Read CHAPTER VI - A Study in Finance of True Stories of Crime From the District Attorney Office, free online book, by Arthur Train, on

“He that maketh haste to be rich shall not be innocent.” 
   ­PROVERBS 28:20.

The victim of moral overstrain is the central figure in many novels and countless magazine stories.  In most of them he finally repents him fully of his sins past and returns to his former or to some equally desirable position, to lead a new and better life.  The dangers and temptations of the “Street” are, however, too real and terrible to be studied other than in actuality, and the fall of hundreds of previously honest young men owing to easily remedied conditions should teach its lesson, not only to their comrades, but to their employers as well.  The ball and chain, quite as often as repentance and forgiveness, ends their experience.

No young man takes a position in a banking-house with the deliberate intention of becoming an embezzler.  He knows precisely, as well as does the reader, that if he listens to the whisper of temptation he is lost ­and so does his employer.  Yet the employer, who would hold himself remiss if he allowed his little boy to have the run of the jam-closet and then discovered that the latter’s lips bore evidence of petty larceny, or would regard himself as almost criminally negligent if he placed a priceless pearl necklace where an ignorant chimney-sweep might fall under the hypnotism of its shimmer, will calmly allow a condition of things in his own brokerage or banking office where a fifteen-dollars-a-week clerk may have free access to a million dollars’ worth of negotiable securities, and even encourage the latter by occasional “sure” tips to take a flyer in the market.

It is a deplorable fact that the officers of certain companies occasionally “unload” undesirable securities upon their employees, and, in order to boom or create a “movement” in a certain stock, will induce the persons under their control to purchase it.  It would be a rare case in which a clerk who valued his situation would refuse to take a few shares in an enterprise which the head of the firm was fathering.  Of course, such occurrences are the exceptions, but there are plenty of houses not far from Wall Street where the partners know that their clerks and messengers are “playing the market,” and exert not the slightest influence to stop them.  When these men find that they and their customers, and not the clerks and messengers, are paying the loss accounts of the latter, they are very much distressed, and tell the District Attorney, with regret, that only by sending such wicked and treacherous persons to State’s prison can similar dishonesty be prevented.

Not long ago the writer became acquainted with a young man who, as loan clerk in a trust company, had misappropriated a large amount of securities and had pleaded guilty to the crime of grand larceny in the first degree.  He was awaiting sentence, and in connection therewith it became necessary to examine into the conditions prevailing generally in the financial district.  His story is already public property, for the case attracted wide attention in the daily press; but, inasmuch as the writer’s object is to point a moral rather than adorn a tale, the culprit’s name and the name of the company with which he was connected need not be given.

He is now serving a term in State’s prison and is, the writer believes, sincerely repentant and determined to make a man of himself upon his release.  For present purposes let him be called John Smith.  He was born in New York City, in surroundings rather better than the average.  His family were persons of good education and his home was a comfortable and happy one.  From childhood he received thorough religious instruction and was always a straightforward, honest and obedient boy.  His father, having concluded from observation that the shortest route to success lay in financial enterprise, secured a place in a broker’s office for his son after the latter’s graduation from the high school.  John began at the bottom and gradually worked up to the position of assistant loan clerk in a big trust company.  This took fifteen years of hard work.

From the day that he started in filling inkwells and cleaning out ticker baskets, he saw fortunes made and lost in a twinkling.  He learned that the chief business of a broker is acting as go-between for persons who are trying to sell what they do not own to others who have not the money to pay for what they buy.  And he saw hundreds of such persons grow rich on these fictitious transactions.  He also saw others “wiped out,” but they cheerfully went through bankruptcy and began again, many of them achieving wealth on their second or third attempt.  He was earning five dollars a week and getting his lunch at a “vegetarian health restaurant” for fifteen cents.  The broker, for whom he ran errands, gave away thirty-five-cent cigars to his customers and had an elaborate luncheon served in the office daily to a dozen or more of the elect.  John knew one boy of about his own age, who, having made a successful turn, began as a trader and cleaned up a hundred thousand dollars in a rising market the first year.  That was better than the cleaning up John was used to.  But he was a sensible boy and had made up his mind to succeed in a legitimate fashion.  Gradually he saved a few hundred dollars and, acting on the knowledge he had gained in his business, bought two or three shares in a security which quickly advanced in value and almost doubled his money.  The next time as well fortune favored him, and he soon had a comfortable nest-egg ­enough to warrant his feeling reasonably secure in the event of accident or sickness.

