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, BORROW-
ING, 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
UNITED STATES
GOVERNMENT PRINTING OFFICE
175641 WASHINGTON : 1934
STOCK EXCHANGE PRACTICES
HEARINGS
BEFORE THE
COMMITTEE ON BANKING AND CURRENCY
UNITED STATES SENATE
SEVENTY-THIRD CONGRESS
SECOND SESSION "" -) 6 "^ >v' >■ S 7*7 7 -4
ON
S. Res. 84 P^' * °
(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, BORROW-
ING, 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, Vf'S'^
Printed for the use of the Committee on Banking and Currency
UNITED STATES
GOVERNMENT PRINTING OFFICE
175541 WASHINGTON : 1034
COMMITTEE-ON .BANKING AND CURRENCY
DUNCAN U. FLETCHER, Florida, Chairman
CARTER GLASS, Virginia PETER NORBECK, South Dakota
ROBERT F. WAGNER, New York PHILLIPS LEE GOLDSBOROUGH, Maryland
ALBEN W. BARKLEY, Kentucky JOHN G. TOWNSEND, Jr., Delaware
ROBERT J. BULKLEY, Ohio FREDERIC C. WALCOTT, Connecticut
THOMAS P. GORE, Oklahoma ROBERT D. CAREY, Wyoming
EDWARD P. COSTIQAN, Colorado JAMES COUZENS, Michigan
ROBERT R. REYNOLDS, North Carolina FREDERICK STEIWER, Oregon
JAMES F. BYRNES, South Carolina HAMILTON F. KEAN, New Jersey
JOHN H. BANKHEAD, Alabama
WILLIAM GIBBS McADOO, California
ALVA B. ADAMS, Colorado
William L. Hill, Clerk
R. H. Sparkman, Acting Clerk
Subcommittee on Stock Exchange Practices
DUNCAN U. FLETCHER, Florida, Chairman
CARTER GLASS, Virginia PETER NORBECK, South Dakota »
ALBEN W. BARKLEY, Kentucky ' JOHN G. TOWNSEND, JR., Delaware
EDWARD P. COSTIGAN, Colorado JAMES COUZENS, Michigan
ALVA B. ADAMS, Colorado
' Alternate, Thomas P. Gore, Oklahoma.
2 Alternate, Phillips Lee Qoldshorough, Maryland.
II
CONTENTS
OF
PARTS 19 AND 20
ORDER OF PRESENTATION
Part 19
1. Guardian Trust Co. Pages
Financial history 8269-8356
Financial condition, 1929-33 8442-8452
Window dressing 8452-8468
Loans to officers and directors 8468-8499
Loans to officers of other banks 8499-8512
Loans to Eaton interests 8513-8515
Membership on board and management committees 8516
Compensation paid to officers 8516-8533
Employees' retirement fund 8533-8559
Trust practices 8559-8587
Corporate history, Guardian Trust Co. and subsidiaries 8587-8636
Stock-market activities of the Guardian Securities Co 8636-8652
Examinations 8664-8667
Commingling of funds 8664-8667
Hotel Hollenden Co. and DeWitt Hotels Co 8667
Loans from R.F.C 9236-9274
2. Union Trust Co.
Financial historv 8667-8713
Financial condition, 1929-33 8713-8738
Part 20
Consolidated list of officers and directors 8739-8740
Compensation to officers 8740-8746
Loans to directors 8746-8770
Loans to officers, directors of other banks 8770-8785
Loan to J. P. Harris 8786-8799
Loans to William G. Mather, director, Union Trust Co 8799-8825
Loans to K. V. Painter, director. Union Trust Co 8825-8850
Van Sweringen loans 8850-8976
Window dressing 8976-9036
Corrigan-McKinney Steel Co 9036-9081
United Milk Products Corporation 9081-9129
Trust accounts .__ 9129-9130
Union Cleveland Corporation 9131-9192
Tax evasion 9192-9217
Activities in Trust Co. stock 9218-9235
Loans from the R.F.C 9275-9296
EXHIBITS
Part 19
I. The Guardian Trust Co., Cleveland, Ohio
1. G-4-2 8269-8355
2. G-4-3 to G-4-50, inclusive 8356-8442
3. G-6a-l to G-6a-12a, inclusive 8443-8452
III
IV CONTENTS
I. The Guarriiaii Trust Co., Cleveland, Ohio — Continued
Pages
4. G-8-la to G-8-36, inclusive 8452-8468
c
G Faces 8468
6. G-5b-a to G-5b-40, inclusive 8468-8499
7. G-5C-1 to G-5C-29, inclusive 8499-8512
8. G-5e-7 to G-5e-15, inclusive 8513-8515
9. G-11-1 to G-11-15, inclusive 8516-8533
10. G-9-1 to G-9-15q, inclusive 8533-8558
11. 10-2-A to 10-22-A, inclusive 8559-8583
12. G-3 1 to G-3-17, inclusive 8587-8636
13. G-12 1 to G-12-16, inclusive 9236-9274
14. G-17-la to G-17-9, inclusive 8636-8652
15. G-6-3 to G-6-13, inclusive 8653-8664
16. 18~1-A to 18-4-A, inclusive 8664-8667
II. The Union Trust Co., Cleveland, Ohio
17. U-96a to U-97, inclu.sive 8668-8671
18. U-103 to U-108, inclusive 8671-8676
19. U-109 8677
20. U-110 8678
21. U-llla 8678
22. U-112 to U-112a, inclusive 8678
23. U-83 to U-85, inclusive 8679-8691
24. U-86 to U-89a, inclusive 8692-8704
25. U-90 to U-90g, inclusive 8705-8708
26. U-91 to U-91C, inclusive 8708-8710
27. U-93 to U-93a, inclusive 8710
28. U-94 to U-95, inclusive 8711-8712
29. U-97 8671
30. U-98 to U-101, inclusive 8712-8713
31. U-5-16 to U-5-20, inclusive 8714-8738
Part 20
32. U-B to U-B-2, inclusive 8739-8740
33. U-17-1 to U-17-10, inclusive 8740-8747
34. The Union Trust Co. loans to directors 8746
35. U-6-54ato U-6-94, inclusive 8747-8770
36. U-11-1 to U-11-13, inclusive 8770-8783
37. U-22-1 to U-22-16, inclusive 8784-8799
38. U-6-1 to U-6-53, inclusive 8799-8825
39. U-4-1A to U-4-25, inclusive 8825-8850
40. U-2-1 to U-3-12, inclusive 8850-8975
41. Institute cup Faces 8976
42. U-9-1 to U-9-34, inclusive 8976-9030
43. U-15-la to U-15-71, inclusive 9036-9081
44. U-13-1 to U-13-35, inclusive (U-13-16a-e are omitted) 9081-9129
45. U-12-6 to U-12-32b, inclusive 9129-9169
46. U-16-la to U-16-31, inclusive 9169-9192
47. U-14-la to U-14-17, inclusive 9192-9217
48. U-18-la to U-18-12, inclusive 9218-9235
49. U-19-la to U-19-7, inclusive 9275-9290
Schedule of Directors 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
Aleeting 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,
AUard 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,
Kenvon 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-1
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.— 'K. 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.
Havden, Emil Joseph, John A. Kling, E. J. Kulas, Wm. G. Mather, Otto Miller,
Kenvon 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. Mj-ers,
C. N. Osborne, N. G. Richman, Thos. P. Robbins, Jos. E. Rogers, Samuel Lewis
Smith, Whitnev Warner.
Addition to "industrial Committee, September 13, 1932: T. W. Miller.
Trust Committee.— \Y. P. Belden, F. H. 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, 19SS
The fo'.lowiiiK committees of the Board were thereupon proposed and were
named by tlic 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, Tlios. P. Rohljins.
Execvtive Committee. — F. H. Ginn, E. R. Grassclli, W. A. Harshaw, W. S.
Harden, Emil Joseph, John A. Kling, E. J. I\iilas, E. P. Lenihan, Wm. G. Mather,
Otto Miller, R. C. Norton, J. R. Nutt, Thos. P. Robbins, F. P. Root, AUard 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, Gcf). 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. Beldcn, 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-1 7-6-7-8-9 refer to photostatic copies of annual reports.
Exhibit U-17-1
The officers pay roll ta.v return for 1928
C. W. Carlson
John H. Caswell
Thomas J. Champion.
Wm. H. Frevtag
George Q. HalL
Elmer E. Creswell
Charles E. Farnsworth.
William A. Hartford..
Chas. Heil
M. B. Koellikcr
John P. Kraus
D. Y. LeFcver
H.J. McGinness
W. R. Park
Rali)h li. Pcttit
John Slicrwin, Jr
W. G. Stuber
J. L. Wudsworth
R:il|)li Williams
J. P. Harris-
Van R. Piirdy....
A. C. Coney
C. B. Lincoln
Arthur F. Reed..
J. C. Armstrong. .
C. S. BechlKTger.
E. C. Genee
Exhibit U-17-
Jo.seph P. Hancc
Win. A. lilies
II. D. Mes.sick
Chas. A. Morgan
$9. 000. 00
6, 500. 00
14, 000. 00
5, 500. 00
3, 000. 00
21, 000. 00
25. 000. 00
5, 220. 00
5, 000. 00
8, 400. 00
6, ()()(). 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
(i, 000. 00
20, 000. 00
17, 500. 00
13, 000. 00
5, 700. 00
9, 000. 00
(), 300. 00
la
$10. 000. 00
5, 500. 00
25, 000. 00
5, 730. 00
Joseph C. Rovon
L. H. Stofcr."
Jos. H. Thompson
W. A. Gibson
Lewis C. Gilger
(J. H. Hull...
W. J. O'Neill
Geo. N. Sherwin
H. L. Brown
C. J. Fairbanks
A. E. Mason
W. H. Kinsev
Harry F. Pratt
J. G."Gcddes
W. O. Stromberg
Fred W. Cook
Geo. P. Steele
F. D. Williams
Barton A. Bruce
A. B. Marshall
Horace H. Sanborn
Clara Doml)ey
Chas. B. Anderson
Exhibit U-17-
W. M. Baldwin
Geo. A. Coulton
Robert S. Crawford...
Harry K. Hills
lioger C. Hyatt
.lo.soph 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, ISO. 00
12,000. 00
lb
$45, 000. 00
50. 000. 00
30, 000. 00
IS. 000. 00
30, 000. 00
45, 000. 00
7, 200. 00
50, 000. 00
STOCK EXCHANGE PRACTICES
8741
The officers pay roll tax return for 1928 — Continued
John Sherwin
Allard Smith
C. L. Tewksbury
P. S. Wiseman
Ernest Wagley
John E. Washer
F. W. Hoyer
J. H. Clark
S. D. James
John R. Geary
A. L. Moler
William Tonks
J. C. Anderson
W. A. Pfeiflfer
Donald S. Knowlton__
George Brauer
James Dunn, Jr
C. G. Stark
Armin Boethelt
0
$35, 000. 00
4, 800. 00
12, 000. 00
4, 800. 00
7, 500. 00
4, 800. 00
8, 700. 00
5, 266. 00
5, 000. 00
7, 500. 00
15, 000. 00
7, 700. 00
6, 000. 00
6, 500. 00
4, 800. 00
25, 000. 00
4, 500. 00
4, 185. 00
Exhibit U-17-lc
Don Girgor
M. S. Halliday__
John V. Holecek.
Paul Kowallek _ _
J. E. Mazach
Carl Orlikowski_.
James L. Paton_.
Chas. Piwonka__
Ernest J. Simak_
P. J. Slach
O. M. Stafford- _
Joseph Ranft
Arnold Chimo
Gus Rozman
L. H. Fisher
G. M. Kovachy-
Earl F. Grow__.
$4, 800. 00
10, 125. 00
3, 950. 00
4, 450. 00
3, 950. 00
4, 650. 00
8, 000. 00
11,750.00
3, 300. 00
16, 000. 00
25, 000. 00
6, 000. 00
4, 080. 00
3, 660. 00
13, 500. 00
7, 750. 00
5, 100. 00
C. L. Bethel
Geo. W. Falkner
Charles J. Hodous
Frank L. Frey
P. T. Harrold
C. D. Hajek
C. J. Jindra
H. B. Chappell
Bruce Peter
C. C. Morgan
$4, 500. 00
3, 300. 00
7, 200. 00
5, 800. 00
9, 000. 00
5, 200. 00
4, 500. 00
5, 800. 00
3, 230. 00
5, 100. 00
Exhibit U-17-ld
J. B. Monda
Theodore V. BasteL..
J. H. Lackamp
T. J. Ehne
John G. Armstrong
John C. Zamecnik
Frank Kakes
Joseph Kakes
J. B. Lackamp
H. Piwonka
J. L. Tekesky
Edson L. Twerell
J. C. Sanders
G. A. Spear
W. H. Cool
F. J. Wool worth
H. H. Herbert
Roy W. Irwin
Grover H. Culver
Joseph Hollander
J. W. McHaffie
E. M. Coen
Geo. Wickerlings
$3,
3
5
4
10
3
3
4,
4
8
3
4
18
8
5
5
3
4
5
2
4
3
6
762. 00
300. 00
200. 00
900. 00
000. 00
000. 00
800. 00
500. 00
800. 00
000. 00
600. 00
800. 00
000. 00
000. 00
980. 00
250. 00
780. 00
500. 00
000. 00
875. 00
908. 00
600. 00
200. 00
1, 304, 409. 00
Exhibit U-17-2
Information return for calendar year 1929, the Union Trust Company
C. W. Carlson
John H. Caswell
Thomas J. Champion.
J. H. Clark
Elmer E. Creswell
Charles E. Farnsworth.
Wm. H. Frey tag
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
$9, 600. 00
6, 500. 00
15, 000. 00
9, 000. 00
22, 000. 00
25, 000. 00
5, 700. 00
3, 600. 00
5, 400. 00
137. 00
000. 00
750. 00
000. 00
6, 000. 00
7, 200. 00
5, 400. 00
4, 390. 00
7, 000. 00
12, 000. 00
5, 100. 00
7, 200. 00
7, 200. 00
5,
4,
4,
9,
J. P. Harris
Van R. Purdy.
Peter Ball
Exhibit U-17-2a
A. C. Coney
C. B. Lincoln
Henry Ranft
C. E. Regester
L. J. Roeder
J. C. Armstrong-.
C. S. Bechberger.
Grove H. Culver.
E. C. Genee
Joseph P. Hance..
Wm. A. Hiles
Joseph Hollander.
H. D. Messick
Chas. A. Morgan.
Joseph C. Royon.
L. H. Stofer
W. A. Gibson
$36,
000.
00
6,
000.
00
6,
569.
22
a
$13,
333.
36
11,
666.
72
3,
500.
00
4,
324.
00
3,
166.
00
6,
000.
00
10,
000.
00
5,
354.
00
6,
600.
00
10,
800.
00
6,
000.
00
3,
250.
00
27,
000.
00
6,
600.
00
20,
000.
00
8,
400.
00
6,
000.
00
8742
STOCK EXCHANGE PRACTICES
Information return for calendar year 1929, the Union Trust Company — Con.
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
J. W. McHaffie..
$f), 000. 00
13, 500. 00
21,000. 00
21,000. 00
9, 000. 00
4, 500. 00
4, 800. 00
6, 000. 00
4, 800. 00
15, 000. 00
5, 166. 00
Exhibit U-17-2b
W. O. Stroniberg
Fred W. Cook
Geo. P. Steele
Barton A. Bruce
A. B. Marshall
Horace R. Sanborn
F. D. Williams..
Clara Doinbey
Chas. B. Anderson
W. M. Baldwin
Geo. A. Coulton
Robert S. Crawford. _.
Harry E. Hills
Joseph R. Kraus
Alden W. Lewis
Ladimer Lustig
J. R. Nutt
Ailard Smith
C. L. Tewksbury
P. S. Wiseman
John E. Washer
F. W. Hoyer
S. D. James
John R. Geary
A. L. Moler
William Tonks
J. C. Anderson
Fred Hart
$7
4
21
5
14
3
9
3
13
48
50
30
20
48
8
5
50
37
4
13
7
4
5
5
8
18
8,
4
200. 00
000. 00
500. 00
500. 00
000. 00
600. 00
000. 00
180. 00
200. 00
333. 00
000. 00
000. 00
000. 00
333. 00
400. 00
448. 00
000. 00
500. 00
800. 00
000. 00
500. 00
800. 00
500. 00
000. 00
333. 00
000. 00
000. 00
500. 00
Exhibit U-17-2c
W. A. Pfeiffcr. $6, 300. 00
Donald S. Knowlton.. 7, 200. 00
George Brauer 4, 800. 00
James Dunn, Jr 25, 000. 00
C.G.Stark 4,500.00
Armin Bocthelt 4, 320. 00
Don Grigor 5, 100. 00
M. S. Hallidav 12,000.00
John V. Hoiecek 4, 200. 00
Paul Kowallek 4, 600. 00
Carl Orlikowski 4, 800. 00
Ernest J. Simak 3, 480. 00
James L. Paton 8, 000. 00
Chas. Piwonka
P. J. Slach
Jo.seph Ranft
Arnold Chimo
Gus Rozman
L. H. Fisher
G. M. Kovachv
Earl F. Grow."....
C. L. Bethel
Geo. W. Falkner...
Charles J. Hodous.
P. T. Harrold
George S. Jones
C. J. Jindra
J. E. Mazach
$11, 750. 00
16, 000. 00
4, 800. 00
4, 080. 00
4,012.00
15, 000. 00
7, 7.50. 00
5, 100. 00
4, 800. 00
3, 397. 00
7, 200. 00
9, 600. 00
3, 030. 00
4, 800. 00
4, 100. 00
Exhibit U-17-2d
H. B. Chappell
Bruce Peter
C. C. Morgan
J. B. Monda
Theodore V. Bastel...
J. H. Lackamp
W. J. Bauknet
T. J. EHne
John G. Armstrong
D. D. Scott
John C. Zamecnik
George Weckerling
Frank Kakes
Joseph Kakes
J. B. Lackamp
H. Piwonka
J. L. Tekesky
G. A. Spear
E. M. Coon
Walter Forsythe
R. Z. Mickey
Henry Lange
Paul Glove
Herbert Zdara
Pvlmcr W. Schacht
H. W. Black
Wm. J. Adamson
J. H. Benes
$5
3
5
3
3
5
2
5
10
3
3
6
3
4
5
8
3
8
2
4
4
3
3
3
3
3
4
4
800. 00
360. 00
106. 00
900. 00
600. 00
600. 00
750. 00
200. 00
000. 00
352. 00
037. 00
200. 00
900. 00
500. 00
100. 00
000. 00
600. 00
000. 00
323. 00
020. 00
500. 00
900. 00
900. 00
360. 00
390. 00
500. 00
750. 00
000. 00
Exhibit U-17-2e
Richard Bosworth
C. D. Hajek
O. M. Stafford
J. C. Sanders
Jos. H. Thompson
Roger C. Hyatt
Edson L. Twerell
$3, 525. 00
2, 741. 00
16, 666. 00
9, 000. 00
5, 775. 00
22, 500. 00
1. 200. 00
1, 345, 901. 08
11. Bones-
P. I!
urns.
J.
J.
Van R. Purdy...
C. W. C^arl.son...
Joliii 11. Caswell
Exhibit U-17-3
Tax return reported for 1930 The Union Trust Company
$4,200.00
36, 000. 00
6, 000. 00
10,200.00
7, 000. 00
Tlionuis J. Champion -
J. H. Clark-
$15, 000. 00
9, 000 00
Elmer E. Crcswcll
Charles E. Farnsworth.
Ciias. B. (;i(>HSon
22, 000. 00
25, 000. 00
IS, 121. 00
STOCK EXCHANGE PRACTICES
8743
Tax return reported for 1930 The Union Trust Company — Continued
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. Stiiber
J. L. Wadsworth__
Ernest Wagley
Ralph Williams
J. G. Geddes
$3, 600. 00
6, 000. 00
5, 600. 00
4, 500. 00
4, 800. 00
9, 000. 00
6, 000. 00
4, 200. 00
7, 450. 00
5, 400. 00
4, 500. 00
7, 000. 00
13, 000. 00
7, 200. 00
6, 000. 00
8, 400. 00
16, 500. 00
Exhibit U-17-3a
J. W. McHaffie
W. O. Stromberg
J. C Armstrong
C. 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. 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
Harrv F. Pratt
Fred'W. Cook
Geo. P. Steele
Barton A. Bruce
$5
7
6
11
4
6
12
6
3
27
4
7
22
9
6
6
7,
13
21
21
9
4
4
6
5
4
22
5
366. 00
200. 00
000. 00
200. 00
500. 00
900. 00
000. 00
300. 00
900. 00
000. 00
800. 00
200. 00
OOO. 00
000. 00
000. 00
000. 00
000. 00
500. 00
000. 00
000. 00
000. 00
500. 00
800. 00
000. 00
000. 00
000. 00
500. 00
500. 00
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. Frevtag
Harry E. Hills
Joseph R. Kraus
Alden W. Lewis
J. R. Nutt
$12, 000. 00
3, 600. 00
4, 800. 00
4, 100. 00
3, 180. 00
5, 400. 00
14, 000. 00
50, 000. 00
50, 000. 00
30, 000. 00
6, 000. 00
21, 000. 00
50, 000. 00
10, 000. 00
50, 000. 00
Allard Smith
C. L. Tewksbury
Richard W. Bosworth.
John E. Washer
F. W. Hoyer
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
Cleve
land
Cor-
pora-
tion.
Exhibit U-17-3c
W. A. Pfeiffer
Donald S. Knowlton
George Brauer
James Dunn, Jr
C. G. Stark
Armin Boethelt
Don Grigor
M. S. Hallidav
Peter Ball_..I>Union/
A. C. Coney..
C. B. Lincoln.
Henry Ranft__
C. E. Regester
L. J. Roeder...
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
7
4
25
4
4
5
13
13
20
17
5
9
5
4
4
4
5
3
8
12
16
3
4
4
16
7,
5
600. 00
800. 00
800. 00
000. 00
500. 00
500. 00
400. 00
500. 00
058. 00
000. 00
500. 00
600. 00
946. 00
000. 00
147. 00
400. 00
800. 00
000. 00
600. 00
000. 00
000. 00
500. 00
000. 00
260. 00
200. 00
500. 00
750. 00
400. 00
Exhibit U-17-3d
Herbert Zdara
C. L. Bethel
Geo. W. Falkner
Chas. J. Hodous
P. T. Harrold
George S. Jones
Elmer W. Schacht
C. J. Jindra
J. E. Mazach
H. W. Black
H. B. Chappell
Bruce Peters
C. C. Morgan
J. B. Monda
Theodore V. Bastel...
J. H. Lackamp
W. J. Bauknet
T. J. Eline
John G. Armstrong
$3, 780. 00
5, 000. 00
3, 480. 00
7, 200. 00
10, 000. 00
3, 420. 00
3, 480. 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
8744
STOCK EXCHANGE PRACTICES
Tax return reported for 1930 The Union Trust Com-pany — Continued
D. D. Scott
George Weckerling.
Frank Kakes
Joseph Kakes
J. B. Lackamp
$3, 000. 00
6, 200. 00
4, 000. 00
4, 800. 00
5, 400. 00
IT. Piwonka..
J. L. Tekesky
G. A. Spear..
$8, 000. 00
3, 600. 00
8, 000. 00
1, 296. 132. 00
Exhibit U-17-4
The Union Trust Company — Salaries reported to the Government for the year 1931
J. H. Bcnes $4, 200. 00
J. P. Harris 36, 000. 00
Van R. Purdy 6, 000. 00
C. W. Carlson- 10, 200. 00
John H. Caswell 7, 000. 00
Tliomas J. Ch.i.npion. 15, 000. 00
J.H.Clark 9,000.00
Elmer E. Creswell 22, 000. 00
Charles E. Farnsworth. 25, 000. 00
Charles B. Gleason. . _ 25, 000. 00
George Q . Hall 3, 600. 00
William A. Hartford.. 6, 000. 00
Charles Heil 5, 600. 00
Homer H. Herbert 4, 500. 00
W.R.Irwin 4,800.00
M. B. Koelliker 9, 000. 00
Henry Lange 4,200.00
D. Y. LaFever 7, 500. 00
Dave Lewis 4, 600. 00
H. J. McGinness 5, 400. 00
W.R.Park 4,500.00
Ralph B. Pettit 7, 000. 00
W. G. Stuber 13, 000. 00
J. L. Wadsworth 6, 200. 00
Ernest Wagley 6, 000. 00
Ralph Williams 8, 400. 00
J. G. Geddes 16, 500. 00
J. W. McHaffie 5, 400. 00
W. O. Stromberg 7, 200. 00
J. C. Armstrong 6, 000. 00
C. S. Bechberger 11, 200. 00
Walter M. Forsy the.- 4,500.00
E. C. Genee 6,900.00
Joseph P. Hance 12, 000. 00
Wm. A. Hiles 6, 300. 00
Joseph Hollander 3, 900. 00
H. D. Mcssick 27,000.00
R.Z.Mickey 4,800.00
Chas. A. Morgan 7, 200. 00
Joseph C. Rovon 22, 000. 00
L. II. Stufer 9, 000. 00
Grove H. Culver 6, 000. 00
W. A. Gibson 6, 000. 00
Lewis C. Gilger 7, 000. 00
G. H. Hull 13, 500. 00
W. J. O'iNeill 21, 000. 00
George N. Sherwin 21, 000. 00
II. L. Brown 9, 000. 00
C. J. Fairl)anks 4, 500. 00
A. E. Ma.son 4, SOO. 00
W. H. Kiiisev 6,000.00
Harry F. Pratt 5, 000. 00
Fred W. Cook 4, 000. 00
George P. Steele 22, 500. 00
Barton k. Bruce
John P. Kraus
A. B. Marshall
Horace R. Sanborn..
F. D. Williams
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
Allard Smith
C. L. Tewskbury
Richard W. Bosworth
John E. Washer
F. W. Hoyer
Ladimer Lustig
S. D. James
John R. Geary
A. L. Moler
William Tonks
J. C. Anderson
Ed. M. Coen
Fred Hart
W. A. Pfeiffer
Donald S. Knowlton.
Beorge Brauer
James Dunn, Jr
C. G. Stark
Armin Boethelt
Don Grigor
M. S. Hallidav
Peter Ball... 1.1
A. C. Coney...
C. B. Lincoln..
Henry Ranft
C. E. Regester_
L. J. Rocder
Paul Glove
John v. Holecek
Paul Kowalk'k...
Carl Orlikowsky.
Ernest J. Simak.
James L. Paton.
Chas. Piwonka..
P. J. Slacii
Jo.scph Ranft
Arnold Chimo
Gus Rozman
$5
3
11
3
3
3
2
14
50
50
30
6
21
50
10
50
40
4
5
3
5
5
i$66, 100.00 J
5
5
9
19
9
3
5
6
7
4
25
4
4
5
13
12
20
17
5
6
5
4
4
4
5
3
7
12
17
2
4
4
, 500. 00
, 000. 00
, 000. 00
, 600. 00
, 600. 00
, 180. 00
, 925. 00
, 000. 00
, 000. 00
, 000. 00
, 000. 00
, 600. 00
. 000. 00
, 000. 00
, 000. 00
, 000. 00
, 000. 00
, 550. 00
, 000. 00
, 712. 00
, 000. 00
, 500. 00
, 700. 00
, 000. 00
, 000. 00
, 000. 00
, 000. 00
, 900. 00
, 000. 00
, 600. 00
, 800. 00
, 800. 00
, 000. 00
, 500. 00
, 500. 00
, 400. 00
, 500. 00
, 000. 00
. 000. 00
, 500. 00
, 600. 00
, 000. 00
, 000. 00
, 200. 00
, 400. 00
, SOO. 00
, 000. 00
, 600. 00
, 833. 00
, 000. 00
, 500. 00
, 400. 00
, 260. 00
, 200. 00
STOCK EXCHANGE PEACTICES
8745
The Union Trust Company — Salaries reported to the Government for the year 1931 —
Continued
L. H. Fisher
G. M. Kovaciiy
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
J. B. Monda
Theodore V. Bastel.__
J. H. Lackamp
W. J. Bauknet
T. J. EUne
John G. Armstrong
D. D. Scott
George Weckerling
Frank Kakes
Joseph Kakes
J. B. Lackamp
H. Piwonka
J. L. Tekesky
G. A. Spear
$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
1, 286. 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. WiUiams
Chas. B. Anderson
W. M. Baldwin
George A. Coulton
Robert S. Crawford
Wm. H. Freytag
George R. Herzog
Harry E. Hills
Joseph R. Kraus
Alden W. Lewis
AUard Smith
C. L. Tewksbury
Richard W. Bosworth_
F. W. Hoyer
Ladimer Lustig
S. D. James
John R. Gearj^
William Tonks
J. C. Anderson
Fred Hart
W. A. Pfeiffer
Donald S. KnowIton__
Armin Boethelt
Don Grigor
M. S. Hallidav
A. C. Concy_"_
C. B. Lincoln
Henry Ranf t
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
4, 146. 00
4, 341. 00
3, 110. 00
5, 600. 00
Chas. Piwonka
P. J. Slach
Joseph Ranft
J. H. Benes
C. W. Carlson
John H. Caswell
Thomas J. Champion _-
J. H. Clark
Elmer E. Creswell
James Dunn, Jr
Charles E. Farnsworth
Charles B. Gleason
William A. Hartford _
Charles Heil
Homer H. Herbert
Exhibit U-17-5a
W. R. Irwin
Henrv Knepper
M. B". KoeUiker
Henry Lange
Dave Lewis
H. J. McGinness
W. R. Park
Ralph B. Pettit
Van R. Purdv
W. G. Stuber
Ernest Wagley
Ralph Williams
J. G. Geddes
W. O. Stromberg
J. C. Armstrong
C. S. Bechberger
George Brauer
Walter M. Forsvthe___
E. C. Genee__.l
Joseph P. Hance
Wm. A. Hiles
Joseph Hollander
H. D. Messick
R. Z. Mickey
Chas. A. Morgan
Joseph C. Royon
$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
$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. Kiiisov
W. .1. O'Ncili
Geo. N. Sherwin
Arnold Chime
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
5
5
6
11
5
18
14
3
3
14
6
4
3
4
6
6
3
3
4
3
3
5
3
3
5
575. 00
300. 00
300. 00
208. 00
624. 00
300. 00
625. 00
499. 00
715. 00
815. 00
375. 00
589. 00
905. 00
431. 00
541. 00
220. 00
812. 00
542. 00
330. 00
905. 00
987. 00
380. 00
183. 00
139. 00
542. 00
450. 00
\V. J. Bauknet
T. J. Eliue
John G. Armstrong.
C. C. Morgan
.Joseiih Kakes
J. B. Lackanij)
H. Piwonka
G. A. Spear
Exhibit U-17-
J. R. Nutt (H year)..
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
Deduct.
$5, 450. 00
4, 905. 00
9, 591. 00
4, 905. 00
4, 188. 00
4, 785. 00
5. 118. 00
4, 749. 00
5b
$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
1, 044. 051. 00
' 35, 446. 00
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
1929
1930
1931
1932
('ha.s. E. P'arnsworth .
$25. 000. 00
30. 000. 00
25. 000. 00
45. 000. 00
50. 000. 00
30. 000. 00
30, 000. 00
45, 000. 00
50, 000. 00
35, 000. 00
25. 000. 00
25,000.00
$25, 000. 00
3(>, 000. 00
27. 000. 00
4K, 333. 00
50, 000. (X)
30, 000. 00
22. .-iOO. 00
48, ;«3. 00
50. 000. 00
37. 500. 00
25. 000. 00
10, 666. 00
$25, 000. 00
36, 000. 00
27. 000. 00
50. 000. 00
50. 000. 00
30, 000. 00
$25. 000. 00
36. 000. 00
27. 000. 00
50. 000. 00
50. 000. 00
30, 000. 00
$21,4.xS. OO
J. P. Harris
15. 5(M). 00
H. 1). Mes.sick
22. 750. 00
W. M. H:il(lwin
44. 166. 00
Geo. .\. Coulton.
40.916.00
Robert S. Crawford
25, 750. 00
RoRPr C. Hvatt
Jos. R. Kraus
.50. 000. 00
50, 000. 00
40, 000. 00
25, 000. 00
50. 000. 00
50, 000. 00
40, 000. 00
25.000.00
44. IiW. 00
J. R. Nutt
22. '.116.00
All'ird Smith
33. 333. 00
Ja.s. Uutin, Jr
17.708.00
O. M. SliilTord
CliMs n ni(';i'«)n .
25.000.00
17.333.00
$15, 000. 00
416,332.00
383.000.00
408,000.00
305.996.00
Number employed
12
12
10
U
It
The Union Trust CoMr.\NY Loans to Directors — M. J. La Padula
Union Directors' Loans 40% Paid
only 15 ok 32 on notes still owe; pay okk 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.
STOCK EXCHANGE PRACTICES
8747
Excluding the sums owed bv Kenvon V. Painter, other directors had bor-
rowed $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 still owe and all but two of the largest loans show reductions in the
amount owed. 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 pay-
ments were made. For instance, a loan of $312,000 was reduced bv $106,064.25
to present a balance of $206,935.75. Another loan of $984,387.50' was reduced
bv 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 generallv a good ratio of pavment to the size of the loan. These pavments
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
February 17, 1934
Direct
Liability
Contin-
gent Li-
ability
Total
Liability
Direct
Liability
Contin-
gent Li-
ability
Total
Liability
Date paid
Baldwin, W. M
None
8, 000. 00
None
12, 500. 00
32, 000. 00
None
None
20, 865. 89
None
1,000.00
10, 000. 00
10, 000. 00
None
312, 000. 00
None
371, 530. 70
None
None
Barkwin. E. S
8, 000. 00
None 6-24-33
Bartel, George
Belden, W. P_
12, 500. 00
32, 000. 00
11,150.00
31, 354. 16
11, 150. 00
Comey, Geo. P
31, 354. 16
None
None
10, 833. 72
None
None
None
None
None
206, 935. 75
None
None
None
Corning, Henr j- W .
Coulton, Geo. A-. .
Dalton, H. G
20, 865. 89
10, 833. 72
Joint with
Fretter, F. B
W m . G .
Mather et
al.
Gerhauser, W. H_-.
1,000.00
8-16-33
Ginn, F. H
10, 000. 00
7-29-33
Oirdler, T. M _
10, 000. 00
5-3-33
Gordon, Geo. C.
Grandin, O. W
312, 000. 00
206, 935. 75
Grasselli, E. R
Grasselli, Thomas
371, 530. 70
5-9-33
S.
Gund, George
8748
STOCK EXCHANGE PRACTICES
Oscar L. Cox, depul;/ superinlendent of hanks in charge of the liquidation of The
Union Trust Company, Cleveland, Ohio — Continued
DIRECTORS' LIABILITY AT THE CLOSE OF BUSINESS FEB. 25, 1933, AND FEB. 17. 1934—
Continued
nadden, John A.
Hanna, II. M...
Harshaw, \V. A..
Haserot, F. H.
Hayden, W. S.
HodR.son, George H.
Joseph, Einil
Joyce, Adrian D
King, Ralph T
KlinR, John A
Kraus, J. R.
Kulas, E. J-
Lenihan, E. P
Little, Bascom
Mather, Philip R...
Mather, \Vm. G....
Miller, Otto.
Miller, T. W
Moss, Herman
Norton, Laurence
U.
Norton, Robert C.
Nutt, J. R—
Osborne, Carl N
Painter, Kenyon V.
Richman, N. Q
Robbins, Thomas
P.
Rogers, Jos. E
Root, F. P
Smith, Allard
Squire, Andrew
Tremmel, II. O
Wade, J. II., Jr
Warner, Whitney.,
White, Fred R....
White, Thomas II.
White, Windsor T.
Less Duplications
Account of Joint
Liahilily.
February 25, 1933
Direct
Liability
IS, 280. 00
33, 900. 00
83, 612. 50
708,841.50
29, 205. 71
37, 343. 44
40, 000. 00
20, 865. 89
836, 967. 50
83, 612. 50
830, 000. 00
100, 000. 00
90, 000. 00
2, 930, 000. 00
17, 250.
15, 300.
290, 000.
3, 080.
350, 000.
9, 925.
110,050.00
7, 403, 730. 83
I
Contin-
gent Li-
ability
6, 595. 30
7, 194. 25
152, 000. 00
350. 00
70, 775. 00
20, 140. 57
3, 850. 00
31,000.00
552, 928. 50
8, 700. 00
Total
Liability
15, 2S0. 00
None
40, 495. 30
None
83, 612. 50
None
None
708. 841.50
29, 20.5. 71
7, 194. 25
None
None
None
189, 343. 44
40, 350. 00
857, 833. 39
984, 387. 50
None
20, 140. 57
100, 000. 00
None
3, 850. 00
90, 000. 00
2, 930, 000. 00
None
None
None
17, 250. 00
15, 300. 00
321, 000. 00
3, 680. 00
S.W, 000. 00
562, 853. 70
110,050.00
None
8,700.00
February 17, 1934
Direct
Liability
6, 294. 98
Contin-
gent Li-
ability
4, 700. 00
None
707, 539. 06
8, 991. 60
35, 750. 61
None
10. 833. 72
849,648.55
None
743, 273. 51
2, 926, 778. 75
None
863, 533. 02 8, 2f>7, 204. 45 6, 549. 384. 41
104, 477. 39
8, 162. 787. 08
146, 281. 16
None
None
9. 276. 37
30,940.62
398, 742. 52
689,940.67
Total
Liability
6, 294. 98
None
4, 700. 00
None
None
None
None
707, 539. 06
8, 991. 60
None
None
None
None
182, 031. 77
None
860,482.27
743, 273. 51
None
9, 276. 37
None
None
None
None
2, 926, 778. 75
None
None
None
None
None
30, 940. 6:
None
None
398, 742. 52
Date paid
None
None
None
6, 139. 325. 08
10, 833. 72
6, 128. 491. 36
6-17-33-Di-
rect Li-
ability of
33,900
4-24-33-Joint
with Otto
Miller on
Hayden
Miller &
Co.
7-31-33
7-2S-33
Joint with
W m . G .
Mather et
al
See special
report.
4-24-33-Joint
with W. S.
Hayden on
Hayden
Miller &
Co.
12-20-33
4-7-33
7-6-33
See special
report.
9-20-33
8-8-33
7-12-33-Di-
rect Li-
ability
290.000.
7-7-33
2-2-34
12- 26-33-D i-
rect Li-
ability
9,925.20
4-8-33
S-14-33
., ott# NAT;l CJTY
#2 card
lion Trust Fldg.
'■J.PU.
/i /J J/
•>-r i^'?- W-$a» . l^-lojji:,>'AK I 1933
Exhibit U-6-56
■'he •'■f^Trtr«I-Nat-lxm«*-i*!mSr H;tnreiarKj OMn Cap
i'CA3'i9-100sh
'.Ullcr ^ Co
to :.:lll3r CA3^9/&:
,..t„e-ii«ii«-y-
;;;>9-.;5f;shE
_y3004f}-3;';0sh-s- "uydsn ^ill^ler- & Co ' . '
\.,.A;.^t-,J^^ Z,/^-^
i-fX^ '/f-.<^.U^. 60-,t /T ^^
Exhibit U-6-56a
^ NATLCiTY
1250 Unl :n "r i^ldg.
OATt M»T
,.-- ^_ , • '-If ■?=' »CV J7 1S29
\7J'- ■
■>»>.e. ;?;{£. /■s-B %;ixS.i- 1-"'^ »:v-j.3
A?R i we
6- ; r>^^> 'Jt' /-"iff ^t.H S ;««- . /,t^.
thc Union tnust co
Exhibit U-6-57
ocMniniOM or colutb
«2&,ei6.76 C*«h
2/20/jS
»2S,516.7S Offleikl UhMin conTarttd^nto Ftdaiml rundt
ptiy*bl« to Th« Ji»oonttruotlon Flr.»no» flyrpi
;4K UWOH Mutr co«li*A*iv <:i4«.
,xmmT
•Miller, M.n.
' - If /i J *.
.-^-'-■f «f
SEP 17 1532 N=fi,W. A.^.^.xv.A«^' r^Cv^- v>^.,'
■'■"■ ^' "■ -V ■■'7 '■'■■,
rs'Sf c -tr
^■<.,.J5 ^v^v
Pfi. n., it. -^
Exhibit U-6-58
^DAr^_ V j. W«ORSHA^E>
■ Msp»ic^foi^p^ colutebjil
^ S.OOOshs* 'i^ie Glidd»)n Co. Con
#CA4767/75 at lOOshs es n/o
Miller 3c fio.
700shs The Otis Steel Co. Prior Pref.
,fC472/3 at lOOshs sa n/o Otto iflllar
^i'' //' *-v
/44 #9922/26 at 1,000 ea due
^' \ I!II -^i^^- 8/1/44 ,728643 #23645 #5230 at 1,000 ea. ^3
j-AFi I31? ^,^yx> #V86S'#21877-#3423l/83'#26269- #28638/40"
#6326- #7681' #3 1494- #19577- #5331' #33232'#18712''
#2163af #18550- #2157^ #a0317"#3315l/53' #16251/5: '
i993672003or#30041-at 1,000 each '^ ° ° ■''''' -
#19673/76 #2997 #23252 #5'892 #12552 #1866
,,#1867/68 at 1,000 ea . #291/92 #3323/29 #621l/l2
«f9912 #19672 /A26499 ^27440 ,-/31956-l,0O0 ea
#23792/801-1,000 ea #13769 fflA, #25445 4'8198-1,000 ea
Exhibit U-6-58a
•Miller, ^oN'^
^ J 1260 Union Trust Bldg.
oca T
C«tO-l
(NTLIItST TO I OAlt H,
•5,r.-
:»f'V//,
Exhibit U-6-59
.; igoo-hs The Rlchman Brothers Co, Com f"*^'
#31337 at 300shs #37119 at lOOshe ^
- *'33164/79 at lOOaha ea n/o Otto »'lller "
1«C t t t«>\*g&V^ie.?5— ^fl:fr^€blr^Cheel€0 Tho »Bt«a-TPU»t, Co, .^ ^
-s The Chesapeake coi-pn Com ■- *: y>/l- ''^ H^'i • '
l;GS»vm/Z2iiZ2 at lOOshs ea n/o Hayden i^lller It Co.
)f l.lOOshs The Firestone Tire i Rutter Co. 6% Cum Pfd. «'•<'.
/!'CP1108/13 at lOOsns ea n/o Otto Killer, 7*" f» ((-i"? •>:.
,fCP1360/64 at lOOshs ea n/o Hayden Killer & Co. ..«cr. Atl.
,fC17822l/30 at lOOshs ea n/o Hcyden Miller V Co.
5008h8 The Union Carbide Jc Carton Corpn Com ' • *" •♦• >T<
#A88165/69 at lOOshs ea n/o Hayden Killer V Co.
l,iiftn«hn
#C615l/5a
_-i,<oA^»r'
-u*^
Tut uwut iniM awpw> cimu><, om c«
J„\llllil
r L U
O'Ju
'i'he Pucyrus Krle Co. Coin
iKyi373a/47 ot lOOshS e
/o '"lyion i«illl
Vhp Bucyrus Erie: Oo.Ccnv. Pfi;. ' '' ^i,,/
.CKYlt^'W/fei: at. lobsha. nil n/oi'syden JTIUqr ■-; ; .
ih(! KarisTS Clty'Sbutluu-n tiny co. Co
• 37ij2S/50 at lOOshiS pd, n/o ii-.:;!.'-^ *!n;:^r %: •:.. .
,fCr,Bt>9/SC. at lOOsha wm .■..., .^, ^ „, i., «-;. rvc-
Hayde>i Miliar <- Co.
■ Sp&rUa '.'.Ithir.plon Co. Con
:'D279?/£3£3 at lOOshe »a n/o Otto ViKor
If, 000 " Ihe Ch3ca.ro v: Eostoi-n Illinois Kwy Cr. .^.
fi513P?5/'50 i?M1365ii .^M159<1 at 1,000 "a •■r..;,
at 500 «!a SMSZZJO #M210iW //".U'Sft?') -<it i , .:-
[ p 5/1./51 ^
Exhibit U-6-60
— «>Oi>elte-
'/ IZOOshs
)( Zii&Os.hs
%e "lieghany Corpn i^fd. Series A $40.irarr. -Attv
)f4>b«9«-^jU»SeiS/Hi}#XL/F619 #XI./P622 ^XI,/P874 ut
p-UtS'il/ii »JvV3?523 >Xi/l>SS>-i0ash3 .,»-flKl/pOOO-100sh.i o
Th« Alleghany Coppr. ffd; Series A #30.Warr. Aft
,fP«iS47A©-#l>«474-#P6816/8 iP6903/66 fP6889 at
lOOshs ea t'J-"6J47/!;-0 jHi474 n 10C:.>'.^ sp. \,
5*7112/13 «iP7CiO at l.^ucha t>, ' ^7135 joos!- ■
tKSSS #)HSS12/lft-100shs bb
NT!?USTCOM«NY Clwaluid, Mlo Colt
t:!^ /0//3.
Exhibit U-6-61
Hlllai^»'tto
NAT'!. CITY
1250 Union Trust Bldp.
«f'7
ll-i YS' V . .
UiSf- A-3,»,\
<*<2.!r- ■ \-A- -bS
^*%i - ^^ Vo-NT. 'A
t( 1 V f - ■ \ - <- 31^
1 Soo - 1.'->;2.
1*... iUo /. ^
^7. ^'f^4o
^vf/7c. 7- /- 3 3
•M^-"^-^^/"
M.Ti,:)<f ^^i^Vo^-
/I /i4n n-i- 33 -
io-,i-7i'^'\inii^}
f# ^^^-Z IC 1 J3
-•^ '^^ 7i„ ' ' Ho-
.llfiS}S^ .. ,-%a
C
f >'i„_A .^. '^. J'.S 8 1014
'• 33*ett 33e ^
F<«.v... • ... ,. -...^SiLuiri
?■?? I I Jf
THC.UHIOH TmitT COmVanV. CilVCL*
Exhibit U-tj-b2
-67500- gh 9 Th<» Cho«ap«»ke Corp. Con
-..rwBicio.W
fe*t6*9/W-l«)»hT »ii li/e h»yagn;-
-ifNe.^Wt-^'r
^1,0008^-8 i'ha Sparks- 7,'lthlnr- tof; Co. Com tJ / ;. .
/A»468p-~H4Wk>/8«-fi«»««9-«-t"10©«b«-e»"i»/o
;^oPnM.OTer-*-W««i»». »Kb6t52/71-lOOth. •• K/0 OUo hill.r
ty(W>0«h« The Vjilvern Land Co. ten " ' . • . /y >' "X
• l.o/Bch. noeg/lO aV,100aha o« yioio/ai-uo.hi i» ,.tiH4-7».hf
:./c ctto viiitr
jteMi7«/caaiia-'
Iroquoii £«eurltt«8. Inc. i.«p.
h«M''f« fiMi tk» uMON viiuir eciimiv, c«itii»i>i imwHw* •
t^MNVWit Vrtn ln% SW^ vVSV^VVS lv*l^4
Exhibit U-0-G3
Lller, ^to
1250 Union »r Elir.
/ I oo ■
' ^Uj 'i;i.toli ■ ' «W\o-5-»-v-
, (^.r- JAN 1 1333 JM 4- I9J3
at/ "jLV^a /0-i- 3 3 ■ ; n laij
Exhibit U-6-64
♦ cOOshs .V-3711P Bi
« . t - J.' '
UiUi f // /> 3 .
l.OOOshf Th* Firestone Tire i Rubber Co. 6> Cun. tti. Seriei A- I«iF. Ctfs. exehFoged for
FerE. Ctfs. , *
,,32,^^ VS^/^.^ XS^ & ^^, ^' ^^fZ^ ^^U*^^, (yl^f^. y^s?^^t>t/
Exhibit U-6-65
OTTO M I LL ER
8 7 000 00 7-2 4-
97 000 00 8- 19-'
10 000 00 »-2vk
10 nn-'' "« 1-4 -2t I
5 OCT CO 1-5-2
5-4-2* 532'^'^
15 975 00 ^-^^-^9 5.502^
16 980 00 6-21-5 9 555«7
17 482 50 6-28-; 9 559:7
17 985 00 7-10- !9+564:6
18 487 50 ■'-20-; 9 56912
24 517 50 j8-10-i9 678't6
25 77d 75 8-1 6-^9
IS 97b .C(.
o
75 975 00 10-29-29 61 1 31
3C5 975 OC M-T _,
269 975 00 11.2 2.29
."^34 975 00 1 11-25- 29
219 OCO 00 'U-27- 29
100 000 00 12-9-^9 636716
175 OCO 00 13-26-dO 6852l6
175 OCO CO' 6-26- 10
505 COO CO n-1 2- iO
B05 OOC 00 1 13-32
805 OOC C« 8- 15-: 2
804 963 30 9-2-3;
805 COC CO tt-17
72753
556536
ENDORSKR I
OR COt.l.ATKR '
P Ddt
16 obt
I
6 D^
61 DEM
^ 5f DJEM
|fc Den'
16 D^M
10 000 00 9-2V26
8-19-26
1-4-29
I 1- 5- 29
15 ^75 CO I 8-16-29
' 11-25-29
1 005 00 I
i
502 50 i
■ i
502 50 !
502 50
5 025 CO
502 50
' 50? 50
1 256 25
60 000 00 11-12-29
11-^7-29
230 CO'' 00 n-28-29
11-27-29
75 COC 00
75 000 00
330 OCC CO
300 000 CO
2i« 000 oe .
4-7- jO
8-15-3 2
4-17-33
(.LATERAL. LOANS
10 000 Oq 97 000 00 '7- 34-
i
B7 000 od 10 000 001*8-19-
•3 000 ' "
5 0 -^0 00
9 798 73
15 975 Od
-0-|»9-21-a6
5 000 001*1-4-:
15 97b 0e»5-4-!^
16 980 00 ♦6-11-29
17 482 50|*«-2V|f9
17 985 001*6-28-'
23 512 50*7-20-
24 015 00*7-23-b9
24 517 .,(j*=^1-2lb
25 T73 75*8-10-j^9
15 975 00*8-16-59
35 OCO 00
95 COO CO
1 234 975 00fcl1-K. 29
219 000 0flj*1V?S29
100 000 00j»n-27 29
! 175 OCO 00*12-9-^9
75 OCO C! 250 000 CC'»3-26-i
21C COC oo;
!
; 3P 7C;
25 felA 75!
175 OCC 00 '4- 7-c
505 COC C0*6-26-PC
»05 nOC C0ill-1243C
806 CC" 00-1 13*2
804 963 30*8-15-12
805 COO C0|*9- 3-3
779 483 25 '4- IT- 3
1, J. tu!wd. soi« J) i»«B«». t
Exhibit U-6-66
. ■ r- f -• *■
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 — Essen-
tial 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 Hay den. Miller & Co., which has been somewhat handi-
capped by the death of Mr. Hayden; Mr. Williams' resigning to be the Govern-
ment's agent for the Federal Reserve Bank of Cleveland; and Mr. Fleek's re-
tirement.
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)
8750
STOCK EXCHANGE PRACTICES
1^
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4-»
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CO 1 1 CO 'CO
CO 1 1 M 1 CO
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r* 1 ( r>- 1 1^ r- *o
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CO 1 iO> ic^ost-
OS < I Oi 1 OS -^ CS
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b- 1 1 r>. 1 1^ t^ I '
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S88SS i i i
r-;o»ocj »o 1 1 1
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io OS r^ OS 1 1 1
r^'^ r^ III
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22
CO CO CO ^*^ ^ I 1 1
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k^\^^ : : 1
Cl C^CO — iC^t 1 1 1
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t^ t^ t^ rH ^ 1 i 1
-4->
IS
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as
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03
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03
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03
•o 1 ; 1 1 1 1 1
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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, 1963 Union Trust Building,
President 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 Sjaidicates — wliich, as you know, are Newcomer
S3'ndicates — 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
Glidden Prior Preferred
Distillata Company Common
Leach Securities Corporation Pfd.
Western Reserve Investment Co. Units
Kennecott Copper Corporation
Pacific Western Oil Co. Bonds
1, 000 shares Wood Chemical Products Co. Common
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
pohcy 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 Com-
panv 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
716
500
500
1,
000
250
$20, 000 P.V.
1,
000 shares
Midland Bank:
12,
000
shares
800
(1
325
((
2,
000
n
$20,
000
P.V.
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 5yz% 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 3'ours,
President.
WMB:EMS
(Exhibits U-6-71a through U-6-75b face this page)
Exhibit U-6-76
Received L.A.C.
Cordrey
Interviews and Commitments Affecting Loans — Official Instructions
TO Credit i3epartment — 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 — Essenti.\l
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. liarker (wlio substituted for C. C. Sigmier) having been at former
meeting.
Mr. Crawford subniittcd 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 state-
ment submitted at October 25 meeting.
yi Residuary interest in Estate of W. J. Crawford.
Yi Residuary interest in Estate of Raiulall Crawford.
Entire rosicluary interest in Estate of Bessie Crawford which includes Jj
of the residuary interest in the Estate of W. J. Crawford and ,'4 of the
residuary interest in the Estate of Randall Crawford.
"""1-' \ . . V. »■ ,>End by T. •>{..•"» r'n.^r^t Co,
' The ^Sar..W.bl lierles to: . Th." :7. H. .^aj^.r Coa^. (
AooREjs 660 Unloi^rust Bldg. ' K. ^C^.
. pue/?/?*- »..., "^f^Or? due// 3^ J2-
MEMO , p.';";!; ■ <-'i"^ 9^ "- ■
INTEREST OR DISCOUNT - int. '
OAlt OMOOUNT INT. RtMTE INT. WCCTUE IN^ftBtST TD 0*TE P»rO RATE DATE
io; ffjc i IJ
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Exhibit U-6-71i
^ "^^ R. F.-C. _, E„d, by ,. H. !r.rnar ,4 Co. i *^^"^
^VtoDREu The >arneiAxUariM~ Co. The ». B. War^^Coal Co.
660 Dnlon iKrt Bldg. ^
No « DUE No. 9 OUE
DUE 1/30/33
|_ WKOiim i iNT.iKUTc lim.ntrfci « nmnriv S mti h» mtii
-^'-©-"-miSreJML
Exhibit U-6-71b
oacmrTioN or ocuiATCMfc
^. 7978h« The Panda Steamship Co. Cap
#24
< 596ahs '
The Ohio Hivar iidlson CmI Co, Cap
#23 .
The Har-ltar Coal i-o. Cap
#58 at 2888h8 #5P ot 2949h8 *65 at Kahs n/o
Whitney '.larner
S2E 0 P STEELE cEFORE RSLEASIkG
^ ' .lOLi) cc ,^ „__:_ ^ :::,:" V :" ~- - :
LOAK TO OHIO iU ER, EuISOK, COaL CO. G P. STKVLK
, THt OmON TBU8T COMPANr-CLEVELAND OHIO. CoMaial SkuMb uid III dtm MMn "■> Wliudta •• •»»• MK>«M I
__Ji
Exhibit U-6-71c
."Tc.
Hi'-' -, .^ .4.«-i3 " B»d by W. H. ^rner i Co..
/ The "•. H. ■^er Coal Co. i
\oomu „oO Union .ffust Bldg. i
■' out/ / ■3'- «... 'St oue/<'^''*>-
• OUE >, bo-*A Nil.,. K<C»SO out /i .3* 'Si-
I INTEREST on oikount' ;
MTE OtMOumr INT. KBATI INT. ncpn£ ~ INItMfTTO ;, 0A11MI0 ^1
wtV :>f -''
OUE ^ 3.-
^ ' 1 ■ \
kSaptlAY J I IBS?!"'' .\1 1!
■ s
' i554|£4"<' ' '"4"' '■ ' "«•
i/<'Ji>/*|r
•*} ff*
IJON M ;»< I ! /oiffo
I toiffM-M^
'ua J » w? \oi «v%o .'^' ■
. OCT ».i in.; i/o3?poi
.: /^^.wm JO »«»»* »" i< OCT SI I., /ohyf-* t4rfr
rf/yf^t: jt NOV l« W2.^.^f/0 ♦'.^..T ' j
/i)>f/^«
>03^fc
*?►' I im:-
Exhibit U-6-72a
Date par gn sh
V 244shs
The Pocahontas Domestic; Coal Co. Can
#201 ■
msmmrnmrnmamitma
The Maher Collieries Co. ^gs M ^OOOMju v./q
.fCt n/o T
Ish ea
« 251/lOOOths Trust Certificate of fart Ownership, The Tamer
,. YouphlORheny Coal Trust #84/5 at lOO/lOOOths ea
#89 at 51/lOOOths • "
\ 125,000 ^ The McKeesport Coal i Coke Co. Second Mt<rs St ^/p
Od Cpn Bd #2, 4, 6, 3, 10, 12. K, la. 18. 20, 22.24,26
#28, 30. 32,34 ,36, 33, 40, 42, 44, 46, 48, 50, 52!^5'«, 56, 59
#60,62,64,66,68.,70,72,74,76,78,90,32:84.86.83,90, -
#92,94,96,93,100,102,104,106,10!
#116,120,122,124,126,123,130,13;
#142, 144 ,146,148, 150. 152, 154, 166, 153, 160, 162, 154,
#165, 153, 170,' 172, 174, 176,173, 130, 182, 134, 186, 133
#190,192,194,196,193,200,202,204,206.203,210,212
i'214. 216. 213-220. P25>_PP4_P5« O'^a.ZSQ ,SZs's3i[236 .
. at 1,000 ea !3u9 '
«, 136. 139, 140
THE UhlOW TRUST COMPANY-CLtVEi ANE> OHIO. CulMtfat S
Exhibit U-6-72b
iv "'oal Co.
IMIEREST on DISCOUNT •
(NT. RCaATE " INT. fiECCi
S 3<>^')t if'Tfu sHocH. 1-1-3+
1 ■ ■
" - '
'•:->t
. . ....
1, .
1 - .
OESIT CflCDIT MUNCC
"" i. " '
f ■ ■
■ ■ s • ; ,
- i
1
- s i
Exhibit U-6-72c
* SSOahe The Dragon Co«l Co. Cap
#22 at 2603h8 #11 at lOOshs n/o r'lorence S. W*pnar
#13 at 2008h8 n/o W. H. »arner .Coal Co.
.: llOSsha Th« Goodman Uanufacturlng Co. Cap
^495 at 2138h9 #2916 at 5548h8 #1816 at 277eh8
#373 at 648hs n/o W. H. ••arner
* 4488h« ' The Pitt Gas Coal Co. Cap ' y
#7 at SOshs n/o Blizabath C. Kamar #6 at 2S08h8 ■'^
n/o *'. '!. Warner #8 at 1488h8 n/o rhltney *arner
k 2008h8 -^ The Stovar glkhorn Coal Co. Cap
#1 n/o *hltney lamer
"^ 10,71l8h8'^The Warner Colllorlea Co. Com
#379 at 2058i8ha ^ZZZ at 371li8hs f390 at 17?58h8
#343 at 368hs rr342 at 10408h8 #341 at 8408hs
#336 at 1300shs n/o T. H. *arner Coal Co.
Exhibit U-6-72(1
19958h8 The W. H. Warner Coal Co. Cap
#54 at 72sh8 #39 at 261eh8 #43 at 5sh8 S^A at
20ah8 #45 at 571shs #11 at 2.48h8 *16 at ,^.68ha
#19 at 6ahs #26 at Sshs n/o V. H. Warner
#55 at 728h3 #41 at llOsha #49 at 128h8 #<9 at
148h8 #50 at £868ha #17 at 3.68h8 #12 at 2.48hs
#20 at llBh8 n/o miitney larnflr. #40 at 127sh8
^ • #46 at 193sh8 »47 at 130ah8 n/o Ellzaheth C. Tamer
#42 at llOshs #52 at 104shs fr51 at 948h8 n/o " '■
Florence S. Tamer.
< 50,000 •'V The Brady Warner Coal t.orpn Ctf ot Deposit l«t MtM
1$ S/F Od Bd #182 due9/l/42 ^, i^ ■» i>^»^~f- ><.
< 19l8h8 , -/ The i<o» Volatile Coal Co. Com
#229- ^ ^^ ^i—**^.
K ISOOehe "^ The '^Keeaport Coal fc Coke Co. Com
#113 at 500ah8 #100 at 12i8h8 #98 at 6?*8h8 #09
at SOaha #1 at 1258h8 i/o Whitney Warner
#204 at lOaha #97 atesiaha #10rat 12?sh8
#102 at bOOaha #75 at 1258h8 #195 at SSshs
#196 at Ibsha n/o W. H. *arner
-> TM UNION TmitT ooMnutr-aiva.MO .omo. ciim tmim at «
1 i ^
1
J']xiiimr r tl 72t
lOOOahs ^ The McKeesport toal i Coke Co. Pfd.
#1 at 250sha #122 at e5shs #115 at lOOshs
#114 at 1253h8 #/o Whitney Sarner #219 at 20shs
#91 at 250sh8 #209 at SOshs #113 at 125shB
#210 at 308h8 #123 at 2Ssh3 n/o 57. H. V/arrsar
81,520.90
3 ^ 25,000 1 at 6520.90
-oka Co. due Deinand
Declaration of Trust by and batwe»n ^' ^- Davis
and The Ti. H,. Warner Coal Co., ". A. Davla tCo.
tmder which D. R. Davis holds title to certain
tracts of coal and surface lands in Versailles
and Korth Versailles Township, Alleghany County,
Penna.
Da:ted Oct. 26,1922
The W. H. Warner Coal Co. interest assigned to
The Union Trust Co. June 29,1928.
_H0LD— SEE 0.', ?. STEELE.
ACCOUNT EKDOaSED HOPES WARNER COLLIERIES CO
OHIO RIVSR EDXSOK COAL CO. "'
1MPANY-CLEVE1.AND OHIO, CiaW.,.l S«u,Jtl. .m an MJusr ,.,«. ,, temMlbo .» >lu» <
HKm
Exhibit U-6-72f
STr.ith, KnlstOT Vo%
■■■.':.■ -^.f.s- CorJ Co
7v/zr
ia^ 7%»y^»«^r„'iv AV/'
O I.. .OX
ire
^STc ..iii , mi , ,
TttC UNION TAUST COMPANY. CL>
Exhibit U-6-73a
<\^tUAy ^i.
,^^^.ff^^
^iroo
^ /., ' ' •»»
iOtO ^OCrV'
Ir c >>
jm 2 9 »».
DEC I »» l--^.-' ^^^
wr 2 0 1M7 /rt •/''«'/
%//-'/•
'' vb J'.
//,/, 7 • . i/- </.
TliuaT confanT, Cityrt*»o
Exhibit U-6-73b
■^1fc40d8h '^ The WameraColllerlea Co. Com. .
#219/21 3 lOOBh ea. -^f*/ ^,.*.U
1/000.. to be paid quarterly
7T5»35.?.--f,;-ll
8,519sh8 ^ Tho National huJiatoi^ ; ..; ,- of
;, Itii? it 21i)sho ,.;ii)i.' at SCh-isiis j^j.,- j. ;
l.OOOsiis aa n/o Aiitiu Puga Joyce"
Ibsas , The Otia Stool Go. :i'iorirof.
,;i,.v.'.5i;o !j/o rtiO l,nioj: ,j'..nt Ccsij-jny
200sh3 ,, i'ne ii tar.dard .extilo ii'od„cts Co. Com.
rfCw- a/SiJ-lOOsUs ea ii/c .i-i:iU F. "Lahut
■'■> • lOOshS
i25 ii/o Frani: i-
.ict-^ Co. Class A.
lOOshs / Tiie StatQ atreet, InvasLnanl Corp. Class P.C'r
#1456 Ji/o rVa,.k F. L;ihut ' '
,mv . ■•>■« • lOOsub-sh^ The Texas i'acifir u d irust
*C90V n/o i'Van'-: ;-'. Laivat
^Y /
63sh3 ' Tae United .■.'ilk i-roduots Co. Pfd. .<<« -vv IV f'
II«o»««l Iram TKE UKION TBUSt CO««r.» cimlurf. d«W C»«m™i S«u-1
Exhibit r-6-73d
LxHimi l'-0-73e
Whltworth^'Si
Union Trust
- Bldg.
INTEREST
iniir
i«7
MhT cHCorr
.r TO
UTI
i
ML
tfrl
I nuo ft*TI »*TC i
1 'ili • %.■■-
1 - '!■:
J MAY 1 r -926
/ 0C1 ( MM
%1i,fhlUL 1 .
HIM
M< - ', ■r^.i
w; ■ .
-US 1 5 J927
,^ ,.MI11
nv
i(H 14 fT*
XjJ-e^*'
i<^ ooo-
MIS 15 «3d"', '
^71,)
i9 eoa
/{0 /l/%4.
n,-, -) . IS
llJff*-'-^
Exhibit U-6-74a
1 O^^LATt«AL
.326|8h Tha Warner Collieries Co. Com
•/»'/.* fiV
5/1000
VAoo
#78-1048h^41-45*-#96-l8h-#125-7sh^!E70-508h-
#210-l-?3h-#214-9ah-#253-408h-#£44-9ah-#283-308h-
jj«60-10sh.
Interest In Tamer YovO^hlogheny Coal Trust #4S
Block Coal Co.
Exhibit U-f)-74b
„ / fr-M'" ' ••■'33
S loi, til 4^- I- I -?'f-
Exhibit U-6-74c
Comey, uoo. r. — "o.i
S'jee-leFkBhlre-Rd . 2906 Xeybrldgo Rd . S . H. ««.!
DUEO ■''7 ^*'' No. • DUE N(
•:■;•,•• DUE W- SO •'^ >-No. W
^f*.tli DUE ;?'*/• 33 N.. 11
^ : .^5=^ ; INT. _
INTEREST TO OATE PAtO fWTE 0*TE
PRINCIPAL
/- JO J/
' O'i'
-^^ ' "^''Z 1 >■«>'•■ lay.p 7 iv^
'/
)f
J ,
/'
T-
-P/
/;2
■■> -,
3 '
3
/ -
'< ^
^s-yj
1 1 .>/ 0.5 i iJ, tL I I ^' l-ji ir I- >-'
32 L |l(IV3o 193J ?-?uTo
fyoo 'J
Fp.COB
Exhibit U-6-75a
^ SBB WMB.GPS.OR CBF,BEi''ORE RELEASIKO AliY COLL.
*■ SeOshs The **atlonal "eflr.lng ^o. Com "'^
% SSshs I'he Triton Steamsnlp Co. of uel. Co- ' ' •> r»
jjfgj — JiAl if.75 n/o jRson >;rain
X758h« The Plonee;- Stea«shlp Co. of Uoi. C.r. '' * //« '
j)^06 25 si. 3., .'^D? 50 3; s n/o Jeaon Cnlrwi-- j
>' azahs *he I'atlonaX Keflnlng Co. Pfd. ^'-^
#i-16i-«t-fr«t»i/C''552 r/o Jrscm Croin'l-ij-Jjl
*4008h8 ihe Union Trust Co^?{New) tSS.OO ea Cap
#1167/69 at lOOshs ea ^\\10/\ at SOsha ea •
HOLD FOR ENDORSKMEKT ON COMEY h JOHNSON CO
^ MORTOAOE LOAN
HMMW Ma THC UNMW TDUtl COMP«NV.a.(Vn.M>D OHIO,
Exhibit U-(>-75b
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 proliability be consumed by the trust he
created for the benefit of his widow and children. It is also subject to assess-
ment on 75 shares of Cuyahoga Valley Realtj^ 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. Craw-
ford, 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 anj' 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. Cra\vford, 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 greatlj^ 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 stiU under-
secured, 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. Devine.
Re: Parmely W. Herrick
Gentlemen: Among our collateral loans pledged to j^our bank is one of Par-
mely 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 Companv Warrants
$6, 000 Missouri Pacific 5r 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 as.sct.s and Uabilities
of Mr. Parmelv W. Herrick. The Union Trust Company wa.s de.signated as
trustee. The agreement between the committee and the creditors provided
amoiigst other things that all i)roceeds derived from the trust estate, either from
income or princii)al, were to be held for the pro rata benefit of the creditors under
the agreement, in the proportion which the amount of their iuflebtedness in ex-
cess of the value of the security held may bear to the aggregate of like indebted-
ness by the other creditors under the agreement. These creditors originally
were:
The Union Trust Company, The Society for Savings, Estate of James Parmelv,
The Midland Bank, Hurkham Herrick Publishing Company. (By supplemen-
tary agreement): Tlie Oliver C. Schroeder Drug Company, The Cuyahoga
Exhibit U-6-79b
ors.
any
Comi)any, and The Ilarriman National Bank were included among the credit
The standstill feature of this agreement expired Nov. 1, 1938, after which ;
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 Parmcly 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 Com-
pany 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
liciuidaling program would be put into eflfect.
The prime consideration for requesting the six months' extension was that the
investment in Union Carbide, which is the princii)al holding, had reasonable
prospects within that time to make a good showing, in which case it is the inten-
tion of the committee to sell substantial amounts. It was also felt that inasmvich
as considerable tax would be involved in the sale of Union Carbide stock that by
granting the extension Mr. Herrick would be in a i)osition 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 arc therefore requesting
your approval of the Second Supplementary Agreement enclosed.
For your further information we are enclosing a balance sheet of Parmely \\ .
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. BuHMESTER, 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
Januauy 11, 1934.
Mr. Parmelv W. Herrick,
Cuyahoga Building, Cleveland. Ohio.
Dear Siu: We wish to advise yovi of credits totaling $39, 71."). 72 to your loan
account, proceeds of the sale of:
1000 shs Atlas Utilities Corp., $3 pfd, Series A.
STOCK EXCHANGE PRACTICES
8755
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.
RJR; EJR
Exhibit U-6-80b
Janxjary 11, 1934.
Itemized statement of sale of 1000 shs Atlas Utilities Corporation
Broker
Jackson & Curtis
Chas. Quincey & Co.
Hornblower & Weeks
Livingston & Co
Dyer, Hudson & Co.
Post and Flagg
E. A. Pierce & Co....
Curtiss, House Co...
Salomon Bros. & Hutzler.
Shares
Price
Amount
Commis-
sion
ICO
40
$4, 000
$15. 00
100
40
4,000
15.00
100
40
4,000
15.00
100
40
4.000
15.00
100
40
4,000
15.00
200
40
8,000
30.00
100
40
4,000
15.00
100
40
4,000
15.00
100
40
4,000
15.00
Interest
borrowing
tax
3.86
borrowing
ta.\
.55
Tax
Post-
age
$9.00
.25
4.00
9.00
9.00
.25
9.00
.21
9.00
.24
18.00
.25
9.00
.20
9.00
.25
4.00
9.00
.22
Total
$3, 971. 75
3, 976. 00
3, 975. 75
3, 975. 79
3, 975. 76
7,951.75
3,971.94
3,971.75
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 cer-
tificates of deposit on the Winters National Bank and Trust Company of Davton,
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 ^\'ith our
Estates Trust Department under receipt aated Februarj' 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 Companj' 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 6ubsta<itial amounts on a secured basis, and
on September 30, 1931, made further demand on nim for additional collateral
under his loan and received at that time the certificates of deposit above referred
to, as well as several hunarea 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 b^y questionable collateral. About
a year and a half later tlie trustees for the estate learned for the first time that
the bank had, upon demand, received the additional collateral referred to above,
and thereby 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 tliat 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 this 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 alh^wed it to go into escrow. Conse-
quentl.y, 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 tl)ere was good probability tliat 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 adjust-
ment the matter is being presented to the court in the District of Columbia,
and approval of tlie 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, ana, togetner 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. Normady, the certificates would immediately
be converted into cash, and the distribution of $81,2-18.07 would be made to the
estate. However, same is deemed inadvisable at the moment, and the bank
has expressed itself as preferring to paj'^ $55,000 at this time and the balance at
the rate of $15,000 per montn until all tlie certificates of deposit are liquidated.
Consequently, in order to adhere to that plan and to share proportionate!}- in
any cash proceedj, it was agreed that we wsuld 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-6-81c
each and one certificate for $3,653.99, or a total of $13,961.42, details of whicli
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 trulv,
0. L. Cox,
Special Deputy Supen'ntendent of Banks.
By H. F. BURMESTKR,
Agent.
HFB:R
(Exhibits U-6-83a through U-6-83k face this page)
Orandln
Union
rt Bide.
^^■^m
•» I y- OUE^'> /_■• ' .- No. 10 DUE ', '■■
\^f^^ out No.n Due
°- fJi"2iS'^ .*»•>? instaUmentj ss follows:
$50,00!) due July 1, 1934 425,000 due Julv 1 193fi
26^)00 <iu«Jjinri' 1335 ii:6^^
INTEREST OR DISCOUNT
frr<?.
■J-
•iN<.l>n SM 332
iTE;! - MTC , . j
\ ■
DCS
1
Ol
1
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UJUtCC
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iis if ok
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•^*
Exhibit U-6-83a
The Louisiana Central Uirabor Co.
#S06— #837 n/o Goor^e "«. Urandin
The Clark-Randolph Bldg. Site ^f' -
#1608 n/e-Httt-ry:.
i;1737 r./o O^or^^e v;. Gran din
The Northwestern Bldg. Site Und Trust Ctf.
iffiOBS n/o George ». Orandln'''- 1 ' '**
n atsis *mi,.jn.
j
^^^^^^f
1
The Grandin Coast Lumber Co .Cap,
PV t^li.ni
-The Union Iruo*. Ce.-
■ #6&-l'{>efia"n/o"(Kff»0ra»dln
nited mik Produota Co. Pfd. C '^
The United lUlk Produota Co. Pfd.
#TP245-S0sh8 #TP244-400ah3
■}--^ ; vv^ yoi'tc
R««v« fn»n T!1E UNION TRUST COMPAliy.ClivElANb. 0Hl6;Corr.i«lwiS'rf5 .11 oiKrw
lection with obovc dascrrbsd loan.
Exhibit U-6-83b
IWTWtST 0« DIKOUNT
/i^7^
AX'S'-
2- '/ .
ii'/u
/.^.'X.a'c
» - y /■
r ■ 1
1 i^ H
— ..»
J'iXHlBIT U-()-83c
-Ih»^St»nd«r4 Oil Co of li«w J«r«ey Co«.
<Dll!J9U4/00 x/e 0.*>'i*'MVttn.-}(H'!»h« •»
jC8069Ti*DiiTisi»OZUa»4-W»ha o/o Unloo Iru»t Co.Cl«v»land, Ohio
>i»Mliimja>lHLilll
The Arthur GJloK«* & Cb> CIms B.
#CB34/3e-100iha Mi
rh« Ollddm Oo.Com^* '' "^ '^
|KM3d»/e»-j|WD37Gi</(32 |ilFQ3766S/69-103alii M. |HlB<»t(WT-^»h»
n/o O.W.Qrandln. <i|IIHi7C70 Um»h«.Vo Bolan t>»«» C«.
ji.D4101S n/o Oocrco .i. jrnndln
fT4e-ti/<; M«l««iw-gMfln<>t>^ru*i-Co.
^.Mlth* The Slohwn Bros. Co.Coa.
A-v,^ y40«*« )»6bT01-l»h i>tl<7oa fcil<» 4MV0»/l 10»..»
Mcuvu .Th67M/9-20flh» T667««/l«-e6«h» fefe*H-9e
^SKTlSyiS-lOOcha M. ,;i
■>$ ,74. H""'!
r r0liTlS-9OB>n
110to^
"■ imitT COMMNV CLIVIL«MD,0«IO.Cc<Ulxal(MIMIMiaMall«M<pM»nl«co«ilMlM<Mtia
EXUllUT L' t) .S3d
INTEREST OR DISCOUNT
INTEREST Tp '> DATE FAIO lUTE DATE J -BlllT |-
•*-«'. o-i. *t>
WKo. 0 89 SM' 3-ft2 j;
Exhibit U-6-83e
)--)>Vil>
)/OO.ii54S9/60-&0»h»-^»-^7ia65/66-100ehi M n/o Curtia*.
t- -*.W i2> looshs
T!\« Onion C«rol4« 4 Carbon Corp. Cap.
#273310/ll-S0«ha aa n/o Ourtlss Hoiisa 4 Co.
//f' ^i w. t/\.-i.
Vaw->,B looshi
The American Tolsphono * Tslesraph Co.Cap.
#NJ*714l/42-50sh« aa n/o Curtias, Houae 4 Co.
Ar' //{' /l" ■ // /*'f>
^l,-^\«--i%'
'"■'-' 5 .'93J' aoOalM-
Agroaaent ibtad August 26, 1933 , by and batwean Georga IT .
Grandin and Ira J-RiHon, Supt. or Banks of the State of '
Ohio, in ohargB of liquidation of The Uhloi Trust Co. at
Clavelaad, Ohio.
The Standard Oil Oo of Calif omla Cap. tjl </( fi IHl^'
i9ii/U182394/S5-10OBha aa »Wi/C233329-60ah» i^KY/D192«4-100sha ' : j
The P. Lorlllard Oo. OoB. ll' ig '1 ^y^'>
fr810U/U-*ieeaha'aa— ^GS»a«2>80«h» ' ,
i?J4174 at 90 shs., :fi:40S6A et 100 shs ea n/r Goorgo V/. / i-
,„„„, Orandin JAN 1 5 J934
290 shs The P. Lorillsrd Oo. Com axch for now $10 Par ||2L^|o
RwHnadftwii THE UNION TRUIT COMMNY-anELANO. OHIO, Collaural S«cur!ttei'«id M oUiir wixn In oonnactloii mith •tnM dMcrlbxl i
Exhibit U-6-83f
Uaorg* ii^^«..Jln
MTCRUT M OltCOUNT
5- I I « ».0 (Z^ iiLtt^.tUutt^.^i.^^J-'J^^^
CMSfT tALMCC
^■uAi,*tA*i'j,
■fP^.
'^44i/^T^'J(»^S;t'^Z<t* '^*'»< ,
c;^<«
• • fjri
Exhibit i:-6-83g
Ih« AtohUon Topvkii « bknta Fa Unry Uo. G.
,269J6e-1008hs ]r«4206d4-«O«hi
iCT I a \nf zeosha
Tha Anoriean Loconotlv* Co<Caia<
»C44810/ll-100»h« 0* )A.0H8552-80»h«
y/ -1 'V ^,
Th* Kanntoott Uopfcr Corp.
ir02ioe97-iooihi |027eoe7-eoihi
lf</ i I *<»
120thi I'll* HoraiKta Uinot, l.td. C«p.
ffUiC177e2-100ihi t«tB1026S-20lha
30e»))a Iha Fhtkpi Dodg* Uoip. Cap.
260ahi t64244/48-lOO»h» M »041006-B0»hi
•Me»)» Ih« Ooodyatr Tlrt ft Rubber Co. Cou
170«hB »J64047-10O,hi i)IJ0108fl06-70ihj
UOiht Ih« u.K.InduitrlkX «loohol Co. Oea.
t70044-100th« fA12867S-10(h*
MOtha. Dm ChryiUr Corp. Oeik
200aha 1*28776 ./"ZSSCn-lOOaha 6>.
*r^ 3W ^;
W /^ /'/ ¥
It/ 9<f J» ttj'
/vV i0t U Lie*
A// /^ /■/ //VCO
i,M ii« uMoii iMMT oa«r«Av.n.tvii.iMin omki. r
iLtn
KxiiiiuT U-6-83h
Tha l.ir RPduC-.lon, Inc. C'.,p.
T'no A]as!:a Jvioau Golf! «.ini; '-. C' r,
, li:57f4-IOOslii! „06S3S?-60a- -i
XJ19 Andricen Sroltim- i: fiof'ininr; Co .Con.
,yC01281G4
^! H^ VV
UT ! 0 '331 300»hs
■The Gonerttl totora Cor;).Ccr,
:/D259-C4e •'•D2fi?-(>P4A'-'5-100s!3 00
"CI I . f49 eoshs
The NRtlonal Diatlllora Pioducts Oorr.Core,
.,Ca/0/1C>014
it-o Worti em Pacific Rwy.Co, Cup.
,v/.217126/£7-1003hs 00 „CJ29477-4Csh»
The J.Cftnney Co. Con.
#;.C5i<;6e
/■^ L>o t>^ ic
T ; 0 ;d>
v«l l(«n Tilt ONION tBU9T COMP*Nr.CMVLi»NO OHIO. CiillaUi.
Exhibit U-6-83i
oelcmpTicm or couatcral
The ionrs, Hoebuek ft Co. Can.
;;K112844-1008h» .'?KZ15894-10ah«
llSshg
The Texas Guloh -"nlphur Co.Onp.
,/C1970CO -lOOehs .'F217874-18ah»
i1t$ntl
:r 1 3 tsflp
460ahs
The Croat Weatern Sujrar Co. 0»,. /v f 5 / 11 / /VT
;?i;Y/o/48al5
The Iclntyrfl Porcupine lilnea, Ltd. Cap. J6 oer *'■' 5k f"" ^, if'c'"'
ffi;YA/lS9TS
The BemMit Uinlr.g Corp. *\0 par Cap. '«-^'^, -^^ ''-^ 5^^ •
,fi;23274
The 4ri(^ht-Hargreavea Ulnoa, Ltd. Cap. <:'»^ -7 '■' •J.ij'-'
,?B31410/ll-lC0ah3 ea #BS2006/7-100aha o« #B32009-603ha
The Crlted Stetea Siteltlng, Seflalag & Mining Co Com. /*3. " ^ V />-*
*?T/077249
The Lake Shore Klroa, Eti. Cop. jl par
#M7O02
i^i, 41. Hi Vj..-
HM.<¥»i» (r»ti THE UNION TRII8T COMPANY-atVEtAND OHIO. Canit
Exhibit U-6-83J
' » ;.':.13l 85shs
The Airrrlcar Coir^reinl tlcohol Cerp Ca
^fCOlPlTO-fiOahn jCOl-WTZ-nSaha
100 »li» i:nlon P»cif Ic Rsllrooa Cor.p»ny
j»lH813 n/o Curtias Houao ^ Co. -
>EG I ff. 19» 7 2/6th» »h» TJi» Coche U Poutire Co., Cap. ,
^ 2000 at 7 aha., #2-3-73 at 2/5th» ah n/o fJeorga IT. OraiV;
nosha Tha national Pomr & Light Co. Coo.
tfNY/o/ieSZS? n/o *^urtl3a Hcuae 4 Co.
SOaht Tn* Intamational Harvsatar Cg.Com.
«(?N169537 n/o Curtlaa Houao & Co. ■
RaMlMd treXl THE UNKW TRUIT COimWV.CLEVIUNO. CHIO. CellHral JacurMN and Ml 0«l« pawn M rannKHM «•< iboM
Exhibit U-6-83k
R F. C,
Little, a«Rcon
rJAH 1 <k
///?/7
-TRCOn 5 «
-»■ 1^ I'-'iO. 1. .1. , „ i-,-, .
Exhibit U-6-85a
T-.e Wyoming pooohontas Ccal i; Coke Co. Pf d , '>/>'l-*' '"
- #69 -t*>«-A. /:.„ i ..,/ ,'
»^ 910shs The Syomlng Pocohontas Coal & Col;e Co. Con. ').''
#101
X 1,000 The .Vomen's City Club of i-levelaRd Co. 1st ;.!tg9
h/V._6i G. B. due 4/1/37 #97 c/D #3X3.40 Principal
Balance A.%
-66-,-OtJtr" The AsBOCiated Gas. & Electric Co. Conv. 5« Gd .
duo £/• !./ bO
— >7' ^r.-.ortgagot'i
■ -■o^f.ty locri-eas
;> lit .,i.'v<>v ..n^.-?'i
'£i^«t*'f -
Exhibit U-6-85b
Exhibit L-O 5>Jc
j^ »\. r,
Penton, J^^ A.
«D0Resj Penton Bldg.
#2 o5953
DUE <A3-^ .33
OATt
DISCOUNT
UUfc MO. II l^ut no. 3
INTEPESff OR DISCOUNT ^ ^/ INT. ^ PRfNCIPAL
ISCOUNI INT. BEBAir IKT. HECEilt INTCBEST TO OATt MID RATE DATS DIBIT CRECI
y/-* ri
JRtN •' <-f 7'f'
Spg iO^tJol-i.
EXHIBIT
r-G-S7j
OATE
PAR 0» S?).J|^ DtSCRlPTiON OF C^^ATERAL HARKCT
"^^4^^^^^^^^^|^H
i ^ ;*^^P^f^P*^i'^RF1^ 1
f
/2,0103hs The Penton Publishing Co Pfd. ■- . -^
' ,f300-t'003hs //l-37-17i)Sfts #177-140shs #226-114shs
~^~-",_ ffl79-100sh3 ;;i72-5l3hs ^249-30sh3 n/o John A.
Penton. #a9-600shs n/o Adah Nell Penton.
K.itn An<:r»>* S',-.' -otp.)
_ = I- Cart>in Co. j- - . -y?'
■lit H'/^n
k
mccivED
ri*-i:si.«'<J \<<~TK> 1H( Uf.;jN If-LST C<;Mt'AfiY<:lf Vf l*?-iD.OHIO. Ci;|;jte-r.-.iS«"i"ili-.-i.a«if •iiOtt>«r p,-|(i*ir*mconntcl«ori»iitllttboye(1("-crit-eJ lonti.
Exhibit U-6-87b
STOCK EXCHANGE PRACTICES 8757
Exhibit U-6-84
Status of loans to directors, February 25, 1934
Total Liability $6, 139, 325. 08
Special Report:
Wm. G. Mather $860, 482. 27
K. V. Painter 2, 926, 778. 75
3, 787, 261. 02
$2, 352, 064. 06
Made up as follows:
W. P. Belden $11, 150. 00
G. P. Comey 31, 354. 16
H. G. Dalton 10, 833. 72
G. W. Grandin 206, 935. 75
J. A. Hadden 6, 294. 98
W. A. Harshaw 4, 700. 00
A. D. Joyce 707, 539. 06
R. T. King 8, 991. 60
B. Little 182, 03L 77
O. Miller 743,273.51
H. Moss 9,276.37
A. Squire 30, 940. 62
W. Warner 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 unde-
termined 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. BURMESTER.
Noted: Mr. Tonks, W. T., Mr. Williams, Wm.
(Exhibits U-6-87a through U-6-87b face this page)
8758
STOCK EXCHANGE PRACTICES
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STOCK EXCHANGE PRACTICES 8763
Exhibit U-6-89a
(Coi)y 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 Collateral Value
100 shares Canfield Oil Co. Pfd $7, 500. 00
100 " Midland Steel Products, Pfd 3,200.00
51 " M. A. Haima Co., Pfd 1,887.00
12, 587. 00
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 250. 00
274 " Alabastine Co., Pfd 1,096.00
64 " Cliffs Corp., Com 448.00
80 " Cleveland Cliffs Iron, Pfd 2,000.00
15 " M. A. Hanna Co., Pfd 555.00
10 " Calumet & Arizona Mining Co., Cap 150. 00
35 " Republic Steel Co., Pfd 280.00
4, 779. 00
Comey, Geo. P.— $32,000.00
360 shares National Refining Co., Com 1, 440. 00
25 " Triton Steamship Co. of Del., Cap
75 " Pioneer Steamship Co. of Del., Cap 9, 000. 00
82 " National Refining Co., Pfd 5,740.00
400 " Union Trust Co 5,600.00
21, 78'0. 00
Crawford, W. J. Jr.— $59, 100. 00
76 shares Degnon Contracting Co.
53 " Degnon Realty & Terminal Imp. Co.
85 " Jordan Motor Car In., Pfd.
50 " Cleveland Realization Co., Cap.
925 " Crawford Realtv Co., Com.
300 " Union Carbide & Carbon Corp., Cap 5,100.00
100 " Union Oil Co 900.00
20 " Equity Savings & Loan Co 8,000.00
35000 Crawford Realty Co. 6s— 31
14, 000. 00
Gershauser, W. H.— $1,000.00
2000 Trumbull Cliffs Furnace 6—43 1, 760. 00
Girdler, T. M.— $10,000.00
400 shares Goodvear Tire & Rubber Co., Com 3, 200. 00
80 " Union Trust Co., Cap 1,120.00
4, 320. 00
Gordon, Geo. C— $13,000.00
38000 U.S.A. 3I/2 L.L 38, 000. 00
Exhibit U-6-89b
Grandin, G. W.— $345,000.00
500 shares Standard Oil of N.J $11, 500. 00
10000 Tokvo Elec. Lt. 6s— 53 3, 600. 00
500 shares Arthur G. McKee & Co 14, 000. 00
98 " Richman Bros. Co., Cap 17,658.00
6299 " Glidden Co., Com 25,196.00
1531 " White Motor Co., Cap 12,248.00
950 " Louisiana Central Lumber Co.
600 " United Milk Products, Pfd 9,000.00
25000 Clark Randolph Bldg. Site 11, 250. 00
30000 Northwestern Bldg. Site 21, 900. 00
1400 units Western Reserve Investing Corp 14, 000. 00
1400 shares Western Reserve Investing Corp. Com.
865 " Grandin Coast Lumber Co., Cap.
" 140, 352. 00
3764 STOCK EXCHANGE PRACTICES
Loans to directors of the Union Trust Company — Continued
Grasselli, T. S.-$372,630.70 ""taiVna'm
7700 shares E. I. DuPont de Nemours & Co $207, 900. 00
600 " Ohio Oil Co., Cap... - 4, 200. 00
20000 Federal Land Bank Bonds 41/4—55 17, 200. OU
25000 Federal Land Bank Bonds 5s— 41 . ^o i nn nn
420 shares American Rolling Mill Co., Com 2, 100. OU
300 " F. E. Myers Co., Com - ?' Snn nn
200 " Ohio Brass "B" 7;;—^-- — " J' 55n nn
180 " Youngstown Sheet & Tube Co., Com 1, 440. 00
1176 " Union Trust Co., Cleveland, Cap ^I' Ho^' nn
100 " Proctor & Gamble Co., Pfd 9. 200. 00
287, 480. 00
Hadden, Jno. A.— $18,440.00 . ^ ^ „^ ^r.
40 shares General Electric Co., Com ...... o^U. uu
10 " Atchison Topeka Santa Fe Rwy, Com , ^nn nn
200 " White Motor Co., Cap •^' o^n nn
10 " U.S. Steel Corp., Com.. innnnn
400 " Missouri Kansas Texas, Com . 1, UUU. uu
20 " Alleghany Corp., Pfd 40.00
80 " Marshall Mortgage Co., Cap.
2000 European Elec. Corp. Ltd. 6/2--.- »40. UO
32 shares Cleveland Builders Realty Co }^f- 00
16 " Cleveland Builders Supply Co "^lo nn
17 " Lamson & Sessions Co., Com o^- ""
5, 050. 00
Harshaw, W. A.— $15,000.00
700 shares Harshaw Chemical Co., Pfd.
Hayden, W. S.— $45,000.00
200 shares Halle Bros. Co., Pfd._ 9, 800. 00
150 " Cleveland Elec. Ilium. Co., Pfd 14, 100. 00
150 " White Motor Securities -^l' 1 -H' nn
50 " Chase Brass & Copper Co., Pfd --.-- «*, 1^0. 00
10/1350ths Interest Land Trust Ctf. Northwestern Bldg.
Site ;,.----.---, "' ""
10/5750ths Interest Land Trust Ctf. Cleveland Termmal
Tower 5, 000. 00
50, 150. 00
Exhibit U-6-89c
Herrick,Parmely W.- $808,800.00 1 .^nn no
Option Warrant to Purchase 1,000 Atlas Utilities Com 1, 5 0. uo
1000 shares Atlas Utilities Corp., Pfd 34, 000. 00
10525 " Union Carbide & Carbon Corp., Cap 178, 925. UU
800 " Harriman National Bank, N. Y 1, 040, 000. 00
58000 " National Hotel of Cuba 6s-59
,500 " International Products Corp., Pfd. ,o,.r,nr.n
600 " New York Joint Stock Land Bank 18, 000. 0
50 " Sun Investing Co., Pfd -^ :.-- 950.00
1350 " Hcadlev Emulsified Products "A" cm nn
6000 " M issouVi Pacific R. R. 5-77 1. p^"- ^
40/900ths Int. L/H Ctf. Property at Euclid & E. 105 8, UUU. UU
105,387.52 Ctf. of Deposit Winters National Bank, Dayton,
Ohio - -- 105, 387. 00
1, 388, 322. 00
STOCK EXCHANGE PEACTICES 8765
Loans to directors of the Union Trust Company—Continued
Joyce, Adrian D.-$711,500.00 _ Collateral Value
lUU shares Bank of America a-o mn nn
200 « Halle Bros., Com..:: ' son nn
80 « Mullins Mfg., Pfd : . f^^' ^^
100 « Cleveland Graphite Bronze::: 1400 00
32 Commonwealth Securities, Pfd. i, *uu. uu
104 " Commonwealth Securities, Com
500 " National Acme Co., Com i nnn an
750 « Standard Oil of Indiana..'::: lo' ^X^" ^2
343 « Glidden Co., Prior Pfd_.. }o' f?^" 22
120 « Cleveland Quarries fi' 1^0 00
^ToTat^ilS.lr.^k'^ii;^^^ Chicago-mie-^-Tr-u7t:: 100,' O^S; SS
|o : ftrdifd'a^St^s^PTd-: ^f'?go%%'
300 " Bac Ohio Corp ' 1' ^00 oo
900 « Richman Bros. Co., Com A' Son 00
350 « Interstate Equities Corp., Pfd ^4' Ino 00
300 " Interstate Equities Corp., Com ' ^°^- ^^
5940 " Wood Chemical Prod., "B" c qah nn
10000 « Shell Union Oil Corp.,'5 ?' IfS; 22
7000 " Glidden Co., Com.:.' ol' noo on
1000 ;; U.S. Elec. St. & Pr. Share's" -A ''V. l|' oOq- no
3400 « Glidden Co., Com.... iq'fioonn
1 000 units Western Reserve Investing Co Jn' 000 00
14000 Chemical & Pigment 6s.. ^.... 13 ?00 00
5000 Cleveland Discount Co. 6s :::: 3' ^^2" 22
iS ^'rrutZ\T'''^ ^-'- 5s...:::::::: ; :
2400 Industrial Fibre 8s" V. 5' ?o? 00
^2222 J^«^^'« Ohio Theatres 6sV.::::: I ?2^- 22
2000 Sinclair Cons. Oil 7s i fiOO oS
300 shares Ahumada Lead 1,600.00
100 " American Multigraph, Com i son nn
100 « Chemical Prod. Co , Cap. 1,800.00
200 « The Fair :.. ^' . _„ „„
1839 " Glidden Co., Com. 7' ???• nn
410 « Glidden Co. Com..: J' Sn on
100 « Joyce Realt; Co..... ono' 000 on
8519 « National Radiator & MYg" ^^^' °°^- ^°
15 " Otis Steel Co., Com... _ ^n nn
200 « Standard Textile Prod., Com ^^- ^^
100 « Standard Textile Prod., Pfd 500.00
Exhibit U-6-89d
100 shares State Street Investing o ann nn
100 sub shares Texas Pacific Land Trust:::: ^' ?oO 00
85 shares United Milk Prod., Pfd s^n nn
($150,000.00 Life Insurance) ^^^- ^^
Ralpli T. King— $77,000 00 ^^^' ^^^- ^^
100 shares gu^dimi Savings & Trust Co., Cap 11, qoo. 00
zuu 1^. W. VVoolworth Co., Can r nnn no
100 ;; American Tel. & Tel. 'Co.,W:::: ^' ^^Ho
200 " General Elec. Co., Com 9 finn nn
200 « Proctor & Gambk, Com I'fioo'on
200 « Union Carbide & Carbon,' c^p::::::".::::::: I, Tod. oS
Lenihan, E. P.— $40,000.00 ^^' ^^^- ^^
Trust Agreement.
8766 STOCK EXCHANGE PHACTICES
Loans to directors of the Union Trust Company — Continued
Little, Bascom— $43,000.00
378 shares Wyoming Pociiliontas Coal & Coke Co., Pfd.
910 " Wvoniing Pocahontas Coal & Coke Co., Com.
1000 Women's Citv Club 6.S-37 Collateral Value
121/1020th Euclid E. 13th Chester L/H Trust Ctf $24, 200. 00
25000 Associated Gas & Elec. os-50 5, 000. 00
29, 200. 00
Mather, Philip R.— $47,000.00
700 slinres Cleveland Cliffs Iron Co., Pfd 17, 500. 00
165 " Standard Tool Co., Cap.
1300 " Voungstown Sheet & Tube Co., Com 11.700.00
2080 " Interlake Iron Corp., Com 5,720.00
682 " Interlake Steamship Co., Cap 9,268.00
70 " Linde Air Products Co., Pfd 4, 200. 00
48, 388. 00
Mather, Wm. G.— $800,000.00
31,253 shares Cleveland Cliffs Iron Co., Pfd 781, 325. 00
8,000 " cuffs Corp., Com 56,000.00
837, 325. 00
Miller, Otto— $805,000.00
1000 shares Sparks Withington Co., Com 1, 500. 00
1578 " Malvern Land Co., Com.
3299 " Irociuois Securities Inc., Cap.
1000 " Bucvrus Erie Co., Com 2,000.00
200 " Kansas Citv Southern, Com 1, 000. 00
1000 " Bucvrus Erie Co., Conv., Pfd 4, 000. 00
300 " Midland Steel Prod Com 900.00
3000 " Sparks Withington Co., Com 4,500.00
12000 Chicago & Eastern 111. Co. 5s-51 1, 440. 00
1200 shares Alleghanv Corp., Pfd., $40 Warrant 2, 400. 00
2250 " Alleghany Corp., Pfd., $30 Warrant 4, 500. 00
600 " Alleghany Corp., Pfd 1,200.00
Exhibit U-6-89e
1900 shares Richman Bros. Co., Com 36, 100. 00
5500 " Chesapeake Corp., Com 44,000.00
1100 " Firestone Tire & Rubber Co., Pfd 52, 800. 00
1000 " Chesapeake & Ohio Rwy., Com 14,000.00
500 " Union Carbide & Carbon, Com 8, 500. 00
1000 " White Motor Co., Com 7,000.00
3000 " Glidden Co., Com 12,000.00
700 " Otis Steel Co., Pfd 2,800.00
533 " Faultless, Com 10,127.00
210, 767. 00
Mitchell, R. V.— $15,400.00
3340 shares Harris Se vl)old 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) 91, 800. 00
Osborne, C. N.— $90,000.00
200 shares M. A. lianna, Pfd. -.. 7, 400. 00
4350 " M. A. Hanna, Com
500 " National Steel Corj)., Cap - - 7, 500. 00
14, 900. 00
STOCK EXCHANGE PRACTICES
8767
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 Akelev 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.
Smith, Samuel Lewis— $65,378.75
Cap.
30000
5000
10000
5000
6000
U.S.A. Treas. Bonds 3/8—49.
U.S.A. 1st Zyi L.L
Dodge Bros. 6s — 40
Nugent Realty 6s — 44
B. F. Keith 6s— 46
50 shares New York, Chicago & St. Louis R.R., Pfd.
300
270
50
5000
Cleveland Elec. Ilium. Co., Com.
Union Carbide & Carbon Co., Cap.
Ohio Public Service Co., Pfd
Twin City Rapid Transit 5s— 52. _
Exhibit U-6-89f
50 shares Commonwealth & Southern, Pfd.
5000 International Match 5s — 41
5000 Missouri Pacific 5—81
6000 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 " Guardian Trust Co., Cap
2000 " Kelley Island Lime & Transport Co.
500 " Wellman Seaver Morgan, Pfd
600 " W.S.Tyler Co
Wade, J. H. Jr.,-
2968 shares
9007
500
2000
1000
1500
90
600
171
1000
1400
241
200
1000
2000
300
1680
1000
i600
1000
-$350,000.00
Medusa Portland Cement, Com
Cliffs Corp., Com
American Tel. & Tel. Co., Cap
Goodyear Tire & Rubber Co., Com.
U.S. Steel Corp., Com
Cleveland Cliffs Iron, Pfd
Sherwin Williams Co., Pfd
Great Lakes Towing Co., Com
Guardian Trust Co., Cap
Lehigh Portland Cement, Com
National Refining Co., Com
National Refining, Pfd
American Ship Bldg., Com
Chr3'sler Corp., Com
Eaton Mfg
General Motors Corp. , Com
Addressograph Multigraph, Com
Standard Oil of Calif
Republic Steel, Pfd
Montreal Mining Co., Cap
Collateral Value
$24, 458. 00
200. 00
186, 000. 00
210, 658. 00
27, 900. 00
5, 000. 00
7, 000. 00
2, 750. 00
2, 000. 00
150. 00
7, 200. 00
4, 590. 00
3, 400. 00
1, 500. 00
2, 150. 00
1,
300.
00
4,
900.
00
4,
600.
00
3,
900.
00
78,
340.
00
263,
500.
00
20,
000.
00
20,
000.
00
37,
000.
00
340,
500.
00
23,
744.
00
63,
049.
00
47,
500.
00
18,
000.
00
27,
000.
00
37.
500.
00
7,
470.
00
30,
000.
00
17,
100.
00
4,
000.
00
5,
600.
00
16,
870.
00
3,
000.
00
8,
000.
00
8,
000.
00
3,
000.
00
16,
800.
00
18,
000.
00
4,
200.
00
125,
000.
00
175541— 34— PT 20 3
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 Collateral Value
500 " International Nickel $2,500.00
120 " Guarantee Title & Trust Co., Cap 8,400.00
90 " Canadian Oil Companies, Pfd
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 34, 000. 00
2050 " Standard Oil of Indiana 34, 850. 00
1809 " E. I. DuPont de Nemours & Co 48, 843. 00
30000 U.S.A. 3% Trea. Bonds 27,600.00
10000 Note of The Van Sweringen
145, 293. 00
Totalloansto directors $8, 291, 117. 15
Exhibit U-6-89g
(Copy of a longhand statement taken from the personal files of Joseph R. Nutt)
LIABILITY OF 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
Mvers, 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
I
STOCK EXCHANGE PRACTICES 8769
Exhibit U-6-90
directors' loans THOMAS S. GRASSELH
On January 20, 1933, date of last examination by Ohio State Banking Depart-
ment, Mr. Grasselli was indebted to the bank in the amount of $371,530.70. In
conniienting on the loan the examiner stated:
" T. S. Grasselli — $371,530.70. CoUateraled 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 - $8, 516. 40
April 12, 1933 3,983.20
April 14, 1933 8,066.40
April 19, 1933 28, 582. 40
April 21, 1933 12, 399. 60
April 22, 1933 129,096.00
$290, 644. 00
May 9, 1933 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 Ohin State Banking
Department, J. H. Wade, Jr., was indebted in amount of $350,000.00. We quote
from the bank examiner's report:
'V. H. Wade, ./r.— $350,000.00 CoUateraled by listed stocks worth $265,000.00
together with 1,000 sliares 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 indel)ted in amount of $100,000.00. We
qucte from the bank examiner's report:
''Laurence H. A^'or^on.— $100,000.00 Amply CoUateraled."
Exhibit U-6-93
directors' LOANS ANDREW SQUIRE
On Januarj^ 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:
" Andreiv Squire. — $290,000.00 Loan is amply collateraled by marketable stocks
which include 15,500 shares Union Carbide & Carbon Company, which have &
present market value of $418,000.00.
8770
STOCK EXCHANGE PEACTICES
Exhibit U-6-94
loans to directors tjnder-sectjred
Feb. 25,
1934
Wm P BeMen - -.
$12, 700. 00
82, 000. 00
10, 000 00
313,000 00
371. 530 70
Ifi 839 00
90. 900 00
709. 500. 00
38. 743. 64
37, 343. 44
15. 400. 00
90. 000. 00
149, 143. 20
Ooen
(ien P Pomey - -
r.
T. M. Oird!er -_ -_.
Paid
O W Orindia -
Orpu
T. S OrfisselU --- - --
Paid
John A Hiddeii ___ -___. ____.-..
Open
W. S Havdeu
Paid
Adrim D. .lowe ..
Open
Ralph T Kiiij;
Bascom T.ittle -
)j
R. V. Mitchell
C M. Oshorne - - -
Paid
Whitney Warner. . .
Open
Total
.$1, 937, 099. 98
The Union Trust Company Loans to Officers & Directors Other Banks —
Walter H. Seymour
Exhibit U-11-1
Schedule of loans to officers, directors and employees of The Union Trust Company
and other banks as of January SO, 1933
Inform, obtained Total Loans of Every Nature - .$95,825,231.2?
from E.\hibits.
Loan=: to Offlcars, Directors and Employees of The Union
Trust Compinv --- $8,266,940.49
U-5-3 Liability as Endorser Union Trust Co-., 898,736.62
Page 16
Total Union Trust Company 9,165,677.11
Per cent to total loans .096
U-5-3 Loans to Companies in which Officers or Directors are
Page 15 interested Union Trust Co.:
Secured Loans 15,467,431.03
Unsecured Loans -- 5,043, 189.40
Total Uhion Trust Company 20,510,620.43
Per cent to total loans -.. .214
Loans to Officers, Directors and Employees of other
Cleveland Binks:
Guardian Trust Company 1,845.725.26
Cleveland Trust Company 2,374.495.18
Federal Reserve Bank 154.395.00
Society for Savinss 239.200.00
Nati:)nal Citv Bank 200.000.00
Morris Plan Bank 49.000.00
Central United National Bank 287,650 00
Lorain Street Savings & Trust Co 43, 150. 00
Total other Cleveland banks 5,193,615.44
Percent to total loans .054
Loans to Officers, Directors and Employees of Out-of-
Towd Banks— ..- 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 .623
Grand total loans -. 95,825, 231. 22
Percent to total loans... 100.0
STOCK EXCHANGE PUACIICES
8771
Exhibit U-11-2
Loans to Officers & Directors oj Other Banks
Name
Amount
Bank Connection
Shares
of own
bank
pledged
Other Collateral & comments
Chas. E. Adams
Chas. K. Arter
$5, 700. 00
136, 464. 60
14, 200. 00
7, 000. 00
1, 180, 184. 80
93, 750. 00
32, 500. 00
40, 000. 00
* 13, 550. 00
160, 000. 00
50, 000. 00
1, 300. 00
575. 00
1,000.00
92, 000. 00
11,400.00
Director, Cleveland
Tr. Co., Cleveland,
O
Director, Guardian
Trust Co., Cleve-
land, 0.
Vice President, Cleve-
land Trust Co.,
Cleveland, 0.
Vice President, Farm-
ers Bank, Spencer-
ville, 0.
Director, Guradian
Trust Co., Cleve-
land, 0.
Director, Guardian
Trust Co., Cleve-
land, O.
Director, Morris Plan
Bbnk, Cleveknd, 0.
Director, Central
United N/B, Cleve-
land, 0.
0
0
16
0
0
0
100
0
Amply coUateraled.
Listed stock, value $240 M.
A. L. Assmus ---
Quoted stocks worth .$900.00.
Wm. Bailey
120 sh. Cleve. Punch & Shear,P
100 " Crane & Engineering.
Believed covered.
7 M U.S. Treasury 4 H%-52.
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 com-
menls in "Lean Schedule."
Jt. P. E. Bli=s & C J. Stillwell
R. n. Bishop, Jr.-
I. C.Bolton
R. J. Bulkley
G25 f h. Warner &. SwEsey Co.
Guar, by " "
Other collateral worth $1,800.00.
Reducing.
$40 M note F. L. Swetland
secured by agreement covering
sale of real estate.
* Represents proportionate lia-
bility in Hunting Valley Syn
die te.
Amply coUateraled.
Amply coUateraled.
Collateral sufl3cient.
Book value $180.00.
Collateral value $2,700.00.
Collateral value $160 M .
Last sale $50.00.
E.S.Burke, Jr
F. B. Black
Director, Mansfield
Sav. Bk & Tr. Co.,
Mansfield, 0.
Pres. & Director,
Farmers Sav. & Tr.
Co., Mansfield, O.
Asst. Vice President,
Cleveland Tiujt Co.,
Cleveland, 0.
Cashier, First Nation-
al Bank, Dalton, 0.
As.st. Secy. & Treas.,
Soci.ny frr Savings,
Cleveland. O.
Director, Central
United N/Bk, Cleve-
land, 0.
Director, Guardian
Trust Co., Cleve-
land, 0.
0
0
7
30
0
216
H. S. Black
G. C. Beck
C. F. Buchwalter
F. E. Burdett
A. Carlin
Geo. S. Case
(Examiners Report,
Dept. of Banks, State
of Ohio, January 20,
1933.)
Exhibit U-ll-2a
H.T.Clark
$10, 000. 00
Trustee, Society for
Savings, Cleveland,
0.
Vice Pres. & Pres. re-
spectively, Orrville
Savings Bank, Orr-
ville, 0.
Pres. First Nat. Bank,
Ada, O., & Director
Federal Reserve
Bank.
Director, Orrville Sav-
ings Bank, Orrville,
Ohio.
Asst. Auditor, Cleve-
land Trust Co.,
Cleveland, 0.
0
Amply coUateraled.
Carl E. & Maud B.
Congdon.
Ben R. Conner.
B. G. Cope
12, 250. 00
1, 000. 00
7, 500. 00
1, 825. 00
130
0
0
7
Various quoted securities esti-
mated market value tl3,000.00.
Unsecured.
10 M U.S. Treasury 3 3/8%.
Other collateral worth $300.
Edward M. Coan.
8772 STOCK EXCHANGE PRACTICES
Loans to Officers & Directors of Other Banks — Continued
Name
Amount
Bank Connection
. Shares
of own
bank
pledged
Other Collateral & comments
B.H. Cowdery..
Homer D. Cozad
J. S. Crider
$9, 400. 00
8, 400. 00
200, 000. 00
20, 650. 00
120. 00
1, 650. 00
84, 750. 00
13, 450. 00
180, 000. 00
34, 600. 00
19, 500. 00
3, 500. GO
Director, Geneva Sav.
& Tr. Co., Geneva,
Ohio.
Asst. Vice President,
Cleveland Trust
Co., Cleveland, 0.
Director, National
City Bank, Cleve-
land, Ohio.
Vice President, Cleve-
land Trust Co.,
Cleveland, 0.
Employee, Federal
Reserve Bank,
Cleveland, 0.
Lorain Co. Sav. &
Trust Co., Elyria,
Ohio.
Trustee, Society for
Savings, Cleveland,
Ohio.
Trustee, Society for
Savings, Cleveland,
O.
Director, Guardian
Trust Co., Cleve-
land, 0.
Vice President, Cleve-
land, Trust Co.,
Cleveland, Ohio.
Director, Cleveland
Trust Co., Cleve-
land, Ohio.
Cashier, Central Bank
Co., Lorain, Ohio.
0
40
50
40
48
0
166
110
0
Collateral value $10 M.
Also $5 M life insurance, no cash
value.
4,200 sh. Union Carbide
E. S. Curtiss
1,265 '• Dow Chemical
Present market value insufficient
to cover. Believe will work
out.
11 M market value various
Bobert C. Dougherty..
H.A.Daniels
quoted stocks. Estimated
shortage $5 M. Reducing reg-
ularly.
Unsecured.
Other collateral worth $100.
Ernest C. Dempsey
S. D. Dodge
Amply collateraled.
Stocks worth $2,300.00 and $7 M
a. B. Durell
second mortgage.
American Fork & Hoe Co. stocks,
John T. Feighan
Horatio Ford..
value sufficient.
Other collateral worth 1 M.
Estimated 15 M short. Re-
ducing.
Other collateral worth $8,200.
B. A. Foskett ..
Believed covered.
Collateral value $4,600.00.
Examiners Report,
Dept of Banks, State
of Ohio, January 20,
1933.
Exhibit U-ll-2b
1. F. Freiberger
J. E. Galvin..
$15, 000. 00
40, 000. 00
6,350.00
219,000.00
271, 210. 00
1, 525. 00
31, 906. 86
12, 950. 00
32, 936. 08
33, 289. 17
55, 100. 00
1, 800. 00
Vice President, Cleve-
land Trust Co.,
Cleveland, 0.
Director, Federal Re-
serve Bank, Cleve-
land, 0.
Vice President,
Guardian Trust
Co., Cleveland, 0.
Cliariman of Board,
Cleveland Trust
Co., Cleveland, 0.
Vice Pres. & Director,
Cleveland Trust
Co., Cleveland, 0.
Asst. Trust Officer,
Cleveland Trust
Co., Cleveland, O.
Director, Guardian
Trust Co., Cleve-
land, 0.
Director, Guardian
Trust Co.
Vice Pres. & Director,
Exchange Bank,
Canal Fulton, 0.
Director, Exchange
Bank Canal, Ful-
ton, O.
Vice President, Cleve-
land Trust Co.,
Cleveland, 0.
Vice President, Cleve-
land Trust Co.,
Cleveland, 0.
120
0
183
946
0
50
5
18
23
147
0
Collateral covers.
20 sh. Nivlag Corp. Holding
W. R. Green
Company for personal assets.
See loan schedule.
Collateral value $6,300.00.
E. B. Greene
Various listed & unlisted securi-
John M. Gundry
P. J. Heflner
ties, value sufficient.
Total collateral value estimated
at $150 M. See loan schedule.
Collateral value nominal. Pays
D. R. Hanna, Jr
Chas. G. Heer..
$50.00 per month.
Other unlisted collateral, value
believed sufficient.
Other collateral worth $5 M.
Donald D. Held
H. E. Held.
Reducing.
Collateral value nominal. Very
doubtful loan.
Same comments.
F. H. Hobson
Other collateral worth $3 M.
F. H. Houghton
Estimated 35 M short. See
loan schedule.
Collateral worth $3 M.
STOCK EXCHANGE PRACTICES 8773
Loans to Officers & Directors of Other Banks — Continued
Name
Amount
Bank Connection
Shares
of own
bank
pledged
Other Collateral & comments
J. A. House
$08, 000. 00
7, 900 00
155. 00
6, 000. 00
58, 000. 00
President & Director,
Guardian Trust Co.,
Cleveland, 0.
Vice President, Cleve-
land Trust Co.,
Cleveland, 0.
Asst. Treasurer,
Guardian Trust Co.,
Cleveland, O.
President & Director,
Commercial Bank,
Delphos, Ohio.
Director, Cleveland
Trust Co., Cleve-
land, O.
0
45
2
0
25
Listed stocks worth $13 M to-
A. F. Humel
gether with 500 sh. M. A.
Hanna Co. common, book
value $30.00. See loan sched-
ule.
No other collateral.
Peter Janicki
Collateral suflBcient.
Jos. Jettinghoff--
Thos. H. Jones
Collateral sufficient.
Collateral value about $45 M.
Examiners Keport,
Dept. of Banks,
State of Ohio, Jan-
uary 20, 1933.
Reduced.
Exhibit U-11-2c
Geo. Q. Keeley
$36, 800. 00
Director, Cleveland
49
Other listed stocks worth 12 M
Trust Co., Cleve-
and 24 M life insurance. Re-
land, 0.
ducing.
Carl R. Kimball
5, 400. 00
Cashier & Director,
Exchange Bank
Madison, 0.
60
Other listed stocks worth $1 M.
H. D. King, Trustee
71, 127. 50
300
Making regular reductions. O/a
(Syndicate of Cleve-
$115 M.
land Trust Officers
& employees.)
M. J. Ludwig
6, 900. 00
Asst. Secretary, Cleve-
25
Other collateral worth $1 M.
land Trust Co,
Makes monthly reductions.
Cleveland, 0.
J.J. Luthi
3, 350. 00
Asst. Secretary,
20
Other collateral worth $1 M.
Guardian Trust Co.,
Pays $40.00 per month.
Cleveland, O.
A. A. McCaslin
17, 700. 00
Vice President, Cleve-
land Trust Co.,
Cleveland, Ohio.
77
Other unlisted stock, value be-
lieved sufficient.
H. P. Mcintosh III....
850. 00
Asst. Treasurer,
Guardian Trust Co.,
Cleveland, 0.
15
Other collateral, value sufficient.
R. A. Malm
5, 050. 00
Vice President, Cleve-
5
Other collateral worth $900. Re-
land Trust Co.,
duces regularly.
Cleveland, 0.
M. J. Mandelbaum
109, 812. 68
Director, Cleveland
Trust Co., Cleve-
land, 0.
0
Estimated value of collateral is
$32 M. Has no additional col-
lateral to pledge. Doubtful.
G. A. Martin
50, 000. 00
Director, Cleveland
Trust Co., Cleve-
0
Collateral worthless. President
of Sherwin Williams Co. Good
land, 0.
earning capacity.
S. L. Mather
112, 000. 00
Director, Cleveland
600
Varirus unlisted stocks value
Trust Co., Cleve-
believed sufficient.
land, 0.
E. B..Merrell
6, 700. 00
Vice President, Cleve-
25
Other collateral, value sufficient.
land Trust Co.,
Cleveland, Ohio.
Severance A. Milliken.
40, 000. 00
Director, Cleveland
Trust Co., Cleve-
land, 0.
56
Various other listed and unlisted
securities, value believed suf-
ficient.
W. S. Miller...
19, 162. 19
Director, Lorain Co.
360
Book value $60 per share.
Sav. & Tr. Co.,
'
Elyria, Ohio.
T. E. Monks
18, 000. 00
Vies Pres & Direc-
0
Unlisted stock and 1st mortgage
1 Ave i * S^kJt V^ i*.-' ** V^*./
tor, Guardian Trust
on real estate.
Co., Cleveland, 0.
M. W. Mounteastle
550. 00
Asst. Treasurer,
Cleveland Trust
Co., Cleveland, 0.
11
Collateral covers.
J. D. Myer....
5,870.00
Asst. Mgr. Invest.
0
Collateral value $1,900.00. Can't
{Examiner's Report,
Dept. Cleveland
reduce. Doubtful.
Dept. of Banks, State
Trust Co., Cleve-
of Ohio, January 20,
land, 0.
1933.)
8774
STOCK EXCHANGE PRACTICES
Exhibit U-ll-2d
Loans to Officers & Directors of Other Banks — Continued
Name
Amount
Bank Connection
Shares
of own
bank
pledged
Other Collateral & comments
Guy C. Myers
$50,000.00
185, 000. 00
28, 349. 50
43, 445. 00
100,000.00
84, 500. 00
4, 100. 00
775. 00
400.00
1, 675. 00
6, 550. 00
20, 250. 00
715.00
2,300.00
34, 500. 00
68, 864. 00
5, 100. 00
Director, First Na-
tional Bank, Ash-
land, 0.
Director, First Na-
tional Bank, Ash-
land, 0.
President & Director,
Bank of Berea Co.,
Berea, 0.
Vice, Pres. & Director,
National Bank of
Commerce, Lorain,
0.
Trustee, Society for
Savings, Cleveland,
0.
Vice Chairman, Cen-
tral Rep. Bk. & Tr.
Co., Chicago, 111.
Vice President,
Guardian Trust Co.,
Cleveland, 0. ■
Asst. Trust Officers,
Cleveland Trust
Co., Cleveland, 0.
Asst. Trust Officer,
Cleveland Trust
■ Co., Cleveland, 0.
Vice Pres. & Tr. Offi-
cer, Lorain Co. Sav.
& Tr. Co., Elyria,
0.
Vice Pres. & Director,
Lorain St. Sav. &
Tr. Co., Cleveland,
0.
Trust Officer, Cleve-
land Trust Co.,
Cleveland, 0.
Asst. Secretary,
Guardian Trust Co.,
Cleveland, O.
Cashier & Director,
Farmers Nat. Bank,
Canfield, 0.
Director, Cleveland
Trust Co., Cleve-
land, 0.
Director, Guardian
Trust Co., Cleve-
land, 0.
Cashier, Farmers Nat.
Bk.&Tr. Co., Ash-
tabula, 0.
0
0
0
0
0
126
30
0
1
36
50
100
5
55
141
0
40
100 M U.S. Treas. 4H%.
213 M First L.L. Bonds.
J. 0. Myers
Percy Neubrand
Harry Nicholl
Collateral value $8,500.00. Bal-
ance doubtful.
Collateral covers.
L. H. Norton
Collateral covers.
J. W. O'Leary
Other listed and unlisted stocks.
Stanley J. Olstyn
A. J. Perfler
Value insufficient. Doubtful
loan.
$10 M life insurance, C.V. $900.
Reducing.
First mortgage.
Henry Pirtle
Other collateral. Value suffi-
A. J. Plocher-
cient.
Book value $60.
E. Rice
No other collateral. 2 months
Edward B. Roberts
T. R. Roberts
delinquent in interest.
5 M life insurance. Reducing
regularly.
1 M life insurance.
T. C. Rose
Other collateral worth $250.
W. L. Robinson..
W. T. Rossiter. ..
Other collateral worth $16 M.
Under-collateraled $2 M.
Collateral value $25 M. Has no
F. B. Russell-. .
other worth. Doubtful.
Other collateral worth $1,500.
Reducing.
(Examiners Report, Dept. of Banks, State of Ohio, January 20, 1933.)
Exhibit U-ll-2e
Carl W. Schaefer.
O. A. Schuele
F. A. Scott.
A. A. Searle
A. H. Seibig.
$36, 600. 00
35, 500. 00
26, 980. 00
2, 500. 00
37, 500. 00
Trust Officer & Dtr.,
Lorain St. Sav. &
Tr. Co., Cleveland,
O.
Director, Cleveland
Trust Co., Cleve-
land, O.
Director, Cleveland
Trust Co., Cleve-
land, O.
Secy-Treas. & Direc-
tor, Geneva Savings
Bank Co., Geneva,
O.
President & Director,
Central United Nat.
Bk, Cleveland, O.
80
163
165
50
1,700
Other listed and unlisted stocks,
value probably sufficient.
Other collateral worth $1,500.00,
Reducing regularly.
Other collateral worth 1 M.
Additional collateral coming.
No other collateral.
No other collateral,
value $20,400.00.
Market
STOCK EXCHANGE PRACTICES
Loans to Officers & Directors of Other Banks — Continued
8775
Name
Amount
Bank Connection
Shares
of own
h'n'-
pledBed
Other Collateral & comments
J Tj Severance
.$1,000,000.00
37, 320. 00
16, 500. 00
8, 975. 00
5, 500. 00
17, 050. 00
14, 700. 00
39, 000. 00
212, 000. 00
14, 500. 00
5,000.00
Director, Cleveland
Trust Co., Cleve-
land, O.
Director, Cleveland
Trust Company,
Cleveland, O.
Vice Pres. & Direc-
tor, Morris Plan
Bank, Cleveland,
Ohio.
Pres. & Director, Sav.
Deposit Bank Co.,
Medina, 0.
V.P. & Director, Lo-
rain Co. Sav. & Tr.
Co., Elyria, 0.
Vice President, Cleve-
land Trust Co.,
Cleveland, 0.
Vice Pres. & Director,
Dollar Sav. Bank
Co., Niles, 0.
Ch. of Board, Central
United Nat. Bk.,
Cleveland, O.
Pres. & Director, Lo-
rain Co. Sav. & Tr.
Co , Elyria, O.
Director, Guardian
Trust Co., Cleve-
land, O.
Director, Marine Sav.
Bank Co., Ashta-
bula, 0.
2,199
90
28
91
100
60
0
1,050
800
21
0
Other listed and unlisted stocks.
Belden Seymour
H E Small
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.
E. B. Spitzer
Estimated shortage $6 M.
Depends on collateral.
No other collateral.
S. H. Squire
No other collateral.
C. W. Stansbury
Wm. H. Stevens
C E Sullivan
Other collateral worth $5 M.
Reducing.
Collateral value $13 M.
Other unlisted stocks and se-
A B Taylor
curities, value undetermined.
Other collateral worth $55 M.
E. Q Tillotson
Estimated $120 M short. Very
doubtful loan. See loan sched-
ules.
Other collateral worth $1,700.
0. C. Topky
Reducing each renewal.
$6 M.L.L. Bonds.
(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
$3, 500. 00
65, 600. 00
7, 275. 00
Vice President, Cleve-
land Trust Co.,
Cleveland, 0.
Both Directors, Cen-
tral United Nat.
Bk , Cleveland, 0.
Vice Pres. & Director,
Painesville N/B &
Tr. Co., Painesville,
0.
Director, Union Na-
tional Bank,
Young.stown, 0.
Asst. Treasurer,
Guardian Trust
Co., Cleveland, O.
Ch. of Board, First
Central Tr. Co.,
Akron, 0.
Vice Chairman, Fed-
eral Reserve Bank,
Cleveland, 0.
0
0
0
Collateral covers.
Collateral $60 M. Reducing.
Collateral value $2,700.00. Bal-
ance doubtful.
Myron A. Wick
K. Brice Wiggins
Harry Williams
L. B tVilliams
296, 000. 00
685. 00
12, 000. 00
101, 775. 00
0
6
200
Collateral worth $231 M plus
second mortgage.
Other collateral worth $350.
Other collateral worth $7,600.00.
Reducing.
Personal $6,000
Liab. in Hunting Valley
Syndicate 6,775
Liab. as partner in
Haj'den Miller & Co._ 89, 000
John Williams
5, 517. 60
13, 500. 00
Pres. & Director,
Citizens Banking
Co., Salineville, O.
Vice President,
( ; iiardian Trust Co.,
Cleveland, O.
75
119
101,775
No other collateral. Has worth
A. F. Young
in real estate.
Other collateral nominal value.
Reducing.
8776 STOCK EXCHANGE PRACTICES
Loans to Officers & Directors of Other Banks — Continued
Name
Amount
Bank Connection
Shares
of own
bank
pledged
Other Colloteral & comments
J. B. Zerbe
$30, 000. 00
11, 500. 00
Trustee, Society for
Savings, Cleveland,
0.
Deputy Governor,
Federal Reserve
Bank, Cleveland,
0.
F. J. Zurlinden
sufficient.
Listed and unlisted stocks value
sufficient.
(Examiners Report,
Dept. of Banks, State
of Ohio, January 20,
1933.)
6,512,114.98
(Exhibits U-ll-3a through U-11-3C face this page)
Exhibit U-11-4
Interviews and Comments Affecting Loans — Official Instructions to
Credit Department — Comments on Financial Statements — Essential
Credit Information
For exclusive use of Credit Department.
J. A. House
January 8, 1934.
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 doubly
liability of $386,600.
G. R. Herzog.
GRH:M
Noted:
LAC LAC.
J. A. House 1-25-34.
Loan: Principal
Collateral 62,840.40
Interest
3,259.80 (1-1)
Value
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 obliga-
tion 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 liqui-
dation. 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 under-
collateralled, 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 hina
accordingly.
L. A. CORDREY.
Noted by: HFB HFB
LAC:A
House ,
Tv««*-
leoi TEj<KiiiAi> roasa
m^
kjU LOAN K^
Itti - />-■.■ .-V!
^S. 5? JAN I 1933
■3t Lit .'>'>- ii
I. ■ ■ <y -..i-
I'H r I "/■ 7-,' .:•-
^:^
.yMJ^' ' i- ''>'9
"^tjlZJ-iu A ' ---^
^^i'///- (^fCt'^eA ^^/^
llb-3^
/Coo ^c cfo o
A4, ^7>r
•I i>cH^-' Lc
Exhibit U-ll-3a
l.OOOshs The ContJr
CXark, flodge :.■ ^o. ."Ky/Clg^l n/o aoc •» ^> Schloy
;VKY/C136G0 ;KY/Ci£664 n/o «.E.Huttorj ';o.
,tKY/c13415 r./o A.E. ,Iseii,n & CO. rfKY/clK733 v
#f<Y/C156££ -,,/o Logan & Bryan #KY/c 13337 n/o-
Goldman i^aohs •.; Co. frKY/C14o21 .o/o E.P.ilutton c Co.
'/^ ri'>i>
i>^
'/' :l "■>
,'i^ //^
/i->o-i}
C? J^^M^
THEUSBNTauSTCOMWHy Ci«*»Kl. Ohio CoH
h«r c^p«.» dii* in WRiMCtfon wM lh« awi^ dMa.4iMrf t
Exhibit U-ll-3b
■♦■.*r_.^ -•
,
■t-yf^
- 1
g/TE -f PA^^HUK
OEKRI^JOf COU>TE«l
|wniteT| usis
: •• 'utoMm
A BOshs 1
The First National Bank if Boston. c5 <?■
,f 16185 ; ,,:^~. . ^-i,.; )
sy
■ 1 ' "
♦ 308h3
The Stone ?c *ebstor Inc. Cap. . vf
yTO0154S- :>!-C74So;i p./o Jeson Orain -'.J-'
y
^ ; " i
>r 400shB .
