The Nonpartisan Leader Newspaper, March 23, 1916, Page 4

NSttt e o o S e S S ST P G I o S Ao E e S e ARt e st LSV AR St SR T 10, 1914. . Wheelock & Wheelock was h: . he testified, could 1 Governor Hanna THE 'NONPARTISAN LEADER Wheelock and Wheelock -~ -Weiser Syndwate and the Bank That F azled All the stock of the Medima State bank was owned or controlled by ‘Wheelock & ‘Wheelock: of Fargo, a real estate corporation doing a large sbusiness in North Dakota lands. H: H. Wheelock of the Wheelock com= ‘. pany and .C. H. Barbei, secretary ofs the Wheelock copamny, were officers of the Medina bank and it was popu- larly known as the Wheelock bank. ‘Wheelock & Wheelock became heav- ily involved financially. It appears of court record .that in the latter part of 1913 the company was indebt- ed -to. a syndicate of finaneciers for something over $100,000. This syndi- cate, known as the Waeiser -syndieate, was composed of Governor L. B. Hanna, director of the First -National® - bank of Fargo, E. J. Weiser, presi- dent of that bank, F. A. Irish, wice “president of that bank, and E W. Decker, president of the Northwestem ank of Minneapolis. A large portion of the stock of the Medina bank, approximately half, was held by the Weiser syndxcate along with «ather collateral, to secure the Wheelock & Wheelock indebted- mess to the syndicate, according. to sworn testxmony which was brought out later, ‘Wheelock & Wheelock went into the ‘hands of a receiver January 10, 1914, at Fargo. ‘The district court was “asked. to fippomt a_receiver on that date by . Grace Bell Wheelock. The suit for the receivership was apperently a friendly affair, agreed to on all sides._The receivership was asked, the ‘company formally agreed to it without pretest and the receiver was-named on the same day~—-January WHEELOCK ASSETS PLEDGED . TO WEISER SYNDICATE Two: menths later the receiver in his first report gave the total assets . and contingent assets of Wheelock: & ‘Wheelock as $2,228,961.88, and 'the liabilities and contmgem: liabilities as . 1$1,728,740:06. - The receivér : reported .~ that. the assets included -$688,694.97 in real estate, all pledged: to"secure : indebtedness, and only $220,528.34 in 1ea.1 estate not thus hypothecated. s and - contracts re- : celval?fla by Wheelock & Wheelock, but " all pledged to ‘secure mdebtedness, amounting to $681,985.35, and report- ed only $80,988.41 in bills and’ con- tracts receivable not pledged to secure. indebtedness. The: report said that all the stock in the Medina State bank ownedfl})y e- «cated, amounting in_ face value: to $14,600 The report showed the cor- - . poration owed the - First. National bank of Fargo about $25,000, all -se- . cured by collateral.. The Wheelock bank ‘at. Medma of «course faced a serious crisis in' the failure of Wheelock. & Wheelock. It failed to . open its doors on the morning of January 13, three days after the crash of the real estate firm. ‘The bank examiner was put in charge: on that day. At the time it closed the bank did not have enough cash on hand to meet the expected run resalting from the ‘Wheelock failure, according to_the testimony of its officers and of the bank examiner. The bank had de- posits of about $60,000; mostly ‘the © money of farmers. The bank examiner afterwards testified that on the day of closing the bank had liabilities of about $85,000, including = the deposits - of $60, 000’ and about $25,000 bills: pay- able :and other liabilities, but mnof figuring in the capital stock. To meet this, he said, the hank had about $59,000 in assets in the bank, the rest of its assets being p‘ledged, as collateral to secure the mdebted ness. MUCH POOR COLLATERAL IN MEDINA BANK Muelt of the collaterail in the ‘bu&, mot be realized -on at face value or anywhere near n;. He 'said ‘he’ considered the bank in an insolvent condition ion January 12, sthe last day it did business.