52ac01d4Full suspension, Books examined
Other: Affiliated institutions (Louisville Trust, Security Bank and two small Negro banks) closed precautionarily; federal receiver Paul C. Keyes appointed.
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Banks Over Many State of Kentucky Close Their Doors Six Institutions in Kentucky Close Their Doors as Precautionary Measure By The Press Nov. closing of the National bank of Kentucky here today was followed by the closing of of five smaller banks precautionary measure for four here and one at the of the Meanwhile, presidents other banks issued statements that were solvent and unaftheir banks fected. Bank of Kentucky's resources were given
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National of Kentucky Closes Five Smaller Banks Closed as Precautionary Move LOUISVILLE, KY., Nov. Closing the National Bank Kentucky here today followed five smaller banks closing as precautionary measure. here and one in Franklin, Ky. Meanwhile presidents of the other banks in city issued statements asserting their solvent every respect and would not affected. The National Bank of Kentucky which James Brown president was placed the hands of Paul Keyes of the federal comptrolgeneral's office as receiver. The other Louisville banks closed the Security Bank which was stated was closed purely precaution; the Louisville Trust Company which is affiliated with the National Bank of Kentucky, and two small Negro banks, the American Union Savings Bank and the First Standard Bank. The latter two members local clearing house association but their clearing through the Louisville Trust Company. Bankers Optimistic The McElwain Bank and Trust company Franklin, the fifth close. Its said had to shut because the National Bank Kentucky one of its correspondents and that its depositors would paid in full. In Louisville slightly more than the normal numbers patrons gathered the other banks but nothing approaching was noted and bank officials issued timistic statements that the public would not become excited. Crowds the National Bank Kentucky and the Louisville Trust Company delayed traffic slightly and special police were duty. LOUISVILLE, Nov. National Bank of Kentucky, the oldest bank in Kentucky, was closed today by resolution of its board of directors and placed in the hands of national bank examiner. The Louisville Trust company, an affiliated institution, also closed by action of its board of directors. James Brown, president of the National Bank of Kentucky, issued the following statement: "Due to withdrawals in the past and constantly rumors on the streets was deemed advisable by majority of the board of directors to close the bank, least temporarily, for the best interests of depositors and all concerned." Presidents of other Louisville banks issued statements that their institutions were solvent. The National Bank Kentucky, founded in 1834 the Bank Kentucky, and capitalized at $5.last statement listed and deposits Act Protect Creditors Directors of the bank in their resolution the action was taken conserve resources of this bank for the benefit of its crediDirectors of the trust com-
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Six Kentucky Banks Closed Associated Louisville, Ky. Nov. 17.-Closing of the National Bank of Kentucky here today was followed by five smaller banks closing up prehere and in Franklin, Ky. Meanwhile presidents of the other banks in the city issued asserting their institutions were solvent every respect and would not be affected. The National Bank of Kentucky, of which James ident, placed in the hands of Paul Keyes of the federal comptroller general's office as receiver Its announced resources were $54.The other Louisville banks the Security Bank, which it was stated was closed purely precaution: the Louisville Trust Company, which affiliated with the National Bank Kentucky, two small negro banks, the American Union Bank and the First Standard Bank. The latter not members of the local Clearing House Association but did their clearing through the Louisville Trust The McElwain Meguiar Bank was the fifth said had down the Bank Kentucky of its ents and that its depositors would be paid In Louisville slightly more than numbers gathered the other banks but nothing "run" was noted bank issued optimistic that the public would not excited. Crowds around the National Bank of Kentucky and the ville Trust fic slightly and special police were duty
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CHAIN SUSPENDS (Continued from Preceding Page.) least half" of the banks will reopen. closing AmeriExchange at Little Rock as mitted under state law, was uted by the directors public hysteria resulting from the placing the Caldwell Co. "The affairs Co. public mind could the this bank, by the American Exchange said. Mr. Banks announced after Caldwell Co. been placed receivership that its the had been by local capitalists. Texarkana, Ark., State bank Fouke, at in here, closed today was placed charge of ern for not partment affiliated with Banks the group, which pended deposits today for period of five days. Deposits of the Fouke bank on the tember 24 were It was capat Allan Winham. Texarkana, vicepresident, and Laxwell, cashier. Suspends Payments. Helena, Planters here, which Banks Little Rock of five The action last by the Little Rock, of which Banks president. signed by officials and placed on the bank's said today that the general unrest existing state, drawn the deposits with of have in cash. bonds and sight exchange which than the legal requirement, but the protection of depositors in that the be equal the was the added. Banks Close. Closing of the National Bank Kentucky today was by five banks up tionary four one the other the city issued statements their solvent respect and affected. The National Bank of of which James Brown was placed the hands Paul Keyes the fice The Louisville banks closed were the bank. which was stated closed purely precauthe Trust which affiliated with the National of and two the Union the First can Standard not members the house clearing through Trust company The Bank and company was Trust the fifth close. Its announcement to the Bank of Its and that its deposwould be full. In Louisville slightly than nornumbers of patrons gathered other but nothing proaching "run" officials issued optimistic statements that the public would become excited. Crowds around the National Bank of and the traffic alightly and special Paducah Banks Merge. City bank today of the First the National Paducah of the Mechanics Trust and Savings bank Paducah. James Utterback, president of the City announced his bank had acquired other two local institutions and guaranteed their National bank which affiliated with the closing the Bank Louisville had affected the First National They added the First of Paducah owed Bancokentucky owed the Paducah? bank business the three local banks will City National bank of Paducah, effective toThe merger said to give the Negotiations for tion were to have been pending for time. Connected With Caldwell. Nov. generally understood that the Bank Kentucky controlled by the teresta which control Banco. banking investment concern similar Caldwell Co. Banco also generally understood to been Caldwell, exchange of ties other Some deal had through whereby quire this later denied. inventory the Bank of Tennessee, Caldwell's bank, which closed recently, assets include $3,325,Banco stock. The inventory also under bills payable $200,000 owed the National Kentucky due demand. sum $400,000 also listed to the Kentucky bank Under the classification of securities held guarantee Bank lists Bango stock no value given. Two Fall In Illinois. Springfield, Nov. Illinois creasing the failures the since Friday five. The Wallace State bank. Clayton, the Timewell State bank, closed State Auditor All the closings were with the failure the State Savings Trust company of Quincy, which the Timewell and Clayton institutions were correspondents. The Timewell had deposits 000 and bank Four in Missouri. Jefferson City, Mo., Nov. banking closed doors today direct the failure last of the State Savings Loan and Trust All the institutions had deposited their surplus funds Illinois and were forced to close their doors to protect Banks closed The Downing
