FEBRUARY, 1819.

Bank of the United States.

H.OF R.

have no interest in the election; their stock is represented by their own directors, appointed by their own authority, without the consent or knowledge of the other stockholders; and it is worthy of constant remembrance, in considering this subject, that those by whom this particular violation was principally practised, and to whom the most of the evils and abuses which grow out of it have been attributed, were the directors appointed by the Government, and, with the power of removal in their hands, retained by the Government, from time to time, until the recent exposition in the report of the committee.

In short, then, Mr. Chairman, said Mr. McL., all the acts complained of as violations of the charter consist, at most, in either an unwise or improper exercise of a legal right, or in the acts or misconduct of individuals, for which the incorporation cannot be officially responsible: they have in no degree defeated the great ends of the institution, or impaired its capacity to perform and discharge all its principal functions. It is yet in full life and vigor; shaken a little, perhaps, by our treatment to it, by our jealousies and suspicions, and reproaches, but, containing a sound constitution and abundant means of usefulness, would be capable, with a few wholesome corrections, of answering all our reasonable expectations. Under such circumstances, it would be difficult to find a motive sufficient to justify its unnatural and premature dissolution.

taken to be the common law of the case. It was a right, also, in which every subscriber might have participated. It does not appear very satisfactorily, from the proof, whether the practice was generally known or adopted, though it is certain that it was adopted by many of the large stockholders; but whether it was certainly known to others, or to what number, or to all the judges, or whether they were in possession of sufficient proof of the fact, does not appear. Mr. McLANE asked, if, under these circumstances, it was clear that the persons in whose name the stock was so held had not the legal right to vote, or that the judges could have rejected the votes, or compelled a consolidation? He believed not. By the charter, the number of votes to which the stock holders shall be entitled, shall be according to the number of shares which he, she, or they, respectively, shall "hold" the act of holding is adopted as the evidence of ownership, or, at least, as giving the right to vote. The person in whose name the stock stands is the holder; with him are all the legal rights and all the responsibilities. No other than the holder could vote upon the shares, and neither the commissioners nor the corporation possessed the power of compelling the transfer of the shares. Even if they had suspected the contrivance, they had no means of defeating it; they were bound to receive the best evidence, and the books of the commissioners were conclusive of the fact of holding. It could not, therefore, have been the misconduct of the judges of Mr. McL. said that he had intended, when he the election, since they were unauthorized to act rose, to have entered into a consideration of the otherwise, and since it would have been imprac- different acts of abuse and misconduct to which ticable for them to detect the collusion which the report of the committee had alluded, though was supposed to have been practised between the not amounting to a violation of the charter; but "holder" and the attorney. For this reason, it he felt, if he did so, he should exhaust himself therefore follows, that the manner of voting com- and the Committee before he could submit all plained of was not a corporate act; it was not an the remarks which the course he had prescribed abuse by the corporation, but the mere misbe- to himself rendered necessary. Upon this part haviour of a few of the individual stockholders, of the subject, he would, therefore, briefly refor their own private purposes-misbehaviour, mark, that, besides the improper speculations in either unknown to the great body of the stock-stock, of which he had already spoken, the abuses holders, or over which they had no control. It which had fallen under the animadversion of the surely will not be contended, that the misconduct report might be comprehended under six general of one or more of the stockholders, unauthorized heads: 1. The conduct of the Bank of the United and unofficial, is to destroy the rights of all the States towards the State institutions. 2. The others, who are innocent men, and alone injured practice of selling drafts on its offices. 3. Disby the misbehaviour. If it were a violation of counting on a pledge of stock. 4. The arrangethe charter, it was a violation by those individ- ment for paying the dividends in Europe. 5. uals by whom it was practised; it might be proper The improper rejection of business paper; and, to punish them, but it would be worse than in- 6. Allowing discounts to be made by the presi justice to involve others in a common fate! Per- dent and cashier. As to the second and fourth haps, too, if the votes thus given were necessary of these acts, which had been the most condemned, to the election of the successful candidates, their Mr. McL. said no doubt could be entertained that election might have been declared void; but this the bank had the right to do both; and he did would have been the extent of the operation upon not think we should interfere with its exercise, the being of the incorporation. Mr. McL. also unless some manifest and serious injury was contended, that this provision in the charter was likely to result to the public; even then we could introduced for the benefit of the individual stock-do little more than withdraw the public depoholders, and principally for the small stockhold- sites. He had yet seen no such evil flowing from ers: these were chiefly, if not solely, interested these measures. The selling drafts upon its offices in its faithful performance; and we have not was a mere exchange operation, of great public heard that they would desire a remedy, if it could convenience and accommodation, contributing be so called, which would annihilate at a blow essential facilities to the commercial enterprise the whole of their interests. The Government of the country and the financial concerns of the 15th CoN. 2d SESS.-43

