substituted. (O. P. and M. J. Van Sweringen also guaranteed both of the Morgan loans).
Nov. 19, 1930: Van Sweringen Company gave Vaness Company its note for
$5,134,154, which was pledged under the Morgan loan. There was no increase in
the Morgan loan at that time. This action was strange, inasmuch as all of the
common stock of Van Sweringen Company was pledged under the Morgan loan,
and at that time Morgan apparently was the only Vaness creditor of any importance. [No prior debt and arrangement.] [See comment 5.]
Nov. 20, 1930: A loan of $800,000 was made to Vaness Company by The Union
Trust Company, and $800,000 was paid on the loan of $5,000,000 of O. P. and
M. J. Van Sweringen. There is no information in our files to indicate the reason
for $800,000 of the O. P. and M. J. Van Sweringen loan being transferred to the
Vaness Company on November 20th. It is possible [no, at our request] that there
might have been considerable comment on the transfer on October 30, 1930 r
from Vaness Company loans to O. P. and M. J. Van Sweringen loans, and this
raises the question as to whether Morgan knew of [No.] this discussion and took
the only other unpledged asset of Vaness Company before the Cleveland banks
could get it. [See comment 6.]
8940
STOCK EXCHANGE PRACTICES
EXHIBIT
U-60
{For Walter H. Seymour, Representative of U.S. Senate Committee on Banking &
Currency: This is not a part of the records of The Union Trust Co. It is an
internal memo by a junior member of the staff of the undersigned. It has not
been verified as to facts. Any opinions or conclusions are personal to the member of the staff preparing this memo.—Oscar L. Cox, Deputy Superintendent of
Banks, State of Ohio)
Summary of Union Trust interests
(Excluding Railroad and Railroad Holding Companies).
Principal
A. Union Trust as Creditor (See following pages).
1. Commercial and Collateral.
2 Mortgage Loans
3. Land Contract
Interest Delinquent to
May 1, 1933.
$11,412,908 54
772,064 57
1, 000, 000 00
$1, 039,958 01
49, 087 82
201, 595 35
$13,184,973 11
$1, 290, 641.18
Par Value
B. Union Trust Ownership of Bonds and Stocks
1. Van Swenngen Company 6's—1938
2. Van Swenngen Company 6's—1935.
$36, 000 00
64, 000 00
$100, 000 00
Par Value
C. Held in Collateral Loan Department (Mam Office)
1 Cleveland Railway 1st Mtg 5's
2 Cleveland Railway Capital Stock ($100 par)
3. Cleveland Railway Certificates
4 Van Swenngen Company 6's—1935
5. Van Swenngen Company 6's—1938
6. Van Swenngen Company 6% Notes A/C K V Painter
7. Van Swermgen Corporation 6% Notes
8. Van Swenngen Corporation Common
9 Shaker Company 7's
10. Cleveland Terminal Building 6's
11. Vaness Company Preferred (Various Loans)
12 Vaness Company Common (O P. and M J. Van Swenngen
loan)
13 Metropolitan Utilities, Inc Common
Shares
$5,000 00
1,000 00
9, 200 00
258,130 48
1,000 00
4,410
240
7,400 00
3, 500 00
17,310
16, 250
10,296
$285, 230 48
Par Value
D. Estates Trust Department Holdings.
1. Van Swenngen Company 6's—1935
2 Van Swenngen Company 6's—1938_
3 Cleveland Terminal Tower Land Trusts
4 Cleveland Terminal Tower Bldg. 6's—1941...
5 Shaker Company 7's
6 Cleveland Hotel Land Trusts
7 Higbee Company 1st Preferred
8 Higbee Company 2nd Preferred
9 Vaness Company Preferred
10 Vaness Company Common-11 Cleveland Railway Cap Stk & Certificates..
$458,200 00
578, 400 00
209, 000 00
0
16, 500 00
251,500 00
361
44
1,535
14, 250
17, 845
$1, 513, 600 00
E. Union Trust Corporate Trustee
(See Schsdule prepared by Corporate Trust.)
EXHIBIT
Shares
U-61
(For Walter H. Seymour, Representative of U.S. Senate Committee on Banking &
Currency: This is not a part of the records of The Union Trust Co. It is an
internal memo, by a junior member of the staff of the undersigned. It has
STOCK EXCHANGE PRACTICES
8941
not been verified as to facts. Any opinions or conclusions are personal to
the member of the staff preparing this memo.—Oscar L. Cox, Deputy Superintendent of Banks, State of Ohio)
ACTIVE TRUSTS
CORPORATE TRUST DEPARTMENT
Trust 1396: O. P. and M. J. Van Sweringen.
1. Date of Trust—September 28, 1912.
2. The Union Trust Company holds funds of Park Reserve Trustees for
certain improvements under plans for real estate development in Shaker
Heights and for payment of taxes.
3. Property
involved:
Free funds—$774.56. Impounded
funds
$14,716 89.
Trust 1558: The Cleveland & Youngstown R.R. Company.
1. Agreement (letter dated 2/3/1914).
2. The Union Trust Company originally acted as Trustee to hold title to
real estate and stock of The Cleveland & Youngstown R.R. Company.
Now holds only stock to secure obligations owing to New York Central R.R.
Company. Equity now in Metropolitan Utilities, Inc. and pledged under
participated loan.
Trust 2975: Painter, Bradley, F. E. Myers & Bro., The Citizens Savings and
Trust Company and The Van Sweringen Company.
1. Trust agreement dated 4/14/20/.
2. Holding title to the property for benefit of syndicate and The Van
Sweringen Company acting as sales and collection agent. Receiving and
disbursing proceeds.
3. (a) Property covered consists of several sublots on Scottsdale, Tolland,
Lomond, Norwood, Lytle, Traver, Susses and other streets in the Village of
Shaker Heights. (Complete survey in Otto Morton's possession).
(b) Appraisal figures not available. Schedule of release prices in file.
(c) Taxes to be paid by The Van Sweringen Company.
(d) Ownership and distribution of income: K. V. Painter, 1/5; C. L.
Bradley, 1/10; Alva Bradley, 1/10; The Van Sweringen Company, 1/5;
The Union Trust Company (Estates Dept.), 1/5; P. A. Myers (deceased),
1/10; F. E. Myers (deceased), 1/10.
(e) Delinquent taxes (oetter of 10/4/32). $62,494.67 including last half
1931 and penalty.
EXHIBIT
U~61a
Trust 3314: F. E. and P. A. Myers—Agency Trust.
1. Trust opened February 9, 1921.
2. No formal agreement—letter instructions in file.
3. The Union Trust Company to receive monies from The Van Sweringen
Company from sale of the lots, make distribution and see that taxes are paid.
4. (a) Various sublots in Village of Shaker Heights (Selling Agent—The
Van Sweringen Company).
(b) (b) Appraisal figures not available.
(c) Taxes paid by owners.
(d) Distribution—Estate of P. A. Myers—1/3; Estate of F. E. Myers—2/3.
(e) Ownership—the same.
(f) Delinquent taxes—1932 taxes not paid.
Trust 4056: The Cleveland Union Terminals Company and The Cleveland
Terminal Building Company.
1. Land Contract agreement between The Cleveland Union Terminals
Company and The Cleveland Terminals Building Company, dated 1/1/22,
under which property acquired for terminal development and air rights
established.
Property involved—reference is made to schedule in file, all located in
terminal area and west approach to terminal.
2. The Union Trust Company holds title as passive repository for title for
The Cleveland Union Terminals Company and The Cleveland Terminals
Building Company.
Trust 4244 The Terminal Building Company.
1. Agreement and deed of trust dated 9/1/22.
2 The Union Trust Company holds title to property and issued certificates of equitable ownership now cancelled. Title held to secure loan of
the Vaness Company (Collateral Loan).
8942
STOCK EXCHANGE PRACTICES
3. Property involved (Old Glenville Syndicate) various parcels of property. Reference is made to agreement for detailed information as to location, size, etc. Taxes to be paid by Terminal Building Company. Distribution of income was made to holders of Certificates of Equitable Ownership. No information available regarding delinquent taxes.
EXHIBIT
U-61b
Trust 4574: Gabriel & Kendel.
1. Lease dated November 1, 1923.
2. The Union Trust Company holds funds of The Traction Stores Company as security for lease and insurance policies as trustee under long term
lease and receives and disburses rentals.
3. Property involved—northerly 1/2 of sublot 82 in A. W. Walworth's
subdivision (Broadway & Ontario).
Trust 4650: State Banking & Trust Company and John Connell
1. The Union Trust Company acts as Trustee of Insurance only under long
term lease and the property involved is the same as in Trust 5284—Connell
Land Trust.
Trust 4651: Harris & Connell
1. Date of Trust—February, 1924.
2. The Union Trust Company acts as Trustee for Insurance under 99 year
Ownership as indicated on our records: Lessor—Charles and Samuel
Harris; Lessee—John Connell (Nominee of Van Sweringen interests)
3. Property involved—456 to 462; 468 to 476 Broadway extending thru
to 2501-7 Ontario Street.
Trust 4985: The Fairmount Properties Company and The Van Sweringen
Company.
1. Agreement dated March 5, 1925.
2. The Union Trust Company to receive and disburse funds in accordance
with agreement. The Fairmount Properties Company purchased property
under land contract from The Van Sweringen Company and in turn sold
under land contract to individual purchasers. Property subject to Trust
Deed securing The Van Sweringen Company bonds dated October 1, 1928.
The Fairmount Properties Company financially not responsible.
3. (a) Property involved—Three subdivisions (15-16-18) of The Rapid
Transit Land Company. (Warrensville Road and Fairmount Blvd.)
(b) Appraisal figures not available.
(c) Taxes to be paid by The Fairmount Properties Company.
(d) Distribution—from each sale.
First 25% to The Fairmount Properties Company—Commission
Next 7% to The Fairmount Properties Company.
Next 68% to The Van Sweringen Company until balance of contract
between The Van Sweringen Company and The Fairmount Properties
Company has been paid.
All over and above said price to go to The Fairmount Properties Company.
(e) Delinquent taxes—Information from schedule furnished August 9,
1932: $153,570.00 including last half 1931.
EXHIBIT U - 6 1 C
Trust 5040: Bradley, The Van Sweringen Company and The Union Trust
Company.
1. Agreement dated July 14, 1922.
2. The Union Trust Company to act as Transfer Agent and Registrar of
the certificates of interest. No duties with reference to property.
3. (a) Property involved—(reference is made to agreement). (Several
parcels in Village of Idlewood)
(b) Appraisal figures not available.
(c) Taxes paid by Sales Agent (The Van Sweringen Company).
(d) Present records of outstanding interests: C. L. Bradley, 1/3; The
Union Trust Company 1/3; The Van Sweringen Company 1/3.
(e) Delinquent taxes—no record.
Trust 5284: Connell Land Trust
1. The Union Trust Company, Trustee under Agreement and Declaration
of Trust dated 8/16/24—Land Trust. Beneficial interest owned by The
Union Trust Company.
STOCK EXCHANGE PEACTICES
8943
2. Property involved—Known as sublot 80 in A. W. Walworth's subdivision; triangular parcel at Ontario and Broadway.
Taxes to be paid by Lessee (John Connell nominee for The Van Sweringen
Company interest) Distribution of income to holders of Certificates.
Trust 5424 Painter, Van Sweringen Company and The Union Trust Company.
1. Date of trust—10/21/1926
2. The Union Trust Company holds a mortgage from The Van Sweringen
Company to K. V. Painter—assigned to The Union Trust Company. Receives and disburses money, makes releases.
Ownership—K. V. Painter—Note for balance owing $258,130.48, pledged
by K. V. Painter to The Union Trust Company.
3. (a) Property involved—Several parcels situated in Village of Shaker
Heights, Village of Euclid, Township of Orange (acreage)
(b) The Van Sweringen Company to pay the taxes.
(c) Income for benefit of K. V. Painter, pledged to The Union Trust
Company
(d) Delinquent taxes—no information.
EXHIBIT U-61d
Trust 5774: The Van Sweringen Company, Lexington Realty Company and The
Union Trust Company.
1. Agreement dated July 6, 1928.
2. The Union Trust Company holds title to secure loan of The Van Sweringen Company for the sum of $85,500.00.
3. Property involved—27.326 acres on Wynnewood Avenue. Part of
original Euclid Township Tract 14, 872.78' frontage on Wynnewood.
(b) Appraisal figures not available.
(c) Taxes to be paid by The Van Sweringen Company.
Trust 5954: The Cleveland Interurban R.R. Company.
1. Trust Agreement dated March 24, 1930.
2. The Union Trust Company holds title as naked Trustee subject to
instructions of Company.
3. Property involved—10 parcels situated in Cleveland and located as part
of original 100 acre lots 328-329, Kindman Rd., Berwick Avenue, East 64th
Street.
Trust 6178: The Terminal Building Company and The Union Trust Company.
1. Agreement (letter dated 7/15/31.
2. The Union Trust Company holds title as naked Trustee and to reconvey upon request from The Terminal Building Company.
3. Property involved—Sublot 444 in Walworth & Kelley's Allotment
being 50' frontage on northwesterly side of Central Avenue, S.E.
Trust 6201: The Van Sweringen Company and The Union Trust Company.
1. Agreement dated 10/28/1931
2. The Union Trust Company holds title to property to secure payment of
$400,000.00 demand note of The Van Sweringen Company.
3. Property involved—Several parcels located in Euclid Village, Village
of Pepper Pike and in the city. Viz:
(1) South of Nickel Plate RR and East of 260th St.
(2) North of Nickel Plate RR and East of 260th St.
(3) North of Lake Shore and Michigan Southern RR
(4) North of Nickel Plate and East of Babbitt Road.
(5) South of N.Y.C. and St. Louis & West of East 260th St.
(6) Vicinity of St. Clair and Krauss Court (2 parcels)
(7) North Woodland and Lander Road (Village of Pepper Pike)
(8) Shaker Blvd. and Lander Rd. (Village of Pepper Pike)
(9) Parcels 6, 18, 19, 21 and 22 Shaker Country Estates Subdivision #43
(Village of Pepper Pike)
EXHIBIT U-61e
Appraisal figures not available.
The Van Sweringen Company to pay taxes. No information regarding
delinquency if any in taxes
Trust 6201: In memorandum to the Collateral Loan Department dated July 13th,
1933, Mr. John C. McConnell states that the company reports unpaid taxes
including the first half of the year 1932 and the penalty for the year 1931 of
$32,846.28.
175541—34—PT 20
14
8944
STOCK EXCHANGE PRACTICES
EXHIBIT
U-62
(For Walter H. Seymour, Representative of U.S. Senate Committee on Banking
& Currency: This is not a part of the records of The Union Trust Co. It is an
internal memo by a junior member of the staff of the undersigned. It has not
been verified as to facts. Any opinions or conclusions are personal to the member of the staff preparing this memo.—Oscar L. Cox, Deputy Superintendent of
Banks, State of Ohio)
VANESS COMPANY.
UNION TRUST INTERESTS.
1. Creditor in the amount of $304,183.75 secured by marketable and other
collateral.
2. Creditor to Terminal Building Company and Vaness Company jointly in
amount of $557,000, secured.
3. Interest in preferred and common stock of Vaness Company held as collateral for loans (See O. P. and M. J. Van Sweringen loans under "Union Trust
Creditor")4. Stock held in Estates Trust Department.
SUMMARY
1. Company has shown no income in past four years, except profits from sale of
securities in 1929.
2. Statements submitted by Company are not audited, and do not contain
reconciliation of surplus accounts.
3. Equities in subsidiaries and investments are all pledged.
4. These equities are junior to so much indebtedness that there is little chance
of Vaness realizing any cash from interest, dividends, or principal payments, except as creditors are willing to release these funds.
CONCLUSION
1. Stocks of Company have no present value other than on warrant basis.
2. Union Trust must look to collateral for interest and principal payments on
its loans to Vaness Company.
3. Loan of $304,183.75 has possibilities of working out, although value of part
of the collateral cannot be ascertained.
4. Value of Vaness Company obligations and securities in the past cannot be
determined without comprehensive study of Company's past operations, as well
as its subsidiaries.
5. However, information submitted by the Company to date indicates that
Vaness Company securities could at no time in the past four years have been considered satisfactory collateral in large amounts for commercial bank loans.
EXHIBIT
U-63
(For Walter H. Seymour, Representative of U.S. Senate Committee on Banking
& Currency: This is not a part of the records of The Union Trust Co. It is
an internal memo by a junior member of the staff of the undersigned. It has
not been verified as to facts. Any opinions or conclusions are personal to the
member of the staff preparing this memo.—Oscar L. Cox, Deputy Superintendent of Banks, State of Ohio)
METROPOLITAN UTILITIES, INC. & SUBSIDIARIES
UNION TRUST INTERESTS
1. $2,100,000 Participation and accrued interest in $4,500,000 loan to Metropolitan Utilities.
2. $165,823 75 Interest Notes taken in payment of interest on above loan to
November 14, 1932
3. $45,000 Loan to Cleveland Interurban Railroad.
4. Entire common stock of Metropolitan Utilities pledged buck of $4,1C0,000
loan to O. P. and M. J. Van Sweringen.
STOCK EXCHANGE PRACTICES
8945
5. Stocks and bonds of Cleveland Railway held in Estates Trust Department
and as collateral to loans. (See list under "Union Trust Interests" Summary.)
6. Union Trust, Trustee for Cleveland Railway bonds. (Refunding of these
bonds has practically been completed, and Cleveland Trust is Trustee for the
new issue.)
SUMMARY
1. Companies have deficit in working capital.
2. Operations of the Company and its subsidiaries have been at a loss for each
of past four years for which wre have statements. Working capital to cover these
cash losses was supplied by the Cleveland bank loans and by advances from
Vaness Company.
3. Operating expenses have beer reduced substantiallv.
4. Of the $4,500,000 advanced by Cleveland Banks
?
was used for
additions to roaa and equipment.
5. Problem of maturity of Cleveland Railway Bonds has been solved by
successful refunding of the issue through extension agreement with holders.
CONCLUSIONS
1. No likelihood of companies earning sufficient to pay interest on loans, much
less principal.
2. Probably no chance of disposing of properties if banks took title.
3. Voting control of Cleveland Railway is of little advantage to Metropolitan
Utilities. Probably no chance of Metropolitan Utilities ever recovering the $10
per share advanced to holders of Certificates, (over $3,000,000 in the aggregate).
EXHIBIT
U-64
(For Walter H. Seymour, Representative of U.S. Senate Committee on Banking
& Currency: This is not a part of the records of The Union Trust Co. It is an
internal memo by a junior member of the staff of the undersigned. It has not
been verified as to facts. Any opinions or conclusions are personal to the
member of the staff preparing this memo.—Oscar L. Cox, Deputy Superintendent of Banks, State of Ohio)
THE
VAN SWERINGEN COMPANY
UNION TRUST'S INTERESTS
1. Creditor in the amount of $751,620 and accrued interest on various collateral
ana mortgage loans to Van Sweringen Company.
2. Interest in Vaness Company and its equity in Van Sweringen Company
through pledging of Vaness stock to Union Trust
3. Corporate Trustee for Van Sweringen Company First Mortgage and
Collateral Trust 6% Bonds due 1938, of which
$578,400 are held in Estates Trust,
9,200 are held as Collateral to loans,
36,000 are owned by Union Trust Company.
(Majority of above bonds deposited under Reroganization Plan—See plan
under captior "Union Trust Financing").
4. Union Trust Estates Trust Department also holds $458,200 Van Swringen
Company First Mortgage and Collateral Trust 6's due 1935.
SUMMARY
1. The Company has been operating at a substantial loss for at least the past
four years, and no dividends have been paid on the preferred or common stocks in
the past thirteen years.
2. The Company has apparently always operated on a large amount of borrowed capital, both from the public and from Vaness Company.
3. The Company is in default on a large amount of taxes, is in default on its
funded debt and on a number of its mortgages and land contracts.
4. The Company has virtually no current assets, and any improvement in its
cash position would probably only come from liquidation of properties. Outlook
for substantial increase in sales of property not bright at the present time.
8946
STOCK EXCHANGE PEACTICES
5. The value of unsold land, which is the principal unpledged asset, is steadily
declining because of the accumulation of taxes, and unless a substantial amount
of these lands can be sold in the relatively near future, the taxes will have eaten
up a substantial part of the Company's equity.
CONCLUSIONS
1. No likelihood of near term payment of interest or principal on Van Sweringen
Company account to Vaness Company.
2. Van Sweringen Company common stock of questionable present value other
than on a warrant basis.
3. Hence, equity of Vaness Company in Van Sweringen Company can be
liberally discounted on Vaness Company balance sheet.
EXHIBIT U-64a
4. Van Sweringen Company common stock could never, under any circumstances, have been considered satisfactory collateral for a banking loan for the
following reasons:
(a) No dividends paid on the preferred stock since prior to 1919.
(b) No market.
(c) Virtually all assets of the Company pledged or mortgaged.
(d) Large payables to Vaness which ranked ahead of common stock and made
the common stock in the nature of a third lien.
5. Union Trust as creditor cannot expect payment of interest or principal from
Company, but must look to its collateral for realization.
6. Similarly, bond issues must be serviced from proceeds from their own
collateral. (See plans of readjustment under "Union Trust Financing").
EXHIBIT
U-65
(For Walter H. Seymour, Representative of U.S. Senate Committee on Banking
& Currency: This is not a part of the records of The Union Trust Co. It is
an internal memo by a junior member of the staff of the undersigned. It has
not been verified as to facts. Any opinions or conclusions are personal to the
member of the staff preparing this memo.—Oscar L. Cox, Deputy Superintendent of Banks, State of Ohio)
THE
VAN SWERINGEN CORPORATION
SUMMARY
The Van Sweringen Corporation is a shell and the value of its common stock
is dependent entirely on its investment in Cleveland Terminals Building. The
stock has no present worth other than in the nature of a warrant, and in view of
the manner in which Cleveland Terminals Building was financed there is some
question as to its probable value at the time of its issuance. (See comment on
Cleveland Terminals Building for value of that Company's stock).
HISTORY
The Van Sweringen Corporaton was incorporated April 21, 1930, by the Terminal Building Company and General Securities Corporation primarily as a financing
medium for Cleveland Terminals Building Company and for General Securities
Corporation. Of the original stock issued, The Terminal Building Company
received 1,124,800 shares in exchange for its equity in the Cleveland Terminals
Building Company and General Securities Corporation received 620,000 shares
in exchange for 500,000 shares of Alleghany Corporation common. Terminal
Building Company in turn liquidated its indebtedness to Terminal Properties
Company by selling the above mentioned 1,124,800 shares of Van Sweringen
Corporation stock to Terminal Properties.
The Van Sweringen Corporation issued $30,000,000 of 5-year 6% Notes, dated
May 1, 1930, which were sold by a syndicate headed by the Guaranty Compan}'
(See Union Trust Financing). Proceeds from these notes were used for the following pu r poses:
$7,500,000 advanced to Cleveland Terminals Building for purchase by that
Company of Higbee Company stock from Vaness Company.
$1,087,000 advanced to Cleveland Terminals Building for purchase of Country
Club note3 from Van Sweringen Company.
STOCK EXCHANGE PRACTICES
8947
$6,053,000 advanced to Cleveland Terminals Building to retire an issue of
Cleveland Terminals Building Company 3-year Notes, which were secured by
title to the air rights in the Terminal development (except Tower Building Site and
Cleveland Hotel site l).
$15,360,000 covered discount on the Notes, retirement of some small obligations
of subsidiaries ($340,500 payable to Union Trust) and the balance was used for
working capital. Details not furnished by the Company.
When the Van Sweringen Corporation note issue was sold it was provided in
the indenture that "Messrs. O. P. and M. J. Van Sweringen, as individuals, will
enter into an agreement for the benefit of the holders of these notes effectively
guaranteeing (until at least $15,000,000 of these notes shall have been retired with
the proceeds of said stock) that if at any time ard while the market value of said
Alleghany Corporation common stock then owned together with the proceeds of
any shares sold and/or United States Government obligations representing the
investment of such proceeds, shall amount to less than 50% of the amount of tnese
notes then outstanding, they will make available additional readily marketable
securities to the extent necessary to make up such deficiency, all as set forth in
the Trust Indenture."
EXHIBIT U-65a.
In the fall of 1930 the market value of Alleghany Corporation stock had declined
to such an extent that tne Vans borrowed from J. P. Morgan & Company through
Vaness Company and Cleveland Terminals Building Company sufficient funds to
purchase and deposit $15,000,000 of Government securities with the Trustee for
these Notes in place of the Alleghany stock. In November 1931, when it became
apparent that earnings of the Van Sweringen Corporation would not carry the
interest on the notes, Van Sweringen Corporation made an offer of exchange to
the holders of $15,000,000 par value of notes whereby the holder of a $1,000
note received $500 in cash and 20 shares of common stock of Van Sweringen
Corporation. In this way $15,000,000 of the notes were retired and canceled.
Vaness Company then, through a loan from Morgan, offered to acquire the other
$15,000,000 of the notes in the hands of the public on the same basis, and did
obtain $13,787,000 which it now holds and which are pledged with Morgan under
the $18,250,000 loan.
FINANCIAL POSITION & EARNINGS
The sole asset of Van Sweringen Corporation consists of the capital stock of
and an open account with the Cleveland Terminals Building Company carried
on the books at $56,384,831. Liabilities include $15,000,000 of 6% notes, approximately $36,000 of accrued expense, and an account payable to Vaness
Company of $4,301,869 representing principally cash advances by that Company.
The Corporation has only one class of stock, consisting of 1,744,800 shares of
no-par common, having a book value of $21.23 per share.
The Van Sweringen Corporation received no interest or dividends on its investment in Cleveland Terminals Building Company for 1932, and its expenses consisted of only $14,601 of taxes and trustee charges. Although interest payable
was accrued on the $15,000,000 of 6% notes, interest was paid on only those
outstanding in the hands of the public ($1,213,000) and interest on these bonds
has since been defaulted.
EXHIBIT
U-66
(For Walter H. Seymour, Representative of U.S. Senate Committee on Banking
& Currency: This is not a part of the records of The Union Trust Co. It is
an internal memo by a junior member of the staff of the undersigned. It has
not been verified as to facts. Any opinions or conclusions are personal to the
member of the staff preparing this memo.—Oscar L. Cox, Deputy Superintendent of Banks, State of Ohio)
THE CLEVELAND TERMINAL BUILDING CO.
UNION TRUST INTERESTS
1. Interest through Vaness Company equity in Cleveland Terminal Building.
2. Distributor of Cleveland Terminal Tower Land Trust Certificates for which
Union Trust is Corporate Trustee and of which $209,000 are held in Estates
Trust.
i Union Trust held $3,418,000 in its Securities Investment Department, and the balance were held by
other Cleveland Banks.
8948
STOCK EXCHANGE PRACTICES
3. Interest in Higbee Company, which is wholly owned subsidiary of Cleveland
Terminal Building (See report on Higbee Company under that heading).
SUMMARY
1. Virtually all of Cleveland Terminal Building Company's fixed assets are
mortgaged for an amount almost equivalent to their cash cost to the Company.
2. All listed securities and its investment in Higbee Company are pledged back
of the Morgan Loan.
3. All of the Company's bonds as well as its notes payable to Morgan are in
default.
4. Although consolidated operating statements for the various properties
operated indicate a reduction in expenses, leasehold rental accruals and interest
accruals are so large that prospects for the company earning these charges in the
near future are not favorable.
5. It is understood that those taxes which have been billed have been paid.
6. Detailed operating statements of the various properties have been requested,
but are not yet available. [Now available in our files.
.]
CONCLUSION
1. The Company has no present equity in its securities or properties.
2. The Company is making arrangements with its larger creditors for extension
and moratorium of interest on its obligations.
3. Outlook for profitable operations of the Company's properties as a whole is
not favorable, and hence it is not likely that Vaness Company through Van
Sweringen Corporation will derive any income from the operations of the Cleveland Terminal Building Company.
4. Equity for Cleveland Terminal Tower Land Trust Certificates appears
ample, although rental requirements are barely being covered.
EXHIBIT
U-67
(For Walter H. Seymour, Representative of U.S. Senate Committee on Banking
& Currency: This is not a part of the records of The Union Trust Co. It is
an internal memo by a junior member of the staff of the undersigned. It
has not been verified as to facts. Any opinions or conclusions are personal
to the member of the staff preparing this memo.—-Oscar L. Cox, Deputy
Superintendent of Banks, State of Ohio)
THE TERMINAL BUILDING COMPANY
UNION TRUST INTERESTS
1. $557,000 collateral loan to Terminal Building Company and Vaness Com"
pany.
2. Intsrest in Terminal Building Company as subsidiary of the Vaness Company.
3. Relationship between Union Trust Company and Terminal Building Company in connection with land contracts to O. P. and M. J. Van Sweringen.
Terminal Building Company was incorporated June 10, 1911, and is a real
estate holding company owning fee and leasehold properties in the neighborhood
of the Terminal
development and along the Rapid Transit right-of-way. The
Company wras originally formed by Terminal Properties, and when Terminal
Properties was merged with Vaness Company in 1930 Vaness Company acquired
Terminal Building Company stock which was outstanding in the amount of
1,700 shares, par value $100.
STOCK EXCHANGE PEACTICES
EXHIBIT
8949
U-68
(For Walter H. Seymour, Representative of U.S. Senate Committee on Banking
& Currency: This is not a part of the records of The Union Trust Co. It is
an internal memo by a junior member of the staff of the undersigned. It
has not been verified as to facts. Any opinions or conclusions are personal to
the member of the staff preparing this memo.—Oscar L. Cox, Deputy Superintendent of Banks, State of Ohio)
OUTLINE
OF VAN SWERINGEN PUBLIC FINANCING HANDLED BY THE UNION
TRUST COMPANY OR UNION CLEVELAND CORPORATION
THE VAN SWERINGEN COMPANY FIRST MORTGAGE & COLLATERAL TRUST 7% NOTES
DUE 1924 TO 1930.
For a period of approximately 25 years, starting in 1905, the Van Sweringen
interests were active in the purchase and improvement of streets, parkways,
boulevards, and other street facilities in Shaker Heights, Ohio, and in the southerly portion of Cleveland Heights, Ohio.
Up to the time that The Union Trust Company was first identified with the
underwriting of a Van Sweringen Company bond issue in June of 1922 there was
issued and sold by the Van Sweringen Company bonds in the aggregate amount
of $10,000,000, all of which up to the time of this financing were paid, except an
issue of $2,750,000 dated September 1, 1919, which by June 1, 1922, had been
reduced to $2,044,000.
For many years the Shaker Heights district showed a constant growth in
population and real estate values, resulting through the exceptional character
of the improvements, in the creation of a residential section generally regarded
as one of the most substantial and extensive home site developments in the
country.
For the purpose of refunding bank loans and providing working capital, the
Van Sweringen Company (established in 1913) sold in June of 1922 to an investment banking syndicate, headed by The Union Trust Company, Cleveland, an
issue of $3,150,000 First Mortgage Collateral Trust Gold Notes, dated June 1,
1922, due serially as follows:
$350,000 October 1, 1924
$450,000 October 1, 1928
350,000 October 1, 1925
600,000 October 1, 1929
400,000 October 1, 1926
600,000 October 1, 1930
400,000 October 1, 1927
This issue was divided into two portions, one amounting to $2,000,000 principal
amount, which was retailed through investment channels specified below, and
the other part placed privately.
For the $2,000,000 portion a Purchase Group was formed at 92, consisting of:
The Union Trust Company, with a participation of $633,333.34
The Herrick Company
" "
"
" 633,333.33
Hayden, Miller & Company
" "
"
" 633,333.33
Guardian Savings & Trust Co
"
"
" 100,000.00
A banking group was then formed at 94^ for the 1924 and 1925 maturities
and at 93J^ for the balance of maturities, which group was participated in by a
number of banks and investment houses as enumerated in Exhibit "A" attached
under the heading of Special Purchase Group. The Union Trust Company's
participation in this Banking Group was $341,666.67. The Selling Group
was then organized at 96 for the 1924/25 maturities, and 95 on the balance of
the maturities, in which group a large number of dealers participated as enumerated in Exhibit "B" attached. The Union Trust Company's participation
in the Selling Group was $185,000. The retail selling price of this issue was
100 for the 1924 and 1925 maturities, and 99 on the balance of maturities. The
total profit to The Union Trust Company in the various groups as itemized in
Exhibit " C " attached, amounted to $34,673.87.
8950
STOCK EXCHANGE PRACTICES
EXHIBIT U-68a
The security for these bonds consisted of a first mortgage on land and a pledge
of purchasers' obligations secured by land, which collateral and land were valued
as follows:
Purchasers' Obligations
First Mtgs. and Lien Claims
Land Contracts & Lien Claims _
Total
Valuation of Land directly mortgaged..
Amount
Valuation of
Security
$2, 332, 361.96
841,481. 66
i $6, 018, 281. 50
2 1, 688, 395. 00
$3,173, 843. 62
$7, 706, 676. 50
3 752, 000. 00
$8, 458, 676 50
1
2
3
Values based on independent appraisal.
Values based on actual selling prices of land.
This land allocated to such individual mortgage and land contracts as are secured on a basis of less
than 225%.
The appraisals of land were made as of May 25, 1922, by H. C. Robinson, Vice
President of the Guardian Savings and Trust Company, Alexander S. Taylor of
V. C. Taylor & Sons, and W. H. Fowler, of The Union Trust Company.
In August of the same year, namely 1922, a three-way group account was
formed consisting of The Union Trust Company, Hayden, Miller and Company,
and The Herrick Company, which group purchased from the Securities and Investments Department of The Union Trust Company, $483,000 principal amount
of the bonds at 94. These $483,000 principal amount of bonds represented a
part of the original portion of the bonds that were placed privately. The participation of each of the three group members was as follows:
The Union Trust Company
$124, 700
The Herrick Company
125, 000
Hayden, Miller & Company
126, 000
This accounted for $375,700 of the $483,000. The remaining $107,300 were
sold at 96)i to a list of dealers enumerated in Exhibit " D " attached. The total
profit to The Union Trust Company on this secondary offering of the 7% bonds
amounted to $1,028.50.
All maturities of this issue were met promptly, the last two maturities having
been called and paid on December 1, 1928, (prior to their due date) with proceeds
of an issue of 6% bonds, described below.
VAN SWERINGEN COMPANY FIRST MORTGAGE & COLLATERAL TRUST 6's DUE
AUGUST 1, 1935
In 1925 there was sold an issue of $6,500,000 of Van Sweringen Company First
Mortgage and Collateral Trust Sinking Fund 6% Gold Bonds, due August 1,
1935. Although we did not participate in the underwriting of this issue, we did
purchase from dealers and resell to banks and individuals from the time of original
offering to 1930 about $75,000 bonds.
These bonds were secured by a direct first mortgage on land, by the pledge of
purchasers' obligations secured by land, and by the pledge of all of the capital
stock and first mortgage note of the Cleveland Interurban Railroad Company
valued as follows:
EXHIBIT U-68b
Land
$5,377,803
Land purchase contract and mortgage
6, 534, 539
First Mortgage Note and stock of Cleveland Interurban Railroad
Company
2, 109, 707
$14, 022, 049
The land purchase contracts and mortgages covered land valued at $2,309,311
in excess of the balances payable on them.
The note of the Cleveland Interurban Railroad Company was paid in August
of 1929, thus releasing the note and capital stock of the Cleveland Interurban
STOCK EXCHANGE PEACTICES
8951
Railroad Company. The proceeds were used to retire about $1,100,000 of the
6% bonds.
Appraisals were made by H. C. Robinson, Vice President of the Guardian
Trust Company (Trustee of the issue) and Mr. Alexander S. Taylor of V. C.
Taylor and Son, both of whom were recognized authorities on real estate values
in Cleveland.
The proceeds from this issue were used, among other purposes, for redemption
of an issue of land trust certificates, for the taking up of purchase money mortgages, and for the retirement of certain corporate obligations.
These bonds defaulted in interest on August 1, 1932, by which time the $6,500,000 principal amount of bonds initially outstanding had been reduced to
$3,949,200. As of July 1, 1932, the security for these bonds consisted of:
Unsold land, having release prices aggregating $1,683,319.85, appraised at time of the issue at
$2, 805, 533. 08
Mortgage notes and land purchase contracts, with principal balances of $1,308,335.14, secured by land similarly appraised at__ 1, 957, 370. 75
Land committed under sales contract with affiliated interests with
release prices aggregating $1,954,185.10, secured by lands similarly appraised at
3, 256, 975. 15
Although in population and tax valuation, the growth of the Shaker Heights
area had in the ten-year period immediately preceding been greater than that of
any of Cleveland's other suburbs, the marked decline in real estate acti\ity,
together with the generally low level of business operations, resulted in a sharp
falling off in new sales as well as collections upon pledged mortgage notes and
land purchase contracts. Furthermore, certain of the mortgage and land contract purchasers failed to meet their taxes.
To the end that the mortgaged properties might be protected against accruing
taxes and assessments, and might be held together and uniformly developed to
the best advantage, the Company presented to the holders of these bonds, under
date of July 28, 1932, a plan which among other features contained the following:
1. Replacement of the existing coupons on the bonds for income coupons providing for payment of interest up to 6 %, any difference arising out of a smaller
amount being paid to cumulate and to be payable August 1, 1935, unless maturity
date of the bonds is extended.
EXHIBIT U - 6 8 C
2. Depositing bondholders agree to waive defaults arising out of Company's
failure to meet interest, taxes, and sinking fund requirements on the existing
mortgage.
3. Depositing bondholders agree to extension of maturity for five years on an
income coupon basis, providing 95% of principal amount of bonds are deposited,
in which event the depositing bondholders as a class would receive as a bonus
25% of the capital stock of a new corporation to be formed for the purpose of
acquiring title to property covered by existing mortgage.
The Union Trust Company, Cleveland, was named Depositary under this Plan
of Readjustment.
Up to the present time sufficient bonds have not been deposited to make the
plan operative, only about half of the outstanding bonds having been delivered
to the Depositary.
VAN SWERINGEN COMPANY FIRST MORTGAGE AND COLLATERAL TRUST 67S DUE
OCTOBER 1, 1938
The second piece of Van Sweringen financing with which we were identified in
a substantial way was in October 1928, when, in conjunction with Tillotson and
Wolcott Company, we formed a Purchase Group at 94 to underwrite an issue of
$5,700,000 of Van Sweringen Company First Mortgage and Collateral Trust
Sinking Fund 6% Gold Bonds, due October 1, 1938. The Union Trust Company, Cleveland, was Trustee for this issue. Our position in this Purchase Group
was $2,850,000, as was likewise that of Tillotson and Wolcott Company.
A Special Purchase Group was then formed at 94}£, comprising The Union
Trust Company, whose participation was $2,350,000, Tillotson and Wolcott,
whose participation was $2,350,000, and Pearson, Taft and Company, of Chicago,
whose participation was $1,000,000.
8952
STOCK EXCHANGE PRACTICES
A subsequent Special Group was then organized at 95}£ comprising the three
houses above mentioned in addition to the Atlantic, Merrill, Oldham Corporation. The Union Trust Company participation in this Special Group was
$1,850,000. For participations of other members see Exhibit " E " attached.
A Special Banking Group was then formed at 96, consisting of the four houses
enumerated immediately above, in addition to the Trust Department of The
Union Trust Company, as well as the First National Company of St. Louis. In
this Special Banking Group, The Union Trust Company Bond Department was
committed for $1,475,000, and The Union Trust Company Estates Trust Department for $500,000. See Exhibit " E " attached for commitments of other
members.
Later a Banking Group was organized at 96}£ consisting of the banks and
investment houses enumerated in the preceding group in addition to other barks
and investment dealers named in Exhibit " E " attached.
The retailing of the bonds was accomplished through the formation of a Selling
Group consisting of the banks and investment houses enumerated in Exhibit "F"
attached. The Union Trust Company's participation in the Selling Group was
$500,000 for the Bond Department and a like amount for the Estates Trust
Department. In addition to the $500,000 of bonds originally purchased by
EXHIBIT U-68d
the Bond Department of The Union Trust Company another block of $100,000
bonds was purchased by the Bond Department from the Estates Trust Department at the latter's cost of 96. The total profit accruing to The Union Trust
Company Bond Department from its positions in the various groups above listed
amounted to $75,538.11. (See Exhibit " G " attached).
At the time of this financing the statement of the Van Sweringen Company
showed a net worth in excess of $20,000,000. It was likewise estimated that up
to that time over $75,000,000 had been spent in the Shaker Heights District and
vicinity by the Van Sweringen Company, municipalities, public service corporations and property owners.
These bonds were secured by land directly mortgaged and appraised at that
time at $2,301,724 and by the pledge of land contracts and first mortgage obligations with a face value of $5,746,071, being the obligations of 185 individuals and
corporations, and being secured by land and buildings which upon completion
were expected to have an appraised value of $9,893,855. This made a total
appraised value of all land and buildings as shown by appraisals mentioned below
of $12,195,579. Appraisals were made by Mr. Alexander S. Taylor and the
Standard Valuation Company, Cleveland, who were well recognized authorities
on real estate values in metropolitan Cleveland. Mr. Taylor was a Director of
The Guardian Trust Company, Cleveland, and served as President of the Cleveland Real Estate Board as well as the National Association of Real Estate
Boards. Appraisals for the Standard Valuation Company were made by Mr.
R. F. Berwald, who was then and still is a Director of the Cleveland Trust Company, and Mr. George Rutherford of the George A. Rutherford Company, general
contractors.
The proceeds of this issue were used, among other purposes, to underwrite
certain obligations of the Company bearing a higher rate of interest (including
$1,650,000 of Van Sweringen Company First Mortgage and Collateral Trust 7%
Notes, still outstanding) and to provide funds for construction of a group of buildings immediately adjacent to the Shaker Square development. By June 1, 1932,
this issue had been reduced from its original amount of $5,700,000 to $4,270,600.
The security for this issue as of June 1, 1932, consisted of:
Unsold land, appraised at the time of the issuance of the above
bonds at
$1, 703, 374. 00
First Mortgage Bonds, Notes and Land Contracts receivable—
face amount
___
4,483,410.36
Despite the rapid growth of population and tax valuation in the Shaker
Heights area in the ten years from 1922 to 1932, the period of wide-spread
economic depression prevailing during the end of that period caused a drastic
falling off in sales and collections upon the pledged securities. In anticipation
of the Company's inability to meet the interest due October 1, 1932, and to meet
the circumstances caused by the curtailment in sales and collections, the Company in a letter dated June 11, 1932, proposed a plan to bondholders, the principal
features of which are summarized as follows
(a) Interest coupons for a five-year period beginning April 1, 1932, to be
unded at 6% in the form of a refunding bond for an amount equivalent to the
STOCK EXCHANGE PEACTICES
8953
coupons, thus reducing the total annual cash interest requirements of the Company from $256,200 to $76,870.
(b) Depositing bondholders to waive annual maximum sinking fund requirements.
EXHIBIT U-68e
(c) Depositing bondholders to waive all defaults arising out of failure to pay
taxes.
(d) Later the Company agreed to appointment by the creditor banks of a
representative who will supervise the administration of the assets pledged as
security for the bonds, and control the expenditure of funds arising from sale
of the assets. Up to the present time approximately 86% of the bonds have been
deposited under the proposed plan.
VAN SWERINGEN CORPOKATION FIVE-YEAR 6% NOTES DUE MAY 1, 1935.
(WITH STOCK PURCHASE WARRANTS)
Two years later, or in May 1930, there was formed the Van Sweringen Corporation, which company acquired from the Van Sweringen interests—
(1) All of the outstanding stock of a subsidiary having title to:
(a) "Air rights" over the new Cleveland Union Terminals Passenger Station
and yards.
(b) A co-ordinated group of buildings erected and at that time being erected
in the district immediately adjoining the Terminal development and including
among these structures the Medical Arts Building, Builders Exchange Building,
Midland Bank Banking, and later the new Higbee Department Store Building.
(c) Certain additional adjoining building sites and land available for improvement as the Terminal area continued to develop.
(2) 500,000 Shares of Common Stock of the Alleghany Corporation, an investment company organized in January 1929 by the Van Sweringens to acquire
substantial interests in certain railroads in which the Van Sweringens were
interested. The market on the Alleghany Corporation Common Stock at the
time of the issuance of the Van Sweringen Corporation Notes was 27.
To provide the funds for the purpose of acquiring the above mentioned assets
there was underwritten a $30,000,000 issue of Van Sweringen Corporation FiveYear 6% Gold Notes, due May 1, 1935, with Warrants attached. These Warrants entitled the holders to purchase during the life of the Notes 20 shares
Common Stock of the Van Sweringen Corporation at $25 per share for each
$1,000 Note.
It was estimated that annual earnings available to the Corporation, upon completion and occupancy of the various buildings after average allowance for vacancies, would be well in excess of annual interest requirements on these Notes.
This issue of $30,000,000 of Notes was underwritten by a group of investment
banking houses headed by the Guarznty Company of New York, and including
Lee-Higginson and Company, Union Cleveland Corporation, Hayden, Miller
and Company, and the Midland Corporation.
In the underlying Purchase Group formed at 96}^, the Union Cleveland Corporation had a participation of $4,500,000. In the Banking Group formed at 97%
our participation was $1,420,000. In the Selling Group formed at 98H our participation was $1,000,000, snowing a total profit in all the groups, after, some
deductions (as per Exhibit " H " attached) of $57,815.49. The retail offering
price was 100.
In September 1930 a joint trading account with a maximum liability of $2,500,€00 principal amount of the Notes (in which our liability was confined to 15%
or $375,000) was formed with the Guaranty Company of New York and others.
This trading account took over from a Special Group at 96, $1,431,000 par value
of Notes, which apparently represented the amount of Notes remaining unsold
at that time.
During the existence of this Special Group we took up $100,000 of the bonds
at 96, and sold them to the Securities1 and Investment Department of The Union
Trust Company at the same price. In addition to this, we took up $39,000
more bonds which we sold retail at the then prevailing market prices. Our takeup price on these $39,000 was market less 1.
After the close of the joint account on December 8, 1930, our proportionate
share of the remaining bonds was $64,000 par value, which bonds were taken up
1
The Securities and Investment Department of The Union Trust Company on September 11, 1931,
.exchanged these $100,000 bonds, together with $600,000 additional bonds of the same issue, at 49, for $200,000
principal amount of Missouri Pacific Convertible 5 ^ at 59^ and 8,035 shares of Chesapeake Corporation
Common Stock at 29J4
8954
STOCK EXCHANGE PRACTICES
from the Guaranty Company of New York at 91.341 (market value at that
time being 67). About nine months later, on September 10, 1931, we traded
these bonds to the Alleghany Corporrion at 49 and accrued interest for 1119
shares of Chesapeake Corporation Common Stock at 2934.