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THIRTY BANKS CLOSE IN ARK Continued from Page financial difficulties of Caldwell Company, bankers Tenn." also said affairs Caldwell & remote Arkansas nothing but an from excited public could have forced closing of this strong Nov. the closing the National Bank of Kentucky. today started run depositors every the city practically Similar existed in other parts the Most institutions issued of statements they no connection with the bank of Kentucky. The bank was closed following meeting of the board with repreof Louisville finanhouse. The meeting was in cial session from p.m. Saturday until 10 p.m. Sunday, when agreed that no immediate solution could be attained. SPRINGFIELD, Ill., Nov. Illinois banks were closed today, the number of failures in the state since Friday The Bartlett and Wallace State bank, Clayton. and Timewell State bank, Timewell, were closed today, auditor Oscar Nelson announced. All the closings in connection with the failure of the State Savings Loan and Trust company of Qunicy, which Timewell and Clayton institutions were correspondents. Timewell bank had deposits of $150,000 and the Clayton bank $50,000. NASHVILLE, Tenn., Nov. 17. Federal Judge John Gore today sustained for creditors' bill against Caldwell Company, investment banking house and dered to their claims before next July JEFFERSON CITY, Mo., Nov. Exchange bank, Rutledge, in with total of $43,790, and the Downing State bank, at Downing, in Schuyler county, were clostoday placed the hands the state finance department. The Downing bank had total resources of $193,929. Both banks were closed as sult the failure recently of the State Savings Loan Trust company Quincy, III., where they transacted business. LOUISVILLE, Ky., Nov. 17. Security bank, affiliated the bank Louisville Trust company through inclusion in the company, temporary suspension here today. LOUISVILLE Ky., Nov. 17.Kentucky, the oldest bank Kentucky, was closed by resolution of its board of placed the hands National bank examiner. The Trust company, an was closed by action of its board James B. Brown, president of the National of Kentucky, issued the to withdrawals in the past week and ruon the streets was advisable majority of the board of directors to close the bank, least temporarily, for the best interests of depositors and all concerned." Presidents of other Louisville banks issued statements that their institutions were solvent.
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Eight Banks in Kentucky Suspend All Business LOUISVILLE, Nov. 18 (I.N.S.). Business was suspended today at eight Kentucky banks having resources of approximately $70,000,000. Among them was the National Bank of Kentucky, a 96-year-old institution, for which a receiver was named bv the Federal controllers' department. The Louisville Trust Company and the Security Bank closed their doors, as a precautionary measure, according to the directors. Both institutions are solvent, directors said. Other institutions to suspend business were the American Mutual Savings Bank and the First Standard Bank, both clearing through the Louisville Trust Company; the Bank of St. Helens, Louisville suburb; the McElwainMeguiar Bank and Trust Company, of Franklin, Ky., and the First National Bank at Horse Cave.
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mining good will for the United States in the world market. The political medicine had been prepared by both Democratic and Republican elements in the convention. in executive sessions. Both groups said they would demand of their parties that they hold fast to support of prohibition. Miss Aldrich's movie report, which she intended to make before offering her resolution, declared that "repeated promises to stop putting anti-prohibition and anti-respect for authority propaganda on the screen have been followed by continued production of films containing this very propaganda. The public has been very willing to give the motion picture industry a chance to clean up. But the public is not blind. We cannot ignore the fact that it continues, that this injurious propaganda appears in comics or inserts in connection with some of the best films." two affiliated institutions, the Louisville Trust Company and the Security Bank, suspended operations. Their directors said they were solvent and that they were closed as precautionary measure. The three institutions are affiliated through the BancoKentucky, a holding company. Two small negro banks in Louisville, the American Mutual Savings Bank and the First Standard Bank, which cleared through the Louisville Trust Company, later closed. The bank of St. Helens, a Louisville suburb, also suspended as a precautionary measure. Two banks outside Louisville also closed when it was learned the National Bank of Kentucky had suspended. They were the McElwain Bank Meguiar Bank and Trust Company at Franklin, Ky., and the First National Bank at Horse Cave, Ky. The National Banks of Kentucky served as correspondent for both. Officers of other leading Louisville banks issued statements last night declaring yesterday's deposits were greater than withdrawals, reported new accounts were opened during the day, and reiterated earlier statements that the institutions were sol-
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GOVERNMENT DEFICIT NOV. 15 IS $278,291,356 WASHINGTON, Nov. 18.-(P) -The Government's deficit on November 15 was $278,291,356 or $71,000,000 greater than last year. Income tax collections the mid- The largest of these was the Na. tional Bank of Kentucky at Louisville. under control of receiver, Paul C. Keyes, of the Comptroller of the Currency at Washington. Its resources $60,000,000. Directors of the National Bank of Kentucky said the suspension yeeterday was deemed necessary because of wild rumors concerning its condition. Simultaneously with closing. two affiliated institutions. the Louisville Trust Company and the Security Bank, suspended operations. Their directors said they were solvent and were closed as die of next month and in March will wipe it out temporarily at least. Whether the Treasury will finish the fiscal year in July with the deficit expected by President Hoover will depend on the March and June collections. Treasury figures today also showed Federal expenditures had increased $55,000,000 in the first four months of this fiscal year as compared with the same period a year ago. From last July to October 31, $790,000,000 was spent. At the close of business Saturday the Government had collected $1,075,181 since July 1 and had spent $1,353,473,345. The Farm Board spent $24,655.000 in four months and another $15,329,790 in the fifteen days of November. The total collections of the Government from July to November 15 were $184,000,000 less than that collected in the same period of last year, while the total expenditures were 13,000,000 less than year ago.