H. OF R.

Bank of the United States.

FEBRUARY, 1819.

demption; thus throwing into circulation a large amount of good paper, supplying the wants of the Treasury, and relieving the State banks from the pressure from which they had everything to apprehend.

nation. There had been no instance, within his knowledge, in which it had been exercised oppressively or improperly; in the nature of things, it could not be, since it was optional with the individual to make his own bargain. The ar rangement for paying the dividends in Europe But, sir, said Mr. McL., it is inconsistent with could never be used to the prejudice of the stock- my present design to pursue this part of the subholder or the public. He saw no impropriety in ject further. I have already said, that I do not giving to the stock its highest credit in the Eu- stand here as the indiscriminate defender of the ropean market; and it was a matter involving bank. The inquiry which I deem material to so many considerations, connected with all our pursue is, whether the abuses which have been commercial and political relations abroad, that practised and really do exist, will not admit of a he felt entirely satisfied to rest it with the discre- perfect correction without the destruction of the tion of gentlemen who were daily and intimately being of the incorporation? If they will, I will conversant with all their details. He was sure never consent to be among its destroyers. It that the arrangement would be continued no would be unbecoming in us to wield our power longer than was consistent with the interest and vindictively, when a chastening arm would an. profit of the institution. Of the third head, he swer every good purpose. That all these acts of not only believed the bank had the perfect right misconduct will admit of correction by mild to discount on a pledge of stock, but he was in means, and will, in fact, be corrected without clined to think it was the safest and best mode much interference on our part, is to me perfectly of doing business, if it were not practised to the clear. The most serious acts of abuse, those in injury of the commercial activity and general which it is alleged are involved the violations of enterprise of the country. Of this, he believed charter, are already corrected-they exist no long the directors, from their local knowledge, would er. There is no apprehension that the bank will always have the best means of judging; and the ever repeat the purchase of any part of the pubinvestigation he had made afforded him no rea- lic debt; it has suffered too sorely in the past inson to believe that either of these effects had yet stance, to yield so ready an acquiescence in the been produced. He would not refrain, however, instructions of the Treasury in future. The loans from condemning the practice of discounting on account of the instalments have principally upon a pledge of stock above its par value, and been paid, and cannot, in the nature of things, of dispensing with the personal security, under ever recur. And the same remark may be made the power of substitution. Equally reprehensi- in relation to the payment of the dividends to the ble, in his opinion, was the practice of permitting delinquent stockholders. As it regards the divithe president and cashier to make loans without sion of the votes, the documents furnished by the the approbation of the directors, in each particu- committee show that all the stock has long since lar case. He believed it was calculated to lead been consolidated; but, if it should be otherwise, to serious abuses; and he trusted to the good the bill reported by the committee will compel it sense of the stockholders to correct it. As it re- to be done, and effectually prevent a recurrence garded the conduct of the Bank of the United of the evil. Those scenes of speculation also, of States towards State institutions, he could not which so much has been said, must very soon imagine that it would afford any ground of com- cease, if they have not ceased already. They are plaint. It had undoubtedly been mild, generous, more or less incident to the inception of all such and conciliatory; and it was with surprise he had institutions, and cannot be prevented. Men will heard his honorable friend from Virginia (Mr. subscribe for and purchase stock on speculation; TYLER) maintain that it had not facilitated their the only remedy is to be found in the regular resumption of specie payments. Sir, this was march of the institution. Under a sound manamong the first and great benefits which this in-agement and a prudent disposition of its means, stitution diffused throughout the community, and the documents show that its desire to accomplish this end led to the adoption of some of those very acts upon which censure has since fallen, and created difficulties with which it would otherwise not have struggled. It accomplished this desirable end in your cities, by large and liberal loans to the State banks, and by giving currency to their paper, thus shielding the individual debtors from an undue and fatal pressure, and enabling the banks, without their aid, to meet all their engagements. It enabled all the country banks, and especially those in the interior and to the westward, to do so, by receiving from the Government an immense amount of the country bank notes, which could not have been redeemed as early as the public necessities required, and gave to the banks a liberal time for their re

the large speculator will soon lose his power of controlling the market; the affairs of the insti tution will acquire stability; its stock will reach a regular sound value, liable only to the inevit able fluctuations of ordinary property, and finally become vested in the hands of the solid capitalist. For the correction of all these abuses, we also have a pledge in the interest of the stockholders. A safer one could not be provided. They are well acquainted with their interests, and, if they perceive a course of conduct calcu lated to prejudice them, they will not fail to check it, and promptly apply the remedy. If this has not been the case heretofore, it is because the great body of stockholders, in common with us, were ignorant of the nature or exist ence of the abuses. Besides, if this were a cause of complaint, the Government would come in

FEBRUARY, 1819.

1 Bank of the United States.

H. OF R.

for a large share. Their directors were the prin- it would be very unnecessary to enter into a concipal actors in the drama, and they possessed the sideration of it, since, if there were no forfeiture, power of removal at any time. We cannot doubt the charter would be beyond our power. Nor that the stockholders, with a due regard to their would he go so much into detail upon this part private interests, will confide their management of the subject, because of the length of time he to men no longer than they prove themselves to had already occupied, and the danger of encroachbe worthy of the trust. There is also, in the ing upon the views taken by the gentleman from very nature of the exposure which the report has South Carolina. Without detaining the Commade, an ample remedy for all the evils; the mittee, therefore, said Mr. McL., in particularly scrutinizing power of Congress has already been considering the importance of this institution, in felt; that it will be exercised, is no longer a mat- providing a circulating medium, in averting the ter of speculation; and these facts, together with evils of a depreciated paper currency, in equalthe nature of the report arising out of the recent izing the exchange in the different parts of this investigation, will necessarily inculcate and pre-extensive country in the eminent degree it has serve a due circumspection of conduct in future. done, in facilitating the financial operations of Of all this, we need no better proof than is to be the Government, in providing a ready medium found in the effects already produced by the late for their revenue, and safety for their deposites, inquiry. We have already seen the unfortunate and in inspiring life and activity into the comman who presided over this institution, surrend-mercial enterprise of the community, I will reering a lucrative post the moment it was intimated that he had abused the trust confided to him. I call this gentleman unfortunate, because I believe his misfortunes are attributable to the influence of others, much more than to any immoral propensity in his own breast. And we have further seen his example followed by another, against whom the animadversions of the report have been principally directed. The same spirit, in obedience to which these sacrifices have been made, will not falter in its course until an entire reform has been effected.