In the eighteen months immediately following the issuance of these Notes,
general business conditions, as well as the situation prevailing in the security
markets, grew more and more unfavorable, as a result of which the market on
these Notes by October of 1931 had substantially declined. The Van Sweringen
Corporation had available at that latter date, sufficient cash and United States
Government obligations, amounting to 50% of the then outstanding Notes in
the hands of the public (amounting to $26,234,000).
In *the belief that it was mutually beneficial to the Note-holders and to the
Van Sweringen Corporation the latter, in October 1931 submitted an offer to all
of its Note-holders to acquire its Five-Year 6% notes for $500 in cash and 20
shares of common stock for each $1,000 principal amount of Notes. $15,000,000
of the Notes were retired on this exchange basis, and $13,787,000 additional
Notes were acquired by the Van Sweringen interests, now held by The Vaness
Company, leaving outstanding in the hands of the public $1,213,000. Interest
on these Notes has been in default since May 1, 1933.
The Vaness Company has withheld the May 1, 1932 and the November 1, 1932
coupons on the Van Sweringen Corporation Notes held by it, and in addition has
advanced to the Van Sweringen Corporation funds with which the latter paid the
interest due on the May 1, 1932 and November 1, 1932 coupons on Notes held
by the public. The Vaness Company recently advised the Van Sweringen Corporation that it is willing to forego the payment of all additional coupons up to
May 1, 1935 (or earlier maturity of the Notes) upon condition that the holders of
substantially all of the Notes outstanding in the hands of the public would likewise agree to withhold their May 1, 1933, and subsequent coupons. In the belief
that it is to the best interests of all Note-holders to do so, the Van Sweringen Corporation is asking all of its Note-holders to agree to this proposal.
H. J. RANFT.
May 9, 1933.
EXHIBIT
U-69
(For Walter H. Seympur, Representative of U. S. Senate Committee on Banking
& Currency: This is not a part of the records of The Union Trust Co. It is
an internal memo by a junior member of the staff of the undersigned. It
has not been verified as to facts. Any opinions or conlcusions are personal to
the member of the staff preparing this memo.—Oscar L. Cox, Deputy Superintendent of Banks, State of Ohio)
Summary of Union Trust position as creditor
(See following pages for collateral on each loan)
Commercial & Collateral loans:
O. P. and M. J. Van Sweringen:
Participation
Direct
J. D Templeman note discounted
Daisy Hill Co :
Secured
Unsecured at Terminal Office
Vaness Co :
Terminal Building Co and Vaness Co
Metropolitan Utilities, Inc :
Participation
Interest Notes to 11-14-32
The Van Sweringen Co
do
Cleveland Interurban Railway Co
The Higbee Co. (See Higbee Co. Report).
Total-
Interest Delinquent to
May 1, 1933
Schedule
Principal
May 1, 1933
A
B
C
$2,800, 000 00
4,100,000 00
6, 342. 71
7- 1-31
7- 1-31
$327,813.16
480,012 17
D
E
487,000 00
50, 558.33
304,183. 75
557,000 00
7- 1-31
1- 1-33
1- 1-32
1-11-32
47,659. 91
441. 67
25,457.19
45, 626 08
2,100,000 00 8-17-31
165,823 75
400,000 00 10-28-31
80,000 00 7- 1-31
45, 000. 00 10- 1-32
317,000. 00 6- 1-33
63,975. 19
F
F
G
G
G
$11,412,908.54
Interest
paid to
38,160 46
9, 220. 00
1, 591 88
$1,039,958.01
STOCK EXCHANGE PRACTICES
8955
Summary of Union Trust position as creditor—Continued
Original
Amount
Mortgage loans (Schedule H):
The Van Swermgen Co
Traction Stores Co
do (Paul K Jones)
0 P. and M. J. Van Swermgen
Terminal Building Co
Shaker Company
Shaker Village Land Co
B. L. and L. D. Jenks
Balance Due Interest paid to
$371,620.00
176,600. 00
30,000. 00
35,000.00
150, 000 00
180,000.00
24,000 00
50, 000 00
Total
Land Contract to 0. P. and M J.
Van Sweringen (Schedule J)
Summaiy:
$11,412,908.54
Commercial & Collateral Loans
772, 064. 57
Mortgage Loans
1, 000,000. 00
Land Contracts
Total
_. $13,184,973.11
Interest Delinquent to
May 1, 1933
$344,415 00 Various Dates
176,600 00
12-15-31
15,000. 00
3-15-32
25,200 00
9-15-32
47,000. 00
12-15-31
94,109 57
3-15-32
19,740 00
12-15-32
50,000 00
12-15-31
$17, 527 37
15,002 24
1,035. 46
960. 62
3,992 68
6,496 38
447. 44
3,625. 63
$772,064. 57
$49,087.82
$1, 000,000 00
0)
$1,039,958. 01
49,087.82
0)
$1,089,045 83
i Interest, Kentals, Taxes, etc. due us totalled $201,595.35 on May 1, 1933.
EXHIBIT U-69a
SCHEDULE
U
A"
O. P. AND M. J. VAN SWERINGEN
Participation—Demand—Present Balance
$2, 800, 000. 00
Dated October 30, 1930, Interest paid to July 1, 1931, Delinquent
Interest to May 1, 1933
327, 813. 16
Collateral:
Participation in $9,000,000 Demand Loan of Cleveland Banks, secured by
97,500 shares Vaness Company Common stock (162,500 shares outstanding).
Participants in loan are:
Union Trust Company
$2, 800, 000]
Guardian Trust Company
2, 500, 0001 Union Trust Co.
Midland Bank
1, 200, OOOf Trustee
Cleveland Trust Company
2, 500, 000J
Comment:
Collateral for above loans has no present value other than on a warrant basis.
ORIGIN OF ABOVE LOAN
On April 19, 1926, the Vaness Company paid off its loans to The Union Trust
Company (other Van Sweringen controlled companies were borrowing over $2,000,000 from Union Trust at this time) and was out of debt to the bank until July 21,
1926, when $225,000 was borrowed. From that time on the Vaness Company was
a constant borrower, with loans running as high as $2,250,000 in July 1927 and as
low as $350,000 in October 1927. On June 23, 1928, total loans to Vaness Company stood at $4,350,000, and on July 28th at $3,350,000. On July 28, 1928, the
following notes, aggregating $2,000,000 were paid by the substitution of a $2,000,000 note with collateral as indicated below: (The balance of $1,350,000 as of
July 28, 1928, was gradually paid off to July 23, 1929.)
Vaness Company note dated January 14, 1928, for $500,000, secured by—
32,600 shares Terminal Properties, 1st Pfd. No market.
27,300 " Terminal Properties, 2nd Pfd. No Market.
93,300 " Terminal Properties, Common. No Market.
Vaness Company note dated December 29, 1927, for $250,000, secured
by 2,500 shares N.Y., C. & St. L. R.R. Common, @125
$312, 500
Vaness Company note dated February 17, 1928, for $500,000, secured
by—5,000 shares N.Y., C. & St. L. R.R. Common, @129
$645, 000
Vaness Company note dated February 20, 1928, for $500,000, secured
by—5,000 shares N.Y., C. & St. L. R.R. Common, @129
$645, 000
Vaness Company note dated March 1, 1928, for $250,000, secured by—
2,500 shares N.Y., C. & St. L. R.R. Common@130
$325, 000
$1, 927, 500
8956
STOCK EXCHANGE PRACTICES
EXHIBIT U-69b
The collateral for the new $2,000,000 note dated July 28, 1928, consisted of the
following:
32,631 shares Terminal Properties, 1st Pfd. No Market.
30,255
"
Terminal Properties, 2nd Pfd. No market.
95,600
"
Terminal Properties, Common. No Market.
It should be noted that the Nickel Plate common was released without reduction in loan and with substitution of only
31 shares Terminal Properties, 1st Pfd.
2,955
"
Terminal Properties, 2nd Pfd.
2,300
"
Terminal Properties, Common.
The market value of the Nickel Plate common stock on July 28, 1928, was
approximately 125, or a total value of $1,875,000.
11-1-29 The Vaness Company borrowed $9,000,000 from the Cleveland Banks,
in which loan The Union Trust had a participation of $2,000,000. The Vaness
Company note to The Union Trust Company dated July 28, 1928, was paid off by
the new $2,000,000 participation in the $9,000,000 loan and the collateral released
to become part of the following collateral for the total loan of $9,000,000:
32,893 shares Terminal Properties, 1st Pfd. No market.
33,187
"
Terminal Properties, 2nd Pfd. No Market.
99,222
"
Terminal Properties, Common. No Market.
122,000
"
Van Sweringen Company Common. No Market.
100
"
Cleveland Terminal Building Co. Com. No Market.
Participants in this $9,000,000 loan were as follows:
Union Trust
$2,000,000
Guardian Trust
2, 500, 000
Midland Bank
1, 200, 000
Cleveland Trust
3, 300, 000
5-13-30 The Union Trust Company's participation of $2,000,000 was increased
to $2,800,000 in the total loan of $9,000,000 to the Vaness Company. At that
time the Terminal Properties preferred and common stocks and the Cleveland
Terminals Building Company common stock indicated above were released and
600,000 shares of Van Sweringen Corporation common stock substituted. The
collateral held for the $9,000,000 loan of the Cleveland banks then consisted of the
following: [See comment 7.]
122,000 shares Van Sweringen Co. Common. No Market.
600,000
"
Van Sweringen Corp. Common. No Market.
At this time the Cleveland Trust's participation was reduced $800,000 by our
increasing our participation $800,000. [Received $3,700,000. H.]
10-30-30 The note of the Vaness Company to Cleveland banks was released,
and the note of O. P. and M. J. Van Sweringen for the same amount, $9,000,000,
was substituted. At that time the collateral which had been held for the Vaness
Company loan was released, and 97,500 shares, or 60% of the common stock of
Vaness Company was pledged as collateral for the O. P. and M. J. Van Sweringen
$9,000,000 loan, of which The Union Trust Company had participation of $2,800,000. This balance of $2,800,000 is outstanding today, as indicated in the condensed schedule of payables of the Van Sweringen interests to The Union Trust
Company. [See comment 8.1
EXHIBIT U - 6 9 C
SCHEDULE
" B "
O. P. AND M. J. VAN SWERINGEN
Direct Loan—Demand—Present Balance
$4, 100, 000. 00
Dated October 30, 1930, Interest paid to July 1, 1931, Delinquent Interest to May 1, 1933
480, 012. 17
Collateral:
10,296 shares Metropolitan Utilities, Inc. Common stock (10,547
shares outstanding).
9,000 shares Vaness Company Preferred (41,385 shares outstanding).
16,250 shares Vaness Company Common (162,500 shares outstanding).
Comment:
Collateral for above loans has no present value other than on a warrant basis.
STOCK EXCHANGE PRACTICES
8957
ORIGIN OF ABOVE LOAN
10-29-29. The Union Trust Company loaned The Vaness Company $5,000,000,
secured by—
Market value
10-29-29
32,000 shares Cleveland Railway Co
6,500 "
Midland Bank
30,000 "
Alleghany Corporation Common
6,000 "
United Corporation Common
3,000 Units Western Reserve Inv. Corp. 6% Pfd.1
@ 100
465
20%
25%
100
$3, 200, 000
3, 022, 500
618,750
154,500
300, 000
$7, 295, 750
6-20-30. 1,760 additional shares of the Midland Bank (Market was 340—
total $598,400) were substituted for the 30,000 shares of Alleghany Corporation,
(market was 19^—total market value $585,000). $5,972,400.
10-14-30. 50,000 shares of Van Sweringen Corporation common (no market)
were pledged as additional collateral to the same loan. $5,089,810.
10-30-30. The above loan was paid with a new loan of $5,000,000 to O. P
and M. J. Van Sweringen, secured by—
Market value
10-30-30
4,000 shares
5,000
"
3,000 Units
1,400 shares
33,000
6,000
9,000
16,500
3,000
17,999^
10,296
Niagara Hudson Power Corp. C o m m o n . . ®
Standard Brands, Inc. Common
Western Reserve Inv. Corp. Common
Newton Steel Company Common
Peerless Motor Car Corp. Common
United Corporation Common
Vaness Company Pfd
Vaness Company Common
Western Reserve Inv. Corp
Calumet Trust Certificates
Metropolitan Utilities, Inc. Common
12^
16)4
85
20H
3%
22%
No Mkt.
No Mkt.
No Mkt.
No Mkt.
No Mkt.
$50, 000
81,250
255, 000
28, 700
123, 750
133, 500
$672, 200
EXHIBIT U-69d
and equity in the following, held in Corporate Trust Department,
subject to previous pledge under Metropolitan Utilities, Inc.
$3,100,000 loan:
100 shares Traction Stores Co. Common. No Mkt.
5,800
"
Cleveland & Youngstown R. R. Common. No Mkt.
100
"
Cleveland Traction Terminal Common. No Mkt.
1,465
"
Cleveland Interurban R. R. Co. Common. No. Mkt.
Market value
10-30-30
Released 10-30-30:
32,000 shares Cleveland Railway, @ 77
8,260 "
Midland Bank, 300
$2, 464, 000
2, 472, 000
$4, 936, 000
50,000 shares Van Sweringen Corp. Common. No Mkt. (Probably no
value.)
11-20-30. A loan of $800,000 was made to The Vaness Company and the loan
or $5,000,000 to O. P. and M. J. Van Sweringen was reduced to $4,200,000.
i No Market
Indicated value $100.
8958
STOCK EXCHANGE PRACTICES
The following collateral was taken from the $5,000,000 loan and transferred to
the $800,000 loan:
Market value
4,000 shares
5,000 "
3,000 Units
1,400 shares
33,000 "
6,000 "
3,000 "
17,999^ "
Niagara Hudson Power Corp. Common..®
Standard Brands, Inc. Common
Western Reserve Inv. Corp
Newton Steel Company Common
Peerless Motor Car Corp. Common
United Corp. Common
Western Reserve Inv. Corp. Common
Calumet Trust Certificates
11-20-30
11%
$47, 000
15%
78,125
85
255, 000
19K
26, 950
4%
144, 375
20
120,000
No Mkt.
No Mkt.
$671, 450
This left the O. P. and M. J. Van Sweringen loan of $4,200,000 secured as
follows:
9,000 shares Vaness Co. Pfd
No Mkt.
16,250 "
Vaness Co. Common
No Mkt.
10,296 "
Metropolitan Utilities, Inc. Common
No Mkt.
Equity in 4 blocks of securities as listed previously under October 30, 1930
loan.
12-31-30. The above loan of $4,200,000 was paid with a new loan of $4,200,000,
and the equity in 4 blocks of securities indicated above was released. Renewal
loan secured by—
9,000 shares Vaness Co. Pfd
No Mkt.
16,250 "
Vaness Co. Common
No Mkt.
10,296 "
Metropolitan Utilities, Inc. Common
No Mkt.
1-24-31. $100,000 was paid on the principal of the loan, leaving a balance of
$4,100,000, which is outstanding today (April 25, 1933).
EXHIBIT U-69e
SCHEDULE
"c"
THE DAISY HILL CO.
1. Demand Loan
$487, 000. 00
Dated $387,000 November 1, 1930, 100,000 January 24, 1931,
Interest paid to July 1, 1931, Delinquent Interest to May 1,
1933
47,659. 91
Collateral: 7,935 shares Vaness Company Pfd. (41,385 shares
outstanding).
2. Demand Loan to Terminal Office
$50, 558. 33
Dated March 7, 1930, Interest paid to January 1, 1933, Delinquent Interest to May 1, 1933
441. 67
Unsecured.
3. Comment:
Collateral security of 7,935 shares Vaness preferred stock has no present value.
The above loans are junior to the mortgage on the entire property held by Society
for Savings for $24,000. While the property is undoubtedly worth substantially
in excess of the amount of this $34,000 loan and accrued unpaid taxes, it would
be almost impossible to ascertain the equity for The Union Trust Company loans
in the Daisy Hill Company at the present time. However, if taxes and interest,
on the underlying loan can be kept up for a period of time, it is possible that some
value may be realized in the future on the Union Trust loans to Daisy Hill
Company, inasmuch as the property is very desirable as a country estate.
J. D. Templeman Note (Discounted)
$6, 342. 71
Dated August 20, 1930, Renewed May 27, 1933, for Maturing
June 22, 1933
6, 231. 00
Discounted by O. P. and M. J. Van Sweringen.
STOCK EXCHANGE PRACTICES
8959
EXHIBIT U-69f
SCHEDULE " D "
VANESS COMPANY
Demand Loan
$304, 183. 75
Originally dated November 20, 1930, Interest paid to January
1, 1932, Delinquent Interest to May 1, 1933
'_ 25, 457. 19
Mkt. Value
s-si-ss
Collateral:
1,333 shares Niagara Hudson Power Corp. Common...® 10._
5,000 " Standard Brands, Inc., Common.
20. .
560 " Corrigan, McKinney Steel Co. Vot. C o m . . . 10..
140 " Corrigan, McKinney Steel Co. Non-V. Com_10_.
6,000 " United Corp. Common
9..
3,000 Units Western Reserve Inv. Corp. Com. & Pfd
17,999^ Shares Calumet Trust Certificates
1,250 shares Cleveland Base Ball Company
$13, 330. 00
100, 000. 00
5, 600. 00
1, 400. 00
54,000.00
No Market
No Market
No Market
$174, 330. 00
Comment:
The marketable collateral listed above has distinct possibilities of further appreciation over a period of time. The units of Western Reserve Investing Corporation preferred and common stocks have no liquidating value and have a substantial
amount of bonds and prior preferred stock ahead of them which are not completely
covered by liquidating value of the Company's assets.
The Calumet Trust Certificates represent equiuy in unimproved and improved
real estate in Chicago, with very little indebtedness ahead of the certificates.
These certificates would undoubtedly have some value with any improvement in
real estate conditions in Chicago.
EXHIBIT U-69g
OKIGIN OF $304,183.75 DEMAND COLLATEEAL LOAN
As mentioned under the Origin of the $4,100,000 Demand Collateral Loan to
O. P. and M. J. Van Sweringen, on November 20, 1930, a loan of $800,000 was
made to The Vaness Company and the loan of $5,000,000 to O. P. and M. J.
Van Sweringen was reduced to $4,200,000. The following collateral was taken
from the $5,000,000 loan and transferred to the $800,000 loan:
Mkt. Value
11-20-30
4,000 shares Niagara Hudson Power Corp. Common
5,000 " Standard Brands, Inc. Common
3,000 Units Western Reserve Inv. Corp
1,400 shares Newton Steel Company Common
33,000 " Peerless Motor Car Corp. Common
6,000 " United Corp. Common
3,000 " Western Reserve Inv. Corp. Common
17,999/2 " Calumet Trust Certificates
@11%__
$47, 000
15%. .
78, 125
85
255, 000
19J4
26, 950
4%-- 144, 375
20
120,000
No Market
No Market
$671, 450
10-13-31. There was pledged as additional collateral to the loan: 1,250 shar e
Cleveland Base Ball Company, No Market.
10-20-31. There was pledged as additional collateral to the loan: $645,000
Note, secured by deeds to real estate.
11-31-31. A new loan of $400,000 was made to the Van Sweringen Company,
and the loan to The Vaness Company was reduced from $800,000 to $400,000.
At that time the $645,000 note secured by deeds to real estate was released, and
the collateral to the $400,000 Van Sweringen Company loan is probably part or
all of this real estate. (See Comment 9.)
11-19-31. Upon the payment of $95,222.25 principal, the 33,000 shares of
Peerless Motor Car Corporation common was released. (Market 2%—total
$86,625.)
12-12-31. $594.00 was paid on account of principal.
6-30-32. The 4,000 shares Niagara Hudson Power Corporation common
were exchanged for 1,333 new shares Niagara Hudson Power Corporation common.
(No change in total equity.)
175541—34—PT 20
15
8960
STOCK EXCHANGE PRACTICES
9-27-32. The 1,400 shares Newton Steel Company common were exchanged
for 560 shares Corrigan McKinney Steel Company Voting Common and 140
shares Corrigan McKinney Steel Company Non-Voting Common.
These changes leave the loan of $304,183.75 secured as follows:
1,333 shares Niagara Hudson Power Corp. Common @ 10%
5,000 " Standard Brands, Inc. Common 18%.
560
Corrigan, McKmney Steel Co. Vot. Com. 4H
140
Corrigan, McKinney Steel Co. Non-V. Com. sy2
6,000
United Corporation Common 7H__
Western Reserve Inv. Corp. Common No Market.
3,000
3,000 Units Western Reserve Inv. Corp No Market.
17,999^ Shares
Calumet Trust Certificates No Market
u
1,250
Cleveland Base Ball Company No Market.
Mkt.
Mkt
Value
Value
9-27-32 5-81-33
_._ $13,830 $13,330
93,125 100,000
—
2,520
5,600
490
1,400
43,500 54,000
$153,465 $174,330-
5-9-33. Present amount of loan, without accrued inteest, $304,183.75.
EXHIBIT
U-69h
SCHEDULE
"E"
Terminal Building Company and Vaness Company
Collateral Loan due July 11, 1932
$557, 000. 00
Dated January 20, 1928, interest paid to January 11, 1932, Delinquent Interest to May 1, 1933
45, 626. 08
Collateral:
A first lien against real estate held in the Corporate Trust Department for the
account of Terminal Building Company.
This property is mostly that on which is erected the N. P. Freight Terminal,
and was formerly owned by the so-called "Glenville Syndicate". In 1922 there
were issued some Land Trust Certificates against this property in the aggregate
amount of $997,500. These certificates were redeemable at par. The property
was leased to the Terminal Building Company for a rental sufficient to pay 3%
semi-annually on the cerificates. The lease was for a period of five years and contained an option for the Terminal Building Company to purchase at $997,500.
In July 1927 the lessee exercised its option on a portion of the property, paying
therefor $314,000. Payment was made to the Trustee by $24,500 in cash and
the surrender of a certificate amounting to $72,500. In January 1928 the remainder of the property was purchased under this option for an aggregate consideration of $683,500 of which $543,500 was paid in cash and $140,000 in surrender of Land Trust Certificates. The subject loan was made for the purpose
of providing the cash necessary to consummate this transaction. A short time
subsequent to this purchase a total distribution of $551,063.36 was made to
certificate holders and the sum of $250,000 was reserved for certain taxes which
were disputed. These taxes were settled, and in 1931finaldistribution was made
to certificate holders in the aggregate amount of $261,993.29. [See Comment.]
Greater part of taxes on this property paid by Nickel Plate Railroad Company\
which leases the property. Balance^ totalling only small amount, are in default for
1931 and 1932.
EXHIBIT U-69i
SCHEDULE " F "
Metropolitan Utilitiesy Inc.
Participation due November 14, 1932
$2, 100, 000. 00
Interest notes for Interest from August 17, 1932, to November
14, 1932
165, 823. 75
Dated: See Comment under "Origin of Loan".
Interest paid to August 17, 1931.
Delinquent Interest from November 14, 1932 to May 1, 1933.__
63, 975. 49
Guaranteed By Vaness Company.
STOCK EXCHANGE PRACTICES
8961
Metropolitan Utilities, Inc.—Continued
Collateral:
Participation in following:
$4,331,444.72 Note of Cleveland Interurban Railroad Company,
989,069.86 Note of Cleveland Traction Terminal Company,
73,569.95 Note of Traction Stores; also
100 shares Cleveland Traction Terminal Company Stock (100%)
100 shares Traction Stores Company Stock (100%)
1,465 shares Cleveland Interurban Railroad Co. Stock (100%)
5,800 shares Cleveland & Youngstown Railroad Co. Stock (100%)
(Subject to $855,041 indebtedness of Cleveland & Youngstown
Railroad to New York Central).
Participants:
Union Trust Company 1
$2, 265, 823. 75
Midland Bank
1, 078, 963. 68
Guardian Trust Company
1, 510, 549. 17
$4, 855, 336. 60
Comment: While there does not appear to be any immediate possibility of
Metropolitan Utilities and its subsidiaries earning sufficient money to pay interest
on the above bank loans, the collateral securing the bank loans undoubtedly has
some value because of the necessity of maintaining the Cleveland Interurban
Railroad for the present need and further development of Shaker Heights.
However, it will undoubtedly be a considerable period of time before any cash can
be realized on these loans, unless the whole enterprise could be sold to the Cleveland Railway Company or other interests, a possibility which has not been developed up to the present time.
EXHIBIT
HISTORY OF METROPOLITAN
8-14-30
8-15-30
9-15-30
9-16-30
11- 6-30
11-20-30
U-69J
UTILITIES, INC. LOANS PREPARED BY CORPORATE
TRUST DEPARTMENT
Original Advance of $2,100,000.
Union Trust Company
$1, 422, 500. 00
Midland Bank
677, 500. 00
Evidenced by note of Metropolitan Utilities, Inc., dated August 14,
1930, payable on or before February 15, 1931, bearing an endorsement
of guarantee by The Vaness Company. Participation certificates specified the guarantee of The Vaness Company.
Received $2,100,000 Promissory Note of Cleveland Interurban R.R.
Co.
1,465 Shares Cleveland Interurban R.R. Co.
100 "
The Traction Stores Co. Common.
100 "
The Traction Terminals Co. Capital.
Also received Assignment of Equity of Metropolitan Utilities, Inc. in
5,800 shares of capital stock of Cleveland & Youngstown Railroad
Company, subject to pledge to New York Central, per agreement
dated 8-5-13.
Second Advance of $1,000,000 made by Guardian Trust Company.
Evidenced by note of Metropolitan Utilities, Inc., dated same date
and payable on or before February 15, 1931, and bearing endorsement
of guarantee by The Vaness Company. Participation certificates specified the guarantee of The Vaness Company.
Received $1,000,000 Promissory Note of Cleveland Interurban R.R.
Co.
New notes substituted for the above, bearing endorsement of guarantee of O. P. and M. J. Van Sweringen. New participation certificates
issued specifying guarantee of O. P. and M. J. Van Sweringen.
New notes substituted, bearing endorsement of guarantee by The
Vaness Co. No record of new participation certificates issued at this
time.
i Union Trust Co Trustee.
8962
STOCK EXCHANGE PRACTICES
HISTORY OF METROPOLITAN
UTILITIES, INC. LOANS PREPARED BY
CORPORATE
TRUST DEPARTMENT—continued
11-26-30 Third Advance of $400,000 made:
Union Trust Company
$210, 000
Midland Bank
100, 000
Guardian Trust Co
90, 000
Note dated November 26, 1930, payable on or before February 15,
1931, and bearing endorsement of guarantee by The Vaness Company.
New certificates of participation issued specifying endorsement of
guarantee by The Vaness Company.
11-26-30 Received $400,000 Promissory Note of Cleveland Traction Terminals
Co.
12-15-30 Fourth Advance of $1,000,000 made:
Union Trust Company
$467, 500
Midland Bank
22, 500
Guardian Trust Co
310, 000
Evidenced by note of same date and payable on or before February
15, 1931, bearing endorsement of guarantee by The Vaness Company.
Same certificates of participation used.
EXHIBIT
U~69k
12-16-30 Received $455,000 Promissory Note of Cleveland Traction Terminals
Co.
515,000 Promissory Note of Cleveland Interurban R.R. Co.
30,000 Promissory Note of The Traction Stores Co.
2-16-31 Renewal notes given, due 8-16-31, bearing endorsement of guarantee
by The Vaness Company. New certificates of participation issued,
specifying endorsement of guarantee of The Vaness Company.
8-17-31 Renewal notes given, due 2-17-32, bearing endorsement of guarantee
by The Vaness Company. New certificates of participation issued,
specifying endorsement of guarantee by The Vaness Company.
2-17-32 Renewal note given, due 3 months after date, bearing endorsement of
guarantee by The Vaness Company. New certificates of participation issued, specifying endorsement of guarantee of The Vaness Company.
3- 3-32 Received $420,000 Promissory Note of Cleveland Interurban R.R. Co.
65,000 Promissory Note of Cleveland Traction Terminals
Co.
40,000 Promissory Note of The Traction Stores Co.
5-17-32 Renewal note given, due 90 days thereafter, bearing endorsement of
guarantee by The Vaness Company. New certificates of participation issued, specifying endorsement of guarantee by The Vaness Company.
8-15-32 Renewal note given, due 91 days thereafter, bearing endorsement of
guarantee by The Vaness Company. New certificates of participation issued specifying endorsement of guarantee by The Vaness
Company.
11-14-32 No renewal note given. Same certificates of participation outstanding.
Present amounts of Promissory Notes held as Collateral:
$4,331,444.72 Cleveland Interurban R.R. Co.
989,069.86 Cleveland Traction Terminals Co.
73,569.95 The Traction Stores Co.
To help confirm the information that the endorsement of guarantee on notes
was changed on or about November 6, 1930, from that of The Vaness Company,
to that of O. P. and M. J. Van Sweringen, attention is called to a letter from
J. A. House, Guardian Bank, dated October 31, 1930, referring to their participation certificate which stated that the notes evidencing the loan were guaranteed by The Vaness Company, but said Company was to be relieved and the
payment of both principal and interest was to be assumed and guaranteed by
endorsement of O. P. and M. J. Van Sweringen. [See comment #11.]
On November 20, 1930, Mr. Sherwin's letters to The Midland Bank and
Guardian Trust Company refer to their participation in loan to Metropolitan
Utilities, Inc. evidenced by the notes of said Company, bearing endorsement of
guarantee by O. P. and M. J. Van Sweringen.
STOCK EXCHANGE PRACTICES
8963
He stated that new notes had been received, bearing endorsement of guarantee
by The Vaness Company and to forward their old certificates to be exchanged
for new one embodying the change of endorsement.
EXHIBIT
U-691
SCHEDULE " G "
VAN SWERINGEN COMPANY
1. Demand Loan
Dated November 3, 1931
$400, 000. 00
Interest paid to October 28, 1931
Delinquent Interest to May 1, 1933
38, 160. 46
Collateral: Title to the following real estate held in trust by The Union
Trust Company:
(1) 27.52 Acres St. Clair Avenue and Babbitt and Upson Roads,
(2) 120.00 Ft. St. Clair Avenue, [See comment 12.]
(3)
7.97 Acres North Woodland and Lander,
(4) 37.98 Acres, Block 12, Shaker Country Estates,
(5) 119.78 Acres, Block 12, Shaker Country Estates.
2. Demand Loan
$80, 000. 00
Dated July 6, 1928,
Interest paid to July 1, 1931,
Delinquent Interest to May 1, 1933
9, 220. 00
Collateral: Title to 28.586 acres of land on Wynnewood Avenue and N. Y.,
C. & St. L. Railroad held by Union Trust Company under trust agreement dated July 3, 1928, and July 6, 1928.
Comment: Mr. Stuber, of our Mortgage Loan Department, has advised
that although there is undoubtedly some value to the above real estate
held as collateral for these loans, it would be difficult, if not impossible,
to determine this value at the present time. He is doubtful if the property could be sold, and the only chance of realization on the loans
appears to be to keep the taxes paid on the property if possible in the
hope that the property ultimately can be sold. [See comment 12.]
No taxes paid on the above properties since first half of 1930.
CLEVELAND INTERURBAN RAILWAY
Demand Loan
$45, 000. 00
Dated June 19, 1929,
Interest paid to October 1, 1932,
Delinquent Interest to May 1, 1933
1, 591. 88
Collateral: 500 shares Electric Depot Company Common Stock.
EXHIBIT U-69m
SCHEDULE " H "
UNION TRUST REAL ESTATE LOANS
MAIN OFFICE
Comment: The loans listed on the following pages are held in the Real Estate
Loan Department. Mr. Stuber, of that department, stated that it would not be
worth while to make an appriasal of the properties held as security for the loans
unless and until a buyer for any piece of property could be found. There apparently is no real market for any of this property, except that some realization might
be had from the improved property on a sacrifice sale.
EXHIBIT U-690
The Union Trust Company—Main office real estate loans—April 21, 193S.
Kind of
Property
Location
Name
nTiv
Shaker CoiDP
Shaker Villagre Land Co
Shaker Blvd & So Moreland
West Park Blvd
.
Terminal Bu ilding Co
Traction St™•p.s O,n
*
Eagle Ave (& Ontario; released)
Broadway & Ontano.
Orange Ave
Broadway
1
1
._
1
East 23rd Place
Broadway, Cor. 23rd Place
Orange Ave
Broadway & Pittsburgh Ave—
Broadway & B & 0 RR
Sedgewick Road #293j
Kinsman Road #18504
Parkland Dr. #18514.!
So. Moreland Blvd. #18419.
Parkland Dr. #18414Fairmount Blvd. #3397
No Woodland Rd
Granger Ave. #1353" .
Larchmere Ave. #13645
Shaker Blvd. .
_2_
Aldersyde Drive
Glengary Road
.
Winchell Road
So. Woodland Road
Lee Road
Brighton Road #3008
Chadbourne Road #2992
So. Woodland Blvd. #3125
Total
Balance
Original
Amount Payments
Due
Vacant
.
w
Van Sweringen, 0 . P. & M. J
Van SwerinC*11 rinmnanv
Date of
Note
.
8-30-27 $180,000
12-10-25
8,000
12-10-25
8,000
12-10-25
8,000
150,000
2-25-27
11- 6-24
16,000
Fr Stores
5-23-25
8,000
Vfir ant
7,400
5-16-25
4-20-25
7,600
...
7 21 25
3,600
7-21-25
18,000
4,000
7-31-25
6,000
7-31-25
8-27-25
14,000
7-21-25
12,000
80,000
11-14-28
Br. Bide-s
35,000
7-16-25
Br. Single
7,000
8-20-23
Fr. Single
33,000
4- 1-24
Sgl Stone Stucco
7-31-24
26,400
Sgl Stone
"
34,000
* Brick
' _ 4- 1-24
11-20-24
20,000
4- 1-25
30,000
Vacant
6,000
Fr. Sgl
5-20-25
20,000
Fr. Stucco.
9-10-25
30,000
10-20-25
Vacant
3,000
12- 1-25
10,000
12- 1-25
9,500
12- 1-25
800
f11-23-25
420
\ 7-16-27
10,000
2- 5-26
6,000
12-16-26
13,500
3-27-26
Stucco Sgl
7,500
3-28-27
F SPI
3-15-28
22,000
Br. Stucco Sgl
$85,890
2,780
740
740
103,000
0
0
0
0
0
0
0
0
0
0
0
9,800
1,015
0
3,400
6,350
0
o
500
12,500
0
240
800
760
}
20
0
o
1,620
0
0
$94,110
5,220
7,260
7,260
47,000
16,000
8,000
7,400
7,600
3,600
18,000
4,000
6,000
14,000
12,000
80,000
25,200
5,985
33,000
23,000
27,650
20,000
30,000
5,500"
7,500
30,00tf
2,760
9,200
8,740
1,200
10,000
6,000
11,88Q
7,500
22,000
Interest
Paid to
Int. Due Int. Due
as of
as of
3-15-33
5-1-33
3-15-32
12-16-32
12-15-32
12-15-32
l£-l&-31
12-15-31
12-15-31
12-J5-31
12-15-31
12-15-31
1$-15-31
12-15-31
12-15-31
12-15-31
12-15-31
12-15-31
9tl5-32
i 9- 1-32
6-15-32
3-15-32
1 tr 1-32
§-15-33
$5,774.87 $6,496.38
78.30
118 32
108.90
164 56
164 56
108.90
3,632.35
3,992.68
1, 236. 54 1,359. 21
679. 59
618. 26
628 46
571.90
645. 63
587.36
305 89
278. 22
1, 391.11 1,529.11
339.80
309.13
463.70
509.70
1,081.98 1,189.31
927.41
1,019.41
6,182. 72 6,796.05
960.62
767.42
204.90
159.02
1,524.00
1,777.00
1,411.84
1,588.17
1,128.29
1,340. 27
0
153.00
2,318. 52 2,548 52
337.62
379.00
579. 63
637.13
2,318. 52 2, 548. 52
213.30
234 46
711.01
781.54
675.47
742.48
101.93
92.73
772.83
849.50
509 70
463 70
0
91.08
0
57.50
136.42
305.09
3,-15-32
12-15-31
12^-15-31
12-15-31
12-15-31
l2r15-31
12-15-31
12-15-31
12-15-31
3-15-33
i 1-21-33
CD
H
O
a
W
X
a
o
a
H
M
o
EXHIBIT U - 6 9 N
Van Sweringen Company.
Paul K. Jones a .
B. L. & L. D. Jenks..
1
Almar Drive #20699
Warrensville Center Rd
Almar Drive #20900
#20876
So. Moreland Blvd. #3137...Shaker Blvd. #19600
Euclid Ave #13223
85.24 Acre Warrensville Center Rd_
11 Acres S. O. M. Center Road...
Fr. Sgl
Vacant
Br. Sgl._
Fr. Br. Sgl
Stucco Sgl.
Stucco Stone Sgl.
Fr. Sgl
Vacant
Vacant
8-14-28
8-14-28
8-14-28
10-10-28
7-29-29
11- 1-28
11-28-25
1926
1928
4,200
6,600
7,200
9,500
20,000
35,000
30,000
40,000
10,000
0
0
0
0
0
0
15,000
0
0
4,200
6,600
7,200
9,500
20,000
35,000
15,000
40,000
10,000
3-15-32
12-15-31
3-15-32
i 3-15-32
i 2- 1-33
3 3- 1-33
3-15-32
12-15-31
12-15-32
257.82
510.09
441.97
583.15
159.08
91.86
920.46
290.02
497.17
655.98
312.41
360.19
1,035.46
3,398.00
227. 59
Approximate date.
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EXHIBIT U-69p
00
CO
History of present loan of $2,800,000 to 0. P . and M. J. Van Sweringen
Maker
Amount
Date
Substitution of Collateral
Changes in Amt. of
Loan
Collateral
In
1-14-28 $500,000
Vaness Co.
250,000
Vaness Co.
12-29-27
2-17-28
500,000
2-20-28
500,000
_
. . . . Vaness Co.
3-1-28
250,000
— . Vaness Co.
Vaness Co.
32,600 Shs. Term. Prop. 1st
Pfd.
27,300 Shs. Term. Prop. 2nd
Pfd.
93,300 Shs. Term. Prop.
Common.
2,500 Shs. Nickel Plate
Common.
5,000 Shs. Nickel Plate
Common.
5,000 Shs. Nickel Plate
Common.
2,500 Shs. Nickel Plate
Common.
2,000,000.
7-28-28
11-1-29
2,000,000
2,000,000
Participation in
Loan to Cleve.
U. Tr
Guardian...
Midland.—
Cleve. T r . . .
_
$9,000,000
banks:
$2,000,000
2,500,000
1,200,000
3,300,000
5-15-30 2,800,000
10-30-30
2,800,000
Vaness Co.
32,631 Shs Term. Prop. 1st
30,255 Shs. Term. Prop.
2nd Pfd.
95,600 Shs. Term Prop.
Common.
8
O
O
W
X
Paid by Renewal
July 28,1928
None..
a
W
>
31 Shs. Term Prop 1st Pfd.
2,955 Shs Term. Prop. 2nd 15,000 Shs. Nickel Plate Com.
Pfd.
Market Value, $1,875,000.
2,300 Shs. Term. Prop. Common.
i
122,000 Shs. Van Sweringen
Co Com , 100 Shs. Cleveland Term. Bldg Com.
o
Vaness Co.
Paid by Renewal
Nov 1,1929
Above and 122,000 Shs Van $7,000,000 total inSweringen Co. Com.,
crease in Loan.
100 Shs. Cleve. Term
Bldg. Co. Com.
Vaness Co.
122,000 Shs. Van Sweringen U.Tr. took over $800,Co. Com., 600,000 Shs.
from Cleve. [600,000 Shs. Van Sweringen
Van Sweringen Corp. } 000
Trust Co.
Corp. Com.
Com.
/O. P. and M. J. Van
\ Sweringen.
Out
97,500 Shs. Vaness
Com. (60%)
Co.l
/ None..
o
H
32,631 Shs. Term. Prop. 1st
Pfd.
30,255 Shs. Term. Prop 2nd
Pfd
95,600 Shs. Term. Prop. Common
122,000 Shs. Van Sweringen
Co. Com.
97,5000 Shs.Vanes Co. Com. 600,000
Shs. Van Sweringen
Corp. Com.
M
8967
STOCK EXCHANGE PEACTICES
EXHIBIT U-69q
Consolidated liability to the Union Trust Company of Van Sweringen controlled
companies
Date
1920
July 1
July 20
Nov. 22
1921
Apr 2
M a y 28
June 6
15
27
30
July 13
14
21
23
Balance
$230,587.89
270, 587.89
425, 665. 22
475, 665. 22
453, 665. 22
981,093 62
1,081, 093. 62
1,056, 093 62
1, 076, 093 62
1,805, 530 97
1,825,530 97
1, 855, 530 97
1,894, 805 97
Increase
Decrease
50,000 00
20,000.00
729, 437. 35
20,000.00
30, 000 00
40,000 00
Balance
1921
Aug 22 $1,877, 213. 97
Sept. 13 1,927,065. 97
1,906,851.42
19 1,886,851. 42
26 1,986,851.42
$40,000 00
155,077. 33
527, 428. 40
100,000 00
Date
$25,000 00
25,000 00
Oct. 14
2,041,449 09
26
Nov. 21
25
Dec. 8
22
27
2,021, 249. 09
2, 053,133.12
2,033,133.12
2,062,633 12
2,306,398 54
2, 296, 398 54
Increase
Decrease
$20,000.00
$50,000.00
20,214.55
20,000 00
100,000.00
f 235,077. 33
499,019.00 \ 120,000.00
I 88,850.00
20,000. 00
32,571.03
20,000.00
30,000.00
250,000.00
10,000.00
EXHIBIT U-69r
Date
Balance
Increase
Decrease
1922
Jan. 5
17
26
30
Feb. 14
15
27
Mar. 4
23
24
28
Apr. 25
26
I ate
Balance
Increase
Decrease
1922
$2,166,972. 47
$129,426 07 June 26 $5, 042, 259. 6!
2, 316,001. 22 $150,000 00
3, 777,140.34
July 3
2, 306,001. 22
i6~6oo"66
2, 346,001.22
40,000.00
12
3,090,802 35
3,133, 998 31 790,000 00
15
2, 720, 611. 95
3,081,573. 67
52,424. 64
2,740,611 95
18
3, 058, 602 42
20, 000 00
2, 715, 611.
26
3,044,064 92
14, 537. 50
4,339,590 " 1, 300, 000 00
2,067,453.03
Aug. 2
4, 319, 590 62
20,000 00
4, 519, 590 62 200, 000 00
2, 567,453. 03
11
4,426,094 53
92, 500 00
2, 717,453. 03
24
4, 901,094 53 500, 000 00 25,000. 00
2, 692,453. 03
25
May 5 5,000, 094 53 100, 000 00
4,967,929 17
29
25, 000. 00
5, 074, 596 84 106, 667 67
31
$75,000.00
20,000.00
$25,000.00
764,994.01
500,000.00
683,689.99
442, 505. 99
25,000. 00
40,000. 00
345,000. 00
263,158. 92
500,000.00
150,000.00
25, 000. 00
EXHIBIT U-69S
Date
Balance
1922
Sept. 1 $2,904, 953 03
6 2,939,953. 03
14 2, 589,968 88
15 2, 664,968.88
19 2, 674, 968 88
25 2,646,968 88
28 2, 746, 968 88
29 2,821,968 88
Oct. 13 2, 796, 968 88
17 2,773,377 79
24 2, 848, 377. 79
25 2,823,377. 79
28 3,188,377. 79
Increase
$212,500.00
35,000 00
25, 000 00
75, 000 00
40, 000 00
100, 000 00
75,000 00
75, 000 00
365, 000 00
Decrease
$375, 000. 00
30, 000 00
25,000.00
25, 000. 00
23,591 09
25, 000. 00
Date
Balance
1922
Nov. 7 $3,198,377. 79
8 3, 228,377.79
16 3, 215, 667. 79
20 3,265,667. 79
23 3, 295, 667. 79
24 3,270,667. 79
29 3,320,667. 79
Dec 1 3,395,667.79
5 3,640,651. 94 /\
19 3,682,651.94
23 3, 932,651.94
28 3, 907,651.94
29 4, 042, 651. 94
Increase
$10,000.00
30,000.00
50,000.00
30,000.00
50,000.00
75,000.00
175,000 00
70,000 00
42,000.00
250,000.00
135,666.66
Decrease
$12,710.00
25,000.00
25,000.00
8968
STOCK EXCHANGE PRACTICES
EXHIBIT U-69t
Consolidated liability to the Union Trust Company of Van Sweringen controlled
companies—Continued
Date
Balance
1923
Jan. 25 $3, 967, 052. 64
29 3,992,052. 64
31 4, 317,052. 64
Feb. 9 4, 274, 783. 30
16 4, 299, 783 30
Mar. 28 4, 274, 783. 30
30 4,287, 283 30
31 4,462,283 30
April 3 4, 587, 283 30
11 4, 562, 283 30
26 5, 059,632 70
27 4,634r632 70
30 4, 609, 632 70
May 1 4, 634, 632 70
5 4, 334, 632 70
31 4, 309,632 70
Increase
Decrease
$84,599 30
$25,000. 00
325, 000. 00
42,269 34
25,000. 00
"25"666"66
12, 500. 00
175, 000 00
125, 000 00
25, 000 00
500,000.00
Date
Balance
Increase
Decrease
1923
June 7 $4, 324, 632 70 $15,000. 00
20 4,484, 632. 70 160, 000 00
23 4, 984, 632 70 500, 000 00
25 5, 094, 632 70 110, 000. 00
26 5, 069,632. 70
$25, 000 00
July 16 5, 091, 632 70 25, 000 00
30 5, 066, 632 70
25, 000. 00
Aug. 3 5, 086, 632 70 20, 000 00
11 5,146, 632 70
60,000 00
31 5, 226,632. 70
80, 000. 00
Sept. 4 5,236,632 70
10, 000. 00
425, 000 00
25,000. 00
25, 000. 00
300, 000. 00
25, 000 00
EXHIBIT U - 6 9 U
Date
Balance
1923
Sept. 6 $5,266,632.70
26 5,093, 510.40
27 5,068, 510.40
Oct. 2 5,008, 510.40
25 1,920,478.69
29 1,892,955.36
1,862,408. 74
Dec. 26
28 1,852,374.39
1924
Jan. 7
11
30
Feb. 5
13
Mar. 17
1,827,374.39
1,927,374.39
1,987,301.59
2,013,301.59
2,313, 222.17
2,362,899.17
Increase
$30,000.00
100,000.00
65,000.00
26,000.00
300,000.00
50,000.00
Decrease
$173,102.00
25,000.00
60,000. 00
/2,587,000.00
\ 500,000.00
25,000.00
25, 000.00
10,000. 00
25,000.00
Date
Balance
1924
Mar. 31
Apr. 2
30
M a y 17
2,546,399.17 /1
2,516,399.17
2, 491,374.17
3,230,255.05
June 5
625,363. 03
1925
Feb. 6
Apr. 2
May 1
June 1
6
16
1,024,863.03
1,124,863.03
1,106,418.03
1,094,418.86
1, 294,418.86
1,092,013.49
Increase
Decrease
35,000.000
150,000.00
30,000.00
25,000.00
750,000.00
f
1
11,
I
400,000.00
100,000.00
200,000.00
319,166.67
280,000.00
235,000.00
770,633.36
16,555.55
10,000.00
200,000.0Q
EXHIBIT U - 6 9 V
Date
Balance
1925
July 3 $1,292,013.49
Aug. 3 1,477,729.02
24 1,276,403.58
Sept. 1 1,266,403.58
1,507,938.77
Oct. 14
1926
Mar. 17
31
Apr. 15
19
July 21
Aug. 20
Nov. 10
29
Dec. 18
28
620,368.04
720,368.04
2,319,118.04
2,219,118.04
2,439,585.96
2,753,545.34
3,099,594.67
3,337,594.67
3,586,548.53
5,586,260.39
Increase
$200,000.00
200,000.00
Decrease
$200,000.00
10,000.00
250,000.00
100,000.00
1,600,000.00
225,000.00
315,000.00
350,000.00
250,000.00
250,000.00
2,000,000.00
850,000.00
100,000.00
Date
1927
Jan. 17
Feb. 1
18
23
Mar. 1
June 6
7
July 1
Oct. 4
Nov. 8
27
Dec. 5
28
Balance
5,361,260.39
5,608,360.39
5,908,064. 28
5,593,064.28
5,943,064.28
4,341,363.03
2,341,363.03
2,841,363.03
941,363.03
1,191,363.03
1,441,363.03
1,941,363.03
2,191,363.03
Increase
250,000.00
300,000.00
350,000.00
500,555.55
250,000 00
250,000.00
500,000.00
250,000.00
Decrease
225,000.00
315,000.00
1,600,000.00
2,000,000.00
1,900,000.00
EXHIBIT U-70
•
The * l a p a r a » utieon Po
/•T&10735 n / o ©. A » an
4000shs
orp. Com *- PHTT
SH
/ 5,000shs- The Standard srsnda ] nc . Comi4550/99 a t lOOshs
n/o S . J. SmiU)
—=i43&sftg-
itie
fe»*^on St. 0 0
1 ^O-.— €«*!—ntif
*r
'
\
*"»*>*> l e s s -iotor G*
4371/4700 at 100s ha aa n / o A..T. Stiver
35,000a ha
The United Co r p . Com
"^ tjOOOshs
,fc 13738/61 n/o r.W.
rt in i C13768/63 a/o C. .
