suspended banks to issue the same amount in counter notes, as an order to extend the circulation and business of each bank. This bank had acted on that understanding.
A committee of the directors of the same bank said that the books of the bank for 1839, the period they were set to investigate, "seemed to be in great confusion, with errors almost on every page, to correct which it would require, in the opinion of your Committee, the services of at least two competent clerks for twelve months." They were trying to find how a leaf had been cut out of the check-book and had disappeared.
The Commissioners on the same bank, in their report of November 5, 1840, stated that they had given particular attention to the cotton transactions, which had been persisted in until immediately before. "It will be difficult to imagine any cause that ultimately will be so disastrous to the institution." They anticipated reclamations to be made on shippers for a deficiency in the realizations compared with the advances, to the amount of $478,747. "In view of the vast amount of reclamations as shown; the great number of bales never delivered, the payment being almost universally resisted (without exception, it is believed, in all large amounts), with the most confident hope of defeating the bank of its just dues; and many of the parties believed to be insolvent, or have taken measures to be so, as regards the bank—taking all these things into consideration, a more ruinous and reckless administration of the affairs of the bank could not well have been devised." They complain of the negligence and remissness of the officers of the bank in regard to pursuing debtors, and a delinquent attorney of the bank. They had ascertained a certain loss of $540,761, and anticipated losses on cotton to the amount of $700,000. Forced balances had been made in the books to cover errors.
The Commissioners on the Mobile branch, 1840, reported that its surplus or sinking fund of $1 million consisted only of book-keeping entries, showing apparent profit, and discount charges which had not been collected or realized. "We are afraid that its qualities as a sinking fund are altogether imaginary and that a much larger amount will be swallowed up by the hopelessly bad debt." An illustration of what they meant, and also of the way in which the "relief" actually came to the debtor, is furnished by the following facts: The extension laws enjoined strictly that at every renewal twenty per cent. of the debt must be paid, and interest in advance at eight per cent. "The bank rule has been to compute discount for the whole term at eight per cent., and require notes which at that rate of discount would produce the net amount of the whole debt in cash." This produced an annual interest rate of about thirteen and two-thirds per cent. The Commissioners showed that the excess of immediate liabilities over immediate means had increased, in 1840, $512,890, "which is about the amount which the Legislature required the bank to issue of its own paper, by the relief act of the 3d of February last, at a period when the utmost prudence was required to give some hope of so reducing its liabilities as to be able to
