The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.
) 04,0-4-05-fiff - https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis I IAA /T35-- rveie JANUARY TERM, 1865. 541 Danby Bank v. State Treasurer. In Fletcher et al. v. Jackson, et a/., 23 Vt. 593, the sureties recovered of their co-sureties not only a proportionate share of the taxable costs, but also of the expenses incurred in defending a suit. Where the setting up of the defence is reasonable, hopeful, prudent,—the expenses thereby incurred by a surety are held in that case to be a proper subject for contribution. To the same point is Marsh v. Harrington, 18 Vt. 150. The English decisions on this point do not seem to harmonize. In _Kemp v. Finden, 12 M. & W.421, PARKE, Baron, held that in a suit on a debt, where the sureties by default of their principal were jointly liable, and one of them had paid the whole costs, lie was entitled to recover of his co•surety his share. In 15 M.& W. 494, Me. 364. But contra, 11 N. II. 431. There is nothing to indicate that t''e 3•.;sts in this ••ase which riggs het', to ;:..y were enhanced by any neglect or default or unreasonable defence on his part. Latd. DANBY BANK V. STATE TREASURER. [IN CHANCERY.] Banks. The Danby Bank was in business several years without contributing to the bank fund, the directors giving bonds instead for the security of the bills and deposits. After 1856 the directors did not give bonds but paid into the fund. Held, that the liability of the fund attached at once upon the failure of the directors to give bonds. Held, also, that the state treasurer was properly made a party to the application for the fund. APPEAL FROM CHANCERY. The facts set forth in the petition, answer and replication, and the decree of the court, made at the March Term, 1864, KELLOGG, Chancellor, are sufficiently stated in the opinion of the court. https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis 542 RUTLAND COUNTY, Denby Bank v. State Treasurer. E. Edgerton, for the petitionee. The four banks, that contributed the fund in question by C. S., ch. 84, § 6, are made its "owners," with the exception of that portion of it paid in by the Denby Bank; and one of these (The Farmers' Bank) has already, under § 13 of the same statute, claimed payment of its share from the state treasurer. These banks should therefore all be made parties to the present proceeding, that their respective rights may be conclusively settled by such order as the court shall make. Story's Eq.. Pl. § 207; Noyes v. Sawyer, 3 Vt. 160. The Danby Bank prior to the payment to the state treasurer of any part of the $750. had suspended its redemptions and all its business, and had finally failed and become insolvent, and although this payment was not intended, probably, as a fraud, it nevertheless has that effect upon the other safety fund banks, and should not subject them to the payment of the Danby Bank debts. See C. S., ch. 84, §§ 6, 7, and 8. Another point which the court are requested to consider, is, whether the directors of the Denby Bank, having given bonds as they did, pursuant to § 57, p. 490 of the statutes up to the year 1856 could subsequently make their debts a charge upon the bank fund, by neglecting thereafter to renew their annual bonds. (§ 87, p. 495, C. S.) Especially when it does not appear when the insolvency actually accrued. The decree should have been made for the amount of the bank fund merely, which is shown by the case to be but $13,125. Front & Dunton, on the same side. 1. When the directors gave bonds for the redemption of the bills, do.,the bank thereafter became exempt from all the provisions of the statute relative to the bank fund. C. S., p. 495, §§ 87, 88, 89. It is absurd to contend that a bank might adopt this system of securing its bill holders and depositors by the bonds of its directors, until it was in failing circumstances, then elect a new board of directors, and, by their neglect or refusal to give the requisite bonds for the redemption of the bills and payment of the depositors,thereby charge the bank fund. As to the construction of statutes not explicit, see Kent 521, and note and cases there cited. https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis JANUARY TERM, 1865. 548 Denby Bank n. State Treasurer. This bank fund is the property of the banks that contributed it, (see C. S., p. 482, § 6,) and its owners can only be divested of it by a strict compliance with the statute. Spear v. Ditty, 9 Vt. 283; Brown et al. v. Wright, 17 Vt. 97; Chandler v. Spear, 22 Vt. 388; Culver v. Hayden, 1 Vt. 364. The Denby Bank has not complied with the statute. The directors did not either give the requisite bonds or contribute to the bank fund, until after the bank failed. If true that the bill holders and depositors have no security if their bank fund fails them, it does not alter the case. The equities of the owners of this fund, are, to say the least, equal to the equities of the bill holders and other creditors of the bank; and when the equities are equal, the law must prevail. 1 Story's Eq., p. 57; Fitzsimmons v. Ogden, 7 Cranch ; Mitford Eq. Pl. 274. G. W. Berman, for the receiver of Denby Bank, maintained that directors give bonds for the payment of bills and deposits, the if such act exempts the bank from all payments to the "bank fund," but this exemption exists only while the bonds are extant. The general provisions of the statute make it the duty of the bank to contribute to the "bank fund." The exception is that if the directors give the bonds to pay the bills and deposits, while they are in office, the bauk shall "thereafter" be exempt from all payments to the "bank fund." The court are called upon by construction, to give a meaning to the term "thereafter" as used in this statute. We claim that it should be limited to the period for which the directors furnish their bonds; that such is the only rational construction. Should the decree of the court of chancery be affirmed, the cause should be remanded, untrammelled by any order which shall preclude the receiver or creditors from a full examination of the state of the "bank fund." Peck & Fifield, for the creditors. 1. The act of 1840 permitting directors to give bonds is an exception to the general rule prescribed by § 1, ch. 84. All banks are safety fund banks unless the directors give bonds, &c.' When therefore the directors of this bank ceased to give bonds they became ipso facto a safety fund bank, and if the treasurer of the state omitted to https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis 544 RUTLAND COUNTY, Danby Bank v. State Treasurer. collect their contribution, it was the fault of the state and not of these creditors. 2. But in September, 1857, the bank paid its full contribution for 1856 and 1857 and took the state treasurer's receipt for it. This made the bank a safety fund bank. It was competent for the state to waive the payment of the contribution on the day it was due. Instead of asserting a forfeiture for this neglect they waived it and took the money. 3. The answer alleges that the bank suspended the redemption of its bills, discontinued business and in fact failed before the payments were made to the safety fund. The case, however, shows that the bank elected directors in 1856 and 1857, kept up its organization, and made the payments before mentioned in 1857, so that business was not entirely discontinued. Most of the banks in the state did in 1857 suspend specie payments and business. But, 4. Conceding all the answer claims, the bank would continue subject to the provisions of the safety fund act, until "it shall become insolvent and have been proceeded against as hereinafter mentioned ;" § 9, ch. 84. This bank could not be regarded as legally insolvent within the meaning of the statute until it was proceeded against as an insolvent corporation which was long subsequent to 1857. The 27th and following sections of the act point out the manner in which insolvent banks shall be proceeded against, and until these proceedings are commenced the corporation cannot be regarded as insolvent. 5. The Danby Bank then, being subject to the safety fund law, the decree of the chancellor was right and in accordance with the 9th section of chapter 84. Elwood v. State Treasurer, 23 Vt. 701. PIERPOINT, J. This case Comes before this court upon an appeal from an order of the court of chancery, made in the course of proceedings instituted to settle up the affairs of the Danby Bank, as an insolvent banking institution. The order appealed from fixes the amount of debts against the corporation, the amount of assets applied towards the payment of such debts, and the balance still due; and directs the receiver, appointed to close the affairs of said bank, to apply to, and receive from, the treasurer of the state, in the manner provided by the statute, a sum sufficient to pay such balance. https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis JANUARY TERM, 1865. 545 Danby Bank v. State Treasurer. This order is based upon the supposition that the bank fund, so called, in the hands of the treasurer of the state, is properly applicable to the payment of the said deficiency. Before proceeding to make the said order upon the treasurer, the court of chancery caused said treasurer to be cited in, to show cause why the order should not be made. The treasurer appeared before said court, and resisted the making of the order, on the ground that the bank fund in his hands cannot properly be applied to the payment of such deficiency. The decision of the court being adverse to his claim, he has brought the question here by appeal. And the principal question now to be considered is as to the correctness of the order in this respect. The Danby Bank was chartered in 1850. By the statute of this state then in force, every moneyed corporation having banking powers chartered subsequent to 1831 were required on or before the third Thursday of October in every year, to pay to the treasurer of the state a sum equal to three-fourths of one per cent. on the capital stock of said corporation paid in,(with certain exceptions not affecting this question,) until such corporation shall have paid into the treasury four and one-half per cent. upon its capital stock, to remain a perpetual fund, to be denominated the bank fund, and to be inviolably appropriated, and applied to the payment of such portion of the debts, exclusive of the capital stock, of any of said corporations that should become insolvent, as remain unpaid, after applying the property and effects of such insolvent corporation towards the payment of its debts. See C. S. 481-2. The legislature of this state at its session in 1840 passed an act in relation to banks, in addition to the then existing law on the subject, which is incorporated into the Compiled Statutes, in which it was provided in section 8 of that act, and sections 56 and 57 of chapter 84 of the Compiled Statutes, that the directors of every bank,chartered, or re-chartered, at that or any subsequent session, should be liable to pay to the creditors and stockholders of such bank,all losses sustained in consequence of any violation, by them, of the provisions of that act, or of any other law, or other unfaithfulness in the discharge of their official duties; and to secure such liabilities, each of the directors are required to execute a bond to the treasurer of the https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis U6 RUTLAND COUNTY, Danby Bank v. State Treasurer. state, with sufficient sureties, approved by the bank commissioner, the aggregate amount of which bonds to_le equal to the amount of the capital stock of such bank, actually paid in. See Compiled Statutes, 490. The statute requires these bonds to be executed, before the bank can go into operation, or the directors discharge tho duties of their office. By the 87th section it is provided that if the directors of any bank corporation subject to the provisions of this chapter shall execute bonds to the treasurer of the state, to the amount and with the security required in section 57,to be approved by the bank commissioner, and deposited with said treasurer,conditioned that such directors shall at all times pay and redeem according to law all the bills issued by such bank, and shall pay and refund all deposits made in such bank, when such payments are demanded,while such directors are in office, such bank shall thereafter be exempt from all payments, required to be paid in to the bank fund, and from all the provisions for the establishment, preservation and regulation of said fund. It appears from the agreed facts in the case, that when the Danby Bank first went into operation in 1851, the directors executed bonds according to the provisions of the said 87th section, and continued 80 to do, until the annual election of directors of said bank on the 2d Tuesday in January, 1856, thus relieving the bank from the annual contribution to the bank fund, as otherwise required by law. After the said second Tuesday in January, 1856, the directors then elected did not execute bonds as provided by said 87th section, but continued the operations of said bank, and at a subsequent period, paid to the treasurer of the state, for the benefit of the bank fund, the required annual contribution for the years 1856 and 1857, amounting to the sum of $750. It is now insisted on the part of the state treasurer, that the directors having once given bonds according to the provisions of section 87, and operated their bank under the system therein provided, a subsequent failure to execute such bonds does not leave the bank subject to the provisions of the law relating to the bank fund, but only makes them liable to be proceeded against, by the bank commissioner, in a court of chancery, as an insolvent corporation. https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis JANUARY TERM, 1865. 547 .r. Denby Bank v. State Treasure In testing the correctness of this position, it must be borne in mind, that the bank, when created, was made subject to the provisions of the law relating to the bank fund. No act of the bank was necessary to bring it within its provisions. It is not a case where it is necessary that the bank should make a choice,or take any action on the subject, to make its organization complete, or for the transaction of its business. When the directors have executed the bonds as required by the 57th section,they are authorized to discharge the duties of directors, and the bank to go into operation. The organization is perfect, and the corporation exists as a banking institution under the law, and is liable to make its annual contribution for the benefit of the bank fund. By the 87th section a method is provided by which the bank may become exempt from this liability to contribute, and that is by the directors giving bonds to redeem the bills of the bank, and pay the deposits, while such directors are in office. The directors of the Danby Bank having executed such bonds according to the provisions of this section, the bank thereby became exempt from this liability. The question then arises, for what length of time did that exemption continue? The natural and common sense answer would seem to be, just as long as the facts, upon which the exemption was based, continue to esist, and no longer; or in other words, as long as the directors continued to execute such bonds; and that when they fail so to do, the liability under the bank fund law at once attaches, thus effecting the obvious purpose of the statute, that is security to the bill holders, either by means of the bank fund, or the directors' bonds. But it is said that when the bonds are once executed, so that the exemption exists, by the terms of the statute the exemption is made perpetual, the language being that "such bank shall thereafter be exempt," &c. The word "thereafter" in its ordinary signification has no future limitation; but it is apparent that the word is not used in this section in that unlimited sense. To give it that meaning would defeat the object the legislature had in view, which was to provide a security for the redemption of the bills issued by the several banks in this state, through the medium of the bank fund, or the bonds of the directors. https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis M8 RUTLAND COUNTY, Dinby Bank v. State Treasurer. If when the bank is once exempt by reason of the bonds, they are always thereafter exempt, the neglect of any board of directors, subsequently elected, to execute such bonds would leave the bill holders without any security for the redemption of the bills, beyond the ordinary assets of the bank, unless they could resort to the bank fund. Even if such neglect would make the bank liable to be proceeded against as an insolvent institution, that would afford no additional security to the bill holders. Again, the statute does not require the directors at any time, or under any circumstances, to give bonds of this character. It is optional with every board of directors to do it or not. When their bonds are once executed they stand as a substituted security to the bill holders, in place of the bank fund, so long as those bonds continue in force and operation as such security, which is in fact until the next annual election of directors. Then such bonds cease to have that effect, and new bonds become necessary to the continuance of the exemption. If they are not executed, the bank resumes its original position and obligation, under the law creating and regulating the bank fund. We think it was the intention of the legislature, as evidenced by the language of the said 87th section in connection with the spirit and purpose of all our legislation upon this subject, to exempt the banks from contribution to the bank fund, so long as the .directors of said banks should furnish security for the redemption of their bills, and the payment of depositors, by bonds executed according to the provisions of said section, and no longer; and that the word "thereafter"as used in that section should be taken and considered in that sense. It is said that under this view of the statute the directors of a bank that is in embarrassed circumstances may, by neglecting to execute bonds, make the bank fund chargeable with the redemption of their bills, when said bank has never contributed anything to said fund, and this to the prejudice of those banks which had contributed. If this be so the fault is with the legislature, and this court cannot remedy the evil. The legislature in all these provisions was seeking to protect the bill holders, rather than those who should contribute to the fund. But the liability of the fund to redeem the bills of a particular bank is not made to depend upon the fact, whether the https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis JANUARY TERM, 1865. 549 Danby Bank v. State Treasurer. bank has contributed much or little to the fund, or at all. If the bank had never contributed to the fund, or its directors executed bonds under said 87th section, and the proper authorities had neglected to discharge their duties, and the bank had continued its business until it failed, it will hardly be contended,I apprehend, that the fund would not be liable. A question has been raised as to the propriety of making the treasurer of the state a party to this application. Whether to do so was the only proper course, it is not necessary now to inquire. We certainly see no impropriety in making him a party. The bank fund is in his hands; he is its keeper, and the only person who has any control over it; he represents the state in the matter. The object of the application was to obtain an order of the chancellor directing the treasurer to pay the bank fund in his hands to the receiver. On notice to him he appears and objects to the granting of the order on the ground that the creditors have no claim upon the fund,for the reasons which we have been considering. This it was clearly competent and proper for him to do. And probably there was no method by which this question could be so readily and economically settled as that adopted, and the chancellor was clearly right in entertaining it. No question could arise upon this application of the receiver, as to the amount of the bank fund in the hands of the treasurer,the source from which it came, or the claims of others, if any, upon it. All questions of such a character, if they arise, must be settled in the course of other proceedings instituted for that purpose. The only question to be settled here is as to the right of the receiver to resort to this fund, and the amount which he is entitled to apply for, and recover, from the treasurer. These questions settled in his favor,the order follows as a matter of course. All this would be necessary if there was no money in the hands of the treasurer belonging to the bank fund—the statute pointing out the course to be pursued in such a case. The decree of the chancellor is affirmed and the case remanded. https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis - 39 38 After having paid the expenses of putting the institution into operation. "Given under my band at Guildhall, this 13th day of March, A. D 1935. "HARRY HALE, Bank Commissioner of Vermont." On the bill entitled,"An act altering the name of Charlottis Miranda Messrs. Converse and Bishop. The committee appointed to inspect the concerns of the Essex Bank, made the following REPORT. To the Hon. the Legislature of the State of Vermont, now in session: heretofore aPpoiuted by your lion. Body, to inspect the concerns Th. Committee, Bank, located at Guildhall in said Stole, respeoftilly makes Report. of the Essex That about the first of March last past, he, your Committee, inspected the concerns of the said Essex Bank, and from an examination of its papers, considering that the corporation thereof had exceeded their powers, and had failed to comply with the condition of their act of iticorporatimi, directed Isaac Fletcher, Esq an attorney, residing in Lyndon, in the Couhty of Caledmiia, to file an information against said corporation, before the Supreme Court of Judicature in and for the County of Essex.—That after such direction was so given to file said information, Directors of all the Safety Fund a statement was made by your Committee to the Banks in the State, except the Bank of Newbury.—That iii consequence of which 1 Safety Fund statement and infprmation, • meeting of the Directors of the Banks was called and holden at Woodstock, in the County of Windsor, and an Agent appointed by those Banks to call on a Bank Commissioner, to repair to said Guildhall, and there examine into the concerns of that B•nk, and to pursue such measures as he should think proper. By a reference to the Safety Fund Act, it will officers of appear that the Commissioner has power to cite the would be the Bahk before a pursued necessary every measure single Chancellor, Sic. Believing that of the Safety Fund Banks, your interests and the _public, the of rights to secure the Committee directed Mr Fletcher to suspend the proceedings against said Essex Bank, until by him further required On the 17th day of March, your Committee received a copy of the report of the Bank Commissioner, above referred to, [Mr. Haled of which the following is a coy: "BANK COMMISSIONER'S REPORT. "STATE OF VERMONT. "Unfavorable reports having recently been circulated relative to the Situation and management of the Essex Bank. located at Guildhall in said State, and having been requested by Gen. Lyman Mower, Ptesident of the Bank of Woodstock. acting in ths• capacity of Agent for several of the Safety Fund Banks of said State, to algae an investigation of the concerns of the said Essex Bank,—On the 11th du, of March instant, I re taired to Guildhall, and as Bank Commissioner, proceeded with Hutchins. Esq., one of the Directors of the assistance of said Mower, and Samuel books, papers, notes, the Bank of Newbury, to make a thorough inspection of the them with the liabilities of said Bank, and compare sod debts, evidences of and having carefully examined the Directors and Cashier under oath, touching the premises, Report. That in my opiniou, the concerns of the institution have, from the commencement of its operations to the present time, been conducted in a prudent,safe,and economical manner,—That it has stall times been, strid now is, shun: dautly able to redeem all its bills, and outstanding liabilities, and that the Directors appear to have acted with due regard to the interest of the stockholders, and the safety of the public. The debts due the Bank appear to be well secured, and no losses have been sustained. 