The New Orleans daily Democrat. [volume] (New Orleans, La.) 1877-1880, 1879-11-04
A Readable Document Filed Yes
terday in the Fifth Dis
trict Court.
Report of Milton G. Randall. ESQ, ON
the Condition and Management
Of the Suspended Louisiana
Savings Bank-Inter-
esting Facts and
Figures.

Several months ago the Louisiana Savings
Bank was placed In the hands Of receivers by
an order OF the Fifth Distxict Court OF this
parish issued on tho application OF q number
OF the deposors. By subsequent order Mil
ton Q. Randall. Esd was appointed
EXPERT
to exam ne into the condition Of the affairs of
the bank and report. Yesterday his report was
nlod. and below 1t Is given In full. Although IL
ID an exceedingly lengthy document, it will be
found decidedly interesting and will we'll repay
Il perusal The report WAS as follows:
To the Honorable Judge of the Fifth District
Court Parish OF Orleans, State Of Louisiana:
In accordance with the appointment of your
Honor. to examine the affairs Of the Louisiana
Savings Bank, | respectfully report that have
points. and have made very elaborate report
with many details, and sustained this by ledger,
eorrespondns sr s t cironmstances, BY which tie
lunldating COMMISSIONERS and their legal ad-
viaers can better Judge of the merits Of this re-
From the report which the commissioners res
tain for prudential reasons. / have drawn such
sent them to your Honor promising. howeyer.
by saying that when bank with a capital OF
slsoooo has Its capital absorbed In less than four
lD years, and Its successor, with q re-
puted capital OF $3.50 600, finds Itself in the same
| unfortunate condition after m existence or six
| and no dividends In the meantime except few
nominal ones In the curly part Of Its existence.
and not one during Mr. Palmer,s administra-
tion then there must be very serious causes
for such results.
Having therefore, a problem to solve. found
it necessary to iamliarize myself with the his
tory OF both banks. which could only do by
| carefully examining all tho minutes from 1869
to 1870 and By this course an indebted for
that conclusion, disagreeable to know and
more so to express: what appears SO foreible
| and 80 logical. maadminlstration OF the grsy-
L 4 phearu oil a nbar
| While similarities exist In most bank fall
ures, there nre peoullarities. connected with
history to be- presented. / do not think its
parallel can be found, where such lack OF .ordt.
nary prudence and care have been manifested
and it is suggested: are directors simply hon
orary appendeges, Of corporation. with . all o.
| Its advantages and none OF the Responsibilities
attached TO u violation attached to the trustf
THE FIRST CHARTER
| OF this bank was o notaria4 one. ln 1869, Sue
ceeded shortly after by one from the Legisla-
| 500 600 In May 1872, the necessities OF the
| bank prompted an effort to Increase the capital
s9 but only $4,000 davng N peea slp b
capital as elboooo. At the date OF this decision
only $50 600 had been paid OF the original s1oo.-
sGo ooo u made lad o deficit Of hence tie ne.
cessity for the increase. ! now present to your
Honor Of what the capital Of slsoooo was com-
First cash paid. $4,000 leaving $4,000 due.
This amount was made during the administra-
Of the pen. by debiting q speculative account
called stocks and bonds. and oreditinR capital
es the with sas me n
while no such dividend Was earned II could be
declared by making the above % entry ,d Ct go PEI y
stockholders" and that this entry could have as
an offset the present fund OF accrued profits
nally exlinguished by additional credits as
they may hereafter be earned"
close it. and In 1875 by Mr., Palmer the following
entry was made by charging profits and loss.
OF, s24 ,os7. This heavy attack on profit and LOSS
found Its justification M IL the same day In the
following entry: Stocks and bonds to profit
and and loss Difference between cost and par Of
the following described securities: Mstropoli-
tan certificates, wharf bonds etc. ETC.. s2s 44s OBJ
i. Charging stocks and bonds" and credit
ing capital a. count. with $4,000 capital at an
} Increased dividend bonus TO stockholders.
2. Charging profit and loss" and ,erediting
' stocks and bonds" to complete capital account.
: s. And to relieve profit and loss.', presents
another entry by charging stocks and bonds and
crediting profit and loss s25 44s. the differences
/ between the, cost and par Of securities, whien
were, very fuctuating and could not Dy any
reach HER and N more than na nkeIy q
Q entry In it's results made subsequently by the
: president tPalmer) Of q similar character:
i
q ence between cost and par OF the following
I described securities: One park bond. face value
cost $780, One house soa o. hsp
i loss, ss2s2.''
d While this park bond may possibly be worth
y ! 40 cents the House OF Representatives war
b rant was charged subsequently, to profit end
loss. making the bad result for another fraudu-
lent entry.
This explains
THE HISTORY OF THE 100000 CAPITAL,
3. one-half OF which WAS genuine and the other
oy WITH 6s Il
o old bank and closed by the head OF the new
: bank.
THE HISTORY OF TEE ADD1TIesAL, $4,000
is equally as entertaining. While s45 600 wa
: paid in each another novel entry was made
x making quite prominent STOCKS and bonds 40
% count again, showing great generosity ant
Ia culpability. The following entry accounts fol
n the 5000:
- ' For one-half new stock lold bank. 50
shares for II. @. Warmoth 400
Profit and loss to capital accoun. for the
- balance $25Sos-.. oW
d Given to. his excellency Gov. Warmoth as
is donation $2seo new stock told. bank , but re
to auiring him to, pay per cent interest On q
This originated with tho old bank but was Ee
cognized and permitted by the new bank. M
President Palmer las In the closinG, enLIies
=, balance the previous settlement Of Original caI
VI ital $1oa who was eogn zant OF all the trans
"a actions and permitted It's trangier 20 ~ Malae
Ills so1. @ unI t, most irectly with ii
Oh services rendered the bank by some one as o
plained when this entry was made as DelnG
aareement with H. @. Warmoth. At the time,
knriI. 1879 when this bank. with only capt.
las 81 $50, 600, showing deficit OF $4,000 .ae Dan
tY- was
ng MADE FISCAL ASENt
OF the great corporation Of New Orleans, a
IN whose interest the bank. on the tentn O. o. W
is7a contracted with Mr.. Palmer to visit Euro
9al- and negotiate for the loan Of $40 900 TO u
leir tha debs Of this city The successful opposti
to this scheme on the par. of many eilzens tb se
management. and who in anticipation 2
os.. bought up large amounts Of floating secur1t1
ilsd bnt it paved the way to the election of I
Palmer as president Of the bank. sustained