Click image to open full size in new tab
Article Text
The First Why National Failed
(By PHILLIP H. ARROWSMITH) propos the confusion attending depositors meetin in the Opera House this morning, and, in view the apparent failure the part of the public generally un derstand the situation, being self largely interested stock holder and attorney for num ber of the largest depositors the old bank, feel that in the interest of the community and my clients would perhaps be the entire facts plainly be. fore the public, together with my views thereon. In 1920, the First National Bank like great many other banks carrying heavy lines credit, and the deflation resulted in render ing uncollectible large percentof these Following upon this, came the boll weevil invasion, which converted liquid assets frozen and, of that the Co-operative Tobac. Marketing Association com pletely revolutionized finan. result of the marketing of tobacco crop, and while produc. ing eventually to the grower larger return for his crop, still, stroying the immediate liquid character of agricultural loans. Being confronted with these conditions, over which the bank had no control, immediately gan to convert its entire earncharging off bad loans and converting otherwise uncollectible loans into First Mortgages of real estate; and, consistently pursued this course up to the stant of its closing. will understood that there two banks operating in the same building with the same directors and employees.
One national bank and the other state bank The state bank had capital stock of $25,000 and was intended and conducted for the purpose of enabling the bank to carry real esttate mortgage loans through this avenue. which otherwould not have been permitted do because of the National Banking Laws. the Fall 1924, the Nation Banking Bureau required that the State Bank be closed At that time the Board of Directors of the First National Bank decid. that they would relieve the First National Bank of the em. barrassment the State Bank and. at the same time of bal the uncollectible paper which the First National Bank and, to this Directors up in cash its equivalent and sur rendered $25,000 worth of their stock the First National Bank. in order that the stockholders the State Bank might surrender their stock receive an equal amount of stock in the First Na tional Bank, thereby the directors made an and personal sacrifice of one hundred thousand dollars. Unfortunately the public did not understand that by this movement the First National Bank was placed better condition than had been any time for the preceding four and. because this of understanding confidence in its solvency began wane, consequent upon the discussion the situation by uninform persons. On March the 11th, 1925, when statement was made that the bank had closed and would not open again, run started upon the bank. officers the bank called to assistance for counsel the other bankers the City Florence and, the question was then bated whether not they should ignore the rumor and pro. ceed business as usual whether they should give the ation widest publicity an absolutely true and accurate state ment as the solvent. but non quid condition of the bank. considered that publicity would be hurtful. that would acknowledge existence condition which necessitated nial and, 80 the bank officials fought to stem tide of resulting from the rumor personally discussing the mat ter each depositor pre sented his check. found however, that the confidence the community had been so badly shaken that eventual closing and, after further conference other bankers not only the City of Florence but throughout the Pee Dee Sec tion, for protection of those loyal depositors, who, refused be stampeded the rumor, that the bank should closed: and it When bank was closed, was turned over National Bank Examiner. who, holds the assets until intact some plan for liquidation be agreed upon between the deposiand the officers and disec. tors officers direc. for that purpose, or, failing that, through receivership. (Contnued on page 6)
