laws of 1824, p. 148,); the bank of Rochester, (session laws of 1824, p. 33,); the Delaware and Hudson canal company, (session laws of 1824, p. 332,); the Dry Dock company, (session laws of 1825, p. 178,); the Dutchess County bank, (session laws of 1825 p. 204,) and the Commercial bank of Albany, (session laws of 1825, p. 198.) It is hardly necessary for the committee to express their opinion that in all these cases, the legislative power to do so having been expressly reserved, its exercise by such an alteration of the acts conferring banking privileges as will subject these corporations to the bank fund law, is a question of expediency only. The right exists unimpaired by the legislative grant.

There is, however, another class of banking corporations, the charters of which contain no express reservation of legislative power to repeal, or even modify or alter the grant. The two corporations thus apparently placed beyond the reach of control are the Manhattan company, (laws of 1799, Andrews' edition, p. 810,) and the North River bank, (session laws of 1821, p. 135.) The latter grant is unconditional; the former is made to rest upon supplying the city of New-York with pure and wholesome water.

The only objection to subjecting these corporations to the liabili ties of the bank fund law, seems to arise from the exaction of the amount required to be paid, and the regulations to which, in common with the other banking institutions of the State, they will be compelled to submit. But upon examination it will be found that the State has not, by its charters of incorporation in these cases, expressly abandoned the right of taxation; and the committee trust it will not be contended that the exercise of a power so important to the existence of the government and the welfare of community, can be waived by implication, or forfeited by neglect to reserve it in a bank charter. It may be objected that the tax is not imposed upon individuals or other corporations, and that the discrimination is therefore invidious and unjust. It seems sufficient to reply, that it is a matter of legislative discretion to select the objects of taxation, and the use of that discretion is the result of a power never heretofore disputed. Should it be said, the money so to be levied is applied to a special purpose, and that these corporations, if allowed to do so, would dissent from such application, it may be answered, that the application of the money, as well as the selection of the objects upon which it is to be assessed, is alike under legislative control. Nor will the power of taxing monied corporations

for any purpose whatever find its first exercise in the law recommended by the committee. They were not long since totally exempt from taxation; now they most properly and justly contribute their share to all public expenses, and the committee are not aware that the power of compelling them to do so has been successfully disputed in the judicial tribunals of the State.

The committee are unable to find any force in the other objections, that subjecting the banks in question to the visitation of the Commissioners and controlling the amount of their discounts and issues, violates their charters. Such visitation and control do not take away the charter, or change the corporation government in a manner inconsistent with the grant, under which it acts.

The power of directing this government to the public benefit and preventing it from causing public evil, was reserved to the State authorities, or rather it was never yielded. It is an implied reservation in the charter, and whenever the Legislature deems it necessary, it may interfere and enforce the right so reserved. This should not be done for slight cause, but to judge of the sufficiency of the cause, is an act of discretion only. A striking illus tration of the exercise of this controlling power is found in the act to prevent fraudulent bankruptcies, &c. (Session Laws of 1825, page 448.) That act imposed duties and inflicted penalties upon all concerned in the management of incorporated companies, as much in restraint of the powers conferred by the original charters, as those prescribed in the bank fund law. That act opened the stock books to the inspection of the stockholders, restricted the power of making dividends, prohibited the withdrawal of the capital stock, limited the amount of corporation debts, gave a summary proceeding for their recovery, forbade an assignment of corporation effects after a refusal to pay its notes, imposed penalties and liabilities upon the directors, made a variety of essential provisions changing the mode of doing business in such corporations, and finally brought the Attorney-General in aid of closing their concerns in case of insolvency. This law was passed by a Legislature of acknowledged ability after full discussion, and the power to enact it has never been doubted. It expressly controlled the operations of the banks whose rights the committee are now discussing, and they are of opinion that the precedent is of great authority in favor of the power they recommend the Legislature to

assert.

