Waterbury evening Democrat. [volume] (Waterbury, Conn.) 1887-1895, 1890-01-31
BANKS In A CRASH
Two Big Financial Surprise
for New York City.
ARRESTING THE WRECKERs.
The Timel y Warning of a Cashier Stop,
the Work of a Reckless Syndicate.

The Bank Exa miner Receivers Part OF
tho Steal--Big Prico Paid for Bank
Money-Oueer Financial Tricks Of the
Conspirators.
New YORK, Jan. 31.-Two banks
closed and the third in shaky condi-
ton and broker George II. Pell arrested
for alleged completely in deal that
caused the trouble.
Such is the record of the last two
days in New York following on the an
nouncement OF the managers i'll the
Sixth National Bank, Broadway and
Thirty-third street.
Bank Examiner Hepburn yes terday
brought to light an astounding state of
affairs.
The new esident of the bank, p. j.
Classen, du ing his two days term of
office had endeavo"ed to dispose of
*622, 900 worth Of the banks securities
consisting of bonds with a market value
of sS0O,oO0
These BOMBS were all sold with the
exception of 80, 900 worth. and no one
can tell whore the money has gone.
The syndicate which bought the con-
trolling interest in the bank from
dent, is represc nted by Mr.. Classon, and
the most mysterious part of the whole
affair is the fact that that Mr.. Leland
sold his l,035 shares of stock at $3.50,
though they never brought more than
$3.50 in the market before.
The Bank Ruined
A week ago the Sixth National Bank
was considered ono Of the soundest
financial institutions of this city. 1t
49, ~ > !
its depositors were proud of the prud-
ence and energy which the manage
ment was reputed to have so wisely
com bined. Its capital had boon
strengthened by handsome reserve
fund. while its stock was rated very
high by judlcious investors. and com
manded a handsome premium. Last
evening the United States Bank Exam
liner who had made a thorough inves-
tigation of the banks affairs, was COM
PEELED to admit that the bank was
ruined, and that it was the most
scandalOus case of bank wrecking
which had ever como within his iuris
diction."
Method in Their Madness.
The payment of $3.50 share for bank
stock which was quoted at $50 was not
the piece of recklessness which it would
at first appear.
the checks the keys of the vault were
turned over to them. In the vaults of
the bank were gilt edged securities val
ued at S692, 900. These were taken and
the greater part either sold or by
pothecated. The proceeds were dcpos-
tied in the banks on which the checks
were drawn, SO that they would not be
protested. In other words, they used
the assets Of the bank to pay for The
stock they had purchased. a very
clever scheme, when it is remembered
not dollar was actually paid out of
their own pockets.
Exposed by tho Cashier.
They obtained control of the bank for
nothing and at the same time succeeded
in getting rid of a lot of worthless stock,
certificates that were not even nota BILE
as specimens Of the lithographer's art.
The privilege which tho bank possesses
of raising the capital stock of tho bank
from 500, 900 to 81 900, 900 afforded such
glorious opportunities for fleeing the
public by watering tho stock that it is
fair to presume it would be taken ad.
vantage of had not the exposure occur
red.
The cashier of the bank, A. e. Colson.
first put into active shape the SuSpic
ions which had lain dormant in the
minds of many. He became alarmed
whom he saw the new control making
big loans on the stock of the Equitable
and the LenoX Hill banks, two compare
lively small concerns. lie laid the
facts before the Clearing House Com
mittee, and the National Bank EXamin-
err Hepburn was called in to make an
investigation. This resulted in tho
closing of the doors of tho bankr.
The Scene at the Bank.
The scene at the door of the bank
was an exciting one. Before it stood
policemen, who good naturedly but
firmly urged along even the most sub
stantlal looking OF the depositors, who
began to arrive at the Broadway en-
trance. Not only these, but citi-
zens Of all classes, men, women and
children, were attracted by the unusual
sight of bank with closed doors, an
ominouS looking sign in plain script
on its panels The depositors received
but little information, except that they
were told by cashier A. solson they
would receive their deposits in full,
whatever might be the extent to which
the stockholders would be involved.
The Lenox Also Suspends.
The Lenox Bank, though the officers
declared in the morning that there was
no danger, had 4 run on it. 1t could
not stand the strain and suspe nded
payment. When MIR. Colson, cashier
of the Sixth National, called and pro-
sented two certified checks for $50, 900,
Cashier Cornell OF the LenoX Bonk,
said that the bank had temporarily
closed.
In the course Of conversation between
the two cashiers Mr.. ColSon said:
There are so more checks certified
like these.
Pell Under Arrest.
George II. Pell, who is said to have
had charge of the scheme for purchas-
ing the bank was arrested at his resi-
dence on Fifty-tifth street by United
States Commissioner Shields. He was
taken to Ludlow street Jail, where he
refused to be seen by reporters.
IISh rrices at an Autograph Auction.
New YORK, Jan.3l. At an autograph
auction page written by Dickens
containing II humorous agreement
among three friends who were about to
hovo y-ollyipp t..b sold for 5000 a