New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1880-03-28

House yesterday on the Diplomatic Service his
statements were refuted by gentlemen on both
sides Of the House. The charge that Mr..
Blackburn accused Speaker Randall of treach-
cry to his party Is reiterated. The Senate com
mittee which investigated the affairs of the
Fleedmen's Bank has completed its report; the
cause of the banks failure is attributed to
loose and dishonest management. The COM
mittee recommends placing the banks affairs
in the hands of q single person.
REPORT ON THE FREEDNEN'S BANK.
RESULTS OF THE INQUIRY BY SENATOR BRUCE's
CoMMIrTEE-CAUsE or THE BANKS FAILURE
ALLEGED DISHONESTY OF ITS OFFICIALs-RE-
COMBINATIONS OF THE COMMITTEE.
[BT TELEGRAPH TO THE TRIBUSFl
WAsHINGToN. March Ex-senator Bruce's com
mittee, appointed nearly year ago. to inquire into
the affairs Of the Freedmcn's Bank for the purpose
Of asceltunng the causes of It's failure under the
management provided in the original charter, and
also 10 ascertain the condition Of the institution
administered by the Commissioners appointed in
1874. sikh the view 10 rcduce the present cost Of
manag ment and 10 secure a speedy and final adj
justncit OF the aifairs Of the hank, has completed
It's rep T. aud it wil be submitted to the Senate on
Monday.
December. and even before what purpoltcd to be
abstracts Of this document lave been published,
but they were all based on conjecture since the
port bas only just been completed and adopted by
the committee.
After rccouuting briefly the circumstances under
which the Ere dmcns Bank was organized, and re-
viewing its early history, the committee aualyzos
the provisions Of the original charter, and shows
how The amendment OF IT,, in 1870 authorizing an
iucrca-e "a the percentage of its funds TO be in
vested tErotcs ard mortgages, furnished the op-
por.uit efor dishonest men to speculate with its
funds, and finally bring 1t into bankruptcy.
q" IT, says the committee. " the trustees who con-
ducted this bank bad been men OF great discretion,
great integrity and entire devotion 10 the purpose
Of the enterprise under thclr control, there is no
reason why either los to the dcpostors should have
followed or DISASTER to the institution should have
come"
The trouble with the baall began with miscon-
structon of the charter of the Institution by the
trustees before 1870. The charter allowed one
third of the deposits 10 be used as an available
fund.- but twO-thlrls 1t required to b. invested in
United States bonds This available fund was
intended 20 be- kept for the payment of depositOrs
on demand and 10 meet tho current expenses of the
bank. Tho trustees instead, used one-thiTl of the
funds tor the transaction Of general banking
business" t. discount paper 20 do n business that
can never be safely done, except under cOmpacty
Organized Institutions, IN which the moncyed in
tcrcss of the viii guarantee discretion and
care and which. for success even then, demands
the best and most experienced talent In ITS olcere'
Again. th" .'rgnll trustees. by their regulations,
conferred .Jn a Finance Committee of five in which
"A majortslthrcel controlled. powers which. under
the H.. ~, could not lrqali, be exercised by less
a., frue nd he
allowed 20 loan large sums of money and change
important Investments The requirement of the
charter that the officers OF the bank shOuld give
bonds for their fidelity ignored or loosely
cutcd. The charter forbade the officers from bor
rowing money from the bank prohibition that was
directly or indirectly dsrgardcd.
These are atcw oi the original causes OF the banks
disaster But IN 1870 the amendment of the char |
ter gave an OPPORTUNITY for still more loose manage
ucnt and di dishonesty. Before that time two-thiui5
OF tine funds had TO be invested IN United states
bonds. leaving ouly oBc-ihIrd 10 bc manipulated by
the officers and trustees. After 1870 onc-ha!f Of
the deposits became fund with which those who !
controlled the institution speculaIcd, either directly
OF indirectly.
" But the committee says, with all these dis |
ahllc- discretion and honesty m the management
Of the bank. had % been held 10 the purpose OF its
creation. would have ayeI.od the disasters that !
came upo4 n. No bank" II continues, " what |
cycrits charter, would have advsedly entered into
the seneca sands tone the Kennedy Fleming, Boyle,
Lyons, Nandcnburgh. and the Abbott Company !
holders and dcpns.tors of the company from loss
II adequate penal provisions had been moor
pOTatcd IA he original chaiter 10 punish nhdcllN, !
many Ol those who practically controlled the opera
tons of the institution would have been subject To /
criminal prosecution.
Tie committee then recount the operations, in
connection with the Frccdmcn's Bank. of th Seneca
Stone Company, j. &. Kennedy. v NandcnDurgh, Evan
Lyons X. J. Fleming, and Juan Boyle by which
thc money of the institution was Loaned on INSULT
cicnt security and, u Is believed, IN accordance
with corrupt agreements betwocn the officers of the
bank and the borrowers. The total amount Of loans
ui this character WAS about ha.f a Gtlluu dollars,
about two-thrls of which will prove to'al loss.
linden the present management siuce the bank
was closed. diylucud- amounting to 30 per cent OF
the liabilities have been declared. and lhelc Is good
reason expect that 90 per cent more VIII be- paid
The entire loss 10 dcpositOrS VIII therefore bo
something over 81 .5OO,oOO.
HE expenses of winding mp the Ahalfs ol the
bank have been III the last four years $3.50 99l -,
of which more than TJ0,OOO has been PAID rs
salaries 10 tie commissioners, T1O,OoO to agents.
and SBl 900 rs attorneys fees. These expenses
the committee thinks, have been unnec sSar ~
large, and even il this expensive machinery were
ever needed, t is no longer 80. Inc COMMITTEES,
hands of single person, with such powers con-
fcTcd upon him and such restrictions ~ VIII lead
10 The earliest practicable settlement OF the business
oi the institution II also advises the purchase bN
the Government Of the Freedmcn's Bank building
in tins city, which in now rented by the Govern |
ment for tie Department of Justice and the Court
of Claims at the rate Of $40 600 year.
The entire report Is a straightIoiwaitd stiIemtmt
of the facts as asccrt1ined by the Investigation,
without any attempt 10 prodnce sensational docu-
mcEt and it reflects great credlt upon senator
Brace. upon whose shoulders tho heaviest work ot
conducting tho inquiry and preparing the report
has fallen.
THE DIPLOMATIC SERVICE.
MIR. BLACKBURN ATTACKS 1T IN WEAK SPEECH
HIS STATEMENT RtfUTED-No ACTION TAKEN