Memorial of Government Directors Bank United States.

and which, otherwise conducted, has involved and must involve the institution in transactions from which it is difficult to withdraw without loss.

[23d CONG. 1st SESS.

any documents from the Clerk of the House of Representatives, or from the trustees, which gave any thing like a definite statement of the amount which the bank could calculate upon receiving. We endeavored to induce the board to commence the reduction of so large a debt, and to obtain, at any rate, a partial payment from the funds received from Congress. All these efforts were, however, quite unavailing. When the notes were offered for renewal, we were repeatedly assured that the debt would be reduced, yet month after month passed away, and it still remained little if it all diminished.

On the 20th of September, six months after the adjournment of Congress, when, it was understood, they were to receive large sums of money for the works which they were printing, we observed that the books laid before the board showed that the account was actually increased since that time, and we offered the following resolution to effect at least a small and gradual reduction:

"Resolved, That a reduction of five per cent. be made on all their paper offered hereafter for renewal; and that the cashier so inform them; and that none be made without such reduction."

It was not long before we had a practical instance of the operation of this unwise, if not illegal deviation from the mode authorized and contemplated by the charter and by-laws. On the 22d of March, we observed from the books laid before the board, that a note of Messrs. Gales and Seaton remained due and unpaid, and that it had not been protested. The by-law of the bank declares in express terms, that if a bill or note be not paid on the last day of grace, it shall be forthwith protested." The omission to comply with this law appeared to us particularly extraordinary, when we ascertained that the debt, of which this was part, had been allowed to increase within a few years from $11,000 to upwards of $80,000; that this large sum was principally on security of an unusual, and we believe doubtful, character-much of it on acceptances of drafts drawn by the same parties, on certain trustees holding funds received from Congress or an edition of State Papers—that even these funds were also partially appropriated as security for other objects, and that the acceptances, being in themselves con- This resolution, notwithstanding the moderate and litional, the neglect of protest was rendered still more gradual reduction contemplated by it; notwithstanding agular, both in relation to the security of the bank, and the curtailment then making in the loans to the commu. o the right of notice which was due to the persons who nity in general; notwithstanding the expectations of a night be called on for the payment. It appeared too, diminution in this account, repeatedly held out; and notit the same time, that the account in question then was, withstanding the usual character and uncertain value of and since the month of November preceding had be en, the security for it-was rejected, even without consider epeatedly overdrawn to a considerable amount. Weation. We then requested, that at least such renewals hought it due to the whole board, that the reason on as should be made by the committee on exchange, might which such a deviation from the rules of the bank had be reduced to this small extent-this also was rejected. een made, should be ascertained and recorded. On But the matter was not allowed to rest here. Instead of alling their attention to the facts, it was resolved on the the notes being afterwards presented to the board for renotion of another director, and without a dissenting voice, newal, in the usual course of business, they have been, hat the account in question should be referred to a in repeated instances, submitted to the committee on expecial committee of seven, including the three resident change, and, according to the books laid before the Government directors:" thus admitting us, for the first board, they have been done by that committee, on days me, into a participation of the business of the commit- when the board was actually in session. Nay, more, After the unanimous adoption of this resolution, so appeared, by the credit book, that a note of $7,500 was ust and proper in itself, it was with no small surprise that due on the 25th of September; on the day preceding, re heard, at the very next meeting of the board, three being a regular discount day of the board, we requested ays after, and before the account in question had been that, if offered for renewal, the note might be then subJoked at by the committee, a motion introduced and mitted to the board. This was rejected; yet it appears oted for by all present, except ourselves and the mover by the same book, that on the same day, namely, the 24th f the original resolution, by which it was altogether re- of September, the note was renewed, we presume by the cinded. Nor was this all. It appeared, by the books committee on exchange. f the bank, that, while the special committee for invesigating this account was actually in existence, the comnittee on exchange had themselves undertaken to renew he very note, the neglect to protest which had led to its ppointment, and the only reason assigned was, an unlerstanding previously made to that effect. Nor did the ommittee on exchange stop here. At the same time, Ithough another by-law of the bank declares, in express erm, that "no person while he remains an overdrawer hall have a note or bill discounted"-they did discount or the same persons a further sum of $2,500, and this on security of the most unusual kind. It consisted of their order, on the Clerk of the House of Representatives, "for the amount which would be due to them, for the second part of volume sixth of the Register of Debates, ay for five hundred copies, twenty-five hundred dollars, when authorized by the House as heretofore." On this order, the Clerk declined putting any acceptance, as the work had not been subscribed for, though, as he said, "he did not doubt of its being ordered," but he stated that if the order was lodged with his paying clerk, he would pay the money, when due, to the proper person." We remonstrated agains! loans made in so unusual a manner, but in vain. We tried to ascertain something of the actual value of the state paper fund, pledged as it already was, for other purposes, but there did not appear to be

res.

