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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 dole tained 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 de, three 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: 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 And the last to
9,640,000 00 has been done for the last five months, and the curtailing of discounts, are but mere palliatives,
$12,115,668 10 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.
Auence 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 Auctuations in its value, must, we fear, compel them still further to cur hurtful 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 cal$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 go: sidered, 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 impose 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 departe, 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, an! to what extent the bank hasaded the
government in its fiscal operations beyond the ed to trouble you with those views with the hente 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 is the Bank of the United States, receives nothing tion in any of them which you shall deem con
but specie, or notes of the Bank of the United sistent with the public good, you will feel a if kies States
, and makes its payments in nothing else. pleasure in doing so.". The Secretary of the them. If the notes of State banks are received by the Treasury, in closing his answer, under date of
2 bank in place of its own, it is a private matter the 27th March, 1819, says, “ every facility rk e between such banks and the Bank of the Uni- which it is in the power of this department to yan's ted States, and one with which the government afford the bank, in its efforts to support specie al does not concern itself; and it is to be presum- payments, and restore the currency to a natural
ed that the Bank of the United States is too state, may be confidently relied upon." watchful and vigilant in the protection of its By a reference to a statement of the public own interests, not to see that it obtains from the deposites in the Bank of the United States each State banks, for the notes thus taken, specie or month, from March, 1818, to March 1832, inits equivalent, or its own notes, in exchange, clusive, marked No. 37, it will be seen that and thereby be provided with a fund from the from the 1st of January, 1823, up to the month collection of the revenue, equal, in value, to of March, 1832, there has been only one period, that in which they are required to pay.
(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 al- will be found that since the month of March, most every part of the country, creates a de. 1824, at all the different periods immediately mand for funds upon them, from nearly every following the redemption by the Government quarter, constantly, and generally at a premium. of portions of its funded debt, there is no one Therefore
, so far as the bank is called upon to time when the bank was not left with more than transfer fuuds from those cities to other places, one million and a half of dollars of public de it becomes a matter of profit, and not of ex-posites; and in many instances with four and pense to it, and the greater the distance, the five millions, which sums were, immediately greater the premium; and the larger the amount after, increasing by the constant accumulated thus required to be transferred by the govern- collection of the public revenue. ment, 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 al 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. tec, 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 actee 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 Governdiary 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 i made. By referring to the correspondence, at the time the call from Government is
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
, the bank then pays the samittee discover that the bank was then ap- Government, and the Government immediately plying to the Treasury Department to aid it în again circulates it among the community. its operations, and was reoeiving all that it
The operation; as thus described, appears to
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, Becretary, Mr. Crawford, thus: “I have ventur- they cannot discover in what manner the opera
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 seupon 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. For 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 From the observations made, and the exami- paying to each stockholder only one half of his nation of documents during the course of this loan, would not be so acceptable as if his whole investigation, the committee have strong rea- loan were repaid at once. son 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 sink. ment, 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, un. of 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 re The committee cannot discover any ability quested any suspension of the payment of any which the bank possesses or will possess, to give portion of the public debt."
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 next, 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 sustain itself
. The committee are fully of opi; amount of his certificate.' He added, nion, that though the bank neither • sought",
'If any objection occurs to you either as to the for, nor requested” a postponement of the amount or mode of payment, I will thank you payment by the Government, as stated in the to suggest it.'
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 comof 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 it, menin carrying into effect the measure they prothe necessary amount of funds in the bank to posed, which the president of the bank, in huis
remarks, speaks of having proffered to them. The committee are obliged to dissent from All that the Government could ask of the bank the views expressed by the president in the fore. on the 1st of July, or at any other time, would going extract. The committee cannot believe be, to pay over to them the amount it had col- that the pressure which has, and which conlected for their account, when they wished to tinues to exist since October last, is attributable employ it-the same as a principal would call mainly “ to the great amount of duties payable
upon its agent to pay to him moneys which he for the last few months." The committee e had collected for his benefit.
believe the operations of the Bank of the 1990 By document marked No. 39, it would ap- United States in Philadelphia, and the of.
