whole amount charged as bills in circulation.
The amount of drafts assumed by Mr. TredwelL was about
#40|000. The amount of moni^y and other assets put in bis hands
exceeded that sum by about #9,000, out of which he was to be
allowed for expenses and exchange in converting these items into
funds current at the place where the drafts so assumed had been
made payable, and to account to the bank for the remainder. I
have now grven you, as nearly as I can, the state of the bank at
the time of my purchase of its stock, and of the manner ia
which the transfer was completed. For what has taken place
since thf^n, the old officers aoKi stockholders ought not to be held
I understand you to requiest from me an account of the maooer
in which the affairs of the bank were conducted while I remaio^
.connected with it.
At the time of the transfer^ Mr. Folletti the Ibrmer cashier, de*
^dtniag Uy continue* Mr. 6. H. I'racy consented to act as cashier*
but with the qnderstanding that it should be temporarily, and
shortly afterwards 1 was chosen president.
. By the arrangement made with Mr. Tredwell, the bank was
.deprived of all her cash resources, except the specie and foreign
notes actually in the vaults, and small sums due from other banks.
Unfavorable rumors growing out of the change, soon began to
circulate ; a pretty severe run upon the bank here, and upon its
agents at Chicago, commenced, and was continued for some time.
I provided in Buffib 810,000, and in Utica $15,000, and made
an arrangement in Philadelphia for 920,000 more^ if wanted; mod
the bank sustained herself completely.
These funds were advanced out of my own resources, and by
my own exertions^ As they were put into the bank, her drafts
for some of the amounts were given : and this will account for the
amount of these in existence until very lately.
; An important arrangement was made by us for the redemptioa
of our bills at Chicago. A contract was made with Sirahan &
.Scott of that pidcc, by which that house agreed to take $10,000
of the notes of^ the bank and disburse them. At the end of ninety
days they were to return to the Bank of Ypsilanti that amount in
currency equal to that of the State bank of Illinois, and in the
mean time were to redeem all notes of the Ypsilanti bank that
might be ofllered to them, at two and a half per cent discount, in
Illinois money, and to disburse them again in the most advanta-
geous way for the bank. On the 24tb of October, 1 10,000 of the
notes were given them under this arrangement, and in November
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HOUSE DOCUMENTS. 689 '
an additiooal fum of like amount Theyv^ere also furnished
with (SyOOO of eastern funds, to aid them in their rederitption.
It is proper to say that, from advice received from them, from
time to time, it appears that the amount in their hands has not
been decreased: Of course this amount was not included in the
statement of droulation.
I understood that you considered this arrangement objectiona-
ble. I anb willing to admit that k was out of the ordinary train
of business ; but you will aibw me respectfblly to remind you o(^'
the state of things at Chicago. More than half the cii^ulation of
the bank was in that vicinity, and, unless some arrangement hikl
been made for its redemption there, it would at once have mtutn*
ed to the bank. It is evident that mme arrangement was render* ^
ed absolutely necessary by this fact : Mr. Banantine, who before-
hud redeemed the notes of the bank, in Chicago, was about to dis-
continue ; and it is t>elieved that the contract with Strahan d&
Scott was as favorable as atnr that could be made ; and indeed'
not only from its 1ern>S) but from the high character of that house, '
and ihecredit reflected from their undertaking the agency, it pr6Â«
mised unquestionably great benefits to the bank.
It will not be expected that we shall give in detail every act
done by us, until our transfer of the stock of the bank was'comÂ«
pleted. The books of the bank will show that the policy pUrsu^
ed was one of Contracting the circniation and general liabititiesof '
the bank. The deposites were reduced to almost nothing* and
the circulation to about two-thirds of its amount at the time when
we assumed the management. Notwithstanding the removal of
the state deposites, and the run upon the bank, before alluded to,
ita credit was fully stistained. Every thing presented at its coun-
ter was redeemed, and as far as I know, general satisfaction was
If I am not mistaken, a comparison of the proportion between
the immediate liabilities of the bank and its cash resources at the
time of its purchase by me, and the like proportion at the time of
my sate, will demonstrate the truth of my position, that the poli-
cy pursued during the interval was that of steady and actual con-
traction of business and liabilities.
