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large balance in the treasury, which is principally deposited in the bank. Some minor items, arising from accidental circumstances, are omitted, for the sake of perspicuity.
I. Debts due to the bank, viz:
1. Six per cent stock of the United States, be-
2. Loans to individuals, consisting chiefly of
13, 000, 000
23, 000, 000
Balance, being the amount of undivided profits, commonly called the "contingent fund," and applicable to cover losses which may arise from bad debts or other contingencies, and to extra dividends---
It sufficiently appears, from that general view, that the affairs of the Bank of the United States, considered as a moneyed institution, have been wisely and skilfully managed.
The advantages derived by Government from the bank, are nearly of the same nature with those obtained by individuals, who transact business with similar institutions, and may be reduced to the following heads:
1. Safe-keeping of the public moneys.-This applies not only to moneys already in the treasury, but, also, to those in the hands of the principal collectors, of the commissioners of loans, and of several other officers, and affords one of the best securities against delinquencies.
2. Transmission of public moneys.-As the collectors will always, in various quarters of the extensive territory of the Union, either exceed or fall short of the expenditures in the same places, a perpetual transmission of money, or purchases of remittances at the risk and expense of the United States, would become necessary, in order to meet those demands; but this is done by the bank, at its own risk and expense, for every place where one of its branches is established, which embraces all payments of any importance.
3. Collection of the revenue.-The punctuality of payments introduced by the banking system, and the facilities afforded by the bank to the importers indebted for revenue bonds, are amongst the causes which have enabled the United States to collect, with so great facility, and with so few losses, the large revenue derived from the impost. 4. Loans. Although the prosperity of past years has enabled Government, during the present administration, to meet all the public demands without recurring to loans, the bank had, heretofore, been eminently useful in making the advances, which, under different circumstances, were necessary. There was a time, when, exclusively of the six per cent., stock held by the institution, as part of the original subscription, the loans obtained by Government from the bank, amounted to 6,200,000 dollars. And a similar disposition has been repeatedly evinced, whenever the aspect of public affairs has rendered it proper to ascertain whether new loans might, if wanted, be obtained.
The numerous banks now established, under the authority of the several States, might, it is true, afford considerable assistance to Government in its fiscal operations. There is none, however, which could effect the transmission of public moneys with the same facility, and to the same extent, as the Bank of the United States is enabled to do, through its several branches. The superior capital of that institution offers, also, a greater security against any possible losses, and greater resources in relation to loans. Nor is it eligible, that the General Government should, in respect to its own operations, be entirely dependent on institutions over which it has no control whatever. A National Bank, deriving its charter from the National Legislature, will, at all times, and under every emergency, feel stronger inducements, both from interest and from a sense of duty, to afford to the Union every assistance within its power.
The strongest objection against the renewal of the charter seems to arise from the great portion of the bank stock held by foreignersnot on account of any influence it gives them over the institution, since they have no vote-but of the high rate of interest payable by America to foreign countries, on the portion thus held. If the charter is not renewed, the principal of that portion, amounting to about 7,200,000 dollars, must, at once, be remitted abroad; but, if the charter is renewed, dividends, equal to an interest of about 812 per cent. a year, must be annually remitted in the same manner. The renewal of the charter will, in that respect, operate, in a national point of view, as a foreign loan, bearing an interest of 81/2 per cent. a year.
That inconvenience might, perhaps, be removed, by a modification in the charter, providing for the repayment of that portion of the principal by a new subscription to the same amount, in favor of citizens; but it does not, at all events, appear sufficient to outweigh the manifest public advantages derived from a renewal of the charter.
The conditions in favor of the public, on which this should be granted, are the next subject of consideration.
The net profit annually derived by the stockholders, from a renewal of the charter, is equal to the difference between the annual dividends and the market rate of interest. Supposing this to continue at six per cent. during the period granted by the extension of the charter, and the dividends to be on an average at the rate of 82 per cent.,
that profit will be 22 per cent. a year. If the charter be extended twenty years, the value of the privilege will be equal to an annuity of 212 per cent. on the capital, that is to say, 250,000 dollars, for twenty years; and such annuity being payable semi-annually, is worth almost 2,890,000 dollars. This, however, would be much more than any bank would give for a charter, as it would leave it nothing but the right of dividing at the rate of six percent. a year, which the stockholders have without a charter. It is believed, that they would not be willing to give even half that sum for the extension; and that about 1,250,000 dollars may be considered as the maximum, which could be obtained, if it was thought eligible to sell the renewal of the charter for a fixed sum of money.
