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TO REOPEN April Date State Finance partment SEDALIA April American Exchange Bank and the Farmers Mechanics Bank closed March the state finance will opened Wednesday April under plans tonight meetings of depositors of both instituOfficials of the banks expect the plan meet the approval the finance partment. Do need industrious help? There's get and use Star Want Ads.
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SEDALIA BACKS BANKERS Who FAILED Depositors, some of whom lost life savings, calmly organize to reopen institutions closed because of too many "Frozen Loans" By FLORA KAISER, Globe-Democrat Staff Writer. EDALIA, MO., April towns which have been the scenes S of bank runs, where riots have made part of their history and where the actions of people in times of emotional stress have cost a high price, may take as an example the conduct of the people of Sedalia, Mo., following the closing of two of its banks by the State Finance Department March 24. Preachers may draw from it a text on the virtues of faith and confidence in mankind; business men may get from it a glimpse of the necessity of calm, unprejudiced, clear thinkIng, and the service organizations may evolve from it a golden rule of conduct. For the people of Sedalia put away doubt, suspicion and the many kindred failings of people deprived of the use of their money and presented not the spectacle of irate depositors at an indignation meeting, but rather a homecoming for the officials of the failed institutions, making plans for further business dealings with them. When meetings were held by the deposItors and stockholders of the Farmers and Mechanics' Bank and of the American Exchange Bank to discuss the possibilities of reopening these banks, both meetings drew large attendance and Emil L. Zoernig, president of the Farmers and Mechanics' Bank, and W. W. Barrett, president of the American Exchange Bank, were greeted with applause. Scores of depositors shook hands with them, expressing confidence in them, and the meetings passed resolutions expressing confidence in the officers of the closed banks. Then many depositors went further and assigned part of their deposits in the effort to replace $290,000 worth of paper which the State Department ruled was objectionable and must be replaced with cash. Yet the audience was not one composed only of stockholders in the banks, or depositors who were men of means. In the assemblage of about 1500 persons who crowded the Circuit Court room of the courthouse at the meeting for the Farmers' and Merchants' Bank so that an overflow meeting had to be arranged, were workmen in overalls, farmers whose hands bore the marks of long toil, thin, wrinkled, elderly women in old battered hats, a few negroes, and many of those who were distinetly of the poorer class. The meeting for the American Exchange Company, the next evening, Tuesday, March 30, brought a similar audience. While a blizzard kept the attendance down somewhat, the meeting room was well filled. The audience seemed somequiet, for the American Exchange Company handled only time and savings de. posits and among its depositors were many who had put away a "bit" for the rainy day. or old age and they were wor- The depositors of both the Farmers' and Merchants' Bank and the American Exchange Bank were in the main working people, those who put their weekly earnings into the bank for checking convenience, paying it out perhaps the same week, and those whose small savings were the result of the work of many years. The banks were the newer banks in Sedalia, so that the more substantial people had connections with some of the older banks, also. The American Exchange Bank started the Christmas Savings Clubs in Sedalia, and had the majority of these small savings there. Approximately 5000 depositors, representing about $1,000,000 on deposit, were affected by the closing of the banks. That there was distress among them was evident not only from the scenes in front of the bank on the morning when depositors went there to find the doors closed, but from the stories heard afterwards. If there were angry words that morning in front of the building which housed both banks, they were quickly forgotten when at became known that the failure was due to no personal speculation of officials, but to the objectionable paper or "frozen loans" which the bank held. Among the largest depositors was H. E. Hunter, 59 years cirl, whose anti re sav- ings were in the Farmers' and Mechanics' Bank. Hunter had several months ago sold a soft drink agency he had in Sedalia, and was preparing to leave for California where he has a son. The proceeds of the sale he put into the Farmers' Bank, which, together with the small amount of stock he owned there, came to some $11,000. This is the second bank failure in Hunter's life. He lost his entire savings in the failure of the Salmon Bank while he was engaged in the lumber business in Clinton, Mo. "I didn't have 80 very much then, but It was a hard blow, because we had to start all over again," Hunter says. Hunter came to Sedalia a few years ago and has had the Coco Cola concession there since. J. Cahrs, the Circuit Clerk at Sedalia, kept the court's funds under a personal account and turned them in with his quarterly report to the state officials. His quarterly report was due in April, and Cahrs had $11,500 in the bank at the time the State Department closed its doors. "Dad" Lorsbach, who is 70 years old and drives a wagon for a local laundry, had his life's savings, $1600, in the Exchange Bank. A local shoe store proprietor tells of one man to whom he sold a. pair of shoes around Christmas time, who brought them back and asked to have his money refunded. The closing of the banks had left him without money enough to buy food for the next day. A waitress in one of the hotels had $1000 saved in the American Exchange Bank. The telegraph operator at the Missouri Pacific Railroad, I. C. Evans, had $1500 there; Mrs. Lucy Minor, a widow past 70, had her savings there; Mrs. Matthew Bryson had just drawn a check on some $500 she had in the bank to bring the body of her husband home from Hot Springs, where he had died, when the bank was closed. Many estates were held by the bank. A number of civic and charitable organizations had accounts with the Farmers' and Merchants' Bank. The Knights of Columbus, the Red Cross, the Rotary* Club and several church organizations had money deposited there. The talès of hardship