The New York herald., 1869-08-17
TIE TENNESSEE School FUND.
Arrest Of q Bnnk President ON the Charss Of
EmbexzIing SO2O,OOO.

EmbexzIing 100000.
Some time during the week before last Superin
tendent Kennedy received despatch from the au
thoritie1 OF the State OF Tennessee, representing
that the ex-presdent Of the First National Bank Of
Memphis, which failed In June. 1907, was in this
city, and his arrest on the charge OF embezzling
$720 Of the State school fnd that had been de.
posted in the bank, was requested. The superin
tendent set his ocials at work. and on Tuesday last
detectives Kearns and Clacry were rewarded by
finding Mr.. George X. Rutter In Howard street. He
was astonlshed when Informed Of the nature Of the
charge and at once volunteered to accompany the
officers TO the Central police Office, where he was
locked up and the Tennessee authorities informed Of
Mr.. Rutter expressed his willingness to return
without requtsiti0n, and declared his innocence OF
any criminal act; but he was detained in close con-
him, lest his discharge should be secured on writ
Of habeas CORPUS. In the meantime requislton
oser % to this city escort him to his
arrive in the city i1t night il 1. probable that he
viii leave to-uay for Tennessee IN their custody.
On Sunday Mr.. Rntter's counsel and his wife had
interviews with him, and yesterday rumors were
pus was being prepared; but up to four O'Clock the
police had not been called upon to produce his body
before the court.
authorities, but they are briefly these-in 1865 or
early IA 1861 the State Treasurer, who resided IN
Nashville deposited in the bank over which Mr..
Rutter exercised supervision the school fund,
amounting to about so2o,ooo instead Of deposltina
1t ct the capital Persons familiar with the facts
represent that the moment this fund reached the
vaults Of the bank its officers employed 1t n buying
up Tennessee securtles--whicn under the law, are
legal tender for Indebtedness to the state and
which were gt o large dlscount--for the .pur-
pose of realizing Q large speculation. When
posed to pay Il inthis depreciated paper, which, the
State refused to receive and as consequence the
bank had to succumb to the pressure and faied
The Treasurer It was said. was party to the trans
actions, but as he has since passed from earth IL Is
charitable to say he may have been tho victim OF
others Interpretations. The movements OF Mr..
Etter since ne left Tennessee are not known, nor ~
1t certain that he wiling party to the nisap-
preparation OF the school fund, that created such
comm2ton In the State IN 1867, and for which Gov
crnor BrownOw was, perhaps, unduy cen5Hred
Mr. Rutter represented to the friends IN explana-
tion Of the case that q committee ef the radical
Legislature and the Attorney General Of the state
nine months ago settled the case fully, aud acquitted
him of any criminal intent. He left Tennessee, Inc
AYERS, with clear record, and coming here es-
tablished himself In business; has never feared
full investigation OF his connection with the fund.
he Is OF opinion that this action s taken by the con-
seryatve government with view OF securing him
o. witness In the prosecution OF radical politicians
eupposed 10 have been Implicated Ia the nlsaypro-
priatlol Of the FUNDS