a2d4d09aPartial suspension, Books examined
Other: Deposit 'holiday' declared by mayor; depositors' agreement / trustees created; state banking department took control of Hershey bank and supervised plans for First National.
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TOWN TO HAVE 3-WEEK HOLIDAY Iowa- (AP) business holiday of three weeks Muscatine was proclaimed today by Mayor Herman Lord. Directors the First National bank Hershey State banks issued statements the effect that their institutions would remain closed for the duration of the hollThe Muscatine State bank was open usual, however, and ficial the bank said this policy would continue.
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Holiday Proclaimed; Two Banks Close First National, Hershey Directors Issue Statement. business holiday of three weeks in Muscatine proclaimthis morning by Mayor Herman Lord, and directors of the First National and Hershey State banks issued statement the effect that their institutions will remain closed for the duration of the holistatement follows: "We, with other banks in the middle west, are confronted with problems over which no has control. Troubles in other cities have aroused state panic people, helped along by insidious and rumors fomented by people who should know better. The result been steady and cometimes withdrawals from There certain evidence that these will not Iowa City, Davenport and other cities show what happened when action was too long delayed. banks vinced that the logical solution problem does not lie payment of certain steady the detrideposits those depositors who remain steadfast. Some depositors have displayed courageto their banks and ous loyalty In their intheir community. have therefore taken terests, we of the holiday deadvantage in order clared by our mayor may have that such depositors to carefully conopportunity plan whereby conof these banks tinued operation may be reported but not conIt firmed this morning that organithe depositors of the two zation work out plan of banks will be attempted within tion few days. Muscatine State Open. statement forthcoming from officials of the Muscatine bank, other than reiteraState (Continued On Page Col.
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Agreements Are Offered at Meetings Signatures Sought for Trustee Agreements. A depositors' agreement for dealing with the situation sioned by the "holiday" closing of the First National and Hershey State banks was presented to depositors of the two institutions two meetings this afternoon, after smaller group meetings had been held during the day. Original plans for presentation program to the main body of depositors called for single mass meeting the town theater this afternoon but the crowd that gathered for the event was far too large to be accommodated the theater, and an overflow meeting was held the First Baptist church. meeting smaller group depositors this morning city hall, the trustees each bank stipulated in the agreements which depositors being to the First Henry Otte, Henry and John Diercks. For the Hershey Barry, Arthur Grensing and William Cashman. Briefly. the plan presented the depositors for their acceptance rejection provides the lowing The establishment of trust fund in each bank, to be (Continued on Page Col.
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OUR Hershey (Continued From communication from state banking authorities notifying them of the position taken REMEMBER Governor Herring and D. THE Bates, newly appointed superintendent of banking. The latter now in the office of Mr. Andrew PLAY charge of banks coming under provisions of the new state law. State Forces Action. Both Bates and Governor Herring are in agreement that all state banks wishing to take depositors' agreements or waivers shall do 80 only after coming under the provisions of the new law. This decision is applied with equal force to any bank which now may be the process of taking waivers under holiday plan, their said. The Hershey State bank suspended business Jan. 16 under provisions of three week holiday declared at that time. The First National bank likewise suspended business under the holiday. Both banks have since that time taking depositors' agreements under plan which announced Jan. Policy What the policy of the Hershey State bank will be after It comes under state remains and will for the man placed charge by the state to officials of the bank said today. What effect the state control of the Hershey bank will have upon with Mr. Stein and he gave policy of the First National figures showing what cash bank is not would be necessary to have in Likewise, what der to operate First effect the placing of the Hershey bank bank under state selling bonds and using will have upon efforts of various cash hand, working balance groups to effect an adjustment would be available, but there betwean the banks and their dewould not be sufficient cash to positors, looking toward evenboth open and pay 20 per cent. tual resumption of normal busi"Bear mind that certain ness. Stein Awaits Meeting. Stein, president of the First National bank, said this morning that he was awaiting action taken this afternoon called meeting of depositors, before making any statements. Report Read. who served secretary of the committee, read the following report at today's meeting: "Your committee feels that it to make port of its and submits the following for