The Bismarck tribune. [volume] (Bismarck, N.D.) 1916-current, 1924-04-17
BANK CONDUCT
AT WILLIST0N
DEFENDED
John +. Sullivan Attorney.
Says Voting Trust Agree
mcnt was for Good of Bank
EXPLAINS THE BASIS
Disastrous Crop Conditions
Alone Cause Williams Co.
Bank to Fail, He Says

DoAn W i ohS AN DSAy
The voting trust agreement
County State Bank of Williston was
refinanced in December, 1920, and
which was the basis of attacks lead
ing up to the filing Of charges against
four signatories by U. L. Burdick
was, explained today by John +. Sui
livan Of Nandan, attorney for two of
those named defendants in the COM
plaint instituted by Burdick. The
charges against the four men in
.volved-Geofge F. Bates of the Cit,
liens Trust Company of Buffalo, n.
Y; Ed. Schulenberg, First National
Bank. st. Paul; Erick Thorberg, First
National Bank, Minneapolis; and
Gilbert Semingson, at present state
bank examiner but who represented
the Bank of North Dakota in the
agrcement-were dismissed in Willis
ton yesterday.
The actual facts in the matter
show not only that there was nothing
criminal in the voting trust agree
ment, but in truth and in fact the
so-called trust arrangements from
the standpoint of what appeared to
be the conditions at that time was
for the best interests of the bank
and its depositors. said Mr.. Sulli-
van.
Outside banks refinanced the Will
liams County Bank in 1920. They
allowed credit OF approximately a
quarter of a million dollars and ad
vanced $4,000 cash to take up bad
paper, according to Mr.. Sullivan.
The outside banks who had done tins
desired to know that the bank would
be under what they considered safe
management. The voting trust agree
ment was made under which their
representatives could vote the stock
and protect themselves.
Advanced Credit
+. "The result of the trust agreement
was that Twin City banks advanced
credit approximating a quarter OF Il
million dollars said Mr.. Sullivan.
IF conditions in the Williston ter
ritory had subsequently been any
thing other than absolutely dsas.
trous the Williston bank today would
have been ono Of the big banks of
the state.
The voting trust agreement did not
require that the outside bankers be
permitted to run the bank, Mr.. Sui
livan said. but was simply for the
purpose of assuring the banks who
were advancing the money that the
management of the bank would be in
the hands of people capable of giving
it expert attention"
No changes were forced in the
bank personnel, it was pointed out.
Reports show that up to the end of
this trust agreement, which termi-
mated Oh January IL, 1923, many
months before the bank closed, that
the bank was in excellent condition
insofar as bad paper was concerned"
Mr.. Sullivan continued. 'As a mat
ter Of fact when the trust arrange
ment was entered into, it permitted
the taking out Of all paper known
to be bad at the time, which amount
ed in the neighborhood of $32 900.
When it was necessary to refi-
nance the Williston bank. it is point
ed out here at the banking depart
ment. not only the bank directors but
citizens of Williston were called in
to pass on the security in the banks
hands, since these local people knew
the value of the security better
than outsiders. The paper they de-
cided was bad paper was ordered
out of the bank.
Crops Failed
Several banking department Off
cials assert that if the Williston dis
trict had had crop in 1923 like the
district enjoyed in 1922 the bank ne
YER would have closed. The Willis
ton area. they say, was one Of the
hardest hit in the state, and there
was more emigration from that dis
trict than in most others. 1t was
pointed out that lands in the Willis
ton district sank in value 50 that
their selling value lacked $4 to Sc AIN
acre Of equalling the amount of first
mortgages, and since first mortgages
usually made on 40 to so percent
valuation, the shrinkage IN land
values. for banking purposes, was
more than half. As an example, one
official pointed out that $4,000 loan
might have been made on a farm
considered worth $4,000. The farm
later would sell for not more than
81 500. or less than the mortgage
The same was true of cattle, there
being much cattle in that territory,
after the slump of 1920. Most of
this slump in values took place after
the voting trust agreement was made
and the bank refinanced. The Twin
City banks and others expected con
ditions to right themselves, but they
got worse instead of better, it is
pointed out. The Williston bank was
finally forced to close June IL, 1923
Gilbert Semingson, who figured in
the voting trust agreement. was dep
uty state examiner in December
1920. and he represented the Bank
of North Dakota, which was heavily
involved with the Williston bank
F. W. Cathro was director-genera
of the Bank of North Dakota at tn,
time.