The Topeka state journal. [volume] (Topeka, Kansas) 1892-1980, 1919-05-28
Bank Guarantee Fund To Suffer
by Salina Crash.
Large Part of Reserve May Be
Used in Payments.
ACCOUNTS ARE BEING CHECKED
Bad Paper May Amount to as
Much as 100000.
New Bank Using Equipment OF
Defunct Institution.

Kansas state banks which for ten
years have zealously built up the state
bank guaranty fund, may now appor-
tion a large slice of their funds to the
defunct Kansas State bank of Salina
Closing of the doors of the Sa1ina in
stitution has occasioned no excite
ment. Depositors know they will get
dollar for dollar. What is more, GER
tificates on the state guaranty fund
draw per cent interest from date OF
issue.
John Hunt, representing the state
banking department in handling the
legal tangle. returned today from Sa-
lima. He said that of the 400 de-
positors of the bank, fewer than thirty
called for their money Tuesday. or
the $4,000 worth of certificates is
sued by Frank j. Harper. examiner in
charge of the bank, practically all OF
the money was redeposited with the
Reserve state bank at Salina. This
bank received a charter several days
ago, was incorporated by Fred w
Payne, state treasurer; Guy 7. Hell
vering former congressman, and their
associates.
New Bank in Same Building.
Tuesday morning when the Kansas
State was closed by order of Walter
f. Wilson, state bank commissioner.
the Reserve State opened for business
in the same building and with the
same fixtures.
No bank failure in Kansas since the
enactment of the bank guaranty act
has threatened such a heavy jolt for
the fund The exact amount of bad
paper in the bank is unknown. 1t is
estimated at from $250.000 to $400,-
900. To meet this paper Commission
er Wilson expects to reduce losses
, from sale of considerable valuab BILE
property owned by officers of the in
stitution.
A total of s1,2o2.Ooo worth Of as
sets are in the bank guaranty fund.
This includes $402, 900 in cash and
100000 worth of bonds deposited by
| banks operating under the law. The
fund will easily absorb the Kansas
state bank losses without tie necessity
of an extra assessment on the banks.
None the les3 there is every prospect
that losses of the Sa1ina bank will eat
a big hole in the cash reserve of the
fund. The cash and bond fund has
been steadily growing since the legis-
lature passed the law in 1909.
Had the state banks of Kansas been
a BILE to weat ther the present year with
out losses, further assessments Of par
ticipating guaranty banks might have
been evaded. The law provides that
each bank participating under the
fund shall make a cash payment to
the fund in an amount equal to one
twentieth of their total deposits. They
shall also deposit with the state treas
ury bonds equal to $500 for each
$100,0 or fraction in deposits. 1t
! has been under this system of assess
ment that cash and securities amount
ing to more than $1.200,000 have been
accumulated. Under the law further
cash assessments would have ceased
when the cash reserve reached half
million dollars. This figure might
have been reached this year without
failures of participating banks.
L. A. Johnson, assistant state bank
commissioner, is in SaIina checking
the accounts of the Kansas State bank.
Frank j. Harper. an examiner, is in
charge of the business affairs pending
appointment of a receiver. John Hunt,
former assistant attorney general, will
direct the legal fight connected with
the settlement of the banks affairs
Hunt was in charge of the affairs of
the institution when the Felix Broeker
smash came some months ago and the
bank was reOrganiZed.
Broeker is interested in the present
, tangle of the Salina bank. He is said
to be in New York. where he is seek
ing to raise funds with which to clean
up some of the objectionable paper in
the hands of the banking department
H. J. Lefferdink, cashier of the
closed bank, left Salina Monday morn
ing. 1t was reported that he had gone
to Kansas City. Commissioner Will
son said today that the department
had been unable to find the bank
cashier.
No arrests have been made in con-
nection with the failure.