Brattleboro’s Calamity – The First National Bank Ruined

If you were alive in 1880, you may have been attracted to the following story in the newspaper: one of the three local banks left in ruins after the bank president skipped town after being discovered forging accounts.

It was a massive and stunning crime, as evident from this coverage in The Phoenix. Read on for an amazing story of Brattleboro banks, lawyers, investigators, detectives, and people who lost everything, today in history..

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Brattleboro’s Calamity
The First National Bank Ruined

S. M. Waite A Forger To An Enormous Amount

He Flies the Country, and Developments Show Him Guilty of One of the Worst Financial Crimes on Record

What Is Known Of The Terrible Affair Up To This Date

The announcement which was made in private circles last Tuesday evening, and which became public property on Wednesday morning, that S.M. Waite president and cashier of the First National Bank, had fled the country, and that he was a forger to an unknown amount, fell like a lightning stroke on the whole community. Many people had feared that Mr. Waite was standing on a shaky foundation financially, but even those who distrusted him most had not suspected him of being a forger, and a cold-blooded criminal in financial matters. That he is all this is only too true. We give below a careful history of the proceedings and developments which led to a discovery of the true state of affairs.

Ex-Gov. Hendee’s Examination

On the 20th of May ex-Gov. Hendee, National Bank Examiner for this State, made his first official visit to Brattleboro, and made a careful examination of the three banks. In the presence of Mr. Waite and two of the directors, he went carefully through all the paper, assets and securities of the First National. He found the assets to amount, in round numbers to $500,000, and the liabilities to be $434,000. Of the latter sum $300,000 was in capital stock, $90,000 in circulation, $44,000 due depositors. This showed a surplus of $66,000, and the bank was apparently in sound condition.

Mr. Hendee himself examined all the assets of the bank, reading the notes one by one, and receiving the opinion of the directors on each that it was good. He also made a complete memorandum of these assets, figured them up himself, found them to balance the liabilities to a cent, and to correspond exactly with Mr. Waite’s figures. In some minor matters there were small irregularities, but on Mr. Waite’s promise to have them immediately corrected, he pronounced himself satisfied.

There was one item, however, which attracted Mr. Hendee’s attention, and, in connection with the prevailing local uneasiness relative to the bank, awakened his suspicion. This was a credit of $70,000 which Mr. Waite claimed to have with Vermilye & Co., the large and well=known firm of private bankers in New York, – it being an unusual occurrence for a country bank to have so large a credit with such an institution.

Mr. Hendee kept his suspicion to himself ad he was morally and officially bound to do until it was verified, corresponded with the department at Washington, and took immediate means to find out whether there was any ground for his suspicion. He became satisfied that there was reason for it, and on Tuesday afternoon of last week, June 8th, returned to Brattleboro, at once sought an interview with Mr. Waite, and told him frankly that he had reason to suspect that the bank had no credit with Vermilye & Co.

Mr. Waite, without the least appearance of concern or uneasiness, protested that there was a mistake, that the credit stood in his private name instead of the bank’s; he showed a letter from Vermilye & Co., which indicated that this was the case, and offered to bring affidavits from New York within a reasonable length of time to show that his statement of the matter was correct.

Mr. Hendee assured him he hoped it could be proved so, told him he had no disposition to crowd him into a corner, gave him a week to clear the matter up, and Wednesday morning he left for the North with the understanding that he should remain during the week in the near vicinity.

It is due to Gov. Hendee to say that this detailed statement, not heretofore published, of the proceedings and developments which led to Mr. Waite’s flight and exposure, were not obtained from him.

Mr. Waite’s Flight – The Discovery Of His Crimes

On Thursday morning, June 10th, Mr. Waite left town on the 4:20 express, telling his wife that he was obliged to go to New York on bank business. Nothing was heard from or of him till Saturday afternoon, about 2:30, when Mr. F. A. Nash received a dispatch from Mr. Libby, the chief clerk at the Brevoort House, asking him if he would meet “Mr. Waite” in Springfield or Brattleboro Sunday night.

Mr. Nash was utterly at a loss to know what this meant, supposing as he did that the “Mr. Waite” referred to was S. M. Waite. A despatch sent in reply, asking Mr. Waite to name the place of the meeting brought no reply, and Sunday morning he went to Springfield by the owl train. He waited there through the day, and the 2:30 night express from New York brought Mr. Chas. B. Waite, son of the late C.C. Wait, and nephew of S.M. Waite.

