The sun. [volume] (New York [N.Y.]) 1833-1916, 1878-12-02
HOW A BANK WAS RUINED.
a STARTLING DISCOTERY OF WHERE
DEPOSITORS' MONEY WENT
The story OF President nalliard's Financial
Management Told by Secretary DoneIan-
Missing, $4,000 Where it Disappeared.

NhhuuEtment toiu ny hecretnrN DOnelnn-
Missing, $4,000 Where II Disappeared.
When the Mechanics and Laborers' Saw
ings Bank. at 3s3 Grove street. Jersey City was
opened on tho sth Of May. 1869. Charles @. Sis
son was President. but in the year or year and
q half that he held the Office he did not once en-
ter the bank. Tho vice-Prcsdcnt and acting
President from the first was John Hallard.
who was at the same time President Of the State
Insurance Company. Before this Mr.. Halliard
had been travelling salesman for n
largo dealer In -four. The Secretary
was David Hallanan. who was also Sec
rotary OF the same insurance company.
Tho board Of directors desire to settle up the
affairs OF the bank and they impute the re-
sponsibilty for its suspension to Mr. Hallard.
Mr.. IIalDard says that he is willing to take all
the blame until the settlement shall be made
satisfactorily to the depositors. The depositors
are uncertain how they ought to act in the face
OF proposition Of the Board Of Directors that
they tho directorsl will personally contribute
100000 to the assets and settle tho affairs OF the
bank without the expense Of q receiver. and
with an annual outlay for salaries, &C., not to
exceed $4,000 provided they are allowed to
continue business. Many OF the depositors
have signed paper accepting this proposition.
The secretary. Mr.. j. w. Donelan. gives the
following account Of events which gradually
led to the suspension Of the banks business ON
the 1st Of November when notice was given
that no money would be paid out without
ninety days notice:
In December. 1874. Mr.. Haanan died. and
was made secretary pro tom. until May. 1875,
at which tImo l was duly elected secretary.
For about year before his death | had been
keeping the books. The first thing that aston
ishcd me WAS II difference between tho balance
Of the cash account in the general ledger md
the act al cash on hand Of about $4,000 |
asked llaiard about it. and he told me 1t must
be- nm error in the books. Then asked Halla-
nan. lie told me that the explanation probably
lay in the largo number OF checks on which
lia'hard had obtained money. for which
,mnneyl he had not accounted.
When / was about To be- made sccretarv-two
weeks before was elected-I called on rresi-
dent Hallinrd nt his house and begged of him
to let the directors know the true condition uf
affairs. Iullard seemed TO be greatly troubled.
lie refused To do what asked him To- giving NJ
% reason that many Of tho directors were not
business men, and would not undersiQnd the
situation. even though he should explain u.
rho upShot Of such u course he said. would
be To- hurst the bank.
" A week before tho ncNt regular meeting in
Noyember. 1901 continued Mr. ponelan, |
laid tho rNact condition " the bank before Vice.
President Mckay and Messrs. Monck and Mc-
| quest Of Mr. Mckay. President Hallnrd np-
| loarcd before them at meeting in the bank
| IN" n"Nt day at which a full statement ol the
| banks AFFAIRS WIS formally made; Mr. Haliiard
| snid IN his d"ionce that ho hnd been on UNI
| tered Tor some tlmo ny large lois or real estate
| belonging TO the Bishop OF the diocese. Tine
| land ndJoiued the Catholic cemetery, and he
! gave us 90 nndcrstnnd that ho was holding II 20
! 1blige Bishop toTigan Al ne wanted. ne
| said WIS a lltilo timc, and ho would make
| everything all right. Haliard If a man that
| everybody is inclined 10 trust. He has won
dcriul way Of inspiring faith in himself We
| helieyed him and thought bcst To- give him tho
| time he asked. He also further Inspired conn-
| d"nro by bringing to the meeting u bond in the
| sum of {iO0nO signed by himseli and executed
| hcforo Mr.. Mortendyke. a wcll-known lawyer,
/ b lITf 4HruTtN tU the lnUk until he puWIl turn
| himself. Tho ntiuirs remained In this condl-
| ton iof about "a year. that h until tho election
| n. 70 new executive committee. Nov. ~.
