The Nonpartisan Leader Newspaper, March 23, 1916, Page 3

5 an A4 Startling' Fact Story of How Big Business . Plays‘ Safe and Only the Little Fellows Lose | THE*NONPARTISAN LEADER ' N & This: rex_n_arkable narrati:\n of the ihside story of a Sensational bank fnilu}e in which the governor of the and as a private investor and banker is here set forth publicly in print for the first time, - been available for nearly.a year and the facts kn C d the Medin state was concerned both as a public official though the records from which the story is taken have a 1 5 own to many for a much longer time. The Leader believes it is conservative in stating that no more amazing series of transactions ever has been recorded in any state. - a Bank THE Medina State bank of Medina, just west of Jamestown on the main line of the Northern Pacific railway, failed to open_for busi- ness on Tuesday, January 18, 1914. That was two years ago. In that two years the de mostly farmers, have received 25 per cent of their deposits in dividends. ! The closing of the bank and the sensational testimony which followed: the airest of its officers have brought about a suit for $50,- 000 against Governor L. B. Hanna, his financial associate 7 . £ & * A TOWN TRAGEDY: ¢ “THE BANK HAS FAILED.” For several days previous to the . failure of the Medina bank there had been rumors quietly circulating among - the people of Medina that the bank was in a shaky condition. On Mon- day, the 12th, several depositors who had been made uneasy by these ru- mors, had called at the bank to.with- draw their deposits. There weére signs that day of the beginning of a run _en the bank. The next morning the news had " spread and when the bank failed to apen its doors at the usual hour on the 13th the depositors began to - er in numbers. Finally the state bank examiner appeared at the-door of the bank and posted a notice that was " like a blow in the face to the small merchants and working people of the . townh who had been nursing the hope / that the rumors about the bank weze not true. The notice was in the usual form for failed “banks. It said that : the bank was closed for business and - scores.” that its affairs were in charge of the state banking department, represented by the state bank examiner. OLD STORY OF SUFFERING. IN “LITTLE PEOPLE’S” HOMES It is not necessaryvto g0 into details about what happened then outside the - ~bank and in the places of business ‘and homes' of the people of Medina. - It is the old story .o tragedies of “little people,” of the working men and women who trust - ¢ ‘their savings to the town banker, of* the farmers who have on deposit the hard earned savings of years of toil, the money they will need to buy their food and clothes, to feed their stock, to iay for the mew farm machinery, to keep them alive and their farms operatltz;s- till _the mnext crop is - harvested, e Like all bank failures it meant the blackest kind' of discouragement to hundreds. It brought want to stare some in the face.. It took the life and the hope, the plans and the ambi- tions out of the minds and hearts of " To some it brought resentment that ¢ o . Blg B@fiks»Get T I_ze' M Oney; »Depb}s'i'to.rs Lose 1, The hank £ od because it was overloaded 49 with: “ontside paper.”. The loans made in the financial = - would ' have developed int; fierce anger %)f lal1!:lhey had only known whom to ‘f x (J Who was to blame? makes a bank like this fail, any- way? Was it some fault of the people of Medina or the farmers This is the bank v_vhose .~ dition. - Medina were declared to be fair and-of such a "'+ nature that they “ought to pay out.” Other paper, ~constituting ‘a’ large ‘part of ‘the bank’s nominal assets, was, according to the deputy state bank - . examiher who testified, taken in violation of the law of the state. | S j2 .. It had long been known by the state bank ¢ examiner ;t“l;at:'tlig bank was in a bad con- 5 3 Thy nnkwu dh'ectlydueto Gy e o ailure ys hefore of Wheeloc! ‘had delivered it over to his own bank. * no eash market value 5 . was not bankable under“the law. ' representative of the Merchants’ National bank OO * * ¥ of high finanee. word? ‘What 7 vFive days before the closing of the Medina * bank Cashier Nesbit had gone to Medina and had taken from the bank between $12,000 and $13,000 of the bank’s choicest collatefial ::g e done, this, he said, to protect his own bank against loss, but he admitted that Cashier Schroeder was given to understand: the Medina bank could ‘expect further aid from his bank in consideration of yielding up this collateral. 