Indiana Republican, Volume 3, Number 116, Madison, Jefferson County, 27 February 1819 — Page 1

CAM "where liberty dwells, the r e is my country. V",' 1 if! VOI- IU. MADISON, (INDIANA) SATURDAY, FEBRUARY 27, 1819. No. 116.

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A;norl 01 the committee npn.nntcvl to investigate the procttdl:! of the bank of the United St ite-. Cn.N'TINUK I. On the 9th Januiry, 117, r.: board re-olved (piper ir.ukevi xmxvl) from and alter the 20th February tium r.cxtaii;! to the 1st of July to 'jisOTt rsntes to tiio-e who should h ive revenue bonds to pjy Jurini; that period. The ix wunt dor.? under that reso.'M'.fti f n: a:!, ar..! it dives ajt appear that sueh notes have at any time been discounted cxtensiveiv. i'iie principal business of the Ihiik cfrtainly lias been to discount on note secured bv a p'edj of stock under the various resolutions before recited. Their e'Xect was to abandon all personal security, and to rely entirely on the stock pledged. A sv teni which your committec think need only to !e stared to i:ii:rc urupulihed repreLcnAn. Beside-, the objection, which arcs from thce loan.-;, bein; in their nature perpetn4' after all j?rson d security ves abandoned, it appears to hive been an aa of self immo-iAti-un, thu to place beyond the re:ch of the institution, in the event of an cmerencv, to which it arid all others arc liahle, so lare a portion of its ioans. c)ii the ceth October 5sr, a statement was madeexKlhitin the amounts discounted o.n lic tcs secured by a pledge cf the ba-.ik stock, and then leairdrsg unpaid at the tol-iawin-places : at Philadelphia, 4jSo,Sod dollars, of which 1 73.500 dollars was above the ; - altim-)re 2,402,435 4trs, or w'lic'i it cannot be -pertained what proportion vas above the par value, but K is believed to have exceeded 5sc,cco cluliars ; at Charlcslon s974-9, of which 2,000 '!hrs was above par ; at Washington 298,570, of which I)Ut a small amount was above P"r; at Richmond 209,840, none above par. There 21 ': n accounts from the other "lt the directors having J'l'Jir'ed siatcments only from '-'-.'ur-c discounts on stock 4 " 1 i Co, 000 dolla; A ' ;i !. ; , been luii.blicd

by the bank of the amount discounted at the abovc places, and remaining unpaid at this time, marked XL1I, which diifers somewhat, but not materially, from the statement in October last; by that statement the total amounts of discounts at the bank, and at their otJices, on pledged stock, is 8,022.954 ; by the general statement on the 1st of December bst, the total amount of such discounts at the bank and all its otlices, is 8,954.712 ; the difference between which sums is the aniounts discounted at all the other offices ::ot above enumerated. The committee have compiled a statement XLUI, which exhibits among other things the total amount of discounts at the bank, and all its ofiiccs, at different periods, on pcrjcna! security, ami on pledged stock, irom whic: it will appear, that the largest amount discounted on bank stocis u was in January and February, 1 S 1 3, when it was 11,244.514 dolls. From this recital it ill be apparent how Urge .1 pc rtion of the capital of the bank : was thus placed beyond its coi trol. Although there have been ? vw.c fluctuations i;v tb.e aiv.oiu it ot these discounts at diitcreni : periods, yet the crreiitet pa; 't ii them, indeed the w'lo'e, vith but few exception;, iiave i')n constantly renewed trom t ime to time, as the Dotes fell lue, in many casc: for four and ajx montiis. Indeed every s-:bie-qucnt act of the bank has bc;n wiiuily at war with the profc.rsion of the ,e loUns being temporary, held cut in thcrccv.jl of the resolution or xjt !i J'lly, and in order to insure the greatest amount of such 1 euns, and at the same time afro rd facilities to the prompt purchase and sale rf stock, the dir cctois, tin the Sth of August, 1S17, pa.ed a general resolution authoriv.ng the President and Cashier to discount, all stock notes that should be offered between discount days, to a certain amount ; and by various resolutions, adopted at different meetings, until 7th September, appropriated two millions of dollars to their disposal for that purpose. And on the 30th September 1817, the resolution already referred to, passed, authorizing these oilices, in all cases, to renew the stock notes as they fell due between discount days. 0 Another; and probably much more censurable effect of these various resolutions and proceedings was, to keep the price of the stock constantly advancmg, until it readied a point where it exploded and felk From various sources of information, the committee have compiled a table of the prices of stock, at the different periods, when these resolutions were adopted, marked -ly. from which their effect in enhancing the prices of shares is very clearly exhibited. It will appear from that table3 that the price of shares at Philadelphia on the 2cth of Aug. 18 17, was, according to the public

