The Collapse of a 'Rotten' Bank
A post-mortem of a defunct banking institution reveals a web of insider lending, conflicts of interest, and empty promises that devastated local depositors.
The story, cleaned up
A cleaned-up reading of the newspaper page: spelling and layout repaired, one story lifted off a crowded page. It follows the original closely but it is not a transcription. The original page is below; read it if a detail matters.
An examination of the final report of ex-Receiver Richards, of the defunct Puget Sound Loan, Trust and Banking Company, proves conclusively that the press and street reports of the rottenness of the institution were not in the slightest degree exaggerated. The receiver's attorneys, contrary to the strict letter of the law, were the attorneys of the bank prior to its suspension, and they were also borrowers from the bank. The principal petitioner in that case held stock to the amount of $5,000, for which he had given his note in payment and had not paid a dollar in cash, and yet he had raised from the bank over $2,300. In his report the receiver says: 'I have also found that nearly $100,000 is due the bank from the directors and stockholders.' Its total resources are now reported to be $207,301.18, and liabilities, including capital stock, the same amount. But unfortunately the bulk of its resources is in bills receivable upon which it is doubtful if 25 cents on the dollar could now be realized.
“It is doubtful if 25 cents on the dollar could now be realized.”
The collapse of the Puget Sound Loan, Trust and Banking Company serves as a classic example of Gilded Age financial corruption. It illustrates the 'boom and bust' cycle prevalent in 1890s Washington, where speculative banking and insider dealing regularly wiped out the savings of ordinary residents.
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