~ ' ;, ' " • \C -.REP:o·R.T .. · 
' -
. INVESTIGATING 
. TO THE 
/ ; -. ' 
. ·STOCJ(HOLDERS .· 
OF. THE' 
MEETING, FEB:RUAR°X 5;.· 1858. 
~ ' ;, ' " • \C -.REP:o·R.T .. · 
' -
. INVESTIGATING 
. TO THE 
/ ; -. ' 
. ·STOCJ(HOLDERS .· 
OF. THE' 
MEETING, FEB:RUAR°X 5;.· 1858. 
I \ .;~ 

B 0 ST 0 N.:


-~ -;z 

' 1858. 

J ..H. EASTBURN'S. PRESS, 


REPORT 


OF THE 

INVESTIGATING COMl\HTTEE 

TO THE 

STOCKHOLDERS 

OF THE 

BAY STATE MILLS, 


AT THEIR 

MEETING, FEBRUARY 5, 1858. 

BOSTON: 
185 8. 

J, H. EASTBURN'S PRESS. 


THE LIBltAF..'i 
THE UNIVERSITY 


OF TEXAS 

REPORT. 


To the Stockholders of the Bay· State Mills. 

GENTLE~EN:The 
Committee appointed under the vote passed at your meeting 
held on the 8th day of December last, to Investigate ~he Affairs 
of the Corporation, and to report to an adjourned meeting and 
recommend such course as they may judge best in order to 
~ secure the interests of the Corporation, and also to bring to 
..,T just punishment any persons, if any there be, criminally liable, 
) 

REPORT: 

That Messrs. Geo. W. Lyman and Charles P. Curtis declined 
to act as members of the Committee, and Messrs' W. R~ P. 
Washburn and E. S. Williams, of Newburyport, were chosen 

'by the Committee, in pursuance of •authority given them by 
your vote, to fill the vacancies occasioned by these declinations, 
and they accepted the appointments and have acted with the 
other members. 

It may appear that there has been an unnecessary delay in 
making the investigations into the affairs of the Company and 

. reporting thereon, which impression may not be removed by 
reading the resu~t. In explanation of which, however, it must 
be remembered that some of the Committee, not to say all of 
us, have had other engagements of importance which have 
required much of our time, and that in the examinations, 
appraisals and estimating the value of the property, making 
inquiries, and the investigations of complicated accounts and 
books, in most cases without the explanations of those by whom. 
transactions were made and entries directed, we have been often 
baffled and interrupted; and that we have endeavored to perform 
p these duties a~ thoroughly as could be, within the limits· of any 


4 


reasonable length of time. We have caused the books of the 
Company to be carefully examined, and have also examined the 
books of Lawrence, Stone & Co., and compared them together 
in many instances. By some of our number we have examined 
the notes receivable and the personal property, and compared 
them with the books ; and in general, as far as· possible, have, by 
personal examination, ascertained the actual existence, custody 
and value thereof. The mills, real estate and machinery at 
Lawrence, have been thoroughly and minutely examined, and 
an exact schedule of all the machinery been made, with the cost 
thereof as charged on the books of the Company, by one of our 
number, and a careful valuation thereof taken, item by item, 
with the assistance of competent experts. From these data a 
statement is made, showing the condition of the Company, the 
amount of its debts and liabilities, and the assets and resources 
to pay the same. 

This Company was incorporated in February, 1846. Operations 
were soon commenced; land, and water power at Lawrence 
were purchased, mills erected, and the manufacturing of goods 
begun in 1848. Subsequently, and most unfortunately, another 
inill, (No. 3,) was added, which was completed in May, 1851. 
This great enterprise was gotten up and prosecuted piainly 
through the exertions of Mr. Samuel Lawrence, who has been 
the Treasurer and principal manager from the beginning, with 
two short intervals, when a temporary Treasurer was appointed, 
and of Messrs. Lawrence, Stone & Co., who have been the 
selling agents during the whole period of its manufacturing to 
the time of their failure, on the first day of October last. The 
parties who composed this firm when first they acted_ in that ' 
capacity, were Samuel Lawrence, William W. Stone, Jarvis 
Slade and H. T. Jenkins ; the first named having . commenced 
business as a member of the firm of W. & S. Lawrence, in 18Zfl. 
In 18fl6, when Mr~ Stone entered it, the name was changed_ to 

W. & S. Lawrence & Stone, under which it continued till 1841, 
when Mr. William Lawrence, the late respected head of it, 
retired, and the present name was assumed. Mr. Slade joined 
it in 1845; Mr. Jenkins, January 1, 1848; and Mr. 0. H. Perry, 
January 1, 1856. 

5 

Mr. S. Lawrence received a salary of $5,000 per annum, as 
Treasurer, and the firm a commission of Zk per cent. on all 
sales, they not guaranteeing them, and a very liberal allowance 
for clerk hire~ labor and other expenses. The sales of goods for 
the Bay State Company amounted in 1856 to $1~945,493.65, 
giving them a clear commission in that year of $48,637.34, 
besides a charge for expenses of selling $33,550.82, which 
included rent, clerk hire, labor, transportation, &c. The entire 
amount of their commissions from 1848 to 1857, inclusive, from 
this Company alone, was $335,071.84, averaging $33,507.18 
per annum, besides the expenses of selling, during ten years, but 
being much larger for the latter part of the term. Besides this, 
however, they were doing a large commission business for the 
Middlesex, Pemberton and New England Worsted_ Companies, 
from which, in the aggregate, they ·received during the year 
1856, including commissions from the Bay State Company, 
$94,799.81, although they sold for the Worsted Company, but 

the last three months of the year. Mr. Lawrence's salaries 
were credited by him to the firm. 
The firm as such, had no capital. The partners had their 

own private property, but nothing was ever put into the concern, 
excepting balances of accounts of profits which might be 
due to them respectively. By the agreement among themselves 
each partner had a right to draw out his share of the earnings at 
his pleasure ; a right which seems to have been freely exercised 
by some of them, since at the time of their failure, Mr. Lawrence 
had overdrawn $1,094.15, Mr. Slade $3,443.74, and Mr. 
Jenkins $5,769.36; while Mr. Stone was a creditor $13,613.42, 
and Mr. Perry $15,019.93. They for a considerable period 
held stock in the Middlesex and Bay State Com_panies, amounting 
to about. $300,000, which, to use a technical expression,: 
was " carried" by raising money on a pledge of it, and by a 
floating indebtedness. This condition of their affairs, the Committee 
consider to have been most reprehensible, and it may 
perhaps have been the primary cause of all their.troubles. The 
firm and some of the individual members appear to have dealt 
in the stock to a large amount from the beginning, and to have 
been almost constantly transferring and receiving transfers of 


6 


s~ares, and changing and pledging the same. Sometimes it 
would seem to have been done by way of speculation, oftener 
perhaps to keep up the price, so as to pr~vent inquiry and alarm 
as to the condition of its affairs, and in one instance at least 
they appear to have purchased a Jarge amount of stock at a great 
advance on the market price, from a holder for himself and 
others, who was known not to be satisfied with their management, 
and who 'did not withhold an expression of his opinions, a 
gentleman of influence, and who is known to look carefully after 
his own and the interests of others which are confided to his 

care. 

It has been found difficult to separate entirely and distinctly 
the acts and d.oings of the Treasurer from those of the firm. 
They are much intermingled and confused, and there seems to 
have been not much distinction kept up of Mr. Lawrence's acts 
as Treasurer and as a member of the firm ; and Mr. Slade 
seems in many cases to have acted and managed as though he 
had been, so to say, a joint or assistant treasurer. 

At the time when they undertook the agency of the Bay 
State Company, they were and had long been the selling agents of 
the Middlesex Company, and they subse.quently, in September, 
1853, became selling agents of the Pemberton Mills, and in 
September, 1856, of the New England Worsted Company. 
These agencies were all of large magnitude, and the companies 
all owed large debts, and this :firm were by the terms of their 
employment bound to come under heavy acceptances and were 
in fact in the habit of raising or of assisting in raising large 
sums of money to carry on their bu3iness, besides and in addition 
to providing for their own indebtedness, which seems to 
have been constantly increasing, notwithstanding the almost 
enormous amount of their commissions. 

