Omaha daily bee., 1916-05-18

recently closed by the board
tFron . STAFF correspoudeutl
Decatur, Ncb., May IL Especial
Interest and excitement IN the
failed Farmers State bans and fnan.
cial operations Of Cashier Elliott have
not subsidized apprcciably and both
dcpositors and stockholders are inI-
patiently waiting for the report Of
the bank examiners, on which lt Is
expected the recciycrship application
will be based
Enough has come out already, how.
ever. 10 make likely great deal ot
litigation growing out 0f the wreck
some Of il 10 determine the owner
ship Of collateral and some TO aseer-
tain whether the liability attaches
personally 10 Elliott or 10 the bank
with its claim on the states deposit
guaranty fund to insure reimburse
mcnt.
instances have been disclosed for
example where Elliott took deposits
for the bank, issuing certificate
bearing the customary rate OF in
tercst. and then had il endorsed 70
himself IN exchange for a personal
note carrying a higher rate of inter
est The question will arise here as 10
whether the depositors must look 10
Elliott or 10 the bank for, il the only
recourse is tn Elliott, it Is likely 10
go unsatisfied a. even the new house
he built was conveyed away 10 se-
cure special creditors almost as soon
as It was finished.
Bank Law Must Be Strengthened.
The impression IN Decatur seems
10 be that the state bank guarantee
law, while it is all right in itself,
has given the public such unbounded
confidence in the security Of state
banks, that III The case Of This bank,
as managed under Cashier Elliott. 10
questions were asked as 10 the char
acter Of any transaction, 50 long as
The cashier was negotiating them.
There il feeling that along with
the deposit guarantee law must GER
tainly go, in the future, more rigid
system Of bank examination, or a
more far-rcaehing control over the
character OF the various deals nego-
tiated by officials OF the banks. In
other words, there is a feeling that
the bank examinations must iii the
future - deeper than mere ycri.
Tying Of bank statements, and hasty
survey OF bank lcdgers and paper
Secretary Royse Of the State Bank.
ing board, in his last official report
called the attention OF the governor
10 these very dangers. IN part he
said at that time:
more power should be given your
honorable body by legislative or ju.
dicial action, giving you sufficient
authority 10 protect communities al
ready provided with safe and solvent
banks, against the intrusion OF spec
ulators and promoters in banking
privileges"
Not Employed by kosaiie Bank.
In rejoinder to The Bees refer
enee 10 Elliotts experience al Rosa
lie il is now explained that he only
did a little collection work, employed
by his brother-in-law, Cashier John
son, and was not employed by the
bank The explanation is contained
in this letter
"Rosalic, Neb May l7-To the
Editor OF The Bee Referring 10 the
article entitled Cashier Elliott
Makes High Jump, in The Bee OF
May 10, we wish TO call your atten-
ton TO the references which connect
Mr.. Elliott with the Farmers State
bank OF Rosalie, Neb We believe
the inference can fairly be drawn
from this article that Mr. Elliott was
officially connected with this bank in
the negotiating OF loans. and that hc
was authorized 10 transact other
business for the bank The facts do
not warrant this inference. Mr.. FL
lott was never authorized 10 and
never did make loans or transact
other business for the Farmers State
bank of Rosalie, either on commits.
sion or otherwise He neither acted
as field man for the Rosalc bank, MOI
did he trade and deal with the Indian,
for the bank
THE directors of the Farmer,
State bank of Rosalir deprecatr mos
sincerely the inference that the bust
ness methods Mr. Elliott Is charge,
with having practired at Decatur
we're acquired BY him as re-
sult nt "a connection with the Resale
bank We fetl aud know that th,
record of the Farmers State banl
ot Ratatr, and the manner ia which
it tfansacis its business. ave ah0v'
ffpfnarh and suspicion. and At nd
time have been questioned by ans
persah
i. l.. GALLAGHER. Vice Pres
taf thf officers and dltcttofa n
ihr EatmrJs' Stale haHk pi kgasiie
Nrb