Liberty State Bank (Bloomington, IL)

Episode Information

Episode UID
70011171599
Episode Type
Suspension → Closure
Bank Type
state
Bank ID
7001117 routing
Routing Number
70-0111
Start Date
March 3, 1933
Location
Bloomington, Illinois (40.484, -88.994)

Metadata

Model
gpt-5-mini (chosen from majority vote of a three-model LLM ensemble)
Short Digest
2c507519b632a89d

Response Measures

None

Events (3)
1. March 3, 1933 Suspension
Cause
Government Action
Cause Details
Closed with other banks on the state and national banking holiday declared in March 1933 (banking holiday).
Newspaper Excerpt
The bank, closed to general banking business March 3.
Source
newspapers
2. October 1, 1933 Receivership
Newspaper Excerpt
AUDITOR TAKES OVER LIBERTY STATE BANK ... was taken over by the state auditor's department Saturday ... It is expected receiver will be appointed within the next few days.
Source
newspapers
3. October 2, 1933 Other
Newspaper Excerpt
PIETSCH MADE BANK RECEIVER ... Carter Pietsch ... has been appointed receiver for the Liberty State bank, effective Monday ... the doors were closed and notice affixed explaining the closing was for auditing purposes.
Source
newspapers

Newspaper Articles (10)
1. October 1, 1933 The Pantagraph Bloomington, IL

Article Text

AUDITOR TAKES OVER LIBERTY STATE BANK RECEIVER MAY BE NAMED SOON Loan by R. F. C. Expected to Hasten Payment to Depositors. The Liberty State bank. founded in 1919, closed by state and national holiday since March was taken over by the state auditor's department Saturday, when was determined by the bank's officials that the for reopening or for liquidation through the trust department of some other bank in the city were so high as to be impossible to meet. As consequence, it is expected receiver will be appointed within the next few days. The closing order was delivered Saturday by W. W. Lucas. bank examiner, sent here from the auditor's office at Springfield. The requirements tentatively set recently by the state auditor for liquidating the bank's through the trust department of another bank, included the pay. ment of about $45,000 by the bank's stockholders, and the posting with the Reconstruction Finance corporation, of bonds. the par value of which $120,000. for loan of about $50,000 to increase cash held In the bank sufficiently to make an immediate payment to depositors of 25 percent of their deposit. The Chicago office of the R. F. C. however, declined to make loan, stating that while loans are made to banks in receivership, it was against the corporation's policy to loan money to banks that were to be liquidated through trusteeship. Converting these bonds into cash at present market values would have brought only about $60,000. May Hasten Payments. Finally. the Washington office of the R. F. C. was contacted by the state auditor's department. according to William D. Bain. chief bank examiner of the state department, and agreed that loan should be made to the Liberty bank on its bond holdings. provided the $45,000 payment by the stockholders did not excuse them from the original 100 percent liability on their stock as prescribed by state law. view of opinions expressed by R. C. officials. and in the light of practice elsewhere and the President's bank program, it is expected the R. C. may now loan to the bank's receiver money to hasten payment to depositors Officers directors of the bank then determined they could not raise the $45,000 in the face continued liability for the $100,000 they might be required to pay un der the banking law. and advised the auditor. thereupon sent Mr. Lucas here Saturday. Supported Consolidation. Efforts to reopen the Liberty bank have been made continuously since it was closed with all other banks on March 3. Instead. how ever, of attempting an individual reopening, the Liberty bank joined with the other Bloomington banks not then reopened. in the various plans advanced for consolidation, move the bank's officers actively supported. These plans, discussed by the local clearing house association immediately after the banking holiday was declared. were later continued and

