New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1877-12-13
TRUST FUNDS MISMANAGED.
BAD SAVINGS BANK INVESTMENTS.

Great excitement was created in Newark yester-
day by the condition OF the Newark Savings Insti-
tuition. Alarmed by a threatened run, the officers
obtained order fOTbdding the payment % deposit
tors Of more .than Is per cent Of the deposits,
but allowing an interest dividend, January l. Of
2 per cent This action precipitated run. Dis
trust had been caused by bad Investment Of about
100000. The deposits amount 20 $40 100000;
the assets, with the deprecated securities about
| $12,OO0,0O0 In this city, the bond OF 100000.
given by the Third Avenue Savings Bank trustees,
was decided to be valid yesterday. SUIT was begun
against trustee Of the Central Park Saving Bank.
NEWARK's GREAT BANK N TROUBLE.
RUN BY ALARMED DEPosToRs-AN ORDER OBJ
TANNED LIMITING PAYMENTS TO Is PER CENT,
AND ALLOWING AN INTEREST DIyIDEND-BAD
INVESTMENTS CAUSE THE DIsTRUsr.
The Newark Savings Institution, the oldest
and largest savings bank that city, yesterday sought
the aid OF the Chancellor Of New-Jerscy. and is
now subject TO his orders. According 20 the last
annual report, the bank had a surplus Of about
S206OOO, or per cent OF the deposits, which
were close to Sl3OO0,OOO This small showing,
IN connection with the report OF some bad invest
ment produced ds,rust among the depostors many Of
whom quietly Withdrew their funds until the managers,
becoming alarmed, applied to Chancellor Runy0n, yes
terday morning that injustice might be prevented and
that the assets might be equaoy distributed among tho
! depositors.
soon after o'clock In tie afternoon the news OF this
action became known throu ;hout the city ald
| Immediately be gun on the bank. AT o'clock large
but not very excited crowd assembled and demanded
their deposits and Al o'clock crowd IN nbered fully
Ave huuGtcd circular was distributed early in
the afternoon stating ina, Wow OF the great Geprccia
ton OF all securities, the officers lad become
satisfied that It was unjust 10 continue TO
ceIye deposits and MAKE payments demand,
/ in the usual manner. and while they hoped mat tho
.fa wIH r.f. rr.HH.r Hr.fr.
injustice they had applied 10 the Chancellor who had
mule order restraining tho payment of u
per cent 10 any deposor besides the January dividend
OF per cent For the reasons OF their scuon they
fegrcd the dcp0sor 20 the ClauceJ-s order Deposits
hereafter would received special deposits. invested
under tie orders OK the Chancellor and Doe
binary drafts.
The distribution Of the circular did not say the ex-
element, and the anxious dcpo,iJors drew tie j. per
cent allowed by ,Le order, and forfeited Oh. per cent
dividend 10 vh. they would have been cut-ed 1y wait
ing until after january !. Several p0c-m maintained
order and C-ecy we've aerC % prevent the operations
of picEp0ckets The bank continued 90 pay dep0st0rs
| tie Is per cent. uatl about I:IJ p. H. when tho
doors closed but the crowd fingered ult after 10
O'Clock, when 10 gradually grew less. There were few
. manifestations VI a-sc., and general good order
/ was maintained. Cae excited man sad lat BIO
hal $1,000 in tue bank and that &c would
/ nave lis money OF take Dan DJdI5 LL-.7 Ho
tie crowd apViG-cd As remark, lie very 4ucAy diaal-
| pelred.
Tho Dime Savings Bank, on which an usucces ,ul run
made about gears aso at BID u., declined %
pay any money. and Claimed tie privilege " cniocc-
ius tue rule requiring taree months notice
THE PETITION To THE CHANCELLOR.
The petition % the Chancellor sets formation
OF ,Ae bank in February 1917 and the clauses Of its
charter fixing it powers and purposes. Up 20 1850, It
continues, the BANGS president and managers were for
hidden, either directly or Indirectly, 10 receive any
emOmeut. II continued is business Tor twenty-five
years in uninterrupted prosperity becoming the medium
ior investment uoJ only % tAe small savings %; the peo
pie, bat of large amounts held by capitalists and
ttcl AID thus tne deposits grew uutl they exceeded
Sl},JO0UOO, and the dep0si,Jis numbered 25OO0. IL
the duty o, the officers keep TINS invested 70
produce irsc OF interest consistent with
safety IL dong they KEEP. about ouctaild IN bonds
and mort cages and the res. mainly in Government aud
municipal bonds, readily convertible INTO cash, and
before 1873 had much In Government bonds and cash
thar they could hardly the interest expected by de-
positors. AT tina, time the price Of Government bonds
nigh. and r,fun4as lower interest tAreat-
eued while luer taxes were heavy exceeding Il ono
/ year 100000.
Under these circumstance the petition states the OH
invested in railroad bonds loans secured by such
bonds, believed them 20 d. thoroughly SAFE. between
| TWO and three million dollars In 1873 came the panic
which caused general depreciation OF such securities and
deprecated the present value Of the assets u the
banE, that question Of whether any part OF
plUs remain must depend upon the ultimate value
OF ITS railroad aud its ability to realize in full
large amount Of mortgages held by IT, In 1873 tho
officers reduced the rate OF interest ~ depOstOrs
TO per cent. and in 1876 TO per cent.
There have been already large Withdrawals OF
deposits reducing them about SIO809COO while the
assets, including the deprecated securities about
sl2OOOOOO, besides some hundreds OF thousands Of
dollars OF unpaid interest. The Officers anticipate still
heavier withdrawal after January which may 20 to
ruiuous extcut unless they ucrp0se tine ninety days
notice, which Will work even greater injury. They hold
S2O00OOO in Cove rnmeut securities and other securities
Immediately available ye. to allow run would cause
an inequality the distribution, falling heavily
those least able bear For these they ask
the Chancellor 10 tx the dividend to DC paid January
90 restrain the payment 10 any depOsOr Of more than
Is per cent 20 restrain bank dsposns It's
assets beyond that amount; 10 provide or special de-
posts and special investments FOR the future; 70 order
the shall take control and institute
nat!on IN the affairs tue institution.
The petition Is signed by A. q. Keasbey sons as
solicitors, aud Cogaudt Parker, as counsel fos The
petitioners
The affidavit OF Danic Dold, president, aud William D.
Carter Of the institution, appended, setting
forth that the petition certificate OF the
gers. signed By Daniel Dodd, William Person, Ira II.
Harrison, Daniel Price Francis Mdckiu, A. :. Huboe,
Henry O.. Darcy, william T. Mercer. John Kennedy and
Zelas :. Crane also attached concurrng IN the petit
tion. and requesting lie immediate presentation the
Chancellor
CHANCELLOR RUEYONs ORDER.
Chancellor Runyon in his OPINION recognizes the great
depreciation OF sccurie4 considered stable IN the
market, aud rcccs the statements Of the petition
the and Liabilities Of the bank and the danger
I IL