The Freedmen's Savings Bank

Bibliographic data

Monograph

Identifikator:: 175265076X

URN:: urn:nbn:de:zbw-retromon-129631

Document type:: Monograph

Author:: Fleming, Walter Lynwood http://d-nb.info/gnd/120660560X

Title:: The Freedmen's Savings Bank

Place of publication:: Chapel Hill

Publisher:: Univ. of North Carolina Press

Year of publication:: 1927

Scope:: x, 170 S.

Digitisation:: 2021

Collection:: Economics Books

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Chapter

Document type:: Monograph

Structure type:: Chapter

Title:: Chapter V. Mismanagement and other troubles

Collection:: Economics Books

MISMANAGEMENT AND OTHER TROUBLES 75 and finance committee seemed unable to check him. PROCEDURE IN MAKING LOANS The charter required a reserve of one third of the deposits as an available fund for immediate use. This was to be kept in the bank or on de- posit in other banks. But after the amendment of the charter in 1870 the actuary, counselled by the finance committee, used this fund for general banking purposes, and soon had the whole of it tied up in miscellaneous loans and investments of poor character. It was said later that no paper was so worthless that it would not pass at the Freedmen’s Bank if it had some trustee or friend of a trustee behind it. Loans were made on individual notes endorsed by trus- tees who had no deposits in the bank and no property in sight and who under the law should not have endorsed any paper accepted by the bank. An example of trustee action in regard to loans may be seen in the case of Zalmon Richards, a trustee, who had an accommodating custom of endorsing the notes of borrowers, and who was finally ruined because of this practice. After the failure of the bank, Richards came before the Congressional investigating committee to testify about conditions. Richards did not know any- thing about the business of the bank or the re- quirements of its charter, yet he had been a prominent trustee. The following extract from his testimony will serve to illustrate his com- 3 Bruce Report, p. 161; Douglas Report, p. 77.

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