The Portland daily press., 1891-06-15
LETTING LIGHT INTO THE DARKNESS.
Comptroller Lacey Tells Something's
Concerning the Keystone Bank.
On His Action Depended the Safety
of other Institutions.
Mr.. Wanamaker's Connection with
the Affair Fully Explained.

WASHINGTON, June 14.-Comptroller La
| cey has submitted to Secretary Foster, a
statement Of facts leading up to the final
closing of the Keystone National Bank of
| Philadelphia and the appointment of a re-
ceiver therefore. The comptroller says the
first information that reached him of the
Lucas defalcation was received January "a
from Bank Examiner Drew, who stated that
January 9, President Marsh voluntarily con-
fessed to him that indebtedness of the Lucas
estate to the bank, amounting to 100000 had
been Heretofore concealed. Mr.. Mar sh said
he was at first ignorantly led into irregular
transactions by the late President Lucas,
whose protege he was and to whom he was
under great obligations. Mr. Lucas had on his
death bed, exacted a promise from Mr..
Marsh to continue the deception
until until the missing sum could be
prises. OF Bank Examiner Drew's letter
the comptroller says: sit is to be observed
the letter states the directors of the bank,
seven members of the clearing house COM
mtttee, and the counsel ON either side, one
for Philadelphia. and the bank examiner
himself, were the only persons who had
known of the Indebtedness of the Lucas es.
tate and Of the conveyance of property,
oO ldI as l6pOIbS SHOW, ndu0 ROOQ
the sum abstracted. 1t is also to be observed
that in Mr.. Drew''s opinion. presumably
upon consultation with the gentlemen named,
and upon their advice, 1t was important that
no publicity be given to the affair until the
bank was fully rehabilitated. Upon the re-
receipt of this report, the comptroller was
confronted with grave responsibility. The
entire country had recently passed through
crisis caused by severe monetary strin-
gency which had made absolutely
necessary the Issuing OF clearing -honse GER
tificates in three great seaboard cities. The
uneasiness caused by this situation was
greatly aggravated in Philadelphia by rea-
son of the failure of several large private
and state banking houses, and by the run
made upon the Keystone National Bank in
November, under the effects of which it was
still suffering. For these reasons, the situa-
tion was one requiring the most considerate
and careful treatment. Anything tending to
shake returning confidence in financial insti-
tutions was to be studiously avoided. A re-
National bank might have involved
other banking institutions and
produced widespread disaster. 1t
is also true the Keystone National Bank had
passed through severe crisis in December,
AMI had been able to weather the storm
with 100000 less assets than it had when
this report reached the comptroller. 1t Is
evident the comptroller could not at this
time lawfully have closed the bank, nor
could he even have levied an assessment to
make good the impairment of capital, as
none existed, according to this report"
In view of these facts, Mr.. Lacey deferred
action until, the directors falling to put mat
ters in satisfactory condition by making
promised deposits to supply money until the
bank could make its assets available. March
9th he levied an assessment of $250,000 upon
the shareholders on the promise from the
committee of the directors of the kank that
the assessment would be paid within week.
March 18th Mr.. Drew complained of little
active support from the directors in the ef-
fort to rehabilitate the bank. This reached
the comptroller on the 10th, and three days
later he closed the bank.
The cromptroller states that Postmaster
General Wanamaker never directly or in
directly suggested or solicited one days de-
lay in the closing of the bank, nor In the ap-
@ ef the receiver exee9t s. pesy
Comptroller. "Mr. Marsh of the Keystone
bank came down last night to say it is re-
ported you intend to appoint receiver of
the Keystone bank unless something more
definite was done today. believe nothing
would suffer from giving them "a hours long
er. and at the end of which they may put on
paper something more definite to be present
ed to you. From what he says they are get
ting along pretty we'll in securing subscrip-
ton to The new stock. would recommend
the appointment of a receiver be deferred,
say one day, until he has an opportunity to
state something more definite"
Previous to this, Mr.. Lacey had urged Mr.
Wanamaker to use his influence in the effort
to reopen the bank. Mr.. Lacev says that ia
his opinion, Bank Examiner Drew's report
did not represent the true condition of the
bank That officer is now under suspension
pending the fair hearing to which his long
and hitherto acceptable service entities him,
makers connection with the affair in this
particular.