The two met at that untimely hour of the night, with the mutual exclamation, “For God’s sake, what does this mean!” Mr. C.B Waite then showed Mr. Nash two letters which he had received from his uncle, one from Boston and one from Portland. Both of them were incoherent in expression and written in a hand scarcely to be recognized as Mr. Waite’s. The letter said, in effect, that he (Mr. Waite) was in trouble, that he “had made a fool of himself,” and that the trouble began when he helped his brother Henry out of his difficulties in Chicago, several years ago. From Portland he wrote, “I sail tomorrow.”

The letters stated his family would never see him of hear from him again, and requested that Mr. C.B. Waite communicate immediately with Mr. Nash. Mr. C.B. Waite stated to Mr. Nash that, supposing the trouble to be that his uncle was temporarily pressed for money, and probably gone partially insane, he telegraphed him at once to come to him and he would help him out; also that he had put a private detective on his track.

Mr. Nash returned home on Monday morning at 10:30, performed the unwelcome task of breaking the sad news to Mr. Waite’s family, got the bank directors together on Tuesday, and went to work to make an examination.

A comparatively short time sufficed to show that there was a large defalcation. The fact was immediately telegraphed to Comptroller Knox at Washington, the appointment of a receiver was asked for, and Dr. W.H. Rockwell was despatched as a special messenger to New York and Washington with instructions to put the best detective to be found on Mr. Waite’s track, and to offer a reward of $5,000 for his arrest.

Within two hours and a half of the time when the despatch was sent to Washington a reply came from Mr. Knox saying that he had communicated with Mr. Hendee and instructed him to come to Brattleboro and take charge of the bank’s affairs. Tuesday night the main facts were known on the street, and Wednesday morning they were in everybody’s mouth. Wednesday afternoon Mr. Hendee arrived, and Thursday afternoon a careful examination of the bank’s affairs was begun.

The Forgeries – Their Amount and Character

When the directors began their examination on Tuesday one of the first pieces of paper which attracted their attention was a note of $15,000 signed by C.J. Amidon of Hinsdale, N.H., a large customer of the bank, and for years one of its directors. This was promptly pronounced a forgery. Other paper, either then in the bank or remembered to have been there at the last examination, and nearly all of which is known to have been forged was –

Connecticut River railroad, $50,000
Frederick Billings, $20,000
T.W. Park, $20,000
Lyon & Healey, Chicago, $25,000
Taunton locomotive company, $18,442
Vermilye & Co, N.Y., $70,000

There amounts, with the Amidon note added, figured up to $218,442. Another forgery, one on a F.A. Nash, clerk of Vt. Valley R.R. Co., for $15,000 has since been heard of, which brings the amount of paper, a very large proportion of which, at least, is forged up to $233,442. A rough estimate places the forgeries at $250,000, with every probability that the case will grow worse as it develops.

One thing is certain: The bank has been stolen almost entire.

Tuesday night all of Mr. Waite’s visible property in this place and in New Hampshire, including the gas works, Connecticut river bridge, Flat street property, etc., was attached in favor of the bank. At the same time suits in favor of the stockholders were begun against individual members of the board of directors under the assumption that the directors had been culpably negligent, and were therefore responsible.

How This Rottenness Was Possible

This brings us to ask, or rather to answer, the question, how could the existing state of things in the bank have obtained and continued without discovery for a series fo years? The answer simply is that this was possible because of the supreme audacity and villainous cunning of S.M. Waite, coupled with the unquestionable faith in the man’s personal integrity which was reposed in him by his directors.

For years a distrust of the bank has existed, but, as his custom was with everything with which he had to do, Mr. Waite held its management strictly in his own hands. When his directors attempted an examination they were shown this forged paper, which made the bank appear so strong as to leave no questions of its absolute soundness. They had not the slightest reason to suspect that the paper was forged, and hence affairs reached the pass which Mr. Hendee’s examination finally brought to light.

Of course a question asked at any time of any of the parties against whom this forged paper was drawn would have revealed the true state of affairs. But nobody suspected a forgery, and therefore none of the directors thought of pushing investigation beyond the point usual in such cases.

That the directors were criminally negligent we do not believe, but we do not understand, and have not for a long time been able to comprehend, how any man could consent to stay in such a supposed responsible position where he was made a mere cipher, and where any unwelcome question or movement on his part was promptly met with a volley of cursing and vituperation.

How Long The Villainy Has Been Going On

At what time Mr. Waite began his course of crime can only be a matter of conjecture. It is altogether probably that his financial troubles began some fifteen years ago, when he was assisting his brother Henry out of embarrassments in which he became involved in Chicago.

