The Topeka state journal. [volume] (Topeka, Kansas) 1892-1980, 1907-11-01
Little Kansas Banks Controlled
by Bankers Trust Co. Close.
Commissioner Royce Is Notified
to Take Charge.
TRIES TO FIX IT UP.
Kansas Official Tries in Vain
to Straighten Out Tangle.
New Plan to Meet Any Future
Emergency.

/ News has reached Topeka that three
small state banks in southeastern Kan
sas. owned by the Bankers Trust COM
pany of Kansas City, Mo, which col
lapsed few days ago, closed their
/ doors Thursday, and notified the bank
commissioner to come and take charge
OF them. The cause of their failure was
the collapse of the Bankers Trust, and
the inability to secure currency to meet
| the demands of business.
That there is a shortage of currency
with which to do business is apparent
kilograms are coming in to the office
of the state bank commissioner asking
Tor authority" to adopt clearing house
rules and put a limit in the amount of
money to be drawn by any depositor.
The bank commissioner can give no
sucn authority; it is an authority which
the banks have simply assumed as an
emergency measure, but as it has met
with no opposition from the banking
department, it is considered to have hi )
sanction
Bank Commissioner John Q. Royce
has been. in Kansas City for several
days trying to straighten out in some
way the Bankers Trust tangle. 1t is
said that this concern will pay out in
full There were about 25 small Kansas
banks which had their reserves deposit
ed with the Bankers Trust, and these
Some of these banks were practically
owned by the Bankers Trust, and three
of these, as already stated, have been
unable to continue in business. Mr..
Royce has been trying to get things i'll
shape so that the reserves of the Bank
ers' Trust might be made available for
the small Kansas banks which now
need their money.
Nothing has yet been officially given
out concerning the failure of the three
e, ho, ix, cyo1,fI fIno sic
but it is known that no receivers will
be appointed for the present. but that
an officer of the state banking depart
ment will take charge of them in an
effort to get them through their tenn
porary embarrassment and back on
their feet.
Fiat Money Scheme.
prominent banking expert of the
state. who refused to allow his name
to be used, made this suggestion today
to the small banks of Kansas who are
una BILE to get cash for their reserve:
There are scores of small banks
which have 80 per cent of their deposits
In the shape of reserve, and who are
unable to get enough currency to make
business safe for them: If 1 owned
I would call into the bank a dozen of
the leading business men of the town.
I would lay before them a big bundle
of the securities of the bank. I would
YOU to select from that lot $40 600 worth
which you consider the very best. I
will place that $4,000 worth in the
hands of any one of your number as a
security, and I will then proceed to
issue cashiers checks on this bank for
the $4,000. I will issue these checks in
all sizes, from 25 cents up to SO, and
each check will be numbered, SO that
the outstanding issue can not be in
creased beyond the $4,000. I will pay
out these cashiers checks, provided that
you merchants will agree to go out
and tell people that they are all right
and are fully secured, and are good as
gold at your stores. This will provide
a temporary circulating medium. As
fast as these cashiers checks come
back to the bank in torn or battered
condition, I will retire them, and file
them away, and when I have the entire
$40 900 back, will present them to you,
and get my bonds and securities back
A proposition like that would meet with
approval in almost any community,
believe and it would save many banks
which might otherwise be placed in a
very embarrassing position simply be-
cause of the shortage of currency.
There is not a bank in the state which
is fnsolvent today, but there are many
banks which are very short on cur
rency,"