2. October 2, 1933 The Pantagraph Bloomington, IL

Article Text

PIETSCH MADE BANK RECEIVER Attorney Appointed to Direct Liquidation of Liberty State. Carter Pietsch, 1528 South Main street, attorney, has been appointed receive for the Liberty State bank, effective Monday, and participated in the compiling of an inventory to be submitted to the state auditor's office. The bank, closed to general banking business March 3. has since been open for receiving payment on obligations due it. Monday afternoon the doors were closed and notice affixed explaining the closing was for auditing purposes. Awaits Instructions. Ray McCarthy and W. W. Lucas, state examiners, expect to ac. company Mr. Pietsch to Springfield Tuesday to present the statement to the office. In line with the state's practice of uniformity in liquidating closed banks, Mr. Pietsch is expected to receive detailed instructions under this head. The examiners' duties here ceased Monday. A standard bookkeeping system mandatory by the auditor's office for closed banks will be made ef. fective at the local institution. Examination of the inventory by state officials at Springfield is expected to result in special procedure instructions relative to col- Acts as Attorney, Too. Appointment of Mr. Pietsch was by the state auditor. He was employed in clerical capacity having to do with collections from 1919 to 1923 at the American State bank while he was law student at Illinois Wesleyan university. Because of this experience and in view of his legal status. he is serv. ing also as attorney for the bank under the receivership. This, it was explained. is consistent with Lib. erty State bank officials' desire for administrative economy in the attempt to provide the maximum on

3. October 3, 1933 The Pantagraph Bloomington, IL

Article Text

PIETSCH MADE BANK RECEIVER Attorney Appointed to Direct Liquidation of Liberty State. Carter Pietsch, 1528 South Main street, attorney, has been appointed received for the Liberty State bank, effective Monday, and participated in the compiling of an inventory to be submitted to the state auditor's office. The bank. closed to general banking business March 3, has since been open for receiving payment on obligations due it. Monday afternoon the doors were closed and notice affixed explaining the closing was for auditing purposes. Awaits Instructions. Ray McCarthy and W. W. Lucas, state bank examiners. expect to accompany Mr. Pietsch to Springfield Tuesday present the statement to the office. In line with the state's practice of uniformity liquidating closed banks, Mr. Pietsch is expected to receive detailed instructions under this head. The examiners' duties here ceased Monday. A standard bookkeeping system mandatory by the auditor's office for closed banks will be made effective at the local institution. Examination of the inventory by state officials at Springfield is expected to result special procedure instructions relative to collections. Acts as Attorney, Too. Appointment of Mr. Pletsch was by the state auditor. He was employed clerical capacity having do with collections from 1919 1923 at the American State bank while he was law student at Illinois Wesleyan university. Because of this experience and in view of his legal status, he is serv. ing also as attorney for the bank under the receivership. This, was explained, consistent with Lib. erty State bank officials' desire for administrative economy in the attempt to provide the maximum on deposits.

4. June 8, 1934 The Pantagraph Bloomington, IL

Article Text

Nine Free Courses Agreement Expected to Be Submitted at Meeting of Council An agreement whereby the Lib- erty State bank deputy receiver Carter Pietsch. would be allowed to proceed with the liquidation of $134,000 worth of disputed securities, in expected to be for creases. action at Friday night's council The circuit court upheld Mr. Pietsch's contention that the securities were withdrawn assets of the bank and ordered the city to restore them to the deputy receiver history. from the First National Bank & Trust company safe deposit box where they were alleged to have been sequestered. The securities were alleged to have been used to secure municipal Carrington said. deposits in the Liberty bank in 1931 and the circuit court ruled this Board Will Discuss arrangement invalid. City Attorney Thomas S. Weldon has been authorized by the council to appeal the case and the agreement to be education will be held at 7:30 considered by the council would permit the liquidation of the securities in order to avoid possible time depreciation during litigaton. Proceeds would be segregated will permit. from receipts from other liquidation of the bank's assets and would be held intact for either the city or the receivership in accordance with the appellate court's finding.

