The New York herald. [volume] (New York [N.Y.]) 1840-1920, 1877-05-17
The Ssnats Committee Investigating the Charges
Against Superintendent Ellis.
DIVIDENDS MADE EASY.
The Insolvency Of the Third Avenue Savings Bank Known
for Years Before II Was Closed
CHOKING OFF EVIDENCE.

Tn0 Sennto committee resumed thciI invcstSauon
OF the charges against Bank superintendent Ellis in
reference to the Third Avenue Savings Bank ycster-
day morning at tho ST Nicholas Hotel. Much impor-
tant evidence offered by the prosecution was rejected
under the rulings OF the committee. Enough was how
ever brought forward to show the real rotenness ofhe
bank, and that Bank superintendent Ellis was aware
oil It's condition. The only that Mr. Ellis seemed
10 have for his negligence was that by immediately
closing up tho bank he would have injured other
similar institutions, and would have increased tho
pahcky feeling.
n. A. Stewart witness for tho dcence, was allowed
by courtesy to be called before all the Witnesses for tho
prosecution had been heard, as he would DO unable 10
be present at the Investigation for any length or
time HIS testimony was therefore drst heard. he
haa been President OF the United States Trust Company
for twelve years; had been acquainted with Mr. Ellis
from the time OF the lattcr's appointment tho ONCE
Of Bank Superintendent shortly after the failure
Of Duncan, Sherman Il Co., Ellis called upon witness
and consulted him with regard to tho ACCESSIBILITY OF
closing up the Third Avenue Savings Bank and APP
pointing receiver to take charge OF It's affairs W.T.
advised him 10 proceed cautiously; Ellis thought
that the sudden closing OF the bank would badly Affect
other institutions and hasten panic; Ellis told wit
ness that the bank was insovcnt; the conversation
was only general MIR. Stewart doubt not about
tho closing up OF the bank but whether that time
trous effect on tho public at large; tho report OF
1875 showed the bank to be in a condition than
the previous year, the effect of closing up the bank
would have been dangerous liable to cause n run
upon other savings banks and thereby nurng the
tercsts OF depositors At this point OF the cxanina-
ton Mr. Chapman was summoned 10 the Court House
by subpoena tho examination had to be suspended
for nearly mn hour
WITNESSES FOR PROSECUTION.
After this enforced recess, Mr. Olmstead resumed
the calling OF witnesses for the prosecution.
Mr.. 4. Sellers. who testified Monday was re-
called. He produced the books of the bank From
tho entries OF the ledger IT appeared that $780, had
been added to the OF the bank property arbitrarily
In order to cover up deficiency ihls fictitious
was counted MIR. Reid the bank cxanl-
ncr had not examined these entries. Mr.. Chapman
objected TO tho reception OF tho testimony, it did
not concern Mr.. Ellis. MIR. Reid, he said, on
trial. In March, 1878, 800 $50 % entered tho
books as the value OF the bank property This
Sloo more than had COST and real estate had de-
prec!ated since tho property was bought Mr. Chap
man objected.
Mr.. oimstcad-Here is an entry that The bank exam
liner must have seen when he examined these books.
II was his duty TO inform himself 10 the actual
Of the real estate oil the bank. He VAS bound take
the necessary steps 10 ascertain tho potua vauo OF
the assets OF the bank. IL was min
ntes' examination would have revealed condi
affairs. propose show whit are the items
that make up thut $500 Ooo TO w,ncss)-Pcasc look
~ tho account and state what arc The items that
make up that sum.
Mr. Chapman objected, that would carry them
back to time before Mr. Ellis was appointed Supcnn
tendcnt.
Mr. om-tcad contendcd that the entry having been
made subsequent 10 tho examination by MI Reid and
forming part o hts report To MI Ellis, ne had right
To show hat that entry Nv showing the parts OF
winch II was composed although these parts might
showed by the law Of SIS mat It was the duty Of Tie
Bank superintendent to thoroughly examine every
savings bank and that The cost oil ali tho securities
should DO embodied III the report ihe cost OF tho
property falsely stated at 800 $50 10 Any gen.
ticnun knew that no isurcs would lie OF any value
less IL was SHOWN what they wcre
The committee after so;ne dcliheration ruled 10 adj
MT the footing Of S200,s5 % the OF h. bank
as report, 10 Superialen drnt Ellis bat excluded the
items Cf when II was composed on the ground that
the dates OF those itcms in tho books OF tho bank
was prior to the examination by Mr. Reid.