Until May, 1856, the financial accounts of the Company were 

kept in the books of Lawrence, Stone & Co., when a separate 

set of books in its own name was opened in Boston. Pre


viously its funds were almost entirely mixed up with theirs, and 

even after the change the distinction was imperfectly observed 

by them. They were accustomed to use the funds of the Bay 

State and Middlesex Companies, of which last Mr. Lawrence 


7 


was also Treasurer, in common with their own, not without 
some show of distinction, it is true, for they from time to ti~e 
made settlements of the different balances; but in fact habitually 
used the money of either to pay the claims against the 
other, as occasion required. This state of things was carefully 
concealed from the Directors, as was the fact of their indebtedness 
to the Company, which had existed for a considerable 
period of time, probably for several years, but we have not been 
able to trace when it commenced, nor its varying amounts from 
time to time. We know that there was represented to the Directors 
to be large sums of cash on hand, when there were only memorand~ 
checks of the firm of large amounts. For instance, in 
the case of D. S. McGilvray & Co., insolvent debtors, of which 
estate Mr. Slade was one of the assignees, when a dividend was 
made, the amount belonging to the Company was entered and 

4represented as so much cash in the hands of the Treasurer, but 
it was in fact received by the firm, who gave a memorandum 
check or due bill therefor. Whenever there was a pressure for 
money, the money, business notes and Treasurer's acceptances 
of either of the two companies were used indiscriminately for 
the wants of the others or of the firm, without the slightest 
regard to the rights of either of them. To some extent it is 
believed, but not so indiscriminately, there was a frequent interchange 
of credit with the other companies, of which they were 
agents. As an instance of the large amount of such transactions 
and of their freedom in misappropriating our property, we may 
mention, that during the last year, they took up two of their 
own notes for $50,000 each, which had been more than once 
before renewed, py procuring to be discounted by the party who 
held them, the obligations of this Company of the same amount, 
although in form the transactions were separate and distinct. 
In other wo~ds they paid their own debts to the amount of 
$100,000 in two transactions, by substituting the indebtedness 
of the Company therefor. 

As we have said, these things were carefully concealed from 

~ 
the Directors. Besides 'vhich there was an extraordinary and 
fraudulent concealment from them of the true condition of the 
affairs of the Company, to be hereafter noticed; and it may be 


8 


mentioned here, that in March, 1857, $25,000 of the balance 
of the interest was charged to " wool " on hand, and the account 
made up for the Directors showed the balance of interest 

the si.~ months to be $83,377.47, whereas it should have 
been '$108,377.47. So, in September of the same year, there 
was a misrepresentation in the same item of $26,956.67 charged 
to "cloth," thus reducing appaTently the balance of interest 
from $109,805.62 to $82,848.95. It may be-it has beensaid 
in justification of these acts, that as a paTt of the interest 
was in fact incmred by reason of holding on hand large stocks 
of wool and cloth, that it was no more than fair to charge those 
items with a portion of interest. This might be true enough if 
the object were to distribute the interest to the various items of 
the accounts. But no such distribution was in fact made-no 
other chaTges of interest were made to particular accounts,one 
six months a paTt was concealed by charging to wooll, 
another to cloth,-and no such mode of keeping · accounts is 
usually practiced in this or other Companies ; and the fact of 
such charges· having been made was not communicated to the 
other officers or to the Stockholders of the Company, who were 
intentionally left ignorant, and misled, and deceived, as to the 
amount of interest which had been paid. 

The result of the whole matter of the dealings of the firm 
in making a free use of the money and credit of the Company 
for their own uses and purposes, is, after giving them various 
credits, as will be shown in the statement hereinafter made, 
that they owe the Company the sum of $308,56~.922,* after deducting 
$145,673.50, the amount of acceptances unlawfully 
charged to No. Z Mill account, and which has been extinguished 
as a claim against them by assuming that account, as hereafter 
stated, which sum is to be increased by whatever amount should 
justly be added for extra interest which they, from time to time 
paid, and ~barged to it on the Company's indebtedness: incmred 
for their own use. · As we cannot tell when this indebtedness 

*The Committee do not intend by this or any other statement they make, 
as to particular accounts, to admit their regularity or justice, or any particular 
liability of the Company. They only mean to state what appears, or is 
claimed to be correct by other parties. 


9 


commenced, and how long therefore it has continued, we know 

not of course. what amount of extra interest has been paid on so 

much debt as we have carried for their account. It must be a 

very large sum. The amount might, perhaps, be ascertained or 

approximated by a long, patient, and careful examination ; but 

it would :i;equire the services of an expert accountant for a 

longer period of time than we could have devoted to it, or 

withheld qur report from the Stockholders. 

This large sum of money has been taken from the Company 
by its confidential agents, of whom the Treasurer was one, With,~ 
out the knowledge, consent, or suspicion even of the Direct():rs, 
and the facts have been most studi~usly ~nd carefully co11ceal~~ 
from them, and· it has been appropriated t,o th~~r o:wn ~~e in 
such manner as they have seen fit to apply it. Wh,(ltev~r thc:t~ 
applic;ation may have been, or however they may h.ave fon.dly ()r 
foolishly hoped or intended to have made it goog a:t sor;:rie {u~ure 
day, does not change the nature of their acti:;, which Cal]. b~ 
characterised only as a fraudulent, criminal :iµ~sconduct, a:i.+ ap,. 
propriation to their own use of the property of a t_oo co:¢idiiig 
Company, by its agents, appointed and m~nificently cornpe~sated 
to guard and watch over its interests, and to Jflanage it.s 
most important concerns,-a Company composed of all classe~ 
and conditions of people, rich and poor, mi110rs and age(l, of 
those in full activity, capable of taking c~e of t}iemselv~s, and 
of those retired from the active walks of life, WOI1l~n, <?f 
guardians, trustees, and of charitable institu.tions, ho~¢ling t.li~ 
stock in their own name, or in pledge for the debts of those 
very agents, now unable to respond to those obligations, and 

thus have brought anxiety, care, mortification, straite11ed c4-cumstances, 
distress, want and poverty, it may be, to many 
homes tmd hearts,-for they have brought it down when b11t f~:r 
their misconduct it might have gone on to a successful result. 

It is natural that some curiosity should exist to ascertain what 
has become of the proceeds of this great d.efalcation and of a similar 
one, though of a less magnitude, in a kindred concern. Although 
the Committee has had a free access to the books of the 
:firm, and have had communication with three of its members, we 

2 


10 


are not able fully to respond to this requirement; we will furnish 

some particulars which have been, however, more or less known 

before. Lawrence, Stone & Co. became proprietors of the Pem


berton Mills to the extent of two-fifths of the whole stock, and 

it is understood have paid into that Company $160,000 on ac


count of it. They have made large advances to private parties. 

They have bought large amounts of the stocks of the Bay State 

and Middlesex Companies from time to time, having largely 

increased the number of shares which they held when they 

assumed the agency of the Company. They have paid out 

$87,000 to secure the passage of the tariff of 1857, and have 

advanced in cash· or in credit to the New England 1Vorsted 

Company $100,000. These sums account for a portion of their 

misappropriations of the property of these concerns. For the 

rest we cannot say. The interest on their own debt would ac


count for a part, unless that were first paid before their com


missions were divided and withdrawn. Ifthey were as reckless 

in their own affairs as they were in yours, it may perhaps be 

not difficult to imagine how it might go. Such results generally . 

follow such abstractions,-the money goes, no one except the 

appropriator, and not always he, knows whither. As the ap


propriation of money expended for procuring the passage of the 

tariff has excited discussion in private, and as the House of Rep


resentatives, at Washington, has raised a' committee to investi


gate the transaction, it may be unnecessary to say more. We 

will, however, add that it is shown that at, and for some time 

after the failure of Lawrence, Stone & Co., there was in a drawer 

in their counting room a memorandum in detail of many, if not 

all the items of the expenditure, which was seen at least by one 

or two persons. Unfortunately it was not carefully examined at 

the time, and when it was again sought for, it had mysteriously 

disappeared. We are told, however, that more than half the 
sum was paid over to a gentleman of Boston who, it has been 
reported, has been summoned to appear before the Committee at 
Washington. Whether the memorandum, before spoken of, 
contained a statement of his expenditures we are not informed. 
· There was paid out at New York $8,000 for printing, compiling 

documents, and the like. 


