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 97

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 97

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The next charge upon which the majority of the committee have deemed it within their competency to report, is that relating to the issuing of the branch drafts or notes. Upon this subject there was nothing of any moment for the investigation of the committee to discover. Their existence, the causes in which they originated, and the purposes which they were intended to answer, had all been disclosed upon returns already made by the president of the bank to inquiries institut- ed by this and the other house of congress. They had been issued, not hastily, but after deliberate advisement with regard to their legality, sanctioned by the written opinions of three of the most eminent counsel, learned in the law, in the United States. All the facts leading to a just estimate of their expediency were well known. They were substituted for small notes, signed by the president and cashier of the parent bank, of which it was impossible for them to supply sufficient numbers

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for the necessary circulation of the country. The re- port of the majority of the committee states, much in detail, the repeated and earnest applications of the pre- sident and directors of the bank, to congress for an ad- ditional authority to the presidents and cashiers of the several branches, to sign the notes issued by those branches. It does not appear that this request was ever denied by congress, after deliberation. In one instance, at least, there was a report of a select committee of the house of representatives, in favor of the appointment of signers to the notes of the bank; but the spirit which, in the halls of legislative power, so often defeat by pro- crastination, that which it cannot reasonably reject, had always succeeded in arresting the action of congress up- on this proposal. But the power which was adequate to withhold the means of furnishing, in this form, uni- form currency for circulation, could neither supply its place, nor suppress the constantly recurring want of it, in the intercourse of business between the different parts of the country. The solicited power was never denied, but it was never granted; and the omission to grant it had the effect of denial.

The want of circulating currency, equivalent to spe- cie, continued with increasing pressure upon the peo- ple, and especially at the locations of the southern and western branches of the bank. An expedient was at last resorted to, which, without transcending the limits of the charter, effected the same purposes which would have been accomplished by notes payable to the branch- es, under the signatures of their presidents and cashiers.

It was, that they should be authorized by the direct- ors of the parent bank to draw notes or drafts upon the bank, payable only there. That this expedient was warranted by law,has been settled by a solemn decision in the Circuit Court of the United States. It had pre- viously received the sanction of the secretary of the treasury. An obvious remark upon it is, that its suc- cess depended upon the extensiveness and universality of the credit of the bank. The drafts, though payable only at the bank in Philadelphia, circulated as specie in every part of the country. But for that credit they could not have circulated at all, or only as depreciated currency. They have answered an exceeding useful purpose, and proved a great public convenience in the transaction of business, and the circulation of exchanges throughout the Union. Under management always prudent and cautious, no serious inconvenience would be anticipated from them. But it is not to be disguis- ed, that they offer facilities and temptations for impro- vident and excessive issues. The bill reported by the committee of ways and means, for re-chartering the Bank of the United States, proposes to prohibit the is- suing of these branch drafts, but to authorize the pre- sidents and cashiers of the branches to sign bills paya- ble at their respective offices only. The want of a circulat- ing currency will not be so effectually supplied by this process, as by that now in use; but it will be more invaria- bly safe to the bank itself. Itis understood to be more ac- ceptable to the president and directors, and the subscriber is willing that it should be substituted for the practice now established, from which, however, he perceives not that any serious public injury has yet resulted. That it is justifiable under the charter, he has no doubt.

The next charge adopted by the majority of the com- mittee, from the bill of indictment of the chairman, is, that the president and directors of the bank have been guilty of the crime of receiving and paying Spanish dollars, and even our own gold coins at their intrinsic value, which is higher than that conferred upon them by statute. The objection is, that these are not techni- cally called bullion; and there seems to be an argument in the report, that to give or receive more for foreign coin, or for domestic coined gold, than their value, as established by law, is unlawful. This argument, the subscriber, believes, has the merit of novelty-to him at least it is new. So long as the proportional va- lue in the market of gold to silver, whether bullion or | land prohibited the bank from selling them.

coin, shall be seven or eight per cent. higher than the relative value assigned to them by statute, while both shall be legal tenders; so long as Spanish or Mexican dol- lars shall contain more pure silver than the coinage of our own mint, so long will the coin of highest intrinsic value be bought and sold as commodities, in spite of all human legislation. Nothing is more clearly established by the universal experience of mankind, than the impotence of despotism itself, to control the value of the precious me- tals. Every attempt to exercise such authority bears upon its face the stamp of injustice. Charles XII. of Sweden, once transmitted a message to the senate of the kingdom, that he would send to govern them one of his boots. The same monarch successively issued eight or ten copper counters, each about the weight of half a cent, and deerecd that they should pass for Swedish silver dollars. His own creditors were compelled to re- ceive them; but to pass them off upon others at the same rate was beyond his power.

