THE CORNING OREGONIAN, TUESDAY, ' DECEMBER 38, 1920
HOUSE IS IN
POfclCE GUARD PORTALS OF MORRtS BROTHERS' BOND HOUSE WHEN IT FAILS TO OPEN FOR
BUSINESS.
r
yam
Bankruptcy Petition Fifed by
I Morris Bros., Inc.
.'GRAND JURY TO CONVENE
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RECEIVER'S HANDS
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; Responsibility for TTrecklne of
i I'irm to Be Fixed; Etlierldge
; I-acea More Charges. V
t.
J fCtm tinned Trom Drat P.ge.)
D. Whitcomb, who waa appointed tern-
f porary receiver, is head of the ac
counting firm now engaged In prob-
Ing the books.
Not until this audit la completed
i will Mr. Morris give any additional
Information regarding the firm's bust-
ness, he said last night. Mr. Whit-
comb said it possibly will be several I
- days before this is done. He does I
-' not believe the deficiency will -total
more than $750,000, although a com
r plete check may possibly place the
deficit nearer the ll.OOO.uDO mark.
In the petition for voluntary bank
ruptcy as filed late In the afternoon,
. the firm showed assets already un
covered amounting to $1,495,315, with
- the statement that assets were bein
brought to light hourly as the audit
" of the books progresses.
Liabilities Are Not Known.
, Against these assets were liablll
ties of an unknown quantity. It waa
- shown, however, that the city of Ed
monton bonds constitute by far th
; largest Jiability, as these Edmonton
Z bonds amounting to $2,066,000 are
' listed under this head.
f The Central National bank of Oak
land. Cal.. was listed in the bank
ruptcy petition as the largest single
f investor in the city of Edmonton
'; bonds, the schedule showing that
holds Interim certificates of $147,000
with collateral security to cover this
investment. fThe Union Trust com-
pany of Walla Walla, Wash., holds ln
terim certificates of $50,000 on this
" same class of bonds.
', The petition named several hundred
t Investors from various cities of the
Z Pacific northwest who have purchased
- the city of Edmonton bonds and who
Z . bold nothing more than the interim
- certificates as a protection against
J loss. X major part of these Indivi
d-dual Investments range from $1000 to
; $5000. .
Other Liabilities Are Lsana.
Other liabilities Include loans given
- by the United States National bank
2ot Portland for $250,000, for which
I? the bank holds collateral securities
for 300.1S9; Ladd & Tilton bank,
which shows a loan of $50,000 covered
by collateral securities of $70,100, and
.' the Merchants National bank of San
Francisco, which loaned $175,000 and
holds securities of an unknown
-amount.
District Attorney Evans last night
. placed an adc ional charge of larceny
of the $75,00u of bonds, expressed by
J; Mr. Etheridge from Tacoma, and now
- In the hands of the prosecutor on at
" tachment. This transaction was ap-
parently a piece of bookkeeping, de-
" -signed to cover some other, deal, de
, . tails of which are a mystery as yet.
" jut. j,vans said Kthendge had no
authority to remove them from Port-
. -. land.
i. . Thesa bonds, which were seized
v " yesterday by deputy sheriffs, were
. . listed among the assets and are now
- held at the office of Sheriff Hurlburt
'pending a complete investigation.
Other assets are bonds amounting
to $960,750. deposits in banks of
. Portland and elsewhere in the north--west,
$301,808; debts due the corpor
is ation. $109,258. Real estate valued
-at $7000 and office furnishings of
:"i $12,000 are included. The $25,000 in
, i bonds found in the safety deposit
. -box of Etheridge and $4501 In stock
'.. . held in other corporations, make up
;the final list of assets so far un
. i covered by those now making a com-
' plete audit of the f irm's books.
The $75,000 in bonds seized in the
i . search made at the express company
offices under the drection of Deputy
Sheriff Christofferson, included $25,
- 000 in Caribou county, Idaho, bonds;
$25,000 in Teton county, Idaho, bonds;
$15,000 in Regina, Canada, bonds, and
J $10,000 in Victoria, B. C. bonds.
. These were the bonds which Ethe
; : ridge took from his safety deposit
.; box in the firm's branch at Taooma
and expressed to the local office the
' ' aight of his flight.
