JAN. 7, 1834.] Removal of the Deposites. [H. OF R. ruin. If the project shall be successful, we are again to would devise, for the use of this people, some control see these paper missiles shooting in every direction over the paper currency of the State banks, and relieve through the country-a derangement of all values-a us from the perpetual recurrence of constitutional doubts depreciated circulation-a suspension of specie pay- and party contention, to which the career of a Bank of ments; then a further extension of the same detestable the United States seems necessarily exposed. Control paper-a still greater depreciation--with failures of tra- of some kind is essential—it is indispensable; there can be ders, and failures of banks, in its train-to arrive, at last, no property, or, what is the same thing, no security or uniat the same point from which we departed in 1817. Suf- formity to its value, without it. Let us have a respite fer me to recall to the recollection of the House a few of from the evil while the law will give it to us. Let us not the more striking events of that day. The first Bank of be turned off before the warrant of execution calls for the United States expired in March, 1811. Between the it. Let two years more be given to sober reflection by 1st of January, 1811, and the close of the year 1814, more the people, that there may be a locus penitentiæ allowed than one hundred new banks were established, to supply to those who are now proposing this plan, without sugthis more uniform and better currency. For ten millions gesting the means of control, or appearing to think that of capital called in by that bank, twenty millions of capi- they are necessary. tal, so called, were invested in these. In the place of five But, sir, the Secretary says that the deposites will not and a half millions, about the amount of circulation in be promptly paid, if they are left in the bank until the notes of that bank withdrawn, twenty-two millions were charter expires, and it is his duty, therefore, not to leave pushed out. Then came a suspension of specie payments, them there. What is it that it is apprehended will cause in August and September, 1814. As an immediate conse- this default? Does the Secretary suppose that private quence of this suspension, the circulation of the country, deposites will continue in the bank to the same time, and, in the course of fifteen months, increased fifty per cent., by their demands, interfere with the payments to the or from forty-five to sixty-eight millions of dollars; and public? If individual deposites do not remain, all will be the fruit of this more uniform currency was the failure of admitted to be well. The public deposites will be paid innumerable traders, mechanics, and even farmers; of then, as they are now paid, promptly. If the private one hundred and sixty-five banks, with capitals amount- deposites do remain, and the bank notes continue in ciring to thirty millions of dollars; and a loss to the United culation to their old amount, then, sir, let the Treasury, States alone, in the negotiation of her loans, and in the for once, trust to the instinct of self-interest in the peoreceipt of bankrupt paper, to an amount exceeding four ple, and believe that what all concur in doing for themmillions of dollars. I take this summary from the Treatise selves, when they have the readiest means of doing otherof Mr. Gallatin on the Currency and Banking System of wise, if they please, cannot be very dangerous to the the United States, one of the most valuable contributions public. Sound reasoning and experience alike expose that great sagacity and an enlightened spirit of research this Treasury apprehension. A bank, having the resources have made to the political literature of this country, that the Bank of the United States is admitted to have, and which it is one of the sins of the present bank that when she arrives at the term of her charter, increases, she has endeavored to diffuse among the people. This from that moment, in strength; because her capital is may enable us to apprehend what was lost, in the item of then to be returned to her, and her debtors have been property alone, by this better currency. What it cost us previously admonished that they must then be prepared in reputation, it is impossible to estimate. Does Ken to return it to her. Other banks may then assist, by their tucky wish to see the return of those days? Does Pennsyl- expansion, the liquidation of her debts; and they may do vania wish it? Does any man wish it, who has property, it safely, to a considerable extent, as she cannot have, or, or the desire to possess it, and reason to discern the if she has, she cannot exercise, a power to distress them causes of its decay and destruction? I thank the Secretary by her demands, without combining a vast force of public for the disclosure of this plan. I trust in God it will be opinion against her, that will effectually resist her. To defeated; that the Bank of the United States, while it is in ask of the State banks what it must distress them to give, existence, may be sustained and strengthened by the pub- and what is not necessary to the United States Bank for lic opinion and interests of the people to defeat it; that operations then discontinued, would be as idle in her as the sound and sober State banks of the Union may resist the apprehension of it is in others. It cannot