Itie Inland Investors, Inc. Cap. !<!<?
ff-ei«4V«-!re-3*i-'b'J9shsear-' #cl606/9-lD08h» e*
n/o Jsson Craln
/o
4»(»«
Jr 100sh3
The -:.'».Hanna Co. 57 Cui.i Pf d . vK
!<Cf61 ■ fCP339 n/o J»«on Craln •
tf
n**
t lOOsh* -
The Industrial Kayon Corp. Cap.
r^C33a. —
j
•t 500shs
The ii.^.Uanna Co. Com. , 'o
fr(i63u'iwO*tM-trG4i6-iV>9M #C463 at 393«ii« i«:464 at llOahi
r./o Jsaon CJrain
1
r lOOshB ■
The Cities Service Co. Com. ec^(-
ir'/^SSm #Xli25696 n/o Jeson Crnln ■
3
^«>.
-* 20, 000 «
Life Insurance Policy. The Kone Life Ina. Co,
#405894
ix- J
BECEIVEO
.^
/ULt>
\co
\ I
Rir:««d'ffom TMC UNION TRyST COUIWl
0*1 F
Exhibit U-11-3c
STOCK EXCHANGE PRACTICES
8777
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-11-5
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 ex[)lained 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— Vaid to February 1. 1933. Accrued to August 1, 1933— $1,653.15
Secured by
80Shs
80 "
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, Common...
Market
8-24-33
27
12
11
82
3
Value
$2,160
9(50
4,400
8,200
300
$16, 020
Rate
.50
Income
$100
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 EXCHAISTGE PKACTICES
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 unmarket-
able, has a real value ;>! at least SIO per share. It loould he of considerable assist-
ance to Wtf in fnUowinq this holding if Mr. House could obtain for us an up-to-date
list 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 outstandintr 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 hi 1931, and 65 to 132in 1930. The bank e-ijoys
an excellent reputation for good management, and probably has been le.ss 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. Peymour, 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 prejiaring this memo.
Oscar L. Cox,
Dzputxj Superintendent of Bmks, State of Ohio.
Stone & Webster, Inc. — Capital
Earnings
Per Share
Dividends
Price Range
1930
$3.06
1.56
.72
. 14 Def.
$5.00
3.00
. 37^2
None.
113 -37
1931
54^- 9%
1932
173^- 4^8
1933 (1st 6 Mos )
19M- 5?4 (To date)
The company functions primarily as a consulting engineer, manager financing
medium, and holding company and investment trust for the public utility in-
dustry. Its principal asset consists of 91% of Engineers Public Service Company
stock, which is a public utilitv holding concern. Stone & Webster's capitaliza-
tion 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 sub-
sidiary 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 inproyement in
business conditions, while activities of security houses — particularly in the un-
derwriting 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 lever-
age and could respond readily to favorable developments, while the shareholders
stand to lose relatively little at these prices.
STOCK EXCHANGE PRACTICES
8779
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 mem-
ber of the staff preparing this memo. Oscar L Cox
Deputy Superintendent of Banks, State of Ohio,
Inland Investors, Inc.—
-Capital
Earnings:
Net Profit
Per Share
Dividends
Liquidating
Value
1932
$62, 294
195, 959
245, 266
885, 851
297, 032
$0.62
1.95
2.45
8.86
2.97
$0.70
2.20
2.55
2.65
1.50
$9.91
14.24
34.22
52.27
57.29
1931
1930
1929
1928.
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, con-
sisting 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.) i 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 mem-
ber of the staff preparing this memo. p. j n
wSCA R 1j, V_yOX.
Deputy Superintendent of Banks, State of Ohio.
Earnings:
1928
1929
1930
1931
1932
1933 (1st 6 Mos.)
Net In-
come
$2,231,221
3, 698. 524
2, 226. 814
1, 377, 925
722, 892
394, 910
Earnings per Sh.
Pfd.
Com.
$19. 92
$2.20
26.03
2.66
16.20
1.26
9.96
.40
5.30
1.24
2.92
1.08
Price
Range —
Pfd.
98 -85
94 -67
70 -33
2 83W-45H
1 Deficit.
Note.— Present preferred not issued until 1930.
i 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 there-
for 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 com-
panies, 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 substan-
tial appreciation has occurred in the market value of its investments, this amount-
ing to about $16 per share on Hanna common. This calculation is somewhat
■ Includes 10,322 shares of Preferred held in 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 ^IMf., as against 75ji in 1932. The Company, however, is
Exhibit U-ll-6d
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 here-
tofore. 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. Never-
theless, 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.
8-26-33.
MFK
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 veri-
fied 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-ll-7b
Date
Par or
shares
Description of collateral
Market
Basis
Amount
Continued.
Parcel # 9:
S/L #10 in The Seltzer Round
Go's Monticello Subd #2 City
of Cleveland Heights County
of Cuyahoga.
Parcel #10:
S.L #11 in Seltzer Round Go's
Monticello Subd #2 City of
Cleveland Heights County of
Cuyahoga.
Parcel #11:
S/L #12 in 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.
2/23/33
Appraised land bldgs, no. Received. By
Assignment Recorded, yes.
Insurance Held, no.
Ctf. of Titl3 Held.
Ctf. of Title Examined.
Notify to Pay Here.
Received from THE UNION TRUST COMPANY CLEVELAND, Collateral Securities and aU
other papars in connection with above described loan.
DATE —
.Monks, Thoa. E."^- ^- '^ .^^^
-fi^-T Euclid Ave. /i
l^V-/?-^-' <*KV
Z/I--
IMTEBE8T OR DISCOUNT
Dtl
lOOUNT WT. RCtATC INT. RECPflLC INTCHC9T TO
/A-
3o o -CEO n
ln^^p . ^
^to- JiJi 1 mtn
Ii ^ro~t^i^
/ffWW
/(",
tar
^'
''.. .-' r y 1/
/r^r<r^
,-<<■
a c_i
. cf —
' f / <» l' '1 5i ■'■'
////''
2?^ -OCT 2J 1J370C1 2U W3'/(^ j. Wi, /^ fioc ^^r4 ■ /'
Exhibit U-ll-7a
STOCK EXCHANGE PRACTICES
8781
Exhibit U-11-7c
Date
FB 28 1931..
Par or
shares
165 shs..
38, 812
Description of collateral
The Detroit and Warren Road Co.
Cap #26 n/o Allen Holdinc Co.
Note & 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 Kuclid Tvvps. 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 in 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 m 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.
Market
Basis
Amount
Received from THE UNION TRUST COMPANY CLEVELAND, Collateral Securities and all
other papers in connection with above described loan.
DATE .
Exhibit U-11-8
Interviews and Commitments Affecting Loans — Officlal Instructions
TO Credit Department — Comments on Financial Statements — Essen-
tial Credit Information
For exclusive use of Credit Department.
Thos. E. Monks
October 9, 1933
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.
RHK:LMF
R. H. Kastneb
(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 i:)ersonal to the member of the staff pre-
paring this memo.
Oscar L. Cox
Deputy Superintendent of Banks, State of Ohio
Exhibit U-11-10
Interviews and Commitments Affecting Loans — Official Instrtjctions
TO Credit Department — Comments on Financial Statements — Essen-
tial 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 tiiat 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 pay-
ments, but his insurance business lias 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 tlie net amount realized. He has previously
refused to give us mortgaQ;e3 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
Seymour, Belden
620 Cuyahoga Bldg
// INTEREST
^ r?) 1;'^'' ' ■■■■ v.-^-»^
.-) Vj,::'k> , ■•' >»•' >\'.'o
Ota*' "x.-v^.j^
7','-' 'rr;,''^.***^. / o C" , ,■ ffy^^i' ,o-' / J \y
X'»Z.fSgS<>llX . -^iT* X2»«X» ,. '833/ •
• / St>- 2 7 l'jJ9 J,roo
4 :« . .u ■
^■^.\JL/.^0
A;.^()uU ,;iU^^//S^^
MifSpW" ■■
THC UNION TRUrr COMMHll
Exhibit U-ll-9a
HO. '-f-l^ll
\....:.,.,_, .......JNTEREST _ _' 'l"T.{ _ -. PRINCK
oat; \ DtSIT J. CMOII f. |)AL«NCe i IHtSkt TO P OUTtMiO " 'Wp "' "oSft ""'"""""BEsif
iS^c-t-ii ibo<f M-9;j.aX iS5ii? M-i.ii.^
"^"•"^i ?xi55' H5S<^ x»«")«(9 n-i-^s. :
Exhibit U-ll-9b
\'\/\„y'^b^^^>\j\y
.■c>f;i ■:iU ">'■-. ;^:?i ---^
A/A •%;,.,;, rW.i^,
A'A , ,
DEMAND LOAN t
*^s-*^ '"jiC-^.'i
Exhibit U-11-9c
,^:ift^:^)di.«.
JNTEIWST
-;» -fc") ^-)S. "53?? i-i->^
i?nS. 7XS "iTS- i».>>5i H-t'^'^
22S-7. 7&4 >T1?, a^?^'! ")!-^.=^
„,■ S".^4/^
I I I ;^^-» -
; i : .
i
1
> i
Exhibit U-ll-9d
R-F. C.
, rVsuu^^
X-r^c
OooL'*]
S^xiSo'. J1o?<> 4-1-^^
>«« is, i«ls. 1. - . Ir-jitortj supiJ «i 'i^-f*
Exhibit U-ll-9e
Exhibit U-ll-9f
Exhibit U-ll-9g
oEKniniOH ofroiuTtwi
market! WSIS j «MOUNt
Exhibit U-ll-9h
': -t»+- o 908h8 The Cleveland Trust Co
#3005-609h8 #5446-30sh8
/f .J '4, 500 The Tru~buH /Steel Co Ibyr 1st S/p due ll-l-4o' ^ ■?>-
' ; #M8178/9 12277 at 1,000 ea /?'D203^500
^O'^V;'
*.t»>-
' 'i^'iw1£iriir.1«0« 'nosf csarAiiv,' aimiib'iiiiim."iS'S^iiS-^SSrsSli:i:^iSSiiiS^
Exhibit U-ll-9i
, ttondelbaum, V., 3, *5« C,» W
AODRMs 'j^^Qg Shetland Bid.-.
, , «f'*'0 DOE??-? 3>^
^, 781 a oue/'5/-33
NAf^" L;
INTEREST pB DISCOUNT I"- j "
EHKOUNT IMT.HEMTt INT. NECPaU , INTEREST TO DATE PAID MTE. . ««
' ^ '■ -ON NCTIC? SENT ..X' ^ ' 3-3
^ VeSlW *"fco-n<. <\-v-d5;
aeon t iAUNct
i ;
■ j
>
1
i 1
i i 1
^ 1 ■ ^ ■ ' ■
Exhibit U-ll-Ha
' „• jR F. a ^ #5^384il
«a.« ■=■ ■■■.■•■ * ■.--'■
IKTEREJT OR OISCOONT '"■
«ti wtoowrr i»t. tatn . int. rktw ijoirest to , wnrua rati
10 ^n
/oin
i :>.>^^ Jui
'3'SJ^/
V(. ^-S^^SC
.*« ^^ «'
J'l" •< ■. 1937
7 i"**?
H^/^,
3^yi DEC 1 1. iw?t «e 1 » »tt
7:00^
\7 r^'f
7WA
■ y Soe
■I /^^y^
•700 a
Exhibit U-ll-llb
Exhibit U-ll-llc
V l.SOOshs :The Continental Shares Inc. Com.
#C/C142d/35-100shB ea
t 2733h8 The Cleveland Trust Co. Cap.
#14135-88hs #11434-108h8 n/o L.J Wolf
#14207-248h8 #14134-16sh8 ;f859-108ha #1261-5sh3
#lS2-2S8h8 #358-153hst #5963-143h8 #3039-3sh8
#6794-2shs #1243-108hs #1674-5shs #1S79-S3h8
#1277-58h8 #1276 #1263-58h8 ea #11290-283h8
#16129-4sh8 #16130-i08hs #1613l/2-108h8 ea '
#16133/34-258h8 ea n/o U. J. U^ndelbaum.
7r 111 10
. I. J
\9A >or^\
HMI.X Ion THE UNION TRUCT GOMPANT.aEVaW«0»tjJa
Exhibit U-ll-lld
STOCK EXCHANGE PRACTICES 8783
(Exhibits U-U-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 veri-
fied as to facts. Any opinions or conclusions are personal to the member of the
stalf preparing this memo.
Oscar L. Cox
Deputy Superintendent of Banks, State of Ohio
Exhibit U-11-12
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 liis financial affairs. Confidentially, we
are of the opinion that he, Uke 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-11-13
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 deter-
mination 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. H. Kastner, Agent.
WT
Burmester WM
M. J. Mandlebaum owed Standard Tr when it closed 28 M on Weinburger
Drug & Gabriel Snublicr 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. 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, Stale of Ohio
17r.u41— 34— PT 20 4
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 AUard 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 " " 14 8,170.00
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 Com-
mittee 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]
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, Chairrnan
R. S. Crawford, Secretary
Exhibit U-22-2
Minutes of a meeting of the Finance Committee of The Union Trust Company
held 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 liOans approved by the Real Estate Loan
Committee under date of December 23, 1930, aggregating $7,540.00 was sub-
mitted 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.
I
-.'i-'-.a •w*'-;!«Ea
■fs^
DEMAND COLLATERAL LOAN REGISTER
THE UMOS TBUST COMPAN f— CLEVELAND. OHIO
[)~
X2- 3
ENDORSER OR COLLATERAL
l£0o9 3L l.*i<0 TrJif CTF I . o~Z UK LEMV
TO T£^ l.iilL aire C0'2?&C7 78.<»:0TE iTATL
r-O'D UNO CO 3£C' 3ir Tsr ••.Ta'4>r'='o «>■ '*'. ^
><£LE» CJ''HF» INC tO'J P:?CO>'IOTE '? ^> GFCt.
TJOy'iCTE « R COf-LET-T TCO^^CiTE C.«faES I
>l Ct»R< TITLC TO fiE«U £ST«T£ y-;OEF »!;f--^ ■
20CSH!>';il*G»R» SHJI'-E COI-i' VlRVLiNC CC'
T-"'" CTf -vsfF 10 S'J3iCR13e FOR ?CSH5
-rAPE coFP ' ;;/ . '■
23
3S
+ - ■■ AMOUNT O^Vb^^VmoUNt""
./
itcSH^vf IREaTO'f.c Iif^ CO A r;. iOCi.-ii''
r;|CK*N 8F03 IfCtHS/INACCID* CO-"EP
lOOEHi;^ IliCLMR'CONtOL OtL CO
Mi:<(:
NO
JPH
e^O-^r £ "VERS S 3r<0S CO com eOOShS -Tf-MCHER
•FD CO CO'.^ ;»n"!SHS^1NSUfi»HSHAPES i GENL •)»"«!;£-
•:ENT CO V'T/CTF 10nSHS^U<ITE0 FP'JIT CO
CJ' 2V SHSv-ET.'* CIJdE CP'ENT COR" CO'.' i ' J
SHS. UNITEO STATES FlCELirr * X'«PiNTr CO
C*P lOSHS^LIDCEM C3 PRIOR' PFO 12-2
30'.!
.!^AP-
VALUE
1 ErVSHS/LASOFATOFif
3R0S CO CO'"
>KOl CO
CALL RATE r
■1b-
I- V V'OORUFF *>2i67
'■ : = r • TAYLOR T-9'.'
I' LIAM8 72y -
i-'S-T2STr-
CALL RATE
1
:,',■ JT 3 TOOAr THE CHASE f«TIC/iAL -'■■ ..
OJLO HAVE BECN 2#i» "^
jUSSTIIUTIO'IS
j UJOSKS COCO COLA CO COM A DDL COLL y /
RELEASED 88SHS VACUUM OIL CAP FREE v
£V DGUND '?'."rr «:';0C|ATI3-J 68 ACD,
JBTNT STOC
ANTC'llO T:XAi, 5i
C NE»6ERPr J^A 'OhTLAf^D CB(£!U C0C»P«Dt)L COiJL'^
»V<'CNO . «M BFOS CO C 7.^ «0OL COLL ^
TLCHER -^ . ilTEO tCFEvV ) BOLT COR° aSfcS A *D CL
pent::! . . Lv CALJ'.IET i HECLA CONS CO''»£R CO CA ' ■- N/O
^ TPET/ETT l-^'iriS ALCEnHAHV COTP CO'J ArnL COIL </
T 3 SMITH aS99aW J!»3'S F0»0 MOTOR CC LTD «00L 1.:LL«/
: OJNO I 4C0SHS ><ELL053 CO C0« APOL COLL"'
• /
C 0!
v^
■■tfcfL'ccja'^^ : >
•
CULL ' ^ , y
CEORHE * rssvJTrt.ARDL COLUv'
Exhibit U-22-3
V
Ctf VELAND, OHIO
i>n Benunb, FOR VALUE RECEivEo"^-^ promise to pay to the order of Ly— J?2-~. *~/
THE UNION TRUST COMPANY ^/
.DOLLARS
AT ITS OFFICE IN THE CITY OF CLEVELAND, OHIO. WITH INTEREST AT THE RATE 0F_
PER CENT PER ANNUM, PAYABLE QUARTERLY ON THE 1«t DAYS OF JANUARY, APRIL. JULY AND OCTOBER,
UNTIL PRINCIPAL IS PAID, ,
The undersigned ha . deposited with and hereby pledgee and assigna to aald company at collateral aecurlty for
the payment of lhl« and any and every liability or liabllltlel of the undersigned to said company direct or contingent, due
to or to become due, or which may hereafter be contracted or existing, and whether the same may have been or (hall bo
participated In whole or part to others by trust agreement or otherwise, or in any manner acquired by or accruing to said
company whether by agreement with the undersigned or by assignment or by endorsen\snt to It by any one whomaoevep,
the following property, viz:
I o
, I o
^P-»^-^Aa^ ^»»w»
■fj-o ■C'CV^
tott<4ber wilh all other afciirltiet la U« po*i««salon of aid Coropftnr. betonKlnir to tlw und«rsiKn«l or Is whteh the un<)«n{afMd ha* aa loUmt. hereby
wrrcina Jo <fc-ll»vr lo u.ld Compaiu «ilijitl«ial ■Mgrltlt, to it. ntiitactlos upon it« diim«nd : iil«o hercb; aivioi the uid Compsn; • ll«ii for the
•nuxint of sil Bakl liabllitiri of th« ondeffliirctd to rai.] Company upon all pr.-perty or i<^^rttl«, which now are or may h«reafier t>e pMaed with (aid
LoDiiuiny hy tbo ondtr>.ij:ncd. or in th« poweasion ot aaid CompaAy in whi«h the umJ.r*iKn.-<J ho« any interest. On the non-perfortnance of taid proffilM
or upon the nuo-pa>mtnt of any of said Ifahilitiea. or upon the failure of thi- undersiened forlhwilh to furnish satisfactory addilional st-cuiity oa
dmiand. at the option of .aid Cotopaoy tbll oblteation shall become tauiicdlat.iy doe and payable, and sod Company la hereby elven full power to
cnlleet. kU a^uliin and d<'ll>'rr the whole of said securillen or any part th,r>-.it or any «ub«titulea therefor, or addilkilu thereto, through any stock
•icham:e. broker, board o» broker or at privau aale without advertisement or n.,tiec. the «ime being hereby expre^ly waived: or uy Company at
lu.o,,tioo m.y k11 (he whole or any pan of la^ ,«;uritie. or properly at piblU: .ale. up<ni notice publisbea one* in any newspaper printed in Ih.
- of t.levelaiid not le». than ten (lej day. prior to such Mile, at which public «,le said Company loay purcha.* «ald ^eutitie. oT property or any
■?. «*<'r>~f. free fton any rurht o( rKk^nption on the part of the UDdecii;ni^. which Is hereby expreuiy waived and releaiied. Upon any such wla,
after deduetinu aU eosU and •<pcn«c9 of every kind, said Company may apply the re.idue ot the proceed, of such Mile as it .hall deem proper toward
t(^ payment of any one or More or all of the liabllitie. of the undersigned to uld Company whether due or not doe. retuminj the overpiu. to tha
oisk.r.u.-o.d, i\ny hijder of Ihl. note ^1 liic«i« have ail of the nfote-aid richt. and power, with teap,.-«t lo security and additional wcurily for
Ihi. note and the sale and dL*iHi»it.on of the .ueh security and the pr<-iceeds thereof.
.r. .I'" "»''«"ll'«^ hereby aothtTitt. any attorney-at-law In th. Stale of Ohio or any other State or Territory of tba United SUtea. at any tima
after the abov. «,ni becoioc doe to app<>r for the under>iened lo any Court in the Stat, of Ohu) or any other Slate or Territory of th. Unlt«l
?„vl!: to waive the ttsolna and «rvic« of proce... and eonfem judt-nicnl auainst the undersisned in favor of the payee or any holder of thia note
— XL ^^, w*"»« do" •"« '« '»»'• of suit and thcteop<ni to release all errors and waive aU riijbu of appeal and iUy of eueulloo. Tb«
■taken of thU hole, when mora Ihaa one, ahaU be jointly and aeeeraUy ln,bl« hereon. -i . . v oi Fpe„ .00 ,1., „ eiecuuoii. swa
Korra No. O-ZliS liH 6-30
Exhibit U-22-4
STOCK EXCHANGE PRACTICES
8785
Exhibit U-22-2a
A schedule showing securities bought by the Securities and Investments De-
partment under date of December 22, 1930, aggregating $22,190.00. certified
correct by the signature of Van R. Purdy, Assistant Vice President, was sub-
mitted 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 Ashtabula, 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. Kraus,
Chairman.
R. S. Crawfobd,
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 anj' extension thereof, in whole 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 Terri-
tory 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
-of 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
Payment
Balance
JAN 2 - 1931
2,000
261 000
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
In erest paid to Jan 1 - 1933 .. .
Interest paid to Apr. 1 - 1933
8788
STOCK EXCHANGE PRACTICES
Exhibit U-22-5
DEPOSIT TICKET
The Union Trust Company
Credit: J. P. Harris
Cleveland, Ohio, 12-22, 1930
i^g°*Checks 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. Items lost in transit
may be charged back to depositor's account pending receipt of duphcates.
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
Interest
Discount
Exchange
263
000
00
Bennett
(The Union Trust Co., Coll. Loan Dec. 22, 1930, Mam Officer.)
Exhibit U-22-5a
THE UNION TRUST COMPANY, CLEVELAND
Name J- P- Harris
Address
Savings No.
Checks in detail
Date
Deposits
Date
Balance
1930
Dec 16 '30
90.00
Dec 16 '30
2, 081. 05
1,421.35—
Dec 16 '30
Dec 16 '30
659. 70
Dec 17 '30
35.00
Dec 17 '30
694. 70
15.00—
Dec 18 '30
Dec 18 '30
679. 70
Dec 22 '30
800. 00
Dec 22 '30
1. 479. 70
Dec 22 '30
263, 000. 00
Dec 22 '30
264, 479. 70
264, 344. 52—
Dec 22 '30
Dec 22 '30
135. 18
15.00—
Dec 23 '30
Dec 23 '30
120. 18
50.00 —
Dec 24 '30
Dec 24 '30
70.18
15. oa-
Dec 26 '30
Dec 26 '30
55. 18
Dec 29 '30
800. 00
Dec 29 '30
855. ; 8
ses. 28—
345.00—
Dec 29 '30
Dec 29 '30
144. 90
15.00—
Dec 29 '30
Dec 29 '30
129.90
1.70—
Dec 30 '30
Dec 30 '30
128.20
20.00-
Dec 31 '30
1931
Dec 31 '30
1931
108.20
750.00—
150.0ff-
Jan 2 '31
240. 00
Jan 2 '31
2, 902. 50
Jan 2 '31
2, 350. 70
2, 000. 00—
Jan 2 '31
Jan 2 '31
350. 70
100. 00-
17.50—
Jan 2 '31
Jan 2 '31
233. 20
15.00—
Jan 3 '31
Jan 3 '31
218. 20
4.00—
Jan 5 '31
Jan 5 '31
214. 20
10.50—
Jan 5 '31
Jan 5 '31
203. 70
12.00—
Jan 6 '31
Jan 6 '31
191. 70
8.70—
Jan 6 '31
Jan 6 '31
183. 00
7. so-
Jan e '31
Jan 6 '31
175. 50
lo. OO—
6.00-
Jan 7 '31
Jan 7 '31
159. 50
le.od-
Jan 8 '31
Jan 8 '31
143. 50
5.00—
Jan 8 '31
Jan 8 '31
138. so
(Exhibit U-22-3 faces this page)
DEPOSITED WITH
THE UNION TRUST COMPANY
CLEVELAND, OHIO
FOR CREDIT TO THE ACCOUNT OF
C^ DEC 2r :W
18
tZw CMCCnaoNTMift or net will •« CMEOiffO CO««OtTiO<«AU.v If MOT rOUND OOOOAT Ct.O%C Of •Uttl*ftft«,
*-^ THt " MAY m€. CMAKOCO •*<•* TO OCPOXTQAS. CMCCMft OM OTMC* CITV •«»«« AMD OTMCM Q^WKM% W
TmiS bamk mav bc CANniiD OVIM fO* M«CSCmT*tiOM ThAOUOH INK CkC ARtMO MQU«t,rtDCMU. M •KAvC DAMI^
OM DtRLLT ON T*«r FOllOwimO Cjav AN D CHAMOtO BACm If NOT rCMjMO ftOOD.
IM Wr CKtviNO ANO FOiaWANDtNO ITCMft PAYABLE CLSCWMtRI. TNANIR CLC V'lLAMOkTHt S KAMK AtSUMES
MO «ISI>ONMa«lTY FOH TNt. NKOoCtV NCI ON OCCAUkT OT Amy DiNICT 0« )N(H NC C T COiktCTlMa A«CMTft, AMD
SHAiL BC HeiOklABlt ONL* WMIN ^NOCtlOS IN ACTvAL ruNOS OA KOtvCNT CBCDlTS »HA4.i. NAVf COmt IKT©
ITS POS»( J«<ON,OTH« ni«<«e,iT(MS ^MCv^iOwftkY CftCOiTCO may Bt CHABOCp KACm TO Of ^0«iTOBft. I TCM*
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OFFICE
Exhibit U-22-6
STOCK EXCtlATirGE 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 assign-
ment 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 41}.^. 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. Harris'
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, 1933.
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 pur-
chaser 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 u'hen my loan at the Cleveland Trust be-
came impaired I had it transferred to my brokerage account at Hornblower &
Weeks, where I had sulRcient 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 accompUshing 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 morn-
ing, 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 organ-
ized 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 PRACTICES 8789
The plaintiff, for his cause of action against the defendant, says: that, con-
tinuously, 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 vice-
president 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 pro-
spective borrower to the bank, it was, in the first iuvstance, if considered satis-
factory, 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
borrower 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 thor-
oughly 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 hun-
dred (1500) shares of the common capital stock of the F. E. Myers & Bros. Com-
pany, 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 suffi-
ciently 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 de-
posited 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 belong-
ing 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 efi"ect, 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 banii's finance
committee, which, on or about the 19th day of December, 1930, agreed to the
Exhibit U-22-9c
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 iininediately 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
te'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
Bet 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 Hornblower & Weeks had closed the account it was carrying for the said Harris
and sold the securities deposited as collateral thereto; that tlie 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 Horn-
blower & Weeks; that the said Harris was not of sufficient financial worth or
responsibility to pay said note, and the collateral securing the same was insuffi-
cient 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 contin-
uous 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 Countv, 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 known 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 wrong-
ful 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 equit-
able in the premises.
J 7
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 OP 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 charge 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.
(Taken from J. R. Nutt's ersonal files. , 2/16/34.)
J. P. Harris.
Exhibit U-22-11
Joseph Porter Harris
Cleveland
Blue Hill, Me., July 22, 1928.
Dear Mr. Nutt: Wagley whites me that you are eager to sell some of our
securities and has sent me a list of suggestions for my comment or recommenda-
tion. Of course, if we are pressea for funds we must sell, but I earnestly hope
8792 STOCK EXCHANGE PRACTICES
that we shall not be called upon to liquidate anything in this market. In my
judgment it would be very foolish to do so, for I am sure that this money flurry
is only a temporary affair and that inyide of 60 or 90 days we shall see cheaper
money reflected in substantially better prices for bonds. You, of course, are the
Doctor, but mv opinion is that we should not sell a tning, even tnougn 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
@ £8. 1 wc u'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 n% (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
oesk on Monday, August 6th, if not on Saturday, the 4th. In the meantime I
nave been in close toucn with 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 wislies, as ever.
Joe.
Taken from J. R. Nutt's personal file. MMM, 2/16/34.
STOCK EXCHANGE PRACTICES
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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 finan-
cial condition of The F. PI Myers & Bro. Companj^, with a statement of the
operating results and an analysis of Income and Surplus Account at the close of
the fiscal year, October 31st, 1933.
Daring 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 con-
servative, your management has provided a reserve of $70,000.00 by a charge
against operations for the 'ast quarter of the year ended October 31, 1933.
Efl'ect has been given in the annexed balance sheet to an appraisal of the Com-
pany's permanent assets by indei)endent appraisers as of February 1, 1933. It
has been the policy of j'our Company 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 Dirsctors 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 niar-
ket conditions, curtailment in the volume of business, increased burden of sales
and overhead expenses and unsatisfactory operating results.
Problems confronting us have been squarely met and adjustments and plans
made to meet existing and probable conditions and 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-opera-
tion, 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 The F. E. Myers & Bro. Company, Ashland, Ohio, as of
the Close of Business Octobek 31, 1933
assets
Current:
Cash on Hand and on De-
posit $466, 946. 68
U.S. Government Securi-
ties (at cost) $920, 250. 00
(Indicated Market Value
$918,562.50)
Accrued Interest 11, 812. 50
Notes Receiv- 932, 062. 50
able-custom-
ers $38, 778. 66
Accounts Re-
ceivable—cus-
tomers 245,682.13
$284, 460. 79
Less: Reserve 47, 578. 60
236, 882. 19
Inventory (Valued at lower
of cost or market) 797, 454. 60
$2, 433, 345. 97
8796
STOCK EXCHANGE PRACTICES
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.
liess: Reserve
$93, 195. 39
70, 000. 00
Real Estate not used in
operations. Gas Wells,
Pipe Lines
Miscellaneous Notes &
Acc'ts. Receivable, etc
$23, 195. 39
5, 609. 56
4, 912. 54
Permanent:
As appraised by West
Brothers, Inc. as of Feb-
ruary 1, 1933 with subse-
quent additions at cost
and less allowance for
Depreciation to October
31, 1933:
Land
Buildings, Machinery,
Equipment, etc $1, 649, 326. 04
Less: Reserve for De-
preciation 531, 037. 14
$33, 717. 49
$107, 854. 25
1, 118,288. 90
Deferred:
Inventory of Supplies and Prepaid Expenses,
1, 226, 143. 15
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
15, 000. 00
Reserve:
For Contingencies
Nominal: .• '
Capita] 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 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 exclu-
sive of Depreciation $933, 370. GO
Administrative, Selling and General Expenses 496, 688. 86
Operating Profit before depreciation $436, 681. 74
Depreciation on Plant and Equipment $90, 944. 80
Reserve provided for deposit in liquidating
bank 70,000.00
Other charges 36, 945. 49
$197, 890. 29
Less: Interest Earned and Other income 52,484.80 145,405.49
Profit Before Providing For Federal Income Taxes $291, 276. 25
Provision for Federal income Taxes 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 $803,373.97
Less: Adjustment of value of plant and
equipment to independent appraisal by
West Brothers, Inc., as of February 1,
1933 372,443. 83
Balance October 31, 1933 $430, 930. 14
Profit and loss surplus:
Balance October 31, 1932 $1, 912, 301. 75
Net Profit for the year ended October 31,
1933 242, 776. 25
$2, 155, 078. 00
Less: Dividends Paid:
Preferred, 6%.- $75,000.00
Common, 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 $1, 955,078. CO
Total $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 state-
ment 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 3}^% 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 quanti-
ties, 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 Febru-
ary 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, Ashland,
Ohio, October 31, 1933
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, Ash-
land, Ohio, Assistant Treasurer.
directors
J. C. Myers, Ashland, Ohio; Guv C. Myers, Ashland, Ohio; A. N. Mvers, Ash-
land, 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's 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 coUateraled 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. I referred to his letter of April 13th to R. S. Crawford in reply to a refer-
ence 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 Horn-
blower 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 PRACTICES 8799
4. Accordingly, the loan appeT.red to have been unwarranted by banking
practice, and as one in the making of which he had substantial interest in the
protection of liis own securities. Therefore, it appeared a proper request, and
I was now so malving, that he should 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 wp.s maie. He did not say who had
handled the making of the loan for the bank, but mentioned that Mr. Harris
had pressed him to see that it was made. I told Mr. Nutt no more than is
specified in Nos. I, 2, and 3, above.
Iv^t 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 tlie quarterly dividend dates
of June 30th, September 30th, December 31st and March 31st, and the transfer
effected if dividends are to be paid.
OLC M
Exhibit U-22-16
Oscar L. Cox, Conservator.
September 12th, 1933.
Mr. J. R. Nutt,
2512 Terminal Tower, Cleveland, O.
Re: 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 that
connection at some early day, addressed either to the writer, or to our counsel in
this transaction, Mr. Luther Day.
Ver}- truly yours,
Oscar L. Cox,
Special Deputy Superintendent of Banks.
OLCo
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 Julv, 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 Com-
pany, 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:
17."541— 34— FT 20 5
8800
STOCK EXCHANGE PRACTICES
Type A indebtedness
Payee
Principal
amount
Interest rate
Date
Maturity
The Union Trust Comoanv.
$450, 000
350, 000
6% quarterly
6% quarterly
March 9, 1932
March 9,1932
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 Agree-
ment 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 Cor-
poration.
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 Agree-
ment 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 Pre-
ferred 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
Principal
amount
Interest rate
Date
Maturity
Miner.'; National Bank, Ishpem-
ing, Michigan.
Irving Trust Company, New
York.
$5, 000
7,500
5.000
2, 500
10. 000
10,000
10, 000
9,000
4,250
t% quarterly
5% quarterly
5% quarterly
5% quarterly _
^7c quarterly
5% quarterly
5% quarterly
■';% quarterly
5% quarterly
August 1, 1931 .
Demand
September 1, 1931
October 1, 1931
October 1, 1931
November 1, 1931
December 1, 1931
January 1, 1932
June 4, 1932 . .
Demand
Demand
Demand
Demand
Demand
Demand
September 2,
The Cleveland Cliffs Iron Com-
pany.
October 20, 1896..
1932
Demand
Also joint and several note of First Party and M. C. Rosenfeld to The Guardian
Trust Company in the amount of $103,000, 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.
STOCK EXCHANGE PRACTICES
8801
And whereas, First Party is liable either coiitiiigeutly or with others upon obliga-
tions 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
principal amount originally of $30,000 and now of $16,576.80, bearing interest at
534% per 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,
paj-able 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, Michi-
gan, in the principal amount of $12,500, bearing interest at 7% per annum, pay-
able 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 indi-
viduals are jointly and severally liable.
And whereas, First Party has executed the following secured note for a benev-
olent purpose, but represents that the same was upon a valid consideration, so
that it has become a legal obligation of First Party:
TYPE C INDEBTEDNESS
Payee
Principal
amount
Interest rate
Date
Maturity
Trinity College
$60, 000
6% quarterly
AprU4, 1932...
Demand.
secured by 5,000 Preferred shares of The Cleveland-Cliffs Iron Company.
And whereas. First Party has executed notes to callages 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
foUows:
TYPE D INDEBTEDNESS
Payee
Principal
amount
Interest rate
Date
Maturity
Trinity College . .
$75. 000
50,0 JO
2 J, 000
21, 000
200, 000
16, 000
3, 265
6% quarterly
6% quarterly
5% quarterly
6% quarterly
5% quarterly
6% quarterly
6% quarterly
June Jan. 1, 1925
July 1, 1925... .
July 1, 1948, > 1943.
July 1, 1945.
June 1, 1932.
January 1, 1934.
March 1, 1933, ' 1932.
Demand.
Demand.
Kenyon College
Diocese of Marquette, Mich..
Musical Arts Association
Western Reserve University .
Cleveland Museum of Art
June 11, 1929
October 1, 1924
February 23, 1929. ._
October 1, 1926
July 12, 1922
1 (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 E INDEBTEDNESS
Payee
Principal
amount
Interest rate
Date
Maturity
Katharine L. Mather
$7, 000
4,000
15, 000
10, 000
100, 000
10, 000
6% quarterly
6% quarterly
6% quarterly
6% quarterly
6% quarterly
7% quarterly
March , 1894
Octobers, 1898
June 6, 1903
Demand.
Demand.
Demand.
July 1, 1909
Demand.
Marian S. Bower . . ...
May 1, 1929
May 1, 1949.
The Union Trust Company..
March 14, 1923
March 14, 1943.
8802 STOCK EXCHANGE PRACTICES
A7i(i 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 Cleve-
land, 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 Companv 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 vear 1932 $50,000;
During the calendar vear 1933 $85,000;
During the calendar vear 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:
PROMISSORY NOTE
$ 19-.
On or before January 1, 1936, I promise to pay to the order of
at its office
Dollars,
for value received, with interest at the rate of six (6) per cent, per annum, pay-
able 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;
38 1 Preferred shares The Munising Paper Company;
717 Common shares Commercial Investment Trust Corporation;
180 Common shares Republic Steel Corporation;
300 Preferred shares Republic Steel Coiporation;
417 Preferred shares Vlchek Tool Company;
250 Common 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 PROPERTV
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 by the above mentioned note of First Party and M. C. Rosenfeld
to The Guardian Trust Company in the amount of $100,000, 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 Part}' against any or all other parties to the T\'pe B Indebtedness.
STOCKS AND SECURITIES SUBJECT TO SENIOR PLEDGE
Promissorv 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 Party to said Trust Company above listed.
Promissor}^ note of The Cleveland-Cliffs Iron Company for $125,000 issued
under, and secured bv, Collateral Trust Indenture between said Companj' and
The Union Trust Company, dated March 23, 1932;
Promissorv 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 Plrst Party to said bank above listed.
10,000 Pi-eferred 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 Com-
pany;
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 succes-
sors in trust and assigns, hut 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 PBACTICES
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 S3curity, 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 respec-
tively, 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 im-
munities, 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, in-
terest on each of the notes representing New Indebtedness and Type A Indebted-
ness, 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, repre-
senting New Indebtedness, plus any 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, mort-
gage 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 ISTew
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 re-
quest, 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 applica-
tion 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 EXCTTANGE 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 or a substantial portion of his propertj^,
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 paj'-
able (which determination shall be communicated to the Trustee and by it to the
First Party) and First Party sliall 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 dis-
cretion, 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 judg-
ment or decree of a court, the entire principal amount of all the notes and in-
struments 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 judg-
ment 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 In-
debtedness hereinabove listed or referred to and interest due and unpaid, includ-
ing 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 with-
out 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 compen-
sation 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 prefer-
ence 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 bj- 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 rep-
resentatives 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 indem-
nity 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 here-
under 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 reason-
able 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, to-
gether 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 Indebted-
ness, then this indenture shall become void, and the lien hereof upon the stocks
and securities pledged hereunder 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 hereinbefoie 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 Partj^ 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 per-
sons, 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 con-
current 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 instru-
ment, may appoint a Trustee to fill such vacanc3^ 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 con-
tained, 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 not-
withstanding.
Section 11. While First Party shall not be in default hereunder, the Trustee
may froin time to time release from the lien of this Indenture any of the property
pledged hereunder, provided FirsL 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 cor-
poration, 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 eighty (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, ex-
ecuted 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 hereina.bove 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
Conipany 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 Secre-
taries, all on the dav and year first above written.
(Sgd.) Wm. G. Mather,
Signed, sealed and delivered by William G. Mather in the presence of:
(Sgd.) Chas. G. Heer,
(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: L. C. Gilger, (Sgd.)
[seal] Assistant Secretary.
8808 STOCK EXCHANGE PRACTICES
State of Ohio \
Cuyahoga County / '
Before me, a Notary Public in and for said County and State, personally ap-
peared 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 of Ohio 1
Cuyahoga County / '
Before me, a Notary Public in and for said County and State, personally ap-
peared the above named Grover H. Hull, Vice President, and L. C. Gilger, Assist-
ant 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 fore-
going Collateral Trust Indenture.
Dated J«ly 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 Com-
pany, by H. P. Mcintosh, Jr. (Sgd.), Vice President; Miners
National Bank, by C. H. Moss (Sgd), Cashier; Irving Trust Com-
pany, by Nolan Harrigan (Sgd), Asst. Vice President; The Cleve-
land 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)
k J Unlon..Tr».'-t P7
(ACIUAL DaYS)
LXHIBIT L-(J-2
DESCmPTlOU OF COLIATEH
Sl',e533hs IVo'Clev-land Cliffs ironCo. Pfd:. - ' (»»* ' >W
•''PB77. !--t, 6-Ehs HY-vi? 5V lOOahs /-PSZP it lOOrhs
' Plb-^P St lOOOshs "PieeS aj, SOOOshs rP161«/5 at :
, 10,-OOOshs aa f!?16'??A4 at l,000?h8-fta #P1550/l Sit
l.OOOshs ea : . ' . '
gOOOaha. • Tne Cliffs Corpn Can. Votlrf TruEt Ctf. tiuM, ^
• ■' ;yTC706/9: it l.OOOshs e.^ VTCSPlit SOOOshs
J^iwt-ii, 1S32 ./-i*-/^**-"-
:-^-4jt>te --»f - She Cl«vel«nd-liUf f s -trou-
. &/S57%2- Due 9/Ea/5e •, .
■»/>.;/">.>' -^ > /■■■.»/ ) >—
Itt.t.ol-i'
R«o«f««a li«n THe UHION rftuSX COMPANY Omiand, CK
Exhibit U-G-2a
OATE PAR OR SHARE
i^^^38
I Dated 10-2S-35;., Dw 1-E3-34.,
iUetea X0-2S-S3.. Dub 1-2S-34.,
IWtnKETI' BASIS 11 AMOUHT
I Iron Co., Dated 10-23-33., Duo 1-23-34
'^i-Z'/tyii
iOliffa Iron Co., Dated 10-23-35., Due 1-23-34
" l4l5^,«^«^-^''-^'«^-^
-yy'-^jf<-
Exhibit U-3-2b
Bete Ihe ClevclanA-Ctifge Ht»» Ca. a«tnrt l/ai/i^i ^:. /^. ^ i
"'' ^' ' ■" due 4/24/33, secured by Extension fledge Agljeament J f ,
- i dated 1/23/33 ^^»«»« ^t.^ VWj ' /''" '
t^.OOOiOO ■ Het^e The meTelnnil Cliffa Ivaa Cat, aatai V^li<ia ^ f^p-
»,'~T/-rj. ^ iue 4/24/33 secured by Extension Hedge AgBoement dated V|7!i/-J5
, '*■'"'*, i-cOO, 000.00 '" lioto The Cluvolaiici OllXTs li'uii Cor-asred //'sa^SB i^-
'.rfi-7i*>f , due /*/^/33 secured by Extension Agreement datisd
• ■ , 1/25/33 a-'uended by agreemer.t dated 4/20/o3
,,RtaW«, 1^,088 ig3M{o to do - do
7>i/*7/V • (payment of discount)
/'^jUy/>i/ "^yx?-*?- du»/a^/£A/-^ uuduieJ bj Il/>LBiiiiXuu PlHdfeB AfertSeniwit
daWd-l/.£5./5^-ame«ded' Uy n^l'etili'ifeKt Jatea -t/eO/SB
,,:,;» i&3e j,ri^r<m Kates —
^^3 -.7/>-^ ^'^^'^ (payment of discojpt)
iBEcBveo discount notes 5^3,023.33 & $75.84
^/-./„ ^7 'J ^(^-^.^.^ • f^-V^'. %^,
,..^u««.^«*« «•»"•"*"'"
^'oNo C»li«£ilS«:«rl6»"rf«n^P««"<'»l'''»»~<^°^
I
Exhibit U-6-2c
/.7-i ift'J 3r*.J /o'-i
//-J-i ,U*/ /fof i _1
%^jCt<i^-
, ^/^
7^^Z^>^,
~TI
1
: II
^^^^^^H
■■«
^^^^^^^^H
^^H'l»
i
kp ^-
1
1
1
1
HiH!9i
r
Exhibit U-6-2d
Exhibit U-b-2e
Sfcthor, Vm.a.
'union Trust Bldg.
%.<^>.iil
v/\k.-^
"f>^V^
i
I ;
■•<Li4.aoliuMa.liM. ^
Exhibit U-6-3
DESCmftKW OF.COlUTEmL
:i««kct: wsi* . «MouK
For Collateral See Deaand Loan #98708
kf d<t-,-u^^tf ''^ '"AZ/t.//^/^ ^.^/i*^*-*
.7I^A.'^ \ \
I TRUST COMPANY CIw«<WK). 0>>
MirwetlOfi wfW th* «bov« dntOrlbKl 1
Exhibit U-(>-3a
STOCK EXCHANGE PRACTICES
8809
Exhibit U-6-4
Wm. G. Mather
Statement of estimated receipts & disbursements to December 31, 1932, and for
1983-4-5
Cash on Hand '
Estimated Receipts:
Salary:
Cleveland-Cliflfs 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.
Quardian 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
June 1 to
Dec. 31, 1932
Total receipts.
Disbursements:
Interest to Banks
Automobile Expense
House Expense
Club Expense
Personal Expense
Matheriana Expense
Taxes— Real Estate
" Ohio Intangibles
" Miscellaneoas
Pew Rent
Books & Magazines
Cliffs Cottage Expense
Virginia Bramhall
Mary F. Bolles
Insurance
Clothing
Expense a/c Timber Lands.
Donations
Total disbursements.
Total short
Add: For Miscellaneous & Possible Con-
tingencies
$24, 397. 07
11,666.00
8, 750. 00
1, 500. 00
12, 750. 00
967. 00
1, 402. 00
1, 250. 00
310. 40
360.00
240.00
717.00
238.00
450. 00
64, 997. 47
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
103, 609. 82
38, 612. 35
11,387.65
$50, 000. 00
1933
1931
$20, 000. 00
15, 000. 00
1, 500. 00
19, 500. 00
1,9.34.00
2, 804. 00
2, 500. 00
620. 80
720.00
480.00
1, 454. 00
476.00
900. 00
67, 868. 80
102, 221. 23
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
143, 090. 28
75, 221. 48
10, 000. 00
85, 221. 48
$20, 000. 00
15.000.00
1,500.00
19, 500. 00
1,934.00
2, 804. 00
2, 500. 00
620. 80
720. 00
480. 00
1. 434. 00
476. 00
900.00
67, 888. 80
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
143, 090. 28
75, 221. 48
10, 000. 00
85. 221. 48
193.5
$20, 000. 00
15, 000. 00
1, 500. 00
19, 500. 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
102,221.28
3,391.00
16, 02.5. 00
2, 102. 00
3. 000. OO
5. 000. OO
7. 500. 00
300.00
292. 00
180. OO
420. 00
600.00
1, 000. 00
65.00
250. 00
1.50. 00
600.00
143. 090. 28
75. 221. 48
10, 000. 00
85, 221. 48
Cash on Hand as of June 1, 1932, is as follows:
Guardian Trust Co 7,301.26
Union Trust Co 6,236.81
Irving Trust Co 578. 52
First National Bank of Alger County 3,285. 20
Gwinn State Savings Bank 6,995. 28
Total as Above 24,397 07
8810
STOCK EXCHANGE PRACTICES
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Exhibit U-6-5
JM—i
Collateral Tmt Indonture Dated 7/4l/32 betwee
Wllllajn 0. Mather and The Onion Trust C©., as 1
iHotlfy Corporate Trust Dipt.
;Copy of Indenture in Vault.
Promissory Hote
JiL^±-^^
On or before January 1, 1936, I proBlse to
pay to the order of
I ' at Its office
j for value received, with interest at the rate o
[65{ per annum, payable quarterly on the Ist daysl
I of January, April, July and October In each yeaj ,
jxinpaid Installaenta of interest to draw Interes .
■at the same rate as the principal. |
i^-y J/aTZ sd.c^-
Racaind (ram THE UNION TRUST COMPANY-CI.EVEIAIID, OHIO. Coll.Mnl $KUrllto> an) all oUiar Mpan In cannacUon wW. ation <laacf»ad Man.
Exhibit U-6-5a
Exhibit U-d-6
Mil I MIWMIMM
•IFTMIl or COUJlttMt
ZIM
■Aunt •»•! »lM»»IIt
ColUUrtX tlPu»t InJ.ntur. D»t.d 7/21/42 b«twMn WlUtMijct.
lUthar •nd lh» Onlon trvMi Co., •• UrustMi. <
notify Corpor«t« Iru«t 0»pt.
Copy of Indonturo in t«u1».
FroBtdory Soto
On or boforo January 1, 1986, I pronHo te
j ftp to tho ordor of
•t it* pfflo*
; for T»lu« MOOlTod,
: annuB, I
I April, July and Ootobor In oaoh yoar,
am rat* »» th* prlijolfUl. ;•■
1
i
-J
Exhibit U-6-6a
Exhibit U-6-7
■irmir or cMunui
William O.Mathar and Ibe Union Trust Co., as Tw.atw
j Motifjr Corporate Trust Dwpt.
Copy of Inde atwo In Vault * i
Prcnlssory Hots
tL'^rS:r'^? J««>«ry 1, 193«.,I pr«l.s to ply
i to the order of
at ItB office
i" ?!r..*^^: W»*l»_ quarterly on the lat da
rate as the principal
\^^A/>f.^^ sdo ^7 -^
■raWT COMmNY-CUVEUND. OHIO. CoMUral SmrttM IM M Mtar p«
nation tMh abon dMCrttadMK
Exhibit U-6-7a
Mather, William G.
. 1*4*1 !•* OUE /-<'3 4
^
jc y^f/' I-
r
.•oT-v-f*^ Hjj^ J
(wTSsa *K 3«
Exhibit U-6-8
Collateral Trtist Indenture Dated 7^1/38 betwee<»
William 6. Mather and The Union Jrost Co., as Twistee
Hotify Corporate Trust Dept.
Copy of Indenture In Vault.
Promissory Mote
on or before January 1, 1936, I proiiilse to
pay to the order of
at Its office
for value received, wiu» ^nvoio.^ — -"« --™ — .
656 per annum, payaile quarterly on the lat days;
of January, April, July, and October in each ye*r,
unpaid Installments of Interest to draw interest
at the same rate as the principal.
S«civ<tlIro.n THE UNIOX TRUST CCMPASY-CLCVCIANO, OHIO, Coual.ral S..
Exhibit U-6-8a
Exhibit U-6-9
iPTIOS Of CC'Lt*IC<V«.
Coll»t.9.'al Imet. i.Mltnture dsted 7/21/o2 b»t»Mn »ilHMi 0.
Itothar *nd th» Union Ir«it Co., «• Trust**
Hotlfy Cor^r«t« xruM Dapt.
Cop; of indanttaT* in Tault
ProBiSBory Kot«
On, or b*for* Juniory 1, 1936,
th* or<)*r°of
at it* offio*
msssm
for valu* r*c*iT*d,
•nriun, payabl* cuai
April, July, uotober in **oh ;**r, unpaid ln*t*lljwnt*
of int*r««t to dm int*r«*t at ttv* (aa* rat* a* th* prinoipal
L.
1 TBust c6iiJ>*i!»-<iE»HjSi6"^Hib. eniiiiii 6«rtiii •■< « ••« i
Exhibit U-6-9a
littfte-ii^ /i-ii .
Mather, «llliam 0.
ViEMO,
. Sits 1
1=.
I
'J
h
INTEREST OROtSCOUNT
i- znisn "'-^fitAii ««»
i I ■ \
Po4Ki.>.Jti i
.,l-.~ J-vt
'-• i
\ \.
'i i
J. I'ufiloii,
j
IS i
1 i
li
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1 ^
Exhibit U-6-10
i , collateral Trust Indenture >d "/ar 'between I » i >
t William O.Kather and The Un. Trust , ae Trustee ^
(Hotij^y Corporate Trust Dept. )
<^/^ JW-^4-l.,fc,,^
PromiBSory Note
On or before January 1, 1936, I Promise to ,
pay to the order of
at its office
for value received, with Interest at the rate of
6:;^ 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.
.,/ 4^^.-/i-<i 4- '£"(^a / 7 ■
i
1 THE UNION TRUST <:0MPANY.CLEVEt.AND.OH!O.CofIatw«1S«Curt
Exhibit U-6-lOa
aither, '^^•
„ ~ V INTEREST OB DISCOUNT
^ 'mOOUNT mT, NKIATE INT. RtCfBU mTtHEBT TD
/f¥7Si>
& Jl.»*3.'fy,
'fS'c a o ' Atjf
/?3/6iJCk,yfftu • m 'i' "J
sEf 7* !r:< asy-^-o
^^il>/»/> >
^r^"^
w z :- rsi*
IS'oo'-
fo.W^^
IIBN TllU«T COMpaWT. CUVtKNO.
Exhibit U-6-11
Exhibit U-6-lla
Exhibit U-6-llc
Exhibit U-6-lld
v-i , linlcn 'ilust l-loii^
r:mi
INTEREST OR DISCOUNT
-it 30
'770-ro "fyo/rr
SS<e :'•■■■ fs^te ^--'
•^^*^<^*JS^SR^^^^^
THI UNtOn TRUST COMVAR*. CLKVIiAN*
Exhibit U-6-lld
Exhibit U-6-lle
Mather, Win. 0.
^nlon Trust BXdg.
#4 9g7
7vj;?5r> o«y///-^^
INTCRCST on DlieOUNT
^;;^U
Exhibit U-6-llf
Exhibit U-6-llg
«o.. 33902
... -IGriv
INTeKEST OR DISCOUNT
l"T. PRINCIPAL
OATI PAID UTf DATE 0»IT <
OCT 5 W A~Bi>^>^
to f-S- .hf-a-M. :»:■: ■ - im C
S:f-g^if^%
ST> c:fn^-^
a-7> ihlHi '>.;,'
7> O-if-^
■ J-U- it ■ M- iTd " *>o
~f(: UA,d^^_
Exhibit U~6-12
itt ^Air oil IWAtlBI ^
cocao 'The Inter:
*^^//^-? .,%- 0>. M /•'•fM J*, i/4l':k
I frwn »■• UHKM TMWr C
-JoCdh/L^^i^.
Exhibit U-6-12a
Mather, "m. G.
Union Trvicl Bldg.
INTEREST on DISCOUNT
iNr.J1;C'fc".'Bi.E INTtHtiT TO DATE *
^ ^ooco — —
SO 00 0 yiUxA:^ ^f
JUN 1 o 1926
OCT IC \VK
f3J3J ./— l/tfiim 11 J?27
T<«f)
Tm« ukioh thu»t cowpAwyp-Ct-r
Exhibit U-6-12b
Exhibit U-6-12c
MsthHr, •■■m. 0.
\f, ,, , Union 1ru8t:
INTEREST OR DOCOUNt'
•83684
r- J, o
fi2T J 8- nit:)
JUN S- 19»
<i»<ji /r-JT^'Xrr
iir- iA
3c a jt ■» /...-/
.'ia a J a ? ?ic.''
3e atj'
'fooac -
l+OOQ
Exhibit U-6-12d
,,■10/30 due 7-1-eb
,66/30 due 7-1-86
Uo/lSOdue 7-1-27
:;icu/l30du,-- ■'-l-ff^
-^«cJ5^^3^f'/
fr^i^
^M. "7 ri* ^yi^-^-^i).
<?**»f-''** • • — ,^i«U<^^*tt*r 'i**t4^-A^ ,tJuL<A.x^ ,1.4,^ w<*. f\
Exhibit U-6-12e
INTEREST OR DISCOUNT ' fNT. PRINCIPAL
IMT. RKflATE INT. RECE'BLE INTEREST TO D*TE ^AlO R»TE DATE OEEIT CflEOtT BAL*MCE
ySZf-- M. i saOUL C 1922 4 %;,'fc/?>y ?^c<: c '-rf:/ ^ 7-'^cc<^
JUL «- B2^' 7/hao
JUL ^ S92./ yyl^ih-P ,,<;
^-.i'^OOO ' ty-
IS if So ■■ IP ^^^
\^Wi9^»\» 1124 V ■ (, 4> •'■ <?.7-4' .?.<">■. lA..../- ^ ',■
'•5 51^7-^-^^ JUL ''"92+' J« '' "?♦ ^-jf"""- "
' < «„ , ^...1'^ CIS a i-<djV~ <-!.•,
Exhibit U-6-13
Exhibit U-6-13a
•Mather, Wm G,
' 1460 Union Trust Bldg^ ,
DUE ■" '■, t »0.7 {V^ I 1
INTEREST OR DISCOUNT
I „7 *->7
6 "^■'>')
' „: . .4- • r JO. ■ - *> ■
'■•^ ■• , . MOV 15 19265'' 7 ' '
, /1-) ;x?3i .1,1 ,
'■ .'lit t/ y-'- y?'
L'/ii. Twii.
OAN
/
^i^i^^
/;
■v.
iJ
Wm^Jf^"
'r. /, 1
PRINC AL
CMDtT
8ALANCC
7o~ 0 0--
■75"-. -
c— —
•-y
^s
'~..
'■^'lAi'"
L
. /'
'^■r
?— -
TmC union TftUVT COMPANY, CLKVKLAN
Exhibit U-6-13b
Exhibit U-&-13c
Exhibit U-6-13d
Exhibit U-6-13e
. Mather, Wm. G. ^
"""" '1460 Union Trust Bldg.
#4 29351
INTEHE8T OR DiSCOUNT INT.
OUNT INT. nCBATE INT. RtOC»LC IKTCREST TO DATE PAIO RATE" DATE
lo-!.y
OCT / 'sao
TIHE LOAN
740;i8
ovt // ya 3a
DUE
ouc
^^y^
ouc
maz^^it'sss.^^^M
PRINCIPAL
CREDIT
H^^^^^^H
*..u
•/f^OO
— j.
//9 <r oe
-■ «■ ■
Exhibit U-6-13f
DESCRIPTION Of COLIATERAI
MARKET :«AM . AHOUNT
94,000 Fhe Interstate Foundries Inc. 1st Mtge S/P 7jt
i #581/700 due 7/1/30 cpns due 1/1/86 attached
R~l~d IM TW UNION TRUST COMRANT tttVELANO, C0IIU...I S.ufKIa >r< .11 gtto KPi'i f
Exhibit U-6-13g
;^^'^*^th8r, Win. <>•
"" Union I'ruat bldg.
L..r. y ji 3/
out/ jiS" 'J •»--
INTMCJT OR OIKOMNT jlNT. _^
o«ra " owaum ' | iict. imate ' int^ KcciU \ imtnai to ' « o»ti p«io jiuTt o«Tt
/^fe - t i MAR 1? te .«: ,
'7i/{f^o\
r/tXe f i\
7'k^o\
Exhibit U-6-13h
)fW»6-*u»-7/iySft #66/80 due 7/1/26 i^'116/l30- "■
due 7/l/ir7 *16«i/l9p due 7/1/28 #216/830 due
7/1/29 #476/560 dlle 7/1/30 #581/700 due 7/1/3C
Coupons due l/l/25 attached.
.iuats WAKs AoonssATiNo « J4jja« '
^ .
wcsjw
nMtf««d fram TH£ UNION TIIU9T COMPANV>CLEVELAND. OHip. CoIUUmI S^cbuliH and til oHw
Exhibit U-6-14a
ioonin ilather, "m. 0.
/Union 'i'rust 31dg.
\ .. .,\
-7<P^33 -?-.--»-i:i \ V
•S<? f' ■-. '^
/S'i>'*'o ■ 3-io-iV .
"^•/ooico /■/^''tto
jj'i \ c-i 5\
'^A« ! 2,133?
Exhibit U-6-15
-««- «iin«-io«««- #SC«ei,- e8«4«-,-feaV(>e- for- 6«ii«4.«p«l-
30 oshs Trie Crtf t'i Cci-p, Ccn>-. V ting Tr..it Ctf.
|VTC706/8-1.000 (a #VTC681-S,000
AtMSAGSRP^Wlft
^q,<.o
0 o poo.
Exhibit U-6-15a
Nt-E/V/^
Jtother, «ni. G.
Union Trust Eldg.
INICREST pR DISCOUNT
J 11-/'/^
SfjB<3
Exhibit U-6-16
oEscnrTKw or couateim.
1-f
6868^8 Vhe Cleveland Cliffs Iron Co. Pfd. '^
E9.253sh= #P877 at 538h8 #P87a at lOOshs #P332 at lOOaha
#P1649 at lOOOahB #P1626 at 6000«ha
\ ■ jflola ffP1614!i 10.000 (a *yi6«A4-l,0OQ shs <=a
7ff»»'' —
Ra>lv«l Mm THE UNCON TRUST COMPANT.CLEVELAND. OHIO, C«lil.ril S
Exhibit U-6-16a
Mather, Hii. 6.
F CIlEoir i " S«UliCE I IHTESESI.TO I DATE ?A13
3 3 o . ^..
Exhibit U-6-17 (front)
l?-j^0»st]8 '"tKi Cleveland Cliffs -Ton Co. Pfd.
>aC'O.^I^^'> #Ple51 i:?\6i.Q at l.OOOshs ea ,me2fi at SOOOsha
40,0003hs The 'continental '■ihr,reB ^nc. Com V. T. Ctf.
#Ky/C09229/4p .«KY/C09260/S /2NY/C09207 at SOshs ea
f?N?/ClD020/l et lOOsbs ea n/o E. A. ?lorce * 06
#NY/c40{j5/e7 n/o Otis 4 Co. frNY/C1506e p/a>?'A.
Pierce Jc to. r?K"jr/C1501£ n/c Boettchor '*»irfon 1 Co.
#^T/Cle646/S^ #Ny/C5665/73 #NY/c11658;^ /?NY/C11664
#KY/C126i>tVt50 ,*lty/C14a6/7. Hwi/CbJ^b #NY/C5737
#Ry/C14aa #KY/C1gK^KY/C1126/J^Y/C3083 #NY/C9967A3
#KY/C12eO/23 #JiY/C3S7V81^JlY/ca964 #C/C469l/4702
#SY/C995o/7 #KY/C9966 #ji%^3958 #NY/C 1301/8
■ #Ny/C301E/l4 #Ny/C30?e/76 #f?X/Cl'309/lO .#NY7C4043/4.
#NY/C15000/1 i»^/C15017/l9 n/o E ^i-^Plerce * Co.
NY/C56(
'C 10225/30
"-■-05/12/
t*o/6e&ae6-40-,ooosi!B-i9Vtnt.-s-. mtjnr'j
7*^^ /-'r i'V** c^, »i ^/j'.. ^.i, i4u.^/^' i. J/u. ^>h/S
Exhibit U-6-17 (reverse;
STOCK EXCHANGE PRACTICES
8811
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8812
STOCK EXCHANGE PRACTICES
Exhibit U-6-18
NAME OTIS & CO— CONTROL
ADDRESS
r DIRECT
BOND
INDIRECT
COLLATERAL LOANS
Old balance
1338
1324
1312
1310
1306
1305
1296
1295
1266
1261
1240
1208
1146
1124
1111
1107
1099
1092
1092
1192
1183
1165
1154
1143
1043
1040
1037
1035
1020
1017
179 00
179 00
679 00
679 00
979 00
479 00
579 00
079 00
079 00
579 00
579 00
079 00
979 00
479 00
179 00
179 00
679 00
679 00
679 00
679 00
679 00
679 00
179 00
679 00
679 00
679 00
679 00
679 00
829 00
829 00
1931
2-6
2-7
2-9
2-10
2-11
2-16
2-17
2-20
2-25
2-26
3-2
3-4
3-5
3-6
3-7
3-13
3-18
3-19
3-23
3-28
3-30
3-31
4-1
4-4
4-6
4-7
4-8
4-9
4-10
4-15
No.
Maker
Endorser or
collateral
Rate
Due
date
Debit
Date
paid
Credit
Balance
Date
1324
179
00
*2.6
1312
679
00
*2-7
1310
679
00
♦2-9
1306
979
00
*2-10
1305
479
00
*2-ll
1296
579
00
*2-16
1295
079
00
*2-17
1266
079
00
*2-20
1261
579
00
*2-25
1240
579
00
*2-26
1208
079
00
*3-2
1146
979
00
*3-4
1124
479
00
♦3-5
nil
179
00
♦3-fl
1107
179
00
♦3-7
1099
679
00
♦3-13
1092
679
00
♦3-18
1092
679
00
♦3-19
1192
679
00
♦3-23
1183
679
00
♦3-28
1165
679
00
♦3-30
1154
179
00
♦3-31
1143
679
00
♦4-1
1043
679
00
♦4-4
1040
679
00
♦4-6
1037
679
00
♦4-7
1035
679
00
♦4-8
1020
829
00
♦4-9
1017
829
00
♦4-10
1012
829
00
♦4-15
Exhibit U-6-18a
1012
829
00
4-17
1245
829
00
4-18
1240
629
00
4-20
1205
629
00
4-21
1198
629
00
4-22
1182
629
00
4-23
1177
629
00
4-24
1149
629
00
4-25
1143
829
00
4-27
1313
829
00
4-28
1601
125
00
4-29
1691
287
00
4-30
1678
677
00
5-1
1760
307
00
5-2
1815
507
00
5-4
1900
307
00
5-5
1852
429
00
5-6
1813
829
00
5-7
1807
429
00
5-8
1955
129
00
5-9
1943
689
81
5-11
1722
189
81
5-12
1586
839
81
5-13
1255
739
81
5-14
1226
289
81
5-15
1223
889
81
5-16
1081
339
81
5-18
1034
897
31
5-19
1026
097
31
5-20
957
877
31
5-21
950
823
31
5-22
1252
560
00
5-23
1352
928
00
5-25
1026
511
00
5-26
1012
425
00
5-27
997
876
20
5-28
981
896
20
5-29
1245
1240
1205
1198
1182
1177
1149
1143
1313
1601
1691
1678
1760
1815
1900
1852
1813
1807
1955
1943
1722
1586
1255
1226
1223
1081
1034
1026
957
950
1252
1352
1026
1012
997
981
964
829
00
629
00
629
00
629
00
629
00
629
00
629
00
829
00
829
00
125
00
287
00
677
00
307
00
507
00
307
00
429
00
829
00
429
00
129
00
689
81
189
81
839
81
739
81
289
81
889
81
339
81
897
31
097
31
877
31
823
31
560
00
928
00
511
00
425
00
876
20
896
20
284
20
() 10 2Sm S-M
o
TOE UNION TRUST GO>IPANY
DEPOSIT TICKET
CREDIT CLEVELAND,©. October- 50 io29
WIIUM J[l..-MATHEa,I ^ —
1480 UNI^ TWJSTJIJXJ,
T^-'ChiciSoSTh.s office will be credited condliionolly if not fourxl gooaMclOMof busiw^
*^ ^ ^_,.. ^, ., ._ ^-...^rf™^ r^ix^we ,.r-. r.rfi«r/-i*v rvw^ks and other Onic*' "
DEPOSIT -flGKET
HK UNION TRUST COMPANY
CLEVEKAI^D, OHIO
(j-i>-n
lorm >u. O 1» tm I M
THE UNION TRUST COMPANY
OffiM »«l ■>• owHled MKdi
DII'OSIT TICKET
■hall !». r-'- "-■-'
STwi'h;^"^ dapu-t-: ~ua«. '.ss.SeTsss.sfitS.'^' iSJuii;
or direct on the following day, and cnargeo kick " not found j,. ,.^._,,
m receiving and forwarding Hems payable elsewhere than in Cleveland, tnis Dan* assumes
-no responsibility for the negligence or default Of any direct or indirect collecting agents, and
r^aTS heiJ liable only when Sroceeds in actual funds orsotvent ^^-^''^ '-^Jl^ """f '"i?
,1^ possession otherwise, items previously credited mx/ be charged bacKto "^^oMon nemi
lest in transit may be charged bacK to depositofs account pending receipt of duplicates
Unless otherwise instructed, items may be mailed to drawee BanKS ^ ^_ ^^ ^ ^^
hereby assents to the foregoing conditions
Unp>.d 1
d«po«it«r li
INTEREST i! DISCOUNT Excmahc
^/n/i
INTEREST OI»CCl
'/^6
^fe^r-
' Mr Z/'
Ooo
-^T7t^
Exhibit U-6-17a
STOCK EXCHANGE PRACTICES
8813
Exhibit U-6-19
Participation
Name:
Address: Otis & Co. New York
Demand loan No. 6000B. $500,000.00
Interest
Int.
rate
Principal
Date
Debit
Cred-
it
Bal-
ance
Interest to
Date paid
Date
Debit
Credit
Balance
393. 25
393. 25
6
May 8,1931
May 18, 1931
May 21, 1931
May 22, 1931
170,000
170, 000. 00
May 22, 1931
May 22, 1931
4, 632. 50
1, 938. 00
163, 429. 50
165, 367. 50
163, 429. 50
$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
Par or share
170, 000
Description of collateral
Certificate of Participation, Total 500,000.00.
Collateral held in Corporate Trust Dept.
Market basis
Amount
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.
Interest
Int.
rate
Principal
Date
Debit
Cred-
it
Bal-
ance
Interest to
Date paid
Date
Debit
Credit
Bal-
ance
136.00
632. 06
632. 06
May 1,1931
May 2,1931
6
Apr. 28,1931
May 9, 1931
May 11,1931
May 20, 1931
May 22, 1931
272, 000
"68,"o6o'
85,000
50, 320
68, 680
272, 000
204, 000
May 22, 1931
May 22,1931
119, 000
68, 680
Transferred to New Loan Mav 22 1931.
8814
STOCK EXCHANGE PRACTICES
Exhibit U-6-20a
Date
Par or share
272, 000
Description of collateral
Certificate of Participation, Total 800,000.00
Union Trust Co. Corporate Trust Dept
Received.
Market basis
Amount
Received from THE UNION TRUST COMPANY Cleveland, Ohio Collateral Securities and all
other papers due in connection with the above described loan.
Date--- -
Name W. M. B.
Address
Exhibit U-6-21
Demand loan
No. 5105B
2,000,000.00
Interest
Int.
rate
Principal
Date
Debit
Cred-
it
Balance
Interest to
Date paid
Date
Debit
Credit
Balance
3, 385. 26
3, 450. 12
3, 070. 58
3, 354. 09
3, 200. 27
2, 209. 65
Jan. 1,1931
Feb. 1, 1931
Mar. 1, 1931
Apr. 1, 1931
May 1, 1931
Jan. 3, 1931
Feb. 2, 1931
Mar. 2, 1931
Apr. 1, 1931
May 1. 1931
6
Dec. 2, 1930
Dec. 10,1930
Dec. 12,1930
Dec. 12,1930
Jan. 6, 1931
Jan. 12,1931
Feb. 2, 1931
Mar. 2, 1931
Apr. 1, 1931
Apr. 9, 1931
Mav 1,1931
May 22,1931
680,000
— (2)—
"'""850
1,700
1,700
9,350
221
8,500
8,500
8,500
850
8,500
631, 329
680, 000
679, 150
1 $3, 071. 16
677, 450
675, 750
1 3, 200. 14
666, 400
666, 179
657, 679
649. 179
640, 679
639, 829
031, 329
2, 209. 65
May 22, 1931
May 22, 1931
1 Paid.
» Pay as of 12-11-30.
Transferred to New Loan May 22, 1931.
Exhibit U-6-21a
Date
Par or share
680, 000
Description of collateral
Certificate of participation. Total 2,000,-
000 00 Union Trust Co., Corporate Trust
Dept.
Received
Market
Basis
Amount
Received from THE 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)
,J^^-^
•til It Co.
D>TC OUIT
IMTERCSTTO I UTC MO
w 1 - ,'
iV d - I9J»
■■jr b - SS
. IWlf ^/ I93J
•-.jwza-"' ^
t<?.*
»«v*»
Exhibit U-6-22
i ; I
S956n
i ! 1 ;
;«» ? - i*^ /,
; MAY U 1S» ' ^-^
< >• •■Vi»3i /y /\'
WWli W3 /J?«
MAr Is i-W ■; : _^ j>
(Mf X 4 1931 ^^ e
MATIS 1931 /^
I 'A'' 1 « 1931_
pr 1 g !33,., -»
|lAY18 1S3t //»
jiAYl* I93t y t C ■■
2 0 «3? ^ 's^" - ■
/y / ^' c 5 ! 0 cc
Exhibit U-6-23
•-o. of "nil iork Cap
'it!» C-!-.i4ngn-tal fesnte- *■ '?rtrst
4,700sh8 The Contiriert&i Shar-fis Inc Com
#C/C5906 ri/o Knaok t Co. i'N'Y/C U45 =1/67 #c/C4672/4
#NY/C1476/<33 #C/C471i- ,iC/C3&<>6/a #Ky/C5657/9
#KY/C12050/1 *C/C44S1/7 #KY/C1421 #c/C4675/91
#C/C47il at lOOshs «a
WAnjmmj.m
"" "" / - - - - ^^^ ^^^ lOOali* «a
69snr The National City tank of "aw l^ork Cap
//»/ #F£24028 at 4slTS n/o Harry A, Bachman #C67S76 at
5ah8 n/o Oeorpe C Ylck »F227730 at £0sh9 n/o
TSalter P. Mc Gowan #FSJr4400 ■;^o Mlliam KerVlaon
at lOshs /i'FS'24971 at oshs n/o Marry A, Eachman
s,^;»,.. i. "/.v^ /^■/)/f/
Exhibit U-6-23a
■■ -t«4- Light * >owop-COi Ccw
)ffi«&14? B/^-Sdgftr-H^-lH.11 lawB
iB_ The Hatlon Side Securities Co. Trust Ctf Series B
#829128/35 #828114/25 n/o K.P. Hill at lOOahs ea
#B»17157 at 5U18 n/o nis k Co- #Btl6931 at TOehs
#Bil6972 a^lOshs #8617339 at 15shs n/o N.P.C|11
#8016917 at Ish n/o «tls k Co. #Btl7187 at 74«h«
n/o N.P. Mill #B«12655 at ISshs n/o Herbert W lalnefurther
#8616999 at lOahs n/o N.P. 1111 #8615969 #8614292
#8614384 n/o O.P. Parkeraon #8615991 #8616298
#8616290 #8616070 #8616835 #8617197 #8617196
#8817316/6 at SOsha ea #827648/61 #827474/80
#827280/3 n/o N. P. Hill #827398 #827408/14 n/o
March t Kimball #827963/4 n/o H.P.Hill #827405/7
n/o March * Hmtall #824357/60 #825803 #825802 ■/©
6tla Jc Co. at lOOshs ea .
.S . AVOUHT
1
«»X /^ 1^
>
^^^^
Exhibit U-6-23b
«tla Ic Go. "
Jny -^,
Exhibit U-6-24
U£SCIbt>'i:iCN OF COLLATEfiUU.
_ Co lOyr-^i^t
'■'"' "' " » Stato of Tojttto irhapg-fc-Jftaolt— -
- -»t.-i,00a. •• Du^Vl/38
I'he Tillage of ''arma b\f. County of Cuyahoga Sarlas
J1929 Imp i>d #237 iu« 10/1/38 #83 ■'arma Rural
School District 5lj{ School Bond duo lVl/38
— -he Fro» St*4^ of -''ruBste-ft^ «/F-fi<i- Bd-Bjtt, l-oan
- — #08700 ^Vm\^m V -l,e6& -e» Bae- t^/'lo/sg-
: the Hlchmond Bay Co Ltd 57g fcay St^«^ l4it Mtge
S/P~Sd-B4-#ll&6»/5?* -MSCft/oa-at-irOOO -«a Bu«
' iS/i/«- - -
-^W ¥14i««« -«l^ iiocky---lw«j.- -Si C<>UBty of CuyahOR*
Hampton -Se»«s-Dl»t.i^l8-t #8 Bd#Ppop»i«ty Oi.ner»
— -Portion #8/9 Serlal»-#«-6032/3. flaap^ton ilorewood
— 6e«rcr aiet #6 Bd-#9a Sei4«l-#Se36-#90 Sei'tol #&997
— #frl -Serial #5888- at^L, 0Oa-«« Dua 10/1/36
»g» lyifeS 67 1041 -tow- lr&53 4154 at -1^
— #046 oiaa fliao at &o" - ''
&/1-/43-
Exhibit U-6-24a
IMRKET USS WOUNT
iiP!ii.i]:i;iiiimiif.i'pM
■ Tlia 'rumbull Steal Cu fi 10jir-(
- jyD4?*at -50fr-#MDaC 4ZC1 -t^ liOOfy-^m: Bno-l l/i/3&
rtie 6/1/3"
ri s/r sd Bd ^
^"^^ 0lrl»*«>n«-5*)^-#efi''*/'i'6-** 1^«60 *» miw 2/iy»t
. ^#aa-du»_2A/
--Warrant Sf ta of *l«b»ii*
»-isAi/3&
-fa^Httt-L/" «li!t aa Bd
^^<^ll^-
I SwMrffiM (Md ali BtMr
PARORSHJUte U
Exhibit U-6-24b
-. ■ ^ BtSCRiPTION OF CClu*te?(
" L___Ih»li!^M*l-Und-S»nte -Of Sprltigf laid 4^* Gpn «d - "-
_#J05554&-du«..-&/l/67 :— r-^^ .r-~;-r^-^ -
■._i'..i.;6OO.O0-T*e B. -P>-go»drl<h-^Eo lOyr Oii Cuuv-^ald Bat TeTnp
. V, ., : #10730/37 at lOO^aa #TD660/&1 at 600 a^ »u« S/l/4&
- -■■■ C^rp lot Mt^a Uaaehold -
-tO-J^rOOQ #&13P P65 055-*V^^Oft-ea
I OOP — --^he-ehl<>-'''«nn*ylv«"*«"^**"*"^**'"'*'"'^'^^
^- ' 4mi<i-,-^»to i>i Cpn ]
oa Duo 3/1/63
-•' "-■' ■' ■ ■" ^ ■, . '-,■ .
S OQO ^Jie San Antonio Joint Stock Land Eanl of San Antanla
"7* „.*.: J , ■_1...3eK«» ■fejr C{)n bd ,jT»M30&003 dna 7/l/&« - .,;
'"-. t^ •'■'■-'*,.'"■■ ■ ■"■'-'■
J^tO^.^ili/i'^ .-^^ J^*W l9tr-f4t»W S/P *>d Ed- - --r-.
"'■ . jasaa a t- It^OOO -Ci»9 iSl/lSJE «t lOO ea D«» 14/1/37— ■
-Afel*t-i<-€ Ittb
Mi^Piif4^n^
Exhibit U-6-24c
•tla fc Co.
44781]
l'nB3BCH|9ESSi
i:l^■\^1m
'•m •» y • )3}|. f'
OCT IS io:ii)«-
.«*^'
OfC ! 0 I93ffi-
!lf C ) il ISM I
/{PC
/'j <><:> J>
/T tor-
19 00 0
f*n-'«
•AY I a !93t
iiM zo-'ssv-
Mrifo «R
Exhibit U-6-24d
BESCBSPTION OF COUATE»AL
MMNIiiMiiiJiilUHii
ifc-i— /j'^^-j'i'j-f » I'M'i't'a
, «■ genarn ■
4/1/45
/46 at 1,000 aa Buy
■DeaBe.TiBi- L.imusLunt) & ce^igirt Xg~laf~IR,ge ''gOyr
■ j ■ - %^ Gd Bd-#ifta3g <iw-e/l/4? =-— '- — :....^
a 1,000 The Bowman Biltmoro Hotela Corp lOyr 7< S/P Secured
Gold Note #M48 due 12/15/34
" feaap^ Hotolo Corp let Mtpe I^eaaehold —
466 184 at lOQ-ea #D6g3-?»-B60 at —
. x>. ^366. due 11/1/34^ --^ ^ :
r Cleveland. Obto Callattnftl S«euril»M md Uli oA^ pAjMn
Exhibit U-6-24e
Exhibit L'-6-24f
I>e$C«lfTK»l OF COi.l«TEi!
DEC 9 0 183$
if,', J IW
iN « Its*
jSK t« —
m 2*
FES 2 »r i,^^.
. ^Z^ y .. /. , ,f yl^ Otis S Ht..
rtS iS 1931
;B 2 3 193'.
/ceo -J,
T^ . <^^«T>
OH* X Ho,
;^S2^
/J
lAT 1 » 1931
HAY 2 0 IMI ^4<f
. /^ »'«' ^■'.j/^, „ -^,^^, x^ Olis & Co.
oMr papM 4m In canMctfon wNh «« abo** <JMCf*b«l hMn.
Exhibit U-6-24g
I
H»»h«H.«. TMt WHOM TRUST C0IIW>IIYO.wH.J.<»i« Coll«»..l S«cilrtS» .iH M
Exhibit U-6-24h
/oo - ^
/tra. ./
^9t>„ J
OCT IS '9W
•SookJ X.
j^.iM J ^
/y"" /
>* * ;»^
/eD€>„ )|
HOY 7 1931)
/'OO )i
tt-y V !i3'j
/tdo /
KOV M 1930
Ac^y ;(
HOV n '930
/'s^ X
r. ;v i4 1930
/i<i» )f
. . / , " « & C;i,
,^^ '• — — otissca^
,. -f / Otis&Xo. /I
^(^ ■ /-i '''^^■^ "^ "-^ 08» S Ga
-Otis & Co
f .puy.'jA .
'^.z^,^
''^^^.tettede/i
)lis >:• Co,
<^-<K»/>^>^0'l.s< (.0.
-'" ,, OMs&Ca"
-^4:/ ^ OrteSCo. '
i7 y- ^^^/ }!i8 8 Co,
"■' ' V^Jii^a^z:. *?sx >z.^. Otis*.;:.
Exhibit U-6-24i
300shB-; . * I'he "ow Chemical
^iSSS©^t3--The Eaton -Axle .-
,,' j= 113,200.00
17,310.00
JS.OO--
'<^'^^:'^
„iihlto aotOP-—
i,.iM- —
' W >oungst,own Sheet & Tubs c/D .?:!22:2?-
,:- ■ , $ 52,745.00
■ 1
*
mwr
Exhibit U-6-24J
• •
« f. tils h Co.
ADDRESS
5d83B
v,/-^
//
■ ?y/^Y 6 1S3i i
\my R- ,1931 ■;
;»!AY 14 1931;
/i-.^ ^ /'.- <?,^<3■
Exhibit U-6-25
6,000 Thn CollatRral Spcufltles ^orpn, Commonwealth '^f
Massachusetts S?Oyr 6'.' Od/^eh .? V'P.-./C fi\1?,7. #M66 «t
1,000 na due 12/1/47 Harr Att .
-,«0& «« ciiKo 1/16/54
7,000 - The P. V. -oodrlch Co. ISyr 6> Cony Gd/i-eb
/'M19192D #M97<'0DiM9764D /'M5736B/?) «t 1,000 aa
due 6/1/4S
J;fltjf«ee ^he Indiana i-irnestone Co. 15yr lat ■'•'» r» 6^ S/p
' ■ '* Od/Pd «M138?1 )fM11731 #M9354 #M3:'2B at 1,000 oa
due 5/1/41
■ ■ '" ' " ■" Unr ''Orpn lat-iitpa L/K-ciX - _
, Jj4/iJd- -#M&90-#JK»ie. #M3«0/4-.. «.t.-.l.,.000..-»»...<Ju«
a/1/43
12,000 The Kansas ^Ity.Kaw Valley V Western "allroid Co,
Ist tpe 4>' Od ^pn Bd #A413/l9 f «35l/2 it 75 oa
#0330 #0263 <it 100 oa | B185/3 #D135 at 500 en
;fJ1624/6 #!I536/541 at 1,000 8u due 10/1/47
Exhibit U-6-25a
— c,ooo-
• •
60,000 The "ake Shore Athletic CXuh <J„nl Mt(?e 7< Gd/bd
fM1050/9 #a981/1000 #M924/33 #M866/3B5 at 1 000
ea due 11/1/40
-#&b68 a<
8.000 iW Olenn L. 'iartln Co. 5yr 6i Conv Od/"ote
#112554/5 #ailS4 at 1,000 e!i due 11/1/34
— -8,00a^ - ai»«,^ P«cn»ylvfcnia i'ower .V Licht^o. Ut *t-(ee Gd/«>d
- 4fcv-S«ri«s T»a? isd ,;xa74S&o^5 at^ 1,000 «« 4u«:4/l/ai
2,000 *he>otel Pierre 1st «tpe L/H 6ji S/V "d/'^d
'#M6189/90 at 1,000 ea due 4/1/49 ^'^ ^'^ °
' /»■ 'Stf/^a
Exhibit U-6-25b
\i/ii at, 1,000 ea — Sotrth--**!*-
BooMrfgoing Hd )i''lA-4w.» ta/l/iB at l)OQQ«q-
4 000 '^he Tan Sworlngen Co. 1st Mtge S/F Coll Tr 6^
' Od Bd #M4216/17 #M4gl9/20 at 1,000 ea due "^/l/ss
?,000 .M.e terminals * Traasportallon Corp of America SOyr
1st iitgo Sc Coll Trust S/P 6\t% ^d^d Series A
#)J2993/4 at 1,000 ea due 5/1/47
1,000 The Portage Hotel Co. i-and ■'rust ^tf of EqultaVle
ewnershlp ,#1194
-ifiySOO '^he City National iJanV Bulldine Co. "and "rust ^tf
" .,A— of BquitaVls ^'wnerahlp /^448 n/o "^rs »<?l?^n Durst Boeh™
"^ #1105/9 n/o Leslie T yontaine at 1,000 ea #1104 n/o
UalleTi' Fontaine at 10,000
; T Pantalne
' UoarlDOfH
r,n9lflf>t, ■^>W «<* Bb,n« 4HCrt«»l '4
..i«i*aiJ
Exhibit IT-6-25c
MAY ,5- '^ .P-C^^'
.,A¥ 5 "33) JeO"
■m 6 193)
WAY ? ''•'■ -^feo
fit KM 'If
MAY ^4 •!»» /'' '-^
«Y 14 1331 Sf'"
It IX IS* ! ^O-PO
DESCRtPTION OF COLLATCR^^ ^^^
. ■ .' . .' , - Otis & Co.; Qj
/X, .--»-, / ■ . Otis&Ca h
i-yj^/f.
Exhibit U-6-25d
o oo
DEscnnKM or cou>Ti
^ o
luiKCTl Mas I Mwun
/ 20,418.26 Ihe *llUge of faarea 5j^ Street Imp "a.
Wsmfmw&mm
#41/3 duell/1/57 #44/6 due S/l/SB #47/9 due 11/1/38 ' ^
#50/1 due 5/1/39 #54/6 due 11/1/39 #57/9 due 6/1/40 ri^'^ .
#60/2 *ue 11/1/40 at 600 ea #63 at 918.26 due H/l/40 |
y 1,000 The "essemer Limestone St Cement lat MtgeSOyr 6il^ 3*-^
Od/^a #C134/6 #C138 #C211 at 100 ea #D192 due 2/1/47
at 500 ' ' .
V 6000 The State of Texas, Bexar Medina Ataic'Aii^Xlounties »'
Water Imp. Plst #1 #1777/81 at • 1,000 ea duo 6/1/61
^ 5 000 The City of Blackfoot i*unicipal Coupon Refg. Waterworks
Eds Series B #161/3 due 1/1/45 #179/80 due 1/1/46 1'
; at 1,000 ea 5ij£
7 1 000 ' '^he ''owman Blltmore "otels Corpn lOyr 7f V^ Se«(.0d'>M7>|<<
I Bd #1142 due 12/15/34 . , s
y 10,000 The S. V. Bowser k Co. Inc. let Mtge lOyr 7% s/f6?-
#C70/3 #C84 C95 due 11/1/34 at 100 ea #D94 #D100
Exhibit U-6-27a
Name R. S. C.
Address
STOCK EXCHANGE PRACTICES
Exhibit U-6-26
Otis & Co. (New York) Participation
8815
Demand loan
No. 5943B
120,000.00
Interest
Int.
rate
Principal
Date
Debit
Credit
Balance
Interest to
Date paid
Date
Debit
Credit
Balance
20.40
130. 31
May 1,1931
May 2,1931
6
Apr. 28,1931
May 9, 1931
May 21, 1931
May 22, 1931
40,800
40, 800. oa
35, 160. 81
5, 639. 19
816. 00
34, 344. 81
34, 344. 81
130. 31
May 22, 1931
May 22, 1931
Transferred to New Loan May 22, 1931.
Exhibit U-6-26a
Date
Par or
share
40, 800
Description of collateral
Certiflcate of Participation Total 120,000.00
Union Trust Co. Corporate Trust Dept.
Market
Basis
Amount
Name R. S. C. Address: Otis & Co
Demand loan no. 6075B.
Exhibit U-6-27
Union Trust Co.
Interest
Int.
rate
Principal
Date
Debit
Cred-
it
Bal-
lance
Interest to
Date paid
Date
Debit
Credit
Balance
May 22, 1931
May 23, 1931
May 25, 1931
May 25, 1931
May 25, 1931
May 26, 1931
May 26, 1931
May 27, 1931
1. 252, 560
1,252,560.00
1,251,608.00
952. 00
14, 144. 00
302, 644. 20
9, 628. 80
1 2, 754. 00
35, 904. 00
886, 533. 00
1,237 464 00
934 819 80
925, 191.00
922, 437. 00
886, 533. 00
928. 36
May 27, 1931
May 27, 1931
As of 5-27-31.
Certificate of Participations:
Union Trust Co $1, 252, 560. 00
Cleveland Trust $1, 252, 560. 00
Guardian Trust $736, 800. 00
Central United $442,080. 00
Transferred to New Loan.
$3, 684, 000. 00
(Exhibit U-6-27a faces this page)
175541— 34— PT 20-
8816
STOCK EXCHANGE PRACTICES
Exhibit U-6-28
Name I
Address Otis & Co. Guardian Tr Co.
Interest
Int.
rate
Principal
Date
Debit
Credit
Balance
Interest to
Date paid
Date
Debit
Credit
Balance
6
May 22, 1931
May 23, 1931
May 25, 1931
May 25, 1931
May 25, 1931
May 26, 1931
May 26, 1931
May 27, 1931
736, 800
560
8,320
178, 026
5,664
I 1, 620
21, 120
521, 490
736. 240
727,920
549, 894
544, 230
542, 610
521, 490
546. 12
May 27, 1931
May 27, 1931
I As of 5-27-31.
Certificate of Participation:
Union Trust Co $1, 252, 560. 00
Cleveland Trust 1, 252, 560. 00
Guardian Trust 736, 800. 00
Central United 442, 080. 00
$3, 684, 000. 00
Transferred to New Loan.
Exhibit U-6-29
Name I
Address Otis & Co. Cleveland Tr Co.
Interest
Int.
rate
Principal
Date
Debit
Cred-
it
Bal-
ance
Interest to
Date paid
Date
Debit
Credit
Balance
6
May 22, 1931
May 23, 1931
May 25, 1931
May 25, 1931
May 25, 1931
May 26,1931
May 26,1931
May 27,1931
1,252,560.00
1,251,608.00
1, 237, 464. 00
934,819.80
925 191 00
952. 00
14, 144. 00
302, 644. 20
9, 628. 80
12,754.00
35, 904. 00
886,533.00
922,437.00
886,533.00
928.36
May 27, 1931
May 27, 1931
1 As of 5-27-31.
Certificate of Participation:
Union Trust Co $1, 252, 560. 00
Cleveland Trust 1, 252, 560. 00
Guardian Trust 736, 800. 00
Central United 442,080. 00
Transferred to New Loan.
(Exhibits U-6-29a tlirougli U-6-29C face this page)
$3, 684, 000. 00
Exhibit U-6-29a
oEscmmoN op goluteral
'tmmmHmimmm
/1/40
mmmmi
9nm.im9mrmm:mMmfrtm l iirtxttkiaMj
iwmiiii!ii.[r.iiiiiij:!ij»
MAY £ 0 M3;
nTiT;vaH<i!fi
r^Jo- #»559 #1709 #D46S #9654 at 500 sa #k602 'HtltESZi
.'^i'=' i««"«.^«3593 #g296 M45g8 mSBi H1982/S 113014
j ia740 iC295 112186 JI3407 ie326 M2323 in739 i
-,• /^ffo
AY ! 3 193j jfSffo
1,000 e« due S/l/»» Warr Att.
Exhibit U-6-29b
HEUN!C >TCOWfANY &•*«:
I With t^• abcvc dMOrlbvd i
Exhibit U-6-29c
STOCK EXCHANGE PRACTICES
8817
Otis & Co.
Exhibit U-6-30
Central United
Interest
Int.
rate
Principal
Date
Debit
Cred-
it
Bal-
ance
Interest to
Date paid
Date
Debit
Credit
Balance
6
May 22,1931
May 23, 1931
May 25, 1931
May 25, 1931
May 25, 1931
May 26, 1931
May 26, 1931
May 27, 1931
442, 080. 00
441 744 00
336. 00
4, 992. 00
106, 815. 60
3, 398. 40
1 972. 00
12, 672. 00
312, 894. 00
436, 752. 00
329, 936. 40
326, 538 00
325, 566. 00
312, 894. 00
327. 66
May 27, 1931
May 27, 1931
1 As of 5-27-31.
Certificate of Participation:
Union Trust Co $1, 252, 560. 00
Cleveland Trust 1, 252, 560. 00
Guardian Trust 736, 800. 00
Central United 442, 080. 00
3, 684, 000. 00
Transferred to New Loan.
Exhibit U-6-31
Interviews and Commitments Affecting Loans — Official Instructions
TO Credit Department — Comments on Financial Statements— Essen-
tial Credit Information
For exclusive use of Credit Department.
memorandum regarding OTIS & CO. LOANS
Mat 21, 1931.
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 com-
prises the following loans:
Original Amount
Present Bal-
ance
Collateral
Value
$2,000,000.00
1 $1, 856, 850. 00
1 480, 675. 00
I 202, 000. 00
I 101,014.14
$1, 864, 000. 00
500,000.00
626, 000. 00
800,000.00
223, 468. 00
120,000.00.-- . .
134, 500. 00
$2, 640, 539. 14
$533, 070. 00
457, 780. 00
50, 000. 00
Out of Town Loans. -..
829, 000. 00
Direct Cleveland Loans .
1, 040, 000. 00
Guardian Trust Loans ("endorsed bv Otis & Co )
Additional loan -
$3, 681, 389. 14
500, 000. 00
$4, 716, 968. 00
Total loans.. . .
$4, 181, 389. 14
896, 130. 00
Payment to be presently made .
$3, 285, 259. 14
Thru release of 179,226 shares of Continental Shares.-
537, 678. 00
$4, 179, 290. 00
* Now participated— 4 banks.
8818 STOCK EXCHANGE PRACTICES
Exhibit U-6-32
It is also understood that a further payment of $680,000.00 will be made to
release customers' collateral valued at $850,000.00; also that in addition to
collateral 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 [J-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 Con-
tinental 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 en-
dorsed in blank and stamped for transfer, representing all the shares of Conti-
nental 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.
May 22, 1951
Th« Union Trust Co.
Cleveland, Ohio
Attsntlon: Mr. Crawford
0«ntlemen :
in accordance with the arrangement
made with Mr. M. C.Harvey, we have today In-
structed the Continental Shares, Inc. to de-
liver to you .52*000 shares of Continental
Shares, inc. Common St.ock which will be pre-
sented 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 amomt of our notip 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 & or.
L.T.Fontaine :MS
.eoO"
Exhibit U-6-38
STOCK EXCHANGE PRACTICES 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 Western Public Service
1200 " Continental Shares Inc. Common
800 " Sherwin Williams Common
$5,000.00 Joseph & Foics 8K's of 1943
Payment received $47,000.00.
Disbursement: Balance
The Union Trust Companv $15, 630. 00 $968, 296. 20
The Cleveland Trust Company 15, 980. 00 968, 296. 20
The Guardian Trust Company 9,400.00 500,586.00
Central United National Bank 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 28lh, 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-&-37
Otis & Co.,
1500 Walnut Street,
Philadelphia, Pa., May 22, 1981.
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 $52, 300.
10,460 shs. Continental Shares, Inc. Common Stock
Philadelphia National Bank $31, 500.
6,300 shs. Continental Shares, Inc. Common Stock
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 $2 10,070. 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 U-6-41
Name. Newberry Investment Corporation
Address. 2222 Buhl Building, Detroit, Mich
Time loan 87130
No. 1 due 8-20-31.
No. 2 due
No. 3 due
No. 4 due
No. 5 due
No. 6 due
No. 7 due
No. 8 due
No. 9 due
No. 10 due
No. 11 due
Interest or Discount
Int.
Rate
Principal
Date
Dis-
count
Int. Re-
bate
Int. Re-
ce'ble
Interest
to
Date paid
Date
Debit
Credit
Bal-
ance
781 25
8-20-31
May 25, 1931
5
May 22, 1931
Aug. 20,1931
62,500
"62,'566"
62 ."iOO
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.
Mar-
ket
Basis
3H
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)
Tho Southern Ohio Power Co.
..ISO Bast Broad Street, ColumbT&. Ohio
■ 0«J JJ'JV N» . DUE '
DUE ^-V ■^Z-
DUE y^// J/
lynWTTO DATE MID
^^-l^.3. OV 2 0 isTr
18 NJll
WA<^ei
^9* 1-2
*//} ea.
'Ma<fJ
« 2-
Exhibit U-6-40
iiJimui«iB.i.uijwjiu.mwjjp
80,0008h«' Tho '•ontlnental Share* -hie. Com T. T. ^^tf. '^
iftC/C 41,02-^^^" ""-' '-- '"- ' '— ^■
#e/G447SA
ljk;/C5878/fiO<«r .ifi.^.niro/nn — ip./i.n.'wn/ in »T Luuans ea
n/e Otla fc Ce. / #C/C«6We-Vt>-S«uttt«n>-eM»-'<'«««t^C«,
200aha Lov Voletlle Coal Co. Pfd.
rlJ/M-'OOsha ea
lOOOsha The United Ohio Utilities Co. Pfd
#P11
^ *^^*^/f/^uA^kjy/ 7'9^-
n«>l~l fm THE UNION TRUST COMP>Nr-a.EVELANDl OHIO. ColliMnI itaiMm ari di ■■» |
j**^^
/i
u™-— .- ■
Exhibit U-6-40a
Wade, G. 0.
1B50 Union Trust Bldg.
©o
1 1 ■[ |>/uv«*:-
J ^« o. i/Sooo
/CCC o
Exhibit U-6-42
DESCRIPTION OF COLWTERAL
* MARKET BASIS AWOUW
15,000- -'The Continental Shares inc. Com '■ i-
#1«/C4S016/17- -#i<¥/Clg9£4/9' ^HY/ClSgeS/W '^
iimY/C14U»/ggHi^K¥/C10Dl/6' fllY/CtinOPA- #»¥/&456;e/7» ^
)j^NY/cA5rzy:8£-#w^e»e/4*#^^»/c4047/6^■ '!gHY/-&&frt/e?»»
jjilfy/C44a£y^'-ifBY/CJr«6-l/5--a4r-J:0&ghg--»*-ty'-e Ptle & gor-
#9e5/'*vSrtr~i7000Kljs «tt ll/o t. T?'." BUWSlI*
. ' (s6 n/o G. G. »R(le) ,
lOOOshe *he Uedusa Portland Cement Co. CajJ '*
#90~ r
The Kutional defining Co. Ffd.
RMNrivKl IrtXT. THE UNION TF
IE UNION TRUST COMPANY Ci«rtH»n«l, OPto Coil
Exhibit U-6-42a
03pgn;tn','V
Wade, J. H. Jr.
c/o S C Oene«« Estates i>ept.
mnmtr to wti nuo
'>«inciml'
un ouir
MAY t 'i 1930
ji'i. J « \m
'■'■ . ■-■■i^« I/O a -
• jUt tym> _.. _. - ^ Id 00 0
/-^ 6? ij «
Exhibit U-6-43
iMAWKET;, BASIS ' AUOUHT
IjOOOshs 'Jnited,jtf.'.e5 Steal Corfu Com. ■')■
^K195672/76 #H211268/72-10U»hs «& r./o the Union Trurt Co.
Exhibit U-6-43a
BummoM or oouATtiiM.
C^ 296asli9 Tna Medusa Portland Cement oo Cpm 3o
iSiM- |«16 n/0 Iba Dnlon IruEt Co.
C 9007sha The ''llf fi Corp Com Shares Voting Tr ^tf *»
#VW4&a jp7IC1338 n/a The Union Trust Canpuigr
V
n eOOOsheVThe ^ontlneptal Share* ^nc. Com , ' //
#!nr/C135l/2^#NY/C1548i7 #NY/C2119/23''JUT/C21ST. '^
#!r!r/C354lAV#NY/C404l/2-/#NY/C4648-4c7c4663^
#NY/C4773/81>/#KY/C5146/7-/#IIY/C5152/6-^NY/C5228^ >
■^f,,^w»«-'<.-#l^r/C^93^^#KY/C9008>-SfNY/C10716^#KY/C10836.#Ny/C12^6l/
#»Y/C13766^#NY/C13785/92-#NY/ci3812/l6^t lOOehB ea
n/o Oils & Co.
3a ?f<3>/o
'4 ^0^(7
SOOaha iunsriean Telephone' h Telegraph Co. Cap.
|qC3806/9-1005hs ea n/o Bie Union Tniit Co.
liJ- ■ Li'.
8000»h« ihe Goodyear Tire 4 Kubber Co. Com. ^tf . ^\000
^608/22 #B2626/3O-10Oshs ea n/o The Union Truat Co.
I^4ll(>
Exhibit U-6-43b
Exhibit U-6-44
4,000ehs The ^ontlriental Shares Inc. Com "^ 1 -•
#C/0GClC/a'7 #tnr/<;7B0.<)'NY/01000/l3/#KY/ClO8a/0
#M¥Me'?Ct'#NVji'C13<l<l/^ m/C1340/5q, at lOOaha •m
n/o-6tl8 k 0»r /it4 'n/o Edward B. Greon«)
373Bh« '^he ^llffa Corpn Con,. Votln? ir.
fV.clSaS
' "^^^/.JLi^^fC^r^^
Exhibit U-6-44a
STOCK EXCHANGE PRACTICES
8821
Exhibit U-6-45
Daily fluctuations of continental shares from April 15, 1931 to June SO, 1931 as
shown by Cleveland Plain Dealer
Date
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.
6/6/31.
5/7/31.
5/8/31.
5/9/31-
6/11/31
High
Low
7^
m
7^
7%
7M
evs
6H
5
Wi.
5^
eVs
6
m
5y2
m
iVi
5}i
hVi
5%
5
5
3^
eVs
5
6^
6J^
eys
6
m.
^V%
6H
5H
6
5M
&H
5%
6
Ws
5
4M
5
iV2
5H
45^8
bVs
5
iVs
iVa
Volume
Trading in
Hundreds
10
11
52
171
61
11
30
38
42
69
251
307
92
50
34
86
10
27
47
51
30
50
5
12
Date
5/12/31
6/13/31
6/14/31
5/15/31
5/16/31
5/18/31
5/19/31
6/20/31
6/21/31
6/22/31
6/23/31
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
4Ji
iH
m
m
iH
iVs
iH
4
iH
4
AVi
4
4
3K
4
ZH
4Ji
3^
5}^
iH
6J^
5H
5M
5%
tVi
m
hVz
iVa
5H
5
5K
5
5
4M
4J^
4M
m
4^
5%
4Ji
5^
Wi
5
iH
5
5
Volume
Trading' in
Hundreds
71
18
1.950
31
17
34
27
34
67
96
76
50
37
62
24
56
10
22
29
33
48
6
10
Exhibit U-6-45a
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.
5H
4^
m
Wi
hVi
W4.
5
Ws
6
4H
m
Wi
ili
m
^Vi
44K2
24
3
40
4
13
2
17
6
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
m
43^
hVi
iH
5H
Wi
5H
m
SVs
5ys
6M
hVs
6
5H
m
5%
5ys
5ys
1
6
29
118
63
156
37
32
19
« Odd lots.
8822
STOCK EXCHANGE PRACTICES
Exhibit U-6-46
Daily fluctuations of continental shares from April 15, 1931 to June 30, 1931 its
shown by Cleveland Plain Dealer
Date
High
Low
Volume
Trading in
Hundreds
Date
High
Low
Volume
Trading in
Hundreds
4/14/31
7%
7M
7M
en
w%
5H
w%
5
6^8
6K
65/i
6M
6
6K
6
6
5
53/8
W%
734
73/^
6^8
5
5^8
6
5H
5M
hVi
5
3^
5
63^
6
63^
5Ji
6M
i%
434
5
10
11
52
171
61
11
30
38
42
69
251
307
92
60
34
86
10
27
47
51
30
60
5
12
5/12/31
4T-8
434
434
434
434
4
4
434
53^
63^8
5^8
53^8
5%
5
4K
iVs
53^
5H
5
5
434
43^8
43^
4
4
4
ZVs
ZH
ZVi
m
5
5
4?4
434
434
4?4
454
5
71
4/15/31
5/13/31
18
4/10/31
5/14/31
» 1, 950
4/17/31
5/15/31
31
4/18/31
5/16/31.
17
4/20/31
5/18/31
34
4/21/31
5/19/31
27
4/22/31
5/20/31
34
4/23/31
5/21/31.
67
4/24/31
5/22/31...
96
4/25/31
5/23/31
76
4/27/31
6/24/31
50
4/28/31
5/26/31
37
4/29/31 -
5/27/31 -
62
4/30/31 - . -
5/28/31
24
6/1/31
5/29/31
55
5/2/31
6/1/31
10
5/4/31
6/2/31.
22
6/5/31
6/3/31
29
5/6/31
6/4/31.
33
6/7/31
6/5/31
48
5/8/31
6/6/31
6
6/9/31 -. .
6/8/31...
10
5/11/31.
Exhibit U-6-46a
6/9/31..
6/10/31.
6/11/31.
6/12/31-
6/13/31.
6/16/31.
6/16/31.
6/17/31.
6/18/31.
6/19/31.
534
Ws
m
4J4
5H
4J4
5
4^8
5
4?4
4?4
4?4
m
^H
4M
Wi
24
3
40
4
13
2
17
6
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
43^
4H
53^
4M
53^
Wi
5?4
iVs
5^
53^
634
53^
6
5H
63^
5H
hy%
^Vs
1
6
29
118
53
156
37
32
19
Odd lots.
Exhibit U-6-47
TAKEN FROM EXAMINERS REPORT, DEPARTMENT OF BANKS, STATE OF OHIO,
MARCH 27, 1931.
Otis & Company
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%, Cleve-
land 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, O.
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, J933.
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 sa3dng 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 wiU 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.
Signed L. T. Fontaine, AssH. Cashier
L. T. Fontaine: MS
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.
NYC279, 280, 282, 283,
NYC4588 to 96 incl.
NYC4573-74.
NYC3502 to 10 incl.
NYC4300-4301
NYC4305- to 4312 incl.
NYC5862-63
NYC4586-87
NYC2895 to 98 incl.
NYC5979 to 83 incl.
284. NYC5985
NYC4507 to 12 incl.
NYC274 to 278 incl.
NYC4597-98
NYC4500 to 06 incl.
NYC285 to 291 incl.
NYC4575-76
NYC4497 to 99 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.
#1
Name: O. & Co.
1
Address: Otis & Co.
Demand loan No. 6075B.
Exhibit U-6-52
Control card
Interest
Int.
Principal
Date
Debit
Credit
Balance
Interest to
Date paid
Rate
Date
Debit
Credit
Balance
6
May 22, 1931
May 23, 1931
May 25, 1931
May 25, 1931
May 25, 1931
May 26, 1931
May 26, 1931
May 27, 1931
3, 684, 000
3, 684, 000
2,800
41,600
890, 130
28,320
8,100
105, 600
2, 607, 450
3, 681, 200
3, 639, 600
2, 749, 470
2, 721, 150
as of
5-27-31
2, 713, 050
2, 607, 450
2, 730. 50
May 27, 1931
May 27, 1931
Transferred to New Loan.
STOCK EXCHANGE PRACTICES
8825
Name: O. & C.
Address: Otis & Co.
Demand loan No. G070B.
Exhibit U-6-53
Interest
Int.
Principal
Date
Debit
Credit
Balance
Interest to
Date paid
Rate
Date
Debit
Credit
Balance
May 22, 1931
500,000
500,000
May 22, 1931
May 22, 1931
May 22, 1931
500,000
The Union Trust Company: Loans, K. V. Painter — Walter 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. It 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 PEACTICES
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 Remain-
ing as Collateral in the Year 1930.
1. Equitv (if anv) in University Hall Apartments, subject to a first mortgage
of $80,000.00. (10838 Deering Ave.)
2. Equity (if anv) in Boulevard Apartments, subject to a first mortgage of
$70,000.00. (10310 Wade Park Ave.)
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 Re-
Subdivision 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 Cedar-
brook Allotment of part of original Warrens ville 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. Boynton 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. (West-
gate 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 liquida-
ing value over a period of time in excess of the amount of Painter's indebtedness, i
yet, at the same time, such collateral cannot be considered as adequate, bankable, j
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 bv 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 m.v 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.)
October 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, No-
vember ISth, 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, Novem-
ber 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
ISth, 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 ad-
vance 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 PRACTICES
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, February
9th, 1931; Baldwin to Painter, February 13th, 1931; Carlson to Painter, Feb-
ruary 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 paym.ent on Painter's loan with that
bank. In consideration of that payment, the New York Trust Company re-
leased 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 indebted-
ness. 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 Com-
pany 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 ac-
count 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 ac-
count 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 Bald-
win 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 Carl-
son 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 ac-
count 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 ac-
count 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 ac-
count 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 Pahiter, 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 iPainter'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 trans-
fer of that amount to the New York Trust Company of New Yorlv Citj' to be used
in payment of Painter's note for $575,000.00 held by that bank. The collateral
to that ol:)lio;ation 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 weU as certain other properties not previously included. Full description
of this real estate is set forth in the pledge agreement, copy of which is 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 re-
appraised 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 pos-
sible 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 particular 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 PEACTICES 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 Rv. Common
600 " Midland Steel Products Co. Common
400 " Gillette Safety Razor Company
100 " Midland Steel Products 8% Cumulatiye 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 con-
tain 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 state-
ment 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. (See
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 ad-
vance 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 investiga-
tion 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, aU 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 securi-
ties 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
6684
2000
1100
600
400
100
100
800
200
100
100
400
100
500
100
The Glidden Companv Common 34, 250. 50
The White Motor Company Capital 16, 000. 00
Chesapeake & Ohio Ry . Common 28, 600. 00
The Midland Steel Products, Common 4, 500. 00
The Gillette Safety Razor Company 4, 450. 00
The Midland Steel Products Company 8% Cumulative
Preferred 4, 500. 00
The American Chicle Company, Common 3, 300. 00
The Richman Brothers Company 28, 000. 00
The Missouri Pacific Ry. Pref 5, 400. 00
U.S. Steel Common 6, 800. 00
The Goodyear Tire & Rubber Company Common 2, 100. 00
Chesapeake Corporation 6, 800. 00
The N. Y. N. H. & H. Ry 3, 600. 00
The United Corporation Common 6, 000. 00
The New York Central Capital 5,500.00
$314, 600. 5a
With the exception of 3300 shares of Manufacturers Trust Company stock
and 2684 shares of Glidden Company Common, all of the aforementioned secu-
rities 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 ta
that bank. (See letter H. S. Gibbons, Assistant Vice President, Chemical Bank
& Trust Company to Baldwin, October 6th, 1931.)
STOCK EXCHANGE PRACTICES 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 arrangeinents 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 fur-
nish 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 lease-
hold 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 Com-
pany 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
3n 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,
rherefore, the bank weakened it's position by this transaction to the amount of
Bl 16,000.00 for Painter's use, benefit, and advantage. (See letters Baldwin to
;he New York Trust Company, October 23rd, 1931; Painter to the Union Trust
Oompanv, 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
;he Union Trust Company and leaves him indebted to that bank to the amount
)f $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
ittention at this time.
Referring again to the letter of R. L. Williams to Painter, dated July 13th, 1931
md relating to interest computations, you will notice that after July 1st, 1931
nterest 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 herein-
before discussed) the interest rate on Painter's indebtedness was arbitrarily in-
;reased to 5%. (See letter Baldwin to Painter, November 10th, 1931.)
Following that increase in his interest rate, Painter made but one partial pay-
nent of interest due on his obligations. January 6th, 1932 he paid $24,269.87
eaving an unpaid interest balance of $12,000.00 due the bank. Since that time
le has made no voluntarj' payments of principal or interest whatsoever.
January 1st, 1932 Painter's interest rate was further increased to 6%. With
ihe exception of the payment noted above, all other interest pa^yments have been
8834 STOCK EXCHANGE PRACTICES
in the form of seizures of dividends on Union Trust Company Capital stock pur-
chased with bank funds for the benefit of Painter.
Painter's attitude toward his creditors is perhaps well illustrated by a trans-
action 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 trans-
actions in condensed form.
In closing this report, I desire to express my appreciation of the service rendered
by Mrs. Ralph W. Emerson and John Nihill, both of the State Banking Depart-
ment. 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
necessarv for a prosecution in this case, but such list will be prepared uijon request
by Mr. Cullitan.
■Respectfullv isubmitted.
(Signed) R. M. Huston,
RoBEET 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 propertv— 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 propertv— 1964 East 66th St.— Value of land
$40,000— Value of building $50,400.00 90, 400. 00
',!
STOCK EXCHANGE PRACTICES 8835
15 — Moses property — 9301 Euclid Ave — Value of lease and
buildings $78, 350. 00
State Road land secured bv First Mortgage 22, 807. 78
8,000 shares Akelev Camera Company @ $138.00 per share. 1, 104, 000. 00
Van Sweringen note due 2-21-32 261, 336. 00
Estimated approximate value $4, 345, 452. 78
Title to real estate under agreement dated May ls(, 1926
53.8547 acres NW corner N. Woodland and Brainard — -SW
corner Brainard & Cedar — Approximate
value per acre 5,000 269, 272. 50
105.7500 acres — West side Lander Rd — East side Brainerd — all
way through — approximate value per acre
3,000 317, 250. 00
24.9870 acres — West side Lander Road — approximate value
per acre 3,000 74, 961. 00
217.8000 " — Lander and Jackson — corner — approximate
value per acre 2,000 435, 600. 00
107.3400 " — SW corner S. Kinsman & Giles Rd— approxi-
mate value per acre 3,000 322, 020. 00
45.5950 " — NW corner Lander and Cedar — approximate
value per acre 4,000 182, 400. 00
33.6700 " — SE corner Brainard & Cedar — approximate
value per acre 4,000 134, 680. 00
3,5000 " — S. Kinsman and Center 75, 000. 00
1.3512 " —Giles and S. Kinsman 18,512.00
.1150 " — Twinsburg 31,500.00
Estimated approximate value title to real estate under
agreement dated Mav 1st, 1926 $1, 861, 195. 50
Vi 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 $8, 226, 648. 28
Formerly my loans have been as high as $2,235,383.00.
Kenyon V. Painter (Signed)
May 21sT, 1931
'8836
STOCK EXCHANGE PRACTICES
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STOCK EXCHANGE PRACTICES
8837
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8838 STOCK EXCHANGE PRACTICES
Kenyan V. Painter — Analysis of loan account
Date
Mar. 3,1928
Apr. 14,1928
Apr. 18,1928
Apr. 26,1928
May
24, 1928
June
20, 1928
July
2, 1928
July
July
16, 1928
28,1928
Aug.
13, 1928
Aug.
Aug.
Sept.
Sept.
18, 1928
23, 1928
5, 1928
10, 1928
Sept.
11, 1928
Dec.
3, 1928
Dec.
Jan.
Jan.
10. 1928
2, 1929
25. 1929
Feb.
20, 1929
Feb.
21, 1929
Mar.
Apr.
May
May
26, 1929
13, 1929
6, 1929
9, 1929
May
17, 1929
May
24. 1929
June
19, 1929
July
July
1, 1929
9, 1929
July
22, 1929
July
25, 1929
Total amount borrowed to date secured by
collateral and a real estate agreement dated
May 1, 1926
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
Additional Collateral pledged— $187,500.00
Certiflcate of participation of New York
Trust Co. loan of .$750,000.00 to Fishers Island
Co. dated 3-9-28
Additional collateral pledged— 250% shares
Akeley Camera Inc
Payment made on State Road Land Co. note
held as collateral to K. V. Painter loan
credited to his eom'l. account of $1,750.00
Proceeds s^le of 150,000 Montank Beach De-
velopment Co. 7's Bonds to the New York
Trust Co., New York
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
Credit to Corporate Trust Dept. for Escrow
deal and acquired the Brainard Cedar parcel
of land from the Brainard Cedar Realty Co..
Credit to com'l. account of K. V. Painter
Collateral released and no payment made on
loan— 250?4 shares Akeley Camera Inc
Additional collateral pledged— 8000 shares
Akeley Camera Inc. Common stock
Payment from the com'l. account of K.V. Painter
Credit to com'l account of K. V. Painter (Fwd .) .
(Forwarded)
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
Sweringen 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
Additional collateral pledged— 100 shares
Workers Trust Co. Johnson City, N.Y
Credit to com'l. account of K.V. Painter
Proceeds of part payment of Van Sweringen Co.
note due 2-21-29. Taken care of by the Cor-
porate Trust Dept
Proceeds of part payment of Van Sweringen Co.
note due 2-21-29. Taken care of by the Cor-
porate 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 Cleve-
land Cliffs Iron Co. Common stock
Additional collateral pledged— 200 shares
Marine Union Investors Inc. Capital stock...
Additional collateral pledged— 500 shares
F. E. Meyers & Bro. Co. Common stock
Additional collateral pledged— 2955 shares
Cleveland ChfEs Iron Co. Pfd. stock
Credit to com'l account of K. V. Painter
Additional collateral pledged— 200 shares
Richman Bros. Co. Capital stock ( Forward).
(Forwarded)
Additional collateral pledged— 200 shares Rich-
man Bros. Co. Capital stock 100 shares
Fleischman Co. Common stock
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..
Debit
$500, 000. 00
71, 250. 00
100, 000. 00
25, 000. 00
60, 000. 00
400, 000. 00
25, 000. 00
25, 000. 00
15, 000. 00
55, 000. 00
80, 000. 00
60, 000. 00
Credit
$150, 583. 34
30, 000. 00
10, 000. 00
20, 000. 00
$168, 829. 01
253, 707. 77
8, 748. 89
Balance
$343, 319. 12
843, 319. 12
843,319.12
843, 319. 12
843, 319. 12
692, 735. 78
763, 985. 78
873, 985. 78
898,985.78
898, 985. 78
898, 985. 78
868, 985. 78
858, 985. 78
838, 985. 78
888, 985. 78
888, 985. 78
1, 288, 985. 78
1, 288, 985. 78
1, 313, 985, 78
1, 338, 985. 78
1, 170, 156. 77
916, 449. 00
907,
922,
977,
1,057,
1, 057,
1, 057,
1, 057,
1, 057,
1,117,
1,117,
$1, 117,
700. 11
700. 11
700. 11
700. U
700. 11
700. 11
700. 11
700. 11
700. 11
700. 11
700. 11
1, 117, 700. 11
1, 117, 700. U
STOCK EXCHANGE PRACTICES 8839
Kenyan 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
Teb. 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 Clifls
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 Sweringen 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 Sweringen Co.
note due 2-21-30. Taken care of by the Cor-
porate Trust Dept. (Forward)
(Forwarded)
Collateral released and no payment made upon
loan: Balance due on Van Sweringen 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. -
Renewal #73308 of previous notes into one loan..
Payment from commercial account K. V.
Painter. Transferred from New York Trust
Co. and credited to K. V. Painter's commer-
cial account of $75,000.00
Credit to commercial account of K. V. Painter.
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 In-
vestors Inc. Capital stock
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
Funds used to partly purchase misc. stocks. -
Credit to commercial account of K.V. Painter
Funds used to partly purchase miscellaneous
stocks (Forward)
(Forwarded)
Credit to commercial account of K. V. Painter
Funds used to partly purchase miscellaneous
stocks..
Credit to commercial account of K. V. Painter
Funds used to partly purchase miscellaneous
stocks
Credit to commercial account of K. V. Painter
Funds used to partly purchase miscellaneous
stocks
Credit
$1, 117, 700. 11
Balance
$217, 700. 11
$100, 000. 00
50, 000. 00
100. 000. 00
60. 000. 00
950, 000. 00
25, 000. 00
40, 000. 00
42, 000. 00
15, 000. 00
$15, 000. 00
20, 000. 00
15, 000. 00
260, 000. 00
950, 000. 00
75, 000. 00
200, 000. 00
40, 000. 00
1, 117, 700. 11
1, 117, 700. 11
1, 117, 700. 11
1, 117, 700. 11
1, 117, 700. 11
900, 000. 00
$900, 000. 00
900, 000. 00
900, 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
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 PRACTICES
Kenyan V. Painter — Analysis of loan account — Continued
Date
Debit
Credit
Balance
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
Purchased a cashier's check #D 286561 on the
Union Trust Co. payable to K. V. Painter
for $1,000,000.00. Check is endorsed and
given to ttie 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
" 12-12-28 --- 200,000.00
" 8-29-29 350,000.00
" 11-6-29 100,000.00
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 Presi-
dent of the Union Trust Co —
Transferred from the New York Trust Co.,
New York, for the account of K. V. Painter.
(See letter dated 10-6-30 from New York
Trust Co.)
Credit to commercial account of K. V. Painter.
Credit to commercial account of K. V. Painter;
Transferred $50,000.00 to K. V. Painter's
Vickers account and balance used to pur-
chase miscellaneous stocks-
Credit to commercial account of K. V. Painter:
Funds used to purchase miscellaneous stocks
(Fwd)
(Forwarded)
Credit to commercial account of K. V. Painter
Funds used to purchase miscellaneous stocks.
Credit to commercial account of K. V. Painter
Transferred $75,000.00 to K. V. Painter's
Vickers account and also purchased 150 shares
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 pur-
chase miscellaneous stocks
Credit to commercial account of K. V. Painter
To date has purchased 181 shares of Union
Trust stock
Credit to commercial account of K. V. Painter
To date has purchased 526 shares of Union
Trust stock
Credit to commercial account of K. V. Painter
To date has purchased 1100 shares of Union
Trust stock
Credit to commercial account of K. V. Painter
Funds used to purchase miscellaneous stocks.
Credit to commercial account of K. V. Painter
Funds used to purchase miscellaneous stocks.
Credit to commercial account of K. V. Painter
Funds used to purchase miscellaneous stocks.
Credit to commercial account of K. V. Painter
To date has purchased a total of 1830 shares
of Union Trust stock
Credit to commercial account of K. V. Painter
To date has purchased a total of 2456 shares
of Union Trust stock
Credit to commercial account of K. V. Painter
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)
(Forwarded) :
Credit to commercial account of K. V. Painter
To date has purchased a total of 3085 shares of
Union Trust stocli
Collateral released and no payment made upon
loan: $2,200.00 note of \V. M. Green
$1, 000, 000. 00
20, 000. 00
100, 000. 00
40, 000. 00
$1, 200, 000. 00
33, 000. 00
100, 000. 00
40, 000. 00
10, 000. 00
50, 000. 00
20, 000. 00
30, 000. 00
50, 000. 00
30, 000. 00
50, 000. 00
40, 000. 00
20, 000. 00
20, 000. 00
10, 000. 00
$1, 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'
STOCK EXCHANGE PRACTICES
Kenyan V. Painter — Analysis of loan account — Continued
8841
Date
Debit
Credit
Balance
Jan.
21, 1931
Jan.
26, 1931
Jan.
Jan.
27, 1931
30, 1931
Feb.
2, 1931
Feb.
9. 1931
Feb.
13, 1931
Feb.
16, 1931
Feb. 18,1931
Feb. 26,1931
Mar. 2, 1931
Mar. 5,1931
Mar. 18, 1931
Mar. 27, 1931
Apr. 2, 1931
Apr. 6, 1931
Apr. 15,1931
Apr. 28,1931
May 1, 1931
May 7, 1931
May 13,1931
May 16,1931
Credit to commercial account of K. V. Painter.
To date has purchased a total of 3375 shares of
Union Trust stock.
Credit to commercial account of K. V. Painter
To date has purchased a total of 3772 shares of
Union Trust stock .-.
Credit to commercial account of K. V. Painter.
Credit to commercial account of K. V. Painter
To date has purchased a total of 3992 shares of
Trust Trust stock. __ __
Credit to commercial account of K. V. Painter
To date has purchased a total of 4657 shares of
Union Trust stock
Credit to commercial account of K. V. Painter
To date has purchased a total of 4837 sliares of
Union Trust stock
Payment from commercial account of K. V.
Painter
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, .
Transferred to New York Trust Co., New York,
to apply on K. V. Painter's loan in New York.
(See letter dated 2-13-31 to New York Trust
Co., New York, by \V. 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 furtlier stated
that the New York Trust Co. would release
the Vart Sweringen 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 Sweringen note was transferred to the
Union Trust Co. but instead of the Van
Sweringen Co. paying the note, the due date
was extended to 2-21-33, and is still unpaid.
See letter 1-30-31 in Painter's file from Gilger
re: Van Sweringen loan
Credit to commercial account of K. V. Painter
To date has purchased a total of 5170 shares of
Union Trust stock
Credit to commercial account of K. V. Painter
Funds used to purchase miscellaneous stocks...
Credit to commercial account of K. V. Painter
Funds used to purchase miscellaneous stocks...
Transferred from the Chemical Bank & Trust
Co. New York, to apply on K. V.. Painter's
loan
Credit to commercial account of K. V. Painter
To date has purchased a total of 5440 shares of
Union Trust stock
Credit to commercial account of K. V. Painter
Credit to commercial account of K. V. Painter
To date has purchased a total of 5978 shares of
Union Trust stock
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 pur-
chased a total of 6240 shares of Union Trust
stock
Credit to commercial account of K. V. Painter
Funds sent to the New York Trust Co. for the
account of K. V. Painter..
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)
Credit to commercial account of K. V. Painter
To date has purchased a total of 6920 shares of
Union Trust stock
Credit to commercial account of K. V. Painter
To date has purchased a total of 7140 shares of
Union Trust stock
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
$30, 000. 00
10, 000. 00
15, 000. 00
10, 000. 00
40, 000. 00
20, 000. 00
$20, 000. 00
20, 000. 00
200, 000. 00
20, 000. 00
60, 000. 00
45, 000. 00
30, 000. 00
10, 000. 00
20, 000. 00
70, 000. 00
50, 000. 00
50, 000. 00
20, 000. 00
20, 000. 00
100, 000. 00
th'** f- » it
$1, 300, 000. 00
350, 000. 00
1,310,000.00
1, 325, 000. 00
1, 335, 000. 00
1, 375, 000. 00
1, 395, 000. 00
1, 375, 000. 00
1, 355, 000. 00
1, 355, 000. 00
1, 355, 000. 00
1, 555, 000. 00
1, 575, 000. 00
1, 635, 000. 00
1, 680, 000. 00
1, 330, 000. 00
1, 360, 000. 00
1, 370, 000. 00
1, 390, 000. 00
1, 460, 000. 00
1, 510, 000. 00
1, 560, 000. 00
1, 560, 000. 00
1, 580, 000. 00
1, 600, 000. 00
1,700,000.00
8842 STOCK EXCHANGE PRACTICES
Kenyan 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
Sept. 1, 1931
Sept. 2,1931
Sept. 16, 1931
Sept. 22, 1931
Sept. 25, 1931
Sept. 30, 1931
Credit to commercial account of K. V. Painter
To date has purchased a total of 7842 shares of
Union Trust stocli
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. Painter,
Credit to commercial account of K. V. Painter
$198,000.00 option price paid for Brooks property
at 4300 Euclid Avenue. To date has pur-
chased 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.
; of K. V
, of 12,618
. Painter
shares of
Credit to commercial account
To date has purchased a total
Union Trust stock
Credit to commercial account
Credit to commercial account
To date has purchased a total
Union Trust stock
Credit to commercial account
To date has purchased a total
Union Trust stock..
Credit to commercial account of K. V. Painter
of K. V
of K. V
1 of 12,938
, Painter.
