The New York herald., 1879-10-08
GUARD THE SAVINGS.
The BankinsSupsriniendent on The NisapproPra-
ton ofFunds BY Savings Bank Officials.
DIRECT VIOLATIONS OF LAW
Good Effects OF the Letter Of
Inquiry.


| Mr.. Henry l.. Lamb. Superintendent of the Bank
ing Department. in reply to inquiries to-day regard
ing his conduct of the investigation into certain
alleged illegal expenditures by savings bank officials
said substantially as foows:-
l have received answers to my circular request
ing information to certain expenditures by trus-
tees and officers of savings banks of the funds de-
posors for various purposes therein from
over two thirds of the savings banks of the State,
and no one OF them has vet refused to make answer
as requested. The circular simply calls for informa
ton and is in no sense any proceeding in litigation
Statements Rave been made by newspapers in New
York city that the Attorney General was preparing
the papers in suits for the recovery of money and
that had stated that would compromise any Of
these Those statements are both ut
terly false. There is not particle of
foundation for either of them. have not
yet called any savings bank for the
restitution of any funds unlawfully diverted. When
the information is obtained as to the diversion Of
funds in any savings institution each will be
treated separately. and the question of reclamation
cannot be decided until the exact facts obtained.
CoRnEspoNDENT-whatw was the original cause of
the issue of your circular?
Mr.. LAMB-Thar question is natural 1t appeared
to in July last from reports of examinations made
this year that questionable expenditures Of deposits
had been made and then submitted the question
TO the Attorney General whether certain classes
of expenses which were specially named were law
full and further whether when 1t appeared to the
Superintendent that such diversion Of funds had
been made it his official duty to require resti-
.ution Of the money by trustees who had author
lied the alleged misappropriation. The following
is extract of the Attorney Generals opinion in
reply
Paymens from the Of depostors for all such
suthorze or them personally liable for the
diversion Of such funds 1t is undoubtedly the duty
to ire the
restitution Of the funds misappropriated or unlsw
and in case of failure to make rostita.io" 70
be aecorans s
Nor there as11 til that the msase Of the funds
make restitution constitute such abuses of trust to fur
| Revised Statutes.
That" said Mr.. Lamb 'defnes my official duty.
Having that opinion prescribing my duty could
ascertain the facts by examination or by inquiry
of the officers OF each savings bank. As examine
tions would require much time and ex pense deemed
it the easiest. quickest and cheapest way to make
| direct inquiry OF each savings bank. Therefore the
| circular issued
| SENT TO ALL THE BANKS.
| CORREsPONDENT-Was 1t sent to all the banks?
MR. LAMB deemed it only fair make the In
quiry of every savings bank in the State, since
unable to decide which ones might have expended
| funds in unauthorized ways. From the facts in my
| possession it seemed that these acts of COM
parstivey recent dates and that such practices
banks III the State, and thought it important in
clude in the inquiry all such payments by any
|
had crept in during the period of the aud subse
quent years.
CoRREsPoNDENT-But 1t has been said that
action is indiscreet.
Mr.. LAMB-Yes: that I had acted with zeal but
without discretion The Senate. in the trial of the
late superintendent of the Bank Department de-
cided that when duty is imposed upon the Super
the defendant i'll that case; but that he act.
Otherwise lie exposes himself to the risk of trial for
neglect Of duty and is also liable to punishment for
the offence of misdemeanor for such delinquency.
In that Senate were such conspicuous lawyers y
James w. Gerard. william II. Robertson Attorney
General Schoonmaker, Hamilton Harris James +.
Starbuck and George Il. Bradley (who tho demo-
cratic candidate for Judge Of the Court Appeals
last year, and these gentlemen took that position in
their speeches in that trial The punishment
neglect of duty is removal. but msdemean pun
ishable by fine or imprisonment had 10 discretion.
KrFEcT OF THE INQUIRY.
| CoRIxsPoNDESr-How will this inquiry affect the
| depositors?
Mr.. LAMB-The depositors should have no con-
| Germ about the inquiry. for the reclamation Of any
funds will strengthen any savings bank in which
there may have been diversions of money. believe
that the trustees and officials Of savings banks will
in future be careful and crcumspect the ex-
comply strictly with the law will be aided by this
action. which is calculated to check any trus-
tees officials Of savings banks who have
loose notions in the administration Of trust funds.
Improper ideas have prevailed for time among
many managers Of such trusts. This fact
mented on by General Dix. in his Message to the
| Legislature in 1884. in these words There is
of crime than the abuse of dnsiarx tpnsts
| Little is needed now on the OF firm
and admin stratton of Justice, but there
will be security against the bad faith trustees
employees of the state and the managers and
of corporations, public and private. until the
version to their own use OF the moneys confded to
them the diversion OF such moneys from their
proper objects is more severely punished.
| CoGIEsPoNDENr-Havo these same Irregularities
been commented on before?
Mr.. LAMi,-Yes; they attracted the attention of
| the Senate during the trial of the Superintendent
In the investigation by the Senate of the transac
| tions OF the German Savings Bank of Morrisanis
| which had failed aud was then in the hands of
| ceIy nd hcld aspa-
cia meeting for the inauguration and opening OF a
| new savings bank building. On page 1870 of the
proceedings appears account of meeting at
| which toasts offered TO various directors to
to the press. to the ladies' &C.. by the trustees
sempled and appears page l27l that the cost Of
the 'jolhca,on. as it is there called. was:-"Lunch.
s75 wines. STA 81; total $2i9 So On motion to
Carthy said IL vote for the printing of this mat
ter in order that the people of the state may know
that discovering things that very interest
ing in regard to savings banks" The evidence was
INSTANCES MIsAppRopRrATIoS
CoRERsroSpkST-lIavo you yet any estimate of the
amount of such misappropriationsy
Mr IMnmies, TO CERTAIN s,a extent; . ~ appears
| ings banks such division Of funds in about ton
years have exceeded $4,000 in each institution
of moneys six years was sufficient to
give each depositor a dividend of than Ss. and
| percentum dividend would give larger derositors
S25 $40 each. In 1876 the appropriation of money
in u single meeting OF trustees would have given
each depositor o dividend of 50 If the money had
been distributed among them. In another institu-
ton the appropriation on one occasion TO humane
| organization, outside the bank, was 5000 in ono
lump in another savings bank similar sppropria-
tion $4,000, and IN another 200. and another
$1,000. all single appropriations. The trustees of
| each of these savings banks acting under
authority of a special charter, which declared
| as follows - mo president. vice president or
trustee officer servant OF said corporation shall
directly indirectly borrow the funds said cor.
poration or its deposits. or in any use the
| same any part thereof. except to pay necessary
| expenses" That has been the provision in the
charter OF savings banks since 1919. II appears in
| the charter of the Bank for Savings located in
| Beocker street. New York. which the nrst bank
| Incorporated in the State, and in all subsequent
charters. A newspaper reporter has told me re-
Gently that he attended jolihcaton at tho opening
OF the new Bond street bank building in 1873 or