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report in 1822.

the committee think it right to recommend to the particulars of the debts "considered lost," the continued attention of the president and di- marked No. 30; a statement of the suspended rectors the necessity of withdrawing those debt and real estate, with the probable loss branches which are found to be unprofitable, thereon, marked No. 31; the statement headand transferring their funds to the offices which ed "Contingent Fund," marked No. 32; the shall seem to require additional capital." Since sales of the forfeited bank stock, marked No. this period two have been discontinued, and 33; and the dividend reports for July, 1829, Janine others have been established, as per tri-nuary and July, 1830, January and July, 1831, ennial report of 1831. These opinions of Mr. marked No. 34. To these the committee refer Cheves, in which the committee have coneur- for the particulars of the subjects to which they red, were approved by the stockholders, as will relate, in eonnection with the "Contingent appear by the following extract from this same Fund." 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 acknowregard 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 light." effects and consequences succeed. To illusThe 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, circula

In 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 suspendpared 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 were 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 upwards 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 exerpropriations 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 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 mategreatly distressed. Considering the extent of rially aid us, by taking drafts upon the large cithe suffering, it is greatly to be desired that ties nearest to them. some good may result from it."

First. The whole of the funded
debt which it then held,
Second. The difference between
the specie it then held,
And the amount it possessed on
the 1st April,

$3,497,681 06

$11,545,116 51

5,799,753 63

$4,745,362 88

I am, respectfully, your obedient servant, The committee believe that the course of W. McILVAINE, Cashier. 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 diminished its means to meet the demands which Since the 1st of September last the bank has and notes, payable at distant offices, were then freely discounted at the Bank of the United may come upon it— States, and the different offices. Bank notes were issued by the bank, without regard to the wants of the community, or the effect upon the circulating medium, which became depreciated, driving the precious metals from the country; and, until the reaction had operated to check them, led to extravagant speculations, which ended in ruin; and relief was not obtained until 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 dollars. Before this was accomplished, the ex- September, of $8,243,043 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 bank 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, $2,840,000 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 October last, and is evidenced by the following circular, which indicates, beyond all doubt, that the bank had overtraded.

CIRCULAR.

States, between the 5th day of January and the 29th day of March, is $1,810,408 37; at the office of New York, between the 4th day of January and the 28th day of March, is $259,305 43; at the office of Boston, between the 5th day of 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 ix millions of funded debt, which was, on the of Baltimore, between the 16th of January and 1st instant, advertised by the Government to the 2d day of April, $123, 741 63, and on a distake place on the 1st and 2d days of January count line of little more than two millions of next, but which, according to subsequent no- dollars, as will be seen by the weekly statetice 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 K 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 y provision must be made, and from the pre- of its notes, which amounted on the 1st Sepvaling 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 ly, as that without denying reasonable accom- of $1,317,993 62. During this period the bank modation 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 no early 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 banks, and on individuals, will prove particu- of more than $1,700,000 in Europe at this

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period. The cause which led to this necessity branch notes redeemed by the Bank of the still yet exists, with an increase to the extent of United States at Philadelphia, during the month the increase of circulation, and but for a decline of February last only, to be $726,000; and the in the price of specie in Europe, it would still amount redeemed, in 1831, during the same continue to be exported. month, was only $368,910.

The committee would present another strik- In a letter under date of the 26th of March ing analogy between the situation of the bank last, to the chairman of the committee, the prein April, 1819, and its present condition. At sident of the bank says, "that the amount of the first mentioned period, Mr. Cheves inform-branch notes redeemed at the New York office ed the Secretary of the Treasury that the bank during the year 1831, was $13,219,635, and at would not pay the Louisiana debt of three mil- Philadelphia, $5,398,800, making a total of lions, without negociating a loan in Europe, and $18,618,435, with an increase of circulation betwo millions were actually borrowed in Europe, tween the 2d of February, 1831, and the 2d of the indulgence of the Government being ob- January, 1832, of more than six millions of doltained to that effect. The bank at this time is lars, as per monthly statements, and decrease of precisely in the same situation; it has asked the its means, between the 2d of February, 1831, Government to postpone the redemption of the and 1st of April, 1832, to meet immediate dethree per cents. from 1st of July to 1st of Oc-mands, of more than twelve millions of dollars, tober, and has assumed the payment of one viz:

And the last to

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9,640,000 00 $12,115,668 10

quarter's interest on these stocks, being sub- In specie, funded debt, and notes of other stantially equivalent to borrowing seven millions banks, which, at first named date, amounted, as of the Government's money for three months. per monthly statements, to $21,756,668 10 The supplying of exchange by the bank, as has been done for the last five months, and the curtailing of discounts, are but mere palliatives, as the committee fully believe; and they are persuaded that no measure can be invented to Making, as just stated, a diminution in the restore a sound currency, and a regular state of active means immediately applied to the extinthings generally, and give a solid and perma-guishment of its debts, of considerably more nent value to property, but the withdrawal of than half of its former capacity, to effect the a large portion of notes now in circulation, by same object.

the bank, which will compel other banks to do With such an increase of issues, and the inthe same. fluence of a most powerful reaction now operaThe committee will here introduce a quota- ting upon the fiscal energies of the country, as tion from Mr. Rush, in his Treasury Report in is exhibited by the difference of the redemp1828; which fully accords with their sentiments. tion of branch notes at the periods and places "It is the preservation of a good currency above mentioned, together with such a reducwhich can alone impart stability to property, tion of its means, to meet its engagements, and prevent those fluctuations in its value, must, we fear, compel them still further to curhurtful alike to individual and national wealth." tail their accommodations. Again, he says, "This advantage the bank has It is evident, from the circulars aldressed to secured to the community, by confining within the branches, and correspondence with them prudent limits its issues of paper, whereby a since October last, that the chief object of the restraint has been imposed upon excessive im- bank has been to sustain itself-the statements portations, which are thus kept more within the accompanying this report, clearly proving that true wants and capacities of the country.the bank has not increased its facilities to the According to the triennial report of the direc- trading community, in any part of the Union. tors to the stockholders on the 1st of August, The Bank of the United States, among other of 1828, the amount of circulation then was conditions of its charter, is bound to make col$13,044,760 71; and on the first of April last, lections of the public revenue, to transfer the as before stated, it was $23,717,441 14, pre-same, or any part thereof, from one point to senting the astonishing difference of $10,671,780 another, that may be required; and to make 43, in less than four years. Can this be con- any and all payments for the account of the gosidered, according to the sound doctrine of Mr. vernment, whether for principal, interest, civil Rush, confining its issues of paper within pru- list, army, navy, pensions, or for any other purdent limits, whereby a restraint has been im- pose whatever, free of all and any charges for posed upon excessive importations? That great such services.

contractions are injurious, the committee consi- For performing this duty, the bank has claimthey have adduced an authority that cannot well ed, and has received from the treasury depart. be doubted, and that a great one is now in ment, and the country generally, for some years operation there are too many general evidences past, merit to an extent that could not have been in confirmation of the fact, to be refuted. A par-surpassed, even if all those services it performs ticular one will suffice, which is taken from the were gratuitous. This and other circumstances documents called for by the Senate, and pre-have led the committee to an investigation of sented to that body by the Secretary of the the subject, as far as the limited time would alTreasury, on the 12th of March last; in which low, before closing their labors, to see how far will be found a communication from the pre- the bank is entitled to the credit bestowed up. sident of the bank, stating that the amount of on it, and to what extent the bank has aided the

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every facility which it is in the power of this department to afford the bank, in its efforts to support specie payments, and restore the currency to a natural state, may be confidently relied upon."

government in its fiscal operations beyond the ed to trouble you with those views with the obligation imposed in obedience to its charter. hope that you will pardon the liberty, and with The government, in its collections through the conviction that if you can serve this institu the Bank of the United States, receives nothing tion in any of them which you shall deem conbut specie, or notes of the Bank of the United sistent with the public good, you will feel a States, and makes its payments in nothing else. pleasure in doing so. The Secretary of the If the notes of State banks are received by the Treasury, in closing his answer, under date of bank in place of its own, it is a private matter the 27th March, 1819, says, between such banks and the Bank of the United States, and one with which the government does not concern itself; and it is to be presumed that the Bank of the United States is too watchful and vigilant in the protection of its own interests, not to see that it obtains from the State banks, for the notes thus taken, specie or its equivalent, or its own notes, in exchange, and thereby be provided with a fund from the collection of the revenue, equal, in value, to that in which they are required to pay.

will be found that since the month of March, 1824, at all the different periods immediately following the redemption by the Government of portions of its funded debt, there is no one time when the bank was not left with more than one million and a half of dollars of public de posites; and in many instances with four and five millions, which sums were, immediately after, increasing by the constant accumulated collection of the public revenue.

