The watchman and southron. [volume] (Sumter, S.C.) 1881-1930, 1903-10-14

AS the loans to shareholders coulo
be renewed at the discretion of the
president and cashier there was no rea-
son why the unpaid shares should ever
be paid or why the money should not
be returned on those that had been
paid.'' z
Thus is made apparent the unsounS-
ness of the bank at its beginning, and
the lesson which taught what is now
the national bank law, that no bank
should lend money on its own STOCK.
In two years the bank under Mr.. Jones
had run its course and reached the end
of its rope.
"The bank at this time.'' January,
1919, says Mr.. White, was really in
solvent. It was held up only by the
Government deposits, which amounted
to S9, 900, 900. It was saved from i'm
pending bankruptcy by Mr.. Langdon
Cheves, of South Carolina, who be-
came its president in March, 1915"
Prof. Sumner, of Yale College, in his
life of Andrew Jackson, p. 1884, says:
s'In the first two years Of its exist
ence the great bank was carried to the
verge Of bankruptcy by as bad banking
as ever was heard of. Instead of check
ing the other banks in their im proper
proceedings it led and surpassed them
al,. A clique inside the bank was Job
bing in its shares and robbing it to
provide the margins. Instead of recti-
flying the currency it made the cur
rency worse. Instead of helping the
country out Of the distress produced
By the war it plunged the country into
the commercial crisis Of 1919, which
caused a general liquidation lasting
four or five years. * Langdon
Cheves was elected president of the
bank on March 6s~1S19. He set about
restoring it. In three years te had
succeeded, although the losses had
been over So, coo, ooo--accusately about
So, zoo, 000."
Gouge on Banking, p. 94-5, thus
described the bank under Mr.. Jones,
1Sl7-18l9 To sustain its operations
the bank exchanged part of it's funded
debt for specie in Europe and pur-
chased large amount Of coin in the
West Indies and other places. Between
July, 1917, and July 1918, upwards Of
81, 600, 600 of specie were imported by
the bank at a cost Of $500, 600. But
the original cause of the specie leav-
ing the country, viz, the excess Of
paper issues, still continuing to oper-
ate, the money was exported by indi-
viduals fsater than it was imported
by the bank. -
Over $4,000 were exported in
twelve months from Boston and Salem
alone, and it was estimated that the
aggregate vas over $4,000, 600.
Notwithstanding the importation
of specie made by the bank, the
amount at any one time in the vaults
did not rise to S3, 600, O00-au amount
which If divided between the mother
bank.and eighteen branches was quite
Insufficient to sustain it's operations. !"
On November 80. 1S18s committee
|of Congress was appointed to investi-
gate the affairs of the bank, and on
January 16, 1919, made its report.
"On receipt in Philadelphia of the re-
port of the committee the stock fell, -
says Mr.. Gouge, p. 102, "to SO, and
Dr.. William Jones, the president,
soon after fed in alright from the
Institution. Mr.. Cheves, of South
Carolina, was invited to take his
place." The situation to its full ex-
tent was not then even imagined, but
was nevertheless regarded as desper-
ate. In March, 1919, Mr.. W. Fl. Craw-
ford, Secretary Of the Treasury writ
ing to Mr.. Cheves, says: ''The task''
of restoring a sound currency Twill
be executed with difficulty and loss if.
indeed, it be practicable. y =
The ss!oppage of specie payments by
the bank and by the State institutions
is inevitable. i * q greatly fear
that NO efforts which it is in the pow
er Of the directors to make will be
successful. !" John Quincy Adams. in
his diary on April 5, 1919, soon after
Cheves had gone in, writes: "The
bank is so drained of its specie that it
| is hardly conceivable that it can go
till June without stopping payments.
* y The state of our currency is
perilous in the highest degree and
threatens to terminate in national
convulsion.'' And again, on 18TH Of
April, writing of visit Of Mr.. Cheves
to Washington, he says: "It's the
visits real cause is the tottering stu
alton Of the bank, which will very
shortly be reduced to the alternative
of calling in all its notes and trading
on those Of other banks, or stopping
payment "But like many others, -
says the young historian, before the
Historical Association. "Mr. Adams
had failed to appreciate the remarka-
bic ability and energy of the new
president. Three weeks after the last
quoted entry in the diary the bank was
safe and sound. again and in position
to aid other solvent but needy con-
cerns.
The above is sufficient evidence to
show That in less than twenty four
months from the day it opened the
| bank had lost over 50, 500, 600, it's cred
it and its good name, and that in less
than two months after Cheves took
charge both credit and good name
had been restored.
The records further show that in
three years the loss of S3, 700. 600 had
been wiped out and replaced by an
item on the credit side entitled, econ
tingent fund to cover the losses sus-
l