Els Her #C13702/37 n / o F. V f .
X 3.0003H 3
/
TT/C
,
The Seatern R eserva
A
104/133 a t 100ah3
K
artln at lOOshs sa
r:v- st tng Corp COM
n/o • tto Killer
jt, SyOOO Unl' -8 Th o Western Reserve In V? at in g Csrp. Ish of 6% " ;.
l a h of Com fUMKK/133 at 100 units ea n/o 8tto "filler
-
< 17999js i s
The Trflste^s of thH C a 1 ©t '•£ rust
#36 at Ish itoO at 15Os v s
i t iGsha f96 at 17,817jah«
#95 a t ISaha n / o V BV
Co.
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LA*
'rn-Q /-Cn ii^y <i c.y -w
T**»
o (
iged f o r 5bOs.vis Voting r».-. •
ewto i S t e e l 0 j . C cm. uce
1400sh
^ori'i'an. loKinney *tO8
140ahs I,c n-Vo t-ing COKI.1 Dn s h a r e 3 C V
EXHIBIT U-70a
% e Cleveland Base Eall Co. Cap
#89 n/o Alva Bradley
Drrlgsh, McKinney •
40 n/o C.L.Brad lay
EXHIBIT
EXHIBIT
U-70b
U-71
EXHIBIT
U-71a
EXHIBIT
U-71b
EXHIBIT U-72
EXHIBIT U-72a
rnir.al Bui 1^3 g Co. & The Vaneae C o .
Fermir a l Bldg.
2?6S3^
I B w». i
. BUt / '/ i A
Nx 8
I / .
'.At
~/,
r,' 4" ' • - W
V/X'f'
,
IN ER£8T OR DISCOUNT
:
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EXHIBIT
U-73
EXHIBIT U-73a
.
•
.
-
.
.
•
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J
.
.
.
•"«>;•
T I M E LOAN
cert lfic »te of j&t. Ic-lGiion in 16ari*£o
Metropoll tan U t l l i t | ^3 I n c .
3uarant89d by '
«•"»• wA -> '^he ^anes3 Co
* a S
DUE ^*
M»7
DUE
Nix 3
^
DUE
™E
"
MEMO.
RKST OR DISCOUNT
IVi . . V .
yfjf Y£'
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7D
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3' $ f o
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EXHIBIT
s_ 8,100.000
lOOahs
lOOshs
U-74
C « r t i f l « a t a of s'artlclj:
u t l l t l t l e s -inc 6',T»00-{9Qe
The Cleveland fraction '/er^iinais Co. CoThe Traction Stores ^ o . Corn
Assignment of equity In 5 SOOsha j-he u l ?
Yowngsto«n Railroad t<o.Com,subject to a
New x ork Central Kallmod Co,
1465^hs
Ths ^l«V9l»nd interurVan ''allroad Co> C
C o l l a t e r a l held In Corporate Trust
EXHIBIT U-74a
Dent
'
-
•> >
EXHIBIT
U-75
EXHIBIT
U-75a
EXHIBIT U-76
EXHIBIT U-76a
8969
STOCK EXCHANGE PRACTICES
EXHIBIT U - 6 9 W
Consolidated liability to the Union Trust Company of Van Sweringen controlled
companies—Continued
Date
Balance
Increase
Decrease
1928
Jan. 10 $2,691, 363. 03 $500, 000 00
14 3,191, 363. 03 500, 000 00
20 3, 748, 363. 03 557,000. 00
Feb. 17 4, 248, 363.03 500, 000. 00
20 4, 748,363.
500, 000. 00
Mar. 1 4,998, 363. 03 250, 000. 00
Apr. 2 4,998,363.03
500,000.00 $500, 000. 00
June 23 5, 998, 363.03 1, 000,000. 00
26 5, 998,363. 03 1,000,000.00 1, 000, 000. 00
27 6, 698, 363.03 700, 000. 00
July 6 6,781,863.03
83,500. 00
Sept. 4 6, 632, 243. 03
149, 620. 00
6 6, 597,386. 03
34, 857. 00
13 6, 581,894. 03
15, 492. 00
Oct. 17 6, 582, 510. 28
20, 000. 00
18 7, 082, 510. 28 500,000. 00
Date
1928
Dec. 1
3
1929
Jan. 10
18
25
Feb. 20
26
Mar. 1
22
Apr. 19
23
Balance
7, 055,172 28
7, 543, 253 28
Increase
Decrease
23, 838. 00
500, 000. 00
8, 043, 253 28 500, 000. 00
8, 643, 253. 28 600, 000 00
9,143, 253. 28 500, 000. 00
800, 000. 00
8, 248, 363. 03
94, 890. 25
9,948, 363. 03 1, 700, 000. 00
11,448, 363 03 1, 500, 000. 00
54, 000. 00
11, 394, 363. 03
11, 394, 363. 03 1, 000, 000. 00 1, 000, 000.00
135, 000.00
11, 259, 363. 03
EXHIBIT U-69X
Date
Balance
1929
M a y 31 $10, 759, 363. 03
June 19 10,804, 363. 03
J u l y 13 10, 654, 363. 03
20
9, 294, 363. 03
7, 294, 363.03
23
Increase
Decrease
$500,000.00
$45, 000. 00
/
\
80,000.00
70,000. 00
1,360,000.00
/ 930,000.00
U , 070,000. 00
/3,001,000.00
\1,000,000. 00
25
Oct. 29
3, 293, 363. 03
8, 293, 363. 03
5,000,000.00
1930
Mar. 7
M a y 13
Aug. 14
8,344,363.03
8,939, 363. 03
10,361,863. 03
51,000.00
800,000.00
1,422, 500. 00
Date
Balance
1930
Oct. 30
Nov. 1
20
26
10, 361,863. 03
10, 362, 500. 00
10, 362, 500. 00
11, 040,000. 00
1931
Jan. 24
Oct. 6
Nov. 3
19
11,040,000.00
11,035,000.00
11,035,000.00
10,939,777.75
1932
Jan. 26
10,924,183.75
Increase
Decrease
7,800,000.00 7,800,000.00
387,000.00
386, 363. 03
800,000. 00
800,000.00
677, 500.00
100,000. 00
400,000. 00
100,000.00
5,000.00
400,000. 00
95,222. 25
10,000.00
205,000. 00
(Exhibits TJ-70 through U-76a face this page)
EXHIBIT
U-77
INTERVIEWS AND COMMITMENTS AFFECTING LOANS—OFFICIAL INSTRUCTIONS
TO CREDIT DEPARTMENT—COMMENTS ON FINANCIAL STATEMENT—ESSENTIAL
CREDIT INFORMATION—FOR EXCLUSIVE USE OF CREDIT DEPARTMENT
July 26, 1928
THE VAN ESS COMPANY
It was agreed to loan The Van Ess Company $2,000,000.00 secured by
32,631 shares first preferred
30,255 shares second preferred
95,600 shares common stock
of the Terminal Properties Company. The proceeds of this loan will be used to
pay existing loans of the company to this bank, and consequently this loan will
not increase the amount of its indebtedness here.
DISCOUNT
WMB
R. S.
COMMITTEE,
CRAWFORD,
Secretary,
8970
STOCK EXCHANGE PRACTICES
EXHIBIT U-78
THE VANESS COMPANY,
TERMINAL TOWER,
Cleveland, November 1st, 1929.
THE UNION TRUST COMPANY,
Corporate Trust Department, Cleveland, Ohio.
Attention: Mr. Hull
Reference is made to our demand loan in the amount of $9,000,000
dated today, collaterally secured by stock of The Terminal Properties Company,
The Van Sweringen Company and The Cleveland Terminals Building Company.
With reference to the various participations in this loan, the proceeds of same
are to be credited by the participants as follows:
The Cleveland Trust Company (to the credit of our account at their
bank)
$3,300,000
The Guardian Trust Company (to the credit of our account at their
bank)
2,500,000
Midland Bank (to the credit of our account at their bank)
1, 200, 000
The Union Trust Company (to be applied to take up our present loan
in the amount of $2,000,000, dated July 27, 1928, collaterally
secured by stock of The Terminal Properties Company)
2, 000, 000
GENTLEMEN:
Total
Very truly yours,
$9, 000, 000
THE VANESS COMPANY,
By J. J. ANZALONE,
Assistant Treasurer.
J. J. Anzalone
HOC
EXHIBIT U-79
INTERVIEWS AND COMMITMENTS AFFECTING LOANS—OFFICIAL INSTRUCTIONS, TO
CREDIT DEPARTMENT—COMMENTS ON FINANCIAL STATEMENTS—ESSENTIAL
CREDIT INFORMATION—FOR EXCLUSIVE USE OF CREDIT DEPARTMENT
October 28, 1930
O. P. & M. J. VAN SWERINGEN
VANESS COMPANY
METROPOLITAN UTILITIES INC.
It was agreed to accept participation of $2,800,000.00 in a loan of $9,000,000.00
to O. P. and M. J. Van Sweringen, to be secured by 60% of the entire issue of
common stock of the Vaness Company. The other participants in this loan are
The Cleveland Trust Company, the Guardian Trust Company and the Midland
Bank.
»-Jt was agreed to loan O. P. and M. J. Van Sweringen $5,000,000.00 to be
secured by collateral—
9,000 shares Vaness Company preferred
1,400 shares Newton Steel Company common
4,000 shares Niagara & Hudson Power Corp.
33,000 shares Peerless Motor Car Corp. common
5,000 shares Standard Brands Inc.
6,000 shares United Corporation common
3,000 shares Western Reserve Investing Corporation common
3,000 units Western Reserve Investing Corporation pfd. and common
17,999^ shares Calumet Trust
16,250 shares Vaness Company pommon
10,296 shares Metropolitan Utilities, Inc.
and—
100 shares Traction Stores common
100 shares Cleveland Traction Terminal common
1,465 shares Cleveland Interurban Railroad common
5,800 shares Cleveland and Youngstown Railroad common previously
pledged to secure loan of $3,100,000.00 of Metropolitan Utilities, Inc.
the above two loans being accepted in lieu of similar amounts now loaned to the
Vaness Company.
STOCK EXCHANGE PRACTICES
8971
It was agreed to accept the personal guarantee of O. P. and M. J. Van Sweringen in lieu of the present guarantee of the Vaness Company on participation of
$1,422,500.00 in a loan of $3,100,000 to Metropolitan Utilities, Inc.
FINANCE COMMITTEE,
R. S. CRAWFORD, Secretary.
WMB
EXHIBIT
U-80
JANUARY 8th, 1931.
Mr. 0. C. GRAY,
Superintendent of Banks, Columbus, Ohio. [State
DEAR MR. GRAY: We wish to acknowledge receipt
3rd addressed to our Board of Directors, in reference
excess loan limit. This matter will have our prompt
Very truly yours,
of]
of your letter of January
to what appears to be an
attention.
WMB.EMS
President
EXHIBIT
U-81
JANUARY 24th, 1931.
Mr. 0. C. GRAY,
Superintendent of Banks, Columbus, Ohio. [State of]
DEAR MR. GRAY: Referring again to your letter of January 3rd, I wish to
advise that the excess loan has been cleared.
Very truly yours,
WMB.EMS
President.
EXHIBIT
U-3
LOANS MADE BY THE UNION TRUST CO. TO VAN SWERINGENS AND CONTROLLED
COMPANIES
PAINTER-BRADLEY-NUTT VAN SWERINGEN SYNDICATE—W.
H. SEYMOUR
SEPTEMBER 13, 1929.
THE
VAN SWERINGEN COMPANY,
Terminal Tower Building, Cleveland, Ohio.
(Attention: Mr. T. W. Boutall, Asst. Secretary.)
GENTLEMEN: In accordance with your request in a letter to us under date of
September 12, 1929, relative to sublot number 1942 Sutherland Road, sold under
land contract to Hans Glad-Block, which property is subject to the so-called,
Painter-Bradley-Nutt Syndicate Agreement, we hand you herewith duly executed
quit claim deed together with our copy of the land contract.
This deed and land contract are lodged with you as agent to be used only when
you can deposit with us the note secured by mortgage deed, to be substituted
in lieu thereof and fully in accordance with the terms and conditions as outlined
in your letter of September 12, 1929 as referred to above. We ask that you
kindly acknowledge receipt of the enclosures upon tjae accompanying carbon and
return to us for our files.
Very truly yours,
L. C. GILGER,
Asst. Secretary.
REP:EP
Enc.
EXHIBIT
U-3-1
JANUARY 9, 1933
Mr. K. V. PAINTER,
8240 Fair mount Blvd., Shaker Heights, Ohio.
DEAR MR. PAINTER: We advise that we are preparing the usual Fiducivy
return of income for the calendar year 1932 with reference to oar Trust No. 2975
known as the u Painter-Bradley-Myers Syndicate," in which you have a }£jh interest. The total income of the Trust to be reported is $13,510.08 and the report
8972
STOCK EXCHANGE PRACTICES
lists your share thereof, namely, $2,702.01. We are advising you of this for your
information in connection with your 1932 return.
Very trulv yours,
L. C. GILGER,
Assistant Secretary.
LCG G
EXHIBIT
U-3-2
JANUARY 9,
ESTATES TRUST
1933.
DEPARTMENT,
Bank,
GENTLEMEN: We advise that we are preparing the usual fiduciary return of
income for the calendar year 1932 with reference to our Trust No. 2975 known as
the "Painter-Bradley-Myers Syndicate". The total income of the Trust to be
reported is $13,510.08 and the report lists the shares of the various parties listed
below:
Estate of P. A. Myers
J. R. Nutt, Jr., Trust
Frances Nutt Trust
_
Jane Nutt Akens Trust
Louise Nutt Iseman Trust
David Clark Nutt Trust.
Share of
income
Interest
Name
l/10th
3/lOOths
3/lOOths
3/lOOths
3/lOOths
8/100ths
. . .
-
$1,351.01
405.29
405.29
405.29
405.29
1,080.86
We are advising you of this for your information in connection with 1932 returns for the above trusts.
Very truly yours,
L. C. GILGER,
Assistant Secretary.
LCG G
EXHIBIT
U-3-3
COPY OF A LETTER FOUND IN THE FILES OF THE UNION TRUST COMPANY
FEBRUARY 5,
1932.
K. V. PAINTER,
3240 Fair mount Blvd., Shaker Heights, Ohio.
DEAR SIR: Your share of the distributable income for 1931 from the so-called
Painter,Bradley-Myers Syndicate, our Trust No. 2975, is $12,065.47. This
amount is returnable by you and will be reported by us as Trustee on the Fiduciary Return of Income f r the calendar year 1932, tor this Trust.
Yours very truly,
L. C. GILGER,
Assistant Secretary.
LCG:MT
EXHIBIT
U-3-4
COPY OF A LETTER FOUND IN THE FILES OF THE UNION TRUST COMPANY
CLEVELAND, OHIO, October 15th,
1924.
To: The Union Trust Company, successor by consolidation to The Citizens
Sayings and Trust Company, Trustee under agreement by and among K. V.
Painter, C. L. Bradley, F. E. Myers & Bro. and The Van Sweringen Company,
dated April 14, 1920."
The undersigned, Supervisors appointed by the above described Agreement,
do hereby authorize and direct you to distribute to the holders of "Land Trust
Certificates of Equitable Ownership in Residential Allotment Property" issued
under the above referred to agreement, the sum of One Hundred and Thirty-five
Thousand Dollars ($135,000.), being a portion of the monies accumulated in
STOCK EXCHANGE PRACTICES
8973
your hands as Trustee as aforesaid—said distribution to be made in accordance
with the terms of said Agreement dated April 14, 1920.
(Signed)
0 . P. VAN SWERINGEN,
(Signed)
Supervisor.
C. L. BRADLEY, Supervisor.
Approved:
(S)
J. P. MURPHY.
EXHIBIT U-3-5
COPY OF A LETTER FOUND IN THE FILES OF THE UNION TRUST COMPANY
CLEVELAND, OHIO, April 7th, 1925.
To: The Union Trust Company, successor by consolidation to The Citizens
Sayings and Trust Company, Trustee under agreement by and among K. V.
Painter, C. L. Bradley, F. E. Myers & Bro. and The Van Sweringen Company,
dated April 14, 1920.
The undersigned, Supervisors appointed by the above described Agreement,
do hereby authorize and direct you to distribute to the holders of "Land Trust
Certificates of Equitable Ownership in Residential Allotment Property" issued
under the above referred to Agreement, the sum of Forty Thousand Dollars
($40,000.00), being a portion of the monies accumulated in your hands as Trustee as aforesaid—said distribution to be made in accordance with the terms of
said Agreement dated April 14, 1920.
(Signed)
O. P. VAN SWERINGEN,
(Signed)
Supervisor.
C. L. BRADLEY, Supervisor.
EXHIBIT U-3-6
COPY OF A LETTER FOUND IN THE FILES OF THE UNION TRUST COMPANY
TERMINAL TOWER,
Cleveland, May 7, 1929.
Mr. L. C. GILGER,
Asst. Secretary, The Union Trust Company, Cleveland^ Ohio.
DEAR MR. GILGER: Mr. C L. Bradley is in receipt of your letter of May 4th
relative to the Painter-Bradley-Myers Trust No. 2975. He wishes you to be
advised that Mr. Alva Bradley is the owner of 1/10 interest in this trust. Although
disbursements for the combined Bradley interest, aggregating 1/5 of the beneficial
interest of the trust, are usually made to Mr. C. L. Bradley, the latter turns over
1/2 of the receipts to Mr. Alva Bradley.
This for your information in connection with the Internal Revenue Department reports.
Yours very truly,
(Signed)
F. L. JOUANNET,
Secretary to Mr. Bradley.
EXHIBIT U-3-7
MARCH 10, 1933.
Mr. J. R. KRAUS,
Chairman of the Board Bank.
DEAR MR. KRAUS: I urge that we immediately give consideration to setting
apart in the trust departments cash or special credit in the Federal Reserve Bank
to take care of all items which might properly be classed as special deposits or
trust funds under the rule laid down in the so-called Sears-Roebuck and later
cases.
I think the same principle should be applied to items held in the collection department, and to drafts and certified checks which, under the statutes, are entitled to preference.
My idea is that we should bring ourselves within the rule which applies when
a bank has at all times had available in cash an amount in excess of the amount
represented by such trust and preferred items.
8974
STOCK EXCHANGE PRACTICES
The prestige of our profitable trust business has undoubtedly suffered already
through stoppage of payments on such classes of items, and I think it is extremely
important that our cash be not reduced by payments on unpref erred items below
the amount of cash required to meet such preferred items.
Very truly yours,
Vice President.
WJO'N-o.
EXHIBIT
U-8
FEBRUARY 20,
The
1930.
VAN SWERINGEN COMPANY,
Terminal Tower, Cleveland, Ohio.
(Attention Mr. J. J. Anzalone.)
GENTLEMEN: For your information in connection with your Income Tax
Return for 1929, we advise that our records show $23,503.20 received by us and
distributable to you in 1929 on your one-fifth interest in the so-called PainterBradley-Myers Trust property.
Very truly yours,
L.
C.
GILGER,
Asst. Secretary.
LCG:W
EXHIBIT
U-9
JULY 30,
The
1929.
VAN SWERINGEN COMPANY,
Terminal Tower Building, Cleveland, Ohio.
(Att: Mr. Nichols.)
Re: Trust No. 2975—Painter, Bradley, Myers property.
GENTLEMEN: In connection with the above trust will you please be kind
enough to furnish us written evidence that the taxes for the last half of the year
1928 have been paid.
Very truly yours,
WM. A.
GIBSON,
Asst. Secretary.
DSB:EC
EXHIBIT
U-10
DECEMBER 23,
The
1930.
VAN SWERINGEN COMPANY,
Terminal Tower, Cleveland, Ohio.
(Attention: T. W. Boutall, Asst. Treasurer.)
Re: Agreement by and among K. V. Painter, C. L. Bradley, F. E. Myers and
Bros, and The Van Sweringen Company dated April 14, 1920.
GENTLEMEN: We acknowledge receipt of your letter of December 23rd,
enclosing the revised schedule of release prices for the six months period from
December 20, 1930 to June 20, 1931, approved by the Supervisors.
Will you also kindly prepare for us a statement of the land and debt status in
order that we may submit it to the beneficiaries with the new schedule for their
approval?
Yours very truly,
L.
CG:MT
C.
GILGER,
Asst. Secretary.
8975
STOCK EXCHANGE PRACTICES
EXHIBIT U-3-11
Recapitulation of amounts received from corporate trust no. 2975
1924
1925
1926
Van Sweringen Co
$27,000.00 $11,200. 00 $19,800 00
C. L. Bradley
27, 000. 00
11, 200. 00
19,800 00
Alva Bradley
Estate Dept Union Trust Co., J. R Nutt.. 27,000 00 11, 200 00 19, 800.00
K. V. Painter
19, 800.00
27, 000 00 11, 200. 00
Jno. C. Myers, Administrator for Estate of
13, 500 00
9,900.00
5, 600. 00
F. E. Myers
5, 600 00
9,900 00
P. A. Myers
13, 500 00
Total..
1927
1928
$26,000. 00
26,000.00
$35,000 00
35,000 00
26,000 00
26, 000 00
35, 000. 00
35, 000. 00
13,000 00
13,000 00
17, 500 00
17,500 00
175,000 00
135,000 00
56,000.00
99, 000. 00
130, 000 00
1929
1930
1931
1932
Total
$22,000 00 $12,000. 00 $14, 500 00 $2,100 00 $169, 600 00
Van Sweringen Co
17,500 00 6,000 00 7, 250 00 1, 050 00 150, 800 00
C. L Bradley
4, 500 00 6,000 00 7, 250 00 1, 050 00 18, 800. 00
Alva Bradley...
_
Estate Dept. Union Trust Co , J. R. N u t t - 22, 000.00 12,000. 00 14, 500 00 2,100 00 169, 600 00
22, 000 00 12,000.00 14, 500 00 2,100 00 169, 600 00
K. V. Painter
Jno. C. Myers, Administrator for Estate of
6,000.00
7, 250 00 1, 050 00 84,800 00
11,000.00
F. E. Myers
7, 250 00 1,050 00 84, 800 00
P. A. Myers
,_.. 11, 000. 00 6,000.00
Total
110, 000 00 60,000.00 72, 500. 00 10, 500 00 848, 000 00
This is to certify that the above is in accordance with the trust ledgers of the
Union Trust Company.
EXHIBIT U-3-12
Amounts received from the corporate trust in the names Painter, Bradley, Myers,
Citz. Savings & Trust Co., & Van Sweringen Co., as shown from trust ledger,
the Union Trust Co., corporate trust no. 2975
Date
Oct.
Apr.
July
Jan.
May
July
Aug.
Sept.
Oct.
Jan.
Apr.
June
July
Sept
Oct.
Nov.
Dec.
Feb.
Feb
Mar
Apr
June
July
Aug.
Sept
Oct
Nov
Dec
Jan
Van
Swermgen Co
Alva
Bradley
C. L
Bradley
16,1924 $27,000.00 $27,000 00
8,1925 8,000 00 8,000 00
9.1925 3, 200 00 3,200 00
21,1926 3,000 00 3,000 00
11,1926 3,000.00 3, 000.00
22,1926 3,000 00 3,000 00
30,1926 3,000 00 3, 000.00
8.1926 4,800 00 4, 800 00
14.1926 3, 000 00 3, 000 00
3.1927 3, 000 00 3,000 00
7.1927 3,000 00 3,000 00
18.1927 4,000 00 4, 000.00
20,1927 3,000 00 3,000 00
12,1927 3, 000 00 3, 000 00
11,1927 3,000 00 3,000 00
26,1927 3, 000 00 3,000 00
31.1927 4,000 00 4,000 00
1.1928 3,000.00 3, 000 00
27.1928 3,000 00 3, 000 00
16,1928 3,000 00 3,000 00
20,1928 3,000 00 3,000 00
2,1928 3, 000 00 3,000 00
17,1928 3, 000 00 3, 000 00
8.1928 3,000 00 3,000. 00
6,1928 3,000 00 3, 000 00
18,1928 3,000 00 3, 000 00
12,1928 4, 000 00 4, 000 00
31.1928
4, 000 00 4,000 00
24.1929
4, 000 00 4, 000 00
17.">541—34—PT 20
16
Estate
Dept.
Union
Trust
Co. J R.
Nutt
K. V.
Painter
Jno. C
Myers
Adm. for
Estate
of F. E.
Myers
P A.
Myers
Total
$27,000 00 $27,000 00 $13,500.00 $13,500.00 $135,000.00
8,000.00 8,000.00 4,000.00 4,000 00 40,000.00
3,200 00 3,200.00 1,600.00 1, 600.00 16,000.00
3,000 00 3,000.00 1,500.00 1, 500.00 15,000 00
3,000.00 3,000.00 1, 500.00 1, 500 00 15,000 00
3,000 00 3,000.00 1, 500.00 1, 500.00 15,000.00
3,000.00 3,000.00 1,500.00 1, 500.00 15,000.00
4,800 00 4,800.00 2,400.00 2,400.00 24,000.00
3,000.00 3,000.00 1, 500.00 1, 500 00 15,000.00
3,000 00 3,000.00 1, 500.00 1, 500 00 15,000 00
3,000.00 3,000.00 1,500 00 1, 500 00 15,000.00
4,000 00 4,000.00 2,000. 00 2,000 00 20,000.00
3, 000. 00 3,000.00 1, 500 00 1, 500 00 15,000.00
3,000 00 3,000.00 1, 500.00 1, 500.00 15,000 00
3,000 00 3,000.00 1,500.00 1, 500 00 15,000 00
3,000 00 3, 000 00 1, 500.00 1, 500.00 15, 000 00
4,000. 00 4, 000 00 2, 000.00 2,000.00 20, 000 00
3,000. 00 3, 000.00 1, 500.00 1,500 00 15.000.00
3,000.00 3,000.00 1, 500 00 1, 500.00 15,000 00
3,000 00 3,000.00 1, 500.00 1, 500 00 15,000. 00
3,000.00 3,000.00 1, 500. 00 1, 500.00 15,000 00
3,000 00 3,000. 00 1, 500 00 1, 500 00 15, 000.00
3,000. 00 3,000 00 1, 500.00 1, 500 00 15,000.00
1, 500.00 13,500 00
3,000 00 3,000 00
3,000.00 3,000.00 3,000.00 1, 500 00 16, 500 00
3,000 00 3,000. 00 1, 500. 00 1, 500 00 15,000 00
4,000 00 4,000 00 2,000.00 2,000 00 20, 000 00
4,000. 00 4,000.00 2,000.00 2,000.00 20, 000.00
4,000 00 4, 000 00 2,000 00 2,000 00 20, 000 00
8976
STOCK EXCHANGE PRACTICES
Amounts received from the corporate trust in the names Painter, Bradley, Myers,
Citz. Savings & Trust Co., & Van Sweringen Co., as shown from trust ledger,
the Union Trust Co., corporate trust no. 2975—Continued.
Date
Mar
Apr.
May
July
Sept.
Nov.
Jan.
Apr.
July
Oct.
Jan.
Apr
July
Sept.
Dec.
May
Van
Sweringen Co.
C. L.
Bradley
Alva
Bradley
Estate
Dept.
Union
Trust
Co. J.R.
Nutt
K. V.
Painter
Jno. C.
Myers
Adm. for
Estate
of F. E.
Myers
P. A.
Myers
Total
$3,000.00 $3,000.00 $1,500.00 $1,500.00 $15,000.00
5,1929 $3,000.00 $3,000.00
3,000.00
3,000.00
3,000.00
3,000.00
1,500 00
12,1929
13,500.00
3,000.00
3,000.00
3,000.00
3,000.00
1,500.00 16,500.00
10,1929
3,000.00
1,500.00 $1,500.00 3,000.00
3,000.00
12,1929 3,000.00
1,500.00 1,500.00 15,000.00
1,500.00 1, 500.00 3,000.00
3,000.00
10,1929 3,000.00
1,500.00 1,500.00 15,000.00
1,500.00 1,500.00 3,000.00
3,000.00
18,1929 3,000.00
1,500.00 1,500.00 15,000.00
1,500.00 1,500.00 3,000.00
3,000 00
24,1930 3,000.00
1,500.00 1,500.00 15,000.00
1,500.00
3,000.00
18,1930 3,000.00
1,500.00 3,000.00
1, 500.00 1,500.00 15,000.00
1,500.00 1,500.00 3,000 00 3,000.00
11,1930 3,000.00
1, 500.00 1,500.00 15,000.00
1,500.00
3,000 00
22,1930 3,000.00
1,500.00 3,000.00
1, 500 00 1,500.00 15,000.00
1, 500.00 1, 500.00 3,000 00 3,000.00
1, 500.00 15,000.00
2,1931 3,000.00
1,500 00
1, 500.00 1, 500.00 3,000.00
3,000 00
7,1931 3,000.00
1, 500.00 1,500.00 15,000.00
1,500.00 1, 500. 00 3,000.00
3,000 00
1,500 00
7,1931 3,000 00
13,500.00
1, 500.00
3,000.00
9,1931 3,000.00
1, 500.00 3,000.00
16,500.00
3, 000. 00 1,500 00
1,250.00 1,250.00 2, 500.00 2,500 00
16,1931 2,500.00
1, 250.00 1,250.00 12,500.00
1,050.00 1,050.00 2,100.00
2,100 00 1,050.00 1,050.00 10, 500.00
7,1932 2,100.00
Total __ 169,600.00 150,800. 00 18,800. 00 169, 600.00 169,600 00 84,800.00 84,800.00 848,000.00
No other payments were made. Balance as shown by the records as of Feb. 28, 1933, amounted to
$5,940.30.
Possession of Business and Property taken June 15, 1933, by I. J. Fulton, Supt of Banks.
This is to certify that the above is in accordance with the trust ledgers of the
Union Trust Company.
THE UNION TRUST COMPANY—JOHN H. WINCHESTER WINDOW DRESSING
MEMORANDUM
There is no Exhibit U-9-19.
Apparently The Union Trust Company was quite expert in the art of WindowDressing, so much so in fact that they were awarded a cup from the American
Institute of Banking. This appeared in a newspaper photograph clipped from
the Cleveland Press of March 15, 1934.
( T H E CLEVELAND PRESS, MARCH 15, 1934)
BEST WINDOW DRESSER
The best bank window-dressing in the nation was done by the Union Trust
Co. in February 1930. The bank got this cup for it from the American Institute
of Banking. Still reposing in a trophy case in a dim corner of what was the
largest banking room in America, the cup bears this inscription: " Presented for
the Best Window Display During National Publicity Week."
(Institute Cup faces this page)
EXHIBIT U-9-1
To the President or Cashier of the Bank Addressed:
DEAR SIR: In accordance with the provisions of
Rec'd Oct. 7, 1931
Mailed Oct. 14, 1931
STATE OF OHIO,
DIVISION OF BANKS,
Columbus, Oct. 6, 1931.
Sections 710-31-32-33 of the
General Code of Ohio, you are hereby required to forward immediately to this
office, a report of the condition of your bank at the close of business on Sept.
29, 1931, using the blank forms herewith enclosed. Form CI (large sheet)
should be made in duplicate, one to be retained in your files and the other forwarded to this office.
8977
STOCK EXCHANGE PRACTICES
Form C2 (small sheet) is provided for proof of publication one copy of which
should be sent to this office as soon as the publishers' certificate has been executed
thereon.
Where there is no entry applicable to any of the items on the face of the report
or in the schedules, the word "NONE" should be written therein.
Use the blank lines if necessary, but do not change or erase any of the printed
items.
Respectfully,
I. J. FULTON,
Superintendent of Banks.
NOTE.—Form CI (large sheet) should be executed and sent to this office immediately and in no case held awaiting proof of publication.
©^"PLEASE read and follow all printed instructions and notes in order to
avoid unnecessary correspondence.
The time limit for filing the report Form C-1 expires on Oct. 16, 1931.
EXHIBIT
U-9-2
Schedules
Past due paper
Cash items
Amount of paper past due on which no
interest has been paid for six months
$3,041,967.19
Amount of paper past due on which no
interest has been paid for one year_
3,029,457.51
Carried
Since
Amount
All temporary-
RATE OF INTEREST PAID
Highest rate of interest paid on Public Deposits
Highest rate of interest paid on Time Certificates
Highest rate of interest paid on Savings
Deposits
Highest rate of interest paid on Bills Payable
__
Highest rate of interest paid on Bills Rediscounted.-
$242,905.02
0%
LAWFUL RESERVE
Day of this Report
Average for 10 days previous
4 86%
5. 32%
Other bonds, stock and securities (Must agree with Item 10)
Par
Value
Name and Kind of Bond, Stock or Security
Rate
Mature
Amount Carried on Books
Domestic Securities
Railroad Bonds
-_Other Public Service Corporation Bonds
All Other Bonds
Stock of Other Corporations
Collateral Trust and Other Corpn Notes
Municipal "Warrants
All Other, including claims, judgments, etc
$3,951, 217. 23
6,988, 522. 58
2,182, 548 19
5,386,223 83
Foreign Securities
Government Bonds
Other Foreign Securities including Bonds of Municipalities, etc
Total..
993,159 64
7,213,698 78
26, 715, 370 25
Default
Since
8978
STOCK EXCHANGE PRACTICES
Other real estate owned (Must agree with Item lJf)
Description
Amount
When
Lien Tax Value Date
Title Ac- Reason
Carried on Prior
if Any
quired
Books
Schedule Attached
Total..
Overdrafts
Standing 6 months or more..
Temporary
Officers and Directors
Employees
$14,213.03
15,927.10
1,866.79
Total..
32,006.92
Important for Statistical Purposes. No. of Savings Accounts, 249,440. No.
of Commercial Accounts 40,072.
Has any loan been made or renewed since last report, to any officer, or director,
which was not authorized by the Directors, None. Sec. 710-115 G. C.
t^"All schedules must be filled in—
IMPORTANT.—See that this Report Balances. Items Making Group Totals are
Correct. It is Properly Dated and Signed. All Questions are Answered. All
Schedules are Filled in. This will save unnecessary correspondence.
Loans including other investments exceeding the limit prescribed by Sections 710—Illy
710-121, 710-122, and 710-125 General Code of Ohio, including overdrafts
Total direct. Total indirect. Combined
Name of Borrower.
None
Net balances due from banks and bankers (item 24)
Per Cent
Interest Name and Location of Bank Amount
Received
Schedule Attached
Per Cent
Interest
Received
Name and Location of Bank
Amount
8979
STOCK EXCHANGE PRACTICES
Liability of officers and directors
Names of Officers and
Directors
Official
Title
No Shares
Owned
Cash Items
and Checks
Amount
Borrowed
from Bank
Amount as
Endorser to Overdrafts
to Bank
Bank
Schedule Attached
Total
List the name of every Officer and Director and write "NONE" after the
name of those who are not indebted to your bank.
All schedules must be filled in—
MEMBER BANK FEDERAL RESERVE SYSTEM
Report of the Union Trust Co., Cleveland, Ohio, September 29, 1931.
Mail promptly to Department of Banks and Banking, Columbus, Ohio.
Do not hold for publisher7s certificate.
EXHIBIT
U-9-2h
[ Use the blank lines if necessary, but do not erase or change any of the printed items—For use only of member banks—Federal Reserve System]
Report of condition of The Union Trust Company at Cleveland in the State of Ohio
at the close of business on the 29th day of September 1931
Verify all items and totals.
Insert word
NONE if no
amount is to
be entered at
right
Amount
RESOURCES
1
2
3
3a
3b
Loans on Real E s t a t e . . .
Loans on Collateral
Other Loans and Discounts.__ __
Acceptances of other bands discounted
_
Acceptances of this bank purchased or discounted
$72,537,215 07
71,374,39105
29,847,219.83
None
2, 359,877 47
4
5
6
7
8
Overdrafts, secured (14,293 42) unsecured (17,713 50)
United States Bonds and Treasury Certificates . . . __ 22,117,061 83
Liberty Loan Bonds..
_
_
None
Premium on U.S Bonds (Items 5-6)
_
None
War Savings Certificates and Stamps
None
9 State, County and Municipal Bonds. __
_
10 Other Bonds, Stocks and Securities
11 Premiums on Bonds and Securities (Items 9-10)
12 Banking House and Lot (Tax Value $
).
13 Furniture and Fixtures .
_ _ _ _
__
14 Real Estate other than Banking House . . .
_
15 Cash Items
_
_
16 Lawful reserve with Federal Reserve Bank
16a Stock of Federal Reserve Bank (50% of subscription)
__
16b Items with Federal Reserve Bank in process of collection (not available as reserve).__ __
_________
_
16c Real Estate Sold Under Land Contract.__ __
17 Exchange for clearing.-. __ __
$2,571,655 50
18 Gold Com and Gold Certificates
__
118,787 50
19 Silver Com (Dollars—Halves—Quarters—Dimes)
125,093.65
20 Nickels and Pennies _._
_
46,789 13
21 Paper Currency
2,412,369.00
$176,118, 703. 42
32, 006.92
None
22,117,016.83
1, 771,365. 35
26, 715, 370 25
13, 437, 976.17
41, 531. 09
5, 029,805. 51
242,905.02
10,685,511.89
1, 050,000.00
9,367, 563.83
1,429, 690.80
5, 274,694.78
8980
STOCK EXCHANGE PEACTICES
Report of condition of The Union Trust Company at Cleveland in the State of Ohio
at the dose of business on the 29th day of September 1931—Continued
Insert word
N O N E if no
amount is to
be entered at
right
Amount
RESOURCES—continued
$2, 034, 040. 27
1, 712 48
32, 226, 761. 75
305, 690. 63
720,677 29
6, 618,837 50
22 Accrued Interest Receivable
23 Foreign Money
24 Net amount due from Banks and Bankers
25 Items in Transit
26 Other Assets (attach schedule)
26a "Acceptances" executed by this bank and now outstanding
26b Liability of bankers to this bank, a/c acceptances guaranteed or endorsed (Contra Item 53)
26e Liability of others to this bank, a/c endorsement of bills of exchange or
drafts sold (Contra Item 54)
27 Cash short
28 Letters of Credit—Customer's Liability
(Verify all items)
4,136, 557 61
2, 574 89
423 99
1,424, 261.18
320, 785, 679. 45
Total.
LIABILITIES
22,850, 000 00
12,150,000 00
29 Capital Stock paid in
30 Surplus Fund
Undivided Profits
Less Expenses, Interest and Taxes paid
31
$15,316,460 39
10, 243,516 79
Net undivided profits
5,072,943. 60
5,072,943 60
32 Reserved for Taxes $503,087 04; Interest $1,021,149 59. __
33 Reserved for Depreciation
1, 524, 236 63
1, 524, 236. 63
34 U.S. Deposits other than Postal Savings
35 Public Funds (except Postal Savings)
5,783,105. 39
36 Individual Deposits subject to Check (except Public
Funds)
81,796,607 28
37 Demand Certificates of Deposit (except Public Funds).
1,122 36
38 Cashier's Checks outstanding
909,879.08
39 Certified Checks outstanding
405,907. 23
40 Net amount due to Banks and Bankers
33,033,463.62
41 Dividends Unpaid
687,522 75
Total Demand Deposits
122,617,607. 7 r
122,617,607.71
=
Time Certificates of Deposit
Public Funds
:
Savings Deposits
Other Time Deposits
44 U.S. Postal Savings
Total Time Deposits
45
46
47
48
49
50
50a
2,081,945.19-
Funds on Deposit by Trust Department
Notes and Bills Rediscounted
Bills Payable
Certificates of Deposit representing Money Borrowed.
Bonds Borrowed
Bills payable with Federal Reserve Bank
Rediscounts with Federal Reserve Bank.
•
'
=
13,224,410.46
6,363,457 86
101,967,328.41
7,962,956 18
895, 709. 67
130,414,362. 58
130,414,362.58
11, 721,912. 00*
None
None
None
None
None
None
51 Liabilities other than above stated (attach schedule)
"Acceptances" executed for customers
8,978,714.97
Less "Acceptances" of this bank purchased or discounted
2,359,877.47
61a
Net acceptances
6,618,837.50
52 Cash over
53 Acceptances of banks payable at a future date, guaranteed by this bank
by endorsement or otherwise. (Contra Item 26b)
54 Bills of exchange or drafts sold with endorsement of this bank. (Contra Item 26c)
55 Letters of Credit executed for customers
(Verify all items)
Total.
160,>39O. 5&
6,618,837.50
None
4,136,557 61
2,574 8$
1,425,311.18320,785,679 45
Prove all footings. (Enter Items 4-34-51 in Total column only).
I, A. W. Lewis, Vice Pres., of the Union Trust Company do solemnly swear that
the above statement is true, and that the schedules on the back hereof fully and
STOCK EXCHANGE PEACTICES
8981
correctly represent the matters therein to be covered, to the best of my knowledge
and beMef.
Correct—Attest:
(Signed)
(Signed)
(Signed)
E. R. GEASSELLI,
F. P. ROOT,
OTTO MILLER,
(Signed)
A. W. LEWIS*,
Vice President.
Directors.
4®"*Report of condition must be sworn to by President, Vice President, Cashier, Secretary or Treasurer
and forwarded to the Superintendent of Banks not later than 10 days from receipt of request. (See Sec.
710-31 G.C)
STATE OF OHIO,
County of Cuyahoga.
Sworn to and subscribed before me this 13th day of October, 1931.
[SEAL]
(Signed)
C. H. ROYON,
Notary Public.
NOTE.—Notary must not be a director or officer of this bank.
EXHIBIT U-9-2a
Net amount due from banks and bankers (Item No. 2Jf) the Union Trust Company
Cleveland, Ohio. At the close of business on September 29, 1931
Due from New York City banks:
Bank of America-Atlantic Office
Bank of Manhattan Trust Company
Bankers Trust Company
Central Hanover Bank and Trust Company
Chase National Bank
Chemical Bank and Trust Company
Commercial National Bank and Trust Company
First National Bank
Guaranty Trust Company
Irving Trust Company
Manufacturers Trust Company
J. P. Morgan Company
National City Bank
New York Trust Company
$24, 508. 50
68, 327. 03
3, 545, 187. 09
268, 583. 74
1, 500, 712. 15
99, 236. 38
111, 972.
1, 008, 918.
5, 982, 925.
327, 471.
50, 000.
5, 279, 660.
7, 361, 877.
127, 691.
29
16
16
21
00
87
06
41
$25, 757, 071. 05
Due from Chicago banks:
Central Republic Bank and Trust Company
Continental Illinois Bank and Trust Company
First National Bank
Northern Trust Company
Due from other correspondents
$312, 081. 76
491, 441. 80
462, 059. 04
46, 783. 29
$1, 312, 365. 89
$5, 157, 324. 81
$32, 226, 761. 75
8982
STOCK EXCHANGE PRACTICES
EXHIBIT U-9-2b
Liability of officers and directors the Union Trust Company—Cleveland at the close
of business on September 29, 1931
OFFICERS
Name
Official title
Liability
(individual
or firm) as
payers
Chairman of Board of Directors (D)
Vice Chairman of Board of
Directors (D).
Vice Chairman of Board of
Kraus, J. R
Directors (D).
President (D)
Baldwin, W. M
Executive Vice President (D). $16, 750 00
Smith, Allard
Executive Vice President
3,900 00
Farnsworth, C. E
Crawford, R S
_ Executive Vice President &
Secy
Vice President
6,430 00
Anderson, J C
Vice President
2,400 00
Armstrong, J. G
Carlson, C. W
Vice President
24, 900 00
Champion, T J
Vice President
Clark, J . H
3,100 00
Vice President
Creswell, E E
Vice President
22, 000 00
Dunn, James, Jr
Vice President
6,175 00
Fisher, L H
Vice President-Oeddes, J G
Vice President.
3, 000 00
Gleason, Chas B
Vice President
Halliday, M. S
18,150 66
Vice President
Harris, J. P
284,000 00
Vice President
Harrold, P. T__
13, 575. 00
Vice President
Hills, H. E
3,500 00
Vice President
Hull, Grover H
15, 050 00
Vice President
Lewis, A. W
Vice President
Messick, H. D
Vice President
Vice President
O'Neill, W. J
91, 305. 00
Paton, James L
Vice President
Piwonka, Charles. _ . Vice President
2, 000 00
Royon, J. C
Vice President.
