USA > Arkansas > The aftermath of the civil war, in Arkansas > Part 18
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From the message of Governor Roane, November, 1850:4
"Since the date of her assignment the Real Estate Bank has been a sealed book to all those uninitiated in the banking operations of the present day, whether pri-
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vate individuals or public officers, save so far as the native politeness and gentlemanly bearing of her worthy secretary may prompt him to gratify the curious and enlighten the public. History, prior to this date, un- fortunately however for the State, reminds us of a few facts in connection with this mystic monument of modern banking.
"In 1836 and 1837 the State of Arkansas issued 1, 530 bonds of $1,000 each, which were sold by the Real Estate Bank at their par value; subsequently 500 other bonds for a like amount were issued to this bank and by her hypothecated for the sum of $122,389.77, realizing in all from the sale of these bonds $1,652,389.77, which was to constitute her capital.for the purpose of bank- ing. We also know that after discounting heavily for a time she suspended payment, closed her doors, and made an assignment of all her assets, appointed trustees to take charge of them, with a clerk to keep the accounts and an attorney to advise and control them, and then provide for their payment.
"Here the authentic history of this institution ceases. What accounts may have reached us of her transactions wear more the gaudy apparel of romance than the plain habiliments of reality. And although the State has such a deep interest in the correct management and final settle- ment of this institution, she sets her authority at defiance, and claims the right to close her doors in the face of her officers, acknowledging that when she shall be con- demned to lay down the heavy debt which she has con- tracted the State must take it up."
From the message of Governor Conway, November 4, 1856:5
"Notwithstanding all this, if the people of the State do not ultimately obtain full and correct information of the conditions of the Bank by means of the suit now pend- ing, it will not be the fault of the executive. To the
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General Assembly the executive appeals for the neces- sary discretionary powers and means to enable him to have this suit faithfully and vigorously prosecuted, so that the laws on the subject may be effectively executed. Then the true condition of the bank will be known, the interests of the State and stockholders well looked to, and the mysteries which have so long hung around the institution will be unveiled, and it is to be hoped that the day will never again come when the executive of the State, in his message to the General Assembly, will be compelled to compare an institution like this, involving the interests, credit, and honor of the State in millions of dollars, to a 'sealed book,' so far as its transactions are known to the authorities of the State or the people."
At the session of the Legislature of 1852-53 an act was passed providing for the appointment of a joint committee to inquire into the affairs of the Real Estate Bank. From the report of this committee, made in 1856, I give the following extracts :
"At the session of 1852-53 the legislature resumed its efforts to arrive at a knowledge of the condition of the bank, and appointed a committee to inquire into its affairs." 6
"An act was passed January the 15th, 1855, 'to estab- lish a separate court of chancery at the seat of Govern- ment, so that the causes of the State, including that against the trustees and officers of the Real Estate Bank, and those of individuals, may be determined as early as practicable.' " 7
"In the session of 1844-45 an amendment to the Con- stitution was proposed, in which it is declared that 'No bank or banking institution shall be hereafter incorpo- rated or established in this State,' which amendment was unanimously adopted by both houses at the session of 1846-47." 8
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Under the authority of the Legislature of 1856 full powers were granted the Governor to investigate thor- oughly the conditions of this bank, among which powers was the authority to appoint two expert accountants to aid him in his investigation, which resulted in the appoint- ment of Messrs. William M. Gouge and William R. Miller. Mr. Gouge had a long record of service in the sub-treasury department at Washington, D. C. Mr. Miller was afterward Governor of the State.
Their able report upon the condition of the bank, rendered to Governor Conway on October 20, 1856, is full of important information, among which is the fact that none of the bonds of this bank were held by citi- zens of Arkansas, as shown by the following extract:9
"Of the amount due for bonds, upwards of $500,000 was due to the United States Treasury Department for an investment made by it of the funds of the Smithsonian Institute. The residue was due to various parties in the Atlantic States and Europe."
