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Manuscripts by Subject - Business / Commerce - #11056

Title: Kidder County Bank. Records

Date: 1907-1930

Collection Number: MSS 11056

Quantity: 0.25 cubic feet

Abstract: Consists of one ledger with minutes and by-laws and a folder of material that was loose in the ledger. The loose material is primarily financial and legal, but also consists of several blank forms.

Provenance: The ledger came in with a records transfer from Kidder County in November 2009. The historical sketch was researched and written by Erlys Fardal, and edited by Emily J. Ergen. The finding aid was created by Emily J. Ergen in January 2010.

Property Rights: The State Historical Society of North Dakota owns the property rights to this collection.

Copyrights: Copyrights to this collection remain with the donor, publisher, author, or author's heirs. Researchers should consult the 1976 Copyright Act, Public Law 94-553, Title 17, U.S. Code or an archivist at this repository if clarification of copyright requirements are needed.

Access: This collection is open under the rules and regulations of the State Historical Society of North Dakota.

Citation: Researchers are requested to cite the collection title, collection number, and the State Historical Society of North Dakota in all footnote and bibliographic references.

Transfer:


HISTORICAL SKETCH:

FARMERS AND MERCHANTS STATE BANK OF STEELE,
KIDDER COUNTY BANK OF DAWSON

The Kidder County Bank had its beginning as the Farmers and Merchants State Bank of Steele, ND. Therefore, it is necessary to first review the history of the Farmers and Merchants Bank in order to tell the story of the Kidder County Bank. The first recorded meeting of the Farmers and Merchants State Bank was held January 2, 1907, in Sawyer, ND. Those present were M. T. Weum, O. J. Mortenson, and O. A. Engemoen. The organization and incorporation papers of the bank were dated February 1, 1907. The bank would raise $10,000 in capital; to do this, shares of stock were sold at $100 per share. The majority stockholder was W. T. Weum of Minneapolis. Stocks were also sold to others so that more people would be eligible to serve as directors, officers, and bank personnel. Those who held the greatest number of stocks became directors and officers. The bank had three directors, and those present at the meeting were elected directors and officers. Weum was elected President, and Mortenson Vice President; Engemoen served as secretary for the meeting. The first cashier in 1907 was Emil G. Kardell, and his wage was $600 per year.

It is unclear when the bank actually started operations in Steele, but it was incorporated and chartered in 1907. By-laws and conditions for operating the bank are found in this record book, Manuscript Collection 11056, which is among the collections at the State Archives. One of the provisions stated in the by-laws was that the bank would operate for 25 years, from February 1, 1907, to February 1, 1932. Other brief histories of the bank state that the Kidder State Bank closed in l933, but this record book indicates that it actually it closed in l929.

In 1909, a motion was passed so all past due loans would be collected or renewed with securities that “satisfied” the bank, and if necessary, help would be secured to assist with this policy. As a result, no new loans could be made without the approval of the cashier. Another motion passed was that commissions on Farm Loans, insurance and sales handled through the bank be marked as profit or loss for the bank earnings for the year, and carried as individual profits. Also, the Board of Directors was increased to five members.

By 1910, there were 64 stockholders who each held a various number of shares. In 1915, there was a need to increase capital to $25,000, so additional shares were made available. They sold for 5% over par, and the 5% received was placed in individual profits; the dollar amount per share is not noted. The bank also needed to borrow money to meet operating expenses because of poor crop conditions. The cashier, who was authorized to make loans, borrowed $2500 in time certificates from Union Investment.

The need for borrowing to meet operating needs continued for the duration of the operation of the bank. Loans came from a variety of lending institutions, but with no financial record among the archival collections the amount of the loans are unknown. The bank did make a profit for some years; the amount of profit is recorded in the minutes of the annual meetings. In 1916 a 4% dividend was paid to stockholders.

Most of the business conducted by the board of directors was routine. Director and stockholder annual meetings were held each year in January, and a semi-annual meeting was held in August. There were few special meetings during the year. A typical meeting included the election of officers of the board of directors, appointing an examining committee, assigning a cashier and assistant cashier, as well as determining their wages; since they needed to be bonded, the amount of the bond was set. In the early years of Farmers and Merchants State Bank, the bond on the cashier was $2,000, which quickly rose to $5,000 and eventually settled at $10,000. In January the examining committee, after checking accounts and loans, reported on the condition of the bank. The same men held offices, but changed positions. Among the early directors were M. T. Weum, O. T. Ness, and H. T. Crawford.

