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power of the corporation, and commit to the care of a single individual the corporate power which the law has declared should be exercised by the Board of Directors.
Chief Justice Marshall, in the case of the Bank of the United States vs. Dandridge, when speaking of the bonds required to be given by the cashiers of the bank, says: "It requires very little knowledge of the interior of banks, to know that the interests of the stockholders are committed to a very great extent to these, and other officers. It was, and ought to have been the intention of Congress to secure the Government, which took a deep interest in this institution, and to secure individuals, who embarked their fortunes in it on the faith of the Government, as far as possible from the malpractices of its officers." But the directors of the bank seemed to have acted on principles directly opposite to those stated by the Chief Justice, and, instead of endeavoring to secure "as far as possible" the public and individuals from the malpractices of its officers, they place the funds of the bank under the control of a single officer, from whom neither security nor specific vouchers have been required. It is true that, in the opinion which the Chief Justice gave in the case from which the above passage is quoted, he differed from the rest of the court. But the difference was on other principles, and not on the one above stated.
In forming my judgment on this as part of the case, I have not regarded the short time the charter has yet to run. But my conduct has been governed by considerations which arise altogether out of the course pursued by the bank, and which would have equally influenced the decision of this department in relation to the deposites, if the bank were now in the first years of its existence; and upon this view of the subject the following propositions appear to be fully maintained.
1st. That the bank, being the fiscal agent of the Government in the duties which the law requires it to perform, is liable to all the responsibilities which attach to the character of agent in ordinary cases of principal and agent among individuals; and it is therefore the duty of the officer of the Government, to whom the power has been entrusted, to withdraw from its possession the public funds whenever its conduct towards its principal has been such as would induce a prudent man in private life to dismiss his agent from his employment.
2d. That, by means of its exchange committee, it has so arranged its business as to deprive the public servants of those opportunities of observing its conduct which the law had provided for the safety of the public money confided to its care; and that there is sufficient evidence to show that the arrangement on the part of the bank was deliberately planned, and is still persisted in, for the purpose of concealment.
3d. That it has also, in the case of the three per cent. stock, and of the bill of exchange on France, endeavored unjustly to advance its own interests at the expense of the interests and just rights of the people of the United States.
If these propositions be established, it is very clear that a man of ordinary prudence in private life would withdraw his funds from an agent who had thus behaved himself in relation to his princi
pal; and it follows that it was the duty of the Secretary of the Treasury to withdraw the funds of the United States from the bank.
4th. That there is sufficient evidence to show that the bank has been, and still is, seeking to obtain political power, and has used its money for the purpose of influencing the election of the public servants; and it was incumbent upon the Secretary of the Treasury, on that account, to withdraw from its possession the money of the United States, which it was thus using for improper purposes. Upon the whole, I have felt myself bound by the strongest obligation to remove the deposits. The obligation was imposed upon me by the near approach of the time when this corporation will cease to exist, as well as by the course of conduct which it has seen fit to pursue.
