The Manitowoc pilot. [volume] (Manitowoc, Wis.) 1859-1932, 1893-09-28
THE STATE BANK.

i've In the management of the defunct
State Bank are now dead, its affairs are
undergoing very thorough examination.
The examination OF John ". Barnes who
was vice-president and one of the direct
ors of the bank is now in progress, The
purpose OF the prosecution being to show
that he took part in the management OF
the bank and knew its unsound condition.
Mr.. Barnes became a stakeholder of the
bank in 1886, at which time he purchased
$4,000 of Its stock. At this time the
banks capital was SO badly impaired that
it really had no existence. il, indeed, II
had any when the bank was organized.
Mr.. Barnes claims that when he pur-
chased this stock he was hlmself imposed
upon, as he paid for stock which had not
a cents value.
Directly after the failure it was gen.
orally supposed that the bank would pay
nearly 100 cents on the dollar, and that
creditors would suffer manly from the
Inconvenience Of delay, and not through
deprecia ion of their claims. The bank
had suffered no great loss of which the
people knew, and its management was
believed to have been prudent and
economical. J. w. Barnes was made as
signee and expressed himself hopeful
after cursory examination OF the books,
of being able to pay creditors quite a
large percentage. The preparation OF
the detailed statement of assets showed,
however, such discrepancy between the
certificate register and the ledger as to
increase the liabilities Of the bank about
$4,000. The absence OF capital stock
became quite apparent, thus still further
reducing the probability that the divi.
dend which the creditors would receive
would approximate the amount OF their
claims. When the bank was organized
IN 1858 there was large number OF stock
holders apparently, but it appears that
notes we're given for stock and charged
to Bills Receivable by quite number OF
the stockholders. No stock ledger was
kept SO that transfers of stock Is difficult
to trace. The manner in which the alb
sence OF paid up capital was concealed
was explained in the issue of The Pilot
of June 20.
When it became known that the condi-
ton of the bank was otherwise than what
it would be under proper management, a
demand was made for the arrest of its
officers. Two expert accountants, MIR
Meyers of Milwaukee and Mr.. Brent OF
st. Louis we're employed. They have
been at work on the books since the early
part of August. They have made no for.
NAL report but what they found must be
gathered from their testimony IN the e1'
animation now il progress before Justice
Markham.
Almost simultaneous with the arrests
petition was put in circulation among
the creditors asking for the appointment
of a new assignee. The examination ane
matters connected with the petition have
absorbed large share Of local attention
The examination has however resulted
in sitting out the truth from a great
deal of rumor, and though it is not yet
completed the facts as far as they have
developed clearly Indicate that when the
examination closes the history of the
bank will be complete.
On the 26th of December 1891 the Ma
tional Bank of this city published notice
that on that day the stockholders of the
bank had decided to 60 into voluntary
liquidation, and all persons having claims
against the bank were requested to pre-
sent them for payment or renewal. Ac
companylng this was notice stating tina,
! the business would be continued by the
State Bank as a successor OF the Natlona
Bank. The change was affected Jany.
1892, but the capital of the old bank was
non est, and the new bank was organized
on transfer Of the worthless old CAPT
tai. The circumstances preceding this
change and which led to it are among
the most important revelations connect
ed with the banks affairs, except in it,
earlier history when by manipulation the
absence of capital was screened from de
lection.
The bank examiner had, some time
prior to the change, discovered large
quantity of overdue paper sufficient t.
materially impair the capital Of the banl
should it become worthless or depreciate
and that loans were made to individual
in excess of what was allowed by the ma
tional banking laws for a bank with {
capital such as this had. The presiden,
was noLi6ed Of this by the bank comp
troller and directed TO have the overdue
paper renewed with good security and
the loans reduced to the limit required
by law. Also that the examiner estimat
ed that the loss on overdue paper would
amount to S26, 900 and that an assessment
of 20 per cent. of the capital should be
made and that an item OF bad debts
amounting TO 1889 be charged off be.
] lOTc d uINlucuo Oc ocCldIcO, anu buS&6St-
ed that stock ledger and stock certii-
cate book be procured.
To this the president of the bank re-
Piled under date of Oct. %, sending
statement OF directors that at meeting
of that body the officers were instructed
to act in every particular as directed by
the comptroller. The comptroller re-
| piled that notice of assessment would be
better if made by him and receipt of such
notice was acknowledged. On Dec. q,
| the president of the bank notified the
comptroller that assessment of 20 per
cent. was ready but not yet credited.
That past due paper was in suit and was
being pushed as rapidly as the law would
permit, that the item of bad debts was re-