There is very little other business recorded in the minutes until 1921, when the bank began borrowing to meet its needs. In 1921, the president was paid $150 per month and the cashier $135 per month; there was no pay for the vice president. The cashier, H. T. Johnson, was authorized to make loans. A motion was passed, stating that officers and directors were “entitled” to borrow up to 10% of capital and surpluses of the bank. At this time, Farmers and Merchants State Bank entered into an agreement with the Midland National Bank of Minneapolis, where loans were made from Midland using securities for collateral. During the same year, loans were made available though the War Finance Corporation for “agricultural purposes.” The bank applied for a loan that was not to exceed $50,000, and was to be repaid by October 25, l924; the War Finance Board determined the interest rate. That rate was not recorded.

It was evident by the end of 1923 that the bank had serious financial problems: they owed Midland National Bank $67,090.67, the Bank of ND $24957.22 and the War Finance Corp. $5,000. The minutes state that the bank had more value in equity, interest and notes, than its indebtedness, and the board decided that they would pay their creditors; O. T. Ness was to “take care of the task.” All assets were turned over to the mortgage holder, Midland National Bank of Minneapolis.

A special Board of Directors meeting was called for December 31, l923, in an attempt to work out the financial problems. Any money received was under a special deposit order, and was to be deposited into the First National Bank of Fargo or the Bank of ND. It was put into a special trust fund. An expert collector would be hired as soon as possible. Salaries to President O. T. Ness and cashier Crawford were frozen at no more than $150 per month. It was deemed advisable to replenish the depleted reserve and to make some provisions for the elimination of certain “undesirable and worthless” papers held by the bank. There was a 100% assessment of the stock of the bank. A certified copy of the minutes from this meeting was sent to the Depositors Guaranty Fund Commission.

At the special December meeting, over $10,000 in loans were written off. The 1924 annual meeting of the board of directors of the Farmers and Merchants State was attended by only two directors. O. T. Ness was elected president and H. T. Crawford Vice President. By August, the necessity of reorganizing the bank became apparent; half of the bank shares were represented at the meeting. Four men ran for Board of directors. The three elected to the positions were F. B. Lodge, D. D. McKee and Arne Vinje. Because of the stigma attached to the Farmers and Merchant State Bank and the failure of the bank, three fourths of those present voted to change the name of the bank to Kidder County Bank.

Thus, the Farmers and Merchants State Bank became the Kidder County Bank on August 25, 1924. Any shareholder wanting to sell stock had to first offer it to a bank director. Officers of the Kidder County Bank were President D. D. McKee, First Vice President Arne Vinje, and Second Vice President N. P. Lodge. Assigned cashier was J. W. McKee, with a wage of $150 per month, and assistant cashier O. T. Ness, with a wage of $100 per month. Neither cashier remained in their positions at the bank for very long.

In January 15, 1926, the bank charter was moved from Steele to Dawson, ND. H. L. Smythe became cashier. The Board of Directors gave specific instructions to the examination committee listing exactly what financial instruments they were expected to examine. Included were checking all individual and savings accounts, time certificates, cashier checks, loans, securities, interest rates and the cash. In spite of more careful banking practices, the bank found it necessary to secure loans to meet their obligations. There were also questions and concerns about several loans they had made to individuals. Smythe, as cashier, was authorized to secure loans for the bank with collateral which did not exceed one and one half times the amount of the loan. The bank was again obtaining needed loans from the Midland Bank National Bank of Minneapolis.

Because of the financial difficulties an assessment of 50% was levied on capital stock of the corporation. The assessment was to be paid by March 16, l929. If the stockholder did not pay the assessment the stock would be advertised at public auction. Although the payment date was extended, many stockholders did not pay the levy, which resulted in a public stock auction in June. Stock not sold went to the bank. The final action of the Kidder County State Bank was on November 16, 1929 at a special meeting of the board of directors. All directors were present. It was decided by all of the directors that the Kidder County Bank would close on November 30, 1929, and would not accept deposits after that date. The bank would be moved to Tappen, ND, where it would occupy an office at the Tappen State Bank, from which it would liquidate assets and settle affairs. H. L. Smythe, working from the office in Tappen, was in charge of liquidations. The final action recorded in the minutes involved issuing a Quick Claim Deed to R. T. Taber. Taber held the first mortgage, valued at $7,600, and would receive the property for the accrued interest and taxes for the past five years.

Why did the bank fail? The reader can only draw his own conclusion from reading the record book of minutes. With no financial records available we will never know the actual financial condition of the bank.

Sources:

Dawson Centennial, 1880-1980: The First 100 Years. Steele, ND: Steele Ozone-Press, 1980. P. 60.
Kidder County Bank. Records. MSS 11056. State Historical Society of North Dakota. State
Archives. Manuscript Collections.

BOX AND FOLDER INVENTORY

BOX 1

(loose) Ledger - minutes and by-laws, 1907-1930
1 Folder of loose material from ledger - blank forms, legal and financial documents, 1907-1930

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