He had worked faithfully, had given great satisfaction to his employers, and presently had a clerical position in a prominent trust company offered to him.  It seemed an advance.  The salary was larger, even if absurdly small, and he gladly accepted the place.

Shortly after this he had his first experience in real finance.  The president of the company sent for him ­the reader will remember that this is a true story ­and the boy entered his private office and came into the august presence of the magnate.  This man is to-day what is commonly known as a “power” in Wall Street.

“My boy,” said the president, “you have been doing very well.  I have noticed the excellence of your work.  I want to commend you.”

“Thank you, sir,” said John modestly, expecting to hear that his salary was to be raised.

“Yes,” continued the great man.  “And I want you to have an interest in the business.”

The blood rushed to John’s head and face.  “Thank you very much,” he gasped.

“I have allotted you five shares in the trust company,” said the president.  “If you take them up and carry them you will feel that you have a real connection with the house and it will net you a handsome return.  Have you any money?”

It so happened that at this time John’s savings were invested in a few bonds of an old and conservatively managed railroad.  His heart fell.  He didn’t want to buy any bank stock.

“No,” he answered.  “My salary is small enough and I need it all.  I don’t save any money.”

“Oh, well,” said the magnate, “I will try and fix it up for you.  I will arrange for a loan with the ­ Bank on the stock.  Remember, I’m doing this to help you.  That is all.  You may go back to your books.”

Next day John was informed that he had bought five shares of ­ Trust Company stock in the neighborhood of three hundred, and he signed a note for one thousand four hundred and twenty-five dollars, and indorsed the stock over to the bank from which the money had been borrowed for him.  The stock almost immediately dropped over fifty points.  John paid the interest on the note out of his salary, and the dividends, as fast as they were declared, went to extinguish the body of the loan.  Some time afterward he learned that he had bought the stock from the magnate himself.  He never received any benefit from it, for the stock was sold to cover the note, and John was obliged to make up the difference.  He also discovered that ten or fifteen other employees had been given a similar opportunity by their generous employer at about the same time.  John, in prison, says it was a scheme to keep fifty or a hundred shares where it could easily be controlled by the president, without risk to himself, in case of need.  Of course, he may be wrong.  At any rate, he feels bitterly now toward the big men who are at large while he is in jail.

John continued to keep up with the acquaintances formed during his years in the broker’s office, many of whom had started little businesses of their own and had done well.  Part of their stock-in-trade was to appear prosperous and they took John out to lunch, and told him what a fine fellow he was, and gave him sure tips.  But John had grown “wise.”  He had had all the chances of that sort he wanted, and from a bigger man than any of them.  He ate their lunches and invited them in return.  Then he economized for a day or two to even up.  He was not prosperous himself, but he did not accept favors without repaying them.

One thing he observed and noted carefully ­every man he knew who had begun a brokerage business and kept sober, who attended to business and did not speculate, made money and plenty of it.  He knew one young firm which cleared up fifteen thousand in commissions at the end of the second year.  That looked good to him, and he knew, besides, that he was sober and attended to business.  He made inquiries and learned that one could start in, if one were modest in one’s pretensions, for two thousand five hundred dollars.  That would pay office rent and keep things going until the commissions began to come in.  He started to look around for some other young man who could put up the money in consideration of John’s contributing the experience.  But all the men he knew had experience without money.

