Mechanics National Bank

Bank Information

Episode Type: Suspension → Closure
Bank Type: national
Bank ID: 1327
Charter Number: 1327
Start Date: May 1, 1880*
Location: Trenton, New Jersey (40.217, -74.743)

Metadata

Model: gpt-5-mini
Short Digest: b924af33

Response Measures

None

Description

Article describes the failure of the Mechanics National Bank (insolvency discovered in May 1880) with large deficiencies caused by frauds/abstractions and later actions by the receiver (Frederick Frelinghuysen) including a suit filed in March 1882. No run is described; the bank had failed and a receiver is active, so this is a suspension/closure with receivership due to bank-specific fraud.

Events (3)

1. June 22, 1865 Chartered

Source: historical_nic

2. May 1, 1880* Suspension

Cause: Bank Specific Adverse Info
Cause Details: Large losses from frauds/abstractions involving C. Nugent & Co. and misconduct by cashier/director leading to insolvency.
Newspaper Excerpt: the bill...recounting the failure of the bank and stating that the deficiency amounted to at least 2,600,000 ... no discovery was made until May, 1880, when two clerks of the bank learned of the frauds
Source: newspapers

3. March 6, 1882 Receivership

Newspaper Excerpt: Receiver Frederick Frelinghuysen against Director Stephen H. Condict, of the Mechanics' National Bank, has been filed in the United States Circuit Court here. ... recounting the failure of the bank ... the receiver under the law is entitled to sue any or all of the directors ... The receiver fears ... that Condict will succeed in taking all his property out of the jurisdiction of the court ... An Injunction restraining him from transferring his property and an order directing him to answer the civil suit is prayed for.
Source: newspapers

Newspaper Articles (1)

1. March 7, 1882 New-York Tribune New York, NY

Article from New-York Tribune, March 7, 1882

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Article Text

DIRECTOR CONDICTS CASE. RECEIVER FRELINGHUYSEN SUES HIM FOR $700,000. [FROM THE REGULAR CORRESPONDENT OF THE TRIBUNE.| TRENTON, March 6. .-The - bill of complaint of Receiver Frederick Frelinghuysen against Di rector Stephen H. Condict, of the Mechanics' National Bank, has been filed in the United States Circuit Court here. It begins a suit for $700,000 against Condict. After briefly recounting the failure of the bank and stating that the deficiency amounted to at least 2,600,000 and that creditors will not receive more than 60 per cent from the assets now on hand, the bill says that the receiver under the law is entitled to sue any or all of the directors if it can be proved that the losses were due to their neglect of duty. The money of the bank which is missing went to the firm of C. Nugent & Co., and the means by which the deficiency was concealed were such as the directors might have easily discovered. As a matter of fact no discovery was made until May, 1880, when two clerks of the bank learned of the frauds, and gave a circumstantial account of them to Director Stephen H. Condict, because he had the most intimate knowledge of the affairs of the bank. Condict told the clerks he would investigate the matter, and did so, but told them to keep still or the bank would be ruined. At that time he held 250 shares O stock, but sold them soon after learning that the bank was hopelessly insolvent. Instead of performing his duty Condict made no attempt apparently to stop the abstractions, and a large part of the loss occurred after he had been informed of the condition of affairs. He united with other directors in declaring dividends, and permitted them to indorse the false statements of the cashier, though carefully abstaining from indorsing them himself. When he discovered the frauds he held Nugent's personal notes to the amount of $15,000, secured by a second mortgage on Nugent's house. He forced the cashier to pay him about $8,500 of this sum out of the bank's assets, thus, the bill says, knowingly misapplying the funds and conspiring with the cashier. Besides this, says the bill, he had since 1873 discounted the notes received by Nugent & Co. which could have been discounted at the legal rate, at 12 and 18 per cent off, and continued to do this after the discovery in 1880, and .. by reason of this extortionate and insurious interest the bank's assets were greatly redueed." The amount of the notes discounted was at least half a million dollars. The with trawal of Condict from the directors' proposition is recised by the bill. and its failure is ascribed to him. The bill says that by the law Condict is responsible for at least $700,000 of the bank's deficiency. The bill in conclusion states that Condict has been disposing of his property to take it out of the Court's jurisdiction, and declares a belief that Condict has made up his mind to suffer any proceeding that may be taken. The receiver fears. says the bill. that Condiet will sueceed in taking all his property out of the jurisdiction of the court and that he designs to remove to Europe, where he has been in the habit of spen ling long periods of time with his family. An Injunction restraining him from transferring his property and an order directing him to answer the civil suit 18 prayed for.