« ForrigeFortsett »
ed to their wishes, they would find that dis- loans, and occurred as far back as 1822, during tress sggravaled by it, instead of being re- the presidency of Mr.Cheves. 'The Branch Bank lieved. To yield to their wishes would be at Lexington, had received a large amount of the death to us, and to them it would do no possi- notes of the Bank of Kentucky, a portion of them ble good. The south, we even believe, be- a Government deposites. These notes were conside their common interest, common with their si lerably depreciated. The branch having decountry, have a peculiar interest in this policy. clined issuing any of its own notes, in obedience Are their immense resources, now dormant, to orders of the mother bank, an individual apforever to remain dormant? Are they never to plied for a loan of these depreciated bank notes, be developed? I mean their resources in pow. alleging that he wanted them to pay a debt, er, by water and by steam, so abundant as it and that they would answer his purpose as well is, (in New Eugland it is not so abundant,) and as any other bills. The loan was granted. The in the abundance of the raw material for manu- Bank of Kentucky was, at the time, regularly facture within themselves. These can only be paying to the branch, interest on these notes, developed by this policy. If that be continued, and finally redeemed all that remained, a few its march will be onward; it will in timc fill months after the loan in question. It this aptheir high lands with thriving villages, and co- pears, that these bills were as good as cash to ver them with a thriving population. Their the bank, and the borrower alleged that they streams will not be idle; they will carry mills, were of equal value to him. It is difficult to and feed canals; the rich products of their soil conceive any solid ground for considering this a and industry will be water-borne from place case of usury. It would be as reasonable to to place; and this reprobated policy will say, that it would have been usury, for the scatter plenty o'er their smiling land." Capi. Bank of Kentucky itself, to make a loan of its tal and enterprise will find their way there; own depreciated notes. The utmost fairness and if they have not there the population fitted was exhibited by the branch bank, in this transfor the labor, population will dock there that action; the loan was made with reluctance after is fitted. This will give to their slave and field repeated applications, and yet the directors of labor a new value, and to them a new source he mother bank, many years afterwards, and of security.
since Mr. Biddle has been at the head of the in I have done. In pleading the cause of this stitution, refunded to the borrower of the Kene policy, I have the most intimate convictions lucky notes, the full amount of the difference that I have been pleading the cause of our between their nominal and their real value, at country, of our whole country, and of every the time of the loan, with interest. This has part of our country, of every man, woman, and heen also done in another similar case; so that, child, in our country: not as its importance rt in the only two cases which have been brought quired, no, by no means, but as my feeble to the view of the directors at Philadelphia, powers permitted. To our natural parents we for the purpose of having the amount of the owe all the pious offices of life, but to anuther depreciation refunded, the application has been parent, our country, we owe morewe owe granted with a promptness and liberality highly life itself, when her good requires its devotion. creditable to the institution. Were this effort, poor as it is, the effort of iny The minority of the committee will barely expiring life-expiring by the effort-in that remark, upon these transactions, ibat being free final moment, and last struggle, I should be from all imputation of intentional usury, and ne. happy in the feeling and belief that I was ex. ver having been sanctioned by the directors of piring in my country's calise.
the mother bank, but, on the contrary, correct.
-d, they cannot furnish the slightest ground for UNITED STATES BANK. alleging that the charter has been violated.
The second ground of imputation, noticed IN THE HOUSE OF REPRESENTATIVES. by the majority of the commiitee, is, “ the isFRIDAY, Mar 11, 1832.
suing of branch orders as circulation."