5. June 16, 1934 The Pantagraph Bloomington, IL

Article Text

CITY BACKS PLAYGROUNDS Votes to Pay Supervisor: Other Matters Are Discussed. of playground at the and meeting Friday weekly of night : after presented on the matter report that group the Relative the Council Agencies at the the the I recreational appointed by the mayor the approval of the with the purpose of employing for supervisor and trained recreational purchase of for the and to and out of suitable places for recreational activities BUYS EQUIPMENT also reported that Mr. Goodger the the of Mark R. to proposal and dock to the city for two at Lake equipment and formerly Leland The such by the purchase RECEIVES PETITION A 640 name from his on his route was on file without celved and placed REFERRED TO COMMITTEE. A Army municipal help in suggesting taining that organization's transient relief service, was referred to the finance of Alderman Alonzo The ter stated that the last year the local organization provided 61,290 meals and beds for clothfumigation and night shirt ing Mayor Louis F. Wellmerling pointed out that the finance had discussed the matter with the Salvation Army board at Friday morning meeting CLAIM PRESENTED. A request from John C. McGraw that the city settle an old case he filed against the Bloomington Wa. ter company for damages Alleged to have been entailed to his land below Lake Bloomington because of the dam construction. was ferred to the claims committee and on motion of Alderman DeWitt Gray. Mr. McGraw offered to set. tie the matter for $140. SALES TAX DISCUSSED. A from the Tolman, Chandler & Dickinson law firm, Chicago, suggesting that Bloomington provide water and electrical deta with view participating in general municipal resistance the sales tax on these referred to the judiciary committee and city attorney motion of Alderman Willis O. Schueth. who remarked: "It's pretty pass in the United States when are trying to tax each other." LIQUIDATION OKAYED On motion of the finance committee. the mayor and City Clerk Herman J. Bock. were authorized to sign stipulation whereby the Liberty State bank deputy receiver. Carter Pietsch, may proceed with the liquidation of $134,000 in assets under legal dispute between Receiver William L. O'Connell and the city Proceeds are to be segregated pending the result of an ap. peal by the city from circuit court order here ordering return of the securities to Mr. Pietsch. BOX OFFICE ASKED. A request that the city permit use of part of the sidewalk for building box office at the Castle theater was referred to the streets Discussing state politics. Mr. said: "We had Democratic platform in 1932, which would make fine reading matter today. Since the Democrate have come Into power in Illinois what has occurred to the civil service? What has to economy in government? Ever more and new revenues has impelled the Chicago Tammany Democratic rule in Illinois. Even the road fund has been (Continued on Page 5. Col. 1)

6. August 7, 1934 The Times Streator, IL

Article Text

The report showed that loans authorized to banks and other financial institutions at a 4 per cent interest totaled $57,512,410. Other large advances authorized included $41,820,000 for subscription to preferred stocks in banks; $45,000,000 for the Home Owners' Loan Corporation; $5,455,500 for bank debentures; $7,619,576 in loans to drainage and irrigation projects. The balance was for relief and other government purposes. Of the $57,512,410 authorized in loans, $32,698,236 went to banks and trust companies, including $28,615,330 to aid in the reorganization or liquidation of closed institutions, and $22,048,883 to mortgage loan companies. The corporation announced it had authorized loans to Illinois banks which included: First National in Aurora, $310,000; Liberty State Bank in Bloomington (receiver) $82,000; Merchants State Bank in Centralia (receiver), $80,221; First Trust and Savings Bank in DeKalb (receiver, $190,000; Rockford National Bank (receiver), $185,000. None of these authorizations had been drawn upon by May 31, the RFC added. The RFC said it also had authorized the purchase of $50,000 in capital notes or debentures from the

