The star of the north. [volume] (Bloomsburg, Pa.) 1849-1866, 1857-01-21
STAR OF THE NORTH.
Wednesday. Jan. II. 1857
TfsE MYSTERIES OF BANKING.


TnE mYsrERlEs OF BANKING.
In order that come of the honest people of
Columbia moy see IN what manner the Banks
are managed, whose paper you handle every
day, we propose TO treat them 10 the state
ment of the management Of the Lancaster
BANK, which was supposed by most people
10 be very sound institution. II 10 the re-
por! Of the. Committee appointed recently to
inquire into the causes Of the Banks failure !:
Report 10 the stockh aiders OF the Lancaa-
ter Bank.
The undersigned commiltae OF Stockhold-
cfs Of said Bank appointed 10 investigate lie
condition and make report
1. Whether ssld Bank is solvent OF insol-
vent:
2. If found insolvent, TO report the cause
OF causes of such insolvency, and the mar
ner 10 whiol. 1t wee psednosd:
8. The time or times when the losses were
Incurred that have rendered it insolvent:
4. The names the Directors and officers
nnder whose administration the insolvency
OF the Bank occurred ......
respectfully beg leave 10 submit 10 this meet
Ing, That having made the investigation di-
rec,ed By the resolution under which tEey
were appointed, and after a careful examlns-
lion of the assets and Liabilities of the Bank,
.-hage come 10 the conclusion that ihs slate
Admitted to the Stockholders al foT-
ml ling was fair and impar'isl exhi.
bill he Bank--thus leaving no doubt oi
its ii kncy to an amount sufficient to ab-
sorb Ms<8lirs capital stock and portion ol
The dep6sisF
The insolvency OF the Bank can be readily
traced to q continuation Of causes, each con-
lribuling 10 waste ils resources and enc roach
upon lis assets. Instead Of accommodating
.hs business community in The locality OF The
Bank, where The Directors had The means Of
knowing the responsibility of The drawers and
sndorsers Of the psper offered for discount, il
loaned an amount exceeding three-iourlhs o
iis capital 10 q few individuals (ils Presiden
and Cashier among the number,) for the pur'
nose of building the Sunbury and Philadsl.
phia Misunderstanding extensive iron es'
adjustments, and developing The Shamokir
Coal 6sds-projec,s, which, every man o
even ordinary discretion must have foreseen
would lock up the funds of the Bank, thu
loaned 10 those parties, FOR long space o
time and. # those speculations should prove
disastrous, must inevitably lose 10 the Banl
ibe money loaned for such purposes.
In consequence of the entire capital of thu
Bank being locked up: either on the protes
list, invested in factory stock, and in loans Il
lis President, David Longeuecker, end hi
eo.operaiors in the Shamokin Coal specula
tons, resort was had 10 various illegiimsi,
methods of banking, in order TO carry it's cir
eulation, but which in rapid succession onl
tended sill more to cripple its condition.
Among the expedients resoI,ed 10 by tia
Bank TO carry i,s circulation. without tie ba
Gle oil Its capital, was the furnishing Of il
bills 10 wildcat Savings Institutions, privat
banking establishments, and even private in
dividuaIs, in large amounts, charging inteI
est at the rate Of three per cent. per snnum
with the understanding, on the part of thi
class of borrowers, that they should kee
those bills afoa,, so as not to incommod
the Bank. By this means one single ind
viduaI has become indebted 10 the Bank i
very large amount, which indebtedness
mt down among the doubtful and bad al
se,s. Blu, independent Of the insolvency
the parties 10 whom the bills Of the ban
were thus furnished in large amounts fc
circulation, this method Of keeping up Gil
cula,on was the cause Of additional losse
These bills Of The bank found their way I
Philadelphia, the commercial mart of Penn
sylvania, where il was required they shout
be redeemed in gold or silver; and in orde
10. do s,nis The notes and bills of exchang g
which had been discounted al The counter
of the Bank, "a legal raies, were sent |
. Philadelphia, and there sold at discoun
rating from II to 3 per cent. per month";
More Than sy0, 900 Of the insolvency of III
Bank can be traced to the payment Of ext
interest TO meet the demands Of its cireull
ton. -,
Among other causes Of lis Insolvency ma
be mentioned the transfer TO the Bank
10000 worth Of the factory stock OF par B
David Longenecker, tho Presidenh on d
2olh of january, is52.-when in fact the stoc
was not selling atmore than si4 10 Sl6 p,
share, the par value being 500 per shar'
Also, in The exchange byths Bank of SO
600, James, Loan, 81 par, bling a loan ssci
red By first mortgass on Conestoga Steal
Mill, no. 3, Tor 22B shares Lancaster Ban
Stock At 500 per share. This exchanges Va
eirscsed by The Board OF Directors IN Ma
1855, The stock 10 be transferred ID the Ban
before the fins q November, 1855; but ,h