New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1911-08-02
Says He Tried to Rebuild Union
Bank of Brooklyn, and Won't
Be the Scapegoat.

totally IN error, ana asks II " Is not
strange that Mr.. Cheney should wait from
April. 1910. to July. 1911. before he criticises
II. while the Banking Department had ell
the time all the facts and records in the
case. Mr. Grout saws that "the delay in
dicates a change Of mind on Mr. Cheney's
part"
Mr.. Grout also lays the responsibility Of
failure Of the bank on the State Banking
Department. saying:
The seat Of the whole trouble arising
from the second closing Of the Union Bank
VIII be found in the report made by the
Banking Department TO the supreme
Court. in July. 1908 when II certified that
the assets exceeded the liabilities by 81
80 0'n and that the bank was absolutely
solvent II was with the irresistible, the
unbearabe burden Of this false statement
Of assets and liabilities that / was started
off to do the impossible task Of steering
wreck into port.
I Department shall now. contrary 70 its own
course and construction Of the law, and by
trying 10 spell out mere teChnicalites, at
tempt TO becloud the facts, conceal the
responsibility FOR its own examination and
of reoreutrC make ~ ma and OF my
associates who. both as officers and dTec-
! fully, 10 reinstate the bank lambs or
sacrifice for faults which originally lay in
the department in the summer of 1905.
The transactions 20 which Mr. Cheney
referred were connected with a loan Of
$4,000 made by the Metropolitan Trust
Company for the benefit Of the Union
Bank The Loan was divided into three
parts The Union Bank received directly
$4,000. While sl250oo went to the Shetland
company and $4,000 went 10 the Onslow
I Dr.. ~ 40 lat
were guaranteed by the Union Bank and
the money was paid TO the bank by the
companies to reduce loans made by the
bank 10 them. Mr.. Cheney said that the
last report made by the bank 10 the state
Banking Department was false, IN that it
did not include among the liabilities these
two guaranteed loans.
Explains Metropolitan Loans.
Il believe that report TO be absolutely
true as made. as were all others during
my presidency Of the bank" says Mr..
| Grout. and continues in explanation:
While the transactions to which he re
| fers-the sums borrowed b the Cnslov-
Moore Company and by the Shetland com,
pany-were transactions with which | did
not haze PerS ,, Illness 70 in no e a 1853
! | have inquired into them and believe thdt
/ thsy were correctly stated in the report.
| Such reports are on their face summaries
! and do not give details. These companies
were indebted TO the bank. which held
| claims upon their assets as security
| When these borrowings were MADE ny tne
companies, and guaranteed. as am IN
formed by the bank, the proceeds were
| paid over to the oank. and loans were re
| duced proportionately.
| TO have then entered the guarantee over
/ again as an additional liability would have
I 10 charge. a
! The Metropolitan Trust Company held col
! lateral against these loans PROVIDED ny
| these companies. ana ~ss ponna 10 resort orr
which the guarantee might ever Become
| effective was therefore absolutely inde-
! terminate and for whatever II could be
! come effective the bank would have re
covered collateral held by the trust COM
! pany.
! manner IN which such an indefinite possible
| liability could he entered as charge
| against the assets OF the hank without
/ falsifying the same The report was
! therefore true as made. and presented ire
! true condition Of the bank.
As proof that the method Of reporting
these loans had the approval Of the Bank
ing Department. Mr.. Grout offers the ey-
ample of loan Of $4,000 secured by the
! Union Bank IN August 1903, on mortgage
! On its banking buildings This loan was
carried on the reports. he saws, from Az
/ gust. lshs to April. 1910. as q reduction IN
the book value OF the banks assets snd
not ae a separate Liability This method
! Of reporting the loan was never questioned.
he says. and he says that the principle is
/ the same in both instances. and the bank
officials and bookkeepers had the right 10
understand that the department agreed
with their method of reporting tire trans
! actions
Mr.. CHENEY should rerneu1 ber. Mr.. GroUt
saws. that when the bank was closed IN
April. 1870. he publicly stated that IT was
because Of the character Of assets. FOR
which the management Of the bank at that
! time was in no wise responsible.
Teller's Sheet Torn Up.
TIE investigation of the closing of the
Mon Bank was devoted yesterday TO
showing the irregularities in the ransac-
tons in the Mechanics and Traders Bank.
the predecessor q the Union Bank, on Jan
nary q. la1s. the last dsy it was open after
the panic of 1907. Destruction OF records
and the forging Of checks by which money
was drawn from the bank after closing
hours were the charges made. George ..
Frank who was nineteen years old at the
time Of the happenings, was the chief wit
ress relied on TO prove the charges. In the
three years that have elapsed his memory
bal lost dekniteness and clearness Of out
lire
Here Is the story that was drawn ont Of
him. somewhat painfully Al certain stages,
by Assemblynlsn Goidstein, special coun-
sci for the state Banking Department, for
th.. purposes Of the investigation. Frank
was employed as a general assistant clerk
BY the Mechanics and Traders Bank and
had charge Of the passbooks, the filing Of
checks and he posted some special &C
counts Through handling the checks he
had become familiar with the signatures OF
81 ne Of the banks customers.
/. On January %, 1903 after the close OF
hiking hours he saw some torn paper In
the waste basket in the teller cage and
went in the cage and got the scraps OF
paper These scraps constituted the teller
sheet for the day, showing the checks he
had cashed That evening now telers
sheet was produced in the bank. contain
ing items not on the one Frank had found
in scraps Among the items were two
checks charged against the account Of
Emery, one for $500 and tho other for $3.50
CIc against the account Of y. \ Seaborg
fo, S300. one against the account Of Curen.
CLrren or Herman for $500 and ono against
the account Of the BriarWood Land Com
psny for 81 20 According 10 Frank. these
cfecks were forged, though he said that
two days later Scaborg acknowledged the
correctness Of the signature on his check
Frank said that he pasted together the
scraps Of ps per he had found and took his
story 10 = newspaper Two days later be
was called into the office Of President sui
Ivan I'm the bank, where, after he was re-
dbced 20 tears, he signed paper with,
drawing III the charges he had made
AGAINST the bank snd its clerks and officers
he said that this statement was dictated