11 


The Stockholders will remember that in December, 1855, a 
proposition was made by the Selling Agents to fit up No. 3 
Mill, at Lawrence, at their own cost, and to stock it with machinery 
for the manufacture of Cotton Goods, and that it met with 
such decided opposition from the Compan;y-that it was withdrawn 
and abandoned. Subsequently, in 1856, however, an agreement 
was made by the Directors, in behalf of the Company, with 
Messrs. Lawrence, Stone & Co., a copy of which is appended to 
this Report, by which it will be seen that the Mill was leased to 
them, and they were to put in machinery on their own account 
to the amount not exceeding $55,000, and that it was to be run 
by them, for their own benefit, for five years, unless the Com• 
pany should assume their whole account at any time during that 
term, which they had a _right to do. They immediately proceed 
to purchase this machinery, set it up in the mill, and to 
put it in operation. A part of the work was done at your machine 
shop without any authority from, or the knowledge of 
the Directors. A part was ordered from the Lowell Machine 
Shop, of which some portion has been put in the Mill, the 
balance is finished, but is not ; :ln ; and it is understood that 
no part has been so far delivered as to pass the property. Such 
at least is the claim of that company. Lawrence, Stone & Co., so 
far as they have paid anything for what has been done, have done 
it from the means of the Bay State and Middlesex Companies, 
for they had none of their own. As stated at your last meet


ing by Mr. Kuhn, your Treasurer, "'There are outstanding acceptances 
of the Treasurer's drafts, amounting to $145,673.50, 
which have not been entered on the Company's books, and for 
which it does not appear that it has received any consideration." 
He adds, " These acceptances are understood to have been given 
on account of the business of Mill No. 3." It turns out, however, 
on further investigation, that although they are so charged, 
they were not given specifically for that account, and were so 
charged merely to put them to some account,' and keep them 
from your books and the knowledge of your Directors; and 
that they, specifically, no more were chargeable to, or belonged 
to that account, than any other acceptances of the Company. 
The amount of such acceptances originally charged, at two dif



12 


ferent times, was $165,673.50, of which $20,000 has been 
paid. The Bookkeeper says, he was instructed to make that 
cliai'ge, as that was nearly or within the amount of the expenditures 
on that head. The Directors, acting under legal advice, 
on. the 24th of December last, assumed ·the whole of that account 
for the Company, the effect of which Will be that as the 
Company have, by the unlihvful use of their acceptances, means 
or credit, :paid"for it, 'the properly will beldng to them;"--and the 
indebtedness d:f L., :S. & Co., ·as statea i:b. ;~fr. Krihn's Report, 
w hieh included · the ·acceptances charged 1to that account, ·will 
he materially 'reduced from the amount 'of the deficiency stated 
by him. A ·statement of 'this ·account wi11 be found at the 
end of the Re'port. There are liabilities· of Lawrence, Stone 
&·Co. 'to various· parties amounting,• as they state, to $28 ,345.27 
whieh •are 1not inc!Iuded, because they do not form a lien upon 
the accounts ·or assets. The Tteasurer's statement, made at 
the la8t meeting is, for convenience, printed at the end of this 
Report. ·on:e of the items of assets in that statement is " Assignees 
of D. S. McGilvray & Co., $13,134.43." This is 
liierely)t claim against insolvent debtors, and should have been 
put into ·''Suspense Account," as similar claims usually were, 
arid ·not charged to the Assignees, as though they owed it, for 
they ·am 'riot. Mr. Slade was one of the assignees, and they, 
instead of depositing whatever was collected from the estate in 
Bank, as :is required by law, loaned a considerable sum to 
another firril, 'now themselVes insolvent, and to Lawrence, Stone 
&iCo., 'the ainourit to the latter being $14,519.82; and thus 
the unfortunate creditors of the l\foGilvray estate are subjected 
to a second lds's through the illegal appropriation of the funds 
by the assignees, they·not being· able personally to respond for 
the amount. 

It has been stated that the malefeasances ·spoken ·of were ·done 
without the knowledge of the Directors, and were always by 
various devices and misrepresentations carefully concealed from 
them. To set this matter in its true light, and at the same time 
to show the estimate which the guilty pa1·ties put upon their 
own conduct, it will be proper to mention how, when, and under 
what· cfrcumstances, they first divulged these things. At the 


13 


first meeting of the Committee, a communication was addressed 
to the Directors requesting this information from theni. From 
their written replies and verbal statements, the following narra'tion 
is imade. 

A gentleman, a connection of Mr. Lawrence's, at his request, 
called on the .President ofthe Company on the evening of Nov. 
16th last, and informed him that there was a large indebtedness 
from Lawrence, Stone & Co. to the Bay State and Middlesex 
Companies; that Mr. Lawrence had hoped and made an attempt 
to raise the money from his -friends, to save his 1character, but 
the amount being very 1arge, he had been unable .to do so ; and 
he wished to make a disclosure of these matters the :next morn• 
ing to 'the Directors at a meeting to be held at Mr. 'Slade's 
house, who was confined there by sickness. A meeting ·was 
accordingly held there on the next ·day, the .17th, at 9 o'clock, 
A.M., at which all the Directors were 'present, ·except Mr. Fay, 
who was absent from the country. Messrs. Lawrence, Stone, 
Slade, ana Perry were also present. Mr. Hall, the President, 
told Mr. Lawrence that they were assembled to learn from him 
the amount of the indebtedness of his firm to these Mills, and 
made allusion to the message he had sent him the preceding 
evening, and then ·begged him to tell everything, so that they 
might know the worst. Mr. .Lawrence replied, that on his return, 
from Europe, on the seeond of October, he was :surprised . to 
learn that the firm had been ·using a large amount of funds obtained 
by him, as Treasurer~quite :$600,000 ; about $Z38,000 
of which was due to the Middlesex, and the balance to the Bay 
State' Company ; that it had been used for a considerable length 
6ftime, the amount of which he was unconscious of until within 

a short time. One of the Directors asked what he had to show 
for this amount of money. He replied a large amount of stock 
in both Companies, about $100,0000~ in uncovered real estate, 
some Lowell stock, and other things, but not representing much 
value. That the firm had expended $85,000 in procuring the 
passage of the tariff. He then went on to say that two or more 
years since, (Sept. 1855,) at the time the Salisbury Manufacturing 
Company's accounts made up badly, the Bay State's being 

* '\Ve are not aware of any such item of property. 

14 


equally bad, and not considering it for the interest of the 
Company that the Directors should know the result, fearing 
that if they did they would be discouraged and stop the Mills, 
he conferred with his partner, Mr. Slade, and they concluded to 
and' did send up to the Mills wool to the amount of $rnO,OOO 
to $130,000, which was included in the account of stock then 
taken, making no charge of it, but giving it outright to the 
Company, feeling that they could afford to do it, as it was but 
their commissions for two years. By this act, as the wool was 
included in the Company's accounts as "stock on hand," and 
there was no charge for the price of it, their affairs looked better 
by that amount than the actual result. The prospect for the 
future was so flattering they felt they should soon overcome 
their present deficiency ; but that they had never been able to 
do so. He added then or soon after, that if the Company had 
after that have done a good business and made large profits, he 
intended to ask payment for the wool. Such was the statement. 
The misrepresentations were never corrected, but continued to 
the time of the disclosure. 

