« PreviousContinue »
It is necessary here to observe, that the charter must have intended some meaning in prohibiting the bank from dealing in stocks. There is, perhaps, no subject so fruitful in speculations as stocks, and none which is so fluctuating and liable to be influenced by the slightest causes, often producing ruin or immense fortunes in the most sudden manner. To prevent such a great moneyed institution then, as the bank, from dealing in this article, which its vast means could raise and depress at pleasure, seems to have been a wise provision in the charter. The right of the bank to 'acquire or sell stocks, is a special one; it must be done by virtue of a law of Congress. The charter itself provided that a part of its capital might be paid in the stock of the Government, and such stock, particularly, might be disposed of. But the committee suggests whether this will apply to other stocks obtained by virtue of a subsequent law of Congress, unless that law specially confers. the power to dispose of it. In two important loans obtained from the Government since the charter was granted, the bank has parted with a valuable stock; and these cases will illustrate the point now submitted to Congress.. While the committee refer to the transactions of the bank in the funded debt of the United States, for the purpose above mentioned, they also have in view the presentation of the subject, to show not only the manner of disa posing of that stock, but whether it was not contrary to the express understanding with the Government at the time of obtaining the stocks. For the loan of $4,000,000 of 5 per cents. made in 1821, and the 5,000,000 of 4 per cents. made in December, 1824, there was strong individual competition, at a premium for a part or the whole, against the bank; yet, the bank had a preference over the individual offers, upon the principle that it would be more advantageous to give it to the bank at a reduced rate, and participate as a partner,
than to give it to individuals at a premium. This was confirmed at the Treasury. The president of the bank, in a letter dated 15th December, 1824, which will be found among the documentary testimony after saying he had taken the whole of the 5,000,000 loan at par, says, “ando since we have taken the loan at par, on the distinct ground of our having the means of doing it, it would be advisable, in every point of view, not to sell any of the Florida loan in Boston.” By a statement of the amount of funded debt sold by the bank, marked No. 6, it will be seen that, as early as June and July, 1625, the year after it was taken, the bank began to sell this stock, and continued to do so, sometimes at a premium and sometimes at a loss, up to the 27th day of November, 1829, on which day they had disposed of all but $ 93,925 92, and that, too, at a loss of 84,443 34, notwithstanding offers were made by individuals for a large amount, at a premium, and rejected by the Government upon the principle before stated. The same document shows that there was, between February, 1829, and October of the same year, sold, of the 5,000,000 Florida loan, $ 1,742,261, at a loss of $ 17,661 09. For this loan, the committee are not aware of there being any offers by individuals at a premium. The same document shows, that, between February, 1826, and. February, 1832, the whole of the 4,000,000 loan of 5 per cents. of 1821, has been disposed of at a premium of $136,789 25. The premium paid for which, at the time it was taken, was provided for in a semi-annual appropriation of $ 60,000, in the report of the 1st of July, 1821, before adverted to. By these operations, it will be obviously serceived, that, if the bank is allowed to sell stocks acquired by special agreements with the Government, it can secure, by speculations, all the advantages which the Government might possess, in putting up its loans to
the highest bidder. It not only destroys competition, but takes the loan of the Government from other individuals, who would have given a premium for it, and which the Government refuses, because it expects to derive a greater profit in another way, but in which it may be defeated, by an immediate sale of the loan, and which, if the right to sell by the bank is acknowledged, might have been made directly to those very individuals who had just offered a premium. In relation to the four million loan of 5 per cents. of 1821, Mr. Cheves, in his report on the first of October, 1822, says: “The four million loan of five per cents. are longer irredeemable than any other stock of the Government of the United States, and hence probably this stock is more valuable than any other stock of the United States." He also says, " the more the bank can retain of this stock, the better for the institution.” In the whole of which, the committee most fully concur; for it may be mentioned, with feelings of pride, that such is the high credit of the Government, its stock is better than specie, and would be to the bank, in any emergency, precisely the same.
The committee proceed to mention the 5th case, which is making donations for roads, canals, and other objects, the amount of which is $4,620 00, as will appear by document No. 7. Two of the largest of these items, amounting to $3,000, are for turnpike roads made, too, after the General Government had declined to make appropriations for similar objects. *
A question would naturally arise, whether the public funds in the bank, for that institution, is expressly founded upon the principle that it is necessary to, and constitutes a part of the Treasury of the United States, can be appropriated to objects, indirectly, by the officers of that institution, when the Government directly refuses to expend its revenues on the very same objects. The committee have looked, in vain, for any authority in the charter to give away the money of the stockholders. If the charter
contains the powers by which the bank is to act, and they are to be strictly p ursued, there is then no grant to make gratuities for any object whatever.