caused by the failure of the bank are numerous, and merchants say they are hearing many more at the first of the month, not only from the bona fide losers, but from the "dead beats," who will be only too willing, to take advantage of such an opportunity. One man on the afternoon before the bank was.closed was late with his deposit. He got there just as the doors were closing, and as one of the late customers was coming out, slipped in to deposit his $1600. These people, whose troubles were due to the closing of the banks, were at the meetings for the consideration of the reopening of the banks. Yet there was no word of censure for the officials of the banks, which the State Finance Commissioner said were not solvent-the\officials who had taken on $290,000 worth of paper, which the State Department considered as "frozen loans." They voted their confidence in these men, and many of them signed over a percentage of their deposits, some their entire deposits, for a period of time, SO that they might try to meet the State Department's ruling that the objectionable and slow paper be replaced with cash and the banks be allowed to reopen and gradually try to make good the bad paper. They promised, also, not to make a run on the bank when it was reopened, drawing only 25 per cent of their deposits on demand, and the rest in percentages of the total deposit at stated intervals. This procedure they agreed was the common-sense way; the best way to get all their money and help the officers of the bank keep their doors open, rather than have the bank liquidate and draw what percentage they could while the stockholders had no bility of getting anything. The sentiment throughout Sedalia was a favorable one toward the officers of the bank, and their efforts at reorganization met with co-operation everywhere in the town. The Clearing House Association favored the reopening. Sermons were preached on the bank failures, calling attention to the fact that the bank officials were men whose integrity was not questioned, and that it-was in trying to help the people of the community that the banks failed. One speaker at the meetings voiced the same sentiment, stressing the freedom of the officials from any blame in the failures, but placing the cause to the decline of value of the farm lands on which the banks held mortgages, and urging that the depositors help open the bank. "They were my friends in the day of their prosperity," he said, "and I will be their friend now in their day of adversity." This statement was met with applause by the depositors. Who are the men who have inspired such confidence, that no one asks how SO many frozen loans were accumulated, or publicly censors the judgment of the officials? E. L. Zoernig, the president of the Farms ers and Merchants' Bank, a man in his early 40s, is well known to Sedalia people. He began his banking career with the Sedalia Trust Company, where he served as secretary and cashier for a good many years. He then went to Kansas City, where he became associated with the Central National Bank, and later went to Alton as cashier of the Continued on Page Eleven.
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AMERICAN EXCHANGE BANK WAS CLOSED BY DIRECTORS VOLUNTARY MOVE CAME IN ACTION THIS MORNING Followed Closing of The Farmers and Mechanics Bank Saturday HOPED DEPOSITORS BE PAID IN FULL Both Banks in Hands of Finance Department To Liquidate special meeting the board directors of the American Ex change Bank held this morning, they passed resolution suspend and liquiits affairs in the manner scribed by law. This resolution was passed. W. Barrett, president of the bank, stated reporter after due consideration had been given to existand in the belief conditions, that interests of the depositors would best be served. is the confident belief of all the directors that the depositors will be paid full. The meeting was held before the opening hour this morning, and o'clock the doors were not opened the public, but notice reading follows posted bank voluntarily closed by order of board of directors. Liquidation be made by the state finance department. We are confident that all our depositors will be paid full. W. W. president.' The bank located in the same building with the Farmers and Mechanics the directors of which announced Saturday night of their decision to suspend business and liquidate its affairs. On the door opposite notice concerning the American Exchange Bank was similar notice relative to the Farmers and Mechanics Bank. Barrett president of the American Exchange Bank, Barrett, his brother, cashier, and Green vice-president. Other directors are, Keuper, Wingate, W. E. McCormick. Total resources the American Exchange Bank, the April 30 statement loans deposits, and capital $50,000. Total resources of the Farmers and Mechanics Bank, according the April statement was loans $411,949: deposits $351,000: capital, $100,000: surplus $10,000. State Bank Examiner Joe McElvain, of Chillicothe, arrived in dalia this morning and is in charge the Farmers and Mechanics bank. According to dispatch from JefferOscar state bank examiner, will be in charge of the American Exchange Bank. Mr. Vemmer expected to arrive in SeTuesday morning. The first duty of the state bank aminer taking over the bank to make inventory the bank's holdings and obligations, which filed with the State Bank Examiner Frenck. When this filed, the matter in the hands the state finance outlines the proceedure to be followed in liquidating. The taking requires about the inventory usually week days. The American Exchange and Farmers and Mechanics Banks closed by the state bank examiner on March of this year, hy the state finance department, which objected paper which was termed slow. reorganization plan worked out, and the banks reopened within thirty large number days. By this plan signed over all or part depositors with withdrawal their deposits, privilege at state intervals. The American Exchange Bank 1911 with capital organized in In November, 1925, stock of $50,000. sold its commercial assets the bank and Mechanics aBnk, to the Farmers moved into the latter concern building with the American change. The interior while both banks were separate and distinct institutions one occupied the building, the north side other the south side. the doors were not opened When usual hour this morning the number of depositors and large on the ous spectators awhile, then Some lingered ,others taking their walked away crowd were several In the places. women.