The Nonpartisan Leader Newspaper, December 30, 1915, Page 2

TWO Shameful Looting Closes Bank at Casselton On December 6 the First National THE NONPARTISAN LEADER bank of Casselton, N. D., closed its Directors Knew for Months of Kittel’s {Speculations With the Bank’s Funds---Agreed To Make Bad Paper Good, Then Closed the Bank---Losses Great, Bank May Not doors ‘and hung up a sign reading: “In the hands of the Comptroller of the Currency.” According to charges which the federal authorities have made against R. C. Kittel, former pres.dent of the bank, as shameful a - tale of bank looting as was ever brought to light in the Northwest lies back of the. grim sign which today confronts hundreds of depositors in that now paralyzed community. The Real Facts of the Failure One of the big, outstanding facts of the whole sad, story has net been told by ‘the papers of North Dakota and the Twin Citiez, which:have bzen full of the surface details of ‘the sus- pension. It i5 Lere set down for the first time since the bank clozed its doors. It was known as long ago as May, 1915, to the national bank examiners that Kittel had been guilty of irreg- ularities dating back over a year. Yet he remained as head of the in- stitution until Novembser 29, just a week prior to the day the federal authorities took over the affairs of the bank. Kittel Indicted Last Summer. In the May. (1915) term of the fed- eral court in Fargo a grand jury, on testimony furnished by C. H. Anheier, national bank examiner, returned an indictment of four counts against Mr. Kittel, charging that h2 had on May 8, 1914, “wilfully and urlawfully and with intent to deceive the offi- cers and stockholders and any agent appointed to examine the affairs of the bank.... made uron the books of accounts and records of said bank certain false and fictitious entiies,” and had on July 7, 1914, “made cer- tain untrue, false and fictitious en- tries” in his report to the call of the comptroller for the condition of the bank on June 30, 1914. Directors Knew of Falsifizations Since the closing of the bank no newspaper has printed the fact of this indictment. In the long printed quotations from the bank’s directors no exclanation ‘has ‘bren given - or comment ‘irade ‘on the fact that for at least: seven months after the bank examiner had ‘reported- gross <drregu- larities tagainst Mr. Kittel he remain- ed 'as president of the institution. It is true that.in Fargo on July 2, 1915, Mr. Kittel was acquitted of criminal irregularities -reported by the examiners. The verdict of . the jury on the .indictmnets was not guilty. BleakDays for Depositors Casselton .and ‘the great farming territory stretching out in all-direc- tions from it is not excited. It is dumb, patient, awaiting the result of the audit -of ‘the books of the closed bank by Examiner Anheier and for the fulfilment of ‘the optimistic promises of Kittel and the bank’s di- rectors that-everything ynszs'ble will be done to reopen the institution. But this was /a ‘bleak ‘Christmas for - Casselton. Christmas_ Vratde Paralyzed No bank closing in recent y:ars ‘has involved so.great a proportion of small depositors—practically cvery ' degosit which made ur, the $530,£00 the bank had was that of a faumer, ~a farm hand, a school teacher or a iclerk. Pgul, ‘Ross, High ‘School prin- ‘cipal, is-authority 'for the :statement “that nearly -every -teacher in the vi- cinity had all her small savings in the bank. The closing came when ‘holiday preparations were -on—when- | farmers were preparing to draw’ out part of ‘their savings for the many Open. er be paid; savings of years stand to be wiped out. A Trusting Community Betrayed. The failure of the bank to open Dec. 6 was like a bolt of lightning out of a clear sky to the trusting community. Frightened directors on the worst—that the bank would un- doubtedly have to susvend. Kittel Adviser to Farmers. The First National bank of Cassel- ton is one of the oldest banks in the state. It -started in business in 1882 and R. C. Kittel has been its presi- This is the Wrecked Casselton Bank - First National Bank of Casselton, which was closed Dec. 6 and is now in tirc hands of the comptrollor of thie currency. Acccrding. to the di- ‘veciors the illegal deals of the banXk’s presideni, R. ©. Kittel, in paper of thie Northern Trading company, in which he is interested, brought akout the suspension. November 29 ousted R. C. Kittel as president and his brother, W. F. Kit- tel, as cashier and both were dropped from the board of directcrs. The public, naturally comewhat excited at a sudden change like this, was lulled to supnozed security by a statement of the Casselton mewspaper on De- cember 3, which said, supppsedly on the autkerity of the directors: Directors Lull People to Sleep “The directors are making the nec- essary inventory and examination pending the transfer of the business; but these matters will in no way in- terfere ‘with ‘the regular dispatch of business. Matters will ryroceed exact- ly as in all the years the First Na- tional bank has been in existerce. Its officers and .directorate are a guar- anty of the worth of its tranzactions and will remain o0.” Matters will proceed exactly as in all the years :the bank has been in existence! Three days later its doors were closed. Asking Deposits When Bank Unsound Adjoining the “writeup” of the dent for years. Business men B dominated on the beard of directd but the bank’s business was rratti cally all with the farmers. Cassel and vicinity is settled up largely w people of German extraction and Kittel was of German decent. He wielded a big influence in the com- munity as an adviser of farmers for this reaon. Farmers made invest- ments on his advice and many of them not involved in the bank closing it- self are spending anxious days. Directors Continue to 'Fool ‘People Published statements -of the direc- tors are all to the “effect that they first 1zarned of the seriousness of the irregularities after the change in ‘offi- cers, when M.