| Show written tor for thiM Paper NATIONAL BANK FRAUDS copyrighted by frank G carpenter 1896 washington march ath 1896 W WROTE R 0 TE today of the losses of millions our national b banks a n k s are c on sid er ed the safest of in vestments still in them fortunes have been stolen rich m men e n have been made paupers haupers pau pers and the widow and the orphan have again and again agai n lost their little all gigantic frauds have been perpetrated through them and the stories of many of them are lull of romance and adventure during the past lew few weeks with the assistance of mr james H eckels the controller of the currency I 1 have looked into some of the biggest swindles p perpetrated rated by dishonest persons who have got en control of national bankland bank sand the matter which follows I 1 is perhaps the first true statement given as to the great failures of which it treats it is made from notes for me by the receivers of the various banks at the request ot of the controller and it may be relied upon as authentic first take the great swindle perpetrated through the name of general beneral grant by the firm of grant ward this is perhaps the most notorious bank banic failure of our history it occurred on the ath day of may 1884 the bank was know as the marine national bank it had a capital stock of on oa the day it tailed failed it had debts amounting to more than five million dollars the marine bank had been in existence for twenty years but about the time general grant came into it in 1883 1880 it was reorganized and the chief proprietors kropi of the bank were then james D fish ferdinand ward general grant and ulysses S grant jr grant put into the bank he got the money it is said from the sale ol of the house which the citizens of philadelphia gave him after the war was over as a token of their love and esteem grant was then at the height of his fame he had just returned irom from his trip around the world and was talked ot of as the third term candidate for the presidency james D fish had long been the president of the bank he was then sixty years old and he was it is believed to a large extent innocent of fraud the arch fiend of the conspiracy was ferdinand D ward who at the time the bank was organized was still fiill under thirty he got acquainted with fish by depositing in in his bank and also through his marriage with a daughter of one of fishs fichs friends friend it was ward who manipulated all I 1 t tae swindles tS it was he who got grant into the batik bank and made him believe that he could make a fortune in it As soon as the bank was thoroughly organized ward brought forward forwar ct his celebrated scheme cf government con tracts which never existed he would pretend for instance that he had secured a cun contract tract calling for on which there was a sure profit of from thirty to fifty percent per cent he would take worth ot the stock for grant ward and would then bring in other capitalists to take the balance fish thought the contracts were genuine and he urged the other parties to go in the money of the capitalists was paid into the marine bank and ward would give notes on the bank indorsed endorsed indor sed by fish bearing the legal rate of interest and also a separate guarantee for a certain amount ot of profit within a certain time when the notes became due he would check against the account of grant ward and he kept up this scheme of organizing companies until the bank failed his transactions lasted for a year and a half and during this time he be received and reinvested the enormous amount of oco when the banks affairs were wound up it was found that grant knew practically nothing of the working working of the institution he knew no more a about out the accounts than ward did about military campaigns and he was immensely tickled at the large showing of profits which ward placed to his credit general sheridan said that grant used to poke him in the sides and say you thought I 1 was a good general but you never thought I 1 could do this 0 when the bank failed grant gave up everything he had bad popular sentiment lor a time was against him and he be sunk under the storm and was attacked by a mortal disease he then rallied and wrote his memoirs out of which his family have already realized more than fish was sent to the penitentiary for ten years but was pardoned out after two years imprisonment by president cleveland ward was also sent to prison for ten years but he is again at large and is I 1 am told still living one ol of the biggest wheat corners of history was manipulated through a national bank it burst and both wheat and bank stock went sky high this was the fidelity national bank of cincinnati cin nati it failed in 1887 the arch fiend of this swindle was a man named harper who has since served a term in the penitentiary who was pardoned out and who is now again acting as a broker in cincinnati harper was one of the chief organizers of the bank he was supposed to be worth about two million and a half balf dollars at the time the organ was effected and he be had interests in steel works and other things the bank was founded in 1886 in 1887 it had io in deposits and of this was due to more thansis than six hundred banks and bankers covering all parts of the united states harper was the vice president of