The Washington herald., 1915-02-06
BANK MUST PAY
FOR ITS LOSSES
Williams Demands Settlement
by National Bank of Com
merce of New York.
DEALINGS UNAUTHORIZED
These Are Understood to Have Oc-
Cured Years Ago. and He Reviews
Work of His Predecessors.

John Shelton Williams, Comptroller
of the Currency, has called upon the
directors of the National Bank of Com
merce of New York City personally
to make good certain losses sustained
by the bank through stock transac-
tions. The directors of the bank. or
at least a part of them. have yielded
to the Comptroller's demand.
What the amount involved was
could not be ascertained, but Wash
ington was not so much interested in
that as in the new policy which this
action seems to indicate on the part
of the ComptrolIers office.
The losses which the Bank of Com
merce directors were called on to
make good resulted from transactions
or investments which Comptroller
williams contended were without au-
thority in law They did not consti-
tute violations of the law. but there
was nothing in the national banking
act which authorized them.
The transactions which have been re-
viewed by Comptroller Williams. and on
which he based his demand. covered a
period, II is understood, of several years.
All of them occurred when Valentine p.
Snyder was president OF the bank. James
S. Alexander. the present head Of the
bank, succeeded Mr.. Snyder in 1911. 1t is
understood that some of the losses to
which Mr.. Williams took exception were
on transactions dating back ten years.
1t is this action of Comptroller Will
Jams, in reviewing the official record OF
his predecessors in office and taking eX-
ception to their acts, that is commented
on in Washington by bankers and others
who had heard of the ComptrOllers de-
mand. Many deemed to doubt the CorGp-
troller's power to make such review
and hold the directors of bank per-
sonally liable for acts not committed
under his administration.
The directors of the Bank of Com
merce, however. apparently did not
care to make an issue of the matter
and yielded to the Comptroller's de-
mand rather than be subjected to the
annoyances that would follow upon his
threat to enforce a refunding Of the
losses.
Stocks Caused Losses.
All the transactions to which he OBJ
jected involved losses sustained through
the ownership of corporate stocks Mr..
williams complaint being that under
the national banking act no member
bank is authorized to buy or own Sc
Curities of this character.
Information obtained indicated that
the National Bank of Commerce is not
the only New York City institution
whose records of the last ten years or
so have been subjected to the scrutiny
OF Comptroller williams agents with
a view to uncovering losses OF this
character and calling upon the directors
to make good. Reports were In circu-
lation that action might be taken
against directors Of some other banks.
Previous ComptrOllers Of the Currency
when losses OF this kind came to their
attention. contented themselves with de-
mands upon the bank directors to make
good. There was. however, nothing in
the national banking act giving the
Comptroller the power to enforce such
demand. The result was that in many
cases these orders were never Obeyed.
In addition TO searching for new evil
dence. Comptroller Williams is said to
be following up these old orders.
As understood here. however. he is
going much further than any other
Comptroller of the Currency and is hold
ing out on the possibility of a stock
holder suit to recover unless the losses
on such transactions are refunded.
In the case of the National Bank of
Commerce Comptroller Williams was able
to make use also of the fact that very
close to a majority. if not a clear ma
jcrity, of the present directors were
members of the board when some of the
losses complained of were sustained.
1t is not exactly clear whether Mr.. Will
liams has called on the present board of
directors to make good the losses or
whether he had asked the board to hold
those members personally responsible
who were serving when the losses were
sustained.