USA > Alabama > Reminiscences of public men in Alabama : for thirty years, with an appendix > Part 25
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To move with no sudden, hasty, or violent effort, but with a calm and fixed purpose to attain the end-to move, not from the impulse of a speculative opinion, or even the just conclusions to which we may have attained, so much as to answer the sober demands of our constituents. For it has been well remarked, "that the remark can scarcely be repeated often enough, that however beneficial any proposed change in the policy of a country may be, it may not unfrequently be productive of evils on its sudden introduction, which will more than compensate the good it is fitted eventually to confer." Among other reasons for this there is one peculiarly applicable in a country whose Government is constituted like ours :
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" That it is seldom a change of any kind in the political or social relations of society, can be benefically carried into execution before public opinion can be in- duced to declare decidedly in its favor."
Your Committee have no doubt that the people of the State look to the General Assembly to settle a day for the resumption of specie payments by the Banks. They require that the Banks shall make one effort to furnish to the State a con- vertible currency. Your Committee have appointed in the bill a day quite as far distant as the people will be disposed to tolerate, and have thus preserved to the people the means of answering, by their own experience and observation, whether the Banks have entirely failed in the objects of their creation, and whether the charters of the Banks shall be continued. Your Committee feel satisfied that a course less temperate than this will be productive of injurious consequences.
The State Bank system was early adopted in the State. To its benign influence in the first years of its existence, many of our people trace their prosperity. Within the last few years, doubts for the first time have beeu awakened to the result of the experiment. Against these doubts the community at large has struggled. Your Committee do not believe that the disasters which have overtaken the Banks, and which have depreciated their character and currency, have had the effect of destroying this confidence. The measure of its prostration should be resolved upon by the people, upon a view of its deficiencies, before the General Assembly will be justified in adopting it. Your Committee have, therefore, refrained from the inquiry, how far the system has failed. They have reported a bill which guards the Banks from mismanagement during the ensuing year, and have exposed the system to a plain and easy test, one which the sense of the community has selected, and upon its ability to bear that test, has rendered their existence de- pendent.
Your Committee will not discuss at length the details of the bills they have presented. These details comprise a change in the mode of selecting Directors- a chage demanded by public opinion.
The plan proposed by the Committee contains the advantage derivable from the power of appointment; and some of the abuses to which it is exposed are not comprehended in it.
To the subject of the reduction of the number of officers in the Banks, and to the retrenchment of other expenses of the Banks, the Committee directed their attention. A very great retrenchment will be effected under the bills presented.
The joint resolutions submitted in regard to the course of the Bank Directors in the management of the Banks, are intended to answer the inquiries continually made for the course to be taken with the debts. The Committee are opposed to the passage of an undiscriminating relief measure. A discretion, regulated by the General Assembly, ought to be confided to the President and Directors.
The instructions contained in these resolutions will justify these officers in the adoption of a forbearing, and even indulgent course of action. Still, there should be limits to these, and the General Assembly can not, by law, accurately mark these limits. The subject must be confided to the Presidents and Directors.
The Committee have directed some attention to the inquiry, how far the Banks were able to meet their engagements. The result of these inquiries has led to the report of resolutions referring to the application of means not entirely within the control of the State, but providing for the attainment of them. The Committee will report more fully hereafter upon the subject of the resources of the Banks, and their ability to pay the interest upon the public debt and the bonds falling due in eighteen hundred and forty-four; also, upon the disposition to be made of the specie funds in the Mobile and Decatur Branches, and upon the measures to be taken to sustain the public faith.
The Committee can not conclude their report without declaring, that the evils from disordered finances crowd upon the people.
That the duty of the General Assembly to mitigate these evils, by an examina- tion into all the departments of expenditure, has become an imperative obligation.
That efficiency in the administration of all the departments of the Government is demanded, and that efficiency will be most promoted by diminishing the number of officers, and defining with precision their duties.
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Your Committee feel assured that when the General Assembly shall come to the people with evidence that their interests have been studiously considered-that their cause has suffered no harm by its dereliction of duty-it can make an appeal to the people to maintain the public faith and discharge the public obligations, which will never be rejected. Your Committee look with confidence to this co-ope- ration between the General Assembly and the people, as the means, under Provi- dence, left us for the preservation of the honor of the State, and the maintenance of its faith and character; and that upon the General Assembly devolves the duty of taking the first measures to secure that co-operation.
J. A. CAMPBELL, Chairman.
The report was laid on the table and five hundred copies ordered to be printed.
