bills of exchange now are; and those which are payable to bearer, shall be negotiable and assignable by delivery

only.

Dividends of

XIV. Half yearly dividends shall be made of so much profits made. of the profits of the bank, as shall appear to the directors advisable; and once in every three years, the directors shall lay before the stockholders, at a general meeting, for their information, an exact and particular statement of the debts, which shall have remained unpaid after the expiration of the original credit, for a period of treble the term of that credit; and of the surplus of profit, if any, after deducting losses and dividends. If there shall be a failure in the payment of any part of any sum, subscribed by any person, co-partnership, or body politic, the party failing shall lose the benefit of any dividend, which may have accrued, prior to the time for making such payment, and during the delay of the same.

XV. It shall be lawful for the directors aforesaid, to establish offices wheresoever they shall think fit, within the United States, for the purposes of discount and deposit only, and upon the same terms, and in the same manner, as shall be practised at the bank; and to commit the management of the said offices, and the making of the said discounts, to such persons, under such agreements, and subject to such regulations as they shall deem proper; not being contrary to law, or to the constitution of the bank.

Offices may

be established States, for discount and deposit only, &c.

Officer at the

head of the treasury, to be statements.

furnished with

Not of private

Penalty for

XVI. The officer at the head of the treasury department of the United States, shall be furnished, from time to time, as often as he may require, not exceeding once a week, with statements of the amount of the capital stock of the said corporation, and of the debts due to the same; of the monies deposited therein; of the notes in circulation, and of the cash in hand; and shall have a right to inspect such general accounts in the books of the bank, as shall relate to the said statements. Provided, That nature. this shall not be construed to imply a right of inspecting the account of any private individual or individuals with the bank. SEC. 8. And be it further enacted, That if the said buying or sellcorporation, or any person or persons for or to the use of the same, shall deal or trade in buying or selling any goods, wares, merchandise, or commodities whatsoever, contrary to the provisions of this act, all and every person and persons, by whom any order or direction for so dealing or trading shall have been given, and all and every person and persons who shall have been concerned as parties or agents therein, shall forefeit and lose treble the value of the goods, wares, merchandises, and commodities, in which such dealing and trade shall have been; one half thereof to the use of the informer, and the other half thereof to the use of the United States, to be recovered with costs of suit.

ing goods, &c.

How money can be ad

vanced or lent.

Bills or notes made receivable by U. States.

Subscriptions made by United States, how to be paid, &c.

No other bank to be established.

SEC. 9. And be it further enacted, That if the said corporation shall advance or lend any sum, for the use or on account of the government of the United States, to an amount exceeding one hundred thousand dollars; or of any particular state to an amount exceeding_fifty thousand dollars; or of any foreign prince or State, (unless previously authorized thereto by a law of the United States,) all and every person and persons, by and with whose order, agreement, consent, approbation, or connivance, such unlawful advance or loan shall have been made, upon conviction thereof, shall forfeit and pay, for every such offence, treble the value or amount of the sum or sums which shall have been so unlawfully advanced or lent; one fifth thereof to the use of the informer, and the residue thereof to the use of the United States; to be disposed of by law and not otherwise.

SEC. 10. And be it further enacted, That the bills or notes of the said corporation, originally made payable, or which shall have become payable on demand, in gold and silver coin, shall be receivable in all payments to the United States.

SEC. 11. And be it further enacted, That it shall be lawful for the President of the United States, at any time or times, within eighteen months after the first day of April next, to cause a subscription to be made to the stock of the said corporation, as part of the aforesaid capital stock of ten millions of dollars, on behalf of the United States, to an amount not exceeding two millions of dollars; to be paid out of the monies which shall be borrowed by virtue of either of the acts, the one entitled "An act making provision for the debt of the United States;" and the other entitled "An act making provision for the reduction of the public debt;" borrowing of the bank an equal sum, to be applied to the purposes, for which the said monies shall have been procured; reimbursable in ten years, by equal annual instalments; or at any time sooner, or in any greater proportions, that the government may think fit.

SEC. 12. And be it further enacted, That no other bank shall be established by any future law of the United States, during the continuance of the corporation hereby created; for which the faith of the United States is hereby pledged.

APPROVED, February 25, 1791.

Report of Secretary of Treasury (Albert Gallatin), on Renewal

of Charter of Bank of United States

COMMUNICATED TO THE SENATE, MARCH 3, 1809.