On this point, the minority deem it sufficient Mr. McDontie, from the Select Committee ap- to remark, that a branch order is nothing thore
pointed to examine the books and proceed- nor less than a draft or bill of exchange drawo ings of the Bank of the United States, sub. by a branch upon the mother bank; and that mitted the following as the views of the mio the charter expressly authorizes as one of the nority of the said committee.
primary operations of the bank, the buying and The minority of the committee, appointed to selling of bills of exchange. If the bank has a examine the books and proceedings of the right to issue these drafts at all, it cannot, sureBank of the United States, dissenting from the ly, be made a ground of just complaint against report of the majority, beg leave to present it, :hat they are used as circulation. That is the grounds of their dissent, for the considera exclusively the affair of the community. The tion of the House.
bank cannot be justly made responsible for the The majority of the committee have submit- use which the public may choose to make of ted, without expressing any decided opinion on these drafts. It is the ligh credit of the bank them, siz cases which they allege to have be that gives the character of circulation to this come subjects of imputation against the bank, paper; and it is the voluntary act of the comtouching ihe violation of its charter. inunity receiving it as such.
The first of these cases relates to usurious In fact, there is no part of the bank circulation
et Band which has been so beneficial to the public. It has, vernment stocks, except under the express au. u in practice, furnished the southern and western/thority of Congress, and by an express stipula
States with the means of affecting their ex. tion with the Treasury Department. And after may changes with the north, without any expense it has obtained a large amount of Government 781 in whatever.
stocks in this mode, it is difficult to conceive It may be well doubted, however, whether how it could raise the price of these stocks by dels an extensive and permanent issue of these coming into the market as a seller, or how it uten drafts might not prove very inconvenient to the could promote the purposes of a stock.jobbing up a der. bank itself, in a certain sate of the domestic speculation, by depressing the price, the only ef
exchanges, and it would be, therefore, a judi- fect which could result from offering them for ated :
cious measure, to supersede the necessity in sale. When these stocks were sold in 1825, there which these drafts originated, by authorizing was an extraordinary pressure upon the money other officers than the president and cashier of market of the whole comercial world. They the mother bank, to sigo notes for circulation. constiiuted the very resource which the bank
The third ground of imputation, as relates to most required in such an emergency ; and it the violation of le charter, is," he selling of is now matter of bistory, that it was partly by coin, particularly American coin."
The wise, judicious, and timely use of this reThe minority would respectfully suggest, source, that the Bank of the United States that the majority have entirely overlooked the averted from this country the calamity of a ge. nature and essential purposes of the bank. Ineral failure of the banks, and a widely extend. may be well defined to be "an institution es- ed scene of commercial bankruptcy. tablished for the purpose of dealing in mo The majority of the commitice seem to reney.". Now money is a current coin; yel, a gard it as a matter of complaint, that the Go. committee of Congress very gravely bring itsvernment permitted the bank to subscribe for forward as a charge, touching the violation of these stocks, in preference to individuals. If its charter, 100, that it has been guilty of deal- this is, indeed, a just cause of complaint, it ing in current coins, and, particularly, Ameri. should be made against the Government, and can coins, the very end for which it was creat not against the bank. When Congress express. ed.
ly authorizes the Secretary of the Treasury to As relates to dealing in current coin, the obtain a loan from the bank, and the Secretaright to do so is involved in the right of lending ry stipulates the terms of ihat loan, it is impos. money and of receiving it back. The autho sible to conceive how any blame can be imrity to deal in billion is expressly granted in puted to the bank, if it failhfully performs ity the charter, because bullion is not current engagements. coin, and, of course, the right to deal in it is
The fifth ground of imputation presented in not necessarily involved in the right of carrying the report of the majority is, “making dona. on banking operations.
Lions for roads, canals, and other obj cts.”
