New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1913-12-09
Deposit Charged to Ma
tional Banks Not Legally
Obligated for Amount.
u. S. TRUST SECURITIES
MAY BE WORTHLESS
Under Bank Act Collection Can
Be Enjoined by Dissatisfied
Stockholders.
From The Tribune Bureau. J


Washington. Dee. S.-One million dol
lars of the United States governments
money has been deposited with the
Munsey Trust Company for which the
government has not a shred Of legal
security.
This deposit, made 10y Assistant Sec
retary John Shelton Williams. on No
vember -, has been charged to the ma
tional banks of the District of Column
bia on the books of the Treasury. but
the banks. which have been consulting
their attorneys, find they are not legal
" obligated for the amount.
There was no representative of the
Treasury Department at the conference
Of bankers at which this deposit Was
proposed. Those who spoke for the
Treasury Department were r. Lancas-
Ter Williams, a director of tine Munsey
Trust Company. and Stuart Olivier. the
personal repre- sentative OF Frank y.
Munsey: neither Of them connected win
the United States Treasury in any Off
cial capacity.
4 part Of the agreement into whicn
these men entered with the national
bankers Of Washington was that Frank
A. Munsey should deposit with the
Munsey Trust Company 100000 in
cash. That part OF the agreement mas
been repudiated by -fr. Munsey. 50
that il is now a question if the bankers
are even in honor bound TO protect the
government from loss.
Al the close Of business to-day the
efforts Of the national banks to induce
Frank =. Munsey to make good the
promise of his representative, Stuart
Olivier, that Mr.. Munsey would deposit
in his trust company 100000 in cash
had availed nothing: but the declara-
tion of the lawyers that the banks were
not legally responsible for the $1,000
coo deposited with that company tend
ed to allay in some degree the impd
tience of the bankers.
Collection May Be EnJoined.
Trust Company, which John Shelton
Williams accepted as the primary coll
lateral for the $1.000.00O which he de-
posted in the Munsey Trust Company.
may prove worthless in the hands of
The Treasury, it is pointed out by coun-
sci for the bankers, for the reason that
under the national bank act the Treas
ury can have no legal relations with
trust company, and the collection Cf
these securities is liable at any time
to be enjoined by any dissatisfied stock
holder of the United States Trust Com
pany.
Grave question is also raised as TO
the legal right of the Treasury Depart
ment to accept the securities of trust
company with Which,, under the law,
II cannot sustain business relations.
One million dollars in cash was de-
posted with the eleven national banks
OF this city this morning, on the re-
ceipt Of proper security by the Treas
ury, this money going through the
Clearing House TO meet the needs of
the Munsey Trust Company" said
John Shelton Williams in the official
statement Of November 80. The fact
ls that the money was deposited di.
rectly in the Munsey Trust Company,
that the security accepted had not
been received from the national banks,
nor indorsed by them. and that it is
now found that because proper legal
precautions were neglected this secur-
ity may be rendered worthless i'm the
hands Of the Treasury Department by
the action Of any stockholder of the
United States Trust Company.
No one, it is asserted by counsel for
the bankers, is responsible for the .
per cent interest which it Is customary
Continued on fifth page. fourth column.