Evening times-Republican. [volume] (Marshalltown, Iowa) 1890-1923, 1904-08-19
Now Develops at Lineville That
Capital Stock Will Be
Wiped Out
MERRIAM NEGLECTED HIS DUTY
Examination Showed $4,000 Shortage
in 1899, But Inducements Of Some
Kind Caused State Auditor Merriam
to Ignore the Report - Bank Was
Allowed To Run on and Shortage
Grew.
Special to Times-Republlcan

Special to Times Repubilcan
Des Moines, Aug. 1a.-It now devel-
ops that the failure of the bank OF
Lineville. Wayne county was a bad
one. More of Elk State Auditor Mer-
RAMS cussedness is disclosed and the
stockholders are struggling to lock
their doors after the horse has been
stolen.
of $4,000 is more than eaten up by
the shortage and that possibly the lat
ter is twice as great When Harry T
Blackburn, cashier. of the Iowa Nat
ional bank, examined the bank under
the direction of State Auditor Merriam
in the fall of 1899, he reported tina,
the capital stock was impaired to a
very serious extent and recommended
that various transactions be stopped at
once. He showed shortage of nearly
$4,000 TO exist even then. But his re-
port was ignored by the state auditor
and when the banks charter expired
three months later, after an existence
of twenty years, it did not renew II,
but became a private institution. IN
the meantime the depositors continued
TO entrust their money to the institu>
ton and the shortage is said to have
grown.
AT the time of Mr.. Blackburn's ex>
animation the deposits aggregated
$4,000. 1t is understood they now
approximate $4,000. 1t is conceded
by Cashier Rockhold that the stock
holders will have to lose the sio,ooo
capital stock and he indicates that an
assessment may be nessary to meet a
further deficit.
Leland Windsor Of this city has just
completed an examination OF the
banks affairs under the direction OF
the district court. he was asked to-
day to indicate the nature of his ind
ings, but declined to make any state
ment.
AT the Office Of State Auditor Carroll
it was learned this morning that the
stockholders Of the bank had applied to
him two months ago to take. charge
of the banks affairs and wind them
UP. He declined on the ground that II
was a private institution and no lon
ger under state jurisdiction. An e1ort
was then made TO compel him to act
thru the attorney general. hut there
was no law to require It. Mr.. Carroll
took the position that 1t was fatal
error on the part OF his predecessors,
Mr. Merriam, to fail TO appoint re-
ceiver after Mr.. Blackburn's examina>
tion in 1899, but that Ii was now too
late for him to act.
A receivership was then appointed by
the district court, c. w. Nelson being
named to take charge OF the banks
affairs. At Linevil.e the principal
are directed at Mr.. Rock
hold. He is popular man and was
the democratic nominee for state sem
ator against Haselquist last year. So
far as is known no criminal proceed
ings have yet been instituted.
Mr.. Blackburn's report to Auditor
Merriam disclosed some exceptionally
loose methods OF banking. He showed
that the cashier had been in the habit
Of cashing checks and holding them in
definitely, awaiting deposits to offset
hem. 1t was also shown that loss
IF $4,000 was sustained thru loose
dealings with ]. T. McCarty, one of its
patrons. He borrowed large sums OF
hem, giving second mortgage on 100
mead of cattle and first mortgage Oh
l03 head of cattle. He was a promi-
1ent cattle feeder and shipper and thrr
failure of the market he was unable to
meet his obligations.