Books Ordered Produce-d.
Although Presiding Judge Ta2well
In the circuit court ordered the bond
' house to produce its books and rec
ords In open court at 9:30 o'clock this
morning, it waa said last night that
the filing of the voluntary bankruptcy
petition In the federal court would
halt any proceedings which mighl be
started in the state courts.
1 The suit on which Judge Tazwell
, based his subpena duces tecum for
the production of these books in court
was filed during mid-afternoon by
William A. Carter and Franklin F.
Korrell on behalf of P. E. Hale, who
alleged he purchased $5500 of the city
of Edmonton bonds from Morris Bros.,
Inc., and received an interim certifi
cate without colateral security. He
demands the bonds or their value in
cash.
All day yesterday persons who had
purchased the city of Edmonton or
other bonds from this firm appeared
at the office of District Attorney
Evans to register their complaints.
The names of these investors, to
gether with the amounts paid to the
bond firm, were listed at the prose
cutor's office and this data will be
used in a presentation of the case to
the grand jury.
Mr. Evans announced that a pre
liminary Investigation by his office
showed other evidence of alleged
' fraud on the part of Etheridge which
vwlll warrant further investigation.
Complaint was made to him by in
vestors whose names were withheld
that they had purchased liberty bonds
of small denominations in large num
bers through Etheridge. Later, he
was told, Etheridge came to these in
vestors and. told them it would be
more convenient for them to have the
smaller bonds converted into one bond
- of a large denomination.
Bonds Reported Surrendered.
Several such Investors were said to
feave surrendered the smaller bonds
to Etheridge with the understanding
- that he would send them to San Fran
cisco for conversion into larger bonds.
' They alleged Etheridge failed to de
liver these larger bonds, nor did he
give them any security to protect the
bonds they delivered to him, it was
charged. !
Dr. J. D. Duback issued a call for
a meeting of all investors who hold
interim certificates given by Morris
Bros.. Inc., to meet at 8 o'clock to
night at the Portland publio library,
at which time ways and means of pro
tectjng tbeir Interests will be dis
. cussed. Dr. Duback said that inves
tors to whom be had talked were
... eager to carry the matter Into the
- federal courts In an effort to save at
" least a part of their Investments.
As the people of Portland, cams to
In ;K
If I
ii nui j aim 1 1 rtiTi ii tij ri
"Move !" was the edict of police
n-hra diwappointed investors ap
peared before barred doors of firm
for information concerning; firm's
finances. Insert, John L. Etheridge,
fugitive ex-president, under arrest
at Minneapolis.
a full realization of the effect of the
failure of the bond house and the
probable loss of thousands of dollars
by hundreds of small Investors, facts
concerning the activities of the flee
ing ex-president, John L. Etheridge,
became better known.
It was learned that Fred S. Morris,
who took over the business from Eth
eridge the night he left Portland, had
given Etheridge $10,000 In cash a few
hours before he left Portland by auto
mobile for Tacoma in company with
Mrs. Etheridge and Roy Fike, an em
ploye of the bond house.
Mr. Morris admitted yesterday that
this money had been given to Eth
eridge on the night of his departure.
He said, however, that It was fully
covered by securities given to him
by Etheridge. These securities, he
said, included a- mortgage on the
Etheridge home In Irvington. This
home was purchased by Etheridge
from Mr. Morris several months ago
for $30,000.
Mrs. Etheridge Is Loyal.
It was likewise learned that Mrs.
Etheridge at first fought vehemently
gainst the flight of her husband
from Portland. She was loyal to
him throughout his troubles leading
to his ousting as president, and was
confident there was nothing wrong in
incumbency as president of the
ond house.
She was said to have Insisted that
Etheridge remain in Portland and
face h's accusers. At the time she
thought his prison record in New
Jersey was the only trouble he had
to ;ace, and knew nothing of the
perilous condition of the bond house
ere.
So far as was known, the $10,000
cash which Mr. Morris gave to
im just before his departure was
11 the cash Etheridge had when he
left for Tacoma.
Destination la Leaned.
