FIFTY-FIFTH CONGRESS, 1897-1899. 1783 
by private stockholders, who subscribed their stock and attempted to 
secure its payments by real-estate mortgages. To this private institu- 
tion the State in its infancy lent its credit by issuing about $2,000,000 
of 6 per cent thirty-year bonds, to be sold by the bank at par value. 
These bonds were negotiated and the capital to start the bank was 
in that way raised. Under the provisions of the first act of the gen- 
eral assembly the Real Estate Bank was established at Little Rock, 
with branches at Washington, Arkansas Post, Batesville, and Helena, 
and the entire stock first authorized was taken in the eastern portion 
of the State. Running a line from Batesville to Washington showed 
all of the stockholders to be east of that line. This caused great dis- 
satisfaction in the western portion of the State, and, in consequence of 
this, at the next session of the general assembly there was another act 
passed authorizing the further issue of $500,000 of bonds to establish 
a branch of the Real Estate Bank at Van Buren, and required that the 
‘stockholders or subscribers should be confined to certain western 
counties. 
This stock was subscribed, and the stock mortgages put upon record 
to secure it, but the bonds, which are now known as the Holford 
bonds, could not be sold at par and were illegally hypothecated by the 
bank to the North American Trust and Banking Company for only 
$125,000. As this was not sufficient to establish the branch bank, the 
funds were placed in the parent bank at Little Rock and the branch 
bank was never put in operation. The consequence was, when the 
State attempted to foreclose on the Holford bond mortgages she was 
defeated on the ground of failure of consideration. 
The bank suspended specie payment on the 2d day of November, 
1839, and on the 2d day of April, 1842, became hopelessly insolvent 
and made an assignment of its real estate, credits and effects, bonds, 
bills, notes, and money. The State proceeded against the bank by 
quo warranto to seize the franchise, and the supreme court in passing 
upon the question said, ‘‘She has abused her trust and perverted its 
object, and this works a forfeiture of her charter.” There was a 
great deal of expensive litigation and much delay in winding up the 
affairs of the bank, and the net assets realized were only sufficient to 
pay avery small part of the bonds loaned by the State to it, and so 
the legal liability still rests upon the people after the lapse of nearly 
sixty years. 
They do not and will not dispute the legal and moral obligation to 
pay so many of these bonds as are now owned by the United States, 
for they were all negotiated strictly in accordance with the law of the 
State which authorized their issue and sale, and as a matter of fact 
the bank received a dollar in cash for every dollar of the bonds deliy- 
ered to the United States as trustee for the Smithsonian and Chickasaw 
funds. But the unredeemed bonds issued on behalf of both banks, 