mark merely, that all the reasons that so powerfully recommended the creation of the bank yet exist, in all their vigor, to recommend its preservation. Among these, the most important, in my view, is the necessity of a national currency, beyond the reach of local interests and commercial fluctuations; and the inexpediency of relying upon State banks, for the national wants and the operations of our public finances. Not merely as it respects the supplying of the Government and its debtors with a sound unvarying medium, considerations suggested by the gentleman from But, Mr. McL. said, there were other reasons South Carolina, but as it regards the stability of why these abuses would not continue. They were the Government and the efficiency of all its measnot the result of any general unsoundness in the ures in war and in peace. I ask, sir, if it is wise management of the institution. My honorable to place the pecuniary resources of the National colleagues, said Mr. McL., will, I am sure, jus- Government at the control of State banks? If tify me in saying, that there were men in the we consider for a moment the vast extent of our direction, the example of whose general conduct continent, from all quarters whereof our revenue individually and officially any one might proudly is to be drawn, and over all parts of which the imitate. Men of highminded honorable feelings supreme arm of the General Government is to and sound intelligence, capable of conducting be extended, in the regulation of commerce and the institution with credit to themselves and providing for the common defence and general benefit to the public, and to whom no sinister welfare; if we consider also the augmenting conmotive or unfair conduct could be imputed-cerns which are daily multiplying with the who had, on all occasions, been the advocates of an enlightened, disinterested policy, and had resigned considerable emolument, which they might honorably have made, rather than incur the suspicion of participating in the smallest degree in those stock speculations which have been so much reprobated. In the number of these men, besides those named in the report, Mr. McL. said it afforded him great pleasure to enumerate Mr. T. Willing and Mr. Fisher, of Philadelphia, and his honorable friend in this House, from Pennsylvania, (Mr. SERGEANT,) as conspicuous for the qualifications he had mentioned. On the whole, he concluded that there was every reason to calculate upon a safe and discreet management of the affairs of the bank in future, superintended, as it would be, by the inquisitorial power of Congress, and the control of the Treasury over the public deposites.

In regard to the question of the expediency of abrogating their charter, Mr. McL. said, if his construction of the acts of violation were correct,

growth of this mighty empire, and the almost absolute necessity of banking facilities for the effectual exercise of all the powers intrusted to the Federal Government, the folly of placing our reliance on State institutions will be manifest. Their charters might expire, and their existence cease at the very moment their aid would be the most necessary. I invite gentlemen to reflect also upon their power and influence over the moneyed affairs of the community. It is in their power to render worthless any inedium which the Government may be compelled to create, excepting the metals, of which we all know the scarcity is greatest in times of the most pressing necessity. Such a power, in the hands of that diversity of interests, which might prevail in the different States of this Union, might paralyze the national arm and have a fatal influence upon our prosperity. I ask gentlemen to recur to the experience of the late war. Then all these calamities were seriously felt. We must all remember the embarrassments of the Government at that

time. Then the State banks, in most instances, refused their aid, and the very necessities of the Government forfeited individual confidence.Treasury notes were resorted to, and every effort was made to give them currency-the faith of the nation was pledged for their redemption, and they were made receivable for public debts, but the State banks refused to receive them in deposites; and by this single act depressed them to ten, and in some instances to fifteen per cent. below par. The consequence was unavoidable; the national arm was weakened, its resources crippled, and its credit annihilated. To prevent a recurrence of similar calamities, the present bank was incorporated, and I admonish gentlemen to beware how they leave us exposed once more to evils of the same character.

FEBRUARY, 1819.

when the child was in its infancy, and if we then overlooked it, as the folly of the infant, it is the more necessary now to punish the aberrations of its manhood. Mr. McL. said, it was a new system of discipline to visit on the head of the man the follies of the boy, and was unreasonable as well in the artificial as in the natural person. Sir, said Mr. McL., I have no sort of objection that you shall consider this institution as your child; in fact it is so, and, if properly cherished, one that will not dishonor its parent. I only desire that you shall exercise towards him a parental solicitude and authority; if he prove refractory, admonish him; if it be necessary to prevent him from doing an injury to you and himself, administer wholesome correction; but do not act the part of an unnatural parent, and not only torture, but sacrifice him for faults which you have once overlooked, or for future acts of misconduct, which may in some degree be ascribed to your own improper indulgence.