Shortly after the resolution referred to, placing us expressly on a committee, one of us was appointed on the committee on the offices, and another of us on that on the state of the bank. From that on exchange, by which the powers of the board have been, as we have seen, virtually assum ed, we continued to be excluded. When the committees were last appointed, we were again removed from them all.

The committee on exchange, we observed, was appointed by the president alone, and it was evident that, organized as it was, and assuming the power it did, the directors became in a great degree useless, and the interests of the institution and the money of the stockholders, were so far placed beyond their control. Its formation, too, was in direct opposition to the by-laws, which provided that the committee having the business of exchange under its care, as well as that attending daily at the bank, "should be selected from the board in rotation"-a just arrangement, acted on until within a few years, and enabling all the directors from time to time to participate in the action on matters which they had all been selected to superintend. Being satisfied that this arrangement was altogether the proper one, both in regard to the safe disposal of the funds of the stockhold. ers, and to the legitimate performance of their duties by the directors, we were desirous of restoring it in practice. We therefore offered the following resolutions:

23d CONG. 1st SESS.]

Memorial of Government Directors Bank United States.

"Whereas it is proper that the ordinary business of month of April last. When they were under considerathe board, should not be transacted by a smaller number tion, we requested "that the standing committees might of directors than that required by the charter, and the be appointed from the board in rotation"-this was rejectbusiness of discounts can be conveniently transacted, as ed, and the president was authorized himself to select heretofore it has been at the meetings of the board- the two of most importance, that on the offices and that "Therefore, resolved, That the duties of the commit-on exchange. We then requested that the powers of the tee on exchange shall not extend to the business of dis- committee on exchange "might not be extended to the counts-that the committee on exchange shall, after the business of discounts"-this too was rejected. Desirous expiration of the present month, consist of three direct- that if these powers were thus to be exercised by a comors residing in Philadelphia, to be selected, as prescri- mittee, selected by the president, the other directors bed by the existing by-laws, monthly, from the board, in might at least be regularly informed of its proceedings, rotation, and that the president and cashier shall be united we then requested that they "should lay before the board, with them." These resolutions were at once laid upon at every stated meeting, a statement of their proceedings, the table by a vote of the majority, and we could not ob- which should be read before the discounts of the day tain their adoption. were settled"-this too was rejected. All these being refused, we requested, that among the business of the day, the board might have submitted and read to it, a "report of the final proceedings of the committee," since the previous stated meeting-this too was rejected. In a word, the system of late years acted upon, was formally sanctioned by a majority of the board. It is now a por tion of its by-laws, as before it was of its practice.

But this mode of appointment by the president alone, and this assumption of power by the committee on exchange, were not merely contrary to the spirit of the charter and the letter of the by-laws. In assuming to discount notes on days intervening between the meetings of the board, and not unfrequently on days when it did meet, the committee on exchange acted in direct opposition to two recorded decisions of the board, by the last In the month of April, we received a letter from the of which, no longer since than in 1830, on an application President of the United States, calling our attention to from the office at Charleston to give these same powers rumors which had come to him, relative to the proceed. to a committee, the inexpediency of doing so was declaredings of the board, and requiring us to give him such inin the most explicit terms. When the application was formation in regard to them, as was within our knowledge made, it was referred to the standing committee on the as public directors. We were all of opinion that the course offices. They reported against it without hesitation, and deliberately pursued by the majority, had already renderon general principles, applicable to the whole institution. ed our services as public agents nearly inefficient. In re"The subject," they say, "of discounts by committees ply to his letter, therefore, we stated to him such circum. has frequently engaged the attention of the board, who stances as had been the subject of discussion and action by have always felt and expressed great repugnance to such the board, and we suggested to him the propriety of an a practice, to which in fact much of the losses of the official investigation into its proceedings. We were board may be ascribed. The committee on the offices convinced that such interposition had become necessary, still entertain that opinion, and they think that the better if it was desirable that the officers of the government course to be pursued, in regard to the present suggestion, should any longer participate in, or be acquainted with is that adopted on the 31st of October, 1823, on a similar the most important acts of the institution. application from the office at Boston. They accordingly recommend the adoption of the following resolution: "That the president be requested to communicate to the presi dent of the office at Charleston, the unwillingness of this board to adopt the plan of making discounts of notes by a committee, that being the proper business of the board or ganized as such; but in order to give every proper facility to business, the board perceives no objection to more frequent and even daily meetings of the board, which could take place for a short time at a particular hour of every day." To this correct decision, the reasoning of which appears to us unanswerable, made nearly ten years ago, and deliberately reconsidered and renewed six years afterwards, we referred. We pointed it cut still standing on the minutes, and we asked that its principles might be adhered to. All, however, was without effect. Final ly, that the subject might be brought more fully to the consideration of the directors, we offered the following resolution:

"Resolved, That the cashier be instructed to lay before the board any resolution rescinding that passed on the 2d of February, 1830, which declares the inexpediency of discounts being done be committees; and any resolution altering the rule of the by-laws which directs the appointment of the committee attending at the bank, monthly in rotation, and which, as appears by the minutes, was complied with up to 1828." This resolution also was at once laid upon the table by a vote of the majority, and we could not obtain its adoption.

Our remonstrances, however, were not without effect. They led to a determination on the part of the majority to give same sanction to their course, by adopting new rules, and abolishing those long in existence. A new set of by-laws was prepared in accordance with the actual practice. They were submitted to the board in the

Strengthened by the changes in the by-laws, to which we have referred, the committee on exchange has continued to assume the most important powers of the board, and no control whatever can be exercised either to prevent or to remedy what they may choose to do. On the 16th of August, we perceived a striking instance of the extent of authority they assumed. We observed that, a week before, a single loan of no less than $100,000 was made by the committee, to one person, without any authority from the board-although it had been in session that very day-although the proposition for the loan must have been made before the meeting of the board, for it was submitted to the committee by its chairman immedi ately on the adjournment-and although the board had, on the same day, been obliged to refuse good mercantile paper. When we made inquiry, we ascertained that the loan was not in fact done for the person whose name was entered on the books, but for a bank of which he was a director, and on account of a large debt then due from it to the Bank of the United States, the regular payment of which was thus postponed. We cannot doubt that the board would have refused this proposal, had it been submitted to them; but, however that might have been, the assumption of such a power, exercised in such a manner, by the committee, is not to be sanctioned unless the other members of the board have become utterly useless.

Another instance was lately exhibited of the injustice arising from this unlimited and irresponsible power of the committee on exchange. The policy adopted by the board has caused curtailments in the loans to the comma nity to a great extent. These ought at least to be general in their operation. Yet on a loan for a very large sum, secured on stock, being offered for renewal on the 8th of November, all reduction was refused on the ground that it had been originally made by the committee on exchange,

Memorial of Government Directors Bank United States.

23d CONG. 1st SESS.]

Memorial of Government Directors Bank United States.

not be examined without difficulty. Some of the payments were evidently made to persons not engaged in printing or publishing. Among the publications, were "extras and editorial articles of newspapers," "speeches of members of Congress," "addresses to members of the State Legislatures,' "remarks on the veto," and others, which were notoriously of a political character, and such as we believe neither the stockholders nor the directors, had they previously known it, would have desired or directed to be circulated at their expense. We, therefore, conceived it to be a matter of duty on the part of the board, both with regard to their own conduct, and to the wishes of their constituents, that the particulars of these expenditures should be so clearly exhibited, in the accounts of the bank, as to be susceptible of ready and full examination.

From the extensive authority we knew to be assumed, under these resolutions, we were disposed to believe that similar expenditures might have been made at the offices, and that these disbursements, under the head of stationary and printing, large as they were, might not be all that had been made; at any rate we believed the fact to be one that the board would at least be willing and even desirous to ascertain.

In conclusion, we urged on the board the propriety of rescinding resolutions, under which a power so inde finite and so susceptible of being carried beyond the intentions of those who granted it, was claimed and exercised. If ever right or justifiable, the publications had been now all made, and if the system was to be prolonged, it ought to be done by the open authority of the stockholders.

"That the said resolutions be rescinded, and no further expenditures be made under the same."