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40 CLOSED ARKANSAS BANKS CLOSE WELL AS OLDEST BANK KENTUCKY." During the ten days, forty banks throughout the country have according to news At Louisville, Kentucky, the National Bank of Kentucky, oldest bank in that state, closed Monday order of the board of directors. Heavy withdrawals of deposits and street gossip was given the direct cause of the closing. LouisTrust Co., an affiliated institution, also closed. Officials of the Banks Co., Little Rock. also announced that 27 banks in that state had suspended payments depositors. American Exchange Trust of Little Rock, the largest bank to suspend. At Pine Bluff, Ark., the Merchants and Planters Bank suspended under the state banking laws of Arkansas. Six more banks have closed result of the big clash among banks which occurred at Quincy, last week. As result of the closing of one of the largest and oldest banks in Quincy, four banks in Missouri towns closed, well as two smaller Illinois towns. Frozen assets given as the cause of these failures. Again, want express our confidence faith in the banks old Barry county Recent nancial statements issued by them. show they are all enjoying nice business and in and healthy safe condition, which highly commendable the part of their management.
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Group Banking Plan Prestige Unimpaired Not Adversely Affected by Recent Suspensions, Says H. L. Rackliff. A close analysis of the banking situation as it now exists in the southern and southwestern states result the recent small banking suspension supplies evidence strongest kind that American banking has been af fected and furthermore that the prestige which is attracted group banking has not been impaired any way. This statement made by Herbert Rackliff in an article entitled "Plain Facts Regarding Small Bank Suspensions, which appears the current issue of "Banking weekly published by Rackliff & Co., Inc. Mr. Rackliff that "those who by inclination by business interests are opposed the further growth of the group system of banking naturally eager to seize upon rapid succession of small bank failures as offering evidence that the group movement is doubtful benefit to American banking and to the in general. Affiliation Not Effected. The fact It had been anthis that CaldCo. was to be affiliated with Co., group banking organization It reportnever actually place, given as reason by Mr. Rackliff for the spread of disturbing rumors in Louisville regarding the latter company failure Caldwell & Co. These rumors were responsible for the closing of the National Bank Kentucky and small Banco Kentucky Co. he ly, however, the bank was placed receivership by controller of the currency. subsequent events prove the BancoKentucky Co. and the National Bank of Kentucky to have suffered heavy losses and to be actually insolvent as is not unlikely the facts will constitute no indictment of group bank ing. the article continues 'Group banking does not pretend to be immune poor management. The leading of the group have always welcomed the idea of supervision over the activities of holding companies for banks, and they, themselves, recognize the fact that the dangers inherent lack of supervision such companies is the only factor in the itself which may be open to justifiable "The suspension of 43 banks in Arkansas was voluntary and in with the state law which permits voluntary suspension of payments for five days. Mr. Rackliff ascribes the closing various small banks in Missouri Illinois, Indiana, Iowa and North Carolina the general excitement and to agricultural and business conditions "The remote cause however, he says, "is more important and that originated in an unsatisfactory condition the small unit bank throughout the ag. ricultural sections of the country "Unit banks in the agricultural sections of the country, particularin the south and southwest, have not satisfactorlly since the start of the deflation following the World war and the record unit bank failures bears eloquent to the adverse under which many of these institutions struggled for ex istence and finally fell by the way side. The merger movement in enterprise has resulted large distributing and manufacturing organizations and great public utility companies which converge their cash assets with the larger institutions in adjacent cities addition, small unit banks as
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The Financial Week By Seymour N. Siegel Bank Suspensions and Some Plain Talk The proponents of Group Bankagainst them last week in the failure large Southern investment house, with consequent closings of many small subsidiary country banks. Those individuals who have been opposed to Branch and Group Banking avidly seized this opportunity to come statements Daily Press Group Banking the counthat in particular were the proof of the pudding. If the situation is gone into on more analytical basis, quite obvious that American banking, general has not lost any its prestige. the Group Banking idea has not been adversely affected. The situation is simply this Caldwell and vestment bankers Nashville, Tenn. had expanded in rapid way the prosperity period culminating last year. The Item to consider here is the fact that this staid old house had large most the small the Sonth the Bank of placed receivership. The hysterical effect series of runs u banks, with result that ten banks had to suspend payAbout year ago, there was much talk in Louisville that Caldwell and Company, were going to affiliate with Banco Kentucky, group banking holding company, whose chief holding was in the National Bank of Kentucky. Even though actual combination completed, the previous rumors lead to run on the financial institution. The Controller of Currency put the bank in receivership. Banks the Middle West, and in took vantage of State law which lowed for period five days. Bad ag. gravated agricultural conditions, plus general hysteria that prevalled, were reasons given for the general suspension of business. that these failures an indictment of unit banking, argument in favor of Group Banking. rather than the reverse. Unit banks not funetioned properly during the past ten especially in towns where there is little diversification of industry. In many cases, especially in frozen credits have been the real reason insolvencies. Group Banking has been the result political failure to pass Branch Banking legislation. has brought the small country banker all the skilled management that characterizes the largest city The identity the banks has been with the advantages of metropolitan management. Another event last week was the resumption of Wheat buying by the Federal Board. Generally, this for regret. artificial pegging, although possibly some temporary superficial value, quite definitely interfering with the free workings of the law of supply and demand. It may apparently support the price of Grain for the being, only puts the farther new element enters into the equation. This Wheat buying in the Chk cago Pot came almost as plete surprise. in as much as Mr. Legge had declared. ago that not going to further the of the attempt Wheat with future Grain purchases. seems that he the past week crisis the markets somewhat akin to the panic in the stock market the of 1929 Like the formed at the Farm chairthat time, man felt, last week, that he crisis. The board feels that It merely "stabilizing the decline" of prices, allowing them drift lower without any precipitated drop. With all due the future effect of board. quite obviously has illusions to the future effect its actions. In the meantime, how supply of Wheat. bought ever. optimistically being increased. The fact that Canadian offering the as the United at prices, means that any hope of European buying Amer lean surplus Wheat delusion exports from North America will emanate from the cheapest How the whole situation is ing end is that burdens pity being heaped upon the shoulof Old Man making the steep climb toward more difficult. (Copyright 1980 Traube & Traube) years.
