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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.

Chapter XI