Articles describe heavy withdrawals (runs) tied to the collapse of Caldwell & Co. and revelations of substituted/depreciated securities and large state deposits. The bank suspended payments in early November 1930 (suspended Nov. 5) and was placed in receivership within days (inventory/receiver reports Nov. 10). Criminal indictments and prosecutions followed. Cause of the runs and suspension is primarily bank-specific adverse information (insolvency, substituted/devalued collateral, ties to Caldwell & Co.).
Events (3)
1.November 1, 1930Run
Cause
Bank Specific Adverse Info
Cause Details
Heavy withdrawals triggered by collapse of Caldwell & Co., revelations of substituted/depreciated securities and loss of confidence after disclosure of large state deposits and insolvency concerns.
Measures
Directors announced suspension/closing; safety deposit box holders to be admitted soon per receiver; no successful emergency liquidity measures reported in articles.
Newspaper Excerpt
Heavy withdrawals during the past few days were given by directors as the reason it was necessary for the bank to close.
Source
newspapers
2.November 5, 1930Suspension
Cause
Bank Specific Adverse Info
Cause Details
Suspension followed runs and discovery of substituted and devalued securities, large public (state and county) deposits and insolvency concerns tied to Caldwell & Co.'s operations.
Newspaper Excerpt
The bank suspended November 5, and went into receivership Nov. 7. A week thereafter Caldwell & Company went into receivership.
Source
newspapers
3.November 10, 1930Receivership
Newspaper Excerpt
Appointment of receiver the Bank of Tennessee, Nashville... inventory was filed by the receiver... 'When the bank closed November the state excess cash on hand $32.55.' 'nothing of approximately $3,840,000 in securities ... were found among the bank's assets when it went into receivership November 10.'
Report State Has Little Security for Protection of Approximately $4,000,000.
CITIES AND COUNTIES HIT
Tennessee Money Exceeded Legal Funds Involved.
Nashville, Nov. Three factors stand out in the developing examination of the difficulties Caldwell Nashville and investment house. and the Bank of Tennessee, its subsidiary. now in the hands of the Tennessee state banking department, These are: First, the total of public money on deposit in the Bank Ten. added counties cities which had deposits there. This figure estimated between $10,000,000 and Second, reports in circulation that has made the for several denied by Robertsaid the bank examined Third. political repercussions of the Caldwell beginning There here this that vigorous tempt would be made organize the coming general the state under independent, leadership.
Caldwell Subsidiary. While the Bank Tennessee operate general business. fact Caldsources landbusiness. far depublic Financial estimates its total liabilities are the effect run lion dollars of this and perhaps hundred more believed have due borrowings from finanAll variously from ten and half the milion public funds, either of state cities and within the state, the Caldwell Of this money the state deposit estimated between and The the Bank mainly Caldwell Co. officials. deposited Caldwell subsidiary by cities and estimated and deposits are believed be posited against these deposits pay them. This lateral thought Nashville to amount Exceeded Legal Figure. Under the general Tennesese law the state make deposits capital the bank question. The Bank Thus, under the the could by treasurer the Bank admitted October state had almost $350,000 more than figure, on deposit with the Caldwell Highway Funds The money on dethe have placed there the Unexisting governing the nancing of the state highway bid specific project been accepted the required draw the face conthis check over The requires official demoney this highway contract in bank banks close proximity the being Whether this the placing highway funds the Bank of
STOCK MARKET SINKS TO LOW FOR TWO YEARS
United States Steel Goes to 138, Price In Spring of 1928.
By United Press NEW YORK With United States Steel selling at 138, where it was in the spring of 1928, the entire Stock Market sank to new low levels for and few issues in the railroad category fell to the lowest prices in six years. Wheat at Chicago crashed to new lows for the while cotton at New York fell more than bale. Losses in stocks ranged to eight points, Atchison suffering heaviest. The latter was at 182, new low since 1927. declined % to 20% new low since 1924. Lehigh Valley made new low since 1924 at 41% off 1/8 : Missouri Pacific low since 1926 at off Chesapeake & Ohio off new low for the present shares; Alleghany Corporation 9½, off and new low for the shares. low since 1926 at off 3%
Follows Disclosure of State Highway Department's $2,068,612 Deposit. By BENTON STONG
NASHVILLE A Republican chorus of "we told you 80's" has echoed in Nashville since disclosure that State Highway Department had $2,968,612 in Bank of Tennessee, a subsidiary of Caldwell & Co., when It closed Friday. Republicans tried for two weeks by direct requests upon Highway Commissioner Robert H. Baker to get list of banks in which highway funds were deposited. Failing, they charged Baker with concealing public records in the waning days of the campaign and charged that he would not give them the information for fear of disclosing favoritism to Caldwell banks.
Attorney-General L. D. Smith is making thoro of all angles of the state deposits. which reached total of more than $3,350,000. including accounts of the Department and John Nolan. of several counties were here Monday learn the status of county deposits, and whether cessation of construction jobs will be necessary. Among those known to be affected are Knox and Gibson Counties in Tennessee, Owensboro and Christian County in Kentucky.
STATE HALTS BRIDGE WORK
Stopped for Time Being By Closing of Bank.
Sentinel NASHVILLE Highway Commissioner Baker told reporters today that closing of the Bank of Tennessee would not have the slightest effect on the gen eral highway program but might force delay in work on bridges In Sumner, Jackson and Meigs and Rhea Counties. The deposit of $72 county monies belonged to Cocke and Carter Counties. Baker said, and the state, he said, has no for it except to supervise its expenditure. Highway projects covered by monies in the bank, he indicated. can be kept going by transfer of money from other accounts.
