1719. Freedman's Savings & Trust Company (Washington, DC)

Bank Information

Episode Type
Run → Suspension → Closure
Bank Type
federal
Start Date
January 1, 1874*
Location
Washington, District of Columbia (38.895, -77.036)

Metadata

Model
gpt-5-mini
Short Digest
a9c7561a66d25ed2

Response Measures

None

Description

Articles describe occasional runs on the Freedman's Bank during tight times and the money panic of 1874, followed by the bank closing its doors on June 29, 1874 and subsequent appointment of commissioners/turnover to officials and liquidating dividends. Closure was driven by poor/adverse investments and fraud/embezzlement combined with the 1874 money panic; I classify the immediate cause of suspension/closure as bank-specific adverse information (insolvency from bad investments and fraud) though macro panic contributed to runs.

Events (4)
1. January 1, 1874* Run
Cause
Macro News
Cause Details
Occasional runs coinciding with the money panic of 1874 led depositors to demand cash; bank sold investments at ruinous sacrifices to meet withdrawals.
Measures
Sold investments (often at ruinous sacrifices) to raise cash to meet withdrawals.
Newspaper Excerpt
There were occasional runs on the bank; now at this city, then at that, and it became necessary, in order to get the cash to pay the calling depositors, sell out some of the investments, in many instances at ruinous sacrifices.
Source
newspapers
2. June 29, 1874 Suspension
Cause
Bank Specific Adverse Info
Cause Details
Bank closed due to insolvency caused by unwise and unsound investments and alleged fraud/embezzlement; resources insufficient to meet obligations.
Newspaper Excerpt
On the 29th day of June, 1874, the Freedmen's Bank CLOSED ITS DOORS in the thirty-four cities and refused to pay any further demands.
Source
newspapers
3. July 13, 1874 Other
Newspaper Excerpt
Shortly after the failure of the bank, on the 13th of July, Messrs. Leipola, Creswell, and Purvis, of this city, were appointed a commission to settle the affairs of the company.
Source
newspapers
4. November 1, 1875 Other
Newspaper Excerpt
On the 1st day of November, 1875, the first dividend of 20 per cent was declared in favor of the depositors.
Source
newspapers

Newspaper Articles (2)
1. December 25, 1884 The Republican Journal Belfast, ME
Article from The Republican Journal, December 25, 1884

