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REPORTS
OF THE

COMMITTEE OF INQUIRY,
Appointed March 14,1832,
BY TH£

HOUSE OF REPRESENTATIVES AT WASHINGTON,
CONCERNING THE

JBank of the United States.







TWENTY-SECOND CONGRESS,
F I R S T SESSION.

HOUSE OF REPRESENTATIVES,
Monday, April 30,1832.

Mr. Clayton asked leave to make a Report in relation to the
Bank of the United States.
Mr. Hubbard objected—but afterwards withdrew his objection.
Mr. Clay ton then presented his Report, and moved that it be re­
ferred to the Committee of the Whole on the state of the Union,
and printed.
Mr. MiDuffie said he felt bound to make one or two remarks in
explanation of the doctrines of the Report, before the question
was taken. In justification of this course, he would remark, that
this investigation of the Committee extended over a great variety
of topics, some of them highly important. The Report, said he,
is voluminous, and the Committee did not finally agree upon the
form in which it should be presented until this morning. The
minority of the Committee has in consequence had no opportu­
nity of presenting their views in relation to some interesting ques­
tions adverted to and discussed in this document I shall be very
brief, however, in the remarks I propose to make, and will barely
state distinctly the opinions of the minority on the points in which
it dissents from the majority. The attention of the Committee,
it would be recollected, had been directed to a great many speci­
fications of abuse, by the gentleman from Georgia, (Mr. Clayton)
when he first proposed this inquiry. Many of these had turned
out to be trivial, on examination, and had been permitted to pass
away without notice. The Committee have selected in the Re­
port those only, which, in the opinion of the majority, deserved
the particular attention of Congress. As to the charges of taking
usurious interest, and of issuing branch drafts, I have nothing to
remark, since they have been fully discussed heretofore, and since
no new discl6sures have been obtained in relation to them. Some
new questions in relation to the violation of the charter of the
Bank are raised in the Report, which I feel bound to notice.
Some general calls had been made for information from the Bank,
which were not answered before I left Philadelphia. No expla­
nations were asked from the President, and the facts were com-




4

Reports on the

municaled without comment. These facts, thus unexplained, the
majority of the Committee have made the subject of speculative
conjecture, and have intimated doubts whether some of the prac­
tices disclosed are not against the spirit of the charter. In the
absence of the explanations which would no doubt have been sa­
tisfactory, if it had been intimated that these practices were
deemed irregular by the Committee, I present such views as now
occur to me. The Report refers, among others, to the practice
of buying and selling coin. In relation to this practice the Presi­
dent did give an explanation, so far as it regarded foreign coin.
The Report seems to imply, that such dealing is not authorized
by the charter. By the charter the Bank is expressly authorized
to deal in bullion. The opinion of eminent counsel was obtained
by the Bank on this question, and it was, that foreign coin 'was
included under the term " bullion." That, indeed, is the usual
form in which bullion is received in this country. Upon this
mere legal question, somewhat technical' in its character, I will
make no further remark. A portion of the Committee seem to
entertain the opinion that the Bank has been in the habit of deal­
ing in American coin, without any authority from the charter. I
believe they are mistaken in this matter in point of fact. The
Bank was called upon to state what amount of coin it had pur­
chased and sold, and in presenting the tabular statement, there is
a column stating the amount of American gold bought and sold
by the Bank, without stating where purchased or where sold. I
have no doubt, though we obtained no explanation from the Bank,
that this is an ordinary and unavoidable transaction, and that it
can, with no propriety of language, be denominated a dealing in
American coin. Under the tender laws of the United States, the
legal value of gold and silver does not correspond with the intrin­
sic value. By these laws an ounce of gold is estimated to be
worth only fifteen ounces of silver, whereas the real market value
of gold'is sixteen times as great as that of silver.
Now, no one will dispute the right of the Bank to receive its
debts in American gold, and much less, its right, and indeed its
obligation, to allow for this gold what it is really worth. In like
manner, no one can dispute the right of the Bank to pay its debts
in American gold, nor its consequent right of receiving for this
gold what it is really worth. This cannot be denominated a deal­
ing in coin, any further than unavoidably results from having pe­
cuniary transactions, and using money. The very object for
which the Bank was created, was to deal in money, and it is a
strange idea, that no such power exists because it is not expressly
given in the charter. The power to deal in bullion was given ex­
pressly, only because it was not implied in the very nature of the
transactions of a money-dealing institution. Another topic has
been, very unexpectedly to me, introduced into the Report. A
doubt seems to be entertained by the majority of the Committee,
as to the right of the Bank to sell the Government stock for which
it subscribed, under the express authority of Congress. Nothing
can be more self-evident, in my judgment, than the right of the




