H. OF R. Bank of the United States. FEBRUARY, 1819. Can this position be relied on? What reply shall I make to it? Sir, I present the contract to your view. The stockholder had expressly stipulated to observe its provisions, and a faithful compliance on his part is guarantied by the last clause, which declares, that, unless he fulfils his undertaking, the compact shall be forfeited and null. disappoint the very inducement you held out for the force you please, what will it avail? True, punctuality? The dividends of delinquent stock- other banks may have suffered such violations of holders were declared to be forfeited, and yet this their charters, (I am, however, not cognizant of overweening influence had the effect to do away the fact,) and have been still suffered to exist. this salutary regulation, and to cause the benefits But, is the bare circumstance of their having esof punctuality to be distributed to all alike. Nor caped with impunity, any evidence of the legaldid the evil stop here. This same influence pro-ity of their conduct? Has the question ever duced the resolution of the 25th August, 1817, been presented to a court of justice? In order authorizing the loans on stock at $125 per share, that it should be urged as a justification of this and the stockjobbing which followed. But I go violation, it must be shown to have received a further, and I feel myself authorized to make the legal sanction. You cannot justify illegal acts declaration, that the present situation of this by illegal acts, or the violation of a contract by country-the distress in the mercantile world- the violation of a previous contract. But the the bankruptcies in your cities-are in a great charter was not sufficiently guarded. measure ascribable to this very violation. What has produced the great drain of specie from the North? I will not repeat the reasoning contained in the reports; I will only remind you of the excessive drafts from Baltimore. The directors at Philadelphia saw the ruin which threatened them; they protested against the practice. What more could they do? They dare not act decisively; they could only supplicate, and entreat. And why not? George Williams answers the question-names could be obtained in Baltimore at eleven pence a piece. These excessive issues had the effect of producing a curtailment on the part of the United States Bank, and the State banks were driven to the adoption of the same system, as a measure of self-defence. Ruin and bankruptcy have been the inevitable effects. Sir, eighteen months ago we were prosperous and happy. What now is our situation? Gloom and despondence in our cities-usury stalking at large, and boasting of its illicit gains, while honesty and industry are covered with rags, the melancholy image of our changed condition. Does it not follow, then, that this was such a violation as was calculated to defeat the objects expressed in the charter? We are disappointed as to the mode of voting-as to the payment of specie-ing over the books, the eye being attracted by as to the dividends; and every measure calculated to produce evil has grown out of this; and yet my friend from South Carolina gravely contends that this charter is not forfeited! I know it will be said that the course pursued in subscribing for the stock of other banks was similar to that pursued in regard to this, and that the charter in itself was not sufficiently guarded. For myself, I can listen to no such excuse. Was this stipulation entered into merely to gull and deceive? Did Congress, at the time of creating this charter, introduce this article that it might be violated? Did the stockholder, when he accepted it, accept it with a knowledge of this condition and shall he be permitted to say, " true, I contracted with you on certain conditions, which I never intended to fulfil ?" Did he sign it with good faith or with bad? That he has executed it in bad faith, there is no doubt; but I ask of honorable gentlemen to say, if they really do think that this stipulation was made out of mere sport, and to afford to the stockholder an opportunity of evincing his cunning and ingenuity? I have the authority of the charter to contradict such a conclusion. But, give the argument all [Here Mr. TUCKER, of Virginia, it being at a late hour, and Mr. TYLER having given way, moved that the Committee should rise, which it accordingly did.] On Monday morning Mr. TYLER resumed his argument of Saturday. He recapitulated the grounds he had taken, and begged leave to explain a remark which he then made in reply to Mr. LOWNDES, as to the expression that most of the large and excessive loans were made to speculators. I feel myself authorized, he said, to repeat the assertion upon more mature reflection, aided by reference to a document in my possession. Let me not be misunderstood when I speak of large loans, I do not mean loans of ten, twenty, or even forty thousand dollars. For, although these elsewhere would be considered large and excessive, yet, at Philadelphia, in look greater objects, would scarcely rest on them for a moment. Sir, I will give you the amount of such loans as I allude to. One loan of $97,000 to one individual; two of $123,000 