Evening journal., 1893-02-24
THE BANKS STATEMENT.
oficials Tell OF Smiths Modus operandi.
They Declare That the Bank is Per-
fectly Sound.

They Declare That the Bank is Per-
fectly Sound.
PeterT. e Smith has been employed
in the First National Bank since 1852
During this time he required splendid
experience, and, it is said, beca me so
rapid and accurate as paying teller that
his services to the bank we're invaluable.
He was worth as much as two men in
counting out money.
The statement given out officially at
the bank this morning is as follows:
"Mr Smith is now under arrest.
charged with embezzling $55, 900 from
the bank. The deficiency covers false
entries extending over fifteen years
Smith, in addition to acting as paying
teller, also did the posting in the ledger.
in which the individual accounts are
kept He kept on his desk what is
known as spindle, which he
used as a file for the checks which
be paid every day, and also as
caucelling medium. These checks. after
being thus cancelled, we're chars ed up
in the individual cash book against the
respective accounts by another clerk.
They we're then posted by Smith under
the proper headings in the ledger
These checks we're then packed away in
boxes in the vault, waiting for TIE
balancing Of pass books. Smith went
into the vault aud took out a cancelled,
or dead check, aud, putting it on the
spindle-taking care that the spindle was
passed through the old cancellation hole
would take an amount of cash cores.
pOnding to that named on the check
from the cash drawer and put in his
pocket The check would then pass,
with other bona fide checks, to the clerk
who charged up the items, in the usual
way. Smith would then of course
neglect to post the entry OF the false or
cancelled check. The ledger folio would
thus show figures identical with the
customers pass book making the ledger
of individual accounts show the proper
balance due to the customer.
"The bank keeps another ledger called
the general ledger This shows the geD
eral condition of the bank-its capital its
surplus, gross amount of deposits due
individuals, its general resources, etc
This special account of individual de
posits is a debt of the banks and it is
charged daily with the total amour. of de
posts aud credited with the total amount
of checks paid. These two amounts
are taken from the individual cash book,
before referred to. This cash book, as
before shown, would represent more
checks paid by the bank by the amount
of the dead or cancelled check. This
overcredit, many times repeated and ex
tended over many years. would have the
eff ct of reducing the debit item of de
posit by the total amount of the embez
zled sums.
The bank has a capital Of $500, O0l
~ l..I fo 81
SI27, O00 This shortage will be charged
against this surplus fund. leaving the
bank with a capital of $500, 900 and I
surplus of $40
Smith is under a bond of $4,000
taken out by himself in the American
Surety Company of New YorK. Th'
proceeds of this bond will, of course, re
duce the amount Of the defalcation tina
much
Mr.. Stone Says It's Sound.
"The examination of the First Nationa
Bank, " says Bank Examiner Stone, "ha
just been completed, and there i
no doubt whatever that it is full,
able to meet its obligations to its depos
itors without any inconvenience. Tn
, loss through the defalcation of tn
teller will fall entirely upon tn
| STOCKHOLDERS. IL Will reduce the Surplu
q and undivided profits less than one-hali
! but the solvency of the bank will not b
> in any way affected, as the amount O
surplus will still remain about $40 00C
: and the capital will remain intact.
f Spent it in High Living.
Yesterday afternoon President Wir
chester was summoned TO the Office G
Levi G. Bird. There he met Smith, VIII
confessed to having taken $50, 900 of th
>, banks money. His speculations, he saiC
extended over a period of hftee
years, although he had taken nothin
q recently. He was asked whether he ha
e not taken dead, or cancelled check
Il from the vault-as explained in I'll
presidents statement-and then cashe
n them a second time for his own use. =
said that was the way. He felt his di
10 grace very keenly. He claimed that IL
= stolen money was spent in maintaining
large household extensively.
st Frank Nolow. an ex-collector of customs
this CITY. was elected past comma nder Of d
AFar 4 aaI Ill1f4 ...slr