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He replied: "I have no reason to be- lieve otherwise, but cannot say posi- tively."
For the loans to Adolf Segal, Hipple accepted as collateral securities of the Majestic hotel, a new apartment house operated by Segal, the Swedish Steel Co. of Lancaster Pa., and the Pennsyl- vania Sugar Refining Co. of this city. The Steel Co. and the sugar refining concern have never been placed in op- eration. Segal claims the collateral he gave is good and that he will meet all his obligations.
There are others to whom Hipple loaned money on alleged insufficient security, but their names have not been made public and the sums are not believed to be large. How far Hip- ple benefitted in the loans made or whether he was merely the tool of other has not yet been determined. All the directors are remaining si- lent on that point and also on the question of whether there will be any criminal proceedings.
In order to hide the true conditions of the company and save himself Hip- ple resorted to the falsification of his books which were accepted as true by the directors. He used what they usu- ally term "a double system of making a report." When the state bank exam- iner called Hipple presented to him se- curities to offset the loans made and when the president made his report to the directors he would show them a bundle of other securities and other paper and along with these he would exhibit the certificate of the bank ex- aminer which showed that the ac- counts the examiner had investigated were correct. The directors, supposing the securities shown them were the same, approved the reports.
Among these directors are Dr. S. Weir Mitchell, the eminent author; John D. Converse of the Baldwin Locu- motive Works and one of the most prominent laymen in the Presbyterian church in the United States; John F. Betz, the millionaire brewer; William A. Patton, assistant to President Cas- satt of the Pennsylvania Railroad; Judge W. W. Porter; R. Dale Benson, president of the Penn Fire Ins. Co.; Joseph Dunkin, Edward R. Borden; Samuel Houston, who is also vice president of the company, and Former State Senator J. Bayard Henry and Frank C. Roberts.
As soon as the directors learned of the sudden death of President Hipple they began an investigation of his af- fairs and were shocked when they learned the true condition of the com- pany. This was after the close of business Friday. A meeting of the board was hurriedly called and ti was decided to instruct the officers of the bank that all deposits received after the opening of business Saturday morning should be set aside and de- posited with the Franklin National Bank, in the name of the individuals presenting the money. This was done to absolve the directors from criminal proceedings for receiving money after they knew the Trust Company was in- volved.
On Monday morning more than $150,000 was deposited by patrons of the bank which was practically offset by with- drawals by persons who had heard ru- mors of the company's conditions. The money deposited since Saturday will, however, not be returned to the deposi- tors until the courts have decided wheth- er it should be paid back.
While the depositors were supposedly placing their money with the Real Es- tate Trust Co., the directors were mak- ing strenuous effort to bridge the insti- tution over the difficulty. All day yes- terday they worked, but it became appar- ent shortly after noon today that the crash was inevitable. Application papers for a temporary receiver were prepared and left at the offices of the Trust Co., after which the directors went to the meeting of the Clearing House Associa- tion to make a last appeal for help.
There were probably 30 bank presidents at the Clearing House to meet the di- rectors of the Trust Co. The latter stat- ed that they needed $7,000,000, but the best the banks could do was to guaran- tee $3,500,000. This was not enough, and as all other means for getting money had failed, Vice President Houseton tel- ephoned to the bank to suspend busi- ness and send the receivership papers to court. In an incredibly short time the story was on the street and created great consternation. Hundreds of persons gathered on the streets about the build- (Continued on Page Two.)
