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22d CONGRESS,

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2d Session.

Rep.
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No.

121.

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BANK OF THE JJNITED S T A T E * * ' # *

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Mr.

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M A B C H 1,

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1833.

',, W Read, a»d postponed until to-taorrow.

from the (fommtlrce of Wavs» afid Means, to which the
subject had been r£ferr|*l, §tibmitte,d the following

YERPLANCK,

^ R E P O R T ANB RESOLUTION:'
That among the subjects referred lb &e Committee of Ways and Means^
at an e^rly period of the session, were fte transaction* of the Bank of the
Uffcted States in relatiojto the payment of a pprtiori of the public debt, and
the inquiry into the present pecuniary and financial state and management
of the, institution. The arrangement madefy the bank, for a temporary postponement, with
the consent of the holders," of the payment of five millions o£ the three per
cent, debt, being now substantially closed, by the surrender to the Govern*
ment of the certificates of stock, exceptTor a small amount, and the whole
d£bt itself having been liquidated s#far as it respects the Government, at
an earlier period thai* it is probable it would otherwise have been, this questi%S seema »o longer to present any important QT practical object of inquiry,
or tc*«alL for or admit any action ot Congress ;upon ijt.
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The compf&tee have examined several of the directors on the subject, as
well aS lipou other points connected with the management of the institution.
Their testimony is herewith submitted, and the committee specially refer
to the evidence of Mr. Bevan and Mr. Eyre,' as explanatory of the history
and motives of thfe transaction.
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It is due, however, to the Government, to express tfce opinion, that, in
&p arrangement made \gy the agent in England for the "puretiase of the three
per cent, stock, and the detention of the certificates, (whic,h meaguret were
subsequently disclaimwLby the bankj) th^institution exceeded its legitimate
authority, and had no warrant in the correspondence of the Se#et#y of th^
Treasury.
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\ The inquiry intd the present condition of the banb} tHfe* general character
of its business, and the soundness of its capital^ is a subject of much greater
interest and importance, since itiiwolvei-tiot only the question of the safety
of the public deposites, but the Value of the large amount oFstock held by
Government, and the still more momentous considerations of .the soundness
of a larg? portion of our currency and thc^consequent security or insecu­
rity of (nedomestic exchanges ancPcommerce of fh£ country.
The President, in his message |o Congress* at 4he opening of the present
session, informed them "that such measures as werelvithin the reach of tb'
Secretary*o£the Treasury had been taken, to enable him tq judge whet'
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the public deposites in the Bank of the United Stajtes were entirely safe; but,
as his limited: power might prove insufficient to that object," the President
recommended the subject to Congress, as particularly worthy of their inves­
tigation.
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Since^thsS periftd, the report of theaigent, appointed by Government.for
this examination, has been commufticMed to Congress, and referred to this
committee. The Committee of Ways and Means have also, received from
the directors of the bank a report on the principal poj^ts of its administra­
tion, and its present state, prepared by the exchange^cTOnmittee of the bank,
and adopted by the board of directors.
The importance of the statements and results'contained in that report,
induced the Committee of Ways and,J\Jeans, in the course of the examina­
tion of the directors, composing the exchange committee, to require their
attestation, under oath, to the facts and statements of that paper, as distin. •
guished from its opinions and arguments: This was done very fully.
The same and other directors, (two of whom had, her«tofo^e, keen Govern­
ment directors, one under the present, and one nnder two former adminis­
trations,) in reply to various interrqgatorjts, stated, as will hfrSjaen in the
evidence herewith submitted, the means at the command of the board of
directors, or any member of it, for distinctly knov^ig the operations of t|jk
several branches, and the character of the paper discounted at them, togethef
with their own opinion, drawn from these sou|ces, of the general safety of
such paper.
The Committee of Ways and Means have to regret that the constant and
-daily pressure*of the various duties which have devolved upon them, during this short and laborious session, did not permit a more full examination
of the concerns of the institution. Jf,jK>weverf in the entire absence of any
, evidence, calculated to refute, or in any other way impeach, that which is
before the committee, the statements and opinions of the agent selected by
the Treasury to examine the condition of the bank; those of several.of the
present directors, men of character and intelligence, long conversant with
accounts and banking business; the official returns of the b&nK itself, and
the report of its principal committee, attested to under oathf if all these
•can be relied upon as furnishing satisfactory information on the present
state and pecuniary means of the institution, the following results wilF
appear:
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JFirst* The directors of the bank at Philadelphia, receive fnJm the boards
of their branches frequent, regular, and minute returns of the paper discount­
ed by'them. These returns, together with the separate correspondence of
the cashiers tof the several branches, afford such information of all the business
of those branches as^o enable the board of the mother bank, or. any single
director who may wish to enquire into it, to ascertain the character of the
business of those branches: as, for instance, whether the mass of paper dis­
counted be founded on ordinary, commercial transactions, and to be paid
from their proceeds when at maturity,* dr whether any considerable pro­
portion of it consists of what is called accommodation paper, jor permanent
loans in the shape of promissory notes, recujwly renewed.
They can know, in like, manner,-whe^pfer the domestic bills of exchange,
purchased at the branches, arine*out of business transactions, and to be paid
when at maturity; or whether they are mere accommodation paper, in
another form, to be repeatedjkk renewed, Jby drawing and redrawing, be­
tween distant offices.
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Second. These returns, together with the reports of the boards of the,
several branches, upon whose character and judgment they place great re­
liance, form the ground upon which the directors have stated, under oath,
their full confidence that the mass of £aper discounted by the bank and its
branches, detailed as active debt in their statement, is safe. On thjs they be­
lieve no serious loss need be apprehended. The* dishonored paper held by
the bank is stated to be returned as doubtful or suspended paper, and to be
estimated, not at its nominal, but at its presumed actual value. The real
estate of*the bank is in like manner valued, not at cost, but on estimates
founded on frequently renewed appraisals of the ^probable market value.
They depose that, to the best of their knowledge and belief, the wholfe
amount, with inconsiderable exceptions, if any, of domestic bills of ex­
change purchased by the bank and its officers, is regular business paper,
founded upon the agricultural exports and commercial imports of the coun­
try; and that by far the greatest portion (probably nine-tenths) of the notes
discounted is of the same character. They also attert, with much confi­
dence, that most of their apcommodation notes are well secured, and form
in fact the safest investment of the bank.
The inquiries respecting the amount of accommodation paper were made
to ascertain the character of the general business transactions of the bank,
and not because the committee believed that accommodation paper discount­
ed to a great extent* would necessarily endanger the solidity of any moneyed
institution. Such paper may frequently be as safe, and such loans as usefol,
as any. But it is certain that, when moneyed institutions are in a hollow
and unsound state, it commonly arises from the capital having been invest­
ed in doubtful paper of this description. The very fact, therefore, of the
discounts of a bank being principally applied to the ordinary business paper
of air active commercial community, will show that, allowing for only
ordinary judgment and integrity in the selection* of such paper, nothing
short of some general overthrow of mercantile credit will produce material
oss.
Third. In general corroboration of their statements on this point, as well
as of their opinions of the security of the bank debt, the director* appeal,
1st, to the fact of the greatfluctuationof th* exchange business, at differ­
ent periods, at the same points, corresponding with the periods of the ship­
ments of agricultural produce in the west; as, for instance,, at Nashville within
three months in 1831, from 366,000 dollars to 1,062,000. And, again, at
the same place, in 18SB, within about a half a year, from 2,760,000 dollars
down to 503,000 dollars. 2d, {hat of the easy reduction, during the last
year, of about one-eighth of the whole amount ofKthe bank debtihrougnout
the Union, and especially the amount reduced in the western offices. 3d,
to the very Bmall amount of losses which hsVe occurred, for some time
past> in those offices; and the facility, with which, in addition to the aggregate
reduction of loans there, a very considerable proportion of the local debt,
on promissory notes, has been^orfyerted into the more secure and managea­
ble form of domestic bills of exchange.■
If these statements and Ms evidence cat 4>e relied upon, the available and
secuife resources of the bank amounted, on the first of Jarinary last, to eighty
millions eight hundred and sixty-five thousand dollars, whilst all the claims
against it, for bills, debts, aud deposites, including those of the Government,
and for the redemption of tht public debt, were but 37,800,000 dollars,
legating above forty-three, millions as a guarantee to the ^nation against any

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[ Rep. No/121. ]

losses. For, as the whole amount of debts, bills, and deposites, must be paid
before the stockholders, the whole capital and the surplus must be considered
as a pledge for the!debts due to individuals an$ the Government.
As the capital consists of* thirty-flVe millions of dolFars, it would appear,
from this statement, that the bank had earned and then possessed a surplus of
twenty-two. per cent above the amount of its capital. Whether that whole
surplus could or could not be realized at a final winding up of the bank, is
a subject only interesting to the buyers, sellers, and holders of stock; and
though it is desirable that the Government should ultimately receive a pre­
mium upon the seven millions of stock held by it, still this is but a,secon­
dary consideration.
The single point of view in which this surplus is very important to the na­
tion, is in regard to its bearing on the healthy state of the bank, and the
consequent safety'of the public deposites, and the sound state of the currency.
For these objects, it is sufficient to enquire, whether this surplus does or
does not afford a sufficient guarantee that the original capital of 35,000,000dollars is unimpaired.
The whole amount of bills and paper held by the bank on the 1st January
last, was #61,695,000 of which $8,246,000 is stated to be the local debt
of the western States, leaving $53,749,000 as the debt of the Atlantic com­
mercial cities, and that in the shape of domestic bills between them and the
interior. There seems no reason to doubt that the paper*of the description
last mentioned is of the same general character as that of other city banks
managed with ordinary discretion.
Now, it is well known that, in our great cities, business paper is constantly
guaranteed by commercial houses of prudence, stability, and Wealth, for a
del credere commission of two anfi a half per cent. On much of the bet­
ter class of paper, and in some of our northern cities, upon most of it, the
charge is much less; but a greater proportion of loss than this ought certainly
not to oceur in a well managed city bank, where the judgmentand information
of a board of directors are combined with that of its officers. In point of fact,
it is believed, that two and a half per cent, on the discounted paper actually
exceeds the losses of prudently managed institutions in our cities. But, allow­
ing the loss on the Atlantic and commercial debt to reach four times that
amount, say ten per cent, then $5,370,000 of the surplus would be an am­
ple guarantee against such loss. This would leave about $2,680,000 as a
further surplus, which would meet the loss of about one-third of the local
western debt, without impairing the original capital of the bank.
Or, in another view of the subject, if the bills of exchange purchased at
the western offices be added to the local debt of the western States, then.
4,823,000, or ten per «ent. on the whole, would more than meet the losses.
on the remaining notes and bills held by the bank, and due in the maritime
States, leaving about three millions two hundred thousand dollars to meet
all western losses; which would be above twenty-five per cent, or one-fourth
of that whole debt in every shape
The committee do not mean'to be.understood as asserting their belief that
the western debt is more hazardous than that in any othe* part of the Union.
The bank directors express their convictio|p that it is not so; and the agent
appointed by the Treasury does not hesitate to say, " that he considers that
debt in a safe and wholesome state, and that a greater amount of loss need not
he apprehended from it, than iJ^M^4simiIar mass distributed in the cities of
the Atlantic frontier;" but Uii&3PtKa|%. has been made, becfcus^f^extent

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-of the western transactions of .the bank has been mentioned as one of the
■subjects peculiarly calling for investigation.
These general views of the situation of the bank, and the consequent safe­
ty of its depositors and bill-holders, derive strong confirmation from the
fact of the large proportion of the specie in the country which is held by the
bank.
It appears, from officfal documents of unquestionable authority, that the
specie actually in the vaults of the Bank of the United States is within onetenth gf the amount held by all the other banks in the Union together,
whilst its circulation of paper is but one-fourth^ the aggregate of theirs.
In other words., the Bank of the United States mtnow above nine millions
of specie with a circulation of notes to the amount of seventeen millions and
a half, whilst the aggregate of all the other banks with specie in their vaults
of from ten to eleven millions, have a circulation of sixty-eight millions of bank
paper.
If, then, the evidence herewith submitted can be relied upon, which it is for
the House to judge of, there can be no doubt of tft entire soundness of the
whole bank capital, after meeting all demands upon it, either by its billholders or the Government; and such is the opinion of the committee, who
feel great confidence in the well known character and intelligence of the di­
rectors whose testimony supports the facts above stated.
Resolvedy That the Government deposites may, in the opinion of the
House, be safely continued in the Bank of the United States.
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22d

CONGRESS,

2d Session.

T Rep.

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No.

131-

1

Ho. ttv

REM.,

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BANK UNITED STATES—VIEWS OF T H E MINORITY.

MARCH 1,

1833.

Read/ and postponed until tq-jnorrow.

Mr.

POLK,

from the minority of the Committee of Ways and Means,
submitted the following

REPORT:
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The minority of the Committee of Ways and Means, consisting of three of its
members, to whom was referred so much of the message of the President of the
United States, of the 4th of December last, as relates tb the Bank of the United
States, and to whom ioas also referred the annual report of the Secretary of the
Treasury upon thteame subject, have had the sanie under consideration, and, n
concurring in the report of the majority, ask leave to report:
That the attention of the committee has been directed chiefly to ihe
transactions of the' bank in relation to the proposed payment, by the Go­
vernment, of a large portion of the public debt, denominated the three per
cent stocks, during the past year, and on the 1st of January, u l t , whereby
the payment of a portion of that debt has been postponed by the bank
beyond the period^xed by the Government for its reimbursement To
ascertain the true sjjk of facts connected with this transaction, the com­
mittee deemed it proper to request the Government directors of the bank,
and a part of the directors on the part of the stockholders, to attend before
them, and give information upon the subject Several of the directors,
both on the part of the Government and of the stockholders, accordingly
attended before them, and gave testimony upon the subject Their testi• mony is herewith submitted with this report. Sundry letters and docu­
ments upon the same subject, numbered from 1 to —«-, inclusive, are also
herewith submitted. From all which the following facts appear: That the
bank, as early at the month of October, 1831, gave instructions to its offi­
ces, and particularly to those in the western and southwestern portion of
the^country, to curtail their business, and furnish aid to the principal bank
and the eastern offices, to enable the institution to meet the large payments
of the public debt which were anticipated during the following year. From i
the answers redeived from the offices in the west and southwest, this effort i
to curtail its discounts seems to have been'unsuccessful, as will be more par- f
ticularly stated in a subsequent part of this1 report
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Some inquiry has been made into the general condition and management J
of the institution, but, from the want of means and time, a thorough inve#« 1
^tigafion could not be had upoh these points. They content themselves, >
'rthereforc, with submitting the facts of the case as they are disclosed by 1
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documents, and b^ the oral testimony of the directors, in relation to the
payment of the public debt, adding such particulars upon the other points
as they have been able, in the limited period allowed them for the investi­
gation, to collect
It was*anticipated by the bank, at an early period, that the Government
would, during the year 1S32, draw from it neariy^he whole of the publie depositiflAo be apgHed in payment ofmhe national *lebt. On the 24th
of December, 1831, m a letter from the cashier of the principal bank to
the cashier of the New Orleans branch, it is observed, "that such appears
to be the anxiety of the Government for the early extinguishment of the
public debt, that we are not likely to have the use of any considerable
amount of Treasury balances during the coming year." In letters dated
20th and 21st of January, 1832, to the cashiers of the branches at Cincin­
nati, Louisville, Pittsburgh, Natchez, Mobile, Nashville, and Washington,
is the following declaration: " The rapid redemption of the public debt will
probably deprive the Atlantic offices, in a great degree, of the benefit of
Government deposites during the whole of the present year." In March
negotiations were entSred into by the President of the bank and the ex­
change committee, with the view of procuring a postponement of the pay­
ment of a portion of the public debt beyond the period which might be
fixed by the Government for the payment, so as to enable the bank to re­
tain possession, and have the use of the public funds which it held on deposite, during the period of postponement. Prior to the 13th of March, a
communjeation was opened by the President of theljank with Thomas
W. Ludlow, esq., of New York, the agent for the foreign holders of about
#%700,000 of the three per cent, stocks, with the view of postponing its
payment for one year beyond the time at which its payment might be di-,
rected by the Government In a correspondence commencing on the 13th
of March* and ending on the 23d July, and which is herewith submitted,
the following proposition was made by the President of the bank in a let­
ter dated 19th of March: « When the three per cent^jssumed by foreign­
ers, whom you represent, shall be paid off, the ban^Pvill continue to pay
the interest at the same" rate, for one year from the date of the payment by
the Government. At the expiration of that year, if you will give to the
bank three months' notice of your wish to receive reimbursement of the
principal, either in the whole or in part, the principal shall be so reimburs­
ed. And if the bank will give to you, or to whomsoever may then repre­
sent the foreign stockholders in this cpuntry, a like notice of three months,
of their intention to make reimbursement, either in whole or in part, the
agent of such stockholders shall receive such reimbursement, and surren­
der the certificates." About the same period, a similar negotiation was open­
ed with another representative of about a million of stocks held* abroad;
but neither yas brought' to any satisfactory result, for the want of power
in the f^Hts J>f the foreign stockholders, to make such an arrangement.
These propositions were concealed from the Government.
On the 24th of*March, the acting Secretary of the Treasury informed
the President of the bank, that it was pr$p6>ed to give notice of the pur­
pose of the Government to redeem one-half of theyferee per cent, stocks,
(about six and one-half millions pt dollars*) on the flfet day iof the succeed­
ing'July, remarking to him, if any objection,occurred to hmV, "either as
to the amount or mode of payment," to suggest it, * The President imme­
diately visited Washington, and urge! the Government to postpone the ^
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tended payment for three months; and upon agreeing, on behalf of the bank,
to pay the quarter's interest, procured the postponement unfil the §rst of
the succeeding October. Having failed, as we have seen, to effect a post­
ponement with the agents of foreign holders residing in this country, but,
by representations made to the Government, having succeeded in obtaining
a postponement until the 1st of October, the bank was temporarily relieved*
but, as the period approached for the payment in October, it found it neces­
sary to seek further relief, Between the 1st and 10th of July, the Presi­
dent and the exchange committee determined to open a negotiation in Eu­
rope for the postponement, for one year, of the payment of five millions of
the three per cerft. stocks held abroad; but they carefully concealed* their
intention from the Government, and there is strong reason to believe, in­
deed it is certain, that it was concealed also from the Government direc­
tors and the board itself. This will be shown more clearly when we
come to examine the proof on this point. Gen. Cadwallader, a director of
the bank, was requested to undertake the mission. He received his instruc­
tions on the 18th July, and sailed for Europe on the 20th. On the 22d
August, Gen. Cadwallader closed an arrangement with the house of Baring,
Brothers & Co., of London, providing for the purchase or postponement of
five millions of the United States' three per cent, stocks for one year, from
the first of October, 1832, the Barings retaining possession of the certificatesN
of that purchased, and U^tftockbolders retaining the certificates of that post­
poned; and, in the eveflKhe amounts purchased and postponed should not
equal five millions pf dollars, then the Barings were to give the bank a
credit for the deficiency,*upon which the bank might draw. In a letter,
dated 22d of August, and received as early as the 1st of October, Gen.
Cadwallader informed the President of ihe bank of the tenor and substance
o f this agreement; and, in a letter dated 25th August, enclosed the agreement
itself. The Barings proceeded under this contract to make purchases of
stock on account of tfie bank, and for the bank, to the amount of #1,798,597, 57, and procured the postponement of $2,376,4S1 ,45, amounting, in
all, to $4,175,079 02, of which they apprised the President of the bank
from time to time.
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A supplemental agreement was made by Gen. Cadwallader, on the 13th
of September, with the Dutch holders of three per cents, who might con­
s e n t to postpone the payment of their stock, stipulating to pay them,, at the
c l o s e of the period of postponement, at the rate of forty cents per guilder.
On tfie 15th October, the President of the bank wrote' to the Barings,
disavowing so much of Gien. Cadwallader's arrangement as provided for the
purchase of stocks on account of the bank, on the groundVtJiat it was a vio­
lation of the bank charter. In the same letter, he propo^es^as a substitute
for Gen. Cadwallader's arrangement, that all the certificates, both of tfief
stock postponed and purchased, that the portion which the stockholders
have consented to postpone "should be passed to their.credit on'the books
of t h e bank, and continue to bear art interest of three per cent, per annum,
p a y a b l e quarterly, until the 1st of/October next, when the* principal will be
reimbursed;" that «the portion purchased by you, [the Barings,] will,
i n l i k e manner, go to your credit, when it is paid by" the Government.
A t that time it will be for you to determine whether, it shall bontioue to
d r a w an interest of four per cent.* (if that be the rate,) payable quarterly,
o r whetfiir you would desire immediate payment." In a letter dated 19th
O c t o b e r , the Resident propcoes, in. case, of any difficulty ^ t g ^ s t o c k -

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[ Rep. No. 121. ]

holders who have agreed to postpone their stock, to let them retain the cer­
tificates, and adds, " we will endeavor to accomplish the object of the bank
withdut possession of the certificates." In a third letter, dated 31st Octo­
ber, the President urges the surrender of all the certificates, and says:
" Should any difficulty occur, it would be agBee*J)le to the bank if you
would obviate h i t h e r by causing tjhfe certificates to be sent to the bank
for immediate reimbursement, or, if necessary, by purchasing the certifi­
cates on your own account, in the same manner as was done with those preyiously*purchased, and taking your reimbursement in the mode most agree­
able to yourselves."
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On the 6th November, the Baring's received the President's letter of the
15th October, but took no immediate steps to comply with.his wishes.
On the 14th November, the Baring's received the President's letter of the
19th October, and, in reply, referred him to their agent in the United States,
T. W. Ward, of Boston, to make an arrangement relative to the purchased
stock, expressing a desire to accommodate the bank.
On the 22d November, the Barings received tbe President's letter of the
31st October, and, in relation to the deferred stock, say: " We have alreadymentioned to you that several of the holders of the three per cent certifi­
cates made the retention of them the condition of their postponing re­
imbursement There can be but little ground, therefore, to expect that they
would now accept less favorable terms, and we Jtf>no4 express any confi- *
dencc in an attempt to persuade them to reliev«pb bank from the engage­
ment* we entered into with them on ^ts behalf."
The Barings, however, issued a circular, inviting the holders to surrender
the certificates, " engaging to obtain for you" (the holders) " an acknowledg­
ment from the bank, that the amount has been passed to your credit on its
books, and will be either held at your disposal or remitted in a bill at the
usual time on the 1st of October, 1833, up to Which period it engages to
remit the. interest, as before it was reimbursed. Should you, however, for
any reason, prefer an immediate remittance, both of interest accrue4 and
capital, the bank will of course comply on receiving your instructions to
that effect" To the stockholders who desire if, the Baring's agreed to give
the guarantee of their house for the faithful performance of the mere agree­
ment
There is no evidence to show what is the nature of the agreement finally
made by the bank with the Barings, through their agent Mr. Ward, i£ re­
lation to the purchased stock} nor is it shown, with precision, to vvhaf amount
the holders of the deferred stock have agreed toi give up their certificates,
and receive a credit on the books of the bank, bearing interest until, reim­
bursed in October, 1833. From the letters of the Barings to the bank, dated
29th November, and 6th, 14th, 19th, and 22d December," we collect vari­
ous items of the deferred stocks, for which the holders have agreed to w a i t
for reimbursement until October, 1803, surrendering the certificates, a n d
taking a crediton the books o{thfe bank,'amounting in all to $1,428,974 5 4 .
There appears to be still outstanding of the stocks postponed under G e n .
Cadwallader's arrangement $918,381 98, most of which will probably
not be called for until October next; so that the ptobable amount of thoseu
stocks, w^ich will #ot be paid until that time, exceeds two millions of d o l ­
lars. But the sum of #1,428,974 54 is now known to have been definitively
postponed until October, 1^33, according to the proposition contained i n
the President's letter to % Qlri&gs, of the 15th O&ober^a^^fcJthough

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the Government has probably been released from its responsibility, and in
the accounts of the bank with the Treasury the whole amount is represent*
ed as paid, yet, to the amount thus postponed^ nothing has, in fact, been paid
by the bank.
By the monthly statement of the bank of the 1st February, 1833, it appears
that there was then standing to the credit of redemption of public debt, assign­
ed by the Government to that object, but not yet applied by the bank, the sum
of
.
.
.
.
.
$5,163,075 40
To this add the above sum definitively postponed until
October, 1833, but transferred from Government to indivi­
dual account,
- $1,428,974 54

I

I

11

•■

'

Giving a total of

,-

-

-

-

$6,592,049 90

There was, therefore, an aggregate sum exceeding six millions five hun­
dred thousand dollars ordered to be paid in October and January last,
. which had not been paid by the bank on the 1st of the present month, un­
less the assumption of $1,428,974 54 of it, by the bank, be considered a
payment to that extent.
.
"
•
'
.
'
Various reasons have been assigned by the bank and its officers for the
postponment of the payment of these stocks; and the committee propose,
briefly, to examine them.
L It appears, from o,ffieial Jocuments in possession of the committee, that
the President of t{ie bank^ as early as the 13th March, 1832, after having
previously, as we, have seen,taken measures to curtail the discounts at the
' western and southwestern offices, and after having made a fruitless effort to
obtain aid from these offices, stated to the board " his views in relation to
the4 probability of the redemption, by the Government, in the course of the
present year, of a large portion of the three per cents, of the United States,
more than one-half of which he stated to be held by foreigners} the magni­
tude of whose claims on the bank might, possible expose the community
tOkgreat inconvenience, unless some measures shoura be adopted for deferring
i a part of the payment which miy be required," &c.
For the postponement from July to October, sought by the President, of
\ the Government, in a letter to the Secretary of the Treasury, dated 29th
Mar eh, 1832, he gives the following reasons, viz.
"Tgle inconvenience, then, of the proposed measure is, that the repayment
of s i * qr seven millions'of dollars, more than one-half of which is' held in
Europe/ may create a demand for the remittance of these funds, which
would operate injuriously on the community, and, by abridging the facilities
which the debtors of the Government are itf the habit of receiving from ttoe
L bank, may endanger the punctual payment of the revenue, as the bank will
I necessarily be obliged to commence early its preparations for the reimburse• mentof so large an amount of public debt."
I The President, in a postscript to that letter, illustrates his meaning, as
1
follows, viz.
" P . S. As an illustration of the effect of the measure proposed, I may
k Mention that, in the month of February last, the collector of New York, with
'; a laudable anxiety to protect the public revenue, applied'to the bank to au­
thorize an extension of loans in that city, in order to assist the debtors to the
Government. This was promptly done. This*I should desire to do again,
[ as the payments to the Government during the next quarter will prdbaoly
[ be very large.
N. B.

1*

[ Rep. No. 121. ]

In his evidence before the committee of investigation last year, (see do­
cuments accompanying the report of the committee, page 530,) the Presi­
dent of the bank adds another reason for this postponement After refer­
ring to the letter ofthe acting Secretary of the Treasury of the 24th March,
1$32,* heretofore alluded to, he proceeds to say: **Thus invited by the Go­
vernment, in a communication marked <confid$rrtial,, to give my opinion
Jjm a measure contemplated by the'Government, I felt it my duty to express
illy views of its probable' operation." He then adverts to the contents of
his letter of 29th March, in reply, and proceeds: " Having thus performed my
daty in giving the opinion asked, I left it, of course, to the Government to
decide. On the part of the bank-I sought nothing, and requested nothing.
After weighing the circumstances, the Government were desirous of adopt­
ing the measure,"&c.; and concludes, " Now it will be seen, that in all this,
the bank has not had the least agency, except to offer its opinion when it
was asked, in regard to a measure proposed by the Government, and then to
offer its aid in carrying that measure into operation."
For the secret mission of Gen. Cadwallader to Europe in July last, and
the postponement negotiated there, in a letter to the Secretary of the Trea­
sury, dated 27th October, 1832, Hhe President of the bank adduces reasons
similar to those contained in the foregoing*extracts, and adds—
" Their inherent difficulty has increased, on the present occasion, by the
prevalence of the cholera, which was already in New York and Philadel­
phia, and seemed destined to pervade the whole' country, deranging, in its
progress, all the relations of business, and threatening duch a general pros­
tration of commerce, as would endanger the punctuality of private engage­
ments, and put to great hazard the public revenue, of which the, estimated
receipts, from July to January, ^vere about thirteen millions. To those who
witnessed its ravages, it was manifest that'a continuance df the pestilence,
for a few weeks longer, would have thrown into great confusion the pecu­
niary affairs of the country; and have pressed, with peculiar force, on the
public revenue, more especially as the demand on account of the foreign »
holders of three per cenw. at New York and Philadelphia alone, on the 1st I)
of October, would have exceeded five millions of dollars. Under these [.
circumstances, the bank deemed it an imperious duty to avert, as far as
possible, the effects of such a calamity, and to husband its means, in order
to interpose, if necessary, for the relief of the community. It was deter­
mined, therefore, to reserve five millions of dollars for that purpose; and,
accordingly, the foreign holders of the three per cents, to that amount,
principally represented by the bank as their agent, were invited to leave
the fand with the hank for a few months after the payment by the Govern- I
ment, receiving from the bank the same rate of interest."
•The reasons given by the exchange committee, in their report to the di­
rectory on the 29th of January last, correspond with those given by the
President They also place the negotiation with Mr. Ludlow, inMarch,
1832, on the ground of preventing the inconvenience which might arise in
suddenly withdrawing so much capital from the country. They likewise
attribute to the Government the postponement from July to October, re­
marking, that " The Treasury Department having applied to the bank for
its opinion, as to the expediency of making a payment of sixtnillions on
the first of July, the opinion was given, that it would be better for the coun­
try not to make such a pressure on its resources at that moment; and the
payment was postponed, th*e bank consenting to allow tlip Government the

[Rep. No. 121. ]

,13

quarter's interest during the interval/' In relation to the postponement ne­
gotiated in Europe, the committee say—" From the communication with
the Treasury, in July, It. was probable that the funds of the Government
might be insufficient to pay the debt advertised to be paid," &c. « I t was
further manifest, that thelfcility of the Government/to meet its engagements
depended entirely on the jfemcti|al payment of the revenue in the commer­
cial cities from July to January, which was estimated at about twejve mtt?
lions of dollars. That revenue was threatened with the greatest danger ©J*
the appearance of the cholera, which had already begun .its ravages in New
York and Philadelphia, with every indication of pervading the whole coun­
try."
As to the reason given for desiring, on the 13th March, 1832, to defer
the payment of an unlimited amount of the three per cents., it would be at
all times equally applicable.' The sending of money out of the, country
without any return, especially in large amounts, would unquestionably re­
duce the value of property, and create commercial embarrassments. But,
as in commercial transactions, so in the transfer or payment of stocks, an
export is followed by an import, .and a reimbursement by a reinvestment
A large portion cf the public debt of the United States has always been
held by foreigners. It has been paid from time to time without any sensi­
ble effect upon the community.' That portion held abroad, which remained
to be paid, two-thirds, in October and one third in January last, was about
#7,800,Q00. But it must be recollected that these funds do not all lqave
the.country. A portion of them is reinvested in other stocks, and at the
same time other funds are introduced. It is not long since the city of
Washington borrowed in Holland, and brought into the country, a million
of dollars to be invested in canal stocks.' A large portion of the New York,
Pennsylvania, and Ohio canal'stocks have passed into Europe. In the
transactions of a fe^y months, disclosed in the report of tlje investigating
committee of last year, (see Bank Report, page 125,) the process is exhihited by which $-1,794,000 of American stocks was sent to England by a sin­
gle broker. It is understood that the Louisianaloan of last year, amount.
ing to $ 7,000,000, was all taken by the house of Baring, Brothers fit Co.,
of London; and we perceive that the President of the bank, in his letter of
the 15th October, proposed to pay them the amount of the three percent.
stocks purchased by them for the bank, by funds in £*ew Orleans. While
old stocks are paid off to foreigners, new stocks are subscribed for or pur­
chased by them, and it is doubtful whether the aggregate held by them in
thisjcountry is not now greater than it .was ttyo years ago. The Louisiana
loan of itself is nearly sufficient to counterbalance the Government three
per cents. In addition to these facts, the Government itself, by its success­
ful diplomacy, is bringing large sums of money into the country from Den­
mark, France, &c. On the whole, it does not appear that the drain of funds,
and the commercial embarrassment anticipated from promptly paying off
the three per cents., could have taken place; and the apprehension of such
, serious consequences appears to have been without foundation. The next
reason given for seeking the postponement of the proposed payment of
about six and an half millions from July to October, viz.; tho necessity of
extending accommodations to the merchants who had duty bonds to pa£ to
the Government, inoVder to secure the payment of the revenue, itself, ap­
pears not to have guided the bank in its subsequent course. The monthly
statements from the Now YorV branch show ver,y conclusively that the jgreDigitized by V J O O Q I C

14

[ Rep. No. 121. J '

sident is mistaken in his illustration, contained in the postscript to his letter
of the 29th March, to the Secretary of the Treasury; and that the bank did
not, after the indulgence was obtained, extend those accommodations in the
commercial cities which he stated to be necessary, and which had been the
inducement with the Government to grant the postponement, which the
bank asked from July to October. The amount€f discounts and bills pur­
chased at the New York branchy at the days stated, were as follows, viz.
?<See Toland's Report, page 16, pf December, 1832.)
~
#6,071,613
m
, «,.,
reurusry
7, 5,948,423
March
April
4, 5,769,363
2, May
5,581,684
6, June
5,327,861
a
u
20, 5,174,109
3, 5,321,419
My
a
5,575,547
August
h a
6,222,137
September
5, - ,
5,845,155
October l
3, - ,
6,314,187
«
November
7, a
6,046,53c
December
1, - ■ *
6,170,687
1833, January
1, It hence appears that the aggregate of discounts and domestic exchange at
New York, instead of being increased in February, was steadily reduced.
from the, 2d of February to the 20th June, to the extent of near #900,000;
that it then rose again, but, on the 1st of December, was still below its
amount in February last; and on the 1st of January, was about the same as
in the preceding February. Mr. Eyre, a director of the bank, and a mem­
ber of the exchange committee, examined as a witness before the cofijfrnittee,
has appended to his testimony a statement ineludfng foreign bills purchased,
and balances due from city banks, commencing on the 3d of July, itocl end­
ing on the 3d October. Even this statement shows a diminution of the
amounts due to the bank avwn to the 25th July, and then an increase, to the
26th September; but the increase consists almost entirely of an augmenta­
tion of the balances due from the city banks, and is not certainly that sort of
accommodation to the merchants which was referred to in the President's
representations to the Government, when he asked, in behalf of the bank, the
postponement from July to October.
'
v
If there was but little extension of accommodation to the merchants1©
New York, there was more* to those at Philadelphia. From February,
1832, down ft) January, 1833, the amount of discountsaarid domestic bills at
the principal bank has been as follows: (See Toland's report, page 16.)
1832, February*
2,
.
- $9,759,832
«
March
1,
" *
8,843,354
"
April
'
5,
8,080,614
"
May
3,
.
.
* 7,575,163
"
Jtfne
7,
7,398,923
"
July
5,
7,230,311
"
Atjgist
2,, .
£010,793
"
September
6,
7,017,008
"
October
4,
.
.
.
6,562,051
"
November
1,
* 6,579,912
. *■ "
December
r,
f DigfnzedbyGoo#&?4,715
1833, January
1,
6,5S6,945

[ Rep. No. 121. ]

15

It appears that, instead of an extension of loans at Philadelphia, there has
been a very heavy curtailment, amounting to more than three millions of
dollars, within the first nine months; and that the loans at that place on the
1st January last, were more than three millions less than they were a year
ago. During this periqsl the discounts on stocks at that place have increased.
At Baltimore there Was a curtailment^ from February to Noverfiber, of
about half a million, and the loans at that branch were, on the 1st January
last, .less than they were! a year ago.
At Boston, from February to June, 1832, there was a curtailment of more
than $700j000, but the debt has since increased so as to exceed its amount
a year ago.
On the whole it appears by the statements of the bank, furnished by it­
self, that no extraordinary accommodations were granted to the community
at the points where the revenue is principally collected, in consequence of
the indulgence obtained from the Government. ' On the contrary, during
the first part of that indulgence there was a general curtailment, and, at the
four commercial cities, the aggregate of accommodations was less on the 1st
of January last than it was on the 1st January, 1832, by $3,185,996. In­
deed the testimony taken by the committee clearly proves that, neither at
the time the indulgence was granted, nor at any subsequent period during
the past year, have the importing merchants needed or received any unusual
accommodations. . The following question was put by the committee to
Joshua Lippincott, esq., a director, viz.
" Has there been, during the past, any pressure generally upon that class
of merchants in Philadelphia who secure and pay the duties to the Govern­
ment upon foreign importations?"
To this he answered, " None more than usual"
Tfl^rmmilar question John T. Sullivan, esq., another director, answered:
I " l a m not aware of any pressure, generally, upon that portion of our
|citize»|S» I believe no extended accommodations have been made to them
by theubank. The importers, in my opinion, have been borrowers,to a
verf moderate amount."
Manual Eyre, esq., another director, answers:
" I think the pressure was not so heavy on the east as on the west for
that time, and forbearing to take from the west, enabled them to pay to the
east, &c. I do not recollect whether any increased accommodations were
granted to the importing merchants."
It is thus proved by the testimony of the directors, that there was no un­
usual pressure upon that portion of the conimunity who pay duties to Go­
vernment, and, by the same testimony, as well as the accounts of the bank,
that not only no unusual accommodations were* extended to them, but their
usual accommodations have been Curtailed. To give them increased facili­
ties, and thus enable them to pay their bonds to the Government, was not
therefore the object of the bank in asking and procuring a postponement of
the public debt. Nor are the other reasons assigned by the President of the
bank [see bank document, page 530,'l] for seeking a postponement of the
Government nor his declarations that (t he^nade no application to the Go­
vernment, nor have I requested any suspension of the payment of the pub­
lic deblj" and that the measure was " proposed by the, Governmentj'^nor his
other declaration to the committee of the last year, that " I am not aware
that the bank, on the 1st of October last (1881,) or at any other period
during more* than nine years, in which I fiavtf been conjiected(g^ytas its

16

[ Rep. No. 121. ]

presiding officer, has sought or obtained any indulgence from the Govern­
ment, of any kind, in reference to the payment of the public debt;" nor the de­
clarations of the exchange committee upon the same subject—sustained by
the evidence taken by this committee.
Richard Willing, esq., a director, in his testimony says:
"With regard to the payment in July, in consequence of the pressure
on the western country, and the difficulty of withdrawing funds from that
source, it was desirable to postpone that payment to the 1st 6f October."
« I presume that the postponement to the first of October was concealed by
<
the Secretary of Ihe Treasury at the solicitation of the bank, with the
view that the bank might not press hard upon its debtors, or upon its accom­
modations to them, or for which period the bank allowed the Government
the interest. " I have no doubt the arrangement was made at the solicita­
tion of the bank."
Mr. Eyre, on being asked whether the object of the President, in visiting
Washington in March, 1832, was not to ask Government to postpone the
proposed payment of about six and a half millions from July to October, re­
plied, " I know that was the object of his visit," and says, *' it was known
to me, as a member of the exchange committee."
Asbury Dickens, esq., who, as acting Secretary of the Treasury, wrote
the letter of the 24th March, 1832, which brought the President of the
bank to Washington, says, in his testimony, " I wrote the letter as mention­
ed in the interrogatory, and Mr. Biddle came to Washington as therein
described. He represented verbally, and similar to those stated in his letter
of the 29th March, that it would be desirable to postpone the payment of
the three per cents, until another quarter; and I think it was upon my sug­
gestion that he put his representation in the form of a letter. The letter of
the 29th March was accordingly written; which, though dated in bank, was
written by Mr. Biddle at the Treasury. During the interview with Mr.
Biddle, Mr. McLane, the Secretary, came to the department. He had beenw
confined at home by indisposition, and, as well as I recollect, came out for
the purpose of seeing Mr. Biddle. The postponement was again urged
by Mr. Biddle, and upon grounds similar to those urged in his letter. Mr.
McLane did not, at that time, however, give any positive answer. I be­
lieve it was one or two days before the matter was finally settled, and the
consent of Mr. McLane was communicated to Mr. Biddle, through me,
verbally, on condition that the bank should pay the quarter's interest which
would accrue by the postponement. The application for the postpontment
was on ihe part of the bank, and was granted by the Government, not
because of any apprehension of a want of funds to meet the intended
payment on the 1st of July then next following."
It is clear, then, that the postponement was granted upon the application
and urgent solicitation of the bank, and for its accommodation.
On reference to the monthly statements of the bank, for the 1st April and
1st July, 1832, we find that, at theformer period, the public deposite in the
bank tvas $9,513,000, and at the latter, $9,811,000; being at the time the
postponement was sought by the bank: and during the whole intervening
period up to July, three millions more than the amount proposed to be paid
The Government, therefore, had no motive to propose the postponement.
In his letter of the 24th of March, Mr. Dickens first spates the purpose o
the Government to pay off, on the 1st of July, <c one-half of every certificate'
of the three per cents, and then adds, " if any objection occurs ftrvPU,...either
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• [ Rep. No. 121. ]

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17

as to the amount, or as to the mode, of payment, I will thank you to sug­
gest it." He did not ask any opinion as to the time of payment, but only
as to the expediency of paying so large an amount, or paying the certificates
by halves. But the President of the bank availed himself of the occasion
to procure from the Government a respite for the bank, which he had preTiously been secretly, but unsuccessfully, negotiating with the agents of
some of the foreign stockholders to obtain, and agreed to pay the interest
to the Government, as in his letters of the 13th and 19th of March, to Mr.
Ludlow of. New York, he had proposed to do to the foreign stockholders,
if they would agree to grant the bank a similar indulgence, by agreeing to
withhold their certificates, and postpone the payment. It is not probable
that the Government would ask, or that the bank would pay, about $48,000,
the quarter's interest, for an arrangement «' proposed by the Government,*'
in which the bank "sought nothing and requested nothing."
The reasons assigned by the President of the bank fof General Cadwallader's mission to England in July fast, and the postponement of five mil­
lions of the three per cents, held abroad, for one year beyond the time fixed
by the Government ior theit payment, are divided into three branches:
1st. The desire of the bank to accommodate the importing merchants,
who were the debtors of the Government in revenue bonds.
2d. The prevalence of the cholera in New York and Philadelphia at the
time the mission was resolved on. And,
3d. An alleged understanding, which, as will hereafter appear, never .
existed, between the bank and the Treasury Department, by which, in con­
sequence of a possible deficiency of public deposites to meet the payments
of the public debt, advertised to be paid on the 1st of October and the \«t
January, the bank might be required to make advances on account of th?
Government
As to the first, we have already shown that there was no unusual pressure
on the importing merchants during the whole year 1S32, and that no un.usual accommodations were extended to them; but that, on the contrary,
there was a considerable curtailment of discounts at the principal points of
importation. That reason, therefore, is as little applicable to the postpone­
ment negotiated in Europe in August, as to that procured from Government
in the preceding March.
In relation to the second reason, based upon the prevalence of the cholera,
the President says, "it was already in New York and Philadelphia, and
seemed destined to pervade the whole country;" and the committee O ex­
T
change, in their report, say, "it had already begun its ravages in New
York and Philadelphia, with every indication of pervading the whole coun­
try." The President says, "to those who witnessed its ravages, it was
manifest that a continuance of the pestilence for a few weeks longer would
have thrown into great confusion the pecuniarj*affairs of the country;" and the committee say, " had it continued as it began, and as all the appearances
in July warranted the belief of its continuance, there can be no doubt it
would have prostrated all commercial credit." By the experience of man­
kind, the fact is well established, that the visitations of the cholera, at any
particular place, are of short duration. Probably no instance can be found
in the history of the disease, in Europe or in this country, in which it has
raged at the same place during the space of two months. In our own cities,
its visits have generally been much shorter. To send to Europe for relief
after the disease had appeared, when a return could not possibly be received
3
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18

[ Rep. No. 121. ]

until it had passed away, would seem to be an inadequate means of provid­
ing against its ravages. In point of fact, during the months of July and
August, within which the cholera appeared and disappeared in Philadelphia
and New York, the bank accommodations were actually curtailed at these
points, in the former city, and not materially extended in the latter; nor
did General Cadwallader's arrangement enable the bank to extend its busi­
ness until the 1st of October—long after the cholera was gone from both
cities.
* *
But from the evidence taken by the committee, and from historical data,
it appears that, when the mission to England originated, the cholera had not
appeared in either Philadelphia or New York.
John McKim, esq., a director, residing at Baltimore, in his testimony
states, that, at the meeting of the board of directors, for the purpose of de­
claring the dividend of July, 1S32, "the mission of General Cadwallader
was mentioned at the board, but I did!hot consider the mention of it official.
The precise object of his mission I do not think was mentioned. I, how­
ever, understood that it had relation to the three per cents."
The meetings of the board to appoint the dividend committees, to which
the non-resident directors of the bank are called, are held, the committee
ure informed, on the Fridays preceding the first Mondays in July and Janu­
ary; and, on this occasion, that Friday came on the 29th of June. It was,
therefore, on the 29th of June that Mr. McKim heard the subject of thia
mission mentioned at the board.
General Cadwallader, in his testimony, says the subject was mentioned to
him c< between the 1st and I Oth of July, and the object explained to be a post­
ponement of the payment of the three per cent, stocks to the extent of about
five millions of dollars."
By a report of the board of health in New York, it appears that the first
case of cholera in that city occurred on the 2d of July; and, by a similar re­
port of the board of health in Philadelphia, it appears that the disease first
broke out in that city on the 15th or 16th of July. As the mission to Eng-.**
land had been projected as early as the 29th June, and General Cadwallader
had been requested to proceed to Europe before the 10th of July, and the
object explained to him, it is obvious that the ravages of the cholera in New
York and Philadelphia would not have weighed upon the minds of the Pre­
sident or exchange committee in determining on the mission, or on the
amount of payments to be postponed. It is true, on the 18th July, when
General Cadwallader's instructions were given, the cholera had made its ap­
pearance in both cities; and one set of those instructions commences with
saying, " the probability of the spread of the cholera may occasion great
embarrassment and distress in the community, makes it expedient for the
bank to keep itself in an Attitude to afford relief," &c. Nevertheless, it is
now evident that the cholera was not the moving cause of this mission; and
it is remarkable that it is not mentioned in General Cadwallader's private in­
structions, although in that document he is told, " we wish the arrangement
should, at all events, be made."
As to the third reason assigned for the postponement, there seems to be
quite as little ground for imputing this mission to a prospecUof having to
make advances on behalf of the Government It appears that, in a conver­
sation between the Secretary of the Treasury and the President of the bank,
probably about the 1st of July last, the Secretary, calculating his means.
closely, concluded that he *would pay off the whole of the three per cent.
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[ Rep. No. 121. ]

19

stock* by the close of 1833; but, as, in so close a calculation, it was possible
there might be a trifling deficiency of funds to meet the payment, on the
day fixed for that purpose, a suggestion was made, that probably the bank
would be willing to retain the certificates which it was understood to con­
trol, as agent for some of the stockholders, a few days, and until the public
deposites should be sufficient to meet them. To this the President assented. Mr. Dickens, the chief clerk of the Treasury Department, who was
present during the conversation, gives the following account of it: viz.
" I think it was suggested by myself, that it might so happen that there
would not be funds quite sufficient in the bank on the day on which the
debt would be payable, to pay it; and I think I suggested, at the same time,
that, in that case, the bank would doubtless be willing to hold back any cer­
tificates it might have the control of until funds should come in. There
was no formal agreement, to my knowledge, between Mr. McLaneandMr.
Biddle upon the subject: it was merely a conversation. If there had been
a probability of a deficiency of funds, the Government would not have
issued the notice."
It was, therefore, not a probability of deficiency, but a mere possibility,
which induced the Secretary of the Treasury, in his letter of the 19th of
July, after informing the President of his intention to give notice of the
paymen's to be made on the 1st of October and January, to add:
"This has been done with the understanding had between us, that, if it
should happen that the public moneys are insufficient to complete those pay­
ments, the bank will delay the presentation of any certificates of which it
may have the control, until the funds are sufficient to meet them," &c.
In his reply, dated 26th July, the President of the bank says: " the bank
has taken the necessary steps to obtain the control of a considerable portion
of these certificates, and will very cheerfully employ it in such manner as
may best suit the convenience of the Government."
If the President alluded to General Cadwallader's mission, it is evident
that he totally misunderstood the object of the Treasury Department: that
object was to pay off the whole three per cents, in January, by its own
means, if it should possess them; and, if not, the bank was to hpld back,for
a few days, a part of the certificates which it controlled as agent, until the
revenue, which was daily coming into the bank, should be sufficient to meet
them.
It is now alleged that the President of the bank here alluded to Gen. Cad- wallader's mission. But the result of that mission was not " to obtain the
control of a considerable portion of these certificates;" but, by a formal
contract, to leave them in the hands of the Barings, and other stockholders,
until October, 1833. The bank could not, therefore, " employ it in such
manner as may best suit the convenience of the Government,,, because, un­
less it wholly disavowed the expected action of its agent, it could not get
the control of the certificates, or exercise any power over them, for a whole
year. What was the object of the Government? It was to pay off the
whole three per cent, stocks in October, 1832, and January, 1833. It
was expected, that its own means would be sufficient for the purpose; but,
in case there had been a small deficiency, then it was understood that the
bank would hold back any certificates it might control to the amount of that
deficiency, for a short time, and until the public deposite should be sufficient
to meet it. No aid was expected from the bank, but General Cadwallader's
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lions in Europe, until October, 1833, was calculated directly to defeat the
Government, even in the application of its own means. No one deemed
it possible there eould be a deficiency to that amount, or a fourth part of i t
It must be remembered that the allusion of the Secretary to the under­
standing between himself and the bank was contained in a letter dated
at Washington, on the 19th July, which would not have reached Philadelhia before the 21st, and was not acknowledged until the 26lh. By Mr.
1 cKim's testimony, it appears that Gen. Cadwallader's mission had been
projected as early as the 29th of June; had been spoken to, and the
object explained, before the 10th July, had received his instructions
on the ISth, and sailed for Europe on the 20th. He says himself,
in his testimony, " at the time 1 was appointed to proceed to Europe,
no notice had been issued by the Treasury of the intention to pay the three
per cents., nor was it then known whether that stock was to be reim­
bursed in the whole or in part."
Is it possible, then, that the object of
liis mission was to provide against any possible deficiency which might be
produced by the reimbursement of that stock? It was not mentioned in
-either set of Gen. Cadwallader's instructions; nor in the letter of the Presi­
dent of the bank to the Barings introducing him; nor in his letter to Gen.
Cadwallader upon receipt of the Secretary's letter of the 19th July; nor in
his letter to the Barings, of 15th of October, disavowing and proposing to
change the arrangement; nor in his letter to the same, of the 19th and 31st
of October; nor in any other letter or paper in this correspondence.
Nor does the President of the bank, in his letter to the Secretary of the
Treasury, of 27th October, giving the reasons and results of Gen. Cadwalla­
der's mission to England, make the slightest allusion to any understanding
with him, or any probable deficiency in the Treasury, as having been one
of the inducements to that measure. On the contrary, he declares that the
whole fund of five millions provided by the arrangement with the Barings,
was set apart to guard against the contingencies of the cholera. He says,
the appearance of that disease made it "the imperious duty" of the bank
"to husband its means, in order to interpose, if necessary, for the relief of
the community. / / was determined, therefore, to reserve Jive millions of
dollars for that purpose; and, accordingly, the foreign holders of the
three per cents., to that amount, principally represented by the bank as their
agent, were invited to leave the fund with the bank a few months, &c;
andy as if he was anxious to convince the Secretary that it was the cholera,
and nothing but the cholera, which had produced the contract with the
Barings, he says, in conclusion, "that arrangement, as you will perceive,
was a precautionary measure to enable the institution to mitigate the se­
verity of a great disaster; and, when the country was happily relieved from
It, the means the bank had provided for the occasion, were applied to their
appropriate objects." When the bank, as late as the 27th October last, has
thus declared, that the fund provided by the mission to Europe was solely
intended to guard against the effects of the cholera, and, that danger having
passed away, had already been applied lo other objects without the slightest
regard to the condition of the Treasury, how can it now allege that it was
negotiated to meet a probable deficiency of public funds on the first of the
succeeding January? The declarations of the President of the bank then,
and of the exchange committee now, are wholly incompatible. Even now
the members of the exchange committee, in their evidence, declare that the
Government had no interest in this mission.
.Mr- Sevan, chairman of the exchange committee, says, " I presume the

