Evening star. [volume] (Washington, D.C.) 1854-1972, 1876-04-24
TIE FREEDMpN's BANK IyvEsTI.
CATION.
Some Of the IcSfimNux

Some OF the Testimony.
| Tine testimony taken secretly by the select
| committee of investigation of the Freed d.
mems Saving g. and Trust Company has been
mace puoiic The investigation was COM
| menced on the nth of January, and the first
witness who testified was ex-Postmaster
General Creswell. one of the commissioners
! Tor closing the affairs OF the company, which
was largely insolvept, the indeo einess be-
lhg over 50 100000, and he feared they would
rot De able TO realize more than 30 per cent
rom the assets, q large amount OF the per
sGnal securities appearing to be worthless
the next witness "a. NJ. Sperry, who
was inspector of the company from October
| 1871, to July, 1874, when the bank closed.
whose duty 1t was to examine all the &C,
counts of the several branches either ner-
s0i ally or by deputy, )says that the force EN-
ployed was entirely inadequate To the work.
| we were required, ," he says, "tO Inspect an
the branches twice In every year. Some of
them were never inspected, aud could not
be-" Here are few extracts from the tran
scripts Of his testimony:
@ At those branches where iuSpactions
were made were the entries in the draft and
deposit journals compared with the ledger
and pass books? a. AT some of them the Y
were and others not.
q. Did you upon your inspections cause
the accounts TO be checked with the ledgers
and were the records sent to the principal
office showing the errors and omissions?
y. So far as pos sible sent them.
q. Were those duties omitted anywhere
when inspections were made? A. Not so
far as 1t wss possible. 1t was not possible,
y.
| because l had come into the business three
or four years behind time. and to carry out
literally the instructions was almost a o inn
possibility. / caused the ledger balances to
be taken of, and ii was 10 this point that /
referred just now. In many cases, finding
the ledger widely different from the original
entries as returned TO the principal office, l
| made improvements. To illustrate, take
the case Oh the Washington bralch, where IN
1870 found difference between the ledgers
and the general account of some $4,000, aud
a oyrnr md hrrf l,s,n
ment OF additional expert force we were
never able to reduce this difference below,
say, So, COO l speak from memory.
q. You reported uDOn discovering those
discrepancies? A. Yes, sir; to the actuary.
e. DO you know of any proceedings Insti-
tuted by the actuary or any officer or officers
pany TO recover from Wilson (the cashier
and Boston (book keeper the deficiency ap-
Fearing upon their accounts as managers OF
the washington branch? A. No, sir.
The same witness tsstiiE i cOncerhing the
transactions with the Seneca Sandstone
company:
@. When testifying in regard 10 some of
the branches you have spoken of dealings or
the evidences of them being confused and
covered up, do you know OF any case occur
rlDg al the principal Office here in Washing
ton, where there was an attempt 10 cover up
the real nature of previous transaction for
inc purpose OF cODceallng IL? A. The Sene-
ca Stone company was undoubtedly such
case.
@. ! see your name signed as a witness to
the transaction. y. No, sir; my name is
simply atteSting the original papers: simply
for the Commissioners.
q What state of facts do those papers dis
close? y. They disclose this, that loan of
$4,000 was made TO Hallet KilbOurn and
John q, Evans at q certain time with certain
cOllaterals attached, and that secret agree
ment was drawn up between the actuary,
the finance committee, and these gentlemen
that IN case the note was not paid at matur-
ity, the note and all the securities, excepting
the bonds OF the Maryland Mining and Man
uiacturlng company Seneca sandst0ne)
should be surrendered TO the makers OF the
nOte, and that the bonds in qUestion-that is
the Seneca stone company bOnds-should be
taken in full payment of the note.
z. Was not that agreement, between Kill
bOura and Evans On one hand, and the offi
GERS OF th bank on the other, an expedent
to cover up transaction between the actu-
airy and the Seneca Stone company. OF date
prior TO that agreement? A. No, | think II
was something better than that. 1t was an
effort To pay an old loan by new loan which
was larger. In other words, there had been
On the books of the company a previous
loan for some >35 900 10 tie parties represent
II the Seneca Stone company. This loan
vas ordered paid, and, as far as line book OF
the company show, IL was paid.
q. What was the worth Of the other col
la; erals? a. There were enough other col
lateTa'S with the loan TO make 10 a good one,
besides the names OF the parties. Tue note
did not mature, say, for year. When il did
mature and was not paid the then acLuary
demanded pay ment, and the parties stuck at
give up the papers, and was threatened with
suits and there was some wrangling about
1T, and finally the note and the other papers
were given up, and the Seneca bonds re-
q. Who was the actuary who made this
agreement? A. Colonel Eaton.
Subsequently the witness said Let me
state IL again. l think can put the matter
before the committee very plainly. AS /
have always understood IL, this loan of
$4,000 in various sums was by the board of
fFnS N Nod q Arlar
posed that il was paid. About the same
time a loan OF $4,000 was made TO Kilbourn
and Evans: Among the collaterals were
$4,000 of Seneca Stone bonds. There was
enough stuff put in TO cover the loan and to
make IL appear To be good one, so far as
payment was concerned. But afterward a
secret agreement turns up and the real
nature OF the transaction is found out. 1t
was the payment Of the old loan by the new
one, and a secret sale OF the bonds of the
Seneca Stone Company to the Freedmen's
Bank.
2. What are these bonds worth? A They
are not worth anything, and never were.
q. Do you know whether or not any of the
officers or agents OF the Freedmen's Bank
were officers or stockholders in any OF the
companies whose securities were accepted
as cOllaterals fOr loans? A. do not, with
the exception of the Seneca Stone COMPANY
happened To know that ColoLel Eaton held
some of the stock while he was actuary of
the bank; think 81 900.
HGdet Kii6Olan was called before the COM
mittee and made this explanation or his
connection with the $4,000 mole: / never
had any secret understanding with anybody
in regard TO that note. Mr.. Eaton, the actu.
airy, came to me and stated that the bank
had made loan 10 the Seneca Stone Com
pany, and that the papers were denouncing
the company and trying TO place IL in bad
Odor, and he wished TO know If l would not,
with Mr.. Evans, come IN and temporarily
put in some additional securities, aud make
the loan In our name. / sent for Mr.. Evans,
and went over to the bank and said that we
would put in our securities, provided we
were held harmless in the matter, IL it was
any accommodation to the bank. There was
nothing secret about IL. Eaton was the only
person who ever spoke TO me about il. /
hastily drew up paper, and told him that
II that was approved by the finance commit.
tee we would do II; and we did.
WNtdm htt0OJ1, lawyer, testified: have
had as client for the last two or three years
colored man named John Watkins, a very
hard working, industrious man. About
three weeks ago he came and for the first
time Informed me that his money had been
drawn out OF the r reedman's Bank on frau
dulent checks, and that II mad been drawn
by 7. s. Boston, who was the receiving teller
OF the bank. Watkins is very ordinary
man, with little education, and not at all