Evening star. [volume] (Washington, D.C.) 1854-1972, 1874-07-02
SUSPENSION OF THE FREEDMAN,s
BANK.
Action of the Trustees-Scenes at the
Bank To-day.

trust company held meeting yesterday after
noon to take into consideration the affairs o;
the institution, and especially the probable
effect OF the amended charter, which was passed
at the last session of Congress and approved
June 20. the first section of which declares that
one half OF the special deposits after the passage
OF the act 'ssall be invested in real estate Sc
curity situated in the vicinity of the branch
where the deposits have been made and the re-
naming half in L. 5. bonds"
The effect of this clause seems to be that all
money deposited in the bank since June %,
cannot be used to pay depostors previous to
that date, for they are in the nature OF special
deposits; in other words il starts a new bank
to all intents and purposes from June %. This
prevents the bank from taking the money de-
losted since that date to pay those who have
complied with the rule of 60 DAYS notice OF
withdrawal OF deposits now daily maturing
To pay lite deposisOrs previous TO june 23i the
bank would be compelled in some manner TO
realize upon the assets held previous to that
date. AT the meeting yesterday the following
paper WAS submitted for the consideration OF
the trustees and the position in which the
amended charter placed the bank was a matter
of surprise TO them:
WASHINGTON, ID. c., June %, 1874
To the ONceTs and Trustees of tie Freedmaa's
SdrihgS and TrIst Company:
GENTLEMES: Mr.. Dougls has placed in NV
hands, for an opinion In writing, a series of six
questions, and respectfully submit them here
with my answers.
FirSt.-May the trustees of the Freedman's
savings and Trust Company, under the amend
ment of charter enacted June, 1874, refuse for
any reason payment in full to such OF its depos-
ltOrs as have given notice 60 days in advance Of
their intention TO withdraw their deposits?
Answer.-The company, as understand, has
! y proper notice to depositors Informed them
they shall be paid at the end of sixty DAYS from
the time they signify their desire to withdraw
their deposits. This promise on the one side
aid oti e given in accordance with il on the
other, forms valid contract which the COM
pany Is not at liberty to change. The general
principle OF law would prohibit it, and 1t is pro-
niDlted by the closing language or the 9Th sec
ton OF the act of March Sd, 1865. incorporattng
the company; see 18Th statutes at large, .. 5I2
l find nothing in the amendatory legislation OF
June, 1874, to change this view, and conse-
quently hold that the trustees cannot refuse
payment TO deposttors in full who have given
no'lcs sixty days in advance of their intention
20 withdraw their deposits.
Seeond-May the trustees pay a part of any
depository account against the bank, and take
an obligation in writing from the said dep5stor
that ne or she Will not demand any part OF the
sum which may remain until all other depos-
ltcrs snail have received like equal proper
ton?
Answer understand this question to be
whether, by voluntary and unrestrained agree
ment between the con psny and the depOsitor,
All arrangement can be made. There is no
legal objection to such a contract, the depostor
being left free to make it or not. as he pleases.
IhiTd.-Should the company now pay fifty per
cert. OF depoSitOr's account, without taking
any written obligation as above as 10 remainder,
should such payment be Included as a part of
ms or her pro rata share of the assets OF the
company Oh the final settlement?
Answer.-In the absence of such 2 voluntary
contract as is described in the second question
and answer, the payment OF fifty per cent. OF
depositor's account would be final, and not sub
iect TO any future modification By the action OF
the company, and no such payment could be
included as part OF the depositor's DrJ rata
share OF the assets of the company on final
settlement.
Fourth-May the trustees Go either of these
things without reaching tue pDint where they
are bound 70 place the bank IN the hands OF the
commissioners?
Answer.-As already shown the trustees can
DO but one of the things alluded to, namely.
make the agreement implied in the sec Jnd
question and answer. Such a contract would
not bring them to the point of placing the bank
III the hands OF commissioner that event, in
deed, by the terms OF the section third and sew
enth OF the act Of June, 1874, can only occur at
the discretion OF the trustees or on the order OF
Congress.
Fifh.-Can the trustees ace the old deposi-
tors accounts In the hands OF commissioners.
ard still continue the bank under their control
in relation to the new or special depoSitOrs?
ADswer.-The business Of the corporation can.
Lot be separated in such wise a. to make il SOL
vent for one class OF interests and insovent for
another. The expressions of the act OF June
1874. leave no doubt on the subject. When il
shall be deemed advisable TO close up the bust.
ness OF the company, commissioners are to be
appointed ''tO take charge of all the PROPERTY
and effects, close up the principal and suborii-
nate branches, collect from the branches all the
aePosits they nave on hand p SC, &c. Exam
ming these provisions with those of the eighth
section 1t becomes manifest that all the bust
ness OF the company is to proceed together and
all be Close at the same time.
Sirtb.- May the trustees invest one half OF the
amount received from special depositors in
undoubted real estate loans now held as assets
by the company at the principal Office, as a
the general arrangement contemplated by the
amendment of the charter in question?
Answer.-Ihe company can on no account,
and for no consideration, invest the special
deposits received from branches in apy other
way than that prescribed by the first section OF
the act OF June, 1874; that is, one-hslf on real
estate security situated in the vicinity of the
branch where the deposits have been made,
and the remaining half in u. s. bonds; or when
such measure may be necessary, to deposit IL
to meet current expenses, as provided in the
closing words OF the first section OF the act
referred to.
Special deposits made at the bank in W ash
lngton city might, perhaps, under a certain
construction of the law, be deemed to rest on a
inherent footing. but the spirit of the law j.
against the distinction; and its design Ia TO
insure the investment of the funds of new
deposltors In new securities. The object OF the
amendatory legislation OF June, 1871, was to
keep the funds of new depositors from any en-
ties. Tgos j. DtTRIrT
After fully discussing the above subject and
other matters connected with the bank it was
voted nine to four, TO put the liabilities of ths
bank In the hands OF three commissioners To be
wound up. under the late law Of Congress, giving
the trustees that power whenever they thought
the interest of the depositOrs would be promoted
by 1t. They also decided to nominate as such
commissioners Robert Purvis (Coiored) of Phil
adelphia. e1 Postmaster General CresgeIl and
X Leopold, now at the head of the independent
treasury. 1t is thought that, with proper man
agement, the assets will realize as much as wa
reported by Examiner Meigs, VIZ: IS cents OIL
the dollar. W.
This morning the bank opened its doors bu'
neither received nor paid out any money The
depositors, as they learned OF the action of the
trustees, came TO make inquiries. and the num-
erslowly increased. About 30 persons were
aoout the rooms at noon to-day, and there ap-
peared to be no excitement whatever although
many were very anxious, and most of them
thought their cases were deserving of special
attention, saying If the bank would only paw
them part they would wait for the baiarce
Mr. iStickney was compelled to inform them
that he had no power to pay out q dollar In
most cases they left quietly, but now and then
one would vigorously protest against the action
Of the bank officers.
The trustees will hold another meeting at
O'Clock this afternoon. 1t will probably take
two years to wind up the bank entirely, though
partial payment will prhbably be made with.
in q few months.
The New York branch has been notified from
here not to receive or pay out any funds and IL
Is presumed similar notices have been sent to
the other banks.