Farmers & Merchants Bank (Provo, UT)

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F. & M. BANK FAILS TO OPEN

Provo Institution Takes Advantage Of 30-Day Suspension Rule.

The Farmers and Merchants bank failed to open its doors Tuesday morning. A notice was placed on the door to the effect that the directors, deeming it in the interest of the depositors, had turned the affairs of the institution over to the state banking department for a 30-day period.

Following a meeting of the board of directors at an early hour this morning, the following statement was given out:

"Due to extraordinary heavy withdrawals in the past few days, the directors of the Farmers and Merchants bank have deemed it advisable to take advantage of the 30-day suspension period provided by the banking laws of Utah and have turned the affairs of the institution over to the state banking department for the purpose of conserving the bank's assets and to prevent further shrinkage of deposits."

Joseph M. Leggat of the state banking department is the receiver in charge during the suspension period. He assumed control of the business of the bank this morning.

The bank is one of the oldest in Provo and has always been considered as one of the strong banks of the community. False and unfounded rumors circulated several weeks ago apparently started a run which reached disastrous proportions. This led the directors to ask the state banking department to step in in order to protect the interests of the depositors.

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GIRL IS MURDERED BY CONVICT

NEWS WIRES

By UNITED PRESS

WOULD TRACE RUMORS

SALT LAKE CITY, Jan. 13 (U.P.)—An indignant state bank commissioner, W. H. Hadlock, was today attempting to trace the source of rumors which, he claimed, compelled the closure yesterday of the Farmers and Merchants bank of Provo.

The state official characterized the Provo bank as a "splendid financial institution" and added that malicious and unfounded reports of its un-solvency were the sole cause of its downfall.

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WOULD TRACE RUMORS

SALT LAKE CITY, Jan. 13 (U.P.)—An indignant state bank commissioner, W. H. Hadlock, was today attempting to trace the source of rumors which, he claimed, compelled the closure yesterday of the Farmers and Merchants bank of Provo.

The state official characterized the Provo bank as a "splendid financial institution" and added that malicious and unfounded reports of its unsolvecy were the sole cause of its downfall.

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Provo Building and Loan Not Affected

"The Provo Building and Loan society happens to occupy part of the premises owned by the Farmers and Merchants bank.

"The suspension of the latter institution in no manner affects the solvency of the Provo Building and Loan society, and it will continue to do business in the same place and under the same circumstances as heretofore." (Signed) JOSEPH N. LEGGAT, Examiner in charge of Farmers and Merchants Bank.

Customers of the bank who are holders of safety deposit boxes will have access to them in the customary way in two or three days, according to Mr. Leggat.

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FARMERS & MERCHANTS BANK CLOSED

Receiver Appointed

The people of Wasatch were not only surprised but grieved, when word was received here Tuesday that the Farmers and Merchants Bank of Provo had failed to open its doors that morning, taking advantage of the provision in the banking laws of Utah of suspending operations for thirty days. We hope will be for no longer than thirty days, for many of our people have had very agreeable and profitable dealings with the officials of that institution and some are quite heavy loosers if the bank does not a gain open up for business. We do not believe that the closing was brought about by any act of dishonesty on the part of the operators, for we have known them personally for years as men of high honor. The act of closing seems to be the result of unfounded gossip, causing people to lose confidence, which is so easy to do in this time of depression The result was run on the bank, and though there was the usual amount of cash on hand with which to do business, there was not enough to stem the tide and the doors had to be closed.

There should be lesson in this for us all. The closing of an institution of business in community leaves a mark that is mighty hard to erase, and means loss to everybody There is still means enough with which to carry on business successfully, but what we all need is more courage and a greater degree of confidence in others. It is true that we need more money in circulation, and if every person will pay his honest debts just as far as he possibly can, there will soon be enough for all and our business interests will thrive and every individual will be the better off and all will be the happier. In the meantime we hope the Farm ers and Merchants Bank will resume business in the very near future.