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Government was not so informed [of Gen. C.'s mission to Europe,] because
his mission was not designed to inter/ere with any rights or interests of
the Government.99 Again: " as it involved no special interest of the
Government, I conceive they had no more right to be consulted in relation
to it than any other stockholder."
On no other ground can the concealment observed towards the Govern­
ment be at all palliated. The bank did not consult the Secretary of the
Treasury to know whether it would be agreeable to him that the possible
deficiency in the Treasury should be guarded against, by postponing the pay­
ment of five millions of the three per cents, a whole year. If it had, and
he had thought such a postponement necessary, he would undoubtedly have
replied, that he would effect it himself, by not giving notice of payment until
that time, and would not put the bank to the trouble and expense of sending anagent to Europe to effect the object privately^ But the whole matter was
concealed from him. So well did the agent understand that concealment
was expected, that he requested the Barings not to publish or even print
their circular to the stockholders. In his letter of the 25th August, enclos­
ing copies of the contract and the circular, he says, " I requested that the
letter should not be published, but specially directed as a private letter, in
manuscript, and signed by the house," appears not to have been published
in Europe, but, by some means, it found its way into the New York papers
about the 11th or 12th October. The publication of this paper, contrary to
the design of the bank, appears to have given to the Secretary of the Trea­
sury his first information relative to the objects of General Cadwallader's
mission to Europe, and led to the explanations contained in the letter of the
President, dated 27th October. The account therein given of tne arrange­
ment made with, and through the Barings, was, to say the least, imperfect
and unsatisfactory. He says, that certain foreign stockholders "were in­
vited to leave the fund with the bank for a few months after the pay­
ment by the Government, receiving from the bank the same rate of in'
terest;" when, in fact, there was a formal agreement with them, that they
should retain their certificates, and not come forward for payment until Oc­
tober, 1833; and General Cadwallader's private instructions show, thatjie was
authorized to allow an interest "as high as four per cent, or even four and
a half, including all commissions;" and on the purchased stock, at least,
actually did allow four per cent, and a commission of a half per cent.
The President of the bank did, indeed, say, " presuming that it may in­
terest you, I enclose you a copy of the correspondence on the subject of the
three per cents.;" yet the correspondence enclosed was only his letter to the
Barings, of 17th July, one set of General Cadwallader's instructions, dated
* 18th July; his letters to the Barings, dated 15th and 19th October; and his
letter to the cashier of the New York branch, dated 2d October. But the
private instructions of General Cadwallader, dated 18th July; his letters to
the President of the bank, of the 16th, 22d, 25th, and 30th August, and 6th
and 14th September, and the letters of the Barings, dated 22d and 30th
August, and 6th September, together with the contract itself, most of which
are essential to a full understanding of the subject, were withheld. Upon a
request of the Secretary, dated 31st October, the President of the bank sent
the four papers last referred to, and volunteered a copy of his letter to the
Borings, dated 31st October; but none of the other correspondence appears
ever to have been communicated to the Treasury Department.
If this affair had been undertaken for the benefit of the Government, in
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consequence of an understanding with the Treasury Department, is it credi­
ble that its origin, progress, and result, would have been at first so carefully
concealed, and afterwards so reluctantly, and at last so imperfectly commu
nicated to the head of that department?
Mr. Dickens states, in his testimony, that "if there had been a probabi­
lity of a deficiency of funds, the Government would not have issued the
notice." In fact there was no deficiency. The accompanying statement of
the Treasurer shows, that, on thefirstOctober last, after deducting the whole
amount set apart for the payment of the public debt advertised for that day,
the deposites of public officers and all outstanding warrants, he had left an
available balance, subject to draft, of $3,322,792, and, on the first January,
$ 730,217. The monthly statements of the bank show an aggregate amount
of public funds in bank on the first October, under the heads of Treasurer
deposite, deposites of public officers, and redemption of public debt, of
$13,661,193, and on the first January, $12,752,543.
r
On the whole, it is impossible to make any thing more plain, than that it
was not any probable deficiency in the Treasury which, in any degree, tend­
ed to produce General Cadwallader's mission to Europe. In its result, it
thwarted the most cherished object of the Treasury Department, which was
promptly to apply its means to the payment of public debtj and the bank, to
meet this desire of the Treasury, has been engaged, since the 15th October,
in undoing the work of its agent. The attempt, therefore, to throw any part
of the responsibility of this transaction upon the Secretary of the Treasury
is totally unfounded, and most unwarrantable.
As the Treasury Department had no agency in this transaction, the alleged
analogy with a case which occured in 1819 entirely fails. The advance
then agreed to be made on the part of the bank, was expressly requested by
the Secretary of the Treasury.
If further reasons were wanting to prove that it was neither the cholera
nor the Treasury which gave occasion for General Cadwallader's mission to
Europe, they may be found in the date of the authority under which it
was instituted. The committee of exchange refer for their authority to a
resolution adopted on the 13th March, 1832, in the following words, viz.
" Resolved, That the subject of the communication just made by the Presi­
dent, be referred to the committee of exchange, with authority to make, on
behalf of the bank, whatever arrangements, with the holders of the three per
oent. stocks of the United States, may in their opinion best promote the con­
venience of the public, and the interests of this institution." The " com­
munication" then "just made," could not have referred to the cholera, for that
scourge had not then appeared on the American continent; nor could it
have alluded to the understanding with the Secretary of the Treasury, for
that occurred long afterwards. Those topics, therefore, constitute no part of
the reasons of the board for adopting the resolution, and form no part of the
"subject" referred to the exchange committee. The resolution was adopt­
ed far other reasons—reasons which, according to the testimony of Mr. Se­
van, induced thejboard to give the committee power " to go to any extent that
might be necessary, not five millions alone, but ten millions." The com­
mittee did, for those reasons, commence a negotiation forthwith with Mr.
Ludlow for the postponement, for one year or more, of about $1,700,000, and
with another individual for about $1,000,000. Hence it appears that there
were reasons forgiving authority to postpone ten millions, and that an effort
Was actually made to postpone near three millions, long before the reasons
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23

now so strenuously urged could have had existence. And did the exchange
committee think it right, after having acquired power for one purpose, to
exercise it for another, without recurrence to the source of their authority?
If the reasons of the board which induced them to confer the power had
ceased to exist, did they think it right to exercise it for reasons of their own?
We cannot suppose them capable of so thinking or so acting. We must
suppose that the resolution was executed with the same motive that it was
adopted, and that the cholera and the Treasury had as little to do with its
execution as with its adoption.
Indeed the correspondence with Mr. Ludlow, which was commenced on
the 13th March, was continued until the 23d July, after General Cadwallader had sailed for Europe; and the arrangement proposed as early as March
in the United States, was consummated on the 13th of September, in Europe,
by his supplemental agreement with the Dutch stockholders. The propo­
sitions interchanged in this correspondence show, that the exchange com- x
mittee, or the President of the bank, found reasons in executing the resolu­
tion of the 13th March, long before the cholera made its appearance, or a
possible deficiency in the Treasury was suggested, to such a postponement of
payment of a large amount of the three per cent stocks for an entire year,
or such longer period as might be agreeable to the parties, permitting the
holders thereof, in the meantime, to retain their certificates.
It may, however, well be doubted, after reading the annexed testimony,
whether the resolution of the 13th March did confer, or was intended to
confer, on the exchange committee any authority for the steps taken by
them. It appears to have been understood very differently, as well by
those who adopted it as by those who acted under it
Mr* Sullivan, a director, states, that he understood, at the time of its
adoption, that (he resolution only authorized the exchange committee to
negotiate with the agent in this country, of certain foreign stockholders, for
anticipating the payment of about $1,700,000 of stock held by them; aud
says " the board did not confer the power on the exchange committee to
make such an arrangement, as I understood it."
Mr. Willing testified that he understood the resolution as authorizing
the committee " to obtain a postponement, with the consent of the Treasury
Department."
Mr. Bevan, one of the exchange committee, to whom the execution of
(he resolution was entrusted, testifies that " the object [of the resolution}
was, if it should be necessary, to defer tfie payment of a portion [of the
three per cents.] but not the certificates; the holders of the certificates to
surrender them up to the Government, and to take the bank instead of the
Government for debtor."
»
Mf. Eyre, another of the exchange committee, testifies that " the reso­
lution itself gave sufficient authority to the exchange committee to make aty
the arrangements the committee did make."
Ge?i.' Cadwallader, the agent sent to Europe, proved, by his acts, that he
considered it as authorizing the committee to purchase stocks, as well as ne­
gotiate for a postponement of payment.
A resolution which was thus understood Jive different ways by those
who adopted it, and were entrusted with its execution, must, for any pur­
pose, be considered as very doubtful authority. For the purpose to which
itfwas applied, it could constitute no authority; for the directors of the bank
themselves could not rightfully make an arrangement with the public ere*

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ditors, the effect of which should be to thwart the policy of the Government,
and prevent, for a whole year, the application to the payment of the public,
debt of the public funds which were in bank, and had been set apart for that
purpose.
It is not to be presumed that, in adopting the resolution, the board of di­
rectors conceived that they were authorizing, or did in fact authorize, the
propositions made by the President of the bank to Mr. Uudlow, or either
branch of the arrangement negotiated by General Cadwallader. If the com­
mittee were doing no more than the board authorized, why were their pro­
ceedings so carefully concealed from the board?
Mr. Cadwallader testifies: "I understood the business to be secret be­
tween the President, the committee, and myself, only until the period of
its completion."
Mr. Lippincott testifies: " I had no knowledge of the appointment of •
General Cadwallader." Again: "The directors frequently conversed upon
the subject, but what I learned was probably as much from out-door as in­
door conversation. As to the date, I think it was about the time of the ap­
pearance of the circular of the Barings in a New York paper, which was
about the 11th or 12th October: I do not remember that it was spoken of
earlier." Again: " It was not officially made known to the board of di­
rectors till Tuesday, the 29th of January last.,,
Mr. Sullivan testifies " that he had no knowledge of Gen. Cadwallader's
agency; that he constantly attended the board; and that his arrangement
was not submitted to the board, while he was present, until the 29th Janu­
ary ultimo, when the report of the exchange committee was laid before
the board of directors."
fyir. Willing, a director, testifies: " I knew nothing of the precise ob-.
jects of Gen. Cadwallader's mission, till it was suggested to me, out of doors,
that it related to the three per cents." Again: "the proceedings of) the
exchange committee did not come to my knowledge officially until January
last."
Mr. Bevan, a director, and member of the exchange committee, testifies,
that, " as it respects the board of directors, it was understood, when the
matter was referred to the exchange committee, that, as it involved business
somewhat of a nature necessary to be kept secret, and, as is usual, it is not
expected that such committee report until the conclusion of the business re­
ferred to it."
Mr. McKlderry, a director; testifies: " I knew nothing of Gen. Cadwalla­
der's mission, or the objects of it, in July last: it was not mentioned at the
board at any meeting at which 1 was present. The first intimation I had
of it, was the appearance of the circular of the Barings in the New- York
papers, upon the subject of deferring the three per cents, held abroad."
On the 27th July, Mr. Eyre, from the committee on the offices* being
also, as well as the president of the bank, a member of the exchange com­
mittee, made a report to the board of directors, in which, after alluding to
the fact, that, between this time and the 1st January next, there will be re­
imbursed upwards of fifteen millions of dollars of the funded debt of the
United States, proceeds to state, " that provision for these payments must
be made by the bank out of its means, now employed in loans to the com­
munity," concealing from the board the fact, that the president and com­
mittee of exchange had already sent an agent to Europe to negotiate a post­
ponement of five millions of those payments until October, 1833.
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On the 21st September, " the President laid before the board a statement
of the amount of the three per cent stocks of the United States, to be paid
off on Ihe 1st October, and explained the situation of the bank and offices in
relation thereto, showing the ample resources which have been accumulated
to meet the payments, at various points, by means of the policy which has
been pursued for some time past," omitting to mention that he then had
an agent in Europe negotiating the postponement of several million of those
very payments for a whole year.
On the 4th October, having received Oen. Cadwallader's letter of the
22d August, setting forth the tenor and substance of the agreement with the
Barings, " the President stated to the board, that the committee on the of­
fices, under the authority given them on the 21st ult.,in consequence of the
strong position which the bank now occupies, had deemed it advisable to
modify the instructions to the offices at Lexington, Louisville, St. Louis,
Cincinnati, and Pittsburgh, as to allow them to check freely upon the bank,
as heretofore, and to extend their purchases in domestic bills;" concealing
from the board the important fact, that he then had in his possession the
substance of an agreement with the Barings for the postponement of the
payment of five millions of the public debt, which alone, as he afterwards
acknowledges in his letter to the Secretary of the Treasury, of the 27th
October, and as the exchange committee repeat in their report, enabled the
bank to adopt this relaxation of its policy.
On the 20th November, the non-resident directors having been specially
called in to receive information of the proceedings and situation of the bank,
"the President explained, in detail, the course of the operations during the
past year, and the instructions under which the offices are now acting, ac­
companied by various statements from the books of the bank, showing the
amount of its Investments at each point, and their gradual diminution, the
amount of its circulation and specie, and the progress made in the payment
of the public debt," &c, concealing this most important operation, the ar­
rangement with the Barings, and other foreign holders of the public debt,
then unrescinded, which had confessedly controlled the course of the bank
from the first of the preceding month.
The first information in relation to these transactions, given to any one
not of the exchange committee, appears to have been contained in some
statement to the committee on the offices, and the non-resident directors, to
whom was referred the communication of the President to the board, on the
20th November. Mr. Willing says, " the first official information I had
was in November, at the meeting of the committee on the offices, and the
non-resident directors; but the whole of it was not detailed. It was not
till January, upon the receipt of the letter of the chairman of the commit­
tee, [of Ways and Means,] at which time I was a member of the commit­
tee of exchange, that I became possessed of a full knowledge of the whole
transaction."
The committee on the offices, in their report, in November, make no
mention to the board of this transaction, and it was not until the report
drawn from the exchange committee, by a letter from the chairman of this
committee, that any communication on the subject was made to the board
of directors. And, at last, the second set of instructions to Gen. Cadwallader, marked private, the letter fixing his compensation, all his letters from
Europe to the President of the bank, and all the Barings' letters written
since the 6th September, which documents are essential to a full understand*
4
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[ Rep. No. 121. ]

ing of the whole subject, appear to have been withheld from the board.
Why is this, if the committee in all their proceedings, have but executed
the resolution of the 13th of March?
From the evidence before them, the committee are compelled to conclude,
that the members of the exchange committee, in general, have been as little
informed in relation to much of this transaction as the other directors.
In their report, signed Matthew L. Bevan, chairman, it is alleged, that
the whole stocks purchased and deferred in Europe, through Gen. Cadwailader's arrangement, have either been paid, or ample means provided for
their payment, and now in the hands of the Barings. Messrs. Bevan and
Eyre, members of the exchange committee, have testified that the statemeats contained in this report are true, to the best of their knowledge* and
belief. . Mr. Bevan was asked by the committee whether " the amount of
the three per cents., of which certificates have been presented, was paid by
means of any new debt contracted by the bank for that purpose?"
He answered, " No, sir, their own funds in the hands of their agents
were ample to meet all which the bank or its agents had purchased or de­
ferred." In answer to another question, he says—"the bank has paid out
of its own resources all the public stock which has been paid, as per report
of exchange committee, and no part of which have I any knowledge of
being finally deferred. The funds of the bank in the hands of the agent in
Europe, were found to be ample to meet all the stock that was contemplat­
ed to be deferred, and has since been paid, or directed to be paid, out of those
funds in the hands of its agents in Europe; and, as far as I know and believe,
there is not one dollar now due to any body on account of the stock ori­
ginally contemplated to be deferred." Again, he testifies: " I have no
knowledge that any of the European holders have consented to defer any
pafct, but am of opinion that the funds in the hands of the Baring's have
been applied to the entire extinguishment of all the certificates which %
hav§ been transmitted through their hands to the bank; and that, so far
as the said certificates and powers have been received, they have simply
pone to the credit of the Barings against the funds belonging to the bank
ID their hands."
Mr. Willing, another member of the exchange committee, on being asked
whether these certificates were paid off by contracting a new debt in Eu­
rope, testifies: " Not that I know of or believe. The bank does not owe
' m farthing, I believe, in Europe."
Now, the correspondence of the bank with the Barings, a large portion
of which was on hand before this testimony was given, or the report of the
exchange committee drawn up, clearly shows, that many of the holders
of the deferred stock have agreed with the bank or its President to surren­
der their certificates to the bank without receiving payment, taking, in lieu
thereof, a credit for the amount on the books of the bank, bearing interest,
tnd not to be paid to them by the bank until October, 1833. The new
debt in Europe, as shown by this correspondence, already amounts to
$ 1,428,974 54, and will probably be increased to more than two millions.
Now, it is impossible that these witnesses could have seen this correspon­
dence, or known any thing of it when they gave their testimony.
In pursuance of the proposition of the President of the bank, contained
in his letter to the Barings, of the 15th October, to alter the arrangement
in relation to the deferred stock, the Barings issued a circular to the holderf, inviting them to forward their certificates, and adding—
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« We trust it will not be inconvenient to you to comply with this favor,
in which case we shall be glad to receive your certificates, with the neces­
sary power of attorney, upon our giving you the usual letter stating that we
have received them for transmission, and engaging to obtain for you an ac­
knowledgment from the bank, that the amount has been passed to your cre­
dit on its books, and will be either held at your disposal, or remitted in a bill
at the usual time, on the 1st October, 1833, up to which time it engages to
remit the interest as before it was reimbursed."
In a letter of 29th November, the Barings, adverting to the circular, and
other measures taken by them, proceed to say—
" To such parties as require it, we give the guarantee of our house for the
faithful performance of the present agreement, and we likewise assure all,
that the letter or document from the bank, stating that the amount of their
certificates is carried to their credit, and that interest will be paid them until
the reimbursement of the capital, on the 1st October, 1333, shall be deli­
vered to Ihem here free of expense."
In the letter of the 29th November, accompanying the circular, they send
the names of stockholders, and the stock then arranged, under this new
agreement, amounting to $20,363 58. On the 14th January last, the
cashier acknowledges the receipt of these certificates, and says they are
"passed to their respective credits, as per enclosed acknowledgment."
He then adds, " the several certificates, as they are received, will be cre­
dited, in like manner, to the respective holders, who will be duly advised
separately."
On the 6th December, the Barings remitted other certificates, to the
amount of $74,730 31, stating that the holders "wish their capital to re­
main with the institution until 1st October, 1833." In like manner, re­
mittances have been made by them to the amount of $1,428,974 54 of the
deferred stock, leaving $918,381 98 not yet heard from.
By the acknowledgment of the cashier, it appears that the terms of this
new arrangement, and at least one remittance of certificates in pursuance of
it, was received as early as the 14th January last But it is impossible that
it could have been communicated to Mr. Bevan or Mr. Willing, of the
exchange committee. If it had been, they would not have testified so posi­
tively that no new debt had been contracted in Europe to pay these certifi­
cates; " that there is not one dollar now due to any body on account of the
stock originally contemplated to be deferred;" that, "the funds in thev
hands of the Barings have been applied to the entire extinguishment of all
the certificates which have been transmitted through their hands to the
bank;" and that "the bank does not owe a farthing in Europe." The fact
being clearly established by this correspondence, that a new debt has been
created by the bank, we are driven to the conclusion that this correspon­
dence has never been submitted to the exchange committee, and that they
are wholly uninformed in relation to this important transaction, though
done in their name.
Nor could they have had the slightest knowledge of, and muclr less seen
the letter of the President of the bank to the Barings, dated 15th January,
1833, acknowledging the receipt of .their letters of the 6th, 14th, 22d, and
29th November, thanking them for their "zeal and judgment" in arrang­
ing the affairs of the bank, and concluding, by observing, " it remains for
tit only to hope that you may be able to close the arrangement, by trans­
mitting the certificates at an early day/' although the President is but a
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[ Rep. No. 121. ]

Conclusive as this is, there is further evidence that the exchange com­
mittee are not consulted in relation to the transactions done in their name.
Mr. Bevan says, in his testimony, " I do most respectfully deny any^in­
tention, on the part of the exchange committee, to protract or delay the pay­
ment of any portion of the public debt, beyond that directly and expressly
agreed with the honorable Secretary of the Treasury, from July to October;
and that the contemplated deferment was, that the bank alone should be.
come responsible to the European holders of the three per cent stocks: and,
so far from delaying the presentation of the certificates, they have been
hastened by the interference of the agent of the bank in Europe, and will
be in possession of the Government earlier than they would otherwise have
been."
The President of the bank, in his letter to Mr. Ludlow, dated 19th
March, 1833, made a proposition, on behalf of the exchange committee,
looking to the retention of the certificates by the stockholders, until 1833,
or a longer period. This letter could not have been submitted to the ex­
change committee, or Mr. Bevan would have objected to it.
It is not denied that General Cadwallader was authorized, in his negotia­
tion, to admit a stipulation for the retention of the certificates by the stock­
holders, which, as the correspondence with the Barings shows, was essen­
tial to business, and has never been disavowed; yet this subject could never
have been submitted to the exchange committee, or Mr. Bevan would have
opposed it.
In his letter to the Barings, of 19th October, the President proposed, in
case of any difficulty, that the certificates should remain in the hands of the
1
stockholders; but this letter could not have been submitted to the exchange
CQmmittee, or Mr. Bevan would have objected to it.
Indeed, Mr. Bevan's evidence conclusively proves, that he never approved
any part of the first arrangement, and is wholly uninformed as to the se­
cond. Although chairman and organ of the committee, its correspondence
Is not submitted to him, and some of its most important acts are done with­
out consulting him, and much less the other members.
Indeed, it seems that the exchange committee themselves consider the
President of the bank as concentrating in his hands their whole power.
Mr. Eyre, a member of that committee, on being asked why the disavow» al of General Cadwallader's arrangement was deferred until the 15th Octo­
ber, when his letter, communicating its substance, was received about the
first, replied—
"I cannot answer this question further than saying, the first lime I saw
the letter of General Cadwallader, I disavowed it: whether that was imme­
diately on its arrival, or some time afterwards, I cannot now say, as I was
frequently absent about that period. After the President received the
agreement from the Barings, he disavowed it, asstatedin his letter of the
15th October to the Barings."
Hence it would seem that the exchange committee had little to do in
making the agreement or disavowing it; and that they have no knowledge
of the second agreement, is fully proved by their own testimony.
It is, then, well established, by the evidence, that it was not the accom­
modation of the importing merchants, nor any probable deficiency in the
Treasury, nor the appearauce of the cholera, which produced the resolution
of the 13th March, the negotiation with Mr. Ludlow, the application to
the Government for a postponement of the contemplated payment. of the
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public debt from July to October, the mission to England, the contract
with the Barings, and the final arrangement with a portion of the foreign
holders of the three per cents., by which they have agreed to take the bank
for their debtor, and wait for payment until October, 1833. For the true
reason for this train %i measures, all tending to the same end, we must look
to other quarters, and we shall find it in
The Condition of the Bank.
There had been, within a short period, an extension in the business of the
Bank of the United States, perhaps unparalleled in in the history of bank­
ing institutions. The aggregate debt due the bank at the periods named
was as follows, viz.
1829, December 31,
.
.
.
.
$40,216,530.
1830, December 31,
42,402,304.
1831, March 31,
47,164,101.
June 30,
55,143,739.
September 30,
57,849,720.
October 31,
.
.
.
.
60,101,373.
December 31,
63,026 452.
Here was an extension of loans by the bank, in the year 1831, of $20,
622,148, being an advance of about 50 per cent, upon its accommoda­
tion, in a single year. During the same time its circulation had increased
$1,067,838, or about 27 per cent.
Towards the latter part of the year, the bank began to experience a pres­
sure. On the 1st October, the Government having then in bank a deposite
of #9,513,434, advertised its intention to pay off six millions of the public
debt on the first of the succeeding January. The bank, on the 7th of that
month, issued a circular, requesting all their branches to * throw as early as
<
possible, a large amount of available means into our hands in Philadelphia
and New York."
During the balance of the year, the bank was steadily urging this policy
on its various branches; and yet, during the months of October, November,
and December, the discounts of the institution were extended about three
millions of dollars,
We have seen that, as early as the 24th December, the bank anticipated
that it would not have the use of any considerable amount of Government
deposites during the year 1832; and, on the 20th and 21st January, so in­
formed many of its branches. In a letter to the Savannah branch, on the
19th January, it is asserted, that "the state of the money market, com­
bined with the demands of the public creditors," "occasion more pressure
upon our resources than is comfortable." In a letter to the Richmond
branch, of the same date, it is stated, that "the new orders' of the Treasury
to pay about one and three quarter millions to the public creditors on the
1st day of April, renders it desirable that New York and PHiladelphia,
where nine-tenths of that amount is to be redeemed, should continue to be
reinforced." In the letters of the 20th and 21st January, to the branches
at Cincinnati, Louisville, Pittsburgh, Natchez, Mobile, and Nashville,they
are urged to restrict their business, to convert their accommodation
loans into domestic bills, to send on reinforcements, and strengthen the
principal bank. Throughout the month of February, the branches were ur­
ged not to extend but to curtail their discounts; and those in the west were
directed so to shape their business, as to throw into the New Orleans branch
the means of aiding the principal bank. A letter to the Nashvillcbranch,
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dated 14th February, 1832, thus concludes: " I take it for granted that, as
the season advances, you will have shortened the terms of your bills on
New Orleans, so as to throw into the hands of Mr. Jaudon, (the cashier of
that branch,) the means of giving us, in the course of the present half year,
those large reinforcements which we shall certainly require from him."
Nevertheless, the business of the bank continued to extend. The aggre­
gate debt due to it was, as we have seen—
In December, 1831,
$63,026,452
And in January, 1832, it was
.
.
.
66,293,707
February,
67,970,407
March,
.
.
.
68,971,777
And in May,
.
.
.
.
70,428,070
There was an increase, in about five months, of more than seven millions,
notwithstanding the effort made at curtailment. The aggregate increase in
the debt of the bank from October, 1831, to May, 1832, was $10,326,698;
and the aggregate increase in the valley of the Mississippi, was $10,346,824.
So far, therefore, from deriving "reinforcements" from the western
branches, which was so strenuously urged, the institution had become fur­
ther embarrassed by the extension of their business, while the other branches,
taken in the aggregate, were nearly stationary.
The increased and increasing debt in the west, cutting off all supplies from
that quarter, was, of itself, sufficient to alarm the bank, and induce it to look
to some other resource for the means of meeting the payments of the public
debt, expected to be required during the year 1832. It had loaned out the
public deposite' chiefly in the west, and in March it must have been evident,
from the returns received from the branches, that n6 hope existed of collect­
ing it again by the 1st of July, October, or even January, 1833. Hence, we
think, proceeded the resolution of the 13th March, and the immediate neotiation with Mr. Ludlow, not for a postponment until the next October or
anuary, but for a whole year, or longer. Hence, also, the application
of the President of the bank to the Government to postpone the proposed
payment of six millions, from July to October. That he did not consider
this delay as sufficient for the purposes of the bank, is proved by the con­
tinuance of the negotiation with Mr. Ludlow, and by General Cadwallader's
mission to Europe.
That this was the motive that actuated the directory of the bank in adopt­
ing the resolution of the 13th March, and influenced the President in his sub­
sequent application to the Government, is made apparent by the testimony
of the directors, taken by this committee.
Mr. Willing testifies that, " with regard to the payment in July, in con­
sequence of the pressure on the western branches, and the difficulty of with­
drawing funds from that source, it was desirable to postpone that payment to
the 1st October."
Mr. Eyre, on being asked whether there was a heavy pressure on the
merchants indebted to the Government, from March, 1832, to January,
1833, replied: " I think the pressure was not so heavy on the east as on the
west, and forbearing to take from the west enabled them to pay to the east, &c"
Mr, Sullivan states, in relation to the causes of the mission to Europe,
&c, " my impression is, that the postponement was induced by the ex­
tended situation of the affairs of the bank, and by the difficulty of collecting
the funds, or of reducing the discounts so as to meet the contemplated pay­
ment"

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31

In relation to the alleged pressure in Philadelphia, he says: " The great­
est pressure, in my opinion, was felt by that class of merchants who do a
credit business to the western and other States. It continued during the
spring and part of the summer."
Mr. Lippincott says: "one of the reasons why that pressure [on those
who purchased from the importers] took place, was, that when the bank
learned that the Government intended to make so large a payment of the
public debt, the bank refused, in some measure, tojdiscount the paper of the
western merchants, not deeming it proper to increase the debt in that sec­
tion, but, on the contrary, deemed it best to draw the moneys from the west
to the Atlantic cities to meet the payment directed by the Government,the.
certificates of debt being generally presented for payment in those cities."
From the facts thus established by the accounts of the bank, and the testi­
mony of the directors, it appears, that the reason of the board for desiring
to postpone the payment of a portion of the public debt, which led to the
adoption of the resolution of the 13th March, 1832, and the negotiations in­
stituted under color of its authority, was the extension of the business of the
bank, and its inability to collect the public moneys, which it had loaned out
to the community, in time to meet the demand of the Government.
The first movement towards postponement was made, as we have already
seen, in March, 1832, and must have been predicated on the view then
taken of the condition and prospects of the bank. Let us see what it had to
provide for, what was its condition at that time, and how far it has acquired
the means, out of its own resources, to meet the demands of the Government
upon it, for the payments of the public debt down to January, 1833.
On the 1st of March, 1S32, of the amount set apart, by the Government,
for the payment ofsthe public debt prior to that time, which had not been
applied by the bank, was standing on its books, under the head of
Redemption of public debt
$857,613
The Treasurer's deposite on that day was
.
.
.
6,520,137
$7,377,750
As the payment on the 1st January last took the whole public
deposite, with the exception of
730,217
It is evident that the bank had to provide for refunding the bal­
ance of the foregoing sum out of its own means, viz. - 6,647,533
The resources from which the bank could legitimately derive the means
of paying this sum, were, as stated in the minutes of the bank under date
of 27th July last, "its means employed in loans to the community," and
its other property. Those sources were, on the 1st March, 1832, as fol­
lows, viz.
Bills discounted, and domestic bills of exchange
-$68,971,777
Foreign bills of exchange
91,238
Due from State banks
.
.
.
.
.
3,752,822
Real estate 2,131,359
Mortgages .
.
.
.
.
.
.
89,873
Notes of State banks .
.
.
.
.
2,836,900
$77,873,669
On the 1st January last, there were outstanding, under these
heads, the following amounts, viz.
Bills discounted, and domestic exchange
- $61,695,913
ForeignJalls of exchange
.
.
.
83,392
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B2
Due from State banks
Real estate Mortgages Notes of State banks -

.
.
.

.

.
-

.

3,688,143
1,855,169
57,919
2,291,655 ^
69,632,191

.

Showing collections from these sources of . - #8,201,478
Upon these collections, however, there have been the follow­
ing demands, viz.
Reduction of notes in circulation
$2,584,844
Reduction of balances due to State banks
508,379
Reduction of individual deposites
1,297,082
Extinguishment of debt due Barings, &c.
1,876,802'
6,267,r07
Leaves

.

.

.

.

.

.

.

#1,934,371

By this sum, and no more, was the bank more able to pay over its public
deposite on the 1st of January last, than it was on the 1st of March, 1832.
The amount it had to,provide for, out of its own resources, was #6,647,533
It has provided from those resources only
- 1,933,371
Leaving unprovided for

.

.

.

.

.

$4,714,162

That this would be the probable effect of all his exertions at curtailment,
was doubtless evident to the President of the bank when the proceedings
of March, 1832, were instituted. He did not feel safe without a postpone­
ment, until a later period, of a portion of those payments which he expected
the Government would require during that year. Hence arose his proposi­
tion to the board of the 13th March, their resolution of that day, his nego­
tiation with Mr. Ludlow, and the mission to Europe. Learning, about the
1st October, that his object was attained, and that the bank would not, in
consequence of the arrangement with the Barings, be called on for $5,000,000
of the three per cents.,until October, 1S33, he recommended a relaxation of
the policy of the bank, and stopped the curtailments which had, for some
time, been in progress. An examination of its accounts now shows that
there was a deficiency in its collection, on the 1st January, nearly equal to
the amount postponed in Europe.
How, then, has the bank made up ttyisdeficiency, and escaped the embar­
rassments which were apprehended in March and July, and provided
against by the arrangement with the Barings, which became known to it
about the 1st October?
/ / has not, in fact', paid the public debt. We have seen, by the corres­
pondence with the Barings, that more than $1,400,000 has been arranged
in Europe, so as to postpone the payment until October, 1833, which sum
will probably be increased to more than #2,000,000. It had on hand, on
the 1st instant, 85,163,075, to the credit of redemption of the public debt,
not yet applied. Why is it that the public creditors have not presented
their certificates for payment, we have no proof. As the interest to be paid
by the Government ceased on the first of January, it is singular, if the fact
be so, that they should let the funds remain in bank without receiving some
consideration for their use. It is true, that Mr. Bevan says the reason, in
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33

.,ms opinion, is because "the agents who had the certificates have no power
of attorney to receive the money," arid it may be because "the holders pre­
fer to let the matter remain as it is, until a favorable opportunity offers of
reinvesting the money," which he says "is the case with respect to a large
sum of the six per cents., which were due and payable four years ago, and
are*hot called for to the present day." But the only reason here given,
which is not a mere matter of opinion, is proved, by the last Treasury re.
port, to be entirely erroneous; for that report shows that the six per cents.
have long since been paid.
On the first of the present month, the bank had net applied any portion
of the means collected from, its own resources to the payment of the public
debt.
In March, 1632. it had, in deposite, the following sums of public money,
viz.
Redemption of public debt
-♦
- #857,613
Treasurer's deposite - .
- 6,520,137
Deposites of public officers
.
.
.
. 1,719,489
$9,097,239
On the first of February instant, it had on h a n d Redemption of public debt
#5,163,075
Treasurer's deposite
2,735,555
Deposites of public officers
1,622,068
9,520,698
More than in March, 1832, by

$433,459

The bank has, therefore, appropriated none of its means collected from its
debtors since March, 1832, to the payment of the public debt, but has sim­
ply applied the public deposite which has since accumulated.
By the monthly statement of the first January last, it appears
that the amount of specie then on hand was greater than on
the first March, 1832, by
.
.
.
.
$2,152,094
Instead of a debt in Europe, as in March, the bank had a fund
in Europe of
3,106,833
Total

.

.

.

.

$5,258,927

Whence came the means of raising this fund?
We have already seen that the curtailments of the bank have
not been applied to the payment of the public debt. They
have, therefore, been invested in, specie, or in-foreign bills
The funds reserved in consequence of the arrangement with
the public creditors in Europe, are
Total

-

■ -

-

-

$1,933,371
1,428,974
$3,362,345

Here we have the means by which more than half this sum has been
raised, but there is a deficiency of $1,806,582, for which we are wholly un­
able to account. The bank has not raised it in collections from its creditors
5

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[ Rep. No. 121. ]

or sales of its property. It can be accounted for only by supposing that
other debts, similar to that arising out of the arrangement in Europe, have
been contracted, which are alike unknown to the board of directors and ex­
change committee, and do not appear in the accounts of the bank, In Mr.
Willings' testimony, he stated that a bill oh the Barings for a million of
dollars had probably been paid for by a draft on New Orleans. While*the
purchased bill may constitute a part of the fund in the hands of the Barings,
the draft on New Orleans may not have been presented and paid in such
time as to enter into the same monthly statement, which would account for
a million of dollars of this deficiency. It must be by some auch transaction
as this, or by some private loan or postponement of payment on account of
public stocks, that this fund is created, for there is no other source, that we
can conceive of, from which it can have been derived.
From these facts it appears, that this increase of specie and fund in Eu­
rope, with the ^exception of less than two millions, is a show of fictitious
strength, based on responsibilities incurred by the bank, or rather by its
President, which are unknown to its managers, and do not appear in its ac­
counts. The payment of these responsibilities, and of the balance of the
public debt remaining unpaid, would leave the institution in a condition'
much worse than in March, 1832, viz.
Public debt due and unpaid on the 1st instant
Deducting public debt due and unpaid in
March, 1S32
.
•
Funds acquired in Europe, and increase of
specie since March, 1832 Deduct net proceeds of ^collections since that
time
.
.
.
.
-

#5,163,075
'857,613
4,305,462,
5,258,927
1,933,371
3,325,556
$7,631,018

It hence appears that the bank is in a worse condition, by seven and a
half millions, than it was.in March, 1832, when it is admitted on all hands
to have been un'ler pressure. The reason why a more severe pressure is«
not now felt is, because the bank has so arranged its affairs as to evade mak­
ing the payments which were required by the Government.
The exchange committee, in their report, for the purpose of exhibiting
the sound condition of the bank, set forth a statement of the situation .of the
institution from the monthly returns of January last, (Although some of
the liabilities of the bank are entirely omitted in this statement, atid parti­
cularly the dividend amounting to #1,225,000, declared a few days after,
yet it presents the bank in a condition no more favorable than in the most
perilous moment of its existence. In proof of this assertion, we give, in
parallel columns, the statement of the committee, and a statement of its
situation on the 1st April, 1819. The capital was the same at both periods:
at the first period the loans had been reduced #7,760,793 in the preceding
nine months; and, at the latter period, they had been reduced $8,169,824 in
the preceding ten months.

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35

The Claims against the Bank.
18$3.

Notes in circulation
.
.
.
The deposites, public and private Debt to the holders of funded debt, &c.
The unclaimed dividends Due in Europe
-

. 1819.

$1 7,459,571
- ' 13,547,517
6,723,703
76,529

#£,829,690
>6,147,610

876,648
$37,807,322

Its resources were—
Specie
Notes of State banks
Due by State banks -

$13,853,948

$8,951,847

$2,104,720

3,887,907
3,190,225
3,036,241

1,749,951

61,695,913
103,330

33,480,025

$2,291,655
1,596,252

Funds in Europe, and foreign bills of exchange
Real estate -.
Debts Hue by individuals, viz.
43,626,870
On notes discounted
18,069,043
On domestic bills
3

c

> &*
Funded debt

7,llb,2l0
80,^465
37,8$?', 322

44,494,906
d 3,853,948

43,058,143

Totals firing down claims

30,640,958

The committee say "this sum of $43,058,143 forms a guarantee to the
holders of the notes of the bank, and to its depositors, over and above the
whole amount of their claims."
So this sum of $30,640,958, formed in April, 1&19, a guarantee to the
holders of the notes of the bank and to its depositors, over and above the
whole amount of their claims.
The a guarantee" now exceeds the. claims only $5,250,82I, but in 1819
it exceeded the claims $16,787,010. W h o , then, upon the evidence of fi­
gures, would doubt the entire solvency and safety of the bank in April,
1819? Yet Mr. Cheves, the President of the bank, on the 6th day of the
very month in which this very favorable statement was made, in a letter to
Mr. Crawford, Secretary of the Treasury, holds the following language, vfz*
4t
The very critical situation of the bank, which is becoming more so every
.hour, the 'great interests, both public and private, involved in its late, and
trie intimate connection it has with your department, I hope will be a suffi­
cient apology for the frequency of my communications."
And Mr: Crawford, in a letter to Mr. Cheves, of the same date, observes,
« I t is even doubtful whether it is practicable, with all the exertions which
it is in its power to.make, to continue specie payments during the year."
Mr. Cheves, in his exposition to the stockholders, in 1822, adverting to
the condition of the bank, about the 12th of that month, says: " All the re-

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[ lep. No. 121. ]

sources of the bank would not have sustained it in this course and mode of
business another month—such was the prostrate state of the bank of the na­
tion, which had only twenty-seven months commenced business, with an untrameled capital of twenty-eight millions of dollars."
It hence appears, that the bank may be very strong in figures and very
weak in fact The embarrassments in 1S19 arose from the fact that it could
not collect its outstanding debts in time to meet demands against it; and this
was the precise cause of the measures taken to postpone the payment of the
public debt in 1632.
The managers of the bank, who had created the debt in 1819, were, un­
doubtedly, just as confident of its soundness and of the solvency of the in­
stitution, as are the present directors of the enormous debt they have created
within the last two years.
But events showed that the directors of that day were mistaken, and they
may prove, with equal certainty, that those of the present day labor under a
like mistake. Our confidence in their opinion is the less, from the fact so
clearly established, that they have been kept wholly uninformed as to the
negotiations cf last year vitally affecting the action of the bank, and that
they do not now know of,a heavy debt in Europe recently contracted with
the holders of the United States' three percent, stocks, and other private ar­
rangements, which give the bank that show of strength which is so confident­
ly exhibited in their report.
In relation to the western debt, as well as the general situation of the in­
stitution, the evidence of the directors composing the exchange committee
must be considered as subject to explanation. If they know very little of the
important operations resulting in a heavy debt in Europe, which were spe­
cially intrusted to them by the board during the last year, it is not to be ex­
pected that they can know more of the general concerns of the institution,
and especially of the condition of the western debt. Indeed, it appears from
their own statement, that all their knowledge on the subject is derived
from the opinions of others, of the very cashiers and directors who have cre­
ated the debt Being parties concerned, their opinions should be received
with the proper allowance.
The committee of exchange put down Kentucky, Ohio, Tennessee, and
Missouri, as the western States, and represent the sum due to the bank in
those States, on the first of January last, at $ 13,465,506. By the monthly
statement upon which this representation is based, the outstanding claims of
the bank, including real estate in those States, appear to be $16,605,142,
exceeding the representation of the committee by more than three millions.
They proceed to say: "The proofs of the general security of this debt
are confirmed by a single circumstance which seems entirely decisive; which
is the actual payment of such a portion of it as was required from the deb­
tors." They then set forth the reductions of local loans in those States du­
ring certain periods, amounting to $ 3,532,104 93, as an illustration of their
meaning. As the whole debt is made up of local loans and billsof exchange)
any statement which shows the reduction in one only, without comprehend­
ing the other, is obviously deceptive. Such a statement the committee have
.given us: for instance, their representation of the debt of the Louisville
branch is as follows, viz.
>
At Louisville, on the 2d of February, .1832,
The loans were
$2,682^629 50
On 12th January, 1833, they were only
- 2,078,906 19
A diminution of
$ 603,723 31
■v
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37

We have no statements of the latler dates here given, but from Mr. Tolan&'s report, and the monthly statement for January last, we find the real
eondition of the debt due at that branch to have been as follows, at the datj>
annexed, viz.
Debt at Louisville, 2d February, IS32, viz.
Notes discounted,
- $ 2,682,629
Domestic bills,
- 1,267,281 49
Total debt,

-

$3,949,910 99

Debt at Louisville, 13th December, 1832, viz.
Notes discounted,
' Domestic bills,
-

- $2,169,823 29
- 1,969,411 48

Total debt,

-

$4,139,234 77

Actual increase'of debt,

-

$189,323 78

Instead of any diminution of the debt at that branch, there was a conside­
rable increase. The debt had changed its character, but was not paid. Those
who had notes under discount were pressed for payment, and took up their
notes with the bills of exchange discounted by the bank. This is the kind
of payment which the committee of exchange think "entirely decisive of
the general security of this debt." It appears to us much more like the state
of things in 1819, represented by Mr. Cheves to the meeting of the stock­
holders in 1822, in the following words, viz. "The western offices curtailed
their discounted paper, but they purchased what were called race horse bills,
to a greater amount than their curtailment"
There is a single fact which must, in every mind which has turned its at­
tention to banking operations, cast a doubt over the soundness of the western
debt. It is the enormous increase of that debt within the last few years. In
the whole valley of the Mississippi, the am'ouats due the bank at the times
stated, were as follows, viz.
January, 1829,
811,075,603
1830,
18,308,230
1831,
23,279,938
1832,
' 3},285,861
May,
1832,
37,506,388
The debt of the western country was thus more than tripled in a little more
than three years, and more than doubled in fifteen months; the bank had
thrown two and a half millions more than its whole capital into that Section
of the Union. It is impossible, in the nature of things, that sijch a sudden
and enormous increase of credit in the west shbuld not have led to overtrad* ing, embarrassment, and ultimate bankruptcy, among those who were antici­
pating wealth from the use of this fictitious capital.
, In October, 1831, the bank made an effort to check its branches; and in
-January following, instructed them to curtail their business. Notwithstand­
ing all its urgency, there was added to the debt in the valley, from October,
1831, to May, 1832, $10,346,824. . In March, 1832, as we learn from the
testimony of the directors, the western branches were severely pressed, and
to give them relief, measures were adopted to postpone the payment of th%
public debt. From the month of May, there, appears to have been a modeDigitized by

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rate curtailment in that quarter at some branches, and an increase at others,
producing, on the whole, a considerable reduction. But all the exertions of
the bank have not affected a reduction to the standard of October, 1831, when •
the attempt commenced. The debts then were $27,159,564. On the 1st
January last, they were $ 30,494,028.
They are, therefore, three millions more than when the first attempt was
made to prevent the further expansion of the business of those branches. If,
as is proved, the western branches were embarrassed in March, 1832, while
they were extending their loans, it would be remarkable if their debtors
should be in a better condition during a season of curtailment. If they could
not collect so as to aid the principal bank, in March, when the general
credit was good, it would be singular if they could do so in November or
December, when that credit must be somewhat shaken by a general retrench­
ment. Accordingly, dining the latter part of the season, the western
branches have scarcely been able to collect the means of sustaining them­
selves.' To one branch, such was the imminence of its danger, the principal
bank sent out a considerable sum in specie to save it. At other branches
they have been obliged to .take domestic hills, at long dates, in payment for
paper sent to them by the principal bank, and other branches, for collection.
The proof of the first assertion is found in the testimony of Mr. Lippincott,.
and the latter appears by letters from the cashiers at Louisville and Nash­
ville. The cashier at Louisville, under date of 18th November, says—
« Your letter of 10th instant contains views and suggestions in relation to
our business, which do not surprise me. In truth, the increase of our do­
mestic bills induced me to expect such a letter as you have written. We
have been, and still arej in a situation of peculiar delicacy, and believing it
to be not only the desire, but the interest of the bank to sustain all houses
which are supposed to be -solvent, we have found it difficult to attain that
object without, for a time, exceeding the point where it would seem pru­
dent otherwise to stop.
"A iarge proportion of our bills were purchased to enable the parties tomeet their obligations sent here for collection. The amount of such collec­
tions has been at least four millions of dollars in the past year, of which
about one-half came from the Bank United States, and the office al New
Orleans. There is still upwards of a million of paper now in the office for
collection, principally on account of the bank and its branches, which, with
our gradual, but regular curtailment of discounts, will, for some time to- /
come, absorb all the means the country can command. We do not hope,.
* therefore, to make any material diminution of our business for several
months: it may probably, for a time, be a littfe increased.
4i
We have looked with great solicitude on the situation of this country,and the deep stake the bank has in its welfare. Encouraged by the exces­
sive importations at the east, our merchants have been induced to,purchase
more largely than their own means, or the necessity of the country required. »
Hence the embarrassment which now exists, and for which nothing but the
indulgence of the bank, and one full year's products of the country y can
relieve them."
The cashier of the Nashville branch, under date of 21st September,
writes—" The unexampled scarcity of money, in both Alabama and this
State, and our refraining from doing basiness wherein money is to be ad
jranced on either note or bill, has compelled us to discount safe bills, at six
months, to enable debtors to the Orleans and other offices tp meet the paper
i-

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[ Rep..No. 181. j

30

deposited with us for collection. In this way have all the bilk been paid
which were remitted to us for collection from the Orleans and other western
offices, since the month of June last This course of business has, of course,
deprived us of 5 to 600,000 of our funds at Orleans, which was intended for
the parent bank, but w^iqh we had to reserve in that office to meet the bills
thus remitted for collection."
'
s
Here is conclusive proof that the branch at Louisville was in a critical
situation as late as November last; that it could not make collections; that,
to save its debtorsTrom immediate bankruptcy, it was even obliged to ex*
tend its loans; and that, as well as the branch at Nashville, it was obliged
to take bills of exchange in payment of paper sent to it by the principal
bank, and other branches, for collection. These collections the cashier
states at four millions of dollars, and the Nashville branch was even obliged
to draw upon, and absorb a fund of 5 or 8600,000, which it had accumulated
at New Orleans for the principal bank. Is it possible that a debt which
cannot be collected, or even reduced, can be considered sound ?
That the condition of most of the other western branches is but little bet­
ter, is very probable. > A letter from the cashier of the Cincinnati branch,
dated 21st November, says—"at present it appears to be impossible" to re­
duce their discounts.
This committee called for the correspondence with several of the western
branches, for the months of August, September, October, and November
last; but, at so late a period, that it was not received in time to be referred
to in this report. It will doubtless throw much additional light on the sub­
ject.
■ ,
. When we consider the great extension of debt in the west, the difficult
ties of collection preceding March last, the steps to which the bank was
driven by the want of funds from that quarter, the impossibility of collect­
ing them at a recent period, the ^expedient of taking new bills in payment
of old bills and notes discounted, all of which have come to light since the
report of the Secretary of the Treasury in December, 1831, we do, not
think that the ■ ill opinion of the western debt" expressed by him in his
"
last annual report, ought to .have been " unexpected." .
To illustrate the management of some of the offices, and show how far
the anticipations of the principal bank have been realized from them, we
select that at Natchez, on the 4th February, 1832. The cashier of the prin­
cipal bank wrote to the cashier of that branch, as follows, viz.
"The bank is very desirous that you should not extend your line of bills
* discounted, and that even your operations in domestic exchange should, for 4
the present, be confined within moderate limits, and, as far as possible, be ,
restricted te bills at short terms, say sixty and ninety days; which, as respects
your business with New Orleans, will furnish our office therd with the
means of giving us large reinforcements In the course of the present year."
The latest returns the principal bank could then have had from that j
branch, were to the 12th January, 1832. On that day, the debt due was as
follows, viz.
Notes discounted
- $901,997 IS j
Domestic bills .
1,030,81100
Total debt

-

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On the 1st January last, there was due to that branch as follows, viz.
.Notes discounted
.
.
.
.
.
$1,462,958 86
Domestic bills - •
- 2,484,443 05
Total debt

.

.

.

.

.

^3,947,401 91

It thus appears, that, instead of furnishing " reinforcements" for the prin­
cipal bank to enable it to pay the public debt, this branch more than doubled
its business in Teas than a year; employing two additional millions of the
resources of the institution. ,
That the Bank of the United States has not the means of ultimately pay­
ing all its debts, no one will maintain. Whatever may have heen its mis­
management, it is not to be apprehended that its bad debts are equal to its
whole capital stock. But its ultimate solvency is not the question for the con­
sideration of the Government. The point to be considered is, whether it
has been a prompt and faithful agent of the Treasury;' whether it has been
able and willing td pay over the public funds deposited in it, upon demand,
for the purposes of the Government; and whether it is now, and is likely
hereafter to be, in a condition to do s$ On this point, men may differ; but
the facts disclosed in public documents, and the evidence taken by the com­
mittee, give it at least grounds for doubt. The great extension of its loans,
.particularly in the year 1831 and early in 1832, leave room to doubt whe­
ther it could collect its scattered means in time to meet any considerable
demand of the Government on its large deposite.
The operations commenced in March last, with the view of postponing
the payment of a portion of the public debt for a year or more, although
the public deposite was fikely to be ample for the purpose, indicate a conscipusness on the part of the bank itself, that it would be at least inconveni­
ent to meet the payments.
The fallacious reasons given for the resolution of 13th March, the appli­
cation to the Government for a postponement, from July to October, and
for the subsequent arrangement with the Barings, leave room for the in­
ference that the true reason was the weakness of the bank.
The letter of Gen.' Cadwallader, communicating the substance of hU
agreement with the Barings, was received as early as the 1st October, and
the President of the bank then knew that the Barings were to purchase
stock on account of the bank, in molation of its charter. Instead of
promptly disavowing the arrangement, or any part of it, he recommended
and procured a change in the policy of the bank in consequence of the in- *
formation. The whole affair was then a secret from the Government, from
the directors, and, it is probable, most of it from the members of the ex.
change committee themselves. By the publication of the circular of the
Barings, in the New York paper of the 11th and 12th of October, the first
information was obtained by all parties of this negotiation, and on the 15th
of that month the President of the bank disavowed it. The report of the
exchange committee mentions the change of policy upon receiving Gen.
> Cadwallader's letter, and says: * but when the contract itself reached the
<
: bank, on the 12th October, and it appeared from the communications of
Messrs. Baring, Brothers & Co., to be contemplated that the stock was to
be purchased on account of the bank," it was immediately disavowed.
And to convey the impression that Gen. Cadwallader's letter of the 22d
August, 1832 did not give the same information, an extract from it is api '

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41

pended, in which he says, u I have drawn up a contract accordingly, of
which I do not send you, a copy," &c, omitting that part of. the same
letter which stated precisely what the contract was. Devices of this sort
afford reasons to infer, that the disavowal of the contract, more than two
weeks after the policy of the Bank had been shaped with a view to its ex­
ecution, sprang more from the publicity given, and likely to be given to
the transaction, than from its violation of the charter. Nor can the mind
but doubt the safety of an institution which resorts to such means to conceal
the true reasons of its own acts.
••
In the facts that Gen. Cadwallader's mission and its results were entirely
concealed from the board of directors, and that the President, after receiv­
ing it, induced the board to change the policy of the whole institution, by
urging upon them other reasons than those which influenced him, showing
that the entire machinery of the bank is moved by motives unknown to its
managers, is good ground to distrust the safety of the institution.
It is well established that the most important business of the bank is
done by committees, who, as the President himself states, keep no minutes
of their proceedings, although they may injylve negotiations for millions,
affecting the credit and.solvency of the institution, and -seldom report until
,
all the good or mischief their acts tend to produce has fallen upon the bank, ,
the Government, and the country. In this there is ground to doubt as to
the proper management and ultimate safety of the institution.
When the President of the bank not only induces the board to act for
reasons unknown to themselves, but conceals even from the committees >
acts done in their names, something stronger than doubt almost seizes oji . *
the mind. When to the consideratibh that the committees know little of
the proceedings had in their names, is added the fact that every Govern­
ment director is excluded from even that little, by being excluded from every *
committee, the Government at least has grounds to doubt whether its inter­
ests are safe in such keeping. When a .show of the strength of the bank is
made, consisting of sums in specie and amounts in exchange, while the *
debts secretly contracted, which have enabled the bank to accumulate these
funds, are concealed even from those who make the exhibition, there is just
ground to doubt whether there be soundness in the institution, or proper
precaution and responsibility in its management. When, in stating the
claims against the bank on the 1st of January, the exchange committee
wholly omit f!he dividend of 01,225,000, which was payable in a few days,
say nothing of the increasing suspended debt which, in September, 1831,
excluding the amount charged to the contingent fund, amounted to
04,398,305 66, of which the President then estimated $1,851,034 42 to
be bad, and make statements palpably deceptive in relation to the western
debt, they are the strongest reasons for distrusting the reports made by
the bank, and doubting the soundness of its condition.
Nor is it calculated to lessen the doubt, that, in their report, by extracts
of such of the letters from the cashier of the New York branch as suit the
purpose, they attempt to show that there had been an extension of accom­
modations at that branch in the month of March, 1832, to a large amount*
when, in fact, as the weekly statements show, there was a regular curtailment
from week to week, during the whole month, amounting in all to about
0180,000.
Nor will it make a more favorable impression, that, in the same report,
they convey the idea that, subsequent to the 1st October, I832,.that branch
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had rendered essential service to the merchants whe were debtors to the
Government by extended accommodations, when, in fact, after having reduced
their loans #1,008,302, during the week commencing September 26th, and
ending October 3d, as appears by the statement appended by Mr. Eyre to
his testimony, they made a further curtailment during that and the next
succeeding month, of more than 5600,000; although, according to their own
statement, "the month of October was regarded as a month of great embar­
rassment," and there were payable to the branch during, the two months,
from the said banks, #1,920,000; on account of notes discounted and domestic
bills, #7,084,000; and for revenue to the Government #3,225,277: making,
in all, #12,229,277.
Nor does the bank recommend itself to our confidence by claiming
credit for " concentrating the scattered fragments of revenue at the points
of disbursement," when, of #22,828,224 of public debt required to be paid,
the amount payable at Boston, New York, Philadelphia, and Baltimore,
from the 1st of January, 1832, to the 1st January, 1833, was #20,458,748,
and the amount of public revenue received at those points from 1st October,
1831, to the 1st January, 183^ was #31,814,857.
There is ground to doubt the entire safety of the funds in the bank, when
the committee of exchange, or the president of the bank, without the know­
ledge or consent ofthe board of directors, send envoys abroad on special
missions, fix their compensation, and cause it to be paid, and make ar• rangements requiring heavy sums in commissions and interest, from the
, funds of the bank, to carry them into execution.
* . The Government at least has ground to doubt every thing which is favora­
ble to the bank, when attempts are made, without reason or plausible pre­
tence to throw upon the Secretary of the Treasury the resposibility oi its
own secret, unauthorized, and illegal acts, charging him with the absurdity
of using the baak to defeat his own views, and postpone the payment of
that debt which he wai most anxious to extinguish.
To sotoc all these just davits would require fime and means which were
not at the disposition of this committee. On essential points the testimony
of witnesses called before them is imperfect. Nothing shprt of a personal,
impartial, and thorough examination ofthe books and affairs ofthe principal
-bank, and many of its branches, can develope its policy and management,
the security of its debt, and the soundness of its condition.
Time is not left for the further action of Congress with a view to more
perfect information at the present session. Whether existing facts are suf­
ficient to justify the Executive in taking any step against the bank, authoiized
by the charter, is a matter for the decision of the proper officers, acting upon
their own views and responsibility: an opinion by Congress can make it
neither more nor less their duty to act. Whatever, therefore, the opinions
of the members of this committee might be as to the justice or policy of any
Executive action, they deem it unauthorized and improper to express them
officially.
Besolved, That the committee be discharged from the further considera­
tion of the subject.
*
AH which is- submitted.
JAMES K. POLK,
M. ALEXANDER,
NATHAN GAITHER,
.
4 minority ofthe Committee of Way* and Means. .
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r Rep. N o . 121. 1

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Ho. o» RSPS.

J

"

BANK OF THE UNITED STATES.

MARCH 2,

Mr.

POLK,

1833.

from the minority of the Committee of Ways and Means, sub- mitted the following additional
i

REPORT:
Since the body of the former report, submitted by the minority of the
Committee of Ways and Means, was drawn up, the correspondence w,ith
the western offices, which had been called for, has been received, and they
ask leave to submit the following additional report in confirmation of the
views already submitted in relation to the western debt
It is to be observed, as stated in the former report, that the exchange com­
mittee, in their report, state that, "as soon as it was known that the agent
had arrived in England, and that an arrangement of some kind would be
accomplished, no time was lost in communicating to the board the fact,
that the preparations of the bank were such as to make it practicable to re­
new the usual facilities" to the community. The subject was, therefore, im- *
mediately brought to the view of the board, in the manner stated in the
following extract from the minutes." These minutes are dated, " Bank of
the United States, Sept. 21, 1832," and conclude with authorizing the com­
mittee on the offices " to modify the instructions under which the offices
of the bank have been acting, at such points, and in such manner, as they
may deem most conducive to the interests of the,bank." " Instructions
were accordingly addressed to such of the western offices as would most
sensibly feel the restrictions, authorizing them to resume the purchase of
domestic exchange, and draw checks on the bank." As the information a that
an arrangement of some kind would be accomplished," in England, did not
reach the exchange committee before the 1st October, it was difficult to per­
ceive how it could have had any influence in producing the proceedings on
the 21st September. It now appears, by the correspondence with the west­
ern branches, that they were not produced by that cause, but by the actual
condition of the Lexington office,. which the other offices in that quarter
were called upon to sustain.
On the 11th September, as appears by the correspondence, the cashier of
the Lexington branch wrote to the principal bank as follows, viz. " The
disposition, by organized concert, to make a run for specie, seems to be in­
creased. Since the 28th May, we have paid out about #23,000, and, in the
last seven days, #6,200." " W e have been apprised of calls that will be
made for about #25,000, which we are looking for every hour, &c."
On the 18th September, the cashier of the principal bank wrote to the
Lexington branch as follows, viz. rt Your letter of the 11th instant to the
*

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[ Rep. No. 121. ]

late acting cashier, has been received; and we have, in consequence, deter­
mined to dispatch, by the mail to-morrow, two of'our clerks, Samuel Ma­
son, jr., and Edward Whelen, with $50,000, in United States' gold coin,
for your office. This sum, we trust, will put you quite at your ease, at
leasr until you can receive a supply of dollars from New Orleans. In ad<dition to the other offices to which you have written for aid, that at Cincin­
nati may be resorted to."
On* the 14th SeptemberJ the cashier at Lexington wrote that the demand.
upon them still continued.
On the 21st, the day on which the proceedings before adverted to took
place, the President of the principal bank wrote to the Lexington branch
as follows, viz.
BANK OF THE UNITED STATES, Sept. 2\st,

1832.

