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“R ESI JR R ECTI ON NOTES.” IN SE?xATE of the united states, February 12, 183*. Mr. Grundy, from the Committee on the Judiciary, made the following report: The Committee on the Judiciary, to whom was . referred that part of the President’s Message | which relates to the issuing and reissuing of the notes of the late bank of the U. States, I by the bank recently chartered by the State of Pennsylvania, by and under the .same name, have had the same under considera tion, and present the following report; By the act ofCongress chartering the bank of the United States, passed on the tenth of A pril, 1815, that institution was invested with all the usual privileges of banking corporations; and was especially authorized to issue its bills and notes, not less in amount than five dollars, in the ordinary form of bank notes, signed by its president and cashier. I hose bills and notes, when payable on demand, were made receivable in all payments to the United States. For the security of these and itsother legal ob ligations, the capital stock was created, am ounting to thirty five millions of dollars. - Twenty-eight millions of this were to be raised and paid by individuals, companies, or corpora tions. The remaining 7 millions were paid in by the L l . States. The affairs of the corporation were to be managed by twenty-five directms, ■five of whom were to be appointed by the 1 re sident of the United Slates. A committee of Congress was authorized to examine into the transactions of the bank; and legal pro. • ■codings were to be instituted by tue Executive, whenever any of the provisions of the charter were violated. The United States were to receive, half yearly, a portion of the profits of the institution, corresponding to the portion of the capital they subscribed. It will thus be seen that, during the exist ence of the bank, and during the period w'hen its bills and notes were issued under the cnaiter, ihe United States were deriving a profit from its transactions; that their funds were pledged lor the security of those who received and held its notes; and that they were invested (at least so far as the words of the law went) with some control over its management. By the same law, all the banking powers of the corporation were limited to the third of March, 1835, after which day they entirely ceased; although it was authorised for two years subsequent thereto to use its corporate capacity “for the purpose of suits for the final settlement and liquidation of the affairs and ac counts of the corporation, and for the sale and disposition of its estate; but not for any other purpose, or in any other manner; whatsoever.” The objects of this part of the law are too plain to be misunderstood. The intention of Congress was to preclude, after the third of March, 1836, every banking transaction —the issue of bills, the discount of notes, the lending of money; in a word, the continuance of all transactions for the profit of the stockholders. Its object was to prevent the bank from incur ring, after that day, any additional liability, by which the property either of the U nited States or individuals invested in the corporation might bo directly or indirectly bound, and to require the bank fully te settle its accounts and dispose of its property, to redeem its obligations, pay its debts, and collect its assets before the third of March 1838. It appears that, on the eighteenth of Febru ary, 1836, the Legislature of Pennsylvania, by an act entitled “An act to repeal the State taxon real estate and personal property, and to continue and extend the improvements of the State by rail roads and canals, and to char ter a State Bank, to be called the United States Bank/’ incorporated the existing stock holders of the Bank of the United States, (excepting the United States and the Treasur er of the United Slates) and such other persons as might become stockholders, according to the provisions of that act of the Legislature; previously requiring the same, however, to be accepted by the actual stockholders at a general meeting. On the nineteenth of Feb ruary, 1836, a general meeting of these stock holders was held, without, however, auy as sent, representation or authority on the part of the United States. At that meeting, resolu tions were passed, accepting the charter from the Legislature of Pennsylvania, and directing the president of the bank to make that accep tance known to the Governor of the State. At the same meeting, the stockholders thus as scm bled, directed the president and directors of the bank chartered by Congress “to pay, transfer, and deliver to this new institution, all and singular the shares, purparts, interest and property whatsoever of the stockholders, so incorporated by the State of Pennsylvania, of and in the goods, chattels, moneys, effects,nnd estate, real and personal of the present Bank of the United States.” Os this measure no notice was given to the Government of the United States; no application was made to, or authori ty sought from, Congress, although it was no. torious that a portion of the effects of the bank, in addition to the sum of seven millions of dul lars, belonged exclusively to them; that they were entitlcu to one seventh part o’* the effects to !»