The Committee cannot undertake to parcel out to each of the 
partners their several portions of blame. It is just, however, 
that their own views, or the views of such of them as have 
alleged ignorance of these transactions, should be .noticed in 
~rie£ Mr. Perry came recently,-January 1, 1856,-into the 
firm, and his duties were to attend to the department more 
immediately connected with the manufactures carried on at the 
Mills. He. never undertook the management of their finances, 
or in any way interfered with them. He alleges, and we understand 
that the others admit, that he had no know ledge of the 
frauds and concealments we have noticed. He was informed 
when he entered the house that it was not only solvent but rich, 
and he seems to have trusted too implicitly to such information. 
That he did so, is confirmed by the fact that he left an excellent 
situation, that of agent at the Bay State Mills, to enter the firm, 
and that, although the junior partner, at the failure the firm 
owed him a larger balance than was due to Mr. Stone, to wit, 
the very considerable sum of $15,019.93-they being the only 
members who are not indebted to the firm. The Committee 


15 


therefore exonerate him from blame. Messrs. Stone and 
Jenkins resided in New York, and conducted the business 
of the house there and in Philadelphia, and were not often 
in Boston. They both deny their knowledge of any indebtedness 
or misappropriation of funds; but they distinctly admit 
that they knew of the misrepresentations of the true condition 
of the Company's affairs as disclosed by Mr. Lawrence 
to the Directors in regard to the wool transaction in 1855, at 
some time after it took place-at wha,t particular time does not 
certainly appear. Mr. Stone thinks it was nearly a year after; 
but there is scarcely a doubt that it was within a few weeks or 
months at farthest. Whenever it was, they held. their peace 
and said nothing, and thereby sanctioned and assented to it. It 
is clear, indeed it is not denied, that they knew also that the 
funds.and paper of the respective Companies were used for each 
other almost indiscriminately, as they were also to pay liabilities, 
and as security for liabilities of the furn. They knew. the £rm 
had no capital and were large stockholders in the Pemberton, 
Bay State, Middlesex, and other Companies ; that they were to 
. advance and did advance largely for the New England Worsted 
Company ; and that they expended large sums to' secure the 
passage of the· tariff, and consequently that the firm were largely 
in debt. It is true they protested against a large loan to and 
guaranty for a private partnership in Boston, and were informed, 
untruly, by Messrs. Lawrence and Slade that it would not be 
undertaken. For the rest, Messrs. Lawrence and Slade were 

• more 
immediately concerned in these misappropriations and 
concealments, and are the more guilty offenders. Of the latter, 
it is not necessary more particularly to speak. The former left 
the country a few days before the meeting at whi~h this Committee 
was appointed, having been advised by his counsel,-of 
course on his own statement of what he had done,-that he was 
liable to a criminal prosecution for his acts-through a fear of 
the consequences. 
It is painful to make such disclosures. The Committee would 
be glad to soften and mitigate this statement if we might. But 
justice to the Directors, to you, to ourselves, and to the public, 
requires that these things should be fully exposed; and we can~ 


16 


not neglect our duty by hiding or glozing over such glaring 
misconduct. 

These persons had much the largest pecuniary interest in 
originating and carrying on the business and affairs of this Company, 
and they were to and have received a most liberal compensation 
for their services, a compensation given not merely to 
secure the services of their hands and heads in managing the 
business, which was almost wholly under their own control and 
direction, but to secure zeal, honesty and a faithful devotion to 
the best interests of their employers ; an integrity which should 
consider the good of the Stockholders, rather than their own 
individual gain and advantage. They undertook a trust which 
was freely and confidingly bestowed upon them by unsuspicious 
Stockholders, not grudgingly, not such as is sometimes given 
where the trustee is subjected to a jealous and vexatious supervision, 
but which was extended with a liberal hand and with a 
confiding spirit. A trust which should have been performed 
with the most scrupulous, an..""\:ious, pains-taking fidelity, which 
required the recipients of it to have dealt openly and truly with 
those officers of the company to whom the general supervision of 
its affairs was confided, and with the Stockholders themselves, in 
their statements and communications which were from time to 
time made to them, to enable them to understand the true condition 
of their property and affairs-a duty which exacted from 
them to use the property and credit of the Company for its own 
~enefit, without intermingling or employing it for the benefit of 
others, and least of all for their own purposes, which prohibited 
them from in any way putting it . at hazard for any uses not 
required by the interests of their employers. How their trust 
has been executed and how their duties have been performed,, 
has already been stated. , 

It is lamentable to read and to hear the excuses which some 
persons make for such a course of conduct and dealing, and 
which we regret to be called on to notice, and we do so only 
because if such apologies are to be held sufficient for such 
offences, we must be prepared to give up all hope of the con':" 
tinuance of that commercial integrity and mercantile upright'."' 
ness which have hitherto been considered to lie at the founda



17 


tion and to form the basis upon which our trade and business 
are conducted, and we must seek new devices and safegmu·ds for 
our property and to render possible any confidence or trust 
among men, and our city will justly become a reproach and a 
bye~word among nations, and our well-earned credit and character 
for honest dealing must depart from us. Already it k believed 
that a too lax course of dealing with, and a too great wil~ 
lingness to overlook dishonesty on the part of persons acting in 
a fiduciary capacity, a reluctance to hold accountable to. the 
laws of the land and to an enlightened public sentiment, those 
who have been guilty of misappropriations and a misuse of the 
property and credit of others, have induced or encouraged other 
similar frauds and misappropriations which otherwise might not 
have been perpetrated, and have rendered it more and more 
difficult to bring offenders to justice, and to procure their con


viction when they are brought before the public tribunals; and 
thus crimes against property in high places go unpunished, and 
a state of public feeling is engendered which is anything but a 
healthy one., leading to a belief and to the open expression of it, 
that while smaller offenders are punished, the greater ones 
escape. 

In this connection it may not be improper to notice the more 
common expressions of those who seem inclined to excuse some 
of the persons whose conduct we have exposed, which is that 
too much labor, duty, business was imposed upon them, and that 
it is not therefore surprising that the result was such as it is. 
It must not be kept out of sight that nothing in this matter was 
imposed. The duty was sought for and eagerly accepted by 
parties who were desirous to increase their business for the sake 
of the salary and commission which wei-e to result from it, and-perhaps 
in part for the consequence and influence which are, or 
are supposed to be, derived from being intrusted with the management 
of large interests. Those parties have since their ap


pointment to the selling agency of the Bay State Company, 
obtained and voluntarily assumed the agencies of two other large 
manufacturing companies, the Pemberton and the New England 
Worsted Companies, and have also gone into the business, in 
one instance at least, of advancing m~ney and credit to a private 


18 


party or firm, for a commission. They have also invested a large 
sum of money, in one or more of those Companies, and advanced 
a large sum to the other, as an inducement to their 
obtaining their business, and without which they could not have 
received it. Thus of their own accord and for their own gain 
and advantage, and for the gain and advantage of 110 one else, 
have they nearly doubled the amount of their cares and labors, 
without our request and without advantage or proposed advantage 
to our interests. We do not complain, although a just 
complaint might be preferred, of their assuming so many undertakings. 
We only say in this connection, that it forms no· valid 
e~cuse for any wrong doing, or even for any neglect of our affairs, 
least of all can the Company or its officers be charged with imposing 
duties upon their agents under such circumstances. 

