(No. 29.)

Report of the Committee on Banks, &c., to whom was referred so much of the Governor's Message as relates to the establishment of a State Bank.

The committee on banks and incorporations, have had under consideration that part of the Governor's message relating to a state bank, and sundry petitions on the same subject referred to them, and would respectfully submit a charter for a state bank, together with the following report:

A medium of exchange as a currency, has been a subject of momentous consideration from the organization of civil and political institutions. It has claimed the attention of the statesman, the sage, and the philanthropist, in all ages, from the earliest formation of government to the present time, and yet, it seems almost impossible to secure the great desideratum-an unfluctu. ating representative of property value.

The precious metals are now used throughout the empire of civilization as a standard currency, and recognized as a medium of exchange possessing intrinsic value in all enlightened countries.

But the improvements of the last century, in the arts and sciences, and the corresponding development of laudable, ambitious enterprise, in manufacturing and commercial pursuits, have seemed to demand a more extensive currency than the metals would afford at their fixed valuation. To increase the medium of exchange, banking institutions have been established, from which issues of nominal value have been made, and now take the place of metals possessing intrinsic worth. Of the tendency and influence of those institutions, it is not the object of your committee, at this time, to express an opinion; it is not their design to enter into the abstract question of the original utility or detrimental effects of banking corporations. Of their benefits, much can be said; of their evil results, much has been seen within the last half century, even in our own land, where virtue and intelligence sway the government sceptre. To secure the good, and guard against the evil results of a monetary corporation, is the design of your committee, when they recommend the establishment of a state bank. The common system of banking is unequal, and constitutes a moneyed monopoly when conducted by chartered companies, and is calculated to combine individual wealth into powerful, and too often fraudulent compacts.

Experience of the past has shown, that full credit cannot be obtained for a paper currency based upon the promise of collective bodies of men, whose pecuniary interest might prompt them

to issue a greater amount of promissory notes, than they were able to redeem; and that the bank notes of one state would not be taken at par value in another. Confidence has been forfeited, suspicions of fraud been excited, the banks have been called to redeem their pledges, and finding themselves unable, have suspended payment, and spread dismay throughout the whole

country.

The state of our financial affairs, has elicited an investigation, the result of which is, a great change in public opinion, and a disposition to correct the abuses of intrigue and cupidity.

The lamentable situation of our state currency, and the unparalleled frauds in recent banking transactions, are sufficient arguments for a speedy action of our legislature.

The general banking law has received the disapprobation of the community, who seem not so much to condemn the principles, but the result flowing from the abuse.

Banks sprung into existence without capital, men engaged in the business without principle, and consequently, Michigan currency became so much depreciated, that it almost proved fatal to business transactions, and highly prejudicial to the character of our young state.

It would seem at this time, when all confidence is lost in most of our banks, that nothing will so effectually relieve the wants of the community, and place us upon a par with our sister states, as a bank of extensive capital, with the faith of the state pledged for the redemption of its issues.

It is well known, that so long as there is safety in state government, and the unanimity of feeling that now exists between the different members of the Union, so long will the bills and notes of exchange of any one state be current in, and honored by, all the rest. If a state bank be conducted with financial sagacity, with care and prudence, its notes will bear a premium at home and pass at par in the Atlantic cities. The difference of exchange will be more to our advantage-articles of commerce will be reduced in price--facilities of trade will be increased-capitalists will be induced to embark in different enterprises, and the whole state will assume a more promising aspect.

In addition to the general benefit to the trading community, it must be a source of revenue to the state government, by which taxation will be lessened, and a fund be created that will, in a series of years, be sufficient to reimburse the loans for its own capital stock, as well as those made for the completion of our internal improvements.

It presents a system of banking in which all must feel more or less interested; since each and every citizen is a stockholder and shares in the dividend of the profits. A fund is raised by a bond upon unproductive property, or property that yields the same in

come as without it, and money discounted to the joint owners, who at once have the use, and share in the interest and profits of their own loan.

The bill which your committee have framed, fixes a main institution and provides for the establishment of nine branches.

Six directors are to be appointed by a joint vote of the legisla ture, who shall choose a seventh for a president. The president and directors constitute a state board to establish branches at such parts of the state as shall most require them, each with a capital stock of not less than one hundred and fifty thousand dol lars, one half to be supplied by the state, and the other to be subscribed by individual capitalists. The stock in fifty dollar shares, must be taken within a given time, and if the stockholders wish, they may pay 20 per cent, and loan of the state the remaining 88 per cent, for which they must give security upon good, unincumbered real estate, to twice the amount, and at the appraisal of the state board of directors.

For such loan, the state will receive seven per cent interest, and the common school fund nearly one per cent, (as upon all other bank stock,) and no dividends of profits made to such stockholders until the whole amount of their capital stock be paid for, unless by direction of the state board.