Not a discount was made during this time, so far as my know-
ledge extends, to a single director ; certainly not to myselt, di-
rectly or indirectly. All that were made were done with a view
to accommodate business men and for business purposes. I too^
no money Whatever on my own account from the bank, except
Wiien I exchanged other for it, and even this was specially de-
posited in the bank of Michigan, and not U3cd until after i had
resigned my situation as director. All the bills of the bank which
I used were such as I myself had redeemed when out of the state,
and this amomted to but a few thousand dollars- A number of
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690 HOUSE DOCUMENTS*
bUlg (amounting in the wbole to tSStOOO,) were taken by dm to
the state of New York for certain purposes* which were afker-
wards abandoned, and the whole of tlie money returned, as will
hereafter appear* The same identical bills were returned, ex-
cej^ a package of $5|000, which were exchanged in the QHy bank
of Buffalo for another package of the same amount, but of smaller
. A rigid examination of the books of the bank will abow yoÂ«
that my ptafement of its management, while I had the control of
iti isÂ» in all respects^ correct.
I come now in the course of this statement t(0 another pari of
th^ matter, in which you have requested a full disclosure* I re>
fer to the circumstances connected with my sale of the stock at
My object in purchasing the control of tliis stock was, wilh %
view to connect the bank with one ki the state of New York*
Yourself will recollect the conversations had with you on Ihia
sutg^t. Arrangements were made to a eertaki extent, for this
purpose. In carrying out the details, however, difficulties asosa
that had not been anticipated*
3ome of the stockhcJders of the bank dgeoted to any of its notes
beii;^) issued, except in the form of regular discounts, in wluoh
case but a limited number Qould be given to any one infttituuooÂ»
fi)oro the restrictions hnpused by the 10th section of the charter of
the Bank of Ypsilanti*
Mr. Pritchette, one of the Bank Commi^ioners* supposed that
all the notes thus issued, shoukl properly be charged as oircala-
yourself expressed very unfavorable ppinions on tbesubjeo4 of
the pdicy of the intended coursci
I therefore determined to propose to those, to whom a portioQ
of the circulation was to have been loaned, either at onc^ lo take
the bank from my hands, or to release my contract with theniÂ»
and mentioned this freely to my friends in cQnversation*
On the day on which I expeoted to leave Detroit, I receivod Â« .
letter, of which the following is a oopy i
''Detroit, 2Sd Nov., 1838.
T. Bomeyn, Esq,
^Deab Sir ; I am requested by some eastern capitalists to piur*
ciias^ a bank, and they referred me to you for the Bank of Ypsi-
lantL Understanding that you owned the controlling interest of
that bank, I take the earliest opportunity of advising you on tb^
subject!. If you want to sell, what are your terms, ar^ what is the
condition of the bank, and what is the amount oif capital, &o-^7
- Please advise me as soon as convenient, and give roe a brief bis*
lory of the matter, and if you wish to sell, aj^ terma auili I â€”
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reidjr to purdMÂ»e ki troit for others, add the bank will go into
And sir, as I am a strai^r to tovh I have eoolosed letters of
credit from gentlemen that you probably koow, which yoo will
pi^ne retam to nieÂ»
I am truly yours, in haste,
P. s. rawson;'
Oa the same day I wrote- in reply the following :
" Detroit, 28d Nov. 1888.
Si& : Your letter of this date is before me. I am on the point
of leavbg town, and therefore must answer it briefly.
1 have in my name a majority of the stock of the Bank of YpÂ«
silanti, and if other arrangements are not perfected, I am disposed
to transfer it to any gentleman who can satisfy me of his disposi-
tteo and ability to snpport it. The capital paid in is #100,000,
of which I control near 9-10. If I sell I want to receive ten per
eent premtum on the whole amount of stock.
As I am at present in great haste, I must beg you to excuse
me for not goin^ more into detail.
I say to you frankly, thfit I will, without reserve, inquire into
the validity of the recommendations which you have done me the
favor of enclosing, and if they ^re satisfactory, and the arrange-
ment now on hand, (I refer to one contemplated with an eastern
bank,) be not consutnmated, I will enter into a negotiation with
In haste, but
Your oVt serv't,
At this time I did not know Mr. Rawson, except very slightly.