• DEAR SIB: I received, this morning, your favor of the Htfrinst, and,
in consequence, have requested the cashier to send, immediately, an addi­
tional sum of $60,000 in gold; which, with the previous remittance of
1050,000, and the aid which I hope you will have received before this time
from some of the neighboring offices, will place you at your ease. If, from day
to day, as we hear from you, there should seem to be a necessity for a greater
supply, it will be forwarded to you. Meanwhile, you will take care, of
course, to Jteep out of the way of any large demands, by confining your
receipts.to the paf>er of your own office, and keeping your business within
safe limits.
/
Very respectfully, yours,
N. BIDDLE, President
JOSEPH TOWLER,

Esq.,

Cashier Office D. 4* -#•> Lexington, Ky.
In addition to these 8110,000, $10,000 more were furnished from Lou­
isville, £30,000 from St. Louis, $25,000 from Natchez, and $110,000 from
New Orleans; making, in all, $275,000.
This is sufficient, without the aid of the news of the arrangement in Eu­
rope, which could not have been received until more than a week afterwards,
to account for the proceedings of the 21st September, and the instructions
sent to those western branches which were expected to sustain the branch at
Lexington.
In relation to the condition of the western debts, the correspondence
with the- western branches affords evidence, not before the committee when
their former report was drawn up, and which goes strongly to confirm the
opinions therein ^expressed.
To Mr. Bevan the following question is propounded, viz. " Of the
amount of domestic bills of exchange reported in the monthly statements
of the year 1S32, do you believe any considerable proportion to be of the cha­
racter of accommodation paper, to be renewed by drawing and re-drawing
between the bank and its branches, or between the several branches?"
Answer. "If any, nt must be a very limited amount, because the di­
rectors discountenanced and refused, when they knew it to be such, and I
presume the same course to be followed, in the branches, which have in­
structions from the mother bank to guard against that description of paper.*'
. Mr. Eyre was asked: "Is there any amount of the bills of exchange
discounted or purchased by the bank,, which consist of accommodation pa­
per, produced by drawing and re-drawing."
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Answer, " I know of none. Such paper is not countenanced by the
bank."
To Mr. Lippincott the following was propounded, viz. " Of the amount
of domestic bills of exchange, reported in the monthly statements of tbe
years 1831-'32, do you believe any considerable proportion to be of the
character of accommodation paper, to be renewed by drawing and re-draw­
ing between the bank and its branches, or between the several branches?"
Answer, " I do-not recollect of any."
'
,
Mr, Lippincott was also asked: " Have the Directors of the bank the
means of detecting any habitual practice of drawing and re-drawing, just
referred to, if it should exist between the ^ranches when carried to any
extent?"
Answer, " They have, by means of the periodical returns of the branches
to the mother bank of the business done at those branches, respectively."
Of Mr. Eyre and Mr. Bevan similar questions were asked, and each gave
similar replies.
The-testimony of two members of the exchange committee, one of whom
was also chairman of the committee on the offices, is-before the House, and
we take the following extract from their report, to wit:
" In further illustration of the character of the western debts, the returns
show that the total amount of domestic bills of exchange, purchased at the
western offices, from the 1st of July, 1831, to the 31st of December, 1832,
is
#16,3£7,094 93
On which the amount protested and unpaid is 13,863 36
Of which the estimate of probable loss is
1,500. 00
But as some portion of this may be still running to maturity, and its fate
undecided, it should be remarked that the whole of this estimated loss of ,
$ 1,500 arose out of the purchases during the year ending.on the 1st of Ju­
ly, 1832,—
Which amounted to
- '
- $10,137,722 22
v
On which the total amount protested and remaining unpaid, is only
. 13,863*36
The total losses only , - /
1,500 00
The cause of a loss so little proportioned to the amount of the investment
is to be found in the fact, that the exchange transactions, of the western
States grow out of the actual business, the actual shipments of the produce
to the place of its exportation furnishing to the bank the triple security of
the personal responsibility of the shipper, the property which he exports,
and, again, the personal liability of the merchant who receives it at the place
of exportation. As*an illustration of this, the following statement of the
exchange operations of the bank at Nashville may furnish ad interesting
example.
*
1831. October, $366,512 63. When the few bills remaining out of drafts
on shipments of the previous crop had
not yet run to maturity.
1832. Dec'r, 1,062,094 84. When the shipment of the new crop
had commenced, and the planters and
ginners had'begun to draw on their cor­
respondents. * '
,

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1832.

April,

2,759,754 93.

When the crop may be considered to have
all been shipped and drawn upon, and
of course the amount of bills at the high.
•
est point.
1832. October> 503,234 90. When the bills drawn uppn the shipments
of the last crop had mostly matured.
1833. Jan. 9th, 2,049,612 02. The shipments of the present crop having
progressed to some extent, the amount
of bills is naturally swelled in propor­
tion."
4. The branch which the exchange committee has selected to show the
sound condition of this debt, we select, to show its actual condition.
On the 10th day of November last, the following letter was addressed to
the PresMentof the Nashville branch, ?iz.
BANK OF THE UNITED STATES,

November'10, 1832.
DEAR SIR: YOU will receive, through the cashier's department, notice of
the appointment of George W. Gibbs and H. M. Rutledge, esquires, as
members of your board. These gentlemen have long been known to us by
reputation, and I am sure will make- useful and agreeable associates in the
administration of the office.
Allow me to ask your attention to my letter of the 27th of July last, in
which I communicated the wish of the board that you would abstain from
. the purchase of, domestic bills, except in reduction of pre-existing debts to
the bank. At the period when my letter reached you, your amount of do­
mestic bills wag about 500,000. Your statement of the 24th ultimo, the latest
which has reached us, shows that amount to be upwards of one million of
dollars, being an increase of more than g 500,000, and making an actual pur­
chase pf bills to the amourit of eight hundred thousand dollars since the
middle of August. We are aware that many bills have returned upon this
office which it was necessary to take up by redrafts, but still the amount ex­
ceeds much what had been anticipated by the board; and now, that this
source of demand must have ceased, I cannot too strongly invite your adhe­
rence to the instruction contained in my letter of the 27th of July, as the
receipt of your notes occasioned by these purchases may become very in­
convenient to the bank. As the season advances, too, it would be desirable
to shorten the term of all the bills which you are under the necessity of
purchasing, to a period not exceeding four months.
Very respectfully your.s,
N. BIDDLE, President.
JOSIAH NICHOL, Esq.

President Office D. and D., Nashville, Tenn.
By this letter, it will be perceived that^it was known to the bank at Phil­
adelphia that many hills had returned upon the Nashville office which it
was necessary to take up by redrafts. This, letter called out an explana: tion from the President of the Nashville branch,, dated 22d November,
which was followed by another dated the 24th. A note at the end of the
first says, " we will not be able to get the debts due this office paid—indeed,
if any, it will be a small £art: the means are not in the country."
In other respects, the contents of the two are almost precisely alike, and,
we here give tl^t of the 24th entire, viz.
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47

OFFICE BANK UNITE? STATES,

Nashville, 24th November, 1832.
DEAR SIR: On the 22d instant, I did myself this pleasure, acknowledging
the receipt of yours of the 10th instant; but as the mail was just about closing
when I wrote, perhaps it did not explain to your satisfaction the reasons why
our domestic bill account was so large, but, my dear sir, when you are in­
formed of the debts that those bills are intended to liquidate, you will be of
opinion that we have not exceeded very far, in that respect, the parent bank;
and the offices at New York, Baltimore, Washington, Richmond, Pitts­
burgh, Cincinnati, Louisville, and Lexington, have been and still continue
the practice of discounting bills and notes made payable at this office, an4
forwarding them here for collection. This ha? been done this season, to, I
would say, three times the amount of any previous year; and, to adg to OUF
difficulties last season, we had a very shorl crop of cotton, so that our own
drafts, predicated on the crop and payable at New Orleans, could not be
paid out of the crop; in consequence of which, drafts to a very large amount
have been drawn by the commission merchants of New Orleans on their
friends here, and made payable at this office. Those drafts could not be met
when due, at this office, by the payment of cash on account of its scarcity;
and no other means could be resorted to but drafts again on New Orleans,
which our directory thought right to purchase. Supposing that your letter
of the 27th of July permitted or authorized the protecting of paper dis­
counted at the parent bank and offices, as it certainly would, if sent back,
have occasioned a great many failures, if all or a large portion of the above'
notes and drafts had been sent back under protest to the bank$ at Philadel­
phia, New York, Baltimore, Washington, Richmond, Pittsburgh, Cincinna­
ti, Louisville, Lexington, and New Orleans, which would have been the
case, had we not pursued the above plan. And bills payable six months af­
ter date, is as short a time as ought to be taken, if we wish to serve all parT
ties, as you are well apprised that those bills must be paid, if at all, out of *
the crop; and only a very small part can be in cash before May or June.
Be assured, sir, that We are as well convinced as you are that too many bills
are offered and purchased, amounting to more than the present crop of cot­
ton and tobacco will pay—I mean before all those papers are taken up. I
am certain that one half of the collection paper received here since August
for payment, have not been taken up as yet. 0«r cashier will make ^state­
ment to you showing how it stands.
As far as we have yet purchased bills this season, it was to protect and
pay the above collection notes and bills. Cash we have not given for bills,
except small balances might be over after taking up the paper intended. I
am also satisfied that, adding our cash purchases and bills, we received for our
own notes discounted (together) since the 1st September last, would not
amount, in the whole, to more than one hundred and fifty thousand dollars?
so that if we have erred, it was to save the parent bank and offices. Your
letter of the 10th inst, was this day laid before the directors, requesting an
answer to the several parts of it. A committee of three have been ap­
pointed to draft s-jch answer, viz, F. B. Fogg, James P. Clark, and Thomas
H. Fletcher: They will report next Wednesday: it will be forwarded to
you when made up.
1 am, dear sir, very respectfully,
Your obedient servant,
J. NICHOL, President.
N. BIDDLE, Esq.
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[ Kep. No. 121. ]

This was followed on the 26th by the promised explanation of the cashier,
which was of the same import. We content ourselves with taking the fol­
lowing extract, viz.
"The following exhibits the amount collected here for the parent bank
and offices from the 1st September last to this date, which, with small ex­
ceptions, have been paid through our bili operations, viz,
•
Bank United States
#147,473
Office New York
. '
31,365
Baltimore
7,607
Washington
.
.
.
2,460
Richmond
•
.
42,112
Fayetteville
. .
276
New Orleans
. . .
,.
746,893
Natchez?
3,150
St Louis
.
.
.
.
.
722
Louisville
51,595
Lexington
.
.
.
.
24,902
Cincinnati
10,001
Pittsburgh
28,521
Boston
.
.
.
.
.
.
350
$1,097,427
' " In Alabama we have about $30,000 loaned in eleven notes, #20,000 of
which will be turned into.bills when they mature. All are of the first cha­
racter for safety. There are some thousands of dollars of bills from Or­
leans and other offices yet to mature, which can only be met through our
fcill operations."
The subject was submitted to the board of directors of the bank, who
adopted unanimously the following resolution, viz.
" Resolved, That, for the very satisfactory reasons assigned in the letters
of the President and Cashier of this office addressed to the President and
Cashier of the parent bank—one dated the 22d November, 1832, the other
the 26th November, 1832—that this board recommend it to the parent
board to permit this office to continue its purchases of domestic bills at six
months date until the 1st dpy of March next."
Notwithstanding the confidence of the directors of the parent bank, that
little, or none, of the debt based on domestic bills of exchange was in the
nature of accommodation paper, to be renewed by drawing and redrawing,
-we have here conclusive proof that a large amount of the debt to the Nash­
ville branch is precisely of that description. Some of it, as the President
ef the branch states, had already been drawn, for three times, and he anti­
cipates that it will again come back from New Orleans. By the monthly
statements of the 1st November and 1st December, it appears that the
whole amount of domestic bills at Nashville^ on the 17th October, was
$895,228 30, and on the 7th November, $1,245,510. The cashier states
that nearly the whole purchases made in September, October, and Novem­
ber, amounting to $1,097,427, were redrafts: and he says there are some
thousands of dollars of bills from Orleans and the offices, which can be met
only in the same way. The President of the branch, in his letter of the
24th, says that the bills already offered and purchased were mof e than the,
present crop of cotton and tobacco will pay.

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49

Yet, as the committee of exchange state, the amount of those bills had
increased on the 9th of January, 1833, to #2,049,612 02. From the state­
ments of the Cashier and President of the bank, there cannot be a doubt that
a large amount of this whole debt is redrafts!
We have here the reason why there are so few protests in the west.
It is with all this evidence, in the bank, that the committee of exchange
inform us, "theexchange transactions of the western* States grow out of the '
actual business, the actual shipments of produce to the place of exportation,
& c , " and give, as an illustration, the small amount of bills at the Nashville
branch in October, 1831, and 1832, and the large amounts in December,
1831, April, 1832, and January, 1833. If they had examined this evi­
dence, they would have seen that the reason of all this is, that, at tfoe peripds ,
of the lowest depression, the racers were at the other end of the course.
The bills at New Orleans, at the times stated, were as follows, viz.
1831, November 7th, $1,766.828 68
1832, June 25th, .
7,031,968 07
■ October 29th,
"
-, 2,501,840 58
In the fall and first part of the winter, they start from Nashville and other
western offices to New Orleans, and in the spring and early part of the
summer they start back again.
As the amount sinks in Nashville, it rises in New Orleans; and asrit sinks
in New Orleans, it rises in Nashville. The bills on New Orleans, mscoun'ted last September, October, and November, were at six months, so that
they will be falling due in March, April, and May next, at jfchich time the
bill account at New Orleans will rise, and that at Nashville sink. Bills on
Nashville will be discounted to pay the bills from Nashville, and again these
bills will be paid by new bills on New Orleans.
*
There is no reason to suppose that the bill business at the other western \
branches is any better than at Nashville. That it is no better, at Louisville,* '
is shown by the cashier of that branch, written in November last, and already
adverted to in the body of this report
The whole amount of domestic bills under discount in the valley of the
Mississippi, in November last, as shown by the monthly statements at the
close of that month, was $10,112,106 37. Upon the supposition that it ia
all in the same condition as the bill debt at Naihville, at least seven out of >
the ten millions is secured by paper called race-horse bills, which is running
from branch to branch, waiting for crops to be raised to meet them, and run­
ning the drawers with interest, exchange, commissions for endorsement and
acceptance, and other expenses.
In our opinion, no system of banking operations could be invented more
desolating and fatal to the trading and planting community of the west than
this extensibn of bank credits, and overtrading in domestic exchange.
The facts now disclosed throw an additional light upon the other branch
of the western debt To a great extent, the same parties which are engaged
in this extensive business of drawing and redrawing are undoubtedly prin­
cipals and securities in the notes discounted. From the letters of the
cashiers at Cincinnati, Louisville, and Nashville, it appears to be as difficult
to collect this debt, as that based upon'bills.
. It is proper that we should add, in conclusion, that we cannot suppose the
directors called before us, or the exchange committee in their report, could
have been fully apprised of the facts disclosed in this correspondence, which
is herewith submitted.
JAMES K. POLK,
NATHAN GAITHER,

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[ Rep. No. 121. }
TESTIMONY OF DIRECTORS.
COMMITTEE OP WATS AND MEANS, January 31,

1833.

* General Thomas Cadwallader, of Philadelphia, was sworn, examined, and
testified as follows:
No. 1. Question by Mr. Polk. Were you a director of the Bank of the
United States during the years 1S31 and 1832?
Answer. I was a director in 1831 and in 1832, until the month of July,
when I left the United States for Europe.
»
No. 2. Question by Mr. Polk. Were you appointed the agent of the
bank, during the last year, to negotiate a loan in London, or the postpone­
ment of the presentation of the certificates of the United States' three per
cent, stocks for payntent at the bank; which stocks the Government, on the
J 9th of July last, gave notice would be paid, two-thirds on the 1st of Octo­
ber last, and one-third on the 1st of the present month? (January.)
Answer. At the time I was appointed to proceed to Europe, no notice
had been issued by the Treasury of the intention to pay off the three per
cents., nor was it then known whether that stock was to be reimbursed in
. the whole or in part. During the last spring, the precise time not being
within my recollection, the President of the bank communicated to the
board of directors that the Government intended to pay off the three per
eejits. stock on the 1st of October; whether the whole amount, or a portion
thereof, not b«jng then ascertained. He adverted to the difficulties and
embarrassments to the commercial community in general, especially to the
customers of the bank, and to persons indebted to the Government on bonds
for duties, by the intended payment, and intimated that it would be prudent
* and proper for the bank to make? provision to meet that payment in such
'mode as might tend to mitigate the pressure. Such arrangements falling,
usually, within the province of the committee of exchange, a resolution
•was passed by the board, giving to that committee power to make such ar­
rangements as they might deem requisite in relation to the object Never
having been a member of that committee, I know nothing of its arrange*
ments, further than this, that, in the month of July, I think between the 1st
and the 10th, I was requested by the committee, through the President of
the bank, to proceed to Europe for the purpose of endeavoring to make arrangements with the foreign holders of the three per cents, stock for the
postponement of the reimbursement of a portion of the amount held by
them, to the extent of about five millions of dollars, under the expectation
that they would be disposed to continue the amount of loans held by them,
respectively, at the same rate of interest. I agreed to undertake the ajgen*
cy, and to leave Philadelphia for Liverpool in the packet of-the 20th of
July. Before Mr. Biddle's application to me, the cholera had made its ap~pearance within the United States, and I think a few cases had appeared in
New York; at any rate, the disease was in progress in our direction, and
had already excited considerable alarm. The instructions from the President
of the bank, in relation to my mission, were received on the 18th of July,.
bearing that date; and I sailed on the morning of the 20th.
No. 3. Question by Mr. Polk. Was the fact of your going to London,
as the agent of the bank, authorized by, or known to, the board of direc­
tors previous to- your sailing ?
Answer. The board of directors having delegated to the committee of
exchange full authority in relation to the objects of my voyage, I am not
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aware that the other members of, the board had any particular information
on the subject. My intended voyage, however, I believe was known to.
them all: and it was known that the business on which I was to embark '
was connected with the affairs of the bank.
v No. 4. Question by Mr. Verplanck. Was the meeting of the board of
directors, at which the exchange committee were empowered to act on
this subject, a regular meeting, a quorum being present ?
Answer. I have not looked at the minutes of the board lately, but pre­
sume the resolution was passed at one of the regular meetings; a quorum, of
course, being present. No. 5. Question by Mr. Verplanck. What is the number and powers of
the exchange committee ?
Answer. The number of the committee is three—the President being, ex
officio, an additional member of all standing committees. The powers of
the committee extend, generally, to arrangements respecting domestic and
foreign exchange, and to the financial operations of the institution. To
that committee, generally, has been confided the business of the bank, con­
nected with arrangements for its larger operations. (See February 4, for
further answer to this interrogatory.),
No. 6. Question by Mr. Polk. Was a loan, or the postponement of the
three per cents, to the amount of 5,000,000, the subject of consideration be­
fore the board of directors at the time at which you state the authority to
the exchange committee was delegated to them; and was that committee
empowered by the board to effect the loan or postponement abroad, which- .*»
you subsequently made with Baring, Brothers, and Company; and did that
arrangement ever receive the sanction of the board of directors?
Answer. I have no particular recollection whether the postponement of
the three per cents, was a subject discussed at the board when the authority
was given to the exchange committee; nor do I exactly, remember whether
I wis present at that meeting.or not.. Not having been a member of
the board of directors since July, I have no information as to any commu­
nications to the board in relation to my arrangements with Baring, Brothers>
& Co., or as to ariy proceedings of the board thereon.
FEBRUARY 4,

1833.

General Cadufallader, in continuation.
Gen. Cadwallader asked and obtained permission of the committee to add
to the answer given yesterday, to the 5th interrogatory, the following:
* * The discounts done by that committee, [the exchange committee,] in
the recess of the board, are always entered on the discount book, and laid
before the board at its succeeding meeting; all matters also, specially com­
mitted to that committee, are reported to the board at their completion."
" No.' 7. Question by Mr. Polk. Please state whether you had any other
instructions, either verbal or written, other than those contained in a letter
signed by N. Biddle, of the 18th of July, 1832, addressed to you, a copy of
which is contained in page 6 of the documents of the House of Representa­
tives of the present session of Congress, numbered 9; and, if so, state what
- those instructions were.
Answer. I had several conversations, incidentally, with the President of
the bank in relation to ^he arrangements to be made abroad, but have no re­
collection of any suggestion that is not embraced in the instructions. A pri­
vate letter, I think of the same date of the instructions, was {fanded to me

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[ Hep. No, 12t. ]

i

*n reference to my compensation, and some other details: that letter I hare
at ray lodgings, and it will be left with the committee.
No. 8. Question by Mr. Polk. Did the contract entered into by you, as
agent of the bank, with Barings, Brothers, & Co., under date of the 22d
August last, embrace such an arrangement as you were authorized and in•tructed to make?
v
Answer. In part; on my arrival in London on the 19th August, I found,
at my first conference with 'Messrs. Baring, Brothers, & Co., that there
would be an uncertainty as to the amount of the stock that would be defer-.
red in conformity with an inquiry intended to be made by that house, of
the disposition of the stockholders in relation to the postponement of the
yment of the amounts respectively held by them. The amount might be
pge or it might be small; and it was important to the bank, and to the ob­
jects of my mission, thst it should be known by the 1st of October in Phila­
delphia, the amount of stock that would be held back. The object was,
as has been before stated', to extend the accommodation to the sum of about
$5,000,000, and Messrs. Barings were unwilling to agree to make up any
difference that might arise, in case a small quantity of the stock only should
be arranged for. Not being able to await the result of the circular to be is­
sued by Messrs. Baring, one of the gentlemen of the house suggested that
the house might find opportunities of buying up the stock when it could be
gfttat fair prices; and feeling assured that, between these two modes of ope­
ration, a considerable! amount of the stock could be secured, they would be
* willing then to make up any deficiency in the five millions. The purchase
of the stock by Messrs. Baring had not been adverted to in my instructions,
or in any conversation with my constituents'at home; and.it not striking me
that such purchase by Messrs. Baring would involve any question touching
the chartered powers of the institution, I agreed to authorize such purchases
by them, at prices not exceeding ninety-one per cent, as the only means of
effecting, in due season, the main purposes of my voyage. An agreement
was accordingly signed with Messrs. Baring, Brothers, & Co., on the 2Sdof
August last, as exhibited in the Document No. 9 of the House of Repre­
sentatives, page 12; and my report thereof, as I understood verbally from
the President of the bank, reached him on the 1st of October.
I' have learned since my return that, on receiving the first account from
Messrs. Baring of their purchases, as far as they had then gone, it was
deemed expedient to disavow that part of the arrangement- A letter from
the President of the bank to Messrs. Barings, of the 15th October, page 6,
Document No. 9, explains the reasons and manner of that disavowal.
No. 9. Question by Mr. Polk. Did you, at the time of making the conCract with Messrs. Baring, Brothers, & Co., consider or believe that you had
. exceeded the authority delegated to you?
Answer. It did not then strike me that I had exceeded my authority.
No. 10. Question by Mr. Polk. Can you state at what date the bank re­
ceived the first information of your arrangement with the Barings, Brothers,
It Co.?
Answer. 1 have before mentioned that the verbal information given me
' by the President was, that my report of the contract was received by the .
bank on the 1st of October, and I have no reason to believe that any earlier
intimation than mine' could have been received from any other source, as I
wrote by the packet, the mail for which was to depart, I believe, the next.
No. 11. Question by Mr. Polk. Has your report of the arrangement
communicated by you to the President, as you have stated, and received by

E

[ Rep. No. 121. ]

$9

him, as he informed you, on the 1st of October, ever been communicated to
■ the board of directors?
Answer. I have no information whatever on that subject.
No. 12; Question by M* Polk. Was it intended at the time of your ap­
pointment to make this negotiation in London, that the fact should ever
have been made known to the Government, the board of directors, or the
public?' Or was your mission intended to be secret, kntwn only to yourself
the President of the bank, and the exchange committee?
Answer. No intimation was ever given to me of any desire or idea of
concealment from the Government, the board of directors, or the public, of
any arrangement that might beteffeeted in Europe, after the business should
be completed; nor would I have condescended to have undertaken a secret
agency, the results of which, at the proper time, might not have been dis­
closed to the world. I understood the business to be secret between the Pre­
sident, the committee, and myself, only until the period of its completion. .
Nd. 13. Question by Mr. Polk. Was the Government or the board, at
the time of your appointment, notified that such an arrangement was in pro*
gress; and has the arrangement since made been yet officially communicated
by the bank to either, or both?.
Answer. I have no information that will enable me to answer either of
the points in this question.
No. 14, Question by Mri Polk. Can you state the aggregate amount of
the three per cents, purchased under your contract by Baring, Brothers,
k Co., for account of the bank, and what the amount arranged by*the foreign
holders for postponement?
Answer. I believe that in the whole, purchases and deferred, the amount
was about three millions when I left London; but I must leave this question)
to be more definitely answered by the exchange committee, who are now in
Washington, my own recollection upon it being altogether loose.
15. Question by Mr. Polk. Was it the understanding of the parties to
the contract made by you with Messrs. Baring, Brothers, & Co. that the cer­
tificates, of the three per cents, purchased by them for account of the bank,
that the cost was. to be placed to the debit of the bank, and the certificates
remain with Messrs. Baring, Brothers, & Co. as security for the payment,
by the bank, to them of the price paid for them?
'
'
Answer. The agreement states that the certificates of the stock so pur­
chased were to remain with Messrs. Baring, Brothers, & Co. I have learn­
ed, however, that those certificates have been lately forwarded and received
at the bank: if the whole have not already arrived they are on the way. The
certificates were left with Messrs. Baring, Brothers, & €o., as it appeared to
be rather their desire, at the time, to retain them: nothing was said, how­
ever, about security.
No. 16. Question by Mr. Polk. On what principle was the limit of £1
per cent, fixed in your contract with Messrs* Baring, Brothers, & Co.; and
did not the rate of exchange, at the time of your departure from Philadel­
phia, leave a considerable profit to the bank on the purchase at that rate?
Answer. - The price was fixed upon a calculation founded on the average
rate of exchange for some time preceding, so as to secure the bank from pro­
bable loss.
No. 17. Question by Mr. Polk. By whom are the exchange and other
committees of the bank appointed?
Answer. The exchange committee, and all other committees, are appointDigitized by C J O O Q L C

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I Rep. No. 121. ]

ed by the President The committee on the state of the bank, only, is ap.pointed by ballot.
No. J8. Question by Mr. Polk. What number of proxies do you now
represent, exclusively, or jointly with others? '
Answer. I represent, exclusively, rather upwards of two hundred votes.
I do not recollect that my name is united with others in any proxies.
No. 19. Question by Mr. Polk. Will you please state what was your
compensation for your mission, and by whom authorized, and by whom paid?
Answer. The amount of my compensation was five thousand dollars; au­
thorized, I presume, by the exchange committee, and paid by the second
assistant cashier.
FEBRUARY 2,

1833.

Joshua Lippincott affirmed, and examined as follows:
1. Question by Mr. Polk. Were you a director of the bank of the
United States during the last \ ear, on the part of the United States; and are
you now a director chosen by the stockholders?
Answer. I was a director during the last year, appointed by the Presi­
dent. I am now a director appointed by the stockholders.
2. Question by Mr. Polk. Had you any knowledge, in your official
character as a director, in July last, of the appointment of T. Cadwallader as
, agent to negotiate for the bank a postponement of the payment of the three
per cent, stocks of the United States held abroad, and a loan for the bank to
the amount of five millions of dollars?
Answer. I had no knowledge of the appointment of Mr. Cadwallader.»
3. Question by Mr. Verplanck. Had you any knowledge of the powers
given to the exchange committee'by the board in relation to that negotia­
tion.
Answer. I had no such knowledge.
4. Question by Mr. Ingersoll. Were you present at the board of di* rectors at the time the following proceedings and resolutions of the board of
directors of the bank were had? viz..
"BAKE UNITED STATES, March 13,

1332.

The President submitted to the board his views in relation to the proba­
bility of the redemption by the Government, in the course of the present
year, of a large portion of the three per cents, of the United States, more
than one half of which stocks he stated to be held by foreigners, the mag­
nitude of whose claims upon this bank might possibly expose the com.
munity to great inconvenience, unless some measure should be adopted for
deferring a part of the payments that may be required; and suggested the
expediency of empowering a committee of this board to enter for that pur­
pose into such arrangements with the holders of that stock, as might com­
bine the interests of the bank with those of che public.
" Whereupon it was, on motion,
* "Resolved, That the subject of the communication just made by the Pre­
sident be referred to the committee of exchange, with authority to make,
on behalf of this bank, whatever arrangements with the holders of the three
percent, stocks of the United States, may, in their opinion, best promote
the convenience of the public, and the interest of this institution.
"Extract from the minutes.
«W. McILVAINE, Cashier.'*
Answer I was not present; I was In the country.
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55

5. Question by Mr. Alexander. Wfren did you first hear of the passage
of the resolution of the 12th March, 1833?
Answer. I can't recollect dates; it must have been a considerable time
after I heard of it; it was after General Cadwallader had sailed for Europe.
6. Question, by Mr. Verplanck. What opportunities and means have
the Government directors of knowing the proceedings of the board, or the
operations of the exchange or any other committees?
Answer. They have precisely the same opportunities as the other di­
rectors; there is no distinction between the directors chosen by the Govern­
ment and those chosen by the stockholders. The directors have access to
all the books and minutes of the bank, with the exception of those of the
exchange committee, if that committee keep any. It is not the habit of the
exchange committee to make report of their proceedings pending a subject
on which they may be acting: they report when the transaction is closed. 7. Question by Mr. Polk. Has the fact of the appointment of Mr. Cad­
wallader as agent of the bank, and the arrangement made by him with
Baring, Brothers & Co., ever been officially made known to the board of
directors? If so, when, and by whom?
-Answer. It was not officially made known to the board of directors till
Tuesday, the 29th of January last.
8. Question by Mr. Ingersoll. You speak of being official/?/ informed:
were you previously informed in frequent pdnversation, or otherwise, with
members of the exchange committee, or the President, of Mr. CadwalJader's mission? and, if so, how early was the information?
Answer. I don't recollect to have conversed with the exchange com­
mittee or the President upon the subject. Not being desirous of inter­
fering with the duties of the exchange committee, I thought it improper to
address to them any inquiries upon the subject. The directors frequently
conversed upon the subject, but what I learned,was probably as much from
out-door as in-door conversation. As to the date, I think it about the time
of the appearance of the circular of the Barings in a New York paper, which
was about the llth or 12th of October. I do not remember that it was
spoken of earlier.
.
9. Question by Mr. Ingersoll. Were the proceedings of the board of
directors, referring the subjetft of the three per cents, to the exchange com­
mittee, read at a subsequent ^meeting of the board when you were present?
Answer. Yes, they were the next meeting after their adoption; but I do
siot recollect to have attended to the reading of the minutes.
10. Question by Mr. Verplanck. How do the operations of the exchange
committee come officially to the knowledge of the board?
, Answer. By report in writing, which is inserted in the minutes. Their
loans appear on the regular discount book, having a distinctive mark as
having been done by the committee.
11. Question by Mr. Pojk. When and from whom did you first derive
a knowledge of the contract entered into by Mr. Cadwallader with the
Barings, under date of the 22d August last?
Answer. I have already responded to this interrogatory, in my answer
to question which is numbered eight.
12. Question by Mr. Polk. Had you any knowledge, at the time, of the
letter signed N. Biddle, to Baring, Brothers & Co., dated October 15,1S32,
(Doc. No. 9, JIo. of Reps.) disavowing the authority of Mr. Cadwallader to
.make the arrangement he did with Baring, Brothers & Co.; or of the sub*

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sequent letters written by the same to Baring, Brothers & Co., dated the
19th and 31st of October, 1832, (same document?) '
Answer. I did not know any thing about this letter at the time of its
date, nor of those of the 19th and 31st of October. No communication of them
was made to the board at the time, according to the best of my recollection.
13. Question by Mr. Polk. Please state whether you were present at &
general meeting of the board of directors on the 20th November, 1832;
whether the foreign directors were not called together on that day; the ob­
ject of the meeting; and whether the board on that occasion were informed
of the agency to London, the postponement or purchase of the three per
cents, on account of the bank, of the contract made by the agent with Baring,
Brothers & Co., of the subsequent disavowal of the authority of the agent to
make it; and was any communication of any kind made to the board in re­
lation either to the agency of Mr. Cadwallader, or to the contract with
Messrs. Baring, Brothers & Co.?
Answer. I was present at the meeting on the 20th November, 1832;
the directors not residing in Philadelphia were called at that meeting. The
object of that meeting was to consider the propriety of instructing the
branches to continue their business in its usual course. According to my
recollection, the board was not informed on that day of the agency to Lon­
don. The board may have been informed of the postponement or purchase
of the three per cent, stocks on account of the bank; but I cannot recollect
it distinctly. I don't recollect any information being given to that meeting
of the contract made by General Cadwallader, or of the disavowal of his
authority to make it. 1 don't recollect that any information of any kind
was given to the board at that meeting, either in relation to the agency of
Mr. Cadwallader or to the contract which he made.
14. Question by Mr. Polk. Have you any knowledge of any arrange­
ment made by the bank for the postponement of the payment of any part of
. the three per cents., other than the arrangement made in London by the <
agent? If so, state the amount postponed, when the arrangement was made,
and by, and with whom.
Answer. I have heard of no other arrangement for the postponement of
the three per cent, stocks, except that contained in the report of the ex­
change committee, dated the 29th January,, to which I have referred in an
answer to a previous interrogatory.
15. Question by Mr. Polk. Are any of the Government directors placed
on any one of the committees since the last election of directors in January last?
Answer. No; there was but two Government directors, till within a few
days past, residing in Philadelphia.
16. Question by Mr. Polk. By whom are the committees of the bank
appointed?
Answer. By the President, with the exception of one—the committee
on the state of the bank. That committee is elected by the directors.
17. Question by Mr. Polk. Under the present system, do the oommitJ Ntees transact the greater proportion of the business of the bank; and are not
the Government directors, by their exclusion from these committees, virtu­
ally excluded from a participation in, and a knowledge of, much of the im­
portant business and transactions of the bank?
Answer. No, they do not; the regular business of the bank is transacted
by the board. Any important or unusual communications are referred, to
committees, who always make report to the board, where the report is
fe

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57

acted upon. The Government directors have not heretofore been excluded
from committees, but have, I believe, participated in all the business of the
bank. There has not been any marked discrimination, to my knowledge^
it any time, between directors of the Government and of the individual
stockholders, in the formation of committees. The committees ate not suf­
ficiently numerous to include the whole board of directors. Generally, such
are placed on a committee, as, from particular knowledge, or business, seem
more appropriately fitted to act upon the subject With respect to the ex­
change committee, the Government directors must, in common with other
directors, be excluded from a knowledge of the business of^ that committee,
till the business has been consummated, and their report laid before the
board of directors.
FEBRUARY 4,

1833.

Mr. Lippincott in continuation.
Question by Mr. Polk. Has there been, during the past year, any pres­
sure, generally, upon that class of merchants, in Philadelphia, who secure
and pay the duties to the Government upon foreign importations ?
Answer. None more than usual.
Question Dy Mr. Polk. Has the bank granted any extraordinary facilities
to that class of merchants during the past year?
Answer. I dont know that Jhey have,*beyond what has been usually
granted to that class of merchants. They have granted the usual accom­
modations.
Question by Mr. Polk. Has there been any extraordinary pressure upon
the mercantile classes in Philadelphia, other than those who pay the duties
to the Government, during the past year. If so, state upon what class did
it fall principally; when it was most severe, and when did it abate ?
1
. Answer. I believe the class which most overtraded itself were those
who deal in dry goods; I mean those who purchase from the importers..
There has been no very extraordinary pressure upon them. One of the
reasons why that pressure-took place was, that; when the bank learned that
the Governmeut intended Unnake so large a payment of the public debt, the
bank ceased, in some measure, to discount the paper of the western mer­
chants, not deeming it proper to increase the debt in that section; but, on
the contrary, deemed it best to draw the moneys from the west tp the Atlan­
tic cities, to meet the payment directed by the Government—the certificates
of the debt being, generally, presented for payment in those cities.
Question by Mr. Polk. Have any of the western branches, within the
last six months, been in such a condition that it became necessary to send
them relief from Philadelphia, or any other place, in specie funds ?
Answer. The bank understood that an attempt would be made to make
a run upon one of the western branches; and, in order to enable the branch
to sustain itself in such an event, a considerable amount in specie was sent
out to it. This was confined to a single branch. A similar attempt was
made on one of the southern branches, and provided against in the same
way.
Question by Mr. Polk. Has the bank, for more than a year past, been
pressing the western branches to curtail their loans and discounts; and have
they secceeded in effecting it ?
Answer. No. I believe they have not been, for more than a year past,
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[ Hep. No. 131. ]

pressing the western branches to curtail their discounts. Where they hare
limited the common discounts^ they have extended the business in bills and
drafts.
'
Question by Mr. Ingersoll. Have large sums in notes and drafts, dis­
counted at Philadelphia, payable at the western branches, been returned
protested for non-payment within the last twelve months?
Answer. Not to a large amount.
■ • j
Question by Mr. Verplanck. Had you any reason, during your service as a Government director, to doubt whether the mass of' the bills, stated in
the monthly statement to be discounted at the bank and its branches on per­
sonal security., was, in general, safe?
Answer. I believed them safe as such transactions usually are in the best
regulated banks of the country. I have been a Government director two
years, and a director on the part of the stockholders for many years.
Question by Mr. Verplanck. Of the bills discounted on personal security,
is there, to your personal knowledge, any large amount of what is com­
monly called a accommodation paper" discounted, with an understanding
for a renewal for any length of time ?
Answer. The general practice has been to give a preference to what is
called " business paper;" and I believe, for the amount of the capital, there
has been less amount of accommodation paper than is usual in banks.
Question by Mr. Verplanck.' Of the amount of domestic bills of exchange
reported in the monthly statements of the years 1831-1S32, do you believe
any considerable proportion to be of the character of accommodation paper,
to be renewed by drawing and redrawing between the bank and its branches,
or between the several branches ?
Answer. J do not recollect of any.
Question by Mr. Verplanck. Have the directors of the bank the means
of detecting any habitual practice of drawing and redrawing, just referred
to, if it should exist between the branches, when carried to any extent?
Answer. They have, by means of the periodical returns of the branches
to the mother bank of the business done at those branches, respectively.
Question by Mr. Verplanck. Would those returns also include such in- .
formation, relating to bills discounted on personal security, as would enable
the directors of the mother bank. to detect any large regular accommoda­
tions at the branches ?
■
,
Answer* Yes. The branches make regular returns of what is called paylists, on whitfh is stated the name of the drawer and endorser, on every note
that is discounted. An examination of this list would enable one to detect
the practice referred to: it would, however, be a matter of labor to make
the examination. Any director, on suspicion of such transaction, could
ascertain the fact: the returns are open to the inspection of any directdr.
Question by Mr. Verplanck. On what is founded the estimate of the va
lue of real estate and banking houses, which appear in the monthly state
ments?
Answer. On frequent appraisements or valuations, made from time to
time; but whether the changes of value are entered on the books of the
bank, I cannot positively say.
FEBRUARY 5,

1S33.

John T. Sullivan sworn, and examined as follows:
1. Question by Mr. Polk. Were you a director of the Bank of the UnjtQuestion by Mr. Polk. Was the letter of N. Biddle,of the 29th March,
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50

ed States, appointed by the Government, during the last and the present
year?
Answer. I was, and am.
2. Question by Mr. Polk. Did you regularly attend the board of directors
on discount days, during the past year?
Answer. I received my commission in January, 1832. I attended all the
meetings of the board to which I was invited, and all regular meetings, from
that time to last December, when I came to Washington ,on private busi­
ness, never omitting a day.
Question by Mr. Polk. Had you any knowledge, in your official charac­
ter as a.director, in Julylast, of the appointment of Thomas Cadwallader, as
agent of the bank, to negotiate for the bank a postponement of the payment of the three percent stocks of the United-States held abroad, or a
loan for the bank to the amount of five millions of dollars?
Answer. I have not. No such proposition had been submitted to the
board at any time. Mr. Cadwallader's name was never mentioned at the
board, and I was ignorant that he had gone abroad. I had no idea that the
credits which I observed on the books, that the bank held in Europe, was
obtained by a loan. I had supposed it to result from bills actually purchased.
Question by Mr. Verplanck. You state that you had no idea that the cre­
dits which the Bank held in Europe was obtained by a loan, but supposed
it the result of bills actually" purchased. Do you know whether they were
not actually the result of bills purchased?
Answer. I do not know by what means, or from what sources, that credit
was placed there.
Question by Mr. Polk. When and from whom did you first derive a
knowledge that an agent had been sent to London, and of the contract en­
tered into with Baring, Brothers & Co., of the date 22d August last?
Answer. So far as I can recollect, the first official intimation I had of the
appointment was derived ffom the correspondence between the Secretary
of the Treasury and the President of the bank, in relation to the arrange­
ment made by the bank with the Messrs. Baring, Brothers & Co., laid before
Congress shortly after the meeting of the present session of Congress. No
communication having been made to the board, I believe thefirstintimation
I had of Mr. Cadwallader's intention to go abroad was from the Hon.
Campbell P. White. I believe that was about a day or so before his de­
parture. The character of Mr. Cadwallader's mission was not communicated
to me by Mr. White, nor did I know what it was. The departure of Mr.
Cadwallader was, I think, generally known: his business was not. I had
not the most distant knowledge of the character of his business. Seeing the
circular of the Barings, some time afterwards, in a New York paper, stating
that they had the authority of the bank to make arrangements in relation
to the three per cents., I inferred that Mr. Cadwallader might have had
some agency from the bank to make an arrangement with Messrs. Barings,
though I had no knowledge that any such agency had been conferred upon
him by the bank. Nor did I suppose that he could be authorized, officially,
not haying the sanction of the board of directors.
*
<
Question by Mr. Polk. Has the fact of the appointment of Mr. Cadwal- '
lader, and of the arrangement made by him with Messrs. Baring, Brothers
&Co ., ever been, officially, made known to the board of direetors? If so,
when, and by whom? and has'that arrangement ever received the sanction
of the board?
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Answer. Never, during the time I was at the board, until the 29th of
January (ult.) when the report of the exchange committee was laid before
the board of directors. That report, on the 29th ult., received the sanction
of a majority of the board of directors.
Question by Mr. lagers oil. Were you at the meeting of the board of .di­
rectors, when the following proceedings took place in reference to the three
per cents., viz.
Resolution of March 13,1832.
BANK OF THE UNITED STATES,

March 13,1832.
The President submitted to the board his views in relation to the probability of the redemption by the Government, in the course of the present
year, of a large portion of the three per cents, of the United States; more
than one half of which stock he stated to be held by foreigners, the magni­
tude of whose claims upon this bank might possibly expbse the community
to great inconvenience, unless some measures should be adopted for defer­
ring a part of the payments that may be required, and suggested the expe­
diency of empowering a committee of this board to enter, for that purpose,
into such arrangements with the holders of that stock, as might combine the
interests of the bank with those of the public.
Whereupon it was, on motion,
Resolved, That the subject of the communication just made by the Presi- ^
dent be referred to the committee of exchange, with authority to make, on
behalf of this bank, whatever arrangemcits with the holders of the three
per cent, stock of the United States, may, in their opinion, best promote the
convenience of the public, and the interests of this institution.
Extract from the minutes.
W: McILVAINE, Cashier.
Answer. I was.
Question by Mr. Polk. When the proceedings of the bank, of the 13th
March, 1832, to which your attention has just been called, took place, do
you'know whether the postponement, or purchase of the amount of five mil­
lions of the three per cents, was discussed by the board; or do you believe
there was any intention to confer, or that the board did, in fact, confer the
extraordinary power on the exchange committee to make such an arrange­
ment?
Answer. Not a syllable was uttered in regard to an arrangement to the
amount of five millions. I do not know the intention of the mover of the
resolution, but the board did not confer the power on the exchange commit­
tee to make such an arrangement, as is referred to in the interrogatory, as I
understood it.
Question by Mr. Ingersoll. You say that not a syllable was uttered on
the subject- of the postponement of that payment; what then do you make
of the following proceedings, adopted at that time, viz.
" The President submitted to the board his views in relation to the proba­
bility of the redemption by the Government, in 'the course of the present
year, of a large portion of the three per cents, of the United States, more
than one half of which stock he stated to be* held by foreigners; the magni­
tude of whose claims upon the bank might possibly expose the community
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ftp great inconvenience, unless some measures should be adopted for defer.
ring apart of the payments that may be required, and suggested the expe­
diency of empowering a committee of this board to enter, for that purpose,
into such arrangements with the holders of said stocky as might combine
the interests of the bank with those of the public."
Answer. So far as my memory serves, the President, as is cpstomary
with him on various occasions, remarked upon the state of the bank, and
with regard to the large amount of the public debt to be paid within the
course of the present year. He observed that the agent or agents on foreign,
account, in New York, had the control i( a million and seven or eight hun­
dred thousand dollars (about this sum) of the public debt, and he thought it
was desirable to make some arrangement with the agent. I am not abso­
lutely certain, but I am under an impression, that he suggested the propriety
of authorizing the exchange coirimittee to make arrangements in relation to
the amount of which these agents had the control. My understanding was, •
that the business of that committee would be to anticipate the general pay­
ment, by discounting to the amount of the certificates^ or making any other
arrangement, by bills or otherwise, in the interval; that was1, between that pe­
riod (13th March) and the time fixed by the Government for the redemption
Of the debt.
_ .
Question by Mr. IngersolL Am I. then to understand ryou as saying'that
you supposed the committee were empowered to anticipate the payments,
instead of deferring them?
Answer. Yes. The preamble to the resolution of the 13th of March, 1832,
was not submitted in writing—the subject was introduced, orally, by the
President, and, as far as my recollection serves me, had no reference td cfeferring the payment of the public debt: nor did it contain, so far as I re­
collect, the word deferring. I concurred in the adoption of the resolution,
because I conceived its operation to be temporary. Had I supposed that it
contemplated deferring the pavment of the public debt, I should have op­
posed, and voted against it. When the report of the exchange committee
was submitted to the board on Tuesday last, on hearing the proceedings of
the 18th of March read, I then observed to the board that the word deferred
was not introduced into the proceedings of that day, and requested that the
hook of minutes should be produced. On reading the minutes, I found the •
word deferred in the preamble. The usual practice has been for the Presi­
dent to communicate any matters relating to the bank, orally, and recom­
mending the course to be pursued. This being; done, some gentleman, gene-*
rally a member of the exchange committee, or committee on the offices,
moves that the subjeet be referred to a committee. I do not know how
' much of the proceedings the cashier records at the time. He is the keeper
of v e minutes. My impression is, he makes rough miriutes at the time, and,
sti* ^equently reduces them to form.
FEB&UA&Y 6,

1833.

Mr, Sullivan, in continuation.
Question by Mr. Ingersoll. Are the proceedings of each meeting read at
the subsequent meeting?
Answer. I believe they are.
Question by Mr. Alexander. Do the members of the board generally at­
tend to the reading of the minutes?
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[ Rep. No* 121. ]

Answer. The reading of the minutes is rather a matter of form, and I do
not, myself, generally attend particularly to their reading; other gentlemen
may. The minutes can, at any. time, be seen, at the call of any member of
the board;
Question by Mr. Polk. Had you any knowledge, at the time, of the let­
ter written by N. BLddle to.Baring, Brothers & Co., dated 15th October last,
disavowing the authority of Mr. Cadwallader to make the arrangement with
Baring, Brothers & Co., or of the subsequent letters written by the same,
dated the X9th and 21st October?
Answer. I had no such knowledge. The subject was not before the
board.
'
Question by Mr. Polk. Please state whether you were present at the
board on the 20th November last; whether the non-resident directors were
called together on that day; the object of the meeting; and whether the board
were, on that occasion, informed of the agency of Mr. Cadwallader to Lon­
don; the postponement or purchase of the three per cents, on account of the
, bank^ of the contractinade with B. B. & Co., or, of the subsequent disavowal
of the authority of the'agent to make it; and was any communication of any
kind made to the board in relation to the subject?
Answer. I was present at that meeting; the non-resident directors were
invited to assemble on that day. There was no reference to the mission of
Mr Cadwallader, nor was there any to the arrangement with the Messrs.
Barings in relation to the three per cents., submitted, on that occasion, to
the board. When the propriety of inviting the non-resident directors
was suggested by the President, as called for by the peculiar state of the
bank, and for the purpose of recommending a course for the future opera- .
tion of the bank, I remarked, at the time, that I could not see the utility
of inviting gentlemen to direct the operations of the bank, who must neces­
sarily be comparatively ignorant of the state of the bank, and its general
operations. When the suggestions were made by the President, at that '
meeting, (that is the 20th November,) a motion was made to refer the sub­
ject communicated to the non-resident directors, and the Committee on
the Offices. When the reference was made, I expected that the committee
would have called an extra meeting of the board to receive their report be­
fore they dispersed. It was not done. The report was made after the
non-resident directors left Philadelphia.
. Question by Mr. Polk. Have you any knowledge of any arrangement
made by the bank, or any committee or officer thereof, for the postpone­
ment of the payment of any portion of the three per cents., other than the ar­
rangement-made in London by the agent? If so, state the amount; when the
arrangement was made; and by and with whom?
Answer. 1 have no such knowledge.
* Question by Mr. Verplanck. Have you- any reason to believe that any
such-arrangement has been made?
Answer. I have no reason for such belief. There is no circumstance to
warrant me to believe the fact, nor can I believe that which I do not know.
Question by Mr. Polk. When Mr. Biddle came to Washington in March,
1832, to make application to the Government to postpone the intended pay
ment of a portion of the three per. cents., from the 1st July to the 1st October,*
was the object of his visit to Washington known to the board of directors* or
authorized by them?
Answer. The board knew nothing of it. It was not submitted to the
qoard.
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1&32, addressed to the Secietary of the Treasury upon that subject, known
to, or authorized by the board?
Answer. I believe not.
Question by Mr. Verplanck. From your knowledge of the business of
the bank, what do you presume to have been the inducement for making
the arrangement for postponing the payment of the three per cents.?
Answer. I do not consider that the bank authorized the arrangement.
I cannot give you the inducement of others; I can give you my own impres­
sions. My impression is, that the postponement was induced by the extend­
ed situation of the affairs of the bank, and by the difficulty of collecting the
funds, or of reducing the discounts so as to meet the contemplated* payment
Question by Mr. Verplanck. Do you know how much of the three per
cents, hive noW been paid?
Answer. During the past month, statements of various amounts have
been received from Europe, and wer6 submitted by the President to the
board. I think, from the last information I received, the amount was be­
tween two and three millions remaining unpaid.
Question by Mr. Verplanck. How is the present payment of the three
per cents., with the exception of the small proportion remaining unpaid,
consistent with your view, that the extended situation of the affairs, of the
hank, and the difficulty of collecting the funds, or of reducing the discounts
so as to meet the contemplated payments, made this postponement desirable?
Answer. In my answer to a previous question upon this branch of en­
quiry, I gave my own opinions; and, in confirmation of those opinions, I
now refer to the report of the committee on the offices of the 27th July last,
in which the following statement is made:
" The Government having now announced that, ^between this time and
the 1st of? January next, there will be reimbursed upwards of fifteen mil­
lions of dollars of the funded debt of the* United States, as the provisions for
these payments must be made by the bank out of its moans now employed,
in loans to the community,'it is an object of great anxiety to draw these
means in such manner as may press, with the least possible inconvenience,
upon the debtors of the bank and the country at large."
To the first part &( this interrogatory, I answer, that I do not know how
much of the public debt remains unpaid, nor do I know whether the portion
that has been paid, or any part of it, was met by a loan in Europe, ,or whe­
ther any sums were actually remitted to meet it To the second part of the
interrogatory, my previous answer had reference to the state of the bank in
July last. (See end of this testimony for a statement made by Mr. Sullivan
in further answer to this question.)
Question by Mr. Verplanck. Has the situation of the bank, in regard to
its extension of loans, and the power of reducing its discounts, altered since
that period, so as to make the payment of the three per cents, more easy to
the bank or the dealers with it?
Answer. There has been a considerable reduction of the discounts of
the bank in the Atlantic cities, as the monthly statements will show. Tb?
effect of the arrangements in Europe, and their extent and character, I am
not acquainted with.
FEBRUAM\7,

1833.

Mr. Sullivan, in continuation.
Question by Mr. IngersoH. After notice had been given of the intended
payment of any portion of the public debt, is it nofcilfegdqo^mon practice of;/""

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[ Rep. No. 121. ]

the bank to anticipate the payments to such holders of certificates as may
present them before the day of payment, deducting the interest for the time
anticipated?
Answer. I do not know what the common practice of the bank has been,
not having been a director before the year 1832. I believe that the reso­
lution of the 13th of March was intended Tor that purpose: that was my un­
derstanding of it
•
"
Question by Mr. Ingersoll. Was Mr. Biddle a director on the part of
the Government during the past year, and for several years preceding?
Answer. It is difficult to say whether he was a director, on the part of
the Government, during the past year, or on the part of the stockholders,
having been appointed by the one, and elected by the other.
Question by Mr. Gaither. Were the Government deposites ample to
meet the payments of the debt advertised to be redeemed in July, October,
and January, at those respective days?
Answer. I believe they were.
Question by Mr. Gaither. Was the report of the exchange committee
submitted to the board of directors on the 29th January last, adopted unani­
mously? and, if not, what took place in the board?
Answer. Tuesday the 29th, being discount day, a motion prevailed that
the board adjourn to meet that evening at 7 o'clock, to receive the report of
the exchange committee. The board met accordingly, and a report was
presented by Mr. Bevan. The report having been read by the President, a
motion was made, requesting the President to transmit a copy thereof to
the honorable the chairman of the Committee of Way* and Means. It was
moved by Mr. Gilpin, who is a Government director, that the report lie on
the table: this motion was seconded by myself. I objected to the adoption of
the resolution, and was in favor of a postponement, because the report did not,
in my opinion, present a correct view of the causes which led to the defer­
ring of the payment of the public debtt In one part, we are, by this report,
led to believe that the authority to send an agent to Europe was derived from
the resolution of March, 1832; and, if my memory be correct from hearing
the paper read, the necessity of the measure was, in part, produced by
the introduction of the cholera. Mr. Gilpin and myself objected, be­
cause the paper had not been submitted to us a sufficient length of time for
examination. The yeas and nays were called for by me on the motion to
lay the report on the table, and Mr. Gilpin and myself only voted in the
affirmative. I stated that the exchange committee, who had had the subject
under their charge during the past year, without ever having made any re­
port of their proceedings, could scarcely expect the board to tdopt a report
about which they were totally ignorant, and asked or enquired what advan­
tage the gentlemen could expect from a vote of those who were totally ig­
norant of the subject submitted to them; and requested that, as this was the
offspring of the exthange committee exclusively, they should assume the
responsibility of it, and present it as theirs. The question was then taken
-on the- adoption of the resolution, as transmitted to the committee, and it
was carried in the affirmative. We had no further opportunity of looking
into the report after its adoption.
Question by Mr. Ingersoll. You ssuy that in one part of the report we are
led to believe that the authority to send an agent to Europe is derived from
the resolution of March IS, 1832: is any different authority set up in a ef­
ferent part of the report?
Answer. I do not recollect, at present, of any.

[ Rep. Np. 121. 3

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Question by Mr* Pol|c. Are the Government directors excluded from the
exchange and other committees of the bank, since the last election of direc­
tors, which took place about the first of January of the present year?
Answer. They are.
Question by Mr. Verplanck. What do you mean by being excluded from
the committees of the bank?
Answer. No Government director has been appointed on either of the
committees.
Question by Mr. Gaither. How, or by whom are those committees ap­
pointed?
Answer. The exchange committee and the committee on the offices are
appointed by the President; the committee on the state of the bank, by the
board of directors.
Question by Mr. Verplanck. Are there not other directors who are, also,
not on committees?
•
Answer. I believe all those residing in Philadelphia are members of some
committee/ I believe Mr. Chauncey, who is not generally in the habit of at­
tending the board, is not;l believe all the others are.
.Question by Mr. Gaither. Do three Government directors reside in
Philadelphia?
Answer. Yes, sir.
Question by Mr. Polk. Under the present system, do the committees,
and especially the exchange committee, transact a great proportion of the
business of the bank; and are not the Government directors, by being ex­
cluded from being members of these committees, virtually excluded from a
participation in, and a knowledge of, much of the business and transactions of
the bank; and do these committees regularly report .to the board of direc­
tors at .each regular meeting?
Answer. The exchange committee has transacted very extensive opera­
tions: it necessarily follows, that Government directors, being excluded, can
. have no knowledge of the transactions of the exchange committee, ^ho are
not in the habit of making regular reports of all their proceedings.
«
Question by Mr. Polk. Does the exchange committee discount notes
during the interval between discount days? If so, state whether the rotes
and regulations authorize it, and whether that committee report regularly to
the ,next succeeding meeting of the board such discounts, and all other
transactions which ,have taken place in the interval.
Answer. The exchange committee make discounts during the interval of
discount days. I do not know under what rule or regulation. I believe the
exchange committee, formerly made no discounts—recently they have; I do
not recollect to have seen cny authority for it, but I presume there must be.
The discounts are generally entered upon the book, and the book placed on the
discount table, near the President's desk. There are other functions of that
committee, such as the purchase and sale of exchange, which they do not
report to the board.
Question by Mr. Polk. Has there, during the past year, been any ex­
traordinary pressure upon that class of merchants in Philadelphia, who se­
cure and pay the duties to the Government upon foreign importations? if
so, have any extended accommodations been made to them by the bank?
1
Answer. I am not aware of any pressure, generally, upon that portion of
our citizens. I believe no extended accommodations have been made to them
9
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by the bank. The importers, in my opinion, have been borrowers to a
very moderate amount.
Question by Mr. Polk. Has there been any extraordinary pressure upon the
mercantile classes, generally, in Philadelphia^ other than the importers, during
the past year? If so, upon what class, when was it most severe, and when did it
abate? and were any extended accommodations afforded to them by the bank^
Answer. There was. The greatest pressure, in my opinion, was felt by
that class of merchants who do a credit business to the western and other
States. It continued during the spring and part of the summer; I believe the
policy of the bank was, rather to reduce than to increase its discounts. The
monthly statements will show a gradual and general reduction in the dis­
counts of the bank—I mean of the bank at Philadelphia.
FEBRUARY 8,

183S.

Mr. Sullivan, in continuation.
Question by Mr. Polk. Has the bank at Philadelphia, during the year
1832, thrown out considerable amounts of good commercial paper, offered
by importing and other merchants, for discount; and have not other persons
received large loans and discounts upon stock and other securities during
the same period?
Answer. The bank has. thrown out a very considerable amount of such
paper during the period of 18S2; considerable amounts have been loaned
during the same period upon stocks and other securities to persons other
than those mentioned in the first part of the interrogatory.
Question by Mr. Verplanck. Are not loans upon the security of good
stocks considered as safer investments than ordinary business paper, and
preferred by banks as such?
Answer. Some banks are not in the habit of granting large loans upon
stocks, believing that the interests of the bank and the community are better
promoted by confining themselves chiefly to the accommodation of their
commercial customers. I believe, also, that banks in general, in Philadel­
phia, are not in the habit of making large loans upon stocks, or to those
operating in stocks at a period of commercial pressure or embarrassment
When banks have funds unemployed after accommodating their commer­
cial customers, I believe they generally are willing to make discounts on the
security of stocks.
Question by Mr. Verplanck. Has the bank any general rule as to the rate
at which stocks shall be received as security?
, Answer. I do not know of any rule. I have no doubt there is, but I have
no knowledge of it. A considerable portion of those stock loans are made
fcy the exchange committee, and are not submitted to the board, in the first
instance. The books in which they are contained is laid on the table at the
next meeting of the board.
Question by Mr. Wilde. Was the interest on the loan on stocks the same
as the interest on commercial loans?
Answer. I do not know. I believe it was.
Question by Mr. Polk. Have any editors of newspapers received accom­
modations in loans or renewals during the year 1832, without furnishing the
description of security which would be required of merchants, and, in some
instances, whilst they stood charged as overdrawcrs, or were under protest?
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Mr. Ingersoll objected to this question on the ground of its enlarging the
inquiry beyond the subjects referred to the committee.
. The putting of this question, was then, at the instance of Mr. Verplanck,
postponed for the present.,
Question by Mr. Verplanck. Has not the bank at this time considerable
funds in the hands of its agents in England and France, ;md do you think
that the bank has now any large debt due abroad?
Answer. The management of the exchange operations of the bank having
been under the , direction of the exchange committee, whose proceedings
have not generally been submitted to the board, I am not acquainted with
the aetual amount of the credit of the bank in Europe, excepting as
presented by the statements of the general account of the bank laid on
<Jhe table on discount days. That amount I suppose the committee
have before them in the monthly statements. The President recently, in
his communications to the board, referred to the. stocks postponed or ar­
ranged, (he did not explain what he meant by these terms;) and my under­
standing was, that stocks postponed by agreement, were those of which the
certificates could not be obtained. What I understood by the term ar­
ranged, had reference to a negotiation which the bank might have made—
the creditors taking the responsibility of the bank or its agent for the ultimate
payment instead of the Government
Question by Mr. Verplanck. Have you any, and what evidence to in­
duce you to believe that such an arrangement has been made, and is now in
force?
Answer. 1 can tell the. committee what induces me to believe such an
arrangement has been made, but I have no evidence. The reasons I have
for coming to that conclusion are, that the large balances which now appear
to the credit of the bank at home and abroad, were not, in my opinion, de­
rived, exclusively, from the regular income of the bank, or the curtailments
of the discounts.
FEBRUARY 9, ia33.

John McKim^jr., sworn, and testified as follows:
;

Question by Mr. Verplanck. Were you a director of the Bank of the Uni­
ted States during the last year?
. Answer. I was.
Question by Mr. Verplanck. What do you know respecting the arrange­
ments respecting the United States' three per cent, stocks?
Answer. I reside in Baltimore. At the meeting of the directors on the
20th day of November last, the President stated to the board what had been
done in relation to the arrangement for the three per cents. He read the
letters that had passed between himself and the Secretary of the Treasury.
H e stated that he expected the principal part of the certificates would be in
in the month of January; and I believe they are now all in excepting about
nine hundred thousand dollars. I was present at the meeting of the board
in July last, called for the purpose of declaring the dividend." The mission
of Gen'l Qadwallader was then mentioned at the board, but I did not conaider the mention of it as official: the precise object of his mission, I do not
think, was mentioned; no particulars were mentioned. I however under­
stood that it had relation to the three per cents. The subject was casually
mentioned, but was not brought before the board for their sanction or of"

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[ Rep. No. 181. 1

eial action at that time. Some transactions are considered as secret or con­
fidential till they are finished or consummated: this has been usual in all the
banks I have been concerned with. When such things are finished, the di­
rectors are then informed of them by the President Under the administration
of Mr. Cheves, he communicated to the board that the Government were
about to order the redemption of a portion of the public debt, and that there
would not be funds to do it; that some thing must be done by the bank to as­
sist the Government in raising the money. There was a secret committee
appointed by the President on the subject, but not while I was present: I
have however seen it on the records of the bank. Mr. Cadwallader was then
sent to Europe on a mission relative to the affairs; and he received his in­
structions from this committee. His mission, and the object of it, was kept
secret till he had accomplished the purposes for which he was sent, when it
was communicated to the board by Mr. Cheves. Mr. Cadwallader, on the
occasion of which I am speaking, (this is under the Presidency of Mr.
Cheves,) effected a loan with the Messrs. Barings; which loan was advanced
by the bank to the Government
Question by Mr. Gaither. Was the late mission of Mr. Cadwallader su­
perinduced by the necessities of the Government,, as in the case of the mis­
sion of the same gentleman during the Presidency of Mr. Cheves, to which
you have just referred in your answer to the last question?
Answer. I do not know that the late mission of Mr. Cadwallader was Oc­
casioned by the necessities of the Government, or that the necessities of the
Government had any thing to do with it.
Question by Mr. Verplanck. You state that you understand that the three
per cents., except about nine hundred thousand dollars, have been received.
Was this amount of debt paid by the funds of the bank, without contracting
any new debt abroad?
Answer. To the best of my knowledge, it has been paid withuot contract­
ing any new debt abroad. My opinion is, that there was money enough in
the hands of the Barings, and that there are yet funds in their hands*
Question by Mr. Verplanck. Has or. has not the bank, at this time, con.
siderable funds in the hands of its agents in England and France; and do
you think that the bank has now any large debts due abroad?
Answer. The bank has funds in the hands of its agents in England. I
know of no large debts owing by the bank abroad.
Question by Mr. Verplanck. It has been suggested that an arrangement
for a new loan has been effected in England, with a view to the redemption
of the three per cents. Have you any reason to believe that such is the case? %
Answer. I have no knowledge of any such arrangement, and do not be- '
lieve that any such arrangement has been made.
Question by Mr. Verplanck. Have you any reason to doubt whether the
mass of the bills discounted at the bank and its branches, on personal secu­
rity, is in general safe?
Answer. I do not know further than Baltimore is concerned: there, I be­
lieve, such bills are in general safe. My residence at Baltimore, and the infrequency of my attendance at the board in Philadelphia, is the reason why
I cannot give an answer generally to this question.^
Question by Mr. Gaither. Was there, during the last year, at Baltimore,
any unusual pressure on that class of merchants who usually pay the Govern­
ment duties on importations?
,''',-■
Answer. Not that I know of.
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FEBRUARY 11,

6d

1833.

Richard Willing sworn, and examined as follows:
Question by Mr. Verplanck. Are you a director of the Bank of the
United States, and how long have you been a director?
Answer. I am a director, and this is the ninth year of my service. I
have always beeri a director on the part of the stockholders.
Question by Mr. Verplanck. What do you know respecting the arrange­
ment of the United States' three per cent, stocks?
Answer. 1 was not a member of the exchange committee last year, but
am now a member of that,committee. At a meeting of the board in March
^ last, Mr. Biddle, the President of the bank, notified the board that it was
the intention of the Government to redeem the three per cents., and sug­
gested that it might he necessary for the bank to make arrangements to be
prepared for that occurrence. The board passed the resolution, which you
have seen published in the proceedings, giving authority to the exchange
committee to adopt measures to meet the contemplated redemption. The
President of the bank is, ex officio, a member of that committee, and its
president. I knew nothing of the precise objects of Gen. Cadwallader's
mission, till it was suggested to me out of doors that H related to three per
cents. A meeting of the board was held in November last, at which the
non-resident directors were invited to attend. Mr. McElderry, of Baltimore,
a Government director, disired to know what had beendone with respect to
the three per cents., and said that he had heard the bank had interposed ob­
structions to their coming out from Europe. Th« letter book was then produced^ and the correspondence upon the subject was read. Mr. McElderry,
and Mr* Campbell, another Government director, then said that they had
understood the matter differently. The proceedings-of the exchange com­
mittee, upon the subject, did not come to my knowledge, officially, till
January last. The proceeding* of the exchange committee, on matters
such as this, ate not reported till the completion of the business referred to
the committee. In the interim, the other members of the board of directors
do not know more of the nature of the operations than other persons.
Question by Mr^ Gaither. Was the G6v8mment funds in deposite in the
, bank, ample to meet the intended payment of the public debt oh the 1st
July and October last?
Answer. I don't know: but I suppose if all the revenue bontls, on deposite,
falling due within the period, had been paid, the funds would have been
♦ sufficient, but there,was great doubt whether these bonds, falling due be­
tween July and October, would be paid, on account of the prevalence of the
cholera. With regard to the payment falling due in July, I presume the
cholera did not operate. WTith regard to the payment in July, in conse­
quence of the pressure on the western branches, and the difficulty of with­
drawing funds from that source, it was desirable to postpone that payment
ta the 1st of October.
Question by Mr. Ingersoll. Did you distinctly understand the proceed­
ings of the board of the 13th March, as authorizing the exchange commit­
tee to defer, or postpone, if necessary, a part of the three per cents.?
, Answer. Undoubtedly; to obtain a postponement, with the consent of the
Treasury Department.
Question by Mr. Gaither. Did you understand the necessity of that post­
ponement to arise froin the inability of the Government to make the re
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[ Rep. No. 121. ]

' Answer. No, sir; nor did it arise from the inability of the bank to com­
ply to the fullest extent, but it would have occasioned a heavy pressure on
the western branches, already oppressed, and unable to pay promptly, hut
they are 'now in a better situation than they have been since the establish­
ment of the institution.
Question by Mr. Ingersoll. After notice of the intended payment of
any portion of the public debt,, is it not a common practice of the bank to
advance the money to the holders of the certificates, before the pay day, de­
ducting the interest?
Answer. Invariably, sir, when the six per cents, were ordered to be paid
off: the bank did not take the six per cent., but took fire or five and a half.
Question by Mr. Alexander. When did you first know of, or learn the
arrangement between General Cadwallader and the Messrs. Barings?
Answer. The first official information I had was in November, at the
meeting of the committee on the offices, and the non-resident directors, but
then the whole of it was not detailed. It was not till January, upon the receipt
of the letter of the chairman of the committee, at whioh tiihe I was a mem­
ber of the committee of exchange, that I became possessed of a full know­
ledge of the whole transaction.
Question by Mr. Verplanck. Have you any knowledge of any arrange­
ment made by the bank, or any committee, or officer thereof, for the post­
ponement of any portion of three per cents., other than the arrangement
made in London? If so, state the amount, when the arrangement was made,
and by whom, and with whom.
Answer. I know of none* nor do I believe there is any. I think such an
arrangement could not be made without my knowing it.
Question by Mr. Verplanck. Was (he amount of the three per cents., of
which certificates have been presented, paid by means of any new debt con­
tracted by the bank in relation thereto?
Answer. Not that I know of, or believe.
Question by Mr. Verplanck. Has the bank now any large amount of funds
in Europe in the hands of its agents in Europe, or does it owe any large
amount of debt there?
, Answer. The bank now has in Europe, and on the way to Europe, funds
to nearly the amount of five millions of dollars, less the amount of the three
per cents., purchased and postponed by the Messrs. Barings. The bank
does not owe a farthing, I believe, in Europe.
Question by Mr. Polk. By Mr. Cadwallader's contract with the Bar­
ings, the bank obtained a loan of five million of dollars, a part of which
was to consist of three per cent stock deferred or purchased, and for the
balance of the five millions the bank was authorized to draw upon the Bar­
ings. Will you state whether this loan, or the amount thus advanced by
the Barings to the bank, in stocks, purchased and deferred, is now a sub­
sisting debt against the bank, or has it been paid by the bank? If so, when,
in what manner, and out of what means?
Answer. I consider the bank as not indebted a cent to the Barings. The
one million seven hundred and odd thousands purchased by the Barings, and
charged to the bank, is covered by the balance of upwards of {83,000,000 in
the hands of the Barings, and the $ 1,800,000 remitted to the Barings and
Hottinguer and Co., since the first of February instant. These two sums, I
-consider would more than cover the claims of the Barings against the bank.
The balance in the han(ls of the Barings, to the credit of the bankj a bill for
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71

a million, purchased of Mr. Ward, and a bill purchased from the Secretary
of the Treasury, of about eight hundred thousand dollars, constituted the
means by which the bank reimbursed the Barings.
Question by Mr. Polk. How and out of what means was the bill pur­
chased from* Mr. Ward and others, constituting the remittances to Europe,
paid for by the bank, or were they purchased by bills drawn by the bank on
its branches, which have not yet arrived at maturity, and have not yet been
paid?
.
Answer. I don't know, but f suppose it was by a draft, at si^ht, upon
New Orleans. What I have stated upon this subject is derived partly from
my own impressions, and what I have heard from others.
FEBRUARY 12,

1833.

Matthew L* Sevan sworn, and examined as follows: *
Question by Mr. Verplanck. Are you a director of the Bank of the
United States^ and how long have you been a director ?
Answer. I am a director of the Bank of the United States, and this is the
sixth year of my service. I am a director on the part of the stockholders.
Question by Mr. Verplanck. Are you now, and were you last year, a
member of the exchange committee ?
Answer. Yes, sir.
Question by Mr. Verplanck. What do you know respecting the arrange­
ment of the United States' three per cent, stock?
. Answer. I am fully advised of all the arrangements in relation to that
matter, having been present when the incipient measures were taken in re­
lation to it. I think it was about the 13th March that the first action of the
board, in reference to the three per cents., was taken; and it was deemed
advisable to adopt some measures in relation to the payment of the publie
debt, consisting principally of three per cents., which, it was understood,
the Government meant to pay off in the current year; so that the with­
drawal of such a large amount of funds might affect the community in the
least possible manner. It was at this meeting of the board, that is, the 13th
of March, full power and authority was given to the exchange committee
to adopt such measures in Reference to said payment as would prevent a
great shock upon the commercial community of the country. In pursuance
of that authority, and the objects committed to the exchange committee by
the boacd, they made the arrangements in relation to deferring the payment
of a portion of the said three per cent, stocks. It was not, however, until
the early part of July, that the committee thought it proper to depute an
agent to proceed to Europe, to endeavor to make an arrangement; and that, in
consequence of an alarm pervading our city, and, indeed, most of the cities on
the sea-board, from the ravages of the cholera, which mainly induced the com­
mittee to enter into that negotiation; fearing a continuance of the cho­
lera, together with the large abstraction of funds, might produce great
commercial distress. General Cadwallader sailed, I think, in the latter part
of July, for Liverpool, with a view of complying with instructions, which
are already published, to effect a deferment with the European stockholders
of the three per cents., not exceeding five millions. He did succeed by
Messrs. Barings purchasing, I think, about $ 1,700,000, and deferring
about #2,600,000, as nearly as I can recollect, without having the precise
amount about me. Finding, in October, that the cholera was passiug away
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[ Ifep. Nd. 121. ]

without affecting so destructively, as was at first apprehended, that there
wouid be no necessity, either for the convenience of the bank, or the entire
accommodation of the community, they had instructed their agents that the
bank desired to have an immediate settlement for all the certificates which had
been purchased or deferred: acting upon that, the agents of the.Bank have ~
been sending the certificates forward with all the despatch in their power, as
this deponent believes; so that, at the present time, he presumes there is less
than one million of the deferred stocks outstanding; and which he presumes
will all be in and paid within the present month.
Question by Mr. Polk. Was the object of the proceedings of the 13th March,
to which you have referred, and which appear published in the public do­
cuments, submitted to the board orally by the President, or in writing; and,
if orally, by whom, and when were they reduced to writing ?
Answer. They were orally submitted by the President* and reduced'to writ­
ing by the cashier, on the minutes of the proceedings of the board on that day*
Question by Mr. Polk. At that meeting of the board, of the 13th March,
was a loan or postponement of the three per cents., to the amount of five
millions, discussed before the board of directors; and was the committee of
exchange directed or authorized by the board to effect such loan or post­
ponement with the holders abroad; or did the proceedings have reference to*
anticipating the payment of about 01,800,000, with the agent or agents of
foreign holders residing in New York? and, if the latter, state the proposi­
tions made by the bank to said agents; when made, and what was done in
relation thereto.
Answer. There was no particular discussion, but there was a full state­
ment made by the President of what might be deemed necessary; upon
which the whole subject, both as to anticipating any portion, or deferring
any portion, as the committee might, in a sound discretion, believe to be for
the public good, was referred to the exchange committee; and so full and
distinct is my recollection, that there was no doubt on my own mind, as
one of the exchange committee, of ,the fullness of the powers, given to the
committee, which induced the action in relation to that matter; and which
is now before the public and this committee. The committee were fully
authorized to do all they have done, both in anticipating and deferring,
either with the local or foreign holders. It had no exclusive or particular
reference to the payment of $1,800,000 held by an agent in New York for
a foreign house; and, if that were mentioned at all,, it was only incidental.
There was some correspondence, I think, in relation Jo the subject with the
agent in New York; and, if my recollection serves7me, nothing was done
with that agent towards anticipating or deferring any portion of which he
had the control. I think the proposition was to defer the portion of which
it was presumed Mr. Ludlow, of New York, the agent of foreign holders,
would have the control; but nothing .was done with that agent, that is, I
have no recollection of it I have no distinct recollection of dates, but I
think the proposition was made soon after the 13th March. The corres­
pondence upon this branch is doubtless at .the bank.
Question by Mr. Polk. You state that, according to your understanding
of the proceedings of the 13th March, the exchange committee was autho­
rized to do all they have done in relation to the three per cents.: will you
state whether your recollection be distinct, that any proposition was made
•r considered by the board at that meeting, which went'to authorize a loan
of five millions for the bank, or a postponement of three per cents, to that
•mount?
'
^ CZr*r*a\c
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Answer. Yes, sir, tofeoto any extent that should be necessary—not five mil*
Kons alone, but ten millions, if it had been necessary to go to that amount—
though there was not that amount: yet, I mention it merely to show the
entire authority delegated to the committee by the resolution of the board.
Question by Mr. Verplanck. Has any arrangement been made by the
bank or the exchange committee for the postponement of any portion of the
three per cents., other than those in London? If so, state the amount, with
whom, and when made.
Answer. I have no recollection of any. If there had been any, I think I have
the means of knowing. I am pretty certain there was not. The reason why a
portion of the debt in this country appears to remain unpaid is, in my opinion,
that the agents who hold the certificates have no power of attorney to receive
the money upon the certificates which they hold. There may be another
reason, which is this, that the holders prefer to let the matter remain as it is ,
until a favorable opportunity offers of re-investing the money. This is
the case with respect to a large sum of the six per cents., which were due
and payable four years ago. They are uncalled for to the present day.
Question by Mr. Verplanck. Was the amount of the three per*cents.,
of which certificates have been presented, paid by means of any new debt,
contracted by the bank for that purpose?
/
Answer. No, sir; their own funds, in the hands of their agents, were am­
ple to meet all which the bank or its agents had purchased or deferred.
Question by Mr. Verplanck. Has the bank now any large amount of
funds in Europe, or in the hands of its agents in Europe; or does it owe any
large amount of debt there ?'
Answer. It owes no debt whatever abroad: on the contrary, has at least
a million of dollars to its credit, over and above all the three per cents, pur­
chased or deferred.
Question by JV^r. Verplanck. The Committee of Ways and Means have
received from the bank a report of the committee of exchange, to which your
name is signed as chairman, and which is now exhibited to you, marked
(Aa.) Are the facts therein stated, to the best of your ^knowledge and
belief, correctly stated?
Answer. Yes, sir; to the best of my knowledge and belief they are
correctly stated. If there be any error of fact, I will endeavor to ascertain
it, and point it out to the committee hereafter.
FEBRUARY 14,

1833.

Mr. Sevan, in continuation.
, In further answer to the last interrogatory propounded yesterday, Ibeg
leave to state that, in the manuscript report, to which reference is made, the
losses at the branch in Lexington is stated at $27,711 87. There is an error
in copying; it should be $36,486 87, making the aggregate of losses at the
western branches $68,918 09, instead of g60,143 09, stated in the manu­
script report
Question by Mr. Gaither. What are the duties of the exchange commit­
tee, and does that committee report regularly to the board of directors all
their transactions?
Answer. The duties of the exchange committee are, to purchase bills
both foreign and domestic, and, in the absence of the board, they are autho­
rized to discount domestic bills on any part of the United-States. They
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[Aep.No.181.']

report, on the books, all their doings daily. The aggregate of foreign bills
are entered in the general account of the bank, which is always opeh to the
inspection of every director, so that the board can see at any time what the
exchange committee are doing, by an examination of the debit and credit on
the books. In relation to foreign bills, the details of the operations of the
committee do not appear, but the aggregate of each day's purchase or sale
only is entered. The reason of this is, that, to expose these details, might
produce competition, which would be injurious to the interests of ihe bank,
and, it is believed, would not be beneficial to the community. The domestic
bills are entered daily in detail,—the drawer, endorser, and payer, the amount,,
when and where due, are all entered, with the discount and all particulars.
Question by Mr. Gaither. You say in your report, an entirely new cle­
ment is introduced into our money system by the extinguishment of the
public debt Will you please state what this new demerit is?
Answer. The reason, first, that I assign, is the fact that it is new in the
experience of governments to pay off their entire public debt, and a radical
change is thereby produced in systems which generally pervade the perma­
nency of public credit—this also, consequently, produces a new action in the
dissemination of funds of large amount heretofore known only theoretically
Question by Mr. Alexander. Have you any prescribed rules regulating.
the conduct of the exchange committee?
Answer. There is none that I recollect defined, other than those which.
men, feeling an interest in the bank and in the public good, would be go
verned by.
Question by Mr. Gaither. Was it not the object of the resolution of the
13th March to postpone the payment of a portion of the three per cent.
stocks beyond the period which might be fixed upon by the Government
for their payment?
Answer. Yes, sir; the object was, if it should be necessary, to defer the
payment of a portion, but not to defer the certificates—the holders of the
certificates to surrender them up to the Government, and to take the bank
instead of the Government for the debt. This operation was of course to be
by the consent of the holders of the certificates.
Question by Mr. Gaither. Had the Government expressed or intimated
a wish or desire that the bank should make such an arrangement?
Answer. According to my understanding, the Government had doubtsof having a sufficiency of funds to meet the entire payment, and that it
would be agreeable to it, that the bank would hold back such certificates as
it might have the control of, to meet any such contingency; for confirmation
of which, 1 would respectfully refer the committee to a letter of the Hon.
the Secretary of the Treasury, of the 19th July, 1832, directed to Nicholas
Biddle, President of the Bank of the United States.
Question by Mr. Alexander. Was the mission of Mr. €adwallader
made in pursuance of the request contained in that letter, and the object
therein expressed?
Answer. The mission of General Cadwallader was mainly owing to that
understanding of the wish of the Government, and to enable the bank more
effectually to sustain the credit of the community, under the circumstances
referred to in a previous part of this testimony.
Question by Mr. Gaither. Was not the Government wholly uninformed
of this proceeding?
» Answer. I do not know personally whether the Government was or
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because his mission was not designed to interfere with any of the rights or
interests of the Government
Question by Mr. Gaither. Did any portion of the community solicit this
step from the bank?
'
Answer. Only by a general application for more extended accommoda­
tion, which the bank was always disposed to extend, as far as its own safety
and what it deemed the interest of the community, demanded.
Question by Mr. Gaither. Had the cholera then made its appearance in
the United States?
Answer. It had. It was in New York, and had just at that period ap­
peared in Philadelphia, though in this latter city a few isolated cases had
occurred at the time, but great consternation prevailed.
Question by Mr. Gaither. At what time did the exchange committee
determine to send General Cadwallader to England?
Answer. It was a very few days only before he sailedi ' Question by Mr. Gaither. #Was not this course suggested by the Presi­
dent of the bank, and by him only?
Answer. I do not distinctly recollect whether the President first suggest­
ed it or not, but it was agreed to by the committee unanimously. There
seemed to be but one feeling in all the members of the committee of the
propriety of the course.
Questjon by Mr. Gaither. In your report you say that, in the mean
time the Treasury Department applied to the bank for its opinion as to the
expediency „of makings payment of six millions on the 1st July, &c. What
do you mean here by "the bank?"
, Answer. I think, since I hare had the honor to be a director of that ,
bank, and to be a member of tne exchange committee, it has been the inva­
riable practice of the Treasury Department to consult the bank, when the '
Government was about to pay off any portion of the public debt, to see how
far the intention of the Government could be carried out without affecting
the general interest and credit of the community—having a paternal regard
for those great interests, and so to regulate it as not to affect their ultimate
design in giving the bank all necessary time so to shape its accommodations
as to have the least possible injurious effect.
Question by Mr. Gaither. It'was declared, in your report of the 27th of
July, that the bank must obtain meansato meet the contemplated payment, by
the Government, during the year, of more than $ 15,000,000, from the means
then employed in its active business. It appears that its whole reduction of
loans since May last does not exceed $9,000,000, and the actual command
of available funds, applicable to any object, does not exceed two millions.
In what manner has the bank provided for the deficiency?
(The witness here stated that he had no distinct recollection as to the
facts as set forth in this interrogatory, and requested that the report alluded
to might be handed to him. The report not being at hand, the answer
was waived for the time, and the interrogatory was not, subsequently,
pressed or referred to.)
Question by Mr. Gaither. Was the opinion of the board of directors ever •
asked or taken with respect to Gen'l Cadwallader's mission. If so, in what
manner, or in what shape?
'
Answer. I have answered with respect to the facts involved in this inter­
rogatory, in the answer I have given to an interrogatory put to me in apreyious part of this examination.
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Question by ^ r . Gaither. The Acting Secretary of the Treasury, in his
letter to N. Biddle, esq., marked "confidential," dated 24th March, 1832,
says, "if any objection occurs to you, either as to the amount, or as to the
mode of payment, I will thank you to suggest it." Do you understand that
it was the opinion of the bank, or of Mr. Biddle, that was solicited?
Answer. I think it was Mr. Biddle's opinion that was solicited.
Question by Mr. Gaither. Do you understand that the Acting Secretary
wanted the opinion or the advice of the bank, or of Mr. Biddle, in reference
to the management of the Treasury Department; or that the possible objec­
tions referred to belonged exclusively to the bank?
Answer. I can only say that it would be presumption in me to answer in
relation totyfr.Dickens' views. I have no idea there was any design in Mr.
Biddle or the bank interfering in the proper duties of the Treasury Depart*
ment. The opinion solicited by the Acting Secretary was solely in regard to
the effect which the measure would have on the accommodation of the public
Question by Mr. Gaither. Had the Treasury, in fact, any objections to the
proposed payment on the 1st July, 1832, so far as you know, other than those
raised by Mr. Biddle or the bank?
• Answer.. I presume that the postponement, to the 1st October, was conce­
ded by the Secretary of the Treasury, at the solicitation of the bank, with
a view that the bank might not press hard upon its debtors, or lessen its ac­
commodation to them, and for which period the bank allowed the Govern­
ment the interest.
.
Question by Mr. Gaither. In your report, you set forth the means accumu­
lated to meet the payment of the public debt, on the 1st October last, in
Philadelphia, New York, and Europe, at #8,462,000, when the debt to be
paid was #8,634,988 37, and say, in that State, the bank, had it consulted
only its own interest, would have been perfectly passive, since it was per­
fectly at ease. You then advert to the communication with the Treasury in
July, and the prevalence of the cholera at that time, as the reasons for the
mission of Gen. Cadwallader to Europe, and his arrangement with the Bar­
ing's. Will you please to explain how the condition pf the bank in October
could have been known so as to influence its policy in the preceding. July?
Answer. By the measures early adopted in reference to those payments,
in concentrating its means to points where payments were to be made, it was
found, by the 1st of October, that their means were deemed ample without
distressing their debtors by further curtailments.
Question by Mr. Gaither. Did not the proceedings of the board of direct­
ors, on the 21st September and 4th October last, authorize a relaxation in the
policyj and authorize certain offices to check freely on the bank, as hereto­
fore, have their origin in a knowledge of the arrangement having been made
by Gen. Cadwallader in London?
_
.
Answer. I believe not; I have no distinct recollection that, as early as the
21st September, any communication had been received from. Gen. Cadwal­
lader. The change in the arrangements of the bank arose entirely from the
previous preparation, and from all alarms from the cholera having then sub­
sided. Information of the arrangement made by Gen'l Cadwallader was re­
ceived, I think, some time in October.
Question by Mr. Verplanck. Is there, to your knowledge, any large pro­
portion of the bills discounted by the bank on personal security, of the kind,
commonly called accommodation paper, which is done with a view to a re­
newal for any length of time?
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Answer. No; there is some accommodation paper, but it is at the pleasure
of the bank: there is no stipulation for a renewal. The branches have always
been instructed to avoid giving such accommodation. I do not believe that■
the amount of such paper is ten per cent., on the amount of paper discounted
by the bank and its branches; and what there is of such paper, as far as my
knowledge goes, is among the paper, of the best description which the bank
holds.
Question by Mr. Verplanck. Of the amount of domestic bills of exchange,
reported in the monthly statements of the year 1S32, do you believe any
considerable proportion to be of the character of accommodation paper, to be
renewed by drawing and redrawing between the bank and its branches, or
between the several branches?
Answer. If any, it must be of a very limited amount, because the direct­
ors discountenance and refuse, when they knew it to be such; and I presume
the same course to be followed in the branches, which have instructions from
the mother bank'to guard against that description of paper.
Question by Mr. Verplanck. What means have the directors of the bank,
at Philadelphia, to detect the practice of drawing and redrawing just referred
to, if it should exist, between the branches, when carried to any extent?
Answer, By comparing the regular statements furnished by the branches,
of all their dealings in exchanges. These statements are open to the inspec­
tion of any director who may choose to ask for, or examine them, as indeed
are all the books of the banks—the private accounts of individuals only ex­
cepted.
Question by Mr. Verplanck. Are the returns for the branches to the moth­
er bank of such a nature as to enable the directors, or, any one of them, to
form a correctjudgment of the character of the discounts of the several branch-'
es; as, for instance, whether any large amounts of the discounts at any one
branch consisted of accommodation paper regularly renewed?
Answer. Yer, sir; a director may ascertain that, if he will take the time
to investigate the different returns, and compare them, he can ascertain what
is accommodation paper, and what portion is business paper, or nearly so. I
have, with others, made such examination of the returns for branches, for
the purpose of ascertaining the nature and character of many debts that have
excited suspicion, from which enquiries have gone to the branches from the
mother bank, requesting a particular examination into such debts as were
deemed too high.
t
Question by Mr. Ingersoll. Are not loans on good stock security consi­
dered as among the safest transactions of, the bank?
Answer. Yes, sir; and it is always desirable to get them to any extent,
when the funds of the bank will admit of it without encroaching upon the
usual accommodations and facilities to the regular;customers of the bank.
Question by Mr. Alexander. You state that the exchange committee has
the power to grant discounts; by which I suppose you mean business and ac­
commodation paper?
Answer. The board have delegated by resolutions, repeatedly, authority
to the exchange committee to discount in the absence of the board, business
paper and domestic bills of exchange; but the committee only exercise ihp
power so far as discounting domestic bills, and on stock, and such businesi
paper as may be thought necessary to secure a doubtful debt due the bank.
Question by Mr. Alexander. Are the rules or by-laws, No. 12 and 16*
which are in the words following, now in force: "Article 12. There shall
be at least one discount day in each week, when the directors shall be assem*
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bled; a majority of the members shall be required to form a quorum, except
for the purpose of settling discounts, for which five shall constitute a quorum;
and no bill or note shall be discounted, the unexpired term of which exceeds
sixty days."
"Articje 13. Upon each application for discount, every director who may
be present shall be held to give his opinion.for tor against the same; and no
discount shall be made without the consent of three-fourths of the directors
present; and all notes and bills discounted Shall be entered in a book to be
called (tthe credit book," in such manner as to discover to the board, at one
view, on each discount day, the amount which any person is discounter, or
is indebted to the office, either as payer or endorser." If these rules be in
force, how do you reconcile such discounts as you have mentioned by the
committee of exchange with them?
Answer. Because they are all submitted to the board, and there is no dis­
count done which is net submitted to the board at the subsequent day for
their concurrence.
•
Question by Mr. Verplanck. Ori what is founded the estimate of the value
of the real estate and banking houses, which appear in the monthly state­
ments?
Answer. The estimates are always revised previous to a dividend, and
the actual value at the time is the amount which is carried into the account.
Question by Mr. Verplanck. Have you any reason to doubt whether
the mass of the bills, reported in the monthly statements, as discounted at
the bank and its branches, on personal security, is good paper?
Answer. I have no doubt whatever that it is good paper, relying, as I
do, upon the judgment and prudence of the directors of the branches; The
cashiers of the branches are somewhat executive officers of the mother bank,
and they are Very particular in their reports to the bank upon this subject;
and, previous to the declaring of a dividend, a committee is appointed at
each branch to investigate the business, who scrutinize the debts, and report
upon their character to their respective boards; and, upon these reports, the
estimates are founded*
FEBRUARY 14,

1833.

Mr. Bevan, in continuation.
Question by Mr. Polk. On the 24th March, 1832, the acting Secretary
of the Treasury notified the President of the bank of the intended payment
by the Government, on the 1st of July following, of one-half of the three per
cents. Did not Mr. Biddle, immediately upon receiving this information,
tome to Washington, and solicit the Government to postpone this intended
payment from 1st July to 1st October?
Answer. Mr. Biddle came to Washington some time in the latter end«of
March, and an arrangement was made with the Government to postpone
the payment to the 1st October, the bank agreeing to allow the Government
the interest. I have no doubt the arrangement was made at the solicitation
of the bank, because I recollect well it was a subject of conversation that a
payment, at so short a notice, might produce serious distress upon the com­
mercial and trading community.
Question by Mr. Polk. Was this application to the Government for post­
ponement known to, or authorized by, the board of directors; or was it
known jonly to the President and the exchange committee?
Answer. I think it was known to tHe board, and a suggestion made bv
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the President as to the propriety of the measure, though no formal yote^that
I recollect, was taken upon it
»
" Question by Mr. Polk. At what time was that suggestion made by the
President?
Answer. It was subsequent to the 13th of March: I do not recollect the
precise day.
Question by Mr. Polk. What rendered this postponement so desirable to
Ihe bank at that time, as to induce the President to agree, as he did, to pay
the quarter's interest in consideration that the Government would agree to
the postponement?
Answer. The reason that operated on my mind, and the mind of the
board, as far as I understand it, was, that, about that period, there was an im­
mense drain of specie going to Europe; and a very heavy press and demand
for money, which seemed to render it necessary to sustain the community,
by extending the usual accommodation to the commercial and trading com­
munity, and not for any advantage or necessities on account of the bank it­
self.
Question by Mr. Polk. Did the appearance of the cholera, at that time,
constitute any part of the reason, which rendered it necessary on the part of
the bank to ask the postponement?
Answer. No, sir: The reason, simply, for the postponement, has already
been stated in answer to a previous interrogatory.
Question by Mr. Polk. On the 1st July, were not the Government funds
in deposite in the bank ample to meet the intended payment on that day, if
no postponement had been made?
Answer. Not having examined the public account, I am unable to say
what was the precise balance to the credit of the United States on that
day, though I have no doubt of the fact; otherwise, I think the Government
would not have asked, nor would the bank have paid, interest on the amount
Question by Mr. Polk. You state that the postponement was desired by
the bank to enable it to extend to the trading community the usual accom­
modations. Will you 'state whether, subsequently to that period to the end
of the year, there was any extraordinary pressure on the mercantile com­
munity, especially upon the merchants o^ing duties upon foreign imports;
and was there any extended accommodations to them, or were their accom­
modations curtailed?
Answer. There had been a very heayy press upon the community, which
continued with more or less severity up to the beginning of Octooer, and
which was relieved by this arrangement with, the Government, and other
measures adopted by the bank, and I verily believe the Treasury was saved
from heavy losses, which wouM have occurred if these measures had not
been adopted and pursued. The accommodations were not curtailed, but
extended as far as the bank could possibly do so, to preserve a sound state
of currency. During this period, many of the State banks, particularly those
in the city of New York, were large debtors to the bank of the United
States; and, if the bank had called upon them to pay up their debts, there
is no calculating the consequences, both as to the debtors to the Govern­
ment and the debtors to the bank. It was believed that, if the bank had
required immediate payment of the balances due it, there must have been
a commercial distress produced thereby unparalleled in the history of the
commercial credit of this country; and on those balances which were suffer­
ed to lie, the bank received no interest whatever up to the present day, as
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is known to me, so that, in fact, the State banks had quite as much of the ad­
vantage of the public deposites, at that period, as the. Bank of the United
States under that state pf things.
Question by Mr. Polk. Were not the loans to the community, between the
1st August and the 1st October, curtailed, and was not the curtailment prin­
cipally at the principal bank at Philadelphia, and at the offices at'New York,
Boston, and Baltimore? and, if there was a curtailment, to what amount?
Answer. I think there was no systematic curtailment* but there was a
diminution of the loans growing out of the resources of the bank, by the
regular payment of a portion of its debts, but to what extent I do not recol­
lect. The principal cause was the interposition of the bank in checking the
exportation of specie, by purchasing bills themselves at a high rate, and sell­
ing them, as was done to a considerable extent, at ten per cent, thereby tak­
ing away all alarm, and restoring confidence in the commercial community.
Question by Mr. Pplk. It appears by the report of the committee on the •
offices of the 27th July, 1832, that provision for the payment of the public
debt would have to be made by the bank, out of its means then employed
in loansto the community; it also appears that, on the 21st September, 1832,
the President announced to the board the'ample resources which had been
accumulated to meet the payment by means of the policy which had been
pursued .for sometime j)ast; and a relaxation of the policy of curtailment
was recommended and adopted. You have stated, in a previous answer, it had
curtailed its loans to some extent: will you please state whether a part of
the means which authorized and induced a relaxation of this policy, was not
the arrangement made by Gen. Cadwallader in Europe, whereby the bank
obtained the control of the amount of the three per cents, purchased or de­
ferred by the Barings?
Answer. No, sir; it was entirely separate and distinct', having no know­
ledge of any proceedings of Gen. Cadwallader in relation, to the objects of
his mission.
Question by Mr. Polk. On what day did the bank receive Gen. CadwalIader's letter ofthe22d August, or on what day did the bank receive the first
information of the contract made by him with the Barings, and of its tenor
and substance?
Answer. I do not recollect the day when the first advices from Gen. Cad' wallader in relation to his proceedings, were received at the hank, but think
it must have been some time early in October.
Question by Mr. Polk. At what date was the letter of the Messrs. Bar­
ings, of the 30th August, received by the bank or its President?
Answer. I have no recollection of the precise day, but think it was, also,
early in October.
Question by Mr. Polk. State whether the exchange committee had any
other information, and at what date of the contract, or*its tenor and sub­
stance made by Gen. Cadwallader with the Barings, other than what is con­
tained in the report of the bank to this committee?
Answer. I know of none other.
f
Question by Mr. Polk. Had the President or the exchange committee
any intention to disavow General Cadwallader's authority to make the con­
tract he did until after the appearance, in the New York papers, of the 11th
or 12th of October last, of the circular of the Barings to the foreign holders
of the United States' three per cent, stocks, announcing to them that they
had the authority of the bank to purchase or negotiate a postponement of
the stocks held by them?
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Answer. I never did see myself the notice referred to in the New York
papers, but I well recollect, the moment the letter was received giving in­
formation of the proceedings in relation to that negotiation, the President
of the bank, with the approbation of the exchange committee, immediately
wrote, disavowing the.nature of that arrangement, having been made under
a misapprehension.
Question by Mr. Polk. Had the board of directors any knowledge of
Mr. Biddle's letter of the 15lh October to Messrs. Barings, disavowing the
authority of General Cadwalader to make the contract which he had made,
or of the alteration in its terms which was proposed by the President to the
Barings in that letter?
Answer. I think the board had no knowledge of that letter, because it
was the appropriate business of the exchange committee, delegated by the
board to them; and, of course, they made no report until the consummation
of the whole business.
Question by Mr. Polk. Was not the original appointment of General
Cadwalader, and the whole arrangement made by him with'Messrs.
Barings, intended by the President and the exchange committee, to be kept
a secret from the board of directors and from the Government?
Answer. As it involved no special interest of the Govecnment, I con­
ceived they had no more right to be consulted in relation to it than any
other stockholder of the bank; and, as respects the board of directors, it was
understood when the matter was referred to the exchange committee, that
it involved business somewhat of a nature necessary to be kept secret; and,
as is usual, it is not expected that such committee report until the conclusion
of the business referred to it.
Question by Mr. Polk. Do you conceive that the Government had no
interest in being informed of an arrangement intended to be made by the
bank, whereby it would be prevented, and that by the interposition of the
bank, from paying off its public debt at the time fixed by the Treasury for
that purpose, and when the Government had deposited in the bank ample
means for that purpose?
Answer. I do,most respectfully, deny any intention on the part of the
exchange committee to protract or delay the payment of any portion of the
public debt beyond that directly and expressly agreed with the Hon. the
Secretary of the Treasury, from July to October, and t|iat the contemplated
deferment was that the bank should alone become responsible to the Europe­
an holders of the three per cent stock; and, so far from delaying the presen­
tation of the certificates, they have been hastened by the interference of th
agents of the bank in Europe, and will be in possession of the Governmen
earlier than they would otherwise have been.
Question by Mr. Polk. If the bank was in a condition to pay out the
public deposites in redemption of the public debt, why did it become neces­
sary to send an agent abroad to procure, according to General Cadwalader's
instructions, a postponement or deferment of the presentation of the certifi­
cates held abroad to the amount of five millions, for six, nine, or twelve
months, beyond the period which the Government should fix for the pay­
ment?
Answer. The mission of General Cadwalader arose from no inability on
the part of the bank to make any payments directed on the part of the Go­
vernment, but solely, as I have before .stated, from a desire to sustain the
currency and commercial credit of the community, which [it was thought
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would be deeply affected by the withdrawal of such large funds as would be
due to European holders of the stock, and which, withput the deferment, as
contemplated by the bank, would, as I believe, have seriously affected the
great interests of the country; for, without the addditional payment of the
three per cents, in Europe, there was already a flrain of specie from the
country to an alarming extent.
FEBRUARY 15,

1833.

,

Mr. Bevany in continuation.
Question by Mr. Polk. Will you please state where the bank has ob­
tained the means to pay off the amount of the public debt, to wit, between
$11,000,000 and #12,000,000, alleged, in the report of the exchange com­
mittee, to have been paid, and particularly whether it has not, in fact, been
effected, in part or in whole, by arrangements with the creditors or holders
of the certificates, by which they have agreed to give up the certificates to
the bank, and to receive the money from the bank at a future day?
Answer. The bank has paid out, of its own resources all of the.public
stock which has been paid, as per the report of the exchange committee,
and no part of which have I any knowledge of being finally deferred. The
funds of the bank in the hands of their agents in Europe were found to be
ample to meet all the stock that was contemplated to be deferred, and has
since been paid, or directed to be paid, out of these funds in the hands of its
agents in Europe; and, as far as I know and believe, there is not one dollar'
now du« to any body on account of the stock originally contemplated to be
deferred.
Question by Mr. Polk. State whether the certificates arrived, and ar­
riving from England, are sent to the bank upon the conditions proposed by
the bank in the letter of Mr. Biddle, of the 15th of October, disavowing
General Cadwalader's authority; and, if so, upon which of the conditions
stated in that letter, in whole or in part?
Answer. As it was left optional, by Mr. Biddle's letter of the 15th
October, in them to choose their mode of reimbursement, no advices have,
to my knowledge, been received from them in reply to that letter; at least
none that I at present recollect.
Question by Mr. Polk. You state it was left optional with the Barings,
by Mr. Biddle's letter of the 15th October, to choose their mode of reim­
bursement upon one or other of the conditions contained in that letter, and
that no advices have been received from them which condition they have
elected—will you state whether a part, or the whole, of the certificates
which have been received have not been accompanied with powers of attor­
ney to the bank authorizing it to receive payment for them, and surrender
the certificates to the Government? Have the bank received payment ac­
cordingly as the agent of the foreign holders; and, if so, is the amount so
received placed to the credit of said holders on the books of the bank, and
is not the bank liable to them for the same?
Answer. I have no knowledge that any of the European holders have
consented to defer any part, but am of opinion that the funds in the hands
of the Barings have been applied to the entire extinguishment of all the cer­
tificates which have been transmittedithrough their hands to the bank; and
that so far as the said certificates and the powers of attorney have been re­
ceived, they have simply gone to the credit of the Barings against the funds
belonging to the bank in their hands.
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Question by Mr. Polk. If these certificates have been paid by the bank,
and placed to the credit of the Barings against the funds of the bank in their
hands, how does it happen that the balance of the funds of the bank in their
hands remained undiminished, according to the monthly statement, on the
1st of January, or at the present time; or are those balances, in fact, dimi­
nished?
Answer. The balances in their hands will have been reduced by their
debiting the bank for all the certificates they have paid by direction of the
bank, and which will be evidenced when their account current is made up
to the 1st of January; which account has not yet been received, as I believe.
Question by Mr. Polk. Does the bank owe to the Barings, or to any
other person, for any portion of the three per cent, certificates which have
been received, paid by the Government at the bank, and surrendered to the
Government?
Answer. The bank, to my knowledge, does not owe to Barings, or to
any other person in Europe, one dollar beyond the means in the hands of
their agents in Europe.
Question by Mr. Verplanck. At the period referred to in a previous
question, "when the balance of the funds referred to in the hands of the
Barings remained undiminished," was, or was not, the bank still charged
in the monthly statements of the same date with the sum for the redemption
of the public debt covering the amount of the three per cents, arranged or
purchased abroad?
Answer. Yes, sir; the bank was still charged: as the certificates were re­
ceived and paid, the balance last charged will be diminished on the books
of the bank; and, of course, the succeeding monthly statement will exhibit
the diminution.
Question by Mr, Alexander. You state in your report, that, by the
month of October last, that the bank had means fully adequate to discharge
the whole amount of the funded debt payable at that period—from what
sources was this accumulation of money derived?
Answer. They were acquired from the various resources of the bank,
voluntary payment of loans, which were concentered at the points where
the public debt was to be paid.
Question by Mr. Alexander. The report states that there is an actual
reduction of debt of three millions five hundred and thirty-two thousand
one hundred and four dollars and ninety-three cents, in the five western
offices in ten months, which was reinvested for remittance in bills of ex­
change—were not these bills discounted in the ordinary way of business,
or what was the course of operation?
Answer. They were purchased or discounted in the ordinary way, I
have no doubt.
Question by Mr. Alexander. How then does thisactuai reduction ap­
pear, if reinvested in bilk of exchange?
Answer. It appears by the monthly statement in those offices, that the
local debt had been reduced or changed into domestic bills, which is es­
teemed the most desirable and flexible debts of the bank.
Question by Mr. Polk. What compensation, and what amount for ex­
penses, was paid to General Cadwalader for his mission, and by whose au­
thority? Did the board of directors sanction or authorize it?
Answer. I think the compensation was five thousand dollars, which
was paid him by an order of the exchange committee, under the powers be-

84

[ Rep. No. 121. ]

lieved to be delegated to that committee by the board, and which was'revised and approved by the committee on the state of the bank, and which
was also open to the inspection of every member of the board of directors.
The compensation was not paid till General Cadwalader returned.
Question by Mr. Gaither. Please state whether the bank had a correspon­
dence with the Barings, or any other foreign house or houses, in relation
to making a loan pripr to the departure of General Cadwalader—say be­
tween the 1st April and the 20th July?
Answer. None, that I have any knowledge of, except the correspon­
dence, heretofore referred to, with Mr. Ludlow, of New York.
FEBRUARY

16,1833.

Manuel Eyre, sworny and examined as follows:
Question by Mr. Verplanck. Are you a director of the Bank of the
United States? and, if so, how long have you been a director of the bank?
Answer. I was elected a director at the original organization of the bank,.
and have continued a director, with intermissions, till the present time. I
am now a director on the part of the stockholders. During my service, I
have repeatedly been a director on the part of the Government.
Question by Mr. Verplanck. Are you now, and were you last year, a
member of the exchange committee?
Answer. I am now, and I was last year, a member of the exchange com*
mittee.
Question by Mr. Verplanck. The Committee of Waysiacid Means have*
received from the bank a report of the committee of exchange, of which you
are a member, and which is now exhibited to you, marked (Aa.) Are the
facts and statements therein exhibited correctly stated and exhibited, lot
the best of your knowledge and belief?
Answer. 1 believe them to be so.
Question by Mr. Verplanck. What do you know respecting the ar­
rangement by the Bank of the United States of the three per cent stock?
Answer. The facts stated in that report, relative to these stocks, I be­
lieve to be correctly staled. The motives which actuated the committee of
exchange, in my own mind, were to benefit the Government of the United
States and the mercantile community, that every facility might be granted
which the circumstances of the country in our opinion required, arising.
from the alarm from the cholera. The bank itself was fully adequate to all
the payments, in my opinion, which could arise from any balances due the
Government. From July to October, the Bank of the United States gave
an enlarged and increased accommodation to the banks in New York, a
more particular view of which may be seen from an examination of the pa­
per which I now hold in my hand, and which I will leave with the com­
mittee. This paper exhibits the weekly returns of the branch in NewYork to the mother bank, commencing on the 3d July, and ending on the
3d of October. It was handed to me by the cashier of the Bank of the
United States, at my request, shortly before I left Philadelphia to come to­
rtus city, merely for my own information. This exhibit I believe to b*r
correct

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85

(Bb.)
OFFICE BANK UNITED STATES, NEW YORK.
Discounts,
p. security.

1832.
V

July
«•
«
"
Aug.
«
«
"
"
Sept.
«
"
"
Oct.

3
11
18
25
1*
8
15
22
29
5
12
19
26
3

-

4,735,484 09
i 4,744,523 54
i 4,867,825 26
4,992.629 35
5,023,201 49
1 4,982,732 16
i 5,016,572 27
'5,119,345 47
5,536,767 51
5,672,585 02
5,921,120 20
5,067,124 10
5,956,389 47
5,087,236 21

Domestic bills Foreign bills i Due from
city banks.
purchased.
purchased.
585,935
564,742
569,374
575,454
552,346
502,484
479,002
506,227
498,202
549,552
596,484
643,161
688,384
757,919

96
06
38
54
47 j
90 |
85
23
91
32
24
70
11
90

1

357,431
366,184
265,147
199,941
69,232
20,000

Totals.

592,077 90 6,270,929 90
95
59 ■ 629,516 11 6,304,966 30
446,274 74 6,148,624 69
31
344,131 62 6,112,157 16
65
18
580,634 95 6,225,415 09
00
899,557 40 6,404,774 46
1,140,747 38 6.636.322 50
! 1,408,722 43 7,034,295 13
1,555,352 88 7.590.323 30
1,704,919 01 7,927,056 55
1,587,661 34 8,105,265 78
1,684,209 24 8,294,495 04
1,922,903 36 8,567,677 94
1,714,219 04 7,559,375 15

!

It was my firm belief that, if the Bank of the United States had not grant­
ed these accommodations to the banks in the city of New York, and ex­
tended its business in the purchase of bills and making discounts at the time
the cholera was in New York, the merchants would not have been enabled
to have met their engagements, and have paid their bonds for duties due the
Government.
Question by Mr. Polk. On the 24th March, 1832, the acting Secretary
of the Treasury notified the President of the bank of the intended payment
by the Government, on the 1st July following, of one half of the three per
cents. Did not Mr. Biddle, immediately upon receiving this information,
come to Washington, and solicit the Government to postpone the intended
payment from July to October?
Answer. I know that Mr. Biddle came to Washington soon after. I
don't know that he made any solicitation of the Government, as mentioned
in the interrogatory. I refer the committee to Mr. Biddle's letter to the
Secretary of the Treasury, of the 29th March, 1832, in further answer to
this question. I saw the letters of the collector of New York, soliciting
further indulgence towards the merchants who had bonds to pay, referred
to in Mr. Biddle's letter of the 29th March.
Question by Mr. Polk. When Mr. Biddle left Philadelphia for Wash­
ington, did you not know tnat the object of his visit was to ask of the'Go­
vernment the postponement of the intended payment from July to October?
Answer. I knew that that was the object of his visit; I understood that
he brought letters to this city from some members of the committee of Con­
gress then sitting in Philadelphia to investigate the affairs of the bank upon
this subject.
Question by Mr. Polk. Can you state whether his visit to Washington,
and the application to the Government for postponement, was, at the time,
known to, or authorized by, the board of directors?
Answer. I do not recollect whether it was communicated to the board
or not: it was known to me, as a member of the exchange committee.
Question Jbv Mr. Polk. Did the appearance of the cholera in tH§ coun-

86

[ Rep. No. 121. ]

try, at that time, constitute any part of the reason which rendered it neces­
sary for the bank to ask the postponement?
Answer. Not at that time; but it was thought that, although the bank
was fully adequate to the payment of the slock, it was promoting the inte­
rest of the commercial community who had bonds to pay, and it was prorooting the interest of the Government also. Exchanges on England at
that time being against this country, specie was going off in considerable
quantities.
Question by Mr. Polk. If the bank was ready to meet the intended
payment on the 1st July, what rendered the postponement so desirable to
the institution as to induce the President to agree, as he did, to pay the
quarter's interest, if the Government would agree to the*postponement?
Answer. Because a great part of that debt was owned in Europe, and it
would have the effect still further to increase the balance of exchange against
us, and the bank could use the money to advantage, and pay the Government
the interest beside, thereby creating no pressure upon the State banks in
New York.
Question by Mr. Polk. Was there, from the 1st March, 1832, to 1st
January, 1833, any extraordinary pressure on that class of merchants in the
Atlantic cities who were indebted to the Government? and, if so, were any
extended accommodations afforded to them by the bank?
Answer. I think the pressure was not as heavy on the east as on the
west, at that time; and forbearing to take from the west enabled them to pay
to the east, which otherwise could not have been done to the same extent.
I do not recollect whether any increased accommodations were granted, at
the time referred to, to the importing merchants. I think there was an ac­
commodation granted by the free purchase of exchange* particularly foreign
exchange.
Question by Mr. Polk. On the 1st July, were not the Government
funds on deposite ample to meet the intended payment on that day?
Answer. I do not recollect, at this moment, whether the funds on de­
posite were ample for the purpose mentioned. A reference to the monthly
bank statement will show.
Question by Mr. Polk. At the meeting of the board of directors on the
13th March, was a loan or postponement of the United States' three per
cents, held abroad, to the amount of five millions of dollars, considered of by,
or discussed before, the board of directors? and did the board on that occa­
sion authorize the exchange committee to effect such loan or postponement?
Answer. I should say that the resolution itself gave sufficient authority
to the exchange committee to make all the arrangements the committee
did make. They have made no loan whatever, to my knowledge; the
bank had funds in Europe to meet all its engagements, besides a standing
credit of upwards of two millions. So far as I can recollect, the postpone­
ment was mentioned or discussed at the board on that day. It is so long
since, that I cannot pretend to speak positively. The record of the pro­
ceedings on the 13th March was read at the next meeting of the board, and
was sanctioned.
Question by Mr. Polk. At what date did the President or exchange
committee receive the first information of the contract made by General
Cadwalader with the Barings, and of its tenor and substance?
Answer. I cannot tell \ht exact date. I think it was about the 1st Oc?
tobeT.

