"AN ACT TO INCORPORATE THE FREEDMAN'S SAVINGS AND TRUST "COMPANY.

"_Be it enacted by the Senate and House of Representatives of the United States of America in Congress a.s.sembled:_ That Peter Cooper, William C. Bryant, A. A. Low, S. B. Chittenden, Charles H. Marshall, William A. Booth, Gerrit Smith, William A. Hall, William Allen, John Jay, Abraham Baldwin, A. S. Barnes, Hiram Barney, Seth B. Hunt, Samuel Holmes, Charles Collins, R. R.

Graves, Walter S. Griffith, A. H. Wallis, D. S. Gregory, J. W.

Alvord, George Whipple, A. S. Hatch, Walter T. Hatch, E. A.

Lambert, W. G. Lambert, Roe Lockwood, R. H. Manning, R. W. Ropes, Albert Woodruff, and Thomas Denny, of New York; John M. Forbes, William Claflin, S. G. Howe, George L. Stearns, Edward Atkinson, A. A. Lawrence, and John M. S. Williams, of Ma.s.sachusetts; Edward Harris and Thomas Davis, of Rhode Island; Stephen Colwell, J. Wheaton Smith, Francis E. Cope, Thomas Webster, B. S. Hunt, and Henry Samuel, of Pennsylvania; Edward Harwood, Adam Poe, Levi Coffin, J. M. Walden, of Ohio, and their successors, are const.i.tuted a body corporate in the City of Washington, in the District of Columbia, by the name of the FREEDMAN'S SAVINGS AND TRUST COMPANY, and by that name may sue and be sued in any court of the United States.

"SEC. 2. _And be it further enacted_, That the persons named in the first section of this act shall be the first Trustees of the Corporation, and all vacancies by death, resignation, or otherwise, in the office of Trustee shall be filled by the Board, by ballot, without unnecessary delay, and at least ten votes shall be necessary for the election of any Trustee. The Trustees shall hold a regular meeting, at least once in each month, to receive reports of their officers on the affairs of the Corporation, and to transact such business as may be necessary; and any Trustee omitting to attend the regular meetings of the Board for six months in succession, may thereupon be considered as having vacated his place, and a successor may be elected to fill the same.

"SEC. 3. _And be it further enacted_, That the business of the Corporation shall be managed and directed by the Board of Trustees, who shall elect from their number a President and two Vice-Presidents, and may appoint such other officers as they may see fit; nine of the Trustees, of whom the President or one of the Vice-Presidents shall be one, shall form a quorum for the transaction of business at any regular or adjourned meeting of the Board of Trustees; and the affirmative vote of at least seven members of the Board shall be requisite in making any order for, or authorizing the investment of, any moneys, or the sale or transfer of any stock or securities belonging to the Corporation, or the appointment of any officer receiving any salary therefrom.

"SEC. 4. _And be it further enacted_, That the Board of Trustees of the Corporation shall have power, from time to time, to make and establish such By-Laws and regulations as they shall judge proper with regard to the elections of officers and their respective functions, and generally for the management of the affairs of the Corporation, provided such By-Laws and regulations are not repugnant to this act, or to the Const.i.tution or laws of the United States.

"SEC. 5. _And be it further enacted_, That the general business and object of the Corporation hereby created shall be, to receive on deposit such sums of money as may, from time to time, be offered therefor, by or on behalf of persons heretofore held in slavery in the United States, or their descendants, and investing the same in the stocks, bonds, Treasury notes, or other securities of the United States.

"SEC. 6. _And be it further enacted_, That it shall be the duty of the Trustees of the Corporation to invest, as soon as practicable, in the securities named in the next preceding section, all sums received by them beyond an available fund, not exceeding one third of the total amount of deposits with the Corporation, at the discretion of the Trustees, which available funds may be kept by the Trustees, to meet current payments of the Corporation, and may by them be left on deposit, at interest or otherwise, or in such available form as the Trustees may direct.

"SEC. 7. _And be it further enacted_, That the Corporation may, under such regulations as the Board of Trustees shall, from time to time, prescribe, receive any deposit hereby authorized to be received, upon such trusts and for such purposes, not contrary to the laws of the United States, as may be indicated in writing by the depositor, such writing to be subscribed by the depositor and acknowledged or proved before any officer in the civil or military service of the United States, the certificate of which acknowledgment or proof shall be endorsed on the writing; and the writing, so acknowledged or proved, shall accompany such deposit and be filed among the papers of the Corporation, and be carefully preserved therein, and may be read in evidence in any court or before any judicial officer of the United States, without further proof; and the certificate of acknowledgment or proof shall be _prima facie_ evidence only of the due execution of such writing.

