The sun. [volume] (New York [N.Y.]) 1833-1916, 1878-12-24


Thcre is a law Of tho United States which
prohibits any national bank from loaning TO
any one person IN amount more than one
tsnth ot it, capital. Ends's liability 10 his bank
reached and exceeded this limit ia April. 1867.
The liabilities OF the other directors were rap
idly approa hing the limit yet the Ring had
only begun lis career Of borrowing. All OF the
notes caiaiogued above were entered upon the
discount book Of the institution. and were sup
posed 10 come under the supervision OF the
COmuiroller Of the Currency at Washington.
What did the directors do under these circum-
stauces-stop borrowings
That plan did not meet their views. They
solved the problem in very simple manner.
They marked these notes paid" ON the books
Of the bank, withdrew them from the place Of
deposit where banks generally keep such paper.
enclosed them n q neat and strong little IN
NcioDc IaDeleu BANK OF commerce Acct NO.
3. and put away tho package In secure cor
ner Of the safe.
A. lar as tho books OF the Bank OF Missouri
showed the debts of Capt. Eads and his friends
bad been paid. and they were ut liberty to begin
borrowing nlniu,
uAl ana unsecured notes OF the directors 70 the
payment Of the banks debt 10 the Bank Of Com
nerce. they considered that they hnd squared
on their individual indebtedness 10 their own
bank and also paid their own banks ndebted-
ness 70 the creditor bank IN New York. We
for our liabilities have been transferred TO the
Bank Of Commerce" This they styled new
system Of bookkeeping"
ciers failed 10 notify the Bank OF Commerce
that 1t had been paid" That institution was
fortune. The notes remained in the lttlo en-
velope until they were discovered there by the
sharp eyes engaged in investigating the banks
fest.
The directors did report however, to the
Comptroller OF the Currency that the Bank OF
Coininerce's loan had been paid. For three
successive quarters they had reported 10 Wash
lngton an indebtedness OF 81 600. 900 TO- the
Banh OF Commerce. After the eXpedlent OF the
little envelope they reported TO the Comptroller
OF the Currency that they had reduced the
Then for ii. hi years Eads and his fellow d.
rectors kept on voting loans on easy terms TO
themselves. their families. and their friends.
II II was at any time inconvenient to meet one
Of these obligations. or impossible to renew II.
It had only 10 bo marked paid entered in the
OF Commerce acct, No. g."
Al the end Of eight years OF this sort OF inan-
ciering. the directors and their families were in
debt 10 their bank 70 tho total amount OF
81 $50 coo; The money thus raised went into the
and into the other Missouri enterprises" in
which Eads was prominently Interested.
Eads was questioned about the ultimate dis
position Of these funds when he was witness
in the Bank Of Commerce's suit. His replies
were vague.
o-weIe the loans which were made by the National
enterprises you have mentioned which loans had
connseu9n with these enIerprses large or 'mall'
Q~over what extent OF time did these loans
time when they closed the bAnk.
As late rs May 2S. 1877, a note OF Eads's for
S95 900 was marked paid. but II was paid for by
another note given by r. S. Elliott still held by
the banks receiver and secured by the assign
ment OF the Goyernments future payments 10
EAds on account OF the jettes.
The directors also did small business in
Missouri bonds. The bank which they had
captured was the owner OF not less than $40
Missouri! bonds Of ~ 900 each. The directors
needed bonds badly TO replace those which they
inar} operations. They, rs directors, sold these
bonds TO themselves as individuals and on a
rising market Eads took about $500. 900 worth
and applied them to his own PURPOSES He
paid' Tor the bonds by checks OF John j. Roe.
Charles X. Dickson. and Amos Getting. These
checks were drawn against credit secured by
secured by the bonds themsevesl The follow
ing IL an extract from the deposition OF James
II. Britton. President OF the bank:
Q.-what security was given the notes that were
discounted 70 get the credit % pay Tor the bondsf
BnIton-hy present recollection Of the uausaeuon 10