New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1913-07-09
MORSE METHODS MAY
HAVE WRECKED BANKS
Pittsburgh Disclosures Expect
ed to Parallel Exploits OF
High Finance.
M'ADOO PREPARING TO ACT
Treasury Department Inquiry
To Be Thorough-Losses OF
First-Second Bank May
Reach $5,500,000.

Washington. July S.-Disclosures OF a
startling nature, unfolding a system of
| financing akin 10 the Morse exploits in
| high finance. will develop from the rigid
I investigation of the causes Of the crash
Of the First-second National Bank of
Pittsburgh If the suspicious of the Treas
ury Department officials are justified.
The Secretary of the Treasury is dis
inclined to discuss the circumstances at
tending the failure of the bank. involving
indirectly, If not directly, a score of other
organizations, but admits that the inquiry
of the department, supplemented by an in
vestigaton by Department of Justice OPP
eratves, will take a wide range. He SAID
to-day that it was evident that credit had
been strained and that the paper OF
Kuhn corporations is an important factor
IN the investigation.
Asked about the criminal liability for
already exposed irregularities and dis
crepancies in the statements setting forth
the financial status Of the failed bank,
Secretary McAdoo said significantly:
1T is never we'll to hunt criminals with
q bass drum"
20 mdkc
Mr.. McAdoo intimated that the investi-
cation will be conducted quietly, but with
great vigOr and thoroughness. Every
angle of the Kuhn transactions, involving
the activities OF the American Water
Works and Guarantee Company and the
interests Of the Kuhns in other financial
institutions, will be subjected 10 searching
! inquiry.
Attorney General McReynolds late to-
day said that the usual course would be
to refer the questions first TO the local
United States Attorney and ultimately TO
the Attorney General
The activities of the J. S & w 5.
Kuhn, Inc, which is the title Of the Kuhn
interests, in the public utility field, such
as the promotion Of waterworks corpo-
rations and the floating OF the latter's
bends, is a phase Of the investigation re-
garded as particularly important by Sec
rotary McAdoo Ii was stated by MI
McAdoo that he has not yet received any
definite report as TO the probable amount
of Kuhn collateral held by the failed bank
and the First National Bank OF Mckees-
port, which has also closed its doors, but
that this will be investigated.
John Shelton Williams. assistant Sec
rotary OF the Treasury, to-day returned
from Pittsburgh. and reported that the
bank had been seriously mismanagcd.
necessitating a reference Of the condi-
tons to the Department OF Justice.
Treasury officials emphasized the be
lief that the closing of the First-Second
Bank actually had improved conditions
in Pittsburgh by removing doubtful
element from the financial system.
The latest reports to the Treasury De-
partment indicate that the losses OF the
First-Second may reach $4,000. because
the entire capital and surplus OF the
bank now seem to have been wiped out
These advices were accompanied by as
surances from officers OF the bank that
the depositors, whose claims total about
s3s, O0O. 600 probably would be paid In full
or nearly in full through realization on
the banks assets
II developed TO-DAY that the Treasury
Department yesterday offered the SOL
vent Pittsburgh banks 10000 Of gov
eminent deposits to meet any emergency.
but the offer was declined because the
banks were in a position to meet the
situation.
Bank Statement Given Out.
The following statement Of the condi-
ton OF the bank at the close OF business
on Saturday. July g. according to the
banks books, was given out by Secre-
tary McAdoo this afternoon: