The Register of Pennsylvania : devoted to the preservation of facts and documents and every other kind of useful information respecting the state of Pennsylvania, Vol. IX, Part 42

Author: Hazard, Samuel, 1784-1870
Publication date: 1828
Publisher: Philadelphia : Printed by W.F. Geddes ;
Number of Pages: 440

USA > Pennsylvania > The Register of Pennsylvania : devoted to the preservation of facts and documents and every other kind of useful information respecting the state of Pennsylvania, Vol. IX > Part 42

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The present bank, though it has dealt largely in public securities, and, for several years past, held large amounts of Government stock, has, notwithstanding, found it difficult to find employment for a capital of thirty-five millions, in the safe and legitimate business of banking; yet we have applications to incorporate a banking com- pany with a capital of fifty millions. The present bank has not realized more than five per cent. on its comparatively small capital; yet some of the projectors of new banking schemes propose to give a bonus of one million of dollars a year to the General and State Go- vernments, for the privilege of banking on a capital of fifty millions; and expositions have been presented to the public, holding out the idea that such a bank might keep in circulation one hundred million's of its paper, and grant loans to the enormous extent of two hundred millions! In the opinion of the committee, sucli pro- jects as these can only proceed from a spirit of bold and hazardous speculation, and from those who are en- tirely unacquainted with the practical operations of banking, and nothing in the shape of pecuniary bonus could justify Congress in making the dangerous expe- riment of committing to such hands the great duties of maintaining a sound currency, and of keeping in safety, and transferring without delay or expense, the revenues of this extensive confederacy.

An opinion has been sometimes expressed, as plausi- ble perbaps as it is delusive, that all the people of the Uinted States are entitled to the option of subscribing for the stock in a Bank of the United States, and that, consequently it would be an unjust preference to renew the charter of the present company. If a new bank were created, it is almost certain that the stock would go into fewer and less meritorious hands than that of the present bank, and the rest of the people of the United States would have still greater cause to complain of their exclusion, if, when that institution acquired the public confidence, its stock should be considerably above par. Men of accumulated capital, not engaged in business, and stockjobbers are invariably the first subscribers for the stock of a new bank; and it is impos- sible to conceive any substantial reason why the pre- sent stockholders, who have done so much for the country, should be superseded, at the hazard of great public detriment, merely to gratify the speculative views of a still smaller number of persons, principally large monied capitalists and dealers in public stocks. It should be recollected, too, that a considerable por- tion of those who hold stock in the present bank, are widows and orphans, who probably paid very nearly the present market price for the stock; and it is certain that, in the scramble for new subscriptions, most of those would be excluded by the classes of persons to which the committee have just alluded. For a more full explanation of their views on this point, they will refer the House to the report, already noticed, of a former committee of Ways and Means.

It remains for tbe committee to give a brief explana- tion or the modifications they have proposed of the existing charter. The reservation of the power of re- voking it, at any time after ten years, upon giving three years notice of such intention, will create a responsibili- ty in the bank, which may be extremely salutary, with- out creating too great a dependence upon Congress. The change proposed in the form of the bonus, is in some degree connected with this change in the tenure of the charter, and is recommended by other conside- rations. An annual sum, paid in the shape of interest on the Government deposites, will have the recom- mendation of making the amount of the bonus depend upon the extent of the benefit which the bank may de- rive from the public revenues, at the same time that it renders the Government an important service by the safe custody of these revenues. The authority given to the President of the United States to appoint one of the directors of each of the branches, rests upon the same principle with the existing authority to appoint a

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portion of the directors of the mother bank. It may be a matter of great convenience and utility for the Government to have a sentinel to give notice of any irregularities or abuses that may crecp into the direction of the several branches. The prohibition against is- suing drafts or checks for twenty dollars, or any smaller sum, will exclude from common circulation a description of paper, of which considerable complaint has been made in some quarters of the Union. This, however, has rendered it indispensably necessary to au- thorize other officers, as well as the President and Cash- ier, to sign and countersign bills for circulation. If this provision be not made, the whole time of the President and Cashier would be taken up in signing bills, to the entire exclusion of the more important functions of administration and superintendance; and yet these offi- cers would not have the physical ability to execute the necessary signatures. The expediency of prohibiting the issue of any notes at branches where they are not payable, is too obvious to require comment. It is essen- tial to protect the State banks against ruinous drafts for specie on the part of the Bank of the United States.

