New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1873-10-29

euse, which Mr.. seeey has forgotten-hs
probably said that IT was at tho bank being written
III. and the bookkeeper took the amount from the
Iedg,r where Phelps had made the false entry. That
enabIe,' the defaulter to escape detection month
longer. AID to steal additional hundred thou
sand.
In order 10 End out who, il anybody beside P1ielp,
himself is TO blame for this loss Of the State spent
nearly the whole day yesterday in the offices Of ths
Treasurer and Controller and found every there
ready TO give me all the information he possessed
And first with regard TO the Treasures ofice: Mr.
Raines saws that he had known Phelps by reputa-
ton a long time before he appointed bin, and that
he had a host of testimonials In his favor from
those by whom ho had been employed, or Uho
had had business relations with him. Tho
charges that bad been made against
him while in the Custom-house were never brought
to the Treasurers attention he says until recently
except once when they were mentioned by the ed
ior of one Of the most prominent Republican papers
in the State who at the same time pronounced them
of his own knowledge false. Mr. Raines knew that
Phelps had boen tried for something while in the
Custom-house and that he had been acquitted and
restored to duty by Mr. Cornell, though afterwan1
removed for political reasons. No one with whom
conversed either in the TreasureTs Office or that oil
Of the Controller, admitted that he had ever
seen anything suspicious in Phelpss conduct
Mr. Raines asserts that he lived humby and ap-
parently within his means. He owed some small
debts which he was paying in small sums out OF his
salary. One of these was a note for 500 held by
gentleman in Rochester After tho defalcaiOn tins
was found in his room torn into several pieces, and
| n pencil Endorsement on its back In Phcipss own
handwriting, can only be explained on the suppo-
sitiOn that the creditor had demanded payment
| which Phelps protests in the Endorsement 1t was
! entirely beyond bis power 10 make; at the same
| time he was stealing hundreds of thousands OF
dollars.
Mr.. Raines since he became Treasurer has been
nc his Office as much his predecessors IL s the
custom Of the office for the Deputy-lreasurer to
attend to the details Of business while the Treas
urer himself signs checks, attends the meetings oil
the several commissions of which he Is ex-ohicio
member and remains at tho Office only when his
deputy is absent. 1t has been Mr.. Rainess intention
always TO be at the Treasurers Office Whenever the
| deputy Mr.. Paul. has been away, and 1t incident
! ally came out during the examination yesterday
that ON learning of Mr. Paus absence on one occa-
| SION no rose from sick bed at Amena ana came
Immediately to Albany to attend to the business OF
the Office Mr.. Pauls health has not been good dur
ing the whole Summer, and no hes not
been able TO givo the attention to his duties
which should be given by man holding his respon-
s;ble position. This may have given Phelps
li.tle more confidence in laying his plans for the
. robbery of the State, but 1t by no means foilows
that had both Mr. Ranes and Sir. Paul been all OF
| the time IN the Office the defalcation would have
been sooner discovered. 1t 10 impossible for them
to 90 through all the books of their clerks and Yey
every entry as it is for bank president OF cashier
10 exercise similar supervision over all OF the DOCKS
Of a bank. The only way in which the deficiency
could be discovered in the TreasureTs Office was by
some one noticing that the amount deposit in the
| n md Earrnera, Rank less than ~ aT
peared TO be by Phelps's books and the probability
Of discovery IN this way was very small, as, when
Mr. Paines desired TO equalize the deposits IN the
several banks he was likely to consult only one OF
the two sources of information within ms reach'
neither of which, by itself, would tell inc
tale. IT, when Mr. Raines desired this information
be did NOT find the bank pass book in its customary
place in the vault he would naturally conclude that
it was mt the bank and take the amount from Phepss
book 1t was by noticing that the bank state
ment Of its balance did not agree with Pheipss
account that Mr.. Ranes discovered the defaicauoh'
have not found evidence that Mr.. Raines failed to
comply with any provision of the law, which have
carefully examined, and parts of which l bavo
ouotod earlier in this letter. He kept the bank
books required by law and it is not limited that he
ever knew that those books were not exhibited to
the Controller whenever they were demanded.
When he discovered the defalcation be at once took
fine most vigorous measures to the thief and
today Phelps was fully committed on Mr.. Rainess
testimony.
How far is the Controllers Office responsible
The law says that he shall procure from the books
of the banks in which the Treasurer shall make his
deposits monthly statements Of the moneys which
shall be received and paid out Of the same on ac-
count of the Treasurer" This cannot find that
either Mr. Hopkins Or Mr. Galian, his deputy, has
been in the habit Of doing. Two years ago, as l
have already said. a duplicate Of the Treasurers
pass-book at the. Commercial National Bank was
kept in the Controllers office, but that has been
discontinued many months without the knowl-
edge Of the Controller or his deputy, 10
is asserted, and Mr.. Galian told me yester-
day that it had not been the custom TO
require the other banks to furnish duplicate pass
books or to make monthly statements except the
Manhattan Bank of New-York The only books OF
the bank that have been regularly examined by any
Que in the Controllers Office are the TreasureTs
pass books, except, occasionally when for some par
ticular purpose statement of balances obtained
from the banks. The examination of the IreasureTs
pass books does not to to fulfill the require
ment of the law have quoted above, since an in
specion Of them is provided for in another section.
Section 10 Of the act already quoted requires tho
Controller, ION the first tuesday of every month.
or oftener if he deems it necessary 10 carefully
examine the Treasurer's bank-books This neither
Mr. Hopkins nor his deputy has done as far al
can learn. Mr.. Seeley the general bookkeeper, o
man of undoubted integrity and who has long held
! his present position under many administrations.
was obliged to obtain the bank balances the first
of every month in order to balance his own books.