The New Amsterdam National Bank was closed under similar circumstances and liquidated with like results. The capital of this association was $1,000,000, its deposits $3,269,000, and its total liabilities $5,984,000. The bank was not insolvent when it was closed. This institution was known as the theatrical bank of New York City. Its depositors and customers consisted largely of actors, race track men, gamblers, saloon-keepers and sportsmen. The bank was placed in the hands of a receiver January 30, 1908. Its depositors were paid in full with interest from the date of closing, and the receivership was finally terminated April 14, 1909, after turning over to an agent of the stockholders cash and assets amounting to $1,027,612.

After the elimination of F. Augustus Heinze from the Mercantile National Bank and the closing of the National Bank of North America and the New Amsterdam National Bank, the Federal authorities at Washington put expert accountants on the books of these three institutions for the purpose of ascertaining whether any criminal violations of law had been committed by Heinze, Morse and others in connection with their management of these banks. As a result of these investigations Heinze and Morse were indicted by the Federal Grand Jury for misapplication of the funds of the Mercantile National Bank and falsification of the books of the National Bank of North America in connection with certain loans made upon the stock of the American Ice Company, a Morse concern. Morse was tried first. His trial covered a period of several weeks, and resulted in a verdict of guilty. He subsequently resorted to every known means and legal technicality to secure a new trial, but without avail, and was finally sentenced to a term of fifteen years in the penitentiary at Atlanta, Ga. After serving about two and a half years of his sentence, Morse was pardoned by President Taft because of failing health, it having been represented to him, and substantiated by medical experts after an examination, that he would live but a few months if his incarceration in prison were continued.

Heinze was more fortunate. He was tried some months later and acquitted. The original indictment of Heinze in 1909 contained a number of counts, many of which were stricken out by the court on the trial of the case upon technical grounds. The court held that the indictment charging misapplication of the funds of the Mercantile National Bank was defective because it did not charge conversion of such funds, and that the word "conversion" was necessary as supplying the legal measure, which the court was unable to find in the indictment for "willful misapplication."

In 1910 Heinze was again indicted on practically the same charge, the indictment alleging that the purpose of the misapplication of the funds of the bank was to inflate the stock of the United Copper Company. The indictment was again found to be faulty and was quashed. The Government then appealed from the decision of the court to the Supreme Court of the United States, under the Act of Congress of March 2, 1907, authorizing an appeal by the Government in criminal cases involving points of law. On December 5, 1910, the Supreme Court reversed the decision of the United States Circuit Court of New York and held that the various counts in the indictments referred to charging Heinze with misapplication of the funds of the bank were sufficient. But as the transactions covered by the indictments on which the Supreme Court ruled were practically the same as those covered by the indictment on which Heinze was tried and acquitted during the previous spring, no further action was taken by the Government, and Heinze escaped punishment.

The Farmers and Drovers National Bank of Waynesburg, Pa.

The Farmers and Drovers National Bank was placed in the hands of a receiver on December 12, 1906. This was a very old and reputable institution. It was originally organized in 1835, and became a national association on February 25, 1865. Before its conversion into the national system it had the reputation of having been a strong, successful and conservatively managed institution. The capital of this bank was $200,000 and its deposits were nearly $500,000. It was not a large bank, but for rascality of management it has not been surpassed.

For some time before its failure it was known by the Comptroller's office to have been freely rediscounting its bills receivables and otherwise borrowing money. The national banking laws limited the liabilities of a bank for borrowed money to an amount not exceeding the capital stock of the association. When the reports of the bank examiner showed that the liabilities of this bank of the nature indicated largely exceeded the capital of the association, strenuous measures were resorted to to secure a reduction of the amount to at least the legal limit. There was no evidence furnished or obtainable upon which to base a suspicion that the bank was insolvent, and without such evidence, or well-grounded suspicion, the Comptroller had no authority under the law to close and take possession of the association. The bank was practically in charge of an examiner for some time before it was closed, for the sole purpose of securing a reduction in the large line of rediscounts, and it was supposed that reasonable progress was being made in this connection, when it was discovered that the books of the bank did not reflect its true condition in respect to the extent of these liabilities. The examiner was then promptly instructed to close its doors pending a thorough investigation to determine its true condition.

On November 12, 1906, the date of the last report of condition made by the bank previous to the date of its closing, the notes and bills rediscounted were reported as $349,474.61, or $149,474.61 in excess of the capital stock of the association, and the amount due to banks and bankers was shown to be only $3,674.71.