Sidebilder
PDF
ePub

These six warehouses were built. Ited by all to be of vast control, and, if improis also understood, says the same extract, that perly directed, of dangerous tendency, had several other houses have been built by the insinuated itself either into the management of agent at Cincinnati; but, as they were erected the press or the direction of the Government. in part by contributions in labor and materials, This could only be done by an examination of by debtors to the bank who had no other means the transactions of the bank with editors and of payment, and, in part, by direct disburse- public functionaries. And here the committee ments, no accurate statement of. either their wish it to be distinclty understood, that they do number or cost is on file. The agent has been not pretend to set up the absurd idea, that instructed to specify these details, in order to editors or officers are excluded from the right complete this return. common to the rest of the citizens, of borrowing In reference to the foregoing, the commit-money when and where they please, from banks tee believe it enough, merely to quote the fol- or individuals, without being answerable, in lowing provision of the charter, to wit: "The the slighest degree, to any person whatever. land, tenements, and hereditaments, which it But while this admission is demanded by the shall be lawful for the said corporation to hold, clear rights of the parties to whom it relates, it shall be only such as shall be requisite for its im- will not be denied, that if they obtain more mediate accommodation, in relation to the conve- favors than the rest of their fellow citizens, it nient transaction of its business, and such as is, at least, a just cause of complaint against shall have been bona fide mortgaged to it, by the bank, and however they may be innocent of way of security, or conveyed to it in satisfaction any improper or sinister connection with that of debts previously contracted in the course of institution, it does not, by any meens, disprove its dealings, or purchased at sales upon judg the fact, that some other influence may have ments which shall have been obtained for such been intended to operate upon their minds debts." wholly unsuspected by them at the time. If, This closes the view of the committee on the therefore, it should appear, that these individusubject of the violations of the charter. als received larger loans than those who are its In considering the second general head as to usual customers, that they receive these loans any circumstances of mismanagement of the without the security usually required under cirbank, your committee have fully appreciated cumstances not known in any other case, it the delicate character of some of the duties as-would seem to the committee, that instead of a signed them, and the high responsibility of the complaint from those whose transactions with office of inspecting the books, and examining the bank have thus been investigated, the griev into the proceedings of the Bank of the United ance is entirely on the other side. Whether such States. cases do exist, the committee will leave to the

It is possible that the improvements were in better judgment of the House to decide, upon the neighborhood of the real estate of the bank, the facts which they have collected, and now and are made upon the ground that said dona- respectfully submit.

tions would increase the value of that real estate. It had been repeatedly alleged that the bank In discharging that trust, they have not felt had employed its funds for the purpose of subthemselves at liberty to inquire into the private sidizing the press, and the charge was reiterat.. concerns of any individuals, of any denomina-ed during the debate upon the resolution aution, unless the public interest was involved in thorizing this inquiry. The attention of your their transactions with the president and direc- committee was particularly drawn to this subtors of the bank. The investigation was order-ject, at an early period of their examination, by ed by the House under peculiar circumstances, a communication from an editor of a New York and in anticipation of a debate on the renewal paper, who had been accused to a member of of a charter of a national bank, whose annual the committee, through the president of the operations amount to two or three hundred mil- bank. The evidence relating to this case will lions of money, whose influence extends to the be found in papers marked 8 and 9, and in remotest parts of the Union, and whose connec- which are presented the following facts:-On tion with the Federal Government gives it a the 26th of March, 1831, a Mr. Silas E. Burpublic character. Impressed with the import- rows applied to the president of the bank, and ance of the great variety of interests involved, informed him, to use the language of the preyour committee have executed the office assign-sident, that he was desirous of befriending ed them, by inquiring, generally, into the pro- Mr. Noah, and assisting him in the purchase of a ceedings of the bank, not only for the purpose share in a newspaper; and he asked if the bank of ascertaining whether its powers had been would discount the notes of these parties, adviolated or abused, to the injury of the private ding that, although as a merchant he did not and public interests of the country, but, with a wish to appear as a borrower, or to put his view to obtain information for the use of the name on paper not mercantile, yet he would, House, and to suggest, should Congress deter- at any time, do so, whenever it might be nemine to continue a national bank, such modifi- cessary to secure the bank. I do not recollect cations as the proceedings of the existing insti- (says the witness) whether he then mentioned tution would seem to have rendered necessary. the time which the notes would have to run. Adhering to these rules, the committee be- The committee being authorised to discount lieved it entirely within their province to inquire any paper the security of which they might apwhether the influence of the bank, acknowledg- prove, agreed to do them. As Mr. Burrows