"SEC. 8. _And be it further enacted_, That all sums received on deposit shall be repaid to such depositor when required, at such time, with such interest, not exceeding seven per centum per annum, and under such regulations as the Board of Trustees shall, from time to time, prescribe, which regulations shall be posted up in some conspicuous place in the room where the business of the Corporation shall be transacted, but shall not be altered so as to affect any deposit previously made.

"SEC. 9. _And be it further enacted_, That all trusts upon which, and all purposes for which any deposit shall be made, and which shall be indicated in the writing to accompany such deposit, shall be faithfully performed by the Corporation, unless the performing of the same is rendered impossible.

"SEC. 10. _And be it further enacted_, That when any depositor shall die, the funds remaining on deposit with the Corporation to his credit, and all acc.u.mulations thereof, shall belong and be paid to the personal representatives of such depositor, in case he shall have left a last will and testament, and in default of a last will and testament, or of any person qualifying under a last will and testament, competent to act as executor, the Corporation shall be ent.i.tled, in respect to the funds so remaining on deposit to the credit of any such depositor, to administration thereon in preference to all other persons, and letters or administration shall be granted to the Corporation accordingly in the manner prescribed by law in respect to granting of letters of administration, with the will annexed, and in cases of intestacy.

"SEC. 11. _And be it further enacted_, That in the case of the death of any depositor, whose deposit shall not be held upon any trust created pursuant to the provisions hereinbefore contained, or where it may prove impossible to execute such trust, it shall be the duty of the Corporation to make diligent efforts to ascertain and discover whether such deceased depositor has left a husband, wife, or children, surviving, and the Corporation shall keep a record of the efforts so made, and of the results thereof; and in case no person lawfully ent.i.tled thereto shall be discovered, or shall appear, or claim the funds remaining to the credit of such depositor before the expiration of two years from the death of such depositor, it shall be lawful for the Corporation to hold and invest such funds as a separate trust fund, to be applied, with the acc.u.mulations thereof, to the education and improvement of persons heretofore held in slavery, or their descendants, being inhabitants of the United States, in such manner and through such agencies as the Board of Trustees shall deem best calculated to effect that object; _Provided_, That if any depositor be not heard from within five years from the date of his last deposit, the Trustees shall advertise the same in some paper of general circulation in the State where the princ.i.p.al office of the Company is established, and also in the State where the depositor was last heard from; and if, within two years thereafter, such depositor shall not appear, nor a husband, wife, or child of such depositor, to claim his deposits, they shall be used by the Board of Trustees as hereinbefore provided for in this section.

"SEC. 12. _And be it further enacted_, That no President, Vice-President, Trustee, officer, or servant of the Corporation shall, directly or indirectly, borrow the funds of the Corporation or its deposits, or in any manner use the same, or any part thereof, except to pay necessary expenses, under the direction of the Board of Trustees. All certificates or other evidences of deposit made by the proper officers shall be as binding on the Corporation as if they were made under their common seal. It shall be the duty of the Trustees to regulate the rate of interest allowed to the depositors, so that they shall receive, as nearly as may be, a rateable proportion of all the profits of the Corporation, after deducting all necessary expenses; _Provided, however_, That the Trustees may allow to depositors to the amount of five hundred dollars or upward one per centum less than the amount allowed others; _And provided, also_, Whenever it shall appear that, after the payment of the usual interest to depositors, there is in the possession of the Corporation an excess of profits over the liabilities amounting to ten per centum upon the deposits, such excess shall be invested for the security of the depositors in the Corporation; and thereafter, at each annual examination of the affairs of the Corporation, any surplus over and above such ten per centum shall, in addition to the usual interest, be divided rateably among the depositors, in such manner as the Board of Trustees shall direct.

"SEC. 13. _And be it further enacted_, That whenever any deposits shall be made by any minor, the Trustees of the Corporation may, at their discretion, pay to such depositor such sum as may be due to him, although no guardian shall have been appointed for such minor, or the guardian of such minor shall not have authorized the drawing of the same; and the check, receipt, or acquittance of such minor shall be as valid as if the same were executed by a guardian of such minor, or the minor were of full age, if such deposit was made personally by such minor. And whenever any deposits shall have been made by married women, the Trustees may repay the same on their own receipts.

"SEC. 14. _And be it further enacted_, That the Trustees shall not directly or indirectly receive any payment or emolument for their services as such, except the President and Vice-President.