pear, that, on the 13th day of March last, the fices in Baltimore, New York, and Boston, bank was aware of the intention of the Govern- (the four principal places where bonds are pay
ment to pay off, during the year, a great por-able,) during the last quarter, furnish evidence the sition of the 3 per cent. stocks; and the subject to the contrary. By a reference to the weekly :! of making an arrangement with the holders, statements of the Bank of the United States, the
, on that day, referred by a resolution of the offices at Baltimore, New York, and Boston, :board, as follows:
from July, 1831, to April, 1832, marked No. 36, Resolved, that the subject of the communi- it will be seen, that the amount of reductions cation just made by the president, be referred on discounts and loans at those four largest to the committee of exchange, with authority to commercial cities, during the last quarten tak. make, on behalf of the bank, whatever arrange- ing the maximum amount in January last, and ments with the holders of the 3 per cent. stock ending on the 1st of April
, is $2,498,489 76, of the United States may, in their opinion, best or in round numbers,, two millions and a half of promote the convenience of the public, and the dollars ; this reduction by the bank and its interests of this institution.
branches, has probably compelled a similar reThis proceeding on the part of the board, decution on the part of the State institutions, in
nearly two weeks before they were officially in- proportion to the amount of their loans in each beste formed of the intention by the Government to of those places. In this, and in this alone, the
make the proposed payment on the 1st of July, committee are fully persuaded is to be found demonstrates fully, to the minds of the commit- the true secret of the pressure which has existtee, an acknowledgment on the part of the ad-ed, and does still exist, operating upon the comministration of the bank; of its inability to meet mercial community. the demands which the contemplated payments That this pressure will continue for some of the Government 3 per cents. would bring time to come, the committee fear; for the exupan it
, without producing the distress before pansion has been so great, that the contraction alluded to.
which is now in operation cannot, in the opinion In a letter to the Secretary of the Treasury, of the committee, be effectually checked or from the president of the bank, dated the 29th controlled, without a necessary curtailment of March, 1832, murked No. 40, is the following: discounts.
"Owing to a variety of causes, but mainly to If the bank possessed the ability to sustain the great amount of duties payable for the last fitself without curtailing its discounts
, the revefew months, there has been å pressure upon nue falling due the present quarter, might be the mercantile classes, who have been obliged collected, and facilities granted during the time, to make
very great efforts to comply with their upon the principle before pointed out, to the engagements to the Government. That pres commercial community, and disbursed again by sure still continues, and it may be prolonged the Government, without any inconvenience beby the same cause the amount of duties still ing caused by the operation. But such ability, payable during the next three months. This the committée are well satisfied the bank does state of things seem to recommend all the for- not possess, nor can it at present command. bearance and indulgence to the debtors which Besides the diminishad means of the bank precan be safely conceded. The inconvenience, viously alluded to, through the loss of five milthen, of the proposed measure is, that the re- lions of its specie, its foreign exchange and payment of six or seven millions of dollars,more other resources, one of the great difficulties unthan half of which is held in Europe, may cres der which it now labors, in paying the public ate a demand for the remittance of these funds, debt, is its being compelled to receive the pubwhich would operate injuriously on the com- lic revenue, in the Atlantic ports, in a currency, munity
, and, by abridging the facilities which to wit, branch notes and drafts of the western the debtors of the Government are in the habit offices, not promptly convertible, and to pay. of receiving from the bank, may endanger the the public debt in current money. punctual payment of the revenue, as the bank Without a large abridgement of the usual ac. would necessarily be obliged to commence ear-commodations, which will
, of course, greatly with ly its preparations for the reimbursement of so distress the community, the committee
are under large an amount of public debt.
the strongest conviction that it will be little bet. My impression, therefore, is that, with a view ter able to meet the pressure the Government 10 the sale and punctual payment of the public payments will cause, on the 1st of Oct. than they
Atvenue, the Government would be benefitted would have been on the 1st of July. The Bestel by postponeing the proposed payment of the words of Mr. Crawford, in a letter dated 6tt
public debt to another quarter, by which time of April, 1819, to the president of the bank the country will sustain less inconvenience from the committee consider peculiarly appropriat demands on foreign account.”.
here to introduce. “Palliations may prolong whom,” which statement was not furuished the the existing embarrassments, and by exciting committee, but the statement, marked No. 41, the hopes and fears of the community, aggra- was furnished. This shows the whole number vate the existing evils, but cannot influence the of proxies to be 4,533, of which the president final result.”
