The Bismarck Tribune Newspaper, February 4, 1921, Page 3

{i RIDAY, FEBRUARY 4, 1921 CATHRO CLAIMS BANK RE- LATION MUST BE SECRET Continued from page 1) objected to Johnson, of Steele's, statement that the proceeding was a trial, It was an investigation, he) said, and no one who appears before it fad been accused of anything. Mr. Murphy .went at length yester- ay in his examination of Director- neral Cathro into the process by) which the state bank purchased its own bonds and then gave them collateral. to a Chicago bank for loan of $1,000,000, The examination which refei's to this part was as follow Q. Now, Mr. Cathro, I will ask you this question. Is it not a fact in the progress of the business of the ban that a daily trial balance is made each day and mimeographed? A. Ye Q. That is, asf understand it at the close of each day’s business it ig the custom of your bank to make a daily trial balance showing on the oneshand all of the resources-in con- siderable detail, and on the other hand all of the liabilities? A. It is. Q. And inchiding in that all of the interest accrued and earned and ait of the interest payable on the part of the bank? A. It is. Q. And the interest is figured up daily, both coming in and going out? A. It is. Q. And you make quite of ‘these daily trial balan Q. About how many do you make each day, mimeographed copies } mean? A, Not over a couple, two or three probably. Q. And they are filed there in the bank? A. Only one copy’that I know of is being filed. Q. What is being done with the other copies? A..‘‘The only perma- nent file is the one that is passed to my des! Q.. Your personal desk? A. Yes. Q. So that you are then in per- sonal custody of the permanent file of the daily trial balances? A. Ye' Q. Now I will ask you if you will be kind enough to produce for’ the examination of this committee— you will make a note of what I w —the daily trial balance of the hank as of Dec. 3, 1926, and the daily trial balance of the bank as of Feb, 1. 1921, and the daily trial balance as of April 1, 1920. Could you do that Mr. Cathro without too much incon venience? A. I can do that, what disposition will be-made of these? Will they be returned to me?” * Q. Certainly they will be returned to you. A. In other words have got to make copies. I do not want to break up my file. Mr. Lemke. You understand. with the consent of the Industrial Com mission which they uftdoubtedly will give you. Q. You make that reservation? A. Yes. Gea Q. However, you and J cam agree on this, that it won't disturb. the functions of the bank at all for us to look the trial balances over will it? A. I feel disposed to offer every courtesy that is possible, without in- ferfering with the activity of the bank. Q. And it would not impede the operation of the hank if these three trial balances ‘are brought down here for the examination of the committee? A. No. Mr. Lemke: I might say that you will be shown the same courtesy 25 in the matter of the Industrial Com- mission minutes. You can go over and examine it. Mr. Murphy: Well, T might say the committee is conducting “the number mi dNs amination, and not council, and might want them here. Now, M Ctthro, when — this bank opened, July 27, 1919, what was its capital? A. It had io capital. Q. When, if at any time. did it acquire What is that? Q. When did it acquire capital? A. Some two or three weeks later prob- ably later than that date. Q. So then it opetated from the qate of its opening on July 28, for a period of two or three weeks with- out capital? A, Well, I don't think any capital?) A. Her Pie Crust ts Delicious = She Uses Swift’s Premium Oleomargarine 2 It is likewise the reason for better pastry, better cream sauce, better doughnuts, cakes, and candies, Its quality is always the same. The fine U. S. Government fine spected fats, milk twice Pasteur- ized and salt, combine to make pastry light, flaky, tender. Many goodcooks prefer itforshortening. Itis made daily in fourteen con- veniently located factories, and is untouched by bands. Swift & Company, U.S. A. Manufactarers of Le ope hea seats pee aun | admit, if you ‘it was quite that long, but a ‘Tew, days at least. Q. When it dit® acquire capital, what was that capital? A. Cash. Q. Cash—money? A, Yes, sir, or its equivalent Q. Well, let us distinguish if. we can between cash, or its equivalent. Was it actual cash money, or was it something representing -money? A. It was a check. Q. From whom? A. From myself ‘as manager of the Bank. Q. To whom? A, The Industrial Commission 4 Q. The capital consisted of