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IMPORTANT MEETING HELD

The people of Provo and vicinity been greatly concerned because of the voluntary closing of the Farm ers and Merchants Bank some two weeks ago, but they have not been asleep on the matter in the meantime committee of eleven got together shortly after the bank closed and found from the State Bank Examiner that the institution was in excellent condition at the time of the closing and that the bank had closed by order of its Board of Directors, as means of safeguarding the interests of other depositors against the selfishness those who caused the run on the bank. and was not closed by order of the State officials The then made an examination of securities held by the bank and found them most excellent condition, with siderable cash and ment bonds on hand They found some "frozen assetts" of course, but they are good for normal So the committee got into communication with Senator Reed Smoot, relative help from the forming 000.00 financing corporation, and telegraphed back that help would forthcoming and that he would be pleased to present application from the Bank, in person, to the committee in charge of the Government Corpora

The Provo committee then sent out letters to quite number of the 4800 depositors at the Bank, calling meet ing which was held in the Provo High School auditorium Wednesday night. At this meeting, facts above stated were presented to the depositors. Con ditions relative to other banks which have closed, and bad effects upon all communities that have had the experience of Bank closing, were cited. was shown by reference to closed banks at Moroni, Mt. Pleasant, Rich field. Lehi, American Fork, Ogden and elsewhere that If the Farmers and Merchants Bank remains closed, the depositors can hope for not more than one third returns on their money de posited in the bank, because of the and the length of time heavy expense takes to liquidate the holdings of institution, and the financial such an sacrifices which have to be made to cash in on paper. The depositors were asked to give voice to their sentiments and to state their wishes, after full explanation had been made on both the negative and affirmative of the matter. mo tion was made and unanimously pass ed, with loud applause, giving those who had acted as officials of the bank vote of confidence. Another motion passed unanimously that feisable plan be submitted and the bank reopened with the least possible delay When asked if the same officials would operate under the proposed re organization, chairman Hedquist said that all past officials had been con sulted that to man, they had and agreed to leave that matter wholly in the hands of the depositors, but fur that of them had ther said every one agreed to pay 100% assessment on help get the their stock, need be, to institution going again. So, plan substantially as follows was submitted and accepted without dissenting vote:- Those having say ings deposits to sign agreements to leave their money with the bank at 4% interest. payable semiannually principal to be withdrawn for but no when one third may be one two before the second third years available and three years before final withdrawal may be made. Those having checking accounts al to leave their money with the bank 75% to remain with the bank 4%, for one year from the re-opening of the bank, and the other 25% available Five per cent during the as follows: 10% the second month first month: the third month. However and 10% of the plan that depositors is part If need be, on their certimay of by paying regular ficates to the bank. interest that considerable It was explained of now on deposit must amount money agreements at once and be signed by copies of such agreements were pass and we are safe in ed to all present there will be sufficient that with the re-opensigned up to proceed future. In fact. most ing in the near passed to those the agreements signed before the people present were the The committee in charge was in creased to James Ritchie of Charleston being chosen as representative from Wasatch Country. If the plan succeeds, as believe will, we think the Farmers and Merchants Bank will be one of the strongest institutions of its kind in Southern Utah. This matter of reopening however, very expensive job. much better to keep our banks gothan is to re-open them when ing closed.

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Depositors In Utah Banks to Get U. S. Fund

Ogden State, Farmers and Merchants of Provo and Deseret Savings of Salt Lake to Receive Loans

ARRANGEMENTS have been made with the Reconstruction Finance Corporation whereby funds will be available to depositors of the Ogden State bank, the Farmers and Merchants Bank of Provo, the Deseret Savings bank of Salt Lake and other closed Utah banks up to 30 per cent of the amount of deposits.

This was the statement issued today by E. O. Howard, chairman, and M. S. Eccles, O. W. Adams, and J. E. Cosgriff, members of the Reconstruction Finance Corporation's local advisory committee, following announcement that the Deseret Savings bank had been taken over by the state banking department.

The committee indicated that this relief to depositors will be forthcoming just as soon as the closed institutions can file the necessary applications and comply with the legal requirements.

DESERET NAT. BANK GOES TO ECCLES GROUP

Deseret Savings, Another Distinct Bank, Is Suspended

LEGAL PHASES

The Utah attorney general's office and counsel for the advisory committee are looking into the legal phases of the situation and it appears that legal authority to borrow money from the Reconstruction Finance corporation must be obtained either by a special session of the legislature or through a test case to be acted upon speedily by the supreme court.

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BANKS MAY FIND AID FROM U. S.

Friendly Suit To Test Power of Receivers To Borrow.

A move to obtain federal credit relief for the Farmers and Merchants bank and other closed state banks in Utah, was inaugurated Friday when a case to test the power of the receivers to borrow was filed in Salt Lake.

The case in question is a petition of Walter H. Hadlock, Utah state bank commissioner, for authority to borrow $150,000 from the $2,000,000,000 Reconstruction Finance corporation on the assets of the closed Sugar Banking company.

Would Aid Provo Bank—

Joseph N. Leggat, receiver of the Farmers and Merchants bank as well as the Sugar bank, said Saturday that the petition was filed to satisfy the officials of the federal finance corporation who have questioned the right of state bank receivers to borrow.

