Savannah morning news. [volume] (Savannah) 1868-1887, 1884-02-22
FRAUD IN LOANS on COTTON.
Investigating Transactions by Which
the Banks are Losers.

Investigating IransactfOnS by men
the Banks are Losers.
The New York Cotton Exchange is
much excited, says the Herald of the 18th
instant, over the discovery of alleged
frauds practiced upon number Of the
banks BY J. 2. Billups 81 Co., cotton fac
tors, who failed about two months ago
with very heavy liabilities. The method
of the frauds was to obtain loans from
the banks, giving as collateral security
cotton in warehouse which was repre-
scented to be equal to the samples shO wn
as having been drawn from the cotton at
the time of making the loans. After the
failure, and while winding up these out
standing loans. the banks, it is claimed,
discovered that they had been deceived in
the quality and grade Ofthe cotton, which
was very inferior, in several instances
being nothing more than pickings. The
attention OF the Cotton Exchange was
called to the matter, and an investigation
was ordered to be made by the Super
vising Committee.
This committee has finished its work
and made a report to the Board Of Man
ayers, who Will act upon it at the meeting
to-day. The members of the board yes
terday refused to give any information
about the matter, and every one connected
with the trade seemed anxious to cover
it up and withhold everything from the
public. Many Of the members said that.
while it was undoubtedly true that gross
frauds had been committed, it was not yet
clear who was the actual guilty person.
All admitted the frauds, which were said
to be the worst cases of the kind which
have occurred since the opening Of the
Exchange. From trustworthy sources it
was ascertained that the aggregate losses
will be about $4,000, and they were in
every case the result Of the substitution
of inferior cotton for the lots represented
by the samples shO u.
The banks suffering are the Hanover,
Produce Exchange, Corn Exchange, and
the Bank of the State of New York. At
the first named the Cashier said the loss
was very small, and the bank had there
fore, not been instrumental in bringing
the case before the Exchange. The CASH
Ter of the Produce Exchange Bank also
said that its loss would be small, which
he attributed in a large degree to the eX-
ira care taken by the bank in lOaning
upon merchandise the quality Of which
varied. The bank had insisted upon a
brokers' classification, and this had Sc
secured it from much loss. The Cashier
said that Mr.. Billups Indignantly denied
any knowledge Of the frauds, claiming
that they were the work Of his partner.
The officers Of the other banks could
not be seen. At the Mercantile
National Bank, which had also been
mentioned as loser, 1t was stated
that while the institution had made
loans aggregating large amounts to
the firm on the pledge Of cotton, which an
investigation had proved to be Of a quality
inferior to that represented at the time Of
making the loans, the consequent losses
had. however, been covered by the sur
plus on the other loans, so that the bank
would not lose a dollar. Mr.. Billups, il
was said, had assured the bank that the
transactions were entirely the work Of his
partner, and that he was totally ignorant
Of their fraudulent character, and he ac-
cOrdingly cOurted the most rigid inyesti-
cation as to his connection with them.
At the office Of the firm, in the Post build
ing, though the doors We're open, no one
could be found within. The papers were
strewn about in great confusion, and on
the desk was card with the statement,
'.Will return in few minutes" The re-
porter waited for nearly an hour, but no
one appeared.