Roy F'ke, who drove the couple
to Tacoma, at first told District
Attorney Evans that after Etheridge
had transacted business at i acorn
drove them on up to Blaine.
Wash., where the international
boundary line between this country
and Canada crosses. This false In
formation at first led Sheriff Hurl
burt to start on blind clews in his
! search for the missing bond dealer.
I Liater, when District Attorney Evans
sent for Fike and got him to his of
fice, Fike admitted that hi3 first story
was false. He then said that he bad
accompanied Etheridge and his wife
to the Chicago, Milwaukee & St. Paul
train which left Tacoma Friday nigt.
It was then learned that the couple
had taken a private compartment in a
Pullman and had purchased tickets
for Minneapolis.
This Information was received but a
short time before the train was due
to arrive at Minneapolis yesterday
noon. Sheriff Hurlburt telegraphed
descriptions of Etheridge and asked
for his arrest, "which was made.
Approximately 100 men and women
were suddenly thrown out of employ
ment when the bond house of Morris
Brothers, Inc., was closed.
At the headquarters office in Port
land,, a force of about 85 persons, in
cluding salesmen covering this terri
tory and the city proper, were em
ployed. Branch houses in San Fran
cisco. Seattle and Tacoma each had
a manager and four .or five other
employes.
CRASH COMES AS STOPRISE
in
Auditing of Seattle Books Is Fin
ished and Branch Will Open.
SEATTLE, Wash., Dec 27. (Spe
cial.) T. D. Henderson, vice-presi
dent of Morris mos. Inc., for the last
year in charge of the local office In
the Central building, on being asked
concerning the announced suspension
and closing of the head offices of
the company, at Jr-ortiana, tonignc
said:
"The first Intimation I had of this
situation was when I read in The
Oregonian of Friday the announced
resignation of John L. Etheridge,
president, supplemented by the fur
ther announcement that Fred Morris
of Morris Bros., Inc., had ordered an
audit of the companys books follow
ing Jtir. itneriage s resignation.
'Last Friday afternoon I called Mr.
Morris on the telephone when an
auditor from Portland came into my
office to -audit the books of this
branch. During that conversation
Mr. Morris gave no intimation that
Mr. Etheridge was accused or sus
pected of embezzlement. The audit
of the Seattle branch has been com-,
pleted and I expect to open the Seat
tle offices for business as usual in
the morning."
The offices were open today.
CO-UPETITTVE BASIS WANTED
Hoff Outlines Flan for State Bond
Department.
SALEM, Or., Dee, 27. (Special)
O. P. Hoff, state treasurer, following
receipt of information that Morris
Bros., Inc., had closed Us offices
pending an accounting of its affairs,
today issued a statement that In case
a bond commission is created at the
next legislature, he will advise that
the purchase of securities for the
state be placed on a competitive basis.
To bring this about, Mr. Hoff will
urge that when the state has money
on hand with which to purchase
bonds advertisements be inserted in
the newspapers and that the securi
ties be bought direct from the mu
nicipality. Hoff said today that in
revamping the present system of pur
chasing bonds for the state the bond
house commissions would be eliml
nated, but that the state would have
to create a bond department and meet
the expense attendant to its opera
tion. Creation of the bond commis
sion was embodied in Mr. Hoff's bien
nial report and will be submitted for
the consideration of the legislature
at its session here next month.
TACOMANS FACE LOSSES
BOXD CERTIFICATES HELD ES
TIMATED AT $50,000.
Jlorris Brothers Said to Have Done
Large Business in Thurston
and Pierce Counties.
TACOMA, Wash., Dec. 27. (Spe
cial.) Losses totaling nearly $50,000
may result to residents of . Tacoma
and Pierce county who are holders of
interim certificates issued by Morris
Brothers, Inc., Portland bond dealers,
closed today pending an autiit of the
books.
Fred S. Morris, president of the
company, ordered the Portland and
Tacoma offices of the concern closed
Sunday after it was discovered that
John L. Etheridge, former president,
had departed, leaving a large deficit.
While the amount of business done
by the Tacoma office of the company
recently could not be learned. It
believed that the outstanding certifi
cates for which bonds are due amoun
to at least the sum estimated. Ac
cording to statements of Portland in
vestigators, $1,700,000 in interim cer
tificates have been issued.
