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 98

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 98

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But if it were true, that the condition of the bank in 1819, was upon the verge of bankruptcy, and if it were also true that the present condition of the bank were of exact resemblance to its deplorable state at that time, the discretion, the patriotism, and the humanity of the committee could scarcely have sanctioned the disclosure of so disastrous a secret to the world. The market price of the bank stock at the time when the inquisition

1832.]

UNITED STATES BANK.

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into the affairs of the bank was instituted, was at an ad- vance of at least 25 per cent. upon its nominal value. In spite of all the denunciation against it, in spite of all the learned arguments, all the arithmetical calculations, all the statistical theorems, corollaries, and demonstra- tions, with which it had been for years assailed, in and out of congress, the price current of bank stock, the ther- mometer of public confidence, was still at 25 per cent.ad- vance upon the shares. If the majority of the commit- tee had really made the discovery that the affairs of the bank were in such a desperate state, from the extraor- dinary pressure upon the money market and the depres- sion of trade, considering the large stake which the na- tion holds in the stock of the bank, it would have been but prudent forecast in the majority of the committee, and would have manifested a tender regard for the pub- lic interest, to have reserved the exposure of this crisis of terror and dismay, until it shall have exploded or passed away. In such emergencies, the most formida- ble of all dangers to banking institutions is the spread- ing of a panic among its creditors.

The issues and circulation of the bank paper are un- doubtedly large, and there has been for some months a severe pressure, though not a universal one, on the mo- ney market. The president and directors of the bank, became aware of this pressure on its first approach, and took measures of precaution as early as October last, to prepare for meeting it, and breaking its force. On the 7th of that month, a circular was issued to the cashiers of all the branches, noticing the pressure which was to be expected, particularly upon the uffices at Philadel- phia and New York; instructing them so to shape their business as to furnish them so far as might be practica- ble with the means which were likely to be required. At that time the government had given notice of a pay- ment of six millions of funded debt to be paid on the first of January then next. But it had gone further, and authorized the creditors thus to be paid off in Ja- nuary, to claim their payments even at any time of the preceding quarter, although the government had in de- posit scarcely half the sum required for that anticipated payment. The bank made no complaint, but took this measure of precaution. The same vigilant and restric- tive policy was pursued through the winter and spring, except when mollified by the dispensations of Provi- dence in the overflowings of the Ohio at Cincinnati and and at Louisville.

· At these places, the credits of the bank had been ve- ry large; yet, immediately upon being informed of this visitation of calamity, every facility was again extended by the direction of the president and directors at Phila- delphia, to those who had suffered by the floods. Shortly after, the secretary of the treasury makes a confidential intimation of a wish to pay off six millions of three per cent. stocks on the first of July next. To ease the pressure upon the commerce of New York, and to save the bank from curtailing the discounts of the merchants' debts to government, for duties, the presi- dent proceeds to Washington, and in a conference with the secretary of the treasury, suggests the expediency of postponing until the first of October, the payment of the six millions of 3 per cent. stock. The secretary ac- cedes to this arrangement, the bank stipulating to pay the quarter's interest, in consideration of having, du- ring the interval, the use of the money; and this adjust- ment, so advantageous to the government, so provident of the interests of the stockholders,so beneficient to the debtors, both of the government and of the bank, and so facilitating to the collection of the revenue at a time of considerable commercial embarrassment, is seized upon in the majority report as if the dearth of reasonable cause of complaint had bred a famine, and harped upon as if it had been the convulsive grasp of the bank in the very last agonies of bankruptcy.

Now all this has led the mind of the subscriber, re- flecting upon it with all the anxious intensity of which it is capable, to a directly opposite conclusion. That

there was over-trading to a considerable extent in the course of the last two years, he has no doubt. That the issues of bank credit and circulations unusually large, partly furnished the means to this over-energy of enter- prise, he is not prepared to deny. That in the earnest and proper anxiety to re-invest in productive funds the mass of capital thrown back upon their hands by the payment of the seven millions of the government's debt for the stock of the nation in the bank, the presi- dent and directors may have for a moment overstep- ped the line where that prudence, which includes all the attributes of the Divinity, might have stopped, is possible. The subscriber is far from affirming that they did. If they did, lie is sure that it was from motives pure as rectitude itself, and from infirmities of judgment incident to all labors of man.

The president of the bank very forcibly stated to the committee, the extremely delicate position in which the institution stands towards the commercial community in this respect. So long as the bank keeps within the line of safe operations upon its own funds, it leaves those of commerce to regulate themselves. It neither seeks to increase nor diminish them. When, from whatever cause, there is among the merchants a tenden- cy to over-trading, it is not the province of the bank, directly, to interpose against it; for that would be to exercise an invidious and improper control over busi- ness with which it has but a remote concern. Its ge- neral duty is to grant facilities while it has disposable funds uninvested. The point at which it ought to stay its land, is a matter of difficulty to determine, and upon which the soundest discretion may come to different re- sults in different men. From the first appearance of the impending pressure, the measures of the president and directors of the bank appear to the subscriber to have been marked with great judgment, and to have been continued and modified according to the progress of events, with equal steadiness of purpose, and benevo- lence of intention.

