The Sun.
London, England, 1861-02-19 00:00:00

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GREAT FRAUDS UPON TILE COOLAftert \
ff, '4•\Z4
CIAL BANK.
(From the Times City Article.) =
The transfer of the business of the Commercial
11 s
Bank to the London and Westminster Bank, an-
nounced
this morning, is attributable to the dis-
covery of a large embezzlement at the branch of
the Commercial Bank in Henrietta-street, Covent-
garden. The amount is £67,000, and although
this would not have been sufficient to affect the
golvency of the establishment, a resolution was
almost, immediately arrived at that it would be
better to prevent all anxiety and alarm by trans-
ferring the business to the London and West-
minster, and thus assuring the depositors of their
perfect safety. The balance-sheet presented on the
15th ult. showed a reserve fund of £75,000, and,
as the current business of the bank is believed to
have been very safe, there is apparently no reason
to doubt that the shareholders will receive back
the whole of their paid-up capital. Under
these circumstances, as the latest price of the
shares with £2O paid was only £2l, the
prospects of the proprietary will not be severely
affected. On the other hand, if no timely plan
for averting a run had been adopted, a
sudden sacrifice of securities might have been
could
not fail to have involved heavy loss. The Comn2er-
cial was one of the earliest of the London joint-
stock banks, having been established in 1839. Its
subscribed capital was £1,500,000, of which only
£300,000 was paid up. The liabilities to customers
are about £910,000. The propriety of using every
means to prevent alarm on the present occasion
was especially increased by the fact that about
four years ago the establishment experienced some
discredit from a series of malignant and wholly
unfounded rumours, from the effect of which it had
been slowly but steadily recovering. The fraud just
detected is stated to have been committed by a
ledger clerk named Durden, and is believed to have
been carried on, without any accomplice in London,
by simply retaining a portion of the funds paid in
by customers, who were duly credited for such
amounts, which were afterwards, however, written
off to the credit of a fictitious account, said to have
been opened in the name of a confederate in the
country. Upon any absence of Durden from his
post some of the disc-spancies between the pass-
books of the customers and the iedgers of the bank
would have been certainly discovered, and hence,
although it was a strict rule of the bank that
every clerk should periodically absent himself for a
holiday, he disregarded that rule and was never
away for a single day—the branch apparently being
far less under the supervision of the directors than
the parent establishment in Lothbury. His mis-
appropriations have been going on for many ears-
appropriations
few days back, however, a paralytic seizure, inca-
pacitated him from attending to his duties, although
he pertinaceously made an effort to do so, and the
whole affair at once became known. Burden is a
married man, about 40 years of age, with seven
children, and had been 16 years in the bank. Build-
ing speculations are understood to have consti-
tuted the channel through which the money has
been squandered, but he seems anxious to facili-
tate restitution as far as possible, and it is hoped,
that some rather considerable amounts of property
may be recovered. It is remarkable that in July,
1860, after the occurrence of the Pullinger frauds,
the directors instituted, as they imagined, a strict
inquiry into the entire conduct of the establish-
ment, in order to see that every possible check
was in operation throughout, and that this inquiry
terminated in impressing them with a conviction
that there was no cone livable mode ins hich a
fraud by any of the officials Could for anperiod
scape detection.

