The evening herald. [volume] (Shenandoah, Pa.) 1891-1966, 1891-12-28
WILDCAT BANKING. 9wEz
10 is As Easy to start Bank In Penn.
sylvanta As Grocery.

sylvania As a Grocery.
HARHIsBURo, Dec. 2S.-The failure of
the Tyrone Bank, one Of the 200 or
more private banking institutions doing
business in Pennsylvania uucurbed by
any law, is the fourth concern OF the
kind that has gone under within the
past four months.
1t is as easy to start = bank In Penn
sylvsuis as it is to start grocery. All
that it is necessary to do is to hire .
room aud put up sign that there IS a
bank within, and there you are.
The only law relating TO these banks
is one requiring them TO make an an
nual report to the Auditor General ans
pay to the State tax Of per cent. on
their net earnings which must be de-
olared under oath.
Many of the banks are located In
small towns, rem ots from any national
or regularly incorporated State banks
and are the sole repositories Of the saw
ings Of the communities by which they
are supported To establish them ne
authority from the State is required.
They have no capital stock aud are not
required TO register, make returns to
the State of the amount OF capital in
vested, or furnish statements to any
person of their assets and liabilities.
There are no means Of knowing the
amount Of money these banks hold on
deposit in the aggregate, but eleven OF
them that failed in the course of a few
years past lost for their depositors
ST. 500, 600, and from that it may be In
ferred that the total amount OF eredul-
GUS persona money held by the lot is
very large - certainly not less than
41n mn mn at on,NaaWuattua
innate.
The only department. that has any
surveillance over the wildcat banks is
the Auditor Generals, and, in the abb
senoe Of any restrictive law, that is only
passive.
Besides being required to report their
earnings, the banks must also report
their expenses. Auditor General Niles
quotations from the reports show that q
regular and very comprehensive Item In
all these reports of expenses was 'Ioss
in exchange" and that nearly one-half
of the enterprising bankers perjured
themselves to save tax on their net
earnings OF that these institutions were
in a condition Of bankruptcy.
In THAI report tweRty-nine of the
banks were quoted as returning a net
loss for the fiscal year; forty-four made
affidavit that their income waa less
than $500, and twenty five swore that
they ad made less than 81, 600.
By the returns they made OF interest
paid all showed that they must have
had many thousands Of dollars Of otheS
peoples money in their custody.
One of these banks reported that 1t
had paid u,A5., 522, 900 in in terest for
the year, but the net profits on its bust
ness was only SlO5. 81, making its Sta to
tax $3. 10.
A Togs county banker swore gravely
that his gross earnings and expen ses
tailed to a cent each being 81, 22O. 10.
A York county bank made the bust
ness-like statement that, while its gross
income was only $96, 005, it lost during
the year $l1, 500 by exchange and dis
counting notes, nearly as much as II
paid out in interest on deposits.
BY the sworn statement Of "A Columbi la
county bank, the interest paid on de-
posits during the year lacked only few
dollars of tlSs amount reported on the
gross earnings.
Another of the conscientious private
bankers reported exceptionally good
fortune with its exchange business
having met with no loss at all in that
branch, but, although it only carried
| $6 99S, it required 50, $50 to pay clerks
for The years work.
A Crawford county bank reported
gross earnings of 81, 702 and clerk hir
| 81, 702, which, with incidental expenses
entailed loss of over 1000 on tn
| year "Loss in exchange" reported b.
Clarion county bank exceeded by =
the total yearly income.
1t was left to Butler county bRnl
to cap the climax in reporting it's ex
penses to offset the earnings and saw
the per cent tax. That banks gros
income was 50, 815. 86 1t reported or
binary expenses at $949 and frank
credited itself with the sum of So, 679. 3
lost in oil speculation.
AS showing the utter unreliability o
the reports made, Mr.. Niles referred +
one who in a previous report had re
turned $780, 900 on deposit, and a ne
income of $65. That banker the mex
year reported an increased amount o
deposits, but no income.
The banker had made no report be
cause since his last return he had close
his doors, promising to pay ut som
time 20 cents on the dollar to his dc
ceived depositors