New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1876-03-15
DETAILS OF THE FAILURE.

DETAILS OF THE FAILURE.
Like clap of thunder in clear sky came the an
nouncement yesterday morning that the old and
az it was cOnHdered-eOnseryativ Bank of the State
of New-Y0rk, at Exchange-place and Willism-st.,
had failed and closed its doors. For time no ono
would believe the statement, and IL was not until
the positive demonstration of the closed doors had
confirmed it that people could be convinced. In
tense excitement followed the confirmation of tho
story and the street scenes and rumors lent addi-
tonal fuel TO the fame. The facts Of the failure ara
as follows:
For some time past Bank Examiner Meggs has
been watching the condition of the bank. At tho
time of his last investigation the bank had been
somewhat involved but not to such an extent as 20
Justify any apprehensiOns In the regular of
business he examined 1t last week, and observed m
disputable evidence of the fact that the bank was
impaired TO tho amount Of Onehalf OF its capital.
He quietly gave this information to one of the
members of the Clearinghouse Committee ON
Saturday, and conference OF tho COMMITTEES
was held, but action was taken until yes
terday morning, when the Committee met
again and examined George W. Duer, tho
President, and Richard Patrick, the Vice
President of the Bank as to it's condition. Neither
Of these gentlemen could explain away or modify
the Bank Examiners statement, and the Committee.
as they were compelled TO do, took counsel with
the Conference Committee Of the CleariDg house
Association, and formally suspended the Bank Of
the State of New-York from the Clearing House.
this being the extent of their powers. They then
called meeting of the Clearinghouse Association
for the afternoon TO take final and moro decided
action in the matter. In the afternoon the Associa
ton confirmed the action Of the Committee and
finally made permanent the suspension.
I,a Of. ha Col enr A
known. No suspicious had been uttered on the
street. and the bank up 10 the hour of closing boro
an excellent reputation. The inquiry 10 what
caused the failure WAS very earnest and very gen.
orally made. The officers Of the bank would nos
the question: for they caused the doors Of Tho
bank to be closed and then had policeman sts-
toned IN the inside to supplement the strength Of
the iron doors and arrest the progress Of any persons
who might forcibly break through. As the excite
ment subsidized however the facts began to leak out.
aud the old story of cOllusve Encouragement. il NOT
actual fraud, was again repeated. Richard
Patrick, the Vice-President Of the bank, by
some means had obtained almost exclusive
control of the administration Of its affairs. He had
made loans and discounts in a most remarkable
manner and, according to the statements of those
interested IN the investigation, had conducted tho
bank if it were his own. Some of his loans wsro
astounding for business man, and could be ae-
counted for on no other theory than that he was
interested in the loans and discounts thus made.
The securities were absurdly insufficient to meet the
requirements of honest banking. From the develop
ments made it appears that the bank run in the
interest of few produce spectators. glance al
its loans and overdrafts shows that enormous loans
were made to few favored persons Viee-President
Patrick himself had loans aggregating 1880, 600.
check of his for $4,000 was found in the
bank papers and credited as cash. These minor
matters, however, compared with other loans Ths
firm of Smith & Girvan, hop and malt dealers or
No. rs Broad-st received the large sum Of 1919 O00,
$3.50, 900 of which on stock of the United
States and New-York Attrition Flour Companies.
which has no market value, and $425, 900 in tho
share of q loan OF overdraft secured by hops and
malt said to he worth less than One-half tho amount
advanced. In addition il il reported that overdrafs
were allowed to produce commission house
dealing largely IN Kentucky, aggregating
$2J0,0O0 Besides these loans the bank 10
understood 10 have suffered TO the extent Of
about 800, 900 by the failure of Duncan, Sherman
& Co.. $4,000 worth of protested paper bearing the
signature Of that firm being among the assets.
There are also indications of other losses aggrcgat-
lug $4,000, protested paper of various persons To
that amount having been discovered. The losses 10
will be SEEM have been great and is believed that
the stockholders will not receive over 90 per cent
Some persons think that they will not receive 4Oper
cent while others put the amount as low as 20 per
cent. The notes issued by the bank, being secured
by bonds deposited at Washington will Of course DO
promptly paid, and the depositors will probably re-
ceve their deposits in FULL but this will require time
and patience.
The stockholders are shocked and indignant at the
revelations and inquiries 10 the responsibility Of
the directors for the extraordinary loans aud
drafts are being made. stockholders declare that
the directors either allowed the officers ~ control
the bank completely, OF they did not. II they did
allow the officers to do as they pleased, then the
stockholders claim that the directors were culpabls
OIL account of their remissness and If they did not
they must have participated in the making Of the
loans and are responsible for them. II the loans
were made clandestiney then IL the duty Of che
directors to have discovered them aud caused the
money to BIO returned 10 the institution.
SCENES AT THE BANK
The Bank Of the State Of New-York 10 situated 40
the northwest corner Of Exchange Place aud Will
harr-st m a PLAN. substantial marble building.
The bank proper occupies the 6t story Of the build
ing and is fitted up in plain business-liks manner.
Yesterday morning the elleTs aud clerks csale 10