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FEBRUARY, 1819.

Bank of the United States.

H. OF R.

the common law to be in force in the United acts of its predecessors. That this Congress, States? They are certainly not recognised by that this House, would always be actuated by the Constitution of the United States. The prin- the strictest regard to propriely-to the immutaciples of that law, he said, were not suited to ble principles of justice- was fair, was proper lo such a Government as ours. They were gener, presume. But that it ought never to be restrained ally of a character strictly municipal; they bad from repealing any of its own acts, or those of never been adopted by legislative edaction; they its predecessors, when the welfare and happiness had never been adopted by the only branch of of the people required such repeal; or from disthe Government capable of giving law to the solving any corporation, or supposed corporation, people of this country, as a nation-the Congress which claimed to exist by some law of the Uni. of the United States. We therefore, said Mr. J., ted States, when that very law bad been grossly bave neither the common law nor the civil law, and palpably violated. He considered the right by which to test this charter.

clear and indisputable. Is it expedient, under But, sir, said Mr. J., we have the charter be existing circumstances, to exercise this right? fore us. Let us apply the fundamental rules of He considered the policy equally clear and indisthe charter, under the guidance of reason and putable. He understood the bunk was now able common sense, to the conduct of this corpora to pay all its debts, and to meet all its engagetion. Those rules wbicb, at its creation, were ments. The claims of innocent stockholders can imposed on it, to govern and direct ils course, now be secured; they can now be protected from without a due observance and obedience to which injury, if the corporation be immediately disrules it must cease to exist. This charter has solved. Permit it to go on, judging from iis past been violated; and the question now occurs, has conduct, no man can tell what will be the result. Congress the power, the moral power, to repeal If, in the three first years of its existence, it be the charter, or must the question be submitted 10 convicted of such misuse and abuse of its pow. the judiciary? Is the provision in the act of in- ers; if, during that period, the whole tenor of its corporation which provides the remedy by scire conduct be marked with acts of the most glaring facias for breaches of the charter obligatory on impropriety; and if it be permitted to escape the Congress of the United States? Cannoi the with impunity, who can estimate the copsepower which created this corporation dissolve it? quences ? Will it not hereafter put the power of Can the faith of this nation be pledged by an act this House at defiance? What reliance could be which is contrary to the Constitution of the placed on the directors of the Government ? copatry? Can this corporation surrender its From the report of the committee of investigacharter ? To whom would the surrender be lion, it would be found that they, or a portion of made? Would it be to a member of the judi- them, had been guilty of as many violations of ciary, or to a court, in session? If so, to which their duty as the private directors, and characmeinber, or to which of the Federal courts? Or terized by the same culpable regard for their indiwould the surrender be made to the Congress of vidual interests, at the expense of the institution, the Voited States ? He humbly conceived that and of the small and innocent stockholders. A the corporation had the right to surrender its due regard for the interests of the small and incharter; that the surrender, if made, must be to nocent stockholders would induce him to give the power by which it was created. He pre his vote for the repeal of the charter. Let the sumed that it would be conceded to him, ihat corporation continue, and the interests of this the individual members composing the corpora. class will still be sacrificed to the interests and tion had the power and the right to dissolve it. views of the large and influential stockholders. Put the case, ibat they failed or refused 10 elect He would, then, secure the innocent by dissolr. directors, by what process could they be coerced ing the charler; and they would, moreover, Mr.J. or compelled to perform this duty ? 'Some mem-contended, have another security; for he held it a ber had suggested ibat a mandamus might be clear principle, that the president and directors awarded. What, resort to a mandamus against were responsible, in their private fortunes, for all an individual ? Who would sue out the process ? their iniquitous and fraudulent acts, to those who Such a process was sometimes resorted to by a bad sustained injury; that the injured party had superior court to compel an inferior court to dis- a clear remedy. These directors had undertaken charge its duty. Bui it was the first time that to negotiate for specie in Europe. The neceshe bad heard of sueing out a mandamus against sily to resort to this mode of procuring the spe. an individual. If the members of this corporacie part of the capital, was the result of mismantion neglected or refused to appoint directors, it agement of abuse of their powers—of a violawould, as a necessary consequence, be dissolved. tion of their charter-of an inordinate thirst for Mr. J. asked if this institution-if its members wealth-of an ill-judged desire to put their mahad power over its duration and legal existence chine into motion. By evadivg the payment oa which Congress had pot? Had they created a the part of the favored stockholders of the secpower greater than the creator ? Had not the ond specie instalment, this negotiation was ren. power which spoke this charter into existence dered necessary. How was this business conalso the power io destroy it? Mr. J. denied ibat ducted ? Oo principles of equity and justice ? a precedent Legislature could, by any act, biod No, sir. An agent was sent to Europe to purits successors; contended ibat it was at all'times chase specie; the contract was negotiated, and competent for a legislative body to repeal the the specie delivered in this country, at an expense

