Democratic Sentinel, Volume 14, Number 3, Rensselaer, Jasper County, 7 February 1890 — THREE BANKS WRECKED [ARTICLE]

THREE BANKS WRECKED

NEW YORK’S BRILLIANT “NAPOLEON • OXT FINANCE.” P. J. Claassen Fairly Entitled to That Appellation —He Causes the Suspension of the Sixth National, the Lenox Hill, anil the Equitable Institutions. New York dispatch: A worthy successor of Napoleon Ives has arisen in the person of P. J. Claassen, president of the Sixth national bank of this city, and as a result the Sixth national, heretofore considered onc’of the strongest financial institutions in the city, is in the hands of the national bank examiner, and the Lenox Hill bank, which was controlled by men in power at the Sixth national, has closed its doors, and the Equitable has also suspended payment, under acknowledged embarrassment. President Claassen of the Sixth national Is charged with having deliberately wrecked that bank, and warrants have been issued for his. arrest and that of George IL Pell, a broker, who is charged with having aided him in the commission of the crime. Pell and Classen have both been arrested and the latter is locked up in Ludlow street jail default of $25,000 bail. A rumor was current that the St. Nicholas bank in the Equitable Life building on Broadway was also affected, but a denial was made by W. J. Gardner, the cashier of that institution. He said that a statement that $40,000 in protested checks of George H. Pell & Co. in the St. Nicholas bank was given, in lieu of abstracted bonds, to the examiner at the Sixth national was not true, as the amount had been paid the Sixth national bank. A number of checks on the Lenox Hill bank had been presented to the St. Nicholas for payment, but they were refused. The methods by which the Sixth national bank was wrecked are almost identical with those used by Henry S. Ives in his dealings with the Cincinnati, Hamilton & Dayton railroad. A few daysagd, through negotiations conducted by Pell, Claassen and others bought a controlling interest in the Sixth national by purchasing the interest of the president, Charles D. Leland. Frederick D. Tappen, president of the Gallatin national bank, tells the story of the wrecking as follows: “After Mr. Leland had sold his interest in the Sixth National Bank the directors were requested to resign, which they did, one by one, the vacancies being filled by other men who illegally ■lected P. J. Claassen president. Immediately on assuming the office of president Mr. Claassen made throe loans of $60,000 each, secured by the stock of the Lenox Hill bank—a very poor security—and then went down to the safe deposit vaults of the National Park Bank and abstracted therefrom firstclass railroad bonds of the par value of $622,000. These bonds he placed in the hands of George 11. Pell for sale. The cashier of the Sixth National Bank, Mr. Colsen, became alarmed at the extraordinary proceedings of the new president and directors and he came down to the clearing house and gave the startling information already narrated. After careful deliberation on the whole matter the clearing house committee immediately reached the conclusion that the bank should be placed in the hands of the government at once. A. B. Hepburn, the national bank examiner, was sent for and requested to take charge of the concern and investigate the charges made by Mr. Colson, the cashier, against the officers and directors. This examination fully confirmed the charges made by the cashier. To sum up the case, it may be said that the purchasers of Mr. Leland’s stock paid for it, evidently,with the money, belonging to the bank. Ido not know whether the checks which Mr. Leland received were certified or not, but the purchasers evidently managed to make the payment by ‘kiting’ checks back and forth. The Lenox Hill bank and the Equitable bank are State banks —that ffe, they are organized under the laws of the State. Whether the State bank examiner has taken any action with regard to them I don't know. It is probable they will have to be-closed up.’ Mr. Hepburn, the bank examiner, told much the same st.ery, and said that the abstracted bonds were turned over to Pell, Wallack & Co. for sale. They had given rip to him $201,000 in bonds and checks for the remainder. The checks could not be accepted. ( Mr. Hepburn has made a statement of his examination up to this time. He say# that the missing bonds have not yet. been found. Their par value is $421,000, and the market value $480,466. Upon that had been paidsso,ooo, leaving a deficit on account of bonds of $432,466. Mr. Hepburn will at once make a specific report to the comptroller at Washington. After that is done the usual course of appointing a receiver will be pursued.