was going out of town, I (the president and The committee will now submit the facts in witness) gave him the money out of my own relation to the manner in which this loan has funds, and the notes were afterwards put into been disposed of, first premising that the resomy possession. They remained with me a long lution for inquiring into the affairs of the bank time, as I had no occasion to use the funds, nor was introduced into the House on or about the was it till the close of the year that my atten- 17th of February. The loan of August was retion was called to them by the circumstance duced $2,000 at its maturity, on the 10th of that a new board of directors and a new com- February last: On the 2d of March last, Mr. mittee of exchange would be appointed: the Silas E. Burrows obtained from the exchange same committee which made the loan should committee discounts to the amount of thirtyconsummate it. I had seen, also, in the public two thousand four hundred and forty-six dolprints, many reproaches against the bank for lars, being the largest sum loaned on that day, lending money to printers and editors, and I and while many notes of citizens of Philadel was unwilling that any loan made by the bank phia were rejected. That the notes for $17,975, should seem to be a private loan from one of its payable in. 1832, 33, 34, 35, and '36, were officers. Having no use for the money, it paid and withdrawn by him on the 2d of March, would have been perfectly convenient to let without the knowledge of Webb and Noah, as the loan remain as it was, but I thought it right they state. On the 14th of the same month, that every thing done by the bank should al-Burrows obtained another discount from the ways be distinctly known and avowed, and, bank of $14,150, and on the 15th of the same therefore, gave the notes to the chairman of month the note of Webb and Noah for $15,000, the committee, Mr. Thomas P. Cope, who en-loaned them on the 16th of December pretered them on the books." This is the ac-viously, and not due till June next, was paid off count given by the president himself of the by two drafts from Webb, obtained at the Unitransaction in its origin. The money, $15,000, ted States Branch Bank at New York, accomwas advanced on the 26th of March, the notes panied with the following remarks, contained bear date on the 1st of April thereafter, and in a letter to the president of the bank, dated were ten in number for fifteen hundred dollars New York, March 11th, 1832, and found in each, with the interest added on as they re- No. 9, viz: "Although the loans to us by the spectively became due, which was on the 1st of Bank of the United States are purely of a buApril and October of the years 1832, 33, 34, siness character, and made upon statements '35, '36, and amounted, with the interest thus showing the necessity of the accommodation to added, to $17,975. At the time they were en-Jour establishment, and of our ability to meet tered on the books of the bank, on the 2d of Ja- our payments, there can be no doubt but that nuary last, the president received the money for the enemies of the bank, as also our political them. These notes were placed on the books opponents, will endeavor to give a false colorof the bank at this time, and it will be seen on ing to the whole transaction. The loan, though the 2d of March they were withdrawn, as will strictly defensible, is a large one, and the appear hereafter. On the 9th of August last, amount may give rise to the charge of indiscreafter the foregoing transaction had taken place, tionon the part of the directors. This, it is not J. W. Webb and M. M. Noah made an applica- only our duty, but our desire, to prevent, if postion to the bank for a loan of $20,000, accom-sible; and, therefore, with some little inconvepanied by a letter from a gentleman formerly a nience to ourselves, we have made arrangedirector of the Bank of the United States, to the ments to pay the note of $15,000 inthe course president of the bank, in the following words: of a few days.

"I cheerfully forward the enclosed as request- The evidence of the president of the bank ed. I see no reason against this application explains the character of these various loans, and being treated as a fair business transaction."the circumstances which induced him to be saThis was accompanied with sundry letters of tisfied with the security, and to make these adWebb and Noah, and the depositions of per-vances; which, together with all the testimony sons in their service as to their solvency and and correspondence on this subject, will be ability to pay the loan requested, all of which found in the papers marked No. 9. will be found marked No. 9. This loan, at six In that evidence it is stated, by the testimony months, was granted, with no other security of Webb and Noah, that they knew nothing of but that which is just mentioned, the largest the first 15,000 dollar loan made by the pres loan made on that day. On the 16th of De dent of the bank to Burrows; that Burrows cember following, another application was made them believe the $15,000 were loaned to made, by these same parties, for a loan of Noah by his father, and that he had his fa$15,000, which was granted, for six months, by ther present to carry on that transaction, and the exchange committee, without any addition- for which loan Noah allowed Burrows 24 per al security or recommendation. At this time, cent., and did not receive it all for some months there was a considerable pressure in the money after giving his notes; that the notes were dismarket, and many notes of the citizens of Phi- counted by the bank, in their names, without ladelphia were rejected. It was one among the their knowledge, and paid off in the same way. largest loans of the day. These loans, together It will appear by the testimony of Mr. Webb, with the loan made in March to Burrows, that the paper of which he is the editor, made amounted to the sum of $52,975, which con- two publications in the latter part of 1829, fasisted of notes drawn and endorsed by the edi-vorable to the establishment of branches; that tors only.