A tiote of Mr. Rawson'al for some amount, had been put into my
hands the day before, as collateral security for an endorsement,
but I took a guaran'ee from the person delivering it, and niade
ttfy slight inquiries as to Mr. Rawson, and did not retain the note
but a short time. As to his history and occupation, I knew no-
thing. The letters of recommendation which he enclosed, were
of a satisfoctory kind, t shall allude to these nrore particularly
Before leaving Detroit, and on the above day, I saw Mr. Raw-
'BM, who told me that he was peon but that he had been acting
for some time as agent for some highly respectable men, who
^irtredbsironB of engaging more extensively than they had dboe,
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em HOUSE DOCUMENTS.
ia westero op^mtioDS ; thai be had purchased large anKMuits of
flour and wheat, and other produce lo Ohio, and latterly io Mi-
cbigapy and that he bad ei^perienced great difficuky from the loa-
bility and unwillingness of the banks to discount drafts for him ;
that some of his friends and those for whom be acted, had formed
a company, and were desirous of concfentratinÂ£ their means io a
bank, and operating through it, and that he could advance tSOyOOO
in cash towards sustaining the bank after paying for its stock. I
replied that I would think over the matter and would write to him
from Buffalo. Accordingly, I did write from that places as fol-
'<Â£ii/d^ iVovcmfer SO, 1898.
Dear Sik â€”
1 wrote to you a few days since very briefly, oo the subject of
selling the Ypsilanti bank.
I have been for some time satisfied that the bank will not an-
swer the purpose of those for whom.it was (H'iginally purchased^
by me, as its circulation must be limited to the amount of its ca*
pital stock paid in, but the Bank Commissioner has assured me
that any of its notes loaned to other institutions^ will be debited
to it as circulation. I will make you a proposition, subject, how-
ever, to the contingency of the alteration of a <Â»ntract with the
bank already spoken of.
The capital stock of the Ba^k of Ypsilanti . paid in, is SiOOi-
The circulation is about 960,000. The bank is indebted to the
City bank of Buffalo in the sum of 1 10,000, lor which a bill has
been drawn on New York : collateral to this, the like amount of
notes of the bank has been deposited. There is a farther indebt-
edness to the state of S 10,000, for which a bill has been drawn
on Canal bank of Albany.
There are very small amounts due to depositors, and I believe
no balances in favor of other banks.
I will sell stock to the amount of 993,703 25, and surrender the
for my services in the premises, and the respoo-
by me, I expect ten per cent more than the par
lount of stock.
the payment of all the drafts that may be made
e transfer, on receiving from the bank funds siiffi-
payooent all notes which may have been disoooo-
since I assumed the control of it, and for the rS-
Bike funds current in the city of Detroit. If the
k are paid to me, I will take care to give them a
of you, that you cause the old notes of the baak
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Id be deftstytd^tod not rcKitsiAsd, ts I procnifed Mr. Tred^l
(when I purchased from him,) that this should be the case. Such
are the leading outlines of the principles oo which I was wiiliu^
to sell; and it satisfactory to you, I thiok we will have -no dim-
ciilty on my return in consummating a bargain.
Sabsequendy I wrote to Mr. Rawson, in effect, as follows : (I
have not retained a copy of this letter,) that he could have the
bank on the terms mentioned in my former letter, as the directors
of the institution in New York, who had intended to use its notes,
vmre wiUiqg to release me from my bargain with them, and did
not wish to encumber themselves with the management of the
bank, and I could not conclude an arrangement with then* stock*
hoUerti ts individuals, for this purpose ; that if he desired to take
the bankÂ« he mutt have his own directors selected, and all thin^
prepared for a complete change, as I wouM reitain no responsibi-
iity, and would give full notice of the change.
On my way home, T received at Buflbk> a line from him, sim-
ply stating that he was entirely prepared.
. The oMy persons whose names I recollected as having been
mentioRed to me by him as his friends in this matter, were Mr.
Maynard and Mr. Gill. The former I supposed, and certainly
'understood, was a resident of Onondaga county, New York, the
latter of Columbus, ObioÂ» I inquired, and was informed as to
both of these, thai they were exceedingly respectable men. FroOi
the examination' of Mr. Rawson before you, it appeared- that
Mr. Maynard is a resident of Chenango county. Of this gen-
tleman, I ktiow nothing. My inquiries were as to a difi^ent
I renamed home on the 24th day of December. On the 28tfa
I transferred to Mr. Rawson and to others, according to his dl-
Dec6o&s, all my stock in the bank. A scrip for about #15,000
was not in my possession at the time, but as I considered it sub-
ject to my control, it was assigned with the rest, with full notice
of the fact of its having been subjected to a temporary hypothiÂ»-
The mode of transfer was as follows : the stock was transfer-
red upon the books, and the old officers and directors resigned.
