The New York herald., 1876-03-15
BAD BANKING.
The Bank of the State of New York
Forced to Suspend.
CENSURABLE LOOSE MANAGEMENT
What D5positOrs and Stock
holders May Expect.
EXCITEMENT AMONG BUSINESS MEN

The Bank the State OF New York closed its doors
about noon yesterday. When the fact was announced
on the street 1t created good deal Of surprise and
cement among bankers brokers and business
generally II event wholly unexpected, except
by the officials of the Clearing House and the feelings
OF the people consequent upon its announcement mani
tested themselves in the nervous movements of the
crowds in Wall and Broad streets and in the vicinity
OF the bank the corner OF William street and Ex-
change place When the news first circulated the
suspension attributed to injudcious loans by the
bank and to the fact that by bad management, over
drafts and advances partially worthless secu-
rites amounting to about 81 600 900 had been per-
mtted. The loss thus sustained, ii was said, had so
impaired its capital that it ruled out at about
eleven O'Clock by the Clearing House, and at once
orced to suspend A hasty inspection OF the state
ments then obtanabe by fragments here and there led
to the belief that the depostors aicr time would be
paid in full and that the stockholders would receive
possibly seventy per cent OF their investments Tho
deposits on hand at the time OF suspension, reaching
about two millions OF dollars to remain tied up
until tho receiver TO be appointed by the Comptroller
OF the Currency, shall have adjusted the banks af-
fairs Tho capital which all paid up, amounted to
81 600 000
The Bank OF the State of New York organized in
May 1885, its first President being Cornelius W. Law
renee, time Collector of the Port Since then
Mr.. Reuben Withers has been its chief officer and at
the OF suspension its President Mr. George
W. Duer Mr.. Duer has, however, been in III health
for nearly year prior to the suspension, and during
that time the banks affairs managed by
the Vice President, Mr.. Richard Patrick. Upon
the shoulders of this gentleman, therefore,
for the msmanagement If it shall not prove
to have merted harsher name resulting in the forced
failure of the bank, falls most heavily The inquiries
OF HERALD reporters yesterday resulted the dscov
cry of facts damaging In the extreme the reputation
OF the banks managers, especially IN view of its
uNMERIrED REPUTATION FOR CONSERVATIVE DEALING.
That the actual condition of the bank my stery
TO ITS directors is fully believed by many of
the depositors One OF the latter in conversation yes
terday said that the directors in the habit OF de-
claring semi-annua dividend OF per cent cacu-
lated the profits Of each preceding six months The
stock OF the bank sold Monday for l06, aud the
deposor before mentioned said that he understood
the directors had recently possessed himself by pur
chase of a considerable of the stock about
this figure
After sitting tho many floating statements about the
affairs OF the suspended bank the following NORMA
substantially obtained Mr. Patrick, the Vice
President had overdrawn his account with the
bank the OF $3.50 600 This said to be
secured, however by real estate but of the correct
OF this statement definite Information was OBJ
tanable the street yesterday. Counted the banks
cash there also check of his for $50 00O The
stock OF two companies having ascertan.be value
in stock circles is also pledged for
a LOAN OF FOUR HUNDRED AND FIFTY THOUSAND
DOLLARS
These corporations are the United States Attrtion
Company (Limtedl and the New York City Mills
Attrition Company. The officers OF both companies,
hovever eav that neither conpany cot n cont by
way Of loan from the bank from its Vice
President Mr.. Patrick, who is himself a
holder Of their stocks The loans must,
therefore, have been made to individuals
who had become possessed of the stock Other bor-
rowers, the amount OF S42j 000 partly secured 1t
is said by merchandise, Messrs. Smith Girvan,
dealers in hops and malt at No 20 Broad street
Another peculiar circumstance in this connection is
the fact that Mr. Smith is the President OF of the
companies mentioned and Mr.. Girvan OF tho other.
The OF stock held by each it asserted at
the companies Offices, OF Broadway and Fulton
street, but ten shares. The amount OF stock at
The bank collateral for the $3.50 loan stated
at 5000, 900. What value remains 10 be de-
termlned The City Attriton Company rates its stock
above par, and the United States Attrition Com
pany's stock Is declared to be worth S5. But promi
bank president said to the writer yesterday that
he considered this stock OF very little value indeed,
and with his opinion other banking
agree In addition to these peculiar invest
ments. the bank also contrived TO get possession
OF protested paper representing S24o 0o0 or thus
$4,000 acceptanees OF Aessrs Duncan, Sherman
Co This is so far considered very bad showing Tor
"a staid conservative bank" But this not all Ad-
large amount 1t has been discovered, we're
made only warehouse receipts for grain, which
are always considered reliable securities even
on bills OF adIng for gram ranstL Some OF these
bills Of lading It Is sad have been held by the bank
for years So 1t would that the grain
somehow or other reached Its destination. Per-
haps the mystery surrounding these transactions
be cleared away hereafter At present looks rather
queer II is further reported that drafts TO the
extent OF about $3.50 900 made on the bank by
Southwestern produce comm ssion house, whose bust
largely Kentucky and that these secured
only by assignment OF book accounts.
The condition OF the bank having become in some
manner suspected, Bank Inspector Meigs commenced
IN examination of 1t week and found that 1t would
be unsafe to permit IL to continue The Clearing House
Committee com mmenced ITS Investigations only last
Saturday. Yesterday morning the committee concluded
to rule out the bank The Bank Inspector yesterday
elegraphed to the Comptroller OF the Currency the
suit OF his and asked for the appointment OF
receiver TOR the bank How long it will TO adjust
the Affairs OF the institution cannot be stated.
presidents at the Clearing House, called Tor the pur.
pose Of passing upon the action Of the committee that
excluded the Bank OF the state OF New York Inspcc-
Megs present at the meeting but he would not
make any statement to the representatives, OF the
press concerning his examination. The following Is
the latest statement OF the suspended bank -
LIABILITIES RESOURCES.
Capital. .... 81 000,0OO Loans and dis S3 GO 600
Net prOits..... 81, 700 Stocks, BIDS, SC a25 COO
Circulation 27I.2OO Real estate. 2ilO0O
Due banks. s9,lO0 Due from banks lSS 800
Due depostors. 1,G45, 600 Cash discount. 5000
Unpaid diyi- Specc.......... 2.i 200
dcnds........ 1890 Legal tenders. 500 20
Total ...... s. 2514O0 Total ....... s., 30, 400
gFFKCr Oh THE FAILURE
SO much for the failure and It's word
about the effect OF it. This, would will not be
NInI