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23d
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CONGRESS,
Session.
REPORT
FROST
THE SECRETARY OF THE TREASURY,
OK
The removal
of the Public J)eposites
from
D E C E M B E R 4,
the Bank
of the United
States.
1S33.
Read, and ordered that 5,000 copies of the report, and 1,500 of the documents, be printed
for the use of the Senate.
TREASUKY
DEPARTMENT,
December
T o the Honorable H U G H L . W H I T E ,
President pro tempore of the
3, 1833.
Senate.
S I R : I n pursuance of the p o w e r reserved to the Secretary of the Treasury? by the act of Congress entitled " A n act to incorporate the subscribers
to the B a n k of the United States*" I have directed that the deposites of the
m o n e y of the United States shall not be made in the said b a n k or branches
thereof, but in certain State banks which have been designated for that pur*
pose; and I now proceed to lay before Congress the reasons w h i c h induced
nie to give this order and direction. T h e sixteenth section of the lew abo v /enieh tinned »s in the following w o r d s :
<« A n d be it further enacted,'thaV the deposites oil th> money of the United
States in places in whichT,iersaid bank and branches t h e r e o f . m a y be established, shall be made insaVi'banh or branches thereof, unle&Oke Secretary
of the Treasury shall^af any time, cthww&etorder a-ad direct; in,which case
t h e Secretary of t ? ie T r e a s u r y sftairi:nYrreSfafe!y *laj before Con-specs, if in
session, and if nQt;, immediately after the commencement of the nexi session,
t h e reasons of such order ,*0; 'lb 6 - d i o n "
ft has been settled by repealed' adjadicalion^ *hat -a c a r t e r granted by a
State to a corporation, like that of the B a n k of the United States, is a contract between the sovereignty which grants it, and the stockholders.
The
same principle must apply to a charter granted by the United States; and
consequently t h e act incorporating the bank is to be regarded as a contract
between the United States of the one part, and the stockholders of the other;
and, by the plain terms of the contract, as contained in the section above
quoted, the stockholders have agreed that the power reserved to the Secretar y over the deposites shall not be restricted to any particular contingencies,
but be absolute and unconditional as far as thei!r interests are involved in t h e
removal. T h e order, therefore, of the Secretary of the Treasury directing the
public money to be deposited elsewhere, can in no event be regarded as a
violation of the contract with the stockholders, nor impair any right secured
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to them b y the charter.
T h e T r e a s u r y D e p a r t m e n t being entrusted w i t h
t h e administration of t h e finances of t h e c o u n t r y , it w a s a l w a y s the d u t y o f
t h e Secretary, in t h e absence of a n y legislative provision on the subject^ t o
take care that t h e public m o n e y was deposited in safe k e e p i n g in the h a n d *
of faithful agents, and in c o n v e n i e n t places, r e a d y to be applied a c c o r d i n g t o
the wants of t h e G o v e r n m e n t T h e law incorporating t h e bank has r e s e r v *
ed to h i m , in its full e x t e n t , t h e p o w e r h e before possessed- I t does not coffc
fer on h i m a n e w p o w e r , b u t reserves to h i m h i s former authority w i t h o u t
a n y n e w limitation. T h e obligation to assign t h e reasons for his d i r e c t i o n t o
deposite t h e m o n e y of t h e U n i t e d States e l s e w h e r e , cannot be considered a s
a restricton of t h e p o w e r , because t h e r i g h t of the Secretary to designate t h e
places of deposite was a l w a y s necessarily subject to t h e control of C o n g r e s s .
A n d as the S e c r e t a r y of the T r e a s u r y presides over o n e of t h e executive d e p a r t m e n t s of t h e G o v e r n m e n t , and his p o w e r over this subject forms a p a r t
of the executive duties of his office, the m a n n e r in w h i c h it is exercised m u s t
b e subject to t h e supervision of t h e officer to w h o m t h e constitution h a s c o o r
fided t h e w h o l e e x e c u t i v e p o w e r , and has r e q u i r e d to take c?^3 that .the l a w *
be faithfully executed.
T h e faith of t h e United States is, h o w e v e r , pledged, according to the t e r m s
of the section above q u o t e d , that the public m o n e y .shall be deposited in t h i s
b a n k , " unless the S e c r e t a r y of t h e T r e a s u r y shall o t h e r w i s e order a n d ^Ur e c t " A n d as this a g r e e m e n t has been entered into by Congress in behalf
of the United States, the place of deposite could not be changed b y a l e g i s lative act w i t h o u t disregarding a pledge which the legislature has g i v e n ; a n d
t h e m o n e y of t h e United States m u s t therefore continue to be deposited i n
t h e bank until t h e last h o u r of its existence, unless it shall be otherwise ordered by t h e a u t h o r i t y mentioned in t h e charter. T h e p o w e r over the p l a c e
of deposite for t h e public m o n e y would seem p r o p e r l y to belong to the legi3lative d e p a r t m e n t of t h e G o v e r n m e n t ; and it is difficult to imagine w h y
the
authority to w i t h d r a w it from this bank was confided exclusively to t h e
executive. B u t the t e r m s of the c h a r t e r appear to be too plain to a d m i t of
question. A n d , althon£li Congress should be satisfied that the public m o n e y
w a s not safe in t h e CMIC- of t h e batik, or should be convinced that the interests
of t h e people of t h e U n i t e d States imperiously d e m a n d e d t h e removal, y e t
t h e passage rf? law d i r e c t i n g it to be d o n e would be a breach of the agrea*
m e n t into *vhich t h e y have e n t e r e d .
A s s u m i n g this to b*s t*ie t r u e t o a s t r u c t i o n of the charter to the b a n k ,
it must be the d u t y of the S e c r e t a r y ot the Tre&6>ir*< W* w i t h d r a w t h e d 6 ~
posited of t h e public m o n e y from that institution "whenever the c h a n g e
w o u l d , in a n y drj.rec, p r o m o t e tho pub»i<- M e r e s t ,
It is not necessary that
t h e depositee should be unsafe, in c r d c r to justify t h e r e m o v a l . T h e aut h o r i t y to r e m o v e is not limited to such a contingency. T h e bank m a y be
perfectly solvent, and prepared to meet p r o m p t l y all d e m a n d s upon i t — i t
m a y h a v e been faithful in t h e performance of its duties and y e t t h e public
interest m a y r e q u i r e t h e deposites to be w i t h d r a w n ; and, as t h a t cannot b e
d o n e without the action of this d e p a r t m e n t , t h e S e c r e t a r y of t h e T r e a s u r y
w o u l d betray the trust confided to h i m , if h e did not cause t h e deposites If*
be made e l s e w h e r e , w h e n e v e r t h e change would advance t h e public interests
or public convenience. T h e safety of t h e d e p o s i t e s — t h e ability of th$V
b a n k to meet its e n g a g e m e n t s — i t s fidelity in the performance of its o b l i g e
t i o n s — a r e o n l y a part of t h e considerations b y w h i c h his j u d g m e n t m u s t be
g u i d e d . T h e general interest, and convenience of the people, m u s t regulatR h i s n o n d u c L
3
c 23
T h i s principle was distinctly asserted by Mr. Crawford, when he was tl e
Secretary of the Treasury, $pon after the bank obtained its charter. In a,
postscript to his letter to the President of the Mechanics' Barik of N e w
York, dated February 13, 1817, he says: " T h e Secretary of the Treasurv
will always be disposed to support the credit of the State banks, and will
invariably direct transfers, from the deposites of the public money in aid of
their legitimate exertions to maintain their credit- TBut as the proposition of
the Bank of the United States excludes the idea of pressure on its part, no
measure of that nature appears to be necessary at this time." Other passages in thejcorrespondence of Mr, Crawford with the banks, about the period abovementioned, might be referred to, equally indicating the same opinion; and, at that day, no doubt seems to have been entertained of the power
dr of the duty of the Secretary in relation to this subject, It does not appear to have been then even suggested that the right of removal depended
6n the solvency of the bank, or the safety of the public money committed
to its custody. On the contrary, in the passage above quoted, the superior
Safety of the State banks is by no means regarded as necessary to give him
the right to make the transfer to them. For he declares that he will give
the deposites to the State banks on account of their weakness, and to protect them from the Bank of the tlnited States, if, by means of its superior
strength, it sought to oppress them. N o r can any distinction be taken be>tween the transfer of a part and the transfer of the whole sum remaining on
deposite. T h e language of the charter recognizes no such distinction, and
the principle asserted by Mr. Crawford would have led him to the removal
o f the whole amount of the public money to the State banks, if a pressure
on the part of the Bank of the United States had rendered such a measure
necessary in order to support the State banks in their legitimate exertions
to maintain their credit*
T h e language of the law, therefore, and the usage and practice of the Government under it, establish the following principles:
1st. That the power of removal was intended to be reserved exclusively
to the Secretary of the Treasury; and that, according to the stipulations in
the charter, Congress could not direct it to be done.