a check from Mr, F. W. hro as director general of the bank to the Industrial Commission of the state of North Da- kota did it?) A. Yes. Q._ What was done with that chack? A, Well in place of cashing — that} check as they could have done, they endorsed it and returned it to the Bank of North Dakota. Q. Now that check was drawn up-| on the funds of what institution? A; Drawn on the Bank of North Dakota. Q. Drawn by you, as director. gen- eral, upon the Bank of North Dakots | and made payable to the Industrial Commission? —A:9*Yes. Q. The industrial Commission en- dorsed it and returned und depositea it in the Bank of North Dakota.? A | Yes. Q. Now, upon what fund, if any,! was that check drawn in the Bank | of North Dakota? A. The same as any check, any investment of any bank for any purpose is drawn, Q. Just on the general fund? A. From the accumulated funds within: the bank, The funds have lost their identi when they passed over the bank counter and became merged in the common fund- | Q. In the general fund? A. Y Q. That is true, and this chec! was drawn on the general fund? A. Yes. y Q. And the funds. that were in thai; general fund were almost entirely moneys of the public subdivisions of the stater were they not? A. When| the hank received these deposits frou} the treasurers over the state and we agreed to pay interest, the bank, found itself obligated to earn some interest. | , Q. No, you don’t answer my ques-+ tion, A. I think .that'will answer it. Q. My question is, that this check you say was drawn upon the genera! fund of the bank, which consisted of | the deposits from.all sources th had come into the bank. That correct, isn’t it? A. No, that is not) correct. Q. That is not correct? Well. upon what fund was -itgdrawn? <A. + It wasn’t drawn on any fundg; check: are never drawn that way. Q. Well, have you got the check? A. I presume it is in the bank; | don't know. 3 Q. Will you make a note, and pro- duce it- if, as I assume, it won't in- terfere with your operations? A. Checks are never drawn on funds in} the bank. Q. No, IT under! drawn on the bank er check? A. Yes. Q.. And no actual money ever changed hands between the Bank, of North Dakota and the Industrial Com- mission in that ‘transaction? A. Well, that question is misleading. Q. Well, Iam asking you the question and if it misleads you in any way, you can qualify it'in any wa on wish. Does any actudl money pass except by means of a debit and credit entry upon the books of the bank and perhaps the books of the) commission if théy haye any? = A, Every check that passed from ono man ,to another, transfers funds, whether he takes it’ to the teller’s wicket and a the cash or wheth- er he deposits it. Q. We are entirely in accord on that, but what [ want to ha will, that by th vice of drawing the check no actua! outside money was brought into the bank, outside of the funds that w lready there and deposited by positors? A, and that. It was isd like any oth- de- No, there was no addi tional money brought in. Q. Now, isn’t it a fact that the cap ital consisted entirely, as a basis for it? of the $2,000,000 bonds. bank ser- ies, issued by the state. A. No. Q: Hadn’t you acquired those bonds yet at that time? A. Yes. Q. Where were they? A. Th were ‘in our possession, the posses- sion of the bank, “Q. Did they appear among the a sets or liabilitits of the bank an where at that time? A. At what time do you refer to? Q. Well, we are speaking now the time when you first acquired capital? A. They had appeared oi, the assets of the bank in the mean- time. Q. That is between the time you opened up and the time you acquired capital? A. The time that we bougl:t the ~bonds, they appeared among ovr assets. Q. Your statement—the first one which I have here—shows purports to a statement at the close of business on Sept. 12. in bulletin No. 2, series of 1919. 1 read that correct. ly, did I not? A. Yes. Q. It shows-upon its face a capi- tal of $2,000,000, does it not? A. Yes. | Q. Now, will you state to us of! what that capital consisted? A. It} consisted of money delivered to the; Bank of North Dakota by the Indus- trial Commission.” Q. Actual money? ed by check. Q. But the bonds were, as a mat- ter of fact. the basis of the capital at all times? A. There were two sep- arate transactions. You can’t con-| fuse them. You must not combine them. They were two separate trans: | A. Represent- actions. ( Q. Give them to us. A. In first place, the Bank of North kota bought the bonds the same if they bought a bull receivable, a U. S. treasu certificate