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Article Text

# Generalities. Small-pox is alarmingly epidemic in London. Egypt's cotton crop is one of the largest ever raised there. St. Paul, Minn., is to have a Masonic Temple costing $150,000. The English Conservatives dislike the Nicaragua canal scheme. Thurman, it is said, will be offered a place in Cleveland's cabinet. An international exhibition is to be held in London next spring. Secretary McCulloch was confirmed by the Senate, on Thursday. The Senate discussed, Thursday, a National Railroad Commission. Robert C. Winthrop's condition was unchanged at midnight, Thursday. Only 3293 tons of shipping was built in and near Boston the past year. The House has voted to adjourn from the 20th inst. to the 5th of January. Paris Figaro states that there are 36,350 workmen in Paris out of employment. The Baltimore base ball club has been dropped from the Union Association. The break in the Mackay-Bennett cable has been repaired and is working satisfactorily. The Spanish loan of five million dollars has been taken by French and other capitalists. Mrs. Catherine Gabel, of Gabelsville, Pa., has celebrated her one hundredth birthday. The Reagan substitute for the Inter-State Commerce bill was adopted by the House 142 to 98. The United States Senate has passed a bill making inauguration day a legal holiday in the District. Congressman Morrison of Illinois will make active efforts to secure election to the United States Senate. Encke's comet has made its reappearance, having been found by Professor Young, of Princeton. A Swiss criminal, pardoned on condition that he would go to the United States, will be arrested and sent back. The programme of services for the dedication of the Washington Monument and the order of procession is announced. The coal companies have decided to restrict next year's production in order to obtain higher prices from consumers. Bartley Campbell in five years has made a protit of $250,000 out of his plays. He began life as a newspaper reporter. General Swaim, in his testimony before the court martial, makes it appear that he was badly treated by Banker Bateman. The statue of Garfield at the foot of Capitol Hili, Washington, will directly face the Hall of the House of Representatives. The anthracite coal interests of New York and Philadelphia have established an allotment plan of production for the coming year. The 700 divorce suits pending in Philadelphia indicate that the Quaker city isn't wholly given over to peace and the domestic virtues. The National Tanners' Convention has decided to restrict the production of leather 33 per cent, for thirty days, beginning Dee. 22. Mrs. Julia Ward Howe is reported to be much annoyed by a rumor current in New Orleans that she is the sister of Henry Ward Beecher. Illinois has produced more corn on a less acreage than for several years; the yield in money to the farmers is the smallest since 1878. It is said that Phillip Armour, the Chicago pork packer, has one of the best private libraries in the the country, and reads several languages. A proposition is seriously considered to build a narrow gauge railroad from Readsboro to North Adams, Mass., through the Hoosac Tunnel. The Illinois Railway Commissioners have met to consider a reduction of excessive railway freights in view of the small return to producers. A powerful Anglo-Dutch company has signed a contract for cutting 15,000,000 metres of the Panama canal, the work to be finished within two years. It is charged that England has committed a breach of the neutrality laws in selling British merchant vessels to France to carry troops to Tonquin. Mr. Healey's portrait of Longfellow-one of the only three paintings of the poet in existence-has been hung in the art gallery of the Botoiph Club. Boston. The International Monetary Commission at Rome has concluded its sittings. The proposal of America to suspend the coinage of silver was not discussed. Cor. Carroll D. Wright is in Washington to urge the passage of the bill to pay States taking a census every five years hall the cost of the enumeration. The Washington monument cost $1.187.710 about two-thirds the cost being paid by Congressional appropriation. The monument weighs 81.120 tons. The National Sugar Growers' Association and the representatives of the iron mines in the Lake Superior region protest against the ratification of the Spanish treaty. Josh Billings says that humorous writing is played out, and the funny book business has been overdone. The fuuny lecturing business still succeeds, however. The Comptroller of the Currency has recommended that Congress appropriate the money necessary to pay the claims of the depositors against the Freedman's Bank. The rumor that Germany has annexed the Admiralty Islands, the Islands of New Britain and New Ireland and portions of New Guinea, has a disquieting effect in England. A London dispatch says: The court has refused the application to restrain the agents of the New Orleans exhibition from taking the Great Eastern steamship to New Orleans. The captain and mate of the yacht Mignonette, who killed the boy Parker for food to keep themselves alive, have had their sentence of death commuted to six months' imprisonment. The conferrees on the Electoral Count bill have agam failed to agree. It is probable that this is the last attempt that will be made to reconcile the differences between the two houses on this bill. The population of the United States is now reckoned at 57,700,000, and as the average increase is 2 per cent. exclusive of immigration, in a couple of years or so more we can boast of sixty millions. Robert Morris. LL. D., formerly of Kentucky, was crowned Poet Laureate of the Free Masons, at Masonic Temple, New York. Dec. 17. This distinction has not been conferred since Robert Burns was crowned in 1787. Pinkerton's detectives have arrested Geo. A. Proctor, formerly of Susquehanna. Pa., on charge of taking a package containing thirty or forty thousand dollars from the vaults of a bank in that town more than a year ago. The investigation into the affairs of the First Comptroller's office is closed and the report will probably be unanimous that Barker failed to sustain his charges against Comptroller Lawrence or Clement Hill of Boston and other federal officers. A party of Pennsylvania iron men have spent $1,000,000 developing the iron mines in Cuba, where labor costs 8 cents a day, and now they want their ore admitted free into a country where labor costs $2 a day. If they carry their point that is the end of the iron business in this country. The disagreement between the Senate and House upon the Naval Appropriation bill has suggested the possibility of an extra session of Congress. Prominent members of the House Appropriations Committee declare that the majority of the House will not recede, and should the Senate be as stubborn no Naval bill can pass at this session. William B. Keen of Malden has sold to Mr Harry Dutton of Houghton & Dutton, Boston, a sleigh which is marvel of beauty and weighs only 38 pounds, being three pounds lighter than the one built for Dan Mace of New York two years since. Its frame is of hickory and steel, being artistically painted and trimmed with gold; the cushion is a tine imitation of sealskin.