•' co lected and divided; and that they were halde, in the same proportion, for the proper settlement of the affairs and discharge of the obligations, which were thus summarily taken out of their hands, and placed beyond their control. Though, in words, the direction of these assembled stockholders to their president and directors was to transfer their own shares and parts of the eff ets, yet, as those effects had never been divided, as no proposition for their division had ever been made, as they consisted of the great and complicated mass of property belonging to such an institution, and in the nature of things, incapable, without ex treme difficulty, of ;i.vision, it was in fact a sudden and summary transfer of the whole j property and effects belonging to the people of. the United States, and invested by them in that institution, under carefully devised guards and stipulations, to a State corporation, sud- . denly created, in whose transactions they had no participation. As if to remove all doubt of this being the ' nature and intention of the transfer, the presi dent and directors of the bank chartered by Congress proceeded, on the second of March, 1836, the very day before the charter expired, solemnly to resolve, that “o/Z and singular the j money, goods, chattels, rights, credits, and personal estate whatsoever owned by, or InZ/te custody of this bank, wheresoever the same may be, together with all evidences and securities for the same, be, and the same hereby are, as signed, transferred, and conveyed to the pres ident, directors, and company of the Bank of the United States incorporated by the State of Pennsylvania,” and thev created that institu tion their trustee, to conduct and wind up the business of the bank. Thus, in direct violation of the spirit, if not the letter, of the act of Congress, which impo sed upon the bank chartered by itself the duty ' of‘‘settling and liquidating the affairs and ac counts of the corpoiation,” which had given it two years expressly for that purpose, and which had retained for Congress the power of examining, by its committees, the correctness of its proceedings, and controlling it, if neces Isary, by a summary judicial process; in viola tion of this provision, and in manifest infringe i ment of the rights of the people of the United I States, whoso property was invested m the in stitution to a large amount, a portion of the I stockholders, excluding the United States, giv. ing them no notice, asking no authority from Congress, suddenly assuming with a high hand the management of the whole affair, undertake the solemn farce of passing resolutions to cre ate themselves (incorporated it is true, by an other law, though not under another name) their own trustees; and, having so done, they take possession of all the properly, and as sume the settlement of all the affairs of the in s itution, relieved, as they, suppose, from every responsibility and control to which Congress mean ihe bank should b • subject in winding up its business. On the 4th of March, 1836, when, in contem plation of the act of Congress, the Bunk of the United States should have been commencing the settlement of its affairs, including the large interest of the government, we find a portion of its sock holders who have cast off the rest, seizing and keeping possession of every parti cle of the joint property, and assuming the right to manage it, free from the obligations of the charter under which that propcity w.s col- ’ lected, and from the control of those by whom that charter was granted and to whose constit uents a very large portion of that property be longs. It docs not appear that, at the lime of this transfer, by a portion of the stockholders, of the whole property of the bank to themselves, any inventory or statement of the effects and I estate of the institution was made; and no steps whatever were taken for the regular “settle ment and liquidation of the affairs and accoun's of the corporation,” as the charter positively required, The whole busine>s was mixed up with that of the new institution. Although the Secretary of the Treasury was desirous and endeavored to obtain a payment or divid end of the property proportionate to the shares belonging to the United States, he was unable to do so. Resort was of necessity, had to an estimate of the value of the shares, founded on an examination of the general accounts of the old institution. There is, perhaps, no reason . to doubt, on the whole, the correctness of this * valuation; but it must be admitted that such was not “the settlement and liquidation of the: affairs and accounts of the corporation,” stipu-; lated for by Congress at the time it granted the charter, and which was frustrated by the summary ami unauthorized conduct of the in-j dividual stockholders, in transferring to them-| selves all the property ofthe bank just before! the charter expired; and from the time of such transfer, neither keeping its accounts or wind ing up any of its concerns. Soon after the estimated valuation of the stock of the bank, thus made, the State institu tion and trustee came forward, and voluntari ly offered to pay the same, by equal instal ments, in September, 1837, ’3B, ’39, nnd ’4O. with six percent, interest from the time the charter expired. This offer the Secretary of the Treasury was directed, by a joint resolu-1 lion of Congress, passed on the third of March ’37, to accept, taking obligations for its fulfil, t ment; the first of which, it is understood, has been redeemed, and the amount paid into the Treasury. Thus virtually terminated the affairs of the late Bank ofthe United States; in a manner very different from that settlement and liquid ation which were a part of’he obligations of. its charter; in a manner very different from that in which the business of a great national' institution should have been finally closed. Il is true, the individual stockholders have be come possessed, by a general sweep, of all the property of the bank; and the United States have exchanged their shares of stock and their claim to dividends for a liquidated sum, secur ed by t!.e bonds ofanother corporation. But have these operations released either party from their obligations to the community? have they given to those |>ossessed of the propertv a right to use it, in manifest contradiction to the char ter by which it was created’ have they given sanction, direct or indirect, to an employment of the corporate privilege and the corporate property, long after the charter has expired, for purposes not only unnecessary to the setJ lit me nt of its affairs, but calculated to post pone and retard such a settlement? have they ! absolved Congress from the duty, solemnly ini- * posed upon it, of “examining the proceedings’’ done under color of that chartei? v. ill th* y jus tify it in taking no measures to redeem and canci 1 the obligations of an institution it crea ted? above all, do they furnish it with an excuse fur suffering the name, credit, and apparent authority of the United States, to give value to obligations in which they Have no longer an interest? Os ail the powersand privileges of banking institutions, that which’most widely affects the whole community is the issue of bank notes; the authority by which they may be used, the ■ mode in which their ultimate solvency and ■ payment are guaranteed, constitute their char. ■ acter, anti give them a greater or less circula i lion. The notes of the late bank of the United i States were issued under the authority ofCon gress. They were made receivable from one .end of the continent to the other, as equivalent to gold and silver, in the payment of the reve nue. The whole community took them with confidence, because a large portion of the cap ital pledged fortheir redemption belonged to the United States; because the issue of them was limited to the duration of the charter; and 1 because the conduct of those who issued and ' circulated them was placed immediately under ■ the supervision ofCongress. From these cau ses, the notes of the late Bank of the United States derived their extensive credit among the people; and thiscredit. thus derived, impo ses upon Congress the corresponding obliga tion, to take care that no act of omission of theirs shall mislead the community, when these causes of peculiar credit to these notes have ceased to exist. On the 3d of March 1830, when the char- I ter of the bank terminated, the bank notes which it had issued amounted to thirty-four millions four hundred and thirty-four thousand two-hundred and seventy dollars and sixteen cents. On these it had on hand thirteen mil lions three hundred and twenty-four thousand nine hundred and seventeen dollars and nine ty-three cents. These notes, thus on hand at the expiration of the charter, it was the obvi ous duty of the bank immediately to cancel; they were obligations originally issued under a charter which had expired; they had been returned into the bank: they formed no part of its property to be collected or divided. Yet on the 2d of April following, the Slate institution, in its first report to the Legislature of Pennsyl vania, declared the amount of its notes issued to be thirty-six millions six hundred and twen ty-thousand four hundred and twenty dollars and sixteen con’s; of which it had then on hand, notes of the Bank ol the United States to the amount of sixteen m'llions seven hundred and ninety.four thousand seven hundred and thirteen dollars and seventy-one cents; thus showing that the directors of the bank charter ed by Congress, in transferring “all their mon ev, goods, and chattels” to their trustee, ha I delivered up the bank notes which ought to have been cancelled, and which were entirely unnecessary for winding up the concerns of the bank, or performing