Mr. McL. said, that he had already consumed so much time that he would conclude with an apology to the Committee for trespassing so long upon their patience, and with thanking them for their attention.

Mr. SERGEANT addressed the Chair, as follows: Mr. Chairman, I beg the permission of the Committee, to offer to them some observations upon the several propositions that are now submitted for their consideration and decision.

But, Mr. Chairman, said Mr. McL., there are additional reasons now, which recommend the protection of the bank, that did not exist at the time it was incorporated. By giving this institution a being and existence, you have created innumerable rights which did not before exist. There are the debtors and creditors of the bank who have connected their interests with it on the faith of the nation, and would be ruined by its sudden destruction. There are, also, the innocent stockholders, here and abroad, who have invested their fortunes in the institution upon the same national faith, and upon the reasonable presumption, that no harsher measures would be adopted towards it than what experience had The inquiry in which we are engaged is justified in regard to others. Of the foreign stock-attended with some intrinsic difficulties, of no holder, this national faith is the chief reliance, inconsiderable magnitude, and calculated very for, in effect, not being allowed to vote by proxy, much to embarrass our deliberations, as they his interest can scarcely be said to be represented. must have been to embarrass the deliberations of It is the interest of the Government to preserve the select committee, to whom the examination its own and the credit of the stock in Europe, of this subject was more particularly confided. and this cannot be done without giving it secu- In the first place, it is retrospective, and I admit rity and stability in their estimation. If it be it is necessarily so. We are called upon to take once discerned that the existence of such an in- a review of the management and conduct of the stitution is dependent upon legislative caprice or bank during all the period of its existence, and local interests your stocks will soon be looked we expect to find that the best has been done in upon with distrust and jealousy. If anything every instance, which, with the full light derived could add strength to these considerations, it is, from a knowledge of all that has since happened, that the act of violation, upon which a forfeiture appears to us to have been possible. In this manis mainly supported, has already received an ner it is, that battles are fought over again in amnesty at your hands. Two years ago it was discussion; and, whether they have been lost, or officially announced to you-an investigation of whether they have been won, it seldom happens the matter was made-the subject was brought that those who thus sit in judgment upon them before Congress, and it was finally resolved to cannot detect some errors that have been commitbe inexpedient to take any further notice of it. ted-point out advantages that have been lost, By this vote, others than those who at that time and opportunities that have been suffered to pass held stock were encouraged to become purchasers. unimproved. The just rule of judgment in such It was an annunciation to the world, that Con- cases, if, indeed, its application were practicable, gress would sustain the bank, notwithstanding would be to place ourselves in the situation of this act of violation; hundreds of our citizens, those upon whose conduct we are called to pass, upon this principle, purchased the stock at ex in the midst of the difficulties by which they travagant prices, and, after all this, to recall this were surrounded, and with no better view of the act from its grave and seize upon it for the pur- future than what their own judgment could afford pose of immolating the institution, would be an them. act of which, for the glory of the nation, I trust it will never be guilty.

But the honorable gentleman from Virginia (Mr. TYLER) had said, and he thought with more beauty than force, that this act was committed

It is in the nature, too, of this inquiry, conducted as it has been, to group and connect together all the exceptionable acts that have been done by those to whom the management of the institution has been confided; while, to use a bank phrase,

it gives no credit for those things which were right, and even entitled to some commendation. I wish, sir, to be distinctly understood: I am not using the language either of complaint or censure. I only say, that, as the inquiry, from its nature, was in a great measure confined to exceptionable acts, it must necessarily present them in a body, without relief from their association with the mass of good deeds with which, in their order, they stood connected. This is a sort of judgment which none of us would be willing to submit to, or could expect to endure. Let the life of any man, the most honest and honorable, be exposed to the same kind of examination. Begin with his infancy, (to use the language of the gentleman from Virginia,) and follow him through the different periods of his progress, put together, as constituting his history, whatever, from the severest scrutiny, you can find, that has deserved reproach or censure. What a dark exhibition would it be !