Therefore, no one in Arkansas raised his voice against the failure of this bank and the State to preserve the credit of Arkansas. The United States was responsible for the payment of the interest on the trust fund invest- ments, and the other bonds were owned by persons in whose interest no one seemed to be concerned.
The second act of the Legislature of 1836 was to incorporate the State Bank of Arkansas, to which a loan of $1,000,000 of State bonds was made. This bank commenced business in August, 1837, with a paid up capital of $396,000, which was increased by November 6 to $413, 105.29. It began specie payment in January, 1839, and suspended in November of the same year. On the 22d of December, 1840, an act was passed 10 which provided that the State Bank and its branches should re-
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sume and continue specie payments simultaneously with the banks of Louisiana, Tennessee, and Alabama, and that it should not again suspend under any circumstances. This act did not prove effective, however, and on January 31, 1843,11 an act was passed to place the State Bank in liquidation.
About this time the State Bank defaulted in the pay- ment of interest on the State bonds loaned to it, and the State was left to "hold the bag," with nothing in it to meet its interest obligations.
From the report of the Joint Legislative Committee on Banks, dated December 23, 1846, I quote as follows:
"The State mainly lived on the means of the bank [The State Bank] from its commencement, and as long as it had a dollar." 12
I shall now proceed to narrate what occurred in rela- tion to both banks during the term of my administration as Governor of Arkansas. In my message to the General Assembly, November 24, 1868, after referring the Assembly to the report of Hon. J. R. Berry, Auditor of State, in which he named the amount of the public debt on account of the Real Estate and State Banks of r- kansas, I made the following recommendations :13
"I regret that the disturbed condition of the State and the pressure of official business have prevented me from giving the matter sufficient investigation to enable me to lay before you any terms of adjustment.
"I would respectfully recommend that you take steps toward the funding of the indebtedness by the appoint- ment of a suitable person as commissioner to negotiate with the holders of the bonds; and, upon his action being approved by the proper authority, that the State Auditor and State Treasurer be authorized to issue new bonds and cancel the old ones."
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After much discussion in the House, growing out of the provision that required the funding of the full amount of the Real Estate and State Bank bonds, includ- ing the Holford bonds, both Houses passed the bill, which was approved April 6, 1869.14
I selected the American Exchange National Bank of New York City as the fiscal agent of the State, to con- duct the exchange of new bonds for a corresponding amount of the old indebtedness. In order that there should be no chance for the perfected bonds to be inter- cepted in transit from Little Rock to New York City (means of communication by express at that time being very imperfect) I had them duly executed with the ex- ception of my signature as Governor, which I supplied in New York City, where I turned them over to the fiscal agent and took his receipt therefor.
Immediately thereafter I issued the following notice : "EXECUTIVE DEPARTMENT, STATE OF ARKANSAS, "LITTLE ROCK, August 12, 1869.
"TO WHOM IT MAY CONCERN: NOTICE is hereby given that I am prepared to carry into execution the provisions of an act of the Legislature of the State of Arkansas, entitled 'An Act to Provide for the Funding of the Public Debt of the State.' All persons holding the old bonds of the State can have the same, with accrued interest thereon, exchanged for new bonds by present- ing them to the American Exchange National Bank, in the city of New York.
"(Signed) POWELL CLAYTON, "Governor."
Soon after the passage of the Act it was whispered around that money had been corruptly used in the Legis- lature for that purpose, and my attention was specifically called to the peculiar features of the Holford Bond
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transaction. Having resolved not only to investigate the charge of corruption, but also to examine more fully into the history of the Holford Bonds, I gave the fiscal agent instructions to proceed with the exchange of all bonds except, for the time being, those known as the Holford Bonds, and to hold the latter in abeyance until further instructed. This action upon my part was se- verely criticised in the following communication, pub- lished by the Gazette, September 5, 1869, signed "Re- publican":
"Governor Clayton knows very well that he will, sooner or later, fund these bonds, because the law allows him no discretion in the premises, and a bill which gave him that discretion was voted down last winter. But he also knows that the present is a critical period in the negotiations for money to build the roads, and that by this act of his he can impair the credit of the State and suspend the progress of improvement. He knows that this will involve pecuniary loss to many, and this is to him an argument that pecuniary means will be adopted to avert the evil; and these pecuniary means, he trusts, will fatten himself and feed his little nest of obscene birds . ..