With two metallic legal tenders of different intrinsic value, the bank, like every other corporation or indi- vidual,has the option, and always will make the option, to pay in the tender of lowest value. Their debtors having the same option will, as universally, pay the cor- poration in the same tender of lowest value. To forbid the bank from receiving foreign silver or domestic gold coins at an advance, would be to expel them, unless as special deposites, forever from their vaults. To forbid the bank from paying them at an advance, would be a prohibition ever to issue them at all. They are com- modities in the market which will be bought and sold, by all the brokers and state banks in the Union, whic- ther bought and sold by the Bank of the United States ur not. The participation of the bank in the traffic, far from tending to disturb the legal value of the coin, and render that portion of the metallic currency uncer- tain and fluctuating, has a tendency directly the re- verse. To prohibit the bank from making an allow- ance ofadvance upon Spanish dollars, would be a pro- hibition to import specie, consisting of that coin, at all. Then, either it would be imported to the same extent by other institutions and individual traders, or there would he a deficiency in the supply of specie. In the former case the fluctuation in the value of that kind of specie would be neither more nor less than it is, and in the latter, it would be much greater.

The fourth charge reported by the majority of the committee, is that of selling "stock obtained from go- vernment, under special acts of congress."

In this, as in many other parts of the report, the sub- scriber has had occasion to regret the want of precision in the statement of the charge. Here almost every word in which the charge is conveyed is remarkable for its looseness and indefiniteness of meaning. Who, for example, under the denomination of "stock obtained from Government," would naturally understand the evidences of a loan made to the Government by the Bank itself? In the contract of a loan there must be a debtor and a creditor, neither of whom can with pro- priety be said to obtain any thing from the other. In the use of ambiguous language, there is always danger of ambiguity of conception. In this case, if the Bank obtained stock from the government, it was because the government obtained money from the bank. The loans could not have been made without special autho- rity by act of congress, and that authority was expressly given. The bank is prohibited from purchasing any public debt whatsoever; but it is not prohibited from selling any certificate of public debt which it may law- fully possess. With regard to the loans to which the report of the majority of the committee refers, the stock which represented the moneys borrowed, was made transferable by the very acts of Congress which authorized the loans. The bank received the certifi- cates transferable upon their face, and neither that act, nor the charter of the bank, nor any other law of the

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If the object of the argument of the majority report upon this charge be, to urge that, in the new charter which may be granted to the bank, a clause should be introduced to prohibit the bank from selling the certi- ficates of the stock of authorized loans by the bank to the government, it is obvious that such a clause would be precisely equivalent to a provision that the bank should never loan to the government at all, for it is clear that congress could lay no other competitor with the bank for the loan under the same restriction; nor could the bank, under such a restriction, ever enter into compe- tition with other proposers for the loan not so restricted. Among the great public benefits of a national bank, with a capital proportioned to the extent of its operations, the subscriber considers that this very facility furnish- ed to the government of the contracting loans upon mo- derate terms, as the exigencies of the public interest may require, holds a conspicuous rank. He believes those very loans to which the majority report refers, to be signal examples of the benefit of the bank to the na- tion. He is well assured, that if at any time when those loans were contracted, there had been no national bank, the loans must have been made upon terms much more burdensome to the borrowers, while the public treasu- ry would have lost all the profit of the participation in the loan to the nation as stockholders of one fifth of the capital of the bank.

The fifth and sixth subjects of charges, considered by the majority report as amounting to violations of the charter, come within the purview of one and the same principle. They consist of expenditures made by au- thority of the president and directors of the bank for the purpose of improving and of adding value to the real estate, of which, in the course of their business, they have become lawfully possessed. There are two dona- tions of 1500 dollars each to turnpike road companies- some appropriations for canal basins-for building of six ware-houses, and perhaps some other houses. There appears to be in the principle of these charges, some- thing of an instinctive aversion to internal improve- ments-a sentiment with which the subscriber must dis- claim all sympathy whatever. The majority report pre- sents the donations to the two turnpike road companies as offences highly aggravated by the circumstance that the general government had declined making appropri- ations for similar objects-which declining for similar objects becomes, in the very next sentence of the report, a direct refusal of the government to expend its reven- ues on the very same objects.