These provisions, in addition to those which are con- tained in the original charter, afford all the safeguards which can be reasonably required for the public secu- rity. The monthly statements which are made of the debts due by the bank, of the moneys deposited there- in, of the notes in circulation, and the specie in hand; the right of the Secretary of the Treasury to inspect the books of the bank, and to withdraw the public de- posites, subject to the approbation of Congress; the right of "a committee of either House of Congress to inspect the books and examine the proceedings of the bank;" its obligation to pay specie for its notes on de- mand, under a heavy penalty, and the provision "that the total amount of the debts which the said corpora- tion shall at any time owe, over and above the debts due for money deposited, shall not exceed the amount of its capital;"-all these safeguards against imprudent and excessive issues, with the constant supervision of the Government directors, furnish ample guarantees for the faithful performance of its duties to the public, and un- doubted securities to the holders of its notes, not only that they will be ultimately, but promptly paid.

REPORT UPON LOTTERIES.

Report of the Committee of Vice and Immorality of the Senate of Pennsylvania, to whom were referred the message of the Governor and sundry memorials relating to the abolition of Lotteries .- Read in Senate, February 21, 1832, by Mr. Fullerton, Chairman.

The committee on vice and immorality, to whom was referred so much of the Governor's message as relates to lotteries, and tho memorials on the same subject, respectfully report:

the laws; abstaining from an indulgence in imaginary estimates, or in reasoning founded altogether on gratui- tous premises. They attended during the examination recently made before them and the committee of the House of Representatives, on which occasion counsel were heard in support of the memorials of those pray- ing for the entire abolition of lotteries, and also in be- half of the Union Canal Company of Pennsylvania, and of Mr. Archibald M'Intyre, of the state of New York, of the house of Yates & M'Intyre.

The first question which presented itself for conside- ration was, whether the act of Assembly, passed the 2d of April, 1811, entitled "An act to incorporate the Union Canal company of Pennsylvania," and the act passed the 26th March, 1821, entitled " An act for the improvement of the state," gave to the Union Canal company separate and distinct grants of privileges to raise money by way of lottery; or whether the latter act only conferred a certain privilege, to be used in a certain contingency, after the expiration of the former grant.

Your committee are of opinion, that in the acts of 2d April, 1811, and of the 26th March, 1821, two distinct grants of lottery privileges were made to the Union Canal company of Pennsylvania. This construction was adopted shortly after the passage of the act of 1821. It has been acted on ever since: and on the faith of this construction and the sanction given to it, not only by a uniform acquiescence during upwards of twenty years, but also in several reports made to the legislature, large sums of money have been invested by citizens of this state, and by citizens of other states, in the stock and loans of the company. " The stock of few companies is more widely disseminated: and in not a few instances, it is the only property on which women and children rely for their annual income and support. Depending on the tacit approbation, if not the express consent of the legislature, they have been induced to select this as a safe investment of that fund, on which they were entirely dependent.

This construction in the opinion of your committee, is also the only one which is consistent with a due regard for the integrity of this commonwealth. For the pur- pose of showing distinctly the operation of the laws on this subject, your committee proposc briefly to advert to the same, and the circumstances under which they were enacted. The preambles to different acts passed on this subject, set forth that this canal is a great public work, which "will greatly tend to strengthen the bonds of union between citizens inhabiting distant parts of a country governed by the same free and happy constitu- tion and laws, to the encouragement of agriculture and manufactures, and the promotion of commerce." Thus impressed, the legislature invited individuals to embark their capital in this enterprise, then considered one of great hazard. And also to encourage and stimulate them, not only countenanced the undertaking, but in various ways held out inducements, among which the grant of lottery privileges was not the least effectual. At this time, the purpose of the commonwealth was not so much to limit the extent of gaming, as to encourage the investment of money in a work of great public im- portance.

That they have bestowed on the subject that care and time which its importance required. They are sensibly impressed with the conviction, that lotteries are a great public evil, and that they ought to be abolished so soon as it may be effected consistently with a just regard to the rights of individuals, and the faith of the common- wealth. However anxious they may feel to promote the morals of the community, and to put an end to all Having premised thus much, your committee will pro- ceed to notice the laws themselves. gaming under the sanction of law, they do not decm themselves authorised to recommend, even for the at- On the 29th of September, 1791, an act was passed incorporating "the president, managers and company of the Schuylkill and Susquehanna Navigation;" and on the 10th day of April, 1792, an act was passed in- corporating " the president, managers and company of the Delaware and Schuylkill Canal Navigation." On the 17th of April, 1795, an act was passed, reciting, that " whereas the companies incorporated for opening a canal and lock navigation between the rivers Schuyl- kill and Susquehanna, have, from the novelty of such extensive and arduous undertakings in a young country, tainment of these objects, a course which may fairly subject to question the justice of the state. On the uniform maintenance of an open and liberal policy to- wards all who may enter into engagements, or invest their capital on the faith of its promises or pledges, its credit mainly depends. A credit at this time as unlimit. ed, as its integrity is unquestioned. With these im- pressions, your committee have cautiously endeavoured to dismiss from their minds, all prejudice, and to disre- gard the appeals of passion. They have studied to confine themselves to facts, and to a fair construction of | experienced numerous difficulties, beyond what were

