Farmers State Bank - Skyberg, MN

Bank Information

Episode Type: Suspension → Closure
Bank Type: state
Start Date: February 19, 1919
Location: Skyberg, Minnesota (44.211, -92.932)

Metadata

Model: gpt-5-mini
Short Digest: 02cd3733

Response Measures

None

Description

Article (Madison Daily Leader, 1919-02-19) lists the State Bank of Augusta among 13 small state banks closed by order of the state superintendent of banks because they were loaded with worthless paper sold by a mortgage securities company. Closure was by state action; article does not describe a depositor run or reopening (though it notes directors might raise funds to permit reopening). Classified as suspension_closure because closure was by government action and no reopening is documented in the provided text.

Events (1)

1. February 19, 1919 Suspension

Cause: Government Action
Cause Details: Closed by order of F. E. Pearson, state superintendent of banks, after banks were found to have purchased large amounts of worthless or doubtful commercial paper from a mortgage securities company controlled by promoters.
Newspaper Excerpt: Banks closed by state action are: ... State Bank of Augusta, ...
Source: newspapers

Newspaper Articles (1)

1. February 19, 1919 The Madison Daily Leader Madison, SD

Article from The Madison Daily Leader, February 19, 1919

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Article Text

TWO HELD IN INQUIRY Minneapolis Men Arrested Following Closing of 13 State Banks. Accused of Loading Institutions Which They Controlled With $500,000 In Worthless Paper. Minneapolis, Feb. 19.-William H. Schafer, Minneapolis promotor, and Charles F. Wyant, president of the Mortgage Securities company, were arrested and locked up in the city jail, following the closing of a chain of 13 small state banks by order of F. E. Pearson, state superintendent of banks. County Attorney William M. Nash said both men would be charged with first degree grand larceny, growing out of the alleged "loading" of the closed banks with doubtful or worthless paper said to aggregate from $500,000 to $700,000. Banks closed by state action are: St. Louis Park State bank, Waconia State bank, State Bank of New Prairie, State Bank of Chanhasset, Peoples State bank of St. Bonifacius, State Bank of Augusta, Merchants and Miners State bank of Tower, Farmers State bank of Skyberg, Marine Mills State bank, Farmers State bank of Cologne, Farmers State bank of Frontenac, Hamel State bank, Farmers State bank of Long Siding. It is possible that depositors will lose nothing through the closing, the superintendent said. In the cases of many of the suspended banks, he said, it is possible the directors and stock. holders may raise sufficient funds to take up the doubtful paper and permit early reopening of the institutions. Superintendent Pearson said that the mortgage company was controlled by Schafer, and that each of the closed banks, within the last 90 days, had purchased from the company much commercial paper of little or no value. "Each of the banks," said Mr. Pear son's statement, "recently purchased through the Mortgage Security company a large amount of paper made by persons and corporations of little or no financial responsibility, and through these transactions the capital of each bank became impaired to such an extent as to make it necessary to close it.