2d- That the power reserved to the Secretary of the Treasury does not
tlepend for its exercise merely on the safety of the public money in the
hands of the bank, nor upon the fidelity with which it has conducted itself;
'but he has the right to remove the deposites, and it is his duty to remove
t h e m , whenever the public interest or convenience will be promoted by the
change.
Taking these two principles as unquestionable, I proceed to*state the reasons which induced me to believe that it was necessary for the interest and
the convenience of the people that the Bank of the United States should
cease to he the depository of the public money.
T h e charter of the bank will expire, according to the existing law on the
subject* on the 3d of March, 18S6; and, for two years after the termination
of the charter, it is authorized to use the corporate name for the final settlement and liquidation of the affairs and accounts of the corporation, and for
^he sale and disposition of their estate, but not for any other purpose. It i*
the duty of the executive departments of the Government to exercise the
powers conferred on them, and to regulate the discretion confided to them,
according to the existing larts, and .tbejr cannot be allowed to speculate on
the chances of future changes by the idgxsJative authority. Perhaps there
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may be cases in which the discretion vested in an executive department
might, with propriety, be in some degree influenced by the>xpectatioa o f future legislation; but they must be cases in which the principles of j u s t i c e ,
or the public interests, manifestly call for an alteration of the law; or w h e r e
some expression of the public opinion has strongly indicated that a c h a n g e
will probably be made- But where nothing of this kind exists, an e x e c u tive officer of'the Government is not authorized to regulate a discretion w h i c h
the law has entrusted to him, upon the assumption that the law will be changed.
In deciding upon the course which it was m y duty to pursue in relation
to the depbsites, I did not feel myself justified in anticipating the renewal
of the charter on either of the abovementioned grounds. It is very e v i d e n t
that the bank has no claim to renewal, founded on the justice of Congress;
for, independently of the many serious and insurmountable objections w h i c h
its own conduct has furnished, it cannot be supposed that the grant to t h i s
corporation of exclusive privileges, at the expense of the rest of the c o m munity, for twenty years, can give it a right to demand the still further enjoyment of its profitable monopoly. Neither could I act upon the assumption that the public interest required the recharter of the bank, because I
am firmly^persuaded that the law which created this corporation, in m a n y of
its provisions, is not warranted by the constitution, and that the existence
of such a powerful moneyed monopoly is dangerous to the liberties of the
people, and to the purity of our political institutions.
The manifestations of public opinion, instead of being favorable to a renewal, have been decidedly to the contrary; and I have always regarded
the result of the last election of President of the United States as the declaration of a majority of the people, that the charter ought not to be renewed. It is not necessary to state here what is now a matter of history. The
question of the renewal of the charter was introduced into the election by
the corporation itself. Its voluntary application to Congress for the renewal
of its charter four years before it expired, and upon the eve of the election
of President, was understood, on all sides, as bringing forward that cjuestioa
for incidental decision at the then approaching election. It was accordingl y argued on both sides, before the tribunal of the people, and"their verdict
pronounced against the bank by the election of the candidate who w»3
known to have be;en always inflexibly opposed to it.
Under these circumstances, I could not have been justified, upon either
of the grounds abovementioned, in anticipating any change in the existing
laws, in relation to the bank; and as the act of Congress which created tiw>
corporation, limits its duration to the third of March, 1SS6, it became m y
duty, as Secretary of the Treasury, in executing the trust confided to me
under the law, to look to that period of time as the termination of its corporate existence, I had no sufficient grounds for presuming that the law
would be altered in this respect by future legislation, and a new charter be
granted to the bank. It was therefore incumbent upon men in discharging
my official duties, to act upon the assumption that this corporation would
not continue in being after the time above specified.
A n d in this state oi
things, without any reference to the manner in which' the bank has conducted itself, it became necessary to decide whether the deposites ought to
remain i n the bank until the end of its corporate life, or be removed at
some earlier period. In forming m y opinion on this subject, I could only
inquire, which of these measures would most conduce to the public good*
It is obvious that the interests of the country would not be promoted b j
s
C-*2
permitting the depoaites of the public money to continue in the bank until
i t s charter expired. Judging from the past, it is highly probable that t h e y
w i l l always amount to several millions of dollars. It would evidently produce serious inconvenience, if such a large sum were left in possession of
t h e bank until the last moment of its existence, and then be suddenly w i t h drawn, w h e n its immense circulation is returning upon it to be redeemed^
tend its private depositers removing their funds into other institutions. T h e
ability of the bank, under such circumstances, to be prompt in its payments
to the Government, may be well doubted, even if the ultimate safety of the
4eposites could be relied upon. Besides the principal Circulating medium-.
4iow in the hands of the people, and the one most commonly used in thtj
exchanges between distant places, consists of the notes of the Bank of the
TJnited States and its numerous branches. T h e sudden withdrawal of its
{present amount of circulation, or its sudden depreciation before any other
eound and convenient currency was substituted for it, would certainly pro*
duce extensive evils, and be sensibly felt among all classes of society.
It is well understood, that the superior credit heretofore enjoyed by the
<uotes of the Bank of the United States was not founded on any particular
confidence in its management or solidity. It was occasioned altogether
b y the agreement on behalf of the public, in the act of incorporation, to receive them in all payments to the United States; and it was this pledge on
«Jie part of the Government w h i c h gave general currency to notes payable
«t remote branches. T h e same engagement in favor of any other monsye<X
destitution would give its notes equal credit, and make them equally convenient for the purposes of commerce. B u t this obligation on the part of
«he United States, will cease on the third of March, 1836, w h e n the charter
expires; and as so soon as this happens, all the outstanding notes of t h ^
bank will lose the peculiar value they now possess, and the notes payable
*t distant places become as much depreciated as the notes of local banks^
A n d if, in the mean time, no other currency is substituted in its place b y
common consent, it is easy to foresee the extent of the embarrassment w h i c h
w o u l d be caused by the sudden derangement of the circulating medium,
i t would be too late, at that time, to provide a substitute which would ward,
off the evil. T h e notes of the Bank of the United States in circulation OQ,
t h e second of September last, which was the date of the latest return before,
one when the order for removal was given, amounted to 3S1S,413,287 07^
,scattered in every part of the United States: and if a safe and sound cur^rency were immediately provided, on the termination of the charter, to take
t h e place of these notes, it would still require time to bring it into general
-ose, and in the interim the people would be subjected to all fhe inconveniences and losses which necessarily arise from an unsound state of the currency.
T h e evil would be so great, and the distress so general, that it
anight even compel Congress, against its wishes, to recharter the bank$
a i d perhaps more effectual means could hardly be devised for insuring the
-renewal of the charter.
It is evident, that a state of things so much to be
deprecated can only be avoided by timely preparation; and the continuance of the deposites can only be justified by the determination to renew
t h e charter- T h e State banks can, I have no doubt, furnish a general circulating medium, quite as uniform in value as that which has been afforded
b y the B a n k of the United States—probably more so.
F o r it is welj
k n o w n that, in some of the cities, the branches of the bank have been in
*he habit, whenever they thought proper, of refusing to honor the notes of
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their own bank, payable at other branches, when they were not offered i a
discharge of a debt due to the United States.
But a currency founded o n
the notes of State banks could not be suddenly substituted for that h e r e t o fore furnished by the Bank of the United States, and take the place o f i t ^
act the same moment, in every part of the Union. It is essential that t h e
change should be gradual; and sufficient time should be allowed to suffer i t
to make its way by the ordinary operations of commerce, without r e q u i r i n g
a hasty and violent effort.
In this v i e w of the subject, it would be highly injudicious to suffer t h e
deposites to remain in the Bank of the United States until the close o f iw
corporate existence: and as they cannot be withdrawn without the actioa
of the Secretary of the Treasury, it must unavoidably become his duty, a t
some period of t i m e , to exercise the power of removal. Laying aside*
therefore, for the present, all the considerations which the misconduct o f
the bank has furnished, the question presented to this department was, h o w
long could the removal be delayed consistently with the public interests?
It is a question of time only. T h e duty must be performed at some period,
and could not be altogether omitted, without justly incurring a heavy responsibility to the community for ail the consequences that might follows
and it is, I think, apparent that the measure was delayed as long as w a s
compatible with the interests of the people of the United States.
T h e monthly statement of the bank of the second of September last,
before referred to, shows that the notes of the bank and its branches, theA
in circulation, amounted to $ 1 8 , 4 1 3 , 2 S 7 0 7 , and that its discounts amounted to the sum of Sti2,653,359 59. The immense circulation above stated,
pervading every part of the United States, and most commonly used in tb0
business of commerce between distant places, must all be withdrawn from
circulation when the charter expires. If any of the notes then remain if*
the hands of individuals, remote from the branches at which they are pay*
atble, their immediate depreciation will subject the holders to certain losa.
