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DRAINS
On Deposits Serve
To Make Closing An Advisable Step.
Two Former Officials Arrested On Charges
Conspiring To Misapply Funds Of Institution
Action Of Directors Follows Runs Induced By Exaggerated Rumors-Receiver Appointed.
Exaggerated and incorrect rumors regarding its condition forced the closing of the Brotherhood of Railway Clerks National Bank, Court and Vine Streets, yesterday morning, despite the fact that national bank examiners previously had found that the bank itself actually was solvent. Heavy withdrawals by depositors, alarmed by the city-wide undercurrent of rumor regarding this particular bank, and possibility that the withdrawals would continue in volume, forced this action upon the DIrectors three days after they had effectually met the emergency which had given rise to the rumors. It was case, officials said, of bank bridging serious situation completely and then being compelled quit business because of wave of hysteria among depositors not aware of the facts of the situation. Bank Is Solvent.
That the bank actually is in sound condition financially was indicated by the statement of representative of the bank yesterday. Although the emergency met by the Directors arose through the stock manipulations of Amor W. Shafer, former district sales manager of Henry L. Doherty Co., which already had forced the closing of the Cosmopolitan Bank, Fifth and Walnut Streets, it was said that the situation at the Brotherhood Bank was entirely different from that at the Cosmopolitan Bank. "Kited" checks and drafts brought about the closing of the Cosmopolitan. The situation at the Brotherhood Bank developed through the bank's guarantee of indorsement of signatures of stockholders of the Cities Service Company on certificates handled through that bank by Shafer and afterward. it is alleged, found to have been forged. Not To Exceed $517,000. Last night was said that the maximum liability of the bank, even if all the Shafer certificates turn out to be forgeries, could not exceed $517,000. Against this the bank had set up $650,000, with $600,000 more available if needed. making total of well over $1,000,000 available to meet this liability. This was more than double the amount needed to insure the bank against any loss whatever through the stock transactions, it was said. This phase of the situation was arranged last Monday. Then began the rumors which sent hundreds of depositors to the bank Tuesday and Wednesday, with possibility that the "run" would continue indefinitely. So heavy were these withdrawals that the bank anticipated difficulty in raising immediate cash to meet all of them, due to the fact that much of its funds, in common with all banks, was loaned and could not be regained until the loans became due. Two Are Arrested.
Numerous conferences were held by the Directors, the national bank examiners and other bankers, in an attempt to straighten out the situation. These conferences brought about the/resignations three officials of the bank and the arrest yesterday of two of them on charges of conspiracy in misapplying funds of national bank. The two arrested were Lyman E. Norris, 38 years old, Executive Vice President of the bank until few days ago, and Harry Rosenblum, 28 years old, Cashier until the same time. Officials said the two men had admitted dealings with Shafer in which they had made personal profits of $60,000 in the last few months, in connection with his stock transactions through the bank. Morris and Rosenblum were arrested by United States Deputy Marshals on warrants sworn to by Haveth E. Mau, United States District Attorney. When arraigned before United States Commissioner A. Siemon they pleaded not guilty. Mau asked that their bonds be set at $25,000 each. Although the specific charge was the misapplication of $10,000, it was said that several similar charges could be filed. Commissioner Siemon set their bonds at that amount and fixed their hearing for July 26. Morris gave his address as 7075 Ridgeway Avenue, and Rosenblum his address as 3870 Marburg Avenue. While District Attorney Mau was promising of the special grand jury to investigate the case within the next weeks, it was learned that Shafer's transactions with the Cities Service stocks had under way since last November,
