Huntsville gazette., 1891-06-20
THE KEYSTONE BANK.
Statement of Comptroller of the Treasury
Lacey on the Big Defalcation.

stssement of Comptroller of the Treasury
Lacey on the Big Defalcation.
! WASHINGTON, June 15.-After care
1ul preparation and after submission to
his superiors, the statement of Hon E.
,. Lacey, comptroller of the currency,
relative to the downfall of the Key
stone bank of Philadelphia has been
made public by Secretary of the
treasury Foster, to whom it is ad-
dressed. 1t is a voluminous document,
containing 1900 words, and embodies
correspondence and papers bearing
upon the Quaker City's financial scan
dal 1t is in the form of communica-
ton to Secretary Foster The state
ment opens with the letter of Bank
Examiner Drew, January "a, notifying
him of the 5000, 900 defalcation of Luz
cas-, the late president of the bank. In
this Mr.. Drew stated that it
appeared that Mr.. Lucas, dur
ing his presidency of the bank, had,
with the connivance of the cashier, Mr..
Marsh, later the president of the bank,
carried out, by adroit manipulation of
the accounts of the bank for series of
years, scheme for systematic abstrac-
ton from the bank of large sums to
| assist his speculations in real estate at
Spring Lake and Sea Girt, N. j., as
well as in the cons truction of the large
building on Chestnut street, Philadel-
phia, occupied in Part by the bank.
The statement set forth letter from
Mr.. Lacey to Mr.. Drew on March II,
| replying to Mr.. Drew's letter of the
14th, in which he said: ''The condition
of the Keystone bank is such that
must insist upon the prompt payment
OF the large part of the amount of their
assessment within the next five days or
else l shall feel called upon to take per-
emptory action. / do not feel at liberty
to allow matters to proceed any further
under the conditions which now exist,
and you will please so inform the par
ties in interest without delay and advise
me of their reply"
''The comptroller has been criticised
for three things" the statement con-
tinues. First, for allowing Mr.. Marsh
to remain in office after his confession
and not causing his arrest; second, for
delay in closing the bank; third, for
delay in appointing a receiver. AS to
the first matter complained of l have
this to say-that am nowhere charged
with any responsibility in criminal
prosecutions, and bank examiner is
held to have done his duty as soon as
he lays before the United States at
torney any facts involving crime
which may come to his knowledge
in the discharge of his duties. Every
bank examiner is instructed and
expected to do this and l could not
avoid the conclusion that Mr.. Drew had
discharged this duty after reading his
letter of January "a, in which he says
that he was assisted in securing a set
tlement with the Lucas estate by Hon.
John j. Reed, United States district at
| torney, whom he had employed to aid
him in the transaction. l had the right
to suppose that from that time on to
the final arrest that the United States
district attorney was fully informed as
to Marsh's conduct, also the clearing
house committee with the directors of
the bank (who were really the respon-
sible parties) and the examiner.
"Second-For delay in closing the
bank In regard to this matter desire
to say that the comptroller can only
act in accordance with law and SO far
as this ease was concerned he was gov
erned by the provisions of section l of
the act of June so, 1876, under which
the comptroller could not name a re-
ceiver unless satisfied of the banks in
solvency. The entire force of the crit
icism is narrowed down to this
that the comptroller in the con-
scientious exercise of the discretion
imposed on him by the statute,
decided that it was wisest and best to
impose the lighter of the two penalties
which the law provides and give the
bank fourteen days in which to pay an
assessment under section 5205 rather
than to Immediately order it closed
with all that such a disaster means.
"Third-For delay appointing re-
ceiver. This criticism is of very little
Importance in any event and has been
pretty fully discussed already.
'In closing this branch of the sub
iect in Justice to one whose name has
been brought into the discussion of this
failure, desire to state that Hon John
Wanamaker has never directly or indi-
rectly suggested or solicited one days
delay in the closing of the bank, nor in
the appointing of receiver"
SIXTY KILLED..