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EMIL FOLDA ENDS LONG BANKING CAREER Prominent Clarkson Banker Relates Experiences Gained in the Banking Business for the Past 45 Years Just a few words to the patrons and folks interested in the old Clarkson State Bank, which had served the people of this community for 44 years, and which had been taken over by the Banking Department for further liquidation, upon the opening of the new Clarkson Bank, August 6th, 1934. In order to answer the many questions and other talks as to why am not connected with the new bank and owing to the fact that their is much criticism heaped upon the bankers and the banking profession the last few years, deem it may not be out of place to give this explanation which may be of interest to the readers. I spent just exactly 45 years in the banking business. In 1911 was asked to come to Clarkson and take charge of the Clarkson State Bank as cashier. When I came here the bank had $20,000 capital and $8,000 surplus. The deposits at that time were $171,000. In nine years time we have increased the capitalto$25,000 and surplus to $50,000, making total of $75,000. Later on, we thought that $60,000 would be enough so we divided the $15,000 and left it at $60,000 ever since. The deposits hit the high mark in 1929 when they averaged for that year $836,000. The bank did very good business. Most of the bank's deposits were time deposits under interest and the bank had to loan this money out in order to be able to pay the interest on deposits. Prices were high and everybody was making money. We had one of the best banks in the country and things went on well. Land prices then began to drop and dropped from one-half to one-third of their original value. No matter where one had invested his money, there were losses, except in some cases where people bought U. S. bonds. However, even there at one time Liberty bonds sold for less than 85 cents on the dollar. As a result, people that owed the banks could not pay, and some would not pay even though they could have and rather devised plans as to how to avoid paying what they had borrowed. And so here came the losses and a great many of the borrowers went broke. There was no way of getting the money back into the bank. Consequently, the banks could not pay what they owed the depositors and SO here came crash after crash until there were but few banks left. You all know how many banks we had at one time and how many remained. If I remember right, some seventeen thousand banks closed in the United States. We were not alone. Our bank was not SO bad and had it not been for the setback on March 4th, 1933, when every bank in the United States had to close, we may have gone through allright, as most of our time deposits were renewed. The closing was such a shock to the depositors that they got frightened and wanted their money. We all know it just could not be done as the bank's borrowers were unable to meet their obligations on demand. We were called all kinds of names and false reports about the bank were freely circulated. This added considerably to our and suffered tremendous losses. Although things have been plenty bad as they were, another factor has entered the fielddrought. We were in hopes that the bank might be able to pay most of the money back to the depositors by this time and here comes the drought, bringing along another setback. The banker loses the most in these failures, but it is hard to make the public believe it. Take for instance my own case. I had at one time stock or shares in 20 banks. I liked the banking busines and the investment was a well paying proposition, SO whenever I had some spare money it went into some bank for bank stock. Other people again perhaps invested in land, when land and all other classes of property were the highest and now most of us know the mistakes we have made. If you will pardon me, I will endeavor to show you the loss sustained in only one of the 20 banks I was interested in and that is the Clarkson Bank. I figure that the stockholders of this bank are leaving $137,500.00 for the benefit of the depositors, whose bank it now is. That is to say, we have taken no dividends or earnings out of the bank since 1930, having used all these earnings for charging off losses. Our salaries were very small since that time. Our capital, surplus and earnings, as will be seen by our report of Dec. 31, 1933, showed that these items figured approximately $100,000.00. The charge-off up to that time amounted to 00, making a total of $137,500.00, which sum very likely will all be used up by accrued losses. Besides this the stockholders are liable for an equal amount on each $100.00 share of stock they may hold. Some of the stockholders have already paid their double liability on top of the $137,500.00, and in addition to all this the bank has also paid about $40,000 into the guarantee fund before it was repealed, which sum had also been taken out of the bank's earnings and would otherwise have belonged to the stockholders. I am leaving or losing $79,500.00 because I owned 58% of all the stock in the Clarkson State Bank and all the other stockholders owned 42%, besides the $40,000 paid the guarantee fund for the losses of other failed banks. My share of that would have been $23,200.00. So the stockholders are losing all their investment in the bank. It is not that what one hears from the gossipers. have lost money in the other banks and in other investments and paid and paid until I paid myself out and that is why I am not in the new Clarkson Bank. have borrowed on my other properties to keep agoing but the losses were too great and I finally had to give up. am glad of one thing and that it is this that the state banking department had accepted my proposition and let us run the old bank until the new bank was opened, SO that there was no interruption in the banking facilities in Clarkson. After a lifetime work and honest dealings with my fellowmen it is hard to come to this and not be able to do more. In closing, I wish to take this opportunity to thank all the patrons of the Clarkson State Bank and the many friends who loyally stood by us through these trying and crucial times. EMIL FOLDA.