occur. it, for it is their cause; that the poor men and laborers in There must be a reasonable arrangement between the the land may resist it, for it is a scheme to get from every United States Bank and all the State banks who assist in one of them a dollar's worth of labor for fifty cents, and absorbing her loans, to prevent or to mitigate the distress to make fraud the currency of the country as much as that the withdrawing of a large capital would otherwise paper. Sir, the Bank of the United States, in any other occasion. This, therefore, is the moment when the Bank relation than to the currency and property of the coun- of the United States will have the greatest power for her try, is as little to me as to any man under heaven; but after the prime and vigor of life are passed, and the power of accumulation is gone, to see the children stripped, by the monstrous imposture of a paper currency, of all that the father's industry had provided for them—this, sir, may well excuse the warmth that denounces this plan as the precursor of universal dismay and ruin. own protection, without having it for the annoyance of the State banks; and, unless there is a general crash, which shall make deposites unsafe every where, they will be as safe in the Bank of the United States as they can be any where. Sir, this is the result of experience, derived from an operation which the Secretary of the Treasury has strangely overlooked. I have said, sir, that it is the cause of the sound and sober State banks that I am defending. When the evils The honorable member from Tennessee, in the course of such a currency prevail, the people do not discrimi- of his argument, made one remark, which, not being at nate. A bank note is a bank note. Fear gives them all all necessary in the consideration of the present question, the same look to the apprehensive. If a few banks sus-I may be excused for saying was a remark which I regretpend their specie payments, many will do it; all must do ted. The gentleman took occasion to say, that the first it, unless they see the storm in its approach, and close their doors until its fury be spent. The Bank of the United States herself may well look for that day, if it conies in her time, with fear. Let her not be weakened before the hour of her trial. I should regard that man, sir, as one of the greatest benefactors of his country, who Bank of the United States was charged with having been given over to political abuses and to the aid of the aristocracy, in opposition to the Government of the country; and that, in this respect, the present bank had followed in her steps. Sir, I owe a debt to the directors of that first bank H. OF R.] Removal of the Deposites. [JAN. 7, 1834 From the 1st March, 1811, to the 1st March, 1812, she $2,793,316 3,360,154 $11,635,886 And her specie increased from $4,835,702 to $6,116,796, being an increase of $1,281,074. Comparing her capital with that of the present bank, which is three and a half times greater, the present bank might stand with equal safety on the 1st of January, 1836, with the following discounts and liabilities: Notes and domestic bills, $62,156,503 Notes in circulation, Public deposites, which it would ill become me not to endeavor to dis- It is the history of the liquidation of this bank that the Secretary has overlooked, and it is the most triumphant answer to his doctrine of default and depreciation. Her charter expired on the 3d March, 1811, when her corporate existence ceased at once and forever. On the 1st January, 1811, her situation was as follows: The amount of her notes discounted and loans $17,759,001 and Private deposites, 21,245,530 22,660,407 13,493,907 Whereas, on the 1st of October, 1833, the discounts Private deposites, $60,094,202 19,128,189 9,868,434 8,008,862 In one particular, and only in one, was the provision of the first bank better, for the day of trial, than that of the present bank. Her specie, on the 1st of January, 1811, was $5,317,585, being more than equal to one-half of her capital; while that of the present bank, on the 1st of October, 1833, was $10,663,441-a little more than twosevenths of her capital. The specie of the first bank had been greatly augmented by importations under the royal orders from the Spanish colonies, which the embargo and other restrictions had prevented from going abroad; but it was increased instead of being diminished by the liqui dation of her concerns. So much, sir, for the probability of default in paying the public deposites. As to depreciation of her notes, which the Secretary also apprehends: if the notes are to depreciate because they will be paid on presentation, because the quantity in circulation will be daily diminished, because the residue outstanding will be of increased value as exchange, and because, unless Congress shall pass a law to the contrary, the public guarantee 5,317,885 will continue, then, but not otherwise, the Secretary's fears may prove true. Sir, the Secretary has erred, even as to the matter of the guarantee. The letter of the Sec$14,587,134 retary says that "this obligation on the part of the United States will cease on the 3d of March, 1836, when the charter expires; and as soon as this happens, all the outstanding notes will lose the peculiar value they now pos4,835,702 sess." The fourteenth section of the charter says otherwise. It says "that the bills or notes of the said corporation originally