Freedman's Savings & Trust Company (Washington, DC)

Article Text

CITY AND DISTRICT. THE FREEDMEN'S BANK. The Proposit - to Have the Government Reimburse Depositors. THE BILL THAT HAS FASSED THE SENATE-HOW THE BANK W.A. ESTABLISHEDDELUDED FREEDMEN ESTABLISHSD-FREEDMEN INTO THE BELIEF THAT THE GOVERNMENT WAS BEHIND IT-CLAIMS ALREADY PARTLY PAID. The bill that was recently passed by the Senate appropriating $1,000,000 to reimburse the depositors of the Freedmen's Savings and Trust Co. brings up an interesting bit of history. com- This company, commonly known as the Freedmen's Bank, was chartered by a act of Congress approved March 3. 1865, for the benefit of the most illiterate and impoverished class of citizens possible, the freed slaves. There was large number of incorporators, among them being many of the GovernThe officials. avowed ment's highest of object the undertaking was to organize and maintain a savings bank to receive the small deposits of negroes, with the Idea of encouraging them to industry and thrift. In order to give the scheme as -reaching effect as possible the bank was org ganized on multiple plan, the central office being stationed at Washington, with branches located in all other three thirty cities, but two being in the South. These cities were as New follows: York, AlBaltimore, Philadelphia, exandria, Norfolk, Richmond, and Lynchburg, Newbern, Raleigh, and Wilmington, C.; Beaufort and Charleston, S. C.; lanta, Augusta, Maand Tallaand con, Savannah, Jacksonville Ga.; hassee, Fla: Huntsville and Mobile, Ala.; Columbus, Natchez, and Vicksburg, Miss.: Columbia, Memphis, and Nashville, Tenn.: Lexington and and Orleans New Louisville, La.; Shreveport, Ky.: St. Louis, Mo., and Little Rock, Ark. Each bank had separate inization with different officers, but all were bound by the same rules and forming a part of the general company. RUSH OF DEPOSITORS. Organized as It was, under an act of Congress, and officered by Government officials, confidence in the new concern came quickly and with ita flood of depositors, eager to put their paltry scrapings in place that was more secure than the stock. ing-heel or the fireplace. As the money flowed in It was calculated were investments that placed to draw sufficient income to pay the enormous These the of expenses great organization. were all directed the central bank. Some of them were wisely placed in established schemes that gave sure profits on the invested capital, while others were foolishly put into new and with no semenes foundation. golden promises These Theselatter latter nvestments did not hurt the bank few their out became effect years first, apparent later, when money became little tight and times there Then and harder. harder to began grow were occasional runs on the bank; now at this city, then at that, and It became necessary, order get the cash to pay the calling depositors, sell out some of the investments, in many stances at rulnous sacrifices. In fact, the money panic of 1874 was at its height, bankswere failing every direction, going down like bricks that ancaused One failure line. stand edge on other, and finally, on the 29th day of June, 1874, the Freedmen's Bank CLOSED ITS DOORS in the thirty-four cities and refused to pay ahy further demands. Such storm of popular indignation has seldom been known in this country. There were, at the time of the failure, 61,131 depositors, to whom there was due the sum of $3,013,699.56 of which $73,774.34 consisted of despecial deposits, and the balance of general to posits subject dividends. Thus the average deposit amounted to little than $50, but to the class of people forming the bulk the depositors this sum represented much greater comparative value, and was the result of nine years or economy. Fully 15,000 of these deposits were of sums less than $0. It was strange, then, that there were fraud, of underhanded work, of embezzlement, when is considered that these people would be the very last to reason, or to realize situation when was explained. A COMMISSION APPOINTED. Shortly after the failure of the bank, on the 13th of July, Messrs. Leipola, Creswell, and Purvis, of this city, were appointed a commission to settle the affairs of the company. It was hercuiean task they had before them, with 34 banks to examine, 34 sets of books to inspect, and 61,000 claimants listen The books of the central bank, which kept the general accounts the branches, were first balanced, and then the other were books the balanced, obtained, pus results compared. After months of labor It was discovor 88888 the bank at that nominal ered the the ume of the failure were $2. 