each; one of $140,000; another of $166,900; others of $277,000, $365,000, $400,000, and another of $1,800,000. Each of these is an individual loan, or, what amounts to the same thing, a loan to individuals and mercantile firms. I am not permitted to disclose the names of these discounters unless the House should demand the disclosure, which I should hope it would not do, as it would only have the effect of injuring private credit, and lead to no practical result. I have given you instances of the loans made to ten discounters, forming the enormous aggregate of $3 692,150. Can any one pretend to justify such a state of things? Is it to be countenanced by any correct banking principle? The bank has, in fact, committed an act of suicide against itself. Can it control the funds thus disposed of? If it adopts a system of curtailment, must not cases such as I have mentioned form exceptions to that system? If it imposes an equal share of curtailments on such persons with the other debtors of FEBRUARY, 1819. Bank of the United States. H. OF R. the bank, bankruptcy would be the inevitable ruptcy. We had forgotten the fable of the dog consequence. Sir, the mother bank itself has, by and his shadow; for we had let go the substance its conduct, justified me in entertaining these and grasped nothing but empty air. We discovopinions. It has resorted to a curtailment of its ered, when it was too late, that we had exchanged debts, and has never touched the discounts on gold and silver for worthless trash. The banks pledged stock. From eight to ten millions of its could not redeem their notes-they had to stop debts have thus escaped reduction, and, of course, payment. At this moment the National Bank an increased pressure has fallen on our cities. I was thought of. The great object was to secure do not esteem it necessary to press any further to it a specie payment, for which purpose seven this opinion. It must be obvious to all. What millions of dollars was directed to be paid "in does this statement still further prove? Does it the gold or silver coin of Spain or of the United not prove the influence of the large stockholders States." Has it been paid? It is admitted that over the institution, in consequence of the divi- it has not. Has not the charter, then, if it means sion of votes? Let not gentlemen deceive them anything, been violated? I reason on the prinselves in another point of view. The petition I ciples of common sense. Can you manufacture presented you the other day, Mr. Chairman, gold and silver coin into paper? And, if this brings to the bar of this House, with dejected process cannot be performed at your mint, has countenance and eyes swimming with tears, the the bank the possession of the secret? Yes, sir, widow and the orphan, whose funds have been it possesses the secret. Ask if the gold and silver vested in this institution. They are made to has been paid; you are answered in the affirmautter curses against us if we take any step to put tive. Ask an explanation as to the manner, and down this corporation. The picture is improp- you are told by the wise heads, "why, our paper erly filled up. It is the speculator, the stockjob-is equivalent to specie, and the payment has been ber, who should have been presented, kneeling before us. He alone is now to be affected. The eurses of the widow and the orphan will be uttered against them, not against us, for we are doing the innocent stockholder an act of justice, by relieving him from the company into which he has fallen, and returning him his money. I shall presently show that it is to his interest to have this bank put down. I hasten to a prominent instance of violation of this charter, and the last which I shall consider. I mean a failure to pay the instalments in specie and in funded debt, which, although a consequence of the preceding violation, deserves to be distinctly considered. made in that." By the same process, too, is Government stock manufactured at the bank. But, it is urged that the bank was bound to redeem its notes in specie, and that, therefore, its notes were as good as specie. This presents another enigma. I should like to know how it was to be called on to redeem its notes before it had any in circulation? This secret was not discovered before the 18th December, 1816, and the second instalment fell due directly thereaf ter. And, if the bank had not gone into operation before the first of February, I should like to know where its notes were to be obtained ? As to the second instalment, the position must fail. Will it be urged that the stockholders were It is, however, said, that the charter did not conauthorized to pay in the notes of the bank? Upon tain provisions strong enough to compel a comwhat principle will this be justified? Will the pliance. The forfeiture of the dividends was not course pursued by other banks furnish any justi- sufficient. And yet, at the very moment that the fication? Why was this bank created? Was inefficiency of this provision is complained of, the it to imitate the example of other banks, or to directors render it still more feeble and inefficient avoid their errors? The country was flooded by throwing open the doors of the bank. The