The Washington times., 1915-05-15


as depositary any bank whose MANAGE
ment and practices are In violation on
the letter or the spirit of the natloha'
bank act"
Part of General Policy.
In general, secretary McAdoo declares
that withdrawal of Government 1uno"
from the Riggs National was part OF
general policy to assist and encourage
legitimate business and to prevent the
USE of Government funds for speculative
purposes.
He had been informed. he says. that
the Riggs had been In the custom or
transferring n large part of its funds
to the National city Bank to be ioan-
ed on stock exchange collateral. whric-
as II deposited in other directions the
funds that could be made aNallapls
for business purposes or the purpose Vi
commercial paper.
Having thus stated generally the fca
sons for his course toward the Risss
Bank. Secretary McAdoo protesls tnat
his action In distributing GovcrnIneht
funds Is not subject to review OF tne
courts. and has no bearing on the essen
tials of this case. lie denies that ne
has usurpcd or misuscd any power
whatsoever.
The answer then continues that
about February, 1915, Comptroller
attention to the efforts when MI.
Williams was making to learn more
about the condition Of the RIGGS Ma
tional and that the bank was per
sistently refusing to FURNISH ihlor
nation. Theroupon the Secretary OF
the Treasury arranged that comp,
troller Williams should be proVloea
with legal counsel by the Department
of Justice.
COMPARISONS Set Forth.
Attached to Secretary MCAdoo's arm
davit are n series of exhibits setting
forth various Comparisons between the
Riggs National and other banks. lhus
F. shows that from 1896 TO 1915 the
Riggs was leaning from 6l'to sb per
cent of all of It's loans on the Sc
curity OF stocks anu ponds, "nIie
other national banks In washington
were loaning only from 30 70 80 pei
cent on this class OF security anu
at the same time the national BANKS
of the country as whole were max
ing only from 32 to AZ per cent OF
their loans on this kind OF security.
one Of the exhibits attached TO sec
rotary McAdoos affidavit comPI Ilses
a letter from Comptroller w i'''a'
which in part says:
The bank examiner informs me
that on the 18th of April the reai es-
tate account heretofore carTieu ~
Glovcr's name was transferred to 'hS
name of ". j. and II. II. flather, ana
since that time the deals ana opera
tions have been conducted -. liIin '
name and the commissions coiicC'eu o3
them and appropriated for thelr per
sonal benefit. p,,,
II also understand that PRESIDENT
Glover and Vice President Flathef are
hoIh members Of the stock exchange
and that the two Flathers, especially
have been and are conducting a broh-
erage business. charging comm 'SSlois
on the purchase and sale OF stocks.
appears that the bonds ana stocNs
which arc thus bought end sold. ana
,he customers for whom the bonds
and stock are being purchased. are
being carried by the bank. with "hph
the F4athers arrange the loans
Loan to Congressman.
"The two FIathers appear as bor-
rowers Of money personally from the
Riggs National Bank to the extent OF
sl27,300, secured By divers bohos anu
etocks and nearly all the assets ot
,ha hapk nave been loaned out on
hond and stock collateral. not on com
nrrCinl paper and not for the promo
tio,, of the commercial interests OF the
city and the adNanceneht VI 40 "
dustries and general business
There are. however. some laIse PSi, .1'"
stocks, such as gas company. $50
railway company. etc, and there ls one
loan in the bank for about Sl'"',. MhI."
has been there. to greater or Iess
tent for more than ten years pa,
IvhIch was made to a former nemher
~ cnnpr,ss and which IL secured large
Iy nv tn, shares OF street rsil"aH
COMPANY The former rSressh'ah W
whom this loan is made WAS 81 he
time. ] understand. remn"r Oh S,r.
District Committe" or nc houSei m n,,'
his | have not yet verified, ana ! uh-
derstond that a consolidation or th'
street car lines took place while he was
m Congress. ,,,,ns
as are being carried on by MI. HIoNer
.rd the vice president and cashier or
this bank are directly in violation N
the provisions OF the Federal reserve
act. ,
Criticised For Ten Years"
The Riggs National Bank has been
subjected TO frequent criticisms by this
department Tor the past ten years for
various irregularities. but the admoni-
tions of the department have been per
sistently ignored. the bank feeling. ap-
parently, secure and immune from dras-
tic action on the part of the powers
that were"
S2,OOO,O00 In Loans.
.In April 1904, Comptroller Ridgely
called the attention of the bank to ten
loans. aggregating about 100000, all
excessive. At the same time. he said to
them
You are again reminded that the
stocks Of other corporations. which
were acquired as investments, should
be disposed Of, as such investments
cannot be lawfully made by a ma
tional bank.
1.-the examiner reports fortN-slS
loans, aggregating slS4. 4O2. Go. for which
real estate notes are held as collateral
You are again reminded that 1t Is
unlawful for a national bank to make
loans of this character. and such loans
should be disposed of and the practice
of making them discontinued.
"'The examiner also reports the pur'
chase and sale of stocks, bonds, ETC.
on commission. AS heretofore advised
it is ultra vries of a national bank t.
engage in this business, and this prac'
tice should also be discontinued.
The Secretary proceeds with the
enumeration of a number of occasions
on which the Comptroller's department
as far back as 1905, protested to the
Riggs Bank against It's methods and in
sisted that the spirit and purpose OF
the banking law be obeyed.
Loans in excess of the legal loan limit
of the bank were the occasion or pro-
tests and loans on real estate notes
We're also objected to. In one OF the
exhibits, a letter from Comptroller Will
| yK.n nj he