But, whether the corporation issues its circulation with liberality, or curtails it with prudent caution, it equally meets the censure of the majority report. After quoting two passages from a report of Mr. Rush, com- mending the bank for its prudence in limiting the amount of its circulation, it gives two statements, show- ing that, between August 1828, and the first of April last, the circulation had been augmented to what it calls the astonishing increase of upwards of ten millions in less than four years, But it omits all notice of two facts which, if duly considered, would have taken off all the edge of astonishment. The first is that, during the same interval, the seven millions of stock, held by the government, were re-paid. The second, that upwards of three millions of the public debt, held by the bank, were paid off: so that the astonishing increase of circu- lation is a mere re-investment of capital, which had been returned upon the bands of the bank, and only the substitution of one species of productive property for another. And scarcely has the sentence of censure been expressed in the report, but it turns and com- plains, and appeals to the circular addressed to the branches, and correspondence with them since Octo- ber last, that the chief object of the bank has been barely to sustain itself; and that, since that time, the bank has not increased its facilities to the trading com- munity, in any part of the Union.

The subscriber believes that nothing can be more de- lusive than the parallel drawn, in the majority report, between the state and condition of the bank in 1819, and in 1832; but that report has subjected itself to one test which is already disclosing the true character of its reasoning. It has ventured upon the field of prophe- cy, and the failure of its predictions is already bright- ening into demonstration.

In the anticipation that there will be a curtailment of discounts for several months to come, the foresight of the majority report is probably correct. This, of course,

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UNITED STATES BANK.

must occasionally happen in all banking establish- ments. It is incidental to all the unavoidable fluctua- tions of trade, and is believed to be at this time in- dispensable, not only to the bank, but to the whole commercial community. This operation has, indeed, been quietly proceeding in the Bank of the United States, ever since the circular of 7th October 1831; which the majority report turns to so large account for its purposes. It has been in progress, while, at the same time, the direction of the bank has been reserving and husbanding, and prudently applying the means to the commercial portion of our fellow citizens, of meet- ing and passing through this critical emergency, with as little detriment to the public and to individuals as possible. This would explain, one would think, very satisfactorily, the fact stated in the letter of the presi- dent of the bank to the secretary of the treasury, of the 29th of March last, that, in compliance with an intimation from the collector at New York, an ex- tension of loans had been promptly acceded to, in the preceding month of February, to assist the mercan- tile debtors of the government in the punctual payment of their bonds; without needing an argument such as that of the majority report against this plain and direct asser- tion of a very notorious and unquestionable fact. The author of the report finds, by reference to the weekly statement of the office at New York, from July 1831, to April 1832, no aggregate increase of loans; but, on the contrary, a reduction of the amount. He finds that the total amount of discounts at the New York branch, between the 4th of October 1831, and the 28th of March 1832, was actually diminished $468,447 17, while, du- ring the same time, the bonds paid at that port amount- ed to between nine and ten millions of dollars. Can it be imagined that he discovers in this statement, compa- red with that in the letter from the president of the bank, to which he refers, not an unanswerable demon- stra tion of the prudence as well as of the liberality with which the affairs of the bank have, in this respect, been conducted, but an occasion of contesting, by unavoida- ble implication, the veracity of the president of the bank ?- and this, in a report which, upon an immediate- ly preceding page, charges the bank with " the loss of five millions of its specie."

On the first perusal of the report, the subscriber was himself greatly at a loss to know what was meant by this "loss of five million of its specie," of which he was very sure that no evidence had been given to the com- mittee; and it was only after a repeated examination of the paragraph in comparison with another part of the. report, that he found this form of expression was only an ingenious mode of accusing the bank of a loss of five millions of specie between the first of September and the first of April, because there was nearly that amount more of specie in the funds of the bank at the former period than at the latter. This construction, by which payment of debts is converted into loss of specie, may serve as a consolation for the disappointment arising from the inability to convict the bank of any other se- rious loss since 1819.