Then by chance he met a young fellow of bright and agreeable personality whom we shall call Prescott.  The latter was five or six years older than John, had had a large experience in brokerage houses in another city, and had come to New York to promote the interests of a certain copper company.  John had progressed and was now assistant loan clerk of one of the biggest trust companies in the city, which also happened to be transfer agent for the copper company.  Thus John had constantly to handle its certificates.  Prescott said it was a wonderful thing ­that some of the keenest men in the Street were in it, and, although it was a curb stock, strongly advised his new friend to buy all he could of it.  He assured John that, although he was admittedly interested in booming the stock, he was confident that before long it would sell at four times its present quotation.

Meantime the stock, which had been listed at 2-1/4, began to go rapidly up.  Word went around the trust company that it was a great purchase anywhere below 10, and John, as well as the other boys employed in the company, got together what money he could and began to buy it.  It continued to go up ­they had unconsciously assisted it in its ascent ­and they bought more.  John purchased seventy-five shares ­all the way up to 8 and 9.  One of his friends took eight hundred.  Then it dropped out of sight.  They hadn’t time to get out, and John, in prison, has his yet.  But he still had faith in Prescott, for he liked him and believed in his business capacity.

The stock “operation” over, Prescott began to prospect for something new, and suggested to John that they form a brokerage house under the latter’s name.  John was to be president at “a fixed salary.”  It sounded very grand.  His duties at the trust company began to seem picayune.  Moreover, his loss in copper had depressed him and he wanted to recoup, if he could.  But how to get the two thousand five hundred dollars necessary to start in business?  Prescott pleaded poverty, yet talked constantly of the ease with which a fortune might be made if they could only once “get in right.”  It was a period of increased dividends, of stock-jobbing operations of enormous magnitude, of “fifty-point movements,” when the lucky purchaser of only a hundred shares of some inconspicuous railroad sometimes found that he could sell out next week with five thousand dollars’ profit.  The air seemed full of money.  It appeared to rain banknotes and stock certificates.

In the “loan cage” at the trust company John handled daily millions in securities, a great part of which were negotiable.  When almost everybody was so rich he wondered why any one remained poor.  Two or three men of his own age gave up their jobs in other concerns and became traders, while another opened an office of his own.  John was told that they had acted on “good information,” had bought a few hundred shares of Union Pacific, and were now comfortably fixed.  He would have been glad to buy, but copper had left him without anything to buy with.

One day Prescott took him out to lunch and confided to him that one of the big speculators had tipped him off to buy cotton, since there was going to be a failure in the crop.  It was practically a sure thing.  Two thousand dollars’ margin would buy enough cotton to start them in business, even if the rise was only a very small one.

“Why don’t you borrow a couple of bonds?” asked Prescott.

“Borrow from whom?” inquired John.

“Why, from some customer of the trust company.”

“No one would lend them to me,” answered John.

“Well, borrow them, anyhow.  They would never know about it, and you could put them back as soon as we closed the account,” suggested Prescott.

John was shocked, and said so.

“You are easy,” said his comrade.  “Don’t you know that the trust companies do it themselves all the time?  The presidents of the railroads use the holdings of their companies as collateral.  Even the banks use their deposits for trading.  Didn’t old ­ dump a lot of rotten stuff on you?  Why don’t you get even?  Let me tell you something.  Fully one-half of the men who are now successful financiers got their start by putting up as margin securities deposited with them.  No one ever knew the difference, and now they are on their feet.  If you took two bonds overnight you might put them back in the morning.  Every one does it.  It’s part of the game.”

“But suppose we lost?” asked John.

“You can’t,” said Prescott.  “Cotton is sure to go up.  It’s throwing away the chance of your life.”

John said he couldn’t do such a thing, but when he returned to the office the cashier told him that a merger had been planned between their company and another ­a larger one.  John knew what that meant well enough ­half the clerks would lose their positions.  He was getting thirty-five dollars a week, had married a young wife, and, as he had told the magnate, he “needed it all.”  That night as he put the securities from the “loan cage” back in the vault the bonds burned his fingers.  They were lying around loose, no good to anybody, and only two of them, overnight maybe, would make him independent of salaries and mergers ­a free man and his own master.