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H. Op R.

Bank of the United States.

FEBRUARY, 1819.

to the bank of $525,297 38; an expense which there appeared to be an effort to attribute motives resulted from mismanagement, and a fraudulent much less noble, honorable, and disinterested. and culpable system of favoritism, extended to He could not but believe that those who sought the large stockholders. Mr. J. said, as the large with so much solicitude to establish impure mostockholders received indulgences and benefits, tives, were beguiled and led astray, by glancing which made the expenditure of this sum neces- at the mirror which reflected the motives of their sary, it ought to have fallen exclusively on them, own bosoms. and not equally on the innocent stockholders, Mr. J. said, he disliked to speak of himself: he and the Government, which appears to have would, however, to avoid the imputation of any been the fact. And this act rendered necessary interested or undue influence, take this occasion by a total disregard of the fundamental articles to remark, that he had, on all occasions, voted of the charter, and for the purposes of individual against the incorporation of banks; that he voted speculation, was one for which the directors against the charier of the Farmers' Bank of Vir: claimed credit from the nation. Those bumane gioia-lhe extension of the charter of the Old gentlemen, said Mr. J., who have such claims on Bank of Virginia ; that he was not a stockholder, our justice; those ariful gentlemen who can nor ever had been a stockholder, in any; that he divide thirty shares so ingeniously as to enable had never applied for, nor received, any species them to give almost as many thousand votes; of accommodation from any bank whatever. who can now weep for the widow and the or During the late war, ai a period when the phan, who will be ruined by the dissolution of Treasury was empty; when the energy of the ihis charter; who had hearis as hard as stone nation appeared to be paralyzed; when ruin when in pursuit of their favorite object, their seemed to stare us in the face, we were told, he idol, and their god-money; who, to obtain that said, that we must have a National Bank; that desired and loved object, wealth, and its concom, without it the war could not be prosecuted-the itants, power and influence, would have feasted soldiers could not be fed, or clothed, or paid, to on the blood, and battened on the bones of those fight the battles of the country. Great efforts for whom they now affect so much sympathy were made; a bank charter was successfully carand sorrow; those disiaterested, compassionate, ried through both Houses of Congress, and prehighminded, bonorable gentlemen, who could sented to the President of the United States, for soften their president by a douceur of $15,000; his signature. Surrounded, as he was, by all the those gentlemen, who, we are told, have strong gloomy circumstances of the day, Mr. Madison claims on the forbearance of this House. Mr. 3. returned the charter, on the express ground that regretted that this picture, this horrid picture, it did not provide sufficiently for the interest of would be seen not only in this country, but would the Government. The Constitutional difficulties necessarily be presented, in all its deformity, to were removed from his mind; the subject had the gaze of the world. It would attract the eyes been adjudicated, and put to rest. What was the of all nations to the United States. That coun- consequence? Some Republican gentlemen, Mr. try which heretofore had claimed, and received, J. said, now within the sound of his voice, must so much credit for the purity of its character; recollect the course pursued. A meeting was had that country which we have been told is still so by the Republican members of Congress, in order prosperous and so happy, in the forty-third year to agree upon principles, to determine upon a charof its age, to have produced a monster of fraud ter which would be acceptable to the then Presi. and corruption without parallel. Even Eng- dent of the United States. Before this comproland, bad as he believed her, could not furnish an mise of opinion could take place; before a new and institution more distinguished for adroitness in unexceptionable charter could be manufactured, swindling and fraud than this corporation. Sir, the messenger of peace came, with healing in his all Europe will point the steady finger of scorn wings. Nothing more was done at that session at this grand shaving shop:

of Congress, on the subject. The nation's joy Mr. J. called the attention of the Committee was testified, at the seat of Government, by illuto the struggle which was made to recharter the minations and bonfires. The solemo farce perold Bank of the United States, and the argu- formed, of illuminating the monuments of our ments which were used on that occasion. He disgrace, the evidences of the vandalism and baradverted to the feelings which were imparted 10 barism of our enemy. Every window in the the General Assembly of Virginia, when a letter city was gaily illuminated, and the ruin and des. was received from Mr. Giles, a Senator from olation of the Capitol and other public buildings that State, on the subject of his instructions to and edifices rendered more strikingly conspicuvote against the renewal of the charter of the ous by this extravagant evidence of joy at the bank. Mr. J. said he opposed the reading of that return of a peace which the prowess of the naletter; but curiosity prevailed-it was read. It Lion had achieved. seemed to him, Mr. J. said, that all acts were re- But, Mr. Madison's objections produced at the ferred to the standard of motive. All actions ap- succeeding Congress another experiment, which peared to be traced to some motive of interest or proved more fortunate, not for the nation, but design. Jøstead of looking to the one single and for the interests of speculators. The charter to grand motive which ought to be presumed to ani- the existing bank was obtained. Nothing, Mr. mate all in this House, the ardent and pure de- J. said, did he more sincerely regret than that sire to promote the public interest and happiness, Mr. Madison should have put his signature 10

FEBRUARY, 1819.

Bank of the United States.

H. OF R.

such an act. That honest, that respectable, en-charter a National Bank. But, he demanded of lightened, and patriotic stalesman, who had so those who held the affirmative proposition to eslong and so faithfully served his country, had, tablish, by clear and indisputable reasoning, that in this single instance, cast a shade on the hith- the bank had been constitutionally establishederto bright and unclouded orbit, in which he had or, that the faith of the Government could be moved. Mr. J. said, it was extremely painful to pledged by an act not sanctioned by the Conbim to refer to any act of that distinguished stitution. The act of incorporation, he said, statesman, who had retired to private life, in any was a dead letter; it was worse-it was an act other terms than those of respect and approbation. of usurpation. It was idle to talk of the faith Nor would he on this occasion have done so, of the Government being pledged to sustain it. except from a sense of duty; and with a view tó How, then, Mr. J. asked, did the question prethe history of the banks of the United States, sent itself? The Supreme Court, as he had bewhich he felt himself bound to give.

fore remarked, had declared the common law When the question first arose in this country, not to be the law of the United States; and, continued Mr. J., as to the powers of Congress consequently, in making the inquiry, whether to incorporate a National Bank, the wisest men forfeiture had been incurred by this corporation in the nation differed in opinion on the Consti- of its charter, the question could not be tested tutional powers of the Government to create such or settled by the application of the principles of corporation. General Washington himself, as this system of law. According to the settled appeared from the history of that day, labored and well established principles of the common under great difficulty-he called for the opinions law, settled by frequent adjudications, no doubt of his secretaries, and doubted, and doubted, until can exist that the charter of the Bank of the Unithe time had almost elapsed, which would have ted States is forfeited. In support of this docmade the act of incorporation a law, without his trine, he begged leave to refer to the case of the signature. The difficulties and doubts which King against the city of London, and the cases at that time surrounded the mind of the Chief there cited. And, said Mr. J., after the discloMagistrate, produced a most elaborate and able sures which have been made, will the House in vestigation into the Constitutional powers of permit tbis violated act to remain on the Statute Congress to create corporations. We have not Book a disgrace to the nation ? Are we, said only the opinions, but the testimony of two of he, not to support the Constitution; and can the most enlightened men of any age or country, the immaculate and patriotic gamblers in this Mr. Jefferson and Mr. Madison, on the Constitú baok induce us, for a single moment, to prolong tional question, whether Congress has the power an act which violates this instrument? to incorporate a National Bank? Mr. Jefferson's Mr. J. said, if this proposition to repeal the charopinion and testimony will be found in the writ- ter should be negatived, he could not vote for the ten opinion given by bim to General Washing- bill reported by the bank committee, as he should, too on the question. In the year 1791, Mr. by so doing, recognise the legal existence of the Madison, in a very eloquent speech delivered in bank. This, according to his most solemn conCongress, stated the following important fact, victions, would amount to a violation of his oath. speaking of the power to incorporate a bank. He trusted there would be neither difficulty nor " This power was proposed to be vested in Con- hesitation in putting down this corporation. He gress, in the original plan reported by the com- hoped in God his country would not present the mittee of the convention, among the enumera- melancholy, the degraded picture, sketched by 'tion of powers which now form the 8th section the masterhand of Byron, when surrounded by of the Ist article, but that, after three days ar- the gloom resulting from a view of the glorious dent debate, on the special subject, in that body, decay and splendid ruins of Rome. 'the power was rejected and stricken out, upon