holds, exclusively, 1,436, and as a trustee, in In another letter, dated the 9th of April, conjunction with others, 1,684, which gives hím, 1819, to the same gentleman, he says. “Banks, without intending to impugn the exercise of in order to secure specie payments, must ap- the power, decidedly a preponderating control proximate their circulation and individual de in the election of directors, a power which was posites, to a sum justly proportioned to the never contemplated by the charter; so far from amount of specie in their vaults. Any thing it, that instrument, as well as subsequent laws short of this, will keep them in a precarious passed by Congress, have studiously endeastate, and postpone the period when banking vored to prevent the very mischief which this operations can be safely prosecuted upon ordi- accumulation of proxies in the hands of one nary principles.
person is most obviously calculated to produce. When an institution, with investments amount. The charter has limited the votes of the largest ing to seventy-five millions, commanding the stockholder, no matter what may be the number foreign and domestic exchange of the country, of shares, to the number of thirty, clearly with monopolizing the Government deposites, can- a view to prevent the whole affairs of the bank not, at the moment, when we are exporting our from falling into the hands of a few individuals. annual crop of cotton, amounting, by the ad. It is too powerful an engine to be controlled by mission of the president of the bank, to twenty one man alone, and this must be apparent to the millions of dollars, (but really near thirty,) trans- good, sense of every one; yet, notwithstanding fer a few millions of its funds abroad, to pay this restriction, by the use of proxies, indivithe Government debt without embarrassing its duals, with little or no immediate interest, can operations, and seriously distressing traders, is perform what those possessing a direct and deep there not reason to believe that its business has interest are prohibited from doing Connected been too much and too rapidly extended? with this subject, there is one which ought not
In the late letter of the president of the to go unnoticed. The charter positively rebank to the Secretary of the Treasury, of the quires twenty-five directors; for some years 29th March last, there is the following post- past, as appears by the list of directors, marked script: “As an illustration of the effect of the No. 42, there have been but twenty-four
. The measures I have suggested, I may mention, president of the bank holding the appointment that in the month of February last, the collec- from the Government and the stockholders at tor of New York, with a laydable anxiety to the same time. protect the public revenue, applied to the bank to authorise an extension of loans in that The committee cannot pass over mentioning city, in order to assist the debtors to the Go- the subject of the sums paid for printing. By vernment. This was promptly done; this 1 reference to a statement furnished the Senate
, should desire to do again, as the payment to the in March last, it will be seen that, from the per Government during the next quarter, will be riod of the establishment of the bank, after the very large.
year 1817 up to the year 1829, the sum paid for Upon a reference to the weekly statement of printing, in anty one year, has not exceeded the office at New York, from July, 1831, to A. $867 19; and in soue years, it has been reducpril, 1832, before alluded to, the committee ed as low as $124 and $165 50. But in 1830, find no aggregate increase of loans; but, on the the amount is swelled to the sum of $6,762 54; contrary, they find that there has been a reduc.) and, in 1831, to $9,187 94. In the year 1817, tion in the amount viz : the amount on the 29th the year in which the bank was established and February being less than on the 2d, and the 8th went into operation, and consequently a greater days of the same month, and $140,000 less on expense was incurred, the expense for printing the 28th day of March, than on the 29th of Feb. was $3,226 15. ruary previous.
What circumstances occurred or existed du. By examining the statement No. 36, it will ring the years 1830 and '31, to require such an be seen that the total amount of discounts at the unusual increase in this branch of expense over New York branch, between the 4th of October, the preceding years, in the ordinary course of 1831, and the 28th of March, 1832, were actu its business, the committee have been unable ally diminished $468,447 17, while during the to discover,
though they called for the same time, the bonds paid at that port, amount accounts under this head of expenditure, ed to between nine and ten millions of dollars. but have not yet received them. In the same
The committee in order to ascertain the pre document is contained the sums paid to "at cise manner in which the annual election of di torneys,” annually, since the establishment of rectors has been conducted, called at an early the bank. This subject, owing to their limit period of the investigation, for the following ed time, the committee were unable to investi document, viz : “A statement of the number
of gate. Sufficient, however, came to their know votes given at each annual election of directors ledge, to justify' the belief that the sums return since that of 1823, the whole number of votes ed as having been paid to "attorneys," em given, the number given in person, and the num-brace only what was paid to them in that die ber given by proxy, and in the latter case, byl tinct character; that the sums paid to solicitor