Evening star., 1915-04-13
| in New York. AMI two private telephone
lines connecting you with two stock
brokerage houses in Washington.

in New York. and two private telephone
lines connecting you with two stock
brokerage houses in Washington.
Alleges Stock Speculation.
The books Of your bank showed at
the date of the last examination that
nearly 100000 Of the funds Of the
bank were being loaned to some forty
or fifty women on stocks and other Sc
curities. many of them Of highly spec
ulative character, which had been
bought for account Of these women by
ofncars of your bank. and for which
your officers had duly collected their
commissions. Some of these loans
had SUFFICIENT margin, but others were
but scantily secured But few, IL any,
of these women had any balances with
your bank upon which they might have
drawn to make good shr1nkages In
their collateral, and as much OF the
collateral was Of a slow character II Is
uncertain what the results would have
been, or would be, il it should have
been necessary or should be necessary for
YOU to call those loans.
Il regret to have to inform you that
this office has evidence which indicates
that other statements recently submit
ted by you and other officers of your
bank to this Office, under oath. In addi-
ton to the incorrect statements to
which your attention has been specif-
,
true.
Dummy Loans" Charged.
Extract from letter addressed by the
controller Of the currency to the Riggs
National Bank under date of March ..
1915:
"InvestiRations by this Office indicate
that the officers of your bank have not
af 10 m
of so-called dummy or indirect losns'
by which funds are furnished to Gus
toners beyond the amounts Wnlcn the
bank could legally lend directly TO these
of $4,000 each (s250.o00) made some
years ago to your clerks for the beneht
OF one whose excessive loans you hao
been directed to eliminate from the
bank. but your officers have, on diner
ent occasions. it appears. loaned 70
themselves or one to tho other the
banks funds through these so-called
dummy or indirect loans: as. for ex-
ample, when your president. less than
a year ago. got 386,5oo of money from
the bank through a note made by tho
assistant paying teller. on collateral
Furnished by your president for ny
pOthecation.
The dummy loan is again In evi-
dence when your cashier. H. H. Flath-
er, got $26,400 of the banks money on
the note of one unknown to the hank
examiner. but who your president and
cashier have. under oath, described as
and a brother Of your assistant pay
ing teller. and who. 1t appears. permit
ted himself to be used for this pur-
pose by your cashier.
loan occurs whom your vice president.
W. J. F1ather, got from the bank, in
April, 1912. S17.500 on a note signed by
one -. . bookkeeper at a salary Of
curity and Trust Company, in which
company w. J. Fiather is also a direct
or. Vice President W. J. Flather. on
January IL. 1913. made replies under
oath to questions by tho bank exam
iner.
This ONCE regrets to inform you
that 1t has reason to believe that the
dummy loans above referred to we're
by no means all of the loans OF this
character. or lack Of character. which
the officers of your bank have been
dealing in. with or without the knowl-
edge Of its directors.
Loans in Other Banks.
The last report of the bank examiner
shows that, although direct loans to
your president, your two vice presi-
dents and your cashier have, during
the investigation of your bank, been
apparently pretty much eliminated
from the bank. this was done partly by
tho transferring Of the loans Of your Of
fioers to other banking institutions in
the District. One institution here, it
appears. has loaned nearly 100000 to
your cashier and one Of your book
keepers. and the loans Of the banking
institutions Of the District to four Of
your officers at a recent date amounted
in the aggregate to approximately
100000. for much of which highly
speculative and risky securities were
hypothecated by those borrowing Of
hoers.
The first examination Of your bank
made after March 1, l913-namely. the
examination Of May, 19l3-showed that
nearly two-thirds of the entire capital
OF your bank was being borrowed by
its cashier and its other directors.
These loans were in addition to other
large loans which were also being
made to Arms or business concerns of
your directors. which sums largely
Increased the total. The loans at that
time to your president. your two vice
presidents and your cashier exceeded
dummy loans which some of your Of
ficers were also borrowing at that time.
az has been developed in the recent In
vestigation by the bank examiner.
Calls Items Irregular.
AT the time Of tho October. 1918. ex-
animation. the national bank examiner
also complained Of irregular items ag-
gregatins $65,572. all being for stock pur-
chased for customers. which were being
carried in tho cash instead Of being
charged to tho personal accounts OF tho