Whatever sentiments might have been entertained as to the propriety of the resolutions of the 30th of November, 1830, and 11th of March, 1831-or of the expendi tures made by virtue of them-or of the manner in which they were made-or of the mode in which the accounts and entries of them had been previously kept, it appeared to us, and still appears, that the resolutions directing & full statement of them to be prepared by the proper officer of the bank and an inquiry as to their extent, ought to have met with no opposition. We expected none, but we were disappointed. The same systematic determin. ation already so often displayed, was still evinced. Sev eral of the directors admitted their ignorance of the existence of the resolutions in question, as well as of the expenditures under them. More than half of the present directors were not so at the time they were passed. The propriety of the resolutions, or the power assumed under them, or the great excess of expenditure they had led to, or their expediency, or the necessity of their continuance, might have afforded some reason at least for deliberation. Even the request by us, as members of the board, for the statements mentioned in our resolations, might have been sufficient ground that they should be furnished; or that the accounts should be examined; or that the subject it. self should be taken into careful consideration. It was not so. Our resolutions were scarcely read, when the fol lowing substitute for them was proposed:

"Resolved, That the board have confidence in the wis dom and integrity of the president, and in the propriety of the resolutions of the 30 h of November, 1830, and 11th of March, 1831, and entertain a full conviction of the necessity of a renewed attention to the object of the resolutions; and that the president be authorized and re quested to continue his exertions for the promotion of that object."

That our sentiments on these points might be fully known; that it might be seen we had explicitly called the attention of the board to them all; that it might appear to the stockholders and the public, that as soon as this system was discovered, we desired to have it exhibited to them in its full extent, and in the most accurate shape; and, that we might record our efforts to suppress it, we We were scarcely prepared for a course like this. Not offered, on the same day, the 16th of August, the follow-only was all investigation refused—not only was our re ing statement and resolutions, so framing them as to ob- quest for a statement of the expenditures denied—but ou viate, we thought, every objection, and submit the mat the instant, without even calling for or looking at the ac ter, as it now stood, in the clearest light, for more careful count to which we referred-without examination and investigation and more deliberate action. without delay, a settled purpose was thus exhibited to continue and increase the expenditures-to conduct them in the secret and irresponsible way heretofore adoptedand to preserve in the accounts the same obscurity which already existed. But the majority did not rest here. Out remonstrances against a system of proceeding, adopted under resolutions of the board, believed by us to be un-i personal character and motives of the president of the institution, which had never been drawn into discussion. Our resolutions had not called them in question. We had demanded an investigation of the official transactions of a public institution, of which we were officers; we had remonstrated against them as unauthorized by the charter, and wrong in themselves; and we had endeavored to prevent their continuance. Was it an answer, to speak of the wisdom and integrity of its chief officer, to which we had not alluded?

"Whereas it appears, by the expense account of the bank for the years 1831 and 1832, that upwards of eighty thousand dollars were expended and charged under the head of stationary and printing, during that period; that a large proportion of this was paid to the proprietors of newspapers and periodical journals, and for the printing, distribution, and postage of immense numbers of news-wise and illegal, were encountered by a reference to the papers and pamphlets; and that about twenty thousand dollars were expended, under the resolutions of 30th No. vember, 1830, and 11th March, 1831, without any account of the manner in which, or the persons to whom the same were disbursed:

"And whereas it is expedient and proper, that the particulars of an expenditure so large and unusual, which can now be ascertained only by the examination of numerous bil's and receipts, should be so stated as to be readily submitted to and examined by the board of directors and the stockholders:

"Resolved, That the cashier furnish to the board, at as early a day as possible, a full and particular statement of all these expenditures, designating the sums of money paid to each person, the quantity and names of the documents printed by him, and his charges for the distribution and postage of the same; together with as full a statement as may be, of the expenditures on orders, under the resolutions of 30th November, 1830, and 11th March, 1831. "That he ascertain whether expenditures of the same character have been made at any of the offices, and if so, procure similar statements thereof, with the authority on which they were made.

Thus denied the statements we had asked for, in regard to the general expenditures referred to, we offered the following resolutions, limiting our request to those iur which we could discover no vouchers whatever, and to any subsequent proceedings under the original resolutions of the board:

"Resolved, That while this board repose entire confi. dence in the integrity of the president, they respectfully request him to cause the particulars of the expenditures, made under the resolutions of the 30th of November, 1830, and 11th of March, 1831, to be so stated that the same may be readily submitted to and examined by the board of directors and the stockholders.

Memorial of Government Directors Bank United States.