made payable, or which shall have become payable on demand, shall be receivable in all payments to the United States, unless otherwise directed by an act of Congress." They will be notes of the said corporation as much after the charter expires as they now are. On the 1st September, 1811, it was as follows: But, sir, this apprehension of the non-payment of the public deposites, if left in the bank until March, 1836, will appear, from another paper presented by the same department to this House, to have been changed into an apprehension that, at that time, there would be no deposites any where to be paid. "Judging from the past," the Secretary's letter says, "it is highly probable they will always amount to several millions." But a reference 6,116,776 to the past, only, is not the best way of ascertaining what, under our altered revenue system, will be its amount. Accordingly, in his annual report on the state of the finances, made in the last month, the Secretary judges otherwise than by a reference to the past. I ask the attention of the House to a few extracts from this report. The balance in the treasury on the 31st of December, 1834, is estimated to be $2,981,796 05. JAN. 7, 1834.] Removal of the Deposites. [H. OF R. ،، In this view of the receipts of 11834, the income of the was $4,066,146, or $2,000,000 per month; and, as her year will about equal the estimated expenditure; and, discounts and bills in August were $64,000,000, there is with the aid of the balance in the treasury on the 1st of a simple rule in arithmetic by which we may ascertain the January next, it will be sufficient for all the wants of the monthly reduction necessary to effect the Secretary's obGovernment, including the amount necessary to pay off ject during the thirty-one months of the charter which the residue of the national debt." then remained. It is clear, sir, that the monthly re He further says: "If the entire amount of appropria-duction must be more than two millions; and now that tions proposed in the estimates for 1834 were also to be the deposites are removed, and we are in the month required within the year, there would not be money of January, when the loans and bills stand at about enough in the treasury to meet them, after satisfying the $55,000,000, the monthly reductions of the bank for the balances above stated, and paying off the public debt." twenty-six remaining months of the charter must be more He says further: "In estimating the balance in the than $2,000,000, or the object which the Secretary meant treasury at the close of 1834, I have therefore assumed to effect will not be accomplished. It is remarkable that that a portion of the estimates of expenditures herewith the apparent coincidence of the bank with the design of submitted will not be used during the year; and that bal- the Secretary should be a ground of complaint against ances of appropriations, equal to the amount at the close the bank. of the present year, will, in like manner, remain in the The Secretary says, and gentlemen concur with him in treasury at the end of the year 1834, and go into the ex- saying, that the bank has reduced too rapidly. Suppenses of the succeeding year; and it is not necessary to pose it to be so; did the Secretary inform the bank what raise money for the public use sooner than it will proba- amount of reduction he thought sufficient? Did he tell bly be needed. But the balance stated at the end of 1834 | them of the amounts to be from time to time removed, is not to be considered as a clear surplus. It will still be and the places at which they would be required? No. chargeable with the amount of appropriations estimated to remain unexpended at that time. "From this state of the finances, and of the proposed appropriations, it is evident that a reduction of the revenue cannot, at this time, be made without injury to the public service. Under the act of the last session, the receipts of 1835 will be less than those of 1834, as a further reduction in the rate of duties will take effect on the 1st of January, 1835; and if the appropriation should be kept up to the amount authorized for the present year, the charge upon the treasury in 1835 would be more than it could probably meet. But the debt will then have been entirely paid; and, if a guarded rule of appropriation is at once commenced, there will be no difficulty in bringing down the expenditure, without injury to the public service. "If the revenue is not to be reduced more than the existing laws provide for, there seems to be no sufficient reason to open, at this time, the vexed question of the tariff. The manner in which duties are now apportioned on different articles would be liable to insuperable objections, if it were to be considered as a settled and permanent system. But the law is temporary on the face of it, and was intended as a compromise between conflicting interests; and, unless the revenue to arise under it should hereafter be more productive than is anticipated, it will be necessary, in two years from this time, to impose duties on articles that are now free, in order to meet the current expenses of the Government." The existence of the several millions in the treasury in March, 1836, is therefore to depend on the future action of Congress upon the report of the Committee of Ways and Means; and if the existence of any public money in any bank at that time is to depend on the future action of Congress, how could that constitute a motive for removing the deposites in October, 1833? He says that "the nature of the inquiry at the four principal banks" (of which the bank knew nothing) "showed that the immediate withdrawal, so as to distress the bank, was not contemplated; and that if any apprehensions to the contrary were felt by the bank, an inquiry at the department would, no doubt, have been promptly and satisfactorily answered." What, sir! was the bank to come to the Treasury Department to ask for the suspension of a demand, which she was bound to be in readiness to pay whenever made? Is this to be said while the sound of the honorable member's voice upon the subject of the three per cents is still in our ears?