With regard to the increase of the number of the branches, to the precise manner in which the annual election of directors bas been conducted, to the alarm- ing magnitude of the sums recently paid for printing, to the sums paid to the solicitors and counsellors, dis- tinct from those paid to attorneys, to the number of useful documents not referable to any particular head, and to the many statements called for, which the busi- ness of the bank, and the shortness of the time allowed for the investigation, would not admit to be furnished, the subscriber will pass over all these subjects as they are passed over by the majority of the committee, with the expression of his satisfaction that the labours of the committee upon them were abridged by the march of time, and of his hope that no committee of congress will ever again be called to an investigation upon a plan of such interminable outline. He is convinced,

that to fill it up according to the comprehensiveness of its conception and the multifarious complication of its details, a committee appointed at this time, which should sit the year round, and he might safely add night and day, would, at the expiration of the charter of the present bank, be left, like the present committee, with a multitude of subjects of complaint, which they would be "compelled to abandon for the want of time."

With regard to the numerous matters of vital import- ance in the re-organization of the bank, specie pay- ments, domestic and foreign exchanges, investments in public debt by the bank in 1824 and 1825, and its abili- ty to make loans to the government, the influence of the operations of the bank upon trade, on the increase of the paper-circulation of the bank, its agency in di- minishing or enlarging the circulation of local banks, and the means of permanently regulating our circula- tion so as to prevent its injurious effects upon the trade and currency of the country, concerning which the committee, or rather one of its members, submitted a number of inquiries to the president of the bank: a copy of the answers of the president of the bank to these inquiries has already been submitted to the house. It is hoped they will be satisfactory to the house, and that they will contribute with other considerations to the conclusion that the bank of the United States ought, with such modifications as may be deemed expedient by the legislature, to be immediately re-chartered.

The subscriber has long entertained the opinion, that the existence of a national bank is indissolubly connect- ed with the continuance of our national union. The fiscal operations of the government in all its branches, he believes, cannot, without the aid of such an institu- tion, be conducted, he will not say well, but at all. He does not say that the present bank of the United States, is indispensable, and his mind has some times hesitated upon the question, whether at the expiration of the present charter of the bank, the establishment of an- other, though similar institution, might not be more ex- pedient than the renewal of the charter. Inclining rather to the latter of these measures before the insti- tution of this inquiry, he has been very strongly con- firmed in that opinion by the result of the investigation in which he has shared.

The management of the affairs of the corporation du- ring the administration of the present president, not ex- empt from human error and infirmity, has yet appeared to him marked with all the characters of sound judg- ment, of liberal spirit, of benevolent feeling, and of ir- reproachable integrity. A large proportion of its offi- cers in subordinate trusts are of the Society of Friends, a class of citizens peculiarly qualified for the performance of duties, and the exercise of qualities appropriate to the successful management of monied establishments --- industry, punctuality, temperance, and a conscientious discharge of all moral obligations.

In considering the numerous and important public services, and the large contributions of the present bank to the government and people of the United States, he thinks the least return which they are justly authorized to expect from the equity of the nation, is the renewal of their charter. The benefits and profits of the bank have been enjoyed by the nation, far be- yond those shared by the individual stockholders. Be- sides the bonus of a million and a half of dollars paid to the public treasury for the charter-besides the saving of the expense of loan offices for the payment of the public debt, principle and interest-besides the obliga tion of transferring the Government funds to and from every part of the Union, as the public exigencies re- quire-the nation has held one fifth part of the stock from the commencement of the institution to this time, without payment of one dollar to its capital, until the last two years. It has received the dividends in com- mon with the other stockholders; has exercised the ex- clusive right of appointing one-fifth of the directors; has been supplied with loans whenever the occasions of

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1832.]

the government have needed them upon terms more ad- vantageous to the public than could have been secured from any other institution or company of individuals; while the bank, by its salutary control, and its univer- sally extended credit, has compelled the restoration of cash payments and furnished a currency equivalent, in substantial valuc, to specie, throughout the union. These have been the advantages of the bank to the na- tion, while the individual stockholders have realized upon their invested capitals, scarcely more than a year- ly interest of six per cent, even including the advance of the stock at this time in the market. This circum- stance has afforded proof, nothing sbort of demonstra- tion, of the rashness and folly of all those projects for the establishment of a new bank, which have been pre- sented to congress, with a lure of enormous premiums for the grant of a charter. The subscriber has no doubt that the destruction of such an establishment would be speedy and inevitable, either by the absorp- tion of all its profits to pay the premium or by forcing its direction into a wild and reckless extent of business, ruinous to the commerce of the country, not less than to the bank itself.

In considering the expediency of renewing the char- ter, the subscriber discards all considerations of the in- terests or wishes-not only of the president and direct- ors of the bank, hut of all the individual stockholders of the corporation. In the question between chartering a new corporation, and re-chartering the old one, if the interests of the individual adventurers are to be con- sidered at all, like opposite quantities in algebra, they annul each other. It is the public interest alone that can determine the question, and in that view alone, the subscriber would prefer the renewal of this institution to the establishment of another. The present estab- lishment has the advantage of long experience, and of a system matured by the acquired knowledge of many years, and by the correction of its own errors. That knowledge has been purchased at no inconsiderable cost, and a set of new undertakers would most proba- bly have to pass through a similar noviciate. The re- sult of his examination has been an entire conviction that with a view to the public interest alone, the char- ter of the bank of the United States ought forthwith to be renewed.