Yhose payable in the principal commercial cities would, perhaps, retain nearl y their nominal value; but this would not be the case with the notes of th#
anterior branches, remote from the great marts of trade. And the statements of the bank will show* that a great part of its circulation is composed
of notes of this description. T h e S a n k would seem to have tlken pains to
introduce into common use such a description of paper as it could depra*
eiate or raise to its par value, as best suited its own v i e w s ; and it is of th#
first importance to the interests of the public, that these notes should all bm
taken out of .circulation before they depreciate in the hands of the individi*gls who hold them; and they ought to be withdrawn gradually, and their
places supplied as they retire, by the currency which will become the sub*
stitute for them. H o w long will it require for the ordinary operations of
commerce, and the reduction of discounts by the bank, to withdraw tha
amount of circulation before-mentioned, without giving a shock to the cur*
rency, or producing a distressing pressure upon the community? I am convinced that the lime which remained for the charter to run, after the first of
October, (the day on which the first order for removal took effect,) was not
qffiore than was proper to accomplish the object with safety to the commu*c i t y ; and if it had depended upon my judgment at an earlier period, I
should have preferred, and should have taken a longer time. Enough, howfiver, is yet left, provided no measures are adopted by the bank for thp
purpose of inflicting unnecessary suffering upon the country. Apart, there**
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fore, from any considerations arising out of the conduct of t h e b a n k , and
looking merely to the near approach of the day w h e n it would cease to
exist, the w i t h d r a w a l of the deposites appeared to be required by t h e p u b lic interest, at the time w h e n the first order for removal was given by this*
department.
T h i s opinion is confirmed by t h e ground taken in favor of the renewal ot
t h e charter at December session, 1S31* I t was then urged that the s h o r t
period w h i c h y e t remained of its corporate existence, and the necessity of
p r e p a r i n g to win<4 U P its concerns, if the charter was not to be r e n e w e d ,
m a d e it pvoper that t h e question should at once be decided. V e r y little
m o r e than half of that t i m e y e t remains* A n d although I do not concur
in t h e opinions t h e n expressed, and believe that the application was ill-timed
and p r e m a t u r e , y e t the arguments then relied on by m a n y , whose j u d g m e n t
is entitled to respect, affords strong grounds for concluding that the measure
n o w adopted is not objectionable on the score of t i m e ; and that, if t h e d e posites w e r e not to continue in the bank until the termination of its charter, their w i t h d r a w a l could not with p r o p r i e t y be longer delayed.
T h e r e is, h o w e v e r , another v i e w of this subject w h i c h , in m y opinion,
m a d e it impossible further to postpone t h e r e m o v a l . About the first of D e c e m b e r , 1832, it had been ascertained that the present Chief M a g i s t r a t e
w a s re-elected, and that his decision against t h e bank had thus been sanctioned b y the people. A t that timy the discbunts of the bank amounted
to # 6 1 , 5 7 1 , 6 2 5 66. A l t h o u g h t h e issue which the bank took so m u c h
pains to frame had now been tried, and t h e decision pronounced against it
y e t no steps w e r e taken to prepare for its approaching e n d : on the contrary*
i t proceeded to enlarge its discounts, and, on t h e 2d of A u g u s t , 1S33, t h e y
a m o u n t e d to # 6 4 , 1 6 0 , 3 4 9 1 4 , being an increase of m o r e than t w o and a
half millions in the eight m o n t h s immediately following the decision against
t h e m ; and so far from p r e p a r i n g to arrange its affairs with a v i e w to wind
u p its business, it seemed from this course of conduct to be the design of
t h e bank to p u t itself in such an attitude, that, at the close of its charter, t h e
cowntry would be compelled to submit to its r e n e w a l , or to hear all t h e ' c o n sequences of a c u r r e n c y suddenly deranged, and also a severe pressure for
t h e i m m e n s e outstanding claims which would t h e n be due to the corpora*
tiom . W h i l e the b a n k was thus proceeding to enlarge its discounts, a a
agent was appointed by the Secretary of t h e T r e a s u r y to inquire upon w h a t
t e r m s the State banks would u n d e r t a k e to perform the services to the G o v e r n m e n t which have heretofore been rendered by the B a n k of the United
S t a t e s ; and also to ascertain their condition in four of t h e principal corp*mercial cities, for the purpose of enabling this d e p a r t m e n t to j u d g e w h e t h e r
t h e y would be safe and convenient depositories for tho public m o n e y . I t
w a s deemed necessary that suitable Fiscal agents should be prepared in d u e
season; a n d it was p r o p e r that time should he allowed t h e m to m a k e a r r a n g e m e n t s w i t h one another, t h r o u g h o u t the c o u n t r y , in order that t h e y
m i g h t perform their duties in concert, and in a m a n n e r that would be conv e n i e n t and acceptable to the public. I t was essential that a change so i m p o r t a n t in its character, and so extensive in its operation upon t h e financial
concerns of the c o u n t r y , should not be introduced without t i m e l y prenaration- T h e r e was nothing in this proceeding, n o r in the condition of t h e
b a n k , w h i c h should at that time have produced a sudden and entire change
of its p o l i c y ; for, in addition to the ordinary receipts from bonds given
on account of previous importations, the season was at hand when the cash
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6
duties on woollens might well be expected to be very productive, and, frOte
these two sources the receipts from the customs were in fact unusually Iargq»
and the amount of the public deposites in the bank proportionally h e a v y .
T h e capacity of the bank, therefore, at this time, to afford facilities t o c o m merce was not only equal, but greatly superior to what it had been for s o m a
time before; and the nature of the inquiry made of the State banks, confined *8
it was to the four principal commercial cities, showed that the immediate
withdrawal of the entire deposites from the bank so as to distress it, was
*iot contemplated; and if any apprehensions to the contrary were felt b y
the bank, an inquiry at this department} would, no doubt, have been prompt*
i y and satisfactorily answered. And certainly it was the duty of the b a n k ,
before it adopted a course oppressive to the whole country, to be sure olS
the ground on which it acted. It can never be justified for inflicting a pub*
lie injury, b y alleging mistaken opinions of its own, when the means o f obtaining information absolutely certain were so obviously within its reacJn
T h e change was always designed to be gradual, and the conduct of the bank
itself has since compelled me to remove a portion of the deposites earlier
than was originally intended. There was nothing, therefore, in the inquity
before mentioned, nor in the views of the Executive Department, nor i »
the condition of the bank, which justified a sudden and oppressive change
of its policy.
.
T h e situation of the mercantile classes also rendered the usual aids pi ttMi
bank more than ever necessary to sustain them in their business.
Then
bonds for previous importations were, as before stated, constantly becoming
due and heavy cash duties were almost daily to be paid. The demands o?
the*p u t)li c upon those engaged in commerce were consequently unusually
large, and they had a just claim to the most liberal indulgence from th«
fiscal'agent of the Government, which had, for so many years, been reaping
harvests of profits from the deposites of the public money. But the bank
about this time changed its course. B y the monthly statements of the bankj
dated 2d August, 1833, it appears that its loans and domestic bills of ex*
change, purchased and on hand, amounted to
- 8 6 4 , 1 6 0 , 3 ^ 0 14
B y the monthly statement of the 2d September, 1S33, they
appear to have been
6 2 , 6 5 3 , 3 5 9 59
B y that of the 2d of October, 1S33, they were
- 6 0 , 0 9 4 , 2 0 2 93
Reduction in two months -
4,066,146 •*
B y the same paper it appears that the public deposites, including those for the redemption of the public debt, the
Treasurer's, and those of the public officers, were, in
August
I - S 7 , 5 9 9 , 9 3 1 47
* September 9 , 1 S 2 , 1 7 3 1&
October
• 9 , 8 6 8 , 4 3 5 48
Increase of the public deposites in two months
-
Total amount collected from the community
-
-
g 2 , 2 6 S , 5 0 4 11
6,334,650 /3»
•
"
'
•
•
•
•
•
•
i
M
1
T h u s upwards of six millions of dollars were withdrawn from the business of the country by the Bank of the United States in the course of twjo
months. T h i s of itsclt must have produced a pressure on the money market,
affecting all commercial transactions.
But the curtailment in the b*n*
8
[ 2 ]
accommodations of the community was much larger* T h e p o l i c y adopted by the Bank of the United States compelled the State banks to take the
same course in self-defence; and the Bank of the United States appears to
have resorted to the expedient of drawing from the State banks the balances
due in specie, and to have hoarded up the article in its own vaults.
In August, 1833, that bank had in specie $ 1 0 , 0 2 3 , 6 7 7 38
September
10,207,649 2 0
October
.
.
.
.
.
.