Bank of the United States.

5

Bank to sell the stock which it holds by the authority of law.
The act which authorized the Bank to subscribe for this stock
necessarily conveyed the right to sell it; as much as the authority
to hold land conveys the right to sell it. It is essentially involved
in the elementary notion of property. One cannot be said to have
a property in that which he cannot use as he pleases, in all modes
not prohibited by law. To deny the right of the Bank to sell its
stock, would be to deny it the right of making use of its property.
The principal value of Government stock, as a bank investment,
consists in its prompt convertibility into money; and in this view
it is undoubtedly one of the most safe and beneficial investments
a bank can make. It furnishes a resource to meet great emer­
gencies in the money market, which no other investment can
furnish.
The condition of the commercial community, and of the Bank,
would have been utterly disastrous in 1825, if the Bank had not
sold the Government stocks for which it had subscribed in 1824.
Every one must remember the memorable panic of 1825, pro­
duced by probably one of the greatest revulsions in commerce the
world has ever witnessed. It may now be adverted to as furnish­
ing the most triumphant proof of the utility of the Bank of the
United States, and of the admirable state of soundness and secu­
rity to which it has brought the banking system of this country.
At that period it is well known that most of the country banks in
England failed, and that the Bank of England itself, an institution
which had stood unmoved for more than a century, amidst politi­
cal revolutions, and commercial revulsions, was on the very brink
of failure. One of the most philosophical of the English writers
on subjects of this sort, states that it was a providential circum­
stance alone that saved that Bank from stopping payment. There
can be no higher eulogium pronounced on the management of the
Bank of the United States, than to state the fact that during this
period of general consternation and disaster in the commercial
worl<J,npt a single bank in the United States failed that had been
considered solvent. It was by the sale of these Government stocks,
of which a portion of the Committee have thought proper to com­
plain, and this alone, that the Bank of the United States was ena­
bled to throw some ten or fifteen millions of capital into the ac­
tive operations of the Bank, in the form of discounts, and thus
save the banks from failure, and the commercial community from*
general bankruptcy and ruin.
And here I will advert to a circumstance which deserves to be
recorded, as an illustration of the judicious administration of the
Bank. The Chairman of the Select Committee asked the Presi­
dent to state the circumstances of a secret visit made by him to
New York, in 1825, and whether it was not the object of that visit
to obtain some aid for the Bank to save it from failure. This
question has not yet been formally answered by the President.
He stated that he visited New York on the occasion referred to,
not for the purpose of obtaining aid, but of granting it. The dis­
tress of the country had reached a crisis, and the panic was so




