The New Orleans daily Democrat. [volume] (New Orleans, La.) 1877-1880, 1878-12-28
.SHERMAN'S FAVORITISM.
HOW THE FIRST NATIONAL BANK OFF
NEW YORK HAS pRorIrED BY sOnR
PECULIAR TRANSACTION or TuE
sECHETARY or THE TREASURY.
tPblla,Ielnhln Times |

NEW YORK, Dec 23.-JudRe Kelley's reso-
lution of the fourth instant, chilling upon the
Secretary Of the Treasury to onform Congress
what amount Of coin bplOnglng to tho govern
mfnt on the thttieth of November was on de-
post In tho national banks, ms ied 10 some
important developments, especially with
respect to the curious relations exist
ing betwoen the Treasury and the First
National Bank, Of this city, nm allu-
sion 10 which, made by Mr.. Hewitt In
tho House of Representatives on Saturday
last excited quite n breeze among tho mem
bers. he First National Bank Of New York
was originated by the venerable John Thomp-
son, now of the Chase National Bank, and
was, we believe, the first bank organized in
this city under the national banking net. It's
capital Ia 100000 Some two years ago
controlling Interest In Its stock passed into
the hands of new owners, the principal Of
whom was Mr.. II. g. Fahnestock, formerly
Of Jay Cooke II Co, and for many years the
principal manager of the New York branch
of Jay Cooke n Co.'S business. Mr.. Fahne-
stock is n man Of great ability and shrewd-
ness; entirely familiar with political llnan-
cling II such a phrase may be used-and on
terms OF great intimacy. with Mr.. Secre-
tary Sherman. One of the witnesses
before the Banking and Currency Com
tlves last ,spring-a very well known
banker OF New York stated privately TO
members Of the committee that shortly after
Mr. Fahnestock became an officer Of the First
lished, the exclusive business of which WIS
dealing In United States securities. It's ope-
ratonB were cOnducied on q scale of great
magnitude and Mr.. thompson, discovering
one day that this branch OF the bank was In
possession Of some thirty millions of United
States bonds, md ostenslbIy their owner, was
sufficiently startled and alarmed 10 demand
an explanation. II then transpired that Mr..
FBhnestoek had an agreement with the Treas
ury Department which was so framed that,
while 1t gave to the bank whatever profits
might be derived from the sale Of the bonds,
at tho same instant guaranteed the bank
against any loss that might accrue This sort
OF financing was not satisfactory TO Mr..
Thompson, and he severed his connection
with the institution.
That this bank has been In the enjoyment
OF exceptional and extraordinary methods Of
making profits is shown by the fact that the
market value OF It's stock has advanced from
200 ON the twentieth Of March, 1877, To 400 at
this time. This great advance Is clearly not
| due TO ordi1aIy bank profits. It's loans on the
| twentieth OF March, 1877, were So 033 900. and
on the fifteenth instant we're Sc, 10000 It's cir
| culatiOn having been reduced Ia the meantime
| from $4,000 to S45, 900, while its surplus fund
| has Increased from s435000 To 81 ,lG5 900 This
great Increase In surplus represents good
deal more than any possible profits derivable
| from It's regular and legitimate business, and
| is independent Of the profits divided among
| the shareholders. The public have been led
| to believe that the Federal treasury has had
| sum In actual coin, but this so-called
coin was In the form of United States
| bonds, and Of these deposits Of bonds or
| Treasury "coin" three-fonrths have constant
| ly been in the First National Bank Of New
| York. Eominally purchased by the bank,
| they have, as o fact, been used In refundlng
! operations, and great profits have accrued,
Under the refunding act of Is70-which was
engineered by Mr.. Sherman through Con
| gre5s- the Secretary of the Treasury is
allowed to pay One-half Of / per cent for ad-
yertising and disposing Of the bonds author
lied by the act for reiundiug purposes; add
to this commission of one-half Of ] per cent,
the interest accruing upon the bonds during
the period they lay In the hands of the bank
and other incidental profits, and 1t will not be
difficult 10 account for the enormous gains
made by the First National Bank Of New
York out Of It's connection with the treasury.
All these refundlng operations might easily
be performed by treasury officials without an
additional expense of q single dollar to the
public, and that they were not 50 performed
results In serious loss.