But this assertion, in either of its forms, is liable to much controversy, and must be received with much qualification. It is admitted, in a note to the report, to be possible that the improvements were in the neigh- borhood of the real estate of the bank, and upon the ground that such donations would increase the value of that real estate; and this possibility the majority would have found to be positive fact, if they had thought pro- per to ask for an explanation of it before passing cen- sure upon the transaction.

their authority, for their appropriations for these turn- pike roads. Nor is it just to consider them in the light of donations or gratuities, Wasteful of the property of the stockholders. For such expenditures, the board of directors at Philadelphia could have no imaginable mo- tive, other than that of promoting the interest of the stockholders, and making their funds more available. With regard to the building of houses, the majority re- port quotes the restriction in the charter upon the hold- ing of real estate by the bank. The corporation is per- mitted to hold lands, tenaments, and hereditaments, bo- na fide mortgaged to it by way of security, or convey- ed to it in satisfaction of debts previously contracted in the course of its dealings, or purchased at sales upon judgments obtained for such debts. It is not alleged that the bank holds one acre more of land than is thus allowed by law. But the majority report seems to con- sider the restriction as affecting not only the quantity of lands which they might hold, but the right of improv- ing that which was their own-the common proprietary right. If there had heen any manifestation of a desire on the part of the corporation to increase the quantity of their lands, tenaments, and hereditaments, perma- nently held, the subscriber would have been among the first to censure their design, and the readiest to restrain them from the indulgence of such a desire by law.

But almost all these lands were held in one place- Cincinnati, in the state of Ohio. They had, according to the declaration of the president of the bank, come in- to their possession strongly against their own inclina- tions. He stated, and it appears to be perfectly natu- ral, that all the lands which came into their hands were considered by them as incumbrances; that their design was to dispose of them as speedily as they possibly could; that for this purpose they had crected a small number of houses, to make both the land on which they stood,and the adjoining lands, more easily and more free- ly saleable. The buildings were also erccted, partly by contributions, in labor and materials, by debtors to the bank, who had no other means of payment. The ad- vantage of all this was principally to the stockholders of the bank; and the subscriber believes that the solicitude for their interest, so warmly manifested in the majority report, when denying the right of the president and di- rectors to spend their money in donations and gratui- ties, will find no responsive voice among the stockhold- ers themselves. It was indeed the unfortunate condition of those to whom the management of the affairs of the corporation were entrusted, that whatever they have done must be made a subject of censure. If they in- crease their business and their profits by branch drafts upon the bank, it is a heinous offence, because congress had neglected to give a power to sign the bank bills to any other officers than the president and cashier. If they increase the value of their real estate, by contribu- ting to a turnpike road, it is wasting the property of the stockholders in gratuities and dunations. If they enlarge their discounts and accommodations, they sup- ply temptations to over-trading, and bring the bank to the verge of ruin. If they contract their issues, they produce unheard-of distress in the trading community. Do they trade in foreign silver and domestic gold coins? They are accessary to the pernicious exportation of the precious metals. Do they substitute bills of exchange for silver dollars in the exportation to China? Who does not see that they must send to London the coin which formerly went round the Cape of Good llope? And, besides, the transaction looks very like respon- dentia securities. The most perfect parallel to the ma- jority report, known to the subscriber, is the lively la- dy in " Much Ado about Nothing;"

The assertion is therefore altogether gratuitous, that the government had declined to make appropriations for similar objects. The government has made ma- ny and very large appropriations for the construction of roads, because they would give additional value to the public lands through or near which the road was to pass. It was the main argument upon which the first very expensive work of internal improvement, the Cumber- land road, was undertaken. It has silenced many a stubborn objection, satisfied many a timid scruple, sub- ducd many a constitutional obstacle. So decisive has been its effect, that it would be difficult to name a sin- gle instance of the refusal of congress to make an ap- " who never yet saw man, How wisc, how noble, young, how rarely featur'd, But she would spell hun backward." propriation to assist in the construction of a road when it has been made apparent to congress, that it would raise the value of public lands. If, therefore, the pro- Thus, when the administration of Mr. Cheves can be exhibited in favorable contrast with that of the present ceedings of the bank were to he influenced by the ex- ample of the government, they had the full sanction of | president, it is presented with high and earnest com-

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mendation: but when a charge of usury can be brought to bear upon the bank, upon the credit of a confession implied in a demurrer, the occasion to stigmatize the bank cannot be passed over, though ten long years have slumbered over the sin, and though Langdon Cheves himself must be branded as the usurer.

The subscriber will no longer tax the time and pa- tience of the house by pursuing into their microscopic details, a series of inculpations and criminations, not one of which, in his deliberate opinion, has a shadow of reasonable foundation. How could he consider other- wise than a waste of time, a prying scrutiny into the question-Who of the stockholders bave usually voted at the election of the directors? Who were the voters present? And who held the proxies of the absent? When it is notorious that in this, as in all similar institu- tions, whose stockholders have confidence in their pre- siding officer, the great difficulty is to prevail upon the stockholders to attend and vote at the elections at all. How could he consider as a grievance to be probed to the quick, and reported upon to the house, that where- as the charter provides that there shall be twenty-five directors, there are at this very hour only twenty-four, because the stockholders at their annual meeting did elect Nicholas Biddle one of their directors, and the pre- sident of the United States did nominate, and, by and with the advice of the Senate, did appoint the same Nicholas Biddle one of the five directors on the part of the government.