8, ‘A day later, Barber, secretary of Wheelock ¢ - & Wheelock, took out of the Medina: bank Lk $15,000 worth of other securities, replacing them - ‘with $18,000 worth of securities, some of which Ly pas : 89 leacribed ad the assistant bank examiner having some of which he said, Sunday, January 11, Cashier Nesbit of the . First‘{ationnl‘ returned ‘to Medina with a f 'St..‘,l’nnl&who gelected and took away $15,000 ore of th& Medina bank’s collateral. This was" aken, according to the understanding received * by Cashier Schroeder, that the Merchants’ Na- ‘tfrm'd ‘might join in further advances to:help in ‘tiding the Medina M k over a run. y ) Cashier Schroeder. failure has revealed a remarkable story of the surrounding country? Had some of them gone back on their Had some of them de- ceived and swindled the bankers and thus played false to their neighbors and friends, their fel- low working people? positors of about $60,000 in that bank, s and the First National bank of Fargo. This suit is now pending at Fargo. No, they had not. The people of ' Medina and the surrounding coun- try had nothing to do with this bank’s failure. Then who had? Was it “high finance” “that did this? Were bankers and speculators, living easily off the profits of their big- deals and speculations, to blame for having wrecked this institu- tion? Let us not be hasty in assuming this? Let us see what is known of the facts: PEOPLE OF MEDINA FORCE AN INVESTIGATION Tardily enough, an investigation of the -affairs of this bank and all the circumstances connected with its fail- ure, was started. It did not originate with the governor, who as head of the. banking administration of the ) state, might have been expected to » i press -all legal action _which would disclose the underlying conditions and i E prevent a repetition of such affairs, i so damaging to the people of the i whole state and so disastrous to a t .community. .. No, it was started by the people of Medina themselves against the most formidable kind of obstacles. The believed that the officers of the ban| had gone on receiving deposits long after they knew the bank to be in a condition where it could not long con- - tinue to do business. They appealed to the state’s attorney of Stutsman county at Jamestown and, when he s ore failed to take action, to District Judge - 5 J. A. Coffey of the judicial district i which, includes Stutsman county. Un- A der threat;, it is said, that if he did not 41 take action' a special prosecutor would ‘ be appointed, the state’s attorney fin- 5 ally caused the arrest of three officers i i of the Medina'bank. - Whengthe men were brought to trial in justice court at Jamestown on May . 3, 1915, an amazing series of deals in which the governor of the state and B his associates high in business and | financial circles were involved was | brought ‘to light. ; it _ Witnesses at this trial testified to it a state of affairs and a series of - events as enumerated in the numbered paragraphs below: - These two banks, through having taken this collateral out of the Medina bank on - Medina bank. C. H. s Merchants’ National, like the First . AVe ' National of Fargo, after taking from the : . Medina bank securities sufficient to cover twice the ‘Medina bank’s indebtedness to. it, refused to ex- “tend the aid expected by Ca: the eve of its failure, were enabled to collect dol- lar for dollar of their own claims against the bank while the depositors so far have received only 25 cents on the dollar. Governor Hanna, in his private capacity e as a banker, khnew of the condition of the . Barber, secretary of Wheel- okc & Wheelock, testified that at a conference on January 6, of Governor Hanna and associates the governor said he had made up his mind the Medina State bank “would have to be taken care of”” and that he subsequently: sent a man out to examine its s:::.ts for his information and that of his was interested in Wheelock & Wheelock through - Governor Hanna ‘was one of the members of the 'so-called Weiser syndicate, which having made extensive loans to this firm. 14 Governor Hanna was present at a confer- Lo . ence of the members of the Weiser syndi- cate with representatives of Wheelock & Whee- lock on January 6, and, according to Secretary Barber, participated in an ultimatum refusing further aid to the firm. Wheelock & Wheelock went into the hands of a receiver January 10. 15 The First National bank, of which Gov= ®. ernor Hanna was a-director, months he- ‘fore the failure of the Medina bank, had carried on ‘its ks an entry designed to make it ap- . pear that the surplus of the Medina bank was up “ 1o !e_ggl reqpirements,vvqhen.,in’_fut it was not, e U S R0 e et e e