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•• Many oi lUe political evils, under which every Country in the world labours, *re not owing to any waul of lov« for our Country, but to aa ignorance ot iU real constitution and intertill*.-PHIKSTEY,
NEW SERIES Vol. IX. AUGUSTA, TUESDAY MORNING, MAY 15, 1833, No. 95.
U. fcialea ftav\\c \Aerpuri, J
{Concluded from our last.) j
To an inquiry whether there wore any (
other instances of notes being discounted
for ihe 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,
eases.
On the 3d of April the committee, by re
solution, called for the following statements j
to assist them in the elucidation of certain
tacts which had appeared in other docu
ments, viy,
Ist. A tubular statement showing the
aggregate amount of notes dicoumed and
s’ i l l due the bank, drawn and endorsed by
non residents of Philadelphia; which wil*!|
be found marked A.
21. The aggregate amount of good notes
offered for discount, and rejected by the
board ; drawn and endorsed by residents
ot Philadelphia, on Ihe following days res
pectively:9 hos August ;i6 h Dec. 1831;
£ January; 10 h February; 2d and 14 h
id March. 1832; 24 li September, and 15 h 1
Octobo r , 1830. I tie statement, marked B. *
will show toe am unt of notes discounted;
but he officers of .hr bank state their in-j
ability to disc iminate between those that 1
are good or otherwise. i!
Sd. The aggregate amount of notes dis
counted on personal security, and made'
payable more than six months after date,!'
which appear to be only four in number, be
sides the case ot J. VV. Webb and M. M, !
Noan. j 1
4th. The aggregate of notes now due the
bai k, dis counted for a firm or the partners 1
of a fiim, without the name of some person
not belonging to the firm, as drawer or en
dorser, distinguishing in each of the above
statements the amount loaned to members
ot Congress, editors of newspapers, or per-'
sons bo ding offices under the G -neral Gov
ernment. To his last resolution were add
ed the following amendments, viz; “ Ist.
A s aterc- at of the loans made by the bank
sod its branches, to members of Congress,
editors < r newspapers, and officers of the
General Government, and the terms of such ■
loans ” 1 2d. And the names and amounts '
ot payments to members of Congress in an
ticipation <>f heir pay as members before the
passage of f e gei eral appropriation bill.”
*‘3•» And he -•mount of money due the
United Stales, and on deposit in the bank,
after deduc i;-g therefrom 'he sum thus 1
advanced to those to whom the U, States
are ind bted ” “And lastly, a statement
h detail of the amounts paid to those who '
are oow, or have been rn tnbers of Congress (
or fficers of Government, since 1816, for;
services rendered to the bank, stating the'
nature of sh« service. For the information '
sought by these inquiries, see papers mark
ed C. Besides <hefio, there were furnished
the sta entente <’f loans made to five editors
or publishers of newspapers, by which it will
appear, 'hat the accmnini dations to those*'
five editors w -re upwards of 110,000 dollars
previous to the institution ol this inquiry. ];
The various reports which have, for a
lung period past, chaigt-d the Rank with too '
fiequen' tnteicoursc with brokers, and also ! (
of undue favoii i-urt to certain individuals,I 1
as we l as the large transactions which ex
hibited hemselves upon many documents
called for by the committee, induced them
to * xamme par’iculai y the accounts of the
Anns of winch Mr. Thomas Biddle was and
is the chief partner with the Bank, as a
bi ker,
F tur subjects of investigation presented,
themselves in relation to their transactions;
with he Bunk. j
Ist. The allowing and paying interest to
them on deposites.
2d. Rela es tocerlin loansupon thepledge
of stock, and the discounting of notes made
to r. Biddle, by the President or others,,
without the knowledge of the Board, and
on part of them the pledge of stoi k without
interest. The committee weultl refer tor
the particulars of these two charges to ihe
papers marked No. 13.
Ihe third subject is the amount of dis j
counts made T. Biddle, and the rate of)
interest. Ihe document marked No.lll4 1
will show the amount on the 15th of each'
m »nth, from the 15th day of September,
1830, tit the 15th of February, 1832. By
this it appears that, on the 15ih of October,
1830, he was discounter upwards of 1,120,
000 dollars, and has at no time since been
than 400,000 dollars. The committee!
doub -he policy of such large accommoda
tions to individuals or firms, at any time, as
it deprives the Back of the power of fulfill-'
jtig one of the great objects of its institution,!
which is to facilitate trade by loans in time
of pressure; and it may be proper to add that
these large loans, at a low rate of interest,
in times when money is plenty, are usually
followed by overtrading, which produces
pecuniary embarrassment and general dis
tress.