- The * depositors of the Madma bank in .and about Medina beheved there was something illegal in the wag the bank had been conducted in connection with its deals with Wheelock & Wheelock. They re- -quested Russell D, Chase, stafe’s at- torney for Stutsman county, in which: Medmal is sgituated, ‘to. cogfinm;o&ce -crimingl proceedings against the offic- ers ofg:he bank for receiving de ofixts ‘knowing the condition of the b ds’ & cvime in. North -George W. ‘Thorpe, whe: sachnctxm.w- : ‘knowing it was about to fail, w‘hxch' Dakota. The . state’s ‘attorney and ‘his “assistant, -was alse his lwpafiner fafledormetused sta.re_“ Han'na', the Law and the Medina Bank The governor of North . Dakota is chalrman of the state ~bankmg. beard .and appoints -the state bank examiner. It is the board’s duty amon, other things to protect the public and depos\tors in state banks. ; £ . Hanna was governor in 1914 ‘as mow. In.his official capacity: he thus was chairman of a board which had jurisdiction -over the Medma state bank, doing ‘business at Medina, Stutsman cannty. P £ The Medina bank failed ‘January 13, 1914; Aiccording. to testimony in court. and court. reco}dsthe governor had " a connection with the Medina bank other than i m ‘his official capagxty as governor. The Medina bank was owned by Wheelock & Wheelock. The gover- nor was a member of a syndicate of financiers to whom, the records of Wheelock & Wheelock show, that company was: deeply indebted. An officer of Wheelock & Wheelock swears this syndicate virtually controlled Wheelock & Wheelock. Undenied testimony in court is«to the effect that to- partly secure the indebtedness of the Wheelocks ' the syndicate, of whieh the governor was a member, held almost half the stock in the Medina bank. -~ _Governor Hanna and. the banking board did not have the Medina hark closed until, as admitted jn court, two of its big crediters, one of them the hank at Fargo of which the g&vemat was director, had been - ‘allowed ‘to remove something like §25, the eream of the Medina bank’s assets, to protect:them when the crash ‘came. The result of this was that the. bank at Fargo in whlch Goyvernor Hanna was interested was a: nl;{)ly protected when the Medina bank was " finally closed by the state ba examiner. The depositors had to divide up a depleted amount of the bank’s assets, whlch after two years has netted them only 25 cents on the dollar. < Astreetml!edim.meotmtm ecution was made soon fi'ter the bank closed and: was supported by mumer- “ ous affidavits ‘and wmtten ments . - of the depositors. They pressed the case wxfls:out result :tnr a yea,r secution was started ecutors to open e case against bank officers, when the state’s attor- ney and his asmstant themselves came through. COMPLAINT AT LAST MADE . . AGAINST BANK’S OFFICERS - The state’s attorney finally had - three officers of the Medina State bank arrested for acce; I?tmg deposxts knowing that the bank was in carious. condition and about to ¢ ose. The arrests were inade a year after the bank closed and the case came before Justice of the Peace B. F. Bigelow for preliminary hearing at Jamestown in May, 1915, over a year after the bank closed.” The officers and directors of the bank who faced the criminal proceedings were A.. WL Schroeder, cashier, C. H. Barber; vice * president;-and H, H. Wheelock, Two of them, Barber and 'Wheelock, were connected with the Wheelock firm' also,. Barber being secretary of ’Wheelock & "Wheelock. Barber was. ,p!aced ‘on the stand 'by the state. ] He testified he was. secrefiary of- ‘Wheeélock & Wheelock :and vice fi;es- xdent ‘of the Medina State bank, the latter gnsxhon by name m'. ‘because he held no stoc'k in the’ and’ could nat legally be an officer or director. d that ‘the ‘business of Wheel Wheelock” was* pract ically - em:xrely controlled: 'by Weiser syndicate, of which ~and Deeker of Minne: bers.” "He said ‘the Weiser syndicate had Wheelock & Wheelock “all mort- gaged up” and besides secunmie the real estate firm held $6200 womh of the stock of the Medina State bank, ‘turned over. to the s,vndxwte by ':snm h Wheelock & Whee lock. . cussed at estate WHEELOCK & wnEELoc.L AEE REFUSEB LOAN Hanna and ‘other officers and. dlreccons ; of the First National bank of Fargo were mem- = iber's testimony. wfls,a <conference of memhers of the ‘syndieate officers of Wlhgdock & Wheelock m the office of ng\em.. wice president of M%hem ngk'éntm Ffi' pd were con- ‘ference Governor Hanna, Mr. Weiser, C. A. Wheelock and “himself: He said that it was known and dis-, this *mne ‘that. the real firm was. in bad plight and ihat it was alse lmown that when the condition of Wheelock & Wheelock be- came public or the corporation form- a\}}y went inte the hands of a receiver there would be a run on the Wheelock " bank at'Medina. He said the confer- ence was for the purpose of negotiat- ing with the Weiser syndicate or'the First National bank for another loan for Wheelock .