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87

Question by Mr. Polk. Had the President and the exchange committee
any intention to disavow General Cadwalader's authority to make the con­
tract he did, until the appearance in the New York papers, about the 11th
or 12th of October lastj of the circular of the Barings to the foreign holders,
informing them that they had the authority of the bank to negotiate a pur­
chase or postponement?
Answer. I can say yes, positively; I recollect it perfectly well. When
I first read the letter, 1 said it was not proper, and disavowed it.
Question by Mr. Polk. Why then was the disavowal postponed until
Mr. Biddle's letter of the 15th of October?
Answer. I cannot answer this question further than saying, that the first
time I saw the letter of General Cadwalader I disavowed it. Whether
that was immediately on its arrival, or some time afterwards, I cannot now
say, as I was frequently absent about that period. After the President re­
ceived the agreement from the Barings, he disavowed it, as is stated in his
letter of the 15th October to the Barings.
Question by Mr. Polk. State whether the certificates of the three per
cents, arrived and arriving from abroad, are sent upon the conditions pro­
posed by the bank' in Mr. Biddle's letter of the 15th October? and, if so,
upon which of those conditions, in whole or in part?
Answer. I am unable to say, as there may be different contracts with
different people, according to circumstances; but I believe the Government
will receive the certificates much sooner than it would have received them
under ordinary circumstances.
Question by Mr. Polk. Has the bank paid the amount of the certificate*
received? or has it, as the agent of the foreign holders, received reimburse­
ment for them, surrendered the certificates to the Government, and entered
the amount thus received as agent, to the credit of the foreign holders, on
the books of the bank? and, if so, does not the bank owe such amount to the
foreign holders?
Answer. As it regards $ 1,700,000, the certiicates have been paid
by funds in the hands of the Barings, and the certificates surrendered to the
Government. As it regards the balance, I do not know, as the certificates
have been principally forwarded since I left Philadelphia for this eity, but
suppose that, whenever the foreign holders have been willing to receive the
money, it has been paid by the Barings out of funds belonging to the
bank, the remittances having been lately very heavy to the Barings.
Question by Mr. Polk. Out of what resources have the bank obtained
the* means to pay off the amount of the public debt, alleged, in the report
of the exchange committee to this committee, to have been paid? Has it been
by diminishing its loans to the community, or has it not, in part, been ef­
fected by an arrangement withsthe public creditors, in which they have agreed
to give up the certificates to be surrendered to the Government, and t©
receive the money from the bank at a future day?
Answer. Solely upon its own resources, founded upon the public re­
ceipts. In elucidation of the true condition of the bank, compared with
other banks, I herewith present a statement which I have myself prepared
from authentic public documents; by which it will be seen that the Bank
of the United States is, and has for some time been, stronger than any other
bank of the country, and as strong as any bank ought to be. (This state­
ment is marked C C , and will be printed in this place.)
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88

fCc.)
BANK STATEMENT—1833.
Capital

Banks in Pennsylvania.
County banks
City banks

-

Total for Pennsylvania •
Banks of New York .
Banks of Massachusetts

Circulation.

3,795,253
10,720,105

4,583,160
4,639,344

930,611
1,728,340

14,515,358
20,175,800
24,520,200

9,222,504
12,215,926
7,122.856

2,658,951
1,792,372
902,205

159,500,000

86,000,000

20,000,000

Specie.

The whole number of banks in all the United
States, (as stated in the report made to the
New York Legislature, 31st January, 1833,)
are 373, with 75 branches, having in all a
capital of
From which deduct the Bank United States
and branches
Leaving for all the State banks and their
branches .
-

35,000,000

17,667,444

9,046,050

124,500,000

68,332,556

10,953,950

Bank of England's statement, made by
Parliament in February, 1832, it appears— •The pound sterling at five dollars -

Sterling.
£14,553,000
$72,765,000

Sterling.
£18,051,710
90,258,550

Stealing.
£5,293,150
26,465,780

It will be observed that the Bank of England has a circulation of eighteen millions sterling,
with only about five millions sterling in specie. The Bank of the United States, with the
circulation of about seventeen millions, has upwards of nine millions in its vaults. The Par­
liament of Great Britain represents the Bank of England to be in the most flourishing condi­
tion. The executive officers of our Government express doubts as to the solvency of the
Bank of the United States.

Question by Mr. Gaither. Was you a director while Mr. Oheves was
President of the bank?
Answer. Yes, I was, sir.
Question by Mr. Gaither. Was not all the business done by the board
of directors under his administration?
Answer. The business was done upon the same plan in which it is now
conducted—the same committees existed; but the business was not so ex­
tended as it is at this time, as the statements of the bank will show.
Question by Mr. Gaither. Were loans or discounts ever made or grant­
ed, to your knowledge, while he was President, excepting by the board of
directors?
Answer. I do not recollect. I was sick for about two years of Mr. Cheves*
administration, and not a member of the board, and cannot therefore speak
positively upon this point.
Question by Mr. Verplanck., Have the directors of the mother bank full
means of knowing the general character of the notes and bills discounted
at the branches; and, if so, from your knowledge of the present state of the
bank, do you believe the mass of the active debt at the branches to be good.
Answer. From the respectability of the presidents, cashiers, and board
of directors of the offices, and the information we constantly receive from
them, we are enabled to form a tolerably correct opinion of the solvency
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89

of almost every trading man in the neighborhood of* the branches. We
have periodical statements from the offices, which show the whole transac­
tions of the branches in detail. From all these sources, we receive such in­
formation as enables me to give it as my opinion that the paper now dis­
counted at the branches is as sound and good paper as in any other institu­
tion in the community.
Question by Mr. Verplanck. Does any large portion of the discounts at the
bank and branches consist of accommodation paper?
Answer. I do not think larger than usual in well conducted city banks;
and what is of that character, I consider generally of a good character.
Question by Mr. Verplanck. Is there any account of the bills of ex­
change discounted or purchased by the bank, which consist of accommoda­
tion paper, produced by drawing and re-drawing?
Answer. I know of none. Such paper is not countenanced by the
bank. As an illustration of the operation of exchanges, which show that
such is not the case, I refer the committee to the following exhibit of the
operations of the office at Nashville:
NASHVILLE OFFICE.

1830, September, domestic bills discounted
October, 1831, April,
_
.
October, December, 1S32, April,
- •
October, 1833, January, FEBRUARY 19,

,

-

-

-

-

•

162,908
220,355
2,300,898
366,512
1,062,094
2,759,754
503,234
2,049,612

1833.

Jlsbury Dickens, sworn and examined, as follows:
Question by Mr. Polk. Did you, as the acting Secretary of the Treasury,
on the 24ih March last, address a letter to the President of the Bank of'the
United States, apprizing the bank of the intention of the Government to pay
off one half of the three per cent, stocks on the 1st July; and did Mr. Biddle,
immediately upon receiving your letter, come to Washington, and urge the
Government to postpone the intended payment from 1st July, to 1st Octo­
ber. Please state all that occurred upon that subject?
Answer. I wrote the letter mentioned in the interrogatory, and Mr.
Biddle came to Washington as is therein described. He represented ver­
bally, and upon grounds similar to those stated in his letter of the 29th of
March, that it would be desirable to postpone the payments of the three per
cents, for another quarter; and I think it was upon my suggestion that he
put his representation in the form of a letter. His letter of the 29th of
March was accordingly written, which, though dated at the bank, was
written by Mr. Biddle at the Treasury. During the interview with Mr.
Biddle, Mr. McLane, the Secretary, came to the department: he had been con­
fined at his house from indisposition; and, as well as I recollect, he came out
for the purpose of seeing Mr. Biddle. The postponement was again urged
by Mr. Biddle, and upon grounds similar to those presented in his letter.
Mr. McLane, however, did not at that time give any positive answer. I
believe it was one or two days before the matter was finally settled; and the ^
12
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90

[ Rep. No. 181. ]

consent of Mr. McLane was communicated to Mr. Biddle, through me,
verbally, on condition that the bank should pay the^quarter's interest which
would accrue by the postponement. The application for postponement was
on the part of the bank, and was granted by the Government, not because
of any apprehension of a want of funds to meet the intended^ayment on the
1st of July, then next following.
Question by Mr. Polk. Was there any apprehension at the Treasury in
July last, when the Government gave notice of the intended payments in
October and January, that there would be any deficiency of funds in the
hands of the bank to meet them; and state what occurred with the Presi­
dent of the bank in your presence^upon the subject?
Answer. I think it was suggested by myself, that it might happen that
there might not be funds quite sufficient in the bank, on the day on which
the debt would be payable, to pay it; and I think I suggested at the same
time, that, in that case, the bank would doubtless be willing to hold back
any certificates it might have the control of, until the funds should come
in. There was ho formal agreement, to my knowledge, between Mr.
McLane and Mr. Biddle, upon the subject; it was merely conversation. If
there had heen a probability of a deficiency of funds, the Government would
not have issued the notice. I believe there were funds in the bank suffi­
cient to redeem the debt on the days appointed for its redemption. On
this point, however, exact information may be had by referring to the books
of the Treasury.
Question by Mr. Ingersoll. If all the appropriations for the service of the
last and preceding years had been paid, would there have been sufficient to
have cancelled the three per cents, during the last year?
Answer. There would not; but, after satisfying all the appropriations,
that were called for, there was enough. The entire appropriations for a
year are never called for within the year.
Question by Mr. Ingersoll. Am I then to understand you as saying that
it was intended to pay the three per cents, in part, with moneys that had
been previously appropriated by Congress to other objects?
Answer. Not more than to pay for other objects, out of moneys appro­
priated to the sinking fund. All the appropriations do, in point of fact, stand
on the same footing, but in point of principle it has been contended that the
appropriations for the sinking fund, to the amount of ten millions^ annually,
are entitled to a preference.
Question by Mr. Ingersoll. During th e past year, there was sixteen
millions instead of ten, paid. Has it ever been contended that the pay­
ments beyond ten millions, in any year, have a preference over the ordina­
ry appropriations of Congress?
Answer. I should think they would not be entitled to any such prefer­
ence.
Question by Mr. Ingersoll. If the pensions granted by Congress by act
of June last, to revolutionary soldiers, had been paid, could you have paid
off the three per cents, also?
Answer. No payments of revolutionary pensions were deferred, to my
knowledge. I can only state that no demand was made of any kind, for
which there were not ample funds.
Question by Mr. Ingersoll. The Secretary of War estimates the sum of
four millions as necessary to meet the provisions of the pension act of
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91

7th June, 1882, for the first year. .If that sum had been actually paid, could
you have paid the whole of the three per cents.?
Answer. From my recollection of the state ef the Treasury on the 1st
January last, I do not think that an additional payment of four millions
for any object wquld have been made; but 1 am not aware of any estimate
of the Secretary of War for that amount, as payable in 1832.
Question by Mr. Ingersoll. In the estimate of the Secretary of the Trea­
sury, of about 5h millions of unsatisfied appropriations, is the pension
money, which will be payable under the act of June last, included?
Answer. If, by pension money, the four millions alluded to in the former
question are meant, they are not included; they are embraced in estimates
for 1833, in which year, according to "the estimate of the Secretary of War,
they will be payable.
Hugh McEldtry sworn, and testified as follows:
Question by Mr. Polk. Are yoa a director of the Bank of the United
States, appointed by the Government, and were you a director during the
last year? If so, state what knowledge you had, if any, in July last, of the
mission of General Cadwalader to Europe, to make an arrangement in
regard to the three per cent, stocks held abroad; and if you had no
knowledge of the mission, and of the objects of it, at the time, state when it
came to your knowledge, and how.
Answer. I reside in Baltimore. I am a Government director of the Bank
of the* United States, and was also during the last year. I knew nothing of
General Cadwalader's mission, or the objects of it, in July last. It was not
jnentioned at the board at any meeting at which I was present. The first
intimation I had of it, was the appearance of the circular of the Barings in
the newspapers, upon the subject of deferring the three per cents, held
abroad.
Question by Mr. Verplanck. Were you a member of the committee on
the state of the bank, appointed in November last? and, if so, did you con­
cur in the report of that committee, as made November 23,1832?
Answer. Yes, sir. I was a member of that committee, and I concurred in
that report, as made. I suggested to the committee, before the report was
made, other matter's in relation to some large loans which 1 did not conceive
to be well secured, and thought they should be put under curtailment, and
other and additional security required. The answer of the President, and
other members of the committee, was, that this was not the time for the
transaction of such business. The committee was together a very short time;
no documents were examined; but they were referred to in the statement of
the President to the committee. Any member could have examined them
if he had chosen. At the meeting of the committee, the President made a
statement of the condition of the bank, and the report was made in accord­
ance with i t
FEBRUARY 21,

1833.

Mr. John T. Sullivan appeared before the committee, and presented the
following paper, as containing an exhibit of, and reference to, the documents
upon which was founded his answer to the following interrogatory:
" Question by Mr. Verplanck. Has the situation of the bank, in regard
to its extension of loans, and the power of reducing its discounts, altered
since that period, so as to ma'ke the payment of the three per cents, more
easy to the bank, or the dealers with it?"

9&

[ Rep. No. 121. ]

And asked leave to amend his answer to said Interrogatory, by adding
the same thereto. The committee decided against his request, but ordered
the same to be appended to the testimony taken in the case.
Mr. Sullivan9s further

Answer.

I further refer to the letters of the cashier, dated January 19th, 1832,
(Bank Report, pages 516, 17,) to the cashier of the office at Savannah, in
which will be found the following directions: " To the New York office you
are considerably indebted, and we shall be glad to see you not only reduc­
ing that debt, but so shaping your business as to give additional reinforce­
ments to that point of the establishment, when the state of the money market,
combined with the demands of the public creditors, to whom a further pay­
ment of one and three quarter millions is to be made on the first day of
April, occasions more pressure on our resources than is comfortable."
Another letter of the same date, to the cashier of the Charleston office,
contains the following instructions: "We should be glad if you could gently
reduce your discount line, which appears to be too much extended, and
thereby throw a large amount of available resources into our hands, and
into those of the office at New York. The pressure upon our resources at
both points, arising from the state of the money market, combined with the
heavy payments we have been making to public creditors, and are still to
make on the first of April, to the extent of one and three quarter millions,
renders it desirable that you should give your business, if possible, such a
direction as to afford us all the assistance in your power."
I would also refer to the resolution of the board of directors, under date
of 27th April, 1832, in which instructions are given to the " several officers
to use their best endeavors to bring their business within such limits, as to
enable them to assist in placing the parent bank in a state of preparation to
meet the views of the Government, as to the intended reduction of the pub­
lic debt."
A letter from Mr. Mcllvaine, dated Philadelphia, February 4th, 1832,
to Mr. Benson, cashier of the office at Cincinnati, states: "Your business
is larger, by about a million of dollars, than it was last year at this season,
and the circulation connected with it must press uncomfortably upon the
institution in this quarter, unless you take early means for restricting
your loans."
Mr. Benson, cashier of the office at Cincinnati, under date of November
21st, 1832, says, " Our board are struggling to keep down the discount line,
and we hope to be able to do so soon, but at present it appears to be impossible."
The cashier of the Louisville office, on the 18th November, 1S32, states,
"That they do not hope to make any material diminution in their business
for several months: it may probably, for a time, be a little increased."
It would seem reasonable to conclude, that if «the payment of one and
three quarter millions, to be made on the first day of April, occasioned
more pressure on the resources of the bank than was comfortable," a fur­
ther payment of 8,000,000 of dollars, on the first of October, was calculated
to press with more severity.
This will appear more obvious from the proceedings of the board on the
27th of July, 1832, where we find that " the provisions for these payments
(15,000,000) must be made by the bank out of its means now employed in
loans to the community."

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93

These proceedings of the board of directors—the instructions to the
branches, urging them "to give additional reinforcements,9' "and assist
the parent bank," by "affording all the assistance in their power;" and
the answers from those offices, " that at present it appears to be impossible
to reduce their discount line," " that it may probably for a time be increas­
ed;" would seem to corroborate the opinion I have expressed, that the
postponement of the public debt was produced by the extended operations
of the bank, and by the difficulty of reducing its loans to the extent, and
within the period designated by the Government for the payment of the
three per cents.
A—1.
BAKE OP THE UNITED STATES,

February 21, 1833.
SIR: I had, this morning, the honor of receiving your letter of the 18th
instant, requesting, for the Committee of Ways and Means, " a copy of the
correspondence which took place in March or April last, beuveen the Bank
of the United States and, Mr. Ludlow of New York, or any other agent of
the foreign holders of the United States' three per cents., with a view to de­
fer the payment beyond the period which the Government might fix for
the reimbursement, and also copies of any proposition made to them by the
bank upon the subject of the three per cents., and their reply."
I have accordingly the honor of enclosing copies of all the correspondence
with Mr. Ludlow, as well that in March and April, as at a subsequent
period. It consists of letters from the President of the bank to Mr. Lud­
low, dated March 13th and 19th, July 9th, 18th, and 23d, and of letters of
Mr. Ludlow to the President of the bank, dated March 16th, April 5th,
July 14th and 21st, 1832.
This is the only correspondence which took place on the subject, the
communication with the other agent, alluded to in the report of the com­
mittee of exchange, being personal.
Very respectfully, yours,
N. BIDDLE, Prest.
Hon.

G. C. VERPLANCK,

Ch'n Co*lee Ways and Means,

Washington,

A—2.
BANK OF THE UNITED STATES,

March 13, 1832.
DEAR SIB: I this day submitted to the board the subject of our conversa
tion, when I had the pleasure of seeing you, and have received from them
the necessary authority to act in regard to it. I shall, therefore, be happy
to confer with you about it.
My present impression is this, that if your constituents wish it, when the
time arrives for the payment of their stock by the Government, the bank will
. engage to let it remain for a year, and pay the same interest, three per cent,
which they have hitherto received. If this arrangement is satisfactory to
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[Rep. No. 121. ]

you and them, we can at once conclude it, whenever you feel authorized
to consent to i t You will have the goodness to consider this proposal as
communicated for your own private information.
With great respect, yours,
N. BIDDLE, Prest.
J. W. LUDLOWj Esq., New York.

A—3.
,

-NEW YORK, March 16, 1832.

I duly received your letter of the 13th instant I should like
to add to the proposition you have made, that, when the three per cents, are
paid off, the same shall be retained by the bank at the same rate of interest
for a period beyond two or three years, with the right, on my part, to call
in part or the whole of the amount, on giving three months' notice.
The stock is in the name of trustees, and belongs to different persons,
who may give directions at different times respecting their proportion. The
arrangement I propose will probably be more satisfactory to the holders of
this stock, and I should suppose would be equally so to the bank.
Yours, very respectfully,
THOS. W. LUDLOW.
DEAR S I R :

N. BIDDLE, Esq.

A—4.
BANK OF THE UNITED STATES,

March 19, 1832.
DEAR SIR: In reply to your favor of the 16th instant, I have the pleasure
to inform you that the bank is disposed to make the following arrangement
When the three per cents, owned by foreigners, whom you represent, shall be
paid off, the bank will continue to pay the interest at the same rate for one
year from the date of the payment by the Government. At the expiration
of that year, if you will give to the bank three months' notice of your wish
to receive reimbursement of the principal, either in whole or in part, the
principal shall be so reimbursed. And if the bank will give to you, or to
whomsoever may then represent the foreign stockholders in this country,
a like notice of three months of their intention to make reimbursement
either in whole or in part, the agent of the said stockholders shall receive
such reimbursement, and surrender the certificates of stock. This arrange­
ment seems to combine the advantages of a certain investment for some
time, and an option of continuing it longer; and I hope, therefore, that it
may be acceptable to you and to your friends.
Very respectfully, yours,
N. BIDDLE, Prest
T. W. LUDLOW, Esq., Neio York.
A—5.
PHILADELPHIA, Aprils, 1832.
I have submitted to my friends in Europe the terms on which
the United States' Bank will postpone the payment of the United States*
three per cents, held by them, viz. to allow them the same interest for one
DEAR SIR:

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95

year after the time when they are directed to be paid off by the Govern­
ment; after the expiration of the year, either party to pay or receive, on giv­
ing three months' notice—the interest to continue until the notice expires.
I propose to alter these terms as follows: that the bank, after the three
per cents, are directed to be paid off by the Government, allow the same
rate of interest until the principal is paid. That three months' notice shall
be given to the bank for the payment of the whole or part of the stock, as
it may be called for, and that the bank retain the right, on giving me the
same notice, to pay off the whole or part of the said stock, the interest on
which shall cease at the expiration of the notice. These terms, I think,
will be more acceptable to my friends, and I will submit them if authorized
by you.
Yours, respectfully,
THOS. W. LUDLOW. x
N. BIDDLE, Esq*
A—6.
BANK UNITED STATES,

July 9th, 1832.
DEAR SIR: On my return from Washington, a few days ago, Mr. McIlvaine mentioned that you had been in Philadelphia, and spoke of the ar­
rangement which was contemplated in regard to the foreign holders of the
three per cents, whom you represent.
'
As the payment of these, in whole or in part, will take place on the 1st
of October next, I shall bejhappy to know the views of your constituents, so
as to ascertain the probability of our coming to some arrangement mutually
acceptable to them and to the bank.
With great respect, yours,
N. BUNDLE, President.
T. W. LUDLOW, Esq., New York.

A—7.
MOFNT FORDHAM,

West Chester County, July Uth, 1832.
DEAR SIR: Your favor of the 9th inst is received. I immediately sub­
mitted the proposition to postpone the payment of the United States' three per
cents, for one year, (at the same rate of interest) to the parties interested; but
as the stock is not to be paid off by the Government till October next, they
have taken until then to determine what course they will pursue in order to
have the money remitted to the best advantage. I expect by that time to
receive the certificates and powers of attorney, but I am afraid that it will
not before be in my power to come to any definite arrangement with the
bank on the subject. If I should previously receive instructions to enable
me to do so, I will immediately let you know.
From the correspondence I have already had, I believe that the holders
of the largest part of the three per cents, under my direction, would like to
make an arrangement to have the money in this country for several years
at three per cent, in consideration of having the same remitted to them at
par, at the end or at any time during the term.
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I should like to have your opinion whether a proposition of this kind
would be agreeable to the bank, that is, would they keep from a million to
a million and a half at three per cent, until 1836, or for a longer or shorter
period, and remit it to Amsterdam at par, at the expiration, or at any time
within the term of years for which they received it; the interest to cease
when the money is remitted. It appears to me that the bank, in the course
of several years, would find opportunities of placing the money in Amster­
dam at par without loss, and perhaps to a profit.
Any communication from you on this subject will be strictly confidential.
I am not at present prepared to make any proposition, and do not ask for
any thing whichvwould commit the bank hereafter, but merely wish to as­
certain if the object of the parties, to have the money paid to them at par
would, through the bank, be likely to be carried into effect.
I am at present at a country place about two miles from the city, and will
thank you to direct to me, West Farms, West Chester county, N. Y.
I am, very respectfully, your obedient servant,
THOS. W. LUDLOW.
N. BIDDLE, ESQ., Philadelphia, .
A—8.
BANE OP THE UNITED STATES,

July 18, 1832.
DEAR SIR: I have had the pleasure of receiving your favor of the 14th
instant My impression is, that the bank would not be indisposed to con­
tinue the loan at its present interest for a year, or perhaps two; reserv­
ing the option of paying it at any intermediate time at Amsterdam, at par.
At least, the circumstance of the payment at par might not present an in­
superable difficulty. . To arrange this, however, it would be necessary to
come to some early understanding on the subject, as the temptation to make
the arrangement at all, is to fix precisely the extent of its preparations for
October next If, therefore, you feel authorized to make such an arrange­
ment, I shall be happy to hear from you.
In the mean time, I remain,
Very respectfully,
Yours, &c.
N. BIDDLE, President.
T

W.

LUDLOW, Esq.

West Farms, Westchester co., N. Y.
A.—9.
July 21, 1832.
DEAR SIR: Yours of the 18th instant was received yesterday. The
holders of the United States' three per cents, have not anticipated that any
arrangement could be made before' they were paid off by the Government.
They have, therefore, not as yet sent me such instructions as would autho­
rize me to continue the loan on terms which I believe would be acceptable
to them, as well as to the bank. I have given them all the information in
MOUNT FORDHAM,

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97

my power, and will again advise that these terms may perhaps be acceded
to by the bank. When I receive their orders, I will immediately let you
know, which is all that can be done.
I have been waiting since the 1st, for the official notice of the payment in
October, and am surprised that it has not yet appeared.
It may cause some delay on the other side; and if you can give me any
information about it, you will much oblige me.
Very respectfully, . ' ■ . , ' . .
Yours,
THOMAS W. LUDLOW.
N, BlDDLEyEsq.
Philadelphia.
A—10.
BANK OF THE UNITED STATES,

July 23, 1832.
DEAR SIR: I had this morning the pleasure of receiving your favor of the
21st instant. As your retirement from New York may place you out of
the current of information, it will interest you to know that the Secretary
has just given notice of his intention to pay off two-thirds of each certifi­
cate on the 1st of October, and one-third on the 1st of January.
This presents the subject under an aspect different from that under
which we have hitherto regarded it, when the full payment was anticipated
on the 1st of October next I shall, however, be happy to hear from you
whenever you receive your instructions from your foreign constituents. In
the mean time, I remain,
Very respectfully, your's,
N . BIDDLE, President
THOS. W.

LUDLOW,

Esq.

West Farms, Westchester county, New York.
■

.—

♦

B.
BANE OP THE UNITED STATES,

February 11, 1833.
SIR: I had the honor of receiving, onjthe afternoon of Saturday, the 9th
instant, your letter of the 7th instant, requesting certain documents, which
I immediately caused to be prepared, and now enclose. You request,
1st " Mr. Cadwalader's original letter, (or a certified copy thereof,) ac­
companying the contract of the 22d of August, 1832, with Messrs. Baring*
Brothers and Co."
I send that original letter, marked A, being a letter from Thomas Cad*
walader to the President of the bank, dated the 25th of August, 1832.
2d. " The originals, or certified copies, of all other letters writteh by Jtfr.
Cad walader, while in Europe, to the President of the bank, or any of'its
officers."
I send the originals of all that correspondence, marked B, [consisting of,
1st Original letter, No 1, from T. Cad walader to the President of the
bank, dated Liverpool, 16th August, 1832.
13
1

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[ Rep. No. 121. ]

2d. Original letter, No. 2, from T. Cadwalader to the President of the
bank, dated London, 22d August, 1832.
3d. Original letter, No. 3, from T. Cadwalader to the President of the
bank, dated London, 25th August, 1832, with copy of contract and
.circular.
4th. Original letter, No. 4, from T. Cadwalader to the President of the
bank, dated Londdn, 30th August, 1832.
5th. Original letter, No. 5, from T. Cadwalader to the President of the
bank, dated London, 6th September, 1832.
6th. Original letter, No. 6, from T. Cadwalader to the President of the
bank, dated London, 14th September, 1832, with copy of agreement
with Dutch holders.
3d. " All the correspondence of Mr. Cadwalader with Messrs. Baring,
Brothers and Co."
There is no such correspondence known to the bank.
4th. '« All the correspondence between the Messrs. Barings and the bank,
on the subject of the United States' three per cents."
I send all that correspondence, marked C, consisting of letters from
Messrs. Baring, Brothers and Co. to the bank.
1. B. B# & Co. to N. Biddle, President, dated London, August 22d, 1832
<
do 30th, <
2.
I>o
do
do
Sept'r 6th, te
3.
Do
do
do
4.* i Do
do
do
do 14th, u
do 22d, a
5.
Do
do
do
do 29th, ((
6.
Do.
do
do
Oct'r 6th, u
7.
Do
do
do *
13th, u
do
£.
Do
do
do
do 22d, a
9.
Do
do
do
30th, u
do
10.
Do
do
do
6th, 66
Nov'r
11.
Do
do
do
14th, 66
do
12.
Do
do
do
22d, (<
do
13.
Do
do
do
do 29th, 66
14.
Do
do
do
do 29th, 66
15.
Do
do
do
6th, 66
Dec'r
16.
Do
do
do
14th, (6
do
17.
Do
do
do .
t
19th, 66
do
18.
t)o ,
do
do
22d, 66
do
19Do
do
do
Letters from N. Biddle, President, to Messrs. Baring; Brothers and Co ,
marked D.
1. Letter, dated Bank U. States, July 17th, 1332.
2.
Do
do
Oct. 15th, "
3.
Do
do
do 19th, «
4.
Do
do
do 31st, «
5.
Do
do
. Jan. 15th, 1833.
Letters from S. Jaudon, cashier, to Messrs. Baring, Brothers and Co.,
marked JE.
i. Letter, dated Bank U. States, January 14th, 1833.
2. Extract from letter, dated Bank U. States, January 14th, 1833.
3. Letter,
do
do
do 22d,
"
4.
Do
do
do
do 31st,
"
5. Extract from a letter, do
do
February 7th, *«
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[ Rep. No. 121. ]

5th. « Copies of the minutes of the exchange committee from the 1st of
March, 1832, to the 1st of February, 1833, in relation to the arrangements
for the payment of the public debt; or a postponement of a portion thereof
with Baring, Brothers, and Co., or others."
Neither the exchange committee, nor any other committee of the bank
has ever Jjept any. minutes.
I have the honor to be,
Very respectfully, your's,
N. B1DDLE, President.
Honorable G. C. VERPLANCK,
Chairman Committee of Ways and Means,
Washington, D. C.
B—1.
LIVERPOOL, \Qth August, 1832.

Mr DriAR SIR: I have just landed; and as soon as I get my baggage from
the custom-house, shall set out for London.
Faithfully, your's,
T. CADWALADER.
N. BIDDLE, Esq.

President Bank U. S.
B—2.
LONDON, 22d August, 1833.

M Y DEAR SJR: I did not get my baggage on shore, and clear of the cus­
tom-house, till late on the afternoon of the 16th instant, and I reached this
city on Sunday morning the 19th instant. On the 20th, I had a conference i
with the acting members of the house of Messrs. Baring, Brothers & Co.,
(Messrs. Mildmay & Bates;) and, after sundry discussions on that day and
•yesterday, the heads of an agreement were framed, and approved of by the
other members of the house, to be put into shape, and to be signed to-day.
I have drawn up the contract accordingly, of which I do not send you a
copy, as there may be some alteration in form or verbiage, and the hours of
business are so late and short in this great city, that it is not probable a tran­
script can be made in time for this mail. The contract is, in substance-—
1st That Messrs. Baring, Brothers & Co. will at once issue a circular to
the holders of the three per cents., inviting them to retain their stocks until
October, 1833—the bank continuing the payment of the same rate of inte­
rest quarterly to that time, and then paying off the principal.
2d. That they will buy up the three per cents, on the best terms, here and
in Holland, at not over 91 per cent, (equal to 7i per cent, exchange, whicb
I consider a safe limit,) debiting the bank with the cost in a separate ac­
count, and at such interest as they may pay*—the certificates to remain with
them.
3d. If the amount so bought, and retained by the holders, in com plan oe
with the circular, be less than fire millions of dollars, the bank to have thfe
* Money is now very ahunctant.

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[ Rep. No. 121. ]

right of drawing for the deficiency, or any part of it» on Baring, Brothers
& Co.—the interest on such deficiency to be charged as in the general ac*
count. The Barings to charge a commission of one half per cent, on the
amount of the transaction: a less commission, as they very frankly stated,
would not induce them to incur responsibilities, the results of which, as to
the extent of funds which they may be called upon to supply, must be evi­
dently so uncertain.
I will, in my next letter, explain why the reimbursement was fixed in
one entire payment, instead of being spread into payments at different times;
and I will also, in sending the agreement, explain as may be requisite. I
need hardly say that this arrangement leaves the bank its'full power of
using the extra credit, if wanted, as heretofore.
Vour letter of 23d July was handed to me as I entered Messrs. Barings'
counting-house, before my first conference, on the morning of the 20th,
and, in handing them the Treasury notice, I availed myself of your sugges­
tions in relation to the subdivision of the payments, so far as might not
affect the object then in my view, as to spreading the periods of our own re­
imbursements. On this latter point, I may now say that the same reasons
stated in your letter operated so strongly, that I preferred that the circular
inviting the postponement should fix one time for the entire payment, in­
asmuch as I felt assured that the payment by instalments, or fractions, would
diminish the inducement to postpone.
I write in haste. The hours of business are short, and the distances so mag­
nificent that one half of the day is passed in travel. The letter also must be
copied, and a duplicate, if practicable, got ready, as my letters are mailed
before I quit the city—my residence being six miles from that Pandemo­
nium.
I can say nothing of projects and points proposed and rejepted. The short­
ness of time did not induce me to give up, or to yield in any one matter;
and I should not so promptly have closed the bargain, had I not considered
it, under all its aspects, a good one. Should my constituents so regard it, I
shall be most happy.
Always yours, with the greatest respect and regard,
T. CADWALADER.
"N. BTDDLE, Esq.

President of the Bank of the United States,
B—3.
LONDON,

25th August, 1832.

MY DEAR SIR: Referring you to my letter, No. 2, of which a copy is
enclosed, I now send you a copy of the contract with Messrs. Baring, Bro­
thers & Co., dated the 22d instant, and adverted to in that letter; and also
a' copy of their circular to the foreign holders of the three per cent stock. I
requested that the latter should not be published, but specially addressed,
as a private letter* in manuscript, and signed by the house. It seemed to
. me necessary to allude to the authority from the bank, lest it might be lia­
ble .toWisapprehensions; and, in fact, the Barings considered it necessary
that their authority should be declared. Under these views, I hope the comm ttee will see nothing objectidnable in the form of the circular.

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In looking over my letter, No. 2, I do not find that any further com­
ments on, or explanations of, the^contract are necessary. I have before re­
marked on the half per cent commission^ The Barings think it a very low
one, and so do I. You will observe that it is their only inducement for •
holding in reserve, in fact, five millions of dollars; and it is therefore to be
clearly understood, that the commission operates on the whole of that sura,
whether the bank goes the whole, (to use an expression, now perhaps classi­
cal,) or not.
As matters stood when I left the United States, I see nothing in the fea­
tures of the contract but what would be fav orable, and even beneficial to the
bank;.and I have only to hope that the cholera, or other causes, may not
derange the business of the country, so as to give to the bargain another
aspect.
Very respectfully and faithfully vours,
T. CADWALADER.
N. BIDDLE, Esq.

President of the Bank Ut. S.%

(Copy.)
Messrs, Baring, Brothers # Co, of London, and Thomas Cadwalader,
of Philadelphia, in behalf of the Bank of the United States, agree as
follows^ viz.
For a commission of one half per cent on the amount, the said Baring,
Brothers & Co. agree,
1st. To invite the holders of the three per cent, stocks of the United States
to retain their stock until October, A. D. one thousand eight hundred and
thirty-three; the bank engaging to pay the interest quarterly until that
time.
2d. To buy up the said three per cent stocks on the best terms at which
they can be obtained, both here and in Holland, at prices not exceeding
ninety-one per cent., or as much higher as the running quarterly interest,
in case of need. The cost of which stocks to be placed to the .debit of the
Bank of the United States, in a separate account, chargeable with whatever
rate of interest Messrs. Baring, Brothers & Co. may be compelled to pay.*
The certificates of stock, so purchased, to remain with Messrs. Baring, Bro­
thers & Co.
3d. In case the amount of stock so purchased, and the amount that
may be retained by the holders as above, should, together, be less than the
sum of five millions of dollars, then Messrs. Baring, Brothers & Co. agree
to make up the deficiency, in case the bank should find it desirable to d |aw
for such deficiency, or any part thereof. On which sum or deficiency,
Messrs. Baring, Brothers & Co. to charge the same interest as in their ge­
neral aecount with the bank. The whole advances to be reimbursed by the
Bank of the United States, in October, A. D. one thousand eight hundred
and thirty-three.
4
* Expected to be four per cent.

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Wi i ess tht hands oi the said parties, at the city of London, this twentyseconu uay of August, A. D. one thousand eight hundred and thirtytwo.
BARING, BROTHERS & Co.
T. CADWALADER,
for the Bank of the U. S.
Signed in presence of us>
V

JAMES STEWAKT RINGER,
FBAS. WM. GENTRY.

(Circular.)
The foregoing notice will apprize you of the periods at which the $ ——
three per cents. American stock, standing in your name, will be paid off,
and the interest thereon cease. Should you, however, be desirous to post­
pone the time of reimbursement, we have the authority of the Banlf of the
United States to engage that it will continue to pay the interest as hereto­
fore, up to the 1st of October, 1833, when the whole of your capital will be
reimbursed to you,. or your attorney, oh delivery of the necessary docu­
ments; provided you intimate to us, in writing, your wish to avail of this
arrangement, on or before the 10th of September next, and engage, more­
over, not to effect sale of your stock in the interim.
•BARING, BROTHERS & Co.
LONDON, 22d August, 1832.

B—4.
LONDON, 30M August,

1832.

Mr DEAR SIR: YOU will receive, with this, my letter of the 25th'instant,
( No. 3. )
I have requested Messrs. Barings to report to you, directly9 their opera­
tions in the purchases of three per cents, and contracts with the holders
of stock as to postponement; giving you names, numbers of certificates, &c.,
so that you may designate such as are not to be paid off. These lists are to be
sent to you by each packet. You will see by their communications, of this
date, how far they have operated. Of course, they have as yet heard no­
thing from Holland.
As to the purchases of 3's, reported from time to time, the bank may per­
haps find it convenient to reimburse Messrs. Barings; and the extraordinary
fall in exchange, of which we are just advised-by our last letters from home,
Would enable you to close advantageously. The advances for the purchases
here, will stand at an interest of about four per cent
Yours most truly,
And respectfully,
T. CADWALADER.
N . BlDDLE, flfeq.
^President of the Bank of the U. S.
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B—5.
LONDON, September 6, 1832.
MY DEAR SIR: In my letter No. 4. (of 30th August,) t intimated that
you might perhaps find it convenient to take advantage of the fall, in ex­
change to reimburse Messrs. Barings for their advances in the purchases
of three per cent, stock. Our last advices from home show exchange to be
again at 8£, and in demand. And I find, moreover, that Messrs. Barings are
making arrangements for borrowing the cost of the stock tor the period at
which it is to be reimbursed There will then be no difficulty in spreading
out the payments, as may best suit the bank, by extending the times
for portions of the money, if required. The purchases amount now to
about one million and a half; and the agreements to postpone to about the
same amountj^ogether three millions, as will be particularly reported to-day
by Messrs. Barings; and half a million more of the latter may be reckoned
upon with certainty; the stock being held by the Canton of Berne, (in Swit­
zerland,) and not disposed of. Thus half is already secured, and the reply
which has been received from Messrs. Hope & Co., shows that they have
the power of operation in Holland. Borrowing for the period during which
the loan is required, Messrs. Barings will not beable to obtain the money
on more favorable terms than four per cent, per annum. It is true, that com­
mercial paper is now discountable here at a lower rate; but I have satisfied
myself that all the great capitalists, as well as the Barings themselves, in
the employment of their money, would make the same distinction as has
been made by the lenders in this instance. So far} it has been necessary
for me to keep in constant communion with Bishopsgate Street, as mat­
ters have been daily occcurring on 'which our friends there are desirous of'
consulting with me. In a week or ten days more, every thing will be in
such a train, that no further watching will be called for on my part: thus al­
lowing a month in England on the business of the bank. I shall then dis­
engage myself from my' servitorship, and proceed to Paris for a fortnight,
pour de' sennuyer; returning probably in the Havre Packet of the 10th Oc­
tober.
I remain, my dear sir,
Yours with the greatest respect and regard,
T. CADWALADER.
N.

BIDDLE,

Esq.

President of the Bank of the U. S,
B—6.
LONDON, 14th September, 1832.
Mr DEAR SIR: My last letter (No. 5.) of the 6th instant, was altered at
Messrs. Barings compting house, as to the amount of stock secured and
bought—Mr. Bates having made a mistake in a number furnished to me;
but, from my omitting to make a corresponding change in the part of the
letter immediately following, a discrepancy appears. It is corrected in the
accompanying duplicate.
Learning from Messrs. Barings that Messrs. Hope & Co. had suggested
a difficulty as to their successful operation in Holland, unless the bank would
engage to reimburse at the exchange of forty cents per guilder; according
to a proposal stated to have been made by the bank to Mr. Ludlow of New
York, and seeing no objection to such an en ^ageraerit, the rate being a safe
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[ Hep. No. ljM. ]

one, and the exchange or value of the guilder, with us, being almost unvarying
as a coin in silver, compared with the dollar; and the Barings stating that there
would be nothing done in Holland unless under such an arrangement,.
which they urgenfly recommended, I gave theengagement on the part of the
bank of which a copy is enclosed. It is qualified, as you will observe, so
as to accord with the terirts of the arrangement proposed by the bank to Mr.
Ludlow as the representative of a large portion of the Dutch holders; and
which are more acceptable to the views of that cautious people, whose habi­
tual doubts and difficulties render them less formidable rivals in business totheir neighbors, than with their immense power of capital they would
otherwise be found.
The purposes of my mission being now closed, as you will receive the re­
sults of the doings in Holland through Messrs. Barings, it isjny intention
totfrossfrom Brighton to Dieppe on the 18th instant, and, alter frolicking:
in Paris for a brief space, we shall return in the Havre packet, to sail on the
10th of October.
Yours always, with the greatest respect and regard,
«
T. CADWALADER.
N.

BIDDLE,

Esq.

President of the Bank of the United States.

(Copy.)
I hereby engage, on the part of the Bank of the United States, that such*
holders of the three per cent, stock of the United States, as may agree with
Messrs. Hope & Co. of Amsterdam, to postpone the period of reimburse­
ment till the 1st day of October, A. D. 1833, shall receive back the amount
of their certificates, respectively, at the 'rate of exchange of forty cents per
guilder, according to the terms of a late proposal made by the bank to T.
W. Ludlow of New York.
Signed at London, this thirteenth day of September, A. D. one thousand'
eight hundred and thirty-two.
T. CADWALADER,
Agent for the Bank ofthfi United States.
Witness:
THOMAS BARING.

C—1.
August 22, 1832.
SIB: We have had the honor of receiving, from the hands of Mr. Cadwalader, the letter with which you favored us on the 18th ultimo, and in which'
you referred us to that gentleman for the particulars of an arrangement the
institution was desirous of entering into, in regard to the reimbursement of
the United States' three-jier cent, stock.
You will, no doubt, learn from Mr. Cadwalader that no time has been
5>st in coming to an understanding with us as to the mode in which your
views could be carried into effect, and the result of our communications with
him has been a contract, of which, as he will, no doubt, send you a copy, it.
LONDON,

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is not necessary that we should say more than that we trust the board will
perceive in it the evidence of the earnest desire we, at all times, feel to put
all our transactions with them on the same easy and liberal footing.
)t We trust you will excuse our observing that we conceive no question can
now arise as to'any extension of the ordinary credit which we hold at the
disposal of the bank, as the liability to be called upoft for large advances
for the above operation, either in the shape of drafts or purchases of stock,
makes it absolutely necessary that that limit should be strictly attended to.
We have only to add that we feel much flattered by this further proof
of our possessing the confidence of the institution; and have the honor to be,
Sir, your most obedient servants,
BARING, BROTHERS & CO.
N. BIDDLXJ Esq. President of the U. S. Bank, Philadelphia,
C—2.
LONDON, 30/A August,

18§2.

SIR: In consequence of* the personal communications we have received
from Gen. Gadwalader, we beg leave to inform you that we have seojired
and paid for the following parcels of United States' three per cent, stock, viz.
20,000)
100,000tat 90
25,0003
25,000 " "
21,000 " 90*
80,000 " 91
$271,000

and we have also made the following purchases, to be delivered immediate­
ly, viz.
10,000
)
2?,400
£ at 9 0 *
66,037 25
100,000
200,000
"90*
200,000
20,000

$023,437 25

to be delivered before 6th September.

We enclose a list of proprietors of United States' three per cent, stock, who
have consented to postpone the receipt of their principal till 1st October
1833, the amount of their stock, collectively, being 8342,646 68.
As we are not acquainted with the manner in which the institution may
desire to have these transactions managed,, we have adopted the course o
addressing you on the subject, that you may dispose of the accounts, &c
as you may deem expedient.
We have the honor to be,
Sir, your most obedient servants,
BARING, BROTHERS & CO.
N. BIDDLE, Esq. President of the Bank U. States, Philadelphia.
14
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[ Rep. No. 131. ]
C-3.
LONDON,

6lh September, 1832.

SIR: We confirm what we had the honor to write to you on the 30th ult,
and now annex a list of other proprietors of United States' three per cent slock,
who wish to postpone the reimbursement of capital till 1st October, 1833,
making a total, with those already advised, of 0 1,609,707 42 purchases of
the United States' three per cent. st6ck on account of the institution. We con­
clude it may be more convenient to you to have the whole purchases up to
the present date presented to the eye at one view, and we, therefore, inclose
a detailed list, showing the total amount to be
- 01,051,251 31
and purchased, but not yet delivered
384,994 05
We remain, sir,
Your obedient servants.
P. S. Since our above, we have purchased 038,581 97 United States'
three per cents., at 90$.
2& BiDDLE,*Esq., Philadelphia.
C—4.
14th September, 1832.
SIR: We confirm what we had the pleasure to write to you under date of
6th instant, as preceding copy. We now inclose duplicate of the state­
ment furnished in our last, and also a separate list, showing the deliveries
and purchases of United States' three per cent, stock, which have taken place
since that period, amounting to
0459,972 64
to which are to be added
50,000
advanced 6 inst. but not yet delivered.
9,600 "]
49,996 62 I purchased since 6th instant, and in24,S00
f eluded in the above 0459,972 64.

2,000

J

We have to advise that 02,500 in the name of A. Boucheret and others is
to have the reimbursement of capital postponed till the 1st October, 1833.
We have the honor to be, sir,
Your most obedient servants,
BARING, BROTHERS & C 0 .
C—5.
22d September, 183*.
SIR: Confirming what we had the honor to write to you under date 14th
instant, we have now to enclose a list showing the deliveries since that period
to be 065,300 United States' three per cent, stock, and the reimbursement
of the following is to be postponed till the. 1st October, 1833:
glOOO United States' three per cents., in the name of Hester Watson.
5000
"
"
"
«
"
Jaqueline Susanne,
Rillist Neckerl
We have the honor to be,
Sir, your most obedient servants,

BARING, BROTHERS, & CO.
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107

C—6.
LONDON, 29th September, 1832.
SIB: We had the honor to write to you on the 22d instant, and have now
to enclose a list showing the deliveries since that period to be #92,433 33
United States' three per cent, stock.
We remain, sir,
Your obedient servants.

€—7.
6th October, 1832.
SIR: Referring to our respects of 29th ultimo, we have now the honor to
enclose a list showing the purchases since that period of #34,200 United
States' three per cent, stock, on-account of the institution.
We are, respectfully,
Your most obeHient servants,'
;
BARING, BROTHERS & CO.
P. S. Holders of United States' three per cents, in Holland, to the
amount of #672,398 60, have consented to postpone the reimbursement till
October next. Particulars in our next.
C—8.
13M October, 1832.
SIR: With reference to our respects of 6th inst, we have npw the honor
to enclose a list showing'the purchases since that period to be #25,500 Uni­
ted States' three per cent stock, on account of the institution. We likewise
enclose a list of proprietors of United States' three per cent, stock, residing in
Holland, who postpone the reimbursement of capital till the 1st October,
1833, the aggregate amount being #672,465 27.
' We are respectfully, sir,
Your most obedient servants,
BARING, BROTHERS & CO.
N. BIDDLE, Esq., Philadelphia.
C—9.
LONDON, 22d October, 1832.
SIR: With reference to our respects of 13th instant, we enclose a list
showing the purchases since that period of #15,133 33, United States' three
per cent, stock, on account of the institution.
We remain, sir,
Your obedient servants, .
B . B . &Co.

C—10.
30M October, 1832.
SIR: With reference to our respects of the 22d instant, we now enclose a
list showing the purchase since our last of #54,806 96 United States' three per
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[ Rep. No. 121. ]

cents.on account of the institution; and, as the season is now approaching
when we cannot calculate, with any certainty, when our advices may arrive
out, we shall suspend all further operations on the special account, in order
that no doubt may exist on the 1st January as to reimbursement of the prin­
cipal to be remitted or retained.
We have the honor to be, sir,
Your most obedient servants,
BARING, BROTHERS & CO.
The following desires to have the reimbursement postponed till the 1st
October, 1833,#46,8S8 76, name of Joseph Green.
8,900
"
R. R. Hall.
B. B. & Co.
C—11.
LONDON, November 6, 1832.
SIR: We have the honor of acknowledging your letter of the 15th, refer­
ring to a transaction entered into by our house with Mr. (JJadwalader, one
of your board, during his recent visit to Europe. Having only this morn­
ing, however, received your communication, and the subject being one
which cannot hastily be disposed of, we must beg your indulgence in post­
poning our reply to it, in detail, till we have had an opportunity of giving
it fuller consideration.
We cannot, however, refrain from expressing the satisfaction it gives us
to find that our exertions in this business meet with your approval, and,
though the gentleman appointed by the bank to arrange it seems to have
overlooked some important considerations, you may rely upon our endea­
voring, as far as we are concerned, to prevent their causing inconvenience
to the institution; but it must not be lost sight of that we are not the only
parties here interested in the contract, and, though that part of it in which
we are immediately concerned might be satisfactorily arranged, we will
freely confess to you that we have no hope of coming to any other arrange­
ment with the holders of three per cents, who have deferred their repay­
ment, than that which is contained in the first article of the contract above'
alluded to.
As we shall so soon have the honor of addressing you again, we shall now
only add that we regret very much the objections which offer themselves
to an operation undertaken by us with the view of facilitating the arrangements of the institution; and subscribe ourselves,
Very truly, your obedient servants,
BARING, BROTHERS & CO.
N. BIDDLE, Esq.

President of the United States9 Bank,

Philadelphia,

C—12.
LONDON, November 14, 1832.
SIR: We have the honor of enclosing "duplicates" of the few lines we
addressed to you on the 6th inst which will, we trust, have left no doiibt
in your minds of our earnest desire to adapt Ourselves, as much as in our
power,' tQ the change in our arrangements on the subject of the three per
cents., suggested in your letter of the 15th ultimo. We are sorry, however,

[ Rep. No. 121. ] * :

109

now to have to state, what you will be not unprepared for after the receipt of
our reply of 6th instant, that, though we have been almost incessantly occu­
pied since that day in an attempt to devise some plan to carry into effect your
suggestions, we are unable to put them in any shape, as far as the public is
concerned, that would not, either to the holders of the certificates, or to us
as agents of the bank, be so objectionable as to put their adoption quite out
of the question.
When your representative first opened to us the business which brought
him to England, we frankly told him that his calculations as to the benefit •
to be derived from it, in consequence of the low rate of interest then ruling
in London, were quite erroneous, and that it would not, for that as well as
other reasons, suit us to undertake it on our own account; and though we
had every wish to realize the views of the institution, the low rate of inter­
est the stock bore, made us so very doubtful of the holders accepting the
terms he proposed, that we had much rather not have undertaken it in the
manner we afterwards did, if we had only consulted our own feelings, look­
ing at it as a simple question of advantage to ourselves. However, even
then we felt the absolute necessity of allowing the certificates to remain in
London, or in the hands of the proprietors; and you will see that, in drawing
up the contract, special attention was paid to that engagement, but not till
after General Cadwalader had had the question fairly brought under his
consideration, and had stated that no objection existed to it. We had sub­
sequently an opportunity of ascertaining that we had not incorrectly judged
the feeling of the stockholders, for some of those inscribed for the largest
sums, made their assent contingent upon their being allowed to retain their
certificates. We trust we have said enough to convince you that it would (
be impossible for us, after what we have stated, to propose any other ar­
rangement than that which is at present in force with the holders of three
per cents, here and in Holland, (of which you have received the list;) and
we need hardly add that it is of great importance that the same regularity
should be attended to in the remittance of their dividends as heretofore. As
to that part of the contract which concerns ourselves, we are quite prepared
to modify it so as not to infringe the charter, but of course it cannot be ex­
pected that we should do so to the material injury of ourselves. Indeed, we
cannot but acknowledge that there is breathed throughout your letter a spi­
rit in accordance with that remark. We have thought, however, that the
comparative advantage of our mode of arranging the matter, or another,
would be best discussed viva voce with our agent; and we therefore put him
in possession of the facts of the case by this opportunity, and request him,
as soon after the receipt of our letter as is practicable, to proceed to Philadel­
phia for the purpose of putting himself in communication with you on the
subject, not doubting that he may be able to arrange it to your satisfaction.
We have the honor to be, sir,
Your obedient servants,
BARING, BROTHERS & CO.
N. BIDDLE, ESQ.

President of the United States' Bank, Philadelphia*
C—13.
LONDON, November 22, 1832.
SIR: We beg leave to refer you to the letter which we had the honor of
addressing to you on the 14th instant, subsequently to which we have TV
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"[ Rep. No. 121. ]

ceived your lines of the 19th-and 31st ultimo, the latter only by the packet
arrived this morning, and, therefore, too recently to have been able to give
the subject of it the further consideration which your representation of the
case demands. The tenor of your letter of the 19th, had led us to hope
that our instructions to our agent would have enabled him to put this busi­
ness on a footing, if not perfectly satisfactory to the bank, at least not at­
tended with any serious inconvenience.
We have already mentioned to you that several holders of the three per
cent, certificates made the retention of them the condition of their postponing
reimbursement. There can be little ground, therefore, to expect that they
would now accept less favorable terms, and we cannot express any confi­
dence in our attempt to persuade them to relieve .the bank from the engage­
ment we entered into with them on its behalf.
We will not conceal from you, that, for the above and other reasons
which present themselves, involving the confidence of the public in the
high standing of the institution, and which it is our constant desire to do
nothing to impair, we still entertain a hope that you will be able to come
to some understanding with the Treasury Department, that may supersede /
the necessity of your obtaining possession of the certificates before the pe­
riod stipulated in the contract, though you may rely upon our omitting
nothing which suggests itself to us, to arrange the business in the manner
you point out.
We have the honor to be, sir,
Your obedient servants,
BARING, BROTHERS & Co.
N . BIDDLE,

Esq.,

President of the U. 8. Bank,

Philadelphia,

C—14.
November 29,1832.
SIR: We have the honor to refer to the annexed copy of our last private re­
spects of 22d instant, and to a separate letter from us, which carries the
form of our letter addressed to the different stockholders, who have consent­
ed to the postponement of the reimbursement of the United States' three per
cents, to induce them to agree to the arrangement now proposed, and, at the
same time, the certificates and powers of those who have already consented.
These documents we shall transmit to you in the same mode as soon as
we receive them, but, from the fact of many of the parties being in the coun­
try and abroad, and of others requiring time for consideration before they
agreed to the change of plan, it will only be gradually that we shall be
enabled to forward them.
To such parties as require it, we give the guarantee of our house for the
faithful performance of the present agreement; and we likewise assure all that
the letter or document from the bank, stating that the amount of their certi­
ficates is carried to their credit, and that interest will be paid thereon until
the reimbursement of the capital on 1st October, 1833, shall be delivered to
them here free of expense. We have likewise promised to those who may not
wish the remittance of their money at the time of reimbursement, that the
bank will pay it over in Philadelphia to their order free of any charges, and
without the. expense of a power of attorney, or any other document than a
letter.
LONDON,

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111

We have thus done all in our power to comply with your wishes, and
we trust that our object will be successfully attained; for, as soon as we
learned that the matter was of importance both to the bank and to the Go­
vernment, we waived all scruples as to the inconvenience of reverting hefore the public to the former arrangement, and have only considered the
most expeditious mode of meeting your views.
We may, indeed, conscientiously add, that, throughout the course of these
arrangements, we have been actuated less by interested motives than by an
anxious wish to co-operate with the institution over which you preside, in
preventing any shock to the monetary system of the United States, which
might have resulted from the simultaneous payment and remittance of the
large portion of the Government stock held by foreigners.
We have the honor to be,
With great respect, sir,
Your obedient servants,
BARING, BROTHERS & Co.
N. BIDDLE,

Esq.,

President of the U. S. Bank,

Philadelphia.