'On the 12th day of March,! find the situation of the Bank to beat follows.to wit: $S,010 Cash deposited in the Suffolk Bank: 225 , Safety Fund, do. do. 4,901 42 ancl,specie on hand, other Banks, foreign bills do. do. Boston, in payable Funds L301 495 ) 01 Balances due on Book, 34,545 11 Due on notes discounted, A $46,466 54 Capital stock paid in, • Bills in circulation, . . . Doe to depositors, Deposits to be applied on demands due the Bank, Leaving a profit balance of https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis - $20,000 15,964 6,261 75 2,091 46 44,317 21 $2,149 33 %C,,,Ait4A On the 19th day of March, your Committee was again at Gnildhall to examine the concerns of said Rank,—and if the same had been msnaved as represented to the Bank Commissioner by the officers of the Bank. be could not feel justified in prosecuting legal proceedings against the corporation. The circumstances, under which the examination was made by the Commissioner, were such as to induce belief that your Committee might have been mistaken in relation to the concerns of that institution. The examination was made in company with Lyman Mower.President of the Bank of Woodstock, aud Agent for the Ssfey Fond 13anks, and Samuel Hutchins, Director of the Bank of Newbury, gentlemen perfectly well qualified by their connexion with banking institutions, to make a thorn:net Inspection, and to detect and expose any improper management ; but, your Committee was induced by various reasons and considerations to make a second examination, which termi• noted in a full conviction that the cot poration had not complied with the conditions of their charter The capital of $20,000 was paid in, on the 15th day of April, 1833. On the same day, about $17,000 of said capital was loaned to the stockholders, on pledge of their stock, and the notes of the individu•ls, who subscribed for the stock : there might have been the names of some other individaals, as security, besides those who took the stock; but from a minute made by me at the time, it does sot appear that any other signature was to either note, but of such as took stock. On the 22d day of April, $400 more appears to have been loaned in the same manner as the above; and on the 6th day of May, a further sum of $1,015 was loaned in the same way: there may be possibly some trifling error in the statement of the exact sum loaned, but the above statement is made from minutes taken by me at the time—the names of the stockholder and borrower, and the sums borrowed, annexed to each name was taken from the papers of the Bank, except the last sum loaned on the 6th of May:—for these sums, notes were given, payable on demand—some of which had not been paid at the time of the examination. The banking room is in a wooden building,occupied as a store; and the place of deposit for the notes, bills, papers and specie of the Bank is a wooden desk. The books of the Bank consisted of one or two sheets of paper pinned or stitched together.— From these facts, your Committee did believe that it became his duty to order an information to be filed against the said cot poration. The proceedings having been suspended thereon, there was not safficient time, after the second examination, before the session of the Supreme Court, to give the notice required by law. No bearing could be had befhre the Court until March, A. D. 1936. For that reason, your Committee thought it most advisable to suspend entirely all further proceedings in relation to the information, and to submit the facts to the consideration of the Legislature. There were other transactions of the Bank which were considered by your Committee as improper, yet not such as would in his opinion vacate the charter. The funds of the Bank appear to have been monopolized for the benefit of the officers and stockholders of the Bank. In the month of February, 1834, at a time of great pecuniary distress, a large loan was mad to one of the officers of the Bank. Six hundred and eighty shares of the stock was owned last March by Norton, Carlisle Si Co.—One of the firm is said to reside in Buffalo, one in the city of New-York, and one in the state of New -Hampshire. The manner of reporting their funds also leads to false conclusions. From the report of their Cashier,of the amount of their deposits in Boston, it will appear much larger than it really is. The Bank has been in the habit of reporting as deposits in Boston, notes of individuals, some of which were not due at the time they were reported as deposits. The sum of $3,300 contained in the report of the Commissioner, is of that character. That was a sum made payable at the Market Bank in Boston, in four instalments, the first of which became due about the 120th of March—the other payments were on the 26th of March, 10th of April, and 20th of April. The officers of the Bank represented at the time of the examination, that they were abundantly able to redeem all their bills and outstanding liabilities, and at the same time the said Bank was furnished by the Safety Fund Bank with funds to the amouht of $5000 or $6000, to enable them to discharge its liabilities. No express provisions appear to have been made, by law, for any compensation to the informing officer or other attorney, who may be directed to file 111111 10rOrMation against a Bank corporation, in pursuance of the provisions of the statute passed in reference thereto. Whether it is necessary or proper to make any such provision, or to leave the compensation as it as at present, unsettled, is submitied to the wisdom of the Legislature to decide. Mr. Fletcher, the attorney employed by your Committee, as above, was subject. •l to some expense of time and trouble, iu making preparations in the case ; but as CtAxdk.1~-41 1 , u GthottA i%as. -64A U4 1A•vit41%.4 , • Continued on following page. 'the proceedings thereon were suspended,his bill has not beenc called for,nor has he received fl), remuneration for or toward same JOHN S PITTIBONE COMMITTEE https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis 50 51 THE foregoing statement exhibits the condition of all the banks ot this State, except the Essex Bank, which will be noticed in another part of this repoit. From this statement it appears that the specie has not been increased, but rather diminished since the last report, while the circulation has increased nearly $1,000,000. The statement of the condition of the Bank of Orleans has bean received at a date later than the date of the inspection. The specie of the bank at the time of inspection was less than $100. The demand for specie during the last year has increased and probably will for the year to come. It is well understood, the banks do not depend upon specie in their vaults for the redemption of their notes. The amount possessed by the banks of Newbury and Orleans, does not appear sufficient to meet the ordinary demands for specie at the bank. The most of the bills natorally flow into the Cities; where funds are provided for their redemption. And at those places, nearly all the operations ofthe banks, so far as relates to the redemption of their halal are carried on. These funds consist of the hills of other banks : and by mutual exchanges these redemptions are effected. So that a very small proportion is required to be redeemed in specie. I placed the amount of deposits in the cities in a separate column.— The amount of funds in deposite at the time of inspection, was $753,739. To keep up these deposits, the banks are compelled, at considerable risk and expense, to transmit funds to the places of deposite. Paper payable ia the cities is more readily discounted than paper payable at the bank. And in some instances, the borrower has been obliged to make his paper payable at the city banks, as a condition of the loan. If there be no such express condition, the rule of some banks, to give a pre ference to city paper is so generally understood, that the effect is nearly the same. Where a preference is given to city paper, to the exclusion of good paper in the vicinity of the bank, it operates oppressively on those who are unable or unwilling in addition to the legal discount. to transmit the funds of the bank to the place of deposite. These deposites are not like the funds in the bank,. dead capital. For these the banks receive from three to five per cent. merest. The banks then, at the time of the examination, were receiving, on an average, 4 per cent. on the deposite of $753,738, and six per cent, on loans and discounts to the amount of $2,618,649 a sum equal to 17 per cent. on the capital paid in. No allowance is made here for expences, bad debts, or otherlosses. As long as banks present such inducements for capitalists to vest capital in bank stock, the Legislature will be pressed with applications for new charters, and the renewal of those about to expire. The great increase of circulation during the past year tends to strengthen the argument that more banks are necessary. The wants of the manufacturer, merchant and mechanic, far from being satisfied, seem to increase with the increase of banks. From an examination ofthe reports ofthe Bank Inspector, from 1830 to 1836. the circulation has not far exceeded one million. And there is no reason to believe the circulation within our own State, has been 4reater the present year than in the preceding years. Large sums have been loaned the past year to persons emigrating to the western States anti Territories. Another Cause of the increase of the circulation, is the law of the State of New York, prohibiting the issuing or receiving of small hank notes. This has opened a new field for the circulation of small bank notes of this state. Loans to a large amount are made to the inhabitants of the state of New York, from some of the banks of this state These loans are made in small hills,(many of them at least,) https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis of long duwhich pass currently in that state. These causes cannot be of custoration. The western emigrant is not now considered the best without mers. Nor can it be expected that the State of New York, in force continue the co-operation of other states adjoining, will long or receiving small the law prohibiting the banks of that state issuing bills. and debt, If these suggestions be correct, the increase of circulation in favor argument no afford can profit, of increase consequent and the should repeal of an increase of banks. For, if the state of New York, banks of that the law prohibiting the circulation of small notes of the the amount of state, or if our Legislature should pass a similar law, ptoba notes of the banks of this state now in circulation, would, in all do not bility, be reduced one million. To redeem that sum, the banks due possess the means without a demand for the payment of the debts at the banks on discounted notes, and it is difficult to make collectionsex times when hanks are compelled to cur tail their discounts. In my liaaminations this year,I have requested a statement of the Director's or bilities. There is no law limiting the liabilities of the directors, acted stockholders. Yet it it should appear that the Directors had not banks with due regard to the public interest, and as far as relates to the ought. now in operation, there should be no remedy ; the Legislature a remedy for in all future legislation upon the subject of banks,to provideof incorpomcorrecting all abuses of the privileges granted in the acts tion ; by following the example of other states, reserving the power of altering or repealing such acts of incorporation. No evil it is believed. would result from such provisions to the incorporations. A provision of that kit.d, would operate as a more salutary check to abuse than any power givenIto a court. The Legislature would be shackled, by no legal restraints to prevent the exercise of justice towards those corporathe tions who abuse the privileges granted them. The statement of liabilities of the directors have been furnished, and answers to all en quiries have been given, and every facility afforded to obtain full information in relation to that and all other transactious of the banks, with this but one exception, where the right has been denied. The result ofThe inquiry presents a flattering condition of the banks of this State. Director's liabilities are, with a very few exceptions, trifling; and in no instance does it appear that these liabilities have been created for the year past. for purposes of speculation, but in aid of manufacturing and merto cantile interests, in which the individuals were engaged previousit is their connection with the banks. Yet as small as the liability is, of The diminution a withdrawal of so much capital from the banks capital is not the greatest evil resulting from this practice. It gives to those individuals a controling influence which enables them to obtain accommodations upon more favorable terms and frequently to the exclu %ion of others equally deserving. And admitting the stockholders re ceive nine per cent on their capital, such isdividual stockholder pass but three per cent, upon his debt to the amount of his capital. By the Bank of Manchester, where the liabilities of the directors have been equal to four-fifths of the whole capital,and three fourths of that sum oh tamed for purposes of speculation, the right of the government to know the director's liabilities is denied. I have not discovered during the past year any illegal nausartions, or that the funds of the bank have been used for purposes of speculation. I.have the utmost confidence in the present Directors, that no transaction of the diameter alluded to will be permitted. I allude to these 52 53 transactions to show the importance of providing a remedy for abuses af corporate privileges which do not involve a forfeiture or the charter. From the report of the Bank Inspector submitted to the Legislature in Oct. last, it will appear that an information had been directed to be filed against the corporation of the Essex Bank, and that the procedings were suspended for the reasons theiein stated. That report, with the report of the Safety Fund Commissioners, Was referred to a select committee of which Mr. Warner, one of the Safety Fund Commissioners wa s chairman, on the 15th of October. The President of the Essex Bank appeared before the committee with counsel,Messrs.Bell and Briggs,and offered testimony to prove the statement in the Inspector's report, relative to the books, papers and other transactions of the bank, incorrect.— The President of the Bank and the exparte affidavits of the other officers of the bank were offered as evidence to impeach the report of the Inspector. I objected to that kind of testimony. The transactions, of the bank complained of, in that report, appcared, as the report states, from the books and papers of the corporation. These papers were in the possession of the officers of the bank, and the books and papers wcre the best, and only evidence that ought to have been admitted. The objection was overruled by a majority of the committee,and the evidence admitted. The committee continued their labors until the evening session, of the 10th of November, which ended in the following report: "That believing the object or referring the report was, to give those in interest an opportunity of contradicting the facts set forth therein, your committee requested said Pettibone to appear before them for the purse of aiding in the investigation, and also permitted the President of the Bank to be heard by himself and counsel, affording them an opportunity to adduce such evidence as they were pleased to present. "Your committee had not the opportunity of inspecting the books and papers of said Bank, but received among other testimony that of the President under oath, relative to the situation of said books, and the manner of transacting business at said Bank, he having in a great measure to depend upon recollection for the accuracy of his representation. "Your committee find the report of said Pettibone generally supported with the following exceptions, to wit: That on the 6th day of May, 1833, there was *P135 loaner!, instead of$1015, in the manner set forth in the report. "They find that in addition to two or three books of the description named by said Pettibone, the said Bank had a Ledger containing 48 pages of paper of large size—a book of transfer of stock and records conlaining 96 pages of large paper, one of which books was covered with pasteboard. They find that the said Pettibone was in error relative to the manner of said bank's reporting its funds, there being nothing in the manner calculated to lead to wrong conclusions,' so far as the recent transactions of the Bank are concerned, and, in relation to certain stitements of which said Pettibone complained, your committee could not determine, as they were not furnished with sufficient evidence, upon which to found an opinion. "They find that the charge that the funds of the Bank had been mooopolized for the benefit of the officers and stockholders,'is but partially sustained. "T hey also,in compliance with a more recent resolution of the House, report, that relying upon the accuracy and truth of the reports of the Bank Commissioners, Mr. Hale and Mr. Campbell, as well as that of said Pettibone, recently made to this House, they hesitate not to ex pres. the opinion, that the institution k perfect] olvent." The Committee having expressed no opinion whether the facts cop mined in the report of the Inspector would, or would not warrant further proceedings, and the Legislature having no time to act on the report, I directed the attorney before employed, Isaac Fletcher, Esq. of Lyndon, to cause the information to be served on one of the Directo..s of the Essex Bank. The trial Was had in March last, before the Supreme Court at Guildhall. That the State might be prepared for trial, 1 visited the bank previous to the sitting of the Court. The President of the Essex Bank, John Dewey, testified before before the committee of the Legislature, that the notes given for stock or for the security of the capital loaned, had been paid. I had reason to believe that the same eourse would be pursued on the trial of the cause before the court. was confident I could show from the papers of the bank that the debt tirst contracted had never been paid, hut that the same indebtedne:isstil existed under different names. I applied to the President and Cashier of the bank for admittance. and was refused admittance or access tO the books or papers of the bank, before the cause caine on fur trial. And at that time it was impossible to trace all the changes of debt for nearly three years the hank had been in operation. The officers of the bank were requested to produce the book containing the original subscription to the capital of the bank. They refused to produce any, nor did the court require its production, as no charge or complaint of a violation of charter was embraced in the locomotion. The attorney was not pen!'itted to show any violation, under the prosecution, of the .act, regulating the chartering of banks." By the provisions of that act the Criancellor is empowered to issue an injunction against the corporation, and cause the m to deliver up the books and effects of the corporation into the possession of receivers possessed of full powers to wind up the eoneerns of the bank. By the act of incorporation there is no remedy provided Cot any violation of the charter, or abuse of the privileges therein granted, except the power of the Court at their discretion to vacate the charter. There is no power granted to the court to appoint a receiver, or provide means, by which the concerns of the bank may, with safety to the public, and to the stockholder, be wound up. The court were unwilling to inflict so severe a penalty. • I regret that am not able to conitnunicate the report of the case. I requested of the court a copy of their opinion, or a statement of the evi- https://fraser.stlouisfed.orgA..0 ef Federal Reserve Bank of St. Louis 1 14 ; — 6—.7 tle Ihs -11 1.4/fraas-vu.,t tion.. I was informed by the Judge who delivered the opinion, that it communication from him, and renewed my former request. I have, as yet. received no answer. The select committee, to whom the report of the Inspector was referred last session, state, "That believing the object of referring the report was to give those in interest, an opportunity ofcontradicting the facts set forth therein," they permitted the President of the Bank to be heard by himself and counsels,— affording them an opportunity to adduce such evidence as they were pleased to present. The President himself was introduced to contradict the official report ofthe Inspector; relative to the situation of the books, "he having in a great measure to depend upon recollection for the accuracy of his repre sentations." This appears to me to be a requirement for the Inspector to substantiate his report by other evidence than his own oath. In pre senting this report I have accompanied it with the copies ofsome papers which 1 took at a previous examination for my own convenience, not 3_h 55 in-law to Dewey,had 75 shares, John Dewey refused to make knows, the owners of the 670 shares which he said he took and held in trust.— March 29, 1834, Dewey transferred 680 shares to Norton Carlisle and Co. These shares were again transferred to Dewey. In Feb'y. 4th, This loan the 1834, there was a loan to one individual of $15,720 President of the bank stated was not for the benefit of the individual, but for the benefit of the bank. In March, 1835, the Essex Bank, or indiv:duals for the benefit of the bank, obtained a loan, from several of the Shfety Fund Banks, of$5,000 and pledged $6,000 of the Essex Bank as . This loan was obtained for the redemption of the Essex bills, security. and placed to the credit of the Essex Bank,in the Market Bank, Boston. The large loan in 1831, may have been obtained for the same object.— If this practice should ptevail, the safety fund can be no security to the public against losses by insolvent banks. I stated in the report which I submitted to the Legislature in Oct. last, no provision was made to defray the expense attending the prosecution—no opitiion was expressed by the committee to whom that report was referred, in relation to that expense. Additional expense has arisen: I have not yet received the account of Mr. Fletcher. The act regulating the chartering of banks, called the Safety Fund act, provides that the banks chartered under that act, shall pay to the treasurer of this state 4i per cent, on their capital paid in, as a fund to meet any losses that may arise in consequence of the failure of any safety fund bank. This fund will amount to but $20,025. This fund will be increased with the increase of capital. This sum can be no security to the public. The capital of all the banks of this State enumerated in the foregoing statement has been paid in agreeable to the report. As long as this capital yields to the stockholders an income as large as such capital would produce in the hands of individuals, the capital will probably remain in, and the concerns of our banks will be, as they now are, under the direction of men of capital and integrity. This is ample security to the public against loss, and is the only security that can be relied on If any bank were disposed, it could at pleasure throw into circulation bills to any amonnt. The means the safety fund act affords, to pledge bills of those banks as security for private loans, may have an injurious effect. This fund is a heavy tax upon the corporation. It presents a false security to the public, and the repeal of that law, it is believed be your committee, would increase, rather than diminish the soundness of our bank currency. Which is respectfully submitted. JOHN S. PETTIBONE, Bank Inspector. 