The morning call., 1891-06-09
The KEYSTONE BANK
An Investigation Of the Cause
of the Failure.
Postmaster Wanamaker Examined by The
Council Committee.
A Full and Complete Statement Of Ali Hls
Transactions With the Suspended
Institution.
Epeeial to THE MORNING CALL


was present at the meeting of the Inyesti-
cation Committee to-day, attracted by the
fact that Postmaster General Wanamaker
had promised to appear and testify TO all the
knowledge he had in reference to the
banks management. Mr.. Wanamaker was
promptly on hand with his son and partner,
Thomas B. Wanamaker. and at the con-
clusion of the examination Examiner Drew
read his statement which he said was an
answer to all the allegations that have con-
nected his name with the Keystone Bank.
and was at the same time a fun and COM
plete statement of all his transactions with
the bank. His statement said, In substance:
al have been depositor only: never was
an officer or Director; never owned share
Of the stock. but held until recently 2515
shares as collateral. The firm of John
Wanamaker, consisting of three persons,
had an account with the keystone Bank
and the firms account, by arrangement
with the bank, was made responsible for
Mrs. Wanamaker's checks upon the bank,
which. for convenience, were kept In a
separate account. 1t is substantially one
account under two heads. Mrs. Wana-
makers account could not be overdrawn.
while my account had balance to its
credit. Under these circumstances, her ac-
count was not oveTdrawn when the bank
closed according TO our books, which show
balance in our favor. 1t is true the bank
charged against our account at its settle
ment short time before the failure $4,000
which no one at our Office knows anything
about and which we refuse TO recognize un-
til it is explained. We kept up our deposits
straight through the panic"
Mr.. Wauamaker then read a statement
showing tbs deposits in the Keystone Bank
in the months Of November. December.
January. February and up to March 20ths
reaching total OF Sl,263, S96. These de-
poslts had been gradually decreased, begin
ming with January, knowing, as the public
did generally, that Marsh was comforting
with the shareholders TO raise assessments,
and, further, knowing that ii was common
rumor that the bank was short Our course
with the keystone Bank was solely dictated
By the ordinary prudence OF business men.
| never knew of any irregularities in the
Keystone Bank until after the run, when
Lucas Indebtedness was made known 10
the Directors, and / was informed that his
estate intended to reimburse the bank.
Later, was told by President Marsh, for
the first time, that he feared some Of the
SOCK Htlu as C0lidterdl WAS not pl0DeliN
issued. | had no knowledge that the bank
was going to close when 1t did. All dis
counts granted to my firm or myself were
made in the customary manner"
Mr. Wanamaker said that from the best
Information he has the highest amount OF
single name papers held was $4,000 up TO
February, 1890. In that month, in addition
to this. he had a discount of $4,000 for i've
months which was understood to be per-
sonal t. him individually at the time he re-
ceived Ii. ANY discounts beyond this are
not properly chargeable to the firms ac-
count. On one occasion Marsh called ard
said he wanted S60,000 Of the firms paper,
as they understood, for country banks.
They gave 1t to him, and for some time
pressed the Keystone Bank TO turn over the
proceeds, aud finally got them by piece
meal. Before the paper was paid we
learned that it was in the Keystone Bank,
and we had an intimation that it had been
secured for use at the Clearing house"
Wanamaker said he never borrowed
personally from the bank except on
tie one occasion above stated. The paper
appearing in his personal account was paper
received in the course OF business with
which he settled. Lucas indebtedness TO
him was by reason of Lucas having failed
to keep an agreement. Wanamaker never
suggested any person, directly or Indirectly,
TO the Secretary Of the Treasury or Comp
troller for the receiYership of the Keystone
influence the appointment. He did not
know his brother had entered bail for
Marsh until he read Of the fact in the
papers while travelling In the West. lie
never had business transactions with BardS-
ley, Individually or as the City Treasurer,
or with any one representing him IN either
capacity.
Wanamaker had esteemed Drew highly
for years on his reputation as a bank ex-
amner. After the bank failed he saw
Drew twice and talked about the question
of establishing new bank with new men.
Wanamaker knew Lucas in business
way from early manhood and never heard
whisper against his business integrity until
after he was dead. During 1887, upon the
belief that Lucas was a rich man aud
knowledge OF his investing in various enter
priSes as a capitalist, WaDamaker told him
of his great desire to assist in preserving
the Independence Of the Reading Railroad
property and that he (Wanamaker)
thought the purchase of certain holdings
of stock held by parties inmlcal TO the re-
organization would be profitable and useful,
aud invited Lucas to join him in such puT-
chase. The agreement was verbal and to the
effect that Lucas was to supply certain
sums Of money as WanamakeT called for
them and deposit the same to WanamakeT'S
personal account in the Keystone Bank. In
accordance with that agreement Wana-
maker drew checks On that account to the
extent of about $4,000. Upon several occa-
sioDS when he notified Lucas that money
was needed. Lucas brought him stock of the
keystone Bank which he told him to use as
it was not convenient to furnish cash at the
time. AS result, when Lucas died, Wana-
maker had 25l5 shares OF Keystone Bank
stock so received.
After Lucas death Wanamaker found he
had not made the deposits as agreed and
that his (Wanamakers account was over
drawn. He Immediately made it good by
closing it with commercial paper received
in his business, which was all duly paid.
Lucas, therefore, did not in reality furnish
penny for the purchase Of the Reading
stock Wanamaker held, and all the latter
had for Lucas share was Keystone stock
certificates. lie held this subject to the ad-
juStment of his account MIR, Marsh and
Mrs. Lucas urgently desired, after the
run of last December, to have the
stock returned to the bank. This Wana-
maker declined to do. He maintained this
position until the bank closed and then,
recognizing that the stock had no mOneyed
value, and being further assured that If sur
rendered to the Lucas estate 1t would help
the rehabilitation Of the bank, he sarren-
dered il. What he surrendered was value
less 10 him, but might possibly help the
bank and save others. Being a collateral
holder under the law he could not be as
sessed upon the stock, hence any SUPPOSE
ton that he could have parted with the
stock to avoid an assessment is without
foundation and fact
Last autumn Marsh claimed that the bank
had strained itself to help customers and
wanted help, and the firm paid off all its
discounts as fast as they fell due Later,
when the run came, Marsh used 20 come to
the firm. saying lie had no one to go tO, as
suring them that everything was right, pre-
ciSely as he did at the Clearing house. He
pressed Wanamaker TO buy the Lucas Build
ing and seashore property, to loan paper for
use at the Clearinghouse TO recover other
collateral, all of which WanaEaker de-
clined.
About o'clock the night before the
failure Marsh called upon Wanamaker In
Comptroller and informed him OF his doubts
about the issued stock, and asked Wana-
maker whether be could in any way helm