The Idaho Republican. [volume] (Blackfoot, Idaho) 1904-1932, 1924-05-08
SOME BANKS, BANKERS AND
MEN AND WOMEN


Boise, Idaho, returned verdicts OF
rather unusual features, and people
of Ada county and Bingham county
have occasion to make some COM
ments. Out of such volume of COM
ments as are now being made it is
rather easy to gather some lessons
that might be worth recording.
First, let it be explained, a banker
was on trial for his operations in try
ing to keep bank from going broke
when it had foolishly loaned the de-
positors' money to people who could
never hope to pay it back. Some OF
the people deposited their money for
safekeeping, and others borrowed 1t
and fooled it away or lost it in the
plunges and crashes of business of
the recent stormy times that are not
yet ended The bank was supposed
to be the evener, the ballast, the
balance wheel to guard everybody
interests, but in fact and practice 1T
seems to have been plunging as fool
ishly as the most foolhardy of its
patrons. 1t is said to have loaned
money to farmers on second mort
cages when they had already bor-
rowed more than their property was
worth on first mortgages. 1t is said
to have loaned money to laborers to
use in buying sheep at high prices
and then left it to the laborer and
newly-made executive to go about IN
his new Importance making all kinds
of expense on the flocks and going to
the bank for money to meet these
expenses. Then came the hard
winter an the stock had to be fed on
hay that scared in prices, and that
~. -, L. Go H,,1A r,rinn
tied up in the fiocks. Following
these conditions came the drop in the
price of sheep, wool and lambs, and
the bank in question closed out it's
fiocks and took their losses when
prices we're at the bottom.
We have been informed and we be-
lieve it is true, that the bank lost
more than half a million dollars of
it's own and the depositors' money in
a year or two of that kind of plung-
ing, and never recovered from 1t. We
have information gathered from
sources that make us believe 1t Is
true that the bank was insolvent in
1921, and that for more than two
years they kept it afOat by ASSEMBLE
ing their resources, by selling their
liberty bonds, by borrowing on their
resources of various kinds, by trans
fering money from one fund to an
other, by what is generally known
as "kiting," by taking from Peter to
pay Paul, and finally by using other
peoples wealth as a basis for loans
to get money to tide the bank over
to the hoped-for safe ground ahead,
which they never reached.
If this is the true theory of the
failure, it has consoling features in
the fact that those in charge of the
bank used up their own resources
first in operations which they believed
would save the institution from fail
ure. Then, seeing that further
heroic efforts were necessary, they
resorted to more desperate tactics,
intending as all such actors do, to
put 1t back when safety is reached,
and that part of the story sounds
exactly like the story of practically
all the beginnings of embezzlers, who
have been caught and exposed. At
first they are all honest in their in
tentions to repay it, but that honest
intention has a germ in it that
matches rapidly into other forms of
activity as they progress in these
acts that are departure from sound
business and honesty.
If our defunct bank was insolvent
for two years or for six months
prior to its closing, what was the use
In having state bank examiners?
Anybody could close an institution
that had been insolvent for few
months or few years. We are
convinced that the department of
finance of this state is justly subject
to censure for not taking charge of
N ~ rhAv AvCf
faced insolvency. If examiners are
not employed to detect these things
and to stop the damage before it |
blows up Of it's desperate ventures,
then we might better dispense with |
bank examiners.
But back of it all there Is another |
greater and more damaging power
that has been mismanaged, the Fed
eral Reserve bank. Our information |
makes us believe that when our
finances were already dangerously |
inflated. it encouraged people to Dor
row more money; that it encouraged |
the banks to loan more money and
-drummed up business on the slogan,
Get the money out among the
people" Then when the day of set |
Element came the Federal Reserve |
reversed its policy and collected with |
a firm hand. There was period |
when the United States, in common
with all the allies, counted on having |
a lot of money coming in as result |
of the payment of war debts and in
IDENTITIES They are all suffering in |
disappointment, and the failures re-
sulting from it are worldwide. In
view of all these conditions it is hard
to fix responsibility and say what
punishment should be meted out to
any one individual. 1t is joint re-
spohsibi1ity, and juries all over the
country have refused to return the
verdict of guilty against individuals
when it appeared that they were the
victims of the whole complicated
system of high finance above and be-
low. In many cases where convictions
have been secured, executive Glenn
ency or the acts of pardon board
have been invoked early to set the
ri n