your considera"A meeting was held Monday evening at the Midwest Free Press which was attended by the following members of Joe Nyenhuis, Fred Hoopes, Joe Manjoine, Bruno Daniel M. BridgRandall, Charles Butler, Harold Lawrence. Members absent Richards and Albert Vetter "Mr. Vetter was absent on account of illness of his son. Jim Connors was also present and attended all meetings of the committee. Plan Held Not Feasible. committee gave careful consideration to the plan outlined the Monday afternoon, but believed that feasible for two reasons. First, because the banks themselves would not accept and second, because one year is too short time to expect to turn enough assets into cash realize 100 per cent on the deposits. felt that it might be well to outline some basis for treating with the banks and three things That all deposits should be the end of three years. That amount of cash should be distributed when the banks re-open or within days. That stockholders should assure the depositors that they are now and will remain solvent extent their constitutional liability for assessment of their stock. morning part of "Tuesday your of William Randall, Bridges, Joseph Nyenhuis, Joseph Manjoine, Bruno Mohnsen and Harpld Lawrence met with Stein at the First National bank and gave him the outline just cited. He told us that he would require some time to figure whether suggestions could be worked committee adjourned to meet with Mr. Stein Tuesday night at the First National bank. Hershey Bank Statement, committee then and proceeded to the Hershey State bank where, after some talk we given signed statement as follows: It will be inadvisable at this time for this bank to agree to any general cash distribution to its depositors. We would rather call your attention to the clause the depositors' agreement which has public, which provides adequately, believe, for gencies which may arise in the Guthrie, Cashier. "Tuesday night as per agreement, committee composed Messrs. Randall, Fisher, Bridges, Manjoice, Nyenhuis, Butler, MohnVetter and Lawrence posits, as public funds, cannot controlled an agreement. In other words, if the banks are informed that public funds must available. This does not necessarily mean such funds would be drawn out, but they would have to there if demanded. Stein then asked whether, the depositors would willing to waive the per cent be the 100 cent of interest on per their the bank immedicash could available ate Cash Payment Seen Possible. "He SEEMED to believe that the cent interest on waiving cent of deposits per MIGHT be possible to pay per cent on and 10 per cent deposits 30 days of re-opening and additional cent on savings and 10 per per cent on demand deposits 90 days from would apply to deonly posits in the bank and not deposits assigned to the trust fund. was explained that the 2 per cent interest waived by depositors would be put in trust fund for benefit of depositors, if the waivof the interest payment resulting in net earnings to the bank. then followed our original demand in regard stockholders and their liabilities. "We asked Mr. Stein if the would be willing tc 50 of their legal put up liability in trust stock depositors that fund to assure remain intact their the term the trusteeduring ship. "Mr. Stein indicated that this would be conclusion this "Finally and committee wants distinctly derstood that not recommendcourse of action by the deing any positors. merely reports that its memberg believe the plan outlined at meeting unworkable Monday's the herein set forth and for reasons further reports that some cash least MIGHT be available at least First National bank depositors interest waived the deposleft the bank. respectfully subreport mitted and approved by the followmembers committee. Signed: Joseph Nyenhuis, chairman, secretary, Brune Mohnsen, Joseph Albert Vetter, D. M. Manjoine, Bridges, Roy Fisher, Connor, Hear Report 800 persons were on hand at the church to hear the reading of the committee's report. After its the meeting turned into an open forum, with many from the floor questioning the waiver plan in general. The Rev. Schwiering, president of the Muscatine Ministerial association, which presented plan to banks, was one of the speakers from the floor. He criticized the of the banks and arranging the plans, from the standpoint that torney was spokesman and because the plan called for joint action for the two banks while both were separate institutions operating under separate laws. It was made known this mornthat committee of four men which has been with bank officials for week looking toward plan reopening both banks had been unable to reach any definite with bank officials and has disbanded. Members of this were Richards, Kautz, and Othmer. They proposed an examination of the banks by banking expert corps outside for tion, but action was ever taken on the suggestion. Keep Deposits Separate. Moines New deaccepted by banks after they begin under the Iowa banking law must be kept intact and separate even reorganization should later take place, Attorney General ruled today to request decision by Andrew, state banking O'Connor held that the new law creates two distinct trusts for bank which asks to be managed the state. One trust to depositors and creditors of the bank before its management taken over remains the hands of the officers the bank. The second trust, however, to depositors, of the the superintendent banking.
