There will be no indictment of the 25 directors of the defunct Albemarle Bank, whose Cashier, W.H. Holland, was sentenced to three years and nine months in State’s Prison tis week by Judge Grady. The testimony of Holland that the directors of the bank had known its condition for years will not result in any criminal action, but doesn’t bar any civil procedure.
“It would do no good to indict them,” said Judge Grady. “They are men of high standing in their communities, they have been hard workers and good citizens, and although they may have proceeded largely in ignorance, nothing could be accomplished. It would humiliate them and do harm to them and their communities.”
And this will mark the end of the criminal prosecution of the case, except the hearing in June of N.E. Hart, who was employed as a teller in the bank. On the testimony of Holland, Hart was held this week as an accessory, because some of the entries in the books were made by him, and he is now in jail in default of $5,000 bond.
Dr. E.L. Hoffler, president of the bank, declares Holland’s testimony untrue, and says every cent of stock he subscribed was paid in 50 per cent down, and the balance in installments. Dr. Hoffler explains that when the bank opened more stock had to be sold to comply with state requirement, and that much of this was subscribed to by the directors. He states that a note of $0,000 was made by director to tide the bank over, and that Holland had no emergency to meet on this score. Dr. Hoffler insists the directors knew nothing of the condition of the bank as reported by Holland, and were ignorant of the state of affairs all along until the crash. He expresses the belief that Holland got the money.
The Politics of Banking
But there were startling features brought out in the case of Holland. Thousands of bank depositors are asking worrisome questions that will demand action by banks of character and standing that want to hold their own with their patrons, and the circumstances may result in some effort for the improvement of regulations thrown around the banking business of North Carolina.
Hundreds of people have asked, “what good is a bank examiner if a bank could be insolvent for five years, and the state authorities never knew it? What protection have we got? For all we know, any bank could pull the wool over the eyes of the examiners if this negro bank cashier could do it.
Bank auditors defending themselves against the pointed inquiries of the public insist that the tax payers are unwilling to provide the money to hire more auditors, insisting that the five or six bank examiners in the state have too much to do to give more than 500 state banks of North Carolina a thoro examination. The fact is, the reports of the cashier, and their statements, have been generally accepted by auditors, so called, throughout the state.
And then the sad fact about this bank regulating business is its deplorable connection with politics. Appointment of auditors can be made at the insistence of some influential politicians, without regard to actual qualifications. But worst of all, the Chief Bank Examiner’s job is dependent on the influence of politicians. He must cater to them, or does cater to them, to hold it.
It will be noticed in this instance that when Clarence Latham, Chief Bank Examiner, came to Elizabeth City, politics was played from start to finish. The appointment of Senator P.H. Williams as receiver of the Bank and of J.K. Wilson as attorney for the prosecution were obviously political measures in the interest of Mr. Latham. Mr. Latham has to come up for reappointment and Mr. Latham could have been taking care of possible contingencies if Mr. Williams were to return to the Senate, and Mr. Wilson to the house than Mr. Latham might ?? more like depending on these men for their support.
Holland’s Statement
W.H. Holland, 42 years old, told on the stand that he came to Elizabeth City in 1920 to become Cashier of the Bank. He testified that he actually had only $2,000 to being business on: that while the bank’s authorized capital was $25,000 only $15,000 had been paid in, $5,000 of which was obligated by a note signed by the directors, and $7,000 to $18,000 had been spent for advertising and organization. Holland said when the State Corporation Commission learned of the impairment of the bank’s stock, that the directors signed a note for $10,000 to keep the bank going. The note was renewed semi-annually, and the interest had to be met. When the lawful funds of the bank ran out, he began cutting a little off the depositors’ money to meet the interest, with the full knowledge of the directors, and insistence that expenses of the bank be not increased.
Holland declared that he had not appropriated a cent for hie personal use, but that he was trying to keep the bank going, and hoping that it would eventually get on its feet. Holland made a good appearance on the stand. He testified that he was the shock absorber, or the man between the directors and the public. The shortage is given by W.B. Causey of the Frederick B. Hill Co. at $50,000.
From the front page of The Independent, Elizabeth City, N.C., Friday, March 19, 1926
newspapers.digitalnc.org/lccn/sn83025812/1926-03-19/ed-1/
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