The directors also entered into a signed agreement promising to charge off certain listed assets which the examiner declared to be worthless and to collect or secure other doubtful or questionable loans aggregating $1,070,000.

In November, 1913, the bank was due again for examination in regular order and an examiner other than the one who made the several previous examinations, and one of the most efficient men in the service, was assigned to the work. This examination was commenced on November 15, 1913, and continued until November 20, when a run started which closed the bank and its branches.

This examination disclosed that no honest efforts had been made by the management to carry out in good faith the terms of the bond or the agreement to collect, secure or charge off the doubtful paper and losses, and that the bank was in a much worse condition than at the time of the former examination.

The asset previously carried at a valuation of $851,000, covered by the bond accepted by Comptroller Murray, had been padded $21,000, and the more than one million of doubtful assets listed in the signed agreement to collect, secure, reduce and charge off had been curtailed only $163,000.

As an illustration of the methods of manipulation that were resorted to in this bank the examiner reported that about a year before the absorption of the Merchants and Mechanics Savings Bank by the United States Trust Company in April, 1912, Eldridge E. Jordan, then president of the savings bank, unloaded a certain office building in the city of Washington on the bank in the following manner:

He traded a building owned by him and valued at from $250,-000 to $300,000 for the office building mentioned, subject to a mortgage of $375,000 on the latter building. He then transferred his equity in the office building to the Merchants and Mechanics Savings Bank for $362,500, taking in payment therefor $62,500, in cash and 2,000 shares of the capital stock of the savings bank. The directors of the savings bank, it was claimed, did not know of this purchase until the sale had been consummated, and Jordan, it was stated, admitted that he made a profit in the transaction of $40,000.

This investment of the funds of the savings bank by Jordan resulted in a disruption of the board of directors and the resignation of Jordan.

It appears further that the Merchants and Mechanics Savings Bank then organized a building company with a capital stock of ten thousand dollars to carry this office building and issued bonds for the remainder of the investment.

In April, 1912, the Merchants and Mechanics Savings Bank was absorbed by the United Sttaes Trust Company. At that time the stock of the building company was carried by the savings bank at ten thousand dollars. In order to provide the necessary funds for the purchase of the savings bank the stock of the building company was then inflated $69,192.86. Shortly afterward $3,207.14 was charged to this account and the account further inflated by that amount.

When the United States Trust Company purchased the International Banking Corporation the directors of the former company were reported as having placed a note in the assets of the bank for which a certificate of deposit was issued for $30,000. When it became necessary to pay this certificate the directors' note was eliminated from the assets and the value of the stock in the building company was further inflated thirty thousand dollars.

This account was also further inflated by the amount of the purchase price of ten parcels of real estate which the United States Trust Company found necessary to acquire in order to protect second deeds of trust which the company held against such properties.

In May, 1913, in order to eliminate from the assets of the bank a note of the building company for twenty-one thousand dollars, the stock of the company was again inflated by this amount, making a total inflation of $123,000.

While the examination was in progress and for some time previous thereto negotiations were being carried on between Mr. Jordan and the president of a national bank in Washington with a view to merging the bank with the trust company. At this time Jordan was chairman of the board of directors of the trust company, and in reality president of the company, as Mr. Murray had resigned the presidency several months previously. In furtherance of the negotiations to merge the two institutions Mr. Jordan requested the bank examiner to make a joint examination of the company with the banker with whom he was negotiating. The examiner informed Mr. Jordan that he would submit his request to the Acting Comptroller as he could not make the examination without authority.

Knowing the condition of the trust company to be very unsatisfactory, and having in mind the criticisms to which the Comptroller's office was subjected in connection with the joint examination of the assets of the First and Second National Banks of Pittsburgh by the national bank examiner and the appraisement committee composed of a representative of each bank prior to their consolidation, the Acting Comptroller did not look with favor on the proposition, and instructed the examiner to advise Mr. Jordan that the banker and his associates must make their own examination and appraisement of the assets, but after doing so there would be no objection to his conferring with them in regard to any of the assets about which there was any difference in valuations. The examiner and the officers of the company differed very materially as to the value of certain of the principal assets and the Acting Comptroller desired to obtain the independent judgment of the banker and his associates in regard to these disputed items.

Following these instructions the examiner conferred with the banker and his associates after they had made their own appraisement of these particular assets, and on every item the loss or depreciation estimated by them was greater than that estimated by the examiner.