6

Reports on the

great that a single indication of fear on the jiart of the Bank,
would probably have produced a scene of general distress and
bankruptcy. If the Bank had attempted to save itself from danger by a cold and selfish policy, and commenced curtailing its
discounts, no one can calculate the consequences. But the President pursued the very opposite policy, and the result proved that,
in periods of great danger, true moral courage is the best source
of security.' Instead of obeying the instinct of fear, and ordering
a curtailment of discounts, the President acted upon the higher
impulse, and directed the branch at New York to extend its discounts freely, and relieve the community. "This was promptly
done, and, as soon as it was ascertained, public confidence was restored, and the panic ceased. On such occasions as these, the
smallest circumstance often produces the most important results;
and I have not a doubt but that this bold and decisive, but judicious proceeding, on the part of Mr. Biddle, saved the country
from the greatest disasters. If the Bank had pursued an opposite
course—if regarding its own security merely, it had held on to its
Government stocks, and curtailed its discounts, it would have dev
served the universal execration of the country.
The Committee inquired concerning donations to road companies, and the opinion is expressed in the Report, that such donations were made without any authority in the charter. On the
naked question of making gratuitous donations, I should not hesitate to say that the directors would commit a great breach upon
the rights of the stockholders, if they made any such donations.'
But it would have been monstrous. The Bank owned a large
amount of real estate in Ohio, for the improvement of which two
small appropriations of 1500 dollars each were made. ' These
lands were in the vicinity of the Bank: and the Bank as proprietor
had an interest at stake to ten times the amount. Nothing could
be clearer than the right of the Bank to make such an appropriation; it was a wise and proper application of its funds, If he
was one of the stockholders he should certainly think it wise to
pay 3,000 dollars in aid of a work of improvement which added
9 or 10,000 dollars to the value of his property. Mr. M ( D. had
understood from various sources that the improvements were undertaken for the object he had stated. There was another topic
referred to in the Report, in relation to which he would offer a
single remark. The Committee adverted to the fact of the multiplication of its branches by the Bank within the last four or five
years; and their language seemed to convey the idea that this
policy was not a wise one, as respected either the commercial
community or the Bank itself. Now he was so far from holding
this opinion that he- should vote against any National Bank if it
could not extend its branches as the growth of the country should
call for them. H e should not regard any Bank as a National
Bank at all, if it was to consist of one central institution without
extending its branches through all parts of the Union, wherever
they might be needed. He regarded it as the very excellence of
the institution and its highest praise that it was extended into all




Bank of the United States.

7
i '

parts of the Union, possessing a sort of omnipresence throughout
the commercial community. By this means it was that the Bank*
has restored the currency of the country to a sound condition, and
had preserved it in a state of soundness; which it never could do
without having numerous and wide-spread branches.
He would calb the, attention of the House to the system of exchanges as now conducted by the Bank. It had been one of the
grounds of complaint when the subject was up before, and the
fact had been adverted to in the present Report, with an expression of doubt as to its propriety, that the mother Bank drew large
amounts of specie from the West and South, and substituted for
it its own paper. For himself, as interested in the business of
cotton planting—as a Southern man he should not hesitate to say
that this was one of the most beneficial of all- the operations of
the Bank. He would not ask a better exposition of the true federal character of the institution than this very operation of buying
and selling of exchange. On examining the accounts of the Bank,
the House would, indeed, find a large amount of specie drawn
from the West and South; but they would also find that almost
all of it came from New Orleans. Now every body knew that
New Orleans was the great specie market of the United States.
The whole returns of the South American trade came to New
Orleans in the form of specie. The Bank transported this specie at less than half the price it would cost the owner to transport
it. A citizen of Louisiana, for example, wished to pay a debt in
New York; he bought a bill of exchange on New York, and the
bank transmitted the specie to meet it. The whole matter
amounted to this: that the Bank, through its system of exchange,
effected the object at a cheaper rate than any private individual
could do. But it was not correct to affirm that the northern
branches had drawn largely from the branches at the west, for
they would find on the books of the Bank a credit to the
western branches to two or three times the amount of specie
drawn from them; the Bank had drawn 100,000 dollars in specie,
yet it had also honoured drafts from those branches to three and
four times that amount. This was the operation of those drafts
and checks which had been so warmly censured.
Mr. M'Duffie said he would add a word or two upon another
topic. The President of the Bank had adverted to the practice of
the Bank in selling bills of exchange on London having twelve
months to run, to answer the demands of American merchants
engaged in the East India trade. This, he said, was one means
of preventing the effects of the drain of specie formerly occasioned by this trade. . A majority of the Committee had expressed an
opinion that this operation was injurious to the country. Mr.
M'D. said he would explain the true practical effect of this operation. According to the old usages of the East India trade, the
merchant about to engage in a voyage, purchased specie, and exported it to make his purchases abroad. Owing to the length of
the voyage, this specie was purchased several months before it
could be used; so that the merchant lost the interest during that