shortly thereafter it commenced its opposition offices under the General Government. To to the bank, and was, for sixteen months warm- this last resolution were added the following ly opposed to it; and that, on or about the 8th amendments, viz: "1st. A statement of the of April, 1831, it changed its course in favor of loans made by the bank and its branches, to the bank. Connected with this fact, is an ad-members of Congress, editors of newspapers, mission on the part of one of the editors, that and officers of the General Government, and before the first loan was negotiated he held a the terms of such loans." "2d. And the conversation with a gentleman, through whom names and amounts of payments to members of the loan was then negotiating, (who the com- Congress, in anticipation of their pay as memmittee know to be Burrows,) in which he, Bur-bers before the passage of the general approrows, urged the editors, one of whom, Webb, priation bill." "3d. And the amount of money had expressed himself in favor of a modified re- due the United States, and on deposite in the charter,) to advocate an unconditional renewal, bank, after deducting therefrom the sum thus "but expressed great satisfaction at learning advanced to those to whom the United States are that [one] was in favor of a charter under any indebted." "And lastly, a statement in detail circumstances." of the amounts paid to those who are now, or

The committee will state they were anxious have been members of Congress or officers of to obtain the testimony of Burrows, but were Government, since 1816, for services rendered unable to do it. A subpoena was issued for to the bank, stating the nature of the service. him and sent to New York, to which the mar- For the information sought by these inquiries, shal returned he was not to be found. It was see papers marked C. Besides these, there then sent to Washington city, and the Sergeant- were furnished the statements of loans made to at-Arms made the same return. The marshal five editors or publishers of newspapers, by of Pennsylvania was directed, by the chairman, which it will appear, that the accommodations to make and continue a search for the witness to those five editors were upwards of $110,000 in Philadelphia, having heard of his expected previous to the institution of this inquiry. arrival in that place; that the marshal reported The various reports which have, for a long to the chairman that he ascertained that the witness had arrived in that place, on Thursday the 5th instant; but he was not able to serve the process because he could not be found.

To an inquiry whether there were any other instances of notes being discounted for the accommodation of any merchant and trader, at 1, 2, 3, 4, and 5 years' credit, unless to secure a debt in jeopardy, there was presented to the committee four other cases.

period past, charged the bank with too frequent intercourse with brokers, and also of undue favoritism to certain individuals, as well as the large transactions which exhibited themselves upon many documents called for by the committee, induced them to examine particularly the accounts of the firms of which Mr. Thomas Biddle was and is the chief partner with the bank, as a broker.

Four subjects of investigation presented themselves in relation to their transactions with the bank.

1st. The allowing and paying interest to them on deposites.

On the 3d of April the committee, by resolulution, called for the following statements to assist them in the elucidation of certain facts which had appeared in other documents, viz : 1st. A tabular statement showing the aggre2d. Relates to certain loans upon the pledge gate amount of notes discounted and still due of stock, and the discounting of notes made to the bank, drawn and endorsed by non-residents T. Biddle by the president or others, without · of Philadelphia; which will be found marked A. the knowledge of the board, and on part of 2d. The aggregate amount of good notes of them, the pledge of stock, without interest.fered for discount, and rejected by the board; The committee would refer for the particulars drawn and endorsed by residents of Philadel- of these two charges to the papers marked phia, on the following days respectively: 9th of No. 13.

August; 16th December,1831; 2d January; 10th The third subject is the amount of discounts February; 2d and 14th of March, 1832; 24th made T. Biddle, and the rate of interest. The September, and 15th October, 1830. That state- document marked No. 14 will show the amount ment, marked B., will show the amount of notes on the 15th of each month from the 15th day of discounted; but the officers of the bank state September, 1830, to the 15th of February, their inability to discriminate between those that 1832. By this, it appears, that on the 15th of are good or otherwise. October, 1830, he had discounted upwards of 3d. The aggregate amount of notes dis- $1,120,000, and has at no time since been counted on personal security, and made payable more than six months after date, which appear to be only four in number, besides the case of J. W. Webb and M. M. Noah.

less than $400,000. The committee doubt the policy such large accommodations to individuals or firms, at any time, as it deprives the bank of the power of fulfilling one of the great 4th. The aggregate of notes now due the objects of its institution, which is to facilitate bank, discounted for a firm or the partners of a trade by loans in time of pressure, and it may firm, without the name of some person not be proper to add, that these large loans, at a belonging to the firm, as drawer or endorser, low rate of interest, in times when money is distinguishing in each of the above statements plenty, are usually followed by overtrading, the amount loaned to members of Congress, which produces pecuniary embarrassment and editors of newspapers, or persons holding general distress.

