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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 continue to be exported. The committee would present another striking analogy between the situation of the bank in April, 1819, and its present condition. At the first mentioned period, Mr. Cheves informed the Secretary of the Treasury that the bank would not pay the Louisiana debt of three millions, without ...; a loan in Europe, and two millions were actually borrowed in Europe, the indulgence of the Government being obtained to that effect. . The bank at this time is precisely in the same situation; it has asked the Government to postpone the redemption of the three per cents, from 1st of July to 1st of Oc. tober, and has assumed the payment of 'one quarter's interest on these stocks, being substantially equivalent to borrowing seven millions of the Government’s money for three months. 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 restore a sound currency, and a regular state of
things generally, and give a solid and perma
ment value to property, but the withdrawal of a large portion of notes now in circulation, by the bank, which will compel other banks to do the same. The committee will here introduce a quotation from Mr. Rush, in his Treasury Report in
1828; which fully accords with their sentiments.
“It is the preservation of a good currency which can alone impart stability to property, and prevent those fluctuations in its value. hurtful alike to individual and national wealth.” Again, he says, “This advantage the bank has secured to the community, by confining within prudent limits its issues of paper, whereby a restraint has been imposed upon excessive importations, which are thus kept more within the
true wants and capacities of the country.—
According to the triennial report of the directors to the stockholders on the 1st of August, of 1828, the amount of circulation then was $13,044,760 71; and on the first of April last, as before stated, it was $23,717,441 14, presenting the astonishing difference of$10,671,780 43, in less than four years. Can this be considered, according to the sound doctrine of Mr. Rush, confining its issues of paper within prudent limits, whereby a restraint has been imposed upon excessive importations? That great contractions are injurious, the committee consithey have adduced an authority that cannot well be doubted, and that a great one is now in operation there are too many general evidences in confirmation of the fact, to be refuted. A particular one will suffice, which is taken from the
amount redeemed, in 1831, during the same
Philadelphia, $5,398,800, making a total of $18,618,435, with an increase of circulation be. tween the 2d of Feb , 1831, and the 2d of January, 1832, of more six millions of dol. lars, as per monthly statements, and decrease of its means, between the 2d of February, 1831, and 1st of April, 1832, to meet immediate demands, of more than twelve millions of dollars, Viz:
In specie, funded debt, and notes of other banks, which, at first named date, amounted, as per monthly statements, to $21,756,668 10 And the last to - 9,640,000 00
$12,115,668 10 -Making, as just stated, a diminution in the active means immediately applied to the extin. guishment of its debts, o considerably more than half of its former capacity, to effect the same object. With such an increase of issues, and the influence of a most powerful reaction now openting upon the fiscal energies of the country, * is exhibited by the difference of the redemption of branch notes at the periods and places above mentioned, together with such a reduo tion of its means, to meet its engagements must, we fear, compel them still further to cur tail their accommodations. It is evident, from the circulars addressed to the branches, and correspondence with them since October last, that the chief object of the bank has been to sustain itself—the statements accompanying this report, clearly proving that the bank has not increased its facilities to the trading community, in any part of the Union. The Bank of the United States, among other conditions of its charter, is bound to make cok
same, or any part thereof, from one point to another, that may be required; and to make any and all payments for the account of thego, vernment, whether for principal, interest, civil list, army, navy, pensions, or for any other purpose whatever, free of ail and any charges for such services,
For performing this duty, the bank has claim.
ment, and the country generally, for some years past, merit to an extent that could not have been surpassed, even if all those services it performs were gratuitous. This and "other circumstances
during the year 1831, was $13,219,635, and at .