7. August 8, 1934 Chicago Tribune Chicago, IL

Article Text

168 MILLIONS IN MAY Washington, D. C., Aug. 7.—(AP)—The Reconstruction Finance corporation reported today that it authorized advances in May aggregating $168,644,166. The report showed that loans authorized to banks and other financial institutions at 4 per cent interest totaled $57,512,410. Other large advances authorized included $41,820,000 for subscription to preferred stocks in banks, $45,000,000 for the Home Owners' Loan corporation, $5,455,500 for bank debentures, $7,619,576 in loans to drainage and irrigation projects. The balance was for relief and other government purposes. Of the $57,512,410 authorized in loans, $32,698,236 went to banks and trust companies, including $28,615,330 to aid in the reorganization or liquidation of closed institutions, and $22,048,883 to mortgage loan companies. Among some of the larger loans authorized to banks were: North-Western Trust and Savings bank, receiver, Chicago, $2,500,000; West Side Trust and Savings bank, receiver, Chicago, $1,500,000. Loans authorized to other Illinois banks included the First National bank in Aurora, $310,000; Liberty State bank in Bloomington [receiver], $82,000; Merchants State bank in Centralia [receiver], $80,221; First Trust and Savings bank in De Kalb [receiver], $190,000; Rockford National bank [receiver], $185,000. None of these authorizations had been drawn upon by May 31, the RFC added.

8. April 8, 1935 The Pantagraph Bloomington, IL

Article Text

SHEARER FILES RARE PETITION First Plea of Its Kind Here Makes New Attack on Indictments. That the indictment which charges Russell E. Shearer of Indianapolis, former vice president and cashier of the Liberty State bank here, with making false statement with intent to deceive bank examiners, be dismissed is the plea of a proceeding filed Monday morning with Judge Chalmer C. Taylor by Mr. Shearer's attorneys. In response, State's Attorney Jesse R. Willis filed a demurrer, which is to be argued at a time to be fixed by the court. Mr. Shearer was to have been tried next week, but the trial probably will be continued, pending the court's action on the Monday filing in the case. In event the filing is sustained, the indictment will be dismissed and there will be no trial. First of Its Kind Here. Interest of attorneys was aroused by the proceeding filed Monday by defense counsel, Martin, Hoose & DePew. It is called a special plea in bar and is said to be the first ever filed in the McLean County Circuit court. Illinois courts did not recognize the special plea in bar until last December. It has the effect of an estoppel on the people's case. Previously defense counsel made a motion to quash the indictments against Mr. Shearer on grounds of insufficiency but the court overruled the motion. The defense was successful, however, in compelling the prosecution to furnish a bill of particulars in which were specified certain real estate loans, allegedly valueless but, assertedly, listed as assets of the Liberty State bank in a report to bank examiners. Previously Valuable, Plea. The defense bases its special plea on assertion that the same notes cited in the bill of particulars as being of fictitious value have previously been held valuable assets of the bank. Notes of Jake L. Small, Fred Morris, Alvin Powell, Joe Parker, R. W. Feek, Henry Loercher and Phil Wood were valueless, but were included in counting the bank's total real estate loan assets in the report to the bank examiner, the prosecution alleged. In an action brought in circuit court by William L. O'Connell, receiver of the Liberty State bank, to obtain possession of certain securities that had been withdrawn from the bank, the notes cited in the bill of particulars as valueless were listed with other items as "good and valuable" assets of the bank, the special plea maintains. Subsequently, the court listed the real estate loans under question with the valuable securities in ordering them turned over to the bank receiver. Kept in Files, Says Plea. Defense further contends that the Jake Small note was counted an asset of the bank by the deputy receiver in testifying in a foreclosure suit. The Henry Loercher note, the plea asserts, remains