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[MARCH

ever contemplated by the legislature at the time of pass-

teen hundred and nineteen, two thousand two hundred ing the acts of incorporation, or by the subscribers to | and fifty shares shall have been subscribed to the capi- the said works at the time of subscribing thereto: And 'tal stock of the Union Canal company of Pennsylvania, whereas large sums of money have already been expend- ed on the said works, and there is every reasonable expectation, that a canal navigation, connecting the Eastern and Western waters of Pennsylvania, may be effectually completed, IF EFFICIENT FUNDS CAN BE PRO- VIDED for the same, to the great advantage and increase of the agriculture, trade and manufactures of the state at large"-by which act the said companies were au- thorised to raise by way of lottery, the sum of $400,000 in the respective amounts therein set forth, "to be ap- plied to carrying on" their works. By this it will ap- pear, that the intention of the legislature at that time, was to provide efficient sums, to be applied to works of general importance, and that a specific grant was made to these companies for this purpose.

By an act passed the 2d' April, 1811, entitled " An act to incorporate the Union Canal company of Penn- sylvania," these two companies were united: and by the 28th section of that act, the company thus created was authorised to raise "by way of lottery the residue of the original sum, not exceeding $340,000, authorised to be raised" by the former companies for the purposes aforesaid. In this act the profits from the lotteries are styled a property and a bounty to enable the company to make the tolls as low as possible. By the 26th sec- tion of this act, the company are authorised " to raise by way of loan from any individuals, bodies politic or corporate, on such terms and conditions as they may think fit, such sums of money as they may from time to time find expedient, for the completion of the objects aforesaid, upon the credit of the capital stock and in- corporation, including the nett proceeds and avails of the lotteries hereby authorised, and the tolls and profits of the same, and for the fulfilment of the terms and condi- tions of any such loan, to mortgage any part or the whole of their property, tolls, profits or estates what- soever." This authority is nowhere repealed or con- trolled-and your committee have not discovered in subsequent laws, any thing inconsistent with its exercise. It has been exercised, and one million four hundred and thirty thousand four hundred dollars have been borrow- ed-and among other property the lottery privilege has been expressly mortgaged and pledged to the lenders of the said money, "for the payment of the interest and extinguishment of the principal" of the debt. Without this money the canal could not have been made.

By an act passed the 29th of March, 1819, an addi- tional subscription of stock was.authorised, which how- ever never took effect, and by the third section of that act it was provided, " that the avails and nett proceeds of the lottery granted by the twenty-eighth section of the act to which this is a supplement, shall be and here- by are pledged as a fund for the payment of an annual interest of six per cent. upon all sums subscribed to the stock, in the first section of this act mentioned, reckoning from the day of the payment of each instal- ment. And whereas it is just and right to put upon the same footing the holders of the shares which were not forfeited in the late Delaware and Schuylkill, and Schuylkill and Susquehanna canal companies, it is here- by declared to be the intent of this act, that the hold- ers of all such shares, as soon as twenty-five hundred shares shall have been subscribed, according to the provision of the first section of this act, shall be enti- tled to an annual interest, reckoning from the time of such subscription, in the proportion of the payment made on subscribing by the new subscribers, and of the payment of their respective instalments as may be call- ed for by the board of managers."

By the act for the improvement of the state in 1821, it is provided "that whenever according to the provi- sions of the act supplementary to an act entitled " An act to incorporate the Union Canal company of Penn- sylvania," passed the twenty-ninth day of March, eigh-