By a statement entitled “Remittances to
Europe,” marked No. 16, it appears that
the following purchase* l of foreign bills were
made of Thomas Biddle & Co. drawn by
them, viz;
1831.
October 14, I bill 60 days sight, amt at a
premium of 10$ per cents. £32,399 68
October 14, 3 bills at 75 to 90
and 105 days, and at a pre
mium of 10J per cent. 115.411 11
October 22, 13 bills at 40 to
125 days, and at a premium
of 11 per cent. 592.000 00
December 10, 9 bills at 40 to
110 days, and at a premium
of 10 per cent. 50C.550 00
1832.
February 14, 14 bills at 40 to
105 days, and at a premium
of lOi cents. 400,000 GO
February 14, 3 bills at 50 to
70 days, and at a premium
of 11 percent. 148 000,00
1 794 060 79
By the foregoing statement, it appears!
ithat the Batik purchased, between the 24 h
of October, 1831, and the 14lh February,
1832, of T. Biddle and Co. foreign bills to
the imount of 1,794, 050 79.
V'i h regaid to these large loans, the
icommittee refer to the statement marked.
No. 19 by which it appears that, on the 9 h
of April, 1832, the total amount of discounts
on billsand notes at the Bank in Philadel
phia, was 7,939 679 dollars 52 cents. Os
that aunt more than two thirds were loaned
to ninety-nins persons, to wit : 5.434 111
dollars. Mors than 3,000 000 dollars were
in 'he hands of twenty-seven individuals;
& nearly one seventeenth part in the hands
.off one person. The commifee have already
expressed their conviction, that these large
accommodations to a few individuals are in
jurious to trade generally, and they wil
add, that (hey ought always to be made by
either the Board of directors, or the com
mittee empowered by them for that purpose.
For an explanation of this subject, see papers
numbeted 13 and 18.
Properly connected with this subject is
the accommodation extended by the Bank to
individuals on (he pledge of stock. In all
the monthly statements of the condition of
the Bank, prior to the Ist of March last,
there was no column shewing these loans)
In that mon'h, for the first time, so far as
the Committee can discover, a new column
is ezhibhed " loans on other stocks and
which appeared, at that time, to have been
transferred from the fine called “ bills dis
counted on personal security. This change
was made in consequence, of a call for stock
loans, by the House of Representatives. A
s’a ement of the same was called for, mark
ed No. 2.0, which exhibits a list of stacks
pledged consisting of Theatre shares, Mu
suem stock, Arcade stock, Railroad and
Canal storks, Coal Company slock, real es
tate in Louisiana, &c. amounting to the
sum of *1,713,297 34.
The various transactions in specie, by the
Bank, has been a subject of special notice
by the Committee, and various statements
called for, show the magnitude of them.
i The first statement, tnatked No. 21
shows the amount of specie exported by!
the Bank of the United States, during the)
year 1831:
To London in Mex
ican coin $255,000 00
To Paris in Mexican
coin, 620,000
To Paris gold 247,000
j do. in mixed bul
lion, - . 180,000
! —— 1,047,000 00
| $1,302,000 oo:
2d. The amount of specie exported since!
1819. will be found in the statement mark i
ed N<>. 22.
To England, - . 2,598,357 00
To Trance, - - 2,237,398 50
$4,855,755 50
Os this amount, there was in gold, 2,387 927 50
Tn bullion, .... 596,717 00
jin silver, .... 1,871,111 00
’! $4,855,755 50
I 3d. The amount purchased unco 182.4,
(.marked No. 23, shows :
of silver 005,850 00
gold coin, .... , 17,596 00
gold bullion, . . . 438,000 00
$1,061,446 00
4'h. Ihe amount of Specie sold since
jISI7, marked No, 24, shows it t<> he
■L ..... $5,184,910 29
Os which there was
'i American gold, 84,734 44
British, French and
.! Spanish, 48,291 35
! Silver, 5,051,884 50
I : $5,184,910 29
, sth. ihe amount of specie drawn from
j each of the Southern and Western offices,
B «'«ce 1820. to the Bank of the U. States
, and New-York, marked No. 25, shows the
total amount to be
0 , ~ $22,523,387 94
NOf which 20,925,990 07 has been
' drawn to those places since the
p[ first of January 1823. 20,925,990 07
6th. The amount of specie, (in the same i
statement.) sent to the Southern ami Wcs-1
tern branches, since 1319, is
1896,47* 00
Tha premium received on the Spe
cie sold is 97,140 56
The premium paid on the spec)*
purchased, it 13.171 85
.... ~ 77,968 71
v\ hat profit* were made oa the specie
exported, the Committee did not call for du
cumen's to enable them to ascertain ; it
must, however, from the great quantity sent
away, have been considerate.
