Carson City daily appeal. [volume] (Carson City, Nev.) 1907-1930, 1908-07-20

share portion of the blame. A de.
sire to help ones self in monetary
way Is sometimes a potent influence.
1t was in the air.
A potent factor in the downfall
of this institution may be easily To-
Gated in the fact that, notwithstand-
ing it had nine directors, one of these
the Observation-Disclosures the whole
The other eight, apparently, had the
utmost confidence in the statements
of the President, who reported to
them as having personally supervised
various important matters and who
claimed to have personally examined
the accounts of the various agencies
To have done so was manifeStly
impossible by reason of their number
land complexity. The directors saw
in their President man who, ap-
parently, had so much to loose that he
could not afford the slightest false
step which would imperil his own
somewhat large investment. That
such fatal false steps were made is
clearly established by dividends paid
to stockholders.
Unearned Dividends
In many cases, at least, these divi-
dends were based upon fictitious
earnings-earnings which did not ex-
ist, and by good bookkeeping tre-
mendous losses were made to ap-
pear as profits; which later found
their way into the dividend account
In other words interest which was
never collected was credited indi-
rectly to Dividend Account through
Profit and Loans, and distributed to
the stockholders of the bank. Not
only was this interest never collected
but the principal itself to the extent
of hundreds of thousands of dollars,
was not, and could not, be recovered.
The President and Directors must lie
under the charge of fatal negligence,
if nothing more.
No man in ubiquitous and therefore
he is obliged to place as much con-
fidence in those under HMM this
case in charge of the various branch
es-as he has in himself. Banking
qualifications could not have been
seriously considered, but if some one
of prominence had a friend who had
inhaled at any time, remote or other
wise, the air of bank this was
deemed sufficient qualification to
place him in charge of one of the
branches of this institution
More Costly Procrastination
| find that many deposits made
by this bank in banks of other states,
viz: New York, Denver and San Fran
cisco, in most cases. or at least in
the most material ones, were attached
previously to the Courts appointment
of Receiver; and because his power
to dissolve such attachments is limit
ed to the confines of Nevada, they
have held. This has been a very
serious loss to the bank, amounting
in one instance to over ten thousand
dollars 0,00000) and in all, ap-
Twenty Thousand Dol
lars (S20.000.0O. 1t was the duty
of those in charge of the bank to
protect the creditors by Immediately
calling in all outside balances. In
cidentally l might mention that there
is a strong suspicion that information
leaked out from these institutions, or
rather from some one connected with
them, in some capacity; otherwise
these outside deposits could hardly
have been located and attached.
In the southern branches it ap"Cars
that ii a proposed borrower has an
enormous number of shares of stock
to offer, the security was considered
good regardless of it's intrinsic value.
NO margin accounts were ever kept.
One hundred thousand shares 600.
OOO) of stock selling at One Dollar
$1.00 per share, is more of a men
ace to a Ten Thousand Dollar (sfo.-
O00.00) overdraft account than ten
thousand Q0,00O) shares of the same
stock selling at one dollar (sf.OO) a
share, because the very size Of the
block makes marketing difficult. at
the same time, giving greater con-
ndence TO the lender, which is based
on false reasoning.
Counter Interests
1t appears to me that MANY of
tne accounts were incurred by reason
OF ohe direct interest in them of the
various individuals connected with
the bank, who protected them in ord
er TO protect themselves, and report
ed these accounts as good, in order
10 maintain such self protec-
uon. find that some of these
people have been owners of large
DOCKS OF stock in the various mining
companies which are now debtors
OF this concern. This is rather
pointed statement but believe can
prove every word l utter.
from an examination of reports it
is learned that from time to time, the
directors received assurance from
tneir Assistant Cashiers in Tonopah
ana elsewhere that certain specified
accounts were good, and would be
PAID. They undoubtedly, accepted