A new board was chosen, who passed upon certain paper. Mr.
BawsoB tbeo gi^ve me in payment for my stock, an equal amount
of the old discounted paper of the bank. I wish it distinctly un-
dantood, that neither mjrself, nor any old director, examined the
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M4 HOUSE DOOtJMBIfTS.
tteur paper 6ffered for discount, or bad in anjr way any thii^ to
do with it.
You will recollect that I had taken from the bank f25,000 of
its notes. These I brought back with me. Mr. Tracy declined
to receive them, or to give me up my receipt, lest the matter
should be afterwards misrepresented. I accordingly gave them
to Mr. Rawson, and not satisfied with taking up my reoeiplf I
took from him an acknowledgment of the delivery to him oi the
whole amount, whicli was exhibited to you and admitted by
At the saoie time, or the next day, the directors ordered the
execution of the agreement accompanying this commuoicatioil,
marked B, by which I assumed tbe payment of all the drafts of
the bapk. This instrument speaks for itself.
The mode of transfer was the same that was adopted whee I
Curcbased. In both oases the inteation was to leave all reapomi-
ility with the new directors.
Mr. Rawson wished me to take the premiam on the slock in
some paper which he hetd. I objected as not koowing the oauMt.
He then proposed that I should take certain stocks of a third
person, and after some hesitation) I acceded to this, and took
them, as, at the time, there was a prospect of converting them
. I have now stated to you with entire frankness, all the circomÂ«
stances connected with my contract for the sale of the cKoCrol of
the bank, and the manner in which it was carried into eSecL
While no one will deny my le^l right to seJI bank stock to an^
person who would pay me for it, I am ready to admit my obb-
gation to the community to see that the control of the tnstitatioii
went into safe and responsible bands. I now wish yoa to refer
to the letters of recommendation which MrÂ» RawaoD brought to
roe. (Schedule A.) You will find them to be from peraent of
different states ; you will see that they speak of him while yel a
youth, and follow him down to the present time, dniittg fifteen
successive years ; and that they all concur in th6ir testtOMay as to
his integrity and respectability. The reprssentations whieh Ik
Eve of his backers in the business, were entirehr satisfeetery ;
had with him a letter of credit for $30,000 of money, and I
submit to you, under the cirdunstanees, if I was not entirely jus-
tifiable in treating with him. Since the transfer, he has exUbiled
to n)e a formal power of attorney firom AÂ» K. Maynaffd, r^ularlv
executed and authenticated, aothorixing tbe purchase of tM itoa
of the bank, and also of a miU^
I now come to speak of my conduct since the traasfer ef tke
It will be recoliected that Mr* HopkidB deetined to ^t at oasi^
ier. Mr. R. Lockwood had been in the bank for some time, and
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HOUSE DOCUMENTS. 605
Ifeqaested him to stay uotil matters were settled, as be was ac< '
quaioted with the situ tion of the bank, and I had full confideooe
in his capacity and int^rity^ and, as my own liabiKiies on die
drafts of the bank were large, i was desirous of having some one
with whom I was acquainted remain there temporarily. Ho
agreed to stay for a iew days, and for a few days only.
: I soleainly declare thai from the time cS my resignatbn as di-
reotorr on the 28th day of Deoember, I oe^^^ interaieddled with
the afiairs of the bank, in any way whaterer. I kept entirety
aloof from it, and know nothing of its operations, except as to the
amount of its redemptions, as they were mefitiooed to fne incident
tally by Mn Lockwood and others.
The day after the ass^oment of the stock, I received 95.000
in specie, which I gave to the bank, and ior which I received n^
thing but an open credit. This specie was used by the bank in
its redemptions, and I never received anything but ordiimry coun-
try funds for it.
I proposed to a friend to take the order on the Buffalo city
bank, for the money there deposited, and disburse it westward,
where it would have a good circulation, and pay the draft due
that bank. He referred it to his partner at Bufeuo. Before any
answer was received* I wrote again, arranging in another quar->
ter for the payment of the draft, which has been taken upv and en-
cloaing an order for the bills deposited in the bank ; as I found
that such an increase of western circulation might operate disad*
vantageoQsly. I am advised that but a part of these have been
circulated ; the rest are on my hands.