with paper money. Our statesmen had sketched resolution confines the discounts to stockholders, out blessings without number in the creation of thus enabling those who would otherwise have a multiplicity of institutions. When the scheme been delinquent to pay up the instalment, not in first came up, wealth was promised to all. This specie and funded debt, but by a bank accommoland was to be converted into a garden. On pa- dation. But, Mr. Chairman, I contend that the per wings we were to have soared to the height directors had full power to compel a compliance of our wishes. One dollar was to be manufac- with the stipulations contained in the charter. tured into three. The manufactory of paper They might have instituted suits in the courts of went on. The beggar's rags were even coveted, justice against those who might have been delinand the alleys of our streets ransacked for mate- quent; by which means, I venture nothing when rials to convert into money. For a time all went I say they could have recovered the amount of on swimmingly. The dreams of wealth visited the instalment in specie and in Government our pillows. The vision was brilliant-was en- stock, with interest from the time it should have chanting. We fancied we held in our embraces been paid. But, if this course was doubtful, they youth, and beauty, and unspotted purity. But might have resorted to a more efficient exercise the sun rose, and the cup of our joy was dashed of power. Suppose that the resolution of Defrom our lips. Instead of holding in our arms cember, 1816, had been a resolution announcing the form of loveliness and virtue, we found our- to all, that, until the second instalment was paid, selves in the embraces of an old and haggard no delinquent stockholder should receive an acwitch, deformed in her features, corrupting by commodation at the bank. I verily believe that her example, and breathing around her ruin and such a course would have produced the most benmisery. It was in truth the real image of bank-eficial effects. It would have either produced a payment of the instalment or a more equal distribution of the stock-the one subserving the objects of the charter, the other grappling with the spirit of speculation and overthrowing it in its infancy. It would have made it the decided interest of the large stockholder to have paid up. The men holding the largest quantity of stock are merchants. They, most of all others, require bank accommodation. The pressure of the times would have forced them to look to the bank for aid. I think, therefore, that the effect described would have flowed from the measure. And, if they could not have paid up on all their shares, they would only have retained so many as they could have paid for. No, sir, nothing of this sort could be done. The directors dare not have encountered the dislike of the large stockholders with their innumerable votes. I think it would have been manly, honorable in them, to have pursued such a course. They might have met complaints with the charter in their hand. They might have said to the stockholder, you have made a solemn compact with the Government. You are bound by every principle of honesty to effectuate your undertaking. When you have done so, and not before, can you expect any benefit from the institution. FEBRUARY, 1819. tion, by entering into another. They discharged one bond by giving another. They added not one cent to the ability of the bank to discount; they contributed nothing to its capital, and added not a dollar to the specie in its vaults. If, then, the profits of the bank had been divided among those only who had paid up in specie and public stock, the dividend would have been greater to each. The bank traded on the specie and stock which my constituents and others paid in on the first and second instalments and divided the profits of trade with those who had not advanced a cent on the second instalment. It may be said that it was the loan to the stockholders, that caused the dividend to be as great. The position is not tenable. The bank obtained on the loan no more than six per cent., and this, without the loan, each delinquent would have been bound to pay; for the amount due for the instalment would have borne interest from the time it fell due. Shall we not only, then, suffer the charter to be violated, but submit to be deprived of our rightful gains? For one, I protest against it. We have been told by the gentleman from South Carolina, (Mr. LOWNDES,) that the subject of this violation has once heretofore been before us, and that, not having acted then, we should As to the third instalment, I am ready to admit not act now. What was the fact? The House, that the directors are not culpable for the manner soon after the adoption of the resolution of Deof the payment. I do not require impossibilities cember, 1816, had it intimated to it that such a to be performed. It was perhaps impracticable, resolution had been adopted. The subject was by any regulation of the board, to have prevented referred to a committee, who made a report, an invasion of the charter. But yet the stock-founded on a letter from a director casually in holder violated the covenant. He had no