8

Reports on the

period. The effect was, that the whole country suffered the loss
of interest, on the whole capital employed in the East India trade
during the whole length of the voyage. By substituting gold, this
result was produced. When a merchant wished to embark in a
voyage to Canton, the Bank sold him a bill on London at six
months sight, (and which would not be paid till about twelve
months after date.) The Bank charged him no interest for the
first six months before the bills were presented. The consequence
was, that the bills on the Bank of London were worth more than
specie itself, for the merchant thus accomplished all he desired,
and during six months had to pay no interest; The East India
trade, thus managed, did not produce that perpetual draft of(
specie which had formerly attended it. A majority of the Com­
mittee said that no real difference was produced by this arrange­
ment, since the specie was only sent to London, instead of being
sent to China or Hindostan. It was very true that the bills on
London had to be paid; but they were not paid in specie; they
were paid in the products of the Southern States; and here a new
market was opened to southern industry. The merchants pur­
chased cotton goods in Liverpool, which, owing to the Tariff or
some other cause, he could not sell in the United States, but
which were well adapted to the East India market; so that, in
fact, the bills were exchanged for cotton, not for specie. Thus
much for the outcry about bills of exchange, an operation more
really beneficial to the nation than almost any other that could be
named.
He was sorry that his duty obliged him to add a few remarks
on a topic introduced in the conclusion of the Report; remarks
which could do no good, and which might do much mischief. He
knew that the Committee had no such view or intention, nor did
he think they were themselves fully aware of the impression there
conveyed. The Committee went into a comparison of the re­
sources of the Bank in 1819 and at the present time; and which
might, if unexplained, produce the impression that the resources
of the Bank were not such that it would be able to meet its engage­
ments, or at least, not without producing a great and injurious
pressure on the commercial community. Mr. M'D. said that he
was content to risk his reputation, what little of it he might have,
that there was not in the United States, or upon the face of the
earth, a bank, (if the old Bank of Hamburg did not still exist,) that
was more adequate to meet all its engagements, and that without
any distressing call upon the community. The Committee had
confined their view to the specie in the vaults of the Bank, and to
the State bank bills it held. Now it was true that the amount of
specie, added to the debts of the State banks to the institution,
amounted only to ten and a half millions, while the bills of the
Bank in circulation amounted to twenty-one millions and a small
fraction. Now its circulation being twenty-one millions he would
inquire what were the resources of the Bank to meet it? They
consisted of seven millions of dollars in specie, two millions eight
hundred thousand dollars in bills of State banks, and seven hun-




Bank of the iJnited States.

9

dred and fifty thousand' dollars in what was denominated the Re­
served Fund; making in all eleven millions five hundred and fifty
thousand dollars in. cash, in the vaults of the Bank, which could
be paid at any moment. Its bills, then, amounted to twenty-one
millions, and the cash in its vaults to eleven and a half millions,
a larger portion than existed in any other bank in the country.
But the Bank possessed another resource, which the Committee
entirely overlooked, but which was equivalent to so much specie.
It consisted of the drafts, furnished as t ills of exchange; these
amounted to twenty-one millions. It was the business of the Bank
to deal in exchange, and this formed no part of the discount sys­
tem at all. The Bank bought the bills of merchants in New
Orleans payable at New York, and which were based upon trans­
actions in the produce of the South and the manufactures of the
North. When a merchant in New Orleans sold the Bank a bill
at ninety days, it was not considered as accommodation paper-^
because the drawee paid the bill when due: he did not expect any
accommodation: whereas, accommodation paper was always (in
whole or in part) renewed. . The Bank, he added, could afford to
do this business in exchange, without restraining its discounts.
To be sure, if the Bank should not buy any other bills, the mer­
chant in New Orleans would not be able to buy bills so cheap
here as he could there.
The Bank, then, had twenty millions in drafts to meet its twen­
ty-one millions in notes, besides the eleven and a half millions of
cash in its vaults. If there should be a run on the Bank, intended
. to break the institution, Mr. M'D. fearlessly expressed his opinion
that before the bills could get into the Bank, the Bank would not
only be able to meet them, but could do it, arid have ten millions
over; and this without calling in any part of forty-four millions of
discounts with which it aided the commercial community. Mr.
M'D. hoped that no comparison instituted by the Committee in its
Report, would induce the belief that the Bank was not abundantly
competent to meet all its engagements.
The Committee had also adverted to the fact that the Bank of
the United States had agreed with the Government to pay interest
on the three per cents, for the next quarter, on condition that the
Government would not pay off the stock in July. The imputation
founded on this fact should, he said, be explained, as the subject
had given rise to many very singular rumours. Every body knew
that the President of the Bank, soon after the Committee arrived
in Philadelphia, had visited this city. His journey had occasioned
many curious rumours as well there as here. It had been stated,
among other things, that the Bank Committee had discovered
great frauds on the part of the President, in consequence of which
he had absconded, and lay concealed in Washington.
^ Mr, M'D. would briefly explain the transaction which had occa­
sioned all these surmises and suspicions. The acting Secretary
of the Treasury had informed the President of the Bank, that the
Government contemplated to pay off, in July next, six millions of
the three per cent, stock, and had asked whether the Bank had
B