The vault was in the basement just below the loan cage.  It was some twenty feet long and ten wide.  There were three tiers of boxes with double combination doors.  In the extreme left-hand corner was the “loan box.”  Near it were two other boxes in which the securities of certain customers on deposit were kept.  John had individual access to the loan box and the two others ­one of which contained the collateral which secured loans that were practically permanent.  He thus had within his control negotiable bonds of over a million dollars in value.  The securities were in piles, strapped with rubber bands, and bore slips on which were written the names of the owners.  Every morning John carried up all these piles to the loan cage ­except the securities on deposit.  At the end of the day he carried all back himself and tossed them into the boxes.  When the interest coupons on the deposited bonds had to be cut he carried these, also, upstairs.  At night the vault was secured by two doors, one with a combination lock and the other with a time lock.  It was as safe as human ingenuity could make it.  By day it had only a steel-wire gate which could be opened with a key.  No attendant was stationed at the door.  If John wanted to get in, all he had to do was to ask the person who had the key to open it.  The reason John had the combination to these different boxes was in order to save the loan clerk the trouble of going downstairs to get the collateral himself.

Next day when John went out to lunch he put two bonds belonging to a customer in his pocket.  He did not intend to steal them or even to borrow them.  It was done almost automatically.  His will seemed subjugated to the idea that they were to all intents and purposes his bonds to do as he liked with.  He wanted the feeling of bonds-in-his-pocket.  As he walked along the street to the restaurant, it seemed quite natural that they should be there.  They were nearly as safe with him as lying around loose in the cage or chucked into a box in the vault.  Prescott joined him, full of his new idea that cotton was going to jump overnight.

“If you only had a couple of bonds,” he sighed.

Then somehow John’s legs and arms grew weak.  He seemed to disintegrate internally.  He tried to pull himself together, but he had lost control of his muscles.  He became a dual personality.  His own John heard Prescott’s John say quite naturally: 

“I can let you have two bonds, but mind we get them back to-morrow, or anyhow the day after.”

John’s John felt the other John slip the two American Navigation 4s under the table and Prescott’s fingers close upon them.  Then came a period of hypnotic paralysis.  The flywheel of his will-power hung on a dead centre.  Almost instantly he became himself again.

“Give ’em back,” he whispered hoarsely.  “I didn’t mean you should keep them,” and he reached anxiously across the table.  But Prescott was on his feet, half-way toward the door.

“Don’t be a fool, Smith,” he laughed.  “What’s the matter with you?  It’s a cinch.  Go back and forget it.”  He shot out of the door and down the street.

John followed, dazed and trembling with horror at what he had done.  He went back to the cage and remained the rest of the day in terror lest the broker who owned the two bonds should pay off his loan.  But at the same time he had quickly made up his mind what he should do in that event.  There was more than one loan secured by American Navigation 4s.  He loosened a couple in one of the other piles.  If the first broker came in he would take two bonds from one of these.  But the broker did not come in.

That night John wandered the streets till nearly daylight.  He saw himself arrested, ruined, in prison.  Utterly fagged next morning, he called up Prescott on the telephone and begged him to return the bonds.  Prescott laughed at his fears and assured him that everything was all right.  Cotton was sure to go up.  An hour later the broker who owned the bonds came in and took up his loan, and John removed two American Navigation 4s from another bundle and handed them to the loan clerk.  Of course, the numbers on the bonds were not the same, but few persons would notice a little thing like that, even if they kept a record of it.  They had the bonds ­that was the main thing.

Once more John rushed to the ’phone, told Prescott what had occurred and besought him for the bonds.

“It’s too late now,” growled Prescott.  “Cotton has gone down.  I could only get one back at the most.  We had better stand pat and get out on the next bulge.”

John was by this time almost hysterical.  The perspiration broke out on his forehead every now and then, and he shuddered as he counted his securities and entered up his figures.  If cotton should go down some more!  That was the hideous possibility.  They would have to put up more margin, and then !

