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NOVEMBER 221907
The Commoner.
or
WALSH
The Commoner has no disposition to gloat
over the downfall of any man and It is for edu
cational purposes, that it directs attention to
"the story of John R. Walsh" as told by the as
sistant district attorney in Chicago in present
ing the case to the juryT It will he remembered
that John R. Walsh was president of a national
bank in Chicago, ho was also ftt the head of
other enterprises and was the owner of the Chi
cago Chronicle. Mr. Walsh .had all along claimed
to be a democrat and the Chronicle had posed
as a democratic newspaper, but Mr. Walsh and
his newspaper were both horrified at the course
of the democratic party in 189 6 and since then
no denunciation was too severe, no gibe too
coarse, no Btory too false for it to be used by
the Chicago Chronicle or indulged in by its
owner in the effort to defeat the democratic
party or to make Mr. Bryan odious in the eyes
of good citizens. The Chronicle and John R.
Walsh posed in 1896 as "the defenders of tho
national honor" and now it develops with re
spect to Walsh as it has developed with re
spect to others of tho 1896 pretenders that ho
had no more concern for tho national honor than
he had for his own. The following report is
taken from the Chicago Record-Herald:
"John R. Walsh had a chance to play the
game of millions with tho funds of his bank.
The money which his left hand needed his right
hand could take from the coffers of the insti
tution. And it was before this temptation that
John R. Walsh, fell!"
Assistant District Attorney Fletcher Dobyns
hurled this declaration at the former president
of the defunct Chicago National bank yester
day afternoon before tho jury in Judge Ander
son's court which is to try him for alleged mis
application of banking funds.
The statement sounded the keynote of the
government's case against tho former banker.
It came as a climax to the prosecutor's
opening address to the jury; an address In which
the defendant's 'alleged banking methods were
graphically described in figures that hovered
about the millions; an address that laid bare
what the government describes as the secret
and criminal methods by which Mr, Walsh
sought to unload upon the Chicago National, tho
Home Saving an.d the Equitable Trust banks
speculative securities consisting of worthless
bonds and "forged" notes.
During the recital tho defendant, seated at
the attorneys' table beside his son, J. W. Walsh,
nervously .fingered a pen which occasionally he
dipped Into an ink bottle and then abstractedly
laid upon the table.
His eyes for the most part, though, were
riveted upon tho assistant district attorney, but
his face, a3 on the previous day, remained Im
passive despite the attacks upon his business
Integrity.
The gaze upon the man who was denounc
ing him as a "bank wrecker" and a domineering
financier became even more fixed and he leaned
forward in his chair when Mr. Dobyns declared
that Walsh was "more afraid of Chicago's hon
est bankers" than, he was of the government.
During the address it developed that the
government will attempt to show that $14,000,
000 was removed from the Chicago National
bank, the Home Sayings bank and the Equitable
Trust company, while there was not a "scratch
of the pen" on the booksof these concerns to
indicate the transactions.
"The evidence will show," said Mr. Dobyns,
"that in the early days. when he was a poor boy,
frugal and industrious, and before the greed
for wealth and lust for power seized him, John
R. Walsh was honest. And by this combination
of qualities he rose step by step in this commu
nity until he stood at the head of three impor
tant banking institutions.
"Mr. Walsh was a -man of domineering per
sonality; he was a man of domineering nature
also, and he felt that he knew more about those
banks than did his directors or anyone else. The
officers and employes of the banks, from the
vice president down to the janitor of the build
ing, were in the absolute power of John R.
Walsh."
Continuing, Mr. Dobyns recited a list of
enterprises, including railroads; stone quarries,
coal mines, gas companies and othor corpora
tions, in which he was interested. These the
prosecutor declared Walsh had financed through
his banks and were described as "obscure, un
known and in some instances bankrupt con
cerns." "Of all" tho different companies which Mr.
Walsh owned," said tho prosecutor, "there wns
not one of them which at tho time ho acquired
it was an established and prosperous business
enterprise. Ho organized corporations to take
over tho companies from himself and thon put
his employes in aa dummy directors, and then
through those directors ho would voto to him
self all or practically all of tho capital stock of
tho company and as many of tho bonds as ho
needed, which ho would put in his bank- to
pay for the properties.
"Ho thus would raiso money In which to
pay for tho enterprises himself, so that tho very
purchase money stood not as a liability ngainst
Mr. Walsh, who owned tho properties and
whoso bonds had been put into- theso banks.
Now this, I say, was tho most usual method of
his procedure."
Mr. Dobyns paused and hold a short con
sultation with Assistant District Attorneys
Childs and Hanchett before proceeding.
Resuming his address, tho prosecutor told
the jury that in all theso properties tho de
fendant had Issued approximately $30,000,000
of watered stock, which ho voted to himself and
continued to placo tho bonds in tho bank. Tho
government in this connection, Mr. Dobyns said,
is prepared to show that the defendant would
placo theso bonds in tho Chicago National bank
largely at par.
"Then, after ho had gone as far as ho
dared in these manipulations," said tho prose
cutor, "Walsh rosortod to tho method of get
ting people to sign accommodation notes for
the banks, and finally ho resorted to tho method
of signing people's names to notes, and attach
ing to these fictitious notes this unmarketable
and in many cases practically worthless collat
eral. Then he would, by having a check drawn
to the bearer, dqposit this into his own personal
account and check it out to his own enterprises.
"Millions of dollars that went into the
defendant's private personal account wero
checked out In this manner, and when the money
was gone there was left simply the paper of
Mr. Walsh's enterprises. We will show you tho
exact figures, of course, when wo reach it.
