The true Democrat., 1857-05-12
REPORT
Of the Joint Committee of the Senate and House Of Representatives on the Affairs of the Real Estate Bank.
 (TO THE SENATE.)
Mr. President:


 Gro THE sENATE.)
 Mr. President
 The joint committee op banks respect fully beg leave to submit the following report on the affairs of the Real Estate Bank: On the l2th of September, 1886, the first General Assembly of the State O. Arkansas began its session at Little Rock, and the first act it passed, being that to establish the Real Els tate Bank, was approved by the Governor on the 26th of October, following.
 This baUk was to be of peculiar constitu tion. It was to lend money; but the stockhold- CTS were not to pay in money. Instead there of, they were to give mortgages on lands, bu small portions of which had then been brought into cultivation, and on this security the State wa, to issue bonds to the amount of two mil lions dollars These bonds were to be sold and thus the necessary money was to be procured. Each stockholder was to be entitled to loan equal to one half the appraised value of his lands, which loan to be repayable in twen- tv years in nstalments of five per cent. year. There were to be no annual dividends, but in- stead thereof the profits of each year were to be added to the capital of the bank. When the charter expired pro rnta dividend was to
 
 cumulated profits.
 The benefits of the bank were not to be re- stricted to stock holders. Non-stock holder, were to be allowed loans on mortgage repavable in ten years in instaments of ten per cent. 1 year.
 | The State also was to share in the advantages of the institution. The bank was to pay it an annual bonus of five thousand dollars year for ten years, in all fifty thousand dollars, and besides this, to lend it at five per cent per annum, fifty thousand dollars year for ten years in succession, in all five hundred thou sand dollars.
 This bank was to quicken industry in all its departments, especially agricultural industry, to supply capital to every body, to furnish the people with sound circulating medium, to raise the value of land, and cause the desert to bud and blossom as the rose All this was to be done by coining the wild lands of Arkansas into money, which miracle was to be wrought in the manner above described, by private indi- viduals mortgaging their estates and by the State issuing its bonds. million of dollars of actual capital borrowed from abroad, was to De made to perform the function of four mil lions through the banking privilege of s- suing three for one" In this way were the dwelers in Arkansas to be enriched much more rapidly than they could be by the od-fashion- ed process of industry and economy (See re- port of Mr. Rng5od from banking committee, Senate journal, October 4th, l845. See also. report of Mr. Wilson, first presdeutof the RaaI Estate Bank, House journal, Nov 30th, l837, and report of Mr. Davies, the second president of the bank Appendix to House journal for 1858, pages l, 5)
 For fear " foreigners" should share in the nestlmanls blessings the bank was to bestow, it was expressly provided that none but citizens of Arkansas should be Sub,cr bers to the stock, though + was allowable after the expiration ol four years to make transfers of the stock to any owaer of Arkansas lands even though he might not be a resident of the State
 Matters seem also to have been so managed that but comparatively few of even the citizens should share directly in the benefits expected from the bank. The complaints about tavorit- ,m iu the distribution If the stock w,re so strong, that at an early day, Mr. lzari iutro1uc- ed into the Senate resolution, the preamble 10 which declared that the act incorporating the bank had ''in it's oDeration proved to be un equal, unfair and k just, and was calculated from its nature to erich inc few at the ex- peuse of the many" (See Senate journal Nov. 18th, l957) Whatever the cause may have beeu though there were. according to the cerSuS Ol lS30-wIthout including the counties of Miller and Poinsett--ll, ,567 white men in the State of the age of twenty.oue years a.d up wards, and l,42O white women of the age oi sixteen and upwards, vet only 2o2 of these men, and two pf these women, became subScri- berS to the stock of the bank For the beneh' of these 2St, were mort-aged the labor, land and capital of tue remaining P, 7O3, and not only their labor and capital, but the labor and capital of all who have since become citizens or residents of the State, for a State bond Is mortgage on the wealth of the whole commu- nitv.
 Whatdifficulties the contrvers of this scheme had in selling the bonds, how they iuallv dis posed of them, how in less than one year the bank suspended specie payment, how in less than two wears afterwards 1t made an assign ment, and how affairs were managed under this | assl 5ulneut during the loug period of thirteen wears heed tot here be stated. The particu- lars are given iu sufficient details in the report ot the accoui tantS and in their answers to the nterroLatorles propouudei by the Governor. There Is one fact, however. to which we wish to | call attention, and that is the difficulty that ha, existed from the very beginning in ascertaiuiug the true condition of the bank.
 Alter it had fairly commenced operation, its first report Was male Nov. 2Oth. lS4O. and on the 3d of December following, Mir. Little sub- mltted to the House a resolution. That this legislature deem the report of the president of the principal bank nottne most iuteEyabe and satisfactory" (>ee House journal, Dec. 8 |, l84U) This resolution was not adopted. but instead of it a repor, by the judiciary commit tee, that after an examination of the charter of the Real Estate Bank they had come to the conclusion that the legislature had not tts pol0er to examine said institution Or it's branches. but simply at the commencement of each session, to require the officers of said institution to av before the General Assembly full and correct statement ot it's condition. (See House i5ur- nal. Dec. 10, 1940)
 That there were reasons sufficient for Mir Llttle's resolution, afterwards became fully manifest. At the next session of the General Assembly, Governor Yell, in his message to them used the following language:
 ;" We are in the midst Of great revolution on the subject of banking. The developments gIarlng and startling, of the demorallziug and rulnous consequences of the present system de- mand at your hand radical reform ~I The examination of the branches of the State bank and the developments in relation to the hypothecation' by the Heal Estate Bank of half million of bonds, have fully demonstrat. ed that all the exhibitions of h5ures setting forth the condition of banks by their reports, give no reliable information of their true circum. | stances, but are too often calculated 10 mslead and deceive. The condition of the Favette vile branch fully confirms this impre>sion.- And the report of the Real Estate Bank to the last legislature is conclusive, when they report that the five hundred State bonds are Ion hand ana uns"Id," whereas subsequent facts have demonstrated that they had cen hypothecated with the \. A. Trust and Banking Company near three months previous, for the nominal sum ot about SlZo,OOU without sanction by law ahd n express violation ot charter" (S-r page Z ot appendix to House journal for 1872 and 43) The bonds were hypothccated In Septemhsr lStO but inc flcL dil rnt -L.al- -....