The New York herald. [volume] (New York [N.Y.]) 1840-1920, 1844-03-14
NEW YORK. THURSDAY MORNING. MARCH H. 1914.
To the Public.

The recent statement OF the receiver OF the North
| American Trust and Banking Company, relative 10
the affairs and condition of that company, has i'm.
posed upon me the task of making some expiana-
tons in regard 10 my connection with the insttu
| ton as Its late president.
! Upon the passage of the general banking law in
April 1888, there was considerable latitude Ct OPT
Mon TO the character of organizations to be form
ed under It, and to the nature and extent OF the II
powers and privileges This was to be expected
in the absence OF judicial constructions OF the law
| and It's several provisions.
| The most prevalent opinion was, that banking as
] socIaons formed under the law would be sort OF
special co-partnershps having the power TO issue
bank notes TO circulate as money, upon making the
necessary deposit OF security with the comptroller
and to transact the business OF banking, IN the way
1t was carried on by private bankers and the ncor-
poraed banks then existing.
No doubt was entertained that such associations
would have the power to purchase and sell the
stocks and securities OF the several States and Uni
ted States to establish credits abroad to purchase
and send bills OF exchange, TO receive deposltes
time, at future day, and to issue certificates
| therefor, TO give promlssory notes and other obi
CATIONS on time as securities for money borrowed
by them, or for debts contracted, and to do every
thing incident to the exercises OF these powers.
Upon these viewsot the powers which they might
claim and exercise, the articles OF association of the
| North American Trust and Banking Company We're
framed, will appear by perusal of them; and if
they were mistaken in their right to exercise these
privileges, they IN common with other institutions
formed under the same law, have transcribed the
| powers which they deemed they possessed, and
which learn all such institutions In our city eXcr-
| else to this day.
became stakeholder, and ore of its first direc-
| tors, and acted member of the committee Of in
vestments and finance for the first SIX months from
ITS organization to about the LIST OF January, 1899
From this period to the months of August, 1910,
had very little knowledge Of the affairs of the COM
pany, as was wholly engaged in pursuits of a pub
lie and private nature which so fully occupied my
| time that only attended few meetings of the
board during period of about eighteen months.
1t VIII be unnecessary for me to attempt TO give
any additional light upon the affairs of the company
tor the SIX months remained active director,
after the full vindication made in the statement of
John l.. Graham, Esq its counsel of the good faith
OF It's organlzaon and the manifested in taxi
ing Its securities.
statements OF the receiver which relate to my Off
cia acts president of the institution, and shall
not discuss other TOPICS except SO Tar as 1t is neces
sary to give history of the and loss and fin
al overthrow OF the institution From the month
OF January, 1889, when | resigned member of
the finance committee, to the month ofAugust lSi0
| at which time was appointed vice president OF the
company, a large amount of the state stocks were
purchased These purchases were principally on
time, and were generally made, as learn, for the
purpose OF raising money on their hypothecation, TO
prevent the sacrifice of the old state bonds before
held by the company.
In this movement the board of directors pursued
the policy then generally adopted by indlvdualsand
institutions, in the belief that the DOWN. ard tenden-
cy OF prices would soon be arrested The first three
trusts amounting to 81, 900, were created for
the same object, namely, to prevent the forced sale
of the company's securities The history of these
three trusts and the circumstances attending their
creation, have been already given to the public by
| Mr.. Graham, and need not be repeated. When the
purchase OF the Indiana bonds, amounting to 81,
| 1000 was made in the month OF January, 1889,
| and arrangements made to draw for the proceeds
! on the agent OF the company IN London, the then
president suggested the propriety of investing $500
600 of the sum drawn Tor the purchase of ceIifi.
Gates OF deposite and bills of the southern and south
western banks, and discounting commercial paper,
payable at the south and west. These funds We're
drawing interest, and were believed perfectly good,
and as the season for the export of cotton had arrv
ed southern funds were naturally expected 10 adj
vance in value. Unfortunately, soon after this pc
Rod, the general dstrust had shaken public conf
dence IN these banks, and the funds held by the
company, which were considered as cash, were
rendered unavailable, except at great discount.
TO the difficulties thus created, may be added
the failure OF individual debtors of the company
punctuay to meet their engagements, and the ne
cessity of taking securities believed at the time to
be ample to cover their Indebtedness. by these
| and other means the cash funds of the company
were absorbed, and extraordinary means re-
CURED to provide for the payment of maturing obi
] cations
On my being selected as vice president of the COM
pany in August 1910, caused an inquiry to be in
stiuied into the affairs and condt on of the nsti-
tuition, and the causes which had operated ere
its losses and embellishments. committee OF the
directors were appointed, and made detailed re-
port, which ] am precluded from inserting in this
| communication from its great length but il may be
inspected by any DESTROYS of a more detailed
explanation, than the limits of this communication
will permit.
The following statement, however, in connection
with the facts have detailed will give genera
view OF the condition Of the company at that time
and the prominent of its losses up TO that pc
rod
The situation of the company on making up its ac
count the LIST day OF October, 1910, was found ia
be as follows
| Casll, SOl,0IV ~
Cash vouchers, ........... $3.50 62 $IIs,35l 81
Bills discounted, Observation-Disclosures. 2SS, i0S S3
Loans secured by stocks and other col
laterals, NEUTRALITY-SUSPICIOUS.. 6l9,42 a.
! Ledger accounts, and due from banks, 1885 3
State bonds, Observation-Disclosures. l,954,0i0 OK
Bank and other stocks, ............. l6t,377 *
Bond and mortgages real estate,. 394S, 069 x
] Bonds secured by lands and other
stocks, Observation-Disclosures. I76,5O0 On
S7,7O6,s23 2: