The farmer and mechanic. [volume] (Raleigh, N.C.) 18??-19??, 1913-04-15

and supervision. They were
20 sell TO the people shares of stock
d the States Trust Company-a com
whose name carried visions Of =
roWnstone front on Front and Mar
whose stationery proclaimed it
nad Two hundred thousand capital
ana whose agents guaranteed eight
per cent n then some.
BUT II no more than this had been
onefec the Stock would not have sold.
II they had been as conservative a.
this prospective purchasers would
nave investigated their character and
standing before investing. Make it 50
strong that the people will iump ar it
without investigation. That's the
game. And they did.
And besides, if there was nothing
TO 1T but TO cash in the money as fast
as their agents sold the stock. bust
ness might be too duh. Make it pull
dcuble.
Good Locations.
They selected with care localities
which were beginning to have their
first visions Of a local bank, but need
ed about five years growth before they
would be able to support one. They
proposed to the best people in these
communities that if they would sub
scribe for $2,500 of stock in the States
Trust Company that that
would itself establish in sixty days a
local ban with $4,000 capital stock.
Better yet, the subscribers to this
stock need only pay rs per cent in
cash and notes for the balance. Bear
in mind that these people were not
subscribing for took in the local
bank. but for took in the States Trust
Company. So that in order to get a
bank established in their community,
they only had to pay out 1926 in ready
money. The States Trust Company
was to furnish the money for the en-
tire capital stock Of the bank. Who
would be so ungenerOus; SO lacking
in local pride, as to investigate either
the financial or moral standing Of a
stranger concern that gave out banks
and guaranteed dividends with such
a lavish hand. The resistib}e and the
irresistible forces met and proceeded
to do business-which they did.
1t was no strain whatever on thu
u of the States Trust Company
to start a bank, or twenty banks
Their company would have more
ready money in a week after eacf
bank was started than before
although they furnished all the capita
stock that was furnished, and ISSUED
to themselves all the capital stock ex
CCpL OIlS S1dAO OoCAA ~A
local officers of the bank. Through
the sales Of stock in the States Trus
Company they WOuld get all tn
money they could from folks VIII
could be persuaded to part with it l
that way. But they needed the ban
to get the deposits Of those who coul
not be reached in the other way
Wasn't it their bank? Why shouldn'
they have the deposits? They wer
: just furnishing the people a place t
; put them-a convenient means G
Y transfer that wouldn't crate on thei
y sense of the prOprieties.
: But as soon as they got in the BAN
ing business the corporation commi.
: sioner began to take notice. Tn
States Trust Company was asked
it would be pleased to submit a state
ment Of it's affairs. (The commissiO
had no right to demand it, as tn
trust was not d its 81
q pervision.) They were also asked
:, they would explain how they expecte
y to find the promotion of these banl
profitable. The replies were not sa
s isfying, and the bank examiners WEI
= in to see what could be found O.
n through the medium of the banl
n themselves. And they soon found
l. plenty. They had certified to the con
mission in each case that the capt.
stock of these banks was paid in f,
~, anu III CASH. IhSlI l. III III
er it had been, but the facts showed tn
"a it had not. A showing was made
g depositing checks m drafts, some
al which were turned down outrigl
~ others were "kiting.' and in each ca
s. where they were actually paid tn
D were covered by loans from the bal
to the States Trus Company
o. enough of the funds that had be
it, taken in from deposits to cover
the checks and drafts of the Sta,
Trust Company. TWO of their ban
al had a career OF ABOUT three wee
lie and when closed up each of the
ir- showed that the States Trust Co
pany had gotten out Of them abe
Ak two thousand dollars more than tn
lly had put in and had in each case
nil sued to themselves the entire iss
hi of stock, except the one share ca
to local officers, and, therefor, h
VI his much more material to be us
as collateral in borrowing more NOR
o-Lo~o Who couldn't GtoVf