New-York tribune., 1882-04-24
WHY A BANK FAILED.
CHARGES AGAINST IT'S NEW PRESIDENT.
BANK.EXAMINER YoUNGs REPORT ON THE AFFAIRS
OF THE FIRST NATIONAL BANK OF BUFFALO
u

CHARGES AGAINST IT'S NEW PRESIDENT.
BANK-EXAMINER YOUNG's REPORT ON THE AFFAIRS
OF THE FIRST NATIONAL BANK OF BUFFALO
SINGULAR MANAGEMENT.
BUFFALO, April 23.-Bank- Examiner Young
has furnished following statement of the resources
and liabilities OF the First National Bank which recently
failed in this city, together with his conclusions as to the
failure. On Friday, April Ia, when he TOOK
charge Of its anairs, he reports the condi-
ton OF the bank follows Among the resources were
notes and bills discounted, 81 ,077599 IL; overdrafs
Sis.sO9 AZ; due from state banks and bankers,
S31,96s 81 checks and other cash items $29,22l 63
In its lists OF liabilities the individual deposits
subject TO checks, $i21,279 54; certificates
of deposit. s2s,73O 80 due TO National banks,
$i56,452 97 to state banks and bankers, 1881 15
to savings banks $10oO0s 81 notes and bills redis
counted, $4,000
Mr. Young says: "The following is my statement OF
the condition OF the bank found examna-
ton with the estimated present value OF the assets:
Liabilities TO creditOrs-CrculatOn Secured by United
States bonds S99500; deposits, including certificates,
$45O,OO9 SO; due Treasurer of State of NewYork,
$7O.422 10 due to banks S563,902 43; loans redis-
counted, $4,000 Total, S1,195 s34 75 Assets avail
able to pay and DISCOUNTS 9j7 &C.
overdrafts $129i0 Al; United States bonds TO
circulation, S1111OO; due from banks
and hankers $5e,9l2 9s real estate $50272 G7;
cash items, $19162 20; cash, $3.50 95 re-
demphon fund. per cent, $i19i G7 deficiency texcl-
sive OF capital and surpus S3j2,9j3 81 total.
Sl19s S3i 70. The total losses may be summarized
follows On loans and discounts, Si9l6il 4G; over
drafts s35,s6 O1 cash items, $10,059 49, total,
$jiO3G9 90 From the foregoing figures will he seen
that the capital stock, surplus fund and undivided
ings lost. and $352953 besides Making fair allow
for losses Of debts considered good and for
the expenses of liquidation my estimate
s that the creditors Will receive about 50 per cent 1t
Nv,Il-L he OF
Charles r. Colt il had the reputation Of being we'll
conducted and prosperous bank. The Illegal transac-
tOns which have proved fatal to its existence be-
gan in September last, when, owing TO the illness Of the
president, the management passed into the hands
Of it's vicepresident, r. Porter Lee, who be-
came it's president in January. During his control
large accommodation loans have been made to persons
who were known to be spocuatng in futures and mar
gins in Chicago grain trade Large loans have been
made persons who were known to be spccuating Ill
gold mines and gold mining companies OF doubtful ex-
isence doubtful value and without other security
than beautifully printed certificates OF these enter
prsing companies. Loans which every wise and prudent
banker would have called in collected when due were
renewed and often enlarged I'm violation of law. For
example, Herman ]. Hall Co.. described in the direc
tory az commission merchants, two days before the
bank was closed borrowed 100000 although the
firm that lime owed the bank in loans and over:
drafts $25OOOO thus increasing the totai liabilities OF
coateras for ouly about $4,000 Of all this indebted
nes- and for the rest OF 1t Il. Porter Lee holds some
deeds for partial interests i'll gold l0des
shares in gold mining company Of Buffalo, which
he affects believe OF great value but as they are
not quoted in any stock list have not counted them
contingent Other instances of reckless disre
gard the interests Of depOsors i'll making loans to lr-
responsible parties without proper security, but
on smaller scale, might be given. In max
ing these any other loans, Mr.. Lee did not
consult with the directors, and never called them to-
gcther any such purpose, does appear that any
the directors any time asked iOr or made any OK
animation of the bank its loans Even the cashier,
Theodore = NJ Knight, was regarded as simply CLERK,
gentleman alleges reason Tor MS Teslgna-
ton few days before the bank closed that he be-
alarmed by the reckless character OF the loans
made to Herman J. Hall & Co., above
f,rred to. 1t should be noted in this connec-
ticn that about the time these last large
loans were made to II. j. Hall & Co. tue 11th
Of April Porter Lee went through the form of trans
ferring L. j. Hall 57S shares VI the capital stock OF
the b Including the shares OF three Of the directors
previously assigned in blank the back OF the certh
Gates"
Mr. Young concludes that It viii be from this brief
outline banks condition and its history for the
past few months that ITS failure is due
10 the entire disregard by its responsible
officers OF tine wise restrictions imposed by law for the
safety of those associations and to the participation by
the president reckless spcculatons with the money
inrIIHied his Mr. Young has recommended the
appOntnent r. T. Smith, cashier OF whites Bank, or
tins city, Mr. Smith has not gwen an answer
III the natter ii is believed that he Will accept