C—15.
LONDON,

November 29,1832.

SIR: In consequence of your communication, that the arrangement for
postponing the reimbursement of the United States' three per cent, stock till
October, 1833, cannot be carried into effect without the surrender of the
certificates to the Treasury to be cancelled, we addressed a circular on the
subject to our constituents, of which you will find a copy enclosed fo*r your
information. Hitherto, we have only received the assent of the following
parties to the new arrangement, and we now enclose thdir certificates, viz.
*0.
a
it

tc

$ 8,000
1
6,000
2,000
' In one power from J. C.
2,363 5S f
Shum.

2,552-3
*, 554-5
2,556
2,557

i
No. 2,846

-

#1S,363 58 J
$ 2 , 8 0 0 0 0 ^ ^ o n e power from E. C.Hoo-

You will observe by our circular, that we engage to obtain from the bank
an acknowledgment to each individual stockholder, that the amount of his
stock has been placed on the books of the bank, to be held at his disposal or
remitted in a bill at the usual time, on the 1st of October, 1833; up to which
period the institution is to engage to remit to us the interest as if the stock
was not redeemed. We must, therefore, beg the favor of you to furnish us
with an engagement to this effect, addressed to the above individuals and to
all others, separately, whose stock we may hereafter send out, to be deliver­
ed over by us to each party as their security; and it is, of course, understood
that such instructions as we, on behalf of the proprietors, or the proprietors
themselves may give as to the disposition of their capital in the bank books,
are to be complied with without the form of a power, or any othfer expense. It
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[ Rep. No. 121. ]

will, of course, occur to you,/that, but for the original arrangements assented to by such of our constituents, whose names have been furnished, they
would have sent out their certificates in due season, or otherwise hare dis.
posed of them so as to avoid any loss of interest; and they will, under the
altered circumstances of the case, have to claim interest from the bank till
the day of remittance for their principal, should events prevent their acced­
ing to the proposition of surrendering their certificates. This we know
will happen in some cases of trust, &c; and, even to-day, we sent out to the
cashier some stock, in the name of Collins, for a remittance per appointment,
the party having assented to the original proposition by which the certifi­
cates were to be retained here.
We remain, sir,
Your most obedient servants,
BARING, BROTHERS & Co.
N. BIDDLE,

Esq.,

President V. S. Bank, Philadelphia.

(Circular,)
LONDON,

,

1832.

We beg to refer you to our circular of the 22d August last respecting
your dividendsUnited States' three per cent, stock; and, also, to acquaint you
that we have just received a letter from the President of the bank, stating
that it will be requisite, in order to complete the arrangements for postpon­
ing the reimbursement of your stock, (as the bank cannot otherwise settle
its accounts with the Treasury Department,) that your certificate should be
sent out for the purpose of being cancelled.
We trust it will not be inconvenient to you to comply with this form, ia
which case we shall be glad to receive your certificates with the necessary
power of attorney, upon our giving.you the usual letter stating that we have
received them for transmission, and engaging to obtain for you an acknow­
ledgment from the bank that the amount has been passed to your credit on
its books, and will be either held at your disposal or remitted in a bill at the
usual time, on the 1st October, 1833; up to which period, it engages to re­
mit the interest as before it was reimbursed. Should you, however, for any
reason, prefer an immediate remittance, both of interest accrued and capital,
the bank will of course comply on receiving your instructions to that effect.
We are your obedient servants,
BARING, BROTHERS & Co.

C—16.
LONDON,

December 6, 1832.

SIB: We beg leave to confirm what we had the pleasure to write to you
under date of the 29th ultimo in original and duplicate; and, with reference
thereto, we have now to enclose the following further certificates of United
States' three per cent stock on behalf of parties who wish their capital to re­
main with the institution until 1st October, 1833, viz.

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No. 13,571-2

115

$4,000
4,000
4,000
5,000
4,494
g 21,494

00")
00 |
00 t In one power from Lady
05 |
Mary Cunyngham.
60
65 j

No. 548
" 549
" 550

$ 4,000
3,000
1,000
#8,900

00
00 In one power from Rich00
art} R. Hall. ^
00j

No. 4,266
" 1,493

$ 1,13567)
2 399 99 C
g S ^ S 06 S

«

13,573-6
3,997-8
6,649
2,244

No.
810-2
« 2,778 .

$ 15,000 00
10,000 00

% 25,000 00

T
n one

r

T

P o w e r "" o m James
G0SSeliD
'

one power from Henry
S. Montague.

No. 10,044 " 10,045 -

$ 4,000 00
3,800 00
* 7,800 00

No. 5,007-8
" 5,009-12

$4,000 0 0 ) r o n e o w e r 'c
Tu
4 000 00 C
P
irom J 0 " 11
—
« Leptne.

one power from Wm.
Meeking.

#8,000 00

And we shall be glad to receive a separate acknowledgment, addressed to
-each of these individuals, to be delivered according to our engagement
We are respectfully, sir,
Your most obedient servants,
BARING, BROTHERS & Co.
N. BIDDLE, Esq., Pre*/. U. &. Bank.
C—-17.
LONDON, December 14, 1832.

SIR: With reference to our respects of the 6th ipstant, we now enclose
certificates of United States' three per cent stock, viz
No.
"
"
«
"
"
"
"
"

11,355-6
11,612-4
11,590
11,615
11,923
11,931
12,276
893
1,005

•
•
m

-

$10,000
15,000
4,923
3,094
4,400
1,000
1,439
3,615
2,000

00]
00
29
42
00
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00 jf
Greene.
13
81
00

146.888 76 J
15
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114
No.
u
it

a
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it

1,374-6
1,377-9
1,380
l-,3Sl-2
1,383-4
1,3S5

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# 15,000
12,000
2,246
20,000
6,000
1,417

00
00
32
00
00
52

In one power from H. R.
Hartley.

g 56,663 84 j
In one power from H. Col­
lins, jr.
In one power from Isabella
00?
Ormston.
76 T
00
00
00
00
00 \ In one power from Robert
Ormston.
00
00
00
00

No. 2,996

#5,412 83

No.
No.

1,169

#2,888

395
396
397
804
S05
806
968
969
970
1,171

#19,S18
17,000
6,000
5,000
5,000
3,000
5,000
5,000
5,000
6,112

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a

a
u
a
a
a
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a

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tt

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3,684-8
3,689
4,674-7
4,678-9
4,680-2
4,704-5
4,706-7
4,708-10
4,711
6,406
6,457
6,578
6,610
6,678
6,713
6,759
6,795
1,830
6,873
6,903
6,939
6,968
7,007
7,026
7,053
7,105

#20,000
2,449
12,000
4,000
3,000
6,000
4,000
3,000
1,229
2,900
1,500
1,506
1,537
1,62%
1,630
1,652
1,790
1,830
1,830
1,834
1,919
2,009
2,159
2,303
1,959
1,624

00
17
00
00
00
00
00
00
56
00
00
43
82
00
00
53
00
00
00
86
71
57
55
70
39
97

In one power from Lord
King.

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$

[ Rep. No. U l . ]
u
t(

a
it

a
a
a
a
it
it

a
a
u
a
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7,176
2,231
7,249
7,252
7,390
7,494
7,561
22
59
67
104
139
170
207
246
275
314
336

1,701
1,S40
1,800
1,766
1,836
1,802
1,863
1,835
1,637
1,789
3,348
2,486
3,100
3,153
3,388
3,474

115

18
00
00
36
67
44
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€5
In one power from Lord
27
King.
74 |
94 1
88
50
80

3,661 27 1
3,647 09 1
$131,420 39 J

The whole to remain till October, 1833, and we request the required ac­
knowledgments for each of the parties. We further beg to enclose 37 pow­
ers of attorney of United States' three per cent, amounting to $482,731 93,
as per lis^ received from our friends Hope & Co., from Amsterdam, and for­
warded at their request. The certificates will go forward by next packet.
We are, sir,
Your most obedient servants,
BARING, BROTHERS & Co.
N. BIDDLE,

Esq.

President of the U. S. Bank, Philadelphia*

C—IS.
LONDON,

19 th December, 1832.

SIR: With reference to our respects of the 14th instant, we now beg
leave to enclose the certificates and orders therein referred to for $482,731 93
United States' three per cent, stock, in the names of Van Staphorst and others,
as per enclosed list. The powers of this went in our last, and you will be
pleased to correspond on the subject with our friends Messrs. Hope & Co.,
of Amsterdam, the object being to have the capital collected, and remain
with the institution, till October next, under the proposed conditions, and
the needful acknowledgment to them.
We debit the institution £13 Os. 6d., notarial enregistering of the certifi­
cates, &c. from Messrs. Hope & Co.
Since our second circular regarding the postponement of the United
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116

States' three pe$ cent, the following parcels have been sold, and forwarded
for encashment through other parties, viz.
#27,000 00, name of Davies Gilbert,
$18,009 24,
«
James Basin;
in consequence of which you will be pleased to pay the interest from 1st
January, three per cent, per annum on the day of encashment to our agent Mr.
T. W. Ward, who will apply for the same.
We remain, sir,
Your most obedient servants,
BARING, BROTHERS & Co.
N. BIDDLE,

Esq.,

President of the U. S. Bank,

Philadelphia,

C—19.
LONDON, 22tfDecember, 1832.
SIR: We confirm our respects of the 19th instant, and now beg leave to
enclose certificates of Un ited States' three per cent stock.
No. 101
#20,000 00^

123
109
1C5
115
133
136
146
226
81
100
14,052
14,063
14,062
14,056
14,068
14,050
14,067
99
98
53
65
84
88

120,48
37,977
16,816
2,000
5,400
12,000
7,035
316
11,400

00
52 |
03
00
00 ]
00
65
64
00

55,506 90 J
6,800
2,400
12,000
25,000
60,000
32,249
50,000
6,300
5,100
?5,800
23,182
66,666
4,000

In one power of attorney from R. N. De

Walleville and others, in favor of Louis de
00 IV
00 f J
f Jenner, whose power of substitution will very
shortly be forwarded to you.
00 si
00
00
88
00
00
00
00
71
67
00j

8500,000 00
No, 2,705-7
2,708
2,709-10
2,711
2,714

$15,000
4,000
6,000
1,144
4,000

00'
00
00 \14
00

In one power from N. T. Hill.

#30,144 14
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117

Principal to be collected, and to remain with the institution till October,
833, and we request the required acknowledgment for each;of the parties.
We have the honor to be, sir, *
Your most obedient servants,
BARING; BROTHERS & Co.
N.

BIDDEB,

Esq.

July 17, 1832.
GENTLEMEN: Being desirous of making some arrangements in regard to
the reimbursement of the three per cent, stocks of the United States, and
the time is too short to allow of prolonged correspondence, we have re­
quested Thomas Cadwalader, esquire, to confer with you on the subject.
Mr. Cadwalader has been long and still is a director of the bank, enjoying
its entire confidence, and is personally well known to you. I will there*
fore merely refer you to him for particulars; and remain,
Very respectfully, yours,
N. BIDDLE, President.
BANK UNITED STATES,

Messrs. BABING, BROTHERS & Co.,

London.
D—2.
BANE OP THE UNITED STATES,

October 15, 1832.
I have had the pleasure of receiving your esteemed favors
of the 22d and 30th of August and 6th ultimo. I have been placed, by
Mr. Cadwalader, in possession of the contract between him and y our house,
on the 22d of August last
The care and attention which you have been good enough to exhibit on
this occasion, furnish a new evidence of the zeal to promote the interest of
the bank which has uniformly characterized your house, and which has al­
ways been fully appreciated.
As you remark in your letter of the 30th of August, that you wish to
have the accounts disposed of as the bank may deem expedient, I take the
earliest opportunity of inviting your attention to one part of the arrange­
ment, with which it will be impracticable for the bank to comply.
When the institution was chartered, at the close of the last war, the Go
vernment had a large debt which it proposed to pay or to purchase up out of
the surplus revenue; and in order to prevent any competition in these pur­
chases,. the charter expressly declares that the bank " shall not be at liberty to
purchase any public debt whatsoever." The object of this provision would cer­
tainly not be counteracted by the present operation, since the Government has
actually advertised the payment of the stock, which is thus, in fact, no longer
an object of purchase by the sinking fund. This circumstance, it probably
was, which induced Mr. Cadwalader to regard the purchase of public debt,
so situated, as not conflicting with the provisions of the charter. When,
however, the stock was purchased in August and September last, it was still
a subsisting debt. One third of it will so continue until the first of January
GENTLEMEN:

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[ Rep. No. 121. ]

next, and even were the case less clear than it seems, the institution is, both
from inclination ^nd duty, disposed to give the most rigorous construction
to its own powers. I am under the necessity, therefore, of apprising you
that the bank cannot consider, as purchased on its account, the three percent
stock reported by you m your favors of the 30th of August and 6th ultimo,
amounting to 851,474,827 33. And I have now to propose for your consi­
deration the following substitute for that arrangement, which will, I trust,
be mutually agreeable to both parties.
1st. It will be necessary to transmit, without delay, the whole of the cer­
tificates, with powers of reimbursement, so that, in the first instance, the
bank may receive payment for the owners. Without Buch payment, the
bank is not in actual possession of the funds, which will not be passed to its
credit until paid to the stockholders. This seems to be of immediate urgen­
cy, and I therefore request your immediate attention to it.
2d. When the stock is thus reimbursed to the stockholders, the portion
which they have consented to postpone will be passed to their credit on the
books of the bank, and continue to bear an interest of three per cent, per
annum, payable quarterly, until the 1st of October, next, when the principal
will be reimbursed. If it be necessary, on the delivery to you of the certi­
ficates with powers of reimbursement, to substitute some other certificate
on your part, as was done in the case of the Louisiana debt by you, you are
hereby authorized to give to the parties a certificate for an amount equal to
what they respectively surrender to you.
3d. The portion purchased by you will, in like manner, go to your credit
when paid by the Government. At that time, it will be for you to deter­
mine whether it shall continue to draw an interest of four per cent, (if that
be the rate,) payable quarterly, or whether you would desire immediate pay­
ment. If your arrangements with others make it necessary or expedient for
you to continue the loan to the bank for that period, we shall, with great
cheerfulness, acquiesce in your views. If, however, it should be as consis­
tent with your interest to receive reimbursement, the bank will be ready and
willing to make it immediately. I mention this because it may perhaps be
convenient for you to provide funds in New Orleans for the instalments of
the loan to the Union Bank; in which event, j'ou may consider the whole
amount of your purchases of three per cents., or any portion of it, as imme­
diately applicable to that object.
The wish to postpone the payment of some portion of the fifteen millions,
reimbursable between the 1st of October and the 1st of January, arose from
the appearance of the cholera, which threatened to throw the business of the
country into great confusion, and imposed on the bank the duty of keeping
itself in an attitude of great strength, so as to interpose, if necessary, toNre­
lieve the community. The calamity having passed with less injury to the
mercantile classes than was anticipated, the Hank will not be called upon
for any extraordinary effort, and would be content to pay at once the whole
amount now in your hands. This would have the further recommendation
that it would relieve you from the payment of interest on the balance, which
s probably equal to your purchases.
In either event, whether you wish to take immediate reimbursement, or
continue the loan, it is presumed that the terms of the purchases will, under
this change of the arrangement, be favorable to your interest, which we are
always anxious to promote. Should it, however, happen that any pecuniary.
^losohall be sustained by you in consequence of these purchases, the bank
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119

will, of course, make an ample indemnity for it. The commission stipu­
lated upon the whole sum will not be in any degree affected by this change,
but will continue as originally determined between Mr. Cadwalader and
yourselves. You will readily believe that nothing but an imperious sense
of duty would induce the institution to propose these «hanges in the arrange­
ment, and we must rely on your habitual courtesy to excuse any additional
trouble which they may occasion.
With great respect, yours,
N. BIDDLE, President.
Messrs. BARING, BROTHERS & Co., London*

D—3.
[Annexed to the duplicate of the above letter.]
BANK OP THE UNITED STATES,

October 19, 1832.
The above is a copy of my respects of the 15th instant,
since which I have had the pleasure of receiving, this morning, your favor '
of the 14th ultimo.
To what I had the honor of writing on the 15th instant, the only addition
which it seems necessary to make, is this: The bank, in order to close the
account with the Government, is anxious to obtain the certificates. It is,
however, possible that some of the holders who have agreed to the postpone­
ment, may prefer retaining their certificates until the period of final reim­
bursement. The bank is very unwilling to give, either to these stockhold­
ers or to yourselves, any unnecessary trouble; and should you find any
reluctance on this score, you will please not to urge it, but leave the certifi­
cates in the hands of the stockholders, and we will endeavor to accomplish
the object of the bank without possession of the certificates. Those for the
stock purchased by yourselves, we shall be happy to receive by an early op­
portunity.
With great respect, yours,
N. BIDDLfi, President.
GENTLEMEN:

Messrs. BARING, BROTHERS & Co., London.

BANK UNITED STATES, October 31, 1832.
GENTLEMEN: My last respects were of the 19th instant: since then we
have understood that the Treasury Department is desirous of closing the
accounts of the foreign holders of three per cents., a circumstance which
increases our own anxiety to receive the certificates without delay, and in­
duces me to request that you will have the goodness to give every facility
to the transmission of them.
In regard to those purchased by yourselves, there can, we presume, be
no difficulty; and as to those stockholders with whom you have agreed to
postpone the payments, you will find, we trust, ho indisposition to make
the arrangement, suggested in my letter of the 15th instant, for the delivery
of their certificates. Should, however, any difficuly occur, it would be
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130

[ Rep. No. 191. ]

agreeable to the bank if you could obviate it, either by causing the certifi­
cates to be sent to the bank for immediate reimbursement, or, if necessary,
by purchasing the certificates on your own account, in the same manner as
was done with those previously purchased, and taking your reimbursement
in the mode most agreeable to yourselves. The whole subject is committed
to your good judgment* with the respects of
Your obedient servant,
N. BIDDLE, President
Messrs. BASING, BROTHERS & CO.,
<
London,
D—5.
BANK OF THE UNITED STATES,

Jaunary 15, 1833.
GENTLEMEN: Since my last respects of the 31st of October, we have
waited with much interest to learn the progress wh'ch you had been able
to make in carrying into execution the request contained in it. Of this we
have been duly informed by your favors of the 6th, 14th, 22d, and 29lh of
November last, and by the personal communications of Mr. Ward, the
agent of your house.
The course which you have pursued in respect to the whole negotiation
is entirely satisfactory in every respect,, and justifies all our anticipations
from the zeal and judgment habitually displayed by you in all the concerns
confided to you by the bank. It remains for us only to hope that you may
be able to close the arrangement by transmitting the certificates at an early
day.
With great respect, yours,
N . BIDDLE, President
Messrs. BARING, BROTHERS & CO.,
London.

E—l.
BANK OF THE UNITED STATES,,

January 14,1833.
Herewith you will please find a list of those holders of
United States' three per cent, stock, who have consented to postpone the
receipt of the principal thereof until the 1st of October next, the bank pay­
ing the interest thereon quarterly until that time, agreeably to the terms of
your circular of the 14th November. The agents of the holders of part of
the amount separated in the list, and amounting to #672,465 27, have al­
ready received the interest upon one-third of this sum. The balance of in­
terest due the 1st instant on the whole sum deferred, amounting, as per ac­
companying list, to #2,376,481 45, is therefore #16,142 45, the equiva­
lent of which* I now remit in the enclosed bill on yourselves, No. 3,332,
for i?3,332 3s. 2d, sterling, exchange being nine per cent.
The certificates of John Caspar Shum, amounting to #18,308 58, and of
Edward C. Hootoh amounting to #2,800, are at hand, the principal re­
ceived, and the amounts passed to their respective credits, as per enclosed
GENTLEMEN:

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[ Rep. No. 181. ]

121

acknowledgments. The several certificates as they are received will be
credited, in like manner, to the respective holders, who will be duly ad­
vised, separately*
I am, very respectfully,
Your obedient servant,
S. JAUDON, Cavkier.
Messrs. BARING, BROTHERS &. Co.,

London,
E—2.
Extract of a letter, dated
BANK UNITED STATES,

January 14, 1833.
We have also received from Thomas W. Ward, esquire, various certifi­
cates of United States' funded three per cent stock, with power to receive
the principal, and remit the same to you, per appoint; and have received the
following sums for those powers at hand, to which we have added the in­
terest due on the one-third reimbursable on the 1st instant in our hands.
To this list we have also added the certificates in the name of Henry J. and
Philip Collins, whose names we remark do not appear on the postponed list
as intimated in your letter of the 29th of November.
Received on account of the following persons:
- $15,119 07
Nathaniel Cosens
#20,000
S. C. Jervoice
50
Interest
20,050 00
44,437 21
Anne Rushout
Interest
*
208 96
44,646 17
30,477 55
General J. Ramsay 76 19
Interest
> 30,553 74
- 299,594 05
James Ewing
9,600 00
Van Staphorst et al.
34,581 97
'Hendrickson et al. •
23,800 00
.
G. Nutges et al.
4,400
Rev. J. Phillips
11
Interest
•
4,411 00
Henry J. and Philip Collins
10,000 84
25 00
Interest
10,025 84
•

m

.

w.

Making
$497,381 84
Which, at the exchange of nine per cent, you will please receive in the enclosed bill on yourselves, No. 3,338, for dB102,670 11*. 3d. sterling.
I am, very respectfully, &c
S. JAUDON, Cashier.
Messrs. BARING, BROTHERS & Co.,

London,
16

122

[ Rep. No. 121. ]

/

E—3.
BANK UNITED STATES,

January 22, 1833.
I refer to the annexed copy of my respects of the 14th in­
stant, and have this day received through Thomas W. Ward, esq., powers
for the receipt of the following sums of United States' three per cent, stock,
viz.
Rev. Sir Samuel Clarke Jervoice
{866,037 35
Honorable Anne Rushout 39,14722
Henry Bland and R. Smithson
51,529 53
Gaspard de la Rive Bossier
21,000 00
Gerard Nutges et al.
7,400 00
Do.
.
.
.
.
12,000 00 •
Do.
8,000 00
Jacob C. Martin 1,100 00
Johannes H. A. S. Van Lenschoten
.
.
.
17,000 00
Baron Jacob A. T. Van Amerigan
.
.
.
5,800 00
Ann P. Upham
10,000 00
John H. Tutton 27,400 00
Anne Rushout
5,000 00
Geret Nutges et al.
8,700 00
GENTLEMEN:

Together amounting to

.

.

.

- #280,114 10

The equivalent of which you will please find in the enclosed bill on your­
selves for £57,S21 14$. 4d. sterling, exchange being nine per cent.
I am, very respectfully,
Your obedient servant,
S. JAUDON, Cashier.
Messrs. BARING, BROTHERS & Co.,

London,
E—4.
BANK OP THE UNITED STATES,

January 31, 1 S33.
I had this pleasure on the 23d instant, and am since in re­
ceipt of your esteemed favor, dated the 6th ultimo, covering various certi­
ficates of United States' three per cent, stock for remittance, per appoint.
I have received on account of Francis Squire #10,11109
Do.
do.
Robert and J. Ansell 6,500 00
GENTLEMEN:

Making together
- $16,611 09
For which you will please find bill of the bank on yourselves, No. 3,361, for
£3,248 17*. \\d. sterling, exchange being nine per cent
I have received from Thomas W. Ward certificates and powers for the
following names:
Andrew Christain Oortman
$11,200 00
G. Nutges et al.
147,766 66
N. J. R. Van Staphorst
3,600 00
$ . Hanson et al. .
10,000 00
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[ Rep. No. 121. ]
J. C. W. Vanschloten
G. J. Jonchew et al.
Andrew Service and John Ferguson
John Gray
.
Christopher Wilson
John Abraham Droop
Jane Haneage
-

-

.
-

-

-

123
- '
-

-

#17,000
17,000
10,000
5,500
50,000
2,000
7,406

00
00
00
00
00
00
96

Amounting to
#281,473 62
For which you will please find enclosed our bill on yourselves, No. 3,362,
for £5S,102 7s. sterling.
In your letter to the President of the 6th ultimo, there were various cer­
tificates of three per cents, of parties who wish their capital to remain with
the bank, the principal of which has been received and placed to their re­
spective credits, as follows, viz.
Lady Mary Cunyngham
- v .
#21,494 65
Richard Robus Hall
8,900 00
James Goselin
. - ' 3,535 66
Henry £. Montagu 25,000 00
John Lepine
8,000 00
William Meeking - . 7,800 00
And we also send separate acknowledgments for each.
I am, very respectfully,
Your obedient servant,
S. JAUDON, Cashier.
Messrs. BARING, BROTHERS & Co.,

London.
E—5.
Extracts from a letter, dated
BANK OP THE UNITED STATES,

February 7, 1833.
Confirming my respects of the 31st ult, a copy of which
precedes, 1 now beg leave to acknowledge the receipt of your esteemed fa­
vors, dated 8th, 14th, (duplicate) 19th, and 22d of December, and also those
addressed to the President, of the same date; and we do the needful with
their several enclosures.
I have received reimbursement of the following three per cents.
On account of Dorothy Bayley and R. Ayrey,
- #15,532 27
And added thereto 37 days' interest at three per cent, per annum,
47 89
GENTLEMEN:

Making

#15,580 16

- For which please find our bill No. 3,364, for iE3,216 1 9 sterling.
Received on account of J. S. R. Necker,
-t •
- #5,000 00
Thirty-seven days' interest,
15 42
#5,015 42
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134

[ Rep. No. 181. ]

For which please find our bill, No. 3,369, for £1,035 5 10 sterling.
* * * * I have also received the principal of the three per cents, in
the nameof Nathaniel T. Still, amounting to 030,144 14, which is placed to
his credit, as per enclosed acknowledgment We wait for powers from R.
N. De Watteville and others.
1 have received from Thomas W. Ward, esq. power and certificates for
0280,000, in the name of James Ewing, of United States' three per cents.rand
enclose, as the equivalent, our bill No. 3,367, for J678,440 7 0. Exchange on
all the above at nine per cent.
'.
I am, very respectfully,
Your obedient servant,
S. JAUDON, Cashier.
Messrs. BARING, BROTHERS & Co., London.

BANK OP THE UNITED STATES,

July 18, 1832.
DEAR SIR: The committee of exchange who were authorized by the
board, to make arrangements for the payment of the three per cents, of the Uni­
ted States, are desirous of negotiating with the holders of some of these stocks,
who reside in Europe; and as their distance, and the early, day at which the
stocks are reimbursable, will not allow of a prolonged correspondence with
them, the committee have requested you to negotiate with them in person.
For this purpose, you will proceed to Europe, and execute the enclosed in­
structions.
For your services, the committee will reimburse the personal expenses
of yourself and any member of your family whom the state of your health
may render it agreeable to have with you, and allow the sum of five thou­
sand dollars as a compensation.
Very respectfully,
Yours,
N. BIDDLE, President.
THOMAS CADWALADER, Esq.

Philadelphia.

BANK OF THE UNITED STATES,

[Private.']

July 18, 1832.

DEAR SIR: In addition to what 1 have written to you under this dat«
I wish to add a few remarks:
1st. You are authorized to stipulate for the payment of the principal oi
the postponed stock, either in the United States or, in Amsterdam, at pir.
The first would be preferable; but if you find the authority to repay at Am­
sterdam can be usefully employed in the course of the negotiation, you will
exercise i t
2d. Although we calculate on the continuation of the loan at three per cent,
till, as the object is one of public interest, the bank would prefer making
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125

a temporary sacrifice, rather than fail in the accomplishment of the object,
and, accordingly, you are authorized to go as high as an interest of four per
cent, or even 42, including all commissions which you may be obliged to
pay.
3d. In regard to these commissions, if it is thought advisable to use the
intervention of any mercantile house, we would naturally expect the employ­
ment of our old and valued friends Messrs. Baring,Brothers & Co. In that
event, we should willingly pay a commission of a quarter per cent, or, if ne­
cessary, even half per cent on the amount of the loan deferred.
These ample limits are the evidences rather of our entire confidence in
you, than of what we expect it may be necessary to give; and, accordingly,
while we wish that the arrangement should at all events be made, we rely
on your good judgment to make it on the most economical terms.
It remains only to wish you a pleasant voyage; and to assure you that I
am,
Very truly,
Yours,
N. BIDDLE, President.
THOMAS CADWALADSR,

£sq.

Philadelphia*

TREASURY DEPARTMENT,

22d February, 1833.
SIR: In compliance with the request contained in your letter of the 19th
instant, I have the honor to transmit a statement, by the Treasurer, show­
ing the state of his account with the Bank of the United States and its offi­
ces on the 1st of October, and first of January last; and a statement by
the Register, showing the amount of public debt paid, or payable, since
October, 1831; the amount of the same which stood on the books of the
loan offices at Boston, New York, Philadelphia, and Baltimore, and the
amount of public revenue received at those places since that time.
I have the honor to be,
Very respectfully,
Your obedient servant,
LOUIS McLANE,
Secretary of the Treasury.
Hon.

G. C.

VERPLANCK,

Ch. Com. of Ways and Means,
Ho. Reps. U. S.

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126

STATEMENT showing the situation of the Treasurer's account with
the Bank of the United States on the 1st of October, 1832, and the
1st of January, 1833, including the transactions of those days.
Amount on deposite
at the credit of the
Treasurer, in the
bank and its branch­
es at the times stat­
ed.

First October, 1S32,
First January, 1833,

Amount for which Net amount sub­
warrants had is­ ject to draft, after
sued, but which deducting the war­
had not been pre­ rants so outstand­
sented atbankand ing.
paid.

$3,715,390 14
2,157,724 40

#492,598 00
1,427,506 60

$3,222,792 14
730,217 80

TREASURY OP THE UNITED STATES,

February 21, 1833.
JOHN CAMPBELL, Treasurer U. S.
STATEMENT
of the Public Debt paid since the 1st October, 1831,
and of the amount payable at the Loan Offices, Boston, New York,
Philadelphia, and Baltimore, and also, of the amount of revenue
collected and paid at each of those places, during the periods which
elapsed between each payment of the debt,
Time when paya­ Amount of debt
payable.
ble, per public
notice.

Amount payable at

Amount of revenue collect­
ed and paid in.

81
90
49
23

From Oct. 1 to Dec. 31,1831
$718,000 00
4,184,182 10
861,787 17
253,573 11

1,739,524 01

Boston
626,741 35
New York 83,809 26
Philadel'a 420,186 36
Baltimore 57,988 35

From Jan. 1 to Mar. 31,1832
789,000 00
3,864,850 02
853,929 08
354,228 55

1st October, 1832

8,634,988 37

Boston
810,157
N.York 3,482,531
Philadel. 3,227*469
Baltimore 282,715

39
16
18
72

From April 1 to Sep. 30,1832
2,220,500 00
9,050,471 23
1,799,444 09
472,015 49

1st January, 1833

6,544,902 42

Boston
861,267
N. York 2,186,729
Pennsyl. 2,813,654
Baltimore 235,111

From Oct. 1 to Dec. 31,1832*
716,500 00
57
4,022,348 08
62
848,561 70
74 I
305,466 78
07

1st January, 1832

$5,908,809 22

1st April, 1832 - i

%
222,828,224 02 i

Boston
$901,074
N. York 1,677,598
Philadel. 2,652,332
Baltimore 139,381

$20,458,748 40

$31,314,857 40

TREASURY DEPARTMENT,

Register's Office, February 22,1833.
T. L. SMITH, Register.
I

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BANK OP THE UNITED STATES,

February 25, 1833.
SIR: I had the honor of receiving, on Saturday evening, the 23d instant,
your letter of the 21st instant, postmarked the 23d instant, and have this
morning directed the transmission of the correspondence to which it relates.
Enclosed you have the correspondence with the office at Lexington, and a
statement of the specie sent there; that with the other offices which you have
named, could not be in readiness for this mail, but will be transmitted to­
morrow.
I have the honor to be,
Very respectfully, yours,
N. BIDDLE, President.
Honorable G. C. VERFLANCK, '
Chairman Committee of Ways and Means,
Washington, D. C.
OFFICE BANK UNITED STATES,

^ Lexington, •August 8, 1832.
SIR: Your letters of the 31st ultimo are to hand] yesterday: the instruc­
tions therein contained we will carry into execution forthwith. As some of
the customers of this office have no accommodations other than the conve­
nience of having their drafts cashed for proceeds sales of stock and pro­
duce, may we not be permitted to continue such facilities to a limited amount?
We will explain and do all in our power to render the execution of this
order as little objectionable to the country as we can: with the reasonable
part of the community we have no doubt of succeeding. I wrote to you on
the 4th instant for information, which I presume is answered by these letters.
I am, sir, respectfully,
Your obedient servant,
JNO. TILFORD, Prest.
N. BIDDLE, Esq., Prest,
OFFICE BANK UNITED STATES,

Lexington, August 11, 1832.
SIR: Our friends here are of opinion that some explanation of the causes
which have made it necessary for the bank so materially to change its busi­
ness, should be given to the public through the proper channel.
It is indeed most unfortunate, but true it is, that every step taken by the
bank, although in the ordinary routine of its business, is at once charged by
its opponents (constituting a large and powerful party,) as having connection
with the politics of the day. The present partial suspension of its operations
is attributed, by the opponents of the bank, to a desire of influencing the
election in November, and may probably be the means of exciting much pre­
judice against the institution, unless counteracted by a plain statement of the
reasons*which have rendered such a step proper.
If you concur with me in opinion, an article on the subject could be pre­
pared and published here or in Philadelphia^ you may think most proper.
Very respectfully,
Your obedient servant,
JNO. TILFORD, Prest.
N. BIDDLE, Esq*, Prest.
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[Rep. No. 121. J
OFFICE BANE UNITED STATES,

\

Lexington, September 11,1832*
SIR: Enclosed you have a copy of a letter forwarded by me to J. Saul,
assistant cashier, New Orleans. The disposition, by organized concert, td
make a run for specie seems to be on the increase. Since the 28th May, we
have paid out about $23,000; and* in the last seven days, $6,200.
1 enclose you a copy of a resolution passed at a public meeting in Mont­
gomery county, which, together with an extract from the Kentucky Ga­
zette, sent you some days since, will explain the state of feeling now exist­
ing here, and which no doubt will be kept up by every possible means, for
political effect, for several weeks to come. We have been apprized of calls
that will be made for about #25,000, which we are looking for every hour;
and the application at the counter in small sums is almost constant Under
these circumstances, every thing within our power will be done to guard
against accident,
In addition to Mr. Saul, I have also written to the cashier at Natchez and
at St Louis to send me, without delay, 025,000 each, if their situation will
justify it; and have taken means to have from Louisville, forthwith, the
amount which Mr. Shippen can spare me.
I ain, sir, very respectfully, &c.
JOS. TOWLER, Cashier.
J. COWPERTHWAIT, Esq., Acting Cashier,
« Resolved, That, as a party, we will throw no obstacle in the way of
the present bank winding up its concerns and bringing its affairs to an issue,
happily to both creditor and debtor; but, in case of an interference on the
part of the bank in our elections, we advise our friends, not only in this
State, but throughout the Union, to form associations for the purpose of
cashing all the United States' paper that may fall in their hands.9'
OFFICE BANK UNITED STATES,

Lexington, September 15, 1832.
SIR: An agent from the General Postoffice has been here with three
checks, drawn by <he Postoffice Department on this office, (in all about 0200)
and paid upon forged endorsements. He wished me to aid him in discover­
ing the perpetrators of the fraud, and I accordingly gave him all the assist­
ance in my power. He was instructed to return the checks, to be entered
to the credit of the department, which I was informed should be done so
soon as he returned them. Two of them were sent to me by Mr. Benson ,
the other by a house in Louisville. The entering of them to the credit of
the department is, I presume, consistent with the practice of the bank.
Very respectfully, &c.
JOS. TOWLER, Cashier,
Jos. COWPERTHWAIT, Esq.

JLcting Cashier.

.

BANK UNITED STATES, Sept, 18,

1832.

SIR: Your letter of the 11th inst. to the late acting cashier, has been re­
ceived, and we have, in consequence, determined to despatch, by the mail
%

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to-morrow, two of our clerks, Samuel Mason, jr. and Edward Whelen,with
fifty thousand dollars United States' gold coin for your office. This sum, we
trust, will put you quite at your ease, at least until you can receive a supply of
dollars from New Orleans. In addition to the other offices to which you
have written for aid, that at Cincinnati may be resorted to. My only ap­
prehension is, that the river may be so low as to retard, very much, remit­
tances from St. Louis and New Orleans. In that case, you had better4write
that further assistance from here is desirable, and it shall be sent. The best
mode for checking any demand upon you for specie is, to pay it out to all
applicants with the utmost readiness and cheerfulness, and if any fears
should have been excited by such newspaper paragraphs as you allude to,
they will soon be quieted. It will be prudent, at the same time, so to shape
the business of the office, as to prevent, as far as possible, the accumulation
of a heavy sum in unfriendly hands.
You will, of course, not use the gold coins unless it becomes absolutely
necessary.
I am, &c,
S. JAUDON, Cashier.
9
JOSEPH TOWLEH, Cash'r Off. B k U, S. at Lexington

■•«'•■•

OFFICE BANK UNITED STATES,

Lexington, September 25, 1832.
SIB: Yours of the 18th is received. Since mine of the 11th instant, I
have received from Mr. Shippen, in specie, 810,000, and expect from him
an equal amount. Advice has just reached me, that 830,000 has been re­
ceived by Mr. Shippen, from St. Louis, for this office. Mr. Benson also
writes me {hat $25 or 50,000 can be forwarded from that office at any mo­
ment At present, I am under the impression there is no necessity for any
further supply, though it is probable, under the present state of excitement,
(altogether for political purposes,) there may be a continued demand for sev­
eral weeks.
The suggestions you make have been acted on, and specie paid out with
the utmost cheerfulness. No alarm has been felt, but every precaution
taken to be ready for any demand that could possibly be made.
I am, sir, very respectfully, &e.
JOS. TOWLER, Cashier.
S. JAUDON, Esq., Cashier.

BANK UNITED STATES,

September 21, 1832.
SIR: In order still further to strengthen you in specie, we have determined
to despatch by the mail to-morrow, a further sum of #60,000, in American
gold coin. This, with the $50,000 sent you a few days since, must,
we think, place you beyond the reach of alarm. It will be advisable for
you to exchange a part of the gold with the office at Louisville or Cincin­
nati for silver. Independently ol the greater value of the gold, it is an ob­
ject to retain an article which we can transport so readily from place to
17
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[ Rep. No. 121. ]

place. With a view to decreasing the demand upon you, it may be weir to
refuse to receive, on deposite, the notes of any other office than your own,
as well as the notes of all distant State banks. You may also find it useful
to absorb your own issues by checking freely upon this bank and the offi­
ces at New Orleans and New York; thus transferring the demand to our
strongest points. Indeed, as a general practice, I was about to write to
you, we should, in reference to checks, think it better for you to furnish
them at all times, at a small premium, rather than oblige those who wish to
remit to the Atlantic cities to transport bank notes. The latter become as
direct a charge upon us as the former; and, by the system of checks, the pub­
lic is much better accommodated, the profits of the office are increased, and
the risk of returning your notes to you avoided.
I am, &c.
S. JAUDON, Cashier.
Jos. TOWLER,

Esq.,

Cashier Off. B'k U. S. Lexington.
OFFICE BANK UNITED STATES,

September 28, 1832.
SIR: Yours of the 21st is received. We feel ourselves, to-day, en­
tirely beyond the reach of any alarm, as we shall have $110,000 independ­
ently of the amount this day received from Philadelphia. We have always
received the notes of the Bank of the United States and all its branches on
deposite,and paid the specie for them as our own; and, from the present as­
pect of things, the President concurs with me in the opinion that it would
be injurious to make any change in our usual practice, which, however,.
will be done in conformity to your suggestions, whenever circumstances
may require it as a matter of protection.
I have refrained from checking for large amounts in pursuance to previousinstructions, and, for some time past, have not given any, but for quite small
sums. The course you now recommend, of checking freely, will give great
facility to our operations, and much satisfaction to our customers.
The commercial class of the community, including also all our depositors,
have nothing to do with the demand for specie. The largest demand yet
made, was on the day before yesterday, by a man from Richmond, (about 30.
miles from here,) of #2,640. He had, on a slip of paper, about 25 different
sums set down from #30 to 8300, the aggregate of which was the amount he
drew, showing plainly that it was a neighborhood collection.
We shall, this evening, remove our cash to the new vault, and commence
operations in the new banking room in the morning. The securing our
money in a vault again, will relieve me from an anxiety and responsibility
which I hope never to incur again.
I am, very respectfully,
JOS. TOWLER, Cashier.
S. JAUDON, Esq., Cashier.
BANK OF THE UNITED STATES,

{Confidential]
October 3, 1832.
SIR: I am pleased to find, by your letter of the 25th ultimo, that you
then felt fully prepared for any demand that could probably be made upor*
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your vaults. The sums on their way to you will, therefore, place you
an attitude of great strength. Taking your own specie at #70,000, and add­
ing $20,000 from Lcuisville, $30,000 from St. Louis, $100,000 from New
Orleans, to which'sum I have directed Mr. Saul to increase the shipment, and
the $110,000 sent from here in gold, you will have an aggregate of $330,000.
Another $100,000 could be supplied, in case of emergency, by Louisville
and Cincinnati. No combination among the enemies of the bank is likely
to be formed which can command your notes to such an amount. It is not,
however, by any means certain that the blow is levelled against yo-jr office
only. Indeed we have reason to believe tha*t a scheme is on foot for discred­
iting the bank, if possible, by concentrating demands at its most unguarded
point. Your office, therefore, has probably only been named, first, under
an idea that it was the weakest: as soon, therefore, as it is found "that you
are amply prepared, some other point will be selected. Your office, then,
and those at Louisville, St Louis, and Cincinnati, must stand ready to as­
sist and support each other at any moment. Your united strength is so
great that no combination need be feared; and we do not think it at all ne­
cessary to increase any further your specie funds. It will; however, be
prudent to place the $110,000 in gold at Louisville, as being the most cen­
tral point, and that from which it can most readily be despatched by land or
water. You will please, therefore, exchange the whole of it with Mr. Shippen, as soon as you prudently can, for silver. I have not named the office
at Nashville, supposing it not probable that it can require support; but if it
should, it will of course be given by you. A heavy demand made at' one
office will almost render it certain that another cannot be soon made else­
where*
)
I am, &c.
S. JAUDON, Cashier.
P. S. The checks of the Pbstoffice Department, which were paid by you
upon forged endorsements, as stated in your'letter of 15th ultimo, were very
properly credited to the department. The loss, if the bank is in fault, must
fall upon ourselves.
S. J., Cashier.
Jos. TOWLER,

Esq.,

Cashier Office U. S. B.,

Lexington.

OFFICE BANK UNITED STATES,

[Private.]

Lexington, October 12, 1832.

SIR: Yours of the 3d instant is received. We have now on hand in specie
(including$10,000 from Louisville, 830,000 from St. Louis,) $104,000, and
expect to receive in a few days from Natchez $25,000, making in all $129,000.
This will make our vault amply strong enough to meet any demand that
can be made here. As soon as I am advised of the arrival of the specie from
Natchez at Louisville, I shall send down for it, and take that opportunity
to remit the gold, deemingyit unnecessary, under,present prospect?, to make
any exchange.with that office for silver; and, upon the arrival of the amount
from New Orleans, I shall request Mr. Shippen to retain that also at Louis-

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[ Rep. No. 121. ]

ville. I am of opinion that $100,000 will be entirely sufficient to retain
here; and that the safety of all will be best insured by the deposite at Lou­
isville.
The demand at the counter is decreasing, and I hope will continue to do
so. Only $3,400 have been sunk since the 1st instant. Our opponents have
found that they could not alarm the commercial community, nor, indeed,
the wealthy of any class; and even their expected coup de grace of the Harrodsburgh Convention has been a nullity; nor do I apprehend any revived
effect from the efforts which are now making to give their address an exten­
sive circulation throughout the State.
We have it from high authority, (from a gentleman who said " he knew
Ihe fact,") that the demand was got up on our office in pursuance of instruc­
tions from Washington.
A circumstance took place here this week which shows, in a strong light,
the bias of partisan feelings. Our practice has always been, when counter­
feit notes on the Bank United States and branches are offered at the counter,
to cross them, or to stamp them ie counterfeit" A suit was brought against
one of our officers to recover damages on a note thus crossed. The magis­
trate (a Jackson man) gave judgment for the amount of the note, $5; an
appeal was taken to the county court, and, after an examination and discus­
sion, the judgment was affirmed by two magistrates, (both Jackson men.)
The other magistrate on the bench, disagreeing to the judgment, very prop­
erly observing that he could not consent to give damages where it was obvi­
ous no damage had been sustained. The judgment was final, and of course
we must pay the money. The practice of crossing them will, however, be
continued, unless a different course is suggested by you; and should another
suit be instituted to recover damages for such " a serious injury," the trial
shall be had before men whose judgments and perceptions of right and wrong
are not entirely merged in party feeling.
I am, very respectfully, &c.
JOS. TOWLER, Cashier.
S. JAUDON, Esq., Cashier.

OFFICE BANK UNITED STATES,

Lexington, October 27, 1832.
SIR: Will you please forward a copy of the instructions to the President
♦ of this office, together with the resolutions of the mother board, in relation
to the proposed arrangement with Mr. R. Wickliffe as to the lands mort­
gaged by Messrs. Smith and Buchannan? The originals were handed to Mr.
Wickliffe, and mislaid.
Messrs. J. W. Hunt and others have received a letter from Mr. White of
your board, advising them that a claim made for deficiencies, paid by them
on subscription received as commissioners in 1816.. ha.d been allowed, and
have called on me in relation thereto. I have not been advised on this sub­
ject.
I am, very respectfully, &c.
JOS. TOWLER, Cashier.
S. JAUDON, Esq., Cashier.

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133

BANK OF THE UNITED STATES,

November 7, 1832,
SIR: Your favor of the 27th ultimo is received; and I now forward an­
other copy of the resolution adopted by our board, on the 1st of June, in
relation to an arrangement with Mr. Wickliffe. The letter to your Presi­
dent, which transmitted the former copyt merely requested that no further
delay should take place in settling this business, if it could be avoided.
I send, also, herewith, a copy of a resolution, passed on the 12th ultimo,
authorizing the payment of the claim of the commissioners for receiving
subscriptions to the stock of this bank at Lexington, which you will please
make, and charge the amount to the bank.
Your " private" favors of the 12th and 24th were duly received. Your
position is now too strong to cause the least apprehension; and you will, in
Mr. Shippen, at all times, find a disposition to give prompt and efficient
support.
The decision in regard to the counterfeit note crossed at your office,
was, indeed, most extraordinary. If it could be sustained, the result would
be, that we must give up a practice adopted with a view to protect the pub­
lic from fraud, or make all counterfeit notes as available as the genuine.
The subject has been ta^n into consideration, but no decision has yet been
made. In the mean time, continue the former practice; the moral sense
of the community, we think, must be too much shocked by such a decision
as your county court gave, to suffer it to stand. Is there no way in which
the question, if again raised, could be brought before the United States'
Court?
I am, &c.
S. JAUDON, Cashier.
JOSEPH TOWLER,

Esq.

Cashier Office Bank U. States, Lexington*
OFFICE BANK UNITED STATES,

Lexington, November 20, 1832.
SIR: Your's of the 7th instant is received. On consultation,' it is thought
advisable to take no farther steps as to the decision on the subject of crossing
counterfeit notes. If a second-case should be instituted,, I have every hope
that the same court will give a different decision;/and, if necessary, an
agreed case can be submitted to our State Superior Courts, if not to the Fe­
deral Court, on a note of larger amount, say #50 or #100.
Under the present state of affairs, I cannot but deem it matter of much
gratification in viewing the situation of this office, both as to its debt and
circulation. Our aggregate debt, active and inactive, is now #330,000 less
than it was this day twelve months, and our circulation is considerably re(iuced. Our board of directors have consulted the interest and safety of
the institution, and have only extended facilities for small loans, and at
short dates, to sustain business men, and have kept a steady eye to the great
point of reducing all large discounts, and requiring additional security—a
policy which I .have no doubt will meet with entire approbation.
Very respectfully, &c.
JOS. TOWLER, Cashier.
S. JAUDON, Esq., Cashier.
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[ Bep. No. 121. ]
OFFICE BANK UNITED STATES,

[Private.]
Lexington, September 14, 1832.
SIR: In conversation with some of the delegates who were at the Harrodsburg Convention, on Monday last, I learn that a lengthy and labored
address and resolutions were unanimously adopted; the object of which is,
to produce upon the public mind, that the institution is entirely insolvent,
and unable to redeem its notes.* The materials are chiefly taken from Clay­
ton's report. Our.demand for specie is now constant, and the drain from
$1,000 to 1,500 per day; and what further effect the above proceedings are
to have as to increasing the demand, time will sdon develope. A copy of
the proceedings at Harrodsburg shall be forwarded as soon as 1 can obtain it.
I am, sir, very respectfully,,
Your obedient servant,
JOS. TOWLER, Cashier.
N. BIDDLE, Esq., President.
BANK OF THE UNITED STATES,

September 29,1832.
DEAR SIR: The preparation for the payments tff the public debt on the
1st of next month, being completed, the board have taken the earliest oppor­
tunity of authorizing you to resume the purchase of domestic bills, founded
on the real business of the country, and not having more than four months
to run from the time of purchase. As the engagements of the bank for the
1st of January are still heavy, the board are not anxious, for the sake of the
bank, that you should extend your business; but have adopted this mea­
sure in the hope that it might be the means of averting any inconvenience
from your citizens for the want of the facilities hitherto afforded at this
season. You will also consider yourselves as authorized to draw checks on
the bank as heretofore.
Very repectfully, your's,
N. BIDDLE, President.
JOHN TILFORD, Esq.

President Off. D. $ D. Lexington,

Ky.

OFFICE BANK UNITED STATES,

Lexington, November 3, 1832.
SIR: I think it my duty to inform you that, within the last two days/ a
most shameful attempt has been made to induce the public to believe that
the officers of this branch were influenced by political considerations in
making loans. The directors made a statement to the public, a copy of
which I enclose, which I believe has been effectual to put down this slander.
Knowing, as I do, your anxious desire that the bank should keep entirely
aloof from any thing of a party kind, it affords me great pleasure to say that
your wishes on this subject have been most strictly adheired to. The at­
tack emanated from gentlemen whose standing in society s eemed to require
of us an answer; but for this, we should not have noticed them. This
branch, from its isolated situation, appears to have been the \ one in the west

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135

selected for political vengeance. The run for specie, in the last few weeks,
has beert equal to about fifty thousand dollars, and yet continues at the rate
of about one thousand dollars per day.
In no case, however, has this demand been made by the regular custom­
ers of the bank; but, in a community like this, where such heavy loss from
a depreciated currency has been severely felt, it is impossible to prevent the
alarm from extending widely, where attacks from the public press are daily
made to produce a conviction that the institution is insolvent.
We have, in ord«r to accommodate the publie, paid, specie for the note?
of the bank, and all its branches. The course of tilings in this country has
only had the effect of preventing this branch from doing as much good to
the country as they otherwise might have done, and curtailed'our semi­
annual dividend; for, instead of bills on the east being furnished as hereto­
fore, we have required the specie to be sent us from below. I trust we shall
soon have some quiet; OUT stump orators will have done, and the country
assume its usual business habits.
Respectfully, your obedient servant,
JNO. TILFORD, President. ,
N. BIDDLE, President,
From the Lexington Observer and Reporter.
To THE PUBLIC.—In answer to the statements of Mr. Wm. Thomas
fiuckner and David Thomas, as given in an extra issued from the office of
the Kentucky Gazette, the following statement of the facts upon which
their testimony is founded, is respectfully submitted:
Applications were made, as stated, by many individuals for large sums,
(of $1,000, and upwards,) which were rejected by the board;'but the appli.
cants were informed (Mr. David Thomas amongst the rest) that if smaller
sums were asked for, they could probably be had. At the next meeting of
the board, the application for $400 was made, as stated by Mr. Thomas,
and the amount obtained. This was also the case with many others, who
had reduced their notes to si*ms of from $250 to. #500.
The board of directors has consisted, for several years, of gentlemen of
both political p'arties; and, in acting upon applications for loans, nothing
has ever been required but that the parties should be known to them, or
else recommended to be not only good for the amount asked, but also punc­
tual in their engagements. Politics was no part of their business; they met
as directors of the bank, and as such discharged their duty to the bank and
*o the public.
The charge attempted to be made, is, that the board required that the poitics of the party applying should be known to them, and that if they be­
longed to the Jackson party, their applications were rejected. In this state
of the case, what proof can be offered to the public, of the utter falsity of
uch a charge? Certainly the best evidence is the testimony of those mem­
bers of the board who are themselves supporters of the present administra­
tion; and, under this impression, the following correspondence is offered to
the public, together with the corresponding statements of Mr. Robert J.
Ward, Mr. Joseph Brueu? and Mr. Benj. Taylor, who are known as sup­
porters of Gen. Jackson.

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[ Rep. No. 121. ]
NORTH MIDDLETOWN,

October 16,1832.

DEAR SIR: A gentleman, by the name of David Thomas, is making a
statement here in relation to a transaction he had with the bank at Lexing­
ton a few days since, which I took upon myself flatly to contradict. Tt is
this: that he applied, with good endorsers, well recommended, for $1,000
on his own account, and for the same amount for Lewis Wilson, equally
well endorsed and recommended, but failed to get any money, because the
recommendation omitted saying that they were Clay men; that he was inform.
ed by a gentleman, (perhaps Trumbo,) who had a note discounted the same
day, that no money could be had without such a recommendation, as it was
intended that no loans would be made to the Jackson party; that he returned
home and obtained such a recommendation for himself or Wilson, (or both,
I am not certain,) and that he again applied and obtained the money, and .
was requested by the bank to keep the matter a secret. This, in substance,
is the charge which is making a great noise here against the bank, and ope'.
rating very unfavorable to our prospects. Can you, consistent with your
duty, give me a history of this matter, in order that I can meet it
properly ?
Thomas's certificate has been taken by a Jackson man, and will, I ex­
pect, be published.
The mail is waiting. In great haste, respectfully your friend,
L. N. LINDSAY.
Major TILFORD.
LEXINGTON, October 18, 1832.

DEAR SIR: Yours of the 16th instant is received. In relation to the
statement made by Mr. Thomas, or any body else, that the board of direc­
tors of the office here, are influenced, in granting accommodations, by the
political character of the applicants, I can only give it an unqualified denial.
The board of directors is composed of gentlemen of both the leading politi­
cal parties, and all letters jn regard to loans are read before them; and I am
confident that every member of the board will bear testimony to the entire
impartiality which now, and at all times, has characterized its proceedings.
1 annex a statement in relation to this subject, which has been furnished
me by Mr. Joseph Bruen, a member of the board, and himself a Jackson
man.
Your's, respectfully,
JNO. TILFORD.
N. L. LINDSAY, Esq.

I concur fully in the foregoing statement of Maj. Tilford, in regard to the
impartiality which has always governed the board of directors of the Bank
of the United States in this city since I have been a member of the board.
JOS. BRUEN.
A copy—J. TOWLBR, Cashier.
The undersigned, members of the board of directors of the branch bank
located at Lexington, have seen a publication emanating from the pen of

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Mr. Wm. T. Buckner, of Bourbon county, so utterly at variance with truth,
that they consider it their duty to come forward and pronounce its charges
false in every respect The board have invariably consulted, as far as con­
sistent with the security of the bank, the great interests of the trading com­
munity, without regard to persons or political parties. The farmer, the
mechanic, the trader, and the merchant, the rich and the poor, have all par­
ticipated in the receipt of loans from the institution.
E. WARFIELD.
M. KENNEDY.
B. W. DUDLEY.
JOHN BRAND.
October 25, 1832.
F. DEWEES.
October 23,1832.
GENTLEMEN: I have, to my surprise, seen in the Kentucky Gazette
Extra, of this date, a publication charging the Branch Bank of the United
at this place with partiality and favoritism in the transaction of its business
with the country, for political purposes. I will therefore only remark, that
I have been conversant with the business and the general transactions of the
bank for several years past, having been in the habit of recommending to it
those who made application for accommodations from Fleming county, in
which I live, as well as for many individuals residing in the counties of Bath,
Nicholas, Mason, and Lewis; and I have no hesitation in declaring, so far as
my knowledge and observation has extended, that nothing like party po­
litics or political feeling has ever entered into the deliberations of the board
of directors; but, on the contrary, their transactions with the country have
been marked with liberality and the strictest impartiality; and the general
business of the institution has been conducted on broad and liberal princi­
ples, and in such a manner as has given general satisfaction to all parties.
I will add further, that there can be no doubt but the Jackson men them­
selves, of Fleming and the adjoining counties, (many of whom, alike with
others, have been liberally accommodated by the bank,) would, if necessary,
cheerfully come forward and bear honorable testimony to the impartial and
liberal course of the bank in the transaction of its business with them. Indeed,
it is a matter of general notoriety, in my section of country, that the bank.
has conducted its business with strict impartiality.
Respectfully,
JAMES ALEXANDER,
of thefirmof Alexander $ Stockton.
LEXINGTON,

To the PRESIDENT AND DIRECTORS

of the Br. Bank oj the U. States in Lexington.
GEORGETOWN, October 24, 1832.

DEAR SIR: Your favor of to-day was handed me a few moments since,
informing me that charges had been made against the United States' Branch
Bank in Lexington, of partiality in making their loans.
I have been a director during the present year, and have no hesitation in
declaring that I nave never known an instance where the political opinions
of the applicant had the remotest influence upon the directory in granting or
refusing a loan.
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[ Rep. No. 121. ]

On the contrary, I have believed, and always so stated, that the board of
directors were entirely impartial; and that loans were invariably made or
refused entirely with reference to the responsibility of the parties applying,
and the situation of the bank at the time, and without any reference what­
ever to the political opinions of the applicants.
Very respectfully,
* Your most obedient servant,
ROBERT J. WARD.
J. TILPORP, Esq.

FAYETTE COUNTY, October 25, 1332.

DEAR SIR:. Absence from Home accounts for the delay in answering your
note of yesterday.
The imputation attempted'to be cast on the directors of the branch of the
Bank of the United States at Lexington, of partiality in their loans, grow­
ing out of plitical preferences, so far as I know or believe^ is utterly without
foundation.
Perhaps no member of the board, (yourself excepted,) has been more
punctual in attendance, for nearly three years, than 1 have been. There
has been no occurrence in the board, when I have been present, that fur­
nishes the slightest, foundation for such charge. The greater part of the
time, there have been two other directors in the board that support the re­
election of Gen. Jackson; probably there have not been three discount days
within that time that there was not at least one Jackson member present in the
board.
The imputation of partiality cannot be made without implicating as deeply
that portion of the board as the other.
It is my belief, the only consideration that has influenced each member
of the board, in deciding on applications for loans, has been satifactory
assurance of the punctuality of the applicant and his securities, without re­
gard to the political party with which he was associated.
Respectfully,
Your obedient servant,
BEN. TAYLOR.
Major JOHN TILFORD,

President of the Br, Bank, Lexington.
POSTCRIPT.
LEXINGTON, October 31, 1832.

An extra Kentucky Gazette was issued on the 30th instant, stating that
it was authorized to state that the Jackson members of the board of directors
of the United States* Branch Bank in this city, were absent when D. Tho­
mas and Z. Wilson's notes were offered for discount.
We are authorized by the directors of the bank to state, that it can be
proved in a court of justice that one or more of the Jackson members of the
board WERE present when the above mentioned notes were offered.
We are also authorized by the directors to state, that the reason why

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139

Gabriel J. Morton's bill of exchange was not discounted was, because he
then had from the institution between THREE and FOUR THOUSAND DOLLARS,
and this sum was deemed his fair proportion; and that he was distinctly so
informed.
A denial of this statement is challenged. It can also be proved in a court
of justice, and that too by ttie Jackson directors.
From the Paris Citizen Extra, October 29.
We have received the following letter from Col. Lindsay, with the en­
closure, by which it appears that Mr. Buckner's letter to the editor of the
Kentucky Gazette was so altered as to .change its meaning. Was it not de­
signedly done ?
October 29, 1832.
DEAR SIR: In the Kentucky Gazette Extra of the 23d instant/in the postcriptof a letter written by*Mr. W. Tho. Buckner, I am implicated as being
engaged in preparing a false statement in relation to the partiality charged <
upon the United States' Bank at Lexington, in making their loans.
The enclosed letter upon that subject has been received by a friend of
Mr. Buckner, who has politely furnished me with a copy, exonerating me en­
tirely from all censure; and which I deem it due to the parties as well as
the public, to publish.
Respectfully,
N. L. LINDSAY.
Mr. LYLE.

October 26, 1832.
DEAR SIR: I have seen the Kentucky Gazette, containing the letters I
addressed to Mr. Trotter, on the subject of the partial course pursued by
the officers of the bank in making the loans. I feel mortified that the post­
script to my letter, of the 23d instant, HAS NOT BEEN ACCURATELY STATED:
THE ERROR CHANGES THE MEANING ESSENTIALLY OR ENTIRELY; but I feel

confident that it has been an error on the part of the printer, and not of the
editor. The following is the hasty postcript written to a letter I had pre­
pared, under the impression that the statement was represented as coming
from me, which Mr. Thomas stated in his note to me.
P. S. On going to Middletown, and being informed by whose agency the
statement to Mr. Thomas, which he has contradicted, was prepared, I am
induced to believe that the statement presented to him, which is different in
its whole tenor from the one I have thought proper to publish, migljt have
been so prepared without design on the part of those concerned in it. The
explanation satisfied me that the gentlemen who procured the contradiction
were under the impression that the statement contradicted was the one in­
tended to be given to the public as coming from Thomas, and, therefore, it
is due to honor and justice to say it was prepared without design.
I have thought proper to say this much to you, because I have no desire
to wound the feelings of any man; and, but for the belief that an attempt
was made to injure my character, by obtaining a certificate giving the lie
to what 1 had represented as coming from Thomas, I should not have used
expressions which were used in my letter of the 20th.
W. THO. BUCKNER.
Mr. N. TALIAFERRO, N. Middletown,
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[ Rep. No. 121. ]
BANK UNITED STATES,

February 25, 1833,
Remittances in specie to office Bank United States at Lexington.
1832.
September 19, From Bank United States, in gold $50,000
22, do
do
do 60,000
$110,000
18, Office Louisville, silver 10,000
15, " St Louis,
do 30,000
26, " Natchez,
do 25,000
October
4, " New Orleans, do 30,000
24, «
do
do
70,000
$275^000
S. JAUDON, Cashier.
BANK UNITED STATES,

February 26,1633.
SIR: I had yesterday the honor of forwarding to you the correspondepce
of the bank with the office at Lexington, in compliance with the request
contained in your letter of the 21st instant: I now transmit, enclosed, the
correspondence with the offices of Louisville, Cincinnati, and Nashville.
I have the honor to be,
Very respectfully, yours,
N. BIDDLE, Prest.
The Hon.

G^ C. VBRPLANCK,

Chairman Committee of Ways and Means,

Washington.

BANK UNITED STATES,

September 29, 1S32.
DEAR SIB: The preparations for the payment of the public debt on the
1st of next month, being now completed, the board have taken the earliest
opportunity of examining into the practicably of modifying the instructions,
contained in my letter to you of the 27th of July, and I have now the pleasure of communicating to you their views, as fallows:
1st. After the receipt of this letter, you will be at liberty to draw checks
on the bank as formerly.
2d. You may resume the purchase of domestic bills, especially on the
Atlantic cities and New Orleans, giving particular attention to the purchase
of such bills only as grow out of real business, and do not exceed four months
to run, from the time of purchase. The bank has still many heavy engagements for the 1st of January next, and does not therefore desire any conside­
rable extension of these purchases; but authorizes the resumption of them in
reference exclusively to the convenience of its customers, and the communi­
ty near you.

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141

3d. It is especially desired that these operations in exchange should
be made to assist in the reduction of your local discount line. The amount
of your local discounts is at present beyond what the bank would wish it
to be, and they prefer a gradual and gentle reduction of it. This purpose
can be more readily accomplished by the conversion of it into domestic bills,
than in any other manner; and I would invite the particular attention of
the board to it as furnishing the easiest means of reducing the debt oi the
office to the bank, which is now very considerable.
Hoping that you may find in these measures the advantages we antici­
pate from them, their execution is left to the good judgment of your board.
Very respectfully, yours,
N. BIDDLE, Prest.
W.

II. POPE,

Esq.,

Prest* Office Discount and Deposite, Louisville, Ky.
*

[CONFIDENTIAL.]
BANK OP THE UNITED STATES,

October 3,1832.
SIR: The movements which have recently taken place at Lexington,
will naturally have put you on j-our guard at your office. We have good
reason to believe that a combined effort is meditated by the opponents of
the bank, to bring a heavier demand against it at some point than it is sup­
posed it will be able to meet, and so discredit the institution. That office
will of course be selected which is deemed weakest, and probably it is for
this reason that the office at Lexington seems to have been threatened. It
will soon be known that Lexington has been strengthened, and therefore it
will cease to be a point of attack: we have sent to the office there $110,000
in gold; 3100,000 have been ordered from New Orleans; and $30,000 from
St. Louis have no doubt reached it, together with 820,000 from your office:
the position of'Lexington, therefore, we consider entirely satisfactory. An
order has been sent to New Orleans to ship $50,000 to St. Louis. Your
office and that at Cincinnati are considered sufficiently strong: if however
you think otherwise, write at once to New Orleans. When the sums or­
dered from New Orleans arrive, the offices at Louisville, Lexington, Cin­
cinnati, and St. Louis, will have, together, about $920,000 in specie; add to
this the specie at Nashville, which exceeds $200,000, and we have an t
amount which puts us beyond the reach of any combination that we believe
it possible to form for the purpose of annoyance. It will then be necessary
only to be vigilant, and to be prepared to render prompt assistance at any
point where the blow may be struck. With a view to this, I have instructed
Mr. Towler to exchange with you the $110,000 of gold for silver, as it is
better that so portable an article as gold should be kept at the most central
point. If it were known that more than a million in specie could be con­
centrated in the course of a week at any one of the five offices, it is proba­
ble that the attempt of our enemies would be abandoned, and it would not
be a matter of surprise if all should yet pass quietly off. Nevertheless, we
are warned, from a quarter entitled to respect, that we are menaced, and
you are therefore apprized to be ready.

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[ Kfep. No. 121. ]

It has been our wish, for some time, to give your office the latitude in its
exchange operations which is extended in the President's late letter. It
now becomes necessary, however, to caution you to use it with the utmost
discretion, so as not to let the relief which we wish to.give to your mercan­
tile and planting interests, become a source of direct demands upon your
office. Indeed, you will see the propriety of so shaping the whole busi­
ness of the office until the storm passes by, that your position may not be
weakened. No checks should be drawn but upon our strongest points; say
upon this bank, and the offices at New York and New Orleans.
It will be a matter, too, requiring the exercise of your best discretion,
whether notes of other offices should be received by you at present. We
should not wish to do any thing that would injure the general circulation of
all our issues, but your own safety is the first thing to be regarded.
I am, &c
S. JAUDOxV, Cash.
EDWARD SHIPPEN, Esq., Cashier

Office Bank U. Si Louisville.

OFFICE BANK UNITED STATES,

Louisville, October 19, 1832.
BEAR SIR: Your confidential letter of the 3d instant has been received.
In answer, I beg leave to refer you to a private letter I recently enclosed to
Mr. Biddle, in a letter on the subject of our new board. The opinions ex­
pressed on the subject of the dreaded combination remain unaltered. I
should be greatly surprised if the combined efforts of the party in this
State could draw from the bank 50,000 dollars. They might exceed that sum,
but it would then come back as fast as they could demand more. We feel
most entirely easy, and if we were now reduced to 50,000 dollars in specie,
I should not feel any serious uneasiness as to the consequence. This may
be mistaken confidence, but when we consider the pressing demand for
money in every part of the west, the little aid that such a combination
could derive from banks, brokers, and capitalists, of which we have none
of any oonsequence, and the natural disinclination which the prudent and
pence-saving planter would have to join suc/i a league, or to trust his mo­
ney to their unholy keeping, I cannot for one moment believe we have any
thing to fear. The administrators of the General Government have been
1
charged with almost every crime—how truly, I know not; but it is scarcely
possible their aid could be given directly or indirectly for such an object.
The chief of one of the departments, I believe, has every disposition to in­
flict an injury, particularly on the Lexington branch, which has committed
the deadly sin of dispensing too many favors to him. I presume he has
not much in his power without the aid of the Treasury, and there is surely
too much honor there for apprehension.
The demand on the Lexington office, I am told, is only a few hundred
dollars per day. The most ignorant part of the community are imposed
upon by representations of the insolvency of the bank, and they take in
their small claims of 10, 20, and 50 dollars for specie, which is put into
circulation, and will shortly find its way back again to the bank.

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14*3

On two or three occasions we have been compelled, for want of notes, to
refuse to pay any thing but silver. The consequence was, that the notes of
the bank instantly commanded h to 1 per cent, premium. Should any com­
bination be detected for annoyance in this neighborhood, we think of stop­
ping the issue of any notes, either our own or of other offices, and to pay out
nothing but silver. The effect must be the same as on former occasions, and
would effectually turn into ridicule the efforts of our enemies to discredit
the paper. If the Lexington offi6e would try the experiment, the payment
of 10,000 dollars in specie would turn the current.
The silver from Natchez ($25,000) has arrived here, and will be forwarded
to Lexington in a few days. Mr. Towlerhas said nothing about the gold
which you directed should be sent here in exchange for silver.
I am, &c.
EDWARD SHIPPEN, Cash.
SAMUEL JAUDON, Esq., Cashier

Bank U. States, Philadelphia.
BANK UNITED STATES,

November 10, 1832.
DEAR SIR: I transmit, enclosed, a list of directors of your office for the
ensuing year, elected at yesterday's meeting of our board.
*
The periods of the elections having now gone by, and the bank being at
liberty to adopt that course of policy which its own interest requires, with­
out being subject to an imputation of acting for political effect, we are about
to make a special review of cur whole business, that we may give it such a
direction as circumstances appear to require. In the mean time it occurs to
* me that it is right to say that the increase in the business of your office is
not favorably regarded. We are willing to help the west in realizing its
crop, but we want the proceeds to be applied, in part at least, to the pay­
ment of debts due to us. If your line Qf notes discounted were falling
rapidly, we should not object to the increase in your bills of exchange.
We should wish, too, to see your bills payable at more available points than
the western offices; and, with a view to our future instructions, I should be
glad to receive from you an explanation of hhe business upon which bills
drawn upon St. Louis, Natchez, Nashville, Lexington, Cincinnati, Pitts­
burgh, and Wheeling, are founded, and how far the purchase of such bills
could be restricted without producing injurious consequences. The last in­
structions given to your office respecting the purchase of domestic bills, au­
thorized the course which you have pursued, but the amount has exceeded
our expectations.
I wish you also to give me the names of the State banks with which you
correspond, and particularly of those whose notes you receive on deposite,
with a statement of the nature and value of their accounts. The policy of
' receiving any distant State bank paper on deposite, is a point to be discussed.
Your favor of the 19th ultimo wa3 duly received, and gave us much sa­
tisfaction. That an attack upon one of our western offices, encouraged from
a nameless quarter, and based upon funds to be furnished from the Atlantic
States, was meditated, we have good reason to believe, and that it has been
abandoned in consequence of our movements. We wished to place all our

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[ Rep. No. 121. ]

offices in such an attitude as to prevent their business from being in any way
affected by the slightest apprehensiou. We are happy in having yourself
to look to, as we do, in every thing touching our western interests generally,
and your influence and advice we know will be appreciated by your neigh­
boring offices.
I am, &c.
S. JAUDON, Cash.
EDWARD SHIPPED, Esq. Cashier

Office Bank U. States t Louisville.
OFFICE BANE UNITED STATES,

Louisville, November 18, 1832.
DEAR SIR: Your letter of the 10th instant contains views and sugges­
tions in relation to our business, which do not surprise me: the increase of
our domestic bills induced me to exppct such a letter as you have written.
We have been, and still are, in a situation of peculiar delicacyj and believ­
ing it to be not only the desire, but the interest of the bank to sustain all
houses which are supposed to be solvent, we have found it difficult to attain
that object without, tor a time, exceeding the point where it would have
seemed prudent otherwise to stop.
A large proportion of our bills were purchased to enable the parties to
meet their obligations sent here for collection: the amotiht of such collec­
tions has been at least four millions of dollars in the past year, of which
about one half came from the Bank of the United States and the office at
New Orleans. The greater part of that debt was created by the purchase
of merchandise, groceries, &c, which had to be resold here on time, for
negotiable notes, which could not, under existing rules, be discounted; and
a part (groceries particularly) have been shipped to Cincinnati, Lexington,
Wheeling, and Pittsburgh, thus forming the foundation of many of the
bills on those places.
By a hasty estimate, the bills collected for the offiee at New Orleans, amount,
for the past twelve months, to upwards of $1,300,000, and a large amount
is still on hand coming to maturity. These, J presume, were principally for
groceries, and will give some idea of the amount annually sold here. The
consumption of this place and neighborhood is of course not very large. The
residue must therefore be sold to the towns in the weslern country: add to
this, lead, tobacco, and cotton, in large quantities sent up the river; pork,
whiskey, and flour shipped to St. Louis; dry goods, groceries, bagging,
bale rope, flour, and pork, shipped to Mississippi; and the bills on those
points will be in a great measure accounted for.
Louisville has become the great mart for the western States. Some gen­
tlemen undertook, about a year since, an estimate of imports and exports,
derived from the books of our merchants and dealers: the aggregate was up­
wards of thirteen millions during the preceding year, and since that time it
has been greatly increased. This you will see forms a large field for ex­
change operations, particularly as we have no competition. I do not mean
to say all our bills have a real business origin: we are doubtless often im­
posed upon by fictitious transactions; but I believe not to a greater extent
than such institutions are always liable to. The first order to curtail our
operations was received on the 1st of February; since that time our "bilk

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145

discounted" have been reduced more than half a million; more than three
millions of collection paper has been provided for, and a considerable sum
of money has recently been advanced in the flour transactions of the coun­
try, but the aggregate of our business now stands nearly where it did in
February. In prospective, our situation is this: our bills are rapidly ma­
turing, but the large pork business now commencing, and the tobacco and x
hemp exports after that,'will, if sustained, require nearly all those funds.
There is still upwards of a million of paper now in the office for collection,
principally on account of the bank and its branches, which, with our gra­
dual and regular curtailment of discounts, will, for some time to come, ab­
sorb all the means the country can command. We do not hope, therefore,
to make any material diminution of our business for several months: it may
probably, for a time, be a little increased.
We have looked, with great solicitude, on the situation of this country,
and the deep stake the bank has in its welfare. Encouraged by the exces­
sive importations at the east, our merchants have been induced to purchase
more largely than their own means or the necessity of the country required:
hence the embarrassment which now exists, and from which nothing but the
indulgence of the bank, and the aid of one full year's products of .the coun.try, can relieve them. It seems to me all important that every solvent per­
son should be sustained: their purchases have lately been, and will continue
to be, much more limited. The produce business promises well, and, if
encouraged, will afford infinite relief; and a few months of prudent opera­
tions will place us beyond danger, and leave the people in moderate but
easy circumstances.
These are the views which have, governed our movements, and eight
months* experience convinces us it is the only means of extrication. We
of course look only on a very limited sphere, forming but a speck in the
great commercial atmosphere, to which your attention is directed. We do
not ask to be made an exception to any general rule, but only that you will
give us as much latitude as circumstances will justify. The chief capital
of the west is the products of its soil; to that source we must lool$ for pay­
ment, and a proper encouragement of its exports not only tends to its being
fully and speedily realized, but places the proceeds in the hands of the bank
in proportion as its facilities are given.
I assure you we will do all that circumstances will justify, and if we do
not meet your wishes promptly, the heavy load of collection paper, with
which we are burdened will, I hope, be viewed as some extenuation.
The State banks with which we correspond are as follows, viz. the Com­
mercial Bank of Cincinnati; Bank of Chillicothe, Ohio; Bank of Marietta,
Ohio; Farmers and Mechanics' Bank of Steubenville; Lancaster, Ohio, Bank;
Branch Bank of Virginia, at Charleston; Northwestern Bank of Virginia,
at Wheeling; Bank of Pittsburgh; Monongahela Bank, Brownsville, Penn­
sylvania; Evan Poultney's Bank, Baltimore; Girard's Bank, Philadelphia;
Hartford Bank, Connecticut; Phenix Bank, New York. With these banks
we have no other business than to collect for them; except the Northwest
Bank of Virginia; at Wheeling, which acts as our agent in collecting bills
payable there.
All the others are a tax upon us without any benefit whatever. Their
.balances are generally required in specie, or are transferred to the offices

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[ Rep. No.121. ]

of the bank in their vicinity. They have all the profit of the transactions,
which, by the facilities afforded them, withdraw so much from the Bank of
the United States. The Commercial Bank of Cincinnati, the Bank of
Pittsburgh, and the Girard Bank, are particularly disservicable in that way.
We do not receive the notes of any of those banks, nor indeed of any bank
except tke Bank of the United States and its branches. This regulation ex­
cludes all other notes from circulation, and it meets the entire approbation
of our citizens.
I am, &c.
EDWARD SHIPPEN, Cask.
SAMUEL JAUDON, Esq., Cashier.

BANK OF THE UNITED STATES,

November 10, 1832.
DEAR SIB: By the list of directors transmitted from the cashier's depart­
ment, you will perceive that we have adopted the views presented in your
letter of the 29th September. We mean to make no change in the past
practice of the bank in regard to political divisions in the community.
Have the goodness to say to Mr. Pope that we understand it to be his
own wish not to continue in the presidency, and that the selection of Mr.
Jacob does not, in the least, imply any want of entire confidence in him;
the best evidence of which is our wish to prolong his connexion with the
bank for a fourth year, the only example which, I believe, has ever occurred
of a similar arrangement
Very truly, your's,
N. BIDDLE, President.
EDWARD SHIPPEN, Esq.

Cashier Off. D. fy D., Louisville, Ky.
BANK OP THE UNITED STATES,

September 29, 1832.
DEAR SIR: The preparations for the payment of the public debt on the
1st of next month, being now completed, the board have taken the earliest
opportunity of examining into the practicability of modifying the instruc­
tions contained in my letter to yqu of the 27th of July. And I have now
the pleasure of communicating to you their views, as follows.
1st. After the receipt of this letter, you will be at liberty to draw checks
' on the bank as formerly.
2d. You .may resume the purchase of domestic bills, especially on the
Atlantic cities and New Orleans, giving particular attention to the purchase
of bills only as grow out of real Dusiness,*and do not exceed four months to
run from the time of purchase. The bank has still many heavy engage­
ments for the 1st of January next, and does not, therefore, desire any con­
siderable extension of these purchases; but authorizes the resumption of
them in reference, exclusively, to the convenience of its customers, and the
community near you.
3d. It is especially desired that these operations in exchange should be

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147

made to assist in the reduction of your local discount line. The amount of
your local discount is, at present, beyond what the bank would wish it to
be, and they prefer a gradual and gentle reduction of it This purpose can
be more readily accomplished by the conversion of it into domestic bills
than in any other manner; and I would invite the particular attention of
the board to it, as furnishing the easiest means of reducing the debt of the
office to the bank, which is now very considerable.
Hoping that you may find in these measures the advantages we anticipate
from them, their execution is left to the good judgment of your board.
Very respectfully, your's,
"
N. BIDDLE, President.
JAMES REYNOLDS, Esq.

President Off. D. $ D., Cincinnati, Ohio.

[Confidential']

BANK OP THE UNITED STATES,

October 3, 1832.
SIR: The recent application which you have had from the office at Lex­
ington for a supply of specie, will have apprised you of the anticipated de­
mand upon its vaults. Arrangements have been made here to furnish that
office with an ample amount; but it is by no means certain that an attempt
to discredit the bank will he made at that point only. On the contary, we
have reason to believe that a scheme is on foe* among the enemies of th«
bank for accumlating demands upon it at all unguarded points; and
that, in particular, that office will be selected which is supposed to be weak­
est. It will soon be known that the office at Lexington has been greatly
strengthened, and we may therefore expect that some other will be selected
for the main attack. It is therefore necessary that the western offices
should all be on their guard, and that each should be prepared, at any mo­
ment, to support the others. The amount of specie at your office, and those
of Lexington, Louisville, and St. Louis, are so great, that no further mea­
sures to increase it are deemed necessary. It has, however, been thought
proper to transfer the sum of $110,000 in gold, which we had sent to Lexing­
ton, to the office at Louisville, as being a more central point, and one from
which it can be more readily despatched in any direction. The knowledge
of our preparation may, and probably will, put an end to the attempts
alluded to; but it is well that you should be aware of them, that you may
so shape the business of your office as not to favor any unfriendly design.
You will, of course, abstain from drawing any large checks, and proba­
bly it may be better to say any checks at all, upon any other points than
those at which the bank is strongest, say on the bank itself, and the offices
of New York, Boston, and New Orleans. You will also judge how far it
may be proper to refuse the notes of any other office than your own. And,
in reference to the instructions recently: given by the President, allowing
an extension of the exchange business of your office, you will be careful so
to act under them, as not to expose your office to greater demands upon it
for specie. We have been anxious to extend this sort of relief to your
merchants, and have authorized the purchase of bills based upon actual pro-

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[ Kep. No. 181. ]

duce operations, at as early periods as the situation of tfce bank would allow.
No idea, however, was entertained a few days ago that, by any possibility,
this relief to the community might be made to act against the credit of the
bank. We do not change the instructions now, but merely require you to
act cautiously under it It is our wish that an extension of exchange ope­
rations may be made to accomplish a reduction of notes discounted. The
Commercial Bank of Cincinnati, last season, bought a large amount of bills on
New Orleans. If your office can get this business, the Commercial Bank would
have to employ its funds in discounting city paper. This is more peculiarly its
business as a local bank, while the exchange business properly belpngs to your
office as a part of the national bank. The capital which the Commercial
Bank employs in buying bills might be used in discounting a part of the
city notes which are now offered to you. Cannot this object be effected ?
A reduction in your rates of purchase would probably render the exchange
business no longer profitable to that bank; and we know well that our
offices can afford to purchase at lower rates than State banks.
I am, &c.
S. JAUDON, Cashier.
P. BENSON, Esq.'

Cashier Off. Bank, U. States,

[Confidential.]

Cincinnati.

OFFICE BANK UNITED STATES,

Cincinnati, November 21, 1832.
SIR: I have been prevented from replying to your favor of.the 3d ultimo
(marked confidential,) by severe indisposition, and the necessity of devoting
all the time my strength allowed to the current business of the office, which
was in danger of suffering from the absence of several clerks, who were ill
at home.
We have always felt strong enough to resist any attempt to embarrass us
here, and I wrote to the cashier of the Lexington office, that we could af­
ford him a good deal of assistance, if necessary. We do not know, how­
ever, the strength of the combination that was, or still may be, intended,
and will continue to be cautious. We still receive in payment and on
deposite, a great deal of paper of banks east of the mountains, parti­
cularly of Philadelphia, Baltimore, and Virginia, which I have for some
time hought of refusing. We charge discount for taking it, but it does not
add toiour strength, and is not available for a long time. We commenced
taking it at a discount, with a belief that it would place our paper on so
much higher ground, that it would be always brought out in preference.
But the State bank paper appears to come out faster than ever. Our dis­
count line does not go down as fast, I am afraid, as the parent board wish.
The truth i s, we have had a most disastrous * fall. The cholera raged here
10 violently from the beginning of October until within a few days, that the
business of the place has been thrown into a confusion that it will not reco­
ver from for some time. Our board are struggling to get it down,and we
hope to be able to do so soon, but at present it appears to be impossible.
As fast as good bills of exohange are offered, to be applied to discounted
notes, they are purchased. Further than that, we do not feel authorized to
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go under our instructions; and until we can get funds from our income,
we are refusing first rate* bills, as we do not feel authorized to increase the
total amount of our discounts. The Commercial Bank is not interfering
with us. I believe we could control the whole exchange business, but the
bills offered now are for new operations principally, and we cannot at pre­
sent get them applied as we wish. The demand for money for the winter
operations in produce, as well as for eastern acceptances, is enormous, and
we shall have a severe struggle for some time to resist it. In the mean
time, you may rest assured we will do all we can. Our board are anxious
to comply with the wishes of the parent board, and, I think, determined to
do so. If we can gradually, as I think we can, transfer a large amount from
our discount line to domestic bills, we can easily keep it there. By the
close of the winter, I hope we shall exhibit a statement much improved in
this respect.
I amj &c.
P. BENSON, Cashier.
S. JAUDON, Esq.

Cashier Bank U. S., Philadelphia.

OFFICE BANK UNITED STATES,

Nashville, October 21, 1882.
SIR: A S your official situation in the office at New Orleans enables you to
understand the operations of this office much better than your predecessor in
the parent bank, I will .merely state, that the past season, or twelve months,
affords a full and fair development of my favorite course of banking opera­
tions, adapted to the localities of country which necessarily has to rely oa
the productions of the soil for payment, once a year, of its bank engage­
ments; and, notwithstanding the severe disappointments we have met with,
occasioned by the unlooked for frost of the 25th October last, and the con­
sequent curtailment, by redrafts on our customers, of the means we had creted at the Orleans office to liquidate all balances against us, I am still an
advocate for a continuance of the same course of policy, and to the same
extent, provided the parent bank and other offices will sustain us in that
ceurse by a continuance of that forbearance heretofore practised in relation
to the balances against us; or rather, if the parent shall allow all the office*
to draw upon us, through her, for the balances against us from time to time,
and receive from us whatever means we can create at the other offices, which
will nearly or quite balance the account once a year, then we can furnish a
desirable profit and loss account each year.
I ask the arrangement of the parent bank liquidating all our balances in
the way just mentioned, because of the difficulty I encounter in making
satisfactory remittances to the New York office, from whence I have been
uniformly pressed to draw on New Orleans for the balances in its favor, and
which I have as uniformly, except in two instances, declined; because I well
know my drafts on New Orleans, in favor of the New York office, was con­
sidered very inconvenient to the former, as we ft\>m the conversation I
had with you on that subject, when I had the pie\yire of seeing you here,
as from letters requesting me to forbear as miun possible from drawing
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[ Hep. No. 121. ]

in favor of the latter office. Without such a request, I was disposed, and
so acted, to make our large business as easy as possible to that office, because
of the great trouble and labor which that business occasioned it, and, with
that view, I drew upon it altogether in favor of the parent bank, with only
two or three, or at most four or five, exceptions in favor of New York and
some of our Western offices, in the whole range of our operations, from the
commencement Our checks in favor of individuals were always very con­
venient to that office. For the New York office, I reserved the funds created
at Natchez, Mobile, Savannah, and Charleston, thinking that, as much cotton
was shipped from these points, that the offices thereat would have it in their
power to make very satisfactory remittances in payment of my drafts; but
in that expectation I have been disappointed, as drafts on the Natchez office
do not suit at all. My last remittance on Mobile was not at all liked; the
same in regard to Savannah and Charleston, received without much, but
some, complaint, still urging me to draw on New Orleans. This I could
not with justice do, because I had set that fund apart, exclusively, for the
parent bank. To obvia'te such difficulties, and to me unpleasantries in busi­
ness, is my reason for soliciting the parent bank to adopt the plan I have
above mentioned, of liquidating our balances; and this I the more confi­
dently press, because our profits are larger than any other in the family, on
the same capital, except the Orleans office.
Have the goodness to give these matters your serious reflection, and pre­
sent your practical views thereon to the parent board.
For the last two seasons, my attention has been steadily applied to the les­
sening our note business, by a substitution of bills to the amount of such
reduction; but in this I have not been as successful as I could wish, because
it is the interest of the merchants to counteract this policy; and therefore it
is, that we neither get as large an amount in bills, or payment in money, as
we had a right to expect at the originating of each operation. I am decided-*
ly in favor of our bill operations, as being the most profitable, and by far the
safest: of the truth of which, our operations in Alabama, for the three last
seasons, is positive proof. The whole of our business within that State, for
the two last seasons, has been wound up within the season, without any
other difficulty than such redrafts as the loss of crop necessarily produced;
but all such operations are solvent.
The unexampled scarcity of money in both Alabama and this State, and
our refraining from doing business wherein money is to be advanced on
either note or bill, has compelled us to discount safe bills at six months ad­
vance, to enable debtors to the Orleans and other offices to meet the paper
deppsite.d with us for collection. In this way have all the bills been paid
which were remitted to us for collection from the Orleans and other west­
ern offices since the month of June last. This course of business has, of
course, deprived ns of five to s k hundred thousand dollars of our funds at
Orleans, which was intended for the parent bank, but which we had to re­
serve in that office to meet the bills thus remitted for collection. However,
we will have that amount ready for the parent in the spring. This opera­
tion has swelled our domestic bill account very much, without lessening
the debts due to this office very sensibly as yet; but in the course of the
months of November and December next, we will get, as I hope and confi­
dently expect, a pretty large amount towards the payment of notes now
under discount

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•
It is reported here, with much confidence, that the Louisville office has
received instructions to discount bills for money. If this be true, then allow
me, with becoming and due respect, to solicit similar instructions to this
office; for I assure you, that no portion of the Union contains a more suffer­
ing population, for lack of a circulating medium, than does that portion of
which this office is the focus; and one of the evils produced by that distress,
is the chartering a local bank in this State, by the Legislature, now in ses­
sion; which charter you will find in the Banner of yesterday, which I have
addressed to you.
' The friends of that measure calculate on raising, with great ease, from
, capitalists to the eastward, particularly in Boston, the whole amount of the
bonds to be issued by the State under that law. The law passed, contrary
to my calculation, and, from the present scarcity of money, is likely to be­
come so great a favorite with the people at large, as to fill the subscription
for the purpose of getting it organized; and then, if subscribers cannot pay
the second and other instalments* the board of directors will, as I believe,
follow up the former customs of this State, on similar occasions, by dis­
counting the stockholders' paper in some way or other, so as to get the
bank in operatron, when discounts will be granted with such a lavish hand
as to fill every debtor's pockets with their notes. The sequel of the fifth
year's operation of that bank, should it go into operation, will produce a
state of things, and of distress, that none of its friends now dream of. My
experience in the former local banks of this State enables me to foresee the
consequences that will inevitably result from the operations of such a bank.
My health continues good, although my present duties are so arduous;
for the best arrangement I could make, after Mr. Vanwyck's departure, was
to assume his duties myself until his return. The task is severe, but yet I
get on with safety, and every duty executed within each twenty-four hours.
. I offer the subject-matter of this communication as an apojogy for its
enormous length. I could not, in an honest discharge of duty, say less.
Most respectfully,
Your obedient servant,
J. SOMMERVILLE, Cashier.
S. JAUDON,

Esq.,

Cashier Bank United States.

BANK OP THE UNITED STATES,

November 7, 1832.
DEAR SIR: I duly received your interesting letter of the 2lst ultimo,
which I had been for some time expecting in consequence of your private
notes of the 28th September.
'
«- '
The |>olicy to be pursued, in the management of the general -business of
your office in future, has been a subject of frequent discussion; but no posi­
tive instructions have yet been given, as I wished your views to be laid
before our board. This will be done at its next meeting, so that you will
hear from the President or myself, very soon, what is decided upon. In
the mean time, I can only say that the course you have been pursuing unde

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[ Rep. No. 121. ]

the instructions already given, has been entirely satisfactory; and that in
our directions to other offices, we have adhered to a system which tends in
the most easy, safe, and certain preparation, for what appears inevitable—the
winding up of our affairs.
In reference to such an event, we do not look upon the establishment of
State banks as a matter to be deprecated by us; and, in granting any charter*,
we cannot but hope that the local Legislatures will remember the lessons of
experience, and impose such restrictions and penalties upon directors and
■ stockholders as will prevent a recurrence of the evils of an unsound
currency.
I enclose the resolutions adopted by our board on the 2d instant, giving
your board a discretionary power in relation to the debt of
, and
in regard to the repair of houses.
I am, &c,
S. JAUBON, Cashier.
JOHN SOMMERVILLE,

Esq.,

Cashier, Nashville.
*

BANK OF THE UNITED STATES,

November 10,1832.
DEAR SIR: At yesterday's meeting of the board, the two vacancies in
the board of your office were filled, as you will find by the enclosed extract
from our minutes.
We regret to see your line of bills of exchange advancing so rapidly,
with so trifling a reduction of your bills discounted. The funds derived
from* the sale of bills, we hoped would be applied in diminution of discount­
ed notes. Your distant borrowers, too, particularly those in Alabama, we
think might now be referred to the new branch of the State Bank, and- if
another branch should be established, it would be well to consider the pro­
priety of returning to the former rule of requiring a resident name on all
discounted notes. What proportion of your discounts is in the names of
non-residents alone? and what propriety will there be in •ontinuing to dis­
count for them,? It is a satisfaction to find that so large a proportion of your
bills is upon points where funds are always useful: we wish you to perse­
vere in this, and not waste your means upon less available bills. The terms
at which you purchased, should, be shortened, and four months should be
made the maximum.
What State bank paper do you receive on deposite? if any, what is on
distant banks, what is the object in receiving it, and how are settlements
made? The state of your office, on the 24th ultimo, exhibited a considera­
ble sum on hand, under the general title of "State banks."
x
I am, &c,
S. JAUDON, Cashier.
J. SOMMERVILLE,

Esq.,

Gdjhier Office B. U. S., Nashville.
OFFICE BANK .UNITED STATES,

Nashville, November 22, 1832.
DEAR SIR: Yours «f the 10th instant' is duly received, noticing the apDigitized by

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pointments made by your board of directors, of G. W* Gibbs and H. M. Rutledge, esqs., as directors of this office for the present year.
I am really scrry that our purchase of domestic bills should be displeasing
to you; but, my dear sir, when you are informed of tHe situation of the
debts that those bills are intended to liquidate; you will be of opinion that
we have not erred very far in that respect; the parent bank, as well as
the offices at New York, Baltimore, Washington, Pittsburgh, Cincinnati,
Louisville, Lexington, and Richmond, have been in the Habit of discounting
bills and notes made payable at this office, and forwarding them here for
collection. This has been done this season to a much larger amount than in
any previous year, and last season we had a very short crop of cotton and
tobacco, so that. the bills we purchased ourselves, and payable at New Or­
leans, could not be met; in consequence of which, drafts, to a very large
amount, have been drawn, by the commission merchants of New Orleans,
on their friends in this country, and made payable at this office. Those
drafts, as well as the notes and drafts as above, could not be met by the pay­
ment of cash, as that article is. not to be had. It certainly is scarcer than I
have known it for five years, and no other way was, or could be practicable,
to liquidate those debts, J>ut by drafts on New Orleans; and as all the above
paper, if not taken up, must, of necessity, be sent back to Philadelphia,
Baltimore, Washington, Richmond, Pittsburgh, Cincinnati, Louisville, Lex­
ington, and New Orleans, we preferred discounting good domestic bills
for those debts payable six months after date, as a shorter time would not
have answered any purpose, as payment must be made out of the" cotton
and tobacco crops, and those articles are never available, except a small
part, before the months of May or June. If those drafts and notes had
been permitted to return to the cities from whence forwarded, the conse­
quence might have been very serious, as protests, in all those cases, would
-have a tendency to prostrate some of the most respectable merchants in the
different cities; and, by taking those bills, our directors were of opinion that
they were'strictly adhering to the instructions in yours ef the 27th of July.
Be assured, sir, that we are as well convinced as you are, that; too many
bills are offered and purchased, amounting to a great deal more than the
present poor crop of cotton and tobacco will net, and that is occasioned en­
tirely by the paper sent to this office for collection; and, as a proof of what
I say, I am sure that we have not purchased bills for money and for payment
of debts due to this office added together, since the 1st of September last,
to a greater amount than one hundred and fifty thousand dollars, so that
there is little room for complaints of too many bills purchased on our own
account If we have erred, it was to serve the bank and offices.
On Saturday your letter will be laid before the directors, to take their
opinion on the reduction of time on bills purchased.
I am, sir, very respectfully,
Your most obedient servant,
J. NICHOL, President
y

N. BIDDLE, Esq.

We will not be able to get the debts due this office paid; indeed, if any,
it will be a small part: the means are not in the country.
20
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[ Bep. No. 121. ]
OFFICE BANE OF THE UNITED STATES,

Nashville, November 26, 1832.
Stet: Your letters of the 7th and 10th inst. came duly to hand; the first
on the 20th and the other on the 23d instant. They were submitted to the
board immediately on the receipt of each.
Thefirstwas cheering and satisfactory to a board and officers who were exer­
cising their best endeavors to carry into effect the views of the parent board,
communicated in the letter of the President of the parent institution of the 27th
July last, as faithfully as the unforeseen loss of last year's crop, and the unexam­
pled scarcity of money, would permit, and in a way to promote the best in­
terests of the parent bank, of this and the other offices that were collecting
vast sums through its operations. These pleasant feelings were, on Saturday
last, changed to those of deep regret, by the implied disapprobation con­
veyed in the latter of the course we pursued in discounting bills to so large
an amount, as exhibited by our statement of the 24th ultimo, with so small
a diminution of our line of discounted notes, whence an impression seems
to have been created that we were disregarding the rule prescribed to us in
the above letter of the 27th February last, when, in fact, every means with­
in our control were used to carry the provisions of that rule into full effect.
And, in discharge of this duty, the exchange committee have, on all occa­
sions, refused to discount bills that they knew at the time would draw
money from the office; and so scrupulously has this rule been executed, that
bills of very short dates, and of undoubted character, drawn and offered by
persons we were desirous to accommodate, were rejected.
The great increase in the line of our domestic bill transactions, without a
corresponding reduction of our line of discounted notes, appears to be dis­
approved of; but this dissatisfaction will assuredly give way to sentiments
of approval under the following explanation:
The increase complained of, has been produced by our protection from
inevitable protest of the vast amount of paper discounted at the Orleans and
other offices, with a considerable addition at the parent bank, and sent here
for collection; and to pay which, by bank facilities, we have, in every case,
insisted upon a bill on some quarter, as being the most certain channel to in­
sure punctuality, and the speediest way of a final extinguishment of the
debt. In general cases of paper sent here for collection, which we had rea­
son to believe was not discounted by either the parent bank or the office
forwarding it, we have refused to discount the bill offered for its payment,
considering such transactions as infringing our rule, not to advance money
on either note or bill. And, by a rigid adherence to this rule, in conform­
ity to the rule prescribed to us in the President's letter of the 37th July
last, many bills and notes were suffered to return under protest for non­
payment, the payers and acceptors not having it in their power to make any
other provision at the moment to protect their credit, the town and coun­
try being, as I may say, literally drained of its money.
The reason why so small an amount of our line of discounted notes have
been turned into bills, is, that such portion of our debtors as have a fair pros­
pect of shipping more produce than will pay the balances against them for
the operations of the last season, occasioned by the unexpected loss of crop,
are unwilling to draw at a date that will subject them to the expensive and
much to be deprecated act of redrawing again; and, as too many, with hoDigitized by

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nest intentions and faithful exertions, would not be able to get their crops
to market and sold in time to meet the bills that would mature before the
latter part of May and June; and as the situation of the country is such as
to present but one choice only, that of granting the time asked for on a bill
with the additional security of a letter of credit, or of protesting, and wait­
ing a much longer time for payment of the note, and, in numerous cases, un­
der such circumstances, be obliged to await the*tardy course of the law.
Under such circumstances, and on mature reflection, under the difficultiesof an­
other unfavorable crop, without money to supply the deficiency, and frequent
discussions on the subject, the board considered it a faithful discbarge of the
important responsibilities confided to it, to renew the nfotes maturing within
the last and the present month, and, when these shall again mature, to insist
upon payment, either by bill or otherwise; and, in the event of failure to
pay, to sue the debtor, unless in such cases as justice would dictate the
propriety of further indulgence. In this case, under all circumstances de­
scribed, it is my firm and honest conviction, and expressed under the high
responsibility of my station, that the best interests of the parent bank, of
this office, and of the offices collecting through it, have been prevented, and
will still be further prevented by a continuance of the same course of oper­
ations to the end of the present season, say 1st of March. Be assured that
no other disposition prevails here than that of conforming to the rules which
the parent board may, from time to time, prescribe for the conducting of
the affairs of this office as strictly as the situation of the country and of our
debtors will permit, so as to promote the collection of the debts of the of­
fice in as short a time as possible, taking all things into view.
For a clearer and more intelligent view of the subject of your letter of the
10th instant, I enclose a hasty statement of our collections for the parent
bank arid offices from the 1st of September last, which I have prepared on
the spur of the occasion, a small portion only of which has been paid other­
wise than through our bill operations.
Our Alabama has, in my opinion, been by far the safest and most profita­
ble business done by this office; for we have not met with a positive loss in
that quarter from the commencement of our business to this day, and have
only one transaction of #1,579 that is in jeopardy, which originated in
1828, in a bill on J. 6 . Banks arid,Brothers.
The redrawing of the last season, produced by the failure in the crops in
that quarter, is not greater in proportion to the amount of bills we purchased
from them, than is the proportion redrawn for on eur customers in Tennes­
see; and of the Tennesseans, the Alabamians have a great advantage this
season in their more abundant crops, and thereby possess a more flattering
prospect of being able to meet their engagements of this season with great­
er punctuality than their brethren of this State.
There will be no branch of the Bank of the State of Alabama in opera­
tion in North Alabama, where our customers in 'that State reside, short of
March or April next, as I am informed. A loss of the business we have
done in that State would be sincerely regretted by me, on account of its
magnitude, safety, and profitableness.
In respect to city endorsers, where they are offered, it is well, provided
they add strength to the paper; and where we have such, I am, and always
liave been, opposed to letting them off on renewals of the paper, however
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weak such endorsement may be, unless a stronger one could be obtained in
its stead; but Nashville has as much weight of its own of this nature as ks
citizens can bear. Our board has always practiced much caution in granting loans to persons at a distance, rejecting all such paper as some one of
the members of the board could not recommend, or be supported by the
recommendation of others, of whom the board, or some one of the mem­
bers, had such a knowledge as would entitle the recommendation to confi­
dence; but with all this'caution, as must be expected in all institutions of
the kind, we have met with very unexpected disappointments, when we
consider the office perfectly safe; and yet our disappointments, upon the
whole, of this kind, amongst our distant customers, are but few. Notwith­
standing these disappointments in our distant business, thereby meaning
beyond the limits 01 the country we live in, I hesitate not to recommend
to the parent board to permit the board here to persevere to the end of this
season in the course hitherto pursued in relation to our distant customers,
as their cautious mode of proceeding in such cases will preserve the office
from any serious injury or risk that would not occur with a resident en­
dorser.
The State bank notes, under the head of "sundries," in the statement of
the 21st, consists of notes of the State of Alabama, received on Govern­
ment account, from the receiver of public moneys at JJuntsville $44,000
Virginia, Orleans, and some Atlantic city notes, with our defaced
notes and drafts, mingled in them by Mr. Vanwyck - 24,089
$68,089
By an arrangement with Mr. Poe, of the Mobile office, I send the Ala­
bama paper which I may receive at any time from the receiver of public
moneys, for Government account, to him, via New Orleans office, and, on its
receipt, he gives this office an absolute credit therefor. This enables me to
create a fund for the New York office in relief of the Orleans officer, on
which. I would otherwise be compelled to draw, to the dissatisfaction of
that office. Sometimes my checks on Mobile are complained of at New
York, as not suiting so well as checks on the Orleans office. The funds to
be remitted to Mobile and Orleans have been on hand a long time, waiting
for the running of the steamboat. To these points, I can make no remittances
from June to the following January.
The notes of the local banks of Virginia, except those at, Winchester in
that State, have always been in such good credit here as to induce me to
continue to take them in small amounts in payments to the office, and from
good depositors. These notes I send to the Washington, Richmond, and
Norfolk offices, which creates a fund tjiat has been very useful to me in li­
quidating the balances against us at Baltimore. This paper has been thus
received and remitted under a persuasion, on my part, that it was in unison
with the policy of the parent bank for its offices to conciliate the good will
of State institutions, where that could be attained without any other risk
than that of transmission; and, in this case, I considered, as Mr. Cowperthwait did in my receipt and similar use of Alabama paper received on Go­
vernment account, that the advantage I derived from the use of the remit­
tance of the Virginia notes was worth the risk of transmission.

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% Such notes of the banks of the Atlantic cities as we are sufficient judges
of, are also received; such, however, seldom appear here. The notes of the
local banks at Orleans we also receive, as well as Natchez notes in a few in­
stances, in payments, or where a good depositor has a small amount received
with our paper. These I exchanged with the Orleans office until that at
Natchez was put into operation, to which I now send them via New Or­
leans, the small amounts received in the way above described. Yeatman,
Woods & Co's. post notes are not received, except now and then a few
small notes happen to be in a dcposite, which are taken by them in our ex*
changes; but since Mr., Vanwyck's departure, in the execution of the teller's
duties, I have, in every case, refused them.
On the subject of continuing the practice just described in relation to
notes of distant banks, I will thank you for your opinion, as well as to the
course I had better pursue in relation to the notes to be issued by the
branches of the new State Bank which is about to be established in this
place, under a charter passed the last session of the State Legislature. Much
difficulty will attend exchanges with them, and your experience with the lo­
cal banks and their branches in Louisiana renders you the most competent
judge in such matters.
Our circulation of late has been much increased by my payments for Go­
vernment account in the removal of the Indians and the surveyor's depart­
ment, for a large portion of which I received Treasury warrants on the
New York office, which was very acceptable. I also give our paper in ex­
change for larger notes of other offices, thereby to create an useful fund for
remittances to offices at which we are constantly indebted. This also adds
some to our circulation.
The following exhibits the amount collected here for the parent bank and
offices from the 1st September last to this date, which, with small excep­
tions, have been paid through our bill operations, viz.
Bank United States
#147,473
Office New York .
31,365
Baltimore
7,607
Washington .
2,460
Richmond .
,42,112
Fayetteville
276
New Orleans
746,893
Natchez
3,150
St. Louis
722
Louisvilie
51,595
Lexington .
24,902
Cincinnati .
10,001
Pittsburgh
28,521
Boston
350

#1,097,427
In Alabama we have about #30,000 loaned in eleven notes, #20,000 of
which will be turned into bills when they mature: all are of the first char­
acter for safety. There are some thousands of dollars of bills from Orleans

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and other offices yet to mature, which can only be met through our bill
operations. What portion of our own debts may be turned into bills, I can­
not now form a satisfactory estimate, not less perhaps than 2400,000.
You ask "what proportion of our discounts is on the names of non-resi­
dents alone, and what propriety will there be in continuing to discount for
, them?" The first part of this inquiry I cannot now answer so minutely as
I wish; therefore I must defer doing so until I report my quarterly summa­
ry, with the semi-annual statement of the office. To the latter part of the
inquiry, 1 respectfully and unhesitatingly state, that the course pursued by
the board in so general a diffusion of its discounts is, for the sphere of which
this office is the focus, the safest and the best that could have been adopted for
the mutual interest of the parent bank and the country, on account of the
greater safety of the debts arising from the greater number of persons en­
gaged in their payments, and the consequent larger amount of real estate
which would be thus added to the increased amount of personal security
which would also be thus pledged, as it were, for payment of so .many dif­
ferent sums to the bank. And, further, in cases of unexpected losses, the
amount would not be so great nor so numerous as if the discounts were con­
fined to the citizens of Nashville, and the immediate surrounding country
and towns. Experience has shown, that, in the propriety of this course of
policy, there is no mistake, as our heaviest and only losses, as I may with
propriety say, there being but one exception of $1,579 out of our distant
business, have occurred in Nashville and the adjacent county of Sumner,
which, in our business, may fairly be considered as within the vicinity of the
office. The course pursued by the board, in its general diffusion of dis­
counts, has always commanded my approbation, as thereby it extended its
immense benefits to the doors of every section of the country, and thils af­
fording the strongest practical proofs of the incalculable importance of the
operations of the Bank of the United States through its unrivalled machi­
nery in the improvement of the wealth, happiness, and general welfare of
the country, in every particular; passing through every grade of society,
from the wealthiest, in regular gradation, to the poorest man in the country;
and in this none are so much or more benefitted than the poorest and mid­
dling classes of our country, and, above all, the agriculturists of every rank
and denomination; combining, at the same time, with such important re­
sults, that of the greater security for the debts of the institution in the
way before described; and I feel fully persuaded that, if the parent board
had set here, they would, under all circumstances, have operated precisely
in the-same way that this board has.
On your generous indulgence, I repose for a pardon for so lengthy a com­
munication. Your inquiries were few, and communicated in a few words,
but the subject-matter embraced by them required long paragraphs in an­
swer, and my limited capacity could not comprise what was necessary t o
be said in fewer words. I pray you to accept a tender of the sincere r e ­
gard of, sir, your most obedient servant,
JNO. SOMMERVILLE, Cash.
P. S. Allow me to ask of your candor, with your intimate knowledge
of the commission houses in New Orleans who possess the business of this
country, if it was not safer, in the highest degree, for us to secure so many
parties to the vast debt of 9746,892 drawn at that point, as our course o f
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9

15$

policy in this particular has been, than to have suffered the various bills, by
an opposite course of policy, to return upon the first drawers and endorsers
in New Orleans? The consequences will not bear contemplation.
"». JAUDON, Esq., Cashier

*

x

■he

Bank of the Untied States.

•osi
id!

_ _ _

vpi

OFFICE BANK U.

STATES,

^
Nashville, 28th November, 1832.
ei
SIR: At a meeting of the board at this office, on the 24th instant, when
were present, Josiah Nichol, President, and Robert Farquharson, George
Crockett, and Thomas H. Fletcher, Francis B. Fogg, James Woods, Joseph
Vaulx, James Bell, and James P. Clark* directors.
The letters of the President of the parent bank and of yourself, of the 10th
instant, were submitted to the board, as well as the answer of our President,
of the 22d instant, to the letter addressed to him. After due consideration
of the subjects therein presented to the board, Mr. Fogg offered the follow­
ing resolution; which was unanimously adopted, viz.
Resolved, That the board approve of the views and statements contained
in the above mentioned letter of the President of this office, and believe the
same are correct, and contain a proper explanation of the course pursued by
this office in relation to its general discounts.
Resolved, That a committee be appointed to draw up resolutions upon
the subject of shortening the term of bills to be purchased, stating the practi­
cability of transacting business upon bills at four months, and the effect such
a course would have upon the interests of the bank, and that said resolutions
be considered on Wednesday next.
Messrs. Fogg, Fletcher, and Clark, were appointed to compose that com­
mittee, to whose inspection the cashier was required to submit his reply to
your letter above mentioned, so soon as the same should be prepared: which
was done; and, at the meeting of the board to-day, the said committee re­
commended the adoption of the following resolution, viz.
Resolved, That, for the very satisfactory reasons assigned in the letters of
the President and Cashier of this office, addressed to the President and
Cashier of the parent bank, the one dated the 22d of November, 1832, the
other, the 26th November, 1S32, that this board recommends it to the parent
board to permit this office to continue its purchases of domestic bills at six
months' date, until the 1st day of March next
Which resolution was passed unanimously,*there being present Josiah
Nichol, President, O. Crockett, J. Woods, Thomas H. Fletcher, F. B. Fogg,
J. P. Clark, J. Vaulx, and J. Bell, directors.
* 1 remain, most respectfully,
Your obedient servant,
JNO. SOMMERVILLE,
Cashier*
S. JAUDON,

Esq.,

Cashier Bank (/. Stales.