Four Bridges Involved Special CHATTANOOGA Tennessee's bridge construction program, including one between Dayton and Decatur. and three others, will be halted for the time being due to the Bank of Tennessee being in receivership The Times today announced it had been informed by Commissioner Baker. The Bank of Tennessee is subsidiary of Caldwell & Co. Of 900 000 which the State Highway Department had in the bank, approximately $2. was for the bridge construction program, Baker said.
More Deposits Revealed It developed that approximately $90,000 of the highway funds belonged to Carter and Cocke counties. These sold their bonds to Caldwell & Co., under depository agreement that the money would be kept in the bank until used. These bonds were floated build highways in those counties and were placed with state funds as the roads to be constructed under state supervision. Baker Knox County had approximately $700 deposit in the bank, Harriman $302,000. and Roane County $33,000. Rhea Refused Agreement County Judge McKenzie of Rhea County said that, altho Caldwell & Co. had bought some of Rhea's bonds, the county refused to enter depository agreement with reference to the proceeds of the bond sale. must co-operate with our local bankers, 80 that the money can be kept in our county: hence we never enter into depository agreement, McKenzie W. M. Nichols of Bradley County said that his county had sold some brought the money back Bradley County where we could watch it."
4.November 12, 1930The Decatur DailyDecatur, AL
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Bank Receiver On Mill Effect Group
BELIEF EXPRESSED
Tennessee Bank Not One Of General Depositors
EXPLANATION MADE TODAY
Fund On Deposit To Pay Bonds Sold By Caldwell
Appointment of receiver the Bank of Tennessee, Nashville, will have no effect on operation of the Textile Realty of Decacompany, tur. in the belief of officers of the latter company this afternoon, menting on Associated Press patches which listed the Textile Realty company among depositors the Nashville institution. It was pointed out here that the deposit described in the dispatch fund which had been placed by the Connecticut Mills company with Caldwell company, Nashville, under the terms the underwriting agreement which Caldwell company bonds of the local company and in the nature of trust funds to retire bonds they mature and to pay interest as bonds held locally and money to the December dividend pay local stockholders the Textile Realty now on deposit company in Decatur banks and be disbursed to local stockholders on DeThe following Associated Press dispatch was received today:
Tenn., Nov. inventory the Bank lists nessee, now resources liabilities the same amount of November with the cash on hand given The inventory was filed by the receiver, Robertson, state superintendent of banks. report on the inventory, Robertson said: "This bank not commercial bank general deposit. has been examined required by law twice each The present perintendent of banks took office April 1930. The last examinamade September and that time as condition precedent further operation the department required the deposit of securities then valued approximately in order to cover depreciation in securities held assets by the bank. that time the bank had more than cash and the cash position met the requirements the The deposit of this demanded security, together with the cash hand other assets the bank, rendered then solvent. the judgment the department. The value the additional securities pledged ceed the depreciation values the assets more than The inventory showed deposits of the state of Tennessee follows: John Nolan, treasurer highway reimbursement fund state highway department including $80,000 of special county highway funds for which state department says it not responsible, and department finance and taxation. motor vehicle account, Among the large depositors funds held trust, shown in the inventory, were: Memphis Commercial Appeal 475.91; City Clerk, Mobile, public improvements 1927, City Mobile, same purpose for 1928, Southern Department Stores, $190,000; Textile Realty Company, Decatur, Total time deposits of compancontrolled Caldwell Company listed and included: Caldwell and ComState Insurance Company shares south Southern Publishers thern Surety Company Bills payable National Bank Kentucky, $600,Fourth First National Bank, Nashville, Fourth and First Nashville Trust Company, Chase National York First Cincinnati First National Bank, Louis, Holston Union National Bank Knoxville $100,000: Canal Bank and Trust Company, New Orleans $200,000; Interstate Trust and Banking ComNew Orleans,
HOLSTON-UNION IS CLOSED; RECEIVER IS SENT HERE BY
Suspends Activity at Both Banking Houses Here; Heavy Withdrawals Blamed; Poorly Secured Loans Believed a Factor.
CALDWELL CRISIS SEEN AS CAUSE
Decision To Close Reached After Conferences Tuesday; Directors Hope To Reorganize or Form New Bank.
The one of Knoxville's three National Banks, closed today. Its failure to open was preceded by an nouncement issued directors that the bank had suspended operation. Heavy withdrawals during the past few days were given by directors as the reason it was necessary for the bank to close. While their statement did not say so, it is known that these were occasioned by the recent collapse of the strueture of Caldwell and Company of Nashville and the subsequent closing last Friday of the Bank of Tennessee, Caldwell's Nashville state bank which had several millions in public funds on deposit.
Treasury Man Is Receiver Herbert Pearson of the Treasury staff has been appointed receiver the the currency comptroller's office informed the NewsSentinel correspondent today. Pearson, who has been member of the Treasury's regular staff receivers years, and who has had wide experience, working with bank Macon, Georgia, before being sent to Knoxville. He was due here time today and immediate charge. effort had been made by prominent Tennesseans have William Baxter Lee, Knoxville lawyer, appointed receiver; but the Treasury explained to those suggested his name that had not been their practice to point lawyers to such posts, and, addition, they had staff ceivers their own utilize such emergency, the dispatch the Treasury would talk of the reasons for the closing bank, but it learned that officials of the department had been kept the last days the withdrawals from the Knoxville institution. fact that Caldwell investment house that was put in the hands of committee trustees recentwas interested in the Knoxville bank, unofficially given Washington reason for the closing. An effort being made to form separate organization take the affairs of the HolstonUnion. this funds of depositors will immediately available, bank official said day.
