New-York tribune., 1910-07-12
CONTROLLER TRYING TO
BALk BANKING SCHEME
Plan Is to Bring Outside Banks
Deposits Here for SpecuIa-
tive Purposes.
IosNS DISCLOSE THE FACTS
conservative Bankers View Sit
uation with Alarm-No
More Privileges to
Promoters.

Murray. Controller of the Currency. last
night on q scheme Of several well known
r,en 10 bring the deposits Of a chain Of
c,t-of-town banks TO this city and use
me money in the speculative schemes of
The promoters of the enterprise.
Controller Murray is going to find a
way 70 baIk the plan if he can, and If
he can't he is going to keep q sharp
vztch for the first hint OF criminal
x,en and nail the men who are back Of
the scheme.
According TO the report made 10 the
controller, the men who are behind this
Man are 2 Westckester County lawyer
who already has been engaged in two
shady note transactions; q well~known
architect the son-in-law Of q man who
died LEAVING something like s15.oo0ooo
10 be divided between his two daugh-
;s-s. and the officers Of a. construction
cnu7pany that is putting up two of the
largest buildings in the city.
They have already acquired q West
chester banl- 10 start their chain, and
Controller Murray got his first hint Of
ire scheme through the discovery Of the
bank examiners Of some irregular loans
made BY two banks in this city on the
stock Of the westchester institution.
The Old Morse Plan.
The plan is by no means q new one
L is the same that was worked by
Charles " Morse with such startling
results Bu- there has been nothing
criminal in the operations of the pres
thev have been guilty only of bad bank
ing methods. and Controller Murray in
tends TO stop them before they can go
further
The scheme the men have been work
iug out is 10 acquire chain Of country
banks buying the first and paying for
the second with money borrowed from
the first. and continuing this operation
until half z dozen OF more banks have
come under their control Then they
vii be able 10 borrow money from these
banks and use the stock Of the banks
FOR collateral on loans made in this
c7ts- Going still further. they viii place
the deposits Of the country banks with
Institutions in this city and make more
loans equal to the amount brought here
from the country.
In this way an original capital Of
100000 could easily be turned into a
Working capital of 81 10000 and more,
n proportion 10 the increase in the size
q the original capital
Criminal prosecution would follow in
case notes Of the promoters should be
due and unpaid in two or more Of the
chain Of banks at the same time.
= the plan cannot be blocked the bank
examiners viii keep sharp watch Of al
Ire banks in the chain, and If notes
should be unpaid at maturity prosecu-
tons vii be started on a charge OF
criminal conspiracy. This is only one
oF the eveutualities that might result in
criminal prosecutions, but in view Of the
highly speculative enterprises which, il
Is understood. the promoters Of the
scheme intend 20 put the money Of the
country banks into. il is thought by the
bank examiners that Il is not unlikely
tc happen.
Stop Professional Promotion.
~ rhe same time he is looking into
this particular scheme. Controller Muir
lay Is seeking q means to stop the pro-
teseionaI promotion Of national banks.
This 3 an evil thar has grown 10 large
proportions in recent years and leads
70 Just such schemes as that now pro-
posed in this city.
There IS z Middle Western corpora
tion organized for the promotion Of na-
tiorsL banks and that holds the control
Of between fifty and sixty small banks
iu the Middle West. This is only one
instance Of many in which the control
q chain OF banks is held by one cor
poreuon or group Of men
Conservative bankers here look on the
situation with considerable alarm They
szy that trouble with one bank might
mean the collapse Of 4 larger number,
and there would be little hope for the
deposttors. II the stock were individ-
uallv he'd. they say, recovery might be
had from the stockholders, but when the
stock IS held by q corporation and the
bank fails redress must be sought from
he CORPORATION. no assets are found and
The banks deposirors are helpless
Controller Murray intends in the future
70 refuse permission 10 organize 10
hanks fathered by professional prornot-
e-s He expects by this means 10 go a
long way toward breaking up the prac-
ice % using national banks Tor specuL2-
tive purposes.
But there viii still remain the posi-
bility n group OF men buying up
banks already organized There is nuch
more difficulty IN dealing with this con
ditior and the plans for meeting II are
SUI tentative.
50 far they consist IN closer super
VISION ny the bank examiners and more
detailed reports required of the paIlhs
De-eioD~7ent Of the safeguards VIII
come with the study Of resultE
GIRr NJ At SEVENTEEN