GERMAN BANK SCANDAL

New Zealand Times, Volume LXXI, Issue 4289, 23 February 1901, Page 1 (Supplement)

GERMAN BANK SCANDAL

WHOLESALE FRAUDS. THE GL AS GO AY BANK FAILURE REPEATED. Widespread indignation, says the .Berlin coi’respondent of the '‘Times,” has been excited in Prussia by the collapse of certain associated land mortgage companies which were . generally known as the “Spiclhagen. hanks,” the Deutsche Orundschuld bank, and the Pruessischo iiypotheken bank. The report of the committee appointed to examine these bunks exhibits the manner in which their business was conducted in the most unfavourable light. The" balance-sheet of December 31, 1800, is described as “incorrect.” 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. marks’.worth of mostly firstclass mortgages inferior and to some extent quite ■rt’brthless mortgages have been subsituted.” The assets by which about 01.000. marks of the banks’ actual obligations wore supposed to be covered were mostly second mortgages on land belonging to the Spiclhagen ring itself. The manipulations of the banks were facilitated by the policy of placing relations of the directors on the boards of other companies. Tho conduct of the directors, four of whom have been arrested, will form the subject of judicial proceedings. The arrest of Herr Sandan, Herr Heinrich Schmidt, Herr Paul Puchniuller, and Herr Wassieski, directors of tho two banks, has been received with great satisfaction by Gorman 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 was estimated at some 30,000,000 marks. On December 14, after tho mismanagement of the hanks of which he was director had already become notorious, he leccived through the representative of the Church consistory the third class of the Order of tho Crown on the occasion of the consecration of a church for the building of which he had paid. This fact, together with Herr Saudau’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 end suspicious. Herr Heinrich Schmidt quite recently received the title of Komnioi jdenrath. 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 “Spiclhagen Banks,” had invested their savings in these concerns, which seemed to he so firmly established and so flourishing. The assets of the Prcussische Hyootheken bank and of die Deutsche Grundclndd 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.