Indiana Palladium, Volume 8, Number 19, Lawrenceburg, Dearborn County, 26 May 1832 — Page 1

H5y Savid V. CisSScy.

Terms $3 PER YEAR 3oi PER CENT. DISCOUNT MADE OX ADVANCE, OR 105 OX HALE YEARLY PAYMEX'I

0L Till,

Usiilcd Slates lank. Extract? from the report made by Mr. Clayton, in the House of Representatives, April 30, on behalf of the majority of the Committee appointed to inspeet the boohs, and examine the proceedings of the Bank of the United States. The committee approach the last ground, which is the building houses lo rent or sell, and erecting other structures in aid of iJ.'ti ohject. They will mcroly present the fact and the law, arid leave the House to place their own construction upon the cr.se. By an extract from the minutes of the board of directors, communicated to the Senate on the 1 li tli day of March last, the following facts appear, viz: The committee on the offices, to whom was this day, referred a letter to the president, from George W. Jones, agent, dated May recommending to the Lank the construction of two canal basins, and the erection of warehouses around one of them, according to the plan submitted by hiin, recommended to the board the adoption of the following resolution : "Resolved, Tint the board approve of the formation of two C3nal basins at Cincinnati, proposed by Mr. Jones; one of them to be on square number fifty-five ; (55,) and the other to be on the square of ground between Walnut and Vine streets, and Ca nal and St. Clair on Court streets; and that he be authorized to erect forthwith warehouses on the margin of this last mentioned basin, not exceeding six in number, either in one block or separately, as he may deem most expedient for the interest of the bank.'1 These six warehouses were built. It is also understood, says the same extract, 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 cither their number or cost is on file. The agent has been instructed to specify these details, in order to complete this return. 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 tho said corporation to hold, shall be only such as shall be requisite for its immediate accommodation, in relation to tho convenient transaction of its business, and such as shall have been bona fdc mortgaged to it by way of security, 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." It is possible that the improvements were in the neighborhood of the real estate of the bank, and are made upon the ground that said donations would increase the value of that real estate. This closes the view of the committee on tho 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 ihc 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 concerns 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 ban!:, 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 oi the private and public interests of the country, but, with a view to obtain information fur 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 influcnco of the bank, acknowledged by all to be of vast control, raid, if improperly directed, of dangerous tendency, had insinuated itself either into the management of the press or the direction of the Government. This could only be done by an examination of the transactions of the bank with editors and public functionaries. And here the committee wish to be distinctly understood, that thev 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 bv the clear rights of the par-

ties 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 bo innocent of any improper or sinister connection with that institution, it docs not, by any means, disprove the fact, that some other influence may have been intended to operate upvu their minds, wholly unsuspected by them at the time. If, therefore, it should appear,

that these individuals received larger loans than those who are its usual customers, that they receive these loans without the security usually required 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 i entirely on the other side. Whether such i 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 respectfully submit. It had been repeatedly alledged 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 atten tion of your committee was particularly drawn lo 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 S and 9, and in which are presented the following facts: On the 20th of March, 1831, a Mr. Silas E. Burrows applied to the president of the bank, and informed hiin, to use the language of the pros ident, that "lie was desirous of befriending Mr. Noah, and assisting him in the purchase of a share in a newspaper; and lie asked iflhc bank would discount the notesof these partics, adding that, although as a merchant he did not wish t$ appear as a borrower, or to put his name on' a paper not mercantile, yet he would, at any time, do so, whenever it might be necessary to secure the bank. I 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 securi ty of which they might approve, agreed to do I them. As Mr. Burrows was going out of town, I, (die president and witness,) gave him the money out of my own funds, and tho notes were afterwards put into my possession. They remained with me a Jong time, as 1 had no occasion 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 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 notes 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 20th 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 '31' '35, :30, and amounted, with tho interest thus added, to $17,l)7; At C 1 llll.o wrvc ri wwl i,l,o f il.n hl, .i c t..., ....x '""' ""-J LHU-ILU nary 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 0th 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 dollars, 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 dispositions 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 menI tioned; the largest loan made on that day. Un the 10th ol December following, another application was made, by these same parties, for a loan of .$15,000, wliich was granted, for six months, by the exchange committee, without any additional security or recommendation. At th;s 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 of the day. These loans, together with the loan made in March, to Burrows, amounted to the sum of $52,975, which consisted of notes drawn and endorsed bv the editors onlv.