-G. Straus, clothing merckant at Ca's2lton and director of the bank, who was elected Novem- ber 29 to succeed Kittel as president, called in two men from a Minnearplis bank to go over the books. Their ad- vice was to call in the bank examiner and close the doors. Kittel Uses Depositors’ Money But the directors knew ‘as early as November 1, according to Kittel’s View in the Stricken Community This is ‘a photograph of Casselton’s once busy business district, now » bank'in. pagpriof .the Northern Trad- * stitution. . out on bail of $10,000 awaiting- ac- *="'wrecking,” is treasurer of- this com- paper of the Northern Trading :com- rany, a corporation in which ‘the Kit- tels were interested and which ‘the examiner held was improper security for the bank to be holding. Tt was Kittel’s transactions through the bank with ‘this company that, accord- ing to statements of directors, are mostly responsible for the closing. While this ground for suspicion— it ‘was ground for that, at least—ex- isted about the first of November, no thorough examination was made till nearly a month later, to udge from what directors have had to say since the bank’s suspension. - Kittel Still .Deing Business. The -amount of shortage and extent -of irregularities are closely. guarded by the directors-and by the.bank ex- anminers now going -over the books. All admit, however, ‘that it was chiefly Kittel’s “dealings through the ing company ‘which wrecked the in- Since ousted from the bank, Kittel, tion of the January grand jury, has been actively performing at Cassel- - ton the - duties of president of the E Northern. Trading -company. W. F. Kittel, ousted cashier.of - the bank, like. his brother held. for the grand - jury on a general charge ‘of bank pany. : Directors Promised to Pay By degrees since -the. closing it has bzen brought to.light that when the Eittels were ousted they reachsd an agreement. with' the directors under which the lattter contracted to take over. the. Kittels’ interests in the bank—stock, etc.—ard-put:up enough cash to cover the questionable paper. the - Kittels had worked off on the institution. . In this way it was hop- ed to keep. the bank-open. But the long. delayed activity. of the direct- ors in finding out the true condition, - it" has been openly stated, has dis- - closed such extensive thortages that this agreement may never be carried out. The directors publicly promis- : ed when the doors closed to go down in their pockets to the extent of $25,- 000 each to put the bank on its feet. Since ‘then, as the examination of the bank’s affairs proceed, they have not been so emphatic in statements i that the bank will reopen. Kittel Feels Safe Kittel himself -outwardly seems the most calm and ‘undisturbed man con- cerned in the matter. He states con- fidently the bank will reopen—the directors being bound to open it i % under their agreement with him to : make good the ‘bad :paper, he says. He is provoked, because the newspa- pers have reported that Caszclton was exeited ‘when th> bank clozed and he d:nies that there is any great nerv- ousness over the matter now. 3 “The :dealings of ‘the Northern Trading company with the bank are greatly exaggerated,” he says. “All is ‘quiet here mow. The people are waiting for the examiner’s report. Until then nothing definite will be known as to the condition of the bank.” Loses More Than $135,000 As to the amount of 'bad paper ° held by the bank and other alleged R $itiy shortages, Frank Lynch, merchant of S _Casselton and one -of the few busj= . o0 7o N B ne:s men with. big derpsits in the . .o bank, says $135,000 will cover-all ' YT “losses. He states that the Northern i ~ Trading company ha3s 27,000 acres of S land and that keeping up the inter- s est ‘and paying ‘the tax ‘on this land, PR 5 through the manipulations of Kittel, . small expenditures which help ‘to Paralyzed—not ‘because the ‘business men 1lost '‘money because ‘they Was too great a strain on the bank’s * make Christmas merry. Every ac- ‘could stand what they lost, but because with people’s savings ‘tied up resources. Mr. Lynch is one of Kit- S tivity of ‘Casselton, a progressive town they could not or did not spend. They did mot do all their ‘holiday tl€’s bondsmen. : 7 of 1500 people, and in the farming Shepping carly enough at Casselton to beat the closing of the bank, Protested Without Avail 3 . istrict -of which it is the 'hub, has Which occured Dec. 6. T. 0. Taubert, -another merchant of : been stricken. The stores have felt i i Casselton and a ‘director of ithe bank, the pinch. With savings lost few ‘change in officials in the local news- own admissions, that a large amount :says ‘he objected ‘at ‘one time to some 'spent the ‘usual ‘ameunts in ‘Christ- paper was Tinted an advertisement of the bank’s paper was questionable, -of Kittel's transactions, -but to mno - mas shopring, and”holiday trade was of the- bank soliciting the public’s for' on about ‘that date the bank ex--avail. He.says the Northern:Trading , @ sl paralyzed.: ‘Payment.-on farm mert- ‘business. -At the time the “writeup’” .aminer had “informed the directors ‘ompany- ~hus -besn -qitent_lqd,lgtga : VERARAS: ‘gages will'be delayed; some-may-nev- .and -ad--appeared ithe directors knew. that they must take up some of #he . (Continued on Page U3) . . - i ./.