MYSTERIES rgoFir LOSS.
The profit aud loss account was next taken up Mr..
Chapman objected. Tho committee ruled that no owl
OF April 1873 Mr.. Sellers then testified that TO
cover NJ deficiency the directors had made bond
placed 10 the credit OF PROM aud loss and consa-
cr.a as an asset Mi Chapmau obiectcc Mr. Um-
stead offered to prove that That Sll5,c00 which al
pcarcd on the books Ne an asset, Was iraudnionty
entered 20 cover dclciency; that II Oniy II
lateral, but that nevertheless the directors
and declared dividend on II winch they could not
otherwise have declared and that at present the
directors conlest.ng their bonds in the courts
on the ground that they were only c,lious bones aud
oil real value whatever Mr. Chapman OBJECTED
that the qucstidn AT issue was:-Dd the tank have
$4,000 OF personal bondsg ihcy entered on
the books ~ asset DID the bank have them Inc
committee could not 80 behind that question. The
original bonds should DC Produced
Mr. Coleman, Chairman oil the committce-lhc COM
mittee ruo ana wish 10 be understood saying that
they cannot admit anything except what appears ON
the books AS IN asset.
Mr.. Olmscal-Wel VI that is the ruling OF tho COM
mittec we VIII have To submit TO IT,
VERY oaJEcfIoNABLE WITNESS.
Mr. Benjamin \. Mcdonald the next witness
called. He proved to be most important one Tor tho
prosecution. Conhning himself strictly 10 tho rule
LAID down by the commission not 10 20 back OF tho
time OF Mr.. Elhs appointment bank snpcrinicnd-
ent subsequent TO the appointment OF the receiver
he testified that there was large deficiency which
could have been dscoycred ~ ten Minutes examna-
tion OF the books HIS testimony was as follows
1 am resident OF Wcstchcster county, account
ana expert; have examined the books OF the Third
Avenue savings Bank between March, 1873, aud uc-
t0ber, 1875, with view OF informing my self OF tho
condition Of tho bank propose TO give what found
in narrative form, conhnlng myself strictly To tho
examination OF everything that occurred aztec Mr..
Ellis entered into uice III 1919 down TO tho time Mr.
Carnan was appointed receiver called upon Mr..
Ellis Albany, aud obtained from him tabuatcu state
mcnts OF the condition OF tho Third Avenue savings
Bank from 1870 1873 inclusvc he also furnished mo
with private examination made by hts cxpcr.s IN
the proceeding March; Mr. Ellis sand that he knew
tho condition OF the bank that they were short over
500, 600; sald Mr. Ellis, why ddn't you close the
bank" no said that upon advice from certain par
ties ho deemed u inexpedien,, Us II might create
pinic; Mr. Ellis presented me with an additional
mado by Mr. Carman of tho condition OF tho
bank on tho LIST OF July, 1873; | left Mr.. Es aud
came 10 New YORK, but subsequently sent 10 nn tor
the Official reports anu certified copies OF the bank
amlnaiion upon the reception % these reports |
learned from them that the bank had been hopeiessiy
insolvcnt. (OhJecon.j propose TO Snow tho condi-
ton oil The bank during Mr.. Ebis' ADMINISTRATIVE;
had the trustees OF the bank arrested in October 1870.
(Obcotion) You can't get at the facts OF this thing
you 90 ipto tho arrest of tho trustees and the
examination oil the books that followed; Will sin-
ply state that what learned by examination OF
tho books; learned that during Mr. Ellis
administration from july 1874, to jane, 1870, the
uro uvidends were made out OF fraudulent entries
made from December IL, 1sI2 up 10 and including
Junc 30. 1915 during period oil two ana halt years
these divdeDds were made wholly out Of fraudulent
entries, oil which can give the amounts and dates;
included asset Ia 1879 WIS the trustees bond tor
Sll5. 600, which never was asset.
Mr.. Colcnan--We don't want you TO 10 into that; IL
IS not material II Is admitted IN the report as
asset 'f
WHAT WOULD MAKE A DIFFERENCE
Mr. MacDonald-lt would make great difference
10 YOU, IL you were dcposItor whether u was IN
INSECT or not The report shows II an asset, but pro.
nna 10 show from Tho books thai tho report to tho