of indebt-| edness, Liberty bonds, or. the like. | Q. What with? A. With the same’ kind of money we buy a rediscount, a farm loan, a U. of indebtedness, s nt or any asset of the bank; me kind of money. Q. What kind of money is that? A, The same money: that all banks loan. Q. What money is it? A. Money that is in the bank and has accumu- lated there through all the deposits the of the combined depositors. | jthe minute the bends | Ye: |of one kind or | earned? jand the Industrial Commission » | $2.,000;000 of deposits of that’ bank | same relation as deposits in 'No griping—no inconvenience. Q. Proceed with the explanation?, A. After that transaction was com- pleted, and the bonds hought and paid for from the Industrial Commission, based on the assets of the bank, then subsequent to that:time the Industrial Commission delivered to us the check on the Bank of North Dakota, in e:- tect saying here is your capital, cred- it this up to a capital account. Q. Delivered the bond: é Q. Delivered your checks ?. Q. Drawn on what? A. The Ban of North Dakota. Q. When did the honds enter the Bank of North. Dakota.as the proper of the hank? A. At the time the bank issues its check to the Indus- trial Commission and received the resolution of the Industrial Commis- sion that they received our offer to buy the bonds at par. Q. Can you give us any idea ag to when that was Well, it somewhere about the first or second ‘ot August, some early day in August 1nd. Q. You will pardon if T appear to be confused, because J. think. your recollection will bear me out that the law under which the bank was organ- ized, as I recollect it, provides that re delivered they become the capital and known as the capital of the bank. You are aware of that fact, are you A. As T recall it now, I haven't time. 1 think there ig some provision made for deliver- ing the bonds to the bank. Q. And to be known and de: nated as the capit A. Well, that wasn’t the tran on that was foi- lowed in this cas: Q. That wasn't followed, did tT un- derstand you to say that? A. No. Q. The bonds thereafter never did represent capital at ‘all? A. Thev ; were purchased direct. : Q. They were purchased direct > and became the property of the bank? A, Under that provision of law which allows the bank to purchase any {bonds with any funds in its posses - sior. | Cyt cay, fat of 4 thé) kheck the Industrial Commission gai{{you instead of the bonds? A. Q. The bonds are ethien cearried offsetting this capital sin your re- sources? A, That is correct. Q. All of the moneys that were in the bank came to it at that time and subsequently in the form of deposits another or interests That is true, isn't it? A. Well, that is not exactly correc Q. Well, wherein is it incorret A. It is very rarely that the deposits in the bank are increased by virtue ef actual money. I don’t suppose ji has happened a dozen times, ybe a hundred times, since we or: that deposits were in posit of actual money. They are al- ways increased by deposits of checks In this case, it was by these checks Q. I think we are speaking at cross fires. I am not speaking of actua money or evidence of money, 1 wani ‘to make this point, that all of the whether in the other form. bank, or funds in the form of check all of its deposits in some form or another. Yes. Q. Now, let me ask you this ques: tion, if it is not true that ag a result of the transaction between the bank that were transferred into capital. A. No.! Q. They were not? A. No. Q. Was anything transferred into capital? A. Yes. ;Q. What? A. The check of the Industrial Commission given on the Bank of North Dakota. Q. Credited to capital account? es. Q. What was your counter entry there, where did you get the money What account did you charge th check to? When you credited up capital, where did you put debits en- try? Q. A paid check? A. Yes. ~ Q. ‘Haven't you any debit entry oi the hooks of the bank, counter entry to that $2,000,000 capital? A. ‘Not except the paid check. Q. Now we are agreed on that but what I want to get at is this, the check that was drawn for two million dollars which you say ‘when it was (delivered to you as director-general was credited to the capital account! mi ve been debited to some oth- er-account, must it not, there must have been something on which that check w drawn, As a matter of fact you just transferred it from de- posits and you offset it by puiting in “They WO RK while you sieep” at} = You are bilious, constipated, head- achy, full of cold, unstrung. Your meals don’t fit—breath is bad, skin ‘sallow. Take