, Painter
shares of
, of K. V
; of 13,140
. Painter
shares of
Debit
$20, 000. 00
10, 000. 00
25, 000. 00
20, 000. 00
100, 000. 00
20, 000. 00
20, 000. 00
245, 000. 00
20, 000. 00
30, 000. 00
15, 000. 00
575, 000. 00
5, 000. 00
30, 000. 00
40, 000. 00
20, 000. 00
5, 000. 00
20, 000. 00
10, 000. 00
15, 000. 00
15, 000. 00
25, 000. 00
10, 000. 00
50, 000. 00
25, 000. 00
10, 000. 00
10, 000. 00
Credit
$1, 720, 000. 00
1, 730, 000. 00
1, 755, 000. 00
1, 775, 000. 00
1, 875, 000. 00
1, 895, 000. 00
1, 915, 000. 00
2, 160, 000. 00
2, 180, 000. 00
2, 210, 000. 00
2, 210, 000. 00
2, 225, 000. 00
Balance
2, 800, 000. 00
2, 805, 000. 00
2, 835, 000. 00
2, 875, 000. 00
2, 895, 000. 00
2, 900, 000. 00
2, 920, 000. 00
2, 920, 000. 00
2. 930, 000. 00
2, 945, 000. 00
2, 960, 000. 00
2, 985, 000. 00
2, 995, 000. 00
3, 045, 000. 00
3, 070, 000. 00
3, 080, 000. 00
3, 090, 000. 00
STOCK EXCHANGE PRACTICES
Kenyan V. Painter — Analysis of loan account — Continued
8843
Date
Oct. 1, 1931
Oct. 3, 1931
Oct. 4, 1931
Oct. 10, 1931
Oct. 13,1931
Oct. 26,1931
Mar. 7,1932
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 collat-
eral 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 appro.ximately .$266,000.00
Substitution of collateral pledged: 9300 shares of
Manufacturers Trust Co. Capital stock ex-
changed for 9300 shares of Manufacturers Trust
Co. new stock and 9300 shares of Huron Hold-
ing Corp. depository certificates
Debit
$10, 000. 00
Credit
$5, 000. 00
15,000.00
$150, 000. 00
Balance
$3, 100, 000. 00
3, 100, COO. 00
3, 100, 000. 00
3, 095, 000. 00
3, 080, 000. 00
3,080,000.00
2, 930, 000. 00
2,930,000.00
November 14, 1930.
Exhibit U-4-3
kenyon v. painter
3240 fairmont boulevard
shaker heights
cleveland
OHIO
Mr. W. M. Baldwin, President,
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 liame 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.
November 17, 1930.
Exhibit U-4-4
kenyon v. PAINTER
3240 FAIRMONT BOULEVARD
SHAKER HEIGHTS
CLEVELAND
OHIO
Mr. W. M. Baldwin, President,
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 PEACTICES
Exhibit 17-4-5
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>^.
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 70>^ 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 @ 69^4. 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,
3340 Fairmont Blvd.
Cleveland Heights, O.
Dear Mr. Painter: We wish to advise that we have today charged your ac-
count $7,080.00 in payment for purchase of 100 Shares Union Trust Company
Stock at 70}4 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 PKACTICES 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 Mr. 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 De-
cember 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,
3340 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.
WMB:EMS
President.
Exhibit U-4-10
[Copy]
January 14th, 1931.
Mr. Kenyon V. Painter,
3340 Fairmount Blvd.,
Cleveland Heights, 0.
Dear Mr. Painter: I have today purchased for your account 489 Shares
Union Trust Company at the following prices:
15 Shares @ 70}^ plus brokers' commission
474 " @ 69K "
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 any figures as 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 unim-
proved, 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 prop-
erties. 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 sub-
stantial 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, 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 no knowledge concerning the release of collateral to Painter,.
and did not hear the matter discussed, his permission was not asked,,
nor the matter mentioned to him.
STOCK EXCHANGE PRACTICES 8847
5. He states that the Painter transactions were handled by Mr. 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 memoran-
dum made in Mr. Nutt's presence. I asked Mr. Baldwin to call.
Noted: Mr. Rogan
Mr. Lavlin
Exhibit 11-4-13
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 after-
noon 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 sorrj' 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 yesterdaj^ 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
69J4, of which I bought for you 474 Shares at that price, and previous to the
execution of that, 15 Shares at 70/2, so that yesterday I bought a total of 489
Shares. It is quite apparent to me that this particular holding was some dis-
tressed 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>i
I have charged your account todaj^ 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-4-14
[Copy]
January 20th, 1931.
Mr. Kenyon V. Painter,
3^40 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 office.
175541— 34— PT 20 8
8848 STOCK EXCHANGE PRACTICES
Exhibit U-4-15
[Copy]
January 26th, 1931
Mr. Kenyon V. Painter
32/^.0 Fairmount Blvd., Cleveland Heights, 0.
Dear Mr. Painter: 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,
WMB:EMS President.
Original carbon copy of this letter is in Confidential file in Mr. Cox's office.
Exhibit U-4-16
February 5th, 1931.
Mr. Kenyon V. Painter
3240 Fairmount Blvd., Cleveland Heights, O.
Dear Mr. Painter: 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 70}^ and
low 70.
Ver}^ truly yours,
WMB:EMS President.
Original carbon copy of this letter is in Confidential file in Mr. Cox's office.
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)^, 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 op 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 state-
ment 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-
I
:1B-K> FAiKMO.VT I«01 I-Vr.'AKC
SlIAKCn MKK.HTH
, <i.KVBi^Ni> Taly 16, 1'321
Ur. f. M. Bftldwln, PreildM',, """^
Tha Union Trust Co.,
Cleyjland, Ohio,
Doer Mr, Baldwin :-
On July 13th I arote you as follows:-
■As I am leaving for Europe on July 16th, I wish to rsrlfy the open
orders which you have to purchase additional stock of The Union
Trust Company, as followa:-
500 ahspes 0 57-1/4
100 • O 57-3/e
100 " O 57-1/2 ;
100 • C 57-5/8
100 " 0 57-3/4 I
£80 ■ O 59 y
I hereby authorize you during my absence to purchase any addlt-onal ,
■ amount up to _^_^__ Shares at auah prices as you may determine from
time to tl3ie»"
It has occurred to me that this might be asking you to
assuae more responsibility than you cared to and tlierefore I will csncel the letter
and also ask you to cancel buying orders in Union Trust and then^o place the following.
7,. ..'I .:.r^v> ' " •'
BUT 'w..'-' ^t
2,000 Shares Union Trust 0 58 H /- '' ' *1
2,000 " ■ ■ o 57-^ j^ J.'-*-
4,000 Chesapeake 4 Ohio O 27
3,000 Missouri Pacific Prefurr^d 0 50 .
a.OOO U. 3. Steel O 88 i, ^^^v_^ C'^^,
All stocks bought will be held as security until I return
and if my present note is used up, I will sign aagiiiwr-or'SrraiiSB^-Vt in any way
satisfactory. If you hare any suggestions tp^-aS^e as to the aboTe crlSfrs, please
adTise me.
, Slnffs^ely yours.
This letter will receive our ett-untlon.
Exhibit U-4-18
SepteaabGr 30, 193S
Mr. W, M. Baldwin, President,
The Union Trust Company,
ClOTelana, Ohio.
Dear Mr. Baldwin :-
The Akeley CoiTipany writes me that
equipment to the Fox Film Corporation.
Tliey tell me that they understand
fro-m a meeting between the Western Electric Company and the
7ol corporation, that they will be in t«e market for about
fifty (50) outfits.
We need all the influence we can get
together to try and put over the sale of our e.ulr^ent to thja
ItVuld be of great benefit to mo in a financial way, if tne^^
Akeley Company can_get this order, ^^ -..^*
' '^^Mr ^g Banking ijj.t«-6'sts' represented in
interests, it would bear gre.t influence in the sale of this
equipment.
Tbe Ateley- equipment 8tand8_way_ahead
-- ..V... .nmr^^tltor In quality^' psrfojBAa«-SSJTrice^~~^
would greatly appreciate it if you^>^d «PPf f \f ^!,?f JJ^ )
Sincerely,
l^-^-
,^
Exhibit U-4-19
CLEVELAND, OHIO.
IJOQ^QQQ*
€>n Dtmanl). for value received L promise to pay to the order of
THE UNION TRUST COMPANY
Thre* hundred thousand k no/lOOth» ------_._._____
" " " ■■■'■;; --■ — — ,r_D0Ll.AR»
AT ITS OFFICE IN THE CITY OF CLEVELAND. OHIO, WITH INTEREST AT THE RATE OF_*L„
PER CENT PER ANNUM, PAYABLE QUARTERLY ON THE l.t DAYS OF JANUARY, APRIL, JULY AliFScToiii^
UNTIL PRINCIPAL IS PAID. ;
<h< d..m.nt «f .h' . .„H H "^ ,, "ZT """ ""■•"*■ """'»" "* •"'•"• '" "I" ""P'"/ •• coll.ter.l Mcurlty for
Lr,r^r. \ ^T ^': "' "^"'' "*" "«"'"•■■ "« «n.r.ct.<i or ..i.tino. and whether Ih. ..m. may h.y. be" or .hill b.
p.rt,c,p.ted In whole or p.rt to other, by tru.t .greement or otherw,.,. or in .ny m.nner acquired by or .ccrutna t ' Mid
.hT?oMo'w7na p™;.'?,;'".'""'" *'" "" "'"'•'•'««'' " "y ".iBn-ent or by endor..m.nt .1 (t by \n, on, ^homwetlr.
Titlfi^to,Seal Eatate Und«r /isr-'ewnt dated Julj:.. 15.. 153i
22,807.78 Sote The State Head Land Co. secured by 1st Utg.
8.000 sh» The- .A.keley Ga.mep« Inc. Com. - ,-_
•7-50.Ot! Note of A. R. Corlett due 12/15/29
7CX!;1X! Note of Charles ?:. Clark due 1/12/30 — " — -"
■200 -5hs Th.e Niagara Khare Cofp of Vary land Com Teaji Qt^
^arrant to -Subsorile for 20 shs The Niagara Share Corp of Mar^Oand Com.
J^anufftcturers Tnjfft Co. Cap,
6/6fl4 SMS The trti^aer: Co. "Trass; —
__g.,000 sha The ?;hite i!otor Co. Car>.
to«rt>i*r wUh «U oth .
I- Any S.<id«. ,. ..
nyin whk-h lh« un<}*r«i«f»f^ m* «n» iracr**!. On the no«-i,firf-.»rni«nc« of uUi protnMW
»ti». and M -i (.Vmyar.y t« twfwtry gi*»B fyll pew^r
" * or fc^dkicR. lb«r«o. Urrtoch «oj itock
once Ir »r.7 R«w«p»i>«' pri&U4 la tbt
KsM uMi a«vurstw« or priHMrty »r aajr
-^ «r,d ntWaH. U^cm »(i7 iueb mU,
., -,.., ..^ ..-. . of ih* ur<i««Bi» ul tutii m!« u u .h*JJ Amm pr«i»« u>w»«l
iii:!)t\4 lo WLUI L^mranr *lwth«r dii* or not du#, rr*siinitit th* «w»r»itti to tte
r «ny part.
tit idler: ue»«at .
Miimil
ji^aiitMBaai
K. V. Palmer
■wr» »nd wBivt »:j righ;
>i__i_
Exhibit U-4-23(1)
F«r vatunbU e«n«tdtr*tion. ail (wrvont, fifrn* itiMl cvrporat^en*, who** nam** now app««r er «ff haraifUr writttn baiow, imha.
f, ahaii b« jointly and aavaratiy boundl, abto^iitaly and unconditionairy guarantat tha paymant in lull af tha
■jf .ixantion Ut«r«of. in wt«ol« or any part, whan dua, and haraby watva praaantmant, damand. prolaat and netica
t-paymant, and contant to any antanaion or axttnaiona In who)* or in pari, wUHout notlca tharaoF.
The partona. flrma and corporat'ont. whota n«m»i art wrtttan bafow, haraby authortia any attorn«y-at-)aw in tH% fttata of Onlo
ly othar itala or Tarrltery In tn* Unltad SUtea at any tim^ aftar tno «wm of tha within not* bacomai dua, to appaaf for t^a
riignad. In -any court of r«cord in th« Stato «f O^'O or any Q^tiar Statt or Tarritory of tha Unitad Stataa. and to wa>va tha iaaufna
•arvka Of proctaa and c«nfa«a Judgmant aB»"nat tha uodarfigned in favor of tna payca Or any ho:d«r of tnia noto fc tha amount
nq dua and th« casta of tu't. and than
appaat and atay of <
Co.iiCom.
— 4<»~^b* Th* iit Mttk 4^«^y ^^^■
9W ?feg..Ilig„..£l<Ms&
Exhibit U-4-23(2)
STOCK EXCHANGE PRACTICES 8849
ment of a l^ill of exchange, promissory note or other commercial paper, either
for the benefit of himself, or such person, firm or corj^oration, 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 j'ears or both,
or if the value be less than that sum, be deemeci 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 IS, 19S1.
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 here-
with 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
COPY
Exhibit U-4-22
the union trust company main office
Cleveland, October 8th, 1931.
Mr. K. V. Painter,
S240 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 vour 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. 2S, 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 1 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. Hope to l^e back in a few days.
Sincerely
K. V. Painter.
Exhibit U-2-1
The Union Trust Company
extracts from report op 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 Companv 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 comparedwith
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,
GRH:A
G. R. Herzog.
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 Companv 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
Metropohtan Utilities Companv 2, 100, 000. 00
The Higbee Company 317, 000. 00
Total 12, 334, 901. 21
The Glenville 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 16tli, 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,
Broadwaj^, Orange and Ontario, and intersecting streets as the Sjmdicate may
think it wise to bu}-."
Pursuant to trie above, the Van Sweringen interests purchased the lands ac-
quired by the Syndicate and large profits were realized bj' the members thereof,
most of whom at one time or another served as directors of The Union Trust Com-
pany.
The Vaness Company:
This company w^as 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.
The original shareholders were as follows:
J. R. Nutt 16,250 shares
C. L. Bradley 16,250 shares
Warren S. Havden 16,250 shares
Otto Miller. _1 16,250 shares
O. P. and M. J. Van Sweringen 97,500 shares
Total authorized 162,500 shares
An agreement was entered into as of July 15th, 1922 bj^ 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 tlie 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 PRACTICES
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
O. P. and M. J. Van Sweriiigen 130,000 shares
Total 162,500 shares
A new agreement w^as 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, inaicate 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 Sw^eringen covering
purchase by the Van Sw-eringens 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 0. 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 Sweringen,
president of The Vaness Company, given by them at the hearings before the Com-
mittee 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, w^e
have listed the directors of The Union Trust Companv, 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 witli their then direct liability to The Union
Trust Company for loans over $50,000.00 and the direct liabiUty over $50,000.00
of corporations, individuals, etc., in which the directors may have beex^ interested.
Also designated thereon will be found the directors who were members of tlie
Executive, Discount, Finance, Securities and Investment, and Trust Commit-
tees.
The comments submitted herewdth 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 wdiich the participation of The Union Trust Com-
pany amountea 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 Vairess Company as
follows:
Date
Loan
No.
Amount
(1)
(2)
(3)
(4)
(5)
December 28, 1927.
February 17, 1928..
February 20, 1928..
January 14, 1928. ..
March 1, 1928
26399
29160
29162
27338
29700
$250, 000. 00
500, 000. 00
500, 000. 00
500, 000. 00
250, 000. 00
Total.
$2, 000, 000. 00.
The collateral security for the I oans 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
STOCK EXCHANGE PRACTICES
8853
93,300 " The Terminal Properties Co. Conunon
(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 afore-
mentioned 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:
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
New York, Chicago and St. Louis RR Common. .. .
18,000 shares
0.
The Terminal Properties Company 1st Preferred...
32,600 shares
32,631 shares.
The Terminal Properties Company 2nd Preferred
27,300 shares
30,255 shares.
The Terminal Properties Company Common .
93,300 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
Par Value . .
$3,100.00
2nd Preferred
Par Value
.... 295,500.00
Common
Par Value
230,000.00
Total par value
$528, 600. 00
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 Company 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 b}' 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 Dela-
ware 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 PEACTICES
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 out-
standing 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 61,980 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.^ 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 liabihties $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 Jul}^ 27th, 1928 and Novem-
ber 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 Com-
pany 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 $9, 000, 000. 00
The collateral securing the $9,000,000.00 note was as follows:
(1) 32,893 shares The Terminal Properties Co 1st Preferred.
(2) 33,187 shares The Terminal Properties Co 2nd Preferred.
(3) 99,222 " The Terminal Properties Co Coimnon.
(4) 122,000 " The Van Sweringen Company Common.
(5) 100 " The Cleveland Terminals Building Company. Common.
STOCK EXCHANGE PRACTICES
8855
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 47, 233
O. P. and M. J. Van"Sweringen 51, 980
C. W. Stage 3
J. P. Murphv 3
D. S. Barrett, Jr 3
99, 222
(4) The Terminal Properties Company 121, 995
. Unidentified 5
122, 000
(5) Tlie Terminal Building Company 89
John P. Murphy 1 2
D. S. Barrett, Jr 2
M. J. Van Sweringen 2
O. P. Van Sweringen • 2
Ralph H . Sharpe 1
C. L. Bradley 2
100
Exhibit 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:
July 27, 1928 Loan No.
37659 By The Union
Trust Co. to The
Vaness Co. Amount
$2,000,000.00
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
The Terminal Properties Company 1st Preferred
The Terminal Properties Company 2nd Preferred
The Terminal Properties Company Common
The Van Sweringen 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 Companj^ 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
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
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
The Terminal Properties Co.
1st Preferred.
The Terminal Properties Co.
2nd Preferred.
The Terminal Properties Co.
Common.
The Van Sweringen Company
Common.
The Cleveland Terminals Build-
ing Company Common.
Van Sweringen Corporation
Common.
32,631 shrs.
30,255 shrs.
95,000 shrs-
32,893 shrs-
33,187 shrs-
99,222 shrs...
122,000 shrs.
100 shrs
122,000 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 Com-
pany 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 subsidiar}', 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 Cleve-
land 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 bv The Guaranty Trust Companv in connection with the sale of the
$30,000,000.00 Five year 6% Gold Bonds,^l, 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 Cor-
poration 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 approximatelv all of the Van Sweringen Corpora-
tion 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 Com-
mittee, page 6000, under date of Mav 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 PRACTICES
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
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
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
Oct. 30, 1930,
Loan No. 78310,
By The Union
Trust Co. to
0. P. and M.J.
Van Sweringen
$2,800,000.00
Participation
in
$9,000,000.00
Loan
The Terminal Properties Co. 1st Pre-
ferred
Shrs.
32. 631
30, 255
95, 600
Shrs.
32, 893
33, 187
99, 222
122, 000
100
Shrs.
Shrs.
The Terminal Properties Co. 2nd Pre-
ferred
The Terminal Properties Co. Common
The Van Sweringen Company Com-
mon - -
122, 000
The Cleveland Terminal Building Co.
Common.—
Van Sweringen Corporation Common
600, 000
The Vaness Company Common
97, 500
Exhibit U-2-11
No reasons are given in the corporate minute books of The Union Trust Com-
pany and The Guardian Trust Company for the retirement of The Vaness Com-
pany 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 testi-
mony 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 testi-
mony 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 EXCHAXGE PRACTICES 8859
Mr. Pecora (reading): The Vaness Company,
Terminal Tower, Cleveland,
New York, N.Y., October SO, 1930.
Exhibit U-2-12
Messrs. J. P. Morgan & Co.,
28 Wall Street, Neiv 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 liave.
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 obli-
gations, 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 obhgation owing to The Vaness Com-
pany 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 cer-
tain real estate or real estate interests between The Terminal Building Co., sub-
sidiaries 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 Cleve-
land 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 develop-
ment 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 fea-
tures 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 Companv, 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 oifice?
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
(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 con-
tained 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, to-
gether with other assets, were removed from the portfolios of The Vaness Com-
pany and its subsidiary and pledged to secure the notes of J. P. Morgan & Com-
pany.
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 Companv on their $2,800,000.00 participation totaled $391,774.64 at
September 1st, 1933.
STOCK EXCHANGE PRACTICES 8861
Exhibit 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 (6 1739- 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 Corporaf n, 6,000 shares @ 22/8 132, 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, 0. 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 @ 20^8 28, 175. 00
Niagara & Hudson Power Corporation, 4,000 shares @, 12}i_- 48, 500. 00
Peerless Motor Car Corporation, 33,000 shares @ 3% 123, 750. 00
Standard Brands, Inc., 5,000 shares @ 16/ 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 Companv Common 16, 250
Metropolitan Utilities 10, 296
And equities in shares of stock also pledged on Loan by The Union Trust Com-
pany, Amount $1,422,500.00 (Participation in $3,100,000.00 Loan) to Metro-
politan Utilities, Inc. as follows:
Shares
Traction Stores, Common 100
Cleveland Traction Terminal Common 100
Cleveland Interurban Railroad Common 1, 465
Cleveland and Youngstown Railroad Common 5, 800
these are also so-called "Van Sweringen Controlled."
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 Cleve-
land 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,
TJNITED 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 O. 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 O. 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 invi-
tation 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. Whitnev, 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 Repubhcan?
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 PRACTICES 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 prei^aration 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 general way did I do that, make any
inquiries.
Mr. Pecora. Will you give the names of all other individuals with whom
you say 3'ou conferred, or whom you consulted?
Exhibit U-2-18
Mr. Van Sweringen. 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. Murpliy, Mr. Bernet, I 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 sav to your credit that a^ou 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 m3'self 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 3'ou say in your prepared statement as follows:
"hi 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 "we" 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 actuallv 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
ciates.] 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 corjwrtaion 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
capita] stock of the Nickel Plate Securities Corporation?
Mr. Van Sweringen. Our interests, as I have doscribed them heretofore.
Mr. Pecora. What is that?
Mr. Van Sweringen. Our interests, as T liave described them heretofore.
Mr. Pecora. Well, by your interests, whom do you mean?
Mr. Van Sweringen. I 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 other than your own ininiedi.ate
grou]) or interest?
Mr. Van Sweringev. In the small percent that I have just noted.
STOCK EXCHANGE PRACTICES 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 associate*
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 recol-
lection.
Mr. Van Sweringen. T 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 j^our 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 Sweri^igen 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 j^ou 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 <fc
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 comjianies 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 vv-as 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?
8S66 STOCK EXCHANGE PRACTICES
Mr. Van Sweringen. That is very awkwardly put, if you don't mind. [Laugh-
ter.] I wouldn't attempt from recollection to undertake to give you the trans-
action 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 com-
prehensible 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 com-
panies 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. Lat 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. 1 think he had better answer that.
Mr. Pecora. Do j^ou 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 wants 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 Swer-
ingen 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,
and Mr. Barrett — if I had a list of the shareholders I could tell j'ou 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 copy 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 down the list, and when you come across a name that was recommended
by the Van Sweringen interests, will you indicate that name to the 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 was 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 Sher\\in, 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. Sub-
ject 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 Swerincen. I was its president, and
Mr. Pecora (interposing). You were its president?
Mr. Van Swertngen. Yes, sir. And Mr. C. L. Bradlev, 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 com-
menced 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 stuck of the xVUeghanv Corporation, also at $20 per share,
and that the\- invited certain persons whom you named on yesterday to sul:)scribe
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 sul)scribe
at $20 per share sliould be extended, were Mr. Nutt and Mr. Bradley, two of your
associates. What was the occasion for }'our 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 21^ million shares directly at $20 a
share?
Mr. Van Sweringen. So that they might themselves have those individually,
.apart from the Vaness CjO.
Mr. Pecora. Couldn't they have had those out of the 2^ 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 2V4
million sliares 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 Swehin'gen. It was 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 well 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 satis-
fied, although it was our tliought 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
jiot 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 necessar}^ 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 Me were all looking forward to the future.
Mr. Pecora. Well, couldn't the.y 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 thej' 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.
Mr. Van Sweringen. I do not really know. I don't remember.
comments relative to the minutes of meetings of the discotjnt 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, Direc-
tor— 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, Execu-
tive 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 com-
mittee, 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 mem-
bers 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 was financially interested 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 com-
mittee 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 resolu-
tion 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.
Exhibit U-2-28
The fourteen who were present at both the Director's meetings (August 14th
and September 11th, 1928) areas follows: J. R. Nutt, Executive Committee-
Discount Committee; Geo. A. Coulton, Executive Committee — Discount Com-
mittee; W. M. Baldwin, Executive Committee — Discount Committee; Thomas
P. Robbins, Executive Committee — Discount Committee; E. F. Carter, Geo. P.
Comey, P. B. Fretter, Geo. H. Hodgson, Emii Joseph, Robert C. Norton, E. J.
Siller, Henry W. Corning, W. P. Belden, Alexander C. Brown.
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 Com-
mittee; 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. Farns-
worth, 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. Harden, Director — Executive Committee; Emil
Joseph, Director — Executive Committee; Kenyon V. Painter, Director — Execu-
tive 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 Connnittee; W. H. Baldwin, Executive Committee —
Finance Committee; Thomas P. Robbins, Executive Coinmittee — Finance*
Committee; F. P. Root, Executive Committee — Finance Committee; E. R.
GrasseUi, Executive Committee — Finance Committee; F. H. Ginn, Executive
Committee; W. A. Harshaw, Executive Committee; W. S. Hayden, 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 ma-
jority. 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 l^e made to an officer of the bank, or to a syndi-
cate 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 sub-
stantial 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, Direc-
tor— Executive Committee — Finance Committee; C. E. Farnsworth, Vice Presi-
dent; 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 Com-
mittee; 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. Hayden, Director — Executive Com-
mittee; 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 Com-
mittee; F. H. Ginn, Executive Committee; W. S. Hayden, 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. H. 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 SWER-
INGEN, 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 Com-
mittee; J. R. Kraus, Director — Executive Committee — Finance Committee;
W. M. Baldwin, Director — Executive Committee — Finance Committee; E. R.
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 Com-
mittee; 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. Robbins, Exec-
utive 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, Di-
rector— Executive Committee; W. S. Hayden, Director — Executive Committee;
Emil Joseph, Director — Executive Committee; John A. Kling, Director — Exec-
utive Committee; E. J. Kulas, Director- — Executive Committee; Kenyon V.
Painter, Director — Executive Committee; Windsor T. White, Director — Exec-
utive 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, Execu-
tive Committee — Finance Committee; Otto Miller, Executive Committee —
Finance Committee; Thos. P. Robbins, Executive Committee — Finance Com-
mittee; F. P. Root, Executive Committee- — Finance Committee; W. A. Harshaw,
Director — Executive Committee; W. S. Hayden, Director — Executive Com-
mittee; Emil Joseph, Director — Executive Committee; John A. Kling, Direc-
tor— 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 Commit-
tee; 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, Di-
rector— Executive Committee — Finance Committee; F. P. Root, Director —
Executive Committee — Finance Committee; Allard Smith, Director^ — Executive
Committee — Finance Committee; F. H. Ginn, Executive Conunittee; Emil
Joseph, Executive Committee; Kenyon V. Painter, Executive Committee;
Windsor T. White, Executive Committee; Geo. P. Comev, 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-1 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 com-
mittee's unanimous approval of the minutes of the Finance Committee Meetings
from October 27th, 1930 to November 1st, 1930. Minutes of the P^xecutive
Committee under date of November 10th, 1930 contain approval of all loans aa
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, Maij 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 tele-
phone conversation pertaining to it on Fridaj^ of last week, the stock held by
you in The Vaness Corporation, as Trustee for the participants in the Nine-
Exhibit 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 establish-
ment 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 Cleve-
land 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 Cleve-
land banks, which note bore the guaranty of the Vaness Company, were sur-
rendered, 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 Novemljer 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 outstand-
ing 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.
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-c
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 (?>
JSJr:W
list
The Vaness Company
1,350,000 Shs. Alleghany Corp. $30 Warrants
655,892 " Alleghany Corp. Com.
765 " Alleghany Corp. Pfd. Ex Warrants
2,400 " Alleghany Corp. Pfd. $30 Warrants
1,230 " Alleghany Corp. Pfd. $40 Warrants
8876 STOCK EXCHANGE PRACTICES
40,393 Shs. Cleveland Railway Co. Com. C/D
10,900 " Erie R.R. Co. 2nd Pfd.
3,000 " Missouri Pacific R.R. Co. Com.
3,300 " Chesapeake Corp.
5,000 " Otis Steel Co. Com.
8,260 " Midland Bank of Cleveland
1,244,580 " Van Sweringen Corp. Com.
122,000 " Van Sweringen Company
17,000 " 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: Li 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 Trea-
surer 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 inay 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
• r lis mt} S3 mved by 1409 shares of 1 277 Euclid Rsalty Co. stock which is also held as collateral to another
note for $250,000.00.
STOCK EXCHANGE PRACTICES 8877
various holding companies (sucli as Cliesapeake Corporation, Alleghany Cor-
poration 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 projects, there certainly
was no excuse for taking the marketable collateral from the Union Trust Com-
pany $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 col-
lateral 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.
Ver.y 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
17,999^2 shares Cahmiet 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 Companv on participation of
$1,422,500.00 in a loan of $3,100,000 to Metropolitan Utifities, Inc.
Finance Committee
R. S. Crawford,
Secretary.
RSC (initialed in pencil)
WMB
8878
STOCK EXCHANGE PRACTICES
EXHIBIT F
Cleveland, Ohio, May 10th, 19S0.
The Union Trust Company,
Cleveland, Ohio.
Gentlemen: Reference is made to The Vauess 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 Companj' 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 U-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,
The Guardian Trust Company.
By J. A. House (Signed),
President.
Participation $2,500,000.00.
Participation $1,200,000.00.
Participation $3,300,000.00.
The Midland Bank,
By E. E. Barker (Signed),
Vice President.
The Cleveland Trust Company
By Harris Creech (Signed),
President.
"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 conmion 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 accom-
panied by certificates of authority to pledge signed l>y the respective stockholders
and also received herewith, and said certificates are issued in the following names
and endorsed in blank —
Certifi-
cate num-
ber
In name of
Number
of shares
Certifi-
eate num-
ber
In name of
Number
of shares
0
John P. Murphy .
2
2
2
2
9
10
11
■
Ralph H. Sharpe
1
4
D. S. Barrett, Jr
The Terminal Building Co..
r. L. Bradley
89
M. J. Van Sweringen
0. P. Van Sweringen
2
8
The Vaness Company,
By J.J. Anzalone (Signed),
Ass't. Treas.
"5-10-30 Rec'd the substitute collateral described above.
The Union Trust Co.
Bv W. J. O'Neill, V.P." (in ink)
;
STOCK EXCHANGE PRACTICES 8879
Exhibit U-4
September 17, 1931.
Mr. O. P. Van Sweringen
Terminal Toiver Cleveland, Ohio.
My dear Mr. Van Sweringen: In accordance with our telephone conversa-
tion, 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 2}^% per annum.
Inasmuch as the Alleghanj^ 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 tliis 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 Cleve-
land 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 speci-
fically one obligation of $4,000,000. He also said that he thougnt this action
warranted the ^'aness 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. Murj)hy said that the transactions showing the authority of Metropolitan
Utilities to permit the pledge of its assets by 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 with 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 truh' 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 aiid we are forwarding the enclosed
copy to you at Mr. Painter's suggestion.
Yours very truly,
L. C. GiLGER, Assi. Secretary.
LCG:HK
17.5541 — 34 — px 20 1(1
8880 STOCK EXCHANGE PRACTICES
Exhibit U-7
October 27, 1928.
The 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-U
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 bj^ Edward J. Falkenstein, accountant-
examiner for the Special Banking Committee of the State Senate, at its hearing
Friday respecting the switch in collateral behind the Van Sweringen loans at 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 im-
portant testimony.
The history of these loans and the collateral switches is rather involved, but
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
$5,000,000.00, secured by 10-29-29 market value
32,000 shs. Cleveland Railway Co @100 $3, 200, 000
6,500 " Midland Bank 465 3,022,50
30,000 " Alleghaney Corp., Com 20^8 618,750
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 Corpora-
tion (market was 19>'2— 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 " StandardBrandsInc.com 16>4 81,250
3,000 units Western Reserve Inv. Corp. Com. 85 255, 000
1.400 shs. Newton Steel Co., Com 20^2 28,700
33,000 " Peerless Motor Car Corp. Com. __ S% 123,750
6,000 " United Corp. Com 22K 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. Indicated value $100.
STOCK EXCHANGE PRACTICES 8881
and equity in tlie following, subject to a previous pledge under Metropolitan
Utilities Inc. $3,100,000 loan:
100 slis. 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-lla
At this time there was releaseed from collateral held behind this loan the fol-
lowing securities:
market value 10-30-30
32,000 shs. Cleveland Railway Co @ 77 $2, 464, 000
8,260 " Midland Bank 300 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 col-
lateral 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
(( a
■ $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 " ClevelandterminalBuildingCo.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-llb
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:
"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.
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 finan-
cial 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, AUeghaney 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 devel-
opment 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 per-
mitted 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 Com-
mittee. 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 accu-
rately 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 Railwav 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 Com-
pany 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 obliga-
tions 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 pro-
posed 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 Swerin-
gen, 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 col-
lateral 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 !>2 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 securit}^ 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 mar-
ket 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 Utihties, 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 prop-
erties 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 pavment 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 stand-
point of collateral alone, as is evident from the information just given, this so-
called "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 deci-
sion or action of one or two officers, but was the decision of the Finance Com-
8884
STOCK EXCHANGE PEACTICES
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 tlian 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 cus-
tomers whose operations, capabilities and resoiu'ces 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 stand-
point 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 Com-
pany 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 Swerin-
gen 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 AUe-
ghany 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 onl)')
STOCK EXCHANGE PRACTICES 8885
Exhibit U-14
The Union Trust Company,
Cleveland, Ohio, February 6th, 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. Kraus,
Chairman The Union Trust Company,
Cleveland, Ohio.
Dear Mr. Kraus: 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 provid-
ing 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 Com-
pany common stock pledged to the loan of $1,200,000.00 shown among the liabili-
ties 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. 0. P. & M. J. Van Swer-
ingen in whole or in part $25,000 par value of The Vaness Company 7% pre-
ferred 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 EXCHANfiE 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 paj' out the obliga-
tions 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-15c
contingent liabilities
Guarantee of The Vaness Companv $18,250,000.00 note to J. P. Morgan &
Co., dated October 31, 1930, due May 1, 1935.
Guarantee of The Cleveland Terminals Building Companv $23,350,000.00
note to J. P. Morgan & Co., dated October 31, 1930, due May"l, 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 Na-
tional parcel, known as 241 Euclid Building, and all of The Union Trust Com-
pany'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 an-
num. Fee option purchase price $280,000 to May 1, 1939. If option is not
e.xercised 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; prin-
cipal, 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 Com-
pany, covering rental of the concession area and traction facilities. Principals —
The Vaness Company and The Cleveland Traction Terminals Company.
STOCK EXCHANGE PRACTICES
Exhibit U-15d
8887
Apr 12, 5 13 PM 1933
O. P. & M. J. Van Sweringen statement March SI, 1932
ASSETS
The Vaness Company Common stock:'
113,750shares out of a total of 162,500
shares - —
Real Estate:
Shaker Lander Participation.
Other Real Estate.
Listed Securities (at cost)
Accounts Receivable (The Vaness Com-
pany)
Miscellaneous Assets
Cash
Total assets
LIABILITIKS
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
Book Cost
3-31-32, $112.28
per share
$12, 771, 499. 87
340, 275. 45
3£0, 400. 53
20, 471. 40
158, 666. 43
2, 090. 49
17, 405. 75
$13, 660, 809. 92
Value 12-31-31,
$167.59 per sh.
(a)
$19, 063, 362. 50
340, 275. 45
350, 400. 53
20, 471. 40
158, 666. 43
2, 090. 49
17, 405. 75
$19, 952, 672. 55
$25, 200. 00
14, 686, 000. 00
423, 638. 04
643, 444. 33
9, 254. 25
$15, 787, 536. 62
$2, 126, 726. 70
$13, 660, 809. 92
$25, 200. 00
14, 686, 000. 00
423, 638. 04
643, 444. 33
9, 254. 25
$15, 787, 536. 62
$4, 165, 135. 93
$19, 952, 672. 55
Value 10-30-30,
.$330.53 per sh.
(a)
$37, 597, 787. 50
340, 275. 45
350, 400. 53
20, 471. 40
158, 666. 43
2, 090. 49
17, 405. 75
$38, 487, 097. 55
$25, 200. 00
14, 686, 000. 00
423, 638. 04
643, 444. 33
9, 254. 25
$15, 787, 536. 62
$22, 699, 560. 93
B, 487, 097. 55
Value 9-30-29,
$931.62 per sh.
(a)
$105, 971, 775. CO
340, 275. 45
350, 400. 53
20, 471. 40
158, 666. 43
2, 090. 49
17, 405. 75
$106, 861, 085. 05
$25, 200. 00
14, 686, 000. 00
423, 638. 04
643, 444. 33
9, 254. 25
$15, 787, 536. 62
$91, 073, 548. 43
$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:
Maiket 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 apprai.sal 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.
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 m&
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 cliecks 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 & Com-
pany. (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 per-
sisted 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 Satur-
day, 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 PKACTICES 8889
Exhibit 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 follow-
ing 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.
In Re 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 par-
ticularly 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 necessit}' 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, Conservalor.
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. O. 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 individu-
als 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 con-
tend at the present time in connection with their railroad operations are the
Alleghany Corporation bonds due in 1950 and the Missouri Pacific reorganiza-
tion. Concerning the former Mr. Barrett said that with the increased dividends
payable by the Chesapeake & Ohio to the Chesapeake Corporation and the possi-
bility 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 19f0. 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 pri-
marily 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 Marciuette ties in very closely with the Chesapeake & Ohio, dis-
tributing West Virginia coal to all parts of Michigan.
The Nickel Plate Railroad and the Erie Railroad have been showing gratifying
improveirent 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 85ji a barrel as
compared with 15 to 200 a barrel before proration.
STOCK EXCHANGE PRACTICES 8891
Concerning the debts of the Daisy Ilill Company, Mr. Barrett explained
vohintarily that sonie years ago the Van Svveringen Company and the Messrs.
Van Sweringen personalh^ were buying property between Warrensville 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 t)e 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, 1933
file o. p. & m. j. van sweringen
In view of the current public discussion of two of the so-called Van Sweringen
obligations to The Union Trust Company, it seems appropriate to supply, as
supplementing our inventory already ot public record, a schedule of the collateral
held by The Union Trust Company at various periods under these obligations
and their apparent predecessors. Valuations of the collateral have, of course,
varied from 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 Julv 21, 1926, when $225,000 was borowed. Loans ii^creased
gradually, reaching a'peak of $2,250,000 on July 1, 1927. On October 4, 1927,
$1,900,000 was paid after which loans again increased graduallv 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 Companv dated Feb. 17, 1928 500,000
Secured bv 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 Companv dated Dec. 2b, 1927 250, 000
Secured by 2,500 Shs. N. Y., Chicago & St. L. R.R. Common
The Vaness Companv dated Mar. 1, 1928 250, 000
Secured bv 2,500 Shs. N. Y., Chicago & St. L. R.R. Common
2, 000, 000
The proceeds of the following note was used to i^ay the above mentioned
obligations:
The Vaness Company dated Julv 28, 1928 $2,000,000
Secured bv 32,631 Shs. Terminal Properties, 1st Pfd.
30,255 Shs. " " 2nd Pfd.
95,600 Shs. " " Common
8892 STOCK EXCHANGE PRACTICES
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 Swerhigen Company
100 Shs. Cleveland Terminal Bids:. 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 $2,800,000
Total Loan, $9,000,000 secured by:
122,000 Shs. Van Sweringen Co.
600,000 Shs. Van Sweringen Corp.
■(At- the eame ^me-; May i^ 1030, t4ie following loano were fl48« paid:
Se%el Cleveland G^. $1J06,000
fteftl Estate Loana 136,600
€eT <fe Vancoo G^ "3-¥i- Notco $3,118,000)
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 ^ ■W33>t
Exhibit U-20c
(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 1)\ 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 irestern 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 Octoljer 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
17,999V2 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 L'tilities, Inc. Common
and equity in the following held in Corporate Trust Dejjart-
ment
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 In v. Corp. Common.
3,000 Units Western Reserve Inv. Corp.
17,999^2 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. Vane.ss Co. Pfd.
16,250 Shs. Vaness Co. Common.
10,296 Shs. Metropolitan Utilities, Inc. Common.
On Januarv 24, 1931, $100,000 was paid on the principal of the loan.
The balance of .?4, 100,000 is outstanding today (April 3^ 1033).
Exhibit U-21
Interviews asd Commitments Affecting Loans- — Official Instructions
TO Credit Department — Comments on Financial Statements- — Essen-
tial 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 partici-
pating loans of the Van Sweringen.s, 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 was present.
Mr. Cox asked the Messrs Van Sweringen what i)ossibility there was of obtain-
ing 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, w as the statement that the two Van Sweringen
brothers received not one cent in salary from any of the companies. He further-
more explained that neither he nor his brother had l)een 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 sertjtlement 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 de-
ferred everything that they had in mind, but that the.v were working day and
night to restore values. As before, he said that all the information his organiza-
tion had was at the disposal of any of the banks at any time.
G. R. Herzog.
Exhibit U-22
Cleveland, January 6, 1933.
Mr. A. C. Coney,
Vice President & Manager.
In accordance witli 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 state-
ments 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 considerat^le 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 Tiothing 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 payable, 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 unaljle to meet even its pay roll. While Van Ess Com-
pany 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 Compan\' is in position to advance sufficient mone\' to take
care of accrued taxes, interest and principal payments on land contracts and mort-
gages 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 pavments on principal of receivables
pledged (Seepage 20) '- $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 eco-
nomic conditions during the current j^ear, 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 impaid taxes on certain
pieces of property on which it holds land contracts and mortgages receivable,
where the maker of the paj^able has been unable to keep up the taxes. Further-
more, part of this money might be necessary to the continued operations of the
Van Sweringen Company, since income of that Company is not covering operat-
ing 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 l)ack of the bond issue.
Tlfe statements attached to this report include the following:
1. Comparative Income Account of Van Sweringen Company for vears 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 Summarv 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 Summarv 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 1933 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 in-
terest. 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 payments have been kept
up to date, and for that matter, it is possible that some of these principal pay-
ments 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 i^ayments. While it is
possible that some interest will be received on some of the accounts which here-
tofore 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 re-
ceivables and land contracts should be approximately $36,218. This amount,
obviously, would be increased by any general improvement in economic condi-
tions 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 prin-
cipal 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 per-
mitted them to obtain without delay or trouble details of past operations.
C. C. Merrifield.
CCM:K
Exhibit U-22c
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 accrued 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 con-
trast to this, current liabilities included the following — (See Page 3):
Accounts Payable $65, 969 .
Demand Notes Payable — Secured 718, 921
Demand Notes Payable — Unsecured 42, 277
Accrued Interest on Bonds 327, 072
Accrued Interest on Mortgages & Land Contracts payable to Banks
and individuals 218, 465
1930 Local Taxes 38, 532
1931 Local Taxes 296, 029
1932 Local Taxes (Estimated) 247, 730
Total $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 orig-
inally made in the amount of $16,000,000 in October 1930. Originally the de-
STOCK EXCHANGE PEACTICES 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 in-
crease 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 New 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 Swer-
i ngen Company with Van Ess Company. During the year 1932 the Van Swer-
ingen Company executed notes which up to October 31, 1932 totalled $120,792
to Van Ess Company for cash. These notes were secured by various land con-
tracts, 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 Com-
pany. Mr. Peckham, of the Van Sweringen Company accounting staff, indicated
that the notes executed during the j'ear 1932 to Van Ess Company had not been
pledged back of the Morgan loan, but were held by Van Ess Company in Cleve-
land. 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 Com-
pany 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 mafty of the notes and I did not obtain all the details, but it was my impres-
sion that in most instances the amount of these payables had been reduced hi to
y2, 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
LIABILITIES UP
Notes Payable
Taxes Local
Improvement Taxes
Accrued Interest
Van Ess
$27,
064
4,
730
9,
376
97,
015
22,
857
22,
264
681,
379
351,
448
5,
456
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, ^53.^— Continued
Disposed
assets up
Mortgages & Land Contracts $371, 627
Deferred 624, 533
Shaker Lander Participation 42, 343
LIABILITIES DOWX
Accounts Payable 4, 618
Mortgages & Land Contracts Payable 37,769
Bonds 1 71,800
Deferred 33,330
Surplus-- 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 in-
cluded 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 improve-
ment 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 Com-
pany. (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 iS
The Shaker Company has had a deficit in capital and surplus since last year,
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. It
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 Build-
ings 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 EXCHAXGE 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 proper-
ties 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 allo-
cated to this unit were virtually the same as for 1931, with the exception of a
slight reduction in salaries and wages, 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 deprecia-
ation, 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. Con-
sidering 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 reduc-
tion 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 interest-
ing to note that the cost of steam and hot water for the Moreland Courts Addi-
tions 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 monthsof 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
virtuallv all of the income billed mav be considered cash income.
8900 STOCK EXCHANGE PRACTICES
SHAKER TAVERX
Comparative nine months operating statements of Shaker Tavern for 1931
and 1932 are shown on page 13. While there was a decHne 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 onlv
$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
ma}' 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.
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 mort-
gaged 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 state-
ments were set up to show taxes on the Shaker Scjuare 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 prop-
erty and by an abatement of $3,865.
ESTIMATED OPERATING RESULTS FOR 19.33
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% J.^-onds
on the original Moreland Courts Apartments), and since monthlyoperating
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 eff"ect 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. This apparently has been irrespective
of volume of sales in the dining room, which incidentally have shown a steady
decline during the current year. Unless radical changes are made in the manage-
ment 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 approx-
mately $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 question-
able 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
was 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,
The Union Trust Company,
Cleveland, Ohio.
Gentlemen: This will 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 PKACTICES
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 sur-
rounding their home were purchased and were placed in the Daisy Hill Company.
Furthermore, 24,300 shares of the preferred stock of the Vaness Conapany 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 Savings 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 Companj-. The furniture in the elabo-
rate 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. Bar-
rett'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 mort-
gage 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 PKACTICES 8903
be noted that total debt is in excess of net worth. The $1,500,000 of debt men-
tioned 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 verj- likel.y that it will take a long time to
work out the loan.
Exhibit U-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 years 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 — ToUes Hogsett & Ginn, representing Van Swer-
ingen 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 Com-
pany, 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 May 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 II-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 consecjuent default in the payment of rental
on the Euclid East 1 3th 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 subse-
quently sold to the Cleveland Terminals Building Company in May, 1930.
This change in ownership was a forerunner of the removal of the Higbee Com-
pany 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 wdth
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 which are payable by the Higbee Company. In
addition, the occupancy of the larger floor space tended to make a larger per-
sonnel and larger inventory necessary. All of these factors combined made it
imperative that the Higbee Company change the character of its business ma-
teriall3\ 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. Every-
thing, 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) $1, 551, 042
(Renewable for a period of one year.)
* First Preferred Stock, 7% 1, 140. 000
* Second Preferred Stock, 8% Cumulative 454, 900
Common Stock— 100,000 Shares 1, 900, 000
Profit & Loss Deficit 3, 852, 328
* No dividends have been paid on either class of stock since I93I and at the annual meeting in June
1933, sole voting rights will rest in the preferred stock by reason of the default in dividend payments and
other provisions of the preferred issues.
STOCK EXCHANGE PRACTICES 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. Phj^sical 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 investment in buildings
and carried its furniture and fixtures at $473,921 which compares with an original
cost of more than $2,000,0j0. During the year the entire investment in lease-
hold improvements at the Euclid Avenue store site was written oft' 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 com-
pany 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 Company 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)4% bonds secured by a first lien
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-27c
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 nearlv 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 di-opped 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 pre-
vious 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 in-
curred 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 en-
tered 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 turn-
ing over its merchandise at a more rapid rate than formerly. However, this
development has probably been due more to the financial difficulties of the com-
pany' 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 hold-
ings.
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 Juh^ 1,
1932. We also include for the sake of comparison actual charges in the year
just past.
Prior to
change in
location
(1929)
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
Rental Charges __
Interest Expense.
Ta.xes
$174, 624
127,' 082'
$600, 000
186, 000
293, 000
$284, 140
120, 589
293,617
$301, 706
079, 000 $698, 346
$61, 720
293, 000
$354, 720
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.
STOCK EXCHANGE PRACTICES
Financial position (See appended balance sheets — Exhibit A).
S907
3-31-33
1-31-33
1-31-32
1-31-31
1-31-30
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
$2, 867, 323
257, 272
990, 955
1, 499, 744
2, 906, 885
1, 000, 000
443, 800
447, 795
407, 666
*39, 562
203, 242
1,551,042
$2, 936, 584
338, 396
880, 045
1, 598, 790
2, 737, 640
1,600,000
443, 800
271, 273
362, 900
198, 944
$4, 641, 645
92. 284
2, 057, 632
2, 384, 096
3, 094, 244
1, 600, 000
$5, 101, 738
6,802
1,817,997
2, 245, 830
2, 077, 952
$5, 193. 245
28, 335
1,768,356
2, 284, 201
2, 076, 259
1, 307, 790
136, 367
1, 547, 401
1, 561, 936
172, 843
3, 023, 786
1,525,797
203, 924
3, 116,986
1, 500, 000
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 bj^ 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.
Approximate
Date of Charge: amount
Prior to January 1, 1932 $174, 000
Januarv, Februarv and March 1932 59, 000
April, Mav and June 1932 93, 000
Julv, August and September 1932 104, 000
Subsequent to October 1, 1932 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 classifica-
tions. 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 would fall the substantial reduction in net working
capital which took place primarily as a result of operating losses and extra-
ordinary 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 EXCHAXGE 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 paj'able.
The confidence of the trade in this company has never been completely rees-
tablished 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 monej' obtained from the Cleveland Terminals Building Company was insuf-
ficient to take care of the investment in permanent assets and the money bor-
rowed 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
HIGBEB 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 $68-5, 411
Decrease in Inventories 888, 311
Decrease in U.S. Govt. Securi-
ties $1, 027, 948
Less : Increase in cash 310,061
Increase in Value of Life
Insurance 34,948 682, 939 $2, 256, 661
STOCK EXCHANGE PRACTICES 8909
Statement of Source and Application of Funds During the Three Year Period from
Januarij 31, 1930 to January 31, 1933 — Continued
Funds were obtained from — Continued.
Increase in Current Liabilities:
Borrowed from Banks (Notes Pay-
able) $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 1,273,536
" " in Divs. Pay-
able and
Other Liab_ 346,538 1,620,074 $661,381
Term Indebtedness:
Borrowed from Cleveland Termi-
nals Building Co 1, 500, 000
Refund of Taxes (lucl. adjustment of
tax reserves) 66, 868
Increase in Reserves 7, 500
$4, 492, 410
Funds were applied to —
Net Loss 1,730,750
Less Depreciation 349,578 1,381,172
Extraordinary Losses incidental to re-
organization and opening of new store 616, 680
Dividend Payments 414, 980
Less Dividends Rescinded 150, 000 264, 980
Investment in Permanent Assets:
Write off of Euclid Ave. Store prop-
erty 1, 940, 163
Write down of Furniture & Fix-
tures 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 ac-
counts _■ 1, 693, 842
Estimated investment in furniture
and fixtures 2, 095, 659
Reduction in Preferred Stock 48, 100
Plus Premium Paid 2,118 50,218
Increase in Deferred Assets 41, 254
Increase in Other Assets:
Write-down of investments 42, 247
Less: reduction in net other assets 23, 330
(as appearing on the balance
sheets) 18, 917
Miscellaneous charges (to unearned sur-
plus) 23,530
4, 492, 410
8910
STOCK EXCHAISTGE PRACTICES
Exhibit U-27h
Relationship of creditors
We have previously pointed out the fact that this company is being operated
ahnost 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 have 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 wliich we are interested:
(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
Amount
of Notes
$300, 000
250, 000
200, 000
317, 000
533, 000
1, 600, 000
Im-
pounded
Cash
$99, 376
103, 866
203, 242
Amount
3-31-33
$1,551,042
1, 600, 000
443, 800
407, 665
186, 168
269, 252
The bank notes payable were issued in November, 1931 under a special trust
agreement depositing certam 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 addi-
tion 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 Termi-
nals 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 indebted-
ness. 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 Com])any 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 PKACTICES 8911
panj\ 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 bj' the banks. In substance, the
following is the opinion of ToUes Hoggsett & Ginn with respect to this subordi-
nation.
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
Cleveland Trust Company.
Midland Bank
Guardian Trust Company.
Union Trust Company
J. P. Morgan & Company .
Amt. of
Notes
$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
tlie 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 instru-
ments, 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 PEACTICES
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 anj^ 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 mer-
chandise 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 oper-
ating 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 vear has been made. We have balance sheets and operating state-
ments 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 $87,048
Less: Depreciation 17,000
$70, 048
Expenditure for Permanent Assets 3, 183
Increases in Other Assets-- 13, 076
Reduction in working capital attributable to operations $86, 307
STOCK EXCHANGE PRACTICES
8913
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 86, 307
Cash Impounded $203, 242
Less; Current Liability transferred to term indebtedness - 51, 042
152, 200
Reduction in icorking 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 some-
what 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 e.xpected 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
1-31-33
ASSETS
Cash.._ . .
$28, 335
1, 027, 948
2, 349, 172
64, 971
$6, 802
985, 000
2,311,175
65, 345
$92, 284
$338, 396
Accounts Receivable - -
2, 484, 694
100, 598
1, 773, 790
Less Reserve. -- - -
175,000
Net Accounts Receivable
2, 284, 201
2, 245, 830
2, 384, 096
1, 598, 790
Inventory .
1, 837, 413
69, 057
1, 885, 194
67, 197
2, 142, 642
85,010
1,016,280
Less Reserves _ - 1
136, 235
Net Inventory
1, 768, 356
84, 405
1,817,997
96, 109
2, 057, 632
107, 643
880, 045
Cash Surrender Value of Life Insurance '-. - _ . _
119,353
Total Current Assets-
5, 193, 245
73, 938
400, 000
72,293
5, 101, 738
75, 438
400, 000
54, 107
4, 641, 645
93, 078
400, 000
116,489
(2, 041, 059)
(1,980,564)
2, 936, 584
Other Assets - - - - --
50, 608
Good Will
400, 000
Deferred Assets _
113,547
Permanent Assets — Furniture & Fixtures Delivery
Kqnipniftnt (net^
473, 921
Leasehold improvements
2, 167, 763
2, 090, 900
Total Assets
$7, 907, 239
$7. 722, 182
$9, 272, 845
$3, 974, 660
LIABILITIES
Notes Payable Banks
$1, 600, 000
$1,600,000
Xotes Pavable Cleveland Terminal Bide Co
443, 800
Accounts Payable (Total). ._
$1, 525, 797
$1, 561, 936
1, 307, 790
(244, 651)
136. .367
44, 536
5,551
271, 273
Including (Cleveland Terminal Bldg. Co.)
(19,012)
-\ccrued Taxes. . . ... _ . .
203, 924
172. 843
1,981
363, 900
.\ccraed Interest on term indebtedness. ...
58, 667
Other Accruals
1,981
344, 557
Dividends Payable
341, 192
Total current liabilities .
2, 076, 259
2, 077, 952
3, 094, 244
1, 500, 000
2, 737, 640
Term Tndehtedness 2
1, 500, 000
Reserves
7,500
First Preferred .. .. . ..
1, 187, 500
455, 400
1,900,000
1, 341, 223
3 946, 857
1, 140, 000
454, 900
1, 900, 000
1,319,425
3 829, 905
1, 139, 900
454, 900
1, 900, 000
1,297,628
113,827
1, 139, 900
Second Preferred . _ .. _ _ .
454, 900
Common Stock No Par 100.000 Shares.
1, 900, 000
SurDlus Unearned
Profit and Loss Deficit
3, 765, 280
Total LiabiUties
$7. 907, 239
$7, 722, 182
$9, 272, 845
$3, 974, 660
Xet Working Capital. .
$3,116,986
$3, 023, 786
$1, 547, 401
$198,944
'■ The life insurance policies of $500,000 face amount are deposited as security for the bank loans.
2 Cleveland Terminal Building Co. renewable annually for 2 years from maturity 10-30-32.
3 Surplus.
' The reduction in working capital is subject to modiflcation upon the offset of impounded cash balances
against notes payable.
8914
STOCK EXCHANGE PRACTICES
Exhibit U-27n
EXHIBIT "B"
The Higbee Company and subsidiaries operating statements
(Years ended January 31)
1930
'^Jof
Sales
1931
%of
Sales
1932
'^cOf
Sales
1933
TcOf
Sales
Net Sales
$11, 639, 393
100.0
$10, 960, 940
100.0
$12,683,331
100.0
$9, 662, 850
100.0
Cost of Sales
7, 813, 792
3, 064, 576
761, 025
67.0
26.0
7.0
7, 435, 844
2, 960, 289
564, 807
67.0
27.0
5.1
8, 663, 149
4, 149, 839
129, 657 d
68.3
32.7
l.Od
7, 237, 784
3, 440, 676
1,015, 610 d
74.9
Selling & Gen. & Ad-
min. Expse
Operating Profit -.
35.6
10.5 d
Other Deductions (net)._
Incl. Depr
130,811
108, 249
36, 023
I. 1
0.9
0.3
200, 726
112,643
65, 357
1.8
1.0
0.6
411,807
134, 383
123, 240
48, 894
3.2
1.1
1.0
0.4
492, 720
102, 552
207, 663
120, 589
5.1
1.1
" Loss on Bad Accts.
Interest Expse
2.1
1.2
Federal Income Tax Pro-
vision-._ .. ._
70, 500
559, 714
0.6
4.8
45, 038
319, 043
0.4
2.9
Net Profit
541, 464 d
4. 2d
1,508, 330 d! 15. 6 d
OPERATING EXPENSE
ANALYSIS
Total Expense (Selling,
Gen. & Admin. Expse).
Including the following
important expense
items:
Salaries
.$3, 064, 576
1, 730, 729
26.0
14.8
$2, 960, 289
1, 680, 357
517, 158
186, 821
121,726
27.0
15.3
4.7
1.7
1.1
$4, 149, 839
2, 227, 318
655, 126
391, 935
103, 737
32.7
17.5
5.1
3.1
0.8
$3, 440, 676
1, 730, 987
512,062
284, 140
293, 617
35.6
17.9
Advertising
525, 719 4. 5
174, 624 1. 5
5.2
Rent
2.9
Taxes — Real, per-
sonal & Corp
127, 082
1.1
3.0
Exhibit U-27o
The Higbee Company and subsidiaries — Reconciliation of surplus
1-31-30
1-31-31
1-31-32
1-31-33
Adjusted Surplus at beginning of year (Com-
bined Profit & Loss & Unearned)
$3, 418, 869
559, 714
$2, 288, 080
319, 043
477
$2, 149, 330
541, 464 d
45, 038
150, 000
$1,183,801
Add:
Net Profit -.-
1, 508, 330 d
Federal Tax Prov. adj. or Refund
21, 354
Dividends Rescinded
Deductions from earned surplus:
Dividends:
Stock .
1, 000, 000
640, 493
20, 000
Cash
414, 980
19, 373
Reorganization Expense -
Extraordinarv expense (new store)
597, 306
Write-down of Furniture & Fi.xtures
i, 479, 894
Premium on Preferred Stoclt
8,213
2,118
Charge-off of Euclid Ave. Store property
(to earned Surplus)
642, 535
Charge-off of Euclid Ave. Store property
(portion charged to Unearned Surplus)
1, 297, 628
Write-down of Investments
42, 247
Miscellaneouscharges to Unearned Surplus .
Surplus at end of year
21, 798
$2, 288, 080
21, 798
$2, 149, 330
21, 798
$1, 183, 801
$3, 765, 280 d
STOCK EXCHAXGE PRACTICES 8915
Exhibit U-27p
HiGBEE Company
StJMMARY AND CONCLUSIONS
The principal interest of tlie Union Trust Company in tliis situation is the
commercial loan of $317,000 which is offset by an impounded cash balance of
8103,866. Another consideration, however, is the effect that any action we might
take would have upon the success of the whole terminal development in which we
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".
"New York Bank Credit"
(a) Owner of Higbee notes payable $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 Com-
pany.
Metropolitan Life Insurance Company
(a) Holder of $8,000,000 First Mortgage 5->2% Cleveland Terminals
Building Company secured bj' 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 Compan v $300, 000
Midland Bank Companv 250, 000
Guardian Trust Companv 200, 000
J. P. Morgan & Company 533, 000
Preferred Stockholders
The voting control of the company will rest in the hands of the pre-
ferred 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 properly organized, would have to be considered. The
first preferred stock was 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 sub-
stantial 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 tlie 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 and receivables. The bank creditors
are in a rather strong position due principally 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 receiver-
ship or the possibility of other creditors establishing priorities. Sixty percent
recovery of current assets is assumed.
Approximate Approximate
Amount Amount
Total Indebtedness *$4, 100, 000 Total Current Assets *$2, 750, 000
Bank Notes Payable *$1, 280, 000 60% Recovery 1, 650, 000
Term Indebtedness 1,500,000 Amount applicable to
bank debt 1,122,000
2, 780. 000
% of Total Debt 68%
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 bj' 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 recover}- 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 mini-
miun. 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 con-
tinued 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 inven-
tories and receivables.
The continued operation of the business appears to be the most desirable alter-
native at the present time, particularly in view of our other interests in the termi-
nal 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-27s
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
TTUStCB
Euclid Thirteenth Chester (Higbee Corner) Leasehold Trust Certifi-
cates.
Transfer Agent and Registrar
Cumulative 7% First Preferred Stock
Cumulative 8% Second Preferred Stock
Common Stock
Unio7i 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 Certifi-
cates.
Exhibit U-28
The Higbee Company
June 3 1933
Jun 7 4 45 PM 1933
SUMMARY OF AGREEMENT JULY 1, 1932
The parties to this agreement were:
The Higbee Conapany — 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 Companv 200, 000
J. P. Morgan & Co 1 533, 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 adjust-
ment 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,(300,000 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 sin-rendered 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 Decem-
ber 31, 1932, otherwise it expires February 28, 1933. Notice to be given by any
partv bv mailing notice to the other partv not later than December 30 or Decem-
ber 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 specifi-
cally modified and only for the terms of the agreement.
J. The termination of the agreement bj' expiration or by action shall in no
wise effect the validity of anv 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 opinion that considering the condition of the company's finances, it
should be either discounting trade obligations or paying them wlien 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,
WT:E-6
Vice President.
Exhibit U-30
June 23, 1932.
Mr. Wm. Feick,
Vice Pres., Irving Trust Company,
New York City.
' Dear Bill: The Credit Department received a letter under date of the 20tli
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 tlie above, they did not have cnougli 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. Tiieir 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-1 credit, but they tell me thcj'
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 l)y new capital or
a readjustment of their current debt; but how that is to be accomplished I don't
know.
Verj^ sincereh' yours,
JRK R
Vice Chairman of the Board.
Exhibit U-31
June 25, 1932.
Mr. 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 materialh',
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 alwaj's been successful.
Truly yours,
Executive Vice President.
Exhibit U-32
October 22, 1931.
Mr. 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 are 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 arc
used for retirement of bonds. Similarly, when 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 vahies in other sections of the Cit3^ In my opinion, the cur-
rent 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 everj*
little bit of selling has depressed the market. As conditions in the securities
market improve over a period of time the favorable pinking fund operations
should continue to improve the market considerably for these bonds.
CCW:GT
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 Comj^any 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 Term-
nals 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. The Guardian Trust Company
By J. A. House, Prest.
Participation $1,200,000.00. The Midland Bank,
By E. E. Barker, Vice President.
Participation $3,300,000.00. The Cleveland Trust Company
By Harris Creech, Pres.
5/10/30
Approved by M. Mutt for Union Mrt. Co. 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 blank —
STOCK EXCHANGE PEACTICES
8921
Certifi-
cate
number
8
9
10
11
In name of
John P. Murphy
D. S. Barrett, Jr
M. J. Van Sweringen
O. P. Van Sweringen
Ralph H. Sharpe
The Terminal Building Co
C. L. Bradlev _.
Number
of shares
2
2
2
2
1
89
2
The Vaness Company,
By J. J. Anzalona, Ass't Treas.
5/10/30: Ree'd the substitute collateral described above.
The Uniox Trust Co.,
Bv W. J. Orcutt, V.P.
Exhibit U-34
April 13, 1933.
2512 Terminal Tower.
Mr. R. S. Crawford,
The Union Trust Company,
Cleveland, Ohio.
Dear Mr. 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
Sweringen 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 OfRce on the authority of Mr. Nutt."
No. 4, Fayette Title & Trust Bldg.: "In 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 arid
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 reduc-
tions 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 h'im $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 liim he gave me a lien by proper assignment filed in our Trust Depart-
ment against his life insurance trust. Your Committee had not the slightest
Exhibit U-34a
foundation for being "under impression Mr. J. R.
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.
Nutt guaranteed this loan'
8922 STOCK EXCHANGE PKACTICES
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 re-
member that he ever made any inquirv. 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 fol-
lowing payments have been made:
1933:
Januarv 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
ever,vthing owned bj' the Faj^ette 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 OP BANKS, STATE OF
OHIO, JANUARY 20, 1933
0. p. and M. J. Van Sweringeri, $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 Cleve-
land Trust Co. and the Guardian Trust Co. The loan is collateraled b}' 97,500
shares of Vaness Co., common, which is the key company to all of the Van Swerin-
gen 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 problema-
tical 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 Metro-
politan Utilities Inc. Both loans are delinquent in interest since July 1, 1931.
Thev are statutory losses and the examiner has classed the line as an entire loss.
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 Companj^ 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 0. 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 EXCHAXGE PRACTICES 8923
111 this coni.ection it is interesting to note that on November 6th 1930 notes
of Metropolitan Utilities, Inc., representing its loan, participated in by the Cleve-
land banks, which notes bore the guaranty of the Vaness Company, were sur-
rendered, 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 certifi-
cates of participation were taken up and new certificates, showing the change in
the guaranty, were issued. On November 20th 1930 new notes were again sub-
stituted, 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 prox}- requested by the Vaness Company'
management. At our rec^uest the annual meeting of the Vaness Company was
postponed for one week. This will give the banks an opportunit\- to consider
whether or not they wisli to have representation on the new Board.
Very truly yours,
WJO, N-c - — — — , Vice President.
Exhibit U-37
January 18, 1933.
The Clevelaxd 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 Sweringen, 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 Companj^ a proxy
for said stock in the following form — •
"Know all men bv these presents, that I, the undersigned stockholder of
THE VANESS COMPANY, do herebv 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 bj^ 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 Januarj', 1933, at two o'clock P. M.,
and on such other daj' 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 rati-
fying 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 mv hand and seal this — day of Jan-
uary, 1933."
Before delivering said proxy we desire to have your advice as to whether you
approve the giving of it.
Very truly yours,
Vice President.
WJO' N-c
8924 STOCK EXCHANGE PRACTICES
Exhibit U-3S
The Guardian Trust Company,
(Capital and surplus sixteen million dollars)
Cleveland, January 23, 1933.
H. C. Robinson Member Federal Reserve System 300
Executive Vice President
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 tele-
phone 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
Com pan 3'.
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 establish-
ment 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 Cleve-
land Trust would feel about it also.
With kind regards, I am
Very truly j'ours,
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 Companv 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 8925
Exhibit 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 Chesa-
peake Corp. stock owned by Alleghany.
(2) Release of impounded cash out of the bond issues of 1944-1949 to insure
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. & 0. stock wiU 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 $9, 586, 270
Expense:
Interest on $43,000,000 bonds @ 5% $2, 150, 000
" Loans Payable, $18,500,000 @ 4% 740, 000
" " $200,000 Accounts Payable @ 5% 10, 000
Annual Expense 60, 000
. $2, 960, 000
Net Income Available for Dividends $6, 626, 270
3% Dividend on 1,799,745 shares 5, 399, 235
Remainder Available for Other Purposes $1, 227, OSb
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 PRACTICES
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.
AUeghany 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 Alleghanv 5's of 1950 $2, 128, 842. 27
Interest on Alleghany 5's of 1950.1 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
AUeghany 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
Alleghanv 5's of 1949 would be available for purchase of securities, probablv
Alleghany 5's of 1950.
Otto Miller.
OM:EL
Exhibit U-43
Union Cleveland Corporation,
5^«« Union Trust 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 Cor-
poration 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 -24^8
1932 31>{- 9%
1931 46/2-23^8
1930 51^8-32%
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 51M.
STOCK EXCHANGE PRACTICES 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
5/2% 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. Fur-
thermore, 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 Recon-
struction Finance Corporation is requesting an impartial investigation of par-
ticipation 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 out-
side 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 selUng 240,000 shares of Chesa-
peake & 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 sub-
stantially, there is probably little chance of increasing the dividend on Chesa-
peake 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 Chesa-
peake Corporation stock during this year, in spite of the fact that if Chesapeake
& Ohio stock were to sell at $50, the hquidating value of Chesapeake Corpo-
ration 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 can-
not be released to the 5's due 1950.
5. Because of default in interest on Missouri Pacific Debenture 5K's and
Terminal Shares, Inc. Notes, income for Alleghany 5's due 1950 will not he
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 Cor-
poration do not demand a further reduction in that Corporation's dividend rate,
pending funding of the loans payable. However, annual income on the Chesa-
peake 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 op 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. It is
collateraled by 500 shares of the Elect. Depot Co., value undetermined.
Exhibit 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 unde-
termined 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 in-
terest 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 col-
lateraled 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 8929
Exhibit U-49 I
EXCERPTS TAKEN FROM EXAMINERS REPORT, DEPARTMENT OF BANKS, STATE OF
OHIO, JANUARY 20, 1933
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 Trac-
tion 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 impos-
sible to make any definite appraisal of the collateral held due to lack of suflficient
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 prom 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 Incor-
poration.
Original Stockholders: The Vaness Company; 10,526 shares.
Present Stockholders: The Vaness Company; 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 Re 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, pack-
ages, express matter, U.S. mail, baggage and freight, using electricitj' or other
motive power, other than steam or animal power, etc.
Original stockholders: Shares
W. S. Havden 1
Otto Miller 1
J. R. Nutt 1
W. D. Turner 1
O. P. Van Sweringen 46
50
8930 STOCK EXCHANGE PRACTICES
Present Stockholders: shares
B. L. Jenks
John P. Murphy
D. S. Barrett, Jr
C. L. Bradley
Geo. D. McGwinn
Metropolitan Utilities, Inc 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 Corpora-
tion)
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 pow^er, having Cleveland, Ohio and Youngstown, Ohio, for its
terminal, and passing in and through counties of Cuyahoga, Geauge, Portage,
Trumbull and Mahoning.
Original stockholders: Shares
O. P. Van Sweringen 3
M. J. Van Sweringen 2
C. W. Fuller
John L. Cannon
B. L. Jenks
W. E. Pease
W. D. Turner
10
Present Stockholders: Metropolitan Utilities, Inc.; 5,800 shares.
Original Capitalization: Authorized, 100 shares, par value $100 each. Issued,
10 shares, par value $100 each.
Present Capitalization: Authorized, 6,000 shares, par value $1G0 each. Issued,
5,800 shares, par value $100 each.
Exhibit 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 8931
Exhibit U-54
(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 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 Utihties, Inc., 100 shares.
Original Capitahzation: 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. Circum-
stances 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 letterj
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, 1933.
Mr. Oscar L. 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, has
been 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 ' 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 hasbeen arranged
upon a five-year basis under an agreement whereby Morgan wiU 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,
Mc Loan Collection Department.
1 Does not mean tried to obtain it in Cleveland. Q. R. H.
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 Superin-
tendent 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 tem-
porary 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 City. 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 Cor-
poration so that the purchases of the ten to twelve smaller distributors could be
made immediately. Morgan underwrote the issue, for details of which see com-
ment 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 tem-
porary 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 under-
written 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 in.sisted 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 basis of new money given for five years 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 PKACTICES 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 Ter-
minal 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 Swer-
ingen 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 opera-
tions.
Mr. Barrett mentioned that the $39,500,000.00 loan, as they refer to the ad-
vance of $16,000,000.00 to the Vaness Company and $23,500,000.00 advance to
the Cleveland Terminals Building Company, 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-56c
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 ordei* 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 en-
gineers 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 with-
out 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 PRACTICES
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, 1933.
Mr. 0. L. Cox,
Conservator, The Union Trust Company,
Cleveland, Ohio.
Dear Mr. Cox: In our recent conversation j'ou 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 Vauess 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 Mid-
land 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 question-
able. 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 Corpo-
ration 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 owii 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 8935
Exhibit 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
& 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 Superin-
tendent 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 Railwa}') intact;
3. Avoiding litigation with trade creditors and avoiding tax suits where pos-
sible 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 PEACTKJES
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 securi-
ties, by the formation of subsidiary companies organized for that purpose. Be-
cause 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 utli-
mately buUding 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 Ter-
minals Building Company, acquired without cost the air rights to certain areas
Exhibit U-58a
over the Cleveland Union Terminals development. While these air rights un-
doubtedly 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 equit\' 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 securi-
ties, it would be necessary, as pointed out above, to make a very thorough
analj'sis 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 proba-
bility of interest payinents on these loans in the near future, inasmuch as all of
the companies have operated at a loss for some tiine and there is no present indi-
cation 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 Com-
pany 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 Depart-
ment, 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 Super-
intendent 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 Companv $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 used 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 pavable.
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 pro-
ceeds 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 davs 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
CoT'poration and Geneva Corporation appear as foUows:
Amount
of loan
Market
Value
Collateral
Union Trust
Midland Bank
Cleveland Banks.
Morgan
Morgan,
Paine-Webber
O. P. & M. J. Van Sweringen
(To Chemical National Bank, N.Y.)
$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
» Market Value of A Y Y [Alleghany] securities $4, 607, 500
« Do- 8,730,000
8 Do 16,694,788
* Higbee Co. common stock 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 Corpora-
tion.
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 Corpora-
tion had been entirely paid. [See comment 4.]
Apr. 30, 1930: By this date the accounts payable of Vaness, General Securi-
ties 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 tlae Guar-
anty Company (See Union Trust Financing). Proceeds from these notes were
used for the following purposes:
$7,500,000 advanced to Cleveland Terminals Building for purchase by
that company of Higbee Company stock from Vaness Com-
pany.
1,087,000 advanced to Cleveland Terminals Building for purchase of
Country Club notes from Van Sweringen 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 tlie 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 Cleve-
land 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 Build-
ing 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 pay-
able 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 market-
able 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. J.
Van Sweringen were substituted. (O. P. and M. J. Van Sweringen also guaran-
teed 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 impor-
tance. [No prior debt and arrangement.] [See comment 5.]
Nov. 20, 1930: A loan of $800,000 was made to Vaness Companv 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,
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 mem-
•. ber 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).
A. Union Trust as Creditor (See following pages):
1. Commercial and Collateral
2. Mortgage Loans
3. Land Contract
B,
Union Trust Ownership of Bonds and Stocks:
1. Van Sweringen Company 6's— 1938
2. Van Sweringen Company 6's— 1935 -
Held in Collateral Loan Department (Main Office):
1. Cleveland Railway 1st Mtg. 5's --•
Cleveland Railway Capital Stock ($100 par)
Cleveland Railway Certificates ---
Van Sweringen Company 6's— 1935 -
Van Sweringen Company 6's — 1938 -
Van Sweringen Company 6% Notes A/C K. V. Painter
Van Sweringen Corporation 6% Notes..
8. Van Sweringen 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 Sweringen
loan)
13. Metropolitan Utilities, Inc. Common
Principal
$11,412,908.54
772, 064. 57
1, 000, 000. 00
$13,184,973.11
Par Value
$36, 000. 00
64, 000. 00
$100, 000. 00
Par Value
2.
3.
4.
5.
6.
7.
D. Estates Trust Department Holdings:
1. Van Sweringen Company 6's— 1935
, 2. Van Sweringen 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.
$5, 000. 00
Interest De-
linquent to
May 1, 1933.
$1, 039, 958. 01
49, 087. 82
201, 595. 35
$1, 290, 641. 18
1, 000. 00
9, 200. 00
258, 130. 48
1, 000. 00
7, 400. 00
3, 500. 00
.$285, 230. 48
Par Value
$458, 200. 00
578, 400. 00
209, 000. 00
0
16, 500. 00
251, 500. 00
E. Union Trust Corporate Trustee:
(See Schedule prepared by Corporate Trust.)
$1,513,600.00
Shares
68
4,410
240
17, 310
16, 250
10, 296
Shares
361
44
1,535
14, 250
17, 845
Exhibit 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 PKACTICES 894 1
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 Super-
intendent 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).
(6) (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 certifi-
cates 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 prop-
erty. Reference is inade to agreement for detailed information as to loca-
tion, size, etc. Taxes to be paid by Terminal Building Company. Dis-
tribution of income was made to holders of Certificates of Equitable Owner-
ship. 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 Com-
pany 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
L Date of Trust— February, 1924.
2. The Union Trust Company acts as Trustee for Insurance under 99 year
lease.
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-61c
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 PRACTICES 8943
2. Property involved — Known as sublot 80 in A. W. Walworth's subdi-
vision; 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. Re-
ceives 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 Comiaany to pay the taxes.
(c) Income for benefit of K. V. Painter, pledged to The Union Trust
Compan}'
(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 Juh' 6, 1928.
2. The Union Trust Company holds title to secure loan of The Van Swer-
ingen 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 recon-
vey 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 vear 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 mem-
ber of the staff preparing this memo. — Oscar L. Cox, Deputy Superintendent of
Banks, State of Oliio)
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 col-
lateral 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, ex-
cept 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 con-
sidered 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 Superin-
tendent 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 Metro-
politan 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 back of $4,100,000
loan to O. P. and M. J. Van Sweringen.
STOCK EXCHANGE PRACTICES S945
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 wliich we 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 substantially.
4. Of the $4,500,000 advanced by Cleveland Banks ? was used for
additions to roaa and equipment.
5. Problem of maturity of Clevelana 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 Superin-
tendent 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 Sw-eringen 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 caption "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 bor-
rowed 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 improveme.it in its
cash position would probably only come from liquidation of properties. Outlook
for substantial increase in sales of property not brigJit at the present time.
8946 STOCK EXCHANGE PRACTICES
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 circum-
stances, 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 Superintend-
ent 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 Termi-
nal 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 Company
(See Union Trust Financing). Proceeds from these notes were used for the fol-
lowing 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 note3 from Van Sweringen Company.
STOCK EXCHANGE PKACTICES 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 i).
$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 these
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 the Vans borrowed from J. P. Morgan & Company through
Vaness Company and Cleveland Terminals Building Company sufficient funds to
purchase and deposit G15,000,000 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 Companj'- 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 Companv carried
on the books at $56,384,831. Liabilities include $15,000,000 of 6% notes, ap-
proximately $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 invest-
ment in Cleveland Terminals Building Company for 1932, and its expenses con-
sisted 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 Superin-
tendent 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 requestedf
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 Cleve-
land 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. Interest in Terminal Building Company as subsidiary of the Vaness Com-
pany.
3. Relationship between Union Trust Company and Terminal Building Com-
pany in connection with land contracts to O. P. and M. J. Van Sweringen.
HISTORY
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 was 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 PRACTICES 8949
Exhibit U-68
(For Walter H. Sej-mour, 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 staflf 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 Superin-
tendent 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 south-
erly 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 invest-
ment 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:
$450,000 October 1, 1928
600,000 October 1, 1929
600,000 October 1, 1930
$350,000 October 1, 1924
350,000 October 1, 1925
400,000 October 1, 1926
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 Companv " " " " 633,333.33
Hayden, Miller & Companv " " " " 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 93}^ for the balance of maturities, which group was participated in lay 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 enu-
merated 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
Amount
Valuation of
Security
First Mtgs. and Lien Claims
$2, 332, 361. 96
841,481.66
' $6, 018, 281. 50
Land Contracts & Lien Claims
2 1, 688, 395. 00
Total.
$3, 173, 843. 62
$7, 706, 676. 50
Valuation of Land directly mortgaged
3 752, 000. 00
$8, 458, 676. 50
1 Values based on independent appraisal.
2 Values based on actual selling prices of land.
3 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 In-
vestments 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 par-
ticipation 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^^ 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 PRACTICES 8951
Railroad Companj'. 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 mort-
gages, 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, ap-
praised at time of the issue at $2, 805, 533. 08
Mortgage notes and land purchase contracts, with principal bal-
ances 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 simi-
larly 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 activity,
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 con-
tract 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 pro-
viding 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-68c
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 6's 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 Com-
pany, 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 Corpora-
tion. 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
envimerated 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 S])ecial Banking Group, The Union Trust Company Bond Department was
committed for $1,475,000, and The Union Trust Company Estates Trust Depart-
ment 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 banks
and investment dealers named in Exhibit "E" attached.
The retailing of the bonds was accomplished through the formation of a Stlling
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 Depart-
ment 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 corpora-
tions 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 obliga-
tions 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 Cleve-
land 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 Com-
pany, 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 build-
ings 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 jjeriod 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 Com-
pany 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 PRACTICES 8953
coupons, thus reducing the total annual cash interest requirements of the Com-
pany from $256,200 to $76,870.
(b) Depositing bondholders to waive annual maximum sinking fund require-
ments.
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 CORPORATION 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 Corpora-
tion, 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 improve-
ment as the Terminal area continued to develop.
(2) 500,000 Shares of Common Stock of the Alleghany Corporation, an invest-
ment 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 Five-
Year 6% Gold Notes, due May 1, 1935, with Warrants attached. These War-
rants 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 com-
pletion and occupancy of the various buildings after average allowance for vacan-
cies, 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 J-^, the Union Cleveland Cor-
poration 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 98}^ our par-
ticipation was $1,000,000, showing 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,-
000 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 Securities 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 take-
up 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 59J^ and 8,035 shares of Chesapeake Corporation
Common Stock at 29J-4.
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 29^.
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 Cor-
poration 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 like-
wise 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 Cor-
poration is asking all of its Note-holders to agree to this proposal.
H. J. Ranft.
May 9, 1933.
Exhibit U-69
(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 conlcusions are personal to
the member of the staff preparing this memo. — Oscar L. Cox, Deputy Super-
intendent 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 Oflice
Vaness Co.:
Terminal Building Co. and Vaness Co
Metropolitan Utilities, Inc.;
Participation
Interest Notes to 1 1-14-32
The Van Sweringen Co
do
Cleveland Interurban Railway Co
The Higbee Co. (See Higbee Co. Report).
Total _
See
Sched-
ule
A
B
C
D
E
F
F
G
Q
O
Principal
May 1, 1933
.S2, 800, 000. 00
4, 100, 000. 00
6,342.71
487, 000. 00
50, 558. .%
304, 183. 75
557, 000. 00
2, 100, 000. 00
165, 823. 75
400, 000. 00
80, 000. 00
45, 000. 00
317,000.00
$11,412,908.54
Interest
paid to
1-31
1-31
7- 1-31
1- 1-33
1- 1-32
1-11-32
8-17-31
10-28-31
7- 1-31
10- 1-32
6- 1-33
Interest De-
linquent to
May 1, 1933
$327, 813. 16
480, 012. 17
47, 659. 91
441. 07
25, 457. 19
45, 626. 08
63, 975. 49
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
Balance Due
Interest paid to
Interest De-
linquent to
May 1, 1933
Mortgage loans (Schedule H):
The Van Sweringen Co
$371,620.00
176, 600. 00
30, 000. 00
35, 000. 00
150, 000. 00
180,000.00
24, 000. 00
50, 000. 00
$344,415.00
176, 600. 00
15, 000. 00
25, 200. 00
47, 000. 00
94, 109. 57
19, 740. 00
50, 000. 00
Various Dates
12-15-31
3-15-32
9-15-32
12-15-31
3-15-32
12-15-32
12-15-31
$17, 527. 37
Traction Stores Co -
15, 002. 24
do (Paul K. Jones)
0. P. and M. J. Van Sweringen
Terminal Building Co .-
1, 035. 46
960. 62
•3. 992. 68
Shaker Companv
6, 496. 38
Shaker Village Land Co
447. 44
B. L. and L. D. Jenks-
3, 625. 63
Total
$772, 064. 57
$1, 000, 000. 00
$49, 087. 82
Land Contract to 0. P. and M. J.
Van Sweringen (Schedule J)-- --
(0
Summaiy:
Commercial & Collateral Loans
$11,412,908.54
772, 064. 57
1, 000, 000. 00
$1, 039, 958. 01
Mortgage Loans
49, 087. 82
Land Contracts
(')
Total
$13, 184, 973. 11
$1, 089, 045. 83
1 Interest, Rentals, Taxes, etc. due us totalled $201,595.35 on May 1, 1933.
Exhibit U-69a
SCHEDULE "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 Companv $2, 800, 000]
Guardian Trust Company 2, 500, 000 1 Union Trust Co.
Midland Bank 1,200, OOOf Trustee
Cleveland Trust Company 2, 500, OOOj
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 Com-
pany 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 v.'ith 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 Februarv 20, 1928, for $500,000, secured
by— 5,000 shares N.Y., C. & St. L. R.R. Common, (^129 $645, 000
Vaness Companv note dated March 1, 1928, for $250,000, secured by —
2,500 shares N.Y.,C.& St. L. R.R. Common (a) 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 reduc-
tion 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
approximatelj^ 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 Companv 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 Companv'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 con-
densed schedule of payables of the Van Sweringen interests to The Union Trust
Company. [See comment 8.1
Exhibit U-69c
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, De-
linquent 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 @ 100 $3, 200, 000
6,500 " Midland Bank 465 3,022,500
30,000 " Alleghany Corporation Common 20^ 618,750
6,000 " United Corporation Common 25^ 154,500
3,000 Units Western Reserve Inv. Corp. 6% Pfd.i 100 300, 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 Niagara Hudson Power Corp. Common__@ 12}^
5,000 " Standard Brands, Inc. Common 16}^
3,000 Units Western Reserve Inv. Corp. Common 85
1,400 shares Newton Steel Company Common 20 H
33,000 " Peerless Motor Car Corp. Common 3^
6,000 " United Corporation Common 22^
9,000 " Vaness Company Pfd No
16,500 " Vaness Company Common No
3,000 " Western Reserve Inv. Corp No
17,999H " Calumet Trust Certificates No
10,296 " Metropolitan Utilities, Inc. Common . No
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:
$50, 000
81, 250
255, 000
28, 700
123, 750
133, 500
Mkt.
Mkt.
Mkt.
Mkt.
Mkt.
$672, 200
32,000 shares Cleveland Railway, @ 77 $2, 464, 000
8,260 " Midland Bank, 300 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.
1 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
11-20-30
4,000 shares Niagara Hudson Power Corp. Common__@ 11% $47, 000
5,000 " Standard Brands, Inc. Common 15^8 78,125
3,000 Units Western Reserve Inv. Corp 85 255, 000
1,400 shares Newton Steel Company Common 19K 26,950
33,000 " Peerless Motor Car Corp. Common 4% 144,375
6,000 " United Corp. Common 20 120,000
3,000 " Western Reserve Inv. Corp. Common No Mkt.
17,999}^" Calumet Trust Certificates 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 Dais? 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, Delin-
quent 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 in teres o
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
Collateral: ^-^'ss
1,333 shares Niagara Hudson Power Corp. Common...© 10. . $13, 330. 00
5,000 " Standard Brands, Inc., Common 20-_ 100,000.00
560 " Corrigan, McKinney Steel Co. Vot. Com_..10.- 5, 600. 00
140 " Corrigan, McKinney Steel Co. Non-V. Com, 10.. 1, 400. 00
6,000 " United Corp. Common 9.. 54,000.00
3,000 Units Western Reserve Inv. Corp. Com. & Pfd No Market
17,999>^ Shares Calumet Trust Certificates No Market
1,250 shares Cleveland Base Ball Company No Market
$174, 330. 00
Comment:
The marketable collateral listed above has distinct possibilities of further appre-
ciation over a period of time. The units of Western Reserve Investing Corpora-
tion 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 equity 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
ORIGIN OF $304,183.75 DEMAND COLLATERAL LOAN
As mentioned under the Origin of the $4,100,000 Demand Collateral Loan to
O. P. and M. J. Van Pweringen, 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. Vniue
11 -20-30
4,000 shares Niagara Hudson Power Corp. Common @11%__ $47, 000
5,000 " Standard Brands, Inc. Common 15^i._ 78,125
3,000 Units Western Reserve Inv. Corp 85 255, 000
1,400 shares Newton Steel Company Common 19)4-- 26, 950
33,000 " Peerless Motor Car Corp. Common 4%__ 144,375
6,000 " United Corp. Common 20 120,000
3,000 " Western Reserve Inv. Corp. Common No Market
17,999/2 " Calumet Trust Certificates 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 2^8 — 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:
Mkt. Mkt.
Value Value
9-37 ~S2 6-31-3S
1,333 shares Niagara Hudson Power Corp. Common @ lOJi.. $13,830 $13,330
5,000 " Standard Brands, Inc. Common 18?i _ 93,125 100,000
560 " Corrigan, McKinney Steel Co. Vot. Com. 4>i 2,520 5,600
140 " Corrigan, McKinney Steel Co. Non-V. Com. 3H_ 490 1,400
6,000 " United Corporation Common 7H --- 43,500 54,000
3,000 " Western Reserve Inv. Corp. Common No Market
3,000 Units Western Reserve Inv. Corp No Marliet
17,999^ Shares Calumet Trust Certificates No Marlcet
1,250 " Cleveland Base Ball Company No Market
$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, Delin-
quent 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 con-
tained 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 re-
mainder of the property was purchased under this option for an aggregate con-
sideration of $683,500 of which $543,500 was paid in cash and $140,000 in sur-
render 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 1931 final distribution 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 Utilities, 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
v^ollateral:
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 Companv ' ' $2, 265, 823. 75
Midland Bank I 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 undoul^tedly 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 anj^ cash can
be realized on these loans, unless the whole enterprise could be sold to the Cleve-
land Railway Company or other interests, a possibility which has not been de-
veloped up to the present time.
Exhibit U-69j
HISTORY OF METROPOLITAN UTILITIES, INC. LOANS PREPARED BY CORPORATE
TRUST DEPARTMENT
8-14-30 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 spec-
ified the guarantee of The Vaness Companv.
8-15-30 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
Companv, subject to pledge to New York Central, per agreement
dated 8-5-13.
9-15-30 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 spec-
ified the guarantee of The Vaness Companv.
9-16-30 Received $1,000,000 Promissory Note of Cleveland Interurban R.R.
Co.
1 1- 6-30 New notes substituted for the above, bearing endorsement of guaran-
tee of O. P. and M. J. Van Sweringen. New participation certificates
issued specif jing guarantee of O. P. and M. J. Van Sweringen.
11-20-30 New notes substituted, bearing endorsement of guarantee by The
Vaness Co. No record of new participation certificates issued at this
time.
1 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 bv 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 Promissorv 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 Companj'. New certificates of participa-
tion issued, specifying endorsement of guarantee of The Vaness Com-
panv.
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 participa-
tion issued, specifying endorsement of guarantee by The Vaness Com-
pany.
8-15-32 Renewal note given, due 91 days thereafter, bearing endorsement of
guarantee by The Vaness Company. New certificates of participa-
tion issued specifying endorsement of guarantee by The Vaness
Company.
1 1-14-32 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 partici-
pation certificate which stated that the notes evidencing the loan were guaran-
teed b}^ 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 S963
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-69I
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 Julv 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 bv Union Trust Company under trust agree-
ment 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, il would be difficult, if not impossible,
to determine this value at the present time. He is doubtful if the prop-
erty 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 appar-
ently is no real market for any of this property, except that some realization might
be had from the improved property on a sacrifice sale.
8984
STOCK EXCHANGE PRACTICES
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STOCK EXCHANGE PRACTICES
8967
Exhibit U-69q
Co7isolidated liability to the Union Trust Company of Van Sweringen controlled
companies
Balance
$230, 587. 89
270, 587. 89
425, 665. 22
475,
453,
981,
1, 081,
1, 056,
1, 076,
1, 805,
1, 825,
1, 855,
1, 894,
665. 22
665. 22
093. 62
093. 62
093. 62
093. 62
530. 97
530. 97
530. 97
805. 97
Increase
$40, 000. 00
155, 077. 33
50, 000. 00
527, 428. 40
100, 000. 00
20, 000. 00
729, 437. 35
20, 000. 00
30, 000. 00
40, 000. 00
Decrease
$25, 000. 00
25, 000. 00
Date
1921
Aug. 22
Sept. 13
17
19
26
Oct. 14
26
Nov. 21
25
Dec. 8
22
27
Balance
$1,877,213.
1, 927, 065.
1, 906, 851.
1, 886, 851.
1, 986, 851.
2, 041, 449. 09
2,021,249.
2, 053, 133.
2, 033, 133.
2, 062, 633.
2, 306, 398.
2, 296, 398.
Increase
$50, 000. 00
100, 000. GO
499, 019. 00
32, 571. 03
30, 000. 00
250, 000. 00
Decrease
$20, 000. 00
20, 214. 55
20, 000. 00
235, 077. 33
120, 000. 00
88, 850. 00
20, 000. 00
20, 000. 00
10,000.00
Exhibit U-69r
Balance
$2, 166, 972.
2,316,001.
2, 306, 001.
2, 346, 001.
3, 133, 998.
3, 081, 573.
3, 058, 602.
3, 044, 064.
4, 339, 590.
4, 319, 590.
4, 519, 590.
4, 426, 094.
4,901,094.
5, 000, 094.
4, 967, 929.
5, 074, 596.
Increase
$150, 000. 00
40, 000. 00
790, 000. 00
1, 300, 000. 00
200, 000. 00
500, 000. 00
100, 000. 00
106, 667. 67
Decrease
$129, 426. 07
'""10,666.66
52, 424. 64
20, 000. 00
14, 537. 50
20, 000. 00
92, 500. 00
25, 000. 00
25, 000. 00
I ate
1922
June 26
July 3
12
15
18
26
Aug. 2
11
24
25
Balance
$5, 042, 259. 62
3, 777, 140. 34
3, 090, 802. 35
2,720,611.95
2,740,611.95
2,715,611.95
2, 067, 453. 03
2, 567, 453. 03
2,717,453.03
2, 692, 453. 03
Increase
$75, 000. 00
20, 000. 00
500, 000. 00
150, 000. 00
Decrease
$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
25, 000. 00
Exhibit U-69s
Balance
$2, 904,
2, 939,
2, 589,
2, 664,
2, 674,
2, 646,
2, 746,
2,821,
2, 796,
2, 773,
2, 848,
2, 823,
3,188,
953. 03
953. 03
968. 88
968. 88
968. 88
968. 88
968. 88
968. 88
968. 88
377. 79
377. 79
377. 79
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
'365,666.'66
Decrease
$375, 000. 00
30, 000. 00
25, 000. 00
25, 000. 00
23, 591. 09
25, 000. 00
Date
1922
Nov. 7
8
16
20
23
24
29
Dec. 1
19
23
28
29
Balance
198,
228,
215,
265,
295,
270,
320,
395,
377.
377. 79
667. 79
667.7
667. 79
667.7
667. 79
667. 79
640, 651. 94
682,
932,
907,
042,
651. 94
651. 94
051. 94
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, 000. 00
Decrease
$12,710.00
25, 000. 00
25, 000. 00
8968
STOCK EXCHANGE PEACTICES
Exhibit U-69t
Consolidated liability to the Union Trust Company of Van Sweringen controlled
companies — Continued
Date Balance
1923
Jan. 25
29
31
Feb. 9
16
Mar. 28
30
31
April 3
11
26
27
30
May 1
5
31
$3, 967,
3, 992,
4, 317,
4, 274,
4, 299,
4, 274,
4, 287,
4, 462,
4, 587,
4, 562.
5, 059,
4, 634,
4, 609,
4, 634,
4, 334,
4, 309,
052. 64
052. 64
052. 64
783. 30
783. 30
783. 30
283. 30
283. 30
283. 30
283. 30
632. 70
632. 70
632. 70
632. 70
632. 70
632. 701
Increase
$25, 000. 00
325, 000. 00
"25," 000.' 00
12, 500. 00
175, 000. 00
125, 000. 00
500, 000. 00
25, 000. 00
Decrease
$84, 599. 30
42, 269. 34
"25,"6o6."6o
25, 000, 00
'425, 000." 65
25, 000. 00
300, 000. 00
25, 000. 00
Date
1923
June
7
20
23
25
26
July
16
30
Aug.
3
11
31
Sept.
4
Balance
$4, 324,
4, 484,
4, 984,
5, 094,
5, 069,
5, 091,
5, 066,
5, 086,
5, 146,
5, 226,
5, 236,
632. 70
632. 70
632. 70
632. 70
632. 70
632. 70
632. 70
632. 70
632. 70
632. 70
632. 70
Increase
$15, 000. 00
160, 000. 00
500, 000. 00
110, 000. 00
25, 000. 00
20, 000. 00
60, 000. 00
80, 009. 00
10, 000. 00
Decrease
$25, 000. 00
25, 000. 00
Exhibit U-69u
Date
1923
Sept. 6
Oct.
26
27
2
25
29
Dec. 26
28
1924
Jan. 7
11
30
Feb. 5
13
Mar. 17
Balance
$5, 266, 632. 70
5, 093, 510. 40
5, 068. 510. 40
5, OOS, 510. 40
1, 920, 478. 69
1, 892, 955. 36
1, 862, 408. 74
1, 852, 374. 39
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
1924
Mar. 31
Apr. 2
30
May 17
June 5
1925
Feb. 6
Apr. 2
May 1
June 1
6
16
Balance
2, 546, 399. 17
2, 516, 399. 17
2, 491, 374. 17
3, 230, 255. 05
625, 363. 03
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
35, 000. 000
150,000.00
760, 000. 00
400, 000. 00
100, 000. 00
200. 000. 00
Decrease
30, 000. 00
25, 000. 00
r 319,166.67
I 280, 000. 00
1, 235, 000. 00
I 770, 633. 36
10, 000. 00
10, 000. 00
200, 000. 00
Exhibit U-69v
Date
1925
July 3
Aug. 3
24
Sept. 1
Oct. 14
1926
Mar. 17
31
Apr. 15
19
July 21
Aug. 20
Nov. 10
29
Dec. 18
28
Balance
$1, 292, 013. 49
1, 477, 729. 02
1, 276, 403. 58
1, 266, 403. 58
1, 507, 938. 77
620,
720,
2, 319,
2, 219,
2. 439,
2, 753,
3, 099,
3, 337,
3, 586,
5, 586,
368. 04
368. 04
118. 04
118. 04
585. 96
545. 34
594. 67
594. 67
548. 53
260. 39
Increase
$200, 000. 00
200, 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
Decrease
$200, 000. 00
10, 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,
5, 608,
5, 908,
5, 593,
5, 943,
4, 341,
2, 341,
2, 841,
941,
1, 191,
1,441,
1, 941,
2, 191,
260. 39
360. 39
064.28
064. 28
064. 28
363. 03
363. 03
363. 03
363. 03
363. 03
363. 03
363. 03
363. 03
Increase
250, 000. 00
300, 000. 00
350, 000. 00
500, 000. 00
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
The VanesB Co. l'
INTEREST 0^-<iSC*..^ ^"^■"■'i^^V/i'
A - V - \ b -
^ 7V,'. f /./r'-3V .w ?f 1931
■V l' ^nti-li-J I U- 1 H-! lit I o -2.'+5
iS;:: ■ .,ioW.Mi5r %i? - » Ji.'iTito'- ■ ■ •933
m jf w»
■a^U'if
.<atT - jH-/ ^3-
Exhibit U-70
4000sh8 »- Th«^-lH«jrar«f -«iacl«^» -*e»ep i-oriK Ctam
C oC 5,006sha- The Standard fcranda Inc. Cora^'^ -^ •^♦- '''' ?>
#TC64550/99 at lOOshs ea n/o B. J. Smith
t ' -3&-,90Qahe-'ghe-gaefl«»3-io4.or- Car Corp Cap^
7yc437l/4700 at lOOshs ea n/o A.J. Stiver
11 C -jtsOOOshs .The Unltud Corp. Com '•■-'. -- i .^.^^ Ibi S . Js
^fC13733/51 n/o F.Jf. Ifartin ,fC137S2/61 a/o C. '.
Elsllar #C13702/37 n/o P.W. >tertln at lOOshs ea
C X 3,0008ha,,Tho l/Ieatern Hesorve -investing Corp Cot.
#C!!104/133 at lOOaha ea n/o &tto '.Millar
- 1 ^ 3!>000 Units The Western Kessr'/e Investing Corp. Ish of 6't ffi .
Ish of Com #UH10«/133 at 100 Units ea n/o Otto 'riller
< 17999i8hs The Trftsteas of thi> Calumet irust
^36 at Ish #50 at ISOsha #35 at 16sh8 #96 at 17,317*shs
««MM #95 at loshs n/o Vaness Co. /;v >
1400sh8 I^ewton Steel Co. Cora, excaanged for 5G0shs Voting and
1403hs Kon-Votins Conunon sliares of The Corr-i-an. .:cAlnr.ey -teei
HEUHIONTRUSTCQMmlHY Cl«v««nd. Oliia CfriiAMrct 5«Mri|ia end «It athw cAp*
Exhibit U-70a
iigedsto the follovJing real, estate, title being
heTW--tiL_The Union Trust Co.
27.52 Acres~~SVi.,jUalr, Eatllt & Upson Kds.
lEO.no Fost 3 1 . ^TSTiCixe.;^^
7.97 Acres Ko. 'Woodland !r~L?1K»ii..,____^
Z'7 .9S Acx-es I lo-k 12 Shaker Country'-^Bt-':; tes
119. 7B .icr.j:; i.lock 12 SKaker Countrv Estatsa
>* 1250sh3 ^he Claveland Base Ball Co. Cap
#89 n/o Alva Bradley
,..^ /
hiOfcra Kudsor; fov^er Corrr. Cos, *1».00 v« :
»Cll8ieA0 ot lOOshs va JCC544G6 ct 338hs .., ,
.0, *. ViHi i" erii.' on
The Corrlgan , r.!cKlnnoy
#CV/544 r./o C.L.Bradley
). Com VotlRf '
i'he Corrlgan, MoKlnney ''toal Co. Com Kon-Votlr.- f"
#CU/540 n/o C.L.Bradley
..^,^<..<j«ivi.; ft. ./,.<-<^v.y:, , .'--v <f<//'
. cxohaniied for 1,;333;"£
rslccseiS to i.r. Vrr. -v erl
Exhibit U-70b
Exhibit U-71
SHA<(£ DE*Cft>PTM)N OF COl.LAT£H»_
V etKX^sh'S The 'adljjnd Bank of Cleveland Ohio Cap Temti C
MOOrtri /'TSG&-AJ^»et»«--- -€-4r- Bradley ?;^lJX£f_Or •''---'•
ihs ;. ;St''r-n .lessrve Invost.inr c6r— 6.? Pfd
Units ., ,;g:?i^//33 ^t iqO Units ea. Otto Hlllsr
=60Bf}shz "the "nlted ^or? Com •iiVwj-tw '
\^ i^e?*->^^/9«.-«t— i-'>'»fl+rth--'«-G-ii-r>->«t4-er
•£^^ J?//*/**^
n. rerner
r:^ /3V
^»*-»«r-l ... , .. „„ ^,,„
h-ia-^tH»^..^TO0'I80l/»S at fe^OOOgaa sa
.■r?ef>^-9frgAg^8--at-iT9ftOi»ii9- «» ?p<ink ShoJeg ,
'iSfO^siis 'Hie ''leveTand RalLvay Co Ct€ of ■-'e; c.^it
':b^v
g/»-^^ raiilUO/l£34 C K CravBford '
.■■C124;?'iS46 The Union I>-ust Co at lOOsha ea.
7- Py3Z;
/Vf/5CC
« .^Z- 7'r^/ /■^ "''i
'/J.*^
6.000 8h8 <he United Corpn Con. leisr. Ctfe. exchuieed for Pern. Ctfi.
^jT^ ^j^
s«»4-i*<^.^S9w^.-
Exhibit U-71a
1
plif OH OHA^IF.
UESCItlPTlON OF COUATemL ^^^
1
Yen £?.erir.ger. Corm Coc..
/
^.^
tuv/- _ ._
f ■: J ; 3- '. '^^vo eo'iiiUirf ?.,<T;fil..|«Yn4 *-'&^^»*,Mt^T»d J» :' .
Exhibit U-71b
Exhibit U-72
'0 ;?.'«: \{. J. Van
Exhibit U-72a
The Terminal Eull||hg Co. & The Vanesa to.
Terminal Bldg.
CLt / '/ f.
• ■ « -J ,. .
•f^A^ '. i-'rj.
.UShc f 9 J?.-'
' < // !r/r
Exhibit U-73
Exhibit U-73a
Jfetropolitan ntlllt|^
DUE "'''^■ J'»'N».ia
INTEREST OR DISCOUNT
DISCOUNT INT. REBATE INT. BECETOLE
1 -'» • j/ ~> '-The '^^aneas Co.
nfyrfS' ft.
Wh 5
DJE
D1»E f '/'/■.?/
DUE ^J/ J ^
2/A? i <» .!'
•'* CT "•"
/^ y * i> i»
H-J> 3 T-"*? "^
Exhibit U-74
''U-'^l^-y '■^<^fi»f^'h2^-^ ^^ DESCmPTlON or COUAtEBW. —
^Ivivo/^ito^ 2, 100.600* Cortificate of ''articipatlon loan to Metropolitan
utlltltlfts -i-nc 8,S00;00e Secured by the following
lOOsha The Cleveland fraction '?or!ninal8 Co. Com '
I lOOshB The Traction Stores ^o. Com
Aaaignment of equity in 5 SOOsha '^he Cleveland and
YoungBtown "ailroad Co. Com, subject to a pledge to the
h'ew ^ork Sentral Railraod Co,
•^ 1465 f ha Tha ''lavaland Intarurban "allroad Co. Com Cap
Collateral held In Corporate Trust Dept.
"l'^^ .5-r7a3^r67'iS^6 Kotp of The tievsland Intsrurban Railroad Co,
1^ fJ'<?^^y^%S4,-694-,~6e Kote of ^he ClflVf^land I'rQCtion Terminals Co,
MK-j^H'-d^ Ht^QS^^iS- \.c.t9 of The Traction Stores Go,
' JiU,. IMt, .3/'.*
nUi' /«.- /Htn^
«« t<«« THE UHIOM TRUST COMPANY, CLEVELAND, C«iUi>l 8«J»a» a* HI mil* ptp«l h mm^m •«1 tbov. tae«Mlnin
Exhibit U-74a
The Van Swerlngei^o.
S -
^JtA..i
i;/«l
1^
' !
I:
Exhibit U-75
Title to the rollowlng real estate held In trust
by iriH "nion Trust Co.
?7.52 acres St. Clair Ave, Eafctlt * Upson Roads
120.00 Peet St. Clair Ave.
7.97 acres No. Woodland Se Lander
37.93 Acres Elock 12 Shaker Country Estates
119.78 Acres block 12 Shaker Country Estates
Appraisal
Eabllt ?; Upson Koad 27.52 arms $6^,-800.00
St. Clair Ave. 120 ft 66.000.00
. K.Soodland % Lander 7.97 acres 15,!-40.00
Block 12, Shaker Country Est. 37. pa acres 75,f'6O.b0
BlOOk l'^, do do llf-.7e acrps 419^230.^0
Total ^ "645,530^00*
< Certified copy of '■•gr'eKraer.t
■JL Certificate of Kesolutiori toard of J.lrectcrs
The Van Swerinren Co.
Exhibit U-75a
The Daisy Hill Co.^
y,'.
jj c> i-t:,
-7 ' .i
r ;■/ ■/
'7
i :•
Exhibit U-76
Exhibit U-76a
STOCK EXCHANGE PRACTICES
Exhibit U-69w
8969
Consolidated liability to the Union Trust Company of Van Sweringen controlled
companies — Continued
Date Balance Increase Decrease
1928
Jan. 10
14
20
Feb. 17
20
Mar. I
Apr. 2
June 23
26
27
July 6
Sept. 4
6
13
Oct. 17
18
$2, 691, 363. 03
3, 191, 363. 03
3, 748, 363. 03
4, 248, 363. 03
4, 748, 363. 03
4, 998, 363. 03
4, 998, 363. 03
5, 998, 363. 03
5, 998, 363. 03
6, 698, 363. 03
6, 781, 863. 03
6, 632, 243. 03
6, 697, 386. 03
6, 5S1, 894. 03
6. 582, 510. 28
7, 082, 510. 28
$500,
500,
557,
500,
500,
250,
500,
1, 000,
1, 000,
700,
83,
000. 00
000. 00
000. 00
000. 00
000. 00
000. 00
000. 00
000. 00
000. 00
000. 00
500. 00
20,
500,
000. 00
000.00
$500, 000. 00
i,'6oo,'ooo."oo
149, 620. 00
34, 857. 00
15, 492. 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
9,
11,
11,
11,
11,
043, 253. 28
643, 253. 28
143, 253. 28
248, 363. 03
948, 363. 03
448, 363. 03
394, 363. 03
394, 363. 03
259, 363. 03
Increase
500, 000. 00
500, 000. 00
600, 000. 00
500, 000. 00
1, 700, 000. 00
1, 500, 000. 00
1, 000, 000. 00
Decrease
23, 838. 00
f 800, 000. 00
\ 94, 890. 25
54, 000. 00
1, 000, 000. 00
135, 000. 00
Exhibit U-69x
Date
1929
May 31
June 19
July 13
20
23
25
Oct. 29
1930
Mar. 7
May 13
Aug. 14
Balance
$10, 759, 363. 03
10, 804, 363. 03
10, 654, 363. 03
9, 294, 363. 03
7, 294, 363. 03
3, 293, 363. 03
8, 293, 363. 03
8, 344, 363. 03
8, 939, 363. 03
10, 361, 863. 03
Increase
$45, 000. 00
Decrease
$500, 000. 00
5, 000, 000. 00
51, 000. 00
800, 000. 00
1, 422, 500. 00'
r 80, 000. 00
i 70, 000. 00
1, 360, 000. 00
r 930,000.00
11,070,000.00
f3, 001, 000. 00
U, 000, 000. 00
205, 000. 00
Date
1930
Oct. 30
Nov. 1
20
26
1931
Jan. 24
Oct. 6
Nov. 3
19
1932
Jan. 26
Balance
10, 361, 863. 03
10, 362, 500. 00
10, 362, 500. 00
11,040,000.00
11,040,000.00
11,035,000.00
11,035,000.00
10, 939, 777. 75
10, 924, 183. 75
Increase
7, 800, 000. 00
387, 000. 00
800, 000. 00
677, 500. 00
100, 000. 00
loo," 000.' 00
Decrease
7, 800, 000. 00
386, 363. 03
800, 000. 00
100, 000. 00
5, 000. 00
400, 000. 00
95, 222. 25
10. 000. 00
(Exhibits U-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 Committee,
R. S. Crawford, Secretary.
WMB
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
Gentlemen: 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 Companv (to the credit of our account at their
bank) 1 $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 Companv (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
Total $9, 000, 000
Very truly j^ours.
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.
It was agreed to loan O. P. and M. J. Van Sweringen $5,000,000.00 to be
secured by coUataral —
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
17,999^2 shares Calumet Trust
16,250 shares Vaness Company common
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 Swerin-
gen 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 MetropoHtan Utilities, Inc.
Finance Committee,
WMB
Exhibit U-80
R. S. Crawford, Secretary.
January 8th, 1931.
Mr. O. C. Gray,
Superintendent of Banks, Columbus, Ohio. [State of]
Dear Mr. Gray: We wish to acknowledge receipt of your letter of January
3rd addressed to our Board of Directors, in reference to what appears to be an
excess loan limit. This matter will have our prompt attention.
Very truly yours,
WMB.EMS President.
Exhibit U-81
January 24th, 1931.
Mr. O. 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 dulj^ 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
3^ou 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 the accompanying carbon and
return to us for our files.
Very truly yours.
REP:EP
Enc.
L. C. GiLGER,
Asst. Secretary.
Exhibit U-3-1
January 9, 1933.
Mr. K. V. Painter,
3^40 Fairmount Blvd., Shaker Heights, Ohio.
Dear Mr. Painter: We advise that we are preparing the usual Fiducii-y
return of income for the calendar year 1932 with reference to our Trust No. 2975
known as the "Painter-Bradley-Myers Syjidicate," in which you have a K^h in-
terest. 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 truly yours,
L. C. GiLGER,
Assistant Secretary.
LCG G
Exhibit U-3-2
January 9, 1933.
Estates Trust 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:
Name
Interest
Share of
income
Estate of P. A. Myers
1/lOth
$1,351.01
J. R. Nutt, Jr., Trust -.-
3/lOOths .-
405. 29
Frances Nutt Trust- - .-
3/lOOths
405. 29
Jane Nutt Akens Trust
3/lOOths
405.29
Louise Nutt Iseman Trust
3/lOOths
405. 29
David Clark Nutt Trust --- --
8/lOOths -
1, 080. 86
We are advising you of this for your information in connection with 1932 re-
turns for the above trusts.
Very truly yours,
L. C. Gilger,
Assista7it Secretary.
LCG G
Exhibit U-3-3
COPY OP A letter found IN THE FILES OF THE UNION TRUST COMPANY
February 5, 1932.
K. V. Painter,
S£40 Fairmount 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 Fiduci-
ary 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
Savings and Trust Company, Trustee under agreement by and among K. V.
Painter, C. L. Bradlev, 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 PEACTICES 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) O. P. Van Sweringen,
Supervisor.
(Signed) 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, 1926..
To: The Union Trust Company, successor by consolidation to The Citizens
Savings 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 Trus-
tee as aforesaid — said distribution to be made in accordance with the terms of
said Agreement dated April 14, 1920.
(Signed) O. P. Van Sweringen,
Supervisor.
(Signed) 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 Depart-
ment reports.
Yours verj' trul}-,
(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 aU 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 de-
partment, and to drafts and certified checks which, under the statutes, are en-
titled 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 unpreferred 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, 1930.
The 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 Painter-
Bradley-Myers Trust property.
Very truly yours,
L. C. GiLGER,
Asst. Secretary.
LCG:W
Exhibit U-9
July 30, 1929.
The 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, 1930.
The 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. C. Gilger,
Asst. Secretary.
CG:MT
STOCK EXCHANGE PRACTICES
8975
Exhibit U-3-11
Recapitulation of amounts received from corporate trust no. 2975
Van Sweringen Co _.
C. L. Bradley. -_ -..
Alva Bradley.--
Estate Dept. Union Trust Co., J. R. Niitt-
K. V. Painter -
Jno. C. Myers, .Administrator for Estate of
F. E. Myers ---
P. A. Myers
Total.
1924
$27, 000. 00
27, 000. 00
27, 000. 00
27, 000. 00
13, 500. 00
13,500.00
135, 000. 00
1925
$11, 200. 00
11,200.00
11,200.00
11,200.00
5, 600. 00
5, fiOO. 00
1926
$19, 800. 00
19, 800. 00
19, 800. 00
19, 800. 00
9, 900. 00
9, 900. 00
56,000.00 99,000.00
1927
$26, 000. 00
26, 000. 00
26, 000. 00
26, 000. 00
13,000.00
13, 000. 00
130, 000. 00
1928
$35, 000. 00
35, 000. 00
35, 000. 00
35, 000. 00
17,500.00
17,500.00
175,000.00
Van Sweringen Co
C. L. Bradley
Alva Bradley-
Estate Dept. Union Trust Co., J. R. Nutt-
K. V. Painter
Jno. C. Myers, Administrator for Estate of
F. E-. Myers
P. \. Myers
Total
1929
$22, 000. 00
17, 500. 00
4, 500. 00
22, 000. 00
22, 000. 00
11,000.00
11,000.00
110,000.00
1930
$12, 000. 00
6, 000. 00
6,000.00
12, 000. 00
12, 000. 00
6. 000. 00
6, 000. 00
60, 000. 00
1931
$14, 500. 00
7, 250. 00
7, 250. 00
14,500.00
14, 500. 00
7, 250. 00
7, 250. 00
1932
$2, 100. 00
1,050.00
1. 0.50. 00
2,100.00
2, 100. 00
1, 050. 00
1, 0.50. 00
72, 500. 00 10, 500. 00
Total
$169, 600. 00
150,800.00
IS, 800. OO
169, 600. 00
169, 600. 00
84, 800. 00
84, 800. 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.
.\pr.
June
July
Sept.
Oct.
Nov.
Dec.
Feb.
Feb.
Mar.
.\pr.
June
July
.A.ug.
Sept.
Oct.
Nov.
Dec.
Jan.
16, 1924
8, 1925
9. 1925
21, 1926
11, 1926
22, 1926
30, 1926
8. 1926
14. 1926
3. 1927
7, 1927
18, 1927
20, 1927
12, 1927
11, 1927
26, 1927
31. 1927
1,1928
27. 1928
16, 1928
20, 1928
2. 1928
17. 1928
8,1928
6,1928
IS, 1928
12. 1928
31, 1928
24. 1929
Van
Swerin-
gen Co.
$27, 000. 00
8, 000. 00
3, 200. 00
3, 000. 00
3, 000. 00
3, 000. 00
3, 000. 00
4, 800. 00
3,000.00
3, 000. 00
3, 000. 00
4,000.00
3. 000. 00
3, 000. 00
3, 000. 00
3,000.00
4.000.00
3, 000. 00
3, 000. 00
3, 000. 00
3, 000. 00
3, 000. 00
3, 000. 00
3, 000. 00
3, 000. 00
3, 000. 00
4. 000. 00
4, 000. 00
4, 000. 00
C. L.
Bradley
$27,
8,
3,
3,
3,
3,
3,
4.
3,
3,
3.
4,
3,
3.
3,
3,
4,
3.
3,
3,
3,
3,
3,
3,
3,
3,
4.
4,
4,
000.00
000.00
200.00
000.00
000. 00
000.00
000.00
800.00
000.00
000.00
000.00
000.00
000.00
000.00
000.00
000.00
000.00
000.00
000.00
000. 00
000.00
000.00
000.00
000.00
000.00
000. 00
000.00
000.00
000.00
Alva
Bradley
Estate
Dept.
Union
Trust
Co. J. R.
Nutt
$27,
8,
3,
3,
3,
3,
3,
4,
3,
3,
3,
4.
3,
3,
3,
3,
4,
3,
3,
3,
3,
3,
3,
3,
3,
3,
4,
4,
4,
000.00
000.00
200.00
000.00
000.00
000. 00
000.00
800. 00
000.00
000.00
000.00
000.00
000.00
000.00
000.00
000.00
000.00
000.00
000.00
000.00
000.00
000.00
000.00
000.00
000.00
000.00
000.00
000.00
000.00
K. V.
Painter
$27, 000. 00
8, 000. 00
3, 200. 00
3,000.00
3, 000. 00
3, 000. 00
3, 000. 00
4, 800. 00
3,000.00
3,000.00
3,000.00
4,000.00
3, 000. 00
3, 000. 00
3,000.00
3, 000. 00
4, 000. 00
3, 000. 00
3.000.00
3, 000. 00
3, 000. 00
3, 000. 00
3, 000. 00
3,000.00
3, 000. 00
3, 000. 00
4, 000. 00
4, 000. 00
4, 000. 00
Jno. C.
Myers
Adm. for
Estate
of F. E.
Myers
$13, 500. 00
4,000.00
1, 600. 00
1, 500. 00
1, 500. 00
1,500.00
1, 500. 00
2, 400. 00
1, 500. 00
1, 500. 00
1, 500. 00
2, 000. 00
1, 500. 00
1, 500. 00
1, 500. 00
1, 500. 00
2, 000. 00
1,500.00
1, 500. 00
1, 500. 00
1, 500. 00
1, 500. 00
1, 500. 00
'"3,'666.'o6'
1, 500. 00
2, 000. 00
2, 000. 00
2,000.00
$13, 500. 00
4, 000. 00
1, 600. 00
1, 500. 00
1, 500. 00
1, 500. 00
1, 500. 00
2, 400. 00
1, 500. 00
1, 500. 00
1, 500. 00
2, 000. 00
1, 500. 00
1, 500. 00
1, 500. 00
1, 500. 00
2, 000. 00
1, 500. 00
1, 500. 00
1, 500. 00
1, 500. 00
1, 500. 00
1, 500. 00
1, 500. 00
1, 500. 00
1, 500. 00
2. 000. 00
2, 000. 00
2, 000. 00
Total
$135,
40,
16,
15,
15,
15,
15,
24,
15,
15,
15,
20,
15,
15,
15,
15,
20,
1.5.
15,
15.
15,
15,
15,
13,
16.
15,
20,
20,
20,
000.00
000.00
000.00
000.00
000.00
000.00
000.00
000; 00
000.00
000.00
000.00
000.00
000.00
000.00
000.00
000.00
000.00
000.00
000.00
000.00
000.00
000.00
000.00
500.00
500.00
000. 00
000. 00
000. 00
000. 00
175541 — 34— PT 20-
-16
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
Van
Swerin-
gen 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
Mar. 5, 1929
$3, 000. 00
3, 000. 00
3,000.00
3,000.00
3, 000. 00
3,000.00
3,000.00
3, 000. 00
3, 000. 00
3, 000. 00
3, 000. 00
3, 000. 00
3, 000. 00
3, 000. 00
2, 500. 00
2, 100. 00
$3, 000. 00
3, 000. 00
3, 000. 00
1, 500. 00
1, 500. 00
1, 500. 00
1, 500. 00
1,500.00
1, 500. 00
1, 500. 00
1, 500. 00
1, 500. 00
1, 500. 00
1, 500. 00
1, 250. 00
1, 050. 00
$3, 000. 00
3, 000. 00
3, 000. 00
3, 000. 00
3, 000. 00
3, 000. 00
3, 000. 00
3, 000. 00
3, 000. 00
3, 000. 00
3, 000. 00
3, 000. 00
3, 000. 00
3, 000. 00
2, 500. 00
2, 100. 00
$3, 000. 00
3, 000. 00
3, 000. 00
3, 000. 00
3, 000. 00
3, 000. 00
3, 000. 00
3, 000. 00
3, 000. 00
3, 000. 00
3, 000. 00
3, 000. 00
3, 000. 00
3, 000. 00
2, 500. 00
2, 100. 00
$1, 500. 00
$1, 500. 00
1, 500. 00
1, 500. 00
1, 500. 00
1, 500. 00
1, 500. 00
1, 500. 00
1, 500. 00
1, 500. 00
1, 500. 00
1, 500. 00
1, 500. 00
1, 500. 00
1, 500. 00
1, 250. 00
1,050.00
$15,000.00
Apr. 12, 1929
13, 500. 00
May 10,1929
July 12,1929
Sept. 10, 1929
Nov. 18, 1929
Jan. 24,1930
Apr. 18,1930
July 11,1930
Oct. 22,1930
Jan. 2, 1931
Apr. 7, 1931
July 7, 1931
Sept. 9,1931
Dec. 16,1931
May 7, 1932
3, 000. 00
1, 500. 00
1, 500. 00
1, 500. 00
1, 500. 00
1, 500. 00
1, 500. 00
1, 500. 00
1, 500. 00
1, 500. 00
16, 500. 00
$1, 500. 00
1, 500. 00
1, 500. 00
1, 500. 00
1, 500. 00
1, 500. 00
1, 500. 00
1, 500. 00
1, 500. 00
1, 500. 00
1, 500. 00
1, 250. 00
1, 050. 00
15, 000. 00
15, 000. 00
15, 000. 00
15,000.00
15, 000. 00
15, 000. 00
15, 000. 00
15, 000. 00
15, 000. 00
13, 500. 00
3, 000. 00
1, 250. 00
1, 050. 00
16, 500. 00
12, 500. 00
10, 500. 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 Tkust 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 Window-
Dressing, 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.
(The 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
Rec'd Oct. 7, 1931
Mailed Oct. 14, 1931
State of Ohio,
Division of Banks,
Columbus, Oct. 6, 1931.
To the President or Cashier of the Bank Addressed:
Dear Sir: In accordance with the provisions of 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 for-
warded to this office.
STOCK EXCHANGE PKACTICES
8977
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
it ems.
Respectfully,
I. J. Fulton,
Superintendent of Banks.
Note. — Form CI (large sheet) should be executed and sent to this office im-
mediately and in no case held awaiting proof of publication.
BQT'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
Amount of paper past due on which no
interest has been paid for one year
RATE OF INTEREST PAID
Highest rate of interest paid on Public De-
posits ._
Highest rate of interest paid on Time Cer-
tificates
Highest rate of interest paid on Savings
Deposits -
Highest rate of interest paid on Bills Pay-
able -
Highest rate of interest paid on Bills Re-
discounted
LAWFUL RESEEVE
Day of this Report
Average for 10 days previous-..
041, 967. 19
029, 457. 51
3M%
3H%
3M%
0%
4. 86%
5. 32%
Carried
Since
All temporary.
Amount
$242, 905. 02
Other bonds, stock and securities (Must agree with Item 10)
Par
Value
Name and Kind of Bond, Stock or Security
Rate
Mature
Amount Car-
ried on Books
Default
Since
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 Mu-
nicipalities, etc
993, 159. 64
7, 213, 698. 78
Total.
26, 715, 370. 25
8978
STOCK EXCHANGE PRACTICES
Other real estate owned {Must agree with Item 14)
Description
Amount
Carried on
Books
Prior Lien
if Any
Tax Value
Date When
Title Ac-
quired
Reason
Schedule Attached.
Total.
Overdrafts
Standing 6 months or more-
Temporary
Officers and Directors
Employees
Total.
$14, 213. 03
15, 927. 10
1, 866. 79
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.
^^'All schedules 7nust 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 7 10-11 1^
710-121, 710-122, and 710-125 General Code of Ohio, including overdrafts
Name of Borrower.
Total direct.
Total indirect.
Combined
None
Net balances due from banks and bankers {item 24)
Per Cent
Interest
Received
Name and Location of Bank
Schedule Attached
Amount
Per Cent
Interest
Received
Name and Location of Bank
Amount
STOCK EXCHANGE PRACTICES
8979
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
Bank
Overdrafts
to 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 publisher's 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 mem-
ber 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 Loans on Real Estate .. - $72,537,215.07
2 Loans on Collateral 71,374,391.05
3 Other Loans and Discounts 29, 847, 219. 83
3a Acceptances of other bands discounted __ . None
3b Acceptances of this bank purchased or discounted 2, 359, 877. 47
$176,118,703.42
32, 006. 92
4 Overdrafts, secured (14,293.42) unsecured (17,713.50)
5 United States Bonds and Treasury Certificates 22, 117, 061. 83
6 Liberty Loan Bonds. _ . None
7 Premium on U.S. Bonds (Items 5-6) _ . None
8 War Savings Certificates and Stamps None
22,117,016.83
1, 771, 365. 35
9 State, County and Municipal Bonds,- . _ - _ --
10 Other Bonds, Stocks and Securities . .__---.-- ...
26, 715, 370. 25
11 Premiums on Bonds and Securities (Items 9-10)
None.
12 Banking House and Lot (Ta.x Value $ ). . .. .
13, 437, 976. 17
13 Furniture and Fi.xtures
41, 531. 09
14 Real Estate other than Banking House -- . _ ._
5, 029, 805. 51
15 Cash Items -_ ... , ... . . _ _.
242, 905. 02
16 Lawful reserve with Federal Reserve Bank
10,685,511.89
16a Stock of Federal Reserve Bank (50% of subscription)
1, 050, 000. 00
16b Items with Federal Reserve Bank in process of collection (not availa-
ble as reserve) ... ...... _ _ .. . -
9, 367, 563. 83
16c Real Estate Sold Under Land Contract
1, 429, 690. 80
17 Exchange for clearing _ . . _ $2,571,655.50
18 Gold Coin and Gold Certificates .. 118,787.50
19 Silver Coin (Dollars— Halves— Quarters— Dimes) 125,093.65
20 Nickels and Pennies ... 46,789.13
21 Paper Currency 2,412,369.00
5, 274, 694. 78
8980
STOCK EXCHANGE PRACTICES
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 — Continued
Insert word
NONE if no
amount is to
be entered at
right
Amount
RESOURCES— continued
22 Accrued Interest Receivable -- ._ . . . .
$2, 034, 040. 27
23 Foreign Money . . — — .. --
1, 712. 48
24 Net amount due from Banks and Bankers
32, 226, 761. 75
25 Items in Transit _ - -. . .
305, 690. 63
26 Other Assets (attach schedule) -_ -.- _ _
720, 677. 29
26a "Acceptances" executed by this bank and now outstanding
6, 618, 837. 50
26b Liability of bankers to this bank, a/c acceptances guaranteed or en-
dorsed. (Contra Item 53) .. _. . __. .
4, 136, 557. 61
26c Liability of others to this bank, a/c endorsement of bills of exchange or
drafts sold. (Contra Item 54)
2, 574. 89
27 Cash short
423. 99
28 Letters of Credit— Customer's Liability
1, 424, 261. 18
(Verify all items.) Total .. .
320, 785, 679. 45
LIABILITIES
29 Capital stock paid in
22, 850, 000. 00
30 Surplus Fund
12, 150, 000. 00
Undivided Profits...
