“There is such a powerful element of failure in all human affairs, that a shrewd man is always saying to himself, 'What shall I do, if that which I count upon does not come out as I expect?' This foresight dwarfs and crushes all but men of great resolution.”—Companions of my Solitude.
In this chapter it is our intention to describe with more or less minuteness the principal cases of frauds in Savings Banks pretty much in the order of their occurrence, and also to speak to some extent of the results which followed from them. How the progress of legislation was affected by these frauds has been already shown; and with the object of making more clear the legislation of 1844 and 1848, we have already entered into the details of the notorious Cuffe Street Bank failure, and one occurring in England prior to those dates. So far as we have been able to ascertain, the first case of fraud in a Savings Bank occurred at Carnarvon in the year 1824. In this case the actuary received deposits to a large extent for which he in no way accounted. Up to 1848 no less than ten cases, other than those already referred to, occurred, in all of which the trustees promptly paid the claims. These cases include the frauds which took place in Carmarthenshire, Northamptonshire, and Cumberland, one at Mildenhall in Suffolk, and another at Mitcham in the same county. In the latter case the secretary managed to embezzle a sum amounting to near 12,000l., and then made off; Mr. Hoare, the eminent brewer, paying down no less a sum than 7,000l. to atone for his neglect, and the other trustees making up the amount by subscriptions of 1,000l. and 500l. each. Into any further particulars of the above cases it is impossible to enter, inasmuch as they have never been allowed to transpire,—precautions which, so long as there were no efficient remedies at hand, were both wise and magnanimous. The catalogue, however, can be made black enough and full enough without such cases; and it is to others which have been exposed in all the fulness of their iniquity down to the minutest details that we will now turn. Claiming priority in all respects was the fraud on the County of Kerry Savings Bank at Tralee.
The Tralee Savings Bank was established in 1823, many of the noblemen and leading gentlemen of the neighbourhood taking part in its formation. The secretary from the commencement was Mr. John Lynch, who was appointed by a majority of the trustees at a salary of 60l. per annum. From the commencement the bank was held at the house of the secretary, and was open from two till four every Monday.[114] Among the directors there were five clergymen, and the rest were highly respectable gentlemen of Tralee. The same might be said of the twenty managers, nearly half of whom were clergymen. The Rev. A. B. Rowan was treasurer of the bank. In the pass-books were abstracts of the Rules and Regulations of the bank, and these were headed by the following motto:—
"For age and want save while you may,
No morning sun lasts a whole day."
Other useful injunctions were given in sober prose, such as “Examine your pass-book, and see that the entry is correct.” “If you lose this book, give immediate notice at the bank, otherwise you may be defrauded.”[115] With what feelings the pages of the books containing this sage advice would be turned subsequently, we leave the reader to judge after he has learnt more. Of course, Lynch was highly respected in the town: one witness describes him as, from the first of his connexion with the bank till the exposure, a man above suspicion; and Mr. Rowan, the treasurer, told the Committee of 1848, that he believed the public generally “had more confidence in Mr. Lynch than they had in many, or any, of the trustees themselves.” (839.) That he was clever, as well as “correct,” is manifest from the fact that he succeeded for sixteen years in carrying on, unsuspected by anybody, a complete system of frauds of different kinds, by which he appropriated to his own use during that time no less than an average of 2,000l. a year. He seems to have commenced his dishonest practices soon after the formation of the bank; but until 1832 his peculations were of small amount. From 1832 to 1847 he practised every possible description of fraud, and though some of them might have been detected by a rigid system of check, nearly all of them were remarkable for the ingenuity they displayed: “The contrivance and adroitness with which he managed these frauds,” says one who subsequently went over the accounts of the bank, “were so ingenious as almost to defy detection.” One of his practices was to account for a less sum than he received from a depositor, and this description of fraud he managed as follows (and this is a case which actually occurred): He received for lodgment three sums of 30l., 15l., and 27l. in one day, without any assistance or supervision from trustee or manager. These amounts he entered in his books as 3l., 5l., and 7l. respectively, and pocketed the difference. The manager at the close of the day, in examining and certifying the business done, marked the three entries as correct, as he found that they tallied exactly with the amount of money received into the bank. No sooner, however, was the bank closed and the acting manager left, than Lynch completed the case he had commenced by securing himself against exposure in the event of the depositor seeking to withdraw any of the sums named. The burden of the fraud was made to fall upon the funds of the bank by the actuary now altering the bank books to make them agree with the money actually deposited; and this he did in the cases in question by putting an 0 after the figure 3, the figure 1 before the 5, and 2 before the 7. In this way Lynch netted, with little or no risk of detection, a matter of 57l. in one day. This was only one mode adopted. He likewise received money out of office hours, which he never entered in any day-book or accounted for to the manager. To preserve himself, however, as in the previous case, he never forgot to post the amount in the ledger, so that whenever it might be claimed it would appear to the debit of the bank and at once be paid. Of course, there was here the absence of everything like check or audit.[116] Other descriptions of fraud may be left to be given in the culprit's own words.
