New-York tribune., 1922-08-10
New bank to
Get Asse cts of
The Mercantile
Bank of Central and South
America Incorporated at
Hartford With Capital
of Five Million Dollars
10 Drop Trading Firms
Control Will Be Divided
Among Various Financial
institutions of Country

incorporation at Hartford, Conn. of
the Bank of Central and South Amer
ica, with capital of $4,000, 900, brings
to the point Of final adjustment the af-
fairs of the Mercantile Bank of the
Americas, whose snarled condition q
year ago caused the most severe crisis
of the deflation period in the financial
district.
The new bank, whose capitalization
is divided into $4,000 shares of S1O0
par value, will, it was learned last
night, take over the assets and bust
ness of the Mercantile Bank, which has
been under liquidation for more than a
year. The branches in South and Cen
tral America which can be carried on
at a profit will be continued when the
affairs of the Mercantile Bank are
wound up, but the trading companies
associated with the enterprise will not
be acquired
Little information regarding the
project was available last night, but
Edward R. Stettinius, of ]. P. Morgan
d Co., indicated that he would be pre-
pared to divulge full details to-day.
Mr.. Stettinius has been probably the
most active member of the committee
named to administer the Mercantile
Banks affairs, the committee including
also Gates w. McGarrah, chairman Of
the Mechanics and Metals National
Bank, William C. Potter, president of
the Guaranty Trust Company; Walter
e. Frew, president of the Corn Ex-
change Bank, and Willard V. King,
president of the Columbia Trust Com
pany.
Ownership Divided
The understanding is that owner
ship and control of the new bank will
be divided among various banking in
stitutions, and houses much as was
that of the Mercantile Bank of the
Americas. In that institution, the
Guaranty Trust Company, Brown
Brothers & Co., and J. & w. Seligman
d Co, were the largest stockholders,
while other banks all over the country
were jointly interested. The Board of
Directors and personnel of the new
bank is expected to be determined by
the committee which has liquidated
the Mercantile Banks affairs.
The Mercantile Bank "situation"
first began to assume threatening pro-
portions following the collapse late in
1920, of the price of sugar, cocoa and
was
terested. The bank was engaged in
financing South and Central American
commodities from the soil up and de-
pended for repayment of loans upon
the sale Of these commodities. When
the bottom of the market fell out, ad-
ditional money was called for to en-
able the financing of new crop, what
occurred being virtually pyramiding
process in the, expectation that prices
would recover, r" f+NT, "
r Z Called Upon Stockholders
First official intimation of the de-
velopment of a crisis was given when
early in 1921 call was made upon
stockh olders to contribute additional
capital, and an acceptance credit was
established in which great majority
Of the banking institutions and houses
in the Street participated This at
tempt to meet the problem proved un-
successful and late in July, year ago,
the situation became so acute that J.
P. Morgan postponed his annual holi-
day trip to Europe and further
credit was provided.
Since the Morgan firm definitely took
charge, little information has been
Forthcoming on progress of the bank S
affairs. 1t has been known that the
commodities held by the bank were be-
ing gr"d ally disposed Of and that as
sociated banks and trading companies
were being liquidated or put on a sound
bas $. No exact estimate of the losses
tn have been taken is available, but
they 1re known TO run into millions.