Admit Boxholders Soon Safety deposit box holders will be admitted to the bank within few days. Some of employes of Holthe will be laid off and others will be kept. learned from bank official. National Bank examiner for charge the day. Depositors will be given preference in funds, assets of the including the Holston Bank building owned by the subject to their claims.
Time to Settle Uncertain don't know how long will determine the status bank. Basham told Depositors will, course, be given preference payment. Basil Ramsey, president not come kthis morning. At his the ban home Hills, told reporter that he did wish make statement other than that made by the rectors night. The federal banking officials will appoint receiver who will liquidate assets the the depositors first. other bank affected by the closing the number new accounts have been opened here and there have been speak Cowan Rogers, City National Bank president, said. President Carter, the East Tennessee National Bank. not comment the matter except to say that know my right.' Checks drawn on funds in the after close of busiMonday cannot be honored local bankers The bank closed all day yesterday for Armistice Day. Caldwell and the South's largest financial concern, placed the hands mittee three Nashville banklast week. Rogers was the owner of 700 shares stock, minority the He had also been heavy borrower the bank, Basil Ramsey, its presiadmitted statement last week which Ramsey pointed that Caldwell and Company not connected the He said that the bank had not time loaned any to Last This
6.November 14, 1930St. Louis Post-DispatchSt. Louis, MO
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FOR PERJURY mately but due to heavy withdrawals found impossible to weather the raging financial bank has capital of with surplus and undivided profits of
Account of Missouri State Life Co. Opened Years Ago. The account the Missouri State Life Insurance with the Bank of Tennessee opened about four and half ago, Hillsman Taylor, president of Missouri State, said today. It an active said, subject drawals from time to time, and he estimated that the time the bank closed company's balance on deposit approximately $850.000. The inventory as reported by the bank's receiver places Taylor said the collateral held by the curity for deposit acquired within the last year and that prior to that the deposit was secured by collateral, there being no legal requirement for security Taylor said that the time the collateral taken was considample security and he still believed its intrinsic value would protect the insurance company full, despite the shrinkage the the under present The the as reported by the bank's shares of stock Banco Kentucky and bonds follows: Alabama Cadet Hosiery Frank Silk Rockhill Printing Finishing $100,000; Warrior Water The Banco Kentucky stock listed on the Chicago but has not been active although quoted from to share At the higher figure the value the shares would be $315, The face value of the bonds Only one of the bond items found standard lists used by bond This Mills. bonds part of issue first mortgage bonds offered in 1928 by Caldwell and sold These bonds listed the New Orleans curb been offered recently The directorate Alabama Mills company includes both Rogers president the Caldwell and President of Missouri State Life. The opening the company's account the Bank of prior acquisition of control the company by Caldwell said. by ownership of more than 30 of the stock, ended last May when Caldwell sold its stock. block of the stock. of the total. was bought by the Life Insurance Co. of Ky., also filiated the Caldwell interests. Taylor said he did not know how this stock was held The company has about that easy for single large block to acquire Total capital of the Missouri State Life Insurance Co. represented shares of $10 par value, according to of State Insurance Department ferson City, also said the company has surplus of said that in the course of the recent state the company, completed last he sent examiners to ville to check security sales made to Missouri State by Caldwell Co., particularly to the cost Caldwell and the price to the insurance and found that these transactions reasonable. Thompson the State Insurance Department has no control bank deposits made by insurcompanies and cannot require them to obtain collateral such but does have trol to deposited with the State and over securities which capital and surplus are invested.
PROBE
Legislator Urges State Investigation.
Goodwin. floterial for Knox Loudon Counties, thoro "state favored banks" change in state's taxing system. hope be people without fear especially this time and ing the financial conditions some of our state favored banks. On the face of things, looks there radically wrong which certain officials should have notice. have also made thoro matters taxation want aid change the taxing system now in use Goodwin is city attorney of Lenoir City. He attended U-T for two years and University of Michigan four years, from which he was graduated with the degree of LLB.
Thus, when the Bank of Tennessee closed, with liabilities its total cash on hand $32.55. The remainder of its assets consists of stocks and bonds with book value of $12,655,094.61. The liabilities and assets of the Bank at the time of closing have not yet been disclosed. The state government's deposits the and Bank Tennessee totalled 543.15, which the Nashville bank and in the bank Knoxville.
Seven Counties Hit Seven Tennessee counties had in the Bank Of the Knox county deposit of by the The other counties were Weakley, CarDyer, Grundy and Roane. several counties and cities have claims against CaldCo. city with claim of $302,000. The city of Knoxville the only city in the deeply the failures. Knox county and Knoxville together had in the two funct banks. Knox county officials went Nashville the county's $733,531 the Bank of came back and reported the security money find the lowing public funds in the banks: both banks county HolstonCity Knoxville in unreported $7,133,359.05 The Harriman money, representing the proceeds from the its municipal power plant. believed to be with Caldwell Company. The Knox county money in the Holston Union is secured by surety bond, Three Other States Suffer Tennessee, the state, cities and counties, the only state deeply in the two bank failures. Louisiana, spite (Turn to Last Page This Section)
8.December 5, 1930Ledger-StarNorfolk, VA
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BY TENNESSEE
State Moves To Recover Money Involved In Bank Crash
Nashville, Tenn., Dec. 5-(P)Five men named as personal sureties on bonds securing state deposits in the closed Bank of Tennesare made defendants suit filed the state Tennessee, which seeks for $3,060,000 as the amount of highway funds in the band. The was filed in chancery court last night against Rogers Caldand four Caldwell of which the Bank of subsidiary. Both the company and its subsidiary Caldwell, Frank D. Marr. D. Carter, H. and Hetzenberg said by Attorney General Smith have signed surety bonds totalmore than Another bill was directed by the state his father. James Caldwell. the Nash. ville Trust Company, seeking sale of "Brentwood Hall,"- where Rogers Caldwell The state the ground on which "Brentwood Hall" stands recently by James E. Caldwell to the trust company, to be held for the benefit Rogers Caldwell and his heirs. The suit alleged the conveyance made for purpose evading creditors of Rogers Caldwell, If the court should not set aside the trust instrument, then the state permission sell house it. erected by Rogers Caldwell, the states, cost more than $350,000. In the further event the court Rogers Caldwell with the to the house, he petitional decree against James Caldwell for an amount equal to its cost.
