The New York herald. [volume] (New York [N.Y.]) 1840-1920, 1878-01-03
) NATIONAL TRUST COMPANY.
Examiner Best's Report to the
Banking Department.
A DAMAGING EXPOSE
Fictitious Statements and Worth
less Securities Discovered.
GROSS MlSMANAGEMENT CHARGED.

NJ. william j. Best, receiver OF tho Natona! Trust
Company, mado the following report yesterday as
special examiner to Henry l.. Lamb, acting supern-
teudent OF the Banking Department to the result
OF his investigation OF tho affairs OF that institution;
NATIONAL TRUST CoMPANY,)
Nos. pol 263 BROADWAY. 7
NEW YORK, Dec. 81, 1871
SIR-I lncIose herewith balance she 81 OF The Ma
lonsl Trust Company OF this CITY, dated December =.
1877, by which the capital OF ihr company Is SNOW
10 be impaired TO the extent Of $73i 81 81 From the
date named the l4th inst the United states bonus
which appear In the balance sheet nave been sold
with the exception OF 500 600 ned by the Banking
Department sectiUn.23 of the company 3 char-
Ter benefit OF the deposors or creditors oil
sald corporation" These securities ana portion oil
The ra lroad bonds ana Stock were SOFA 10 meet tne
demands OF depositors, ard realized approximately
The values at which they are taken ~ my Stale men
The remainder, excepting the 100000 OF United
States bonds cannot be disposed OF so readily NOR SO
,dvautag eously Most OF them are not quoted here,
aud are dealt IN only by a few firms by Judicious
management however they be placed at the
prices AT which | have rated them
FICTITIOUS STATEMENTS
In regard to the business methods pursued by This
company II paias exceedingly 10 write as the
facts In my possession demand. The published state
ments oil It's condition Tor years past were hcltious
ana so cunningly devised as to deceive not only the
rred ors and stockholders, but also believe, ma
iorily OF the Board OF Trustees. number OF these
Gentlemen became interested IN the company during
md to the year 1878 Ut the solicitation OF
The president with whom they were on terms OF Trend
N regard ASIDE the implicit confidence IN HIM,
hey havc made for themselves honest and olameless
records The same is true of many Of the trustees OF
longer standing. The only criticism 10 which they
are open connection with the present aepioraDie
condtiol of the company is that they permitted tho
president to ipulate ITS affairs according TO his
own notions These gentlemen were greatly shocked
when lhty became cosnzant of the actual condition
OF Inc com pany since which time they nave been I'M
tagging their efforts 10 protect the Interests OF All
concerned
The capital OF the company is placed by its charter
at 81 QUO 600 From returns made 10 the Brnkng De-
parmeut II that that amount OF stock bad been
subscribed and paid IN TINS, however, PRESIDENT
Mangan practised the grosscst dupcity IN AIS G.
latious TO The department, me stockholders ana
the public Al no Tune since 1873 has the capital
amounted to Sl,0O0QoO Beginning with the panic OF
that year ana continuing down 70 october - 1917,
Ar. Mangam has Systematically used the lands Of The
company to purchase its own stock. Bearing upon
this point Mr.. Mangam testlies:-
O. The capital stock the company has been placed in
u charter AT win the 9fivegs OF Increasing
O Is any portion of that stock now owned by the
p "4 A. There some stock that the company liable
o. How muchg A. some $4,000.
q. Iu what has the company become liable tor tho
named of It's own socHs A. Sometimes in panies
deprecations it mas been deemed advisable by some.
nor AZ ., our sr @ be W. hav Whenever could do So
In instances where IL has gone below our marx we
@. Does the company own that stock at the present
A. should say that 1t did In other words, the
has been placed IN loan by consent OF one OF the
In that shape with the understanding of course on the
part OF our hxeeutivc Committee that it was to be pro-
O. Was that stock bought mt different A. Yes sir
was mace y the company OF its own stock in the amer
have deseOedf A. should say right after tue panic
AZ The present time, you think the company owns
O. What number of shares does that amount represent
a. At round number should say 500 shares
O. In whose name 800 shares OF stock OF which
you have spoks stanG now A. In various names; some
dividends Cruik shanKs and in the name Of
dsasnS has BEEN that we call the
dividend and place it 10 the credit OF tne loans;
teller OF the company \ Mr. CruiSshank Is secretary
@ 10 whom was he money loaned by the oany
Its own stock A TO reasiey % ,
Hrn OF reasley Co was at one time connected with our
ane ,ruste &c ns always understood it.
q. Mat is that gentleman's name A. Wiiham b..
shsttucS.
Later. Mr. Mangam testified further IN relation 10
this matter as iolows:-
Those TO have been settled on Noyembe.
amount borrowed by you on the day named from Ma,
Ona and Leoiher Bank and the Central National
O. Is there anything upon the books OF tho National
Shoe aud Lsniher the Central National Bank
the of Ssl 81 81 A. Not at the present time
know that William Shattuck the ony representative
OF hI r Won q not Mr. So Of
g. Do you sno. that such person as mr. peaSiey. IN
io S% % with '"'' h'" eA''''a A. 90 A0'
o. Your dealings with the firm were through shattuck
A. Yes Dir. We had account with rcasley Co., and
had dealings nth feasley & 60.
auction Or otherwise a. No, sir; bought by the
Trust Company and for convenience carried in
the shape OF a loan made to Peasley Go.
O. When first began buying the stock OF tins company
carryin the form OF loans made to Peasey Co.
was not Mr. SbRttucK the National Trust Com
pnnyg \. think he was
d In what did he be trustee OF this
% my A. / 60 renember think about year two
ago.
TRANSACTIONS ENTERED
December the company owned $50 shares OF its
own stock worth at par 1900. Upon this, on No.
vcmber Is, Mr.. Nangam had borrowed $50 25S 2S,
which included 9l5 u OF interest then due on tho
reasley There rs nothing IN the minutes OF the
Executive Committee or In the books of account in
relation TO this Transaction. There Is entry show
Ing the payment oil the Peasley loans but OF tho
cOmpany's Indebtedness TO the banks already men
toned The motive for concealnent IS obvious. Tho
president anticipated the annual examination by the
BANKING Department and feared the result of carrying
30 large an of the company's stock, nomnaliy
rs coaterals and, therefore, borrowed upon IL SUN.
Gent TO cancel Peasley IL Co. Indebtedness. Com
mens upon this deception Is unnecessary.
According to tho loan ledger the loans OF tho
pany on December 4, amounted 81, 10 902 IS
IRON this should DO deducted the follow
Ing hetiuously carried, VIZ -
4. IL. Ilcrcc s1-,fo- -
Z. khlstOu. ............ lAso"p -
A. H. Doughty. ............. l34olO -
Security Bank OF Watcrtown ABB 10
i. H. JOncs................. z0,OOD W
Rollins Bros. Co.......... ls,0OO 90
GO 524 20
-
Actual amount OF loans. 81, 37s 80