any of the trust duties undertaken by that trustee. The practice thus adopted,of keeping instead ofcancelingthe no’es issued under the authority of the charter from congress,after that charter had expired was not confined to those thus improperly delivered by a part of the stockholders to themselves, under the name of a trustee. Nearly two years ■ have since elapsed, and yet in the statement made by the bank to the Legislature of Penn sylvania, on the sth January, 1838, is this item, “notes issued of the late r\nk and AroncAcf on h vnd, $15,800,517 73.” Thus when the two years in which the affairs of the banJ< were to have been settled are nearly ex pired, when the control (such as it is) that Congress may yet possess is almost at an end, about sixteen millions of dollars, in bank notes which bear the name of the United States, and were actually made under the authority of Congress, which, if put in circulation, will be naturally and reasonably considered by those who take them as guaranteed by Congress, are now in the exclusive possession of a banking institution which has the power to use them when and for what purpose it pleases. Even if it could be said that these bank notes would not be used for purposes of circu lation and currency; even if it were certain that these evidences of the liability of the Uni ted States would not be put forth after that lia bilit v was at an end; even if the trustee who has obtained possession of them had evinced a determination to cancel them, as the redeemed obligations of a concern which ought to be wound up without delay, still, it is a duty im posed upon Congress, who originally authoriz ed their issue, to see that this is done; to on force, by law, and not to leave to the discre tion or honesty of auy individual or corpora tion, that which the whole American people have a right to look for at their hands. But is not that duty absolutely forced upon them, when those who have thus obtained pos session of these uncancelled notes ofan extinct corporation actually use them for purposes of circulation, and, in defiance of the charter, boldly issue them as a lawful currency and for their own individual profit? Yet not only is this the case. They claim the legitimate right so to use and issue them. The trustee who receives and accepts the property of th" late bank, under the pledge to redeem its notes, debts, obligations, unequivocally asserts the right, not merely to refuse to cancel the notes for the redemption of which funds have been conveyed, but actually to pay out these notes as other tanks might d* who received them in the ordinary transactions of trade- “The Bank of the United Sta’es chartered by th« State of Pennsylvania, has,” in the deliberate language of its own directors, “done as other bonks have done—paid out the notes of the Rank of the United States;” as if there was the slightest similarity between a bank which re ce«ve», by a general transfer, sixteen millions of dolla rs in bank notes that had been regular ly issued and returned to the institution by : which they were made, and those banks which receive the notes of one another in the ordin ary course of commercial dealing, and pay them out in the same mode: as if there was the least resemblance between the reissue of bank notes by a trustee who had undertaken to re deem those notes, and had received a large and sufficient amount of funds for that, object, and the bona fide payment of them by a bank, for the purpose of collecting their amount, and without any interest in them whatever, except as a common medium of exchange. Between such proceedings there is no similarity, nor can the one affo d any justification to the other. But is not the course pursued by this institu tion, which has received these no'es for the purpose of redeeming them, and now boldly re issues them, in all respects identical with that of a partner who having funds of an expired I partnership in his hands, for the purpose of I settlement, should use and reissue, in violation | of all faith, the notes or obligations of his con fiding partner? Is it not similar to that of an executor, who voluntarily assumes the duty of winding up the estate of a deceased testator, and yet seizes upon the property confided to him in that trust, and applies it to his personal benefit, and put into circulation, by himself and his agents, uncancclled notes found among the papers of the testator, which had been ful ly paid off and discharged? Previously to the Ist of July, 1837, the monthly statemen’s furnished to, and published by, the Aud.tor General ol Pennsylvania, cid not distinguish between the business of the State Bank and that of its trus tee; between the notes of the late and present bank, issued or in circulation. The informa tion that should thus have been furnished can not, therefore, be obtained for the long inter val between the third of March, 1835, and the Ist of July, 1837. On the first of July, 1837, however, notes of‘.he late bank, in circulation, were only $7,013,909, 43, while on the first ot August, 1838, they amounted to $7,170,658 ; 36; an excess of issue of the old notes over all that were paid in of upwards of $150,000 in a single month. Again, on the second October, 1837, the notes of the late bank in circulation a restated at $6,175,861 05, but on the first November following, at $6,522,839 40; w! ich would show a re.is.