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BANK RECEIVER WILL PAY SOON National Bank of Kentucky to Reimburse Depositors Special The Post. LOUISVILLE Dec. positors National Bank Kentucky will receive the first on their deposits late in today by Paul C. Keyes, receiver for the Beginning Monday the depositors, execution of proper be given certificates. proof claims require Keyes said, and will require other three weeks month to issue the making it the latter part of February before the first payment made. receiver has established his the main the bank. The branches are being give boxholders to their property, the receiver said. The notice reads: statements and canceled checks will be to former the National Bank of Kentucky upon execution of proper receipts.
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Body of Arlene Draves Exhumed While Curious Throng Watches (Continued from First Page.) table Coroner W. L. Henry lifted lid. brother and sister stood Arlene's the foot the coffin. quietly Charles elderly to sobbed just the started as they beThe spectators held the body the three months dead. The were rouged. the eyes and the After Arlene's relatives had looked the body authorupon ities cleared the room all but the two for the State and two physicians, physicians remained the while the room again in October, 1927, by Chief Examiner institution was required to charge estimated of $137,000 April, and was charged in the in October The was severely account cessive loans, credit slow and doubtful aslines and matters less sets, Both serious and chief examiner the setting detail all criticisms of the bank, and mat- the and stated ters needing of the bank reports the affairs by President are James Calls Unsafe Banker. apparent the "Although controller that examiners was not safe shown disregard and had the for the and although charged the of to shake the faith did not seem the president bank. directors of in 1927 letters based on were written letters covered all which contained in the to and and. were required to they their "They ward and Examiner John ports to in St. the evident affairs them was had not the bank sufficient been the They bank was conservative policy making and and in or improving the action of had been condition requested to review "They carefully the letters from the the next board and take the to the affairs of the bank satisThereafter letters factory were received from the directors adhad reporting Criticisms Renewed. Examiner October that year Chief Examiner The aminers again the large amount the large was required charge 000 off at time of the tion October March the Controller wrote Chief Examiner Wood and stated the affairs dominatby President that member of was important the board advised unsatisfactory instructed Chief Examiner to ascertain whether examinations and office actually and considered by the and they had any being carried proposed leave the situation in the hands of the active officers. the delay of the On letters and giving the chief examiwas instructed the ter the directors the time of the next examination the Eliminations Urged. "Upon of exin questing give particular tention the and doubtful asthat materially and with was brought management the with Knitting Company Murray Van Camp Company Consolidated Realty Company and The the controller's that for the refinancing very large of unthe examination in Examiner had been again and of slow assets this crowds milled about the muddy main street. When the doctors finally emerged, to say. The samthey had nothing ple from the was dispatched the attorChicago, neys sped made to Arlene to her were grave. stricken father before going to his home Gary his son and daughter paid another to his daughter's grave. As though he were talking instead the milling group of curious, he Why couldn't they have left my child in peace?" agement seemed to have definite plans for the with the Louisville Trust Company, under State "The chief examiner stated in his report expected be functioning State within days After this amination, officers advised that plans rapidly being developed whereby the Bank would consolidated with the Trust Company Formation Told. "Upon of of exwritten to with respect the and condition bank but no reply was until the had ten letters requesting detailed report the correcting of criticism listed tion cashier the that $50,000,000 the BancoKentucky and September 19. bank days, make withdraw the National with the Louisville Trust Company under State There was apparently some doubt the the examiner as or not examined view the management withdrawing the National sysIn his ing this matter the structed the examiner the was made December 1929 and was than at previous examinations report disclosed slow assets aggregating and estimated aggregating $386 The stated President and diwhich Controller Writes Immediately this the the calling attention to the the various critthem carefully and advise over ual letters written the of the At the time the next 1930 Chief Examiner estimated losses and directors promised eliminate the amounting June and on September to and amount doubtful than the aggregate being found to be loans various including to officers and Corby the the bank July and September for the ascertaining whether not directors had kept their assets 000 May letter was written to the board of directors the examination and covering all as shown the and as detail examiner the of his examination was that the report and the letter each the and that meeting forwarded Controller advising him tion in connection of each the brought their special atten practice making loans by stock the that the practice met the disapproval the Controller's The directors to make immediand such loans with minimum of Letter Reports Progress. "The directors on August which the cashier that the had been and had The September progress again that his based on the last report had letter be tion the stock of the was entirely the controller's had inite being listed and Chicago by stock not listed by the excontroller's office was informed had had one in Caldwell and interest had given 900 On Mr Robert who had reFISH chief of the Federal District CHOWDER Examiner informed controller Mooney had A whole meal in Bank for Kentucky the purpose itself, and mighty the direchad kept promise to elimsatisfying one, items you add that fine and reported old seasoning been for part the the LEA & and that the bank was lending Caldwell & Co. large amount PERRINS through its immediate SAUCE was Chief Neill was instructed. and began his of the on September 17. 