It is supposed that he helped his brother on this occasion to the extent of $70,000 to $90,000, and many persons have supposed that it was the funds of the bank which he used for this purpose. Developments on Thursday showed that his forged use of Mr. Amidon’s name began in 1868. It is probably, therefore, that for at least twelve years he has been bolstering himself with forged paper.

Where Has The Money Gone?

This question is easier asked than answered. Waite’s expenditures in his great organ fight have been very heavy, but parties who should know of this say that $75,000 must cover all that he has paid out in this direction. Add to this sum presumably furnished his brother, and there is still a very large balance unaccounted for.

The most natural supposition is that this balance has gone where so many other wicked men, brought to great straits by their crimes, have put the money of which they were legal guardians – into the whirlpool in Wall street – in the vain hope to retrieve his losses and save his reputation.

The Bank’s History

The institution now known as the First National Bank was chartered in 1852 as the Windham County Bank, and began business in 1853. S.M. Waite was its first cashier, and N.B. Williston its first president. This position Mr. Williston held till January, 1879, when he withdrew, and Mr. Waite was elected president, and since that time he has been both president and cashier – he having, under one pretext or another, succeeded in staving off the appointment of a cashier, for reasons which are now only too apparent.

The bank was the first in this county to organize as a national bank under the law of 1862. In August, 1871, occurred the robbery which ever since has cast suspicion on the soundness of the bank and on its management. In 1876 the circulation was reduced from $270,000 to $90,000.

Waite’s History and Character

A.M. Waite was born in Fayetteville in the year 1825. In his childhood his family removed to Brattleboro, and here his whole life has been spent, with the exception of a short period when in his teens, when he held a position as messenger in a Springfield, Mass., bank. Leaving that bank, he became the stage agent at this place, a position which he efficiently filled for several years. he was afterward express agent, and then became bank cashier, as stated.

he was a man with a remarkable grasp of business affairs, of wide general information, and of unusual facility in all mathematical operations. He was a man of great public spirit, and his services in connection with the schools and the fire department will not soon be forgotten. He was a warm friend and a bitter enemy, and it has been often remarked with perfect truth that it was far easier to get along with him as an enemy than as a friend – and this because of that intense autocratic spirit which he manifested in any business or matter whatever with which he was connected.

In the face of this terrible and damning revelation of the past few days, it is impossible not to remember that he was a man of exceptional warmth of heart and quickness of sympathy. Beneath his ofttimes harsh and overbearing demeanor, his friends knew that in his emotions he was as sensitive as a child.

How, through these long and weary years, he has been able to carry his dreadful load of crime, apparently of all men the most self-confident and unconcerned, is a matter not to be comprehended by ordinary men. Even to the very last. on the very night after Mr. Hendee had told him his suspicions, and the guilty man knew inevitably that his hour of doom had come, his nerve did not forsake him in the least, and he went with perfect nonchalance to the Brooks House with Mr. Hendee, and talked with him for a full half hour on all sorts of indifferent subjects.

If it be necessary to point to the moral of the dreadful story to any young man, let him only be asked to remember the perfect hell of torment in which S.M. Waite must have lived for full twelve years past.

In this terrible affliction Mr. Waite’s family have the quick and overflowing sympathy of the whole community, and the spirit which the family manifest is more than praiseworthy. Mr. W.E. Waite, the son, has resolutely faced the whole matter, and exerted himself to discover and turn over to the bank every dollar of his father’s property, saying that neither he nor his family wanted a penny which could belong to his father’s creditors.

The homestead belongs to Mrs. Waite, and was bought with her own private funds. In the first excitement of the terrible revelations she proposed to give even this up, but wise friends, it is reported, have persuaded her to desist from so unwise a sacrifice.

Every development goes to show that neither Col. Sawyer nor Mr. Guild had any knowledge whatever of the condition of things in the bank. Their position was purely clerical; they were not allowed to know anything of the bank’s affairs or general business.; they simply performed routine work and did what Mr. Waite told them to do. Col. Sawyer, called by courtesy the assistant cashier, was not even allowed to open the bank’s mail. Everything was under Mr. Waite’s strict autocratic management.

A year ago last April Col. Sawyer resigned, and it was only because Mr. Waite went to his house and begged of him to remain that he consented to do so. Why Waite was thus anxious is now only too apparent.

Losses To Stockholders and Others

The loss and disaster touches so many people, and the calamity is so universally felt to be a personal matter, that a feeling of positive doom pervades the community. From the poor farmer, widow or working woman, who held a paltry share or two of the bank’s stock, up to those persons and families who had invested in it the accumulated earnings and savings of years, the disaster reaches. many have lost their all, and others are crippled at a time of life when they can illy stand forth and again put their shoulder to the wheel. In West Brattleboro there is general and serious loss, but our space does not permit us now to go into particulars.