Much space has been already occupied by matter from the Jour- nal of the House, but its perusal will at once reward the labor of examination. While drawing so freely from the mind and ener- gies of Mr. Campbell, to indicate the action of the House, and the measures necessary for the occasion, a still further resort to this enlightened statesman is here ventured upon, as summing up the business of the session. On the Journal of February 14, 1843, the day before adjournment, the following report appears:
Mr. Campbell, from the select Committee, to whom was referred a bill to raise a revenue to maintain the plighted faith of Alabama, made the following report-
The select Committee to whom was referred a bill to be entitled an act to raise a revenue to maintain the plighted faith of the State, have had the subject under consideration, and have instructed me to report-
That the committee acquiesce, with regret and difficulty, in the conclusion that no action can be taken on the bill at the present session of the General Assembly. The Committee feel that a review of the measures of the present session will afford evidence that indifference to the objects of the bill can not be imputed to them.
When the General Assembly convened, it found that, years ago, the people had been discharged from the office of maintaining their institutions. That the Gov- ernment of the State, its officers and administration, were all maintained by con- tributions from the public Banks. That all the appropriations in favor of schools, and for internal improvement, were derived from the same source.
These Banks had been, for years, unable to maintain their own engagements. They had furnished to the people an irredeemable currency, which was constantly fluctuating in value.
They had generated in the State a spirit of improvidence and wastefulness. Their management had been characterized by abuse and extravagance. They had indulged, in more instances than one, in fanciful speculations, to the great detri- ment of the business of the country. They had already occasioned a vast loss of capital and credit to the State. A reform was imperiously demanded.
The General Assembly, at its present session, have passed bills :
1. To provide by taxation a sum sufficient to meet the current expenses of the present year, and to support the Government until the taxes can be collected in the succeeding year.
2. The appropriation of money from the Banks for schools has been withdrawn, and no application for internal improvements has been admitted.
3. The powers granted to the Banks, to lend money or to increase their debts, have been revoked, and four Branch Banks have been placed in liquidation.
4. The system of bank management has been scrutinized. The number of offi- cers has been reduced, their salaries curtailed, and efficiency has been promoted.
5. Resolutions enforcing responsibility, on account of illegal expenditures, have been adopted.
6. The salaries of all the officers in the Executive and Judicial Departments have been reduced, and the fees to subordinate officers, in the same departments, have been diminished.
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7. The compensation to members of the General Assembly was reduced in the House. The Senate refuses to permit any alteration so far as it is concerned. Your Committee trust that the House will proceed as far as it is now permitted, and wait for instructions from the people, to perfect their system on this subject.
9. Bills have passed the House, retrenching expenses of suits in court, and dispensing with the expensive machinery employed to settle controversies, where no controversy exists between the parties.
The measures which the House has refused to pass are not less in importance, in their conservative influence, than those that were adopted. The embarrass- ments of the people are known to be great. The pecuniary distress, which orig- inated in causes that have been in operation for years, will be increased by the measures of the session.
The General Assembly has passed no law to obstruct the regular administra- tion of justice, or to hinder or delay the creditor in the collection of his debt. The debtors of the Banks have received no preference in the legislation of the State. The discrimination and indulgence that have marked the laws of the State for their benefit, have not appeared in the acts of the House of Representatives.
The preparation of these acts was necessarily a work of time, requiring much thought and discussion. In instances, all has not been done that some thought to be necessary to maintain the public obligations. And, in other instances, more has been done than many esteemed to be consistent with the observance of a pru- dent and discreet policy. Differences of opinion were unavoidable.
Examining the system of policy as a connected whole, your Committee feel con- strained to say that a great and radical reform has been accomplished. That the present evils may be more severe than another course might have occasioned; but if such should be the fact, the people will have a compensation afforded to them in the good which must ultimately flow from their final and complete abandonment of a vicious and demoralizing system.
The separation of the State from all dependence on the Banks, and the conces- sion of the fact, that years will elapse before they can discharge their debts from their resources, imposes the duty of an inquiry into the obligations of the State. The result of this inquiry has been to induce the conviction that the State should resort to taxation to provide the means to fulfil the public engagements.
The Banks were created by the State. They were endowed with the power of making contracts, and furnished them with the means of acquiring credit with the community. The acknowledgment of these facts, results in the conclusion that the State should refuse to withdraw any of the resources placed at the command of those institutions, while their engagements remain unfulfilled. It is true, that the State may safely calculate that a surplus will remain after the payment of those debts. It is not less true, that the employment by the State of that surplus in ad- vance will impair the public confidence, diminish the value of the currency, and thereby increase the embarrassments of the people, and violate the faith of the State to the holders of the bills of the Banks.
The surplus that shall remain of the assets of the Banks, after the payment of their debts, should be applied to the payment of the principal sum due on ac- count of their capitals.
The debts due to the Banks bear interest, while the debts due by them do not carry any interest in favor of their creditors. Hence, the resources of the Banks would be accumulating, and their credit would improve in proportion. If the State would dedicate the resources of these institutions to the fulfilment of their engagements, we might, within a very few years, expect the currency to be ab- sorbed, and the State relieved from the scourge that has so severely afflicted it.