By a reference to a statement of the public deposites in the Bank of the United States each month, from March, 1818, to March 1832, inclusive, marked No. 37, it will be seen that from the 1st of January, 1823, up to the month of March, 1832, there has been only one period, (November, 1825,) when the public deposites The largest portion of the revenue, particu- did not exceed four millions of dollars, in the larly from imports, as is universally known, is hands of the bank, and they frequently amountcollected in the Atlantic eities, north of the Po-ed to eight, nine, ten, and eleven; and on one tomac. Those cities being the great marts of occasion to twelve millions of dollars. supply to nearly the whole of the United States, By reference to document marked No. 38, it and places to which remittances centre from almost every part of the country, creates a demand for funds upon them, from nearly every quarter, constantly, and generally at a premium. Therefore, so far as the bank is called upon to transfer funds from those cities to other places, it becomes a matter of profit, and not of expense to it, and the greater the distance, the greater the premium; and the larger the amount thus required to be transferred by the government, and the greater the distance, the great- The bank, as it collects the revenue, knows, er the profit and advantage to the bank. or ought to know, that it will be called upon by That the bank has aided the Government the Government to reimburse it, and in all thus far, the committee are unable to discover, cases of redemption of the funded debt, three or that they are under any obligations to the months notice is given by the Treasury of such bank for those services, they are at a loss to intention. With such notice, and with proper imagine. How far the bank has aided the Go- management on the part of the bank, the comvernment in its fiscal operations, as it claims to mittee, cannot see that either the Government have done, will be seen by a communication requires any aid, or that the community can be from the President of the bank to this commit-affected by the course of the operation. tee, hereafter adverted to in another part of The bank has its legitimate banking capital this report; and also in a report of the commit- with which to do its regular business, and ac tee of the stockholders, at the triennial meet-commodate the community. As it collects the ing on the 1st of September, 1831, in the follow-public revenue it is enabled both to avail itself ing words: "That the bank, through the whole of the advantage of employing it to its own be course of its operations, has effectually assisted nefit, and the accommodation of the commercial the Treasury in the collection and distribution community who principally contribute to its of the public revenue, and that, of late years, it payment, by commencing the discounting of has been signally efficient in preventing the dis- business paper, payable within or about the charge of the public debt from disturbing the time they know they will be called upon to operations of commerce, or the value of pecu- make the payments on account of the Govern nary investments." ment; and, as they gradually approach that pe Now the committee are not able to discover riod, they must also shorten the period which pon what principles the foregoing declaration the business paper has to run, until they arrive made. By referring to the correspondence, at the time the call from Government is in 1819, between the then president of the bank made upon them, when the business paper and the then Secretary of the Treasury, the will have been paid off, the bank then pays the committee discover that the bank was then ap- Government, and the Government immediately plying to the Treasury Department to aid it in again circulates it among the community. its operations, and was reoeiving all that it The operation, as thus described, appears to could promise. the committee too plain and simple to require On the 20th March, 1819, the President of any further illusrtation; and if the principle is the bank closes a communication to, the then sound, and has been acted upon by the bank, secretary, Mr. Crawford, thus: "I have 'ventur- they cannot discover in what manner the opera

