The Indianapolis journal. [volume] (Indianapolis [Ind.]) 1867-1904, 1897-12-19
A BAD BANK FAILURE.

Tie report of commissioner, submitted
to Congress few days ago, showed that
there are still outstanding $31. 594 of the
claims against the Freedmans Bank, and
that during the last year only one claim
was presented and paid, that being for S.. 9S.
This statement will be "caviare to the gen
erar' who never heard of the bank
named, while to others it will recall one of
the worst failures of money concern that
ever occurred in this country About the
close of the civil war friends of the emanci-
pated slaves proposed the establishment of
freedman's bank for the purpose of en-
couragins frugaiity and thrift among the
newly liberated blacks. The scheme was
intended as charitable one. Hon. Charles
Sumner reported a bill charterng the bank
in February, 1866, and on the Sd of March
following it became law. The bank was
established in Washington, and branch
banks to the number of thirty-four were
subsequently located in different parts of
the Union. The institution was authorized
to receive the deposits of negroes only and
invest the same in the stocks bonds, treas
ury notes or other securities of the United
States. 1t was not intended to be a money
making concern, either for bankers or de-
positors, but to provide for the safe-keeping
of the freedmen's savings. The government
did not guarantee the safety of the bank.
though the negroes were generally made
to believe that it had done so, nor did il
take the proper precautions to secure honest
management. In short, it was loosely or
ganized concern. The result was that the
trustees, who were spectators, ran the
bank largely in their own interests. Dur
ing the nine years of it's existence it ham
died no less than $50, 900 of deposits. Then
it suspended payment. A committee ap-
pointed by Congress to investigate the mat
ter found that the bank had been scan
dalously mismanaged it's charter regula-
tons ignored and it's funds dissipated by
loaning poor securities. BY law the in
vestments Of the bank were confined to gov
eminent securities, but this law was ignored
and the funds used to aid the wildcat
schemes of the managers and their friends.
Unimproved real estate, unstable or worth
less stocks and personal notes were the
assets instead Of government securities. In
vestigation of the branch banks also dis
closed considerable shortages and some en-
bezziements. The unsecured debts owed by
the bank to depostors July Is, 1874,
amounted to $2,94O,OOO. There were about 6l,-
900 depositors. In February, 1874, the bank
was closed and three commissioners were
appointed to wind it up This took several
years. The assets realized more than was
expected, and in the course of ten years
they yielded upwards of 81, SOe,0o Claims
were allowed to the amount of 81 1922, 75S, of
which $1,63S259 was called for and paid
Many of the depositors had very small
amounts in the bank, and, being ignorant
of business matters, did not present their
claims. In 1881 the affairs of the bank were
turned over to the controller of the cur
rency. Although it was closed twenty
three years ago, it seems there is still ON
hand $S1, 594 to pay claims which have never
been presented and probably never will be-
All things considered, and especially the
number and character of the depositors who
suffered losses, this was about the worst
no MI foii,,ra m, raoord