The propriety of removing the deposites being thus evident, and it being consequently my duty to select the places to which they were to be removed, it became necessary that arrangements should be immediately made with the new depositories of the public money, which would not only render it safe, but would at the same time secure to the Government, and to the community at large, the conveniences and facilities that were intended to be obtained by incorporating the Bank of the United States. Measures were accordingly taken for that purpose, and copies of the contracts which have been made with the selected banks, and of the letters of instructions to them from this department, are herewith submitted. The contracts with the banks in the interior are not precisely the same with those in the Atlantic cities. The difference between them arises from the nature of the business transacted by the banks in these different places. The State banks selected are all institutions of high character and undoubted strength, and are under the management and control of persons of unquestioned probity and intelligence. And in order to ensure the safety of the public money, each of them is required, and has agreed, to give security whenever the amount of the deposite shall exceed the half of the amount of the capital actually paid in; and this department has reserved to itself the right to demand security whenever it may think it advisable, although the amount on deposite may not be equal to the sum above stated. The banks selected have also severally engaged to transmit money to any point at which it may be required by the directions of this department for the public service, and to perform all the services to the Government which were heretofore rendered by the Bank of the United States. And, by agreements among themselves to honor each other's notes and drafts, they are providing a general currency at least as sound as that of the Bank of the United States, and will afford facilities to commerce and in the business of domestic exchange quite equal to any which the community heretofore enjoyed. There has not been yet sufficient time to perfect these arrangements, but enough has already been done to show that, even on the score of expediency, a Bank of the United States is not necessary, either for the fiscal operations of the Government, or the public convenience; and that every object which the charter to the present bank was designed to attain, may be as effectually accomplished by the State banks. And, if this can be done, nothing that is useful will be lost or endangered by the change, while much that is desirable will be gained by it. For no one of these corporations will possess that absolute, and
almost unlimited dominion over the property of the citizens of the United States which the present bank holds, and which enables it at any moment, at its own pleasure, to bring distress upon any portion of the community whenever it may deem it useful to its interest to make its power felt. The influence of each of the State banks is necessarily limited to its own immediate neighborhood, and they will be kept in check by the other local banks. They will not, therefore, be tempted by the consciousness of power to aspire to political influence, nor likely to interfere in the elections of the public servants. They will, moreover, be managed by persons who reside in the midst of the people who are to be immediately affected by their measures; and they cannot be insensible or indifferent to the opinions and peculiar interests of those by whom they are daily surrounded, and with whom they are constantly associated. These circumstances always furnish strong safeguards against an oppressive exercise of power, and forcibly recommend the employment of State banks in preference to a Bank of the United States, with its numerous and distant branches. A corporation of the latter description is continually acting under the conviction of its immense power over the money concerns of the whole country, and is dealing also with the fortunes and comforts of men who are distant from them, and to whom they are personally strangers. The directors of the bank are not compelled to hear, daily, the complaints, and witness the sufferings of those who may be ruined by their proceedings. From the nature of man, such an institution cannot always be expected to sympathize with the wants and feelings of those who are affected by its policy. And we ought not, perhaps, to be surprised if a corporation like the Bank of the United States, from the feeling of rivalry, or from cold calculations of interest or ambition, should deliberately plan and execute a course of measures highly injurious and oppressive in places where the directors who control its conduct have no local sympathies to restrain them.
It is a fixed principle of our political institutions to guard against the unnecessary accumulation of power over persons and property in any hands. And no hands are less worthy to be trusted with it than those of a moneyed corporation. In the selection, therefore, of the State banks as the fiscal agents of the Government, no disadvantages appear to have been incurred on the score of safety or convenience, or the general interests of the country, while much that is valuable will be gained by the change. I am however well aware of the vast power of the Bank of the United States, and of its ability to bring distress and suffering on the country. This is one of the evils of chartering a bank with such an amount of capital, with the right of shooting its branches into every part of the Union, so as to extend its influence to every neighborhood. The immense loan of more than twenty-eight millions of dollars suddenly poured out, chiefly in the Western States in 1831, and the first four months in 1832, sufficiently attests that the bank is sensible of the power which its money gives it, and has placed itself in an attitude to make the people of the United States feel the weight of its resentment, if they presume to disappoint the wishes of the corporation. By a severe curtailment it has already made it proper to withdraw a portion of the money it held on deposite, and transfer it to the custody of the new fiscal agents, in order to shield the community from the injustice of the Bank of the United States.
But I have not supposed that the course of the Government ought to be regulated by the fear of the power of the bank. If such a motive could be allowed to influence the legislation of Congress, or the action of the Executive Departments of the Government, there is an end to the sovereignty of the people; and the liberties of the country are at once surrendered at the feet of a moneyed corporation. They may now demand the possession of the public money, or the renewal of the charter; and if these objects are yielded to them from apprehensions of their power, or from the suffering which rapid curtailments on their part are inflicting on the community, what may they not next require? Will submission render such a corporation more forbearing in its course? What law may it not hereafter demand, that it will not, if it pleases, be able to enforce by the same means?
