6573. Merchants State Bank (Dodge City, KS)

Bank Information

Episode Type
Run → Suspension → Closure
Bank Type
state
Start Date
February 27, 1891
Location
Dodge City, Kansas (37.753, -100.017)

Metadata

Model
gpt-5-mini
Short Digest
f13d91e9

Response Measures

Full suspension, Books examined

Other: Assignment to assignee and receiver, litigation over attachments; bank remained defunct under receiver/assignee.

Description

Bank experienced withdrawals/run amid rumors but principally because of overextended, unsecured loans and insolvency. Bank closed/doors locked Feb 27, 1891; receiver/assignee appointed in early March and bank remained defunct. No reopening reported.

Events (3)
1. February 27, 1891 Run
Cause
Bank Specific Adverse Info
Cause Details
Large unsecured loans and insolvency combined with rumors led depositors to withdraw funds; bank unable to meet presented checks.
Measures
None reported (bank closed doors at noon)
Newspaper Excerpt
For some time ugly rumors were afloat regarding the shaky condition of the institution and this led to the withdrawal of a large amount of deposits. These ... amounted to practically a run on the bank.
Source
newspapers
2. February 27, 1891 Suspension
Cause
Bank Specific Adverse Info
Cause Details
Refused to pay a presented check for nearly $3,500/$4,000 for lack of funds; multiple attachments followed; heavy encumbered real estate assets and insolvency.
Newspaper Excerpt
THE DOORS CLOSED. THE MERCHANTS' STATE BANK OF DODGE CITY CLOSES ITS DOORS AT NOON TO-DAY
Source
newspapers
3. March 4, 1891 Receivership
Newspaper Excerpt
Shortly after the first attachment issued the county attorney asked that a receiver be appointed, and L. G. Grobety was made receiver. Soon after the receiver had qualified and demanded possession an assignment was made to C. W. Averill.
Source
newspapers

Newspaper Articles (6)
1. February 27, 1891 Dodge City Times Dodge City, KS
Article from Dodge City Times, February 27, 1891

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Article Text

THE DOORS CLOSED. THE MERCHANTS' STATE BANK OF DODGE CITY CLOSES ITS DOORS AT NOON TO-DAY Ata little after 12 o'clock to-day the doors of the Merchants' State Bank of this city were closed. For some time ugly rumors were afloat regarding the shaky condition of the institution and this led to the withdrawal of a large amount of deposits. These increased of late and the withdrawal of depos its amounted to practically a run on the bank. It is understood that the bank le nt a large amount of money on paper, and failed to take sufficient security during its earlier days. This it was able to carry until the hard times set in and the stringency in monetary matters came about. Large sums of money were loaned on individuals' notes, and no security of any kind was obtained. The collapse of the boom period and the stringency left the borrowers unable to meet their obligations. The bank was the depository of county funds. of many district schools and some townships: also of the city and and city school funds. The immediate cause of the closing was an attachment for $3,500 gotten out by City Treasurer Beverly. Mr. Beverly drew a check for the amount on the bank, but it was not paid for lack of funds. Two hours time 6 was given to procure the amount, but t this did not avail and the attachment P was issued. The bank is in arrears on the county funds to the amount of a $16,950. Other depositors or losers are as follows. John Riney, $430; school district 16, $118; John Kilburn, $100Grand View township, $400; L. E. McGarry, $100; Strange Summersby, $700; L Oliver Ellswick, a farmer living north of c town, $800; A. O. U. W. Lodge, $175. a This makes a total of $22,773, but there to are other depositors whose names could et not be learned. The city school funds, a amounting to $4,000, were recently withti drawn and placed in the First National. th Several attachments were gotten out be al sides that of City Treasurer Beverley's. u The appraisement of property is now p taking place. The bank owned a large T amount of real estate, though that al turned over by the Cox assignment is in encumbered, and but a small amount te could be realized on it above the mortle gages. Its most valuable possession is the block consisting of the City Drug al Store, bank and post office building. Not per a dollar of funds is left in the vaults. th H. J. Strange. president of the institupl tion, told the TIMES man that the county ca would lose nothing by the closing of the dr bank, and Commissioner McKinney who was looking after the county's interest, expressed the same opinion, The law, relif quires banks, where county funds are co deposited. to give a bond, and while it is said such a bond was given in this case, st on Deputy County Clerk Crane was unable to find a record of it when the TIMES ro W man called. There is a difference of ta opinion as to whether or not the bondsmen of the county treasurer can be held go are for the funds. as it is claimed they are released from obligation when funds are ro ba deposited elsewhere than in the treasurho er's office. We understand that some as $15,000 of county funds are deposited with the First National, The affairs of Pu bu the institution are in such a complicated condition that it is difficult to get at the eas facts, Following is the statement of the an ed condition of the bank made in January:

2. March 4, 1891 The Globe-Republican Dodge City, KS
Article from The Globe-Republican, March 4, 1891

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GONE UNDER. The Merchants' State Bank Ceases Operations Friday at Noon. A Full and Complete List of Assets and Liabilities.-C. W. Averill Appointed Assignee. Notwithstanding the many rumors concerning the shaky condition of the Merchants' State Bank it was a matter of great surprise when the doors were locked Friday last. Deposits to the amount of several thousand dollars had been recently withdrawn by parties who knew of the insufficient security that had been taken by the bank upon loans made during the last 18 months. This with the stringent times and depreciated real estate values made it impossible to much longer hold out, and upon the presentation of a check for nearly $4,000 they refused to pay it, for lack of funds. A number of attachments immediately followed. The first being in favor of H. M. Beverley. The bank was the repository for many school districts, as well as the county and city treasurers. The real estate assets of the institution are heavily encumbered and their cash value is difficult to estimate. Although the county may sustain some loss, it will not affect the price of county scrip as there is much more money on deposit in the First National Bank than the total amount of scrip outstanding. Also the amount deposited in the defunct bank was the sinking fund, and should it not all be recovered the loss will be lightly felt by the county. The complicated affairs of the bank will require some time for a full examination,and much litigation will undoubtedly result. A majority of the creditors seem willing to give the bank officials ample time to make settlement. Some, however, seem to think that at least criminal carelessness has been shown in the management of the bank,and it is not improbable that some prosecutions will follow. A. E. Grier, representing the Rollins Investment Company, of Denver, was in the city Monday to investigate the company's business, they having $4,000 in Ford county scrip which had been forwarded to the Merchants State Bank for collection. The county's check had been given for the amount of the scrip, there being a large amount to the county's credit, but the check was not accepted by the bank. In some way the scrip has fallen into the possession of the county treasurer and the Rollins Investment Company will bring suit to recover the scrip or its cash value. They have retained Sutton & McGarry to protect their interests. Shortly after the first attachment issued the county attorney asked that a receiver be appointed, and L. G. Grobety was made receiver. Soon after the receiver had qualified and demanded possession an assignment was made to C. W. Averill. The commissioners and county attorney are awake to the interests of the county, but with the several attachments in the hands of the sheriff, the assignee and receiver each attempting to obtain possession, the assets will be used up in the payment of fees. The liabilities, with names of ceditors, are given below: LIARILITIES

3. March 20, 1891 Dodge City Times Dodge City, KS
Article from Dodge City Times, March 20, 1891

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Article Text

Unraveling. The commissioners meet today for the purpose of coming to a definite conclusion in regard to the defunct Merchants Bank affairs. The commissioners and the city council favor the appointment of G. M. Hoover as either assignee or receiver. This would immediately re lieve the embarrassing contingency that now confronts the creditors-a receiver and assignee conflicting with each other. We understand that Mr. Hoover is being urged and is favorably inclined to reorganize the bank and open it for business, with the object in view of effecting a full settlement with the creditors. Should he conclude to carry out this plan, his name at the head of the institution would at once restore confidence, interest capital and allay all fears of creditors. Since the above was written G. M. Hoover was appointed assignee.

4. March 25, 1891 The Globe-Republican Dodge City, KS
Article from The Globe-Republican, March 25, 1891

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Proceedings of City Council. DODGE CITY, March 18th. 1891. A special meeting of the City Council was called for 9:30 a. m. on above date. Accordingly the council met promptly on time set. There were present, R. W. Evans, Mayor, Chas. Beeman, P. H. Sughrue, J. J. Summersby, W. C. Shinn, and J. N. Pope Councilmen. Absent, J. T. Hubbard, S. Stubbs and W. J. Fitzgerald, Councilmen. The object of the meeting was briefly reviewed by the mayor, the same being to consider the question of releasing the City Treasurer and bondsmen from liability in the loss of city funds in his hands and deposited by him in the Merchants' State Bank, and occasioned by the failure of said bank, the object of such release being to dissolve attachments levied by him on the property of said bank and join with county and other creditors in the selection of a receiver, to be placed in charge of the affairs of said insolvent bank with full power to control and dispose of the assets of said bank for the benefit of all creditors. The mayor stated that be had consulted good legal authority which satisfied him that attachments would not stand the test of the courts and the effect of such attachments would be to involve the business of the bank in prolonged litigation and consumption of the assets in payment of costs of such litigation. The City Attorney rendered an opinion corroborating above, after which Mr. Shinn moved that it be the sense of the city council: That attachments levied by the City Treasurer on the property of the Merchants' State Bank be dissolved, providing all other attaching creditors dissolve their attachments, and that G. M. Hoover be designated to take charge of the affairs of the concern. On call of the roll Councilmen Chas. Beeman. P. H. Sughrue, J.J. Summersby, W. C. Shinn and J. N. Pope voted, aye. After which the mayor declared the motion unanimously carried. The purpose of the special meeting having been accomplished the council adjourned. Attest: L. G. GROBETY, City Clerk.

