[Volume XXV
THE CHICAGO BANKER
Kansas City
its creditors, as those assets are realized upon, which will require two years or more. Furthermore, if the receiver believes there is any doubt about the assets realizing an amount equal to the bank’s liabilities he will assess the stockholders under the double liability provision of the national banking law. He is not compelled to wait until the assets are all disposed of before making such an assessment. He can make it whenever his judgment deems it wise.”
The notification to Ridgely that he was to be removed was brought about in a dramatic way. Woods sent out a circular letter November 2d, requesting stockholders to send proxies to W. T. Kemper, vice-president of the Commerce Trust Company, officered by the crowd in the national bank. It was stated in the circular that the proxies were asked for at the instance of some of the “old stockholders.”
Ridgely learned about the letter. He also “circularized” the stockholders. He asked for their proxies on the plea of continuing “the present management.” Ridgely presented the letter before a meeting of the directors and asked them to approve it and sign it.
“I am in control of this bank and any director who votes for this letter is acting against my interests.”
This declaration, made by־ Hr. Woods, brought Ridgely to his feet. He found that Woods owns or controls between 12,000 and 13,000 shares of the 20,000 shares׳.
It is said that Edward Ridgely, the president’s brother, also will be let out at the annual meeting, if not before. A clause in the bank’s by-laws allows the directors to dismiss any employee at any time. It may be possible that Woods will bring affairs to a climax without waiting for the annual meeting.
The bank had 50 per cent of the $13,000,000 it owed depositors in its vaults in cash when it reopened. Its deposits now are $18,000,000. Its failure was the largest made by any national bank in America.
What Dr. W. S. Woods Says
The Kansas City Post printed the following letter from Dr. Woods:
“Kansas City, Mo., November 18.—To the Post: An article in your paper in regard to the National Bank of Commerce contains statements which do great injustice to both Mr. Ridgely and myself, as well as to others. In all of our transactions pertaining to the affairs of the bank I have acted from a business standpoint, and have been influenced solely by business considerations, and I am sure the same is true as to those who are associated with me and as to Mr. Ridgely also. No question of a social nature has ever been taken into consideration in any way whatever. In fact, no thought of that kind ever occurred to me, and there was no reason why it should; nor did I ever have an intimation of anything of that kind until I read the article in your paper above mentioned. Doubtless some one on your staff has been misinformed as to the facts, and I ask you to publish this statement to the end that false impressions which would naturally be created by the article referred to may be corrected, and I hope you will make it as conspicuous in the columns of your paper as was the article which it is intended to correct.
“Throughout my business career I have made it a rule not to rush into print about matters of a business nature; but I feel that the circumstances in this case are such as to both justify and require me to depart from my usual custom in that regard. Very truly yours,
W. S. Woods.”
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The First National of Gary, Ind., has increased its capital stock from $30,000 to $100,000.
Rid^elys at
value of about $100 a share, the 100,000 shares were worth at one time $3,300,000, shares having been transferred at 350. A statement was issued from the treasury department officials that the bank could meet every obligation if $1,000,000 was added in “new money” to its capital.
It was determined to issue the new stock at no. The “Kansas City crowd” demurred at taking large amounts of the new stock. Several of them had lost more than $100,000 through the depreciation in the value of the old stock. Dr. Woods had lost nearly $1,000,000. They held that in losing control of the bank they should not be compelled to take large amounts of the stock.
The reorganization committee alleged that a deadlock was on concerning the issue. It is said that the “Kansas City crowd” finally capitulated. Hanging over them was the threat of not only the loss of the entire value of their stock, but a federal assessment to meet depreciated and sacrificed values if the appointment of the receiver, Mr. Cutts, was made permanent and he was ordered to liquidate the assets in favor of the stockholders. The “St. Louis crowd,” which said that it was in no way responsible for the bank’s condition, took but little of the stock.
Then the Stock Soared
Ridgely and his friends bought $230,000 worth of the stock. They paid $110 a share for it. Since then the stock rose to 151, at which price it sold last Saturday. At this figure the Ridgely crowd had made $102,500 on their investment of less than a year in market values. 1 he stock fell nine points as soon as the news was made public that Ridgely was to get the ax. At the present price, 142, the Ridgely crowd is still $80,000 to the good.