“ There is the moral of all human tales, the principle that it was a power improper to

'Tis but the same rehearsal of the past ; 'be vested in the General Government. Mr. J.

First freedom, and then glory-when that fails, said, that he was aware that an instrument of

Wealth, vice, corruption-barbarism at last.” writing might convey more or less power than We had enjoyed the blessings of freedom. We was intended by the contractiog parties—that had had a reasonable share of glory. Our arms this result might be produced from the want of had been triumphant on the land and on the sufficient accuracy and precision in the terms ocean. All seemed animated, now, by the desire used.

to accumulate wealth. He hoped the nation Such a charge, he presumed, could scarcely would still pause, and reflect, seriously reflect, exist in reference to the Constitution of the Uni- on the consequences of changing the pursuit of ted States. He denied that by a fair and clear a national character, distinguished by liberality, deduction; that by any rational construction, magpanimity, and honor, for the sordid pursuit this power could be derived from the Constitu- of wealth, ai lhe expense of vice and corruption. tion. It did not belong to any of the enumerated Mr. J: said, he had hoped much from the fair despowers. Nor was it fairly referable to any of tinies of this nation, but those would be marred ihe implied or resulting powers of the Govern- and destroyed, if a miserable corporation could ment. He did not mean to enter on the discuss hold the Government in check, influence its sion of the Constitutional powers of the Congress operations, plunge it into corruption, or cover it of the Voited States to create corporations, or to with vice and shame whenever it should please.

15th Con. 2d Sess.-40

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H. OF R.

Bank of the United States.

FEBRUARY, 1819.

Mr. Pindall, of Virginia, took the floor. He fundamentals, it departed from the orbit within was confident, he said, ihat the House, as well as which Congress had confined its operations. himself. was willing to acknowledge its gratitude I will now, (said Mr. P.) pray the House to to the honorable members of the select commit. accompany me, in the review of another part of tee, who, by a laborious and deep investigation of the report, where will be found a feature, which the affairs of the National Bank, had been en-cannot fail to excite in the House a degree of reabled to present to our view an elaborate state- gret and disappointment. The report manifests ment of facts, not less interesting to the nation chat the honorable committee have deemed them. than important with regard to their consequences. selves clothed with authority to pass an unqualiBut, whilst he remained sensible of the exalted fied censure upon the conduct of the State banks. merit of the committee, he would claim the priv- Gentlemen are now invited to show the power ilege of judging for himself, by deducing his own of the committee to investigate the concerns or conclusions from the facts contained in the re- proceedings of State banks, with which it would port, and, in so doing, he would frankly acknowl- seem the violation or non-violation of the charter edge that the report sought to ioculcate a prin- of the United States Bank had do connexion. ciple to which he was unable to subscribe. The With the most profound respect for the motives committee had asserted, that there might be many and talents of the committee, I must assume the violations of the bank charter, which should not liberty of declaring that I consider this public be considered as producing a forfeiture. Against and official condemnation of ihe respectable banks, the assumption of such principle, Mr. P. would which pervade the respective States, as ill-timed take leave to enter his decided protest. The Le- and unjust-as produced by the statements, and gislature had enacted certain fundamental rules, probably partial complaints of their formidable to which this bank corporation was bound to coo- rival, who was fully heard by the committee, form, and, by infracting those fundamental can- whilst the many respectable State institutions ons, the corporation violated its charter, and there- bave incurred a heavy and cruel censure, without by incurred a forfeiture of that charter. He was being summoned, or having any opportunity, to not prepared to say, tbat this House would always be beard in their defence. This subject, however, feel itself disposed to enforce a forfeiture for every has been presented to us by the report

