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 79 stockholders. In 1868 Cooke and Huntington of the First National Bank, both trustees of the Freedmen’s Bank, secured control of the com- pany, over-capitalized it, declared a stock divi- dend to the original incorporators, issued a lot of first and second mortgage bonds, which were placed on sale, and then speculation began.” As the Freedmen’s Bank offered an easy mark, from it a loan of $51,000 was secured in 1871, and $49,000 in second mortgage bonds and £20,000 in first mortgage bonds were given as collateral.®® The second mortgage bonds were generally known to be valueless, and, the fact of the loan becoming public, attacks were made by the newspapers upon the bank management.® Thereupon Eaton, the actuary, went to Kilbourn and Evans, real estate brokers and appraisers for the bank, and made an agreement with them and with the Seneca Sandstone Company to change the form of the loan and thus protect the finance committee from hostile criticism. The account of the Seneca Company was then closed, the loan being transferred on the books to Kil- bourn and Evans, who gave their joint note, % The property of the Seneca Sandstone Company cost $120,000; the company was incorporated with a capital stock of $500,000, later raised to $1,000,000, and a stock dividend of $300,000 was declared. Not more than enough money was collected from stockholders to pay the original cost of the property. It was charged that noted men re- ceived blocks of stock free in return for the use of their names, but the charge was not proved. See Douglas and Bruce Reports, passim. 3 An earlier transaction in 1870 was the “loan” of $18,000 upon $20,000 first mortgage Seneca bonds, but it was testified that there was no intention on either side of redeeming the bonds—they were to be considered an investment. . Tt was charged that loans secured by collateral of this kind were in violation of the charter of the bank. It was at this time that Ketchum, of the board of trustees, after objecting in vain to such loans, resigned.

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