8, 490 00
Sherwin, Geo. N
Vice President
Slach, P. J
2, 000 00
Vice President
Steele, Geo P
_. Vice President
Stuber, Wm. G
16, 800 00
Vice President
Tonks, Wm
Vice President and Credit
10, 000 00
Manager
1,175 00
Treasurer
Anderson, C. B
Nutt, J. R
Liability
(individual Checks
or firm) as and
Overmdorsers
cash
drafts
or guaran- items
tors
$4,000 00
Coulton, Geo. A
Auditor, Branches
Assistant Vice President
Assistant Vice President
Assistant Vice President
Assistant Vice President
Assistant Vice President
Assistant Vice President
Assistant Vice President
Assistant Vice President
Assistant Vice President
Assistant Vice President
Assistant Vice President
Assistant Vice President
Assistant Vice President
Assistant Vice President
Assistant Vice President
Assistant Vice President
Assistant Vice President
Assistant Vice President
Assistant Vice President
Assistant Vice President
Assistant Vice President _.
Assistant Vice President
Assistant Secretary
Assistant Secretary
Assistant Secretary
Assistant Secretary
Assistant Secretary
Assistant Secretary
Assistant Secretary
Assistant Secretary
1200
1000
310
380
110
10
200
10
140
25
10, 500 00
3, 000 00
915
25
1420
60
40
20, 300 00
10
120
200
90
400
400
1200
400
50
$3,400 00
5,980 00
15,000 00
350 00
16,850 00
6, 400 00
11,975.00
27, 000 00
$230 50
7, 750 00
9,500 00
6,100 00
3,360 00
1, 340 00
15, 555 00
7, 060 00
5, 060 00
4,520 00
1, 500 00
10,435.00
5,980 00
7,400 00
6,140 00
8,050 00
5000
2500
EXHIBIT U - 9 - 2 C
Tewksbury, C. L__
Bechberger, C. S___
Brown, H. L
Carr, L. O., Jr
Caswell, J. H
Freytag, W. H
Hance, J. P
Heil, C. F
Herbert, H H
Hodous, Chas J.__
Jindra, C. J__.
Koelliker, M B . . _ .
Kovachy, G. M
Lackamp, J. H
LaFever, D. Y
Moler, A. L
Pettit, R B
Pfeiffer, W. A
Purdy, Van R
Stromberg, W. O._
Wadsworth, J. L._.
Wagley, E N
Williams, R. L
Armstrong, J. C
Chimo, Arnold
Coen, E. M
Fairbanks, C. J
Forsythe, W. M.__
Genee, E C
Gibson, W A
•Gilger, L. C
Number
of shares
of stock
of this
bank
owned
1, 050 00
STOCK EXCHANGE PRACTICES
8983
Liability of officers and directors the Union Trust Company—Cleveland at the close
of business on September 29, 1931—Continued
OFFICERS—Continued
Liability
Name
Hiles, W. A....
Holecek, John V
Kakes, Joseph
Assistant Secretary.
Assistant Secretary.
Assistant Secretary.
Kmsey, W. H
Mason, A. E
Mazach, J E
Mickey, R. Z
Morgan, C. A
Piwonka, H
Rozman, Gustave
Tekesky, J. L
Bastel, T V
Bauknet, W. J
Benes, J H
Bethel, C. L
Black, H. W
Boethelt, A. R
Chappell, H. B
Elme, T. J.
Falkner, Geo. W
Glove, Paul
Gngor, D. D
Grow, E. F_
Hall, George Q
Hart, Fred A
Hartford, W. A
Irwin, W. R
James, S D
Knepper, Henry
Kowallek, Paul
Lackamp, J B__
Lange, Henry C
Lewis, Dave P
Lustig, Ladimer
McGinness, H. J
Assistant Secretary
Assistant Secretary
Assistant Secretary
Assistant Secretary
Assistant Secretary
Assistant Secretary
Assistant Secretary
Assistant Secretary
Assistant Treasurer
Assistant Treasurer
Assistant Treasurer.
Assistant Treasurer. _
Assistant Treasurer
Assistant Treasurer
Assistant Treasurer
Assistant Treasurer
Assistant Treasurer
Assistant Treasurer
Assistant Treasurer
Assistant Treasurer
Assistant Treasurer
Assistant Treasurer
Assistant Treasurer
Assistant Treasurer
Assistant Treasurer
Assistant Treasurer
Assistant Treasurer
Assistant Treasurer
Assistant Treasurer
Assistant Treasurer
Assistant Treasurer
Assistant Treasurer
Number
Liability (individual Checks
of shares
Over- of stock
(individual orfirm)as and
or firm) as mdorsers
cash drafts of this
payers
or guaran- items
bank
tors
owned
Official title
$1,475 00
29,500.00
EXHIBIT U-9-2d
_
_
_
_.
__
_
__
$6,000 00
9,950 00
2, 400.00
4, 320. 00
1, 380 00
10, 280. 00
24, 000 00
4, 775 00
2, 550 00
5,000 00
1, 640 00
4, 300. 00
2,820 00
4,900. 00
7,040. 00
4, 200. 00
._
2,320 00
8,190. 00
4, 710 00
12, 265. 00
5, 700.00
785.00
3, 660 00
10, 452 00
25
~85
10
5
5
5
60
25
10
10
10
10
5
10
10
45
10
10
23
10
5
5
5
8
10
10
EXHIBIT U-9-2e
McHaffie, J W
Monda, J. B
Morgan, C. C
Orhkowski, Carl
Park, W. R.
Peter, B L
Schacht, E. W
Scott, D. D
Simak, Ernest J
Spear, G. A
Zdara, H. E
Pratt, Harry F
Assistant Treasurer
Assistant Treasurer
Assistant Treasurer .
Assistant Treasurer
Assistant Treasurer
Assistant Treasurer
Assistant Treasurer
_ Assistant Treasurer
Assistant Treasurer
Assistant Treasurer
Assistant Treasurer
Manager Safe Deposit Department.
Culver, G. H
Assistant Estates Trust Officer.
Knowlton, D. S
Manager Publicity Department.
Dombey, Clara L
Manager Women's Service
Department.
Purchasing Agent
Hoyer, F. W
Assistant Credit Manager
Cordrey, L. A
Assistant Credit Manager
Cheadle, F. A
Assistant Credit ManagerStout, C. T
Ginther, P. C
Assistant Credit Manager
Brauer, George
Tax Consultant
Stark, C.G
Tax Consultant
Stofer, L. H
Real Estate Officer...
Hollander, J. R
Assistant Real Estate Officer.
Bosworth, R. W
Manager Statistical Department.
$2,200.00
5,000.00
6, 200.00
3,925.00
3, 340.00
5
18
5
5
5
10
5
30
50
5
133
5,705.00
5
11,860.00
10
2, 700.00
1,000.00
5, 760.00
200.00
34
10
5
1,100.00
20
15
8,905.00
7, 680.00
20
5
17
NOTE.—An Officer, who is also a Director, is indicated by the letter " D " following his name and title.
8984
STOCK EXCHANGE PRACTICES
EXHIBIT
U-9-2f
Liability of Officers and Directors
The Union Trust Company, Cleveland, at the close of business on September 29', 1931
DIRECTORS
Liability
(individual
orfirm)as
payers
Name
Barkwill, E. S
Bartol, George
Belden, W. P
Comey, Geo. P...
Corning,
Crawford,Henry
W. J.,WJr
Dalton, H. G
Pretter, F. B
Gerhauser, W. H
Ginn, F. H
Girdler, T. M
Gordon, George
C
Grandin,
G. W...
Grasselli,
E. R S
Grasselli, Thomas
Gund, George
Hadden, John A
TTfvnnq., "R"- TVf
Harshaw, W. A
Haserot, P.
Hayden,
W.HS
Herrick, Parmely W
Hodgson, George H_.
Johnson, David L
Joseph, Emil _ _.
Joyce, Adrian D
King, Ralph T
Kling, John A
Kulas, E. J
Langenbach, E. A
Lemhan, E. P
Little, Bascom
Mather, Samuel
Mather, Wm. G - .
$19,000.00
.
Overdrafts
$13,400.00
61,500. 00
3,480.74
1,000.00
43,526 39
10,000 00
_
_
Less: Eliminations on account of
duplication of joint liability of
Officers and Directors
148,820.00
345,000.00
731,130.70
405,800.00
19,983.02
10,500.00
7,400 00
73,750.00
870,000.00
36,780.63
2,700.00
711,500.00
110,000.00
40,000 00
44,000 00
386,803. 33
800, 740. 37
EXHIBIT
Checks
and cash
items
17,235 27
85,000.00
Miller, Otto
Mitchell, Ralph D
Mitchell, R. V
Moss, Herman . ..
Myers, P. A
Norton, Laurence H
Norton, Robert C
Osborne, Qarl N
Painter, Kenyon V
Richman, N. G
Robbins, Thomas P
Root, F. P
Smith, Samuel Lewis
Squire, Andrew- .
Trammel, H. G
Wade, J. H. Jr
Warner, Whitney
White, Fred R
White, Thomas H
White, Windsor T
Rogers, J. E__
Total
Liability
(individual
orfirm)as
indorsers or
guarantors
859,750.00
16,000.00
10,000.00
81,680.00
6,105.00
11,300.00
195,500.00
3,500.00
1,866.79
352,000.00
113,905. 20
157, 292. 50
3,630
322
40
170
2,600
1,600
1,200
110
21,671
160
800
600
1,140
1,350
1,050
6,517
20
1,290
40
2,272
10
136,780.83
22,054.85
14,060.67
500.00
22,500.00
329,875.00
35,000 00
$10,955,548.27
148
860
100
400
1,688
800
700
550
100
1,100
100
300
500
196
1,176
6,218
25
1,000
500
3,660
2,060
1,270
4,000
1,340
3,312
825
340
1,510
483
384
1,000
1,800
4,000
2,500
U-9-2g
100,000.00
3,080,000.00
68,378.75
345,000.00
Number
of shares
of stock
of this
owned
$1,025,357.68
2,000 00
36,780.83
10,953,548 27
988,576.85
1,866.79
1,866.79
STOCK EXCHANGE PRACTICES
EXHIBIT
8985
U-9-3
[Cleveland News 10/15/31]
KEPORT OF THE CONDITION OF THE UNION TRUST CO., AT CLEVELAND, IN THE STATE
OF OHIO, AT THE CLOSE OF BUSINESS SEPT. 29, 1931
(Member Bank—Federal Reserve System)
Resources
Loans and discounts
$176, 118, 703. 42
Overdrafts
32, 006. 92
U. S. bonds and securities owned
22, 117, 016. 83
Other bonds, stocks and securities
29, 536, 735. 60
Customers' liabilities on account of acceptances executed and
letters of credit
8, 043, 098. 68
Banking house
.__
13, 437, 976. 17
Furniture and
fixtures
41, 531. 09
Real estate other than banking house
5,029, 805. 51
Reserve with Federal Reserve bank
10, 685, 511. 89
Cash and due from banks
46, 870, 732. 84
Outside checks and other cash items
548, 595. 65
Acceptances of other banks and bills of exchange or drafts sold
with indorsement of this bank
4, 139, 132. 50
Other assets
721, 101. 28
Real estate sold under land contract
1, 429, 690. 80
Accrued interest receivable
2, 034, 040. 27
Total
320, 785, 679. 45
Liabilities
Capital stock paid in
22, 850, 000. 00
Surplus
12, 150, 000. 00
Undivided profits—Net
5, 072, 943. 60
Reserves for dividends, contingencies, etc
685, 500. 00
Reserves for interest, taxes and other expenses accrued and unpaid
1, 524, 236. 63
Due to banks, including certified and cashier's checks outstanding
34,349,249.93
Demand deposits
87, 582, 857. 78
Time deposits
142, 136, 274. 58
United States deposits
2, 081, 045. 19
"Acceptances" executed for customers
$8, 978, 714. 97
"Acceptances" of this bank purchased or discounted
2, 359, 877. 57
6, 618, 837. 50
Other liabilities
4, 308, 523. 06
Letters of credit executed for customers
1, 425, 311. 18
Total
$320, 785, 679. 45
I, A. W. Lewis, vice president of the above named The Union Trust Company,
do solemnly swear that the above statement is true to the best of my knowledge
and belief.
A. W. LEWIS, Vice President.
Correct—Attest:
E. R. GRASSELLI,
E. P. ROOT,
OTTO MILLER,
Directors.
State of Ohio, County of Cuyahoga.
Subscribed and sworn to before me this 13th day of October, 1931.
[SEAL]
C. H. ROYON, Notary Public.
EXHIBIT
TJ-9-4
00
CO
00
Consolidated financial statement The Union Trust Company-Cleveland^ Ohio
Liabilities
Monday
Sept. 28, 1931
Tuesday
Sept. 29, 1931
Wednesday
Sept. 30,1931
o
Thursday
Oct. 1,1931
Friday
Oct. 2,1931
Saturday
Oct. 3, 1931
DEMAND DEPOSITS
Due Corporations and Individuals
Due Cleveland Banks and Bankers
Due Out-of-Town Banks and Bankers
Public Funds
Federal Reserve Bank—Fiscal Agent
United States Deposits
Certificates of Deposit
Certified Checks
OflScial Checks
Unpaid Dividends
Sundry Bank Credits—Undistributed
Unremitted Funds
--.
Late Entries, Missorts, etc
Dormant Accounts
Unlocated Deposits
Due to Foreign Banks—Dollar Accounts
Other Foreign Banking Department Deposits
Stock Transfer Deposits
Total demand deposits—
75,961,759.78
1,859,051.10
28,607,220 98
2,577,538.00
2,023,000 00
61,586 09
1,122.36
389,379. 98
1,042,751. 56
2,067.75
608.17
106,447. 59
5,554. 38
249,916.12
2,793. 27
817,771.46
3,813.14
208,998.92
80,863,356. 77
2, 275,654 79
29,937,073 95
5, 783,105 39
2,023,000 00
58,945.19
1,122.36
405,907.23
909,879 08
2,022.75
72, 581 99
54, 036. 52
5, 269. 28
249, 254 80
1,381. 35
748,152.89
4, 243.14
844,736. 04
77,244, 356 01
2,180,006. 73
28,894,791.13
6,061,713 74
2,023,000.00
59, 202 03
1,122.36
182,191 86
3,039, 581.10
687, 522.75
16,045 31
63,775 19
3,416 11
249,156. 43
1,381.35
763, 597. 36
14,978.14
2, 503,030.96
79,431,487.06
2,565,379 21
33,187,372 23
2,633,853 21
1,932,000 00
85, 779 37
1,122 36
198, 865 31
1,977,788.11
441, 245. 25
32,854.43
83,302 47
15, 596. 45
248, 700.18
1,381. 35
764,365.32
13,006.19
2,363,682 42
77, 640,900 20
2,119, 517 27
32, 530,998 29
2,548,521 11
1,841,000.00
101,174 83
1,122 36
169,166. 00
1, 704,489.17
238, 004. 25
125 00
57, 863.14
8, 240 44
248,051 23
1,536.35
768,890. 60
4, 244. 39
1,756,274.88
76,736,953 18
1,962,510. 65
31,277,495.92
2, 377,730 06
1, 841,000 00
99,292. 64
1,122.36
173, 785.01
1,465,452.49
152,049.00
248.50
281,944.13
22,311. 22
247, 561.30
1,386 35
792,046. 35
4,614.39
1, 374,150. 22
113,921,380.65
124,239, 723 52
123,988,868. 56
125,977, 780.92
121, 740,119 51
118, 811,653 77
99,737,149 48
1,162, 310. 56
1,030,516 50
5, 603,136. 57
4,453, 734. 59
13,174,410 46
6,357,457 86
936,902. 50
100,000 00
4, 584, 262. 68
98,346,650 24
1,156, 668. 72
1,035, 385. 75
6,476,051.90
4,198, 884 26
13,171,664 15
6,176, 635 82
936,902 50
100,000. 00
3,178,109 23
97,857,110 33
1,137, 763 33
1, 039, 636 25
6, 574, 444.88
4, 216, 737. 28
13,589,664 15
6,337,923 81
1,060,000.00
100,000 00
3,182,955.84
97,651,575 86
1,131,621 91
1,043,243. 50
6,469,120 99
4,103.599.49
13, 588,664.15
6,337,923.81
1,060,000. 00
100,000. 00
3, 362,955. 66
137,139,881. 20
134, 776,952. 57
135, 096, 235 87
134,848, 705. 37
W
8
j
s
o
TIME DEPOSITS
Savings Deposits
Savings Deposits—Foreign Banking Department.
Christmas Money Club---Estates Trust Deposits
-—
Corporate Trust Deposits _..
Certificates of DepositPublic Funds
_.Postal Savings Deposits
Acceptances Anticipated.._
Other Time Deposits
Total time deposits
-
O
O
99,957,348.86
1,164,003. 50
1,024,546 00
5, 768, 765.26
3,591, 750 38
13,228,410 46
7,213,457.86
860,000.00
100,000.00
7,862,856.18
140,771,138. 50
141,954,874 86
i
SILLS PAYABLE AND REDISCOUNTS
Bills Payable with Federal Reserve Bank
Rediscounts with Federal Reserve Bank
Total bills payable and rediscounts
4,000,000.00
4,000,000.00
ACCEPTANCES AND LETTERS OF CREDIT
Our Acceptances Sold and Outstanding
Acceptances of Other Banks Sold and Outstanding
Our Acceptances Executed Under L/C Outstanding.
Acceptances of Other Banks Guaranteed by Us
Acceptances to Create Dollar Exchange
Letters of Credit Outstanding—Commercial
Letters of Credit Outstanding—Travelers'
Travelers' Checks Outstanding
Letters of Credit Issued Under Guarantee of Other Banks
Foreign Bills Sold with Our Endorsement
6,890, 790. 50
4,136, 557. 61
25,370. 01
6, 618,837. 50
4,136,557. 61
25,370.01
' 6,568,837.50
4,136, 557 61
25,370 01
6, 560,815 68
4,136. 557. 61
25,370 01
6,470,815.68
4,136,557.61
25,370.01
6,470,815 68
4,136,557.61
25,370.01
..
1,131,663.07
471,312 75
4, 210 00
934,027.42
461,243. 75
4, 670 00
907,858.14
446,848. 75
4,670.00
907,858.14
446,848 75
4, 670.00
809,325.17
438,441.42
4,670.00
809,325.17
449,091.42
4,570. 00
.-.
2, 574 89
2, 574.89
2,574 89
2,574.89
2,574 89
2,574. 89
12, 662,478 83
12,183,281.18
12,092,716.90
12,084,695.08
11,887,754.78
11,898,304 78
129,171.68
20, 636.05
1,096, 558. 60
126, 304.36
14,750.91
1,059,008.02
128,171.49
12,660. 84
1,070,446.88
137,154. 61
181,842. 69
1,073,471.68
176,675.54
176,008.83
1,066,196.91
173,832 14
170,174.97
1,079,636.44
1, 246, 366 33
1, 200,063. 29
1, 211, 279. 21
1,392,468.98
1.418,881 28
1,423,643. 55
499, 691. 51
31,521. 57
3 00
685, 500.00
503,087. 04
9,526 14
3.00
685, 500 00
506,683.91
3.00
10, 500.00
510,079.44
3.00
513,474.97
3,139. 26
3.00
516,870. 50
13,639 26
13.00
a
1,153,672. 94
1,179,063.90
506, 686. 91
520,582. 44
516,617. 23
530,522. 76
i
22,850,000 00
12,150,000. 00
3,863,964 07
1,188, 763. 72
22,850, 000 00
12.150,000 00
3,863,964 07
1,208, 979 53
22,850,000. 00
12,150,000.00
5,094,444. 54
22,850,000. 00
12.150,000.00
5,094,444 54
6, 717.30
22,850,000.00
12,150,000.00
5,094,444.54
22, 643.66
22,850,000.00
12,150,000.00
5,094,444. 54
40,028.08
Total acceptances and letters of credit
OTHER LIABILITIES
Interest a n d Discount Unearned
Other Income Unearned
__._
Accrued Interest Payable
_
Total other liabilities
3
O
O
W
H
X
O
W
Q
RESERVES
Reserve for Taxes
_.
__
Reserve for Expenses
Reserve for Adjustment of State Bank Assets
Reserve for Dividend
Total reserves
Capital Stock.
Surplus
Undivided Profits
. . .
CAPITAL
_ __
Current Period Profits.
Total capital, surplus and profits
Total liabilities
_
40,052, 727. 79
40,072,943. 60
40,094,444.54
40,101,161.84
40,117,088.20
40,134,472. 62
309,807, 765 04
320,829,950.35
315,033,877. 32
318,853,641.83
310,776,696.87
307,647,302.85
H
00
00
4
EXHIBIT
00
U-9-4a
CO
00
00
Consolidated financial statement The Union Trust Company, Cleveland, Ohio
Liabilities
Monday
Sept. 28, 1931
Tuesday
Sept 29, 1931
Wednesday
Sept. 30, 1931
Thursday
Oct. 1, 1931
Friday
Oct. 2, 1931
Saturday
Oct. 3, 1931
LOANS AND DISCOUNTS
Call Loans-Demand Collateral Loans
_
Time Collateral Loans
Real Estate Loans.
--Demand Loans Unsecured
Notes and Bills
_
Bills of Exchange
Foreign Loans (General Banking Dept.)
_
Foreign Bills, Loans and Advances (Foreign Bkg. Dept.)
Our Acceptances Held By Us—Genl. Bkg. Dept
Acceptances of Other Banks Held By Us—Genl. Bkg. Dept-.
Customers Liability on Unpaid Acceptances
Total loans and discounts_
41,021, 727. 58
30,218,967. 54
72,541,839.92
5,119,832.94
22,809,416.18
420,019. 67
40,984, 284 37
30,208,737.37
72,537,215.07
5,128,522.94
22, 705, 715. 24
955.482.81
41,028, 111. 37
30, 326,814.45
72, 564,792 60
5,130,037.94
22,326,658.98
861,959. 74
41,200,115. 34
29,933,711.23
72,472,746.82
4,986,167.94
22, 306,593.12
705,160.24
41,157,884 15
29,883,945 57
72,432,110 12
4,956,117.94
22, 306, 456. 21
633,188.13
41,300,639. 75
29,860,402. 74
72,433,545.35
4,981,117.94
22,319,560. 73
696,623.39
1,557,859.74
1,057,498.84
109,468.05
1,057,124.05
262,484.05
1,058,153 58
268,359 47
1,056,506.00
293,359.47
1,045,220. 02
293,359.47
1, 211,909.95
1,211,909.95
1,186,909.95
1,186,909.95
175,167,979.42
1,478,315.85
175,326,469 94
1, 639, 515. 25
174,769,893.13
174,142,917.69
173,906,477.54
174,117,379.34
610,864.17
610,864.17
i3,864.47
.4.47
893,864.47
893,864.47
6,809,790. 50
4,136,557. 61
6,618,837. 50
4,136,557 61
6, 568,837. 50
4,136,557.61
6, 560,815.68
4,136,557. 61
6,470,815. 68
4,136, 557. 61
6,470,815.68
4,136,557. 61
1,157,033.08
470, 262.75
4,210.00
959,397.43
460,193. 75
4,670.00
933,228.15
445, 798. 75
4,670.00
933,228.15
445, 798. 75
4,670.00
834,695.18
437,391.42
4,670. 00
834,695 18
448,041.42
4,570.00
ACCEPTANCES AND LETTERS OF CREDIT
Our Acceptances Held by Us
__
Acceptances of Other Banks Held by Us._
..
Our Acceptances Sold and Outstanding
Acceptances of Other Banks Sold and Outstanding
Acceptances to Create Dollar Exchange
Customers' Liability Under Letters of Credit:
Commercial
Travelers'
___
.-.
Customers' Liability Under Travelers' Checks
Letters of Credit Issued Under Guarantee of Other Bank
Foreign Bills Sold with Our Endorsement
Total acceptances and letters of credit..
Total investments..
o
o
W
X
a
W
O
2,574.89
2,574.89
2, 574.89
2, 574.89
2,574. S
13,272,293.00
12,793,095.35
12,985,531.37
12,977,509.55
12,780,569.25
12,791,119.25
12,376,866.84
1,790,097.18
12, S13,706.16
6,436,223.83
8, 216,858.42
22,406,866 84
1,790,097 18
12,813,706.16
6,436,223.83
8, 206,858. 42
22,406,866.84
1,790,097.18
12,813,706.16
6,436,223.83
8,206,858. 42
22,406,866.84
1,515, 590. 59
12,784,693.23
6, 436, 223 83
8,206,858.42
22,406,866 84
1, 515, 590 59
12,784,693 23
6,436, 223. 83
8, 206,858 42
22,406,866.84
1, 515,590.59
12,784,693.23
6,436,223.83
8, 206,858.42
41,623,752.43
51,653,752.43
51,653, 752.43
51,350,232.91
51,350,232.91
51,350,232.91
2, 574 89
INVESTMENTS
United States Government SecuritiesState, County and Municipal Bonds..
Corporation Bonds and Notes
Corporation Stocks
Foreign Securities
_
S
CASH AND CASH ITEMS
2, 580,012 03
6,409 80
214,410. 24
220 08
2,698,248 12
6, 503 64
242,905. 02
423 99
2,622,093
5,971
255,074
205
73
85
67
69
2, 660,264.14
10,226.08
210,160. 45
3,206.99
2,741,358 13
7. 729.05
232, 093 58
12,997.07
2,517,704.07
6,054. 05
260,679 70
1,170. 51
2,801,052 15
2,948,080 77
2,883, 345 94
2,877,443 68
2,968,183.69
2, 783,267.31
10,288, 390 09
10, 685, 511 89
12,347,999 79
13,128,118. 07
13,805,316 26
12,356,913 77
23,036, 269 31
1, 442, 502 68
3,036, 692. 24
25, 757,071. 05
1,312,365 89
2,878,142 62
18, 527,134 68
1,060,642.30
3, 013, 549.37
16,499, 756.97
1,061, 589.17
2,846,455 35
12,064,919.77
944, 386 61
2, 775,365.00
12,952,895.33
1,122.217. 36
2, 807, 717 99
__
27, 515,464. 23
29,947, 579. 56
22,601,326 35
20,407,801 49
15,784,671.38
16,882,830.68
._
732,260 46
728,401 59
739,360.43
748,852 43
741,083 85
728,545.66
Currency
and Com—Foreign
Com_
Currency and
Banking Dept
Cash Items
__ _ _
__
Difference Accounts
Total cash and cash items
LEGAL RESERVE
Federal Reserve BankDUE FROM DOMESTIC CORRESPONDENTS
New York City Banks
Chicago Banks
Other Banks
Total due from domestic correspondents
H
O
O
W
DUE FROM FOREIGN CORRESPONDENTS
Foreign Banks (Foreign Banking Dept)
_-
M
O
DEFERRED CREDITS, EXCHANGES, ETC.
Federal Reserve Bank—Deferred Credits
Checks on Cleveland Banks
Checks on Other Offices—The Union Trust Company
Checks on Out-of-Town Banks.. _
Coupons
Due from Sundry Banks and Bankers
Total deferred credits, exchanges, etc
.._
10,172,414 87
3, 847, 253 98
264, 707 05
279,571 55
29,537.46
1,247, 734. 00
9,367,536 83
2,571,655 50
257,647.13
220,725 77
84,964 86
1,550, 780. 60
9,478,162 06
2,184, 578. 47
394,942.99
504,675.88
310, 399 82
1, 530, 322.12
9,985,988 19
3, 592, 230 55
572, 728 40
351,235 35
4, 617,510. 02
1,614,565.94
9,095,472 47
3,679,425 62
443, 626 20
331, 206. 63
1,827,117.14
1,679,325. 04
8, 321, 399.19
2,197, 798 92
374,172 39
418,487.13
1,425, 527 21
1, 525,197. 88
15,841,218. 91
14,053, 337. 69
14,403,081.34
20, 734,264. 45
17,056,173.10
14, 262, 582. 72
18, 510, 066.80
18,509,312.77
18, 508,171. 57
18, 507,416. 97
18, 506,662.37
18,490,946. 45
1,943,001 06
147,877. 23
72,714.92
11,036 12
449,106 38
1,431, 551.84
2,034,040. 27
184,092.48
72,221.03
15, 257.40
449,106. 38
1,429, 690 80
2, 013,017. 25
157,445 31
71,727.18
15,643 56
449,106 38
1,434,475 29
1, 675,824.03
327,476 67
81,109. 32
11,092 90
449,106. 38
1,434,475 29
1, 586,265.21
304, 796.17
80,889.40
20,785. 26
449,106.38
1, 435,484.10
1, 590, 732. 78
292,492.53
80,395.51
35,343.46
449,106. 38
1,435,414.10
PROPERTY ACCOUNTS
Real Estate, Bulidings, Leaseholds, etc
w
o
>
O
H
M
O
OTHER RESOURCES
Accrued Interest, etc., Receivable
Accounts Receivable
Prepaid and Deferred Accounts
Late Entries, Missorts, etc
_
.. .
Cleveland Akron Bag Co., Properties in Liquidation
Land Contracts
Total other resources
Total resources
--
_
4,055, 287 55
4,184,408 36
4,141, 414 97
3,979,081 59
3,877, 326. 52
3,883,484. 76
309,807, 765 04
320, 829,950 35
315, 033, 877 32
318,853,641 83
310, 776, 696 87
307,647,310.85
oo
CO
00
P
8990
STOCK EXCHANGE PRACTICES
EXHIBIT
U-9-5
THE UNION TRUST COMPANY,
Date: Sep. 29, 1931.
Credit Van Sweringen Corporation for Demand deposit.
Offset entry must be described—Chg Sec Inv.
Authorized by
, official approval.
(This Ticket should be prepared and signed with Ink.)
EXHIBIT
Cleveland, Ohio.
$10,112,540.98
U-9-6
THE UNION TRUST COMPANY,
Cleveland, Ohio.
Date: Sep. 29, 1931.
$10,030,000.00
Charge United States Government Securities for
General Ledger, Sep. 29, 1931, The Union Trust Co.
Offset entry must be described—
Authorized by
, official approval.
(This Ticket should be prepared and signed with Ink.)
EXHIBIT
U-9-7
THE UNION TRUST COMPANY,
Cleveland, Ohio.
Date: Sep. 29, 1931.
$82,540.98
Charge interest, United States Government Securities, for
General Ledger, Sep. 29, 1931, The Union Trust Co.
Offset entry must be described—
Authorized by
official approval.
(This Ticket should be prepared and signed with Ink.)
EXHIBIT
U-9-8
J. P. MORGAN &
Co.,
September 29, 1931.
DUPLICATE, FEB. 3 1K33 A.M. 1933
VAN SWERINGEN CORPORATION,
Terminal Building, Cleveland, Ohio.
This will confirm our purchase from you today of the following
U.S. Government Treasury Certificates and Treasury Notes hereinafter described
at the following prices:
$4,000,000 U.S. Government 1%% Certificates due December 15, 1931 at 100^2
$4, 003, 750. 00
Interest
21, 721. 32
$6,000,000 U.S. Treasury 3H% Notes due 1932 called
1
for payment December 15, 1931 at lOO ^- 6, 026, 250. 00
Interest
60, 819. 66
and we have today credited your checking account with the proceeds of such sale
in the amount of $10,112,540.98.
This deposit is subject to demand withdrawal and as security for such deposit
we have simultaneously delivered to J. P. Morgan & Co., for your account the
above mentioned $10,000,000 par value of U.S. Government Treasury Certificates and Treasury Notes, and agree that in case of default on our part to repay
said deposit upon your demand you may cause such U.S. Government obligations to be sold at public or private sale and apply the proceeds in the amount
then due you.
It is understood that, if there is a partial withdrawal from said checking account, a pro rata portion of the above securities will be released.
Very truly yours,
GENTLEMEN:
M.
UNION TRUST COMPANY.
STOCK EXCHANGE PRACTICES
EXHIBIT
8991
U-9-9
FEB. 3, 11133 A.M. 1933
SEPTEMBER 29, 1931.
Messrs. J. P. MORGAN & Co.,
23 Wall Street, New York.
We have to-day sold to the Union Trust Company of Cleveland
$10,000,000 principal amount of United States Government Treasury Certificates and Treasury Notes now held by you for our account. Please hold these
subject to the instructions of the Union Trust Company of Cleveland.
Very truly yours,
DEAR SIRS:
By
M.
EXHIBIT
VAN SWERINGEN
CORPORATION,
U-9-10
FEB. 3, 11:33 A.M. 1933
SEPTEMBER 29, 1931.
Messrs. J. P. MORGAN & Co.,
23 Wall Street, New York.
We have to-day purchased from the Van Sweringen Corporation
$10,000,000. principal amount of United States Government Treasury Certificates and Treasury Notes on terms set forth in the copy of letter addressed to the
Van Sweringen Corporation of even date annexed hereto. Under the terms of
this letter we have agreed to pledge the said United States Government Treasury
Certificates and Treasury Notes as security for the Demand Deposit which the
Van Sweringen Corporation are making with us. Kindly hold these Treasury
Certificates and Treasury Notes for the account of the Van Sweringen Corporation as security for this Demand Deposit with us, all in accordance with the terms
of the annexed letter.
DEAR SIRS:
THE UNION TRUST COMPANY,
Cleveland, Ohio.
Chairman.
W,
EXHIBIT
U-9-11
FEB. 3, 11:32 A.M. 1933
VAN SWERINGEN
CORPORATION,
Terminal Tower, Cleveland.
V. S. Cop. copy dated 10-7-31.
(11-20-33. J.)
J. P. MORGAN & Co.,
23 Wall St., New York, N.Y.
We have this day purchased from The Union Trust Company,
Cleveland, Ohio, the $10,000,000 principal amount of U.S. Government Treasury
Certificates and Treasury Notes you are holding as security for the demand deposit of this Corporation with The Union Trust Company in accordance with
instructions to your firm contained in letter of The Union Trust Company addressed to your firm dated September 29, 1931, signed by J. R. Nutt, Chairman.
Payment of the purchase price therefor is to be (has been) made by withdrawal of
said deposit.
For your information we enclose copy of our letter to The Union Trust Company confirming this purchase.
Upon receipt of appropriate instructions from The Union Trust Company,
please hold these U.S. Government obligations for our account.
Yours very truly,
GENTLEMEN:
By
1 Enclosure.
W.
175541—34—PT 20
17
VAN SWERINGEN
CORPORATION,
8992
STOCK EXCHANGE PRACTICES
EXHIBIT U-9-12
FEB. 3, 11:32 A.M. 1933
OCTOBER 8,
1931.
J. P. MORGAN & COMPANY,
23 Wall Street, New York, N. Y.
GENTLEMEN: We have today sold to Van Sweringen Corporation, the $10,000,000 principal amount of U.S. Government Treasury Certificates and Treasury
Notes now held by you as security for demand deposit made by the Van Sweringen Corporation with this Company in accordance with advice to you contained
in our letter dated September 29, 1931, signed by J. R. Nutt, Chairman of this
Company.
We have received from the Van Sweringen Corporation payment in full for the
above mentioned United States Government obligations, and wish you would,
therefore, kindly hold them for the account of the Van Sweringen Corporation.
Yours very truly,
R. M. BALDWIN,
President.
W.
EXHIBIT U-9-13a
Consolidated Financial Statement, the Union Trust Company, Cleveland, Ohio
Resources
Monday, Oct 5, Tuesday, Oct 6,
1931
1931
Wednesday,
Oct 7, 1931
Thursday, Oct.
8, 1931
F r i d a y Oct 9,
1931
Saturday, Oct.
10, 1931
LOANS AND DISCOUNTS
Call Loans
Demand Collateral Loans
Time Collateral Loans
Real Estate Loans
Demand Loans Unsecured
Notes and Bills
Bills of Exchange
Foreign Loans (General Banking D e p t )
Foreign Bills, Loans and Advances (Foreign Bkg D e p t ) _ .
Our Acceptances Held By Us Genl Pkg. Dept
Acceptances of Other Banks Held By Us Genl. Bkg. Dept-.
Customers Liability on Unpaid Acceptances
Total Loans and Discounts.
$41,553, 303. 72
29,748, 083 96
72,391, 759 46
4,986, 592. 94
22,310,045 51
691, 557. 71
$41, 416, 888 43
29, 522, 044 64
72, 361,014 44
5, 040, 533. 72
22, 308, 016. 35
663,143 83
$41, 343,118. 22
29, 496,182. 71
72, 364, 654. 88
5, 058, 993 72
25, 830,152 80
634, 680 31
$41,325, 798 22
29, 414,494 88
72, 276, 680. 54
4, 932, 693. 72
25, 844,127. 99
691,101.11
$41,339, 252 97
29,357,865 17
72, 278,748 69
5, 002, 693 72
25,791,876 68
329, 683. 31
$41, 337,120 89
29,332,370 17
72, 280,940 95
5, 001, 693 72
25,677,972 15
296,187.13
1,045, 599. 88
307, 202.83
1, 045, 880 44
70,323.00
1,055,983 92
1, 056, 311. 05
1, 056, 320 05
1, 055, 274 62
1,186, 909 95
1,116, 586 94
1,189, 030 95
1,189, 030 95
1,072, 030. 95
1, 072, 030 95
174,221, 055 96
173,544,431 80
176, 972, 797. 51
176, 730, 238 46
176, 228, 471. 54
176, 053, 590 58
27,435 00
27,435 00
144, 435.00
144, 435. 00
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ACCEPTANCES AND LETTEKS OF CREDIT
Our Acceptances Held by Us
Acceptances of Other Banks Held by Us
Our Acceptances Sold and Outstanding
Acceptances of Other Banks Sold and Outstanding
Acceptances to Create Dollar Exchange
Customers' Liability Under Letters of Credit:
Commercial
Travelers'
Customers' Liability Under Travelers' Checks
Letters of Cerdit Issued Under Guarantee of Other Banks _
Foreign Bills Sold with Our Endorsement
Collateral loans sold under repurchase agreement
Total Acceptances and Letters of Credit-
893,864 47
6,448,791 86
4,136, 557 61
7,549,859 16
4,136, 557 61
7,520,303 16
4,136, 557 61
7,530,303 16
4,136, 557. 61
7,328,303 16
4,136, 557 61
7,328,303 16
4,136, 557 61
834,695 18
447,141. 42
4, 560 00
829,953.18
444,466 42
4, 560 00
828,972 02
439,416 42
4,460 00
828,592 13
439,416 42
4, 460 00
832, 042 13
435,133 09
4, 450 00
709,182 63
435,133 09
4, 450 00
2, 574 !
2, 574 i
2, 574 i
2, 574 89
8, 648, 656 58
2, 574.89
8, 566, 682 82
O
o
2, 574 8
8, 654,973. £
12, 768,185. 43
12, 967,971. 26
12,959,719 10
21,624,313 19
21, 532, 152 <
21, 327, 319 20
22,406,866 84
1,532,548 58
12,784,693 23
6,436, 223 83
8, 206, 858 42
22,406,866 84
1,531,498 70
13, 084, 969. 77
6, 436, 223 83
8, 206, 858. 42
22,406, 866.84
1, 531, 498 70
13, 084, 969 77
6, 436, 223. 83
8, 206, 858. 42
12, 376, 866 84
1, 531, 498. 70
13, 084,969. 77
6, 436, 223 83
8, 206, 858 42
12, 376, 866. 84
1, 531, 498 70
13, 084, 969 77
6, 436, 223 83
8, 206, 858 42
12, 376, 866
1,531,498
12,850,969
6, 436, 223
8, 206, 858
51,367,190.90
51, 666, 417 56
51, 666, 417 56
41,636,417 56
41, 636, 417 56
41,402,417 56
H
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INVESTMENTS
United States Government Securities.
State, County and Municipal Bonds. _
C orporation Bonds and Notes.
Corporation Stocks
Foreign Securities
Total Investments.
84
70
77
83
42
CO
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Consolidated Financial Statement, the Union Trust Company, Cleveland, Ohio—Continued
Monday, Oct. 5,
Resources
1931
Tuesday, Oct 6,
1931
Wednesday,
Oct 7, 1931
CASH AND CASH ITEMS
Currency and Coin
Currency and Com—Foreign Banking Dept__
Cash ItemsAccount
_
_ _.
_
Difference
Total Cash and Cash Items
-
_..
.
$2,672,873, 52
6,064. 61
293, 671. 42
1,934 01
2,970, 675 54
$2,386, 416.82
8, 020. 29
152, 790 41
8, 471. 42
2, 538, 756.10
92, 399, 794 66
6, 806. 95
209,188. 51
4, 221. 38
2, 620,011. 50
T h u r s d a y , Oct.
8, 1931
$2, 559, 020 59
7, 553 80
222,091.14
273.17
2, 788,938. 70
F r i d a y Oct 9,
1931
Saturday, Oct.
10, 1931
$2, 286,450 09
6, 673. 59
186,976 15
265 80
2, 480, 365 63
$2, 022, 836. 53
6, 365.91
191, 699 82
262 76
2, 221,165 02
LEGAL RESERVE
Federal Reserve Bank
_
13,180,897. 22
13,883,871. 21
12,934,058. 54
13, 333, 371. 37
11,916,371 90
11,940,867.70
3, 659, 350. 26
1,146,445. 27
2, 730, 679 66
4, 267, 433 74
1,170, 606. 60
2, 700, 763 95
7, 536,475.19
8,138,804 29
DUE FROM DOMESTIC CORRESPONDENTS
New York City Banks
Chicago Banks
Other Banks
Total Due from Domestic Correspondents. _
83
55
69
07
9, 626,138 57
1,185,118 79
3, 054,168 18
4,984, 789.17
1, 034, 223. 92
3, 260,124 92
13,865,425 54
9, 279,138 01
3, 534, 722. 84
1,192, 020 70
2,705,951 66
7,432,695 20
714, 726 35
724, 339. 79
711,317 63
699, 542 02
681, 687. 39
620,798. 05
9, 566,184 02
2, 636,147. 26
366,990. 31
355, 305 96
1,089,926 82
1,374, 230 22
15, 388, 784 59
9, 057, 351. 66
2, 224, 263. 04
286, 516.15
245,109. 47
810, 940. 47
1, 430, 029.14
14, 054, 209 93
8, 723, 996. 34
1, 898, 364.12
257,129.81
320, 253.65
598,900.92
1, 315, 539. 68
13,114,184. 52
9,093,434 12
1,976,638 15
288, 042. 46
198,618.11
461,649 88
1, 253, 630. 73
13, 272, 013. 45
9, 266,933.98
1,980, 667.18
331, 692. 20
180, 230. 50
419,820.83
1, 071,473. 55
13, 250,818. 24
8, 339,464. 92
2,432,539 61
298,137. 58
301, 249. 75
231,471. 23
1,089, 244.94
12, 692,108.03
18, 504, 856. 25
18, 504,101. 65
18, 503, 347. 05
18, 510, 579. 48
18, 505, 067.88
18, 500,963. 28
1, 628, 758. 76
245, 209 07
79,407. 73
16, 790.48
449,106. 38
1, 434, 784.10
3,854, 056.52
1, 638, 755. 63
239,882 90
78,845. 35
15,438 15
449,106. 38
1,434, 784.10
1, 654, 849. 21
238,186. 40
78, 419. 95
9, 942. 03
449,106 38
1, 434, 784.10
1, 581,168. 49
227, 544. 20
77,720. 58
7,817. 41
449,106. 38
1, 434, 578. 32
1, 600, 628. 64
218, 566. 62
77, 226. 69
19,940. 24
449,106.38
1,434,166. 57
3, 856, 812. 51
3,865, 288. 07
3, 777,935 38
3, 799, 635.14
1, 618,242. 64
214,930. 64
77,397. 20
28,988 37
449,106 38
1,434,166. 57
3,822,831.80
305,275,162.83
305, 606, 337. 35
302,626, 279.49
299,806,044.81
297, 567,462.93
296, 720,865.51
8,082, 559
1,248,243
2, 973,930
12,304, 734
DUE FROM FOREIGN CORRESPONDENTS
Foreign Banks (Foreign Banking Dept.)---
-
DEFERRED CREDITS, EXCHANGES, ETC.
Federal Reserve Bank—Deferred Credits
Checks on
Banks Union Trust Company
Checks
on Cleveland
Other Offices—The
Checks on Out-of-Town Banks.
Coupons
Due from Sundry Banks and Bankers
Total Deferred Credits, Exchanges, Etc
_
_.
__
_
Real Estate, Buildings, Leaseholds, etc__
OTHER RESOURCES
Late
Entries,
Missorts,
etc Properties in Liquidation
Cleveland
Akron
Bag Co.,
Land Contracts..
Total Other Resources
Total Resources—
_
X
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PROPERTY ACCOUNTS
Accrued Interest, etc., Receivable.
Accounts
Receivable
Prepaid and
Deferred Accounts
H
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EXHIBIT
U-13b
Consolidated financial statement, the Union Trust Company, Cleveland, Ohio
Liabilities
Monday, Oct. 5, Tuesday, Oct. 6,
1931
1931
Wednesday,
Oct. 7, 1931
Thursday, Oct.
8,1931
Friday Oct. 9,
1931
Saturday, Oct.
10,1931
DEMAND DEPOSITS
Due Corporations and Individuals
Due Cleveland Banks and Bankers
Due Out-of-To\Mi Banks and Bankers
Public Funds
Federal Reserve Bank—Fiscal Agent
United States Deposits
Certificates of Deposit
Certified Checks
Official Checks
Unpaid Dividends
Sundry Bank Credits—Undistributed
Unremitted Funds
Late Entries, Missorts, etc
Dormant Accounts
Unlocated Deposits
Due to Foreign Banks—Dollar Accounts
Other Foreign Banking Department DepositsStock Transfer Deposits
__.
Total Demand Deposits..
TIME DEPOSITS
Savings Deposits
Savings Deposits—Foreign Banking DepartmentChristmas Money Club
_
Estates Trust Deposits
Corporate Trust Deposits
Certificates of Deposit
_
Public Funds
Postal Savings Deposits
Acceptances Anticipated.
Other Time Deposits..