REPORTS $55,000 AS DUE FROM NASHVILLE BANKS COMMITTEE LAYS PLANS* TO ORGANIZE ASSEMBLY
LITTLE ROCK, Ark., Dec. A statement of the affairs of the closed American Exchange Trust company, filed in chancery court today by the state bank commissioner disclosed it was from the Bank of Tennessee, at Nashville, now in receiverAnother Nashville bank. the Fourth and First National, owes the statement said of assets and liabilities The statement was filed accordance with state law after the state banking department took over the bank until it is liquidated or reorganized Arkansas banks were named as debtor the change from the change Bank and Trust company owing from the Merchants and Planters Bank and Trust company, of Pine Bluff An inventory assets listed unhypothecated loans and overdrafts Liabilities listed bills payable and deposits in excess 000 Cash hand listed with assets amounted to cash items. 58, and items in transit, $90,-
By Staff Correspondent. NASHVILLE Dec. state public emergency committee managers, Lewis Pope. Hill McAlister and almost all day today laying plans for the work they intend organizing the coming session of the legislaMany plans are under consideration by the committee, but was said today definite had been reached this The managers said they did not desire make public their they had advised with the various and felt sure they were taking the right course. headquarters were opened this week the rooms have been filled with section Tennessee Political leaders dissatisfied with the regime manner which has manipulated the state's finances are calling to offer their supDaily press statements concerning regime issued beginning managers said They added that the people must what "this administration has done to the people of Tennessee these the committee intends to some of the of the present administration and nearly political have been applied to the state's funds. New names being added each day and in many stances the organizations of the various counties have been increased Independent in each county will effected so mass meetings can against the well administration unexceled in Tennessee politics People have been bribed with their own money. and selfish interests have dominated,' one commember said the Horton headquarters in the Jackson "has subsided Charlie Love, former job holder, former speaker of the house, former manager of the Horton campaign present manager the Horton headquarters. is bearing troubled look these Inside sources say ganization the emergency committee the like thunderbolt. The started to organize legislature when the state primary campaigns opened last summer, according to litical leaders. In many districts passed out fabulous sums of money to defeat After the election Gov Horton Manager Love left in the headquarters to organize the legislature for the regime He conferring with former henchmen of the regime and with members of the governor's cabinet daily. that when new members of the legislature comes to favor for his counhe sent to headquarters to confer with Mr. Love
HEARING IN SUIT AGAINST MEMPHIS PUBLISHER RESET
Court Postpones Action On Lea Receivership Until Tuesday
NASHVILLE Tenn., Dec. 11. Hearing petition for receiver of Southern Inc., holdcompany for the companies publishing The Memphis Commercial and Evening Appeal and The Knoxville Journal by Chancellor James Newman today until Tuesday. Whether the hearing will be held the petition time depends the chancellor's ruling on the fendants motion to transfer the case to the Federal court versity citizenship of the parties
To Resist Suits On the praceding day hearing before the petition for receiver for the Tennessee Company publishers of The Nashville Tennesand Evening Tennessean ColLuke Lea. president Southern the holding company and also president Memphis Appeal, Inc. The Journal and Company and the Tennessee Publishing Company. returned from business trip today the announced purresisting these suits and other action brought against him Luke Lea others receiver for Liberty Bank and Trust Company Receivership Southern Publishers, petition filed by the Minnesota and Ontario Paper the Nashville Trust Company and Robertson celver for the Bank of Tennessee, Receiver Sought It sought have receiver named hold Memphis Commercistock pledged by Southern the Nashville Trust to secure bond issue purchased the Minneapolis The Minnesota and Paper Company the complainant in the general creditor's bill against the Tennessee Publishing Company claim for approximately $94,000 for being set addition answers the Publishing Company stock in the Memphis and Knoxville newspapers Colonel Lea his intention contesting the filed by the Liberty Bank Judgement $80,000 was sought against Colonel Lea and for approximately $86,000 against Colonel and othincluding several Referring the Liberty Bank ceiver's suit, Lea said formal statement that state. ments made bill, they allege ny fraudulent purpose of are utterlys false" adding that such charges were honestly and fairly made the public shall the judge. through the introduction of evidence. facts shall supplant fiction without warrant," he the allegation that
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LEA ISSUES DENIAL OF FRAUD CHARGES
Nashville Publisher to Fight Receivership Plea.
Hearing on Petition Postponed Until Take Case to U.S. Court.