The committee will now submit the facts in relation to the manner in which this loan lias been disposed of, first premising t hat the resolution for inquring into the aiiairs 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 'id

of March last, Mr. Silas E. Burrows obtained from the exchange committee discounts to the amount of thirty-two thousand four ! hundred and fortv-six dollars, being the largest sum loaned on that day, and whil many notes of citizens of Philadelphia" were rejected. That the notes for 17,1)75, payable in: 1832, 3, '31, '35, and '30, were paid and withdrawn by him on the 2d of March, without the knowledge of Webb and Noah, as they state. On the 1-lth of the same month, Burrows obtained another discount from the bank of $i 1,150, and on the 15th of tho same month the note of Webb and Noah for $15,000 loaned them on tho 10th of December previously, and not duo till June next, was paid oft' 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, 1S32, and found in No. 9, viz: "Although the loans to us by the Bank of the United States arc purely of a business character, and made upon statements showing the necessity of the accommodation to our establishment, and ofour ability to meet our payments, there can bo no doubt but that 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 tho charge of indiscretion on the part of the directors. This, it is not only our duty, but our desire, to prevent, if possible; and, therefore, with some little inconvenience to ourselves, wo have made arrangements to pay the note of $15,000 in the course of a few days.'" The evidence of the president of the bank explains the character of these various loans, and the circumstances which induced him to be satisfied with the security, and to make these advances; which, together with all the testimony and correspondence on this subject, will be found in the papers marked No. 1). In that evidence it is stated, by the testimony of Webb and Noah, that they knew nothing of the first 15,000 dollar loan made by the president of the bank to Burrows; that Burrows mad e tnem lci.cvc ; me fci.,- j o INoah by ms lather, and i , . ,. , ...., 000 were loaned to that he had his father present to cany on that transaction, and for which loan Noah allowed Burrows 2j per cent, and did not receive it all for some months after giving his notes; that the notes were discounted by the bank, in their names, without their knowledge, and paid oft' in the same way. It will appear by the testimony of Mr. Webb, that the paper of which he is the editor, made two publications in the latter part of 1829, favorable to the establishment of branches; that shortly thereafter it commenced its opposition lothe bank, and was, for sixteen months warmly opposed to it; and that, on or about the Nth of April, 1831, it changed its course in favor of the bank. Connected with this fact, is an admission on the part of one of the editors, that before the first loan was negotiated he held a conversation with a gentleman, through whom the loan wa3 then negotiating, (who the committee knew to be Burrows,) in which ho, Burrows, urged the editors, (one of whom, Webb, had expressed himself in favor of a modified rechartcr.) to advocate an unconditional renewal, "but expressed great satisfaction at learning that one was in favor of a charter under any circumstances." liie committee will stale they were i . . i'I anxious lo ooiam me testimony oi Jiunuws but were unable to do it. A subpena was

issued for him and sent to New-York, to J cp pav 1819 to Mr. Crawford, then Secrewhich tho marsnal returned he was not to . r ,:,,,, Mvnn,. c.. . ij n. nirr,,.iir

be f ounu. It was then sent to Washington citv. and the 8enrcant-at-Anns made the same return. The marshal of Pennsylvania was directed, bv the chairman, to make and continue a search for the witness in Philadelphia, having heard of his expected arrival in that place ; that the marshal reported to the chairman that he ascertained that the witness had arrived in that place, on Thursday, the 5th instant; but he was not able to serve me piocess uecause j 11 . .1 1 1. IT HOI UC lOUnU. Trk mi inmnrv whether there were, nnr other instances of notes beinu discounted ; r " rU for the accommodation of any merchant and trader, at 1, 2, 3, 4 and 5 years" credit, unless to secure a debt in jeopardy, there was presented to the committee four other cases. ' The various reports which have, for a long period past, charged the bank with too frequent intercourse with brokers, and also of undue favoritism to certain individuals, as well as the large transactions which exhibited themselves upon many documents called for by the committee, induced them to examine particularly the accounts of the firms of which Mr. Thomas Biddle was and is the chief partner with the bank, as a broker. Four subjects of investigation present themselves in relation to their transactions with the bank. 1st. The allowing and paying interest to j them on deposites. 1 2d. Relates to certain loans upon the