the bank and he be practically controlled everything the directors were good men but they had confidence in harper and they allowed him to do as he pleased within ten months after being made vice president harper had drawn out for his own use he then got the idea of cornering wheat and he began to buy in the chicago market he had a young lady clerk a miss losie holmes in the bank through whom he worked and in connection with her the paying teller and the exchange clerk he manipulated worthless checks to the amount of more than a million dollars this money was also sent on tb chicago and invested in wheat it was not however enough and he borrowed horn from outside banks he got from the first national bank of 0 new york from the chemical Nati national bank and from the western nal Na nacional ional bank of new york this money he threw into chicago but still he needed more he then ben proposed pio posed that the capital stock ot 01 the bank be increased one million dollars to this the stockholders agreed supposing that it was for a legitimate banking business five hundred and dollars was paid in and harper at once shipped this off to chicago so that by the loth of june 1887 he had borrowed more than two iwo million militon dollars and had put it into wheat in the meantime these purchases began to materially affect the market no one knew who was buying the wheat but it was finally found that the money came from cincinnati harper was suspected and a circular was sent around asking as to his credit this soon got to the banks who had deposits in the fidelity they began to telegraph for their money and harper saw that he must quickly sell out his wheat or fail he could not dot do this at once and he had to have more money he gathered together such bills receivable as he had in the bank and expressed them to the chemical national bank in new york telling them he would draw upon them for the amount of these bills the bills aggregated they did not of course belong to harper he wired new york however that false rumors had been circulated about the bank and begged the chemical to stand by him a few days the chemical replied that it would help him out but it was not their business to aid in cornering wheat in chicago in the meantime harper sent a man to chicago with lour jour drafts on the chemical bank for each he also sent a false letter of credit for and he thought that through these amounts he could consummate his wheat deal the money however was not delivered in time it was one day late and wheat fell it dropped from ninety cents to seventy cents and harper harder and the fidelity bank went up with the bursting bubble there was immense excitement the bank examiners were called in and the doors were closed after a time lime harper and his confederate were brought to trial josie holmes turned states evidence and escaped harper was sentenced to ten years in in the ohio penitentiary but in 1893 president harrison commuted his sentence ben tence and pardoned him on the ground that he was physically broken down As above stated he is again a broker in Cinci cincinnati I 1 ant am told that asa potter the president of the maverick national bank of bo boston ston is now doir g business in new york this bank was ruined through loans to its directors and us its failure resulted in the loss of one of the biggest hypocrites among these national bank presidents who have failed was theodore P haughey who was the president of the indianapolis national bank haughey was a member of the methodist church and an active worker in the sunday school where he had a class which he called his poor class he was a hypocrite of hypocrites and was up to all sorts of rascality his bank failed to the amount of about and this money was scattered among a great many small creditors the bank had bad all told about creditors and among these were many school teachers and poor church members missionary societies aid societies and benevolent associations were all in the bank as depositors and haughey boasted that he was the friend of such organizations A large part ot of his swindles were carried on by getting braymen dr aymen porters and clerks to sign fraudulent notes which he accepted in bank and used as assets atone at one time when he was about getting a drayman to sign one of these notes he overheard a young boy who had caught his finger in in some machinery swearing swear ipg jig he had him at once called up and discharged saying that he could not have any one in his business who would use such language the indianapolis national bank of which this man was the president was one of the first of the kind organized it was in a bad way in 1884 but at this time it issued some new stock and among others got ex vice president colfax to put 27 into it at this time Haug heys biggest swindles began he started several fictitious companies one was a glue factory of which his son lew haughey was head he also started a hair works and put another son schuyler haughey in charge of that neither ot of these enterprises ever paid nor is it known that they were expected to pay their chief business was the issuing ol of paper to be discounted by the bank the capital of the bank was and the limit of the loans to a ingle bingle borrower under the law was ten per cent of this or by this law neither of these