& Wheelock. While the conference was going on _he said that Assistant Cashier Crosby “of the Medina bank called up on the phone ard told him that checks of Wheeloek & Wheeloek had been pre- sented at Medina for payment and that if they were paid they would overdraw the Wheelock checking ac- count in the bank ‘several thousand dollars. . The checks were in favor of the First National bank for deeds that had been sent there for -collection." Mr. Barber said he turned to these at the conference and asked what he should advise the assistant cashier at Medina. Mr. Weiser asked if the bank had money enough to pay the checks. Crosby, when asked by. Barher, said the bank had the money and Barber bestified that Weiser then said to go ahead ‘and.pay the accounts, regard- less of the fact it would ov’erdraw the Zfllxliilsock account ~several thausan 0] 000 ‘laan to tide ‘Wheelock & Whee- lock over the crisi 53 accprdmg to Bar- _Turned 'down "on this loan,’ then adked the syndicate .become ‘of the bank, Mr Wexser ‘had’ talked d had made i 2 g By f ; : members sent Frank 'Pucker to Me- | dina to see. ! This was January 6, 1914, M. Bar- ber said,-after the conference before members -of the synehcate promised . Wheelock & Wheelock that 1f “Tuc~ ker’s report was favorable they. would make available at the First National " bank in_Fargo to the credit of the Medina bank a credit which had been placed there December 28, 1913, but which had no collateral back of it and - which 4ill' then had not been subJect to check. . ] FIRST NATIONAL, AGREED i TO AID., SAYS BARBER. ' Also, he testified it was. agmed« - Gordon C. Nesbit, cashier of the First National bank, was to go to Medina and take out such additional «collateral - mentioned, Tucker ‘went:; to Medina ‘January 7, -he said.:- Barber saidithe as was needed to safely secure an ad- - ditional-advance of money sufficient to tide the bank over any stress by rea- son of the im crash of the real estate corporation. Mr. Barber testified the representa- tives of the First National bank of Fargo and of the Weiser syndwnte said they would eall in the Merchants’ National bank of St. Paul to go in‘on the loan to the Medina bank. ' Barber declared that in aecordance with - this understanding and agvree- ment Nesbit went out to. Medina on s January 6 and came back te Fargo o the next day with $12,000 to $14;000 worth of collateral taken -from the Medina bank, “being the security for the advance of the expected foan. - . SAYS HANNA ISSUED s INSTRUCTIONS TO HIM. . The witness went on to say that before the conference, at which na and Weiser were present, broke up on Januwary 6, Governor Hanna want- ed to know if Wheelock & Wheelock had any security they ‘could take out to Medina to cover the overdraft Wei- ser had 'authorized the Medina bank ‘ to pay that day on checks in favor of the First National bank; also to take up any securities of Wheelock & Wheelock in the Medina bank which the bank ‘“couldn’t handle.” When told by Barber that this might be done, Hanna told Barber to do it, ac- cording. to the' testimony. Mr. Barber testified that accordmg to his ipstructions from” Hanna 'he . took out to Medina on Januaty 9 securities totaling -about $18,000 and ¢ put them: in the elock bank; tak- ing out about $15,000 worth of other Z securities, thus covering the overdraft, (A receiver was appointed for Whee- lock & Wheelock the next day). MORE SECURITIES TAKEN 3 FROM BANK, SAYS BARBER. : Barber’s testimony went on as fol- ows: On Januay 11 (day after the Whee- ] recexvershlp) Mr. ‘Nesbit came back te Medina, this time a Mr. Knauf of the Merchants’ National bank of St. Paul. Accerding to Bar- ber’s testimony Knauf said to Barber and officers of the Medina bank that he Wanted to take out some eollat- 5. that -he had talked the matter over with Mr. Nesbit and the First. National bank of Fargo and-they had agreed to see the matter through and that he wanted the collateral with-the understanding cash was going to be furnished to tide over the expected “run. Mr. Knauf took out of the Me- dina bank about $15,000 worth of col- lateral. This was in addition %o that taken out previously by Nesbit. = The two outside bank xepmenta— txves then suggested that there ought to be a new .set of -officers for the - ‘bank, so ‘that- it would be: -entirely severed from Wheelock & Wheelock. It was suggested . that Casabier ; Schroeder, who was an ‘Wheelock' & Wheelock, act a.s tprem-“.‘ efused. 3 dent, but he r STOCK IN NESBIT'S nocm' ‘his *pdcket the state . the ed, and Governor: H’ahna H Han- - . )