the Governor of this commonwealth be and he is hereby authorised and required to subscribe in behalf thereof two hundred and fifty shares of the stock of said compa- ny, to be paid by the State Treasurer on warrants drawn by the Governor, in the proportion of the payment made on subscribing, by the new subscribers, and of the payment of their respective instalments, as may be called for by the board of managers. And if the pro- cceds of the lottery granted to the Union Canal compa- ny, together with the tolls which may be collected, shall not hereafter, from year to year, for the period of twen- ty-five years, yield a sum equal to an annual interest of six per cent. upon all sums not exceeding in amount four hundred and fifty thousand dollars, which may be sub- scribed by new subscribers as aforesaid, and paid ac- cording to law, to the capital stock of the said company, the Governor shall from year to year, for the term of twenty-five years, whenever it shall appear to his satis- faction that such disability exists, draw his warrant on the State Treasurer in favor of the said board of mana- gers for the amount of such deficiency, which money shall be applied to the payment of an annual interest of six per cent. to such new subscribers, and the faith of the commonwealth is hereby pledged for the term of twenty-five years, for the full and punctual payment of said interest: Provided, That the subscriptions shall be paid in such instalments as shall be called for by the managers of the said company, and each subscriber shall be entitled to interest only from the time of the actual payment of each instalment respectively. And in or- der to avoid as far as possible, all disability to pay such interest, so much of the third section of the act afore- said as pledges any portion of the avails or nett proceeds of the lottery aforesaid, to the payment of an annual interest to the holders of shares not forfeited in the late Delaware and Schuylkdl, and Schuylkill and Susque- hanna canal companies, be and the same is hereby sus- pended, until the canal shall be completed, and the president and managers of said company shall be and they are hereby authorised to continue, during the said term of twenty-five years, to raise by way of lottery, any sum that may be wanted for the purpose of paying to the holders of said stock, the six per cent. as afore- said: Provided, That whenever the nett proceeds of the tolls shall amount to the said six per cent., the privilege hereby granted of raising money by lottery shall, during such time, be suspended, except so far as is authorised by existing laws, and it shall in no event be lawful to divide any sum arising from said lottery over and above six per cent. upon the stock of said company, it being the intent and meaning of this act that all such excess shall be reserved to meet any deficiency thereof that may at any time occur in the tolls as aforesaid, and if any payment of interest shall be made on the part of this commonwealth which may amount to a share or shares,in all such cases certificates of stock to the amount of such payments shall be delivered by the president or treasurer of said company to the State Treasurer, which shall vest in the commonwealth all the rights and emoluments appertaining to a share or shares, as if held by individual stockholders. And if the water commu- nication between the Susquehanna and the Schuylkill, by means of said canal, shall not be completed in such manner as to admit boats of at least twenty tons bur- den, to pass"and repass, within ten years after interest shall first accrue by the provisions of this section, then and in such case the guarantee of interest hereby given shall cease."

.. By this act the pledge given to the old stockholders is not taken away. It is, on the contrary, expressly re- cognized, but the enjoyment of it is suspended till the completion of the canal. A construction which denies that this law confers any new and independent grant of lottery privileges cannot be adopted without the incon-

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sistency of recognizing the pledge of a specific fund to certain persons, and in the same law making another appropriation of that fund, which will in all probability exhaust it before the expiration of the suspension it creates. It also, by a strained implication, is made to interfere with the power of borrowing money, and pledg- ing this fund to the lenders. But such, in the opinion of your committee, was not the intention of the legis- lature. A new lottery privilege is given by that act, to be suspended "whenever the nett proceeds of the tolls shall amount to the said six per cent. By nett pro- ceeds can only be intended proceeds deducting all charges against the same, among which nothing can more properly be included than interest on the debts incurred in making the canal itself. In addition to these arguments, the law contains words which are entirely inconsistent with the interpretation which denies that there are two grants. The law provides, "that the privilege hereby granted of raising money by lottery, shall, during such time be suspended, except so far as is authorised by existing laws." If the grant made by the act of the second April were intended to be first used, and applied to the payment of interest on the new stock till it was exhausted, the new grant given by the act of 1821 could not come into active operation during the continuation of any privilege "authorised by exist- ing laws." And consequently when its suspension should take effect, there would be no grant "authorised by existing laws." Your committee do not feel at liber- ty to discard this important reservation of a right in fa- vor of the company, and consequently cannot adopt a construction which would render these words inoperative.

with the amount actually received by them. This has been generally known. And on the 3d of February 1819, at the call of the legislature, the company made to them a detailed report of their accounts, showing their different contracts, and the suin received from each lottery contractor; which statement was not only unquestioned, but is expressly referred to in the pre- amble to the 7th section of the act of the 29th March, 1819. Subsequent reports have been made by this company to the legislature, and investigations were had before the committees of ways and means in the years 1828, 1830, and 1831, all of which adopted and con- firmed this construction. Your committee cannot deem it just or politic to shake a construction thus sustained, and to adopt another which would greatly impair the value of property acquired under such a conviction.