-uc of notes that ought to have been cancelled, amounting to upwards of $340,000 in less than a mouth. Thus it appears, that al hough Congress ex presslv enacted, in granting the charter, that 'he banking privileges o' the Bank ol the Uni t d States should expire on the third ot March, 1836, yet the most important of those privile ges, so far as the community is concerned — the issue of bank notes, made under the provi sions of the charier—has continued for twenty mon’hs alter that period, and probably still continues; that although two years were al lowed after the expiration of ihe charter, “for the final settlement an 1 liquidation of the fa. fairs arid accounts of the corporation, and for ihe sale and disposition of its (state, bid not for any other purpose," yet now, when the two years are nearly at an end, there are in exist ence, and ready to be re issued, when desired, about $16,000,000 in bank notes, the cancel ling of which was one of the first and principal duties of those who were “to settle and liquid ate its affairs.” No provision was made in the charter for such a state of things. It is therefore, proper that Congress should at once provide for it by appropriate legislation. Such is its duty, if the principles of the charter which it granted are to be fulfilled. It is no infringement of any privilege actually confer red on any individual or corporation, er inten ded to be by that charter; and it will at once 1 put an end to the erroneous impression which a want of it will naturally establish, th it the I faith or the property of the United States con- ■ tinues to be pledged for the security ofthe bank notes bearing the name of the United States, and originally issued under that pledge. It is due to consistency that the termsand meaning of the charter should be guarded and preserv ed; it is due to good faith that, when the prop, erty ofthe United States is withdrawn, by the sale of the stock, from liability for the redemp. tion of the notes, they should not stand by and permit them to be issued and circulated among the community, exactly as they were when that property formed a part of the capital by which they were secured; it is due to their le gislative functions that the right which they retained, of examining into the proceedings of of the bank, and thus virtually promising the community the exercise of a supervisory pow er, should not, at a moment when it is most | needed for the public welfare, be neglected or relinquished, even though their own direct in terest has ceased by the bargain they have made. Nor is it with reference alone to the late or present bank of the United States that such legislation is necessary. The course adopted by those institutions may be pursued by every other banking institution chartered by Con gress. The notes issued in the District of Co lumbia, under the authority of charters from the United States, may, without greater im propriety, be re-issued and circulated after those charters have expired, either by the banks themselves, or by trustees to whom they may transfer them the day before their corpo rate privileges terminate. 1 hnt some law should be passed to prevent and obviate such a proceeding, cannot admit of question. In passing such a law, it is the duty of Con gress carefully to avoid any provision which should affect the citizen who holds or receives these notes in the ordinary course of trade, or who passes or transfers them in good faith from hand to hand. It is only those who hold or re ceive them with the means and for the purpose of redeeming them; who pass and circulate them when ’hey know that they hav - come in- to their hands for such a purpose and under such obligations; and who neglect or refuse to cancel them, when they are bound to do so by the intention ofthe charter under which they were originally made. Considering this subject, therefore, with re ference to these relations of the United States towards the lale national bank and to the com munity which are derived from the charter of that institution, a prompt and efficient interfer ence of Congress is unquestionably demanded. They have derived large profits from the cir culation of these notes, for the redemption of which their share of the capital was pledged; and they have now withdrawn that shareof the capital from its former liability; they prescribed by the charter that all banking privileges, a mong which was that of issuing these no’es, should terminate at a certain period, and that period is now passed; they reserved to them selves the light,and thus imposed on themselves the duty, of examining that the stipulations of the charter were fulfilled, and to do this