Down in the vault where the depositors’ bonds were kept were two piles of Overland 4s.  One contained about two hundred and the other nearly six hundred bonds.  The par value of these negotiable securities alone was nearly eight hundred thousand dollars.  Twice a year John cut the coupons off of them.  Each pile was marked with the owner’s name.  They were never called for, and it appeared that these customers intended to keep them there permanently.  John, realizing that the chances of detection were smaller, removed two bonds from the pile of two hundred Overlands and substituted them with Prescott for the two Navigation 4s.

Then cotton went down with a slump.  Prescott did not wait even to telephone.  He came himself to the trust company and told John that they needed two more bonds for additional margin to protect their loan.  But he said it was merely temporary, and that they had better even up by buying some more cotton.  John went down into the vault and came back with four more Overland 4s bonds under his coat.  He was in for it now and might as well be hung for a sheep as for a lamb.  He was beginning to get used to the idea of being a thief.  He was, to be sure, wretchedly unhappy, but he was experiencing the excitement of trying to dodge Fate until Fortune looked his way.  Cotton still went down.  It never occurred to him that Prescott perhaps had not bought all the cotton.  Now that he is in prison he thinks maybe Prescott didn’t.  But he kept going down into the vault and bringing up more bonds, and, getting reckless, bought more cotton ­quantities of it.  In a month sixty bonds were gone from the pile of two hundred.  John, a nervous wreck, almost laughed, grimly, at the joke of his being short sixty bonds!

At home they thought he was getting run down.  His wife !  He was so kind and thoughtful that she had never been so happy.  It made her fearful that he had some fatal disease and knew he was going to die.  Up at the bank John made a separate bundle of sixty bonds out of the pile of six hundred so that he could substitute them for those first taken if the owner called for them.  It was not likely that both owners would call for their bonds on the same day, so that he was practically safe until one or the other had withdrawn his deposit.

About this time the special accountants came around to make their annual investigation.  It was apparently done in the regular and usual way.  One examiner stood inside the vault and another outside, surrounded by four or five assistants.  They “investigated” the loans.  John brought them out in armfuls and the accountants checked them off and sent them back.  When John brought out the one hundred and forty bonds left in the bundle of two hundred Overland 4s he placed on top of them the pile of sixty bonds taken from the other bundle of six hundred.  Then he took them back, shifted over the sixty and brought out the bundle of six hundred Overland 4s made up in part of the same bonds.  It was the easiest thing going.  The experts simply counted the sixty bonds twice ­and John had the sixty bonds (or Prescott had them) down the street.  Later the same firm of “experts” certified to the presence of three hundred thousand dollars of missing bonds, counting the same bundle, not only twice, but five and six times!  You see, Prescott’s John had grown wise in his generation.

After that he felt reasonably secure.  It did seem almost unbelievable that such a situation could exist, but it was, nevertheless, a fact that it did.  He expected momentarily that his theft would be detected and that he would be thrown into prison, and the fear of the actual arrest, the moment of public ignominy, the shock and agony of his wife and family, were what drove him sleepless into the streets, and every evening to the theatres to try to forget what must inevitably come; but the fact that he had “gone wrong,” that he was a thief, that he had betrayed his trust, had lost its edge.  He now thought no more of shoving a package of bonds into his overcoat pocket than he did of taking that garment down from its peg behind the door.  He knew from inquiry that men who stole a few hundred dollars, and were caught, usually got as long a term as those who stole thousands.  If he stole one bond he was just as likely to get ten years in State’s prison as if he stole fifty ­so he stole fifty, and when they were wiped out he stole fifty more ­and, well, if the reader is interested he will learn before the end of the story just what John did steal.

