« ForrigeFortsett »
for shortly thereafter it commenced its opposition offices under the General Government. To Hur best to the bank, and was, for sixteen months warm- this last resolution were added the following bees by opposed to it; and that, on or about the 8th amendments, viz: “1st. A statement of the me best of April
, 1831, it changed its course in favor of loans made by the bank and its branches, to hotel 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 did 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 bad 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 abtain the testimony of Burrows, but were Government, since 1816, for services rendered unable to do it. A subpæna 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 period past, charged the bank with too frewitness had arrived in that place, on Thursday quent intercourse with brokers, and also of the 5th instant; but he was not able to serve the undue favoritism to certain individuals, as well process because he could not be found. as the large transactions which exhibited them
To an inquiry whether there were any other selves upon many documents called for by the instances of notes being discounted for the accommittee, induced them to examine particommodation of any merchant and trader, at 1, cularly the accounts of the firms of which Mr. 2, 3, 4, and 5 years
' credit, unless to secure a Thomas Biddle was and is the chief partner with debt in jeopardy, there was presented to the the bank, as a broker. committee four other cases.
Four subjects of investigation presented themOn the 3d of April the committee, by resolu- selves in relation to their transactions with the lution, called for the following statements to bank. assist them in the elucidation of certain facts 1st. The allowing and paying interest to them which had appeared in other documents, yiz : on deposites. Ist. A tabulár statement showing the aggre.
2d. 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
boxd; 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; 20 January; 10th The third subject is the amount of discounts February; 24 and 14th of March, 1833; 24th made T. Biddle, and the rate of interest. The September, and 15th October, 1836. 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 cotinted on personal security, and made pay-less than $400,000. The committee doubt the able more than six months after date, which policy e such large accommodations to indiappear to be only four in number, besides the viduals or firms, at any time, as it deprives the case of J. W. Webb and M. M. Noah.
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, $255,000 00 1831.
To Paris, in Mexican Oct. 14, 1 bill 60 days sight, and at a premium coin,
620,000 of 104 per cents.
$32,399 68 To Paris, in gold, 247,000 Oct. 14, 3 bills at 75 to 90 and 105
Do. in mixed bul. days, and at a premium of 10%
180,000 per cents. 115,411 11
1,047,000 00 Oct. 22, 13 bills at 40 to 125 days, and at a premium of 11 per cent. 592,000 00
$1,302,000 00 Dec. 10, 9 bills at 40 to 110 days,
2d. The amount of specie exported since 1819, and at a premium of 10 per cent. 506,250 00 will be found in the statement marked No. 22. 1832.
2,598,357 00 Feb. 14, 14 bills at 40 to 105 days,
2,257,398 50 and at a premium of 104 cents. 400,000 00 Feb. 14, 3 bills at 50 to 70 days,
$4,855,755 50 * and at a premium of 11 per ct. 148,000 00 of this amount there was in gold, 2,387,927 50
596,717 00 $1,794,060 79 In silver,
1,871,111 po By the foregoing statement, it appears that the bank purchased, between the 14th of Octo
$4,855,755 50 ber, 1831, and the 14th February, 1832, of T. 3d. The amount purchased since 1824, Biddle and Co. foreign bills to the amount of marked No. 23, shows: $1,794,060 79.
605,850 00 With regard to these large loans, the com gold coin,
17,596 00 mittee refer to the statement marked No. 19, gold bullion,
438,000 00 by which it appears that, on the 9th of April, 1832, the total amount of discounts on bills and
$1,061,446 00 notes at the bank in Philadelphia, was $7,939, 4th. The amount of specie sold since 1817, 679 52. of that sum more than two-thirds marked. No. 24, shows it be
$5,184,910 29 were loaned to ninety-nine persons, to wit, of which there was, American $5,434,111. More than $3,000,000 were in the
84,734 44 hands of twenty-seven individuals; and nearly British, French one seventeenth part in the hands of one per and Spanish,
48,291 35 son. The committee have already expressed Silver,
5,051,884 50 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
$22,523,387 94 this subject, see papers numbered 13 and 18. Of which $20,925,990 07 has
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 branches, since 1819, is
$896,472 10 no column showing these loans. In that month, The premium received on the for the first time, so far as the committee can specie sold, is discover, a new column is exhibited, entitled the premium paid on the spe“ loans on other stocks,” and which appeared, at cie purchased, is
19,171 85 that time, to have been transferred from the line called “bills discounted on personal securi
$77,968 71 ty." This change was made in consequence of What profits were made on the specie es. a call for stock loans, by the House of Repre-ported, the committee did not call for docu. Sentatives. 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. 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.
presume none was imported. The various transactions in specie, by the What proportion of the gold exported was bank, has been a subject of special notice by American coin the committee have not before the committee, and various statements called them the means to determine ; it was expected for, show the magnitude of them.
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 obli. a 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 otherJeans. Of this there can be no complaint ; it is wise take place if the operations were commen. the 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 repoft of September last, as s'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 à 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 pub. funds 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 let
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 die as 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 dis. The mode in which these bills are drawn and tresses of this country, excepting a little agridisposed of to the pnrchasers, 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 simi. committee 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 capital 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,
the place of payment.
the committee think it right to recommend to the particulars of the debts “considered lost,"
They say, “they take great. The committee feel it their duty now. to give pleasure in unanimously declaring that the cir- their views as to the causes of the present discumstances of the bank fully realize their an- tress in the trading community, and which they ticipations as expressed at their last meeting in fear may greatly increase. It is an acknow. regard to the president, (Mr. Cheves,) who, ledged principle that like causes, in all cases, by his talents, disinterestedness, and assiduity, produce like effects; and as in 1819 contraction has placed its affairs in an attitude so safe and followeed the expansion of 1817 and 1818, so prosperous as that the burthen of duty devolv- by the same rule must contraction follow the ing upon his successor will be comparatively immense expansion of 1830 and 1831, and like
effects ‘and consequences succeed. To illus The committee cannot but think that, had trate more clearly the position, and bring it the succeeding direction of the bank been gui. home to the minds of every one, the following ded more by the opinions and wishes of the table of the state of the bank during some of stockholders, as then expressed, and gone on the mouths of 1818 and '19, and 1831 and 32, gradually growing with the growth, and in- are here exhibited, embracing items from creasing with the natural wants of the country, which direct calls upon the vaults proceed, and great sufferings to the community would have the immediate means which remain to meet been avoided.
them, viz: The first are the deposites, circulaIn the year 1819, great abuses existed in the tion and debts abroad, not on permanent.loan. branches, of which Mr. Cheves speaks without The second, the specie, funded debt, and notes reserve, in his last report to the stockholders,as of other banks, the amount of each will be well as in his correspondence 'with Mr. Craw- found under their proper heads at the various ford, and upon casting the eye over the month periods mentioned." (For table see page 192.] ly statements, it is remarkable to observe what The preceding table shows that, at no period losses have taken place at the branches com- in 1819, when the bank was very near suspend. pared with the mother bank. For instance: on ing payment, was it less able to extend relief to the 1st of January last, the loss of the mother a suffering community as at the present mobank, on a capital of sixteen millions and a half ment. In April of that year, the month in was, in round numbers, $328,000; that of the which its difficulties' vere the greatest, its Baltimore branch was, $1,662,000, on a capital means of specie, notes of other banks, and of one million and a half, so that it lost more funded debt (which could have been turned inthan its capital. That of the Norfolk branch to specie or notes of other banks) amounted to was $229,000, on a capital of 500,000; losing upwarıls of ten millions of dollars; and the nearly one half of its capital, and so with all the whole demands, which could come against it in rest of the branches, their losses are out of all the same month, of circulation, deposites, and proportion to their capital, and ten times great- debts owing abroad, amounted only to about er than the mother bank, according to the a- fourteen millions. But the committee feel mount of their respective capitals. These los bound, in candor, to state, that this was after a ses, however, were principally incurred prior to number of months of constant contraction, not 1819. The proper inference to be drawn from only by the Bank of the United States, but also these facts is, that the worst of mismanagement by most of the other banking institutions of the has existed in the branches.
country, where a general exhaustion had been The "Contingent Fund” has claimed the at. produced. It was on the 6th April
, 1819, that tention of the committee. The object for which Mr. Crawford, then Secretary of the Treasury, it was originally created, and the original a- writes to Mr. Cheves thus: “It is even doubtmount provided, together with the additional ap- ful whether it is practicable, with all the exer propriations which have been made to it, and tions which it is in your power to make, to conthe manner in which the same have been ap-tinue specie payments through the year.” Unplied at different periods, will all be explained der the same date, he says: “My impression is, in the following documents.
that the safety of the bank can only be effected The report of the board of directors, in July, by withdrawing nearly the whole of its papers 1821, published in the gazettes at that time, in circulation. If the bank does this, all other marked No. 28; the report of the stockholders solvent banks will be compelled to do the same. at the triennial meeting in October, 1822; the When this is effected, gold and silver will be report of the Dividend Committee, on the 16th introduced into the country, and make a subJanuary, 1823, marked No. 29; a statement of stantial part of the circulation, and enable the
banking institutions gradually to resume their larly acceptable for several months to come, and med last accustomed operations. Whilst this is effecting, whenever direct claims of that kind, on those two the community
, in all its relations, will be places are not to be procured, you might matebet tas greatly distressed. Considering the extent of rially aid, us, by taking drafts upon the large ci
the suffering, it is greatly to be desired that ties nearest to them. 3.34 moine good may result from it.”
