The Providence news. (Providence [R.I.]) 1891-1906, 1905-01-05
MAY HAVE
VIOLATED
BANK Law

New York Jan. h-1he testimony tdheh
In the bankruptcy proceedings against
Munroe q Mi1nroe. showing that the Ma
tionai City hank CRockefelerO loaned
SEQ 600 to the nrm every morning for eight
successive dayv on the firm's unindorsed
and unsecured demand notes, which were
cancelled each afternoon just before clos
ing doors, attracted a lot OF attention In
Wall street yesterday.
When asked II Il was customary among
financial institutions 20 loan money In the
morning upon unindorsed and unFecureo
notes TO be cancelled Just before closing
hours. one banker said;
II shouldn't say II was customary. AS
proof of that I've only 10 odte the fact
that the number OF banks which will
handle brokers business is proportion
ateiy small
1--WE ref,rse 10 DO II here and could
run over the names OF a whole lot of big
banks right in the Wall street district
Who don't do f. on the other hand.
there are a few big banks like the Ma
ttcnsl City that do.
ONLY NOTE DEPOSITED.
.T don't care To discuss the specific case,
hut suppose that we did a brokers busi-
psss and AT the same time wanted to keep
could
..suppose that a broker came along and
assked us TO certify his check for an
amount largely I'm excess OF his deposit
for use in buying stocks in the morning.
which he would sell later I'm the day,
and the proceeds of which he would de-
posit 10 cover tho check and suppose
that. flst to make this sort OF thing
a little less Illegal. as we thought, or TO
fr. ~
we required that the broker. before get
ting his check certified. should put in his
note as a deposit against which the check
could be drawn, the note IN be cancelled
when ne brought us the checks he had
received for his sales?
Don't you think that 20 some people
that might appeal az a good way Of getting
around the law which makes It a crime
for any bank OFFICER 10 certify a check
for any amount in excess OF the deposit
against IT.? Or IL not a way 20 get around
the law 10 give the bank just little
excuse for lending fts money. where, IL II
had certified the check without the
money, it wouldn't seem 10 have any ex-
cuse.
vIOL.AToR OF LAW.
~As a matter OF fact a bank which en-
tered into any such transaction such as
] have described is just as much vio-
lator of the national banking law as n
bank which certihes a clients check for
an amount larger than he has on de-
posit. trusting To get the money back in
the afternoon"
M,inroe & Munyoe, whose credit was
30 good at the bank that they could get
SEQ ono every morning, for their daily oper-
afions on just their promise 10 pay the
bank back and nothing else, seem 20 have
dealt better by the City bank than others
Although their name was considered
good for $50. 900 a day. the firm OF Munroe
a. Munroe had TO buy the furniture from
its fine suite OF offices on the installment
plan. Most of Il is mahogany.
Two large rooms. which look like hotel
reception rooms, have ebonized sets. In
the largest OF these two rooms there are
large arm chairs with bright red cushions.
the combination being very effective as
seen from the hall outside, into which
the clients were first ushered. The cost
price of the furniture was something like
5000.
II was secured last August by the usual
caxh deposit. The furniture man was 10
come around monthly. He got his money
for two months. The Arm still owes for
December and now the January install
nient In due and the furniture man has
already begun TO take the furniture back.
Two large safes were secured in the same
WAY and the instsllment man will take
than