The sun. [volume] (New York [N.Y.]) 1833-1916, 1915-05-22
GREENHUT PUTS ALL
BLAME ON BANKERS.
Tells How Seven Institutions
Refused to Renew Notes
for $35O,OOO.
DEAL MADE SIEGEL CRY

Capt. J. 3. Greenhut ascribes the fall
nre OF his department store primarily to
Size "freemasonry that exists between
banks" and which within twenty-four
hours caused seven banks to refuse to
renew notes amounting to s350.ooo. He
testified to that effect yesterday after
noon In the assembly room at the Mer-
chants Association before Peter b
olney. referee In bankruptcy. who asked
him at the opening OF the creditors ex-
animation what had caused the bank
ruptcy. -
The general denial Of credit by the
Creenhut bankers began. he said. with
the Guaranty Trust Company, which
held a note OF tho J. b. Greenhut Com
pan lndorsed by Capt. Greenhut.
Amounting to $500, 900 and due on Mon
day. April S, 1915. Capt. Greenhut made
out a renewal note on that day and sent
IL to the bank with a letter. On Tues
day Xice-President Potter asked to see
Mr.. Greenhut or his son at the bank.
Mr.. Potter told Benedict J. Greenhut
that he wanted a lien on another note OF
the Monmouth Security Company. In
dorsed by the Greenhut banking firm and
held as collateral by the BAN
The G%reenhuts decided that to give
such allen would mix up the store busi-
ness with the banking firms business.
but In lieu OF the lien Capt. Greenhvt
offered for the renewal OF the 100000
note other Monmouth Security Company
securities owned by Capt. Greenhut.
which the bank refused to accept. Mr..
Potter then old Capt. Greenhut on
Wednesday that the bank wanted pay
meDt Of the note due two days earlier.
Had No MisgivinGs.
I'VE had enjoyed ample credit sale
tho department. store head, and never
had any doubt hat a note would be re-
newed when renewal was asked. l
thought somebody was working there to
undermine our credit. We had S350.000
In notes duo at seven other banks on
Thursday, April 8. We knew the free
masonry that exists among banks and
understood that II the news Of the Guar
anty Trust Company's refusal got out
the others would follow suit. BY noon
on Thursday six OF the seven, all except
the National City Bank. notified us that
the notes they held would not be re-
newed. II looked to me like concerted
action"
The banks Capt. Greenhut mentioned
were the Mechanics and Metals National.
Garfield National. American Exchange
.NHllOi1dI, 1Udse .NdtlOndl, SHtfnlCdl Y
,ional and National Park. Capt. Green
hut said the general refusal of the banks
was remarkable because he had deposits
amounting to s390.000. against a total
debt OF s550.000 at the banks. When he
asked for the renewal of the 5000 600
note at the Guaranty Trust, he said, he
had s1S4.000 oil deposit there at 3 per
cent.
Questioned by James N. Rosenberg.
counsel for the trustee in bankruptcy,
Capt. Greenhut testified that he thought
perhaps the merchandise creditors whom
he had been slow in paying in order to
strengthen his bank credit. had talked
about the stores slowness. He consid-
cred the bank credit most important. the
mercantile credit secondary and emphati-
cally denied that he had any intention
In his method OF relieving mis- W obli-
cations at the banks. his name having
Endorsed the stores notes. He had
heard OF the talk" he said, but dis
counted 1t as a risk.
1T Ia common knowledge In this
town." he said, that a number OF large
stores 10 not intend 10 pay on due
dates, very important stores. too"
BANKING Debts Reduced.
Capt. Greenhut admitted tho stores
banking debts had been reduced $780,
600 In the first four months OF this year.
but he could not recall how much OF
its merchandise debts had been paid
OFF. A total Of $3.50, 900 was due in
April. but he had hoped to raise this
amount on notes at the banks as well
as perhaps $500, 900 more without any
difficulty. He pointed out in justifica-
ton of that hope that last August. in
distressful times. he had raised more
than 100000 in two days on the COM
pany's paper without collateral, except
his own Endorsement.
The witness admitted the store had
lost 100000 last year, but he said con-
dltions never were so unusual. The year
previous-l9l3-had been abnormally
'of" IN business, he said people did
not spend money and business fell of.
But his troubles began with the Siegel
failure. The mail order business after
that crash fell of so per cent. $500. 900.
Orders did not come In, largely because
II was thought all over the country that
Greenhut's was in the Siegel failure.
Then came the necessity OF changing
the firms name. After the war began
business had been practically paralyzed,
he said. while expenses went on.
Capt. Greenhut insisted tina at the
end OF 1914, however. he felt that bust
ness would revive from the greatest
depression ever known" Everybody
felt that way. he said the general finan-
cial condition was improved and he
hoped to turn a 1914 loss into a 1915
profit. He had no idea OF receivership,
he said, until two days before It came,
when he sent the notes down for re-
newal. He knew. he said. that other
stores were letting their merchandise
creditors wait, on a larger scale than
his store, and he added. they are still
living"
Made sieReI Cry.
The real property on the west side OF
Sixth avenue, he said. was worth upward
or $4,000 900. on which he put a mort
sage OF $4,000 with Henry Morgen-
thau' He could not place a value on
the east side property, but he told rather
humorously OF buying Henry Sleeel's
lnterest-corsidered to be worth $1,000
oo0-for 100000 because Slegel came
TO him and said "he must have the
money to put into the Fourteenth Street
store" Capt. Greenhut beat him down
from $1,000, 900 to $1,000, 900, then 10
$4,000 and finally TO $500. 900 because
or Siegels need. Siegel cried, he said.
when he made out the papers, saving
II was the greatest sacrifice of his he.
The witness would not admit that ne
thought real estate in the vicinity OF the
store had deprecated, but he did say
that the books OF last year were moi
closed because "A possible dn-eclat!on
In real estate was under cOnsi ieratIon,
by the tim the exlIirati0a continues
at : +. NJ. on next Tuesday IL is expected
that ground will be laid for more de.InIte
GnnQiInrntit nf . IA g.,