As soon as the stock is taken, the stockholders have the right of choosing five directors, and the state board appoints four, who shall select one from the nine for their president.

The state board issue the bills to the branches, all signed by the president, and the branches discount and perform all other business transactions usual to banking institutions.

The parent institution discounts no notes, but keeps the plates, and controls the amount issued to each respective branch.

When any branch goes into operation, the directors of said branch shall choose one of their number to meet with the state board, with a right equal to a state director, upon all questions relating to the state bank and its branches. But when the board shall have established seven branches, then the legislature have the right to increase the number of the state board to equal the number elected by the branches. Each state director to hold his office for the term of two, and the president, five years, but subject to be removed by a vote of two-thirds of each branch of the legislature. It is the duty of the state board to have a general supervision of the branches, to examine the books and accounts, and to report annually to the legislature, all matters connected with the institution, its dues, liabilities, circulation, losses and profits. The directors of the branches are restricted in their discounts, and to prevent fraud or undue patronage to any party, two votes out of the nine, will prevent a discount.

Each officer of the bank, is not only required to take an oath

for the faithful and impartial discharge of his duty, but to enter into heavy penal bonds as security to the state, and safety to the rights of private stockholders.

The faith of the state stands pledged for the redemption of all the bank issues, and in case of insolvency in any branch, its directors are first held responsible in their personal and real property, next the private stockholders, and last, the state, so that the bill holder can suffer no loss, so long as he has such security, and the funds of the state cannot be impaired without fraudulent conduct of officers.

The bill provides for the punishment of frauds, and fixes severe penalties for violation of official oaths, and for embezzling the funds, or otherwise wilfully attempting to defraud the institution.

The bill requires that the directors appointed by the legislature, shall be ex-officio a board of loan Commissioners, to make such loans as the state may order, and to manage all funds and stocks belonging to the different interests of the state.

Any branch may be a depository of funds to be expended by the state, subject to removal when required by the interest of the public; and all funds belonging to the state are to be kept and disbursed by the different branches.

Your committee are aware, that a variety of opinions have been entertained upon the details of a bill for a state bank, nor is it to be denied but a discrepancy of sentiment has existed in committee upon the question before them. Some preferred an institution with the stock owned and controlled entirely by the state; and others believed that the system proposed in the bill would be safer and more satisfactory to the public, for whom we were called to legislate. The subject has been carefully and candidly examined, and your committee are now unanimous in reporting, and pledging their cordial support to the charter herewith transmitted.

Although many strong objections may present themselves to the union of the state stock with private capital for banking pursuits, still it is believed, that with the guards and checks which one interest has upon the other, it will be safe to each.

It has been the object of the committee to establish a plan, that should remove the bank as far from party political influence as possible; and it is believed that the system adopted for the management of the bank and its branches, is placed beyond the immediate control of any interest, or any party. An institution, where all of the officers are to be elected by the people or their immediate representatives, would soon become a matter of political controversy, and thus expose the financial affairs of the state to the intrigue, cupidity, and management of aspiring and heartless demagogues. But the plan proposed, divides the control and

the benefits between different interests, and places each as a watchman over the other, and secures the guardian care of all, in protecting the rights of the community.

In the present institution there must be entire safety, as there is a mutual interest of state and private capital, while each branch is obliged to redeem the bills of any other.

Upon mature deliberation, your committee come to the conclusion that the system proposed would be most beneficial and least objectionable to the commonwealth of Michigan. There can be but little doubt in the minds of the observing, as to the importance of establishing a currency in this state that shall answer as a medium of exchange in business pursuits. It is but in its infancy, the balance of trade is yet against it, the capital invested in banks cannot be used to advantage, credit is languishing, and the whole community are suffering from the sad dilemma into which they have fallen!

It is not to be expected that a bank will give permanent relief to the state without collateral aid, and that aid can only be found in the productions of our prolific soil. Money is but the representative of property, and is good for nothing only as a medium of exchange, in the transfer and change of essential commodities.

The establishment of a state bank in Michigan, will be an epoch in its history-it will restore credit, open the avenues of commerce, unclog the wheels of industry, and invite the mass of emigrants to settle within her limits and cultivate her soil. The hundreds who now lie dormant for the want of available funds to culture the soil, will feel the electric impulse and rouse to active pursuits. Her internal improvement system will be aided, her rich resources will be developed, and the prospects of her enterprising inhabitants will be more cheering.

THOMAS FITZGERALD,
DANIEL S. BACON.

ISAAC WIXOM,

NORMAN LITTLE,

ANDREW G. HAMMOND,

NOBLE H. FINNEY,

GEO. C. GIBBS,

ANDREW MACK,

CALEB N. ORMSBY.