lections of the public revenue, to transfer the
ed, and has received from the treasury depart'. '
documents called for by the Senate, and pre-shave 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 al
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
Treasury, on the 12th of March last; in :
sident of the bank, stating that the *mount o t
on it, and to what cotent the bank has aided the
the Bank of the government in its fiscal operations beyond the
ed to trouble you with those views with the hope that you will pardon the liberty, and with the conviction that if you can serve this institution in any of them which you shall deem consistent with the public good, you will feel a pleasure in doing so.” The Secretary of the Treasury, in closing his answer, under date of the 27th March, 1819, says, “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.” 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, in
durington's obligation imposed in obedience to its charter. $726,000; inith: The government, in its collections through during the am, the Bank ofthe United States, receives nothing but specie, or notes of the Bank of the United the 25th of Mr. States, and makes its payments in nothing else. ommittee, ther. If the notes of State banks are received by the tuttle amo bank in place of its own, it is a private matter he New York to between such banks and the Bank of the Uni13:19,635, at od States, and one with which the government making 4 of does not concern itself, and it is to be presumse of circulok td that the Bank of the United States is too 1851, amide: witchful and vigilant in the protection of its a six milliosis own interests, not to see that it obtains from the ints, and do Satebanks, for the notes thus taken, specie or of Februn, so ... or its own notes, in exchange, meet immo and thereby be provided with a fund from the emillion dio tollection of the revenue, equal, in value, to
that in which they are required to pay.
clusive, marked No. 37, it will be seen that
and no do The largest portion of the revenue, particudate, amo htly from imports, as is universally known, is , solo collected in the Atlantic eities, north of the Po. So, tomac. Those cities being the great marts of —- supply to nearly the whole of the United States, $1.1% and places to which remittances centre from al–- most exery part of the country, creates a deadminto mand for funds upon them, from nearly every oldo ontoly, and generally at a premium, of conso fore, so far as the bank is called upon to
to ansfer funds from those cities to other places,
thus fit, the committee are unable to discover,
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 deposites; and in many instances with four and five millions, which sums were, immediately
floater the premium; and the larger the amount after, increasing by the constant accumulated
collection of the public revenue.
The bank, as it collects the revenue, knows, orought to know, that it will be called upon by the Government to reimburse it, and in all 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
malso bank for those services, they are at a loss to intention. With such notice, and with proper
*| *gine. How fir the bank has aided the Go- management on the part of the bank, the comWernment in its fiscal operations, as it claims to mittee, cannot see that either the Government a communications requires any aid, or that the community can be Rumthe President of he bank to this commit affected by the course of the operation.
The bank has its legitimate banking capital with which to do its regular business, and ac. commodate the community. As it collects the public revenue it is enabled both to avail itself
*; words: “That the bank, through the whole of the advantage of employing it to its own be
nefit, and the accommodation of the commercial
* of commerce, or the value of pecu*7investments.”
: *Principles the foregoing declaration o, By referring to the correspondence,
* then Secretary of the Treasury, the omittee discover .. the bank was then apt the Treasury Department to aid it in go', orations, and was reoeiving all that it promise. o *29th March, 1819, the President of * closes a communication to the then
ofthe Public revenue, and that, ofiate years, it payment, by commencing the discounting of been signally efficient in preventing the dis-business paper, payable within or about the *Yeof the public debt from disturbing the time they know they will be called upon to
make the payments on account of the Government; and, as they gradually approach that pe.
"the committee are notable to discover|riod, they must also shorten the period which
the business paper has to run, until they arrive at the time the call from Government is
also, between the then president of the bank made upon them, when the business paper
will have been paid off, the bank then pays the Government, and the Government immediately again circulates it among the community.
The operation, as thus described, appears to the committee too plain and simple to require any further, illusrtation; and if the principle is sound, and has been acted upon by the bank,
they cannot discover in what manner the opera;
tions of commerce could have been disturbed,
or the value of pecuniary investments have
been affected by the payment
of the public debt by the Government.
