Nashville union and American. [volume] (Nashville, Tenn.) 1868-1875, 1874-03-24
JAYCOOKERY.
The Failure of the First National
Bank of Washington.

10 the National Currency Act.
From the New York Tribune.
WASHINGTON, March 20.-The fol-
lowing is In substance the report of the
sub Committee of the House Judiciary
Committee, appointed to investigate
circumstances attending the failure Of
the First National Bank of this city.
The report was made to the full COM
mittee to-day:
The report states that the principal
stockholders at the time of the failure
of this bank were members of the firm
of Jay Cooke & Co. During its exist
ence the bank has been depository of
public moneys, and largely employed
at times as financial agent of the Gov
eminent. 1t has acted as such in the
conversion of the 7:30s notes, and In
funding various Government loans in
connection with the Syndicate. As
Government agents its transactions
have been of great magnitude, and
large profits have been derived from
them, and from dealing in Government
securities of all kinds. Another large
branch Of its business has been
the conversion of mutilaUed cur
rency. At the time of the fail
ure this mutilated currency fund
amounted to $4,000 of Indebtedness
to other banks. The Committee find
that there was great remissness and
neglect by the officers of the bank to
establish and carry out a proper sys-
TEN for the management of its details.
No adequate checks were established 10
insure correctness and accuracy. No
record is found of any cash settlement
having been made In this department
of the bank. 1t did not enter into the
general cash account, but was kept
separately. The books of this account
were simply memoranda AT the time
of the failure the accumulation of cur
rency not RENTED for and not entered
on the general books of the bank
amounted to nearly $4,000. This
amount has since been entered. and
comes IN its proper place IN the balance
sheet. There is a difference between
the balance sheet prepared by the
Committee and the statement actually
shown by the books on the 18th of
September last, in this mutiIated cur
rency account, of $40, 1913. A thorough
examination shows that this deficit
cannot be accounted for.
The large Indebtedness of this bank
to the Government, exceeding the
amount of securities deposited, has
been specially inquired into and arose
as follows: As designated depository
this bank issued its certificates in favor
of the United States Treasurer for
fractional currency, to be forwarded to
banks who made their orders through
it. In the natural course of business
said certificates would not be large,
and the balances In bank would be kept
down to a proper amount by transfer
orders, made as soon as the reports of
the bank, received at the Treasury,
could be examined. On Aug. %, 1873,
the balance to the credit of the Treas
urer on the books of the bank and re-
ported to hum was S13S, l0S.45. During
the following week certificates were is
sued by the bank and cashed by the
Treasurer, amo-rting to $1lS,750 run
ming the balance on the3 0th of August to
S261 ,S5S.45. During the following week
certificates were issued to the amount of
$40, 524, making total of 1922, 3S2. AS.
Transfer orders were paid to the
amount of Sl45,000, leaving the balance
on Sep. 6 at S147, 49,. As. From the Sth
to the 18th of September, inclusive,
certificates were issued to the amount
of SlS5, 400, making totalof 1882, 702;
and on the 18th of September trans
fer order was paid for S45, 900, leaving
a balance on Sept. Is of S287, 78245.
OF the certificates issued during the
last week, S125.000 were for fractional
currency to be shipped to Jay Cooke &
Co.. Philadelphia. AT the time these
large sums were forwarded on the
strength of the certificates of the First
National Bank, that bank was already
indebted to the United States Treasur-
er for a sum larger than the amount of
its securities on deposit with the Treas
urer.
The committee find that the manner
In which Jay Cooke & Co. were per-
mitted thus to obtain from the govern
ment what might be called temporary
loan of a large amount of money, on
the simple Endorsement of the First
National Bank, was due to a laxity in
former Treasury regulations, of which
they took advantage In an attempt to
bolster up their failing fortune. I'M
mediately after the failure of the bank
the present Secretary of the Treasury
took effective steps, through which he
has been enabled to obtain full and
ample guarantees and security, by
which the government would be saved
from loss. The committee have exam
ined the character of the guarantee and
security, and feel confident that any
deficiency will be fully met from an
other source than the assets of the
bank. The committee give the Secre-
tary credit for his promptness In this
matter.
In speaking of the management and
cause of the failure of the bank, the COM
mttee find that on Sept. Is there was
$50, 1888 of past due paper, mostly owed,
and S72, S38 In demand notes, making a
total of S156,222. These demand notes
were accommodation loans of long
standing, which should be called past
due, some of them having run for
years IN one shape or another. The
bank is carrying some $4,000 in real
estate to secure Indebtedness, which has
also been carried for years. The COM
mittee further find that during the
banks existence, a sum amounting to
over $3.50, 900 has been charged to the
profit and loss account for bad debts.
The statement of these facts the COM
mittee deem sufficient to show that the
management of the bank has been, to
say the least, unfortunate from the
commencement to the present time.
The bank seems to have paid no atten-
ton to the law limiting loans to one
tenth of its capital. The provision of
the 29th section of the currency act has
been repeatedly transgressed both in
letter and spirit, and to this the failure
of the bank is directly traceable.
Technically, it might be said that the
large amount due from Jay Cooke &
Co. was in the nature of a deposit, but