54 them with any view at that time, of using them as evidence. I believe and to be perfect copies. I intended to compare them with the originals before called at the bank for that purpose, and was refused, as I have stated, admittance. I requested the cashier at my examination in Jan'y last, to produce the hook containing the list of the original subscribers. any The cashier was not able, as he said, to find any such book nor other than the one of which the following is a copy. (See paper marked A.) the From this paper it appears the whole subscription was made on for 15th of April, 1833, mole than 60 days after the books were opened of subscription, if said boliks were opened according to the provisions the act. Attached to this paper will be found also the certificate of the Commissioners—the receipt of the Directors—the sum first loaned and the receipt of the Cashier, and the first entry of the notes discounted.— These papers show clearly the manner in which the bank went into operation. John Dewey, one of the Commissioners and one of the Directors, stated to me that a few days previous to the 15th day of April 1833, he went to the Haverhill Bank, and obtained a loan of $18,000 or near that KUM. He left of that sum in deposite, $9,000,and took a certificate for that sum; the balance he received in Haverhill bills and specie. On the 15th day of April he deposited that sum,(the certificate of deposite being received as specie,) with the commissioners, and completed the subscription of 1000 shares, and the depeoite of $20,000, and on the same day he took from the bank $18,000 including the certificate of of deposite, and returned that sum to the Haverhill Bank, and took up his note. The names of the subscribers appear in alphabetical order.— From this paper there appears to have been deposited with the commissioner, about $2,400; $1,260 of the sum deposited was loaned back to the same individuals the same day. In addition to the loan of the in the 15th, and 22d of April, there was another sum of $135 loaned capisame way on pledge of stock, leaving less than $1,000 as the tal of the Essex Bank. And upon this capital the bank went into opebefore ration. There was no payment of the loan of April 15, made papers and the 20th of July. I have stated that a production of the booksmade ofthe of the bank would show that no payment had actually been remained loan of April 13, of 617845., or that the same indebtedness These from some of the borrowers—the debt may have changed bands. notes other demand; on payable and made notes, stock called were notes and were discounted for 3 or more months, and the discount received entered on the book. March 13., 1835, at ths time Mr. Hale made his examinntion, there was then due in interest on notes $1,578 12; a sum loan of about equal to the interest that would have been due on the amount April 15, at 6 per cent. to the time of that examination. That amount of interest could not have been due if there had not been a large bank at waning on interest. I took a list of the number of notes in the did not 1 the examination I made in 1835, which I submit. The dates notes.— take. I took the No. of the notes and the amount due on said were so Note, No. 3, 4, 5, 8, 9, 10, 13, appeared to have been paid, and$i7,110. entered on the book, the sums of all these notes amounted to $15,000, No. 180, and 181 were notes payable on demand, amounting towith No. and No. 90,92, 93,94 were also made payable on demand, and of 92 made 85000. all of the same date; and I could not learn the cause these en were them, of some or names, same The divided. being of their some notes that were on the notes of April 15th. These notes includedThere other names. John Dewey,stated that he owned about 100 shares. fatherwere in his name 770 shares,and Thomas Carlisle of Lancaster, `,-.-Ausey.-41._ https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis I - - 7 56 57 [PATER A.) We certify that the foregoing ss a true list of the names of all the subscribers to the capital stock of the Essex Bank at Guildhall, Vt. also ofthe number ofshares to which each of the subscribers is entitled, the amount of deposit paid by each at the time of subscribing; also ofthe additional sums deposited with us the subscribers—amounting in the whole to the sum of $20,000. JOHN DEWEY, G. WEBB, C. K. BROOKS, D. HEPHREN, N.DENISON. APRIL 5, 1.8:33. Guildhall, April 15, 1833 —Received of the above named Commissioners the above sum of $20,000, for and in behalf of the President, Directors and Company of the Essex Bank. G. WEBB, C. K. BROOKS, JOHN DEWEY, J. B. HALL, J. S. WELLS. Eases Bask, Guildhall, April 16, 1893.—Received of the above named Directors the above sum of $20,000 for safe keeping, and subject at all times to the direction of a majority of said Board, to be used only as they may direct. L. GERALD, Cashier. ',uhscribers to the Capital Steck ofthe JYamcs. William Ames William Atkinson C. K. Brooks Geo. W. Barker Joel Bassett D.Baldwin W.Barns C. Bellows I. F. Barns Luther CrOb8 /1 M.Cottrill 12 D. S. Clark 13 E. Cheney 14 I. Cheney 15 Tho's. Carlisle 16 P. Clark 17 A. Clark 18 Isaac Cumings 19 N. Denison • 20 I. Dewey 21 I. S. Dewey 22 S. Dewey .23 1. Y. Dewey 24 H. Dewey 25 H. Dewey 2d 26 D. Denison 27 D. E. Denison 28 I. P. Denison 29 R. Graves 30 L. Gernold 31 L. Hibbard 32 R. Hibbard 33 G. E. Holmes & Co. 34 J. B. Hall 35 C.Jewitt 36 R.Joslin 37 A. Moore 38 I. Kelsey 39 M. Olcot 40 A. Paulson 411. Read 42 I. Ross 43 A. Rich 44 I. Ricky 45 G. Webb 46 L.K. Webb 47 E. Ware 48 D. Wight 49 J. S. Wells I 2 :3 4 5 6 7 8 9 10 https://fraser.stlouisfed.org P_s.ego,Lio Federal Reserve Bank of St. Louis dm. -S7 .Vo. share:. 10 50 10 25 10 95 5 5 2 50 25 10 10 25 25 10 10 1 5 92 50 25 50 20 25 25 10 10 25 10 50 25 4 30 25 5 25 25 25 1 50 4 2 10 50 10 2 2 5 ssc.c Bank. $ 150 50 750 250 150 rec't 150 rec't 375 125 150 50 375 125 25 rec't 75 ree't 75 25 10 rec't 30 rec't 250 rec't 750 rec't 375 125 150 50 150 50 375 125 375 125 150 50 150 50 15 rec't 5rec't 25 rec't 75 rec't 1380 460 375 250 375 125 750 250 300 100 375 125 375 125 50 rec't 150rec't 150 50 125 rec't 375 150 50 750 250 975 125 20re c't 60 450 150 375 125 25 rec't 75 rec't 375 125 125 rec't 375 125 rec't 375 rec't 15 5 150 rec't 750 rec't 60 20 10 rec't 30 rec't 150 50 750 250 150 50 10 rec't 30 rec't 30 10 75 rec't 25 }11,tt April 5th.—Surns loaned. .No. of the .]'soles. Stock pledged 2 3 4 It 5 ti 6 sf 7 security 8 9 10 stock pledged ,c 11 12 SC i( SC 66 Si $100 75 1125 2580 150 250 250 3865 375 9015 30 30 $17845 ko-i/ 16, 1836—Ehtered on the book of records, Notes,from No. 1 to So. 12, inclusive, amounting to $17,845. Which on motion of Mr. Foot, was ordered to be laid on the tibia. On motion of Mr. Richmond of,Derby, Resolved, To reconsider the vote referring the petition of Andrew Spaidm and others, to the General Committee, and en his motion was referred to the members of Orleans and Essex counties. 1\1.h,ppl.4%.,k./V 3 4, 81 THURSDAY, OCT. 19, 1837. JOURNAL OF THE HOUSE, respect, than that of suspending the redemption of their bills in specie; and from the examination very minutely entered into, they are satisfied of the ability of all the Banks, to meet all their liabilities, unless the most wealthy and business part of community should become involved in general bankruptcy and ruin. It having been suggested to the Commissioners, that n great share of the loans made by the banks, had been made to the Directors—and in large sums, so that others, wishing fig Bank accommodations, in small ainounts,could not be accommodated ; we have been induced to make a particular examination relative to these charges; end are prepared to bear testimony to the injustice of the allegations,—as at all the banks examined by us, except two, the proportion of debts due from the Directors, is extremely small ;--and at the other two, perhaps the Directors have received no greater facilities, than might reasonably be expected, were they not members of the board; and a large proportion of notes due the banks, are given for sums varying fi'om fifty to three hundred dollars each. Another charge equally without foundation in truth, is that the payment of a large amount due the banks, is secured in no other manner than by a pledge of Bank Stock ; whereas the facts are, that at live of the Banks embraced in this report, having doe them more than 41,500,000, we find only the sum of $6,207,50 thus secured ; and at the other Banks the enquiry was forgotten to be entered into. The Cotnmissioners are aware, that under the existing laws, the Banks cannot be proceeded against, in so full and ample a manner, by those holding their notes, as may be done by one individual against another; but whether any other, and additional security, might to be provided by law, the Commissioners are not fully agreed ; but submit that question to the wisdom of the Legislature. The Bank of Brattleborough, which it was the duty of the Commissioners to inspect, is not included in this repnrt. The Conunissioner to whom this duty was assigned, the uedersigned Commissioners have been very recently informed, was prevented from making the inspection in consequence ofsickness. That Lank will be immediately inspected, mind a report made of its condition. All which is respectfully submitted. Bank HARRY HALE, ALMON WARNER,t Commissioners. Montpelier, October 12th, 1837. From the foregoing statements it w;11 be seen that the nine Banks which have been examined, have diminished their circulation since the examaivation of 1836, to the amount of $275,489, and that their means for the redemption of their Bills, are likewise reduced; but not to the name amount ; consequently, their liabilities are less in proportion to their ability to pay now:than at the tittle above mentioned. It appears from enquiring of the officers of the banks, that they all, professedly suspended specie payments, on, or near the 15th dny of May last; but at the same tune it appears, that they have been in the habit of paying small stuns, for the purpose of accommodation ; and some banks have redeemed more bills since the suspension, than they had been requested to do, on an average, in any equal length of time, previous. The uniform reason given by officers of the banks, for suspending has been, that it was in consequence of the suspension of specie payments by the city banks. Most of the banks in Vermont, having large deporites in the eitiee, could not avail themselves of their funds there, to redeem their bills at home ; but the bills of all those Vermont banks, having deposits in the Cities, are eonvertible, at any time,into the bills of the City banks, which keeps them at par,in the market. The reason assigned for the suspension, appears to the commissioners to be well founded, as it could not be expected far a moment, that our small banks, averaging n capital of only $100,000 each, could continue to redeem their bills with specie, while the city banks,'with a capital of millions, refused to redeem theirs. The Comtnissioners are satisfied front the manner in which the banks have been conducted by those having the management of them, that they intend, and eventually will, redeetn all thei, bills in circulation. In most eases, it appears that the Directors have offe.,:d, and in many cases have given security for the payment of the liabilities of the batiks, itt their individual capacity ; and have thereby assumed u responsibility which the law does not require. The 18th Section of the act passed the igh day of November, 1831, entitled "an act regulating the chartering of banks," makes it imperative on the bank Commissioners, upon certain contingencies therein named, to apply to a Chancellor, for an injunction; but by the 22d Section of the same act, it is left discretionary with them, in case of the suspension of specie payment for the space of sixty days to do it or not, as they may deem expedient. The Commissioners have not deemed it their dial, under existing cireumstanees, to make any application to a Chancellor,—although all the banks under their supervision, are liable to be proceeded against, for it violation of their charters, for refusing to redeem their bills in specie. In coming to the above conclusion, the Commissioners have been influenced, not oMy by the honorable conduct Of the officers of the banks; but they have also taken into consideration, the existing requirements of the laws; to wit, the security of the safety fund, and also the bonds required to be executed to the State Treasurer, by each director which lust mentioned security of the banks, in the swim of amounts generally to the sum of $56,000, and in no case to a less sum than $40,000 to each bank ; which, it will be perceived, is more than one halt; and in some cases about equal to the whole sum, in which the banks are liable to the public. In addition to this, the public are secured by the capital stock paid in and debts due the Banks. The Commissioners are not aware that any of the Banks inspected by them, have been guilty of any violation of their charters, in any other https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis To his Excellency, the Governor: The following statement shows the condition of the Bank of Brattleboro' which was not included in ottr Report of the 12th inst. for the rersons therein stated. Stock paid in Deposits Pi ofits and Loss Bills in Circulatioit 75,000 1Notes Discounted 130.23698 20,807 57 Funds in Boston, Troy 3,765 37 and other Cities 52,540 2C 96,362 Bills of other Banks 2,930 Specie 13,808 21 Banking house 2,418 47 -Sept. 4, 1837. 201,933 92 201,933 92 HARRY HALE, Bank Commissinners. A. WARNER, ç Montpelier, October 14, 1837 $8,000, -"-re--°" - 73. cd- r a 7 1313. JOURNAL OF THE HOUSE, FRIDAY, OCT. 27, 1837. remaining undivided in each bank, on the day the last dividend shall have been declared, and the amount of surplus or profits on the day of inspection, also that said committee and commissioner he required to report whether the several banks in the state have heretoliire been accustomed to pay the per centar of their profits due the stale, upon the amount of their declared dividends. The report and rerstution were read and ordered to be laid on the table. Mr. Hitc7i, front the same comniittee, made the I.:Wowing minority It E P0 It T: To the House of Repeesentativcs now in session: The undersigned, from the committee appointed to ascertain "whether any of the banks of this state have failed to comply with the provisions of the law, requiring them to pay a portion of their profits into the 'treasury of the state," disagreeing with the majority of the committee in relation to the matter to be submitted to the House, respectliilly reports:— It is believed that the provisions in the charters of the several banks of this state, requiring said banks to pay a certain portion of their profits into the treasury of the state, are uniform; except, that a part of them are required to ply six and a part ten per cent. of those profits. With this variation the law requires the banks to ply, "semi-annually at the time, at which the directors of said bank, shall declare dividends of the profits Gf said bank, with the treasury ofthis state, for the use and benefit of this state, (six or ten per cent.) ofthe profits of said bank, whether all of said property shall have been divided or not." In the opinion of the undersigned, this requirement of the charters of the banks, is imperative upon them to pay, semi-annually, at the time they declare dividends of' those profits, as well of any amount which may remain after a dividend, as of the amount actually divided ; and that the officers of the banks have no power to withhold any portion of the s.:1 thus due the state, upon any pretence whatever, and that art application of the whole or part of the undivided profits of' a bank, out of which the statc has not received the amount specified by its charter, for the benefit of' such bank, is an appropriation to itself of the money or the state, equally opposed to the provisions of the law aral the principles or common justice. In the prosecution of' the enquiry instituted by the House, the committee requested several gentlemen, known to be connected with some of the banks of the state, either as officers or stockholder., to appear before the committee, and communicate to them such information as might be within their knowledge, touching the subject of investigation. These gentlemen readily complied with the request of the committee, and from the sta tements made by them in reply to the enquiries propounded, the undersigned has arrived at the conclusion, that. the practice generally prevails among the banks to pay into the treasury of the state, the rate percent. in their profits required by their charters on their semi-annual dividends alone, at the time of making those dividends; https://fraser.stlouisfed.org I 3 41 6144' simmommj Federal Reserve ' Bank of St. Louis ,4,q.,,cL 4111 )) • and that they pay nothing to the state out or these undivided profiL9, except in case of a dividend of those profits. It also appears by the report* of the bank inspector and bank commissioner, for sonie.%ears past, that all or nearly all of the banks have- had and now have undivided profits, to a considerable amount, and that the amount of these undivided profits have varied from year to year. The reason assigned before the committee for the practice pursued by the banks of paying to the state, the rate per cent. required by their charters, on the semi-annual dividends alone, and not upon the undivided profits accruing at the time of making these dividends, are, first, that it is fur the safety of the banks to provide a fund to meet the losses that may accrue on notes then due or which may thereafter become due: and, second, that it is for the benefit of the state, on the ground that, notwithstanding a portion of the money belonging to the state, remains unpaid, yet that by the rapid accumulation of the amount of undivided profits, received by the state, on a dividend of those profits, the amount will be greater than if' payments were made on all the profits semi-annually. In relation to the first reason assigned fur the practice of the banks, it is sufficient to say, as has been suggested before, that the law is imperative, in requiring the payments to be made on all the profits of the withbank semi-annually, at the time of declaring dividends; and that holding the portion which then becomes the property of the state, by operation of law, for any purposes of banks, is a manifest violation of the plain provisions of their charters. It is arresting the operation of the law for their own benefit. In relation to the second reason assigned, it might be questioned whether the practice cperates, even under the most favorable view of the rate the subject, for the benefit of the state. If it be admitted that profits, per cent. required by the charters of the banks, on all undivided be paid to the state on dividends of surplus profits made at remote periods from each other, it admits of a doubt whether the state does not to lose the in terest which would accrue, on the several amounts added the undivided profits at each semi-annual dividend, from the time of such dividend, until the dividend of the surplus profits, when payments a are made out of those profits to the state. Be that as it may, it is sufficient answer lo the second reason assigned to say, that, if the undivided profits are holden as security against accruing losses, as alledged accumulain the first reason, they cannot he holden for purposes of' Losses tion and benefit of the state as alledged in the second reason.profits of may accrue, which may swallow up the whole of the surplus any the banks, and io this way, the state may be deprived of receiving cr their portion of them, instead of having them rapidly accumulate benefit. The operation of the practice pursued by the banks, manifisit • n i4eas ate ly is, to hold a portion of the money actually belonging to the state, security for their losses, to be appropriated to meet these losses, they may happen, which is, as has been before said, equally a violation of law and the principles of justice. Besides, it appears that some of the banks claim to have their banking houses and cost of plates, 8tc., as items of expenditure, deducted from their surplus profits, before any dividends of them are declared. This is in effect appropriating a portion of the money of the state to pay for property which they retail' in their own hands. "7 140 JOURNAL OF THE HOUrgE, FRIDAY,OCT. 27, 1837. In some cases where banks are reported to have a moderate amount profits, it is stated that they have met with losses which, should go to reduce those profits. In one case, where a bank is reported to have had a considerable amount of surplus in 1835, less in 1836, and less in 1837, the correctness of the report is denied altogether. In another came, where a bank is reported to Irave had between five and six thousand dollars surplus in 1836, it ia alledged that no surplus existed. In another ease, where the bank is of $14,000 surplus in 1836, the amountreported to have had upwards reported is stated to he too barge by $10,000, the error having been made, as is alledged, by the inspectors adding to the undivided profits $10,000, which had been taken from the capital stock of the bank, instead of its undivided profits, and invested M the stock of another bank. Such discrepancies, between the reports of the inspector and comnxissioner, made to the uporr oath,and the statements made by the officers of the Legislature banks, shew the necessity of a thorough investigation, at least, into the banka, in relation to their undivided profits, by the the situation of proper officers. It was stated before the committee in relation to a bank ported to have aorneihing over $2,000 surplus profits, that which is re the bank has declared no dividends since July 1836, and has paid on its surplus since that time. It was also stated in nothing to the state relation to another bank, that it has divided fuer per cent. semi-annually, ever since its in. ; besides which, it has divided, at three different times, $20,000 of surplus profits, of which, the state ias been paid the amount due at the rate per cent. required by the charter, although not time required by the law. Annexed to this report is a table, at the showing the amount the tanks have severally paid into the treasury of the state, nnnually, since the year 1834, as well as the amount of undivided prof ilsepossessed by each bank, from the same period. 'File undersigned, deeming it due to the public interest, and the rightful supremacy of the law over corporations as well us individuals, that the evil, into which the committee were directed to enquire, should be snore thoroughly probed, in older that its extent may be fully and an adequate remedy applied, recommends the adoption of known, the lblluteing resolution: Resolved, the Senate concurring herein, that the bank committee and bank commissioner appointed by the General Assembly at their present session, be empowered and directed to examine the books, papers vaults, and any officer or officers, of the several banks in this state, and under oath; to ascertain what amount of dividends have been declared by each bank front the surplus profits of such bank ; and whether plrtion of such dividends belonging to the state, has been paid intothat the treasury thereof or not: also, to ascertain if any bank or banks have invested any portion of their surplus profits in stocks or otherwise, and if so invested, what amount has been paid into the treasury of the on the amoent of surplus profits so invested : also, to ascertain ifstate any bank or batik; have deducted as items of expenditure, the cost ef their banking house and plates, from their surplus profits, and if so deducted, what amount has been withheld thereby from the state, by each bank; and that the said committee and commissioner be directed to report the facts in relation to each specific subject of enquiry in this resolution, to the Legislature of this state at their nextembraced session. The foregoing is respectfully submitted, by ROYAL HATCH. TABLE or undivided I https://fraser.stlouisfed.org 10u.sFederal Reserve Bank of St. Louis -a,L tri -4/t44 f 141 by the VerShowing the undivided profits and the amount paid the state '37. mont banksfor the years 1834,'35,'36 Sr. __ --- - TREAS. UNDIVIDED PROFITS. ii AM'T PAID INTO 1835 1 1836 1 1837 1834 11 1837 1 1836 1834 1 1835 1 609 71 1637 10 513 $978-23- 9,5141 7,138 9,243 494 46Burlingtou 13atik 384 384 384 6,136 3,3641 5,846 12,166 384 do Windsor 900 160 420 8,860 9,39 12,932 12,727 600 Brattleboro' do : 8 4) ? 