Somehow, Prescott’s speculations never succeeded.  Occasionally they would make a good turn and get a few bonds back, but the next week there would be a new fiasco, and John would have to visit the Overland 4s again.  That performance of the accountants had given him a huge contempt for bankers and banking.  He knew that if he wanted to he could grab up a million any day and walk off with it, but he didn’t want to.  All he desired now was to get back to where he was before.  All the speculation was in the hands of Prescott, and Prescott never seemed worried in the least.  He called on John almost daily for what extra bonds were needed as additional collateral, and John took his word absolutely as to the result of the transactions.  He could not do otherwise, for one word from Prescott would have ruined him.

Before long the pile of two hundred Overland 4s was gone.  So was a large quantity of other securities, for John and Prescott had dropped cotton and gone plunging into the stock market.  Here, however, they had no better success than before.  Of course, a difficulty arose when the interest on the Overland 4s came due.  The coupons had to be cut by some one in the bank, and although John usually cut them he did not always do so.  Sometimes the loan clerk himself would take a hand, and call for a particular lot of bonds.  John, however, was now fertile in devices.  The owner of the larger pile of six hundred bonds usually wrote to have his coupons cut about the twenty-seventh of April.  John would make up a collection of six hundred bonds of the same sort, carry them up and cut the coupons in the loan cage.  The other man generally sent in a draft for his interest on the second or third of May.  But now the bonds were away, scattered all over the Street.  So John started a new operation to get the bonds back and straighten out the coupon tangle.  He substituted with the brokers an equal number of bonds of other companies, the interest upon which was not yet due.  There was a large block of Electric 5s and Cumberland 4s which served his purpose admirably, and thus he kept up with the game.  When the coupons became due on the latter he carried back the first.  It kept him and Prescott busy most of the time juggling securities ­at least John knew he was kept busy, and Prescott claimed to be equally so.

There were many loans of brokers and others all secured by the same sort of collateral.  Most of these John appropriated.  When it was necessary to check off the loans, John, having retained enough of the same kind of bonds to cover the largest loan, would bring up the same bundle time after time with a different name upon it.  If one of the customers wanted to pay off a loan and his bonds were gone he would be given some one else’s collateral.  Apparently the only thing that was necessary was to have enough of each kind of security on hand to cover the largest loan on the books at any given time.

Once, when the examiners were at work on the vault, John had to make up one hundred thousand dollars in Overland 4s or 5s from the different small loans in the loan vault and put them in a package in the deposit vault in order to make it appear that certain depositors’ bonds were all there.

The most extraordinary performance of all was when, upon one of the annual examinations, John covered the absence of over fifty bonds in the collateral covering a certain loan by merely shoving the balance of the securities into the back of the vault, so that it was not examined at all.  He had taken these bonds to substitute for others in different brokers’ offices, and it so happened that there were no similar securities in the building; thus the deficiency could not be covered up even by John’s expert sleight of hand.  Of course, if there had been other bonds of the same kind in another vault it would have been a simple matter to substitute them.  But there were not.  So John pushed the remaining one hundred and fifty bonds into a dark corner of the vault and awaited the discovery with throbbing pulses.  Yet, strange to relate, these watchdogs of finance, did not see the bonds which John had hidden, and did not discover that anything was wrong, since, for purposes of its own, the bank had neglected to make any record of the loan in question.  It would really have been safer for John if he had taken the whole pile, but then he did not know that the accountants were going to do their business in any such crazy fashion.  The whole thing came to seem a sort of joke to John.  He never took any bonds for his own personal use.  He gave everything to Prescott, and he rarely, if ever, saw Prescott except to hand him securities.

One day Prescott walked right into the bank itself and John gave him one hundred and sixty-five bonds, which he stuffed under his overcoat and carried away.  Remember that this is a fact.

The thing, which began in August, 1905, dragged over through the following year and on into 1907.  John weathered two examinations by the accountants, the last being in October, 1906, when they certified that the company was absolutely “O.K.” and everything intact.  On that particular day John had over three hundred thousand dollars in Overland 4s and 5s scattered over the Street.

