GAOL FOR FARROW

Evening Post, Volume CII, Issue 49, 26 August 1921, Page 10

GAOL FOR FARROW

HIS DRAMATIC SPEECH

"MY FINANCIAL CHILD"

(PROU OUK OWN CORRESPONDENT.)

LONDON, 6th July.

After an Old Bailey trial lasting for twelve days, the curtain has fallen on the last /act of the tragedy of the Farrow Bank case, with its accompaniment of ruined homes. When the bank closed its doors about Christmas time the deficiency was estimated at nearly £3,000.----000. The sentences cannot be said to err on the side of seventy, but Mr. Justice Greer remarked that the disgrace^which the • defendants had brought ori^ their families was part, and perhaps the greatest part, of their punishment. / Thomas Farrow (founder and chairman of the bank), William Walter Crotch (a director), and Frederick Duncan Tabrum Hart (auditor) wore all found guilty on the charges of conspiracy in connection with the bank—Hart from 1918 only. FarrW and Crotch were found guilty of publishing fraudulent statements, and Hart was found guilty of aiding and abetting. The'jury strongly recommended Hart to mercy. Mr: Justice Greer passed sentences thus:—Farrow, four years' penal servitude; Crotch, four years', penal servitude; Hart., twelve months' imprisonment. FARROW'S BELIEF.

Counsel for Farrow said the only question for the jury was: "Was Farrow fraudulent?" Submitting that he was not, Mr. Whiteley said if there, was one strong element in human nature it was paternal affection, and he quoted from a letter Farrow had written to Read when the latter was negotiating for the purchase of the bank, asking, as a con.dition, the future association of his sons with the business.

"Do you believe," counsel asked, "that if Mr. Fajrow really knew the bank had been a, dishonest concern for the last ten or twelve jeans he would have sought to introduce his two sons into that damnosa h-eredibas ? Farrow's wholo attitude was : 'I believed in this bank: I believe in it still. I believed it had a great future. It may be I thought I was bidding on a rock, whereas I was building on samid, but, whatever may be said against me or my colleagues, I believed it was sound.'"

TWELVE YEARS OF DECEPTION. Sir Gordon Hewart (for the' Crown) referred to the "writings up," and asked, "Is. it credible that any sane man, whether a business man or not, could have sup-posed that the profits from them would wipe out losses in money and justify the payment of dividends and interest in money?" It was said that Farrow was innocent and trusting. If he had no knowledge of the deception which had been practised on the public, why did he not have an. accountant in • a position of independence to succeed Mr. George Hart ? Crotch had expressed sorrow for his negligence, and said he trusted the other director and the officials of the bank. Could they attach the slightest importance to his excuses? The- moat pathetic, figure of the three was, perhaps, Frederick Hart, "who asked to be excused on the ground that he could mot be expected to think that ho could be wrong in following closely a system adopted and pursued by his predecessor, his own father. Theyi might wonder what storage fato had brought together two men bo closely resembling each other as Farrow and Crotch in that adventure, and, still more, what :. extraordinary fate had brought within their reach a man like Hart. Without somebody in his position th© fraiuds might have been conceived in the directors' room, but .they would not have had contoct with the publdo. "If," said Sir Gordon, "you are drivem—and who can fail to be on the evidence ?—to the conclusion ■ that caeh of th«se three defendants was engaged in this colossal and ( protracted fraud—the stage management, the stage hands, amid the property room of Trhich you have had to contemplate—you will not hesitate to say so." MR.i ■FARROWS "FINANCIAL CHILD." y In his summing up (which took fou/ hours), Mr. Justice Greer said that the defendants were, before the . present charges were brought, men of irreproachable character. The case was one of great gravity. If the defendants were found guilty, the interests of the public demanded that the kind of conduct alleged against them should be treated ! with severity, so tKat people subjected to similar temptation should resist it in future. The jury might think that when the defendants first embarked on this fallacious method of dealing with the bank's properties they did not think it would'be necessary to go on year by year taking in larger sums from these imaginary reserves to meet contingencies, but, "having found that this .:was the only way to keep alive this financial child of Mr. Farrow, they decided to keep:on until they were found out." MR. READ'S HALF MILLION. Referring to the evidence of Mr. W. A. Read that Crotch said w.hen the real situation ,of the bank was discovered that if he believed in a hereafter Jio should know what to do, tho Judge said lie I thought the witness must have boenjmis-. taken. If a man believed that when' he died he would have to face his Maker and answer for the misdeeds of his life, tit was the last thing ,he would'do to commit suicide. ■ But the real burden of Mr. Read's evidence was that Crotch acted on that occasion like a man who knew he had been doing wrong from year to year and at last had been found/ out. Dealing with the subject of valuations, Mr. Justice Greer said the defendants were justified in asking the jury to say that it was quite possible for honest men in their position to have accepted these valuations as a justification for relying on the properties as a kind of reserve' so as to give a dividend in lean times. It was easy to /see now how wrong they were, but it was for the jury tq; say whether, at the time, they really did think it was a profit so certain that they could put it in the balance-sheet: People had luck on the racecourse, but they must not, value, their speculations as if the horse had won and the money was in their pocket. Passing to "Read's halfmillion," • which he described as a very important part of the case, the Judge said no one could treat that offer as a promissory note, that the money would bo available in any event. Was anyone reading the agreement with intelligence and treating it honestly entitled to'Vegard that sum as an asset available for the estimation of the profits of 1920 and for distribution to the shareholders and payment of creditors? That it. was improper, irregular, • and grossly negligent there could hardly be two opinions, but it did not follow that that it was fraudulent. On the other hand, the jury might think that it was put in the balance-sheet with the object oC continuing the system, which had been in existence for years, of .paying dividends when (lie yearly working of the bank showed a loss.