25 17 1 0: 480 420 17,120 12,556 12,642 3,919 1.1 tit land do •200 1,057 1 989 4,073 3,746 600 Middlebury do 384 1240 240 20 St. Albans do 1 SW 13 63 2:9 240 240 240 120 20 15 7:6 354 125 3 95 3;6°2 Montpelier do 222 -216 198 180 5,454 14,487 4,233 Caledonia do 384 4E8 288 2,009 1,968 6,946 4,181 306 Vergennes do 5,340 3,820 5,595 Bennington do 9, 4 710; 36 36 3 4 : 0 6 99 , 13 92 6 :0 3 .4631 600 6° 1 4,18.5 ,362 2,365 4 Woodstock do 240 240 240 9,249 8,672 13,38! 18,499 192 Orange co. do 210 066 1,600' 61 5,01 49 62 4 do Orleans 791 149 47 439 88 410 652 Manchester do 2 40 0c lit 404 2r 00 6414) 784 9 2,0 8 2:66 7,416 4,264 5,025 Bellows Falls 1,450 1,004 Newbury do 167 48 mc. 102 98 16x) 205 2,026 not rep. 2,001i du Ems's 1,323i 1,198 3,028; Farmers'& Mech'es 28 543 68 403 201 0361 1,117 3,179! Farmers'(Orwell) and the Nom-The foregoing was taken from the treasurer's account the jourappears by report, as commissioners' bank and inspector's bank books nals of the House for the yews 1834,'35,'36, and the treasurer's in 1897. the The report and resolution were read and ordered to be laid on table. a The motion to reconsider the vote refusing the second reading of bill entitled "An act for the promotion of agriculture," Was taken up,and the House refused to leconsider the vote. reported by the seMr. Field of Wilmington called up the resolutions list. grand the committee, on lect en the table, Mr. Smith of St. Albans, moved to lay the resolutions negative. the in determined was it taken being vote And on the the word Mr. Ftelam moved to amend the first resolution by erasing "April" and inserting February. Mr. Dillingham moved to lay the resolutions on the table, And on the vote being taken it was determined in the negative. Mr. Chittenden moved the House adjourn, And on the vote being taken it was determined in the negative. Mr. Adams of Grand Isle, moved to amend the amendment by inserting June for "February," which teas withdrawn. Mr. Briggs moved to dismiss the resolutions, And on the vote beim* taken it was determined in the negative. And on the question Shall the amendment be adopted? the yeas and nays were demanded and were as follows: Those who voted in the affirmative are Messrs. 67 APPENDIX. APPENDIX. Q14 ever may be regarded that policy which has by law increased and facilitated the means of procuring credit, a community that has largely availed itself of such means and now finds itself deeply in debt, most emphatically calls for some system ofcredit of immediate availability to be extended to it, until the proceeds of more years of industry than those of the present can be realised to diseinharrass it. Such an order of prosecution on my part, would bin increase our present difficulties, by further exciting the inutilel fears both of the banks and of the people. The cases where I am at liberty to use my discretion, I refer to the consideration of the legislature; and as the other banks, where the order is imperative on me, are in all respects situated like the otlit re, I have ventured to delay any order and to refer them to the mine legislative action. In addition to this, I find in the charters of the banks under my consideration, no provisions for winding up and settling the concerns of a banicwhose charter is vacated,as is provided for the banks under the safety fund act. ‘Vithout such provis.on it wou d hardly be expected the supreme court,to whose discretion the question is referred, would, for the breach assigned, (the refusal to redeem in specie,) confiscate them. At the same time the banks may be considered responsible, yet, in consequence of the want of confidence existing on the part of the community on account 01 the suspension of specie payment, and on the part of the banks from the fact of such suspension and knowledge of such public distrust, die banks instead of extending their accommodations as far as they otherwise would be able, have been rapidly diminishing their circulation. Without public confidence iti the solvency and just management of the banks, it is apparent they cannot extend, in times of embarrnssment, the relief they otherwise could extend,and it is equally clear that the confidence of the community can be extended to them only through an assuraece in their solvency and just managemant ; which is to be obtained from a full and detsiled statement,from time to time, of their condition, merle public, and a belief on the part of that conununity,that it has on the' bank all the checks, guards nod securities, enabling it to keep and control them within the bounds intended, and for the object for which they were granted. When we regard banks as public agencies, through which credit rimy be obtained, that they with one hand receive to themselves the indsbtednees of the people, and with the other on that security, extend their indebtedness to that same community, we see by looking into the solvency of the banks, we necessari v look back of them to the people indebted to them, and if their debtors are good and held by proper securities, the banks are consequently so; the public ultimately safe, provided it has sufficient provisions, by law, to so couteal them as to make their ructions applicable to their respce.sibilities. Looking at both whin tends to the causes of insolvency and to produce popular distrust, g•ertain practices of the banks would seem to deserve considerntion. First, their system of exchanging their hills for those of other banks. The practice is obnoxious to some of the banks, and to use their own language, is a "kind of piracy on each other." A bank situated within the reach of one or more banks, has sometimes to decide agemitt discounting an application, from the consciousness that as bills will lie circulated in the vicinity of some batik or exchange agent, and be picked up and immediately he sent to the cities for re- The foregoing statements exhibit our banks to have in demands due them, specie, deposits in the cities, and bills of other banks called in the statements"foreign bilk," an amount equal to all their Jiabilities, their capital stock included. It will be further noted, that since the suspension of specie payment, they have been diminishing the amount of the sum due them, and the amount of their bills in circulation. It is apparent that our banks, constituted as they are, must necessarily,on going into operation, soon have their capital stock and most of their funds out on credit in the hands of the people, and any exertion to keep up an usual flow of circulation, must look, for the redemption of the bills emitted, to their funds then outstanding and due. In tunes of.great depression, like the present, as it would be impossible, in -any great degree to call in their dues, even though attempted by legal process, they necessarily luck the present means, convertible into funds, that will redeem their bills, unless issued under great limitation. However promptly our banks may have assumed the obligation to redeem their bills in specie, they nevertheless, took on therms Ives what, under all circumstances, they could not perform when at the same time their funds may be equal to all their responsibilities, us they at this time would seen, to be. The direction of all our bank cireulation is to the cities, where the bills will accumulate, and from whence demands for specie will principally be made, and where, when specie bears its present rate of pr.enium, our bills would themselves bear a premium so long as by presenting them at our counters specie could be obtained cheeper than elsewhere. The debtors of our banks, called on for payment, in proportion as they tail to obtain the bills of their creditor, are compelled—if exacted to pay, either such bills or what will redeem them—to obtain the bilh under such cull for, and of specie redemption, would often be impossible, and to obtain the specie equally so. While specie bears its present rate of premimn it would be impossible, in times of great embarrassments, for our banks both to continue their circulation and redeem in specie. Under the present large indebtedness of the country, it would be ruinous, now, to have the banks, at present our only public system of credit, at once to refuse all accommodation and relief to die people. The banks must have seen, that in any event, uncould der such a state of things, the continuation of specie redemption not be lime sustained, and that to further continue their hille in circulation,tnust be under a refusal of such redemption. It is difficult to see how our banks could have avoided being swept along by causes which have every where else throughout the Union produced the seine effects. As I have remarked, the banks have continued to redeem their bills in they the cities, and keep them there at their usual value ; and so far as have have been able to procure the means for such redemption, they continued their bills in circulation, which would have entirely ceased, but for such suspension, unless circulated at a depreciated value. For these considerations, believing in addition the banks to be as it my sound and responsible as at any former inspection, I have felt duties duty to trice the course I have pursued in reference to certain of its imposed on me in rase of a violation, by a batik, of the provisions charter. urn left at In the cases of the banks of Burlington and Windsor, 1 direcliberty to order a prosecution. In the case of all the others I am Howted and it is made my duty to direct a prosecution to be instituted. y .A.A•sit https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis a.( -t- t r Uw14.4wir- 37 APPENDIX. 216 demption. This forces the banks to seek opportunities to discount where their bills will be used out of our community, when otherwise, so far as required, they might have been had to facilitate our home and domestic transactions. Regarding as I have,in my inspection, that all bills out for exchange, are so far as the public are concerned, out in circulation, it is an ,ndirect mode of increasing circulation and putting out bills on the slight security of individual indebtedness, generally charged on book; it has the effect to weaken public confidence both in the responsibility of the banks and in the just distribution of their accommodations, for it cannot be expected the community will always discriminate between bills thus taken out and taken in the ordinary mode of discounting ; it furnishes the exchangers with money at their control, to use for daily and weekly purposes, without paying for its use what others pay, tind without giving the mine security. The object of this is to substitute their own hills in the hands of the people, where they may lay along for daily use, and remit the bills they procure in their stead to the cities, where they are received in the redemption of their own bills that may there accumulate. From the statements, it will appear that some of the banks charge occasionally their discounts on hook, at other times, take the individual note of the applicant. NVhile one stands at their counter and is expected to bring his two endoreors, he sees another of no greater responsibility, receiving their bills on his mere order or private note. This is discriminating in its character, and while any given case of such accommodation may he satisfactorily explained to have been done under the prop• cr usages of banking, the less informed in the details of banking will distrust such discrimination and attribute it to private friendship or a direct or more remote interest of the tnanagers of the bank, which is thus consulted. A further distrust is created from the consideration dint from such indirect and less secured accommodations, banks have and always are liable to sutler most, and like the insecure condition of bills out for exchange, are procuring causes of insolvency. In addition, as matters tending to the same result, is letting notes overrun indefinitelt, and granting large and unusual discounts. A bank that should in no case let a bill go from their counter (unless to exchange for bills of banks out of the state, and that done in their bank,) without two endorsors, and in case of letting a note due overrun a certain time, as say one yenr,'nnd iii case of any one individual or concerti running up an indebtedness to equal or exceed a certain amount, as say five thousand dollars, the directors, for the time when either occurred, added by law thereto their guaranty for their ultimate payment,—would attach to it a public confidence and patronage that would not falter under the present suspension of specie payment, and would no doubt sustain its credit in times more perilous, if possible, than the present. This additioaal security, when given, would be voluntary, and in effect, might go far to furnish all the security that would be sought for in having private property of stockholders holden. This responsibility directors would seldom care to assume. The effect of the measure would le highly salutary in moderating and confining the wants of the applicant for bank favors within the bounds of his means to meet his yearly responsibilities, as he would not often count on the directors extending an indu'gence on their own risk. And as the banks would more seldom supply grant large discounts,their means would be more abundant to This the more numerous and ordinary amounts that may be applied for. .2./ https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis , 41.4 — br 3 LtdkeN, It-vw " APPENDIX. sit measure might perhaps limit the opportunities of some of our banks of doing a sufficiently lucrative business. The business of the country would soon designate the localities where banks would be required, and those that could not tiffiiird the expenses of banking, for the amount of their transactions, would take back their capital and tise it in other pursuits. The bank at Danville, to do a saving business, put ten thousand dollars ot its funds into the bank of Orleans; and tiller granting all ordinary applications had means still unemployed, it hich iimiltsced them to extend to a few individuals large accommnodations. This single Stet illustrates that banking may easily be extended beyond the ordinary wants of time community. It may deserve consideration, whether the public, so long as it holds out by its banks, inducements and facilities for extending credit, should not throw round those who are inclined to use such facilities, such guards and checks, as while they tend to the solvency of the banks, restrain them also from that venturous use of bank credit, which fin- the want of sufficient restraints, has been largely resorted to and has proved, in the present revoision, in many instances, of an unfortunate result. An individual whose discounts are easily drawn out on his individual note or charged in account, driven along by the excitement of speculation, almost unconscious'y multiplies his indebtedness till he finds that nothing hut a successful venture can save hint from bankruptcy ; when,had he been otherwise compelled to furnish his substantial endorsors, he would have been thrown within the influence of the more sobes views of others and would have been remained within the bounds that the suggestions of friendship and the pm:knee or fears of endorsors would have prescribed. In addition, a measure of importance to the public, and under the present distrust, almost indispensable, would be to have the banks make, at least, a statement monthly, minder oatli, of their standing and condition, to such officer as should be designated, and in detail as such officer should from time to time direct, und have these statements occasionally published through the year; and with these statements accompanying, let tne annual inspeetion be made. Have the statements, among other things, show the whole amount of discounts applied for,during the month; the whole amount discounted ; and of the amount discounted what part was taken by the directors and officers, or by those known to be connected with any of them in business; and the amount taken by other ofThe stockholders ; in addition, give the whole sum taken in any other way than on ordinary discounted paper, when not entered with other discounts on their discount book ; and of this last named item give the several amounts and state by whom received. Let the board of directors, under whose supervision all the transactions of the banks weekly pass, or ought to pass, as they will often have intimate knowledge of the individuals really interested iii obtaining loans, add their oath to that of the cashier. As the hanks are created kw the benefit ofthe whole community,it is Inn reasonable for that community to see, front time to time, how far the banks distribute their accommodations over the public,indiscriminately, and how far those accommodations are mocopolised by the managers of the banks. It may further do an act of justice to the banks, enabling them to meet a prevailing impression, that in difficult times when they cannot discount all applications, the directors, officers, and those in whose business they mire concerned,obtain usual discounts, while others, however necessitous,are refuted, especially if engaged in bush Bb APPENDIX. R'18 APPENDIX.. nese near rival establishments or in pursuits in which the &wired claw are engaged. For if it should turn out that the whole hank accommodations of any given period, when there were other applications, were all or principally all granted to the managers of the banks ; to such extent, the banks would be turned aside from the object for which they were granted, and practically become privileges granted by law to individuals for private use. If there should be but few or no applications for bankdis counts, save those made by those owning and governing the bank, it would be conclusive of the inutility of such bank in a public point of view. The present provisions by law, in ease a bank violates its charter, are at best,slow in their operations;subject, when an investigation is instituted, to be continued from sitting to sitting, from term to term, before a final order or adjudication; in the mean time the evil complained of goes on increasing. To put the staff on the other side, in the hands of the public, should a public officer, designated by law, discover a bank to be wide out of its chartered limits, or from bad debts or other causes, to be insolvent,a further issuing of bills in such instances should at once cease, and it would be more summary for such officer at once to direct such suspension, leaving it for the bank immediately to get an injunction on such order, if improperly or unnecessarily imposed; and in case no injunction is granted, the officer imposing it will carry the whole matter before the supreme court for a hearing, or in the mean time he might be empowered to remove it at his discretion. I omitted to note in its proper place a practice ofone bank, at least, of allowing, by its by-laws, stockholders to draw on to a certain extent on the credit of their stock. It may be questioned whether they should not furnish the ordinary security. The capital stock should be di-encumbered of any private pledges. This practice might let out all or nearly all the capital stock on the mere security of the individual stockholders. This,if general, would destroy all confidence in the security this fond was intended to give ; if the usual security was given, there would be no necessity of this special pledge, and the capital stock would remain a permanent and available fund, pledged alike for all the liabilitiee of the bank. Which is respectfully submitted, S. A. WEBBER,Bank Inspector Rochester, 13th October, 1837. • To the House of Representatives now in session : The committee on banks, to whom the within [foregoing.)report was referred,report as herewith returned, and ask to be discharged from the further consideration thereof. S. FULLAM Jr., for committee, https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis /9}7 ACCOUNT OF SUPERINTENDENT OF THE STATE HOUSE, from November 1, 1836, to October 15, 1837,—presenled for auditing. Amount paidin materieTs, mount of Footings. balance to new account, Names. &c. credit. 403 75 Ilarvey Ainsworth 1181 83 C. W. Bancroft 274 27 Carlos Bancroft 78 21 Bancroft & Riker 470 60 Josiah Brown 17 15 Francis Barker 4 80 Joel Colburn 14139 John Barker 16 98-2461 94 Proctor & Felt 23 00 John Gilbert jr. 122 91 Leary Con 6 77 t Morris Conway 3 75 Harry McEllery 32 43 Ira Slayton /0 80 Willis Keith 226 88 John S Cummings 50 100 brick S 382 80 Oliver Clark ZJ 50 1112 perch stone 14 39 82373$ James Dawson -32 -013 Lorenzo Johnson 1 17 14 t Asa Phelps /4 00 Flynn Woodward t 2 75 I Walter Peck 423 19 Addison Fowler 178 91 Leander French 239 48 Luther Farrar 147 63-1055 18 Charles Gravlin 125 31 Silas Ham ll 95 67 J. & C. Spalding 143 88 William A. Kelly 164 60 Thomas Lyle Ii 16 91 Orrin Pitkin 15 70 Amapa Lyman I 31 25 Silas F. Jones 141 48 Joel Manchester 1 459 44 Ozee Manchester 200 86-1395 10 Chester Marshal 8 08 Robert McDonald 9 32 I Phineas Benjamin 144 75 Nathan Parker 46 70 Sidney Patterson 1 28 Francis Rayhue I 8 93 Michael King t Gravlin 159 28 Peter 81 Stephen Pierce 373 128 56-880 71 Hugh Roach $6616 70 $3000 APPENDIX. - •- t.'V Current bills • Notes due the bank Montpelier bank stock APPENI)IX. 2,188 74,264 35 960 . • $114,572 10 LIABILITIES. Capital stock paid in Bills in circulation Due depositors Discounts unpaid $60,000 45,836 2,863 38 10 - . 9108,708 38 Jan. 13, 1840. BANK OF CALEDONIA. RESOURCES. 950,000 2,385 43 Capital stock Deposits Circulation Profit and loss Due Suffolk Bank . 42,466 '15 2,987 23 . 817 63 $98,657 at LIABILITIES. Loans and discounts Deposit in Suffolk Bank Specie Bills of other Banks Bank House Expense . $81,789 91 3,000 . 8,916 33 2,793 57 . 1,799 16 358 07 $98,657 04 Sept. 1, 1840. In presenting the statement of the condition of the banks, subject to my inspection, I have conformed to the previous practice of Inspectors and Commissioners. One side of these accounts shows the liabilities of the banks, and the other, the funds to meet those liabilities. The object of the inspection is, or ought to be, to show the public the true condition of those institutions which furnish the almost entire circulation of the country. One important fact,in which the whole community are interested, is, whether those institutions are able, or not, to redeem all their liabilities on demand ? If they arc so, have they managed therein with a due regard to the https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis public interest? The statement accompanying this report furnishes little evidence of the ability of the corporations to pay their liabilities. The only property belonging to the corporations, of which the public have any means of ascertaining its true value, is the specie on hand and the real estate they possess. Deposits, in the Boston and New York banks, are represented as specie funds. There is no want of confidence, perhaps, in the soundness of those banks. Yet the public have no evi• dence of their ability to pay, except the annual statement furnished by the banks to the commissioner. The principal item contained in the statement of . some of the banks, on which they must depend for the redemption of their bills, is the sum due on discounted notes. The value of those notes must depend upon the ability of the debtors to pay.