Charles W. Foster, manager of the
local office of the company, declared
today that the report of the closing
of Morris Brothers headquarters did
not reach him officially until late in
the morning and that the only in
structions he received were that the
office had closed pending an audit of
the books and that the Tacoma office
should do no more business until fur
ther notice.
Mr. Foster said he did not care to
make any public statement until he
had further information, but that the
company had done a large business
in municipal ponds among the rest
dents or .fierce ana Thurston coun
ties of late. Outstanding interim cer
tificates for various securities might
total $50,000, he admitted, though he
would give no exact figures. He also
declined to state the number of per
sons involved.
Regarding the reported visit to Ta-
A distinguished
concert by
uBLmmmm
Arthur
Tie
Middleton
Masterful
One of the world's most extraordinary voices. Both
a. bass, rich" and full, and a baritone, brilliant,
scintillating.
Hear Middleton, the masterful basso of the Metro
politan Opera Company, New York.
. Wednesday Night Heilig Theater
Some artists are great of
voice. Others are merely
great of stage perform
ance. To judge how truly great
is Arthur Middleton, near
him outside of his physical
presence. Hear his voice as
it is literally Re-Created
by the New Edison.
Only then will you be
able to appreciate fully its
sublime beauty.
It is actually true that
thousands of music lovers
have heard M iddleton pub
licly compare his voice
with the New Edison's
Re-Creation of that voice,
and could distinguish no
difference.
2& NEW EDISON
. "The Phonograph with a Soul"
Come in and let us prove to you in this inter
esting way the greatness of Arthur Middleton.
Reed-French Piano Mf gf. Co.
CORNER 12TH AND WASHINGTON STS.
Hyatt Talking Machine Co.
330 ALDER STREET
nma Saturday of John L. Etheridge,
former president of the company, Mr,
Foster said he knew nothing.
If. Mr. Etheridge was in lacoma
e did not let me know of his pres-
nce, said Mr. poster.
'As far as I know he did not visit
this office. The report that he tooK
some securities from here is nonsense.
Nothing has been taken and no se-
rities of any value have been held
n this office recently."
Mr. Foster explained that the firm s
method of doing business was to make
is! sales on bonds to customers and to
issue to these purchasers interim cer
tificates, which are really no more
than promises to deliver the bonds
when issued, or failing that to return
the money. The orders for bonds
with the cash received for paymen
are always forwarded to the Portland
office, he declared. When the Dona
are received at Portland they are for
warded to the local office and then
distributed to purchasers.
The published statement that Clin
ton Green, former manager of the
local office of Morris Brothers, is still
in charge, is erroneous. Mr. Greene
has been with another firm in Seattle
since September 1.
PHOTOGRAPHIC REPRODUCTION OF INTERIM CERTIFICATE SIGNED BY JOHN L. ETHERIDGE
AS RECEIPT FOR PURCHASE OF UNDELIVERED CITY OF EDMONTON BONDS.
Jl -OTpS"ffl3Oi4990 .P
I Tfls! Portuuho. ""y October 13th 4itJQ f-pj
1 vilsfc I -Oaamn sf b, ooo .oo, , 1
I J flTeTBottaana ul. Ho100 Wo&t I
1 41Pal WTO--BMfr0I v m 'liPb.
'S0tM iunmbit-vasa ... I
s ! -'M & T 0 h 1- 1921 -f fA S-fS-J! fcv I
I jgpfi ,yrtt. ranr ThnnMndTHnnn'Tml FIT A.I8X '- XSl 1
, . 4,506.60.. -.AssSmjys ,.w.siis.s. i I
lwlf ' "" -5Ttr"nbsT 1. stJJ. -y. 'rtwj t
The above is of four sack certificates -for $5000 ear which represent investment of a local business .- I
maa. -
PRISON CAREER IS BARED
EVIDENCE SHOWS ETHERIDGE
HAS SERVED TWO TERMS.
Morris Brothers Have Many Clients
in Salem and Marion County,
.Say Capital City Reports.
SALEM, Or., Dec. 27. (Special.)-
T7vidnc unearthed by George M.