NASHVILLE, Dec. petition receiver for Publishers, holding company for the companies publishing the Memphis Appeal and Evening Appeal and the Knoxville Journal, postponed Chancellor James Newman Tuesday Whether the will be held the petition that depends the ruling motion transfer the the federal because diversity citizenship involved. hearing the petition for for the publishers the Nashville Tennessean and of the South the pany, Memphis Appeal, Inc., the Knoxville Journal and Tribune the Publishing back today for the purpose of these and tion brought Luke Lea and the for the Liberty Bank Trust for Southern Publishers, Inc., was asked on petition filed by the and Ontario Paper comNashville Trust company and pany, Robertson, receiver for the Bank of Tennessee. was sought to have receiver named hold Memphis Commercial Appeal, pledged the Southern Publishers, the Trust company bond purchased by the The Minnesota and Ontario Paper complainant creditors against the Publishing claim for approximately for newsprint set bill due Dec. addition to preparing answers to lishing company stock in the Memnewspapers, announced his the suit the Liberty bank ceiver, tendent sought Col. against others, including several porations. Referring the Liberty bank ceiver's formal made allege utterly that charges fairly public shall the judge when, the introduction dence, facts supplant fiction." without added, allegation that Sept. the bank deposit which any manner irregularly which direct Central Bank Trust time to the best of my knowledge
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Larkin E. Crouch To Manage Affairs Southern Pub lishers, Inc.
Nashville, Tenn. Dec. 24. (AP) two decrees handed down today Chancellor James B. Newman placed the Southern Publishers, Inc., in receivership, but denied an application for receiver for the Tennessee Publishing Co., pub lishers of the Nashville Tennessean and Evening Tennessean. Southern Publishers, Inc. is holding company for stock of the Memphis Appeal, Inc., and Knoxville Journal, Inc. whose physical properties are in receiver ships at Memphis and Knoxville One company publishes the Memphis Appeal, while the other operates The Knoxville Journal, morning newspaper. Col. Lea At Helm the Southern Publishers, Inc., as well as of the Memphis Commerclai Appeal, Inc., and the Knoxville Journal, Inc., and the Tennessee Publishing Rogers Caldwell is associated with him in except nessee Publishing Co. The Chancellor anmed Larkin E. Crouch. Nashville attorney as receiver for Southern Publishers, and instruced the receiver immediate of stock now held by the Nashville Trust trustee to secure bond issue of South ern Publishers, Inc., purchased by the Minnesota and Ontario Paper of Minneapolis. The Minnesota and Ontario PaNashville Trust and D. Robertson, receiver for the Bank of Tennessee, made the application for the receiver. The bank holds 500 shares of Southern Pubishers, Inc., stock pledged by Caldwell and Co., to teh bank before its closing.
13.January 28, 1931Johnson City ChronicleJohnson City, TN
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Assistant Attorney General, Testifies Before Senate Tipton,
Claims Securities Used as Collateral in Banks Only Worth 15 to 20 Cents on Dollar
Tenn., Jan. (AP) -Testimony substitutions made for securities deposited as additional collatteral upon demand of the state banking and reduction its cash hand all probability" rendered the bank of Teninsolvent while still accepting state deposits was heard today the legislative investigatcommittee. Nat Tipton, an sistant attorney general, told committee some of the for those valued which were originally deposited, district bonds worth from 10 15 cents the dollar. of the he had been bank what the in the street calls "cats and securities, has stated banks, were deposited the bank following examinalast cover preciation held by bank. When the bank closed November had state excess hand at the time of closing The first Mr. October shares intersouthern Other withdrawals continued, stated, until all the original curities had been withdrawn except shares Rogers Caldwell New York Corporation, and shares Nashville properties company. these securities were withdrawn by officials authorand others of value subgstituted, what criminal offense that asked ChairWalter Faulkner. think would fraudulent breach of trust, Tipton replied. assistant attorney general the person making not stated the ords. agents Caldwell been testified. He letter dated September from Caldwell Co., pledging the Tennessee, and said reply question pledge He tified later date cial bank that custom' had the privilege substituting equal Caldwell its subsidiary, bank Tennessee, were locking, the witness continued. understood Caldwell, owned stock the bank Tencapital and that bank dents also officers of Caldwell Tipton referred to repurch. agreement, whereby the bank Tennessee would invest surplus in securities that Caldwell funds agreed take back at the original price. Speaker Scott hugh of the Senate, member asked such agreement not "agreement between themselves, Tipton replied that ment between your right and your left
SECURITY SHIFT BARED AT QUIZ
Tipton Blames Withdrawals For Bank Crash,
SUBSTITUTIONS BARED
Transactions, With State Explained.
NASHVILLE, Jan. 27 timony made securities deposited additional collateral upon the state banking department of its cash in hand all probability' rendered the Bank of Tennessee today the Nat Tipton, an assistant attertee that some of the securities sub stituted for those valued which were deposit drainage worth from cents on the dollar. Some of the others, he had bank what the man in the street "cats and dogs. LISTS The of been stated by ordered deposited by the Bank Tennessee following examinalast September to cover securities held assets the bank. When the bank closed November had state deposits excess hand at the time of closing $32.55. The first withdrawal, Mr. Tipton said, was made when shares InterInsurance stock replaced by various other curities. Other withdrawals continued, he stated, until all of the original securities had been with1,000 shares of RogCaldwell York corporation, and 10,000 shares Nashville REVEAL TRANSACTIONS these securities withdrawn officials without author other of less ity value fense would that ed Faulkner. think would be breach of trust, Mr. Tipton replied. The attorney general said the person making the with.