Tenth Congress, 2d Session

[Source: American State Papers, Finance, Vol. 2, pp. 351-353]

The Secretary of the Treasury, to whom was referred the memorial of the stockholders of the Bank of the United States, praying for a renewal of their charter, which will expire on the 14th day of March, 1811, respectfully submits the following report: The Bank of the United States was incorporated by act of March 2d, 1791, with a capital of ten millions of dollars, divided into 25,000 shares of 400 dollars each. Two millions of dollars were subscribed by the United States, and paid in ten equal annual instalments. Of the eight millions of dollars subscribed by individuals, two millions were paid in specie and six millions in six per cent. stock of the United States. Two thousand four hundred and ninety-three of the shares belonging to Government were sold in the years 1796 and 1797, at an advance of 25 per cent.; two hundred and eighty-seven were sold in the year 1797, at an advance of 20 per cent., and the other two thousand two hundred and twenty shares in the year 1802, at an advance of

per cent.; making together, exclusively of the dividends, a profit of 671,860 dollars to the United States. The greater part of the six per cent. stock, originally paid by the stockholders, has since been sold by the bank: a portion has been redeemed by Government, by the operation of the annual reimbursement, and the bank retains, at present, only a sum of 2,231,598 dollars, in six per cent. stock.

About eighteen thousand shares of the bank stock are held by persons residing abroad, who are, by the charter, excluded from the right of voting. The stockholders resident within the United States, and who have the exclusive control over the institution, hold only seven thousand shares, or little more than one-fourth part of its capital. They appoint annually twenty-five directors of the bank itself, which is established at Philadelphia; and those directors have the entire management of the discounts and other transactions of the institution in that city, and the general superintendence and appointment of the directors and cashiers of the offices of discount and deposite, established in other places. There are at present eight of those offices, viz: at Boston, New York, Baltimore, Norfolk, Charleston, Savannah, the city of Washington, and New Orleans. The two last were established at the request of the Secretary of the Treasury.

The profits of a bank arise from the interest received on the loans made, either to Government or to individuals; and they exceed six per cent., or the rate of interest at which the loans are made, because every bank lends, not only the whole of its capital, but, also, a portion of the moneys deposited for safe keeping in its vaults, either by Gov

ernment or by individuals. For every sum of money thus deposited, the party making that deposite either receives the amount în bank notes, or obtains a credit on the books of the bank. In either case he has the same right, at any time, to withdraw his deposite; in the first case, on presentation and surrender of the bank notes; in the other case, by drawing on the bank for the amount. Bank notes and credits on the books of the bank, arise, therefore, equally from deposites, although the credits alone are, in common parlance, called deposites; and the aggregate of those credits, and of the bank notes issued, constitutes the circulating medium substituted by the banking operations to money; for payments from one individual to another are equally made by drafts on the bank, or by the delivery of bank notes. Experience has taught the directors what portion of the money thus deposited they may lend, or, in other words, how far they may, with safety, extend their discounts beyond the capital of the bank, and what amount of specie it is necessary they should keep in their vaults. The profits, and, therefore, the dividends of a bank, will increase in proportion as the directors will increase loans of the moneys deposited, and suffer the amount of specie on hand to diminish. Moderate dividends, when not produced by some particular cause, which checks the circulation of bank paper, are the best evidence of the safety of the institution, and of the wisdom of its direction.

The annexed table of all the dividends made by the Bank of the United States, since its establishment, shows that they have, on an average, been at the rate of 83% (precisely 81334) per cent, a year, and proves, that the bank has not, in any considerable degree, used the public deposites for the purpose of extending its discounts.

From what has been premised, it appears that the property of a bank in full operation consists of three general items, viz: 1st. outstanding debts, consisting principally of the notes payable at sixty days, which have been discounted at the bank; 2dly, specie in the vaults; 3dly, buildings necessary for the institution. On the other hand, the bank owes, 1st. to the stockholders, the amount of the capital stock originally subscribed, payable only in case of the dissolution of the institution; 2dly, to Government or individuals, the whole amount of moneys deposited, payable on demand, and including both the credits on the bank books, commonly called deposites, and the bank notes in circulation. The account is balanced by the amount of undivided profits and accruing discounts, which constitute the fund for defraying current expenses, for paying subsequent dividends, and for covering contingent losses.

The following statement of the situation of the Bank of the United States, including its branches, exhibits the true amount of public stock, which is still held by the institution, of the cost of its buildings, and lots of ground, and of the undivided surplus or contingent fund, subsequent to the dividend made in January last. But the amount of loans to individuals, or discounts, of specie in the vaults, and of moneys deposited, including both the credits on the bank books, commonly called deposites, and the bank notes in circulation, is taken on a medium: and, so far as relates, on the credit side of the account, to specie on hand, and, on the debit side, to deposites, is several millions of dollars less than it happens to be at this moment; both having been swelled much beyond the average by the embargo, and by the unusually

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