Full text of Report of the Committee of Ways and Means of the Legislature of Pennsylvania, on the Currency and Finances of the Commonwealth : Mr. Keating, Chairman : Read in the House of Representatives, March 1, 1834

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:

REPORT
OP

THE COMMITTEE

OJP

WAYS AND MEANS
OP THE
I

LEGISLATURE OF PENNSYLVANIA*
ON THE

CURRENCY AND FINANCES
OP THE

COMMONWEALTH.

MR, KEATING, CHAIRMAN.

Read

in the

House of

Representatives,

March

HARRISBURG
MINTED BY HENBY
1834.

K. STBOXa,

1

,

1834,

REPORT
OP

THE COMMITTEE OF

WAYS AND MEAN8
OF

THE

LEGISLATURE OF PENNSYLVANIA*

CURRENCY AND FINANCES
OF

THE

COMMONWEALTH,

MR, KEATING, CHAIRMAN.

Read

in the

Hov$e of Representatives, March

HARRISBURG
MINTED BY HEN8Y
1834.

:

K. STSOKff.

1,

1834.

REPORT.
The committee of Ways and Means, to whom were referred
1st. So much of the Governor's message of the 4th of December last, as relates to the finances of the Commonwealth;
2d and 3d. The messages from the Governor, of the 21st of
January and of the 26th of February, and who
4th.

By

a resolution

of the

on the 20th of December

House of Representatives, passed

were ''directed to inquire into the
present state of the currency, and its probable effects upon the
credit of this Commonwealth; and also to inquire how far the public interests might be promoted by the continuation of the operations of the Bank of the United States under a charter from this
Commonwealth, should its present charier not be renewed by the
United States," REPORT:
That they have devoted to the subjects referred to them all the
care and reflection consistent with the time which has elapsed since
they were committed to them.
From the first moment of their investigation, they were alarmed
at the contemplation of the very serious crisis, which, it became
apparent to them, our financial concerns were approaching.
The condition of our money market had materially changed in a
short time, and the effects of this change were already sensibly
felt in every branch of trade and industry.
A personal visit to
our commercial metropolis, and a careful scrutiny into the various
facts and statements which were communicated to them, have led
them to the conclusion, that the pressure upon our community is
at this moment alarmingly great; exceeding any which has befallen
of those among us, who have not far adit within the memory
vanced beyond the meridian of life. The committee are aware
that the existence of this pressure has been denied by light and
unreflecting persons, and considered doubtful by others of graver
character; but they believe that no one having any respect for his
reputation, who has carefully inquired into it, will at this time be
hardy enough to deny its reality.
Lest, however, the committee
should be supposed to have erroneously or hastily admitted it,
they proceed briefly to state some of the evidences of it, which
have come under their personal knowledge.
Of these, perhaps, no safer test exists, than that which is furnished by the stock exchange. This exhibits a decline of from
last,

ten to thirty per cent, in the value of stocks; affecting all of them
more or less, and leaving none untouched. Even those favorite
investments, which are deemed free from all chance of losses, or
from vicissitudes in their dividends, have undergone great depressions; as wo shall nave occasion hereafter to show.

Next to these, the rate of exchange on England may be consid-.
ered as a safe test of the relative state of the money markets of
London and the United States. At this moment, when the value
of the silver dollar is in England 4s. lOd. (by the latest advices)
exchange on England has been sold as low as from 98 to 100.
On the 12th of February, 98| was the price paid in New York.
lower than any paid for more than thirteen years past.
It is
The committee are advised, that since 1820, the rate of exchange
In 1820 it ranghas never been below three per cent, advance.
ed from par to 3£ per cent, premium; at present it is 2 per cent,
below par. The following table, (which they believe to be accurate,) exhibits the fluctuations of exchange during a lapse of

yearsRates of exchange on London from 1821

to 1833, inclusive

;

exhibiting the lowest cash price on any packet clay in each month
The highest price, during the time, was 14 per
for prime bills.
cent, in February, 1832.

Another evidence of the pressure is found in the extravagant
prices which are now paid for the discount of notes; and which the
committee are assured has of late been not less than from 1A to 2
per cent, per month, for the very best paper in the market; and
which has risen even to 3 per cent, in many cases, where the security of the re imbursement of the debt was unquestionable.
A still more painful proof is exhibited in the number of heavy
which have lately occurred both in Philadelphia and New
In the latter city there have been not less than fifty failures; and in most cases, we observe them among men of high
men also possessed
standing and of unquestionable character
of undoubted fortunes, but whose credit is impaired in these days,
not by an actual surplus of their debits over their credits, but by
the impossibility of making the latter immediately available to
failures,

York.

—

meet the former.

The

actual dearth of means has broken up

many of our manufac-.
establishments; and compelled large manufacturers, (the
names of whom are before the committee,) either to curtail in part
their operations, or in some cases to stop them altogether.
Comparing this state of the country with the prosperity which
prevailed at this time last year, the investigation becomes both
painful as to the present, and alarming as to the future.
In his annual message to the Legislature, at the commencement
pf the last session, the Governor of the State depicted the prosperity of the country in terms, which, however true then, it might be
deemed mockery at this time of distress, to cite. In the able report submitted to the House, by the chairman of the committee of
Ways and Means t on the 22d of March last, he congratulated
"the House upon the unexampled prosperity of our financial condition, as demonstrated by the fact that the requisite loans are obtained at a higher premium than has e\er been received by the
similar operations of any state or country."
In like manner the committee on Banks in their report of Jan.
31, 1833, did " not hesitate to congratulate the Commonwealth
on the possession of a currency, which unites all the requisites
of a perfect circulating medium, consisting entirely of the precious metals and Bank notes convertible into them."
This state of prosperity seems to have been very slightly impaired during the last winter, as the Governor announced to this
Legislature at the opening of the present session, that *' The
loan of $2, .040,661 44 authorized by the act of the 16th of February last, (1833,) after the usual notice, had been taken by Dr.
Jesse R. Burden; lie agreeing to pay §113 51 in money for every
$100 in stock, bearing an interest of five per cent, per annum;
and that of 530,000, directed to be made by the act of the 27th of
March last, was taken, after similar notice, by Messrs. S. &. M.
Allen, of the City of Philadelphia, at SI 14 in money for every
#100 in stock, bearing a like interest, they having previously beturing

corne possessed of the

first

mentioned loan, by transfer from the

original holder."

then entertained were not realized
and the Gov-:
Message of Jan. 21, 1834, has presented to the Legislaand to the people, the new, and (it is believed) unparrallel-

The hopes

;

ernor's
ture,

in our history, of the failure of a contractor for our
The
loans to meet his engagements with the Commonwealth.
fact of the inability of the Messrs. Aliens to pay the remaining instalments of the loan, to the amount (including premium) of
$827,890 22, and the subsequent failure of this respectable
house (at a time when, from careful examination it appears, that

ed instance

after full allowances for all

losses

upon Pennsylvania and other

stocks, their net available assets exceed the total liabilities of
their concerns, by a sum of more than five hundred thousand dollars,) are among the awful evidences of the very sudden catastro-

may

affect the financial concerns of a commercial
advised or injudicious measures on the part of ita
rulers ; and the committee cannot refrain from expressing their
opinion that a due sense of morality revolts at the idea of the evils,
entailed upon faithful and enterprizing citizens, by the adoption of
measures of government, equally unforeseen and uncalled for.
effected his loan
It is true, that at the time when Dr. Burden
there were many, who predicted the dangers to which the currency of the country might be exposed in the course of a twelveand hence by some it was deemed a hazardous undertamonth
king for those who had not previously made preparations for the
diffusion of the stock abroad, to venture so deeply into a speculation, which all cautious men considered as made on terms more
advantageous to the Commonwealth, than desirable to the con-

phes which

country, by

ill

;

tractor.

Comparing the prices of the Philadelphia and New York stock
at various periods of the years 1833 and 1834, as exhibi-

markets

ted by actual sales, reported by brokers,
depressions
:

we observe

the following

Th;

try 1834.

&a
ist

Sales

P9

known to us.
February 15,

00
00

•«

>9

«<

m
20

0*

«

"

14,
18,

«
27,

«<

"
"
e<

«
44

<<

«

«<

25,

21,
18,
21,
27,
«<

25,

6
come possessed

of the

first

mentioned loan, by transfer from the

original holder."