2. July 28, 1888 Evening Star Washington, DC
Article from Evening Star, July 28, 1888

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Article Text

CITY AND DISTRICT. THE FREEDMEN'S BANK. The Proposit - to Have the Government Reimburse Depositors. THE BILL THAT HAS FASSED THE SENATE-HOW THE BANK W.A. ESTABLISHEDDELUDED FREEDMEN ESTABLISHSD-FREEDMEN INTO THE BELIEF THAT THE GOVERNMENT WAS BEHIND IT-CLAIMS ALREADY PARTLY PAID. The bill that was recently passed by the Senate appropriating $1,000,000 to reimburse the depositors of the Freedmen's Savings and Trust Co. brings up an interesting bit of history. com- This company, commonly known as the Freedmen's Bank, was chartered by a act of Congress approved March 3. 1865, for the benefit of the most illiterate and impoverished class of citizens possible, the freed slaves. There was large number of incorporators, among them being many of the GovernThe officials. avowed ment's highest of object the undertaking was to organize and maintain a savings bank to receive the small deposits of negroes, with the Idea of encouraging them to industry and thrift. In order to give the scheme as -reaching effect as possible the bank was org ganized on multiple plan, the central office being stationed at Washington, with branches located in all other three thirty cities, but two being in the South. These cities were as New follows: York, AlBaltimore, Philadelphia, exandria, Norfolk, Richmond, and Lynchburg, Newbern, Raleigh, and Wilmington, C.; Beaufort and Charleston, S. C.; lanta, Augusta, Maand Tallaand con, Savannah, Jacksonville Ga.; hassee, Fla: Huntsville and Mobile, Ala.; Columbus, Natchez, and Vicksburg, Miss.: Columbia, Memphis, and Nashville, Tenn.: Lexington and and Orleans New Louisville, La.; Shreveport, Ky.: St. Louis, Mo., and Little Rock, Ark. Each bank had separate inization with different officers, but all were bound by the same rules and forming a part of the general company. RUSH OF DEPOSITORS. Organized as It was, under an act of Congress, and officered by Government officials, confidence in the new concern came quickly and with ita flood of depositors, eager to put their paltry scrapings in place that was more secure than the stock. ing-heel or the fireplace. As the money flowed in It was calculated were investments that placed to draw sufficient income to pay the enormous These the of expenses great organization. were all directed the central bank. Some of them were wisely placed in established schemes that gave sure profits on the invested capital, while others were foolishly put into new and with no semenes foundation. golden promises These Theselatter latter nvestments did not hurt the bank few their out became effect years first, apparent later, when money became little tight and times there Then and harder. harder to began grow were occasional runs on the bank; now at this city, then at that, and It became necessary, order get the cash to pay the calling depositors, sell out some of the investments, in many stances at rulnous sacrifices. In fact, the money panic of 1874 was at its height, bankswere failing every direction, going down like bricks that ancaused One failure line. stand edge on other, and finally, on the 29th day of June, 1874, the Freedmen's Bank CLOSED ITS DOORS in the thirty-four cities and refused to pay ahy further demands. Such storm of popular indignation has seldom been known in this country. There were, at the time of the failure, 61,131 depositors, to whom there was due the sum of $3,013,699.56 of which $73,774.34 consisted of despecial deposits, and the balance of general to posits subject dividends. Thus the average deposit amounted to little than $50, but to the class of people forming the bulk the depositors this sum represented much greater comparative value, and was the result of nine years or economy. Fully 15,000 of these deposits were of sums less than $0. It was strange, then, that there were fraud, of underhanded work, of embezzlement, when is considered that these people would be the very last to reason, or to realize situation when was explained. A COMMISSION APPOINTED. Shortly after the failure of the bank, on the 13th of July, Messrs. Leipola, Creswell, and Purvis, of this city, were appointed a commission to settle the affairs of the company. It was hercuiean task they had before them, with 34 banks to examine, 34 sets of books to inspect, and 61,000 claimants listen The books of the central bank, which kept the general accounts the branches, were first balanced, and then the other were books the balanced, obtained, pus results compared. After months of labor It was discovor 88888 the bank at that nominal ered the the ume of the failure were $2. 