New-York tribune., 1905-02-13
BANKING Law CHANGES.
Recommended by Becker an German
Bank Report.

Albany. Feb. 12-Attorney General Mayer tonight
made public the report of Tracey c. Becker, Of
Buffalo, who, special deputy attorney general
investigated the insolvency of the German Bank. OF
that city. giving out at the time his own
letter transmitting the report 10 superintendent
r. D. Kilburn of the State Banking Department
In indorsing the recommendations of Mr.. Becker,
the Attorney General in his letter to Superintend
ent Klburn, proposes four amendments to the
ranking law. designed to prevent the occurrence of
such irregularities alleged to have led to
the collapse of the German Bank. Three of these
recommendations are already embodied in bills be-
fore the present legislature.
Mr. Becker reports at length the events and
conditions which he finds to have led up TO the
failure of the German Bank. and 1t appears from
ms report that il he who drafted the bill in
troduced last Friday by Senator Stevens chairman
of the Senate Committee Banks, which seeks
make it a misdemeanor for any bank officer
employe TO accept any perquisite or gratuity in
connection with loan overdraft of account
In the course of his letter to Superintendent Kn-
burn, the Attorney General says that the investi-
CATION LEADS to the inference that if all the di-
reetors, large majority of them had been fully
converSant with the conditions of the bank, the
failure might have been prevented. 1t would seem
that such requirement of examination by the di-
rectors themselves would not improperly add to the
Iabors of the directors of banks, while it would
clearly afford an additional and reasonable safe
guard to the stockholders and depositors."
/ The four recommendations of the Attorney Gen
eral follows:
That limit be placed on the amount which a
! That semi-annual examination Of the affairs of
bank or trust company by its directors be re-
od That the asesPtsnGe Of any gratgity by bank
! overdraft of account be made nlsdemeanor
That no bank shall be allowed to hold as col
other bank nor shall i be permitted @ to lend on the
the accepted collateral
He suggests further that the pending bill re-
quiring the examination and report Of the condition
OF bank by its directors be amended so as to en-
power the Superintendent of Banks to require still
further information to the affairs Of the bank
whenever he deems it necessary After recitine his
proceedings in the affair and presenting a state
nlent Of alleged facts in regard to Arthur r Apple
yard, Of Boston, getting control of the bank Air
Becker says:
Amos: Immediately after said Appleysrd thus
acquired control of said bank and. through said
l1mory its president. of it's loans and discounts,
he began to borrow money in large sums of said
bank and to kite checks and drafts on il and
which he was connected, until when the bank was
taken possession OF by the Superintendent Of Banks
yard ard the various street railway companies with
which he was connected were Indebted TO said bank
discounts and drafts Of said Appleyard and his
considerable amount. by the bonds OF the several
have since the failure of the German Bank nearly
/ all of them been placed by the Ohio courts in
bonds or other securities deposited by them as col
Lateral are e. neaTiy all Wo1rIthe7s except certain
/ OF Wisconsin, to the amount of about 5000" which
! are said TO be worth par and upward. ana from
/ the best information oOtainahe st the present
! time il would appear that the GermIr Bank will
J realize THAI . per cent of its loans TO
! said Appleyart and the companies in which he
/ was interested.
! During the year 1874 the dis court committee OF
! the German Bank did not pass upon report upon
any of its loans discounts, and its attention
never called to did its members seek 10
learn anything about the eXcess loans discounts
and drafts other transactions of said Appleyard.
The bank had April 80 1904, deposits aggregat-
/ ing upward Of 100000 It had for many yeaTI
! been paying interest time deposits. many of
! them, 1t the rate of per cent year, while tho
! other banks in Buffalo were almost unanimous in
J not paying over per cent OF at the outside SO
J per cent such deposits.
In this way. because Of the peculiar character and
history of the bank. it had been for several years
and continued TO be TO the time of its failure, the
thrifty German people os city OF Buffalo OF
/ others who placed their savings and trust funds
I there in preference to deposting the in
ngs banks. So that it is estimated and claimed by
those in position TO know that such time deposits
(Which were practically savings bank deposits and
not drawn upon except occasionally by the depos-
! toTs) amounted to upward Of 5000 600.
Thus will be tnat by the simple process of
acquiring ifty-one shares OF hundred of the
CAPITAL of said bank for the purchase price of
J about S3s2.400 said Appeyard had placed at his
mercy and under his control all of the surplus and
suspense account moneys Of said bank and deposits
10 the amount of several millions of dollars, except
in so FAR the same had been loaned on the paper
of other persons. firms and corporations, and the
latter subject to his call as the same matured