Evening star. [volume] (Washington, D.C.) 1854-1972, 1866-07-17
NATIONAL BANK FAILURES

Il
How they Occur-Merchants' National
Of Washinston-Reporto of Investigating
COMMUNICATIONS Mismanagement-
Abuses of the Law
Representative Hooper yesterday, from the
Committee on banking and currency, charged
TO inquire into the condition OF National banks,
etc, m ace a report to the House of Represen-
tatiyes.
They first took up the matter of the Mer.
chants National Bank OF Washington, in
winch institution at the time OF failure there
were nearly $4,000 of public money on de.
post. A. that period and Cor some time pre
yiousiy, the house OF l.. p. Rayne & Co. of
Baltimore, was indebted to the bank for An
amount very nearly equal TO this amount,
Inls house was the principal debtor, and had
almost all the valuable funds of the bank with.
out having gwen or being required 10 give
any security whatever for their debt which
was 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 Bayne Il 60. On
the first of January last these bonds seem To
have been made the pretext for q false and de.
cepuye statement to the Comptroller of the
Currency. by representing the bonds sent to
Bayne Company as being in the possession
OF the bank, while in fact they We're then be.
yond control. All the testimony taken by the
committee proves the management of the bank
10 have been in the highest degree illegal, i'm
proyident, reckless and dishonest and that
the failure was caused by the extravagant and
unreasonable credits allowed without securily
10 Bayne Il Company, and that the failure of
mat hrm necessarily involved that of the bank
III is SHOWN that Huyck, as the Treasurer of
the Washington, Georgetown and Alexandra
Railroad Company, illegally issued two hun
dred and eighty five thousand dollars worth
OF It's Stock TO prop his transaction, and that
the original certificate of the bank itself was a
fraud, one party q. Stewart) having been
represented 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 50 reck
less and Inscriptions, and the failure OF this
bank, involving so considerable a loss of pu bile
money, must be attributed wholly to the dis.
hoEest and criminal conduct of the men who
controlled it.
II appears by the testimony that most per.
nicious system was adopted by the president
OF the bank. Mr.. Huyck, in connection with
MI Oscar King. one of the directors and Mr..
ID u. FAINT, by which they undertook to pro-
officers, for which Mr.. FAINT and Mr.. King re.
ceived compensation in the nature of interest
upon the deposits of these officers, whom thew
claimed to have influenced to open accounts
WIN Inc bank Mr. King was the suecial
friend and bondsman for Paymaster Pauld.
ing, MT Il. r. Bayne, of the house Of Bayne &
20; being the other surety on his bond-both
OF them being directors Of the bank
II does not appear by any testimony that the
omcers making the deposits had knowledge of
tnis payment OF interest on their accounts or
that they derived any benefit from Il. On the
contrary, the parties concerned expressly de.
clare that ey'cencealed all knowledge Of that
TACT from the officers whose acts they thus
made the source of profit to themselves
In Iegaro 10 the gross abuse Of their trusts as
depository of public money by the Merchants
National Bank, the committee are of opip.
lon that legal proceedings should be had for
the punishment Of those Of the managers who
are responsible for that breach OF trust, and
also such proceedings as may be necessary to
recover any portion OF the money: and as il
was mostly money entrusted to disbursing Of
hcers OF the War Department. the duty of in
cOndnctiQD
should be committed to the War Department
Ihey therefore report resolution for this
purpose.
The other loss OF pnblic money deposi,ad IN
National bank, viii ch has come to the knowi
edge OF the committee, is in the case of the We
mango National Bank Of Franklin, Pennsyi-
vsnia, which Jailed On or about the 18th of
March 1t was depositing bank, with fifty
thousand dollars in bonds and Treasury notes
as security for deposits. The capital was
S3CO,COO. 1t seems TO have been managed for
the benefit OF Culver, Penn & Co. of New
York, who had all of the funds of the bank.
their debt to bank being over S6tD.0OO. Under
rem 20, necessarily involved the failure
Many Of the National banks which were
converted from state banks do not make pro-
per exertion to withdraw their old circula-
hon, and In many instances pay it out, and
t'ke measures to continue 1t IN circulation
thereby receiving the benefit OF the old circu.
iafios, and at the same time of the National
currency notes received from the Bureau of
of the Comptroller.
The COMMITTEES are satisfied that the existing
law does not confer the power TO correct and
prevent many OF those Objectionable practices
and abuses OF the banking priyIieees confer
red by the law TO which their attention has
nren called by the testimony before them
Ihe bill tie committee have reported to amend
Inc National Currency act eoaiains manv pro.
visions to remedy the defects Of the existing
law and to give TO the Comptroller of the Cur.
rrncy more power TO restrain banks which he
knows 10 he improperly managed