Steel City Banking Company (Pittsburg, PA)

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Efficient Supervision Needed.

The importance of experienced bankers in charge of banks indicated by the plight of the Steel City Banking Company which has been closed by the State Banking Department Apparently the arose through granting of too many loans estate which resulted in large proportion of the bank's being frozen It is imthat maintain certain proportion of its assets in liquid form in order that may meet legitimate demands for money by depositors. Failure to do this the indicated cause of the Steel Company's closing The suspension is especially unfortunate in that majority of the depositors people of small means to whom inability to their money when quired distinct But there satisfaction in the belief expressed by the authorities that the depositors will not anything This bank suspension emphasizes the necessity of public supervision of all And that the pervision be efficient was only about the middle of last year that Steel City company came under the jurisdiction of the State Banking Department It would seem that in the interval discovery should have been made the alleged practices that finally led to its closing Had it been, the failure probably would avoided

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BANK CLOSED AFTER STATE EXAMINATION

Steel City Banking Co., Of Pittsburgh Ordered To Close Doors Following Auditing

MADE POOR INVESTMENTS HAD 5000 DEPOSITORS

$500,000 Involved In The Affairs Of Bank Which Was Organized Six Years Ago

14 Steel Banking one the leading the ordered closed State Banking Department Its The East Liberty branch institution given closing the bank. whose assets given deposits, Has Depositors The the Banking the East branch East End. closed Chief Banking that more than depositors feeted by declared there nature the bank by the that heavy

No Run On Bank There bank. small Tuesday notice the posted Robert was placed temporary charge of the Records on hand In the East Liberty branch were transferred bank Tuesday

First Examination

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FROZEN ASSETS CAUSE RUIN OF PITTSBURG BANK

Steel City Bank Had 5000 Depositors And $488,000

Assets

ACTION TUESDAY BY STATE BANK DEPT.

Assets "Frozen" By Too Ex- tensive Investments in

Real Estate

Pittsburg, Pa., (Special) -Poor real estate investments were blamed Tuesday by the state bank examiner for the shortage in cash that resulted in the closing of the Steel City Banking Co., at 801 Wylie avenue and a branch at 6309 a street, Eastend. It has been known for some time that the bank was in difficulties and persons familiar its history and operations were not surprised to learn that the doors had finally been closed. The Steel City Bank was part group institutions under the spirational leadership Dr Austin, pastor Baptist Church of this city. These organtzations Ebenezer Baptist Church, he Home Finder's League, The Pitts burg American, weekly newspaper which suspended with the issue January 1st, Sons the Southern Soil, kind of politicalreligious organization and the Steal Bank. Besides these organizations, were more that, operated by private persons individual businesses closely associated with the above named corporations and man at the head them. Leaders The men were leaders in Dr. Austin, pastor of Baptist Church, President of the State Baptist vice president of the Steel Bank, president of the Sons of the Southern Soll and at time the Home League he the founder: Moses until recently president of the Steel City Bank, assistant pastor Ebenezer Church and officer in all the other allied the bank officer the corporations Shedrack Fields, N. and other local Under Observation The bank had been under observation the State Department of Banking when the directors take steps protect the was this time that the directors decided ask for resignation Rev. Hunter as president. It was rumored that there was of dollars, that the bank had not been efficiently managed and that it drastic reorganization would be necessary.

Frozen Assets is said by those who are close the bank that main management, was dabbling real Aside this, reported that Rev. Hunter had withdrawn of dollars from the bank to finance the Pittsburgh American. It alleged that shortage good of funds of Ebenezer Church the bank's and giving the church note against Pittsburgh American. Combined with announceby Dr. Austin of his intention Pittsburgh up the pastorate of Pilgrim Baptist Church Chicago. Many of the the bank were members of Rev. Austin's had put their money the bank of his with believthat when these depositors learnthat he was preparing leave they went to the bank withdraw their funds. Run On Bank Although there has been noticeable run the bank, been steady and constant. Rumors were affoat the time the Christmas savings clubs were paid the bank was in such poor condition that it was necessary aid in large sum of to make this this that very small amount of money The banking department has giv en word as to the actual condition of the bank. lone the door that the Steel Banking Company, nership had been Police tection was asked for and all city police officers stood outside the door.

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FROZEN ASSETS CAUSE RUIN OF

Steel City Bank Had 5000

Depositors And $488,000

Assets

ACTION TUESDAY BY STATE BANK DEPT.