impossibility to perform; he was bound to pay in specie and in funded debt. Is it an excuse for him to say, it was easy for me to evade my contract, and I did evade it? Are we to submit to such mockery of justice? Do we sit here to countenance such evasions? What a farce, then, is your legislation! The gentleman from South Carolina contends that the bank had entered into a contract with the State banks, and that the proceedings, as to the second instalment, arose out of a desire, on the part of the bank, to fulfil that engagement. It is only necessary to say, that this, instead of diminishing, increases the error of the bank. It had no right to enter into a contract which should force upon it a violation of the charter; and, to carry into execution such contract, was doubly to violate the charter. But, if I am wrong here, I would inquire of the gentlemen, what is the date of the contract with the State banks? Sir, it is dated the last of January, 1817. When was the resolution to discount to stockholders adopted? One month before. So that it is perfectly obvious, that the bank was untrammelled by any engagemont at the time of its having adopted the resolution to which I have alluded. But, sir, there was gross injustice, I will not say fraud, practised on the Government, and on those who had paid up the second instalment, by admitting those, who had availed themselves of the resolution, to come in for a share of the dividends. The first had paid up, according to contract; the other only cancelled one obliga this city, (Mr. Lloyd.) and which report was neither adopted nor rejected, but ordered to lie on the table. We had then only a partial view of the measure; we knew not in what spirit it had originated; we knew nothing of the violation of the first fundamental article of the charter; we saw not that it was but the bolt which opened the door to speculation and individual aggrandizement. These things were then concealed from our view. But, I ask the honorable gentleman to say, what measure we should then have adopted? Should we have taken upon ourselves the management of the bank? Did it belong to us to say to the directors, your resolution is a bad one, and in violation of the charter, therefore rescind it? Or, if we were not to pursue that course, does it make any difference whether we had then rescinded the charter, or do it now? Or yes, sir, there would have been some difference; a great difference in the cases. We should have been saved the pain of beholding the picture presented by the report and testimony; we should have been saved the sight of this cold and unfeeling speculation which has grown up among us. Nay, our reliance on the virtue and integrity of men standing high in our confidence, would have remained unshaken. And shall we now be referred to our former omissions, to justify still further omissions? Shall we now be told that, because we did not punish impropriety in its birth, we must not approach it when it has gained full size? Shall it be said that, because we did not punish the infant, we shall not extend retributive justice to the adult? No, sir, now is the time for us to interpose. Will not that overwhelming influence which heretofore has ruled, still rule? Will a change of directors be followed by a change of measures? Where is the security which you have against a continuance of the present course? Will the bill reported by the committee produce a change? I question your right to pass it. You can annex no new penalties. The contract has been accepted, on certain conditions, and I know not where your power is to be found to alter or enlarge them. | H. of R. specie, or the notes of banks paying specie, after the 20th February, 1817, as the great cause of this resumption. I am disposed to ascribe more energy to the arm of this Government than to any moneyed institution. Under every view, then, which I have been able to take, I think that the bank has forfeited its charter; or at least that it becomes us to direct the scire facias. If we differ on the subject of violation and forfeiture, submit it to the court to settle the question. It is the mode pointed out in the charter, and against it the stockholders can have no good objection. Mr. Chairman, it seems that we owe something like gratitude to this bank for having brought There remains now but one branch of inquiry about specie payments. It is with difficulty with those who do not think the creation of this I bring myself to differ with the gentleman from corporation an unconstitutional act, viz: Is it exSouth Carolina, upon any question connected pedient to direct a scire facias, or, in other words, with mercantile or banking operations; but I to put down this corporation? I contend that it cannot admit the correctness of this position to is. For one, I enter my protest against the bankthe extent that he would carry it. I think that ing system; a system not to be supported by any the incorporation of the United States Bank was correct principles of political economy. A gross calculated to delay the resumption of specie pay- delusion-the dream of a visionary-a system ments on the part of the State banks. If I am | which has done more to corrupt