If the State insists upon applying the assets of the Banks to the payment of the interest on the State bonds, the capital of the Banks will soon be exhausted. The charges on the interest, arising from the separate debts of the Banks, will not be met by the amount that can be collected from that source during the present year.
At the end of this year's transactions, the Banks will be found in a worse con- dition than they now are, by the charges that are already imposed upon them.
This condition of things will be continued by the almost constant diminution
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of the debts from which interest will be derived, by means of payments in the bills of the Bank, and the destruction of these bills, while the interest payable by the State on account of its bonds, and the University and School Funds, will exhibit no diminution.
Hence, every year will show the property of the State lessening in amount, while its debts remain stationary.
The end will be a resort to the people for taxes of a much larger amount, and imposing a severer burden, or to a declaration of bankruptcy by the State.
Your Committee are firmly of opinion that a timely resort to the people, for the means of paying the interest on the State debts, and the honest application of the remaining resources of the Banks to the extinguishment of the principal sum, is the policy most consistent with the duty and honor of the State. The idea can not be tolerated that this generation shall spend, in profusion and extravagance, the money borrowed upon the public credit, and that posterity shall bear the conse- quences. It would be a most atrocious violation of all the obligations we owe to our children, to impose upon them the burden, exclusively, of discharging the public debt. Let us, at least, transmit to them the inheritance of a State relieved, as far as possible, of the incumbrances which, in an evil hour, we imposed upon it. Let those incumbrances be a tax upon our industry, our comfort, our energies, and not upon theirs.
The propriety of this course is manifested when we consider the condition of a portion of the public debt.
There has been disclosed, at the present session of the General Assembly, a strong disposition to withdraw the Sixteenth Section Funds from the Banks. The University Funds are equally sacred.
These provisions for public education have their origin in the councils of the fathers of the republic. They display that forethought and farsightedness, which characterize the men of the revolution. They exhibit that profound and earnest spirit of patriotism, which is not satisfied by a transient and ephemeral policy, but which comprehends in its arrangements, every interest, however minute, and every person, however remote, either in time or in place, who is concerned in the destinies of the State. Your Committee invoke, for our counsels, the presence of that spirit.
These funds should be carefully and religiously preserved in the wrecks of the Banks, and the powers of the State should be employod at once to supply them, if they have been lost.
The bonds falling due in 1844, by the act under which they were issued, were made a charge upon a portion of the assets of the Banks. The payment of the principal of those bonds should be made as soon as practicable from these assets. Your Committee conclude that, after the redemption of the circulation, and the payment of the depositors of the Banks-after the security of the University and School Funds, and the payment of the intesest on the bonds during this year and the next, there will not be a large amount of the resources of the Banks immedi- ately available.
Some of the debts classified as good must be extended to very distant periods. Much of the real estate can not be disposed of, and the bad and doubtful debts will afford an unsafe dependence.
Every consideration your Committee can give this subject only fortifies the con- viction that an appeal to the people has become necessary to sustain the plighted faith of the State. Your Committee can not make an argument in favor of the obligation. There are considerations, however, which should strengthen us to a prompt and ready obedience to it.
The American name, which for more than half a century has been an object of interest and hope to mankind, is now a word of reproach. It has become so from the want of fidelity on the part of the States in paying their debts.
The energies of our people have become weak and enervated. We want firm and manly public spirit in our legislation to restore power and confidence in our people.
The bonds of the American States have been distributed through European States. , The pittance of the laboring man, the small fortune of the widow and 17
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the orphan, the charities of the humane and the benevolent, the savings of honest industry, were cheerfully and trustingly invested in the promises of our people.
The existence of these facts should awaken the attention of our people to the importance of prompt and efficient action on this subject. They surely are of a character to aggravate the offense of any default on their part.
Your Committee regret that the work of preparation had not been commenced by the General Assembly at its present session. They express their deliberate con- viction, that if any neglect should occur on the part of the Legislature at its next session, that the worst of consequences may happen. They can not, therefore, return the bill to the House, without an earnest exhortation to the people, and to the General Assembly which shall succeed this, in the care of the public interests, to go on to the full accomplishment of this work.
All of which is respectfully submitted.
The session of the General Assembly for the year 1842-'3 was regarded by the people of Alabama with great expectation and interest. The old State Bank had been incorporated in 1823, and its capital had been composed of the University Funds, the Funds from the Sales of the School Lands, the Three Per Cent. Fund, and all other public funds of the State. Its operations, for years, were. simple and cautious, and its loans small and well secured. It assisted many persons with the means to enter their lands at the public offices, and was thus greatly endeared to the people of the State. After 1832 and to 1836, branches were established at Montgomery, Mobile, Decatur, and Huntsville, and the bonds of the State were sold to establish their capital. The capital of the State Bank was also increased, so that in 1842 the public debt of the State was near $14,000,000, which was represented by the assets of these banks.