Brown, ex-attorney-general, with re
lation to the. operations of John L.
Etheridge, manager of Morris, Bros.,
Inc.. at the time certain bond trans
actions Involving, the state treasurers
office were placed before the Marion
countv grand Jury, will De transmit
ted to Walter H. Evans, district at
torney for Multnomah county, to be
used In connection with the prosecu
tion of Etheridge In the event he Js
brought to trial.
In the absence or Air. crown irom
the city. Attorney-General Van Win
kle said today that this evidence
would, show conclusively that Ether
idge naa servea two lerms in me
New Jersey state penitentiary. Other
regularities in Etheridge a past also
were found by Mr. Brown, it was
said here, although some of the mat
ters divulged by the. Investigation
were not admissible under the law
and could not be submitted to the
nquisitorial body.
James Crawford, deputy state treas
urer, said that the state would not
ose as a result or the failure 01
Morris Bros., as all bonds purchased
by the treasury department had been
delivered.
Salesmen for local bond houses say
that Morris Bros, had many clients in
Salem and Marion county and that
as much as $50,000 a month had been
nvested through that concern in Ca-
years. whether any of these Invest
ors will lose as a result of the trans
actions could not be determined here.
I. H. Van Winkle, attorney-general,
denied tonight that he -had said' that
addition to charges already filed
against John L. Etheridge, in Mult
nomah county, the state would -charge
m with falsifying his reports and
with larcerty of public funds.
Van Winkle said the only chance
for the state to enter the case would
be further evidence indicating that
Etherldge's defalcations had" Injured
some department of the state govern
ment. He explained, however, that
It Blight bs possible, (or the stale
legal department to act under the
banking law, but this apparently is
unnecessary because of action that
already has been launched in Mult
nomah county.
"I have not yet discovered any
thing that would warrant this de
partment going into the case," said
Van Winkle.
Charges made last spring that
Etherldge's firm had made exces
sive profits in bond transactions with
the state treasurer's office, which
were subjected to grand Jury investi
gation in Marion county. Van Winkle
said, were apparently out of consid
eration at present.
COUNTRY HOME TRAXSFERED
Etheridge Turns Property Over to
Henrietta A. Morris.
OREGON CITY. Dec. 27. (Special.)
John L. Etheridge, wanted In Port
land In connection with the wrecking
of the Morris Bros, bonding' house,
transferred property at the court
house here Decembe'r 23.
The deed transferred by him called
foi 14.93 acres comprising his country
honae on the Clackamas river. The
property was transferred to Henrietta
A. Morris, and was witnessed by Nora
Moser and executed in the presence of
M. R. Klepper and Mae A. Granning.
The revenue 8 tamp on the deed at the
time-of the transfer was for $2. show
ing that the property was at least
worth 12000. The consideration
shown in the deal was S10. Etheridge
came to this city on the afternoon of
December 23, and after having the
deed properly transferred, departed
for Portland.
It was learned that when Etheridge
Increased the capital stock to $l.uo.
U00 in September, 1919, he issued !0U.
000 in common stock. Of this amount
all but 300 or 1100 was held in the
name of his wife. Mr. Etheridge him
self held only one share of a par
value of 1100. Two or three other em
ployes of the bond house held one
share each for voting purposes only.
Of the J500.000 in preferred stock,
but 1100.000 was issued, it was said
yesterday by persons In touch with
the operations of the bond house un
der the Etheridge regime. All but
$30,000 of this preferred stock had
been redeemed by the corporation, It
was said, leaving hut this latter
amount outstanding. The names of the
persons holding this stock were not
divulged.
Etheridge was both president and
treasurer of the firm and employes
of the house yesterday said that
Etheridge was the only person who
might have had Intimate knowledge
of the financial condition of the cor-
fporatlon. Each of the several depart
ment heads confined their activities
to their departments alone and none
knew of the perilous condition of the
firm during the several weeks privr
to the flight of Etheridge and the
subsequent closing of the doors.
$50,000 LOSS
IS
i
VANCOUVER
LIFE-TIME SAVINGS LOST
ANGRY INVESTORS GATHER AT
DEFUNCT BOND HOUSE.
Edmonton Securities Represent
Largest Losses, According to
Audits so Far Made.