The Committee called for a statement of
alt the specie imported by the Bank from
abroad since 1819 jbut as none was return
ed, they presume none was imported.
What proportion of the gold exported
was American coin the Committee have not
before them the means to determine ; it was
expected to have been given in the state
ments ; but in looking into them the gold
[exported is without a designatory name ;
jit is believed, however, the amount is con-j
siderable.
In examining (his subject minutely, the
committee find that large amounts of the 1
specie have been drawn from the office a
New Orleans. Os this there can be no
complaint; i: is the principal debt for re
'turns ot goods shipped to Mexico, which
are almost exclusively paid for in specie, and
if cannot be expected that it will remain!
■here. But the committee suggest, wheth
er the withdrawal of tire specie Irom most
of the other ports of the country, and sub
stituling paper in its stead, might not be
highly injurious to those suctions of cuun
tiy subject to its operation.
The subject ol the Bank’s furnishing bills
of exchange for the trade of India, China,
and South America, has been brought tothe !
attention of the committee by document 1
marked N<n 26; and having been so strong
ly desciibcd as affix ding great advantages
to the country, in the triennial report of Sep
( tember l -st, as “economising” the specie of
the country, the committee l ave felt it a du
(y to examine and present the subject to the
consideration of Congress and die commer
cial community, believing, as they do, that
there is something delusive in the operation.!
The result of their examination has led them
to the conviction that this new method ol
dealing in bills of exchange does not “econo-;
inise” the specie of die coun ry a s all. I is
a universal law of drawing, that funds must
.either go b f*»re or tuilow mter the draft to
[honor it at maturity; and whether it g'-eg
idirectly or circuitously, the fund .lodis
|rharge i‘, must, sooner or ia er, arrive at die
place of payment. These bills atelobe
paid in England; ba 'hey go-round the Cape
of Good Hope before th y reach their place
of destination. I nstead, therefore, of send -
ing the specie dir.-ctly to Aodia and China,
as formerly, who d 'es not perceive that it
must now be sent to England, die country
upon which thes ■ bills are drawn, there to
meet them upon died arrival at the place
where they are to be p«id f The Bank con
sequently becomes die shipper of the specie,
to pay its hills, in place of the merchant to
purchase his merchandise in the E st Indies,
jit is simply and purely nothing but a change:
lof the destination of the specie, with only!
;'he advantage of its going to Lomdon.
1 he mode in which these bills are drawn
i and disposed of to the purchasers, having
twelve mouths to run, as will be seen by a
copy ol the obligation taken by the flank
marked No. 27, the committee consider ol
doubtful utility to the country. The legiti
mate object of batiks (he committee believe
to be, granting facilities, not loaning capital.
'The supplying of bills appears even much
jmore objectionable than loaning capital, for
it encourages an operation which commences
andends without the employment of any*
| capital whatever, and is sirnilui in their char-!
acter to respondentia secuni ». The buyer 1
,is enabled, within the term of credit, to:
. make the voy ge, dispose of his goods, and
i obtain from the proceeds the funds to Kite’
l his obligati n, and the Bar k to transmit the!
' same to the place upon which their bills are*
j diawn, (width are at six months sight,)long!
[before they become due it would seem to
produce a greater export of specie evei tual-'
, ly, than would otherwise take p ace if the;
j operations were commenced with specie, and
i not with hills purchased in the manner de-|
- scribed; for the rneichant, relying upon his
' immediate resources, would not engage to 1
; such an extent in the business, and would
. 'combine in the operation much of the pro
duce of the cuun ry; whereas, relying upon;
jan extensive ciedii, he h fcards every thing
jon the success of the enterprise. It is a
■ species ot speculation in trade leading to
great risks, and certainly terminating in
3 over-trading—he evils of which the couu
-1 .try is now sorely experiencing. By loans of!
' a similar characer, by insurance companies
* providing funds for ir ders to China. Gov
' eminent has sustained more loss than in any
‘other branches of trade.
£
[ The increase of tha number of branches
established since 1823, cannot be passed!
f over ia silence by the committee, and de- 1
serves, as a source of extended influence of
the Bank, the most serious consideration.
| In some few instances, where new branch
es have been established, peihaps they may
[have been called for Ly the community, and
[may have been useful to them and profitable
to the Hank; but, in most of the cases, the
committee doubt whether they were called
for from public utility, and their establish
ment will, in the end, not only prove profit
able to the Bank, but very injurious to the
communities among which they are located.