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I Rep. No. 121. ]
A a.
i

BANK OP THE U. STATES,

January 29, 1833.
SIR: I am instructed by the board of directors to transmit to you a cop&t}f
a report this day made to them by the committee to whom your letter oftlye
10th instant was referred.
"H"
I have the honor to be,
>f
Very respectfully, yours,
&
N. BIDDLE, Presidetf
Honorable G. C. VERPLAXCK,
&
Chairman of the Committee Ways and Means,
{
Washington, D. C.
The Committee of Exchange, to whom was referred on the 15th instant, a
letter from the honorable G. C. Verplanck, chairman of the Committee of
Ways and Means of the House of Representatives of the United States,
dated the 10th instant, apprising the board of directors that the Committee
of Ways and Means intended, as early as possible after the 14th instant,
to consider the several subjects touching the Bank of the United States re­
ferred to them by the House of Representatives, and requesting any in­
formation which the board of directors may think it important to commu­
nicate, report:
« That, having requested the cashier of the bank to visit Washington for
the purpose of learning the particular objects of inquiry, and having ascer­
tained that they related to the late arrangement in regard to the three per
cents., the condition of the debts in the western States, and the general situ­
ation and solvency of the institution, submit for consideration the following
statements and views on these several subjects:
The three per cents.
One of the most important objects in the administration of the bank, is to
preserve the currency and credit of the country in a state of the greatest
possible uniformity. The vibrations of business, and the usual irregularities
of trade, in so extensive a territory, require constant care to preserve that
uniformity in a system of currency so complicated as ours. But in addi­
tion to these causes of fluctuation, an entirely new element is introduced
into our'moneyed system by the extinguishment of the public debt. No
country has ever yet paid off its debt, no country, therefore, has had to
contend with the inconvenience of accumulating, in the first instance,
large amounts of revenue, and then throwing suddenly back upon the
community those masses of capital. To do this without any sensible de­
rangement of the business of the community, is a work of much labor.
When the Government directs that, on a given day, a certain number of mil­
lions, lying scattered over the whole interior, shall be paid at a few places
on the Atlantic, as there is never a previous accumulation of funds lying in
the vaults of the bank, but they are distributed in loans over the whole
Union, it becomes necessary to concenter them at the places of payment;
and the difficulty lies in, thus withdrawing from the community only what

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may be necessary, and for as short a period as possible. The success of the
, bank in these operations has attracted the attention of the officer^ of the
Treasury who witnessed them. Thus, Mr. Rush, in his Treasury report o*
the 13th December, 1828, says:
" In conclusion, the mode of its agency in large payments of the principal
of the debt, is not to be overlooked. By its arrangement for them, it avoids
the inconvenience of too great an accumulation of money in the vaults of deposite used by the Government, and the vacuum that would succeed its too
sudden distribution. It does this by anticipating, as the periods of payment
approach, the disbursement of a considerable portion of the stock in the form
of discounts in favor of those who are to be paid off, thereby enabling them
to employ their capital as opportunity may offer beforehand. In this man­
ner, heavy payments of the debt are in effect made gradually, instead of the
whole mass being thrown at once upon the money market, which might pro­
duce injurious shocks. So prudently in this and other respects does the
bank aid the operation of paying off the debt, that the community hardly has
a consciousness that it js going on."
So, too, Mr. Ingham, in his letter to the bank of the 11th of July, 1829,
already published, says:
" I take the occasion to express the great satisfaction of the Treasury De­
partment at the manner in which the President and directors of the parent
bank have discharged their trusts in all their immediate relations to the Go­
vernment, so far as their transactions have come under my notice, and es­
pecially in the facilities afforded in transferring the funds of the Govern­
ment, and in the preparations for the heavy payment of the public debt on
the 1st instant, which has been effected by means of the prudent arrange­
ments of your board, at a time of severe depression on all the productive
employments of the country, without causing any sensible addition to the
pressure, or even vissible effect upon the ordinary operations of the State
hanks."
And the President of the United States, in his message to Congress of
December, 1829, says:
"The payment on account of the public debt, made on the 1st of July
last, was eight millions seven hundred and fifteen thousand four hundred
and sixty-two dollars and eighty-seven cents. It was apprehended that the
withdrawal of so large a sum from the banks in which it was deposited, at
a time of unusal pressure in the money market, might cause much injury to
the interests dependant on the bank accommodations. But this evil was
wholly averted by an early anticipation of it at the Treasury, aided by the
judicious arrangements of the officers of the Bank of the United States."
It had thus become part of the settled policy of the bank, at the approach
of any large payment, to begin its preparations for a long period in advance,
so as to collect its means gradually, and to distribute its disbursements over
as wide a space as possible.
The year 1832 presented
of peculiar delicacy in regard not mere­
ly to the amount of debt redeemable, but to the situation of the country
which was to pay it.
1. The situation of the country was this. It was one of those commer­
cial moments incident to all free and active nations: the importations of the
year 1831 were unusually heavv, owjng principally to the state of Europe,
21
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and the close of that year found the country much indebted to Europe.
The actual and inevitable corrective was to import less the next season, and,
in the interval, to assist in the-diffusion of these importations, and to facili­
tate their gradual consumption, until the new crop furnished new means for
paying for them. It was therefore specially desirable that, during the year
1832, as little extraordinary claim as possible should be made upon our citi­
zens; the importations of 1831 having made the exchauges unfavorable to
the United States, and the great object of the bank was to prevent any addition to the foreign demand until the fall of 1832.
In this state of things, the payments on account of the funded debt in the
year 1832 were to be, for principal and interest, 818,080,057 46: of this,
^1,739,524 01 of principal had been paid on the 1st of January.
There remained of principal of #15,230,595 56; of which between eight
and nine millions were owned by Europeans, thus adding to the commercial
claims that amount of extraneous demand on account of the public debt.
On this occasion, the board of directors thought it necessary to begin early
to make their arrangements, and accordingly the following proceedings took
place.
BANK oy THE UNITED STATES, March 13,1832.
At a meeting of the board of directors held this day, the following gen­
tlemen present, viz. N. Biddle, President, Messrs. Sullivan, Bohlen, Pratt,
Neff, Coleman, Piatt, Willing, Bevan, Eyre*, White, and Henry.
The President submitted to the board his views in relation to the proba­
bility of the redemption by the Government, in the course of the present
year, of a large portion of the three per cents, of the United States, more
than one-half of which stock he stated to be held by foreigners, the magni­
tude of whose claims upon this bank might possibly expose the community
to great inconvenience, unless some measures should be adopted for defer­
ring a part of the payments that may be required, and suggested the expe­
diency of empowering a committee of this board to enter, for that purpose,
into, such arrangements with the holders of said stock as might combine the
interests of the bank with those of the public.
Whereupon, it was, on motion,
Resolved, That the subject of' the communication just made by the Pre- s
sident be referred to the committee of exchange, with authority to make,
on behalf of the bank, whatever arrangements with the holders of the three
per cent, stock of the United States may, in their opinion, best promote the
convenience of the public and the interests of this institution.
This reference to the committee was considered specially appropriate, be­
cause the payment of the foreign stockholders was connected with the fo­
reign exchanges, and because to this committee had always been referred
all the large moneyed operations of the bank requiring confidential and
prompt action.
It has been for a series of years the uniform practice of the bank to refer
such negotiations to some small committee, and since the permanent organiza­
tion of the exchange committee, that has betn selected for such objects. Thusi.
Extract from the minutes of the Bank United States, Aug. 27, 1819.
Present, Langdon Cheves, President; Messrs. Biddle, Fisher, Sergeant,
Lippincott, Coulter, Lisle, Colhoun, Connellv, Lammot, Dugan, Schott,.
Toland, and Potter.

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The following among other resolutions was adopted.
1. That a select committee of three members be appointed, who, together
with the President, shall be authorized to effect a loan for a sum not ex­
ceeding three millions for a period not exceeding three years, and that they
be authorized to pledge a sum not exceeding three and a half millions of
five per cent stock belonging to the bank to secure the said loan.
The committee was appointed, consisting of Messrs. Biddle, Fisher, and
Sergeant, with Mr. Cheves, by whom Mr. Cadwalader was sent to Europe,
and made with Messrs. Barings the loan.
BANK OP THE UNITES STATES, 16M July, 1822.

Present, Langdon Cheves, Messrs. Willing, Cope, Flemming, Coxe, Lippincott, Whitney, and Brugiere.
On motion,
Resolved, That the subject of remitting the balance of the loan due in
Holland, directly or indirectly, be referred to the foreign exchange commit­
tee, with authority to take the necessary measures.
BANK OP THE UNITED STATES,

29th April, 1823.

Present, N. Biddle, President; Messrs. Dupont, Fisher, Cope, Pratt,
Willing, Coulter, Lippincott, Coxe, Whitney, and Henry.
Mr. Cope, from the committee on foreign exchange, reports the following
resolution, which was adopted.
Resolved^ That the President and cashier are hereby authorized, in con­
junction with the exchange committee, to make such arrangements as they
may judge expedient with regard to the account of the bank with Messrs.
Baring, Brothers & Co., of London.
BANK OF THE UNITED STATES,

July 22, 1823.

Present, N. Biddle, Messrs. Dupont, Fisher, Cope, Pratt, Coulter, Bohlen, Whitney, Cadwalader, and Willing.
The committee of foreign exchange, in conjunction with the President
and cashier of the bank, were authorized to dispose of the five franc pieces
on hand belonging to the bank, at such rates as they may think for the in­
terest of the institution.
BANK UNITED STATES,

December 2, 1823.

Present, N. Biddle, Messrs. Connelly, Dupont, Cope, Pratt, Lippincott,
Bohlen, Coxe, Whitney, Willing, and Henry.
Mr. Cope, from the committee on exchange, offered the following resolu­
tion, which was read and adopted.
Resolved, That the executive officers of the bank, in conjunction with the
exchange committee, be, and they are hereby authorized to operate in ex­
change, by the sale of bills of this bank or of bills drawn upon it, in such
manner as they may deem most for the interest of the institution.
BANK UNITED STATES, March 30, 1824.

Present, N. Biddle, Messrs. Eyre, Cadwalader, Henry, Brown, Boblerv
Willing, Wetherill, and Evans.

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[ Rep. No. 121. ]

The President communicated to the board the opinion of the counsel of
the bank on the subject of the sale of bank stock which has been hypothe­
cated to the bank, and forfeited.
Whereupon, on motion,
Resolved, That the committee on foreign exchange be authorized to make
such disposition of the forfeited bank stock as they may deem expedient
BANK UNITED STATES,

Jipril 23, 1824.

Present, N. Biddle, Messrs. Dupont, Eyre, Bohlen, Henry, Whitney,
Lippincott, Clapier, Beck, Brown, Evans, Willing, and Potter.
On motion,
Resolved, That the committee on foreign exchange be authorized, with
the officers of the bank, to negotiate for the sale of Spanish dollars.
BANK UNITED STATES,

November 27, 1824.

Present, N. BLddle, Messrs. Eyre, McKim, Whitney, Willing, CadwAlader, Henry, Clapier, Wetherill, Brown, Evans, Colt, and Verplanck.
On motion,
' Resolved, That the committee on exchange be authorized to adopt such
measures as they may deem expedient in relation to the loan of five millions.
BANK UNITED STATES, January 6, 1826.

Present, N. Biddle, Messrs. Dupont, Eyre, Beck, Brown, Evans, Wier,
Coxe, Bohlen, Pratt, and Mcllvaine.
On motion of Mr. Eyre,
Resolved, That the exchange committee be authorized to dispose of so
much of the United States' and bank stock as may seem to them for the in­
terest of the bank.
BANK UNITED STATES, January

16, 1827.

Present, N. Biddle, Messrs. Cope, Weir, Fisher, Bohlen, Pratt, Cadwalader, Willing, Toland, A. White, Bevan, and Hemphill.
On motion of Mr. Toland,
Resolved, That the committee of exchange be authorized to negotiate
with the Government of the United States for the whole or any part of the
sum which it proposes to borrow, on such terms as they may deem most for
the interest of the bank.
BANK UNITED STATES, March 27, 1827.

Present, N. Biddle, Messrs. Cope, Fisher, Bohlen, Pratt, Willing, To­
land, A. White, and Hemphill.
On motion,
Resolved, That the committee of exchange be authorized to make what­
ever arrangements they may deem most for the interest of the bank in re­
gard to discounts upon certificates of funded debt of the United States that
may become payable on the 1st of July next, at a rate different from that of
the ordinary discounts.

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r

Thus appointed in the accustomed manner, by a large meeting of the
board, to execute this important trust, the committee immediately com­
menced, by negotiating with the agent of a numerous body of European
stockholders who owned 81,700,000 of the three per cents., and another
who represented nearly one million of dollars. With neither of these,
however, could any arrangement be effected, the parties especially repre­
sented 'by the former preferring to wait till the period of actual reim' bursement, before they decided on the disposal of their funds. In the mean
time, the Treasury Department having applied to the bank for its opinion
as to the expediency of making a payment of six millions on the 1st of
July, the opinion given was, that it would be better for the country not to
make such a pressure on its resources at that moment, and the payment was
postponed, the bank consenting to allow the Government the quarter's in­
terest during the interval. From that period, the whole operations of the
bank were directed to the gradual withdrawal of all the surplus means of
the institution from the points where they could be spared, and the accumu­
lation of them in the Northern Atlantic cities where the payments were to
be made, and also in Europe, so as to provide the means of payment there
to the foreign stockholders who might desire the transmission of them to
their respective homes. The result of these preparations was, that, by the
month of October, the bank had. concentered at these points means fully
adequate to pay the whole amount of funded debt payable at that period,
without the slightest inconvenience to itself. On that day, the State banks
of Philadelphia, New York, and Boston, owed to the bank - 02,280,000
It had paid off all its foreign debt, amounting, in May, to
01,878,000, and had in Europe a balance of
2,982,000
Its specie at these places amounted to
3,200,000
Making of cash means
.
.
.
.
.
08,462,000
besides large sums falling due in those places, remitted from all the distant
points, and local loans immediately available in October and November,
to the amount of many millions—while the amount of the public debt re­
imbursable in October, was 08,634,988 37. In this state, the bank, had
it consulted only its own interest, would have been perfectly passive, since
it was perfectly at ease: but it had other and higher interests to consult
From the communication with the Treasury in July, it was probable that
the funds of the Government might be insumcient to pay the debt adver­
tised to be paid; and that, even if these funds were adequate, the operation
would exhaust all the means of the Government, and require that the com­
munity should repay the whole amount of the public funds distributed
among them. It was further manifest that the ability of the Government
to meet its engagements, depended entirely on the punctual payment of the
revenue in the commercial cities from July to January, whieh was estimat­
ed at about twelve millions of dollars. That resource was threatened with
the greatest danger by the appearance of the cholera, which had already
begun its ravages in New York and Philadelphia, with every indication of
pervading the country. Had it continued as it began, and as all the ap­
pearances in July warranted the belief of its continuance, there can be no
doubt it would have prostrated all commercial credit, and seriously endan­
gered the public revenue, as in New York and Philadelphia alone the de­
mand on account of the foreign three per cent3. was about f-ve million?.
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The condition of the Treasury is seen in the letter of the Secretary ot
the Treasury to the President of the bank, dated July 19, 1832, as follows:
"TREASURY DEPARTMENT,

19//* July, 1832.
<' SIR: It was not until to-day that I have been able to ascertain the
amount of the appropriations made at the last session of Congress; and: there­
fore I have not been able to decide before now upon the amount of the
three per cents., to be redeemed on the 1st of October. I find, as was sup­
posed when you were here, that we shall be able to pay off about twothirds at that time. A notice will accordingly be given in to-morrow's
paper for the payment of that amount on the 1st of October, and the re­
maining one-third on the 1st of January. This has been done with the
understanding had between us, that, if it should happen that the public
moneys are insufficient to complete those payments, the bank will delay
the presentation of any certificates of which it may have the control, until
the funds are sufficient to meet them, the interest to be paid by the United
States during the interval. You will be pleased to indicate such transfers
of funds as may be desirable, preparatory to the proposed payments."
" I am, &c.
LOUIS McLANE,
Secretary of the Treasury,
" N. BIDDLE,

Esq.,

President Bank U. States,

Philadelphia."

To which the following answer was given.
BANE OP THE UNITED STATES *

July 26, 1832.
"SIR: I have had the honor of receiving your letter of the 19th instant,
apprising me of your intention to reimburse two-thirds of the three per cents.
on the 1st of October, and the remaining third on the 1st of January. You
further state that this course has been adopted with the understanding had
between us, that, if it should happen that the public moneys are insufficient
to complete those payments, the bank will delay the presentation of any cer­
tificates of which it may hive the control, until the funds are sufficient to
meet them."
"The bank has taken the necessary steps to obtain the control of a consi­
derable portion of these certificates, and will very cheerfully employ it in
such a manner as may best suit the convenience of the Government"
" I have the honor to be,
Very respectfully, yours,
N. BIDDLE. Prat.
" Honorable Louis MCLANE,
Secretary of the Treasury, Washington, D. C."
This letter of the Secretary communicated the facts previously understood
by the committee, of the probable exhaustion, and possible deficiency of the

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public funds, and confirmed them in the expediency of the measure which
they had adopted.
It rendered it still more probable that the bank might be called upon to
make advances for the Government analogous to that which took place in the
year 1320, at the time when the Louisiana loan held in Europe was reim­
bursable. On that occasion, the following proceedings occurred, as detailed
in the minutes.
*
" B A N K UNITED STATES,

10M October, 1820.
"Present, Langdon Cheves, President; Messrs. Eyre, Rundell, Lippincott, Willing, Astley, Wetherill, Kuhn, Weir, and Potter.
" The President laid before the board a private correspondence between him
and Edward Jones, esq., chief clerk of the Treasury Department, in which
that officer states that the Treasury will not have the means of paying the
balance of the Louisiana stock redeemable on the 21st instant, and requests
to know Whether the bank can advance the amount to the holders of the
stock or their agents, in such manner as to save the public credit, and to sa­
tisfy holders.
•
" Whereupon, the bank agreed to advance #1,500,000 to the stockholders,
and withhold the stock until the Government had the funds to pay it. The
proposed division of the payments between the months of October and Jan­
uary, announced in the letter of the Secretary of the Treasury, was there­
fore communicated to the agent as a circumstance that would facilitate his
negotiation with the foreign stockholders, with this remark: " The subdi­
vision, by weakening the expected pressure on the 1st of October, makes the
bank less anxious about that event; but, in the present state of the country,
while the whole moneyed concerns of the community are threatened with con­
fusion by the spread of the pestilence, the bank is so desiroas of keeping itself
in an attitude of great strength, to interpose, if necessary, for the relief of
the sufferers, that it is content to submit to any merely pecuniary sacrifice to
secure that object. The notice of the Secretary of the Treasury will there­
fore make no difference in your instructions, as they are so shaped as to pro­
vide for this contingency, by making the postponement to a certain term after
the payment that may occur."
It was with a full.vie,w of all these circumstances, the commercial state of
the country, the prevalence of the cholera, and the probability of some ad­
vance to Government, that the committee, having ascertained that the agents
of the foreign stockholders were not empowered to make any arrangements,
resolved to transfer the negotiation to Europe, and accordingly they request­
ed the same gentleman who had made a similar arrangement in the year 1819,
to proceed to England for that purpose. His instructions, with the corres­
pondence with Messrs. Baring, Brothers & Co., which followed, are annex­
ed to this report. It was the expectation of the committee, that a postpone­
ment of a few months, until the cholera had subsided, would have been suf­
ficient, but, as the foreign stockholders might be unwilling to make a loan for
a less time than twelve months, authority for that purpose was given.
On hearing of the arrival of the agent in Europe, and the certainty of an
arrangement for the postponement of a portion of the foreign debt, the pre­
parations of the bank were so advanced as to justify an extension of increased
facilities to the community, as will be subsequently detailed. But when the
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contract itself reached the bank o,n the 12Jjh of October, and it appeared from
the communications of Messrs. Baring Brothers & Co., to be contemplated
that the stock was to be purchased on account of the bank, they were imme­
diately instructed, on the 15th of October, that the bank had no authority ta
become owners of the stock, and that it was necessary, in order to close the
accounts of the Government, that the certificates should be actually in pos­
session; and they were requested to reimburse themselves, if desirable,, out
of the funds of the bank, and to transmit all thq certificates. This is accord­
ingly now in progress, the successive arrivals from England bringing portions
of them.
The whole amount purchased was #1,798,597 57
The whole amount agreed to be deferred
2,376,481 45
Making an aggregate of
For which certificates are already received to amount of
Leaving

-

-

4,175,079 02
1,524,446 46
$2^650,632 56

The progress which has been made in the payment of the whole public
debt, with the actual preparations of the bank to meet the remainder, will be
seen in the following statement:
The total payments of principal to be made in October and
January, are
$15,236,595 50
Of which are distributed among the smaller loan offices, and
■all paid there except some small sums fully provided for
1,262,885 00
Leaving at the loan offices of Boston, New York, Philadel­
phia, and Baltimore
.
.
.
$13,973,710 50
Of these $13,973,710 50, the domestic and foreign stock has
been paid, except what was not called for, amounting to $1,011,639 00
Of the purchased and deferred foreign stock,
amounting to
.
.
.
$4,175,000 00
Certificates have been received to the amount
of 1,524,000 00
Leaving outstanding -

-

-

-

-

2,651,000 00

Making the total of foreign and domestic, for which certifi­
cates have not been returned
.
.
.
$3,662,639 OG
Certificates received 11,573,956 5 a
$15,236,595 50
The preparation for the payment of these is as follows:
The outstanding foreign and domestic stock
not included in the arrangement of the
bank, is $1,011,639 00
Add at the smaller offices yet unpaid
221,750 00
$1,233,389 Ofr

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For which the bank has, at Boston, New
York, Philadelphia, and Baltimore, debts
from the city banks to the amount of
#939,000 00
And specie
- 4,264,686 89
Making
.
.
.
.
.
.
5,203,626 89
The amount of purchased and deferred stock, for which
certificates have not yet been received, is $2,651,000;
but as certificates to the amount of #380,000 have not yet
been payable for want of powers of attorney, the amount ,
of the purchased and deferred stock yet unpaid, is
#3,031,600 00
To pay this, the bank has in the hands of its foreign cor.
respondents, at the present rate at which it would be
drawn for 3,250,000 00
The general result is, that the whole of the fifteen millions are paid or
provided for, and will be finally extinguished without causing the slightest
inconvenience, and without in the least deranging the business of the com­
munity. What is, moreover, equally remarkable and satisfactory, is, that
by breaking the force of this foreign demand, and assuming it by the bank,
tne exchanges with England and France, instead of being forced up to rates
at which inconvenient shipments of specie might have been made, have, from
the month of July last, kept uniformly at rates not above the actual par of
exchange between this country and Europe.
It has been already stated that the design of the arrangement in Europe
was to prevent any pressure on the community. The cessation of the cholera made that pressure less severe, but, under any circumstances, the accu­
mulation of so large a sum might disturb some of the branches of industry;
and accordingly, as soon as it was known that the agent had arrived in Eng­
land, and'that an arrangement of some kind would be accomplished, no time
was lost in communicating to the board the fact, that the preparations of the
bank were such as to make it practicable to resume the usual facilities to the
community. The subject was therefore immediately brought to the view
of the board in the manner stated in the following extract from the minutes:
BANK OF THE UNITED STATES,

September 21, 1832.
Present. N. Biddle, President; Messrs. Lippincott, Bohlen, Nefli
Willing, Bevan, Sullivan, Pratt, Piatt, Eyre, White, and Henry.
The President laid before the board a statement of the amount of the
three per cents, of the United States to be paid off on the 1st of October, and
explained the situation of the bank and offices in relation thereto, showing
the ample resources which have been accumulated to meet the payment at
various points* by means of the policy which has been pursued for some time
past He suggested also to the board the propriety of considering, now that
%the bank occupies so favorable a position, whether some relaxation in that
'policy might not be advantageously made.
Whereupon it was, on motion,
Resolved, Thatthe committee on the offices be authorized to modify the in.
structions under which the offices of'the bank have been acting, at such
' points and in such manner as they may deem most conducive to the interests
22
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[ Bep. No. 181. ]

of the bank. Instructions were accordingly addressed to such of the western
offices as would most sensibly feel the instructions, authorizing them to re­
sume the purchase of domestic exchange, and draw checks on the bank. In
the same spirit, similar instructions were given to the office at New York,
the situation of which presents the best illustration of the measure in ques­
tion. On the 29th of September, 1832, the State banks were indebted to
the office at New York #1,920,000, and the sums falling due and payable at
the office, for October and November, were, of domestic bills, $2,670,000,
and of local discounts, #4,414,000—making an aggregate of more than
$7,000,000. The sums actually payable to the Government in the months
of October and November for revenue, were $3,225,277 85 cents. But
while the State banks were in debt to the office, it was impossible for them
to discount freely, while the office itself; with an impending demand of
several millions, a great portion of which was payable to foreigners, was
obliged to husband its resources for these payments. The month of October
was therefore regarded as a month of great embarrassment. Fortunately,
the arrival of the intelligence of the arrangement came in time to enable the
bank to avert it by the following instruction:
BANK OP THE UNITED STATES,

October 2,1832.
DEAR SIR: The preparations for the payment of the public debt on the 1st
instant are so ample that no inconvenience is apprehended from them at the
bank or any of its offices; and, after all the immediate demands on that account
are discharged at your office, it will still, in all probability, be very largely a
creditor of the State banks in the city. This state of things naturally presents
for consideration the course which the office should pursue towards them and
towards the community. In the present condition of the exchanges with Eu­
rope. there will probably be no demand for specie, and it would therefore be
unnecessary to call upon the State banks for payment in that form of their bal­
ances, that being a measure to be avoided, unless to replace what piay be taken
from the office should any demand be made upon it But, while the balan­
ces continue thus heavily against the State banks, they will be unable or
unwilling to do much business, and the office will therefore have an'opportunity of giving to the community such facilities as these State banks have
it no longer in their power to furnish. A large portion of the debt from
them to the office may thus be absorbed in good paper, payable on or about
the first of January next, when another payment on account of the public
debt will be made.
I therefore take the earliest opportunity, after ascertaining the probable
demands against the bank on account of these payments, to submit to the
consideration of the board the expediency of employing a portion of the
surplus funds, now in the form of balances from the State banks, in the dis­
count of such paper as may give facilities to the business of the city. The
funds will be thus usefully and profitably employed .until they are wanted,
and a great accumulation of bank balances be prevented.
•
Very respectfully, yours,
N. BIDDLE, President.
ISAAP LAWRENCE, Esq.

Prest. Off. Dis. and Bep. New York.

t

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171

The President of the office answered as follows, in his letter of the 4th of
October, 1832.
Your letter had the desired effect of inducing the board to increase our
discounts on good paper, payable about the 1st of January, and on different
stocks payable about the same time. This will enable us to aid the com­
munity, reduce the balances due the city banks, and be profitable to the in­
stitution.
I am, &c.
ISAAC LAWRENCE, President.
And the cashier wrote as follows, October 3d, 1832:
" Our offering to-day was 0750,000; our receipts $295,000; and discounts,
including $170,000 on three per cents., and $135,000 on other stocks,
$551,000. The banks are in our debt $1,540,000; and we have paid, of the
three per cents., $1,100,000, or about that amount"
The committee have entered into this explanation, in order to show the
operations of the measure confided to them in all its details. On reflecting
upon the whole course of iti with all the information which subsequent
events have supplied, they are entirely satisfied that the measure has been
highly beneficial to the community as well as to the Government; and that,
so far from protracting the settlement of the accounts of the Government,
they will, in fact, be brought to an earlier termination than if the arrange­
ment had not been made.
,

The Western Debts.
In the report of the Secretary of the Treasury, of the 5th December, 1832,
he enumerates, among the causes which made him anxious about the security
of the bank as a depository of the public funds, " the great amount of the
bank's transactions, especially in its western branches," and a special agent
was sent to examine the operations of the bank in the western States, as.
being objects of particular uneasiness.
This ill opinion of the western debts was unexpected/because, in his re­
port of the last year, the Secretary, in enumerating the merits of the bank,
was pleased to say, " to these may be added the knowledge the present bank
has acquired of the business, and the wants of the various portions of this
extensive country, which, being the result of time and experience, is an
advantage it must necessarily possess over any new institution."
In the course of this year, the debt in the western States has been consi­
derably diminished; and the judgment which has declared that the loans of
last year were deserving of praise, it was presumed would have exempted
from censure the smaller loans of the present year. The effect of such a
declaration, not on the bank, but upon the character and credit of the country
generally, and more especially upon our western fellow citizens, is deeply
to be regretted, since it may inflict upon them a lasting injury.
The western country is blessed with a fertile soil adapted to evwy variety
of culture, and with an intelligent and; industrious people, who need nothing,
except the assistance of pecuniary capital, for the full development of their

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[ Bep. No, 121. ]

'

resources. Knowing this, the bank has willingly devoted a large share of
its means to the use of that part of the Union. Believing that the commer­
cial credit of the country is the common property of the Union, it has en­
deavored, on all occasions, to sustain the reputation of the State institutions,
and to aid the State Governments in their efforts to attract the investment
of foreign capital. Of the seventeen millions of loans made by the State of
Pennsylvania, nearly the whole is furnished from Europe. The loans of
Ohio and New York are similarly situated; and at this moment the States
of Alabama, Tennessee, Ohio, and Indiana, are endeavoring, either by the
direct responsibility of the State Governments, or through the agency of
banking institutions, to procure the use of foreign capital. At such a mo­
ment, a declaration by what is presumed to be the highestfinancialautho­
rity in the Union, that the Bank of the United States is an unsafe depository
of the public funds, and that this insecurity arises mainly from its loans in the
western States, is calculated to destroy the confidence of European capital­
ists, and to impair the credit of the western States, and the western banks.
As the common friend of the solvent State institutions, and to a certain ex­
tent identified with the general credit of the country, to the Bank of the
United States it especially belongs to remove so injurious an impression, and
to bear a willing testimony to the ability and the punctuality of its fellowcitizens in the western States, in the course of its -connexion with whom
the bank hasv met with few losses, and who have uniformly displayed an
honorable punctuality in their engagements. The desire to render them
justice induces the committee to enter into some details in regard to the
debts of the bank in the western States.

Places.

Kentucky, Lexington
Do
Louisville
Ohio, Cincinnati < Tennessee, Nashville
Missouri, St. Louis

Loans.

0916,230
2,165,656
2,830,821
1,767,179
566,361

Bills of Exchange.

40
49
92
17
24

0840,426
1,969,411
542,332
1,787,466
74,620

Totals.

54 01,761,656 94
48 4,135,067 97
8d 3,373,154 81
00 3,554,645 17
48
640,981 72

08,246,249 22 05,219,257 39 013,465,506 61
These loans have been made by boards of directors selected, in their re­
spective residencies, with great care, and composed of the most respectable
inhabitants of the neighborhood. They act under a feeling of strong and
habitual responsibility, and they are required to make a semi-armual report
of the situation of the debts, in a form which cannot fail to secure it a delibe­
rate examination.In regard to these, the returns from the offices, respectively, on the first
of December last, contain the following certificates:
" The undersigned hereby certify, that they have carefully examined, in
detail, the lists of suspended debt and real estate at this office, and are of
opinion that the classification of the debts, the estimated probable loss of

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173

principal on each debt of the doubtful and bad classes throughout the
list, with the estimated present value of the real estate, are all correctly
made as therein stated. That, the explanatory remarks opposite to each
debt will give an abstract of the measures which have been pursued within
the last six months for its recovery or security, ahd that the recapitulation
exhibits in the aggregate (including the losses chargeable to the contingent
fund) all the losses at present known or apprehended on the inactive debt at
this office; and that of the active or current debt growing to maturity, $
is considered doubtful, ahd upon which we apprehend there will be ultimate­
ly a probable loss of
dollars
Cashier.
President.
> Committee.
OFFICE BANK U.

STATES,

18,

The latest returns thus certified, of the losses at these several offices, on
the above debt are as follows:
Lexington
$27,711 87
Louisville
7,734 38
Cincinnati
- '
- 16,953 59
Nashville
.
7,744 25
St. Louis
no loss
$60,143 09
The proofs of the general security of this debt are confirmed by a single
circumstance which seems entirely decisive—which is the actual payment of
such a portion of it as was required from the debtors. For example, on an
average of ten months past, the local loans in Kentucky, Ohio, Missouri,
and Tennessee, have actually been paid to the amount of $3,532,104 93
out of a sum of $ 11,257,862 18. Thus the bank had lent in Tennessee, at
the branch in Nashville, on the 12th of October, 1831,
$ 3,137,870 73
By January 2d, 1833, it had been reduced to
-•
1,640,07120
A diminution of $1,497,799 53
At Louisville on the 2d February, 1832, the
loans were
.
$2,682,629 50
On 12th January, 1833, they were only
- 2,078,906 19
603,723 31

At Lexington they were, on the 16th July,
1832
81,333,530 66
And on the 12th January, 1833
773,865 37
559,665 29
At Cincinnati on 19th June, 1832 On 10th January, 1833
-

$ 3,366,068 00
- 2,675,701 80

At St. Louis on the 18th June, 1832
On 7th January, 1833
-

-

690,366 20
$ 737,763 09
557,212 69
$ 180,550 40
Making an actual reduction of the debt of

-

$ 3,582,104 93

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which is an actual diminution of about one-third of the original debt within
an average time of ten months, which was re-invested for remittance in bills
of exchange. These comparisons are made from the highest points at which
the loans were within the course of fifteen months, so as to show the great*
est reduction. The reduction of these same offices, calculating it from Jan­
uary, 1832, to January, 1833, was 02,138,065 47, while, during the same
period, the domestic bills had increased $ 657,004 58, making an actual re­
duction of investments of all kinds, amounting to $ 1,481,061 09, or near­
ly a million and a half.
In further illustration of the character of the western debts, the returns
show that the total amount of domestic bills of exchange purchased at the
western offices from the 1st of July, 1831, to the 31st of December, 1832,
is
.
„
.
.
$16,397,094 93
On which the amount protested and unpaid is
13,863 87
Of which the estimate of probable loss is
1,500 00
But as some portion of this may be still running to maturity, and its fate un­
decided, it should be remarked that the whole of this estimated loss of $ 1,500.
arose out of the purchases during the year ending on the 1st of July, 1832,
which amounted to
$ 10,137,722 22
On which the whole amount protested and remaining un­
paid is .
.
.
.
.
.
.
13,863 36
The total losses only
1,500 00
The cause of a loss, so little proportioned to the amount of the investment,
is to be found in the fact that the exchange transactions of the western States
grow out of the actual business, the actual shipments of the produce to the
place of its exportation furnishing to the bank the triple security of the
personal responsibility of the shipper, the property which he exports, and
again the personal liability of the merchant who receives it at the place of
exportation. As an illustration of this, the following statement of the exchange operations of the bank at Nashville may furnish an interesting exam­
ple—
1831, October, $ 366,5J2 63—When the few bills remaining out of drafts
on shipments of the previous crop had
not yet run to maturity.
1831, Decem'r, 1,062,094 84—When the shipment of the new crop had
commenced, and the planters and ginners
had begun to draw on their correspon­
dents.
1832, April,
2,759,754 93—When the crop may be considered to have
all been shipped, and drawn upon, and
of course the amount of bills at the highest point.
1832, October, 503,234 90—*When the bills drawn upon the shipment of
the last crop had mostly matured.
1833, Jaauary, 2,049,612 02—The shipments of the present crop having
rogressed to some extent, the amount of
ills is naturally swelled in proportion.
In respect to ihe ultimate security ef the present debt in the western
States, there is a case of a branch actually closed, from which some estimate

I

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175

may be'cellected for the future. In the year 1821, the branch at Cincinnati
was closed with a debt of $2,528,350 39. A large estimate of probable
losses was made, amounting to $851,000, but, by judicious or fortunate ma­
nagement, this debt has been so secured by mortgage and judgments, and by
compromising on real estate, that no loss is now anticipated.
In confirmation of these statements, the committee add the report of the
agent of the Government itself. In the month of November, 1832, the Se­
cretary of the Treasury deputed Henry Toland, esq., of Philadelphia, to
make an examination of the State of the bank, adding, "you are requested
to direct your attention particularly to the state of the debt due to the wes­
tern branches, and from persons in the western country generally, and, in as­
certaining its amount, to inquire what amount of the domestic bills of ex­
changers due in the western country, and generally how the western debt
is secured."
Mr. Toland was eminently qualified for this task, as being a man of busi­
ness, familiar with the operations of the bank of which he was formerly a
director, and long engaged in trade with the western country. His report
concludes with the following emphatic language:
"Placing reliance on the cashiers of the different offices, and the respect­
able gentlemen composing their different directions, and comparing the
amount of business and profits, and adding thereto my own knowledge of the
general business of the western country, 1 do not hesitate to say that I consi­
der the debt in a safe and wholesome state, and that a greater amount of loss
need not be apprehended from it than from a similar mass distributed in the
cities of the Atlantic frontier."
In this opinion of Mr. Toland, the committee, from their own experience
and observation, entirely concur.
The safety of the Public Deposiles.
The security of the public deposites may perhaps be inferred from the
explanations already given, but it may not be superfluous to suggest some
considerations which may relieve all solicitude on that subject.
1st From the establishment of the bank to the present day, it has been the
depository of about 440 millions of dollars of public revenue. The safety
with which they have been kept and transferred throughout the United States,
is attested by all the Secretaries of the Treasury. By Mr. Crawford, who,
on the 4th of December, 1818, in reply to an inquiry from a committee of
Congress, says: "In reply to the specific enquiries which you make, I have
the honor to state that the bank has correctly discharged the duties of com*
missioners of loans, and agents for the payment of military pensions, as far
as it has been required by law." It has promptly transmitted the public
money wherever, and whenever, it has been required to perform that service.
It is presumed that the facilities expected from it, in the collection of du­
ties, have been furnished, as no information has been received at the depart­
ment that such facilities have been withheld.
By Mr. Rush, who in his report of the 13th of December, 1828, says:
"In faithful obedience to the conditions of i*3 charter, and aided by its
branches, it has afforded the necessary facilities for transferring the public
moneys from place to place, concentrating them at the points required. In
this manner, all payments on account of the public debt, whether for inter­
est or principal; all on account of pensions; all for the civil list; for the ar-

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[ Rep. No. 121. ]

my, for the navy, or whatever other purpose wanted in any part of (he Un­
ion, have been perpetually met. The bank is also the depository with its1
branches for the public moneys from whatever sources of revenue received,
aiding, too, in their collection, thereby giving safety to the keeping, as well
as promptitude and certainty to the disbursement of the public treasure.
It receives the paper of the State banks, paid on public account, in the inte­
rior, as well as elsewhere, and by placing it to the credit ©f the United States
as cash, renders it available wherever the public service may require."
"By Mr. Ingham, who in a published letter declares of the bank, that it ena­
bles the Government to transmit its funds from one extremity of the Union
to another, without cost, without risk, without pressure upon the section
from which they are withdrawn, and with a despatch which is more like
magic than reality."1
.
And the present Secretary of the Treasury, in his report of ihe 5th of
December, 1831, remarks, it roust be admitted, however, that the good
management of the present bank, the accommodation it has given to the
Government, and the practical benefits it has rendered the community,whe­
ther it may, or may not have accomplished all that was expected from it,
and the advantages of its present condition, are circumstances in its favor
entitled to great weight, and give it strong claims upon the consideration
of Congress to any future legislation on the subject. Moreover, in his
report to Congress at the present session, he declares that no loss had ever
been sustained by the Government on its deposites with the Bank of the
United Slates.
"
The simple facts thus emphatically vouched, that, out of 440 millions ot
Government deposites taken in all kinds of bank paper, an.d in all parts of the
United States, during a period of sixteen years, not one dollar of loss has
been sustained; that, during that whole period, it has faithfully performed
all its duties to the Government, and never, on any occasion, failed to meet
its engagements, may be accepted as presumptions in favor of its solvency.
2d. The general situation of the bank may afford similar assurances. The
bank has a capital of 35 millions, all paid; it has more than one-fourth of that
capital actually in gold and silver in its vaults; it has due to it from individualsjin the United States upwards of 60 millions of debts, and a balance
exceeding three millions in Europe; it has real estate which is estimated at
three millioas of dollars; and, in'the opinion of the committee, there never
was any period since its establishment when it was in a more prosperous con­
dition than at the present moment.
This will be seen in further detail by the following condensed table from
the last monthly statement of the bank and its offices and agencies.
The claims against the bank, are,
Its notes in circulation, - & 17,459,571 79
The deposites, public and private, ■ - 13,347,517 95
The debt to the holders of the funded debt of the United
States, for principal and interest,
- ■ 6,723,703 16
The unclaimed dividends,
.
76,529 84
Amounting to

-

- $37,807,322 74

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[ Rep. No. 131. ]
j Its resources are,
Specie, Notes of State banks,
.«Balances due by State banks,
-

177

-

88,951,847 60
- $2,391,655 04
- 1,596,253 08
-—■
3,887,907 \2
Funds in Europe, and foreign bills of exchange, 3,190,225 43
Real estate, including banking houses, - ■ s 3,036,241 52
. Debts due by individuals, viz.
On notefrdiscounted,
$43,626,870 32
On domestic bills of exchange, 18,069,043 25
61,695,913 57
Mortgages, &c, 103,330 75
#
Making
a
From which deduct the claims as above, -

,
-

-

And there remains an excess of -

-

-#43,058,143 2$

-

80,865,465 99
37,807,322 74

This sum of $ 43,058,143 25 forms a guarantee to the holders of the notes
of the bank, and to its depositors, over and above the whole amount of
their claims. It is applicable, in the first instance, and before one dollar of
it can be appropriated in any other way, to the payment of any deficiency
which might, by any possibility, arise from the 37 millions first destined for
the payment of notes and deposites, The whole of it must be absolutely
lost before there can be a question whether the holders of the notes of the
bank, and public and private depositors, are in danger of sustaining any loss.
After these claimants are satisfied, and not until then, the stockholders who
own its 35 millions of capital may divide the balance amongst them.
They therefore conclude this part of the subject by expressing their entire
conviction of the accuracy of the opinion expressed by Mr. Toland, the con­
fidential agent of the Government, who says; "Thus far I consider my re­
port as complying with that part of your letter directing the investigation,"
so as to ascertain the security of the public money and the solvency of the
bank, "neither of which can, in my opinion, admit of a doubt."
All of. which is respectfully submitted.
»
MATTHEW L. BEVAN, Chairman.

BANK UNITED STATES,

July 1^, 1832.
Being desirous of making some arrangement in regard to
the reimbursement of the three per cent, stocks of the United States, and
the time being too short to allow of a prolonged correspondence, we have
requested Th. Cadwalader, esquire, to confer with you on the subject. Mr.
Cadwalader has been long, and still is, a director of the bank, enjoying
its entire confidence, and is personally well known to you. I will there­
fore merely refer you to him for particulars; and remain,
Very respectfully,yours,
N. BJDDLE, Prut,
,
GENTLEMEN:

Messrs. BARING, BROTHERS & Co., London.

23
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178

[ Rep. No. 121. ]
BANE UNITED STATES,

July 18, 1832.
DEAR SIE: The probability that the spread of the Cholera may occasion
great embarrassment and distress in the community, makes it expedient for
the bank to keep itself in an attitude to afford relief should its interposition
be necessary; and also to mitigate the pressure which the reimbursement of
the three per cent, stock, held by foreigners, may produce in October
next. The whole amount of this foreign stock is about $7,800,000, of which
the bank is desirous of postponing the payment of about $5,000,000. You
will perceive from the statement accompanying this letter, that the bank is
the agent of Messrs. Baring, Brothers & Co. for upwards of three millions.
For the postponement of that amount, with an additional sum of two mil­
lions belonging to residents in Europe, you are authorized to make an ar­
rangement on the following terms:
1st As to the time. It is not yet positively decided when the whole
of the threes will be paid, and the proposed arrangement must therefore re*
fer to that contingency, and be so modified as to fix a certain time after the
period of redemption named by the Treasury. You may make this post­
ponement for six, nine, or twelve months, after that period, and endeavor to
preserve such an option as to time, as may enable the bank to diffuse the
payment over as wide a period as possible of the term.
d. As to the rate of interest. We presume, of course, that there will
be no difficulty in continuing the loan at its present rate of three per cent
without any further charge. Should you, however, find it more advantage­
ous, instead of making the arrangements personally with the stockholders
themselves, to employ the agency of any mercantile house to effect the ob­
ject, you are authorized to allow a reasonable commission for their trouble.
As you h'ave already concluded, very satisfactorily, a similar arrangement
some years ago,, and our personal interviews have made you very familiar
with the whole subject, I will only add, that
I am, very truly, &c.
N. BIDDLE, Prest,
THOMAS CADWALADER, Esq., Philadelphia.

BANE UNITED STATES,

October 19, 1832.
GENTLEMEN: The above is a copy of my respects of the 15th instant,
since which 1 have had the pleasure of receiving, this morning, your favor
of the 14th ultimo. To what I had the honor of writing on the 15th in­
stant, the only addition which it seems necessary to make, is this: the bank,
in order to close the account with the Government, is anxious to obtain the
certificates. It is, however, possible that some of the holders who have agreed
to the postponement may prefer retaining the certificates till the period of
final reimbursement. The bank is very unwilling to give either to these
stockholders or to yourselves any unnecessary trouble; and, should you find
any reluctance on this score, you will please not to urge it, but leave the
certificates in the hands of the stockholders, and we will endeavor to accom­
plish the object of the bank without possession of the certificates. Those
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179

for the stock purchased by yourselves, we shall be happy to receive by an
early opportunity.
With great respect, yours,
N. BIDDLE, Prest.
Messrs. BARING, BROTHERS & Co., London,

August 22, 183d.
SIR: WC have had the honor of receiving, from the hands of Mr. Cadwalader, the letter with which you favored us on the 18th ultimo* and in which
you refer us to that gentleman for the particulars of an arrangement the in­
stitution was desirous of entering into in regard to the reimbursement of the
United States' three per cent, stock. You will, no doubt, learn from Mr.
Cadwalader that no time has been lost in coming to an understanding with
us as to the mode in which your views could be carried into effect J and the
result of our communications with him has been a contract, of which, as he
will no doubt send you a copy, it is not necessary we should say more than
that we trust the board will perceive in it evidence of that earnest we at all
times feel to put all our transactions with, them on the same easy and liberal
footing.
We trust you will excuse our observing that we conceive no question-can
now arise as to any extension of the ordinary credit which we hold at the
disposal of the bank, as the liability to be called upon for large advances for
the above operation, either in the shape of drafts or purchases of stock, makes
it absolutely necessary that the limit should be strictly attended to.
We have only to add, that we feel much flattered at this further proof of
our possessing the confidence of the institution; and have the honor to be*
sir, your obedient servants,
BARING, BROTHERS & Co.*
LONDON^

N. BIDDLE, Esq.

PresH V. S. Bank, Philadelphia.

August 30,183d.
SIR: In consequence of the personal communications we have received
from General Cadwalader, we beg leave to inform you that we have secur­
ed and paid for the following parcels of United States' three per cent, stock,
20,0001
viz.
LONDON,

100,000
► at 90.
25,000
25,000 w
21,000 at 90*
* 80,000 at 91.
#271,000.

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And we have also made the following purchases, to be delivered immediately,
lethe
viz.
10,000
27,400
J. at 90*.
66,037 25
100,000
200,000
I at 90§.
200,000
20,000

I-

$623,437 25—to be delivered before the 6th September.
We enclose a list of proprietors of United States' three per cent, stock,
who have consented to postpone the receipt of their principal till 1st Octo*
ber, 1833, the amount of their stock being, collectively,'$342,646 63. As
we are not acquainted with the manner in which the institution may desire
to have these transactions managed, we have adopted the course of address­
ing you on the subject, that you may dispose of the accounts, &c. as you
may deem expedient.
We have the honor to be, your most obedient servants,
BARING, BROTHERS & Co.
N. BIDDLB,

Esq.

Pres't Bank U. S., Philadelphia.

LONDON,

September 6, 1832!,

SIR: We confirm wfcat we had the honor to write to you on the 30thult,
and now annex a list of other proprietors of United States' three per cent.
stock, who wish to postpone the reimbursement of capital till October, 1833,
making a total, with those already advised, of Si,609,707 42 purchases of
the United States' three per cent, stock on account of the institution. We
conclude it may be more convenient to you to have the whole purchases up
to the present date presented to the eye at one view; and we therefore en­
close a detailed list, showingthe total amount to be
- Si ,051,251 31
And purchases, but not yet delivered
.
.
.
364,995 05
We remain, sir, your obedient servants,
B. B. & Co,
N. BIDDLE, Esq., Philadelphia.

Messrs. Baring, Brothers & Co., of London, and Thomas Cadwalader, of
Philadelphia, on behalf of the Bank of the United States, agree, as follows,
viz. for a commission of one-half per cent, .on the amount, and the said
Baring, Brothers & Co. agree:
1st To invite the holders of the three per cent, stock of the United States
to retain their stock until October, A. D. one thousand eight hundred and
thirty-three, the bank engaging to pay the interest quarterly until that time.
2d. To buy up the said three per cent, stocks on the best terms at which
they can be obtained, both here and in Holland, at prices not exceeding
ninety-one per cent., or as much higher as the running quarterly interest, in
case of need: the cost of which stocks to be placed to the debit of the Bank
of the United States, in a separate account, chargeable with whatever rate of
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18*

[ Rep. So. 121. ]

interest Messrs. Baring, Brothers & Co. may be compelled to pay. The
ertificates of stock so purchased to remain with Messrs. Baring, Brothers
& Co.
3d. In case the amount of stocks so purchased, and the amount that may
be retained by the holders, as above, should, together, be less than the sum
of five millions of dollars, then Messw. Baring, Brothers & Co. agree to
make up the deficiency, in case the bank should find it desirable to draw for
such deficiency, or any part thereof, on which sum or deficiency Messrs.
Baring, Brothers & Co. to charge the same interest as in their general ac­
count with the bank. The whole advances to be reimbursed by the Bank of
the United States in October, A. D. one thousand eight hundred and thirtythree.
Witness the hands of the said parties, at the city of London, the 82d da}'
of August, A. D. one thousand eight hundred and thirty two.
BARING, BROTHERS & Co.
T. CADWALADER.
Signed in presence of us,
JAMES STEWAKT RANGER.
FBAS. WM. GENTRY.

BANK OF THE UNITED STATES,

October 31, 1832.
GENTLEMEN: My last respects were of the 19lh instant: since then we
have understood that the Treasury Department is desirous of closing the ac­
counts of the foreign holders of the three per cents , a circumstance which
increases our own anxiety to receive the certificates without delay, and in­
duces me to request that you will have tha goodness to give every facility
to the transmission of them.
In regard to those purchased by yourselves, there can, we presume, be
no difficulty; and as to those stockholders with whom you have agreed to
postpone the payment, you will find, we trust, no indisposition to make the
arrangements suggested in-my letter of the 15th instant for the delivery of
their certificates. Should, however, any difficulty occur, it would be agree­
able to the bank if you could obviate it, either by causing the certificates to
be sent to the bank for immediate reimbursement, or, if necessary, by pur- chasing the certificates on your own account, in the same manner as was
done with those previously purchased, and taking your reimbursement in
the mode most agreeable to yourselves. The whole subject is committed
to your good judgment; with the respects of
Your obedient servant,
N. B1DDLE, President.

Messrs. BARING, BROTHERS & Co., London.

PHILADELPHIA,

July 23//, 1832.

DEAR SIR: The day after you left Philadelphia, I received a communi­
cation from the Secretary of the Treasury, apprising me of his intention of
paying off two-thirds of the three per cents, on the first of October, and the
remaining thir&on thefirstof January next. The mail of to-day has brought the official notice to that effect; a copy of which is enclose^.

182

I Hep. No. 121, ]

I hasten to give you the earliest information on the subject, as it will hare
an important bearing upon the negotiation with which you are charged. The
first effect of it will be, that, as the foreign stockholders will receive, not the
whole of their payment, but only two-thirds of it, they will not. be able to
make as satisfactory an investment as they otherwise would, being obliged to
divide it into two separate investments, and'of course they will be more
disposed to make an arrangement by which they may receive their interest
on the two-thirds, until the remaining third is paid, so as to make an invest­
ment of the whole.
The subdivision, by weakening the expected pressure on the first of Oc­
tober, makes the bank less anxious about the event. But, in the present
state of the country, while the whole moneyed concerns of the community
are threatened with confusion by the spread of the pestilence, the bank is so
desirous of keeping itself in an attitude of great strength, to interpose, if
necessary, for the relief of the sufferers, that it is content to submit to any
merely pecuniary sacrifice to secure that object. The notice of the Secretary
of the Treasury will therefore make no difference in your instructions, as
they are so shaped as to provide for this contingency, by making the post­
ponement to a certain term after the payment, whenever that may occur.
Very truly, yours,
N. BIDDLE, President.
TBOMAS CABWALADER, Esq.,

London.

BANE OF THE UNITED STATES*

|

October 15, 1832.
I have had the pleasure of receiving your esteemed favors
of the 22d and 30th of August, and 6th ultimo, and have been placed, by
Mr. Cadwalader, in possession of the contract between him and your house,on the 22d of August last.
The care and attention which you have been good enough to exhibit on
this occasion, furnish a new evidence of the zeal to promote the interest of
the bank which has uniformly characterized your house, and which has
always been fully appreciated.
As you remark in your letter of the 30th of August that you wish to have
the account disposed of as the bank may deem expedient, I take the earliest opportunity of inviting your attention to one part of the arrangement, with
which it will be impracticable for the bank to comply.
When ihe institution was chartered at the close of the last war, the g o ­
vernment had a large debt which it proposed to pay or purchase up out of
the surplus revenue-, and, in order to prevent any competition, in these
purchases, the charter expressly declares that the bank shall not be at liberty
to purchase any public debt whatsoever. The object of this provision would
certainly not be counteracted by the present operation, since Government
has actually advertised the payment of the stock, which is thus, in fact, no
longer an object of purchase by the sinking fund. This circumstance it *
probably was which induced Mr. Cadwalader to regard the purchase of
public debt so situated as not conflicting with the provisions of the charter.
When, however, the stock was purchased in August and September last, it
was still a subsisting debt—one-third of it will so continue^jntil the 1st of
January next. And even were the case less clear than it seems, the instiGENTLEMEN:

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183

' tution is, both from inclination and duty, disposed to give the most rigorous
construction of its own powers. -I am under the necessity, therefore, of ap­
prising you that the bank cannot-consider as purchased on its account, the
three per cent stock reported hy you in your favors of the 30th of August
and 6th ultimo, amounting to $1,474,827 33; and I have now to propose
for your consideration the following substitute for that arrangement; which
will, I trust, be mutually agreeable to, both parlies.
let. It will be necessary to transmit, without delay, the whole of the certifi­
cates with powers of reimbursement, so that, in the first instance, the bank may
receive payment for the owners. Without such payment, the bank is not
in actual possession of the funds, which will not be passed to its credit until
paid to the stockholders. This seems to be of immediate urgency, and I
therefore request your immediate attention to it.
2d. When the.stock is thus reimbursed to the stockholders, the portion
which they have consented to postpone will be passed to their credit on
the books of the bank, and continue to bear an interest of three per cent.
per annum, payable quarterly, until the 1st of October next, when the
principal will be reimbursed. If it be necessary, on the delivery to you of
the certificates, with powers of reimbursement, to substitute some other cer­
tificate on your part, as was done in case of the Louisiana debt by you, you
are hereby authorized to give to the parties a certificate for an amount equal
to what they respectively surrender to you.
3d. The portion purchased by you will, in like manner, go to your credit
when paid by the Government. At that time it will be for you to deter­
mine whether it shall continue to draw an interest of four per cent, (if that
be the rate,) payable quarterly, or whether you would desire immediate
payment. If your arrangements with others make it necessary or expe* dient for you to continue the loan to the bank for that period, we shall, with
great cheerfulness, acquiesce in your views. If, however, it should be as
consistent with your interest to receive reimbursement, the bank will be
ready and willing to make it immediately. I mention this, because it may
perhaps be convenient for you to provide funds in New Orleans for the in­
stalments of the loan to the Union Bank, in which event, you may consider
the whole amount of your purchases of three per cents., or any porfion of
it, as immediately applicable to that object.
The wish to postpone the payment of some portion of the fifteen millions,
reimbursable between the 1st October and the 1st of January, arose from
' the appearance of the cholera, which threatened to throw the business of the
country into great confusion, and imposed on the bank the duty of keep­
ing itself in an attitude of great strength, so as to interpose, if necessary, to
relieve the community. The calamity having passed with less injury to
the mercantile classes than was anticipated, the bank will not be called upon
for any extraordinary effort, and would be content to pay at once the whole
amount now in your hands. This would have the further recommendation,
that it would relieve you from the payment of interest on the balance, which is
probably equal to your purchases.
In either event, whether you wish to. 'take immediate reimbursement, or
continue the loan, it is presumed that the terms of the purchases will, under
this change of the arrangement, be favorablefcanyourinterest, which we are
always anxious to promote. Should it, however, happen that-any pecuniary
loss shall be sustained by you in consequence of these purchases, the bank
will, of course, make an ample indemnity, for it. The commission sti*
4
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184

[ Rep. No. 121. ]

pulated upon the whole sum will not be in any degree affected by this
change, but will continue as originally determined between Mr. Cadwalader and yourselves. You will readily believe that nothing but an imperious
sense of duty would induce the institution to propose these changes in the
arrangement; and we must rely upon your habitual courtesy to excuse any
additional trouble which they may occasion.
With great respect, your's,
N. BIDDLE, President.
^Messrs. BARING, BROTHERS & Co.
London.

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Federal Reserve Bank of St. Louis, One Federal Reserve Bank Plaza, St. Louis, MO 63102