709,952.1 thus leaving over and above dedicit em claims of depositors of $303,747.42. But these nominal assets in many cases had shrunk in value, bringing the actual resources at hand down to a much lower figure. The assets were turned into vallable cash as quickly as possible, on the 1st day or November, 1875, the first dividend or 20 per cent was declared in favor of the depositors. The news of this dividend was spread through the papers, and by or means ann from uncements the pulpits churches, in every possible way in order that might reach the ears of all of the ignorant depostors. The books soon came flowing in upon the commissioners, but not half or them were received. At this first dividend about 30,000 claims were paid, amounting to $555,360.08, leaving 31, 31,135 claims, represnting $47,379.83, but these MOI unpaid. 5 were presented. Thus will be seen that only those claimants or deposfors with sums of sufficient amount in the bank took the trouble to advance their claims. The second dividend, of 10 per cent, was declared March 20, 1878, and 26,069 claims, amounting to $267 $267,683.34, were paid. The third dividend, also of 10 per cent, was declared September 1880, and 23,280 liquidated claims, $259,123.18. On of June, 1882, the fourth representing dividend, of 15 per cent, was declared, and 21,527 claims, amounting to $383,996.71, were paid. A Lttie than year later, May 12, 1883, came the of the fifth and last dividend, of 7 per cent, which paid 18,774 claims, to the value 0f $172,096.18 This dividend virtually exhausted the resources of the emmissioners and completed the payment et 62 per cent of all claims on the bank, the actual pay payments amounting to $1,721,831.26, while the full amount of the 62 per cent would have been showing that $146,662.46 46 had not been claimed. IN CHARGE OF THE CONTROLLER. By the act of Congress, approved February 21, 1881, the original commissioners were relieved of their duties and the affairs of the bank were placed in charge of the Controller of the Currency, that office then filled by being John Hon. Jay Inox. Tue same act provided that all dividends 100 claimed two years after the declaration of the be should dividends Another barred. Februact, ary 17, 1883, revived certain of these claims, and these have of some been paid At the since. time of the last report of the controller of the state D the the affairs bank, 14 there cember last, vas a cash balance of $6,191.01 on hand. The receipts the preceding year had amounted to $1,579 71, from three sources-the proceeds of the of lots in South W ashington, dividends on the stock of theSecond National Bank of Washington, and the collection ons on account of loan the bank lad once made to Beaufort County, The exbeen had ures $3,107.90, pendit the being of salary the commis $1,000 asation an agent, and office expenses $1,500, costs of suits, insurance, printing the annual report, the payment of two barred claims, and the contingent expenses. THE REMAINING ASSETS. A statement of the available assets showed that their face value was $26,592.07. while their estinated proceeds were but $13,817.70. Among the assets are some items that are given no estimate as to present value, such as $4,000 in Detroit Car Loan Company stock; in $3,950 Young Men's $2,440 thristian Association stock: $3,184 in tax deeds; in tax-lien pur other certificates, assets, such as judgments, real estate in litigation, suits old end raflroad bonds *Mut and tocks, &c., which may result in some collection, but their realizaton 21 too uncertain warrant any estimate of their value. The claim against Beaufort County, E.C., is being paid by taxation. Thus It will be seen that the grist of the Freedman's Bank is about all ground, and should the controller, by good fortune, sue ceed in realizing on the assets on there would books, scarcely be enough to pay dividend of per cent. THE PRESIDENT'S RECOMMENDATION. The President, aware of this fact, called the atention of Congress, in his message of 1886, to what he styled "a plain duty which the Government owes to the depositors of the Freedmen's taving and Trust Company. The President said that thought the 32 per cent the deposits