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business circles of the city. The financial standing of the bank now seemed to be better than at any previous time in its history.
In July twenty thousand dollars in speciel was deposited in the Galena Branch of the State Bank of Illinois, by the St. Louis Gas Light Company with which to redeem the notes of the Miners' Bank of Dubuque. The bank continued the redemption of its notes for about one week, when being disappointed in receiving ten thousand dollars in specie it again suspended. At the time of the last suspension of specie payments there were besides the notes held by the St. Louis Gas Light Company, only about eight thousand dollars in circulation, and the bank had at this time for their redemption about one thousand dollars in specie. During this period Mr. St. John of St. Louis purchased forty thousand dollars of the stock by giving his note to the bank. As a stockholder he borrowed from the bank, on his individual notes, fifty-seven thousand dollars. St. John failed in business and took the benefit of the existing “ Bankrupt Act,” and by this transaction the bank sustained a clear loss of ninety-seven thousand dollars.
Later in the year, Dr. Barrett and Thomas Mather became the principal owners of the stock of the bank.
4.· Failure of the Territory of Iowa to Pay the Debt Due the Miners' Bank.
As mentioned before, the Territory of Iowa had borrowed from the Miners' Bank of Dubuque five hundred dollars, and had given its note payable at the Missouri Bank in St. Louis. This note had become due on June 30th, 1842, and, upon failure to pay, it had been protested. The probability that the Territory would not be able to meet the payment of its five thousand dollar note when due and that it also would be protested, led to a correspondence between the Territorial Agent and the officers of the bank. The Territorial Agent sought to influence them to hold the note for payment or adjustment at the bank in Dubuque, instead of forwarding it to New York for payment.
1 Davis testimony before Investigating Committee, Journal of House, 1843, p. 150.
2 See Mobley's testimony, Ibid, p. 151.
In his letter of August 13, 1842, to the Cashier of the bank, the Territorial Agent, after acknowledging the receipt of the notification of the protest, wrote that it had been impossible to meet this payment as the office came into his hands without funds; that he had been embarrassed with a large number of small debts outstanding from the previous year; that the only resources that were at his command during the year were the remainders of old debts due the office from previous sales, many of these were not collectible, and that any of them would be difficult to collect. The Legislature having repealed the law authorizing the agent to borrow money, and having passed an act requiring that the proceeds of the sales of city lots should be used only in payment for work upon and material for the capitol, it would be an absolute impossibility for him to meet any part of the debt due the bank this year. He was certain that the debt for $5,000 could not be met at maturity and the only practicable course to pursue that he could see, was to renew the notes.
On September 20th, he wrote a letter to the President and •Directors of the bank which was to be handed to them by Hon. Francis Springer who was "one of the counsel" for the collection of debts due the Territory. Mr. Springer was to explain to them the financial condition of the Territorial Agent's office, and would be as an answer from him to them. Mr. Pearson, Cashier, in his reply of the 23rd of September, 1842, stated that he had“depended upon the prompt payment of that debt" as by its payment the bank would be able to redeem the small balance of their notes still in circulation. Bu he promised to retain the note in the bank, and acknowledge. a deposit of $50, made to the State's credit, and that "any
1 Journal of Council, 5th Legislative Assembly, pp. 195-96.
arrangement you make for the payment, in small or large amounts, of the notes now due, and becoming due, will be satisfactory.'
The Territorial Agent at the closing of his report suggests that as the note will not become due until December 28-31, 1843, there is time for the Legislature to make some arrangement for the payment or renewal of it and save its being protested.
5. Attempt in the Fifth General Assembly to Revoke the Charter of the Miners' Bank.
On the 5th of December, 1842, the Fifth Legislative Assembly of the Territory of Iowa convened, and on the third day of the session, Mr. Rogers of Dubuque gave notice that at some future day he would introduce a bill to repeal the charter of the Miners' Bank and provide for winding up the affairs of the same. This bill was not introdued 2 by him until the second of January, 1843. It was considered in the Committee of the Whole on the same day and referred back to the House without amendment. An attempt 3 to refer it to the committee on Judiciary failed and it was finally referred to a Select Committee of one from each electoral district. To this committee of ten members was given the power to send for such persons and papers as may be had at Iowa City relative to the subject.
