The astonishing business conditions under which the Calkins Syndicate was conducted were brought out during the proceedings in bankruptcy. For example: The Union Trust Company, closely connected financially with the Southern Pacific Company, and the United Railroads, advanced the syndicate $175,000.
To secure this loan, the Syndicate gave the Union Trust Company as collateral 1251 shares of the 2500 shares of the capital stock of the Sacramento Publishing Company, 150,100 shares of the 300,000 shares of the capital stock of the Calkins Publishing House, the majority of the capital stock of the Fresno Publishing Company, which published the Fresno “Herald” and bonds of the company publishing the San Francisco “Globe,” valued at $30,000.
This loan remained unpaid at the time of the Syndicate’s failure. The stock of the Fresno Publishing Company sold under the hammer for $4,850. The 1251 shares of the Sacramento Publishing Company were estimated to be worth $51,000. The stock of the Calkins Publishing House was of doubtful value. The Union Trust Company, before the failure, released the Globe bonds without payment of the note or consideration of other security. This left the stock of the Sacramento Publishing Company, valued at perhaps $51,000, as sure security for the $175,000 loan.
But this stock was curiously involved. The entire stock of the company consisted of 2500 shares of a par value of $100 a share. The corporation’s property consisted of the Sacramento Union newspaper and the real property where the paper was published.
Soon after purchasing the Sacramento stock, the Calkins Syndicate organized a second Sacramento Publishing Company. The first company—that of the 2500 shares—was organized as The Sacramento Publishing Company. The Calkins people in organizing the second company dropped the “The,” calling it “Sacramento Publishing Company.” The second company was organized with a capital stock of 300,000 shares,—175,000 shares common stock and 125,000 shares preferred.
The Syndicate took 100,000 shares of this preferred stock to the London, Paris and American Bank, and used it with certain stock of the Nevada County Publishing Company, another Calkins concern, as collateral to secure a loan of $30,000. Of the 25,000 (preferred) shares remaining, the Calkins people sold 10,000 shares for money. The 15,000 shares remaining, Mr. Willard P. Calkins, head of the Calkins Syndicate, took to compensate him for his peculiar labors in the transaction. This disposed of the 125,000 shares of preferred stock in the second company.
The 175,000 shares of common stock still remained to be disposed of. Mr. Calkins, as president of the Calkins Syndicate, wanting more money, took the 175,000 shares to the London, Paris and American Bank, and pledged them as part collateral for a second loan. He did more—he pledged the “Union’s” Associated Press franchise as further security for this second loan.
Eventually, the second loan was paid off, but the London, Paris and American Bank continued to hold the 175,000 shares of common stock and the Associated Press franchise, under an alleged collateral agreement, as further security for the first loan of $30,000. The first loan was eventually reduced to $16,085.02. When the crash came, two Sacramento Publishing Companies, one with a “The” and one without a “The,” claimed ownership of the Sacramento “Union.” A majority of the stock of the first company was pledged to the Union Trust Company as part collateral for a loan of $175,000; 175,000 shares of the common stock of the second company and 100,000 shares of its preferred stock, together with the paper’s Associated Press franchise, were in the hands of the successor of the London, Paris and American Bank, the Anglo & London, Paris National Bank, to secure a balance of $16,085.02 due on an original loan of $30,000.
But there were further complications. The first Sacramento Publishing Company, the directors and officers of which were the directors and officers of the second company, transferred the corporation’s office building to the second corporation. The second corporation thereupon mortgaged this real estate to the People’s Bank of Sacramento to secure a second loan of $20,000.
When Mr. I. W. Hellman, Jr., manager of the Union Trust Company—also one of the prominent managers of the Hellman movement in local politics—was on the witness stand, at the time of the Calkins investigation, he was asked to whom he looked for the payment of the $175,000.