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15.February 6, 1931The Atlanta JournalAtlanta, GA
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FAILURE TO PROBE TENNESSEE'S BANK CLOSINGS STUDIED
Kiting Charged to Col. Lea by Superintendent at Inquiry
Feb. NASHVILLE committhe inquired legislative Friday why criminal trosecution had not from the and the loss state banks estimated at several millions Robertson. superintendent of said he had reported the rehis investigations Nashville, the disgeneral attorney state attorney general's had the been fully He other duty the superintendexplained Robertson had testified at length regarding substitutions that he said by Caldwell & Co. rithout approval made of the Banking Devalued at for required the Bank of Tennessee to put condition for continuing busiits September 25 examina Bank of Tennessee was subsidiary The of the investment banking juse. about the substitutions, WalAsking Haynes inquired if Caldwell had any more right to go into the Bank of Tennessee and substitute securities than any other citizen had right to in there in the dead of the night and take them
"That's putting it pretty strong," the witness mplied No Right to Substitute Then he was asked if the letter which Caldwell Co. pledged the securities the bank permitted it, Robertson replied that 'so far the pledge was concerned they had Mr. right Robertson told the legislative irrestigating committee Friday that Bank of Tennessee paid only 3 of cent on state deposits while payon other public funds interest per from The bank, to subsidiary of Caldwell Company, closed on November rith approximately 400,000 of state said records showed that the of Tennessee borrowed $525,000 im the old Fourth and First Namal Bank at per cent interest. carrying deposit of $400 000 at same institution which drew only cent interest. also testified that the bank all highly speculative securities there by Caldwell & Company Asked Robert McReynolds comnitee attorney. if the stocks were ones, he Well, they were not stocks I'd buy. Kiting Is Charged The testified that deposits of the bank climbed rapidly periods following the sale of state Just before the committee recessed all day hearing Thursday Robertasked if he knew of any eviinte "kiting' about the time the failed last "Yes, there had been a kite trough the bank for several months, aid. To the question "Who seemed have been the participants in that be!" the superintendent replied Colonel Lea and his son. Colonel Lea is a Nashville newspaper Previously Robertson had testified at Colonel Lea was "instrumental appointment" as superintendent Inquiry was made of Robertson about Chancery Court suit he had against Colonel Lea and others etcing judgment for approximately 160,000 alleged to be due the bank him them. The suit averred that Colonel Lea and R. E. Donnell, late resident of the Liberty Bank, had iminated" its affairs and used the promote their own gains Donnell committed suicide shortly bank failed. "Dummy corwations were organized to further is plan, Robertson alleged. Runs On Bank He agreed with Robert L. McReynrids, the committee questioner, that purpose of the "dummy corporlitte was conceal from the bankdepartment the names of those reiving the benefits of loans Asked if such alleged actions were responsible for breaking the bank Robertson said that the closing was directly to "runs" on it and that udden withdrawal' by the state masurer of about $110,000 of state ttds within ten days of the closing "largely responsible for its failHe conceded that if money laned the alleged "dummy" corprations had been invested in "good ans" the bank could have used these collateral to its benefit The bank about $350,000 of state funds on when Much of the hearing was devoted substitutions made for $3,840,securities that the Banking Deariment had demanded of the Bank Tennessee when the September exmination showed $2,200,000 depreciaassets Robertson said Caldwell & Co masferred the $3,840,000 collateral the bank to secure a repurchase stement between the two affiliated atitutions and that there was "no merstanding" with his department substitutions be made. 15 Per Cent Recovery Had the pledged remained said, the state vould not have lost dime of its These deposits were in ex$3,400 and Attorney GenSmith has announced that more than 15 per cent of them Robertson "understood" that the institutions were by E. A. sodioe, cashier of the Bank Tenone part and certain offiCaldwell & Co. on the other named the latter as E. J. Heitzeand Dewitt Carter, vice presiand Donovan, secretary
FACES
Ramsey Ordered Brought Back On Charges.
Criminal charges will be preferred against Ramsey, former president of the National Bank and Holston Trust Co., on instructions of the State Investigating Committee which today endorsed the demand of Senator Hal Clements of Knoxville. Ramsey and his family are Florida, and planned have him brought back for trial. About six years ago, Ramsey came to Knoxville from small town Kentucky, going with the Third National Bank and after Joseph Gaut resigned president of the merged National Bank short time later. he made the Holston generally considered that Luke Rogers Caldwell put him at the head the bank. Ramsey had personal notes Liberty Bank Trust Co. Nashville, and $19,500 Bank of Tennessee when closed. He also in one
17.March 21, 1931The Atlanta ConstitutionAtlanta, GA
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CALDWELL NAMED IN TWO INDICTMENTS
NASHVILLE. Tenn., March 20.deposits made by the state less than two weeks before Caldwell & Company's Bank of Tennessee closed formed the basis for indictments returned by n county grand jury today against Rogers Caldwell, president of the two institutions. Both indictments each containing two counts, charged Caldwell with receiving deposits in an insolvent bank. The first count in each said Caldwell knew the institution was insolvent and the second said he had reason to believe it insolvent. The deposits were made. the indietments said, by Highway Commissioner Robert H. Baker and Treasurer John F. Nolan. One bill said Baker deposited $6,500 of bridge funds on October 28, 1930. and the other said Nolan deposited $50,000 of state general funds on October 25. The bank suspended November 5. and went into receivership November A week thereafter. Caldwell & Company went into receivership. Criminal Court Judge Chester K. Hart set bond at $10,000 in each case. James E. Caldwell, Rogers Caldwell's father, and T. D. Webb, formerly associated with James E. Caldwell in the Fourth and First National Bank. pledged real estate valued at $30,000 and $25,000, respectively, as bondsmen. Caldwell is now under six indict ments, two of which relate to alleged transactions at the Bank of Tennessee, two to operations of Caldwell & Company and the Bank of Tennessee and two to transactions at the Holston Union National Bank at Knox ville. The last named two were returned by federal grand jury at Greeneville, Tenn. The jury at the same time jointly indicted Colonel Luke Lea, Nashville publisher, and J. Basil Ramsey, president of the Holston Union Bank, Conviction for receiving deposits in an insolvent bank carries with it penitentiary sentence of from one to five years if the deposit exceeds $25.