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EXTENSION HOLIDAY SOUGHT First National of Muscatine Asks Additional Time. Muscatine, Ia., Feb. tension of one week in the bank holiday which has been in effect here the past three weeks was quested of Mayor Herman Lord to day by committee chosen Friday mass meeting to represent de positors of the First National bank. No extension had been granted Mayor Lord this afternoon, the there possibility that such action might be taken prior Monday. Butler, chairman of the committee, also announced the in definite of meeting of depositors of the First National bank which had been scheduled this afternoon. The meeting be called later, he indicated. Action of the today follows meeting Friday two five bers were chosen to positors both First and Hershey State banks, both which have been closed the three weeks under the bank hollproclamation. In addition to Mr. Butler, who chairman of the committee represent First National depositors, others on the committee are the Rev. W. H. Schwiering, Albert Vetter, Mrs. Vera Shoemaker and Augusta Rumsey. Hershey State Reopens. Regardless the knowledge that the Hershey bank will reopen Monday under management of the state banking department committee to depositors was also the meeting, consisting Albert Vetter, Con nor, Hitchcock, Randall, Kemble. Bruno Mohnsand and the Rev. B. Schwartz sen named members. The meeting at which these mittees named originally hear the report of committee named Monday at mass meeting. Its covered negotiations report bank officials looking toward acceptable plan for reopening the banks. made and the committee was later thanked and relieved of fugeneral discussion of banks, banking law and allied followed. this morning of meeting the chosen to represent Hershey bank depositors, resolu tion five recommendations was follows: This committee We, the undersigned meeting of depositors named at to represent deheld Feb. positors in the Hershey State bank, hereby resolve: recommend to deposisign no agreement that they funds the Herregarding their shey State bank unless said agreeprovides at least per ment cent cash distribution of their funds them within 30 days, and, recommend that, the bank unable the event that this request for such meet tribution, that evidence of such submitted to the deposiability tors' in writing. recommend that the stockholders of said bank immediescrow cash or its ately put equivalent to the 50 per of value of their stock cent the par said fund to said bank, conditioned to provide that said fund only in case of and judgment against liquidation stockholders. recommend that any submitted must treat agreement called funds on the same public basis funds of other depositors. recommend that the above equally all types of deposits. Those present the committee meeting Connor, Jr., Dr. Schwartz, Bruno Hitchcock and Kemble. Mr. Connor made chairman. 100 Attend Meeting. Petitions embodying recommendations contained the resolutions presented to the Hershey State bank depositors for sign this meeting. The meeting was scheduled but was nearly an hour before the session got under At that time between and 125, representing depositors of both banks were attendance. After members the commithad explained of the resolution as adopted by the com mittee, general ensued and was finally decided pace copies of the resolutions on tile for signatures the depositors. This acted on when some depositors backward about signing. Happiness not of much use unless you take partner
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Depositors Ask More Favorable Bank Pact (Continued From Page commended to depositors whole for their decision. After several preliminary clashes, with Albert Vetter and Horst of the committee favoring the all and Rev. W. H. Schwiering, chairman, opposing such course, motion by Mr. Horst favoring his stand was lost and later tion, authorizing the course of tion previously outlined, was adopted. Rejected. During the course of the discussion both Mr. and Mr. Horst tendered their tions, neither of which was accepted. Mr. Schwiering also took occasion to criticize The Journal being for the small at the meeting and for using the name First Trust Savings of First National his contention that there no First Trust Savings bank and that state officials supervision without proper authority. The Journal also criticized for giving the notice of the meeting although on the front page four column headline. Schwiering Issues Statement. In statement issued today over his signature chairman of the depositors' committee, Mr. Schwiering reviews the action taken at the meeting Wednesday, notes that small, and asks that depositors notify Mrs. Augusta of the committee, of their stand by Saturday. Although the statement is signby Mr. Schwiering as chairman the and it purports to the as whole, majority of the committee know nothing about it, they said afternoon. Mrs. secretary of the Rumsey, committee, when reached by telephone, that she had attendcommittee meeting since Wednesday was not advised any statement being issued. Bast and E. Horst, other members of the committee, also said they had been notified of no committee meeting and knew nothing of the An effort to reach Albert Vetter, the member of the committee not successful. The Statement. The statement, as presented to Journal, follows: "For depositors of the First National bank of Muscatine, Iowa: duly called meeting of the depositors the First National bank Iowa, the compromise waiver offered by the bank was rejected and motion carried in the national au thorities for an investigation of the affairs of the bank and tc same under national control found "With this proviso that the committee was to negotiwith the officials of the bank and see whether not better agreement was obtainable, such negotiations to be terminated by Saturday at the latest. "Now since at that meeting there was only cross-section of the present, chairman the committee and the positors organization issue this statement, that every depositor has due notice of the proposed action can take action according to his or her individual conviction in the matter and utter either or protest to the committee on or before March by such approval protest to Mrs. Augusta Rumsey, the