— Whether the large sums, due on discounted notes, are good, or bad, the public have no means of knowledge. The inspector may be satisfied that a large amount of that sum can never be collected, yet he is not permitted to disclose the names of the debtors. It appears to me more important at this time, that the true value of this debt dime the banks should be ascertained, from the consideration that many of the charters arc about to expire, and the corporations are petitioning for a renewal of them. Should the Legislature deem it expedient to renew thorn, ought they to be less careful in guarding the public against loss, than they were when the banks were first chartered ? Then the capital was required to be paid in in gold and silver. Should the charter be renewed, the debt due on discounted notes would constitute the capital stock upon which the corporation would commence their operation. Of the value of this capital, on which the corporation have a right to issue bills to three times its amount, the public have no knowledge. The effect of a renewal of a charter will more clearly appear from the statement of the condition of the Orange Co. Bank. They report a capital paid in of $70,000. They also report a suspended debt of $30,000. I would here remark, that a large amount due some of the other banks, might, with as much propriety, be reported a suspended debt, as that of Orange county. Should the charter of that bank be renewed. they would have a right to issue bills to the amount of $210,000. APPENDIX. APPENDIX. _ must bank of that sum, the For the redemption of debt. this suspended upon depend , The necessity of ascertaining the value of the debt in favor of a bank askin. a renewal of its charter, will appear from the history of the r'Windsor Bank. From the statement of the condition of that bank, reported to the Legislature a few weeks before its failure, there was as much evidence of its ability to pay all its liabilities, as any bank in the State. And if its charter had then been about to expire, the Legislature would, no doubt, as readily renewed it, as they would that of Brattleboro' or St. Albans. That bank was reported to possess a capital paid in of $80,000, and they had a right to issue bills to the amount of $!240,000. Why may not a bank be permitted to go into operation at first, without a capital, as to renew one, without clear evidence that the capital first paid in has not been changed from specie for the notes of insolvent speculators? Facts, disconnected from the doings of the Inspector, have disclosed to the public the true value of the capital of the Windsor Bank. In August last I requested of the cashiers of the banks now in operation, subject to my inspection, the amount of indebtedness of all the directors, also their liabilities. From the Vergennes Bank, and from the Orange Co. Bank, I have received no statement of the amount of the indebtedness of the directors. From the Danville Bank I have received no statement of the condition of the bank, in form, to embody in this report. In January last I inspected that bank. The books were not in a condition then to make a formal and correct statement. The circulation was small, about $:35,000. The liabilities of one of the directors was large. The indebtedness of the directors of the Bank of Rutland was, in August last, $22,000. The entire liabilities of the directors of the Bank of Burlington was, in February lust, fidt3,050 ; May 1st, $2,3(.10 ; and August 1st, $3400. The liabilities of the directors of the Bank of Bennington, since the 7th of January last, have not exceeded $'2,500,—August '20th, $2,000. I would abstain from making any remarks, which would have a tendency to destroy, or to injure, a well regulated system of credit. If any hank has pursued a course of management. which, if exposed to public view, would, of itself, dstroy its credit, the sooner the exposure is made,the better for the people. The Essex Bank partially sustained its credit, e woo° 4k.a https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis 'IL — y /)L 1) uvws....,dv icyh by secretly depositing its own bills, as•seenritv for loans obwined from other banks. After these transactions were reported to the Legislature,the transaction wasjustified, at least not condemned, by a committee of the House, a majority of which committee were officers of other banks. The effects of endeavoring to sustain the credit system of a rotten and corrupt institution, are severely felt by the laboring class of the community, who have sustained a loss of thousands of dollars by the fruitless attempt to sustain this credit system. The Windsor Bank not only deposited its own bills to sustain its credit, but loaned a sealed package ef $10,000 of its bills, at one time, seal not to be broken, at three per cent.'interest. This loan must have been made to enable this borrower to sustain his credit, by depositing these bills as security for other loans. Can it be thought wrong, to be at war with a credit system of this character ? In my examination of the past transactions of the Bank of Bennington, I find one of the Directors was connected with a firm of Brokers in New York, under the name of Swift. Mills & Co. H. Gay, the director and broker, was authorized to draw, by a resolution of the Board of Directors, tift75,(XX) from their deposites in the Boston and Troy banks. It appears from the statement of the Bank, March ;20th, 1838, that there were in the hands of Gay, at that time, 75,04)0. As a director, Gay had a perfect knowledge of the condition of the bank, and holding so large an amount of the funds of the bank, he could, as a broker, make a profitable business in purchasing up the bills of the bank at discount. There was at that time a large amount of bills in circulation, being $185,250, and in 1839, the circulation was less than $33,000. Whether this reduction in the circulation of$ 150,0)0 was made by the purchase of the bills by Gay, or not, does not appear. There was ^a' change in the Board of Directors last January. None of the present board appear to be connected with brokers. A liberal mode of discounting was adopted early in the spring. The circulation of the Bank has increased from $33,000 to $97,000. This liberal and just policy, adopted by the directors, has given general satisfaction. They have been able to tnaintaig the circulation without difficulty. The extraordinary expansions and contractions of bank issues of paper, must seriously alli!et the business of the country. By APPENDIX. APPENDIX. reference to past reports, it will appear that immediately after the suspension of specie payments, in 1837, some of our banks began to increase their circulation, while others contracted theirs. The Bank of Manchester had in May, 1837, at the time they stopped payment, less than lit70,000 in circulation, as appears from a circular published at that time, signed by all the directors ; and on the 9th day of January following, it appeared from a statement of the condition of that bank, exhibited to the directors on that flay, that the amount of bills in circulation was above 140,000; thus, increasing their circulation 870,000 in The amount of bills put in circulation eight months. by the banks in the county of Bennington,(and we have no reason to suppose it less in other counties) from the two statements of Jan. 9th, and March 20th, 1838, amounted to $3725.000, and in December, 1839, the circulation was less than fl#75,000. This sudden contraction of it 230,000 must seriously affect the price of n11 articles of produce. It is evident that the confidence in the soundness, as well as usefulness of our banking institutions, is greatly impaired, and nothing short of a thorough examination of all the concerns of the corporation, and the result of such examination made public, can restore confidence. The transactions of the banks are shrouded in darkness. The public have no means of distinguishing the good from the bad. Even stockholders have been denied the right of examining the booksof their own corporation. They do not know whether the semi-annual dividends they receive are made from the profits or the cap(al of the bank. I have known banks to make dividends when they had no profits to divide. And this fraud upon the honest stockholder and the public is effected by the inventory of worthless notes, as available funds. Ought not the directors of the banks to be required to note, in their statement of the condition of the banks, all debts, which have been due more than one year, as a suspended debt, or unavailable funds; and that no dividends should be made until the deficiency of available funds, occasioned by such suspended debt, should be made good. either by the payment of more capital by the stockholder, or by the application of the profits, to make good such deficiency. This would influence the honest stockholder to investigate the management of the bank. Ile is apparently satisfied with the directors, https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis 444. Jr XI' so long as he receives his semi-annual dividend of 4 per cent. By the Safety Fund Act, the Directors and Stockholders are limited in the sum they may be indebted to the bank, to 4)2000. This clause in the law is easily evaded—an endorser of a note is not considered a debtor by such endorsement. It is only a liability, no indebtedness. Thus, the liabilities of a director may be 0100,000 without any violation of the statute, and the money received on such endorsed note may be for his own benefit. He is only to change the form of the note, and the work is done. I have not discovered any violation of their acts of incorporation by any of the corporations subject to my inspection within the last year; if I had I should not feel it my duty to order information to be filed against the corporation. For in 1835 I directed a prosecution against the Essex Bank. On application, the Legislature refused to refund to me the money I expended in my endeavors to bring that institution to justice. I could not consider this act of the LegislaLure in any other light than a disapprobation of my proceedings. The conduct of the hank was also justified by a report of a Committee of the Legislature. A majority of the Committee were Bank Directors. See the Journal of the House of Represeotatives. 1835 and 1836. JOHN S. PETTIBONE, Bank Inspector. October 8, 1840. I have just received a letter from the Cashier of the Danville Bank, stating that he forwarded the state of the Danville Bank to Montpelier, expecting I should be there. J. S. PETTIBONE, B. Insp. 3 APPENDIX. Is BANK COMMISSIONER'S REPORT.' To the Auditor of Accounts Sin:—ln obedience to an act of the last session of the General Assembly, I submit the following report in relation to the Banks in this State: There are seventeen Banks in operation in this State, sixteen of which are subject to the examination of the Bank Commissioner, and one ((ha Bank of Burlington) to the annual inspection of the Bank Committee. Previous to JEW there was eo genera) statute in force in relation to Banks, but the powers, duties, and liabilities of each Bank, were regulated by its act of incorporation, the charters of incorporation of the several Banks being uniform, or nearly so, in their provisions. The amount of the capital of the Bank was specified,or rather limited, but the Bank might go into operation upon the payment of about one-tenth of its nominal capital, and the amount of additional actual capital employed depended upon such assessments upon the stockholders as the directors might from time ID tune think proper to make. The Banks *ere required to redeem their bills and pay their liabilities in specie on demand; were prohibited from dealing in real estate or goods, and limited to the demand of six per cent. discount or interest on loans. They were also prohibited from contracting debts to a greater amount than their deposits and three times the amount of capital stock paid in; and in case of excess of indebtedness, the directors under whose administration it happened were made liable for the same in their private capacity. The Banks were, semi-annually, at the time of making their dividends, to pay into the State Treasury six per cent, of their profits, which sums thus paid were, by act of Nov. 17, 1825, inyested in a School Fund. All the property and funds of the corporation were made liable to the satisfaction of its debts, and as additional security to the public, each of the directors was to give bonds (usually in the sum of eight thousand dollars) to the Treasurer of the State, with sureties to his satisfaction, conditioned "for the faithful discharge of the duties of his office, agreeably to the regulations, requirements, and restrictions, of the act of incorporation." The bonds might be prosecuted,on the complaint of any person injured by the misconduct of the director, and wcre to stand as security for all persons'injured, to the amount of the penalty, The General Assembly, at each session, were to appoint a Committee to examine into the affairs of the Bank,and to report to the Assembly. If the •Tttfetred to In Repoli f Auditor of Aceoucts in Aispindit to House Joutnal. /1y https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis 0-1R P (1-4t.L. 9q- 10 5-• _ I! 101 APPENDIX. APPENDIX. Committee found the Bank had exceeded its powers, they were to direct the State's Attorney of the county in which it was situated to file an information against the corporation before the Supreme Court for such county, and such Court might thereupon declare such charter vacated. The charters of all the Banks, which were thus incorporated, have already expired, except that of the Bank of Burlington, which will terminate January 1, 1849. At the October session of the General Assembly in 1831, an act, commonly called the "Safety Fund Act," was passed, the leading object of which was to constitute a fund out of which the creditors, other than the stockholders, of any bank, that should become insolvent, might be paid. For the purpose of raising such fund, each of the Banks, that should be thereafter chartered, was required to pay into the State Treasury four and one-half per cent, of its capital stock, in six annual enstalments of threefourths of one per cent, each, which fund, if reduced either wholly or in part by the failure of any Bank, was to be reimbursed and kept to the amount of four and one-half per cent. upon the capital stock, by assessments made by the State Treasurer, at the rate of not exceeding threefourths of one per cent. annually. The fund, until used for the above purpose, was to remain the property of the respective Banks from which it was raised, and be invested in productive stocks,or put at interest by the Treasurer, and the accruing interest, after deducting the salaries of Bank Commissioners, was to be annually paid to such Banks. On the expiration of the charter of any bank,the amount paid to the fund by such Bank, if not required to indemnify the creditors of any other Bank that had become insolvent, was to be returned by the Treasurer to such Bank. The act of 1831 also provided for the appointment of three Bank Commissioners, whose duty it should be,"at least once _in twelve months, to visit every monied corporation, upon which the provisions of the act should be binding, and thoroughly to inspect the affairs of said corporations, to examine all the books, papers, bonds and evidences of debt of such corporations, to compare the funds and property of said corporations with the statements, to be made by them as thereinafter provided, to ascertain the quantity of specie the said corporations had on hand, and generally to make such other inquiries as might be necessary to ascertain the actual condition of said corporations, and their ability to fulfil all their engagements." The Commissioners were empowered to examine the officers of the Banks, and any other persons on oath, in relation to their affairs and condition, and in case they should find that any corporation was insolvent, or had violated any of the provishms pf that act, or of its act of incorporation, or of any other law binding upon it, the said Commissioners were to apply to a Chancellor for an injunction against such corporation; and if the Chancellor deemed the application well founded, the funds and property pf the Bank were to be administered and distributed by receivers, under the appointment and direction of the Court of Chancery. The Commissioners were to report to the Legislature "the manner in which they had discharged their duties, and to accompany such reports by such abstracts from the reports made to them,and such other statements,as they should deem useful." By subsequent acts, the number of Bank Commissionersis reduced to one, and the report of the Bank Commissioner, as well as that of the pank Committee,is to be made to the Auditor of Accounts. The act of 1831 also provided, that no Bank, subject to its provisions, should make any loans or discounts until at least fifty per cent, of its cap- ital stock should be actually paid in, to be proved on oath to the satisfaction of the Bank Commissioners. In other particulars, the powers, duties and liabilities of the Banks were left to be regulated by their respective charters; and the charters of the Banks which have since been incorporated and made subject to its provisions, are in general the same as those previously incorporated, except that the Banks are required to pay into the Treasury of the State, for the benefit of the School Fund, ten per cent. of their profits, instead of the six per cent. previously required. The Banks which have been chartered subject to the provisions of this act of 1831,are the following, via: the Banks of Middlebury, Woodstock, Bellows Falls, Manchester, Orleans, Newbury, Brattleboro', Farmer's, at Orwell, Farmer's and Mechanic's, at Burlington, St. Albans, and Essex County, all of which, except the last, are now in operation. The Essex County Bank was chartered at the October session of 183'2, with a capital of $40,000, and by the fraudulent misconduct of its officers and stockholders, became insolvent, and suspended payment on the 14th of August, 1839. In November following, its funds and property went into the hands of a receiver, under the direction of the Court of Chancery, and its affairs yet remain unsettled. Within the time limited by the Chancellor, bills of the Bank to the amount of $34,426 were presented to the receiver by claimants; but of this sum about Jlit28,000 is understood to be disputed, and the validity of the claims to be now in contest before the Court of Chancery. The assets of the Bank are believed to be small, and if the disputed claims should be adjudged valid, the Bank fund, now amonoting to the sum of about $31,000, will thereby be largely absorbed. If these disputed claims should he found invalid, the fund will not be much impaired. In October, 1840, the General Assembly passed an additional act "relating to Banks," by which any banking conipany thereafter chartered or re-chartered should be subject to the provisions of the Safety Fund Act, and be at all times under the control of the Legislature "to alter, amend, or repeal, as the public good might require." The act also provided, that before any Bank went into operation one-half of its capital stock should be paid in,in specie; and that it should not continue in operation for more than two years, unless the whole of its capital stock should be thus paid in, such payments to be ascertained and certified by the Bank Commissionor; that no part of such capital stock should be withdrawn from the Bank; that "the directors of such Bank should be liable to pay to the creditors and stockholders all losses which might be sustained in consequence of any violation by them of the provisions of that act or any other law, or other unfaithfulness in the discharge of their official duties;" that, to secure such liabilities, each of the directors should execute a bond to the State Treasurer, in an equal amount, the aggregate aniount of the bonds to be equal to the capital stock actually paid in, with sureties residing in the State and not directors, or with mortgage security on real estate,to be approved by the Bank Commissioner; that the cashier should also execute a bond to the State Treasurer in the sum of $20,000, with sureties, to be approved by the Bank Commissioner,conditioned for the faithful discharge of the duties of his office; that such bonds might be prosecuted for the benefit of the claimants upon such Bank by order of the Bank Commissioner or by a receiver; that no stockholder, director, or other officer of the Bank, should be indebted to the Bank in a greater amount than five per cent, of the capital stock paid in; that all of the directors and officers 100 ' )..4-4Ads."%-d https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis 4SLAA-4044. 