"There are two ways in which the question can be determined," said Mr. Leggat. "One is by an act of the legislature, and the other, which is the step we have taken, places the issue before the supreme court of the state."

Mr. Leggat indicated that if the petition was granted, the assets of the Farmers and Merchants bank would be pledged for a loan. Congress set aside $200,000,000 of the total reconstruction issue for the benefit of closed national and state banks.

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BANKS MAY FIND AID FROM U.S.

Friendly Suit To Test Power of Receivers To Borrow.

A move to obtain federal credit relief for the Farmers and Merchants bank and other closed state banks in Utah, was inaugurated Friday when a case to test the power of the receivers to borrow was filed in Salt Lake. The case in question is n. petition of Walter H. Hadlock, Utah state bank commissioner. for authority to borrow $150.00 from the $2,000,000,000 Reconstruction Finance corporation on the assets of the closed Sugar Banking company Would Aid Provo BankJoseph N. Leggat, receiver of the Farmers and Merchants bank as well as the Sugar bank, said Saturday that the petition was filed satisfy the officials of the federal finance corporation who have questioned the right of state bank receivers to borrow. "There are two ways in which the question can be determined. said Mr. Leggat. "One is by an act of the legislature, and the other. which is the step we have taken, places the issue before the supreme court of the state." Mr. Leggat indicated that if the petition was granted. the assets or the Farmers and Merchants bank would be pledged for a loan Congress set aside $200,000,000 of the total reconstruction issue for the benefit of closed national and state banks

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COURT REFUSES TO OUST PROVO BANK RECEIVER

Judge Upholds Demurrer Attacking Jurisdiction

The effort to oust Joseph N. Leggett as examiner charge of the closed Farmers and Merchants bank in Provo failed Friday when Judge sustained the counsel for H. state bank tion, throwing the case court. informal meeting of representatives both sides of the controversy following the court session, the depositors committee July Mr. Hadlock, which out reopening plans. He made condition. that the positors raise additional capital and make more secure loans the Taylor and Dixon Hadlock promised the operation of state that open bank and not merely pledges and scriptions. He the depositors July to reopen the bank. Assessment notices be mailed that all stockholders can get their money in George Ballif, attorney for Leggett and Mr. Hadlock assisted today's hearing by HenSalt Lake attorneys employed banking Moyle based his argument Friday Riches supreme court that the court has pointing an of closed The counsel for the petitioners, Alex countered the argument that court did have "otherwise the bank comwould ezar and subHadlock denied statement said have been Thursday by Judge Morgan, that Governor Dern ordered Had to remove Leggett. He said he never opposed any order givby who him. He spoke very highof Leggett's ability said that any proof could be shown him he would move the

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The Barometer of Business

(By United Press.) New Machine Metals, reported the ter ended June 30 profit of against loss in the second quarter of 1931. Ohio Republic Steel corporation resumed operations at four sheet mills plant, recalling about 100 to with additional ployes, Middleton Silk start with 100 more employes, Toledo Overland ments for the first showed gain per the month 46.6 per over the first half of May 20 cent increase business volume June, was reported by Norge Warner For the first six months was cent the 12 months of 1931 Salt Lake City-Two Utah finanthe Fork State Bank day after being closed since Jan A third larger bank the Farmers Merchants bank Provo, be reopened within week or

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Court Hearing Held For Bank Receiver

PROVO, Aug 10.-Hearing on petition for an order the report and account of Walter H. Hadlock, state bank covering the liquidation of the Farmers and Merchants bank since its closing. January 12, was held in the district court ednesday The was filed Tuesday by Ballif, attorney, in behalf Hadlock and examiner since June Malla, Prior to that time N. Leggat examiner. The of liquidation up August Part of this amount, or consists of losses on bonds and real estate and the by the exand their staff. According to the petition, a plan of reapening has been approved by the examiner, an of which will be filed soon for the court's

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JUDGE REFUSES Hearing Ordered On Bank Proposal TO OKEH PAY OF Transfer of Assets to BANK RECEIVER Holding Company