secretary of the committee. "For myself and the committee wish state that would like to perpetuate the existence of the bank, possible, but feel that the depositors ought not in all justice fairness be called upon either the bank or the state banking of Iowa to bear whole loss of the bank, nor furnish all the money make bank proof. While we would heartily welcome run-proof national bank Muscatine, hold that the bank fairness be called upon to furnish of the assets for such part bank and also to share part of the loss of the trust fund to created. this incorrect we would like to shown such incorrectIf correct would like ness. and demand that our claims be met. "We hold contrary to the claim of the back officials and the state department, that the First tional still exists and has gally out existence gone this writing have any to the contrary. If such exists would preciate to have the proof us for but sented unless done the committee holds that the First National alive and all legally other claims to the contrary withstanding. statement is made for the sole and only of stating purpose and motives that our position have actuated us in our dealings with the bank in the interest of depositors. We have no personal grievances to nurse, charges make or barriers build against amicable settlement. Indeed the latter is our ardent wish but we will not consent to that do not fair and equitable to and alike "Signed Schwiering, "Chairman of the depositors committee. Hershey Group The in question been of the Hershey bank depositors all members of the Hershey positors' committee, the committee making no to the decision depostiors. Three of the five members of the First Trust committee were in sympathy with this same procedure. Ben Summerwill of the state banking department, who was Muscatine today, that state department is in charge of the banks under provisions senate file onl: give the bank and depositors chance reach agreement looking toward the reopening solvent bank and to conserve and protect the banks' assets. Any reached must meet the approval of the state executive and the state banking department, he declared. noting that such would not given on any proposal not providing for safe and sound organized bank. Proposed Agreement, The full text the under which it to submit to of both the First and Savings bank and the Hershey State bank, the depositor the above bank, the unusual economic and business conditions existing generally and the mark. depreciation in the value real estate, live stock grain and and in all other and and property thereby recognizing the consequent inability of borrowers said bank pay their notes said bank under the prevailing economic conditions, and further the great need for recognizing every way that and its borrowgiven time in which may to liquidate said loans in as orderly and just manner poswill thus inure to and will ultimately bring greater cash benefit to the undersigned and to other and to the community, and desiring the continuof said consideration similar signed to be signed various other depositors, hereby agree with said bank, officers, stockholders, their heirs, executors, cessors and assigns, for all posits in said bank that control, including those of any minor children, binding my heirs, executors, and assigns, as follows: allow 50 per cent of on posit in said bank, its and, assigns, with accrued interest thereon to January 1933, any, until the opinion the board directors said bank economic condition sufficiently improves, not later than March 1936, cept that 20 per cent of amount the bank shall made available lows: from day that this agreement has been declared erative by superintendent within ten days, within the next sixty days remaining 1-2 within the next days, hereby assign, transfer and set over the other 50 per cent all such deposits and crued interest thereon, to the trustees named below, in trust, hereby authorize said bank to make said transfer to said trustees of said deposits, to be used trustees, together with similar funds from other deposithe purchase from said bank, without recourse, of an equal amount of active sets, part any asset, now held by said bank, for face value, and real estate other property, cost, less any amounts heretofore charged off thereon, plus earned interest, if any, parts therepurchased to be selected by the board directors said bank as being the least desirable of those now held by said bank, and Until March 1936 as provided it further understood and agreed: That the present stockholders agree that transfer of said deposits said trustees shall not relieve the stockholders from their statutory liability for deposits remaining in said bank; That the present reduced salaries of the officers said bank shall not be increased except consent of the trustees; That all future net earnings of the bank after the deduction of future net losses, shall be paid ansually with ified statement of annual income and expenses of said bank; (4) That no dividend shall be paid to on the stock of this bank. is further understood and agreed: That no charge shall be made the trustees for their services unless meeting of the depositor shall so authorize; (2) That meetings of the depositor beneficiaries may called by any trustee on days written notice, either by ordinary mail, of notice in newspaper, and at such meeting, each depositor present person by written proxy shall titled to one vote for each fraction thereof the trust fund and that all depositor beneficiaries and the shall bound by the vote such and may be removed and vacancies their office filled thereby; (3) That the trustees or their trust shall have represent the power depositor beneficiaries trust, to collect, extend, compromise, sell, pledge, convey, exchange, otherwise deal said trust assets in their for the best terests protection of said positors, and fully, simply and completely said personally the same; That said trustees shall pay, pro depositors net funds hands truscoming tee,s, and often sufficient funds That represent clare that have not and will not said deposits other assign any than herein provided; That with respect deposits remaining said bank, hereby authorize the oficers said bank release additional deposits soon as they deem justified; Christmas club accounts shall not be bound terms of this agreement; That this agreement being of reorganization under tion of Senate File of the the 45th General Assembly and becoming January 23rd, 1933, shall be in effect only after being approved the superintendent of banking by the executive council of the and (9) That this state of agreement shall not and does not affect deposits made by me said bank after the signing this agreement (10) That constitute and appoint by name, and as trustees hereun-