$15,316,460.39
10, 243, 516. 79
Less Expenses, Interest and Taxes paid . ..
31 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
2, 081, 945. 19
35 Public Funds (except Postal Savings) .
5, 783, 105. 39
81, 796, 607. 28
1, 122. 36
909, 879. 08
405, 907. 23
33, 033, 463. 62
687, 522. 75
36 Individual Deposits subject to Check (except Public
Funds)
37 Demand Certificates of Deposit (except Public Funds) .
38 Cashier's Checks outstanding.
39 Certified Checks outstandinsj ... ..
40 Net amount due to Banks and Bankers ..
41 Dividends Unpaid. . . . ..
Total Demand Deposits
122, 617, 607. 71
122, 617, 607. 71
42 Time Certificates of Deposit
13, 224, 410. 46
6, 363, 457. 86
101, 967, 828. 41
7, 962, 956. 18
895, 709. 67
Public Funds _..-..
43 Savings Deposits..
Other Time Deposits
44 U.S. Postal Savings
Total Time Deposits.. _. — -_
130, 414, 362. 58
130, 414, 362. 58
None
None
None
None
45 Funds on Deposit by Trust Department
11,721,912. 00
46 Notes and Bills Rediscounted .
47 Bills Payable ._
48 Certificates of Deposit representing Money Borrowed
49 Bonds Borrowed . ...
50 Bills payable with Federal Reserve Bank .
None
None
50a Rediscounts with Federal Reserve Bank
51 Liabilities other than above stated (attach schedule) .
169, 390. 56
"Acceptances" executed for customers..
Less "Acceptances" of this bank purchased or dis-
counted.
8, 978, 714. 97
2, 359, 877. 47
61a Net acceptances.. ..
6, 618, 837. 50
6, 618, 837. 50
62 Cash over ..
None
63 Acceptances of banks payable at a future date, guaranteed by this bank
by endorsement or otherwise. (Contra Item 26b)-.. ... ..
4, 136, 557. 61
54 Bills of exchange or drafts sold with endorsement of this bank. (Con-
tra Item 26c)-.
2, 574. 89
55 Letters of Credit executed for customers
1, 425, 311. 18
(Verify all items.) Total . _
320, 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 PRACTICES 8981
correctly represent the matters therein to be covered, to the best of my knowledge
and belief.
Correct — Attest:
(Signed) E. R. Grasselli,
(Signed) F. P. Root, (Signed) A. W. Lewis*,
(Signed) Otto Miller, Vice President.
Directors.
•*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 Q.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. 2J^ 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 $24, 508. 50
Bank of Manhattan Trust Company 68, 327. 03
Bankers Trust Company 3, 545, 187. 09
Central Hanover Bank and Trust Com-
pany 268, 583. 74
Chase National Bank 1, 500, 712. 15
Chemical Bank and Trust Company 99, 236. 38
Commercial National Bank and Trust Com-
panv 111,972. 29
First National Bank 1, 008, 918. 16
Guaranty Trust Company 5, 982, 925. 16
Irving Trust Company 327, 471. 21
Manufacturers Trust Company 50, 000. 00
J. P. Morgan Company 5, 279, 660. 87
National Citv Bank 7,361,877.06
New York Trust Company 127, 691. 41
$25, 757, 071. 05
Due from Chicago banks:
Central Republic Bank and Trust Com-
pany $312,081. 76
Continental Illinois Bank and Trust Com-
pany 491, 441. 80
First National Bank 462, 059. 04
Northern Trust Company 46, 783. 29
$1, 312, 365. 89
Due from other correspondents' $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
Liability
(individual
or firm) as
indorsers
or guaran-
tors
Checks
and
cash
items
Over-
drafts
Number
of shares
of stock
of this
bank
owned
Nutt, J. R
Chairman of Board of Direc-
tors (D).
Vice Chairman of Board of
Directors (D).
Vice Chairman of Board of
Directors (D).
President (D)
$4, 000. 00
5000
Coulton, Geo. A
2500
Kraus, J. R.
1200
Baldwin, W. M.. ..
1000
Smith, Allard
Executive Vice President (D).
Executive Vice President
Executive Vice President &
Secy.
Vice President
$16, 750. 00
3, 900. 00
310
Farnsworth, C. E.
380
Crawford, R. S
110
Anderson, J. C
0, 430. 00
2, 400. 00
24, 900. 00
10
Armstrong, J- Q
Vice President.-
200
Carlson, C. W
Vice President _
10
Champion, T. J
Vice President
140
Clark, J. H-.
Vice President
3, 100. 00
22, 000. 00
6, 175. 00
25
Creswell, E. E
Vice President
Dunn, James, Jr
Vice President .
10, 500. 00
Fisher, L. H .
Vice President
915
Geddes, J. O
Vice President .
3, 000. 00
25
Gleason, Chas. B
Vice President..
3, 000. 00
1420
Halliday, M. S
Vice President . .
18, 150. 00
284, 000. 00
13, 575. 00
3, 500. 00
15, 050. 00
60
Harris, J. F
Vice President.. .
Harrold, P. T.
Vice President...
Hills, H. E
Vice President
40
Hull, Grover H
Vice President
20, 300. 00
Lewis, A. W
Vice President.. .
10
Messick, H. D
Vice President-. .
120
O'Neill, W. J.
Vice President
91, 305. 00
Paton, James L
Vice President
200
Piwonka, Charles
Vice President
2, 000. 00
8, 490. 00
90
Rovon, J. C...
Vice President..
400
Sherwin, Geo. N
Vice President.. .
400
Slach, P. J
Vice President ..
2, 000. 00
1200
Steele, Geo. P
Vice President
400
Stuber, Wm. G
Vice President. . ..
16, 866. 66
10, 000. 00
1,175.00
50
Tonks, Wm
Vice President and Credit
Manager.
Treasurer
Anderson, C. B
Exhibit U-9-2c
Tewksbury, C. L..
Bechberger, C. S-._
Brown, H. L
Carr, L. O., Jr
Caswell, J. H
Freytag, W. H
Hance, J. P
Hell, C. F
Herbert, H.H
Hodous, Chas. J
Jindra, C. J.
Koelliker, M. B.--.
Kovachy, O. M
Lackamp, J. H
LaFever, D. Y
Moler, A. L
Pettit, R. B
Pfeiffer, W. A
Purdy, Van R
Stromberg, W. 0-.
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
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
$3,
5,
400. 00
980. 00
15,
16,
6,
11.
27,
000. 00
350. 00
850. 00
400. 00
975. 00
000. 00
750. 00
500, 00
100. 00
360. 00
340. 00
555. 00
060. 00
060. 00
520. 00
500. 00
10,
5,
7,
6,
435. 00
980. 00
400. 00
140. 00
050. 00
$230. 50
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, /5SJf— Continued
O FFICERS— Continued
Name
Official title
Liability
(individual
or firm) as
payers
Liability
(individual
or firm) as
indorsers
or guaran-
tors
Checks
and
cash
items
Over-
drafts
Number
of shares
of stock
of this
bank
owned
Hiles W \
\ssistant Secretary
$1,475.00
29, 500. 00
5
Kakes, Joseph
Assistant Secretary
5
Exhibit U-9-2d
Kinsey, 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
Eline, T. J
Falkner, Geo. W
Glove, Paul
Qrigor, 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
McQinness, H. J
Assistant
Assistant
Assistant
Assistant
Assistant
Assistant
Assistant
Assistant
Assistant
Assistant
Assistant
Assistant
Assistant
Assistant
Assistant
Assistant
Assistant
Assistant
Assistant
Assistant
Assistant
Assistant
Assistant
Assistant
Assistant
Assistant
Assistant
Assistant
Assistant
Assistant
Assistant
Assistant
Secretary
Secretary
Secretarv
$6, 000. 00
9. 950. 00
2, 400. 00
4, 320. 00
25
85
8
Secretary., _ - _
10
Secretary
5
5
Secretarv
1, 380. 00
10, 280. 00
5
Treasurer
-
60
Treasurer
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
25
10
10
Treasurer
10
10
Treasurer
5
Treasurer
10
Treasurer
10
4, 200. 00
45
Treasurer
10
Treasurer
2, 320. 00
8, 190. 00
4,710.00
12, 265. 00
5, 700. 00
785.00
10
Treasurer
23
Treasurer
10
5
Treasurer
5
Treasurer
5
8
Treasurer
10
Treasurer
3, 660. 00
10, 452. 00
10
Treasurer
Exhibit U-9-2e
McHaffie. J W
Monda, J B
Assistant Treasurer
5
Morgan, C. C
Assistant Treasurer
18
$2, 200. 00
5, 000. 00
6, 200. 00
3, 925. 00
5
Park W R
Assistant Treasurer
5
Peter. B L
Assistant Treasurer
5
Schacht, E W
Assistant Treasurer
10
Scott, D. D
Assistant Treasurer..
5
30
Spear, G. A
Assistant Treasurer
3, 340. 00
50
Zdara, H E
Assistant Treasurer
5
Pratt, Harry F
Culver, G. H
Manager Safe Deposit De-
partment.
Assistant Estates Trust Offi-
cer.
Manager Publicity Depart-
ment.
Manager Women's Service
Department.
Purchasing Aeent
133
5, 705. 00
11,860.00
2, 700. 00
1,000.00
5, 760. 00
200.00
5
EnowltoD, D. S
10
Dombey, Clara L
Hover, F W
34
Cordrey, L. A
Cheadle. F A
Assistant Credit Manager
Assistant Credit Manager
10
5
Stout, C. T
Ginther. P C
Assistant Credit Manaeer
20
Brauer, George
Stark. C G
Tax Consultant
1, 100. 00
15
Ta\ Consultant
Stofer, L H
Real Estate Officer
8, 905. 00
20
Hollander J R
Assistant Real Estate Officer.
Manager Statistical Depart-
ment.
5
Bosworth, R W
7, 680. 00
17
Note.— An Officer, who is also a Director, is indicated by the letter "D" following his name and title.
8984
STOCK EXCHA]SrGE 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
Name
Liability
(individual
or firm) as
payers
Liability
(individual
or firm) as
indorsers or
guarantors
Checks
and cash
items
Overdrafts
Number
of shares
of stock
of this
owned
Barkwill, E. S
$19, 000. 00
$13, 400. 00
148
Bartol, George
860
Belden, W. P
17, 235. 27
85,000.00
100
Comey, Geo. P .
400
Corning, Henry W
1,688
Crawford. W. J., Jr
6i,5"do". 00
3,480.74
800
Dalton, H. G
700
Pretter, F. B.
550
Gerhauser, W. H
1, 000. 00
43, 526. 39
10, 000. 00
100
Ginn, F. H -
148, 820. 00
1,100
Girdler, T. M-.
100
Gordon, George C . . .
300
Grandin, G. W
345, 000. 00
1
500
Grasselli, E. R
196
Grasselli, Thomas S- - - ..
731,130.70
405, 800. 00
19, 9S3. 02
1,176
Gund, George
6,218
Hadden, John A
25
Hanna, H. M
1,000
Harshaw, W. A
10, 500. 00
7, 400. 00
500
Haserot, P. H . ...
3,660
Hayden, W. S
73, 750. 00
870, 000. 00
36, 780. 63
2,060
Herrick, Parmelv W
1,270
Hodgson, George H..
4,000
Johnson, David L
2, 700. 00
1,340
Joseph, Emil
3,312
Joyce, Adrian D
711, 500. 00
110, 000. 00
825
King, Ralph T.
340
Kling, John A. ..-
6, 105. 00
11, 300. 00
1,510
Kulas, E. J
483
Langenbach, E. A .. '
384
Lenihan, E. P.
40, 000. 00
44, 000. 00
386, 803. 33
800, 740. 37
1,000
Little, Bascom
195, 500. 00
3, 500. 00
1, 866. 79
1,800
Mather, Samuel
4,000
Mather, Wm. G...
2,500
Exhibit U-9-2g
Miller, Otto . .
859, 750. 00
136, 780. 83
3,630
Mitchell, Ralph D
322
Mitchell, R. V
16, 000. 00
10, 000. 00
40
Moss, Herman
22,054.85
14, 060. 67
170
Myers, P. A
2,600
Norton, Laurence H . . -.
81, 680. 00
1,600
Norton, Robert C
1,200
Osborne, Carl N
100, 000. 00
3, 080, 000. 00
110
Painter, Kenyon V
21, 671
Richman, N. G
160
Robbins, Thomas P. .. --
500. 00
22, 500. 00
800
Root, F. P
600
Smith, Samuel Lewis
68, 378. 75
345, 000. 00
1,140
SQuire, Andrew
1,350
Trammel, H. G
1,050
Wade, J. H. Jr
352, 000. 00
113,905.20
157, 292. 50
6,517
Warner, Whitnev
329, 875. 00
20
White, Fred R.
1,290
White, Thomas H
40
White, Windsor T .
35, 000. 00
2,272
Rogers, J. E
10
$10, 955, 548. 27
2, 000. 00
$1, 025, 357. 68
36, 780. 83
1, 866. 79
Less: Eliminations on account of
duplication of joint liability of
Total
10, 953, 548. 27
988, 576. 85
1,866.79 -
STOCK EXCHANGE PEACTICES 8985
Exhibit U-9-3
[Cleveland News 10/15/31]
REPORT OF THE COXDITION 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
Rea,l estate sold under land contract 1, 429, 690. 80
Accrued interest receivable 2, 034, 040. 27
Total 320, 785, 679. 45
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 un-
paid 1, 524, 236. 63
Due to banks, including certified and cashier's checks outstand-
ing 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 dis-
counted. 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.
8986
STOCK EXCHANGE PRACTICES
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8990 STOCK EXCHA^TGE PRACTICES
Exhibit U-9-5
The Union Trust Company,
Cleveland, Ohio.
Date: Sep. 29, 1931. $10,112,540.98
Credit Van Sweringea Corporation for Demand deposit.
Offset entry must be described — Chg Sec Inv.
Authorized by , official approval.
(Tfiis Ticket should be prepared and signed with Ink.)
Exhibit 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 11:33 A.M. 1933
Van Sweringen Corporation,
Terminal Building, Cleveland, Ohio.
Gentlemen: This will confirm our purchase from you today of the following
U.S. Government Treasury Certificates and Treasury Notes liereinafter described
at tlie following prices:
$4,000,000 U.S. Government 1%% Certificates due De-
cember 15, 1931 at 100^2 $4, 003, 750. 00
Interest 21, 721. 32
$6,000,000 U.S. Treasury W'>% Notes due 1932 caUed
for pavment December 15, 1931 at lOO'^a- 6, 026, 250. 00
Interest- 60, 819. 66
and we have todav 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 Certifi-
cates 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 obliga-
tions 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 ac-
count, a pro rata portion of the above securities will be released.
Very truly yours,
Union Trust Company.
M.
STOCK EXCHANGE PRACTICES
8991
Exhibit U-9-9
FEB. 3, 11:33 A.M. 1933
September 29, 1931.
Messrs. J. P. Morgan & Co.,
33 Wall Sired, New York.
Dear Sirs: We have to-day sold to the Union Trust Company of Cleveland
$10,000,000 principal amount of United States Government Treasury Certifi-
cates 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,
Van Sweringen Corporation,
By
M.
Exhibit U-9-10
FEB. 3, 11:33 A.M. 1933
September 29, 1931.
Messrs. J. P. Morgan & Co.,
23 Wall Street, New York.
Dear Sirs: We have to-day purchased from the Van Sweringen Corporation
$10,000,000. principal amount of United States Government Treasury Certifi-
cates 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 Corpora-
tion as security for this Demand Deposit with us, all in accordance with the terms
of the annexed letter.
The Union Trust Company,
Cleveland, Ohio.
W.
Chairman.
Exhibit U-9-11
FEB. 3, 11:32 a.m. 1933
Van Sweringen Corporation,
Terminal Tower, Cleveland.
V. S. Cop. copv dated 10-7-31.
(11-20-33. J.)
J. P. Morgan & Co.,
23 Wall St., New York, N.Y.
Gentlemen: 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 de-
posit of this Corporation with The Union Trust Company in accordance with
instructions to your firm contained in letter of The Union Trust Company ad-
dressed 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 Com-
pany 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,
Van Sweringen Corporation,
By
1 Enclosure.
W.
175541— 34— FT 20-
8992 STOCK EXCHANGE PEACTICES
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 Swerin-
gen 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.
STOCK EXCHANGE PRACTICES
8993
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STOCK EXCHANGE PRACTICES 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, 19S1
RESOURCES
Cash on Hand and on Deposit with Banks $58, 105, 264. 37
United States Government Securities 22, 117, 016. 83
Stock of Federal Reserve Bank, Cleveland 1, 050, 000. 00
Other Bonds and Securities,— 28, 486, 735. 60
Commercial Loans 32, 207, 097. 30
Collateral Loans 71, 374, 391. 05
First Mortgage Loans 72, 537, 215. 07
Customers' Liability on Acceptances and Letters of Credit 12, 182, 231. 18
Accrued Interest and Other Resources 2, 786, 724. 48
Real Estate Sold Under Land Contract 1, 429, 690. 80
Bank Buildings and Real Estate Owned 18, 509, 312. 77
Total $320, 785, 679. 45
liabilities
Capital— Paid Up . $22, 850, 000. 00
Surplus and Undivided Profits 17, 222, 943. 60
Deposits $264, 193, 822. 21
Postal Savings Deposits 895, 709. 67
Other United States Government Deposits. 2, 081, 945. 19
$40, 072, 943. 60
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
Member Federal Reserve System. Member Cleveland Clearing House Asso-
ciation.
OFFICES OF THE UNION TRUST CO., CLEVELAND, OHIO
Euclid-Ninth-Chester 415 Eagle Avenue
Broadway Avenue and East 55th Street Lorain and West 93rd Street
Woodland Avenue and East 55th Fleet Avenue and East 49th Street
Street St. Clair at East 140th Street
Buckeye Road at East 89th Street Euclid Avenue at Taylor Road
Euclid Avenue at East 101st Street 12301 Mayfield Road
Terminal Tower Building Cedar and Lee Roads
East 105th at Pasadena Avenue Buckeye Road and E. 118th Street
Kinsman Road at East 140th Street Detroit Avenue and Cook Avenue
West 65th Street and Detroit Avenue Madison Avenue and Hilliard Road
West 25th and Denison Avenue East 185th Street and Landseer Road
Pearl and State Roads East 116th Street and Corlett Avenue
Resources over 300 millions.
8998 STOCK EXCHANGE PRACTICES
Exhibit U-9-15
The Union Trust Company,
Cleveland, Ohio, February 16, 1934-
Mr. Otto Morton,
Bank Examiner, The Union Trust Company.
Dear Sir: 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,
The Union Lennox Company,
By P. W. Jewell, Secretary.
PWJ:V
Exhibit 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) (De-
preciation not charged off on books) From No. B-12 69, 664. 23
Depreciation on Furniture & Fixtures (Cost capitalized) (De-
preciation 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
STOCK EXCHANGE PEACTICES
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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 emploijed 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
totalfor 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 bal-
ances. 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:Mc
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 in-
vested 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 tliis Department as well as of
both the National Department and Federal Reserve to have the published state-
ments 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 suggest-
for 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.
9002
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9006 STOCK EXCHANGE PRACTICES
Exhibit U-9-21
October 6th, 1931.
Mr. 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 Com-
pany 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 Companj^ 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, pro-
vided 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,
Confirmed:
October , 1931.
The Union Trust Company of Cleveland,
By — — President.
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 Com-
pany 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 agree-
ments 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 Partj^ of the First Part agrees to re-
purchase and the Party of the Second Part agrees to sell said securities on of
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 (3}^%) 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
deficienc}^ 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. Vanderpcel,
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 Painesville, 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 op New York,
County of New York ss.
On this day of October, 1931, before me personallj^ 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 instru-
ment; 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 Compan\' of Cleveland, Ohio,
in loan to the Cleveland-Cliffs Iron Company, dated September 23rd, 1931, pay-
able six months after date, in the amount of $3,387,500.00.
The above Certificate of Participation has been discounted b\^ you on a 4J«^%
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 repur-
chase 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 op New York,
By W. S. Lambie, V.P.
Exhibit U-9-24
THE national CITY BANK OF NEW YORK
Established 1812
New York, October 7, 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 ref-
erence 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 $3,555,141
Charge Guaranty Trust Co., New York.
For
Offset entry must be described.
("Authorized 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 $6,741,281.25
Charge Natl City Bank, New York.
For
Offset entry must be described.
Ac. Cleve. Cliffs Iron Co. ("Authorized 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. \OflHcial approval.
(This Ticket should be prepared and signed with Ink)
Form No. M-24 100m 2-30
STOCK EXCHANGE PRACTICES
9009
Exhibit U-9-26
The National City Bank of New York, 55 Wall. Street — Statement op
Discount
To Union Trust Company, Cleveland, Ohio.
New York, Sept. 25, 1931.
Rate
Days
Due
Amount
Discount
Exch.
Proceeds
4H
180
Mar. 23
3. 387, 500. 00
76, 218. 75
3, 311, 281. 25
"
The National City Bank of New York, 55 Wall Street — Statement op
Discount
New York, Sept. 25, 19S1.
To Union Trust Company, Cleveland, Ohio.
Rate
Days
Due
Amount
Discount
Exch.
Proceeds
4%
180
Mar. 23
3, 000, 000. 00
301, OOOM
500, 000. 00
70, 000. 00
23
3, 500, 000. 00
3, 430, 000. 00
Exhibit U-&-27a
The Union Trust Company — Main Office Cleveland, Ohio
account collateral loans SOLD UNDER REPURCHASE AGREEMENT
Old balance
Date,
1931
Explana-
tion
V
Debit
Creait
V
New balance
Debit
Cred-
it
Debit
Cred-
it
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
8 913 733 36
258 759. 38
6 317 40
81 973 76
3 000 00
500 00
307 890 00
38 036 72
3 500 00
42 918 60
1 028 390 50
26 919 50
142 300 00
500 00
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
-
8 654, 973 98*
8 648 656 58*
8 566 682 82*
8 563 682 82*
8 563 682 82*
8 267 892 82*
8 229 856 10*
8 226 356 10*
8 183 437 50*
7 166 547 00*
7 145 627 50*
7 145 527 50*
7 145 027 50*
7 145 027 50*
7 145 027 50*
7 127 282 50*
7 105 556 25*
7 104 056 25*
7 084 113 95*
5 822 326 59*
5 812 226 59*
5 811 826 69*
5 811 826 59*
5 811 636 59*
5 811 634 60*
5 811 634 60*
5 811 634 60*
5 809 134 60*
5 807 134 60*
5 807 134 60*
Coll. loan
8 654 973 98
Coll. loan
8 648 656 58
Coll. loan
8 566 682 82
Coll. loans
8 563 682 82
500 00
12 100 00
Coll. loan
8 563 682 82
Coll. loan
8 267 892 82
Coll. loan
8 229 856 10
Coll. loan
8 226 356 10
Coll. loan
8 183 437 50
11 500 00
6 000 00
142 200 00
Coll. loan
7 166 547 00
Coll. loan
7 145 627 50
Coll. loan
7 145 527 50
Coll. loan
7 145 027 50
20 000 00
7 775 00
Coll. loan
7 145 027 50
Coll. loan
7 145 027 50
Coll. loan
7 127 282 50
Coll. loan
7 105 556 25
i 500 00
Coll. loan
7 104 056 25
Coll. loan
7 084 113 95
10 000 00
10 700 00
Coll. loan
5 822 326 59
Coll. loans
5 812 226 59
400 00 ..
Coll. loans
5 811 826 59
15 000 00
28 600 00
15 720 00
50 000 00
10 000 00
110 790 00
15 000 00
28 790 00
15 721 99
50 000 00
10 000 00
113 290 00
2 000 00
45 000 00
--
Coll. loans
5 811 826 59
Coll. loans
5 811 636 59
Coll. loans
5 811 634 60
Coll. loans
6 811 634 60
Coll. loans
5 811 634 60
Coll. loan
5 809 134 60
Coll. loans
5 807 134 60
45 000 00
Coll. loans
9010 STOCK EXCHANGE PRACTICES .
The Union Trust Company — Main Office Cleveland, Ohio — Continued
ACCOUNT COLLATERAL LOANS SOLD UNDER REPURCHASE AGREEMENT Con.
Old balance
Date,
1931
Explana-
tion
V
Debit
Credit
V
New balance
Debit
Cred-
it
Debit
Cred-
it
5 807 134 60
Dec.
10
12
14
15
16
17
21
22
28
29
30
31
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*
5 798 634 60*
5 797 634 60*
5 795 134 60*
5 793 234 60*
5 785 734 60*
5 784 034 60*
5 782 534 60*
5 782 434 60*
5 782 434 60*
5 772 349 70*
5 772 320 30*
6 802 134 60
10 000 00
5 798 634 60
S 797 634 60
5 795 134 60
5 793 234 60
10 000 00
5 785 734 60
6 784 034 60
11 000 00
92 500 00
26 000 00
72 000 00
16 000 00
5 782 534 60
5 782 434 60
5 782 434 60
5 772 349 70
Exhibit U-9-27c
772 320 30
2
4
5
6
7
8
9
12
14
15
16
18
19
22
25
27
28
29
Feb.
3
5
10
23
26
29
Mar.
2
3
8
17
18
23
3 500 00
95 000 00
8 000 00
124 900 00
3 387 615 10
11 500 00
45 000 00
10 000 00
5 000 00
1 000 00
10 000 00
14 019 38
1 500 00
5 000 00
26 500 00
26 500 00
5 000 00
69 500 00
20 000 00
18 000 00
5 137 00
7 275 00
19 700 00
11 000 00
15 000 00
44 120 00
82 790 00
51 500 00
10 000 00
10 000 00
20 000 00
1 000 00
45 000 00
--
5 767 820 30*
5 737 920 30*
2 350 305 20*
2 349 505 20*
2 344 505 20*
2 338 005 20*
2 333 005 20*
2 332 005 20*
2 331 005 20*
2 328 885 82*
2 327 305 82*
2 322 385 82*
2 295 885 82*
2 295 885 82*
2 290 885 82*
2 289 785 82*
2 289 785 82*
2 289 785 82*
2 288 848 82*
2 288 573 82*
2 288 273 82*
2 288 273 82*
2 288 273 82*
2 284 703 82*
2 283 413 82*
2 278 413 82*
2 278 413 82*
2 268 413 82*
2 248 413 82*
2 247 413 82*
Loans sold
767 820 30
Loans sold
737 920 30
Loans sold
350 305 20
10 700 00
40 000 00
3 500 00
Loans sold
349 505 20
Loans sold
344 505 20
Loans sold
338 005 20
Loans sold
333 005 20
Loans sold
332 005 20
9 000 00
11 900.00
Loans sold
331 005 20
Loans sold
328 885 82
Loans sold
327 385 82
Loans sold
322 385 82
Laons sold
295 885 82
26 500 00
Loans sold
295 885 82
Loans sold
290 885 82
68 400 00
20 000 00
18 000 00
4 200 00
7 000 00
19 400 00
11 000 00
15 000 00
40 550 00
81 500 00
46 500 00
10 000 00
Loans sold
289 785 82
Loans sold
289 785 82
Loans sold
289 785 82
Loans sold
288 848 82
Loans sold
288 573 82
Loans sold
288 273 82
Loans sold
288 273 82
Loans sold
288 273 82
Loans sold
284 703 82
Loans sold
283 413 82
Loans sold
278 413 82
Loans sold
278 413 82
Loans sold
268 413 82
Loans sold
248 413 82
45 000 00
Loans sold
STOCK EXCHANGE PRACTICES 9011
Exhibit U-9-27d
The Union Trust Company — Main Office Cleveland, Ohio — Continued
ACCOUNT collateral LOANS — ^SOLD UNDER REPURCHASE AGREEMENT Con;
Old balance
Debit
2 247 413 82
2 245 413 82
2 243 813 82
2 243 813 82
1 243 323 20
1 243 123 20
242
203
202
192
191
189
180
176
176
169
168
167
167
166
151
144
070
070
070
823 20
423 20
423 20
423 20
423 20
723 20
393 35
839 72
539 72
139 72
939 72
393 35
393 35
893 35
893 35
193 35
993 35
893 35
893 35
1 055 293 35
1 055 093 35
1 025 093 35
1 018 793 35
1 008 293 35
Cred.
it
Date,
1931
Mar.
24
25
28
29
30
31
Apr.
1
4
5
6
7
8
9
11
14
16
18
19
21
22
23
25
26
27
29
May
3
4
5
7
10
Explana-
tion
Debit
59 000 00
76 000 00
27 200 00
65 000 00
15 000 00
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
Credit
\/
2 000 00
1 600 00
59 000 00
076 490 62
27 000 00
300 00
--
104 400 00
16 000 00
10 000 00
1 000 00
135 700 00
9 329 85
3 553 63
300 00
7 400 00
11 900 00
__
18 046 37
136 000 00
500 00
15 000 00
31 700 00
73 200 00
11 000 00
43 000 00
39 100 00
-
4 200 00
30 000 00
6 300 00
10 500 00
8 000 00
--
New balance
Debit
2 245 413 82*
2 243 813 82*
2 243 813 82*
1 243 323 20*
1 243 123 20*
1 242 823 20*
1 203
1 202
1 192
1 191
1 189
1 180
1 176
1 176
1 169
1 168
1 167
1 167
1 166
1 151
1 144
1 070
1 070
1 070
1 055
423 20*
423 20*
423 20*
423 20*
723 20*
393 35*
839 72*
539 72"
139 72*
939 72*
393 35*
393 35*
893 35*
893 35*
193 35*
993 35*
893 35*"
893 35*
293 35*
1 055 093 35*
1 025 093 35*
1 018 793 35*
1 008 293 35*
1 008 293 35*
Cred-
it
Exhibit U-9-27e
008 293 35
007 793 35
007 293 35
999 793 35
999 793 35
998 493 35
998 393 35
998 393 35
997 393 35
995 893 35
988 657 10
988 337 60
988 337 60
970 337
969 837
969 837
969 837
60
60
60
60
17
20
21
23
27
31
June
1
2
4
6
7
8
14
21
25
27
30
4 500 00
23 500 00
35 000 00
46 500 00
9 000 00
1 500 00
8 200 00
30 000 00
21 500 00
138 500 00
22 000 00
5 000 00
500 00
7 500 00
23 500 00
1 300 00
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
--
1 007 793 35*
1 007 293 35*
999 793 35*
999 793 35*
998 493 35*
998 393 35*
998 393
997 393
995 893
988 657
983 337
988 337
970 337
969 837
969 837
969 837
969 707
35*
35*
35*
10*
60*
60*
60*
60*
60*
60*
23*
Loans sold
Loans sold
Loans sold
Loans sold
Loans sold
Loans sold
Loans sold
Loans sold
Loans sold
Loans sold
Loans sold
Loans sold
Loans sold
Loans sold
Loans sold
Loans sold
Loans sold
9012
STOCK EXCHANGE PRACTICES
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STOCK EXCHANGE PRACTICES
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9021
Exhibit U-9-29
Statement for comparison of the Union Trust Company's published statement Sep-
tember 29, 1931, and statement adjusted to conform to criticisms contained in the
report on "window dressing"
Published State-
ment Sept. 29,
1931
Adjusted State-
ment
Accounts not in-
cluded on Pub-
lished Statement
RESOURCES
Cash on Hand and on Deposit with Banks
United States Qovernment 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 -
UABIUTIE3
Capital— Paid Up
Surplus and Undivided Profits
Deposits
Postal Savings Deposits
Other United States Qovernment 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 -
$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
22, 850, 000. 00
17, 222, 943. 60
40, 072, 943. 60
264, 193, 822. 21
895, 709. 67
2, 081, 945. 19
267, 171, 477. 07
685, 500. 00
None.
12, 183, 281. 18
672, 477. 60
$58, 105, 264. 37
12, 004, 475. 86
1, 050, 000. 00
13, 362, 517. 49
15, 124, 218. 11
28, 486, 735. 60
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
22, 850,
16, 669,
000.00
179. 05
39,619,179.05
'24ii'934,'7i7.'98'
12, 146,
895,
2, 081,
663. 25
709. 67
945. 19
257, 068,
685,
936. 09
500. 00
None.
12, 296, 422. 44
12, 183, 281. 18
672, 477. 60
4, 200, 000. 00
$320, 785, 679. 45
$326, 615, 796. 36
Unpledged.
Pledged to secure
Public Funds.
TOTAL
Unsecured Depos-
its.
Public Funds.
Loans Sold Under
Repurchase
Agreement.
Mortgages Pay-
able.
9022
STOCK EXCHANGE PRACTICES
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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 $22,850,000.00
Surplus and Undivided Profits $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 vear 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 $58, 105, 264. 37
United States Government Securities 22, 117, 016. 83
Stock of Federal Reserve Bank, Cleveland 1,050, 000. 00
Other Bonds and Securities 28, 486, 735. 60
Commercial Loans 32, 207, 097. 30
Collateral Loans 71, 374, 391. 05
First Mortgage Loans 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 $12, 182, 231. 18
Accrued Interest and Other Resources 2, 786, 724. 48
Real Estate Sold Under Land Contract 1 , 429, 690. 80
Bank Buildings and Real Estate Owned 18, 509. 312. 77
Total $320, 785, 679. 45
LIABILITIES
$40, 072, 943. 60
Capital— Paid Up $22, 850,000. 00
Surplus and Undivided Profits 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 $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 op 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, 15L 32
Pledged . 8, 382, 410. 96
Total demand collateral loans $30, 1 57, 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 (For-
eign banking department) 950, 390. 34
Secured advances to trusts 163, 143. 24
Total loans and discounts $96, 226, 452. 64
9032 STOCK EXCHANGE PKACTICES
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 $4, 543, 002. 40
Acceptances of other banks held byus-_
Our acceptances sold and outstanding 1, 093, 147. 75
Acceptances of other banks sold and out-
standing 557, 352. 37
Customers' liability under letters of
Commercial 70, 200. 13
Travelers' 267, 988. 25
Customers' liability under travelers'
checks 150. 00
Letters of credit issued under guarantee
of otlier banks
Foreign bills sold vs^ith our indorsement. _
Customers' liability on unpaid accept-
ances 1 229,521.08
Collections — mortgage loans 360.00
Bonds sold under repurchase agreement. 66, 473. 33
Total acceptances and letters of
credit $6, 828, 195. 31
Investments:
United States Government Securities:
Unpledged 55, 466. 37
Pledged 12, 007, 534. 95
Total United States Government
securities $12,063,001.32
State, County and Municipal Bonds:
Unpledged 534,894. 76
Pledged 766, 387. 56
Total State, County and Munici-
pal Bonds $1, 301, 282. 32
Corporation Bonds and Notes:
Unpledged $204, 064. 17
Pledged 9,757,871.73
Total Corporation Bonds and
Notes 9, 961, 935. 90
Corporation Stocks:
Unpledged 4, 016, 726. 57
Pledged 523, 960. 00
Total Corporation Stocks 4, 540, 686. 57
Foreign Securities 7, 412, 800. 38
Federal Reserve Bank Stock 1, 050, 000. 00
Total Investments $36, 329, 706. 49
Cash and Cash Items:
Currency and Coin 1, 408, 441. 16
Currencv and Coin — Foreign Bkg. Dept.
Cash Items 20, 589. 15
Difference Account . 82
Total Cash and Cash Items 1, 429, 031. 12
Legal Reserve — Federal Reserve Bank 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
Chicaa;o 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 Corre-
spondents $552, 398. 96
Due from Foreign Correspondents
Foreign Banks (Foreign Banking Dept.) 14, 413. 85
Deferred Credits, Exchanges, Etc.
Property Accounts
Real Estate, Buildings, Leaseholds, Etc. 20, 428, 757. 40
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-Akron Bag Co., Properties in
Liquidation 449,106.38
Land Contracts 1, 003, 301. 17
Bonds Borrowed
Interest Receivable — Mortgages Sold... 873, 412. 53
Total Other Resources . 30, 415, 724. 89
Sub total $197, 207, 500. 03
Amounts Segregated by bank prior to con-
servatorship:
Segregated Cash 1, 326, 262. 07
Federal Reserve Bank Special Account.. 6, 301, 403. 20
Deferred Accounts 767,861.06 8,395,526.33
Grand total $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
Public funds 258. 82
Certificates of deposit 2, 612. 50
Certified checks 80, 984. 55
Official checks 516,869.30
Unpaid dividends 1, 762. 41
Sundry 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 de-
posits 25. 00
Stock transfer deposits 36, 965. 84
Payments due to Western Reserve Mort-
gage Co 1, 505. 08
Total demand deposits 39, 775, 683. 52
9034 STOCK EXCHANGE PRACTICES
Financial Statement of The Union Trust Company, Clevkland, 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 19. 10
Cori^orate trust dept.- — special deposit. _ 75, 268. 34
Total time deposits $75, 827, 998. 52
Total all deposits $130,993,277. 79
Bills payable and rediscounts:
Bills payable with Federal Reserve
Bank. I 7,290, 707. 33
Rediscount with Federal Reserve bank
Bills payable— other banks 2, 287, 621. 68
Reconstruction Finance Corporation 15, 188, 597. 79
Total bills pavable and redis-
counts : 24, 766, 926. 80
Acceptances and letters of credit:
Our acceptances sold and outstanding. .. 1, 073, 789. 86
Acceptances of other banks sold and out-
standing 557, 352. 37
Our acceptances executed under L/C out-
standing 38, 793. 45
Acceptances of other banks guaranteed
by us
Letters of credit outstanding — commer-
cial 31,798.68
Letters of credit outstanding— travelers'. 277, 838. 25
Travelers' checks outstanding 150.00
Letters of credit issued under guarantee
of other banks
Foreign bills sold with our indorsement
City of Cleveland — collections mortgage
loans 360.00
Bonds sold under repurchase agreement. 66, 473. 33
Foreign drafts payable 15, 497. 59
Total acceptances and letters of
credit 2, 062, 053. 53
Other Liabilities:
Interest and Discount Unearned
Other Income Unearned $119,031.74
Accrued Interest Payable 957, 751. 33
Bonds Borrowed
Check and Safe Deposit Tax Payable.. 1, 324. 33
Accounts Payable 47, 503. 79
Total Other Liabilities 1, 125, 611. 19
Reserve for Taxes $683, 502. 91
Reserve for Expenses 36, 415. 57
Reserve for Adjustment of State Bank
Assets 939. 28
Reserve for Dividend
Total Reserves 720, 857. 76
STOCK EXCHANGE PRACTICES 9035
Financial Statement of The Union Trust Company, Cleveland, Ohio, At
THE Close of Business April 8, 1933 — Coutinued
liabilities — continued
Capital:
Capital Stock $22, 850, 000. GO
Surplus 12, 150, 000. 00
Undivided Profits 2, 523, 750. 56
Current Period Profits 15,022. 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 aj^sets
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 $600,371.60
Public funds 856, 154. 07
United States deposits 32, 564. 10
Federal Reserve — fiscal agent 296, 650. 00
$1, 785, 739. 77
Time deposits:
Public funds $3, 540, 505. 95
Certificates of deposit 190, 000. 00
Postal savings 9, 873, 350. 03
13, 603, 855. 98
Total secured deposits $15, 389, 595. 75
Due Corporations and Individuals:
I. J. Fulton, Re: The Kinsman Banking
Co., Kinsman, O $3, 950. 44
I. J. Fulton, Re: Orangeville Savings
Bank, Orangeville, O 1, 979. 65
I. J. Fulton, Re: Commercial Savings
Bank, Toledo, O 57, 590. 04
I. J. Fulton, Re: Citizens Commercial
Bank, Warren, O 19,019. 37
Geo. S. Addams, Judge of Probate Court,
Cuyahoga county 4, 487. 12
Brotherhood of Locomotive Enginemen
and Firemen 500,000. 00
Catholic Knights of Ohio 13, 344. 98
$600,371.60
9036 STOCK EXCHANGE PEACTICES
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 $35, 071. 01
City of Cleveland Active Account 62, 810. 56
City of Cleveland, Sinking Fund Commis-
sion 458, 672. 62
City of Cleveland Heights, Ohio 41, 927. 43
Cleveland Metropolitan Park District 194. 75
Bratenahl Village 8, 069. 48
Mayfield Village School District 1 74. 55
Village of Cuyahoga Heights 53, 103. 77
Beachwood Village 91, 159. 67
Board of Education, Citv of Euchd, Ohio.. 71, 063. 13
Village of Warrensville Heights, Ohio 31, 257. 28
City of Lakewood, Ohio 2, 646. 82
$856, 154. 07
Federal Reserve — Fiscal agent 296, 650. 00
United States Deposits 32, 564. 10
Certificates of Deposit — Time:
Brotherhood of Locomotive Enginemen
and Firemen 190, 000. 00
Public Funds — Time:
City of Cleveland— Inactive Account $285, 000. 00
Cuyahoga County No. 20 1, 935, 778. 18
Cleveland Metropolitan Park District 57, 177. 77
Bureau of Insular Affairs 1, 187, 500. 00
City of Lakewood, Ohio 75, 050. 00
3 540 505. 95
Postal Savings 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-McKinnet 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 direc-
tor 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 40
Mr. Price McKinney 30
Mr. E. S. Burke, Jr 13^/4
/4
Mrs. Stevenson Burke 7/'2
Mrs. Ross (Mr. Burke's sister) 8?
Total 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 con-
sidered 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 tlie
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 Com-
pany to be held as security for and as long as any of the preferred stock was out-
standing. 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 liis 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 $0,500,000
in cash. Upon completion of this transaction, Mr. Burke gave me his clieck 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 H. Watson, Jr., so they
would know about the commission, Mr. Sherwin, of course, all the time knowing
Exhibit U-15-l-b
the entire deal. When Mr. Burke gave me his check for $130,000.00 he congratu-
lated 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 personally
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 The Union Trust Company and John H. Watson,
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 prev-
iously stated controlled 53%% of the Corrigan, McKinney Steel Company. I
also represented the 8%% owned by Mrs. Ross, or a total of 62/2%. These
negotiations finally resulted in a sale to The Cleveland Clitfs 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 Companv and the Steel stock was pledged as security for the pre-
ferred stock, so that from the $32,250,000 there was deducted $7,250,000 pre-
ferred 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 commis-
sion 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 every-
thing 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 con-
nection 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 e pert
accountant, whom you may select, and have him go over The Union Trust Com-
pany 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 Mc Kinney Steel
Holding Company preferred stock. The members of my family now hold over
a thousand shares at an average cost of about 95/^, most of it purchased from
The Union Trust Company. There is no market whatever for this stock at
present, but eventually I believe it ^^ ill be paid at 105 and accumulated divic'ends,
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,(537,500 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
McKinnev Steel Co. which I give you exclusive authority to sell for Seven
Mil.ion 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 j^ou 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 cxchisively 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. 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
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 simulto,neous 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 13, 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 tl\e Company) for your 13%% interest in The McKinney Steel
Company. Attached to this letter j'ou 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 Companv 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 con-
formity 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
17.'5541— 34 — PT 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 stock to be issued will be $7,250,000 par value,
which will bj the entire amoant o" th3 Preferred stock.
2. The Union Trust Comoaiiy, Cleveland, Ohio, will be and/or name the
registrar and transfer agent for th3 Preferred stock.
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
tlie 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 Com-
pany, 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. Corrigan
Mr. James W. Corrigan,
Cleveland, Ohio
I hereby accept the foregoing proposition and agree to carry out all the pro-
visions thereof on my part Ao 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,
h,iid we will purchase the same from you at the price of $6,500,000, paying you
therefor forthwith in cash.
STOCK EXCHANGE PRACTICES 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 assign-
ment to be in form attached hereto.
Yours very truly,
J. R. NuTT, President.
Copy
JRN A
Exhibit U-15-7
Co-py
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?0 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 (1,343^4) 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 Mc-
Kinney 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 n.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 ISth, 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 Com-
pany 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 commis-
sion 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-lOa 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 jjreparing this memo.— Oscar L. Cox, Deputy Superin-
tendent of Banks, State of Ohio)
COMPENSATION AND COMMISSIONS RECEIVED BY THE tJNION 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 Com-
pany, 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 95^2
Special Purchase Group, 95J»2 to 93
Banking Group, 96 to 96}^
Selling Group, 96^4 to 99^2
Union Trust Co. Bond Department
Purchase Group 50,000 shs 2>/^ points $120, 000. 00
Special Pur. Gr. 35,556 shs >^ " 17,778.00
Banking Group 33,556 shs >^ " 16,778.00
SeUing Group 28,941 shs 3 points less Expenses 80, 050. 04
239, 606. 04
Allowances to dealers from our Inventory 1,205.21
$238, 355. 83
There may have been other trading profits made by this Department, but it
is rather ditticult to allocate them.
(Exhibits U-ir-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 deduc-
tion 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 Com-
pany, to the purchase of said Preferred stock at or below the redemption price
or redemption at 105 and accrued dividends.
X
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rHE liMQlV TRlI:>T.iC.0.MPANYU-/,&
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PAY TO THE ORDER OF
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Exhibit U-15-10
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Exhibit U-15-12a
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l^E UNION TRI -T COMPANY U -f/J'
BOND DEPARTMENT J^^^'t*-^ I b/l^"
WHOLESALE
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Exhibit U-15-14a
STOCK EXCHANGE PRACTICES 9043
Mr. James W. Corrigan, President of McKinney Steel Holding Company,
advises as follows:
THE COMPANY
"McKinney Steel Holding Company has been incorporated in Delaware for
the purpose of acquiring not less than 53^4% 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 Oiilstanding
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 Decem-
ber 31, 1924, according to the audit by Ernst & Ernst, Certified Public Account-
ants, 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 com-
pletely rounded unit, with vast ore reserves in the Missabe, Gogebic and Menom-
inee 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 maxi-
mum 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 Compajiy 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 applic-
able 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 divi-
dends 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 evclusion 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.
The Company will not without the affirmative vote or written consent of the
holders of two-thirds of the outstanding Preferred stock, (1) create or assume
any obligation which would take procedure 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 <fe Morley.
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 under-
stood, 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 my 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-tliree and
three-quarters per cent. (53%%) of The McKinney Steel Company stock) in
payment for his thirteen and tl ree-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. Sher^\in, 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 to
turn it over to our Bond Department at ninety -three (93), and in doing this we
STOCK EXCHANGE PRACTICES 9045
would first have a very nice profit for the Banking Department. Tliis was unani-
mously approved by every member of the Committee present but no record made.
Within a few davs 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 e.xpressed 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 Comnany, The Corrigan-
McKinney Steel Company, The McKinney Steel Holding Company, The Cleve-
land-Cliflfs Iron Company and the Estate of James W. Corrigan and Joseph R.
Nutt.
I welcome your most searching investigation. You will find that every transac-
tion 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. Ntjtt.
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) W. M. Baldwin.
WMB:EMS
2280 Demington Drive, Cleveland Heights, O.
[From Nutt's personal files. — M/LP]
9040 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 v/ith you regarding McKin-
ney Steel and you were good enough to arrange a meeting for me with Mr. Cor-
rigan.
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 whether
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 oppor-
tunity presents.
With 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 Com-
pany. 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 Co\ilby and Mrs. McKinney are holding this
stock as Trustees. S%% is owned by Mrs. Ross. The balance of 7}i% is owned
by Mrs. Stevenson Burke, so that, as you see, the entire stock of the Company is
owned really by four v/omen.
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 l)y 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 verj' clear view of the present
situation.
Sincerely yours.
Exhibit U- 15 -2 la
Cleveland, Ohio, March 19, 19S0.
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
Steel Holding Company owned by the Trust Estate created by the Last Will and
STOCK EXCHANGE PRACTICES 9047
Testament of James W. Corrigan, deceased, upon the following terms and con-
ditions:
The Purchaser is to purchase all of the common stock of the McKiimey 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 Thou-
sand 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 Company, 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 Thou-
sand 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 p]dward G. Resch 25, 000. 00
To John H. Watson, Jr 500, 000. 00
Any charge, compensation or expense which is necessary or proper in connec-
tion 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 P]state.
The Purchaser is to give you assurance of his (its) intention to continue the employ-
ment 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
McKinney 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 j^ours,
Laura Mae Corrigan.
Exhibit U-15-22a
Cleveland, Ohio, March 21, 1930.
The 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-Mc-
Kinney 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 immedi-
ately deliver to The Union Trust Company for distribution to the preferred stock-
holders 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 com-
pany to the State of Ohio for 1929.
Exhibit U-15-22b
The undersigned trustees agree that they will pay and satisfy all existing obliga-
tions 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 direc-
tors 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 ITnion Trust Company,
By W. M. Baldwin,
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 PRACTICES 9049
Exhibit U-15-23
Probate Coukt,
Lake County, Ohio, March 21sl, 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 Com-
pany, a Delaware corporation; that under the provisions of the said Will of James
W. fcorrigan, 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 condi-
tions set forth therein, a copy of said consent, marked "Exhibit A," being here-
unto attached and made a part hereof; that said consent provides for the payment
of certain compensation to Messrs. Donald B. GiUies, Henry T. Harrison, James
S. McKesson, Edward G. Resch 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. GiUies, 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 Meetino March 26, 1930 in Re:
James W. Corrigan Estate, Sale of Corrigan McKinney Stock
At the meeting of March 5, 1930, J. R. Nutt w^as 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 McKinnej^ 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-execirtor with The Union Trust Company, and
also with the consent and approval of Mrs. Laura Mae Corrigan, who 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^j% 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 was sold.
He further stated that in making said sale the entire net value for sale pur-
poses 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.-503.00 thus giving a sale value to the 10,100 sha^-es 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 $355, 702. 23
Donald B. Gillies 35, 570. 22
Henry T. Harrison 35, 570. 22
James S. McKesson 35, 570. 22
Edward G. Resch 17, 785. 12
Cost of Revenue stamps in addition 200. 00
Making a total of $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 approxi-
mately $1,600,000.00 would have to be paid to the U.S. Treasury as an income or
profit tax.
STOCK EXCHANGE PRACTICES 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 ai:)proved 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 Corrigan-
McKinney 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 $4. 38
Compensation for services rendered in matter
of sale of 218% shares The Corrigan-
McKinney Steel Company common stock
owned by Parthenia Burke Ross to:
John H. Watson, Jr 140, 740. 75
Donald B. Gillies 14, 074. 08
Henry T. Harrison 14, 074. 08
James S. McKesson 14,074.08
Edward G. Resch 7, 037. 01
Apr. 3. Paid to Parthenia Burke Ross by wire transfer
thru Federal Reserve Bank of New York for her
credit at Fidelitv Union Trust Company,
Newark, N.J I 2, 000, 000. 00
4. Paid to Parthenia Burke Ross by wire transfer
thru Federal Reserve Bank of New York for her
credit at Fidelity Union Trust Companv,
Newark, N.J _\ 1,000,000.00
8. Paid to Parthenia Burke Ross bj' wire transfer
thru Federal Reserve Bank of New York for her
credit at Fidelity Union Trust Company,
Newark, N.J 1,000,000.00
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 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 Superin-
tendent of Banks, State of Ohio)
Summary of compensation paid for sale of various interests entering into the Cleve-
land Cliffs purchase of controlling interest in Corrigan McKinney Steel Company
Corrigan
Estate
M. B.&
H. H.John-
son
Parthenia
Burke Ross
Total re-
ceived
John H. Watson, Jr.
Donald B. Oillies...
Henry T. Harrison.
James S. McKesson
Edward G. Resch.,
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. 0«
14. 074. 08
14, 074. 08
7, 037. 01
500. 000. 00
50, 000. 00
50, 000. 00
60. 000. 00
25, 000. 00
480, 198. 01
4, 801. 99
190, 000. 00
675, 000. CO
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 III. 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 quar-
terly 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 ratably secured by an Extension Agreement, 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 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 Eightv-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 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 stalement 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 repre-
sented bv 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 Januar.y 23, 1934. Such
successive renewals of this note, if proposed by the undersigned, must be ac-
ev#knd Cliffs iron Co. fJf^^ J^ fC
The XlevipLnd Cinxs -— / ^Ctu^ /{.r
N.. -y^-'-^ry „„U . . /^ «. . 9515 ouE /-^3j33
' / ' r f ' . - * .
Ma. 9 • ■ i ' '^ ^' ' "^^ *'•- /*■■"'
1-3 , .Jk/ya*>£)t, ^r^f^MM^-
INTErtEsr OR DISCOUNT
0«Tt DUOOUnt INI. BEMTE " INT. RECE-Dli limWmTO
^ *5 7/
Utt it i»^
; ■'^•' ■-■- 1933
/<?-?? -3.i*i
33(7 y "
\9U7rf->
-. *^ "
i3>iro
3i9flStt>
3/lSi>m .?
Exhibit U-IS- 28c
to Cleveland Cllfi s -^ron C:
/V:-7-»'3-*'<^. 'raii^'
100,084aha
_8b«- ihe Corrlgan Mc Kinney Steel CoCot
lO.lOOsha The '^Kinney Steel Holding Co
-lOOjOOOihs i'he Otis Steel Co Com
Held In Corporate Trust Dept.
ntrtioipantat
Ouarditoi Trust Co.. Cl*T«luid #1,500,000.00
Central United national Bank.ClavsUnd 500,000.00
Clrraland Tn»t Company ■ SOO.000.00
Bnion Truat g^p^ ^ . 3.387.5OO.OO
bankara Trust Conpany, M. X. 4,000,000.00
Cent. 111. Bank It Trust Co., Chioace 8,500,000.00
firat lational Bank, Chioagp 1,000,000.00
ma. 0. lUthar 20O.00O.0O
/fey /ft¥y ,-yo '" •
i4T4«ar856Vi«^ Aggregate principal amount, all bearing the
same date and secured by an Extension Agreement
dated January 23, 1933, betwenn The Cleveland-
Cliffs I ron Co. and The Union Trust Co., Trustee
IKEt BASIS AMOuAt
R«»i»< Iran THE UNION TRUST COMPANY CLEVELAND^ C<ilt>Mcil Eawllto .n< ill Mm fuut h emnidta wiOi alx». ileicrte] Icm
Exhibit U-15-28d
NAME
ClsTeland C^HTa Ir<a
ADORER
NO.fi
' DUE
No. 7
DUE
No. 8
DUE
HEMO.
It tf
U .^..£t^ .
^ -''■«*=^ ^-= INTEREST OR :
OAT£
Dwcouiir \ m. MciATE int.
:^. Iran Convmr /^i^/f^/^^C-
/\kjih.
H0.1 ^'l^ig DUeVW^^
/ 0 3 r-ys- .* '^ -7-1
Ju,ic 15, IW3, I. }, ruUm, 3u(<t. WBt-'
I HIS I't
3/^3yi,
Exhibit U-15-28e
STOCK EXCHANGE PRACTICES 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 pay-
ment 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 tliis note may become due in advance of its maturity in case
of default or sale under said Extension Indenture and/or said Extension Agree-
ment as provided therein respectively.
The Cleveland-Cliffs Iron Company,
By W. G. Mather, President.
Chas. S. Heek, Treasurer.
Due 7/24/33, 13219.
Exhibit U-15-28b
The Union Trust Company,
Oscar L. Cox,
Conservator.
William Totjles,
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 Holditig Company togetlier 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 i^articipa-
tion to you under our re-purchase agreement or with our endorsement, which
ever you prefer. My thought is that if the Reconstruction Finance Corpora-
tion is authorized by Congress, and I believe it will be, — as soon as it is in opera-
tion 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 Cliflfs Iron Company was all created
through its purchase in March 1930 of a 62>^% interest in The Corrigan, Mc-
Kinney Steel Company, at a cost of $37,500,000.00. It assumed $7,250,000
McKinnev Steel Holding Companv 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
Sincerelv vours,
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 $15,000,030 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 arrange-
ment 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, 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 cjuote Kindly return Cleveland Cliffs data sent you in mj'^ 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.
3. R. Nutt,
Union Trust Bldg.
I am mailing you tonight the data requested.
T. W. Lamont.
STOCK EXCHANGE PRACTICES 9055
Exhibit U-15-34
January 14, 1932.
Personal
Mr. T. W. Lamont,
£3 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 under-
stand the matter perfectly. Be assured I deeply appreciate the careful considera-
tion 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/lOO 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 Twenty-
six 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 bj" an Extension Indenture, dated January 23, 1933,
betvreen 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 bj- the Trustee and upon which
such security maj' 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 Twent3'-four Thousand One Hundred
Thirty-eight DoUars 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 Tj^pe 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 PEACTICES
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-15-35c
$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/106 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 ninnber 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) 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 Twentv-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 Twenty-
six 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 Iiereby made for a statement of the securitj^ 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 aggre-
gates Seven Million Five Hundred Twenty-four Tliousand One Hundred Thirty-
eight Dollars and Eighty-nine Cents ($7,524,138.89).
This note is subject to tlje 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 b}' 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
Exhibit U-15-35f
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 Powers, Assistant Conservator
R. L. Williams, Junior Assistant Conservator.
Exhibit U-15-35g
$500,000.00 April 23, 1933.
On or before three months after date, the undersigned. The Cleveland-Cliffs
Iron Companj^, an Ohio corporation, promises to pay to the order of The Union
Trust Company, at its office. Five Hundred Thousand 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 inter-
est to draw interest at the same rate as the principal.
This note is 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) 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 Tj^pe A Indebtedness, which
aggregates Seven Million Five Hundred Twentv-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
9058
STOCK EXCHANGE PRACTICES
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
Exhibit U-15-35h
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 Powers, Assistant Conservator.
R. A. Williams, Junior Assistant Conservator.
(Exhibits U-15-35i ttirough U-l5-37a face this page)
Exhibit U-15-38a
BAKER, HOSTETLER, SIDLO & PATTERSON
NEWTON D. BAKER
JOSEPH C. HOSTETLER
THOMAS L. SIDLO
ARTHUR C. DENISON
PAUL PATTERSON
M. DE VAUGHN
BENJAMIN F. FIERY
HOWARD F. BURNS
RAYMOND T. JACKSON
WILLIAM H. BEMIS
CLAYTON A. OUINTEELL
LOCKWOOD THOMPSON
JOSEPH R. FAWCETT
PAUL W. FRUM
DONALD D. WICK
JOHN C. MORLEY
THOMAS J. EDWARDS
JOHN ADAMS
SPENCER W. REEDER
Union Trust Building
cleveland
(Mr. Wogly: Pis advise & turn over for hearing in court to Mr. Loyd also pis
advise Briefs, G. C. 8/7/lp.m.)
August 7, 1933.
Re Cleveland Cliffs Iron Company
Oscar L. Cox,
Conservator, The Union Trust Company,
Cleveland, Ohio.
Dear Sir: I am enclosing herewith form of application to Common Pleas
Court and form of mutual release between I. J. Fulton, Superintendent of Banks
in charge of the liquidation of The Union Trust Company, and The Cleveland
Cliffs Iron Company.
This application and this release, as you will observe, cover the matter of the
alleged excessive interest charged by The Union Trust Company on The Cleveland
Cliffs Iron Company loans. The amount of the credit to be given The Cleveland
Chffs Iron Company under this release and application is $145,838.22. This
does not represent the amount by which the interest received (either by cash or
in note) exceeded 8%. As a matter of fact, no interest in excess of 8% was re-
ceived for any period except that for the ten months from March 23, 1932, to
January 23, 1933, and the interest for that period was substantially 8.4%. It
is the law in Ohio that parties may contract for any rate of interest up to 8% but
not in excess of that amount. If a contract is entered into for interest in excess
of 8%, such contract is voidable and upon the cjuestion being raised, the creditor
is remitted to his legal right to receive 6% interest only. Thus, for the ten
months period from March 23, 1932, to January 23, 1933, it is neccesaary for us
to remit all interest in excess of 6%. This amounts to $145,838.22.
In arriving at the amount to be credited to The Cleveland Cliffs Iron Com-
pany it was necessary for us to take into account the commission notes given on
June 27, 1932, aggregating $68,875.00, the commission note given on September
23, 1932, for $68,875.00, and all interest either in cash or in notes which has been
paid upon these two amounts.
Th« Cle*el»Ti<J Cliffs Iron Co.
DUE ^-iJ .?•'
^V^V^SS due£ -?5 ->*.
DATE DIMOUKT
^3 !.(,(> i^
tNTEnCST OR DISCOUNT
E ~ INT. KLCbil.
■ T • ! ■
13^z «•*
'932 .^teff^t / '
JtW a^ (9.'2 .
\ m a* i>- j i
I JO': as •»•'■ I I
; la JW a^!3K V*o BO-
V JT*" a* >3J' ^'"^ oo
\ooo oo o -
Koae ooo -
3'Scoooci .
>/'*$'o«.
Exhibit U-lo-35i
^^e^^^-^
-SHARcJ^P
Held In Corp
■i*l>*i '8»>-S&r8»8^('*3i74 Aggregate principal amount , all bearing the
same date and secured by an Extension Indenture
dated January 23, 1933, between The Cleveland-
Cliffs Iron Co and The Union Trust Co., Trustee
J
I In- TOE UNION Tmj«T COWAN r.CltvaAHR OHIO. CMI«.rtf a.,.!)!. MMM., w. M .rawUix Mlh .bm texIMI
Exhibit U-15-35J
mMtamtn*^
Xhet:leVeXar;Cl Cliffs
-1 •*«>•> \
#3 9SS63
out yHf/Ti
^7/«^/3a
INTtRESr OB DISCOUNT
^■ioi-iyiS
l'?i<t*A>^u>.^^.
t^ -11, '-yy'
T'^H -33
jy^.i^
f 1017 '■'»- •
(, MN 3 3 mi) 0,0,.^
(> JAN 2 y^it$»coo
C JAN 2 .'> 193y««. .. .
;3.»3-^ JAN 2 • m-)^e aoo
•■■■-. ■ ^ , Ss-ii^-^^i-' — V-
/ l0t»»»o
. 1 f,f Jiupino.^s ana PrvpertytaJceo
•
Exhibit U-15-35k
u..H.^ 0 :: .,: - #a 99353
'The Cleyel^-CUffa Iro n Co.
No e'^ 9516 ""^Axi-M No. 5 951 9 out /-;ii_33
"'■'■ 95i? ouEz-xg^.^^ No.,0 9530 out /-;
"*■■' 95i8 out /-Z?'J7 NO. 11 out-
,s ri94
D'^E ,» .1.3.} -
out /2.-X3 3>
out /•j.-'>3-3
fNTEBEST OR DISCOUNT
[. accc'iLi r mruaTTe B utimw uti
I oiflf bo
ft
' A*y^^*-^jjuvtA-
/*>3->»-s
<'-^-?3 q:£C 21
\^-/.7»;
U£C X 1 1i
;jtC r 1 ■»»
ate J J •*'
'0(C I >
0000 o
/oaaooe
/oaa o 00
,5^000 o
/fioo oeo
ii-myr
^iSis
3S.....
Exhibit U-1 5-351
DATE J«» 27. 1982
THE UNION TRUST C
CLEVELAND. OHI
CREDIT S>&mrjn,
Fnw eo—d«»lon
th« CleTel«nd Cllffa Iron Company
renwral i
6.987.S00t for throe monthi. aMA-^JWit'lie bJteii4yl«leno»<i by two not»t
of the ClOTBland Cliffs Iron Co., one In the amijunt of ♦Sfr^WCi and the other In tho
mount of tSS.eTS.. both dated June 23. 19S2, peyble three mpnthii after ^tef »
OFFeCT EMTRV MUaT BE DESCRIBED I "1 TTi J /" ""^^.y , .
!(• MM VMm Ml
<11«k.Tlcket >haal<i b« impared .nd ti(»Nl wilh I>k)
Exhibit U-15-36
N«ME Committee
The ClevelanWbllffB Iron Co
#2 99363'
Noi 9520
NO. 2 as fa ^
1/23/^3
) DUE VU;)L^i3
^/ DUE ^X</^33
■* DUE 7 -♦^-73
INTEREST OR DISCOUNT
^*|* 2^ 1333"es -'- :;'^: JAN 2 3 I93J
^2f ,333 FEB ;.- ^33 JAH 2 3 m^Fffttlf^', f-
JAN 2 3 1833. 7/3 V-T
''Snn r-i
. L.£c L%, Vlii. l.i, Futta. I>a:>u «i BaalBi
Exhibit U-15-37
.00 in principal amount, all bearing
the 8ame~"3Jtt*.4ancl secured by a Pledge Agreement,
dated June 23, l95a,.,^tweBn the Cleveland-Cliffs
Iron Co. and the UniraTTftiaist C o . , Trustee, to which
Pledge Agreement referencet^-^igreby made for a
statement of the security and the'TrwcBis and con-
ditions under which such security is helH-^Jjy "
, ^ lyuotioo ana upon which the aama may bo "onfpp
ts^:jbi - "
$600, 000 .?3- Aggregate principal amount, all dated January 23,
1933 , secured by an Extension Pledge Agreement, dated
January 23. 1933, between The Cleveland-Cliffs
Iron Co. and The Union Trust Co., Trustee
inMtlon with abov* dascrilwd xomn.
Exhibit U-15-37a
STOCK EXCHANGE TRACTICES 9059
Exhibit U-15-38b
We requested Mr. Herzog to compute this amount and his computation
showed $145,838.22. The same computation was made by the auditors of The
Cleveland Cliffs Iron Company, which resulted in a figure two or three cents
larger than Mr. Herzog's. The Clevelad Cliffs Iron Company agreed to accept
Mr. Herzog's figures.
I have not yet secured the approval of Mr. Belden who represents The Cleve-
land Cliffs Iron Company to the release and application enclosed, but I hope to
secure it during the day and as soon as I have secured it we can proceed to file
the application and secure the order.
1 understand that you prefer to have this application granted forthwith and
that the court dispense with the publication of notice.
Very truly yours,
Howard F. Burns.
T:2A
2 enclosures
Exhibit U-lo-39a
abraham kollin
attorney- at-law
945 society for savings building
cleveland
February 13, 1934.
Mr. Walter H. Seymour,
Room 614 Hotel Statler, Cleveland, Ohio
Dear Mr. Seymour: I am herewith enclosing transcript of the testimony
of W. J. O'Neill, Vice-President of The Union Trust Company, in connection
with the application which was filed by the Lifiuidator of The Union Trust Com-
pany asking for authority of the court to settle an alleged controversy with The
Cleveland-Cliffs Iron Company.
This is the matter I spoke to you about when I called at your hotel room and
at that time I promised to send you a transcript of Mr. O'Neill's testimony. I
call your special attention to that part of the testimony in which Mr. O'Neill
testifies that he knew that the transaction was usurious and still did nothing to
make it legal.
As I explained to you, the contention of the Liquidator was that by accepting
two commission notes of 1 % each for an extension of ten months together with
the 6% interest which the indebtedness* bore, it made the interest 8.4%. The
law of Ohio provides that if interest is in excess of 8%, that the lender can collect
only 6%. In this particular instance, it is strange that although the bank's
attorneys knew that it was usurious as testified to by Mr. O'Neill, that they
nevertheless permitted the tranaction to go through when it would have been an
easy matter to make the interest rate exactly 8% per annum.
As the matter now stands, the court has allowed a credit of over $145,000.00,
which however, I am contesting in an independent suit which I filed against The
Union Trust Company and the Superintendent of Banks, and The Cleveland-
Cliffs Iron Company.
Trusting that the within enclosure together with the copy of the Application
which, I believe, I left with you, will be of service to you in your investigation of
the affairs of The Union Trust Company, I remain
Very truly yours,
A. KOLLIN.
AK:K
ENCL.
9060 STOCK EXCHANGE PRACTICES
Exhibit U-15-39b
In The Court of Common Pleas
no. 393938. application for authority to settle controversy with the
cleveland-cliffs iron company
State of Ohio,
Cuyahoga County, ss:
(In the matter of liquidation of The Union Trust Company)
TESTIMONY OF W. J. o'NEILL IN THE ABOVE MATTER, TAKEN DECEMBER 29, 1933, IN
ROOM I, COMMON PLEAS, BEFORE JUDGE CORLETT
Appearances: On behalf of I. J. Fulton: H. F. Burns, esq., of the law firm of
Baker, Hostettler, Sidlow & Patterson; and George Young, Esq.; on behalf of
Abraham KoUin: Abraham Kollin, Esq.
W. J. O'Neill, called as a witness, and having been first duly sworn, was exam-
ined and testified as follows:
Direct examination of W. J. O'Neill by Mr. Young:
Q. Will you give us vour name?
A. W. J. O'Neill.
Q. And you were a vice-president of the Union Trust Company?
A. I was.
Q. Were j'ou in that position in March of 1932?
A. Yes, sir.
Q. Did you participate in a certain discussion in connection with the making
of arrangements for the loans which were made to the Cleveland-Cliflfs Iron
Company on March 23, 1932?
A. Yes.
Q. Was there some discussion at that time about this rate of interest, whether
or not that interest and thus bonus provisions, would amount to a usurious rate?
A. Yes.
Q. What was that discussion?
A. Well, it took place in the office of Andrews & Belden. Mr. Andrews was, as
I remember, there. There were present counsel for the Cleveland-Cliffs Iron
Company, Mr. Young and Mr. Patton; one of the counsel for the New York bank,
and I think a Mr. Kline as counsel for a Chicago bank and Mr. Bingham repre-
sented the Guardian, and myself. The question was raised by the lawyers as to
whether or not this was a usurious rate of interest. We all agreed that so far as
the Ohio banks were concerned it was. ^The New York bank took the position
that it was a usurious interest, but tho'ught that if the others were favorable
it was so far as they were concerned. They wanted to stand on the agreement
that have been made by the representatives and the company. The Chicago
bank took the same position. The Cleveland banks concluded to go along with
them because they were all part of it. As I remember Mr. Kline called up, long
distance telephone, called one of the large bankers in New York and discussed
the matter with him and was convinced that they wanted to go ahead.
Q. The loan was originally $25,000,000?
A. Approximately. There were credit extensions, I believe. I don't think
I participated in the arrangement for the extensions, but the situation was that
these banks all held obligations of the company. There were some participation
notes, one Fourteen Million Dollar note which the bank purchased. The aggre-
gate was about Twenty-five Million. They made this arrangement for a ten
months extension, or which amounted to an extension.
Q. Your bank, the New York and Chicago Banks?
A. Yes, four large banks. The matter came up, I think, at a time when a note
given the bank matured in June. Mr. Mather requested that the banks waive
their provision for the 1% commission so called. The bankers discussed the
matter and took the position that they had been carrying these loans for a long
time at a low rate of interest and they thought they were entitled to it.
Mr. Young. That is all.
Cross examination of W. J. O'Neill by Mr. Kollin:
Q. Did you participate in these conferences after the agreements were signed
or before?
STOCK EXCHANGE PRACTICES 9061
Exhibit U-15-39d
A. I don't understand.
Q. You said you had a conference in Mr. Beldon's office with the attorneys
there?
A. That was while the agreements were being prepared.
Q. Well, you were representing the Union Trust?
A. Well, I was representing the Union Trust Company as Trustee. We were
to hold these papers. Therefore, we were participating in the preparation of them.
Q. Why didn't you make the interest smaller so far as the Union Trust Company
was concerned when there was so much money involved?
A. For one thing, I wasn't making the bargain. I was representing the Trustee,
the bank, who was making the bargain.
Q. You represented the Union Trust Company to whom the Cleveland Cliffs
Company owed over Six Million Seven Hundred Fifty Thousand Dollars?
A. Yes; about Six Million.
Q. You thought it wasn't your duty to do it any other way?
A. Why, the question was raised among them and Mr. Belden discussed it with
them and the position taken was that we should go along on the same basis with
the other banks.
Q. But you had your doubts, not only a doubt, but j'ou thought it was a
usurious rate?
A. I did not have any doubt at all. I was certain it was usurious.
Q. Still it was permitted to be that way and the banks took that position,
did they?
A. Yes, sir.
The Court. Did you take the time to figure out at that time the 8.4?
The Witness. It was obvious if you took a maximum for the period of ten
months, 6% plus 2% commission, you would have a usurious rate of interest.
If you took it on another basis it would figure 10% a year. It was on the question
of the validity of the contracts that the usurious interest was discussed.
Mr. KoLLiN. That is all.
Mr. Young. That is all.
The Court. Have you anything further?
Mr. Young. I think that is all we have to submit.
The Court. Have you anything further, Mr. KoUin.
Exhibit U-15-39e
Mr. KoLLiN. No, Your Honor.
The Court. Let me have the application.
Mr. Young. Here it is.
The Court. I would suggest that you leave that with the Court and the matter
will be marked heard and submitted and decide it right away. I want to get rid
of this tomorrow morning.
Exhibit U-15-40a
August 8th, 1933.
Subject: Rebate of Usurious Interest on Cleveland-Cliffs Iron Works Notes.
Mr. F. S. Callander,
Acting Manager Reconstruction Finance Corporation,
Cleveland, 0.
Dear Mr. Callander: During the writer's incumbency as conservator of
this institution, he was advised that a local attorney, having a client who had
recently purchased a nominal amount of the stock of the Cleveland-Cliffs Iron
Works, had obtained access to the companj-'s books and demanded among other
things that it obtain refund from its banking creditors of certain interest claimed
to be usurious.
Four of these banks are located in Cleveland, three being state banks, the
Cleveland, Guardian and Union Trust Companies, and one being a national
bank — the Central United; the others are out of state banks.
Conferences of a committee representing all of the banks were called, at which
it developed that the respective counsel uniformly advised as follows:
1. The out of state banks were so located that their respective state laws
would apply, and that under these laws the transactions so far as applied to these
institutions were not usurious.
9062 STOCK EXCHANGE PRACTICES
2. That as to the three state institutions in Cleveland, the transactions were
clearly technically usurious; therefore, these institutions, including ourselves,
were without defense.
3. That the Central United National Bank in Cleveland was governed by
certain other legal factors which need not be enumerated here.
Acting upon advice of our counsel, which in this matter is Baker, Hostetler,
Sidlo & Patterson, represented by Mr. Baker and Mr. Burns, the conservator
agreed to immediately allow sufficient credit to reduce the interest rate for the
period to 6%, involving a total credit of $145,838.22. At the request of the
company, the effecting of this credit was delayed, and we are only now in posi-
tion to put it through.
Exhibit U-15-40b
A copy of counsel's letter of August 7th is attached; also, copy of application
for Court approval which they have prepared, in filing which we are awaiting
your approval or non-approval of the allowance of the credit.
Inasmuch as the obligation to the extent of the amount claimed is believed to
be invalid, the writer has from the beginning concurred in the proposed rebate,
and makes such recommendation to you.
Very truly yours,
"^' Oscar L. Cox,
OLC.S Special Deputy Superintendent of Banks.
Encls.
CC to Mr. Frank R. Hanrahan.
Mr. Ladimer Lustig.
'■a-
Exhibit U-15-41a
(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 Superin-
tendent of Banks, State of Ohio)
The Union Trust Company,
Cleveland, Ohio, October 3, 1933.
Oscar L. Cox,
Deputy Superintendent of Banks,
The Union Trust Company, Cleveland, Ohio.
Dear Mr. Cox: Complying with your request to give you whatever informa-
tion I have regarding the sale of 10,000 shares of McKinney Steel Holding Com-
pany common stock which was owned by the estate of James W. Corrigan, of
which estate The Union Trust Company and John H. Watson, Jr. are trustees,
desire to say that all negotiations for such sale, up to the time when the sale
price was agreed upon, were conducted by Mr. Nutt and Mr. Watson — Mrs.
Corrigan, the life beneficiary under said trust, consenting and approving thereto.
You will recall that at the time the said 10,000 shares were sold there was also
sold to the same purcliaser 100 shares of said common stock owned by the firm
of M. B. & H. H. Johnson, and also 218% shares of the stock of Corrigan Mc-
Kinney Steel Company owned by Parthenia Burke Ross.
Immediately after the sale price had been agreed upon Mr. Nutt called me to
office, gave me the terms of the sale and asked that I cooperate with Mr. Watson
in completing the sale, which I did. The total purchase price for the sale was
received by our Estates Trust Department, and all amounts paid out on account
of said sale were contained in our Estates Trust Department records, and are,
I believe, identical with those contained in vour file relating to such sale.
You will note from the copy of letter dated March 19, 1930, written by Mrs.
Corrigan to The Union Trust Company and John H. Watson, Jr. trustees, she
stipulates as a condition of her consenting to such sale, that there shall be paid
to the five persons mentioned in her letter, the total sum of $675,000.00. This
compensation was paid by apportioning same among those interested in the sale
as follows:
Corrigan Estate $480, 198. 01
M. B. & H. H. Johnson 4, 801. 99
Parthenia Burke Ross 190, 000. 00
STOCK EXCHANGE PRACTICES 9063
Exhibit U-15-41b
My understanding is that Mrs. Corrigan stipulated that said compensation
should be paid to said persons for the reason tliat they had all rendered extraor-
dinary services in greatly improving the financial condition of the Corrigan
McKinney Steel Company, thus enabling the estate to realize in such sale a far
greater price than could have been obtained had these services not be rendered.
I am not certain whether Mrs. Corrigan told me that promises of additional
compensation had been made to these persons by Mr. Corrigan during his life-
time and by herself after his death, but it is my recollection that she did make
such statement.
While the matter of closing the sale was being agreed on I talked to both Mr.
Nutt and Mr. Watson with reference to extra compensation being allowed to
The Union Trust Company bj' reason of such sale, and they both advised me that
it had been understood between them and Mrs. Corrigan that no such extra
compensation would be claimed. I also know from conversations had with Mrs.
Corrigan, that she too understood that no such claim would be made.
At first glance it might appear that if compensation was paid to Mr. Watson
then compensation should also have been paid to The Union Trust Company,
but as I understand it, Mr. Watson's compensation was based on special services
rendered and not that he participated in the actual making of the sale. The
time involved in making the sale was comparatively brief, and I believe it was
the feeling among those at The Union Trust Company that sale of the stock and
the reinvestment of the funds would greatly increase the income of the trust,
which increased income would result in increased earnings to the trust com-
pany, since it receives for its services as trustee a percentage of the income of
the trust.
With reference to the sale of the E. S. Burke, Jr., stock in Corrigan McKinney
Steel Company made in the year 1925, wish to say that this sale was made by Mr.
Nutt and was handled through our Banking Department, so I have no informa-
tion regarding it except statements which Mr. Nutt made to me, which are
practically identical with those which he made to you.
Yours very truly,
H. D. Messick, Agent.
This stationery is for inter-department and inter-office use only
Exhibit U-15-42
September 30th, 1933.
Mr. Laylin has, at the writer's request, reviewed the correspondence of
September 18th and prior with Mr. Snyder and the liquidator's confidential file
as to the sale of Corrigan-McKinney Steel Company prepared under date of
September 12th, 1933, by Mr. Morton. He has also read memorandum of the
writer's interview of September 29th with Mr. Nutt.
Mr. Laylin gives the verbal opinion that it appears v/e would be estopped from
claiming fees in connection with this sale on the ground that the payments made
to Mr. Watson and others were specified by our trustor and later approved by
the Court. It is noted these fees were represented as covering not only whatever
service had been rendered in connection with the sale of the trustor's stock, but
more particularly a long period of services to herself and her. husband for which
she desired to show appreciation and provide some generous recompense.
He is also influenced by the representations of Mr. Messick and Mr. Nutt that
the bank felt at the time it could not properly ch.arge for its services, and that it
was generally understood between all parties that no such charge would be made.
A factor bearing on this is that from the standpoint of handling the trust, the
bank anticipated a substantial profit and as of the near future realized it. In
other words, it appears that the whole transaction was carried through and com-
pleted in accordance with the commitments and understanding with The Union
Trust Company at that time.
This appears to us to be an effort to earn an attorney's fee, rather thaii an
effort to serve The Union Trust Company, either by Mr. Snj^der or his reputed
clients and associates. It is felt that it may be constructive to hold Mr. Snyder
to our request that he evidence good faith by facilitating our investigation of
his original claim through supplying the names of the directors and officers who
9064 STOCK EXCHANGE PKACTICES
he stated had requested Mr. Nutt to turn over a certain million dollar fee. See
Mr. Snyder's letter of April 19th, 1933.
Oscar L. Cox,
OLC.S Special Deputy Superintendent of Banks.
Exhibit U-15-43a
Snyder, Thomsen, Ford, Seagrave & Roudebush,
Attorneys at Law,
Ninth Floor The Williamson Building,
Cleveland, Ohio, April 19, 1933.
To Oscar L. Cox,
Conservator of and for The Union Trust Company, an Ohio Banking Corpora-
tion, of Cleveland, Ohio;
Ira J. Fulton,
Superintendent of Banks in and for the State of Ohio, and said The Union
Trust Company.
We represent Zella G. Olmsted who owns one hundred (100) shares of the
capital stock of The Union Trust Company, of Cleveland, Ohio, and also repre-
sent other owners of a large number of shares of said stock. On behalf of each
and all of such stockholders, we present the facts and request the action thereon
hereinafter indicated:
On or about March 21, 1930, while Joseph R. Nutt was the ranking active
officer of The Union Trust Company, under salary, he negotiated for the owners,
one of which was The Union Trust Companj', Trustee, the sale to the Cleveland
CliflFs Iron Company for Thirty Million Dollars ($30,000,000.00) of certain stocks
of The Corrigan-McKinney Steel Company and The McKinney Steel Holding
Company, and as a part of the transaction, said Nutt negotiated for The Cleveland
Cliffs Iron Company a loan of Twenty-five MiUion Dollars ($25,000,000.00),
approximately Seven Million Dollars ($7,000,000.00) of which was made by The
Union Trust Company, the greater part of which is stiU outstanding; and in
connection with said transaction, we understand said Joseph R. Nutt received
a sum or sums of money approximating One Million Dollars ($1,000,000.00),
which money we believe properly and legally belonged to The Union Trust
Company, but which said money said Nutt claimed and retained and still retains
notwithstanding he was requested by certain officers and directors of The Union
Trust Company to turn or pay over same to The Union Trust Company.
On behalf of said Zella G. Olmsted and other stockholders, we request that
you forthwith bring an action in the Court of Common Pleas of Cuyahoga County,
or other proper court, in the name of The Union Trust Company, or other name, if
you so decide, against Joseph R. Nutt, for a full accounting of said transaction,
and particularly the sums of money received and retained by him, which properly
and legally belonged to The Union Trust Company, and seeking a restitution
and return of such money to The Union Trust Company by said Nutt, all for
the benefit of the creditors and stockholders of said The Union Trust Company.
Exhibit U-15-43b
If such action is not brought or caused to be brought by you, we will institute
such action in the name of Zella G. Olmsted on behalf of and for the benefit of
The Union Trust Company, its creditors and stockholders.
Very Respectfully,
Snyder Thomsen Ford Seagrave & Roudebush
and Steel & Class,
By Alonzo M. Snyder
Attorneys for Zella G. Olmsted and other stockholders.
AMS:BVW
RECEIVED this day of April, 1933, three (3) copies of the fore-
going, and the request therein made is declined.
STOCK l!.XCHAISrGE TRACTICES 9065
Exhibit U-15-44
October 21st, 1933
At my request, Mr. John H. Watson called. He has received Mr. Snyder's
letter of September 19th, which he has ignored. He has also advised Mrs. Ross'
brother that Mrs. Ross could appropriately ignore Mr. Snyder's communications.
The following information was given by Mr. Watson, and will he says, agreeable
to my request, be confirmed by letter:
1. Prior to Mr. Corrigan's death, Mr. Watson was his attorney and personal
friend and went to the Corrigan-McKinney Co. as its secretary, but practically
as the first assistant in charge.
2. When Mr. Corrigan died, he took charge of and operated the company at
the request of Mrs. Corrigan and Miss Burke (now Mrs. Ross).
3. The company was very heavily in debt, but in two years had reversed its
position. The purpose of Mrs. Corrigan and Miss Burke was to get the property
in shape to sell as soon as a two-year period had elapsed, and a general under-
standing has been that in proportion as this sale was favorable, the ke}'^ executives
would be specifically rewarded.
4. Sale to the Cleveland-Cliflfs was consummated; a cash offer for practically the
same sum had been received from another source which indicated that the manage-
ment of the business would be taken away from Cleveland. To avoid this loss
of business in Cleveland, negotiations were instituted with the Cleveland-Cliffs.
5. Mrs. Corrigan was in position to block any sale, and stipulated that certain
rewards should be paid to the key employees, which was done, as outlined in a
court decree.
6. It was definitely understood that no fees were to be paid to The Union Trust
Company in connection with this sale, and it is Mr. Watson's judgment that
The Union Trust Company actually did little more than afford a contact, from
the standpoint of civic interest, between the company and Cleveland-Cliffs; at
any rate, he feels it was definitely understood by all parties and, lie thinks, by
the Court, that The Union Trust Company was not seeking a commission on the
sale, nor that if it had, that Mrs. Corrigan would have assented.
OLC.S O. L. C.
Exhibit U-15-45
(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 Superin-
tendent of Banks, State of Ohio)
September 12, 1933.
Mr. Oscar L. Cox,
Special Deputy Superintendent of Banks,
Cleveland, Ohio
Dear Mr. Cox: As requested I am attaching hereto pertinent information
pertaining to the McKinney Steel deal, in particular, to the payment or non-
payment of a commission to Mr. J. R. Nutt or The Union Trust Company as
set forth in a letter of September 7, 1933 from the law firm of Snyder, Thomsen,
Ford, Seagrave & Roudebush.
This deal had two definite steps, first being the acquisition from E. S. Burke,
Jr. of 13^4% of the outstanding capital stock of the McKinney Steel Company
for James W. Corrigan. This was accomplislied by formation of the McKinney
Steel Holding Company in 1925 in which there was a total of $7,250,000.00 of
Preferred Stock issued and 10,100 shares of Common Stock. The Preferred
Stock was underv^^ritten by The Union Trust Co. Bond Department and from
the proceeds there was paid to Mr. E. S. Burke, Jr., the sum of money as set
forth in his contract. This left the Estate of James W. Corrigan 10,000 shares of
McKinney Steel Holding Company, Common Stock and the firm of M. B. &
H. H. Johnson, Attorneys who liandled the deal for James W. Corrigan 100 shares*
The next (second) step was a sale of the Common Stock above mentioned and
the acquisition of 208% shares of the Common Stock of tlie Corrigan McKinney
Steel Company from Parthena Burke Ross in 1930.
I am attaching hereto a copy of each of the contracts whicli are in our files
together with other representative correspondence and photostatic copies of the
ledger sheets from our Trust Department showing the disbursement of funds
9066 STOCK EXCHANGE PRACTICES
received in payment of the sale of the controUing interests in the Corrigan, Mc-
Kinney Steel Company to the Cleveland Cliffs Iron Company.
I am also attaching a summary of the commissions received By The Union Trust
Company for its part in these transactions, also summary of the compensation
paid by each of the three interests entering into the second part of this deal; that
is the sale to the Cleveland Cliffs Iron Company.
From the contracts in our file covering these various transactions, I find that
The Union Trust Company has received and has had credited to its Earning
Account, all the compensation called for in the agreements.
I am also attaching a schedule showing the fees collected by The Union Trust
Company as Co-Trustee under the will of James W. Corrigan.
RespectfuUv submitted.
O. C. Morton.
Exhibit U-15-46a
Copy TERMS AND PROVISIONS OF PREFERRED STOCK
1. The holders of the preferred stock shall be entitled to receive, when and as
declared by the Board of Directors, out of the surplus of net profits of this Com-
pany, cumulative dividends at the rate of Six Per Cent (6%) per annum, and no
more, payable quarter-yearly, on the last day of March, of June, of September
and of December in each year, before any dividend shall be set aside or paid on
the common stock. The dividends on said preferred stock shall accumulate from
the day of issue.
2. In the event of any involuntary liquidation, dissolution or winding up of
this Company, the holders of the preferred stock shall be entitled to be paid in
full the par value thereof and all accumulated and unpaid dividends thereon,
before any payment or distribution is made to the holders of the common stock;
and the remaining assets and property shall belong to and be divided among the
holders of the common stock. In the event of any voluntary liquidation, dis-
solution or winding up of this Company, the holders of the preferred stock shall
be entitled to be paid all accumulated and unpaid dividends thereon plus One
Hundred and Five Per Cent (105%) of the par value of said preferred stock,
before any payment or distribution is made to the holders of the common stock;
and the remaining assets and property shall belong to and be divided among the
holders of the common stock.
3. The holders of the preferred stock shall have no voting powers whatsoever,
nor shall they be entitled to notice of any meetings of the stockholders of this
Company; provided, however, that if this Company shall fail to pay any dividend
on the preferred stock when payable as above provided, and if such default shall
have continued for the period of six (6) months or more, then the holders of said
preferred stock shall have the entire voting power as stockholders of the Company
to the exclusion of the common stockholders, and be entitled to notice of any and
all stockholders' meetings until (and only until) all such defaults shall have been
cured.
4. This Company may, at one time or from time to time, purchase and retire
any part or all of said preferred stock, at any time, upon such terms and condi-
tions as the Board of Directors may determine and as may be satisfactory to the
owners of the stock to be purchased; provided, however, that the purchase price
of said preferred stock shall not exceed the sum of the accumulated and unpaid
dividends thereon plus One Hundred and Five Per Cent (105%) of the par value
of said stock. This Company shall have the right, at one time or from time to
time, at any dividend paying date, to redeem and retire any part or all of said
preferred stock, paying therefor the sum of all accumulated and unpaid dividends
thereon plus One Hundred and Five Per Cent (105%) of the par value thereof.
In case less than all of said outstanding preferred stock shall be redeemed and
retired as provided in the preceding sentence, the preferred stock so to be redeemed
and retired, shall be chosen by lot in such manner as the Board of Directors shall
Exhibit U-15-46b
McKinney Steel Holding Co.
determine. The holder of any of the preferred stock, by his acceptance of the
certificate therefor, shall be deemed to have agreed that all or any part of the
preferred stock of this Company may be redeemed or purchased and retired as
above provided, and, further, that he will, at any time, upon thirty (30) days'
STOCK EXCHANGE PRACTICES 9067
notice mailcfi to his last known post-office address, surrender the certificates and
all of the shares represented thereby, so redeemed, to this Company, at the office
designated by this Company in such notice, upon payinent, at said office, of the
redemption price as above provided, and that after the date named in such
notice, the holder of the shares so redeemed shall not be entitled to receive any
dividends thereon.
5. Until all of said preferred stock shall have been retired, this Company will
on or before March 31, 1927, and on or before the 31st day of March of each year
thereafter, apply to the purchase and retirement or redemption and retirement
of said preferred stock not less than Seventy-five Per Cent (75%) of its net earn-
ings for the calendar year ending on the 31st day of the preceding December,
remaining after reduction of all taxes, including income and profits taxes, accrued
to said 31st day of December, and after deduction and payment of all dividends
accrued to said 31st day of December on the preferred stock of this Company,
and after deduction of the sum of Five Hundred Thousand Dollars ($500,000.00)
for dividends on the common stock of this Company. No stock retired under
the provisions of this paragraph, or redeemed under the provisions of paragraph
4 hereof, shall thereafter be reissued.
6. Except with the affirmative note or written consent of the holders of two-
thirds (2/3) of the then outstanding preferred stock of this issue, this Company
shall not (1) create or assume any obligation or lien which would take precedence
as to assets or earnings over this preferred stock, provided, however, that this
provision shall not restrict or prevent the incurring of ordinary obligations or
indebtedness or current borrowings by this Company; or-(2) place any lien upon
or hypothecate or sell all or any part of the shares of stock owned by this Com-
pany in another corporation, where such owned shares represent a majority or
controlling interest in such other corporation, provided however that this pro-
vision shall not restrict the right of this Company to deposit any such owned
shares in trust for safe-keeping and/or to secure performance of the terms of this
preferred stock; or (3) vote any such owned shares in favor of a consolidation
(in whatever fonn, whether of merger, purchase, sale or otherwise) of any such
corporation with any other; or (4) avithorize or issue any shares of stock on a
parity with this issue or having priority over it.
J.W.C.
E.S.B. Jr.
Exhibit U-15-47
Copy
extract from minutes of trust committee meeting march 5, 1930
In re: Corrigan Estate
The officers reported to the Committee that certain negotiations had been had
looking toward the sale of the common capital stock of the McKinney Steel
Holding Company held in the James W. Corrigan Estate, of which estate The
Union Trust Company and John H. Watson, Jr., are executors and trustees,
and sale of which stock can only be made by said executors and trustees subject
to the approval of Mrs. Corrigan. The Officers further stated that a situation
might develop which would make it very advisable to immediately close a sale
of said stock.
On motion duly made, seconded and carried, the matter of the sale of said
stock was referred to J. R. Nutt, with authority on behalf of The Union Trust
Company, as executor and trustee as aforesaid to continue negotiations for the
sale of said stock and to close such sale subject however to the approval of Mr.
Watson and Mrs. Corrigan.
(From Estates Trust Files.)
Exhibit U-15-48
Copy
excerpt from a letter written by john h. watson, jr., to mrs. james w-
corrigan, dated october 14, 1930
The sale of the Corrigan interest in The Corrigan, McKinney Steel Company
was m.ade on the basis of a net valuation of $60,000,000.00 for the Steel Company.
The McKinney Steel Holding Company held 53%% of the capital stock of The
9068 STOCK EXCHANGE PEACTICES
Corrigan McKiiinej' Steel Company. Fifty-three and three quarters per cent of
$60,000,000.00 is $32,250,000.00. There was $7,250,000.00 par value of preferred
stock of the McKinney Steel Holding Company outstanding, which is retirable
at 105. The cost of retiring the preferred stock is consequently $7,612,500.00,
leaving $24,637,500.00 valuation to the McKinney Steel Holding Company
common stock. There were 10,100 shares of McKinney Steel Holding Company
common stock outstanding, of which 100 shares were owned by M. B. and H. H.
Johnson and 10,000 shares by the Corrigan Estate. Ten Thousand-Ten Thou-
sand One Hundredths of $24,637,500.00 or $24,393,564.35 was consequently the
gross proceeds of the sale of the common stock of the McKinney Steel Holding
Company owned by the Trustees of the Corrigan Estate, as set forth in my
letter of August 15, to j'ou.
(From Estates Trust" Files.)
(This is an excerpt taken from a 7 page letter in which only the paragraph
quoted is pertinent to the situation. The other items contained in the letter
were purely personal.)
Exhibit U- 15-49
Cleveland Cliffs Iron et al., Patterson Busby Ross Acct.
Parland House,
Madison, New Jersey, 4-3-30.
My Dear Mr. Nutt: My mother has told me of the details in connection
with the sale of the Corrigan Estate stock and my stock in the Corrigan-McKinney
Steel Company. I wish to congratulate you on the brilliant way in which you
handled this negotiation and the successful outcome. I thank you sincerely and
am very grateful to you for the benefits that have come to me through your
splendid efforts.
I am very happy that this sale has been consummated, especially as it does and
should bring benefits to every one interested in any way.
Again with sincere thanks, grateful appreciation of your interest, and congratu-
lations on the brilliant result. I am
Sincerely yours,
Parthenia Burke Ross.
April the third, 1930.
(Exhibits U-15-SOa through U-15-51 face this this page)
Exhibit U-15-52
May 6, 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 percent. (53%%) of the authorized and issued
capital stock of The McKinney Steel Company.
This Investment Company to be capitalized as follows: $8,500,000 PV 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 percent. (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 vou personally. This authority is good until noon
Saturday, May 16th, 1925.
Very truly yours,
(Signed) E. S. Burke, Jr.
Mr. E. S. Burke, Jr.,
Cleveland, Ohio.
Dear Sir: It is my understanding that the authority given above is contingent
upon my providing you simultaneous with the delivery of your stock, a purchaser
1 230 000 00 7-10 43650
10-9 330 000 00
10-9 330 000 JOO 1 280 000 00 7-10
1 280 000 00 8-25
'•1 030 000 00 8-25
i-\fyy^ .ooo--oo----i-o-(>---'i^>*^3
1 030 000 00 10-3 4-6238
i 5 4-.a.._..3.3O-.OOft.-00
5. 1-2 700 000 00
30-060-06 1^6-9-
7ii ^ ! 1 030 000 00 10-3
1 030 000' 00 10-9 46463
5 1-8 330 000 00
330 j.O) ^,)^^^ ^^^ ^^ ^^_^
10 JO 000 'JO 1?-?9
i.!0 000 10
1030 ono 00 !->■
4- .3 . 7 10 000 00-
i30 000- 00 >J6
330 000 nO»l?-P9
JAN 1 - 1923
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Exhibit U-15-60a
we-ooo-oo-i-^-i-*-
500 000 00 > 21-24
500 000 00 1?. 31 i
12-31-23 i 500 000 OQ ^30 OOO 0(^*10-1
- 0- i»ia.31
5 ♦.2-24 500 000 00 : v+-.e+-
3-21-24 : 500 000 00
500 000 0O»V3-a4
- 0- •3-21-24
12-31-27 26570
1000 000 00 1-4-28
4 OEM 1000 000 00 1-4-28 1 000 000 00 1000 000 00*12-31-27
-0-»1-4-28
3-21-30
S 9-22-30 14387 500 00 3-22-30 14387 500 06 14387 500 00*3-21-30
14387 600 00 3-22-30
3387 500 00 9-22-30
3387 500 00 3-23-31
3387 500 00 S-23-31
3387 500 00 9-25-31
5 9-22-30 3387 500 00 9-22-30 3387 500 00 3387 500 00*3-22-$0
4 3-23-31 3387 500 00
4 9-23-31 3387 500 00
*i 3-23-32 338'< 500 00
3-2 3-31 33d7 500 00 3387 500 00»9-22-30
9-23-31 33rt7 bOO 00 3387 500 00»3-23-?
9-25-31 3387 500 00 33(J7 500 00*9-23^
10-8-31
3387 500 00 1-5-32
3387 oOO 00 3-29-32
6887 500 00 6-23-32
6887 500 00 6-2 4-3 2 i
6887 50 0 00 6-27-32
6956 375 00 9-23-32 ;
2667
4i 3-23-323387 600 00
4i 3-23-323387 500 00
6 6-23-32 3387 bOO 00
3-2 9-32
6-24^2
A- 3 4-3 2
5 9-23-32 3387 500 00 9-2 3-32
6 9-23-32 1000 000 00 ^"^3-32
6 9-23-32 1000 000 00 E'o^'^
c Q-'iT-O') tr.nr\ 000 00 7*^J~Jc
000 00 9-23-32
6 9-23-32 35 000 00 f'^i'l?,
6 12-23-32 500 000 00 12-23-32
I li-Mzmm m 88 mm
6 12 -23-32 1 000 000 00 ''^"-^3'-^3^2
6 12-23-32 6b bVS 00 ig
:3387 500 0q-33dV 500 00»10-8-fl
3367 aOO 00 3387 500 00»1-5-3i
|il^ !
500 000 OOv^ijjjV 500 00*3-29-32
33d7 &00 00 6887 500,00*6-23-32
1000 OUO 00
1000 000 00
lOOC 000 ou r-.-v
bOO UOO 00 6887 500 00»6-24«2
3b 000 00
33^f S6B 88 6956 375 00*6-27-32
bOO 000 00
?S88 888 8b : ■
ioot,oOQCtOe.f>
^8 8(5 00^956 375 00 •-■
6 8 8 75 00 -T^'
Exhibit U-15-50Ij
CLEVELAND CLIFFS IRON CO
i 956 376 00 12-23M2
956 3T5 CO 8-2
i956 375 00 k-25 13217
16956 373 00 7-7
$154 968 75 -f"
$172 187 50^-
3 394. 96 ^-
68 502 TT ^-
'87 500 00
00 000 00
1-d3-33 IPOO 000 00
1-:3-33 1000 000 00
1-23-33 68 875 00
1-23-33 68 876 00
70 77 7 16-^ '"-
(ABILITY— -— 7025 250 00 "N BO.KS-- 6956 375 0O^^2-23|32
4-24 1)00 000 00-' 4-25-33
4-24 1)00 000 00^ 4-25-3 3
4-24 1)00 000 00' 4-25-33
4-24 iOOOO? 00^^25.33
4-24 3387 500 00 "^ 4-25-33
'24 68 875 00' 4-26-33
<■ 783 45/4-2 5-33
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4-24 V 17 694 45 ' 4-25-33
Deo. 1, 193 S S3 of 7-24-3
7-24. 68 875 00' 12-1-33
7-2 4 8387 500 00
7-24 000 000 00
7-24. 000 000 00
7-24 000 000 00
7-24 500 000 00
3387 500 00
500 OCO 00
1000 000 00
1000 OOQ 00
1000 OPO 00
68 875 00
68 876 00
1000 000 00
1 000 000 00
1000 000 00
500 OCO 00
3387 bix> 00
68 875 00
UOOK VALUE
IBOOK.VM.UE
[BOOK VALUE
[BOOK VALUE
lABILlh-Y 47078 072 34 ON BO OKS— 6956 375 00^2-2-3
7-7-33
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1 -7 -33
Me. -363-01
f|3^556 378 0
,j5 084 OV ON PGOKS 6612 7:i2 43
Exhibit U-15-50c
I
REGISTER Ol
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Exhibit U-15-51
STOCK EXCHANGE PRACTICES 9069
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,
(Signed) J. R. Nutt.
From Nutt's personal files.
Exhibit U-15~53
Cleveland, Ohio, May 1, 1925.
J. R. Nutt,
Cleveland, Ohio.
Dear Sir: I own l'S%% of the authorized and issued capital stock of The
McKinney Steel Companv which I give you exclusive authority to sell for Seven
Million 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 personall}^ and good until June 15th, 1925, 12:00 o'clock
noon.
It is understood that you may yourself purchase or be interested in the pur-
chase of the stock, and shall, in that event, be entitled to the commission stated.
Very truly yours,
(initialed) E S B Jr.
From Nutt's personal files.
Exhibit U-15-54
The Union Trust Company,
Cleveland, Ohio, May IS, 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.
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,
(Signed) J. R. Nutt, President.
From Nutt's personal files.
Exhibit U-15-55
Cleveland, Ohio, May IS, 1925.
Mr. J. R. Nutt,
The Union Trust Company,
Cleveland, Ohio.
Dear Sir: Referring to the thirteen and three-quarters percent (13%%) inter-
est 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 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 percent (2%) of the sale price or $130,000.00.
Very truly yours,
(Signed) E. S. Burke, Jr.
From Nutt's personal files.
9070 STOCK EXCHANGE PEACTICES
Exhibit U-15-56
Excerpts Taken from Ex;aminers Report, Department of Banks, State op
Ohio, January 20, 1933
Geo. T. Bishop, Syndicate Manager — $573,038.09
The syndicate is composed of several companies which were formerly under
the control of Cyrus S. Eaton. It was formed to purchase stock interest in the
Cleveland Cliffs Iron Company. This loan is a participation in a loan of $1,895,-
363.14 which was held by the Cleveland Trust Company and is secured by
preferred stock of the Cleveland Cliffs Iron Company and common stock of the
Cliffs Corporation. The present market value of these stocks is less Yz of the
amount advanced. It is believed however, that the intrinsic value of the stocks
held is sufficient to eventually take care of the obligation. $400,000.00 of the loan
has been classed as undetermined at this time.
Exhibit U-15-57
Excerpts Taken from Examiners Report, Department of Banks, State
OF Ohio, January 20, 1933
Cleveland Cliffs Iron Company — $6,956,375.00
These loans are participations in loans totaling approximately $25,000,000.00
which money was originally used to acquire the business and properties of the
Corrigan McKinney Steel Company. They are secured by a pledge of stock of
practically all of the subsidiaries of the Cleveland Cliffs Iron Company. Due
to lack of sufficient credit information, it is impossible to make accurate dollar
appraisals of the values of the securities held. The Cleveland Cliffs Iron Com-
pany is one of the largest producers of iron ore in the country. They have vast
holdings of oi-e properties in Michigan and the Lake Superior Region. The
company has always been very successful in the past, but under present condi-
tions the loans are badly frozen and pajanent of them is out of the question at
this time. An audited statement of the company dated July 31, 1932 shows a
net worth in excess of $60,000,000.00 and a total debt amounting to approxi-
mately $28,000,000.00. It is believed that a short period of improved business
conditions would change the appearance of these loans materially. Interest
requirements are being maintained.
Exhibit U-15-58
Excerpts Taken from Examiners Report, Department of Banks, State
OF Ohio, January 20, 1933
Wm. G. Ma</ier— $857,523.99
Loans are based principally upon preferred stock of the Cleveland Cliffs Iron
Co. and common stock of the Cliffs Corp. Bank also holds $204,000 notes re-
ceivable of the Cleveland Cliffs Iron Co. It is impossible to make an accurate
appraisal of any of the securities held as collateral. Quotations on the Cleve-
land Cliffs Iron preferred stock vary all the way from $5 per share to $25 per
share. Mather's total indebtedness to all banks is known to be in excess of
$2,000,000. Under the terms of a creditors' agreement betv/een Mather and
his various creditor banks his indebtedness was extended to January 1, 1936.
Mather in turn has trusteed all of his tangible assets for the prorata benefit of
the various creditor banks. The outcome of this credit depends largely upon
the future of the Cleveland Cliffs Iron Co. Officers believe that the line can
eventually be worked out.
STOCK EXCHANGE PRACTICES 9071
Exhibit U-15-59
The Corrigan, McKinney Steel Company
(and Subsidiary Companies)
ASSETS
Current: Nov. 30, 1931
Cash and U. S. Securities $729, 221. 91
Notes & Acceptances Receivable 29, 489. 27
Accounts Receivable 1, 349, 539. 13
Inventory Ore at Mine 1, 606, 492. 71
Inventorv Ore at Lower Ports 1, 729, 617. 57
Inventory Pig Iron 2, 229, 779. 71
Inventory Products 1, 584, 127. 36
Inventory Raw Materials 417, 986. 08
Inventory Supplies 568, 553. 71
$10, 244, 807. 45
Investments:
Securities $66, 009. 85
Properties:
Plant & Equipment, Ore Reserves etc., less allowance for
Depreciation & Depletion $43, 360, 148. 60
Deferred:
Minimum Rovaltv $891, 268. 42
Deferred Charges 316, 725. 22
$1, 207, 993. 64
Total assets $54, 878, 959. 54
LIABILITIES
Current:
Bank Loans . $2, 400, 000. 00
Accounts Payable 224, 872. 65
Pay Rolls 117, 608. 47
Compensation Claims 68, 780. 24
Accrued Taxes 886, 941. 60
$3, 698, 202. 96
Other Liabilities:
Contingent Purchase Money Obligation $150, 000. 00
Great Western Aid Fund 131, 410. 93
$281, 410. 93
Reserves:
Relining & Rebuilding $651, 509. 13
Insurance 460, 312. 23
Contingencies 224, 901. 07
$1, 336, 722. 43
Minority Interest in The N & G Taylor Co $203, 289. 48
Surplus $49,359,333. 74
Total liabilities $54, 878, 959. 54
175541— 34— PT 20 22
9072 STOCK EXCHANGE PRACTICES
Exhibit U-15-59a
Seven months ending
Gross sales: Nov.30,i93i
Iron Ore $849, 725. 81
Coke 82, 709. 71
By Products 414, 668. 75
Pig Iron 1,026,898. 21
Semi Finished Steel 3,467,276. 74
Finished Steel 1, 249, 118. 53
N. & G. Taylor 991,770.41
Total $8,082, 168. 16
Less Inter Company 337, 774. 35
Gross sales $7, 744, 393. 81
Cash Discounts 35, 293. 77
Net Sales $7, 709, 100. 04
Less: Cost of Sales 7, 155, 180. 44
Gross Operating Profit J $553, 919. 60
General Administrative Expense 212, 093. 94
General Selling Expense 91, 683. 24
Net Operating Profit $250, 142. 42
Non Operating Deductions:
Missabe Idle Mines : $110, 841. 19
Gogebic Idle Mines 23, 232. 16
Menominee Idle Mines 66, 063. 62
Foxdale Idle Mine 560. 00
Kentucky 18, 625. 22
Josephine 212. 44
Concheno 33, 937. 50
Rio Tinto 8, 492. 98
Clayton 770. 76
Total Non Operating Deductions 262, 310. 99
Other Income:
Dividends Received 350. 00
Other Deductions:
Interest on Bank Loans 55, 339. 95
Other Interest 12, 751. 71
Total Other Deductions $68, 091. 66
Profit before Depreciation and Depletion $79, 910. 23
Depreciation:
Ore Mines $63, 202. 96
Other 732, 168. 35
Depletion 100, 580. 50
Net Loss & Decrease in Surplus $975, 862. 04
Detail of Gross Operating Profit:
Coke $10,969. 85
Pig Iron 127, 252. 62
Ingots 109. 61
40" Mill 10,551.73
18" Mill 321,064. 22
12" Mill 35,616.65
10" Mill 84,892.38
Dock 236.83
Railroad 45,637. 23
N. & G. Taylor 8, 862. 94
$553, 919. 60
STOCK EXCHANGE PKACTICES 9073
Exhibit U-15-60
mckinney steel holding company 6% preferred stock
The McKinney Steel Holding Company, a Delaware Corporation, has as its
only asset 53%% (1343^ shs.) of the common stock of the Corrigan-McKinney
Steel Company. Its preferred stock is outstanding in the amount of $7,250,000.
The cost to The Cleveland Cliffs Iron Company of the common stock of the
Corrigan-McKinney Steel Company was $32,250,000 and all of this common stock
is deposited in our Corporate Trust Department as collateral to the McKinney
Steel Holding Company preferred stock. Dividends paid on the Corrigan-Mc-
Kinney Steel Company stock is the onlj^ source of income of the McKinney
Steel Holding Company. Balance sheets and income statements of the Corrigan-
McKinney Steel Company are not published but confidential quarterly reports
are submitted to this bank. All of the common stock of the McKinney Steel
Holding Company is owned by the Cleveland Cliffs Iron Company and while no
dividends are being paid on the common stock of the Corrigan-McKinney Com-
pany, still the Cleveland Cliffs Iron Company considers the McKinney Steel
Holding Company preferred in the nature of a collateral loan of the Cleveland
Cliffs Iron Company and therefore is itself paying the dividends on the Holding
Company preferred stock.
CAPITAL McKinney Steel Holding Company:
72,500 shs $100 par 6% Pfd $7, 250, 000
(Can be called at 105)
10,100 shs No par common
CAPITAL Corrigan-McKinney Steel Company:
2,500 shs Common stock
Exhibit U-15-61
The Union Trust Company
Cleveland, Ohio, September 9, 1931.
Mr. J. R. NuTT,
Chairman of the Board, Bank.
Dear Mr. Nutt: I quote below extracts from the by-laws of The McKinnej'
Steel Holding Company as relate to dividends on the Preferred stock:
"The holders of the Preferred stock shall be entitled to receive, when and as
declared by the Board of Directors, out of the surplus or net profits of this Com-
pany, cumulative dividends at the rate of 6% per annum, and no more, payable
quarterly on the last day of March, of June, of September and of December in
each year before any dividends shall be set aside or paid on the Common stock."
"The holders of the Preferred stock shall have no voting powers whatsoever,
nor shall they be entitled to notice of any meetings of the stockholders of this
Company; provided, however, that if this Company shall fail to pay any dividend
on the Preferred stock when payable, as above provided, and if such default shall
have continued for a period of six months or more, then the holders of such Pre-
ferred stock shall have the entire voting power as stockholders of the Company,
to the exclusion of the common stockholders, and be entitled to notice of any and
all stockholders' meetings until (and only until) all such defaults shall have been
cured."
Very truly yours,
Geo. N. Sherwin,
Vice President.
GNS MG
Exhibit U- 15-62
January 8, 1930.
(the corrigan-mckinney steel company)
Memorandum.
In May 1925 Mr. James W. Corrigan purchased an interest equal to 13%%
in The McKinney Steel Company from E. S. Burke, Jr. In order to make pay-
ment, Mr. Corrigan formed The McKinney Steel Holding Company with a capital
9074
STOCK EXCHANGE PRACTICES
of $7,250,000 6% Cumulative Preferred Stock and 1,000 shares of common.
He turned into this holding company the 13^^% purchased from Mr. Burke and
in addition his own holding of 40%, so that the McKinney Steel Holding Company
owns 53%%. He turned over to Mr. Burke the $7,250,000 of preferred stock,
which is callable at 105.
Based upon the purchase price of $7,250,000 for 13%%, the entire 100% of the
property would have a value of $52,727,272.
Taking the cost of the interest purchased from Mr. Burke — of $7,250,000 —
and adding to it the call price of 5% or $362,500, the cost of this interest would be
$7,612,500, and on this basis the entire property would equal $55,363,636.00.
The balance sheet of the Company on December 31, 1924,
showed a Surplus of $65, 566, 882. 55
(Which represents the Net Worth)
Surplus December 31, 1929 is 54, 525, 908. 51
Showing a decrease of $11, 040, 974. 04
The credits and charges to Surplus since December 31st, 1924 are shown in
attached statement.
Exhibit U-15-63
#3356 CLEVELAND CLIFFS IRON CO. ET AL.
Inv. J. 3-21-30.
Corrigan Estate $23, 913, 366. 34
Parthenia Burke Ross 5, 060, 000. 00
H. H. Johnson 66,957. 42
David L. Johnson 66, 957. 42
John T. Scott 38, 261. 40
Donald B. Gillies 50, 000. 00
Henry T. Harrison 50, 000. 00
James S. McKesson 50, 000. 00
E. G. Resch 25,000.00
John H. Watson, Jr $66, 957. 42
500, 000. 00
• — 566, 957. 42
$29, 887, 500. 00
Original in James W. Corrigan #3359.
Exhibit U-15-64
February 1931.
Valuations of operating mines, iron ore reserves and mineral properties of the
company as estimated by its officers
Tons
Amount
Marquette Range:
Underground Mines — High Grade Ore...
Fee Properties:
Bunker Hill— 68.07% Ownership
Cliffs-Shaft
Jackson-Cambria
Morris-Lloyd
Princeton
Section 3 Extension
Section 6 Extension
Leased Properties
Athens Mine — 52.4% Ownership
Gardner-Mackinaw
Maas
Negaunee, 50% Ownership
Open Pit Mines:
Tilden — Silicious Ore — Fee property.
Menominee Range:
Underground Mines:
Virgil — High Grade Ore— Leased
79, 179, 934
$53, 282, 090
50, 000, 000
2, 465, 570
3, 403, 843
1, 880, 851
STOCK EXCHANGE PRACTICES
Exhibit U-15-64 — Continued
9075
Vahiations of operating mines, iron ore reserves and mineral properties of the
company as estimated by its officers — Continued
Tons
Amount
Mesaba Range:
Underground Mines:
Wade — Standard Mesaba — Leased
Open Pit Mines:
Leased Properties, Standard Mesaba
Direct and Washed Shipping Ore.
Bingham & North Star 25% Owners.
Canisteo 20%
Dean 100%
Drew 50%
Hill-Trumbull 25%
Holman-Brown 25%
Iron Ore Reserves:
Marquette Range:
Negaunee Basin— High Grade Ores— fee
SiUcious Ores — Owned in fee..
Menominee Range — High Phos. Ores — Lease.
Cuyuna Range — Mang. Ores — Lease
Total Mines and Ore Reserves-
2, 000, 000
"io," 250,' 566'
105, 400, 000
100, 000, 000
1, 958, 000
1, 200, 000
352, 453, 504
$687,117
"5,"i55,'69i
46, 450, 000
2, 000, 000
168,912
750, 052
113,778,356
Exhibit U-15-64a
other Mining Properties:
Inventories of Ores at Mines .
2, 297, 537
7, 043, 585
10, 000, 000
291, 855
Mineral Lands on Marquette Mineral Formation, approximately 10,000
acres -. _
Advance Royalties.. ._ ... _ ....
Stock in Michigan Mineral Land Company (50% Ownership, repre-
senting 53,000 acres of land in fee & mineral rights, principally on the
Menominee Range)
300, 000
Stock in Lucky Star Mining Company (25% Ownership, representing
mineral lands, on Marquette Range)--
99,900
Dwellings, Clubhouses and Town Lots located in Ishpeming, Negaunee
& other mining locations, including Gwinn Townsite .. ...
2, 753, 150
Hospitals at Ishpeming & Negaunee, and Gwinn ... .
250, 000
Grand Total .
134, 466, 846
Exhibit U-15-64b
September 11, 1931.
The Cleveland-Cliffs Iron Company
Lake Superior & Ishpeming Railway Co
Interstate Commerce Commission has placed a value on this railroad,
of
Cliffs Power & Light Company..
Ready sale value
Athens Iron & Mining Company.
Real Value not Less than
Negaunee Mines
Real Value not Less Than
75% owned
$12, 000, 000. 00
7, 000, 000. 00
"2,"666,"666."66'
i, 566,'666.'66
Book value
$430, 000. 00
1, 149, 000. 00
"'434,"666.'66
'"296," 666." 66
9076
STOCK EXCHANGE PRACTICES
Exhibit U-15-65
The Cleveland Cliffs Iron Company and constituent companies consolidated com-
parative balance sheet November 30th, 1931, and December 31st, 1930
November 30,
1931
December 31,
1930
Increase
Decrease
Assets:
Fixed Assets:
Land, Construction and Equipment
$39, 953, 957. 40
15, 392, 554. 38
54, 931, 277. 73
6, 509, 606. 23
$39, 740, 482. 61
15, 392, 554. 38
64, 680, 201. 53
6, 390, 044. 49
$213, 474. 49
Increment Value of Tbr. & Ore
Deposits -
Securities and Investments '
251, 076. 20
119,561.74
Vessels
Total Fixed Assets
116, 787, 395. 74
116,203,283.01
584,112.73
Quick Assets:
Inventories of Profits & Supplies;
Iron Ore
5, 823, 474. 32
1,317,261.67
85, 328. 86
799, 017. 28
94, 607. 93
451,901.76
4, 122, 838. 93
1, 425, 809. 82
76, 971. 29
706, 798. 48
82, 418. 66
470, 084. 06
1, 700, 635. 39
Pig Iron & Chem. Products
$108, 548. 15
Lumber & Forest Products
8, 357. 57
92, 218. 80
12, 189. 27
Coal -
Stock
SuddIv
18, 182. 30
Total Inventory Products &
Supplies
8, 571, 591. 82
6, 884, 921. 24
1, 686, 670. 58
Cash on Hand _. -
1, 983, 486. 72
321, 476. 18
19, 380. 00
4. 188, 131. 27
150, 481. 20
123, 358. 25
60, 555. 29
676, 097. 26
351, 638. 72
340, 100. 04
1,662,010.54
Marketable Securities—
U.S. Lib. Bonds
19, 380. 00
Accounts Receivable:
Ore Accounts
2, 503, 772. 10
118,920.27
150, 249. 04
31,487.07
706,415.05
139, 977. 08
514, 837. 47
1, 684, 359. 17
Chemical Accounts. - - -
31, 560. 93
Pig Iron & Coke Accts.— Otis Stl.
Co. & T.C.F. Co., Corrigan-
McK. Steel Co
26, 890. 79
Pig Iron Accts.— Superior Char.
I. Co -.- -.
29, 068. 22
Coal Accounts
30,317.79
Transportation Accounts
211,661.64
Other Accounts
174, 737. 43
Total Accts Receivable
4, 165, 658. 08
781, 484. 93
5, 890, 362. 03
1,717,113.88
1, 724, 703. 95
Notes Receivable and Trade Accept-
ances Receivable - -
935, 628. 95
Total Ouick Assets
15, 502, 221. 55
14, 833, 253. 33
668, 968. 22
Preferred Stock in Treasury-
Purchased for Redemption 1930—
2,000 shares
186, 800. 00
291, 855. 07
535, 238. 09
186, 800. 00
Deferred Charges:
380, 950. 30
909, 946. 67
89, 095. 23
374, 708. 58
Charsre to Future ODer
Total Deferred Charges.
1, 290, 896. 97
827, 093. 16
463, 803. 81
Total Assets
133, 580, 514. 26
132, 050, 429. 50
1, 530, 084. 76
Exhibit U-15-65a
Liabilities:
Capital Stock Outstanding:
Common — No Par:
Authorized— 410,000 Shares
Outstanding-408,296 Shares..
Preferred— No Par:
Authorized— 500,000 Shares
Outstanding— 487,243 Shares.
408, 296. 00
19, 489, 720. 00
408, 296. 00
19, 704, 280. 00
214,560.00
1 Special Bank Loans cover amount received from various banks for purchase of 218% shares of Common
stock in Corrigan-McKinney Steel Company, and 10,100 Shares of Common Stock in McKinney Steel
Holding Company. Securities consisting of Stock of the McKinney Steel Holding Company, Corrigan,
McKinney Steel Company and Otis Steel Company having a book value of $38,918,464.75 have been placed
as collateral on loan of $14,387,500.00. There was also placed as collateral on loan of $4,000,000.00 32,235
shares of Stock of the L.S. & I.R.R. Co. having a book value of $430,272.97. These loans are part of
Special Bank Loans referred to above. The balance of these special loans are unsecured.
STOCK EXCHANGE PRACTICES
9077
Exhibit U-15-65a — Continued
The Cleveland Cliffs Iron Company and constituent companies consolidated com-
partative balance sheet November SOlh, 1931, and December Slst, 1930 — Con.
November 30,
1931
December 31,
1930
Increase
Decrease
Liabilities— Continued.
Prefered Stock:
McKinney Stl. Hldg. Co. 72,500 shs.
@ $100.00 Per Share
$7, 250, 000. 00
810. 00
$7, 250, 000. 00
820. 00
Constituent Companies
$10.00
Total Capital Stock Outstanding
27, 148, 826. 00
27, 363, 396. 00
214, 570. 00
Quick Liabilities:
Notes Payable
474, 250. 00
3,011,071.31
867, 734. 25
113,533.11
71, 379. 64
504, 250. 00
3, 112, 007. 31
70, 820. 50
363, 674. 15
329, 103. 74
30, 000. 00
Accounts & Vouchers Payable
110, 936. 00
Accrued Taxes Payable
$796, 913. 75
Income Taxes Payable
250, 141. 04
Advance Receipts on Ore
257, 724. 10
Total Quick Liabilities
4, 537, 968. 31
4, 389, 855. 70
148, 112. 61
Special Bank Loans '-..
24, 887, 500. 00
175, 506. 63
11,816,217.66
6, 386, 667. 64
8, 945, 025. 12
3, 665, 195. 96
149, 738. 52
57, 814. 00
5, 794. 99
23, 047, 500. 00
156, 022. 72
11,637,054.93
6, 271, 163. 54
8, 451, 597. 49
3, 486, 811. 99
176, 976. 60
25, 108. 96
12, 373. 82
1, 840, 000. 00
19, 483. 91
179, 162. 73
115,504.10
493, 427. 63
178, 383. 97
Deferred Credits
Reserves:
For Depl'n. of Minerals & Tbr.—
Orig. Cost
For Depl'n of Minerals & Increment
For Depr'n of Plant & Equip
For Depr'n of Vessels
Reserve for Losses in connection
with Abandoned Mines
27, 238. 08
Reserve for Ins., Relinings, etc
32, 705. 04
Reserve for Personal Injury Exp
18, 168. 81
Total Reserves
31, 014, 863. 91
30, 061, 087. 33
953, 776. 58
Surplus .Accounts:
Capital Surplus Accrued — 3-1-13
9, 005, 886. 74
9,973,115.74
990, 000. 00
25, 846, 846. 93
9, 121, 390. 84
10,113,073.58
990, 000. 00
26, 808, 103. 33
115, 504. 10
Surplus Arising from Fed. Tax Re-
quirement
139, 957. 84
Paid in Surplus
Profit and Loss Surplus
961, 256. 40
Total Surplus Account
45, 815, 849. 41
47, 032, 567. 75
1, 216, 718. 34
Total LiabDities
$133, 580, 514. 26
$132, 050, 429. 50
$1,530,084.76
Exhibit U-15-65b
Quick Assets
Quick Liabilities.
Net Quick Assets .
15, 502, 221. 55
4, 537, 968. 31
10, 964, 253. 24
14, 833, 253. 33
4, 389, 855. 70
10, 443, 397. 63
668, 968. 22
148, 112. 61
520, 855. 61
Exhibit U-15-66
1/4/32
Cleveland Cliflfs Iron Company (#6031)
Note— Dated September 23, 1931 (Payable Six Months after date) Due March
23, 1932. Rate 6%.
Amount $14, 387, 500
Guardian Trust Co Cert. #1_. $1, 500, 000
Central United Nat'l. Bank #2_. 500, 000
Continental Illinois Bank & Trust Co #3 _ _ 3, 500, 000
Union Trust Co #4.. 3, 387, 500
First Nat. Bank of Chicago #5._ 1, 000, 000
Bankers Trust Co. N.Y #6.. 4, 000, 000
9078 STOCK EXCHANGE PKACTICES
Exhibit U-15-66 — Continued
Participants — Continued.
W. G. Mather #8-_ $200,000
Cleveland Trust Co #7-_ 300, 000
$14, 387, 500
Collateral
218% shs Corrigan McKinney Steel Co. Comn = 8%%
100,084 " Otis Steel Co. Comn
10,100 " McKinnev Steel Holding Co. Comn == 53^%
62>4%
Exhibit U-15-67 1-6-32
Cleveland Cliffs Iron Company
$14, 387, 500 Participated Secured Loan
4, 000, 000 Bank of Manhattan Co. N.Y.
Secured bv 32,235 shs Lake Superior & Ishpeming RR.
3, 500, 000 Union Trust Co. Cleveland Unsecured
2, 000, 000 Cleveland Trust Co. Cleveland Unsecured
500, 000 Guardian Trust Co. Cleveland Unsecured
500, 000 Society for Savings Cleveland Unsecured
$24, 887, 500 Total Loans
Exhibit U-15-68
Cleveland, Ohio, March 21, 1930.
The Cleveland-Cliffs Iron Company,
Cleveland, Ohio.
Gentlemen: The Union Trust Company represents that it is the duly author-
ized agent for Mrs. Perthenia Burke Ross and, as such agent, it represents that
The Corrigan-McKinney Steel Companj^ 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^^1 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-McKinne.v 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 1345% shares, amounting to 53%% of the
entire 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 tliat there are not outstanding anj^ 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
^irtue 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 Companv for their account for all of the aforesaid stock
in cash the amount of $29,887,500.
STOCK EXCHANGE PRACTICES 9079
The Union Trust Company and John H. Watson Jr., as such trustees, from
unds now in the hands of said McKinney Steel Holding Company, will imme-
iately deliver to The Uni(jn Trust Company for distribution to the preferred
stockholders of said holding company an amount in cash suflicient 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 companj^ 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 com-
pany to the State of Ohio for 1929.
Exhibit U-15-68a
The undersigned trustees agree that they will pay and satisfy all existing
obligations and indebtedness of the holding companj' 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 imme-
diately 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 B. M. Baldwin, President.
The Union Trust Company,
By B. M. Baldwin, 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. E. Mather, Vice President.
Exhibit U-15-69
Interest Note
$68,502.77 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, Sixty Eight Thousand Five Hundred Two and 77/100
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 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 ratably secured by an Extension Agreement, 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 Agreement reference is hereby made for a statement of the se-
curity and the terms and conditions upon which such security is held by the
Trustee, and upon which such security may be enforced.
9080' STOCK EXCHANGE PKACTICES
This note is additionally secured as one of a number of notes of the under-
signed, aggregating Twenty-six Million Two Hundred Eighty-three Thousand
Four Hundred Seventy-four Dollars and Ninety-eiglit Cents ($26,283,474.98),
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 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
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 In-
debtedness 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 paj'^able 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 pay-
ment 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 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 and/or said Extension Agreement
as provided therein respectively
The Cleveland-Cliffs Iron Company
By Wm. G. Mather,
President.
Chas. S. Heer,
Treasurer.
Due 7/24/33
Exhibit U-15-69a
The Union Trust Company
Oscar L. Cox, Conservator
William Tonlio
Assistant Conservator.
R. S. Williams
Junior Assistant Conservator.
Exhibit U-15-70
Excerpt from R. G. Dun & Co. Analytical Report of Corrigan McKinney Steel
Company, relative to condition as of December 20, 1932. Contained in this
report is a historj^ of the company as follows:
History
The business was founded u)3ward of forty years ago by James Corrigan, who
subsequently admitted Price McKinney to an interest. In 1901 charter was taken
out under Ohio laws inider the style of Quinnesec Iron Mining Co., with an au-
thorized capital stock of S250,000. Another corporation known as the Corrigan
McKinney Co. was in existence, and in December 1917 all activities were merged,
the Quinnesec Iron Mining Co. transferring its assets to The McKinney Steel
Co., with tlie authorized capital stock remaining at $250,000. In 1926 the com-
pany amended its charter, changing the name to the Corrigan McKinney Steel Co.
Formerly the official headquarters of the company, as designated by the char-
ter, was Wickliffe, Ohio, a small suburb of Cleveland, with low corporation tax.