NEW INDICTMENTS ACCUSE CALDWELL
Davidson Grand Jury Charges Receiving Deposits.
Baker, Nolan Gave Up Cash Few Days Before Collapse of Tennessee Bank.
NASHVILLE, March 20 (A).-Two deposits made by the state less than two weeks before Caldwell & Co.'s Bank of Tennessee closed formed the basis for indictments returned by Davidson county grand jury today against Rogers Caldwell, president of the two institutions. Both indictments, each containing two counts, charged Caldwell with receiving deposits in an insolvent bank. The first count in each said Caldwell knew the institution was insolvent and the second said he had reason to believe it was insolvent. The deposits were made, the indictments said, by Highway Commissioner Robert H. Baker and Treasurer John F. Nolan. One abill said Baker deposited 500 of bridge funds on Oct. 28, 1930, and the other said Nolan deposited $50,000 of state general funds on Oct. 25. The bank suspended Nov. 5, and went into receivership Nov. 7. A week thereafter Caldwell & Co. went into receivership Criminal Court Judge Chester K. Hart set bond at $10,000 in each case. James E. Caldwell. Rogers Caldwell's father. and D. formerly assoclated with James E. Caldwell in the Fourth and First bank. pledged real estate valued at $30.000 and $25,000, respectively. as bondsmen. Caldwell is now under six indictments. which relate to alleged transactions at the Bank of Tennessee, two to operations of Caldwell & Co. and the Bank of Tennessee two to transactions at the Nabank tional The last named were returned by federal grand jury Greeneville. The jury at the same time jointly indicted Col. Luke Lea, Nashville publisher. and Basil Ramsey. president of the bank. Conviction for receiving deposits in bank with it an insolvent penitentiary of from one to five years if the deposit exceeds $25.
ARKANSAS BANKER MAKES BOND IN BANK CRASH
OSCEOLA. Ark., March 20 (/P).Six Osceola business men provided $2,000 bond today for A. B. Banks, fallen giant of Arkansas finance, and he returned to his home at Fordyce to prepare his charge that accepted deposits in an insolvent Mr Banks appeared voluntarily before Circuit Judge Neil Killough, who let no trial date S. Gladish. Mississippi county prosecutor. said the trial probably will held at the October term of circuit court Mississippi grand jury indicted Wednesday upon testimony that as president of the First State bank here he authorized the ceipt of deposits two days before the bank closed. Nov. 17. 1930. Then the time that Mr. Banks' state-wide chain fell with its parent American Exchange Trust of Little Rock oldest and largest bank in
Arkansas, and 'bulwark of the smaller institutions. Two of three insurance companies he headed crashed during the same period. Then, too, was the time that Tennessee's great banking house, Caldwell & Co., collapsed at Nashville. In testimony before state commitMr. Banks blamed his disaster affiliation Rogers Caldwell, indicted head of the Tennessee house. Williams, one of Mr. Banks' bondsmen. is president of formerly rival institution, the Bank of Osceola, which is doing Others M. C. Ermen, Bickey, H. A. Hale and H B. Cartwright. Prosecutor Gladish said heavy routine docket likely will trial of Mr. Banks at the spring court term, now in progress.
19.July 4, 1931The Independent-RecordHelena, MT
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Securities of Bank Declared Missing
NASHVILLE Tenn., Nov. 15-(P) -Attorney General L. D. Smith said today that nothing of approximately $3,840,000 in securities deposited by the Bank of Tennessee September 25 at the demand of the superintendent of banks, were found among the bank's assets when it went into receivership November 10.
RADIO FOR ALL POLICEMEN To fight the serious and growing auto bandit menace in England a committee of police chiefs and ra dio experts recently met in London and outlined a system by which every policeman in the country will be equipped with a pocket radio set. This will keep all officers in constant touch with headquarters as they patrol their beats. An electric buzzer carried on the outside of the tunic will warn them when they are being called. and small earphones will enable them to receive messages. It is expected that within the next few months all English police forces will have their own broadcasting stations.
LONDON WOMEN'S CLUB BUSY Women clubs in London are becoming so popular that they are. not only growing rapidly in number but found themselves too busy to close down during the usual 'dead'' months of the summer. Some, like the Ladies' Carlton, are in such favor that the question of limiting their membership has been discussed. One of the chief reasons for the way in which women's clubs thrive is that women put_them to much greater use than men do their clubs. It is increasingingly becoming the practice for women to use their clubs for wedding receptions, while the special suites are often booked by hostesses for private parties.
20.October 29, 1931The Dodge CriterionDodge, NE
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Had $4,and Counties State 400,000 Deposited in Defunct Bank
Nov 12 Nashville. various the in the Bank Tennessee deposit Tennes filed to total approximately today listed in the invenState as the State highway departcredit the vehicle ment, finance account of the of the general and credit to specounty fund deposited credit counties, computed from the was time deposits, funds in trust. Claims Have Priority. While the inventory not list securities pledged collateral for State's deposits, the State supreme court the State titled claims the bank payable its depositors no priority claim unpledged assets. made what might realized from the sale unpledged securities and from the favorable from the pledged Loans overdrafts and other real estate in invenbook value stocks, municipal corporation bonds and stocks of trolled Caldwell and Company, of which the Bank of was subsidiary and certificates deposits. Liabilities given as the same listed the securities pledged secure deposits and bills payable The Bank of Tennessee acted f1nancial agent Caldwell Combanking house, of which Total time deposits companies controlled Caldwell and Company the and included the following Caldwell and Company the Southern Surety Company Bills payable included the following Bank LouisNational York, National $200,000, the National bills payable the Holston Union Tenn. which closed yesterday.