Assets "Frozen" By Too Ex- tensive Investments in

Real Estate

Pittsburg, Pa., (Special) -Poor real estate investments were blamed Tuesday by the state bank examiner for the shortage in cash that resulted in the closing of the Steel City Banking Co., at 801 Wylie avenue and a branch at 6309 a street, Eastend. It has been known for some time that the bank was in difficulties and persons familiar with its history and not surprised to operations were learn that the doors had finally been closed. The Steel City Bank was part group of institutions under the inspirational leadership of Dr Austin, pastor of Ebenezer Baptist Church this city These organiEbenezer Baptist zations Church, he Home Finder's League, real estate corporation The Pitts burg American, weekly newspaper which suspended publication with the issue of January 1st, Sons the Southern Soil, kind of politicalreligious organization and the Steal City Bank. Besides these organizations, there were that, operated by private perindividual businesses were closely associated with above named corporations and the man at the head of them. Leaders The men who leaders in these Dr. Austin, Baptist Church, President the State Baptist vice president of the Steel City Bank, president of the Sons of the Southern Soll and at one time the Home Finder's League of which he the founder: Hunter, until recently president the Steel City Bank, assistant pastor Ebenezer Church and officer all the other allied companies: Arthur Stevenson, of the bank officer Shedrack Fields W. N. Johnson and other men. Under Observation The bank had under observation the State Department of Banking July when the directors to take proper steps protect the It this time that the directors decided to ask for the of Rev. Hunter as president. was rumored that there shortage thousand dollars, that the had not efficiently manthat survived drastic reorganization would be necessary.

Frozen Assets is said by those who are close bank that the main its difficulties. from Inefficient anagement, was indiscreet dabbling in real Aside this, it reported that Rev. Hunter had withdrawn several dollars from the bank to finance the American. alleged that shortage good transfer funds of Ebenezer Church to the bank's account and giving the church note against the Pittsburgh American. Combined with was the announcement by Dr. Austin his intention leave Pittsburgh and take up the pastorate Pilgrim Church Chicago. Many of the the bank were members of Rev. Austin's church had put their money in the bank on account of his with It believthat these depositors learned that preparing leave they went to the bank to withdraw their funds.

No Run On Bank Although there has been noticeable run the been steady and constant. Rumors affoat the time the Christmas savings clubs were paid that the bank was in such poor condition that was necessary secure aid in borrowing large sum to make this payment. that very small amount this money was redeposited. The banking department has giv en out no word as to the actual condition of the bank. lone not the door announcing that the Steel City Company, partnership had Police tection asked for and all day two city police officers stood outside the door.

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Steel Bank City Community Day Forced To Close Will Doors By State Draw

Institution of Pittsburgh in Hands of State Banking Officials

$500,000 INVOLVED

Pa., Jan. Steel City Banking Company, private partnership which operated general banking business 801 Wylie avenue, this city, with branch bank 6309 Broad eet, was closed Tuesday by Chief Banking Examiner, "Frozen was given the reason the action of the Banking exact figures available this the amount of assets lia bilities of the believed, however, that upwards of involved. There depositors affected by closing of the Not Subject Examination Like banking institution of Brown and Stevens Philadelphia was not subject to examination by the State Banking Department until the legislature made private banking institutions subject to examination May, 1925. impossible for banks to escape State supervision. Frozen Assets Examination the books disclosed that practically al lits cash was invested in real estate and mortgages. The assets could not easily liquidated and there was sufficient funds on hand to meet the depositors' daily demands. Robert G. Dickson placed temporary charge the institution by Chief Examiner Ferguson who said that there has nothing of crim. Inal nature the operation of the bank disclosed by the examination but that the heavy investments had simply made it "land poor."

No Run on Bank There no run though large crowd sons about the doors of the bank the time was supposed to sign posted the door to the effect that the bank charge Peter Cam eron, Secretary Banking of the of The records cash on hand of the East Liberty Branch were transferred to the avenue bank Tues. day The Rev. Austin, pastor of the Ebenezer Baptist Church, vice pres. Ident of the bank: Attorney Arthur Stevenson, secretary and cashier: and John Fletcher, assistant cashier The Rev. Hunter, who pres. ident of the bank. resigned some time ago. directorate the bank includes Loving, the Austin. W Hughes, H. Walker, John. Fletcher, James M. BurHampton Joseph James, Shadrack Fields, Miles Sales Shorter the Rev Johnson, Augustus Hargrove and Attorney thur D.