Under date of August 29, 1932, the company amended its charter, increasing the
authorized capital stock from $250,000 to 1,500,000 Common shares, stated par
value $1 each, and changing the official location to Cleveland. The charter
designates 1,146,450 voting shares and 353,550 non-voting shares.
STOCK EXCHANGE PRACTICES 9081
The change in the capital structure was for the purpose of acquiring, by ex-
change of shares, the business of The Newton Steel Co. A total of 1,433,700
shares were issued as follows: Stockholders of the Corrigan McKinney Steel Co.
received 1,015,000 voting shares and 235,000 non-voting shares in exchange for
$250,000 in Common Stock, a total of 1,250,000 shares to the stockholders of the
Corrigan McKinney Steel Co. Holders of 25,850 shares of Preferred Stock of
The Newton Steel Co. received an equal amount of stock in The Corrigan McKin-
ney Steel Co. plus 105,600 shares of voting stock in exchange for 26-4,000 shares of
Common Capital Stock of The Newton Steel Co. In addition, holders of the
Common Stock received 52,250 shares of non-voting stock in The Corrigan
McKinne}' Steel Co. The authorized but unissued shares total 66,300.
Following the death of James Corrigan, his son, James W. Corrigan, Jr., ac-
quired his stoclcholdings as sole heir. For many years the company was prac-
tically owned by James W. Corrigan, Jr., Price McKinney and Stevenson Burke.
Price McKinney, President, resigned in May 1925 and was succeeded by James W.
Corrigan, who died January 23, 1928. In connection with the shift in the sub-
stantial ownership of the company, following the resignation of Price McKinney
in 1925, it was necessary to arrange for additional financing. This financing was
accomplished by the organization of The McKinney Steel Holding Co., which in
turn is controlled bv The Cleveland Cliffs Iron Co.
Exhibit U-15-71
Excerpt from National Credit Office, New York City, Report of Corrigan
McKinney Steel Company, relative to condition as of August 25, 1933. Con-
tained in this report is a history of the companj' as follows:
History
The company was incorporated in accordance with Ohio laws in 1901. Au-
thorized capital is 1,500,000 shares of $1 par value common stock. Of these
1,146,450 are voting shares, and the balance non-voting shares.
The present Ohio Corporation succeesed a partnership which had been estab-
lished about ten years previously.
The name originally was Quinnesec Iron Mining Company, but in 1917 it was
merged with Corrigan McKinney Company, the name The McKinney Steel Co.
being adopted. In 1926 the present style was made legal.
James W. Corrigan, Jr., son of the founder of the business, until his death in
1928 was dominant in the management. Following his death stock of the cor-
poration became more widely held.
Exhibit U-13-1
The Union Trust Company: The United Milk Products Corporation —
Walter H. Seymour
LIQUIDATOR'S CONFIDENTIAL FILE
United Milk Products Corporation
Exhibit U-13-la
(For Walter H. Se3'mour, 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 Super-
intendent of Banks, State of Ohio)
September 27, 1933.
In Re: United Milk Products Corporation
Oscar L. Cox,
Special Deputy Superintendent of Banks, Cleveland, Ohio.
Dear Mr. Cox: Pursuant to your request, the following report is submitted
on the status of the above company in its relation to the affairs of the Union
Trust Company.
9082 STOCK EXCHANGE PRACTICES
History of Company
United Milk Products Corporation was organized in December, 1925, as a
consolidation of the following companies, engaged in production, canning, and
condensation of milk:
Western Reserve Condensed Milk Company, Cleveland
GifFord Milk Company, Chicago
National Dairy Company, Morenci, Michigan
Wisconsin Butter & Cheese Company, Elkhorn, Wise.
Northern New York Milk Corporation, New York
Fred C. Mansfield Company, Johnson Creek, Wise.
Lewis Countv Condensed Milk Company, Lowville, N. Y.
Troy Milk Products Co. East Troy, Wise.
Merton Dairy Products Company, North Lake, Wis.
Cardinal Milk Products Company, Osseo, Wise.
Belle Isle Creamery Company, Standish, Mich.
Plant at Adams Center, N. Y.
Plant at Loleta, California
No definite information appears in the credit files as to its original capitaliza-
tion, but from information later obtained from the company records, it appears
as follows:
7% Cumulative Preferred Stock — authorized $25,000,000,000.00— outstanding —
$13,404,400.00
No — Par Common Stock — authorized 250,000 shares — outstanding — 250,000
shares.
At its inception, the organizing and flotation of the Company's securities was
apparently a closely guarded secret. The first indication in the bank's files of
the existence of such a company consists of a telegram dated November 2, 1925
in answer to an inquiry from Mr. J. H. Skinner, Vice President, Bank of Italy,
San Francisco, the wire reading as follows:
"Unable to get trace of company mentioned ,your night letter. Can you
furnish address or names of principals?"
This was followed by a confirmatorv letter to Mr. Skinner signed by W. F
Copeland, Assistant Vice President, stating that the United Milk Product
Corporation was unknown to anybody in this territory.
Exhibit U-13-lb
Just one month after the above letter and wire went out, a letter appears in
the files dated December 4, 1925, written by Mr. J. R. Kraus and addressed to
Mr. C. S. Castle, President, Standard Trust & Savings Bank, Chicago. The
latter had apparently inquired as to the possibility of securing some stock in the
company, but was advised in Mr. Kraus's letter that the stock issue had been
oversubscribed eight and one-half times, and that the company already had too
much cash, further advising Mr. Castle that "if you are allotted any of this
stock, it will be on account of personal friendship of some one of the crowd.^'
Certain other information relative to the affairs of the company is given in
this letter, a photostatic copy of which is attached hereto.
After organization, several letters appear in the files, signed by J. P. Harris,
advising various people to purchase the company's stock. There is also a
memorandum placed in the files by J. R. Nutt as of May 6, 1926, in which he
states he feels that the preferred stock will show a very handsome profit and that
the common should earn a very substantial surplus during the first year. A
photostatic copy of this memorandum is submitted herewith.
Until 1929 no details were made public as to the company's earnings an no
financial statements furnished. Prior to this time, intimations were given out
that earnings were excellent, enabling the corporation to repurchase its Preferred
Stock on the open market. The company and its affairs were commended in
the highest terms in letters appearing in the Credit Files, in answer to inquiries
by various banks and individuals, although at this time no financial statements
appear in the files.
As of December 31, 1932, pursuant to a re-organization agreement, the United
Milk Products Corporation was dissolved and the United Milk Products Com-
pany organized as a successor. This resulted in an exchange of stock as follows:
STOCK EXCHANGE PRACTICES
9083
United Milk Products
Corporation
1 share-Preferred
1 share-Common
Exchanged
for
for
for
United Milk Products
Company (New Stock)
Yio share — Preferred
and $3.00 cash.
}i share-Common.
The Preferred Stock held as Collateral to Union Trust loans has all been
exchanged for stock in the new corporation with the exception of 100 shares held
as security to a loan to W. J. O'Neill.
Preferred Stock Placed in Bank in Trust Estates and as Collateral to Loans
It appears that a large part of the opening capital of the United Milk Products
Corporation was furnished by the Union Trust Company through the Estates
Trust and Collateral Loan Departments.
An analysis has been made of transactions through both of these departments,
which is herewith submitted as follows:
Schedule I— Collateral Loans made January 2, 1926 to June 30, 1926.
Schedule II — Acquisition and disposition of United Milk Preferred Stock
through Estates Trusts from January 2, 1926 to May 5, 1933.
Schedule III.
Exhibit U-13-lc
-Loans secured by United Milk Preferred Stock as collateral still in
Bank July 15, 1933
Loans based in whole or in part on United Milk Preferred Stock as collateral
are set forth in Schedule I. A summary of such loans follows, showing the total
amount loaned day by day from January 2 to June 30, 1926, the period of greatest
activity in this line:
January
2,
1926
$302,
4,
238,
■5,
28,
8,
8,
20,
2,
22,
2,
27,
31,
29,
90,
February
1,
101,
2,
95,
8,
370,
9,
100,
19,
8,
20,
2,
25,
390,
Alarch
1,
112,
5,
15,
6,
1,
8,
125,
11,
28,
055. 00
617. 60
000. 00
500. 00
000. 00
000. 00
000. 00
000. 00
500. 00
000. 00
000. 00
000. 00
809. 80
750. 00
000. 00
500. 00
500. 00
500. 00
000. 00
881. 25
March
23,
25,
April
2
5,
6,
7
Es
April
s,
14,
17,
20,
May
5,
6,
13,
June
11,
14,
25,
$700. 00
1, 100. 00
40, 850. 55
7, 500. 00
6, ICO. 00
600. 00
Exhibit U-13-ld
800. 00
500. 00
100. 00
3, 875. 00
5, 367. 50
4. 275. 00
450. 00
900. 00
3, 600. 00
32,815.04
Total for period- $2, 163, 206. 74
Of the above loans, and others since made, there remained as collateral in the
Loan Department at Julv 15, 1933 the following shares of United Milk Company
Preferred Stock (New):
Number of shares 7436. 8
Market value at July 15 (at 22, based upon last previous sale) $163, 609. 60
The loans representing the above are in many cases now secured by other
collateral.
Schedule III details the names of borrowers still owing the bank. This schedule
was originally prepared as of May 5, 1933, but has been brought down to Juh' 15,
the holdings of the bank at the respective dates being shown in parallel columns.
In the period from January 2 to June 30, 1926, covered by Schedule I, numerous
loans appear in which an apparent excessive amount was loaned. Certain
borrowers deposited a small amount of other collateral, but the following tabula-
tion is submitted covering loans on which 80 to 100% of par value was allowed
solely upon United Milk Preferred Stock as collateral (in each case "par value"
9084
STOCK EXCHANGE PRACTICES
refers to the Preferred Stock, with an equivalent number of Common Shares
which were given as a bonus):
Borrower
Matilda B. Dowling
C. N. Osborne
Ralph H. Sharpe
JohnM. Killits
Approved
By
R.S.C.-
C.L.B...
C. W. C.
J. R. N..
Amount
of Loan
$855. 00
20, 000. 00
4, 500. 00
9, 000. 00
Percentage
of Par Value
85^
100
90
90
Exhibit U-13-le
E. N. Wagley
Leslie O. Carr, Jr
Robert A. Woppner and J. E. Weil
E. R. Fancher..-
L. H. Stofer
C. B. Anderson
Sam W. Emerson
Maude H. Bruce
Leon S. Miller -..
C. L. Bartshe --.
C. L. Ayers
Grace D. & Chas. K. Arter
Matilda B. Dowling
M. H. Hurst
A. M. Kelly --.
R. T. Taylor
C. T. Ni.\ton
W. L. Fox
H. M. Jones -
C. W. C.
J. R. N...
J. R. N...
J. R. N...
C. W. C.
C. W. 0..
C. W. C.
C. W. C.
J. R. N...
C. W. C.
J. R. N...
C. W. C-.
W. M. B..
c. w. c._
c. w. c._
C. W. C-.
C. W. C-
c. w. c.
c. w. c.
90
80
90
90
88
90
80
85
85
100
192
100
85
100
100-
100
100
100
100
1 Plus.
Attention is invited to the loan to C. L. Ayers, above noted, in the sum of
$125,000.00, made March 8, 1926, approved by J. R. Nutt, secured by 1350 shares
Preferred and 1000 shares Common Stock of United Milk. On this loan the bank
suffered a large loss, having charged off $102,000.00 to Reserve for Losses, as
follows:
November 5, 1930 $25, 000. 00
December 30, 1930 10, 000. 00
December 30, 1931 67, 000. 00
$102, 000. 00
The credit files contain practically no information relative to loans, but the
following memorandum, dated July 20, 1927, was found in the Statistical Depart-
ment file, which may be of interest as denoting the attitude of the various bank
officers mentioned, toward loans on United Milk Stock:
"Re: Loan to Maurice Briggs, 320 Leader Building.
We have a loan of $10,000.00, due August 4, 1927, secured by 200 shares of
United Milk Products Common. The present bid price on this stock is 45,
Exhibit U-13-lf
making a total of $9,000.00, or $1,000.00 less than the loan.
I called this to the attention of Mr. Crawford, who talked with Ralph Williams,
who said that this loan had been taken up with Mr. J. R. Kraus and C. A. Carlson,
who had talked to Mr. Nutt.
There apparently is nothing that can be done at this time. The borrower is
unable to reduce the loan.
E. R. Van Horn."
In addition to the loans above noted at over 80% of Par Value, the following,
endorsed by C. L. Bartshe, President of the company, were made during the period
mentioned, on the basis of 100% of the par value of United Milk stock deposited
as collateral.
STOCK EXCHANGE PEACTICES
9085
Borrower
Approved by
Amount of
Loan
Percentage
of Par
Value
E. J. Koppenhafer....
Herman G. Gustaves
CassH. Hatch
Newton M. Miller.—,
Burton M. Smith
J. H. Schindler
Edgar E. O'Connell .
Otto E. Mystedt
F. D. Metcalf
Fred Mason
T. P. Mapes
Victor F. Hellwig
W. L. Fox
Harry V. Danser
Robert L. Corby
Fred B. Childs
Fred H. Caley
James F. Brownlee...
Frank E. Barger
Benj. F. Amos
C.W.C
C.W.C
C.W.C
C.W.C
C.W.C
C.W.C
C.W.C
C.W.C
C.W.C
C.W.C
C.W.C
C.W.C
C.W.C
C.W.C
C.W.C
C.W.C
C.W.C
C.W.C
C.W.C
C.W.C
$10, 000. 00
5, 000. 00
5, 000. 00
2,'), 000. 00
25, 000. 00
10, 000. 00
25, 000. 00
25, 000. 00
5, 000. 00
50, 000. 00
5, 000. 00
25, 000. 00
25, 000. 00
5, 000. 00
100, 000. 00
25, 000. 00
10, 000. 00
50, 000. 00
5, 000. 00
25, 000. 00
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
Exhibit U-13-lg
Harry D. Tipton
J.R.N
100, 000. 00
10, 000. 00
10, 000. 00
10, 000. 00
100
Lewis M. Holcomb
J.R.N
100
Helen E. Hunt -.
C.W.C
C.W.C
100
A. A. Clarke
100
It is true that during part of the period covered above, there was a market for
both the Preferred and Common Stocks at above par, but this price was manipu-
lated by one of the stockholders, as detailed later, and even the company officials
state that the figure for the Common at that time, was not justified in any way.iJ
The analysis of transactions through the Estates Trusts during the period from
the organization of the company to May 5, 1933 (Schedule II) shows 18,902
shares of Preferred Stock placed in the various trusts during the periods mentioned
below:
1926 3, 990 shares
2,640 "
140 "
654 "
431 "
422 "
446 "
175 "
January
February "
March "
April "
May "
June "
July "
August "
September "
October "
November "
December "
Year 1927 2,
430
50
948
1928.
1929.
1930.
1931.
1932.
2,340
3,062
250
619
305
18, 902 shares
The majority of this stock was purchased at market prices, the balance repre-
senting principally stock deposited by estates at appraisal figures.
At May 5, 1933 the following Preferred Stock, representing shares in the re-
organized company, was still in the Estates Trust Department:
Shares 10,094
Carrying Value $782, 487. 11
Market Value May 5, 1933 $181, 692. 00
Of this total, 1,760 shares belonged to the Nutt family trusts, leaving a balance
of 8,334 shares in the names of holders outside that familv.
9086
STOCK EXCHA]SrGE PKACTICES
Exhibit U-13-lh
This schedule was originally set up as of May 5, and has not been changed to
cover transactions subsequent to that date. However, if so desired, it may be
revised to indicate the current situation.
Notations on the records of the Estates Trust Department indicate that pur-
chases for the following trusts were effected upon authority or orders of Mr. J. R.
Nutt:
Trust
Num-
ber
2563
383
385
2605
945
510
3630
737
642
643
3706
3716
293
3194
Name
Jane N. Akins
Agnes H. Baker
Gertrude Baker Bradley
Daniel M. Ely
Louise N. Iseman
E. W. Moore
Elizabeth H. Nutt
J. R. Nutt, for David Clark Nutt
J. R. Nutt, for Frances Nutt
J. R. Nutt, for J. R. Nutt, Jr
J. R. Nutt, for Walter R. Nutt & Elizabeth N. Krepps
Ditto
Mildred H. Sackett
Eleanor N. Swallow
Ditto
F. A. Walters
Exhibit U-13-li
Harriette Von Pflugl
Date
1- 6-26
1- 2-26
1- 2-26
1- 2-26
1- 2-26
1- 2-26
1- 2-26
1- 2-26
1- 2-26
1- 2-26
1- 2-26
11- 9-26
1- 2-26
5-13-26
7-21-26
1- 2-26
Shares
250 Pfd.
205 Com.
100 Pfd.
100 Com.
500 Pfd.
500 Com.
100 Pfd.
100 Com.
250 Pfd.
250 Com.
200 Pfd.
200 Com.
500 Pfd.
500 Com.
500 Pfd.
500 Com.
500 Pfd.
500 Com.
500 Pfd.
500 Com.
250 Pfd.
250 Com.
400 Pfd.
100 Pfd.
100 Com.
30 Pfd.
30 Pfd.
50 Pfd.
50 Com.
Cost
} $25, 000. 00
} 10,000.00
} 50,000.00
} 10,000.00
} 25,000.00
} 20,000.00
} 50,000.00
50, 000. 00
50, 000. 00
50, 000. 00
} 25,000.00
35, 000. 00
} 10, 000. 00
2, 572. 50
948. 75
} 5, 000. 00
1206
1- 2-26
90 Pfd.
90 Com.
9, 000. 00
It is noted that the Estates Trust Department paid by official check to United
Milk Products Corporation on January 2, 1926, the sum of $390,000.00 repre-
senting the subscription of holders of the various trusts to the original issue of
stock.
STOCK withdrawn FROM ESTATES TRUSTS MAY 6, 1929
In connection with the United Milk Products stock carried in the Estates
Trusts, a series of transactions is noted, with no reasonable explanation apparent.
On May 6, 1929 a total of 2750 shares of United Milk Products Common
Stock was withdrawn from the following trust accounts:
Agnes H. Baker 100 shares
Mable Grandin Carruthers 100 "
Daniel M. Ely 100 "
Alice E. Grandin 200 "
Florence Grandin 200 "
Henry B. Grandin 200 "
Elizabeth H. Nutt 900 "
J. R. Nutt for David C. Nutt 200 "
" Francis Nutt 150 "
" " J. R. Nutt, Jr 200 "
Mildred H. Sacket 100 "
Winifred E. Treat 200 "
Harriette Von Pflugl 100 "
Total 2750 shares.
STOCK EXCHANGE PRACTICES 9087
A receipt for 2750 shares of Common Stock signed by C W. Carlson and dated
May 6, 1929, is contained in the files of the Estates Trust Department.
These files also contain a copy of a letter of the same date, May 6, 1929, ad-
dressed by C. W. Carlson to the Corporation Trust Company, requesting the
transfer of 2750 shares of Common Stock to the name of the Union Trust Com-
pany from the following names:
Kay & Company 100 shares
Hornblovver & Weeks 2250
James Dunn, Jr 100 "
John F. Keena 100 "
Farrar Tilnev 100 "
Harry J. Kirby 100 "
Total 2750 shares.
Exhibit U-13-lj
Certificates accompanying this letter of transmittal were of an entirely different
series of numbers from those removed from tlie trust accounts previously noted.
The new certificates dated May 8, 1929 received in exchange for those forwarded
by Carlson were returned to the respective trust accounts, thus restoring them
to their former position prior to the withdrawal on May 6.
The certificates taken from the above mentioned trust accounts were turned
over to Hornblower and Weeks and by them transferred to their own name.
The transfer sheets at the office of the United Milk Products Corporation indi-
cate that a total of 3600 shares, including the above 2750, were placed in Horn-
blower and Weeks' na,me on May 11, 1929. The records of the latter firm,
which were consulted, indicate that the new certificates when received, were
delivered on May 15, 1929 as follows:
To Otto Miller 3100 shares
To W. S. Hayden 500 shares
The Auditor for Hornblower and Weeks advises that there was no monej^ in-
volved in any part of this transaction, the whole matter constituting what is
termed a "Complimentary transfer" to the booker's name. No further infor-
mation is obtainable from the latter's records and no reason can be assigned for
the transfer.
It is difficult, if not impossible, to determine a logical reason for the handling
of this entire transaction. The "In" and "Out" tickets of the Estates Trusts
Department were examined, indicating that the shares held prior to May 6 were
in the form of Temporary- Certificates and were forwarded for exchange to per-
manent form. However, the incoming shares were also in the form of Temporary
Certificates, and the Secretary of the United Milk Products Corporation advises
that there was no change in form then, or at any other time, during the old cor-
poration's existence, and that all Common shares were represented by Temporary
Certificates at all times. This exchange would therefore, appear to have accom-
plished nothing as far as the trust accounts were concerned.
Furthermore, it would also appear that Mr. Carlson could have used the
stock which was apparently in his possession May 6 for transfer to the name of
Hornblower and Weeks and final delivery through that firm to Otto Miller and
W. S. Hayden. This would, of course, have been the customary method of
transfer and would have precluded the necessity of withdrawing and replacing
numerous certificates in the trust accoimts. It is noted in this connection that
2250 of the 2750 shares held by Carlson were already in the name of Hornblower
and Weeks.
There appears to be no answer available to account for the complicated pro-
cedure which was followed out. There is a slight possibility that some Income-
tax question may have been involved, though this does not seem to apply to the
trust accounts, as no entries were made on the ledgers except memoranda as to
the exchange of certificate numbers. The entire transaction may have no sig-
nificance whatsoever, but on account of the very unusual method employed, it
is suggested that Mr. Carlson be requested, at the proi)er time, to explain the
matter.
175541—34 — PT 20 23
9088
STOCK EXCHANGE PRACTICES
Exhibit U-13-lk
FINANCIAL POSITION OF COMPANY
As previously stated, the compaii}' furnished no statements and did not make
public any record of its earnings prior to those for the year 1928. During this
year the files of the Credit Department seem to indicate that stockholders were
becoming uneasy as to the affairs of the company, probably due in large part to
the low market price of the stock, resulting in numerous letters of inquiry to the
bank. Replies thereto, usually by Mr. J. P. Harris, stated that the bank was
using pressure to secure the issuance of public statements. Whatever the cause,
a statement, certified by Messrs. Arthur Young & Company was issued for the
year ending December 31, 1928.
The credit files contain an analysis of the companj^'s operations for the years
1926, 1927 and 1928. The source of the figures for the first two years is not
indicated and they may not be reliable, but are set forth below, together with the
certified figures for the following years:
Year
Net operating
income or loss
Dividends
paid
Net operat-
ing credit
or charge to
surplus
1926-
$1, 285, 543. 55
653, 626. 04
604, 492. 84
526, 554. 98
134, 733. 15
107, 336. 68
57, 328. 45
$925, 204. 00
718,744.25
571, 655. 00
521, 095. 75
510, 170. 50
$360, 339. 55
1927
65, 118. 21
1928
32, 837. 84
1929
5, 459. 25
1930
644, 903. 65
1931
107, 336. 68
1932
57, 328. 45
Total
2, 885, 476. 03
3, 246, 869. 50
361, 393. 47
In addition to the above operating income, the company created a "profit"
through the repurchase of its preferred stock at a discount, and obtained cer-
tain other non-operating income set forth below:
Profit on Repurchase of Preferred Stock — -
1927 $439,336.00
1928 148,444. 12
1929 63,278.00
1930 173, 128. 58
1931 24,835.00
1932
$849, 021. 70
Exhibit U-13-11
Profit on sale of plants, sale of Liberty Bonds, setting up Cash Surrender
Value of Life Insurance Policies and other non-operating income:
1927 $84, 743. 96
1928 8,029. 18
1929
1930 53, 122.07
1931
1932
Total $145,895. 21
$994, 916. 91
STOCK EXCHANGE PRACTICES 9089
An analysis of Surplus for the above period indicates the following:
"Profit" on repurchase of company's Preferred Stock $849, 021. 70
Other non-operating income 145, 895. 21
$994, 916. 91
Less — Excess of dividends paid over operating income 361, 393. 47
Surplus, December 31, 1932 $633, 523. 44
It thus appears that a large part of the dividends paid were derived from the
discount on stock repurchased — in reality a return of capital.
With reference to the company's Balance Sheet, a certain item deserves con-
sideration in relation to the transactions with the bank. To illustrate this i)oint,
the Balance Sheet at December 31, 1932 is set forth in brief form below:
ASSETS
Current _.. $1, 996, 993. 20
Deferred 79, 275. 70
Permanent, less Reserves 1, 929, 996. 88
"Milk Supplv" 4, 364, 662. 08
Brands & Trade Marks 10. 00
Total Assets $8, 370, 937. 86
Exhibit U-13-lm
LIABILITIES
Current $259, 446. 05
Capital St6ck— Preferred— Outstanding 6, 940, 500. 00
Capital Surplus, represented by 209,394 shares No-
Par Common stock outstanding 537, 468. 37
Earned Surplus 633, 523. 44
Total Liabilities $8, 370, 937. 86
The particular item to which reference is made is that of " Milk Supply" above
stated in the amount of $4,364,662.08, the same figure as set up during the first
year of the company's operations. Inasmuch as this appears to be a goodwill
item, it is thought advisable to secure an analysis of the account to determine if
any cash or securities were issued to anyone connected with the bank and charged
to this account.
OUTSIDE INFOKMATION GENERAL
In an attempt to secure additional information not revealed in the bank's
records, a discreet interview was had with Mr. Brown, Resident Partner of
Hornblower & Weeks, who was known to have had some knowledge of the
aflfairs of the companj', this information having come to light at the time the
J. P. Harris account was analyzed.
Mr. Brown stated that shortly after the organization of the United Milk Prod-
ucts Corporation, he noted that the stock was drifting in as collateral to Horn-
blower & Weeks' accounts. He was highly opposed to this as collateral and
ordered it cleared from all accounts as rapidly as possible.
His objection to this security was based upon the following.
1. In his opinion the company was grossly over-capitalized and the set-up
would not have been accepted or approved by his firm.
2. No figures as to earnings were obtainable from the company's officers.
3. Future earnings were very speculative.
4. There was practically no market for the stock.
It is interesting to note Mr. Brown's attitude in refusing to accept L^'nited
Milk Products stock as collateral at any figure, as compared with that of the
officers of the bank in loaning 90 or 100% of par value or issue price.
Mr. Brown further stated that he felt Mr. Nutt's action in using his prestige
in the organization and flotation of securies of this type is an action deserving
of severe criticism. He also ventured the opinion that if some of the bank't.
trust funds might be found to be invested in United Milk Products stock, that
Mr. Nutt should be sued therefor. (Of course, no mention was made of the
large volume of this stock in the Estates Trusts.)
9090 STOCK EXCHANGE PRACTICES
Exhibit U-13-ln
OUTSIDE INFORMATION — COMPANY RECORDS
Since writing the foregoing, an interview was had with Mr. G. E. Bartshe,
President, and Mr. P. L. Haymes of the United Milk Products Company, who
upon August 8 called upon Mr. Cox relative to other matters. At that time Mr.
Cox requested access to the company's records, which was granted. The purpose
of this request was to determine the connection of the bank's officers with the
company, with a view to establishing the reason for the large volume of this
stock in the collateral Loan and Estates Trusts Departments, special attention
to V)e directed to the following:
1. An analysis of the "Milk Supply" Account to determine disposition of
securities or cash.
2. Details of acquisition of predecessor con.fianies, with particular reference
to previous ownership by bank officers. (Records in Estates Trust Department
appeared to indicate that Mr. Nutt or his family had a considerable interest in
the Western Reserve Condensed Milk Company.)
3. Names of bank officers, if any, drawing salaries from subject company.
4. Complete list of ownership of Common Stock by t;ank officers, cost and
elling price thereof, and profit made.
RECORDS OV UNITED MILK PRODUCTS CORPORATION
Through the cooperation of the officials of the corporation, an examination
was made of the records of the company, with particular reference to the points
previously outlined.
For the purpose of determining the stock interests of various bank officials,
and of the bank, the individual transfer sheets of the Corporation Trust Company,
transfer agent, were examined for the period from January 2, 1926 to December
31, 1932. With the exception of the following, no changes, of any apparent
interest were noted in the ownership of stock by bank officers, and therefore no
specific comment is now offered relative thereto. The transactions worthy of
note are submitted herewith in the following schedules:
Schedule IV. Stock Transfers— J. R. Nutt
Schedule V. St"k Tra"fers— C. W. Carlson
Schedule VI. St"k Tra"fers— Union Trust Company.
Estates Trusts Department.
Schedule VII. Stock issued to subscribers through J. R. Nutt.
The original Preferred Stock was issued to the following:
J. R. Nutt — Original subscription 10 shs.
Western Reserve Stockholders 50,000 "
Nominees of J. R. Nutt 25, 000 "
ExniiiiT U-13-lo
Other Subscribers 31, 650 shs.
H. E. Collin, el al— National Dairy Company 10, 000 "
In pavment for various companies acc}uired (Exclusive of Western
Reserve Condensed Milk Co.) 15, 7S4 "
Nominees of H. N. Gifford 1, 600
t(
Total original issue 134. 044 shs.
A list of subscribers through J. R. Nutt is submitted herewith as Schedule VII,
totalling 25,000 shares, issued principally to officers ?nd employees of the bank,
as well as certain outside "friends'' such as the Van Sweringen's, C. I-. Bradley,
etc.
With reference to the stock interest of J. R. Nutt, the pertinent points are
summarized below:
Mr. Nutt and his wife were stockholders in the Western Reserve Condensed
M'lk Company, one of the companies acquired at the organization of the United
Milk Products Corporation. At this time the stockholders of Western Reserve
were given 2}^ shares of the new company's Preferred Stock, with an equivalent
number of Common Shares, for each Western Reserve share held by them. This
resulted in the issuance of:
STOCK EXCHANGE PRACTICES
9091
1,250 shares Preferred Uo Mrs. Elizabeth H. Nutt (Carried in
1 ,250 " Common / Estates Trusts Department)
1,750 shares Preferred-- l^^^ t t> ^'^ <^+
IJoO " Common r '^^ ^^ ^"^*-
In addition to the above Mr. Nutt subscribed for 10 shares each of Preferred
and Common, issued to him January 11, 1926, for which he paid $1,000.00 in
cash, making a total of 1760 shares of each class of stock held in his name. Ap-
proximately three months after acqm'sition, he disposed of all of his stock with
the e.\'ce])tion of the original 10 share su!)scription transferring to C. W. Carlson
on April 1, 1926, 750 shares of Common and 12.50 Preferred, and on April 15th
an aclditional lot of 370 shares Preferred, the balance of the latter class of stock
being disposed of to five other persons.
The remaining Common Stock of 1000 shares in Mr. Nutt's name was trans-
ferred on April 1, 1926 to Hord, Curtis.- & Company, Stockbrokers. The transfer
sheets do not, of course, supply any details relative to this transaction other than
to indicate the mere transfer from one name to another, and accordingly the
circumstances cannot be stated. In this case it is recommended that steps be
taken to consult the records of Hord, Curtis;-; & Company to determine the nature
of the transaction. Should it be assumed to represent a sale through these
brokers, it would indicate that Mr. Nutt had 'received at least $54,000.00
for his Common Stock, as this was the lowest price quoted for the month of
April, 1926, the high for that month being 85, according to the records of the
Statistical Department.
Of the stock transferred by Mr. Nutt to C. W. Carlson, no details can be
obtained from the transfer sheets at the com])any's office, as the certificates lo.se
their identity as to actual ownership upon transfer to Mr. Carlson's name. The
dividend lists prepared by the Corporation Trust Company covering quarterly
Preferred dividends, as well as lists of Common Stockholders prepared at various
dates (generally at the time of annual meetings) indicate the following numV;er
of shares in the name of C. W. Carlson.
Exhibit U-13 Ip
Date
March 15, 1926
June lo, "
September 15,
December 15,
January 27,
March 15,
June 15,
September 15,
December 15,
January 27,
March 15,
June 15,
September 15,
December 15,
January 31,
_
1?, 825
12, 972
'<
12,822
((
12, 802
*i
"
10, 582
il
10, 392
"
7,082
1'
6,550
1928
6,157
n
6,272
"
6, 357
"
5,507
1929
Pre-
ferred
Com-
mon
10, 190
9,470
"7,185
4,617
"3,"797
Date
March 15.
June 15,
September 14,
December 14,
January 22.
March 20,
June 14,
September 15,
December 15,
January 23,
March 31,
September 30,
January 23,
December 31,
ganization._
1929 _
19.30.
1931-
1932.
1932-
-date of re-or-
Pre-
ferred
5,207
4,811
6, 157
fi,017
5,992
5,817
5,817
5,262
5, 2r.2
4,812
4,812
4,812
Com-
mon
3,157
2,807
"2,"767
2,207
An attempt was made to determine from the bank's records the actual owner-
ship of the above stock standing in Mr. Carlson's name, from the distribution of
the Preferred quarterly dividends received by Carlson. It was his practice to
purchase Official Checks payable (apparently) to the actual owners of the stock;
however, the determination of such ownership is complicated by Mr. Carlson's
practice during a portion of this time of using part of the proceeds of each original
dividend check in the purchase of an Official Check payable to himself, which
appears to cover interest and dividends upon unpaid stock subscriptions — in some
instances he held such official checks for months and eventually returned a part
of the proceeds to the Milk company.
From the analysis of these dividend distributions it appears for a time that
J. R. Nutt and C. L. Bradley had the largest individual interests in this "syndi-
cate", with smaller participation by other officers or directors of the bank. It is
also noted among other matters, that Mr. R. E. Vinson appears to have had an
interest to the extent of 100 shares.
9092 STOCK EXCHANGE PEACTICES
As determined from the distributions of dividends, Mr. Nutt appears to have
been the owner of the following number of shares of Preferred Stock in the name
of C. W. Carlson at the dates specified:
1926
April 1 1,705
July 1 3,020
October 1 3,020
Exhibit U-13-lq
1927
January 1 j 2, 500
April 1 2, 360
July 1 2,390
October 1 2, 155
1928
January 1 270
April 1 205
July 1 205
October 1 205
1929
January 1 205
April 1 205
July 1 205
October 1 205
1930
Januarv 1 205
April ll 205
July 1 205
October 1 147
1931
January 1
(No further dividends paid)
Details as to the disposition of the stock represented by the decreases noted
above, are not available from the bank's or the corporation's records. Presum-
ably such information may be obtained from the detailed records which it is
understood are still retained by Mr. C. W. Carlson.
The transfer sheets showing stock in and out of C. W. Carlson's name, as set
forth in Schedule V, indicate numerous certificates transferred to:
Union Trust Company-Estates Trusts
United Milk Products Corporation — Preferred stock retired
Louis J. Reeder — Stock purchased for customers and employees.
It also appears from the transfer sheets that an active campaign to dispose of
the common stock in Carlson's name was carried on during the early part of the
year 1928, as such records indicate a total of 4,865 Common shares transferred
out from January 1 to June 30, 1928, going principally into the names of various
brokers. The records of the Statistical Department indicate that during this
period the average price for the Common was $42.00 per share, and for the Pre-
ferred, $90.00. Inasmuch as the majority of this "syndicate's" stock was ac-
quired at the issue price of $100.00 per unit of 1 share Preferred and 1 share Com-
mon, a large profit must have accrued, during this period alone, to those inter-
ested in the pool. Such profits would presumably be merely a part of the total
earned from 1926 to 1932, wherein 13,705 Common and 13,838 Preferred shares
were transferred out of the Carlson name.
Exhibit U-13-lr
With reference to market prices for United Milk stock, another set of circum-
stances is noted, which may possibly be of interest in connection with the hold-
ings of the bank's officers. One H. E. Collin, connected with the brokerage firm
of Collin, Norton & Co. of Toledo, Ohio, was a trustee for the stockholders of the
National Dairy Companj-, with a plant at Morenoi, Michigan, one of the proper-
ties acquired by United Milk at organization. The consideration therefor was
10,000 shares each of Preferred and Common Stock of the United Milk Company,
which was duly issued to Collin and his co-trustees, of which 7,000 shares of each
STOCK EXCHANGE PEACTICES 9093
class of stock were at once transferred to Campbell, Starring & Company, a New
York brokerage firm, and 3,000 each to R. L. Corby.
In addition to the stock above issued, Collin was given an option to purchase
an additional 20,000 shares of Common Stock at prices ranging from $45.00 to
$90.00 per share. This he exercised to the extent of 9,000 shares, paying there-
for $485,000.00 in cash.
An immediate market was created for United Milk Common Stock, resulting
in a price range from 110 to 115 during the month of January 1926, at the same
time the Preferred was being offered at 91. The officers of the company disclaim
any responsibility for the high price for the common, stating that they were not
interested in the market and did not profit thereby. They do state, however,
that they believe Collin was responsible for creating this market in order to dispose
of his common holdings at a profit. This is based partly upon the fact that
letters have come to their attention dated about the time of organization, cir-
culating various rumors calculated to enhance the value of the common stock,
and also the fact that Collin at that time was attempting to sell units of 1 share
Preferred and 1 common at $150.00, in the face of the company's subscription
price of $100.00 for the same unit.
With further reference to this angle, it appears that the majority of purchases
made by the Estates Trust Department during the first six months of 1926 were
made through Campbell, Starring & Company, the brokers previously mentioned
as transferees of Collin's stock. This, added to the fact that J. R. Nutt disposed
of his stock during this comparatively high-priced period, might possibly indi-
cate a connection between Collin and the bank officers, designed to promote
the interests and profits of the latter. This is entirely an assumption, not sus-
ceptible of proof from any source now available; however, it is suggested that
the matter might deserve further consideration in case additional avenues of
information present themselves later.
Of the balance of the purchases by the Estates Trust Department, consider-
able stock was acquired from that appearing in the name of C. W. Carlson, as
detailed in Schedule VI.
Another item disclosed by the books of the United Milk Products Corporation
is the fact that a large loan was made to J. R. Nutt by the company shortly after
organization, as evidenced by the following disbursements:
April 15, 1926 Check $25, 000. 00
June 2, 1926 " __. 500,000.00
Total $525,000.00
A memorandum in the company's files indicates that this loan was secured by:
5000 shares Southern Baking Co. Preferred Stock.
1250 " " " " Common Stock.
The officers of the company produced the cancelled check for $500,000.00,
which showed an endorsement b}' J. R. Nutt in payment for a New York draft.
The draft was located in the bank's files, dated June 2, 1926, for $500,000.00,
Exhibit U-13-ls
payable to the Southern Baking Company. Photostatic copies of both the
check and the draft are attached hereto. The loan was repaid by Mr. Nutt
during the year 1927.
Under present circumstances it is not possible to secure further details relative
to this transaction. The company officials have no positive information in con-
nection therewith but believe the check to Mr. Nutt probably paid for the pur-
chase of the stock used as collateral to the loan. Mr. Lindahl, Secretary, also
thinks that Mr. Nutt made large profits from the purchase and sale of Southern
Baking Company stock, not only from that acquired through this loan, but
likewise from other transactions in this stock entered into in syndicates with
the Bartshe family.
It therefore appears that Mr. Nutt made such profits as accrued on stock pur-
chased through this loan, on capital furnished by the United Milk Products
Company. It is true that the latter company had an excess of cash on hand
which it desired to employ profitably; nevertheless, the conclusion may be
drawn that such excess was largely supplied by the Union Trust Company
through its Collateral Loan and Estates Trusts Departments, and that any
profits thus created were at least indirectly attributable to the contributions by
9094 STOCK EXCHANGE PRACTICES
the bank which as is now apparent, will result in large losses to the Union Trust
Company.
OTHER OUTSIDE INFORMATION
It is recommended that interviews also be had with holders of Estates Trusts
containing United Milk Stock, to determine circumstances under which they
were induced to purchase stock. Also with borrowers from the Collateral Loan
Department, for the same purpose.
In connection with the latter point, an interview was had with Mr. Charles
L. Bethel, formerly Assistant Treasurer, in charge of the Detroit-Cook Office,
and now employed in the Main Office. Mr. Bethel, together with his wife, Ida
M., appears as a borrower in the Collateral Loan Department, his loan still
being open as of July 15, 1933, with 56 shares of United Milk Products Preferred
and 3-2/6 shares Common (formerly 70 and 20 shares, respectively, of the old
company) as part collateral. Asked as to the circumstances under which he was
induced to purchase this stock, Mr. Bethel stated that he was on the list of those
invited to subscribe for the original issue of stock, receiving 20 shares of the
Preferred with a bonus of 20 Common. This was financed bv Mr. Bethel's pay-
ment of $500.00, and a bank loan of $1,500.00, dated February 1, 1926.
About a year later, Mr. Bethel states he had sold his residence and having
some cash available from the proceeds, Mr. Nutt advised his wife, Ida M. Bethel
to purchase an additional 50 shares United Milk Preferred, stating at the time
that he would personally guaranty that she would never suffer a loss through
this purchase. Acting upon this advice, Mr. Bethel purchased the stock
recommended.
The stock transfer records at the office of the company indicate that 50 shares
of Preferred were transferred to the name of Ida M. Bethel on January 17, 1927.
A loan of $950.00 appears in the Collateral Loan Department dated April 6,
1927 in the name of Ida M. Bethel, secured by this stock.
At present Mr. Bethel's obligation to the bank amounts to $4,177.48, resulting
from a consolidation of the previously mentioned loans, together with others.
It is secured by collateral of a value (as of September 20, 1933) of $2,448.00.
This value is of course, contingent upon the possiblity of securing the quoted
market price for that part of the collateral represented by United Milk stock,
which seems improbable due to the large amount of stock which it will be
necessary to liquidate in a very thin market.
Exhibit U-13-lt
Needless to say, Mr. Nutt's guarantee was never made good.
It might be well to make further inqui/y of Mr. Bethel as to the possibility of
his holding Mr. Nutt to his guaranty against loss, in order to enable Mr. Bethel
to repay his loan to the bank. Furthermore it is quite possible that the same
"guaranty" was extended to other prospective stock purchasers, which it is
suggested be investigated through further interviews. The names of other sub-
scribers may be obtained from Schedule VII, setting forth a list of persons to
whom a total of 25,000 shares of Preferred and Common Stock was issued,
through the subscription of J. R. Nutt.
As to participation by Estates Trusts in stock of United Milk Products Cor-
poration, an instance has come to light indicating that this stock, in one case at
least, was recommended for purchase to the holders of such trusts. The trust
in question is that of R. W. Sheffer, 19 W. Main Street, Wolcott, N.Y., from
whom numerous letters are in the files, of which the following quotation con-
tained in a letter dated December 30, 1931, is a typical example:
"I asked Mr. Gates to tell Union Trust Co. to pick out some securities that
would be suitable for my trust and that on my next trip to the bank, we could
make a switch, the result was, you passed on to my Trust $5,000.00 of your
United Milk Preferred Stock 7%- I was told to put $10,000.00 in my trust
but I only left you put in $5,000.00 of your United Milk * * *."
A photostatic copy of another letter from Mr. Sheffer, dated March 22, 1933,
containing similar statements, is attached hereto.
Due to Mr. Sheffer's numerous protests, an investigation was made by the
Trust Officers of the alleged improper handling of his trust, in connection with
which a memo was placed in the files by Mr. Lahut dated April 4, 1931, who
stated that at the time of purchase he had given Mr. Sheffer lists of stocks such
as U.S. Steel, American Telephone & Telegraph, etc., but that Mr. Sheffer
insisted upon a higher yield. Whereupon, United Milk was mentioned to him
STOCK EXCHANGE PRACTICES 9095
as a business man's investment resulting in a signed order dated August 22,
1927 to buy 50 shares United Milk Preferred at market.
This one instance indicates that the Estates Trusts Department may have in
some cases recommended the purchase of United Milk stock, and it is therefore,
suggested that interviews with the holders of other trusts might be desirable.
"milk supply" accounts on books of united milk products corporation
An analysis of this account was made for the purpose previously outlined, of
determining if cash or securities were issued to anyone connected with the bank,
and charged to this account.
It was found that such was not the case, as the account represents only the
difference between the consideration paid for the various companies acquired at
Exhibit U-13-lu
organization and the appraised value of their respective physical assets. The
greater portion of the account is concerned with the Western Reserve properties
due primarily to the exchange of shares on a 2-1/2 for 1 basis. A brief summary
of the account follows:
Set up in connection with valuation of assets of:
Western Reserve Condensed Milk Companv — Januarv 1,
1926 - $2, 098, 43G. 01
National Dairy Co.— February 26, 1926 300,000.00
All Plants— December 31, 1926 1, 716, 401. 07
$4, 114,837.08
Less — Value of Milk Supply applicable to Standish plant sold
during 1927 175. 00
$4, 114,662.08
Milk Supply Account set up on books of subsidiary, United
Milk Products Corporation of California, representing dif-
ference between value of physical properties and cash paid
Libby, McNeil & Libby for Loleta Plant 250, 000. 00
Milk Supplv Account per Consolidated Balance Sheet, Decem-
ber 31, 1932 $4,364,662.08
In connection with the above valuations, Mr. P. L. Haynes, of the company,
advises that as a general rule, appraisals of physical assets were placed at as low
a figure as possible in order to reduce the burdens of local taxes upon, their num-
erous plants. This would naturally result in a correspondingly higher figure for
intangibles.
It thus appears that no cash or securities were issued directly to any individual
connected with the bank, and charged to this account. The only benefit accruing
to such persons would be indirectly as stockholders in the predecessor companies
taken over, though this would of course be shared in common with all othei- stock-
holders of such companies. In this connection, Mr. J. R. Nutt and his wife
appear, as previously stated, as stockholders in the Western Reserve Condensed
Milk Company.
officers and directors
Mr. J. R. Nutt was never at any time an officer or director of the subject
company, and drew no compensation therefrom.
The only persons in any way connected with the bank and also with the com-
pany were Sam W. Emerson and Otto Miller, who were elected directors of the
companv April 7, 1931. Mr. Miller tendered his resignation from the directorate
March i7, 1933.
Considerable additional information is contained in the working papers of this
case which it is not thought necessary to sul)mit with this report, but which may
be consulted if deemed advisable.
It is suggested that at an opportune time, Mr. C. W. Carlson be called upon
to produce his records, which it is understood he has retained, in order to secure
further information not obtainable from the bank's records.
9096 STOCK EXCHANGE PRACTICES
Exhibit U-13-lv
It is further recommended that this case be called to the attention of the
United States Attorney for further investigation as to a possible violation of the
National Bank and Federal Reserve Acts.
Respectfully submitted,
Walter G. Mitchell.
WGM:ES
Exhibit U-13-2
Liquidator's Confidential File United Milk Products Corporation
(Supplementary Report)
Exhibit U-13-2a
(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 Super-
intendent of Banks, State of Ohio)
November 17, 1933.
Oscar L. Cox,
Special Deputy Superintendent of Banks,
Cleveland, Ohio.
In Re: United Milk Products Corporation
Dear Mr. Cox: In reply to your memorandum relative to report previously
submitted on the above companj^, a brief summary of the facts contained therein
has been prepared, with references to the pages in the report where details may be
found. This is followed by a similar summary of recommendations made.
Placing the worst construction on all circumstances which have been indicated
by this investigation, it may be assumed that the entire deal was a scheme to
organize and float the United Milk Products Corporation for the personal benefit
and profit of J. R. Nutt and/or other persons connected with the bank. This
assumption is supported by the following:
(a) J. R. Nutt and his wife acquired a large amount of the corporation stock
through prior ownership of stock of the Western Reserve Condensed Milk Com-
pany. (Page 13 of report.)
(b) Mr. Nutt acquired an additional amount of stock through subscription by
C. W. Carlson, the exact amount of which cannot be determined. (Page 14.)
(c) Pursuant to the scheme, loans aggregating over $2,000,000.00 were made
by the Collateral Loan Department in the first six months of 1926 with United
Milk Stock as all or part collateral (Page 3) . In many cases the loans represented
80 to 100% of the par value of the collateral (Pages 4, 5, 6, 7). These loans were,
in nearly every case, approved by J. R. Nutt or C. W. Carlson. (Schedule I.)
(d) A large volume of this stock was placed in various accounts in the Estates
Trusts Department, in some cases upon the direct authorization of Mr. Nutt.
(Pages 7, 8.)
(e) To aid in disposing of the bank officers' stocks, various steps were taken,
including:
1. Letters written bj^ bank officers to outside persons advising purchase of the
stock (Page 2) based in part upon a memo placed in the files by Mr. Nutt (Page 2).
2. Representations to bank employees and outside associates that they might
be permitted to subscribe to a wonderful investment opportunity, which resulted
in a total subscription of 25,000 shares from such persons. (Schedule VII:)
This represented approximately 43% of the total 58,250 shares of stock sold for
cash, exclusive of that issued in acquisition of predecessor companies. (Page 12.)
3. A personal quaranty by Mr. Nutt, in one instance at least, that the pur-
chaser of the stock would not incur a loss through such purchase. (Page 17.)
It is quite possible that this guaranty was extended to other purchasers.
(e) Information to be obtained from C. W. Carlson, at the proper time, relative
to the following:
1. Members of the "syndicate" who subscribed for L'nited Milk stock in the
name of Carlson, together with their respective interests and all details as to
purchases and sales of the stock. This to determine profits realized by each on
Exhibit U-13-2c
such transactions. (Pages 15, 19.)
STOCK EXCHANGE PRACTICES 9097
2. Details relative to the abstraction for two da_ys of 2,750 shares of stock from
various Trust accounts. (Pages 9, 9A.) While the purpose of this move is not
clear, from all information now available, it may be that the mere taking of this
stock for the two-day period might constitute a proper basis for criminal action.
(/) Interviews with borrowers, as well as subscribers. To determine if they
were guaranteed against losses in the purchase of United Milk stock. (Page 18.)
It would appear that with proper corroboration by more than one borrower, civil
action might be started to enforce such guarantees, enabling borrowers to repay
their loans to the bank.
(g) Reference of entire case to United States Attorney. (Page 20.) To secure
further information only obtainable through official channels, including reference
to Mr. Nutt's (and other officers') income tax returns. Also for an official opinion
as to possible criminality of this entire deal.
If it is possible to prove conclusively that this entire deal constituted mis-
management on the part of the bank's officers, it would appear that a good cause
for civil action would lie against the directors for recovery of losses sustained.
This principle has been clearly set forth by the United States Supreme Court in
its decision in the case of Boiuerman vs. Hammer (250 U.S. 504). In defining the
liability of directors in that case, the Court cited the earlier case of Martin vs.
Webb, reading in part as follows:
"Directors cannot, in justice to those who deal with the bank, shut their eyes
to what is going on around them. It is their duty to use ordinarj' diligence in
ascertaining the condition of its business and to exercise reasonable control and
supervision of its officers. * * * That which they ought, by proper diligence,
to have known as to the general course of business in the bank, the}^ may be
presumed to have known in any contest between the corporation and those who
are justified by the circumstances in dealing with its officers upon the basis of
that course of business.'
Exhibit U-13-2b
(/) In order to establish a market a possible arrangement existed between the
bank officers and H. E. Collin, the latter to create a market for the corporation's
stock. (Page 16.)
(g) Immediately after this market was built up, Mr. Nutt disposed of all the
stock which he had received in exchange for his prior holdings in Western Reserve
Condensed Milk Company, presumably at a large profit. (Page 13.)
(h) Stock in the name of C. W. Carlson, held for various persons, including
J. R. Nutt, was disposed of from time to time, the largest sales consisting of
Common Stock sold during the first half of the year 1928, at a large profit. vPage
15.)
(i) As an additional source of profit to J. R. Nutt, he secured the loan of
$525,000.00 from the corporation, derived from the excess capital contributed
through the Union Trust Company. Through this loan he was enabled to make
further profits in the purchase and sale of Southern Baking Company stock.
(Page 16.)
(j) Further benefits were received through dividends of 7% on United Milk
Preferred Stock during the j^ears from 1926 to 1931.
The suggestions and recommendations contained in the report were submitted
primarily for the purpose of proving the above conclusions. Such suggestions
may be summarized as follows, with reference to the page numl)ers on which
incorporated in the report:
(a) Interviews with subscribers to stock. To determine inducements offered.
(Page 18.)
(fc) Interviews with holders of Estates Trusts. To determine inducements
offered. (Page 18.)
(c) Securing of any possible information relative to connection with H. E.
Collin. To determine if the latter 's market activities were inspired by an agree-
ment to establish a high price in order to enable J. R. Nutt and/or others to
unload their stock. (Page 16.)
((/) Examination of records of Hord, Curtiss & Company, stock-brokers, with
particular reference to any accounts carried by .J. R. Nutt, and to the disposition
by him of his United Milk Common Stock. For the purpose of attempting to
ascertain the profit obtained at the time of sale. (Page 13.)
9098 STOCK EXCHANGE PRACTICES
The Court continues, with reference to the aVjove citation:
"This latter statement of the rule is made in a case dealing only with borrowers
from the bank, but there is no good reason why it should not be applied for the
protection of depositors and stockholders."
In accordance with your memorandum, there have been prepared tabulations
of the loans made during the first six months of 1926, with United Milk Preferred
Stock as all or part collateral, indicating the present status of such loans (Sched-
ule B) ; also a summary of such stock placed in various accounts in the Trust
Department, indicating that now held in these accounts together with losses
sustained on sales. (Schedule C) For further convenience, the.se tabulations are
preceded by a summary (Schedule A) of the original loans sti'.l in the Collateral
Loan Department indicating losses sustained through charge-offs and tlio.'-e which
would be incurred in tiie event of liquidation at present values.
The ascertainable losses, both to the bank as the lender, and to holders of the
trusts, appear as follows:
Exhibit U-13-2d
Loans: Losses charged off and to be taken in event of liciuidation. $172, 759. 91
Trust Accounts:
Sustained by holders on sales already made 30, 496. 50
In case of sale by holders — difference between carrying value
and present market (22) on stock still in accounts 424, 251. 01
Total $627, 507. 42
Attention is invited to the fact that the above figures do not measure the total
losses on transactions in United Milk stock, for the following reasons:
Loans made after the first six months of the year 1926 are not included in the
tabulations, and probable losses on such loans still held by the bank are therefore
not a part of the total indicated.
Losses on loans on Common Stock, are excluded, as only the transactions
involving Preferred Stock were analyzed.
Losses on stock withdrav.'u from trust accounts cannot, of course, be determined
from the bank's records. Such withdrawals have been particularly heavy during
the period since commencement of liquidation, comprising a large part of 3,008
shares withdrawn during the year 1933. Assuming for purposes of computation
an average purchase price of 85 and a present market of 22, the loss to holders
who have withdrawn their stock since January 1, 1933, should they sell at to-
day's figures, would amount to approximately $189,500.00, in addition to the
known losses set forth above. This latter figure does not include possible losses
on stock withdrawn prior to 1933, as it cannot be stated if holders still retain the
stock taken out; however, the estimate for 1933 is fairly accurate as the market
during the current year did not vary to a great extent.
It will be noted from the schedule of trust account transactions, that the Nutt
family trusts sustained comparatively large losses in the sale of a portion of
their Preferred Stack. It is also noted however, that the account of Elizabeth
H. Nutt shows profits on the sale of Common Stock in the amount of $24,945.00.
As to the disposition of copies of the report previously submitted, you are
advised that one copy was handed to Mr. Burmeister, and two placed in the
files of the Inspection Dej^artment. The original is returned herewith.
I trust the foregoing will supply the information required.
Respectfully submitted.
Walter G. Mitchell.
STOCK EXCHANGE PRACTICES
9099
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9100
STOCK EXCHANGE PRACTICES
Exhibit U-13-3
Send Following Telegbam
CODE
OPEN
To Mr. J. H. Skinner, Date 11/2/25.
Vice-President, Bank of Italy, Montgomery Street Branch,
San Francisco, Calif.
Unable to get trace of company mentioned your night letter can you furnish
address or names of principals
The Union Trust Company, Credit Department.
Send Collect.
Authorized by
PLEASE DESIGNATE "MAKE ENTRIES" "DO NOT MAKE
ENTRIES"
Exhibit U-13-4
united milk products CORP.
The Corporation Trust Company,
Jersey City, N.J., January — , 1926.
Pursuant to resolutions of the Board of Directors, you are authorized to issue
44835 original PREFERRED shares and 44835 original COMMON shares of
this company, in the names and amounts listed below.
The cash or property for which the above mentioned shares are issued has
been actually conveyed or transferred and delivered to the Company. COMMON
STOCK FROM CTF TCI FOR 115,000 IN NAME OF P. L. HAYMES.
President. Secretary.
Sheet No. 3.
Date 1/14/26.
Common
Preferred
Name
Folio
Certificate
numbers
Shares
each
Shares
Certificate
numbers
Shares
each
Shares
Address
TC20
"'soo'
""loo"
45
10
2,750
2,755
2,500
2,497
3
2,500
2,500
210
2,500
587
3
835
572
4,000
3
600
90
4,000
700
700
5
837
3
TPl
TP2
TP3
TP4
TP5
TP6
TP7
TP8
TP9
TPIO
TPll
TP12
TP13
TP14
TP15/22
TP23
TP24/25
TP26/27
TP28
TP29
TP30
TP31
TP32
TP33
"""soo"
"""300"
45
10
2,750
2,755
2,500
2,497
3
2,500
2,500
210
2,500
587
3
835
572
4,000
3
600
90
4,000
700
700
5
837
3
J. R. Nutt
c/o Union Tr Co
TC21
James B Arthur
Cleve. Ohio
464 Riverside Drive
TC22
Marv C Arthur.
NYC
Do.
TC23
Addie L. Bartshe ..-
1252 Bway. Cleve.
TC24
TC25
Clarence L. Bartshe.
do
Ohio
Do.
TC26
TC27
Dorothy M Bartshe.
Qlen E Bartshe
Do.
Do.
TC28
do
TC29
RuthH Bartshe
Do.
TC30
William A Bartshe..
330 W Main St
TC31
do
Kent, Ohio
TC32
Frank B Carr..
1418 Keith Bldg
TC33
do
Cleve. 0
TC34/41
do
TC42
do
TC43/44
Mary E Carr .
1615 Clifton Blvd.
TC45/46
do
Lakewood-Cleve.
Ohio
TC47
Charles I Corby
R F D #3 Rock-
TC48
Robert L Corby
ville, Md
c/o Fleischmann
TC49
William S Corby
Laboratories,
158th St & Mott
Ave. NYC
26 Jackson PI. NW
TC50
William L Fox
Wash. D.C.
1248 Bway Cleve.
TC51
Philip L Haymes ..-
Ohio
1252 Bway Cleve.
TC52
do -.
0
STOCK EXCHANGE PEACTICES
9101
Common
Preferred
Name
Folio
Certificate
numbers
Shares
each
Shares
Certificate
numbers
Shares
each
Shares
Address
TC53
TC54
250
250
3,000
3,000
250
1,250
1,750
847
3
50
300
50
2,500
50
625
TP34
TP35
TP36
TP37/41
TP42/48
TP49
TP50
TP51
TPS2
TP53
TP54
TP55
TP56
250
250
3.000
3,000
250
1,250
1,750
847
3
50
300
50
2,500
50
625
Estate of W Duane
Hunt.
Florence W. Hunt . .
920 Guardian Bldg
Cleve. Ohio
Do.
TC55
TC56/60
TC61/67
Edward M Johnson.
The Union Trust Co.
J. R. Nutt.
3146 Washington
Blvd. Cleve.
Hgts. Ohio
The Union Tr Co
Cleve. Ohio
110 Mentor Av
TC68
Fred A Searl
Painesville,Ohio
110 Mentor Av
TC69
do
Painesville, Ohio
TC70
George T Searl. . .
Washington St
TC71
Lizzie T Searl. _
Painesville, Ohio
110 Mentor Av
TC527
George T Searl. . .
Painesville, Ohio
TC528
FarrarTinley
450 Park Av Le-
TC74
William H Turner. .
onia, NJ
1405 E 110th St
TC75
Donna L AVard ...
Cleve. Ohio
c/o Ralph D Ward
c/o Drake Bak-
eries Inc. 77 Clin-
ton Ave. Bklyn.
NY
44, 835
44, 835
Exhibit U-13-5
November 2nd, 1925.
Mr. J. H. Skinner,
Vice-President, Bank of Italy, Montgomery Street Branch,
San Francisco, California.
Dear Sir: In reply to your wire of October 31st regarding the United Milk
Products Company, we telegraphed you this afternoon as follows:
"Unable to get trace of company mentioned your night letter. Can you fur-
nish address or names of principals?"
This concern is unknown to all of those with whom we talked including the
leading milk companies, dairy supply houses and brokers in the evaporated milk
business. The various services we use have nothing on the name. Under the
circumstances we were unable to be of assistance but if you can give us anything
definite to work from it will be a pleasure to make further inquiry.
Very truly yours,
W. F. COPELAND,
Assistant Vice-President.
Exhibit U-13-6
The Union Trust Company
Cleveland, Ohio, December 4th, 1925.
J. R. Kraus,
Vice President, The Union Trust Company.
Dear Joe: I have just read your letter of November 30th from Mr. C. S.
Castle. The situation is about as follows:
The United Milk Products Corp'n. has been organized under the laws of
Delaware with an authorized capital of $25,000,000 7% cumulative preferred
stock, callable at 110, and 250,000 shares non par common stock.
There are some 10 or 12 different companies, with Ijetween 40 and 50 plants,
coming into the United Corporation. They had the option of taking either
cash or securities of the new company, and I understand they all elected to take
securities. When these properties are all put together, and after paying each
company in cash for its inventory, they find thej- will have about $1,800,000 in
cash, and this, they claim, is all the working capital they will need to operate
their business without borrowing any money. It is therefore unnecessary to
9102 STOCK EXCHANGE PRACTICES
put out any underwriting. However, the men active in handling the deal feel
that in the interest of the new company a certain amount of this stock should be
placed with friends who can be instrumental in bringing business to the company.
I have never seen a deal quite like it in my life. Most new corporations of this
kind want a lot of new money, but this company does not need nor want any,
and they have had applications for eight and a half times the amount of new
stock that they can prudently let out. In fact any stock sold is that amount
additional of new cash in the treasury which is not needed.
I think with the above explanation you will understand it is very doubtful if
Mr. Castle could get any of the stock. In fact I do not know how it could be
done. I asked a long time ago for a substantial block to be distributed among
my friends, but I know I will not be able to get anything like the amount requested.
Sincerely yours,
J. R. NUTT.
Exhibit U-13-7
December 4, 1925.
Mr. C. S. Castle,
President, Standard Trust & Savings Bank,
Chicago, Illinois.
Dear Mr. Castle: I am in receipt of yours of the 30th ult., regarding the
United Milk Products Corporation.
This Company has been organized under the laws of the state of Delaware
with an authorized capital of $25,000,000 7% cumulative preferred stock, callable
at 110, and 250,000 shares non par common stock.
There are some 10 or 12 different companies, with between 40 and 50 plants,
coming into the United Corporation. They had the option of taking either
cash or securities of the new company, and I understand they all elected to take
securities. When these properties are all put together, and after paying each
company in cash for its inventory, they find they will have about $1,800,000 in
cash, and this, they claim, is all the working capital they will need to operate
their business without borrowing any money. It is therefore unnecessary to
put out any underwriting. However, the men active in handling the deal feel
that in the interest of the new company a certain amount of this stock should be
placed with friends who can be instrumental in bringing business to the Company.
I have never seen a deal quite like it in mj^ life. Most new corporations of this
kind want a lot of new money, but this Company does not need nor want any,
and they have had applications for eight and a half times the amount of new
stock that they can prudently let out. In fact, any stock sold is that amount
additional of new cash in the treasury which is not needed.
If you are alloted any of this stock, it will be on account of personal friendship
of some one of the crowd. I understand the common stock is being bought at the
present time at $30.00 per share.
Trusting that this information may be of service to you, and with kind personal
regards, I remain.
Very sincerely yours,
Vice-President.
Exhibit U-13-8
Subscription to Preferred Stock
"united milk products corporation
Preferred stock — $25,000,000, par value $100 per share.
Common stock — 250,000 shares without par value.
Preferred Stock is entitled to a cumulative dividend at the rate of Seven Dollars
($7.00) per share per annum, and no more. Preferred Stock is non-voting and
in the event of any distribution of assets is entitled to receive One Hundred
Dollars ($100.) per share before any sums are paid to the holders of Common
Stock, all the remaining assets being distributable among the holders of the
Common Stock. The Preferred Stock is subject to redemption at One Hundred
Ten ($110.) Dollars per share at the option of the Board of Directors at any
time upon thirty (30) days' notice.
STOCK EXCHANGE PRACTICES
9103
Cleveland, Ohio, Dec. 31, 1925.
To United Milk Products Corporation:
I hereby subscribe for twenty five thousand shares of the Preferred Stock of
United Milk Products Corporation, as described above, at One Hundred Dollars
($100.) per share, subject to terms as stated below:
(1) I understand that the authorized Common Stock has been issued, in con-
nection with the organization and promotion of the company, for certain options,
and that I shall receive One (1) share of said Common Stock with each share of
Preferred Stock allotted under this subscription.
(2) This subscription is payable in full at time of subscribing.
(3) Certificates will be issued as of January 2, 1926.
(4) I understand that you may allot a smaller number of shares, or reject this
subscription.
(5) Dividends will accrue from January 1, 1926, upon all Preferred Stock
allotted under this subscription.
Name J. R. Nutt,
Address c/o Union Trust Co.,
Issue certificates in name of — will advise by letter.
{State Mr., Mrs. or Miss.)
Make checks payable to order of United Milk Products Corporation, and mail
to the company at 1252 Broadway, Cleveland, Ohio, or Room 510, 100 Hudson
Street, New York, N.Y.
Exhibit U-13-9a
Checked by
United Milk Products Corporation,
January 2, 1926.
THE corporation TRUST COMPANY, JERSEY CITY, N.J.
Pursuant to resolutions of the Board of Directors, vou are authorized to issue
25,000 original PREFERRED shares and 25,000 original COMMON shares of
this company, in the names and amounts listed below.
The cash or property for which the above mentioned shares are issued has been
actually conveyed or transferred and delivered to the Company.
President. Secretar}-.
Leave these columns blank.
Common
Preferred
Name
Folio
Certificate
numbers
Shares
each
Shares
Certificate
numbers
Shares
each
Shares
Address
T.C. 203/10
250
100
90
50
20
10
500
250
100
90
50
100
100
50
2,000
4,500
90
1,200
180
10
2,500
750
400
90
50
500
200
50
T.P.570
T. P. 180,182/7
188/231
233
*' 232
T.P.234/57
T. P. 258/66
T.P.267
T. P. 268/72
T. P. 273/5
276/9
280
511
283/6
512
287/8
289
250
100
90
50
20
10
500
250
100
90
50
100
100
50
2,000
4, 500
90
1.200
180
10
2,500
750
400
90
50
500
200
50
SHEET NO. 8
C. W. Carlson
c/o The Union
T.C. 211/55
C. W. Carlson
Company, Eu-
clid & E. 9th St.,
Cleveland, Ohio,
do do
T.C. 256
C. W. Carlson
do do
T.C. 257/280
C. W. Carlson
do do
T.C. 281/289
C. W. Carlson
do do
T.C. 290
C. W. Carlson
do do
T.C. 538/542
T.C. 543/5
T.C. 546/9
T.C. 550
T.C. 551
T.C. 305/9
The Union Trust
Company.
The Union Trust
Company.
The Union Trust
Company.
The Union Trust
Company.
The Union Trust
Company.
Mr. R. H. Nutt
Estates Trust De-
partment, Cleve-
land, Ohio,
do do
do do
do do
do do
1901 TTnion Trust
T.C.310/1
T.C.312
Mr. W.M.Baldwin.
Mr. W. M. Baldwin.
Building, Cleve-
land, Ohio,
c/o The Union
Trust Company,
Cleveland, Ohio,
do do
175541— 34— PT 20-
-24
9104
STOCK EXCHAISTGE PRACTICES
Exhibit U-13-9a — Continued
Common
Preferred
Name
Folb
Certificate
numbers
Shares
each
Shares
Certificate
numbers
Shares
each
Shares
Address
T.C.552/6
T.C. 318/21
100
100
100
100
100
50
100
50
100
50
50
100
100
10
100
50
100
50
100
50
100
50
10
500
400
500
200
100
50
100
50
200
50
50
100
100
10
200
50
200
50
200
50
200
50
20
T.P.513/7
295/98
" 299/303
304/5
306
307
308
309
310/1
312
313
314
315
316
317/8
518
320/1
322
323/4
325
326/7
328
" 329/519
100
100
100
100
100
50
100
50
100
50
50
100
100
10
100
50
100
50
100
50
100
50
10
500
400
500
200
100
50
100
50
200
50
50
100
100
10
200
50
200
50
200
50
200
50
20
SHEET NO. 8— con.
Messrs. 0. P. & N".
J. Van Sweringen.
Mr. J. J. Bernet
Marshall Building,
Cleveland, Ohio.
616 Columbia
T.C. 322/6
Mr. C. L. Bradley
Building, Cleve-
land, Ohio,
c/o The Union
T.C.327/8
Mr. J. P. Harris
Trust Company,
Cleveland, Ohio.
c/o The Union
T.C. 329
T.C.330
T.C.33I
Mrs. Elsa W.Miller.
Mrs. ElsaW. Miller-
Mr. Otto Miller
Trust Company,
Cleveland, Ohio.
2700 Eaton Rd.,
Village of Shaker
Heights, Ohio,
do do
c/o Hayden, Miller
T.C.332
Mr. Otto Miller
& Co., Union
Trust Building,
Cleveland, Ohio,
do do
T.C.333/4
T.C.335
T.C.336
T.C.337
Mr. W.S.Haydea..
Mr. W. S. Hayden..
Mrs. Elizabeth S.
Hay den.
Mr. D. W. Myers...
do do
do do
1856 East 89th St.,
Cleveland, Ohio,
c/o Hayden, Miller
T.C. 338
Mr. L. B. Williams..
& Company
Union Trust
Bids;., Cleveland
Ohio,
do do
T.C.339
Mr. L. B. Williams..
do do
T.C.340/1
T.C.342
T.C.343/4
Mr. Geo. A. Coul-
ton.
Mr. Geo. A. Coul-
ton.
Mr. H. G. Kraus .
c/o The Union
Trust Company,
Cleveland, Ohio,
do do
do do
T.C. 345
Mr. H. G. Kraus...
do do
T.C.346/7
Mr. J. E. Washer .
do do
T.C.348
T.C. 349/50
T.C.351
T.C.352/3
Mr. J. E. Washer
Miss Winifred E.
Treat.
Miss Winifred E.
Trsct
Miss Winifred E.
Treat.
do do
do do
do do
do do
Exhibit U-13-9b
T.C.396
397
398
399
400
401
402
403
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
T.C.373
100
100
T.C. 374
T.C.375
100
100
100
100
T.P.376
100
100
377
100
100
378
100
100
379
100
100
380
100
100
SHEET NO. 10
Mrs. Harriette B.
Borton.
Mr. F. C.Noon
Mr. S. J. Kropps...
Mr. Sherwood B.
Crawford.
Mr. F. F.Wilkison..
Dr. J. A. Stephens.
Mr. Frank C. New-
comer.
Mrs. Ethel B. Mc-
Graw.
c/o Borton & Bor-
ton.HannaBldg.,
Cleveland, Ohio.
Provo, Utah.
c/o Ward Baking
Corporation
Windsor Ave.
Cleveland, O.
1500 Keith Build
Ing, Cleveland
Ohio.
HippodromeBuild
ing, Cleveland
Ohio.
1856 Euclid Ave.
Cleveland, Ohio
Uninn Trust Build-
ing, Cleveland,
Ohio.
2559 Wellington
Rd., Cleveland
Heights, O.
STOCK EXCHANGE PRACTICES
Exhibit U-13-9b — Continued
9105
Common
Preferred
Name
Folio
Address
Certificate
Shares
Shares
Certificate
Shares
Shares
numbers
each
numbers
each
SHEET NO. 10— con.
T
.C. 404
100
100
T.C.381
100
100
Mr. Geo. S. Ross
822 Columbia
Buildinj;, Cleve-
land, Ohio.
(I
405
100
100
382
100
100
Mr.D. S.Barrett, Jr.
Marshall Bldg.,
Cleveland, Ohio.
tt
406
100
100
383
100
100
Mr. E.R. Faneher..
c/o Federal Re-
serve Bank,
Cleveland, Ohio.
4t
531
100
100
384
100
100
Mr. E.S.Jordan
c/o Jordan Motor
Car Co. ,E. 152nd
St., Cleveland,
0.
do do
H
408
409
410
100
100
100
100
100
100
385
386
387
100
100
100
100
100
100
Mr. Paul Zone
It
Mr. W. B. Riley
do do
tt
Mr. C.E.Denney...
616 Columbia
Building, Cleve-
land, Ohio.
it
411
100
100
388
100
100
Trustees of Deep
Springs.
Provo, Utah.
tt
412
100
100
506
100
100
Mr. A. W. Dean
1603 Union Trust
Building, Cleve-
land, Ohio.
tt
413
100
100
390
100
100
Mr.J. J. Carny
9701 Lamont Ave.,
Cleveland, Ohio.
tt
414
100
100
391
100
100
Mr.T. P. Robbins..
c/o Cleveland
Hardware Co.,
Cleveland, Ohio.
tt
415
100
100
392
100
100
Mr. G. W. Grandin.
1756 Union Trust
Building, Cleve-
land, Ohio.
it
416
100
100
393
100
100
Mr.Jos. H.Thomp-
son.
c/o The Union
Trust Company,
Cleveland, Ohio.
41
417
100
100
394
100
100
Mr.JohnM.Killite.
c/o United States
Federal Court,
Toledo, Ohio.
tt
418
75
75
395
75
75
Mr. Atlee Pomerene.
1857 Union Trust
Building, Cleve-
land, Ohio.
ti
419
25
25
396
25
25
Mr. Harry H. Weise.
Keith Building,
Cleveland, Ohio.
n
420
100
100
397
100
100
Mrs. Marion S. Gor-
don.
c/o Forge Co.,.
Cleveland, Ohio.
tt
421
100
100
398
100
100
Mr. Newton D.
Baker.
1924 Union Trust
Building, Cleve-
land, Ohio.
it
422/3
100
200
" 399/400
100
200
Dr.W.V. Mullin...
c/o J. R. Nutt, The
Union Trust Co.,
Cleveland, 0.
n
424
100
100
607
100
100
Mrs. Grace V.
Coates.
1879 East 84th St.,
Cleveland, Ohio.
*•
425
50
50
402
50
50
Mr. H.B.Merrill...
c/o Chase-Morrill
Co., Suttar At
Van Ness, San
Francisco, Calif.
tt
532
50
50
403
50
50
Mr. C.W.Maxwell.
1712 East 9th St.,
Cleveland, Ohio.
tt
427
50
50
404
50
50
Mr. H. D.Messick..
c/o The Union
Trust Company,
Cleveland, Ohio.
tt
428
50
50
405
50
50
Mrs. Mary L.Mess-
ick.
2945FontenayRd.,
Village of Shaker
Heights, Ohio.
tt
429
50
50
406
50
50
Mrs. Margaret God-
frey.
ISeoStanwoodRd.,
E. Cleveland, O.
tt
533
50
50
508
50
50
Mrs. Adah M.
Graves.
ISGOStanwoodRd.,
E. Cleveland, 0.
n
431
50
50
408
50
50
Mr. Van R. Purdy. .
c/o The Union
Trust Company,
Cleveland, Ohio.
tt
534
50
50
409
50
50
Mr. Jerome H.
Bones.
do do
ti
433
50
50
410
50
50
Mr. J. C. Anderson..
do do
9106
STOCK EXCHANGE PRACTICES
Exhibit U-13-9c
Common
Preferred
Name
Folio
Address
Certificate
Shares
Shares
Certificate
Shares
Shares
numbers
each
numbers
each
SHEET NO. 9
T.C.354/5
100
200
T.P.331/2
100
200
Mr. Allard Smith...
c/o The Union
334
Trust Company,
Cleveland, Ohio.
tt
356/7
100
200
503
100
200
Mrs. Helen C. Wil-
liams.
12546 Cedar Rd.,
Cleveland
Heights, Ohio.
It
358/9
100
200
" 335,504
100
200
Mr. C.N. Osborne..
c/oM. A. Hanna&
Co. .Leader-News
Bldg., Cleveland
tt
360/1
100
200
337/8
100
200
Mr. Adrian D.
Joyce.
c/o The Glidden
Company, Cleve-
land, Ohio.
tl
362/3
100
200
339/40
100
200
Mr. E. W. Moore...
1210 Union Trust
Bldg., Cleveland
Ohio.
it
364
100
100
341
100
100
Mr. James Dunn,
Jr.
c/o The Union
Trust Company,
Cleveland, Ohio.
tt
365
50
50
342
50
50
Mr. James Dunn,
Jr.
Mr. William Tonks.
do do
It
366
100
100
343
100
100
do do
tt
367
50
50
344
50
50
Mr. William Tonks.
do do
tt
368
100
100
345
100
100
Mr. R. J. Bowman..
616 Columbia
Building, Cleve-
land, Ohio.
it
369
50
50
346
50
50
Mr.R. J .Bowman..
do do
tt
370
100
100
505
100
100
Mr. O. M.Stafford--
c/o The Union
Trust Company,
Broadway Office
Cleveland, Ohio.
tt
371
372
50
100
50
100
348
349
50
100
50
100
Mr. 0. M. Stafford..
do do
tt
Mr. F. H.Ginn
1759 Union Trust
Building, Cleve-
land, Ohio.
tt
373
374
50
100
50
100
350
351
50
100
50
100
Mr. F. H. Oinn
do do
"
Philip Hofer & Com-
1708 Union Trust
pany.
Building, Cleve-
land, Ohio.
tt
375
50
50
352
50
50
Philip Hofer& Com-
pany.
do do
<l
376
100
100
353
100
100
Miss Maude H.
Bruce.
147 Worthington
St., Fenway, Bos-
ton, Mass.
(1
377
100
100
354
100
100
Mr. A. H. Scoville...
c/o The Union
Trust Company,
Cleveland, Ohio.
l(
378
100
100
355
100
100
Mrs. Mary M. O'-
Neill.
15103 Lake Ave..
Lakewood, Ohio.
((
379
100
100
356
100
100
Mr. R.C.Hyatt
c/o The Union
Trust Company,
Cleveland, Ohio.
41
380
100
100
357
100
100
Mr. R. S. Crawford.
do do
tt
381
100
100
358
100
100
Mr. N. S. Hallidav-
do do
tt
382
100
100
359
100
100
Mr. G. D.McGwinn
do do
tt
385
100
100
360
100
100
Mr. C. H. Hender-
do do
tl
383
384
386
100
100
100
100
100
100
361
362
363
100
100
100
100
100
100
son.
Mr. J. P. Hance
do do
tt
Mr. G.P. Steele
do do
tt
Mr. C. E. Farns-
do do
worth.
tt
387
100
100
364
100
100
Mr. F. D. WMlliams-
do do
tt
388
389
390
100
100
100
100
100
100
365
366
367
100
100
100
100
100
100
Mr.E. V.Hale
do do
(t
Mr. G. S. Russell
do do
((
Mr. F. W. Wood-
do do
worth.
(1
391
100
100
368
100
100
Miss Emma L. Ho-
gan.
do do
if
392
100
100
369
100
100
Miss Auriel M.
Spencer.
c/o Hayden, Miller
& Companv Un-
ion Trust Bldg.,
Cleveland, Ohio.
€t
393
100
100
370
100
100
Miss Nelle C.White
1903 East 84th St.,
Cleveland, Ohio.
tt
394
100
100
371
100
100
Miss Ellen Chad-
bourne.
2810 Wood bridge,
Ave., Cleveland,
Ohio.
STOCK EXCHANGE PRACTICES
9107
Exhibit U-13-9c — Continued
Common
Preferred
Name
Folio
Certificate
numbers
Shares
each
Shares
Certificate
numbers
Shares
each
Shares
Address
T.C.395
100
100
T.P.372
100
100
SHEET NO. 9— COntd.
Mrs. Bessie D. Mar-
vin.
804 Guardian
Building, Cleve-
land, Ohio.
Exhibit U-13-9d
T.C. 434
435
537
437
438
439
440
441
442
443
444
445
446
447
448
449
450
tt
451
452
4i
453
4t
454
it
455
tt
456
<t
457
'•
458
ti
459
11
460
n
461
462
4t
463
It
464
it
465
it
466
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
T.C. 411
412
413
414
415
416
417
418
419
420
421
422
423
424
425
" 426
" 427
" 428
" 429
" 430
" 431
" 509
" 433
" 434
" 435
" 436
" 437
" 438
" 439
" 440
" 441
" 442
" 443
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
SHEET NO. 11
Mr. C.B. Anderson.
Mr. T. J. Champion.
Mr. GroverH. Null.
Mr. Judd H.Clark..
Mr. Ralph L. Wil-
liams.
Mr. H. L. Brown. _.
Mr. J. G. Geddes...
Mr. H. E. Hills
Mr. Wm. G. Stuber.
Miss Etta M. Starr-
Mr. W. A. Gibson..
Mr. A. C. Coney. --
Mr. E. N. Wagley..
Mr. P. N. Nunn....
Mrs. Helyn F. Nutt
Mr. T. F. Newman.
Mr. H.O. Van Hart
Mr. R. H. Sharpe.-
Mrs. Sophia T.
Bowes.
Miss Hazel S. Cor-
win.
Miss Grace C. Hay-
cox.
Miss Ina H. Rife.-
Mrs. Ida E. Rock-
well.
Mr. Steve Beeske-
hazy.
Mr. F. A. Graves. -
Mr. W. H. Way...
Mr. W. L. Biersach .
Mr. G. E. Steck..
Mr. A. H. Shotter.
Mrs. Agnes G. Nunn
Mrs. J. V. Hamilton.
Mr. A. C. House
Mr. L. H. Stofer.
c/o The Union
Trust Company
Cleveland, Ohio,
do do
do do
do do
do do
do
do
do
do
do
do
do
do
do
do
do
do
do
do
do
do
2440 Albatross St.,
San Dieco, Calif.
12526 Cedar Rd.,
Cleveland
Heights, O.
c/o Cleveland &
Buffalo Transit
Co., Cleveland,
O.
c/o The Union
Trust Company
Cleveland, Ohio,
do do
do do
1294 Ethel Ave.,
Lakewood, Ohio.
9511 Euclid Ave.,
Cleveland, Ohio.
1816 Union Trust
Building, Cleve-
land, Ohio.
1751 Page Ave., E.
Cleveland, Ohio.
c/oJ.R. Nutt, Stop
nVi Ridge Rd.,
Wickliffe, O.
1438 Union Trust
Building, Cleve-
land, Ohio.
1696 Lee Road,
Cleveland
Heights, O.
6533 Hollywood
Blvd., Los Ange-
les, Calif.
Dalton, Ohio.
1276 West Third
St., Cleveland,
Ohio.
2440 Albatross St.,
San Diego, Calif.
2440 Albatross St.,
San Diego, Calif.
1201 Union Trust
Building, Cleve-
land, Ohio,
c/o The Union
Trust Company,
Cleveland, Ohio.
9108
STOCK EXCHANGE PRACTICES
Exhibit U-13-9d — Continued
Common
Preferred
Name
Folio
Certificate
numbers
Shares
each
Shares
Certificate
numbers
Shares
each
Shares
Address
T.C.467
" 468
50
50
30
20
50
50
30
20
T.P.444
" 445
" 446
" 447
50
50
30
20
50
50
30
20
SHEET NO. 11— COntd.
Mrs. Katharine A.
Rockwell.
Mr, L. 0. Carr, Jr...
Ravenna, Ohio.
3360 Equitable
" 469
Dr. T.D.Rowley.. -
Building, 120
Broadway, New
York.
2919 Coleridge Rd.,
" 470
Miss Margaret H.
Campbell.
Cleveland
Heights, 0.
c/o J. R. Nutt, Un-
ion Trust Co.,
Cleveland, 0.
]
ilXHIB
IT U-
■13-9e
T.C. 471
" 472
20
10
10
10
10
10
10
10
10
20
10
10
10
10
10
10
10
10
T.P. 448
" 449
" 450
" 451
" 452
" 453
" 454
" 455
" 456
20
10
10
10
10
10
10
10
10
20
10
10
10
10
10
10
10
10
SHEET NO. 12
Mr. Q. T. Rockwell.
Mrs. Nellie Froaz .
1873 Farmington
Rd., E. Cleve-
land, 0.
2285 Coventry Rd.,
" 473
" 474
" 535
Miss Margaret Otis.
Miss Margaret Prin-
gle.
Mrs. Alice Quinn
Cleveland
Heights, 0.
do do
do do
do do
" 476
" 477
Miss Matilda Dow-
ling.
Miss Mary Quinn . .
c/o The Union
Trust Company
Cleveland, Ohio.
415)^ Sixth St.,
" 478
" 479
Mr. Wm. H. Jack-
son.
Eneric von Pflugl
Marietta, Ohio.
2285 Coventry Rd.,
Cleveland
Heights, 0.
Chateau de Belle-
rive, CoUonge—
Bellerive, Gene-
ve, Switzerland.
25, 000
25, 000
Jan. 18, 1926: Received the above Certificates.
C. W. Carlson, A. V. P.
Exhibit U-13-10
March 22, 1926.
Mr. R. R. Mentz,
Manager, Credit Department,
The National Bank of the Republic,
Chicaqo, Illinois.
Dear Sir: As you may know, the United Milk Products Corporation, inquired
about in your letter of March 19th, was incorporated under Delaware laws as a
merger of condensed milk plants in various part of the country, the early part of
this year. At the time of incorporation it was stated that the company's capital
stock consisted of 250,000 shares of 7% Cumulative Preferred, par SlOO, and
callable at $110, and 250,000 shares of no par value Common stock. There is at
present outstanding around $13,000,000 of Preferred, and $14,000,000 of Common
stock.
As yet the company has issued no financial statements, although we are told
that one is to be issued some time soon. We understand the company is in a
good financial position, with around $6,000,000 of cash and practically no debts.
STOCK EXCHANGE PKACTICES 9109
Tho market for both the Preferred and Common stock is largely in New York.
Although they are not listed, they are quoted by brokers in unlisted securities.
We notice that the New York Times of Friday, March 19th, in the Industrial
Section of the Miscellaneous Market Quotations, lists the Common at 84 bid,
90 asked, and the Preferred at 87 bid, 90 asked.
We hold the management of the company in very high regard, and feel that the
people associated with it represent some of the best milk people in this country.
Very truly yours,
William Tonks, Vice President.
ENW:ER
Exhibit U-13-11
April 9th, 1926.
Mr. W. K. Adams,
Vice-President, First Wisconsin National Bank,
Milwaukee, Wis.
Dear Sir: As you may know, the United Milk Products Corporation, inquired
about in your letter of April 8th, was incorporated under Delaware laws as a
merger of condensed milk plants in various parts of the country, the early part of
this year. At the time of incorporation it was stated that the company's capital
stock consisted of 250,000 shares of 7% cumulative preferred, par $100, and call-
able at $110, and 250,000 shares of no par value common stock. The market
for both the preferred and common stock is largely in New York. Although they
are not listed, they are quoted by brokers in unlisted securities.
The company is in strong cash position and we hold the management of the
company in very high regard and feel that the people associated with it represent
the best experience in the milk business in this country.
If you are making inquiry from the standpoint of their credit for mercantile
purposes, you may tell your client the company's obligations will always be paid
promptly.
Yours veiy truly,
William Tonks, Vi'^e-Presidenl.
A-1
Exhibit U-13-12
December 24, 1926.
Mr. George F. Batcholder,
Lake Forest, Illinois.
Dear Sir: Your letter of November 22nd, regarding the United Milk Products
Corporation, has just come to our attention. We are unable to account for the
delay, but the letter apparently was pigeonholded through some error in one of
our departments.
To our knowledge, neither a prospectus nor a circular on this Company has
been published. At the time of the formation of the company, it was stated that
capitalization consisted of $25,000,000 of 7% Cumulative Preferred stock, and
250,000 shares of no par value Common stock. It is our understanding that
there was issued at that time $13,404,000 of the Preferred stock, and aU of the
Common.
No statements of the company are available, but some of our officers have
seen the company's statement, which we understand shows an excellent financial
condition, the company having large cash balances, with no debt.
Regular dividends of 7% are being paid on the Preferred stock, and we under-
stand that the company earns a very nice surplus over and above this dividend.
Very truly yours,
AFK:RR • , Vice President.
JPH
9110 STOCK EXCHANGE PRACTICES
Exhibit U-13-13
January 27th, 1928.
Mr. D. B. A. Richardson,
Manager Statistical Department,
Standard Statistics Company, Inc.,
47-49 West Street, New York, N.Y.
Dear Sir: Your inquiry in regard to United Milk Products Corporation has
been handed to me in view of my knowledge of that situation. I am very sorry
to report, however, that I cannot send you a financial statement of this company,
although the company's operations are known to us rather intimately. As yet,
the company has not seen fit to issue any statements of any sort, but it is not at
all impossible that in the not distant future they will decide that the time has
arrived when the complete statement may be given out to all stockholders. In
general, however, I may say that the company is very highly regarded by us here;
that we have the highest respect for the quality of the management, which to our
minds is one of the best in the industry in America, and that we know the com-
pany to be doing very well. As you probably know, they do not owe a dollar to
any one, and are in the habit of discounting all bills. They are in a very strong
cash position, while their current position generally is exceptional.
Having been organized only two years ago, through the consolidation of some
fift}' or more milk companies scattered from Loleta, Calif., through Wisconsin,
Illinois, Indiana, Michigan and New York State, much of their time and attention
during the past two years have been devoted to the consolidation and correlation
of these scattered operations. That work has now been very successfully com-
pleted, and in the meantime operations have been most satisfactory. The future,
however, should in my judgment be even more gratifying to the stockholders,
and I am inclined to consider the 7% Preferred stock at current prices a very
attractive investment issue, while the Common stock has very distinct and attrac-"
tive possibilities. Further than this I cannot speak in view of the fact that the
company gives us our information under the seal of confidence, but, as already
stated, I should not be surprised to see figures doubled in the not too distant
future.
Very truly yours,
JPB:LRA , Vice President.
Exhibit U-13-14
May 6th, 1926.
Re United Milk Products Corporation
This company was incorporated under the laws of Delaware; authorized
$25,000,000, 7% cumulative preferred stock, of which there is outstanding about
$13,400,000; authorized 250,000 shares common stock without par or stated
value. The statement of the company shows it is all outstanding. We under-
stand, however, there has actuallj' been issued about 143,000 shares.
The company owns plants located in New York, Ohio, Indiana, Illinois, Michi-
gan, Wisconsin and California. They are wholesale manufacturers of condensed
milk, and we are told that they supply all the big baking companies with the milk
used by them.
No statement of the company is available for the public. The company has no
debts except current accounts and has large cash resources. Net quick assets,
mostly cash and liberty bonds, equal to about $50.00 per share for all the preferred
stock outstanding.
The company was formed by consolidation of a number of condensed milk
companies, the principal one being the Western Reserve Condensed Milk Com-
pany of Cleveland. The United Company began business January 1st, 1926, but
it was in reality a continuation of the successful business carried on by these com-
panies over a long period of years.
The first cjuarterly dividend on the preferred stock was paid on April 1st. The
earnings of the company are very satisfactory.
STOCK EXCHANGE PRACTICES 9111
I personally feel that the preferred stock is an excellent investment and will
not only pay a good return in the way of dividends, but if held for a few years will
show a very handsome profit. It is now selling around 85 to 90. The common
stock has sold as high as 116 — now selling between 60 and 70. It is more of a
speculation, but from the way the business is going I would not be surprised to see
it earn the first year a very substantial surplus after paying dividends on the
preferred.
The men in the control and management of the company, who have their
fortunes invested in the business, are thoroughly practical, and I believe recog-
nized as the best men in the industry. I have confidence in the securities of the
company and in its management.
J. P. HUTT.
Mr. ToNKs: The above to be used by your department with discretion.
9112 STOCK EXCHANGE PRACTICES
(Exhibit U-13-15a faces this page)
LEDGER SHEET
TriLE OP ACCOUNT •
^/rt-^c/y
Y^o o o
V o o a
0' ej a 0
1' o o o
^o oo
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fooo
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/ O O CJ o
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y~e/oo
v
•
Exhibit U-13-15a
LEDGER SHEET
TiTi,« or AOOOUKT
OCBTT ' OncOtT
«*£ 4*y-. /^^ iHf.f''^^^ ff
1
/!<:3 o o . •
/ o O o
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/ o o o
JU i 'ke rf 'ho (*-r
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Exhibit U-13-15b
STOCK EXCHANGE PRACTICES 9113
(Exhibit U-13-15b)
9114 STOCK EXCHANGE PRACTICES
(Exhibits U-13-17a and U-13-17b)
'
■ >-^
_
■ ■■ ^
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3. VTJ
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n ►-■r.ic.c-- „ :, « t,'' / < '
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5' ).o'i*,r!s.r?
3n?t
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Exhibit U-13-17a
.fcoi aL
o o o o \ thA^ : ^1
a o o o (7 3. 1
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•J I ? '*■' 1^ I 7 » 13
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Exhibit U-13-17b
3- A./»
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5, -U~)>vt2i'>^
X fcl; r o o e o o
ni«k)
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^ ool V{' „0 1^ CM,„© j . rq-t
,^ „ I ajro o • o
,A.jd%.U)Gl5^*T© is 00 0 0 ,
Exhibit U-13-17c
STOCK EXCHANGE PRACTICES 9115
(Exhibit U-13-17c)
9116 STOCK EXCHANGE PRACTICES
(Exhibit U-13-17d)
-SUftji^k.
2,*, G., (3. A^. &J>. Q\i *> , /^- -^
cnTS. llCtC/v/^bi
!<-,<.. I FU-
■v^ 6 .-P. Pn*^ Sip,';
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b« .."■- =■ i ^ -.L-'^Sil VRl S J'l li 1,1. ^
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f.i>fr:>*\£^ (3fjt
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.^v;- •
/^7'33/
I * ip r
Exhibit U-13-17d
Unit^ Milkf ro^Acts Corporation
• * * * GBNERAL OFFICES
tLKVhLA]9D;oAQ* _*1 « '926
PAY TO TlIE ORDER OF
:.g.4L:>^4^_
N9___M61
♦vSi^e^^e.
DOLLARS
To Th e Union Tru st jSfitfdPANiS, I •
6-10 Cleveland.Ohio.
UNlTKIHil
it
f
Ay A
-_ ^
•
M^
Exhibit U-13-18 (front)
a'B-s:-^';"
^ v?r53?-'/i.fC''7?f t«Si'S«'VT
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• • •
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^^
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1 •■••
•
• • •
• •
• •>
7
Exhibit U-13-18 (reverse)
STOCK EXCHANGE PKACTICES 9117
(Exhibit U-13-18)
9118 STOCK EXCHANGE PRACTICES
(Exhibit U-13-19)
THE UiiION TRUST COi-IPANY "™""'*
6-10 129472
r TO THE ORDER OF
6 - lO • • •MAVi ^ JTICE
*. •• • • •
7* ^t^tVELANI^ToHIO
JUN 2- 1926
<«t«|
%c^fi^£l£>&
• • • • • •
TO •*• J*.*:",
THE CHASE NATIONAL BANR T?; ••% .,
1-74 NEW YORK CITY
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Exhibit U-13-19 (front)
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Exhibit U-13-19 (reverse)
STOCK EXCHANGE PRACTICES
9119
Exhibit U-13-20a
LEDGER SHEET
Title of account Southern Baking Company
Date
1926
June
Dec.
1927
Feb.
April
May
June
Oct.
Nov.
Dec.
Items
B.\
5000 shs. 8% Pfd 1250 shs. N.P
Comn
C. L. Bartshe 1000 Pfd. 250 Comn
Bal. 4000 Pfd. 1000 Comn.
Bot.
600 shs. 8% Pfd. 150 shs. N.P.
Comn
Sold 2% 4069
Stanley Zeit 100 Pfd. 25 Comn..
Sold C%4068.
Ruth Percival 100 " 25 " ...
4400 Pfd. 1100 Comn.
Sold 300 shs Pfd...
" 100 " "
4000 Pfd 1100 Comn
Sold 1000 Pfd. 250 Comn @ $100
per sh. pfd. & .\ccrued Int. @
6% Apr. 1st to date and Comn.
as bonus
Int. .$200 Cr. to Int. rec'd acct.
3000 Pfd. 850 Comn.
Sold 500 shs Pfd
40
60
" 250 Comn 150
2500 Pfd. 600 Comn
" 150shsComn
2500 Pfd. 450 Comn
" 150 " Comn
" 60 " Pfd....
2440 Pfd 300 Comn.
" 100 " Pfd
" 75 " Comn
2340 Pfd 225 Comn.
" 200 " Pfd
" 225 " Comn
2140 Pfd.
" 100
4040 Pfd.
" 300
" 200
1540 Pfd.
" 100
1540 Pfd.
" 100
" 100
1240 Pfd.
" 200
1040
" 100
" 200
770
Sold 740 shs Pfd at.
Pfd.
Pfd.
Pfd.
Pfd.
Pfd.
Pfd.
Pfd.
Pfd.
Forward.
Debit
$500, 000
60,000
560, 000
34, 521
40
Credit
$100, 000
10,000
10,000
28, 938
9,673
158,611
100,000
44,980
28, 745
332, 336
16, 497
348, 833
16, 570
5,262
8,771
6,672
17, 542
19, 791
423, 441
8,771
432, 212
26, 088
17. 392
475, 692
8,498
484. 190
7,796
7,898
499, 884
9,996
509.880
5,198
10, 400
525, 478
00
Balance
$400, 000
460, 000.
450, 000
440, 000
401, 389
301, 389.
227, 664
127. 787
60.115
50, 119
34, 521
34, 521
00
00
00
00
00
00
00
40
40
40
15
40
Exhibit U-13-20b
1927
Dec.
28
Forwarded. .. .
34, 521
40
$35.00 per sh less Tax 2^ per
share 34.98 net
25, 885
8,636
20
20
Loss to Trading a/c
34,321
40
175541— 34— PT 20-
-25
9120
STOCK EXCHANGE PRACTICES
Exhibit U-13-21
Market prices of United Milk Products Corporation Stock, taken from standard
corporation records
(Listed on the New York Curb Exchange.)
Common
Preferred
High
Low
High
Low
1932
1
6
21
42%
80
H
%
H
2^
14
36
12
37
65
80
91
94
10
1931
15
1930
44
1929 -.-
50
1928
67
1927 . -
86
Exhibit U-13-22
United Milk Products Corporation
COMMON stockholders' PROTECTIVE COMMITTEE
Cook, Nathan & Lehman
Counsel
Frederick G. Brown
20 Pine Street, Nexo York
Secretary
Charles M. Connfelt
Chairman
Robert S. Bright
Jesse Spier
Henry M. Barlow
Committee
April 10, 1929.
To the Holders of Common Stock of United Milk Products Corporation:
Dear Sirs: At the annual meeting of the stockholders of your Corporation,
one of the officers was questioned about the affairs of the Corporation. Further
examination was suspended, however, because the attorneys for the Corporation
consented to release accountants employed by one of the members of the under-
signed committee to make an investigation of the affairs of your Corporation
from restrictions imposed upon them by the management of your Corporation.
Such restrictions prevented disclosure by the accountants to their client of the
facts ascertained in the course of their investigation.
As a result of the investigation of the accountsnts thus made available, it is
disclosed that the Corporation received no money or property for all of its 250,000
shares of Common Stock, although at the time when the stock was issued the
shares were selling and were purchased by many stockholders in the open market
in New York at prices in excess of $100. per share. It appears quite clear that
certain persons then in control of the Corporation profited improperly at the
expense of the Corporation and its stockholders.
The investigation of the accountants also disclosed that the affairs of the Cor-
poration have not been conducted in such a manner as the stockholders have a
right to expect from a management acting solely in the interests of the stock-
holders whom they represent.
The situation makes it imperative therefore for the Common stockholders of
United Milk Products Corporation to unite for the protection of their interests
and the assertion of their rights, and for that purpose the undersigned have, at
the request of stockholders, consented to act as a Committee under the terms of a
Protective Agreement, a copy of which is enclosed herewith.
You are invited to deposit your certificates of stock with The New York Trusc
Company, 100 Broadway, New York City, the Depositary under the Protective
Agreement, which will issue transferable certificates of deposit therefor. Cer-
tificates should be properly endorsed in blank with necessary transfer stamps
affixed and with signatures properly guaranteed. As the Committee will require
funds for the enforcement of the rights of the stockholders and as shares of
Common Stock of LFnited Milk Products Corporation do not afford sufficient
basis for the making of loans to provide such funds, a deposit of $1.00 per share
to provide a fund to meet the expenditures, obligations, and liabilities of the Committee
should accompany your certificates.
L_PRe&ye¥S-€©RPG>RA?t€>H-— ^
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REGISTER OF CASH RECEIPTS
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Exhibit U-13-24a
IWCCfVID FKOM
i^'
^U.^
JNTTED -MILK PRODUCTS
;grporat»on^-
REGISTER OF CASH RECEIPTS
I 0 ori l<l.
-- — uArm' :^Vu.-«^u7— 4Axi.^,>''C
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Exhibit U-13-24b
STOCK EXCHANGE PRACTICES 9121
In the judgment of the Committee, your interests will best be served by an
immediate deposit of your shares. The Committee will represent only those
who deposit their shares.
Very truly yours,
Charles M. Connfelt
of Hayden, Stone & Co., New York,
Chairman^
Robert S. Bright
of Thos. A. Biddle & Co., Philadelphia,.
Jesse Spier
of Jesse Spier & Co., New York,.
Henry M. Barlow
of New York
Committee..
Exhibit U-13-23
United Milk Products Corporation,
^000 West 14th St., Cleveland, Ohio, 4-17-29
To the Holders of Common Stock of United Milk Products Corp:
Dear Sirs: A misleading letter, dated April 10, 1929, addressed to you by
certain persons, styling themselves "Common Stockholders' Protective Com-
mittee", has come to the attention of your President and the other officers of
your corporation and a demand liaas been made upon each member of such Com-
mittee for an immediate and complete retraction thereof.
It is not our purpose to enter into controversial letter writing as a result of that
Committee's activities, nor do we believe that it is necessary to justify to you
the acts of your directors and officers. We do feel, however, that those of you
who purchased your stock in the market are entitled to know that property,
which constituted adequate consideration for the issuance of the Common Stock
of the corporation, was actually received by the corporation, a fact known to all
stockholders who acquired their stock direct from the corporation, and that no
one in control of the corporation profited improperly in any way at the expense
of the corporation and its stockholders.
Your directors and officers have at all times devoted their best efforts to further
the interests of the corporation, and every action taken has had that end in view.
We feel confident that the progress that your corporation is making indicates
that we have built upon a substantial foundation and that the formation of the
Stockholders' Protective Committee and the deposit of stock, as requested by
such Committee, is not only unnecessary and inadvisable, but may cause a
stockholder so depositing his stock to pay his proportionate share of all expenses
which the Committee in its absolute discretion may see fit to incur, including^
compensation to the members of such Committee.
Disgruntled stockholders, who may have purchased Common Stock in the-
market at high prices with the expectation of making quick speculative profits,
would best serve their own interests, as well as the interests of the other stock-
holders, by permitting the management to devote its entire time to the operations
of the corporation.
Very truly yours,
C. L. Bartshe, President,
United Milk Products Corporations-
Business extension has copy of this letter.
Exhibit U-13-25
(Exhibits U-13-24a through U-I3-24b face this page)
Mat 22, 1926.
Chicago, Wilmington & Franklin Coal Co.,
Chicago, III.
Gentlemen: It is a pleasure for us to say that the United Milk Products
Company, subject of your letter of May 21st, is a thoroughly responsible cor-
poration and a good risk for anything required from you. "This company was.
formed by consolidating a number of the condensed milk companies.
9122
STOCK EXCHANGE PRACTICES
The United Milk Products Company has large cash resources and no debts; of
any consequence.
Yours yery truly,
Arthur L. Moler,
C-8 Asst. Credit Manager.
Exhibit U-13-26
Industrials
Bulk of crude oil run through refineries is purchased under contract.
Sales — Gasoline sales for the year ended March 31, 1930 were 41,873,923
gallons, including export sales, compared with 27,764,837 gallons in preceding
year.
CAPITAL STOCK
Authorized, 1,000,000 shares of no par value; outstanding, Dec. 31, 1929,
188,411 shares.
Capital Stock Changes — Authorized capital was changed March 31, 1928,
from $5,000,000, par, $25, to $1,600,000, par, $8. Stockholders received one
new share for each share of $25 par value stock owned, and also the right to buy
"two new shares for each three owned at a price of $8 a share. Authorized capital
was changed in November, 1929, from $1,600,000, par, $8, to 1,000,000 shares of
■no par value, and each old share exchanged for 1 new share.
Subscription Privilege — Stockholders of record July 15, 1929, received the
right to subscribe to 1 share of Company's stock at $12 per share for each 40
shares held. Right to subscribe expired Aug. 12, 1929. Stockholders of record
April 15, 1930, received the right to subscribe to 1 share of Company's stock at
$15 per share for each 30 shares held. Right to subscribe expired May 12, 1930.
Transfer Agent — Stock transferred at company's office.
Registrar — Citizens National Trust & Savings Bank, Los Angeles, Cal.
Listed — Los Angeles Stock Exchange.
Price Range-
1929
1928
1927
1926
1925
1924
High
153/6
10
14H
4
3
6
17H
10
223-^
Low.- -
13M
Dividends — Annual rate of 8% paid quarterly from beginning of operations in
July, 1923, to Sept. 30, 1924; none thereafter until July 30, 1929, when the initial
quarterly dividend of 30 cents, on stock of par $8, was paid; Oct. 31, 1929, 30
cents. On new no par stock initial dividend of 30 cents i^aid Jan. 31, 1930;
April 30, 1930, 30 cents.
Annual Meeting — Third Tuesday in June, at Los Angeles, Cal.
Income account
Yr. End.
March 31,
1930
Yr. End.
March 31,
1929
• Yr. End.
Dec. 31,
1927
Sales -. — -
$8, 106, 423
7, 569, 711
$6, 130, 526
5, 821, 083
$5, 316, 8.34
Cost of sales, exps., etc
5,280,813
Net earnings
$536, 712
145, 910
$309, 443
$36, 021
Total inconie .
$682, 622
233, 195
$309, 443
3, 253
$36, 021
Interest, etc .
26, 690
Surplus - --—
$449, 427
194, 305
$2.31
$306, 190
183, 359
$1.71
$9, 331
Shares outstandinE _ - ■
145, 859
Earnings per share
$0.06
♦ For the 3 months ended March 31, 1928, Company reported a loss of $42,710.
STOCK EXCHANGE PRACTICES
General balance sheet, March 31
9123
1930
1929
Assets —
Property account, less deprec.
Contracts and goodwill
Invests, in & advs. to a£Rl. cos..
Securities owned
Current assets
Deferred charges -.
Total.
Liabilities —
Capital stock
Due to Qilmore Co
Purchase money obligations-
Current liabilities- -
Notes payable
Surplus
Total.
$1,824,817
250, 000
378, 163
16, 153
1,091,914
74, 867
$3, 635, 914
$1, 554, 410
157, 780
69, 809
1,215,800
638, 085
$3, 635, 914
$1,215,235
250, 000
220, 017
17, .557
856, 423
47, 371
$2, 606, 603
$1,466,872
210, 094
68, 146
503, 796
45, 000
312, 695
$2, 606, 603
Officers: E. B. Gilmore, Pres.; C. S. Beesemeyer, V-P. & Treas.; S. M. Salis-
bury, V-P. & Sec.
Directors: E. B. Gilmore, C. S. Beesmeyer, S. M. Salisbury, Dwight Whiting,
C. C. Magenheimer, L. G. Barton, Oscar Howard.
Main Office, 2423 E. 28th St., Los Angeles, Cal.
United Milk Products Corporation
History. — Incorporated in 1925 in Delaware and acquired properties located in
New York, Michigan, Ohio, California and other states. Principal products are
condensed milk, evaporated milk and other milk products.
capital stock
Authorized 250,000 shares Common, no par value and $25,000,000 7% cumu-
lative Pfd., par $100; outstanding 209,394 shares Common and $7,401,700 Pfd,
Transfer y4ge«i.— Corporation Trust Co., Jersey City, N. J.
Market. — Traded in on New York Curb Exchange.
Price Range-
1929
1928
1927
Preferred—
High .
80
50
21
2H
91
76
42%
17
94
Low .. ..... . .
86
Common —
High..
80
Low .
36
Dividends. — Pfd. dividends paid quarterly J, A, J & O 1. None reported on
Common.
Consolidated income account, years ended December 31
[Funded debt— None]
Net earnings..
Depreciation
Federal Income tax reserve
Net profit
Excess of par value of 7% Pfd. stock purchased and cancelled during year at
cost - -
Other income
Total income
Preferred dividends
Surplus for year...
7% Preferred shares outstanding..
Times Preferred dividend earned.
Common shares outstanding
Earnings per Common share
1929
$803, 035
209, 114
67, 366
$526, 555
63, 278
$589, 833
621, 096
$68, 737
74,017
1.14
209, 394
$0.33
1928
$908, 854
220, 580
83, 781
$604, 493
148, 444
8,029
$760, 966
571.655
$189,311
76, 755
1.42
209, 394
$0.20
9124
STOCK EXCHANGE PRACTICES
CONSOLIDATED BALANCE SHEET, DECEMBER 31
1929
1928
Assets —
Property account, less depreciation .
Milk supply
Brands & trademarks
Current Assets —
Cash
Investments U. S. Govt, bonds
Trade accounts receivable
Inventories
Total current assets
Deferred assets.
Total .--.
■Liabilities —
Capital stock
Current Liabilities-
Dividend payable.-
Accounts payable and accrued taxes
Income tax for current year
Total current liabilities
Capital surplus
Earned surplus
Total
Net Working Capital
$2, 444, 949
4, 364, 662
10
$390, 639
405, 600
809, 441
1, 191, 088
$2, 796, 768
95,542
$9, 701, 931
$7, 401, 700
$129, 530
488, 518
67, 365
$685, 413
537. 468
1, 077, 350
$9, 701, 931
$2,111,355
$2, 594, 544
4, 364, 662
10
$341, 579
1, 373, 800
822, 279
469, 474
$3, 007, 132
83, 708
$10, 050, 056
$7, 675, 500
$137, 253
607, 442
83, 781
$828. 476
537, 468
1, 008, 612
$10, 050, 056
$2, 178, 656
Officers: C. L. Bartshe, Pres.; J. L. Harris, B. F. Amos, G. E. Bartshe, V-Ps.;
W. L. Fox, Treas.; C. P. Lindahl, Sec.
General Office, Cleveland, Ohio.
The Foundation Company of Canada, Limited
History. — Incorporated under The Companies Act, Canada, Sept. 22, 1924.
Acquired the contracting business and plant of The Foundation Company of
New York in Canada, as represented by the issued capital stock of Construction
Equipment Company Limited. The Company operates a general contracting
business throughout Canada, specializing in building construction, industrial
plants, power developments and general engineering and marine construction.
Through its subsidiaries Foundation Maritime Limited and The Foundation
Company of Ontario Limited, the Company carries on a general contracting
business in the maritime provinces and in Ontario. Through Construction
Equipment Co. Limited and Foundation Maritime Limited, the Company owns
and operates yards and shops at Dorval, and Montreal, Que., Toronto, Ont.,
and a maritime salvage station at Rimouski, Que. Company owns a general
construction plant, salvage vessels, tugs and derrick boats.
Change in Control. — In February, 1929, The Foundation Company of New
York sold its entire holdings in The Foundation Company of Canada, Ltd., to
Drury & Co. Ltd., Montreal.
CAPITAL STOCK
Authorized, 150,000 shares Common of no par value; outstanding, 84,600
shares.
Capital Stock Changes. — At a special meeting held May 22, 1929, stockholders
approved a change in the authorized capitalization from $360,000 7% cumulative
First Pfd., $250,000 7% cumulative Second Pfd., par of both classes of Pfd., $100,
and $300,000 Common, par. $25^ to 150,000 shares Common of no par value.
The First Pfd. and the Second Pfd. stock were exchanged for no par value Com-
mon on the basis of one share of * * *
Exhibit U-13-27
December 12, 1925.
Mr. C. S. Castle,
c/o Standard Trust & Savings Bank,
Chicago, III.
Dear Charlie: I have your letter of the 9th. Since writing you regarding
the United Milk Products Corporation I have gathered some more information
STOCK EXCHANGE PRACTICES
9125
which confirms your figures in regard to working capital. No concern seem to
want cash for their property and all are demanding stock. Therefore, there is
hardly any underwriting to' be done, and the only way that you can get some
stock' is through some friend, and I would advise you to keep after him in order
to get as much as you can. The distribution is going to be made early in the
year, and very few will be able to get any of the stock.
I have been told that the common stock has already been bid for at 30 and that
40 is the lowest offering that has been made.
Very truly yours,
— — , Vice-President.
JRK
Exhibit U-13-28
Fluctuations of stock of United Milk Products Corporation
[Taken from Commercial & Financial Chronicle (Unable to find 1926 and 1927)]
LISTED ON NEW YORK CURB
6/8/28..
6/15/28..
6/22/28..
6/29/28..
7/6/28...
7/13/28..
7/20/28..
7/27/38..
8/3/28...
8/10/28..
8/17/28..
8/24/28..
8/31/28..
9/7/28...
9/14/28..
9/21/28..
9/28/28..
10/5/28. .
10/12/28,
10/19/28
10/26/28.
11/2/28..
11/9/28-.
11/16/28.
11/23/28
11/30/28.
12/7/28. .
12/14/28.
12/21/28.
12/28/28.
Common Stock
;h
Low
42H
40
•iQli
36}^
•Mi
33
34
32
31
22
29K
24}^
25^
22M
23
22K
22
17
19
18
25H
20^
27
20
32H
27H
31
27
301^
25J4
26
25
24
22
22
21
21
201/^
26
20M
25^^8
22
23
22
221^
22
23
2\H
2VA
20
20%
20H
20
17
ISM
16
18
17
17M
16
Vol.
Trading
in Shares
Per Week
1,500
900
1,200
900
600
2,200
900
500
300
300
1,400
3,000
4,600
2,900
1,200
800
2,400
1,100
2,200
500
2,000
1,200
2,100
1,400
1,700
400
1,700
300
1,700
5,100
Preferred Stock
High
91
88
86
83
821^
83
79
76
82
80
80
81
80
78
78
78
80M
85M
83H
81^
SOVs
80
79
80
Low
91
88
84
80
82
78
78
76
80
79M
79
81
80
78
76
76
78^
84?i
81J^
80H
80
79H
79
80
Vol.
Trading
in Shares
Per Week
25
29
200
525
200
226
75
25
30
175
60
50
50
100
125
175
400
200
500
350
300
825
50
100
Exhibit U-13-29
July 26th, 1927.
Mr. Geo. T. Wolf, President,
First State Savings Bank,
Three Rivers, Michigan.
Dear Sir: It is a pleasure for us to say that the United Milk Products Com-
pany, subject of your letter of July 23rd, is a strong corporation and in an excel-
lent position and that in our opinion the farmers in your vicinity need not hesitate
to conclude arrangements for disposal of their products to this company.
The capitalization of this company, which was a consolidation of a number of
condensed milk companies throughout the country, with $25,000,000 of preferred
stock and 250,000 shares of no-par common stock. The amount originally
9126 STOCK EXCHANGE PRACTICES
issued was about $13,500,000. This will give you some idea of the standing of
the concern. It is our understanding that it has no debt of consequence and has
large cash balances.
Yours very truly,
Arthur L. Moler,
Assistant Vice President.
ALM:C-3
Exhibit U-13-30
Received of The Union Trust Co., Cleveland, O. two thousand seven hundred
Fifty (2,750) shares United Milk Products Corp. N.P. Common, various certifi-
cates all registered "The Union Trust Company"
Date, May 6, 1929.
S. W. Parlson,
May 6th, 1929.
Exhibit U-13-31a
Registered Mail
The Corporation Trust Company,
15 Exchange Place, Jersey City, N.J.
Gentlemen: We beg to enclose herewith, by registered mail, 2750 Shares of
the Common Stock of the United Milk Products Corporation, certificates as
follows:
No. TC1231 for 100 Shares in name of Hornblower & Weeks
" TCI 429 " 75 " " " " " "
" TCI 655 " 75 " " " " " "
" Tdfi82 " 100 " " " " " "
Nos. TC1694 & 5 @ 100 " " " "
" TC2921/26 @ 100 " " " " " "
No. TC2942for 100 " " " " " "
" TC2955 " 100 " " " " " "
" TC2988 " 100 " " " " " "
" TC2994 " 100 " " " " " "
" TC2999 " 100 " " " " " "
Nos. TC3000/2 @ 100 " " "
" TC4055 & 56 @ 50 " " " " " "
« TC4278 & 79 @ 100 " " " " " «
No. TC364 for 100 " " " " James Dunn, Jr.
" TC2104 " 100 " " " " John F. Keena
" TC2397 " 100 " " " " Farrar Tilney
« TC2501 " 100 " " " " Harry J. Kirby
" TC2551 " 100 " " " " Kay & Company
The above certificates have been duly assigned for transfer to The Union Trust
Company, Room 400 Union Trust Building, Cleveland, Ohio, and we would like
certificates issued in the above name as follows:
Exhibit U-13-31b q^ot^l
17 @ 100 Shares 1700 Shares
19 @ 50 " 950 "
1 @ 90 " 90 "
1 @ 10 " 10 "
2750 "
Kindly forward the new certificates to us as soon as possible.
Very truly yours,
C. A. Carlson, Vice President.
CWC.EMS
Encle.
STOCK EXCHANGE PKACTICES 9127
Exhibit U-13-32
[Received by Statistical Dep't. Jul. 20 1927]
Re: Loan to Maurice Briggs,
320 Leader Building.
We have a loan of $10,000, due August 4, 1927, secured by 200 shares of United
Milk Products Common. The present bid price on this stock is 45, making a
total of $9,000, or $1,000 less than the loan.
I called this to the attention of Mr. Crawford, who talked with Ralph Williams,
who said that this loan had been taken up with Mr. J. R. Kraus and C. A. Carl-
son, who had talked to Mr. Nutt.
There apparently is nothing that can be done at this time. The borrower is
unable to reduce the loan.
E. R. Van Horn.
7-20-27
Exhibit U-13-33a
Memorandum Re United Milk Products Corp.
November 7, 1931.
Producing plants of the company number 25.
Book value of all the plants $3, 321, 078. 16
Depreciation 1, 197, 016. 78
Net Value $2, 124, 061. 38
Depreciation is figured 10% each year on machinery and equipment, 2}^% to
3% on buildings, 33^% on motor equipment and 30% on milk cans. The com-
pany is anxious to sell two of its plants and is content to keep the remaining
23 plants. The plants which they would like to sell are
Merton, Wise:
Book value $21, 822
Depreciation 6, 543
Net value $15,279
Possible Sales Value $20,000
Fav, Illinois:
Book Value $80,499
Depreciation 30, 647
Net Value $49, 852
Possible Sales Value $40, 000
If these two plants were sold there would be a net loss of $5,000.
During the month of September, 4 of the 25 plants operated at a loss.
Depreciation is taken monthly and amounts to approximately $200,000 a year.
Inventory:
December 31, 1929 310 cars $1, 191, 088. 17
December 31, 1930 217 " 780,548.54
September 30, 1931 120 " 459,277.55
Current Assets $1, 899, 266. 16
Current Liabilities 310, 299. 90
Net Current Assets 1, 588, 966. 26
Plant Account Net 2, 124, 061. 38
Total Value Exclusive of Milk Supply $3, 713, 027. 64
Exhibit U-13-33b
Including the net plant account and net current assets a figure of $53 a share for
the preferred stock is arrived at. This would leave the item of milk supply, which
is a good will item, as the principal asset (as a going conern) to be set up against
commoon stck of 209,394 shares. Mr. Bartshe and Mr. Havnes estimate that in
9128 STOCK EXCHANGE PEACTICES
a normal year the earnings of the company, after depreciation and taxes, should
amount to $350,000. They do not think that 1932 will be a normal year for many
reasons, one of which is that the Department of Agriculture estimates an increase
by October 1932 of 10% in the number of milk cows,and therefore a corresponding
increase in the amount of milk produced. The annual dividend requirement on
the 69,405 shares of preferred stock outstanding is $485,835. It is therefore
apparent that in no year of normal operation will it be possible to earn and pay the
dividend on the present outstanding preferred stock. If none of the preferred
stock is retired at the end of two years, that is, December 31, 1932, the accumulated
dividends will amount to $971,670. Adding to this present preferred stock out-
standing of $6,940,500, a total of $7,912,170 is shown to be ahead of the common
stock. If the present preferred stock was reduced to $3,500,000 the annual
dividend requirement on this amount would be $245,000 and, assuming the earn-
ing of $350,000 a year, would leave $105,000 a year for the common stock, which
is about 50j5 a share.
Exhibit U-13-33c
As I see the situation, the company will be greatly benefited by any reduction
of the preferred stock and comfortably situated if one-half the preferred stock
could be retired. Retirement of preferred stock will benefit not only holders of
the remaining preferred but also holders of common stock. Mr. Haynes stated
that he thought the cash and Governments in the company's treasury necessary
to carry on its business should amount to $750,000. The present amount of
these two items is $1,007,337, so that there is an excess of $257,337. Personally
I think that Mr. Haynes' estimate of the amount of cash and Governments neces-
sary to carry on the business, even with increased business, is too high. It should
be understood that each year the cash position of the company increases by the
amount of depreciation; i.e. $200,000. I feel that at the present time the company
should use $400,000 to ask for tenders of preferred stock. Assume that the stock
was acquired at $20 a share. This would take up 20,000 shares, which would
reduce the outstanding stock to 49,405 shares and also save a year's dividend when
the stock was retired, or $140,000, and an accrual of like amount for the year 1932;
that is, a total of $280,000. At the present time it is easy for a person to make a
switch from United Milk Products at $20 a share to other securities. As the price
of other securities improve, as they probably will in the near future, the opportunity
to make certain switches will not be so apparent as at the present time.
Otto Miller.
OM:EL
Exhibit U-13-34
("Taken from the personal files of J. R. Nutt")
1117133.
Cleveland Plain Dealer — November 5, 1933 — reports in the E. J. Falkenstein
testimony the following:
"Falkenstein cited records of collateral loans secured by stock in the United
Milk Products Co., in which Nutt was an organizer and large investor, to show
that adequate collateral was not maintained.
"'The way this ties into the investigation,' he explained, ' is to determine whether
loans secured by stock in companies in which officers and directors are interested
obtain special consideration. There is good evidence that, in so far as this con-
cern was concerned, the collateral was not maintained. Mr. Nutt was apparently
a heavy holder of stock in this company. Whether this had influence on mainten-
ance of collateral I am not prepared to state.' "
This is nothing but pure bunk. I was not "an organizer" and was never an
ofiicer or director of the United Milk Products Corporation. My only relation
to this Company was that at the time it was organized I purchased a substantial
block of this stock for my friends and members of my family. This stock was
all turned over in every instance at my exact cost. The members of my fanuly
still retain a large block of this stock.
The records will show that every loan made by the Bank, with this stock as
collateral, was properly margined at the time the loan was made, and as the market
went down additional collateral was secured wherever possible. The fact that
I was a stockholder could have no possible influence with the Finance Committee
in passing on loans where this stock was offered as part of the collateral.
The United Milk Products Corporation never borrowed a dollar from The
Union Trust Company, but on the contrary, kept large balances, at times exceeding
two million dollars. At the time the Bank was closed, the Company had a balance
in excess of $300,000. in its account.
Ayers,
-A I I' ■ «• '
^y^Jv.
,.// APR 1 1927
Tt PAID ll*'C O^Tf
APR / B26 ''
.^'<l%^s^^
isCo- eCo-. / o • • -
DEC . ).^ Jff //fj/^^
Exhibit U-13-36a
DUCRirriGM Cr 0<H.U»TE«AL
rreJ Cerrti gfj i^
X 166-*4/*«h» -t»it*il-14iit product* C«. C^gu ^400 »t 4/6tli«-«f -l«h
-secv«f
nECCIVCD , - - j;
1360Bhs united WilJc rrod. I'f.d exchncgod for l.OeOshs now end chBOk for
v4, 060.00 Meditsd on loan. l,0O0«hs united kiik Coo. cxchcngsd for
16G 44/63!u DO*.
Exhibit U-13-36b
Exhibit U-13-36c
0E5CRIPTI0N OF COLUTERal
l.OSOahs
United ISilk Produqtg Gonroany, Comon
#EC578 at lOOaha #rC581 at oSshs #S«48-»-
^ n/o Jason Orain • :
Onitad Milk Products Co. Pfd.
#rF93eA7-10DBh8 «« #rPIF960 at BOshs
♦/St*s-of-l»h-
X ^^,1
•'i'U^^.MM^'^^^,..^^^^^-' - l^^'^s,^,-^ «<
,-^<.y
Exhibit U-13-36d
„,, Tire 5I.IDDES COtfASY iVy. YBAR Bjgl OCID !t0TES.(l«,O0O,0OO)
i^k oW«uF Bana«aerlc« Bl«ir Corpor^oD
Cl-OSES T'il/jO EXTENSIONS * ,'\ "fO BANKIRS OISC
tICt '^f^/'^ OFFERINO PRICE ff^/V S|i«ClAU TC
o„c»l«y 20, 1930 •<„:;;
6-1-50 ouc 6-1-1B
^_ LMSILITY UNU^rc
PARTICIPATION RECORD
Exhibit U-12-1
AMOtJNT
j-nic*
■I
SIStL 0(-yHKY 2-yr e» KLU NOTJJS tJi.000,000)
SUE Midland Corporation
x/j/ja EXTENSIONS .y^frt ^ /^/
^^^^.Jsn. 3. 19S0
°'-'': 12-Sl-Sl
W.'-^" lis.
.yfcjteA A-e-^ (2. ;>>rooo /^ M7j-«:i "
ovrnsALCs I >
^0^ C^/f^mJTAT'/ii^. - -t^y^o -
REPURCHASES Fm3M OEAl-ERS
. ii
AMOUNT PRIC&
1 **""'! ill ■■ lU* 1*1
'(Z.^) /f'^'-a fy
PARTICIPATION RECORD
Exhibit U-12-2
The KatioiMil City Co,
ACXOUNT CL.OSCS 6.6-31
TOTAi issue $40,000,000 matohity 4-1-66
SC. 1/4 • OCALJIMS OI9C. I/A* L.IABII.ITV ONL
IPrrWIEST 0« OiVIOKND DATrS
Rl^tCS AND ADJUSTMENT*
r-v*fc*-^vC
:-rii^v
ruRCHAftES FNOM OCAUCHft
j.<^j:^-
■^"^
PAmiCIPMION RrCORD
Exhibit U-12-3
ISSUE US SICiUIllSON.KO.'
TOTAL ISSUE fSO,000,000. MATUmTl-15-41
CCOUNT CI.OSE5 '^//V/i / ('
r - /( <J BANKERS DISC. , / f
INTEREST OR DIVIDEND DATES
RESALES AND ACUUSTMCNTS
MOUSE
ADDITIONAL PURCHASES FROM DEALERS
PARTICIPATION RECOKD
Exhibit U-12-4
-->
•• •
,.;o,,f-. THK
v>l.l!ii»?: CCS£;^??Y S-YH &^5t OOtP NOTKS IIB^; 6-1-3$
^--. - /.:.
„_. _ . „.„,..„„ .J^-i^Llt'^^m.-*^] 1
PROFITS MECCI
IVEO ALLOTMENT OF PROFITS
SECURITICS RCPUftCMASCD
OATK C"OUP
TAKE IIP
.si,, ^d.
AMOUNT HOUSE AMOUNr PKNALTV M«T
/v^'^ •■ " .^■•''':
NUMBCWS AMOUNT
i
\
cy^,.^ ^^j-*
rOTAC«
i/'-^f^-;
1 rs9 ALLOrMCNTS
K-ttAI. Ntr PROFFT MCC'D
' m MAMMI
Exhibit U-12-5
STOCK EXCHANGE PRACTICES
9129
Exhibit U-13-35
United Milk Products Company
Dec. 9, 1933.
