The morning call. [volume] (San Francisco [Calif.]) 1878-1895, 1893-08-04


clearly showing that the Pacific Bank was
insolvent, were as follows:
Report Of Pacific Bank sent to tho Attorney.
General december !, 1892:
Due depositors and general ac-
counts. ..-......$l.21OoSo o.
Due on certificates OF deposit. 6s9as2 1a
Bearing interest. 4l9UOO W
Total liabilities exclusive Of atocx. ~
noldrr oSSl,l5S II
Total assets 4,s04,574 So
Total good assets. 2,so2,33s ii
Showing excess of assets.......... 1919 ~
1t would appear from the above that
nearly the entire capital and surplus OF
S1S00.000 are absorbed with Objectionable
assets. In making the above calculation
the total real estate owned by the bank IS
estimated at $500, 900, and yet it would be
difficult to dispose of it at that amount.
while If used as collateral on which to
raise funds probably not over $4,000
could be realized.
In bills receivable there are $500, 900 of
bank notes of the Riverside Banking Com
pany. which notes are said to be in the
East in the hands OF the cashier. who Is
endeayoring to negotiate them. The Pa
cific Bank has only copies of them.
Of overdrafts the amounts eliminated are
such as are in reality investments which
cannot be converted. There is $500. 900
and the reason for having accounts witt,
six different banks in one city is not ap-
Parent. unless it be the necessity for bor-
rowing. The total amount due banks IS
abnormal and indicated the necessity for
funds incident to bad conditions.
By the above figures it will be seen for
the purpose of arriving at the true value
OF the assets there has been deducted
81. 800. $50 II from sthe total assets a pre-
sented by the bank. and this deduction is
made mainly upon the fact that the bank
had used great efforts for year past to
dispose of these assets, and had not sue
ceeded in converting any of them, but, on
the contrary. had been obliged to increase
several of these Objectionable accounts.
The following amounts in various forms
represent the investment of the Pacific
Bank in the following corporations: Los
Angeles Consolidated Railroad. $685.
$50 90; Mohawk Canal. S196.137 %: john
Brown Colony, S2l6. 400; California Maya
zine, SAB: 240. Assuming, however, that
these accounts are good. but unavailable.
and they may be considered on invest
in time The question arises whether the
bank is safe whose entire capital is invested
in collateral? 1t may be said that a
banks surplus may be entirely lost with
no harm to any one except the stock
holders. but in this case not only the sur
plus but also the entire capital is invested
in unavailable real estate, stocks, bonds
and lands.
1t is further shown that the natural
course in banking business is here per-
verted and runs in false channels. from
the fact that this bank is a large borrower.
There Is now due banks S1,OOO,00O, and
should these banks demand settlement on
the larger amounts. how could the Pacific
Bank meet such demands? Having moth
off.,r Hot NIB toh ot,c
would De impossible to raise funds, and
the result would be suspicion. The man.
agement of the bank for the last year has
been bad, and the carrying OF large
amounts in bills receivable and overdrafts,
accounts which did not belong there. but
which should be charged to investment. is
evidence of an effort to hide or disguise
the undesirable position.
None of the instructions sent TO this
bank December II. 1891. have been COM
piled WITH and it appears that the bank is
in no better condition than it was year
ago. and notwith standing the promises of
K. II. Mcdonald. president of the bank,
that all the bad features would be elm
mated. nothing has been accomplished.
appears to be greater than it was al the
last examination, December 5. 1891
The largest investments Of the bank are
in enterprises which may undoubtedly
prove Of great value, but are at present
worthless as banking assets, and while
waiting for their realization the bank may
be irrepafably injured. notwithstanding
the efforts of TINS board and positive
instructions to improve the the condition
of the bank 1t appears that no change
has been made in the large and important
Objectionable Investments anu accounts.
but that some Of the larger loans which
are evidently good have been called in.
and while the totals are less now than they
were one year ago, the weakest elements
are still there, and greater than they were
before. 1t was understood that If these
items could not be disposed of that they
would be EXCHANGED for valuable assets
from the private fortune Of r. b. Mac
Donald. but this ha. not been done, and
The proportion of unavailable assets to the
total assets is greater to-day than one year
since, consequently it is evident that no
improvement has taken place. 1t APP
been made by the bank managers
to dispose of Objectionable features. but
this has been unsuccessful, all Of which
proves that these assets are unavaila BILE,
and therefore should be eliminated from
the bank, and probably this can only be
accomplished by the directors of this bank
replacing all bad investments with other
and valuable assets, such as have a cur
rent value.
The conclusions are that this bank is in
an unsafe condition, as 1t is evident that
the Pacific has refused or neglected tn COM
ply with the instructions of this board
AN act creating Board of Bank Commits.
sionars.) Yours respectfully,
BOARD OF BANK COMMISSIONERS.