Kiter Lea

"Weren't practically all the transactions that Colonel Lea had with this institution kites, except when he borrowed?" "Yes, I would say they were." Asking the question was Robert L. McReynolds, counsel of a committee looking into the alleged misuse of Tennessee funds, last week looking especially into the affairs of Col. Luke Lea, publisher, politician, crony of bankrupt Rogers Clark Caldwell (TIME, Nov. 24 et seq.). Answering was M. D. Johnson, assistant cashier of the defunct Liberty Bank & Trust Co. of Nashville, whose president, Ridley Edward Donnell, shot himself after the bank closed. Witness Johnson also testified that Col. Lea opened his bank account in 1925 six days after the bank was formed, deposited $11,430,373.82 between then and the day the bank failed. This account, said Cashier Johnson, sometimes was high, sometimes subzero. President Donnell spent practically all his time attending to it. But however great was the account, Cashier Johnson said it never had much of a "realizable balance." Reason: too much kiting.*

*To kite is to draw upon a bank account in which there is at the moment less money than the draft. Example: Perhaps Col. Lea one day deposited in Liberty Bank a check of $1,000,000 drawn against a Missouri bank. Properly speaking, he would have had no money in Liberty Bank until the check had been cleared. But his good friend Mr. Donnell might have let him draw $500,000 against the deposit at once, thus kiting. If at the same time he in reality had no money in the Missouri bank but had merely deposited there a check on a third bank, he properly could be said to have kited twice. Little unintentional kites are often flown in the financial skies. Bankers agree that kiting becomes opprobrious only when the kiter deliberately uses the kite's lifting power to pull him out of a financial sinkhole.

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