These considerations need not, however, be pressed further in this report. They are too obvious and striking to need enforcement by argument. And I rely with confidence on the representatives of this enlightened nation to sustain a measure which the best interests of the country called for, and which had become absolutely necessary to preserve untainted its free institutions, and to secure the liberties and happiness of the people.
I have the honor to be, sir, very respectfully,
R. B. TANEY, Secretary of the Treasury.
Fifth Annual Message-Andrew Jackson
Twenty-Third Congress, 1st Session
DECEMBER 5, 1833.
[Source: James D. Richardson, A Compilation of the Messages and Papers of the Presidents, Vol. 2, pp. 1249–1251]
Since the last adjournment of Congress the Secretary of the Treasury has directed the money of the United States to be deposited in certain State banks designated by him, and he will immediately lay before you his reasons for this direction. I concur with him entirely in the view he has taken of the subject, and some months before the removal I urged upon the Department the propriety of taking that step. The near approach of the day on which the charter will expire, as well as the conduct of the bank, appeared to me to call for this measure upon the high considerations of public interest and public duty. The extent of its misconduct, however, although known to be great, was not at that time fully developed by proof. It was not until late in the month of August that I received from the Government directors an offical report establishing beyond question that this great and powerful institution had been actively engaged in attempting to influence the elections of the public officers by means of its money, and that, in violation of the express provisions of its charter, it had by a formal resolution placed its funds at the disposition of its president to be em
ployed in sustaining the political power of the bank. A copy of this resolution is contained in the report of the Government directors before referred to, and however the object may be disguised by cautious language, no one can doubt that this money was in truth intended for electioneering purposes, and the particular uses to which it was proved to have been applied abundantly show that it was so understood. Not only was the evidence complete as to the past application of the money and power of the bank to electioneering purposes, but that the resolution of the board of directors authorized the same course to be pursued in future.
It being thus established by unquestionable proof that the Bank of the United States was converted into a permanent electioneering engine, it appeared to me that the path of duty which the executive department of the Government ought to pursue was not doubtful. As by the terms of the bank charter no officer but the Secretary of the Treasury could remove the deposits, it seemed to me that this authority ought to be at once exerted to deprive that great corporation of the support and countenance of the Government in such a use of its funds and such an exertion of its power. In this point of the case the question is distinctly presented whether the people of the United States are to govern through representatives chosen by their unbiased suffrages or whether the money and power of a great corporation are to be secretly exerted to influence their judgment and control their decisions. It must now be determined whether the bank is to have its candidates for all offices in the country, from the highest to the lowest, or whether candidates on both sides of political questions shall be brought forward as heretofore and supported by the usual means.
At this time the efforts of the bank to control public opinion, through the distresses of some and the fears of others, are equally apparent, and, if possible, more objectionable. By a curtailment of its accommodations more rapid than any emergency requires, and even while it retains specie to an almost unprecedented amount in its vaults, it is attempting to produce great embarrassment in one portion of the community, while through presses known to have been sustained by its money it attempts by unfounded alarms to create a panic in all.
These are the means by which it seems to expect that it can force a restoration of the deposits, and as a necessary consequence extort from Congress a renewal of its charter. I am happy to know that through the good sense of our people the effort to get up a panic has hitherto failed, and that through the increased accommodations which the State banks have been enabled to afford, no public distress has followed the exertions of the bank, and it can not be doubted that the exercise of its power and the expenditure of its money, as well as its efforts to spread groundless alarm, will be met and rebuked as they deserve. In my own sphere of duty I should feel myself called on by the facts disclosed to order a scire facias against the bank, with a view to put an end to the chartered rights it has so palpably violated, were it not that the charter itself will expire as soon as a decision would probably be obtained from the court of last resort.
I called the attention of Congress to this subject in my last annual message, and informed them that such measures as were within the reach of the Secretary of the Treasury had been taken to enable him to