The sun. [volume] (New York [N.Y.]) 1833-1916, 1905-01-05
AS EASY AS OVERCERTIFYING.
o,ry BANK LOANS TO HABER-
DtSUERS STOCK LAUNDRY.

u,,y Not Reckon Such a Capitalists / q u
ma Cash Deposit and Let Him Check
It7-NIr. spear In Good Company In
IN. VI. g. II. Job-Instailment Men Car
r,tng Away the Capitalists Furniture
and tho "Munroe Magazine Aborted
The testimony taken In the bankruptcy
proceedings against Munroe Munroe,
showing that the National City Bank loaned
go Oo0 to the firm every morning for eight
.upcessive days on the firms unindorsed
and unsecured demand notes, which were
cancelled each afternoon just before clos
,nr hours. attracted lot OF attention in
wall street yesterday. Up to that time
good many people had been wondering
inst how the firm had been able to do so
much business. People who believe that
In order to do business in stocks you must
he possessed OF real money for capital and
n the attributes which generally go to
make UP good credit are looked upon as
foolish by some OF the wise ones in the Street
who we're not in the least surprised 70 hear
Row the firm had got the money with which
u washed Montreal and Boston CONSOLE
dated stock In an attempt TO sell 1t TO the
public.
Bankers who we're asked yesterday about
the esteem In which are held such TRANSACT
dons as those recorded daily for eight days
between Munroe 4 Munroe and the National
CITY Bank contented themselves generally
With stating that they knew Of no similar
transactions in their own banks or that
nvould be time 10 discuss the case when the
National City Bank officials had made their
explanation. probably on the witness stand.
When asked II it was customary among
financial institutions to loan money in the
morning upon unindorsed and unsecured
notes 70 be cancelled just before closing
hours one banker said:
i shouldn't say it was customary. As
proof oi that I've only to cite the fact that
the number OF banks which will handle
brokers' business ia proportionately small.
We refuse 10 do 1t here and could run oyer
the names OF n whole lot OF big banks right
10 the Wall Street district who don't do it.
On the other hand, there are a few big banks.
Nke the National City, that do
\ don't cara to discuss the specific case,
but suppose that we did brokers business
and at the same time wanted to keep as
nearly within the law as we possibly could.
Suppose that broker came along and asked
us 10 certify his check for an amount largely
10 excess Of his deposit for use in buying
stocks In the morning which he would
sell later In the day and the proceeds of
which he would deposit TO cover the check,
and suppose that. just to make this sort
OF thing a little less Illegal, as we thought,
or to square our consciences, in other words,
We required that the broker, before getting
his check certified. should put in MA note
az a deposit against which the check could
be drawn. the note to be cancelled when he
brought US the checks he had received for
his sales Don't you think that TO some
people that might appeal as good way
Of getting around the law which makes
Il crime for any bank officer to certify
a check for any emount in excess OF the
deposit against It? Or, II not way TO
gel around the law, TO give the bank just
A little excuse for lending it, money, where
II it had certified the check without the
money it wouldn't seem to have any ex-
Fuse
A. matter OF fact, a bank which entered
into auy such transaction as have
described IL just a. much vlolator OF
fts National Banking law as bank which
rpriifeS a clients check for an amount
larger than he has on deposit, trusting TO
gel the money back in the afternoon. The
iayv does not include his note as deposit
against which no can draw and have the
ank certify his check. No legal authority.
am sure could or ever would try 10 main
Tain that such a transaction came within
the law. Some very eminent legal minds
have given their opinion TO the contrary.
There j. still another theory by which
II j. sought to Justify GENERALIZATION.
This Is that a check thus certiiied to 10y
Tho bank il not presented uh.il the next
iay by which time tho bank has received
he amount to make it good This might
-. u 81 . ina MI
The next dav bv the bank, 80 that II really
e loan renewed each day Hithout So
~lnN
ANY one who knows anything about
hanking can take the regular bank state
iuenrs and notice what banks are doing
This L. il a violation Of the law. but 20
iong as there Is no complaint and no state
law against il there is nothing done until
-onething happens ike the Seventh Ma
nnnal case In that case heavy fine was
imposed upon the president
ANTE there arc. a. I say. comparatively
'ev banks which accommodate brokers
pthis manner everv bank. Of course. makes
lolus on siuCie name paper without any
collateral, providing the credit NJ the maker
pall established This Is something for
thr bank to decide. Usually a hank re,.
fuses to accept such a note unless II II backed
100 hv a veil established credit and the
Grr whose name is on II is engaged IN a
reputable business Bank examiners find
'''- paper ana t1eN can ueIeLunue ltH Ndhus
only hy the average balance Of the concern
aud the nnnher 81 times il has asked for
such accommodation If there i n doubt
about any amount Of paper 81 m lent 10
impair the bank capital. OF course the
bank examiner must act At once. often
'imas an examiner simply contents himself
9th cnticsiug such loans in his report
fine Comptroller Of the Currency
Some idea 81 the amount % business done
by the National C,tv Hank can be gained
from the last statement made on Nov, 10.
IN that day the total amount of its loans
and i-coputs was 4 G86i .97o49 lt5 eX-
change for the Clc1'ilg House amounted
1n that dav 10 Si25S5,-li while the amount
n certified oh' *, tAat day vas sy3 S3s 270fS.
Munroe & Munroe. whose credit was so
good az the bank that they could get $4,000
every morning for their daily operations on
iust their promise 10 pay the bank back
and nothing else. seem % have dealt better
BIS the City Bank than others. Although
heir name was considered good for SEQ coo
q dav the firm Of Munroe 4 Munroe had 70
my the furniture for it's fine suite Of Offices
IN tie installment plan, as the 500 a week
clerk does when he gets married Most OF
= rs mahogany Two large rooms, which
ooh like hotel reception rooms, have
obouized cots In the larger Of these two