On Monday, August 6, 1906, the Milwaukee Avenue State Bank closed its doors. The unexpected closing of this bank has thoroughly upset all sections of Chicago. The great majority of the depositors of this bank are people of very moderate means whose hard-earned savings are all they have in the world.

Thousands of excited depositors, among them many old men and women with utter despair written on their faces, have gathered outside the closed bank every day since the closing. All were anxious to enter the bank and withdraw their savings. Threats against the bank, its officers and employees, were so vigorous that a strong police detail was on duty to prevent any violent demonstrations.

The bank failure has already cost the loss of two lives. The thirty-seven-year-old John E. Visser, 772 Wrightwood Avenue had deposited $500 belonging to the Royal League, of which he was treasurer, and when he was informed of the bank's 2failure, he had a paralytic stroke that instantly took his life. Henry Koepke, a spice dealer at 1773 North Kedzie had all of his money (seven hundred dollars) deposited in this bank. Failing in his efforts to get into the closed bank, he shot himself in despair.

At the time the bank crashed, Paul O. Stensland the president, and H. W. Hering were, and still are, out of the city. This fact immediately started the rumor that these two had embezzled every dollar in the bank. The bank inspector was on the job but until all accounts are audited he will make no definite statement as to whether a part of the deposits will be available.

According to a recent statement in the Chicago Tribune, the auditor had found from the beginning improper entries covering amounts from one thousand to fifteen thousand dollars each,--a total of $1,003,000 thus far--and indications are that the final figure will be still greater. Among the forged signatures brought to light were those of Francis S. Peabody, commissioner, and Marcus 3Kirkeby, both heavy stockholders in the bank. The signature of a Mr. Koehler was also forged.

Vice-president Theodore Stensland, son of Paul O. Stensland, was arrested and thoroughly questioned. Theodore Stensland was the one had revealed the irregularities in the bank, stating that he had been told to take this action in a letter mailed by his father from St. Paul, Minnesota. He (Theodore) was then examined and put under a five-thousand-dollar bond, furnished by Jacob Kern, his attorney. He was openly suspected and accused of knowing more about his father's doubtful business methods than he would admit.

On Thursday, August 9, the cashier, Hering, was arrested. Previous to his arrest he had informed reporters of the Chicago dailies that all irregular or doubtful deals of the bank were made by the president, Paul O. Stensland, and by him alone, and that he, Hering, was innocent. He also stated that 4although he was known as the cashier, he was nothing more than a handy clerk to whom Stensland gave orders, and he could not do otherwise than obey the orders--for his bread and butter.

During the audit on Thursday, bank inspectors Jones and John C. Fitzer, assisted by cashier Hering, found a private daybook kept by P. O. Stensland. In this book they found the true details of the $198,000 embezzled by Stensland. According to the statement of State's Attorney Harry Olson, indications are that they will find no stumbling blocks that will cause them any trouble in convicting Paul O. Stensland of about two hundred or more crooked transactions.

The auditors worked all day Friday until one o'clock Saturday morning, during which time these men, who have done such work for twenty years, found so many glaring swindles that they threw up their hands. This bank is by far in the worst condition of any they had ever examined. Crooked work in 5disposing of one million dollars has been brought to the surface and the prospects are that a great deal more will be uncovered.

In many cases, the crooked transactions involved other people working with Stensland. According to the auditors, Stensland's principal co-worker was cashier Hering, who was revealed as the one who handled about a half a million dollars in real-estate deals; most of this money, if not all, landed in Stensland's pockets.

Five years ago, a teller embezzled approximately fifty thousand dollars, and Hering is suspected of knowing of this deal and sharing the loot by keeping silent about the theft. When the theft was discovered, the teller was not arrested and prosecuted, but simply discharged. Hering evidently looked more useful to Stensland, so he was kept on the job.