5' r"/6 dy APPENDIX. should not be indebted to the Bank in a greater amount than the aggregate amount of three per cont, for each director; that no individual or corporation should be so indebted in 4 greater amount than ten per cent of the capital paid in, except for deposits for redeeming its bills or on the purchase of bills of exchange; that no loan exceeding fifty dollars should be made without the approval of a majority of the directors* that no loan should be made on the pledge of the stock of the Bank; that the Bank should not issue bills or otherwise contract debts to a greater amount than the amount of its deposits and twice tile amount of its capital stock paid in; that if the capital should be reduced to the amount of five per cent. below the amount paid in, it should be immediately reimbursed by assessments on the stockholders; and that the Bank should, semi-annually, at the usual times for declaring dividends,pay into the Treasury of the State one per cent. of the capital stock actually paid in, as a tax upon the income of such Bank, "provided that if the directors should keep a sufficient deposit of funds in the city of Boston, and should at that city uniformly cause its bills to be redeemed at par," the Bank should be exempt from such tax. Ths act of 1840 contains other provisions in detail, similar to those usually inserted in the Bank charters before mentioned, and also additional provisions for the punishment, criminally, of the officers of Banks for wilful siolations of their duties. Under these provisions of the act of 1840 the Banks of Rutland, Vergennes, and Poultney, have been chartered and are now in operation. By an act of 1812, it was provided that the Banks chartered previous to 1840 might avail themselves of the foregoing provisions of the act of 1840, by giving the requisite bonds and complying with such provisions. The Bank of Brattleboro', on the 12d of December, 1843, and the Bank of Middlebury, on the 10th of February, 1644,gave bonds as required by the act of 1840, and have thus become subject to its provisions. By the 39th Section of the act of 1840, it was further provided, that any banking corporation subject to the provisions of that act, might be exempt from contribution to the Safety Fund, by executing bonds to the State Treasurer to the amount of the capital stock paid in, with sureties to be approved by the Bank Commissioner, conditioned "that such directors should at all times pay and redeem, according to law, all the bills issued by such Bank, and should pay and refund all deposits made in such e Bank when such payments were demanded." The directors of the Banks of Caledonia, Montpelier and Orange County, chartered under the provisions of the act of 1840, have given such bonds. All the Banks now in operation under the act of 1840, viz: the Banks of Rutland, Vergennes, Poultney, Brattleboro', Middlebury, Caledonia, Montpelier, and Orange County, having uniformly redeemed their bills in Boston as required by law, are exempt from the semi-annual payment of one per cent. on their capital to the State; and the three latter Banks, having also complied with the 39th Section of the act of 1840, are further exempt from contribution to the Safety Fund. The directors of the Orange County Bank have, within the past year, made an assessment upon the stockholders of $12,500, which has been paid into the Bank, and on the 10th of July last, the fact of such payment was duly ascermined and certified; and bonds of the directors for the additional capital, in conformity with the 8th and 39th Sections of the act of 1840, were at the same time examined and approved by the undersigned. The annual examination of the several Banks in this State has, in Confbrmitv with the act of Nov. 1, 1843, been made in the month of August. In making this examination, thirundersig,ned has endeavored to comply with the requirements of the laws. The statements of the resources and liabilities of the Banks, fioni their books,of which abstracts are hereinafter given, have been made under oath by the several cashiers; and to verify their accuracy, "the books, papers, notes, bonds and'evidences of debt," together with "the funds and property of the flank and specie on hand," have been'exaniined and compared with such statements, and they have been found to agree. It is apparent, however,that the value of these statements, as a test of the soundness of the Banks,depends not more upon the amount than upon the character of the (hinds ishich make up the resources of the Bank. If the resources are of the full N'altle at which they stand in the statement, the test may be relied upon; if not, it fails. The undersigned has therefore sought to ascertain the real value of the several matters composing the items of the resources of the Banks, and for this purpose, as well as for the other purposes of his examination, he has, in every instance, examined the cashier of each Bank, and generally, when accessible, other officers of the Bank, on oath, as to the character and value of the particular debts or funds composing each item. He Mu; also taken an examination in writing, subscribed and sworn to by each officer or officers, in relation to the compliance of the Bank with its charter requireinents, especially such as would not be likely to be within the knowleilse of the public, or the Cornmissioner:—As whether the Bank has regularly chosen its directors, and who they are, with a view to ascertain whether they have given bonds according to law; whether the Bank has dealt in reel estate or goods; whether it has demanded more than six per cent. interest on loans or discounts; n hut dividends it has made; whether it has issued bills or otherwise contracted debts to a greater amount than allowed by law; and in regard to the Banks chartered under the act of 1840, whether the restiictions on the amount of loans to stockholders, directors, and officers of the Bank. and also to other persons or cosporations, have been observed; whether loans exceeding fifty dollars have been made without the approval of a majority of the directors; whether any loans have been made on a pledge of the stock of the Bank; and whether the Bank has kept sufficient funds in Boston, and has there uniformly caused its bills to be redeemed at par. The general result of this examination has been, that the charter requirements of the Banks have, in general, been strictly observed; that all the Banks appear to be solvent, to be in easy circumstances, and to be doing an active and a reasonably profitable business. It is, however, deemed proper to state that the capitals of the Banks of Manchester and St. Albans,by reason oeloans made some few years since, which are either bad or of a doubtful character, have become in some degree impaired. The probable loss to the Bank of Manchester, as near as could be estimated by the Commissioner, will be about 20,000 dollars; though strong expectations are entertained by the officers of the Bank that it will not be more than half that sum, if so much. The capital of the Bank being $70,000, and it having for a year or two past been doing a profitable and apparently safe business on its active capital, the undersigned does not think that the security to the creditors of the institution is impaired, though the stockholders will doubtless suffer loss. The directors of this Bank in January last declared a dividend of three per cent. s.A.V‘ess...shl https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis r 103 APPENDIX. 102 a.I'Vp-ss--rs-f— https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis 2. 47cr :41 0 .-.. c•-% c. g to 0 a.TiRtligg •-• '' 3 C ° s •-• ,-. 0 c. ti •-•1=- 0-'0 ••• B,....,0- •,, 0 '5L.• S 12:1 0 r) CD 00 s to. 0 ., t. 0.0 r... `" oi '''') a 3.,1 : ;i 4T a rf,.E. -,c1 0 0 it zs0 • 2 It S.56• F; 5 51- a ti•0 a- m..s 0 g" e es 9. 1:r* 9. ,0 847 VERMONT, AS RESOURCES. &limy Fund. BY Real Estote and Bank Stock. 4,669 64 11 ,250 00 1,450 00 8,901 11 3,375 00 1,701 98 3,008 69 1,854 94 Specie. ASCERTAINED P. =.-er .a. a.r,1 5E- t .... 0 fgm 0 m s' a F-°- F.,.' to i p " a a- CD ..:. 0 m 0 -cb r:o a o.g P.. .9. A ; .- a F. 'D ,.'. 0 ,• •-.1 Deposits Bills and Notes and Due on in Boston Drafts of Bills Books, and other other discounted. Cities. Banks. 099,279 97 153,62:3 414 8,3..7 71 58,817 57 70300 111,275 18 150,436 00 41,751 98 8,108 00 117,053 144 00,060 00 17,366 02 13,164 56 213,039 77 141,965,e51,91224 11,137 76 Total Resources. m gS a g. i MI •-•& M tA g co C.. g i-;• ° C.... . ., P.P.g;..ikais:i"..' . 9 0 CD ' ':.o . cr a- .... 5% 6 LO 0 '.' c,i)., pi.2 ,..:)..(21 6-1 ,, , C1.a 0 0,, re 8 e 5.. M pi *log cr •-• r .., .... h-i.a .,. cr. a' I 4 .-',„ cs •B csil 0 ,.... v., x .5., 0- •. 4) "I 2 "I 5- 0 -• re ke o 0 5.= 50 2.Ertg 0 0 a CD CDA 0, 0 eD a CD 0,0., 0 P , ,C 0.1 tn- p P- 0 • er 4 mo °.C9 t7-: cr. § g6.5.3. ' BENNINGTON, September 16, 1844. U1LAND HALL, Bank Comm4sioner. liellows Falls, 218,711 38 Brattleboro', 210,741 60 Caledonia, at Danville, 124,335 35 Farmers', at Orwell, 210,3115 76 9,700 00 2,492 92 3,1,31 Farmers'& Mechanics', at Burlington, 105, 191,926 00 99,9 48 • 213,254 73 231,10020 145,925 119 00 44,596 9,896 31 5,155 4 4,725 00 11,360 61 70,000 81,993 00 244 65 151,237 Manehester, 150,245 59 105,614 08 1,8130 80 25,399 03 6,892 50 1,118 61 3,150 00 11,247 57 VI Middlebury, 00,000 93,856 Si'18,014 38 171,870 88 178,478 07 101,419 117 71 59,977 8 9,8133 00 4,300 05 2,700 00 50,009 117,771 00 0,775 59 191,746 59 190,892 I ts-s Montpelier, 10,433 04 3,001 67 56,588 . 7,500 00 5,768 50, Newbury, 131,087005,-.91 187,389 86 199,228 119,805 10,047 57 51,293 27 3,8825 00 3,178 71 1,250 00 1,927 94 Orange County, at Chelsea, 37,500 73,50200 1,75056 112,a2 56 113,638 2,049 57 21,411 34 14,171 58 6,735 . 67,586 1,683 55 30,9100 30,3.24 00 7,212 00 67,536 00 Orleans, at Iriaburgli. 70,818 78 54,702 11,870 00 2,976 78 1,350 00 50,090 77,091 00 6,354 53 134,046 53 134,793 97 81,915 48 Poult nev, 41,525 18 6,484 00 2,851 31 1,008 00 Rutland, 100,000 114,586 00 14,111 93 238,6(17 93 243,723 01 175,555 1 160 50 46,711 57 1,850 05 8,350 93 1,194 21 1,050 00 St. Albans, 50,000 83,1)4 06 134,071 26 1.31,24026 175,901 77 114,607 14519,453 79 24,714. 37 9,087 09 4,024326 1,417 81 1,400 00 Vergennes, 100,000 84,104 00 38,788 47 22.2,9'12 47 224,984 92 180,955 51 010 913 21,900 73 6,704 00 6,774 00 1,950 00 5,012 05 50,000 141,488' 15 5,910 11 198,008 37 204,278 OF. 111,453 Woodstock, 18,067 42 33,951 57 9,4514,805 ret 2,150 00 3,000 00 150,0011 111,773 00 67,877 04 3721,650 04 349,137 65 214,322 10 Burlington, 4,000 00 1o1,5131 et 15,1132 01114,891 70 1,137,500 1,743,807 50.3,9,079 843,170,387 34 3,264,64131142,160,758 64,486 74,700,812 8.9 151,471 0092,502 0131,2:40 0760,336 32 Total Liabilities. u m- 0 - ge a i-i• 4 " P, 0 ..0 3' 0' ( og Po ‘.. ct- m cDG CN . Fp Mc 0 a. 2 .-.`e• g c. -.28 i4„„ OF THE SEVERAL BANKS IN Capital Bills in Due deStock, circulation. proitors & Banks. 50,000 149,248 00 19,494 125,359 75,000 00 10,385 00 50,000 72,871 75 1,401 60 60,940 130,611 00 19,694 7 0 m ="" 0or " CD i S a. ci, t-• • 0 CD ..-. ''-', m G-2, S21 r cr 0 '4' 0• . c. _ eD, 0 THE BANK COMMISSIONER, IN AUGUST, 1844. CONDITION LIABILITIES. OF THE SANIC03148111... ABSTRACT 5 ,. . .i.. 3,,a...: 0. 5,•• '"' i...L1 5,og.i0 -.F.,t-i: g". .j . r5,1/, 5.B a.o m nk 5...co CD , _. 5....... 0 4 0 ;3 a. ,-,1 0- eplii a' pc,. 2 0 =co ..< s 0 0 F,•= a g0P ,g 1...?.. ' 0 Z . C tg R CM .E., 4 o Z Ti• Litz -0 a. .:. g vg.. . -30 •P 0.. oic , -, a:' el . cr c, ,, 11 n St. E._ ri 42....,, g. , p 0 0 -.1 0 ,'-', 0 •-• • 0 .eti 0, ..., 3 .5.0, 9 to, or .6 .-.9. ozg. pi n•„ I 3-„ a 0 0 ..-' gcD 5.5... -00 u/ ``' 5- 2 .E _, ;7 0 a. :4.- •-• . - Frip „. VD: 0, 2.• g. ; rz ...7! . a... cr = s t ; s. g:cr 5.cr 0 * 3 0 (DO - cf. o 0-3,0 ri crrn .28 Si ICIGNaddV https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis 4 tief'fOi‘ : 0,000 3 '\•Ce4' REMIT OF THE COMMITTEE UPON THE AFFAIRS OF THE ESSEX COUNTY BANK. Tu the honorulde Ike Gerutral -lasernbly of the Stale of Vermont now Kari )ri: Your committee, appointed at the last session of this General Assent. lily, "to itivestignte the situation nod concerns of the Batik of EriPeX County, to eseertain the manner of the tomsfer of the stock of said batik to foreign purchasers, the liabilities and responeihilities of each officer of said bank since the iucorporntiott thereof, and to adopt and pit tante emit niessuree by suits or otherwise, as said e rittnittee rutty deem expedient, to pri.uset the safety fuud and the public from luelld ift consequence of I be loners of se..4 book to rodortn its hilla. amid to correct frauds, if cry may be fattowl to UM,. ratodusttilii, reloaci Alamo. semeeips.d them, they have availed them r. a ativeirlasyl 111.111111 oirs the hi* winch be books and papers of the batik now in do handl of the receiver, and the monotony of the president and cashier, would throw upon its transactions, and they believe they emote( hettasetinly out the views of the General Assembly, than by giving a history of the feeding sets of the bank, from the tone of its organization to the torweissatioo of its busitwes. no Comex Hook seas sisoirostosl to the October session of 183'2, with a eapital f 044000, divided into 1000 shares of $40 each, subject to the provisions of the safety fund act of 1831, requiring that fifty per cent. of as capital stock should ba paid ill, previous to Mt melting army discounts. The books worts opened by Om commissioners, the stock ettleteribed mail rim fins board of directors duly elerted. On the of A/y.0, 181, one of dm bank commissioners certified that $10,000 hod boon paid in as capital stock, agreeably to the requirements of the charter. On the 16th day of April, 1g33, the batik commenced its operations, at which time the cashier charged himself with the capital stork, consisting of a certificate of a deposite of specie in the Grafton Bank $10,000, current bill, 08,537, and specie 01,463, amounting it) the whole to $20.000. On the stone day 017,845 of Ow capital stock plaved in the hank as aforesaid, and on the 22i1 of the same April $400 more of said stock was taken out of.the bank, by some of thin stockholders, substituting their private notes therefor, leaving only the sum of $1,755 and the notes of tit. .4...kilobit:re for the stun of $18,215 to secure the redemption of the L. • ' batik, which were thereatterwards to be put in circulation. • o•• otketi frotn the bank, John Dewey received $15,460, .. • iim I. m..1 $1.""m00, they being the principal owners of the alt.eik 'Flue first bills ot ,tim o • .% ere prepared for emission on the Gilt day of May, 1833, tip to whe i, 11110 lit loans or discounts were made to persons other than the stock ho!derit, in the niatitier above described. In consequence of the loss of that part of the disrotiot register which https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis APPENDIX. contained the transactions of the bank tip to July, 1833, your commit tee are utinble to ascertain on what security the discounts to stock hold ors were made, but from the statetnetes of Greenlief %Veld), one of the directors, they are led to the conclusion that no security oilier than a pledge of the stock um) requited. Your committee would here remark, that from the manner of keeping the hooks (dame brink, they hell: beet' tillable to ascertain th- tiOie of the payment of the chive, or any other or the notes of the bank, except they find that John Dewey paid $2,000 on his note nlitive nettled, Aug. 1, 1833, unit they are thereby precluded front aseerlittoilig all the liabilities and responsibilities of the officers of the batik at tiny given time during its existence. 040 •'• rerni It is worthy of remark, that for o, °iteration, it In bored neuter embarraemients so •io.•••• • and one Irequeittly obliged to obtain loans in Boettet tied .-oiewtorre, sometimes at a high rate of interest, and that many of its individual loan@ were extiavegantly large, considering the amount oh its capital. In one Instance they find u RAM W011 made to John Dewey of $15,720. 'chin was Feb. 4, 1834, at a well-remembered time of severe embarratternents in the money market, and at a time when the bank was very much entte. 4iaN t/ t adeqn1 ibuseabi +.itleir rit marls cm ilemee. lostis zr4..igisow rr ss len ommde ganc snaiswinerp ad. Inimo fu ilii.zz .17f by7 see etrAtr4; ii=• iat prear wisii4 which are still taispat.1 ow-4 ors was also loaned for time betide of poolsollell4=0$ les Pessillbed, Maine, $5.1GO, which wits protested July SI, IRV,tad mimed into the hands of the receiver, who eotneromised with the endorsers an the payment of twelve and one-111'1r per tent. Te dividemd book of the bank exhibits the divides* of the beak as follows: $1,000 J uly G, 1835, 1,000 January II, 1836, 600 1836, July 1,000 March 11, 1839, The last of the above dividends wail made on the stock as it was own ed August 10, 183'3, of which John Dewey reeeived 1.647, sod Thorn Is Carlisle $112, although said Carlisle, as a mort,ber .0 iatp K•41. Cat lisle mk.: Co., was then iodelited to tbe bank in the sum of 03,391), *.o1 the note of said firm was then in the hank, protested. It wilt be seen, that at the time of making mid last mentioned divi dend, the Whole of die proteeted paper, above described, was in the batik and composed n part of its assets; there was also n large ',to • .• r part of Imetitteuilotio,r or bath 11,.tes then in the bank, nod was 1.4.;rire.l, and the obbald 1.0,S,'IS, RW1111011 ell is hiCh joet of the oectiiiar mauttur in Moe,. it was et, dectso .1, will be perceived when the circumstances of the transfer or the stock, which undoubtedly lett to the //nee of the concern, are stated. The first board of directors was composed of John Dewey, Greenlief Webb, Chopin K. Brooks, Josiah B. Hall, end John S. Wells, who set erally lodged their respective bonds with the Treasurer of the le•IW for the sure tit fr,,000 each, with one surety to each bond, who .••••• mostly irresponsible men ; all the bonds subsequently estetwoo, esteem s'part of those in 1839, lime sureties of undoubted rsopossibttoy. John APPENDIX. Ile APPENDIX. nued such until Sept 17 Dewey was elected first preside's, aad conti d. itute subst was Webb lief Green whets many transfers of Your Comanittee find that, as usual, there were John Dewey, een betw uated it fluct of on porti ipal princ stack, but the dr, Co., of Bufsle Carli n, Norto and sle, Carli as , Greenleaf Webb Thom were indebted to the Bank falo, N. Y., although Norton, Carlisle Ift Co. ary to the provisions ofthe contr , stock their of at the lime of the transfer act of incorporation. of Burlington, who was Jo the sunitner of 1838, H. Bradley, Esq., n that sorne persons from the then Bank Inspector, received informatio purchase the stock of the Essex State Of New York were rittempting to to uttempt to prevent the sale, hall Guild to went y iatel immed He . think y, who owned most of the Dewe John from ance an assur ved recei sad ut his consent. Sometime witho made be d shoul sale no such , that stock N. Y., called on Mr. Bradley yra, Palm of tend, S. E. Towia wards after Townsend wished Bradwith a letter of introduction from Dr. Dewey. stock to him by Dew01 fer a trane to ug writi in nt conse his ley to give saying he could not left, send Town and ed, iefne utely ey, but be absol . obtain the stock ferred to Thomas CarOath. 17th of August, 1838,John Dewey trans the same day transferon eho hank, said ot stock the of s lisle 790 share Y. and 400 shares to N. ster, , of Roche Mack F. Isaac to red 400 shares ferred to Mack 141 trans sle h 1839, Carli Marc lo . said E. S. Townsend other sources, from ned s 4 obtai share with h, whic additional shares, of the bank, e stock of whol rs the owne the send wade Meek sod. Town and evei fer, trans e above the befor years al sever save 55 shares. For ed a bankrupt, and has not possessed sines, said Carlisle has been reput nal, and it was in proof before your perso any visible estate either real or the sale to Meek & Townsend, and COMOliStell that Dewey negotiated them for the shares pretendedly sold rewired the purchase money of e have yet to learn for what good diem by Carlisle, and your committe ed, for conveying the shares this roundabout method was adopt they feel constrained to say that ey to Mack and Townsend, but light than a mere artifice to protect Dewey they eau regard it in no other the imputation of haring broken his avoid to also and frees liability, ley. Bead premiss to Mr. when Mack and Townsend bought Year committee are satisfied that funds called capital stock were and notes the that the stock, they knew assumed stun of $18,820 sold the that and , value no of for the most part and that they intended at false, and ious fictit y mostl them am capital was t of the hank, which credi the raise to , stuck said the time of purchasing tly in the city ofNew promp bills its g emin rede by was then at a low ebb, to flood the country with them and let York, for a short time, arid then only prevented from fully constim• were the bank fail, and Mar they e, w hich took place soon after. failur own mating their plans by their and Towesetirl was privateMack and y The bargain between Dewe of tbe batik, nor any other rs office the nor ly made: neither the public, been able to find, knew of the terms person that your committee have until die batik had wholly failed and conditions of the sale (ribald stock Aug. 14, le:Ilt. to redeem its hills, iv inch took place euailliittve are well satisfied, that Cite terms of the sale were, as yourr each share of $20, the venders to for it30 paid send Town and Mack 111$ vr:s https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis 109 the us, estimating tho entire debts of retain all the accuinulated surpl bunk as solvent and coffee table. of aseertaining with nbsolute certainYour committee have no means & tor the stock purchased by Mack ent peynt of mode and time ty the nit the time payments were that tied stitis well are but , Townsend owed for s, oilier than the Essex, borr of purchns! in the bills of brink obtained were afterwards thus loans the that and se, purpo that express pnirl in the bills of Essex !rank. circulabank hail $41907 of it. trills it; At the time of the sale, the its %aril's in epecie in had rind y, mone of tion, arid owed other sums 00 8 9° 3010 72 Foreign bills, 60 00 State orders, 991 64 n, Deposites in Market 13enk, Bosto --$2,570 72 Amounting to than sted of notes and accounts, more nconsi s effect its of ue resid The remai the of tumid bad, essly boyel are n unSI2,000 of which were and still were very doubtful and still remai if der severe! thousands of dollars of your committee, very little, on opini the in h, whic from paiJ, and any thing, can ever be realized. nce in the case, that for 945 shares of less and It is evident, from all .the evide and made up mostly of worth the nominal value of $18,900, send paid $28,350 in cash. This act Town & Mack , paper protested the ebjeat d's( it, earry Interred etidettee of 1.nd the circumstances atten ief, and afforded an amplest,misch with ant pregn was it & upon dis of tire parties: e of the tweet uniregremit free poi-tunny for tbs perpetrarits public. of directors, 1838, at a meeting of the board Haywood jr., On the 24tn of Sept. am Willi and , Webb lief Green y, composed of John Dewe 0 for his serDewey be allowed and paid $3,50 it was voted "that John Aug. 17,1838, end to 18, 15, April from bank vices as president of the his deposites up to the last date," which sum on evidence that for balances of interest to him; and although there ha no ces, except servi was stibeequently allowed his for thing arty ved ously recei are given to said Dewey had previ ess of the bank, your crimmirtee March 11, of when abroad cro the bustu end divid the with her vote, toget utiderstand that the above stock the preed to give the sellers of the with the iance 1839, were the means adopt compl in oned, us before menti tendedly aectimulated surpl send. contract with Mack & Town 1838, the bank of August and 12th of Sept. h was On the 17th and 2011i days 00, about one half ol whic i,32,0 send Town & of loaned to Mack & Co., in firm composed rson Patte , Muck of paper loaned on the Plitterson, who Watt then and J. as Thom one mmii l sere of Mack & Mack & Town the residue on the paper was afterstill is in responsible II11111, arid of Mack, Patterson & debt the of part Townsend, Towitseed ; a with the paper of Mack & ward- !raid, awl the rettininder, d a part of their notes of $60,110 hereforme werds after wae renewed, end Mari, & Towns• matter described. oflicerm of the bank mid It was agrecil between the Toe,iisetel :-.1,ould place Mack that biee, end, at the iinie of die above York, lor the reperson in the city of New funds in the hands of some . demption of the bills of tire bank r https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis 110 APPEriDLX. On Me 21th of August, 18318, Mask It. Townsend executed a bond of $20,000 to the bank, to secure the bank for loans made or to be made to theta, with several sureties residin g in the western part of the State of New York, who, there is reason to believe, were wholly irresponsible at Me time. On the 10th of Sept.!RN, the directo rs voted an assessment of $5, ou each share of the stock of the batik, and ou the 24111 of the value September a like assessment was voted. The stock ledger Erhuws a credit of $4.720 on account of the tii.t assessment, but no other entry appears on the books in relation to it, and no intuition is made of the mecum'. The issue book shows that $107,600 of hills had been prepnred for $20,100 were prepared ether the stile to Muck & Townsend, from blanks furnished by them, ..$'18,229 of which passed into the hands oh the receiver, leaving $79,371 in circulation. The bunk was enjoined by the chancellor, on the 12th day of October 1839, and ite effects passed into the hands of a receiver Nov. 4, le:39. From a statement of the receiver it appears, that when he took pos• cession of the bank, its outstanding bills were $3,000 had been pledged It the payinein of it $79,371 of that sum loan and have since been returned to the receiver, and $5,770 have been delivered to him by Houghtona & Co., broken; ol Me city of New Yolk, 1141 redeemed bills, exhibiting an actual circulation of $70,601. It was proved before your committee by the the cashier of the hank, that Me batik sent $10,000 to said Houghton. & Co., after the sale to Mack fa. l'ownsithil, to redeem the bills of the batik, Mat lie subs'sepsently demanded the redeemed money of them for die batik, but they refused to let him have it, sayitig they should sell it to pay the liabilitiea of Mack & l'owasend to them, and your commit tee hive strong rf!.1eons to believe that a large amount at the bills preven ted to the receiver by pretended olairnauts, have been redeemed with the fonds of the bank, sad it is clearly proved that n large It11101/11( of the bills presented to the receiver for payment, were ',resettled by persons other than the real owners, end your ($011111iitICO are uot satisfied that they were so preeentad for any honest or honorable purpose. On* of the lioughtons appeared before your commit tee and requested to he examined, but beliire the examiliation closed, lie utterly ref used to 'newer (pastime put hint, calculated to eseertnin the summit of 111011ey redeemed by them with the funds of the bank, and how much money thus redeemed, he had caused to be depoeited with Me receiver in the names of other persolls--and said he could not tell the ey redeemed by Mein, or the amount of finals receiv 111110Ullt of moned by them to redeem bills with, within the s11111 of $5,000. lie however admitted that they I tat I been employ ed by Mack and Townsend to i edeem the bills, mid that they hail received funds to conaideralile amount, both from Mack and Townse rid mid the hank, and that when they received die bills of the bank that were not to be put ip cirruletion, they punched a hole throug h them. A large minima of the bills deposited with the receive r, punched through them, nod some of the psegi•s tippenr have holes itt tip have been separated 6ince they Werr• ill(' in Me manner desci 1,1 liy Houghton —there is now in the hands of tie receiver a package ef$7,500 APPENDIX. 