"He began rather modestly at first, taking
out a Binall amount way back in the early '90s,
and the amount grew a little larger and a little
larger, until finally ho was taking it out, as
wo shall show, by the hundreds of thousands
and even by the millions at a single deal,
"At the time of the suspension of the Walsh
banks in 1905 there had been taken from the
institutions by Mr. Walsh more than $14,000,
000 on these unmarketable and practically
worthless bonds. This, gentlemen, was more
than half the total deposits of tho banks, al
though in this connection his name did not ap
pear on the books of the banks as owing ono
cent to the Chicago National bank."
Mr. Dobyns said that in 1903 the govern
ment bank examiners became suspicious and that
in the early part pf 1904 Bank Examiner Oakley
demanded an explanation.
"They retired to tho directors' room," re
lated tho .attorney, "and there the examiner said
to him:
" 'Mr. Walsh, this bank is being loaded
down with the securities of your enterprises'
It Is an outrage and this stock must be taken
out of tho bank and the money returned.'
" 'Yes, that is rjght, and It will be done
replitd Mr. Walsh.'
Mr. Dobyns said tho banker furnished a
list of dates to the -comptroller of thq currency
setting, forth when he would relieve his institu
tions .of the stocks and bonds complained of
by the gpvernment, but, the condition, the. prose
cutor told the Jury, was no better when the next
examination was made in 19.04.
"Again ho was warned and told that this
stock must be taken put," recited Mr. Dobyns,
"and again he promised. Letters were ex
changed between him and the comptroller of
the currency on the subject, which will be in
troduced as evidence."
When Bank Examiner Bosworth went over
the books of the institutions In 1905 their con
dition, according to the government, was "still
worse "
- "And ,remeraber,w gentlemen, it "fwas not
known to the bank examiner at this time that
all this money had gono Into Mr. Walsh's per
sonal account. In fact, all tho highly crlmluat
ing evidence of this did not appear on tho faco
of tho books. So the oxamlnor, upon tho direc
tion of tho. comptroller of curroncy, again called
upon Mr. Walsh and told him ho had promised
to got this stock out of tho bank and that ho
must do it or tho matter would bo laid before
tho diroctors of tho institution."
Thoro followed a Bharp lottor from tho
comptroller of curroncy, according to Mr.
Dobyns, In which tho Kovornmont officer in
formed Mr. Walsh promise no longer would
bo accepted.
"Mr. Walsh received this letter," contin
ued tho prosecutor, "nud framed a roply, which
ho induced tho directors to sign, although ho
did not permit thorn to know anything about the
truo condition of affairs. Thoy signed tho let
ter" because they had porfoct confidence In Mr.
Walsh, and In tho communication various ex
cuses and promises wore mado. This was fol
lowed by tho receivership proceeding In Decem
ber, 1905."
Mr. Dobyns told how, aftor other Chicago
bankers wero informed of tho condition of tho
Walsh banks, thoy had gone to the rcscuo of
tho depositors by paying thorn in full and buying
in tho securities. Ho pointed to the law, which
declares a banker shall not loan more than ten
per cont of Its capital stock to any Individual
firm or corporation, a violation of which ho said
constituted a criminal off on so if tho loan is mado
for tho benefit of tho banker hlmsolf rathcr-than
for tho benefit of tho Institution of which ho la
an officer.
Mr. Dobyns declared tho government Is pre
pared to show criminal Intent in this.
"Tho facts In this caso will largely bo
taken from tho books of Mr. Walsh's own enter
prises, from his banks and all his other corpor
ations," said tho prosecutor. "They will bo
takon from his employes and associates, men
who are friendly to him, and men who naturally
will tell no more than thoy imvo to toll; who
will put upon tholr admissions a construction as
favorable to Mr. Walsh as possible."
With tho ovldenco that the so-called worth
loss securities wero deposited by the defendant
in the Chicago National bank, Mr. Dobyns ox
plained to tho jury that tho paramount ques
tion will bo that of the bankor's Intent. .. .
"Now, gentlemen, in determining that Issue
I might say that this is the offense charged in
tho indictment," aid-ho. "That Mr. Walsh took,
this money not for tho purpose of benefiting
tho bank, but that he did so without tho knowl
edge or consent of the directors, and for the
solo purpose of benefiting himself, with tho re
sult that tho bank suffered loss thereby.
"Tho evidence will show that he started in
cautiously and that, emboldened by tho success
of his plans for somo of those entorpr,Ue did
turn out well ho had been able by ho adroitly
keeping his books that tho true naturo of his
transactions were concealed from tho bank ex
aminer, from his directors and associates. Thu
he became more and more bold and toward th
end he was taking money out of these banks by
arirfsful with utter recklessness. And this, I
say, gentlemen, he was doing right p to tho
day tho banks closed."
An Illustration of the alleged methods, em
ployed by Mr. Walsh in financing his various
enterprises was given by Mr. Dobyns as follows;
"Mr. Walsh would glvo a bond to his pri
vate ' secretary, McKay, who would Cake it to
the bond department man, Mr. Ferrlor, Tho
latter, having instructions from Mr. Walsh to
purchase this bond at, say, 95, or at par, would
enter ii as 'sold by Mr. Wymand' or somo other
employe, but never by Mr. Walsh. He then
would make out a bond department check, pay
able to Mr. Wymand or bearer, which he would
deposit to Mr. Walsh's personal account without
tho Iatter's name appearing anywhere on tho
books of the bank In this connection.
"Thus the defendant would have $95,000
or $100,000 or $1,000,000, as the case might
be, to hi personal account and subject to his
check He would sell these bonds to himself
at a certain price, charge himself with a certain,
price on tho books of his company and then
would go and sell them to his bank at a higher
(Continued on Page Nine)
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