10,663,441 51
Showing an increase of specie in two months of
-
-
$ 6 3 9 , 7 6 4 13
This sum, it is believed, was chiefly drawn from the State banks. T o
fortify themselves, those banks were compelled to call on their debtors, and
curtail their accommodations; and so large a proportion of these calls are
always paid in their own notes, that, to obtain g>100,000 in specie, they are
probably obliged to call for four or five times that amount. T o replace the
specie taken from them by the Bank of the United States, and to provide
for their own safety, the State banks, therefore, must have curtailed from
two to three millions of dollars- On the whole, it is a fair estimate that the
collections from the community, during these two months, without any corresponding return, did not fall much short of nine millions of dollars. A s
might have been expected, complaints of a pressure upon the m o n e y market
were heard from every quarter. T h e balances due from the State banks
had, during the same time, increased from S36S,969 98 to 452,288,573 19,
and, from the uncertain policy of the bank, it was apprehended they might
suddenly be called for in specie. T h e State banks, so far from being able
to relieve the community, found themselves under the necessity of providing for their own safety.
A very large proportion of the collections of the bank in August and September were in Philadelphia, N e w York, and Boston.
In August and September the curtailment in Philadelphia
was
.
.
.
.
.
g l 9 5 , 5 4 8 69
Increase of public deposites
.
.
.
.
64G,S46 8 0
Actual collections by the bank
.
.
.
.
Increase of public deposites in N e w York Deduct increase of loans .
.
.
.
Actual collections by the bank
-
$S42,395 49
- $ 1 , 3 9 6 , 5 9 7 24
331,295 35
-
g l , 0 6 5 , 3 0 1 86
Curtailment in Boston was
Increase of public deposites
*
8717,264 45
48,069 88
Actual collections by the bank
-
$ 7 6 5 , 3 3 4 33
Total collections in the three cities
.
.
.
g S , 6 7 3 , 0 3 1 6S
It will be perceived that it was solely through the increase of the public
deposites that the bank raised balances against the Stnte banks in N e w York,
and was placed in a situation to take from them, at its pleasure, large sums
in specie. A n d when it is considered that those curtailments and collections
2
C ft ]
10
of the Bank of the United States necessarily compelled the State batiks t o
curtail also, w e shall be at no loss to perceive the cause of the pressure w h i c h
existed in the commercial cities about the end of the month of S e p t e m b e r .
I t was impossible that the commercial community could have sustained i t s e l f
much longer under such a policy.
I n the t w o succeeding months, t h e
collections of the bank would probably have exceeded five millions m o r e ,
and the State banks would have been obliged t o curtail in an equal s u m .
The reduction of bank accommodations to the amount of nineteen million* of dollars in four months, must have almost put an end to trade; and before
thenrst of October this pressure in the principal commercial cities had b e c o m e
so intense that it could not have been endured much longer without the m o s t
serious embarrassments. It was then daily increasing, and, from the hes*
information that I have been able to obtain, I am persuaded that, if the p u b l i c
£ ™ T ^ r e T T e ? * ? £ r e v e " u e h a d b e e n continued to be deposited in t h e
onS™.«f^e
?
f
r f ° r t w . 0 u m o n t h s ^ n g e r , and it had adhered to t h e
m
f
, 0 , , V W h
months * 5 3 ? ° i
; e t S i p U r s U e d d u r i n S the t w o preceding
8
6
S e w L n o ^ C l ^ ! ;
°r b a i \ k r u P ^ . V and ruin*must have followed!
f
u t ^ e o r l h ^ n t Z ' f i ^ ^ '
T t h e T ^ a s u r y Department but to act
J
w o u U Aof nprmft th * I •?
"together.
Duties of the highest character
C UrSe a d
to the Former
°
' " * d M n o t h e ^ a t e promptly to resort
r ^ a J i C f a t e d , t h ! e C 0 ! l d i ^ 0 n o f t h e mercantile classes at the time of t h e
™S«]i
r? e / P l a i n . w h y J t w a s impossible to postpone it even for a short
period.
Under other circumstances, I should have been disposed to direct
tne removal to take effect at a distant day, so as to give Congress an oppor- <
tun.ty ot prescribing, in the mean time, the places of deposite, and of regui t ' n l t h e securities proper to be taken. It is true that the power g i v e n to
Y
Tln't^
Treasury to remove the deposites from the Bank o f the .
o n n e a Mates necessarily carries with it the right to select the places w h e r e
iney shall afterwards be made. T h e power of removal cannot be exercised
without placing them elsewhere; and the right to select is therefore c o n K , ^ 6
right to remove. It is a ] s o true that, in m y judgment, as ha*
c h a n - h a ^ t a t ^ \ * ? U b I i c i n t e r e s t v v o u l d h a v e bee» advanced if the
Y e t a sa
n S t l £mes ft- "* *5 e a r , i e r pGriod<™ months would,
".d^^^r^^
*ffe™c*>and
the
TTi
aC
G S
S i : had d e i 2 E ? 1 f
.T
° & e C t i n a d v a n c e o f t h « « * » * removal,
S
no choice extent IS?***??
° ^ B u t t h e c o ^ « c t of the bank left m e
tween
m e n t f o r ' if
ttE™
^ ' ^ ^ l a t e removal and its final relinquishm e n t , lor i f the measure had been then suspended, to be resumed at «
ever it v ^ a l ^ 8 , ? t h c P J > w % o f . ^ e bank ^ p r o d u c e the same evil w h e n !,TK* 1 FiU a l t e m P t c d -Pitting aside, therefore, from the v i e w o f the
subject w h i c h I am n o w presenting, all the inducements which grew out of
Iht f^°nf
r°i t h e b a n k ' a n d r e S a ^ i n g only its approaching end, and
Idmislfble
Pressure it was then producing, no further delay w «
;„ J ^ ™ ^ * n d r c a s o n s a b o v e 8 t a t e «3 appear to have established the f o l l o w i n g propositions:
,u \Sl'u L\ W*9i V? e d u t y o f t h i * A p a r t m e n t not to act upon the assumption
g a t the legislative p o w e r would hereafter change the law in relation to t h e
Bank of the United States, and it was bound to regulate ita conduct u p o *
11
C2 J
the principle that the existence of this corporation would terminate on the
3d of March, 1836.
2d. The public interest required that the deposites of public money should
not continue to be made in the Bank of the United States until the close of
its existence, but should be transferred to some other place, at some period
prior to that time.
3d. T h e power of removal being reserved exclusively to the Secretary of
the Treasury, by the terms of the charter, his action was necessary in order
to effect it; and the deposites eould not, according to the agreement made by
Congress with the stockholders, have been removed by the legislative branch
of the Government until the charter was at an end.
4th. T h e near approach of the time when the chai^er would expire, as
well as the condition of the mercantile community, produced by the conduct of the bank, rendered the removal indispensable at the time it was
begun; and it could not have been postponed to a later day without injury
to the country.
Acting on these principles, I should have felt myself bound to follow the
course I have pursued in relation to the deposites, without any reference to
the misconduct of the bank; but there are other reasons for the removal,
growing out of the manner in which the affairs of the bank bave been man*
aged, and its money applied, which would have made it m y duty to withdraw the deposites at any period of the charter.
It will, I presume, be admitted on all hands, that the bank was incorporated in order to create an useful and convenient public agent to assist
the Government in its fiscal operations. The act of incorporation was not
designed merely as an act of favor to the stockholders, nor were exclusive
privileges given to them for the purpose of enabling them to obtain political
power, or to amass wealth at the expense of the people of the United States.
T h e motive for establishing this vast monopoly was the hope that it would
conduce to the public good. It was created to be the agent of the public, to
be employed for the benefit of the people; and the peculiar privileges and
means of private emolument given to it by the act of incorporation, were
intended as rewards for the services it was expected to perform. It was
never supposed that its own separate interest would be voluntarily brought
into collision with those of the public; and still less was it anticipated that
at would seek, by its money, to obtain political power, and control the action
of the Government either by the favors it can shower, or the fear of its resentment. Its duty was simply that of an agent, bound to render certain services to its principal in consideration of the advantages granted to it; and,
l i k e every other public agent or officer, its own separate interests were subordinate to its duty to the public* It was bound to consult the general
good rather than its private emolument, if they should happen to come
into conflict with one another. If, therefore, it sought to obtain political
power, or to increase its gains by means which would probably bring distress on the community, it violated its duty, and perverted to the public injury the powers which were given to be used for the public good; and,
in such an event, it was the duty of the public servants, to whom the trust
Tvas reserved, to dismiss it, so far as might lawfully be done, from the agency
i t had thus abused.
Regarding the bank, therefore, as the agent of the United States, and
bound by the duties, and liable to the obligations which ordinarily belong to
the relation of principal and agent, except where the charter has otherwise
Ca ]
12
directed, I proceed to state the circumstances which show that it had j u s t l y
forfeited the, confidence of the Government, and that it ought not t o h a v e
been further trusted as the depository of the public money.
The United States, by the charter, reserved the right of appointing five
directors of the bank.
