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The committee submit, for the information of the Senate, certain questions propounded to the President of the Bank of the United States, together with his answers thereto, and a document furnished by that officer, showing the rates of exchange at which drafts are drawn by the Bank of the United States and its offices of discount and deposite; and ask to be discharged from the further consideration of the subject.
QUESTIONS SUBMITTED TO THE PRESIDENT OF THE BANK OF THE U. STATES, WITH HIS ANSWERS.
Question 1. When the Bank went into operation, was not Philadelphia paper ten per cent. worse than Boston, and that much better than Baltimore?
Answer. Philadelphia paper was 17 per cent. worse than Boston paper-9 to 911⁄2 worse than New York paper-412 better than Balti
Q. 2. Were not the State Banks indebted to the Government in large sums, which they could not have paid in sound currency? If so, to what amount? And did not the Bank in many instances assume those debts, and pay them in sound currency, (if so, to what amount?) and indulge those Banks until it was convenient for them to pay? and did not the Bank lose money by such indulgence?
A. In the years 1817 and 1818, the Government transferred to the bank at Philadelphia, from the State institutions, $7,472,419 87, which was cashed, and $3,336,691 67 of special deposite, to be collected by the bank, making $10,809,111 54. The loss sustained by the bank, I cannot estimate. I should willingly compromise for a loss of only $200,000.
Q. 3. Has the bank at any time oppressed any of the State banks? A. Never. There are very few banks which might not have been destroyed by an exertion of the power of the bank. None have ever been injured. Many have been saved. And more have been, and are constantly relieved, when it is found that they are solvent, but are suffering under temporary difficulty.
Q. 4. When a State bank becomes indebted to the bank to an improper extent, what course do you pursue? Do you let them go beyond a certain amount, and what is that amount?
A. The great object is to keep the State banks within proper limits; to make them shape their business according to their means. For this purpose they are called upon to settle; never forced to pay specie, if it can be avoided, but payment is taken in their bills of exchange, or suffered to lie occasionally until the bank can turn round; no amount of debt is fixed, because the principle we wish to establish is, that every bank should always be ready to provide for its notes.
Q. 5. If you give drafts on any of the branches, or from one branch on another, or on the mother bank, what is the commission charged? A. The charge for drafts is less than the transportation of specie. I send a detailed statement on this point.
Q. 6. Do you, and at every branch, pay specie on demand? Has
there ever been a refusal?
Q. 7. Can you state whether specie is more or less abundant in the United States at present, than at any former period?
A. At the present moment, I think, specie is more abundant than usual. It comes in as usual. And the state of the exchanges with Europe is such that it is cheaper to buy bills, than to ship coin. The bank had, on the first instant, $7,608,000, which is more than it has had for nine years past.
Q. 8. When the debt is annually paid off to foreigners, do they remit in specie or bills of exchange? Do you supply the means in either way?
A. When foreigners are paid off, a part is remitted in other stocks, a part goes in bills, a considerable portion of which are bills of the bank. Specie is never resorted to unless the bill market is so high as to make that mode of remittance cheaper.
Q. 9. Since you commenced the purchase and sale of bills of exchange, has the rate varied; if so, to what extent?
A. The operations of the bank in exchanges has had the effect of preventing the great fluctuations to which they were previously liable. Q. 10. What is the reason that exchange on England continues above what was formerly considered the par, that is, the dollar valued at 48. 6d. sterling? Is it that the intrinsic value of the dollar has been found to be less than 48. 6d? If so, what is that intrinsic value?
A. The reason is, that we choose to call our dollar 4s. 6d. when it never has been worth four and sixpence, and of course when it goes abroad, it is estimated not by the name we give it, but according to its real value.
RATES of EXCHANGE at which Drafts are drawn by the Banks of the United States and its Offices of Discount and Deposite.
Report of House Committee of Ways and Means, on Presidential Message About Bank of United States
[House Report 358, Twenty-First Congress, 1st Session, Pages 1-31]
BANK OF THE UNITED STATES.
APRIL 13, 1830.
Read, and laid upon the table.
