The Topeka state journal. [volume] (Topeka, Kansas) 1892-1980, 1905-07-07
From the Ottawa Herald. ]

State and Its Money.
LFrom the Ottawa Herald
The business failure of c. j. Devlin,
which seems much more absolute
than was at first supposed, will carry
with it a huge train of disasters.
The First National bank of Topeka,
and the two small Illinois banks, of
which Mr.. DevIin was chief stockhold-
er, have already gone to the wall, and
while no other bank failures are like
ly to follow, Devlins liabilities are
already discovered to be three million
dollars and many institutions will be
crippled.
The failure of the First National
bank of Topeka. is of course, the most
sensational feature of Mr.. Devlin' s
financial collapse. 1t is simply another
chapter in a story which has become
so old in the American banking bust
ness that men wonder whenever a new
chapter is added, why our banking
laws forbidding the Ioaning of more
than 10 per cent of a banks capital
to one man are so poorly enforced. !
Mr.. Devlin owned five-sixths of the
First National bank stock. The bank
carried about a million and a Quarter
dollars in deposits. Of this sum Dew
lin had borrowed on his mere per-
SOnal account one million and one
hundred thousand dollars, practically
failure in the United States for ten
years has occurred in almost identi-
cally the same way. Some single in |
dIVldual officer of the bank has been
allowed to monopolize the money of
the depoSitorS OF course the failure
is the result of rankest sort of dis
obedience of the laws governing ma |
uonal banks, and by the disclosures
attendant upon this failure all the of
hcerS of the bank became subject to
prosecution for penal offenses. The
proba bility of the bank paying out is
very slight because the bank has few /
assets outside Of DevIin's paper
Another grave feature of the situa- |
ton is that $547. 900 of state money has |
been used by Mr.. Devlin and is there |
fore lost by his failure This state |
money was in the First National bank |
in violation of law. The state cannot t
become a preferred creditor because the |
state law expressly forbids the state |
treasurer to deposit the money in the
bank The money was here illegally |
and the law makes Mr.. Kelly, the state
treasurer, an ennbezZler for having the
money there. For a number of years
it has been known that state treasurers
were depositing state funds in Topeka
banks and receiving interest thereon.
Mr.. Kelly has been charged with this
offense openly and repeatedly, but the
Topeka papers, which were defending
Mr.. Kelly, and the Topeka bankers
have been able for a long time to ig-
more the charge and defeat all Iegisla-
ton for state depository law. Last
winter, however, at the earnest instance
of the State Bankers association, a new
state depository law was passed which
makes future peculation of this charac-
ter impossible. This law should have
become operative in April, but with
their usual hardness the governor and |
his associates have not yet started the !
of the new law to moving.
The probability is that the state will |
lose a large part of the $547, 900 which |
Mr.. Kelly had in the First National |
bank. Mr.. Kel1y's bond was the poorest |
ever approved by any governor and |
when the public discovers just what
sort of a bond it is, the public will be
amazed that it was ever accepted. The
sum of the bond was one million dollars.
OF this sum c. J. Devlin guaranteed
100000 and a small bonding firm of
Scranton, Pa. gave Mr.. Kelly a securi-
ty bond for 100000. A Mr.. Thomas. of
Topeka, also signed the bond with Dew
lin and qualified for 100000. Mr.. Dew
lin and Mr.. Thomas are both ruined by
the Devlin failure, so half of the bond
is thus wiped out.
1t is questionable whether the Scran-
ton company is strong enough to meet
the loss. Its assets are said to be very
limited.
The governor was ordered by the last
legislature to investigate the Kansas
treasury. He waited until six months
had passed before he even started the
work, and since the work has started
he has allowed the continued violation
of the law; he and the other members
of the executive council who have sane
toned Mr.. Kei1y'S action in depositine
state money contrary to law will have
to bear their share of the responsibility
for the loss which may fall upon the
taxpayers of the state
While Mr.. Kelly is liable to prosecu-
ton for ernbeZzlement under the law it
is not th9Hght that he will be prosecut-