FARROW'S APPEAL FROM THE DOCK.

The jury were away for an hour and twenty minutes. Farrow made a twenty minutes' speech from the dock, in which at .times his voice was almost overcome with emotion. He began: "Suffering as I am just now from the effect of this terrible verdict, with, all the strain of

the past seven months, and the complaints of bronchitis and insomnia, I can hardly trust myself to speak. I must pay this tribute to the jury, that they listened,with great attention to all that has been said in my favour. But I do deeply regret the verdict. I never knew I should live to see the day when I should bo declared a criminal. I have, of course, deplored the result to those unfortunate depositors who through the sudden stoppage of the bank lost their money, but the loss of my life's work is to me hell indeed. I did hope I could build up an institution to which my children could one day point with pride and say, 'My father built it.' . . .

I do assure you I found the task of running this bank a colossal one; the responsibility of handling' £4;000,000 of the people's money sometimes seemed too great a burden. I made the bank my financial child, and you can understand the extraordinary feelings that have come over me Mere when I found that child being discredited and denounced, and I, being innocent—and I say it with all sincerity—deemed to bo a criminal. I had no idea there could be found twelve of' my fellow-countrymen who .would unanimously say Farrow is a criminal.

. . .'. I had faith in the assets of this bank. If circumstances had permitted me, I would have devoted my Me to seeing that everybody was paid to the last penny, and that nobody would ever be able to say that he lost by being connected with Farrow's Bank. ' Now I am denounced as a criminal, and all those things I should have described as difficulties overcome are held up to my everlasting shame. The idea of prison life lias awful terrors, for me. I don't know how I shall face it. I ask you to enable me to get back from prison as quickly as possible, so that I can hold up my head once more." ' "PUBLIC SERVICE." Crotch also addressed the Judge, say- . ing he never intended to inflict any injury on the public He had had great dreams in his life as a young man of public service, and he had tried to render public service. During the war he was instrumental in raising £25,000 for our blind soldiers and sailors, and hi also went to India and assisted the Government in raising a loan. "My one desire," he added, "now that' the jury, as I think wrongly, have found me guilty, is that you will give me the opportunity of .coming back soon to a decent and useful life as a good citizen."

The Judge, in passing sentence on Farrow/and i Crotch, said his duty was painful, and it was not made easier by their appeals. "You are both of you men of great intelligence, men who have done useful things in the course of your lives, and I take that into account, as I am- entitled to do. I also am entitled to take into account the fact that neither of you, so far as can be ascertained, has lived an extravagant life and used the moneys of the bank for your own personal gratification. But at the same time it is my dnty to regard the effect of your fraudulent acts, as the "jury have found, and with which on the evidence I am bound to • agree. You have brought distress, and, in some cases, ruin upon the very people for whom, I believe, you started this bank with a notion that you were going to help. These acts haye gone on from year to year, these false statements having been made in the hope, as Crotch said on one occasion, that something would turn up to enable the situation to be straighteued out. That is no excuse in law for the offences of which you have been found guilty. . . ;. And I cannot pass a less sentence than that you both be kept in penal servitude for four^years." ' Farrow and Crotch-, who received the sentence calmly, then turned and left tho dock. ■•iiAddtessing Hart, the Judge said his offence was of a less serious character, as he did* not originate the false and fraudulent scheme under which this balance-sheets were prepared from year to year. But the purpose of an auditor was to protect the depositors and shareholders in the bank, a-nd the pxiblic generally from the fraudulent acts of those who managed th o company, and it was impossible to pass over his offence without a serious term of imprisonment.

, The Financial Times recalls the fact that it has repeatedly warned the public of the risk tbey were running in.committing their funds- —in this case frequently hard-earned savings—to the cars of institutions ~of mushroom growth, whose only attraction was that they offered high interest on small current accounts. Banking cannot be conducted with safety on such lines; neither is it a business,the art of which can be easily acquired. "Herein lies Farrow's mistake. He started on a business of which he knew little and with only a meagre amount-of capital. To attract the public he adopted means which no wise banker would have dreamt .of. The fact that year, after year & trading loss* was incurred should have warned him of the fate that must overtake his 'financial child,' but the warning was unheeded, and, to conceal losses, resoH was had to the expedient of writing up assets to provide the estimated profits required to balance the accounts. Once started on this road there was no turning back, although he must have known it led to destruction. . . The result of the "trial may be poor consolation to those who have lost their money, but wo trust the lesson will not be lost, on the public."