111 which was forwarded by the Houghtons and Co. and deposited in the name of oue J. W. Martin. Mack end Townsend', notes are in the hands of the receiver to the amount of $60.4-10, all of which bear date March 16. 18:39, except one note of $5,000, with no security whatever except Paid which olio missed into the lintels of the receiver, has been $20 000 bond, sued,judgment obtained and the execution returned nulfa bone, both as to principals and Sureties. It is a remarkelde fact that several of the tildes now in die hands (if the receiver egninet Mack mid Townsetid,correeptaid exactly in smontit with several of the bills of sale of said stock, from Carlisl e to 31nek & Tow ['send. At the dine the bank received Me $20,000 bond, it was accompanied by ti certificate of the cashier of die ‘Vayne Count y Bank, certifying that snit! bond was good. The indelitedneas of die batik, as reported by the cashier above stated, was $;3,840 :39, it hieli accrued from money, other :hen ns borrowed by Jobe Dewey, on the notes of Jitlio Dewey, Greenl ief Webb anti Win. Haywood,jr., (against w his said Deere, held. the Indemnify of the said Webb and Ilaywood,) to erudite the bank to redee m ita bills alter the sale to Mack Milt TO•1111111111d • thor hsv;ng failed to furnish funds ea they had agreed, said notes still minim emisiesadieg semi are atepsosl. The nominal assets of the bank, which passed into the hands of the receiver, were— Discounied notes and other evidences of debt, $94,907 79 Julio Dewey's receipts for notes held by trim as collateral security, . 9,457 50 Amnunting to . , . . . $104,ae5 29 Included in the above are the notes of Mark amid Towns end. Of the debts other than those of Mack and Townsend, the receiver reports $10 or $12,000 absolutely bad, $6,402 collected, and a large proportion of the balance extremely doubtfol. The time limited by the Chencellor for pres,enting claims a ninst the bank to the receiver, expired on the first of Sept. 1842, at winch time there had been collected of the bills el Essex Batik, . $5,639 Depreited by claimants, . . . . 34,426 Amounting to . , . . . which deducted from $70,601 leaves $30,536 still outstanding, $40,065 end it is apparent that the bank Ions run tinder more than $60,000. At the winding up of the business concerns of the batik, on die 14th end 15th days of August, 1839, writs of attachment were issued egninst the trade but to property of any value could be (Lentil, except $19 41 in specie, en ,. Iron e;tite,'some packages of unsigned bills, n few blank book., n quantity 01 intsigned bills, and a few sticks ef sealing - wax. Yntir committee I a-Her report, that iti their opinion thu grannie; the chart, Is ,,I the several l..afety Fund Banks, legislature, in and by the several laws they have enacted iti relation to them, have tndenv ored to protect the rights of all persons, w Ito may have any concern with, or intereat in, them ; under these laws a bank fund had accumulated to a large amount, which the law has intended for the payment or redemption of the bills ofany Safety Fund Benk. which may become insolve nt through https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis 112 APPENDLX. misfortune and without the fault of its sabers. It has also made ample provision for the protection of the hill-holders against the frauds of such officers, by requiring large bonds far the faithful discharge of their officcial duties, to he lodged with the Treasurer of the state, and when the insolvency has been occasioned by the fraudulent conduct or neglect of such officers, adequate remedy may be obtained by the bill-holder, by a prosecution of such officers, in the manner prescribed by law. The bill-holders being the perking immediately injured by the Inilure of the bank to redeem its bills, and the inability so to do being produced by the fraudulent acts of its officers, no doubt can exist but that suits upon their bonds may lie resorted to by the bill-holders for their indemnification. In till cases where the officers have performed their duty faithfully, end have been guilty of no breach of the conditions of their bonds, then no source can remain from which remuneration can be obtained by such bill-holder, but the bank fund. Anil us it was manifestly time intentioc of the Legislature, that the interest of all persons concerned should be equally guarded end protected, we think that this construction of the law would evidently effect that ohject, but if bilbholders are permitted to resort to the bank fund for the redemption of the bills of insolvent betake, without regard to the manner in which that insolvent:y was produced, it is manliest That no person would seek redress by a suit on the bonds, while a single dollar of the bank fund shall remain in the Treasury. Your committee are clearly of opinion, that the hill-lioldere of insolvent sTifety fund be like, msde so by the misconduct of their officers, should never lie permitted to have indemnity from the bank fund, while they ruby obtain redress by a suit on the bonds of the officers. To permit such billholders to resort to the bank fund for redress, would be the height of injustice,—it would lie taking the money of those banks that have honestly amid judiciously conducted their business, ti pay the damages oe visioned iiy the fraud of others, at the same time depriving the State of the use and IIICOMS of the bank fundj and erstroying the security of billholders, while those who have been guilty of the most barefaced frauds would go unpunished ; in short, it would be punishing the innocent and rewnrding the guilty. Your committee, for reasons that must be manifest to all, leave this subject without recommending any measures to be pursued by the LegisInture, trusting that in their wisdom, they will adopt such au the exigencies of the case may require, while your committee will give such advisory instructions to the receiver, as they are advised are prudent and proper. All which is reepectfully'stibmitted. DAVID HIBBARD, JR. Cemmiltee. DANIEL COBB, SEWALL FULLAM, Montpeliet, Oct. 24, REPORT OF TH To his Ercelkiicy Charies Pa The undersigned, Bar moot, respectfully rt.pori this State, subject to thc 6111. ring of Banks, aiu to be its follows : 13.1h12* ads. Notes discot Due on book Specie, Bills I. Safety fund, Deposits in I Capital &toe'. Bills in citel Uncli,enrol Due deposit' Sept. 20. nqvi RESOUKCE.,. Notes am', Real Foreign hal Safety fun.• Dui: frail: De;iosits it Sprci Bills i.n 1e42. LIAr • Capital St, Bills in el. Dividends Due to re 71 TO Capital, Circulation. Due Depositors, Due other Banks, Total Liabilities, LIARILMEN. 9180,000 00 129,349 00 22,930 03 3,204 84 $305,483 .87 $16.280 63 Surplus, profit and re has been charged to Since the last report the loss, of bad debts, $97 84. cent. 4, $6,000, being 4 per Dividends,—January 1, 185 4 8.000, " July 1. hier. CHARLES P. HART, Cas DAN LYON, President. B. BuckDavid P. Noyes, Daniel Directors.—Dan Lyon, m R. Vilas, Samuel M. Pope, Willia ley, George Peterson, bonds for the ren. They have given Lucius E. Chittende demption of the bills. 10, 1854. DANBY BANK. JULY will expire Jan. 1,1866. Charter granted 1850; RESOURCES. $105,141 47 nted, Notes and bills discoh 12,203 80 ks, Deposites in City Ban 2,655 00 Bills of other Banks. 5,747 05 Due on Book, 1,883 02 Specie, 1,878 00 Banking lions, . $129,509 34 Total Resources, https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis Capital, Circulation. Due Depositors. Dividends unpaid, 50,000 00 59,331 00 16,666 76 1,648 110 Total Resources. Reported Surplus, —Est limited loss, Doubtful debts, S13.01111 $127,645 76 $1,863 58 6,500 00 $4,636 42 Deficit, 4, $2,000, being 4 per cent. Dividends,—January I. 185 2,000, ‘• ,1 " Jaly 1, h an uncertainty as to the In my opinion, there was suc 1st of July, that it was not resources of this Batik upon the clear dividend : and it is now warranted in making its last ts deb e, until its doubtful that no other ought to be mad shall become productive. of this Bank was 9108,98. Oct. 12, 1853, the circulation mistake, . as it is said. "which occurred through a ement with a Western firm, This Bank has had an arrang warded its bills in packages under which the Bank has for 0 the amount of from $75,00 of $5,000 from time to time, to discounting paper therewith to 511100,000 in all. that firm per cent. discount, and taking for the Bank at the rate of 7 their agency. Aside from of such discount 1 per cent. for to the Bank. it is clearly unthe hazard of such a business t. Lt is deputing to one outlawful in two respects : Firs cretion in discounting. which side the Board of Directors a dis https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis 72 ly, it pertains to a majority of the Directors alone; second is taking more than six per cent. interest, paying the agent from such excess. Upon my remonstrance,this business has .been discontinued. JACOB W. MOORE, Cashier. J EssE LAPIIAN, President. Frederick Directors.—Jesse Lapham, Jacob W. Moore, CaButton, Isaac B. Munson, Augustus G. Clark, George pron, Jr., John H. Vail. They have given bonds for the redemption of the bills. 1851. EXCHANGE BANK, SPRINGFIELD, JULY 24, Chartered 1853,—will expire January I ,1872. Paid in and certified. Julie Authorized capital 22, 1854,$40,000. RESOURCF.S. $56,873 57 Notes and Bills discounted, 050,000. Deposites in City Banks, Bills and checks of other Banks, 34,960 31 2,089 76 2,922 67 Specie, 896.846 31 'l'otal Resources, LIABILITIES. Capital, Circulation, Due Depositors, Total Liabilities, Surplus, $40,000 00 52,365 00 3,475 SS $95,840 SS 01,00.'5 .13 eAri- 0)' I ow rt 164 Acc 114 85 84 Deposites in City Banks and Bills of other Banks, DANBY BANK, JULY 11, 1855. Specie, Charter granted in 1850 ; will expire Jan. 1, 1866. RESOURCES. Notes and Bills discounted, Deposites in City Banks, Specie, Banking House, Circulation, Due Depositors, $95,747 94 23,586 93 2,125 83 2,000 00 commodation bill. LIABILITIES. Capital, Circulation, Due Depositors, Total Liabilities, JESSE LAPHAM, Pres't. $50,000 00 54,770 00 14,287 96 $119,057 96 They have given bonds for the redemption of the bills. Apparent Surplus, 10,000 ito Bad and doubtful Debts, $12,51111, estimated loss, $3,397 .26 Estimated Deficit, Vurinoin $5,000 of Second Mortgage Bond.: et 1\ estern al above 1eiri. Railroad Company stand atn,, e in arriv$3,000. I have made no change Hi that c,Inual ing at the estimated deficit above. I, IS51. No Dividends have been declared since July be deficit Ibis No others, it is presumed, will be, until made up. Averages for the year ending July I, 1855: https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis JACOB W. MOORC, Cash'r. Directors,—Jesse Lapham, Jacob W. Moore, Frederick CaButton, Issac B. Munson, Augustus G. Clark, .George pron, Jr., George Barney. $1,1irt 7.1 Loans, 63,420 00 1.5,375 87 This Bank has violated the law limiting the amount of indebtedness of individuals. It has no farther regarded the statute restriction than by making the security for the excess in the form of a draft, though well undtnistood to be an ac123,460 70 Total Resources, 16,052 78 2,180 37 $108,599 60 I. 1 GA VA mi. k141 pf0 75 31, 1856. 4 • $270,817 00 25,562 00 3,830 00 DANBY BANK, AUGUST '23, 1856. Charter granted in 1850, and will expire January I, 1866. 120,440 00 19,066 00 .NOTES, Cash'r. ,titivid P. Noyes, , Ira Shattuck, RESOURCES. Notes and Bills discounted, Deposits in City Banks, Bills of other Banks. Spvcie, Real Estate, 03 86 00 21 2,000 00 $161,449 10 ion of. their bills ..411 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis $130,154 25,931 140 3,223 Capital, Circulation, Due Depositors. $50,000 00 96,022 00 7,664 (J5 $153,686 93 Apparent Surplus. $7,762 13 They have of had and doubtful paper $10,000 00, on Ivhich they estimate a loss of $7,500 00. No dividends have been declared since July 1, 1854 ; and the Directors do not design to declare one, until they hayt. actual funds for one. A teport has gone out that a majority of their capital stock is owed by residents in the State of New York, but this is not the fact ; though twenty thousand five hundred • 75 -•,•• 61 a" •.1.! 'if DANBY BANK, AUGUST,19, 1867. 'January 1, ill expire 1850_ Charter granted in .1866. Cash Items, Foreign Bills, Specie, Banking House and Lot. 2,000 00 usinurlEs• $50,000 00 97,988 00 4,601 75 S152,484 75 $4,244 67 Aparent Surplus, doubtful paper loss on their the that say The Directors their surplus. will not exceed declared since 1854. have been No Dividends https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis $141,776 69 17,326 04 2,879 65 98,173 00 8,075 18 JOHN . V MI., Cashier. Directors,—Isaac J. Vail, Enoch Smith, Udney Burke, C. M. Bruce and John H. Vail. $120,595 20 19,201 26 10,863 07 417 00 3,652 88 $166,729 42 Capital stock, Circulation, Due Depositors, bolkaas, Deposits in City Banks and Foreign Bills. Specie, Circulation, Due Depositors. ISAAC J. VAIL, President. RESOURCES. discounted, Notes and Bills Deposits in City Banks, Averages for the year ending July, 1857. Though it is nearly two years since they became connected with the Safety Fund, they had not, at the time of my annual visit, contributed any part thereto. I have directed them to pay to the Treasurer, as it became due, and trust it will be soon done. I am now informed that the Directors have paid to the Treasurer, towards the Safety Fund, as far as it has become due. A majority of their stock belongs to citizens of "Vermont, as it stands upon their stock book, yet western men own a large interest in the Bank, and large discounts have been made on western paper, as their extended circulation too plainly shows. The late panic in the money market, especially, west, has driven their bills home so rapidly, as to suspend their redemption at the Suffolk Bank, and at their own counter, at least for a time. I am still assured, September 9, by an agent from their Board of Directors. who called on me, that they shall shortly have the means of establishing their credit, both at home, and at the Suffolk Bank. When at the : - 1•1' ,er •••• ••• ••• ;Art • • A 76 to aspertain s in my power, an me e th l al neers loam, Bank, I used pecially for ve es , es ti ri cu se eir Otte goodness of th ors had taket ct re Di e th uld learn, fie=f—re the and from all I co themselves sa ep ke to r we r po business, or it precaution in thei only a hone ne do ve ha curities at true course, to d by known se te ec ot pr s nt discou fbr the year least had all their eir discounts, th of n io at in am rded aohome. In the ex they have affo at th ow sh s their book ns of Denpast, I find that , to the citize nt te ex le ab er a consid ctors assume, commodation to that the Dire d an s, wn to g by and neighborin at is presented. home paper th od go l al nt ou that they disc • -1.13t ? 4. https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis •-• 1Ce on many e greatest n, will be and near ke a well rope 150 :ring any g, issuing sufficient And on tile tree. everal L well .ssess were of 1 tiring one 1869. 1 fea• )eing any lysi- tt of sely ton. iug https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis "d 1° ' e(itkrkcJj et At iijnt 61 r1 by,defsin "Is° 9 ill J.c. siv },c4 ittsronv OF DANZY. :121 a mlid. fit Iro n. combined with Sulp huric, Silicia, Carbonic and Cr, Hie Acids, :ol d traces ofClorine. It is aer:0,1, alkaline cha lbeate water. The comp ',Foto xiii it iro ound of n. contained, is un usually stable, and wil boiling %vithout deco l bear mposition, and the pre thts. adds much to sence of alkalies, with the value of the wate It is like some of r, as a'medicinal agent. the favorite Europe an waters, and worthy of 1.0011)lete qIl alit Lii t iii al vsis. a Respectfully, S. DANA HavLs. State Assayer of Mass. Tlw spring is situat ed about two miles nor and about one-half th of the Borough, mile from the railro ad, being conveniently accessible, and will no doubt rival any iu its medicinal eff this part of the State, in eets. Although bu t a short time has elapse since its discovery d , its reputation has alr eady become considerably extensive, mid the water is being sought tions. after from different sec- DANBY BANK. The Danbv Bank Nva business in 1851, wit s chartered ill Oct. 1850, and comm enced h a capital of $50. ham was its first 000 dollars. Jesse President, and held Lapthe office till Jawn Jac(dy IV. Moore ce 1852. was cashier from The first 1>iree!“rs co mmencement til were Jesse Laph am, Frederick Butt l 1857. Crampton. Isaac on, B. Munson, and Imard continued till Augustus G. Clar Eliada k, and (;eorge Capron January 1856, except Crampton wh which was appointed in o died, his place. In I a.. Chester Hitchcock, then of Buffalo, N. Y. nine-wtolts of the bought Bank, and in Ja new nuary 1856, electe La ph da am , wh ic h bo Laphaul. Isaae .1. Vail, John II. Vai ard were as follows: Jesse l, Enoch Smith, an Burk. In January, d Udney 1857, Laphtun we then were John II. Vail, Isaac J. Vai nt out, and the directors l, Charles M. Br Smith, Ifilney Burk. uce, Enoch John It. Vail. C.t,li Isaac J. Vail was elected Pre sident, and ivr. •111.•Ill. fail,(1 in Scrt. 1857, and chest. r Hon. A. L. Miner lirpOillied of ManBaimi thil ii. C. II ite Receiver, in Dee. following. When the lwock and J. 'I'. Hatch of Buffal (IIIl% Lid ! H'"‘."I o, owed it loss ev.eed iwiec the it total loss, and other had debts made the amount of the cap ital stock. 61 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis 66 Averages: I ,oatis, Deposits in city Banks, Circulation, Due Depositors, Specie, $239,523 33 118,139 64 199,053 00 35,092 39 BA Charter 11,072 52 PHILIP WELLS, Cashier. SAM'L ROOT, President. Goodhue, W. H. RockDirectors—Samuel Root, Joseph Starr. well, Joseph Clark, Parley redemption of given bonds for the have Directors The liabilities. their bills and all Notes De posi Bills Specie Bankir I/ Ca pit, Circul Due [ A ppai Bad a Avail A ) APPENDIX. 106 APPENDIX. 1833, your commitcontained the transactiona of the bank tip to July, the discounts to stockholdtee are unable to ascertain on wlint securityGreenlief Webb, otie of the ers were made, but from the eintements of no security other than a directors, they are led to the conclusion that pledge of the steel, wits required. the manner of keeping Your committee would here remark, that from tines of the the books of the batik, they have been unable to ascertitin the batik, except pnyment of the above, or any other of the notes of the named, Aug. they find that John Dewey peel $2,000 011 I,is 11010 above all the liabili18*3, mill they are thereto)? precluded from ascertaining any given time duat batik the of officers the of ice responsibilit ties and ring its existence. after the bunk went into It is worthy of remark, that for several years redemption of its 'dile, die operation, it labored under embarrusemente in Boston and elsewhere, auth u% as frequently oldiged to obtain loans in of its individual loans sometimes at a high rate of interest, and that manyet its cnpital. In one were extravagantly large, considering the amount Dewey of $15,710. This instance they find a loan wits nuele to John severe embarrassments was Feb. 4, 1831, at n well-remembered tittle of vvlien the batik was very much emitt the money market, and at a ii lute wine made without adequate barrassed. In some instnnces large loans Carlisle St Co. of Buffalo, N. Norum, to made were two loans : steetri-y and April 29, 1837, V., tub $3.300,. which were protested Nov. 15, 1836., uncollectable. There wholly ;probably rue and unpaid still which are residing in Portland, Maine, was also lonned for the benefit of pereons passed into the hands of and 1837, 24, July pretested wits which $5.1CO, on the payment of endorsers the with d compromise who the receiver, cent. per tate-hall twelve and :1000e000bank as dividends ofs110 'rho dividend book of the bank exhibits the follows: July 6, 1835, January 11, 1836,' 1836, July 000 1,6 0 March 11, 1839, made on the stork as it was own'Ube last of the above dividends was received $847, and l'hoines ed August 10, 1838, of which John Dewey member of the firm of Norton, Carlisle $112, although said Carlisle, as it CO., WilS then indebted to the bank in the el/in of $3,300, and Carlisle saitl firm was then in the bank, protested. of note the mentioned iii vi It will be seen, that at the time of making said last was in the batik described, above paper, protested the of whole the (lend, and composed a part of its assets; there was also it large amount of 81/..f.• a ;tart of pendeol paper or bail notes then in die bank, mid also composed the obsaiil assets, and ii lout nil wjiIcIt1,11.01 dividend was declared, and lie perceivject of the peculiar manner in which it was so declared, will ed when the circumstances of the transfer of the stock, which undoubtedly led to thefinafe of the concern, are stated. The first board of directors was composed of John Dewey,Greenlief sev1Vebb, Chapin K. Brooks, Josinli B. Dull, at 141 John S. Wells, whoState, erally ludgell their respective bonds with the Treasurer of the were tor the sum of $8,000 each, with 0103 surety to each bond, whoexcept mostly irresponsible men ; all the bonds subsequently executed, mu part of those in 1839, have sureties of undoubted responsibility. John REPORT OF THE COMMITTEE UPON THE AFFAIRS OF THE ESSEX COUNTY 'BANK. 7'o 'he honorable lhe General Assembly nf Ihe Stale of Vermont now in mai : Your committee, appointed at the last session of thin General Assembly, "to investigate the situation and concerns of the Bank of L'essex County, to ascertain the manner of the trunsfer of the stock of se ill batik to foreign purchasers, the liabilities and reepousibilities of each officer of said bank &ince the incorporation thereof, mid to adopt and pit oeue ouch measures by suits or otherwise. as said e ,mmittee may deem expedient, to protect the safety fund and the public trent loge in consequettce ()film failure of amid bank to redeem its bills, and to correct lintels, iinLy may be found to exise" respectfully report — That, in attending to the duties assigned them, they have /availed thent• selves of :ill the light which the books end papers of the bank now in the hands of the receiver, and the testimony of the president and cashier, woid.1 throw upon its transactions, mid they believe they etIllnot better carry out the views of the General Assembly, dem by giving a history of the leatlitig arts of the batik, front the tittle of its orgatoizaiion to the termination of its business. The Essex flank was chartered at the October seseion of 1832, with a capital of $40,000, divided into 1000 shares of $40 each, subject to the provisions of the safety fund net of 1831, requiring dint fifty per cent, of its capital stock should be paid in, previous to its making city discounts. The books were opened by the conimiesioners, the stock sitbscribed in proper feriae mill the first board of directors duly elected. Oti the 15th day of Apo il, 1833, one of the bank you llllissioners certified 111211 $20,000 hail been paid it, tic capital stock, iigreettbly to the reqeircinents of the charier. 