one of two Cascarets tonight for your liver and howels and wake up clear, rosy and cheertf dren love Caséarets too. 10, cents ASK Your Grocer For Humpty Dumpty Bread Produced by BARKER BAKERY ~ ed up the bonds as an are ised by a de-. THE BISMARCK TRIBUNE two ‘million dollars. as ‘a resource? A, When the transactions for the purchase of bonds’ were effected two checks were drawn, cashiers’ checks | so-called, one for $500,000 and one for’ $1,500,000. : \ Q. To buy the bonds with? A. The first $500,000 check was sent up to! the Industrial -Commission by a mes- senger with the statement that we would take $500,000 of bonds in the Bank of North Dakota. They kept the check and we immediately charg- et and then credited it on our books as outstand ing the cashier's check that was re- tained for some period of time by the Industrial Commission—it makes no || difference how long: it is a ‘separate transaction. After*that they return- ed that check to us and we credited capital and we charged cashier's chee Q. And the same transaction took splace with refarence to the larger ttansaction,. the $1,500,000 deal? A, Yes, ~ .Q.’ And’ that is-all there wag of it? A. Yes, Q. And at the same time you-? A. We took the ‘$2,000,000 worth of bonds. 4°” And they .became part of your resourves to offs€t the — $2,000,000 worth of capital? A. Now, that is contusing. The bonds became part| the ‘differences which led to the re- of the resources the same as farm] cess culminated. loans and loans to bank. ‘They have; When the hearing opened this no connection with capital whatever; | morning Mr. Murphy again delved in- they were bought and paid for, ‘to the method of the Bank of North Dakota gaining: capital stock. THE NEW The Pitk o° VIOLA “Someone in year, Method of Redepos: Preceding the questions with re-| .¢, Question on Entry. rd to the. Seandinaviun-American |, 21OW do you account for the fact ik Mr. Cathro had been asked | tat you didn’t have a threp-cornerad xbout the method of making rede- entry ae Se eeeee Ong 17 Or enor jjosita dus hanks Aiggtio ‘tite: 8 $2,000,000?” Mr. Murphy asked. In the few minutes Mr, Cathro When the Bank of North Dakota was organized many banks which had} pu tunds were uhable to pay, and the funds were left, chere, and most ot a redeposits are of that ‘nature. fr, Cathe ou pay 2 percent on the public tunds .to the treasurers and* you charge 4 percent on redeposits, do you not?”..the witness was asked. Answering questions regarding the distribution of money Mr. Cathro said that the bank .had “tried to maintain deposits in local banks in proportion to the amount from those counties” and added on questioning that there were portions of the state in need of money more than .others and that money had been taken from the east- ern to the western part of the state. “We made no attempt at favorit- he said. ‘Do you know the amount in the Scandinavian-American bank in Fa go on Dec. 3, 19202” the witness was asked. Mr. Cathro demurred. saying he did not want to be a party willingly to divulging relations of different banks. Mr. Murphy said there was no desire to injure anyone. Chairman Gran- gaard said the committee would hold an executive sion, and bar the public, if Mr. Cathro would rather give his testimony in that manner. {made a demand for counsel, and Mr. Lemke rose and said: “As Attorney- general I am going to see that the state ig represented and I will per- sist in saying what I wish as long as the executive department of the gov- ernment is discussed.” Mr. Cathro said that an attempt was being made to: create the im- pression that, some bookkeeping en- try was omitted and he denied this was the case. The question of the $1, 000,009 loan in Chicago brought out a question of MOTHER! — “California Syrup of Figs” Child’s Best Laxative og Polley of Fairness, _Mr. Murphy asked Mr. Cathro if his policy of fairness with regard to | receposits was adopted in‘ all cases. Ne then asked shim if} the amount on deposit in the “Scandinavian- ! American bank on Dec. 3 was in the other banks when the Bank of North Da- | kota started—that most of — the | amount in the bank.on Dec. 3 was in | the bank at the previous time. Mr. Cathro said it was. Then Mr. Murphy asked Mr. Cathro to bring the record, these records ‘being kept in loose-leat form, and Accept “California Syrup of Tigs only—look for the name California on the package, then you are sure your child is having the best and most harmless physic for the little stom- ache, liver and bowels. Children love its fruity taste. Full directions