Wilmington daily gazette., 1874-03-24
Cookies SwindIing Bank.

acting under resolution of the House of Rep. 8
have just concluded an investiga-
ZION into the affairs of the First ational Bank
at Washington, which was chiefly owned by
Jay Cooke & Co., and closed Its doors on the q
18th OF last September, when that concern led
of in the panic which so seriously disturbed I
confidence and credit |,
The capital of this bank was $500 900, and
Henry D. Cooke, member of the house OF
jay Cooke & Co., was its President. The bank
and the firm, which were substantially one, oc-
cupied the same building in Washington, di-
rectly opposite the Treasury Department. The
First National was depository of public
moneys, financial agent OF the Treasury in
Conversion OF portion of its bonds, and the
agent of q large number Of national banks for
the exchange Of mutilated currency, to which
1t was indebted $4,000 on tho day of the col
lapse.
These various relations and the influences
arising out ofthem were utihzed in tagrant
defiance OF law, Treasury regulations and good
faith to deposltors and other creditors, solely |
for the benefit of Jay Cooke Il Co. and to prop
up their tottering fortunes when the crash
came. In fact the bank was a contrivauce
10 attract public and private deposits, aud
conduit pipe to carry them into the firm OF
Jay Cooke IL Co. Its President took the |
money out of the vaults OF one and put it |
into those of the other, and then after max ]
ing this fraudulen: transfer, drew out about |
one-haf OF 1t for himself. |
According to the twenty-nlnth section of
the National Currency act, the total liablli- |
| ties OF any person, company, corporation or |
| fiji IN to any National Bank for money bor |
| rowed. should at no time exceed one-tenth |
part of the capital stock actually paid in, |
| Consequently If the Cookies had owned the
| whole stock of this bank they could have
| borrowed but $4,000. In presence OF this
express and emphatic restriction, the
| committee say that from the beginning of
its business, and throughout the whole ca
| reer OF this bank, no attention was ever
| paid to the Limitation.
| The report shows that jay Cooke * Co.
not only drew out tho entire capital, but
nearly as much more. The figures are worth
studying. On the 18th OF September Jay
Cooke & Co. were indebted to the bank in
the sum of S749, ,960 go in current account.
lTaey also owed Sl00, 900 as endorser OF the
Northern Pacific Railroad for a loan more
than two years ago. And Henry ID. Cooke,
the President, was indebted S40,97S AZ on
note dated back to January. 1868. The total
of these various items Is $685., 1888 IL due by
the Cookies to the bank a the time of shut
ting up the shop. But this does not tell the
whole story by any means, for the fraudu-
lent misapplication of this money is traced
down to the very eve OF the failure, when
the vaults were cleaned out to aid the over
loaded and bankrupt firm. Between the lst
of August and the 18th of September, the
current account of Jay Cooke Il Co. was in-
: creased from 1926, ,6S2 to $74S, $50 without a
). dime of security. That is to say, they car
. ried oil bodily over half million of the
public and private deposits In six weeks, in
J. addition to the quarter of a million which
a they owed before. Nearly S3O0,000 OF this
aggregate was taken after tue lst OF fSeptem-
Der and $240, 900 on the 18th and 10Th ol
September, two days before the explosion.
To be more accurate, $5i0.000 went from
the bank up stairs to Jay Cooke Il Co., down
stairs in sixteen days.
1t is impossible that this pillage could have
been carried on without the collusion OF the
o Treasury officials. The act of March 8, 1862 re
! quires that the national banks shall make live
! ports annually TO the Comptroller of the Curren
cy, and that he may call tor special reports from
any ASSOCIATION whenever in his Judgment th
same shall bs necessary to fall and complete
knowledge OF its condition. In addition, he i
authorized to appoint examiners to inquire int
the affairs OF every association, with power to pu
the agents and officers thereof under path, VIII
shall make q full and detailed report to th
iComptr.l er.
Iu view OF these mandatory statutes the Comp
troller Of the currency must have known that tn
= First Aational had not only violated the lmita
tion act but that the capital, the surplus and th
d. deposits were corruptly and crminally appropr
lie ated to the use Of Jay Cooke IL Co., through th
e. manipulation of the President OF the bank. II
stands in the light OF having tacitly conspired
I | defraud the creditors and TO defy the law.
nd Let US now turn to the connection OF this ban
ng with the Treasury Department, in order 10 d
na cover how the public money was treated ard VIII.
" - the head OF that department did to favor q col
d. spiracy to abuse its unauthorized trust. AS
. lpublc depository the bank issued its certificate
to the Treasurer of tie United States for fraction
= al currency, to be forwarded to the banks whic
made their orders for this currency through Il
First National. Ordinarily these certificates wou
be limited III amount, and the balance in ban
would be kept down by transfer orders, made
soon as the reports of the bank could be exami
ed; so that in the course Of regular business the
ea' was O check upon excess
On the Esd of August, 1878, about thee weel
, before the fall tho balance to the credit OF Il
as Treasurer in this bank was Sl33, l0S45 DuriI
ed, the following week certificates issued by Il
i 4 bank and cashed by the Treasurer to the amour
:, of $llS,7 Thus the balance to the credit
,x ~, the Treasurer the 30th OF August had run
he to S25l, ,SjS45. The next week more certificat
Ill were paid for SAC, 524, making an aggregate
S292, ,3S2.45. Transfer orders were paid amour
ing TO $145000, thus reducing this balance
Sl41, ,3S2 on The 9th OF September. Between Il
On Sth and 18th of September, certificates were
~ sued by the bank tor $lS5, 400 and cashsd.
the 18th of September transfer order for $45 0
was paid. On the day of the failure there wa:
= balance due the Treasury OF $2s7, ,7s2 45. OF t
last certificates $4,000 went to Jay Cooke u G
In Philadelphia. When these large certiicai
=, were cashed at the Treasury the bank was
'' ready Indebted for sum much larger than I
amount OF securities on deposit with the Ire
, urer.
II may well be asked how 1t came to pass Il
al the Treasury made these advances OF the pub
money upon the mere drafts of bank which
,ral Secretary, the Treasurer and the Comptroller
the Currency must have known was on the eve
!. bankruptcy. Was there any influence inyoi
from the White House, or who is responsible
this criminal offence? The committee shed
light on this subject. They do not appear to hi
examined the witnesses who could tell all ab,
tes it. or to have inquired whether General spin
protested as has been alleged, against this dar
outrage when the Secretary of the Treasury
manded it to be done.-N. I. san.