In the free and unreserved animadversion upon the course of proceedings pursued in this investigation by the majority of the committee, and upon the conse- quences to which they necessarily led; which he has felt it bis duty to indulge, he trusts it will not be under- stood as his intention to speak in censure of any indi- vidual member of the committee. Ile imputes no in- justice of intention to any onc, even where he sees it most flagrant in the result of measures. If in the ex- amination of the books and proceedings of the bank, a penetrating and severe scrutiny into the official conduct of the president and directors of that institution was within the scope of the labors of the committee, and he has no doubt it was, he was equally clear in the convic- tion that the resolution of the house gave them no right, and that the first principle of national justice denied them the right, to bring before themselves for censure or vindicatiun the persons or the concerns uf any other individual. The majority of the committee thought otherwise. Editors of newspapers, printers, attorneys, counsellors, solicitors, brokers, members of congress, and officers of government, they thought came fairly to be hunted down, if they had an account in bank, he- cause the committee were authorized to examine the hooks and the proceedings of the corporation. They thought this a liberal construction of their power. Dif- fering from them in their definition of liberality, he has seen no cause to question the liberality of disposition of any one of them, according to their sense of the term. He does all possible justice to their intentions, though often and essentially dissenting from their reasoning, and from their philology. Liberality, in his vocabula- VOL. IX. 14

ry, is a word of very different import, and as unintelli- gible to them, as in theirs it is to him. From this re- mark, he deems it à tribute of candor to except the member of the committee who constituted the majority, and the generosity of whose nature licensed the report made by the chairman of the committee to the house. That same generosity of his nature impelled him, when the report was presented, to rise in his place, and de- clare, that in the whole course of this investigation, he had seen in the conduct of the president and directors of the bank nothing inconsistent with the purest honor and integrity. Had that same candid and explicit de- claration, due, as the subscriber believes, to the most rigorous justice, been made by the other members who sanctioned the majority report, many a painful remark in the paper now submitted, perhaps the whole paper itself, would have been suppressed. But to vindicate the honor of injured worth, is, in his opininn, among the first of moral obligations, and in concluding these observations, he would say to every individual of the house, and to every fellow citizen of the nation, inqui- sitive of the cause of any over-anxious sensibility to im- putations upon the good name of other men which they may here find-

"When truth and virtue an affront endures,

The offence is mine, my friend, and should be yours." JOIIN Q. ADAMS.

May 14th, 1832.

I concur tully in all the statements made and princi- ples developed in the above report.

J. G. WATMOUGH.

NEW PRESBYTERIAN CHURCII.

At an adjourned meeting of a number of individuals, communicants, pewholders and worshippers in the Se- cond Presbyterian Church in the city of Philadelphia, late under the pastoral care of the Rev. Joseph San- ford, convened in the HIall of the Franklin Institute, agreeably to public notice, on the 21st of May, 1832, for the purpose of adopting the requisite regular measures, and making the necessary arrangements for the organi- zation of a new Presbyterian Church,

The Rev. Dr. AARON W. LELAND of Charles- ton South Carolina, being present was chosen Mode- rator, and MATTHEW NEWKIRK, Was appointed Secre- tary of the meeting.

After a hymn had been sung and a prayer offered up to the Throne of Grace by the Moderator, the following resolutions were offered and unanimously adopted.

Resolved, That while we feel it a privilege at all times to acknowledge our obligations to Almighty God, and our entire dependenee upon him, we desire espe- cially under the painful circumstances in which we are convened deeply to feel this dependence, and to cast ourselves on his gracious direction and favor.

Resolved, That in view of the grievances to which we feel ourselves subjected in the Church to which we are attached, we now proceed to the adoption of measures for the purpose of organizing a new church and con- gregation upon the principles and under the form of government of the Presbyterian Church in the United States.

Resolved, That the enmmunicanty of the Second Presbyterian Church respectfully request certificates of good standing from the Second Church to which they are now attached, as soon as may be thought expedient, with a view of regularly carrying into effect the previ- ous resolutions.

Resolved, That the communicants thus dismissed and recommended, and the other worshippers of the new church, as soon as convenient, request Presbytery to lake measures to effect the organization above specified, and that M. L. Bevan, M. Newkirk and William Wal- lace, be a committee for that purpose.

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PROCEEDINGS OF COUNCILS.

[JUNE

Resolved, That a committee be appointed to procure an act of incorporation, with all the rights and immu- nities of a Presbyterian Church, agreeably to the laws of the United States and that of the State of Pennsylva- nia, and A. Henry, M. L. Bevan and John H. Campbell, be that committee.

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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 98

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