There were reports of such profits, that, in the year 1834, all State taxes were abolished, and the civil government was carried on by what was called bank profits.
The consequences of this large increase of bank capital, were, as usual, pernicious and baneful. The sober expectations of in- dustry, together with the prudent courses by which these expecta- tions might be realized, were neglected and exploded. Property attained a fictitious value; speculations were engendered in every part of the community; and a demand for bank credit became universal. The office of bank director was regarded as the most lucrative office of the State, and the Legislature was beset by greedy adventurers who sought the office as the chief object of ambition. The Legislature was corrupted by the struggles for the place, and all the mischiefs of log-rolling and huckstering were resorted to, in the competitions for the place.
In 1837, the banks suspended-a revulsion took place in the affairs of the people-relief-laws became necessary, and a weighty mass of insolvency was produced. From 1837 to 1842, the cur- rency was depreciated, till it became inconvertible, except at a loss of fifty per cent., for specie, The interest on the State debt was
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paid by purchases of cotton, which was re-sold at a heavy loss. There were frauds and peculations, and the apprehension of frauds became prevalent; a panic began to prevail; the bank debtors dreaded a change, and the bank dependents operated to prevent one. No measures of the General Assembly, during these years, show any improvement.
Gov. Fitzpatrick was alive to this condition of things as a patriot, a conservative statesman, and as the leader of the Democratic party, which had been, in the main, opposed to the enlargement of the banking system, and which had been carried by combinations of a minority of the party with their opponents-but which was now held responsible for the consequences.
In the Summer of 1842, during the session of the Supreme Court, the Governor had long and earnest consultations with his old and intimate friends, the Hon. Henry Goldtwaite and John A. Campbell, Esq., upon the policy to be adopted, and the measures to be prepared during the next Winter; and the last named gen- tleman agreed to be a candidate for the Legislature, to assist in the consummation of the policy agreed upon. They agreed that the State Bank System was pernicious in principle, and that it should be abolished whenever it could be done, having a regard to the interests of the people, and the credit of the State; that the branches at Mobile and Decatur should be immediately de- prived of the powers of banks, and should be put in liquidation; and that the course, as to the others, should depend upon the de- velopments to be made.
On this basis, the elections in 1842 were carried by the Demo- . cratic party, which had a large majority in the Legislature. After the elections, the Governor took the most efficient measures to have the subject properly presented to the Legislature. The com- missioners for examining the banks were selected with care and discrimination, and searching inquiries were made into the condi- tion of the banks, and interrogatories, prepared by Mr. Campbell, were sent by the Governor to each of them, to be answered in their reports. Mr. Campbell also prepared the bill for the Mobile Branch Bank as the model for the work of liquidation, and sub- mitted it to the Governor, and adopted.
With this preparation, the session commenced. At the meet- ing of the Legislature, it was agreed among these friends that John Erwin, of Greene, should be the Speaker of the House. He was selected for his efficiency-his power, as a presiding officer, to hold a deliberative body to its duty, and for his known integrity, and independence of all Bank connections. The selection was ad- mirable.
The Bank Committee was chosen of men known to be firm, consistent and conservative-of men who could understand a
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policy, and who would and could maintain one. As soon as it was fairly understood that the measures for a complete removal of the system from the State could be carried, without any sacrifice of the public honor and credit, or ruinous concessions to the public debt- ors, the Governor and his friends came heartily to the measures. All the acts on the subject of the Banks were prepared by the Bank Committee. The measure for closing the mother Bank of the State was projected by that Committee, and carried by its in- fluence.
In the passage of these measures, the wisdom, providence and tact of Governor Fitzpatrick were displayed in their full vigor. With the measures, there was a restoration of taxation, a renewed pledge of the determination to sustain the public honor and cred- it ; large reduction in expenditure-a careful selection of compe- tent and faithful agents. No officer ever obtained so large a meas- ure of popularity in the same time, as the Governor, and none more eminently deserved it.
At this same session, the Planters' and Merchants' Bank was put in liquidation-the charter of the City of Mobile passed, and provision made for the restoration of the damaged credit of that city, and also a provision against the creation of more debts. The whole system of that city was rescued from mismanagement and insolvency ; and the management of the public trusts of the State, and public funds, was duly secured. The measures were so com- plete and efficient, that but little additions were found necssary at a future Legislature. The fruit of these measures was, the reduc- tion of the State indebtedness to the sum of $3,584,666, which was the debt in 1853.
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