“Walsh’s Best Road in Receiver’s Hands: Alleged at Convicted Banker’s Trial That he Drained Funds of His Banks to Develop Railroads”
The following information appeared The New York Times, August 21, 1909: “Federal jurisdiction now extends over the Southern Indiana Railway Company through the appointment of a receiver in the United States Circuit Court. The road has long been regarded as the best of what are known as the John R. WALSH Railroads. On a petition presented by counsel for the First Trust and Savings Bank of Chicago, the representatives of the Chicago Clearing House Association, Judge Christian C. KOHISAAT late last night appointed M. J. CARPENTER, formerly President of the Chicago & Eastern Illinois Railway Company, receiver of the Southern Indiana Railway Company.
Failure to meet the interest on the bonded indebtedness of the road was the proximate cause of the petition for court action. For months there have been rumors that a receivership was the only solution of the financial difficulties of the road, which were actuated by industrial depression that made it difficult to pay operating expenses.The Southern Indiana Road was the first railroad acquired by John R. WALSH in the extending of his banking business from banking lines to a wider financial field; the methods employed to develop the road and finance the other railroad enterprises formed a large part of the trial which preceded the conviction of the aged banker on a charge of misapplying funds of the Chicago National Bank, of which he had been president.…One of the strong points made by the government attorneys in their arguments before the jury, which convicted the former banker, was that the Chicago National Bank and the Home Savings Bank, as well as the Equitable Trust Company, which were practically controlled by John R. WALSH, had been drained of funds to supply money with which to develop the railways. Mr. WALSH, on the witness stand, declared his belief that the roads were good business propositions, and that his judgment in investing money in them would be supported…The claim of the First Trust and Savings Bank, complainant in the receivership proceedings, amounts to $135,000, on two promissory notes. Interest on these notes and the notes themselves are past due, and the defendant company admits its inability to pay.”
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