, and must, violation of the charter, as a departure from the therefore, demand the attention which seems due terms of the law might possibly be imagioed, un- co its importance. I am sensible ibat the House der circumstances which would induce the Legis- would not, at this late day, relish a discussion of lature to commiserate the institution, or excuse the remote and complicated causes which led the error, but he would contend, that every pal- the way to a suspension of specie payments by pable violation of the fundamental principles of the State banks, during the late war; topics that ihe institution would subject it to the discretion have given birth to arguments, or rather disputes, and mercy of the National Legislature (the author by which public patience has been long since exof its existence) which would decide on the jus- hausted. Yet, there were some circumstances tice and policy of enforcing the forfeiture, or ex- condected with the suspension of bank payments, cusing this offence. The select committee had with regard to which ibere could exist no differsupposed that some violations of the charter would ence of opioion. It is deemed proper to remind induce its forfeiture, whilst other violations would the House of these circumstances, the uncertainty not produce that effect, and, among the former, of which will beguile us into no disputation, al. the committee had classed those violations which though their remembrance may enable us to acdefeated the very objects of the institution, as ex count, in some measure, for our present embarpressed in the charter itself. But, it was evident, rassment. It is certain, ihat, previous to the close ihis sort of indefinite classification could afford of the late war, the disorder of the currency disno aid to our investigation. There was no pre-tressed the community, and imposed an evil not amble to the act of incorporation expressive of only on every quarter of the country, but afiicted the objecis of the institution. One gentleman almost every operation of trade. It is equally would see, in one given violation of charter, a certain that the superabundant issue of bills by prostration of the objects of the institution, whilst the moneyed corporations of the Stales, coeval other gentlemen, attaching less magnitude to the with, and after the suspension of specie payments, same crime, would look in a different avenue to produced the disorder in the state of the curfind what are called the objects of the institution, rency. If it be charged, inat the State banks, in and, in that predicament of vexation and perplex their over issues of paper, were prompted by an ity, it would be seen that neither the Legislature unwarrantable thirst of gain, I would not feel nor the honorable select committee had been kind myself authorized to make a total denial of the enough to furnish a thermometer for the true ad charge, nor find it necessary to contend, that those measurement of the objects of the incorporation. banks were exempt from ihe prevalent appetite In relation, bowever, io one circumstance, there which has since so remarkably characterized the could arise no difficulty of opinion. Oerlain Bank of the United States, and which seems principles were prescribed for the control and more or less to guide the deliberations of all corgovernment of the corporation, which had been porations of trade. In truth, it may be affirmed digpified by the Legislature as fundamental rules that the spirit which iostigated or enticed the and articles, and it would be equally inanifest that, commercial classes of our community to overwhensoever the corporation transcended those trade their means, insinuated itself into the court

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FBBRUARY, 1819.

Bank of the United States.