The hopes

then entertained were not realized

;

and the Gov-

ernor's Message of Jan. 21, 1834, has presented to the Legislature, and to the people, the new, and (it is believed) unparralleled instance in our history, of the failure of a contractor for our
The
loans to meet his engagements with the Commonwealth.
fact of the inability of the Messrs. Aliens to pay the remaining instalments of the loan, to the amount (including premium) of
$827,890 22, and the subsequent failure of this respectable
house (at a time when, from careful examination it appears, that
after full allowances for all losses upon Pennsylvania and other
stocks, their net available assets exceed the total liabilities of
their concerns, by a sum of more than five hundred thousand dollars,) are among the awful evidences of the very sudden catastrophes which may affect the financial concerns of a commercial
country, by ill advised or injudicious measures on the part of its
and the committee cannot refrain from expressing their
rulers
opinion that a due sense of morality revolts at the idea of the evils,
entailed upon faithful and cnterprizing citizens, by the adoption of
measures of government, equally unforeseen and uncalled for.
effected his loan
It is true, that at the time when Dr. Burden
there were many, who predicted the dangers to which the currency of the country might be exposed in the course of a twelveand hence by some it was deemed a hazardous undertamonth
king for those who had not previously made preparations for the
diffusion of the stock abroad, to venture so deeply into a speculation, which all cautious men considered as made on terms more
advantageous to the Commonwealth, than desirable to the con;

;

tractor.

Comparing the prices of the Philadelphia and New York stock
at various periods of the years 1833 and 1834, as exhibi-

markets

ted by actual sales, reported by brokers,
depressions
:

we observe

the following

TABLE
Tar.| February.!

Penna. 6 per

cts.,

du
i

'inn!:

'

»

of tbe United States,
of Pennsylvania,
Philadelphia,

"

Commercial,
Farmers' &, MechaD.
Mechanics'

«

Girard,

»

New

Western,
Orleans Canal Bank,

City,
Schuylkill Navigation Co.

&

Hudson Canal,
N. Castle &F. Town Rl.Rd.
Camden &- Amboy Rail Road
Delaware

Mohawk

"

"

M

of actual

April.

_

]

sales

May.

[

of
S^

—
This pressure appears to be neither limited in its extent, nor local
The memorials presented to Congress by immense
meetings of citizens of Massachusetts, New York, New Jersey,
North Carolina, Georgia and other States are conclusive evidences,

in its character.

same evils are felt at a distance. The presses of almost
our Western and Southern States, have, without distinction of
party, admitted its existence
In our own Commonwealth large meetings have been held in
distant sections of Country, and the unparalleled nnmber of signatures attached to the memorials from the cities of Philadelphia, and
Pittsburg and from the counties of Berks, Northampton, Scliuylkill, Chester, Lancaster &c. are among the painful evidences of
severe and heart-rending distress.
In proceeding to enquire into the sources of it, we readily discover, that no ordinary cause could have produced so sudden and
so general a prostration, as that which we witness.
The change
in the prices of our stocks has been loo rapid to be the result of
any but extraordinary causes.
In comparing the prices obtained in 1832 and 1833 we observe
a diminution in the latter of about one and one third per cent;
while in 1834, no proposals whatever have yet been obtained, and
even a small temporary loan has been with difficulty negotiated.
The slight depression, which was felt last winter appears to have
increased in August and September,from which moment it has been
uninteruptedly felt, and has been accompanied by a pressure in tho
money market, which seems to reach at this moment a point almost
unknown in our country
And yet, during this time, no physical convulsions, no revolutions or disturbances athome, or abroad, have occurred to produce
it; our foreign commerce has met with no serious or unforeseen
losses.
The whole world is at peace; no belligerent powers have
again ventured to question our rights of neutrality. At home.the last
twelve months were marked by an unusual degree of health. Our
crops both in 1832 and 1833, were fair averages; the value in foreign markets of our staples has been such as to encourage our industry.
The rise in the price of cotton in Europe is calculated
to benefit the whole countiy. With so many sources of wealth and
happiness around us, it. must be our own fault, the result of misrule and misgovernment, if the country be so much depressed.
From the table previously inserted, we have selected the stock
ofthe Schuylkill Navigation Company as a fair standard of the condition of the money exchange ; because it is one of established
accredited value in the Philadelphia market.
The works of thai
company are altogether within our State and subject to our celusive Legislation.
They have. been several years in succor,.',,
operation.
Their profits depend upon a large and in:-:-.!i.v
l,
trade; the returns' of which; being published weekly k&c\l}
„
..c ooiiuaence, by removmn -r.-.y uncertainly or doxxiz. a r
that the

all

&

;

j

\

dition of the works, or as to the extent of their usefulness.

In the
ordinary course of events, this Stock is now relieved from all the usual contingencies of new and untried schemes.
The trade upon
that canal can at no time.materially decline; it must on the contrary
gradually increase until it shall attain the maximum of which the
capacity of the works will admit
and the dividends, far from being
materially depressed, must continue to increase until they shall
reach the maximum permitted by law.
The prices of this stock are therefore a fair test of the condition
of the money market.
;

They have

varied as follows

In 1833 in

June

:

sold for

it

$

July

124

August
September
October

118i

November
December
M

110

1834 " January
February

The dividends made
August

In

"

February

««

August

92£

for the last

127£
1264
125
120
115
112£
98
102^
94

$50

paid.

two years were as follows

1832
1883

*5 per
5 "

"

« February

for

«

6
5

1834

"

:

cent.
«"

"
"

That the depression since July last was not occasioned by a di"
munition in the business of the company will appear from the following statement, for which we are indebted to its officers.
in

The receipts from
1833—
In April

May

•»

" June

Navigation company, wer©

the Schuylkill

$34,740 22
41,584 91
42,214 30

July

August
September

$118,539 43

Thus

$45,842 18
38,635 17
47,523 04

$132,000 39

showing an increase of business in the 2d quarter over

that of the 1st quarter, of the

summer

operations.

these facts known to the public, the stock, which at
this time last year sold for about $122 and which in June last sold
at gl27-£, is now worth only from $92^ to $94.
jThese changes have by some persons been ascribed to an actual
This the committee do not admjVfty'of money in the country.
Money, that is to say, specie, is perhaps as
the case.

With

a

all

i>e

ow m ^ e U n te d States, as almost at any former
"N^ *o than it was at this time last year

cert a,n l'\
'

y

'

time;

The returns of the Bank of the United
specie on the 1st of January, 1833 was
"

'4

States shew, that

vts

$8, 951, 847 60

1834 «

10,031,237 72

Exhibiting an increase of
$1,079,390 12
In the Pennsylvania State Banks the specie was
On the 3d of November, 1832
$2,954,047 44
"
1833
5th
2,909,105 66

Having

fallen off only
the Banks of the State of

In

New

44,941 78
$
York, the specie in the

Safety Fund Banks was
In 58 Banks, on the 1st of Jan. 1833
66 "
1st of Jan. 1834
»

$1,792,392 81
2,196,957 79

in the Banks subject to that fund an
increased quantity of specie of*
g 404,564 98
The annual importations and exportations of specie into and from,
the United States, are certified by the Register of the Treasury,
to be, for the year ending Sept, 30, 1S33.
Gold.
Silver.
Total.
Importations
$335,118
$4,147,386 $4,482,504
Exportations
472,79!
1,291,299
1,764,090

Having

Excess of importations over exportations
$2,718,414
Taking a lapse of several years we find the importations and
exportations of gold and silver Bullion and specie for £ve years
from 1828 to 1832, both inclusive, as follow?
Gold Bullion
Importations.
$563,767
" Specie
3,571,029
:

Silver Bullion

"

Specie

3,774,512
28,393,512

36,302,820
Exportations.

U.

S.

Gold and

Silver coin

Foreign do. do.
"
Bullion

5,704,483
23,486,524
818,955

30,009,962

Excess of importations over exportations

$6,292,858

*This increased specie does not indicate in those Banks an increased
strength as will appear from the following summary of the two last Reports
of
the New York Bank Commissioners
:

Jan.
««

1833, in 58 Banks,
" 1834,
69
1,

Increaw in 1833,

Capital.

Circulation.

20,175,800
22,730,264

12,215,926 18
15,102,705 54

1,792,382 18
2,196,957 79

2,544,464

3,186,779 41

404,564 98

2

Specie.

10

&

[Extract from Walleastein's
Vansand's tables, quoted at second hand.]
Taking the returns of the D. S. Mint for the coinage of Gold,
produced from the gold region of our Southern States, we find that
the coinage was as follows
:

The

aggregate of 5 years
For the year 1829

fr.

1824

to

1828 inclusive

140,000

1830

466,000
520,000
678,000
868,000

1831
1832
1833

Shewing

a coinage of

8109,000

American gold

to the

amount of $2,781,000

This coinage, which has been constantly increasing for a few years
past, and which there is every reason to believe will continue to
increase for many years to come, constitutes, however, but a portion of the gold obtained from that region; in the opinion of the experienced director of our Mint, not much exceeding one half the
quantity, which it produces.
Whether therefore we consider the returns of specie made by the
Bank of the United States, by our State Banks and by the Banks
of the State of New York, or the returns of the Register of the
Treasury as to the Importations and Exportations of last year
or
the tables for several years past, which were published by careful
compilers, or the produce and coinage of gold from our mines
for a term of years, we will have no reason to doubt, that specie is
at this moment as abundant, if not more so, than it was last year,
and probably more so, than it has been for several years past.
A
fact well according with the experience of all, who travel exten«
sively through the country; and who have observed, that there isj^r
scarcity of it for the purposes of change, throughout Pennsylvania;
except perhaps in some of our remotest counties, distant from any
banks, and bordering upon those States, which still permit the issue of bank notes ofsmall denomination.
The true cause of the pressure in the money market is to be
found most unquestionably, as the committee believe, in the destruction of all confidence created in the Commercial community,
by the present alarming state of our affairs. When an entire change
of the whole financial arrangements of a Country is apparent; when
those who wield the power of the Union distinctly avow a determined purpose to make experiments upon the great interests
ef the country, and to pursue their measures until they shall be
however destructive such experiments
satisfied of their ineificacy
;

;

maybe

pledged faith of the country, however repulsive to
the first principles of political science, however opposed to the lessons of experience and history, it can be no matter of surprise, that
the whole community should be alarmed; that each individual
and that that
Should endeavor to draw to himself all his resources
to the

;

II
mutual confidence and support, which constitute the basis ofcommercial prosperity and security should instantaneously cease to
exist.
The results of this want of confidence might be easily foreseen, and experience shows that all have been produced in this case.
The circulation of our paper money becomes more contracted,
or more dangerous; a panic is created; all private paper transactions are checked; drafts, promisory notes, bills of exchange, (the
value of all of which consists in the confidence placed in the solvency and fidelity of the drawers, indorsers, or acceptors,) become
The facilities for
worth no more than a blank sheet of paper.
commercial exchanges (both domestic and foreign) being destroyed,
all mercantile transactions are paralysed; and we return suddenly
from a high state of trading prosperity to the contracted intercourse
These results have
of nations that deal exclusively by barter.
been apparent in our cities, and their influence must soon be felt
all over the country; not a cabin, however humble, can hope to
be beyond its reach.— All the floating capital, which of late assisted
in any judicious enterprize is now hoarded up with more than
miserly care: for who that has. by hard toil and industry, secured
to himself, and to those dependant on him, the means of livelihood,
will be willing to risk it in schemes liable to be affected by the
experiments of those in power? In order to estimate the extent
to which a pressure may be produced by such causes, it is well to
bear in mind the ample range given to the term "circulating
medium" or "currency" of a country, by Mr. Gallatin, who
extends it to "whatever commodity or species of paper may, by

law or general consent, be universally received in any country in
exchange of every other commodity, and in payment of all debts."
That general consent depends, of course, upon general confidence,
To what extent this
and ceases as the latter is withdrawn.
system of credit transactions may ramify, when founded upon a
safe basis, we learn from the fact, that while the circulation of the
Bank of the United States was, on the 1st of January, 1833, only
$17,459,571 79, the amount of exchanges carried on by means of
that bank, in 1832, was no less than $225,174,047; its exchanges
amounting to nearly fifteen times its circulation. The currency of
a country resting thus upon general confidence, its issues are
expanded or curtailed exactly in the ratio in which that confidence
hence it is, that while the specie and the circulation
prevails;
(bank notes) of a country may remain unaffected, there may be an
abundance or a pressure in the money market.
The committee are aware, that it was asserted at one time, that
this pressure was occasioned by a want of confidence in the soundness of the Bank of the United States, and they know, that an attempt was made to impair its usefulness by an imputation upon its
solvency.
The absurdity of the charge has caused it to recoil upon the weak individuals, that circulated it
The solidity of the bank will appear from the following State
ments of its resources and liabilities on the 1st of Jan 1834 and

—

12
of Feb. 1834, which we may compare with those of the
the 1st. of January and on the 1st. of Dec.
1833, as obtained from the latest returns from Europe.

on the

1st.

Bank of England on
1834.
Jan.

1.

Condition of the

Bank of the

Bills discounted

Domestic

bills

of

United States and

its offices.

$38,609,069 46
16,302,392 24

Exchange

54,911,461 70

Fundsin Europe
Due by State Banks
Notes of do.

1,801,669
1,536,745
1,982,640
10,031,237

—

Specie-

Real Estates

48
68

33
72
15,352,293,21
2,930,533 80

x

$73,194,288 71
$19, 208,379 90

Circulation
Deposites, public

"

Private

4,230,509 63
6,734,866 06 10,965,375 69

30,173,755 59

1834
Feb. 1.
Bills discounted,

Due

bills

Funds

$37,544,252 82
17,298,720 82

of Exchange

—

Europe
Due by State Banks
Notes of do do

54,842,973 64

1,644,415 75

in

1,386,95165
1,824,434 37
10,523,385 69

Speice

15,379,187 46
2,940,168 51

Real Estate

$73,162,329 61
Circulation
Deposits public

"

Private

19,260,472 90
3,066,561 72
6,715,312 60 9,781,874 32

*29,042,347 22

* Since this report was made to the House, and while it was in the press, the
statements of the Bank for the 1st of March have been made up and published.
extract the following in further confirmation of the views expressed in
the report we doubt not they will be satisfactory to every candid inquirer after
the truth.

We

;

First Monthly Statement of the
1834, March 1.
Bills Discounted,

Domestic Bills of Exchange,

Bank

of the United States and

its Offices.

$37,381,13186
18,786,698 00
1

$56,167,829 86

13
Condition of the Bank of England,
igla
January
£.27,912,000
;27,
11,737,000

1,

1833:

Circulation,
Deposits,

Total

£39,649,000

liabilities,

December

Bullion, £8,983,000,

3d, 1833:

£18,059,000

Circulation,

Deposits,

12,465,000

Total

liabilies,
£31,074,000 Bullion, £10,134,000
a further proof of the solidity of the bank, the committee
refer lo the prices now paid for its stock, which indicate as great a
degree of confidence in its security as in that of any other slock in
the market.
The fluctuations, in the last twelve months, are

As

...

singularly small.
It

was sold

And

in February, 1833, for
on the 22d of February, 1833, 44 shares were sold
"
"
23d
1834, 31
do
<*
H
26lh
1834,44 do
"
*'•

at

104
103}
103£
103$

By other individuals, the pressure has been ascribed to the
change in our Custom House regulations, by which the merchants
were called upon to pay cash duties, instead of receiving the usual
facilities of eight, ten, and twelve months credit.
This opinion
the committee believe to be equally erroneous.
The extent of a
pressure, arising from this source, though it may not be actually
ascertained,

may be

for the object

readily determined with sufficient certainty
which we have in view. The whole amount of

duties secured at the port of Philadelphia, during the year 1833,
did not much exceed, or fall short of, three and a half millions of
dollars; only a small portion of which was liable to the effects ef

Funds

in Europe,
by State Banks,
Notes of State Banks,

Due

Specie,

1,916,376
129,251
1,906,734
10,385,439

94
85
38
15

14,337,802 3-2
2,927,170 57

Real Estate,

$73,432,802 75
Circulation,

18,523,189

.Deposits, Public

"

Private

2,604,233 62
7,343,129 92
9,947,363 54

28,470,552 54
Total loans.
Jan.