The consequences of the exercise of such a right might be fraught with ve ry great injury to the stockholders; certainly of dangerous interference in the rival trade of different sections of the country, and of pernicious influence upon the operations of the Government.
The committee approach the last ground, which is the building houses to rent or sell, and erecting other structures in aid of that object. They will merely present the fact and the law, and leave the House to place their own .construction upon the case.
By an extract from the minutes of the board of directors, communicated to the Senate on the 12th of March last, the following facts appear, viz.
w The Committee on the Offices, to whom was, this day, referred a letter to the president from George W. Jones, agent, dated May 23d, recommending to the bank the construction of two canal basins, and the erection of WAREHOUSES around one of them, according to the plan submitted by him, recommend to the board the adoption of the following resolution:
Resolved, That the board approve of the formation of two canal basias at Cincinnati, proposed by Mr. Jones; one of them to be on square number fifty-five, (55,) and the other one to be on the square of ground be. tween Walnut and Vine streets, and Canal and St. Clair or Court streets; and that he be authorized to erect, forthwith, warekouses on the margin of this last mentioned basin, not exceeding six in number, either in one block or separately, as he may deem most for the interest of the bank.” These six warehouses were built. It is also understood, says the same ex. tract, that several other houses have been built by the agent at Cincinnati, but as they were erected, in part, by contributions in labor and materials by debtors to the bank who had no other means of payment, and, in part, by direct disbursements, no accurate statement of either their number or cost is on file. The agent has been instructed to specify these details in order to complete this return.
* The President furnished this statement without explaining the grounds of these conations no explanation having been particularly required of him.
It is possible that the improvements were in the neighborhood of the real estate of the bank, and upon the ground that such donations would increase the value of the real estatc.
In reference to the foregoing, the committee believe it enough, merely to quote the following provision of the charter, to wit: “The land, tenements, and hereditaments, which it shall be lawful for the said eorporation to hold, shall be only such as shall be requisite for its immediate accommodation, in relation to the convenient transactions of its business, and such as shall have been bona fide mortgaged to it by way of seeurity, or conveyed to it in satisfaction of debts previously contracted in the course of its dealings, or purchased at sales upon judgments which shall have been obtained for such debts."
This closes the view of the committee on the subject of the violations of the charter.
In considering the second general head as to any circumstances of mismanagement of the bank, your committee have fully appreciated the delicate character of some of the duties assigned them, and the high responsibility of the office of inspecting the books, and examining into the proceedings of the Bank of the United States.
In discharging that trust, they have not felt themselves at liberty to inquire into the private coneerns of any individuals of any denomination, unless the public interest was involved in their transactions with the president and directors of the bank. The investigation was ordered by the House under peculiar circumstances, and in anticipation of a debate on the renewal of a charter of a National Bank, whose annual operations amount to two or three hundred millions of money, whose influence extends to the remotest parts of the Union, and whose connection with the Federal Government gives it a public character. Impressed with the importance of the great variety of interests involved, your committee have executed the office assigned them, by inquiring, generally, into the proceedings of the bank, not only for the purpose of ascertaining whether its powers had been violated or abused to the injury of the private and public interests of the country; but, with a view to obtain information for the use of the House, and to suggest, should Congress determine to continue a National Bank, such modifications as the proceedings of the existing institution would seem to have rendered necessary.
Adhering to these rules, the committee believed it entirely within their province to inquire whether the influence of the bank, acknowledged by all to be of vast control, and, if improperly directed, of dangerous tendency, had inslauated itself either into the management of the press, or the direction of the Government. This could only be done by the examination of the transactions of the bank with editors and public functionaries. the committee wish it to be distinctly understood, that they do not pretend to set up the absurd idea that editors or officers are excluded from the right, common to the rest of the citizens, of borrowing money when and where they please, from banks or individuals, without being answerable, in the slightest degree, to any person whatever. But while this admission is demanded by the clear rights of the parties to whom it relates, it will not be denied, that if they obtain more favors than the rest of their fellow citizens, it is, at least, a just cause of complaint against the bank, and however they may be innocent of any improper or sinister connection with that institution, it does not, by any means, disprove the fact, that some other influence may have been intended to operate upon their minds, wholly unsuspected by them at the time. If, therefore, it should appear that these individuals receive larger loans than those who are its usual customers; that they receive these loans without the security usually acquired under circumstances not known in any other case; it would seem to the committee, that instead of a complaint from those whose transactions with the bank have thus been investigated, the grievance is entirely on the other side. Whether such cases do exist, the committee will leave to the better judgment of the House to decide upon the facts which they have collected, and now respect-fully submit.