It has also been suggested that however improperly these 
parties may have conducted themselves, that it was done with 
no view to any private advantage or gain, and that they have in 
fact gained nothing by it ; that they had great confidence that 
ultimately everything would result advantageously, that great 
profits would ensue to this Company, and these misdeeds would 
then be unknown, winked at, or forgotten ; in short, that though 
a rather unusual responsibility was assumed and a use of our 
property was made, not strictly such as can be justified, yet 
it was done with the best intentions, and for what they believed 
to be the true good of the Stockholders~ If all this were true 
in fact, and if we could believe that such motives were the 
guiding ones, it is a poor compliment to the judgment, either 
of those who acted or of those who are willing to adopt such 
excuses, and a still poorer one to the characters and senses of 

· those who were to be the recipients of these large profits and 
benefits, of us the Stockholders, of whom it would be a question 
whether we are considered to be greater fools or rogues, thus to 
ignore or sanction such conduct. But in truth there is not the 
slightest foundation for such suggestions. They assume that it 
was for our advantage that we should be grossly deceived more 
than two years ago, an~ so from that time to the present, as to 
our true condition, by having cqncealed from us the fact that 
our losses then were some $180,000 more than the account 


19 


kept under their direction in our books, and an abstract of which 
was stated by our Treasurer to the Directors, and deliberately 
read to us by him at our annual meeting, represented them to 
be; and this, too, at the time when we were to consider our 
most important interests and to pass upon his own re;_election as 
Treasurer, and when it is conceded that had we known the fact, 
we must have dismissed him and o'Ur selling agents from our 
employment, and made an entire change in the conduct of our 
affairs, and have probably stopped manufacturing goods, and 
very likely have wound up our affairs.· But ·they say they 
thought it best for us to employ this concealment because .they 
were satisfied better times were to ensue, and that it would be 
better for us to continue our business. Truly a most benevolent 
guardianship. over us:, and a modest appreciation of their 
own better judgment. · 

It was for our benefit also, that a very large amount of our 
funds should be abstracted from us and invested by them in 
their own names, for their own account and advantage, as before 
shown to procure for them a large increase of their commissions, 
in the Pemberton Mill, that our money should be loaned by 
them to other parties, in no way connected with us, that our 
money and acceptances should be used promiscuously for their 
own and other people's use and advantage; that our means 
should be used for their speculations in stocks, in the expectation 
or hope that a rise would take place and large gains accrue 
to them, and to buy out at a large advance above the market 
price, shares of our stock owned and controlled by one of the 
most influential gentlemen among us, who they supposed watched 
with a care, not quite so common as it should be, over the 
interests of others which were intrusted to him, and over his 
own, and who they feared might prove troublesome to them, 
and exercise an influence not favorable to their wishes and views, 
and interests amongst the Stockholders ; that our credit should 
be employed to take up their own liabilities, or those of others 
whom they represented; our promises and liabilities be hawked 
about the streets as often as they had occasion to raise money 
for their own or others' uses, that large amounts due from them 
to the Company, and for which the Treasurer held only their 


20 


due-bills, should from· time to time be falsely reported to the 
Directors as cash on hand ; that for the various lru·ge sums ·of 
money, which for a period of time of which we cannot ascertain 
the beginning, they have unlawfully and fraudulently appropriated 
to their own use, (whilst they fully acknowledged themselves 
to be debtors therefor,) they have to this day never credited the 
actual amount of extra interest which has been charged to and 
paid by the Company thereon. The amount of this extra interest 
we know not ; we know only that· it must be a very large suni. 
That they, having hired our No. 3 Mill on which we were to 
expend $5,000 of our money, and that only, to fit it up' and 
prepare it for the reception of machinery, and which they by a 
written agreement were to put into it at an expense of $55,000, 
entirely from their own means, and ·when so stocked, to run at 
their own charges, and for their own account, without rent, 
subject only to our right to assume the machinery and the 
business, on"" paying them in full all the money so to be 
expended by them ; should at once go on and fulfil the agreement 
by a gross and fraudulent misuse of our credit and money, 
without so far as we know, having applied one cent of their own 
means, indeed we know they did not, for they had no means, 
except the private property of the partners, which it is not pretended 
was used for partnership purposes; all which appro· 
priations and misuse of our funds were carefully concealed from 
the Directors. That the dividends on an insolvent estate due to 
the Company should be paid to it by the memorandum check 
of their firm; and one of the assignees of said estate, Mr. 
Slade, himself a member of the firm, having besides that loaned 
other funds of said insolvent estate in which we had an interest, 
to his own firm, in direct violation of the law and of his duty as 
a trustee. Not to be tedious in the enumeration, all these 
things have been done when the Company was laboring under 
serious embarrassments for want of sufficient capital to carry on 
its own business, when it was staggering under heavy losses, 
when its stock was selling for only 30 to 35 per cent. of its par 
value, and its Stockholders had long been without dividends, 
and but small rays of hope remained to them. If such a state 
of things will warrant or justify the excuses which have been 


21 


urged, then let the parties have the benefit of them. If they or 
any one else, by any effort of imagination, can suppose that they 
intended the good of the Company, rather than their own or 
that of others, ·they must rejoice in their belief. For ourselves, 
we have only to say that while we have a right, nay, while it 
may be our duty to forgive a wrong, we do not intend to co~found 
the distinction between right and wrong, or to condemn 
ourselves by acquitting the guilty. 

The simple truth is, they took our money and used our credit, 
and resorted to such various acts of deception and concealment 
by false entries in, and omissions from the books, and by false 
statements to the Directors of the Company, and they played a. 
deep, desperate game with our means for their own advantage, as 
they hoped-no possible gain could accr1:1e to us from their 
ventures-and they have lost all, property, reputation and character 
; and have destroyed our property' blasted our hopes, and 
if they have not prevented us from discharging debts which are 
justly due from the Company to innocent creditors, have at least 
obliged it to fail from meeting them at maturity, and to postpone 
them to a future uncertain period. However little it may have 
received from them, as a consideration for these liabilities, we 
must as far as possible discharge engagements made on its behalf 
by faithless agents, who represented ·it, unless there shall be 
found tq be cases where the parties holding claims, took them 
under circumstances affecting them with notice that the agents 
unlawfully issued them, or where it ought not to be equitably 
liable. 

We would say further, that if it were true that these agents 
had made a justifiable or good use of the property wrongfully 
abstracted from us, in our opinion it would form no excuse for 
the offence, although we might consider it in passing sentence 
upon the,offender. When one wrongfully takes from .us our 
property, it is of little moment to us-and it in no way atones 
for that wrong-that the offender applies it to the benefit of 
another, that he expends it in charity, or bestows it to pious 
uses. What shall be said, however, of the large sum of 
$87,000 of money, which in effect forms a part of that so taken 
from us, and from others, which was applied to the procuring 


22 


the passage of the last tariff, that panacea which was to cure all 
our evils? Is that application of our money, such as to commend 
it to our approval, or to that of the public ? It is true 
we know not with certainty where it went, or how it was applied, 
if we except some $8,000 which was spent for publications, 
newspaper articles, and the like. Of the balance we 
know that it has gone, and we know one person by whom it 
was disbursed. We know there were; at one time, certain. memoranda 
in the possession of our agents which it is supposed 
would expfain, in part,. this mystery, but they have disappeared. 
While we have figures for matters which do not appear objectionable,-
the diffusion of light, of information, of arguments,-
there is. a careful omission of anything which would 
show what became of the balance of the money.. This gives 
rise to disagreeable suspicions, that it must have gone for purposes 
which would not bear exposure, and which needed to be 
hidden and concealed. Was it employed in costly entertainments 
at Washington, given to those supposed to be able to influence 
legislation there ? Was it expended in the employment _ 
of a corps of lobby members, hangers on to the skirts of Members. 
of Congress, to worry thym into giving votes in favor of 
such measures as might' be supposed favorably to affect their 

interests? Or was it employed for still darker and more objectionable 
purposes? We know only that one of the firm, Mr. 
Stone, has told us, that while he was at Washington laboring 
diligently, and with all his might, to diffuse information, and by 
all lawful means to persuade Congress into the passage of a 
tariff, which would prove less onerous and more advantageous 
to the woollen interests, which have long been depressed; 
he was told, if he hoped for success, it would be necessary 
for him to adopt quite another course of measures, and 
to be .less scrupulous than he was in the use of the means 
at his disposal ; and that letters were written home that some 
other agent, one of a more pliable temper, must be employed, 
and that, in consequence thereof, he was withdrawn and another 
member of the firm sent on to represent them, and who, as he 
supposes, paid out and disbursed, or controlled the application 
of the rest of the money. Sq our money went, without our 


23 


knowledge or consent. We have no account of it, and are not 
able to tell how much of it was ours, and how much belonged 
to others. We are not assured that it even did go for the tariff. 
It is hinted that it was so. There is a darkness about it that 
we cannot penetrate. Perhaps it may be better that we should 
not. There might be brought to light matters of State which 
it would be disagreeable (to some people) to have exposed. 
We are told that whatever was done, it was done with the best 
intentions, and for our good. If that much-v~mnted tariff shall 
prove beneficial to the woollen manufacturing interest, . we have 
the satisfaction of contemplating that had we not been stifled by 
our friends before the day dawned, we too might have tasted its 
good fruits. · 

It may be asked what the Committee has done under that 
part of the vote which requires them under certain circumstances 
to bring to punishment guilty persons, if any were 
discovered, for their offences. In reply, we have to say that 
we have reason to know that the subject has been considered in 
the proper quarter, and that we do not consider it our duty to 
say more on that matter in this report. We have stated to you 
but few particulars of the wrong doings-not improbably many 
things of a like character were done of which we know nothing. 
The books have generally been regularly kept, and few. if any 
important errors have b.een found therein. It has been extremely 
difficult .to trace the specific application of our means or credit to 
any particular unlawful purpose. We have shown that on the 
whole there has been a great defalcation in our property, and 
an appropriation of it by our agents to their own use ; but we 
cannot show the details item by item, any more than one could 
identify, after they were mingled in one reservoir, the various 
particles of water which had fl.owed into it from separate streams. 

