Vilas County news. [volume] (Eagle River, Vilas County, Wis.) 1896-1927, 1897-11-29
Madison, Nov. %.


Nov. % to State Treasurer S. A. Pc
terson explaining the z ethods OF
banking employed in the Edgerton
bank and showing the misapprehen-
sion OF the public in regard to his
duties and their performance. The
report is as follows:
In connection with the failure OF
the Bank OF Edgerton, a portion Of the
state press has endeavored.. inferen-
TALLY at least, to lay some portion OF
the blame upon me in my official ca
pacity as state bank examiner. Be-
lieving that scuh criticism is Without
foundation, had intended to let my
official report, to be. made the second
Tuesday in December. next, state. the
facts in the regular course Of business,
but there seems to be such a misap-
pFehensien of the facts and such a
misconception OF the duties Of the
bank examiner that deem it proper
TO submit this statement at this time
end leave it to your judgment as to the
publicity which should be given the
same.
The facts are simply these: The
Bank OF EdgertOn was founded some II
years ago, and until 1t was closed Oct.
Ia and hao apparently done prosper
GUS business. 1t was the only bank in
Edgerton and the people OF that local
ity had unbounded confidence in the
bank and it's officers. About a dozen
years ago it seems that systematic
course of embezzling money from the
bank and swindling its depositOrs and
outsiders as well, in several most in
genious ways, was entered upon. one
OF these was by the over-issue Of GER
titicateS OF stock OF the bank, which
certificates were employed as the
wherewithal to false money by put
ting tlem up as collateral security
either with individuals or BANKS. Up
on the face of the reports and in the
stockholders meetings no trace of this
fraudulent procedure was discoverable.
The excess Of the certificates, which
amounted to many thousands of DOL
lars, was in the form of a duplication
of the stock, issued either to the
cashier or to members of the family Of
the former president of the bank. One
bank alone recently was found by me
to have $4,000 of those certificates,
and suspicion could not even attach to
this fraud so long as care was exer-
~clsed by it's perpetrators in their oper-
aItions. 1t constitutes a clear offense
under section 4436 of our statutes and
is punishable by a long term in the
pen teItUlary.
Another means of obtaining money
commonly employed was to receive
call deposits which were ct once mis-
appropriated aud never placed in the
bank,-of these, entries were some
times made upon pass books Of depos-
ltors; with some, not even this was
done, and no entry OF any kind was
permitted to appear on the books.
In this way many thousands of dol
Lars OF the money Of the patrons Of
the bank was stolen without leaving
on the books any evidence Of the en-
bezzlement, and no examination Of the
bank, whether by the examiner Or the
directors, could reveal the commission
Of these acts. The offender was secure
SO long as he retained in the bank
sufficient money to meet checks of de-
positors when presented.
"A third custom was to receive
money in exchange for certificates of
deposit, appropriate the money and
make no entry in the books of the
bank OF the issue OF the certificates, or,
if any entry was made, to make it for
an amount much smaller than the sum
named in the certificate; or when issue
was made of a certificate to depos-
itor to issue another of like number
end enter but one of the certificates
up the banks books. By the issue OF
these unentere6 or falsely entered GER
tificates of deposit the bulk OF the mis-
appropriation OF moneys was accomp-
lished. 1t was shrewd method, easily
concealed and insuring the maximum
of safety-being time certificates the
date of their prospective presentation
for payment could be anticipated with
reasonable certainty, especially as the
offender encouraged such depOSitOrS to
hold them until maturity and for re-
newal by paying them secretly very
high rates of interest. A depositor for
large amount would be privately in
formed that as special favor the bank
would pay him high rate of interest
upon his certificate, and that in MAX
ing this rate with him the bank trust
ed to his discretion and secrecy, and
instances are now discovered, where
patrons Of this bank have maintained
such deposits for a long period of
years, receiving thereon a seven per
cent. rate. The result of all
THIS was that the citizens
of Edgerton and vicinity
were unknown to each other, carrying
in their pockets certificates of deposit
to the aggregate of $4,000 with
no trace upon the books of the bank
of anything approximating such an
amount. In other words the cashier