The morning call., 1893-05-11
Suspension Of the Santa
Clara Bank.
RECKLESS MISUSE OF FUNDS.
The Vice-PreSideut Indebted to the
Institution for Over a Hundred
Thousand Dollars.
Special to THE MORNING CALI.

lcUGu u Inc bdilk lOt luIIleI information
found the following notice posted on the
doors Of the ba1k:
Notice to depoSitorS On account of
business complications growing out of the
death OF C. c. Hayward, the late cashier of
this bank, the Board of Directors have
deemed it advisable to close the bank
temporarily, in order that its affairs may
be examined and its condition ascertained.
Depositors and certificate holders are re-
qussted 10 present their passbooks and
certificates without delay"
As soon as the fact of the banks sus-
pension became known all sorts of sensa-
tional Tumors as to the cause of the event
and the amount of the deficiency began to
circulate about the street. Some of these
proved on investigation to be exaggerated
or untrue. From reliable sources The
CALL correspondent was enabled to gather
the following facts:
c. c. Hayward. for many years cashier
and secretary Of the bank, died only a few
days ago. He, together with h NJ. Leon
ard, vice-pTesident and manager, h ad COM
plete executive management of the bank.
All the practical details of the business
were under their immediate direction. j.
L. Pierce, the president, and one of the
chief stockholders. had been in poor health
Tor some two years past and had been ab-
sent in Southern California much of that
time.
Tie most implicit confidence had ALWAYS
been reposed in both Mr.. Hayward and
Mr. Leonard, not only by the directors
and stockholders, but by the whole bust
ness community. No breath of suspicion
had ever tarnished their names Not only
their personal integrity but their ability
as practical bankers had never been uues-
TONED.
The rumor that Mr. Hayward commit
ted suicide on account OF financial entan-
clements has no foundation whatever in
fact. 1t has been clearly proved that he
died from natural causes.
Il was reported that during his illness
it was discovered that a certifcats of
deposit of $1,000 appeared on the stub and
on tie certificate register marked as
paid" which a subsequent Investigation
proved had not been paid. Following up
this clew, il is Tumored that numerous
glaring discrepancies in the accounts were
found, and that Hayward admitted before
he died that he had issued certificates of
deposit aggregating $4,000, and had used
the money without its going upon the books
In regular form.
To-1ay affairs were brought to a focus
by the filing Of a personal petition in insol-
yeucy by II. NJ. Leonard. vice-president of
the banb. The document proved TO be a
great surprise. In It he states that in con-
sequence of loss in land speculatioHs,
depre citation in the value of mining stock
ana the payment of security debts. he is
forced to file his petition.
An examination of the figures in the
debted to the bank OF Santa Clara County
in round numbers for about S110O prin-
cipally for money borrowed on promis-
sorry notes, most of which was without
security, though there was one note of
81, coo secured by James P. Pierce.
Among other creditors of MIR. Leonard
appear the names of the First National
Bank IF san Jose for SIS, 600. unsecured,
the Garden City Bank of San Jose $40, 900,
secured by 500 shares of the Bank of Santa
Clara County, the Bank of San Jose S10,-
COO. secured by 800 shares Of the Bank OF
Santa Clara County, besides numerous in
dividual creditors. The total amount OF
Mr. Leonard's Indebtedness, according to
the petition filed to-day, is about Sl3j.000.
the bulk Of which is unsecured.
NThe board of directors held two meet
ings to-day TO discuss the situation. Mich
Olas Bowien was retained as attorney for
the bank At the forenoon session it is
understood that little was done except TO
discuss ways and means. lay out the work
and arrange for exporting the books. In
the afternoon Mr.. LeODard's statement
was heard. He said that all he could do
was to file his petition in insolvency and
refer to that as to how matters stood. he
could not give them any details about the
banks condition, as he was not the book
keeper.
In the course of an interview late this
evening Mr.. BowdeD, the banks attorney.
said to The CALL correspondent: MY
relations to the board of directors are
such hat cannot give you many accurate
details, but in my opinion the bank will,
without delay, devise ways to meet all its
obligations in full, and will probably re-
sume business at an early date. There is
no apprehension of loss On the part OF the
depOsitors and no prospect of run on the
bank when it reopens. 1t has always been
considered one Of the solidest banks In
Northern California, has been in exist
enee about eighteen years and is backed
by capitalists who are both able and will
ing to make good all losses.
The Pierces are mllionaires and are
abundantiy able to make good any short
age. Before this trouble the stock, which
eos: originally S4J per share. was quoted
at 500"
The creditors and Santa Clara business
men generally show disposition IT, ex-
tend every possible aid to the bank. The
trial balance of the bank March l showed
assets amounting to S439, 43O. surplus of
$4,000 ard undivided profits of $4,000 Ii
hos Fft,Y. old dividend Of
per cent.
Secretary of tie Bank Commission
Hardesty was seen by a reporter Of The
CALL last night and asked regarding the
failure Of the Bank OF Santa Clara.
The news was much more OF a surprise
to me than to anybody else," he said. "It
came like thunder from clear sky.
''The Bank Commi issoners investigated
the affairs of the bank on December II,
1892, and found them to be substantially
as set forth in the last published statement
of the bank.
'"Ihe stockholders in the bank are anon g
the weaithiest men in Santa Clara County,
and L Go not see how it is possible for
de} }o'iloFs to lose single cent, and neither
can Imagine the cause of the suspension.
"ln running the thing over in my mind
IL occurred 10 me that run on the DanK
may have been started by the depositors
hearing the rumor that the late cashier,
I. {. Haywood, who recently died, was
short in his accounts.
The bank may have been caught short
OF available cash and yet been in a per-
1ectly solvent condition.
Being near no place where cash funds
couid be readily supplied it was obliged TO
close for short time only.
do not anticipate even permanent
suspension of business"
Inc Bank Commissioners were out OF
nv Sl'5 yesterday and last night ana could
nor De seen regarding the failure.
ne san francisco representative of the
Bank Of Santa Clara County is the Bank
Oh California. The officials Of the Bank of
oaiiofhia stated yesterday that their in
s.tunoh heId none Of the paper of the sus-
penuea pank, and would not be Involved