Besides, sir, what is at last the test we apply ? We set opinion against opinion, upon a subject of a very comprehensive and of a very complicated nature, involving much detail, and every detail involving more or less of speculative inquiry.

H. of R.

appeal to many who are within hearing what I state, and are able to confirm its truth, as a mere matter of fact; I appeal to every one acquainted with our nature, to say whether it is not what would generally happen-those who had themselves refused to subscribe, and discouraged the subscription of others; those who had thus neglected to avail themselves of what then appeared to have been the golden opportunity, suffered all the mortification of seeing their predictions continually falsified, and could scarcely avoid the influence of a certain deeply implanted kindred feeling, which is never more sharply exerted than when we see others profit by what we have permitted to escape from ourselves. They did not avoid it.

There are, besides, many who think that a National Bank, however organized, is impolitic and unwise; and there are some who think it not within the Constitutional power of Congress to establish a bank.

of the report.

Under the combined operation of such a mass of causes, the committee had no doubt a difficult task to perform, even if they had taken much more time for its performance than seems to have been allotted. If they have fallen into errors, it There are extrinsic difficulties, of no less mag- is not surprising; but it ought to secure from nitude. It cannot be denied that there has been them some indulgence for errors in others. It a vast deal of prejudice in the public mind, against will at least entitle us to differ from them in opinthis institution, which, whatever may be our re-ion, and freely and fully to canvass the grounds solutions to the contrary, affects us insensibly, and, when we neither know nor suspect it. The Before, however, I proceed to examine the resources of this prejudice are sufficiently apparent. port, I beg leave to call the attention of the ComThe State institutions have many of them been mittee to the authority under which we have induced to regard the National Bank as an enemy, been acting, as it is to be found in the law for inand the spirit of hostility which they have felt corporating the subscribers to the bank. The has had a most powerful influence throughout the provisions of the charter, designed to secure the community, with which they are so extensively faithful administration of the bank, contain in and intimately connected. It is in the ordinary them a distribution of powers, just in itself, and course, too, of the operations of the bank, to give perfectly well adapted to attain the object. The frequent offence to individuals. Every man who power given to this House, (sec. 23,) is confined to is refused a discount thinks himself aggrieved, a single point of inquiry, whether or not the charand indulges a feeling of resentment, not at all ter has been violated, in order that we may be mitigated by any consideration of the circum-enabled to judge whether or not it is expedient stances that may have rendered it prudent, or even necessary, to reject his application. The same remark might be made, with equal truth, of every sort of accommodation which the bank is supposed to have the capacity to afford, but which events, beyond its power to control, do frequently oblige it to withhold. When the directors, not very long ago, exercising a right that no one denies to have belonged to them, and exercising it under the compulsion of circumstances so imperious, that every one now confesses they could not have refrained without a plain violation of their duty; when, I say, they determined that branch notes should thenceforth be paid only where, upon their face, they were made payable, there was an almost universal clamor. Sir, there is still another source of prejudice. The bank has had the day of its beginning. It is now in the day of its humiliation. But, it has had the day of its prosperity, too-when success, even beyond the expectations of its most sanguine friends, seemed to crown its operations. In that day-I

to institute legal proceedings for its repeal. The examination we are authorized to make, is subordinate to this object; and, to my mind, it it quite clear that we have no right to pursue is further. The care of the remaining interests of the Government in the institution is confided to the Executive. The President appoints the Goverament directors. The Secretary of the Treasury has an almost unlimited power of examining the proceedings of the bank. Weekly statements are to be made to him, (sec. 11, art. 15,) and he has the right to inspect everything except the accounts of individuals. The purpose is manifest: it is, in the first place, to enable him to judge of the conduct of the directors appointed by the Government. It is, in the next place, to enable him to decide whether the public interest in the bank, consisting of the stock belonging to the Government, and the deposites of public money, are faithfully guarded. The necessary sanction for enforcing the exercise of this power, is also confided to the Executive. The President has