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pledge of stock, and the discounting of notes made loT. Biddle bv the president or others, without the knowledge of the board, ami on part of them, the pledge of stoc k, without interest. 1 he committee would reter lor tho particulars of these two charges to the pa - pers marKcu -o. to. The third subject is the amount of discounts made T. Biddle, and the rate of intercst. The document marked No. 11 will show tho amount on the 15th of each month from the 15th day of September, 1830, to the 15th of Feb. 1832. By this, it appears, that on the 15th of October, 1830, he had discounted upwards of $1,120,000, and has at no time since been less than $100,000. The committee doubt the policy of such large accommodations to individuals or firms, at any time, as it deprives the bank of the power of fulfilling one of the great objects of its institution, which is to facilitate trade by loins in time of pressure, and it may be proper to add, that these large loans, at a low rate of interest, in tunes when money is plenty, arc usually followed by overtrading, which produces pecuniary embarrassment and general distress. By a statement entitled "Remittances to Europe,'"1 marked No. 10, it appears that the purchase of foreign bill s were mailt of Thomas Biddle Co. drawn bv them vk 1831. ; Oct. 14, 1 bill 00 days sight, and at a pre mium of 102 per cent. $J2,:J99 08 Oct. 14, o bills at 75 to 00 and 105 days, and at a premium of 104 per cent 115,111 11 Oct. 22 13 bills at 10 to 125 days, and at a premium of 1 1 percent. 592,000 00 Dec. 10, 9 bills at 40 to 110 days, and at a premium of 10 percent. 500250 00 1883. Feb. 14, 14 bills at 10 to 105 days, and at a premium of 10 percent. 100,000 00 Feb. 14, a bills at 50 to 70 days, and at a premium of 1 1 per cent. 14S.000 00 $1,791,000 79 By the foregoing statement, it appears that the bank purchased, between the 14th of October, 1SH, and the 11th February, 1832, of T. Biddle and Co. foicijm bills to the amount of $1,791,00.0 V.l With regard to these large loins, the committee refer to the statement marked A'o. 1 !V liv v!i!"-li if nnn''irs liivt un t!r U1J1 i ? J - "v ..i .v--..j int. i, .... ll"' .'HI ol April, 1832, the total amount of discounts i -n, . ii en uins uiiu Jiuil.l at liii: UUUii, Ill JL iuiuuciphia, was $759:59,)79 5 Of that .sum more than two-thirds were loaned to ninctvnine persons, to wit: than $3,000,000 were in the hands oft wen tv-seven individuals; and nearly the seventeenth pait in the hands of one person. The committee have already expressed their conviction that these large accommodations, to a few individual'?, are injurious to trade generally, and they will Mid, that thev our!it always to be made by either the board of directors, or the committee empowered bv f them lor tii : t purpose 1 L or an explanation ol tins suoject, and 18. see papers numl.ered IJ The increase of the number of branches established since 1822, cannot be p:;scd over in silence by the committee, and deserves, as a source of extended inlluence of the bank, the most serious consideration. In some few instances where new brandies have been established, perhaps they may have been called for by the community, and may have been useful to them and profitable to the bank; but, in most of the cases, the committee doubt whether they we recalled for from public utility, and their establishment will, in the end, i.ot only prove unprofitable to the bank, but very injurious Wftft,i ni,. rhovr. in -riettrr r.fibn O, tarv ol the lreasurv. says 4 Ulll satficd that, with the present organization of the bank, it can never be managed well. We have too many branches, and the directors are frequently governed by individual and local interests and feelings. For a time we must bear with the branches, but 1 hope they will be l educed."' Again, in the same letter, he observes, ''the real and original evil under which the country is sullerinu is ovcrrbankinir. This J leads to excess in trading, manuf cturing. l.;i.t;r,,Y nnrl ll.n l.Utorr nf ibf. iP.-iHihr,-.! i i i T 01 enterprises wmcn nave oeen unuenuuen ,n these several concerns, would give a lull history ofall the distresses of this country, excepting a little agricultural distress growing out of the inordinate expectations wliich the others excited." These opinions fully accord with the views of the committee, and ! they consider them as peculiarly applicable i to the present time, as exhibiting similar causes now operating with extended force, from which similar elfects must follow, augmented in proportion to the increase of its branches. The stockholders, at the triennial meeting on the 1st of October, 1822, recommended a w ithdrawal of some of the branches then existing, in these words: "In taking into view the business of the bank, as connecte d with its cilices, the committee think it right to recommend to the continued attention of the president and directors, the met ssity ut withdrawing these branches which are found to be unprefialle, and transferring their