MR. MCDUFFIE, from the Committee of Ways and Means, to which the subject had been referred, made the following
The Committee of Ways and Means, to whom was referred so much of the Message of the President as relates to the Bank of the United States, beg leave to report:
That they have bestowed upon the subject all the attention demanded by its intrinsic importance, and now respectfully submit the result of their deliberations to the consideration of the House. There are few subjects, having reference to the policy of an established government, so vitally connected with the health of the body politic, or in which the pecuniary interests of society are so extensively and deeply involved. No one of the attributes of sovereignty carries with it a more solemn responsibility, or calls in requisition a higher degree of wisdom, than the power of regulating the common currency, and thus fixing the general standard of value for a great commercial community, composed of confederated States.
Such being, in the opinion of the committee, the high and delicate trust exclusively committed to Congress by the Federal Constitution, they have proceeded to discharge the duty assigned to them with a corresponding sense of its magnitude and difficulty.
The most simple and obvious analysis of the subject, as it is presented by the message of the President, exhibits the following questions for the decision of the National Legislature:
1. Has Congress the constitutional power to incorporate a bank, such as that of the United States?
2. Is it expedient to establish and maintain such an institution? 3. Is it expedient to establish "a National Bank, founded upon the credit of the Government and its revenues?"
I. If the concurrence of all the departments of the Government, at different period of our history, under every administration, and during the ascendency of both the great political parties, into which the country was divided, soon after the adoption of the present Constitution, shall be regarded as having the authority ascribed to such sanctions by the common consent of all well regulated communities, the constitutional power of Congress to incorporate a bank, may be assumed as a postulate no longer open to controversy. In little more
than two years after the Government went into operation, and at a period when most of the distinguished members of the Federal Convention were either in the Executive or Legislative councils, the act, incorporating the first bank of the United States, passed both branches of Congress by large majorities, and received the deliberate sanction of President Washington, who had then recently presided over the deliberations of the Convention. The constitutional power of Congress to pass the act of incorporation, was thoroughly investigated, both in the Executive Cabinet and in Congress, under circumstances, in all respects, propitious to a dispassionate decision. There was, at that time, no organization of political parties, and the question was therefore, decided by those, who, from their knowledge and experience, were peculiarly qualified to decide correctly; and who were entirely free from the influence of that party excitement and prejudice, which would justly impair, in the estimation of posterity, the authority of a legislative interpretation of the constitutional charter. No persons can be more competent to give a just construction to the Constitution, than those who had a principal agency in framing it; and no administration can claim a more perfect exemption from all those influences which, sometimes, pervert the judgments, even of the most wise and patriotic, than that of the Father of his Country, during the first term of his service.
Such were the circumstances, under which all the branches of the National Legislature solemnly determined that the power of creating a National Bank was vested in Congress by the Constitution. The bank thus created, continued its operations for twenty years-the period for which its charter was granted-during which time, public and private credit were raised, from a prostrate, to a very elevated condition, and the finances of the nation were placed upon the most solid foundation.
When the charter expired, in 1811, Congress refused to renew it, principally owing, as the committee believes to the then existing state of political parties. Soon after the bank was chartered, the two great parties that have since divided the country, began to assume an organized existence. Mr. Jefferson and Mr. Madison, the former in the Executive Cabinet, and the latter in Congress, had been opposed to the establishment of the bank, on constitutional grounds, and being placed at the head of the party most unfavorable to the extension of the powers of the Government, by implication, the bank question came to be regarded as, in some degree, the test of political principle.
When Mr. Jefferson came into power, upon the strong tide of a great political revolution, the odium of the Alien and Sedition laws was, in part, communicated to the Bank of the United States; and, although he gave his official sanction to an act, creating a new branch of that institution, at New Orleans, and to another to punish the counterfeiting of its bills, yet, when the question of renewing the charter came before Congress, it was discussed as a party question. And, though some of the most distinguished republicans, including Mr. Gallatin, then Secretary of the Treasury, and Mr. Crawford, then a member of the Senate, were decidedly in favor of the renewal, sustaining the measure by able arguments, the votes in both branches of Congress were distinctly marked as party votes. At no time, since
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