"In this matter he is acting in wretched bad faith, and his motives add all the moral turpitude of personal dishonesty to official malfeasance. He is thus making a most pitiable exhibition of the depravity of human nature, and demonstrating to the world how low a man can sink himself in the debasing pursuit of sordid gains."
This Gazette article was followed by others still more scurrilous. It turned out that they were all insti- gated by Mr. Peak, the former editor of the Republican, who was to receive for his services a certain compensation from the Ft. Smith Railroad Company, for the payment of which he afterward brought suit and thus the whole
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transaction came to light. In this connection I quote from the Gazette of October 24, 1872, as follows :
"SUB ROSA. . . . In like manner all our well in- tended efforts to keep Mr. Peak quiet in his little bed have failed, and he still wants to engage in 'mutual inquiry and discussion.' The Journal of Monday con- tains another card over his signature. He appears oblivious of the ridiculous (to say the least) attitude he presents to the public. Strange to say, he takes a rose- colored view of his situation. Having previously de- clared that, 'It is not true that, as the old editor of the Republican, or in any other manner, I favored the Hol- ford Bond Swindle, but, on the contrary, as is well known to every man who took an active interest in that measure, I was its earliest and most earnest and persistent oppo- nent,' he now admits that he brought suit for $5,000 and recovered $500 damages against the Little Rock and Ft. Smith Railroad Company for service rendered in writing, at their instance and request, articles to influ- ence Governor Clayton to execute the provisions of an act of the Legislature! The act referred to was the act attempting to legalize the Holford Bond swindle ! That is to say, having once, from principle alone, opposed the measure almost to its defeat before the legislature. he afterwards, for pay, agreed to write and surrepti- tiously procure the publication of articles in the Gazette, intended to influence Governor Clayton to execute these illegal provisions after they were put into the semblance of law !"
To have legally changed the provisions of the Act would have required a re-assembling of the Legislature, and this perhaps would have imperiled the whole meas- ure. In obedience to the only power conferred upon me. I directed the fiscal agent to exchange the Holford Bonds just as he did the others.
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During my short absence in New York on this fund- ing business a conspiracy was hatched between the Demo- cratic leaders at Little Rock and some of Lieutenant- Governor Johnson's supporters, which might have plunged the State into serious disturbances had not my prompt return to the Capital prevented. It was planned to have the Lieutenant-Governor take possession of the executive office under the pretext of the following pro- vision of the State Constitution :15
"In case of the impeachment of the Governor, his removal from office, death, resignation, inability or re- moval from the State, the powers and duties of the Governor shall devolve upon the Lieutenant-Governor during the residue of the term, or until the disabilities of the Governor are removed."
The reader will readily discern that the Governor's removal from the State and his temporary absence on State business were two very distinctly different things. But the Democratic leaders were ready to stir up trouble under any pretext, provided they could get Johnson to take the initiative, which subsequent events show he was quite willing to do.
To show the extreme purposes of this movement, I reproduce a communication signed "X"-a pseudonym for Thomas C. Peak, heretofore referred to 16-pub- lished by the Gazette, August 1, 1869 :
"It is conceded by his friends and members of the coordinate departments of the State Government that 'Governor' Clayton has gone out of the State, without giving notice to the Lieutenant-Governor, his constitu- tional successor in such event by virtue of the provisions of section ten of article six, of the Constitution, which declares :
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" 'In case of the impeachment of the Governor, his removal from office, death, resignation, inability or re- moval from the State, the powers and duties of the Gov- ernor shall devolve upon the Lieutenant-Governor dur- ing the residue of the term, or until the disabilities of the Governor are removed.'