Of the cither drafts assunoed by me to a large amount, all, ex-
cept about ^H^OOO, have been fMrovided for.
Of the discounted paper assigned to mo to pay these drafts, I
have only received about one hundred dollars. A small amount
was taken in notes of the Bank of Ypsilanti, which are still on
my hands* flind about three hundred dollars were paid imo the
bank to my credit, where it remains, being covered by the injunc*
Of the ten thousand dollars paid to me in the notes of the bank,
(also for the purpose of paving these drafts) about eight thousand
dollars were paid into the farmers' and i\]echanics'l>ank of this
city. As soon, as I onderstood that the Bank of Ypsilanti was
made the object of suspicion and remark, and that her notes were'
returned to her counter constantly for redemption, I went to the
above bank and withdrew every dollar she had, being about four
thousand dollars, which notes are still in my handsL
. I loaned to a gentleman of this city five hundred dollars, which
were not used by him, white the bank was in good credits and
which I Am expected to take back.
To another I paid four hundred dtdlars, which was immediate-
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M6 HOUSE DOCUBfENTS.
]y seot borne to the \mnkf contrary to iny expectatioaB* mod tbers
To another I loaned one thoasand dollars^ but requested him
not to use it immediately, as it might prejudice the bank. He did
90, and the money perished on his banids* Voluntarily I oAer-
ed to return bis note ; so that tbb will be my loss.
To another I advanced five hundred dollars, and the nooment I
received information of the discredit of the paper, I wrote to bira
a note requesting the return of the money.
Except a very few hundred dollars disbursed by me in small
suoEis, I used none of the money except as above stated.
I challenge any individual to come forward and say that I have
been instrumental in extenditig tho circulation of the notes c4*tbe
bank except as above stated* Let any man who has received
tbem from me answer.
The result of the whole is, that of the ten thousand dollars paid
to me, more than one half perished on my hands.
I now come to speak of my conduct while the bank was mak-
ing its last efibrt
Mr. Lockwood brought to me a note for ten thousand dollars,
that had been discountol at the bank^ and wished me to procure
its rediscount I was satbfied this was impossible;, but told bim
I would make the efibrt. The only thii^ which I could do, was
to exchange, temporarily, notes of the Bank of Ypsilanti, to the
amount offive thousand dollars, for other money ; which I did,
by pledging my own private property and individual credit for
the return of the sum advanced. All this went to the Bank of
Ypsilanti, and all that I hold for it is the like amount of their own
depreciated paper, and the ten thoosand dollar note at>ove men*
I also went to the Bank of Michigan, and Idl with her teller
two hundred and fifty dollars, to redeem what Ypsilanti money
might be ofiered at her counter. 'l*his amount is also on my
I was induced to make the last exertion for the bank, because
I had a direct interest in sustaining her credit not only from my
recent connection with her, but from the amount of her money in
my hands. I did it in good faith, ui^ged to it by her oflk^ers, and
aMured by themÂ» that a large amount of Ohb and other fondt
were daily expected. I did it, after unfavorable rumors had
come to my ears, and against the advice of friends. The resoh
of the wbote is, that I have never circulated but a small amount
of the notes of the bank; that at my own risk, I prevented their
cihsulation in numerous instances, thereby incurring loss myself;
and that I have supplied her whh exchanges from my own re-
sources, and to my own disadvantage, to nearly the amonnt of
all that I bave used. If the notes oftbe bank are wortbleisÂ» thro
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HOUSE DOCUMBNT& Wf
I am a direct loier lo the amount of tbousands by my coimectioii
You have dow a statement of all my connexions with the Bank
of Ypsilanti, and I am sure ttiat you will do me the justice to say
that it is in every respect confirmed by all the testimony, oral and
written^ which has been elicited on this subject
It only remains that t speak of what I have said and done pub'
licfy in this matter.
Before I assumed the control of the bank, I mentioned to your-
self that I had it in contemplation, and did the same to Mr. Frit-
So soon as it had passed into my hadds, I wrote to you, advi^
sing you of the fact, that I alone was responsible for its manage*
I gave the same information to all the Detroit banks.
Immediately upon my return, I announced to all who spoke to
me on the subject, my intention of relinquishing the management
of the bank.
When I had done so, I advised the Detroit banks of it, and all
the agents and correspondents of the bank were advised of it, and
every thing was done to give full publicity to the matter.,