In two instances, the directors subscribed of sock, obtained from Guvernment, under small sums to certain internal improvements in special acts of Congress."
the vicinity of the real estate of the bank. This This charge is, if possible, more extraordi: they did in the exercise of their proprietary nary, than the last. If the acts of Congress, right, and with a view to the improvement of which expressly authorized the bank to sub- the value of their property. For this exercise scribe tor Government stock, had any meaning of power, they are responsible to the stockat all they certainly meant to authorize the holders alone; and the question is, whether they bank to acquire the right of property in the have or have not made a proper appħcation of stock for which it was authorized to subscribe. the funds of the corporation,
with a view to the The right to sell this stock at p easure, is of the promotion of its interests? To what extent the Very essence of the right of property, and is as value of the real estate of the bank has been clearly conveyed to the corporation by the act increased, by the internal improvements in authorizing a subscription, as the right to re- question, has not been ascertained; but it may ceive the interest.
be well supposed that it exceeds the sum The right to sell, therefore, is indisputable.' appropriated by the directors 10 uid in the
But the raajority of the committee seem to sup. construction of these improvements. pose that the policy which forbids the bank to The other donations to which the report speculate in stocks, with its immense resources, refers, consist of small sums contributed 10 fire by which the price might be raised and de-insurance companies, for the safety of the banks pressed at pleasure ,' equally forbade the bank properly, and against which it is not pretended to sell the stock for which it had subscribed by that any objection can be fairly raised. the express authority of the Government. Now
The last ground of imputation, as touching it is apparent, that the evil of dealing in stocks, the violation of the charter, is, “building houses by such an institution, can only exist in cases of to rent or sell, and erecting other structures in buying and selling
stocks al the pleusure of the aid of that object.” bank. To raise and depress prices, the bank
The bank is expressly authorized to pur. must have the right, boih to buy and to sell al- chase real estate, which has been mortgaged to ternately, as may suit its purposes of specula. secure debts previously contracted, and also tion. But it bas never pretended to claim, such as may be sold under judgments and ex: much less 10 exercise, We right of buying Co. ecutions in its own favor. In the exercise of
this right, the debtors of the bank are as much vas $25,750, after deducting ten per cept. for interested as the bank itself. For it must be bad debts, and defraying all the expenses of apparent, that if the bank were not permitted their establishment. Upon the whole, it to bid at these sales, the property of iis debtors appeared that this was one of the most profiter de would be frequently sacrificed, at a sumable, as it is certainly the largest commercial greally below its value. It has been only for newspaper in the Union, with an immense the purpose of saving itself from loss, and the advertising patronage, and a large and rapidly property of its debtors from being thus sacri- increasing subscription list. ficed, that the bank has ever purchased any With these exliibits, Mr. Webb produced real estate, except what has been necessary for the letter of Mr. Walter Bowne, Mayor of the its banking houses. There is no description of city of New York, and formerly a director of property which a banking institution is so un- the Bank of the United States, a man of wealth willing to own as real estate. Such an insti and high character, enclosing the application tution is entirely unsuited to the management for the loan, and stating that "he did so with of such property, as much so as a farmer would pleasure, and saw no reason against this being be to manage the discounts of a bank.
treated as a fair business Iransaction:" Several Owing to the extensive failures of the per of the directors, as well as the president pf the sons indebted to the bank, in the western bank, were examined on oath, in relation to country, prior to 1819, the directors were un- this transaction, and as the clearest mode of avoidably compelled to take a very large --xhibiting its true character to the House, erquantity of real estate, as the only means of tracts from these examinations will be given. avoiding still greater losses than they have The following is the testimony of Mr. Biddle, actually sustained. They have dispose of this relative to these loans. estate as rapidly as they could, consistently Ques.-"Did you consider the loans made to with the interests of the institution. On a por. James Watson Webb & Co. fair business trans. tion of it they have erected improvements, to actions, such as you could not refuse without prepare it for sale, and by means of which they subjecting the bank to the imputation of in. will save the stockholders from a great portion ulging political partiality? siate fully the of the loss which would have otherwise oc-views and considerations on which you voted in curred, and will recover a large amount of favor of those loans.” the debts which were some years ago set down Ans.