7121. American State Bank (Wichita, KS)

Bank Information

Episode Type
Suspension → Closure
Bank Type
state
Start Date
June 21, 1923
Location
Wichita, Kansas (37.692, -97.338)

Metadata

Model
gpt-5-mini
Short Digest
5cd8988c

Response Measures

None

Description

Articles describe large defalcations by the cashier Philip A. Drumm that 'wrecked' the American State Bank (Wichita) in 1923; subsequent items (Jan 1925) call it 'defunct' and say a new Wichita bank 'succeeded the defunct American State bank.' No article describes a depositor run; the failure was due to internal embezzlement and the bank was reorganized/closed and succeeded by a new institution. Dates based on June 21, 1923 Washington Times report and later 1925 commentary that the bank 'failed about two years ago.'

Events (3)
1. June 21, 1923 Suspension
Cause
Bank Specific Adverse Info
Cause Details
Large-scale embezzlement/defalcations by cashier Philip A. Drumm over multiple years (losses in excess of $1.5 million), which 'wrecked' the bank.
Newspaper Excerpt
CASHIER STOLE MILLIONS IN FIVE YEARS Defalcations Wrecked Kansas Bank, One of Strongest In West. WICHITA, Kan., June 21.-Five ... Philip A. Drumm, trusted officer of the American State Bank here, began a series of defalcations, which ended with the wrecking of the bank
Source
newspapers
2. January 8, 1925 Other
Newspaper Excerpt
The most extensive undertaking of this kind was the organization of the Wichita bank which succeeded the defunct American State bank. By this plan a loss of more than $2,000,000 to the guaranty fund was avoided.
Source
newspapers
3. * Receivership
Newspaper Excerpt
the defunct American State bank... The American State bank at Wichita with deposits of over $4,000,000 failed about two years ago. It became at once apparent that the reorganization of this bank was necessary to prevent a complete collapse of the guaranty law.
Source
newspapers

Newspaper Articles (9)
1. June 21, 1923 The Washington Times Washington, DC
Article from The Washington Times, June 21, 1923

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Article Text

CASHIER STOLE MILLIONS IN FIVE YEARS Defalcations Wrecked Kansas Bank, One of Strongest In West. WICHITA, Kan., June 21.-Five an even longer period of time than years ago Philip A. Drumm, trusted officer of the American State Bank here, began a series of defalcations, which ended with the wrecking of the bank supposed to be one of the strongest financial institutions in the Southwest. Authorities investigating the losses today said it was possible the irregularities had extended back over an even longer period of time. than since 1918. These defalcations appear certain to run in excess of one and one-half million dollars. How much can be clipped from this sum from the value of industrial securities turned back by Drumm is purely problematical. The tide turned against Drumm deeper and deeper. He sank more money after the first, probably in an effort to stem this tide. J. T. Haynes, head of the Kansas Gas and Petroleum Company, Frontier Refining Company and Penn-Western Oil Company, allied companies, today is an outstanding figure in the case, as representing nearly one million of the dollars loaned by Drumm. A large stock interest was held in some of Haynes concerns by Drumm, but the former bank cashier declares these were held prior to the time of the defalcations. J. N. Richardson, head of the defunct bank and for dozens of years held in banking circles as one of the most ultra-conservative bankers in the Middle West, today was still in a sort of stupor as the result of the breaking of the confidence he had placed for twenty years past in Drumm. The cashier had been Richardson's protege, having been taken