"SEC. 15. _And be it further enacted_, That the President, Vice-President, and subordinate officers and agents of the Corporation, shall respectively give such security for their fidelity and good conduct as the Board of Trustees may, from time to time, require, and the Board shall fix the salaries of such officers and agents.

"SEC. 16. _And be it further enacted_, That the books of the Corporation shall, at all times during the hours of business, be open for inspection and examination to such persons as Congress shall designate or appoint.

"Approved March 3, 1865."

Eleven of these banks were established in 1865, nine in 1866, three in 1868, one in 1869, and the remainder in 1870, after the charter had been amended as follows:

"AN ACT TO AMEND AN ACT ENt.i.tLED 'AN ACT TO INCORPORATE THE FREEDMAN'S SAVINGS AND TRUST COMPANY,' APPROVED MARCH THIRD, EIGHTEEN HUNDRED AND SIXTY-FIVE.

"_Be it enacted by the Senate and House of Representatives of the United Stales of America, in Congress a.s.sembled_, That the fifth section of the Act ent.i.tled 'An Act to Incorporate the Freedman's Savings and Trust Company,' approved March third, eighteen hundred and sixty-five, be, and the same is hereby, amended by adding thereto at the end thereof the words following: 'and to the extent of one half in bonds or notes, secured by mortgage on real estate in double the value of the loan; and the corporation is also authorized hereby to hold and improve the real estate now owned by it in the city of Washington, to wit: the west half of lot number three; all of lots four, five, six, seven, and the south half of lot number eight, in square number two hundred and twenty-one, as laid out and recorded in the original plats or plan of said city: _Provided_, That said corporation shall not use the princ.i.p.al of any deposits made with it for the purpose of such improvement.'

"SEC. 2. _And be it further enacted_, That Congress shall have the right to alter or repeal this amendment at any time.

"Approved May 6, 1870."

The company was organized on the 16th of May, 1865, and the trustees made their first report on the 8th of June, 1865. Deposits up to this date were $700, besides $7,956.38 transferred from the Military Savings Bank at Norfolk, Virginia, on the 3d of June. On the 1st of August the first branch office was opened at Washington, D. C., and on the 1st of September it had a balance due its depositors of $843.84.

Other branches were opened during the year at Louisville, Richmond, Nashville, Wilmington, Huntsville, Memphis, Mobile, and Vicksburg.

December 14, 1865, the Military Bank at Beaufort, organized October 16, 1865, was, by order of General Saxton, transferred to this company, with its balance of $170,000. At the end of the first year, March 1, 1866, fourteen branch offices had been opened, and the balance due depositors was $199,283.42.

The total deposits made by freedmen in them, from their establishment up to July 1, 1870, was $16,960,336, of which over $2,000,000 still remained on deposit. The total amount of deposits in the Richmond branch up to that date was $318,913, and the balance undrawn $84,537.

The average amount deposited by the various depositors was nearly $284. So far as the facts were obtained, it appeared that about seventy per cent. of the money drawn from these banks was invested in real estate and in business.

By the financial statement of the banking company, for August, 1871, it appears that in the thirty-four banks then in operation the deposits made during that month, which was considered "dull," amounted to $882,806.67, and that the total amount to the credit of the depositors was $3,058,232.81. In the Richmond branch, the deposits for that month were $17,790.60, and the total amount due depositors was $123,733.75; all of which was to the credit of Colored people, except $6,929.19. A branch shortly before had been established in Lynchburg, which showed a balance due depositors of $7,382.83.

The following table shows the business of the company for the years 1866-1871:

_Table Showing the Relative Business of the Company for Each Fiscal Year._

For year ending Total amount of Total amount of Balance due March 1. deposits. drafts. depositors.

--------------- --------------- --------------- ------------- 1866 $305,167 00 $105,883 58 $199,283 42 1867 1,624,853 33 1,258,515 00 366,338 33 1868 3,582,378 36 2,944,079 36 638,299 00 1869 7,257,798 63 6,184,333 32 1,073,465 31 1870 12,605,781 95 10,948,775 20 1,657,006 75 1871 19,952,647 36 17,497,111 25 2,455,836 11

For year ending Deposits each Drafts each Gain each March 1. year. year. year.

--------------- ------------- ------------- ------------ 1866 $305,167 00 $105,883 58 $199,283 42 1867 1,319,686 33 1,152,631 42 167,054 91 1868 1,957,525 03 1,685,564 36 271,960 67 1869 3,675,420 27 3,240,253 96 435,166 31 1870 5,347,983 32 4,764,441 88 583,341 44 1871 7,347,165 41 6,548,336 05 798,829 36

The total amount of deposits received from the organization of the company to October 1, 1871--six years from the opening of the first branch--was $25,977,435 48 Total drafts during the same period were 22,850,926 47 -------------- Leaving due depositors October 1, 1871 3,126,509 01 The _total a.s.sets_ of company on same day amounted to 3,157,206 17 -------------- The interest paid during this time amounted to 180,565 35

In 1872 the trustees made the following interesting statement:

THE FREEDMAN'S SAVINGS AND TRUST COMPANY.

