The interior journal. [volume] (Stanford, Ky.) 1912-1984, 1916-07-18

TO HOLD BAG
Receiver Appointed for Kentucky
Rural Credits Association
Fraud Is Charged.


quite flourish at Lexington, about
a year ago, went into the hands of
receiver Saturday and a host of
stockholders over the state will be
left with the bag to hold. Among
them are quite number of Lincoln
people. A dispatch from Lexington
to the Cincinnati Enquirer Monday
had this to say of the concern, in
which many in this section will be in
terested, as quite number had plan
ned to make large loans from the
association:
The Kentucky Rural Credit Asso-
citation was incorporated under the
laws of Delaware, but the names of
the incorpoartors do not appear to
be available at Lexington.
The association was authorized to
have a capital stock of S1,000,000
and its business was to make long
term notes on farm lands, secured
by mortgage, the amount of a loan
in no instance to be greater than so
per cent of the value of the land
mortgaged. 1t was part of the plan
to issue bonds for the mortgages
taken, the bonds being secured by
the mortgages and 10 per cent addi-
tional put up by the association.
The bonds then were sold by invest
ors.
The loans made were for 20 years
on a per cent interest basis, with
stipulated sums payable each year of
the 20 years, steadily reducing the
principal and at the same time pay
ing the interest.
The plan has generally been re-
garded by fnanciers who have look
ed into it as feasible and a good
one if properly administered, but it
is alleged by President Mcdowell and
others of the Board of Directors
that from the very beginning there
appeared to be disposition to OPP
crate for the benefit of the promo
tiers and not the stockholders, the
vast majority of whom were farm
ers, it being stipulated in the agree
ments and plans of the association
that no person other than a land
owner could procure a loan. A
Board of Directors of prominent
| farmers in the several sections of
the state was announced and in due
time the election of the then Cover
nor, James B. McCreary, at a sala-
ry of $4,000 per annum was an
nounced, while Joseph c. Van Meter
was named Secretary at salary of
$4,000. James L. Watkins, of Lex
ington, was secured for Treasurer
at $4,000 per year. A bookkeepe1
was employed at $1,000 per year
and several stenographers were put
to work in offices, the furniture and
fixtures for which cost $4,000.
There are letters in the files in the
Offices now which set up the claim
that VanLanningham's force Of
stock statesmen represented to the
farmers buying the stock in the as
ISOLATION that they could secure {
loan after making the second pay
ment of the four payments required
up on each share sold. Theis, thu
present officers claim, was a direc
Misrepresentation and that it wa
in no way authorized. President
Mcdowell, however, charges laxit.
on the part of his predecessor ant
his associates in the matter of meet
ing these claims. Instead of makins
it clear to the farmer stockholde
that it was misrepresentation the,
are said to have adopted policy O
Cancellation, which Mcdowell assert
was equivalent to merely prolongin'
a certain day of reckoning.
Claude Mercer, of Hardinsburg
who is one of the Directors and
: leading attorney in his section of tn
state, states unreservedly that GO;
: great fraud has been committe,
/ somewhere" and he believes som
of the money can be recovered.
The present Directors as show
| upon the books of the association
: are: James B. McCreary, Richmond
: ]. L. Watkins, Lexington; Claud
! Mercer, Hardinsburg; R. A. Nc
5 Dowell, Louisville; p M. Witt, New
port; j. L. Earring, Shelbyville; I
5 C. Rankin, Lancaster; C. ]. EblicE
5 La Grange; j. Forrest Butts, Can
t rollton; William H. Giltner, Emi
= nence and John C.. Van Meter, Lex
S ington.