1930. KEEP criticisms of the and by troller examiners despite the fact that the bank had reKLAD quired to charge out of its assets large amounts at previous considerable period. President was dicthe Safe, Dependable tating the bank's and dominating affairs Caldwell & Co. proved disastrous The Sepsale at Good tember 17 Chief Neill DRUG was not October 1930 At that the bank had STORES Home capital of and surplus undivided profits and reserve aggre- gating The examiner estilosses aggregating 356,000. in to slow and doubtful addition amounting to $4,542,000 and $686,000, bank was found to be carrying shares stock of the Bancoon its at which had previously been substituted was also found for cirticised that the bank had loans to Caldwell Co., Rogers Caldwell $2.- afaggregating 065,000. collateraled largely by stock Inter-Southern Life Insurance Company Loan Exceeded Law. the course this "During used his best the examiner to have the losses eliminated He held two meetings the with the ecutive He succeeded in having formed Though placing the affairs the and in hands He had of the elimfrom the promise to correct matters criticism enough Although the loan to Caldwell & Co. exceeded the limit prescribed by the examiner before and after the he left committee had appointthat granted anthe other loan $300,000 to Caldwell & Co. without the approval the directors The brought matter the attention of the board of directors. report examination was received the The 28. signed directors, dated Octo- tant 24. advising of the action ternity the of the examination during Vestal with respect the tional the creaSenator and tion an sought containing correct rowing ous matters placother cates the responsibility for ing ized Caldwell & Co. on Presbills of the report of ex"Upon the controller letter amination by was written directors the criticism to the 12 and unlawful loans to dangerous Caldwell The letter requested the the directors forward frequently detailed the made Caldwell Watched. "On account President Caldwell Co. and Rogers Caldwell the was with constant Chief Examiner in an effort to further extension of and matters to Caldwell & and its were be dan. and the controller only demand that they be elim inated The could not at the time examination although unbut with value ure Caldwell Co. evident that the National Bank Kentucky was which could not be Within days. the bank lost million dollars, was that the being careful analysis of the situation the November clearly withdrawals had proportions that do but the bank did not open for business on
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ASSESSMENT Faces Banco Holders. Liability or Millions Involved In Closing or Kentucky Institution, Receiver Declares Post Building March of Company face an the itself can proits liability under the Paul C. Keyes receiver for the National Bank of Kentucky, said to We will take steps to collect stock Mr. Keyes "If the money be from the com Liability of of bank has never before but we been on the matter since the bank and we are about the initial There BancoKentucky Company outstand Ing. the majority of which is owned and vicinity. If the as by the receiver is upheld by the stockholders be called upon make up the defiafter due from the Keyes pointed are liable for losses sustained by bank the on in excess of 10 per Of combined capital and surplus in limit for the National Bank Kentucky was were number of over that limit where per anticipated. these loans in of legal Mr. Keyes said "but the facts coming out now and of the now stand chargeable what they should have reasonably known these loans Besides being liable for loans in ex of were also for the prudent and safe management of the bank A large battery of accountants also been engaged to assist lawyers the task of digging into bilities The is much in volved of the of the National Bank of Kentucky with the Louisville Trust Company prior formation of the BancoKentucky Company and the scrambling of seboth eventually in the shape of Comwhich now is threatened with an levy.
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TEST OF GROUP BANK LIABILITY PLANNED Controller May Determine Extent of Stockholders' Interest in Paying Debts. The liability of shareholders in group bank organizations in the case of failure of a bank which is a member of the group may be finally determined as a result of action taken by the controller of currency, John W. Pole, it was learned here today. The Federal receiver of the National Bank of Kentucky in Louisville has announced that he has been directed by the controller to assess the stockholders of that bank 100 per cent on the double liability that attaches to holders of stock in national banks. A large percentage of the bank's stock was owned by the Banco-Kentucky Co. If the Banco-Kentucky Co. cannot meet the assessment of more than $3,000,000. assessments will be levied against the shareholders of Banco-Kentucky and suit brought in an attempt to pass along the liability to them. This, it was stated, will be the first case of its kind on record. The question of the liability of shareholders of group banks has given the State Legislatures and Congress considerable concern and has been used as an
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Responsible? Fifteen ago James years accounted the ablest Brown financier and the most potent litical power Louisville. Robert Bingham, who had gained spicuity after his advent to Louishad recently come into large wealth. According to general ports Mr. Brown and Judge ham were on the most intimate litical and business terms. Accordcurrent belief Mr. Brown very great assistance to Judge Bingham, both in politics and business. In 1918, we recall, the Kenas tucky Jockey Club was organized. Mr. Brown and Judge Bingham both became directors of that ganization. When the fight was made to repeal the law authorizing the system of betting Judge Bingham appeared before the and made most earnand eloquent argument against repeal of that law. Judge Bingham afterward sold his stock in the Kentucky Jockey Club and resigndirector thereof, again accordto general reports, because of personal break with certain directors the club. An estrangement arose between Judge Bingham and Mr. Brown. Under the influence of Percy Haly the Courier-Journal joined hands with those who sought repeal the law authorizing the use of the system of wagering. From the embers of the former intimacy between Mr. Brown and Mr. Bingham