Tales of lifetime savings lost in the
wrecking of Morris Bros., Inc, were
related by angry and disappointed In
vestors who gathered about the doors
of the defunct bond house yesterday
and discussed with each other the
closing of the doors and the flight of
John I Etheridge, ex-president and
principal owner of the Institution.
Mttuy persons had invested their an
In the city of Edmonton bonds, which,
according to audits thus far made,
represent the largest losses in the
closing of the bond houne. One young
woman, a stenographer In one ot tne
local courts, said she had lost prac
tically every cent-she ha4 saved for
years. Other members of her family
also were heavy losers, she said.
Long before the hour of the open
ing of . the bank. Chief of Police
Jenkins stationed uniformed police
men to stand guard before the locked
doors and these police kept the
crowds moving throughout the day.
Persons who had safety deposit
boxes rented were allowed access to
the building in order to remove their
valuables. Scores of renters of these
safety deposit boxes appeared during
the morning and remove their prop
erty from the building. Women rep
resented the major part of those who
withdrew their bonds and other val
uables from these vaults.
Investigations Into the operation of
the corporation developed that Mrs.
Etheridge held practically all the
stock In the corporation up until
Thursday night when It was turned
back to Fred S. Morris, ex-president. I
Man, 78, Invests $1000; Another
Holds Reecipls for 1500 0.
VANCOUVER, Wash., Dee. 27
(Special.) The closing of Morris
Bros, bond house of Portland will
chiiw mnnv Inveitnr In Clarke county
to lose considerable money. The total
may reach $.".0,000.
The city of Vancouver, which liu
been doing street Improvement m-ork,
will not be loser tlirouidi the failure,
William t'. Ilatea. city attorney, I1
toilay. . W hile .Morris llroi. owed
ClarKe county $40,000 a few inonllt
ago. this has all been paid, according
to T. U llenrichsen.
The contrart for paving Kast
Seventh street, at of Vancouver
barracks, amounted to aiprolinutly
106.000 for the city ami 1:7,000 for
the county, the latter belna paid by
the county frum bridge tolltt, no no
bnnil for this were Knld. Morrla
Bros, paid the I'nlled ('nntrartlna
company last week for tlila dlatrnt
and bonds are to be isaurd within a
short time. I'erKons holding tins
rertlflcatts will probably be able to
get the bonds hen they are turned
over to the conlrai-tor by th city.
The contractor can turn thrne homia
over to thone holding --rtiriraips, aa
far aa they will go. and they will o
around If the isnue was not oversold
by Morris Pro
Thla could be done, and has been
done severul times in the past.
The contract for Columbia atreet
whs about IK.OOO and Morris Hroa.
have sold $.10,000 of til", a Mlmitun
reported he-re today. It la understood
that theae warrants have not been
cashed, in which rain the certificate
holders will not !(-.
One man who bought worth
of bonds over the counter from Mnr
rls Kroa., received interim ccrtlflcaiee.
Noveral others are known to hav r.
reived certificates for pmaller sums.
A man, 78 years old. Invested iooo in
Kilmot'ton bonds.
'men
A better Cooking or Heating
apparatus than the CHARTER
OAK is, cannot bo made.
A Polly can be taught to tay
"Just as Good as"
I (jy 0AKX-'j,-) I
For Goal, Wood
or Gas or
Combination
of All
MO rtralnrs la T7nll4 nuUm
136 Dealers In Kt. Laaia
Soil Them
but ho wont know what he is talking
about.
. All really pood articles, all works
of taste and merit must bear a price
' in proportion to the Bkill, tirne, ma
terial and expense attending their
invention and manufacture.
In tho construction of an articlo
which is put to such hard use. u a
cooking or heating apparatus, it is
particularly necessary to use only the
best and plenty of it
This we do.
A composition for cheapness and
not for excellence is the most frequent
and certain cause of dissatisfaction
and waste.
If yar mrr rire talk ymm !')
knylss; another kiss, writs t as. '
Charter Oak Store & Range Co., St. Louis, Mo.
W Ala Make Warm-Air parase.
HEXTER & CO., Portland, Sales Agents
. I-
!-
I.
V
...
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