It was intended by this means not only to p r o v i d e
goardians for the interests of the public in the general administration o f its
affairs, but also to h?ve faithful officers, whose situation would enable t h e m
to become intimately acquainted with all the transaction* of the institution;
and whose duty it would be to apprise the proper authorities of a n y m i s conduct on the part of the corporation, likely to affect the public i n t e r e s t .
T h e fourth fundamental article of the constitution of the corporation, d e clares that not less than seven directors shall constitute aboard for t h e t r a n s action of business. A t these meetings of the board, the directors o n the
partofthe United States had, of course, a right to be present; and consequently, if the business of the corporation had been transacted in t h e man*
ner which the law requires, there was abundant security that nothing could
be done injuriously affecting the interests of the people, without being i m m e diately communicated to the public servants, who were authorized t o apply
the remedy. And if the corporation has so arranged its concerns as t o conceal from the public directors some of its most important operations, and has
thereby distroyed the safeguards which were designed to secure the interests of
the United States, it would seem to be very cltear that it has forfeited its
claim to confidence, and is no longer worthy of trust* In the ordinary concerns *f life among individuals, no pt-jdent man would continue to place
his funds in the hands of an agent after he disdbvered that he was studiously concealing from him the manner in which they were employed. The
public money ought not to be guarded with less vigilance than that of an
individual; and measures of concealment, on the part of this corporation,
are not only contrary to the duties of its agency, but are also in direct viola*
tion of the law to which it owes its corporate existence* And the same
misconduct which, in the case of private individuals, would induce a prudent man to dismiss an agent from his employment, would require a similar*
course towards the fiscal agent of the Government by the officer to w h o m
the law has entrusted the supervision of its conduct, and given the power of
removal.
Tried by these principles, it will be found that the conduct of the bank
made it the duty of the Secretary of the Treasury to withdraw from its car*
the public funds.
1st* Instead of a board constituted of at least seven directors, according *0
the charter, at which those appointed by the United States have a right to
be present, many of the most important money transactions of the bank
have been, and still are, placed under the control of a committee denomi~
inated the exchange committee, of which no one of the public directors has
be^n allowed to be a member since the commencement of the present yeafr*
This committee is not even elected by the board, and the public directors
have no voice in their appointment* T h e y are chosen by the president oi>
the bank; and the business of the institution which ought to be decided oa
by the board of directors, is, in many instances, transacted by this committee*
and no one has a right to be present at their proceedings but the president^
and those whom he shall please to name as members of this committee.
Thus loans are made, unknown at the time to a majority of the board, *nd
papexe discountd, which might probably be rejected at a regular meeting of
13
[ 2 ]
the directors.
T h e most important operations of the bank are sometimes
resolved on and executed by this committee; and its measures are, it appears, designedly, and by regular system, so arranged as to conceal from
the officers of the Government transactions in which the public are deeply
involved. A n d this fact alone furnishes evidence too strong to be resisted,
that the concealment of certain important operations of the corporation.
fVom the officers of the Government, is one of the objects which is intended
to be accomplished by means of this committee* The plain words of the
dfriarter are violated in order to deprive the people of the United States of
one of the principal securities which the law had provided to guard their
interests, and to render more safe the public money entrusted to the care of
the bank.
Would any individual of ordinary discretion continue his money in the hands of an agent who had violated his instructions, for the purpose of hiding from him the manner in which he was conducting the business confided to his charge ? Would he continue his property in his hands,
when he had not only ascertained that concealment had been practised to-,
wards him, but when the agent avowed his determination to continue in
(he same course, and to withhold from him, as far as he could, all knowledge
of the manner in which he was employing his funds? If an individual
would not be expected to continue his confidence under such circumstances,
upon what principle could a different line of conduct be required from the
crtficers of the United States charged with the care of the public interests 2
T h e public money is surely entitled to the same care and protection as that
Of an individual; and if the.latter would be bound, in justice to himself, to
withdraw his money from the hands of an agent thus regardless of his du~
tjr, the same principle requires that the money of the United States should,
Under the like circumstances, be withdrawn from the hands of their fiscalagentj
and as the power of withdrawal was confided to the Secretary of the Treasury, it was his duty to remove it on this ground alone, if no other cause of
complaint had existed against the bank. T h e conduct of the bank in relation to the three per cent, stock of the United States is a memorable instance of the power exercised in secret by the exchange committee, andthe abuses to which it is incident. T h e circumstances attending that transaction have been so fully laid before Congress and the public, that it is use*
(less to repeat them here. It was a case in which this committee not only
^managed, in secret, a moneyed transaction of vast amount intimately connects
ed with the interests of the people of this country, but one where the measures of the Government were thwarted by the bank, and the nation com*
pelled to continue for a time liable for a debt which it was ready, and desired to extinguish. N o r is this the only measure of the kind which has come
officially to m y knowledge. I have the honor to present, herewith, a report
in»de by three of the public directors to the President of the United State*,
On the 2£d of April, 1S33, (marked A , ) in which, incompliance with hi*
nequeet that they would communicate to him such information as was withi n their personal knowledge relative to these unusual proceedings of the
"board of director*, they disclose the exceptionable manner in which the
power conferred by law on the board has been surrendered to the exchange
committee; that this has been done evidently with the design of preventing
* proper and contemplated examination into the accounts of persons whose
aper was offered for discount; that a minority of the board, apparently sufcient to have prevented the loan if the security was bad, were deprived of
i&eir votes upon the question; and that the long established by-laws of thp
g
[*]
14
institution were set aside for the purpose of carrying these d e s i g n s i n t o efc
feet with less difficulty or ernbarrasment.
If proceedings like this, are sanctioned by the constituted a u t h o r i t i e s of thll
United States, the appointment of directoVs on their part is an i d l e c e r e m *
ny» and affords no safeguard to the public treasure in the c u s t o d y o f th*
bank; and even legislative enactments in relation to this c o r p o r a t i o n ut
but of little value, if it may, at its pleasure, disregard one of the fundamear
tai articles of its constitution, and transfer to a secret committee t h e busir
ness which, by law, ought to be transacted by the board.
It is scarcely necessary, in presenting this document to the consideration
of Congress, to notice an objection which has been sometimes p u t forward
against the publication of any proceedings which relate to the a c c o u n t s erf
private individuals. T h e circumstances detailed are the regular a n d official
transactions of the board of directors, nor do they involve the p r i v a t e debtor
and creditor account of persons dealing with the bank, which i s a l o n e tor
eluded in the distinction taken by the charter in regard to private accounts*
I f the argument thus brought forward w*ere a sound one, there c o u l d be n<*
such thing as an examination of any value into the conduct of t h e bank;
because the business of the bank, being with individuals, its misconduct
could never be s h o w n without bringing before the public the individual
transaction in which the conduct of the bank was impeached.
A n d if i*
could make good the position that such proceedings are never to b e expo«&
to the public, because individuals are concerned in them, it would effectually
shut out all useful examination, and t>e enabled to apply its m o n e y to tha
most improper purposes, without detection or exposure.
W h e n its*conduct
is impeached, on the ground that it has used its great money power to obtain political influence, the investigation of the charge is, in its very nature,
an inquiry into its transactions with individuals. A n d , although thea<^
Counts brought forward on such occasions may be the accounts of individuals, y e t t h e y are also the accounts of the bank, and show its couduct*
and, being the fiscal agent of the Government, with such immense p o w e r to
be'exercised for good or for evilj the public safety requires that all of it3
proceedings should be open to the strictest and most rigorous scrutiny.
Itj
character m a y be forfeited by it* misconduct, and would be justly forfeited
i f it sought to obtain political influence in the affairs of the nation; and
y e t such attempts on t h e part of the bank can never be proved, except by
t h e examination and disclosure of its dealings with individuals.
2d. It is not merely by its concealments that the bank has proved itself
regardless of the duties of its agency: its o w n interests will be found to be
its ruling principle, and the just claims of the public to be treated with bufc
little regard, w h e n they have come into collision with the interests of ih#
corporation. T h i s was but too plainly the case in the affair of the three per
cents, above mentioned, A recent instance proves that its rule of action in
not changed in this respect; and the failure of the French Government to
pay the bill drawn for the first instalment due by the treaty, has b e e a
m a d e the occasion of endeavoring to obtain from the public the sum of
# 1 5 8 , 8 4 2 7 7 , to which no principle of justice appears to entitle it. Th%
m o n e y for which the bill was sold remained in the bank. T h e expenses i%
incurred ware of small amount, and these the Government are w i l l i n g t o
p a y ; but the corporation, not content with the profits it was deriving Irooi
the millions of public money then in its vaults, and which it w a s daily u s i n g
in its discounts, endeavors to convert the public disappointment into a g a i u -
15
[2]
ful transaction for itself; and demands the large sum a b o v e m e n t i o n e d , w i t h out p r e t e n d i n g that it sustained a n y loss or i n c o n v e n i e n c e commensurate
with the amount it seeks to obtain from the G o v e r n m e n t .
