New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1893-08-18
THE COMMITTEE NAY BESUED.
CLEARING HOUSE REPRESENTATIVES AND
THE MADISON SQUARE BANK.
INVITATIONS OF LEGAL PROCEEDINGS GROWING
OUT OF THE TRANSFER OF $500 900 IN
SECURITIES JUST BEFORE TIE
BANK WAS CLOSED.

| BANK WAS CLOSED
| II was ntmated yesterday that suit might be
brought against the officials OF the New-York
Clearing House Association to the 500 600
| in securities which were secured from the Madison
! Square Bank on the night before 1t suspended
| At p. m. that day the Clearing House Com
mittee went to the bank 10 examine into its con-
! diton. No definite announcement as to the rate
| of the institution was made that night. but 1t
was closed the day. and has since gone into
! the hands Of receivers 1t learned that while
| the Clearing House Committee in session
at the bank the officers handed over TO them
100000. or tnereabouts in quick assets. for the
purpose of securing the St. Nicholas Bank, which
was its Clearing House agent.
| 1t has been charged that the withdrawal OF this
100000 at critical time. placed the bank In such
straitened position that it could not pull
| through. On this ground 1t was intimated that
| the suit be brought although by whom as
a complainant was not made clear. Ordinarily
such proceedings would be brought by the re-
cevers who are Miles NJ. O'Brien and James G.
Cannon vice-president Of the Fourth National
Bank Mr. Cannon is a brother Of Henry w. Can
non president Of the Chase National, who Is a
member of the Clearing House Committee. 1t
was suggested. too. as possibility. that the pro-
ceedings might be brought in the name of some
Of the directors stockholders personally and in
a representative capacity.
The idea of lawsuit was secuted by leading
bank officers who seen yesterday. The Clear
ing House Committee and the ST. Nicholas Bank,
it was asserted. had acted only in compliance with
the rules Of the Clearing House Association. This
was what a member of the Clearing House Com
mittee said:
1.-The securities transferred were about 100000,
and were handed over to the committee by the
| officers of the Madison Square Bank while they
were in full authority The talk of there having
been a possibility of averting the suspension Is
nonsense in light of actual condition of the in
stitution Under the rules of the Clearing House
! Association outside banks must protect the banks
which clear for them. 1t was known that the ST.
! Nicholas Bank would have to honor checks for
about 10000 the next day. and for that reason
| these securities transferred. OF that %W"p
| the sum OF $3.50 900 was the States money. drawn
out by Mr.. Danforth. and $4,000 was the personal
| deposit of one Of the directors Of the Madison
| Square Bank
| The little ruse by which Mr.. Danforth withdrew
| the States money has become so well known IN
connection with his notorious $4,000 unsecured note
that it need not be reold. 1t will Ice remembered
that Mr. Danforth only drew the official checK AFTER
| a flying trip to Albany in the dark hours OF the
night after the Clearing House Committee had
met and after the transfer OF the 100000 to secure
the St Nicholas Bank had supposedly h'en made.
| When this was called to the attention OF the
members of the Clearing House committee ne
replied ut known that Mr.. Danforths checK
for that amount certainly would be drhwn-'hat rs "
was known as much such a thing could be
known IT was impossible for the St Nicholas
Panl, TO refuse to honor the check. because 1t
could not be proved that there was anything out
| Of the way in the withdrawal and the ST Memo
las Bank vas required to honor all checks when
came up to the time that the bank closed us
doors
| mo papers have been served on us he added
| land we do not expect any suits from the Madison
Square Bank"
| Although the Madison Square was not a member
| NJ the Clearing House Association. IT was subject
LAT any in1p q
long as II cleared" through any OF the associateu
! banks The rules bearing upon this point are;
| THE Clearing House Committee Is empowered;
whenever It shall consider II for the interest OF
, the ton, examine any bank fn"inh"r
| OF the association and to require from any mem
| Der securities OF such amount and character as
| said committee may deem sufficient Tor the pro-
| lection of the balances resulting from the eA-
| changes Of the Clearing House -,
| section providing for exchanges between the as
| ISOLATED banks and outside banks. says: .
| ION and after January ]. 1891, this association
! permits It's members to make such exchanges only
after the consent of the Clearing House Committee
shall have been obtained and the banks or parties
| shall have obligated themselves TO pay TO the
| Clearing House Association an annual payment OF
| 5000 and shall also consent to the same eXamina-
! lions as are now required OF its members
! are T. H. Perkins jr.. president OF the Importers
! and Traders National Bank; Frederick D. Iappeh.
| of the Ciallatin National Henry w. Cannon, OF
| the Chase National; J. Edward simmons OF the
| Fourth National, and William a. Nash, of the
| Com Exchange Bank