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tions of commerce could have been disturbed, make the contemplated payments." I then or the value of pecuniary investments have proceeded to observe, that in the present situabeen affected by the payment of the public tion of the commercial community, and with a debt by the Government. very large amount of revenue, (amounting to But if the bank has, as the public re- nine millions,) to be paid before the 1st of July, venue has accumulated to the credit of the debtors of the Government would require the Treasury Department, gone on discount-all the forbearance, and all the aid that could ing upon it, or loaning it out, disregard-be given them: and that the payment proposed ing the period when they would be called by creating a demand for the remittance of se upon to reimburse it, the committee can veral millions of dollars to European stockholreadily perceive that, when that order arrived, ders, would tend to diminish the usual facilities they would be found not only deficient in pre- afforded to the debtors of the Government, and paration, but in a state of surprise, and that the might endanger the punctual payment. payments would first embarrass the bank, and this reason I thought it, for the interest of the then lead it to press and embarrass the commer- Government, to postpone the payment till the cial community. next quarter. I further stated, that the plan of paying to each stockholder only one half of his loan, would not be so acceptable as if his whole loan were repaid at once.

For

From the observations made, and the examination of documents during the course of this investigation, the committee have strong reason to apprehend that the course pursued by "Having thus performed my duty in giving the the bank has been upon this latter principle. opinion asked, I left it, of course, to the Govern If so, the bank has incurred a high responsibility. ment to decide. On the part of the bank, I The committee believing the subject of the sought nothing, I requested nothing. After late postponement of a portion of the 3 per cent. weighing the circumstances, the Government stocks, intended, as they understood, to have were desirous of adopting the measure, but the been paid on the 1st of July by the Govern-difficulty I understood to be this, that the sinkment, to be within the province of their inqui-ing fund would lose the quarter's interest, from ries; and believing, also, that it had a strong July to October, of the sum intended to be paid connection with the present state and situation in July; and that the Government did not feel of the affairs of the bank, and for the purpose itself justified in making the postponement, unof enabling them to form a correct and true opi- less that, interest could be saved, but that it nion upon that subject, they made a call upon would be made, provided the bank would make the president of the bank for the correspon- the sinking fund whole on the 1st October. To dence in relation to the postponement of that this I said, that, as the bank would have the use payment in the following words: "Will you of the fund during the three months, it would please give a copy of the correspondence con- consent to save the sinking fund harmless, by nected with your application in March last, re-paying the three months interest itself; and so questing a suspension by the Government of the the matter stands. payment of a portion of its debt intended to "Now, it will be seen, that the bank, in all have been made on the 1st July next, or a this, has had not the least agency, except to of statement of the arrangement made in relation fer its opinion, when it was asked, in regard to to that subject." Which correspondence was a measure proposed by the Government; and communicated by the president of the bank, then to offer its aid in carrying that measure inwith the following remarks: "I have made no to operation. application to the Government, nor have I requested any suspension of the payment of any portion of the public debt."

The committee cannot discover any ability which the bank possesses or will possess, to give increased aid to public debtors in the payment "The inquiry, I suppose, relates to this cir- of the nine millions of dollars falling due (as is cumstance, I received a letter from the acting said) in the quarter ending with the 1st of July; Secretary of the Treasury, dated the 24th March, but, on the contrary, they believe that such is 1832, informing me that Government was about the situation of the bank now, and such will be to issue a notice on the 1st of April, of their the demands which it will be called upon to intention to pay, on the 1st of July hext, one meet, that it will require the aid of all the achalf of the three per cent. stock, and to do it cumulated collections for the Government, to by paying to each stockholder one half of the amount of his certificate.' He added,

"If any objection occurs to you either as to the amount or mode of payment, I will thank you to suggest it.'

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sustain itself. The committee are fully of opinion, that though the bank neither "sought", for, nor requested" a postponement of the payment by the Government, as stated in the declaration of the president, yet if such post"Thus invited by the Government to a com- ponement had not been made, the bank would munication marked 'confidential,' to give my not, on the 1st of July, have possessed the abiopinions on a measure contemplated by the Go.lity to have met the demand, without causing a vernment, I felt it my duty to express my views scene of great distress in the commercial com. of its probable operation; in 'my reply, there-munity.

fore, dated 29th of March, I stated that so far The committee are unable to discover in what as the bank is concerned no objection occurs to afford manner the bank could aid to the Governme, it being sufficient that the Government has t, menin carrying into effect the measure they prothe necessary amount of funds in the bank to posed, which the president of the bank, in his

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