The Latest Developments

The developments on Thursday give good ground for the fear that the worst may be yet to come. Some of the forged paper spoken of in the beginning of this account, was found by the directors and bank examiners to have disappeared, and it is probably that much of it may be found to have been endorsed by Waite in the bank’s name, he then collecting the cash on it and appropriating it to his own use.

The note of $15,000 signed by F.A.Nash, clerk and treasurer of the Vt. Valley railroad company of 1871, is of this character, and this note was heard from on Thursday as having been cashed by the Fourth National Bank of New York – this having been the First National’s bank of deposit in New York. From the same bank comes news of a block of 300 shares of First National stock, deposited there as a collateral security, which is strongly suspected to be spurious. The stock book is in a badly mixed condition, and large blocks are missing from it.

It is found that Mr. Waite had been freely offering the bank’s stock for collateral. Only a few days ago he asked a loan of $15,000 of G.H. Newman of Easthampton, Mass., and offered him $20,000 in stock for security, but this offer was not accepted. The note signed by Frederick Billings, and at first hoped to be genuine, is a forgery. There are rumors of special deposits of bonds having been taken, but at this time we are not able to verify them. The amount of cash which Mr. Waite has taken with him is believed to be $2500.

As reliable an estimate of the liabilities as can be arrived at is this:

Capital stock, $300,000
Circulation, $90,000
Surplus (which never existed), $57,000
Deposits, $60,000

Total, $507,000

The capital stock and surplus are of course wiped out. The circulation is secured by $100,000 of bonds deposited in Washington. These bonds are worth a premium of say 4 per cent., which leaves some $14,000 to apply toward the demands of the depositors.

There are also some $16,000 or $18,000 of good notes, and there is the whole of Mr. Waite’s property to apply on the same account. Should no new developments arise it is possible that enough may be realized to pay the depositors without an assessment on the stockholders.

It was Mr. Waite’s custom, however, to receive interest-bearing deposits, for which he simply gave a receipt written on one of the bank letter-headings, probably without entering them on the books of the bank, and it is feared that a troublesome amount of such liabilities may in time show themselves.

We speak entirely within bounds when we say that it is more than probably that it will be found that no forgery and defalcation in New England has ever equaled this in comparative extent and amount.

Notes

Our statement in regard to Gov. Hendee;s course in unearthing the villainy more than vindicates him from the irresponsible charges made against him in the public prints. Leading bank men in this village assure us of their belief that Mr. Hendee has acted with the greatest wisdom and competency in the matter.

C.N. Davenport undertook on the street Thursday afternoon to read Mr. Hendee a lesson on his official duites, in reply to which that gentleman, with imperturbable coolness emphatically “sat down on” the officious attorney to the great delight of a crowd of 100 people or more.

IT is not believed by competent lawyers or experienced bank men that the suits against the directors, in behalf of the stockholders, can be made to hold. To make the directors responsible, they say there must have been guilty knowledge on their part. By many people the attachments of the directors’ property, and the planning of a receiver in H.C. Willard’s store is looked on as a piece of folly or personal persecution. The directors must be held morally responsible, however, for weakly allowing themselves to be bluffed and bulldozed as has been the case.

Nothing is certainly known of Mr. Waite’s whereabouts. One account says he was seen in Portland last Friday by a gentleman who knew him and talked with him on general subjects. Another account, claiming to have some foundation, says he is in Cuba. The idea that he has committed suicide, or will do so, is generally given up. Intimate friends of the family say that no man was so fully posted as to the extradition laws of all parts of the world as was mr. Waite.

Rumors that there has been a settlement in the organ case before Mr. Waite’s flight are without foundation. It is understood that the suit must go on to a legitimate termination, in the interest of the ruined bank’s creditors.

It is stated this morning that a dry goods firm in this village has made an attachment on Mrs. Waite’s household furniture to cover a small debt. We hope this is not the case.

Dr. Rockwell returned to Brattleboro last evening, accompanied by Hon. J.M. Tyler. He brings no new developments which are yet made public. Pinkerton’s detective agency has been put to work on the case, to try to find Mr. Waite, and the directors reward of $5000 for his arrest is published in the associated press despatches this morning. Gov. hendee’s official statement has been completed and forwarded to Washington. Its receipt by the department will be followed in due time by the appointment of a receiver.

Trenor W. Park and the Taunton Locomotive Works pronounce the paper bearing their names a forgery.

The stock held in Bellows falls amounts to $25,000. About $7000 is held in Westminster.