of the Freedman’s Bank at the First National Bank in Washington, D.C., which was Jay Cooke’s office. This amount at its highest was $500,000, on which the Cooke brothers paid a 5 percent interest, even while the Freedman’s Bank was promising 6 percent to its own depositors. In violation of its charter, the Freedman's Bank invested in the bonds of the Union Pacific and Central Railroads, made as early as 1869. A series of increasingly speculative investments caused the bank to accumulate bad debt, while the decision to build a new building in Washington, D.C., added to its outlays. On May 2, 1870, the bank was authorized by Congress to make loans backed by real estate, up to half the deposit funds. These loans were to be secured by mortgages that were double the value of the loan. Another apparently corrupt investment was in loans totalling $50,000 to the Seneca Sandstone Company, owner of the Seneca Quarry, secured by "the company's worthless bonds". The loan was approved by Henry D. Cooke, who was sat on the board of the quarry company. Bank officials approved personal loans to themselves and associates of the bank. For instance, loans totaling $224,000 were made to Robert I. Fleming, the contractor for the bank's building in Washington, D.C. Even as the failure of the bank was imminent and depositor withdrawals were refused, a secret loan of $33,366 was made to Juan Boyle by the actuary George L. Stickney on June 30, 1874. Failure When the Panic of 1873 struck, several railroad projects failed, which undermined the finances of the Freedman's Savings Bank. This led to a series of runs in different branches. Following the panic, in an attempt to restore confidence in the bank among the African-American community, there was a significant change in the leadership of the bank. Trustees of the bank deposed the founder and president John W. Alvord in March 1874, and elected in favor of Frederick Douglass as president. Of this change in leadership, Walter Lynwood Fleming remarked: "Some, looking for a scapegoat, were anxious that colored officials be in charge when the bank failed as they were sure it would; others thought that a Negro administration would restore the confidence of the depositors and enable the institution to survive until better times." The bank closed on July 2, 1874, despite the reform attempt. Some scholars claim that the failure of