Thirty-four national banks were placed in the hands of receivers during Mr. Dawes' administration. The most important of these failures were the Chestnut Street National Bank of Philadelphia, Pa., and the Globe National Bank of Boston, Mass.
The Chestnut Street National Bank was closed January 20, 1898, twenty days after Mr. Dawes assumed charge of the Comptroller's office, and remained in the hands of the bank examiner until January 29 following, when George H. Earle, of Philadelphia, was appointed receiver.
This bank had a capital stock of $500,000 and deposits aggregating $1,700,000. About $1,200,000 of these deposits were those of individuals, firms and corporations in Philadelphia, and the balance represented accounts of banks in other cities. William M. Singerly, the proprietor of The Record Publishing Company, was president of this association, and W. Steele was its cashier.
The president of the bank owned twenty-eight hundred of the five thousand shares of the capital stock, and was also the owner of nearly all of the capital stock of The Record Publishing Company, and regarded himself as substantially the owner of the latter's business. The company appeared to be a paying and prosperous concern and in no need to borrow money, but Singerly as president of the company borrowed from himself as president of the bank over $382,000 on notes and checks of the company, and apparently without the knowledge or assent of the directors of the company, and used the money not for the benefit of the company but for his own purposes.
While the bank was in the hands of the examiner efforts were made to liquidate it without the intervention of a receiver. A plan was devised to capitalize The Record Publishing Company at $4,000,000, to be divided into $1,500,000 of preferred stock and $2,500,000 of common stock. All holders of the company's bonds and stocks were to accept for their claims a proportionate amount of the new issue of stock, and after satisfying the holders of mortgages against the company it was calculated that enough preferred stock would be left to discharge the president's indebtedness to the bank. The bank was to have accepted stock for a corresponding amount of the president's obligations, . the value of the stock to be determined by the earning power of the company.
This plan contemplated the restoration of the bank to solvency, but because of some dissensions among the creditors it was not consummated and the bank was finally placed in the hands of a receiver, January 29, 1898, after having been previously voted into voluntary liquidation by stockholders owning 3948 of its shares.
The Chestnut Street Trust Company, an allied institution, controlled by the same directors who controlled the bank, failed at the same time, also a paper mill company controlled by President Singerly. The failure of these three concerns was due to a commingling of politics, the newspaper business and bank management. Politics and newspaper management may be made to harmonize, but politics, like religion, will never blend with banking, and wherever it has been tried, it has invariably failed, and in most cases very disastrously.
The stockholders of the bank were assessed one hundred per cent. of their stockholdings, or $500,000, of which amount $178,-058 was collected. The total collections from all sources amounted to $3,296,200. The creditors were paid one hundred per cent. of their claims, with interest at the rate of six per cent. per annum from the date of failure, and $156,512 was returned to the shareholders.
The president of the bank, who was responsible for its failure, died suddenly February 27, 1898.
When the Chestnut Street National Bank failed, its affairs were found to be so badly involved that it was estimated that even with an assessment of one hundred per cent. on the stockholders the assets would fall far short of yielding sufficient to pay the liabilities to depositors and other creditors in full. But President Singerly, before his death, was induced to assign to the receiver of the bank his equity in a large portion of the stock of The Record Publishing Company, in the hope that something might be realized through this source for the unfortunate creditors of the association. From the date of this assignment the receiver of the bank and his associates practically managed The Record Publishing Company, which was a good paying property, and as a result of their management, the securities of the company held by the bank greatly increased in value. These securities were sold by the receiver at public auction on May 15, 1902, for the sum of $2,874,800, and from the proceeds of this sale the receiver of the bank realized in full the bank's claim, amounting to over $1,190,000.
That this bank was able to pay its creditors in full and return such a substantial sum to the stockholders was due wholly to the excellent manner in which the affairs of the trust were administered, and the good management and business judgment displayed by Comptroller Dawes and the receiver in connection with the liquidation of the Singerly indebtedness.
The failure of the Chestnut Street National Bank and the conditions disclosed immediately following its suspension was the one weak spot in Mr. Eckels' administration of the Comptroller's office.
This bank was known to be in a precarious condition for months before its failure. But Mr. Eckels' confidence in Mr. Singerly's ability and his promises to extricate the bank from its perilous situation delayed the closing of the institution until after Mr. Dawes assumed charge of the Comptroller's office, when it was discovered that Mr. Eckels had been grossly deceived as to the true condition. The results of the liquidation, however, were very satisfactory and gratifying, and reflect great credit upon Mr. Dawes and the receiver.
The affairs of the Chestnut Street Trust Company, the affiliated institution, were closed in April, 1910, by the payment of a final dividend of four per cent., making the total payments ninety-one and one-half per cent.