THE NEWARK BANK FAILURE.

Lyttelton Times, Volume LVI, Issue 6499, 26 December 1881, Page 6

THE NEWARK BANK FAILURE.

SXT&AOSDISABT OISCI.OSCBB3. The Standard’* Hew York correspondent tap ” The story of the Newark Bank failure i* nearly incredible. It* credit waa almost equal to that of the United State* Treasury, owing to tho wealth and character of the Directors, and the brilliant abilities of the cashier, Baldwin, who repeatedly refused flattering offer* from Hew York financial institutions. Dividend* of no less than IT per cent were paid, and the stock was unpurchaseable at nearly twice the par value on the very day before the collapse. On Sun* day Baldwin announced the deficit to the assembled Directors. Mr Halsey, a leather deader, offered half a million of dollars ; bat Baldwin said that was insufficient. Mr Clark, a thread manufacturer, is reported to have offered a million. Baldwin said that twice the amount would be insufficient. According to hi* story IS years ago he began making personal and unsecured loans to the firm of Christopher and James Hugest, tho largest morocco manufacturers in America, and asserted to be the second largest in the world. The money thus advanced really belonged to the Bank. “ Baldwin says the total deficit is or-r two million a of dollar*, which have been auuk in the Hugest business. The property of the firm ho* been attached. Christopher H agent ha* been arrested for alleged complicity in Bald sin’s defalcations. Home Hew York financiers refuse to believe the story, and allege that the speculative crash was precipitated by on unexpected visit from the bank examiner. As to the method of the defalca*

lions, that consists in the cashier's abuse of the unlimited control of the Bank's reserve fund.” The Daily Nett* Now York correspondent, telegraphing on November 1, says;—•** The city was startled yesterday by the news of an extraordinary Bank defalcation in Newark, a large manufacturing town of New Jersey. Or-ar h. Baldwin, cashier of the Meehan ice' National Bonk, confessed he had stolen 2.000,000d01, equivalent to five-sixths of the whole amounts of the deposits. For eight years he had carried on au elaborate system of false entries, false reports and false correspondence without detection. As late as October 6 he made a report which purported to show that the Bank had 1,i00,000u0l on deposit in a New York Bask, when the fact was the establishment was in debt HOJ.OOOdoI to the same Bank. The cashier was one of the most respected men in Newark, and was vestryman of the oldest Episcopal church in the city, a prominent director of the second largest insurance company in the country, and bad the reputation of being the ablest financier in the State. The Directors of the bank, all eminent citizens deeply engaged in their own business affairs, had implicit confidence in Baldwie, who was to all intent* and purposes the bank, which was considered one of the soundest in the country,, the stock standing at 160 at the time of the failure. The President is 86 years old. He had perfect confidence in Baldwin, and only visited the bonk every week or two. Baldwin says he has not used the money in speculation, but lent it all to Nugmt and Co., morocco manufacturers, of Newark. They kep» an account at the bark, and Baldwin made them heavy loans without adequate security. Having once begun he could not stop for fear of exposure, ' Nugent and Co. promised repeatedly to pay the money back, but failed to do so. Baldwin declared

he bad no interest in their business, and derived no profit from their loan* Me received a salary from the bank of 7500d01, lived modestly, and without extravagance. Nugent's store in this city was attached yesterday by the bank for IOD.OOCtdoI. The i took is valued at 25,000, The factory at Newark is the largest e»Ud Irsbraent of the kind in the country. The heaviest depositor# of the bank were large firms, charitable ins* Rations, insurance companies, and the city government and various hoards of public works. The shareholders are liable for the par value of the slock, which wa# 600,000d0l U is believed now that the depositors will gel not over 40 cent on the dollar. It was arranged in the Bank that the President should retire next January, and that Baldwin should be elected in his piece. The exposure wa# caused by an official visit of the district Bank examiner." Telegraphing on November 2, the same correspondent ssyi: —"The Investigation into Newark Bank defalcations shows that Baldwin had an arrangement with Nugent and Company to receive 1 per cent on all loans to them. The examiner estimate* the sum stolen at 2,246.000d01*. The district attorney hea demanded the surrender of all Nugent’s stock and property as soon as a receiver of the Bank is appointed. The hook* sbdw that Nugent overdrew hi* account this year alone Olo.OOOdol. Tire President of the Bank has been sued by a depositor for £6,000J0l damages, charging neglect of duty, horn# of the Directors do not believe that Nugent bed received all the money. The public sentiment strongly condemns, the ncfligcnoe of the Directors and the Brestdent,"