Grand Forks herald. [volume] (Grand Forks, N.D.) 1916-1955, 1921-02-18
BELIEVED THAT
CAPITAL STOCK
WASNOT ALL CASH
Some Stockholders Notes
Believed to Have Been For
Original Purchase.
G..F. AMERICAN HAD
. HEAVY OBLIGATIONS
State Examiner Must Ap-
point Receiver-Stockhold-
ers Liable For Assessment

Peoples State Bank, the Nonpartisal
League financial institution, whicl
closed it's doors at / o'clock yesterda
afternoon on an order of the boar
of directors. Inquiries regarding tn
situation were made this morning b
a Herald representative and the fol
lowing facts were revealed:
The bank was doing business
on u $1o,OOO Capital slOck, much
fOi winch, 1t is believed, was not
ali lald in c;aen.
Many OF inc notes taken for
stock were secured by the organ
iz>rs [lhomiis Amen Box and
Jonn hastings OH the under-
standing tIlat Lilcy would not have
TO be paid for, The earnings OF
the bank being counted upon to
unlorllZe the obligations.
Before u bank can secure Il
charter, tho cashier must make u
certified statement to the effect
tIut the capital Stock is all paid
IN cash and the money OH dc
lDslt. 1t is we'll known, however,
that the Peoples State Bank mas
ON file notes OF stockholders, a
number OF which, it is believed,
were given in original payment
tor stock.
The Peoples State bank held
d note OF $7,5ND from the Con-
sumcrs' United Stores company.
49,. Tho hank held direct snotcska,f
9S, ,vuu aud ilttirscC notes dr OBJ
lig..tions. of $15,OOO from the
Grand. Forks american, which
went into the hands OF u receiver
carry in January. ...,.. -.
Tie last examination of the
bunk by state bank examiner
was made OH September =, 1920,
and the report Of the examiner
caves INC general condition Of the
bank as "tair."
On Lnat date, the Grand Forks
American had an Overdraft of
$YSu.
The report said:
Loans could not be verified.
There is no record kept of re-
discounts, and the discrepancy
Is perhaps TO be found here"
,lIc discrepancy referred to or
the amount short on loans is given
as 25,89s.35.
" On N ccmbcr 8, the last day
covered in the audit company's'
koisa, the Peoples State Bank was
unucr total obligations of $57, ,2SO.87
to the state bank. there being $17,-
227.72 in re-deposits and $4O,-
O53.25 in loans, rediscounts and
other obligations. Since that time
about $4,000 was paid the state
bank.
The Grand Forks Clearing
House Association, after an In
vcstigation of the situation and
in an <.7ort to help the bank, Of
fcred the directors loan of $780,
600, which was to be fully Sc
, cured, on condition that an us-
statement should bc made against
the stock and every effort made
to get in actual cash. The di-
rectors refused 10 accept the loan,
ono of them absolutely refusing
to sign his name for another cent.
&. Gordon, the cashier, wanted
to close the bank Oh Tuesday,
but was notified that he could
not do 50 except on authority Of
the board Of directors or by order
of the state examiner. A meet
Inc of the directors was immcd-
iatfly called. One Grand Forks
j, bank purchased several hundred
dollars worth of Liberty Bonds
from the bank, thus providing
cash enough to enable the bank
tn open Wednesday morning.
Iofthus Notified.
According to word received he
from Bismarck. the bank examin
was notified yesterday afternoon
the action of the directors in closir
the bank. o. E. Lofthus. the exam
liner. was not in Bismarck, so no al
ncuncement regarding his plans cou
be secured. So far as The Herald
able to learn. no representative fro
the bank examiners office has reacl
ed Grand Forks.
IT is the general belief that stocl
holders and depositors will be paid
full, although 1t will take some tin
to secure the money. Those famili
with the situation are Of the opinit
that the loss will not be more this
the capital $4,000.
The first step in handling the a
fairs Of the bank will be the appoin
ment of a receiver. This will be dol
bv the bank examiner.
Stockholders liable for Assessmer
Under the law, stockholders a
liable for 100 per- cent assessme
on their STOCK. a receiver dlso
annowered to realize on the gross a
sets Of the bank. To do so, a receiv
For the Peoples State bank won
have to begin a collection campaig
The gross assets. listed at $4,000
more than cover the liabilities of Il
institution.
CONTINUED on page 5.)