The Mitchell capital. (Mitchell, Dakota [S.D.]) 1879-1918, 1913-01-02
Examiner Wing
field Sends Biennial
Report to Governor.
RECOGNIZE NDATION
Changes ii
Laws to Protect Deposi-
tors and Stockholders.

In his tenth biennial report to
Governor Vessey State Bank Exam
liner Wingfield OF this city covers an
interesting period of the banking
business in this state, as refers to
state banks, and the report indi-
Gates that at the close of business
for the period of to years, June 80.
1912, the banks are in a generallr.
prosperous condition. The report
covers the condition of five hundred
state banks, fourteen private banks,
and twelve trust companies doing
business in the state on the date OF
the last call, June IA.
During the periods covered by the
report forty state banks, one private
bank and four trust companies were
organized; six banks left the juris-
diction by becoming national banks;
three private banks Incorporated as
state banks. and eight banks for
feited their charters by failing to
open for business within the time
specified by law. making a total net
gain of tw~enty-nine banks for the
period of two years.
Six banks suspended payments in
the past two years, viz: Chelsea State
bank, First State bank, Onida, North
western State bank, Newell, Meade
County bank, Sturgis, Farmers State
bank. Mobridge, Henderson State
bank, Washington.
Why Banks Failed.
The examiner traces the failure
OF these banks to various causes.
ranging from the failure to maintain
the required legal cash reserve, large
amount OF delinquent loans. negli-
gence OF officers in conduct of af-
fairs. carrying exceedingly heavy
loans without good security. Re
sulting from two of the failures at
Stnrgis and South Shore two cash
iers committed suicide, and several
others have been given terms in the
state p~enitentiary for their viola
tion of the state law.
The Newell Bank Failure.
Concerning The failure OF the Nor
thwestern State Bank at Newell, S.
d., and which o%ccasioned much com
ment during the recent campaign In
this state, the bank examiner makes
the following statement:
The North western State Bank OF
Newell was suspended on account OF
Nthe generally Unsatisfactory condi-
tion of its affairs. due to negligence
on the part of the officers and direct
.ors n fraudulent transactions on
the part of the cashier. An examina-
ton OF it's affairs developed a greatly
impaired cash reserve, misappropri-
alton, embezzlement, forgery and
Justification by the cashier, and other
y A lnOo ~ ~ D,,~ 1~.. ~.
banks officers were beneficiaries. AS
n result of this general misconduct
of affairs, improper, assets aggregat.
ing many thousands of dollars were
admitted.
Shortly before the suspension OF
this bank the capital stock was trans
ferred to an entirely new manage-
ment with the exception of the cash
Ter who was temporarily retained on
account of his familiarity with the
business. No criticism is due the peo-
pie who took i've the bank from the
former stockholders. The cause
which resulted in the suspension OF
the bank We're traceable to the for
mer directors and officers in charge.
At this point 1t may be we'll to note
the wisdom of the provisions of Sec
ton ~ of Article 2, Chapter 222,
>,> Session Laws of 1909 as amended
by the Session of 1911, State Of South
dakota wherein it provides in part
as follows: The stockholders Of ev-
cry bank shall be individually liable,
equally and ratably, not one for the
other for the benefit of the creditors
OF said bank to the amount of their
STOCK at the par value thereof, in ad.
qltion to the amount invested in said
stock. Such liability shall continue
0 one year after any transfer of
STOCK, as to the affairs of the bank at
the time and prior to the date of
transfer"
The misconduct of the affairs of
this bank was traceable as stated.
70 the former management who had
transferred its affairs within the
hscai year Just passed, consequently
the former stockholders were held
responsible in accordance with the,
provisions of Section Al, as cited
above. The bond of the cashier was
realized upon in a sufficient mount
tofcovere his dealings. and the section
OF the law last referred to made it
possible for the new management TO
realize from the former nagemen
something over ST., 100000 on ac-
count of the improper assets in the
bank at the time of the transfer.
During the examination the cash.
Ter committed suicide and the bank
was Immediately suspended. remain
ing in this condition until August l..
1911, at which time it was re-opened
under an agreement with this depart
ment. A sufficient amount was rea-I
liked from the former stockholders
on account of their liability in con-
:nection with the improper assets
above mentioned, and from the surety
company on account of it's liability
for misconduct of the cashier, am
0unting altogether to $%16,512.23.
whereby the institution could reopen
nm a satisfactory basis
Makes Recommendations.
The state bank examiner makes
n number of recommendations to the