-while this House has in its fresh recollection the charge against the bank, that she asked in March a suspension of the discharge of half the three per cents, from July to October, 1832, "because the bank was not able to pay them?" No, sir; that was sufficient warning to Mr. Biddle not to approach the department upon the subject, even had he been invited; and, if he had approached it, under any circumstances, we should have heard again the same changes rung upon the inability to pay the deposites that we have heard in regard to the three per cents. The master of the removal was in the Treasury. The time and proportions depended upon him; and, if his concern for the country was excited, if the reductions of the bank were too rapid according to the Treasury views, the remedy was in the power of the Treasury, and should have been applied. Her Sir, the Bank of the United States acted wisely and warily in August and September. Although the removal of the deposites did not take place until the 1st of October, the intention to remove was fully known in July. The agency to negotiate with the State banks was announced in the Globe on the 25th of July; and, whatever the public might think, it was not for the bank to act in any other faith than that the purpose would be immedi The Secretary of the Treasury presents another reason ately and relentlessly executed. It was the clear duty of for withdrawing the deposites on the 1st of October, which the board to prepare itself without a moment's delay. The is very remarkable. If I understand the Secretary, he position of the bank was every where known to the makes the removal in October a consequence of the re- Treasury Department by the weekly statements. ductions by the bank in August and September. The widely dispersed branches were to be strengthened remarkable feature of this reason is, that the very effect wherever they required it. Her circulation was large, he intended to produce by the removal, and which, if the and she was in the practice of assisting it by an almost bank did reduce, was produced by the known intention universal payment at all points, without regard to the of removal, is preferred as the ground of complaint against tenor of the notes. The House may judge of the extent the bank, and as the justification of the removal. He of accommodation which the bank was in the practice of complains of the bank, because she acted as if she meant giving, by the thirty-nine millions of these notes paid out to carry his design into effect; and he removes the de- of place in the year 1832. They may know it further posites because the bank took measures to prevent the removal from distressing her. The amount of reductions in August and September, as the Secretary states them, by the fact, that, of these branch notes, $1,540,000 were paid at the Bank of the United States in Philadelphia, during the very months of August and September, 1833. H. OF R.] Removal of the Deposites. [JAN. 7, 1834. This circulation was to be sustained and increased, to be | Nor was the reduction by the Bank of the United still more facilitated, as it since has been, to keep the States, in the month of December, the cause of the dispeople and the bank from feeling the consequences of tress. the measure. All this required that the bank should not In Dec. 1833, the discounts and bills were I understand the honorable member from Tennessee to say that the reductions by the bank, in August and September last, were greater than they ever had been in any other two months since her institution. I join issue upon this allegation. They have been greater in other months, and they were greater in the very same months of the preceding year. Showing an actual increase of $54,453,104 54,911,461 $458,357 Yet, in that month, the public and private deposites were paid to the extent of $1,024,058. Yes, sir, in this very month, when it has been said that the bank had grasped the debtor's throat, to compel an outcry to Congress for the return of the deposites, the bank extended her loans nearly half a million of dollars, while she paid more than a million of her deposites. $4,066,146 Nor was the entire reduction in the four commercial 4,315,678 cities, from October, 1833, to January, 1834, the cause of the prevailing distress. In August and September, 1833, the amount reduced In August and September, 1832, it was being the difference between $68,008,988, the discounts and domestic bills in August, 1832, and $63,693,310, their amount in October; and yet there was no alarm whatever in 1832. There was, moreover, a greater reduction, by a million and a half, from July to October, 1832, than there was between