2. January 8, 1925 The Wilson World Wilson, KS
Article from The Wilson World, January 8, 1925

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Occurrences During Week Gathered From All Parts of Kansas. Financial Institutions of State Star New Year With Bright Outlook, Says Peterson. banks as whole are starting the new year under mor avorable conditions than they have experienced in the last four years according to Carl Peterson, state bank commissioner. Conditions are better now that have been since became bank commissioner nearly four years ago. said. expect the new statement resulting from our call December 26 to show healthy con dition and noticeable increase The state bank guaranty fund ha. paid out approximately the last year protecting depositors and now has on hand more than $1 in and guaranty fund has prove valuable asset to the bank wed as to the depositors,' M eterson said. not only protect generally as stabilizer business that such on bank which the guaranty fund unheard of. "Those who have deposited in which fail are given drawing cent interes per process of the bank Liquidation, and ultimately are conts on the dollar on their de Commissioner Peterson believe one of the outstanding accomplish ments of his department of the las has been the successful reorgan year ization of score of banks which, ha this not been effected, would process have caused heavy drain on the fund and even heavier guaranty losses to the stockholders. The most extensive undertaking kind the organization of the this was Wichita bank which succeeded the American State bank. By defunct this loss of more than $2, plan to the guaranty fund was 000,000 avoided. Sam Amidon of Wichita, national Democratic for Kan admitted he virtually had beer sas, tendered position of national party chairman. have been advised that the appointment is mine if want but haven't yet made up mind whether want A would be in Chicago said. meeting of next month, he said the latter part at which the matter of appointing national chairman would be taken up about the farmer That old saw his is not SC "threshing pumpkins" with as one unacquainted imaginary in southwest agricultural processes might Thresh ern Kansas suppose. canteloupes has ing muskmelons and been developed into one of the most important industries in that part has enabled melor the state. to build up business, unique growers of sup American seed to most of the plying melon firms of the United prominent seed The extent of this particu States. may be visualized lar enterprise and muskmelor the fact cantaloupe shipped to the seed seed are from Lakin by the car load.

3. January 8, 1925 The Freedom Call Freedom, OK
Article from The Freedom Call, January 8, 1925

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NEWS ITEMS FROM ALL OVER KANSAS Happenings of More or Less Interest Gathered From Many Sources. BANKS IN GOOD CONDITION Financial Institutions of State Start New Year With Bright Outlook, Says Peterson. Topeka,-Kansas banks as a whole are starting the new year under more favorable conditions than they have experienced in the last four years, according to Carl J. Peterson, state bank commissioner. "Conditions are better now than they have been since I became bank commissioner nearly four years ago," Peterson said. "I expect the new statement resulting from our call of December 26 to show a healthy condition and a noticeable increase in The state bank guaranty fund has paid out approximately $1,000,000 in the last year protecting depositors of insolvent banks against loss. The fund now has on hand more than $1,000,000 in securities and $250,000 in cash. "The guaranty fund has proved itself a valuable asset to the banks as well as to the depositors," Mr. Peterson said. "It not only protects legitimate depositors, but it is recog nized so generally as a stabilizer of the banking business that such a thing as a run on a bank which is a member of the guaranty fund is almost unheard of. "Those who have deposited in institutions which fail are given certificates drawing 6 per cent interest during the process of the bank's liquidation, and ultimately are paid 100 cents on the dollar on their deposits." Commissioner Peterson believes one of the outstanding accomplish ments of his department of the last year has been the successful reorganization of a score of banks which, had this process not been effected, would have caused a heavy drain on the guaranty fund and even heavier losses to the stockholders. The most extensive undertaking of this kind was the organization of the Wichita bank which succeeded the defunct American State bank. By this plan a loss of more than $2,000,000 to the guaranty fund was avoided.

4. January 9, 1925 Johnson City Pioneer and Journal-News Johnson, KS
Article from Johnson City Pioneer and Journal-News, January 9, 1925