709,952.1 thus leaving over and above dedicit em claims of depositors of $303,747.42. But these nominal assets in many cases had shrunk in value, bringing the actual resources at hand down to a much lower figure. The assets were turned into vallable cash as quickly as possible, on the 1st day or November, 1875, the first dividend or 20 per cent was declared in favor of the depositors. The news of this dividend was spread through the papers, and by or means ann from uncements the pulpits churches, in every possible way in order that might reach the ears of all of the ignorant depostors. The books soon came flowing in upon the commissioners, but not half or them were received. At this first dividend about 30,000 claims were paid, amounting to $555,360.08, leaving 31, 31,135 claims, represnting $47,379.83, but these MOI unpaid. 5 were presented. Thus will be seen that only those claimants or deposfors with sums of sufficient amount in the bank took the trouble to advance their claims. The second dividend, of 10 per cent, was declared March 20, 1878, and 26,069 claims, amounting to $267 $267,683.34, were paid. The third dividend, also of 10 per cent, was declared September 1880, and 23,280 liquidated claims, $259,123.18. On of June, 1882, the fourth representing dividend, of 15 per cent, was declared, and 21,527 claims, amounting to $383,996.71, were paid. A Lttie than year later, May 12, 1883, came the of the fifth and last dividend, of 7 per cent, which paid 18,774 claims, to the value 0f $172,096.18 This dividend virtually exhausted the resources of the emmissioners and completed the payment et 62 per cent of all claims on the bank, the actual pay payments amounting to $1,721,831.26, while the full amount of the 62 per cent would have been showing that $146,662.46 46 had not been claimed. IN CHARGE OF THE CONTROLLER. By the act of Congress, approved February 21, 1881, the original commissioners were relieved of their duties and the affairs of the bank were placed in charge of the Controller of the Currency, that office then filled by being John Hon. Jay Inox. Tue same act provided that all dividends 100 claimed two years after the declaration of the be should dividends Another barred. Februact, ary 17, 1883, revived certain of these claims, and these have of some been paid At the since. time of the last report of the controller of the state D the the affairs bank, 14 there cember last, vas a cash balance of $6,191.01 on hand. The receipts the preceding year had amounted to $1,579 71, from three sources-the proceeds of the of lots in South W ashington, dividends on the stock of theSecond National Bank of Washington, and the collection ons on account of loan the bank lad once made to Beaufort County, The exbeen had ures $3,107.90, pendit the being of salary the commis $1,000 asation an agent, and office expenses $1,500, costs of suits, insurance, printing the annual report, the payment of two barred claims, and the contingent expenses. THE REMAINING ASSETS. A statement of the available assets showed that their face value was $26,592.07. while their estinated proceeds were but $13,817.70. Among the assets are some items that are given no estimate as to present value, such as $4,000 in Detroit Car Loan Company stock; in $3,950 Young Men's $2,440 thristian Association stock: $3,184 in tax deeds; in tax-lien pur other certificates, assets, such as judgments, real estate in litigation, suits old end raflroad bonds *Mut and tocks, &c., which may result in some collection, but their realizaton 21 too uncertain warrant any estimate of their value. The claim against Beaufort County, E.C., is being paid by taxation. Thus It will be seen that the grist of the Freedman's Bank is about all ground, and should the controller, by good fortune, sue ceed in realizing on the assets on there would books, scarcely be enough to pay dividend of per cent. THE PRESIDENT'S RECOMMENDATION. The President, aware of this fact, called the atention of Congress, in his message of 1886, to what he styled "a plain duty which the Government owes to the depositors of the Freedmen's taving and Trust Company. The President said that thought the 32 per cent the deposits