Great Depression: On the Brink of Financial Ruin
On December 22, 1929, only 7 weeks after the great crash of wall street, George Newhall, President of NLF at the time and the youngest son of Henry Mayo Newhall, died.
After his death, rumors began to spread about the dire financial status in which he had left the company. William Mayo, the last surviving brother, now at the age of 75 and in frail health, hired his son in law, Atholl McBean, to determine if there were irregularities.
McBean, successful in his own right, hired professional controllers to examine the books of the company which found several irregularities that left the company over 3 million dollars in debt.
The biggest problem was that the company and all of its sales and purchases were done on a cash basis. There was no accounting as to where the money went. Large salaries, bonuses, and dividends were still being paid out to family members even though the company was running significantly in debt and no one knew it.