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POSSIBILITY OF RECEIVERSHIP FACING DEPOSITORS OF BANKS (Continued from page one) loans at five cents on the dollar. If the banks are going to liquidate in 1936 or sooner they would be better off to liquidate now. Stockholders received bank dividends for years and should be willing to share losses with depositors through stock assessments. The bank executives may not be capable bankers and if so should be retired from the banking business, If a receivership must come, delay will mean possibility of come stockholders relieving themselves of responsibility. Depositors Meet Depositors of the First National Bank meeting in the Muscatine city hall Wednesday afternoon voted to approve a receivership by the bank by Saturday night if the bank does not submit a better proposition than the proposed 'depositor's agreement." Rev. W. H. Schwiering, chairman of the bank's depositors' committee asserted that he would not approve the agreement. "I have fought from the start to avoid a receivership, but if this agreement is the best we can get as an alternative to receivership I favor receivership," Rev. Schwiering declared. The minister added that he be-i lieved the Muscatine Journal was favoring the bankers. He objected to the Journal terming the bank "the First Savings and Trust Bank" in the notice of the meeting stating that he had specifically asked that the bank meeting be called for "First National Bank" depositors. Rev. Schwiering stated he would make the open statement that if depositors wanted the real news of the banking situation they should read the Midwest Free Press. Chairman Explains Explaining the situation, Rev. Schwiering declared: "At a duly called meeting of the Depositors of the First National Bank of Muscatine, Iowa, the compromise waiver offered by the Bank was rejected and a motion carried to call in the national authorities for an investigation of the affairs of the Bank and to close same under national control, if found insolvent with this proviso that the committee was authorized to negotiate with the officials of the Bank and see whether or not a better agreement was obtainable, such negotiations to be terminated by Saturday at the latest. "Now since at that meeting there was only a cross-section of the depositors present, I, as chairman of the committee and the depositors organization issue this statement, SO that every> depositor has due notice of the proposed action and can take action according to his or her individual conviction in the matter and utter either approval or protest to the committee on or before Saturday, March 4, by addressing such approval or protest to Mrs. Augusta Rumsey, the secretary of the committee. "For myself and the committee I wish to state that we would like to perpetuate the existence of the Bank, if possible, but feel that the depositors ought not in all fairness and justice be called upon either by the bank or the state banking commission of Iowa to bear the whole loss of the present condition of the bank, nor to furnish all the money to make the bank run-proof. "While we would heartily welcome a run-proof National Bank in Muscatine, we hold that the stockholders of the bank ought in all fairness be called upon to furnish part of the assets for the run-proof bank and also share part of the loss of the so-called trust fund, to be created. If this position is incorrect we would like to be shown the incorrectness, if correct we would like and demand, that our just claims be met. "We hold, contrary to the claim of the bank officials and the state banking commission, that the First National still exists and has not legally gone out of exist- ence and up to the writing of this statement have never been shown any proof to the contrary; if such proof exists we would appreciate to have the proof presented to us for examination but unless that is done the committee holds that the First National Bank is legally alive and responsible, all other claims to the contrary notwithstanding. "This statement is made for the sole and only purpose of stating our position and the motives that have actuated us in our dealings with the bank in the interest of all depositors; we have no personal grievances to nurse, no charges to make or barriers to build up against an amicable settlement. Indeed the latter is our ardent wish and desire but we will not consent to a settlement, which we do net consider fair and equitable to depositor and stockholder alike." Copies For All When the new agreement was submitted to both committees at a meeting Monday with bank department executives and S. G. Stein, president of the First National and vice president of the Hershey State Bank, members of the Hershey committee agreed, that the banks should mail copies of the agreement to all depositors. The bank officials have stated the agreement will be-mailed to depositors that all will have copies of it by the first of next week. Under the plan approved at the Monday meeting the depositors will be asked to state if they favor signing the agreement or a receivership. J. R. Connor, chairman of the Hershey depositors' committee, after polling members of the committee, said most of the committee members were against holding a depositers' meeting until there had been an expression from depositors on the proposed agreement.
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NOTICE The First National Bank of Muscalocated at in the holders closing other its All and sociation to present the notes and other claims payment. Dated July
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NOTICE The First National Bank of Musca located Muscatine, In the State closing its affairs All note holders and other sociation notified to present the notes and other claims Dated July 1933 Cashier.