011 the 16;Ii day of April, 1833, the loank commenced its operations, at which time the eneliier charged himself wit II 1110 capital stock,(.M18.1/fla certificate of a deposite of specie in the Gritften 'Intik $10,000, ing current bills $8,537, anti specie $1,463, aneounting in the whole to $20.000. On the B1111111 day $17,845 of the capital stock placed in the bunk ns aforesaid, and on the 2211 of the same April $400 more of said stock was taken out of the bank, by some of the stockholders, subetituting their private notes therefor, leaving only the sum of $1,755 and the notes of the stockholders for the stun of $18,215 to secure the redemption of the bills of the bank, which were thereufterwards to be put in circulation. Of the above sums taken from the bank,John Dewey received $15,460, and Themes Carlisle meek cd $1,500,they being the principal owners of the stock. The first bills of the bank were piepared for emission on the Gill they of May, 1833, tip to which time no loans or discounts were made to persons other than the stockholders, in the manlier above described. In consequence of the loss of that part of the discount register which of https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis „ILL.! 414 / c 10 _ / APPENDIX. APPENDIX- Dewey was elected first president, and continued such until Sept 17 1838, when Greenlief Webb was substituted. Your Committee find that, as ustinl, there were many transfers of stack, but the principal portion of it fluctuated between John Dewey, Greenleaf Webb, Thorned Carhale, and Norton, Carlisle & Co., of Buffalo, N. Y., although Norton, Carlisle Ert. Co. were indebted to 'be Bank at the time of the transfer of their stock, contrary to the provisions ofthe act of incorporation. In the summer of 1838, II. Bradley, Esq., of Burlington, who was then Bank Inspector, received information that some persons front the state of New York were attempting to purchase the stock of the Essex Bank. He immediately went to Guildhall to attempt to prevent the sale, and received an assurance from John Dewey, who owned most of the stock, that no such sale should he made without his consent. Sometime afterwards E. S. Townsend, of Palmyre, N. Y., called on Mr. Bradley with a letter of introduction from Dr. Dewey. Townsend wished Bradley to give his consent in writing to a tratisler of stock to him by Dewey, but he alosolutely iefused, and Townsend lelt, saying he could not obtain the stock. On the 17th of August, 1838,John Dewey transferred to Thomas Carlisle 790 shares of the stock oh said bank, who on the same day transferred 400 shares to Isaac F. Mack,of Rochester, N. Y. and 400 shares to said E. S. Townsend. Ii' March 1839, Carlisle transferred to Mack 141 additional shares, which, with 4 shares obtained from other sources, made Mack and Townferod the owners of the whole stock of the batik, save 55 shares. For several years before the above transfer, and eveu since, said Carlisle has been reputed a bankrupt, and has not possessed any visible estate either real or personal, and it was in proof before your committee that Dewey negotiated the sale to Mack & Townsend, anti received the purcloatte money of them for the shares pretendedly sold them by Carlisle, anti your committee have yet to learn for what good purpose this roundabout method was adopted, for conveying the shame of Dewey to Mack and Townsend, but they feel constrained to say that they can regard it in no other light than a mere artifice to protect Dewey from liability, and also to avoid the imputation of having brokea his promise to Mr. Bradley. Your committee are satisfied that when Mack and Townsend bought the stock, they knew that the notes and funds called capital stock were for the most part of no value,and that the assumed sum of $18,820 sold them as capital was mostly fictitious and false, and that they intended at the time of purchasing said stock, to raise the credit of the bank, which was then at a low ebb, by redeeming its bills promptly in the city ofNew York, for a short time, and then to flood the country with them and let the bank fail, and that they were only prevented from fully consummating their plans by their own failure, which took place soon after. The bargain between Dewey mid Mack and 'Townsend was privately made: [wither the public, nor the officers of the bank, nor any other person that your committee have been able to find, knew of the terms ant conditions of the vele of said stock until the brink had wholly failed to redeem its bills, which took place Aug. 14, 1839. The terms of the sale were, as your committee are well satisfied, that Muck and Towuseptl paid $30 for each share of $20, the vendors to retain all the accumulated surplus, estimating the entire debts of the bank as solvent and collectable. Your committee have no means of assertaining with absolute certainty the time and mode of payment for the stock purchased by Mack & Townsend, but are well satisfied that payments were made at the time of pundit'sa in the bills of banks, other than the Essex, borrowed for that express purpose, and that the loans thus obtained were afterwards peill in the bills of Ewes bunk. At the time of the sale, the bank had $44,907 of its bills in circulation, and owed other sums of money, and had in its vaults in specie *31908 1,200 00 Foreign bills, 60 00 State orders, 991 64 Deposites in Market Bank, Boston, -$2,570 72 Amounting to The residue of its effects consisted of notes and accounts, more than 812,000 of which were ant! still ate houelessly burl, and of the remaiiider severe! thousands of dollars were very doubtful and still remain unpaid, and from which, in tloe opinion of your committee, very little, if any thing, can ever be realized. It is evident, from all the evidence in the case, that for 945 shares of the nominal value of $18,900, and made up mostly of worthless and protested paper, Slack & Townsend paid $26o350 in cash. This act ind the circumstances attending it, carry internal evidence of the object of the parties: it was pregnant with mischief; mid afforrled an ample opriluicuity for the perpetration of the most outrtogeous frauds upon the uh 108 https://fraser.stlouisfed.org • Federal Reserve Bank of St. Louis )o(_ mei 109 rOtt the 24tn of Sept. 1838, at a meeting of the board of directors, • composed of John Dewey, Greenlief Webb,and William Haywood jr., it was voted "that John Dewey be allowed and paid $3,500 for his services as president of the bank from April 15, 1833, to Aug. 17,1838, and for balances of interest on his deposites up to the last date," which sum was subsequently allowed to him; and although there is no evidence that said Dewey had previously received any thing for his services, except ittee are given to when abroad on the business of the hank, your c tooderstand that the above vote, together with the dividend of March 11, 1839, were the means adopted to give the sellers of the stock the pretendedly accumulated surplus before mentioned, in compliance with the contract with Mack & Townsend. On the 17th and 20th days of August and 12th of Sflpt. 1838, the bank homed to Mack & 'Townsend $32,000, about one half of which was formed on the paper of Slack, Patterson & Co., a firm composed of Mack &r. Townsend and one Thomas J. Pattersou, who was then and till is a responsible man, and the residue on the paper of Mack & Townsend ; a part of the debt of Mack, Patterson & Co. was afterwards paid, and the remainder, with the riper of Mack & Townsend, formed a part of thuir motes of$60,410 herewas renewed, mod all inafter described. It was agreed between mite officers of the limitk and Meek & Ti,wns• entl, at the tittle of the above loan, that Muck ts Trio oisetul should place funds in the hands of some perstoi in the city ut New York, lor the re• demption of the bills of the bank. APPENDIX. I/0 On the 25th of August, 1838,- Mack & Townsend executed a bond of $20,000 to the bank, to secure the bank for loans made or to be made to them, with several sureties residing in the western part of the Slate of New York, who, there is reason to believe, were wholly irresponsible at the time. On the 10th of Sept. 1838, the directors voted an assessment of $5, sante f II 011 each share of the stuck of the bank, and on Lie 2.1 I o. September a like assessment was voted. The stuck ledger shows a credit of $4.720 on account of the first assessment, but ter ether entry appears on the books in relation to it, and no mention is made of the second. The issue book shows that $107,600 of bills heel been prepared for eniission, $20,100 were prepared after the sale to Meek & Townsend, from blanks furnished by them, $28,22'J of which passed into the hands of the receiver, leaving 879,371 itt circulation. The bank was enjoined by the chancellor, on the 12.1i day of Oct,bet 1839, end its effects passed nee the hainla of n receiver Nov.4, 1839. From a statement of the receiver it appears, that when he took posaeesion of the bank, its ointeanding bills were $79,371 ; of that sum $3,000 had been pledged 14 the payment of a loan and have since been returned to the receiver, and $5,770 have beset delivered LO liii., by Iloughtona & Co., brokers oh the city of New Yolk, us redeemed bills, exhibiting an actiiel circulation of $70,601. It was preyed before your committee by the the cashier of the bank, that the bank sent $10,000 to said Iloughtutia & Co., after the sale to Mack & Townsend, to redeem the bine of the batik, that he subsequently demanded the redeemed money of them for the batik, but they refused to let him have it, saying they should sell it to pay the liabilities of Mack & Townsend to them, end your committee have strong reason. to believe that a large amount et the bills ',repented to the receiver by pretended clttiittants, leave been redeemed with the funds of the bank, and it is clearly proved that a large amount of the bills presented to the receiver for pityment, were presented by 'terminal other them the real owners, and your committee are not satiefied that they vi ere so presented for any honest or honorable purpose. One of the Houghtons appeared before your committee and requested to be examined, hut before the examination closed, lie utterly retiree.' to answer questions put hint, calculated to i:acertain the amount of intim ey redeemed Ity them with the funds of the bank, lied how much nioney thus redeemed, he had caused to be deposited with the receiver in thu :mines of other persons-. and said he coold not tell the amount of money redeemed by them, or the mitnount of funds received by them to redeem bills with, within the sum of $5,000. He however admitted that they had been employed by Mack and Townsend to iedeem the bills, tied that they had received funds to a considerable amount, both from Mack anti Townsend and the bank, and that when they received the hills of the bank that were not to be put is circulation, they penciled it hole through them. A large immure I)1 the bills deposited with the receiver, have holes n:lieu through them, and sonic of the packages appear not to have been separated since they were punelted in the mamier described by Houghton—there is now in the hands of the receiver it package of$7,500 • https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis 111 APPENDIX. bt"-Lt4AA4A tr( 13 - which was forwarded by the Illoughtons and Co. and deposited in the melte of one J. W. Abitibi. Mack and Townsend's notes are in the bands of the receiver to the amount of $60,440, all of which bear date March 16, 1839,except one note of $5,000, with no security whatever except said $20,000 bond, which also passed into the hands of the receiver, has been sued,judgment obtained and the execution returned nalla bane, both as to principals and eureties. It is a reetarkaltle fart that several of the notes now in the hands of the receiver Nonni! Muck ned Townsend,correspond exactly in amount with several of the bills of sale of said stock, from Carlisle to Mack & Toe its end. At the time the batik received the $20,000 bond, it was accompanied by a certificate orate cashier of the Wayne County Batik, certifying thet said bond was good. 'Flue indebtedness of the bank, as reported by the cashier, other Man as above stated, was $3,840 39, which accrued from money borrowed by John Dewey,on the notes of Jelits Dewey, Greenlief Webb and Wm. Hay woo I, jr. (agniust which, the said Devvey holds the indemnity of the said Webb and Hay enoti,) to unable the bank to redeem its bills niter the sale to Mack and Townsend: they having failed to furnish funds as they had agreed, said notes still remain outstanding anti are twined. The nominal assets of the batik, which passed into the hands of the receiver, were— $94,907 79 • Discotinted notes and other evidences of debt, John Dewey's receipts for noted held by him as collateral 9,457 50 . security, $104,3C5 '29 . . Arnomoing in Included in the above we the notes of Mack and Townsend. Of the debts other than those of Mack and Townsend, the receiver reports $10 or 612,000 absolutely bad, $6,402 collected, awl it large proportion of the balance extremely doubt ful. The time limited by the Chancellor for presenting claims n ainst the batik to the receiver, expired on the first of Sept. 1841, at which time $5,639 there hal been collected of the bills of Essex Batik, 34,426 Depo-ited by elaimatite, $40,065 Amoimting to which deducted from $70,601 loaves $30,536 still outstanding, and it is apparent that the bank has run under more than $60,000. At the winding up of the business concerns of the bank, on the 14th. and 15th ;lays of August, 1839, writs of attachment were issued against the bank, but no property of any value could be found, except $319 41 iti specie, an "Iron Safe," ROMP packages of unsigned bills, a few blank books, a quantity ol unsigned bilk, and a few sticks of aealing. wax. Your conimittee further report, that in their opinion the legislature, in granting the charters of the several Safety Fund Banks, and by the several laws they have enacted in relation to them, have endeavored to protect the rights of all persons, who may IIKVC any concerti with, or interest in, then ; under these laws a batik bind has accumulated to a large atueunt, which the luw has intended for the pnyinent or redemption of the bills ofany Safety Fund Bank, which niay become insolvent through 112 APPENDIX. misfortune and without the fault of its officers. It has also made ample provision for the protection of the bill- holders against the frauds of such officers, by requiring large bonds for the faithful discharge of their officeial duties, to be lolged with the Treasurer of the state, end when rhe insolvency has been occasioned by the fraudulent conduct or neglect of such officers, adequate remedy may be obtained by the bill•holder, by a prosecution ofsuch officers, in the manner prescribed by law. The bill-holders being the perions immediately injured by the failure of the bank to redeem its bin, and the inability so to do being produced by the fraudulent acts of its officers, no doubt can exist but that suits upon their bonds ttsay be resorted to by the bill-holders for their indemnification. In all cases where the officers have performed their duty faithfully, end have been guilty of no breach ot the conditions of their !winds, then no source can remain from which remuneration can be obtained by such bill- holder, but the batik fund. Anti as it was manifestly the intention of the Legislature, that the- interest of all persons concerned should be equally guarded and protected, we think that this construction of the law would evidently effect that object, but if bill -holders are permitted to resort to the batik fund for the redemption of the bills of insolvent banks, without regard to the mann s.r in which that insolvenoy was produced, it is wannest that no person would seek redress by a suit on the bonds, while a single dollar of the batik fund shall remain in the Treasury. Your committee are clearly of opinion, that the bill-holders of insolvent safety fund banksounde so by the misconduct of their officers,should never be permitted to have indemnity from the batik fund, while they may obtain redress by a suit on the bonds of the officers. To permit such billholders to resort to the bank fund for redress, would be the height of injustice,—it would be taking the money of those batiks that have honestly and judiciotiely conducted their business, to pay the damages oc easioned by the fraud of others, lit the same time depriving the State of the use and inconte of the bank fund, and destroying the security of bill. holders, while those who have been guilty of the most barefaced frauds would go unpunished ; in short, it would be punishing the innocent and rewarding the guilty. Your committee, for reasons that must be manifest t all, leave this subject without recommending any measures to be pursued by the LegMature, trusting that in their wisdom, they will adopt such as the exigencies of the case may require, while your committee will give such advisory instructions to the receiver,as they are advised are prudent and proper. All which is respectfully submitted. DAVID HIBBARD, JR. Committee. DANIEL COBB, SEWALL FULLAM, Montpelier, Oct.424, 1842. https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis 113 APPENDIX. REPORT OF THE BANK COMMISSIONER. To his'Excelleney Charles Paine, Governor of the Stale of Vermont: The undersigned, Bank Commissioner of the State of Vermont, respectfully reports that he has inspected the Banks of this State, subject to the provisions of the act regulating the chartering of Banks, and finds the condition of those Banks to be iis follows : B.:INK OF MIDDLEBURY. itzsovacts. $75,857 60 Notes discounted, . . • Due on book and from other Vermont banks, 1,584 68 3,585 34 . . . Specie, 2,917 00 Bills of other banks, . 2,700 00 . Safety fund, . 41,654 01 Deposits in Boston and Troy, $128,298 13 Capital stock, . Bills in circulation and certificates, . Unclaimed dividends, . • Due depositors and I3ank of Burlington, $60,000 00 54,W3 00 245 95 8,199 04 $123,077 99 Sept. 20. B.I.VK OF VERGENNES. its...suuitLLS. Notes and bills discounted, . Real estate, . Foreign bank stock, Safety fund, . . Due from other banks, . Deposits in New York and Boston, . Specie, . . Bills of other banks, . $166,992 35 . 2,500 00 157 15 . 450 00 1,070 60 . 12,721 49 7,740 a) . 3,747 00 $195,378 98 LIABILITIES. Capital Stock, Bills in circulation, Dividends unpaid. Due to other banks, . $100,000 00 57,891 00 558 70 5,438 19 17, tivyvt,v,„,)- I Via-b — 2.- Continued. 218 it adds considerably to united with the proceeds of the public lands, d. distribute the amount now to be lands, at fair pricYour committee consider the sale of the public of our coun. welfare t permanen the to beneficial more r es, altogethe rs. While adventure or settlers to on distributi try than a voluntary ,his farm for paid be to tion on the one hand, a moderate compensa also diffuses and industry, of habits to yeoman hardy stimulates the families, in the origimore equally to our brave ancestors and their patriotism. And on nal states, the reward for their sacrifices and distributed and wisely ap• the other hand, the fund created, if rightly y to form an arch powerfull propriated, will probably contribute most nor external ensap, cannot foes internal which virtue, t of intelligen emies press down. that part of the resoluMost fully, therefore, in accordance with she says that the wherein ania, Pennsylv sister, patriotic tions of our for the promorevenue a as regarded is proceeds of the public lands do we reschools, common tion of education, and more especially s. resolution following the of passage the spond, and recommend Verof atives Represent of House Resolved, By the Senate and d and our Senators instructe be Congress in senators our mont, that procure the passage of a be recommended to use their influence to from the sale of the arising law to distribute the future proceeds we highly approve that and basis; equal most the upon public lands back to returning in , Congress last the by of the principle adopted came originally which money the States as a contingent loan, the created through thr was which of means the or pockets, from their times past or present. instrumentality oftheir patriotic services, in and our RepresentaResolved, That our Senators be instructed expenditure of public judicious a for vote to nded recomme tives be fortifications for the demonies for the erection and completion of country. common our of fence J. SAWYER,for committee. by the committee were Which was read, and the resolutions reported read and passed. the Vermont Asylum for the The select committee, on the report of appropriation to the Vermaking act "an lwane,.and on the bill entitled bill ought to be amend the that mont Asylum for the Insane," reported pass. and ed the bill amended as reported The report was read and concurred in, ordered to be engrossed and and time second the read e, committe by the time. third read the Edward Simons and The General Committee, on the petititontoof granted. be not ought prayer the that eported others,—r by the House. And leave to withdraw the petition was granted act more effectually to The saar committee, on the bill entitled "an same ought to pass. the reported State," this within prevent gambling bill read the first and seThe report was read and concurred in, the the third time to-morread and engrossed cond times, and ordered to be row morning. https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis "your committee find no reason to question the correctness of the report of the Bnk 219 On the petition of Benjamin Leland and others,—that the same ot.ght to be dismissed. The report was read and concurred in. and leave to withdraw the petition was granted by the House. The committee of ways and means, on the petition of Amos Speare, and others," reported that the petitioners have leave to bring in a bill. The report was read and concurred in, and leave to bring in a bill was granted. The select committee on the Bank Inspector's and Bank Commis 'loners' reports, made the following: REPORT To the House of Representatives, now in session: Your select committee to whom was referred the respective reports of the Bank Inspector and Bank Commissioners, respectfully report: That your committee believe it to be the intention of the House in referring these reports, that the attention of your committee should be principally directed to that part of the Inspector's report which relates to the Essex Bank, with a view to ascertain whether or not the same is correct. It appeared to your committee that the Essex Bank was examined by the Inspector in January last, but no definite statement of the condition of the bank at that time is contained in his report, though he was specially requested by the President of the Bank to report a specific statement of its condition as then found by him. Your committee further find that a prosecution was instituted against the corporation of the Essex Bank, and a trial had before the Supreme Court in March last, and that on that occasion, the court said, "That the Bank had been managed, apparently with much ability and financial skill—that although they could not agree with the counsel for the defendant that the loaning of the capital stock to the stockholders, before the issuing of the bills of the bank was a course autho. rized by.the charter yet as the bank was then, and always had been sound, with abundant means to redeem its outstanding bills, they should dismiss the prosecution." From the Bank Commissioners' reiiort to the present Legislature, made from a recent examination of the Essex Bank, it appears that it is perfectly solvent, and in good condition. The statement as to this bank is as follows: Capital stock, 020,000 Due depositors, &c., . 9,468 07 • Bills in circulation, . 32,115 00 Due on notes, book, &c., . Drafts, payable in Boston, . . Specie,foreign bills, and deposits in Boston, 861,583 97 42,887 23 11,216 53 8,059 40 $62.163 16 commissioner above referred to, or to doubt that the determina+Asn of the court in the prosecuti 17-ts induced by evidence which exhibeted the real , ;ircumstances of the bank. Your committee consider . some portions if the inspectors report relative to Exsex Bank calculated to exite groundless alarm, and to create a suspicion which may prove highly predjudicial to the interest of the institution, ugh ,in the oppinion of your committee. it is nti ed to the full confidence of the public. JOHN S LRCY 11A TR N 07