March

1,1834.
1,

54,911,46170
56,167,829 86

Total deposits.
10,965,375 69
9,947,363 54

Increase ofloans in 60 days, 1,256,368 16 decrease of depos. in do. 1,018,012 15

14
change in the system, and the Jong notice which our merchants
had of its commencing on the 1st of September last, would enable
them to limit their importations, or to be prepared to meet this
new order of things. At the same time it is evident, that had the
Custom House bonds continued to be payable at, and collected by
the Bank of the United States, a slight extension of its discoun
line, at that, time, would have been as convenient to itself as effec
In this
tive to the importers, in relieving them from any pressure.
case, the bank would have stepped in as the creditor, instead of
the United States' government; and might have discounted the
importer's note with the very funds received from this system of
The bank notes issued in the morning, as a discount-,
cash duties.
would have been returned to the bank, before three o'clock, in
payment of the duty; but it is evident, that this cannot be done
this

with safety to the bank, while the duties are deposited in the
Girard Bank, or in any other place than its own vaults; since, in
such a caae, the notes would return before three o'clock to be
converted into specie.
That the new deposit banks, selected by
the Treasury Department have failed to extend this relief, by
affording analagous facilities, is now no longer a matter of doubt,
Experience has shown, that they will not, and that, if they would
they could not afford this assistance to any very great extent.
The committee are also aware, that by a few unreflecting persons the pressure has been ascribed to over-trading;an opinion
equally unsound with all those previously refuted.
This arises
from entirely overlooking or mistaking the character ©f the times;

and the manner in which the evils arose. The committee cannot
express their views on this subject better, than in the words of one
of our ablest and most experienced financiers, whose opportunities
of deep research and extensive observation have probably exceeded
"There is," says
those of any other individual in this country.*

Mr, Gallatin, "this difference between a commercial distress, and
presumed scarcity of currency due to internal causes, whilst the
foreign exchanges remain favorable, and a similar distress arising
from large foreign debts, and accompanied by an unfavorable rate
of exchange, that in the last case there is an exportation of the
coins of the country, which cannot take place in the first.
If the
same effects, in other respects are nevertheless the same in both
cases; if in both, the same, and sometimes general distress equally
prevails; if the same difficulty occurs in the payment of debts; if

the same complaint is made of want of money, whether specie is
exported or not; it is obvious, that there must be another cause
besides an actual scarcity of currency for the real distress which
is felt, and that what is called "want of money" is not "want of
It will be found that this cause is, universally overcurrency."
*

Considerations on the Currency and Banking System of the United Stales,

by Albert Gallatin, 1831.

15
trading, &,c." Now, it appears clear to the committee, from
the opinion of all experienced merchants in our commercial cities,
from the returns of the imports and exports throughout the country, from the low rates of foreign exchange, from the importations
of specie recently made from Europe, from a close review of the
condition or our trade and industry, during the preceding twelve

months, from the number of failures, which, though great, is much
less than was apprehended under this long and unusual pressure,
that far from having overtraded, the community must have been al
the time when the pressure commenced, in an unusually sound and
healthy condition. To this alone are we to ascribe the power which
it has had to support itself in so trying a crisis; but it must be apparent, that this power is gradually wasting itself away, and that the efforts made to resist the pressure must finally wear away the energies of even the strongest among us.
As none of the causes, which we have examined, can account for
the eV'ls, which we feel ; it is evident that thej proceed from another source; which in the opinion of the committee is the removal
of the deposites from the bank of the United States, and the perseverence of the federal Executive iu a course of open and avowed

—

To this cause, we must ascribe the
curtailment forced upon the bank, and which now re-acts upon the
whole s community. As the bank of the United States ceases to
discount freely, all the state banks must pursue a similar policy;
or their paper would soon return upon them, with a rapidity, which
would drain their vaults of specie. The withdrawal of the deposhostility to that institution.

from the bank of the United States must also check its ability
which it had usually afforded
them; facilities, which the new deposite-bank has not replaced, and
which it cannot extend. The amount of these facilities is not sufficiently known and appreciated by the whole community, though
In the mefelt and acknowledged by almost all our State Banks.
ites

to extend, to State banks.the facilities

morial submitted by some of them to congress, they state that "unthe 1st of October the revenue paid by the whole country was
diffused by the Bank and its branches, throughout the whole community to be used for the support of the industry ofthe whole; and
while
gently recalled, when needed for the service ofthe whole
the Bank, as the common friend of all sound State Banks, uniting
wtih and sustaining them, was enabled to supply an adequate circulating medium from its own resources, and to preserve in a unitil

;

form and sound condition the issues of the state institutions.
Now the public revenue is no longer diffused throughout the whole
Union; it cannot even be advantageously used where it is collected
and the Bank ofthe United States, whose expansive power
and credit have been so frequently employed to relieve the community, must look necessarily and primarily to its own securi;

ty-'*

From

an

official

document, now before the Committee,

it

ap.

16
ars, that while the monthly collection of Bonds at the Port of Philadelphia averaged only about g300,000duringthe.first nine months
the daily balances due by the Banks of the City and lil>
of 1832
erties of Philadelphia to the Bank of the United States, during the
whole of the year 1833. averaged upwards of g2 16,500, and that
far from curtailing these facilities, after the removal of the deposites, the daily balances averaged for the last three months of
1833 upwards of $2?9,000.* So that it appears, that the balances
due by our State Banks in the City of Philadelphia swept away a
very larcre proportion of the amount of public moneys deposited in
This is a fact to which the Comthe Bank of the United States.
;

The beneficial
mittee invite the careful attention of the House.
upon our country-banks was sensibly felt. While the
City Banks were permitted to have heavy balances owing to the
Bank of the United States, they weie indulgent to the Country
Banks.
The advantages, which the City Banks thus received

effect of this

from the public moneys deposited in the Bank of the United States,
were by them extended to the Country Ba'nks, and, by means of
those, diffused throughout the whole State.

At this time, a new order of things has arisen; the transfer of the
public moneys compels the Bank of the United States to call upon
the state banks in the city; and these press upon the country banks
The country notes no longer circulate
to pay up iheir balances.
to the same extent; this must compel these institutions also to curtail their accommodations, with a view to meet this new condition
of our currency. Its effect is visible in all our domestic exchanges.
The notes even of some of our soundest country banks are no longer
Maryland and Delaware
received in deposit in the city banks.
money is at a discount in Philadelphia.; and so great is the difficulty of effecting exchanges, so indispensable is the paper of the
Bank of the United States for this purpose, that, on several occasions of late, the officers of deposit-banks have been obliged to apply to the Bank of the United States for its notes, in order to
remit them to a distance.
Specie was tendered by the Bank
of the United States, and declined, because it would have been too
The deposit-banks could not
expensive and hazardous to send.
send their own notes to a distant state, where their value would
Jbave been very questionable; and therefore, as the notes of the
National Bank formed the only convenient remittance for national
mrposes, they were asked as a favor, and granted. Of the risks
*

The amount due by

nited States

On the
"

1st

aud

its

all

the State

several branches

of October, 1833,
January, 1834.

1st of

Banks
was

in

theUuion
,

to the

Dank

of the

$'2,280,000

1,530,000

750,000
months of
had been reduced in that time upwards of five millions
[See Appendix, D.]
wit from nine millions down to four millions.

Making a reduction

in three

hile the public deposites

17
that now attend our domestic exchanges, wo see painful proofs ta
the late protests in Philadelphia of drafts and notes, not merely of
banks in the State of Ohio and other distant states; but also of

banks of this commonwealth, whose names are in the possession
of the committee, but which they withhold so as not to add to the
difficulties under which those institutions now labor.
That the State Banks have received no benefit from this new
order of things is evident from the embarrassment, of which all com
plain, and of which no proof can be adduced more striking than that
drawn from the Governor's late message, which shows that the
temporary loan of $300,000 authorized by act of the 27th of Jan.
last, had not then been entirely taken; and that the applications
made by the Governor to the State Banks had proved ineffectual.
It appears also, that the difficulty presses at. least as much upon that bank, which was supposed to be favored by the transfer of
the moneys from the bank of the United States to its vaults; since
the Girard Bank was the last to come in to the assistance of the
state in this emergency; while the Bank of Pennsylvania, the
Philadelphia Bank, the Schuylkill Bank, the Commercial Bank
and others, came out e.t once, if not largely, at least to the fullest

extent of their

abilities.

The committee

assumed by some, that the
power to prevent this disby extending facilities to commercial men.

are aware, that it
States has it in

Bank of the United
tress or to relieve

it,

Without stopping

to

is

its

inquire into the fight to dictate to that init should pursue, or to scan the motives
of those who, while they deprive it of one of its most valuable
rights, that of keeping the public moneys, or who sanction this measure on the part of others, ask it to extend its favors to men in
business, we may well express our decided opinion, that the removal of the deposites has made this a measure of utter impossibility.
It must be recollected, that the President of the United
States has repeatedly placed before congress his views of that institution in terms of the most embittered hostility; that, not satisfied
with calling in question the constitutionality of a bank, which
stitution the course

which

almost every president from the time of the immortal Washington,
and every Secretary »f the Treasury from the foundation of our
government down to the present iucumbenls, had deemed essential
to the well being of the country, he has sanctioned and still contemplates measures, intended and calculated to break down and
dishonor that institution. It is a melancholy evidence of the situation of our affairs, that an attempt, was made to break one of the
distant branches of that bank,, (at Savannah,) by a sudden call
upon it, to redeem a very large amount of its notes ($350,000)
which bad been carefully hoarded up by brokers in oue of our principal cities, who, we are advised, had received facilities in the execution of this plot from one of the deposit-banks, to which the
moneys withdrawn from the Bank of the United States had been
3

