erroneous reports of the condition of said bank, deceiving it in the amount of overdrafts and amount of reserve.

The following statement as of August 27, 1908, shows the exact condition of the bank's affairs:

The Farmers and Merchants' State Bank of Parma.

The Farmers and Merchants' State Bank of Parma was taken charge of by the Department on the eighteenth day of September, 1908, as the result of developments growing out of an examination made on September 9, 1908. S. H. Godfrey was appointed receiver of said bank by the circuit court for Jackson county, September 21, 1908.

As a result of a very exacting examination by the Department, it appeared that the cashier of this bank was interested in a private bank located in the village of Hanover; that there had been an intermingling and confusion of the assets and liabilities of this private bank with the assets of the Farmers and Merchants' State Bank of Parma, in that notes aggregating $9,365.60 were found among the loans and discounts of the latter that were made by parties living in Hanover and appeared on the

to complete the total amount of loans as exhibited by its books; and further that the Hanover bank had received approximately $14,000.00 in savings deposits for which it had issued to depositors savings books of the Farmers and Merchants' State Bank of Parma. The examination further revealed shortages in several of the accounts of the bank, as will be seen by reference to the following statements of condition, under date of September 18, 1908:

Immediately below, I give you the condition of the bank as shown by its books:

The following is a correct exhibit of the actual conditions existing in the bank:

I took possession of this bank on December 11th, 1908. During the progress of an examination by the directors on December 5th, 1908, irregularities were discovered on the part of the cashier to an extent which more than wiped out the entire capital of the institution. Upon being notified by the directors of their discoveries I immediately placed an examiner in charge of the bank, and with the aid of the directors have succeeded in locating nearly all the discrepancies in the accounts and books of the bank. This condition was a heritage from the Springport Banking Company, the name under which it was known when a private bank. For a period covering nearly three years the cashier had been loaning the bank's funds on drafts, with bills of lading attached, to a stock and produce shipper. Finally becoming involved with this customer to an excessive amount the books and accounts of the bank were manipulated to cover up the transactions. This condition existed when the bank was incorporated as a State institution, at which time the books and accounts were apparently regular and in balance.

The bank was examined by the Department on August 6th, 1908, and all accounts were balanced by the examiner. About the time an examination of the bank by its directors was to be called for by the Department, the directors made a perfunctory examination of the bank, and reported the same to the Department on a form usually used for publishing the quarterly condition of State banks. This report was not accepted by the Department and the cashier was instructed to inform his directors that an examination must be made and a report of their findings forwarded, according to the provisions of the banking law, and on forms furnished by the Department. One of the directors who assisted in making this examination discovered a certificate of deposit marked "paid" on the certificate of deposit register which he had reason to believe had not been paid, and upon making inquiries ascertained this to be the fact. The department was notified and ultimately numerous other irregularities were found by the examiner.

I mention this merely to show the efficacy of the amendment made to the law, requiring the directors to examine a bank at least twice each year. The irregularities in this case might have continued over an extended period of time, as an examiner is not and could not be

expected to have as intimate knowledge of the affairs of the customers of a bank as the directors, and consequently, would not have been able to detect this condition.

The following is a statement of the condition of the bank found by the directors as a result of their examination December 5th, 1908:

I give you below, under date of December 26th, 1908, statement showing exact condition of bank :

No petition has been filed as yet for the appointment of a receiver. The directors of the bank are in hopes of securing funds sufficient in

amount to enable them to make good the loss incidental to the failure of the bank. If the pending negotiations do not enable them to raise an amount sufficient to wipe out the loss, without calling on the stockholders to exceed their liability, a petition will be filed asking for the appointment of a receiver.

The cashiers of the foregoing insolvent banks are now awaiting trial for violations of the provisions of the General Banking Law.

REPORTS OF RECEIVERS.

Under date of December 1st, 1908, I have called for reports of the condition of the insolvent banks in Michigan, and I give you below a summary of the receiver's reports:

The Chelsea Savings Bank, Chelsea.

William W. Wedemeyer, receiver, under date of December 1st, 1908, reports as follows:

Liability to depositors at date of suspension..
Other liabilities

Total

$1,028,852 84 20,764 21

$1,049,617 05

Total assets at date of, and received since suspension.... $1,331,043 70 Amount collected by receiver to date

495,259 60

$454,766 66

3,877 09

7,953 46

5.000 00

961 94

22.700 45

$495,259 60

The Farmers and Merchants' State Bank, Parma.

Seymour H. Godfrey, receiver, under date of December 1st, 1908. reports as follows:

Total assets at date of, and received since suspension.... $118,291 02

Amount collected by receiver to date

Amount cash on hand at date of suspension

Total amount on hand

$11,169 92

4,736 18

$15.906 10