The only Philadelphia that news affectthe

Lincoln Quintette Sing Dr. Jesse Moorland to Speak; City-wide Effort TO INCREASE MEMBERSHIP

The Young Men's Christian Association will community service program on Sunday evening, January 17th the First African Baptist The Christian Association making strenuous drive for new memrenewal on the part members The program be pleasing and instructive. Lincoln University Quintette will sing repetoire William Harrod make also Dr. Moorland Brooklyn, The admission is free. It is hoped that everyone will come out and pack the church

Afternoon Meeting On the same date meeting under the auspices the at Miller Memorial Baptist Church. going establish branch in North Philadelphia. This meeting in the interest of the new branch. Rev. W. Jones is the pastor of church He is interested the velopment of work in that section of the city

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Rev. Austin

(Continued From Page 1) as a position of honor only, and have never been called upon for any official service; such as having to do with the books, hiring or discharging help, checking up on the daily work, receiving or handling the money. There isn't a depositor on earth who ever saw me in any of the cages of the Steel City Bank. My further relation a member the Board of Directors and, in spite of busy program as President of the State Work among Baptists, Chairman of the Foreign Mission Board of the National Baptist Convention and active pastor, sat in conference with the board whenever could to listen to the reports of business and cast my vote for or against same. Question No. 2.-What relation did you, J. Austin, sustain to the Home Finders' League and what nature of service did you render Answer-I was president of this organization until this organization merged into the Steel City Bank by the exchange of Home Finders' League stock for Steel City Bank stock, which merger took place at the voted consent of the Home Finders' League stockholders and the official board of the Steel City Bank. After this transaction, which was more than year ago, was regarded-as an honorary officer only. The Home Finders' was financed by the Steel City Banking Co. upon the recommendation the presiding officer of the bank and the voted consent of the board of the said institution. This we all hoped to have proven a step of progress on our parts. Question No. 3.-Why didn't you, J. C. Austin, show more interest in the people's welfare, whom you encouraged to patronize this Negro business? Answer- question is a just one and brings from me the frank confession of my regrets that could not have been more officially active. had absolute confidence in the honesty and the ability of those manning the instiution and believed in the reports on conditions and the recommendations for expansion and boosted the same from the pulpits throughout the city and state. It was never in my purpose to be business manager over real estate nor a banker in reality. attached my name to these institutions as have done to the secret organizations and Negroes' general business in town that might help to encourage and rally this group of ours to the spirit of co-operation, ownership, self and race pride. In spite of the closing of the doors of the Steel City Banking Co., feel that have done right to encourage and plead for Negro business enterprises, whether myself, had the brains or the time to operate them or not. Question No. the Ebenezer Church release $32,000 last June to save the Steel City Banking Co. from closing its doors at that time and if did pastor of the Ebenezer Church so recommend Answer-The Steel City Bank would have closed its doors, according to the frank statement of the bank examiners had we overnight raised $50,000. Ebenezer Church, having $32,000 in the bank, and many members depositing their money there, and having the race interest at heart, did release $32,000 in order that this institution might stem the tide. Question No. 5.-How was it done Answer-After we, ourselves, as directors had gone our limit and finding ourselves yet $32,000 away from the mark, the cashier of the bank conceived the idea to take the matter up with the board of the Ebenezer Church. This he did in the absence of the pastor and enabled them to see the wisdom of releasing the said funds. This transaction was officially brought before the church-at-large in regular church business meeting and the church unanimously voted their endorsement of the above mentioned act, on the part of the official board. Question No. 6.-What relation did you, J. C. Austin, sustain to the Pittsburgh American? Answer-The only relation I have ever sustained has been that of subscriber and reader of the paper Question No. 7.-Why is it that the Home Finders' League Stock said to be valueless Answer-There should be no Home Finders' League stock today, for a year or more ago, upon the of the business manager of the Home Finders' League, who was the president of the bank, the Home Finders' League stockholders voted to exchange their stock for bank stock and all stockholders thereafter were stockholders of the Steel City Banking Co., and the Home Finders' League became the property of the bank as its real estate department. am confident, my friends, that had we exercised greater faith in ourselves and co-operated with the Steel City Banking Co. fully; had we been depositors in deed and in truth rather than make such a run on the bank, drawing out our funds in the time of little excitement, this chapter would not have been recorded in our history.

Prescriptions Filled Mother-"Children, here's quarter. Go down to the saloon and get your ice cream cone and soda water. And on your way back stop in the drug store and bring your father home."

