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GREENHUT PUTS ALL BLAME ON BANKERS Tells How Seven Institutions Refused to Renew Notes for $350,000. DEAL MADE SIEGEL CRY Capt. J. B. Greenhut ascribes the fallare of his department store primarily to the "freemasonry that exists between banks" and which within twenty-four hours caused seven banks to refuse to renew notes amounting to $350,000. He testified to that effect yesterday afternoon in the assembly room at the Merchants Association before Peter B. Olney, referee in bankruptcy, who asked him at the opening of the creditors examination what had caused the bankruptcy. The general denial of credit by the Greenhut bankers began, he said, with the Guaranty Trust Company, which held a note of the J. B. Greenhut Company. indorsed by Capt. Greenhut, amounting to $200,000 and due on Monday, April 5. 1915. Capt. Greenhut made out a renewal note on that day and sent it to the bank with a letter. On Tuesday Wice-President Potter asked to see Mr. Greenhut or his son at the bank. Mr. Potter told Benedict J. Greenhut that he wanted a lien on another note of the Monmouth Security Company, indorsed by the Greenhut banking firm and held as collateral by the bank. The Greenhuts decided that to give such a-lien would mix up the store business with the banking firm's business, but in lleu of the lien Capt. Greenhut offered for the renewal of the $200,000 note other Monmouth Security Company securities owned by Capt. Greenhut, which the bank refused to accept. Mr. Potter then told Capt. Greenhut on Wednesday that the bank wanted payment of the note due two days earlier. Had No Misgivings. "We had enjoyed ample credit." said the department store head, "and never had any doubt that a note would be reI newed when renewal was asked. thought somebody was working there to undermine our credit. We had $350,000 in notes due at seven other banks on Thursday, April 8. We knew the freemasonry that exists among banks and understood that If the news of the Guaranty Trust Company's refusal got out the others would follow suit. By noon on Thursday six of the seven, all except the National City Bank. notified us that the notes they held would not be renewed. It looked to me like concerted action." The banks Capt. Greenhut mentioned were the Mechanics and Metals National, Garfield National. American Exchange National, Chase National, Chemical National and National Park. Capt. Greenhut said the general refusal of the banks was remarkable because he had deposits amounting to $390,000, against a total debt of $550,000 at the banks. When he asked for the renewal of the $200,000 note at the Guaranty Trust, he said, he had $184,000 on deposit there at 3 per cent. Questioned by James N. Rosenberg. counsel for the trustee in bankruptcy. Capt. Greenhut testified that he thought perhaps the merchandise creditors whom he had been slow in paying in order to strengthen his bank credit, had talked about the store's slowness. He considered the bank credit most important, the mercantile credit secondary and emphatically denied that he had any intention in his method of relieving his own obligations at the banks, his name having indorsed the store's notes He had heard of "the talk," he said, but discounted it as a risk. "It is common knowledge in this town." he said, "that a number of large stores do not intend to pay on due dates. very important stores, too." Banking Debts Reduced. Capt. Greenhut admitted the store's banking debts had been reduced $900.000 in the first four months of this year. but he could not recall how much of its merchandise debts had been paid off. A total of $660,000 was due in April. but he had hoped to raise this amount on notes at the banks as well as perhaps $400,000 more without any difficulty He pointed out in justification of that hope that last August, in distressful times, he had raised more than $600,000 in two days on the company's paper without collateral, except his own indorsement. The witness admitted the store had lost $500,000 last year, but he said conditions never were so unusual. The year previous-1913-had been abnormally "off" in business, he said: people did not spend money and business fell off. But his troubles began with the Siegel failure. The mail order business after that crash fell off 50 per cent., $800,000. Orders did not come in. largely because It was thought all over the country that Greenhut's was in the Siegel failure. Then came the necessity of changing the firm's name. After the war began business had been practically paralyzed. he said. while expenses went on. Capt. Greenhut insisted that at the end of 1914, however, he felt that bustness would revive from the "greatest depression ever known.' Everybody felt that way. he said: the general financlal condition was improved and he hoped to turn a 1914 loss into a 1915 profit. He had no idea of receivership. he said, until two days before it came, when he sent the notes down for renewal. He knew, he said. that other stores were letting their merchandise creditors wait. on a larger scale than his store, and he added, "they are still living." Made Siegel Cry. The real property on the west side of Sixth avenue, he said. was worth upward of $2,000,000. on which he put a mortgage of $1,200,000 with Henry Morgenthau. He could not place a value on the east side property, but he told rather