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Occurrences During Past Week Gathered From All Parts of Kansas. BANKS IN GOOD CONDITION Financial Institutions of State Start New Year With Bright Outlook, Says Peterson. banks as a whole are starting the new year under more favorable conditions than they have experienced in the last four years, according to Carl J. Peterson, state bank commissioner. "Conditions are better now than they have been since became bank commis nearly four years ago,' Peterson said. "I expect the new statement resulting from our call of December 26 to show a healthy con dition and a noticeable increase in deposits." The state bank guaranty fund has paid out approximately 000,000 in the last year protecting depositors of insolvent banks against loss. The fund now has on hand more than $1,000,000 in securities and $250,000 in cash. "The guaranty fund has proved itself a valuable asset to the banks as well as to the depositors," Mr. Peterson said. "It not only protects legitimate depositors, but it is recog nized so generally as a stabilizer of the banking business that such a thing as a run on bank which is a member of the guaranty fund is almost unheard of. "Those who have deposited in in stitutions which fail are given cer tificates drawing 6 per cent interest during process of the bank's liquidation, and ultimately 'are paid 100 cents on the dollar on their deposits.' Commissioner Peterson believes one of the outstanding accomplish ments of his department of the last year has been the successful reorganization of score of banks which, had this process not been effected, would have caused a heavy drain on the guaranty fund and even heavier losses to the stockholders. The most extensive undertaking of this kind was the organization of the Wichita bank which succeeded the defunct American State bank. By this plan a loss of more than $2,000,000 to the guaranty fund was avoided. Sam Amidon of Wichita, national Democratic committeeman for Kansas, admitted he virtually had been tendered the position of national party chairman. "I have been advised that the appointment is mine if want it, but haven't yet made up my mind whether want it," he said A meeting would be in Chicago the latter part of next month he said, at which the matter of appointing a national chairman would be taken up. That old saw about the farmer "threshing his pumpkins" is not so imaginary as one unacquainted with agricultural processes in southwestern Kansas might suppose. Threshing muskmelons and canteloupes has been developed into one of the most important industries in that part of the state. It has enabled melon growers to build up business, unique in American agriculture-that of supplying melon seed to most of the prominent seed firms of the United States. The extent of this particular enterprise may be visualized by the fact cantaloupe and muskmelon seed are shipped to the seed houses from Lakin by the car load. Four Mexicans are in the Atchison county jail, charged with being ac complices in the shooting of Frank Mix, Mexican, in the Atchison railroad yards, following a Christmas spree in which all five are said to have participated. Adolf Goeldner, 67, who came to Kansas 54 years ago, being one of the first settlers of Derby, is dead after a lingering illness. A half cen tury ago Mr. Goedner filed on a home stead between Wichita and Derby. where he had made his home ever since. William F. Mize, 15, a freshman in the Coffeyville junior high school, died at the home of his parents, Mr. and Mrs. Emery Mize, at Coffeyville of complications resulting from an attack not unlike that which caused the death of Calvin Coolidge, jr., last July. The trouble had its inception two weeks ago, when the youth chafed one of his heels while wearing his basket ball shoes for the first time this season. Robbers entered the Silverdale State Bank, between 2 and 3 o'clock the other morning, and made a fruitless attempt to lift the small bank safe out of its place and carry it away. Mrs. Inez Clark Ottawa has been appointed superintendent of the state industrial school for girls at Beloit, to succeed Mrs. Eula M Ritchie. whose resignation has been accepted. Governor Davis announced, Mrs. Ritchie was appointed superintendent in April, 1923.

5. January 9, 1925 The Hanover Herald Hanover, KS
Article from The Hanover Herald, January 9, 1925

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NEWS ITEMS FROM ALL OVER KANSAS Happenings of More or Less Interest Gathered From Many Sources. BANKS IN GOOD CONDITION Financial Institutions of State Start New Year With Bright Outlook, Says Peterson. Topeka,-Kansas banks as a whole are starting the new year under more favorable conditions than they have experienced in the last four years, according to Carl J. Peterson, state bank commissioner. "Conditions are better now than they have been since I became bank commissioner nearly four years ago," Peterson said. "I expect the new statement resulting from our call of December 26 to show a healthy condition and a noticeable increase in deposits." The state bank guaranty fund has paid out approximately $1,000,000 in the last year protecting depositors of insolvent banks against loss. The fund now has on hand more than $1,000,000 in securities and $250,000 in "The guaranty fund has proved itself a valuable asset to the banks as well as to the depositors," Mr. Peterson said. "It not only protects legitimate depositors, but it is recog nized so generally as a stabilizer of the banking business that such a thing as a run on a bank which is a member of the guaranty fund is almost unheard of. "Those who have deposited in institutions which fail are given certificates drawing 6 per cent interest during the process of the bank's liquidation, and ultimately are paid 100 cents on the dollar on their deposits." Commissioner Peterson believes one of the outstanding accomplishments of his department of the last year has been the successful reorganization of a score of banks which, had this process not been effected, would have caused a heavy drain on the guaranty fund and even heavier losses to the stockholders. The most extensive undertaking of this kind was the organization of the Wichita bank which succeeded the defunct American State bank. By this plan a loss of more than $2,000,000 to the guaranty fund was avoided.