18
Fortunately for the honor of the country, and of the
bank, a prudent direction had foreseen the danger and guarded
against it, and the issue of the conspiracy was as unprofitable to
the aggressors, as it was harmless to the institution.
When, however, such attempts are made to impair the stability of the bank,
and to weaken the confidence of the public in the ability with
which it is managed, it would be worse than folly, it wonld be
crime in the directors to lose sight for a moment of the great interests confided to them.
The President of the United States has
lately declared to a committee of our own citizens, that he had "a
measure in contemplation which will destroy it at once, and
which he is resolved to apply, be the consequences to individuals
what they may. The bank has in circulation ten millions of checks,
which he has no doubt are illegal, and which he will direct the
state banks to refuse in payment of the public revenue<
These
checks must then be returned upon the bank, and will drain her
of the specie she is hoarding."
At other times, a generous exposure on their part might evince
a magnanimity, that would be excusable if not commendable
but
in moments like these, such a course would, in the opinion of the
committee, be wholly unwarrantable.
This institution may be
viewed, both as a corporation, managing the h.nds and interests
of individuals, and as a great engine, created by the legislative
power of the Union, to establish and maintain a sound currency
throughout the country.
In either light the Directors are but
trustees for the public good and it behooves them so to use their
powers as best to answer the great purposes for which it wag
created.
If From a generous desire to promote the interests of
the commercial cities, in which the Bank and its branches are
placed it were to extend its favors so largely at this time as to endanger its own security, it would seriously prejudice the interests
of its stockholders, among whom are many, whose helpless condition entitles them to the particular watchfulness of their trustees
in the Board.
But it is chiefly, as a great public corporation, specially appointed to watch over the soundness of our currency, that
the Bank has public duties to discharge, and an attempt to create
on its part, or to countenance on that of the State Banks, an overissue of paper, would be a violation of public trust, evincing a total disregard of public duty, and justifying the most severe censure.
Its own interest is to extend, at all times, its business as
widely as may be done, consistent with its security.
And a careful perusal of the annexed statement, will show that its course toward the community has been neither unkind nor illiberal.
transferred.

;

;

19

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21
Bank

3.— 1383,

Oct. 3,

1834, Feb.

1,

Decrease

Reduction

3,528,045 13
2,033,524 01

1,223,687 18

1,494,521 12
1,223,687 18

in deposites

For

4.

1833, Oct.
1834, Feb.

in Philadelphia.

8,234,451 34
7,010,764 16

the

exceeds that

Branch

at

6,180,883 40
6,458,540 70

1.

1,

in loans

New

270,833 94

York.

5,484,578 08

1,338,77147

Decrease 4,145,806 61
and private deposites were reduced $4,145,806 61, the Bank actually extended its accommodations $277,657 30.
Thus whether we consider the operations of the Bank at large,
or merely those in New York and Philadelphia we will see, how
little cause there is for charging it with an undue reduction of busiIncrease 277,657 30

So

that in the case of this branch while the public

ness.

we add that the Bank paid
the months of January and February, of branch
notes due elsewhere the amountof
$1,344,345
And its dividends
1,225,000
If to the operations in Philadelphia,

in that

city,

in

Making an aggregate of

And

we

2,569,345

mind that in the early part of Feb. it loaned
to the Mechanics' Bank, in addition to much assistance previously given to it the sum of $130,000 to prevent that Bank from sacrificing in the market at any price a like amount of Pennsylvania
stocks which would have depressed their value, and interfered
if

bear

in

with the proposals then advertised by the State, we will see that the
Bank, far from pressing upon the trade of Philadelphia or contributing to the depression in the Pennsylvania stocks, had materially
relieved the former, and assisted in supporting the credit of the
latter.
facts, that have appeared
committee deem it a duty to state, that in their
opinion these facilities have been extended as far as, under existing circumstances, prudence would permit.
The correspondence
lately transmitted by the Governor to our Senate, shews, that the

After a careful investigation of the

in this matter, the

contractors for our State loans are willing to admit the kindness
and liberality, with which these facilities were afforded to them,

and

a fact, well known, that to this assistance, in a
were those gentlemen indebted for the means they
tinuing so long to execute a contract, which has been
to them.
If in the mad party warfare, which is raging
it is

sure,

great meahad of conso ruinous
against

it,

the public good should be so far lost sight of as lead lo a cfisu.%
which shall compel our State Banks to risk an entire cessation of
3pecie payments, (an event, which the committee contemplate as
neither improbable nor far distant,) the perils and difficulties, to
which this institution will be exposed to maintain its credit will
and if it
far exceed any trial that it has yet had to encounter
should pass unhurt through that perilous ordeal, it will be a subject of congratulation, not merely to the stockholders, or to the
friends of the Bank, but to every friend to his country and his
country's honor, that the vigilant prudence of her Directors shall
have so husbanded her resources, as to enable her to survive that
hour of general bankruptcy.
But there are, as connected with the withdrawal of the public
deposites from the Bank, other and more important considerations
than those which result from the curtailment of its means of usefulness.
In the opinion of the committee a great violation of pub;

has been committed. The trust which had been reposed
power of the law has been impaired. We have
lived to witness a stretch of power hitherto unparalleled in the
The committee deem it unnecessary
history of our government.
to discuss here the terms of the charter of the Bank, and the right
which it has to the public deposites. Suffiee it to say, that their
opinion upon this point conforms to that expressed by the committee of Finance of the Senate of the United States, whose arguViewing the question in
ment appears to them unanswerable.
this light, the committee are of opinion, that public confidence
in the security of our institutions, and in the all ruling power of the
law, cannot be fully restored, until the hasty step shall be retraced,
and the Bank of the United States replaced in the enjoyment of
its chartered rights.
In considering the influence produced upon the credit of the
Commonwealth, by the disordered state of our currency, it is
It would
easier to discover its causes, than to measure its effects.
be a very superficial and imperfect view of the subject to consider
the loss to the State, as indicated merely by the difference between
the present prices of our stocks and those which they formerly
commanded both at home and abroad. It is known to the Committee, that about this time last year, the largest importers of Eu<
ropean manufactures, (whether for the use of our public works,
or for individual consumption) had no better or more desirable mode
of remitting their funds to England, than by sending out certificates
of Pennsylvania five per cent, stocks of 1858; purchased even
at an advance of from fourteen to sixteen per cent in this market,
For
for which they found a ready sale in the London Exchange.
this purpose, they were eagerly sought after in our market in Feb.
1833; at present they lie at par, and even below this, without a
In Europe
purchaser, a dead weight upon the holder of them.
Upon this point the committee exthey are no longer in demand.
lic faith

in the controlling

23
press a decided opinion, because the original letters from houses*
of the greatest respectability in London, that have been extensively
engaged in the sale of Pennsylvania stocks, have been confidentially communicated to them
and from these they were permitted
to make a few extracts, which are placed in a note.
In order to
estimate the value of these letters, it is well to bear in mind, that
they were not written by politicians for political effect but by commercial men of great intelligence and shrewdness to their correspondents in this country, as a guide for future speculations.
The
first extract alludes to the publications of the list of foreign stock
holders in the Pennsylvania loans, made last winter under the authority of the Senate.*
In a letter from London of Dec. 21st an
English Banker observes that they "wish no more consignments
of American stocks at present,'' and the same writer observes, that
we must not for a long time look to the prices of the year 1832.
It is a fact known to the Committee, that large quantities of stocks
which were sent to England to meet bills of Exchange have remained unsold and they are aware of cases even, in which Stock
has returned to this country.
In one instance, it is believed not
less than three hundred thousand dollars was received by one house
in a single day
which may be viewed as an actual abstraction of
a like amount from the floating capital of the country, applicable to
all the exigencies of trade and industry.
An opinion has prevailed with the narrow-minded and prejudiced, (and the committee fear that it has even been entertained by
men of stronger intellect or more information on general matters,
but who had not sufficiently reflected upon this subject,) that the
investment of foreign capital in this country would be destructive
In what manner it can
of our property or of our independence.
injure one who needs money to borrow it, where he can obtain it
on the most advantageous terms, is a question which the commitThe affairs of States
tee profess themselves unable to answer.
and nations generally depend upon the same principles which govWho is there among us who
ern the intercourse of individuals.
;

;

•Extracts from letters from
bankers in London towill here mention and draw your attention to Cobbett's Register of 10 tb
of August reflecting most falsely and severely on the Pennsylvanian loans; it is not
however this we mind, but he names from a New York list the' European holders of this loan.
This, is interfering with private interests, and we deem a decided breach of confidence of which the Pennsylvania Bank, and the officers, who
superintend transfers, should be made aware as preventing persons of conse-

" We

quence in England to invest, who do not like such disclosures.
In another letter we find,"
"$25,000 Ohio, 6. are offered for sale at 1 13 per, cent— $45,000 Penna. 5. of
58 at 104. The tendency is to sell American Stocks. People express themselThe people as
ves disgusted with the President's conduct towards tbe Bank.
well as the public papers express apprehensions, that your monetary system is
to be deranged.
You may be oertain, that it is not without serkrae pain wo feel

—

compelled to say so much."