But if the bank has, as the public revenue has accumulated to the credit of
the Treasury Department, gone on discounting upon it, or loaning it out, disregard: ing the period when they would be called upon to reimburse it, the committee can readily perceive that, when that order arrived, they would be found not only deficientin preparation, but in a state of surprise, and that the payments would first embarrass the bank, and then lead it to press and embarrass the commercial community. 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 the bank has been upon this latter principle. If so, the bank has incurred a high responsibility. The committee believing the subject of the late postponement of a portion of the 3 percent. stocks, intended, as they understood, to have been paid on the 1st of July by the Government, to be within the province of their inquiries; and believing, also, that it had a strong connection with the present state and situation of the affairs of the bank, and for the purpose ofenabling them to form a correct and true opinion upon that subject, they made a call upon the president of the bank for the correspondence in relation to the postponement of that payment in the following words: “Will you please give a copy of the correspondence connected with your application in March last, requesting a suspension by the Government of the ayment of a portion of its debt intended to F. been made on the 1st July next, or a statement of the arrangement made in relation to that subject.” Which correspondence was communicated by the president of the bank, with the following remarks: “I have made no application to the Government, nor have I requested any suspension of the payment of any portion of the public debt.” “The inquiry, I suppose, relates to this circumstance, “I received a letter from the acting Secre of the Treasury, dated the 24th March, 1832, informing me that Government was about to issue a notice on the 1st of April, of their intention to pay, on the 1st of July next, one half of the three per cent stock, and to do it 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.” “Thus invited by the Government to a communication marked “confidential,” to give my opinions on a measure contemplated by the Government, I felt it my duty to express my views of its probable operation; in my reply, therefore, dated 29th of March, I stated “that so far as the bank is concerned no objection occurs to
make the contemplated payments.” I then proceeded td observe, that in the present situation of the commercial community, and with a very large amount of revenue, (amounting to nine millions,) to be paid before the 1st of July, the debtors of the Government would require all the forbearance, and all the aid that could be given them: and that the payment proposed by creating a demand for the remittance of se. veral millions of dollars to European stockholders, would tend to diminish the usual facilities afforded to the debtors of the Government, and might endanger the punctual payment. For this reason I thought it, for the interest of the Government, to postpone the payment till the 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. “Having thus performed my duty in givingthe opinion asked, I left it, of course, to the Govern. ment to decide. On the part of the bank, I sought nothing, I requested nothing. After weighing the circumstances, the Government were desirous of adopting the measure, but the o I understood to be this, that the sinking fund would lose the quarter’s interest, from July to October, of the sum intended to be paid in J uly; and that the Government did not feel itself justified in making the postponement, unless that interest could be o but that it would be made, provided the bank would make the sinking fund whole on the 1st October. To this I said, that, as the bank would have the use of the fund during the three months, it would consent to save the sinking fund harmless, by paying the three months interest itself; and so the matter stands. “Now, it will be seen, that the bank, in all this, has had not the least agency, except to of fer its opinion, when it was asked, in regard to a measure proposed by the Government; and then to offer its aid in carrying that measurein. to operation. * The committee cannot discover any ability which the bank possesses or will possess, to give increased aid to public debtors in the payment of the nine millions of dollars falling due (as is, said) in the quarter ending with the 1st of July; but, on the contrary, they believe that such is the situation of the bank now, and such will be the demands which it will be called upon to meet, that it will require the aid of all the accumulated collections for the Government, to sustain itself. The committee are fully of opi. pion, that though the bank neither “sought”, for, not “requested” a postponement of the
declaration of the president, yet if such post. Ponement had not been made, the bank would not, on the 1st of July, have possessed the abi
me, 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 his
payment by the Government, as stated in the
lity to have met the demand, without causing a scene of great distress in the commercial com
remarks, speaks of having proffered to them.