9. June 15, 1935 The Pantagraph Bloomington, IL

Article Text

LIBERTY ASSET RELEASE SEEN Ruling on Parallel Case Expected to Give Receivership $134,000. Recovery by the receivership of $134,000 worth of assets of the closed Liberty State bank, held as protection for Bloomington municipal funds deposited there, was seen by attorneys in a state supreme court ruling in what was described as the parallel Wiersema State bank case, made public Friday. The Liberty case, in which Circuit Judge Chalmer C. Taylor ordered the restoration of the securities to the receivership, was taken by the municipality to the appellate court. Because of the Wiersema case, which had worked its way up from the Cook County Superior Court through the first district appellate court and finally to the supreme court, the Liberty case remained inactive pending the supreme court's finding. The latter's ruling in the Wiersema case was unanimous, all seven judges concurring. Involves Pledged Assets. The question involved in both cases was whether a bank had a right to pledge assets to secure public funds on deposit. John O. Morrissey of counsel for the bank, and Thomas S. Weldon, city attorney, said the appellate court's decision will undoubtedly follow that of the supreme court; although the ruling probably will not be handed down before the October term. Defendants named by Carter Pietsch, deputy Liberty bank receiver carrying on the litigation for William L. O'Connell, state bank receiver, are: Will F. Costigan, former attorney and director of the Liberty bank; Richard M. O'Connell, former city attorney; his successor, Mr. Weldon; the municipality; Mayor Louis F. Wellmerling and John A. Cleary, city comptroller. Agreement Cited. The receiver's petition recites that the Liberty bank's officials and the municipality entered an agreement in 1931 whereby, to protect the city funds on deposit there, the latter would place in a First National Bank & Trust company safety deposit box listed securities and notes secured by first mortgages on Bloomington real estate in the market value of $250,000 at that time. According to Mr. Pietsch, the city had $130,941.69 on deposit, carried as follows: Firemen's pension fund, $9,742.02; fund No. 1, $1,517.13; fund No. 2, $29,293.12; fund No. 3, $736.43; general fund, $24,007.85; library fund, $3,202.76; payroll, $995.05; police pension fund $2,036.89; sinking fund, bonds, 1941, $56,500, and water fund, $2,910.44. City Would Share. Under the ruling, the city of Bloomington would be obliged to share in the liquidation proceeds of the closed bank as a general depositor, and not as a secured creditor, attorneys explained. In affirming the Cook County Superior Court's ruling regarding the Wiersema State bank, Justice Jones said: "We are of the opinion that the practice of pledging assets by banks to secure deposits is not only unnecessary but dangerous to the general welfare and is against public policy."

10. July 17, 1935 The Pantagraph Bloomington, IL

Article Text

RULING UPHELD IN BANK CASE Appellate Court Decides Liberty Receiver Gets Securities. Judge Chalmer C. Taylor's decree ordering the city of Bloomington to turn over to the receivership of the Liberty State bank $130,940 worth of assets posted by the bank as surety on a city account was affirmed in an opinion handed down Wednesday in the third district appellate court at Springfield. Two courses remain open to the city in its fight to retain possession of the sureties, said Thomas S. Weldon, city attorney, when informed by The Pantagraph of the court order Wednesday afternoon. The city may appeal to the supreme court or may file a petition for rehearing in appellate court. Course Not Decided. "This is the first I have heard of the appellate court's action," Mr. Weldon said. "Naturally, we have not determined the course we shall follow in continuing the case. It will have to be talked over by all parties interested before any decision is made." The bank receivership has had possession of the sureties since Judge Taylor ordered restoration by the city in April, 1934. The court order allowed the bank receiver to liquidate these assets, but under agreement they were segregated from other assets, and could not be used in payment of dividends to bank depositors. "Against Public Policy." In acting on a parallel case recently the supreme court held that "the practice of pledging assets by banks to secure deposits is not only unnecessary but dangerous to the general welfare and is against public policy." Under the ruling in the parallel case, involving the Wiersema State bank in Cook county, the city would be obliged to share in the liquidation proceeds of the closed bank as a general and not a secured depositor. In bringing suit to recover the securities, Carter Pietsch, deputy receiver, alleged the Liberty bank's officials and the municipality entered a secret agreement in 1931, whereby to protect the city funds on deposit there, the bank would place in a First National Bank & Trust Co. safety deposit box listed securities and notes secured by first mortgages on real estate. When he became deputy receiver of the bank, Mr. Pietsch said, he found the city had $130,941.69 on deposit in several funds when the bank closed, and that he also discovered $134,000 worth of securities had been withdrawn from the bank as surety for the deposit. The city maintained custody of the securities from the time the bank failed until the decree in McLean county circuit court ordered restoration to the receivership of the bank.