In October, 1900, a large defalcation was discovered in the First National Bank of New York City. During the progress of the regular examination of this bank by the national bank examiner, the assistant cashier discovered that C. L. Alvord, the note and exchange teller, was short in his cash to an amount which later was found to be $690,000. These thefts had been going on for a long time. It was found to have been as much as $200,000 two years previous to the discovery of the shortage.

The method of operation and concealment resorted to by the defaulter was to make the cash on hand agree with the amount for which the teller was accountable, as shown by the books of the bank, by taking out of the morning mail, of which he had charge, a sufficient number of cash items to cover the aggregate amount of the defalcations and add them to the exchanges for the Clearing House received during the preceding day. Examination of the exchanges by the examiner showed the total amount to be correct, but $690,000 of the items had been taken from the morning's receipts and listed with the previous day's exchanges. The amount of the morning additions were reduced correspondingly, so that the sum of the two equalled the correct amount.

A thorough examination of the teller's accounts disclosed that his stealings covered a period of several years. While absent on a two weeks' vacation he took the precaution to cover his shortage by making a number of charges to out-of-town accounts and credited the amount on his return before the monthly statements were sent out. Whenever he anticipated an examination of his cash, or a periodical examination of the bank by the bank examiner, he covered the shortage by false charges against large accounts.

While the bank examiner did not discover this defalcation, his examination of the bank one month earlier than the time for the regular examination prevented Alvord from manipulating the figures as he had been in the habit of doing, and a change made by him on a slip of paper later in the day while the examination was in progress aroused the suspicion of one of the bank's officers and caused an inquiry to be made at the Clearing House, when it was discovered that the two items of previous day's exchanges and the morning additions did not correspond with the list checked by the examiner. This led to a count of the current day's cash and the checks in hand, which revealed a shortage of $690,000.

There is no way to accurately check the accounts of an employee if he has access to the preceding day's cash from which to make good a shortage of the current day, and this fatal defect in the system employed by the First National Bank afforded the opportunity for Alvord's dishonesty in the first place and the means of successful concealment for a long time.

This theft could probably have been prevented, and certainly would have been detected sooner, by a rotation of the clerical force of the bank, thus placing each department under supervision of different employees successively.

Upon discovery of the shortage, Alvord fled to Boston, where he was arrested on October 30, 1900, and brought back to New York City. He was tried and convicted in the United States Circuit Court and sentenced to a term of thirteen years in the penitentiary at Sing Sing. He was released for good behavior after serving eight years and went to Stockport, N. Y., where he lived until the date of his death, which occurred September 10, 1912.