Owned Dec. 31, 1932
before split up
Present holdings (the
new stock)
Account
Preferred
(shares)
Common
(shares)
Preferred
(shares)
Common
(shares)
J R Nutt -
70
400
50
300
300
1 100
400
400
400
300
700
10
800
50
140
320
40
240
270
880
320
320
320
240
560
8
R H Nutt
133
H F Nutt
8
J N Akins -
E. n. Nutt
400
200
150
200
66
D C Nutt
34
F Nutt
25
J R Nutt Jr
35
Wm F Nutt Est --
E N Krenns & W R Nutt
Totals -
4 420
1 810
3 650
309
The Union Trust Company: Trust Accounts — R. F. Muir
(Exhibits U-13-36a through U-13-36d face this page)
(Exhibits U-12-1 through U-12-5 face this page)
Issue:
Newton Steel Co. 6's
Syndicate closed —
" (81(4 per M)
Exhibit U-12-6
syndicate expenses
Profits received
Allotment of profits
Securities re-
purchased
Date
Group
Amount
House
Amount
Penalty
Net
Num-
bers
Amount
/'883,000
^i take up,
143,000.
Hayden Miller
(U on 15).
Midland —
(banking).
(lMon37).
Purchase
Banking
Selling
Hord - Curtiss
(sell).
N. S. Talbott.
McDonald-
Callahan.
R. V. Mitchell
& Co.
Schultz Bros--
Spaneer-Kam-
erer.
lis
1, 103. 75
178. 75
112. 50
62.50
555.00
12, 000. 00
3, 983. 06
12, 141. 25
137. 50
206. 25
687. 50
687. 50
87.50
30.00
First Nat.
Duluth Co.
Sec. & Inv.
Dept.
Alliance
First Nat.
125,000
100, 000
5,000
\i on take
up.
>i 11
II f(
156. 25
125. 00
6.25
Take up..
4/4/30
4/4/30
4/4/30
First Nat.
Duluth Co.
Sec. & Inv-.
Alliance
First Nat.
First Nat.
Duluth Co.
125, 000
100, 000
5,000
25,000
1?^ Rem.S.C.
It a
<( II
Hon BG.--
1, 718. 75
1, 375. 00
68.75
4/5/30
4/9/30
4/10/30
It
n
II
3, 450. 00
125. 00
Tot!
31, 973. 06
3, 450. 00
Less alloti
Tot
re
uents
al net profit
28, 523. 06
125. 00
28. 398. 06
Remarks:
9130
STOCK EXCHANGE PRACTICES
Exhibit U-12-7
Issue: National Steel Corp. first coll. mtge sinking fund gold bonds 5's due 4-1-56
Expenses — purchase Special Banking Syndicate selling %
Profits received
Adjustments
Securities purchased by managers
Date
Group
Amount
House
Amount
Numbers
Amount
Customer
Take up
Estates Dept
Merril-Hawley Co.
1, 500. 00
400. 00
TM 15512.
TM 15491/
95.
1, 000. 00
5, 000. 00
Mrs. A. Hawirth
8/7
Selling com.
Syndicate.-
7, 865. 00
First Nat. Bk.
No. Baltimore,
Ohio.
8/7
Purchase
Banking
13, 335. 00
Special a/c--.
Trading
248. 92
Othfir houses
Penalty...
Totals
21, 448. 92
1, 900. 00
1, 900. 00
135. 00
Less adjustments.- ._
Tc
)tal net profit
rec'd
19, 548. 92
Eemarks:
Exhibit U-12-8
Issue: International Match Corporation 10-year 5's due 1-15-41
Expenses — purchase Special Banking Syndicate selling
Profits received
Adjustments
Securities purchased by managers
Date
Group
Amount
House
Amount
Numbers
Amount
Customer
Take up .
Penalty
3/12
Selling com..
Syndicate
1, 800. 00
Purchase
4/1/31
Banking
Special
1,001.97
Trading .
Other houses
15.00
T(
Less adj
T(
jtals
2, 816. 97
ustments . _.
)tal net profit
rec'd
Remarks:
STOCK EXCHANGE PRACTICES
9131
To Estates Trust Dept.,
The Union Trust Co.
Exhibit U-12-9
Cleveland Ohio, May 1, 1931.
Sold to you:
Union Cleveland Corporation
Union Trust Building
$50,000 00
National Steel Corn 5*s
99
$49, 500. 00
208. 33
Int. from 4/1 to 5/1 (1 month) @ 5%
National Steel Corp. 5's
99
$49, 708. 33
$50,000.00
$49, 500. 00
208. 33
Int. from 4/1 to 5/1 (1 month) @ 5%
$49, 708. 33
$99, 416. 66
Due date: April 1, 1956.
Int. dates: Apr. & Oct. 1st.
Received the above described securities
Date May 1, 1931.
The Union Trust Company,.
By E. D. Pearson.
9132
STOCK EXCHANGE PRACTICES
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STOCK EXCHANGE PRACTICES
9133
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9136
STOCK EXCHANGE PRACTICES
Exhibit U-12-12
The
Union Trust Company,
Cleveland, Ohio, June 7, 1930.
L. J. ROEDER,
Ass't. Treasurer, Union Cleveland Corporation.
Dear Mr. Roeder: Attached are the third and fourth of the series of trust
booklets, the first two of which you have already received.
As they follow in logical sequence, a certain quantity of them will be bound
together into a master book, which will contain all four under the title "Your
Family and Your Property."
The'^ major portion of the booklets, however, have been individually bound.
Thus, the individual booklets will be useful to pass on to people who are inter-
ested in specific features of the trust idea — whereas the master book can be used
to explain the entire idea of the bank's function as executor and trustee.
These books will not be used for general counter and lobby distribution, but
are to be handed personally or sent to individuals known to be trust prospects,
or interested in some feature of trust service. If at any time you want copies
of any or all of these books, please notify Mr. Culver in the Estates Trust Depart-
ment", or Mr. Knowlton in the Publicity Department.
Very truly yours,
J. C. RoYON, Vice President.
V
Enc.
Exhibit U-12-13
Cleveland, Ohio, February 30, 1931.
To Estates Trust Department, a/c Jessie C. ,
cjo Mr. R. E. Baker, 2422 Euclid Avenue.
Union Cleveland Corporation
Union Trust Building
Sold to you:
$1, 000
International Match Co. 5'.s-
Less H ---
Int. from 1/15 to 2/21 (1 month 6 days) @ 5% .
96
$960. 00
2.50
957. 50
5.00
$962. 50
Due date: January 15, 1941.
Int. dates: Jan. & July 15th.
If payment does not reach us by February 21st, kindly add $.14 per day.
Received the above described securities
The Union Trust Company,
By
Date Feb. 21, 1931.
To Estates Trust Department,
do Mr. Forsythe.
In account with
Exhibit U-12-14
Cleveland, Ohio, September 27, 1929i
union CLEVELAND CORPORATION
UNION TRUST BUILDING
Sold to you:
$1, 000
Van Sweringen 6's 100
Int. from 8-1 to 9-27 (1 mo. 26 days) @ 6% .-J
$1, 000. 00
9.33
$1, 008. 33
STOCK EXCHANGE PRACTICES
9137
Due Date: August 1, 1935.
Ent. Dates: February and August 1st.
Received the above described securities
Date Sep. 21, 1929.
The Union Trust Company.
By A. C. Crist.
Exhibit U-12-15
Cleveland, Ohio, Oct. 30, 1929.
To Estates Trust Department.
Western Union University.
In account with
union CLEVELAND CORPORATION
UNION TRUST BUILDING
500 shs.
TheFirestoneTire&RubberCo. 6% Pfd
Div. from 9/1 to 10/30 (1 month 29 days) @ 6%.
99
$54, 450. 00
540. 83
$54, 990. 83
Div. dates: March, June, Sept. and December 1st.
Received the above described securities:
Date
To Estates Trust Department,
The Union Trust Co.
Exhibit U-12-16
Cleveland, Ohio, November 6, 1929.
In account with
union cleveland corporation
union trust building
Sold to you:
413
Shares Firestone Tire & Rubber Co. 6% Pfd. Stock.
Div. from 9-1 to 11-6 (2 mo .5 days) @ 6%
99
$40, 887. 00
447. 40
$41, 334. 40
Div. Dates: March, June, Sept., and Dec. 1st.
Received the above described securities:
The Union Trust Company.
By M. Klutz.
Date Nov. 6, 1929.
9138
STOCK EXCHANGE PRACTICES
Exhibit U-12-17
Cleveland, Ohio, November 7, 1929..
To Estates Trust Department,
Union Trust Company.
In account with
UNION CLEVELAND CORPORATION
UNION TRUST BUILDING
Sold to you:
50 Shares Firestone Tire & Rubber Co. 6% Pfd. Stock.
Div. from 9-1 to 11-7 (2 mo. 6 days) @ 6%
$4, 950. 00
55.00
$5,005.00'
Div. Dates: Mar., June, Sept., and Dec. 1st.
Received the above described securities
The Union Trust Company,
Bv .
Date Nov. 7, 1929.
To Estates Trust Dept.
Attention: Mr. Forsythe.
In account with
Exhibit U-12-18
Cleveland, Ohio Jan. 31, 1930.
Sold to you:
union CLEVELAND CORPORATION
UNION TRUST BUILDING
,000 THE NEWTON STEEL CO. 6's.
Int. from 1/1 to 1/14 (13 days) @ 6%.
100
$4, 000. 00
8.67
$4, 008. 67
Due date: December 31, 1931.
Int. dates: Jan. & July 1st.
Received the above described securities
Date Jan. 31, 1930.
By
The Union Trust Company, '
Exhibit U-12-19
Cleveland, Ohio, June 9, 1930.
To Mr. J. P. Hance,
AssH Vice President, Estates Trust Dept.
Union Trust Co., Cleveland, 0.
Sold to you:
union CLEVELAND CORPORATION
UNION TRUST BUILDING
$1, 000
Glidden Company 5H's — ■
Accrued Interest 6-1 to 6-9 (8 days) .
$997. 50
1.22
998. 72
STOCK EXCHANGE PRACTICES
9139
Xhje June 1, 1935.
Interest Dates June & Dec. 1st.
Received the above described securities.
Date JuN 9, 1930.
The Union Trust Company,
By O. F. BuscH.
To Estates Trust Dept.
%Mayhell Y. Herr,
c/o Mr. R. E. Baker, 2423 Euclid Avenue.
Exhibit U-12-20
Cleveland, Ohio, February 20, 1931.
Sold to you:
UNION CLEVELAND CORPORATION
UNION TRUST BUILDING
$3, 000
International March Co. 3's_
Less Yi
Int. from 1/15 to 2/21 (1 month 6 days) @ 5%.
96
$2, 550. 00
7.50
2, 872. 50
15.00
$2, 887. 60
Due date: January 15, 1941.
Int. dates: Jan. & July 15th.
If payment does not reach us by February 21st, kindly add $. 42 per day.
Received the above described securities:
Date Feb 21, 1931.
The Union Trust Company,
By O. F. Busch.
9140
STOCK EXCHANGE PEACTICES
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9157
Exhibit U-12-26
Cleveland Ohio, July 21, 1932.
UNIOX CLEVELAND CORPORATION
UNION TRUST BUILDING
STATEMENT
Estates Trust Dept.,
The Union Trust Company.
Atten. Mr. Armstrong.
a/c Mabel Y. Herr.
Sold to you:
$2, 000
Cuyahoga County Poor Relief 6's 100.76
Int. from 6/15 to 7/21 (1 mo. 6 da.) @ 6% -.. -
$2, 015. 20
12.00
$2, 027. 20
Due date, Mar. 1, 1954.
Int. dates. Mar. & Sept. Ist.
By
The Union Trust Company,
Cleveland, Ohio.
9158
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9167
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-28
9168 STOCK EXCHANGE PRACTICES
Exhibit U-12-32
State of Ohio,
Cuyahoga County ss:
IN THE MATTER OF THE LIQUIDATION OF THE UNION TRUST
COMPANY
PROOF OF CLAIM FOR PREFERENCE AGAINST THE UNION TRUST COMPANY
Charles A. Niman and A. C. Knight, being first duly sworn, depose and say;
Central United National Bank of Cleveland, Ohio, and Charles A. Niman are
the duly appointed qualified and acting Administrators d.b.n. — c.t.a of the
Estate of Carsie Baldwin, deceased, having been appointed as such Administrators
by the Probate Court of the County of Cuyahoga on the 24th day of August,
1933 following the resignation of the Union Trust Company, of Cleveland, Ohio
as Executor of said estate: deponent A. C. Knight is Trust Officer of said Central
United National Bank of Cleveland.
Deponents say that said Central United National Bank of Cleveland and
Charles N. Niman as such Administrators are the sole, legal and bona fide owners
of a certain claim against Ira J. Fulton, Superintendent of Banks of Ohio, as
liquidator in charge of The Union Trust Company and against The Union Trust
Company, a statement of which claim is hereinafter made.
Affiants further say that funds belonging to said estate were deposited from
time to time by said Trust Company as Executor of the last will and testament
of Carrie Baldwin, deceased, with itself as a bank; that said funds at the time of
the closing of said Trust Company amounted to at least the sum of $468,862.35;
that there has been paid over to or for the account of said estate the sum of
$175,404.14 leaving a balance so deposited and remaining on deposit of at least
the sum of $293,458.17; that said sum so remaining on deposit constitutes a
preferred claim against the assets and funds of said Trust Company in preference
to the claims of its general creditors.
Exhibit U-12-32a
Affiants further say that said funds belong to said estate in the total amount of
$468,862.35 were mingled by said Trust Company with its own property, funds
and moneys at a time or times when said Trust Company was, to the knowledge
of its officers, insolvent, or in such a financial condition that as Executor, having
knowledge of its condition, it could not properly deposit said trust funds with
itself.
Affiants further say that since and after said mingling by said Trust Company
with its own funds of said funds belong to said estate, the cash and money in the
vaults of said Trust Company have never been diminished below the amount of
$468,862.35 except by the payment of $175,404.14 as aforesaid to said estate,
and that said moneys of said estate so wrongfully mingled with the funds and
money of said Trust Company, or the proceeds thereof, have been at all times
since said mingling thereof and are now in the possession of said Trust Company
and/or of its Conservator and/or of its Liquidator, the Superintendent of Banks
of Ohio.
Affiants further say that by reason of the above facts said estate is entitled to a
preferred right against the funds, property and assets of said The Union Trust
Company in preference to and in priority over the general creditors of said Trust
Company in the amount of $293,458.17, or for such larger amount as such mingled
funds of said estate in fact totalled, and that said Charles A. Niman and Central
United National Bank, as Administrators d.b.n. — C.T.A. of said estate, and for
and on behalf of said estate, hereby make claim for such preference or preferred
right.
Said Administrators for and on behalf of said estate, hereby make further claim
for such preference or preferred right on such other grounds as they may be entitled
to rely upon, when all of the facts concerning said matter are in their possession.
Said Charles A. Niman and Central United National Bank as such Adminis-
trators hereby specifically make claim for preference by reason of any compensa-
tion paid by said The Union Trust Company to itself out of free cash after
February 25, 1933; and/or for any free cash applied by said Executor to payment
of any indebtedness allegedly due from said estate to said The Union Trust
Company; and/or for interest, rent or similar items jjayable to said estate on
bonds, land trust certificates and other securities, the amount of which interest,
STOCK EXCHANGE PRACTICES
9169
Exhibit U-12-32b
rent and similar items had been paid to said Tlie Union Trust Company as agent
or trustee; and/or for drafts, official checks, or similar items issued by said The
Union Trust Company and charged against the deposit balance of said estate,
which were outstanding on February 25, 1933 and which have not been paid;
and/or for checks or other items belonging to said estate and in the course of
collection on Februarj' 25, 1933, and/or for any and all other acts, matters and
transactions on account of which said estate may be entitled to obtain a preference
but which by reason of inadequate information cannot now be specifically detailed
herein.
Charles A. Niman,
A. C. Knight.
SWORN to and subscribed before me by the said Charles A. Niman and by
said A. C. Knight, Trust Officer of Central United National Bank of Cleveland,
this 19th day of October, 1933.
P. C. Stetzelberger,
Notary Public.
My Commission Expires May 16, 1935
filed 10/19/33.
The Union Cleveland Corporation — J. J. Sinnott
Exhibit U-16-la
AUG. 20, 1929
Sales to Union Cleveland Corporation by the Union Trust Co. bond department
Issue
Amer. I. G. Chem. Corp..
Assoc. Gas & Elec
Brand Realty Co., C. W..
« It u
Central Public Service
Cities Serv. Pr. & Lt
Cities Service Co. W. W. .
Cleveland Term. Tower,..
Dodge Court Co
U li u
U U II
U U U
U U li
Eastern Util. Inv. Co
Euclid Doan Bldg
Euclid Doan Leasehold...
Euclid Sixth Co
Fuller Cleaning & Dyeing
Halle Bros. Co
Kerr Realty Co
Hiebee Corners
Koppers Gas & Coke
Lautaro Nitrate Co
Loews Ohio Theatres
u u u
a ti it
(( It u
u u a
McCormick Edith Rdkffr'
Missouri Pacific R.R
Northern Pacific R.R
Northwestern Bldg. .Site..
Pringle Barge Line
li u u
U U U
u u u
Southern Cities Utif...!.!
Sumatra S.S. Co
ti ti a
u U 11
« u u
u it a
Southern Pacific Rly
Spencer Kelloeg
Trumbull Cliffs
University Club Site.
53-^%
4H%
6%
6%
5^%
5%
6%
6%
6%
6%
6%
6%
5%
5%
5%%
6%
6%
^y2%
6%
5M%
5^2%
O/O
6%
6%
0/0
6%
5%
3%
6%
6%
fi%
6%
6%
6%
6%
C%
6%
6%
6%
4}/2%
6%
fi%
5M%
Maturity
5/1/49- _.
1/15/49..
6/1/33...
" 37...
2/1/49...
6/1/49...
3/1/69...
Cert...
7/1/30...
" 33...
" 37—
" 38_-.
" 39
3/15/54"
Cert-...
6/1/30."'
10/1/41..
Cert...
2/1/41...
Cert...
7/1/50...
7/1/54...
6/1/30...
12/1/35..
12/1/36..
6/l/37_..
6/l/38__.
7/1/34...
3/1/77...
1/1/2047.
Cert...
12/1.5/36
" 37
" 38^
" 39
5/1/49..;
1/1/31...
" 33...
« 34...
" 38...
" 39...
" 40__.
5/1/69...
7/1/38...
4/15 '43..
Cert...
Par
10, 000
19, 000
500
100
9,000
4,000
6,000
11,000
500
1,000
2,000
1,000
2,000
6,000
42, 000
1,000
3,000
100
10,000
1,000
1,000
8,000
4,000
5, 000
2,000
8,000
3,500
1,000
1,000
2,000
23,000
1,000
1,000
9,000
9,000
5,600
1,000
1,000
1,000
1,000
1,000
8,000
1,500
15, 000
1,000
4,000
1,000
Book
12, 470. 00
17, 738. 75
480. 00
97.00
8, .^^.47. 50
3, 600. 00
7, 767. 30
10, 770. 00
500. 00
1, 000. 00
1, 976. 00
968.00
1, 849. 00
6, 072. 50
40, 122. 47
955. 00
3, 015. 00
93.00
10, 257. 50
961. 25
990. 00
7, 870. 00
4.211.00
4,735. 10
1, 900. 00
7, 306. 53
3, 426. 06
940. 00
1, 600. 00
1, 940. 00
14, 718. .50
980. 00
858. 00
8, 881. 50
8, 975. 00
5, 319. 00
1, 032. 50
425. 00
412. 50
400.00
650. 00
7, 401. 25
900. 00
6, 634. 85
996.00
4, 000. 00
980. 00
Int
166. 53
83.13
6. 58
1.32
26. 13
48.28
HO. 83
120.89
4.08
8.17
16.33
8.17
16.33
129. 17
554. 16
15.17
54. 50
2.32
74.86
3.17
5.59
59.89
32.67
65.83
26.33
105. 33
46.08
13.17
8.17
46.94
36.42
.76
10.83
97. .50
97.50
60.67
18.17
18.17
18.17
18.17
l.S. 17
145. 33
27. 25
227. 08
8.17
83.33
2.77
Total
12, 636. 53
17,821.88
486. 58
98. 32
8, 573. 63
3, 648. 28
7, 908. 13
10, 890. 69
504. 08
1, 008. 17
1,992.33
976. 17
1, 865. 33
6, 201. 67
40, 676. 63
970.17
3, 069. 50
95.32
10, 332. 36
964. 42
995. 59
7, 929. 89
4, 243. 67
4, 800. 93
1, 926. 33
7,411.86
3, 472. 14
953. 17
1, 608. 17
1, 986. 94
14,754.92
980. 76
868. 83
8, 979. 00
9, 072. 50
5, 379. 67
LO.'^O. 67
443. 17
430. 67
418. 17
668. 17
7, .546. 58
927. 25
6,861.93
1,004, 17
4, 083. 33
982. 77
9170 STOCK EXCHANGE PEACTICES
Sales to Union Cleveland Corporation by the Union Trust Co. bond department — Con.
Issue
Maturity
Par
Boole
Int
Total
Van Sweringen Co
6%
6%
6%
6%
6%
6%
53-^
5%
53/2%
6%
8/1/35
10/1/38
1/1/36
1/1/46
" 47
" 48
2/1/44
1/1/30
8/15/39
2/1/43
4,000
8,000
2,000
5,000
2,000
1,200
'2,000
3,000
50,000
5,000
3, 985. 00
6, 396. 50
1, 870. 00
4, 809. 55
1, 760. 00
282. 85
1 5, 112. 28
2, 974. 00
50, 000. 00
4, 800. 00
12.67
185. 33
16.33
40.83
\0,. 33
9.80
15. 81
20.42
38.19
15.83
3, 097. 67
u u u
6,581.83
Wade Park Manor
] , 886. 33
u u u
4, 850. 3K
u u u
1, 776. 33
u u u
292. 65
Western Reserve In v. Corp
'5,118.09
Wisconsin Cen. R.R
Standard Investing Corp ..
2, 994. 42
50, 038. 19
Toledo Paramount Corp
4, 815. 83
327, 000
299, 488. 68
3, 128. 30
302. 618. 9S
• Denote short sales.
Exhibit U-16-lb
Sales to Union Cleveland Corporation by the Union Trust Co. Bond Department
STOCKS
Issue
Maturity
Par
Book
Div.
Total
General Or.is & Electric -.
67c
Pref
Common.-
a
u
Pref '."
"
a
u
Common..
20 shs.
1 100 shs.
1,784 "
838 " .
92 " .
28 " .
! 43 shs.
391 "
290 " .
1,880.97
1 3, 002. 16
39, 842. 54
12, 570. 00
5,419.95
1,891.72
> 4,081.60
19, 550. 00
5, 069. 98
21.67
1, 902. 65
Hercules Motors Corp. ... ..
' 3, 002. 16
In^uranshare'^ of Del
39, 842. 54
" of N.Y. (Special)
12, 570. 00
MoKinney Steel Holding Co.. _
Newton Steel Co
c%
6%
5H%
76.67
5, 496. 62
1,891.72
Shell Union Oil Co
> 4, 081. 60
Shenandoah Corp. .
61.91
19,611.91
a u
5, 069. 98
51,612
79, 141. 40
160.25
79, 301. 65
FOREIGN
Austria, Prov. of Upper...
Caldas. Dept. of
Canadian Int. Paper
Canadian Natl. Rlys
Canadian Pacific Rly
Cent. Bk. for Agri
Chile, Mtge. Bank of
Minas Geraes, State of
Ruhr Gas Company
Serbs, Croates & Slovenes
Yokohama, City of
Union Trust Co. Capitol.
6%
7H%
6%
5%
5%
6%
6%
6H%
6H%
7%
6%
7/1/30
2,000
1/1/46
2,000
7/1/49
' 1,000
7/1/69
1.000
7/1/44
16,000
4/15/38
500
5/1/62
1 6, 500
3/1/58
1,000
10/1/53
2,000
5/1/62
2,000
12/1/51
7,000
26,000
Stock
1,416 shs.
U
5 shs.
1,970.00
1, 804. 00
' 867. 50
1, 172. 50
15, 875. 00
430. 00
I 5, 980. 00
1, 000. 00
1,633.00
1, 454. 00
6, 541. 00
25, 032. 00
16.33
20.42
18.17
6 81
108. 89
10.42
1 1 16. 06
30.51
50.19
42.39
92.17
251. 88
1, 986. 33
1, 824. 42
1 873. 67
1,179.31
15. 983. 89
440. 42
1 5, 098. 08
1, 030. 51
1, 683. 19
1, 496. 39
6, 633. 17
25, 283. 88
407, 202. 51
140. 358. 37
530. 00
1 Denote short sales.
This statement obtained from the files of the Union Cleveland Corporation.
STOCK EXCHANGE PRACTICES
9171
Exhibit U-16-2
Comparative Income and Expense
Union Cleveland Corporation — Cleveland, Ohio
INCOME
Prom Securities:
Interest— Industrial Bonds and Notes
Interest— Public Utility Bonds
Interest— Railroad Bonds
Interest — Real Estate Bonds
Rental — Land and Leasehold Trust Certificates
Interest — Federal and Joint Stock Land Bank Bonds
Interest— Foreign Government and Municipal Securities-
Interest— Foreign Corporation Bonds
Dividend?— Preferred Stocks (Domestic)
Dividends— Common Stocks (Domestic)
Dividends— Foreign Corporation Stocks
Interest — State, County and Municipal Bonds
Interest — United States Government Securities
Total Income from Securities
Profit from Underwriting and Distributing:
Originating or Purchase Group
Special Group
Banking Group
Syndicate and Distributing Group
Total Profit from Underwriting and Distributing-
Profit from Trading:
Wholesale - -
Retail - --
General Market
Total Profit from Trading
Other Income:
Interest on Bank Deposits
Interest on Notes Receivable
Interest on Accounts Receivable.
Interest on Call Loans
Miscellaneous
Total Other Income.
Total Income
EXPENSES
Operating expense — Originating (100) - -
Operating expense — Selling — Wholesale (200)
Operating expense— Selling— RetaU (300).-
Operatins^ expense — Trading (400)
Operating expense — Clerical— Cashier (500)
Operating expense— Clerical— General OflSce (600).
Operating expense— General Administrative (TOO).
Interest on Bills Payable
Other Interest Charges
Taxes— Federal Income
Taxes — Franchise
Taxes— Personal.
Total expense -
Operating Loss
Other Charges Reserved for Investment Depreciation-
Net Loss -
Four months
ending Dec.
31, 1929
108.67
867. 34
739. 28
867. 80
821. 69
89.22
713. 18
824. 53
296. 70
483. 87
r
29.90
547. 92
26, 390. 10
26, 956. 66
132, 432. 24
36, 487. 31
161,866.95
357, 743. 16
7, 380. 84
284, 954. 02
277, 573. 18
2, 463. 72
850. 65
569. 15
4, 494. 42
50.00
8, 427. 94
114, 988. 02
4, 236. 91
2, 192. 69
65, 310. 55
6, 732. 05
7, 068. 22
9, 459. 39
45, 895. 51
24, 383. 35
165, 278. 67
50, 290. 65
37, 187. 05
87, 477. 70
Increase,
decrease
9172 STOCK EXCHANGE PEACTICES
Exhibit U-16-3
Comparative income and expense — Union Cleveland Corporation, Cleveland, Ohio
INCOME
FROM SECURITIES:
Interest— Industrial Bonds and Notes
Interest— Public Utility Bonds
Interest— Railroad Bonds
Interest— Real Estate Bonds
Rental— Land and Leasehold Trust Certificates
Interest— Federal and Joint Stock Land Bank Bonds
Interest — Foreign Government and Municipal Securities-
Interest — Foreign Corporation Bonds,
Dividends— Preferred Stocks (Domestic)
Dividends— Common Stocks (Domestic)
Dividends— Foreign Corporation Stocks
Interest — State, County and Municipal Bonds
Interest— United States Government Securities
TOTAL INCOME FROM SECURITIES-
PROFIT FROM UNDERWRITING AND DISTRIBUTING:
Originating or Purchase Group
Special Group
Banking Group --
Syndicate and Distributing Group.. -
TOTAL PROFIT FROM UNDERWRITING AND DIS-
TRIBUTING
PROFIT FROM TRADING:
Wholesale
Retail--- _.
General Market
TOTAL PROFIT FROM TRADING-
OTHER INCOME:
Interest on Bank Deposits
Interest on Notes Receivable
Interest on Accounts Receivable-
Miscellaneous ..-
TOTAL OTHER INCOME.
TOTAL INCOME
EXPENSES
Operating expense— Originating (100)
Operating expense— Selling— Wholesale (200)
Operating expense— Selling— Retail (300)
Operating expense— Trading (400)
Operating expense— Clerical — Cashier (500)
Operating expense— Clerical— General Office (600)-
Operating expense— General Administrative (700).
" " Accrued (Not Allocated)
Interest on Notes Payable
Other Interest Charges
Taxes— Federal Income
Taxes— Franchise
Taxes— Personal
Year ended December
3Ist
1931
43, 828. 49
6, ,542. 75
3, 237. 50
3, 578. 66
1, 032. 72
48.79
71.07
1, 857. 99
82, 833. 67
108, 374. 59
00
16. 55
2, 034. 03
253, 456. 81
1930
25, 844. 88
2,817.27
7, 817. 04
4, 790. 51
2, 123. 97
99.54
2. 978. 54
2, 429. 91
111,935.96
125, 433. 30
00
289. 18
2, 314. 29
288, 874. 39
121, 436. 70
9, 695. 53
22, 383. 54
91, 379. 10
244, 894. 87
3, 162. 50
5, 580. 22
57, 397. 63
48, 654. 91
135. 36
4, 962. 19
1, 702. 08
500.00
7, 299. 63
456, 996. 40
13, 463. 51
5,414.07
150, 225. 44
18, 857. 73
18, 050. 17
14, 382. 70
87, 291. 84
500. 00
168, 970. 39
1,071.90
0
2, 346. 40
1, 812. 50
196, 226. 20
22, 844. 84
32, 229. 74
303, 650. 84
554, 951. 62
125. 95
19, 380. 15
10,408.71
8, 845. 49
710.90
1, 776. 53
812.47
1,000.00
4, 299. 90
Increase
Decrease
17, 983. 61
3, 725. 48
4, 579. 54
1,211.85
1, 091. 25
50.75
2, 907. 47
571. 92
29, 102. 29
17, 058. 71
00
272. 63
280. 26
35, 417. 58
74, 789. 50
13, 149. 31
9, 846. 20
212, 271. 74
310, 056. 75
3, 036. 55
24, 960. 37
67, 806. 34
39, 809. 42
575. 64
3, 185. 66
889. 61
500. 00
9.73
839, 280. 42
13, 991. 94
5, 927. 81
209, 496. 31
20, 001. 59
19, 781. 40
17, 240. 05
90, 034. 18
1,000.00
146, 957. 87
936. 26
0
2, 997. 52
27.69
25, 390. 25
Total Expense 482, 386. 65
Operating Profit:
Other Charges Reserved for Investment Depreciation
Net Profit
527, 592. 62
311,687.80
382, 284, 02
528.43
513. 74
59, 270. 87
1, 143. 86
1,731.23
2, 857. 35
2, 742. 34
500. 00
22, 012. 52
135. 64
0
148. 88
1, 784. 81
45, 205. 97
337, 078. 05
STOCK EXCHANGE PRACTICES
9173
Exhibit U-16-4
Comparative Income and Expense
Union Cleveland Corporation — Cleveland, Ohio
Year ending December
31st
Increase
decrease
1932
1931
INCOME
From securities:
INTEREST— Industrial Bonds and Notes.
43. 849. 22
8, 552. 30
58.36
115.17
635. 40
5.53
15.10
6, 540. 56
57, 814. 99
43, 005. 71
43, 828. 49
6, 542. 75
3, 237. 50
3, 578. 66
1, 032. 72
48.79
71.07
1, 857. 99
82, 833. 67
108, 374. 59
20. 73
INTEREST— Public Utility Bonds
2, 009. 55
INTEREST— Railroad Bonds .. .
3, 179. 14
INTEREST— Real Estate Bonds
3, 463. 49
RENTAL— Land and Leasehold Trust Certificates.
397. 32
INTEREST— Federal and Joint Stock Land Bank Bonds
INTEREST— Foreign Government and Municipal Securities..
INTEREST— Foreign Corporation Bonds
43.26
55.97
4, 682. 57
DIVIDENDS— Preferred Stocks (Domestic)
25, 018. 68
DIVIDENDS— Common Stocks (Domestic).
65, 368. 88
DIVIDENDS— Foreign Corporation Stocks
INTEREST — State, County and Municipal Bonds
21.08
1, 536. 65
16.55
2,034.03
4.53
INTEREST— United States Government Securities
497. 38
Total income from securities . . .
162, 150. 07
253, 456. 81
91, 306. 74
Profit from underwriting and Distributing:
Orieinatine or Purchase GrouD
121, 436. 70
9, 695. 53
22, 383. 54
91, 379. 10
121, 436. 70
Special Group
9, 695. 53
Banking Group .. .. .. .
2, 019. 08
1, 413. 75
20, 364. 46
Svndicate and Distributing Group
89, 965. 35
Total profit from Underwriting and Distributing
3, 432. 83
244, 894. 87
241, 462. 04
Profit from Trading:
Wholesale . . . .-.
290. 00
7, 809. 91
25, 118. 32
3, 162. 50
5, 580. 22
57, 397. 63
2,872.50
Retail. .. .. .
2, 229. 69
General Market..
82, 515. 95
Total Profit from Trading
33, 218. 23
48, 654. 91
81, 873. 14
Other Income:
Interest on Bank Deposits . ... .. ..
59.76
5, 053. 56
1, 994. 57
12, 018. 83
135. 36
4, 962. 19
1, 702. 08
500. 00
75.60
Interest on Notes Receivable
91.37
Interest on Accounts Receivable
292. 49
Miscellaneous
11,518.83
Total other Income . . .
19, 126. 72
7, 299. 63
11,827.09
Total Income . . ....
217, 927. 85
456, 996. 40
239,068.55
EXPENSES
Operatins: Expense . . . . .
101, 239. 14
153, 483. 59
53.86
308, 185. 46
168, 970. 39
1,071.90
206, 946. 32
Interest on Notes Payable ..- .. ..- . ...
15, 486. 80
Other Interest Charges .......— . ... .
1, 018. 04
Ta.\e.s — Federal Tncome
Taxes — Franchise . .. . . .
219. 80
1, 099. 00
2, 346. 40
1, 812. 50
2,126.60
Ta.xes — Personal . . . ...
713.50
Total Expense— ... -. ... .
256, 095. 39
482, 386. 65
226, 291. 26
Operating Loss . . .
38, 167. 54
25, 390. 25
12, 777. 29
Other charges:
Reserved for Investment Depreciation .
Profit — Sale of Securities - . -
28, 944. 38
159, 561. 83
28, 944. 38
Losses — Sale of Securities
159, 561. 83
Net Loss ...
168, 784. 99
25, 390. 25
143,394.74
g]^y4 STOCK EXCHANGE PRACTICES
Exhibit U-16-5
Comparative Income and Expense
Union Cleveland Corporation — Cleveland, Ohio
INCOME
From Securities: , ^ -kt ^
Interest— Industrial Bonds and Notes --
Interest— Public Utility Bonds -
Interest— Railroad Bonds
Interest— Real Estate Bonds -.----—-- --
Rental— Land and Leasehold Trust Certiflcates....
Interest— Federal and Joint Stock Land Bank Bonds --
Interest— Foreign Government and Municipal Securities.
Interest— Foreign Corporation Bonds.-.-
Dividends— Preferred Stocks (Domestic).-
Dividends— Common Stocks (Domestic)
Dividends— Foreign Corporation Stocks .--. --
Interest— State, County and Municipal Bonds
Interest— United States Government Securities -
Ten months ended Oct.
31
1933
13, 632. 07
339. 26
8.46
55.66
.64
1.76
2 19
40, 648! 33
20, 361. 30
Total Income From Securities .
Profit from Underwriting and Distributing:
Originating or Purchase Group
Special Group
Banking Group ■
Syndicate and Distributing Group •
Total Profit from Underwriting and Distributing.
Profit from Trading:
Wholesale-
Retail
General Market.
1932
Increase
decrease
36, 667. 42
7, 497. 96
55.28
104.76
813. 95
2.34
9.45
1,423.33
62, 687. 63
42, 958. 45
192. 98
75, 232. 55
21.09
1,445.33
143, 686. 99
Total Profit from Trading.
Other Income:
Interest on Bank Deposits
Interest on Notes Receivable
Interest on Accounts Receivable-
Miscellaneous
Profit- Sale of Securities
Total Other Income-
Total Income
EXPENSES
Operating Expense
Losses— Sale of Securities.
Losses-Miscellaneous
Interest on Bills Payable.
Other Interest Charges...
Taxes — Federal Income...
Taxes— Franchise — ;
Taxes— Personal
5, 341. 25
5, 341. 25
4.37
4, 873. 62
132. 06
24, 743. 35
24, 240. 51
2, 019. 08
1,413.76
3, 432. 83
290.00
7, 809. 91
22, 394. 07
30, 493. 98
53, 993. 93
134, 567. 73
59.76
4, 157. 71
1, 989. 55
9, 655. 63
28, 944. 38
27, 098. 17
2, 633. 65
1, 342. 69
175, 259. 41
Total Expense-
Operating Loss - ^-- .---• —
Other Charges: Reserved for Investment Depreciation-
Net Profit.
25.00
450. 18
206, 809. 10
72, 241. 37
44, 807. 03
222, 420. 83
87, 381. 53
77, 190. 89
130, 083. 89
53.86
183. 10
915. 82
295, 809. 09
73, 388. 26
23, 035. 35
7, 158. 70
46.82
49.20
813. 31
.58
9.45
1,421.14
11, 939. 30
22, 607. 15
21.09
1, 252. 35
68, 454. 44
2, 019. 08
1,413.75
3, 432. 83
290.00
7, 809. 91
17,052.82
25, 152. 73
55.39
715.91
1, 857. 47
15, 087. 72
4, 703. 87
9, 186. 90
87, 853. 10
60, 283. 36
74, 557. 24
1,342.69
45, 175. 52
53.86
158. 10
465.64
88, 999. 99
1, 146. 89
I j 10-17. 29 61|38
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25T7 350 00 10-27-31
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Exhibit U-16-7
STOCK EXCHANGE PRACTICES
9175
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STOCK EXCHANGE PRACTICES
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ADDRESS
COLLATERAL LOANS
|'e-6a 691 rf. 4-6-3?
2b67 ?4f5 r.r. 5-16- )2
2666 553 68 9-3-3!
,-2565 7b\ 68 9-7-3:'
!2565 353 68 9- 12-: 2
2547 923 66 9-i:v; 2
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24»T9 014 59 1»-*«32
2401 066 41 10-5-32
!399 833 92 :10-6-3|2
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2257 893 60 12-9-^2
.3^31 854 12 1:3-10- 32
?214 008 79 1-4-3;
'164 008 79 2-15 11419
■2204 5B6 57 8.16 11519
;3164 008 79 2-23 11677
4118 108 79 ).5
^'ll 593 79 5-2
3984 75fl 52 6- a
3983 790 37 6-5
1"-:
9-28-32
9-2W32
9-30-32
9-30-32
10- V32
10-4-32
10-4-32
10-5-32
10-6-32
10-18-32
12-9- 3?
1 2- 3- 32
13-6-32
13-6-33
6-5-33
6 )FM»W 40 577 78 I 3-16-33
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A'6 6-22 338 100 00
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3395 023 48'ie-184i32
3363 393 19l'1 1-39|.5?
2324 045 CS" >1-|32
2319 5€3 75' 13- 3-33
3304 463 3 i«''^>;;3?
i:
,2257 893 80*1 2- 6- b
■■214 008 7^
3164 008 79^1. 4-
40 577 78| 2204 586 57|»3- 15-S3
3164 008 T9^2. 16.133
4018 108 79^2-2>!33
4010 593 79[§-5-3i
10 ;44C 07 r
■' 396 ^f 3984 750 52 '6-2-38
7 397 89
7 4il el 3'^^ ■''° 3' ♦ft- 3-33
7 421 V, 3945 534 8f^e-5-33
fkjj*,i.i«for'»?t^
Exhibit U-16-10
STOCK EXCHANGE PRACTICES
9177
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9178 STOCK EXCHANGE PRACTICES
Exhibit U-16-12
EXHIBIT "a"
Balance sheet Union Cleveland Corporation October 31, 1933
ASSETS
Cash:
On Hand $192. 09
On Deposit 43, 965. 29
$44, 157. 38
The Union Trust Company:
Special Deposit Account (Impounded) 7, 529. 71
Special Deposit Account (Available) 262. 02
7, 791. 73
Notes and Accounts Receivable:
Notes Receivable — For Securities Sold 2, 025. 82
Notes Receivable — Special 97, 750. 00
Accounts Receivable — For Securities Sold
Accounts Receivable — Employees Stock Sub- 475. 06
100, 250. 88
Accrued Accounts:
Interest, Rental and Dividends on Securities. 11, 834. 97
Interest — On Notes Receivable 5, 516. 18
17, 351. 15
Securities and Investments:
Securities — Purchased for Re-sale 347, 008. 75
Investments... 4, 256, 176. 88
'■ 4, 603, 185. 63
Advances: Reorganizations, etc 189.94
Total assets 4, 772, 926. 71
LIABILITIES
Notes Payable:
To Union Trust Co. Cleveland— Secured 3, 580, 767. 11
To Union Trust Co. Cleveland— Unsecured... 984, 361. 36
4, 565, 128. 47
Accounts Payable 450. 80
Customers' Deposits:
Special Deposit Account (Impounded) 7, 529. 71
Special Deposit Account (Available) 262. 02
7, 791. 73
Accrued Accounts:
Interest on Notes Payable 163, 581. 72
State Franchise Tax
Personal Property Tax 180. 09
163, 761. 81
Total Liabilities 4, 737, 132. 81
Capital: Common Stock — No Par Value — De-
clared Value. 2, 000, 000. 00
Surplus:
Earned (See Exhibit B) 3, 206. 96
Deficit 1, 960, 999. 14
35, 793.
Total liabilities and capital 4, 772, 926. 71
STOCK EXCHANGE PRACTICES
9179
Exhibit U-16-13
Excerpt from State Banking Report dated January 20, 1933.
UNION CLEVELAND CORP., $3,157,435.43
This company is an investment affiliate of the bank and is also used as a
liolding company for the capital stock of the Chagrin Falls Banking Co. The
loan is collateraled by a large number of listed and unlisted stocks and bonds.
The market value of the collateral held is approximately $1,218,000. No value
has been allowed for the capital stock of the Chagrin Falls Bank. All of the
assets of the company are pledged to the bank to secure this loan. A number
of the securities held are investments in substantial companies whose securities
are believed to be selling at prices far under their true value. In making an
appraisal of this loan, the examiner has endeavored to make allowances for pos-
sible recovery in market value of such securities. The shortage in collateral on
date of examination was approximately $1,939,000. For the purpose of this
investigation, loss of $1,239,000 has been estimated and $700,000 has been
classed doubtful, the latter portion being the amount which the examiner be-
lieves has a reasonable possibility of being recovered.
Exhibit U-16-14
Issue, Construction Materials Corporation, two j-ear 6% notes; date offered
4-8-31; house of issue, Union Cleveland Corporation; total issue, $1,500,000
maturity, 3-15-33; account closes, 6/6/31; extensions 8/6; bankers disc. •
dealers disc. ; liability: limited, unlimited; take-up price 99>^; offering
price 99}^; interest or dividend dates — — .
Position
Resales and adjustments
Group
From
To
Amount
%
Profit
House
Amount
%
Profit
Memo.
97
97>^
97H
98
625,000
250, 000
H
H
3,125
1,250
(Less Ex.)
Special
Bankers
(Sales to Con-
tractors & Ter-
minal Bank,
Chicago @98).
Syndicate
Selling com.--
Underwritins
97^
99H
131,000
2
2,620
Ledoyer Clarke &
Co.
7,000
2H
175
syndicate.
Tradine acc't
Additional purchases from dealers
House
Amount
Price
Profit
received
House
Amount
Price
Profit
received
Totals
9180
STOCK EXCHANGE PRACTICES
Participation record.
Issue, Construction Materials Corporation, two year 6's due 3-16-33; expenses:
purchase, ■ ; special, ■ — ; banking, ; syndicate selling, .
Profits received
Adjustments
Securities purchased by
managers
Date
Group
Amount
House
Amount
Numbers
Amount
Customer
Take up
8/6
Selling com
Sj'ndicate. ... .
2, 380. 00
Ledoyer Clarke & Co _
175
8/6
Purchase __.
Banking
3, 586. 80
Special
Trading
._.
Other houses
)tals
, q,j
5, 966. 80
175. 00
Penalty.
Less adj
ustments . -.
Total net Drofit rec'd .
5, 791. 80
Remarks:
Exhibit U-16-15
Issue, Dow Chemical Company 10-yr. 6% sinking fund gold notes ($3,500,000) ;
date, 3-3-30; free market; house of issue, Union Cleveland Corporation. Dated,
2-1-30. Due, 2-1-40; syndicate closes May 3; extensions, • — ■ — ■ — ; bankers
disc, yi; dealers disc, )4; liabilit.v, limited, unlimited; take up price, lOOJ^;
offering price, 100; special terms, ■ — ■ — ■ — .
Position
Adjustments
Net esti-
Group
From
To
Amount
%
Est.
profit
House
Amount
%
Est.
profit
mated
profit
Purchase..
97H
981.4
1, 400, 000
V2
' 7, 000. 00
Bankers.
Special
98V4
mi
981.2
100
1, 240, 000
730, 000
3, 100. 00
10, 950. 00
Sellingicom
Syndicate.-
Firm bonds ... ..
Trading acc't
Oversales
1
Repurchases from dealers
House
Amount Price
Resold to
Amount Price
1 Less Ex.
Special.
Participation record.
Bond department, The Union Trust Company, Cleveland, Ohio.
Total net estimated profit, = ; firm bonds, — ; total inside position
STOCK EXCHANGE PRACTICES
9181
Issue; Dow Chemical Company 6's due 2-1-40; syndicate closed
syndicate expenses, (1.12 per M).
Profits received
Allotment of profits
Securities repurchased
Date
Group
Amount
House
Amount
Penalty
Net
Numbers
Amount
H take up.- -
Selling
Banking--
Purchase
1, 825. 00
9, 125. 00
3, 100. 00
5, 435. 49
3/28
4/16
4/16
Totals
Less a
Total
19, 485. 49
Uotments
net profit rec'd
Remarks:
Exhibit U-16-16
Issue; Sensibar Transportation Company First Mtge. Marine Equipment 6%
S.F. Bonds. Date offered, 3-30-31; House of issue. Union Cleveland Corpora-
tion; total issue, $1,650,000; maturity, 3-15-43; account closes, 5/29/31; exten-
sions, 7/29/31; bankers disc, 1/4; dealers disc, 1/4; liability, limited, unlimited;
take up price, 99; offering price, 99; interest or dividend dates.
Position
Resales and adjustments
Group
From
To
Amount
%
Profit
House
Amount
%
Profit
Memo.
Purchase
93
94^2
95K
94i.'2
95h
96
660, 000
500, 000
250, 000
1
9,900
5,000
1,250
Special
Bankers
Syndicate
Sellinsj com
96
99
250, 000
3
'7,500
Underwriting syndi-
cate -- .--
Trading acc't
J Less Ex.
Union Cleveland Corporation, Cleveland, Ohio.
Participation record.
Issue, Sensibar Transportation Co. 6's; expenses; purchase,
; banking, ; syndicate selling, 1.954 per M.
-; special.
Profits received
Adjustments
Securities purchased by man-
agers
Date
Group
Amount
House
Amount
Numbers
Amount
Customer
Take up
8/6
Selling Com
Syndicate
14, 401. 62
8/
8/fi
Purchase
3, 900. 00
5, 300. 00
2, 600. 00
8/6
Special
8/6
Banking
Trading .
Other Houses.. _
Penalty.
Less a
Total
Totals
32,201.62
djustments
net profit rec'd _
9182 STOCK EXCHANGE PRACTICES
Remarks:
(Exhibits 17-16-17 through U-16-18 face this page)
Exhibit U-16-19
January 15, 1930.
Miss K. Young: Please advise Mr. Smith that I have already drafted the
Minutes for the annual meetings of The Akers Folkman Company and The Union
Cleveland Company. The Akers Folkman meeting is scheduled for January 21st
at 10:00 A.M. and The Union Cleveland Company meeting January 20th at
11:00 a.m. If Mr. Smith is likely to be away on either of these days, please
advise me so that I can procure his Waiver and Proxy in advance.
Very truly yours.
Vice President.
ghh:w
Exhibit U-16-20a
Hayden, Miller and Company,
Investment Bonds,
Union Trust Building, Cleveland, June 26, 1930.
E. N. Wagley,
Secretary, Union Cleveland Corporation,
Union Trust Building, Cleveland, Ohio.
Dear Mr. Wagley: I enclose with this a memorandum which at your request
I have dictated for the purpose of showing what I said at the meeting of the Union
Cleveland Corporation Directors of the 24th inst. and something of the circum-
stances which occasioned my remarks. Of course my report of my own comments
is not verbally accurate but I think I have gathered up the substance and effect
of what I had to say. I rather think that if I were doing it I would not attempt
to report debates in the minutes but that is a matter that as far as I am concerned
may be decided by the officers. Even if the story is not put in the minutes it may
be useful to have it in the files for future reference if occasion arises.
Very truly yours,
W. S. Hayden.
wsh:el
Exhibit U-16-20b
New business being the order, the President stated that Mr. Baldwin had a
matter to present to the Board. Mr. Baldwin then said that prevalent low
prices for sound stocks had led the officers to consider purchases for the rise, and
orders had been placed to buy shares of American Tel. & Tel., General Electric,
U.S. Steel, F. E. Myers & Bro., New York Central and Electric Auto Lite. Execu-
tion of all these orders would absorb about $500,000 and of this sum $213,000 had
to date been absorbed by orders executed. This, however, had not yet appeared
on the books because the acquired shares had not yet been delivered. The
officers wished to take the opinion of the Board upon the general policy of such
operations and upon the particular procedures already under way for the purpose
of averaging down the cost of shares purchased before the declines of last fall at
prices now showing substantial losses. Mr. Baldwin asked Mr. Coney to read to
the Board a memorandum which he had made to bring out clearly the existing
status and the points to be discussed.
Mr. Coney then read the following memorandum: [Omitted.]
• • • » t * •
Exhibit U-16-20c
Speaking to the memorandum Mr. Hayden said that, while it was inevitable
that the Corporation at times suffer inventory losses in the course of merchandis-
ing and underwriting, he thought that the shareholders of the Trust Company,
who of course were identical with the shareholders of the Corporation, would be
unhappily affected if it appeared that the Corporation as a matter of customary
policy were buying and selling on the board merely as a client of brokers. It
would be his inclination to advise against trading of this sort as a part of the
regular business of the Corporation. He would not say that such operations
should never be engaged in. In fact, in the immediate case, as an example, he
would find it difficult to oppose buying some of the sound shares for which orders
K^TTM 5tS=:i CCVPASf 2.yr eH BOtB SOTBS (15,000,000)
-13UHE OF USUI. Midland Corporation
SYNDICATE CLOIES '/*/*'' CXTCN!
OATCD n.so our. 12.51-31 .
ANKCRS DISC. l/^ DEALERS OiSC > /^ i-IABILIT^ t
«5P«? ;,!-*,-»»- t<fs»si. — f.
:ha« .4rit /-t-.— »■ : /
*«!./<» " /fj
j«-('>WJ^y)
IXooo '/i'; (Vi -'
S.ooa. I'lyf '}S°^\ '
REPURCHASES FROM DEALERS
r«o» /i^-/>^>A'r'.4xv-i><> (-%
-''qH^S') /f-^"' /v tfvr>.« x/.
PARTICIPATION RECORD
Exhibit U-16-17 (1)
SECURITIES REPURCHASED
•/■'If M-.'M^-CAUMItn) iMTft ^M^
' fl.Minnai-l.: ill ft. , , ' ,
" ti,-»trf aKss. r7--r» -.iff Aj aI - ^^^
Exhibit U-16-17 (2)
^HE UNION TRUST COVIPANY
Y. 4 CLEVELANP.OHIO
iy 7,,.h»-
.., i, i.UKiator,
0 f i' i c e.
Dear ;4r. Cox:
I appreciate very much the kind oxpressioaa in your letter
of the 5rd instant to ae.
I Juive given c^rrfPil v^naidBration to your ssiggealJoii thJit
Ih-; liquidation of the afTfiirs of the Union ClsvelsJld Corporation rjiight
continue to receive my attention altsiough f have becoioe associated with
the National City BanJc.
ay resignation having been presented to the Co;sp:..ni', it
is, of course, the f-onction of the Directors to provide for a successor,
and I have asked ir. Wsgley, the Secretai?, to call a raeeting of the
Board so that prompt action to this end can be arraneefl for.
The Directors, "S you know, othf^r than •'.r. '.Vasley -md
myself, were all Directors and, in soiae cases also, executive officers
of The Union Trast Co.npany and, while the Union Cleveland Corporation
is a distinct corporation, its Dolicy has been deter jmed by the coi.ion
directors of the tiro co-apanies. I feel sure, therefore, thet the
Directors nill desire to work out with-you all nuestLons of policy
as to the future conduct of the Co^apany's business; it being incuijbent
upon these directors, and not uoon any orevjous officers, to orovide
for the conduct of the Company's affairs.
Very tnxly yours.
^^^ <^.
THIS STATIONARY IS FOR INTER.DEPARTMENT AND INTEROFFICE USE ONLY
.N-(S.M3IS SUM ^)l
Exhibit U-16-18
STOCK EXCHANGE PRACTICES 9183
had been placed. Nevertheless he thought that all must recognize the seriousness
of the risk; that if there were a rule generally forbidding trading on the board as
a recognized policy, and exceptions to that rule were allowed, it would not be too
much to say that the rule would almost certainly be drowned by the exceptions.
If the Board had a different view from his he thought that definite restrictions
of board trading should l^e stated and adhered to. For example, the maximum
amount to be employed at any time in such operations should never exceed a
prescribed part of the Corporation's resources, and purchases should be limited
to a carefully studied list of issues of approved quality. When he said "a carefully
Exhibit U-16-20c
studied list" he meant that each item in such a list should be thoroughly studied
and its investment merit thereby demonstrated. American Tel. & Tel. stock
could be studied in that way but the same would not be true of every market
leader. For example. Electric Bond & Share, though often popular and well
regarded, is not susceptible to study, not only because of the difficulty of getting
data but because of the extremely intricate character of the structure. Everyone
knows that Electric Bond & Share is big, controls very important properties and
is managed by men of great reputation but it is extremely difficult to know very
much more than that.
Within the limits of policy fixed by the restrictions resolved upon, the adminis-
tration of board trading should lie wholly with one man and not with any group
of men. The administrator no doubt would consult others but those consulted
would not take part in decision. The decision would be that of the one man.
A plural executive is weak and decisions as a whole seldom represent the individual
opinion of any one. There is always the tendency on the part of each to yield to
others upon one item in expectation that others will yield to him upon other items.
In effect this is the sort of log-rolling which produces tariff acts. Moreover in
such an important question as that of price, decisions are arrived at by average
Exhibit U-16-20d
ef or compromises instead of by the direct reasoning of an informed and respon-
sible man mind. Group decisions about items to be acquired and prices to be
paid inevitably produce a portfolio which no one clear-headed man would ever
put together. Manifestly the success of the effort is defeated unless the control
of the portfolio is such that at an}- time it satisfies, at least in general, some
coherent scheme of testing. In the business of trading no instrument can be as
good as a man who concentrates constantly on market data and the actual making
of transactions. It is only by such experience that market sense or sense of
market is attained and such market sense is the indispensable condition of that
promptness and intuitive accuracy which characterize the efficient trader and
constitute his distinction in his business. It is this technical fitness which enables
him to seize profits and avoid losses.
Mr. Hayden asked whether in the event that the Board approved now putting
the suggested $500,000 into the market for the sake of averaging down, there
would be any idea of still further averaging down when, as might happen in
the course of a few weeks, the market had fallen substantially below the present
level. He might see his way to concur in a proposal to make the relatively small
additional commitment now suggested if assurance were given that, irrespective
of later conditions, the Corporation would go no further.
C; . Exhibit U-16-20e
Mr. Baldwin said that he would be entirely unwilling to go beyond the addi-
tional $500,000, whatever might happen in future. He was opposed to trading
on the board as a customary policy. He merely thought that the Corporation,
taking into consideration its present investment and material loss, might reason-
ably put in this new half million in the hope of earlier getting even and so being
the earlier in position to quit the board. Mr. Hayden remarked that this seemed
to him to smack a little of the quality of the classic praj^er of the sinner, — "O
Lord, let me sin just this once more", but he added that as a practical matter he
had no serious objection to the course proposed by Mr. Baldwin.
There was a general discussion of the points presented. Mr. Grandin, speaking
to Mr. Hayden's remaiks, inquired whether the question was not simply that of
175541—34 — PT 20 29
9184 STOCK EXCHANGE PRACTICES
going ahead with the pending orders until the additional half million had been
invested. Mr. Baldwin replied that the intention was to have the Board discuss
not merely the immediate step but also the general questions of policy involved.
The President felt that where special and intimate knowledge justified approval
the Corporation would be warranted in buying and selling in the market and he
used as an example F. E. Myers & Bro., speaking of current operating results
Exhibit U-16-20f
and financial policies now before the management of that company. Mr. Kling
was disinclined to buy U. S. Steel and he had a similar attitude as to General
Electric, though for a difi'erent reason. He considered the dividend yield of
General Electric too low to justify acquisition by the Corporation. Mr. Coney
here pointed out that, although it was difficult to find accurately the true value
of the General Electric share, it was known that there were large values not
reflected in the balance sheet and he spoke of one asset carried at $1.00 which
on good authority he understood to be worth $18,000,000. Mr. W. G. Mather
inquired particularly as to the amount already invested on the board, the items
held and the loss indicated at present market.
After extended informal discussion the Board voted etc.
Minutes of meeting of the Directors of the Union Cleveland Corporation held
at the oflice of the Corporation, Cleveland, Ohio, on the 24th day of June, 1930,
at 9:30 a.m.
In order that the question of policy could be brought before the Directors the
Manager presented and read a memorandum, a copy of which is on file with the
secretary's records.
The question as brought forth in this memorandum was fully discussed and
the following decision was reached:
The Union Cleveland Corporation will continue its present orders to buy
stocks until executed, but will not exceed a total investment of $500,000 over
and above the amount shown in the list of Corporation holdings as of June 23,
1930. It is not deemed to be the policy of the Corporation to invest a large
portion of its funds for purely speculative purposes.
Exhibit U-16-21
EXHIBIT "a"
Balance sheet Union Cleveland Corporation December 31, 1933.
^ ASSETS
Cash:
On Hand $10. 00
On Deposit 42, 295. 62
$42, 305. 62
The Union Trust Company: Special Deposit Account — Im-
pounded 3,850.59
Notes and Accounts Receivable:
Notes Receivable — For Securities Sold 1, 849. 82
Notes Receivable — Special 94, 500. 00
Accounts Receivable — Employees' Stock
Subscription 392. 37
96, 742. 19
Accrued Accounts:
Interest, Rental & Dividends on Securities 11, 862. 60
Interest — On Notes Receivable 6, 305. 34
18, 167. 94
Securities and Investments:
Securities — Purchased for Re-Sale 347, 008. 75
Investments 4, 256, 176. 88
4, 603, 185. 63
Advances — Reorganizations etc 189. 94
Total assets 4,764,441. 91
IN»4T(
IINION Ct.EVELAND (^MKraTI
RATION - CI.EVELAND, OHIO
AT Tin a.o.111 or »isinuw Jluatw AV-ias&...
ISSI!t RAT* AIKO MATtlRITT
nfvssBaaiTs . '
COttlOll STOCKS
Alll*d a«n*ral Corp. (W.«. 12-31-S6)
tmrlom Ontmuttid *»*
Balttsar* i Ohio R.8.
»<>thl«l>u> S>Ml Corp.
Blut Hldg* Corp.
Cer.trml IXllnoLa Soo. Corp. !
Ctagrln Mil Banking Co.
Choaapoaka Corp.
Chaaapaako A Ohio. H.H. Co.
Chloago Corp,
Corrigan-UoKlniuy Staal Co. Toting
CorrlKMl-liaXinnoy StMl Co. Hon-Vatlng
Slaotrlo Auto llta Co.
Elaotrlo Storaga Battory Co.
Oorioral Elaetrlo Co.
Inavaranaharaa * dan. Uanagaoant Co.
Krougar A Toll Co.
Uanhattan Daarbom Corp.
kiarlno Hldland Corp.
Uaraiwll^lald A Co.
Uonareh Fir* Inauranoa Co.
Uomroh llaoM.no Tool Co.
F. X. Ilyora A Broa.
Kattenal Cltjr Bank - I.T.
Km Tork Central S.R. Oo.
Pannrocd Corp.
Fhsonlx SMurttiaa Corp.
FIdilU Otlllty aoldlng Corp.
Radio Corp. or taarioa
Trl-Cantlnmtal Corp.
union Truat Co. - Olaroland
ORAIDTOIAI.
»oo H eea.Toi i t/i1 u i/i
600 •> 7,417.60 14 7/4 U
1.600 J U,17S.2«' IT.SSJ S« S/(
7M '■ 1,088.88: 1 Z/t\ \ l/t
500 •>- iu.eoj t/> 1/4 I
866 ^ 727,286.48 7g8.S« Coat !
1,118 -' 18,463.7^ 18 1/1 84 i
4,000 -; 182,888.81 48.2l{40lA
1,000 'i 1.828.001 16/8) t 1/|
1,648 -V S2,880.26{ .w , .„,
1,848 / 32,860.28; 20 ! S
800 ^ 2S,200<6d !
1,000 yi 26,000.0i:< — , ... -,
600 '[ T.63T.6Cf 26.13; 18!
200 '; 2,000.001 If ■
t.ooQ ^ »,aoo.od « t
2,688 '' 26.346.801 10.70 6 6/B
8,M0 * S8,886.0t| 8.86| IS 1/
3.848 f 18.2S8.f«| B | 3 S/lj
U4 A l,l62.od • ' ' ^
24,880.681 36.28
Jiarkat VAlua.
727,288.48
161,000.00
18.787.00
61,480.00
10.600.00
:i soo
t 70,B00.0C
> 238
1*1 40 j
6.6OO.0O
600
/ 22,60O.0C
\ ua
«|
26.400.00
; 8,000
^ 1S,600.0C
\ ^
til T
16.000.00
t
1,700
428.0e
1/4
IV* t|
i,su.eo
(i».w.) i
890
' 8M.2I
8A
-, -
-
M
1.0C
-
8 6/6 U
381.28
2X6
6,760
•^ 6S4.I8
^ 6Ua810.88
2 8/*
8t.81
*k u
1.012.60
TM
l.OC
-
-
-
18.641
1.884.100.0Q
100
coat 100
1.864.100.00
Bharv*
BlchU j
ii
84,818
T60
86,888
l.8»8,270.6t
<0«r 111 ic
4kaJLU.Att,S8
Exhibit U-16-22a
TORY
IJNION CI-EVELASD CJORPblt^TlON - CLF,VELAND. OH
AT Tn* CLOSE Of BOSINUSS- 8efiffl*St J1^-1M5..-^I._
U«UK-RATE AND MATllRITY
DWEStKOTS- _ _ ,,^,==.™S
nlDUSTIilMd
C. A B« TrwiBlt Co.
!(«irtoi> St»»l 00.
1 FAH VAI-ITE i
i OH SHARES
Zi.1,48 i; 60,000 f 22,800.00 ; *S ^
t-h-t* I 1,000 <* 400.00 : 40 :
I-1-S8 I 240,000 ^40,072.50 100.05 1
MARKET VAU'E \.
11,000.00
148,200.00
Total i 291,000. 1262,972.60
189,260.00.
raSUS UTIUTISS
AMOOlatod Su 4t SI. Co.
Intorn»tlonal T»l * T»l Co.
5 2-18-2002 i 8,000
860.69 i 17.01,
1-1-89 1 6,000 f 1,788.21 i 57.T«1 BTf
Total j 10,000 i 2,688.90
Morgan Proportloo Co.
V«a swrlngon Co.
Had* Pu-k lluior Co.
« 8-16-41
620.00 '■ 40
6 10-1-88 : 2.000 -^ 660.00 ^ 88 13
6 l-l-ia/iS ' 86,000 H 12,686.76 : 54.93 { 10
': \ ■ '; .
Total h 59,3W i 13,766.76 |
Lam k UASBHOU) TRUST CliSTSj
Clark-Eandolph
Suolli - Doan Co, Und Ir. B
S. W. 5ornor Suolld-lo8th 'I
18,000 f 8,097.60
SCO / 276.00
19,600. I 8,922.60
RiERRiSD STOCKS
Allaghany Corp.(»40 ffarrant.) 64 Sharoa
Blua Sldgo Cory. 8
Chisago Corp.
OloToland Cltffa Iron Co.. I
Coopor^aaioaar Corp,
Sriraatona Tlra ft W>An Co. 6
Oaneral Oaa * II. Co. - DlT. Karranta
Oonaral Uaohlnoiy Corp.
MoUnnay StMl lIoldlii( Co.
1,777.44 J .89
* . ^ 822 2,925.77
6.60 81t 1
84
16,616.36
• ^ 1.000 14,600.00
Mi 28 1
60 i
25,000.00
• >! 204 6,100.86
26 1 20 1
60
4,090.00
■ "f 1,000 8,760.00
»t «
■ 1
«, -j
19,000.00
a f 8,695 219,852.16
39.29 nf
76 nj
401,441.26
I 5/4 Sh. l.OO
a w- "0 17,«67.76
• , 5 261.74
-
1
I
^iu«i e
60.35 3
0
4
108
1 6,000.00
170.00
total (4)11.807* ^71,606.71
487,72S.k
}
.J ■'
Exhibit U-16-22b
I^^NTORY
UNION CLKVRIAND CORPORATION - CLEVELAND, OHIO
AT THl CUMl Of .imWWB B*"^*' »l*-«M-.. .-
lmV» -KATl AKD MATimrrv
x«snAWW ummt
MtllKUT VAI.rt '
'" taU Prlo.
■onanw raoaun ict mauM.:
MtTlrat V*liw.
XMnSTRUU
C«n.truotlon IkUrUl. Corp. 6 S-lS-wji 9e,»00 •' »«.0«l.M|i».M CMt
Ssiulbv TruuporUUon Co.
»-16-4»;] 260,600 I 24T,»e7.80
M.061.26
MS.OOO i SM.OM.TS!
U6.U1.26
ualhuib
C»r»y ProportlM Co
l-l^»i 1,000 < 960.00
SKi^WJ-rtSi ^^
Exhibit U-16 22c
-i^NTORY
UNION CLFATELAND CBRJPORATION - CXEVELANT). OHIO
Umm-RATK ASB MATtTRITY
HCCUa'TOUtTIOH
SBC'JSITIES TORCiSiSgD ?0B KE-8A18
I«iu»trl»l»
aDul Eatsta
isvssnaitns
Pu'jllo utility
iio»l E»t«t«
lAnd !: I«»««hol4 Il!u«t 0»rt.
CusacDoo Stooks
: OKUMUlli
849,000 ; 848,048.76!
360,000 i 347,008.76;
11,807| j 271,606.71
291,000 ; 282,972.60
89,800 i 13,766.76:
19,600 8,922.50|
84,918)
760)i,698,270.62j
jtoffliijaji;.-
148.1S1.26 1
260.00 1
148,411.26
487,723 .|0
169,260.00
«,9«t.iO
3,964.00
2,660.00
^ .^/, lilt*'
<,tM,e98.8g
78,iM ft
PV ir.lll» I 389,800 4,266,176.88j
OiiAXC tOiO^
76,223 ij
Pur V»lul \ 709,800 4,608, W6.63|
1,flH,87«in
OKIOa. To PurohM?-
937 1/Z Sh»rel Continental Boll * Steal
Foundry Co. Conaon Stoolc »t |60
Per Shu-re - Option Expires 6-1-54
SE0UHTIE8 CAFJgP *I COST I
Con.tru.tl«. tot.rl.1. Corp. 6 3-16-38 : 98.600 j 98,061.26
Oh^crl" ^"' B»nklnB CO. C.plt.1 St.<ik 966 j 727,288.4e|
TTootern Boeerre Iltge. Co. . , . |
il—
lotiA il 1 2,679.447.7^
Exhibit U-16-22d
STOCK EXCHANGE PRACTICES 9185
(Exhibits U-16-22a through U-16-22d face this page)
Balance sheet Union Cleveland Corporation December St, 1933 — Continued
LIABILITIES
Notes Payable:
To Union Trust Company— Secured $3, 571, 606. 21
To Union Trust Company— Unsecured 981, 238. 10
$4, 552, 844. 31
Accounts Payable 450. 80
Customers' Deposits — Special Deposit Account (Impounded) 3, 850. 59
Accrued Accounts: Interest on Notes Payable 212, 056. 65
Total Liabilities 4, 769, 202. 35
Capital: Common Stock — 228,500 Shares — De-
clared Value 2, 000, 000. 00
Surplus:
Earned— (See Exhibit B) 43, 761. 30
Deficit 1,960,999. 14
4, 760. 44
Total Liabilities and Capital 4, 764, 441. 91
9186
STOCK EXCHANGE PRACTICES
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STOCK EXCHANGE PRACTICES
9187
Exhibit U-16-24
Union Cleveland Corporation — Record of purchases-
Company stock
-Chagrin Falls Banking
Date Purchased
Sept. 26, 1929.
Sept. 27, 1929.
Sept. 28, 1929".
Sept. 30, 1929.
Oct. 1, 1929
Oct. 3, 1929
Oct. 7, 1929
Oct. 9, 1929
Oct. 14, 1929...
Oct. 17, 1929...
Nov. 21, 1929.
May 9, 1930
Nov. 14, 1931
Dec. 31, 1932. Transfer Tax
Dec. 29, 1932: Contribution to Surplus Account.
May 14, 1930: Sold to G. A.
Directors)
Coulton (for
Shares
350
61
170
99
81
89
50
34
20
5
13
10
3
5
5
5
1,000
35
965
Price
650 L.T.
650 L.T.
650
650
650
650
650
650
650
650 L.T.
650
650
650
650
650
650
Principal
227, 498. 50
39, 649. 48
110, 500. 00
64, 350. 00
52, 650. 00
57. 850. 00
32, 500. 00
22, 100. 00
13, 000. 00
3, 249. 90
8, 450. 00
6, 500. 00
1, 950. 00
3, 250. 00
3, 250. 00
3, 250. 00
38.60
100, 000. 00
750, 036. 48
22, 750. 00
727, 286. 48
Dividend
2, 625. 00
457. 50
1, 275. 00
742. 50
607. 50
667. 50
375. 00
255. 50
150. 00
37.50
97.50
75.00
22.50
7, 387. 50
Total
230, 123. 50
40, 106. 98
111,775.00
65, 092. 50
53, 257. 50
58, 517. 50
32, 875. 00
22, 355. 00
13, 150. 00
3, 287. 40
8, 547. 50
6, 575. 00
1, 972. 50
3, 250. 00
3, 250. 00
3, 250. 00
38.60
100, 000. 00
757, 423. 98
22, 750. Oa
734, 673. 98
The above is a copy of record shown on Security Ledger Sheet of
Union Cleveland Corporation,
By L. J. RoRDON.
Exhibit U-1&-25
June 30, 1931.
The Chagrin Falls Banking Co. hold notes secured by mortgage of B. L. Jenks
in the amount of $269,914.83. These notes and mortgage are being held as
collateral to a loan of Maud Peter and Henry Nykamp et al. Interest amounting
to $8,000 on these notes due July 1st will be paid.
One of these notes is for $50,000.00 on which a payment has been made showing
a balance due of $30,914.83 due July 29, 1931. The balance of the notes are due
in 1936. The office of O. P. and M. J. Van Sweringen called today and would
like to get an extension of this note of $30,914.83 and were just at a loss to know
how to proceed.
Exhibit U-16-26
statement of CONDITIONS, THE CHAGRIN FALLS BANKING COMPANY, CHAGRIN
FALLS, OHIO
(At the close of business September 23, 1929)
Resources
Cash on hand $33, 954. 78
Due from banks
The Union Trust Company, Cleveland.. $53, 708. 38
Guaranty Trust Co., New York 5, 574. 90
Federal Reserve Bank — Cleveland — Legal
Reserve 143, 825. 37
203, 108. 65
Loans
Bills Receivable 562, 191. 12
Mortgage Loans 950, 347. 80
Collateral Loans 870, 151. 42
2, 382, 690. 34
Investments
Bond Account (County and Mun.) 479,635.07
Other Bonds (Corporation, Foreign, etc) _ 492, 704. 24
U. S. Securities 5, 950. 00
— 978, 289. 31
9188
STOCK EXCHANGE PRACTICES
STATEMENT OF CONDITIONS, THE CHAGRIN FALLS BANKING COMPANY, CHAGRIN
FALLS, OHIO — continued
Resources — Continued
Stock in Federal Reserve bank $9, 000. 00
Real estate and buildings $66, 444. 00
Vault & Fixtures 8, 721. 79
75, 165. 79
Other resources
U. S. Coupons not yet matured 386. 24
Geauga County, Tax Advances for Cus-
tomerg 243. 66
Items in transit 1, 077. 50
Deficiency — First National Bank 17, 379. 44
19, 086. 84
Total resources $3, 701, 295. 71
Liabilities
Capital Stock Outstanding 100, 000. 00
Surplus 200, 000. 00
Undivided Profits $75, 720. 01
1 Less: Loss 2 months & 23 davs
ended 9-23-29 1 . 9, 796. 75
65, 923. 26
365, 923. 26
Deposits
Individual Deposits (Includes Public
Funds of Approx. $1,100,000) 1, 689, 452. 43
Savings Deposits (Includes Public Funds
of $100,000) 1, 638, 307. 47
Certificates of Deposit 7, 462. 28
3, 335, 222. 18
Certified checks outstanding 150. 27
Total liabilities $3, 701, 295. 71
Analysis of undivided profits account, the Chagrin Falls Banking Company, Chagrin
Falls, Ohio, at the close of business September 23, 1929
Balance— January 1, 1928
Recovery— Mississippi Drainage Coupons
— Brainard Note
— American Commercial Company .
Dividend 5-1-1928
Loss— Union Square Coupons
— Crafts Note
— Wolf rum Note
—Miscellaneous
—Union Square Coupons
Dividend 10-27-28
Net Profit— Year 1928
Depreciation— Furniture & Fixtures _..
— Building
Other Bonds charged off
Balance— January 1, 1929 _
Recovery — American Commercial Company.
— M iscellaneous
Loss — M iscellaneous Notes
— Huron High— Coupons .__
Dividend— 4-27-1929
Transferred to Surplus, March 26, 1929
Loss— Ladow Note
— Huron High Bonds
Net Profit Six Months ended June 30, 1929...
Balance— Undivided Profits September 23, 1929.
Debit
9, 000. 00
260. 00
2, 679. 72
205. 00
57.90
130.00'
9, 000. 00
550. 00'
1,356.00
10, 100. 00
33, 338. 62
225. 00
502. 50
9, 000. 00
100, 000. 00
591. 26
750. 00
110,618.76
Credit
120, 340. 39
175.00
70.00
1,800.00
61, 089. 43
183, 474. 82
33, 338. 62
150, 136. 20
1, 449. 00
6.00
34, 747. 57
186, 338. 77
110,618.76
75. 720. 01
STOCK EXCHANGE PRACTICES 9189
Statement of Profit and Loss Chagrin Falls Banking Company, Chagrin Falls, Ohio
Income
Bond Premium (on sale of bonds) .
Rental. --•
Bond Interest
Safe Deposit Rental
Interest on Loans.-
Exchange - -•
Cash over
Total Income.
Expense
General
Salaries
Interest
Taxes.
Cash Short
Total Expenses.
Net Profit.
Net Loss '-
12 Months
ended Dec.
31, 1928
9, 935. 19
fiOO. 00
47, 464. 88
2, 683. 00
148,261.66
1,506.40
210,451.13
7, 235. 73
33, 406. 00
98, 634. 00
9. 840. 17
245. 80
149, 361. 70
61, 089. 43
6 Months
ended June
30, 1929
15, 020. 81
300.00
22, 845. 37
1,515.00
72, 230. 18
821.29
132. 67
112,865.32
5, 272. 39
16,957.00
51.482.12
4, 406. 24
78,117.75
34, 747. 57
2 Months,
23 days
ended Sept.
23, 1929
1,819.86
100.00
9,651.01
648.00
27,115.11
378.26
39, 712. 22
3,713.70
6. 272. 00
38,916.47
600. 38
6.42
49, 508. 97
"9,' 796." 75
I The net loss for 2 months and 23 days is due to the large number of coupons maturing October 1, 1929,
on County and Municipal bonds held.
The Savings interest periods are February and August 1st at 4% under 3 month rule.
The Books of the bank have been kept on a strict cash receipt and disbursement basis.
Public fund account at the close of business September 21, 1929.
Name
Auburn Township, A. J. Qilmore, Clerk..
Auburn Township, Bd. of Ed., Eva Veltman, Clerk
Bainbridge Township, Frank Jaros, Clerk
Bainbridge Township, Bd. of Ed., Albert Haskins, Clerk.
Bentleyville Village, Florence Estys, Clerk
Board of Education, Chagrin Falls, H. B. Piigsley, Clerk.
Chagrin Falls Township, Jas. R. Porter, Clerk
Chagrin Falls Village, Gladys Foster, Clerk
Chagrin Falls Village, S.F., Gladys Foster, Clerk.
Chester Township, T. D. Blackford, Clerk
Chester Township, Bd. of Ed., Chas. A. Sweet, Clerk
City of Cleveland. S.F
City of East Cleveland
Glenwillow. W. O. Avery. Clerk
Hunting Valley Village, H. H. Hill, Clerk
Newbury Township, Jas. S. Gould, Clerk
Orange Township, Rollo Kidd. Clerk
Orange Township. Bd. of Ed., T. W. Taylor, Clerk
Orange Village, T. W. Taylor, Clerk
Pepper Pike Village. Maude Nycamp. Clerk...
Russell Township. Ralph Simmons, Clerk
Russell Township, Bd. of Ed., Flora Niece. Clerk
Solon Township, Bd. of Ed., H. E. Gildard, Clerk
Solon Village, H. E. Gildard, Clerk.
South Russell Village, F. W. Kimball, Clerk
South Russell Village, S.F., F. W. Kimball, Clerk..
Total.
In Saving Deposits Cuyahoga County, 4.05%.
Rate
4. 02%
4. 02%
4.02%
4. 02%
4. 02%
4. 02%
4. 02%
4. 02%
4. 02%
4. 02%
4. 02%
4. 01%
4. 12%
4. %
4. 02%
4. %
4. 02%
4. 02%
4. 02%
4. 02%
4. 02%
4. 02%
4. 02%
4. 02%
4.02%
4.02%
Balance
7, 373. 28
12,300.94
32, 303. 92
15, 320. 10
2. 796. 13
62, 532. 66
5, 285. 27
39, 507. 76
23, 14.5. 75
7,113.14
9,153.56
100. 000. 00
75. 000. 00
4. 403. 27
13. 727. 02
10, 083. 12
68, 407. 46
36, 887. 82
13,069.17
373, 899. 96
8, 631. 27
37. 460. 98
18, .599. 60
200. 642. 62
7, 266. 65
13,271.60
1,186.182.94
100, 000. 00
9190 STOCK EXCHANGE PEACTICES
Schedule of salaries — The Chagrin Falls Banking Company
S. P. Harris
J. A. Church
A. R. Mountjay.
E. L. Campbell..
Ruth Hober
L. W. Green
E. D. Recker
C. E. Oberlin....
Ethel Jones
Laura Sawyer
Kath. Cole
E. O. Russ
Name
7 Directors @ 500.00 per annum.
Position
President
Vice President.
Cashier
Comm'l Teller.
Ass't. Treas
Aomm'l Books.
General Books.
Comm'l Books.
Savings Teller..
Steonographer..
Telephone
Janitor
Per annum
$6, 000. 00
7, 200. 00
3, 000. 00
3, 000. 00
2, 400. 00
1, 800. 00
1, 800. 00
1, 800. 00
1, 200. 00
1, 020. 00
960. 00
1, 080. 00
$31, 260. 00
3, 500. 00
$34, 760. 00
Exhibit U-16-27
Minutes of Meeting of Directors of the Union Cleveland Corpora-
tion Held at the Office of the Corporation, Cleveland, Ohio, on the
27th Day of December. 1932, at 9:30 a.m.
The Chairman stated that the Corporation is the owner of all the outstanding
capital stock of The Chagrin Falls Banking Company, except directors' qualifying
shares. He further stated that due to write-downs in the book value of certain
properties of the Banking Company which the Ohio Superintendent of Banks has
required, the surplus of such company will be severely depleted and it appears
advisable that this surplus be increased. He stated that it appears that this
can best be accomplished by having the corporation, as the holder of substantially
all of the outstanding capital stock of the Banking Company, make a capital
contribution thereto. After a full discussion it was the sense of the meeting that
such a contribution in the amount $100,000 should be made at once.
The Chairman then presented and read to the meeting a proposed form of
letter addressed to The Chagrin Falls Banking Company, whereby the Corpora-
tion offers to make the capital contribution in question. A copy of such letter is
inserted in this record following these minutes.
Cleveland, Ohio.
December 27, 19S2.
The Chagrin Falls Banking Company,
Chagrin Falls, Ohio.
Gentlemen: The undersigned, the owners of all of the outstanding capital
stock, except directors' qualifying shares, recognizing the desirability of increasing
your surplus accounts, hereby offer to make to you a capital contribution of
$100,000 forthwith upon your approval of this offer. It is understood that the
amount of said contribution will be reflected upon your books and balance sheets
as surplus.
In the event that such offer is satisfactory to you will you please indicate your
acceptance below.
Very trulv yours.
By
Accepted December — , 1932,
The Chagrin Falls Banking Company,
By
The Chairman stated that in order to make the desired contribution it would be
necessary for the Corporation to borrow the sum of $100,000 from The Union
Trust Company. Thereupon on motion duly made, seconded and unanimously
carried, it was —
Resolved that Union Cleveland Corporation borrow from The Union Trust
Company, Cleveland, Ohio, the sum of $100,000 upon such terms as the officers
of the corporation may deem proper, and secure the same by the pledge of the
securities of the corporation heretofore pledged by it as collateral security to its i
existing indebtedness to The Union Trust Company.
STOCK EXCHANGE PRACTICES
9191
Further resolved that tlie proper officers of the corporation are authorized on its
behalf to execute and deliver to The Union Trust Company any and all promissory
notes of the corporation to evidence such loan, maturing upon such date or dates
and providing for such rate of interest as the said officers may deem proper.
Further resolved that the said officers are authorized on behalf of the corpora-
tion to execute and deliver to The Union Trust Company any and all assignments
and agreements as they may deem necessary to pledge to The Union Trust Com-
pany as security to such loan any or all securities of the corporation heretofore
pledged to The Union Trust Company as security to existing indebtedness of the
corporation to the Union Trust Company.
Exhibit U-16-29a
THE CHAGRIN FALLS BANKING COMPANY
Officers: George A. Coulton, Chairman of the Board; A. C. Brewster, President; A. R. Mountjoy,
Vice President & Cashier; J. W. Stoneman, Secretary; Ruth H. Ober, Asst. Treasurer.
Capital, $100,000.00; Surplus, $200,000.00.
Directors: A. C. Brewster, M. F. Brewster, Georgo A. Coulton, John A. Church, Allard Smith, E. H,
Baldwin, J. W. Stoneman.
Chagrin Falls, Ohio,
October 31, 1932.
Union Cleveland Corporation,
Union Trust Building, Cleveland, Ohio.
(Attention of L. J. Roeder.)
Dear Sir: After an examination of the accrual records of this bank, we find
that you were overcharged $92.95 at the time you purchased seven Directors'
notes for $3,250.00 each, and in order to adjust, you may use this as your authority
to make a charge to our account in the amount of $92.95 in order that you may be
reimbursed.
This difference was caused by making a charge for actual number of days
elapsed instead of on a thirty-day-to-the-month basis, and in the case of the loan
of M. F. Brewster, interest on the back of the note should 1 e marked as having
been paid to May 1st, 1932.
A schedule is enclosed herewith which will help you make the proper adjust-
ments on your records.
Very truly yours,
HK:S Henry Knepper,
Enc. Treasurer.
Exhibit U-16-29b
Interest overcharge on loans sold to Union Cleveland Corporation
No.
Name (7 loans, all $3,250.00 each, @ 5 %)
Interest
from
Amount
charged
Correct
amount
Over-
charge
Adjust
accrual
3196
E. H. Baldwin
3/31/32
5/1/32
5/1/32
11/1/31
7/12/32
11/1/31
5/1/32
78.09
64.10
146. 25
146. 25
31.60
146. 25
64.10
76.74
62.75
62.75
144. 00
30.70
144. 00
62.75
1.35
1.35
83.50
2.25
.90
2.25
1.35
1.35
9536
A. C, Brewster - - -
1.35
9537
M. F. Brewster
1.35
9540
Geo A. Coulton . - --
2.25
3549
A. R. Mountjoy.. .
.90
9546
Allard Smith
2.25
9547
J. W. Stoneman
1.35
676. 64
583.69
92.95
10.80
7 (a), $3,250.00 $22,750. 00
Inferestto 9/20/32 676.64
Charged to Union Trust Account on 9/20/32, $23,426.64
$23, 426. 64
9192 STOCK EXCHANGE PRACTICES
Exhibit U-16-30
Union Cleveland Corporation, Union Trust Building
Cleveland, Ohio, May 3, 1933.
Mr. Allard Smith
statement
Interest Due May 15th on your note
dated May 1, 1930 for $3,250
$81. 25
This is Ch. Falls bank stock and I do not owe any interest.
H. K.
Exhibit U-16-31
Chagrin Falls, Ohio,
May 5th, 1930.
The Union Cleveland Corporation,
Cleveland, Ohio.
Gentlemen: For the sum of $1.00 and other good and valuable consideration,
the receipt of which I hereby acknowledge, I hereby give to you the right and
option to purchase all shares of stock owned by me or standing in my name in
The Chagrin Falls Banking Company, Chagrin Falls, Ohio, at the price of
$650.00 per share and accrued dividend to date of purchase.
This option shall be available to you up to and including thirty (30) days after
my resignation as a Director of the said Chagrin Falls Banking Company.
Very truly yours,
A. C. Brewster.
Witness:
Nora E. Brewster.
Union-Cleveland Corporation: Tax Evasion — Frank H. Ensign
Exhibit U-14-la
sections of the general code of OHIO
Section 5369. Each person required to list property for taxation shall take
and subscribe an oath or affirmation that all the statements in such list are true,
and that such list contains a full disclosure of all property required by law to be
listed for taxation, and the true value in money of all such property; and when
any person required by law to list and make return of property to the County
Auditor, shall wilfully fail or refuse to make such list or return within the time
fixed by law, (March 1st), or shall refuse to take and subscribe an oath or affirma-
tion to such list or return, or shall wilfully omit to make a full and complete list
and return of all taxable property, or shall wilfully fail to give the true value
of any property in such list or return, or shall wilfully fail or refuse to answer all
questions contained in the blanks for listing such property, the county auditor
shall cause all such property to be listed and assessed and shall add to the amount
thereof the penalty (50%) provided in Section 5398 of the General Code; and in
case of a false oath to any such list he shall certify the facts to the prosecuting
attorney, w^ho shall proceed as in other cases of perjury. This section shall be
printed in plain type upon all blanks for the listing of any property.
Section 5405. The president, secretary, or principal accountng officer of
every incorporated company, except banking or other corporations whose taxa-
tion is specifically provided for, for whatever prupose they may have been created,
whether incorporated by a law of this State or not, shall list for taxation, verified
by the oath of the person so listing, all the personal property tnereof, and all real
estate necessary to the daily operations of the company, moneys and credits of
such company or corporation within the state, at the true value in money.
Section 5405-1. All the listing and valuation of the personal property,
moneys, credits, investments in stocks, bonds, joint stock companies or otherwise,
of incorporated companies, and all the averages of the stocks of merchandise and
STOCK EXCHANGE PRACTICES 9193
material used as a manufacturer, of such incorporated companies, shall be listed,
valued and ascertained as of the first day of January annually.
All such listings together with all supplementary forms and all information
necessary in the proper fixing of such values for taxation, shall be filed with the
county auditor on or before the first day of March, annually
Section 5405. Return shall be made to the several auditors, of the respective
counties where such property is situated, together with a statement of the amount
thereof which is situated in each township, village, city, or taxing district therein.
Upon receiving such returns, the auditor shall ascertain and determine the value
of the property of such companies, and deduct from the aggregate sum so found
of each, the value as assessed for taxation of any real estate included in the return.
The value of the property of each of such companies, after so deducting the value
of all real estate included in the return, shall be apportioned by the auditor to such
cities, villages, townships, or taxing districts, pro rata, in proportion to the value
of the real estate and fixed property included in the return, in each of such cities,
villages, townships, or taxing districts. The auditor shall place such apportioned
valuation on the tax duplicate and taxes shall be levied and collected thereon
at the same rate and in the same manner that taxes are levied and collected on
other personal property in such township, village, city or taxing district.
Exhibit U-14-lb
Section 5406. The auditor of each county * * * shall furnish the
president, secretary, principal accounting officer, or agent as provided in the next
two preceding sections, the necessary blanks for the purpose of making such re-
turns, but neglect or failure on the part of the county auditor to furnish such blank
shall not excuse such president, secretary, accountant, or agent, from making the
returns within the time specified herein. If the county auditor to whom returns
are made is of the opinion that false or incorrect valuations have been made, that
the property of the corporation or association has not been listed at its full value,
or that it has not been listed in the location where it properly belongs, or if no
return has been made to the county auditor, he must have the property valued
and assessed. This section and the next preceding section shall not tax any
stock or interest held by the state in a joint stock company.
Section 5387-1. When a company is incorporated after the first day of
January and prior to the first day of July in any year, and the personal property
employed in such business has not been previously listed for taxation for the then
current year, secretary or principal accounting officer of such corporation shall
list for taxation with the auditor of the county wherein located the probable
average value of the personal property by him intended to be employed until
January 1st thereafter.
Exhibit U-14-2
County Auditor Tax Form No. 10 prescribed by the Tax Commission of Ohio. Individuals or public
utilities shall not use this form.
Corporation Personal Property Tax Return for 1930
This return with the accompanjdng balance sheet must be filed not later than
March 1, 1930, with John A. Zangerle, County Auditor, room 154, New Court
House.
Considerable annoyance will be avoided by reading the letter of instructions
carefully before filling out this return. Show Cuyahoga County values only, on
this page.
Name, Union Cleveland Corporation; business, dealing in securities; Cuyahoga
County address. Union Trust Building; taxing district, Cleveland; organized
under the laws of the State of Ohio; date, July 24, 1929; if foreign corporation
give date of qualification in the State of Ohio, ; principal place of business
designated in Ohio, ; authorized capital stock, $2,000,000.00; subscribed
but not paid, $ ; issued and outstanding, $2,000,000.00; principal office as
specified in charter, Union Trust Building; principal accounting office. Same;
telephone number, ; if the name of your corporation has been changed
during the preceding year, state below, your former name. Former name,
9194
STOCK EXCHANGE PRACTICES
Items
1. All moneys in possession or on deposit
Credits (see Schedule A), $133,450.35.
Lesal bona fide debts, $135,718.64.
*(See Foot Notes.)
2. Excess credits -
(Raw, $
Materials in Cuyahoga CountyUn process, $
[Finished, $
Total materials in Cuyahoga County ._
Merchandise in Cuyahoga County
Tools, machinery, and equipment not assessed as real estate.
See page 4 -
6. Taxable stocks and bonds (from Schedule C)
7. Taxable property converted into non-taxable property (from
Schedule D)
Office, store and shop furniture, fixtures, etc
NUMBER-
Automobiles _ 1
Su^^v^hldls::::::::::::::::::::::::::::: K- s<=b«d"^« E
12. Live stock J
13. All other personal property not classified above (from Sched-
ule F).- --
Do not use this space
Grand total _
3.
4.
S.
8.
9.
10.
11.
These columns to be used for figures
only by
Corpora-
tion
1, 020. 79
1, 020. 79
Auditor
Board of
revision
New buildings, additions, improvements
Have you erected any new buildings in Cuyahoga County since January 1,
1929? no; if so, describe same ; state cost, $ ; location, — ;
have you made any additions or improvements to buildings in Cuyahoga County
since Jan. 1, 1929? no; if so, describe same, ; location, ; state cost
$ .
*Exclusive of taxes and indebtedness incurred in the purchase of non-taxable
securities.
*Debts cannot be deducted from deposits, nor from merchandise or other
tangible property.
Schedule A. — Credits
Description of receivables
Notes -.-
Accounts..
First mortgages
Second mortgages..
Third mortgages
Chattel mortgages
Land contracts
Stock subscriptions
Stock or shares in building and loan companies.
Time deposits
Collateral loans _.
Tr.'ide acceptances
Other receivables: Accrued interest receivable..
Total.
Face value
37, 838. 27
85, 4C1. 48
10, 150. 60
133, 450. 35
Schedule B. — Merchandise and materials
On what date does your fiscal year close? ; on what date was your last
actual physical inventory taken?
STOCK EXCHANGE PRACTICES
9195
state below the actual amount of your inventory of materials and merchandise
in Cuyahoga County at the time of taking inventory for the past three years.
Date
Merchan-
dise
Raw mate-
rials
Materials in
process
Finished
products
Total
None
B-1
B-2
Year
1927
1928
1929
State whether inventory was based on
cost or "Cost or market"
None-
Llsting
day
1928
1929
1930
State whether average or actual inventory
basis was used in returns filed
Corporations maintaining perpetual inventories covering materials and merchandise, who have in the-
past listed averages and desire to continue such method, must use supplementary Schedule 10-C, which
may be had upon application. No average will be accepted unless form 10-C is properly filled out.
BONDS
No. of bonds
Company or authority
issuring same
State nature of bonds
Par value
Book
value
Market
value
Total b
onds owned
STOCKS
No. of shares
Company issuing same
State if Ohio or foreign
Par value
Book value
Market
value
18276 Preferred and common.
Total shares of stock
Ohio.
1, 978. 784. 14
Where no market value prevail.s, taxable stocks and bonds will be assessed at book value.
U. S. BONDS AND SECURITIES
No. of
bonds
Par value
$231. 050
Date when purchased
U.S. Govt. .Bonds & Treasury Notes.
Total bonds and certificates
Value
$219. 985. 66
Schedule D. — Conversion of taxables into non-taxables
Did you at the close of your 1929 fiscal year own or control any non-taxable
stocks or bonds which were purchased within the year ending on that date?
If so, give date of purchase, the authority issuing same, the amount paid and
the number of months the taxable moneys, credits or other effects were held or
controlled by you during said year, before converting same into non-taxables.
9196
STOCK EXCHANGE PRACTICES
•No. of
shares
No. of
bonds
Company of authority issuing same
Date non-
taxables
purchased
Amount
paid
No. mos.
held in tax-
able form
Portion of
value
taxable
Total amount to carry to page 1 and enter in Item
No. 7.
(To illustrate Schedule D: Property valued at $10,000 was held in a taxable form for six months during,
the past year— then invested Lninon-taxable securities. If this value was still in non-tasaJale form, onliseioe
day, one^half of same, or $5,000, should be carried* to Page 1, Item 7.)
Schedule E.^ — Automobile depreciation
Owing to the great number of automobiles owned in the county and the great
diversity of opinion of the value of a used car it has been found necessary to
adopt a uniform scale of percentage of depreciation as follows:
1930 model should be Hsted at 60% of F. O. B. factory list price. 1929 model
should be listed at 40% of F. O. B. factory list price. 1928 model should be
listed at 30% of F. O. B. factorv list price. 1927 model should be listed at 20%
of F. O. B. factory list price. 1926 model should be Ksted at 10% of F. O. B.
factory list price. 1925 model or any other model prior to that date, or any
orphan car should be listed to aid the owner in securing a license under the Lipp
Bill, but the value fixed bv owner will be accepted, but in no case shall it be less
than $25.00.
IMPORTANT
It is absolutely necessary that all automobiles be listed at the schedule of
depreciation shown above; any deviation from these figures will be corrected by
the department without further notice.
AUTOMOBILES (E-1)
Make
Style
Horse
power
Years
model
License
number
List price
Tax value
None
Total
MOTOR TRUCKS (E-2)
Make
Tonnage
Horse
power
Years
model
License
number
List price
Tax value
None
Total.
OTHER VEHICLES (E-3)
Description
Number
Value
None .....
Total. --
LIVE STOCK (E-4)
Description
Number
Value
Horses
Cattle -
Sheep -- --
Hogs - , . .
Other Live Stock
Total -
STOCK EXCHANGE PRACTICES 9197
Schedule F. — List below all other personal property owned or controlled by you not
classified on first page
Description
Amount
None
Total.
CONSIGNED GOODS
Did you on listing day as official custodian, factor, agent or otherwise hold on
consignment in Cuyahoga County, merchandise, manufacturer's stock, machinery
or other property at your place of business or in warehouse, not owned by you and
not shown on your balance sheet? ; if so, describe same and state value,
$ ; (Carry value to Schedule F). Name and principal address of consignor,
; did you on listing day own merchandise, manufacturer's stock, machinery
or other property on consignment at points in Ohio outside of Cuyahoga County?
; if so, state location, ; value, $ ; consignee .
LEASED MACHINERY AND EQUIPMENT
Did you on tax listing day have In your possession machinery leased to you and
located in Cuyahoga County? ; if so, state value $ — ; annual rental,
$ ; name and address of lessor, (Carry value to Schedule F).
Is your company dormant, liquidating, a holding company, or actively engaged
in business?
State of Ohio,
County of Cuyahoga, ss.
Sworn to before me and subscribed in my presence this 27th day of February
A. D. 1930.
Fred N. Miller,
Notary Public.
I do hereby solemnly swear that I am the Vice President of Union Cleveland
Corporation and that to the best of my knowledge and belief all the statements
contained in this list are true and that the list contains a full disclosure of all
property required by law to be listed for taxation and the true value in money of
all such property.
A. C. COUEY,
For the said Company.
Do not fail to make oath to this return. Oath must be made by an officer of
the company.
Machinery and equipment assessed as personal property shall include such
machinery and equipment affixed to the building, as would not pass between
grantor and grantee as a part of the premises if not specifically mentioned or
referred to in the deed, or as would be moved, if the building were vacated or sold,
or the nature of the work carried on therein were changed.
Fixed machinery, assessed as real estate, shall include- — elevators, shafting,
traveling cranes and runways, sprinkler-systems, refrigeration machinery and
insulation, boilers, piping and radiation, ventilating apparatus and grain elevator
equipment.
Sections of the general code of Ohio
Section 5369. Each person required to list property for taxation shall take and
subscribe an oath or affirmation that all the statements in such list are true, and
that such list contains a full disclosure of all property required by law to be listed
for taxation, and the true value in money of all such property; and when any
person required by law to list and make return of property to the County Auditor,
shall wilfully fail or refuse to make such list or return within the time fixed by law,
(March 1st), or shall refuse to take and subscribe an oath or affirmation to such
list or return, or shaU wilfully omit to make a full and complete list and return
of all taxable property, or shall wilfully fail to give the true value of any property
in such list or return, or shall wilfully fail or refuse to answer all questions con-
tained in the blanks for listing such property, the county auditor shall cause all
9198 STOCK EXCHANGE PRACTICES
such property to be listed and assessed and shall add to the amount thereof the
penalty (50%) provided in Section 5398 of the General Code; and in case of a false
oath to any such list, he shall certify the facts to the prosecuting attorney, who
shall proceed as in other cases of perjury. This section shall be printed in plain
type upon all blanks for the listing of any property.
Section 5404. The president, secretary, or principal accounting officer of every
incorporated company, except banking or other corporations whose taxation is
specifically provided for, for whatever purpose they may have been created,
whether incorporated by a law of this State or not, shall list for taxation, verified
by the oath of the person so listing, all the personal property thereof, and all real
estate necessary to the daily operations of the company, moneys and credits of
such company or corporation within the state, as the true value in money.
Section 5404-1. All the listing and valuation of the personal property, moneys,
credits, investments in stocks, bonds, joint stock companies or otherwise, of
incorporated companies, and all the averages of the stocks of merchandise and
material used as a manufacturer, of such incorporated companies, shall be listed,
valued and ascertained as of the first day of January annually.
All such listings together with all supplementary forms and all information
necessary in the proper fixing of such values for taxation, shall be filed with the
county auditor on or before the first day of March, annually.
Section 5405. Return shall be made to the several auditors, of the respective
counties where such property is situated, together with a statement of the amount
thereof which is situated in each township, village, city, or taxing district therein.
Upon receiving such returns, the auditor shall ascertain and determine the value
of the property of such companies, and deduct from the aggregate sum so found
of each, the value as assessed for taxation of any real estate included in the return.
The value of the property of each of such companies, after so deducting the value
of all real estate included in the return, shall be apportioned by the auditor to
such cities, villages, tow^nships, or taxing districts, pro rata, in proportion to the
value of the real estate and fixed property included in the return, in each of such
cities, villages, townships, or taxing districts. The auditor shall place such
apportioned valuation on the tax duplicate and taxes shall be levied and collected
thereon at the same rate and in the same manner that taxes are levied and col-
lected on other personal property in such township, village, city or taxing district.
Section 5406. The auditor of each county * * * shall furnish the president,
secretary, principal accounting officer, or agent as provided in the next two pre-
ceding sections, the necessary blanks for the purpose of making such returns,
but neglect or failure on the part of the county auditor to furnish such blanks
shall not excuse such president, secretary, accountant, or agent, from making
the returns within the time specified herein. If the county auditor to whom
returns are made is of the opinion that false or incorrect valuations have been
made, that the property of the corporation or association has not been listed at
its full value, or that it has not been listed in the location where it properly
belongs, or if no return has been made to the county auditor, he must have the
property valued and assessed. This section and the next preceding section shall
not tax any stock or interest held by the state in a joint stock company.
Section 5387-1. When a company is incorporated after the first day of January
and prior to the first day of July in any year, and the personal property employed
in such business has not been previously listed for taxation for the then current
year, the president, secretary or principal accounting officer of such corporation
shall list for taxation with the auditor of the county wherein located the probable
average value of the personal property by him intended to be employed until
January 1st thereafter.
NOTICE
If there is not sufficient space on the Blank to make full and complete return
of any property, use additional sheet of paper and attach same to return.
STOCK EXCHANGE PRACTICES
9199
Exhibit U-14-2a
TG BE USED BY RESIDENT CORPORATIONS
Considerable annoyance will be avoided by reading letter of instruction carefully
before filling out this balance sheet
Co. Aud. Form 10a. Form prescribed by the Tax Commission of Ohio
Balance Sheet at Close of 1929 Fiscal Year
(With comparative figures at close of 1928)
This form will not be filed with the tax return of the company but will be used
by the County Auditor to verify same. It will be treated as confidential, but
must be an exacc copy of your books at close of fiscal years. Failure to fill out,
sign and swear to this form will necessitate subpoenaing of the Company's
book.s. An audit of your books will be made at a later date, for the purpose of
verifying the figures set forth below.
Balance sheet of the Union Cleveland Corporation company as of December 81st, 1929
ASSETS
Please use these columns
for figures only
Close of 1928
Close of 1929
All moneys in possession or on deposit
1.010 79
Notes and accounts receivable (See Schedule A on return)
133, 450. 35
IRaw..,.
Materials in Cuyahoga County -^In process -
[Finished -.
Merchandise in Cuyahoga County -.
Tools equipment, and machinery in Cuyahoga County not assessed as real
estate (See Schedule 2, reverse side)..
Securities owned (See Schedule C on return) ,.
2. 198. 769. 80
Office, store and shop furniture, fixtures, etc., in Cuyahoga County
Motors and other vehicles in Cuyahoga County
Land in Cuyahoga County
Buildings in Cuyahoga County
Equipment and fixed machinery assessed as real estate in Cuyahoga County
(See Schedule 2, reverse side)
Merchandise and materials (Raw, in process and finished) in Ohio outside
of Cuyahoga County. ._ ._
Land, buildings, machinery and equipment in Ohio outside of Cuyahoga
County
Merchandise and materials (Raw, in process and finished) outside of Ohio...
Land, buildings, machinery and equ pment outside of Ohio
Trade marks, good will and patents
Prepaid expenses (See Schedule No. Sreverse side)—. -. -
Other assets (Describe and itemize)
Total assets
2,333,240.94
LIABILITIES AND CAPITAL
Accounts payable incurred in the operation of the Company's business
85, 718. 64
Notes payable exclusive of indebtedness incurred in the purchase of non-
ta.xable items
50, 000. 00
Notes and accounts payable incurred in the purchase of non-taxable items
Bonded indebtedness
Mortgage indebtedness
r)„^„-„„ f„- t„„„„rFederal
Reserve for taxes g^^^^ ^^^ County
Other reserves (See Schedule No. 4 reverse side)
Other liabilities (Describe and itemize)
Capital stock, issued and outstanding
2, 000, 000. 00
Surplus and undivided profits (See Schedule No. 1, reverse side)
197, 522. 30
Total liabilities and capital
2, 333, 240. 94
Are the above figures gross as shown by your books, without deduction of
reserves? No allowances of any kind will be made unless a
gross balance sheet is furnished. Gross figures should be furnished at all times.
State of Ohio,
County of Cuyahoga, ss.
Sworn to before me and subscribed in my presence this 27th day of February
A.D. 1930. y y
(Signed) Fred W. Miller,
Notary Public.
175541— 34— PT 20 30
9200
STOCK EXCHANGE PRACTICES
I do hereby solemnly swear that I am the Vice President of the Union Cleveland
Corporation Company, and that all of the property possessed or held by said
Company is fully and correctly shown in the foregoing, that all! the items and
statements are tfue and just, as therein set forth, and that the figures given are
actual values as shown by the Company's books.
A. C. COUEY,
Address of company Union Trust Building, Cleveland, Ohio.
Exhibit U-11-2b
Anal'jsis of surplus — Schedule 1
Surplus paid in.
Additions:
Total Additions..
Total
Deductions:
Net loss yearl929...
Total Deductions.
Surplus at Close of 1929.
285,000.00
87, 477. 70
197, 522. 30
Schedule no. 2
Additions to and deductions from tools, equipment and machinery (Item 5 on
return) also buildings, equipment and fixed machinery assessed as real estate
in Cuyahoga County during the past fiscal year.
Additions
Deductions
Month
Nature of additions and deductions
Tools,
equipment
and ma-
chinery
Fixed
equipment
and fixed
machinery
Tools,
equipment
and ma-
chinery
Fixed
equipment
and fixed
machinery
Month
Nature of additions
Additions— Buildings
Deductions— BuildinRS
None
Schedule no. S — Prepaid eipenses
Describe all items included
as Prepaid Expenses
ScJiedule no. 4 — Ref^enes
Describe all Reserves actually carried on
books, analvzing those which apply
to Buildings, Machinery, Furniture,
etc., in Cuvahoga County, and sep-
arating therefrom those which apply
to property outside Cuyahoga
County.
Description
Amount
Description
Amount
Total.
1 Ota 1 —
"- 11"-' -"\
STOCK EXCHANGE PRACTICES
9201
What amount of Federal, local and other taxes did you ewe at the close of your
1929 fiscal year? none; is this amount included in your deduction from credits,
on return? ; did you engage any accovmtant, attorney, tax expert or others
to assist in the preparation of this balance sheet and tax return? no; if so, give
name ; address ; business ; phone no. ; if such assist-
ance was rendered, were the figures herein submitted taken directly from the
books of the corporation by above party, or did said party accept them as sub-
mitted bj- the corporation? .
Note: Attach additional memorandum if there is not sufficient space on this blank.
This Balance Sheet must be signed and sworn to by an officer of the company
and forwarded with tax return to John A. Zangerle, County Auditor, Room 154,
New Court House, Cleveland, Ohio. It will not be accepted unless the questions
listed above are answered.
Exhibit U-14-3
County Auditor Tax Form No. 10 prescribed by the Tax Commission of Ohio. Individuals or public
utilities shall not use this form
CoRPORATiox Personal Property Tax Return for 1931
This return with the accompanying balance sheet must be filed not later than
March 1, 1931, with John A. Zangerle, county auditor, room 154, New Court
House.
Considerable annoyance will be avoided by reading the letter of instructions
carefully before filling out this return. Show Cuyahoga County values only, on
this page.
Name, Union Cleveland Corporation, business, dealing in securities; Cuyahoga
County address, I'nion Trust Building; taxing district, Cleveland; organized
under the laws of the State of Ohio; date, July 24, 1929; if foreign corporation
give date of qualification in the State of Ohio, ; principal place of business
designated in Ohio, ; authorized capital stock, $2,000,000.00; subscribed
but not paid, $ ; issued and outstanding, $2,000,000.00; principal office as
specified in charter, Union Trust Building; principal accounting office, same;
telephone number, ; if the name of your corporation has been changed
during the preceding year, state below, your former name. Former name .
Items
1. All moneys in possession or on deposit. _
Credits (see schedule A) $125,691.56
Legal bona fide debts 9-27; 343. 50
*(See foot notes).
2. Excess credits
(Raw, $
Materials in Cuyahoga County<In process, $
■ (Finished, $ .:.-...
3. Total materials in Cuyahoga County
4. Merchandise in Cuyahoga County
5. Tools, machinery, and equipment not assessed as real estate
P f See page 4.
6. Taxable stocks and bonds (from schedule C)..
7.. Taxable property converted into non-taxable property (from
schedule D)
8. Office, store and shop furniture, fixtures, etc
NT7MBEB
9. Automobiles.. j
10. Motortrucks U,«,^ o«>,«/i„i„ -c -
11. Other vehicles ^from schedule E
12. Livestock j
13. All other personal property not classified above (from schedule
F).
These columns to be used for figures
only by
Corpora-
tion
764. 18
Auditor
Board of
revision
Do not use this space.
Grand total
764.18
9202
STOCK EXCHANGE PRACTICES
New hidldings, additions, improvements
Have you erected any new buildings in Cuyahoga County since January 1,
1930, no; if so, describe same, ; state cost, $ ; location, ;
have you made any additions or improvements to buildings in Cuyahoga County
sinct" Jan. 1, 1930? No; if so, describe same, ; location, ; state cost
$ .
♦Exclusive of taxes and indebtedness incurred in the purchase of non-taxable
securities.
* Debts cannot be deducted from deposits, nor from merchandise or other tangible
propcrt\- .
Schedule A.— Credits
Description of Receivables
Notes
Accounts
First mortgages
Second mortgages ..-
Third mortgages..
Chattel mortgages
Land contracts —
Stock subscriptions
Stocli or shares in building and loan companies.
Time deposits
Collateral loans. — -.
Accrued interest receivable..
Advances..
Other receivables
TOTAL-
Face Value
50, 993. 35
11,374.35
13. 144. 02
50. 179. 84
126, 691. 56
Schedule B. — Merchandise and materials
On what date does your fiscal year close? ; on what date was your last
actual physical inventory taken?
State below the actual amount of your inventory of materials and merchandise
in Cuyahoga County at the time of taking invensory for the past three years.
Date
Merchan-
dise
Raw ma-
terials
Materials
in process
Finished
products
Total
None
B-1 B-2
Year
State whether inventory was based on cost
or " Cost of market "
Listing
day
State whether average or actual inventory
basis was used in returns filed
1928
1929
1930
1931
1929
None
1930
Corporations maintaining perpetual inventories covering materials and mer-
chandise, who have in the past listed averages and desire to continue such
method, must use supplementary Schedule 10-C, which may be had upon
application. No average will be accepted unless form 10-C is properly filled out«
Schedule C. — Securities
BONDS
No. of
bonds
Company or authority issuing
same
State nature of
bonds
Par value
Book value
Market
value
Total bonds owned
STOCK EXCHANGE PRACTICES
9203
Schedule C. — Securities — Continued
STOCKS
No. of
shares
Company issuing same
State if Ohio or
foreign
Par value
Book value
Market
value
31699
Preferred 2nd Common Stocks..
Ohio
2,989.869.00
Total Share of Stock
Where no market value prevails, taxable stocks and bonds will be assessed at book value.
U.S. BONDS AND SECURITIES
No. of
bonds
Date when purchased
Value
84, 0£0. 00
50 000 00
U.S. Govt. Bonds— Treasury Notes
ATiinicinal Bonds
78, 649. 21
51, 201. 73
3, 035. 00
24, 529. 97
3 000 00
F'pdpral Tjfin(i Rank RoTids
24, 500. 00
T>and Trust Cprtifioatps
Total Bonds and Certificates
$157,415.91
Schedule D. — Conversion of taxables into non-taxables
Did you at the close of your 1930 fiscal year own or control any non-taxable stocks or bonds which were
purchased witliin the year ending on that date? If so, give date of purchase, the authority issuing same,
the amount paid and the number of months the taxable moneys, credits or other eflects were held or con-
trolled by you during said year, before converting same into non-taxabiles.
No. of
shares
No. of
bonds
Company or authority issuing
same
Date non-
taxables
purchased
Amount
paid
No. mos.
held in tax-
able form
Portion of
value tax-
able
Toti
N
ilamount^to carry to page land enter in Item
0 7
(To illustrate Schedule D: Property valued at $10,000 was held in a taxable form for six months during
the past year— then invested in non-taxable securities. If this value was still in non-taxable form on listing
day, one-half of same, or $5,000, should be carried to Page 1, Item 7.)
Schedule E. — Automobile depreciation
Owing to the great number of automobiles owned in the county and the great
diversity of opinion of the value of a used car, it has been found necessary to
adopt a uniform scale of percentage of depreciation as follows:
1931 model should be listed at 60% of F.O.B. factory list price; 1930 model
should be listed at 40% of F.O.B. factory list price; 1929 model should be listed
at 30% of F.O.B. factory list price; 1928 model should be listed at 20% of F.O.B.
factory list price; 1927 'model model should be listed at 10% of F.O.B. factory
list price; 1926 model or any other model prior to that date, or any orphan car
should be listed to aid the owner in securing a license under the Lipp Bill, but
the value fixed by owner will be accepted, but in no case shall it be less than $25.00.
IMPORTANT
It is absolutely necessary that all automobiles be listed at the schedule of
depreciation shown above; any deviation from these figures will be corrected by
the department without further notice.
9204
STOCK EXCHANGE PRACTICES
AUTOMOBILES (E-1)
Make
Style
Horse
power
Years
model
License
number
List price
Tax value
None
Total-
MOTOR TRUCKS (E-2)
Make
Tonnage
Horse
power
Years
model
License
number
List price
Tax value
None
Total-
OTHER VEHICLES (E-3)
Description
Number
Value
--None - - -
Total-
LIVE STOCK (E-A)
Description
Number
Value
Horses
Cattle
Sheep
Hogs
Other live stock.
Total
-None.
ScHEDULB F. — List below all other personal property owned or controlled by you
not classified on first page
Description
Amount
.None-
Total.
CONSIGNED GOODS
Did you on listing day as official custodian, factor, agent or otherwise hold on
consignment in Cuyahoga County, merchandise, manufacturer's stock, machinery
or other property at your place of business or in warehouse not owned by you and
not shown on your balance sheet? ; if so, describe same and state value,
$ , (Carry value to Schedule F). Name and principal address of con-
signor, ; did you on listing day own merchandise, manufacturer's stock,
machinery or other property on consignment at points in Ohio outside of Cuya-
hoga County? ; if so, state location, ; Value, $ ; consignee
STOCK EXCHANGE PRACTICES 9205
LEASED MACHINERY AND EQUIPMENT
Did you on tax listing day have in your possession machinery leased to you and
located in Cuyahoga County? ; if so, state value, $ ; annual rental,
$ ; name and address of lessor, — , (Carry value to Schedule F).
Is your company dormant, liquidating, a holding company, or actively engaged
in business?
State of Ohio,
County of Cuyahoga, ss.
Sworn to before me and subscribed in my presence this 19th day of February
A.D. 1931
Notary Public.
I do hereby solemnly swear that I am the Vice President of The Union Cleve-
land Corporation and that to the best of my knowledge and belief all the state-
ments contained in this list are true and that the list contains a full disclosure
of all property required by law to be listed for taxation and the true value in
money of all such property.
(Signed) A. C. Couey,
Fo7' the said Company.
DO NOT fail to MAKE OATH TO THIS RETURN. OATH MUST BE MADE BY AN
OFFICER OF THE COMPANY
Machinery and equipment assessed as personal property shall include such
machinery and equipment affixed to the building, as would not pass between
grantor and grantee as a part of the premises if not specifically mentioned or
referred to in the deed, or as would be moved, if the building were vacated or
sold, or the nature of the work carried on therein were changed.
Fixed machinery, assessed as real estate, shall include — Elevators, shafting,
traveling cranes and runways, sprinkler-systems, refrigeration machinery and
insulation, boilers, piping and radiation, ventilating apparatus and grain elevator
equipment.
Sections of the general code of Ohio
Section 5369. Each person required to list property for taxation shall take and
subscribe an oath or affirmation that all the statements in such list are true,
and that such list contains a full disclosure of all property required by law to
be listed for taxation, and the true value in money of all such property; and when
any person required by law to list and make return of property to the County
Auditor, shall wilfully fail or refuse to make such list or return within the time
fixed by law, (March 1st), or shall refuse to take and subscribe an oath or affirma-
tion to such list or return, or shall wilfully omit to make a full and complete list
and return of all taxable property, or shall wilf ullj' fail to give the true value of
any property in such list or return, or shall wilfully fail or refuse to answer all
questions contained in the blanks for listing such property, the county auditor
shall cause all such property to be listed and assessed and shall add to the amount
thereof the penalty (50%) provided in Section 5398 of the General Code; and
in case of a false oath to any such list, he shall certify the facts to the prosecuting
attorney, who shall proceed as in other cases of perjury. This section shall be
printed in plain type upon all blanks for the listing of any property.
Section 5404. The president, secretary, or principal accounting officer of every
incorporated company, except banking or other corporations whose taxation is
specifically provided for, for whatever purpose they may have been created,
whether incorporated by a law of this State or not, shall list for taxation, verified
by the oath of the person so listing, all the personal property thereof, and all real
estate necessary to the daily operations of the Company, moneys and credits
of such company or corporation within the state, at the true value in money.
Section 5404-1. All the listing and valuation of the personal property, moneys,
credits, investments in stocks, bonds, joint stock companies or otherwise, of
incorporated companies, and all the averages of the stocks of merchandise and
material used as a manufacturer, of such incorporated companies, shall be listed,
valued and ascertained as of the first day of January annually.
All such listings together with all supplementary forms and all information
necessary in the proper fixing of such values for taxation, shall be filed with the
county auditor on or before the first day of March, annually.
9206 STOCK EXCHANGE PRACTICES
Section 5405. Return shall be made to the several auditors, of the respective
counties where such property is situated, together with a statement of the amount
thereof which is situated in each township, village, city, or taxing district therein.
Upon receiving such returns, the auditor shall ascertain and determine the value
of the property of such companies, and deduct from the aggregate sum so found
of each, the value as assessed for taxation of any real estate included in the
return. The value of the property of each of such companies, after so deducting
the value of all real estate included in the return, shall be apportioned by the
auditor to such cities, villages, townships, or taxing districts, pro rata, in pro-
portion to the value of the real estate and fixed property included in the return,
in each of such cities, villages, townships, or taxing districts. The auditor shall
place such apportioned valuation on the tax duplicate and taxes shall be levied
and collected thereon at the same rate and in the same manner that taxes are
levied and collected on other personal property in such township, village, city or
taxing district.
Section 5406. The auditor of each county * * * shall furnish the presi-
dent, secretary, principal accounting officer, or agent as provided in the next
two preceding sections, the necessary blanks for the purpose of making such
returns, but neglect or failure on the part of the county auditor to furnish such
blanks shall not excuse such president, secretary, accountant, or agent, from
making the returns within the time specified herein. If the county auditor
to whom returns are made is of the opinion that false or incorrect valuations have
been made, that the property of the corporation or association has not been listed
at its full value, or that it has not been listed in the location where it properly
belongs, or if no return has been made to the county auditor, he must have the
property valued and assessed. This section and the next preceding section
shall not tax any stock or interest held by the state in a joint stock company.
Section 5387-1. When a company is incorporated after the first day of January
and prior to the first day of July in any year, and the personal property employed
in such business has not been previously listed for taxation for the then current
year, the president, secretary or principal accounting officer of such corporation
shall list for taxation with the auditor of the county wherein located the probable
average value of the personal property by him intended to be employed until
January 1st thereafter.
NOTICE
If there is not sufficient space on the Blank to make full and complete return of
any property, use additional sheet of paper and attach same to return.
Exhibit U-14-3a
TO BE USED BY RESIDENT CORPOEATION8
Considerable annoyance will be avoided by reading Letter of Instructions care-
fully before filling out this Balance Sheet
Co. Aud. Form 10a. Form prescribed by the Tax Commission of Ohio
Balance Sheet at Close of 1930 Fiscal Year
(With comparative figures at close of 1929)
This form will not be filed with the tax return of the Company but will be used
by the County Auditor to verify same. It will be treated as confidential, but
must be an exact copy of your books at close of fiscal years. Failure to fill out,
sign and swear to this form will necessitate subpoenaing of the Company's books.
An audit of your books will be made at a later date for the purpose of verifying
the figures set forth below.
Balance sheet of the Union Cleveland Corporation Company as of December
31st, 1930.
STOCK EXCHANGE PRACTICES
9207
Assets
Ul moneys in possession or on deposit .-.
•^otes and accounts receivable. (See Schedule A on return)
(Raw
Materials in Cuyahoga County-^In process
iFinished
VIerchandise in Cuyahoga County
Pools, equipment and machinery in Cuyahoga County not assessed as real
estate. (See Schedule 2, Reverse Side)
Securities owned. (See Schedule C on return)
Office, store and shop furniture, fixtures, etc., in Cuyahoga County
Victors and other vehicles in Cuyahoga County
Liand in Cuyahoga County _
Buildings in Cuyahoga County
Squipment and fixed machinery assessed as real estate in Cuyahoga County.
(See Schedule 2, Reverse Side)...
Please use these columns for
figures only
Close of 1929
1. 020. 79
133, 450. 35
2, 198, 769. 80
Close of 1930
764. 18
125, 691. 56
3, 147, 284. 91
VIerchandise and materials (Raw, in process and finished) in Ohio outside of
Cuyahoga County
Liand, buildings, machinery and equipment in Ohio outside of Cuyahoga
County. -
VIerchandise and materials (Raw, in process and finished) outside of Ohio-
L,and, buildings, machinery and equipment outside of Ohio
Frade marks, good will and patents
Prepaid expenses (See Schedule No. 3 reverse side)
3tiier assets (Describe and itemize)
Total assets.
2, 333, 240. 94
Liabilities and capital
Accounts payable incurred in the operation of the Company's business —
l^otes payable exclusive of Indebtedness Incurred in the purchase of non-
taxable items - - -
i^otes and accounts payable incurred in the purchase of non-taxable items.
Bonded indebtedness
Mortgage indebtedness
Reserve for taxes{|^^|^c--^y-"-""":-""-";;::::::;:"::::
other reserves (See Schedule No. 4 Reverse Side)
Other liabilities (Describe and Itemize) -
85, 718. 64
50, 000. 00
3, 273, 740. 65
148, 943. 50
778, 400. 00
Dapital stock Issued and Outstanding
Surplus and undivided profits (See Schedule No. 1, Reverse Side).
Total liabilities and capital.
2, 000, 000. 00
197, 522. 30
2, 333, 240. 94
2. 000, 000. 00
346, 397. 15
3, 273, 740. 65
Are the above figures gross as shown by your books, without deduction of
reserves? . No allowances of any kind will be made unless a gross Balance
Sheet is furnished. Gross figures should be furnished at all times.
State of Ohio,
County of Cuyahoga, ss:
Sworn to before me and subscribed in my presence this 19th day of February
A.D., 1931. (Signed) ,
Notary Public.
I do hereby solemnly swear that I am the Vice President of The Union Cleve-
land Corporation Company, and that all of the property possessed or held by said
Company is fully and correctly shown in the foregoing, that all the items and
statements are true and just, as therein set forth, and that the figures given are
actual values as shown by the Company's books.
A. C. Corey,
Address of Company, Union Trust Building, Cleveland Ohio.
9208
STOCK EXCHANGE PRACTICES
Exhibit U-14-3b
Analysis of Surplus — Schedule 1
Surplus at Close of 1929
197, 522. 30
Additions:
Net gain year 1930 - -
148,874.85
Total Additions - - .-.
148. 874. 86
Total
346, 397. 15
Deductions:
Total Deductions . -
0
Surplus at Close 1930
346, 397. 16
Schedule No. 2
Additions to and deductions from tools, equipment and machinery (Item 5 on
return) ; also buildings, equipment and fixed machinery assessed as real estate
in Cuyahoga County during the past fiscal year
Nature of additions
and deductions
Additions
Deductions
Month
Tools, equip-
ment and ma-
chinery
Fixed equip-
ment and fixed
machinery
Tools, equip-
ment and ma-
chinery
Fixed equip-
ment and fixed
machinery
None
Total
Month
Nature of additions
Additions— Buildings
Deductions— Buildng
None
Total
i
Schedule No. S. — Prepaid expenses
Describe all items included
as Prepaid Expenses
Schedule No. 4- — Reserves
Describe all reserves actually carried
on books, analyzing those which
apply to Buildings, Machinery,
Furniture, etc., in Cuyahoga County
and separating therefrom those
which apply to property outside
Cuyahoga County.
Description
Amount
Description
Amount
None
Total
Total
What amount of Federal, local and other taxes did you owe at the close of
your 1930 fiscal year? None; is this amount included in your deduction from
credits on return? - — — — ; did you engage any accountant, attorney, tax
expert or others to assist in the preparation of this balance sheet and tax return?
No; if so, give name, ; address, — — ■ — ; business, ; phone No.
-; if such assistance was rendered, were the figures herein submitted taken
directly from the books of the corporation by above party, or did said party
accept them as submitted by the corporation? .
Note: Attach additional memorandum if there is not suflicient space on this blank.
rioN ($EYiLii?JD*4iRP0RAT10N
4:Lhl\*lfllj.\NU.OHIO
as 19 'Mt.
i26ii)_
I'AV TO THE UR*KR Or
TO ;•• • • • •
The Union Trust <;oJ T : I
Maix Office
?^^
Exhibit U-14-4 (1)
^^^
. ■ ■ - ". — ;
•
• • •
•
•
• • •• •
• • • •
.
« • •
• • • •
. - • • •
3r ■ '
*
5 ' - .
• >
• • ■■•.-.*.■■: :
? • ■ •
Exhibit U-14-4 (2)
1
E UNION TRUSlfcOMPANY
HAiH OFFICE
A24JJ4«0
.•.Cli]vl4AItnj3HIO .?f£.?Ql92o /7/?///
UxNlOri CL^y5it^?iD *GORP.
iMii3miunISii¥Mmtmtmi
"''^%"w.
i I i 1. u f i i i t : 1-
Exhibit U-14^5 (1)
Exhibit U-14-5 (2)
t (i y-- iFTT : t f > > ^
fW
Pf^-— W
fTTr -t t
^ < i > t « * - J* i *^
ifltE UNION TRUSlfcOMPANY
e-lO . • JMAIN OFFICK
• •
.... :**ciEVELAND,OHIO
>vLy TO THE ORDER OF I...I , Z t
k2Vj{)m
.... :^ CIEVELAND.OHIO '^^ - ^ '^<' •;? / y/p
, 'tvLxTOTHlSORDEHOF I...I '• •,.,.• $^^^/" ,
{ ■ yNioT^;};'|^l^i^fe CORP.
; I )- -t { I J. ft)'.
^
Exhibit U-14-6 (1)
Exhibit U-14-6 (2)
/'^ ..(.>_,.-<< J-> ->( v^ —
Pay to the order or
'•;> >— -i^->T ■
XUMfll-R i
JNIOl^jcXbVEti^-TfOltrppRATlON 3748
• ••••• • ' » ***B& 30 1928
\l^O0.
A-ii UMiOJS IKUJii- s,U.
