The Mankato free press. [volume] (Mankato, Blue Earth County, Minn.) 1879-1924, 1905-02-10
CRASH Of FAR|BAULT FIRST NATIONAL
Sensational Disclosures Are Being Made---Many
People Are Hit Hard By the Closing
of This Financial Institution.
From Wednesdays Daily.

From Wednesdays Daily.
The Faribaut bank failure is the lead
ing topic of conversation among bust
ness men and those who have to do
with financial transactions. Many
stories and rumors are atlOat regarding
the crash which startled the people of
the prosperous little city. The Mime
apolis Journal staff correspondent sent
a two column story to his paper, and it
makes very interesting reading:
That the failure of the bank is a
catastrophe is now all too apparent. If
the creditors receive half of what they
are talking of getting they will prob.
ably in the end be satisfied. Some OF
them are talking of getting dollar fol-
dollar. The Journal correspondents in
vestigation lead him to believe that the
creditors will get less than 80 per cent
and this is very liberal estimate.
All classes have suffered as result
of the failure, but those who have suf-
suffered most are the farmers around
Faribault and many of the well-to-do of
the city, who are living on accumulated
savings. Many of these have all their
worldly goods tied up in the First Nat
iOnal bank. 1t will be months before
they can get anything back, and the
dividend, when they do get it, will prob
ably be very small. In the meantime
there is sure to be much suffering, both
for the needs of the life and the finan-
cial purposes.
The failure was the result of unwise
investments in big peach farm in Geo.
rgia, also in a lumber company in the
same state. Mr.. Clement bought bonds
of the company to the extent of $l75,-
600. These purchases were made with
ors. The failure to realize on these
bonds caused the bank to collapse and
there is now revealed tangled state
of affairs hard to conceive. The bank
directors are at loss to understand
how Mr.. Clement could have been in
duced to embark the banks funds in a
venture which could not at the best have
nnn1o rot For he IS NOT
for years. ,'s
The failure of the bank is only part
of the catastrophe. Mr.. Clements per-
sonal creditors, it is said, are numer-
Gus and hold large claims,
AS result of the 100000 liability
that stands a good chance of being a
complete loss, Faribault is in high
fever. Men who have always been
friends of Mr.. Clements are beginning
to question whether their friendship was
well placed.
The trouble has its roots in unwise
investments made years ago. Mr.
Clement, instead of going to the direct
ors and having them charge the losses
to profit and loss, seems to have changed
his investment, covering up bad in
vestment with a more hopeful one
Matters went on from bad to worse un
til he became interested in the De Soto
Fruit, Agricultural and Manufacturing
company of De Soto, Ca, and in the
Minnesota Lumber company of Veldosta
Ga.
The men at the head of these com.
panies are DIR. A. c. Rogers, superintend
of the state school for the feeble mind.
ed of Faribault, and Herbert Clement
son of the president of the bank. The
fruit company in the past year or two
has planted $4,000 trees. These have
been fortified at enormous expense, the
money apparently coming from the Fari
bault bank.
1t is said that last summer Mr.. Glenn
ent authorized a bank in Georgia to
HOliOI Tie cIeulU OI MS son ana another
man interested in the fruit farm to the
extent of $1,000 a week. Later it is
said this limit was raised to $4,000 a
week.
The bank invested from $l5OO0O tt
$4,000 in the bonds of these com
panies. The directors say they knew
absolutely nothing of the investment
They first discovered the situation from
the banks regular statement to the con
troller of currency and at once began al
investigation. Mr.. Clement was persuad
ed to reduce the number of bonds tn,
bank held. Later the bank examiner re
ported that these bonds were not safe
security for the amount invested ant
the directors We're so informed. They
set about general examination of the
bank and found things in such a tangled
condition that they asked the controlle,
DESERVES A TRIAL