the same months in the present year, and without any distress or alarm. In October, 1833, the loans and bills in those places The discounts and bills in July, 1833, were $63,369,897 Reduction, The amount in July, 1832, was Reduction, $7,156,487 6,180,883 3,965,283 2,033,318 making $1,116,604 reduction in the four cities during the three preceding months. $4,722,771 There was a greater State bank debt in October, 1832, The causes of the alarm and general paralysis are not to than in the same month, 1833; and yet there was no be found, then, in the conduct of the Bank of the United alarm. In October, 1833, it was $2,285,573, and in Oc- States. They are to be sought for and found in the retober, 1832, it was $2,820,114. The reason of the moval of the deposites; in the universal derangement of difference may possibly show to gentlemen that mere the money system of the country by that means; in the reduction is an insufficient element for determining the just refusal of the United States Bank to extend herself pressure in the market. In October, 1832, the payment to her own undoing, or to keep herself unprepared for of the three per cents was to restore to the community a the coming storm, by remaining as extended as she was; portion of the sums called in by the bank. In October, in the inability of the State banks to use the deposites as 1833, the deposites were to go where individuals must have a less beneficial use of them, and where they could have no use of them, except as the State banks should choose to lend upon them. beneficially as they were used before; and in the refusal of capitalists to lend their money and adventure their property in the face of a project to overwhelm the country with an uncontrollable State bank paper currency. What, sir, does the Secretary of the Treasury expect of the bank? What measure of justice does he render to her? He says, the design of removing the deposites was to compel reduction, and he censures her because she reduces. He complains that she increased her discounts and domestic bills, from December, 1832, to August, 1833, more than two millions and a half, when this was the very season in which trade requires the increase, and it was wholly in the purchase of domestic bills. He complains that she reduced her discounts, in August and September, 1833, four millions of dollars, when this is the $5,641,098 very season of payment, when trade does not require the means, and three millions of the amount was by the pay ment of domestic bills which had arrived at maturity. He complains of the increase of loans in December, 1830, when they were $42,402,304; and he complains of reductions in August, 1833, when they were twenty-two mil lions more, viz: $64,160,349. He complains of reductions in 1833, when, in the whole, from June to December, they have been but $610,508 more than they were in 1832; and the bank has had also to pay the public deposites.* 5,887,864 *The statements which verify these positions may be more intelligibly placed in a note, than in the body of the $246,766 argument, as they were stated to the House. JAN. 7, 1834.] Removal of the Deposites. [H. OF R. Sir, it is clear that the bank must abide the reproaches There is no violation whatever of the charter in giving the of the Secretary, whatever she does. But what has she president authority to appoint the committee of exchange, not a right to expect from this House, from the people, or in authorizing that committee to transact the business from the solid State banks, from all who are concerned in of exchange, or even to discount, if such a power should the currency, and the property it circulates? Their safe- be deemed expedient. ty depends on her pursuing the course she has traced The Secretary appears to rely on the fourth fundamenout, from which neither the reproaches of enemies nor tal law of the corporation, which enacts that "not less the entreaties of friends should divert her. For the form-than seven directors shall constitute a board for the transer, I have no apprehension; and for the latter, although I action of business, of whom the president shall always be entertain some fears, I trust that an answer will always be one, except in case of sickness or necessary absence; in found by the able board which administers the concerns which case, his place may be supplied by any other directof the bank in the superior claims of public duty. or whom he, by writing under his hand, shall depute for The Secretary asserts, sir-and it seems to be a favor- that purpose. And the director so deputed may do and ite assertion, as it is to be found in more than one place in transact all necessary business belonging to the office of the letter he asserts that the bank has violated the the president of the said corporation, during the continucharter. He says that, "instead of a board constituted ance of the sickness or necessary absence of the presof at least seven directors, according to the charter, at ident." By "transaction of business," the Secretary would which those appointed by the United States have a right seem to understand exclusively the execution of business; to be present, many of the most important money trans- the carrying of a direction, order, or law, into act and efactions of the bank have been, and still are, placed under fect. But this is not the restricted meaning of the word the control of a committee, denominated the exchange in this place, for several satisfactory reasons. 