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reports, 147 dollars 50 cents ; according to the testimony of Mr. M'Eucn, a bsokcr, it was 1 44 dolls, at the same place, on the 30th of the same month, the price was 156 dollars 50 cents. The resolution, authorising discounts on stock, at 125 dolls, was passed on the x6th of the same month, vide xxxv. 'These facis would, in the opinion of your committee, be sufficient to condemn a system, which thus enabled a stockjobber to sport with t lie property of others. Stockjobbing, to an immense extent, and wagers on the price of shares, were its inevitable consequences. It gave equal 1 0 cilities to the bankrupt, who had not creviit enough to obtain an endorser, and to the capitalist. Stock cou!dbc, .:. ! was, purchased without the advance of a cent, by the purchaser, who had only to apply to the directors, or to the president and cashier, between discount days, for a loan on the Glares about to be brought, and, bv what i- termed a simu'taneous operation, he obtained his discount, and, with it, paid for hib stock. A lise in the market would ova' le him to sell hi shares, pocket the difference, and coniinei.ee operations anew. And the committee are competed to fate,

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on pledged t

to bicker, and to individuals, who appear to have teen constantly in the market. Loans on stock, at a rate below 1; par value, may, unquestionably be useful to the merchant, who would avoid the obiigaiiin imnosed bv rcuuiiin- an ndorser, arid would be highly beneficial to the kjmk, when restrained within moderate limits, and not made permanent . But the loans actual v made were most o them umeasoii.ible and excessive in t:ir amount , they were not made to the merchant and trader, but to a few persons consisting of directors, brokers, and speculators ; and have been renewed and continued, almost invariably at the option of the borrower. And when, in July last, the board decided a curtailment of its discounts, it fell, in almost ail cases, upon the business paper, while the immense amount loaned on stock-pledges were but little affected, excepting at the offices at Richmond and Washington, where the curtailments appear to have fallen equally on all notes. But the discounts at those places on stock were very small, particularly when compared with Baltimore, where the loans were such and so long continued as to receive the animadversions of the parent board. An unwillingness to injure the private credit of those engaged in the above mentioned transactions, where no public good is perceived to be probable trom the disclosure, induces the committee to withhold the mention ot their names. But in respect to the direc

tors, the committee consider their conduct intimately connected with the general management of the concerns of the bank ; and under a sense of the duty devolved upon them, they state that many of the directors, as well those appointed by the government as those elected bv the stotkholdcrs, appear to have been the most forward and the most active in trafficking in tcck The mere purchasing shires with an intention to retain them, would not be improper even in a director, if made without any view to intended tuture proceeding of the board of winch he was .1 member: But the practice ot purchasing at nn; time, when the stock was low, and selling at another, after its '-rice ha i been enhancod b the me inures adopted bv the directors, is certainly iii.tair aiul censurable. It is the perversion or a pucTic and