there arose bitter feud. Mr. Brown bought the Louis ville Herald and consolidated with the Louisville Post under the name of The fires of enmity Mr. Brown and Mr. Bingham raged with increasing ferocity entered into business, political, financial and social life. In the heyday of the era of consolidation and expansion the Banco Kentucky organized. In the spring 1930 statement lished that there had been solidation merger the and Caldwell and Company. the of 1930 mors gained currency that Caldwell and Company were in serious financial difficulty. As soon as the mors regard Caldwell and Company being difficulty became current the and Times gave widespread publicity them. emphasizing the previous nouncement that there had been arrangements made for merger between the and Caldwell and Company. On November 1930, lished front page story, intent of which to emphasize the fact that there merger tween Banco-Kentucky and Caldwell and Company and that any difficulty that involved Cald. and Company would involve the When we read that story claimed that looked as Bob Bingham was willing precipitate run on the National Bank of Kentucky injure Jim Brown. We made our mind to write an ed. itorial condemning such methods but upon consideration felt that unwise under the existing circumstances to make comment that would add fuel to the flame of unrest and uncertainty that might sult on National Bank of Kentucky and possibly bring its close. Day after day the Courier-Journal and the Times flashed up news about Caldwell and Company and the negotiations and relationship between the and Caldwell Company. On Sunday, November 16. as recall, the directors of the National Bank of Kentucky determined to close its doors and the greatest financial catastrophe that ever hapin Louisville brought pened The Louisville Trust Comabout. was also closed. James pany Brown, who had been president National Bank of Kentucky, the the most potent financial ercising Louisville, with influence in influence, was held nant closing of the responsible for the cast from the bank and in day pedestal of power. incidents of the Among other closing of the that Louisville owned by James B. Brown, placed in the hands of receiver. From the day of the closing of that bank the and the Times exploited to the very limall news about Caldwell and Company, about the National Bank of Kentucky and about the Louisville Trust Company and, so far possible for publicity to have effect, apparently endeavored to create violent antagonism and vere condemnation Mr. Brown and those connected with those institutions, The result of those failures, while working direst disaster to hundreds business firms and thousands individuals, resulted in giving the and Times, owned Mr. Bingham, practically the exclusive newspaper field in the city Louisville, SO that Judge Bingham sits on the pedestal of power and Mr. Brown is in the dust Two grand juries have met Louisville since the closing of those banks, one March, April. In the report of the grand jury held March stated: An audit of the bank made. However, the condithe referred to evidence heard believe bank was insolvent the open for prior thereto. grand attributes disaster the following causes The Caldwell large amount of loans extended the trust company Bank Kentucky with Banco collatgeneral *financial and publicity given the deal Banco undermined public confidence circles with respect Banco The grand jury that was held in April submitted its report May and published Sunday, May In that report it is said: From the testimony have heard believe March grand statement that the National Louisville Trust solvent. We further dence to support this concluknown Bank Kentucky after losses closing, from assets the bank initial payment cent, We derstand value bank that such bank should been closed, and impressed with how lamentable was this closing and the and its thereby. statement of remarkable incident showing as sinister purpose any know of in financial history is stated in the following: Saturday, November according to statement executive president the TransCorporation, who had been Louisville York, with board, Louisville, whom been unable ascertain diligent effort, telephoned that been tucky effect this phone block deal Transameriand seems to instigated for this belief that the National Bank The report of the grand jury closes with pregnant comment that ground for most thoughtful consideration by citizens of Louisville who were directly fected and by all citizens of Kentucky who were more less affected by the closing of the Na tional Bank of Kentucky. Its closing paragraph This grand jury is of the that every interested the their do thing public confidence their financial and person who would circulate any whether true false financial should the National Bank Kentucky the Louisville Trust there siderable think and warranted. such things should repeated. result the "considerable publicity" which the grand jury unjustified and unwarranted Louisville Courier-Journal and the Louisville Times owned by Judge Bingham have undisputed possession of the newspaper field Louisville and Judge Bingham and General Haly are sitting on the top of the world looking down on the caused by the failure the bank of which James Brown was joking when he said he came for operation on his dastardly criticism persists that art on the decline in AmerIca when there hardly filling station in the country that does not whitewash its curbstone least twice month. Many oldtimers believe the motor car ruining the country but more careful survey discloses that mostly the telephone poles. Although, as one noted minister declares, "man is never really satisfied," our observation has been that couple of extra shots of the real stuff his gin rickey generally makes him better satisfied. Now that A1 Smith deliberately invited Herbert Hoover to help dedicate the new Empire bad luck overtakes will be Al's fault. Another thing that makes the tired man more so all this darn fool pessimistic talk about business not going to coup. Alphonso is not only building more castles in the air but he not able to occupy the one that was built on the ground. Those old-fashioned folk believed the soldier bonus not go. ing to help business are requested to note that automobile sales increased 56,000 since the boys began to borrow. It just well that Ghandi has decided not to visit America this summer as those of us who have been criticising the he dresses couldn't afford to have him drop one of our bathing beaches when the weather warms up.