factories could borrow more than they evaded this however by getting their em aloyes to make out notes tor for five or ten thousand dollars each payable to the glue works lew haughey would then take the notes to the bank indorse them and get the money the employed emp loyes of course received none of it they were mm oi of no responsibility and had neither money nor credit wagon drivers day laborers and clerks were used in in this way to obtain large amounts men working at a dollar a day gave notes for oooo i and lew haughey would get them cashed these notes generally ran ninety days and the making and renewing of them was a large part of the business of the employed emp loyes of the glue and hair works in addition to this other companies were organized one was the indianapolis cabinet company which was supposed to have branches in the different cities of the united states and england from these branches notes would be sent in the indianapolis cabinet company would indorse them and the bank examiner would be told that they were good con cerns doing a large business this work continued until 1893 when the bubble burst and the indianapolis national bank failed faded with liabilities of 2000 and assets of about it then had notes of the indianapolis cabinet company of the curled hair company and of the glue company amounting all 1500 haughey and his sons were ot of course arrested their cases were set for trial in 1894 and haughey plead guilty he was sent to the penitentiary for six years and is now serving out his term there he is seventy five years old and is said to be much broken in health lew haug haughey he y was acquitted it is supposed larg largely e ly through the sympathy connected with his mother who had bad no one eue else to care for foe her the keystone national bank of philadelphia failed in 1891 with an indebtedness of nearly there have now been more than four years of negotiation and litigation and less than oo 00 opo have been realized this failure wa was caused originally by one of th presidents of the bank john T lucas u using si n g the bank funds to invest in seashore real estate he did this to the amount of but died before he could replace the money the next president of the bank was gideon W marsh who was at the head bead of the bank at the time of the failure he saw that he could cluid not withstand the storm and fled to brazil where he is still at large the assistant cashier did not receive a cent from the robbery of the bank he merely tried to conceal the acts of others and for this he was sentenced to prison for seven years in the penitentiary of philadelphia Ano therman who suffered was the treasurer of philadelphia a man named beardsley beardsley Beards fey had a large amount of state funds on band in addition to those ot the city he wanted to get interest on this money and he be loaned it to the bank these funds amounted to more than a million dollars the money was wa used bythe by the bank for its own purposes and when it failed beardsley was arrested and was given a sentence of fifteen years in the penitentiary where he now is the way in which the keystone Key sione bank succeeded in fooling the bank examiners and in defrauding its br editors was by falsifying its books for eight years it suppressed its liabilities and padded its assets some of the books showed that there were nearly fourteen hundred thousand dollars due to depositors while the ledger statement showed only eleven hundred thousand dollars in the year 1886 the books were fraudulently changed to the amount of the bank apparently being solvent when it was really that much behind two years later there was a difference ot of more than between the false and true statements of the banks condition and there was a fraud of more than in the deposits in 1889 the deposits dep sits were understated to the amount of and the bank examiner found several hundred separate items the falsification of the accounts was done by dropping the thousands here and there for instance a balance of appeared on the sheets as another balance of as and another of as the bookkeepers book keepers were arrested but it was found that the fraud had been committed by other parties As the examiners continued their work all sorts of other frauds were found pages had been torn from the ledgers and entire accounts removed in one year nearly four hundred pages were cut out millions of dollars worth of false clearing house bills and certificates of deposit were issued and other frauds of the most slovenly character were perpetrated pet rated in closing this article I 1 wish to say that a large portion of the amounts thus stolen by the above banks have been recovered controller eckels speaks in the highest terms of the work of the receivers and he has given me a memorandum of the men in charge of these various banks and the amounts which have so far been realized the meverick I 1 ml in the charge of mr thomas s receiver it has already paid 5 to the amount of 89 05 per the e keystone bank in the hands aart M yardley receiver has so id seventeen per cent the in lolis is bank edward hawkins hawking paid lorty forty five per cent the r bank david armstrong paid fifty eight per cent tine arine bank walter S johnson has paid eighty three per cent national dional banks which have fabled past |