_
Total time deposits
$77,357,871.91
2,039,160.92
30,483,282. 71
2,380,746. 34
1,749,000. 00
72,161. 71
1,122. 36
290,253.95
1,550,943.41
97,811.25
248. 50
147,325 89
6, 698.98
246,655 10
1,711 35
775, 573 31
5,076. 63
1,006,221.06
118,211,865 38
i,205 10
131, 567.02
048,393. 50
165,707.99
646,820. 71
573,664.15
337,923 81
060,000 00
100,000.00
162,955.66
133,036, 237.94
$77,275,253.95
1,920,020. 68
29,613, 554.10
2,608, 440. 48
1,657,000.00
64,291. 79
1,122.36
252,068 39
1, 576, 236. 72
65,480 25
193,036 56
149,035 37
3,834. 28
246,171.72
1,711 35
709,910 04
22,893 33
845, 228.33
117, 205, 280 70
96,264,168 46
1,123, 318.80
1,051, 555. 00
6,129, 799. 72
3, 574, 512.06
13,573,664 15
6, 236,822.95
1,060,000. 00
100,000.00
3,137,955 66
$77,875,849.83
1,759,528 69
28, 232,358.69
2,612,517.87
1,657,000.00
71,744 90
1,122 36
230,906. 79
1,364, 618. 73
51, 709 50
23,178. 37
121,750. 35
1,440. 38
246,108.34
1,711. 35
726,815.01
16,921.13
605, 652 97
$64,738, 500. 67
709,038.70
27, 689,127.44
2,798,992.06
1, 607,000.00
70, 572.67
1,122.36
160,544. 57
1, 296,606.34
42,166 50
40,131. 26
93, 796 72
811. 75
245,848.47
1, 753 82
665, 578 26
9,254 03
447,612 59
115, 600,935 26
101,618, 458 21
95,993, 598.00
1,120,818. 80
1,053,367 25
6,059,418. 54
3, 511,512.80
13, 573,664.15
6, 236,822.95
1,060,000. 00
100,000 00
3,107,955 66
95,811, 236.45
1,113,412.07
1, 054,758. 50
5,980,143.91
3,401,158.09
13,574,664 15
6,036,822 95
1,060,000 00
100,000 00
3,172,955 66
$65,039,189.72
1, 689, 547.75
25,888,871 08
2, 793,194 29
1, 557,000.00
72,926.10
1,122 36
151,748.96
1,190,628. 78
27, 216.75
6,983.35
78,861.57
7, 204.48
245,612 08
1,437 59
687,464 01
7,402.03
368,799 39
99,815,210 29
$65, 730,420.02
1, 602,352.54
25,646,102.74
2,632,127.13
1,557,000.00
64,009.12
1,122.36
135, 222.85
1,136,112. 54
23,910. 75
3,807.32
342,281.64
1, 629.34
245,432.32
1,437 59
708,188 67
7,457 03
301,901.17
95, 635,464 20
1,113,241 70
1,057,066 00
5,841,837 56
3,394,463 33
13,574,664 15
6,036,822 95
1,060,000.00
95, 553,033.19
1,112,657. 56
1,059,859.25
5,811,146.01
3, 234,705.76
13, 573,649.15
6,036,822 95
1,060,000.00
3,373,372 85
131,086,932 74
3,373, 386 79
130,815, 260 66
1,000,000.00
3, 000,000.00
3,000,000 00
2,300,000.00
1,000, 000. 00
3, 000,000.00 I
3,000,000.00
2,300,000.00
131,817,158.15
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100,140, 515.13
131,305,151.78
132, 251,796.80
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BILLS PAYABLE AND REDISCOUNTS
Bills Payable with Federal Reserve B a n k .
Rediscounts with Federal Reserve B a n k . .
Total bills payable and rediscounts..
00
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00
Consolidated financial statement, the Union Trust Company, Cleveland, Ohio—Continued
Liabilities
Wednesdav
Oct 7, 1931
Monday, Oct 5,
1931
Tuesday, Oct. 6,
1931
$6, 448, 791.86
4,136, 557 61
31,061 01
$7,549,859 16
4. 136, 557. 61
26,469 01
$7,520,303 16
4,136, 557 61
26, 469. 01
$7,530,303 16
4,136, 557 61
26 469 01
$7,328,303 16
4,136, 557 61
26, 469. 01
$7, 328,303.16
4,136, 557 61
26,469 01
803,634 17
448,191 42
4, 560 00
803,484 17
445, 516 42
4, 560 00
802, 503 01
440, 466 42
4,460 00
802,123 12
440,466 42
4, 460 00
805,573 12
436,183 09
4,450 00
682,713 62
436 183 09
4,450 00
2, 574 89
2, 574.89
2, 574 89
2, 574 89
8, 654,973 98
2, 574 89
8,648,656 58
2, 574 89
8, 566, 682.82
11,875,370 96
12,969,021 26
12,933,334 10
21,597,928 19
21, 388, 767 46
21,183,934.20
T h u r s d a y , Oct
8,1931
F r i d a y , Oct 9,
1931
Saturday, Oct.
10,1931
OS
ACCEPTANCES AND LETTERS OF CREDIT
Our Acceptances Sold and Outstanding
Acceptances of Other Banks Sold and Outstanding
Our Acceptances Executed Under L/C Outstanding
Acceptances of Other Banks Guaranteed by Us
Acceptances to Create Dollar Exchange
Letters of Credit Outstanding—Commercial
_ _
.
Letters of Credit Outstanding—Travelers'
Travelers' Checks Outstanding
_
_ _ _ _.
Letters of Credit Issued Under Guarantee of Other Banks
Foreign Bills Sold with Our Endorsement,
Loans sold under repurchase agreement
Total acceptances and letters of credit.
__ ...
__
_
Total other liabilities
w
181,145 98
140,012 56
1,116, 543 32
242, 735 53
134, 232 54
1,129, 869 49
243, 657 32
128,398 68
1,131, 970 83
241,331 59
123, 520 32
1,107,351.15
234,193 06
117. 686 47
1,103, 680 66
Q
1,438,043 59
1,437,701 86
1, 506, 837 56
1, 504, 026 83
1, 472, 203 06
1, 455, 560 19
hj
523,661 56
34,639 26
13 00
527,057 09
45,139 26
16 00
530, 452 62
55, 639. 26
16.00
533,848 15
66,139 26
36 00
537, 243. 68
76, 639 26
36 00
540,639 21
87,139 26
36.00
_.
558,313 82
572, 212 35
586,107 88
600,023 41
613,918 94
627,814 47
22, 850, 000 00
12,150,000 00
5,094,444 54
95,985. 90
22, 850,000 00
12,150,000 00
5,094,444. 54
103,336 32
CAPITAL
Capital Stock
Surplus
Undivided Profits
Current Period Profits
Total capital, surplus and profits
Total liabilities ...
X
176, 743 92
12,660 84
1,102, 792 41
RESERVES
Reserves for Taxes. __
_
_
___
Reserve for Expenses
Reserve for Adjustment of State Bank Assets
Total reserves..
. _. _
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OTHER LIABILITIES
Interest and Discount Unearned
Other Income Unearned _ . Accrued Interest Payable
o
22,850, 000
12,150,000
5,094,444
60,886
00
00
54
60
22, 850,000
12,150, 000
5,094,444
75, 870
00
00
54
84
22,850, 000 00
12,150, 000 00
5,094,444 54
87, 462. 00
22,850, 000
12,150, 000
5,094,444
86,011
00
00
54
85
40,155,331 14
40,170, 315. 38
40,181,906 54
40,180, 456 39
40,190,430 44
40,197, 780 86
305, 275,162.83
305, 606, 337.35
302, 626,279. 49
299,806, 044 81
297, 567,462 93
296, 720,865. 51
O
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STOCK EXCHANGE PKACTICES
8997
EXHIBIT U-9-14
THE UNION TRUST COMPANY—CLEVELAND—FINANCIAL
STATEMENT, SEPT.
29,
1931
Statement of condition at the close of business on September 29, 1931
RESOURCES
Cash on Hand and on Deposit with Banks
United States Government Securities
Stock of Federal Reserve Bank, Cleveland
Other Bonds and Securities
Commercial Loans
Collateral Loans
First Mortgage Loans
Customers' Liability on Acceptances and Letters of Credit
Accrued Interest and Other Resources
Real Estate Sold Under Land Contract
Bank Buildings and Real Estate Owned
Total
$58, 105, 264. 37
22, 117, 016. 83
1, 050, 000. 00
28, 486, 735. 60
32, 207,097. 30
71,374,391.05
72, 537, 215. 07
12, 182, 231. 18
2, 786, 724. 48
1, 429, 690. 80
18, 509, 312. 77
$320, 785, 679. 45
LIABILITIES
Capital—Paid Up
Surplus and Undivided Profits
$22, 850, 000. 00
17, 222, 943. 60
Deposits
$264, 193, 822. 21
Postal Savings Deposits
895, 709. 67
Other United States Government Deposits.
2, 081, 945. 19
Total Deposits
43rd Consecutive Dividend, Payable October 1, 1931
Bills Payable and Rediscounts
Acceptances and Letters of Credit
Reserve for Taxes, Interest, Etc
Total
Member Federal Reserve System.
ciation.
$40, 072, 943. 60
$267, 171, 477. 07
$685, 500. 00
None
12, 183, 281. 18
672,477.60
$320, 785, 679. 45
Member Cleveland Clearing House Asso-
OFFICES OF THE UNION TRUST CO., CLEVELAND, OHIO
Euclid-Ninth-Chester
Broadway Avenue and East 55th Street
Woodland Avenue and East 55th
Street
Buckeye Road at East 89th Street
Euclid Avenue at East 101st Street
Terminal Tower Building
East 105th at Pasadena Avenue
Kinsman Road at East 140th Street
West 65th Street and Detroit Avenue
West 25th and Denison Avenue
Pearl and State Roads
Resources over 300 millions.
415 Eagle Avenue
Lorain and West 93rd Street
Fleet Avenue and East 49th Street
St. Clair at East 140th Street
Euclid Avenue at Taylor Road
12301 Mayfield Road
Cedar and Lee Roads
Buckeye Road and E. 118th Street
Detroit Avenue and Cook Avenue
Madison Avenue and Hilliard Road
East 185th Street and Landseer Road
East 116th Street and Corlett Avenue
8998
STOCK EXCHANGE PRACTICES
EXHIBIT
U-9-15
THE UNION TRUST COMPANY,
Cleveland, Ohio, February 15, 1934*
Mr. OTTO MORTON,
Bank Examiner, The Union Trust Company,
This is to advise you that on September 29, 1931, the balance due
on the mortgage on the Union Trust Building, from the Union Lennox Company
to the Northwestern Mutual Life Insurance Company was $4,200,000.00.
Very truly yours,
DEAR SIR:
THE UNION LENNOX COMPANY,
JEWELL, Secretary.
By P. W.
PWJ:V
U-9-16
The Union Trust Company, Cleveland, Ohio. Item 20, Depreciation
Depreciation on Buildings (Not charged off on books) From No.
B-lla-.
-157,565.71
Amortization of Leaseholds (Not charged off on books) From No.
B-lla
- 2 , 474. 56
Depreciation on Furniture & Fixtures and Mechanical Equipment
(Cost expensed and reported as unallowable deduction) (Depreciation not charged off on books) From No. B-12
69, 664. 23
Depreciation on Furniture & Fixtures (Cost capitalized) (Depreciation not chagred off on books) From No. B-12
—4, 153. 11
Carried to Nontaxable Income (See Work Sheet No. A-9)— 233, 857. 61
Depreciation on Union Trust Bldg. (Charged off on books) From No.
B-13
291, 584. 72
To Item 20 Page 1
505, 442. 33
EXHIBIT
The Union Trust Company, Cleveland, Ohio, Depreciation on Buildings
Book Value
Cedar-Lee
Corlett—116th
Detroit-Cook
Detroit—65th
Euclid—101st
Euclid-Taylor
'
'
'
'
'
'
Kinsman—140th
Landsees—E 185th. __
Loram—93rd
Market
Pasadena—105th
Pearl-State—
_
St. Clair—140th
'
'
*
Cost of
Building
Additions
During
Cost of
Building
Rate
12-31-31
12-31-30
1931
12-31-31
%
99,000.00
367,133. 54
158,010 44
31,449. 08
99,000.00
367,133 54
158, 010. 44
31,449.08
2
3
4
Fix-
412,918. 67
246,563 75
31,449.08
Fix-
18, 355.86
39, 769.17
151, 704 21
107,802 77
550,312.84
24, 274.04
18, 355. 86
33, 894.17
101, 704 21
52,196 38
202, 752 84
24, 274.04
18, 355 86
33,894.17
101, 704 21
52,196 38
202, 752 84
24,274. 04
Fix-
146, 251.91
37,992 71
146, 393. 71
90, 913. 65
143,268 92
41,352 15
20,102. 72
136,251 91
34,400. 28
105,393. 71
90,913 65
110,022 17
41,352 15
20,102. 72
136,251 91
34,400 28
105,393 71
90,913 65
110,022 17
41,352 15
20,102. 72
Brick
Brick.
Permanent
tures
10
215,382 10
9, 428 34
493,845. 77
215,382 10
6, 928 34
389,814 27
31, 500.00
215,382 10
6, 928 34
389,814 27
31, 500. 00
3
4
3
Brick
Permanent
tures.
Brick
tt
it
'
'
«
Terminal Square
'
Washington Park
'
Woodland
'
Detroit—West 65th Building
Depreciation
Description
Building
The Union Trust Co. A rchitect Fees
Broadway-Columbia off ice
Buckeye—89th
'
Buckeye—118th
'
Land &
Building
(i
Permanent
tures
Brick
Previous
years
This year—
1931
00
37
01
67
1,980.00
11,014 01
6, 320.42
1,048. 30
7
3
3
3
3
10
6, 367.90
1,466 57
12,644.06
7, 737. 88
24,433. 22
12,937. 55
1, 284.91
1,016 83
3,051 13
1, 565 89
6,082 59
2,427.40
3
15, 548.43
1, 501. 66
21,358 20
13,637 05
27, 872 88
3,839. 38
12,899. 22
4,087 56
1,032 01
3,161 81
2,727 41
3,300 67
1,240. 56
2,010. 27
15,390 81
1,039 25
123, 537 22
4,725.00
10, 769.11
207.85
15, 592 57
945.00
460,654 33
i 216,126. 74
80,866. 30
i 76, 699. 41
2 676,781. 07
2157,565. 71
3
3
3
3
3
5
14,850
91,648
42, 588
4,371
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1 See Work Sheets B-ll(a) Pages 2-5 incl.
2 To Work Sheet No. B-ll.
OO
CO
CO
CO
The Union Trust Company, Cleveland, Ohio, Amortization of Leaseholds
Description
Statler Lease
Stone Property
West 25th Denison*
-
-
i To Work Sheet No. B-ll.
* Cost represents permanent fixtures. Transfer to Banking Properties and depreciate over 10 yr. period
-
CO
Period
Cost
80 years.>_
P3 " . . .
99 " .__
6,163 67
13,932.83
24,525.00
Previous
years
This year—
1931
462.30
898.86
2,477.30
77.05
149.81
2, 247.70
i 3,838.46
i 2,474.56
3
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GO
STOCK EXCHANGE PRACTICES
9001
EXHIBIT U-9-16a
Calculation of Accrued Depreciation on Real Estate to September 29, 1931, not
deducted on the books of the Union Trust Company and employed to inflate Real
Estate and Income Accounts.
Previous Year Depreciation Accrued to December 31, 1930
$676, 781. 07
Previous Year Amortization
3, 838. 46
Total previous year
680, 619. 53
Depreciation not Charged off Books Year 1931:
Depreciation on Buildings
$157, 565. 71
Amortization of Leaseholds
2, 474. 56
Depreciation on Furniture and Fixtures
4, 153. 11
Total for year 1931
164, 193. 38
Depreciation to September 29, 1931, is approximately 9/12 of the
total for the year 1931 or
123, 145. 02
Total
803, 764. 55
Less: 1929 Reserve for Depreciation
250, 000. 00
Total accrued depreciation to September 29, 1931
$553, 764. 55
EXHIBIT U-9-17
STATE SUPERINTENDENT OF BANKS,
FEBRUARY 15, 1930.
Columbus, Ohio.
DEAR SIR: In compiling the Daily Statement of Condition, we have been
deducting compensating balances in arriving at the net amounts due from
bankers and due to bankers. For example, balance of an account carried by us
in Chicago is deducted from the balance the Chicago bank carries with us and
the net difference is used in compiling our daily statement as due to bankers.
This is an old practice which has been in use for some time. I am told that
national banks are compelled to use compensating balances in this manner.
As The Union Trust Company is a state bank, I am wondering if we would
be criticized by showing the amount due from bankers and the balances due to
bankers at their gross amounts without any deduction for compensating balances. The objection we find to the present practice is that the total amount
shown on our daily statement as due from bankers does not show the total
amount invested in such bank balances. In our case, it makes a difference on
the average of from three to five million dollars. I will be pleased to have your
opinion in this regard.
Very truly yours,
A. W. LEWIS, Vice-President.
AWL: Me
EXHIBIT U-9-18
STATE OF OHIO,
DEPARTMENT OF BANKS,
Columbus, Feb. 28, 1930.
Mr. A. W. LEWIS,
Vice President, Union Trust Co., Cleveland, Ohio.
DEAR MR. LEWIS: We hope you will excuse delay in replying to your letter
of recent date, the same having been mislaid. You ask "if the Union Trust
Company would be criticized if the daily statement disclosed gross balance due
to and due from bankers in place of the net balance as is being done at present.
Also the objection we find to the present practice is the total amount shown on
our daily statement as due from bankers does not show the total amount invested in such bank balances. In our case it makes a difference on the average
from three to five million dollars."
In reply we beg to advise it is the custom of this Department as well as of
both the National Department and Federal Reserve to have the published statements show only the net To do otherwise would have a tendency to undue
inflation of resources There can be no objection to a set-up as you suggestfor your own convenience but we respectfully request the published calls of
condition be compiled as in the past.
Very truly yours,
O. C. GRAY,
Superintendent of Banks.
EXHIBIT U-9-20a
CO
o
o
Consolidated financial statement, the Union Trust Company, Cleveland, Ohio
Monday, Sept.
Resources
21,1931
Tuesday, Sept.
22,1931
Wednesday,
Sept. 23, 1931
T h u r s d a y , Sept.
24,1931
to
Friday, Sept.
25,1931
Saturday, Sept.
26,1931
LOANS AND DISCOUNTS
Call Loans
_
_
Demand Collateral Loans
Time Collateral Loans
Real Estate Loans. _
Demand Loans Unsecured
Notes and Bills
Bills of Exchange
_
__
Foreign Loans (General Banking Dept)
Foreign Bills, Loans and Advances (Foreign Bkg. Dept.)
Our Acceptances Held By Us—Genl. Bkg Dept.. ..
Acceptances of Other Banks Held By Us—Genl Bkg Dept
Customers Liability on Unpaid Acceptances
.
Total loans and Discounts
$42, 664, 681 43
37,483,205 02
72,584,078 35
5,085,914. 33
27, 768, 727. 70
306, 669 80
250,000 00
1, 549,911. 39
187,421. 50
225,413. 98
1, 745,422 03
$41,078,356 49
33,484,473 30
72,577, 253 83
5, 088,345.94
27, 794, 954.41
367,821 92
250,000 00
1, 545, 338 95
217,936 33
225,413 98
1,417,410 70
$41,070,815 23
33, 726,404 52
72, 568,315 00
5,123, 845. 94
27, 801,154. 99
357,526. 26
$41, 054, 642 07
33, 679,027 83
72,569,384 40
5, 089, 047.94
27, 749,336. 64
441,105 92
$41,000,082 78
30,350,496.45
72, 534,951 40
5, 094, 232 94
23, 990, 622 59
442,091 10
$41,128,402 14
30,334,006. 73
72, 523,463 00
5,112, 732 94
24,018,866 43
312,936 12
1, 557, 329 82
450, 875.00
441, 928.43
1,429, 633. 40
1, 557,258. 32
1, 558,114 23
1, 557, 669. 69
886, 664 53
1,178,073 40
1,178,073 40
1,164,330 55
189,851,445 53
184,047,305. 85
184, 527,828. 59
184,204, 541.05
176,148, 664. 89
176,152,407. 60
ACCEPTANCES AND LETTERS OF CREDIT
Our Acceptances Held by Us
Acceptances of Other Banks Held by Us
Our Acceptances Sold and Outstanding
Acceptances of Other Banks Sold and Outstanding
Acceptances to Create Dollar Exchange
Customers' Liability Under Letters of Credits:
Commercial
Travelers' _ __
Customers' Liability Under Travelers' Checks
Letters
Credit
Under
Guarantee of Other Banks
Foreign of
Bills
SoldIssued
with Our
Endorsement
Total Acceptances and Letters of Credit
_.
156,140 00
266, 215 00
266, 215 00
570,392 00
610,864.17
610,864 17
6, 750, 620.44
3,049,893 08
6, 938,041.94
3, 249,893 08
6,938,958 27
3,249, 893 08
7,317,216 27
3, 249, 893 08
7,276, 744.16
4,136,557 61
7, 276, 744.16
4,136, 557. 61
1,201,273 20
522,207 75
4,020 00
1,201,273 20
521,892 75
4,470 00
1,192, 830 72
510,742 75
4,420 00
1,169, 213. 34
510,742 75
4,420 00
1,157, 033 08
484,957 75
4, 220 00
1,157,033 08
479,732 75
4,220.00
2, 574. 89
2, 574 89
2, 574.89
2, 574 89
2, 574 89
2, 574. 89
11, 686, 729. 36
12,184, 360.86
12,165, 634 71
12,824,452. 33
13, 672,951. 60
13, 667, 726. 60
12, 376, 866 84
1,361, 740 93
12,975, 782 86
6,436, 223.83
8, 206,858.42
12, 376, 866 84
1, 361, 740 93
12, 578, 706.16
6,436, 223 83
8, 207, 055.44
12, 376,866 84
1,458, 340 93
12, 578, 706.16
6,436,223 83
8, 206,858.42
12, 376, 866 84
1,452, 041. 74
12, 578, 706.16
6,436, 223 83
8, 206,858.42
12, 376,866. 84
1, 750, 815. 74
12,578,706 16
6,436, 223 83
8, 206,858.42
12, 376,866 84
1, 790,097.18
12, 578, 706.16
6,436,223.83
8,206,858.42
41,357,472.88
40,960,593.20
41,056,996.18
41, 050, 696 99
41,349,470 99
41,388,752 43
INVESTMENTS
United States Government Securities
State County and Municipal Bonds
Corporation Bonds and Notes
Corporation Stocks
__
Foreign Securities
Total investments
.
__
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CASH AND CASH ITEMS
Currency and Coin
Currency and Com—Foreign Banking Dept
Cash Items
Difference Account
Total Cash and Cash Items.
__
-..
2,450,151.05
5, 987.46
167,743 45
96 95
2, 377,424. 04
7,850. 27
206,166 34
1, 870 98
2, 392,511. 22
5,746 57
178,156. 58
21, 008 24
2,382,934 14
5,286 34
273,401.90
2,155. 25
2,161,470.49
6,116 56
180, 824. 50
1,115. 74
2,059, 601.01
5,967.45
161,634.68
291 47
2,623, 785 01
2, 589, 569 67
2,555,406 13
2, 663, 777. 63
2, 347, 295 81
2, 227,494 61
LEGAL RESERVE
Federal Reserve Bank
10,778,159.96
11,325,410 19
12, 584, 763.05
11,734,035 10
12,155,242 61
12,325,742.66
10,695,820 43
2,036,917 11
3,463, 558 61
15,304,224.51
1,859, 595 64
3,446, 230.16
14, 203, 382.41
1, 414,436 64
3,456, 302 73
13, 538, 067. 61
1, 268, 538. 69
3,195, 071. 56
20,772,364 26
1,173,197 90
2, 978,807. 38
20,502,833.86
1, 330, 559 97
3,015,143 33
16,196,296 15
20, 610, 050 31
19,074,121 78
18,021, 677 86
24,924,369 54
24,848,537 16
O
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716,323 28
714, 532 75
726,911 98
726,886 82
M
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8,658,833 62
1, 648, 734. 59
296,000. 50
216,607 59
61,116 20
1, 667,199 23
8, 918, 551. 63
1,643,211 17
280,859 69
253,245 06
38,021 29
1, 362,195 46
12,548,491 73
12,496,084 30
DUE FROM DOMESTIC CORRESPONDENTS
New York City Banks
Chicago Banks ._ _
Other Banks
Total Due from Domestic Correspondents
w
DUE FROM FOREIGN CORRESPONDENTS
Foreign Banks (Foreign Banking Dept.)__
734,261 23
737, 346 64
DEFERRED CREDITS, EXCHANGES, ETC
Federal Reserve Bank—Deferred Credits
__ _
Checks on Cleveland Banks
Checks on Other Offices—The Union Trust Company...
Checks on Out-of-Town Banks
Coupons
Due from Sundry Banks and Bankers.
9, 897, 734 95
1,916,568 56
276, 216 20
343, 691 65
69,977 26
1, 500, 889 31
Total Deferred Credits, Exchanges, etc
14, 005, 077 93
9, 653, 637.12
1,915,620 99
273,580 97
245 793 39
54,235 30
1, 798, 340 28
13, 941, 208 05
8, 810, 625 28
1, 767, 544 73
348, 572 09
232 769 08
238,604 51
1, 685, 610 95
13, 083, 726 64
8, 221, 585 23
1, 500, 797 89
262,617 32
260,413 41
26,456 47
1, 276, 760 37
0
11, 548, 630 69
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PROPERTY ACCOUNTS
Real Estate, Buildings, Leaseholds, etc
3
M
-
18, 515, 345 01
18,514,590 98
18,513,836 9 5 ;
18, 513,082 92
18,512,328 89
18,511, 574. 86
1 880 785 35
156,931 83
76,172 15
77,330 67
449,106 38
1,431,551 84
I 861 279 07
158, 639 43
75, 678 26
33,999 64
449,106 38
1,431,551 84
1 876 641 26
157,973 69
75,184 37
16,867 67
449,106 38
1,431,551 84
1 886,152. 20
154,194 68
74,690 48
12,123 06
449,106. 38
1,431,551 84
1,901,128 43
151,440 74
74,196 59
49,563 60
449,106 38
1,431,551 84
1,918,036 77
146,438. 53
73,702 70
20,386 64
449,106 38
1,431,551 84
OTHER RESOURCES
Accrued Interest, etc , Receivable
Accounts Receivable.
__
_
Prepaid and Deferred Accounts
Late Entries, Missorts, etc Cleveland Akron Bag Co , Properties m Liquidation
Land Contracts
.__ _.
.
Total Other Resources..,.
Total Resources
_
_ _
.._
4,071,878 22
4,013,254 62
4,007, 325. 21
4,007,818 64
4, 056, 987 58
4,039, 222 86
309,820,451 28
308, 923, 690 37
308, 285,962 52
306, 263,107 00
306,390,308.19
305,436,976 29
O
o
EXHIBIT U-9-20b
Consolidated Financial Statement, the Union Trust Company, Cleveland, Ohio
Resources
Wednesday,
Sept 23, 1931
Thursday, Sept
24,1931
Friday, Sept.
25,1931
Saturday, Sept
26,1931
Monday, Sept.
21,1931
Tuesday, Sept.
22,1931
$72, 299 385. 01
1,822,025. 32
31,320,171 90
2,739,096 80
2,129,000 00
52,004 45
1,122 36
352,655 18
1,124,477 28
2,111 25
506 04
106,464 98
8, 602 43
252,180 61
1,359 35
829,004 95
4,832 44
77,446 76
$71, 537, 857 89
1, 858, 715 59
31, 206, 766. 00
2,737,913 05
2,129, 000 00
54,805 00
1,122 36
361,834 42
1,028, 054 66
2,073 75
73,365 39
40, 963 86
1, 267 54
251,299 13
1,381 35
800,962 70
5,177 14
75, 252 52
$71, 224, 309 77
1.975, 509. 77
30, 637,194 13
2, 779,662. 81
2,129,000 00
58,351 78
1,122 36
420, 849 67
1,157, 760 89
2.070 00
4, 259 95
107, 278 93
4, 728 41
251, 224 93
1,381 35
814,467 53
6,863 14
73. 581. 75
$70, 960, 227 67
1, 878,116 36
28,991,155 69
2,864,930 56
2,076,000.00
62, 535. 75
1,122 36
409,890 66
1,164, 027 89
2,067 75
134,723 97
128,846 58
369 69
250,895 13
1,381 35
827,951 12
5,790 14
72,583 16
$70, 856, 626 52
1, 844, 217 75
28,888, 518 66
2,849,616 47
2,023,000 00
58,568 88
1,122 36
359, 748 80
1,081, 528 91
2, 067 75
315 94
79,403 56
5,170. 58
250, 730 61
1,381 35
869,528 34
17,152 39
71, 295. 92
$70, 648, 657 85
1,866,574 27
28, 227,450 00
2,861,783 98
2, 023,000 00
57, 775 78
1,122. 36
381, 644 34
855,185 91
2, 067. 75
286 54
148,194 03
1, 099 39
260,493 10
2,793 27
856,081 07
3,706 14
70,847.17
113,122, 447 11
112,167, 812 35
111,649,617 17
109,832,615 83
109. 259,994. 79
108, 258, 762 !
100, 739, 756 41
1,174,432.14
1,012,033 50
6, 373, 214 01
3,474,072 50
13, 878, 410 46
6, 295.857 43
860,000 00
100, 000. 00
8,514,391 22
100, 597, 218 34
1,173,121. 97
1, 014,476. 50
6, 371, 542 48
3,435,696 07
13,878,410.46
6, 513,180 56
860,000 00
100,000 00
8, 514, 391. 22
100, 528,959 61
1,173,204. 29
1, 015,833 50
6, 078,571 47
3, 391,900. 05
13, 728,410 46
6, 780,792. 93
860, 000 00
100, 000 00
8, 514,391. 22
100, 379, 691. 51
1,169, 074. 29
1,017, 797 00
6,041,044 90
3,394,658 10
13, 228,410 46
6,881, 793. 21
860,000 00
100,000 00
8, 508,404. 56
100, 250,109. 83
1,166,117. 04
1,019,057 50
5, 963, 086 90
3, 394, 098. 34
13, 228,410 46
7, 084, 851. 09
860, 000 00
100,000 00
8, 508,404. 56
100,126, 908 20
1,166,475 72
1, 021, 628. 50
5, 905,114 40
3, 517, 624 82
13, 228,410.46
7,164,472. 68
860, 000 00
100, 000.00
8, 588,404. 56
142,422,167 67
142, 458, 037. 60
142,172, 063 53
147, 580, 874 03
141, 574,135. 72
141, 679, 039. 34
DEMAND DEPOSITS
Due Corporations and Individuals
Due Cleveland Banks and Bankers
__.
Due Out-of-Town Banks and Bankers
Public Funds
Federal Reserve Bank—Fiscal Agent
United States Deposits
Certificates of Deposit
Certified Checks
Official Checks
Unpaid Dividends
Sundry Bank Credits—Undistributed
Unremitted Funds
Late Entries, Missorts, etc
Dormant Accounts
Unlocated Deposits
Due to Foreign Banks—Dollar Accounts
Other Foreign Banking Department Deposits
Stock Transfer Deposits
Total demand deposits
TIME DEPOSITS
Savings Deposit
Savings Deposits—Foreign Banking Department
Christmas Money Club
Estates Trust Deposits.._
Corporate Trust Deposits
Certificates of Deposit
Public Funds
Postal Savings Deposits
Acceptances Anticipated
Other Time Deposits
Total Time Deposits
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BILLS PAYABLE AND REDISCOUNTS
Total Bills Payable and Rediscounts
ACCEPTANCES AND LETTERS OF CREDIT
Our Acceptances Sold and Outstanding
Acc3ptances of Other Banks Sold and Outstanding.
Our Acceptances Executed Under L/C Outstanding
Acceptances of Other Banks Guaranteed by Us
Acceptances to Create Dollar Exchange
Letters of Credit Outstanding—Commercial
Letters of Credit Outstanding—Travelers' _
Tavelers' Checks Outstanding
Letters of Credit Issued Under Guarantee of Other Banks
Foreign Bills Sold with Our Endorsement
Total Acceptances and Letters of Credit
6,750, 620.44
3,049,893.08
25, 370. 01
6,938,041. 94
3, 249, 893.08
25,370 01
6,938,958. 27
3, 249,893.08
25,370. 01
7,317,216 27
3, 249,893. 08
25,370. 01
7,276,744 10
4,136, 557. 61
25,370.01
7,276, 744.10
4,136, 557.61
25, 370. 01
1,175,903.19
523,257. 75
4,020.00
1,175,903 19
522,942 75
4, 470 00
1,167,460. 71
511, 792. 75
4,420. 00
1,143,843. 33
511,792. 75
4,420.00
1,131,663.07
486,007. 75
4,220.00
1,131, 663 07
480,782. 75
4,220.00
2, 574.89
2, 574 89
2, 574. 89
2,574.89
2, 574.89
2,574.89
11, 531, 639. 36
11, 919,195 86
11, 900, 469. 71
12, 255,110. 33
13,063,137.43
13, 057,912.43
137, 395. 02
55,334.28
1,002, 265. 21
131,119 09
50, 768 37
1,016,638. 25
279, 947. 32
44,883. 23
1, 029,385.85
274, 061.35
43, 569. 51
1,039, 774. 93
123, 241.28
38, 291.45
1,054,150.97
127,049 22
32,406.32
1,067, 536. 53
1,194,974. 51
1,198, 525. 71
1, 354, 216. 40
1,357, 405. 79
1, 215,683. 70
1, 226,992. 07
475, 922.80
41,887.37
125. 29
685,500. 00
479, 318 33
52,387. 37
125 29
685, 500. 00
482, 713. 86
62,887. 37
125. 29
685, 500.00
486,109. 39
73,287. 37
125. 29
685, 500.00
489, 504.92
83,887.37
o
685,500.00
492, 900.45
3, 382 38
3.00
685, 500. 00
1, 203,184.88
1, 217, 080 41
1, 230, 975. 94
1, 244,871.47
1, 258,892 29
1,181, 785. 83
o
22,850, 000. 00
12,150,000.00
4,261,040 77
1,084, 996.98
22, 850,000 00
12,150, 000 00
3, 863, 964. 07
1,099,074. 37
22, 850, 000. 00
12,150, 000. 00
3, 863, 964. 07
1,114, 655. 70
22, 850, 000. 00
12,150,000 00
3,863, 964. 07
1,128, 265. 48
22,850, 000. 00
12,150, 000.00
3,863,964.07
1,154, 500.19
22,850,000 00
12,150,000 00
3, 863, 964. 07
1,168, 519.60
X
OTHER LIABILITIES
Interest and Discount Unearned
Other Income Unearned
___
Accrued Interest Payable
..
Total Other Liabilities
CAPITAL
Reserve for
Reserve for
Reserve for
Reserve tor
Total
Taxes
Expenses
-Adjustment of State Bank Assets
Dividend
Reserves
Ul
H
O
O
W
-
_
__
a
W
o
tei
M
Ul
RESERVES
Capital Stock
Surplus
Undivided Profits._ _ . ._.
Current Period Profits
Total Capital, Surplus and Profits
Total Liabilities _
40,346,037. 75
39,963, 038. 44
39, 978, 619. 77
309,820,451. 28
308,923,690.37
308, 285,962. 52
39, 992, 229. 55
306,263,107.00
40,018, 464. 26
40, 032,483. 67
306,390,308.19
305,436,976. 29
9006
STOCK EXCHANGE PKACTICES
EXHIBIT U-9-21
OCTOBER 6th,
1931.
V[r. F. S. BALE, Vice President,
Bankers Trust Company, 16 Wall Street, New York City,
DEAR MR. BALE: This confirms agreement made by The Union Trust ComDany of Cleveland with Bankers Trust Company, of New York, upon request
to repurchase from Bankers Trust Company, at their face value, the loan and
the certificate of participation in loans which you have to date purchased from
us in the agregate of $2,000,000.
This also confirms agreement of Bankers Trust Company, of New York, to
purchase from The Union Trust Company, at face value, and the agreement of
The Union Trust Company to repurchase from Bankers Trust Company upon
request of Bankers Trust Company, at face value, (a) additional loans up to
$3,000,000 face value, inclusive, provided the collateral security for such loans
are issues of corporations of financial standing satisfactory to Bankers Trust
Company, and (b) additional loans up to $5,000,000 face value, inclusive, provided the collateral security for such loans is satisfactory to Bankers Trust
Company.
If the foregoing is your understanding of the agreement, kindly confirm below
in duplicate.
Very truly yours,
THE UNION TRUST COMPANY OF CLEVELAND,
By —
President,
Confirmed:
October
,1931.
BANKERS TRUST COMPANY, OF NEW YORK,
By FRED S. BALE, Vice President.
EXHIBIT U-9-22a
Agreement made the 8th day of October, 1931, between Union Trust Company of Clveland, Ohio hereinafter referred to as the Party of the First Part,
and Guaranty Trust Company of New York, hereinafter referred to as the Party
of the Second Part,
Witnesseth: 1. That the Party of the First Part, in consideration of the agreements hereinafter contained, to be performed by the Party of the Second Part,
agrees to sell and deliver to the said Party of the Second Part on the day and
year first above written the following
various loans (hereinafter referred
to as " securities") in the aggregate sum of Three million, five hundred and
twenty thousand, four hundred and eighty and 63/100 ($3,520,480.63) Dollars,
as set forth on Schedule " A " which is hereto attached and made a part hereof,
for which, in consideration thereof, the Party of the Second Part agrees to pay to
the Party of the First Part Three million, five hundred and twenty thousand,
four hundred and eighty and 63/100 ($3,520,480.63) Dollars.
2. In consideration of the premises, the Party of the First Part agrees to repurchase and the Party of the Second Part agrees to sell said securities on e?
•before demand for the sum of Three million, five hundred and twenty thousand,
four hundred and eighty and 63/100 ($3,520,480.63) Dollars with interest thereon
to net the Party of the Second Part three and one-half (3J^%) per centum per
annum on the purchase price during the time that the Party of the Second Part
is the owner of said securities.
3. Upon the failure of said Party of the First Part to accept delivery of said
securities as provided for in clause two hereof, and to make payment therefor,
then the Party of the Second Part may immediately, without further notice to
the Party of the First Part, sell the above mentioned securities at public or
private sale, at any broker's board or otherwise, and apply the proceeds of said
sale as far as needed toward the above contract price, and of any or all other
obligations or liabilities of the Party of the First Part to the Party of the Second
Part, accounting to the Party of the First Part for any surplus arising; the
Party of the First Part remaining liable to the Party of the Second Part for any
deficiency remaining unpaid after such application.
4. In the event of failure of said Party of the Second Part to deliver said
securities and accept payment therefor under this repurchase agreement, then
the said Party of the First Part may, without further notice to the Party of the
Second Part, "buy in" the Party of the Second Part under terms and conditions
corresponding to those described in the preceding paragraph.
STOCK EXCHANGE PRACTICES
9007
5. Delivery and payment to be made at the Office of the Party of the Second
Part, 140 Broadway, City, County and State of New York.
In witness whereof, the parties above named have caused these presents to be
executed and their corporate seals hereunto affixed the day and year first above
written.
UNION TRUST COMPANY OF CLEVELAND, OHIO,
By GEORGE P. STEELE, Vice President.
Attest:
R. S. CRAWFORD,
Secretary.
GUARANTY TRUST COMPANY OF NEW YORK,
By H. C. STEVENS, Vice President.
Attest:
W. VANDERPOEL,
Assistant Secretary.
EXHIBIT U-9-22b
STATE OF OHIO,
County of Cuyahoga, ss.
On this eighth day of October, 1931, before me personally came George P.
Steele, to me known, who, being by me duly sworn, did depose and say that he
resides in Painesyille, Ohio, that he is Vice President of Union Trust Company
of Cleveland, Ohio, the corporation described in and which executed the foregoing
instrument; that he knows the seal of said corporation; that the seal affixed to
said instrument is such corporate seal; that it was so affixed by order of the
Board of Diectors of said corporation, and that he signed his name thereto by
like order.
HAROLD O. ZIEGLER, 1934
STATE OF NEW YORK,
County of New York ss.
On this
day of October, 1931, before me personally came H. C. Stevens,
to me known, who, being by me duly sworn, did depose and say that he resides in
that he is Vice-President of Guaranty Trust Company of
New York, the corporation described in and which executed the foregoing instrument; that he knows the seal of said corporation; that the seal affixed to said
instrument is such corporate seal; that it was so affixed by order of the Board
of Directors of said corporation, and that he signed his name thereto by like
order.
JAMES I. O'HARE,
Notary Public, Kings County
Kings Co. Clk's. No. 10, Reg. No. 2015
N.Y. Co. Clk's, No. 30, Reg. No. 2035.
Commission Expires March 30, 1932.
EXHIBIT U-9-23
THE UNION TRUST COMPANY
J. R Nutt, Chairman of Board; George A Coulton, Vice Chairman of Board, J. R Kraus, Vice Chairman
of Board, W. M. Baldwin, President; Allard Smith, Executive Vice President
CLEVELAND, OHIO
OFFICE OF THE PRESIDENT,
October 9th, 1931.
THE
NATIONAL CITY BANK OF NEW YORK,
55 Wall St., New York, N.Y.
GENTLEMEN: This is to confirm our repurchase agreement covering:
Certificate of Participation of The Union Trust Company of Cleveland, Ohio,
in loan to the Cleveland-Cliri's Iron Company, dated September 23rd, 1931, payable six months after date, in the amount of $3,387,500.00.
The above Certificate of Participation has been discounted by you on a
per annum interest basis.
175541—34—PT 20
18
9008
STOCK EXCHANGE PRACTICES
Pursuant to our understanding, which we hereby confirm, you have agreed to
resell the above Certificate of Participation to us and we hereby agree to repurchase same from you on or before December 23rd, 1931 on a 4>^% per annum
discount interest basis.
Thanking you for this accommodation, we are,
Very truly yours,
W. M. BALDWIN, President.
Accepted:
NATIONAL CITY BANK OF NEW YORK,
By W. S. LAMBIE, V.P.
EXHIBIT U-9-24
THE NATIONAL CITY BANK OF NEW YORK
Established 1812
NEW YORK, October ?, 1931.
Cable Address " Citibank"
In Replying Please Quote Initials WSL
REGISTERED MAIL
Mr. W. M. BALDWIN,
President Union Trust Company,
Cleveland, Ohio.
DEAR MR. BALDWIN: Upon receipt of your telegram this afternoon with reference to the Cleveland Cliffs Iron Corporation notes for $3,500,000 payable on
March 23, 1932, we charged your account with $3,434,666.69 under advice. The
notes are returned to you herewith along with a memorandum covering the debit
to your account.
With best regards, I am
Sincerely yours,
W. S. LAMBIE, Vice President.
ENC
EXHIBIT U-9-25
THE UNION TRUST COMPANY, CLEVELAND
Date 9/22/31
Charge Guaranty Trust Co., New York.
For
Offset entry must be described.
$3,555,141
fAuthorized by R. J. Rutenbeck.
\Official approval.
(This Ticket should be prepared and signed with Ink)
Form No M-24 100m 2-30
THE UNION TRUST COMPANY, CLEVELAND, OHIO
Date Sept. 25, 1931
Charge Natl City Bank, New York.
For
Offset entry must be described.
Ac. Cleve. Cliffs Iron Co.
$6,741,281.25
fAuthorized by.
\Official approval W. E. HARPER.
(This Ticket should be prepared and signed with Ink)
Form No. M-24 100m 10-30
THE UNION TRUST COMPANY, CLEVELAND
Date 9/22/31
$2,000,000.00
Charge Bankers Trust Co , New York.
For
Offset entry must be described.
John L. Severence
fAuthorized by R. J. Rutenbeck.
R. H. Bishop, Jr., Samuel Mather Park, Jr. \Ofncial approval.
(This Ticket should be prepared and signed with Ink)
Form No M-24 100m 2-30
9009
STOCK EXCHANGE PRACTICES
EXHIBIT U-9-26
T H E NATIONAL CITY BANK OF N E W YORK, 55 WALL STREET-—STATEMENT OF
DISCOUNT
NEW YORK, Sept. 25, 1931.
To Union Trust Company, Cleveland, Ohio.
Rate
Days
180
Due
Mar 23
Amount
Discount
3,387, 500 00
76,218. 75
Exch.
Proceeds
3,311,281. 25
T H E NATIONAL CITY BANK OF N E W YORK, 55 WALL STREET—STATEMENT
DISCOUNT
OF
NEW YORK, Sept. 25, 19S1.
To Union Trust Company, Cleveland, Ohio.
Rate
Days
180
4%
Amount
Due
Mar 23
_ _
Exch
Discount
Proceeds
3,000,000 00
301,000M
500,000 00
23
70,000 00
3, 500,000 00
3,430,000.00
EXHIBIT U-9-27a
THE UNION TRUST COMPANY—MAIN
ACCOUNT COLLATERAL LOANS
OFFICE CLEVELAND,
SOLD UNDER REPURCHASE
Old balance
8
8
8
8
8
8
8
8
8
7
7
7
654 973
648 656
566 682
563 682
563 682
267 892
229 856
226 356
183 437
166 547
145 627
145i527
98
58
82
82
82
82
10
10
50
00
50
50
7
7
7
7
7
7
7
5
5
5
5
5
145
145
145
127
105
104
084
822
812
811
811
811
027
027
027
282
556
056
113
326
226
826
826
636
50
50
50
50
25
25
95
59
59
59
59
59
5
5
5
5
5
811
811
811
809
807
634
634
634
134
134
60
60
60
60
60
AGREEMENT
New balance
Explana- \/
Cred- 1931
tion
it
Debit
OHIO
Oct
8
9
10
13
14
15
16
19
22
24
27
28
29
Nov.
