Phelps Lost His Millions

Neil S. Phelps, the Battle Creek millionaire who came to this county when a little boy and grew up to manhood here, is one more a poor man. After graduating from the Normal at Ypsilanti he went to the Pacific coast and established a business college and made money. In 1893 his property was destroyed by fire involving a loss of $30,000 and leaving him without means. He removed his family to Battle Creek and with Charles L. Ellis, now deceased, formed the Ellis Publishing Co., which employs 150 hands. In 1898 he built the Phelps Sanatorium at a cost of $400,000. Then he brought out Malta Vita, one of the greatest selling of the food products. Two years ago, conservative bankers say, he was worth $2,000,000. He began to spread out and the result was a meeting of his creditors in Battle Creek yesterday. Much to the surprise of the creditors Mr. Phelps was wheeled into their presence in an invalid's chair, attended by a white-capped nurse and doctor. His face showed signs of the mental and physical anguish he was suffering, and one leg was swathed in bandages. During the whole of the conference a doctor of his sanitorium was by his side, feeding him medicine.

Mr. Phelps was asked how much money he had. He answered that his assets-all that had any value at all to him-consisted of $51,000 worth of Ellis Publishing Co. stock and $800,000 worth of Malta Vita stock. Asked what the latter worth in his estimation he shook his head.

Last year the Malta Vita Co. sold more than $1,000,000 worth of its product and spent $750,000 in general publicity. At the time of the company's reorganization, when the capital stock was made $5,000,000, a great many small holders sold for as much as 190, and yet only 10 days ago the Battle Creek Moon contained a display advertisement of a Detroit holder of the stock in which he offered what he had for 6 3/4.

Mr. Phelps frankly confessed that the stock had no market value, as no one wanted it. The depreciation and non-dividend paying feature he credited to bad management and tight money.

Another asset Mr. Phelps said he had was a house and lot on Maple street, on which there is a $4,500 mortgage drawing five per cent. Asked if the Ellis Publishing company had ever paid a dividend, he said it had not, but that Mrs. Ellis, the minority holder, and himself had had their living out of it. For the past three years the company, despite the purchase of a lot of new machinery, installed to print pure food cartons, had paid $35,000 a year on an investment of $100,000. He said that his other stock holdings were of little value, and that he would not schedule them.

Asked what his liabilities were, he informed the meeting that he owed $285,000 and that 47 of his creditors were those who held as collateral securing his notes stock in the Phelps Medical and Surgical Sanitorium built here three years ago to compete with the gigantic Adventist institution at the other side of the street.

The Phelps sanitorium, Mr. Phelps said, had never paid a dividend. Indeed, since its opening there had been a yearly deficit of $40,000, which he had made up out of his own pocket, and every dollar's worth of the stock holdings he had listed were pledged with banks and persons to secure debts.

Speaking of the reorganization of the Malta Vita Co. three years ago, when Higginbotham, Studebaker, Fisher and other millionaires entered the compnay, Mr. Phelps confessed that only $50,000 in money had been put into the business originally. Its capitilization is $5,000,000. He further stated that the men wearing the famous names given had done absolutely nothing for the good of the company. The assets of Malta Vita, he said, were $700,000, a large part of which was in trade-marks and general publicity.

Many violent speeches were made by various creditors.

A.C. Wisner, a colleague of the former millionaire, made an impassioned speech at yesterday's meeting in which he told what Mr. Phelps and he had done for the town and how everything would been easy if George Could, with whom a railroad deal was pending, had not gone back on his word.

It was finally decided to hold another meeting of the creditors next Wednesday.

A new story is that certain big Malta Vita men will help to forge Mr. Phelps into bankruptcy, buy his Malta Vita stock in for a song, and reorganize, for the belief is held by many that sooner or later someone will make a great deal of money out of the Malta Vita.