(a) Majority Report of Select Committee of House.
After two unsuccessful attempts by Mr. Rogers to secure an earlier report, one was finally made on January 23, 1843. The committee reported4 the bill back without amendment and recommended its passage. The committee also reported that they had examined Joseph T. Fales, Timothy Davis, and William Mobley in regard to the affairs and the methods of conducting the bank.
1 Journal of House, p. 12. 2 Ibid, p. 69. 3 Ibid, p. 71. 4 Ibid, p. 150, et seq.
The most important statement of Mr. Fales was that he believes, the stock of the bank was never paid in any other way than by the stockholders giving their notes to the institution." He also testified in regard to the suspension of specie payment by the bank, that he had presented notes to the bank for redemption and had been refused specie. That the officers of the bank threatened to shoot a constable if he should persist in his attempts to serve a writ of attachment on the property of the bank or open the doors of the bank building; that he had been paid forty cents on the dollar for the notes of the bank by one of the directors of it, and that the notes were worth from 37 to 40 cents on the dollar when he left Dubuque to come to the session of the Legislative Assembly; that he believed that nearly every one in Dubuque and the surrounding country, excepting those interested, wanted the bank's affairs closed up.
Mr. Davis, one of the directors, testified that a fifty dollar certificate of stock was handed to him to qualify him to act as director, and that he "intended to return the certificate when he ceased acting as director.” He claimed that other directors were qualified in the same manner as he was. He also testified as to the transactions between the bank and the St. Louis Gas Light Company; and as to the amount of bills yet outstanding which were about eight thousand dollars.
Mr. Mobley of Springfield testified that the principal owners of the bank were Dr. Barrett and Thomas Mather; and that he had been hired by them before purchasing stock to investigate the condition of the bank. He gave an account of Mr. St. John's transactions with the bank whereby it lost the price of forty thousand dollars of the stock, and the fiftyseven thousand dollars which he had borrowed from it on his notes; he had become bankrupt and his debt to the bank was consequently a total loss.
The report discussed the suggestion that had been made
that if the charter of the bank was forfeited by the Legislature, the real estate would revert to the former owners. The case cited' was tried upon the validity of a judgment rather than upon the question of reversion. ment was advanced that by its provisions the bank was permitted to purchase and hold real estate and that upon the forfeiture of the charter, this land would be assigned to the trustees for the benefit of the creditors of the bank. There was cited in support of this view the fact that the State Bank of Illinois held real estate to the value of one million dollars; and that the late U. S. Bank had real estate to the value of over six hundred thousand dollars, and if the doctrine of reversion were true, all of this would be turned over to the individual owners who had sold lands to the bank.
The committee drew the conclusion that it will be seen that in three essential particulars, the charter of the Miners' Bank has long been violated and consequently forfeited.”
First, the bank violated Sec. 20 of its charter in regard to paying for the stock subscribed; the testimony showed that “the stock subscribed was never paid in any other manner than by the stockholders giving their notes to the institution.” This was clearly a violation of the charter and therefore a cause for its forfeiture, because it had proceeded illegally and contrary to its organic law. The community, at the time of its organization, naturally examined the stipulations of its charter as to the security of the notes before receiving them; and supposing that the bank would comply with its requirements, the community were induced to accept its notes. The amount actually paid in, the committee report that they have not been able to determine, "but are inclined to believe that the amount was small, compared with the amount stipulated for in the act granting the charter.” They argued that if only a part of the capital stock was paid in “notes rather than in money, it would be fraudulent and justify the annulling of the charter.” This being the case, they said,
i State Bank of Indiana vs. the State, 1 Blackford, 267.