New Mexico state record. (Santa Fe, N.M.) 1914-19??, 1916-10-06
O. "rhen at that Time you ver,

@. "rhen at that Time you were
going on the assumption that 1t was
$50 per cent impaired"
1t really made no difference what
Ernest's estimate of the impairment
a He never did anything about
rectifying it. Neither did the COVER
nor.
Mr.. Ernest here related how he
naively inquired of the directors of
the bank If certain notes signed by
members Of the Smith family and
their allies were good. and received
their assurances that they were. Still,
Ernest was suspicious of the notes, as
witness this bit of testimony:
@. Nov you did suspect at that
time that the Smith paper wasn't good
and told them so?"
A. THAT is all I did; yes, sir. !
told them frankly I didn't think the
Smith paper IA good"
And that was all that Ernest did do
tell them that the Smith paper was
nc good. He didn't close the bank
he told them he didn't think the
Smith paper was good. And the
Wooters-McCarty reports showed the
bank capital impaired $50 per cent.
Yes, that was all either Ernest or
Governor Mcdonald ever did about it.
They never bothered themselves fur.
Their about the condition of the FRS
Stare Bank and the fate of the Stat
College money and hat OF GOO deposi.
tors.
You had information" continued
Mr.. Holloman with his interrogation.
that you had received from othet
states that the paper of zone OF tn,
Smiths was good?'
Answer Eyes, SIR"
Q. "And you We're going upon thai
presumption rather than upon the
statements made at that time by the
board of d~irectors?"
A. Before | went down there"
Q. Did you absolutely take their
word for il a"Pinst Mr.. Wootcrs' re-.
nort and as against all this other in
formation you had received?'
A. 4 had nc alternative. Therc
WAS a body of men that had lived in
ihat community Tor years, that knew
these people. tlI"y were in a position,
a. least supposed to be in Il position
to know their worth and what thor
LOldinGs were III the community,
what trey hah. and they said it was
absolutely good
TAe %tFav,'lng auditor and stat
bank examiner here declares that his
1nly altC native was 10 accept lii.
word Of these mcn-amoHg them tn"
notorious r. r. II. Smith, whose past
record he knew about, who had de
ceived his deputy and was indicted in
the Tucumcari failure.
lie should have closed the bank
then and there. y For what purpose
was his department created and he
placed in office if not to shut down
insolvent banks. Governor Mcdonald
was there at Las Cruces with hirn
then. The governor evidently had
"no alternative" but to believe that
a bank he knew to be full OF bad pa.
per-was good.
q. Did you inquire at that time
as 10 their holdings in that
iiy?"
A. &" wouldn't say positively
whether | did or not"
Mr.. Ernest told how the paper OF
the First State Bank showed that c.
ii. Harden Smith borrowed $4,000 On
a business worth $500. He adj.
mittrd that he did NOT think any OF
the Smith paper Was any good. One
OF the Smiths exhibited II TELEGRAM
from Oklahoma, indicating thLi r. T..
II. smith might get $5o.UO0 there nr0.
| yided a laW suit ;ur}cd out all right.
That raGI" booking vas ail the
Smiths had TO suppor' lhcir avalanche
Of PAPER in he cru'Hhiiug FIRST STAR
Bark. But Governor Mcdonald ana.
Ira'cliug Auditor Ernest babe lhem
try to straightcn Things out some
way, and left for Santa Fee. Mr.. Err
nest, in his testimony, put it in this
wise:
AT the conclusion of the meeting
with the. bank people, at which Gov
ernor Mcdonald was presently and
sizing them up, understanding they
were men of means and good stand
ing in the community, and their hav-
ing expressed themselves that they
would comply with the recommends
tons made, | felt perfectly satisfied
that they would do So"
Question. Put the bank in shape?"
Answer Eyes, sir"
Perfectly satisfied'-that is the
way the state bank examiner felt
about a bank whose capital was i'm
paired to the extent Of $50 Per cent,
whose strong boxes were filled not
with money but with The worthless
notes Of its president and his part
r"rs in exploitation.
TIE Silent Governor of New Mexico.
Governor w. c. Mcdonald was per
fectly satisfied" too. He won't away
from Las Cruces without making any
provisions &c save the funds that were
10 keep going the State College ana
provide education for the sons and
daughters of the farmers and
ranchers. He went without trying 10
rescue the savings of t~oilers, widows, |
orphans and the aged from the graft
ing talons of It. r. II. Smith.
The bank was doomed then. hut il
Governor Mcdonald had thrown out
an official lifeline when he was in
Las Cruces in January there might
have been some salvage to the poor,
the widows and the orphans and of
the State College funds. One would
think that If nothing else could in
spire him to do the right thing, a GER
tain pride in his position as chief ex-
ecutive of the state might have in
duced Governor Mcdonald to exert a
little effort for the State College. He
let the bank sink to the very bottom,
60 to the deep-and break.
It will be many a long day before
the people of the Mesilla valley can
forget Governor McDonald's "crimi-
nal negligcnce"-to quote the report
of the bona Ana county grand jury