GERMAN BANK SCANDAL.

New Zealand Mail, Issue 1523, 28 February 1901, Page 59

GERMAN BANK SCANDAL.

WHOLESALE FRAUDS. the Glasgow" bank failure REPEATED. Widespread indignation, says the Berlin correspondent of the “Times/" has been excited in Prussia by the collapse of certain associated land mortgage companies which were generally known as the "Spielhagen banks/* the Deutsche Grundschiild bank, and the Pruessische Hypotheken bank. The report of the committee appointed to examine these banks exhibits the manner in which their business was conducted in the most unfavourable light. The balance-sheet of December 31, 1899. is described as ‘Tilcorrect.” The assets enumerated in the statement of October 31 are declared to bo ‘‘for the most part non-existent.” During the past 18 months ‘‘for about 41,000,000 marks* worth of mostly firstclass mortgages inferior and to some extent quite worthless mortgages have been eubsituted/’ The assets by which about 61,000,000 marks of . the banks'* actual obligations were supposed to be covered were mostly second mortgages on land belonging to the Spielhagen ring itself. The manipulations of the banks were facilitated by the policy of placing relations of the directors on the boards of other companies. The conduct of the directors, four of whom have been arrested, will form the subject of judicial proceedings. The arrest of Herr Sancfan, Herr Heinrich Schmidt, Herr Paul Puchmuller, and Herr Wassieski, directors of the two banks, has been received with great satisfaction by German public opinion. Herr Sandan occupied a certain position in Berlin, and more particularly in Potsdam, society. He had contributed large sums for the building of various churches, and his wealth w*as estimated at some 30,000,000 marks. On December 14, after the mismanagement of the banks of which he was director had already become notorious, he ieceived through the representative of the Church consistory the third class of the Order of the Crown on the occasion of the consecration of a church for the building of vdiich he had paid. Tnis fact, together with Herr San dan’s well-known relations with distinguished people in Court society, had caused the delay in his arrest to give rise to all manner of rumours and suspicions. Herr Heinrich Schmidt quite recently received the title of Konimei zienrath. This distinction is only conferred after the board of directors of the Imperial Bank has given its opinion upon the wealth and the business reputation of the proposed recipient. and upon the soundness of the undertakings with which he is connected. A sad feature of the collapse is that it will affect a large number of comparatively poor people, who, in reliance upon the high reputation of the directors of the so-called “Spielhagen Banks,” had invested their savings in these concerns, which seemed to be so firmly established and so flourishing. The assets of the Preussische Hypotheken bank_and of the Deutsche Grundehuld bank are estimated to cover something between a half and a quarter of their liabilities, so that the prospects of the shareholders are dismal in the extreme.