The morning journal-courier., 1908-05-19
PITTSBURG MAY
LOSE $1,000, 900
EmbeSzlement of Suspended
Banks Cashier Involves
the Municipality
Heavily.
BROKERS FORCED TO WALL
----------------
Closing Of Bank Causes Failure of One
OF Largest Brokerage Firms
City Left Without Avail
ablc Funds.
BROKERS FORCED TO WALL

Pittsburg, May 1S,-The closing of
the Allegheny National bank this
morning by the comptroller of the
currency was the direct cause of the
failure this evening Of Carothers &
Co, according to the statement Of the
receiver for the latter firm.
Attorney c. L. Patterson was ap-
pointed receiver for the firm, one Of
the largest brokerage firms in the
city. The firm is composed of James
Carothers and William +. Won Bonn
horst. 1t made a speciality of munici-
pal bonds and was heavy investor in
the city OF Pittsburg securities.
The petition was filed by Charles
w. Dahlinger, Robert Heincle and
William B. Rea, having claims aggre-
eating $14,2S4. The petition alleges
that Carothers & Co. has assets and
pledged securities amounting TO S2,-
10000 and owes 100000 to firms
and individuals and that certain cred
itors threaten to sell securities they
hold to the detrlment of other creli-
tors
The decision of former Cashier Will
liam Montgomery, accused of wreck
ing the bank through the embe2zle-
ment of cash and securities 20 waive
a preliminary hearing to-day and to
b. held for grand jury investigation,
prevented the taking Of any testimony
by United States Commissioner Will
liam T. Lindsay to-day and officially
no new light was thrown upon his al
legged peculations.
SO far as the court records are con-
cerned he is charged only with the
embezlement Of s469,000 cash and
| $125,000 worth OF securities.
That the bank has in some manner
sustained O much greater loss Is APP
parent from all of It's recent state
ments showing that It could sustain q
loss approXimating s2,000000 without
| impairment of Its capital and the
statement made to City Treasurer j
\ +. steel last week when he made in
! qulry as to the city's deposit of ST.
! 546,953 Mr.. Steel said to-day he
was told last week by Bank Examiner
I William l.. Folds and by officers OF
/ the bank that the alleged shortage
was about $500, 900, and that the bank
j could pay that out Of its surplus and
undivided profits and continue bust
ness without interruption, 1t was
about this time that the directors and
men Interested in other financial instl
tutions had agreed to put 100000
cash into the band 10 add to public
confidence and meet possible emer.
gences Later discoveries. Treasure,
Steel is informed changed this situa
ton
Explaining why the eity's funds
amounting to $1,500,O0O were no
withdrawn as soon as the shortage
was discovered Treasurer Steel say.
he was told that II the attempt wa!
made to do so II would force the clos
ing of the bank and that in suel
event the city could not be paid. III
says he was also assured that the banl
would weather the storm and NEE
all of It's obligations,
Whether or not the city VIII los
through the failure Is not known !
/ IS DTDletltU NY VUt bpllu ibI NoNHVIV u
regard to which there is apparently n
doubt There is another bond for a lik
amount which expired -four years ago
but II is contended by the legal depart
ment that II, ms alleged, part Of the dc
falcation occurred before the expiratio
of tho bond, the bondsmen can be he
for the clty's deposit, city solicito
Rodgers late day entered judgmen
against the bank and tho bondsme,
1t was announced last week that tn
city was fully protected by bonds an
! the common belief was that five mel
majority of them good for tn
amount, were sureties to the city fo
100000 each but it develops that th
: five men are jointly responsible 70
only 100000.
Vhe suspension of the bank leave
the city with practically no immediate
ly available funds.