Rock Island daily Argus. (Rock Island, Ill.) 1886-1893, 1891-06-15
LACEYS ANSWER.
The Comptroller and the Key.
stone Bank Failure.
HIS REPLY TO JONES' TESTIMONY,

His Kelly III jONES TESTIMONY.
Explaining the Visit to the Bank in Feb
Misrepresentation of the Concern as
Represeeted to the Comptroller by Of
ficial Letters from Drew-John w ana
makers Connection with the Matter a
Very Slight One-Delsy in Closing the
Bank and Why Action of That Kind
Was Finally Taken.
WASHINGTON CITY, June 15-When
Comptroller Lacey was shown the testi-
mony of Assistant Bank Examiner Jones,
of Philadelphia, in which charges of ne
glect of duty in relation to the Keystone
bank were practically made, he carefully
read the same and then said that he was
member of the assay commission which
met in Philadelphia on the 18th of Febru-
airy. He took advantage of this visit TO
meet the directors of the Keystone bank
and TO impress upon them the necessity Of
keeping their reserves stronger and put
ting the bank in a more satisfactory con-
dition. He made no examination, but
such matters in reation TO the accounts Is
were brought 10 his attention were all
embodied in Bank Examiner Drew's
statement of the 10th of February, which
disclosed an impairment of capital, but
not Insolvency. The Lucas defalcation OF
$500, 600 was of course known TO him be
cause it had been stated in Bank Exam
liner Drew's report of Jan. "a, but the
same report stated that the Lucas estate
had conveyed to the bank the banking
house and seashore property, which was
estimated 10 be worth more than the
amount of the defalcation.
Statement Sent to Mayor Stuart.
As further contribution to the literar
tureof this bank failure the statement pre-
pared by Comptroller Lacey and sent to
Mayor Stuart, of Philadelphia is given
below. Its purpose is to vindicate the
comptroller in regard TO his action in con-
nedtion with the failure, it having been
charged that he was so careless in his Of
fetal action as TO amount almost, if not
quite, to criminality. The statement in
cludes a letter,of Bank Examiner Drew,
of Jan. "a, notifying him of the $500, 900 de
falcation Of Lucas, the late president of
the bank. In this letter Drew explains
how by adroit manipulation of the &C
counts OF the bank Lucas. with the aSsis-
lance of Marsh, the former cashier of the
bank, distracted large sums of money
from the bank to use in speculations in
real estate. Marsh, he reported was ig-
norantly led into the transactions and
promised Lucas, when the latter was on
his death bed, to continue the deception
under representations that the money alb
stracted would soon he returned TO the
bank from the result of Lucas enterprises.
Wanted the Matter Kept Quiet.
Drew also reported that there was no
evidence. that Marsh had profited by these
irregularities. He closed by hoping that
no publicity be given to the affair until
the bank should be rehabilitated or efforts
to that end were found futile. Accom-
panying this letter was a preliminary
statement of the banks condition which
left the capital stock of half million in
tact and net surplus Of SIS, Sl9. Later,
on January 9th, Drew, in an interview
with the comptroller at Washington City,
stated that in his judgment and il the
opinion of the clearing house committee,
the property conveyed 10 the bank by the
Lucas estate was equal in value to the in
debtedness which had been concealed, and
that ia any event the creditors of the bank
were entirely safe: also, that to sever
Marsh's connection with the bank would
excite suspicion, and that Marsh was
thoroughly repentant and was actuated by
an earnest desire TO do all in his power 20
assist the bank in recovering any sums
which had been improperly taken from it.
why Action Was Delayed.
Lacey says he did not close the bank
then for the reason that he had no lawful
authority to do so upon the facts sun
mitted, sRd for the further reason that he
was advised by Bank Examiner Drew
that the capital OF the bank was unim-
paired; that the creditors were therefore
fully protected and that prompt efforts
would be made TO replenish the cash by
deposits of $500, 600 TO be made by the lead
ing directors and stockholders, which
should place it in funds until its own as
sets became available Further and later
reports from Bank Examiner Drew con
WINGED the comptroller that the board OF
directors were show in putting matters in
a satisfactory condition, so on March he
levied an assessment of $50 900 upon the
shareholders on the promise from com
mittee of directors of the bank that the
assessment would De paid within a week
On March Il Mr.. Drew complained Of
little active support from the directors in
the effort to rehabilitate the bank
APPOINTMENT OF A RECEIVER.