New Orleans daily crescent. [volume] ([New Orleans, La.]) 1851-1866, 1866-07-24
THE GREAT swINDLE.


forty days before, the House had, by resolu-
ton, called for an investigation of the affairs
of that bank, the cau9es of its failure, and the
amount of public money deposited, directing
the committee, at the same time, to report
what legislation W as required in order to pro- !
tect the public a'Ad the government
This bank wont into operation in Septem-
Der, 81 Although located at Washington, it
appears to have been conducted for the almost
exclusive be neft of one L. B. Bayne, and his
partners in Baltimore. William Bayne, a bro
Their of L. B. Bayne, was made the president,
and the firm of Bayne & Co, became the
debtor of the bank to a very large amount,
giving no other security than the fraternal
affectun entertained by the Baltimore firm for
&" brother William, the first president of the
bank.
A SERVES of financial manipulations culmi-
mated about the beginning of May, 1866, in
this result The bank had received on deposit
from prudent and sagacious discussing off
GERS of the United States government about
S76h 900, and had loaned to Bayne Co. with
ont security about the same amount. These
dep osits by public officers were procured
through the influence of Mr.. Oscar King, one
of the directors of the bank and Mr.. H. G.
FAINT, in consideration of which they we're
allowed interest on such deposits. The chief
depositor was Colonel E. Z. Paulding, navy
| paymaster, King and L. B, Bayne being the
securities on his official bond to the United
States government Paulding thus conribu-
ted to the firm in Baltimore through the Mer-
chants National Bank over half o million of
dollars, besides check which he gave on the
First National Bank Of $780, 600, avowedly for
the purpose of aiding the Merchants Bank
1t is not proved that Paulding and other de-
| positors knew Of the arrangement by which
King and FAINT were paid bonus on these
deposits, Perhaps they did not know that
their deposits were quickly transferred from
the bank in Washington to the sister institu-
ton in Baltimore known as the firm of Bayne
Il Co.
| The remittances from Washington to Balti-
more were made in the form of United States
bonds, By one Of the constructive fctions Of
that peculiar style of banking these bonds in
the hands of Bayne & Co. were made ID ap-
pear as assets on the books of the bank on
the 1st of January. &c. when report was
made to the United States controller Of the
currency, under direction of Mr.. Leonard
Huyck who had become the successor of VIM.
Bayne as president of the bank in October
'65. Mr.. Huyck showed his ability as a finan-
cier in sundry ways, conducting the affairs of
the bank on plan purely autoeratic. The
law requires weekly meeting Of the board
of directors, but no meeting took place from
October to january. If no quorum was
present Of course nothing was done if
quorum, Huyck quietly informed the board
that nothing was to be done. In spite Of
resolution by the board that no money should
be loaned without their consent, Mr. Huyck
continued to loan money as before. He was
treasurer Of district railroad concern and
over-issued to Bayne & Go. 1886, 900 worth of
shares. In spite of the automatic saw that
Figures will not lie," Mr.. Huyck made his
figures lie most egregiously.
The Baynes in Baltimore, the officers of the
bank, and the depositors of public funds with
their securities appear to have made up a sort
of Happy Family where the main effort was to
intertwine the golden threads of financial in
terest with the softer ties of friendly esteem
and fraternal affection Such exhibitions of
confidence, such emulation in good deeds |
towards one another among financial brethren, |
such sublime obedience to the laws of love
when in conflict with the laws of the land,
have rarely been recorded. Inspired by these
motives there is no reason to wonder at the |
genius displayed in Transforming public funds
into personal property. The legerdemain of
Signor Blitz in transforming hatful of cab I
bage into barrel of feathers is not half as
wonderful as the magic by which this gang of
fnaneiers q cabbaged" the funds of the United
States to feather their own nests withal.
The committee of the House viewed their
transactions in another light and characterized
the management of the Merchants Bank as
GO in the highest degree illegal, improvident,
reckless and dishonest" They do not
scruple to say that the failure of the
bank was the result of extravagant loans
made without security to Bayne & Co.
Having disposed of the Merchants National
Bank, the report continues:
The only other loss of public money deposited
in national bank that has come to the lSnowl.
edge OF the committee, is in the case of the Ven
ango National Bank of Franklin Pa which failed
on or about tile 18th of March. 1t was deposit +
tory bank, with $4,000 in bonds and treasury
notes as security for the deposits. The amount Of
public money in that bank is S223, 1888 u to the
credit of the treasurer and 1854 90 to the credit
OF Mr.. M. 9. Cough, the collector. There is also
draft Of that bank on Culver, Penn & Co.. for
500 600, which was sent on the 2Gth of January
last 70 transfer that amount Of public money from
the Fenango National Bank to the sub-treasury in
New York. The draft has never been paid the
bank claims that it is relieved from any RESPONSE
bility, as the draft was received at the sub.treas
ury IN payment of that amount, and was not pro
tested for non-payment. There is said to be suff
Client security for this draft in the possession of the
government.
The capital of the Yenango National Bank was
$500 600. II seems to have been managed for the
benefit Of Culver, Penn & Co., of New York, who
had nearly all the funds of thesbank. their debt
Tue to TIE bank being over 100000 Under such
circumstances the failure Of Culver, Penn & Co.
necessarily involved tie failure of this bank. The
aW limiting the maximum of the aggregate loan
81 any party to 10 per Centum of the capital of
me bank was wholly disregarded in this case as it
vas ~ the case of Bayne X Co.. by the Merchants
National Bank. This is excused In both eases by ]
he specious pretense that these debts were not 8
oans, but balances due from thepartes 1t should
20. stated that 100000 Of Culver: Penn & Co.'s
iebt was for government bonds, which, as an \
Feared by the testimony before the committee. d
he bank claims were deposited by them for safe
'eepng, but were used by them without the
authority of the bank,