New-York tribune., 1893-10-20
THE UNION UNLIKELY.
WRETCHED STATE OF THE MADISON
SQUARE BANKS AFFAIRS


SMALL. CHANCE THAT THE snERMAN's orFEB
CAN DE ACCEPTED-MoRE QUEER TRANS
ACTIONS COME TO LIGHT-TIIE At
ToRNEY-GENER,L's DELAY.
II Is now evident that the plan of consolidation
Of the Madison Square Bank with the Sherman
Rank must be abandoned, the stockholders OF the
broken institution cannot give the guarantees neces
sary to permit the Sherman Bank to act In the mat
ter The prospects that the only hope OF n.
turns TO unfortunate depositors OF the Madison
Square Bank must rest with the ability Of the re-
caivers to extract as much possible out Of its
assets unless vigorous steps are taken to bring to
account some the directors whose methods helped
TO wreck the institution. Every day brings to light
fresh instances Of improper management and Il
will be surprising II eventually proceedings to com.
pel restitution are not launched against the men
who depleted the funds Of the bank 1t also grows
more evident well-informed persons say that the
stockholders Of the bank must submit to an
ment in order to reimburse depostors, and 1t 10
moro than probable that the assessment will be q
big
THE RECEIVERS CAN DO NOTHING.
The delay By the Attorney General In recognizing
Miles O Brien and James q. Cannon as permanent
receivers Is hampering those officers OF the court
in their handling of the assets and tending to de-
lay any distribution among the depostors The
receivers are reluctant to discuss the subject at
present but there is excellent authority Tor saying
that they themselves astonished at the Attor.
ney- Generals inacton. There Is no excuse Tor the
delay now that is evident that the directors and
officers of the institution cannot reorganHe the
bank and repay to it their loans.
1t is clear to some of the heaviest deposltors that
political stand In the way OF the Attorney.
Generals recognition of the receivers as perma.
nent II this recognition were given the receivers
would be empowered to dissolve the c1,ter OF the
bank sell the securities hand and wind up the
banks affairs thus fastening the payment OF DIV.
idends to suffering depositors. As they are situ'
ated at present the receivers seriously hndered
in a proper treatment Of the banks assets There
are many persons who are anxious that light be
thrown on the political motives that led to the
shielding Of the men under whose management the
bank was wrecked. and IL would not be surprising
IL the should be appealed to for the purpose
of letting in the light.
A LETTER TO MIR. HOWELL.
That the plan OF consolidation is impractcable
Is shown by the following letter by Edward
Iauterbach who is counsel for a committee OF the
stockholders. to President Howell, OF the sherman
Bank. in reply to the atters offer to take up the
assets of the Madison Square Bank and, under
certain conditions. TO pay the depostors In full;
IL beg 10 acknowledge receipt of your kind favor
OF the 18th inst. am of the impression that the
suggestions made therein, especially those as 10
the guaranty OF the extent Of the coectability OK
assets and the creation Of voting trust, present
nsuperable obstacles to the acceptance of the plan
proposed by you"
The loans made to President Baut and ten of the
leading directors OF the Madison Square Bank have
already been exposed in The Tribune. But fresh
light on the loan to r. r. Mcdonald one Of the di-
rectors. brings cut prominently the methods OF
banking wnicn led TO the ruin of the Institution.
Mr.. Mcdonald is known AS promoter OF western fa
electrical enterprises, and he IS at the nead OF the
for time had running arringement Win inc
interr,Ipted by the summers financial disturbances,
and the Fort Wayne Company has been o2srateea
say that is one why he has not been able
TO take up his notes to the Madison square bank,
although anotha given Is that the notes are
not yet due II through President Blaut that
Mr. Mcdonald became creditor Of the bank as
Mr. Mcdonald effected the consolidation Of ths
Mr. Rlaut as the Eastern agent OF the enterprise An
agreement made that the Madison square banS
nrd ioaned Mr McDonaid s5cOco on 10000 OF these
bonds and agreed to renew MS notes ron yvS Sn,S
the money thus obtained Mr.. Mcdonald purchased
1000 shares Of the stock OF ths PARK m ana onaTs
nsper ersg SH svsn bv Mr. Mcdonald and ndors BY the
that his contract with the bank relieves him from
tI aEs ecy rise G 'S to Co. ankrs Consider
this method Of acquiring stock IN the bank ana pro,
tec;ing himself against demands Tor payment ="
the rotes as highly peculiar
THE CASHIERS INDEBTEDNESS
Cashier Thompson's note for $500 to his own
bank also furnishes curious commentary upon
President Elauts practices. His Indebtedness on
the books of the bank stands at $3.50. he pala
81 900 OF the money thus secured to get ten shares
| of the banks stock Sc as TO qualify as director.
and the ten shares stood security Tor the sl""
note Mr.. Thompson says that ne gave the supse.
quent note for $1,000 account OF the repeated
importunities OF Mr. Blaut who wanted him 10 puy
forty shares of the bridgeport Development com.
pany In which Blaut inter asted AtteG sesera
refusas he signed the note for N"0 took tne ioy ,
shares and turned the;a IN rs security Tor the
| He then drew a cashiers check ON the bank 10 10
the order OF the bridgeport Deyelopment SopsHs PAM
and passed II over to Blaut. Mr. TnompS9h ssy, IN,
he never received dollar OF the money ne ~
IA check Tor S5o5 & to the receivers 2n ,ne ,eunns MA
and this is the only indebtedness he VIII recosn|e
This case of Thompson's is only one OF many man.
which the receivers have discovered, Several noses
were presented for payment by tho collector 2 i2s
the receivers and were met with the defence n@als @
6y,n BY ,be solei,icn % Mr Bsat who
ccved the benefit Of the monsy VIII % VIII" hn,,ni
bank discounted them Then a., se Eafsnec discovered
the checks which were drawn az ,n' % ,iI' ' tscosc
were discounted and ,ncsG ST't tbs Sensa, OF the
| loan made by the bank. II is said that Mr. Blaus
! would induce person wno WfsIe" Wse n,o +" ,h lo,n
| would he made and Mr. Baut would receive me
extra 81 900 for his own purposes !. was a'S ,,,n 49,
/ town broker sold Mr. Blaut some securities al ~
cants on the dollar. and these securities were p'
81 h,,s,cd iha; over N0oNO of different kinds OF
securities were fosted upon the BANK III t',s ~, w
WIN these facts In the possession OF the receivers
n womld seem 10 be more than probable that erin:
wSa Sy SS hs lns'usu attitude Of
torney- General. whose conduct caEno, pe pn,n,S
except on tho ground that he Is seeking 10 sh'e'o
! political friends .,.......-