the morals of not mistaken, the State banks had made prepara- society than anything else which has introdutory arrangements towards the resumption of ced a struggle for wealth, instead of that honoraspecie payments; they had curtailed their dis- ble struggle which governs the actions of a pacounts; but the creation of this bank forced upon triot, and makes ambition virtue; which has them, as a measure of self-preservation, a contin- made the husbandman spurn his cottage, and inuance of the course they had adopted. Specie troduced a spirit of luxury at variance with the being required on the part of the stockholders of simplicity of our institutions. I call upon the this institution, they would, if the State banks warm advocates of banking now to surrender had opened their vaults, have collected their their errors. Shall I take them by the hand, and notes, and drained their specie, to the amount of lead them through our cities? Bankruptcy meets said instalments. I think, therefore, that the us at every step; ruin stares us everywhere in the State institutions were left but one course, and face. Shall I be told of the benefits arising to comthat was the very course they did persist in until merce from the concentration of capital? Away the 20th of February, 1817. But, sir, what is the with the delusion; experience has exposed its falnature of the contract entered into between the lacy. True, for a moment it has operated as a United States Bank and State banks? What stimulus; but, like ardent spirit, it has produced great sacrifice did this corporation make on the activity and energy but for a moment; relaxation altar of public good? The State banks owed to has followed, and the torpor of death has ensued. the Government balances on account of deposites; When you first open your bank, much bustle and this bank gives them until the 1st July, 1817, ensues; a fictitious goddess, pretending to be a period of upwards of five months, to pay up Wealth, stands at the door, inviting all to enter those balances. They are, however, in the mean- and receive accommodation. Splendid palaces time, liquidated, and made to carry an interest of arise; the ocean is covered with sails; but some six per cent. Is this the distinguished and pa-alteration in the state of the country takes place; triotic act which is to restrain further proceedings against this body corporate? It adds to its profits by the contract-liquidates a debt-receives an interest, not on its own funds, but on those of the Government-specifies a day for the payment, and this is to cover all its sins and follies. It could not better have subserved its own interests. It swelled its profits, without advancing a cent. True it agreed to throw into circulation, a given quantity of notes by the 1st of July; but, I ask, if the amount of the discounts contracted to be made are greater than, without the contract, it would have made? I cannot then discover any cause of gratitude, growing out of this proceeding? Mr. Chairman, I look to a more efficient cause for the resumption of specie payments. I look to the resolutions of the State Legislatures; to the resolution of Congress, requiring the payment of all dues to the Government to be made in and, when the thoughtless adventurer, seated in the midst of his family, in the imaginary enjoyment of permanent security, sketches out to himself long and halcyon days, his prospects are overshadowed, and misery, ruin, and bankruptcy make their appearance, in the form of bank curtailments. If this be true, and I appeal to the knowledge of all men for its truth, I demand to know if you can put down the system too soon? Can we too soon escape the dangers by which we are surrounded? I know I shall be told that, even if we put down this bank, the State banks will still exist. Even if true, the position is not a justifiable one. If the State Legislatures do not follow the example which we set them, we shall have acquitted ourselves of our duty. It is all that can be asked of us. But, sir, we actually possess the lever of Archimedes, and have a foot of ground on which to rest it. Our revenue H. OF R. Bank of the United States. FEBRUARY, 1819. amounts to upwards of twenty million dollars a report of the condition of its banks has been annually. Require but a fourth, or even a sixth, made, if I am not misinformed, by order of the to be paid in gold or silver, what would be the Legislature. They have immense sums in circueffect? The merchants would collect the notes lation, and scarcely paper enough to carry on of banks and demand specie for them; and thus their daily operations. Nay, sir, one bank, if I a test would be adopted, by means of which to am not deceived, with a large amount of notes out, ascertain the solvency of each institution. The has not one cent of gold or silver in its vaults. demand for specie thus produced would have the A bank in Philadelphia, its title I forget, and beneficial effect of introducing more of it into some other of the banks, appear to have been judithe country; for money is like every other arti- ciously conducted. From the other States I have cle, and will find its way to the market where it seen no return which can