From the careful examination which has been made of the 
machinery and Mills at Lawrence, and of the accounts and 
doings of the agent, G. V. Fox, we are satisfied that he has 
performed his duties not only. with fidelity, punctuality, and 
diligence, but with devotedness to your interests, and with such 
ability that our want of success can in no degree be charged 
upon him. They desire particularly to notice his attention to 


24 


economy in small things and large, for which he is· entitled to 
credit, for it is in such matters· that profits are to be found in 
our manufacturing establishments. It should also be mentioned 
that he volunteered to reduce his salary one·half, after the failure 
of the Company to meet its liabilities. The property at the Mills 
is in excellent condition. They have been built with good 
judgment and skill, in a thorough 1!1anner, and are well adapted 
to the purposes for which they were intended. The whole 
establishment is in a state of efficiency. The machinery is 
modern, and of the latest improvements. We have, as before 
stated, carefully valued the property minutely, with the aid of 
competent persons skilled in the various departments-engineers, 
builders, and machinists. Of course we do not undertake to say 
what the property will bring at a sale, public or private. We 
have estimated it, supposing it to have value as a manufacturing 
establishment for manufacturing purposes. Our estimate in this 
view we believe to be decidedly below the sum it would cost to 
replace the property, with a liberal allowance for depreciation. 

STATEMENT OF THE LIABILITIES AND ASSETS OF THE 
BAY STATE MILLS. 


LIABILITIES. 

Factory accounts, petty bills, &c., --$23,683.34 
Notes payable on demand, 72,615.32 
Notes on interest, -408,913.94 
Notes not on interest, --298,700.06 
Middlesex Company, -16,959.18 
Essex Company, for water power, 5,750.00 
Lawrence, Stone & Co., acceptances 

matured, --779,591.92 
----$1,606,213.76 
Lawrence, Stone & Co., acceptances not matured, -736,009.36 

$2,342,223.12 

ASSETS. 

Water power-11 mill privileges, --$102,696.00 
Land, on which agent's and paymaster's 
houses stand, &c., 7,324.28 

.Amount carried forward, -$110,020.28 


25 


.Amount brought forward, -$110,020.28 
Buildings in mill yard, --880,276.95 
Buildings outside the yard-boarding 

houses, &c., -140,690.38 
Machinery, &c., --429,853.39 
Reservoir, Railroad Tracks, &c., -. 7,503.35 

----$1,568,344.35 

Wool, Dye Stuffs, Coal, &c., 
at cost, -$308,719.35 
Less, estimated, to bring to 
cash value, -60,126.73 
----$248,592.62 

Goods manufactured and on 
hand, --809,400.82 
Less 20 per cent. reduction, 
to make cash value, -161,800.16 

647,600.66 
Land Notes secured by mortgage, -3,336.91 
Notes in hands of Treasurer, $112,523.72 
Accounts receivable, -63, 7 58. 78 
Notes pledged -iii Boston, 

(estimated surplus,) 2,500.00 
Notes pledged ag~inst de· 

mand loans, -63,578.66 
Cash on hand, -3,545.96 
Notes in the hands of W. G. 

Lambert, assignee, 224,883.42 
Notes pledged in New York, 

(estimated surplus,) 17,561.57 
Cash in New York, -9,160.86 
Outstanding Accounts in 

New. York, --143,314.77 

$640,827.74 

Less estimated losses on 

notes and accounts


Philadelphia, $17,500 

New York, 43,000 

Boston, 4,772-65,272.00 

575,555.74 

.Amounts carried forward, $1,475,085.93 $1,568,344.35 

4 


26 


Amounts brought forward, $1,475,085.93 $1,568,344.35 

Suspended Debts, $135,457.55; estimated 
loss, $100,000, 35,457.55 
Other good Debts, 17,128.30 
Sales in December, 1857, 14,216.38 
---1,541,888.16 
Machinery in No. 3 Mill, taken under the 
agreement from L., S. & Co., 82,216.42 
Materials, Merchandise, and No. 3 Mill, 90,000.00 
---172,216.42 


$3,2~2,448.93 

Thus it appears that the whol~n~J·p.ount of Ilabilities is $2,342,223.12 
Total amount of personal proper~y, $1,631,888.16 
Deficiency to be made out of,r;,·~: estate

v.D.,• 

and machinery, -710,334.96 
_,___ $2,342,223.12 

This is as nearly correct a• statement as we have been able to 

make. The value of a great proportion of the assets is estimated. 
We have been aided by the advice 0£ many competent 
·persons, who were called in on account of. their knowledge in 
regard to the various kinds of property. There are some disputed 
claims not embraced in the statement, but of no large 
amount, and are some liabilities included as such, in reference 
to which it may be said there is some question whether they 
are lawful demands. There were attachments upon some of the 
property included in No. 3 , Mill Account, of the nominal amount 
of $6,000 ; whether they will avail against the property we 
cannot say. On the other hand, nothing has been set down on 
account of the claim on the estate of Lawrence, Stone & Co., 
which amounts, as before state~, to $308,56~.~~' upon which 
there will no doubt be a dividend amounting to a considerable 
sum on so large a claim ; -and no account has been made of the 
official bond of the Treasurer, as the representatives of one of 
the sureties deny their liability, and the other is now_ in insolvency, 
but his private property is supposed to be sufficient to 
pay his debts. On the whole, we think enough at least will be 
made of these omissions to cancel the omitted and uncertain 


27 


claims. To the balance due from Lawrence, Stone & Co., 
should be added a large 'sum of uncertain amount for extra 
interest paid by the Company as before stated. It does not 
show the actual amount of the defalcation, because they have 
been credited since their failure with the amount of the Treasurer's 
drafts, which they had improperly charged to No. 3 
Account, of $145,673.50, which added to the balance above 
stated makes the amount $454,235:'72. This sum includ~s the 
wool which was sent by them to the Mills and not charged to 
the Company, .as stated on page 14, the value of which, as they 
state, is $19l7,5~3.6?. This wool went to the use of _the Company, 
and it has directly paid nof · ~ '1g for it. If this should be 
deducted, the actual amount takml irom us is $3~6,71~.07, to 
which should be added many • asands of dollars of extra 
interest we have paid to provide money for their indebtedness, 
as stated on pages 8 and 9. 

There remains now for us only in: conclusion of this perhaps 
unnecessarily long report, "to recommend such course as we 
may judge best" to be pursued under the circumstances, to provide 
for the payment of our debts and for the general management 
and disposition of the property. We have anxiously 
considered this question. We have consulted with gentlemen 
having a large interest as stockholders or as creditors, and some 
who have no real interests, but whose position, long experience, 
and knowledge of such property, we thought entitled their 
opinions to be treated with respect ; and the result to which we 
have reluctantly arrived is that there is no reaso.nable probability 
that the Company, with such ·a heavy debt weighing upon it, 
and interest thereon rapidly accumulating, can go on successfully 
besides meeting its engagements, even although the creditors, or 
a great majority of them, might be willing to give a liberal 

indulgence, and extend and postpone the payment of their 
claims to a future period. Its credit is impaired, if not wholly 
lost, and consequently all its operations, ifthe attempt should be 
made to go on, would be conducted with the greatest disadvantages, 
if indeed they could be carried on at all; and the result 
it is feared would be that its condition would grow worse and 


28 


worse, until hopeless and ruinous bankruptcy would overtake it. 
Every sensible person must, we think, admit that no manufacturing 
business can be carried on at profit, where the real estate 
and machinery are not much more than one-half paid for-and 
more especially a woollen business, which requires a large quick 
capital in addition to its :fL"'{tures. 