5. March 25, 1891 The Globe-Republican Dodge City, KS
Article from The Globe-Republican, March 25, 1891

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DODGE CITY, March 18, 1891. The City Council met in regular session at 7:30 p. m. Present, R. W. Evans, Mayor, P. H. Sughrue, J. J. Summersby, W. J. Fitzgerald, W. C. Shinn. and J. N. Pope, Councilmen. Absent, J. T. Hubbard, Chas. Beeman and S. Stubbs, Councilmen. The minutes of the last regular and special meetings were read and approved. The matter of releasing the City Treasurer and his bondsmen from liability in the loss of funds in his hands as treasurer caused by the failure of the Merchants' State Bank of Dodge City, Kansas, was taken up and discussed at some length, after which Mr. Shinn moved: That the City Attorney be authorized to make a compromise to release the city treasurer H. M. Beverley from liability in the loss of city funds caused by the failure of the Merchants' State Bank, and that his claim against said bank be assigned to the city providing all attaching creditors withdraw attachment suits against said bank, and that all costs accrued be paid out of assets of said bank or otherwise SO that the city be not held liable for any such costs. After a vote taken on the above question the mayor declared the same carried. On motion council adjourned. Attest: L. G. GROBETY, City Clerk.

6. September 2, 1891 The Globe-Republican Dodge City, KS
Article from The Globe-Republican, September 2, 1891

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THE RECORDED FACTS. How the Taxes Were Absorbed by the Cox Dynasty. Through the courtesy of the receiver of the Merchant's State Bank the GLOBEREPUBLICAN scribe has been permitted to make a thorough examination of that defunct institution, and the memoranda therein made by Mr. Cox himself, and his employes, most emphatically verify the very worst that has been even suspected by the writer. Space will not permit us this week to give the data in detail, but we have the dates and items carefully preserved for future reference. We will this week briefly summarise the situation, giving fuller details later on in the campaign. In November, 1887, Geo. B. Cox was elected county treasurer for the first time, over C. N. Van Vliet, who was deputy treasurer under R. M. Wright. In October, 1888, Mr. Wright turned over to Mr. Cox. his successor. every dollar of public funds entrusted to his care as such treasurer, with the books in perfect order. Otto Mueller was instaled as deputy by the new treasurer, has remained in personal supervision of the office until recently, in communication by letter between himself and Mr. Cox, he suggested that the latter return and take charge, while he, Otto, shall make the campaign for election this fall. This suggestion was acted upon and is now in operation. After taking control of the office, Mr. Cox, who was president and principal stockholder of the Merchants State Bank, made an arrangement, which is permitted by the statutes of this State, whereby his bank was designated by the board of county commissioners as the depository for county funds, on A security bond filed with the county clerk and approved by the board. Mr. Cox gave as such bond his own name and that of one other stockholder and director of the bank, whose stock, together with that of Mr. Cox. soon constituted a good working majority of the bank shares.After this, when Mr. Cox had occasion to use money in his private business, or desired to favor a friend or political striker. he could drop into the bank in his official capacity as county treasurer. deposit the cash collections of taxes with Geo. B. Cox, banker. Then Geo. B. Cox, the business man, could write his check or promissory note. leave it with Geo. B. Cox, the banker. and take the money to use as pleased him best. This state of affairs continued till the fall of 1889, when the bank had cashed about as much paper bearing the Cox autograph as that gentleman was apparently worth. Then, by hereulean effort, and the lavish expenditure of money, be was re-elected against L. Sims, the regular republican nominee. With a new lease of power, Mr. Cox now delved deeper than ever into the treasury vaults. In the spring of 1890 the bank held much more paper against him than his entire visible assets could be made to sell for in cash. But as county taxes came in be continued to deposit them in the bank and borrow the money for his own use, and although hopelessly insolvent. took no less than thirteen thousand dollars in addition to what he already owed. The other stock holder who was on the bond to secure the county, was ere this hopelessly involved. notwithstanding which fact he must be provided for, as be had worked tooth and nail for the election of Mr. Cox. Hence he was permitted to take eight thousand dollars of good money. These two hauls left the bank utterly unable to meet the demands of the county. city and school district depositors, and the bond on file with the county clerk having become worthless by the insolvency of the sureties,(who in reality constituted the principal on whose behalf the security was given,) the taxpayers of Ford county have nothing to show for about thirty thousand dollars paid into the treasury as municipal taxes, except the possibility of a slender dividend which the closing out of odds and ends of unsaleable property left in the wreck of the collapsed institution may realize. All this money will have to be collected over again in addition to that needed for future current expenses of the county. Old Ford is one of the best counties in the state and by prudent administration of her affairs hereafter. will soon recuperate her wasted resources, but woe be unto us if again renew the power of the vampire which has so greedily absorbed our revenues in the past. -WANTED: To correspond with some who would like put in small