24
mortgage

to a stranger, if he could therefavorable terms than from a neighbor?
Who, in the hour of need, would not prefer borrowing from a stranger the assistance he required in his business, than, by taking it
from his brother, to cramp the resources of the family, and preIf in borrowing on
vent the improvement of the family estate?
low terms, the operation be not equally advantageous to both parties, upon whom is the favor conferred? upon the borrower or the
If in the course of years, a future war shonld check the
lender?
intercourse between the foreign loan holder and his debtors, upon
whom will the risks and difficulties of the non-intercourse press
most, upon the foreigner who maybe unable to claim his semi-annual interest, or upon the Commonwealth in whose coffees it will

would hesitate
by obtain

remain

to sell a

money on more

idle until

claimed?

not the part of wisdom to accumulate our resources for the
hour of need? and how can this be better effected than by permitting the floating capital of our country to be applied exclusively to
the promotion of individual commerce and enterprise; drawing
Is

it

from the foreigner as much as we can of that which we need for
The committee have endeavoied to estiour great public works.
mate the amount of foreign capital now invested in the public
Impossible as it is to arrive at any accurate
stocks in this country.
information on this subject, thej are led to believe that it can not
fall short of fifty millions of dollars, of which about ten millions are
invested in the Pennsylvania loans and about eight millions in
Bank of United States stock. (On the 1st of January, 1832, the
Had it
stock held by foreigners in that Bank was $8,405,500.)
been necessary to draw all this capital exclusively from our own
citizens, must it not have been by a withdrawal of a similar amount
Must not some fields have
from the active capital of the country?
remained unimproved, some furnaces been inactive, some factories not been created, some roads or canals been neglected, all
of which are now adding to the strength and resources of the
State?
It is not, therefore, merely by the difference in the price
of interest paid for money among the overgrown nations of Europe, or in our new and improving country, that we are benefitted
when we borrow from the foreigner. This is but a small part of the
advantage received.
It is chiefly in the introduction of new capital, which, if our measures of administration wisely
fostered it,
would pour continually into the country, as from an inexhaustible
feeder, supplying every deficiency in this country and making the
foreigner dependent upon us, not us dependent upon him.
Looking into futurity, with that anxious solicitude which recent
events are calculated to excite, are we not struck with the fact, that
if indeed a change is to come on in the form of our government,
that if our Union is to be dissolved, (an event once thought too
improbable ever to occur, but upon which later observations are
calculated to excite distressing forebodings,)

is it

not evident, that

25

m such a case, Pennsylvania, surrounded as she will then be, by
powerful and enterprising but rival states, will need all her resources, and all her energies, to be prepared for the new situation
in which she may then be placed 7 In that hour, (distant we hope,
but we fear not altogether s© remote as some have supposed,) it
will be well for Pennsylvania that her own strength and prosperity
It will be well for
shall enable her to cope with her great rivals.
her, if the statesmen of that day should be able to point to her
steady and unwavering adhesion to the great principles of public
faith and public honesty, (not only in her own state administration,
but in the exercise of her political influence in the councils of the
Union,) as an evidence, that she, as a nation, will then deserve the
confidence of the world.
Comparing the condition of the credit
of the United States shortly after the formation of our government,
with that of many, if not of all the new republics of Spanish
America at this time, we find conclusive evidence, that public
credit depends exclusively upon public faith.
The high standing
of our loans, (both federal and state loans) in Europe, was based
upon the confidence which was placed in the stability of our institutions, and in the high moral tone of the principles of our government, compared with those which have usually actuated the councils of European monarchs.
Previous to the late measures in relation to the Banic of the United States, a single instance, perhaps,
of a breach of implied faith could be traced in the disappointment produced by the refusal, in 181 1, to re-charter the old Bank
of the United States, after having but a few years before sold at a
very high advance to foreigners, all the stock remaining in the
hands of government.* But the creation of a new bank, in 1816,
was considered ss an acknowledgment by the whole Union of tho
impolicy of the measures adopted but a few years, before, and of a
disposition to avail ourselves of the lessons of experience, and to
retrace hasty or ill-advised steps.
By the resolution of the 20th of

December last, the committee
were also directed to "inquire how far the public interests might
be promoted by the continuation of the operations of the Bank of
the United States, under a charter from this commonwealth, should
its present charter not be renewed by the United States."
This is an inquiry involving very grave considerations, present-

* When the first Bank of the United States was created, the government ©f
the United States retained 5,000 shares, representing $2,000,000.
In 1796-7, they sold at an advance of 25 per cent 2,493 shares,

which yielded,
In 1797, they sold 287

20 per cent, advance,
And in 1802, they sold to Mr. Baring their remaining
say 2,220 shares, at an advance of 46 per cent,
shares, at

Total prooeods of

sals,

-

-

$1,296,800
1»7.760

-

1,287,800

interest,
-

......

§2,721,180

26
ing some decided advantages, and giving rise at the same time to
serious doubts. In the opinion of the committee, it would be inexpedient to prejudge the question, before a case actually calling for
a decision shall occur; but they will present some of the observations in relation to the same, which

mature and anxious

reflec-

tion has suggested.

The

case

is

not altogether a

tion of the charter of the

first

new

one.

Shortly after the expira-

Bank of the United

States, a

memo-

was presented "from the trustees of the late Bank of the
United States on behalf of the stockholders, praying that they may
be incorporated for the full amount of their original capital, with
permission to employ any portion of it in such other state or states
as may by law authorize the same.''*
The memorial was, by a
rial

vote of 51 to 35, referred to a select committee, who soon after
reported a bill to that effect, which was considered and negatived
in committee of the whole; the House having agreed to the report
of the committee of the whole, by a vote of 55 to 34, no further
proceedings in relation to it were had that year.
At the succeeding session the application was renewed, and met with a like fate.
From the contents of a protest entered on the journals of that session, (January 25, 1812,) we learn, that the bank offered to subscribe half a million of dollars to sundry works of great public
utility, such as turnpike roads to Pittsburg, to Waterford in Erie,
to Reading, &c; and also, <f to loan to the commonwealth at any
time during the continuance of the charter, the sum of five hundred
thousand dollars, at an interest of five per cent, per annum, for the
purpose of aiding the interior improvements of the state." No
further application was

made

;

the old bank

wound up

its

affairs,

the funds that had been invested in it by foreigners returned to Europe, and the finances of the country soon fell into that disorder
and confusion, which shortly after led to tho cessation of specie
payments on the part of our banks; and from which, no relief could
be obtained, until the creation of a new bank restored confidence,
and with it, specie payments.
In enquiring into the question before us, we must consider the
Bank of the United States as it now is; the rights secured to it by
its charter and the extent to which these rights might be continued

under a state charter.
It may be viewed as a banking corporation with a capital second
in magnitude to one alone in the world;endowed with a national character; bearing to distant nations the impress of a national institu-

Government of the United
whose operations are closely watched
and may, under certain stipulated circumstances, be checked by
the Government; with power to be heard, both as plaintiff and defendant, before the national tribunals; exempt from state taxation
tion; in the direction

States

is

of which the

largely represented;

"

Journal of the House of Representative*, March 18, 1811.

*7
and State regulations infested with the privilege of establishing
branches " wheresoever the directors shall think fit within the
United States or the territories therof;" recognised by law as the
collector, depositary, distributor, and payer of the revenues of the
Union; issuing a paper currency, which by law is made receive*
ble in payment of all debts to the Government of the United
States.