It had been repeatedly alleged that the bank had employed its funds for: the purpose of subsidizing the press, and the charge was reiterated during the debate upon the resolution authorizing this inquiry. The attention of your committee was particularly drawn to this subject at an early period of their examination by a communication from an editor of a New York paper, who had been accused, to a member of the committee, through the president of the bank. The evidence relating to this case will be found in papers marked Nos. 3 and 9, and in which are presented the following facts. On the 26th of March, 1831, a Mr. Silas E. Burrows applied to the president of the bank, and informed him, in the language of the president, that “ he was desirous of befriending Mr. Noah, and assisting him in the purchase of a share in a newspaper; and he asked if the bank would discount the notes of these parties, adding, that, although as a merchant he did not wish to appear as a borrower, or to put his name on paper not mercantile, yet he would, at any time, do so, whenever it might be necessary to secure the bank. í do not recollect, (says the witness, whether he then mentioned the time which the notes would have to run. The committee being authorized to discount any paper, the security of which they might approve, agreed to do: them. As Mr. Burrows was going out of town, I, (the president and witness,) gave him the money out of my own funds, and the notes were afterwards put into my possession. They remained with me a long time, as I had no oceasion to use the funds, nor was it till the close of the year that my attention was called to them by the circumstance that a new board of directors and a new committee of exchange would soon be appointed, the same committee which made the loan should consummate it. I had seen, also in the public prints many reproaches against the bank. for lending money to printers and editors, and I was unwilling that any loan made by the bank should seem to be a private loan from one of its officers. Having no use for the money, it would have been perfectly convenient to let the loan remain as it was, but I thought it right that every thing done by the bank should always be distinctly known and avowed, and therefore gave the noles to the chairman of the committee, Mr. Thomas P. Cope, who entered them on the books.” This is the account given by the president himself, of the
transaction in its origin. The money, $15,000, was advanced on the 26th of March, the notes bear date on the 1st of April thereafter. and were ten in number, for fifteen hundred dollars each, with the interest added on as they respectively became due, which was on the 1st of April and October of the years 1832, '33, '34, '35, '36, and amounted, with the interest thus added, to $17,975. At the time they were entered on the books of the bank, on the 2d of January last, the President received the money for them. These notes were placed on the books of the bank at this time, and it will be seen on the 2d of March they were withdrawn, as will appear hereafter. On the 9th of August last, after the foregoing transaction had taken place, J. W. Webb and M. M. Noah made an application to the bank for a loan of $20,000, accompanied by a letter from a gentleman, formerly a director of the Bank of the United States, to the President of the bank, in the following words: “ I cheerfully forward the enclosed as requested. I see no reason against this application being treated as a fair business transaction.” This was accompanied with sundry letters of Webb and Noah, and the depositions of persons in their service as to their solvency and ability to pay the loan requested, all of which will be found marked No. 9. This loan, at six months, was granted, with no other security but that which is just mentioned, and was the largest loan made on that day. On the 16th of December following, another application was made, by these same parties, for a loan of $15,000, which was granted, for six months, by the exchange committee, without any additional security or recommendation. At this time, there was a considerable pressure in the money market, and many notes of the citizens of Philadelphia were rejected. It was one among the largest loans on that day. These loans, together with the loan made in March to Bur. rows, amounted to the sum of $52,975, which consisted of notes drawn and endorsed by the editors only.
The committee will now submit the facts in relation to the manner in which this loan has been disposed of, first premising that the resolution for inquiring into the affairs of the bank was introduced into the House on or about the 17th of February. The loan of August was reduced $2,000 at its maturity, on the 10th of February last. On the 2d of March last, Mr. Silas E. Burrows obtained from the exchange committee, discounts to the amount of thirty-two thousand four hundred and forty-six dollars, being the largest sum loaned on that day, and while many notes of citizens of Philadelphia were rejected. That the notes for $17,975, payable in 1832, '33,'34, '35, and '36, were paid and withdrawn by him on the 2d of March, without the knowledge of Webb and Noah, as they state. On the 14th of the same month, Burrows obtained another discount from the bank of $14,150, and, on the 15th of the same month, the note of Webb and Noah for $15,000, loaned them on the 16th of December previously, and not due till June next, was paid off by two drafts from Webb, obtained at the United States branch bank at New York, accompanied with the following remarks, contained in a letter to the President of the bank, dated New York, March 11th, 1832, and found in No. 9, viz. “Although the loans to us by the
“ Bank of the United States are purely of a business character, and made upon statements showing the necessity of the accommodation to our establishment, and of our ability to meet our payments, there can be no doubt but the enemies of the bank, as also our political opponents, will endeavor to give a false coloring to the whole transaction. The loan, though strictly defensible, is a large one, and the amount may give rise to the charge of