The times. [volume] (Richmond, Va.) 1890-1903, 1893-08-11
SHREWD TRANSACTION.
THE MADISON SQUARE BANk IN
NEW YORK TIE YICTIM.
State Treasurer Elliott Danforth Drew
$500. 900 State Money From the In
stitution-HIs Note for $4,000.

| city. The institution remained closed
yesterday, and, although the final action
of the directors has not been formally an
nounced. there is little doubt that the
institution will pass into liquidation.
The deyelopm ,nts of an interesting ma
ture referred to relate to the relations
existing between the bank and Elliott Dan
forth. Treasurer of the State OF New
| York.
Mr. Danforth had on deposit in the
bank 10000 OF State money, which was
drawn out yesterday In a hurried and
! somewhat peculiar manner.
feature sharing interest with Mr.. DAN
forth's race for $4,000 is the fact that
among the assets of the bank was found
when the clearing house committee made
| its examination the note Of Elliott Dam
forth for $4,000.
This seems TO be a large sum for the
Treasurer OF the State 10 borrow from
| an institution as small as the Madison
| Square National Bank, and II may occur
! to the public that it was a small concern
| In which TO deposit so large a share OK
| State funds
Treasurer Danforth's note bears the in
dorsement Of G. NJ. Church. Regarding
his responsibility the clearing house COM
mttee knows nothing. but he is reported
/ TO be very young man, without business
experience
Mr.. Church is a son Of the late Sanford
Il. Church. who was chief justice of the
Court Of Appeals.
The relations between Treasurer Dam
forth and the Madison Square Bank, as
illustrated by the large amount OF money
| deposited there and the size OF the loan
he had secured, created profound sensa-
ton in banking circles.
So far as can be ascertained Mr.. Dam
forth was not a deposition in the bank on
his personal account, ard it is exceedingly
unusual, ain ost unprecedented, in fact,
for an institution 10 lend as large an
amount as $4,000 to any individual on a
personal note Endorsed by an almost un-
know man.
But there is another peculiar feature
connected with the transaction which, in
the minds OF many. initiates against
Treasurer Danforth's "shrewd bit OF finan
ciering," as IT was called in securing
from the Madison Square Bank the full
amount-s2O0,O00 Of State funds.
This arises from the fact that the bank
was examined by the State bank ex-
aminer, c. A. Judson. on July oath. and
found by him TO have suffered an impair
ment OF capital amounting TO $1,000
IL is thought 10 be the duty of the
State examiner 10 notify his superior OF
such condition. particularly when State
funds are at stake.
The treasurer should have been inform
ed Of the condition Of the bank by State
Superintendent Preston. Whether this
was done or not could not be ascertain
ed yesterday. Facts, however, speak for
themselves.
In banking circles this view was taken
Of the matter; The banks capital was
impaired $1,000 on June 2ith. Mr.. Dan
forths personal vote for $4,000 was dis
counted. it IS said, before that time, but
even IL at a later date II makes no
difference for the better, and. under these
circumstances, bankers say, 1t seems pc
cular that the Treasurer should carry
100000 OF State funds in a shaky insti-
tuition for fully two weeks after its con-
dtion was known, and that he should !
not have Withdrawn It until its clearing |
house agent called the attention Of the |
association 10 the crippled bank by re-
fusing longer to act for 1t or to honor its |
drafts.
Mr. Danforth was I'm the city on Tues |
day, and was among the first to learn |
that the clearing house committee had |
had attention called 70 the Madison Square |
Bank y story was current I'm the city |
yesterday that the Treasurer had jumped |
on an express train, rushed up to Albany |
and gained entrance TO his office. once |
there he drew an official check against |
the State deposit. sprang aboard another /
express train and managed TO reach the |
city before banking hours
According TO the rules Of the Clearing |
House Association the agent Of the Madi- |
son Square Bank, which is the st. Nicholas |
Bank. is compelled To clear its checks the |
day following the termination of clearing |
house relations
Treasurer Danforth had a friend IN |
Court. He carried his 100000 check to a
friendly bank and through favor had #
amend It's clearing house sheet so as to !
include the 100000.
The sheet was put in due form, and
the treasurer secured the money through /
the payment Of like sum in the clearing
house by the st. Nicholas Bank.
This story is true with the exception |
that some one beside Mr. Danforth did |
the rushing around At the time he is
credited with having been in transit for
Albany he was at the end OF a long dis
lance telephone I'm this city talking TO his
subordinates in his office.
one Of them the corrected version OF
the 'shrewd bit OF financerlng" has il.
came to the city with the Official check,
and the remainder OF the transaction is
as related.
The 81. Nicholas Bank will lose nothing
by the transaction, ai,.Ough perhaps It's
action was a tride contrary TO Clearing |
House rules. Probably IL expected some
such development. for II is reported on
the authority Of Bank Examiner hudson |
that on Tuesday the St Nicholas Bank
obtained $4,000 additional securities from
the Madison Square 10 protect itself |
against clearances
The impression prevailing among Wall
street bankers Is that Treasurer Dan
forth's note OF $4,000 will be cared for
by his friends. None of the members Of
the Clearing House committee could |
speak for publication regarding the Incl
dent OF the treasurers note. Some Of
them when asked the date when IL was |
drawn and whether II had recently been
renewed, said they had not examined IL
and could not answer the question. |
Others declined point blank TO discuss
any feature OF the case.
so far as the examination Of the Clear |
ing House committee is concerned II
showed the affairs OF the Madison Square
Bank TO be I'm a bad way.
inis seems to have been an inherit
lance In part from previous management
Of the Institution under W. Wetmore |
Cryder. BAD loans had been made. which.
instead Of being written Off. had been
carried as good assets. Several loans were
found In the books for which there is
absolutely no security Among them and
in addition 10 the Danforth note OF s50- |
600 is one for So, 600 owing by w. Wetmore
Crs'6er.