The Portland daily press., 1898-01-26

though sufficient in detail, perhaps, tol
an institAtion the size OF this. Inc week
" trial balance, required ~ law an
| Kept by all savings banks, was as saVls
factory IN form as that found III o major
| iby of the other Institutions IN tne 5tase
/ A book of entry was used, IN Wnlch uhe
treasurer was supposed to record all re
oe4pts and disbursements The same book
also contained what purported to be the
| individual accounts of the several deposl
| tors. 1t appeared from these books thai
there was due depositors at that time the
sum of IS, $685. "a. There were certain
other liabilities for moneys borrowed. re
s..rye fund and undivided profits, making
t an apparent total liability of $40, 552 60
| The resources of like amount consisted
of certain bonds, stocks and loans, all OF
which were seen and checked, with the
exception of two government bonds OF
$500 each, which were deposited with
other parties as collateral, the treasurer
holding receipts therefor. The statement
contained in the report OF this depart.
ment for the year 1885, gives the liabili-
| ties as they appeared on the books of the
| bank, and the assets as exhibited to the
examiner, with certain deductions from
the face of the loans and on the unpaid
interest account. 1t shows that the mar
ket value of the assets was 1919. IL in ex-
| cess of the apparent liabilities. Had the
books exhibited been honestly kept, this
statement would show substantially the
| true condition of the bank at that time.
No footing of the individual accounts as
they appeared on the depositors' ledger,
was made at the time of the examination
to ascertain If the total agreed with the
general account of deposits as carried in
the trial balance by the treasurer. Even
had this been done, the accounts would
have agreed substantially, and the exam
iner would not have discovered the short
age that existed. This deficiency would
have appear ed only when the depositors
books were called in and compared with
the books kept by the treasurer.
| Following this examination several
statements were received from the treas
rlrer, each succeeding one showing de-
crease in the amount of deposits. While
at that time there WAS no reason for sus-
pecting anything wrong in the treasur-
er'S accounts, there seemed to be danger
of gradual withdrawal of deposits to
such an extent that the bank would be
compelled to close up it's affairs. AS the
institution appeared to be solvent, did
not, however. feel justified in forcing 1t
| into liquidation, but did write the treas
urer urging the advisability of this, and
| went so far as to suggest the possibility
| of making some arrangements to conscll-
date with the Eastport Savings Bank.
| Needless to say the treasurer refused to
consider UnlS proposition
| In February following, further tnfor-
nation was received justifying some
what my fears regarding the withdrawal
| of deposits and the future of the institu-
| ton, and / again called upon the treasur-
| er for special statement of it's affairs.
| On the 27th day of February statement
was received which purported to show
| the condition of the bank as of the goth
day of that month. 1t included certain
| items of resources that for the first time
excited my suspicion of irregularity in
| sthe accounts, and led me to continue my
| investigations The treasurer was then
requested to furnish a detailed statement
| of the bills-payable account, and the col
| lateral pledged to secure the same, and
| also d list of all notes held by the bank,
| and their amount and probable value.
| His attention was again called to the fact
| that the bank had no legal right to Dor
row money or pledge its securities for
| that purpose. The list OF notes called for
was never obtained, although | wrote a
| second time for 1t.
| Matters had now reached so unsatisfac-
| tory q condition that I went to Lubec,
and on the 18th day of April, made a per-
visit the treasurer was i'll and confined
! to his bed. After examining the books
| and pspers of the bank and comforting
| with the treasurer and his friends, clan
destine ledger WAC produced which
showed the amount due depositors to be
1913. 761. 80, instead of SIS, 500. 81, as ap-
| peared on the books heretofore exhibited
| to examiners as the books of the bank.
An examination of this ledger showed
the actual number of depositors to be 8 l.,
while the number appearing upon the
| book previously exhibited as the general
ledger of the bank, was only about co. in
SOME cases where deposits had been
made, accounts had never been opened
upon the regular ledger, and in others
the accounts had been opened, but the
| treasurer had failed to enter some of the
larger items of deposits thereon. In all
cases where the proper credits had not
been given and depositors accounts
opaned in the regular ledger, the general
account of liabilities had not been in
creased to correspond with the amount
deposited, and there was consequently
no increase in the assets. 1t also appeared
| that in some cases where borrowers had
made partial payments, or had paid
| their loans in full, the proper endorse
ments had not been made, or the treas
| urer had retained possession of the notes
after they had been paid and HAD contin-
ued to carry them for the full amount as
| a part of the assets of the bank. The
Investigation also showed that the gov
| eminent bond for $500 exhibited to me al
the time of my previous examination,
was missing, and SO far as | know, no
one has attempted to account for it.
There were other Irregularities in the reg
ular accounts and assets sufficient tc
have led to closing of. the bank without
the discovery of the additional amount
due depositors.
Up to this time 1 had no suspicion that
| the amount of deposits was not substan-
TALLY the same as that reported to the
department from time to time by the
| treasurer and trustees, and as that OBJ
| tanned from the books by the different ex
aminers. The statement of February
Goth, and information received subse
quentIy, led me to fear that the investi
CATION would show perhaps shortage
| in the amount of assets the bank was
presumed to have. But 1 had no reason
| to suppose that the liabilities would BIZ
more than three times the amount hereto
| fore reported.
On ascertaining the true condition Of
affairs, I at once took possession of what
| property, books and papers remained, an6
sealed them up-although there was nc
provision of law authorizing me to do sc
and, on the 22d day of April applied te
the court for an order restraining the cor.
poration and it's officers from proceeding
| further with the business of the institu
ton, and for a receiver to take possession
| ~ ,,,,opartv and c1oca r,y, ire affairs