Uncle Sam, Detective

by William Atherton DuPuy

The bookkeeper colored to his temples and was noticeably confused at the question. Then he said he had heard of its being done. The sleuth would have sworn he had led the bookkeeper into a confession.

Nothing was more natural than that these two bank bookkeepers should recur occasionally to the possibility of so arranging accounts that were in questionable condition that they would be passed by the examiner. Gard would lead to this in such a way that the bookkeeper would seem to have begun these discussions. Then he would talk freely. He would tell so many stories that the timid Sloan would want to relate a few in furnishing his part of the entertainment. But Gard knew that the bookkeeper was a man without imagination and that he could relate only what had happened in his experience. So he was all ears when Sloan one night gave his opinions on the subject of kiting.

"Of course," he said, "all banks have depositors who kite their checks and thereby get hold of money which they may use for a week before they have to make good. A depositor may turn in a check for a thousand dollars, drawn on a New York bank where he has no money. At the same time he sends the New York bank a check for the same amount, drawn on you. This causes the New York bank to honor the check drawn against it. The check drawn on you has to find its way through the clearing house and it will be a week before it gets back. In the meantime the depositor has had the use of a thousand dollars.

"But when it comes to real kiting," continued the bookkeeper, "it is the banks themselves that do it. If a bank has a sudden call for $100,000 and hasn't the money, all it has to do is to send a messenger with a check to a friendly bank around the corner. The messenger gets the whole amount in cash. It appears as an asset of the bank. It will be two or three days before the check will come back through the clearing house and appear as a liability, or the friendly bank may hold it up even longer. The banks may be swapping this sort of favors. The bank examiner does not know of the outstanding check. He is out of town before it appears."

Special Agent Billy Gard was again practically certain that he had here been told a chapter out of the experience of the Second National. He began to see his way clear to a denouement.

That same night events were transpiring of which he was to know a week later but which as yet were held in confidence among the directors of the Second National. They took place at a meeting of these same directors called by a minority which was dissatisfied with certain features of its management. Director Hinton, a sprightly and quick-tempered little man, was the leader of the revolt. Senator Bothdoldt was present as a supporter of the management of the bank as represented by the suave, forceful cashier, Bayard Alexander, whose hand sometimes shook at breakfast.

"I want to protest," Hinton began by launching directly into the heart of the matter in hand, "against this new loan to the McGrath Construction Company. It has been three years now that we have been pouring out our money to these people. We have $400,000 of their paper and I want to be shown that we can realize on it. It is time to call a halt."

"And there are the notes of the Oldman Mercantile Company," somewhat heatedly argued a second disaffected director. "I have been reliably informed within the last two days that they are in danger of going to the wall."

"And we, as directors, are responsible for the bank," said Mr. Isaacs, who was conservative.