H. OFR.

a

ing rooms of the banks, and prompted them, also great depreciation of some bank bills, and the into exertions scarcely compatible with the maxims considerable depreciation, or par value, of others, of prudence. But, sir, can this House, as a branch mentioned in the report of the select committee of the national Government, criticise the trans- ipdicated the decline of credulity with respect to gressions of the banks without a melancholy paog, the paper system, as well as a public relish of disin reflectiog that this Goveroment has also parti- crimination between banks of solid and spurious cipated in those transgressions, or at least pro- capitals. The State Legislatures, also, the authors moted them, by the extraordinary credit which and guardians of the local banks, had entered is solicited and almost demanded, from those upon an exertion of their proper and visitatorial institutions. The eighty millions of dollars, powers over these institutions, and were hastenwhich the Government round itself under the ing the return of specie payments, by compelling necessity of borrowing, from the year 1812 to the banks immediately, or at fixed periods, to re1815, ioclusive, were drawn from these corpo- deem their paper in specie. At this juncture of rations, in bank notes and bank credits. The convalescence of the paper currency, when the Government, engaged in the prosecution of a danger and dread of war was gone, and when just war, found it absolutely necessary to raise, our Government found it unnecessary to imporfor its current service, enormous sums of money, tune the State banks for further loads, the proand, at the same time, saw the utter impossi- jectors of the United States Bank urged the Nabilty of acquiring the fuods, without the aid tional Government to call into existence a mighty of ihe State banks. It, therefore, resorted to corporation, to overawe and correct the local inmeans of templation adapted to conquer the most stitutions, that had dealt themselves almost out stubborn prudence on the part of the banks. Not of breath' in supporting the Government in times only ordinary interest and premiums of bargain of peril and adversity. It was in April, 1816, were offered, but acts were passed authorizing when these local banks were contemplating, and the disbursement of bounties or bribes to brokers the public anticipating, the restoration of the age aad agents, wbo would, on the part of Govern- of hard money, and only hesitated on the deli* ment, persuade the banks to advance their paper ciency of the quantity of specie in the country, and credit. Even the wholesome restraints in that the General Government determined to cure the charters of the banks of the District of Co- a disordered currency by the establishment of a lumbia, those prudent limitations of their discre- national bank; or, in other words, to create an tion, previously imposed by the National Gov- artificial demand in the market for seven millions ernment itself, (their legitimate guardian,) were of dollars, specie, which, although done with the loosened, and they too were authorized, invited osteosible view of inducing the local banks to reand enticed, to issue paper for Government loans. sume specie payments, would of necessity protract The ardeni solicitude of Government, that the that event, by increasing the danger of opening banks should stretch their credit to its utmost their vaults to the prodigious demand for dollars extension; the appointment of several of those to fill the coffers of the new bank. It is almost un. banks, as the receivers and depositories of the necessary to remark, that the policy thus adopted public revenue; an invitation to nearly all the by the General Goveroment produced an alarm local banks, to open their vaults to receive the which discouraged the payment of specie by the public taxes, and proceeds of the sales of public State banks. Indeed, some of the State Legislands most contiguous to them, (which seemed latures, that had been laudably engaged in ihe to imply a confidence on the part of Government, correction of their own banks, that had shut their indicating its disposition to support these banks ears against all excuses, and marked the time for with its powers and vast resources)—all these the redemption of paper by gold and silver, now considerations, I say, had their due weight in in relaxed their rules of severity, so as to permit fluencing the liberality of the banks, who already their home banks to escape as they could from perceived the promotion of their own interests in the speculators and brokers of the

new project. accepting the contracts for the heavy loans, so

Charity, and every amiable sentiment, predisessential to the operations of the country.

pose us to the impression, that this was only a Our Government, then, as well as the specula- mistaken. policy of the General Government, liog merchant, contributed to produce the evil of whose object might have been to assist the local a disordered and depreciated currency. But, in baoks to resume specie payments, and hence reApril, 1816, when the act to incorporate the Unio form the currency; but the dissimilar or rather ted States Bank, passed, this disease in the na- opposite policy proposed by the Executive Govtional currency had begun to work its own cure; ernment ivhen the great bank was not exempt in proof of which, I must take leave to remind from apprehensions of being placed somewhat in gentlemen of some of the events of that epoch. the condition of the local institutions, removes It will not be forgotten, that, at and previous to the idea of friendship to them. For this

, I refer April, 1816, several of the banks bad ceased to gentlemen to the leiter of the Secretary of the discount for new customers, and could with great Treasury to the United States Bank, of ihe 29th difficulty be prevailed on to renew the outstand- November, 1816, at a time when the institution ing loans then existing, whilst other banks had feared to discount for those who were indebied commenced a gradual curlailment of their loans, to the Treasury for duties, lest it might, in conwith a view to meet the period of a resumption sequence of the scarcity of specie, be placed in of specie payments. The circunstance of the the perilous situation of other banks. The Sec

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