When Mr. Ridgely assumed charge of the Currency Bureau, the first matter of special importance to engage his attention was the question of the second extension of the corporate existence of national banking associations.

The original Bank Act of February 25, 1863, provided for a period of succession for only twenty years from the date of approval of the Act. Under this Act four hundred and eighty-eight national banks were organized for a period of nineteen years only. Had this provision of law continued in force, the banks would have been chartered for periods of shorter duration each as time progressed, and the national banking system would have terminated by limitation in 1883, the end of the twenty-year period from the date of passage of the original Act. But the Act of February 25, 1863, was repealed by the Act of June 3, 1864. The latter Act recognized and corrected this incongruity in the original enactment by changing this provision of law so as to make the period of succession of a bank twenty years from the date of execution of the organization certificate, thus placing all banks, no matter when organized, on an equal footing as to the duration of their existence.

Of the four hundred and eighty-eight banks that were organized under the Act of February 25, 1863, one hundred and fifty-one were placed in liquidation by their stockholders, twenty-one went out of existence by reason of the expiration of their charters, thirty-five were closed because of insolvency, one failed to complete its organization, and the charters of two hundred and eighty were extended for a further period of twenty years under the Act of July 12, 1882, which authorized such extension.

The first of the extended charters granted under the Act of July 12, 1882, expired July 12, 1902, and when Mr. Ridgely assumed charge of the Currency Bureau there was no authority of law to extend the charter of a bank the second time, or at least there was such grave doubt as to whether a second extension was authorized by the Act of July 12, 1882, that legislation was deemed necessary or advisable. Mr. Ridgely therefore recommended and secured the passage of the Act of April 12, 1902, authorizing a further extension for the period of twenty years, and thus avoided the enforced liquidation at the termination of their second twenty-year period of a large number of banks and their reorganization into new associations if they desired to continue in the national system.

Robbery of the Merchants National Bank of Lowell, Mass. On October 17., 1901, the largest bank robbery recorded in the annals of the national banking system occurred at the Merchants National Bank of Lowell, Mass.

The capital stock of this association was $400,000, its surplus and undivided profits over $300,000, and its total liabilities over $1,500,000. The bank was one of the oldest national associations in the State of Massachusetts, its charter number being 506.

It appears from the history of the robbery that for a year or more before it occurred, Albert G. Smith, the teller, who had been employed in the bank for about eight years, and Lewis K. Swift, a bookkeeper, who had also been in the service of the bank for a number of years, conceived the idea of getting rich quickly through the temporary use of the bank's funds in stock speculations. These two employees entered into a conspiracy to extract from the funds of the association an amount of money sufficient to enable them to purchase the stock of a certain corporation which they had reason to believe would materially enhance in value in a short time and enable them to pay back the money abstracted from the bank and realize a handsome profit for themselves, without detection by the bank's officers or the bank examiner. Their method of abstraction of the money and concealment of the shortage was as follows:

They were well acquainted with all of the depositors in the bank and their business dealings with the institution, and selected with care the particular accounts which they determined to manipulate. When a depositor who carried a considerable balance made a deposit the teller would credit the full amount of such deposit in the pass book of the depositor in the customary way, and pass the deposit slip to his confederate, the bookkeeper, who would enter one-half of the amount to the credit of the depositor in the individual ledger and appropriate the balance for the use of himself and the teller.

This method of embezzlement was carried on for some time, until they accumulated sufficient funds to make the purchase of the stock they desired. The shortage was, of course, concealed by false entries in the books of the bank, as it was impossible either for the officers of the bank or the bank examiner to detect the shortage except by comparison of the manipulated accounts with the passbooks in the hands of the depositors whose funds were embezzled.

They invested the proceeds of their peculations in the particular stock they desired to acquire, but instead of the stock advancing in price, as they had anticipated, it immediately depreciated in value, and they were compelled to use more of the bank's funds by the same procedure to make good the margin required to protect their investment. This process continued until their losses became so large that their only hope was to go into the market and speculate in stocks generally. They continued to use the bank's funds until the total sum of their abstractions amounted to over one hundred thousand dollars, all of which was invested in the purchase of stocks.