3
4
5
7
9
10
12
17
20
27
28
30
Dec
1
2
3
5
8
Debit
Credit
V
Debit
8 913 733 36
500 00
12 100 00
11 500 00
6 000 00
142 200 00
20 000 00
7 775 00
1 500 00
10 000 00
10 700 00
15 000 00
28 600 00
15 720 00
50 000 00
10 000 00
110 790 00
45 000 00
258
6
81
3
307
38
3
42
1 028
26
142
759 38
317 40
973 76
000 00
500 00
890 00
036 72
500 00
918 60
390 50
919 50
300 00
500 00
__ 8 654,973 98*
20 000 00
7 775 00
17 745 00
21 726 25
3 000 00
19 942 30
1 271 787 36
20 800 00
400 00
15 000 00
28 790 00
15 721 99
50
10
113
2
45
000
000
290
000
000
00
00
00
00
00
--
Credit
8
8
8
8
8
8
8
8
7
7
7
7
648 656 58*
566 682 82*
563 682 82*
563 682 82*
267 892 82*
229 856 10*
226 356 10*
183 437 50*
166 547 00*
145 627 50*
145 527 50*
145 027 50*
Coll. loan
Coll loan
Coll. loan
Coll. loans
Coll. loan
Coll loan
Coll loan
Coll. loan
Coll. loan
Coll. loan
Coll loan
Coll loan
Coll. loan
7
7
7
7
7
7
5
5
5
5
5
5
145 027 50*
145 027 50*
127 282 50*
105 556 25*
104 056 25*
084 113 95*
822 326 59*
812 226 59*
811 826 59*
811 826 59*
811 636 59*
811 634 60*
Coll. loan
Coll. loan
Coll. loan
Coll. loan
Coll loan
Coll. loan
Coll loan
Coll loans
Coll loans
Coll. loans
Coll loans
Coll loans
5
5
5
5
5
811
811
809
807
807
Coll loans
Coll. loans
Coll loan
Coll loans
Coll loans
634 60*
634 60*
134 60*
134 60*
134 60*
9010
STOCK EXCHANGE PEACTICES
T H E UNION TRUST COMPANY—MAIN OFFICE
ACCOUNT COLLATERAL LOANS
CLEVELAND, OHIO—Continued
SOLD UNDER REPURCHASE AGREEMENT
N e w balance
Old balance
Date, Explanation
Cred- 1931
it
Debit
5
5
5
5
5
5
5
5
5
5
5
5
807 134 60
802 134 60
798 634 60
797 634 60
795 134 60
793 234 60
785 734 60
784 034 60
782 534 60
782 434 60
782 434 60
772 349 70
Con.
Dec.
10
12
14
15
16
17
21
22
28
29
30
31
V
V
Credit
Debit
Credit
Debit
10 000 00
10 000 00
11 000 00
92 500 00
26 000 00
72 000 00
16 000 00
5 000 00
13 500 00
1 000 00
2 500 00
1 900 00
17 500 00
1 700 00
12 500 00
92 600 00
26 000 00
82 084 90
16 029 40
5 802 134 60*
634 60*
-- 55 798
797 634 60*
5
5
5
5
5
5
5
5
5
795 134 60*
793 234 60*
785 734 60*
784 034 60*
782 534 60*
782 434 60*
782 434 60*
772 349 70*
772 320 30*
EXHIBIT U - 9 - 2 7 C
772 320
767 820
737 920
350 305
349 505
344 505
338 005
333 005
332 005
331 005
328 885
327 385
322 385
295 885
295 885
290 885
289 785
289 785
30
30
30
20
20
20
20
20
20
20
82
82
82
82
82
82
82
82
289
288
288
288
288
288
82
82
82
82
82
82
785
848
573
273
273
273
3 500 00
95 000 00
10 700 00
40 000 00
3 500 00
9 000 00
11 900.00
26 500 00
68 400 00
20 000 00
18 000 00
Feb
3
29
000
124 900
3 387 615
11 500
45 000
10 000
5 000
1 000
10 000
14 019
1 500
5 000
26 500
26 500
5 000
69 500
20 000
18 000
00
00
10
00
00
00
00
00
00
38
00
00
00
00
00
00
00
00
5 767 820
5 737 920
2 350 305
2 349 505
2 344 505
2 338 005
2 333 005
2 332 005
2 331 005
2 328 885
2 327 305
2 322 385
2 295 885
2 295 885
2 290 885
2 289 785
2 289 785
2 289 785
30*
30*
20*
20*
20*
20*
20*
20*
20*
82*
82*
82*
82*
82*
82*
82*
82*
82*
Loans
Loans
Loans
Loans
Loans
Loans
Loans
Loans
Loans
Loans
Loans
Loans
Laons
Loans
Loans
Loans
Loans
Loans
sold
sold
sold
sold
sold
sold
sold
sold
sold
sold
sold
sold
sold
sold
sold
sold
sold
sold
00
00
00
00
00
00
5
7
19
11
15
44
137 DO
275 00
700 00
000 00
000 00
120 00
2
2
2
2
2
2
288
288
288
288
288
284
848
573
273
273
273
703
82*
82*
82*
82*
82*
82*
Loans
Loans
Loans
Loans
Loans
Loans
sold
sold
sold
sold
sold
sold
81 500 00
46 500 00
10 000 00
82
51
10
10
20
1
45
790
500
000
000
000
000
000
2
2
2
2
2
2
283 413
278 413
278 413
268 413
248 413
247 413
82*
82*
82*
82*
82*
82*
Loans
Loans
Loans
Loans
Loans
Loans
sold
sold
sold
sold
sold
sold
4
7
19
11
15
40
200
000
400
000
000
550
Mar
284
283
278
278
268
248
703
413
413
413
413
413
82
82
82
82
82
82
2
45 000 00
00
00
00
00
00
00
00
STOCK EXCHANGE PRACTICES
9011
EXHIBIT U-9-27d
THE UNION
TRUST COMPANY—MAIN
ACCOUNT COLLATERAL LOANS
OFFICE
CLEVELAND,
SOLD UNDER REPURCHASE AGREEMENT
Old balance
2
2
2
2
1
1
247
245
243
243
243
243
413
413
813
813
323
123
82
82
82
82
20
20
Mar.
24
25
28
29
30
31
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
242 823
203 423
202 423
192 423
191 423
189 723
180 393
176 839
176 539
169 139
168 939
167 393
167 393
166 893
151 893
144 193
070 993
070 893
070 893
20
20
20
20
20
20
35
72
72
72
72
35
35
35
35
35
35
35
35
Apr.
1
4
5
6
7
8
9
11
14
16
18
19
21
22
23
25
26
27
29
1
1
1
1
1
055
055
025
018
008
35
35
35
35
35
May
3
4
5
7
10
293
093
093
793
293
Coil;
N e w balance
Date, ExplanaCred- 1931
tion
it
Debit
OHIO—Continued
V
Debit
V
Credit
Credit
Debit
2 000
1 600
59 000 00
59 000
76 000 00 1 076 490
27 200 00
27 000
300
00
00
00
62
00
00
2
2
2
1
1
1
65 000 00
15 000 00
15
31
73
11
43
39
400
000
000
000
700
329
553
300
400
900
046
000
500
000
700
200
000
000
100
00
00
00
00
00
85
63
00
00
00
37
00
00
00
00
00
00
00
00
] 9flS 493 9ft*
L 202 423 20*
L 192 423 20*
L 191 423 20*
L 189 723 20*
L 180 393 35*
L 176 839 72*
L 176 539 72*
L 169 139 72*
L 168 939 72*
]L 167 393 35*
L 167 393 35*
L 166 893 35*
L 151 893 35*
L 144 193 35*
L 070 993 35*
L 070 893 35**
L 070 893 35*
L 055 293 35*
4
30
6
10
8
200
000
300
500
000
00
00
00
00
00
L
L
L
L
L
134 000 00
11 700 00
16 500 00
136 000 00
24 000 00
10 900 00
43 000 00
23 500 00
4 000 00
8 000 00
104
16
10
1
135
9
3
7
11
18
136
245
243
243
243
243
242
413
813
813
323
123
823
82*
82*
82*
20*
20*
20*
055 093 35*
025 093 35*
018 793 35*
008 293 35*
008 293 35*
EXHIBIT U-9-27e
!
008
007
007
999
999
998
998
998
997
995
988
988
988
970
969
969
969
293
793
293
793
793
493
393
393
393
893
657
337
337
337
837
837
837
35
35
35
35
35
35
35
35
35
35
10
60
60
60
60
60
60
17
20
4 500 00
23 500 00
35 000 00
June
1
46 500 00
9 000 00
1 500 00
8 200 00
30 000 00
14
21 500 00
138 500 00
22 000 00
1 007 793 35*
5 000 00
1 007 293 35*
500 00
999 793 35*
7 500 00 __
999 793 35*
23 500 00
998 493 35*
1 300 00
998 393 35*
33 100. 00 -46 500 00
10 000 00
1 500 00
7 236 25 __
8 519 50
30 000 00 __
18 000 00
500 00
21 500 00
138 500 00
22 130 37
998
997
995
988
983
988
970
969
969
969
969
393
393
893
657
337
337
337
837
837
837
707
35*
35*
35*
10*
60*
60*
60*
60*
60*
60*
23*
Loans
Loans
Loans
Loans
Loans
Loans
sold
sold
sold
sold
sold
sold
Loans
Loans
Loans
Loans
Loans
Loans
Loans
Loans
Loans
Loans
Loans
sold
sold
sold
sold
sold
sold
sold
sold
sold
sold
sold
EXHIBIT U-9-28a
o
to
Bonds pledged to secure public funds, September 30, 1931
Accounts
B each wood Village Bd of Ed account carried at
Union Trust Co , Woodland Office.
Board of Education
School District Coupon Account..
Richmond and Kinsman Rd.
Bond Imp. Account.
Bratenahl Village Sinking Fund c/o A. H.
Frebach.
Bonds held at Union Trust Co Main Office,
Safe Deposit Box No. 1967.
Account carried at Union Trust Co , Mam
Office.
Trustees of the Sinking Fund of
the Village of Bratenahl, Ohio.
Trustees of the Sinking Fund of
the Bratenahl Village School
District.
Ledger Balance
Int.
Rate
$103,015.92
6,925.00
44 00
None
29, 046.17
13, 314.29
Expiration of
Contract
Securities Pledged
Depository Bond #928714 of the
United States Guaranty Co.,
3%
New York, to Beachwood Village School District, Beachwood,
for $100,000.00, expiring 1-28-32,
Lemhan & Co.
Depository Bonds to Beachwood
Village Board of Education,
No. 3817204 of The Fidelity &
Deposit Co. of Maryland for
$20,000 00. Dated 8-4-31, expiring in one year. Cleveland
Insurance Agency, Inc
3 % Contract for Board of Education, Cleveland
each account
Heights Village, School District,
2%
dated 1-1-31
Ohio, 5% School Bds due 10-1expiring 131/35.
1-33.
Amount
3 % 1-28-1932
$25,000.00
EXHIBIT U-9-28b
Bureau of Insular Affairs, War Dept. (Philippine Govt. Funds)
Bonds held at Federal Reserve Bank, Cleveland, Ohio
Accounts carried at Union Trust Co., Main
Office.
City of Cleveland, R. V. Johnson, City Treasurer
Bonds held at Union Trust Co , Mam Office,
Safe Deposit Box No 975.
Account carried at Union Trust Co , Main
Office.
General Fund Account
Sundry Purpose Bond Fund
Treasury Cert Rd. Account
Active Account, Not to exceed
$1,000,000 00.
[nactive Account, Not to exceed
$3,000,000 00 15 days notice of
withdrawal required.
With-
drawal to be made January 1,-
July 1.
$500,000 00
500,000.00
500,000 00
3, 695, 658 90
1, 600,000 00
3%
3%
3%
Contract dated U.S A. Treasury Bondstyi%due
6-17-1924 to
1946-49.
continue un- USA. Treasury Bonds 3H% due
til cancelled.
We
2%
Dated 7-1-31
expiring 630-32.
Dated 7-1-31
expiring 630-32.
6-15-1949.
U S A . Treasury Bonds 3% due
9-15-51/55
Depository Bonds to the City of
Cleveland, Inactive Funds, total
amount $1,760,000.00 and Active
Account, totaling $300,000 00.
See detailed list below.
$1,000,000.00
500,000 00
440,000.00
ACTIVE FUNDS
Name of Company
National Surety Co
Date of Contract
--
-
Amount
Agent
9-16-31 to 9-16-32
$300,000.00
Coughlin and Whited Company.
7-1-31 to 6-30-32
7-1-31 to 6-30-32
7-1-31 to 6-30-32
7-1-31 to 6-30-32
7-1-31 to 6-30-32
7-1-31 to 6-30-32
7-1-31 to 6-30-32
7-1-31 to 6-30-32
7-1-31 to 6-30-32
7-1-31 to 6-30-32
7-1-31 to 6-30-32.
7-1-31 to 6-30-32
7-1-31 to 6-30-32
7-1-31 to 6-30-32
7-1-31 to 6-30-32
7-1-31 to 6-30-32
7-1-31 to 6-30-32
7-1-31 to 6-30-32
$275,000.00
50, 000. 00
25,000.00
75, 000. 00
25, 000 00
100, 000. 00
225, 000. 00
150,000 00
135,000 00
100, 000 00
150,000. 00
50, 000 00
100, 000 00
150,000.00
25,000.00
50,000.00
50,000.00
25,000 00
Hinig Bixby Company.
Do.
Do.
Do.
Do.
Do
Coughlin & Whited Co.
Himg Bixby Company.
Brooks & Stafford Co.
Hmig Bixby Company
Do.
Do.
Do.
Do.
Do.
Do.
Do.
Do.
EXHIBIT U - 9 - 2 8 C
INACTIVE FUNDS
w
United States Guaranty Co , N.Y
United States Fidelity & Guaranty Co., Maryland.
Alliance Casualty Co. Penn
Alliance Casualty Co. Penn
Consolidated Indemnity & Insurance Co., N.Y
National Surety Co , N Y
National Surety Co., N Y
Hartford Accident & Indemnity Co , Conn
Hartford Accident & Indemnity Co , Conn
Continental Casulaty Co , Indiana
Union Indemnity Co , Louisiana
New Amsterdam Casualty Co
—
Constitution Indemnity Co of Philadelphia-Bankers Indemnity Insurance Co. of N J
Bankers Indemnity Insurance Co. ofNJ
Central West Casualty Co., Michigan
St. Paul Mercury Indemnity Co , Delaware
St. Paul Mercury Indemnity Co , Delaware.
Total
_
_
„
_.
_.
_
$1,760,000.00
H
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3
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EXHIBIT U-9-28d
Bonds pledged to secure public funds, September 30, 1931—Continued
Accounts
Board of Education, city of Cleveland, c/o Mr. Active #4
Allport:
Bonds held at Guardian Trust Company-.. Special Pay Roll "A"_
Accounts carried at Union Trust Company,
Main Office.
City of Cleveland, sinking fund c/o S. C. Rusk,
Secy.:
Accounts carried at Union Trust Co., Main
Office.
Special Pay Roll " B "
Inactive
_
_.
Active Account, Not to exceed
$1,000,000 00.
Inactive Account, At no time to
exceed
$4,000,000 00—Remain
undisturbed for a period of not
less than 6 months from and
after February 1, 1930, and for
period not exceeding two years
from and after February 1,
1930.
Sinking Fund Commission, City
of Cleveland.
Expiration of
Contract
Int.
Ledger Balance Rate
$528,963.77
2%%
Securities Pledged
Amount
1-31-1932 U. S. A. Treasury Bonds
9,592.73
2 % Contract
9,852.70
2 %
$1,300,000.00
due 6-15-1949.
to
continue
until cancelled.
3
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296,000.00
X
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9
720,165. 73
Contract
dated
7-1-1931 expiring
6-30-1932.
Depository Bonds to the Sinking
Fund Commission of the City
of Cleveland, Ohio, See detailed
list below.
i
o
Name of Company
United States Fidelity & Guaranty Co , Baltimore, Md
Glen Falls Indemnity Co., Glen Falls, N. Y
Fidelity and Deposit Co. of Maryland Corp
Employer's Liability Assurance Corp. Ltd. of London, England
Date of Contract
7-1-31 to
7-1-31 to
7-1-31 to
7-1-31 to
6-30-32.
6-30-32.
6-30-32.
6-30-32.
Amount
$500,000 00
100, 000 00
154,500 00
445,500 00
$1,200,000.00
The amount of deposit shall not be in excess of $1,000,000.00.
Agent
Hinig Bixby Co.
Lemhan and Co.
Cleveland Insurance Agency.
Cleveland Insurance Agency.
EXHIBIT U-9-28e
Accounts
Board of park commissioners of the Cleveland
Metropolitan Park District, c/o W. A.
Stinchcomb, Secretary:
Bonds held at Union Trust Co. Main Office,
Safe Deposit Box No. 1961.
Account carried at Union Trust Co., Main
Office
City of Cleveland Heights, Ohio c/o Chas. C.
Frazine, Finance Director:
Bonds held at Union Trust Co. Main Office,
Safe Deposit Box No. 1103.
Account carried at Union Trust Co., Main
Office.
Cuyahoga County No. 74 Cleveland Metropolitan Park District.
General Fund
Int.
Ledger Balance Rate
$61,420.64
275,605.24
Expiration of
Contract
3 % Contract
dated
11-18-1929
expiring
11-18-1932.
3 % 10-27-31
Securities Pledged
U. S. A. Treasury Bonds 3H%
due 1949.
Board of Education, Cleveland
Heights, 0., School District
Ser. 21, due 10-1-31/35—5%.
Cleveland Heights, 0., Paving
due 10-1-32—5%.
Cleveland Heights, Site Equipment due 10-1-32 to 10-1-42—5%.
Cuyahoga Co., Eefunding Series
I due 10-1-34/37; 4-1-35/37.
Cuyahoga Falls, Ohio, due 3-1-32
to 9-1-41.
E. Cleveland Board of Education due 4-16-32/35—4^%.
Mahoning Valley Sanitary Dist.
due 11-1-1932—4H%.
Village of Lyndhurst, Street Imp.
Bonds, due 10-1-34—5J4%.
Series " A "
$8,000.00
Series "B"____
25,000.00
Board of Education, Dayton City
School District, due 10-1-34
Amount
$75,000.00
40,000.00
31,000.00
14,000.00
GO
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o
32,000.00
43,000.00
20,000.00
19,000.00
33,000.00
Q
15,000.00
XJl
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EXHIBIT U-9-28f
O
Bonds pledged to secure public funds, September 80, 1931—Continued
Accounts
Board of Trustees of the Cleveland Public
Library c/o C. S Metcalf, Sec. & Treas.:
Int.
Ledger Balance Kate
Active not to exceed $500,000 00—.
$86, 272. 69
Bonds held at Union Trust Co., Main Office,
Safe Deposit Box No. 1167.
Inactive not to exceed $500,000 00
Three months notice of withdrawal required.
65, 000 00
Account carried at Union Trust Co , Mam
Office This box contains various securities pledged by other Cleveland Banks
Cuyahoga County (Board of County Commissioners) c/o L. G. Colhster, Treas .
Cleveland Library S F Savings
Account #79931
22,931 76
L G Colhster County Treasurer
#20.
2,803, 644 64
224. 26
57.00
179 00
192 53
45.40
16.87
Securities Pledged
Contract
U. S. A. Treasury Bonds,
dated
due 1949.
2-5-1930
expiring
2-4-1932.
3M% Contract
dated
2-5^1930
expiring
2-4-1932.
3 % No contract.__
Contract
dated
9-8-1930
expiring
9-7-1933.
In Dormant Ledgers
Bonds held at Guardian Trust Company._. Cuyahoga County Treas No 42..
Account carried at Union Trust C o , Main Cuyahoga County Mothers Pensions No 59
Office.
Cuyahoga County Soldiers Relief
No. 43_.
Cuyahoga County Mothers Relief
No 45
Cuyahoga County Election Officers No. 46
Cuyahoga County Treasurer No.
21
Expiration of
Contract
U. S A Treasury Bonds
due 6-15-1949
Amount
$160,000.00
O
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4, 510, 000 00
02
2 %
o
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EXHIBIT U-9-28g
Village of Cuyahoga Heights, O , c/o W. J. Clark.
Bonds held at Union Trust Co., Main Office,
Safe Deposit Box. No 1966
Accounts carried at Union Trust Co., Broadway-Columbia Office
Clerk's Office
Sinking Fund
Bond and Coupon Account.
Abatement Fund
Sinking fund trustees, East Cleveland Library Sinking Fund Trustees
Board Account carried at Union Trust Co ,
Mam Office
Board of Education of the village of Euclid, Active—Board of Education
Ohio, c/o Gertrude C Witmer' Account car- Unsecured Loan—To Euclid Vilried at Union Trust Co , Landseer Office.
lage School District for $40,000.00
63, 659. 52
28,659 56
608 25
410 15
3%
3%
36, 813 22
3%
185,106 31
3%
3%
Contract
U S A. Treasury Bonds Z\i% due
dated 12-16-15-1949
28 to continue 3 years
expiring 121-1931.
No contract- __ No securities pledged.
$100,000 00
Contract
Depository Bond of the Massadated 2-1-30
chusetts Bonding and Insurance
expiring 2-1Co. for $100,000.00 to Board of
1932.
Education, Village of Euclid
Dated 9-4-1931, expiring 2-11932.
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EXHIBIT U-9-28h
Q
I. J. Fulton, Supt. of Banks of the State of Ohio: I. J. Fulton, Supt. of Banks of the
Bonds held at Union Trust Co , Mam Office,
State of Ohio m charge of the
liquidation of The Commerce
Safe Deposit Box No 236
Guardian Trust & Savings
Account carried at Union Trust Co . Mam
Bank, Toledo, Ohio.
Office.
$1,000,000 00
No contract... N Y . C . & S t L R R 6% 3 yr
Notes due 10-1-32
Pacific Northwest Public Service
6% Conv. Gold Notes due 3-11950
Alleghany Corp 5% 20 year Coll.
Trust Conv. Bonds due 6-1-1949.
Central Gas & Elec. Co. 5H% 3
yr. Notes due 2-1-1933.
Cont. Gas & Elec Corp. 6% Debenture Bonds due 2-1-1958.
Indiana Service Corp. 5% 1st Ref.
Mtge Ser. A due 2-1-1963.
Chesapeake Corp 20 yr. 5% Conv
Coll Trust Bonds due 5-15-1947.
Ghdden Co 5 yr. 5H% Gold Notes
due 6-1-35.
Super Power Co. of Illinois 1st
Mtge. ±y2% Gold Bonds due
3-1-68
B. F . Goodrich Co 1st Mtge 25
yr. 6K% Gold Bonds.
Central Illinois Public Service
m%
1st Mtge. Series F . due
12-1-67.
$100,000 00
w
100, 000 00
O
100, 000 00
100, 000 00
o
50, 000.00
I—I
50, 000 00
o
462, 000 00
95, 000 00
200, 000 00
100,000.00
170, 000 00
o
I—1
EXHIBIT U-9-28i
CO
Bonds pledged to secure public funds, September 80, 1931—Continued
o
oo
Accounts
I. J. Fulton, Supt. of Banks of State of Ohio:
Bonds held at Union Trust Co., Mam Office,
Safe Deposit Box. Section 13, No. 250.
Account carried at Union Trust Co., Main
Office.
I. J. Fulton, Supt. of Banks of the
State of Ohio in charge of the
liquidation of The Commercial
Savings Bank & Trust Co.,
Toledo, Ohio.
Ledger Balance
$243,667.47
Int.
Eate
Expiration of
Contract
Securities Pledged
No contract... Village of Beach wood, Ohio 5 ^ %
Street Improvement Bonds due
10-1-31/32/33.
City of Cuyahoga Falls, Ohio,
Property Share 6% Improvement Notes due 4-1-1932.
City of Massillon, Ohio, 6% Property Share Improvement Notes
Series 1930-32.
County of Cuyahoga, 5% DetroitSuperior Bridge Bds. due 4-1-36.
Chillicothe, Ohio, 4%% School
Bonds due 4-1-33/34/36.
Village of Rocky River, Ohio, 4%%
Street Imp. Bonds due 10-1-32/33
Mahoning County 4H% Road
Imp. Bonds due 10-1-32.
Village of Brooklyn, Ohio, 6%
Paving, Sewer and Water Bonds
due 10-1-32/33.
Amount
$27,000.00
143,000.00
3
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5,000.00
6,000.00
15,000.00
30,000 00
30,000.00
w
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EXHIBIT U-9-28]
I. J. Fulton, Supt. of Banks of the
State of Ohio in charge of the
liquidation of The Commercial
Savings Bank & Trust Co.,
Trust Department, Toledo,
Ohio.
City of Lakewood (Sinking Fund).
City of Lakewood, Ohio, c/o A. I Kauffman*
Bonds held at Union Trust Co., Main Office, Refund Assessment, Trustee Account.
Safe Deposit Box No. 972.
Account carried at Union Trust Co., De- Municipal Court, A. 0 . Guild,
Clerk.
troit-Cook Office.
Municipal Court, Conciliation
Branch.
Savings Account, M. 0 . #242567_._
Municipal Court, Civil Court
I. J. Fulton, Supt of Banks of State of Ohio:
Bonds held at Union Trust Co., Main Office,
Safe Deposit Box Section B 194.
Account carried at Union Trust Co., Main
Office.
No contract
$50,000.00
59,711.13
1,894.85
m%
1,996.02
281. 52
523.16
775.19
3 %
7-15-1932
Village of Wickliffe, Ohio, 6%
Sewer Bonds due 10-1-32.
Village of Newburgh Heights 5%
Street Improvement due 9-15-37.
Montgomery County b\i% Sewer
Bonds due 10-1-33.
U. S. A. Treasury Bonds 3 ^ %
due 1949.
Depository Bonds of The National Surety Co. for $150,000.00
to the Sinking Fund Commission of the City of Lakewood,
Ohio, covering the period from
August 25, 1931, to the closing
of August 25, 1932—Joseph Laronge, Inc.
$28,000.00
20,000.00
27,000.00
500, 000.00
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EXHIBIT U-9-28k
IH
Board of Education, Mayfield Village School
District, c/o W. H. Martin* Account carried
at Union Trust Co , Mam Office.
Mayfield Village School District..
Village of Newburg Heights, O., c/o Frank J.
Jira, Secy..
Bonds held at Union Trust Co., Main Office,
Safe Deposit Box No 1964.
Account carried at Union Trust Co., Broadway-Columbia Office.
Board of Education, Parma Village School District, G F., c/o Frank S. Shields, Clerk, Louis
Jire, President: Account carried at Union
Trust Co., Pearl-State Office.
General Account
Sinking Fund
Bond-Coupon Account
General Fund
-.
$65,248.73
18,163. 38
6,512. 25
14,053.03
20, 512. 31
Depository Bond of the National
Contract
Surety Co., New York, for $100,dated 3-18000 00. Dated 9-1-31, expiring
1930 for 2
3-18-1932. The Coughlm &
years 3-18Whited Co. Inc.
1932.
3 % Contract
Zanesville, Ohio, Refunding due
dated 1-13 %
7-1-1932/33/34/35—4H%.
1929 to continue for 3
years to 11-1932.
Depository Bond of The Fidelity
Contract
dated 1-6Deposit Company of Maryland
1930 expirto the Board of Education,
ing 1-6-1932.
Parma Village School District,
No. 3817240 for $100,000.00.
Dated 8-29-1931, expiring 1-61932.
Cleveland Insurance Agency I n c .
S
$40,000.00
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EXHIBIT U-9-281
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Bonds pledged to secure public funds, September 30,
Accounts
Postal Savings, Washington, D C , Division of
Postal Savings, Washington, D. C , c/o W S.
Rollins, Director:
Bonds held at Washington, D C.
Account carried at Union Trust Co., Mam
Office (General Ledger)
John M. Sulzmann, Sheriff. Account carried at
Union Trust Co , Mam Office.
Ledger balance
Postal Savings.
$936,902. 50
Sheriff of Cuyahoga County..
Village of University Heights, c/o W. A Horky, General Fund (Cedar-Lee).
Sinking Fund (Cedar-Lee) _.
Clerk:
Bonds held at Union Trust Co , Mam Office, Sinking Fund (Pasadena)...
Safe Deposit Box No 1947
Accounts carried at Union Trust Co., Pasadena-105th and Cedar-Lee Offices
50, 000 00
142. 29
13, 254. 61
13,382 24
™;
2/2%
1931—Continued
E
« °
n
c
t
Securities pledged
No contract, _. U. S. A. Treasury Bonds
due 1946-1949.
None..
This agreement shall
be and rein a l n i n
force until
1-1-1932 and
thereafter
until notice
of the termination hereof shall be
g i v e n by
e i t h e r of
said parties
to the other
Depository Bond No 36-11-13-31
of The Fidelity and Guaranty
of The U.S. Fidelity and Guaranty Company for $50,000 00 to
John M. Sulzmann, Sheriff of
Cuyahoga County, dated March
9, 1931. U. S. Fidelity and
G u a r a n t y Co
Cleveland
Branch
U S. A. Treasury Bonds tyi%
due 1949
o
Amount
$1,060,000 00
H
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60, 000 00
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S
so
EXHIBIT U-9-28m
Village of Warrensville Heights, Ohio, c/o Walter Regular Account
H. W. Elhcott, Mayor
E Knowles:
Bonds held at Union Trust Co , Main Office, Coupon Account
Safe Deposit Box No. 2000.
Account carried at Union Trust Co., Kinsman-140th Office.
Total
-
$83, 331. 42
133. 20
2y2% C o n t r a c t
dated 7-2530 expiring
7-24-33.
a
W
Village of Warrensville Heights
6% Series of 1931, Street Improvement, Property Owners
Portion.
$150,000.00
$22, 237, 000. 00
STOCK EXCHANGE PRACTICES
9021
EXHIBIT U-9-29
Statement for comparison of the Union Trust Company's published statement September 29, 1931, and statement adjusted to conform to criticisms contained in the
report on "window dressing"
Published State- Adjusted Statement Sept. 29,
ment
1931
Accounts not included on Published Statement
RESOURCES
Cash on Hand and on Deposit with Banks
United States Government Securities
Stock of Federal Reserve Bank, Cleveland
Other Bonds and Securities
Commercial Loans
Collateral Loans
First Mortgage Loans
Customers Liability on Acceptances and Letters
of Credit.
Accrued Interest and Other Resources
Real Estate Sold under Land Contract
Bank Building and Real Estate Owned
Total.—
$58,105, 264 37
22,117,016 83
1,050,000 00
28,486,735 60
$58,105, 264.37
12,004,475.85
1,050,000.00
13,362, 517.49
15,124, 218 11
32,207,097 30
71,374,391. 05
72,537, 215 07
12,182, 231.18
Unpledged.
Pledged to secure
Public Funds.
28,486,735. 60 TOTAL
32,207,097. 30
83, 670,813 49
72, 537, 215.07
12,182, 231.18
2,786, 724.48
1,429, 690 80
18,509, 312 77
2, 786, 724 48
1,429, 690.80
22,155, 548. 22
320,785, 679 45
326, 615, 796 36
22,850,000 00
17,222,943. 60
22,850,000 00
16,669,179 05
LIABILITIES
Capital—Paid Up
Surplus and Undivided Profits
Deposits
40,072,943.60
264,193, 822. 21
9,519,179 05
Unsecured Deposits
12,146, 563. 25 Public Funds.
895,709 67
2,081,945.19
241,934,717.98
Postal Savings Deposits
Other United States Government Deposits
Total Deposits
43rd Consecutive Dividend, Payable October 1,
1931.
Bills Payable and Rediscounts
Acceptances and Letters of Credit
Reserve for Taxes, Interest, Etc
Total
895,709. 67
2,081,945.19
267,171,477. 07
685, 500 00
None.
257,058,936 09
685, 500 00
None.
12, 296,422.44
12,183, 281.18
672,477. 60
12,183, 281,18
672,477.60
4,200,000.00
$320, 785, 679 45
$326,615, 796.36
Loans Sold Under
Repurchase
Agreement.
M o r t g a g e s Payable.
EXHIBIT
U-9-30
CO
Statement adjusting financial statement as of September 29, 1931, on the Union Trust Company and showing adjustments established in the
report on "window dressing"
Published Statement September
29, 1931
RESOURCES
Cash on Hand and on Deposit with Banks
U.S. Government Securities _
Stoc, of Federal Reserve Bank, Cleveland
Other Bonds and Securities
32,207,097.30
71,374,391.05
72,537, 215.07
12,182,231.18
2, 786, 724.48
1,429,690.80
18,509,312.77
320, 785,679.45
LIABILITIES
264,193,822. 21
895, 709. 67
2,081,945.19
267,171,477. 07
_
Credit
i $10,112, 540.98
2 $12,296,422.44
< 4, 200,000.00
22,850,000.00
17, 222,943. 60
40,072,943. 60
Capital Paid Up
Surplus & Undivided Profits
Payable October 1, 1931
Bills Payable and Rediscounts
Acceptances and Letters of Credit
Reserve for Taxes, Interest, Etc
Total
Debit
$58,015,264.37
22,117,016.83
1,050,000.00
28,486,735.60
Commercial Loans
Collateral Loans
First Mortgage Loans __
_
_
Customers Liability on Acceptances and Letters of Credit
Accrued Interest and Other Resources
Real Estate Sold under Land Contract
Bank Building and Real Estate Owned
Total
__
_„
__
„_
Deposits
Postal Savings Deposits
Other United States Government Deposits
TOTAL DEPOSITS
43rd Consecutive Dividend
_ __ _
Adjustments Per Report
3 553,764.55
i 10,112,540.98
__ __
685, 500.00
None.
12,183,281.18
672,477.60
320,785,679.45
3 553, 764. 55
Adjusted Statement
$58,105,264.37
12,004,475 85
1,050,000.00
[Pledged
28,486,735.60 lUnpledged
32,207,097.30
83,670,813.49
72,537,215.07
12,182, 231.18
2,786,724.48
1,429,690.80
22,155,548. 22
326,615.796.36
39, 519,179.05
1 241,934,717. 98 Deposits.
\
12,146,563. 25 Public Funds.
895, 709. 67
2,081,945.19
257,058,936 09
12, 296,422.44 Loans sold under
212,296,422. 44
Agreement.
4,200,000 00 Mortgages Payable.
« 4, 200,000.00
685,500.00
None.
12,183, 281.18
672,477. 60
326,615, 796.36
15,124,218.11
13,362,517.49
28,486,735.60
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Repurchase
EXPLANATION OF ADJUSTMENTS
1 To reverse the fictitious purchase of $10,000,000 00 U.S. Government Securities.
2
To set up the Contingent Liability to New York banks on Repurchase Agreements.
to
3 To effect the deduction of Accrued Depreciation to September 29,1931.
4
To set up the Mortgage Payable Liability on the Main Bank Building.
GO
EXHIBIT U-9-31
SPECIAL REPORT IN RE CALL STATEMENT—SEPTEMBER
29,
1931,
UNION TRUST COMPANY, CLEVELAND,
OHIO
[Submitted by Eobert Morris Huston, Special Deputy, Superintendent of Banks,Volume II]
Consolidated financial statement The Union Trust Company, Cleveland, Ohio
Sept. 29, 1931
Liabilities
§
Call Report
Statement Showing Loans Sold
Under Repurchase Rediscount
& True U S.
Bond Account
Published in
Newspaper
Circular
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DEMAND DEPOSITS
Due Corporations and Individuals
Due Cleveland Banks and Bankers
Due Oat-of-Town Banks and Bankers
PUDIIC Funds
Federal Reserve Bank—Fiscal Agent
United States Deposits
Certificates of Deposit
Certified Checks
Official Checks
Unpaid Dividends
Sundry Bank Credits—Undistributed
Unremitted Funds
Late Entries, Missorts, etc
Dormant Accounts
.
Unlocated Deposits
Due to Foreign Banks—Dollar Accounts
Other Foreign Banking Department Deposits
Stock Transfer Deposits
w
80,863 356. 77 E
_
Total Demand Deposits.
1 2, 275, 654 79 B
29, 937, 073 95 B
5, 783, 105 39
2 2,023, 000 00
* 58, 945 19
1, 122 36
405, 907 23
909, 879 08
2, 022 75 A
72. 581 99 B
54 036 52 E
5, 269 28 E
3 249, 254 80 E
« 1, 381 35 E
6
748, 152 89 B
6 4, 243. 14 E
6
844, 736.04 E
124,239,723,52
33. 033,463 62 B
5, 783,105.39
33,033 463 62
5,783,105.39
1,122 36
405.907. 23
909 879 08
687, 522 75 A
1.122 36
405.907. 23
909.879 08
687,522. 75
81, 796, 607. 28 E
71, 684,066. 30
a
34,349, 249.93
W
2,081,045.19
2,081,945.19
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124,699.552 90
114,587,011 92
87, 582. 857 78 D
1
2
Net amount due banks and bankers.
U S deposits other than postal savings.
3 Plus 32,000,92 overdrafts.
* Minus 10,112,540 98.
s Minus 257,647 13.
6 Checks on other offices —30.41 added to sav. figures.
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Consolidated financial statement The Union Trust Company, Cleveland, Ohio—Continued
Liabilities
Sept. 29,1931
Call Report
Statement Showin? Loans Sold
Under Repurchase Rediscount
& True U S.
Bond Account
Published in
Newspaper
TIME DEPOSITS
Savings Deposits
Savings Deposits—Foreign Banking Dept.
Christmas Money Club
Estates Trust Deposits
Corporate Trust Deposits
Certificates of Deposit
Public Funds
Postal Savings Deposits
Acceptances Anticipated
Other Time Deposits
Total Time Deposits.
CD
O
Circular
7
99.780,301 29
8 1.159,801.46
1,027, 695 25
» 5, 735,428 45
5, 805,114 24 A
13.224,410 46
6, 363. 457. 86
895. 709 67
100, 000 00
7,862,956 18
11,721,912.00
11, 721,912 00
13, 224,410 46
6, 363, 457 86
895, 709 67
- 7,982,956.18
13, 224,410. 46
6, 363, 457 86
895, 709. 67
7,962,956.18
141, 954, 874.86
142,136, 274 58
101,967,828.41
264,193,822 21
101,967,828 41
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895,709.67
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142,136, 274. 58 142,136, 274 58 D
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BILLS PAYABLE AND REDISCOUNTS
Loans sold under Repurchase & Rediscounted
one
None j N
12.431,903 12
Total Bills Payable and Rediscounts.
None
12,431,903.12
12,431,903 12
12,183,281.18
ACCEPTANCES AND LETTERS OF CREDIT
Our Acceptances Sold and Outstanding
Acceptances of Other Banks Sold & Outstanding
Our Acceptances Executed Under L/C Outstanding
Acceptances of Other Banks Guaranteed by Us
Acceptances to Create Dollar Exchange
Letters of Credit Outstanding—Commercial
Letters of Credit Outstanding—Travelers'
Travelers' Checks Outstanding
Letters of Credit Issued Under Guarantee of Other Banks.
Foreign Bills Sold with Our Endorsement
Total Acceptances and Letters of Credit..
6, 618.837. 50
4,138, 557 61
io 25,370 01
6, 618,837 50
4,136, 557. 61
6. 618. 837 50
4,136, 557. 61
1,425.311.18
1,425,311.18
6,618,837. 50
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io 934.027 42
io 4fil, 243 75
io 4,670 00
1,425, 311.18
2, 574.89
2. 574.89
2, 574. 89
12,183. 281.18
12,183, 281.18
12. 183. 281. 18
4,308,523.06
OTHER LIABILITIES
Interest and Discount Unearned
Other Income Unearned
Accrued Interest Payable
Total Other Liabilities-.
.
» 126,304 36 D
14,750 91 D
12 1,059,008 02 C
-._
_
1, 200, 0*53 29
169,390.56 D
169,390. 56
1, 524.236. 63 C
1, 524, 236 63
1,693,627 19
1,693, 627 19
RESERVES
Reserve for Taxes
Reserve for ExpsnFe"
Reserve for Ad ustm nt of State Bank Assets
Reserve for Dividends
Total Reserves
_.
1, 524, 236 63
503, 087
»» 9,526
3
685, 500
__
.
04
/i
00
00
672,477.60
C
D
D
A
685, 500 00
685, 500 00
22,850,000 00
12,150,000 00
5,072,943 60
22, 850. 000 00
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1/, 222,943 60
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1,179 033 90
Xfl
CAPITAL
Capital Stock
Surplus..
_
Undivided Profits
Current Period Profits
_
Total Capital, Surplus and Profits
Total Liabilities
7
22, 850, 000 00
12, ] 50 000 00
13 3,863,964 07
1,204,979 53
_
_.
_
22, 850, 000 00
12,150,000 00
5,072,943. 60
40,072,943 60
40, 072, 943 60
320,829,950 35
320, 785,679 45
22,850, 000 00
12, 150.000 00
5,072,943 60
>
40 072, 943 60
323, 105, 041. 59 '1320,784,779 45
X
320, 785, 679 45
Deposits
8
Plus 30.41 savings deposits.
» Plus 181,369.31 advances to trusts.
10
Letters of credit executed for customers
» Plus 37,858 43.
12 Minus 37,858.43, interest on mortgage.
13
Net undivided profits
u Short 900 00, new total 320,785,679.45.
is Italic indicates red figures.
NOTE.—The difference of $44,270 90 in the totals between ths Banks records and the Call Statement is due to the inter-office account of $257,647 13 being eliminated from the
Call Statement, and the advances or overdrafts of certain demand and time deposits being added to the Call Statement. ($123,895.41 —$57,473 90 —$32,008.92.)
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Consolidated financial statement, The Union Trust Company, Cleveland, Ohio
CO
8
Statement
Call Report
Resources—Sept 29, 1931
LOANS AND DISCOUNTS
Demand Collateral Loans
_.
Time Collateral Loans
Real Estate Loans
Demand Loins Unsecured-..
_
Notes and Bills
Bills of Exchange
Foreign Bills, Loans & Advance (Foreign
Bkg. Dept)
Our Acceptances Held by Us—Genl. Bkg.
Dept.—
40,984,284.37
30,203,737 37
72,537.215.07
5,128, 522.94
22,705, 715. 24
955,482 81
Customers Liability on Unpaid Acceptances.._
1,639, 545. 25
Total loans and discounts .._
Showing
Loans Sold
Under Repurchase Rediscount & True
U.S Bond Account
1,057,493 84
109,4^8.05
Advances to Estates
Trust.
Advances to Corp.
Trust
+123,895.41
+57,473.90
Published m—
Newspaper
25
Collateral
71 374,391 05
72, 537,215.07
8,931,903.12
80, 306. 294.17
72, 537,215. 07
Total acceptances and letters of credit
71, 374, 39.1. 05
72, 537, 215. 07
32, 207,097. 30
Other loans and Discounts
Acceptances of this
Bank Purchased or
Discounted
175,326 469 94
29,847, 219.83
+ 3 , 500, 000. 00
33, 347, 219.83
2, 359,877. 47
2, 359,877.47
176,118,703.42
18^550,606 54
176,118, 703. 42
ACCEPTANCES AND LETTERS OF CREDIT
Our Acceptances Held by Us
Acceptances of Other Banks Held by Us
Our Acceptances Sold and Outstanding _
Acceptances of Other Banks Sold & Outstanding
Customers' Liability Under Letters of CreditCommercial
Travelers'
Customers' Liability Under Travelers Checks.
Foreign Bills Sold with Our Endorsement
Circular
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610,864 17
6, 618,837. 50
Overdrafts
4,136,557.61 B
959, 397. 43
460,193. 75
4, 670 00
2,574 89 B
12,793,095.35
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32, 006. 92
6, 618,837. 50
32, 006.92
6, 61i, 837. 50
4,136, 557. 61
4,136, 557.61
8,043, 098. 68
1,424, 261.18
1,424,261.18
2, 574 89
2, 574.89
12,214,238 10
12, 214, 238.10
32, 006. 92
4,139,132 50 B
12,182, 231 18
in
Farm
INVESTMENTS
United States Government Securities
22,406,866.84
State, County and Municipal Bonds.
Corporation Bonds and Notes
Corporation Stocks
Foreign Securities
1,790,097 18
12 813, 706.16
6,433, 223.83
_._
8,206,858 42
Total investments
Loan
Bonds
151,5'0.00
Premium
on
U.S.
Bds H8.330 01.
Other Stocks, Bonds
and Securities
- 1,050.000
Strck in F. R. Bank
+ 151.520.
+ 133,330 01
. 51,65,-5,752 43
22,117,016.83
-10,030,000.00
12,087,016.83
1, 771, 365. 35
1, 771, 365. 35
26, 715, 370. 25
26, 715, 370. 25
50, 60^ 7 ^
40, 573, 752 43
22,117,016.83
22,117,016.83
29, 536,735.60
28,486, 735. 60
CASH AND CASH ITEMS
Currency and Com
Currency and Coin—Foreign Banking Dept. __
Cash Items
Difference Account
2,693,248 12
6,503 64
242,935 02
423 99
Foreign Money.
Stock of F R B a n k .
2,703,039 28
1,712.48
242,605 02
423.99
1, 050, 000. 00
2, 703,039 28
1,712.48
242,905. 02
423 99
1,050,000. 00
548, 595.65
46,870, 732.84
Total cash and cash items
-
1
2,948,080 77
1,050,000. 00
58,105, 264 30
1
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3,998, 080. 77
LEGAL RESERVE
Federal Reserve Bank
10,685,511 89
10,685,511 89
10,685,511 89
9, 387, 563.83
2,571,655.50
9, 367, 563.83
2, 571, 655 50
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10, 685, 511.89
DUE FROM DOMESTIC CORRESPONDENTS
New York City Banks
25,757,071 05 A
Chicago Banks
1,312,335 89 A
Other Banks
2,878,142 C2 A
Total due from domestic correspondents.
29 947,579
DUE FROM FOREIGN CORRESPONDENTS
Foreign Banks (Foreign Banking D e p t )
728,401 59 A
DEFERRED CREDITS, EXCHANGES, ETC
Federal Reserve Bank—Deferred Credits
Checks on Cleveland Banks
Ch cks on Other Offices—The Union Trust Co
Checks on Out-of-Town Banks
Coupons
Due from Sundry Banks and Bankers
Total deferred credits, e\changes, etc
9, 3^7, T63 83
2,571,655 50
257,617 13
2-0,725 77
84,964 86
1, 550, 780 60
14 053,337 69
PROPERTY ACCOUNTS
Real Estate, Buildings, Leaseholds, etc
i Cash and due from banks.
Items in Transit
305,690 63
(Net Amt due from II
32,
226, 761. 75 A
Banks and Bankers
| 44,471,671
13,437,976
Furn & Fixtures
41,531
R E. other tnan Bk
5,029,85
B i n l i n e HOUM) <si Lot
-
18,509,312.77
House
71
17
09
51
305,690. 63
32, 226, W61 75
44.471.671 71
13,457,97b 17
41, 531. 09
5, 029,805 51
13, 437,976.17
41, 531 09
5, 029,805. 51
18,509,312. 77
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Consolidated financial statement, The Union Trust Company, Cleveland, Ohio—Continued
Resources—Sept. 29, 1931
Statement
Showing
Loans Sold
Under Repurchase Rediscount & True
U.S. Bond Account
Call Report
OO
Published in—
Newspaper
Circular
721,101 28
2, 034, 040. 27
2, 786,724 48
OTHER RESOURCES
Accrued Interest, etc , Receivable
Acaounts Receivable
Prepaid and Deferred Accounts
Late Entries, Missorts, etc
Cleveland Akron Bag Co , Properties in Liquidation
Land Contracts
Total other resources
Total resources
2, 034,040. 27
184,092.48
72,221.03
15,257.40
2 2, 034,040. 27
Other Assets
I n t . on L. L. Bonds
-82,540.98.