-"I certainly considered them as fair as desperate. If, for this course of conduct, business transactions, or I should not have con. the directors are rendered obnoxivus to cen- sented to them. At the request of the Comsure, then will they be condemned for the mittee I will explain the reasons of that opinion. very faithfulness of their stewardship. It is too "If in making loans every transaction was obvious to require, or to justify the use of perfectly safe, and every borrower perfectly argument, that the right of the bank to im. good, banking would be an easy office; but as prove its real estate, is inseparably connected men generally borrow to employ the funds, in with the right to purchase to hold, or to own some profitable pursuit, subjeci, of course, to it. On this subject, the House is referred to vicissitudes, all that can be expected in making the exposition of the President, marked A.– loans is a fair and reasonable caution as to the The next subject to which the report of the situation and prospects of the borrower. Trimajority adveris, is the loan to James Watsoned by these, the only tests, I think the loans in Webb and Co. It is proper to remark, in the question are unexceptionable. The first was first place, that the only sums ever loaned to done by a board of directors, consisting, bethis copartnership, were the sums of twenty, sides the presiding officer, of six gentlemen, and of fifteen thousand dollars, the former in Mr. Lippincott, Mr. Fisher, Mr. Buhlen, Mr. August and the latter in December, 1831. It Neff, Mr. Plast, and Mr. Willing, inerchants is also proper to remark, that the first sum was and men of business, with no partialities to reduced to $18,000, at the maturity of the note wards the applicants, with whom none of them given for it; and that the latter sum was entirely has the least acquaintance. The grounds of paid off in March last, by Mr. Webb; and, as their judgment may be thus stated. In making he expressly states on oath, without being re-ordinary loans, the board judge by the general quested by the bank to do so. The whole standing of parties without any examination of amount of the accommodations ever obtained their affairs. But in this case the parties befrom the bank, by Messrs. Webb and Noah, gan by an exposition of their whole situation. was $35,000; and ihe whole amount now due This was forwarued by Walter Bowne, Esq. by them, is $18,000.
the Mayor of the City of New York, where the The grounds and securities upon which these applicants resided, who, in addition to his being accommodations were granted, will now be personally known and respected by all the stated. Mr. Webb produced to the directors members, had been one of ihe oldest directors a full statement of the affairs of he'copartner of the Bank of the United Sta“es, and for many ship, setting forth the value of their properly, years sit at the board around which the diresand the annual income derived from their tors were fhen assembled. In this letter he paper. From this statement, which was authen- says, “I cheerfully forward the papers' and I ticated by the oath of their book-keepers', it see no reason against this application being appeared that the nett annual income of the treated as a fair business transaction." He does paper, from advertisements and subscriptions, not expressly say it ought to be granted, be
cause he transmits at the same time some of the of which could be collected on prematerials on which the directors were to form sentation of bills,
10,000 their own judgment, 10 which others were Due in l'ew York, more than four added by Mr. Webb. But when an old direc months subscription, which, with lor of the bank, forwards" cheerfully" an ap the unpaid arrears of the last six plication to his ancient colleagues, which he says months, may be safely estimated at 20,000 should be treated as "a fair business transac- And the property owned by the aption," it implies certainly no responsibility-bu plicants amounted to
8,000 it may be well regarded as a declaration, that were he still a member of the board, he would
Making 38,000 sanction it. Under these auspices the board while the whole amount of debt was 28,000 proceeded to consider it. One of the parties had been anpointed by Leaving an excess of
10,000 the President and Senate of the Uniied States, That they had been deemed worthy of credit to a confidential and lucrative post under the in New York, appeared from two facts. Government; the other had already invested 1. That the banks of New York had lent $33,000 in the paper, and his father-in-law, Mr. them $15,000, which they had repaid. Stewart
, whose leiter acccompanied the appli. 2. That the respectable mercantile house of cation, was known to be a wealthy man. Buth J. L. & J. Joseph & Co., a firm well known to were considered men of talents and peculiar the directors, had lent them $20,000, which had aptitude for the business in which they were been repaid out of the profits of the establish. engaged. Then what was that business? ment, as those gentlenicn themselves certify in
It was the conducting of the largest newspa- a document accompanying the papers. per in the country, requiring, of course, con. Finally, they had no accommodation, direct siderable means, and giving employment to a or indirect, out of any bank. great mass of active industry. Its situation The case then stood thus : Here are two per. was represented to be this:
sons of skill in their profession engaged in an Mr. Webb declared that were there establi-hment of which the capital is 65,000 then 3300 daily subscribers at $10, $33,000 The gross income,
60,750 2300 others at an average of $4 50, 10,350 The rxpenditures,
- 35,000 275 yearly advertisers at $30, 8,250 And the nett income,
25,750 310 days advertising, at 55 per day, 17,050 In conducting such a business, where the re.