In the first six months they lost one hundred thousand dollars in cotton.  Then they played both sides of the market in stocks and got badly bitten as bears in the temporary bull market in the autumn of 1906, selling Union Pacific at 165, which afterward went to 190, Northern Pacific at 185, which went to 200, etc., etc.  Then they shifted their position, became bulls and went long of stock just at the beginning of the present slump.  They bought Reading at 118, American Smelters at 126, Pennsylvania at 130, Union at 145, and Northern Pacific at 180.  At one time John had five hundred and fifty thousand dollars in bonds out of the vaults.

The thing might have been going on still had it not been for the fact that the anticipated merger between John’s company and another was put through and a new vault in a new building prepared to receive the securities.  Of course, on such an occasion a complete examination would be made of all the securities and there would be practically no chance to deceive the accountants.  Moreover, a part of the securities had actually been moved when the worst slump came and they needed more.  It was obvious that the jig was up.  A few more days and John knew that the gyves would be upon his wrists.  Prescott and he took an account of the stock they had lost and went into committee on ways and means.  Neither had any desire to run away.  Wall Street was the breath of life to them.  Prescott said that the best thing to do was to take enough more to “stand off” the company.  He cited a case in Boston, where a clerk who was badly “in” was advised by his lawyer to take a hundred and twenty-five thousand dollars more.  Then the lawyer dickered with the bank and brought it to terms.  The lawyer got twenty-five thousand dollars, the bank got the rest, and the thief was let go.  Prescott said they ought to get away with enough more to make the bank’s loss a million.  He thought that would make them see what was the wise thing to do.  Prescott also said he would try to get a lawyer who could bring some pressure to bear on the officials of the company.  It would be a rather unpleasant situation to have brought to the attention of the State Superintendent of Banking.  John agreed to get the additional securities and turn them over to Prescott.  Unfortunately, almost everything had by this time been moved into the new vault, and all John could get was a stock certificate for fifteen hundred railroad shares, standing in his own name, and seventy-five thousand dollars in notes.  These he gave to Prescott, thus increasing the amount stolen from the bank without discovery to between six and seven hundred thousand dollars.  This was on the day before the actuaries were to make their investigation.  Knowing that his arrest was now only a question of time, John, about eleven o’clock on the following morning, left the trust company for the last time.  He was in telephonic communication with Prescott, who, in turn, was in touch with their lawyer.  Unfortunately, the president of the company had gone out of town over Sunday, so that again their plans went awry.

For nearly two years John had not known an hour devoid of haunting fear.  From a cheerful and contented youth he had become despondent, taciturn and nervous.  He was the same affectionate husband and attentive son as before, and his general characteristics remained precisely the same.  He was scrupulous to a penny in every other department of his life, and undoubtedly would have felt the same pricks of conscience had he been guilty of any other act of dishonesty.  The affair at the bank was a thing apart.  The embezzler of six hundred thousand dollars was not John at all, but a separate personality wearing John’s clothes and bearing his name.  He perceived clearly the enormity of his offense, but, because he was the same John in every other respect, he had a feeling that somehow the fact that he had done the thing was purely fortuitous ­in other words, that the bonds had to be taken, were going to be taken anyway, and that Fate had simply elected him to take them.  Surely he had not wanted the bonds ­had had no intention of stealing half a million dollars, and, in short, was not the kind of a man who would steal half a million dollars.  Each night he tossed, sleepless, till the light stole in through the shutters.  At every corner on his way uptown he glanced over his shoulder behind him.  The front doorbell never rang that his muscles did not become rigid and his heart almost stop beating.  If he went to a theatre or upon an excursion he passed the time wondering if the next day he would still be a free man.  In short, he paid in full in physical misery and mental anxiety and wretchedness for the real moral obliquity of his crime.  The knowledge of this maddened him for what was coming.  Yet he realized that he had stolen half a million dollars, and that justice demanded that he should be punished for it.