FINANCIAL STATEMENT FOR THE MONTH OF AUGUST, 1872.

Deposits for Drafts for Total amount Total amount Balance due BRANCHES. the month. the month. of Deposits. of Drafts. Depositors.

----------------------- ------------ ---------- ------------- ------------- ----------- Atlanta, Georgia $9,419 68 $11,242 30 $245,200 27 $223,020 17 $22,180 10 Augusta, Georgia 10,771 99 9,217 94 367,653 16 284,406 14 83,247 02 Baltimore, Maryland 29,755 52 18,644 57 1,278,042 32 996,371 98 281,670 34 Beaufort, South Carolina 189,600 74 184,924 40 2,993,873 30 2,944,441 88 49,431 42 Charleston, South Carolina 67,668 83 84,464 53 3,100,641 65 2,795,176 24 305,465 41 Columbus, Mississippi 2,426 15 4,364 34 132,036 46 121,776 67 10,259 79 Columbia, Tennessee 2,552 55 2,086 05 34,088 97 15,738 76 18,350 21 Huntsville, Alabama 7,343 50 10,127 61 416,617 72 364,382 51 52,235 21 Jacksonville, Florida 67,292 09 57,307 54 3,312,424 55 3,234,445 72 77,978 83 Lexington, Kentucky 14,383 85 11,221 13 238,680 22 188,308 76 50,371 46 Little Rock, Arkansas 7,871 27 9,506 37 172,392 10 154,914 42 17,477 68 Louisville, Kentucky 18,311 01 17,535 74 1,057,587 71 914,504 61 143,083 10 Lynchburg, Virginia 3,104 48 1,242 56 36,880 98 18,354 87 18,526 11 Macon, Georgia 6,808 98 7,061 52 197,050 01 156,308 75 40,741 26 Memphis, Tennessee 20,045 40 27,197 06 970,096 09 840,218 91 129,877 18 Mobile, Alabama 11,136 05 18,645 62 1,039,097 05 933,424 30 105,672 75 Montgomery, Alabama 8,522 90 8,679 60 238,106 08 213,861 71 24,244 37 Natchez, Mississippi 25,548 53 15,005 17 649,256 70 612,985 74 36,270 96 Nashville, Tennessee 15,731 46 17,098 58 739,691 88 625,166 40 114,525 48 New Berne, North Carolina 38,113 83 37,775 73 1,057,688 32 1,001,645 74 56,042 58 New Orleans, Louisiana 193,145 48 207,878 53 2,393,584 08 2,171,056 95 222,527 13 New York, New York 133,209 58 74,461 61 1,673,249 36 1,227,449 57 445,799 79 Norfolk, Virginia 16,771 88 17,757 38 1,048,762 05 916,047 59 132,714 46 Philadelphia, Pennsylvania 11,451 12 9,887 49 357,924 89 278,641 10 79,283 79 Raleigh, North Carolina 5,663 28 4,660 18 231,685 82 202,032 44 29,653 38 Richmond, Virginia 64,112 51 53,900 72 1,082,152 71 912,933 45 169,219 26 Savannah, Georgia 30,951 23 27,066 33 1,031,173 38 893,321 30 137,852 02 Shreveport, Louisiana 20,688 72 21,105 59 299,428 39 264,707 78 34,720 61 St. Louis, Missouri 26,323 93 20,599 02 615,876 74 526,490 86 89,385 88 Tallaha.s.see, Florida 4,589 45 4,526 75 361,614 57 329,618 33 31,996 24 Vicksburg, Mississippi 61,691 73 60,068 28 2,962,235 58 2,823,700 87 138,534 71 Washington, Dist. Colum'a 323,555 79 296,321 26 7,438,918 17 6,406,092 39 1,032,825 78 Wilmington, N'th Carolina 10,714 10 12,632 65 457,360 75 407,512 51 49,848 24 Alexandria, Virginia 1,929 91 685 80 14,091 77 1,626 35 12,465 42 $1,461,207 52 $1,364,899 95 $38,245,163 80 $34,000,685 77 $4,244,478 03

Total amount of deposits for the month $1,461,207 56 Total amount of drafts for the month 1,364,899 95 ------------- Gain for the month 96,307 61 =============

Total amount of deposits $38,245,163 80 Total amount of drafts 34,000,685,77 -------------- Total amount due depositors $4,244,478 03 ==============

This first experiment of the new citizen in saving his funds was working admirably. Each report was more cheering than the preceding one. The deposits were generally made by day laborers, house servants, farmers, mechanics, and washerwomen. Two facts were established, viz.: that the Negroes of the South were working; and that they were saving their earnings. Northern as well as Southern whites were agreeably surprised.