on each bottle. You must say “Cali- fornia.” ————_—_ the Pictures Tonight and Tomorrow And All Star Cast, in The fastest moving and most dramatic picture of the _ Coming Wednesday The Triumph Unparalleled in the history of Moving Pictures “IN OLD KENTUCKY” ELTINGE | BISMARCK ——. THEATRE! Tonight and Saturday Matinee Saturday at 2:30 Beautiful Eileen Poe, ‘ “THE LAND OF JAZZ” Also EDGAR RICE BURROUGHS Wonderful Story OF TARZAN” Soon Tere ‘ BERT LYTELL VALE the Hotise” ’ in “The Misleading Lady” Coming “In Old Kentucky” The picture that has broken all records, Right ta Purehase, Correspondence was read giving the opinion of attorney for the Chi cago house who made the $1,000,006 loan with $1,200,000 of bonds of the bank series as collateral that the bank had no right to pledge the bonds if they had not actually been pur: chased. The questidn was indirectly put as to whether the Bank of North Dako- ta had really purchased the bonds by its paper transactions with the In- dustrial Commission in which no actual money was exchanged for the bonds. Mr. Cathro said the bank FOR SALE Spring Valley Coal Phone 270 Painting, Papering, had actually purchased them. Caleimining Interior Decorating a ion Troubles! - Specialty FAIRYFOOT ‘soothes, siete ba brings your foot back to ite e and shape. It will cost you noting it it. does not satisfy. Joseph Breslow + Building Contractor and Re ing timates Furn' Work Guard Plans and Specifications Furnished S. B. SNYDER Corner Sweet and 8th Street Bismarck, N. D. ed and All nteed TEER ENIRS Rheumatism A Remarkable Home ment Given by One Who Had It In the Spring of 1893 T was at : and Inflam: matism. 1 suffered ‘as only those who have Jt know, for over three years, I ‘tried remedy after remedy, and doctor after doc- tor, but such relief as I_ received was only temporary. Finally, 1 found a remedy that cured me completely, and it has never turned, I ‘have given it to a num-. REDUCTION . ‘ ber who were terribly afflicted and In Tailored Suits even bedridden with rheumatism, Soe, of them to at sears old! B11 $85 values now $50.00 $75 values now .$45.00 my own case, J want every sufferer from any form of rheumatic trouble to try form of rheunatic, earl eevee, Bi| $65 values now .$40.00 Don’t send a_ cent; simply mail and T will er you have proven itself to be that long-looked-for means of getting rid of your rheumatism, you may send the price of it, one dollar, but stand, 1 do not want your unless you are pfectl; isfied to send it. Isn't Why suffer any longer relief is thus offered you Don’t delay. Write today. n, No. 470G, Dur- Syracuse, N. Y. nm is responsible. tatement true. your name and $50 to $55 value $37.50 $40 to $45 value $30.00° ‘TERMS CASH | Ending Feb. 28th, 1921 KLEIN Tailor and Cleaner when free? Mark H.. Jac ston Bldg. Mr, Jac Above KUPITZ COMPANY Grocery Department | aK ETY i ¢ Log Tavern Brand Sweet Peas 12 cans $2685 6 ANS 0.0.0... cece cece eee » y Star Bright Brand Extra Preserved Straw \ berries 3 cans $1.45; per can .... Pops Corn Starch in 1 1b. pkg., 6 pk, $3 packages ...... cc cece Kupitz Company, Extra Special Cotfee per Ib, 45, Special. Walnuts, Extra Special | per Ib. Black Walnuts, Special per Ib. ' . 89c 27c 35c 32c 14c Loose Wiles 5 ‘ 500 Ih. Pes anat Butter, Just in per 5h I $1.20 @ Wb MOUS ese eaten sulk 1-2 Ih. cans Red seller: 3 for 40¢; PCV CAN cee ee ccc eccerenee Imon, Regular 30¢ 15c New Bulk Sauer / just in per quart 10 Bars Lenox Soap for 48c 39c 45 pound box Crispy Crackers, 1 Pan Lifter free, per DOX voc... cece ee Pimento Cheese Bulk Cottage Cheese ..........15¢ Sweet Extra Specials in This Department Sutter Nuts, Special per Ib... Filberts, Spe per Ib. Borax in cans, regular 10c seller 4 for ......0. New Bulk Date Per Ib. New Bulk Figs Per Ib. 30c 25c 50c Lettuce, Celery, Green Onions AY Fresh Ege Plant, Loose Wiles Honey Boy and Honey Girl Crackers 97c wisde cone y 2 1 Cans, for Extra Faney Goods ced Pineapple, $1.30 $1. 14| Cream Kraut 2 1-2 Ib. Can Extr: Fancy Apricots, 3 for 14ef; | Meat and Fish Department Fresh Pike, Whitting, Halibut, Smelts and Whitefish Fresh Herring per pound 10c We also have some nice Genuine Eel and Frog Legs Our Prime Corn Fed Steers that We are Cutting can No Be Finer Pot Roast Beef and Roasts 18c 15c per Ib. os o Boiling Ribs, Roast or Stew Extra Lamb Stew or Pot Roasts per Ib. 15¢ to ......... Pork Sausage or Hamburger Steak Veal Shoulder Roast is w Shoulder 3 uk 28c 18c 20c Veu ‘al Cc hops or Steak per Ib. 25¢ to™ Specials in Small Link Sausage (with sage) sameas Swifts Brookfield.