"Arguing that the contingency contemplated has hap- pened in the temporary removal of the Governor to New York to engage for a while in the business of a Wall Street broker, the conservative Republicans of the State have urged upon the Lieutenant-Governor, who is said to be on his way here from his home in Madison County, to assume at once the duties and authority of Governor of the State, and proceed to the arrest of the absconding Governor and such of his deputies and subordinates as have been aiding and abetting him in various violations of the Constitution, and fraudulent and treasonable practices, and hold them in arrest to answer articles of impeachment to be preferred against them by the Legislature, which, it is asserted, Governor Johnson will assemble at the capital without delay. Clayton's guilt and that of his co-conspirators can be established beyond a doubt by such an array of evidence, it is claimed by the conservative Republicans who have advised the course, that the Senate, although there is a majority of Clayton's creatures in that body of two, will be bound to convict him and deprive him of his office for the resi- due of his term.
"This is a bold program; but it is said that Governor Johnson has the mind and heart to carry it out without hesitation; and that the backing of an undoubted influ- ence, formidable and irresistible, of the white and col- ored members of the Republican party of this State is ready to be afforded him. This is most important if true. And that it is true many circumstances go to tes- tify. It would not only give to the Lieutenant-Governor a national reputation for pluck and enterprise, but would make him irresistible forever before the people of Ar-
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kansas; in whose estimation the oppressions and villainies of Clayton have reached an excess intolerable under any other circumstances than those which surround them at this time. This is rumor, suggested perhaps by the sup- posed feasibility of the plan.
"(Signed) X."
I was notified of this movement and, having com- pleted my business in New York, I returned to Little Rock and immediately resumed my official duties. Lieu- tenant-Governor Johnson's home was at Huntsville, the county seat of Madison County, situated in the extreme northwestern part of the State, and could not be reached by any public conveyance; hence, it required consider- able time for the two messengers to reach him, and for him to reach the Capital. To prepare the people for the commotion that would follow the success of their scheme, the two messengers sent to confer with John- son circulated alarming and lying reports along their route, as is shown by the following extract from the Republican of August 13, 1869:
"EXTRAORDINARY REVELATIONS. We re- ceived a call yesterday morning from our friend, Capt. Chas. E. Berry, sheriff of Franklin County, who arrived in the city Wednesday evening direct from his home, for the purpose of settling the taxes of his county with the Treasurer and Auditor.
"We learn from him that a great commotion was created in Ozark before he left. It seems that parties from Little Rock on their way to Huntsville reported that Governor Clayton had left the State, taking with him all the funds of the State, as well as the seal of the State, and that several county sheriffs who had not paid over were to follow the Governor and turn over to him all funds in their hands, and that Lieutenant-Governor
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Johnson was coming to Little Rock to put a stop to the robbery. The two individuals making for Madison County told the story with so much earnestness that some of the people were foolish enough to believe them. Cap- tain Berry's bondsmen were extremely anxious about the matter, although the Captain was permitted to come to the city and make his settlement. No doubt the story was accepted as true after seeing the Lieutenant-Gov- ernor, with one of the party, take passage on the Ameri- can for Little Rock.
"The story was a base slander and an outrage upon the people. Lieutenant-Governor James M. Johnson and J. E. Richardson, the friend who went after him, arrived in Little Rock Wednesday evening. (The other friend returned to this city on Saturday last. )"
The J. E. Richardson referred to was a correspondent of a Northern newspaper, and not a citizen of the State. The name of the other emissary I cannot recall.