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Herald Asks Was ResponLexington sible For Bank Collapse?" relationship between the BancoKentucky and Caldwell and Company. On November 16, the directors of the National Bank of Kentucky termined close its doors the greatest financial catastrophe that ever happened in Louisville was brought about. The Louisville Trust Company was also closed. James B. Brown, been president of the National Bank of Kentucky. exercising the most potent financial influence Louisville, with dominant political influence. was held responsible for the closing of the bank and in day cast from the pedestal of power Among other incidents of the closing of the was that the Louisville Heraldowned by James B. was placed in the hands of ceiver. From the day the closing that bank the and the Times exploited to limit all the news about Caldwell and Company about the Louisville Trust Company and far possible for have effect. apparently endeavored create violent antagonand severe condemnation Mr. Brown and those connected with those institutions. The result those while working direst disaster hundreds of business firms and thousands of individuals, resulted in giving the owned by Mr. Bingham, practically the exclusive newspafield in the city of per that Judge Bingham sits the pedestal of power and Mr Brown in the dust of humiliation. (From Lexington Herald) Fifteen ago James B. years Brown was accounted the ablest and the most potent political power in Lousiville RobW Bingham, who had gained conspicuity after advent to had recently come into large wealth. According to general reports Mr Brown and Judge the most intimate political business According current belief Mr. Brown of very great assistance to Judge Bingham, both in politics and business. In 1918, as recall, the Kentucky Jockey Club was organizMr. Brown and Judge ham both became directors that organization. When the fight made to repeal the thorizing the pari-mutuel system betting Judge Bingham appeared before the legislature and made most earnest and eloquent against the repeal that law Judge Bingham erward sold his stock in the Kentucky Jockey Club and resigned thereof. again accordto general reports, because personal break with certain directors of the club. An estrangement arose between Judge Bingham and Mr. Brown. Under the influence of Percy Haly the joined hands with those sought to repeal the law authorizing the use of the system of wagFrom the embers of the former intimacy Mr. Brown and Mr. there arose bitter feud. Mr. Brown bought the Herald and consolidated with the under the name of The fires enmity between Mr Brown and Mr. Bingham raged Two grand juries have met with increasing ferocity and Louisville since the closing of tered into business, political, those one in March, one nancial and social life. in April. In the report of the In the heyday the era grand jury held in March consolidation expansion the stated: was organized. In the spring of 1930 stateAn audit of the bank ment was published that there of November 15 was not had been consolidation or mermade. However, in view of ger between the Banco-Kentucky the as reflected by and Caldwell and Company. In the two federal reports the fall of 1930 rumors gained ferred to and the evidence that Caldwell and Comheard we do not believe were serious financial pany the bank insolvent the difficulty soon as the rumors last it was open for day regard to Caldwell and Combusiness prior thereto. being difficulty became pany the grand In current the and attributes the banking jury Times widespread publicity disaster to the following them, emphasizing the previcauses: announcement that there had The Caldwell deal. been arrangements made for amount of large merger between loans extended by the trust and Caldwell and Comtucky company and National Bank pany. of Kentucky with Banco as On November 1930, it published front story, the page The general financial and tent which seemed to emphabusiness depression. size fact that there given the publicity between the Baneco-Knmerger deal with Banco Caldwell tucky and Caldwell and Company undermined public confidence and that difficulty that any in to create volved Caldwell and Company financial circles with respect would involve the to Banco banks. tucky When we read that story The grand that was held jury exclaimed that looked its April Bob Bingham willing and was published Sunday run on the National that report cipitate May In to injure Jim said: Bank of Kentucky We made mind Brown. up From the testimony we write an editorial condemning heard we believe the considera- have such methods but upon un- March grand jury was correct tion felt that was unwise to in its statement that the Nader the existing circumstances Kentucky and would tional Bank make comment that and the Louisville Trust Company to the flame of unrest fuel solvent. have result were that might evidence to support this Bank ther on the National conclusion in the fact, known and bring about Kentucky possibly that the deposito close. tors the National Bank of after day the CourierDay in brief time aftand the flashed up Kentucky Journal Times closed, and Com- the bank was news about Caldwell and due and after losses expense and the negotiations to the are receiving from assets the bank initial payment 67 per an approximately $15,cent or We understand this be remarkable proof of the intrinsic value the bank and worth We believe that such bank should never have been closed. and are impressed with how lamentable was this closing and the colossal losses inflicted on Louisville and its people thereby. A statement of as remarkable incident showing as sinister purpose any know of history is stated in following: On Saturday, November according to the statement Mr. vice president of the america Corporation, who been Louisville negotiating the deal, and who on that day was in New York, completing the last negotiations with board, someone Louisville, whom we have been unable ascertain after diligent effort. telephoned him that a meeting had been called to look into the condition the Bank of Kentucky. The effect this telephone call was block the deal between Comthe Corporation, and seems to have been instigated for this purpose. our belief that this one the causes the closing of the National Bank of Kentucky. The report of the grand jury closes with pregnant most thoughtful consideration by citizens Louisville were directly fected and by all citizens of Kentucky who were more or less affected the closing the National Bank Its closing paragraph This grand jury opinion that every terested the their community possible to feeling public faith and confidence in their financial institutions and any person would circulate story, whether true or untrue, any rumor, false not, about financial institution, should be severely condmned. the case the National Bank of and Louisville Trust Company there was considerable publicity which we think unjustified and unwarranted such things should not be repeated. result of the "considerable publicity" which grand jury pronounces unjustified warranted the Louisville CourierJournal and the Louisville Times owned Judge Bingham have by the undisputed possession newspaper field Louisville and Judge Bingham and General Haly sitting the top of world looking down on tress caused by of which the bank Brown was president
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were deadlocked, but were instructed by Judge A. T. Burgevin to continue deliberating. The defense presented no testimony during the trial. The indictments were based on a note Brown executed to his brokers, Wakefield & Co., and which subsequently was indorsed to the Bancokentucky Co., of which Brown was president. Brown also is president of the closed National Bank of Kentucky and publisher of the Louisville HeraldPost, now being operated by a receiver in bankruptcy. Misapplied Funds. Brown and Jones are under Federal indictments charging willful misapplication of funds of the National Bank of Kentucky in connection with a transaction involving $46,777.50. They are accused of ordering Wakefield & Co. to purchase stock without consent of the bank's directors. No date has been set for the Federal trials.
