Western Carolina Democrat and French Broad hustler. [volume] (Hendersonville, N.C.) 1913-1915, 1913-04-17
HOW PEOPLE WERE DUPED BY
WILD CAT BANKING SCHEME.

$50 that III order to get q bank estab-
lished in their community, they only
had to pay out $626 in ready money.
The States Trust Company was to fur
lnish the money for the entire capital
stock Of the bank. Who would be so I'm
generous! 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
resistible and the irresistible forces
met and proceeded to do business
which they did.
1t was no strain whatever on the
resources of the States Trust Company
to start q bank, or twenty banks.
Their company would have more a
money in a week after each bank was
started than before, although they
furnished all the capital stock that
was furnished, and issued to them
selves all the capital stock except nj
share each donated to the local officers
of the bank. Through the sales of
stock in the States Trust Company
they would get all the money they
could from folks who could be per-
suaded to part with it in that way. But
fIn0Y u0GQG0 IA0 UdAAh IL 6OI bAO ~
posts of those who could not be reach
ed in the other way. Wasn't it their
bank? They were just furnishing the
people a place to put them-a con-
venient means of transfer that
wouldn't CRATE on their ense of the
properties.
But as soon as they got in the bank
ing business the corporation commits
sioner fegan to take notice. The
States Trust Company was asked if
it would be pleased to submit a state
ment of it's affairs. (The commission
had no right to demand it, as the trust
company was not under its supervi-
sion.) They were also asked it they
would explain how they expected to
find the promotion of these banks
profitable. The replies were not sat-
isfying, and the bank examiners went
in to see what could be found. OF
through the medium Of the banks
themselves. And they soon found a
plenty. They had certified to the com
mission in each case that the capital
stock Of these banks a paid in full
and in cash. Their banks showed
that it had been, but the facts showed
that it had not, A showing was made
by depositing checks and drafts, some
of which were turned down outright,
others were 'kiting," and in each case
where they were actually paid they
were covered by loans from the bank
t. the States Trust Company of enough
of the funds that had been taken in"
from deposits to cover up the checks
and drafts of the States Trust com
pany. Two of their banks had a ca
reer of about three weeks, and when
closed up each of these showed that
the States Trust Company had gotten
out of them about two thousand dol
lars more than they had put in and
had in each case issued to themselves
the entire issue of stock except the one
share each to local officers and there
for, had this much more material to be
used as collateral in borrowing more
money elsewhere. Who couldn't start
a bank? And the people were so we'll
pleased with getting rid of their non
ey in this expeditions way that they
writing the company to send an
agent back-they wanted to buy more
stock.
The experience should not in any
way operate to discredit or to under
mine confidence in our banking insti-
Generally, they r the pro-
duct of our own people, with tangible
resources and substantial character
them. They are serving the /
people we'll. and deserve their support
and confidence. But the next time a
stranger comes along and wants to
handle your money for you, ask to see
ais OBSERVATION-DISCLOSURES and Observer.