New-York tribune., 1884-11-29
A NATIONAL BANK FAILS.
THE DISASTER DUE TO IRREGULAR LOANS
THE UNITED STATES BANK EXAMINER TAKES
CHARGE OF THE BANK IN MIDDLETOwN.
IBY rKLE0RAPH To the rRIBUSGI

THE UNITED STATES BANK EXAMINER TAKES
CHARGE OF THE BANK IN NIDDLErowN.
Isr TELEGRAPH 10 the rRrBUsGi
MIDDLETowN, Nov. 28.-The Middletown Na-
tional Bank suspended to-day. The bank exam
iner George l. May, arrived from Washington ct
noon to-day and took possession Of the bank until
examination of its affairs can be made. II Is i'm
possible now to tell the amount of the deficit The
president, Thomas King takes the entire response
blty for the failure, fully exonerating the drec-
tors and officers. King had been accepting drafts
irregularIy from Benjamin ID. Brown, o grain opcr-
ator who formerly did business here and latterly
was interested in large elevators In Indianapolis
and in Burlington, Iowa. Kirg kept an account Of
these transactions, which caused the failure OF the
bank. in memorandum. of which the cashier and
directors had no knowledge until week ago.
The directors tried to tide over the trouble,
but the amount of the indebtedness was found
to be too large. On Wednesday afternoon they de-
cidcd that they must suspend, anil telegraphed
to the Controller Of the Currency. II IL believed
that Tire deficit will use up the entire capital Of
$1,000 and surplus Of $1l5,00o, with possibly
assessment upon the shareholders, too.
Several months ago The directors found that King
had lent about $40 900 TO Brown, and directed that
the debt should be reduced. The Department In
Washington also found fault with the excessive
. oan. King was instructed 10 lend no more Of the
banks money 10 brown. In spite Of these instruc-
tious, King continued to advance money. not In the
shape of loans, but by accepting drafts without
adequate surety In large Numbers, carefully con.
cealing the transactions from the directors and
cashier Many believe that King aud Brown wcrc
partners IN grain spceulatioas. IA otherwise they
cannot account for the influence which brown had
over him.
King In completely Frustrated and Ia unable 10
give q satisfactory explanation Of tho matter.
tlrown aud King have both made assi snments to
tho bank, Houston aud Conkltn. gram dealers who
endorsed Browns paper made aa assignment to-day
~ did C.C v. Kstchan, grain dealer. for Tho same
reason.
A slight run occurred At tho Middletown Savings
Bank tp.,lay. 100000 was drawn. This bank IL
sound and able 10 meet all demands. The Treasurer
of tho village kept his accounts with tho suspended
bank, where were deposited also the funds OF the
Board OF Education. 1hese funds will be locked
up for tho present.
Tho directors of the bank have unanimously
recommended to the Comptroller Of the Currcnsy
the name Of the person whom they desire To be ap-
pointed receiver The failure caused great aston.
lshment aud considerable excitement, as the bank
is widely known, and was considered one OF tho
soundest IN tins part Of the State. Brown is severely
denounced and King Is greatly blamed.
some emDarfa6SmenL Will IOiiOW tue bubpoubious
but it is hoped that more failures will occur.
King was the last person who would have been sus-
pccted of such irregular TRANSACTIONS he has been
considered remarkably cautious and conservative.
The Board of Directors Of the bank have unani-
mousy petitonsd the Con ptrollcr of tue Currency
to appoint Moses d Stiyers receiver. Mr.. Stiyers
is the senior editor Of The Prss and for fourteen
years collector Of internal revenue in the Xlth
Brown'e method was To draw time-drafts on
different parties with whom he dong business
at various points in the East. Accompanying
them were bills of lading These were sent TO- tho
Middletown Bank, with instructions that tho bills
should not be dc ivered until the drafts
were paid. King was in the habit of allowing
Brown to take bills Of lading to collect Tho Let:
ter did not turn over tho money collected. and
when tho drafts were due the bank had to provide
for them. When King made his confession to tho
directors, Brown was summon"d and promised to
make the bank secure, but failed. Browns lndebt-
edness is not positively kuown It is thought TO
be over $5O0OO. The directors say that all de-
postors and creditors, except stockholders will DO
paid III full