The Richmond palladium and sun-telegram. [volume] (Richmond, Ind.) 1907-1939, 1922-03-23
NO AUDIT IN
"a MONTHS OF
CLOSED BANK
State Bank Departm en,t
Awaited Cooperation of
Federal Reserve Bank to
Examine Dickinson Trust.
HIATT IN FULL CONTROL

hiatt IN FULL CONTROL
Why was the Dickinson Trust COM
pany, which was closed by Charles w.
Camp, state bank commissioner on
March Is, not examined for period OF
u months by the state banking de-
partment or the federal reserve bank?
This is question asked by many de-
positors of the trust company and by
persons acquainted with banking
methods. The answer is three-fold:
Representatives of the state
banking department say they
were waiting for cooperation
from the Federal Reserve Bank
before they conducted an exam
ination.
The Federal Reserve Bank
answers that 1t makes an exam
inatIon only where there Is an
Indication of gross Irregularities
or marked abuse of federal re-
serve facilities.
Lastly, the Dickinson Trust
company was lone man" insti-
tuition, In which Edgar r. Hiatt,
Its deposed president, dominated
the board of directors and the
personnel of the trust company.
If the foregoing factors are kept in
mind it will be possible to compre-
bend how $660,000 worth of unde-
sirable" securities, as Charles w.
Camp, state bank commissioner, de-
scribed them, could have been substi-
tuted for gilt-edge securities between
last October and March 10.
Benefit of Delay
A representative of the state bank
Ing department says it was a good
thing for the stockholders that an ex-
animation of the condition of the bank
was not made last fall, as would have
been the case in the regular course Of
affairs.
If this examination had been made
prior to that time, the process of sub
stituting undesirable securities for
good ones would not have been inter
rupted as was the case when the ex-
animation finally was started in March.
Another year might have rolled
around before the examiners again
stepped into the bank, and in the
meantime gigantic irregularities might
have taken place.
The failure to do so last fall, and the
institution of the examination in
March fortunately interrupted the pro
cess of substituting securities shortly
after it had gotten under way.
State banks are examined about
I twice year. but as a rule, 10 months
TO year intervenes between the con
clusion of one examination and the
beginning of another.
"The Dickinson Trust COM
pany was not examined for ID
months" said representative
of the state department, "be-
cause we could not secure the
cooperation of the Federal Re-
serve Bank. We asked them re-
peatedIy to send a man to 90
through the bank with US.
1--WE believed that because the
Dickinson Trust company was a
member of the Federal Reserve
Bank, examiners from that bank
should Join with us in this work.
1--WE delayed the work as long
as we could, and then came In
ourselves"
w. A. Heath. chairman of the FED
eral Reserve Bank of Chicago, ha
made the following statement:
THE Federal Reserve Bank
maintains but limited number
of men on it's examining force,
and as a rule these examiners
Join with state or national de-
partments in cooperative exam
ination, or make independent ex-
aminations only when there are
indications of gross irregularity
In banking practice or Of mark
ed abuse of facilities of Federal
Reserve membership.
"Only occasionally have they
taken part in examinations
other than above Indicated, and
that only at times when at the
= moment sufficient number of
the force happen to be available
for regular examination work.
"The Dickinson Trust COM
pany has never at any time
abused its privileges with the
Federal Reserve Bank. Their
lawful reserve with us has been
maintained at the proper figum
until the day before it closed.
when they wired for a large
cash shipment, which was i'm
mediately sent.
at has never abused its bor-
rowing privilege, being most of
the time out of our debt, and at
the time of closing owed us but
sixty thousand dollars, whereas
on the basis of its lawful reserve
it would have been entitled to a
much larger amount without
question.
at is true that Commissioner
Camp invited US to join him in
an examination of this institu-
ton, but our entire force has
been for months engaged with
greatly over-extended banks. We
believed and still believe in
Commissioner Camps ability to
deal with critical situations such
as this proved to be.
His prompt action in the sit
uation when he discovered the
facts and his efforts to accom-
plish a speedy reopening on a
;@E, L