The next inquiry was as to the amount which has ac- tually been raised by way of lottery. Your committee souglit no information from Archibald M'Intyre, the purchaser of the lottery privilege, from the Union Canal company, because having adopted the foregoing construc- tion of the law, it could in no wise assist their delibera- tions. And the question submitted to them being one of vast importance, not only to the company, to the loan holders and Mr. M'Intyre, but also to the common- wealth, they were unwilling to perplex or embarrass it by considerations not legitimately applicable to the inquiry. They applied to the " Union Canal com- pany of Pennsylvania" for such information as was re- quisite, which will be found in the statements annexed in this report.

Your committee cannot recommend any measure

The next important point to which the attention of having a tendency to impair rights which they believe your committee was directed, was the true meaning of to be vested; rights acquired under a construction con- formable to common sense-are generally received, and now after the lapse of so many years, for the first time questioned. Your committee are satisfied that a mea- sure of this kind would not only be unjust, but fraught with mischief. It would lead the community hercafter with great suspicion to make any investment in proper- ty on the faith of a promise, pledge, grant or guaranty by the commonwealth, and would thereby directly af- fect its credit. To adopt any measure which should prove disastrous to this company, would not only injure Philadelphia, but the state generally, by interfering with the only channel of communication by water, be- tween the public improvements and that city. the words "raise money by way of lottery." On the part of those who prayed for the entire abolition of lot- teries, it was contended that they included not only the money actually paid to the company, but also the profits of'their assignees, the managers of the lottery. Your com- mittee will here remark, that no evidence was laid before them or called for on this last subject. It is true, much con- jeeture was hazarded, but it was only conjecture, and not calculated to lead to a safe or satisfactory conclusion. Your committee are of opinion that the sum raised by way of lottery is the amount received by the company, and that they are to be debited with the same, although an actual loss should be sustained by the contractor. The act of 1795 confers on the two companies a grant Your committee, however, are gratified that they are enabled to conclude by proposing a measure whereby lotteries may be entirely abolished in this commonwealth, at the expiration of the next year. The contract enter- ed into by Mr. M'Intyre will then terminate; and the company may be compensated in money for the sum which will then be due to them. Your committee think it would not only be unjust to interfere during the con- tinuance of the existing contract, but would prove cruel- ly oppressive to the contractor. Mr. M'Intyre has complied with his contracts faithfully: he is a citizen of another state, and relying on the faith of acts of Assem- bly of this commonwealth; on the best advice, and sanc- tioned by legislative encouragement, he has made his contract. It is impossible at all to estimate the injury he might sustain, if compelled abruptly to wind up a business at best one of great hazard. of a given sum with directions as to the manner in which it should be appropriated. The act of 1811 authorises the Union Canal company of Pennsylvania "to raise by way of lottery the residue of the original sum not exceeding $340,000," and neither expressly or implied- ly diminishes or impairs the privileges previously given. It authorises the company, either to appoint managers to draw the lottery, or to sell the privilege. And in the same section, immediately after the authority to sell, provides that " the profitsarising from said lotteries shall not form a capital stock of said company," upon which any dividend shall be made to the stockholders, but the same shall be considered as a bounty to said corpora- tion to enable them "to make the tolls as low as possi- blc." The only profit which can be here alluded to, must be the profit on the sale of the privilege, and with that only were the company to be debited. Chicf Jus- Your committee herewith present to the Senate de- tailed statements of the receipts under the lottery privi- leges, also of the tolls received, and the manner in which they have been disbursed, which in ac- cordance with the views of your committee, will show that there will be due to the company, on the 31st day of December, 1833, the sum of one hundred and twenty-four thousand seventy-two dollars and fifty- ty-four cents; which, when paid, the lottery privilegca may be extinguished. tice Marshall well remarks, " that no man will purchase a lottery from which he can make nothing." In the twenty-sixth section of the same law, authority is given to the company " to raise by way of loan," &c. In this case surely, the money raised by way of loan, was in- tended to be the sum received. And it is difficult to understand why a different signification should be given to the words "raise money by way of lottery." The construction put on these words, whatever doubt may have existed originally, seems to determine the question. Your committee have discharged their duty; they be- lieve that the plan proposed is one whereby lotteries may From the passage of the act of 2d April, 1811, down to this time, the company have debited themselves only | be specdily abolished, at a moderate expense to the com-

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The Register of Pennsylvania : devoted to the preservation of facts and documents and every other kind of useful information respecting the state of Pennsylvania, Vol. IX, Part 42

Author: Hazard, Samuel, 1784-1870 Publication date: 1828 Publisher: Philadelphia : Printed by W.F. Geddes ; Number of Pages: 440

Author: Hazard, Samuel, 1784-1870
Publication date: 1828
Publisher: Philadelphia : Printed by W.F. Geddes ;
Number of Pages: 440