6. January 15, 1925 Moundridge Journal Moundridge, KS
Article from Moundridge Journal, January 15, 1925

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Financial Institutions of State Start New Year With Bright Outlook, Says Peterson. banks as whole starting the new year under more favorable conditions than they have experienced in the last four years, according to Carl Peterson, state bank are better now than they have been since became bank commiss.oner nearly four years Peterson said. expect the new statement resulting from our call of December 26 to show healthy con dition and noticeable increase in The state bank guaranty fund has paid out approximately 000,000 in the last year protecting depositors banks against loss. The fund now has on hand more than 000,000 in securities and cash. "The guaranty fund has proved itself valuable asset to the banks well as to the depositors," Mr. Peterson said. not only protects legitimate depositors, but recog nized stabilizer generally the banking business that such thing as run on bank which member of the guaranty fund almost unheard of. "Those who have deposited in in stitutions which fail given tificates drawing cent interest per the of the bank's during process liquidation, and are paid 100 cents on the dollar on their de posits. Commissioner Peterson believes one of the outstanding accomplish ments of his department of the last has been the successful reorgan year ization of score of banks which, had this process not been effected would have caused heavy drain on the fund and even heavier guaranty losses to the stockholders. The most undertaking of this kind was the organization of the Wichita bank which succeeded the defunct American State bank. By this plan loss of more than to the guaranty fund was avoided.

7. January 15, 1925 Longford Journal Longford, KS
Article from Longford Journal, January 15, 1925

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BANKS IN GOOD CONDITION Financial Institutions of State Start New Year With Bright Outlook, Says Peterson. Topeka,-Kansas banks as a whole are starting the new year under more favorable conditions than they have experienced in the last four years, according to Carl J. Peterson, state bank commissioner. "Conditions are better now than they have been since I became bank commissioner nearly four years ago," Peterson said. "I expect the new statement resulting from our call of December 26 to show a healthy condition and a noticeable increase in deposits." The state bank guaranty fund has paid out approximately 000,000 in the last year protecting depositors of insolvent banks against loss. The fund now has on hand more than $1,000,000 in securities and $250,000 in "The guaranty fund has proved itself a valuable asset to the banks as well as to the depositors," Mr. Peterson said. "It not only protects legitimate depositors, but it is recog nized SO generally as a stabilizer of the banking business that such a thing as a run on a bank which is a member of the guaranty fund is almost unheard of. "Those who have deposited in in stitutions which fail are given certificates drawing 6 per cent interest during the process of the bank's liquidation, and ultimately are paid 100 cents on the dollar on their deposits." Commissioner Peterson believes one of the outstanding accomplishments of his department of the last year has been the successful reorganization of a score of banks which, had this process not been effected, would have caused a heavy drain on the guaranty fund and even heavier losses to the stockholders. The most extensive undertaking of this kind was the organization of the Wichita bank which succeeded the defunct American State bank. By this plan a loss of more than $2,000,000 to the guaranty fund was avoided.

