Sunday, March 22, 2009

Michael Bright Corners Madison's bank stock

The question is not whether Michael G. Bright, brother of powerful Senator Jesse G. Bright conspired to capture a lion’s share of stock at the branches of the Indiana State Bank. The question is whether financier James F.D. Lanier was in on the deal.

Bright did everything he could to control the sale of stock at Madison, and probably at Lawrenceburg as subscriptions to stock for the newly chartered bank, was supposed to be open to the public at the branches throughout the state. But while branches such as New Albany had shares sold to 40 or more persons, there were only a handful who bought stock at Madison and Lawrenceburg, and some others, where different businessmen grabbed the shares.

Technically, the Madison office was open from 9 a.m. through noon, as required by law. By in reality, the books closed after perhaps 15 minutes..

Bright acquired 1,200 of the 2,000 shares sold at Madison and 1,200 of 2,000 sold at Lawrenceburg. At Madison, the only successful purchasers were Jesse Bright’s son Richard J., Bright, Joseph Chapman, along John Marsh and J.B. Merriweather, the two subcommissioners were in charge of opening and closing the sales with 200 shares each. Chapman had been Michael’s law partner and Merriweather was later Chapman’s law partner.

If in our modern view this procedure smelled rotten, there were many people who thought so then, which resulted in state senate’s appointing an investigating committee, which took testimony in January and February 1857, to see if there was corruption in the process legislature’s approval of the bill granting the bank charter.

During his testimony, Bright was unapologetic for his actions. “I took myself—sixty thousand dollars. I meant to take stock enough to control the branch at Madison, if I could get it; and I know that other gentlemen intended to have the control of other branches; if they could obtain it.”

The committee tried to determine if any legislators had been illegally influenced in their passage of the bill that established the process. David Branham, who represented the area in the general assembly, testified that when he and John R. Cravens (one of Lanier’s sons-in-law), who had voted for the bank bill as a member of the state senate, met with the commissioners who were running the sale, they were informed that the subcommissioners at Madison “must be acceptable to M. G. Bright.” Finally, it was agreed to choose three subcommissioners and then let Bright pick from those. But Bright chose none of those recommended. Branham said Bright offered him the chance to buy stock at the opening, but he did not accept the offer.

Perhaps the most stinging testimony given by Branham came in the following exchange. “Question. Were, or were not the persons appointed sub-commissioners for the Madison branch, men of good character and standing at the time they were appointed. Answer. I decline answering.”

Bright was coy in denying there was undue influence on legislators prior to the passage of the bill as shown in the following testimony.

“Question. What do you know, if anything, about the friends of the bank being engaged in treating the members with oyster suppers, liquors, or otherwise, as a means of enlisting them in favor of the proposed bank charter?

Answer. I saw gentlemen, who, I know, were friendly disposed to the establishment of a bank, frequently eating oysters, and drinking liquors with members of the legislature; nor did I notice anything unusual in their doing so; nor did I regard it as a means of bribing them to vote for the bank.”

But he then said he knew nothing about any influence peddling.

Williamson Dunn, another one of Lanier’s sons-in-law, said he showed up at the office in Madison between 15 and 30 minutes after nine and it was empty. About 11 a.m., he encountered Marsh and Merriweather in the streets, who informed him the stock had all been sold. Dunn said he did not want any, but had friends who did.

The committee clearly was trying to determine the nature of the agreement between Michael Bright and Lanier, who immediately acquired Bright’s Madison shares for $14,000, which was generally described as a premium. Bright also apparently agreed to indemnify Lanier if the bank charter were thrown out and the sale nullified. The committee was clearly curious about the background of the quick sale.

Cravens, who visited the Madison office that day, said he probably would have purchased some stock, but when he demanded to see the books, he was informed they were sealed and on the way to Indianapolis.

“There was dissatisfaction at Madison, at the manner in which the books were opened and closed; though I cannot say that it was general,” he told the committee.

No one was able to point a finger directly Lanier and his company, Winslow & Lanier. But there was testimony the firm ended up with most of the stock of the Vincennes branch. And this was the only Wall Street firm mentioned in testimony.