The Hays free press. [volume] (Hays, Kan.) 1908-1924, 1921-02-17
BANK EXAMINATION ORDERED
Startling Disclosures Made at Bis
marek, Recently; Many Loans
Made Without Proper


Made Without Proper
Security
Bismarck, N. D., Feb. 10. E.
Lofthus, state bank examiner, has
apparently been using the State Bank
to help finance banks in a critical
financial condition and this may ac-
count for the nearly a million dollars
that is now on deposit in closed
banks.
Mr.. Lofthus testified yesterday on
the witness stand before the House
Investigating committee that he had
requested Mr.. Cathro to send $4,000
to bank at Beach the day before it
closed and he said that he did so be-
cause he thought it could be kept
open.
The evidence produced at the hear
ing yesterday was the most damaging
which has yet been presented. Mr..
Lemke was present at the hearing
and he was visibly affected by the
startling facts brought out.
The offering of the envelope found
by Max O'Connel, a Bismarck high
school boy, Monday evening, in the
cloakroom of the Patterson dance
hall, was a complete surprise.
In this envelope were blank notes
signed by officials of the Nonpartisan
league and with them receipt book
used by appraisers of the Bank of
North Dakota
One of the notes was completely
blank save the interest rate and the
signature of A. C. Townley. Others
had the amount filed in from $25 to
$4,000, but had the payee line and
the due place blank. These were
signed by the Nonpartisan league, by
J. A. Johnson, treasurer; George "A.
Totten, acting secretary, or Ray
Craig, manager, and in two cases by
both Totten and Johnson.
After reading the notes, Attorney
Sullivan said that if any one would
step up and claim them he would be
glad to return the property, but there
was no rush.
Big Brokerage Fee
Mr.. Murphy asked Mr.. Cathro re-
garding a brokerage fee of $4,16O
charged by the State Bank in pur-
chasing the feed and seed bonds Of
Dunn county. The bank manager
said he could not state exactly what
had become of it, but that he thought
it had been turned over TO the brokers
to which bonds had been sold. Mr..
Murphy asked him to produce the
records regarding this transaction.
The finding of notes of the men
whose paper at the time of the Scan
dinavian-American bank closing was
found in that bank and held by Dep
uty Examiner Halderson TO be chad
paper" in the State Bank at the time
of the audit of Bishop, Brissman &
Co., made their report December 3,
again refuted the claim of the League
that no paper of that organization or
its subsidiaries was in the State Bank.
Porter Kimball, who was one of
the men whose loans was held to be
in excess at the investigation of the
Fargo bank, was found to have notes
of his corporations and endorsed by
him, and unsecured totaling $14,-
O41.17 in the state bank as collateral
for loans to the Scandinavian-Amer-
lean bank.
E. ]. Wheeler, who also figured il
Haldorson's report, had S8,624.54
worth of paper, and P. C. Jahnke OF
Casselton. had a note for over $1,000
secured by bank stock, the value OF
which at par, was less than the note
Other notes held as collateral OF
the same nature were read into the
record by E. G. Lee of Bishop, Briss-
man & Co
The Industrial commission is ap
narently determined to save the
State Bank at all costs. What par
Townley played in this decision is no
known. but since his arrival this time
he has apparently been much IN con
ference with William Lemke.
The commission has authorized the
hank to send agents out and compe
the country banks to meet the with
drawal of the Bank of North Dakota
Checks which can not be met I'M
mediately by the state bank will b
registered and will then draw SIX pc
cent interest.
Bismarck, N. D.. Feb. 12.-The
Independent Voters Association to
dav gave the executive committee O.
that organization authority to start
recall. and in a resolution stated tina
this would be necessary, unless Tn
nresent members of the industrial
z-.o.,-,, or found WAYS ant
means to thaw out the frozen esA1
funds to cure the result OF four year,
Of mismanagement.
The association also condemned tn
various advertisements which the IN
dustrial Commission IS alleged to b
publishing as misuse of STATE
funds paid tribute to the "eOnsti