The committee are obliged to dissent from the views expressed by the president in the foregoing extract. The committee cannot believe that the pressure which has, and which continues to exist since October last, is attributable ..". “to the great amount of duties payable for the last few months.” The committee believe the operations of the Bank of the United States in Philadelphia, and the of. fices in Baltimore, New York, and Boston, (the four principal places where bonds are payable,) during the last quarter, furnish evidence to the contrary. By a reference to the weekly statements of the Bank of the United States, the offices at Baltimore, New York, and Boston, from July, 1831, to April, 1832, marked No. 36, it will be seen, that the amount of reductions on discounts and loans at those four largest commercial cities, during the last quartery taking the maximum amount in January last, and ending on the 1st of April, is $2,498,489 76, or in round numbers, two millions and a half of dollars; this reduction by the bank and its branches, has probably compelled a similar redecution on the part of the State institutions, in proportion to the amount of their loans in each of those places. In this, and in this alone, the committee are fully persuaded is to be found the true secret of the pressure which has existed, and does still exist, operating upon the commercial community.
That this pressure will continue for some time to come, the committee fear; for the expansion has been so great, that the contraction which is now in operation cannot, in the opinion of the committee, be effectually checked or controlled, without a necessary curtailment of discounts.
If the bank possessed the ability to sustain itself without curtailing its discounts, the revenue falling due the present quarter, might be collected, and facilities granted during the time, upon the principle before pointed out, to the commercial community, and disbursed again by the Government, without any inconvenience being caused by the operation. ... But such ability, the committee are well satisfied the bank does not possess, nor can it at present command. Besides the diminishad means of the bank previously alluded to, through the loss of five millions of its specie, its foreign exchange and other resources, one of the great difficulties under which it now labors, in paying the public debt, is its being compelled to receive the public revenue, in the Atlantic ports, in a currency, to wit, branch notes and drafts of the western offices, not promptly convertible, and to pay. the public debt in current money. Without a large abridgement of the usual ac. commodations, which will, of course, greatly distress the community, the committee are under the strongest conviction that it will be little bet. ter able to meet the pressure the Government
** safe and punctual payment of the public *nue, the Government would be benefitted
country will sustain less inconvenience from on foreign account.”
payments will cause, on the 1st of Oct. than they would have been on the 1st, of July, th:
by *poneing the proposed payment of the words of Mr. Crawford, in a letter dated 6th *ic debt to another quarter, by which timelof April, 1819, to the pres
ident of the bank jo, appropriat
the committee consider pec
here to introduce. “Palliations may prolong
By examining the statement No. 36, it will'
be seen that the total amount of discounts at the New York branch, between the 4th of October, 1831, and the 28th of March, 1832, were actu ally diminished $468,447 17, while during, the same time, the bonds paid at that port, amount ed to between nine and ten millions of dollars. The committee in order to ascertain the P. cise manner in which the annual election of di rectors has been conducted, called at an early period of the investigation, for the following document, viz.: “A statement of the number of votes given at each annual election of directors since that of 1823, the whole number of votes iven, the number given in person, and the numer given by proxy, and in the latter case, by
ference to the weekly statement of
whom,” which statement was not furuished the o
The committee cannot pass over mentioning the subject of the sums paid for printing. By reference to a statement furnished the Senate in March last, it will be seen,that, from the po riod of the establishment of the bank, after the year 1817 up to the year 1829, the sum paid so printing, in any one year, has not exceeded $867. 19; and in soue years, it has been reduo ed as low as $124 and $165 50. But in 1830, the amount is swelled to the sum of $6,762.5%; and, in 1831, to $9,187 94. In the year 1817; the year in which the bank was established and went into operation, and consequently a greater expense was incurred, the expense for printing was $3,226 15.
What circumstances occurred or existeddu o ring the years 1830 and '31, to require such an a unusual increase in this branch of expense over o the preceding years, in the ordinary course of . its business, the committee have been unable s to discover, though they called for the or accounts under this head of expenditure, e. but have not yet received them. In the same a document is contained the sums paid to “al. torneys,” annually, since the establishment of , the bank. This subject, owing to their limit * ed time, the committee were unable to investi’ s É. Sufficient, however, came to their know to edge, to justify the belief that the sums return-o ed as having been paid to “attorneys,” em. " brace only what was paid to them in that dio tinct character; that #. sums paid to solicitor'