Rensselaer Semi-Weekly Republican, Volume 40, Number 16, Rensselaer, Jasper County, 1 November 1907 — NO INSOLVENCY IN UNITED ACT [ARTICLE]

NO INSOLVENCY IN UNITED ACT

State Auditor Sanctions Position of Bankers In the Issue of Certified Checks. It took but a little reasoning for creditors of the banks to realize that the action of the banking association determined upon Monday and at once put into execution was well timed and actually in th° interests of the depositors and the business of the community, and while the decision of the banks not to pay out currency caused some inconvenience the public adopted a reasonable view of the situation and accepted the plan of the bantis to employ draffs and certificates in the transaction of business. Had the banks not adopted- the plan they did they might easily have been drained of every dollar of currency within a very short time and thereby created distrust and inconvenience that it would have taken much to overcome. The ready grasp the local bankers took of the situation prevented any ac tion that might have created a run On any of the banks and placed the entire body of depositors on an equal footing, large and small, and business has gone on without interruption, drafts being issued as usual in payment of all bills from out of town and the checking system being employed for any consid arable amounts in the transact ion of local business. The question of a bank’s solvency if it refused to pay cash on account was raised by a few, not with a view of testing it but questioning the legal authority of the banks to adopt limited currency payment. The following circular letter received by all banks and trust companies of the state from auditor will set at rest any question relevant to this position. The letter reads: To the Indiana Banns and Trust Companies: Gentlemen: Your bank solvent, should it adopt the same rule that has been adopted by the banks of Indianap olis and refuse to pay to any deposi tor or holder of a check only a limited amount of money in cash and settle the balance due by issuing certified checks, or drafts on correspondents, such act, in this emergency, will-not be considered an act of insolvency by this department.

The same rule will apply to trust companies. John C. Billheimer, • Auditor of State. The following form of script is being issued by the local ban^s: ASSOCIATED BANK CERTIFICATES. Rensselaer, Ind., October 28, 1907. Any of the banks whose names are printed below will pay to Bearer on demand One Dollar, ninety days after the above date. The payment of this certificate is secured by the combined capital of the undersigned bsnks, also by collateral worth more than the face value ot all certificates issued. The following banks are bound for the papment of this certificate: The First National Bank, Rens selaer, Indiana. The Jasper Savings & Trust Company of Rensselaer, Indiana. The Bank of Mt Ayr, Mt. Ay*’, Ind. The State Bank of Rensselaer, Indiana. The Bank of Wheatfield, Wheatfield, Indiana. * : Secretary. .....President. Committee Associated Banks. On the reverse side of this certificate is printed: ■■ tlm undersigned guarantee the payment of this certificate. • •••••« •• UIM ••#•••#•••*••••••••••*•••••• •••••• v- * The above is the form of certificate issued by the Associated Banks in Rensselaer. It is signed by the President and Secretary of the Committee of Associated Banks,

• and before issuicg certificates to any bank, notes of far mers or bonds are deposited with the Committee of a greater'value than the amount of certificates ironed to any bank. Said Committee is composed of five members, a representative from each bank composing said Committee, who pass upon the collateral offered. Said collateral pledged is also guaranteed by the personal indorsement of the Directors of the bank pledging the sama It is now thought that the money stringency is practically overcome and that business will within a few days be resumed on the old basis.