1,951,499.29
720, 677. 29
720, 677. 29
449,105.38
1,429,690.80
1,429,690.80
1,429,690 80
4,184,403. 36
4,184,408. 36
4,101,867. 38
320,829,950.35
320, 785,679. 45
323,105,041. 59 320,785,679 45
320,785,679.45
True statement
DEPOSIT LIABILITIES
U.S. Government Securities
_— $124,699,552.90
142,136,274 58
266,835,827 48
None
_._
.-
_
—_
3,998,080 77
10,685,511 89
44,471,671 71
5'J, 155, 264. 37
21,117,0B 83
81, 272, 281. 20
Shows 30.45+% liquid.
Total Demand Deposits
" Time
"
" All
"
Bills Payable
Quick Liquid Assets
Cash & Cash Ite-ns
Legal Reserve Federal Reserve Bank
Due from Banks & Bankers, exchante, etc
Less Bills Payable
U.S. Government Securities
Shows 22.90 + liquid.
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1,429,690.80
DEPOSIT LIABILITIES
Total Demand Deposits
" Time
"
Total All
"
Bi'ls Payable & Rediscounts
Quick Liquid Assets
Cash & Cash Items
Legal Reserve Federal Reserve Bank
Due from Banks & Bankers, Exchange, etc
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1,429, 690 80
Statement published by bank
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$114,587,011
142,136,274
258,723,283
12,431,903
-
3
92
58
50
12
3,938,080 77
10, 685,511 89
44, 471, 671 71
59,155, 264 37
12,431,903 12
46,723,361 25
12,087,016 83
58,810, 378 OS
30 45
22 QQ
7.55
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Loans sold under repurchase agreement and rediscount control built up from loan proof and banks & bankers ledger
General Books
Sold to—
Debits
Total
Payments
Loans
1931
Sept. 22
"
22
"
22
"
25
"
"
"
25
28
29
R. H. Bishop & Samu el Mather, Bankers
Trust Co , N.Y. 1,OC 0,000
John L Severance, J banker s Trust Co.,
N.Y. 1,000,000
List see list in corresponden ce file Guaranty Trust Co. N Y. 3,555, 141.19
.
Cleveland Cliffs....
Iron, National City Bk N Y . 3,387,500
" N.Y 3,500,000
Chas. W Brown Guaranty 1 r . . .
John L. Severance
"
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coco
F "R TVTifphpll
"
'
Kather ns Fox
Bowman
" 30 John L. Severance
Oct. 1 Stanley M. Feil
2 Louis S. Bing Jr.
00 00
"
2 John L. Severance
3 C. A Benner
3 John L. Severance
5 Milton Cayce
5 F. H. Boughton
6 G. B Collmgs
7 Cleveland Cliffs Iron National City B k . . .
John L. Severance Guaranty Trust Co
Florence C. Gates
"
"
Banks &
Bankers
Notes & Bills
Time Loans
2,000,000.
5, 555,141.19
3, 555,141.19
8
1,000,000.
2,943,172 61
/
1
100
10,638 07
8,942. 641.19
12,442, 641.19
12,442,541.19
12,431,903.12
503
12,431,403.12
23.98
7,234 99
5 0.
600.
12,431,374 14
12,424,169 15
12,42*, 6 9.15
12,423,0J9
Demand
Loans
1,000,000.
1,000,000.
2,000,000.
6,741,281 25
1,000,000.
1,000,000.
1,000,000,
500, 000.
i 146, 218. 75 i 12, 296, 422. 44
i 3, 500, 000.
76,218. 75
70,000.
611,968 58
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3, 387, 500
1
7, 330, 672 61 i 1,611,968.58
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146, 218. 75
12, 296, 422 44
3, 500, 000
7, 330, 672 61
1,611,938.58
12, 442,641.19
12,442,641.19
15
12,414, 238. 23
8,830 92
12,413, 738. 23
500.
49, 238. 52
12, 364. 499. 71
500.
12,363,999 71
6, 257. 60 2 12,357,742.11
8.75
12,357, 733 36
3, 500,000.
8,857, 733 36
202,459. 38
8, 655, 273 98
300.
8,654,973.98
1 Total.
2 Securities sold in New York; see letter U. T. Co. 10/2/30 G. T. 10/5/31.
Discount
Credits
3,500,000
3, 434, 666 69
65, 333. 31
CD
9030
STOCK EXCHANGE PRACTICES
EXHIBIT U-9-32a
STATEMENT OF CONDITION
THE UNION TRUST CO., CLEVELAND, O.
Member Federal Reserve System.
Member Cleveland Clearing House Association.
December 31, 1931.
EXHIBIT U-9-32b.
Statement of condition as of December 31, 1931
RESOURCES
Cash on Hand and on Deposit with Banks
$40, 410, 958. 65
United States Government Securities
12, 116, 968. 45
Other Bonds and Securities including Stock of Federal Reserve
Bank, Cleveland
26, 593, 436. 32
Loans and Discounts
177, 676,800.05
Customers' Liability on Acceptances and Letters of Credit
10, 840, 373. 39
Accrued Interest and Other Resources
2, 390, 649. 82
Real Estate Sold Under Land Contract
1, 504, 219. 59
Bank Buildings and Real Estate Owned
18,588,116.32
Total
$290, 121, 522. 59
LIABILITIES
Capital—Paid Up
Surplus and Undivided Profits
$22,850,000.00
$14, 174, 993. 82
$37, 024, 993. 82
Deposits
221, 554, 972. 31
Rediscounts
10, 529, 748. 06
Bills Payable
3, 436, 000. 00
Loans with Repurchase Agreement
5, 772, 320. 30
Acceptances and Letters of Credit
10, 840, 373. 39
Reserve for Taxes, Interest, Etc
963, 114. 71
Total
.
$290, 121, 522. 59
Net earnings for the year 1931 were $4,084,020.41. Dividends paid amounted
to $2,742,000.00. Surplus earnings, plus $2,700,000,00 of the Undivided Profit
Account, were applied to Reserve Accounts.
THE UNION TRUST CO.
CLEVELAND, O.
Member Federal Reserve System Member Cleveland Clearing House Association
EXHIBIT U-9-33a
STATEMENT OF CONDITION
THE UNION TRUST CO., CLEVELAND, O.
Resources over 300 millions.
September 29, 1931.
EXHIBIT U-9-33b
Statement of condition at the close of business on September 29, 1931
RESOURCES
Cash on Hand and on Deposit with Banks
United States Government Securities
Stock of Federal Reserve Bank, Cleveland
Other Bonds and Securities
Commercial Loans
Collateral Loans
First Mortgage Loans
$58, 105, 264. 37
22, 117, 016. 83
1, 050, 000. 00
28, 486, 735. 60
32,207,097. 30
71, 374, 391. 05
72, 537, 215. 07
STOCK EXCHANGE PRACTICES
9031
EXHIBIT U-9-33b
Statement of condition at the close of business on September 29, 1931—Continued
RESOURCES—Continued
Customers' Liability on Acceptances and Letters of Credit
Accrued Interest and Other Resources
Real Estate Sold Under Land Contract
Bank Buildings and Real Estate Owned
Total
$12, 182, 231. 18
2, 786, 724. 48
1, 429, 690. 80
18, 509, 312. 77
$320, 785, 679. 45
LIABILITIES
Capital—Paid Up
Surplus and Undivided Profits
$22, 850, 000. 00
17, 222, 943. 60
$40, 072, 943. 60
Deposits
$264, 193, 822. 21
Postal Savings Deposits
895, 709. 67
Other United States Government Deposits.
2, 081, 945. 19
Total Deposits
$267, 171, 477. 07
43rd Consecutive Dividend, Payable October 1, 1931
$685, 500. 00
Bills Payable and Rediscounts
None
Acceptances and Letters of Credit
12, 183, 281. 18
Reserve for Taxes, Interest, Etc
672, 477. 60
Total
$320, 785, 679. 45
THE UNION TRUST CO.
CLEVELAND, O.
Member Federal Reserve System Member Cleveland Clearing House Association
EXHIBIT U-9-34
[Cleveland News 4-10-1933]
FINANCIAL STATEMENT OF THE UNION TRUST COMPANY, CLEVELAND, OHIO, AT
THE CLOSE OF BUSINESS APRIL 8, 1933
RESOURCES
Loans and Discounts:
Call loans
Demand collateral loans:
Unpledged
$21, 775, 151. 32
Pledged
8, 382, 410. 96
Total demand collateral loans
$30, 157, 562. 28
Time collateral loans:
Unpledged
16, 028, 867. 91
Pledged
16, 261, 173. 81
Total time collateral loans
$32, 290, 041. 72
Real estate loans:
Unpledged
7, 140, 357. 25
Pledged
10, 356, 201. 51
Total real estate loans
$17, 496, 558. 76
Demand loans—unsecured
2, 196, 273. 63
Notes and bills:
Unpledged
3, 252, 749. 93
Pledged
9, 718, 674. 97
Total notes and bills
$12, 971, 424. 90
Bills of exchanges
1, 057. 77
Foreign bills, loans and advances (Foreign banking department)
950, 390. 34
Secured advances to trusts
163, 143. 24
Total loans and discounts
$96, 226, 452. 64
9032
STOCK EXCHANGE PRACTICES
FINANCIAL STATEMENT OF THE UNION TRUST COMPANY, CLEVELAND, OHIO, AT
THE CLOSE OF BUSINESS APRIL 8, 1933—Continued
RESOURCES—continued
Acceptances and letters of credit:
Our acceptances held by us
Acceptances of other banks held by us__
Our acceptances sold and outstanding
Acceptances of other banks sold and outstanding
Customers' liability under letters of
credit:
Commercial
Travelers'
Customers' liability under travelers'
checks
Letters of credit issued under guarantee
of other banks
Foreign bills sold with our indorsement__
Customers' liability on unpaid acceptances
Collections—mortgage loans
Bonds sold under repurchase agreement.
Total acceptances and letters of
credit
Investments:
United States Government Securities:
Unpledged
Pledged
$4, 543, 002. 40
1, 093, 147. 75
557, 352. 37
70, 200. 13
267, 988. 25
150. 00
229, 521. 08
360. 00
66, 473. 33
$6, 828, 195. 31
55, 466. 37
12, 007, 534. 95
Total United States Government
securities
State, County and Municipal Bonds:
Unpledged
Pledged
534, 894. 76
766, 387. 56
Total State, County and Municipal Bonds
Corporation Bonds and Notes:
Unpledged
Pledged
$204, 064. 17
9, 757, 871. 73
Total Corporation
Notes
Corporation Stocks:
Unpledged
Pledged
$12, 063, 001. 32
$1, 301, 282. 32
Bonds and
9, 961, 935. 90
4, 016, 726. 57
523, 960. 00
Total Corporation Stocks
Foreign Securities
Federal Reserve Bank Stock
Total Investments
Cash and Cash Items:
Currency and Coin
Currency and Coin—Foreign Bkg. Dept.
Cash Items
Difference Account
Total Cash and Cash Items
Legal Reserve—Federal Reserve Bank
4, 540, 686. 57
7, 412, 800. 38
1, 050, 000. 00
$36, 329, 706. 49
1, 408, 441. 16
20,589. 15
.82
1, 429, 031. 12
4, 982, 819. 37
STOCK EXCHANGE PRACTICES
9033
FINANCIAL STATEMENT OF THE UNION TRUST COMPANY, CLEVELAND, OHIO, AT
THE CLOSE OF BUSINESS APPIL 8, 1933—Continued
RESOURCES—continued
Due From Domestic Correspondents:
New York City Banks
$310. 77
Chicago Banks
Other Banks
31, 527. 04
Attachment Account—Manufacturers'
Trust Co
439, 182. 63
Acceptance Group 5 Pc. Adjustment
Acct
81, 378. 52
Total Due From Domestic Correspondents
Due from Foreign Correspondents
Foreign Banks (Foreign Banking Dept.)
Deferred Credits, Exchanges, Etc.
Property Accounts
Real Estate, Buildings, Leaseholds, Etc_
Other Resources
Western Reserve Mortgage Co., Notes__ 25, 167, 784. 76
Accrued Interest, Etc., Receivable
1, 832, 905. 48
Accounts Receivable
281, 023. 04
Prepaid and Deferred Accounts
107, 445. 55
Late Entries, Missorts, Etc
100, 745. 98
Cleveland-Al ron Bag Co., Properties in
Liquidation
449, 106. 38
Land Contracts
1, 603, 301. 17
Bonds Borrow ed
Interest Receivable—Mortgages Sold
873, 412. 53
Total Other Resources
Sub total
Amounts Segregated by bank prior to conservatorship:
Segregated Cash
Federal Reserve Bank Special Accounts
Deferred Accounts
Grand total
$552, 398. 96
14, 413. 85
20, 428, 757. 40
30, 415, 724. 89
$197, 207, 500. 03
1, 326, 262. 07
6, 301, 403. 20
767, 861. 06
8, 395, 526. 33
$205,603,026. 36
LIABILITIES
Secured liabilities:
Deposits (see schedule A)
___ $15, 389, 595. 75
Total secured liabilities
$15, 389, 595. 75
Demand deposits:
Due Corporations and Individuals
30, 705, 639. 25
Due Cleveland banks and bankers
1, 937. 50
Due out-of-town banks and bankers
8, 084, 392. 22
Pul lie funds
258. 82
Certificates of deposit
2, 612. 50
Certified checks
80, 984. 55
Official checks
516, 869. 30
Unpaid dividends
1, 762. 41
Sundrv bank credits—undistributed
Unremitted funds
50,390.88
Late entries, missorts, etc
30, 952. 73
Dormant accounts
213, 844. 54
Unlocated deposits
285. 28
Due foreign banks—dollar accounts
47, 257. 62
Other foreign banking department deposits
1
25. 00
Stock transfer deposits
36, 965. 84
Payments due to Western Reserve Mortgage Co
1, 505. 08
Total demand deposits
39, 775, 683. 52
9031
STOCK EXCHANGE PRACTICES
FINANCIAL STATEMENT OF THE UNION TRUST COMPANY, CLEVELAND, OHIO, AT
THE CLOSE OF BUSINESS APRIL 8, 1933—Continued
LIABILITIES—continued
Time deposits:
Savings deposits
$64, 565, 108. 69
Christmas money club
184, 683. 53
Estates trust deposits
5, 059, 196. 27
Corporate trust "deposits
2, 388, 935. 57
Certificates of deposit
2, 918, 626 19
Public funds
1, 069. 84
Acceptances anticipated
160. 99
Other time deposits
634, 9 i9. 10
Corporate trust dept.—special deposit. _
75, 268. 34
Total time deposits
Total all deposits
Bills payable and rediscounts:
Bills payable with Federal Reserve
Bank
Rediscount with Federal Reserve bank
Bills payable—other banks
Reconstruction Finance Corporation
Total bills payable
and rediscounts
1
Acceptances and letters of credit:
Our acceptances sold and outstanding
Acceptances of other banks sold and outstanding
Our acceptances executed under L/C outstanding
Acceptances of other banks guaranteed
by us
Letters of credit outstanding—commercial
Letters of credit outstanding—travelers'.
Travelers' checks outstanding
Letters of credit issued under guarantee
of other banks
Foreign bills sold with our indorsement
City of Cleveland—collections mortgage
loans
Bonds sold under repurchase agreement.
Foreign drafts payable
Total acceptances and letters of
credit
Other Liabilities:
Interest and Discount Unearned
Other Income Unearned
Accrued Interest Payable
Bonds Borrowed
Check and Safe Deposit Tax Payable. _
Accounts Payable. _
Total Other Liabilities
Reserves:
Reserve for Taxes
Reserve for Expenses
Reserve for Adjustment of State Bank
Assets
Reserve for Dividend
Total Reserves
$75, 827, 998. 52
$130, 993,277. 79
7, 290, 707. 33
2, 287, 621. 68
15, 188, 597. 79
24, 766, 926. 80
1, 073, 789. 86
557, 352. 37
38, 793. 45
31, 798. 68
277, 838. 25
150. 00
360. 00
66, 473. 33
15, 497. 59
2, 062, 053. 53
$119, 031. 74
957, 751. 33
1, 324. 33
47,503.79
1, 125, 611. 19
$683,502.91
36, 415. 57
939. 28
720, 857. 76
STOCK EXCHANGE PRACTICES
9035
FINANCIAL STATEMENT OF THE UNION TRUST COMPANY, CLEVELAND, OHIO, AT
THE CLOSE OF BUSINESS APRIL 8, 1933—Continued
LIABILITIES^—continued
Capital:
Capital Stock
Surplus
Undivided Profits
Current Period Profits
$22, 850, 000.
12, 150, 000.
2, 523, 750.
15, 022.
00
00
56
40
Total Capital, Surplus and Profits
$37, 538, 772. 96
Sub-Total
$197, 207, 500. 03
Deposits accepted in trust prior to date of appointment of
conservator:
Segregated Deposits
8, 303, 921. 58
5% Withheld
91, 604. 75
8, 395, 526. 33
Grand total
$205,603,026.36
The undersigned officers of The Union Trust Company, Cleveland, Ohio,
hereby certify to the best of their knowledge and belief that the foregoing four
pages and the schedules appended hereto represent all the known resources and
liabilities of the said bank, as shown by its books, without appraisal of a.ssets
or valuations by us.
A. W. LEWIS, Vice President.
R. S. CRAWFORD, Executive Vice President.
SECURED DEPOSITS, SCHEDULE A, THE UNION TRUST CO., CLEVELAND, O., AT THE CLOSE
OF BUSINESS APRIL 8, 1933.
Demand deposits:
Corporations and individuals
Public funds
United States deposits
Federal Reserve—fiscal agent
Time deposits:
Public funds
Certificates of deposit
Postal savings
$600, 371.
856, 154.
32, 564.
296, 650.
60
07
10
00
$1, 785, 739. 77
$3,540,505.95
190, 000. 00
9, 873, 350. 03
13, 603, 855. 98
Total secured deposits
Due Corporations and Individuals:
I. J. Fulton, Re: The Kinsman Banking
Co., Kinsman, O
I. J. Fulton, Re: Orangeville Savings
Bank, Orangeville, O
I. J. Fulton, Re: Commercial Savings
Bank, Toledo, O
I. J. Fulton, Re: Citizens Commercial
Bank, Warren, O
Geo. S. Addams, Judge of Probate Court,
Cuyahoga county
Brotherhood of Locomotive Enginemen
and Firemen
Catholic Knights of Ohio
__ $15, 389, 595. 75
$3, 950. 44
1, 979. 65
57, 590. 04
19, 019. 37
4, 487. 12
500,000. 00
13, 344. 98
$600, 371. 60
9036
STOCK EXCHANGE PRACTICES
SECURED DEPOSITS, SCHEDULE A, THE UNION TRUST CO , CLEVELAND, O., AT THE
CLOSE OF BUSINESS APRIL 8, 1933—continued
Public Funds—Demand:
Board of Education No. 4
City of Cleveland Active Account
City of Cleveland, Sinking Fund Commission
City of Cleveland Heights, Ohio
Cleveland Metropolitan Park District
Bratenahl Village
Mayfield Village School District
Village of Cuyahoga Heights
Beachwood Village
Board of Education, City of Euclid, Ohio._
Village of Warrensville Heights, Ohio
City of Lakewood, Ohio
$35, 071. 01
62, 810. 56
458, 672. 62
41, 927. 43
194 75
8, 069. 48
174. 55
53, 108. 77
91, 159. 67
71, 063. 13
31, 257. 28
2, 646. 82
$856, 154. 07
296, 650. 00
32, 564. 10
Federal Reserve—Fiscal agent
United States Deposits
Certificates of Deposit—Time:
Brotherhood of Locomotive Enginemen
and Firemen
Public Funds—Time:
City of Cleveland—Inactive Account
Cuyahoga County No. 20
Cleveland Metropolitan Park District
Bureau of Insular Affairs
City of Lakewood, Ohio
190, 000. 00
$285, 000.
1, 935, 778.
57, 177.
1, 187, 500.
75, 050.
Postal Savings
00
18
77
00
00
3, 540, 505. 95
9, 873, 350. 03
$15, 389, 595. 75
This statement is published as a matter of public information and a means of
making immediately available to the depositors of The Union Trust Company
of Cleveland a statement of its assets and liabilities as reflected by its books at
the close of business on April 8, 1933, at which date the undersigned assumed
the management of the bank as Conservator.
It should be borne in mind that only book values of assets are shown, that
these are not based upon appraisals, and represent no expression of opinion as
to either actual or realizeable values.
OSCAR L. COX, Conservator.
THE UNION TRUST COMPANY, CORRIGAN-MCKINNEY STEEL COMPANY, WALTER
H. SEYMOUR, FIRST COPY
EXHIBIT U-15-la
J. R. NUTT,
2512 Terminal Tower,
Cleveland, Ohio, April 20, 1933.
Mr. OSCAR L. COX,
Conservator The Union Trust
Company,
Cleveland, Ohio.
DEAR MR. COX: I think it was in the spring of 1919 that I first became a director of The McKinney Steel Company, at the request of Mr. James W. Corrigan.
At that time the ownership of the Company was about as follows:
Percent
Mr. James W. Corrigan
Mr. Price McKinney
Mr. E. S. Burke, Jr
Mrs. Ross (Mr. Burke's sister)
Mrs. Stevenson Burke
Total
40
30
133/4
8%
7%
100
STOCK EXCHANGE PRACTICES
9037
In the latter part of April 1925 Mr. E. S. Burke, Jr., called at my office and
stated that he desired to sell his 13%% interest in the Company and wanted to
give me personally the exclusive authority to represent him in the sale of this
interest. He stated that he wanted to place it on a business basis and would
be willing to pay me a commission of 2% of the sale price for my services. I considered the matter for a day or two and then advised Mr. Burke that I would be
willing to represent him. I succeeded in making a sale of this interest about the
middle of May 1925 to Mr. James W. Corrigan. Mr. Corrigan financed the
purchase in the following manner, he organized The McKinney Steel Holding
Company with an authorized capital of $7,250,000 6% cumulative preferred
stock, and 10,000 shares of no par common stock.
The entire issue of the preferred stock was turned over to Mr. Burke for his
13%% of McKinney Steel Company, and Mr. Coriigan received the 10,000 shares
of common stock for his 40% interest in the Steel Company. This 53%% of
The McKinney Steel Company stock was deposited with The Union Trust Company to be held as security for and as long as any of the preferred stock was outstanding. The McKinney Steel Holding Company preferred stock is callable at
105 and the provisions of the issue are such that no consolidation or sale or
merger of any kind can be made without the consent of a certain percentage of
the preferred stockholders. Mr. Burke was anxious to get cash for his holdings,
and after discussing the matter with Mr. John Sherwin, then Chairman of the
Board of The Union Trust Company, and other officers, we finally purchased
the $7,250,000 of preferred stock from Mr. Burke, paying him therefor $6,500,000
in cash. Upon completion of this transaction, Mr. Burke gave me his check for
$130,000 00, being 2% on $6,500,000. At that time I laid this whole matter
before Mr. Corrigan and his personal attorney, Mr. John II. Watson, Jr , so they
would know about the commission, Mr. Sherwin, of course, all the time knowing
EXHIBIT TJ-15-l-b
the entire deal. When Mr. Burke gave me his check for $130,000.00 he congratulated me on making this nice commission. I stated to him that this was not
coming to me personally but would go to The Union Trust Company as earnings.
This check was turned over to The Union Trust Company. I never peisonally
directly or indirectly derived one dollar of profit in any way.
Mr. Corrigan later went in as President of the Company and with John H.
Watson, Jr. and the splendid organization at the Steel Company, he operated it
successfully. During this time the name of the Company was changed to The
Corrigan, McKinney Steel Company. Mr Corrigan died suddenly on January
23, 1928. In his will he named I h e Union Trust Company and John H. \\atson,
Jr. as Executors and Trustees of his estate. Mr. Watson became President of
the Steel Company. The will provided that the Trustees could not sell the
interest in The Corrigan, McKinney Steel Company without the approval of
Mrs. Corrigan. Mrs. Corrigan receives the entire income from the estate during
her life.
I think it was in March 1930, as President of The Union Trust Company,
representing the Corrigan Estate, I began negotiations with Mr. W. G. Mather
for the sale of the Corrigan interest in the Steel Company, represented by 10,000
shares of the McKinney Steel Holding Company common stock, which as previously stated controlled 53%% of the Corrigan, McKinney Steel Company. I
also represented the S%% owned by Mrs. Ross, or a total of 62?2%. These
negotiations finally resulted in a sale to The Cleveland Cliffs Iron Company,—
the price agreed upon was to be on the basis of $37,500,000 for the 62%%. Mrs.
Ross' share amounted to $5,250,000 and the Corrigan Estate $32,250,000. The
Corrigan interest, however, was represented by common stock of The McKinney
Steel Holding Company and the Steel stock was pledged as security for the preferred stock, so that from the $32,250,000 there was deducted $7,250,000 preferred at the call price of 105, or $7,612,500, leaving a net of $24,637,500—this
amount being paid for all of the common stock of The McKinney Steel Holding
Company. My recollection is that after Mr. Corrigan's death the common
stock of The McKinney Steel Holding Company was increased from 10,000 to
10,100 shares—this 100 shares being paid to Messrs. M. B. and H. H. Johnson,
with Mrs. Corrigan's consent, in settlement of fees for a number of years of legal
service—so that the net proceeds above mentioned were divided with all of these
common stock shareholders. In the sale of Mrs. Ross' 8%% for $5,250,000 it
might have been perfectly legitimate and proper to have charged her a commission or fee, but no charge of any kind was made to Mrs. Ross.
9038
STOCK EXCHANGE PRACTICES
I am giving you the above data entirely from memory, as I do not have any
information in my personal files relating to the above transactions. I left everything in connection with these transactions, including the original letter from
Mr. E. S. Burke, Jr. covering the commission, in The Union Trust files.
I have heard that it has been said that I profited to the extent of a large sum in
this sale from the Corrigan Estate to The Cleveland Cliffs Iron Company. This
EXHIBIT U-15-lc
is absolutely untrue in every particular. I did not directly or indirectly ever in
connection with any of the above mentioned transactions receive personally one
dollar of profit. I have no doubt but that you will find records complete in connection with all of the above on the Union Trust Company books, and as a matter
of fairness and justice I would like to have you turn this letter over to some expert
accountant, whom you may select, and have him go over The Union Trust Cornpan v books and verify the above. You will find nothing that is not to the credit
of The Union Trust Company and myself personally and as an officer.
The Union Trust Company still holds a large block of The McKinney Steel
Holding Company preferred stock. The members of my family now hold over
a thousand shares at an average cost of about 95K, most of it purchased from
The Union Trust Company. There is no market whatever for this stock at
present, but eventually I believe it will be paid at 105 and accumulated dividends,
for it represents the controlling interest in one of the best steel companies in this
entire region. I hope that you do not permit the substantial holdings of The
Union Trust Company in this corporation to be sacrificed. Remember, The
Cleveland Cliffs Iron Company paid $24,637,500 in cash for the common stock
of the Holding Company.
If I can be of assistance to you at any time in any way, do not hesitate to call
upon me.
Sincerely yours,
J. R. NUTT.
EXHIBIT U-15-2
Cleveland, Ohio, May 1st, 1925.
Mr. J. R. NUTT,
Cleveland, Ohio.
DEAR SIR: I own 13%% of the authorized and issued capital stock of The
McKinney Steel Co. which I give you exclusive authority to sell for Seven
MiLion Dollars ($7,000,000.00).
If sold I will pay you a commission from the proceeds of sale of 2% of sale
price.
This authority is to you personally and good until June 15th, 1925, 12:00
o'clock noon.
It is understood that you may yourself purchase or be interested in the purchase
of the stock, and shall, in that event, be entitled to the commission stated.
Very truly yours,
E. S. BURKE, Jr.
EXHIBIT U-15-3
THE UNION TRUST COMPANY,
Cleveland, Ohio, May 6th, 1925.
Mr. J. R. NUTT,
Cleveland, Ohio.
DEAR SIR: I understand it is proposed to organize an Investment Company
to own fifty-three and three-quarters per cent. (53%%) of the authorized and
issued capital stock of The McKinney Steel Company.
This Investment Company to be capitalized as follows: $8,500,000 P.V. 6%
cumulative preferred stock. The balance of the capitalization to be represented
by non par shares of common stock.
I own thirteen and three-quarters per cent. (13%%) of The McKinney Steel
Company stock, which percentage is included in that mentioned above, and I
authorize you, in my behalf, to turn over to the Investment Company my entire
holdings in exchange for $8,500,000, being the entire amount of preferred stock
to be authorized and issued. I understand that such preferred stock is to be
STOCK EXCHANGE PRACTICES
9039
issued under the terms and provisions, substantially, in accordance with the
memorandum attached.
This letter will serve as your authority exclusively to represent me in this
transaction and is given to you personally. This authority is good until noon
Saturday, May 16, 1925.
Very truly yours,
E. S. BURKE, Jr.
EXHIBIT U-15-4
May 6thl92o.,
Mr. J. R. NTJTT,
Cleveland, Ohio.
DEAR SIR: I understand it is proposed to organize an Investment Company
to own fifty-three and three-quarters per cent. (53%%) of the authorized and
issued capital stock of The McKinney Steel Company.
This Investment Company to be capitalized as follows: $8,500,000 P.V. 6%
cumulative preferred stock. The balance of the capitalization to be represented
by non par shares of common stock.
I own thirteen and three-quarters per cent. (13%%) of The McKinney Steel
Company stock, which percentage is included in that mentioned above, and I
authorize you, in my behalf, to turn over to the Investment Company my entire
holdings in exchange for $8,500,000, being the entire amount of preferred stock
to be authorized and issued. I understand that such preferred stock is to be
issued under the terms and provisions, substantially, in accordance with the
memorandum attached.
This letter will serve as your authority exclusively to represent me in this
transaction and is given to you personally. This authority is good until noon
Saturday, May 16th, 1925.
Very truly yours,
Mr. E. S. BURKE, Jr.,
Cleveland, Ohio.
DEAR SIR: It is my understanding that the authority given above is contigent
upon my providing you simultaneous with the delivery of your stock, a purchaser
for such preferred stock of the Investment Company as you receive at the price
of $7,000,000 cash, less 2% ($140,000.) commission.
Yours very truly,
EXHIBIT U-15-5
Copy
CLEVELAND, OHIO, May 18, 1925.
Mr. E. S. BURKE, Jr.,
Cleveland, Ohio.
DEAR SIR: I am confirming herewith the terms of my exchange of 72,500 shares
($100 par value) of the Preferred stock of the McKinney Steel Holding Company,
(hereinafter called the Company) for your 13%% interest in The McKinney Steel
Company. Attached to this letter you will find a memorandum of the terms of
the provisions of the Preferred stock, to which further reference will be made.
I will immediately undertake the organization of a corporation under the laws
of Delaware, to be known as the McKinney Steel Holding Company, if said name
is available, or, if not, such other name as may be selected by The Union Trust
Company, which Company will have the following capitalization: $7,250,000 Six
Per Cent Cumulative Preferred Stock ($100 par value) 10,000 Shares, No par
value Common Stock.
This Company will acquire all of your said stock of The McKinney Steel
Company, and my interest therein of 40%, such interests together representing
a par value of $134,375, out of a total capital of $250,000 par value.
All of this stock will be deposited with The Union Trust Company, Cleveland,
Ohio, acting as trustee under an agreement, for safekeeping and to assure conformity with the Preferred stock provisions prohibiting the sale, pledge or
otherwise imposing a lien on said stock, as set forth in the attached memorandum.
I will cause said new corporation to elect to pay, and cause it to pay, under
the provisions of amended Senate Bill No. 150 enacted by the Ohio Legislature
at its last session, so long as said Act remains in effect, annually a franchise tax
175541—34—rr 20
20
9040
STOCK EXCHANGE PRACTICES
at the times, in the manner, on the basis and in the amount prescribed by law
for domestic corporations. This provision is made for the benefit of yourself,
assigns, and successors in ownership of all or any part of the preferred stock to
be delivered to you.
In addition to the terms of the Preferred stock as set forth, the following
provisions will apply:
1. The amount of Preferred stook to be issued will be $7,250,000 par value,
which will b j the entire amount o th3 Preferred stock.
2. The Union Trust Comoany, Cleveland, Ohio, will be and/or name the
registrar and transfer agent for th3 Preferred stoek.
3. The Holding Company will daliver annually to you on or before March 31,
EXHIBIT U-15-5a
an audited statement setting forth its financial condition, and a statement of its
operations for the preceding calendar year. Upon request, you will also be
furnished with special statements showing current operations and balance sheets,
or, at your option, you may have direct access to all of the corporate records of
the Holding Company. The Holding Company will keep the annual audit
statements of The McKinney Steel Company in its files, and you shall be given
access to them.
4. All expenses in connection with the issuance and delivery of this stock to
you will be paid by the Holding Company, such expenses to include the cost of
printing and engraving, trustee's fees, and legal expenses.
5. All of the legal proceedings in connection with the organization of the
Company, the issuance and delivery of stock, and other pertinent matters, shall
be subject to the approval of counsel for The Union Trust Co.
6. Subject to the foregoing, I will deliver to you permanent or temporary
certificates for such Preferred shares of the McKinney Steel Holding Company,
as soon as possible or practicable at the principal office of The Union Trust Company, in the City of Cleveland, Ohio, upon delivery to me of your said shares of
The McKinney Steel Company.
7. In the event that you desire to market the Preferred stock to be received
by you in this trade, the provisions hereof shall be available, by assignment, to
your assignee, and in such event I will cause the new Company to cooperate in
qualifying the stock under the Blue Sky Laws of such states as your assignee
may require, and will furnish such financial statements of the Holding Company
as may be requested for marketing purposes.
8. Forthwith upon your acceptance of this proposition I will deposit with The
Union Trust Company in escrow, the certificates for 40% of the capital stock of
The McKinney Steel Company endorsed in blank, and you are to deposit the
certificates for 13%% of the capital stock of The McKinney Steel Company
endorsed in blank, to be held and delivered to the Holding Company pursuant
to the provisions of this proposition.
Yours very truly,
(signed) JAMES W. CORKIGAN
Mr. JAMES W. CORRTGAN,
Cleveland, Ohio
I hereby accept the foregoing proposition and agree to carry out all the provisions thereof on my part to be carried out.
(signed) E. S. BURKE, Jr.
EXHIBIT U-15-6
MAY
13, 1925.
Mr. E. S. BURKE, Jr.,
Cleveland, Ohio.
DEAR SIR: Referring to your trade of McKinney Steel Common stock for
$7,250,000 par amount of Preferred stock of a corporation to be formed, as
evidenced by your agreement with Mr. James W. Corrigan dated May 13, 1925.
Upon delivery at this office, pursuant to that agreement, of a certificate or
certificates for such $7,250,000 par amount of Preferred stock as provided by
that agreement, you will endorse and deliver such certificate or certificates to us>
and we will purchase the same from you at the price of $6,500,000, paying you
therefor forthwith in cash.
STOCK EXCHANGE PEACTICES
9041
You will at the time of such payment deliver to us an assignment of your
rights under your agreement with Mr. Corrigan, above referred to; such assignment to be in form attached hereto.
Yours very truly,
J. R. NUTT, President
Copy
JRN A
EXHIBIT U-15-7
Copy
CLEVELAND, OHIO, May 15, 1925,
MCKINNEY STEEL HOLDING COMPANY,
Wilmington, Delaware,
GENTLEMEN: This is to acknowledge receipt from you of certificates for
Thirteen Hundred and Forty-three and Three-fourths (1,343%) shares of the
capital stock of The McKinney Steel Company. So long as any of the present
preferred stock of the McKinney Steel Holding Company is outstanding, these
certificates or the certificates subsequently issued in lieu thereof to evidence said
Thirteen Hundred and Forty-three and Three-fourths (1,343%) shares of stock,
are to be held by The Union Trust Company as Trustee for safekeeping, and to
assure conformity with the preferred stock provisions prohibiting the sale, pledge
or otherwise imposing a lien on said stock in The McKinney Steel Company,
which are set forth in the Certificate of Incorporation of the McKinney Steel
Holding Company.
The Certificates for all of the said stock of The McKinney Steel Company are
forthwith to be transferred into and at all times stand in the name of the McKinney Steel Holding Company, except that, upon your order, one (1) share of
stock shall from time to time be transferred into the name of each of the persons
whom you desire to elect as Directors of The McKinney Steel Company, for the
purpose of qualifying such persons as such Directors, it being understood that
The Union Trust Company will require such documents as are necessary or
proper to protect the beneficial interest of the McKinney Steel Holding Company
in the said shares of stock of The McKinney Steel Company so standing in the
names of such Directors.
Very truly yours,
THE UNION TRUST COMPANY,
By (signed) W. J. O'NEILL,
Vice President.
5/19/25 Original delivered to J. H. Watson Jr. by me.
(signed) W. J. O'N.
EXHIBIT U-15-8
Cleveland, Ohio, May 16, 1925.
For value received, I hereby sell, assign, and transfer to The Union Trust
Company, Cleveland, Ohio, its successors and assigns, all i^y right, title and
interest in and to the certain contract made by me with James W. Corrigan,
under his letter to me dated May 13, 1925 and heretofore accepted by me, it
being the intention of this assignment that The Union Trust Company shall
succeed to all property, rights and powers which I am now or hereafter may be
entitled to under that agreement.
(signed) E. S. BURKE, Jr.
Witness:
(signed) J. R. NUTT.
EXHIBIT U-15-9
Cleveland, Ohio, May 13th, 1925.
Mr. J. R. NUTT,
The Union Trust Company, Cleveland, Ohio.
DEAR SIR: Referring to the thirteen and three-quarters percent. (13%%)
interest of the authorized and issued capital stock of The McKinney Steel Company which I have placed in escrow, to be exchanged for $7,250,000. preferred
stock of The McKinney Steel Holding Company, and which the Union Trust
Company has agreed to simultaneously with the delivery of said preferred stock
9042
STOCK EXCHANGE PRACTICES
to me to purchase same from me, paying me therefor $6,500,000. cash; this is
to advise you that upon receipt of said $6,500,000. cash I will pay you a commission equal to two per cent. (2%) of the sale price or $130,000.00.
Very truly yours,
E. S. BURKE, Jr.
(Exhibits U-15-10 through U-15-10a face this page)
EXHIBIT U-15-11
(For Walter H. Seymour, Representative of U.S. Senate Committee on Banking
& Currency: This is not a part of the records of The Union Trust Co. It is an
internal memo by a junior member of the staff of the undersigned. It has
not been verified as to facts. Any opinions or conclusions are personal to the
member of the staff preparing this memo.—Oscar L. Cox, Deputy Superintendent of Banks, State of Ohio)
COMPENSATION AND COMMISSIONS RECEIVED BY THE UNION TRUST CO.
Item I. May 16, 1925
$130,000.00
Above represents a commission of 2% agreed upon in Mr. Burke's contract
based on the price received of $6,500,000.00.
Item II. May 16, 1925
$242, 500. 00
Represents a profit taken on the sale of the McKinney Steel Holding Company, 6 % Preferred Stock by the Banking Department to the Bond Department.
Item III. Profits taken by the Bond Department:
Purchased from Union Trust Co.
for Syndicate Account May 16, 1925 @ 93,
Purchase Group, 93 to 951/2
Special Purchase Group, 95% to 95
Banking Group, 96 to 96^
Selling Group, 961/2 to 99H
Union Trust Co. Bond Departmentl
Purchase Group 50,000 shs 2 /2 points
$120, 000. 00
Special Pur. Gr. 35,556 shs % "
17, 778. 00
Banking Group 33,556 shs % "
16,778.00
Selling Group 28,941 shs 3 points less Expenses
80,050.04
Allowances to dealers from our Inventory
239, 606. 04
1, 205. 21
$238, 355. 83
There may have been other trading profits made by this Department, but it
is rather dimcult to allocate them.
(Exhibits U-l£-12 through U-15-14a face this page)
EXHIBIT U-15-15
$7,250,000
MCKINNEY STEEL HOLDING COMPANY SIX PER CENT CUMULATIVE
PREFERRED STOCK
Authorized $7,250,000 Par value $100 Outstanding $7,250,000 tax free in
Ohio, and dividends are exempt from the present normal Federal income tax.
Dividends payable quarterly on the last days of March, June, September and
December in each year. Preferred as to dividends and assets. Redeemable
at the option of the Company as a whole or in part on any dividend date upon
30 days' notice, at 105% and accrued dividends.
The Union Trust Company, Cleveland, Ohio, Registrar and Transfer Agent
Sinking Fund beginning on or before March 31, 1927, provides for the application
annually of 75% of the net earnings for the preceding calendar year, after deduction of taxes and payment of all dividends, on this issue of Preferred Stock, and
after the deduction of $500,000 for dividends on the Common stock of the Company, to the purchase of said Preferred stock at or below the redemption price
or redemption at 105 and accrued dividends.
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EXHIBIT U-15-10
EXHIBIT U-15-10a
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EXHIBIT U-15-12
•• • ••
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EXHIBIT U-15-12a
UNION TRI ~r COMPANY
BONO DEPARTMENT
WHOLESALE
EXHIBIT U-15-13
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EXHIBIT U-15-14
EXHIBIT U-15-14a
STOCK EXCHANGE PRACTICES
9043
Mr. James W. Corrigan, President of McKinney Steel Holding Company,
advises as follows:
THE COMPANY
"McKinuey Steel Holding Company has been incorporated in Delaware for
the purpose of acquiring not less than 53%% of the outstanding capital stock
of The McKinney Steel Company. The Holding Company therefore controls
one of the most important independent steel companies in the United States,
having no bonds or other funded indebtedness. The capitalization of McKinney
Steel Holding Company, upon completion of this financing, will be as follows:
Authorized
Outstanding
Six Per Cent Preferred Stock (this issue)
$7, 250, 000 $7, 250, 000
Common Stock (No Par Value)
10, 000 shs. 10, 000 shs.
The capital and surplus account of the McKinney Steel Company, as of December 31, 1924, according to the audit by Ernst & Ernst, Certified Public Accountants, is $65,566,882.
Based on this statement, the net value of the Preferred and Common Stocks
of McKinney Steel Holding Company is equal to approximately $35,242,199.
THE MCKINNEY STEEL COMPANY
The McKinney Steel Company was founded in 1916, succeeding a business
established in 1896, and its principal plants and offices are at Cleveland, Ohio.
The Company upon completion of construction now in process, will be a completely rounded unit, with vast ore reserves in the Missabe, Gogebic and Menominee ranges of the Lake Superior District; the Cleveland property includes 4
blast furnaces, 204 by-product coke ovens, and a steel plant consisting of 14 open
hearth furnaces, together with finishing mills now under construction, of about
1,000,000 tons annual capacity; 3 blast furnaces located in New York State and
Pennsylvania; coal mines in Kentucky, comprising 18,000 acres; docks, terminals,
railway equipment, and all other assets necessary to the operation of a large self
contained unit in the iron and steel industry.
EARNINGS
Based on 53%% of the net earnings of The McKinney Steel Company, as
shown in the Company's annual income reports as prepared by Ernst & Ernst,
certified public accountants, for the eight years ended December 31, 1924, after
Federal income taxes, the profits applicable to dividends on the stock owned by
the Holding Company have averaged $1,835,963, as contrasted with the maximum annual dividend requirement of $435,000 on this issue of preferred stock.
These profits are equivalent to 4.22 times such dividend requirements.
ASSETS
The balance sheet of The McKinney Steel Company as of December 31, 1924,
shows that net current assets were $8,804,754, and that the net tangible assets at
the same date were $65,566,882. The book value of the amount of stock applicable to McKinney Steel Holding Company, is $35,242,199, equivalent to more
than $486 per share for the Preferred stock."
RESTRICTIONS
The Preferred stock will be cumulative, and will be entitled to Par and accrued
dividends in the event of involuntary liquidation, and 105% and accrued dividends in the event of voluntary liquidation, before any payment to Common
stockholders. The Preferred stockholders shall be entitled to the entire voting
power as stockholders of the Company to the exclusion of Common stockholders,
in the event that any default in payment of Preferred dividends shall continue
for a period of six months or more, and so long as any such default continues.
Otherwise the common stock has exclusive voting power. T
The Company will not without the affirmative Vote or w ritten consent of the
holders of two-thirds of the outstanding Preferred stock, (1) create or assume
any obligation which would take precedure over the Preferred stock (except for
current obligations in the ordinary course of business); (2) sell, hypothecate or
place any lien upon all or any part of the shares of stock owned by the Company
in another corporation where such owned shares represent a majority or control
9044
STOCK EXCHANGE PRACTICES
ling interest; (3) vote any such owned shares in favor of a consolidation of any
such corporation with any other; (4) authorize or issue any shares of stock on a
parity with this issue, or having priority over it.
TAX EXEMPTION
The Company has elected and agreed to pay each year the applicable Ohio
franchise tax, making this stock tax free in Ohio.
All legal proceedings in connection with the authorization and issuance of this
stock, have been under the supervision of Messrs. M. B. & H. H. Johnson and
Messrs. Tolles, Hogsett, Ginn & Morlev.
All statements relating to assets and earnings have been taken from audits
prepared by Messrs. Ernst and Ernst.
We offer this stock for delivery when, as and if issued and received by us, and
subject to the approval of counsel. Price: 100 and accrued dividend, to yield 6%.
THE UNION TRUST COMPANY,
Cleveland.
The statements herein have been accepted by us as accurate but are in no
event to be construed as representations by us.
MAY, 1925.
EXHIBIT U-15-16
Memorandum re The McKinney Steel Holding Company.
During February 1925 Mr. E. S. Burke, Jr. came to my office and stated that
he desired to sell his thirteen and three-quarters per cent. (13%%) interest in
The McKinney Steel Company, and that he would like me to personally take
charge of and represent him in any negotiations looking to its sale. Mr. Burke
stated that he did not want me to do this on account of friendship, but wanted
it handled on a business basis, and if agreeable to me he would like it understood, in event I should effect a sale, that he would pay me two per cent. (2%)
of sale price for my services.
After considering the matter for a day I reported to Mr. Burke that I was
willing to undertake the job, but that as I represented Mr. James Corrigan on
The McKinney Steel Company Board he was the only person I could approach,
and if Mr. Corrigan was not interested I would have to withdraw.
I 'phoned Mr. John H. Watson and learned that Mr. Corrigan was in the City
and arranged a meeting at my office with Mr. Corrigan and Mr. Watson. I did
not think it wise, for many reasons, to offer Mr. Burke's stock for sale, but my
object in this first meeting was to learn if Mr. Corrigan would be interested in
acquiring the Burke interest, and I soon learned he would if it could be financed.
Several other conferences followed. Mr. Corrigan, a short time later, returned
to Europe, and during his absence Mr. Watson and I were endeavoring to set
up a plan for financing the purchase. Mr. Watson conceived and suggested the
plan that finally was embodied in The McKinney Steel Holding Company.