*• • • •
K^^h-l
dsM-
Main Office
6-10 Clevklani>,C)iiio
IMOX (LK\KI..\Vff>if)RrOR,VriO.V
'.u^^r-^
^{■■f^- -^*.>— — I : »~* ---; >-
Exhibit U-14-7 (1)
Exhibit U-14-7 (2)
JNION tiiiSVELANb^ORPORATlON
WUMBEH
3783
••• •••••
Clkat:i^xd,(>iiio
TO
Main Office
Exhibit U-14-8 (1)
Exhibit U-14-8 (2)
^U.CLE^ANDf:0RP0RAT10N
3786
', Cl.evki^nu,Ohio
Ja;,' l' 1S30
Pay to tbe ohobii or •
6-"lO OLEVEUAJTO.OHIO * :»
5^?fs
I XlOX CU:\KL\>JCfc<{KP0R\TIOX
Exhibit U-14-11 (1)
Exhibit U-14-11 (2)
•he union TRtji#X>0]^PANY ;'"''"
6-10 .""tMAIN OFFICE*. . • .6-10 A282892
... :;-CKEyKi^D.6*fly; fle&-" ■ >^ -^^r/. '/3c-
lEORDEROF \.,,'. , '....• ^j . '^. '^ '
TV/ENT2 mmuyiohk^m^f^^v^f^f^^
:V:.. :•••.: *"" r^ \fMii^ ,
Exhibit U-14-12 (1)
Exhibit U-14-12 (2)
STOCK EXCHANGE PRACTICES
9209
This balance sheet must be signed and sworn to by an officer of the company
and forwarded with tax return to John A. Zangerle, County Auditor, Room 154,
New Court House, Cleveland, Ohio. It will not be accepted unless the questions
listed above are answered.
(Exhibits U-14-4 through U-14-8 face this page)
Exhibit U-14-9
Cleveland, Ohio,
December SI, 1929.
To Securities & Investment Dept., in account with Union Cleveland Corpora-
tion, Union Trust Building.
Form ^fo. UCB 13 5M 8-29
$99. 000
$50, 000
$1, 000
$1, 000
$45, 000
$6, 000
$20, 000
$1, 000
$13, 000
$1, 000
$2, 800
$5, 000
$5,000
Sold to you:
Illinois Power & Light 5's
Due: December 1, 1956.
Milwaukee Elec. Ry. & Lt. 5's
Due: June 1, 1961.
New England Gas & Elec. 5's
Due: December 1, 1948.
Southern California Edison 5's
Due: September 1, 1952.
Union Electric Lt. & Pr. 5's
Due: August 1, 1967.
Baltimore & Ohio R.R. 4H's
Due: March 1, 1933.
Great Northern Rlv. 7's
Due: July 1, 1963.
Canadian International Paper 6's.
Due: July 1, 1949.
Canadian Pacific R.R. 5's
Due: December 1, 1954.
Lautaro Nitrate Co. 6's..
Due: July 1, 1954.
Eastern Michigan Ry. 6's
Due: July 1, 1958.
Maher Colleries 6^'s
Due: August 1, 1927.
Brady Warder Coal 7's
Due: April 1, 1942.
94 H
99H
87. 843
101.4
100. 02
99. 333
110.20
sm
99. 615
81
15
30
30
$94. 155. 50
49, 625. 00
878. 43
1,014.00
45, 012. 50
5, 960. 00
22, 040. 00
897. 50
12, 950. 00
810.00
420.00
I, 500. 00
1, 500. 00
$236, 762. 93
Exhibit U-14-10
The Union Trust Company, Cleveland
Bonds dated: Securities as per attached.
Maturity: Statements, purchased from Union Cleveland Corporation.
Trustee, . Interest due .
Form No. W 18-500-9-29
Num-
bers
De-
nom-
ina-
tion
Date
Bought or
sold
Cost
@
Sold
@
Par
value
of
bonds
Cost or
selling
price
Balance
in par
value of
bonds
Balance as
shown by
general
ledger
Prof-
it or
loss
In-
ven-
tory
1929
Dec. 30
31
bot
1,762,118.82
1, 761, 209. 44
1, 997, 972. 37
sold 1 M
Denmark
4H.
bot
909. 38
236, 762. 93
1, 997, 972. 37
1930
Jan. 2
sold all
above to
U. C. C.
(Exhibits U-14-11 through U-14-12 face this page)
9210
STOCK EXCHANGE PRACTICES
Exhibit U-14-13a
Cleveland, Ohio,
December 31, 1930.
To Securities & Investment Department, The Union Trust Company, in account
with Union Cleveland Corporation, Union Trust Building.
Form No. UCB 13 5M 8-20
$8, 000
$50, 000
$2,000
$4,000
$1,000
$45,000
$5,000
$5,000
$200,000
$5,000
$1,000
Sold to you:
Alleghanv Corporation 5's
Int.7rom 8/1 to 12/31 (150 days) ® 5%.
Due date: February 1, 1944.
American .\ggregates 6's
Int. from 8/1 to 12/31 (150 days) @ 6%.
Due date: February 1, 1943.
American Agriculture Chemical l^'s.--
Int. from 8/1 to 12/31 (150 days) @ 7}4%-
Duedate: February 1, 1941.
Armour & Company 6M's —
(A.sof 1/1).
Due date: January 1, 1943.
Cleveland & Buffalo Transit Co. 5j^'s...
Int. from S/1 to 12/31 (150 days) @ 5J4%.
Due date: February 1, 1934.
Gillette Safety Razor Co. 5's
Int. from 10/1 to 12/31 (90 days) @ 5%.-.
Due date: October 1, 1940.
B. F. Goodrich Co. 6's
Int. from 12/1 to 12/31 (30 days)
.6%...
Due date: June 1, 1945.
International Paper 6's
Int. from 9/1 to 12/31 (120 days) @ 6%.
Due date: March 1, 1935.
The Newton Steel Co. 6's
(As of 1/1).
Due date: December 31, 1931.
Ohmer Fare Register Co. 0'.'^
Int. from 9/1 to 12/31 (120 days) @ 6%.
Due date: March 1, 1933.
Pringle Barge Line 6's
Int. from 12/15 to 12/31 (16 days) @ 6%.
Exhibit U-14-13b
$39,000
$64,000
$2,000
$2,000
$11,000
$15,000
Due date: December 15, 1935.
United States Rubber 6's
Int. from 12/1 to 12/31 (1 month) @ 6%.
Due date: June 1, 1933.
Van Sweringen Co. 6's
Int. from 11/1 to 12/31 (60 days) @ 6%. .
Due date: May 1, 1935.
Youghiogheny & Ohio Coal Col. 6's...
Int. from 8/1 to 12/31 (150 days) @ 6%.
Due date: August 1, 1945.
Central .States Elec. 514's..
Int. from 9/15 to 12/31 (106 days) @ 5)^%.
Due date: September 15, 1954.
Illinois Power & Light 5's
Int. from 12/1 to 12/31 (30 days) @ 5%....
Due date: December 1, 1956.
International Tel. & Tel. 4J4's.--
Int. As of 1/1.
73. 344
85. 23
102. 50
74.25
100
110.067
67.95
62.75
$5, 787. 50
166. 67
$42, 615. 00
1, 250. 00
2, 050. 00
62.50
2, 970. 00
1,000.00
22.92
49, 530. 00
662. 50
3, 397. 50
25.00
100
98
96
3, 137. .50
100. 00
200, 000. 00
4, 900. 00
100.00
950. 00
2.67
101.347
91. 34
99. 875
66.23
$39, 525. 25
195. 00
68, 458. 24
640.00
1, 997. 50
50.00
1, 324. 60
32. 39
96. 75
127. 36
10, 642. 50
45. 83
19, 104. 13
.$5, 964. 17
43, 865. 00
952. 67
STOCK EXCHANGE PRACTICES
Exhibit U-14-13b — Continued
9211
$5,000
Due date: January 1, 1939.
Northern Indian.i Publ'c Service 4}/^'s .. . .
94.50
4, 725. 00
IS. 75
Int. from 12/1 to 12/31 (30 days) @ iH%-
Due date: December 1, 1970.
Toledo Lisht & Power Co. 5's
99.55
$4, 743. 75
$71 000
70, 677. 50
295.83
Int. from 12/1 to 12/31 (30 davs) @ 5%
Due date: December 1, 1932.
Chicago Eastern Illinois 5's . -
31.75
70,973.33
$5,000
1,5S7.50
41.67
Int. from 11/1 to 12/31 (60 days) @ 5%
Due date: May 1, 1951.
Armour & Co. of Delaware 5X^'s__.
74. 25
79.25
1,629.17
$1,000
742. 50
(As of 1/1).
Due date: January 1, 1943.
McKe.sson & Roberts 5V^'s
742.5
$5, 000
3,962.50
45. 83
Int. from 11/1 to 12'31 f60 days) @ 5>^%
Due date: May 1, 19,10.
Amount forwarded
4, 008. 33
$532, 742. 28
Exhibit U-14-13c
Amount forwarded—-
Bowman Biltmore 6's
(Int. as of 1/1).
Due date: July 1, 1931.
S. S. Kresge Co. 5's
Int. from 11/1 to 12/31 (60 days) @ 5%...
Due date: November 1, 1945.
Dodge Court 6's
(Int. as of 1/1).
Due date: July 1, 1931.
Halles Bros. Co. 6's -.
Int. from 10/1 to 12/31 (90 days) @ 6%..
Due date: April 1, 1940.
Kerr Realty Co. 6's
Int. from 8/1 to 12/31 (150 days) @ 6%..,
Due date: February 1, 1930.
Kerr Realty Co. 6's
Int. from 8/1 to 12/31 (150 days) @ 6%..
Due date: February 1, 1941.
Morgan Properties 6's
Int. from 8/15 to 1/2/31 (136 days) T 6%.
Due date: August 15, 1941.
Van Sweringen Co. 6's--
Int. from 10/1 to 12/31 (90 days) ® 6%..
Due date: October 1, 1938.
Wade Park Manor 6's
(As of 1/1).
Due date: January 1, 1943.
Wade Park Manor 6's
(as of 1/1).
Due date: January 1, 1944.
Wade Park Manor 6's
(as of 1/1).
Due date: January 1, 1945.
Wade Park Manor 6's .........
(as of 1/1).
Due date: January 1, 1948.
97.76
100.22
94. 875
95.50
90.00
88.00
98.23
101. 267
25.50
79.00
63.50
69.60
35, 077. 50
291. 67
955. 00
15.00
900.00
25.00
264. 00
7.60
1, 277. 00
29.47
54, 279. 50
804.00
256.00
$532, 742. 28
488.75
35, 369. 17
1,897.60
970.00
926.00
271. 50
1,306.47
55, 083. 50
255.00
9, 480. 00
1, 270. 00
9, 744. 50
649, 803. 67
Exhibit U-14-13d
Amount forwarded . - .
$649, 803. 67
$7,000
Wade Park Manor Co. 6's
62. 0178
44.75
4, 341. 25
$1,000
Int. as of 1/1.
$1,000 due January 1, 1942.
$6,000 " " 1, 1946.
Rio Grande Do Sul 6'2 . .
337.50
5.00
Int. from 12/1 to 12/31 (1 month) @ 6%
Due date: June 1, 1968.
Imperial Japanese Govt. 53^ -.-
93. 125
452.50
$5,000
4, 656. 25
45.83
Int. from 11/1 to 12/31 (60 days) @ 5K
Due date: May 1, 1965.
North German Lloyd 6's.
82.50
4, 702. 08
$5,000
4,125.00
50.00
Int. from 11/1 to 12/31 (60 days) @ 6%
Due date: November 1, 1947.
4, 176. 00
9212
STOCK EXCHANGE PKACTICES
Exhibit U-14-13d — Continued
$5,000
$35,000
$3,000
300 shs.
300 shs.
500 shs.
500 shs.
3,620 shs.
792 shs.
160 shs.
5,000 shs.
1,000 shs.
Ontario Power Corp. 5H's..-
Int. as of 1/1).
Due date: July 1, 1950.
Saxon Public Works Inc. 5'3
Int. from 7/15 to 12/31 (166 days),® 5%
Due date: July 15, 1932.
Farmers Mfg. Co. 7's -
Due date: September 1, 1943.
American Cyanamid "B" common stock
American Tel. & Tel. Co. common stock
Baltimore & Ohio R.R. Co. common stock
Bankers Trust Co. of New York common stock.
Bethlehem Steel Corp. common stock
Blue Ridge Corp. common stock...
Chemical Bk. & Trust Co. common stock
Chesapeake & Ohio R.R. Co. common stock
Continental Chicago Corp. common stock
93.00
97. 086
16. 667
30. 174
204. 30
125. 25
146. 00
91.50
22.25
68.36
47. 835
18.50
4, 650. 00
33, 980. 00
806. 94
$4, 650. 00
34, 786. 94
500.00
9, 214. 20
61, 290. 00
62, 625. 00
73, 000. 00
331,230.00
17. 621. 88
10,938. 10
239. 17,'i.OO
18,500.00
1, 527, 005. 62
Exhibit U-14-13e
1000 shs.
600 shs.
838 shs.
200 shs.
1,000 shs.
500 shs.
2,000 shs.
2,368 Shs.
850 shs.
300 shs.
1,300 shs.
6,000 shs.
1,700 shs.
890 shs.
225 shs.
300 shs.
245 shs.
822 shs.
300 units
1,000 shs.
1,600 shs.
60 shs.
Amount forwarded
Electric Storage Battery conjmon stock
General Elec. Co. common stock...
Insurancshares Corp. of N.Y. common stock
Insurashares Management common stock
Kreuger & Toll Co. common stock...
Lehman Corporation common stock
Manhattan Dearborn Corp. common stock
Marine Midland Corp
Marshall Field Co. common stock.
National City Bank common stock
New York Central R.R. common stock
Pennroad Corporation common stock
Prince & Whitely Trading Corp. common stock.
Public Utility Holding Co. common stock ,
Tri Continental Corp. common^ock
U.S. Steel Corporation common stock
Alleghany Corporation 5H% P*d. stock
Blue Ridge Corp. preferred stock
Central Illinois Sec. Corp
Continental Chicago Corp
Prince & Whitely Trading^«%pfd
General Gas & Elec. preferred stock
89.90
66. 675
15.00
70.00
32.39
104. 00
51.00
35. 274
50.00
236. 00
184. 423
16.50
17, 852
33.39
33.33
158. 25
90.00
66.83
31.48
60.00
61. 949
99.65
$1, 527,
89.
40,
12.
14,
32,
52,
102,
83,
42,
70,
239,
99,
30.
29,
7,
47,
22,
46,
9,
60.
99,
4,
005. 62
900.00
005. 00
570. 00
000. 00
390. 00
000. 00
000. 00
528.80
600. 00
800. 00
750. 00
000.00
347. 06
717. 50
500. 00
475.00
050. 00
713. 97
437. 26
000.00
118.44
982.69
$2, 762. 791. 32
Exhibit U-14-13f
$7,000
200 shs.
$5,000.
$5,000.
100 shs.
Amount forwarded
East Cleveland Corner Co. etf. of deposit
Western Reserve Investing Co. 6J4 pfd. stock.
Toledo Paramount Corp. 6's
Int. from 8/1 to 12/31 (160 days) @6%
Due date: February 1, 1943.
Western Reserve Inv. 6}^'s
Int. from 8/1 to 12/31 (150 days) @ 6>^%
Due date: February 1, 1944.
Alleghany, Cprporatioii 6^% pf^. stock
25
75
90
80
38K
$4, 600. 00
125.00
$4,000.00
114.68
$3,860.00
$2, 752, 791. 32
1, 750. 00
16, 000. 00
4,626.00
4,114.68
3,860.00
$2. 782. 130. UO
(Exhibits U-14-14 through U-14-15 face this page)
isy^csffir^*-,
Pat TOTiik tSRUKROr
UNION GLEVEI^N#^:()I?P(>RATI()N ^ISS
iOi^ TRUST CO. Ul^^VM'-U-'^cL^.^i;^^ fey^k '
The Union Trust <>»
,M\I>- Ol-TKIK
• • • ,
>•• • xMiiN ':".vi:i,vvfM>4niNin.\rii(x
r:-<ry/^-
iHitt
^^*>2^^?g^j2^^^3
Exhibit U-14-14 (1)
Exhibit U-14-14 (2)
Exhibit U-14-15 (1)
Exhibit U-14-15 (2)
STOCK EXCHANGE PRACTICES
9213
Exhibit U-14-16a
Cleveland, Ohio,
December SO, 1929.
To Securities & Investment Dept. The Union Trust Co. In account with
Union Cleveland Corporation, Union Trust Building.
Form No. UCB 13 5M 8-29
Sold to you:
Crowley Milnor 5J^'s
Int. from 11/1 to 12/30 (59 days) @ 53^%.
Due date: Nov. 1, 1937.
Int. dates: May & Nov. 1st.
Inland Steel 43^'s
Int. from Oct. 1 to 12/30 (89 days) @ i}/i%.
Due date: April 1, 1978.
Int. dates: Apr. & Oct. 1st.
Int Sec Corp. of America 5's
Int. from 12/1 to 12/30 (29 days) @ 5%
Due date: June 1, 1947.
Int. dates: June & Dec. 1st.
Lautaro Nitrate Co. 6's
Due date: July 1, 1954.
Int. dates: Jan. & July 1st.
Libby McNeil & Libby 5's
Int. from 10/1 to 12/30 (89 da.) @ 5%.
Due date: Oct. 1, 1942.
Int. dates: Apr. & Oct. 1st.
Pacific Western Oil 6}^'s
Int. from 11/1 to 12/30 (59 da.) @ 6H%-
Due date: Nov. 1, 1943.
Int. dates: May & Nov. 1st.
E. W. Scripps Co. 5i^'s
Int. from 8/1 to 12/30 (149 da.) @ b]^%.
Due date: Feb. 1, 1943.
Int. dates: Feb. & Aug. 1st.
New Orleans Public Service 5's
Int. from 12/1 to 12/30 (29 da) @ 6%.
Due date: June 1, 1955.
Int. .dates: June & Dec. 1st.
Total forwarded
90
91J^
85H
81
91^^
85H
871^
83
$4, 500. 00
45.07
9, 150. 00
111.25
4, 275. 00
20.14
4, 050. 00
4, 581. 25
61.81
4, 275. 00
53.26
4, 375. 00
11.3. 82
4, 150. 00
20.14
$4, 545. 07
9, 261. 25
4,295.14
4, 050. 00
4, 643. 06
4, 328. 26
4, 488. 82
4, 170. 14
39, 781. 74
Exhibit U-14-16b
Sold to you:
Interborough Rapid Transit 5's
Due date: Jan. 1, 1966.
Int. dates: Jan. & July 1st.
City of Brisbane 5's
Int. from 9/1 to 12/30 (119 da.) @ 5%.
Due date: Mar. 1, 1957.
Int. dates: March & Sept. 1st.
Kingdom of Denmark 4>i's_--
Int. from 10/15 to 12/30 (75 da.) @ 4M%-
Due date: April 15, 1962.
Int. dates: Apr. & Oct. L-ith.
Porto Rican American Tobacco 6's_.
Due date: Jan. 1, 1942.
Int. dates: Jan. & July 1st.
Rhine Westphalia Electric 6's
Int. from 8/1 to 12/30 (149 da.) @ 6%.
1st.
Due date: Aug. 1, 1953.
Int. dates: Feb. & Aug
United Steel Works 6M's
Due date: July 1, 1947.
Int. dates: Jan. & July 1st.
61
90
92}^
86
87H
4,450.00
82 64
18, 000. 00
187. 50
4, 625. 00
4, 300. 00
124. 17
4, 375. 00
3,050.00
4, 632. 64
18, 187. 60
4, 625. 00
4, 424. 17
4, 375. 00
78,976.06
9214
STOCK EXCHANGE PRACTICES
Ekhibit U-14-16C
$50, 000
500
500
2,000
2,000
500
1,000
2,000
10,000
6,000
Sold to You:
Lautaro Nitrate 6's
Due date: July 1, 1954.
Int. dates: Jan. & July 1st.
Pringle Barge Line 6's
Int. from 12/15 to 12/30 (15 da)
Due date: Dec. 15, 1935.
Pringle Barge Line 6's...
Int. from 12/15 to 12/30 (15 da)---
Due date: Dec. 15, 1936.
Pringle Barge Line 6's
Int. from 12/15 to 12/30 (15 da)..-.
Due date: Dec. 15, 1937.
Pringle Barge Line 6's
Int. from 12/15 to 12/30 (15 da)....
Due date: Dec. 15, 1938.
Pringle Barge Line 6's
Int. from 12/15 to 12/30 (15 da)....
Due date: Dec. 15, 1939.
Remington Rand 5H's
Int. from 11/1 to 12/30 (59 da)
Due date: May 1, 1947.
Int. dates: May & Nov. 1st.
Sumatra SS 6's
Due date: Jan. 1, 1939.
Int. dates: Jan. & July 1st.
American I Q Chemical ^H's
Int. from 11/1 to 12/30 (59 days)..
Due date: May 1, 1949.
Int. dates: May & Nov. 1st.
Cities Service Company 5's
Int. from 11/1 to 12/30 (59 da)..-
Due date: Nov. 1, 1963.
Int. dates: May & Nov. 1st.
97. 614
100
90
101. 825
110
93.80
95. 325
$48, 807. 00
600.00
1.25
450.00
1.25
2, 036. 50
5.00
2, 200. 00
6.00
469.00
1.25
963. 25
9.01
70. 062
112.20
$5,000
4,000
5,000
28, 000
5,000
3,000
18, 000
13, 000
4,000
Amount forwarded-
83Ji
11, 220. 00
90.14
5, 025. 00
49.17
Exhibit lJ-14-16d
Sold to You:
Forwarded... - v-.v;,"'
International Telephone & Telegraph 4^ s.
Due date: Jan. 1, 1939.
Int. dates: Jan. & July 1st.
New England Gas & Electric 5's-
Int. from 12/1 to 12/30 (29 da)
Due date: Dec. 1, 1948.
Int. dates: June & Dec. 1st.
Pennsylvania Power & Light 7's
Int. from 8/1 to 12/30 (149 da)
Due date: Feb. 1, 1951.
Int. dates: Aug. & Feb. 1st.
Chicago & Northwestern RR iH's
Int. from 11/1 to 12/30 (59 da) — -
Due date: Nov. 1, 1949.
Int. dates: May & Nov. 1st.
Georgia Carolina & Northern Rwy 6 s
Due date: July 1, 1934.
Int. dates: Jan. & July 1st.
New York,Chicago & St. Louis RR 6 s
Int. from 10/1 to 12/30 (89 da)
Due date: Oct. 1, 1932.
Int. dates: Apr. & Oct. 1st.
St. Paul & Kansas City 4H's. -
Int. from 8/1 to 12/30 (149 da).
Due date: Feb. 1, 1941.
Western N. York & Pennsylvania 4 's
Int. from 10/1 to 12/30 (89 da) •
Due date: April 1, 1943.
Baltimore & Ohio RR 4}^'s.
Int. from 9/1 to 12/30 (119 da)
Due March 1, 1933.
Forward
194. 112
90. 162
105Ji
100. 464
97.80
103. 33
$3, 606. 50
16.11
6, 287. 50
144. 86
28, 130. 00
217. 97
3, 100. 00
44.50
95^
87^
17, 145. 00
335. 25
11,375.00
128. 56
$48, 807. 00
501.26
451.26
2, 041. 60
2,205.00
470.25
96Z26
1,401.26
11,310.14
5,074.17
3, 975. 00
59.50
$73, 224. 07
73. 224. 07
$9, 705. 63
3, 622. 61
6, 432. 36
28,347.97
4,890.00
3, 144. 50
17, 480. 26
11, 503. 56
4, 034. 50
$161,385.45
STOCK EXCHANGE PRACTICES
Exhibit U-14r-16e
9215
Sold to you:
Fwded
$161, 385. 46
$10, 000
Chicago, Milwaukee & St. Paul 5's
9334
$9, 375. 00
206. 94
Int. from 8/1 to 12/30 (149 da)
Due date: P'eb. 1, 1975.
Chicago & Western Indiana 4's
90. 497
99
9, 681. 94
904.97
1,000
904. 97
990. 00
4.83
1,000
Due date: July 1, 1952.
C. W. Brand Realty 6's
Int. from 12/1 to 12/30 (29 da)..
Due date: June 1, 1931.
Dodge Court Co. 6's
96
86.9
99
994.83
475.00
869.00
600
475. 00
869. 00
1,980.00
19.67
1,000
Due July 1, 1930.
Dodge Court Co. 6's
2,000
Due July 1, 1939.
Int. from 11/1 to 12/30 (69 da)
Due May 1, 1930.
Fuller Cleaning Company 6's.
90
1, 999. 67
1,000
900. 00
14.83
Int. from in/i to 12/30 (89 da).
Due date: Oct. 1, 1941.
Kerr Realty Co 6's
90
914.83
600
450. 00
12.42
Int. from 8/1 to 12/30 (149 da)
Due date: Feb. 1, 1937.
Loews Ohio Theatres 6's..
95
462.42
1,000
950. 00
4.83
Int. from 12/1 to 12/30 (29 da)
Due: 12/1/.30.
Morgan Properties 6's-.
98. 964
954.83
1,100
1,088.50
24.76
Int. from 8/15 to 12/30 (135 da)..
Due: Aug. 15, 1941.
Van Sweringen Co. 6's
99.10
1, 113. 25
22, 600
22, 295. 76
333. 75
Int. from 10/1 to 12/30 (89 days).
Forward
22, 629. 60
202, 285. 69
Exhibit U-14-16f
Forwarded
Wade Park Manor 6's
Due date: January 1, 1945.
Wade Park Manor C's
Due date: January 1, 1948.
White Motor Realty 6's...
Int. from 12/1 to 12/30 (29 days)
Due date: December 1, 1932.
C. W. Brand Realty 6's
Int. from '2/1 to 12/30 (29 days)
Due date: June 1, 1937.
Euclid Doan Ld. Tr. 5% Ctf....
Rentals from 11/15 to 12/30 (45 days)..
Due dates: May & Nov. 15th.
Hippodrome Bldg. Site 5% Ctfs
Kdgm. of Denmark 5^^'S--
Int. from 8/1 to 12/30 (149 days)..
Due date: August 1, 1955.
Canadian National Rlwys. 6's
Int. from 10/1 to 12/30 (89 days)
Due date: October 1, 1969.
Canadian Pacific R.R. Perpetual 4's-
Qatineau Power Co. 5's
Int. from 12/1 to 12/30 (29 days)
Due date: June 1, 1956.
Hansa Steamship Co. 6's
Int. from 10/1 to 12/30 (89 days)
Due date: October 1, 1939.
Blue Ridge Corporation 6% Pfd
Int. from 12/1 to 12/30 (29 days)
Central Illinois Securities Corp
Continental Chicago Corporation.
Forward...
93
90
95
97
95. 293
96
100. 883
104. 867
87. 016
93.83
93. 293
56. 826
31. 458
68^
2, 850. 00
14.50
97.00
.48
38,117.47
250. 00
6, 053. 00
136. 58
7, 340. 00
86.53
19, 705. 12
84.58
37,317.50
693. 33
46,711.17
198. 65
202, 285. 69
465.00
180.00
2, 864. 60
97.48
38, 367. 47
960.00
6, 189. 58
7, 426. 63
436.08
19, 789. 70
37, 910. 83
46, 909. 82
9, 437. 25
68, 500. 00
441, 818. 93
175541 — 34 — FT 20-
-31
9216
STOCK EXCHANGE PEACTICES
Exhibit U-14-16g
FORWARDED —
$441, 818. 93
80 .shs
General Gas & Elec. G% Dfd
99. 377
$7,950.19
20.00
Div from 12/15 to 12/30 (15 days) -
Tntftrnational Printinsf Ink 6% Dfd
99.98
53. 287
101 H
7,970.19
40 shs
3, 999. 20
118, 831. 88
15, 225. 00
56.25
2280 shs
Pi-iripp, <t Whitelv Tradine Cornoration 6% Dfd - - . .
3,999.20
118. 831. 88
1.10 Tlnits
Tri-Continental Allied Co. 6's - - - -
Int from 11/15 to 12/30 (45 days) - -
Total
15, 281. 25
$587, 901. 45
Exhibit U-14-16h
1815 shs
500
tl
792
U
1150
u
1000
u
500
a
1000
u
50
u
838
u
125
u
200
u
500
a
2003
a
10
u
500
u
1000
u
6000
u
2990
u
1390
u
SOLD TO YOU:
American Cyanamid "B" common stock.. .
Baltimore & Ohio RR common stock
Blue Ridge Corporation common stock
Chsmical National Associates common stock
Cnesapeake & Ohio RR common stock
Electric Auto Lite common stock
Electric Storage Battery common stock
Fourth National Investment common stock.
Insuranshares of Ne'.v York common stock..
Insuranshares of Delaware common stock...
Insuranshares Management common stock..
Lehman Corporation common stock
Manhattan Dearborn common stock
Marine Midland Corporation common stock
Missouri Pacific RR common stock
New York Central RR common stock
Pennroad Corporation common stock
Prince & Whitley comm.on stock
Public Utility Holding Co common stock...
30
125M
22M
27. 052
214. 175
90.30
81.045
46. 235
15
17.70
70
104
51
60
72. 175
186.851
16J.2
12. 732
31. 197
$54,
62,
17,
31,
214,
45,
81,
2,
12,
2,
14,
52,
102,
36,
186,
99,
38,
43,
450. 00
625. 00
621. 88
110.00
175. 00
150. 00
045. 00
311.75
570. 00
212. 86
000. 00
000. 00
000. 00
600. 00
087. 50
851. 58
000. 00
068. 25
362. 50
$1, 095, 241. 32
Exhibit U-14-17
Excerpt from pamphlet entitled "Laws of the State of Ohio Relating to Banks
and Trust Companies":
710-111. INVESTMENTS
Sec. 710-111. (A bank may invest its capital, surplus, undivided profits and
deposits in the following securities):
(a) Bonds or other interest-bearing obligations of the United States, the
Philippines, Hawaii, Porto Rico, and the District of Columbia, or those for which
the faith of the United States is pledged to provide payment of the interest and
principal, and in farm loan bonds issued by federal land banks and joint stock
land banks.
(b) External bonds or other interest-bearing obligations of any foreign gov-
ernment which has not defaulted in the payment of principal or interest on its
external bonds or obligations within a period of twenty years last prior thereto.
(c) Bonds or other interest-bearing obligations of any state or territory of the
United States.
(d) Bonds or other interest-bearing obligations of any county, town, township,
city, school district, improvement district or sewer district, or other organized
or political subdivision in this state.
(e) Bonds or other interest-bearing obligations of any city, town, county or
other legally constituted political or taxing subdivision situated in one of the
states of the United States, or any cities of the Philippines, Hawaii, or Porto
Rico, which city, town, county or taxing subdivision has been in existence ten
years and which for a period of ten years previously has not defaulted for a
period of more than ninety days in the payment of any part of either principal
or interest of any debt contracted by it and whose net indebtedness after deduct-
ing the amount of its water bonds and bonds issued for other self-sustaining
public utilities and the amount of sinking funds which are available for the pay-
ment of its bonds or interest bearing obligations other than water bonds and self-
sustaining public utilities, does not exceed ten per cent of the value of taxable
property in such city, town, county or political or taxing subdivision to be as-
certained by the valuation of property therein for the assessment of taxes next
STOCK EXCHANGE PRACTICES 9217
preceding such investment; provided, that no bonds or other interest bearing
obligations of any such county shall be eligible for investnaent unle.^s such county
has a population of not less than ten thousand inhabitants, and provided, that
no bonds or other interest bearing obligations of any such city, town or political
or taxing subdivision shall be eligible for investment unless such city, town or
po iticil or taxing subdivision has a population of not less than one thousand
inhabitants as ascertained by United States or state census or by any municipal
census taken by authority of the state next preceding such investment, and,
provided, further, that there shall be eligible hereunder the bonds or other interest
bearing obligations of a po'itical or taxing subdivision which has not been in
existence for ten years, but wliich is erected out of another eligible subdivision or
comprises in whole or in part another eligible subdivision or subdivisions or parts
of eligible subclividons if such subdivision shall comply with the other require-
ments of this paragraph.
But nothing herein contained shall authorize the investment of funds in any
special assessment or improvement bonds or other bonds or other interest bearing
obligations which are not the direct obligations of the district issuing same and
for which the full faith and credit of the entire district are not pledged.
(f) Bonds or debentures of any Province of the Dominion of Canada.
IBonds or debentures of any city or town or district except school district in the
Dominion of Canada having a population of not less than ten thousand inhabi-
tants, as ascertained by official census next preceding such investment and which
has not since 1900 defaulted for more than ninety days in the payment of any
part of principal or interest of any debt authorized to be contracted by it and
which has a net indebtedness exclusive of water debt and bonds issued for other
self-sustaining public utilities and the amount of sinking funds available for the
payment of its bonds other than water bonds and gonds issued for public utilities,
which net indebtedness does not exceed seven per cent of the last valuation of its
taxable property for the assessment of taxes preceding such investment, and in
all other respects such bonds shall conform to the requirements of clause E of this
section; and in the bonds or obligations of any city, town or district therein
unconditionally guaranteed as to payment of principal and interest by the Do-
minion of Canada or any province thereof.
(g) Bonds of anj^ governmental subdivision or city of anj' foreign country,
which governmental subdivision or city has a population of not less than one
hundred thousand inhabitants and whose net indebtedness does not exceed seven
per cent of the last valuation of its taxable property for the assessment of taxes
preceding such investment exclusive of bonds issued for pubhc utilities and sink-
ing funds other than for public utilities and which has not defaulted for more
than ninety days on any installment of any part of principal or interest of any
debt authorized to be contracted by it for twenty-five years preceding such in-
vestment.
(h) Bankers' acceptances of the kind and maturity made eligible by law for
re-discount with federal reserve banks, provided the same are accepted by a bank
incorporated under the laws of this state or any member bank of the federal re-
serve system.
(i) Mortgage bonds, collateral trust bonds, debenture bonds or notes of any
regularly incorporated company which, or the constituent companies comprising
which for four years (4) prior to the date of purchase has earned over and above
all fixed charges other than interest on indebtedness, an amount equal to at least
double the interest charges which it will be required to pay upon its outstanding
obligations; or mortgage bonds, collateral trust bonds, debenture bonds or notes
of any regularly incorporated company, which bonds or notes plus all prior in-
cumbrances are outstanding in an amount not in excess of 50% of the actual value
of the property securing said bonds or notes.
(j) Railroad equipment bonds or car trust certificates issued in the United
States or Canada, and bonds secured by first mortgage on steel steamships, in au
amount not exceeding 60% of the value of such vessels.
(k) Bonds or notes secured by first mortgage on improved real estate as defined
in section 113 hereof of not more than 60% of the value thereof.
Securities shall be charged on books at cost. All securities as enumerated
above, having a fixed maturity shall be charged and entered upon the books of
the bank at their cost to the bank, and when a premium is paid therefor an annual
amortization charge shall be made thereon so as to bring the cost of same to the
face value of said bonds at maturity. The superintendent of banks shall have the
power to require any security to be charged down to such sum as in his judgment
represents its value. The superintendent of banks may order any securities
which he deems undesirable removed from the assets of a bank.
9218
STOCK EXCHANGE PEACTICES
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Chas. M. Borchant
Chas. P. Wright, Jr....
Chas. M. Borchart
Chas. P. Wright, Jr....
Corporate Tr. Dept.,
Union Trust Co.
Corporate Trust Dept..
Corporate Trust Dept..
Corporate Trust Dept..
Corporate Trust Dept..
Corporate Trust Dept..
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Corporate Trust Dept..
Corporate Trust Dept..
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Corporate Trust Dept..
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STOCK EXCHANGE PRACTICES
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STOCK EXCHANGE PRACTICES
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Ledogar & Co
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Mrs Gertrude L C
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STOCK EXCHANGE PEACTICES
9227
448, 190. 02
450, 447. 52
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455, 262. 52
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9228
STOCK EXCHANGE PKACTICES
Exhibit U-18-4
The Union Trust Company
(J. R. Nutt, Chairman of Board; George A. Coulton, Chairman of Board; J. R.
Kraus, Vice Chairman of Board; W. M. Baldwin, President; Allard Smith,
Executive Vice President)
CLEVELAND, OHIO
Office of Executive Vice President
June 22, 1931.
Paul Glove,
Asst. Treasurer, Broadway Office.
Dear Mr. Glove: We have received s\ibscriptions for a total of 1,363 shares
of the Union Trust Company capital stock under the partial payment plan and
wish to adivse that we have purchased this stock from time to time at an aver-
age cost of $59.71 per share. You have subscribed for 5 shares, and under this
plan the payment of $6.00 per share will be payable on or before July 1, 1931, at
the cashier's office of the Union Cleveland Corporation. The remainder of the
purchase price is to be paid for at the rate of $3.00 per share per month, deducted
the last of each month from your salary.
Employees may pay for the stock at a more rapid rate than above provided
if they so desire, all stock purchased to be held in trust until fully paid for and
then transferred and delivered to the purchaser.
Interest at the rate of six per cent per annum (6%) will be charged quarterly
on the deferred payments, and dividends paid on the stock on and after October 1,
1931, will be credited first toward interest and the balance toward principal.
Until the stock is fully paid for and delivered no employee shall pledge his
stock subscription in any manner, or use this subscription for any purpose not
contemplated under this plan.
If an employee shall terminate his purchase agreement before it is fully paid
on account of leaving the service of the bank or for other reasons, the purchase
agreement will be cancelled and the balance due on account of the purchase price
will become payable at once; otherwise, the stock will be sold at the market and
the proceeds used toward payment of the balance due, and the remainder re-
mitted to the purchaser.
It is our wish that you continue to hold the stock as an investment and not
purchase with the idea of selling it again in the immediate future.
Yours very truly,
Allard Smith, Executive Vice President.
Exhibit U-18-5a
Union Trust — Corporation account
PURCHASES
4/11/30
6shs.
4/15
3
4/21
25
a
18
4/22
2
((
20
a
100
4/23
16
"
35
4/29
15
4/28
20
5/2
85
.5/2
100
U
100
a
60
u
20
a
100
a
10
u
25
5/5
30
50
u
63
u
50
Corporate Trust Dept
Special Account
Finley Smith Gentsch, City
U (( u u
Robt. Andrews, "
Witt Kraus "
u u a
Wellsted Macklin " .'.''.-'.-.
Finley Smith Gentsch, " "'".]"
Brenda S. Merrill, Andover, O
Finley Smith Gentsch, City
Wellsted Macklin "
Witt Kraus "
Coll Loan (Acct. Bennett)
Finley Smith Gentsch, City
Ledogar & Co "
George A. Obby, St. Clair 140 Office
Finley Smith Gentsch, City
K ([ u u
a a u u
Witt Kraus " '.'.'.'.'.'.'.'.
100 fl. net.
100
91 Plus com
91,^ " "
92 Less com
91?8 P.C.
911-^ "
92H "
93 P.C.
913^ P.C.
91^
911/^ P.C.
91"^ P.C.
911!; P.C.
9iyi L.C.
91 P.C.
91 P.C.
91 L.C.
91 P.C.
90 P.C.
91 P.C.
91 P.C.
91 P.C.
STOCK EXCHANGE PRACTICES
9229
Union Trust — Corporation account — Continued
PURCHASES— Continued
5/5
5/6
5/7
5/8
5/9
U
5/12
50 shs.
25
50
94
25
25
40
50
50
50
50
50
42
50
4
20
10
40
45
30
30
15
10
20
30
6
20
2
25
22
25
28
100
100
10
10
60
25
150
100
100
50
65
8
36
50
Pulliam Emery, City.
Witt Kraus "
u u a
Finley Smith Getsch " ,
u a u «
Witt Kraus
Finley Smith Gentsch "
Wellsted Macklin "
Witt Kraus "
u a u
Finlev Smith Gentsch "
Witt Kraus "
Finley Smith Gentsch "
Merrill Hawley
Finley Smith Gentsch
U li u
U U U
a u u
u it a
Ledogar & Co
u a
W'ellsted Macklin
Ledogar & Co.
Wellsted Macklin
Herd Curtiss
Finley Smith Gentsch
Hord Curtiss
Finley Smith Gentsch
Wellsted Macklin
Hord Curtiss
Finley Smith Gentsch
Borton & Borton
Finley Smith Gentsch
Wellsted Macklin
Finley Smith Gentsch
u u a
Ledogar & Co.
Wellsted Macklin
90H P.C.
90 P. C.
90 P.C.
90 P.C.
90 P.C.
SO P.C.
SO P.C.
90 P.C.
90 P.C.
90 P.C.
90 P.C.
90 P.C.
90 P.C.
90 P.C.
90 P.C.
90 P.C.
90 P.C.
90 P.C.
90 P.C.
90 P.C.
90 P.C.
90 P.C.
90 P.C.
90 P.C.
90 P.C.
90 P.C.
90 P.C.
90 P.C.
90 P.C.
90 P.C.
90 P.C.
90 P.C.
90 P.C.
90 P.C.
90 P.C.
90 P.C.
90 P.C.
90 P.C.
90 P.C.
90 P.C.
90 P.C.
90 P.C.
SO P.C.
SO P.C.
90 P.C.
90 P.C.
Exhibit U-18-5b
5/12/30
20 Shs
6
it
25
tt
10
It
20
6/13
15
100
5/14
5
5/12
46
5/14
200
5/15
125
H
125
tl
200
It
350
t«
100
tl
300
5/16
100
50
II
50
5/17
5
3
.V19
100
II
50
II
25
II
20
II
15
II
40
fi'20
15
ii
25
II
35
1
.'■.0
11
40
l<
25
David Skall & Co. City
Ledogar & Co. "
Borton & Borton "
Finley Smith Gentsch "
II II tt tl
David Skall & Co.
Finley Smith Gentscli "
Ledogar & Co. "
Brenda S. Merrill
Jerome Benes, Sec. & Inv_.
Borton <fe Borton City
Hord Curtiss
Will S. Halle
Witt Kraus
Wellsted Macklin
Finley Smith Gentsch "
Witt Kraus
Ledogar & Co. "
Finley Smith Gentsch "
It tt tt tt
Ledogar & Co.
Witt Kraus "
Borton & Borton "
Witt Kraus
Finley Smith Gentsch "
(t tt tl tt
Ledogar & Co. "
Merrill Hawley
Borton & Borton "
Ledosar & Co. "
Finlev Smith Gentsch "
Will S. Halle
Wellsted Macklin
90 P.C.
90 P.C.
90 P.C.
90 P.C.
90 P.C.
90 P.C.
90 P.C.
90 P.C.
90
90L.C.
90 P.C.
90 P.C.
90 P.C.
90 P.C.
90 P.C.
90 P.C.
90 P.C.
90 P.C.
90 P.C.
90 P.C.
90 P.C.
90 P.C.
90 P.C.
90 P.C.
90 P.C.
90 P.C.
90 P.C.
90 P.C.
90 P.C.
90 P.C.
90 P.C.
90 P.C.
90 P.C.
9230
STOCK EXCHANGE PRACTICES
Union Trust — Corporation account — Continued
PURCHASES— Continued
5/20
6/21
6/22
6/23
5/27
it
6/28
6/29
6/31
6/2
6/13
nord Curtiss City.
Merrill Hawley " -
Borton & Borton " .
Will S. Halle " .
Finely Smith Gentsch " .
Ledogar & Co. " .
Ledogar & Co. " .
C. W. Carlson, V.P .-.
Hornblower Weeks, City.
Ledogar & Co.
Wellsted Macklin
Finley Smith Gentsch
I/Cdogar & Co.
Witt Kraus & Co.
Borton & Borton
Finley Smith Gentsch
Wellsted Macklin
Borton & Borton
Union Tr. Co.
Borton & Borton
Wellsted Macklin
Ledogar & Co.
Witt Kraus
Finley Smith Gentsch
Special .\cct
Less sales.
5 520 I
14 Less special %.
90 P. C.
90 P.C.
90 P.C.
90 P.C.
90 P.C.
90 P.C.
90 P.C.
90 Net.
90 P.C.
90 P.C.
90 P.C.
90 P.C.
90 P.C.
90 P.C.
90 P.C.
90 PC.
90 P.C.
90 P.C.
90 P.C.
100
90 P.C.
90 P.C.
90 P.C.
90 P.C.
90 P.C.
100
Exhibit U-18-5c
SALES
4/16/30
1 shs.
4/24
10
4/25
20
5/2
1
<4
100
5/8
15
6/10
5
5/24
400
552
Mr. W. M. Baldwin, Pres
Lieu W. Osborn, Jefferson, O
Sarah Fickinser, % Mr. Carlson
Mrs. W. L. Deming, Salem, 0
E. M. Hamlin, % Mr. Baldwin.
Nellie K. Ferguson, City
Miss George A. Donahue, Cedar Rap
Mrs. Gertrude L. C. Tucker
93
92 P.C.
93 Net
92 P.C.
91H PC.
90 P.C.
90 P.C.
90H
STOCK EXCHANGE PRACTICES
9231
■XT "^
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iiii
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175541— 34— PT 20-
-32
9232
STOCK EXCHANGE PRACTICES
Exhibit U-18-7a
UNION TRUST COMl'ANV — STOCK
Following are the market quotations on the Cleveland Stock Exchange of the
stock of the Union Trust Company taken from the Commercial and Financial
Chronicle for the period from January 1928 to October 1931, and from the records
of the Cleveland Stock Exchange from October 1931 to December 1932.
Date week ending
1/7/28-
1/13/28.
1/20/28.
1/27/28.
2/3/28-..
2/10/28.
2/17/28.
2/24/28-
3/2/28...
3/9/28...
3/16/28.
3/23/28.
3/30/28.
4/5/28-..
4/13/28..
4/20/28.,
4/27/28..
5/4/28 —
5/11/28..
5/18/28..
5/25/28..
6/1/28...
6/8/28-..
6/15/28.,
6/22/28..
6/29/28..
High
Low
291
286
288
285
289
288
290
288
296
290
298?^
295
299
296
298^
298H
300
299
300
300
300
299M
300
300
300
299
298
298
300
298
SOOJ-^
299?^
301
300
301
298
297
300
297
305
297
304
301
303
300
298
297M
298
298
Volume
trading
actual
shares
66
348
50
111
129
245
171
60
193
125
119
51
36
76
88
398
75
12
25
55
316
157
82
53
39
Date week ending
7/6/28-.
7/13/28..
7/20/28..
7/27/28-.
8/3/28...
8/10/28..
8/17/28..
8/24/28..
8/31/28..
9/7/28-.
9/14/28-
9/21/28..
9/28/28..
10/5/28..
10/11/28.
10/19/28.
10/26/28.
11/2/28..
11/9/28-.
11/16/28.
11/23/28.
11/30/28.
12/7/28..
12/14/28.
12/21/28-
12/28/28-
High
298
297
290
287
287
287H
290
287^2
285}-^
290
295
295
295
295}^
300
304
315
315
320
341
340
330
320
315
Low
298
297
290
285
285
287
287K
285
285
289
291
295
290
295
296
300
306
314
313
330
325
320
315
315
Exhibit IT-18-7b
1/4/29..
1/11/29.
1/18/29.
1/25/29.
2/1/29..
2/8/29..
2/15/29.
2/21/29.
3/1/29..
3/8/29..
3/15/29.
3/22/29.
3/28/29.
4/5/29-.
4/12/29.
4/19/29.
4/26/29.
5/3/29-.
5/10/29.
5/17/29.
5/24/29.
5/31/29.
6/7/29-
6/14/29.
6/21/29.
6/28/29.
7/5/29..
312
307
315
312
320
315^
325
321
327
321
335
330
337
330
340
337
347
346
347
346M
348
346
360
358
350
345
348
345
348
345
348
345
360
340
398
364
424
392
400
395
397
395
396
392
392
390
391
390
390
385
392
390
390
388
43
255
114
146
443
221
300
205
225
192
173
192
277
62
436
110
1,617
2,132
696
454
157
125
304
380
92
291
172
7/12/29..
7/19/29
7/26/29
8/2/29...
8/3/29'(SpTit V to'i)"-".'
8/9/29 (New $25 par).
8/9/29 (Old $100 par).
8/16/29 ($25 par)
8/23/29 ($25 par)
8/30/29 ($25 par)
9/6/29 ($25 par)
9/13/29 ($25 par)
9/20/29
9/27/29...
10'4/29
10/11/29....
10/18/29
10/25/29..
11/1/29
11/8/29 -.
11/15/29
11/22/29
11/29/29
12/6/29
12/13/29
12/20/29
12/27/29
390
390
390
3JJ8
390
389)^
405
400
106)^
104%
405
403
imVi
105H
106H
105H
130
107
124M
124
12434
122
127
119
137
127M
134
127
139
134Ji
136
134
132
120
122
110
113
105
106
96
100i,i
97
98
95
95^
92
97
95
96
95
95
94
Changed Aug. 5, 1929 from $!C0 par to $25 par value.
STOCK EXCHANGE PRACTICES
Exhibit U-18-7c Exhibit U-18-7d
9233
Pate week ending
1/3/30..
1/10/30..-
1/17/30
1/24/30
1/31/30
2/7/30....
2/14/30
2/21/30
2/28/30
3/7/30
3/14/30
3/21/30..
3/28/30
4/4/30
4/11/30
4/17/30
4/25/30
5/2/30 ($25 par).-.
5/9/30
5/16/30 ($25 par)..
5/23/30 ($25 par)..
5/29/30 ($25 par)..
6/6/30 ($25 par)...
6/13/30 ($25 par)..
6/20/30 ($25 par)..
6/27/30 ($25 par)-.
7/3/30 ($25 par)...
7/11/30 ($25 par)..
7/18/30 ($25 par) . .
7/25/30 ($25 par)..
8/1/30 ($25 par)...
8/8/30 ($25 par)...
8/15/30 ($25 park.
8/22/30 ($25 par)..
8/29/30 ($25 par) . .
9/5/30 ($25 par)...
9/12/30 $25 par)...
9/19/30 $25 par)...
9/26/30 ($25 par) . .
10/3/30 ($25 par) . .
10/10/30 ($25 par).
10/17/30 ($25 par).
10/24/30 ($25 par) .
10/31/30 ($25 par).
11/7/30 ($25 par)..
11/14/30 ($25 par).
11/21/30 ($25 par).
11/28/30 ($25 par).
12/5/30 ($25 par)..
12/12/30 ($25 par).
12/19/30 ($25 par).
12/20/30 ($25 par).
High
953/8
94Ji
95
93
93
95
94
94
93K
9234
92
92
93
93'i
9334
92
93
92
91
90
90
90
90
85
83
80
76
77
80
80
83
82^2
81
80
80
80
80
79
763^
75',2
75M
73M
73 1/2
70k'
71J.2
681/2
70^2
71
72
7214
72
711.^
Low
921^
92
9414
92
92^2
93
92
921X
92M
92
92
90Ji
91
93
9IK2
91
91
90
90
90
90
90
80
80
75
75
76
77
80
82M
81
80
79
80
791-i
79^2
77M
75M
75
73
73
69M
69
68}-^
57'
70
70
70
72
70
70,4
Volume
trading
actual
shares
1,023
250
57
183
520
815
111
780
464
493
40
475
339
186
1,220
150
474
440
1,671
2,120
656
450
263
366
555
368
114
253
280
112
199
52
420
227
63
42
148
125
636
901
1,395
809
1,009
392
140
659
894
1,181
478
445
1,188
207
Date week ending
1/9/31 ($25 par).
1/16/31
1/23/31
1/30/31
2/6/31
2/13/31
2/20/31
2/27/31
3/6/31
3/13/31
3/20/31
3/27/31
4/2/31
4/10/31
4/17/31
4/24/31
5/1/31
5/8/31
5/15/31
5/22/31
5/29/31 "
6/5/31 " ..
6/12/31
6/19/31
6/26/31
7/3/31 "
7/10/31 "
7/17/31
7/24/31
7/31/31
8/7/31
8/14/31 "
8/21/31 "
8/28/31
9/4/31 "
9/11/31
9/18/31
9/25/31 "
10/2/31
10/9/31 "
10/16/31
10/23/31
10/30/31 "
11/0/31
11/13/31
11/20/31
11/27/31 "
12/4/31
12/11/31
12/18/31 "
12/24/31
12/31/31
High
Low
75
72
75
70
72
70
71
70
71
70
71
70^
74
71
73
71H
721/2
72
73
72
72
71
71
70
70M
69^2
70
68
68
64k
eoH
62
63
61
611/,
69,4
62
59J'8
60
59V2
60
58M
59H
58
60
59
591/2
57k
60
59
63
59I/2
63
603^
62
60
61
60
61
69
59
mi
59
59
59)2
573k
57^8
50
54
60
541/8
52J./2
53
515.i
51M
49k
461/2
38
45k
44
44
37I/2
40
37k
37^2
35
39
36H
37
36
361/2
36}^
36
35
35
32
31^2
28
28
24
24M
23
Volume
trading
actual
shares
623
908
701
1,231
722
242
333
298
220
341
350
058
353
727
431
1,215
1,073
1,300
787
961
1,685
705
669
1,058
1,039
1,230
615
975
571
411
182
43
2,392
1,467
1,707
307
1,231
1,035
2,148
206
449
377
760
735
619
650
785
602
2,248
889
1,522
Exhibit U-18-7e
1/8/32 ($25
1/15/32
1/22/32
1/29/32
2/5/32
2/11/32
2/19/32
2/26/32
3/4/32
3/11/32
3/18/32
3/24/32
4/1/32
4/8/32
4/15/32
4/22/32
4/29/32
5/6/32
5/13/32
par).
24
22 J/2
24
213^
25>'2
231.^
243k
23
23
22
22K2
20
23
20 J^
23M
23
24
23
26
221/2
28^2
261/2
20H
25
25
24
24
20)^
201/2
19
19,1/2
17
n%
17
17
16
17
15
1,225
1,758
731
953
994
1,447
2,198
310
950
414
200
CO
541
593
885
923
764
260
589
5/20/32
5/27/32
6/3/32
6/10/32
6/17/32
6/24/32
7/8/32
7/15/32
7/22/32
7/29/32
8/5/32
8/12/32
8/19/32
8/26/32
9/2/32
9/9/32
9/16/32
9/23/32
9/30/32
15
14
14
13
11
10
11
lOM
11
10k
14
mi
121^
104
12
11
113/2
1014
123/2
10^8
13
12M
I5I/2
12
165^
14J^
18
163^
191/^
184
20
19
194
17
15M
18
17^
16
1,231
700
1,779
919
929
663
1,099
337
581
256
889
1,604
€07
637
86
278
154
eas
262
9234
STOCK EXCHANGE PRACTICES
Date week ending
High
Low
Vohime
trading
actual
shares
Date week ending
High
Low
Volume
trading
actual
shares
10/7/32 ($25 par)
16
16
15
15
14
13 Ji
1514
14
15
14
13
12
11
721
415
35
206
289
468
1,057
11/25/32 ($25 par)
12/2/32 "
12
113^
11
11
10
10
10?8
10
10
9
9^/2
133
10/14/32 "
193
10/21/32 "
12/9/32 "
12/16/32 "
445
10/28/32 "
672
11/4/32 "
12/23/32 "
870
11/10/32 "
12/30/32 "
3,625
11/18/32 "
(Exhibits U-18-8a through Q-12-8e face this page.)
Exhibit U-18-9
October 5, 1929.
The Union Trust Company,
Corporate Trust Department, Cleveland, Ohio.
Gentlemen: We have placed with the Stock Transfer Department of The
Union Trust Company certificates for 1416 shares of stock of The Union Trust
Company registered in the name of Charles W. Carlson and endorsed in blank.
This stock is appropriated to the allotments made for employee subscriptions
of said stock in accordance with the plan outlined in the letter of Mr. Nutt to
certain of said employees. You are now receiving payments on said subscriptions
which are being transferred daily to our account.
This will authorize you, as particular subscriptions are paid in full, to requisition
transfers for the paid-up shares out of the certificates so lodged with said stock
Transfer Department.
You are further authorized to procure from Mr. Carlson an irrevocable dividend
order making dividends on all untransferred stock payable to your department,
you being accountable for adjustments of dividends and interest with the sub-
scribing employees.
Very truly yours.
Union Cleveland Corporation,
By AccouEY, V. P.
Exhibit U-18-10
The Union Trust Company,
Cleveland, Ohio,
Broadway, Columbia Office, September 28th, 1929.
The Union Trust Co.,
Corporate Trust Dept., Alain Office.
Gentlemen: Enclosed find my check No. 2480 for $40.00, being inital payment
on my allotment of 4 shares of The Union Trust Stock as per circular letter of
Mr. Nutt, of August 24th, 1929.
Kindly make the proper notation and oblige.
Yours very truly,
A. L. Blombyer.
Exhibit U-18-11
The Union Trust Company,
Cleveland, Ohio,
September 20, 1929.
Miss Edith Bomberger,
Stenographic Dep't.
This is to advise you that under the plan outlined in my letter of August 24,
1929, I am glad to allot to you for purchase 2 shares of stock of The Union Trust
Company. The amount of stock available was greatly oversubscribed, so I
very much regret that it is necessary to reduce all subscriptions. This has been
done after very thorough consideration and as fairly as possible.
Please make the initial payment on your subscriptions on or before October 1,
1929 at our Corporate Trust Department.
Sincerely yours,
J. R. Nutt, President.
Wfr-9 U
Asst. Trwsurar
As3*-. ?r9»i!urar
A.I:!'-, TroaBuror
.'.38*. Soerotary
Ass"-. '
As St. Vros3\u-9r
/ri//j
•M. .i. Paris.'-
.. '.■n;-loy-»' •'-'*"
c' .
0 . .iVmstrbng
II ■
A. .';il«3
c.
U- i.organ
L.
^.', S+ofur
,' ,
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. Quiver
--" .
\. ¥Cai.tSer
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■A A. Hart
Dor
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Cl_^
:r?, Tomboy
'■'r.n^
, Tonks
i.
D. Jjinas
V.
•:. KoiT^r
L.
\. 'Jordrey '
•0.. G. Stark
A. W. l^ewis
• C. L. Tq'.lcsbury
«<(. y.-., :?osT?orth
'^j^John i'. Viashgr
C?.rl Crlikowski
nest V. 31"?a!c
' ; l>!).ul SoTOlia'ic ■ •
^T. :i. Spgar
' ::. pr.-rok-r.
J..B. Lno'canp
J;-L. Tgicesky
Jo3 3ph Kskes
F. ". Kskss
Id Chir.o
1-
Gaorge 3. Jonas
'■- B. C. Soott
"*T. V. Bastel ,.
C. J. .Hndra /
John V. Jiolepok '
^VOgor.'^e B. 7alkner
ge T'aokerlinr
. i-organ
.. 3. ShsTpell -
Ars!-.-. Trottsuror
.Xsct .; rr«ft(ivir«r
i.pr. Safi? "i-.poslt
/uia* . oecrotnry
i3s';. Spcratsv;.-
A3«%. Socrotiiry
.^55*. Seorotnry
AS;3t. Secrgtr.r;'
.\as';. 3oBir3ti;Vy
Asst. Soorat;.!-/
As5:t. Sooretery '
.".oai istcta Cfj'iior
Aa's.**. -ioftl Jsts-ta f "'
/.5Pt. astates Trust v
:.'J,>!■^., -rraajuror
i.aa%. Jraasurar
Publici-ty li«.iv>-!:3r ■ .
':,-;r. -.'onion's Sorvico
vioo Pr6Bider>
Asst, ■IVoas-.irar
Piirol.!S0iri|- Ape.-.'.:
Asa+.-Orsdit aaEr:r,-»r
Asst. >gdit-::sp.'CC!r
Tax Cortsvdtfi
As St.
!>eore :Rry
Aisst.
•treasurer
.^isst.
Seorati'.ry
Asjt.
Troasursr
Ass-r.
Secretary
ASEt.
Secretary
Ass-f-.
Ireaeursr
Asst.
Ssoretary
. Asst .
Searetsry
(^St.
Treasurer
Asst.
Treasurer
Asst,
Iraa surer
iisst.
Treasurer
.il3.=t.
Secretary
As-*."^*
Asst.
iTsa Surer _
Treasurer
Asst.
Treasurer
Asst.
■?rea surer
;'ASSt.
Treasurer
iigr. ■
::Mjlid-'J.'aylor
Asst.
Treasurar
Asst.
Treasuror
Exhibit U-18-
_^7 ;V :>., Pu.-'i'
. Vitjs.'i'rasiden':
>» . ':. Mfirisori^!
c', y . ,::or,g. BuilSln-r
<2^-.,.v,»^ (S«^A.Jl<,
fu\r^ ■ - •
1 , .^ !i. Ssf'jnoois-
Ascoiuntinp.-
JwlBon Piorca
:. /lU^'ifcirir;
."■J lis Ttsbar
iuil<Uii(,r
Arthur BennoVt
Goll5.t«iral ioina
;ir*:h«r " tcrtmijig
■ Coilaeti'jR
Al:Yed K. i.fi3ou
"Ji it r iV>ut ing-C i oa rt .no a
Louis V,ild ,
: In.ii'S'i'flaRl Books
5Ved T-'sid^sin
Ssivini53{ Do :'»:■"' or;;
^■H.»B^»r-^i TAfthar-h
T-jlabhons
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-71^^^
..uoli'i-TAvlor
Exhibit U-18-8b
1
•
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•
Accountin-
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■y
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/>£.-\fQ3 30?,r«ph
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■^^uildlnr
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■ Ca?otoriii.
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CoUatoral Lc :.o
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jjithony lii.llar
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Exhibit U-18-8c
Exhibit U-18-8d
EXHIBIT C
CERTIFICATE
April 12.
, 193
I, ...I.'.. ?•„§•»?".■ seorctao' <>f the .<?»"U^4i»?..Tru«t_ Compan^tCloyeland^ Ohio
do hereby certify that the following are the persons authorized to cxecuto documents and papers
in connectioa with applications to and loans by the Reconstruction Finance Corporation; that
said persons have beeii duly elected to the respective offices set after their respective names,
and that they arc the duly authorized and present incumbents of said officoa; and that the
signatures jset opposite their respective names ara true and genuine specimens of their respective
EignBtur«s:
?r«#lij*lt
B. C 80313 fO«
71M rtm/Umtt
JOM n;3
' CjAJt^.<^.
*. ft. CSSM
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AMtk SMr«t«rr
B. lU KC K!S
*M«» frtiy
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J- 1- PCTOKi.
Aaat. Diwtwror, '
Aa«t« t»«M»ir«r_(^
AM%* 7r«Mttr«r
WitX}\l«
«R«JI9S
j^aM. Tnamar^r
xat%, T
Exhibit G-12-6e
Exhibit G-12-8
Exhibit G-12-8e
STOCK EXCHANGE PRACTICES 9235
Exhibit U-18-12
this is cibcuiiar letter offering union trust company stock to employees
August 24th, 1929.
To Officers and Employes:
I have purchased 1,400 shares of Union Trust Company stock, which is here-
with offered for sale to officers and employes as follows:
(a) Junior Officers.
(b) Department Heads.
(c) Assistant Department Heads.
(d) Employes not inchided in the above, who have had fourteen or more
years of service.
This stock may be purchased by you at the price of $100.00 per share, as of
October 1, 1929, $10.00 per share to be paid on or before October 1, 1929, and
$5.00 per share to be deducted each month from your salary and applied as an in-
stallment payment upon the balance of $90.00 per share.
Interest at the rate of 6% per annum will be charged quarterly on the deferred
payments, and dividends paid upon the stock will be credited toward the de-
ferred interest.
Employes maj' pay for the stock at a more rapid rate than above provided if
they so desire, all stock purchased to be held in trust until fully paid, and then
transferred and delivered to the purchaser.
Written application (below attached) for the purchase of this stock will be
received up to September 15fch; at that time the allotment wiU be made and yon
should be advised of the amount of your participation by September 20th.
The maximum subscription of any officer or employe shall not exceed one share
for each $200.00 of his annual salary, and no officer or employe shall subscribe
for more than 20 shares. In the event of an over-subscription, the allotment
will be pro rated.
The executive officers of the bank join me in the hope that this plan will permit
considerable number of our junior officers and employes who feel they can afford
to do so, to purchase some of the stock of this bank upon the monthly payment
plan, and we sincerely believe that in addition to the stock itself being a high-
grade investment, you as a stockholder will thus become even more interested
in your bank.
Until the stock is fully paid for and delivered, no employe shall pledge his stock
subscription, or in any manner use this subscription for any purpose, not con-
templated under this plan.
If an employe shall terminate his purchase agreement before it is fully paid,
account of leaving the service, or for other reasons, the purchase agreement will
be cancelled and he will be reimbursed the amount that he paid, unless ter-
minated through death, in which event his estate may elect to continue to carry
out the purchase.
It is our wish that you will continue to hold this stock as an investment and
not purchase, with the idea of selling it again in the immediate future.
Sincerely yours,
J. R. NuTT, President.
Tear off here Retain
J. R. NuTT,
President, Union Trust Company, Cleveland, Ohio.
1929
I desire to purchase shares of Union Trust stock, in accordance with the
provisions of your letter of August 24, 1929.
(Send at once to C.W. Carlson, Vice President)
9236 STOCK EXCHANGE PRACTICES
The Guardian Trust Company: Directorate's Representation in Other
Concerns — Charles H. Horton
The Guardian Trust Company: Loans from Reconstruction Finance
Corporation
Exhibit G-12-1
State of Ohio,
Division of Banks,
Columbus, November 7, 19S2.
I. J. Fulton, Superintendent of Banks.
A. C. Krug, Deputy Superintendent.
Mr. R. P. Sears,
Secretary, Guardian Trust Co., Cleveland, Ohio.
Dear Mr. Sears: We wish to acknowledge receipt of yours of the fourth
wherein is a request to borrow from the R.F.C. a sum of money up to $11,000,000
in excess of the bank's combined capital and surplus. The permit for this same
amount or $11,000,000 was approved as of April 11th last based upon the resolu-
tion adopted March 15th and copy of which signed by your president and secre-
tary is part of our files and has not expired.
Your present request we understand is a renewal of the permit of April 11th
last. Therefore all previous permits for the Guardian Trust Co. to borrow are
hereby canceled and the said Guardian Trust Co. is authorized to borrow a sum
of money up to $11,000,000 in excess of its combined capital and surplus for a
period of nine months from date.
We are enclosing a duplicate to be used by you in completing this transaction
with the R.F.C.
Very truly yours, I. J. Fulton,
DAF:OM
Exhibit G-12-2
Superintendent of Banks.
State of Ohio,
Division of Banks,
Columbus, April 11, 19S2.
I. J. Fulton, Superintendent of Banks.
A. C. Krug, Deputy Superintendent.
Mr. R. P. Sears,
Secretary, The Guardian Trust Co., Cleveland, Ohio.
Dear Mr. Sears: Please be advised the permit dated March 23, 1932, for
The Guardian Trust Company to borrow $11,000,000 in excess of its combined
capital and surplus for a period of six months is hereby canceled and in lieu
thereof you will please substitute the following —
The Guardian Trust Company of Cleveland, Ohio, is hereby authorized to
borrow a sum of money up to $11,000,000 in excess of the combined capital and
surplus for a period of nine months from April 11, 1932.
We will appreciate your advising this Department when the excess has been
reduced to or below $16,000,000.
Very truly yours, I. J. Fulton,
Superintendent of Banks.
DAF:0M
Exhibit G-12-3
State of Ohio,
Division of Banks,
Columbus, November 30, 1932.
I. J. Fulton, Superintendent of Banks
A. C. Krug, Deputy Superintendent
Mr. R. P. Sears,
Secretary, The Guardian Trust Co.,
Cleveland, Ohio.
Dear Mr. Sears: We hereby acknowledge receipt of your favor under date
of the 28th enclosing copy of resolution as adopted by the executive committse
STOCK EXCHANGE PRACTICES 9237
during meeting held November 25, 1932, requesting permission to borrow
$13,000,000 in excess of the combined capital and surplus.
You may consider this our approval of your request to borrow a sum of money
up to $13,000,000 in excess of the combined capital and surplus of The Guardian
Trust Company for a period of nine months from this date. In granting tliis
request please be advised all permits previously issued for your bank to borrow
in excess are hereby canceled.
You will find enclosed herewith a copy of this letter for use with your applica-'
tion made to the R.F.C.
Very truly yours,
I. J. Fulton,
Superintendent of Banks.
daf:om
Exhibit G-12-4a
The Guardian Trust Company,
Cleveland, Ohio.
W-115
Application op —
(Name) The Guardian Trust Company.
(Address) Cleveland, Ohio.
For a loan under authority of the Reconstruction Finance Corporation Act.
Date March 14, 1932.
In preparing application, detach and fill out inclosed forms, then replace and fasten in binder, sending
completed application to nearest Loan Agency. All forms should be filled out by typewriter. Three
original executed counterparts must be filed.
Exhibit G-12-4b
Application for Loan
The Guardian Trust Company (hereinafter called the applicant) , a Trust Com-
pany organized and existing under the laws of Ohio and having its principal
place of business at Cleveland, Ohio, hereby applies to Reconstruction Finance
Corporation (hereinafter called the Corporation) for a loan not to exceed in the
aggregate $5,100,000.00, to mature on or before September 14, 1932, and to be
secured by collateral listed in Schedule F hereto attached, or other collateral
acceptable to the Corporation. For the purpose of obtaining such loan the appli-
cant represents and agrees as follows:
(1) The loan herein applied for is desired for the purpose of providing funds for
unusual demands made on us by our depositors and to liquidate temporary loans
made for that purpose.
[Note.— The law provides that no loans or advances shall be made upon foreign securities or foreign
acceptances as collateral or for the purpose of assisting in the carrying or liquidation of such foreign securi-
ties and foreign acesptances. The law also. provides tii^t dq loan pr advance shall be made by the corpora-
tion for the purpose of initiating, setting on foot, or financing any enterprise not initiated, set on foot,
or undertaken prior to January 22, 1932, except ti|at this limitation does not apply to loans made to agri-
cultural or livestock credit corporations, or Federal land banks, joint-stock land banks, or Federal inter-
mediate credit banks, nor to loans made to banks for the purpose of financing agricultural operations.)
(2) The applicant expressly consents to such examinations and audits of the
affairs of applicant and any affiliated companies, including inspection and valua-
tion of underlying security, by representatives of the Corporation, as the Corpora-
tion may from time to time direct, and agrees to pay such part or all of the expense
thereof, as the Corporation may require, and further agrees (in accordance with
section 8 of the Reconstruction Finance Corporation Act) that reports of examina-
tions by constituted authorities, and any other information they may have
relating to the applicant, may be furnished by such authorities to the Corporation
upon request therefor.
(3) Applicant will promptly upon demand deposit with the Corporation such
additional collateral and further assurances, acceptable to or required by the
Corporation, as it from time to time shall, in the exercise of its uncontrolled
discretion, require for the full and adequate security of any and all indebtedness
of the applicant to the Corporation. Collateral securing any indebtedness of
the applicant shall be security for any and all other indebtedness of the applicant
to the Corporation whether incurred under this application or otherwise, and
whether now due or hereafter to become due, and whether heretofore or hereafter
contracted.
9238 STOCK EXCHANGE PRACTICES
(4) Default in performance under any other application or obligation of the
applicant to the Corporation shall entitle the Corporation to declare the obliga-
tions under this application immediately due and payable, and thereupon at its
option to deal with all property pledged under this application as though default
had occurred hereunder.
^* (5) The Corporation, at its discretion, may collpct and at the expense and in
the name of applicant, or otlierwlse, enforce the payment when due of any or all
collateral security held hereunder, by suit or otherwise, may surrender, compro-
mise, release, renew, extend, or exchange all or any thereof, and may apply the
net proceeds thereof to the payment of any item of indebtedness of the appiioant
to it. Tie applicant will pay or cause to he paid to the Corporation all expense
which the Corporation may incur in connection with this loan for the collection
and/or enforcement of the obligations of the applicant, including the enforcement
of any guaranty which the Corporation may hold in connection with the appli-
cant's obligo.tions to the Corporation, even though no foreclosure or other ^egal
action take place. The applicant will pay or cause to bo paivl prom.ptly when due
all taxes, insurance premiums, warehouse charges, transportation costs, and
other expenses necessary for the enforcement, preservation, and/or protection of
any security pledged hereunder, including fees for filing ancl recording mortgages
and the like, or assignments thereof required by the Corporation. If the applicant
fail to make any payment required in the preceding provisions of this paragraph,
the Corporation is authorized to do so and Lhall have a lien upon sll collateral
held by it until it shall have been fully reimbursed for any advance which it
may have made in payment of any such items, together witli interest thereon at
the rate of 6 per cent per annum.
Any check or draft received by or for the Corporation for tlie account of the
applicant hereunder may be presented for p.T.yment or forwarded for collection
direct to the bank upon which drawn or at which payable; the Cori)oration
may accept in payment of or remittance for any s\)ch check or draft, cash, bank
drafts, transfers of funds or bank credits, or any other forms of payment or eniit-
tance, but the applicant shall not be entitled to credit on accovint of any such
cheek or draft until the Corjjoration shall h.-xve received the amoimt thereof in
actually and finally collected funds at a Federal Reserve Bank or branch thereof,
and the amount of any such check or draft credited by the Corporation may be
charged back to the applicant notwithstanding tlie check or draft itself can not
be returned.
(6) Upon any failure of the applicant to comply with any picvisions of this
application or default in the payment of any indebtedness to the Corporation or
in case a receiver or liqiiidator is a()pointed for the applicant or any of its property,
or in case of adjudication of insolvency, or assignment for benefit of creditors, the
Corporation is authorized to declare any or all indebtedness of the applicant to
the Corporation due and payable forthwith, and the same shall thereupon become
so due and payable. And in case of any such default, the Corporation is auth-
ori^:ed to sell, assign, ai\d deliver the whole or any part of the collateral held by
it from the applicant and any substitutes therefor or addition? thereto, and any
guarantee held by the Corporation in connection with the applicant's obliga-
tions, at any public or private sale without demand, advertisement, or notice
of the time or place of sale or adjournments thereof, for such price as it may
Exhibit G-12-4c
deem fair, the undersigned hereby waiving any and all equity or right of
redemption whether before or after sale hereunder, and upon such sale, the Cor-
poration may become the purchaser of the whole or any part of such collateral
free from any such right or ea.uity of redemption. In case of any such sale,
after deducting all costs, attorneys' fees, and other expenses of collection, the
Payee or holder ma,}' apply the residue of the proceeds of such sale or sales to the
pavment of any or all indebtedness of the applicant to the Corporation and any
balance remaining shall be paid to the applicant.
Without limiting or affecting such rights of the Corporation so to sell part cr
all of such collateral, the Corporation is further authorized at its option and in its
discretion to collect or cause to be collected or otherwise converted into money
any part of the collateral held hereunder, by suit or otherwise, and is authorized
in such case to surrender, compromise, release, renew, extend, or exchange any
item of such collateral without prior notice or consent of the applicant. Proceeds
of collections so made, after fi!st deducting costs, attorneys' fees and expenses of
collection, shall be applied to the payment of the indebtedness of the applicant to
STOCK EXCHANGE PRACTICES 9239
the Corporation whether due or not In the event of anj' legal proceedings all
costs and reasonable attorneys' fees incurred by the Corporation shall become a
part of the indebtedness of the applicant covered by the provisions hereof.
(7) L'pon any transfer or pledge of any note of the applicant given pursuant
hereto the Corporation may deliver the collateral or any part thereof or interest
therein or any guaranty or other document held in connection with the applicant's
obligations to the Corporation to the transferee or pledgee, who shall thereupon
become vested with all the powers and rights herein given and shall have the
same remedies, including the right to require additional collateral, as if originally
named herein.
(8) The Corporation shall be protected in acting upon any notice, request,
consent, certificate, writing, resolution, or other paper or document believed by
it to be genuine and to have been signed, executed, passed, or presented by the
proper parties.
(9) The applicant agrees to be and remain bound for the payment of all in-
debtedness pursuant hereto and that the lien hereof and any pledge or pledges
hereunder shall remain undisturbed notwithstanding anj- delay, extension of
tim*^, substitution of security, renewal, or other indulgence granted by the Cor-
poration in connection with any collateral, hereby waiving all notice of such
extension, substitution, renev.al, or other indulgence.
(10) The applicant expressly reserves the right to anticipate the payment of
any indebtedness to the Corporation incurred under this or any other application,
but agrees that any payment so n)ade by it may l)e applied upon any item of its
indebtedness to the Corporation in suf'h order as the Corporation may elect.
(11) No agreement has been or will be made by the applicant to pay any per-
son, association, firm, or corporatioti, either direc+Iy or indirectly, any commission
or fee for the loan hereby applied for, and no such payments have been or will be
made by the applicant.
(12) The applicant submits herewith as part of this application the following
documents:
EXHIBIT A. Certified c;py of articles and by-lavfs of applicant with all
amendments to date. [Not required of banks.]
Exhibit B. Certified copy of resolution of its Board of Directors.
Exhibit C. Certificate of election to and incumbency in ofhce of officers
of the applicant, with specimen signatures.
Exhibit D. Statement of the financial condition of applicant.
Exhibit E. Specimen of the note marked ''sample" with all blanks filled
in, which will be executed aiid delivered by the applicant if and wh.en notified
by the Corporation of its acceptance of this application.
Exhibit F. Schedules of collateral to be delivered as security for indebted-
ness of the applicant pursuant hereto, supported by full description and
information as to each item, including certified copies of financial statements
of makers, etc.
Exhibit G. Opinion of counsel for applicant.
Exhibit H. List of all of applicant's subsidiary or afifUiated organi/.ations,
if any.
[Note. — The following exhibits (I and J) are not required of banks subject to
supervision and examination by Federal authority.]
Exhibit I. Copy of last report of examination of financial condition of
applif^ant. [This report must be by State supervising authorities, unless
applicant is not subject to examination, when latest audit must be furnished.]
Exhibit J. Authorization to State banking department or other State
super\ising authority.
(13) In case a loan is made hereunder, this application and any conditions
imposed by the Corporation in granting the loan shall be and become a contract
between the applicant and the Corporation, which shall he binding upon and inure
to the benefit of their successors and assigns.
Executed this 14th day of March, 1932.
The Cuaroian Trpst Company,
[sE\L.] By J. A. florsF., Presvhnt.
Attest:
R. P. Sears,
Senelary.
9240 STOCK EXCHANGE PRACTICES
Exhibit G-12-4d
Exhibit B
resolution of board of directors of applicant
Resolved, That J. A. House, President, H. C. Robinson, Vice President, H. P.
Mcintosh, Jr., Vice President, E. T. Shannon, Vice President, John Fish, Vice
President, T. E. Monks, Vice President, H. I. Shepherd, Vice President, R. P.
Sears, Secy., C. F. Bruggemeier, Treas., John R. Ruggles, Asst. Trea«., K. B.
Wiggins, Asst. Treas. of this corporation, or either of them, be, and they are
hereby, authorized and empowered for and in the name and on behalf of this
corporation to execute and deUver to the Reconstruction Finance Coporation
the following papers and documents, to wit:
1. Application for a loan in an amount not to exceed Ten Million ($10,000,-
000.00) dollars, to mature on or before such date and to bear interest at such
rate as may be prescribed by the board of directors of the Reconstruction Fin-
ance Corporation and to be made on form prescribed or approved by the said
Corporation, which form has been submitted to this board.
2. If such application receive the favorable consideration of the Reconstruction
Finance Corporation said officers, or either of them, are authorized to execute
and deliver to said Corporation or to any fiscal agent or custodian designated by
it the promissory note or notes of this corporation in form prescribed by said
Reconstruction Finance Corporation. Any advance, in the discretion of said
officers, may be accepted in installments and may be evidenced by one or more
notes maturing as directed by said Reconstruction Finance Corporation on or
before the date specified.
Be it further resolved, That in order to secure the payment of any such note or
notes of this corporation evidencing loans made to it by the said Reconstruction
Finance Corporation and to guarantee the faithful performance of any contract
entered into with the said Reconstruction Finance Corporation, the said officers
of this corporation be, and each of them is hereby, authorized and empowered in
their discretion to pledge and hypothecate with the said Reconstruction Finance
Corporation any collateral belonging to this corporation and any collateral
which they may in their discretion, from time to time, substitute therefor, and
any collateral which may be required from time to time as additional security
for said note or notes. And such officers and each of them are further author-
ized and empowered to do such acts and to execute such additional agreements or
instruments under the corporate seal of this corporation or otherwise as may be
necessary or desirable to meet the requirements of said Reconstruction Finance
Corporation.
Be it further resolved, That any of the above named officers
(Name of officers)
' '(Offices)
of this corporation, and each of.them, be, and is hereby, authorized and empowered
to receive and to indorse in the name of this corporation any checks or drafts
representing the proceeds of such note or notes.
CERTIFICATE
I hereby certify that the foregoing is a true and correct copy of a resolution
regularly presented and adopted by the board of directors of the Guardian Trust
Company at a regular meeting duly called and
(Name of applicant)
held at Cleveland, Ohio, on the 8th day of March, 1932, at which meeting a
quorum was present and voted.
[corporate SEAL,] R. P. Sears,
Secretary.
(Exhibit G-12-4e faces this page)
EXHIBIT C
CERTIFICATE
Date U^T£h.d, ,,1932.
I, ^.^.t'^.iie^rE... , secretary of the. 5UAjgiI.U.Iffl!ST.COiiKiIi]Ujaiey£^J2.,
ilo hereby certify that the following are the persons authorized to execute documents and papers
in connection with applications to and loans by the Rccrmsfruclion Finance Corporation; that
sail! persons have been duly elected to the respective offices set after their respective names,
ajiil tliat they are tlie duly authorized and present incumbents of said offices; and that the
signatures set opposite their respective names are true and genuine specimens of their respective
signatures :
J. ,. iliilS'-
EwTWCTWlIe
Vice President
li^^x^?^?
JOKS yrsn-
K. p. tKAF
:■. F. 3!?uaG!-:J!!;iEF.
Vice President
Vice President
Sacretsiy
_ Treasurer fe
' Jt)Sa a. rajaOLSS Asst. Treasurer
"^icited ^,K- 3- WIGGINS
Asst. Treasurer/
In witness whereof I have hereunto set my han3 and affixed my notarial seal this
'^~ ■ f— ..^^k<i£ ,i9A£^
HOWARD E. POPE Nat^^Puhlie.
My commission expires.. _.>9
y^i^/^^a.
Exhibit G-12-4e
STOCK EXCHANGE PEACTICES
9241
Exhibit G-12-4f
INote:— Applicants other than banks will furnish equivalent information in form adapted to their require-
ments.]
Comparative statement of condition of the Guardian Trust Company Bank of
Cleveland
(000 omitted)
Amount
Pledged
Resources
Resources
Date Marcu i*,
1932
Dec. 31,
1931
June 30,
1931
1. Cash on hand
1,209
4,035
5,236
679
1,259
4,969
5,843
3,999
18, 536
4.413
1,330
2. Due from banks
9,477
3. Reserve with Federal Reserve Bank
6,622
4. Exchange checks and cash items
11, 159
18, 385
1,931
5. United States Government securities owned
18, 070
3,754
18, 227
6. State, county, and municipal securities
4,389
9,073
395
6,515
5, 699
7. All other bonds except foreign bonds
3, 304 8. 405
9,546
8. Foreign securities. .._
276
2,828
16,471
538
5,871
99, 372
5,096
1,603
7,567
547
9. Stocks and miscellaneous securities ..
20, 372
93, 369
5,096
1,900
10, 013
5,410
10. Loans and discounts (see Schedule 2)
109,416
11. Banking house and furniture and fixtures
5, 096
12. Other real astate owned
1,358
13. Other assets (Schedules)
6,425
Total
160, 394
44, 703
167, 471
181, 084
Liabilities
Amount
of
security
Liabilities
14. Deposits
102, 399
7,690
24, 657
4, 588
123, 104
9,156
158, 067
15. Bills payable and rediscounts—
16. With Federal Reserve Bank
24, 535
2,944
17. With National Credit Corporation..
18. With
27,479
19. Circulation
20. Other liabilities (Schedule 4)
12, 290
21
12, 290
7,768
17, 153
7,000
10, 056
1,002
4,835
22. Capital
7,000
10, 226
1,000
7,000
23. Surplus and undivided profits
10,!- 03
24. Reserves for contingencies..
18, 226
374
Total
160, 394
44, 703
167, 471
181, 084
Note.— Surety Bonds covering Deposits, 4,665,500.
CERTIFICATE
I hereby certify that the above statement is true and correct to the best of
my knowledge and belief.
R. P. Sears,
Secretary.
Schedule of earnings, dividends, etc., for the years ended December 31
(000 omitted)
Date Mar. 14, 1931
1930
1929
1928
1927
Capital
7,000
11, 226
7,000
11, 058
7,000
11, 036
7,000
10, 678
4,000
6,916
4.000
Surplus, profits and reserves . .
6,723
Total
18, 226
IS, 058
18, 036
17, 678
10, 916
10,723
Net earfiirigs before charge-ofis
303
5
140
2, 354
1,492
840
2,208
800
1,050
2,170
278
930
1,494
701
600
1, 630
Charge-ofls and recoveries (net)...
221
Dividends paid
600
Balance after charge-ofls and dividends...
168
22
358
962
193
809
9242
STOCK EXCHANGE PRACTICES
Show the following information taken from the report of the most recent examina-
tion dated , 193
At date of examination
Charged-off since examination
Recoveries, if any, since examination
Excessive
Loans
Slow
Doubtful
Loss on
Loans
Total
Depreci-
ation on
Securities
Total
Capital,
Surplus
Profits,
and
Reserves
Report not yet received on Examination made as of the
close of business February 29, 1932. A special reserve of
$1,000,000.00 has been set aside for losses, of which amount
$999,942.45 remains unused.
! I 1 I I
Exhibit G-12-4g
Form E
original note
(Place) Cleveland, Ohio,
(Date) March 14, 1932.
$5,100,000.00.
On or before September 14, 1932 for value received, the undersigned promises to
pav to the order of the Reconstruction Finance Corporation at the Federal Reserve
Bank of Cleveland in the city of Cleveland, Five Million, One hundred thousand &
no/100 dollars ($5,100,000.00), with interest from the date thereof until paid at
the rate of 5>2 per cent per annum payable at maturity and has pledged to the
Payee, as collateral security for the payment of this and of any and all other
indebtedness of the undersigned to the Payee, due or to become due, heretofore
or hereafter contracted or existing, the collateral listed in Exhibit F, attached
hereto.
Upon default in the payment of interest upon this note according to its terms,
or in case a receiver or liquidator is appointed for the undersigned, or any of its
property, or in case of adjudication of insolvency, or assignment for benefit of
creditors by the undersigned, the Payee or holder hereof, is authorized to declare
the principal hereof and of any other liabilities of the undersigned held by it, to be
due and payable and thereupon the same shall become so due and payable.
In case of nonpayment when due of the principal of this note either at maturity
or bv such declaration, the Payee or holder hereof is authorized to sell, assign,
and deliver the whole or any part of the above-mentioned collateral and any sub-
stitutes therefor or additions thereto, at any public or private sale, without demand,
advertisement, or notice of the time or place of sale or adjournments thereof, the
undersigned hereby waiving any and all equity or right of redemption whether
before or after sale hereunder, and upon such sale the Payee or holder hereof may
become the purchaser of the whole or any part of the said collateral, free from any
such right or equity of redemption. In case of such sale, after deducting all costs,
attorneys' fees, and other expenses of collection, the Payee or holder may apply
the redidue of the proceeds of such sale oi sales to the payment hereof and of any
or all of the indebtedness of the undersigned to such Payee or holder, as it shall
deem proper, returning the overplus, if any, to the undersigned.
Without limithig or affecting such rights of the Payee or holder to sell part or all
of such collateral at such times as it may select, such Payee or holder is further
authorized, in case of such default, at its option and in its discretion, to collect or
cause to be collected or otherwise converted into money any part of the said
pledged, substituted, or additional collateral, by suit or otherwise, and is hereby
authorized in such case to surrender, compromise, release, renew, extend or
exchange anv item of such collateral without prior notice to or consent of the
undersigned ."^ And in case of such collection or conversion into money of such
collateral or part thereof, the Payee or holder, after first deducting the costs,
attorneys' fees and expenses of collection, shall apply the balance of such proceeds
to the payment of this note or any other indebtedness of the undersigned whether
due or not in such manner as it shall choose.
All indorsers and guarantors hereby waive presentment, protest, and notice of
dishonor, and agree to remain bound for the payment of this note and all interest
and charges thereon, and that the lien hereof and the pledge hereunder shall
remain undisturbed notwithstanding any extension of time, substitution of col-
STOCK EXCHANGE PRACTICES
9243
lateral, or other indulgence granted by any holder of this note, hereby waiving
all notice of such extension, substitution, or other indulgence.
In the event this note or any part thereof is collected by an attorney, either with
or without suit, the undersigned agrees to pay a reasonable attorney's fee and costs
of collection.
In Witness Whereof the undersigned has caused this note to be executed by its
president or vice president and its corporate seal to be hereunto affixed by its
secretary or assistant secretary, this 14th day of March, 1932.
The Guardian Trust Company,
By H. A. H., President.
Attest:
R. P. S.,
Secretary^
Copy.
Exhibit G-12-4h
EXHIBIT F SCHEDULE OF COLLATERAL
Offered by The Guardian Trust Company as security for a loan from the
Reconstruction Finance Corporation.
Summary
1. Bonds and other securities, Schedule F (1) 0
2. Secured notes. Schedule F(2) 0
3. Unsecured notes, Schedule F(3) 0
4. Real estate mortgages. Schedule F (4) $10, 484, 285, 64
5. Other collateral (Schedule 5, to be supplied by
applicant) :
Total 10, 484, 285. 64
We hereby certify that the collateral listed in detail in Schedules F (1), (2),
(3), (4), and (5), and summarized above, consists of securities which the officers
of this corporation, b3' virtue of the resolution of its Board of Directors, attached
hereto marked "Exhibit B," are authorized to pledge as security for a loan from
the Reconstruction Finance Corporation, and that in the opinion of the under-
signed such collateral is full and adequate security for the loan hereby applied
for.
J. A. House, President.
R. P. Sears, Secretary.
EXHIBIT P (J) BONDS AND OTHER SECURITIES
D«SGription
Face
amount
Book
value
Present
market
quotation
Total
market
value
Rating
Issue
Rate
Maturity
9244
STOCK EXCHANGE PRACTICES
Exhibit G-12-5a
BILLS PAYABLE R.P.C.
Memoran-
dum
Debits
Debit bal.
Date
1932
Credit bal.
Credits
Memoran-
dum
7, 999. 93
10. 750. 00
19,112.53
1, 9C3. 99
26, 638. 56
17,219.80
6, 944. 80
292. 68
250. 49
401. 89
6, 693. 09
1, 025. 00
455. 66
209. 44
6, 752. 89
11,005.20
4, 964. 33
21.42
2, 000. 00
2, 202. 49
540. 52
165. 53
Apr. 16
20
23
28
May 13
16
18
19
20
U
21
23
24
25
26
U
27
28
■61
June 1
2
U
3
4
6
U
7
U
8
U
9
U
10
11
13
14
15
16
17
U
18
20
a
21
22
23
a
24
ti
25
a
4, 857, 789. 18
5, 047, 344. 55
5, 039, 344. 62
5. 039, 377. 96
8, 509, 099. 42
8,489,986 89
8, 488, 082. 90
8, 861, 444. 34
8, 837, 279. 74
8, 836, 987. 06
9, 098, 008. 23
9, 097, 546. 34
9, 103, 638. 25
9, 102. 157. 59
9,101,948.15
9, 096, 195. 26
9, 080, 225. 73
9, 080, 204. 31
9, 076, 001. 82
9,075,461.30
9, 075, 294. 77
9. 021. 638. 05
9, 017. 157. 36
9. 004, 562. 40
8,993,255.52
8,992,521.84
8,991,570.65
8, 989, 384. 59
8, 971, 244. 98
8, 968, 899. 42
8,965,627.14
8, 952, 321. 21
8,950,813.92
8,946,126.78
8, 940, 837. 29
8, 933, 744. 74
8,936,382.10
8, 936, 069. GO
8,935,054.59
8,932,142.28
4,857,789.18
189, 555. 37
33.34
3, 480, 471. 46
400,000.00
261, 271. 66
12, 785. 00
IS
18
101
101
103
80
101
103
80
101
103
101
101
80
101
101
80
103
101
101
101
103
101
101
103
101
101
101
103
50, 000. 00
101
3, G56. 72
545. 71
3, 934. 98
11,786.86
808. 04
10, 200. 00
1,106.94
733. 68
951. 19
2, 186. 06
16, 350. 00
1, 789. 61
2, 345. 56
3, 272. 28
7, 339. 35
5, 966. 58
1, 507. 29
1,937.14
2, 750. 00
5, 289. 49
2, 092. 55
2, 362. 64
312.50
990. 01
25.00
562. 31
2, 350. 00
101
80
103
101
103
101
101
101
101
~ *
103
101
101
101
103
101
101
101
103
101
101
101
103
101
103
101
103
Exhibit G-12-5b
101
103
101
101
101
103
101
103
101
103
101
101
18
18
103
101
101
80
398.
28, 918.
1, 138.
926.
1, 046.
2, 500.
16, 770.
1, 775.
686.
5, 567.
1, 641.
17, 392.
685.
1, 000.
6, 621.
768.
233.
3, 000.
1932
June 25
27
28
U
29
30
U
July 1
2
5
U
6
U
7
8, 932,
8,931,
8, 901,
8, 900,
11,613,
11,611.
11, 592,
11, 592,
142. 28
743. 33
685. 66
758. 68
801. 85
301. 85
756. 17
070. 02
11,584,861.42
11, 566, 784. 32
11, 558, 395. 00
11,555,161.73
2,714,090.00
8!)
STOCK EXCHANGE PKACTICES
9245
BILLS PAYABLE — R.F.C.— Continued
Memoran-
dum
Debits
1, 020. 00
3, 350. 00
946. 67
592. 98
2, 368. 01
1, 355. 30
4, 425. 60
90.00
198. 48
314.48
1, 600. 00
388. 55
231.53
25, 500. 00
557. 60
2, 175. 81
60S. 20
196. 28
169. 47
372. 00
297. 07
323. 74
275, 585. 22
3, 659. 22
1,412. 15
9, 785. 33
281.97
1, 337. 50
188. 22
399. 53
10, 000. 00
1, 474. 23
1,319.97
500. 12
Debit bal.
Date
1932
1932
July 9
11
12
U
13
14
15
U
16
18
19
U
20
U
21
22
U
23
25
26
U
27
28
a
29
30
1
2
3
Aug.
Credit bal.
11,549,845.06
11,549,252.08
11,545,528.77
11,541,013.17
11, 540, 814. 69
11,538,900.21
11,538,511.66
11, 538, 280. 13
11, 512, 222. S3
11,509,438.52
11, 509, 242. 24
11,508,700.77
11,508,403.70
11, 508, 079. 96
11, 278, 835. 52
11,217,638.04
11,217,356.07
11,216,018.57
11,215,830.35
11,215,430.82
11,203,956.59
11,203,136.62
11,202,636.50
Credits
500.00
Memoran-
dum
103
Exhibit G-12-5c
Debit
items
1, 020. 00
1, 750. 00
256. 80
1, 500. 00
355. 21
326. 46
308. 65
2, 150. 32
6, 000. 00
688. 66
421. 77
271.34
4, 009. 47
253. 13
423. 74
1, 000. 00
2, 200. 00
246. 54
363. 84
1, 968. 00
310.93
1, 050. 00
114.54
3, 737. 52
1, 563. 67
15, 000. 00
12, 378. 42
5, 207. 06
3,310.00
4,951.32
11, 559. 63
25.00
154. 39
409.18
223.84
Total
debits
3, 026. 80
"i,'855.'2i'
7, 150. 32
4, 370. 81
2, 446. 59
"2,"33i.'84"
27, 378. 42
16, 510. 95
""i79.'39"
Debit
balance
Date
1932
Aug. 3
4
5
U
6
8
9
a
10
11
12
13
15
16
17
U
18
U
19
20
22
23
24
U
25
U
26
27
29
Credit balance
1, 202, 636. 50
199, 609. 70
197, 754. 49
197, 428. 03
197, 119. 38
189, 969. 06
189, 280. 40
188, 858. 63
184, 487. 82
184, 234. 69
183, 810. 95
182, 810. 95
180, 364. 36
178, 032. 52
176, 671. 59
176, 557. 05
172, 819. 53
171, 255. 86
143, 877. 44
138, 670. 38
135, 360. 38
118, 849. 43
118,670.04
118,260.86
118, 037. 02
Total credits
Bro't forward
Credit items
9246
STOCK EXCHANGE PRACTICES
BILLS PAYABLE — R.F.c. — Continued
101
103
101
101
103
101
101
103
101
80
101
80
103
101
101
101
103
Debit
items
209. 52
250.00
501. 16
324.84
10, 000. 00
1, 152. 74
435. 53
1, 250. 00
3, 754. 73
6, 000. 00
1, 285. 66
4, 500. 00
1, 300. 00
6, 266. 02
728.63
354. 27
1, 500. 00
Total
debits
751. 16
10, 324. 84
5, 004. 73
'7,"285."66"
12, 066. 02
"i,"854."27'
Debit
balance
Date
1932
Aug. 30
31
U
Sept. 1
u
2
3
6
U
7
U
8
9
10
Credit balance
11, 117, 827. 50
11,117,076.34
11,106,751.50
11,105,598.76
11, 105, 163. 23
11, 100, 158. 50
11,092,872.84
11,080,806.82
11,080,078.19
11,078,223.92
Total credits
Credit items
Exhibit G-12-5d
80
101
101
101
101
103
101
101
101
81
101
103
103
101
80
103
101
101
103
101
103
101
103
101
103
101
101
103
101
101
80
101
80
103
101
80
103
101
80
101
103
80
101
103
101
103
101
103
101
80
101
103
1, 500. 00
1,412.44
1,415.29
592. 73
1, 998. 90
373. 50
2, 344. 47
3, 373. 36
5. 266. 55
7, 125. 00
2, 189. 80
1, 600. 00
750. 00
1, 512. 46
600. 00
6, 050. 00
679. 04
258. 12
4, 850. 00
911.97
500. 00
1,571.16
2, 500. 00
1, 574. 40
25.00
1, 445. 28
459. 37
500.00
98.83
551. 83
12, 550. 00
369. 29
1, 000. 00
3, 900. 00
4,312.84
5, 000. 00
8, 043. 49
1, 148. 60
7, 000. 00
226. 64
2, 000. 00
12, 300. 00
182. 80
3, 500. 00
1, 328. 73
1, 483. 00
913.90
12, 167. 30
1, 338. 13
1, 000. 00
8, 972. 45
750.00
2, 912. 44
2,717.97
10, 914. 80
"2,"262.'46
7, 329. 04
6,' 108." 12
2, 071. 16
'4," 074." 40
1, 470. 28
598. 83
12, 919. 29
9, 212. 84
14, 192. 09
9, 226. 64
'i5,"982."80
13, 505. 43
10, 722. 45
1932
Sept. 10
12
U
13
14
15
16
U
17
19
20
21
U
22
U
u
23
U
24
26
U
27
«
28
U
29
30
U
1
3
a
4
u
ft
5
u
u
6
a
u
7
Oct.
10
11
u
13
11, 078, 223. 92
11,075,311.48
11.073.896.19
11.073,303.46
11,071.304.56
11,068,586.59
11,065,213.23
11,059,946.68
11, 049, 031. 88
U, 046, 769. 42
11,039,440.38
11,034,
11, 033,
11, 031,
11, 027,
11,025,
11,025,
11,024,
11, 024,
332. 26
420. 29
349. 13
274. 73
804. 45
345. 08
746. 25
194. 42
11,011,275.13
11, 002, 062. 29
10, 987, 870. 20
10, 978, 643. 56
10, 962, 660. 76
10, 961, 332. 03
10, 959, 849. 03
10, 958, 935. 13
10, 945, 429. 70
10, 934, 707. 25
Bro't forward -
STOCK EXCHANGE PRACTICES
9247
Exhibit G-12-5e
BILLS PAYABLE — R.F.c. — Continued
Debit
items
2, 883.
881.
241.
807.
3, 403.
1, 020.
861.
2, 997.
778.
531.
5, 838.
3, 593.
3, 523.
459.
273.
528.
230.
394.
1, 200.
333.
1, 907.
435.
462.
359.
5, 388.
433.
323.
61, 525.
621.
3, 094.
314.
283.
21, 863.
140.
449.
566.
13, 556.
485.
3, 020.
365.
177.
900.
3,051.
50, 427.
384.
327.
55.
467.
6, 864
6, 547
660.
650.
Total
debits
1, 881. 85
9, 432. 13
1, 533. 26
1, 257. 39
62, 147. 37
22, 147. 69
'""'589."75
14, 122. 66
"l," 385.' 90
50, 811. 77
392. 54
Debit
balance
Date
13, 411. 89
1932
Oct. 13
14
15
17
18
19
20
U
21
22
24
25
U
26
27
28
29
31
Nov. 1
2
3
4
5
7
8
9
10
12
14
15
U
16
U
17
18
U
19
21
22
23
25
U
26
28
il
29
Credit balance
10, 934, 707. 25
10,931,823.27
10, 930, 941. 96
10, 930, 700. 75
10, 929, 893. 29
10, 926, 490. 24
10, 924, 608. 39
10, 292, 410. 60
10, 921, 632. 35
10, 921, 101. 04
10,911,668.91
10, 908, 145. 02
10, 907, 685. 19
10, 907, 411. 47
10, 906, 883. 18
10, 906, 652. 37
10, 906. 258. 20
10, 904, 724. 94
10, 902, 817. 86
10, 901, 560. 47
10, 896, 172. 17
10, 895, 738. 39
10, 895, 415. 37
10, 833, 268. 00
10, 830, 173. 68
10, 829, 859. 57
10, 807, 711. 88
10, 807, 122. 13
10, 792, 999. 47
10, 792, 514. 03
10, 789, 128. 13
10, 788, 950. 45
10, 788, 049. 76
10, 784, 997. 78
10, 734, 186. 01
10, 733. 793. 47
10, 733, 324. 22
10,719,912.33
10. 719, 251. 58
10, 718, 601. 58
Total credits
Bro't forward .
Credit items
800.00
103
Exhibit G-12-5f
103
500.00
443.54
406. 04
25, 000. 00
1. 538. 93
553. 23
1, 079. 42
401. 38
2. 500. 00
1, 720. 23
11, 103. 15
14, 500. 00
1, 035. 26
525. 00
3. 957. 22
4, 700. 00
3. 060. 00
688. 17
Nov. 29
30
Dec. 1
a
u
2
3
5
U
6
7
a
a
8
U
u
9
10, 718, 601. 58
10, 717, 658. 04
10,690,713.07
10, 690, 159. 84
10, 689, 080. 42
10. 6S6, 179. 04
Bro't forward
3, 982, 288. 03
50, 800. 00
101
943.54
101
80
103
26, 944. 97
101
101
101
103
2, 901. 38
101
80
103
12, 823. 38
14, 655, 643. 69
14, 639, 583. 43
103
101
105
16, 060. 26
101
sn
103
14,678,666.21
105
11.717.22
101
175541 — 34 — PT 20-
-33
9248
STOCK EXCHANGE PRACTICES
BILLS PAYABLE — R.F.c. — Continued
105
103
101
101
101
103
105
101
103
105
101
101
105
105
101
105
103
101
101
101
103
105
101
103
105
103
101
105
101
101
103
105
101
Debit
items
13,
12,
2,
4,
1,
8,
2,
2,
1,
63,
26,
3,
2,
7,
3,
5,
5,
3,
1,
37,
15,
7,
590.
250.
294.
811.
100.
496.
615.
513.
120.
950.
743.
662.
857.
074.
832.
309.
670.
930.
158.
986.
200.
884.
102.
540.
830.
288.
432.
,227.
976.
237.
,960.
250.
464.
Total
debits
14, 278. 26
'12," 544." 26'
7, 211. 43
13, 814. 09
"2,"5iai6"
89, 906. 97
"is," 909," 79'
15, 071. 13
54, 472. 07
8, 948. 40
2, 447. 94
Debit
balance
Date
1932
Dec. 9
10
U
12
13
14
15
16
U
17
U
19
20
21
22
U
a
23
24
27
28
Credit balance
14, 664, 387. 95
14, 653, 368. 75
15, 295, 759. 60
15, 288, 548. 17
15, 287, 034. 54
IS, 273. 220. 45
15, 270, 701. 29
15, 375, 315. 82
15, 361, 406. 03
15, 358, 247. 87
15, 343, 176. 74
15, 288, 704. 67
15. 279, 756. 27
15, 278, 779. 35
15, 276, 331. 41
15, 275, 867. 36
Total credits
Credit items
1, 525. 00
643, 201. 95
194, 521. 50
105
105
80
Exhibit G-12-5g
101
103
105
101
103
105
101
103
101
103
105
80
101
101
103
105
101
105
101
103
105
101
105
101
101
105
101
80
101
103
105
101
80
103
101
103
101
105
103
101
348. 60
2, 325. 00
2, 045. 00
229. 13
19, 000. 00
11,030.02
14, 464. 63
1, 250. 00
10,
3,
1,
26,
77,
1,
8,
1,
3,
1,
4,
3,
5,
756.
500.
110.
399.
767.
608.
365.
135.
055.
876.
717.
470.
800.
038.
069.
351.
500.
115.
121.
660.
253.
871.
645.
298.
440.
700.
943.
900,
281.
255,
583,
517,
4, 718. 60
30, 259. 15
15, 714. 63
14, 366. 54
2, 167. 50
104,110.05
9, 931. 95
5, 988. 50
5, 107. 17
8, 615. 93
22, 429. 93
2, 436. 05
9, 843. 56
7, 120. 43
Dec. 28
29
30
31
1933
Jan. 3
10
11
U
12
13
14
U
U
16
17
U
U
18
15, 275, 867. 36
15, 271, 148. 76
15, 241, 389. 61
15, 225, 674. 98
15, 211, 308. 44
15, 209, 140. 94
15, 105, 030. 89
"i5,"095,'979.'74'
15, 783, 581. 60
15, 778, 474. 43
15, 778, 123. 34
15, 769, 507. 41
15, 769, 385. 84
15, 746, 955. 91
15, 744, 519. 86
15, 734, 676. 30
15, 727, 555. 87
Bro't forward.
500.00
105
880. 80
693, 590. 36
105
80
STOCK EXCHANGE PRACTICES
9249
BILLS PAYABLE — R.F.C.- — Continued
Debit
items
$13, 449. 53
920. 00
10, 298. 03
234. 30
456. 84
8,316.97
269. 73
3, 426. 94
400. 00
1,119.32
11,041.08
Total
debits
$14, 886. 97
19, 306. 14
"3,"696.'67'
12, 560. 40
Debit
balance
Date
1933
Jan. 18
U
19
20
21
Credit balance
$15, 712, 668. 90
15, 693, 362. 76
15, 689, 666. 09
15, 677, 105. 69
Total crodits
Credit items
Exhibit G-12-5h
101
$2, 086. 44
5, 109. 06
273. 03
1, 100. 47
7, 440. 00
675.31
900. 00
1,211.28
28, 351. 78
18, 83!. 22
4, 608. 51
873. 15
1, 086. 44
8, 162. 50
142. 74
150. 00
12.150.00
584. 26
267. 77
5, 767. 49
57, 657. 47
310. 93
472. 50
548. 40
378. 34
1, 400. 00
3, 992. 07
396. 37
839. 60
652. 90
265.00
1, 198. 74
13, 686. 28
30, 096. 98
51.28
65.00
1, 200. 00
713.91
275. 00
185.00
26, 098. 32
1, 961. 05
700. 00
500. 00
518. 00
113,500.00
10, 200. 00
299. 00
5, 281. 32
6, 693. 67
100. 00
29, 525. 00
Jan. 21
23
24
U
u
25
U
26
U
27
U
u
28
30
a
a
31
(1
Feb. 1
U
u
2
u
u
3
u
u
4
u
6
U
7
U
U
8
U
U
9
U
u
10
11
13
15
u
16
U
17
U
u.
18
$15, 677, 105. 69
15, 669, 910. 19
15,661,096.69
15, 659, 521. 38
15, 629, 958. 32
15, 605, 645. 44
15, 604, 559. 00
Bro't forward.
$7,800.00
6, 200. 00
99.09
16.38
103
$7, 195. 50
101
103
105
8,813.50
101
103
1, 575. 31
101
105
29, 563. 06
105
103
101
24,312.88
101
80
103
101
15, 603, 903. 76
cd
105
8, 455. 24
80
103
101
12, 734. 26
15, 597, 369. 50
101
103
105
105
63, 692. 73
15, 533, 775. 86
15, 532, 444. 03
15, 526, 673. 62
15, 525, 437. 65
15, 524, 519. 75
15, 479, 537. 75
15, 478, 221. 47
15, 477, 047. 56
15, 450, 949. 24
15, 449, 004. 57
15, 448, 304. 57
15, 447, 286. 57
15, 323, 586. 57
15,311,312.58
15,281,687.58
101
103
105
1,331.83
101
103
105
5, 770. 41
105
101
1, 235. 97
101
105
917. 90
101
103
105
44,982.00
103
101
105
1, 316. 28
101
105
103
1, 173. 91
105
101
105
105
103
105
103
105
123, 700. 00
101
103
105
12, 273. 99
105
103
29, 625. 00
9250 STOCK EXCHANGE PRACTICES
Exhibit G-12-6a
W-306
Application of —
(Name) The Guardian Trust Company.
(Address) Cleveland, Ohio. , .. -r.. /-. a- a *
For a loan under authority of the Reconstruction Finance Corporation Act.
Date April 20, 1932.
In preparing application, detach and fill out inclosed forms then replace and fasten in binder, sending
compS application to nearest Loan Agency. All forms should be filled out by typewriter. Three
original executed counterparts must be filed.
Exhibit G-12-6b
APPLICATION FOR LOAN
The Guardian Trust Company (hereinafter called the applicant), a Trust
Company, organized and existing under the laws of Ohio, and having its principal
place of business at Cleveland, Ohio, hereby applies to Reconstruction Finance
Corporation (hereinafter called the Corporation) for a loan not to exceed in the
aggregate $4,550,000.00, to mature on or before October 20, 1932, and to be
secured by collateral listed in Schedule F hereto attached, or other collateral
acceptable to the Corporation. For the purpose of obtaining such loan the
applicant represents and agrees as follo\vs: • ,• <• ^
(1) The loan herein applied for is desired for the purpose of providing funds
for unusual demands made on us by our depositors, to liquidate temporary loans
made for that purpose, and to take care of seasonal requirements of our commer-
cial loan customers.
tNoTE -The law provides that no loans or advances shall be made upon foreign securities or foreign
acceptances afcolllteraror for the purpose of assisting in the carrying or liquidation of such foreign securities
and?ore°°n ac'^ep fnces Th^ law also provides that no loan or advance shall be made by the corporation
for the purpose of init^^^^^ setting on foot, or financing any enterprise not initiated, set on foot, or under-
taken prior to Januarv 22, 1932, except that this limitation does not apply to loans made to agricultural or
ivestock credi corpomtions. or Federal land banks, joint-stock land banks or Federal intermediate credit
binks nor to loans made to banks for the purpose of financing agricultural operations.]
(2) The applicant expressly consents to such examinations and audits of the
affairs of applicant and any affiliated companies, inchiding inspection and valua-
tion of underlying security bv representatives of the Corporation, as the Corpora-
tion may from time to time direct, and agrees to pay such part or all ot the ex-
pense thereof, as the Corporation may require, and further agrees (in accordance
with section 8 of the Reconstruction Finance Corporation Act) that reports of
ekaminations by constituted authorities, and any other indormation they may
have relating to the applicant, may be furnished by such authorities to the Cor-
poration upon request therefor. , „,,„T,
(3) Applicant will promptly upon demand deposit with the Corporation siich
additional collateral and further assurances, acceptable to or required by the
Corporation, as it from time to time shall, in the exercise of its uncontrolled dis-
cretion, require for the full and adequate security of any and all indebtedness of
the applicant to the Corporation. Collateral securing any indebtedness of the
applicint shall be security for any and all other indebtedness of the applicant
to the Corporation whether incurred under this application or otherwise, and
whether now due or hereafter to become due, and whether heretofore or hereafter
*^° (4) ^Default in performance under any other application or obligation of the
applicant to the Corporation shall entitle the Corporation to declare the obliga-
tions under this application immediately due and payable, and thereupon at its
option to deal with all property pledged under this application as though default
^(5)^^Th? Corporation,' at its discretion, may collect and at the expense and in
the name of applicant, or otherwise, enforce the payment when due of any or
all collateral security held hereunder, by suit or otherwise, may ^^J^.^ender, com-
promise, release, renew, extend, or exchange all or any t^y^^.^oj, and may applj
the net proceeds thereof to the payment of any item «f '"^^^^^^^"^^^ °/J^f^
applicant to it. The applicant will pay or cause to be Pf.^^ to te Corporation
all expense which the Corporation may incur m connection with this_ loan tor
the ^o^Sction and/or enforcement of the obligations of the applicant,, including
the enforcemeiit of any guaranty which the Corporation may hold in connec-
tion with tleapplicanVs^bligations to the Corporation, even though no fore-
closure or other' legal action take place. The appHcant wdl pay ^^^^^^^^^ ^^^^^
paid promptly when due all taxes, insurance premiums, warehouse charges, trans
STOCK EXCHANGE PRACTICES 9251
portation costs, and other expenses necessary for the enforcement, preservation,
and/or protection of any security pledged hereunder, including fees for filing and
recording mortgages and the like, or assignments thereof required by the Corpo-
ration. If the applicant fail to make any payment required in the preceding
provisions of this paragraph, the Corporation is authorized to do so and shall
have a lien upon all collateral held by it until it shall have been fully reimbursed
for any advance which it may have made in payment of any such items, together
with interest thereon at the rate of 6 per cent per annum.
Any check or draft received by or for the Corporation for the account of the
applicant hereunder may be presented for payment or forwarded for collection
direct to the bank upon which drawn or at which payable; the Corporation may
accept in payment of or remittance for any such check or draft, cash, bank
drafts, transfers of funds or bank credits, or any other forms of payment or
remittance, but the apphcant shall not be entitled to credit on account of any
such check or draft until the Corporation shall have received the amount thereof
in actually and finally collected funds at a Federal Reserve Bank or branch
thereof, and the amount of any such check or draft credited by the Corporation
may be charged back to the applicant notwithstanding the check or draft itself
can not be returned.
(6) Upon any failure of the applicant to comply with any provisions of this
application or default in the payment of any indebtedness to the Corporation or
in case a receiver or liquidator is appointed for the applicant or a!iy of its prop-
erty, or in case of adjudication of in.solvency, or assignment for benefit of creditors,
the Corporation is authorized to declare any or all indebtedness of the applicant
to the Corporation due and payable forthwith, and the same shall thereupon
become so due and payable. And in case of any such default, the Corporation
is authorized to sell, assign, and deliver the whole or any part of the collateral
held by it from the applicant and any substitutes therefor or additions thereto,
and any guarantee held by the Corporation in connection with the applicant's
obligations, at any public or private sale without demand, advertisement, or
notice of the time or place of sale or adjournments thereof, for such price as it
Exhibit G-12-6c
may deem fair, the undersigned hereby waiving any and all equity or right of
redemption whether before or after sale hereunder, and upon such sale, the Cor-
poration may become the purchaser of the whole or an}^ part of such collateral
free from any such right or equity of redemption. In case of any such sale,
after deducting all costs, attorneys' fees, and other expenses of collection, the
Payee or holder may apply the residue of the proceeds of such sale or sales to
the payment of any or all indebtedness of the applicant to the Corporation and
any balance remaining shall be paid to the applicant.
Without limiting or affecting such rights of the Corporation so to sell part or
all of such collateral, the Corporation is further authorized at its option and in
its discretion to collect or cause to be collected or otherwise converted into money
any part of the collateral held hereunder, by suit or otherwise, and is authorized
in such case to surrender, compromise, release, renew, extend, or exchange any
item of such collateral without prior notice or consent of the applicant. Pro-
ceeds of collections so made, after first deducting costs, attorneys' fees and ex-
penses of collection, shall be applied to the payment of the indebtedness of the
applicant to the Corporation whether due or not. In the event of any legal
proceedings all costs and reasonable attorneys' fees incurred by the Corporation
shall become a part of the indebtedness of the applicant covered by the provisions
hereof.
(7) Upon any transfer or pledge of any note of the applicant given pursuant
hereto the Corporation may deliver the collateral or any part thereof or iziterest
therein or any guarantj' or other document held in connection with the appli-
cant's obligations to the Corporation to the transferee or pledgee, who shall
thereupon become vested with all the powers and rights herein given and shall
have the same remedies, including the right to require additional collateral, as
if originally named herein.
(8j The Corporation shall be protected in acting upon any notice, request,
consent, certificate, writing, resolution, or other paper or docimient believed by
it to be genuine and to have been signed, executed, passed, or presented b}' the
proper parties.
(9) The applicant agrees to be and remain bound for the payment of all
indebtedness pursuant hereto and that the lien hereof and any pledge or j)ledge8
hereunder shall remain undisturbed notwithstanding any delay, extension of
9252 STOCK EXCHANGE PRACTICES
time, substitution of security, renewal, or other indulgence granted by the Cor-
poration in connection with any collateral, hereby waiving all notice of such
extension, substitution, renewal, or other indulgence.
(10) The applicant expressly reserves the right to anticipate the payment of
any indebtedness to the Corporation incurred under this or any other applica-
tion, but agrees that any payment so made by it may be applied upon any item
of its indebtedness to the Corporation in such order as the Corporation may
elect.
(11) No agreement has been or will be made by the applicant to pay any
person, association, firm, or corporation, either directly or indirectly, any com-
mission or fee for the loan hereby applied for, and no such payments have been
or will be made by the applicant.
' (12) The appUcant submits herewith as part of this application the following
documents:
Exhibit A. Certified copy of articles and by-laws of applicant with all
amendments to date. [Not required of banks.]
Exhibit B. Certified copy of resolution of its Board of Directors.
Exhibit C. Certificate of election to and incumbency in office of officers
of the applicant, with specimen signatures.
Exhibit D. Statement of the financial condition of applicant.
Exhibit E. Specimen of the note marked "sample" with all blanks filled
in, which will be executed and delivered by the applicant if and when noti-
fied by the Corporation of its acceptance of this application.
Exhibit F. Schedules of collateral to be delivered as security for indebt-
edness of the applicant pursuant hereto, supported by full description and
information as to each item, including certified copies of financial state-
ments of makers, etc.
Exhibit G. Opinion of counsel for applicant.
Exhibit H. List of all of applicant's subsidiary or affiliated organiza-
tions, if any.
[Note. — The following exhibits (I and J) are not required of banks subject to supervision and exam
nation by Federal authority.]
Exhibit I. Copy of last report of examination of financial condition of
applicant. [This report must be by State supervising authorities, unless
applicant is not subject to examination, when latest audit must be furnished.]
Exhibit J. Authorization to State banking department or other State
supervising authority.
(13) In case a loan is made hereunder, this application and any conditions
imposed by the Corporation in granting the loan shall be and become a contract
between the applicant and the Corporation, which shall be binding upon and
inure to the benefit of their successors and assigns.
Executed this 20th day of April, 1932.
[seal.]
The Guardian Trust Company,
By J. A. House,
President.
Attest:
R. P. Fears,
Secretary.
Exhibit G-12-6d
Exhibit B
resolution of board of directors of applicant
Resolved, That, J. A. House, President; H. C. Robinson, Allan B. Cook, John
Fish, W. R. Green, H. P. Mcintosh, Jr., Thos. E. Monks, Stanley J. Olstyn,
E. T. Shannon, and H. I. Shepherd, Vice Presidents; R. P. Sears, Secretary,
C. F. Bruggemeier, Treasurer, Wm. P. Davis and H. H. McKee, Asst. Sectys;
T. C. Edmonds, E. L. Neuswander, J. A. Purcell, John R. Ruggles and K. B.
Wiggins, Asst. Treasurers of this corporation, or either of them, be, and they are
hereby, authorized and empowered for and in the name and on behalf of this
corporation to execute and deliver to the Reconstruction Finance Corporation
the following papers and documents, to wit:
1. Application for a loan in an amount not to exceed Twelve Million ($12,000,-
000.00) dollars, to mature on or before such date and to bear interest at such
STOCK EXCHANGE PEACTICES
9253
rate as may be prescribed by the board of directors of the Reconstruction Finance
Corporation and to be made on form prescribed or approved by the said Corpor-
ation, which form has been submitted to this board.
2. If such application receive the favorable consideration of the Reconstruction
Finance Corporation said officers, or either of them, are authorized to execute
and deliver to said Corporation or to any fiscal agent or custodian designated by
it the promissory note or notes of this corporation in forms prescribed by said
Reconstruction Finance Corporation. Any advance, in the discretion of said
officers, may be accepted in installments and may be evidenced by one or more
notes maturing as directed by said Reconstruction Finance Corporation on or
before the date specified.
Be it further resolved, That in order to secure the payment of any such note or
notes of this corporation evidencing loans made to it by the said Reconstruction
Finance Corporation and to guarantee the faithful performance of any contract
entered into with the said Reconstruction Finance Corporation, the said officers
of this corporation be, and each of them is hereby, authorized and empowered
in their discretion to pledge and hypothecate with the said Reconstruction Finance
Corporation any collateral belonging to this corporation and any collateral which
they may in their discretion, from time to time, substitute therefor, and any
collateral which may be required from time to time as additional security for said
note or notes. And such officers and each of them are further authorized and
empowered to do such acts and to execute such additional agreements or instru-
ments under the corporate seal of this corporation or otherwise as may be neces-
sary or desirable to meet the requirements of said Reconstruction Finance Cor-
poration.
Be it further resolved, That any of the above named officers of this corporation,
and each of them, be, and is hereby, authorized and empowered to receive and
to indorse in the name of this corporation any checks or drafts representing the
proceeds of such note or notes.
CERTIFICATE
I hereby certify that the foregoing is a true and correct copy of a resolution
regularly presented and adopted lay the board of directors of the Guardian Trust
Company at a Regular meeting duly called and held at Cleveland, Ohio on the
12th day of April, 1932, at which meeting a quorum was present and voted.
[corporate seal.]
A. P. Sears, Secretary.
(Exhibit G-12-6e faces this pagej
Exhibit G-12-6f
[Note. — Applicants other than banks will furnish equivalent information in form adapted to their
requirements.]
Comparative statement of condition of the Guardian Trust Company, Bank of Cleve-
land, Ohio.
[000 omitted]
Amount
pledged
Resources
Resources
Date April 18, 1932
Dec. 31,
1931
June 30,
1931
1. Cash on hand . . .
1,016
4,735
4,744
1,283
18, 424
4,412
8,746
538
6,209
1,259
4,969
5,843
3,999
18. 536
4,413
8,405
538
5,871
99, 372
5,096
1,603
7,567
1,330
2. Due from banks
9,477
3. Reserve with Federal Reserve Bank
6,622
4. Exchange checks and cash items
11, 778
1,931
5. United States Government securities owned
17, 249
3,604
3,568
276
2,828
25, 874
18, 227
6. State, county, and municipal securities
5,699
7. All other bonds except foreign bonds
9,546
8. Foreign securities -- .
547
9. Stocks and miscellaneous securities
38, 328
92, 449
5,221
2,066
8.529
5,410
10. Loans and discounts (see Schedule 2) .
109,416
11. Banking house and furniture and fixtures
5,096
12. Other real estate owned ... . .
1,358
13. Other assets (Schedule 3)
6,425
Total ...
158, 371
53, 399
167, 471
181,084
9254
STOCK EXCHANGE PRACTICES
Comparative statement of condition of the Guardian Trust Company, Bank of
Cleveland, Ohio — ^Continued
[000 omitted]
Liabilities
Amount
of secur-
ity
Liabilities
14. Deposits
102, 497
11, 272
9,960
4, 570
10, 246
123, 104
9,156
158, 067
15. Bills payable and rediscounts —
16. With Federal Reserve Bank
9,960
2, 944
4,858
17. With National Credit Corporation
18. With R. F. C
17, 762
0
19. Circulation .
20. Other liabilities (Schedule 4)
20, 052
17, 351
21.
20, 052
17, 153
7,000
10, 056
1,002
4 835
22. Capital
7,000
10, 166
894
7,000
23. Surplus and undivided profits
10, 808
24. Reserves for contingencies
18, 060
374
Total..
158, 371
53, 399
167, 471
181, 084
Surety Bonds covering deposits $4,655,500.00.
Certificate
I hereby certify that the above statement is true and correct to the best of my
knowledge and belief.
W. W. Dunn,
Vice President.
Schedule of earnings, dividends, etc., for the years ended December 31:
[000 omitted]
Date
4-18-32
1931
1930
1929
1928
1927
Capital
7,000
11,060
7,000
11, 058
7,000
11, 036
7,000
10, 678
4,000
6,916
4,000
Surplus, profits and reserves
6,723
Total
18, 060
18, 058
18, 036
17, 678
10,916
10, 723
Net earnings before charge-oils
489
319
168
2,354
1,492
840
2,208
800
1,050
2,170
278
930
1,494
701
600
1,630
Charge-ofEs and recoveries (net) .
221
Dividends paid..
600
Balance after charge-offs and dividends...
2
22
358
962
193
9
Show the following information taken from the report of the most recent exam-
ination dated , 193-..
Excessive
Loans
Slow-
Doubtful
Loss on
Loans
Total
Deprecia-
tion on
Securities
Total
Capital,
Surplus
Profits,
and Re-
serves
At date of examination...
Charged off since examination
Recoveries, if any, since examination
Report not yet received on Examination made as of Close
of Business February 29, 1932. A special reserve of $1,000,-
000.00 has been set aside for losses of which amount $894,259.63
remains unused.
STOCK EXCHANGE PRACTICES 9255
Exhibit G-12-6g
Form E
original note
(Place) Cleveland, Ohio,
(Date) April 20, 1932.
$4,450,000.00.
On or before October 20, 1932 for value received, the undersigned promises
to pay to the order of the Reconstruction Finance Corporation at the Federal
Reserve Bank of Cleveland, in the citv of Cleveland, Four Million, Four hundred
fifty thousand & no/100 dollars ($4,450,000.00), with interest from the date
hereof until paid at the rate of 5/^ percent per annum payable at maturity and
has pledged to the Payee, as collateral security for the payment of this and of
any and all other indebtedness of the undersigned to the Payee, due or to become
due, heretofore or hereafter contracted or existing, the collateral listed in Exhibit
F, attached hereto.
Upon default in the payment of interest upon this note according to its terms,
or in case a receiver or liquidator is appointed for the undersigned, or any of its
property, or in case of adjudication of insolvency, or assignment for benefit of
creditors by the undersigned, the Payee or holder hereof, is authorized to declare
the principal hereof and of any other liabilities of the undersigned held by it, to
be due and payal)le and thereupon the same shall Vjecome so due and payable.
In case of nonpayment when due of the principal of this note either at maturity
or by such declaration, the Payee or holder hereof is authorized to sell, assign,
and deliver the whole or any part of the above-mentioned collateral and any
substitutes therefor or additions thereto, at any public or private sale, without
demand, advertisement, or notice of the time or place of sale or adjournments
thereof, the undersigned hereby waiving any and all equity or right of redemption
whether before or after sale hereunder, and upon such sale the Payee or holder
hereof may become the purchaser of the whole or any part of the said collateral,
free from any such right or equity of redemption. In case of such sale, after
deducting all costs, attorneys' fees, and other expenses of collection, the Payee
or holder may apply the residue of the proceeds of such sale or sales to the pay-
ment hereof and of any or all of the indebtedness of the undersigned to such
Payee or holder, as it shall deem proper, returning the overplus, if any, to the
undersigned.
Without limiting or affecting such rights of the Payee or holder to sell part or
all of such collateral at such times as it may select, such Paj^ee or holder is further
authorized, in case of such default, at its option and in its discretion, to collect
or cause to be collected or otherwise converted into money any part of the said
pledged, substituted, or additional collateral, by suit or otherwise, and is hereby
authorized in such case to surrender, compromise, release, renew, extend or
exchange any item of such collateral without prior notice to or consent of the
undersigned. And in case of such collection or conversion into money of such
collateral or part thereof, the Payee or holder, after first deducting the costs,
attorneys' fees and expenses of collection, shall apply the balance of such pro-
ceeds to the payment of this note or any other indebtedness of the undersigned
whether due or not in such manner as it shall choose.
All indorsers and guarantors hereby waive presentment, protest, and notice of
dishonor, and agree to remain bound for the payment of this note and all interest
and charges thereon, and that the lien hereof and the pledge hereunder shall
remain undisturbed notwithstanding any extension of time, substitution of
collateral, or other indulgence granted by any holder of this note, hereby waiving
all notice of such extension, substitution, or other indulgence.
In the event this note or any part thereof is collected by an attorney, either
with or without suit, the undersigned agrees to pay a reasonable attorney's fee
and costs of collection.