Deputy Examiners Cannot Draw More Than Chief Says Court

PROVO, Aug. 16-Declaring that he was opposed to deputy examinera of closed banks receiving greater salary than the chief, the state banking Judge A. Watkins, Monday night refusto approve the salary of Joseph N. Leggat, former deputy examiner the Farmers and Merchants bank at $250 per month. Testimony had previously been introduced at the hearing to show that Mr. Leggat as examiner of three banks was receiving an aggre. gate salary of $500 per month. The other banks were the State Bank of Payson and the Sugarhouse bank of Salt Lake In addition to the excessive salary, Judge Watkins also refused approve an expense claim for $150 Mr. Leggat's dated January 30, 14 days after the bank closed. He lowed instead $5 per day for days providing vouchers were filed All other expenses incident to ex amination were by the court but Judge Watkins refused to dis. charge the state banking department until showing had been made by vouchers that the der of the court with respect to the questioned amounts be produced. The court approved the statement submited by George S. Ballif, attorney for the examiner, tainer of $500 and other expenses based on the state department's lowance of $35 per day in court and $20 per day white engaged in office work. Since all plans for the reopening of the bank had been set for Tuesday morning, the court indicated his willingness to turn the assets over to the bank's stockholders, declaring it solvent institution. but withheld discharge of the bank commissioner until later date. The petition for the reopening of the bank approved by the court provides that the depositors will receive 100 per cent of their deposits: that 90 per cent of the savings counts have been deferred, one third to be payble at the end of the first year, two thirds the end of the second year and the entire amount at the end of the third year from Checking accounts have also been deferred. 75 per cent the amount for one year: the remaining 25 per cent to be payable as follows per cent 30 days: 10 per cent 60 days and 10 per cent 90 days after reopening. Savings accounts draw four per cent interest from the date reopening is also provided that depreciatassets in loans, discounts stocks and securities amounting to $76, 178.66 be placed in trust fund to be administered by three trustees. Alex Hedquist, president of the bank L J. Durrant and Elmer Jacobsen. The proceeds are to be returned to the new stockholders as fast as liquidated. reserve account for undesirable assets is set up of $55,012.34. making total of $131,191.

Sought

A hearing Aug. 25. is ordered by Judge (iscar W. McConkie of the Third district court, on a proposal to transfer assets of the Jordan Valley bank from the state banking department to the Jordan Valley Holding company. The court was informed that 95 per cent of the depositors are ready to take stock in the hold. ing company for their deposits, and of $107,296.67 in claims the holders of $102,680.51 are behind the movement. Whether the plan will result ir opening the bank, liquidation. or consolidation with the bank at Midvale, was not stated. The court was informed that the depositors will be given preferred stock representing first lien on all assets and the stockholders will get common stock in the holding

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Efforts have been made by the state banking department to effect a consolidation since last Saturday, but earlier conferences failed to produce agreements on the terms. The exact conditions to be carried out in the merger could not be divulged by the state banking commissioner. It was generally supposed, however, that the plans included provisions for a certain amount of new capital to replace inferior assets in the bank.

A similar consolidation was effected in Springville, in which the Springville Banking company took over the assets and business of the Mendenhall Banking company. All other banks in the county opened as usual.

The nine Salt Lake banks which reopened for normal business Tuesday reported at the close of the day total deposits of $6,568,498.24, against withdrawals of $2,577,707.39 or a net gain in deposits over withdrawals of $3,990,790.85.

The three Ogden banks reported totals for the day as follows: Deposits, $1,130,891; withdrawals, $400,479; or a net gain in deposits over withdrawals of $730,412.

Every bank in both cities reported deposits had greatly exceeded withdrawals.

Licenses for the 10 federal reserve member banks of the state, to resume business, including the Farmers and Merchants bank and First Security bank of Provo, were received directly by them shortly before opening today, from Secretary of Treasury Woodin, through the Federal Reserve bank at San Francisco.

The same was true of the national banks located in 11 Utah towns.

Licenses to 34 out of the 38 state banks were telegraphed by John A. Malia, state bank commissioner, late Tuesday night, as follows:

"This is your license to reopen Wednesday, March 15, 1933, without restriction, except as to payment of gold and gold certificates. Savings withdrawals are subject to pass book contract, and officers of your bank are held responsible for withdrawal of currency for hoarding purposes in accord with executive order of the president. This license may be canceled at any time."

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Licenses for the 10 federal reserve member banks of the state, to resume business, including the Farmers and Merchants bank and First Security bank of Provo, were received directly by them shortly before opening today, from Secretary of Treasury Woodin, through the Federal Reserve bank at San Francisco.

The same was true of the national banks located in 11 Utah towns. Licenses to 34 out of the 38 state banks were telegraphed by John A. Malia, state bank commissioner, late Tuesday night, as follows:

"This is your license to reopen Wednesday, March 15, 1933, without restriction, except as to payment of gold and gold certificates. Savings withdrawals are subject to pass book contract, and officers of your bank are held responsible for withdrawal of currency for hoarding purposes in accord with executive order of the president. This license may be canceled at any time."