We do not believe either .that further contributions in money 
of a. sufficient amount would be voluntarily made by the great 
mass of the Stockholders,• and compulsory measures are out of 
the _question. The creditors too are so numerous, and composed 
of persons and corporations so situated, as· to render it nearly 
impossible for 'them to unite and carry on the establishment 
either by themselves or in conjunction with stockholders. Many 
of them are banks and other financial or charitable corporations, 
which are unable or unwilling to join in such an undertaking. 

, We have considered whether or not there might be a division of 
the Mills, and one or more of them might not be sold separately, 
and the rest be kept and operated as a smaller establishment. 
The No. 3 Mill, which contains the cotton machinery put in by 
Lawrence, Stone & Co., might, we think, be severed from the 
other property, and worked as a disti~ct concern-not however 
without inconvenience to both. With some change ofmachinery, 
it may be used advantageously for the manufacture of cotton 
warps, which are extensively used in the other Mills, and which 
have been heretofore purchased for that purpose. But we are 
not prepared to recommend any action based on these considerations. 
The only course then remaining is, we think, to wind up 
the affairs of the Company and pay its debts ; and then if there 
be any surplus it will belong to the Stockholders. With 
judicious management,-and especially, if in the course of the 
year an improvement shall become manifest in the woollen manufacturing, 
as seems quite probable,-we trust there is at least 
property enough to pay the debts. We think it hjghly desirable 
that the settlement should not be hurried, and that it is manifestly 
better for all concerned that the Company should not go 
into insolvency. By a statute of the Commonwealth, passed on 
the 27th of March, 1852, chapter 55~ the Supreme Judicial 
Court is authorised, upon the petition of a majority in number 


29 


or ·interest of the members of any Corporation, to decree its 

dissolution,,and to appoint one or more persons as receivers or 

trustees, with full power to make a final settlement of its 

business, and to pay its debts, or distribute the proceeds ratably 

among all the creditors who shall prove their debts, and the 

balance, if any, pay over to the Stockholders, according to their 

respective interests. We are of the opinion that it will be much 

better to close your affairs under the provisions of this act, than 

in any other mode, and recommend that an application be made 

accordingly, and have prepared a petition to be signed by the 

Stockholders, if they see fit. By adopting this plan, the whole 

business of winding up the affairs of the Company, will be under 

the constant supervision and direction of the Justices of the 

highest tribunal, who can, upon the application of the receivers, 

or of any parties having an interest, give such authority to them, 

as for instance to work up the unfinished stock, and other orders 

and directions in difficult or doubtful matters, as may be neces


sary or proper, and summarily and finally dispose of any ques


tions or disputes, and settle all collateral questions, claims, and 

demands that may arise, without appeal, and thus much vexation, 

delay, embarrassment, and expense may be avoided. The re


ceivers may be urged to quicker action should their movements 

be dilatory, or restrained ifprecipitate. There will be no danger 

from the acts of dissatisfied parties, after the jurisdiction of the 

Court shall have attached, and ·receivers or trustees shall have 

been appointed, as there might be should a voluntary assignment 

be attempted. And generally there can be no doubt that every


thing may be closed up more speedily, advantageously, safely, 

and satisfactorily, under the provisions of that Act, than in any 

other mode. 

Should this plan be approved, it would be advisable to give 

authority to the Directors to represent the Company as such in 

the matter, and who should be clothed with full power to act as 

they may think best, so that in case difficulties or objections 

should arise which are not anticipated, and which cannot be 

obviated, they may be able to put it into insolvency. In this 

view we have prepared votes, which will be found at the end of 
· the report, for your consideration and action. 


Undoubtedly, here is a large, valuable property, which, ifthe 
woollen manufacture can be made pro£table here,-and we think 
it can be,-is worth the full value we have placed upon it, for 
such purposes, although it can scarcely be expected that it will 
produce so much by a sale. But then the Stockholders will 
have the opportunity to associate themselves together, form a 
new Company, and become the purchasers. So may such of 
the creditor~ as may choose to do so, or they may combine 
together with Stockholders for that purpose; and thus either 
or both classes may protect their own interests, which may be 
sacrificed should there be no competition. We submit these 
views with diffidence-we have come to these opinions not 
hastily, but they have been forced upon us after careful reflection, 
inquiry, and .discussion. It remains for you to adopt them 
or pursue such other course as you in your wisdom may approve. 

Respectfully submitted : 

F. B. CROWNINSHIEJ.JD, 
W. R. P. WASHBURN, 
PETER T. HOMER, 
E. S. WILLIAMS, 
R. S. FAY, JR., 
Committee. 

BosToN, FEBRUARY 5TH, 1858 


31 


Voted, That it is expedient to dissolve this Company, and to 
close its affairs ; and that in the opinion of this meeting it is for 
the interest both of the Creditors and Stockholders that this 
should be done under and according to the provisions of the 
Statute of 1852, Chapter 55. 

Voted, That the Directors have full power and authority to 
represent the Company in any matter or thing touching any 
application which may be made to the Supreme Judicial Court 
for dissolving the Corporation, the appointment of receivers, and 
the final settlement of its business, and in questions, matters, or 
things, which may arise in thus closing its affairs. 

Voted, That in case any obstacle shall arise, or be found to 
exist, to prevent proceedings under the said Statute, the said 
Committee shall have full power and authority to assent to and 
execute, or cause to be executed in the name of the Company, 
any voluntary assignment of all its property in trust for the 
benefit of its Creditors, they assenting or not objecting thereto, 
or at their discretion, to petition to the Court of Insolvency 
for the benefit of the Act to secure the equal distribution of 
the property of Insolvent Corporations amongst their Creditors. 


APPENDIX . 

. MR. KUHN'S STATEMENT TO THE STOCKHOLDERS, 
DECEMBER 8, 1857. 

Bay State Mills. Stockholders' Meeting, December 8, 1857. 

Statement from the Accounts as made up to Sept. 30, 1857. 
The Company has Manufactured Goods, $664,733.53 
Goods and materials at the Mills, 384,687.48 
Wool, 140,757.63 
----$1,190,178.64 

Notes receivable, 299,784.81 
Of these, $128,7 48.99 have been 
assigned, with other property, to 
Wm. G~ Lambert, New York, 
and are held subject to a pledge 
for a loan of -92,807.08 
There are also $41,710.08 pledged 
to Banks for Loans, 40,100.00 
132,907.08 
166,877.73 
Notes on Interest, 3,836.91 
Cash, 1,339.26 
Assignees of D. McGilvray, 13,134.43 
Balance of sales unsettled, -460,357.59 
Sundry balances, 2,413.62 
Suspended debts, 123,120.03 
Less amount Guaranty Account, 42,659.50 
---80,461.53 


$1,918,099.71 

The Company owes, 
Notes on Interest, $422,913.94 
Notes not on Interest, 298,700.06 
Demand Loans, 80,236.54 
Middlesex Company, 16,959.18 
Balances, including those due at the l\Iills, 26,240.17 

845,049.89 
Lawrence, Stone & Co., 675,648.25 

$1,520,698.14 

6 


34 


This is the whole amount of the indebtedness of the Co~pany, as 
it appears on the books 30th September, 1857. 
In consequence of the failure of Messrs. Lawrence, Stone & Co. 
to pay their acceptances of the Treasurer's drafts, the Company will 

· 
ultimately become liable for those acceptances, which amount to 
nearly $1,400,000. On final adjustment of the account, after the 
Company shall have paid these acceptances, a balance will be due 
from Messrs. Lawrence, Stone & Co., the exact amount of" which 
cannot now be ascertained, but which probably will be about three 
hundred and fifty thousand dollars .. 

