Wheeling register. [volume] (Wheeling, W. Va.) 1878-1935, 1891-06-15
KEYSTONE BANK.
UNITED STATES COMPTROLLER LACEY MAKES
AN EXTENDED STATEMENT
About the Affairs Of that Instltution-HOw Presi-
ident Marsh Got Away and Who Was Re
sponsible-Ths Duties Of Bank Examin-
-COmptrOllsrs Responsibility.

WASHINGTON, June 1.-THE state
ment of Hon. f. S. Lacey, Comptroller
of the Currency, relative to the down.
fall of the keystone National b nix, of
Philadelphia, has been made public by
Secretary of the Treasury Foster, to
whom it is addressed 1t is volumin
Gus document, containing over 5000
words, and embodes correspondence
and papers bearing on the Quaker
Cty's financial condition.
The statement says: "The first infor
nation received by me in reference to
the Lucas defalcation was contained in
communication addressed to me by
VIM. p. Drew, Bank Examiner for Phil
adelphia, dated January "a, 1891, and
received by me on the Goth of the same
month. The communication stated that
Mr.. Drew was informed on the 9th inst.
that there would be disclosed a hitherto
effectually concealed debt to the bank,
of it's late president John c. Lucas,
amounting to 100000. This confession
has been fully verified.
1t appears that Mr.. Lucas had, with
the connivance Of the cashier, Marsh,
now President of the bank, carried out
by adroit manipulation OF the accounts
of the bank Tor series Of years, a
scheme for systematic abstraction from
the bank Of large sums to assist his
speculations in real estate.
To protect the bank so far as possible,
IL, iniY Tho
Lucas estate property, used by the
bank as banking house, for S225, 200,
and the property at Spring Lake and
Sea Girt, n. j.
The Committee asked that further
time be allowed the directors OF the
bank to raise some 100000 to put
into the bank.
1t appears that Mr.. Marsh, formerly
the cashier OF the bank, was at first ig-
norantly led into the irregular trans
actions by the President and that the
latter on his death bed, exacted prom
ice from Mr.. Marsh TO continue the
deception under representation that
the money distracted would soon be re-
turned to the bank from the results OF
Mr.. Lucas enterprises.
| OThere does not appear to be any evil
dence that Mr. Marsh profted in the
least by these irregularities. Since the
disclosure, he has faithfully and earn
estly co-operated in all efforts to assist
the bank to secure property for this
debt, and his intimate knowledge of all
matters connected with the affair has
been Of great use.
Accompanying this letter was pre-
liminary statement of the resources and
liabilities of the association, which
after considering all probable losses,
as stated by the examiner, left the
capital stock of 100000 intact, and, in
addition thereto, net surplus OF
$50, 5,S19.
Mr.. Lacey's statement then reverts to
the financial strngency at many points,
and refers to calamitious results that
might have Immediately ensued upon
the disclosure OF the situation or the
ousting of President Marsh.
1t was evident the Comptroller could
not at this time lawfully have closed the
bank, nor could he have even levied an
assessment to make good an impair
ment of capital, as none existed. accord
ing to this report.
1t was represented to the Comptroller
by Mr.. Drew at this interview that in
his judgment and in the opinion OF the
Clearing House committee the property
conveyed to the bank by the Lucas es-
tate was equal in value to the indebted
ness which had been concealed and that,
in any event the creditors Of the bank
were entirely safe.
Under these conditions the Comptrol-
Ter did not insist upon the immediate
resignation of President Marsh.
The statement Of Mr.. Lacey then de-
tails the succeeding steps in the buSi-
ness.
On January 30, Mr.. Drew telegraphed
that prospects were encouraging. On
February II, Mr.. Lacey was in Phlla-
delphia, and met leading directors OF
the bank, and it was agreed that the re-
serve of the bank should be restored
and maintained. Drew wrote February
16, that Mrs. j. c. Lucas, widow OF the
late President, intended to sail for
Europe in short time. AS she owned
1000 shares $500, ,000) stock OF the bank
action should be taken at once.
The bank was a creditor at the clear
ing house that morning $4,000 and
everything quiet. One day later, Feb
ruary II, Drew transmitted his COM
plete report of the banks condition,
and says it will take much time 20 fully
entangle the methods by which the
Lucas deficiency was distracted. Mr..
Drew in this letter adds:
THAT the whole amount OF the loss
has been appropriated by the late Presi-
dent and his friend, am more and more
convinced"
The next communication referring TO
this matter seems TO have been the final
and formal report. This was dated
February %.
"Having duly considered all the ite ms
stated in this report" says Mr.. Lacey,
sit became napparent that an impair
ment of capital existed to the extent OF
at least $3.50, 900, whereupOn, under date
of March 7, levied an assessment OF
$3.50, 900 upon the association.
This assessment was levied under the
positive promises made by the commit
/ tee, Haines, Hughes and Marsh, that
the amount assessed would be paid in
/ one week at most.
On the l4th of March Drew wrote:
Beyond expressing a purpose inaug u
cure, the Board has not as yet.to be Sc