By a statement entitled "Remittances to The first statement, marked No. 21, shows Europe," marked No. 16, it appears that the the amount of specie exported by the Bank of foreign purchase of foreign bills were made of the United States, during the year 1831: Thomas Biddle and Co., drawn by them, viz: To London, in Mexican coin, 1831. To Paris, in Mexican

Oct. 14, 1 bill 60 days sight, and at a premium

of 10 per cents. Oct. 14, 3 bills at 75 to 90 and 105 days, and at a premium of 10 per cents. Oct. 22, 13 bills at 40 to 125 days, and at a premium of 11 per cent. Dec. 10, 9 bills at 40 to 110 days, and at a premium of 10 per cent. 1832. Feb. 14, 14 bills at 40 to 105 days, and at a premium of 10 cents. Feb. 14, 3 bills at 50 to 70 days, *and at a premium of 11 per ct.

coin,

$255,000 00

620,000

$32,399 68

[blocks in formation]

115,411 11

1,047,000 00

592,000 00

506,250 00

[blocks in formation]

400,000 00

$4,855,755 50

148,000 00 $1,794,060 79 By the foregoing statement, it appears that the bank purchased, between the 14th of October, 1831, and the 14th February, 1832, of T. Biddle and Co. foreign bills to the amount of $1,794,060 79. «

[blocks in formation]

3d. The amount purchased
marked No. 23, shows:
Of silver,
gold coin,
gold bullion,

[ocr errors]

4th. The amount of specie
marked. No. 24, shows it be
Of which there was, American
gold,
84,734 44
British, French
and Spanish,

596,717 00 1,871,111 00

$4,855,755 50 since 1824,

605,850 00 17,596 00 438,000 00

$1,061,446 00 sold since 1817, $5,184,910 29

With regard to these large loans, the committee refer to the statement marked No. 19, by which it appears that, on the 9th of April, 1832, the total amount of discounts on bills and notes at the bank in Philadelphia, was $7,939,679 52. Of that sum more than two-thirds were loaned to ninety-nine persons, to wit, $5,434,111. More than $3,000,000 were in the hands of twenty-seven individuals; and nearly one seventeenth part in the hands of one person. The committee have already expressed Silver, their conviction that these large accommoda$5,184,910 29 tions, to a few individuals, are injurious to 5th. The amount of specie drawn from each trade generally, and they will add, that they of the southern and western offices, since 1820, ought always to be made by either the board of to the Bank of the United States and New directors, or the committees empowered by York, marked No. 25, shows the total amount to them for that purpose. For an explanation of be this subject, see papers numbered 13 and 18.

48,291 35 5,051,884 50

[blocks in formation]

Properly connected with this subject is the been drawn to those places accommodation extended by the bank to indi-since the first of January, 1823, $20,925,990 07 viduals on the pledge of stock. In all the 6th. The amount of specie, (in the same monthly statements of the condition of the statement,) sent to the southern and western bank, prior to the first of March last, there was no column showing these loans. In that month, for the first time, so far as the committee can discover, a new column is exhibited, entitled "loans on other stocks," and which appeared, at that time, to have been transferred from the line called "bills discounted on personal securi ty." This change was made in consequence of What profits were made on the specie exa call for stock loans, by the House of Repre-ported, the committee did not call for docusentatives. A statement of the same was called ments to enable them to ascertain; it must, for, marked No. 20, which exhibits list of however, from the great quantity sent away, stocks pledged, consisting of Theatre shares, have been considerable.

The premium paid on the spe-
cie purchased, is

97,140 56

19,171 85

$77,968 71

Museum stock, Arcade stock, Railroad and Ca- The committee called for a statement of all nal stocks, Coal company stock, real estate in the specie imported by the bank from abroad, Louisiana, &c. &c., amounting to the sum of since 1819; but, as none was returned, they $1,713,297 34.

The various transactions in specie, by the bank, has been a subject of special notice by the committee, and various statements called for, show the magnitude of them.

presume none was imported.