Such has for several years been the fact, and the con- clusion naturally and justly to be drawn from it is, that Mr. Biddle has enjoyed the unquestioning and entire confidence, both of the government and of the indivi- dual stockholders. The reason of the double election has been this: the presdent of the bank is elected by the directors on the first Monday of January, and none but a director is eligible to the office of president. The nomination of government directors sometimes lingers in the Senate, until after the first Monday in January. The stockholders, therefore, elect Mr. Biddle as one of their directors, that he may with certainty be re-eligible as president. When the nomination of Mr. Biddle, as a government director, has been completed in time to be known to the stockholders at their election, they have chosen him; when it has not, he has been appoint- ed and elected. And thus there are only twenty-four instead of twenty-five directors. In all former years, however, Mr.Biddle has declined accepting the appoint- ment as a government director, and his place has been supplied. So that, until the present year, the board of directors has been full. The effect of his not declining the appointment from the government the present year 1

is, that he is removable from office at the pleasure of the president of the United States.

Ten years long, has this confidence been enjoyed and justified by that distinguished citizen and honorable man. No question had ever been insidiously started, how many proxies he held? The more he held, the more extensive was the confidence of the stockholders in him. No scruple had ever crossed the mind of any president of the United States, to deter him from nomi- nating him year after year as a government director. Not a voice had ever been raised in the Senate to cause their hesitation to confirm his appointment, and so per- fectly in harmony with this confidence has been that of the public, that not a rumour has ever been raised of a prospect, or even of a project for the election of any other person as president in his place. Afterten years of of fair fame, thus sustained without an adverse whisper be- ing heard, it has been a source of deep mortification to the subscriber to see the character and feelings of such a citizen treated by a committee of the house of repre- sentatives as if he had been an inmate fresh issued from a penitentiary to preside over the Bank of the United States. As an exemplification of this fact, it might be sufficient to refer to the tone of the majority report, from beginning to end; to the consciousness of authora-

tive power which pervades all its pages, unmingled with that courtesy which arrays even authority itself in the ornaments of a meek and quiet spirit-to the con- tinual contestation even of facts stated by the president of the bank upon oath-to expressions so divested of all semblance of delicacy as these, that "the bank as it col- lects the revenue, knows, or ought to know, that it will be called upon by the government to re-imburse it." The subscriber forbears, for he finds it difficult to ex- press his sensations without using terms obnoxious to the same criticism which he is compelled to apply to these.

A large portion of the same report, and that with which it closes, consists of an elaborate argumentative parallel between the condition of the bank in 1819, when it is stated to have been upon the verge of bankrupt- cy, and its present condition. Without entering into the particulars of this disquisition, the subscriber will close this his own report, with a few general remarks concerning it.

And in the first place he observes, that the bank can- not with any propriety be said to have been upon the verge of bankruptcy in 1819. It did not suspend spe- cie payments for an hour-it had met with heavy losses -its capital had not been punctually paid in, conforma- ble to its charter. Imprudent and irregular, if not fraudulent speculations in its stock, had been allowed and shared by one or more of its directors. It had failed in the indiscreet attempts to make all its bills payable at all its branches. Had a severe pressure come upon it, a short interval might have ensued during which it might have suspended cash payments, and that would greatly, perhaps permanently, have affected its credit. But the bank was never near the verge of bankruptcy. The majority report itself, states that in April 1819, when its difficulties were the greatest, its means of spe- cie, notes of other banks, and funded debt, amounted to upwards of ten millions of dollars, while the whole demands which could come against it in the same month, amounted to only about 14 millions. There is nothing like an approach to bankruptcy in this. But the pressure on the bank in 1819 did not proceed from the errors or imprudence of the corporation itself only. There is an ebbing and flowing of the tide of commerce almost, though irregularly, periodically throughout the world, and there is a sort of galvanic sympathy in the contrac- tions and expansions of the great monied institutions in both hemispheres. The restoration of specie payments by the Bank of England, in 1817 and 1818, undoubted- ly produced an immense pressure upon the circulation, and of course upon the commerce of the world. All paper circulation beyond the amount representing the precious metals, is fictitious capital, or rather it is credit. The question whether the balance of moral influence,up- on the condition of men arising from circulating credit and banking, be a blessing or a curse, is a speculation for the closet. Money has long, and upon divine authority, been pronounced the "root of all evil," and paper mo- ney shares in its full proportion the character of its pro- totype. Power for good, is power for evil, even in the hands of Omnipotence. Had there been in 1819, no Bank of the United States, the pressure must have been incomparable greater, and the ruin far more widely spread than it was. The opinions exhibited in this por- tion of the majority report, are produced in the inter- rogatories of the member of the committee to the presi- dent of the bank appended to it. The subscriber will barely refer to the answers by the president of the bank, which render all further discussion of them su- perfluons.

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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 97

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