If then the position be well taken in favor of the right to compel these banks to comply with the bank fund law, it is only necessa ry to examine the expediency of the measure. The object of that law was to create a sound currency, to give it the public confidence, and to save the bill-holders and creditors from loss in case of the insolvency of a bank. The first end has been fully attained, and the bills of the banks subject to the general act are readily received not only in this, but the adjoining States, as a substitute for a metallic currency. Fortunately its beneficial operation in protect} ing those from loss, who in the event of a bank failure are least able to protect themselves, the ignorant and unwary bill-holders has not been tested. No occasion has arisen to call for its aid, and with due discretion as to the amount of the increase of banking capital, and with a just discrimination in its location, by confining it to the more commercial and manufacturing districts, and with a firm and steady refusal of stock-jobbing and speculating applications, there seems little reason to doubt, that this portion of the statute may for a long time remain a dead letter. However this may be, the system has become a part of the settled policy of the State, and as closely identified with its interest and honor, as that of internal improvement, from which she has derived so much of both. In the opinion of the committee, it may be extended to all monied corporations with banking powers. There are many considerations that have led them to this conclusion. It is an act of justice to those corporations who have willingly submitted themselves to legislative control, and whose profits have been lessened in consequence, that others engaged in the same pursuit should be subjected to the same restraints. Equality in this matter is as just as it is desirable. It is due to the public that the circulating paper medium should rest upon a uniform basis for its redemption; otherwise a false confidence in particular portions of it may be created, from a belief that all is equally secured, and which may lead to great individual loss and suffering, in case of the failure of a bank not controlled by the general act. The committee have no information inducing a belief that any of the banks whose operations they seek to control, are unsound, or that their affairs are not managed with prudence and integrity. Indeed, with regard to some of them, they have every reasonable proof they are so managed. But it will be recollected that this confidence has heretofore led, in more than one instance, to the most disastrous consequences, and that integrity and talent have proved

on those occasions an insufficient protection for the people, when unaided by legislative restraint.

The amount of bills issued by banks not under the general law, is not exactly known. Few of the banks in question are compelled to report, and the committee are consequently destitute of information as to the extent of their issues. If they are in proportion to those of the banks under the operation of the bank fund law, it will be found that while fifty-eight banks reporting to the Commissioners, with a capital of $20,175,000, issue notes to the amount of $12,215,000, the ten banks that do not report, with a capital of $5,115,000, will have $3,087,000. Or in other words, of the State notes in circulation, supposed by this estimate to amount to $15,302,000, almost one-fifth, is issued by banks over whose operations the public exercise no control that can prevent insolvency, or remedy its evils. The committee are aware that the report of the Bank Commissioners, by stating the amount of State notes in circulation on the first of January last at $14,500,000, allows only $2,385,000 to the ten uncontrolled banks. They have much reason to believe the amount is more, and even if it lie in the medium between the two sums, it is sufficient to call upon the Legislature to place its ultimate redemption, whenever it may be required, beyond a doubt.

Experience has shown the necessity of guarding against that favoritism which often leads to improvident loans, both to directors and stockholders. In the case of a recent failure, and by which the holders of bills will suffer severely, it is understood that the loss of such a loan to a single individual was of itself sufficient to destroy the solvency of the bank. The propriety of an examination into the situation of these banks will be seen, when it is recollected that, as to several of them, we have no certain information of the amount of capital stock paid in, and their consequent ability to redeem the paper they have issued. And it seems to the committee prudent as well as just, to compel the actual payment of all the capital stock nominally employed.

The committee deem it of the greatest importance to create a community of interest in sustaining the paper currency of the State among all those who issue it. For although owing to peculiar circumstances existing here, and the general prosperity of the commercial world, none of them have for some time past felt that pressure which arises from a want of the public confidence, and

leads to the demand of specie payments, yet we cannot expect this state of things to be permanent. The withdrawal of foreign capital from the reduction of the rate of interest, or any cause rendering its investment elsewhere more profitable to its owners, may produce a scarcity in the money market. And in such an event a state of hostility between the local banks, and even an indifference to the fate of each other, would be attended with fatal effects; while if all were subjected to the same regulations, and connected in the same bond of interest, mutual aid would be rendered, and a joint effort made to prevent a depreciation of their common currency, and sustain the system.

Upon the whole, the committee feel urged by every consideration to recommend the passage of a law subjecting our banking corporations to the control of the general system, and to the examination of its officers. They do so in the confidence that all the beneficial effects anticipated from the bank fund law have been realized, and that its application to the entire paper currency of the State is both right and expedient.

The committee submit to the Senate the expediency of subjecting those corporations to the general act which devote a portion of their capital to other purposes than banking. They are the Dry-Dock, the Chemical, and the Hudson and Delaware canal company. As separate bills are required by the joint rules of the Legislature, the Senate will act separately upon them, as well as the two cases where the power of control is not expressly reserved in the original charters.

Some of the banks were incorporated with provisions of a pecuculiar character, subjecting the stockholders to personal liability, and the directors to severe penalties. It appears just that both be relieved from this burden, and in maturing the details of the bills, the committee have provided such enactments as will have that effect.

They ask leave to introduce bills in conformity with the opinions they have expressed.

In behalf of the committee.

JNO. G. STOWER.