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CHAPTER X
Banks and Bank Failures
During the early '60s N. W. Brown, D. Steele,
and his brother H. K. Steele established a bank of deposit at Albia. The concern
did a general banking business under the old Iowa State banking statute. Brown
was president, D. Steele treasurer, and H. K. Steele cashier. The practical
management of the concern, however, seems to have been under the cashier.
In 1870 the funds on deposit in the bank disappeared and H.
K. Steele left for parts unknown. The funds on deposit were chiefly the small
savings of private individuals, and the amount aggregated about $25,000. Nearly
everybody who had accumulated a little surplus money had placed it in this bank,
and when the concern went down, there was great excitement.
Israel Mills, one of the largest depositors, went in pursuit
of Steele, and arrested him at Cincinnati, Ohio, and brought him back to Albia.
Here Mr. Steele promised his creditors that he would disgorge the embezzled
funds. Some of his creditors arranged with his custodian, Mr. Mills, that the
prisoner be driven to the court room, where negotiations looking towards a
settlement were to be arranged. Steele feigned sickness, but he was loaded into
a sled and started for the court house, but while emerging on the Square the
sled was boarded by a crowd of creditors and the entire party was driven rapidly
out of town. Mr. Mills, who had Steele in custody, was forcibly ejected from the
sled. The sleighing party drove to the residence of Thomas Brandon, in Franklin
Township, but, being pursued by Sheriff McDonald and posse, pushed farther to
the southwest and entered Wayne County.
Steele made some satisfactory verbal promises to his
custodians, and he was brought back to the custody of Mr. Mills. He then went
back on his promises, and finally was arraigned on a charge of perjury and
obtaining money under false pretenses.
He was never punished for his crimes. The people never
recovered their money, and Mr. Steele spent the remainder of his days in Albia.
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Mr. Steele laid the blame on the president of
the bank, and probably on this account escaped conviction. The bank president,
in turn, shifted the responsibility on Wagstaff & Company, bankers, of New
York. It was a clever piece of thievery, and Mr. Steele never succeeded in
living down the calumny which clung to his name.
A part of the embezzled funds belonged to one or more of the
churches. He made no discrimination, but seized every cent he could get his
hands on, and held it to the last, even at the risk of being lynched by an
outraged community.
The next bank failure occurred in 1883. The Monroe County
Bank, which was established at Albia on March 15, 1875, by T. S. Tharp &
Company as a joint stock company, was instituted on a solid basis, so far as the
financial backing of its stockholders was concerned. It was not begun as an
incorporated banking institution under the State banking laws. Its
correspondents were Geo. Opdyke & Company, New York, and the First National
Bank of Chicago. Its stockholders were T. S. Tharp, D. M. Miller, Lewis Miller,
W. M. Tharp, Jas. Elder, Zadoc Chedister, Fred Seifert, N. E. Hendrix, John
Thompson, J. B. Bell, L. S. Chedister, Nelson Gillespie, B. P. Tharp, Cyrus
Kerr, J. B. Turner, A. M. Andrews, Clendenin Boggs, Geo. P. Cramer, H.
Hickenlooper, Robt. Simpson, Geo. Kerr, Martin Clever, J. A. Edwards, J. M.
Richardson, Parmenus Tuttle, Dr. J. H. Russell, B. Fritz, T. E. Bower, Dr. T. H.
Elder, Monroe Miller, M. R. Miller, J. Baldauf & Company, and Henry Miller.
Various changes were made in its management from time to
time. T. S. Tharp retired from the concern before its fall. At about the time of
its dissolution Lewis Miller was president, John Clemons vice president, and
Dan'l M. Miller cashier. Lewis Miller, John E. Carhart, D. Miller, Zadoc
Chedister, John Clemons, J. D. Shields, L. O. Haskell, Cyrus Kerr and Matthew
Elder were its board of directors.
The bank claimed a capital stock of $50,000, and a surplus of
$10,000 just prior to its collapse.
The board of directors was composed of men who had no
knowledge of banking methods, and it was an easy matter for the cashier, Mr.
Miller, to so juggle the books that the board of directors did not suspect and
crookedness. The directors had implicit confidence in Mr. Miller's honesty and
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competency, and probably never took the pains to make a close
scrutiny into the affairs of the bank.
In December, 1882, Edward A. Temple was appointed receiver of
the bank, the concern in the meantime having made an assignment in favor of J.
