Pine Bluff daily graphic. (Pine Bluff, Ark.) 1893-1942, 1914-03-28
All Depositors of Mercantile
Trust Will Be Paid
Off.
SMALL ONES IN FULL,
Objection of One Stakeholder to Plans
Is Thrown Out by Court as
Effort to Block Matter.

Memphis, Tenn, March 27.-Deposi-
tors of the failed Mercantile Bank
with claims less than $1,000 will be
paid in full within the next few days
Other depositors will receive Is per
cent of their claims at the outset with
a probability of more in the future.
Chancellor Francis Fentress has
approved the receivers plan of set
Element with the directors, and de-
MED an appeal to Carr Bros, who
protested. Notice of an application
for supersedeas was served by Judge
J. c. Wilson, representing Carr Bros
Settlement with depositors was
made possible by the directors con-
tributing 100000 and depositors
with accounts of more than $1,000
discounting their claims Is per cent
Directors who contributed to the
100000 fund will be released from
any liability whatsoever to the Mer-
camille Bank, it's creditors, depositors
and stockholders.
A direct result OF the settlement
probably will be the Inauguration OF
national bank with a capital stock
of not less than 100000 and pos
sibly $1,O0O,00O, whose promoters hope
to take over the assets of the
Mercantile Bank. Depositors will be
paid without the tiresome delays and
disheartening litigation incident to
winding up the affairs OF an insolvant
bank.
Certified Accounts Received.
Inquiry responded to under oath,
precedent to the chancellor's plan of
compromise, established that c. H.
Raine, whose defalcations wrecked
the Mercantile Bank, not only kept
the directors and his subordinates,
with the possible exception of Claude
Anderson, the cashier, in complete
ignorance of his speculations and
populations, but that he cunningly
hid a shortage of $4,000 from firm
of certified accountants.
The bank was audited on Dec. 81,
1911 by auditors with headquarters
in New Orleans and branch in
Houston, Texas Since the bank failed
x1yIso oh, duct
ed the audit was in Memphis and stat
ed that he would stake the reputa-
ton of his firm that no shortage ex-
listed at that time. Nevertheless, ac-
cording to F. H. Wilkes, an account
ant of Mr.. Huttons staff, shortage
og $4,000 did exist, and six months
before Mr.. Raine's shortage amounted
to 100000.
In criticism of the directors it has
been stated that Mr.. Raine could not
have stolen $1,091 900 from the bank
if they had done their duty. The
only specific negligence that has been
charged was failure to have the bank
audited once or twice each year by
certified accountants. 1t was ad-
mitted that this had not been done.
The only time such an audit was
made within recent years was in
1911, and as later developments have
shown, the firm of certified account
ants was deceived as to shortage
which existed at that time.
Committees Audited Regularly.
There were audits twice each year
by the banks auditing committee.
Those audits were incomplete only in
that reciprocal accounts with. other
banks were not verified. The cash
was counted at each audit and was
found correct. Mr.. Raine so manipu-
lated that he had sufficient amount
of cash on hand at each audit period
but withdrew it when the audits were
over and substitute worthless checks
which were carried as cash.
j. l.. Hutton, state superintendent
of banks, and receiver for the Mer-
camille Bank, a banker of 266 years
experience, stated that not more than
10 per cent OF the banks Of Tennes'
see are subjected to regular audlts
by certified accountants. He knew
of no law which compelled directors
or other bank officials to cause such
audits.
Bank audits by certified account
ants, he stated, are more common II
Memphis than elsewhere in the state
and such audits are& confined almost
exclusively to the larger cities of the