In Witness Whereof the undersigned has caused this note to be executed by
its president or vice president and its corporate seal to be hereunto affixed by
its secretar}- or assistant secretarj-, this 20th day of April, 1932
The Guardian Trust Company,
By J. A. House, President.
Attest:
R. P. S., Secretary.
Duplicate
9256
STOCK EXCHANGE PRACTICES
Exhibit Gp-12-6h
Exhibit F — Schedule of Collateral
Offered by The Guardian Trust Company, Cleveland, Ohio, as security for a
loan from the Reconstruction Finance Corporation.
SUMMARY
Amount
1. Bonds and other securities. Schedule F (1) $2, 455, 762. 86
2. Secured notes. Schedule F (2) 2, 590, 721. 97
3. Unsecured notes, Schedule F (3) 0
4. Real estate mortgages, Schedule F (4) 4, 556, 023. 60
5. Other collateral (Schedule 5, to be supplied by applicant) :
Total $9, 602, 508. 43
We hereby certify that the collateral listed in detail in Schedules F (1),''(2),
(3), (4), and (5), and summarized above, consists of securities which the officers
of this corporation, by virtue of the resolution of its Board of Directors, attached
hereto marked "Exhibit B," are authorized to pledge as security for a loan from
the Reconstruction Finance Corporation, and that in the opinion of the under-
signed such collateral is full and adequate security for the loan hereby applied
for.
W. R. Green,
Vice President,
R. P. Sears,
Secretary..
Exhibit F (1) — Bonds and Other Securities
Description
Face
amount
Book
value
Present
market
quotation
Total
market
value
Rating
Issue
Rate
Maturity
^
Exhibit G-12-7a
402
Application op —
(Name) The Guardian Trust Company.
(Address) Cleveland, Ohio.
For a loan under authority of the Reconstruction Finance Corporation Act.
Date May 23, 1932.
In preparing application, detach and fill out inclosed forms, then replace and fasten in binder, sending
completed application to nearest Loan Agency. All forms should be filled out by typewriter. Three
original executed counterparts must be filed.
Exhibit G-12-7b
application for loan
The Guardian Trust Company (hereinafter called the applicant) , a Trust Com-
pany organized and existing under the laws of Ohio, and having its principal
place of business at Cleveland, Ohio, hereby applies to Reconstruction Finance
Corporation (hereinafter called the Corporation) for a loan not to exceed in the
STOCK EXCHANGE PRACTICES 9257
aggregate $3,500,000.00, to mature on or before November 23, 1932 and to be
secured by collateral listed in Schedule F hereto attached, or other collateral ac-
ceptable to the Corporation. For the purpose of obtaining such loan the appli-
cant represents and agrees as follows:
(1) The loan herein applied for is desired for the purpose of providing funds
for unusual demands made on us by our depositors, to liquidate temporary loans
made for that purpose, and to take care of seasonal requirements of our commer-
cial loan customers.
[NoTE.^The law provides that no loans or advances shall be made upon foreign securities or foreign
acceptances as collateral or for the purpose of assisting in the carrying or liquidation of such foreign securities
and foreign acceptances. The law also provides that no loan or advance shall be made by the corporation
for the purpose of initiating, setting on foot, or financing any enterprise not initiated, set on foot, or under-
taken prior to January 22, 1932, except that this limitation does not apply to loans made to agricultural or
livestock credit corporations, or Federal land banks, joint-stock land banks, or Federal intermediate credit
banks, nor to loans made to banks for the purpose of financing agricultural operations.]
(2) The applicant expressly consents to such examinations and audits of the
affairs of applicant and any affiliated companies, including inspection and valua-
tion of underlying security, by representatives of the Corporation, as the Cor-
poration may from time to time direct, and agrees to pay such part or all of the
expense thereof, as the Corporation may require, and further agrees (in accord-
ance with section 8 of the Reconstruction Finance Corporation Act) that reports
of examinations by constituted authorities, and any other information they may
have relating to the applicant, may be furnished by such authorities to the
Corporation upon request therefor.
(3) Applicant will promptly upon demand deposit with the Corporation such
additional collateral and further assurances, acceptable to or required by the
Corporation, as it from time to time shall, in the exercise of its uncontrolled
discretion, require for the full and adequate security of any and all indebtedness
of the applicant to the Corporation. Collateral securing any indebtedness of the
applicant shall be security for any and all other indebtedness of the applicant to
the Corporation whether incurred under this application or otherwise, and
whether now due or hereafter to become due, and whether heretofore or here-
after contracted.
(4) Default in performance under any other application or obligation of the
applicant to the Corporation shaU entitle the Corporation to declare the obliga-
tions under this application immediately due and payable, and thereupon at its
option to deal with all property pledged under this application as though default
had occurred hereunder.
(5) The Corporation, at its discretion, may collect and at the expense and in
the name of applicant, or otherwise, enforce the payment when due of any or all
collateral security held hereunder, by suit or otherwise, may surrender, compro-
mise, release, renew, extend, or exchange all or any thereof, and may apply the
net proceeds thereof to the payment of any item of indebtedness of the applicant
to it. The applicant will pay or cause to be paid to the Corporation all expense
which the Corporation may incur in connection with this loan for the collection
and/or enforcement of the obligations of the applicant, including the enforcement
of any guaranty which the Corporation may hold in connection with the appli-
cant's obligations to the Corporation, even though no foreclosure or other legal
action take place. The applicant will pay or cause to be paid promptly when due
aU taxes, insurance premiums, warehouse charges, transportation costs, and other
expenses necessary for the enforcement, preservation, and/or protection of any
security pledged hereunder, including fees for filing and recording mortgages and
the like, or assignments thereof required by the Corporation. If the applicant
fail to make any payment required in the preceding provisions of this paragraph,
the Corporation is authorized to do so and shall have a lien upon all collateral
held by it until it shall have been fully reimbursed for anj' advance which it may
have made in payment of any such items, together with interest thereon at the
rate of 6 per cent per annum.
Any check or draft received by or for the Corporation for the account of the
applicant hereunder may be presented for payment or forwarded for collection
direct to the bank upon which drawn or at wliich payable; the Corporation may
accept in payment of or remittance for any such check or draft, cash, bank drafts,
transfers of funds or bank credits, or any other forms of payment or remittance,
but the applicant shall not be entitled to credit on account of any such check or
draft until the Corporation shall have received the amount thereof in actually
and finally collected funds at a Federal Reserve Bank or branch thereof, and the
amount of any such check or draft credited by the Corporation may be charged
back to the applicant notwithstanding the check or draft itself can not be returned.
9258 STOCK EXCHANGE PRACTICES
(6) Upon any failure of the applicant to comply with any provisions of this
application or default in the payment of any indebtedness to the Corporation
or in case a receiver or liquidator is appointed for the applicant or any of its
property, or in case of adjudication of insolvency, or assignment for benefit of
creditors, the Corporation is authorized to declare any or all indebtedness of the
applicant to the Corporation due and payable forthwith, and the same shall
thereupon become so due and payable. And in case of any such default, the
Corporation is authorized to sell, assign, and deliver the whole or any part of the
collateral held by it from the applicant and any substitutes therefor or additions
thereto, and any guarantee held by the Corporation in connection with the
applicant's obligations, at any public or private sale without demand, advertise-
ment, or notice of the time or place of sale or adjournments thereof, for such
price as it
Exhibit G-12-7c
may deem fair, the undersigned hereby waiving any and all equity or right of
redemption whether before or after sale hereunder, and upon such sale, the Cor-
poration may become the purchaser of the whole or any part of such collateral
free from any such riglit or equity of redemption. In case of any such sale, after
deducting all costs, attorneys' fees, and other expenses of collection, the Payee
or holder may a.p]3ly the residue of the proceeds of such sale or sales to tlie pay-
ment of any or all indebtedness of the applicant to the Corporation and any
balance remaining shall be paid to the applicant.
Without limiting or affecting such rights of the Corporation so to sell part or
all of such collateral, the Corporation is further authorized at its option and in
its discretion to collect or cause to be collected or otherwise converted into money
any part of the collateral held hereunder, by suit or otherwise, and is authorized
in such case to surrender, compromise, release, renew, extend, or exchange any
item of such collateral without prior notice or consent of the applicant. Proceeds
of collections so made, after first deducting costs, attorneys' fees and expenses
of collection, shall be applied to the payment of the indebtedness of the applicant
to the Corporation whether due or not. In the event of any legal proceedings
all costs and reasonable attorneys' fees incurred by the Corporation shall become
a part of the indebtedness of the applicant covered by the provisions hereof.
(7) Upon anj^ transfer or pledge of any note of the applicant given pursuant
hereto the Corporation may deliver the collateral or any part thereof or interest
therein or any guaranty or other document held in connection with the applicant's
obligations to the Corporation to the transferee or pledgee, who shall thereupon
become vested with all the powers and rights herein given and shall have the same
remedies, including the right to require additional collateral, as if originally
named herein.
(8) The Corporation shall be protected in acting upon any notice, request, con-
sent, certificate, writing, resolution, or other paper or document believed by it to
be genuine and to have been signed, executed, passed, or presented by the proper
parties.
(9) The applicant agrees to be and remain bound for the payment of all indebt-
edness pursuant hereto and that the lien hereof and any pledge or pledges here-
under shall remain undisturbed notwithstanding any delay, extension of time,
substitution of security, renewal, or other indulgence granted by the Corporation
in connection with any collateral, hereby waiving all notice of such extension,
substitution, renewal, or other indulgence.
(10) The applicant expressly reserves the right to anticipate the payment of
any indebtedness to the Corporation incurred under this or any other applica-
tion, but agrees that any payment so made by it may be applied upon any item
of its indebtedness to the Corporation in such order as the Corporation may
elect.
(11) No agreement has been or will be made by the applicant to pay any per-
son, association, firm, or corporation, either directly or indirectly, any commission
or fee for the loan hereby applied for, and no such payments have been or will
be made by the applicant.
(12) The applicant submits herewith as part of this application the following
documents:
Exhibit A. Certified copy of articles and by-laws of applicant with all
amendments to date. [Not required of banks.]
Exhibit B. Certified copy of resolution of its Board of Directors.
Exhibit C. Certificate of election to and incumbency in office of officers
of the applicant, with specimen signatures.
STOCK EXCHANGE PRACTICES 9259
Exhibit D. Statement of the financial condition of applicant.
Exhibit E. Specimen of the note marked "sample" with all blanks filled
in, which will be executed and delivered by the applicant if and when notified
by the Corporation of its acceptance of this application.
Exhibit F. Schedules of collateral to be delivered as security for indebted-
ness of the applicant pursuant hereto, supported by full description and
information as to each item, including certified copies of financial statements
of makers, etc.
Exhibit G. Opinion of counsel for applicant.
Exhibit H. List of all of applicant's subsidiary or affiliated organizations,
if any.
( Note.— The following exhibits (I and J) are not required of banks subject to supervision and examination
by Federal authority.]
ExHifliT I. Copy of last report of examination of financial condition of applicant. [This report must be by
State supervising authorities, unless applicant is not subject to examination, when latest audit must be
furnished ]
Exhibit J. Authorization to State banking department or other State supervising authority.
(13) In case a loan is made hereunder, this application and any conditions
imposed bj' the Corporation in granting the loan shall be and become a contract
between the applicant and the Corporation, wiiich shall be binding upon and
inure to the benefit of their successors and assigns.
Executed this 23rd day of May, 1932.
[seal.] The Guardian Trust Company,
By J. A. House, President.
Attest:
A. P. Sears,
Secretary.
Exhibit G-12-7d
Exhibit B
resolution of board of directors of applicant
Resolved, That, J. A. House, President; H. C. Robinson, Allan B. Cook, John
Fish, W. R. Green, H. P. Mcintosh, Jr., Thos. E. Monks, Stanley J. Olstyn,
E. T. Shannon, and H. I. Shepherd, Vice Presidents; R. P. Sears, Secretary,
C F. Bruggemeier, Treasurer, Wm. P. Davis and H. H. McKee, Asst. Sectys;
T. C. Edmonds, E. L. Neuswander, J. A. Purcell, John R. Ruggles and K.B.
Wiggins, Asst. Treasurers of this corporation, or either of them, be, and they are
hereby, authorized and empowered for and in the name and on behalf of this
corporation to execute and deliver to the Reconstruction Finance Corporation
the following papers and documents, to wit:
1. Application for a loan in an amount not to exceed Twelve Million ($12,000,-
000.00) dollars, to mature on or before such date and to bear interest at such rate
as may be prescribed by the board of directors of the Reconstruction Finance
Corporation and to be made on form prescribed or approved by the said Corpora-
tion, which form has been submitted to tliis board.
2. If such application receive the favorable consideration of the Reconstruction
Finance Corporation said officers, or either of them, are authorized to execute
and deliver to said Corporation or to any fiscal agent or custodian designated by
it the promissory note or notes of this corporation in form prescribed by said
Reconstruction Finance Corporation. Any advance, in the discretion of said
officers, may be accepted in installments and may be evidenced by one or more
notes maturing as directed by said Reconstruction Finance Corporation on or
before the date specified.
Be it further resolved, That in order to secure the payment of any such note or
notes of this corporation evidencing loans made to it by the said Reconstruction
Finance Corporation and to guarantee the faithful performance of anj' contract
entered into with the said Reconstruction Finance Corporation, the said officers
of this corporation be, and each of them is hereby, authorized and empowered in
their discretion to pledge and hypothecate with the said Reconstruction Finance
Corporation any collateral belonging to this corporation and any collateral which
they may in their discretion, from time to time, sub.stitute therefor, and an\'
collateral which may be required from time to time as additional security for
said note or notes. And such officers and each of them are further authorized
9260
STOCK EXCHANGE PRACTICES
and empowered to do such acts and to execute such additional agreements or
instruments under the corporate seal of this corporation or otherwise as may be
necessary or desirable to meet the requirements of said Reconstruction Finance
Corporation.
Be it further resolved, That any of the above named officers of this corporation,
and each of them, be, and is herebj', authorized and empowered to receive and
to indorse in the name of this corporation any checks or drafts representing the
proceeds of such note or notes.
CERTIFICATE
I hereby certify that the foregoing is a true and correct copy of a resolution
regularly presented and adopted by the board of directors of the Guardian Trust
Company at a Regular meeting duly called and held at Cleveland, Ohio on the
12th day of April, 1932, at which meeting a quorum was present and voted.
[corporate seal.] R. p. Sears, Secretary.
Exhibit G-12-7f
[Note. — Applicants other than banks will furnish ecjuivalent information in form
adapted to their requirements.]
Comparative statement of condition of the Guardian Trust Company, Cleveland, Ohio
[000 omitted]
Resources
1. Cash on hand
2. Due from hanks ..-
3. Reserve with Federal Reserve Bank.
4. Exchange checks and cash items
United States Government securities owned. .
State, county, and municipal securities
All other bonds except foreign bonds
Foreign securities
Stocks and miscellaneous securities
10. Loans and discounts (see Schedule 2)
11. Banking house and furniture and flxtures.
12. Other real estate owned
13. Other assets (Schedules)
Total.
Date May 23, 1932
1,005
3, 898
4,922
1,365
20,004
4,427
8,642
538
6,203
11, 190
39, 814
90, 379
5,221
2,226
7,071
155, 901
Amount
Pledged
16, 964
3,496
3,944
3, 153
30, 508
58, 065
Resources
Dee. 31,
1931
1,259
4,969
5,843
3,999
18, 536
4,413
8,405
538
5,871
99, 372
5,096
1,603
7,567
167, 471
June 30,
1931
1,330
9,477
6,622
1,931
18, 227
5,699
9,546
547
5,410
109. 416
5, 096
1,358
6,425
181. 084
Liabilities
14. Deposits
15. Bills payable and rediscounts —
16. With Federal Reserve Bank
17. With National Credit Corporation.
18. With R.F.C
19. Circulation
20. Other liabilities (Schedule 4).
21.
22. Capital
23. Surplus and undivided profits.
24. Reserves for contingencies
Total.
10, 457
2,938
9,098
15, 577
7,000
10, 118
589
100, 124
22, 493
15, 577
17, 707
155, 901
Amount
of Se-
curity
9,681
10, 390
4,565
22, 901
10, 528
58, 065
Liabilities
123, 104
9,156
17, 153
7,000
10. 050
1,002
167, 471
158, 067
4,835
7,000
10, 808
374
181, 084
Surety Bonds covering Deposits, 4,584,000.00.
STOCK EXCHANGE PRACTICES
9261
CERTIFICATE
I hereby certify that the above statement is true and correct to the best of my
knowledge and behef.
W. R. Green,
Vice President.
Schedule of earnings, dividends, etc., for the years ended December SI
[000 omitted]
Date
May 23,
'32
1931
1930
1929
1928
1927
Capital
7,000
10, 707
7,000
11,058
7,000
11,036
7,000
10, 678
4,000
6,916
4,000
Surplus, profits and reserves
6,723
Total
17, 707
18, 058
18, 036
17, 678
10,916
10,723
Net earnings before charge-offs
615
744
222
2,354
1,492
840
2,208
800
1,050
2,170
278
930
1,494
701
600
1,630
Charge-ofls and recoveries (net)
221
Dividends paid
600
Balance after charge-offs and dividends
351
22
358
962
193
809
Show the followdng information taken from the report of the most recent
examination dated , 193 .
At date of examination
Charged off since examination
Recoveries, if any, since examination.
Excessive
Loans
Slow
Doubt-
ful
Loss on
Loans
Total
Depre-
ciation
on Se-
curities
Total
Capital,
Surplus
Profits,
and
Reserves
Report not yet received on Examination made as of close
of business February 29, 1932. A special Reserve of $1,000,-
000.00 has been set aside for losses of which amount $589,576.37
remains unused.
Exhibit G-12-7g
Form E — Original Note
(Place) Cleveland, Ohio,
(Date) May 23, 1932.
$2,722,500.00
On or before November 23, 1932, for value received, the undersigned promises
to pay to the order of the Reconstruction Finance Corporation at the Federal
Reserve Bank of Cleveland, in the citv of Cleveland, Two million, seven hundred
twenty-two thousand five hundred & no/100 dollars ($2,722,500.00), with interest
from the date hereof until paid at the rate of 514% per cent per annum payable
at maturity and has pledged to the Payee, as collateral security for the payment
of this and of any and all other indebtedness of the undersigned to the Payee,
due or to become due, heretofore or hereafter contracted or existing, the collateral
listed in Exhibit F, attached hereto.
Upon default in the payment of interest upon this note according to its terms,
or in case a receiver or liquidator is appointed for the undersigned, or any of
its property, or in case of adjudication of insolvency, or assignment for benefit
of creditors by the undersigned, the Payee or holder hereof, is authorized to
declare the principal hereof and of any other liabilities of the undersigned held
by it, to be due and payable and thereupon the same shall become so due and
payable.
In case of nonpayment when due of the principal of tliis note either at maturity
or by such declaration, the Payee or holder hereof is authorized to sell, assign,
and deliver the whole or any part of the above-mentioned collateral and any
substitutes therefor or additions thereto, at any public or private sale, without
demand, advertisement, or notice of the time or place of sale or adjournments
thereof, the undersigned hereby waiving any and all equitv or right of redemption
9262 STOCK EXCHANGE PRACTICES
whether before or after sale hereunder, and upon such sale the Payee or holder
hereof may become the purchaser of the whole or any part of the said collateral,
free from any such right or equity of redemption. In case of such sale, after
deducting all costs, attorneys' fees, and other expenses of collection, the Payee
or holder may apply the residue of the proceeds of such sale or sales to the payment
hereof and of any or all of the indebtedness of the undersigned to such Payee or
holder, as it shall deem proper, returning the overplus, if any, to the undersigned.
Without limiting or affecting such rights of the Payee or holder to sell part or
all of such collateral at such times as it may select, such Payee or holder is further
authorized, in case of such default, at its option and in its discretion, to collect
or cause to be collected or otherwise converted into money any part of the said
pledged, substituted, or additional collateral, by suit or otherwise, and is hereby
authorized in such case to surrender, compromise, release, renew, extend or
exchange any item of such collateral without prior notice to or consent of the
undersigned. And in case of such collection or conversion into money of such
collateral or part thereof, the Payee or holder, after first deducting the costs,
attorneys' fees and expenses of eollection, shall apply the balance of such pro-
ceeds to the payment of this note or any other indebtedness of the undersigned
whether due or not in such manner as it shall choose.
All indorsers and guarantors hereby waive presentment, protest, and notice
of dishonor, and agree to remain bound for the payment of this note and all
interest and charges thereon, and that the lien hereof and the pledge hereunder
shall remain undisturbed notwithstanding any extension of time, substitution of
collateral, or other indulgence granted by any holder of this note, hereby waiving
all notice of such extension, substitution, or other indulgence.
In the event this note or any part thereof is collected by an attorney, either with
or without suit, the undersigned agrees to pay a reasonable attorney's fee and
costs of collection.
In Witness Whereof the undersigned has caused this note to be executed by
its president or vice president and its corporate seal to be hereunto affixed by its
secretary or assistant secretary, this 23rd day of May, 1932.
The Guardian Trust Company,
Attest: By J. A. House,
R. P. S., President.
Secretary.
[Duplicate.]
Exhibit G-12-7h
Exhibit F— Schedule of Collateral
Offered by The Guardian Trust Company, Cleveland, Ohio, as security for a
loan from the Reconstruction Finance Corporation.
summary
Amount
1. Bonds and other securities, Schedule F (1) $4, 392, 810. 53
2. Secured notes. Schedule F (2) 3, 634, 062. 58
3. Unsecured notes, Schedule F (3)
4. Real estate mortgages. Schedule F (4)
5. Other collateral (Schedule 5, to be supplied
by applicant):
Total $8,026,873. 11
We hereby certify that the collateral listed in detail in Schedules F (1), (2),
(3), (4), and (5), and summarized above, consists of securities which the officers
of this corporation, by virtue of the resolution of its Board of Directors, attached
hereto marked "Exhibit B," are authorized to pledge as security for a loan from
the Reconstruction Finance Corporation, and that in the opinion of the under-
signed such collateral is full and adequate security for the loan hereby applied for.
J. A. House,
President .
R. P. Sears,
Sec'y.
STOCK EXCHANGE PRACTICES 9263
Exhibit F (1) — Bonds, and Other Securities
Description
Face
Amount
Book
Value
Present
Market
Quotation
Total Mar-
ket Value
Rating
Issue
Rate
Maturity
(Separate exhibit ac-
companies this re-
port )
Exhibit G-12-8a
W-973
Application of —
(Name) The Guardian Trust Company.
(Address) 623 Euclid Avenue, Cleveland, Ohio.
For a loan under authority of the Reconstruction Finance Corporation Act.
Date November 2, 1932.
In preparing application, detach and fill out inclosed forms, then replace and fasten in binder, sending
completed application to nearest Loan Agency. All forms should be filled out by typewriter. Three
original executed counterparts must be filed.
Exhibit G-12-8b
Application for Loan
The Guardian Trust Company (hereinafter called the applicant), a Trust Com-
pany, organized and existing under the laws of Ohio, and having its principal
place of business at Cleveland, Ohio, hereby applies to Reconstruction Finance
Corporation (hereinafter called the Corporation) for a loan not to exceed in
the aggregate $5,900,000.00, to mature on or before May 2, 1933 and to be
secured by collateral listed in Schedule F hereto attached, or other collateral
acceptable to the Corporation. For the purpose of obtaining such loan the
applicant represents and agrees as follows:
(1) The loan herein applied for is desired for the purpose of repayment of
balance due National Credit Association, and to provide funds to liquidate tem-
porary loans, and to take care of seasonal requirements of our commercial loan
customers.
[Note.— The law provides that no loans or advances shall be made upon foreign securities or foreign
acceptances as collateral or for the purpose of assisting in the carrying or liquidation of such foreign securities
and foreign acceptances. The law also provides that no loan or advance shall be made by the corporation for
the purpose of initiating, setting on foot, or financing any enterprise not initiated, set on foot, or undertaken
prior to January 22, 1932, except that this limitation does not apply to loans made to agricultural or livestock
credit corporations, or Federal land banks, joint-stock land banks, or Federal intermediate credit banks, nor
to loans made to banks for the purpose of financing agricultural operations.]
(2) The applicant expressly consents to such examinations and audits of the
affairs of applicant and any affiliated companies, including inspection and valua-
tion of underlying security, by repi'esentatives of the Corporation, as the Corpora-
tion may from time to time direct, and agrees to pay such part or all of the expense
thereof, as the Corporation may require, and further agrees (in accordance witn
section 8 of the Reconstruction Finance Corporation Act) that reports of examina-
tions by constituted authorities, and any other information they may have
relating to the applicant, may be furnished by such authorities to the Corporation
upon request therefor.
(3) Applicant will promptly upon demand deposit with the Corporation such
additional collateral and further a.ssurances, acceptable to or required b}^ the
Corporation, as it from time to time shall, in the exercise of its uncontrolled dis-
cretion, require for the full and adequate .security of any and all indebtedness of
the applicant to the Corporation. Collateral securing any indebtedness of the
applicant shall be security for any and all other indebtedness of the applicant
to the Corporation whether incurred under this application or otherwise, and
175541— 34— PT 20-
-34
9264 STOCK EXCHANGE PRACTICES
whether now due or hereafter to become due, and whether heretofore or hereafter
contracted.
(4) Default in performance under any other application or obligation of the
applicant to the Corporation shall entitle the Corporation to declare the obliga-
tions under this application immediately due and payable, and thereupon at its
option to deal with all property pledged under this application as though default
had occurred hereunder.
(5) The Corporation, at its discretion, may collect and at the expense and in
the name of applicant, or otherwise, enforce the payment when due of any or all
collateral security held hereunder, by suit or otherwise, may surrender, com-
promise, release, renew, extend, or exchange all or any thereof, and may apply
the net proceeds thereof to the payment of any item of indebtedness of the ap-
plicant to it. The applicant will pay or cause to be paid to the Corporation all
expense which the Corporation may incur in connection with this loan for the
collection and/or enforcement of the obligations of the applicant, including the
enforcement of any guaranty which the Corporation may hold in connection with
the applicant's obligations to the Corporation, even though no foreclosure or
other legal action take place. The applicant will pay or cause to be paid promptly
when due all taxes, insurance premiums, warehouse charges, transportation costs,
and other expenses necessary for the enforcement, preservation, and/or pro-
tection of any security pledged hereunder, including fees for filing and recording
mortgages and the like, or assignments thereof required by the Corporation. If
the applicant fail to make any payment required in the preceding provisions of
this paragraph, the Corporation is authorized to do so and shall have a lien upon
all collateral held by it until it shall have been fully reimbursed for any advance
which it may have made in payment of any such items, together with interest
thereon at the rate of 6 per cent per annum.
Any check or draft received by or for the Corporation for the account of the
applicant hereunder may be presented for payment or forwarded for collection
direct to the bank upon which drawn or at which payable; the Corporation may
accept in payment of or remittance for any such check or draft, cash, bank drafts,
transfers of funds or bank credits, or any other forms of payment or remittance,
but the applicant shall not be entitled to credit on account of any such check or
draft until the Corporation shall have received the amount thereof in actually and
finally collected funds at a Federal Reserve Bank or branch thereof, and the
amount of any such check or draft credited by the Corporation may be charged
back to the applicant notwithstanding the check or draft itself can not be returned.
(6) Upon any failure of the applicant to comply with any provisions of this
application or default in the payment of any indebtedness to the Corporation or
in case a receiver or liquidator is appointed for the applicant or any of its property,
or in case of adjudication of insolvency, or assignment for benefit of creditors, the
Corporation is authorized to declare any or all indebtedness of the applicant to
the Corporation due and payable forthwith, and the same shall thereupon be-
come so due and payable. And in case of any such default, the Corporation is
authorized to sell, assign, and deliver the whole or any part of the collateral held
by it from the applicant and any substitutes therefor or additions thereto, and any
guarantee held by the Cori)oration in connection with the applicant's obligations,
at any public or private sale without demand, advertisement, or notice of the
time or place of sale of adjournments thereof, for such price as it
Exhibit G-12-8c
may deem fair, the undersigned hereby waiving any and all equity or right of
redemption whether before or after sale hereunder, and upon such sale, the Cor-
poration may become the purchaser of the whole or any part of such collateral
free from any such right or equity of redemption. In case of any such sale, after
deducting all costs, attorneys' fees, and other expenses of collection, the Payee or
holder may apply the residue of the proceeds of such sale or sales to the payment
of any or all indebtedness of the applicant to the Corporation and any balance
remaining shall be paid to the applicant.
Without limiting or affecting such rights of the Corporation so to sell part or all
of such collateral, the Corporation is further authorized at its option and in its
discretion to coUect or cause to be collected or otherwise converted into money
any part of the collateral held hereunder, by suit or otherwise, and is authorized
in such case to surrender, compromise, release, renew, extend, or exchange any
item of such collateral without prior notice or consent of the applicant. Proceeds
of collections so made, after first deducting costs, attorneys' fees and expenses of
STOCK EXCHANGE PRACTICES 9265
collection, shall be applied to the payment of the indebtedness of the applicant to
the Corporation whether due or not. In the event of any legal proceedings all
costs and reasonable attorneys' fees incurred by the Corporation shall become a
part of the indebtedness of the applicant covered by the provisions hereof.
(7) I^pon any transfer or pledge of any note of the applicant given pursuant
hereto the Corporation may deliver the collateral or any part thereof or interest
therein or any guaranty or other document held in connection with the applicant's
obligations to the Corporation to the transferee or pledgee, who shall thereupon
become vested with all the powers and rights herein given and shall have the same
remedies, including the right to require additional collateral, as if originally
named herein.
(8) The Corporation shall be protected in acting upon any notice, request,
consent, certificate, writing, resolution, or other paper or document believed Ijy
it to be genuine and to have been signed, executed, passed, or presented by the
proper parties.
(9) The applicant agrees to be and remain bound for the payment of all in-
debtedness pursuant hereto and that the lien hereof and any pledge or pledges
hereunder shall remain undisturbed notwithstanding any delay, extension of
time, suVjstitution of security, renewal, or other indulgence granted by the Cor-
poration in connection with any collateral, hereby waiving all notice of such ex-
tension, substitution, renewal, or other indulgence.
(10) The applicant expressly reserves the right to anticipate the payment of
any indebtedness to the Corporation incurred under this or any other application,
but agrees that any payment so made by it may be applied upon any item of its
indebtedness to the Corporation in such order as the Corporation may elect.
(11) No agreement has been or will be made by the applicant to pay any per-
son, association, firm, or corporation, either directly or indirectly, any commis-
sion or fee for the loan hereby applied for, and no sucn payments have been or
will be made by the applicant.
(12) The applicant submits herewith as part of this application the following
documents:
Exhibit A. Certified copy of articles and by-laws of applicant with all
amendments to date. [Not required of banks.]
Exhibit B. Certified copy of resolution of its Board of Directors.
Exhibit B. Certified copy of resolution of its Board of Directors.
Exhibit C. Certificate of election to and incumbency in office of officers
of the applicant, with specimen signatures.
Exhibit D. Statement of the financial condition of applicant.
Exhibit E. Specimen of the note marked "sample" with all blanks filled
in, which will be executed and delivered by the applicant if and when noti-
fied by the Corporation of its acceptance of this application.
Exhibit F. Schedules of collateral to be delivered as security for indebted-
ness of the applicant pursuant hereto, supported by full description and in-
formation as to each item, including certified copies of financial statements
of makers, etc.
Exhibit G. Opinion of counsel for applicant.
Exhibit H. List of all of applicant's subsidiary or affiliated organizations,
if any.
[Note.— The following exhibits (I and J) are not required of banks subject to supervision and examination
by Federal authority.)
Exhibit I. Copy of last report of examination of financial condition of
applicant. [This report must be by State supervising authorities, unless
applicant is not subject to examination, when latest audit must be fur-
nished.]
Exhibit J. Authorization to State banking department or other State
aupervising autliority.
(13) In case a loan is made hereunder, this application and any conditions im-
posed by the Corporation in granting the loan shall be and become a contract
between the applicant and the Corporation, which shall be binding and inure to
the benefit of their successors and assigns.
Executed this 2nd day of November, 1932.
The Guardian Trust Company,
By W. R. Green,
[seal.] Vice President.
Attest:
R. P. Sears, Secretary.
9266 STOCK EXCHANGE PRACTICES
Exhibit G-12-8d
Exhibit B
resolution of executive committee applicant
Resolved, That (officers as listed below), of this corporation, or either of them,
be, and they are hereby, authorized and empowered for and in the name and
on behalf of this corporation to execute and deliver to the Reconstruction Finance
Corporation the following papers and documents, to wit:
1. Application for a loan in an amount not to exceed $5,900,000.00, to mature
on or before such date and to bear interest at such rate as may be prescribed by
the board of directors of the Reconstruction Finance Corporation and to be made
on form prescribed or approved by the said Corporation, which form has been
submitted to this committee.
2. If such application receive the favorable consideration of the Reconstruction
Finance Corporation said officers, or either of them, are authorized to execute and
deliver to said Corporation or to any fiscal agent or custodian designated by it
the promissory note or notes of this corporation in form prescribed by said Recon-
struction Finance Corporation. Any advance, in the discretion of said officers,
may be accepted in installments and may be evidenced by one or more notes
maturing as directed by said Reconstruction Finance Corporation on or before
the date specified.
Be it further resolved, That in order to secure the payment of any such note or
notes of this corporation evidencing loans made to it by the said Reconstruction
Finance Corporation and to guarantee the faithful performance of any contract
entered into with the said Reconstruction Finance Corporation, the said officers
of this corporation be, and each of them is hereby, authorized and empowered
in their discretion to pledge and hypothecate with the said Reconstruction
Finance Corporation any collateral belonging to this corporation and any col-
lateral which they may in their discretion, from time to time, substitute therefor,
and any collateral which may be required from time to time as additional security
for said note or notes. And such officers and each of them are further authorized
and empowered to do such acts and to execute such additional agreements or
instruments under the corporate seal of this corporation or otherwise as may be
necessary or desirable to meet the requirements of said Reconstruction Finance
Corporation.
Be it further resolved. That the officers as listed below of this corporation, and
each of them, be, and is hereby, authorized and empowered to receive and to
indorse in the name of this corporation any checks or drafts representing the
proceeds of such note or notes.
CERTIFICATE
I hereby certify that the foregoing is a true and correct copy of a resolution
regularly presented and adopted by Executive Committee of the Guardian
Trust Company at a regular meeting duly called and held at Cleveland, Ohio, on
the 1st day of November, 1932, at which meeting a quorum was present and
voted.
[CORPORATE SEAL] R. P. Sears, Secretary.
J. A. House, President; H. C. Robinson, Allan B. Cook, John Fish, W. R.
Green, Geo. B. Johnson, H. P. Mcintosh, Jr., Thos. E. Monks, Stanley J. Olstyn,
W. D. Purdon and E. T. Shannon, Vice Presidents; R. P. Sears, Secretary; C. F.
Bruggemeier, Treasurer; J. A. Purcell, Assistant Vice President; Wm. P. Davis,
H. H. McKee, John R. Ruggles and K. B. Wiggins, Assistant Secretaries; T. C.
Edmonds, Assistant Treasurer.
(Exhibit G-12-7e face this page)
R. r. c. Totm. !<-»
EXHIBIT C
CERTIFICATE
Date ^I^.^.A^J...... ,193
I, E..£.-Sfiax8 , secretary of the Guaraiaa Trust Company, Cleveland, Ohio,
lo hftrflhv fitrtifv that *ha fMI^..^.<» *u _^ ....^L._ ■ .VI"" """r ; r
• '.- •:., -;. - , f- —r ^"^ I'v.c-wuo ttuMi^'ii/.cix tu r.\ecuw; uucuincQEs ana papers
in connecUon vfith appUcations to and loans by the Keoonstruction Finance Corporation- that
I'^A fiff H' *''® been duly elected to the respective ollices set after their respective nkmes,
ana that they arc the duly authorized and present incumbents of said offices; and that the
si^atiires set opposite their respective names arc true and genuine specimens of their respective
J. A. fou;f
H. -J. hO^IS'CS
AlX'-V '•). GfiOi
JOKH ■■la
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Vioo ?r«fid*B*
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VI o« PMald«t
vio« Pr«»l<l«Bt
rTAanr j. OL-Tr.'
H. I. SHI-WERC ■
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w. P. vxn
n. R. UC £ E
e. I„ BEU;-'«A!!DrS
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Viee !Y«sidat
.'loe Prasiaant
VI o« Pr»tl4«»t
^___''eoretf»ry
TroMurar
^i««t. Seoretwry
Aart. Trsajurer tm
/t»t» Treftura:
' Asst* Tr«a«ur*r
»8«t* Irw»«wr«r_^
' A act. TraMwar ^/
^^20i,^v-v--='
, /fe-x^-^-^--
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Exhibit G-12-7e
STOCK EXCHANGE PRACTICES
9267
Exhibit G-12-8f
Comparative statement of condition of the Guardian Trust Company Bank of
Cleveland, Ohio
[000 omitted]
Date Oct
. 29, 1932
Amount
Pledged
Resources
Resources
Dec. 31.
1931
June 30,
1931
1. Cash on hand
1,029
3,498
4,989
551
1,259
4, 909
5,843
3, 999
IS, 536
4,413
8, 405
538
5,871
99, 372
5, 096
1,603
7,567
1,330
2. Due from banks
9 477
3. Reserve with Federal Reserve Bank. . .
6, 622
4. Exchange checks and cash items
10, 067
1,931
24, 103
2,892
6,691
5. United States Government securities owned
25, 781
4, 340
7,740
339
6,132
18, 227
6. State, county, and municipal securities
5, 699
7. All other bonds except foreign bonds
9, 546
8. Foreign securities
547
9. Stocks and miscellaneous securities
44, 338
87, 68S
5,221
2,481
5,285
3,280
31,752
5,410
10. Loans and discounts (sen Schedule 2)
109, 416
11. Banking house and furniture and fixtures..
5,096
12. Other real estare owned . ..
1,358
13. Other assets (Schedules)
6,425
Total..
155, 090
68, 718
167,471
181,084
Liabilities
Amount
of
Security
Liabilities
14. Deposits.
102, 920
17, 591
6, 328
3,642
28,811
123,104
9,156
158, 007
15. Bills payable and rediscounts —
16. With Federal Reserve Bank
6,328
1,901
10, 907
17. With National Credit Corporation
18. With R.F.C
19, 136
19. Circulation
20. Other liabilities (Schedule 4)
3,534
12, 212
17, 153
4,835
21. Repurchase Agreement .. .. .
15, 746
12, 346
7,000
10,050
1,002
22. Capital
7,000
7,612
2,676
7,000
23. Surplus and undivided profits
10, 808
24. Reserves for contingencies
17, 288
374
Total
155, 090
68, 718
167, 471
181, 084
CERTIFICATE
I hereby certify that the above statement is true and correct to the best of my
knowledge and belief.
W. R. Green,
Vice President or Cashier.
Schedule of earnings, dividends, etc., for the years ended December 31
[000 omitted]
Date
Oct. 29,
1932
1931
1930
1929
1928
1927
Capital .. . ..
7,000
10,288
7,000
11,058
7,000
11,036
7,000
10, 678
4,000
6,916
4,000
Surplus, profits and reserves
6,723
Total
17,288
18, 058
18, 036
17, 678
10,916
10,723
Net earnings before charge-offs
1,304
1,772
302
2, 354
1,492
840
2,208
800
1,050
2,170
278
930
1,494
701
600
1,630
Charge-offs and recoveries (net) ..
221
Dividends paid j
600
Balance after charge-offs and dividends...
770
22
358
962
193
809
9268
STOCK EXCHANGE PRACTICES
Show the following information taken from the report of the most recent
examination dated , 193 .
Excessive
Loans
Slow
Doubtful
Loss on
Loans
Total
Depre-
ciation
on
Securities
Total
Capital,
Surplus
Profits,
and
Reserves
At date of examination
Examiners report not yet received. Since January 1, 1932
Charged off since examination
the balance of the Special Reserve of $1,000,000 and an addi-
Eecoveries, if any, since examination
tional $4t)7, 153.58 has been charged off. There remains in our
reserve for depreciation account $75,546.43. In addition to
this. Special Reserves of $2,600,000.00 have been set up at the
suggestion of the State Banking Department to take care of
contingent losses.
Exhibit G-12-8g
Form E
ORIGINAL NOTE
(Place) Cleveland, Ohio,
$5,900,000.00 (Date) November 2, 1932.
On or before May 2, 1933 for value received, the vmdersigned promises to pay
to the order of the Reconstruction Finance Corporation at the Federal Reserve
Bank of Cleveland in the city of Cleveland, Ohio, Five Million, nine hundred
Thousand, and no/100 dollars ($5,900,000.00), with interest from the date hereof
until paid at the rate of 5)4 per cent per annum payable at maturity and has
pledged to the Payee, as collateral security for the payment of this and of any
and all other indebtedness of the undersigned to the Payee, due or to become due,
heretofore or hereafter contracted or existing, the collateral listed in Exhibit F,
attached hereto.
Upon default in the payment of interest upon this note according to its terms,
or in case a receiver or liquidator is appointed for the undersigned, or any of its
property, or in case of adjudication of insolvency, or assignment for benefit of
creditors by the undersigned, the Payee or holder hereof, is authorized to declare
the principal hereof and of any other liabilities of the undersigned held by it,
to be due and payable and thereupon the same shall become so due and payable.
In case of nonpayment when due of the principal of this note either at maturitj^
or by such declaration, the Payee or holder hereof is authorized to sell, assign,
and deliver the whole or any part of the above-mentioned collateral and any
substitutes therefor or additions thereto, at any public or private sale, without
demand, advertisement, or notice of the time or place of sale or adjournments
thereof, the undersigned hereby waiving any and all equity or right of redemption
whether before or after sale hereunder, and upon such sale the Payee or holder
hereof may become the purchaser of the whole or any part of the said collateral,
free from any such right or equity or redemption. In case of such sale, after
deducting all costs, attorneys' fees, and other expenses of collection, the Payee
or holder may apply the residue of the proceeds of such sale or sales to the pay-
ment hereof and of any or all of the indebtedness of the undersigned to such
Payee or holder, as it shall deem proper, returning the overplus, if any, to the
undersigned.
Without limiting or affecting such rights of the Payee or holder to sell part or
all of such collateral at such times as it may select, such Payee or holder is further
authorized, in case of such default, at its option and in its discretion, to collect
or cause to be collected or otherwise converted into money any part of the said
pledged, substituted, or additional collateral, by suit or otherwise, and is hereby
authorized in such case to surrender, compromise, release, renew, extend or
exchange any item of such collateral without prior notice to or consent of the
undersigned. And in case of such collection or conversion into money of such
collateral or part thereof, the Payee or holder, after first deducting the costs,
attorneys' fees and expenses of collection, shall apply the balance of such pro-
ceeds to the payment of this note or any other indebtedness of the undersigned
whether due or not in such manner as it shall choose.
STOCK EXCHANGE PRACTICES 9269
All indorsers and guarantors hereby waive presentment, protest, and notice of
dishonor, and agree to remain bound for the payment of this note and all interest
and charges thereon, and that the lien hereof and the pledge hereunder shall
remain undisturbed notwithstanding any extension of time, substitution of
collateral, or other indulgence granted by any holder of this note, hereby waiving
all notice of such extension, substitution, or other indulgence.
In the event this note or any part thereof is collected by an attorney, either
with or without suit, the undersigned agrees to pay a reasonable attorney's
fee and costs of collection.
In Witness Whereof the undersigned has caused this note to be executed by its
president or vice president and its corporate seal to be hereunto affixed Vjy its
secretary or assistant secretary, this 2nd day of November, 1932.
The Guardian Trust Company,
By W. R. Green, Vice President.
Attest:
R. P. Sears
Secretary.
Exhibit G-12-8h
DUPLICATE
Offered by The Guardian Trust Company as security for a loan from the
Reconstruction Finance Corporation
SUMMARY
Amount
1. Bonds and other securities, Schedule F (1) $1, 290, 768. 00
2. Secured notes, Schedule F (2) 4, 468, 64 1. 01
3. Unsecured notes. Schedule F (3) 5, 120, 035. 69
4. Real estate mortgages. Schedule F (4) 1, 864, 950. 64
5. Other collateral (Schedule 5, to be supplied by
ai^plicant) :
Total $12, 744, 395. 34
We hereby certify that the collateral listed in detail in Schedules F (1),
(2), (3), (4), and (5), and summarized above, consists of securities which the
officers of this corporation, by virtue of the resolution of its Board of Directors,
attached hereto marked "Exhibit B," are authorized to pledge as security for
a loan from the Reconstruction Finance Corporation, and that in the opinion
of the undersigned such collateral is full and adequate security for the loan hereby
applied for.
W. R. Green, Wee President.
R. P. Sears, Secretary.
9270
STOCK EXCHANGE PRACTICES
Exhibit F (1) — Bonds and Other Securities
Description
Face
amount
Book
value
Present
market
quota-
tion
Total
market
value
Rat-
Issue
Rate
Maturity
ing
Wontworth O. Marshall 1st Mtpe.
Oold Bonds (Bedford, C). prop-
erty)
5H7c
0%
C%
6%
7-l-3.'J
7-1-34
7-1-35
7-1-30
7-1-37
7-1-38
7-1-.39
7-1-40
7-1-41
1-1-34
1-1-35
1-1-3(5
1-1-37
1-1-38
1-1-39
4-1-33
11-15-34
11-15-33
11-1-34
5,000
5,000
.5,000
5, ()00
5, 000
5,000
5,000
5,000
5, 000
5, 000
5, 000
5, 000
5,000
5, 000
5,000
354, 000
Ifil, 291
217,742
500, 000
Wcntworlh G. Marshall 1st Mtpe.
(iold Bonds (Lorain-Kullon proi)-
erty)
45,000
100
45,000
Sagamore Iron Co. 5-year Gold
Notes
29, 250
337, 485
100
100
30,000
354, 000
Seiberling Rubber Co. Series A
Gold Debentures (CortiOeates of
Deposit) . ...
The A. C. & Y. Co. 5-year Secured
Oold Bonds
379, 033
500, 000
100
100
379, 033
500,000
1, 308, 033
1. 290, 768
1, 308, 033
Exhibit G-12-9
Febhuary 16, 1933.
Mr. Karl J. Probeok,
Vice President, The New England Company,
Guardian Building, Cleveland, Ohio,
Dear Sir: The New England Company is borrowing from The Guardian
Trust Company $1,200,000.00, pledging as security therefor —
500 shares Capital Stock — The Vincent Building Company
5,000 " " " —Western Reserve Mortgage Comi)any
First Mortgages recently purchased from the Vccla Building & Loan Association,
amounting to $797,494.33.
Mortgages i)urchased from The Guardian Trust Company, amounting to
696,309.43.
With the proceeds of this note you are purchasing from The Guardian Trust
Comjiany, notes and mortgages aggregating $1,198,319.74, upon which interest
will accrue to The New England Company from and after February 15, 1933.
The Guardian Trust Company will endorse payment of $1,680.26 upon your
note of $1,200,000.00, reducing the some to $1,198,319.74.
Please see that the entries are properly made on your books as of February
15th.
Very truly yours,
W. R. Green,
Vice President.
WRG'GMN
C,C— Mr. F. W. Jutze,
Mr. E. L. Geffine.
Exhibit G-12-lOa
The New England Company,
Owner of The Guardian Building,
W. O. Fishley, Manager Cleveland, Ohio, February 18, 1933.
Mr. W. R. Green,
Treasurer, The New England Company.
Dear Sir: I herewith hand you "Bill of Sale" from The Guardian Trust
Comi)any to The New England Company dated February 16, 1933, listing
STOCK EXCHANGE PRACTICES 9271
seven paRcs of mortgages with an aggrcguto total of $1,198,319.74 of "unpairl
balance of obligation" which The Guardian Trust Company has sold to The
New Phigland Company.
I signed a certificate to the Western Reserve Mortgage Company that this
"Bill of Sale" was in my files, so kindly see to it that it is available iif needed.
Very truly yours,
R. P. Seahs,
Secretary.
RP.S:HR
Exhibit G-12-lOb
EXHIBIT "a"
(The following is, bv reference, made a part of tlic- minut(!s of a meeting of the
Board of Directors of The New England Co. held Feb. 15, 1933— R. P. Sears,
Secy)
Also: A part of tl)e nn'nutes of a special meeting of the Exec. Com. of The Gdn
Tr Co of 2/15/33. R. P. Seahs, ^Secy.
Bill of Sale
$1,198,319.74
Know all men l)y these presents that Tlie Guardian Trust Company, a cor-
poration organized and existing under the laws of the State of Ohio, the Grantor,
for the consideration of Ten Dollars ($10.00) and other valualjle consideration
received to its full satisfaction of The New England Company, a corpcjration
organized and existing under the laws of tlic State of Ohio, the Grantee, has
bargained, sold and conveyed, and by these presents does bargain, sell anrl convey
unto said The New lingland Company, its successors and assigns, all of said
Grantor's right, title and interest in and to the mortgages and the obligations
secured thereby listed on Exhibit A, attached hereto and made a part hereof
except the interest accrued and unpaid on said obligations i)rior to the date
hereof. Said Exhibit A consists of pages numbered, cons(!Cutivcly, 1 to 7, in-
clusive, and for the purpose of identification initialed by said Grantor's Assistant
Secretary.
To have and to hold the same unto the said Grantee, its successors and assigns
to its own proper use and behoof forever.
And th(! saifl Grantor hereby convcnants and agrees to execute and deliver
such further instruments, and to do, or cause to be done, all acts and things tiiat
may be requested by the said Grantee, for the purj;ose of eirectuating and carry-
ing out the intents and purpo.ses of this instrument.
In witness w^hereof. The (iuardian Trust Company has caused these presents
to be executed in due legal form this 16 day of Eeb., 1933.
The Guardian Trust Company,
By John Fihh,
Vice President.
Attest: John R. Ruggles,
Assistant Sec'y.
[seal]
Exhibit G-12-11
Western Reserve Mortgage Company, subscription agreement
Cleveland, Ohio,
Feb. 15th 1933.
To the Board of Directors of Western Reserve Mortgage Company:
The undersigned hereby subscribes for Common Shares of Western Reserve
Mortgage Company as indicated below and agrees forthwith to pay therefor $100.
per share for such shares either in cash and/or mortgages and notes securcdthereby.
6,000 Common Shares Aggregate Par Value $500,000.00
Tlie undersigned represents that in so far as payment is made in notes anrl mort-
gages, the fair value of such notes and mortgages shall be at least equal to the
aggregate par value of the shares so paid for. The undersigned agrees that the
directors of your company shall have the right to value such notes and mortgages
9272 STOCK EXCHANGE PRACTICES
and that if your company's directors find that the notes and mortgages tendered
are not sufficient in aggregate fair value to equal the aggregate par value of shares
subscribed for and not paid for in cash, or if your directors request that any notes
or mortgages so tendered be eliminated, then, upon request, the undersigned will
deliver other notes and mortgages sufficient in value, similarly determined by
your directors, to make up the deficit or to replace the notes and mortgages
eliminated.
In determining the fair value of notes and mortgages tendered in payment of
this subscription, all interest accrued prior to the date hereof shall be and remain
the property of the undersigned, provided, however, that collections on account
of such notes and mortgages shall be applied in the following order:
(a) to the payment of interest accruing on such notes and mortgages after the
date hereof;
(b) to the payment of interest accrued and unpaid prior to the date hereof;
(c) to the reduction of principal.
The New England Co.
By A. C. Robinson, V.Pres.
Subscriber,
Exhibit G-12-12a
Agency Agreement
This agreement entered into by and between THE GUARDIAN TRUST
COMPANY, an Ohio corporation. Fist Party, and WESTERN RESERVE
MORTGAGE COMPANY, an Ohio corporation, Second Partv, this 23rd day
of February, 1933.
WITNESSETH:
WHEREAS, The New England Company has sold Second Party certain mort-
gages and the obligations secured thereby which were sold by The New England
Company to Second Party by bill of sale bearing date of February 23, 1933, (said
Mortgages and obligations secured thereby being described on Exhibit A thereto
attached and having an aggregate unpaid balance of Two Hundred Ninety-nine
Thousand Nine Hundred Seventy ^fioo Dollars ($299,970.24) ;
WHEREAS, Second Party desires First Party to make collections on all obli-
gations secured by the said mortgages and to do such other acts in connection
therewith as are provided for herein:
NOW, THEREFORE in consideration of the mutual covenants contained
herein and other valuable considerations, receipt of which is hereby acknowledges,
the parties hereto covenant and agree respectively as follows:
First Party for itself, its successors and assigns, hereby covenants and agreed
to and with Second Party, its successors and assigns:
1. That is, as agent, for Second Party, with due diligence will make collections
on all obligations secured by the said mortgages;
2. That before the close of business upon the day received it will account for
and/or remit to Second Party all such collections which shall be applied in the
following order:
(a) To the payment of interest accruing beginning February 23, 1933
(b) To the payment of interest accrued and unpaid prior to February 23, 1933:
(c) To the reduction of principal.
Exhibit G-12-12b
3. That it will maintain an adequate insurance record and, in the event that
any of the mortgagors or their assignees fail to furnish First Party with insurance
policies with satisfactory mortgagee clauses in favor of First Party issued by
companies satisfactory to First Party with coverage of the type and amount
considered adequate by First Party, it will secure such insurance and advance
the premiums therefor for the account of Second Party, for which Second Party
will reimburse it;
4. It will give prompt notice to Second Party of any and aU litigation affecting
said mortgages and the obligations secured thereby;
5. It, with the consent of Second Party, wiU take assumption agreements with
respect to said mortgages and the obligations secured thereby, in its own name, and
STOCK EXCHANGE PRACTICES 9273
promptly will deliver and assign the said assumption agreements to Second Party
in such manner and form as Second Party may require;
6. It will keep an adequate record of the payment of taxes on the properties
described by said mortgages and will make sucii reports as to said taxes at such
times as Second Party may require, and upon the direction of Second Party, will
pay said taxes for the account of Second Party, for which Second Party will
reimburse it.
II
Second Party for itself, its successors and assigns, hereby covenants and agrees
to and With First Party, its successors and assigns, that it will compensate First
Party at the rate of One-Half of One Per Cent (^ of 1%) per annum upon the
unpaid principal balances of said mortgages and the obligations secured thereby
for First Party's services in accordance with this agreement, such unpaid principal
balances to be determined and re-determined and the service to be paid as of
March 15th, June 15th, September 15th, and December 15th.
Nothing herein contained shall authorize First Party to institute or defend
any action at law or in equity relating to or affecting any of said mortgages and/or
the obligations secured thereby without the written consent of Second Party.
Exhibit G-12-12c
This agreement may be terminated in whole or in part by Second Party giving
First Party a three (3) days' notice in writing to such effect.
This agreement shall be binding upon and shall inure to the benefit of the
successors and assigns of both parties.
In witness whereof, both parties have caused these presents to be executed in
due legal form on the day first above mentioned.
The Guardian Trust Company,
By John Fish.,
Vice President.
Attest:
R. P. Sears,
Secretary.
[seal] Western Reserve Mortgage Company,
By E. S. Burke Jr.,
President.
Attest:
P. D. Jones,
Secretary and Treasurer.
[seal]
Exhibit G-12-13
February 16, 1933.
Mr. Karl J. Probeck,
Vice President, The New England Company,
Guardian Building, Cleveland, Ohio.
Dear Sir: On February 15th The New England Company subscribed to
5,000 shares of the Capital Stock of Western Reserve Mortgage Company and
paid therefor, in mortgages, a total of $499,950.31 and your check for $49.69.
The mortgages above referred to are part of the mortgages purchased today
from The Guardian Trust Company, and should leave in that account mortgages
in the amount of $696,369.43, which is the amount of mortgages you are pledging
as part security to the note of $1,200,000.00 referred to in my other letter of even
date.
Very truly yours,
W. R. Green,
Vice President.
WRG/GMN
C.C— Mr. F. W. Jutze,
Mr. E. L. Geffine.
9274 STOCK EXCHANGE PRACTICES
Exhibit G-12-14
February 16th 1933.
The New England Company,
Cleveland, Ohio.
Dear Sirs: The undersigned company acknowledges receipt of your subscrip-
tion agreement for five thousand (5000) shares of tliis company, and of notes and
mortgages of an unpaid principal amount of $499,950.31 and of cash in the
amount of $49.69. Except as mortgages may be eliminated subject to replace-
ment by you, all as provided in the subscription agreement, this completes the
payment in full of your subscription.
The certificates for the shares of stock of this company cannot be issued at the
present time, but will be sent to you as soon as prepared and signed.
Western Reserve Mortgage Company,
By E. S. Burke, Jr.,
Pres.
Exhibit G-12-15
February 16, 1933.
Federal Reserve Bank of Cleveland,
Attention — Mr. Arnold,
Cleveland, Ohio.
Gentlemen: We enclose herewith our check for $49.69 and a Bill of Sale
from The New England Company to Western Reserve Mortgage Company,
Certified Bill of Sale from The Guardian Trust Company to The New England
Company, Assignment of Mortgages from The New England Company, to West-
ern Reserve Mortgage Company and Certified Assignment of Mortgages from
The Guardian Trust Company to The New England Company.
These documents are being sent you under instructions of our letter of Feb-
ruary 15.
Very truly yours,
The New England Company,
By R. P. Sears,
Secretary.
AO:ML
End.
Receipt of the foregoing listed in letter to Federal Reserve Bank of Cleveland
is hereby acknowledged.
Western Reserve Mortgage Company,
By Squire, Sanders & Danpiny,
Its Attorneys^
February 16, 1933.
Exhibit G-12-16
Cleveland, Ohio,
February 15, 1933.
Received of The New England Co., subscription to 5000 shares of Western
Reserve Mortgage Company.
(Exhibits G-12-17a tlirough G-lL'-19b face this page)
Union Tkust Company: Union Trust's Directorate in Other Concerns
(Note. — We found in the files of the Trust Co. a memorandum showing the
business affiliations of the bank's directors and officers. It was impossible to
determine from the Directory of Directors just what the affiliation was. It was
decided to list them along with information taken from the Directory of Directors
as "Other Affiliations.")
III f. -a •}/ , / ■} I ft ' -f^-^ -^ ignCL. /^■n~^ 7v<^.wt„y^. ./^,...„, ^-■^,
Name o! Security li/oMMcn^ Ai^y^^tUrC ///L^lf .i^c ^^/z vJ" % ,'^^l ^ T'f'-f'- ) Truslet or Traiufer Agent
w B&Blcert Croup Participation / ^
Date of Issue ,_;;^/^ /f33 Selling Group Participation Due Date Q.t,,„^ /<; /9 3 3
Interest or Dividend Due
Interest and Principal Payable at
Selling Group Participation
Definitive Bonds Ready
Interest Coupons on Temporary Bonds
CLASSIFICATION
Redeemable
li 'J . - ^\.,.^j A_-' Jj/J* ■
yt^fi <^- ^i-^^rji*-
1^*^-.^-^^
^^ -^
II) .-*
:s^,;7
'J7J\v,~A/Z7A^'.SiJ ;
Zff^UJSi^,6\
^a/zUsre^/Sl
.' i^/-"
Wj??^/;
X'/liSc
-' i . f-"/"/..
7 of /J
Exhibit G- 12- 17a
Exhibit G- 12- 17b
N.me of Security ^ ^^,^., ,, .^^^ .7//:^^^ ^, .^ J 7. Pi^ '' Tai»l«c or Tr.wfe^ Ag.nt
-r I Buntera'^roup Participation
D»leoHs»uc_J^^ ^^ .//J J Selling Croup Participation • Due Date ^'^^^ ^<', /j^ '''
Definitive Bonds Ready
Interest or Dividend Due ' \ .^^Jt,,,,^ Interest Coupons on Temporary Bonds Redeemable
Interest and Principal Payable at
Securities Held by /f'eccM //yt^^tr- C^^'
Pw On Hud Prin I Bouthl 1 Sold B>l,
ROCK on LEOCBH VALUS9
I CndU 1 B.Ui>s«
7 / r^
/ II
/! ; 0 1 '/ / // ■( ,1 J
4u. H-jlijli
irjnjii
\ -^iVT^.*'^^^'
_,K«^-VA-^ Ci^t^, I'll ^"to. O-^J t<)-»-il(^-^>-<
\ti-h0 Q,
, c/^fSM
Jlli3S4Je£^^SU'
•r/r 7 - irTi i^f
//^i>jrs
Exhibit G-12-18
Name oi i>«:uri:>
Date of Issue ..'■ ^ ^
hucrctit or r)i\i<!cnd I Ait*
Inu-rcst and I'nmipal Payablr ai
H.inkers Group Participation
N.'l!ing Ciroup Participation
-tMinitiNc Bond> Read>-
Inlcresl Coujjons on Tcmiwrary Bonds
! CLASSiriCATION ,
SecuriliesHeldby Ttz/a^ //^c^^^ X/w C.
BOOK OR LEDGER VALUr.s
Zj J. ;:
Onllud Prie. I Bouikl
Ut fltU^/ - '.J ^ i , 7Jj , i( '/>/.<>.»-/
•'J ^ i^-l.//c... X^t
'r.^Mt^ ,.i^^f^^
, i<.*'-/>;«,^
/(.1-. WujJiL AUm^ y '/.nJf^ hC. y*
.. Xx-,
r^r
XCJiJi
A
i'^c^.<* ^, c.*iiy :i,atC^rV<^^
U^^ <, '\j ft'. M
■
pj-rli.'..
;l,d/^^-^
I 'it J
T ■' U "
Urjye 101.4 Xi.i
I 1! is
^1 /jc/.' 7e-^,;'''/-''^
f \niji:.j^n
33 3. i' 3:
2i3iJ7i'\
JC7J:rc\
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i' t IRi
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10^21^7 ic\
7C^,'S7^3c\
Jo-, . r7<r^.
Uc^i 1£1 is
lc4in2oiS
7a I Yo I oo A
Exhibit G-12-19a
Exhibit G-12-19b
STOCK EXCHANGE PRACTICES 9275
Loans Made by Reconstruction Finance Corp. — J. J. Sinnott
Exhibit U-19-la
W-114
Application of — -
(Name) The Union Trust Company.
(Address) Cleveland, Ohio.
For a luan under authority of the Reconstruction Finance Corporation Act.
Date March 10, 1932.
In preparing application, detach and fill out inclosed forms, then replace and fasten in binder, sending
completed application to nearest Loan Agency. All forms should be filled out by typewriter. Three
original executed counterparts must be filed.
Exhibit U-19-lb
Application for Loan
The Union Trust Company (hereinafter called the applicant), a bank and trust
company organized and existing under the laws of Ohio and having its principal
place of business at Cleveland, Ohio, hereby applies to Reconstruction Finance
Corporation^ (hereinafter called the Corporation) for a loan not to exceed in the
aggregate $12,000,000.00, to mature on or before September 10, 1932 and to be
secured by collateral listed in Schedule F hereto attached, or other collateral
acceptable to the Corporation. For the purpose of obtaining such loan the appli-
cant represents and agrees as follows:
(1) The loan herein applied for is desired for the purpose of paying "other bills
payable" which have been outstanding for some time.
[Note.— The liw provides that no loans or advances shall be made upon foreign securities or foreign
acceptances as collateral or for the purpose of assisting in the carrying or liquidation of such foreign securities
and foreign acceptances. The law also provides that no loan or advance shall be made by the corporation
for the purpose of initiating, setting on foot, or financing any enterprise not initiated, set on foot, or under-
taken prior to January 22, 1932, except that this limitation does not apply to loans made to agricultural or
livestock credit corporations, or Federal land banks, joint-stock land banks, or Federal intermediate credit
banks, nor to loans made to banks for the purpose of financing agricultural operations.]
(2) The applicant expressly consents to such examinations and audits of the
affairs of applicant and any affiliated companies, including inspection and valua-
tion of underlying security, by representatives of the Corporation, as the Corpora-
tion may from time to time direct, and agrees to pay such part or all of the expense
thereof, as the Corporation maj' require, and further agrees (in accordance with
section 8 of the Reconstruction Finance Coporation Act) that reports of examina-
tions by constituted authorities, and any other information they may have relating
to the applicant, may be furnished by such authorities to the Corporation upon
request therefor.
(3) Applicant will promptly upon demand deposit with the Corporation such
additional collateral and further assurances, acceptable to or required by the
Corporation, as it from time to time shall, in the exercise of its uncontrolled dis-
cretion, require for the full and adequate security of any and all indebtedness of
the applicant to the Corporation. Collateral securing any indebtedness of the
applicant shall be security for any and all other indebtedness of the applicant to
the Corporation whether incurred under this application or otherwise, and
whether now due or hereafter to become due, and whether heretofore or hereafter
contracted.
(4) Default in performance under any other application or obligation of the
applicant to the Corporation shall entitle the Corporation to declare the obliga-
tions under this ajjplication immediately due and payable, and thereupon at its
option to deal with all property pledged under this application as though default
had occurred hereunder.
(5) The Corporation, at its discretion, may collect and at the expense and in
the name of applicant, or otherwise, enforce the payment when due of any or all
collateral security held hereunder, by suit or otherwise, may surrender, compromise,
release, renew, extend, or exchange all or any thereof, and may apply the net pro-
ceeds thereof to the payment of any item of indebtedness of the applicant to it.
The applicant will pay or cause to be paid to the Corporation all expense which
the Corporation may incur in connection with this loan for the collection and or
enforcement of tlie obligations of the applicant, including the enforcement of any
guaranty which the Corporation may hold in connection with the applicant's
obligations to the Corporation, even though no foreclosure or other legal action
take place. The applicant will pay or cause to be paid promptly when due all
9276 STOCK EXCHANGE PRACTICES
taxes, insurance premiums, warehouse charges, transportation costs, and other
expenses necessary for the enforcement, preservation, and/or protection of any
security pledged hereunder, including fees for filing and recording mortgages
and the like, or assignments thereof required bj- the Corporation. If the appli-
cant fail to make any payment required in the jireceding provisions of this para-
graph, the Corporation is authorized to do so and shall have a lien upon all collat-
eral held by it until it shall have been fully reimbursed for any advance which it
may have made in payment of any such items, together with interest thereon at
the rate of 6 per cent per annum.
Any check or draft received by or for the Corporation for the account of the
applicant hereunder may be presented for payment or forwarded for collection
direct to the bank upon which drawn or at which payable; the Corporation may
accept in payment of or remittance for any such check or draft, cash, bank drafts,
transfers of funds or bank credits, or any other forms of payment or remittance,
but the applicant shall not be entitled to credit on account of any such check or
draft until the Corporation shall have received the amount thereof in a ctually and
finally collected funds at a Federal Reserve Bank or branch thereof, and the amount
of any such check or draft credited by the Corporation may be charged back to the
applicant notwithstanding the check or draft itself can not be returned.
(6) Upon any failure of the applicant to comply with any provisions of this
application or default in the payment of any indebtedness to the Corporation or
in case a receiver or liquidator is appointed for the applicant or any of its property,
or in case of adjudication of insolvency, or assignment for benefit of creditors, the
Corporation is authorized to declare any or all indebtedness of the applicant to
the Corporation due and payable forthwith, and the same shall thereupon become
so due and payable. And in case of any such default, the Corporation is authorizd
to sell, assign, and deliver the whole or any part of the collateral held by it from
the applicant and any substitutes therefor or additions thereto, and any guarantee
held by the Corporation in connection with the applicant's obligations, at an}'
public or private sale without demand, advertisement, or notice of the time or
place of sale or adjournments thereof, for such price as it
Exhibit U-19-lc
may deem fair, the undersigned hereby waiving any and all equity or right of
redemption whether before or after sale hereunder, and upon such sale, the Cor-
poration may become the purchaser of the whole or any part of such collateral
free from any such right or equity of redemption. In case of any such sale, after
deducting all costs, attorneys' fees, and other expenses of collection, the Payee or
holder may apply the residue of the proceeds of such sale or sales to the payment
of any or all indebtedness of the applicant to the Corporation and any balance
remaining shall be paid to the applicant.
Without limiting or affecting such rights of the Corporation so to sell part or
all of such collateral, the Corporation is further authorized at its option and in its
discretion to collect or cause to be collected or otherwise converted into money
any part of the collateral held hereunder, by suit or otherwise, and is authorized
in such case to surrender, compromise, release, renew, extend, or exchange any
item of such collateral without prior notice or consent of the applicant. Proceeds
of collections so made, after first deducting costs, attorneys' fees and expenses of
collection, shall be applied to the payment of the indebtedness of the applicant to
the Corporation whether due or not. In the event of any legal proceedings all
costs and reasonable attorneys' fees incurred by the Corporation shall become a
part of the indebtedness of the applicant covered by the provisions hereof.
(7) Upon any transfer or pledge of any note of the applicant given pursuant
hereto the Corporation may deliver the collateral or any part thereof or interest
therein or any guaranty or other document held in connection with the appli-
cant's obligations to the Corporation to the transferee or pledgee, who shall
thereupon become vested with all the powers and rights herein given and shall
have the same remedies, including the right to require additional collateral, as if
originally named herein.
(8) The Corporation shall be protected in acting upon any notice, request,
consent, certificate, writing, resolution, or other paper or document believed by
it to be genuine and to have been signed, executed, passed, or presented by the
proper parties.
(9) The applicant agrees to be and remain bound for the payment of all
indebtedness pursuant hereto and that the lien hereof and any pledge or pledges
hereunder shall remain undisturbed notwithstanding any delay, extension of
STOCK EXCHANGE PRACTICES 9277
time, substitution of security, renewal, or other indulgence granted by the Cor-
poration in connection with any collateral, hereby waiving all notice of such
extension, substitution, renewal, or other indulgence.
(10) The applicant expressly reserves the right to anticipate the payment of
any indebtedness to the Corporation incurred under this or any other applica-
tion, but agrees that any payment so made by it may be applied upon any item
of its indebtedness to the Corporation in such order as the Corporation may elect.
(11) No agreement has been or will be made by the applicant to pay any per-
son, association, firm, or corporation, either directly or indirectly, any commis-
sion or fee for the loan hereby applied for, and no such, payments have been or
will be made by the applicant.
(12) The applicant submits herewith as part of this application the following
documents:
Exhibit A. Certified copy of articles and by-laws of applicant with all
amendments to date. [Not required of banks.]
Exhibit B. Certified copy of resolution of its Board of Directors.
Exhibit C. Certificate of election to and incumbency in office of officers
of the applicant, with specimen signatures.
Exhibit D. Statement of the financial condition of applicant.
Exhibit E. Specimen of the note marked "sample" with all blanks filled
in, which will be executed and delivered by the applicant if and when notified
by the Corporation of its acceptance of this application.
Exhibit F. Schedules of collateral to be delivered as security for indebted-
ness of the applicant pursuant hereto, supported by fuU description and
information as to each item, including certified copies of financial state-
ments of makers, etc.
Exhibit G. Opinion of counsel for applicant.
Exhibit H. List of all of applicant's subsidiary or affiliated organization
if any.
[Note.— The following exhibits (I and J) are not required of banks subject to supervision and examina-
tion by Federal authority.]
Exhibit I. Copy of last report of examination of financial condition of
applicant. [This report must be by State supervising authorities, unless
applicant is not subject to examination, when latest audit must be furnished.]
Exhibit J. Authorization to State banking department or other State
supervising authority.
(13) In case a loan is made hereunder, this application and any conditions
imposed by the Corporation in granting the loan shall be and become a contract
between the applicant and the Corporation, which shall be binding upon and
inure to the benefit of their successors and assigns.
Executed this 10th day of March, 1932.
[seal.] The Union Trust Company,
By W. M. Baldwin, President.
Attest:
R. S. Crawford, Secretary.
Exhibit U-19-ld
Exhibit F — Schedule of Collateral
Offered by The Union Trust Company, Cleveland, Ohio as security for a loan
from the Reconstruction Finance Corporation.
SUMMARY
1. Bonds and other securities, Schedule Amount
F (1) $5,968,955. 28 Mkt.
2. Secured notes. Schedule F (2) 6, 517, 663. 56 Amt. note
3. Unsecured notes, Schedule F (3) 5, 073, 129. 17 Amt. note
4. Real estate mortgages. Schedule F(4) 1, 673, 440. 00 Amt. prop.
5. Other collateral (Schedule 5, to be
supplied by applicant):
Total $19, 233, 188. 01
9278
STOCK EXCHANGE PRACTICES
We hereby certify that the collateral listed in detail in Schedules F (1), (2),
(3), (4), and (5), and summarized above, consists of securities which the officers
of this corporation, by virtue of the resolution of its Board of Directors, attached
hereto marked "Exhibit B," are authorized to pledge as security for a loan from
the Reconstruction Finance Corporation, and that in the opinion of the under-
signed such collateral is full and adequate security for the loan hereby applied for.
W. M. Baldwin, President.
R. S. Crawford, Secretary.
Exhibit F (1) — Bonds and Other Securities
D ascription
Issue
Rate
Matu-
rity
Face
Amount
Book
Value
Present
Market
Quota-
tion
Total
Market
Value
Rat-
ing
MunHpal
City of Akron, Ohio, Sewage
Disposal Bonds
$19,000—
105,000...-
23,000 -
24,000
5,000..
Bay City, Oregon, Harbor Imp...
$4,000
4,000 -
1,000
7,000.. -
Bedford, Ohio, Street Improve-
ment
Brooklyn, Ohio, Paving Sewer
& Water:
$18,000... - -
19,000 -
13,000-.
Cuyahoga Falls, Ohio, Property
Share Improvement notes
East Cleveland, Ohio, Street Im-
provement
Lima, Ohio, Water Works, Ext.
Imp
($1,000 due April 1st each yr.)
City of Los Angeles, California
Municipal Ownership Certifi-
cates Series E
$6,000
18,000 .-
County of Mahoning Ohio Coun-
ty Sewer Dist. #2 Imp. #15
dated 10-1-26...
$500..
500
Countv of Mahoning Ohio Road
Imp" Bonds dated 11-1-26
$3,000...
1,000
6's.
10/1/44
10/1/45
10/1/49
10/1/50
10/1/51
6's...
6'S.-.
4^'S.
5%-.
7/1/33
7/1/34
7/1/37
7/1/38
10-1-32
10-1-31
10-1-32
10-1-33
4-1-32
3-1-33
1932/1935
8-1-33
8-1-34
10-1-32
10-1-33
5%.
10-1-1932
10-1-33
$176. 000. 00
16, 000. 00
5, 000. 00
50, 000. 00
145, 176. 94
3, ooa 00
4,000.00
24, 000. 00
1, 000. 00
4, 000. 00
$181, 027. 10
16, 000. 00
5, 030. 00
50,469.80
146,498.94
3, 000. 00
4,000.00
23, 880 00
1,011.16
4, 044. 64
6%Ba-.
7%Ba..
6%Ba..
90.
100
6%Ba.-
6%Ba..
6% Ba..
6%Ba..
6%Ba..
$151, 184. 00
15, 500. 00
4,900.00
45, 000. 00
145, 176. 94
2,950 00
3,900.00
23, 000. 00
995.00
3, 980 00
Exhibit U-19-2a
Application of —
(Name) The Union Trust Company.
(Address) Cleveland, Ohio.
For a loan under authority of the Reconstruction Finance Corporation Act.
Date — April 15, 1932.
In preparing application, detach and fill out inclosed forms, then replace and fasten in binder, sending
completed application to nearest Loan Agency. All forms should be filled out by typewriter. Three
original executed counterparts must be filed.
Exhibit U-19-2b
application for loan
The Union Trust Compan}^ (hereinafter called the applicant), a bank and
trust company, organized and existing under the laws of the State of Ohio,
and having its principal place of business at Cleveland, Ohio, hereby applies to
STOCK EXCHANGE PRACTICES 9279
Reconstruction Finance Corporation (hereinafter called the Corporation) for a
loan not to exceed in the aggregate $14,000,000.00, to mature on or before October
15, 1932, and to be secured by collateral listed in Schedule F hereto attached,
or other collateral acceptable to the Corporation. For the purpose of obtaining
such loan the applicant represents and agrees as follows:
(1) The loan herein applied for is desired for the purpose of paying bills payable.
[Note .—The law provides that no loans or advances shall be made upon foreign securities or foreign accept-
ances as collateral or for the purpose of assisting in the carrying or liquidation of such foreign securities
and foreign acceptances. The law also provides that no loan or advance shall be made by the corporation
for the purpose of initiating, setting on foot, or flnancing any enterprise not initiated, set on foot, or under-
taken prior to January 22, 1932, e.xcept that this limitation does not applv to loans made to agricultural or
livestock credit corporations, or Federal land banks, joint-stock land banks, or Federal intermediate credit
banks, nor to loans made to banks for the purpose of flnancing agricultural operations.]
(2) The applicant expressly consents to such examinations and audits of the
affairs of applicant and any affiliated companies, including inspection and valua-
tion of underlying security, by representatives of the Corporation, as the Corpora-
tion may from time to time direct, and agrees to pay such part or all of the expense
thereof, as the Corporation may require, and further agrees (in accordance with
section 8 of the Reconstruction Finance Corporation Act) that reports of examina-
tions by constituted authorities, and any other information they may have relating
to the applicant, may be furnished by such authorities to the Corporation upon
request therefor.
(3) Applicant will promptly upon demand deposit with the Corporation such
additional collateral and further assurances, acceptable to or required by the
Corporation, as it from time to time shall, in the exercise of its uncontrolled dis-
cretion, require for the full and adequate security of any and all indebtedness of
the applicant to the Corporation. Collateral securing any indebtedness of the
applicant shall be security for any and all other indebtedness of the applicant
to the Corporation whether incurred under this application or otherwise, and
whether now due or hereafter to become due, and whether heretofore or hereafter
contracted.
(4) Default in performance under any other application or obligation of the
apphcant to the Corporation shall entitle the Corporation to declare the obliga-
tions under this application immediately due and payable, and thereupon at its
option to deal with all property pledged under this application as though default
had occurred hereunder.
(5) The Corporation, at its discretion, may collect and at the expense and in
the name of applicant, or otherwise, enforce the payment when due of any or all
collateral security held hereunder, by suit or otherwise, may surrender, compro-
mise, release, renew, extend, or exchange all or any thereof, and may apply the
net proceeds thereof to the payment of any item of indebtedness of the applicant
to it. The applicant will pay or cause to be paid to the Corporation all expense
which the Corporation may incur in connection with this loan for the collection
and/or enforcement of the obligations of the applicant, including the enforcement
of any guaranty which the Corporation may hold in connection with the appli-
cant's obligations to the Corporation, even though no foreclosure or other legal
action take place. The applicant will pay or cause to be paid promptly when due
all taxes, insurance premiums, warehouse charges, transportation costs, and other
expenses necessary for the enforcement, preservation, and/or protection of any
security pledged hereunder, including fees for filing and recording mortgages and
the like, or assignments thereof required by the Corporation. If the applicant
fail to make any payment required in the preceding provisions of this paragraph,
the Corporation is authorized to do so and shall have a lien upon all collateral
held by it until it shall have been fully reimbursed for any advance which it may
have made in payment of any such items, together with interest thereon at the
rate of 6 per cent per annum.
Any check or draft received by or for the Corporation for the account of the
applicant hereunder may be presented for payment or forwarded for collection
direct to the bank upon which drawn or at which payable; the Corporation may
accept in payment of or remittance for any such check or draft, cash, bank drafts,
transfers of funds or bank credits, or any other forms of payment or remittance,
but the applicant shall not be entitled to credit on account of any such check or
draft until the Corporation shall have received the amount thereof in actually and
finally collected funds at a Federal Reserve Bank or branch thereof, and the
amount of any such check or draft credited by the Corporation may be charged
back to the applicant notwithstanding the check or draft itself can not be returned.
(6) Upon any failure of the applicant to comply with any provisions of this
application or default in the payment of any indebtedness to the Corporation or
175541— 34— PT 20 35
9280 STOCK EXCHANGE PRACTICES
in case a receiver or liquidator is appointed for the applicant or any of its property,
or in case of adjudication of insolvency, or assignment for benefit of creditors, the
Corporation is authorized to declare any or all indebtedness of the applicant
to the Corporation due and payable forthwith, and the same shall thereupon be-
come so due and payable. And in case of any such default, the Corporation is
authorized to sell, assign, and deliver the whole or any part of the collateral held
by it from the applicant and any substitutes therefor or additions thereto, and
any guarantee held by the Corporation in connection with the applicant's obliga-
tions, at any public or private sale without demand, advertisement, or notice of
the time or place of sale or adjournments thereof, for such price as it
Exhibit U-19-2c
may deem fair, the undersigned hereby waiving any and all equity or right of
redemption whether before or after sale hereunder, and upon such sale, the
Corporation may become the purchaser of the whole or any part of such collateral
free from any such right or equity of redemption. In case of any such sale, after
deducting all costs, attorneys' fees, and other expenses of collection, the Payee or
holder may apply the residue of the proceeds of such sale or sales to the payment
of any or all indebtedness of the applicant to the Corporation and any balance
remaining shall be paid to the applicant.
Without limiting or affecting such rights of the Corporation so to sell part or
all of such collateral, the Corporation is further authorized at its option and in its
discretion to collect or cause to be collected or otherwise converted into money
any part of the collateral held hereunder, by suit or otherwise, and is authorized
in such case to surrender, compromise, release, renew, extend, or e.xchange any
item of such collateral without prior notice or consent of the applicant. Proceeds
of collections so made, after first deducting costs, attorneys' fees and expenses of
collection, shall be applied to the payment of the indebtedness of the applicant
to the Corporation whether due or not. In the event of any legal proceedings
all costs and reasonable attorneys' fees incurred by the Corporation shall become
a part of the indebtedness of the applicant covered by the provisions hereof.
(7) Upon any transfer or pledge of any note of the applicant given pursuant
hereto the Corporation may deliver the collateral or any part thereof or interest
therein or any guaranty or other document held in connection with the appli-
cant's obligations to the Corporation to the transferee or pledgee, who shall
thereupon become vested with all the powers and rights herein given and shall
have the same remedies, including the right to require additional collateral,
as if originally named herein.
(8) The Corporation shall be protected in acting upon any notice, request,
consent, certificate, writing, resolution, or other paper or document believed
by it to be genuine and to have been signed, executed, passed, or presented by
the proper parties.
(9) The applicant agrees to be and remain bound for the payment of all
indebtedness pursuant hereto and that the lien hereof and any pledge or pledges
hereunder shall remain undisturbed notwithstanding any delay, extension of
time, substitution of security, renewal, or other indulgence granted by the Cor-
poration in connection with any collateral, hereby waiving all notice of such
extension, substitution, renewal, or other indulgence.
(10) The applicant expressly reserves the right to anticipate the payment of
any indebtedness to the Corporation incurred under this or any other application,
but agrees that any payment so made by it may be applied upon any item of its
indebtedness to the Corporation in such order as the Corporation may elect.
(11) No agreement has been or will be made by the applicant to pay any person
association, firm, or corporation, either directly or indirectly, any commission
or fee for the loan hereby applied for, and no such payments have been or will
be made by the applicant.
(12) The applicant submits herewith as part of this application the following
documents:
Exhibit A. Certified copy of articles and by-laws of applicant with all
amendments to date. [Not required of banks.]
Exhibit B. Certified copy of resolution of its Board of Directors.
Exhibit C. Certificate of election to and incumbency in office of officers
of the applicant, with specimen signatures.
Exhibit D. Statement of the financial condition of applicant.
STOCK EXCHANGE PRACTICES 9281
Exhibit E. Specimen of the note marked "sample" with all blanks filled
in, which will be executed and delivered by the applicant if and when notified
by the Corporation of its acceptance of this application.
Exhibit F. Schedules of collateral to be delivered as security for indebted-
ness of the applicant pursuant hereto, supported by full description and
information as to each item, including certified copies of financial statements
of makers, etc.
Exhibit G. Opinion of counsel for applicant.
Exhil)it H. List of all of applicant's subsidiary or affiliated organizations,
if any.
[Note. — The following exhibits (I and J) are not required of banks subject
to supervision and examination by Federal authority.]
Exhibit I. Copy of last report of examination of financial condition of
applicant. [This report must be by State supervising authorities, unless
applicant is not subject to examination, when latest audit must be
furnished.]
Exhibit J. Authorization to State banking department or other State
supervising authority.
(13) In case a loan is made hereunder, this application and any conditions
imposed by the Corporation in granting the loan shall be and become a contract
between the applicant and the Corporation, which shall be binding upon and
inure to the benefit of their successors and assigns.
Executed this loth day of April, 1932.
[seal] The Union Trust Company
By Geover H. Hull, Vice President.
Attest:
R. S. Crawford,
Secretary.
Exhibit U-19-2d
Exhibit F — Schedule of Collateral
Offered by The Union Trust Company as security for a loan from the Recon-
struction Finance Corporation.
SUMMARY
Amount
1. Bonds and other securities. Schedule F (1)-- $
2. Secured notes. Schedule F (2)
3. Unsecured notes. Schedule F (3)
4. Real estate mortgages, Schedule F (4) 27, 843, 928. 53
5. Other collateral (Schedule 5, to be supplied by
applicant) :
Total $
We hereby certify that the collateral listed in detail in Schedules F (1), (2),
(3), (4), and (5), and summarized above, consists of securities which the officers
of this corporation, by virtue of the resolution of its Board of Directors, attached
hereto marked "Exhibit B," are authorized to pledge as security for a loan from
the Reconstruction Finance Corporation, and that in the opinion of the under-
signed such collateral is full and adequate security for the loan hereby applied for.
Grover H. Hull,
Vice President.
R. S. Crawford,
Secretary.
9282 STOCK EXCHANGE PEACTICES
Exhibit F (1) — Bonds and Other Securities
Description
Face
amount
Book value
Present
market
ouotation
Total
market
value
Rating
Issue
Rate
Maturity
Application of —
(Name) The Union Trust Company.
(Address) Cleveland, Ohio.
For a loan under authority of the Reconstruction Finance Corporation Act.
Date July 16, 1932.
In preparing application, detach and fill out inclosed forms, then replace and fasten in binder, sending
ompleted application to nearest Loan Agency. All forms should be filled out by typewriter. Three
original executed counterparts must be filed.
Exhibit U-19-3b
Application for Loan
The Union Trust Company (hereinafter called the applicant) , a bank and trust
company organized and existing under the laws of the State of Ohio, and having
its principal place of business at Cleveland, Ohio, hereby applies to Reconstruc-
tion Finance Corporation (hereinafter called the Corporation) for a loan not
to exceed in the aggregate $2,000,000.00, to mature on or before January 16,
1933, and to be secured by collateral listed in Schedule F hereto attached, or other
collateral acceptable to the Corporation. For the purpose of obtaining such
loan the applicant represents and agrees as follows:
(1) The loan herein applied for is desired for the purpose of paying bills payable
[Note. — The law provides that no loans or advances shall be made upon foreign securities or foreign
acceptances as collateral or for the purpose of assisting in the carrying or liquidation of such foreign securities
and foreign acceptances. The law also provides that no loan or advance shall be made by the corporation for
the purpose of initiating, setting on foot, or financing any enterprise not initiated, set on foot, or undertaken
prior to January 22, 1932, except that this limitation does not apply to loans made to agricultural or livestock
credit corporations, or Federal land banks, joint-stock land banks, or Federal intermediate credit banks, nor
to loans made to banks for the purpose of financing agricultural operations.]
(2) The applicant expressly consents to such examinations and audits of the
affairs of applicant and any affiliated companies, including inspection and valua-
tion of underlying security, by representatives of the Corporation, as the Corpora-
tion may from time to time direct, and agrees to pay such part or all of the ex-
pense thereof, as the Corporation may require, and further agrees (in accordance
with section 8 of the Reconstruction Finance Corporation Act) that reports of
examinations by constituted authorities, and any other information they may
have relating to the applicant, may be furnished by such authorities to the Cor-
poration upon request therefor.
(3) Applicant will promptly upon demand deposit with the Corporation such
additional collateral and further assurances, acceptable to or required by the Cor-
poration, as it from time to time shall, in the exercise of its uncontrolled discre-
tion, require for the full and adequate security of any and all indebtedness of the
applicant to the Corporation. Collateral securing any indebtedness of the appli-
cant shall be security for any and all other indebtedness of the applicant to the
Corporation whether incurred under this application or otherwise, and whether
now due or hereafter to become due, and whether heretofore or hereafter con-
tracted.
(4) Default in performance under any other application or obligation of the
applicant to the Corporation shall entitle the Corporation to declare the obliga-
STOCK EXCHANGE PRACTICES 9283
tions under this application inimediatel}' due and payable, and thereupon at its
option to deal with all property pledged under this application as though default
had occurred hereunder.
(5) The Corporation, at its discretion, may collect and at the expense and in
the name of applicant, or otherwise, enforce the payment when due of any or all
collateral security held hereunder, bj- suit or otherwise, may surrender, compro-
mise, release, renew, extend, or exchange all or any thereof, and may apply the
net proceeds thereof to the payment of any item of indebtedness of the applicant
to it. The applicant will pay or cause to be paid to the Corporation all expense
which the Corporation may incur in connection with this loan for the collection
and/or enforcement of the obligations of the applicant, including the enforcement
of any guaranty which the Corporation may hold in connection with the appli-
cant's obligations to the Corporation, even though no foreclosure or other legal
action take place. The applicant will pay or cause to be paid promptly when due
all taxes, insurance premiiuns, warehouse charges, transportation costs, and other
expenses necessarj' for the enforcement, preservation, and/or protection of any
security pledged hereunder, including fees for filing and recording mortgages
and the like, or assignments thereof required by the Corporation. If the appli-
cant fail to make any payment required in the preceding provisions of this para-
graph, the Corporation is authorized to do so and shall have a lien upon all
collateral held by it until it shall have been fully reimbursed for any advance
which it may have made in payment of any such items, together with interest
thereon at the rate of 6 per cent per annum.
Any check or draft received by or for the Corporation for the account of the
applicant hereunder may be presented for payment or forwarded for collection
direct to the bank upon which drawn or at which payable; the Corporation may
accept in payment of or remittance for any such check or draft, cash, bank drafts,
transfers of funds or bank credits, or any other forms of payment or remittance,
but the applicant shall not be entitled to credit on account of any such check or
draft until the Corporation shall have received the amount thereof in actually and
finally collected funds at a Federal Reserve Bank or branch thereof, and the
amount of any such check or draft credited by the Corporation may be charged
back to the applicant notwithstanding the check or draft itself can not be returned.
(6) Upon any failure of the applicant to comply w'ith any provisions of this
application or default in the payment of any indebtedness to the Corporation
or in case a receiver or liquidator is appointed for the applicant or any of its
property, or in case of adjudication of insolvency, or assignment for benefit of
creditors, the Corporation is authorized to declare any or all indebtedness of
the applicant to the Corporation due and payable forthwith, and the same shall
thereupon become so due and payable. And in case of any such default, the
Corporation is authorized to sell, assign, and deliver the whole or any part of the
collateral held by it from the applicant and any substitutes therefor or additions
thereto, and any guarantee held by the Corporation in connection with the appli-
cant's obligations, at any public or private sale without demand, advertisement,
or notice of the time or place of sale or adjournments thereof, for such price as it
Exhibit U-19-3c
maj^ deem fair, the undersigned hereby waiving any and all equity or right of
redemption whether before or after sale hereunder, and upon such sale, the Cor-
poration may become the purchaser of the whole or any part of such collateral
free from any such right or equity of redemption. In case of any such sale,
after deducting all costs, attorneys' fees, and other expenses of collection, the
Payee or holder may apply the residue of the proceeds of such sale or sales to the
payment of any or all indebtedness of the applicant to the Corporation and any
balance remaining shall be paid to the applicant.
Without limiting or affecting such rights of the Corporation so to sell part or
all of such collateral, the Corporation is further authorized at its option and in
its discretion to collect or cause to be collected or otherwise converted into money
any part of the collateral held hereunder, by suit or otherwise, and is authorized
in such case to surrender, compromise, release, renew, extend, or exchange any
item of such collateral without prior notice or consent of the applicant. Pro-
ceeds of collections so made, after first deducting costs, attorneys' fees and
expenses of collection, shall be applied to the payment of the indebtedness of
the applicant to the Corporation whether due or not. In the event of any legal
proceedings all costs and reasonable attorneys' fees incurred by the Corporation
9284
STOCK EXCHANGE PRACTICES
shall become a part of the indebtedness of the applicant covered by the provisions
hereof.
(7) Upon any transfer or pledge of any note of the applicant given pursuant
hereto the Corporation may deliver the collateral or any part thereof or interest
therein or any guaranty or other document held in connection with the applicant's
obligations to the Corporation to the transferee or pledgee, who shall thereupon
become vested with all the powers and rights herein given and shall have the
same remedies, including the right to require additional collateral, as if originally
named herein.
(8) The Corporation shall be protected in acting upon any notice, request,
consent, certificate, writing, resolution, or other paper or document believed by
it to be genuine and to have been signed, executed, passed, or presented by the
proper parties.
(9) The applicant agrees to be and remain bound for the payment of all indebt-
edness pursuant hereto and that the lien hereof and an}' pledge or pledges here-
under shall remain undisturbed notwithstanding any delay, extension of time,
substitution of security, renewal, or other indulgence granted by the Corporation
in connection with any collateral, hereby waiving all notices of such extension,
substitution, renewal, or other indulgence.
(10) The applicant expressly reserves the right to anticipate the payment of
any indebtedness to the Corporation incurred under this or any other application,
but agrees that any payment so made by it may be applied upon any item of its
indebtedness to the Corporation in such order as the Corporation may elect.
(11) No agreement has been or will be made by the applicant to pay any person,
association, firm, or corporation, either directly or indirectly, any commission or
fee for the loan hereby applied for, and no such payments have been or will be
made by the applicant.
(12) The applicant submits herewith as part of this application the following
documents:
Exhibit A. Certified copy of articles and by-laws of applicant with all
amendments to date. [Not required of banks.]
Exhibit B. Certified copy of resolution of its Board of Directors.
Exhibit C. Certificate of election to and incumbency in office of officers
of the applicant, with specimen signatures.
Exhibit D. Statement of the financial condition of applicant.
Exhibit E. Specimen of the note marked "sample" with all blanks filled
in, which will be executed and delivered by the applicant if and when notified
by the Corporation of its acceptance of this application.
Exhibit F. Schedules of collateral to be delivered as security for indebted-
ness of the applicant pursuant hereto, supported by full description and
information as to each item, including certified copies of financial statements
of makers, etc.
Exhibit G. Opinion of counsel for applicant.
Exhibit H. List of all of applicant's subsidiary or affiliated oragnizations,
if any.
[Note. — The following exhibits (I and J) are not required of banks subject to supervision and examination
by Federal authority.]
Exhibit I. Copy of last report of examination of financial condition of
applicant. [This report must be by State supervising authorities, unless
applicant is not subject to examination, when latest audit must be furnished.]
Exhibit J. Authorization to State banking department or other State
supervising authority.
(13) In case a loan is made hereunder, this application and any conditions
imposed by the Corporation in granting the loan shall be and become a contract
between the applicant and the Corporation, which shall be binding upon and
inure to the benefit of their successors and assigns.
Executed this 16th day of July, 1932.
[seal]
Attest:
R. S. Cbawford,
Secretary.
The Union Trust Company,
By W. M. Baldwin, President.
STOCK EXCHANGE PRACTICES
9285
Exhibit U-19-3d
ExHiBT F — Schedule of collateral
Offered by The Union Trust Company as security for a loan from the Recon-
struction Finance Corporation
Summary
1. Bonds and other securities, Schedule F (1)
2. Secured notes, Schedules F (2)
3. Unsecured notes, Schedule F (3)
4. Real estate mortgages, Schedule F (4) $4, 002, 574. 30
5. Other collateral (Schedule 5, to be supplied by
applicant) :
Total
We hereby certify that the collateral listed in detail in Schedules F (1), (2),
(3), (4), and (5), and summarized above, consists of securities which the officers
of this corporation, by virtue of the resolution of its Board of Directors, attached
hereto marked "Exhibit B," are authorized to pledge as security for a loan from
the Reconstruction Finance Corporation, and that in the opinion of the under-
signed such collateral is full and adequate security for the loan hereby applied
for.
W. M. Baldwin, President.
R. S. Crawford, Secretary.
Exhibit F (1) — Bonds and other securities
Description
Face
amount
Book
value
Present
market
quotation
Total
market
value
Rating
Issue
Rate
Maturity
Exhibit U-19-3e
(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)
December 26, 1933.
Memorandum:
In re: R.F.C. Loan No. W-114 Custodian No. 90
Discussed this application with Mr. Menke at the Reconstruction Finance
Corporation and he said that the March 10, 1932 application ^yas amended and
the money actually was advanced on the application dated April 15, 1932, which
was approved on April 27, 1932 for $14,000,000.00.
O. C. Morton.
9286 STOCK EXCHAISTGE PRACTICES
Exhibit U-19-4a
Application of — -
(Name) The Union Trust Company.
(Address) Cleveland, Ohio.
For a loan under authority of the Reconstruction Finance Corporation Act.
Date June 30, 1932.
In preparing application, detach and fill out inclosed forms, then replace and fasten in binder, sending
completed application to nearest Loan Agency. All forms should be filled out by typewriter. Three
original executed counterparts must be filed.
Exhibit 19-4b
APPLICATION FOR LOAN
The Union Trust Company (hereinafter called the applicant), a bank and
trust company organized and existing under the laws of the State of Ohio and
having its principal place of business at Cleveland, Ohio, hereby applies to
Reconstruction Finance Corporation (hereinafter called the Corporation)
for a loan not to exceed in the aggregate $1,500,000.00, to mature on or before
December 30, 1932 and to be secured by collateral listed in Schedule F hereto
attached, or other collateral acceptable to the Corporation. For the purpose of
obtaining such loan the applicant represents and agrees as follows:
(1) The loan herein applied for is desired for the purpose of paying bills payable
[Note.— The law provides that no loans or advances shall be made upon foreign securities or foreign
acceptances as collateral or for the purpose of assisting in the carrying on liquidation of such foreign securities
and foreign acceptances. The law also provides that no loan or advance shall be made by the corporation
for the purpose of initiating, setting on foot, or financing any enterprise not initiated, set on foot, or under-
taken prior to January 22, 1932, except that this limitation does not apply to loans made to agricultural or
livestock credit corporations, or Federal land banks, joint-stock land banks, or Federal intermediate credit
banks, nor to loans made to banks for the purpose of financing agricultural operations.]
(2) The applicant expressly consents to such examinations and audits of the
affairs of applicant and any affiliated companies, including inspection and valua-
tion of underlying security, by representatives of the Corporation, as the Corpor-
ation may from time to time direct, and agrees to pay such part or all of the
expense thereof, as the Corporation may require, and further agrees (in accord-
ance with section 8 of the Reconstruction Finance Corporation Act) that reports
of examinations by constituted authorities, and any other information they may
have relating to the applicant, may be furnished by such authorities to the
Corporation upon request therefor.
(3) Applicant will promptly upon demand deposit with the Corporation such
additional collateral and further assurances, acceptable to or required by the
Corporation, as it from time to time shall, in the exercise of its uncontrolled
discretion, require for the full and adequate security of any and all indebtedness
of the applicant to the Corporation. Collateral securing any indebtedness of
the applicant shall be security for any and all other indebtedness of the applicant
to the Cori^oration whether incurred under this application or otherwise, and
whether now due or hereafter to become due, and whether heretofore or hereafter
contracted.
(4) Default in performance under any other application or obligation of the
applicant to the Corporation shall entitle the Corporation to declare the obliga-
tions under this application immediately due and payable, and thereupon at its
option to deal with all property pledged under this application as though default
had occurred hereunder.
(5) The Corporation, at its discretion, may collect and at the expense and in
the name of applicant, or otherwise, enforce the payment when due of any or all
collateral security held hereunder, by suit or otherwise, may surrender, compro-
mise, release, renew, extend, or exchange all or any thereof, and may apply the
net proceeds thereof to the payment of any item of indebtedness of the applicant
to it. The applicant will paj' or cause to be paid to the Corporation all expense
which the Corporation may incur in connection with this loan for the collection
and/or enforcement of the obligations of the applicant, including the enforcement
of any guaranty which the Corporation may hold in connection with the appli-
cant's obligations to the Corporation, even though no foreclosure or other legal
action take place. The applicant will pay or cause to be paid promptly when
due all taxes, insurance premiums, warehouse charges, transportation costs, and
other expenses necessary for the enforcement, preservation, and/ or protection of
STOCK EXCHANGE PRACTICES 9287
any security pledged hereunder, including fees for filing and recording mortgages
and the like, or assignments thereof required by the Corporation. If the appli-
cant fail to make any payment required in the preceding provisions of this para-
graph, the Corporation is authorized to do so and shall have a lien upon all col-
lateral held by it until it shall have been fully reimbursed for any advance which
it may have made in payment of any such items, together with interest thereon
at the rate of 6 per cent per annum.
Any check or draft received by or for tlie Corporation for the account of the
applicant hereunder may be presented for payment or forwarded for collection
direct to the bank upon which drawn or at which payable; the Corporation may
accept in payment of or remittance for any such check or draft, cash, bank
drafts, transfers of funds or bank credits, or any other forms of payment or
remittance, but the applicant shall not be entitled to credit on account of any such
check or draft until the Corporation shall have received the amount thereof in
actually and finally collected funds at a Federal Reserve Bank or branch thereof,
and the amount of any such check or draft credited by the Corporation may be
charged back to the applicant notwithstanding the check or draft itself can not
be returned.
(6) Upon any failure of the applicant to comply with any provisions of this
application or default in the payment of any indebtedness to the Corporation or
in case a receiver or liquidator is appointed for the applicant or any of its property,
or in case of adjudication of insolvency, or assignment for benefit of creditors,
the Corporation is authorized to declare any or all indebtedness of the applicant
to the Corporation due and payable forthwith, and tlie same shall thereupon
become so due and payable. And in case of any such default, the Corporation is
authorized to sell, assign, and deliver the whole or any part of the collateral held
by it from the applicant and any substitutes therefor or additions thereto, and
any guarantee held by the Corporation in connection with the applicant's obliga-
tions, at any public or private sale without demand, advertisement, or notice of
the time or place of sale or adjournments thereof, for such price as it
Exhibit U-1&-4c
may deem fair, the undersigned hereby waiving any and all equity or right or
redemption whether before or after sale hereunder, and upon such sale, the Cor-
poration may become the purchaser of the whole or any part of such collateral
free from any such right or equity of redemption. In case of any such sale, after
deducting all costs, attorneys' fees, and other expenses of collection, the Payee
or holder may apply the residue of the proceeds of such sale or sales to the pay-
ment of any or all indebtedness of the applicant to the Corporation and any
balance remaining shall be paid to the applicant.
Without limiting or affecting such rights of the Corporation so to sell part of
all of such collateral, the Corporation is further authorized at its option and in
its discretion to collect or cause to be collected or otherwise converted into money
any part of the collateral held hereunder, by suit or otherwise, and is authorized
in such case to surrender, compromise, release, renew, extend, or exchange any
item of such collateral without prior notice or consent of the applicant. Proceeds
of collections so made, after first deducting costs, attorneys' fees and expenses of
collection, shall be applied to the payment of the indebtedness of the applicant
to the Corporation whether due or not. In the event of any legal proceedings
all costs and reasonable attorneys' fees incurred bj' the Corporation shall become
a part of the indebtedness of the applicant covered by the provisions hereof.
(7) Upon any transfer or pledge of an.y note of the applicant given pursuant
hereto the Corporation may deliver the collateral or any part thereof or interest
therein or any guaranty or other document held in connection with the applicant's
obligations to the Corporation to the transferee or pledgee, who shall thereupon
become vested with all the powers and rights herein given and shall have the
same remedies, including the right to require additional collateral, as if originally
named herein.
(8) The Corporation shall be protected in acting upon any notice, request,
consent, certificate, writing, resolution, or other paper or document believed by
it to be genuine and to have been signed, executed, passed, or presented by the
proper parties.
(9) The applicant agrees to be and remain bound for the payment of all indebt-
edness pursuant hereto and that the lien hereof and any pledge or pledges here-
under shall remain undisturbed notwithstanding any delay, extension of time,
9288 STOCK EXCHANGE PRACTICES
substitution of security, renewal, or other indulgence granted by the Corporation
in connection with any collateral, hereby waiving all notice of such extension,
substitution, renewal, or other indulgence.
(10) The applicant expressly reserves the right to anticipate the payment of
any indebtedness to the Corporation incurred under this or any other application,
but agrees that any payment so made by it may be applied upon any item of its
indebtedness to the Corporation in such order as the Corporation may elect.
(11) No agreement has been or will be made by the applicant to pay any person,
association, firm, or corporation, either directly or indirectly, any commission or
fee for the loan hereby applied for, and no such payments have been or will be
made by the applicant.
(12) The applicant submits herewith as part of this application the following
documents:
Exhibit A. Certified copy of articles and by-laws of applicant with all
amendments to date. [Not required of banks.]
Exhibit B. Certified copy of resolution of its Board of Directors.
Exhibit C. Certificate of election to and incumbency in office of officers
of the applicant, with specimen signatures.
Exhibit D. Statement of the financial condition of applicant.
Exhibit E. Specimen of the note marked "sample" with all blanks filled
in, which will be executed and delivered by the applicant if and when notified
by the Corporation of its acceptance of this application.
Exhibit F. Schedules of collateral to be delivered as security for indebted-
ness of the applicant pursuant hereto, supported by full description and in-
formation as to each item, including certified copies of financial statements
of makers, etc.
Exhibit G. Opinion of counsel for applicant.
Exhibit H. List of all of applicant's subsidiary or affiliated organizations,
if any.
[Note. — The following exhibits (I and J) are not required of banks subject to
supervision and examination by Federal authority.]
Exhibit I. Copy of last report of examination of financial condition of
applicant. [This report must be by State supervising authorities, unless
applicant is not subject to examination, when lastest audit must be furnished.]
Exhibit J. Authorization to State banking department or other State
supervising authority.
(13) In case a loan is made hereunder, this application and any conditions
imposed by the Corporation in granting the loan shall be and become a contract
between the applicant and the Corporation, which shall be binding upon and inure
to the benefit of their successors and assigns.
Executed this 30th day of June, 1932.
[seal] The Union Trust Company,
Attest: By W. M. Baldwin, President.
R. S. Ckawford, Secretary.
Exhibit U-19-4d
Exhibit F — Schedule of collateral
Off'ered by The Union Trust Company as security for a loan from the Recon-
struction Finance Corporation
SUMMARY
1. Bonds and other securities. Schedule F Amount
(1)
2. Secured notes. Schedule F (2)
3. Unsecured notes. Schedule F (3)
4. Real estate mortgages, Schedule F (4).. $3, 002, 140. 09
5. Other collateral (Schedule 5, to be sup-
plied by applicant):
Total $-
STOCK EXCHANGE PRACTICES
9289
We hereby certify that the collateral listed in detail in Schedules F (1), (2),
(3), (4), and (5), and summarized above, consists of securities which the officers
of this corporation, by virtue of the resolution of its Board of Directors, attached
hereto marked "Exhibit B," arc authorized to pledge as security for a loan from
the Reconstruction Finance Corporation, and that in the ojiinion of the under-
signed such collateral is full and adequate security for the loan hereby applied
for.
W. M. Baldwin,
President.
R. S. Crawford,
Secretary.
Exhibit F (1) — Bonds and other securities
Description
Face
amount
Book value
Present
market
quotation
Total mar-
ket value
Rating
Issue
Rate
Maturity
Exhibit U-19-5
The Union Trust Company,
Cleveland, Ohio.
Date, August 2, 1932. $1,475,297.21
Credit bills payable — Reconstruction Finance Corporation for note dated June
30, 1932, payable on or before December 30, 1932. Interest from this date,
August 2, 1932, rate, 5J4% per annum, payable at maturity.
Offset entry mast be described
Authorized by
Official approval
(This ticket should be prepared and signed with ink)
Exhibit U-19-6
The Union Trust Company,
Cleveland, Ohio.
Date, August 12, 1932. $1,967,461.76
Credit bills payable for proceeds of our loan of $2,000,000.00 from Reconstruc-
tion Finance Corp. dated July 16, 1932, maturing January 16, 1932, and secured
by mortgages.
Charge Federal Reserve Bank of Cleveland
Offset entry must be described
Authorized by
Official approval
(This ticket should be prepared and signed with ink)
9290 STOCK EXCHANGE PKACTICES
Exhibit U-19-7a
DETAIL OF BORROWINGS OF THE UNION TRUST COMPANY JUNE 30, 1932
National City Bank $387,500.00 Demand Receivables
Irving Trust Company 300, 000. 00
Irving Trust Company 3,000,000.00 " Gov't Bonds
National Credit Assn 3,000,000.00 Due 8/16/32 Receivables
Reconstruction Finance Corp 13, 428, 060. 88 " 10/15/32
It
20, 115,560. 88
Federal Reserve Bank 4,000,000.00 Due 7/15/32 Receivables
Total Direct Borrowings 24, 115, 560. 88
Notes sold under Repurchase Agree-
ment Guaranty Trust Company. 969, 707. 23 Demand
Total Borrowings.- 25, 085, 268. 11
Certified correct
The Union Trust Company,
R. S. Crawford,
Secretary.
This certifies that at the close of business June 30, 1932, the capital and surplus
of The Union Trust Company were as indicated below:
Capital - $22, 850, 000. 00
Surplus 12, 150, 000. 00
Total 35, 000, 000. 00
The Union Trust Company,
By R. S. Crawford,
Secretary.
Exhibit U-19-8
form of note of borrowing bank or trust company
(Place) Cleveland, Ohio,
(Date) Jan. 18, 1932.
$3,000,000.00.
Three months after date, for value received, the undersigned, being a bank
or trust company organized and existing under the laws of the State of Ohio
promises to pay to National Credit Association No. One of the Fourth Federal
Reserve District (herein referred to as the Payee), or order, at Cleveland Trust
Company in the City of Cleveland, State of Ohio, Three Million Dollars ($3,000,-
000.00) with interest at the rate of % per annum from the date hereof,
payable , and has pledged to the Payee as security
for the payment of this note and of all other liabilities of the undersigned to the
Payee whether direct or contingent, due or to become due or which may here-
after be contracted or existing, the property listed in the schedule attached
hereto. As used herein the word "Payee" shall include any holder hereof,
whether before or after maturity.
As security for the payment of this note and of all such other liabilities, the
undersigned hereby pledges with the Payee and/or gives it a lien upon all the
property now or hereafter left by the undersigned in possession of the Payee, or
held by any person or corporation for account of the Payee. The undersigned
agrees that it will promptly deposit with the Paj^ee such additional security
acceptable to the Payee as the latter, from time to time, in the exercise of its
uncontrolled discretion, may require for the full and adequate security of this
note.
I Upon the nonpa.yment when due of any instalment of interest upon this note,
or upon the nonpayment when due of any other liability of the undersigned held
by the Payee, or upon failure by the undersigned to satisfy any requirement for
the deposit of additional security hereunder, the Payee is hereby authorized to
declare the principal hereof, and of any such other liability, due and payable,
and thereupon the same shall be due and payable. Upon any adjudication of
STOCK EXCHANGE PRACTICES 9291
the insolvency of, or the appointment of a receiver or liquidator for, the under-
signed, or of any of its property, or upon the suspension of the transaction of the
business of the unders'gned in the ordinary course, the principal of this note and
the interest thereon, and of any such other liability, shall, unless the Payee shall
otherwise elect, become and be due and payable forthwith, without presentation
or demand or notice of protest or other notice of any kind, all of which are hereby
expressly waived.
The Payee in its discretion may, whether or not the undersigned shall be in
default in respect of any of its obligations hereunder, in its name or in the name
of the undersigned, demand, sue for, collect and/or receive any money or prop-
erty at any time due, payable or receivable on account of any of the security
hereunder, and may make any compromise or settlement deemed desirable in
respect of any such security, but shall be under no obligation so to do. The
Payee may extend the time of payment of any obligation constituting part of the
security hereunder, arrange for the payment of any thereof in instalments, or
otherwise modify the terms thereof as to any other party liable thereon, without
thereby incurring responsibility to or discharging or otherwise affecting the liabil-
ity of the undersigned thereon or in connection therewith. Upon default by the
undersigned in respect of any of its obligations hereunder or in connection with
any such other liabilities, the Payee may sell, assign and deliver the whole or any
part of the security hereunder or any substitute therefor or addition thereto at
any public or private sale or at any broker's board or stock exchange, at any
time or times hereafter, without demand, advertisement or notice; and upon any
such sale the Payee may become the purchaser of the whole or any part of said
security, free from any right of redemption, and no notice of any adjournment of
any such sale shall be required. In case of any such sale, collection or enforce-
ment, after deducting all legal and other costs and expenses for collection, enforce-
ment, sale and delivery, the Payee may apply the residue of the proceeds of such
collection, enforcement or sale, to the payment hereof and of any or all of said
liabilities, as the Payee shall deem proper, returning the overplus, if any, to the
undersigned.
The undersigned will bear all reasonable expense and all loss occasioned by or
connected with the collection, enforcement, or transmission of the security here-
under or instruments or documents delivered herewith or the remittance of pro-
ceeds of any of the foregoing; all collections, enforcement proceedings, transmis-
sion of property and papers, and remittance of funds being solely at the cost and
risk of the undersigned.
The undersigned further agrees that upon any transfer or pledge of this note,
the Payee may deliver the security held hereunder, or any part thereof or interest
therein, to the transferee or pledgee, who shall thereupon become vested with all
the powers and rights herein given in respect of such security and shall also have
the same rights and remedies, including the right to demand additional security,
as if originally named herein as Payee.
The undersigned and all indorsers hereby waive presentment, demand, protest
and notice of dishonor and agree to remain bound for the payment of this obliga-
tion and all interest and charges thereon, and that the lien hereof and the pledge
hereunder shall remain undisturbed, notwithstanding any extension of time, sub-
stitution of security, or other indulgence granted by any holder of this note,
hereby waiving all notice of such extension, substitution, or other indulgence.
No delay on the part of the Payee and/or of anyone in whose behalf it has acted
or shall act as herein provided, or of any transferee or pledgee in exercising any
power or right hereunder shall operate as a waiver thereof; nor shall any single
or partial exercise of any power or right hereunder preclude other or further
exercise thereof or the exercise of any other power or right. The rights and
remedies herein expressly specified are cumulative and not exclusive of any rights
or remedies which the Payee, and/or anyone in whose behalf it has acted or shall
act as herein provided, or its and/or his and/or their transferees, may or would
otherwise have.
The undersigned shall have the right, upon three days' notice in writing de-
livered to the Payee, to anticipate the payment of this note or of any part thereof,
and any payments so made shall be endorsed hereon.
In witness whereof the undersigned has caused this note to be executed by its
president or a vice-president and its corporate seal to be hereunto affixed by its
9292 STOCK EXCHANGE PRACTICES
secretary or cashier or an assistant secretary or assistant cashier as of the day
and year first above written.
The Union Trust Company,
By Howard Smith,
Vice President.
Attest:
R. S. Crawford,
Secretary.
Note: The schedule of security should be attached, and the date of this note
and its place of payment left blank. A conformed copy of this note, including
the schedule of security, should be submitted with the application for the loan.
Paid Apr. 18, 1932, National Credit Association No. 1 of the Fourth Federal
Reserve District.
G. W. Dephusan,
Treasurer.
Exhibit U-19-9
The Union Trust Company,
Cleveland, Ohio.
Date, January 20, 1933. $12,525,723.68
Charge bills payable for loan to Reconstruction Finance Corporation due
October 15, 1932, paid by renewal.
Offset entry must be described
Authorized by
Official approval
(This ticket should be prepared and signed with ink)
Exhibit U-19-10
National Credit Association No. 1 of the
Fourth Federal Reserve District,
709 Federal Reserve Bank Bldg.,
Cleveland, 0., December 17, 1932.
Mr. J. R. Kraus,
Chairman of Board, Union Trust Company,
Cleveland, Ohio.
Dear Mr. Kraus: At a meeting of the Loan Committee of the National
Credit Association No. 1, held December 13, 1932, the Treasurer reported that
all loans made by the Association had been paid in full.
Therefore, it was decided to wind up the financial affairs of the Association
and the Treasurer was authorized to distribute any funds remaining after all
expenses were paid, to the members of the Association pro rata according to
their subscriptions to the Gold Notes of the National Credit Corporation as
provided in the Articles of Agreement of the Association.
Your pro rata share of the remaining funds is $7,987.67, and a check for that
amount is enclosed.
It was also decided not to disband the Association until October 17, 1933 as
authorized by the National Credit Corporation or until the National Credit
Corporation is dissolved.
Yours very truly,
G. A. Stephenson, Secretary.
STOCK EXCHANGE PRACTICES 9293
Exhibit U-19-lla
National Credit Association No. 1 of thk
Fourth Federal Reserve District
709 Federal Reserve Bank Bldg.
Cleveland, O., November 13, 1931.
Loan Committee:
W. M. Baldwin H. V. Shulters, Chairman
Harris Creech G. A. Stephenson, Secy, and Treasurer.
J. Arthur House
John Sherwin, Jr.
H. V. Shulters
C. E. Sullivan
To the bank addressed:
National Credit Association No. 1 of the Fourth Federal Reserve District was
organized by the Clearing House Banks of Cleveland, Ohio, November 2, 1931
under the plan sponsored by the President of the United States.
Each Clearing House Bank subscribed its full quota, making an aggregate sub-
scription to the notes of the National Credit Corporation of $9,110,000.00.
Your bank is cordially invited to become a member of National Credit Asso-
ciation No. 1 of this district. The territory comprising this district includes the
following Ohio counties: Ashland, Ashtabula, Carroll, Columbiana, Crawford,
Cuyahoga, Erie, Geauga, Harrison, Holmes, Huron, Jefferson, Knox, Lake,
Lorain, Mahoning, Marion, Medina, Morrow, Portage, Richland, Stark, Sum-
mit, Trumbull, Tuscarawas, Wayne, Wyandot.
In order to become a member, it will be necessary for your bank to subscribe
to the notes of the National Credit Corporation at par in a principal amount
equal to 2% of your net demand and time deposits as of the call last preceding
the date hereof, not exceeding an amount equal to 10% of your capital and surplus.
A copy of the Articles of Agreement forming National Credit Association No.
1 of the Fourth Federal Reserve District is enclosed, together with forms for your
use should you desire to subscribe for the notes and make application for rnem-
bership. Forms are also enclosed for your use if you wish to make application
for loans.
It is believed that the formation of this Association constitutes an important
step towards strengthening the banking situation in this district and the success
of the plan will depend largely upon the extent to which banks in this district
cooperate by joining.
Exhibit U-19-llb
We have called a meeting of the bankers of the above counties to be held on
the tenth floor Federal Reserve Bank Building, Cleveland, at two o'clock Tues-
day afternoon, November 17th. At this meeting efforts will be made to answer
any questions which anyone desires to ask.
It is our belief that by joining this association you will be able, in case of need,
to get assistance which might not otherwise be available.
Will you kindly have a representative present at the meeting.
Very truly yours, ^ y Shulters, Chairman.
Exhibit U-19-12
March 7, 1932.
Mr. M. J. Fleming,
Manager, Reconstruction Finance Corporation,
Federal Reserve Bank Building, Cleveland, Ohio.
Dear Matt: There are some applications in for credit which I wish you would
try and push to the front as fast as you can.
I know you are busy and rushed but it will be helpful if you will try and place
some of these on the top of the heap:
Ivanhoe Savings Company $252, 000. 00
Quincy Savings and Loan Co 30, 000. 00
Also —
The Progress Building, Savings & Loan Co.
Maple Savings and Loan Company.
The East End Savings and Loan Company.
So far everything seems to be working fine, and everybody feels that the Recon-
struction Finance Corporation is going to clear the atmosphere.
Very sincerely yours, J R K
JRK/F Vice Chairman of Board.
9294 STOCK EXCHANGE PRACTICES
Exhibit U-19-13
The Union Trust Company,
Broadway-Columbia Office, Cleveland, Ohio, March 5th, 1932.
Mr. J. R. Kraus,
Vice Chairman of the Board, The Union Trust Company, Main Office.
Dear Mr. Kraus: I have been assured that you are one of the powers of the
Reconstruction Finance Company and it is necessary to obtain your influence in
order to produce a speedy conclusion to the requests for loans.
Two of our patrons have applied. They are The Progress Building, Savings &
Loan Company and the Maple Savings & Loan Companj\ Will you kindly put
the above two applications on your memorandum pad.
The next request I have is on behalf of The East End Savings & Loan Company,
who, I understand, have applied through The Cleveland Trust Company for a
loan from the Reconstruction Finance Company. They also have an account
with The Union Trust Company, but evidently they owe more money to The
Cleveland Trust than they do to our institution. They have promised if they
obtain the loan based upon their application that they will pay off a $6,000
mortgage that we have here of the Corlett Amusement Company. The interest
on this mortgage loan is paid to December 15, 1931 but the taxes are delinquent to
the amount of $1,726.83. Kindly do your utmost for them, and through them
for us.
Yours very truly,
P. J. Slach,
PJS/M Vice President.
JRK
Exhibit U-19-14
The Union Trust Company,
Buckeye 89th Office, Cleveland, Ohio, March 1, 1932.
Mr. J. R. Kraus,
Vice Chairman, Main Office.
Ivanhoe Savings Company 232, 000 (Woodland)
Empire Savings & Loan Co 8, 400 (Woodland)
Quincy Savings & Loan Co 30, 000 (B-89th)
Dear Mr. Kraus: We wish to report that in cooperation with Mr. Hills we
have succeeded in having applications filed with the Reconstruction Finance
Corporation for loans to take up the above. The thought occurred to us today
that we should now use our influence in exerting pressure with the Reconstruction
Corporation to grant these loans.
We talked with Mr. Peter Slach about the Broadway situation, and he stated
that they were carrying 4 loans, and since talking with you we have requested
him to report to you on the present status of their loans.
In checking up today we find that the 3 above mentioned companies have now
supplied all information in detail in connection with their securities as requested
by the Reconstruction Corporation Committee.
Very truly yours,
L. H. Fisher,
LHF:L Vice President.
JRK
Exhibit U-19-15
Reconstruction Finance Corporation,
Federal Reserve Bank Building,
Cleveland, March 9, 1932.
Mr. J. R. Kraus,
Vice Chairman of Board, The Union Trust Company, Cleveland, Ohio.
Dear Mr. Kraus: We have the following information with reference to the
list of applicants to which you refer in your letter of March 7th:
1. Ivanhoe Savings Company application was received March 7th and has
Work No. 91.
2. Quincy Savings & Loan Company application was received March 4th
and is being held for shortage of data.
STOCK EXCHANGE PRACTICES 9295
3. Maple Savings & Loan Company application was received February 25th
and has Work No. 75.
4. The Progress Building, Savings & Loan Company application not received
in this office.
5. The East End Savings & Loan Company api)lication not received in this
office.
Verv truly your.s,
W. J. TiMIN,
Manager.
JRK
MJF:HG
Exhibit U-19-16
Business extension has copy of this letter
July 26, 1932.
Mr. M. J. Fleming,
Manager, Reconstruction Finance Corp., Federal Reserve Bldg., Cleveland.
Dear Matt: The City Bank of Kent is rather disturbed at the amount which
you people told them you would approve on a loan with the bonds as collateral.
The amount of bonds, as per list enclosed, is $146,825.00. Our Bond Department
figures very conservatively, as per list also enclosed, and their appraisal is
$90,292.50; and they are all figured on a very low basis.
I can hardly see why j^ou could not recommend a loan of $66,500 on all of the
bonds, that is, 75% of $90,000, and about 45% of the total. It is true that some
of these bonds most likely will be in default; but, on the other hand, there are a
good many of them that are well considered.
Please see if you can't have this re-figured and try to help them out. They have
their loan with the National Credit Corporation, and would like to get it
cleaned up.
Very sincerely yours,
J. R. K.,
Chairman.
Exhibit U-1&-7
Western Reserve Mortgage Company
Western Reserve Mortgage Company, an Ohio Corporation for profit, was
organized for the purpose of handling and dealing in and with mortgages, mortgage
notes and all forms of securities. It was organized to do business on February 14,
1933.
Its Shareholders are as follows:
Union Cleveland Corporation (The Union Trust Company) 18, 541 Shares
The New England Company (The Guardian Trust Co.) 8, 000 Shares
The City and Suburban Company (The Cleveland Trust Co.) 2, 500 Shares
The Central United Company (Central United Bank & Trust Co.). 1, 490 Shares
Society for Savings in the City of Cleveland 1, 000 Shares
The Lorain Street Savings and Trust Company 750 Shares
The National City Company (The National City Bank) 50 Shares
Directors 5 Shares
Total 32, 336 Shares
"C-1" The First subscription of the Union Cleveland Corporation was made
February 16, 1933, and was foi 10,000 shares. Tlie proceeds of this subscription,
to the extent of $990,664.29, was invested by the Western Reserve Mortgage
Company in mortgages purchased from The Union Trust Company.
"795" On February 16, 1933, The Union Trust Company sold the Western
Reserve Mortgage Company Real Estate Loans, the aggregate face value of which
was $24,981,574.49, and in payment for said loans, the Western Reserve Mortgage
Company gave its note to The Union Trust Company for the same amount, which
note was secured by a pledge of the mortgages purchased.
The Western Reserve Mortgage Company then borrowed from the Reconstruc-
tion Finance Corporation, the sum of $12,700,000.00, and pledged the mortgages
175541 — 34 — PT 20 36
9296 STOCK EXCHANGE PEACTICES
so purchased totaling $24,981,574.49 to the Reconstruction Finance Corporation,
The Union Trust Company waiving in favor of the Reconstruction Finance
Corporation its Hen on said mortgages.
"C-2" On February 22, 1933, the Union Cleveland Corporation subscribed
for an additional 3,381 shares. The proceeds of this subscription, to the extent
of $338,074.00, was invested l)y the Western Reserve Mortgage Company in
mortgages purchased from The Union Trust Companv.
"809" On February 22, 1933, The Union Trust Company sold the Western
Reserve Mortgage Company Real Estate Loans, the aggregate face value of which
was $8,451,694.26, and in payment for said loans, the Western Reserve Mortgage
Company gave its note to The Union Trust Company for the same amount,
which note was secured by a pledge of the mortgages purchased.
The Western Reserve Mortgage Company then borrowed from the Recon-
struction Finance Corporation, the sum of $4,028,715.00, and pledged the mort-
gages so purchased, totaling $8,451,694.26, to the Reconstruction Finance Cor-
poration, The Union Trust Company waiving in favor of the Reconstruction
Finance Corporation its lien on said mortgages.
"C-3" On February 23, 1933, the Union Cleveland Corporation subscribed
for an additional 5,160 shares. The proceeds of this subscription, to the extent
of $515,904.18, v/as invested by the Western Reserve Mortgage Company in
mortgages purchased from The Union Trust Company.
"813" On February 23, 1933, The Union Trust Company sold the Western
Reserve Mortgage Company Real Estate Loans, the aggregate face value of
which was $12,897,142.01, and in payment for said loans, the Western Reserve
Mortgage Company gave its note to The Union Trust Company for the same
amount, which note was secured by a pledge of the mortgages purchased.
The Western Reserve Mortgage Company then borrowed from the Reconstruc-
tion Finance Corporation, the sum of $4,433,911.00, and pledged the mortgages
so purchased, totaling $12,897,142.01, to the Reconstruction Finance Corporation,
The Union Trust Company waiving in favor of the Reconstruction Finance
Corporation its lien on said mortgages.
In each case the proceeds of the Reconstruction Finance Corporation's loans
were applied to the reduction of the respective notes given by the Western Reserve
Mortgage Company to The Union Trust Company for its purchase of said mort-
gages.
The mortgages in which the capital subscriptions were invested are unpledged
and are for convenience called "C-1, C-2 and C-3."
The three groups of mortgages purchased by note from The Union Trust Com-
pany, are for convenience denominated as groups "795, 809 and 813" respectively.
Agency Agreements providing for the servicing of the mortgages jjurchased
from the Vendor Bank, by the Vendor Bank were entered into as of the dates the
mortgages were purchased.
The notes to the V^endor Bank bear interest at the rate of 5%.
The notes of the Western Reserve Mortgage Company to the Reconstruction
Finance Corporation bore interest at the rate of 5% to July 1st, when the rate
was reduced to 4}^% and which rate continued until October 1st, when it was re-
duced to 4%.
I certify that the foregoing is a resume of the transactions involving the Union
Trust Company, Union Cleveland Corporation, and the Western Reserve Mort-
gage Company, and was obtained from the records and files of the Western Re-
serve Mortgage Company of which I am the Assistant Secretary. Western Re-
serve Mortgage Company is now known as Western Mortgage Company by
change of name.
Ed. Meyers.
March 7, 1934.
X
-p-
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