ceipts are semi-annual, the payments daily and Making
68,650 weekly, they naturally require, like other men Deducting from this, 10 per cent. on
in business, some credit. They accordingly the daily subscriptions and adver apply to borrow $20,000. They wish to bor tisements, (of which about one-sixth ruw it, not to pay previous debts, not to spend is paid in advance,) say
5,830 it on objects inconnected with their business, and 20 per cent on the other
but for the purpose of employing it all in a way 2,070---7,900 to increase the profits of the concern its-If, by
procuring a new press and enlarging their There remains a gross income of
60,750 means of obtaining early commercial informa. The annual expenses were stated at
35,000 tion, and thus make the paper more valuable.
"Now the statements may be presumed to Leaving a nett annual income of 25,750 present the most favorable aspect of the case,
This statement is confirmed by the affidavits from the sanguine temper in which men are of the book-keepers and press nen of the esta-prone to estimate their own professions and blishment.
prospects, and yet unless they were wholly tal. The total value of the paper was thus stated: lacious, the board saw enough to warrant (the James Watson Webblad invested in it $33,000, loan. It was further justified by the event; for for which $40,000 liad been offered, provided when the note fell due $2000 were paid off at a the other half could be had for $25,000. This time when the demand for money induced ma. he declined, but it is mentioned to prove that ny other debtors to ask for a renewal of their the whole might have been sold for $65,000 notes. Then it was an improving establishment.
“So much for the loan of $20,000." It had owed a debt to the banks of
The other loan rested on the same principles which it had paid off in April and
as the first, with this addition. The parties May, 1831, out of the collections of stated, that owing to the part which they had the last six months, which had caken in regard to the Bank, they had been deamounted to
• 20,000 prived of their usual accommodations in their It had, in 1829, owed a tolal debt of 29,000 business. Whatóver might be the reason, the which it had since paid off.
fact of an abridgment of these facilities furnish And at the present moment its out ed a reason for extending the loan in addition standing claims were more than its to the belief of its safety which was, that by so
10,000 duing, any hazard to the original loan might be for its responsibilities and means prevented; and the best evidence of its securistood thus
ty is, that the parties have since repaid the loan. Outstanding debts in the country more
In regard to the other luans, which appear in
as they do
their names, they were given without any know-perceive, by far the greatest amount of loans to
Webb & Co.
, on making apo ministration, it was due to the interest of the plication for the first loan, that the bank of stockholders to correct so unfounded an im N. York had cut them off from their accustompression, when a fair opportunity occurred obed facilities, as they believed, in consequence giving accommodation to those who were con- of their espousing the cause of the Bank of sidered as the most strenuous and efficient sup. the United States. porters or that administration. The directors
It is also proper to add, in this place, that of the bank understand too little of the subject the loan of $17.975 which was made in March, to attempt to adjust the balance of accommoda. 1831, was not a loan to Webb and Noah, or lo tion to political parties, nor have I myself ever ciher of them. The money was borrowed by had even curiosity mufficient to notice it, until Silus E. Burrows, a man of large fortune, upon the inquiry of the committee has suggested it. This onn responsibility, without the knowledge But, unduubily, as the committee canaut fail 10 juf either Webb or Nosh. They bolb testify