But bad management doomed the inst.i.tution to irreparable ruin. The charter was violated in the establishment of branch banks; "persons who were never held in bondage and their descendants" were allowed to deposit funds in the bank; money was loaned upon valueless securities and meaningless collaterals, and in the fall of 1873, having been kept open for a long time on money borrowed on collateral securities belonging to its customers, the bank failed!

During the brief period of its existence about $57,000,000 had been deposited. The liabilities of the inst.i.tution at the time of the failure, as corrected to date, were $3,037,483, of which $73,774.34 were special deposits and preferred claims. The number of open accounts at the time of the failure were 62,000. The _nominal_ a.s.sets at the time of the failure were $2,693,093.20. And in the almost interminable list of over-drafts amounting to $55,567.63, there appeared but one solitary surety!

On the 20th of June, 1874, Congress pa.s.sed an act permitting the very men who had destroyed the bank to nominate three Commissioners, who, upon the approval of the Secretary of the Treasury, should wind up the affairs of this insolvent inst.i.tution. Section 7 of the Act reads as follows:

"SEC. 7. That whenever it shall be deemed advisable by the trustees of said corporation to close up its entire business, then they shall select three competent men, not connected with the previous management of the inst.i.tution and approved by the Secretary of the Treasury, to be known and styled commissioners, whose duty it shall be to take charge of all the property and effects of said Freedman's Savings and Trust Company, close up the princ.i.p.al and subordinate branches, collect from the branches all the deposits they have on hand, and proceed to collect all sums due said company, and dispose of all the property owned by said company, as speedily as the interests of the corporation require, and to distribute the proceeds among the creditors pro rata, according to their respective amounts; they shall make a pro rata dividend whenever they have funds enough to pay twenty per centum of the claims of depositors. Said commissioners, before they proceed to act, shall execute a joint bond to the United States, with good sureties, in the penal sum of one hundred thousand dollars, conditioned for the faithful discharge of their duties as commissioners aforesaid, and shall take an oath to faithfully and honestly perform their duties as such, which bonds shall be executed in presence of the Secretary of the Treasury, be approved by him, and by him safely kept; and whenever said trustees shall file with the Secretary of the Treasury a certified copy of the order appointing said commissioners, and they shall have executed the bonds and taken the oath aforesaid, then said commissioners shall be invested with the legal t.i.tle to all of said property of said company, for the purposes of this act, and shall have full power and authority to sell the same, and make deeds of conveyance to any and all of the real estate sold by them to the purchasers. Said commissioners may employ such agents as are necessary to a.s.sist them in closing up said company, and pay them a reasonable compensation for their services out of the funds of said company; and the said commissioners shall retain out of said funds a reasonable compensation for their trouble, to be fixed by the Secretary of the Treasury and the Comptroller of the Currency, and not exceeding three thousand dollars each per annum. Said commissioners shall deposit all sums collected by them in the Treasury of the United States until they make a pro rata distribution of the same."

There are several legal questions that history would like to ask. 1.

Did not the trustees of the Freedman's Savings Bank and Trust Company violate their charter in establishing branch banks? 2. Were not the trustees personally liable for receiving deposits from persons who were neither "heretofore held in slavery" nor the descendants of such persons? 3. Were not persons "heretofore held in slavery" and "their descendants" preferred creditors? 4. Had Congress the authority to go outside of the Federal bankruptcy laws and create such special machinery for the settlement of a collapsed bank? This matter may come before Congress in a new shape some time in the future.

The three commissioners, at a salary of $3,000 per annum, were charged with the settlement of the affairs of the bank. They were Jno. A. J.

Creswell, Robert Purvis, and R. H. T. Leipold. Mr. Creswell was retained by the United States before the Alabama Claims Commission at a salary of $10,000 per annum; while Mr. Leipold was a lawyer with considerable practice. But neither one of these gentlemen ever entered a court on behalf of the company. In a little more than five years they used up out of the a.s.sets of the company, $40,000 for their salaries; paid for salaries to agents, $64,000, and $31,000 for attorneys' fees, aggregating $135,000--nearly one half of the amount distributed among depositors for the same length of time.