In addition to these, its inherent advantages secured to it at its
it enjoys
in a high degree the confidence and attach*
ment of all those engaged in commercial or financial transactions,
who have dealt with it, not only at home but also abroad; not on this
continent, alone, but likewise in the remotest corners of the world.
As an evidence of the extent to which this confidence has been
carried, the Committee ask leave to state one or two facts well
known to them. For many years past, while the governments of
Spanish America were the scene of frequent changes of rulers,
and of occasional revolutions involving the fortunes and credit of
the commercial men of the country, great difficulties and risks
were experienced in the purchase and sale of bills of Exchange.
AnJ such as had money to remit to those countries were unwilling
creation,

to purchase bills [however good the drawers here might be,] lest
they should be protested abroad.
In such a case it was once suggested to deposit the money in the Bank of the United States, and
to take drafts of the mother Bank upon one of its branches, for
the amount payable at sight.
The transaction proved to be a
highly advantageous one.
Such was the confidence in the character of the institution, that these and subsequent drafts of a similar nature, commanded a high premium in the foreign market.and were sold several per cent, higher than the best private bills
in the country.
The reputation of the Bank is still so high, that a
person recently returned from Mexico reports, that United States
Bank notes of $100 are at a premium of four per cent. In the
island of Cuba these notes are constantly in demand at two per

cent, advance, for the purpose of remittances; and a highly respectable merchant in Philadelphia has assured the committee, that
"when in London, he saw bills of Exchange of the United^States

Bank, drawn on London, that had been negotiated in Canton,
and had before reaching London, been transmitted as remittances
to Manilla, Batavia, Calcutta, Madras, Alexandria, Marseilles,
Hamburg, &c. &c. and after circulating for twenty-eight to thirtysix months, throughout the Eastern Hemisphere, made their appearance in London where they were paid."
Such are the character and standing of this institution, recognized by all commercial men throughout the world, as second to
none in the importance and magnitude of its operations, in the
fidelity and ability of its direction, in the purity and brillianey of
its

unsullied honor.

:

28
been with Pennsylvania, by its location
becomes an object of great interest to inquire, how

Identified as these have
in this state,

it

advantages could be perpetuated under a state charter?
an extent, in the opinion of the committee, great at first, but
which must gradually decline.
The corporate title being preserved, its name would for a while
identify the new with the old bank, and secure to it at least the appearance of a national institution; but this impression, as in the
case of the Bank of North America, would gradually wear away,
until it became merely a matter of history or tradition.
The power to establish branches would be subordinate to the
will and caprice of four and twenty (or more) state legislatures
and although there is no doubt that, at first, many, perhaps a majority of the states, certainly more than a third, would cheerfully
extend to it free and liberal charters; yet, in the course of time,
these would be so altered or fettered with restrictions, (the result
of local jealousies,) as to convert them into gifts of very questionfar these

To

able value.

be heard before the tribunals of the Union, i3, permaturely weighed, one of its most valuable and essential
privileges.
To those who reflect upon the fluctuating character
of the judiciary of the several states, and upon the tendency of
nil our institutions, the importance of our national tribunals becomes more apparent. Th%re is scarcely an individual, largely concerned in the business of trfe* country, who has not had occasion to
lament, at times, that local sectional or temporary excitements
should obscure the vision even of the most intelligent, upright, and
independent judges; producing contradictory dceisions on most
important questions of law- Every individual, conversant with our
law reports, may fin*cl instances, in which cases, under the Constitution of the United States, have received different adjudications,
according to the prevailing opinions or wishes of the several states,
by whose tribunals the questions were considered; and this may be
said without any disparagement of the learning and integrity of the
Its right to

haps,

if

How indispensable
then to a Bank of the United States, that, extending its operations throughout the whole Union, it should have the right to claim
the protection of tribunals, not swayed by local interests, or affected by sectional questions. So long as the national judiciary shall
maintain the lofty eminence which it has heretofore occupied, thus
long will its authority be essential to a Bank of the United
States.
This is a privilege, which, under a state charter, could not
be secured to the bank.
The collection and safe keeping of the revenue form another important branch of the privileges essential to a national bank. Without it, it would be unable to maintain that influence over the currency of the country, and over our domestic exchanges, which are
amongst tho most valuable blessings we owe to it; without it, it beeminent men who composed those tribunals.

is it

2*
comes questionable,

to what extent distant branches would really
be useful.
The experience of our state banks, in relation to
branches, is believed to be unfavorable; whether branches, out of
the state, could be maintained with security, while the currency of
the country was in a state of disorder, is at least a matter of doubt.
Without branches, or with but a few, the Bank of the United
States would be deprived of those extensive sources of information,
that have enabled it to foresee, and provide in time, for the ever
varying wants of the community. In the opinion of the committee,
these means of information, and the consequent results of it in the
hands of an intelligent direction, upon the domestic exchanges of
the country, have greatly promoted our prosperity.
It may also be feared, that other states would soon create similar
institutions, invested with a like power to establish branches,
wherever legislative sanction for it could be obtained. Two or
more institutions of this kind might, in the words of an experienoed
adviser, "only aggravate existing evils, and increase the dangers
which threaten our banking system and paper currency."
Such are, in the opinion of the committee, some of the evils to be
apprehended from the continuance of the bank under a state charter,- and some of the limitations to the usefulness of such an institution.
But, on the other hand, it must be borne in mind, that the
valuable information and experience acquired by the bank and its
officers, and their extensive acquaintance and correspondence
throughout the Union, would be long preserved within the walls of
that institution; enabling it, even under a state charter, to cope with
oiher state corporations.
That for many years (one generation at
least) it would be the depository of the confidence of foieigners;
who (should the present bank go down) will beware, how they
again trust their funds to the fluctuating policy of Congress, which
twice (under circumstances of aggravating severity") lured them
into a snare.
In this respect the consistent and upright policy of
Pennsylvania, which has uniformly renewed the charters of her
banks, would stand in bold contrast; they would remember, that
with us the limitation in a charter is not viewed as indicating a
doubt as to the piopriety of continuing a bank, which has been
well administered, but merely as a check against rnal-administration, and as a means of revising periodically our banking laws, according to the increased experience of each generation.
In this manner, the large capital of fhe Bank of the United
States, with its ten millions of specie, and its eight millions of foreign capital, would become, as it were, the property of Pennsylvania; aiding us in our exigencies, vivifying our industry, permeating every channel of commercial enterprize, contributing, by a
fair but moderate tax, largely to relieve us from the burthens of
taxation; since our usual tax of eight per cent, on the dividends
would amount, upon dividends of six per cent., to no less than
$168,000 per annum, admitting the whole capital to be continued;

32
in his views on this point. In order,however,to manifest their respect
fur the Executive of the State, and to afford to the House an op-

portunity of deciding upoa

and herewith report

it

by • direct »ote, the? h*ve prepared
»ith the wishes of the

a bill in conformity

Governor.
Their objections to the measure are founded upon a conviction,
that, at this time, it would be extremely oppressive, primarily upon
The committhe banks, and ultimately, upon the people ai large.
tee can account for the different views entertained by them on the
subject, from those expressed by the governor, only by supposing,
that, as he states in the introduction of the message, "that recent
events have produced a change in the pecuniary relations of the
commonwealth, so sudden and unexpected," &c. he may not previously have had the same motive to inquire into this question as
themselvesTo them the changes are neither sudden nor unexpected. They were foreseen, and their gradual progress has been
marked. The committee believe, that our banks have, at no time,
been in a condition less likely to enable them to meet such a call.
A statement prepared by the auditor general, for the use of the com
mittee, is hereto annexed; exhibiting the amount which each bank
liable to the call, will have to pay.
The committee have added another table, exhibiting the proportion of circulation to the capital
of each bank, and of specie to the circulation of each, prepared
from the reports of the 5th of November last.
They regret, that
the want of more accurate and minute information, and especially
of any of recent date, prevents them from entering into a full
consideration of this subject.
But the committee cannot forbear
calling the attention of the House, to the difficulty with which the
temporary loan was obtained, as a proof of the condition of our
banks; it is believed, that in all cases, where an amount was contributed, it was, rather as an act of cenerous self-denial, than from
Eny .conviction, that the course was either prudent or desirable. At
a time like this, with so heavy a pressure upon the community, the
banks have no other way of complying with the call, than by in
They must do it,
creasing the difficulties of the present hour.
either by adding to their circulation, or by calling in their discounts.
In the first place, the experiment would be a dangerous, and for
many of them, an unwarrantable one. It will he seen, that out of
twenty-five country banks, ten had but from ten to fifteen cents
in specie for every dollar of paper money, while the range of all
was from ton to forty cents, and in ono instance alone, (the York
Bank.) to fifty-eight cents. In the banks of the city and county of
Philadelphia, the proportion ranges from eighteen to fifty-eight
cents in the dollar.
The average of all our banks is twenty-eight
cents.
In the country hanks, the circulation is to the capital from
fifty-nine to three hundred per cent
a point which ihe committee
deem an extreme one. The Philadelphia banks have a circulation
of from 15$ to 128 per cent, of their capital and the average of all
;