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of the re-organized Louisville Trust company is expected to release gross deposit liabilities of $13,859,914. This would make a total of gross deposit liabilities released of $20,270,591. The state banking department estimates that amount of gross deposit liabilities of state banks in suspension from the period beginning January 1, 1929, will be $8,816,846 after the re-opening of the Louisville Trust company, All but nine of these state bank suspensions date after the closing of the Louisville Trust company and the National Bank of Kentucky in Louisville last November. Liabilities of the National Bank of Kentucky are not included in the state banking department's statistics as it was under the supervision of the federal banking department. The National Bank of Kentucky has already paid a 67 per cent dividend Banks that closed prior to Novem- other one. the Guaranty Bank ber have been or are being liquidated. These banks with the date of Trust Company of Lexington, has been taken over by the Citizens their closing and their gross deposit Bank and Trust company under the liabilities are listed here: Hickman presidency of W. A. Dicken, former Bank & Trust Company, Hickman, state banking commissioner. Decemberf 30, 1929, $595,862: Hargis Thirty-seven banks and trust com- Bank & Trust Company, Jackson, panies, under the supervision of the February 5, 1930, $554,368; Grayson state banking department, have been County Bank, Leitchfield, March 10, suspended since January 1, 1929 1930, $357,254; the Peoples Bank, The gross deposit liabilities of these Mt. Vernon, April 22, 1930, $260,institutions totaled $29,087,437. Of 855; La Grange Bank and Trust the banks re-opened or liabilities Company, LaGrange, May 26, 1930. assumed, the gross deposit liabilities $352,232; Bank of Russellville, Rustotaled $6,410,677. The re-opening sellville, June 12. 1930. $183,660; Hazel Green Bank, Hazel Green, June 30. 1930, $184,054: Elsmere Savings Bank, Erlanger, July 3, 1930. $192,870: Vine Grove State Bank, Vine Grove, $91,464. The banks that have re-opened since November of last year include the Security Bank. Louisville with approximate gross deposit liabilities of $1,996,001. It was able to open for business a few days after November 17. Other banks, with their gross deposit liabilities, that have reopened are: McElwain-McGuiar Bank & Trust Co., Franklin. $373,509: Bank of St. Helens, Shively, $412,824: Peoples Bank, Sulphur, $132,950; Bank of Caneyville, Caneyville, $318,216; Crestwood State Bank. Crestwood, $139,297: Fern Creek Bank, Buechel, $151,279; Farmers Bank, Fulton, $292,638; Bank of Sturgis, Sturgis, $256,463. Two Negro banks, the First Standard Bank and the American Mu- tual Savings Bank. which closed in Louisville November 17. were later consolidated into the Mutual Standard Bank. The bank resulting from the merger closed May 7 of this year and is being liquidated. Liquidating agents have been appointed for the following banks closed since November: Owsley County bank, Boonevill, $100,329; Union Central Bank, Louisville, $503,578; Bankers Trust Company, Louisville, $553,279; Hopkins County Bank, Madisonville, $717,587; Woodbury Deposit Bank, Woodbury, $37,693; Citizens Bank & Trust Co., Middlesboro, $495,977; Webster County bank, Clay, $164,676: Bank of Ludlow, Ludlow, $363,359: Bank of Hardinsburg & Trust Co., Hardinsburg, $523,381 Liquidating agents hav not been appointed for five state banks which have closed since the first of July. These banks are: Citizens Bank, Drakesboro, $81,755; Bank of Barlow, $91,910: Butler Deposit Bank. Butler, $614,388; Bank of Wayland, Wayland, $145,348; Beaver Valley State Bank. Weaksbury, $113,269. Kentucky's Tourist Trade Geoffrey Morgan, acting executive secretary of the Kentucky Progress commission, attributes the increase in gasoline consumption in Kentucky this year to the Progress commission's efforts in advertising the state's tourist attractions. The first six months of this year showed an increase in gasoline taxes of $180,178.03 over the same period last year. "It certainly pays to advertise," said Mr. Morgan, citing these statistics. "Take the figures for Janusry. The tax commission showed gasoline taxes collected in January of this year totaled $620,885.50 as compared with $503,046.73 for January of 1930. That is an enormous difference. The reason for it is this. We had an open winter the first of this year. So the tourists in Florida began flocking home. We had been advertising Kentucky among the tourists and the result was many of these tourists returned northward by way of Kentucky."
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FUNDS AT HAND To Pay Additional Dividend To Louisville Bank Creditors Remaining assets of the National Bank of Kentucky are sufficient to make additional of 13 payment to the This will make total of 80 per cent the will from the of made Paul Keyes, of the hearing before Judge Nat referee in bankruptcy in the proceedings against the Kentucky Wagon facturing Keyes said the additional payment of per cent to be made from the remaining assets does not take account any recovery that might be from Directors and stock the all of whom have in Federal Court The did not say when the be made the The per was made through the First Bank Keyes was questioned by Ernest for attorney Henry operating trustee of the Wagon testimony showed that claims against the tional Bank of of June 30 and that the paid out up to that time
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KENTUCKY BANK ACTION IS TEST Louisville Suit to Determine Directors' Responsibility United Press. WASHINGTON Dec. Bank directors can be compelled to pensate losses to depositors to the of stead the amount of their Pole troller of the told the United Press today Establishing the liability of bank directors for the full amount of their own assets may be one of the evolved to reduce Such law would inflict heavy penalties on violators The government now is conducting case against directors of closed National Bank of KenLouisville, to recover 000 for depositors. deal of this if come private assets other than shares by directors Should the government win its the effects will be far reaching Money deposited would be more secure and bank failures fewer sums money have been collected bank directors, said "when misused their powers and failed to adhere to prescribed by law and advised by
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JEFFERSON NOTES Circuit Judge John Marshall acting on petition for advice filed Paul Keyes. receiver the National Bank Wednesday the settlement the note William for 800 and the 000 note of Hal T. Jefferson In January. 1930 Mr. Keyes sued for payment the the same time filed Jeffersons to enjoin from collecting was set out that the note was cured with 260 shares of stock in the BancoKentucky Company $200,000 note with 9,000 shares the same stock In petitions filed at that time by the Jeffersons it was set out that the notes were executed with the agreement with the bank that as long the BancoKentucky was eral, the and interest be solely from the of the stock pledged and that the plaintiffs were to be under no further
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Order Caldwell To Show Cause For Non-Removal Tenn., vestment Caldwell, former May inbanker, must he th federal should district court show why not removed Louisville, Ky., for trial on eral charges connection with failure of the National Bank Kentucky The order making the provision was part decision handed down by District Judge Gore yesterday. No was set for the Caldwell's conviction for fraudulent breach of trust county crimcourt recently was reversed by the state supreme court.
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U. S. Drops Kentucky Bank Failure Cases LOUISVILLE, KY. The federal government Monday dropped cases arising from failure of the National Bank of Kentucky with dismissal indictments against James B. Brown, former Charles F. Jones, former vice president, and Rogers Caldwell, Nashville. District Attorney J. Sparks said the cases dropped because of lack of proof.