honorable ti ui in the puipcs

to speak of the same contracts and purchases, but give accounts of them somewhat variant from that of Mr. Jones ; particularly, Dennis A. Smith and James W. M'Culloch speak of one of those contracts, or of some other, as having been presented to Mr. Jones g uuitou!y, after the stock had risen, and it was obvious hat a pro'.;, would be reali ?, of which Mr. Jones nub:. no mention. Mr. Jones ates that he sold both those eontracts to D. A. Smith: Mr. Smith says he was one of th? peisonsw ho made one of these contracts a present toMr. Jonc: that the stock never was trans, ferred, arid that the profit -mounting to i5,ccj dollars was paid to Mr. Jones, in moncy. Although the precise time is not specified by Mr. Jones, yet it is obvious, from tiie rate at which the contracts were purchised, th;r h must have been seme time interior

of s. e 1 f - a g g r a u d b'. e i n e 1 1 1 , and to the 25th of August, 3i

places the oircaors in a situation where their own interests aff rd a strong temptation to the aVj-e of ihat trust. Still moie reprehensible is the conduct of those directors who made cor.tre.cts for the purchase of stock deliverable and

t a future period, at

a love rate, and during tiic interminate time, bv their own o.CIcijl acts, raided the price of the stock to its highest point. T he cemmittee do not deem it r.ccce.ry to repeat the details, which will be found in the ex. amir.ations oi the directors and oiliecrs, herewith submitted.

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maiked Lll. LHl. I iv comparing those examinations witli the prices ot stock herein heroic referred to, the !Iou.e will be enabled to perceive which of the directors have participved in this budr.cs. With ropect to the public directors, considering them as public oidicers, responsible to the government, and subject to the constitutional power of this House, the committee deem it their duty to state, that the President, William Jones, Esq. and George Williams, Esq. appear, from their own declarations, and from the testimony of a number of witnesses, to have been deeply concerned in those speculations. Mr. jones appears to have purchased 1 ,555 shares at a high rate, and toMiave sold a large part of them at a loss. He states, that in the summer of 1817, he purchased a contract of ictfo shares, at 132 dollars per share, deliverable ed January, 1S18, and toon after another contract for ioco shares, deliverable in November following, at 135 dolls, per share, both of which, he says, were sold at 150 dollars per share, from which two contracts, it would appear, he realized 33,000 dollars. There is much ambiguity rests on these transactions, arising from the incompatible statements of Mr. Jones, Mr. George Williams, Mr. D. A. Smith, and Mr. James W. M'Culloch. The three latter gentlemen nprcar

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for, at no time af'cr that period, during the year 1817, was stock so low as 135. 'That the resolution of that date, authorising di-.cv.int on stock .it 25 per cent, above its par value, had an immediate etie-et on its price, will have been seen trom a former part oi thri renon. The committee do not ' e state to say, that although ids my. tives may have been strictly correct, and his vote z? without any reference to his priv-le interest, yet his si nation forbade his acting on a question whose result w.u so

important to him ; Or

rather

that he ought never to have placed himselr in that situation. 'The high trust reposed in tiic President of a National Bank, by the government, and by tiic representatives of the stockholders, required that he should abstain from ail concerns in which the price of stock was material. Mr. Jones appears to consider them as lawful private concerns ; the committee deem them intimately connected with the public management of the institution ; of their lawfulness and propriety, it is for the House to judge. Mr. George Williams, another public director, appears to have been deeply concerned in the purchase of stock, and in the making and purchase of contracts for the delivery of stock to a large amount. Eve. ry witness that has been examined speaks of Mr. Williams transactions in that respect. Mr. Wiliiams himself declined stating the amounts and prices at which he purchased, and the committee did not think proper to insist upon his answers, as they had already ol tained satisfactory information respecting his conduct ; and examined him chiefly to give him the opportunity of makingsuch explanations as he thought propei, of which he was advised at the time. With respect to the oiher public directors, Messrs. Pierce Butler and John Connelly, it satisfactorily appears that they were not iw the leas: ccnccrncd in tlr

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