The Minneapolis journal. [volume] (Minneapolis, Minn.) 1888-1939, 1905-03-25
PULLED THE WOOL
OVER EXAMINERS
Clement Scheme to Conceal
Faribault Banks Condition
from Officials Exposed.
ACCOMMODATION NOTES
GIVEN BY FRIENDS
Receiver Baird Will Collect Them
Oldham Investigates for
Washington.
Special to The Journal.

special TO Inc journal'
Fanbault, Mimi, March 25.-While
affairs of the defunct First National
bank, the work necessarily makes slow
progress, and has been delayed by the
failure Of depositors and other creditors
to file claims. There is reason to be-
lieve, however, that the report Of assets
made to the controller was too conserv-
ative and that more will be secured
than was at first thought.
Receiver Baird has found several
notes for which the makers claim no
consideration was given, but which
they say were made as personal &C
were for as much as $4,000 and they
are now believed to have been used by
Mr. Clement to conceal the bank s real
condition from the national bank exam
liners.
Altho some were made y Years ago. they :;
simple method of indorsing interest
upon them, it thus being made to ap-
pear, without the knowledge, as is
claimed, Of their makers that they rep
resented current loans.
"Wheat Deal shortage.''
Mr.. Clement secured these notes on
various pretexts.
To one man he said he wanted a
$4,000 note for few days to cover up a
shortage on wheat deal. Such note
signed by the late Senator Stockton,
was held by the bank at the time of his
death, and Mr.. Clement was about to
put it in as claim against his estate,
when Stockton s partner, John Hutchin-
transaction. The claim was not made
and as the Stockton estate was settled
long ago, this note is probably now
listed among the bank s worthless Sc
curities.
Mr. Baird contends that these notes
mand upon the makers for payment.
Some Of the notes have been paid or
are in process of iuuidation; in other
cases, payment IS resisted.
"Tn all such cases. said Mr.. Baird
eff the party making the note is solv-
emit, action will be brought to enforce
of the bank s assets and will be col,
lected wherever possible
Mr. Baird was asked about a report
that Donald and D. w. Grant had IA
vored Mr.. Clement with such notes
estimated as high as $4,000. :,
"There is no truth what whateveri N " sai6
Donald nor D. W. Grant owed the
bank anything directly, nor had they
given the bank any notes. 1t is true
that some notes given by their friends
had their Endorsement, but every cent
due on such notes has either Deen pale
or arranged for.'
Man from Washington.
The question Of the liability of di
rectors for neglect was investigated
here this week on behalf of the depart
ment at Washington by Judge r: F
Oldham, it's attorney. He went fully
into the subject, both at a meeting
with the committee Of depositors ant
at one held subsequently with the di
rectors themselves. To attend this lat
ter meeting Judge Buckham was callet
from Waseca, where he was holding
court.
At the meeting with the depositors
committeeman, Judge Oldham was a
some pains to inquire just what the!
had learned at various interviews witt
the directors. What conclusions he ar
rived at are not known, except as the.
can be gathered from remarks he lie
fall. For instance, when he was toll
how one of the directors had said tina
he had never critically examined tn
banks securities and had trusted til
making of loans entirely to. Mr.. Glen
ent, he remarked that evidently tn
gentleman had spoken without consult
ING his attorney. It is also REGARDED
as significant that he inquired particu
larlv as to the financial responsibility
Of the directors.
Responsibility of Directors.
At the Subsequent meeting with tn
directors, Judge Oldham s attitude lief
no doubt in the minds Of those presen
that the department. would not be sal
than merely assume the obligations O
or6inarv atOckhOl1erS
Judge Oldham and Mr.. Baird bot
held, It is understood, that the direct
ors should be held responsible for an
losses that they could have prevente
by due diligence.
'"There is no thought" said M
Baird, "of holding the directors IT
sponsible for every loss the bank he
sustained nthe thirty OF more veal
it has been in operation. That, {
course. would be absurdly unfair, fl
naturally there have been many losst
which the officers could not have for
seen. The responsibility of the direc
ors must depend upon the circumstance
of each particular case. If it
shown that investments made by tt
bank which resulted disastrously coul
have been prevented if the directo
had fully discharged the duties CO
templated by our banking laws,
seems to me-and Judge Oldham shar
that view-that they should at lea
share the loss with the depositors.
Judge Oldham has returned to Was
ington Whatever is done will b
done by TIE receiver upon instruction
from Washington. Litigation, howeve
is not looked for. Once fully convince
of their responsibility, the directors,
is believed, will not hesitate to di
eharae all their obligations.
81 X . = Z 8 I.