It is, however, presumed, that the decision on the conditions, which may be annexed to an extension of the charter, will be directed by considerations of a much greater importance than the payment of such sum into the treasury. The object will, undoubtedly, be to give to the institution all the public utility of which it is susceptible, and to derive from it permanent and solid advantages, rather than mere temporary aid. Under these impressions, the following suggestions are respectfully submitted:
I. That the bank should pay interest to the United States, on the public deposits, whenever they shall exceed a certain sum, which might perhaps be fixed at about three millions of dollars. II. That the bank should be bound, whenever required, to lend to the United States a sum not exceeding three-fifths of its capital, at a rate of interest not exceeding six per cent.; the amount of such loan or loans to be paid by the bank in instalments, not exceeding a certain sum, monthly, and to be reimbursed at the pleasure of the Government.
III. That the capital stock of the bank should be increased to thirty millions of dollars, in the following manner, viz:
1. Five millions of dollars to be subscribed by citizens of the United States, under such regulations as would make an equitable apportionment amongst the several States and territories.
2. Fifteen millions to be subscribed by such States as may desire it, and under such equitable apportionment amongst the several States as may be provided by law; and a branch to be established in each subscribing State, if applied for by the State.
3. The payments, either by individuals or States, to be either in specie or in public stock of the United States, at such rates as may be provided by law.
4. The subscribing States to pay their subscription in ten annual instalments, or sooner if it suits their convenience, but to receive dividends in proportion only to the amount of subscription actually paid; and their shares of bank stock not to be transferable.
IV. That some share should be given in the direction to the General and State Governments, the General Government appointing a few directors in the general direction, and the Government of each subscribing State appointing a few directors in the direction of the branch established in such State.
The result of that plan would be, 1st., that the United States, receiving an interest on the public deposites, might, without inconvenience, accumulate, during years of peace and prosperity, a treasure
sufficient to meet periods of war and calamity, and, thereby, avoid the necessity of adding, by increased taxes, to the distresses of such periods. Secondly, that they might rely on a loan of eighteen millions of dollars, on any sudden emergency. Thirdly, that the payment of the greater part of the proposed increase of capital, being made in ten annual instalments, that increase would be gradual, and not more rapid than may be required by the progressive state of the country. Fourthly, that the bank itself would form an additional bond of common interest and union, amongst the several States.
All which is respect fully submitted.
Report of House Committee, on Renewal of Charter of Bank of
COMMUNICATED TO THE HOUSE OF REPRESENTATIVES, FEBRUARY 19, 1810. Eleventh Congress, 2d Session
[Source: American State Papers, Finance, Vol. 2, p. 406]
Mr. MONTGOMERY, from the committee to whom was referred the petition of the stockholders of the Bank of the United States, made the following report:
That, in proceeding to the consideration of the said petition, your committee instructed their chairman to address a letter to the Secretary of the Treasury, requesting him to furnish such information or observations as he might think proper, in relation to the subject matter thereof, as connected with the financial and commercial interests of the
United States. In reply to which, the Secretary, by his letter to the chairman, referred your committee to his former report on the said subject, made to the Senate of the United States, in obedience to the order of that House.
Your committee have been attended by agents of the petitioners, who, in addition to the matters contained in the petition, have suggested to your committee that the object of the petitioners was to obtain the renewal of the charter in its present form; that, for this renewal, the bank is willing to make compensation, either by loans, at a rate of interest, or by a sum of money to be agreed upon, or by an increase of the capital stock, by a number of shares to be taken and subscribed for by the United States, to an amount adequate to the compensation to be agreed upon for such renewal.
These agents also suggested, that they were fully authorized and empowered to offer and conclude the terms, specifically connected with those propositions.
Your committee not feeling themselves authorized to enter into such terms, and judging that the extent of those propositions would better apply to the details of a bill, than to the adoption of a principle to be first settled by the House, have, therefore, foreborne to inquire into the extent of the propositions, and, without expressing an approbation or rejection of these offers, or giving an opinion as to the plan and reasoning of the Secretary of the Treasury, your committee, in order that the opinion of the House on this great national question may be declared previous to entering into the details connected with the subject, recommend the following resolution:
Resolved, That it is proper to make provision for continuing the establishment of the bank of the United States, with offices of discount and deposite, under the regulations necessary for the beneficial administration of the national finances, during such time, and on such conditions, as may be defined by law.
Report of Secretary of Treasury (Albert Gallatin), on Bank of United States
COMMUNICATED TO THE HOUSE OF REPRESENTATIVES, JANUARY 24, 1811. Eleventh Congress, 3d Session
[Source: American State Papers, Finance, Vol. 2, pp. 468-470]
The Secretary of the Treasury, in obedience to the resolution of the House of Representatives, of the 16th instant, respectfully submits the following report:
The Secretary of the Treasury is directed, by the resolution aforesaid, to lay before the House
1. A list of the directors of the Bank of the United States, and of its several branches.