positively be relied on. is most wanting. The system might be enlarged But I think the two references I have made go gradually, until your wishes should be consum- far to show that the United States Bank cannot mated. I know the ground which I occupy, when rely for a supply of specie on the balances due I urge these considerations upon you. A man, from State banks. If it looks to the stock subregardful alone of the fleeting and ephemeral scribed by Government, the commissioners of the popularity of the hour, would hesitate in pressing sinking fund will be bound in duty to redeem it, them upon you. But I should not hold myself if it should be brought into market, and sold either entitled to your countenance, Mr. Chairman, to at or under par. And the payment would be made the countenance of honest men, or, what is still by a transfer of Government deposites, by which more important, the approbation of my con- operation not a cent of specie might be added to science, if I could be operated on by such mo- the bank. But say that it is sold for gold and siltives or fears. Pardon me for still further ex-ver; a diminution of the dividend will still take tending this inquiry. There are three parties interested in the question which we are called on to decide the stockholder, the debtor, and the Government. I contend that is to the interest of the honest stockholder to put down this bank. The interest of the stockholder consists in the amount of dividends which he receives. At this time he receives but two and a half per cent. semi-annually. Will the dividend increase or diminish? Sir, it has constantly been diminishing, and must continue to diminish. The bank has now but two million seven hundred thousand dollars of specie in its vaults, and that sum is daily and hourly diminishing. Experience is the best guide, and that of the last three years proves, beyond doubt, the rapid and incessant drain of specie from the vaults. Let the direction be changed; let an entire new system be adopted; the East India trade will still continue, and the demand for gold and silver will remain unchanged. From what quarter, then, will the bank supply deficiencies? It originally had fifteen million dollars of United States stock paid in by individuals; all of which has been redeemed or sold, with the exception of between three and four hundred thousand dollars. This, then, would constitute but a slender reliance. To what other source will it look? It has a balance due it from State banks. Can it rely on that? A great proportion thereof is due from the Western banks; and the very instant that the Bank of the United States made a demand for specie, they have closed their doors, or stopped specie payments. Are the other banks of the Union in a better situation? Many, no doubt, are; but look to the report of the condition of the banks of this District. One has a large amount of notes in circulation, and thirty thousand dollars in its vaults and on the road. Whether it has more than a dollar in its vaults or not, the amount may still be true; others are in no better a situation; while some few are solvent and able to pay. This, too, is a litter of Congressional creation. Look to Pennsylvania: place. The stock is an active capital, and yields five per cent. annnally; convert it into money, and the bank will have made an exchange of an active for an inactive and unproductive capital. The same thing takes place if it curtails its discounts. And at this moment that is the course which it is driven to pursue. I venture nothing, then, when I predict that, for several years to come, if ever, it will not divide a greater profit than one and a half or two per cent. semi-annu. ally. Return, then, to the stockholder his money; suffer him to use it in his own way; he will, whatever he may do in the first moment of disappointment, in the end have cause to thank you. At this moment the institution is solvent; and although I would not expressly say that it would be able to return one hundred dollars on each share, (for I have not the data on which to make up an opinion,) yet I am certain its ability would not fall far short of that point. Let not gentlemen, then, deceive themselves. The widow will not curse, but bless you; the orphan will not meet us with tears, but with smiles; the land will no longer labor under a flattering delusion; and the speculator alone, who has reduced us to our present condition, will be punished for his misdeeds. What effect will it produce on the debtor of the bank? Let us not conjure up fancies to alarm us. It is the part of children to tremble at the appearance of danger, however unreal; it is the part of men, by facing, to overcome difficulties. My friend from South Carolina has presented you a gloomy picture of distress. I regard it as the production of a vivid imagination. Let us test it by reference to facts. The old United States Bank had a large sum due it; I believe eighteen or twenty million dollars. At the time of its dissolution, the same terrible fancies possessed men's minds. Yet the result proved them to be visionary; and the impression made by its dissolution has long since disappeared. What is the amount due to this bank? Only |