Lynch held uninterrupted sway of the Tralee bank for a long series of years, contriving to make away during the time with many thousands of pounds; but retribution, though long in coming, arrived at last. “The mill of God grinds late,” says the Spanish proverb, “but it grinds to powder,” and the proverb meets with its exemplification here. A trifling incident, as has often been the case before, led the way to the full exposure. Lynch fell ill, to an extent which, though the bank was held at his own house, precluded him from giving those precise instructions which are eminently necessary in dealing with such fragile machinery as that with which he had managed to work so long. It was usual, it seems, to make weekly requisitions to the treasurer of the bank for money to meet the demands upon its funds, and the subordinate on the occasion in question asked for more money from that functionary than had been credited to him altogether. The treasurer, the Rev. A. Rowan, like the rest, had unbounded confidence in the secretary, and had given himself little trouble over the affairs of the bank. At a time when it must have been evident to all that several thousand pounds sterling stood to the credit of depositors, Mr. Rowan was satisfied to think that two or three thousand pounds formed the capital of the bank. It is on record that he several times spoke of the small amount of money in the bank, and innocently pointed to the fact “as a sign of the depressed state of the country.”[117] How this illusion was at length dispelled we leave Mr. Rowan, himself to tell.[118] “As I knew that the requisition of April 3d was for more money than there was in the bank, I went to Mr. Lynch, and said there must be some mistake somewhere, and told them to stop taking in any more money till it was cleared up. The next day Mr. Lynch being ill in bed, sent for me, and made a confession that he had committed frauds; but he stated no amount. I then seized his books and papers and everything I found connected with the bank, and swore information as to the facts.” The books were then subjected to a thorough examination, and “frauds of every possible character,” to the extent of 36,000l., were found to have been committed. At the trial which ensued, Lynch pleaded guilty, and was sentenced to fourteen years' transportation.
The other modes of enriching himself to which we have not yet referred may be given in Lynch's own words. Soon after his apprehension he made a confession of his malpractices, in order to exonerate a clerk of the bank who had been arrested at the same time, and who was at first thought to be an accomplice, and we take the man's own account of his ingenious trafficking in forged pass-books as the most lucid one that could possibly be given. “A depositor lodged money with me,” said the actuary; “I entered it in the pass-book, but not in the receipt-book. He subsequently lodged more, say with Mr. Fitzgerald, and it was duly entered in the pass-book and the receipt-book. For these depositors there necessarily was no account to be found in the bank books, and the party paying him upon notice given would thus be presumptively implicated.” He proceeded to give another instance of his artifice: “I frequently took an old pass-book and tore out the bonâ fide deposit leaf; I made an entry therein in a fictitious name, and a quasi deposit, as if it were some years antecedent. During bank hours I used to hand in those books to whoever might be in the bank, directing notice to be given for the amount, as though the depositor had left it with me for that purpose, as it were, some days antecedently. The manager entering such notice was thus presumptively implicated; and as the course of the bank unfortunately was to 'keep' and not relodge sums 'noticed for,' the manager of the day marked it as 'kept,' which meant, given to me to give to the quasi depositor.” “Kept!” What a fund of irony there is in that one word so applied! In one or other of the modes described, this actuary, “respected by all who knew him,” contrived to “keep,” and, what is worse, to spend, 36,000l. of the hard-earned savings of the poorest classes around him. His estate at the time of his apprehension was worth something like 3,000l.; this property Lynch offered to give up in full, “leaving not even a bed for his daughter;” but on Mr. Pratt's being applied to for advice, that gentleman recommended the treasurer not to fall in with the offer, inasmuch as it would be “a compounding of the felony.” (825.)[119] Mr. Pratt had arrived by this time at Tralee, and was engaged in the investigation of the affairs of the bank, and in making his awards in the case. That investigation showed the most culpable neglect on the part of the managers and trustees: Lynch had been engaged in his nefarious practices for fifteen years, and yet till the day he made his confession a breath of suspicion never reached one of them. The confidence of the trustees in the man was so unbounded, that one trustee would sign anything he wished; and the other, who generally acted, signed because he saw the name of his fellow-trustee. Mr. Pratt ascertained that here, as at Cuffe Street, the law had been systematically violated; depositors had put in money to any extent; they had deposited their money at all times, and under all kinds of circumstances; charitable institutions deposited their funds without any limitation, one fund having at one time had as much as 5,000l. in the bank. Mr. Pratt, in making his awards, had to take all these facts into consideration, giving satisfaction so far as it was in his power to those who had made their deposits legally, and refusing it in all other cases. In this way he made awards on the trustees of the bank to the sum of over 16,000l. The trustees disputed their liability on the strength of the Act of 1844, and when the case was brought before the Court of Queen's Bench the decision of the barrister was set aside. To this day, we believe, the unfortunate depositors in the Tralee Bank have in no sense, either by private benevolence or Government aid, been recompensed for their loss.
When the blow first fell with all its crushing weight upon the people, they are described as having borne it “with wonderful patience;” then this state of things was followed by a period of stolid indifference to all the ordinary maxims of thrift and prudence, as if their treatment had destroyed the growth of provident habits. So much is evident from the statements of a respectable solicitor at Tralee who was examined before the Committee of 1848:—
“Can you state (Mr. Herbert to Mr. Justin Supple, 872), from your own knowledge, what class of persons the depositors are, generally speaking?—Generally speaking, they are composed of servants, artisans, mechanics, and small shopkeepers. There are a few of a higher class, but they are very few indeed. I have pass-books with me amounting to about 16,000l., and I assure the Committee that there is not a case in which I could not point out a more or less considerable degree of hardship.” He then stated several cases.
(878) “Can you state from the general feeling of the country, what evil consequence will be the result of the failure?—Taking the failure,” says the witness, “in connexion with the years of famine, I think the consequence will be to drive the classes which have been hitherto industrious and economical in their habits, to vice and wickedness, because the dissipated characters who have saved nothing, or did not take the trouble of saving, now look upon the poor industrious creature who has been cheated, laugh at him, and tell him that they have spent their own money, while the industrious man has had somebody else to spend his for him.”