The police investigation discloses that an Italian, Antonio Demrio, was 6used by Stensland, not in banking affairs but to forge signatures for him whenever such service was required. As his services were used many years ago, he is not considered as having taking part in the current scandal. His bank connections ended in 1901. Many prominent names were found among the check forgeries, among them: F. S. Peabody, E. Iverson & Co., Fred Ecklund, A. E. Gauss, C. S. Klein, C. A. McDonald, A. Madson, A. H. Michaelson, S. J. Mellins, J. J. Mullen, and others.

Among the suspicious deals in the bank were the reverse checks, signed in blank with the amount filled in later to cover a reverse loan from the bank to P. O. Stensland and other stockholders. Frank R. Crane, commissioner, had borrowed twenty-five thousand dollars and had put up property valued at twenty-four hundred dollars as security. He states that he does not know whether the loan committee of the bank ever met to decide on loans to be granted. He refused to answer many questions without the advice of his attorney.

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Mr. Kirkeby, who was a member of the loan committee, states that he seldom took a hand in checking up on loans; he and the other committee members usually let Stensland handle loans at his own pleasure.

The collapsed bank was organized in 1891 with a capital of $250,0000 with Paul O. Stensland as president; Theodore Stensland, vice-president; Henry W. Hering, cashier; Ulrich Daniels, assistant cashier; Elof Johnson, Marcus Kirkeby, M. A. La Buy, T. Stensland, Joseph Listra, P. O. Stensland, and Frank R. Crane, directors.....

Paul O. Stensland was born fifty-nine years ago near Stavanger, Norway. At the age of eighteen he became a seaman on a ship bound for India where he quit and took work as a cotton baler. Later he became a cotton dealer in Hindustan, and after five years returned to Norway in 1870. Shortly afterwards, he married and left Norway, coming directly to Chicago where in 1880 he organized a private bank which in 1891 became the Milwaukee Avenue State 8Bank. His many speculations were losing ones, and he let the bank stand the losses, thus bringing on the collapse that is now being investigated.

Following the death of his wife, Paul O. Stensland squandered small fortunes on beautiful women, especially one named Mrs. Leone Langaon-Key, who was formerly the music critic on the Chicago American. Rumor had it that this beauty had left Chicago with Stensland but her local friends deny this, stating that she is visiting friends at Baraboo, Wisconsin.

Stensland, during his entire stay in Chicago, has taken a prominent place in the Norwegian colony and this circle is naturally upset at the thought that one of their countrymen is such a crook. Last Friday the scandal cost another life. Frank J. Kowalski, who was a popular teller, especially among the Polish depositors, committed suicide by shooting himself. He was well-known and well-liked in Polish circles and he has been looked at askance and insulted since the bank crash, and has even been threatened with death. The disgrace of being pointed out, and being made the target of accusations, 9wore down his courage; he could not face his friends. In despair he took his own life. Investigations do not connect him with the theft. The chief guilty character of the affair skipped from Chicago to escape questioning and, undoubtedly, punishment. Where he is now, nobody knows. Rumors have gone around that he was last seen in Wisconsin, Minnesota, Canada, and Texas. The prevailing opinion is that he has gone to Mexico, Norway, or India.

Many of the depositors of this bank are now reduced to pauperism, while, as was the case today of a young lady and an old man who were found to be insane, many already have lost, and a great many others are losing, their minds.

The rottenness brought to the surface by the auditing of the accounts of the failed bank has convinced all those affected by the crash that Paul Stensland and two or three co-workers were not wholly responsible; dishonest practices were carried on by other employees who, knowing of the acts of the higher-ups, felt safe in helping themselves.

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Cashier Hering is in jail; unable to furnish the bail fixed at $68,000. Theodore Stensland, in order to protect the depositors as much as he could, brought in and surrendered to Auditor Fetzer all mortgages and deeds covering real estate held by his father, which is a surprising amount in Cook County alone. Theodore thinks his father has gone insane and killed himself, and that his body will be found near Madison, Wisconsin, where he is supposed to have last been seen and where he is said to have bidden farewell to his favorite, Mrs. Leone Langdon-Key, on Wednesday, August 8, 1906. This is to date the final report of his whereabouts, but who can conjecture "what next"?