The failure of the Venango National Bank of Franklin, Pa., was investigated by the same committee. This bank was a designated public depositary. At the time of its failure the public moneys on deposit amounted to about $291,467, while the securitics held by the Treasury Department to protect such deposits amounted to only $50,000.

This bank seemed to have been operated in the interest of Culver, Penn & Company of New York, in the same manner that the Merchants National Bank was managed for the benefit of Bayne & Company of Baltimore. Their transactions with each other were very similar and the results were the same. Bayne & Company failed owing the Merchants National Bank several hundred thousand dollars. The bank failed in consequence. Culver, Penn & Company failed owing the Venango National Bank over $600,000. The failure of the bank followed. Both banks wholly disregarded the law in respect to the limit of loans. Bayne & Company hypothecated or sold securities of the Merchants National Bank. Culver, Penn & Company did likewise with Government bonds belonging to the Venango National Bank, deposited with the firm for safe keeping.

One hundred per cent. assessment was levied upon the stockholders of this bank by the Comptroller to make up the deficiency in its assets to meet its liabilities, but only $1245 was collected from this source out of a total stock liability of $300,000. The total claims proved amounted to $434,531, but the total collection from all sources amounted to only $122,240. The dividends paid on the proved claims aggregated only 23.37 per cent. The receivership was finally closed February 2, 1885.

In the course of the investigation of these two bank failures it was developed that many of the State banks that had converted into national associations did not make proper effort to withdraw their old circulation, but in many instances continued to pay it out and keep the old State bank notes in circulation, thereby receiving the benefit of both their State and National bank circulation. In some instances such banks reported to the Comptroller that the old circulation had been withdrawn when it was actually being paid out. Banks in Massachusetts, Rhode I land, New York and New Jersey were reported as engaged in this practice. Some banks were reported as not engaged in a legitimate banking business but were organized as national asso-ciations simply for the benefit of the circulation privilege. Such banks were mostly owned by brokers and private bankers and were operated in conjunction with their office business.

One bank of this character in Michigan was a designated depositary of the United States, but when it was examined the only account on its books was a credit of $17,083 to the Treasurer of the United States, for which the Government held $50,000 of United States bonds as security.

The committee expressed the opinion that the national banking laws, as they existed at that time, did not confer the power to correct and prevent many of the objectionable practices and abuses that the banks were found to be engaged in, and a bill was therefore reported to give to the Comptroller of the Currency the necessary authority to restrain banks which he knew to be improperly managed.

The facts revealed by the investigation of the causes which led to the failure of these two banks and subsequently of other national institutions demonstrates that speculation, dishonesty and injudicious management in banking has not been confined to any particular period in the life of the national system, but that banking in the early years developed traits of character in individuals and banking methods as unwholesome and pernicious as any that have been discovered in later years.