This plan was presented to and approved by Mr. Corrigan upon his return from
Europe early in May 1925.
During one of mv meetings with Mr. Watson, before Mr. Corrigan's return,
I explained to Mr. Watson my reason for approaching the subject as I had, and
now, as we were negotiating upon the question of price, it was understood that
I represented Mr. Burke, and he and Mr. Corrigan were representing Mr.
Corrigan.
After various negotiations at higher figures, Mr. Burke authorized me to accept
the total authorized issue of The McKinney Steel Holding Company preferred
stock, amounting to $7,250,000. (the Holding Company to own fifty-three and
three-quarters per cent. (53%%) of The McKinney Steel Company stock) in
paymert for his thirteen and three-quarters per cent. (13%%) interest.
Mr. Burke had previously told me that he desired to market all of this stock,
and wanted me to find a purchaser, and after consultation with Mr. Sherwin, I
told him I would agree to produce a purchaser at the cash price he had named
for the entire block.
EXHIBIT U-15-16a
I reported to our Discount Committee the deal in brief, and stated that I
could buy this $7,250,000. preferred stock at a price that would enable me td
turn it over to our Bond Department at ninety-three (93), and in doing this we
STOCK EXCHANGE PKACTICES
9045
would first have a very nice profit for the Banking Department. This was unanimously approved by every member of the Committee present but no record made.
Within a few days thereafter the deal was concluded. We paid Mr. Burke
$6,500,000. We turned this stock over to the Bond Department for $6,742,500;
holding for Banking Department profits $242,500.
Mr. Burke gave me his personal check for my two per cent. (2%) or $130,000.,
and congratulated me, supposing I had earned this for my personal account, and
in order that there should be no false impression I stated to Mr. Burke at the
time that I was not earning one dollar of personal profit; that the $130,000.
was an earning for the bank.
Mr. Corrigan was advised beforehand of the commission Mr. Burke had agreed
to pay me and also advised it would be treated as a bank earning. Our senior
bank officers knew all about this commission as well as several of our directors
(not officers) to whom the entire transaction was explained just after it was
consummated.
Both Mr. Burke and Mr. Corrigan were very profuse in their thanks to me in
bringing this purchase and sale about, and expressed their complete satisfaction
with every detail of the transaction.
J. R. NUTT.
EXHIBIT U-15-17
J. R. NUTT,
2512 TERMINAL TOWER,
Cleveland, Ohio, April 19, 1933.
Mr. OSCAR L. COX,
Conservator, The Union Trust Company,
Cleveland, Ohio.
DEAR MR. COX: I notice by newspaper reports that some question has been
raised about transactions between the Union Trust Company, The CorriganMcKinney Steel Company, The McKinney Steel Holding Company, The Cleveland-Cliffs Iron Company and the Estate of James W. Corrigan and Joseph R.
Nutt.
I welcome your most searching investigation. You will find that everv transaction between myself personally, and as Chairman of the Union, with the above
was in accordance with the best type of banking practice, open and above board
and clean in every respect, and that not one dollar of profit ever went directly or
indirectly to any officer of the Union Trust Company.
Sincerely yours,
J. R. NUTT.
EXHIBIT U-15-18
April 21st, 1933.
,Mr. OSCAR L. COX,
Conservator, The Union Trust Company,
Cleveland, Ohio
DEAR MR. COX: Today I saw copy of Mr. Nutt's letter to you in reference to
the Corrigan McKinney matters, and wish to confirm the report in all details,
with this slight exception: The commission paid by Mr. E. S. Burke was held in
the form of a cashier's check and credit to earnings in the bank was deferred until
later on in the year. At the time the check was received, credit was deferred
because we had under consideration the creation of a pension plan for the benefit
of the officers and employees, and we thought possibly this money could be used
directly towards that purpose. Before the end of the year, however, that idea
was dropped and the amount credited direct to earnings.
Very truly yours,
(Signed)
WMB-.EMS
2280 Demington Drive, Cleveland Heights, O.
[From Nutt's personal files.—M/LP]
W. M. BALDWIN.
9046
STOCK EXCHANGE PRACTICES
EXHIBIT U-15-19
DILLON, READ & Co.,
NASSAU & CEDAR STREETS,
New York, February 6, 1928.
J. R. NUTT, Esq.,
President, Union Trust Company,
Cleveland, Ohio
MY DEAR MR. NUTT: Some time ago I had a talk with you regarding McKinney Steel and you were good enough to arrange a meeting for me with Mr. Corrigan.
I understand that Mr. Corrigan recently passed away and that the ownership
of the McKinney Steel Company is lodged in certain Trusts with the Union
Trust Company and that the stockholders, either direct or beneficiaries of these
trusts, are four women, widows of former owners.
We are very much interested in the possibilities of purchasing all or control of
the McKinney Steel Company and I would appreciate your advice as to wrhether
there is anything that we can do at the present time to develop the situation. We
would be glad to work on this business with you and your associates if the opportunity presents.
WitE 'best wishes,
Very truly yours,
CMM:EHK
CLIFTON M. MILLER.
EXHIBIT U-15-20
FEBRUARY 8th,
1928.
Mr. CLIFTON M. MILLER,
c/o Dillon, Read & Company,
Nassau & Cedar Streets, New York, N. Y.
DEAR MR. MILLER: In reply to your letter of the 6th, wish to say that The
Union Trust Company and John H. Watson, Jr., were named as executors and
Trustees in Mr. Corrigan's will.
Mr. Corrigan owned 53%% of the stock of the Corrigan, McKinney Steel Company. This stock is deposited with The Union Trust Company as security for
an issue of $7,250,000 of the McKinney Steel Holding Company 6% preferred
stock, Mr. Corrigan owning all of the common stock in the Holding Company.
Mr. McKinney, at the time of his death, owned 30% of the Steel Company's
stock. Andrew Squire and Harry Coulby and Mrs. McKinney are holding this
stock as Trustees. S%% is owned by Mrs. Ross. The balance of 7}^% is owned
by Mrs. Stevenson Burke, so that, as you see, the entire stock of the Company is
owned really by four women.
I think there was a general feeling in the minds of a number of steel men, when
they heard of Mr. Corrigan's death, that his holdings in the Steel Company would
be on the bargain counter, or that for some reason his stock would have to be
sold, this, of course, was not true. We elected Mr. John H. Watson, Jr. as
President of the Company to succeed Mr. Corrigan, and we have announced
that the property was not for sale, nor did we care to consider any scheme for
consolidating it with any other campanies. Our plan is to go right ahead and
operate the Company. It is in splendid physical condition. Our costs are low,
and if there is any business, we believe we will get our share of it and can handle
it at a profit.
You can see, however, with the above situation, that the time will come when
the property should be sold. In my judgment, it should not be operated any
longer than is necessary by trustees. If the time comes when responsible people
want to buy it and are willing to pay a fair price for it, personally, I think that
it should be sold. In the event that there is ever a sale of the property, The
Union Trust Company could not have any interest whatever in the purchase end.
I think the above will probably give you a very clear view of the present
situation.
Sincerely yours,
EXHIBIT U-15-21a
Cleveland, Ohio, March 19, 1930.
THE UNION TRUST COMPANY and
JOHN H. WATSON, Jr.,
Trustee under the Last Will and Testament of James W. Corrigan, Deceased.
GENTLEMEN: I hereby consent to the sale of the common stock of the McKinney
http://fraser.stlouisfed.org/
Steel Holding Company owned by the Trust Estate created by the Last Will and
Federal Reserve Bank of St. Louis
STOCK EXCHANGE PRACTICES
9047
Testament of James W. Corrigan, deceased, upon the following terms and conditions:
The Purchaser is to purchase all of the common stock of the McKinney Steel
Holding Company and also the eight and three-fourths per cent (8%%) of the
capital stock of The Corrigan, McKinney Steel Company owned by Parthenia
Burke Ross, and is to pay Twenty-nine Million Eight Hundred Eighty-seven Thousand Five Hundred Dollars ($29,887,500.00) cash, upon tender of certificates
evidencing said stock, duly endorsed in blank. Said sum is to be paid as follows:
Twenty-four Million One Hundred Fifty-two Thousand Five Hundred Dollars
($24,152,500.00) pro rata to the holders of the common stock of the McKinney
Steel Holding Companv, 100/101 of which is to be paid to you as Trustees of the
Estate of James W. Corrigan, deceased; Five Million Sixty Thousand Dollars
($5,060,000.00) to Parthenia Burke Ross, and Six Hundred Seventy-five Thousand Dollars ($675,000.00) to Messrs. Donald B. Gillies, Henry T. Harrison, James
S. McKesson, Edward G. Resch and John H. Watson, Jr., the officers of The
Corrigan, McKinney Steel Company, who have been managing its business, and
who have rendered valuable special services to the said Trust Estate in connection
with the sale above mentioned, in the following amounts respectively, to wit:
EXHIBIT U-15-21b
To Donald B. Gillies
$50,000.00
To Henry T. Harrison
50, 000. 00
To James S. McKesson
50, 000. 00
To Edward G. Resch
25, 000. 00
To John H. Watson, Jr
500, 000. 00
' Any charge, compensation or expense which is necessary or proper in connection with said sale and any income tax which may be imposed on any profits which
may be realized by said Trust Estate from said sale, are to be paid out of the corpus
of said Trust Estate and not from the income drived from said Trust Estate.
The Purchaser is to give you assurance of his (its) intention to continue the employment of Messrs. Donald B. Gillies, Henry T. Harrison and James S. McKesson,
Vice-Presidents, and Edward G. Resch, Secretary and Treasurer, of The Corrigan,
McKinney Steel Company.
The conditions hereinabove set forth with reference to the sale of the stock
owned by Parthenia Burke Ross and with reference to Messrs. Donald B. Gillies,
Henry T. Harrison, James S. McKesson, Edward G. Resch and John H. Watson,
Jr., are imposed by me in recognition and liquidation of commitments made by
my deceased husband, James W. Corrigan, which I deem it my duty to see
respected, and the payments to Messrs. Gillies, Harrison, McKesson, Resch and
Watson, hereinabove provided for, are to cover compensation for their services
hereinabove mentioned.
I enclose herewith formal consent to the sale of the common stock of the
McKinnej7 Steel Holding Company owned by the said Trust Estate, which you
may deliver to the Purchaser if, as and when, but only if, as and when, the terms
and conditions hereinabove set forth are fully performed and complied with.
Very truly yours,
LAURA MAE CORRIGAN.
EXHIBIT U-15-22a
Cleveland, Ohio, March 21, 1930.
T H E CLEVELAND-CLIFFS IRON COMPANY,
Cleveland, Ohio
GENTLEMEN: The Union Trust Company represents that it is the duly authorized
agent for Mrs. Parthenia Burke Ross and, as such agent, it represents that The
Corrigan-McKinney Steel Company has issued and has now outstanding 2,500
shares, and no more, of its common stock, and has no preferred stock or bonds;
and that of said outstanding common stock said Mrs. Ross is the owner of 218%
shares, amounting to 8%% of the entire outstanding stock of The Corrigan-McKinney Steel Company.
The Union Trust Company and John H. Watson Jr., as trustees under the
Last Will and Testament of James W. Corrigan, deceased, represent that The
Corrigan-McKinney Steel Company has issued and has outstanding 2,500 shares,
and no more, of its common stock, and has no preferred stock or bonds; and that of
said outstanding common stock 1343% shares, amounting to 53%% of the entire
9048
STOCK EXCHANGE PRACTICES
outstanding stock of The Corrigan-McKinney Steel Company, are owned by The
McKinney Steel Holding Company.
Said trustees further represent that the entire outstanding capital stock of
The McKinney Steel Holding Company consists of $7,250,000 par value of 6%
preferred stock, and no more, callable at $105 per share, and 10,100 shares of
common stock, and that there are not outstanding any bonds or other obligations
owing by said The McKinney Steel Holding Company. Said trustees further
represent that they own 10,000 shares of said common stock of The McKinney
Steel Holding Company and that they control and are in position to sell and deliver
the other shares of said common stock.
The Union Trust Company and John H. Watson Jr., as trustees under and by
virtue of authority conferred by said Last Will and Testament and with the
approval of Laura Mae Corrigan and of the Probate Court of Lake County, Ohio
and The Union Trust Company as agent for Parthenia Burke Ross, hereby offer to
sell and deliver to you, upon the terms hereinafter stated, said 10,100 shares of the
common stock of The McKinney Steel Holding Company and said 218% shares of
the common stock of The Corrigan-McKinney Steel Company, you to pay to The
Union Trust Company for their account for all of the aforesaid stock in cash the
amount of $29,887,500.
The Union Trust Company and John H. Watson Jr., as such trustees, from
funds now in the hands of said McKinney Steel Holding Company, will immediately deliver to The Union Trust Company for distribution to the preferred stockholders of said holding company an amount in cash sufficient to pay the quarterly
dividend payable to such preferred stockholders on March 31, 1930.
Said trustees will leave in the treasury of said steel holding company an amount
of cash equal to 80/360ths of the amount of the franchise taxes paid to the State
of Delaware for the year 1929, and will also leave in the treasury of said holding
company an amount equal to 80/360ths of the franchise taxes paid by said company to the State of Ohio for 1929.
EXHIBIT U-15-22b
The undersigned trustees agree that they will pay and satisfy all existing obligations and indebtedness of the holding company and, if, after providing for said
dividends payable to said preferred stockholders of March 31, 1930 and leaving
said cash in the treasury for franchise taxes, there shall remain any cash in the
treasury of the steel holding company, they will distribute such remainder of cash
to the present existing stockholders of said company; but no disposition of any of
the other assets of the steel holding company will be made.
The undersigned further agree that they will cause six of the directors of The
Corrigan, McKinney Steel Company, or such of them as you may desire, to
immediately resign, and in the places of those resigning there will be elected
directors whom you may select. They will also cause all of the officers and directors of The McKinney Steel Holding Company to immediately resign, you to
choose in their places officers and directors of your selection.
If this proposition is acceptable to you, please endorse your acceptance on the
bottom hereof.
THE UNION TRUST COMPANY,
Agent for Parthenia Burke Ross.
By W. M. BALDWIN,
President.
THE UNION TRUST COMPANY,
B} W. M. BALDWIN,
r
President.
and
JOHN H. WATSON, JR.,
Trustees.
MARCH 21,
1930.
I hereby approve the above proposition and consent to such sale on the terms
stated.
LAURA MAE CORRIGAN.
MARCH 21,
1930.
The foregoing proposition is hereby accepted.
THE CLEVELAND-CLIFFS IRON COMPANY,
By S. L. MATHER,
Vice President.
STOCK EXCHANGE PKACTICES
9049
EXHIBIT U-15-23
PROBATE COURT,
Lake County, Ohio, March 21st, 1930.
In the matter of the Trusteeship of the estate of James W. Corrigan, deceased.
Compensation allowed
This day this cause came on to be heard upon the application of the Union
Trust Company, of Cleveland, Ohio, and John H. Watson, Jr., Trustees under
the Last Will and Testament of James W. Corrigan, Deceased, for approval and
allowance of the payment of compensation to said John H. Watson, Jr., for special
services rendered in connection with the sale therein mentioned, and upon the
evidence, and the Court, being fully advised in the premises, finds that Three
Hundred Fifty-five Thousand Seven Hundred Two Dollars and Twenty-three
Cents ($355,702.23) is just and equitable compensation to said John H. Watson,
Jr., for special services to said Trust in connection with said sale.
It is therefore ordered and decreed that the payment to said John H. Watson,
Jr., Trustee of said Trust Estate, for special services rendered in connection with
said sale, of the said sum of Three Hundred Fifty-five Thousand Seven Hundred
Two Dollars and Twenty-three Cents ($355,702.23), to be paid only out of the
proceeds of said sale, be and it is hereby approved, authorized and allowed.
ADDIE NYE NORTON, Probate Judge
(Attached is a " Certificate to Copy of Record " of the Lake County, Probate
Court, in Painesville, dated March 21, 1930, signed by Addie Nye Norton, Judge
of Probate Court.)
(Information from Estates Trust Department Files)
EXHIBIT U-15-24a
3-21-1930.
STATE OF OHIO,
Lake County, ss.
In the probate court—Application
In re Estate of James W. Corrigan, Deceased.
Now come the Union Trust Company, of Cleveland, Ohio, and John H. Watson,
Jr., the duly appointed, qualified and acting Trustees of a certain Trust Fund
created by the Last Will and Testament of James W. Corrigan, deceased, and
respectfully represent to the Court that, as said Trustees, they hold Ten Thousand
(10,000) shares of the common capital stock of the McKinney Steel Holding Company, a Delaware corporation; that under the provisions of the said Will of James
W. Corrigan, deceased, said Trustees can sell said stock only with the consent of
Laura Mae Corrigan; that said Laura Mae Corrigan has delivered to said Trustees
a consent, in writing, to the sale of said common stock, upon the terms and conditions set forth therein, a copy of said consent, marked "Exhibit A," being hereunto attached and made a part hereof; that said consent provides for the payment
of certain compensation to Messrs. Donald B. Gillies, Henry T. Harrison, James
S. McKesson, Edward G. Resell and John H. Watson, Jr., who have rendered
valuable special services to the said Trust Estate in connection with the sale
therein mentioned, in the amounts in said consent specifically set forth; that said
John H. Watson, Jr., is one of the Trustees of said Trust Estate; that of the said
special compensation so provided for in said consent, Four Hundred Eighty
Thousand One Hundred Ninety-eight Dollars and One Cent (480,198.01) is
payable by said Trust Estate; that your applicants believe that a sale of the said
common stock of the McKinney Steel Holding Company, owned by said Trust
Estate, upon the terms and conditions set forth in said Exhibit A hereunto
attached and made a part hereof, is for the best interests of said Trust Estate and
the beneficiaries thereof, and that the portion of the compensation to be paid to
Messrs. Donald B. Gillies, Henry T. Harrison, James S. McKesson, Edward G.
Rtsch and John H. Watson, Jr., by the said Trust Estate, for the special services
EXHIBIT U-15-24b
by them rendered to said Trust Estate in connection with said sale, is just and
equitable.
Wherefore, your applicants pray that this Honorable Court authorized a sale
of the common stock of the McKinney Steel Holding Company, upon the terms
and conditions set forth in Exhibit A hereunto attached and made a part hereof,
9050
STOCK EXCHANGE PRACTICES
and that the payment of the said sum of Four Hundred Eighty Thousand One
Hundred Ninety-eight Dollars and One Cent ($480,198.01) toward the said
compensation of said Donald B. Gillies, Henry T. Harrison, James S. McKesson,
Edward G. Resch and John H. Watson, Jr., as in said Exhibit A provided for,
be approved and authorized by this Honorable Court.
THE UNION TRUST COMPANY,
By
and
Trustees under the Last Will and Testament of James W. Corrigan, Deceased,
MARCH 21, 1930.
EXHIBIT U-15-25a
(Copy)
EXTRACT FROM MINUTES OF TRUST COMMITTEE MEETING MARCH 26, 1930 IN R E :
JAMES W. CORRIGAN ESTATE, SALE OF CORRIGAN MCKINNEY STOCK
At the meeting of March 5, 1930, J. R. Nutt was vested with authority on
behalf of The Union Trust Company as one of the executors and trustees under
the will of James W. Corrigan, deceased, to negotiate for the sale of the common
stock of the McKinney Steel Holding Company, and to consummate said sale if
he deemed same advisable, but only with the consent and approval of John H.
Watson, Jr., co-trustee and co-executor with The Union Trust Company, and
also with the consent and approval of Mrs. Laura Mae Corrigan, wTho by the
terms of said will is required to approve said sale.
Mr. Nutt stated to the Committee that a sale of said stock had been made and
payment therefor had been received in cash by the trustee under Mr. Corrigan's
will. Mr. Nutt stated to the Committee that the McKinney Steel Holding
Company owned 53%% of the capital stock of the Corrigan, McKinney Company
and said holding company had outstanding $7,250,000.00 of 6% preferred stock
redeemable at 105, and 10,100 shares of no par common stock, and that of said
common stock the Estate of James W Corrigan held 10,000 shares. He further
stated that the holders of said 100 shares of common stock had consented and
joined in said sale and had sold their said common stock on exactly the same
terms and conditions as the common stock held by the Corrigan Estate wras sold.
He further stated that in making said sale the entire net value for sale purposes of the Corrigan, McKinney Company was taken at $60,000,000.00 which
would have given a value to the 53%% of Corrigan McKinney Company stock
held bv the McKinney Steel Holding Company of $32,250,000.00. From this
was deducted the redemption price of the preferred stock which redemption
price amounted to $7,612,500.00 thus giving a sale value to the 10,100 shares of
common stock of said holding company of $24,637,500.00, and that all of said
common stock was sold for said last mentioned amount; that said amount so
received for all of said common stock was proportioned pro-rata to the holders of
said common stock, and that the trustees of the Estate of Mr. Corrigan received
for said 10,000 shares of common stock the sum of $24,393,564.35; that for
services rendered in connection with the sale of said common stock held by the
Corrigan Estate there had been paid by the trustees of the Corrigan Estate to the
following named persons, the following amounts:
John H. Watson, Jr., Trustee under will of Mr. Corrigan
Donald B. Gillies
Henry T. Harrison
James S. McKesson
Edward G. Resch
Cost of Revenue stamps in addition
Making a total of_ __ _
$355, 702.
35, 570.
35, 570.
35, 570.
17, 785.
200.
23
22
22
22
12
00
$480,398.01
EXHIBIT U-15-25b
and leaving net to the trust estate created by Mr. Corrigan's will the sum of
$23,913,166.34 from which amount however it had been estimated that approximately $1,600,000.00 would have to be paid to the U.S. Treasury as an income or
profit tax.
STOCK EXCHANGE PRACTLCES
9051
Mr. Nutt further stated that Mrs. Corrigan had made it a condition to her
consent to such sale that the above compensation should be paid; that the entire
matter had been submitted to the Probate Court of Lake County, Ohio, and that
said Court had approved said sale and had fixed and allotted the payments of said
compensation in the amounts above set forth on March 21, 1930.
Mr. Nutt further stated that the holders of said 100 shares of McKinney Steel
Holding Company common stock had paid compensations to the above named
persons in proportion to that paid by the Corrigan Estate.
On motion duly made, seconded and carried, the sale so made by Mr. Nutt and
the payment of compensation as above set forth were ratified and confirmed.
(Information taken from Estates Trust Dept. files.)
EXHIBIT U-15-26
(Copy)
PARTHENIA BURKE ROSS
Statement of account covering period from March 24, to April 10, 1930, both
inclusive
Receipts 1930:
Mar. 24. Proceeds of sale of 218% shares The CorriganMcKinney Steel Company common stock
$5, 250, 000. 00
Apr. 10. Interest at 2% on daily cash realized balances
3, 230. 68
$5, 253, 230. 68
Disbursements 1930:
Mar. 24. Paid expenses as follows in connection with sale of
218% shares The Corrigan-McKinney Steel Co.
common stock—
Revenue Stamps
Compensation for services rendered in matter
of sale of 218% shares The CorriganMcKinney Steel Company common stock
owned bv Parthenia Burke Ross to:
John H. Watson, Jr
Donald B. Gillies
Henry T. Harrison
James S. McKesson
Edward G. Resch
Apr. 3. Paid to Parthenia Burke Ross by wire transfer
thru Federal Reserve Bank of New York for her
credit at Fidelity Union Trust Company,
Newark, N.J
!_--_
4. Paid to Parthenia Burke Ross by wire transfer
thru Federal Reserve Bank of New York for her
credit at Fidelity Union Trust Company,
Newark, N.J
8. Paid to Parthenia Burke Ross by wire transfer
thru Federal Reserve Bank of New York for her
credit at Fidelity Union Trust Company,
Newark, N.J
I
10. Paid to Parthenia Burke Ross by wire transfer
thru Federal Reserve Bank of New York for her
credit at Fidelity Union Trust Company,
Newark, N.J. balance in account including
interest-
$4. 38
140, 740. 75
14,074.08
14,074.08
14,074.08
7,037.01
2, 000, 000. 00
1,000,000.00
1,000,000. 00
1, 063, 226. 30
$5, 253, 230. 68
9052
STOCK EXCHANGE PEACTICES
EXHIBIT U-15-27
(For Walter H. Seymour, Representative of U.S. Senate Committee on Banking &
Currency: This is not a part of the records of The Union Trust Co. It is an
internal memo by a junior member of the staff of the undersigned. It has not
been»verified as to facts. Any opinions or conclusions are personal to the
member of the staff preparing this memo.—Oscar L. Cox, Deputy Superintendent of Banks, State of Ohio)
Summary of compensation paid for sale of various interests entering into the Cleveland Cliffs purchase of controlling interest in Corrigan McKinney Steel Company
M. B. &
Parthenia
H. H. John- Burke
Ross
son
Corrigan
Estate
John H Watson, Jr
Donald B. Gillies
Henry T Harrison
James S. McKesson
Edward G. Resch
.
_
Total received
355, 702. 23
35, 570. 22
35, 570 22
35, 570. 22
17, 785.12
3, 557 02
355.70
355. 70
355. 70
177. 87
140.740. 75
14, 074. 08
14.074.08
14, 074. 08
7, 037. 01
500.000.00
50,000.00
50, 000 00
50,000. 00
25, 000. 00
480,198.01
4,801. 99
190, 000.00
675, 000. 00
See Mrs. Corrigan's letter 3-19-30.
Item I. The Corrigan Estate paid for the sale of 10,000 shares of the McKinney
Steel Holding Company, Common Stock.
Item II. M. B. & H. H. Johnson paid for the sale of 100 shares of the McKinney
Steel Holding Company, Common Stock.
Item I I I . Parthenia Burke Ross paid for sale of 218% shares of Corrigan
McKinney Steel Company, Common Stock.
EXHIBIT U-15-28a
$3,387,500.00.
APRIL 23, 1933.
On or before three months after date, the undersigned, The Cleveland-Cliffs
Iron Company, an Ohio corporation, promises to pay to the order of The Union
Trust Company, at its office, Three Million Three Hundred Eighty Seven
Thousand Five Hundred and no/100 Dollars, for value received, with interest at
the rate of six (6) per cent, per annum, after maturity until paid, payable quarterly in advance, unpaid installments of interest to draw interest at the same
rate as the principal.
This note is one of a number of notes the undersigned, aggregating Fourteen
Million Six Hundred Seventy-eight Thousand Four Hundred Forty-seven
Dollars and Twenty Cents ($14,678,447 20) in principal amount, all bearing the
same date and equally and ratablv secured by an Extension Agreement, dated
January 23, 1933, between T H E CLEVELAND-CLIFFS IRON COMPANY and T H E
UNION TRUST COMPANY, TRUSTEE, as amended by Agreement dated April 20,
1933, to which Extension Agreement reference is hereby made for a statement
of the security and the terms and conditions upon which such security is held by
the Trustee, and upon which such security may be enforced.
This note is additionally secured as one of a number of notes of the undersigned,
aggregating Twenty-six Million Two Hundred Eighty-three Thousand Four
Hundred Seventy-four Dollars and Ninety-eight Cents ($26,283,474.98), all
bearing the same date and secured by an Extension Indenture, dated January
23,
1933,
between T H E CLEVELAND-CLIFFS
IRON COMPANY and
T H E UNION
TRUST COMPANY, TRUSTEE, as amended by Agreement dated April 20, 1933, to
which Extension Indenture reference is hereby made for a statement of the
security and the terms and conditions upon which such security is held by the
Trustee, and upon which such security may be enforced, the Indebtedness represented by this note constituting a part of the Indebtedness therein referred to as
"Type B Indebtedness.''
This note is subject to the undersigned proposing successive renewals of this
note, for three months each, such successive renewals together in any event not
to permit a renewal maturity date of this debt beyond January 23, 1934. Such
successive renewals of this note, if proposed by the undersigned, must be ac
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Cliffs Iron Co.
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U-15-28C
to Cleveland Cliffs I5
Collateral on Loan
1 0 , 1 0 0 3 h s fi'he '"cKlnney S t e e l Holding
100,QC£*£i3s the O t i s S t e e l Co Co-n
Held In Corporate Trust D e f t .
Participant*s
Ouftrdisn Trust Co., Cleveland
Central United Hatioml Banlc.C
CleTeland Trust Company
Union Trust comp any
Bankers Trust Company, H. J .
Cont. 111. Bank * Trust Co., Chicago
First National bulk, Chicago
Tto. G. Mather
•1,600,000.00
800,000.00
300,000.00
3.387,600.00
4,000,000.00
3,500,000.00
1,000,000.00
200,000.00
&- Aggregate p r i n c i p a l amount, a l l bearing the
same date and secured by an Extension Agreement
dated January 2 3 , 1933, betwenn The ClevelandC l i f f s I ron Co. and The Onion Trust Co.,Trustee'
EXHIBIT U-15-28d
•• o '
jaf-jSco
3/7V^« 1
i £ 6
.
^3ir7^-=
3'i1-){~o<>
EXHIBIT
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EXHIBIT U-15-28e
STOCK EXCHANGE PEACTICES
9053
cepted by the holder of this note and his endorsees, assignees and transferees
unless the holders of seventy-five (75) per cent, in principal amount of the
Indebtedness secured by said Extension Indenture shall reject any such renewal
as to the entire amount of said Indebtedness.
Interest in advance upon the note representing any such successive renewal
of this note shall be payable one-third thereof by delivery of a note substantially
in the form of this note, and the principal amount of which shall become and be
treated as a part of the Type B Indebtedness of the Company, secured by said
Extension Agreement and by said Extension Indenture, if such method of payment of interest is proposed by the Company and is not rejected by the holders
of seventy-five (75) per cent, in principal amount of the Indentures secured by
said Extension Indenture. Interest in advance upon notes representing interest
shall be paid entirely in cash.
The principal of this note may become due in advance of its maturity in case
of default or sale under said Extension Indenture and/or said Extension Agreement as provided therein respectively.
THE CLEVELAND-CLIFFS IRON COMPANY,
By W. G. MATHER, President.
CHAS. S. HEER, Treasurer.
Due 7/24/33, 13219.
EXHIBIT U-15-28b
THE UNION TRUST COMPANY,
OSCAR L. COX,
Conservator.
WILLIAM TOULES,
Assistant Conservator.
R. S. WILLIAMS,
Junior Assistant Conservator.
(Exhibit U-15-28C through U-15-28e face this page)
EXHIBIT U-15-29
JANUARY 6, 1932.
Mr. T. W. LAMONT,
c/o J. P. MORGAN & Co.,
New York, N.Y.
DEAR MR. LAMONT: Remembering what you said to me one day when I was
in your office, I am enclosing herewith balance sheets of The Cleveland Cliffs
Iron Company and The McKinney Steel Holding Company together with
accompanying data, showing where The Cleveland Cliffs Iron Company's loans
are held and how secured.
You will note under the "Participated Secured Loans" that The Union Trust
Company has an interest of $-3,387,500.00. I would like to sell this participation to you under our re-purchase agreement or with our endorsement, which
ever you prefer. My thought is that if the Reconstruction Finance Corporation is authorized by Congress, and I believe it will be,—as soon as it is in operation I can place this participation with that Corporation and relieve you of it.
I think this is only a matter of a very few weeks.
The indebtedness of The Cleveland Cliffs Iron Company was all created
through its purchase in March 1930 of a 62}^% interest in The Corrigan, McKinney Steel Company, at a cost of $37,500,000.00. It assumed $7,250,000
McKinney Steel Holding Company preferred stock, callable at 105,—amounting
to $7,612,500 and paid the balance $29,887,500 in cash. According to their
statement, The Cleveland Cliffs Iron Co. has evidently used $5,000,000 of its
own cash and has outstanding loans of $24,887,500 representing the balance.
The Cleveland Cliffs Iron Company has been one of our most important and
successful concerns for a long period of years.
I shall be glad to know whether the suggestion I have made above appeals to
you.
With many kind regards I am
Sincerely yours,
9054
STOCK EXCHANGE PRACTICES
EXHIBIT U-15-30a
23 WALL STREET, NEW YORK,
January 13, 1932.
DEAR JOE: In reference to the Cleveland Cliffs matter: I had one of the men
on my staff analyze for me privately this data that you sent on, and what he
says is as follows:
"The loan suggested rests for its only security on 62^% of the common stock
of the Corrigan McKinney Steel Company, and this lien as to most of this stock
is in effect subject to preferred stock of an intermediate company outstanding
in the amount of $7,250,000, calling for annual dividends of $435,000. The
Corrigan McKinney Steel Company is operating at a loss and is not paying any
dividends on its common stock but the Cleveland Cliffs Iron Company is itself
paying the dividends on the $7,250,000 holding company preferred stock. To
meet its obligation in this respect, it shows total current assets on November 30
of $15,500,000 and current liabilities of $4,537,000 outside of special bank loans
aggregating $24,887,000, of which the loan in question is a part. In other words,
its total annual requirements for interest at 6% must be around $1,980,000. Of
its quick assets of around $15,000,000 mentioned above $8,571,000 consists of
inventory, iron ore, pig iron, coal and supplies and about $7,000,000 other current
assets including $2,000,000 cash, to offset $4,500,000 current liabilities.
I am most regretful that the firm cannot see its way clear to take over this
item, even under the repurchase agreement. It falls too much in the category of
dead slow stuff. You know how anxious we are to help in any way that is
feasible. We took over your British credit unhesitatingly. We made an arrangement in the Higbie matter that was of relief to the Cleveland banks. We have
noted without objection the transfer of deposits from New York to Cleveland in
an undue proportion, but in a way that would be of aid to the Cleveland banks;
EXHIBIT U-15-30b
but this particular item, my dear Joe, is beyond us.
With every good will,
Sincerely yours,
T. W. LAMONT.
J. R. NUTT, Esq.,
Union Trust Building y Cleveland, Ohio.
EXHIBIT U-15-31
To Private Wire Operator,the Union Trust Company, Cleveland, Ohio.
Please Despatch the Following Message:
To Mr. L. O. CARR, Jr.,
New York, N.Y.
JAN. 13, 1932.
Please deliver following message to Mr. T. W. Lamont care of J P Morgan &
Company quote Kindly return Cleveland Cliffs data sent you in my letter
January sixth
J. R. NUTT.
EXHIBIT U-15-32
(Postal Telegraph—The International System—Commercial Cables—All America Cables—Mackay Radio)
NEW YORK, N.Y., Jan. 9, 1932.
J. R. NUTT,
Union Trust Bldg.
Will telephone you Monday morning reference your letter sixth.
T. W. LAMONT.
EXHIBIT U-15-33
(Postal Telegraph—The International System—Commercial Cables—All America Cables—Mackay Radio)
NEW YORK, N.Y., Jan. 13, 1934.
J. R. NUTT,
Union Trust Bldg.
I am mailing you tonight the data requested.
T. W. LAMONT.
THE CLEVEUlir
COLLATERAL LOANS
1 280 000 00
7-10 436?0
10-9
330 000 00
10
"9
330 000'00
1 280 000 00 7-10
1 280 000 00
1 030 000 00
- % -O-30- -000- -00- - - 4
1 030 000 00
10-3 4-6Z38
1 030 000'00
1C-9 4646;
8-25
5 4-4i-~~.33O--0O0.-00
-49-9-
Jf! 1-2
700 000 00
5 1-a 330 ooo oo
EXHIBIT U-15-50a
1 030 000 00
1 030 000 00
10-3
10-9
|
NAME
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BOND
INDIRECT
OLD
BALANCE
i
DATE
NO.
j
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COLLATERAL LOANS
~
M A K E R
j
E
3R
RATI
CNODL°URATERRAL
DUE
DATE
DATE
PAID
DEBIT
CREDIT
12-31-23
BALANCE
DATE
^ ^ ^
500 000 00
500 000 00 12-31
j
-
0-
• 12-31
Qk
*
19 24
V3
63695
5
!
4-?-24 500 000 90
500 000 00»1-3-24
V4~e43-21-24
500 000 00
•
•we-Doo-oo- J.4—2-4- 0-
1
500 000 00 3-21-24
12-31-27
1
•>21-24
I 26570
1000 000 00 1-4-28
4 OEM •
,
1000 000 00
1-4-28
1 000 0C0 0Q1000 000 00*12-31-27
-0-»1-4-28
j
3-21-30
68303
5 9-22-30 14387 500 00
3-22-30
14387 500 00 14387 500 00*3-21-30
14387 500 00
3-22-30
68320
5 9-22-30 3387 500 00
9-22-30
3387 500 00 3387 500 00*3-22-30
•
3387 500 00
9-22-30
| 76503
j 4 3-23-31 3387 500 00
3-23-31
33d7 500 00.3387 500 00*9-22-30
\
3387 500 00 3-23-31
3387 bOO 00 9-63431
3387 500 00 9-25-31
84404
j 4 9-23-31 3387 500 00
9-23-31
138? bOo 00 3387 500 00*3-23-?
92112
| \*t 3-23-32 338'i 500 00
9-25-31
3387 500 00 3Jd7 500 00*9-23-
10-8-31
92112
44 3-23-323387 500 00
1-b-32
3387 500 Qq-33u r 500 00*10-8-31
4^ 3-23-323387 500 00
3-29-32
ili'l
6 9-23-32 3387 500 00
9-2 3-32
3387 500 00 1-5-32
33«7 oOO uC 3-29-J2
6887 500 00 6-23-32
6887 500 00
6887 500 00
|
6956 375 00
6-2 4-3 2
6-27-32
J
9- .. 3-3 2
1
i
uQO 00 33d7 500 00*1-5-32
99346
2667
i687
2688
2689
2690
2737
2738
6188
O 1 Ty
6191
6iy2
6 9-23-32 1000 000 00
2"IQ"»
6 9-23-3 2 1000 000 00
taV-*!
bOO 000 00^^87 tjQQ 00 •3-29-32
33d7 ^00 0G 68d7 500,00*6-23-32
1000 boo 00
1000 000 uo
1000 000 00
bOO 000 UJ 6887 500 00*6-24-32
35 000 00
3ott7* g'6B b8 6 9 b 6 3 7 5 00*6-27-32
5 00 000 00
11 um m m 88 ^"^
1
6 9-23-32
35 000 00 ?"^3-32
'
b \ 2-23*324000 Ooo » ^ & ? 3 2
6 12-23-3,;
EXHIBIT U-15-50b
fafc
BV5 0 0 i
2
. , .
875 OO"^
875 00
^Hg
1
NAME
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DIRECT
BOND
INOIRECT
)
OLD
BALANCE
,956 375 00
DATE
MAKER
NO
12-23 •32
o«VoD£niH«J
1-2 3-33
!
j
I
:
fxJCO cDv vw
500 000 03
1000 000 00
1000 000 00
1000 000 00
r Q QT 41 A A
oo o7b 0 0
68 875 00
ON BOwKS— 6 % 6 375 00 12-23 32
11046
i
1-24 1 300 000 00 ' 4-25-3 3
iOOO tOO 00
11047
>
*-24 1 300 000 0 0 - 4-25-33 •
1000 000 0 0
11048
*-24
11050
i
i
i
11051
S
4-24 < /
11052
6
4-24 - 17 125 69 t 4-25-3 3
-0-
(BOOK VALUE)
&
4.24 -v 17 694 45
-0-
(BOOK VALUE]
4-24
4-2 5-3 3
4-25-33
783 45 i 4-2 5- 33
IABILI
4-25-33
707 8 072 34
Deo, 1 , 193 5
7-24
6
7-2 4 : S387 500 00^ ' 7-7-33
6
7-24
1 00
13221
6
7-24
000 000 00
13222
6
7-24
000 000 00
"" 6 7-24
000 000 00
6
7-24
500 000 00
6
7-24 •
*
68 875 00-
r»
rm
m
r~
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0N 90 0 K S - - 6956 375 00• 2 * 2 - 3
.
f
-n
P.s of 7-24-3;
12-1-33
6
3 394, 96 ^
3387 500 00
(BOOK VALU£)
• 68 875 00
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STOCK EXCHANGE PRACTICES
9055
EXHIBIT U-15-34
JANUARY 14,
1932.
Personal
Mr.
T. W. LAMONT,
23 Wall Street, New York, N.Y.
DEAR TOM: Thank you very much for your letter of the 13th. The man on
your staff I think has analyzed the Cleveland Cliffs matter correctly. I am, of
course, sorry that you could not use the item in the way I suggested, but I understand the matter perfectly. Be assured I deeply appreciate the careful consideration that you have given it.
With all good wishes believe me as ever
Faithfully yours,
;
EXHIBIT U-15-35a
$1,000,000.00
APRIL 23, 1933:
On or before three months after date, the undersigned, The Cleveland-Cliffs
Iron Company, an Ohio corporation, promises to pay to the order of The Union
Trust Company at its office, One Million and no/100 Dollars for value received,
with interest at the rate of six (6) per cent, per annum, after maturity until paid,
payable quarterly in advance, unpaid installments of interest to draw interest at
the same rate as the principal.
This note is one of a number of notes of the undersigned aggregating Twentysix Million Two Hundred Eighty-three Thousand Four Hundred Seventy-four
Dollars and Ninety-eight Cents ($26,283,474.98) in principal amount, all bearing
the same date and secured by an Extension Indenture, dated January 23, 1933,
between The Cleveland-Cliffs Iron Company and The Union Trust Company,
Trustee, as amended by Agreement, dated April 20, 1933, to which Extension
Indenture reference is hereby made for a statement of the security and the terms
and conditions upon which such security is held by the Trustee and upon which
such security may be enforced, the indebtedness represented by this note being a
part of the indebtedness therein referred to as Type A Indebtedness, which
aggregates Seven Million Five Hundred Twentj^-four Thousand One Hundred
Thirty-eight Dollars and Eighty-nine Cents ($7,524,138.89).
This note is subject to the undersigned proposing successive renewals of this
note, for three months each, such successive renewals together in any event not
to permit a renewal maturity date of this debt beyond January 23, 1934. Such
successive renewals of this note, if proposed by the undersigned, must be accepted
by the holder of this note and his endorsees, assignees and transferees, unless the
holders of seventy-five (75) per cent, in principal amount of the Indebtedness
secured by said Extension Indenture shall reject any such renewal as to the
entire amount of said Indebtedness.
Interest in advance upon the note representing any such successive renewal
of this note shall be payable one-third thereof by delivery of a note substantially
in the form of this note, and the principal amount of which shall become and be
treated as a part of the Type A Indebtedness of the Company secured by said
Extension Indenture, if such method of payment is proposed by the Company
and is not rejected by the holders of seventy-five (75) per cent, in principal
due 7/24/33
EXHIBIT U-15-35d
amount of the Indebtedness secured by said Extension Indenture. Interest in
advance upon notes representing interest shall be paid entirely in cash.
The principal of this note may become due in advance of its maturity in case
of default or sale under said Extension Indenture as provided therein.
THE
CLEVELAND-CLIFFS IRON COMPANY,
By WM. G. MATHER,
President.
CHAS. G. HEER,
Treasurer.
THE UNION TRUST COMPANY,
OSCAR L. COX, Conservator.
WILLIAM TOWERS, Assistant Conservator.
R. L. WILLIAMS,
Junior Assistant Conservator.
175541—34—PT 20
21
9056
STOCK EXCHANGE PRACTICES
Interest in advance upon the note representing any such successive renewal of
this note shall be payable one-third thereof by delivery of a note substantially in
the form of this note, and the principal amount of which shall become and be
treated as a part of the Type A Indebtedness of the Company secured by said
Extension Indenture, if such method of payment is proposed by the Company
and is not rejected by the holders of seventy-five (75) per cent, in principal
due 7/24/33
EXHIBIT U-15-35b
amount of the Indebtedness secured by said Extension Indenture. Interest in
advance upon notes representing interest shall be paid entirely in cash.
The principal of this note may become due in advance of its maturity in case
of default or sale under said Extension Indenture as provided therein.
THE CLEVELAND-CLIFFS IRON COMPANY,
By WM. G. MATHER, President.
CHAS. G. HEER, Treasurer.
THE UNION TRUST COMPANY,
OSCAR L. COX, Conservator.
WILLIAM TOWERS, Assistant Conservator.
R. L. WILLIAMS,
Junior Assistant Conservator.
EXHIBIT U-15-35e
$1,000,000.00
APRIL 23, 1933
On or before three months after date, the undersigned, The Cleveland-Cliffs
Iron Company, an Ohio corporation, promises to pay to the order of The Union
Trust Company, at its office, One Million and no/100 Dollars for value received,
with interest at the rate of six (6) per cent, per annum, after maturity until paid,
payable quarterly in advance, unpaid installments of interest to draw interest at
the same rate as the principal.
This note is one of a number of notes of the undersigned aggregating Twentysix Million Two Hundred Eighty-three Thousand Four Hundred Seventy-four
Dollars and Ninety-eight Cents ($26,283,474.98) in principal amount, all bearing
the same date and secured by an Extension Indenture, dated January 23, 1933,
between The Cleveland-Cliffs Iron Company and The Union Trust Company,
Trustee, as amended by Agreement, dated April 20, 1933, to which Extension
Indenture reference is hereby made for a statement of the security and the terms
and conditions upon which such security is held by the Trustee and upon which
such security may be enforced, the indebtedness represented by this note being
a part of the indebtedness therein referred to as Type A Indebtedness, which
aggregates Seven Million Five Hundred Twenty-four Thousand One Hundred
Thirty-eight Dollars and Eighty-nine Cents ($7,524,138.89).
This note is subject to the undersigned proposing successive renewals of this
note, for three months each, such successive renewals together in any event not
to permit a renewal maturity date of this debt beyond January 23, 1934. Such
successive renewals of this note, if proposed by the undersigned, must be accepted
by the holder of this note and his endorsees, assigned and transferees, unless
the holders of seventy-five (75) per cent, in principal amount of the Indebtedness
secured by said Extension Indenture shall reject any such renewal as to the entire
amount of said Indebtedness.
EXHIBIT U-15-35e
$1,000,000.00
APRIL 23, 1933.
On or before three months after date, the undersigned, The Cleveland-Cliffs
Iron Company, an Ohio corporation, promises to pay to the order of The Union
Trust Company, at its office, One Million and no/100 Dollars for value received,
with interest at the rate of six (6) per cent, per annum, after maturity until paid,
payable quarterly in advance, unpaid installments of interest to draw interest
at the same rate as the principal.
This note is one of a number of notes of the undersigned aggregating Twentysix Million Two Hundred Eighty-three Thousand Four Hundred Seventy-four
Dollars and Ninety-eight Cents ($26,283,474.98) in principal amount, all bearing
the same date and secured by an Extension Indenture, dated January 23, 1933,
STOCK EXCHANGE PRACTICES
9057
between The Cleveland-Cliffs Iron Company and The Union Trust Company,
Trustee, as amended by Agreement, dated April 20, 1933, to which Extension
Indenture reference is hereby
@FedFRASER