What proportion of the gold exported was American coin the committee have not before them the means to determine; it was expected to have been given in the statement; but in

looking into them the gold exported is without from the proceeds the funds to meet his oblia designatory name; it is believed, however, gation, and the bank to transmit the same to the the amount is considerable. place upon which their bills are drawn, (which In examining this subject minutely, the com- are at six months sight,) long before they be mittee find that large amounts of the specie come due. It would seem to produce a greater have been drawn from the office at New Or- export of specie eventually, than would otherleans. Of this there can be no complaint; it is wise take place if the operations were commenthe principal depot for returns of goods shipped ced with specie, and not with bills purchased to Mexico, which are almost exclusively paid in the manner described; for the merchant, refor in specie, and it cannot be expected that it lying upon his immediate resources, would not will remain there. But the committee suggest engage to such an extent in the business, and whether the withdrawal of the specie from most would combine in the operation much of the of the other ports of the country, and substitut-produce of the country; whereas, relying uping paper in its stead, might not be highly inju- on an extensive credit, he hazards every thing rious to those sections of country subject to its on the success of the enterprise. It is a spe. operation. cies of speculation in trade leading to great

The subject of the bank's furnishing bills of risks, and certainly terminating in overtradingexchange for the trade of India, China, and the evils of which the country is now solely exSouth America, has been brought to the atten- periencing. By loans of a similar character by tion of the committee by document marked No. insurance companies providing funds for traders 26; and having been so stongly described as to China, Government has sustained more loss affording great advantages to the country, in than in any other branches of trade. the triennial report of September last, as "eco- The increase of the number of branches estanomising" the specie of the country. The blished since 1832, cannot be passed over in committee have felt it a duty to examine and silence by the committee, and deserves, as a present the subject to the consideration of Con-source of extended influence of the bank, the gress and the commercial community, believ- most serious consideration. ing, as they do, that there is something delu- In some few instances where new branches sive in the operation. The result of their exa- have been established, perhaps they may have mination has led them to the conviction that been called for by the community, and may this new method of dealing in bills of exchange have been useful to them and profitable to the does not "economise" the specie of the coun-bank; but, in most of the cases, the committee try at all. It is a universal law of drawing, that doubt whether they were called for from pubfunds must either go before or follow after the lic utility, and their establishment will, in the draft to honor it at maturity; and whether it end, not only prove unprofitable to the bank, goes directly or circuitously, the funds to dis- but very injurious to the communities among charge it must, sooner or later, arrive at which they are located. Mr. Cheves, in a letthe place of payment. These bills are to ter of the 27th of May, 1819, to Mr. Crawford, be paid in England; but they go round the then Secretary of the Treasury, says: "I am Cape of Good Hope before they reach their perfectly satisfied that, with the present orgaplace of destination Instead, therefore, of nization of the bank, it can never be managed sending the specie directly to India and China, well. We have too many branches, and the dias formerly, who does not perceive that it must rectors are frequently governed by individual now be sent to England, the country upon and local interests and feelings. For a time we which these bills are drawn, there to meet them must bear with the branches, but I hope they upon their arrival at the place where they are will be reduced."

to be paid? The bank consequently, becomes Again, in the same letter, he observes, "the the shipper of the specie, to pay its bills, in real and original evil under which the country place of the merchant to purchase his merchan- is suffering is over-banking. This leads to exdise in the East Indies. It is simply and purely cess in trading, manufacturing, building; and nothing but a change of the destination of the the history of the ill-judged enterprises which specie, with only the advantage of its going to have been undertaken in these several conLondon. cerns, would give a full history of all the disThe mode in which these bills are drawn and tresses of this country, excepting a little agridisposed of to the purchasers, having twelve cultural distress growing out of the inordinate months to run, as will be seen by a copy of the expectations which the others excited." These obligation taken by the bank, marked No. 27, opinions fully accord with the views of the comthe committee consider of doubtful utility to mittee, and they consider them as peculiarly apthe country. The legitimate object of banks, the plicable to the present time, as exhibiting simicommittee belive to be, the granting facilities, lar causes now operating with extended force, not loaning capital. The supplying of bills appears from which similar effects must follow, augeven much more objectionable than loaning ca- mented in proportion to the increase of its pital, for it encourages an operation which com- branches.

mences and ends without the employment of The stockholders, at the triennial meeting on any capial whatever, and is similar in their cha- the 1st of October, 1822, recommended a withracter to respondentia securities. The buyer drawal of some of the branches then existing, is enabled, within the term of credit, to make in these words: "In taking into view the busithe voyage, dispose of his goods, and obtain ness of the bank, as connected with its offices,

« ForrigeFortsett »