| 80 This. committee consisted of Mr-srs
SNeony. Shcrran. ana Dumar. At inis
meeting rendered my resignation Hs secretary
nnd director. On account of the condition The
| bank Was IN. and ou account OF lnarl', secret
| fact that hud let the affairs oi the bank become
| Known to some of the directors Nevertheless
| he urged me g. stay. saving that II ] left the
hank il would do "a great injury 20 it, liy advire
| II friends | consented e. remain. My ncNt
! % tho new rNrcutiv" committee. An informal
m''ung w@s TSl"d w 9G II ,b. 'h9 onG.Sl 6gns
wcre ir -ent and also Mcssrs. Mon and
! McD1uull and Mr.. Garrick. counsel for the
| bank lnow a District Court Judgol Tn" staie-
| mcnt made io them asionshed all who were
! not prey nu-ly aware ot IL nature. a regular
m""iing was called To be held IN the bank, al
which Hallmrd was present He repeated his
! time was granted TO him. because wo yet had
| faith in him.
Things remained in that condition until Mo-
| vemhsr. 1877 Then DR.. OCalnChan. who II now
! President vas mude Chairman of tho EXccu-
| tive Committee. Soon uiter the regular meeting
| OF directors Joint meeting OF tho Executive
and Finance Committees was held. at which
! HulltHrl told the mpmhers that thoy needn't ho
| alarmed. be 'auso If the bank got ia trouble lac
would guarantee 10 pay every dcposiior dollar
| for dollar. but that the directors must not asK
| him where he got tho money. At this
meeting ! mGdo an important statement
cone co S''' to Heht. Halliard haa lent without
| the knowledge ~ the directors 20 John Van
Worst, leading director Of the state l4surance
Co.. letwcen s2SuoO and 10000 On his IVAN
| NOrst'-l notes. TINS WIS done by Hnllidrd and
| llallunan outside of tho bank, Mr.. Van Worst
| came from tho bank About the time Of the
panic in 1878 Van Worst paid t) llalliard land
| THIS money was duly received by the bank all
| hut about sl0OOu Of the loan. This debt Of
! $4,000 due from Van Worst, with interest which
! Increases II to over ;20OOO. is dead asset OF
| the bank. Besides this on his own admission,
| lialluud md T. ken $4,000 from tho bank which
he hnd caused 10 be charged ON the books rs
| United States Government bonds. or tins
| amount. tlU.O1O. with IA considcrpblo amount of
! interest on the whole 10000, he settled Tor
| aitcrwHrd with the hnnk hy giving mortgage
of tloooO On inrm. rms mortgage remains IA
good nssoi to thr bank. ,....,.,..
| us with his story OF the United Stntoe bonds was
| TINT hc had On the ground that our vault WAS
not sufficiently secure, procured the passage Of
! resolution authorizing lho kceping OF these
| valuable pnprrs in the vaults Of other places Of
| deposit Whom ho was asked whcre the bonds
| were, he said they were in these other vaults.
Again IN 1871. Haiard had got money from
the bnnk on mortgages represented 20 be- made
| by s. NJ. Rice, rector Of Grace Church OF Jersey
City. by j. n. Van ArsduiG and by John G.
| SOrei. The amount obtained on the three mort
| Cages was about $500 Those mortgages.
| with seyon years accumulated interest, remain
| In tho bank to-day ~ worthless nssots. when
| notices were sent to those gentlemen 10 pay
| thoir interest thoy called at tho bank 10 know
| what the notices mennt Rico explained that
his mortgage as he supposed had been duly
| cancelled OF record and that II must have boen
| wrongfuy used. When no askc for oXplana-
ton from HnliHrd. llalllard told him, he says,
that it was all right. that DoneAn must have
made mistake in sending the notice.
Again Il mortgage for $4,000 purporting 70
be- made by Mr. Mccarthy was used by lIalliHTd
with which 10 obtain money from the bank.
This mortgage. 80 far ~ know. has never been
seen in the bank. Halliard says It was stolen
from his desk i the Office OF lhe 1, state M In In
count of sickness. in the summer OF 1879. He
continued 70 pay interest on II. the Inst pay
ment having been made last May
In my statement made ut tho iont meeting
Of tho EXoclVo and the Finance oOmmitoes.
November 1877. it was shown that. outside of
certain mortgages and notes amounting
To about $4,000 and supposed to bo all
right IlHlliard owed the bank between
| 80 lf A. far ~