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' funds to the offices which shall seem I quire additional capital' Since this to ro pe nod tro h u e been discontinued, and nine others have been established, as per triennial reiK)it oi 1N.I. these opinions oi Mr. 1 Chevi s, in which the committee have concurred, were approved by tiie siocwioulers, as will appear by tho following extract from this same report in 1822. They say, "they take great pleasure in unanimously declaring that tho circumstances of the bank fully realize their anticipations, as expressed at their last meeting, in regard to tho president, (Mr. Cheves,) who, by his talents, disinterestedness, and assiduity, has placed its ailairs in an attitude so safe and prosperous as that the burthen of duty devolving upon his successor will be comparatively light' The committee cannot but think, that, had the succeeding direction of the bank been guide d more byiho opinions and wishes of tho stockholders, as then expressed, and gone on gradually growing wiih the growth, and increasing with the n ttural wants of tho country, great su lie rings to the community would have been avoided. In the year 1810, orcat abuses existed in tho branches, of which Mr. Cheves speaks without reserve, in his last report to the i stockholders, as well as in his correspon dence with Mr. Crawford, and upon casting the rye over the monthly statements, it is remaikuble to observe what losses have taken plac? at tho branches compared with the mother banh. For instance: on the 1st of Jan. last, the loss of the mother bank, on a capital of 10,500,000 was in round number:?, $328,000; that of the Baltimore branch was $1,002,000, on a capital of one million and a half, so that it lost more than its capital. That of the Norfolk branch was $229,000, on a capital of 500,000, losing neaily one half of its capital, and so with all the rest of the branches, their lasses are out ofall proportion to their capital, cc ten times greater than tho mother bank, according to the amount of their respective capitals. These losses however, were principally incurred prior to 1819. The proper inference to be drawn from these facts is, that the worst of mismanagement has existed in the branches. A" The committee feel it their duty nowT to give their views as to the causes of the present cbsires'; in the trading community, and whicii tin -y fear may greatly increase. It is an acknowledged principle that like causer, in all caes, produce, lihe effects; and as in 1819 contraction followed the expansion of 1817 and 1818, so by the same rule must contraction follow the immense expansion of 1KJ0 and IN'.I, and like elfects and consequences succeed. To illustrate more clearly the position, and bring it home to the minds of every one, the following tableof lh; state of the bank during some of the months of 1818, and '19, and 1S31, and '32, are here exhibited, embracing items, from which direct calls upon the vaults proceed, and the immediate means which remain to meet them, v:z: the hist are the deposites. circulation and debts abroad, not on permanent loan. The second, the specie, funded debt, and notes of other banks, the amount of each will be found under their proper heads at the various periods men- - a- -f t if J The preceding table shows that, at no period in 1819, when the bank was very near suspending payment, was it less able to extend relief to a suffering community than at the present moment. In xpril of the year, the month in wliich its diliicultics were the greatest, its means of specie, notes of other banks, and funded debt, (which could have been turned into specie or notes of other banks,) amounted to upwards often millions of dollars; and the whole demands, which could come against it in the same month of circulation, deposites, and debts owing abroad, amounted only to about fourteen millions. But the Committee feel bound in candor, to state that this was after a number of months of constant contraction, not only by the Bank of the United States, but also by most of the other banking institutions of the country, where a general exhaustion had been piodueed. It was on the 0th April, 1819, that Mr. Crawford, then Secretary of the Treasury, writes to Mr. Cheves thus: "It is even doubtful whether it is practicable, with all the exertions which it is in your power to make, to continue specie payments through the year.1 Under the same date, he says: 4My impression is, that the safety of the bank can only be effected by withdrawing neaily the whole of its paper in circulation. If the bank does this, all other solvent banks will be compelled to do tho s;ano w, this ig cffcCtcj M and silver will be introduced into the country, and make a substantial part of the circulation, and enable the banking institutions gradually to resume their accustomed ope- , n tro5S0(j rations Wiiilst this is effecting, the comrnus relations, will be greatly disonsiderijig the extent of the suf fering, it is greatly to be dedred that some good may result from it." The committee believe that the course of operations by the bank, during the years;...I8o0, and 18131, have bee n nearly of a simi-;". i lar character to those of the years 1817 and - J818. Drafts and notes, payable at distant olliccs, were then freely' discounted at the""" bank of the United States, and the different olliccs. Bank notes were issued by the -bank, without regard to the wants of the I tic luUie here ictcrrtd to, and omitted i exhibits the situation of the Hank in 1818 '19, '21, ar,d C2. The fubstance of the Ub'e is ij.vtn hi ciLer p.u U oi iLe leport.