A few days after my return Johnson appeared on the scene, only to find that all his ambitious dreams had vanished into thin air. There seemed nothing left for him to do but to tuck his caudal appendage between his legs and sneak back to his mountain home. To relieve the humiliation of his defeat, he had a small crowd assemble on the night of August 13, 1869, in front of the Anthony House, under the pretext of a serenade. To this gathering he delivered in a slightly modified form to suit the occasion the speech that he would have given in its entirety had his appearance upon the scene been oppor- tune. In this speech, by his misrepresentation of facts, he showed that he was either not well informed or was ready to circulate new lies invented for the occasion and repeat old ones that had already been exploded. The following is the Gazette report of the speech in question, under date of August 14, 1869 :
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"This compliment was truly agreeable to him. He was satisfied that the people of Little Rock, with the peo- ple of the entire State, were anxious to hear from one of the officials of the State as much of the history or trans- actions of the Government as he was in possession of. The curiosity of the people residing outside of this city is centered in Little Rock,-to know what kind of a government we are living under.
"A party came into power in this State more than one year ago, belonging to the National Republican party; but soon after this a portion of these officers inaugurated a system known as radicalism. Another wing proposed to adhere to the national platform. But as soon as the election of last year was over those who held the highest positions in the State government undertook to dictate to the people. A few of us stood up manfully and battled for Republican principles. But the others assumed the right to dictate the policy of the party, and inaugurated a reign of terror for the purpose of coercing every honest officer in the State into a support of their infamous measures. He took it for granted that this compliment was paid to one who dared oppose their swindling operations. He was outspoken on every occa- sion when schemes concocted for robbing the people were proposed; he was in favor of an honest and economical administration of the affairs of the government.
"After the reconstruction laws of Congress had been accepted by the people as a fixed fact, this mighty man, Powell Clayton, declared war on the people. He opposed it. Many honest Republicans had been led astray, think- ing they ought to support the State government. He too was in favor of upholding the State government, but when the officers had violated their obligations he thought it time they should be checked.
"He had been traduced by the press of the State for the past eight months and had made no reply. They had it all their own way. It is said that Johnson has sold out to the Democracy. No Democrat ever heard him
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making overtures,-but always found him for an honest administration of the government.
"You hear much talk about railroads, free schools, etc. What has been done? Bogus railroad companies have been organized, and mere adventurers,-men of straw,-given control. The people voted almost unani- mously for State Aid to railroads. How was this aid dispensed? What investigations have been made as to whether the companies are competent and reliable to carry out their part of the agreement? The only question asked by those who dispensed this aid was, Will it put money in our pockets? 10 per cent. is wanted. If they can get that out of the $13,000,000 loan to the various companies, the executive and his three commissioners will be rich.
"A Voice: Fill up their carpet bags.
"The Speaker: A carpet bag would not hold it,-it will take a goods box.
"The Executive, Secretary of State, and others, it is said even with the seal of the State, go to New York and hawk the bonds of Arkansas through her streets. If the seal is in the office of the Secretary of State, any citizen has a right to ask for its exhibition. The people pay taxes and have a right to know what their servants are doing.
"Thirty-odd years ago some bonds were taken to New York, under the instruction of the Legislature, who appointed the commissioners. But under radical rule the Governor appoints his own commissioners, and goes him- self to reside in Gotham while the transaction progresses.
"The executive office is in Little Rock,-not New York,-and requires the Governor to execute the duties of the same at this place. But he travels from pillar to post. By the custom that used to prevail, courtesy required that when a Governor went without the bounds of the State he invited the next officer in rank to preside in his absence. But the present Governor left without telling anybody where he was going, except those who
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were necessary to his schemes. Why was this ? Why not notify the Lieutenant-Governor? The people,-by those bonds and the taxes they pay into the treasury,- are interested in this question. It is obvious there was something which it was necessary to cover up. Is that radicalism? This man wields the scepter of an emperor, a despot as he is. You can tell when radical rule is upon you-the tax gatherers begin to make their appearance. But this Governor created a proxy to act in his absence, who was also Secretary of State and private secretary ; and the same little Methodist preacher also holds the fat position of public printer. No wonder he had the frights and was running up and down the streets for two weeks telegraphing to his master. The affairs of State hung upon his limbs a 'world too wide.'
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