The New York herald. [volume] (New York [N.Y.]) 1840-1920, 1866-07-17

Report OF tho House Committee ON Bank.
Ing and Currency IN Relation % the
Condition OF National BaAks-Ths
MercAants' National Bank Failure
RseonAmenAa alton that Legal Proceed
ings he Instituted Against the Omocrs
81 tho Bank, 90.
WASHINGTON, July 1s 1865.
Representative Hooper, to-day, from the Committee
Banking and Currency charged to inquire into the
don OF national banks &C., made report. They first
took up the case Of the Merchants National Bank OF
Washington which institution at the time Of its failure
there were nearly s7eoOOo Of public money deposit
At that period and for time previously the house
of Payne Co., Of Baltimore was indebted to the
bank for sum nearly equal to this This house
was the principal debtor and had almost all the avaable
funds OF the bank, without having given been
quired TO give any security whatever for their debt
which represented by Mr. Huyck the President of
the bank to have mainly originated in seven thirty
bonds OF the United States transmitted by the
bank to Payne Co. on the LIST Of January
last. These bonds seem TO have been made
the pretest for false and deceptive statement to
bonds sent to Payne Co. as being in the posses.
sion Of the bank while in fact they then beyond
control All the testimony taken by the committee
proves the management Of the bank to have
been in the highest degree Illegal mprovident,
was by the e1travagan and credits
allowed without security to Payne Co., and that the
failure of that firm necessarily involved that Of the bank
1t Is shown that Huyck the Treasurer Of the Wash
ington, Georgetown and Alexandria Railroad Company,
illegally issued $2s5 600 worth Of its stock 10 prop his
transactions and that the organization certificate of the
bank Itself was fraud, one gentleman having been re-
presented as owning six hundred of the two thousand
shares when he had not one dollar thus invested No
institution, the committee say, could be safe in the
hands Of men reckless and INSCRIPTIONS and the fail
ure Of this bank, involving considerable loss Of pub
lie money. be attributed wholly the dishonest and
criminal conduct OF the who controlled II. The
only other loss Of public money deposited in national
s m The mas Of the e
Franklin Pa, which failed about the 2Sth Of
March. 1t was depository bank with $50 600 in bonds
and Treasury notes security for the deposits its CAPT.
tai being $780, 000 II seems to have been managed for
the benefit of Culver, Penn Co, OF New York who
bank being 100000 Under such circumstances
the failure Of Culver, Penn Co., necessarily involved
the failure of the bank
Many Of the national banks which were converted from
State banks do not make proper exertions TO withdraw
their old circulation and in many instances pay it out
and take TO continue il in circulation thereby
receiving the benefit Of the old circulation and at the
time of the national currency notes received from
the bureau of the Comptroller II was stated TO tho
committee that there instances OF banks having
ported to the Comptroller that the State circulation had
been Withdrawn, and again paying IL out In justice to
the very large majority Of national banks that hon.
estly conducted II seems night to give in the report adj
the testimony to the committee this subject, though
national banks in Springfield, Mass, was repre-
sented to have arrangement with oficer
bank IN Boston their State bank
and put II again in circulation by oaning it, Some of
the national banks In Providence, r. l., continue to
make loans Of their State bank notes for circulation.
The Chemung Bank of Elmra, N. " continues TO issue
It's State notes, and Ia quite common practice OF the
national banks In New Jersey and in the interior Of the
State OF New York TO pay out their state bank ISSUE
Some State banks do legitimate banking business but
appear TO have been organized simply for the benefit OF
the circulation. Banks Of this character mostly
owned by brokers private bankers and carried
in conjunction with their official business II stated
TO the committee that bank Of this classthe First
National Bank OF Fenon, Mich, with capital OF $50 000
was depository for public money; and the 26th Of
Nay last, when il examined the only account the
books that Of f. Spinner Treasurer OF the United
States credited with SIT 0S5, for which the
holds $50 600 OF United States bonds security. The
National Bank OF Michigan at Marshall and another ma
tona bank at Lansing both In Michigan are represented
10 be Of similar character to the bank at Fenton but
neither OF them Ia a depository. The committee are
satisfied that the existing law does not confer the power
to correct and prevent OF those pac
tces and abuses Of the banking privilege, confessedy
the law TO which their attention has becn called by the
testimony before them.
National Currency act contains many provisions to
remedy the defects Of the existing law and TO to
tho Comptroller OF the Currency power TO restrain
banks which he knows to be improperly managed. In
regard to the gross abuse OF their trusts depository
OF public money by the Merchants National Bank, the
committee are Of the opinion that legal proceedings
should be had for the punishment OF those Of its
gers who responsible for that breach Of trust and
also such proceedings may DO necessary To recover
any portion OF the money and as II was mostly money
nrusted 70 disbursing officers of the War Department
the duty Of nstutng and conducting these proceedings
should be committed to the War Department. They
therefore report q resolution for this purpose.