(From the Morning Herald's City .dtfiel6.)
The banking public and commercial coOmuultY
at
were taken by surprise to-day on the intimatio:u th_
the business of the Commercial Bank of Lontion.
would be at once transferred to the London ana
Westminster Bank. The notice was issued so
promptly, and the arrangements were so well com-
pleted, that immediately the transactions of the morn-
ing commenced the change was inaugurated without
any great disturbance, although much excitement
prevailed to ascertain thereason for this sudden reso-
lution. It was not long before it transpired that the
bank had been made the victim of an extensive
fraud by one of the ledger-keep
acers at the West-end
branch in Henrietta-street, Covent-garden, and
that the directors, not desiring to ple the de-
posits and assets in jeopardy, had determined upou
at once effeetiqg a general liquidation. The course
they have followed has been commended by some,
and objected to by others, though the circumstan-
ces, when they are reviewed, may admit of
explanation. The fraud, which involves a sum of
between £60,000 and £70,000, was not discovered
until Friday night ; and although it is believed,
with prudent action, the consequences might
nut have been fatal, still the directors,
having already suffered from a run in 1857 which
sorely tried them, hesitated in again passing
through that ordeal, so likely to follow the circula-
tion of exaggerated rumours. The principal direc-
tors of the London and Westminster Bank, includ-
ing Mr. Alderman Salomons, were therefore con-
sulted, and it was eventually agreed that the transfer
of the business should be made, unaccompanied by
specific terms or positive engagement of any kind.
Whether this proceeding was thoroughly in accord-
ance with sound diseretion has been questioned ;
but the difficulties and danger which might have
been entailed by contrary action, it is also urged,
would have been comparatively great. These pre-
liminaries were arranged'on Saturday. The state
of affairs being kept thoroughly secret, the intelli-
gence, when promulgated in the form desired, had
the effect of preparing the customers for the event
and facilitating the current of transactions. It ig
affirmed that the detection of the fraud was made
through a singular casualty. The defaulter, in
his position of ledger-keeper, had been many years
in the employment of the bank, and steadily refused.
to take a holiday. A few days ago he was seized
with paralysis, and another clerk having been
placed on his books, irregularities were traced,
which led to close investigation, and deficiencies to
the extent of £56,000, according to one account,
and £66,000, according to another account, were
found to exist. The full total of defalcation, it is
alleged, has been ascertained, and is said to corre-
spond with the particulars kept by the delinquent
himself of the malversation he committed. The
money has been adventured in and expended on
building speculations—a property of 40 or 50 houses
in the neighbourhood of Westbourne-terrace, heavily
mortgaged, being the remaining proceeds. He has
also made advances to contractors and builders,
operating with the object of recovering himself, but
eventually becoming more than ever embarrassed:
The delinquent and his friends place the value of
the estate at £22,000, but it is doubted whether, if
realised, any such sum will be obtained. A few other
investments exist of which the bank take posses-
sion under the authority of the law. The fraud
has been committed, it is feared, through
the laxity of an associate clerk, and by the assist-
ance (whether premeditated or not remains to be
seen) of one or more customers, whom this par
has has made subservient to his purposes through pecu-
niary obligations. The event has come so unex-
pectedly upon the directors that they have not y
e et
prepared any report for publication, butt a boad
meeting takes place to-morrow, and he first
excitement having passed they will be able .to give
definitive information to the proprietors. Tnrou
this change it was a very busy day both at the
Commercial Bank of London and the London and
Westminster Bank, a large number
'Theof the egruesetoomrsersf
having transferred their accounts.
the Commercial Bank of London, in the early part
of the morning, handed over to the London and
Westminster Bank £250,000, cash balance, &c., at
the Bank of England and Exchequer Bills, but
notwithstanding heavy sums, owing to the arrange-
ment, were taken out, an aggregate of upwards of
£50,000 was
paid in by customers, several express-
ing dissatisfaction that an attempt was not made to
recover the loss and continue business. The Com-
mercial Bank of London was freely patronised by
the members of the Stock Exchange, and their
transactions must have represented a fair total. In
relation to the liquidation, it was also whispered
late in the day that advances bad been made to an
amount on Great Western of Canada and Grand
Trunk of Canada shares, though the fact could not
be confirmed. It is admitted that if the present had,
been a period when an easy money market existed,
the directors would have tried to pull through, but
with the rate of discount, 8 per cent., it is doubted
whether the resources of the bank would have
proved sufficiently elastic to have accomplished the
object.
The effect of the announcement upon the shares
of the bank in the market was unfavourable. The
last transactions were on Friday at 211; or 21 on
£2O paid. To day there was a difficulty in obtain-
ing a price, and to have completed sales a much
lower quotation must have been accepted. Until
the result of the investigation shall have been
attained, the actual position of the shareholders
cannot be accurately defined. The capital of the
bank is £1,500,000, and the amount paid up
£300,000. The last dividend declared was at the
rate of 8 per cent. per annum, and the guao rantee
fund then stood at £75,000. The shares f the
London and Westminster Bank were operated in at
advance took
rather better terms, but no important

place.