While holding but one-eighth of the bank stock the “Ridgely crowd” virtually controlled the bank. Behind them was the sentiment created by increasing business and increasing values of the bank stock. Then something-happened. It was announced Monday that Dr. Woods had bought enough of the stock to regain control of the bank and Ridgely was to be removed. The salary paid Ridgely as president is more than double that he received as Comptroller of the Currency.
In the reopening scheme Woods was forced to raise $2,188,000. Ridgely required that a loan of $600,000 on a Mexican coffee plantation, other loans of $220,000 and $50,000 and $500,-000 in the bank building bonds must be taken up. Woods raised more than $1,000,000 in cash and gave securities of great value for the balance.
A sample of the way the stockholders were talked to when the plan to reorganize by forcing them to come in with subscriptions was urged is an interview printed by a Kansas City newspaper after a talk with Francis, February 18th, in St. Louis. The paper quoted Francis as saying:
“Mr. Ridgely and the St. Louis members of the reorganization committee will go to Kansas City to-night. The Comptroller has imposed conditions which must be compiled with before the bank can reopen.
“The stockholders and creditors are not replying to the circulars of the organization committee in the manner required of them, and if reports from them to-morrow and Thursday are not more satisfactory the committee will take under serious consideration the abandonment of its plan.
How the Bank Reopened
“The result will be that the receiver will go on liquidating the assets of the bank and pay
Story of the
Kansas City, Mo., November 19.—Since the publication last week that William B. Ridgely, former Comptroller of the Currency, had been notified that a new president of the National Bank of Commerce to succeed him will be selected January 1st there has been a revival of comment upon the manner in which Ridgely, his brother, Edward Ridgely, now cashier of the bank, and George T. Cutts, a vice-president, the bank examiner who was placed in charge of the bank’s affairs when it suspended a year ago, became connected with the bank.
The first order made by Ridgely as Comptroller of the Currency, when overtures were opened by stockholders of the bank to resume business, was that none of the old officers of the bank should be connected with the reopened institution. The bank was closed December 5, 1907. Its affairs were administered by the government until March 30th, when it was allowed by Ridgely to resume business, he becoming its president.
The notice to Ridgely to vacate as president of the bank came after some high financing, in which leading western financiers, among them David R. Francis, of St. Louis, were interested. The stock of the bank when it suspended was owned chiefly in Kansas City, St. Louis and interior towns in Missouri. It was the largest bank between St. Louis and San Francisco, its deposits being $35,000,000.
Francis Led Seekers
When the notice was given out by Ridgely that none of the old officers would be retained the stockholders and creditors, who had formed a reorganization committee, headed by Francis, began seeking a head for the institution. Another stipulation by Ridgely was that the capital stock should be increased from $1,000,000 to $2,000,000, the added money, he said, to be a reserve and serve as a measure of safety if a run resulted from the reopening.
Just who suggested Ridgely as a fit man to head the bank is a secret known only to those who handled the reorganization plan. It was pointed out by his champions that his name would add greatly to the bank’s prestige and that he could control avenues through which backing might be secured.
There were twenty thousand depositors in Kansas City. The bank had paid out $19,000,-000 in six weeks, virtually liquidating its assets from day to day in a time of panic. The 20,000 depositors had $16,000,000 tied up in the bank.
Of this amount $11,000,000 was the deposits of other banks, many of which were believed to be in need of assistance, because their assets were tied up and subject to delay which might continue for months unless the demands of the Comptroller of the Currency were met.
The Kansas City depositors were among the great business houses of the city. Some of them were cramped for cash. Others h.td paper due in the bank upon which they were unable to get extensions or could not meet. Commercial disaster seemed imminent. In a few days the name of Ridgely as prospective president became one to conjure with.
The Fight for Control
The reorganization committee, however, held off for ten weeks trying to get the $1,000,000 added capital. There had been dissensions among the bank’s stockholders for years.
The Kansas City people, headed by Dr. W.
S. Woods, president of the bank when it failed and its biggest individual stockholder, had never given the “St. Louis crowd” representation among the officers or directors.
When the bank was a power in Western finance its stock was valuable. Having a par