Mr. Cheves, in a letter of the 27th ol May,
1819, to Mr. Crawford, then Secretary of
the Treasury, says—" lam perfectly satis
fied that, with the present organization of
dm Biok, it can never be managed well.
fFe have too many branches, and the direc
* tors are frequently governed by individual
and local interests and feelings. For a time
1 we must bear with the branches, but 1 hope
' they will be reduced.”
I Again, in the same letter, he observes :
i|“ The real and original evil under which'
i* he country is suff ring, is oveibanking.
jTbis leads to excess in trading, manulacfur-|
‘ ing. building, and speculating; and the his
: lory of the ill-judged enter pi ises which have
been undertaken in these several concerns,
1 would give a full history of all the distress-,
es of this country, excepting a little agt i-l
cultural distress growing out of the inordi-,
mate expectations which the others excit-l
led.” These opinions fully accord with the
views of the committee, and they consider
them as peculiarly applicable to the present;
time, as exhibiting similar causes now ope- (
; rating with more extended force, from
which similar effects must follow, augment
ed in proportion to the increase ol blanches.
' The stockholder, at the triennial meet
ing on (he Ist October, 1822, recommend
ed a withdrawal of some of the branches
1 .then existing, in these words: " In taking
into view the business of the Bank, as
* connected with its different offices, the com
'Jmittee think it right to recommend to the
‘ continued attention of the President and
[Directors the necessity of withdrawing those
; branches which are f und to be unprofitable,
and transfer ing their funds to other offices
■ which shall serin to require additional capi
tal.” Since this period two have been dis
continued, and nine others have been es
tablished, as per triennial report of 1831.
These opinions of Mr. Cheves, in which the
1 committee have concurred, were approved
,hy the stockholders, c,3 will appear by the
' following extract hone this same report in
1822. They say. “ They take great plea
sure in unanirn usiy declaring that the cir
cumstances of the Bank fully realise their
anticipations, as expressed at their last
‘meeting, in regard to the President, (Mr.
Cheves,) who, by his talents, disiuleresied
ness, and assidui y, has placed its affdrs in
an attitude so safe and prosperous as that
'he burthen of duty devolving upon his
successor will be comparatively light,”
The committe cannot but think that, had
the succeeding direction of the bank been
guided more by the opinions and wishes
of Ihe stockholders, as then expressed, and
'gone on gradually growing wi ll the giowth,
and increasing with the natural wants of
jthe country, great sull'crings to the com
munity would have been avoided.
In the year 1819, great abuses existed ini
the branches, of which Mr. Cheves speaks
wi'hout reserve, in his last report to the)
stockholders, as well as his correspondence
with Mr. Crawford, ami upon casting the,
eye over the monthly statements, it is re
mark hie to observe what losses have taken
place at the branches compared with the
mother bank. For instance ; on the Ist of
January lust, the loss of the mother bank,
on a capital of sixteen millions and a half
was, in round numbers, 328,000 dollars ;
. h it of the Baltimore bunch was 1662,000
dollars, 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
jdollars, on a capital of 500,000 dollars, los
jing nearly one half of us capital, and so 1
;wiih all the rest of the branches, their loss-j
! jes are out of all proportion to (heir capital,
; and ten times greater than the mother bank,
[according to the amount ol their respective
capitals. These losses, however, were prin
cipally incurred prior to 1819. Thepioper
inlerence to be drawn from these fact is,
[that the worst of management has existed
1 in the branches,
'l The “ Contingent Fund” lias claimed
the attention of the committee. The ob
ject for which it was originally created,
i and the oiiginal amount piovided, together
1 with the additional appropriations which
‘have been made to it, and the manner in
1 which the same have been applied at differ*!
1 enl periods, will be explained in the follow
ing documents.
The report of the Board of Directors,
1 in July, 1821, published in the Gazettes at
that time, marked No. 23; the report of.
':the stockholders at the triennial meeting ini,
October, 1822: the report ol the Dividend
‘.Committee, on the lOth January, 1323,,
Ijinarked No. 29; a statement of the parti- !