I am, respectfully, your obedient servant, The committee believe that the course of
W. McILVAINE, Cashier. si operations by the bank, during the years 1830 Addressed to the CASHIERs of all the offices.
and 1831, have been nearly of a similar character to those of the years 1817 and 1818. Drafts
Since the 1st of September last the bank has and notes, payable at distant offices, were
then diminished its means to meet the demands which freely discounted at the Bank of the United may come upon itStates
, and the different offices. Bank notes First. The whole of the funded vere issued by the bank, without regard to the
debt which it then held, $3,497,681 06 wants of the community, or the effect upon the Second. The difference between circulating medium, which became depreciated,
the specie it then held, $11,545, 116 51 driving the precious metals from the country: Ànd the amount it possessed on and , until the reaction had operated to check
the 1st April,
5,799,753 63 them, led to extravagant speculations, which ended in ruin; and relief was not obtained un
$4,745,362 88 til the circulation of the Bank of the United Making an aggregate diminution of its means to
States had been reduced to about 4,000,000 of meet its momentary demands, since the 1st of Tim dollars
. Before this was accomplished, the ex- September, of $8,343,043 94, whilst during the pedient was resorted to, of curtailing loans; same period, those demands have increased $4,and, while they were doing that, they continued 197,871 51, viz: the circulation, deposites, and the issue of bánk notes, thereby continuing the foreign debt, the aggregate of which was, on evil which they were striving to avert. the 1st September $38,452,758 67, and on the What is the state of the bank now?
1st April $42,650,630 18. The measures and On the 1st of March, (see monthly statement the effect appear to be similar to those precedmarked No. 35.) the bank had $6,800,000|ing 1819. The extensive discounting of domesspecie, $2,840,006 notes of other banks, and of tic bills and drafts, payable at distant branches, funded debt none!! making an aggregate of the amount being on the 1st of April, per month$9,640,000,to meet its circulation of $23,717,000, ly statement, $20,354,748 79.* The orders for deposites $17,050,000, and foreign debts owing curtailing at the western branches, and the $1,876,000, making an aggregate of $42,643,- curtailing at the principal offices in the Atlan000; and this evil exists while a reaction or con- tic cities, and at the Bank of the United States, traction is operating to a considerable extent, the amount of which, at the Bank of the United
This contraction commenced on the 7th of States, between the 5th day of January and the October last
, and is evidenced by the following 29th day of March, is $1,810,408 37; at the of circular , which indicates
, beyond all doubt, that fice of New York, between the 4th day of Januthe bank had overtraded.
ary and the 28th day of March, is $259,305 43;
at the office of Boston, between the 5th day of CIRCULAR.
January and the 29th day of March, is $167,860 Bank UNITED States, Oct. 7, 1831. 85; (and that too; on a discount line of less than SIB: The unusually heavy reimbursements of two and a half millions of dollars ;) at the office six millions of funded debt, which was, on the of Baltimore, between the 16th of January and Ist instant , advertised by the Government to the 2d day of April
, $123, 741 63, and on a distake place on the 1st and 20 days of January count line of little more than two millions of text, but which, according to subsequent no- dollars, as will be seen by the weekly statebee from the Treasury Department, under yes. ment of those offices
and the Bank of the United terday's
date, may, it appears, be demanded of States, marked No. 36. the bank, by the public creditors, at any period
The most remarkable feature which presents of the present quarter, is calculated to press itself to the view of the committee, connected very inconveniently upon the parent bank, and with the present situation of the bank, and the upon the office at New York; the more so, from course of operations upon it since the 1st of our uncertainty as to the time when the necessa- September last, is the increase in the circulation ey provision must be made, and from the pre- of its notes, which amounted on the 1st Sepsaling active demand for money. Be pleased, tember to $22,399,447 52, and on the 1st therefore, so to shape your business immediate- April to $23,717,441 14, making the increase 17, as that without denying reasonable accom- of $1,317,993 62. During this period the bank undation to your own customers, or sacrificing undertook to check the exportation of specie the interest of your office, you may throw, as by supplying bills at such a rate as left na party as possible, a large amount
of available inducement for individuals to ship it; to do means into our hands in Philadeiphia and New which, they exhausted all the funds which York, and at the same time abstain, as far as they could procure from every source. Over practicable, from drawing upon either of those $5,000,000 were remitted, as per statement points
; checks and short drafts on the local marked No. 16, and still left them with a debt e banks
, and on individuals, will prove particu- of more than $1,700,000 in Europe at this