After leaving the bank John called up Prescott and learned that the plan to adjust matters with the president had miscarried by reason of the latter’s absence.  The two then met in a saloon, and here it was arranged that John should call up the loan clerk and tell him that something would be found to be wrong at the bank, but that nothing had better be said about it until the following Monday morning, when the president would return.  The loan clerk, however, refused to talk with him and hung up the receiver.  John had nowhere to go, for he dared not return home, and spent the afternoon until six o’clock riding in street cars and sitting in saloons.  At that hour he again communicated with Prescott, who said that he had secured rooms for him and his wife at a certain hotel, where they might stay until matters could be fixed up.  John arranged to meet his wife at Forty-second Street with Prescott and conduct her to the hotel.  As Fate decreed, the loan clerk came out of the subway at precisely the same time, saw them together and followed them.  Meantime a hurry call had been sent for the president, who had returned to the city.  John, fully aware that the end had come, went to bed at the hotel, and, for the first time since the day he had taken the bonds two years before, slept soundly.  At three the next morning there came a knock at the door.  His wife awakened him and John opened it.  As he did so a policeman forced his way in, and the loan clerk, who stood in the corridor just behind him, exclaimed theatrically, “Officer, there is your man!”

John is now in prison, serving out the sentence which the court believed it necessary to inflict upon him as a warning to others.  Prescott is also serving a term at hard labor ­a sentence somewhat longer than John’s.  The trust company took up their accounts, paid the losses of the luckless pair, and, owing to a rise in prices which came too late to benefit the latter, escaped with the comparatively trifling loss of a little over one hundred thousand dollars.  At once every banking house and trust company upon the Street looked to its system of checks upon the honesty of its employees, and took precautions which should have been taken long before.  The story was a nine days’ wonder.  Then Union Pacific dropped twenty points more, the tide of finance closed over the heads of John and Prescott, and they were forgotten.

Had the company, instead of putting itself at the mercy of a thirty-five-dollar-a-week clerk, placed double combinations on the loan and deposit vaults, and employed two men, one to act as a check upon the other, to handle its securities, or had it merely adopted the even simpler expedient of requiring an officer of the company to be present when any securities were to be removed from the vaults, John would probably not now be in jail.  It would seem that it would not be a difficult or complicated matter to employ a doorkeeper, who did not have access himself, to stand at the door of the vault and check off all securities removed therefrom or returned thereto.  An officer of the bank should personally see that the loans earned up to the cage in the morning were properly returned to the vaults at night and secured with a time lock.  Such a precaution would not cost the Stockholders a tenth of one per cent. in dividends.

It is a trite saying that an ounce of prevention is worth a pound of cure.  But this is as true, in the case of financial institutions at least, from the point of view of the employe as of the company.  It is an ingenious expedient to insure one’s self with a “fidelity corporation” against the possible défalcations of one’s servants, and doubtless certain risks can only be covered in some such fashion.  These methods are eminently proper so far as they go, but they, unfortunately, do not serve the public purpose of protecting the weak from undue and unnecessary temptation.  Banks and trust companies are prone to rely on the fact that most peculations are easily detected and severely punished, but the public interest demands that all business, State, municipal and private, should be so conducted that dishonesty may not only be punished, but prevented.

A builder who “took a chance” on the strength of a girder would have small credit in his profession.  A good bridge is one which will bear the strain ­not only of the pedestrian, but of the elephant.  A deluge or an earthquake may occur and the bridge may tumble, but next time it is built stronger and better.  Thus science progresses and the public interest is subserved.  A driver who overloads his beast is regarded as a fool or a brute.  Perhaps such names are too harsh for those who overload the moral backbone of an inexperienced subordinate.  Surely the fault is not all on one side.  While there are no formulas to calculate the resiliency of human character, we may demand the same prudence on the part of the officers of financial institutions as we do from nursemaids, lumbermen and manufacturers of explosives.  Though we may have confidence in the rectitude of our fellows, we have no right to ignore the limitations and weaknesses of mankind.  It would not outrage the principles of justice if one who placed needless and disproportionate strain upon the morals of another were himself regarded as an accessory to the crime.