1. Such a committee, of which no one of the public directors has restriction upon the execution of the various business of been allowed to be a member since the commencement of the bank, as that not less than seven directors should form the present year. This committee is not even elected by a quorum to do it, would render the execution of business the board, and the public directors have no voice in their impossible. Not a deposite could be received or paid, or appointment. They are chosen by the president of the the simplest operation of business performed, without the bank; and the business of the institution, which ought to presence of such a quorum. 2. Accordingly, the charbe decided on by the board of directors, is, in many in- ter, by the use of a different term, in a different place, stances, transacted by this committee; and no one has a shows that this is not the meaning of the words "transacright to be present at their proceedings but the president, tion of business." The tenth section gives to the directors and those whom he shall please to name as members of for the time being "power to appoint such officers, this committee. Thus loans are made, unknown at the clerks, and servants under them, as shall be necessary for time to a majority of the board, and paper discounted executing the business of the said corporation, and to alwhich might probably be rejected at a regular meeting of low them such compensation for their services, respectivethe directors. The most important operations of the ly, as shall be reasonable." 3. The word, in its proper bank are sometimes resolved on and executed by this com- sense, includes both execution and direction. 4. The mittee; and its measures are, it appears, designedly, and authority of the board, as would naturally occur to most by regular system, so arranged as to conceal from the of people, is legislative; and although they can also execute ficers of the Government transactions in which the public and perform definitively any business they please, it interests are deeply involved. And this fact alone furnishes must depend upon the law which they prescribe to themevidence too strong to be resisted, that the conceal- selves, or which is prescribed for them by the charter ment of certain important operations of the corporation and by-laws, what part they will perform in person, and from the officers of the Government is one of the objects what they will commit to others. The quorum is appointwhich is intended to be accomplished by means of this ed for the exercise of authority as a board-for legislacommittee. The plain words of the charter are violated, tion, and not for the execution of the laws or directions of in order to deprive the people of the United States of one the board. The body is, by the very name of its office, of the principal securities which the law had provided to directive, and not executive. 5. This is clearly implied guard their interest, and to render more safe the public from the provision which gives to a substituted director money intrusted to the care of the bank." the power to transact all the necessary business belonging to the office of president, during the continuance of the president's sickness or necessary absence. What is the necessary business belonging to the office of president? The variations in the increase and diminution of dis- The charter does not declare it. Perhaps the only busicounts and domestic bills through the years 1832 and ness which it allots to him, expressly, is that of signing 1833, are shown by the following statement: notes of a certain description to give them a certain ef Domestic bills. Discounts. Total. fect. Whence, then, can he get it, except from he $16,691,129 49,602,577 66,293,707 board of directors, or the by-laws and regulations of he 22,850,769 46,712,040 69,562,809 bank? And if he gets it from the board, they must have 16,647,507 44,924,118 61,571,625 power to authorize and direct, and the president, by vir18,069,043 43,626,870 61,695,913 tue thereof, must have power to execute. 22,427,702 40,627,094 63,054,796| Sir, the power of making by-laws and regulations for 15,672,537 38,780,567 54,453,104 the government of the bank has been wholly overlooked by the Secretary. The seventh section of the charter Total reduction from June to December, 1832, 7,991,184 gives to the whole corporation, the stockholders, the Total reduction from June to December, 1833, 8,601,692 2. The increase of two millions and a half, from January to August, 1833, was wholly in domestic bills, while the discounts were reduced. Now, sir, the Secretary cannot have examined this matter, or he would have entertained a different opinion. January, 1832, June, December, January, 1833, January, 1833, Increase, power to "ordain, establish, and put in execution such by-laws, ordinances, and regulations, as they shall deem necessary and convenient for the government of the said corporation, not being contrary to the constitution thereof, or to the laws of the United States;" and the present situation of this power is thus: It has been settled for a century, that where a charter commits the power of making by-laws to the whole body of the corporation, the gene389,764 diminution.ral mass of corporators, they may delegate the power to a Domestic bills. Discounts. 20,923,243 43,237,106 2,854,200 VOL. X.-148 |