Kansas City daily journal. [volume] (Kansas City, Mo.) 1892-1897, 1896-12-22
NATIONAL BANK OF ILLINOIS FAILS
FOR MILLIONS.
DUE TO BAD MANAGEMENT.
DIRECT CAUSE, A s2,IOO,OOO LOAN on
STREET RAILWAY STOCK.
Omcers scored by Comptroller Ecl<eIs
-DeposItors Likely TO Be Paid
in FuII-FaiIure Dragged
Down Three Private
Banking Firms.

1lllEClS, generally tOHslltltd o1AS Va 49,
strongest financial institutions in the West
closed its doors to-day. as was forecasted
In these dispatches last night, and the fan
ure dragged down three other concerns,
l. s. Dreyer & Co, Wasmansdor1, Heine-
man & co. and the Roseland bank.
The failure of the National Bank of Il
liEois was due 10 the fact that its entire
caTital of s2o1G0Oo, and 100000 over and
above it's surplus Of $4,000, had been loaned
on Calumet Electric stock. and s5Oo,o0O was
loaned to Dreyer & Co, who had spread
their capital out so extensively that they
were unable TO concentrate It in time TO
save themselves.
The other failures were due to the lock-
Ing up of assets held by the National
Bank Of Illinois and which were not avail
able when that institution closed its doors.
No further trouble is expected, as the
Clearing House Association has agreed to
pay rs per cent Of the deposits In the Ma
tional Bank of Iliinoiss and al the meet
ing OF the clearing hoese committee. this
afternoon. all OF the banks reported them
selves in good condition. and none of them
asked for the aid that would 5havs been
fl eely extended had 1t been asked.
Il is probable that all of the banks will
resume. with the exception of the National
Bank of Illinois, and all depositors will be
paid In full.
The three private banks which failed as
the result of the National Bank of Illinois
failure were mortgage loan banks and saw
ings societies and their, failures are not
expected to affect any business houses. The
assets Of l.. S. Dreyer & Co. are given at
81. 100000. with liabilities of Sl,2O0,0O0. The
figures for Wasmansdorn & Heinemann
are, approximately: Assets, $650.0OO; liabili-
ties 100000. The Security Title and Trust
Company was appointed receiver OF both
firms. The assets of the Roseland bank are
placed at $4,000 and the deposits at $4,000.
John H. Nichols has been appointed Eeceiv-
er.
The last statement of the National Bank
of Illinois showed. Deposits. sl2. 175, 7s6; cap
ital. 81, 100000; loans s9199,G42; cash re-
sources. 1888 29O; total resources, A4,5OO,-
900.
The National Bank of Illinois was or
ganized in 1871 with capital stock of $780,
coo. which was subsequently increased to
s1,000,O00. 1t has been regarded as one of
the soundest financial institutions in the
city.
. The suspension had but little effect either
in the wheat pit or on the Stock exchange,
Wheat. indeed, showed strength after the
d
and the stock market was ddII and only
fractionally lower.
Neither the bank examiner nor any off,
Ger of the bank will make any statement
at present. -
Alta meeting of the clearing house banks.
held after the close of business this after
noon, all the banks were represented and
upon recommendation of the clearing house
committee, who had made thorough exam
ination or the affairs of the National Bank
OF Illinois. the clearing house banks were
advised TO advance 70 per cent on all claims
against the National Bank of Illinois which
shall have been certified to by the receiver
AS being on deposit in that bank The
general sentiment. Of opinion was that the
depostors would receive their money in
full. and the hank now has on hand, in
cash means. nearly 40 per cent of their en-
tire liabilities. No banks requested any
assistance from the clearing house, and
the statements published to-day on the
call of the comptroller of the currency at
the close of business on the 18th inst. show
very strong reserves. There has been very
little excitement to-day IN banking circles
in this city.
Washington, Dec. 21.-ComptrolIer Eckels
to-day gave out statement concerning the
failure of the National Bank of Illinois,
which, in part, is as follows: II am ad-
iVised by Bank Examiner McKeon that the
National Bank of Illinois has closed for
Business and is now in the hands of the
comptroller of the currency In order to
prevent any trouble in proving claims
against the bank, and TO obtain for credit
ors at an. early date the largest part of
the amount due 10 them. ] have appointed
Mr.. McKeon temporary receiver with tele-
graphic instructions to publish notice of
proof OF claims at once.
The failure OF the bank Is due to injuri-
Gus. reckless and imprudent methods fol-
hN- he officers Rb l,Ny
the directors, though their attention had
been dividually called TO the same and
over their individual signature they had
promised to remedy the weakness in the
banks condition. The largest cause of the
failure IS the banks holdings of Calumet
Electric street railway stock. the full
amount of which cannot now he stated for
1t il discovered that a part of such hold
inEs were not made TO appear OH the books
but concealed in another account This and
other large and doubtful loans had been
called, by special letter. to the Intention
Of the officers and directors and specinc
Improvement promised n year since
D. In June last on the surface there had
been an improvement made but when
Banl, Examiner McKeon, on November 30
examined the bank he found that the books
showed that the loan to the Calumet Flee
tric Company and other similar loans had
been increased and the promises of officers
aud directors had not been carried ont
Upon this report l prepared a letter ad-
dressed TO the president and directors.
which 7 sent TO the examiner on December
"a tc be read TO them at a meeting called
FOR the purpose. The letter reviewed at
leTcth the condition of the bank and the
failure bt the promises mude to be fulfilled
j. emphasizes the position taken by the
office that "a decided and radical change
had TO bc at once made and notified the
directors with a full and complete ANALYSIS
Nf1s ha uFF NJ no
in the bank demanding attention
''On Saturday I received notice from the
examiners that the rumors of the bank S
condition had reached the clearing house
committee and they desired TO have his re-
port read 10 them. I ordered it to be done
hut suggested that before doing 30. he see
the officers Of the National Bank of Illinois
and obtain their acquiescence. This was
obtained and the vice president of the
bank was present with the clearing house
committee. The condition revealed led 10
the resolution to suspend il from the clear
ing house. Before action was taken how
ever, tho examiner teiegraphed me and in
reply l suggested that i'll view of the large
interests involved great care should be had
and even at the risk OF taking some
chances funds might be providedsif it was
deemed safe TO do so, 10 afford voluntary
liquidation. The assets OF the bank were
eNamiRed and its management as shown
by tho examiner considered and as a con-
clusiou II was decided that the bank should
be suspended from the clearing house and
funds not furnished Tor voluntary liquida.
ton Three OF the bank ) directors were
present at these meetings.
In view OF everything I was convinced
that the clearing house committee acted
judiciously. The management on the part
OF the officers and directors has been. to
state IL mildly RroSsIy ungligaD, Tho 1io