A. Edwards. In April, 1883, Mr. Temple made to the District Court the following:
RECEIVER'S REPORT
Liabilities
Claims filed with receiver to April 1, 1893 |
$190,044 89
|
|
Assets
|
||
Cash collected by assignee |
$2,591 02
|
|
Cash collected by receiver |
2,307 44
|
|
$4,898 46
|
||
Bills receivable |
$53,555 88
|
|
Less Probable loss on same |
45,097 00
|
|
$8,458 88
|
|
|
Less collections |
4,898 46
|
|
Leaving available bills receivable |
3,560 42
|
|
Ft. Scott and Gulf Ry. stock estimated at 80 cents. |
800 00
|
|
Amounts available for dividends and expenses |
9,258 88
|
|
Bills receivable held as collateral ( a large portion of which is held to be forged paper) |
24,889 00
|
|
Overdrafts (mostly against certificates of deposit held by creditors) |
9,307 30
|
|
Bank buildings and fixtures at cost |
$12,500 00
|
|
Less incumbrance, say |
8,500 00
|
|
4,000 00
|
||
Other real estate |
$10,000 00
|
|
Less say |
7,000 00
|
|
3,000 00
|
||
160 shares mining stock, Co. stock - no value |
|
|
80 shares A., K. & D. R. R. stock - no value |
|
|
Bills receivable, but which, according to the books, have never been paid, but missing from the assets of the bank |
33,421 84
|
|
Total assets |
$50,455 18
|
|
Deficit |
$139,589 71
|
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In the four years and nine months of the
bank's existence it appears that it lost over $16,000; notwithstanding this
loss, the concern declared dividends and created a surplus fund. There was
actually a shortage in the cashier's accounts, after allowing for all credits,
still unaccountable for, to the amount of $163,925.29. While the books of the
bank showed the assets in bills receivable to be about $74,000, and the
liabilities on certificates of deposit to be only about $30,000, the real facts
were that the assets were only about $14,000, and the liabilities on
certificates of deposit to be about $142,000. As additional liabilities, there
were bills payable, sold, and cash received to the amount of $27,500, of which
there was no entry on the books of the bank. The books of the bank showed that
the cashier had paid out, up to October 11, 1882, the sum of $4,129.52 more cash
than he had received up to that date. He evidently failed in many instances to
give credit where cash was received.
The condition of the bank was found to be in such a tangled
condition that it is impossible to give a detailed statement of the wreck,
within this limited space. The story is one of mismanagement and gross
corruption. It is a story of forgery and embezzlement committed by the cashier
without the knowledge of the other officers of the bank.
Mr. Miller, the cashier, was arrested, convicted of
embezzlement, forgery, and fraud, and sentenced to seven years at hard labor in
the penitentiary at Fort Madison, Iowa. He served out his term, less the usual
time commuted for good behavior. At one time he was one of the most popular men
of Monroe County, and save his complicity in the bank affair, led a strictly
moral and upright life, so far as generally known. Since his release from the
penitentiary he has resided in Kansas.
The First National Bank of Albia is the oldest bank now doing
business in Monroe County, and for many years has transacted probably three
fourths of the banking business of the county. It was started January 7,
1871, by J. H. Drake as president, and B. F. Elbert as cashier. The board of
directors consisted of John A. Drake, John H. Drake, Andrew Trussell, John B.
Lockman, B. F. Elbert, T. S. Tharp, Job P. Jay. It began with a capital stock of
$50,000, and has always weathered through periods of financial unrest without
any embarrassment.
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In 1885 B. F. Elbert retired from the bank as
cashier, and was succeeded by Thos. D. Lockman, who for ten years previous had
been with the bank, as assistant cashier. Mr. Lockman still discharges the
duties of cashier, and is assisted by Mr. Roy Alford.
The institution at present has a surplus fund of $30,000, and
its non interest bearing deposits exceed $150,000. A large majority of the stock
remains in the Drake family, where it has existed since the creation of the
bank.
A short time after the failure of the Monroe County Bank, the
Albia National Bank was established in Albia on the northwest corner of the
Square, where the First National Bank is located at present. Wm. Bradley, of
Centerville, Iowa, was president of the concern, Captain W. F. Vermillion vice
president, and J. R. Hays, cashier. It was a sound and well conducted
institution, but it never prospered. The local patronage was not sufficient to
maintain two banks, and in three or four years the enterprise was abandoned.
The Albia State Bank was established at Albia, March 26,
1891, by Judge H. H. Trimble, of Davis County, Iowa, and Senator T. B. Perry,
with an authorized capital stock of $50,000. S. W. Pennington, a son in
law of
Mr. Perry, has from its beginning acted as cashier. The institution, while
enjoying a fair degree of prosperity, does not transact a large volume of every
day routine business. The concern is never without an abundance of funds,
and its management is safe and reliable.
Thos. Brandon for many years has conducted a local banking
business at Melrose, Iowa, on a limited scale. His banking operations are
chiefly restricted to exchange, loans, and discounts. The concern is on a sound
financial footing, and is of great advantage to the town.
Trussell & Eslinger, at Foster, Iowa, act as an auxiliary
of the First National Bank of Albia, in the exchange business; and Chamberlin
& Carson, of the same place, are correspondents of a large Chicago banking
house.