There are <?Utstanding acceptances .. of the Treasurer's drafts, 
amounting to $145,673.50, which have not been entered on the Company's 
books, and for which it doe~ not appear that the Company has 
received any consideration. These acceptances are understood to 
have been given on account of the business of Mill No. 3, which Mill 
was leased, in 185 6, to Messrs. Lawrence, Stone & Co., by an agreement 
containing the following clause :


" The Bay State Mills shall have the right to take the machinery 
and the business connected therewith, or, in other words to assume 
the whole account as it shall stand upon the ·books above provided 
for, to be kept by Lawrence, Stone & Co., at any time within five 

years." . It 
is believed the Company have the right to take the property 
connected with the business of this Mill, under this Clause of the 
agreement, if they shall elect so to do. .At their estimated value, the 
machinery and goods would nearly suffice to pay these acceptances. 

G. 
H. KUHN, Treasurer. 
STATEMENT MILL No. 3. 

ASSETS. 

Machinery, $71,984.79 
Goods in markets, 21,246.34 
" in Mill, Yarns, &c. 73,356.60 
Notes receivable, 4,343.42 
Outstanding sales in New York, 6,981.65 
" " in Philadelphia, 2,007.32 
" " in Boston, 4,965.76 

184,885.88 
Deduct acceptances, 145,673.50 

$39,212.38 


DR. Bay State Mills, in Account Current with Lawrence, Stone. Sf Co. CR. 

D To Amount of Bay State Mills' 
notes, transferred, -


$ 14,000.00 
To Amount our. account against 
Mill No. 3, transferred, 


193,746.50 
To B~lance due Bay State Mills, 

308,562.22 

$516,308.72 

1857. 
September 30. 


November 30. 
December 17. 


" 22. 
" 24. 
" 31. 
" 31. 

By Balance due Bay State Mills, 

cash, ---_ 
" Dividend of Chapman & Co. 
" Cash, Amount received. by 
Blackstone Bank, on collateral 
notes, ---
" Cash, Amt. rec'd by Suffolk 
Bank, on collateral notes, 
" .Amt. our acceptances on ac" 
count Mill No. 3, --
" Amt. due on Notes held by 
banks as collateral, --
" Cash, amount rec'd by Globe 

Bank, on collateral notes, 
By Balance due Bay State Mills, 

' 
$327,729.02 
1,196.12 

2,554.97 
10,16~.oo 
Cl.:> 
Cl 
145,673.50 
27,514.73 
l,478.38 
----$
516,308. 72 
$308,562.22 


36 


AGREEMENT .A.BOUT NO. 3 MILL • 

.A minute of. th.e Proposition made by Lawren;e, Stone o/ Go., anil 
agreed to by the Bay State Mills, to be entered on the Director.i;;' 
Records, in relation to the manufacture of Warps and Ootton 
Bagging, in Mill No. 3. 

Lawrence, Stone & Co. will put into said Mill the machinery necessary 
to m?-ke the Warps for 150 Looms, at a cost in all not to exceed 
$55,000. The Company shall suffer no loss by running the 

'Mill, nor supply any capital or credit, either in furnishing the machinery, 
or in the operations connected therewith, or on the supply of 
labor or materials. The Company, however, shall not charge any 
rent for the use of the Mill or Water Power; and it will, at its own 
cost, not to exceed $5,000, prepare the 1\fill for the reception of the 
machinery, and for putting it in operation. No Taxes or Real Estate 
to be charged to this account ; and no charge to .be made for the 
services of the Treasurer, or General Agent of the Bay State Mills. 
The said Lawrence, Stone & Co. will conduct the business connected 
with said manufacture, at their sole risk and expense, and for their 
own separate account, which business shall be entered upon a separate 
set of books, to be kept by them for that purpose, and which shall be 
submitted to the Directors at their monthly meeting. 

In making up their accounts, from time to time, the interest account 
shall be kept at six per cent. ; and in .the ascertainment of 
profits, repairs of buildings, machinery, insurance, guarantee 'and 
commissions on sales at two ,per cent. shall be charged to the cost 
of Goods. 

While this agreement subsists, there shall be no profits, as such, 
declared, and paid over to either party; but said profits, if any, 
shall be applied under the supervision, ,and by consent of the Directors 
of the Bay State l\fills, first to the repayment of the money 
advanced by the Company, as before agreed upon, with interest, 
which sum shall be charged on the books, and stand as a separate 
item in their accounts until paid. 

Secondly-To the payments of the cost of Machinery, and interest 
which will be due and belong to Lawrence, Stone & Co. The Bay 
State Mills shall have the right to take the Machinery, and the business 
connected therewith ; or, in other words, to assume the whole 
account as it shall stand upon the books above provided for to be 
kept by Lawrence, Stone & Co., at any time within five years. 


37 


They shall have the right also to discontinue the present arrangement, 
without assuming the account, by giving Lawrence, Stone & 
Co. three months' notice to remove said machinery, which they agreed 
to do at the expiration of said three months, at their own proper 
cost, the accounts of which shall then be made up, closed, and 
settled, according to the spirit and intention of this agreement. The 
aforegoing arrangement has been entered upon at the request of Lawrence, 
Stone & Co., with a view of trying an experiment as to the 
profitable management of a new branch of business, which experiment 
the Bay State Mills Co. agree shall be made in their Mill now 
disused, with a view, in case it succeed, of using the Mill hereafter 
for this business, but for the present contributing towards it nothing 
except the Mill, Water Power, and a sum not to exceed $5,000 for 
preparing the Mill for the Machinery, it being clearly understood 
that the Company are not to be put to any other expense or outlay 
in any manner connected with the same. 

This arrangement to continue for five years, unless the Company 
shall elect, within that period, to assume the account, or to close 
the same by giving three months' notice, as before provided. 

CERTIFICATE OF CHARLES H. BIGELOW, ESQ. 

\ LAWRENCE, JAN. 12, 1858. 

Gentlemen-I estimate the present value of the Water Power 
.belonging to the Bay State Mills as follows :


11 Mill Powers, ea. $9,336.00, -$102,696.00 

In the original purchase of the Water Power, the site of the Mills 

and Boarding Houses was included, amounting to 598,000 feet of 
land, for which no value is carried out in this Report. A moderate 
estimate of its present value would be 10 cts. per foot, amounting to 
$59,800. 

CHAS. H. BIGELOW. 
To the Investigating Committee of the Bay State Mills. 

NoTE, (by Mr. Bigelow.)-The Water Power given in the Report 
of the Middlesex Co. is estimated at the same rate as the above, except 
that at Lowell the reserved annual rent of $300 each has been 
capitalized at $5,000 each. The cash value of a Mill Power owned 
by .the Middl:sex Mills is therefore rated in their R~port at $14,336, 
while our estimate of the Bay State Mills is $9,336. 


In the Middlesex Report all the land of the Mill sites and Boarding 
Houses is carried out in full; while as above stated, no value is 
set upon it here. 


38 


CERTIFICATE OF GEORGE L. DAVIS. 

I hereby certify that I have carefully examined all the Machinery 

in the Bay State Mills, and find the. same constructed in the most 

substantial manner, with the latest improvements, and in perfect run-· 

ning order, showing great care and skill in its preservation and use . 

. I consider it appraised below its value, as similar machinery, 

equally as good, could not be delivered at the Mills at these prices : 

nor are there any improvements in woollen machinery, now known, 

which will render any part of it useless. 

GEO. L. D.AVIS. 

To E. S. Williams, Committee. 

LA.WRENCE, January 9th, 1858. 

CERTIFICATE OF MR. KNOWLES, OF THE VALUE OF THE 
BUILDINGS OF BAY STATE MILLS. 


LAWRENCE, JA.N. 12, 1858. 
I certify that I have examined the. Bay State Mills, and it is my 
opinion that the rise in the price of labor and ·materials amounts to 
more than any depreciation which has occurred in this property. 
Therefore the ·property, to-day, is worth more than the original cost • 

. MORRIS KNOWLES. 

To the Committee of Investigation.