Grant County herald. [volume] (Lancaster, Wis.) 1850-1968, 1891-03-26
WRECKED THE BANK.

The Washington National of New York
Forced to suspend Because Its Presi-
dent Loaned Nearly Half of Its Capital
on Worthless Securities.
NEW YORK, March 25-OfiiciaI an
nouncement was made late Monday
night that the Washington national
bank at No. l Broadway would not
open its doors to-day The banks re-
sources have been loaned ont by the
president to two friends, and the dis
covery of its condition was accidentally
made. The bank is not member of
the Clearing house association but
clears through the Gallatin national
bank. Under rule of the clearing
house which went into effect January
the banks clearing in this way must
submit their accounts to examination
by the clearing house. Monday Bank
Examiner Hepburn, representing the
clearing house, appeared at the Wash
ington bank to examine its affairs.
He soon discovered that its capi-
tai was impaired. AS soon as
this announcement was made Pres
ident Sherman, who has been in
charge of the bank, was prostfated,
but recovered sufficiently to inform the
directory that he had been too liberal
in loaning money to his friends The
bank had capital of $500, 600 and de-
posts of $500, 600.
Cashier Granger said that the level
| opments were a surprise to both MIN
self and the directors None of them
had any idea that the president was in
volved in any irregular transactions,
and he could say nothing about details
of the method by which the funds were
withdrawn. Mr.. Tilghman, director
of the Washington national bank, says
the impairment of the capital is in the
neigh borhood of Sl35 600
President Sherman said:
II wish to have it understood that 1 alone
bear the burden of responsibility. 1t was i'm
possible for me to avoid the overdraft, and
after it was made l could do no better than
TO make il loan. Permitting a man to open an
account by 0epositng out-of-to drafts and
drawing against them was an error Of judgment
"a very unfortunate error. No one friendly has
been benefited by the transaction, nor was
there any real attempt to conceal the affairs OF
my administration of the institution from the
directors They were fully informed OF the
transfer of the overdraft to loan. The
other affair l did not mention for one
reason only, and that was that l hoped
that the man, if his difficulties were not
noised abroad would be abls TO cover his short
age. II have shown too much sympathy A
bank officer has no right 20 have a heart or to
try to save a man who is in difficulties. Still it
is hard to see worthy man go down without
an effort being made to save him.
He admitted that the security was
not frst-class Wall street collateral.
but he hoped to recover the money in a
short time. He did not believe, and
does not believe now, that the account
will be lost. But the security he had
taken, he said, would not stand the
scrutiny of the clearing house. This
overdraft was between S73, 900 and
SIS, 600.
Director Sidell Tilghman gave the
names of two persons to whom Presi-
dent Sherman gave unsecured loans.
One was John S. Silver, formerly a
trustee of the defunct American
Loan and Trust Company, the aggre-
gates of whose drafts were S51, 900. An
other was Capt F. S. Norton, who re-
Gently sailed across the Atlantic in his
life boat and is believed to be lost.
Ten thousand dollars was loaned
him on the stock of his company, now
absolutely worthless The third man
was not named. He owes the bank
S42, 900, of which only 1000 is secured.
Tilghman speaks very bitterly of the
loose way in which the banks affairs
have been CONDUCTED. and it is believed
that sensational developments are forth
coming.