T h e fiscal a g e n t
o f the public attempts to avail itself of the unexpected disappointment of
t h e principal, for the purpose of enhancing its o w n profits,at the e x p e n s e o f
the c o m m u n i t y .
3d. T h e r e is sufficient e v i d e n c e to prove that the bank used its
m e a n s with a v i e w to obtain political p o w e r , and thereby secure the renewal
o f its charter.
T h e d o c u m e n t s w h i c h h a v e been heretofore laid before Congress, and are
n o w on its files, w i l l s h o w that on the 31st of D e c e m b e r , 1 8 3 0 , the aggregate debt due to the bank w a s # 4 2 , 4 0 2 , 3 0 4 2 4 , and that on the 31st of D e c e m b e r , 1 8 3 1 , it was $ 6 3 , 0 2 6 , 4 5 2 93, being an extension of its loans in a
single y e a r of t w e n t y millions of dollars, and an increase of nearly fifty
per cent* o n its p r e v i o u s accommodations.
A n d , as if to leave no r o o m to
doubt as to the m o t i v e of this extraordinary conduct, it continued to add
rapidly to its loans; and, on the 1st of M a y , 1 S 3 2 , w h i l e its petition for the
renewal o f its charter w a s y e t p e n d i n g before Congress, t h e y amounted to
^570,428,070 7 2 , being an increase of $ 7 , 4 0 1 , 6 1 7 79 in the four preceding
m o n t h s ; and m a k i n g altogether an addition of $ 2 8 , 0 2 5 , 7 6 6 48 in the short
space of sixteen m o n t h s , and being an extension of m o r e than 66 per conU
o n its p r e v i o u s loans. Such an increase, at such a period of its charter, is«
w i t h o u t e x a m p l e in the history of banking institutions.
On the 31st o f
D e c e m b e r , 1 8 3 0 , w h e n its loans amounted, as above stated, to only $ 4 2 , 4 0 2 , S 0 4 2 4 , the corporation had been in e x i s t e n c e fourteen years* T h e s u d d e n
and great increase w a s made w h e n the charter w a s d r a w i n g to a close, and
w h e n it had but little m o r e than four y e a r s to run. I t cannot be supposed
that these i m m e n s e loans w e r e made from a confident expectation that t h e
charter w o u l d be r e n e w e d .
On the contrary, it is now an historical fact,
that t h e bank itself d e e m e d the chances of renewal so doubtful, that, in thm
session o f Congress b e g i n n i n g in D e c e m b e r , 1 8 3 J , it petitioned for a recharter, and the reason generally assigned for pressing for a decision at .that
t i m e , w a s the great e x t e n t of its business, and the n e c e s s i t y of preparing t o
b r i n g it to a close if the charter was not to be r e n e w e d .
T h u s , w i t h but
little m o r e than four y e a r s to run, w i t h doubtful chances of r e n e w a l , and
aware of the necessity of b e g i n n i n g to arange its vast transactions, it i n creases its loans in sixteen m o n t h s m o r e than t w e n t y - e i g h t millions o f d o l lars. W a s this imprudence o n l y ? I t cannot be believed that those w h o '
managed its concerns could h a v e committed such an oversight.
Can a n y
proper reason be assigned for this departure from the coarse w h i c h the interests of a m o n e y e d corporation, as w e l l as those of the c o u n t r y , o b v i o u s l y re**
quired?^ I am not aware that a n y sufficient justification has been offered*
A n d this extraordinary increase of its loans, m a d e in so short a space o f
t i m e , at such a period of its charter, and upon the e v e o f a s e v e r e l y c o n tested election o f P r e s i d e n t , i n w h i c h the bank took an open and direct i n terest, demonstrates that it w a s using its m o n e y for the purpose o f obtaining
a hold upon the people o f this c o u n t r y , in order to operate upon their fear^
and to induce t h e m , by the apprehension of ruin, to v o t e against the candidate
w h o m it desired to defeat. I n other words, this great m o n e y e d corporation
d e t e r m i n e d to enter the political arena, and to influence the measures of the
G o v e r n m e n t , b y causing its w e i g h t to be felt in the election o f its officer*.
B u t if the circumstances above stated w e r e not of t h e m s e l v e s suffici-
[ 2 ]
16
ent to prove that the bank had sought, by its money, to obtain political power,
and to exercise by that means a controlling influence on the measures o f th*
Government, recent developments have furnished such proof as to l e a v e tui
room for doubt. I have the honor to transmit, herewith, an official statement
(marked B) signed by four of the public directors of the bank, s h o w i n g , at
the same time, the unlawful manner in which its business is conducted, and
the unwarrantable purposes to which its money has been, and still is, applied*
It will be seen by the proceedings therein stated, that the whole capital o f the
bank is, in effect, placed at the disposition of the president of that institution.
H e is authorized to expend what he pleases in causing " to be prepared and
circulated such documents and papers as may communicate to the people
information in regard to the nature and operations of the bank;*' and he
may therefore, under the very indefinite terms of the resolutions, employ
as many persons as he pleases, at such salaries as he thinks proper, either to
prepare daily paragraphs for newspapers in favor of the bank, or to write
pamphlets and essays to influence the public judgment* And he may even
provide for the publications, by salaries to printers, or by purchasing presses
and types, and placing them in the hands of agents employed and paid by
the bank. Th ere is no limitation, short of the capital of the bank, as to
the sum of money he may thus expend in different parts of the United
States. From the description of articles which appear to hare been paid
for under this resolution, it seems that the president of the institution has
supposed that publications containing attacks upon officers of the Government who are supposed to stand in the way of the renewal of the charter,
is one of the modes of «« communicating to the people information in regard to the nature and operations of the bank." This construction was, it
appears, approved by the board, as they continued the authority in his hands,
unchanged, after the manner in which a portion of the money was applied was
before them; and we are left to conclude this institution is now openly in the
field as a political partisan, and that one of its means of warfare is the destruction
of the political standing of those who are opposed to the renewal of the charter. The sum actually charged to the expenses, under this resolution, is sufficiently startling. H o w much more may have been already squandered, w e
are yet to learn; and the work of preparing and circulating such publications is still, it is presumed, going on under the last resolution of the boardIt is, moreover, impossible to ascertain the specific purposes to which the
money may in fact have been applied, since vouchers are not required to
show the particular services for which it was given. With these positive
proofs of the efforts of the bank to obtain power, and to Knfluence Uie me*~
sures of the Government, I have not hesitated as to the path of dutyIf,
when this evidence was before me, I had failed to withdraw the deposites of
public money from the bank, it would have been lending the countenance
and support of this department to measures which are but too well calculated to destroy the purity of our institutions, and endanger thereby
the liberties of the people.
It cannot be supposed that these expenditures are justifiable on the ground that the bank has a right to de*>
fend itself, and that the money in question was, therefore, properly ex*
pended.
Some of the items accounted for, sufficiently show in what
manner it was endeavoring to defend its interests* It had entered the field of
political warfare, and, ns a political partisan, was endeavoring to defeat the
elections of those who were opposed to its views. It was striving by means of
its money to control the course of the Government, by driving from power
those who were obnoxious u* its resentment. Can it be permitted to a gregt
17
E2 J
m o n e y e d corporation t o e n t e r o n such a c o n t r o v e r s y , and t h e n justify i t s cond u c t on t h e ground that it is d e f e n d i n g its o w n interests? T h e r i g h t of s u c h
a a institution to interfere in t h e political c o n c e r n s of t h e c o u n t r y , for a n y
cause w h a t e v e r , can n e v e r be r e c o g n i z e d ; and a defence l i k e this, on t h e
p a r t of t h e b a n k , could not be tolerated, e v e n ^ f t h e individual s t o c k h o l d e r s
a l o n e w e r e thus using t h e i r o w n m o n e y to p r o m o t e t h e i r o w n interests*
B u t it is not o n l y t h e m o n e y of i n d i v i d u a l s w h i c h is t h u s applied.
The
one-fifth of the capital of the b a n k , a m o u n t i n g to seven millions of dollars, b e l o n g s to the U n i t e d States, and t h e one-fifth of t h e m o n e y w h i c h has b e e n e x p e n d e d , and is y e t to be e x p e n d e d u n d e r this resolution, is t h e p r o p e r t y of t h e
p u b l i c - and does n o t belong to p r i v a t e i n d i v i d u a l s ; y e t the board of d i r e c t o r s ass e r t the r i g h t not only to a u t h o r i z e the e x p e n d i t u r e of t h e m o n e y of i n d i v i d u a l
s t o c k h o l d e r s in o r d e r to p r o m o t e t h e i r individual i n t e r e s t s , b u t h a v e also*, b y
t h e resolution in q u e s t i o n , t a k e n u p o n t h e m s e l v e s to give t h e like a u t h o r i t y
o v e r m o n e y w h i c h belongs to t h e U n i t e d States.