the enactment of such a law is now absolutely re quired. But there are other considerations bearing directly on the present situation of the com merce and business ofthe country, and on the respect due from Congress to the laws and pol. icy ofthe individual States, which ougiit not to be overlooked. It is a fact that .the present Bank of the United Slates is in actual posses sion, having them within its own vaults, and under its control, of a fund of bank notes to the amount of’about twenty millions of dollars over and above those in circulation, issued, to a certain extent, on the faith of the United States, and bearing a corresponding credit. There appears, at least in many portions of the country, a s’rongdisposition on the part of the banks to resume specie payments; but tire uncontrolled possession of this vast amount of paper mor.ey will enable the present Bank of tire U.Slates,if so disposed, to* retard, perhaps to prevent, them from effecting that laudable and desirable object It holds in its hands, under the apparent sane ion of Congress, an immense fund, which it can transport to any part of the country at its pleasure, and purchase the notes ofthe State banks, to be returned upon them en masse, at the very instant they shall endea vor to resume. What is there to prevent this institution from sending to New Orleans one or two millions of these no’es, placing them in ’ the possession of any local bank or its agents, and exchanging them for the notes, of banks preparing to resume, so that they may be us ed to embarrass and retard their efforts as s ion as they are commenced? It cannot be said that this is a proceeding arising from tho large capital of the present bank ofthe United States, and which is not consequent upon tho ssue of its old and uncancclled notes. It is the possession of those notes which exempts it from danger in the adoption of such a course. In dependent of the additional credit, attached to them from being made under a national char ter; they are now circulated without the res ponsibility that attends those issued under the charter ofthe State; and it is to this cause that may be attributed the remarkable fact, disclo. sed in the statement of the bank on the sth January last, that while they had on hand sis. teen millions eight hundred thousand five hu i dred dollars and 73 cents of the old no'.**;, one million fair hundred and three thousand ninety-two dollars at their Stale bank agencie •, and two millions seven hundred and thirty, three thousand nine hundrel and ninety dolla s m transitu, making altogether no less a sum in their actual possession and under their contr 4 than nineteen millions nine hundred and thirt seven thousand five hundred and ninety.nine dollars and seventy.three cents of these o'd notes; when they h id, also, in circulation a t mong the community, the further sum of six millions two hundred and twenty thousand four I hundred and sixty seven dollars and seventre i cents of these same old not* s; being an nggr ’- gate of the notes ofthe expired corporation, of twenty six millions one hundred and fifty eight thousand and sixty six dollars and ninety cents; yet, at the same time, the whole outstanding circulation of their own notes, (exclusive of post notes;) only amounted to five hundred an I forty-seven thousand six hundred dollars an 1 forty-five cents, or about the fortieth part of the old notes in their hands and in circulation. On every’ note issued under the present State charter of Pennsylvania, the holder has by the State Jaw a summary proceeding, if it is not redeemed on demand; more than this, the bank is bound, in case of refusal, to pay the high interest of 12 per cent.; and if such refu sal be continued beyond a stated period, there is a provision for the speedy forfeitures of its charter. But how is it with these notes of the late bank, of which it has obtained possession? To them none of these penalties of the law of Penn . sylvania will apply; it has received them, and i promises to redeem them/is a mere trustee; and iin case of refusal, holder, it is presumed, i is to be driven to the tedious process of a suit in chancery, or some other form of protracted legal proceeding, to obtain that payment which he could enforce if the note had been is sued by a State Bank, in the most rapid and compulsory mode. Thus it is, that so long a* Congress permits this institution to keep and issue these, it gives it the power of circulating a paper currency, free from the restriction* and safeguards which the State that chartered it meant to impose; it enables it to control the* efforts of other banks for the resumption ofspe cie payments; and leaves the citizen who takes or circulates these notes without any speedy protection and redress. But again: This voluntary trustee of the National Bank received its new charter from the State of Pennsylvania, on the expressed condition that it should issue no bank note of a less denomination than ten dollars. It is presumed to be part of the policy of that wiso