21.November 5, 1931The Alliance NewsAlliance, NE
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POSTPONE HEARING FOR RECEIVERSHIP
Petition Against Southern Publishers, Inc., Deferred Until Tuesday
Nashville, Tenn. Dec. 11 ing on petition for receiver for Southern Publishers, Inc., holding company for the companies publishing the Memphis Commercial Appeal and Memphis Evening Appeal and the Knoxville Journal was postponed by Chancellor James B. Newman today until Tuesday Whether the hearing will be held on the petition at that time depends on the chancellor's ruling on the defendant's motion to transfer the case to the Federal court because of diversity of citizenship of the involved On the preceding day hearing is scheduled before Chancellor Newman on the petition for receiver for the Tennessee Publishing Company, publishers the Nashville Tennesseean and Evening Tennesseean. Colonel Lea Returns. Colonel Luke Lea, president of the Southern Publishers, Inc. the holding company, and also of the Commercial Appeal. Inc., the Knoxville Journal and Tribune Company and the Tennessee Publishing Co., returned from business trip today for the announced purpose of resisting these suits and another action brought against him Luke Lea, Jr., and others by D. Robertson for the Liberty Bank and Trust Co. Receivership for Southern Publishthe Minnesota and Ontario Paper Co., the Nashville Trust Co., and Mr Robertson as receiver for the Bank of Tennessee It was sought to have receiver named hold Memphis Commercial Appeal, stock pledged by the Southern Publishers, Inc. to the Nashville Trust Company to secure 500 000 bond issue purchased by the Minneapolis The Minnesota and Ontario Paper Company also was the complainant in the general creditors bill against the for approximately $94,000 for news print being set In addition to preparing answers to the suit involving the Tennessee Publishing Company and stock in the Memphis and Knoxville newspapers, Col. Lea announced his intention of contesting the suit filed by the Liberty Bank Judgment for $80,000 was sought against Colonel Lea and for $86,000 Colonel Lea and others, several corReferring to the Liberty Bank receiver's Colonel Lea said in formal statement that statements made in the bill in so far as they allege any fraudulent act or purpose of mine are utterly false.' adding that "whether such charges were honestly and fairly made the public shall be the judge when through the introduction of evidence, facts shall supplant fiction "Particularly without warrant." he added. "is the allegation that on Sep-
22.December 9, 1933Hope StarHope, AR
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Luke Lea and Son Lose Final Fight To Escape Prison
Tennessee Supreme Court Orders Them Into Corolina
CALDWELL'S CRASH
Failure of Tenn House Closed 46 Banks in Arkansas in 1930
NASHVILLE, Colonel Luke Lea, former senator, and his eldest son Luke Lea, Jr., fighting extradition to North Carolina, lost in the Tennessee Supreme Court Saturday. The high court sustained North Carolina's demurrer to the Leas' petition
Another Appeal
NASHVILLE, Lea and his son announced late Saturday that they planned to carry the North Carolina extradition proceedings to the United States Supreme Court. It will be their third appeal to the highest tribunal, having lost on two preVious points. for writ of habeas corpus following Governor McAlister's order for their extradition. The Leas were convicted more than two years ago at Ashville, N. C., of violating the North Carolina banking laws. The elder Lea was sentenced to to ten years imprisonment and the younger the alternative of paying $25,000 fine or serving two six years.
A Record Court Fight By one technicality or another the Leas have set something of legal record in delaying execution of their sentences for banking violations following the crash of the Bank of Tennessee and the Rogers Caldwell-Luke Lea financial and newspaper interests. Their appeal was taken twice to the United States Supreme Court and Then, when 1.orth Carolina formalrequested extradition from their native state of Tennessee the Lea father and son went into hiding in the which they emerged what appears to be the final chapter before they begin serving time in prison. Luke Lea, Sr., publisher of the Nashville Tennessean, allied himself with Rogers Caldwell, son of famous Tennessee banker, building up the brokerage and investment house Bought Commercial Appeal In 1927 they bought the Memphis Commercial Appeal, and tried unsuccessfully buy the Atlanta Constitution, Clark Howell and his son finally withdrawing from what they believed to be an unwise contract Caldwell & Co. failed in 1930, carrying down with Banks Co. of Arkansas, which included the defunct Arkansas Bank Trust Co. Although Mr. Banks had Caldwell only portion of his business, failure the Bank of Tennessee Nashville, Tenn., November 10, 1930, alarmed the public that run started on Bank's key bank, the American-Exchange Trust compay at Little Rock, ending with the suspension the entire Banks' system NovemLea entered the Caldwell picture primarily publisher the Memphis Commercial Appeal, which he and his partner bought the year followthe death of its great editor C. Mooney. With the failure of the Caldwell investment and banking houses was revealed that Lea and Caldwell withdrew $1,300,000 in cash from the Commercial Appeal's to save their paper-mill company threw the Commercial Appeal into receivership.
Paper Sold The Appeal finally sold last spring James Hammond. an man who years ago went East and rose to eminence first in banking and stores. and then with William Randolph Hearst head his Detroit Times, Mr. Hammond announced, however, that bought the Commercial Appeal for fewhimself and for not Mr. Hearst. Indictment and conviction of Luke Lea and his son occurred in bank Asheville,