I s an institution w h i c h
deals thus w i t h t h e m o n e y of the people, a p r o p e r d e p o s i t o r y for t h e public
funds?
W h e n such a r i g h t is o p e n l y claimed and acted upon by t h e board
of d i r e c t o r s , can the m o n e y of the U n i t e d States be d e e m e d safe in its hands?
T h e same p r i n c i p l e t h a t w o u l d sanction t h e application of o n e p o r t i o n of t h e
p u b l i c m o n e y to such p u r p o s e s , would justify t h e like use of all t h a t m a y
c o m e to its possession.
T h e board of d i r e c t o r s h a v e n o law r ful a u t h o r i t y
t o e m p l o y t h e m o n e y of t h e U n i t e d States for such objects. So far as t h e
nation is concerned in t h e c h a r a c t e r of t h e b a n k , t h e p e o p l e , t h r o u g h t h e i r
o w n r e p r e s e n t a t i v e s in C o n g r e s s , can t a k e care of their o w n r i g h t s , and v i n d i c a t e t h e character of t h e h a n k if t h e y t h e y t h i n k it unjustly assailed. A n d
t h e y d o not need the aid of persons e m p l o y e d and paid by t h e b a n k , to l e a r n
w h e t h e r its c h a r t e r be constitutional or n o t ; n o r w h e t h e r t h e public i n t e r e s t
r e q u i r e s it to be r e n e w e d ; nor h a v e t h e y a u t h o r i z e d the* p r e s i d e n t and d i r e c t o r s of that institution to e x p e n d t h e p u b l i c m o n e y to e n l i g h t e n therq en
t h i s subject*
/
B
T h e r e s o l u t i o n in q u e s t i o n is, m o r e o v e r , in direct violation of t h e act of
C o n g r e s s by w i v c h this corporation w a s established; &nd it is difficult to
i m a g i n e h o w t h e u n l i m i t e d and irresponsible p o w e r over t h e m o n e y of t h e
b a n k , w h i c h t h e d i r e c t o r s have given to t h e p r e s i d e n t , can be r e c o n c i l e d
t o t h e clause in its c h a r t e r w h i c h r e q u i r e s seven d i r e c t o r s to form a board
for t h e transaction of business. If t h e e x p e n d i t u r e of m o n e y for t h e p u r p o s e s c o n t e m p l a t e d b y t h e r e s o l u t i o n , be a legitimate p a r t of t h e business o r
t h e c o r p o r a t i o n , t h e board could n o t lawfully.transfer it to o n e of its officers,
unless t h e y can, by resolution, s u r r e n d e r into the h a n d s of t h e i r p r e s i d e n t
t h e e n t i r e p o w e r of t h e c o r p o r a t i o n , and c o m m i t to t h e care of a single ind i v i d u a l t h e c o r p o r a t e p o w e r s w h i c h t h e l a w has d e c l a r e d should be e x e r cised by t h e board of d i r e c t o r s .
Chief, Justice M a r s h a l l , in t h e case of t h e B a n k of t h e U n i t e d States y»
D a n d r i d g e , w h e n s p e a k i n g of t h e b o n d s r e q u i r e d to be given b y t h e cashier
of t h e b a n k , s a y s , " i t r e q u i r e s v e r y little k n o w l e d g e of t h e i n t e r i o r o t
b a n k s to k n o w that t h e interests of t h e s t o c k h o l d e r s are c o m m i t t e d , to a v e r y
g r e a t e x t e n t , to t h e s e a n d o t h e r officers. I t w a s , and o u g h t t o h a v e b e e n , thfc
i n t e n t i o n of C o n g r e s s to secure t h e G o v e r n m e n t ^ w h i c h t o o k a d e e p i n t e r e s t
i n t h i s institution, and to s e c u r e i n d i v i d u a l s w h o e m b a r k e d t h e i r fortunes in,
i t on t h e faith of t h e G o v e r n m e n t , as far as possible, from t h e mal-practices of
it* officers." B v * t h n d i r e c t o r ? of t h e b a n k seem to h a v e acted on principled
[ 2 3
IS
d i r e c t l y opposite to those slated h y t h e Chief J u s t i c e ; and, i n s t e a d of £ |
d e a v o r i n g to secure, " as far as p o s s i b l e , " the public and i n d i v i d u a l s i r o m i
mid practices of its ofhccrs; t h e y place t h e funds of t h e b a n k u n d e r t j
c o n i i o l o f a single oHieer, from w h o m n e i t h e r security nor specific vouch!!
h a v e been r e q u i r e d . It is t r u e that, in t h e o p i n i o n w h i c h t h e C h i e f JV
lice gave in the case from w h i c h t h e a b o v e passage is q u o t e d , h e difleffl
from the rest of t h e c o u r t ; but t h e difference was on o t h e r p r i n c i p l e s , art
not on the one above stated.
In f o r m i n g m y j u d g m e n t on this part of t h e case, I have n o t regardd
t h e s h o r t t i m e t h e c h a r t e r has y e t to r u n ; but m y c o n d u c t h a s beel
g o v e r n e d by considerations w h i c h arise a l t o g e t h e r out of the c o u r s e pur
sued bv t h e b a n k , and w h i c h would have equally influenced t h e decision d
t h i s o e p a r t m ent in relation u> th*» depositee, if t h e bank w e r e n o w in tU
first years* of i:s existence.
An*.!, upoii this v i e w of t h e subject, t h e follow
ing; propositions appear to be fully m a i n t a i n e d .
•
1st, fhai the ha:>k, being t h e iiscal agent of the G o v e r n m e n t i n t h e duties which t h e law r e q u i r e s it to perform, is liable t o all the responsibilities
w h i c h attach to t h e character of a g e n t , in o r d i n a r y cases of p r i n c i p a l a&d
agent a m o n g i n d i v i d u a l s ; and it is, therefore, the J u t v of the officer t>f the
G o v e r n m e n t to w h o m t h e p o w e r has been e n t r u s t e d , to w i t h d r a w / fro©
its possession the public funds, w h e n e v e r its c o n d u c t towards* i t s principal
lias been such as would induce a p r u d e n t m a n , in p r i v a t e life, to dismiss*"*
agent from his e m p l o y m e n t ,
2d T h a t , by m e a n s of its e x c h a n g e c o m m i t t e e , it h i s so a r r a n g e d its business as to d e p r i v e the public s e r v a n t s of tlio.se o p p o r t u n i t i e s of observing
its conduct, w h i c h t h e law had p r o v i d e d for t h e safety of t h e p u b l i c money
confided to its c a r e ; and that t h e r e is sufficient'evidence to s h o w t h a t thi$
a r r a n g e m e n t , on t h e part of the b a n k , w a s d e l i b e r a t e l y p l a n n e d , and is stiH
persisted i n , for the purpose of c o n c e a l m e n t .
3d. T h a t it has also, in t h e case of the t h r e e p e r cent, s t o c k , nnd of the
hill of e x c h a n g e on F r a n c e , e n d e a v o r e d , tmjustlv, to a d v a n c e its own interests, at the e x p e n s e of t h e i n t e r e s t s and t h e j u s t r i g h t s of t h e p e o p l e of the
United Slates.
If t h e s e p r o p o s i t i o n s he established, it is very clear t h a t a m a n of ordin a r y p r u d e n c e , in p r i v a t e life, w o u l d w i t h d r a w his funds from an agent
w h o had t h u s b e h a v e d himself in relation to h i s p r i n c i p a l ; and it follows,
t h a t it was t h e d u t y of t h e S e c r e t a r y of t h e T r e a s u r y to w i t h d r a w t h e
funds of the U n i t e d States from the b a n k .
4 t h , T h a t t h e r e is sufficient e v i d e n c e to s h o w that t h e b a n k h a s keen,
and s'ill i s , p e e k i n g to obtain political p o w e r , and has used its m o n e y for the
p u r p o s e of influencing the eieciion of t h e public s e r v a n t s , and-it w a s incumb e n t upon t h e S e c r e t a r y uf the T r e a s u r y , on t h a t account, to w i t h d r a w front
its possession ihe m o n e y oi the U n i t e d S t a t e s which it was thus u s i n g for
i m p r o p e r purposes.
U p o n the w h o l e , I h a v e felt m y s e l f b o u n d , b y t h e
s t r o n g e s t obligations, to r e m o v e the deposites. T h e obligation w a s i m p o s e d
u p o n m e by i h e near a p p r o a c h of the t i m e w h e n t h i s c o r p o r a t i o n w i l l
cease to exist, as wisll as by tk'j course of c o n d u c t w h i c h it has s e e n fit t o
pursue.
