The record-union., 1899-02-04
SAN JOSE BANK FAILURE.
THE MORE 1T Is INVESTIGATED
THE WORSE IT LOOKS.
Directors Warned Last December
That They Were Doing
Unsafe Banking.

Unsafe Banking.
| SAN JOSE. Feb. 3-There have been
no developments in the bank failure SO
far to-day Interest is centered in a
meeting of the State Commissioners
which was scheduled to take place in
San Francisco to-day. Depositors ex-
press grave apprehension of serious
difficulties and long delays in getting
| their money.
The statement heretofore given out
that the bank had paid Mrs. Myra 3.
Wright $4,000 on the 100000 which
she, according to the deed, had paid for
the bank building, is not correct. A
Director of the institution is author
| ity for the statement that not a dol
lar has been paid her. 1t is said that the
story grew out of an altogether differ
ent affair, and one which pinches on
another foot The Wright brothers
have been interested in retaining some
land near Stockton. They have spent
large sums of money in the work, and
| it is stated they are indebted to the
| bank for $4,000 which they secured
| from it for this work
Many small depositors are seriously
hurt by the failure as they had their
all there. The small shareholders are
also uneasy An instance is given of a
widow who holds $4,000 of the stock.
This is her entire fortune. She owns
little home. Now she says she will
! be forced to sacrifice her home if she
pays the assessment which is expected.
Numerous working girls have their
savings there. One, a printer, has
S43O on deposit, the earnings of her life.
A serious situation arises when it is
known that deposits were received
right along the day before the bank
ceased to pay. This is causing much
unfavorable comment and the state
ment is still circulated about the
streets that there will be criminal pro-
| ceedings. The more the whole affair
is investigated, the worse it looks for
the bank.
THE DIRECTORS WARNED.
SAN JOSE, Feb. 3.-The following
letter was sent to the Directors Of the
Union Savings Bank in this city in De-
cember last. by the Bank Commission
ers:
San Francisco (Cal), Dec. 8, 1893.
ITO the officers and Directors of the
Union Savings Bank, San Jose, CAL
Gentlemen: The examination recently
made by the commission of your bank
presents a condition of the banks bus
mess and its management which does
not meet the approval of this board.
I'VE find, upon examination, that the
bank has resources of 81, ISL, 1861 and
deposits, including amount due banks,
in the sum of $794, 400. Is, and that you
have as a cash reserve on hand in bank
the sum of $1O,575.O9 and due from
banks the sum of $40, 4S3 %, making a.
total of SOL O5S.37 This sum is only
fraction over per cent of your de-
posit liability. In a bank of the char
| acter and Importance Of the Union
Savings Bank. doing the business which
it does, you should under no circum-
stances let it's reserve fall below 20 per
cent. in cash of the depositors' liability
THE sum now held by you is by this
commission, considered far below the
limit, and may cause serious results
1t is. in fact unsafe banking and dan
gerous in the extreme.
Again we find you are sanctioning a
practice which this commission has al
ways condemned, viz: permitting over
drafts TO such an extent as is danger
Gus, especially SO in the cases of How
ard & Co, J. F. Devendorf, Jersey
Laundry Tract, Thomas E. Johnson.
and the Santa Clara Fruit Exchange.
You have permitted Howard & Co. to
draw from your bank the enormous
sum of S141, 1850, for which amount
you have not even taken a promissory
| note In addition to this sum, you have
advanced to- him the further sum of
SS6,JO0 as a commercial loan, making
total of $22S,220 This is unsafe
banking and very dangerous for a
bank, under any circumstances. and es-
pecially so of bank with capital of
only 100000.
In the case of ). F. Devendorf, you
have allowed him to overdraw ST.
S5I ~, also advanced him as q COM
mercial loan $4,000, making 2 total
advance to him of 500, S3T SO. Also the
Jersey laundry tract has been permit
ted to overdraw its account S20,915 SO,
and Thomas E. johnson is overdrawn
in the sum of $12,00S.53, and the Santa
Clara Fruit Exchange is overdrawn to
the extent of $15,422. 10, permitting live
customers of your bank to overdraw the
enormous sum of $225, 9O4 90
10 allow overdrafts to such an ex-
tent Is condemned by the commission
They are classed by the commission as
doubtful resources, and this practice,
when carried to such an extent, should
be checked at once
Therefore, in view of all the facts,
the Board of Bank Commissioners are
unanimous in their opinion that your
bank is conducting business in an I'M
safe manner, and it is. therefore, or
Idered by the commission that you take
steps and measures at once:
/ "First-To increase you reserve of
cash to sum equal to % per cent. of
your commercial liability
"Second-To increase your reserve of
cash to sum equal to 10 per cent. of
your savings liability.
Thlrd-That further overdrafts to
the parties herein named be stopped at
once, and that all of said overdrafts be
secured by notes. executed by said par
ties, with such other securities as the
bank may be able to obtain, and to the
full satisfaction of the Board of Dr.
rectors of your bank and the Bank
Commission.
That you report your action to this
commission within thirty days from
this date.
by order of the Board of Bank Com
miss1oners, H. w. MAGEE,
JOHN MARKLEY,
1 PARIS KILBURN,
ATTEST: G. H. Dunsmoor, Secretary
ACTION TO BETAKEN DECLARING
THE BANK INSOLvENT.
/ SAN FRANCISCO, Feb. 3-The Bank