Richmond dispatch. [volume] (Richmond, Va.) 1884-1903, 1890-01-31
a BANK WRECKED.
Once the Strongest in the City--How the
Steal Was Made.
fpv telerrapa to the Dispatch.I

Once the Strongest in the City-How the
Steal Was Made.
tBy telegraph to the Dispatch.l
NEW YORK January 30.-The LennoL-Hill
Bank has suspended payment. IL ~ con-
trolled bv the same parties who last week
bought the control of the Sixth National
Bank of this city, which had already been
closed by the Bank Examiner The know
ledge of this caused run on the Lennox.
Frederick d. Happen, president, OF the Gal
latin National Bank and member OF tho
Clearing House Committee, gave the follow
ING statement TO reporter this morning: AZ
Ger President Leland sold his interest in the
Sixth National Bank the directors were re-
auested TO resign. which they did, one by
one, the vacancies being filed by new men:
The Board Of Directors, however, has not
been legally organized since. They
could not legally elect president be-
cause none of the new directors had
taken the oath Of office, which is q
requisite before any legal action OF
any kind could be taken by the board
Their election of p. j. Classen was there
fore void. Immediately on assuming tho
Office OF president Of the bank Classen
made three loans Of 100000 each, secured
by stock Of the Lenox-Hill Bank very poor
security, and then went down 20 the safe
deposit vaults in the National Park Ban <
andabstracted therefrom tirst-class railroad
bonds of the par value of S622,0O0. These
bonds he placed IN the hands Of a man
named George III. Pell for sale. Pell was
formerly partner in the firm Of Grove
staen d Pell. stock brokers, who failed in
August. 1887. The cashier of the Sixth Ma
tiOnal Bank. MIR. COlsen. became alarmed at
the extraordinary proceedings Of the new
president and directors and he came down
10 the clearing house net the Clearing
House Committee, and gave the startling
information already narrated. After u
very careful delberatiOn OF the whole mat
ter the Clearing Committee imme-
diately reached the conclusion that the
bank should be placed in the hands OF "a
Government official at once. A. is. Hep
burn. national-bank examiner, was sent
for and the facts communicated TO him,
with the request that he would take charge
# the concern the following morning and
investigate the charges made by Mr.. Col
sen. the cashier. against the officers and d.
rectors This examination took place yes
terday, and fully confirmed the statements
made by the cashier.
The Clearinghouse Committee VISITED
the Sixth National Bank late yesterday al
ternoon, and after having verified by por-
sonal examination the facts IA already
stated, telegraphed 10 the Comptroller OF
the Currency ut Washington that the bank
would not be permitted TO exchange
through the clearing house this morning,
and that thenew Board Of Directors should
have no further control over the assets OF
that institution. The bank-examlner,
after discovering that the bonds for Sb22, =
900 had been taken ont of the sate-deposlt
vaults. demanded Of the putative President
Classen that they should be at once re-
turned or their equivalent in cash at iull
market value. Tho examiner by his
PROMPT action succeeded in getting back
S2O1 600 of the bonds. In lieu or on ac-
count of the rest of the distracted bonds
Classen handed the bank examiner checks
for 1885,, 0Q0. These checks fell short OF the
market value Of the abstracted securities
Sl4O. 600. None of the checks, however,
have been paid. and they are, beng pro-
tested this morning. The bank WILL go
into the hands of q receiver. That IS the
only way to protect the interest of depo-
sitors and the minority stockholders. or
course the customers of tho bank VIII be
Temporarily Inconvenience, but the close
of the bank was the only way to prevent
further depredations. The Comptroller OF
the Currency will appoint receiver, and
all the facts in the case will be laid before
the District Attorney to-day, There was no
better bank in New York than the sixth
National, continued Mr.. Happen. IL had
81. 600, 900 Of deposits and large surplus,
the whole Of which was invested In first
class securities. The market value Of ITS
stock was about S4G0 per share. Leland
sold his stock of 1,035 shares out OF the
Q CO., however. at an enormous increase,
receiving at the rate of $3.50 per share for
il. He was paid S650000 in round figures
for his stock, and Immediately on receipt
of the money, which was paid in checks
l. 4l., ofnrz and -
uently the control of the bank TO the
purchasers. The negotiations for the
purchase Of his stock were conducted
bv George II. Pell. Leland was before
the clearinghouse Committee yesterday
and was pretty warmly scored 10y them tor
his very impohte conduct. He seemed
TO be much disturbed at the situation.
There was also very lively scene between
the bank examiner and Ciassen when the
former demanded tho return OF the ao-
stracted bonds or their equivalent III
money. Classen pretended to be entirely
innocent OF any wrong-doing IN the mat
| ter, but could give no satisfactory explana-
ton of his extraordinary act III trusting Sc
large an amount Of securities TO a broker
Tor sale, or, indeed, any reason for desiring
their sale.
Early this evening A. b. Hepburn
the United States bank examiner who Is IL
charge of the affairs OF the Sixth National
Bank, made statement of his exanina.
ton M 10 that time He said the missing
! bonds have not vet been found. Their pan
value Is SA2l eco and the market value
! S4s2. 46G. Upon that had been PAID
S5O, 900, leaving a deficit on account OF
| bonds of $40, f66. He has discovered III
| his examination that there Is III the bank
| loan of 100000 secured by SG5,OO'
of the EQUITABLE Bank stock, An
other loan of 100000 secured py
| $4,000 of the Lenox-Hiu Bank STOCK
and still another loan, OF Soq'VOg s9
cured bv $50 shares of Equitable Banl
stock. 81, OC0 worth Of the Empire Ga ano
Electric-Idght Company's bond, Sll,OO.
stock of the st. Louis. New Orleans ant
Ocean Canal and Transportation Company
/ of New Jersey, $40, 600 OF Carolina Contra
! second mortgages. and $4,000 OF Carolina
/ third mortgages. The amount 10 be rear
/ zed on these loans, he said, Is probe
inatical. They were, he SAID, very poorly
secured. la addition to these loan
/ Hepburn found on hand Sso'ouV II
protested papers OF Pen ana otner;
| lie altered syndicate, of which amount
/ 81 0J0 came from the Lenox-Hill Bank
II lbe other assets are reported 10 be all right
bis being a statement of the bad assets
l Nenburp expects to complete his examina
ton Tonight. and will at once make
tmecifc report to the Comptroller IN Wash
hcgton. Aftor that is done the usual course
hi appointing receiver Will be pursued
Espburn says that from his examination
D. cannot SEQ that the dopositors are IL
b. LANCER. Even if they were he SAID
EEarles II. Leland. ex-plesident o.
Z bank, has authorized him TO stat
4 "a. no viii make good any deficit II
IT, accounts of the depositors. The eA
stiaer was very strong in his remarks. con
chung the manner in which tho steal wa
ctoocted and carried through. he gav'
y3r 10 his feelings by saying that II wa
tlt aost scandalous case OF bank-wreckins
infAs history of the finances of the city
tn sixth National Bank, he said, was a
onl Tine regarded as the strongest, ~ IN
ci:k, Ii was virtually Il gilt-edged inst,
tutta only week ago its surplu'
am(rl'ed 10 S50O,000. The stockhoidef'
OF Hebank are liable TO the amount 0
thef socks aud for an assessment OF al
amfn equal to the par value OF thei
hoidns'.
New York Worlds Fair Bill.
by telegraph to the Dispatch
q. M I.a