T h e p r o p r i e t y of r e m o v i n g t h e deposites b e i n g t h u s e v i d e n t , a n d it beinp: c o n s e q u e n t l y m y d u t y to select t h e places to w h i c h t h e y w e r e t o b e re«
m o v e d , it beeame necessary that a r r a n g e m e n t s should be i m m e d i a t e l y matte
*vjth t h e n e w depositories of the-public m o n e y , w h i c h would n o t o n l y r e n .
19
[2]
4 e r it safe, but w o u l d , at t h e same t i m e , secure to t h e G o v e r n m e n t , and t o
t h e c o m m u n i t y at large, t h e c o n v e n i e n c e s and facilities that w e r e i n t e n d e d
to be obtained by i n c o r p o r a t i n g the B a n k of the U n i t e d States.
Measures
w e r e accordingly taken for that p u r p o s e ; and copies of t h e c o n t r a c t s w h i c h
h a v e been m a d e w i t h the selected b a n k s , and of (he letters of i n s t r u c t i o n s
to t h e m from this d e p a r t m e n t , are h e r e w i t h s u b m i t t e d . T h e c o n t r a c t s w i t h
t h e b a n k s in the i n t e r i o r ore not precisely t h e s a m e w i t h those in t h e A t lantic cities. T h e difference b e t w e e n t h e m arises from t h e n a t u r e of t h e
business transacted by t h e b a n k s in these different places
T h e State b a n k s
selected are all institutions of high character and u n d o u b t e d s t r e n g t h , and
a r e u n d e r t h e m a n a g e m e n t and control of p e r s o n s of u n q u e s t i o n e d p r o b i t y
and i n t e l l i g e n c e ; and, in o r d e r to insure the safety of the public m o n e y ,
each of t h e m is r e q u i r e d , and has agreed to give s e c u r i t y , w h e n e v e r t h e
a m o u n t of t h e deposites shall exceed the half of t h e capital actually paid i n ;
and this d e p a r t m e n t has r e s e r v e d to itself t h e r i g h t to d e m a n d s e c u r i t y
w h e n e v e r it may t h i n k it advisable, although t h e a m o u n t on deposite m a y
not be equal to t h e sum above stated. T h e b a n k s s e l e c t e d h a v e also s e v e r a l l y
engaged to t r a n s m i t m o n e y to any p o i n t at w h i c h it m a y be r e q u i r e d by t h e d i rection of this d e p a r t m e n t for the public s e r v i c e ; and to perform all the services to t h e G o v e r n m e n t w h i c h w e r e heretofore r e n d e r e d b y t h e B a n k of t h e
U n i t e d S t a t e s ; and, by a g r e e m e n t s a m o n g t h e m s e l v e s to h o n o r each o t h e r ' s
n o t : f* and drafts, t h e y are p r o v i d i n g a general c u r r e n c y at least as sound as t h a t
of t h e B a n k of the U n i t e d States, and will aflbrd facilities to c o m m e r c e , and i n
t h e business of d o m e s t i c e x c h a n g e , q u i t e equal fo a n y w h i c h t h e c o m m u n i t y
heretofore enjo\ T ed* T h e r e has not been yet sufficient t i m e to perfect these ar-*
r a n g e m e n t s ; but e n o u g h has already been d o n e to s h o w that, even on t h e score
of e x p e d i e n c y , a B a n k of t h e U n i t e d States is not necessary e i t h e r for t h e
fiscal o p e r a t i o n s of t h e G o v e r n m e n t or t h e public c o n v e n i e n c e , and that e v e r y
object w h i c h t h e c h a r t e r to t h e present bank was designed to attain, m a y b e
as effectually accomplished b}^ the State b a n k s . A n d if this can be d o n e ,
n o t h i n g t h a t is useful will be lost or e n d a n g e r e d by t h e c h a n g e , w h i l e m u c h
that is desirable will be gained b y i t ; for no o n e of these c o r p o r a t i o n s will
possess that absolute and almost u n l i m i t e d d o m i n i o n o v e r t h e p r o p e r t y of
t h e citizens of t h e U n i t e d States w h i c h t h e p r e s e n t b a n k holds, and w h i c h
enables it at a n y m o m e n t , at its o w n pleasure, to b r i n g distress u p o n a n y
p o r t i o n of t h e c o m m u n i t y , w h e n e v e r it m a y d e e m it useful tn its i n t e r e s t t o
m a k e its p o w e r felt. T h e influence of each of t h e State b a n k s is necessarily
l t n v t e d t o its o w n i m m e d i a t e n e i g h b o r h o o d , and t h e y will he k e p t in c h e c k
b y t h e o t h e r local b a n k s . T h e y will not therefore be t e m p t e d , by the consciousness of p o w e r , to*nspire to political influence, n o r likely to interfere in t h e
elections of t h e public s e r v a n t s . T h e y will m o r e o v e r be managed b y persons w h o reside in t h e midst of t h e people w h o are to be i m m e d i a t e l y
affected b y t h e i r m e a s u r e s , and t h e y cannot be insensible o r indifferent to
t h e o p i n i o n s a n d peculiar i n t e r e s t s of those b y w h o m t h e y are daily s u r r o u n d e d , and w i t h w h o m thej^ a r e c o n s t a n t l y associating. T h e s e c i r c u m stances a l w a y s furnish s t r o n g safeguards against an o p p r e s s i v e exercise of
p o w e r , and forcibly r e c o m m e n d the e m p l o y m e n t of State b a n k s , in prefere n c e to a B a n k of t h e U n i t e d States with its n u m e r o u s and distant b r a n c h e s .
A corporation of t h e latter description is continually acting u n d e r t h e conv i c t i o n of its i m m e n s e p o w e r o v e r t h e m o n e y c o n c e r n s of t h e w h o l e c o u n t r y , and is d e a l i n g also w i t h t h e fortunes and comforts of men w h o a r e
d i s t a n t from t h e m , and to w h o m t h e y are p e r s o n a l l y s t r a n g e r s . T h e d i r e c -
[ 2 ]
20
tors of the hank are not compelled, to hear daily the complaints, and w i t n e s s
the sufferings, of those who may be ruined by their proceedings. F r o m t h e
nature of man, such an institution cannot always be expected to sympathise^
with the wants and feelings of those who are affected by its policy; a n d
we oucrht not, perhaps, to be surprised if a corporatioir'like the Bank o f t h e
United States, from the feeling of rivalry? or from cold calculations 6T i n t e rest ( ) r ambition- should deliberately plan and execute a course of measures
highly injurious and oppressive in places where the directors who control i t s
conduct have no local sympathies to restrain them.
It is a fixed p r i n c i p l e
of our political institutions, to guard against the unnecessary accumulative
of power over persons and property in arty hands; and no hands are ;
worthy to be trusted with it thnn those of a moneyed corporation. In th°
lection, therefore, of the State banks as the fiscal ageritsof the Goverm
no disadvantages appear to have been incurred on the score of safety or
venience, or the general interests oi the country, while much that is v
bl$ will be gained by the change. I am, however, well aware of the v ^
J)ower of the Bank of the United States, and of its ability to bring distress^
and suffering on the country- T h i s is one of the evils of chartering a b » » ^
with such an amount of capital, with the right of shooting its branv
into avery part of the Union, so as to extend its influence to every ne*
borhood. The immense loan of more than twenty-eight millions of do*
suddenly poured out, chiefly in the western Spates, in 1831, and the first t\
months ol 1832, sufficiently attests that the bank is sensible of the pc
which its money <^ves it; and* it has placed itself in an attitude to make
people ft el the weight rff its resentment if thoy presume to disappoint t .
wishes of the corporation. B y a severe curtailment it has already made it
proper to withdraw a portion of the money it held on deposite, and transfer
it to the custody of the n-xv fiscal agents, in order to shield the community
from the injustice of the Bank of the United States
Bui I have not suopot
ed that the course of the Government 6ught to be regulated by t b a f c f r ^
the power of the bank. If such a motive could be allowed to influence t h e
legislation of Congress, or the action of the Executive Departments of th^
Government, there is an end to the sovereignty of the people, and the
liberties of the country are at once surrendered at the feet of a moneyed corporation. T h e y may now demand the possession of the public money* or
the renewal of the charter; and if these objects are yielded to them from
.apprehensionsof their power, or from the suffering which rapid curtailment*
on iheir part are inflicting on the community, what may they not next require?
Will submission render such a corporation more forbearing in its course?
W h a t law may it not hereafter demand, that it will n o t , t f it pleases, be *bl
tt enforce by the same means?
These considerations need nor, however, be pressed further in this report
T h e y are too obvious and striking to need enforcement by argument; and
I rely with confidence ou the representatives of this enlightened nation t&
sustain a measure which the best interests of the country called for, and
which had become absolutely necessary to preserve, untainted, its free institutions, and to secure the liberties and happiness of the people.
I have the honor to be,^sir,
Very respectfully,
Your obedient servant,
R. B- T A N E Y ,
Secretary of ihe
Treasury
@FedFRASER