Business: Arrested: Caldwell & Lea

Investigation of the affairs of defunct Caldwell & Co. (TIME, Nov. 24 et seq.) has revealed many a skin-tight alliance between the banking interests of Rogers Clark Caldwell and the newspaper-political interests of his crony, Col. Luke Lea. Last week a federal grand jury pried into the affairs not of the big Caldwell-controlled bank of Tennessee but the smaller Holston-Union National Bank of Knoxville which went under early in the storm caused by the failure of Caldwell & Co. What the jury found was not pleasing. Contemplation of it lead to what many southerners had long expected, had begun to think might never come—orders for the arrest of Rogers Caldwell and Col. Luke Lea. And included in the warrants was J. Basil Ramsey, president of Holston-Union National Bank, who last week was sunning himself in Florida.

The indictments charged that on March 31, 1928, the day that Mr. Caldwell and Col. Lea bought the Knoxville Journal (now in receivership [TIME, Dec. 22]), Banker Ramsey, aided and abetted by his two friends both of whom were large stockholders in the bank, wilfully misapplied $98,000 to the joint Caldwell-Lea account. In addition to this charge of violating the Federal banking law, the indictments further claimed that the three friends had conspired to violate Federal banking law by hiding the bank's condition.

From Florida, ex-Banker Ramsey telegraphed his bond. At home in Nashville, Mr. Caldwell and Col. Lea let their attorney, Albert Williams, onetime Tennessee Commissioner of Taxation, arrange their bonds. On the fourth Monday in May the Federal Court will convene, hear the defense.