For a time they were successful in their speculations, and at one time recovered the entire losses that they had previously sustained to within two or three thousand dollars. But immediately preceding the phenomenal advance in stocks occasiond by the corner effected in the stocks of the Northern Pacific Railroad Company, they had disposed of their holdings of that stock short to a considerable extent, which caused their losses to again reach nearly one hundred thousand dollars.

About this time a dispute arose in the bank between a depositor and the assistant cashier in regard to an apparent overdraft in the account of the former, which was heard by one of the embezzlers, and knowing that an investigation of this particular account would follow and lead to a discovery of the shortage, as this was one of the accounts that had been manipulated, he notified his partner in crime, who was absent on vacation, and urged him to return to Lowell at once, which he did, and after a conference over the situation they determined to rob the bank of all the funds and securities they could obtain and make away with them. Accordingly, between the hours of ten and eleven o'clock on the night the robbery occurred they gained access to the bank and stole between twenty-two and twenty-three hundred thousand dollars in cash and securities and immediately left for Boston, a distance of only twenty-five miles, where they placed their plunder in the hands of other parties for safe-keeping.

On the following morning they consulted and engaged counsel in Boston to advise them what they should do, and through this counsel secured the services of a prominent attorney at Lowell with a view to opening negotiations with the bank's officers and making the best terms of settlement possible as a condition precedent to the return of the stolen assets.

When the national bank examiner commenced an examination on the morning following the robbery, he having been summoned to the bank by its officers, he found a very serious condition of affairs. All of the cash, notes, collateral and securities were missing and the bank had been completely looted and stripped of everything.

If the property had not been recovered the bank would have been hopelessly insolvent, and had the real condition of affairs been known at the time, public confidence in Lowell and vicinity would have been badly shaken and a serious disturbance would no doubt have resulted. The counsel for the absconding teller and bookkeeper, however, immediately opened negotiations with the officers of the bank for the return of the stolen property, and plans were discussed for making the bank solvent if the assets were not recovered. In the meantime the teller and bookkeeper remained in hiding in the vicinity of Boston.

After various consultations by the directors by telephone with the attorneys for the culprits, a meeting between the attorneys and a committee composed of two directors of the bank was arranged for and held. The robbery occurred on Thursday night, and this meeting was held shortly before midnight on the Sunday following, at which an arrangement was made for the return of all the property of the bank, less a certain sum withheld for services and expenses, and between one and two o'clock on Monday morning one of the attorneys for the robbers delivered at the bank all of the cash and securities that had been taken, which, after being counted and examined by the bank examiner and some of the officers of the bank, were found to be intact, except about a thousand dollars in cash, which is supposed to have been used in expenses of counsel.

In justice to the attorneys for the culprits, it should be stated that at the very outset they informed their clients that they would accept employment only upon the condition that they would agree to return every dollar of the bank's property in their possession, otherwise they would have nothing to do with the case. They agreed to do this, whereupon the stolen property was surrendered to the attorneys, and by them returned to the bank.

No promises of immunity from punishment were made by the directors of the bank as a condition precedent to the return of the property, notwithstanding the statements published in the newspapers at the time to the contrary, and if any had been made they would have been of no avail, as the examiner who had information of the robbery would have reported the facts to the United States Attorney for action, as is done in every case of dishonesty or criminal violation of the banking laws which comes to the attention of examiners.

The embezzlers knew this, and they also knew that there was no possibility of escaping with their plunder, so they finally consented to surrender it. They were also advised by their counsel to surrender themselves and take the consequences of their acts, and their counsel offered to defend them on trial, but this they declined to do.

As soon as the stolen assets were recovered and the bank's affairs were found to be in a satisfactory condition, the bank examiner reported all the facts to the United States Attorney at Boston, and although Pinkerton detectives were placed on the trail of the robbers they never were captured. It was currently reported at the time that they succeeded in escaping from this country and had gone to South America, or some other country with which the United States had no extradition treaty covering their offense.

It was the generally accepted theory that the motive of the teller and bookkeeper in stealing the assets of the bank in bulk was to compel the bank's officers to settle with them on the most favorable terms for their previous embezzlements, and that this desperate measure was suggested by an occurrence of a similar nature on a smaller scale more than twenty years previously in the same section of the country.

While the business of the bank proceeded as usual without interruption, on January 4, 1902, the association was placed in voluntary liquidation by a vote of its stockholders and with two other banks was merged into the Union National Bank of Lowell, which bank commenced business on January 6, 1902.