■ culars of the debts " cons',dersd lout,’?
marked No. 30 ; a statement of the sns
pended debt and real estate, with the pro
bable lose (hereon, marked No 3| -%, e
statement headed " Contingent Fund ”
marked No. 32 ; the sates of the forfti ed
bank stock, marked No. 33; and the divi
dend reports for July, 1829, January and
July. 1830, January and July, 1831, mark
ed No. 34. To these the committee n fer
for (he particulars of he subject* to which
they relate, in connexion with the ** Con
tingent /V end
The c inmittee lee I it their duty now to
give (heir view* no to the causes of the pre
jsent distrea- in the trading community, and
■ which they (ear may greatly increase. U
, is an acknowledged principle that like can
■l*6*.fn all rases, produce like effect; and
fas in 1819 contraction followed the exp.n
. sion of 1817 and 1818, so by the same rule
; must contraction follow the immense ex
pansion of 1830 and 183 J, and liktfeffVcts
-and consequences succeed. To illustrate
i more cleaily the position, and bring it home
,!to the mind of every one, the following ta
. ble of the state of the bank during some of
the months of 1818 and ’l9. 1831 and ’32,
. are here exhibited, embracing items from
j w, 'ich direct calls upon the vaults proceed,
and the in mediate means which remain to
meet them, viz ; The first are the deposites,
circulation, and debts abroad, not on per
manent loan, Ihe second, the specie, lund
,ed debt, and notes of other bank,. the a
mount of each will be found under their
proper heads at the various periods men
..turned.
,
[ i i ;
iFundeddebt. Specie, Notesofoth’r issues. . Circulation. Deposites. sueinsarope
banks. J
September 9,430,926 60 ; 2,780,726 15 2,838 632 19 19.622,881 59 a214,885 10 12.484,420 16 1,908,706 57
October, (7,425,549 12 2,818.208 96 2,541 072 90.19.854,881 39. 3,713,551 0b 12,986,543 83 173.072 80
November, 7,393,049 12; 2,176,928 92 1,974.037 OT 9.968,934 15 8.348,421 82l 8 682 734 85 ! 596,432 99
December, 7,395.049 12! 2.389,626 28 2,039,001 58 19,989,618 07; 7,286,069 49- 9,134,033 14! 499,517 04
1819. ' | ! |
January, 7.391,823 64,' 2,665.696 52 1.8 77.909 13 13,719,828 49 6,563,750 19 ! 5,792,871 40 ! 2,049,212 72
February, j 7,391,523 64 2,184.088 57 1,999.537 84 ’3,719,828 49 6,441.407 17 6.374 907 53 1 665,083 69
Mi-rch, 7,322,823 64 2,053,622 90 2,048,108 08 13,719,828 49* 5 994,301 1~ 6,5°.l 929 4911,130,941 13
April, 7.160,210 71, 2,104,739 53 1,749,951 40 15.867,828 49 6.829.690 21 6 147,610 691 876,648 00
May, 7,159 485 36 2 283,882 49 1,830,514 55 14,068,138 49 5,610.C24 91 5,658 935 72 445,320 00
June, 7,139,485 36 2,510.371 27 1,415.530 35 14,084,138 49 5,083 613 40) 5,424,707 87 356,007 31
1831. I |
September 1, .3,497,631 06 11,545,116 51 2,080,442 33 35,811,623 96 22,399,447 52 15,884.938 43 168,372 72
1832. I
January 1, 2,200 00 7,038,823 13 2,171 676 31140,621,211 18 24,630,747 60117 997 889 57 1 447.748 68
April 1, j Nuue. 6,790,753 63 2,836,900 40.42,118,452 13 23,717,441 1017,056,386 69j 1,876,802 39
j The preceding table shows that at Do pe
r;od in 181), when the Bank wag very near
suspending payment, was it less able to ex
tend relief to a suffering community as at
the present moment. In April of hat
year, the month in which ils d ftiruttie*
were the greatest, its means of specie, no'ea
of other banks, and funded debt, (which
could have been turned into specie or note*
of other banks,) amounted to upwards often
millions of dollars > an«i the whole demands,,
which could come against it in the same
month, of circulation, dep< sites, and debt*
own g abroad, amounted only to about four
teen millions. But (he committee feel
bound, in candor, to state, that this wng af
ter a number of mon'hs ol constate con
traction, not only by the Bank of the Unit
ed States, but also by most of the other
banking institutions ol the country, wnere r
general exhaustion had been produced. It
was on the sth April, 1819, that Mr Crew
‘ord, then Secretary of the Treasury, wii 1 *
to Mr. Cheves thus : “ fr ia even doubt
ful whether it is practicable, with all the.
exertions which it is in your power to make,
to continue specie payments through the
year.” Under the same date, he says ;
My impression is (hat the safely of the
Hank can oe only effected by withdrawing
neaily the whole of its paper in circulation,
it the Bank doe* this, all other solvent
hanks will be compelled to do the same
When this is effected, gold ai d f iUer will
tie introduced into the country, and make r
(Substantial part of the circulation, and en
(able (he banking institutions gradually (<j
Resume their accustomed operations. Whilal
jthie is effecting, the community,in all its
lations, will be greatly distressed. {
sidering the extent of the suffer'.rp, a jr
greatly to be desired that some c od ma
result from it ”