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Four File Exceptions to Report Of Bank Receivers

Exceptions were filed on behalf depositors, first and partial account of the Steel City Banking Company made by Frank W Jackthe state banking department. in common pleas court yesterday morning. The depositors object to eight notes of the Home Finders' League listed as valueless in the accounting of the assets the bank The declare that the holdings of the Home Finders' League worth about

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STEEL CITY BANK RECORDS STOLEN, HEARING BRINGS OUT (Preston News Service) Pittsburgh, Pa., Jan. 21.-Records have been stolen that were necessary to settle the affairs of the Steel City Banking Company, which was closed by the state banking department over a year ago, and of which Rev. M. S. Hunter was president; Rev. J. C. Austin, vice-president and leading member of the board of directors; and Attorney Arthur W. Stevenson, cashier, it was disclosed before Judge Richard Martin, of Common Pleas Court, Thursday when stockholders and depositors appeared at a hearing to determine whether the stockholders are liable for the condition of the bank since it was said to be a partnership institution. The bank was closed when it found difficulty in paying off Christmas depositors a year ago. Then a loan of $10,000 and some of the collateral of the Home Finders' League, of which Rev. J. C. Austin was founder and president, and affiliated with the bank, was advanced to raise the money. Exceptions have been filed to the item of the account showing an expenditure of $12,000 for the receivership administration, while only $10,000 has been collected. The hearing was adjourned until January 31. Attorney Richard Jones represented the complainants.

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MANY FACTS IN

Prominent Pittsburgh Residents Called

By HARRY B. WEBBER Pittsburgh, Pa., Feb. 11 Rev. J. C. Austin, now of Chicago, former president of the board of directors of the defunct Steel City Banking company; Rev. Moses S. Hunter, former president of the bank, and Harry Aronson (white), millionaire real estate magnate and head of the United States Realty company, were charged with conspiracy to defraud depositors of the institution when Attorney Arthur D. Stevenson, former cashier of the bank, sat in the witness stand of Judge Martin's common pleas court last Thursday morning and made such an allegation on being cross-examined by the attorney of the state banking commission.

Exceptions filed by the Fifth Ward Citizens Protective other depositors of the bank to the first and partial of the tary banking, has been charge of the Steel City bank since closed its doors, Jan. 12. 1926. were being heard of Judge Martin Thursday morning and Firday morning These depositors claimed that the bank examiner had been guilty negligence in redeeming all the assets of the institution that positors receive more than 42 per the dollar. which pay ment announced to be ready to be made December.

Refused to Testify The hearing inaddition to detailed and statistical arguments presented by Attorney Thomas A. Barton, act. ing for the depositors was by rather sensational testimony in dicating that the real truth of bank's failure was hidden in whirlpool of mismanagement and illegal transactions. Three other important witnesses were called in this hearing Rev. Moses S. Hunter, when placed on the stand and questioned regarding the unauthorized payment by the bank of an item of $16,000 to real estate company, refused testify to anything he "there were malicious efforts being made to hurt Mr M. Jackson deputy of the commissioner of banking, with offices in this and been in active charge the bank's liquidation. when called as witness by Attorney Clyde Randall, representing several other exceptants, stated that no investigation had been made of alleged payments the bank to Rev Austin and Rev Hunter. Charge Graft Bonuses Harry called to the stand by Attorney Robert M. Ewing. counsel for the banking commission. claimed that he had at all times been ready to help the defunct bank out of it difficulties. He was not ques tioned on irregulariti because such question was not permissable in the rebuttal cross-exa which was in progress when he was called The graft charges concerned leged bonuses between the three men after the bank was made to pay inflated prices for real estate Wide interest has existed here in the hearing ever since it was uled to be held. The first and partial of the bank receivers was filed in December The receivers announced at that time that about 50 cents would be paid on the dollar within 30 days from the time of filing. unless made to the account. A closer calculation based the report indicated that the payment was exactly 42 per cent. On the last day of the 30-day neriod in which be filed three sets of these were filed by different depositors. The main tenor of such exceptions dealt with the allegation that the receivers could have taken $80,000 of the money they held in hand and redeemed real estate security of the Home Finders league to the amount $195,000. which had, shortly before, been pledged for an $80,000 loan to the bank. The receivers claim that this would be throwing good money after questionable money The exceptants claimed that the property was actually worth this amount and that to redeem would permit about 80 per cent to be paid on the dollar instead of 42 per cent. The hearing last revoly about this point. Judge Martin will render a decision to whether the exceptions are valid within ten days in order to give both attorneys time to file briefs to prove their At first Attorney Vann was actively interested in the exceptions of the Fifth Ward Protective organ-

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