Yorkville enquirer. [volume] (Yorkville, S.C.) 1855-2006, 1909-04-30

the dollar. The receivers, in their
sworn statement submitted to the ref
leree, admitted that they had collected
s275, 900, but that the cost Of admins
Itration had been $4,000. or this huge
sum $4,000 was expended for counsel
that the lawyers had charged s20,0S3
for collecting $4,000, which it took two
years to collect. 1t was estimated that
the total cost of this receivership was
more than seventy per cent Of the ac-
tual assets.
In passing on this case the referee,
Mr.. Alexander Mckinney, well known
Brooklyn lawyer, said:
1T is indeed a very unfortunate sit
uation for the shareholders to find that
the assets Of this corporation, which
were placed by the state banking de-
partment, just prior to the appointment
of the receivers, at $1,0S6,00O, and sub
lsequently fixed by the receivers them
selves at 100000. have shrunk to about
100000, as appears by the receivers
final accounts. This was apparently
due to two causes:
h First: To the improvident and
reckless investments made by the off,
GERS Of the corporation.
Second: To the expense Of the ad-
ministration of the receivership."
The Maze of Legal Red Tape.
Continuing, Mr.. Mckinney said, in
reference to the attorneys huge fees:
1T did appear to me that their attor-
neys had unnecessarily prolonged these
proceedings, which should have been
closed some time ago. 1t should be
said in fairness that the administration
Of this property was in no wise differ
ent from, or relatively more expensive
than, that Of the average receivership
in New York.
Our statutes have permitted the
growth Of q system which has receiv-
ed the passive, II not active, approval
Of the courts, whereby the sole admin
istration Of affairs Is usually placed in
the hands of the receivers attorneys,
who envelop the most trifling matters
in a maze of legal red tape when ordi-
nary acumen and business experience
would suffice"
Another case was the New York
Building Loan Banking company,
which failed in 1903. 1t is still in liti-
CATION. It was one Of the so-called
national associations and not a
neighborhood company, which is usu-
ally conservatively conducted. So far
the stockholders have received twenty
two and one-haK cents on the dollar
and will probably get little more. In
single year the expenses of counsel
alone were $90,SS6.24. One attorney
alone got $73,921.sO Of this. The list
might be continued at great length. In
every receivership, whether bank or
building association, delay and extrav-
agance marked the work Of the re-
ceivers.
It sometimes takes great war or
vast calamity to produce a national
reform. So 1t required panic to shake
the receivership system to its fall.
Everybody knows what happened in
New York city in October, 1907. With
the closing Of the great bronze doors
Of the white marble palace Of the
Knickerbocker Trust company began
financial disturbance that unseated
all business. A dozen other New York
banks and trust companies failed. The
receivership tree, like its time-honor-
ed fellow, the plum tree, bloomed.
In those trying days there were three
men in public service in New York
state cast for big parts In the undoing
of the old receivership system. Fore
most among them was a sturdy, whis-
kered keen-eyed man who sat in the
governors chair at Albany. He was
Charles e. Hughes. In the same build
ing where he ruled there was another
man who had been lifted from a law
office in Buffalo and projected into the
office Of attorney general. He was
William s. Jackson. Down in New
York city, in the office of superintend-
ent of banks, was a clean-limbed ath-
letic young man who had been called
to that post in a dramatic hour( 1t was
the day after the Knickerbocker failed)
by Governor Hughes. He was Clark
Williams. He had never been in poll
tics, had never held office, and had not
seen the governor until the day he was
named. But, what was most import
ant, he had been through the banking
and trust company business from the
bottom, and he fitted conspicuously in
to that group of men named for office
by Governor Hughes on account Of
ability and not pull.
The Governor to the Rescue.
During the period following the pam
ic, when the shattered financial insti-
tutions were binding up their wounds,
an ounce Of confidence was worth a
ton of gold. A receivership was thing
to be avoided rather than to be encour-
aged. What did the attorney general
do? The case Of the Oriental bank fur
nishes an answer.
This institution weathered the panic
but found itself owing the Clearing
House a million and half. The bank
had a capital Of $750,000 and a surplus
of more than a million. But, on sud-
den call for money from the Clearing
House, 1t found itself unable to meet
its obligations, and rather than jeop-
ard the interests Of it's depositors the
directors decided to quit.
This fact was communicated to the
superintendent of banks, who took
charge of the bank, closed 1t up and
reported 1t to the attorney general, as
was required by statute.
Now it !.Appened that the directors
of this bank were men of high integrity
who had a profound sense of their OBJ
legation to the depositors, whose depos-
its aggregated s6,OOO,OOO. They did not
want these stockholders to incur the
long and expensive delay Of receiv-
ership. They knew what other state
receiverships had cost, so they arrang-