Centre Democrat. [volume] (Bellefonte, Pa.) 1848-1989, 1880-04-01
The Freedman's Bank.
REPORT OF THE INVESTIGATING COMMITTEE.
why THE BANK FAILED.

hEPOHI Of THE INV ESIluAftNU COMMITTEE.
why THE BANK FAILED.
Special dispatch to the Times.
WASHINGTON, March 2S.-The Freed.
mans Bank investigating committee, OF
which Bruce, the colored Senator from
Mississippi, is chairman, has completed
its report, aud all the Democrats have
signed it. The report is plain state.
ment OF fact, free from partisan bias.
The report gives as one cause of the
failure n misapprehension on the part
of the trustees of the character and
purposes OF the available fund, the com.
mittee holding that under the charter
that fund was intended simply TO pay
such depositors as might wish to with.
draw their deposits and the employees
of the bank. The trustees construed il
to authorize them to set apart one-third
of the deposits for ordinary banking
purposes and went into very exten.
sive discount business. Another cause
of failure is alleged TO have been the
transfer of the control OF the funds and
the investments thereof from the trus.
tees to financial committee and to the
actuary. Under the practical operations
of the institution three OF the finance
committee, and sometimes the actuary
alone, performed functions which under
the charter could only be performed by
ut least seven affirmative votes on the
part of the trustees. The committee
suggest as another cause OF failure that
the provisions of the charter forbid
ding any officer or employe, directly or
indirectly to be a beneficiary or borrow.
| nr nE IN han l. uIn al al
the officers sometimes borrowing, some.
times negotiating their own paper osten.
sibly for others, sometimes acting as in.
dorsers and frequently making loans TO
corporations in which they were stock.
holders. Another section of the char.
ter provided that the president, vice
president and other important officers
should be bonded officers. This provi.
sion was .disregarded, as no bond was
required. In addition to these causes
of failure the committee. suggest that
there was great inexpeIience, ignorance
and carelessness on the part of the Off.
GERS in administering the affairs of the
bank. There were no penal clauses in.
corporated in the original charter to
punish infidelity in office, and such
clauses were not incorporated in the
mandatory acts until the act of 1874,
ten days before the bank suspended.
With adequate penal provisions in the
original charter many of the managers
of the institution would have been sub.
ject TO both criminal and civil prosecu.
ton, and one Of them. George W. Stick.
ney, the last actuary, is subject to such
prosecution under the provisions of the
last mandatory act. He appears to
have loaned $4,000 the day after the
bank closed without consulting any one
and taking no security for part OF the
loan and insufficient security for the
rest. Some of the criminal actions are
now barred by time, and the civil &C.
ton would be unproductive, because of
the insolvency of the men who were liza.
BILE 10 them. The present management
is reported to be ncedlessly expensive
and costly, the cost of administration,
including taxes, for thisyear being $685..
600, the salaries Of the commissioners
amounting to $4,000, attorneys fees,
s3l, 900, aud employees, $4,000. The
committee recommend the substitution
of the Board OF Commissioners by the
appointment OF the Comptroller of the
Treasury, and they also recommend the
purchase by the government OF the
property known as the Freedman's
Savings Bank and the adjacent property
for the use OF the government and re.
port bills to carry out these two pur.
poses. The report ia unanimous. The
committee is composed Of Bruce, Angus,
Cameron, Garland, Gordon and Withers.