33
In a moment like this, when the
our banks is sixty-one per cent.
cessation of specie payments is threatened, and when we may in
aome measure be exposed to serious losses from the rottenness of

some bank3, out of

this state, which have thrown out millions of
paper money, based upon less than four per cent, of specie r on
prudent direction should, we think, be disposed to increase its cirTo exhibit the nature of an operation of this kind, the
culation.
committee state, that in one or more cases', where state banks had
contributed to the temporary loan, the notes issued, for this purpose, were thrown back upon the bank for payment within a few
days only of the dale of their omission, and thus the loan was equivalent to a sudden drain of as much from the specie, or other* resources of the banks.
If the five per cent, be not obtained from increased circulation,
it must be by a curtailment of discounts, an operation
extremely
distressing at this time of universal pressure.
It would probably
involve in ruin many who now barely struggle against the present
hour.
In a letter, written to a member of this committee by the
president of a bank in the interior of Pennsylvania, under date of
the 23d of February, it is staled, that "If the state at this time
should call on the banks for aid, it would much add to the existing
embarrassments.
Their drafts on their borrowers are now generally, as heavy as can be well met, but if they are forced to lend
the state, the money must come from the people, and the pressure
will consequently be increased."
These views are shared by the
committee.
In the present difficulty, it would be impossible to realize any
immediate assistance from taxes
the proceeds of which must of
course flow in gradually
but the committee believe, that all the
evils we now labor under, could be readily removpj by such an expression of legislative wishes, as would be heard by our representatives in Washington, who like those of Virginia, in a similar
case, would not hesitate at once to yield all private views to the
great intsrests of the State.
The recal of the hasty measures,,
which have produced those embarrassments, the expectation held
out, that the currency of the country would, by ulterior measures,
founded upon salutary experience, be rescued from total deterioration would produce, an immediate change in our affairs. Our banks
would be relieved from the fear of bankruptcy, confidence would
soon be restored
the causes of the pressure being removed, its
effects would soon disappear; the credit of the State, its ability to
borrow wonld be met by a corresponding ability to lend to it; onr
works of internal improvement might be repaired cr completed, so
that the increasing tolls would replenish the treasury of the SttWe.
This, in the opinion of the committee, is the true and legitimate
way of removing the present evils, and of sustaining the credit of
;

:

;

the

Commonwealth.

The committee have thrown

into an

b

Appendix various

state-

34
ment» and extracts, which they consider as appropriate to the occasion, and in conformity with the reasons before alleged, though
entirely disapproving of the expediency of the passage into a law,
they report a bill, entitled, "An Act authorizing a call upon the

Banks of

this

Commonwealth

for

a loan

of

five

per centum of

heir capital paid in."

APPENDIX
TO THE REPORT OF THE COMMITTEE OF WAYS
AND MEANS.
A. List of banks liable to be called on for a loan of five per
cent upon capital paid in, prepared by the Auditor General.
B. Table shewing the relation between the capital of the banks in
the state of Pennsylvania and their notes in circulation ; also showing the proportion between their notes out and the specie held by them
made from the report of the Auditor General to the Legislature, Jan.
5, 1834, the state of the banks was made up November 5, 1833.
C. Table exhibiting the proportion of specie to the circulation of
Fund Banks in the state of New York, Jan. 1, 1834.

the Safety

D. Balances due from banks in the City and Liberties of Philadelphia to the bank of the United States,
E. Extract of a letter from Mr. Secretary Dallas, to Mr. Eppes,
chairman of the committee of ways and means dated 17th Oct. la 14.

—
35

A

Lint of

Bank*

liable to be called

on for loan of 5 par cent, upon
by the Auditor General.

their capital paid in, prepared

Girard Bank,
Commercial Bank of Pennsylvania,

g 1,500,000 00

275,000 00

36

.5*3

O©

1C

^2
O **

'S

2 ?

^:i

£

C

TrNff)OoaiKa)f)iHOt,
oo" c<T co"

if
03

©

G C«

"5

c2
CO

a)

©

'o

•G

2

»
rf

^
S2

"S tj -2

m a

£

©

©

~

-c "S -a

o
."S

C

|
~

to

©^

« go
g I b
te

X

© 3
C

-Q

2 G

^

M3 2
.2 §*

=
«

S S.3
2 2bO bo

©

a a

rC

'£ "S
o) si
J3 ^2

—«

«3

T3

o

K W d
w o S'
•^ J2 a
» a ©

rt

oT cT co" oT cf *? eo

wkh-h

-

^, „- ,_ ,_

ccT to"

^,

ko»o
~

©f

—

.

cT

?>

37
„

.

21

f
38
C.

—Table

exhibiting the proportion of specie, to the circulation of

the safety fund Banks, in the State-of

Country Banks.

Mohawk

county,

Albany,
Mechanics

1

20
19

& Farm.

1

Steuben,

1

Jefferson county,

10
10
10
9
9

Cayuga county,
Lockport,
Newburg,

New York

state*

Orange county,
Rome,
Ogdensburg,
Troy Bank,

Troy

city,

Lansingburg,
Chatauque county,
Lewis county,
Farmers
Mech's.
Merchants
Mech's.
•Essex county,
Gennessee,
'
Brooklyn,
Utica and Branch,

&
&

Whitehall,

Schenectady,

January

1,

1834.

Country Banks

2

Buffalo,

New York,

8
8
8
8
8
8
8

7
7
7
7
7

6|
6
6
6
6

per cent.
?*
.

"
\
\

"
f
"
M
"
f

u
4
']
«jj

"
"
"
'*

"
"

H
"
'«

"
Montgomery,
Note The twelve last named banks, have notes in circulation
the amount of upwards of 82,700,000, and have only $80,463

—

specie.

to
in

8

0.

—Balances due

-\

froiHv

phia to

J

T

o« days,
j„„r^
26
24
26

183X January,
J anlJri
February,
.March,

>.

27
25

«
"

,71*, 668 daily

average

25

27
26

October,

November,
December,

6,079,;

22

"%
u

"

8 181 ,21
114,996
125,779
427,155
323,644
355,840

8,895,996 r
409,5*
3,721,351
7,609,490V

i=

I

August,
September,

of Philadel-

.

n,l05;

Ma>^
June/Nw
July,

liberties

n
c uy and
i>He ciw
theTYV
"l
T<zll
<* the Lmted States.

,-52

137,828
304,379i
301,648
89,042
339,561

8,144,497
7*45,080

'

307 days
216,591
Since the Deposites were removfe*,

November

27 days
26 "

Becember,

22

October,

"

75 days

EL

8,144,497
2,315,089
7,470,352
1

7,9 29,9S&

average daily, 23^,056

—Extract

of a letter from Mr. Secretary DallasNn Mr. L:pP e9 ?
chairman of the committee of Ways and Means, da\3 19th October, 1814.

" In making a proposition for the establishment of a national bank,
k
I cannot be insensible to the high authority of the names which have
appeared in opposition to that measure upon constitutional grounds. It
would be presumptuous to conjecture that the sentiments which actuaand yet it would be denying to
ted the opposition have passed away
experience a great practical advantage, were we to suppose that a difference of times and circumstances would not produce a correspond;

ing difference in the opinions of the wisest as well as of the purest
But in the present case, a change of private opinion is not material to the success of the proposition for establishing a national bankIn the administration of human affairs, there must be a period when

men.

A

diversdiscussion shall cease, and decision shall become absolute.
ity of opinion may honourably survive the contest; but upon the^
genuine principles of a representative government, the opinion of th?
The judge, who dissents
majority can alone be carried into action.

from the majority of the bench, changes not his opinion, but perform*
his duty, when he enforces the judgment of the court, although it i«
contrary

to his

own

convictions.

An

oath to support the constitution

40
and the laws,

is

not, therefore,

Support them under

oatijKL **

f^fl an

an appellatejur-^"

.

of the

conation,

cig

au

cumstances, according to'the ojJ..
von ««
but ,t is, emphatically,
lhe
an
terpretation of the fegitima^Rl!
of a censorial
re dress
upon
f ions oi a court of law
act, founded
of

all

V le2is iative

««.

"^T£^P
^.^as

^

goyern .

departing

d epartrnen t /
"
w ha ve seen ^departments, legis-/

J^£^
knd,

if even afthe exercise of a powe/
constitutional trust, or to opshould
flative, executive and judibifi
which is either though/to transcend tne case is still within the reach
to
erate injuriously uporfthe communine medium of an amendment
the
of a competent copuoul, throjition, no* only of congress, but of
oi a
the constitution, upon the.r-tore, we have marked the existence
VVherjcd of twenty years, with all the sanctions of
several states.
seen
national bank for § ;;V e and judicial authorities ; when we have
call
continued
and
loud
/rfi3 legisladve, ea
heard
oae instituW, and
the diss^t^rnerit of another; when, under these circumstances,
for the
have resorted to the power of
ress n or the several states
neit^ ° can j t be deemed a violation of the 'right of* private
national bank as a quesn insider the coiQStitutionality of a

.^^ifediaTpower:

e^
'

?^TV

Sfevef settled and/re^

'