Morning journal and courier., 1891-06-15
THE LOOTED KEYSTONE BANK.
Some Moro Facts Brought to Light
What the COMPTROLLER Saws.

THE LOOTED KEYSTONE BANK.
Some Moro Facts Brought to Light
What the Comptroller Says.
| WASHINGTON, D. c., June 14.-Comp-
troller Lacey has submitted to Secretary
Foster statement Of the facts leading up
to the final closing of the Keystone Ma
tional bank of Philadelphia and the ap-
pointment of a receiver therefor.
The comptroller says the first informa-
ton that reached him of the Lucas defal-
cation was received January "a from Ex-
aminer Drew, who stated that on January
| 9 President Marsh voluntarily confessed to
him that an Indebtedness of the Lucas es-
tate to the bank, amounting to $500, 900,
had been heretofore concealed. Mr.. Marsh
said he had been at first ignorantly led in
to irregular transactions by the late Presi-
dent Lucas, whose protege he was and to
whom he was under very great obligations,
and that Mr.. Lucas on his
death bed exacted promise from
Mr.. Marsh to continue the deception until
the missing sum could be made good from
the results of the Lucas enterprises. Of
Bank Examiner Drew's letter the comp
troller says: "1t is to be observed that the
letter states that the directors of the bank,
seven members of the clearing house COM
mittee, counsel on either side Zone of whom
was the United States attorney for Phila-
delPhia) and the bank examiner himself
were the only persons who had knowl-
edge of the Indebtedness of the Lucas es-
tate and of the conveyance of property
which, SO far as the report shows, made
good the sum abstracted
ut is also to be observed in Mr. Drew's
opinion. and presumably upon consulta-
ton with the gentlemen named, and upon
their advice it was important that no pub
licity be given to the affair until the bank
should be fully rehabilitated.
Upon receipt of this report the comp
troller was confronted with a grave re-
sponsibility. The entire country had been
recently passed through a crisis, caused by
severe monetary stringency, which made
absolutely necessary the issuing of clear
ing house certificates in three of the great
seaboard cities. The uneasiness caused by
this situation had been greatly aggravated
in Philadelphia by reason of the failure of
several large private and state banks, and
by the run which had been made upon the
Keystone National bank in December, un-
der the effects ofswich it was still suffering.
For these reasons the situation was one
requiring the most considerate and careful
treatment, and anything tending to shake
returning confidence in financial institu-
tions was to be studiously avoided. A re-
newal of the run upon the Keystone Ma
tional bank might have involved other
banking institutions and produced wide
spread disaster. 1t was also true that the
keystone National bank had passed
through severe crisis in December and
had been able to weather the storm with
$500, 900 less assets than it had when this
report reached the comptroller. 1t is true
that the comptroller could not have at this
time lawfully closed the bank nor could he
even levy an assessment to make good an |
impairment of capital, as none existed ac-
cording to this report. The danger then |
was for time passed and the comptroller |
decided to await the arrival of Mr.. Drew |
on the 9th of January, the day following
the receipt of his letter.
It was represented to the comptroller by
Mr.. Drew at this interview that, in his |
judgments and in the opinion of the clear
ing house committee, the property con-
veyed to the bank by the Lucas estate was
equal in value to the Indebtedness which |
had been concealed, that in any event the
creditors of the bank were entirely safe
and that prompt efforts would be made to
replenish the cash by deposits of $500, 900
to be made by the leading directors and
stockholders, which should place it in
funds until it's own assets became availa-
BILE. Further and later reports from Drew
convinced the comptroller that the board
of directors were slow in putting matters
in satisfactory condition, 30 on March
7 he levied an assessment of $3.50, 1000
upon the shareholders on the prom
Use from a committee of directors
of the bank that the assessment
would be paid within week. On March |
IA Mr.. Drew complained of little active |
support from the directors on the effort to |
comptroller on the 18th, and three days
after he closed the bank. The bank then |
remained in charge of the examiner for
fifty days. In regard to the delay in ap-
pointing receiver Mr.. Lacey says it was
not done Immediately because it was the
duty of the comptroller to facilitate re-
sumption of business by the bank. 1t was
important, considering all the business and
municipal ramifcations which the failure
involved that plenty of time be given for
developments, in order to avoid the sp-
pointment of some improper and interested
person. No person, he says, can show
that any creditor or stakeholder has been
damaged to the extent of one dollar by
reason of the delay.
The comptroller states that Postmaster
General Wanamaker "never directly or in
directly suggested or solicited one days
delay in the closing of the bank nor in the
appointment of receiver, except as ap-
pears by the telegram hereinafter quoted.
In fact have met him but once during
the present year, and that meeting was on
the Dist day of last March at the sugges-
ton and in the presence of Hon. A. B.
Nettleton, then acting secretary of the
treasury. This interview was the day af-
ter the Keystone bank was closed, and the
failure was fully discussed"
He subsequently confirmed the informa-
ton I received from Mr.. Marsh and said
that he held as a pledge certificates of {,
500 shares of stock in the Keystone bank,
and that he had declined to surrender
them unless the Lucas estate would pay
him the amount due. I urged him to use
his influence in aid of the efforts being
made to reopen the bank. He promised
to look into the matter the same night on
his return to Philadelphia, and l tele-
graphed Mr.. Drew to call upon him with a
statement of the assets and liabilities of
the bank, and to facilitate in every way
possible his taking an active interest in
the schemes for Reorganization. 1 failed,
however, in my attempt to enlist him in
in the enterprise, and ended all COM
munication between US on any subject
connected with the banks affairs, except
ing the receipt af the following telegram:
From Postoffice Department
Hon. Edward S. Lacey, comptroller: Mr..
Marsh of the Keystone bank came down last
night to say that it was reported you intend to
appoint q receiver of the Keystone bank unless
something more definite was done to-day. be-
lieve nothing would suffer from giving them
twenty-four hours longer at the end of which
they put on paper something more definite to be
presented to you. From what he says, they are
getting along pretty well in securing subscrip-
tions to the new stock. would recommend APP
pointment of receiver be deferred, say one
day, until he had an opportunity to state some
thing more definite (Signed),
JOHN WANAAAKER.
Tn copc1,,dipo tho stafapapf Mr. ooay