Mr. Knox denied that the criminal sections of the national banking laws imposed any duties whatever upon the Comptroller of the Currency, but that it was the duty of the United States Attorney to prosecute in his district all delinquents for crimes and offenses cognizable under the authority of the United States. Notwithstanding this fact, however, he was and always had been willing to give the proper officers of the Government full and prompt information of all criminal violations of the banking laws that came to his knowledge, and to do everything in his power to further their efforts to secure the punishment of offenders against the laws, but that he did not consider that he was charged with the duties and responsibilities of a public prosecutor, and that this view of the matter always had been the position of the Bureau.
After answering the accusations against himself and the administration of his office, Mr. Knox calls attention to what he termed some peculiar and noticeable features in the conduct of the United States Attorney in connection with the prosecution of the officers of this bank, which, he stated, explains the motive of his bitter and malicious attack upon him.
He stated that within six months after the failure of the bank, the receiver communicated to the United States Attorney all the information of which he had knowledge, of the causes which led to the failure, but that the latter took no steps toward instituting official inquiry into the management of the bank or the punishment of the delinquent officers and directors. When the grand jury, more than a year after the failure, took the initiative and demanded that the receiver of the bank should be required to appear before it, the United States Attorney steadily opposed this demand on the ground that the grand jury had no right to demand the presence of any witnesses except upon the direction of the United States Attorney, and that he had no knowledge of the commission of any crime in relation to the management of the bank, as the receiver had not appeared before him and made complaint under oath. It was not, Mr. Knox stated, until the grand jury made complaint in open court of their inability to obtain the attendance of witnesses they wished to examine that the inquest was begun.
Although the conduct of all of the directors in the management of the bank must have become known to the grand jury in the course of their prolonged investigation, Mr. Knox said, indictments were found only against the former president, vice-president and cashier for declaring unearned dividends, for purchasing the stock of the bank, and for making false reports, but no indictments were found for wilful misapplication of the funds of the bank in the disposition of the immense sums of money which were lost by the action of the directors. Nor were any indictments found against any of the other directors, although it was not reasonable to suppose that the three indicted officers were alone responsible for the purchase of the stock of the bank. Mr. Knox, therefore, expressed the conclusion that either the grand jury dismissed the case from consideration on their own motion, or did so on the advice or influence of the United States Attorney.
Mr. Knox concluded his report to Secretary Sherman by expressing the conviction that the purpose of the United States Attorney in making false and groundless charges against him was to divert attention from his own gross negligence and omissions of duty, and to conceal the partiality and inefficiency of official conduct, in order to prepare the public mind in advance for the probable failure of the prosecutions because of some weakness in the testimony or defect in the indictments.
But, be that as it may, the most remarkable feature of this strange and eventful story is the fact that a pool of seven men could borrow a million dollars from a bank in the name of another bank with which they had no official connection, and through the means of a credit thus obtained secure a controlling interest in the stock of that bank, elect themselves its sole directors, then repay the loan from the funds of the institution and escape liability for misapplication of such funds. It is simply incomprehensible.
To what extent the practice prevailed in the Currency Bureau, if at all, when Mr. Knox was Comptroller, in regard to withholding from the United States Attorney information of criminal violations of law on the part of bank officers until efforts were first exhausted to recover from the accused any funds of the bank for which they were liable, is not apparent. But such was not the practice in later years.
Bank examiners under their general instructions were directed to immediately report in writing to the United States Attorney all criminal violations of law on the part of bank officers or employees that came to their knowledge, and to forward a copy of 6uch report, in duplicate, to the Comptroller, one copy for the files of the office and the other for the Department of Justice, so that the Attorney General might have knowledge of the complaint and see that the United States Attorney, to whom the complaint was made, took prompt and proper action.
The Failure of the First National Bank of Washington, D. C.
The First National Bank of Washington, D. C, was chartered July 16,1863, with an authorized capital stock of $500,000. The principal stockholders were members of the firm of Jay Cooke & Company, of Philadelphia, Pa., who continued to control the bank to the date of its failure. Henry D. Cooke, of Georgetown, D. C, the first Governor of the District of Columbia when the district was under territorial form of government, was president of the bank. At the date of its failure, September 19, 1872, the liabilities, exclusive of capital stock and circulation, amounted to $1,619,968. An assessment was levied upon the stockholders for sixty per cent., or $300,000, but only $5200 was collected from this source. The receiver collected from the assets $1,447,103. This, together with the amount realized from collateral in the hands of creditors, and from the assessment on the shareholders, enabled him to pay one hundred per cent. of the claims proved. The receivership was finally closed January 24, 1876.