8. January 15, 1925 The Longton News and Elk Falls Reflector Longton, KS
Article from The Longton News and Elk Falls Reflector, January 15, 1925

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Financial Institutions of State Start New Year With Bright Outlook, Says Peterson. banks as whole starting the new year under conditions than they have experienced in the last four years, according to Carl Peterson, state commiss.oner. "Conditions are better now than they have been since became bank commiss.oner nearly four years Peterson said. expect the statement resulting from our call of December 26 to show healthy con dition and noticeable increase in deposits.' The state bank guaranty fund has paid approximately in the last depositors of year protecting insolvent banks against loss. The fund now has on hand more than 000,000 in securities and guaranty fund has proved itself valuable asset to the banks as well to the depositors," Mr. as Peterson said. not only protects legitimate depositors, but recog nized generally stabilizer the banking business that such thing run on bank which member of the guaranty fund almost unheard of. "Those who have deposited in stitutions which fail are given tificates drawing per cent interest during the process of the liquidation, and ultimately are paid 100 cents the dollar on their posits." Commissioner Peterson believes one of the outstanding accomplishhis department of the last ments of year has been the successful reorgan ization of banks had this not been effected would process have caused heavy drain on the guaranty fund and even heavier losses to the stockholders. The most extensive undertaking of this kind was the organization the Wichita bank which succeeded the defunct American State bank. By this plan loss of more than 000,000 the guaranty fund

9. January 16, 1925 Casper Daily Tribune Casper, WY
Article from Casper Daily Tribune, January 16, 1925

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and the assets of closed banks will largely offset the interest paid on the depositor's certificates, yet responsible bankers who are in position to speak with authority, claim that this cannot be true. They insist that the averave time to liquidate a closed bank in Kansas is two years and that in this period of time during which guaranty certificates must run, interest to the amount of $700,000 will accrue. This will increase the amount to be paid by the going banks to approximately $7,700,000. Bankers estimate that liquidation from closed banks will not exceed $3,500,000, thus leaving the same amount plus interest of $700,000, or a total of $4,200,000 to be paid from the guaranty fund. Therefore, at the rate at which assessments can be levied, it would require from fifteen to seventeen years to take care of guaranteed deposits of banks closed to date. Later failures which are bound to occur can not be taken care of for many years, if at all. The banking officials seem to take a different view of the situation, and claim that four and one-half years will be required if no other failures occur, to take care of the losses already determined. It is evident that time only will reveal who is correct. The American State bank at Wichita with deposits. of over $4,000,000 failed about two years ago. It became at once apparent that the reorganization of this bank was ncessary to prevent a complete collapse of the guaranty law. Reliable bankers say that in order to accomplish this purpose, the banking department employed drastic methods which have called forth the most bitter criticism. The condition of this bank was so bad that a sale of new capital stock at $400 per share was required to permit the removal of its recognized poor assets. Some bankers of Kansas were practically compelled to subscribe to this stock by threats that examiners would be placed in their banks and required to remain there until the quota assigned to them was subscribed for. Fearing the disastrous effect of the fulfillment of this threat a number made subscriptions. Some, who had undivided profits enough to justify, at once charged off the stock, not desiring to carry it as an asset, the value of which is even yet extremely uncertain. In one instance, vouched for by a reliable informant, an examiner notified a banker that if he would not subscribe for his quota of this stock, he would be required to charge off a Certain note which had been carried by the bank as a part of its assets. This requirement, in the opinion of the banker would have seriously handicapped his institution. In order to avoid this embarrassment, he purchased the stock assigned to his bank. As a result of the burdens imposed by the law eleven banks have withdrawn from the state system during the last year. Many instances of wildcat banking attributable to the bank guaranty law could be cited. Only one is mentioned which illustrates the methods resorted to. A banker in dire straits induced a friend to deposit all. he had in the former's bank. In return for the accommodation, the bank paid a bonus of $5,000 to the depositor on condition that his deposit would remain for a period of at least 120 days. The banker assured the depositor that the law would protect him against loss even though the institution should fail. In the opinion of certain officials, a compulsory law is doomed to certain failure in the course of time. They insist that all banks should not be allowed to come under the law and that careful. selection of the membership should be made. The law is optional in Kansas. One official expressed the opinion that the law of Kansas limiting the amount of interest that a state bank may pay on depisits should be