10

Reports on the Bank of the United States*

any objections to the measure. As the proposed payment would
cause great pressure from the immediate exportation of so many
millions of specie, the President of the Bank, and the Board of
Directors, with that provident regard for the interests of the
community which had ever marked their course, and which so
justly entitled them to the gratitude and confidence of the com­
munity, looked at the effects which must follow: they saw and
knew, that if the Government should go into such an operation
immediately, it would produce a pressure upon the mercantile
world that could not but issue in immense failures among the
debtors of Government, as well as others. Nine millions of Go­
vernment funds would fall due at New York before the close of
the next quarter. It was therefore obvious, that the Government
would, in all probability,flose more by failures of its debtors than
it could save in the interest of the stock. The Bank, then, acting
in that spirit of solicitude which it had always shown for the
safety and prosperity of the commercial community, proposed to
Government to defer the operation: and as the Bank would have
the use of the money in the meanwhile, to pay the interest. The
Bank had no selfish interests in this proposal. It possessed ample
resources to meet the demand. The only effect of doing so would
have been to call in some of its discounts.
Mr. M'D. would conclude his remarks on the subject of the
stocks by a few explanations in reference to a question which had
been proposed here, and which had produced in liis mind a degree
of excitement which some gentlemen supposed to be uncalled for.
One of the charges of the gentleman from Georgia against the
Directors of the^ Bank had been, that they were in the habit of
dealing as stock-jobbers in the public stocks of the Government.
Mr. M'D. had stated at the time, that if that charge was true, it
fixed a stigma on the reputation of those gentlemen, which was
not lightly to be removed. Well, and how did the fact turn out?
The explanation would lead to the statement of another very ex­
traordinary transaction. The Bank had been employed by the.
Secretary of the Treasury to buy up the three per cent, stock.
Some secret informer, (and there were many such,) finding out,
by prying into the affairs of the Bank, (as some persons did in a
very improper manner,) that it was buying up the three per cent,
stock, forthwith set afloat a rumour that the Bank was speculating
in Government securities. That fact, among others, had been
inquired into by the Committee, and the result had been a full,
prompt, and most triumphant explanation. This, however, the
-Committee had not thought proper to spread upon their Report,
.and therefore he had given the explanation here.
Mr. M'D. concluded by observing, that he should reserve any
further observations until the Report itself should appear.




REPORT OF THE MAJORITY.

House of Representatives, March 14, 1832.
Resolved, That a select committee be appointed to inspect the
books, and to examine into the proceedings of the Bank of the
United States, to report thereon, and to report whether the provisions of its charter have been violated or not; that the said committee have leave to meet in the city of Philadelphia, and shall
make their final report on or before the twenty-first day of April
next, that they shall have power to send for persons and papers,
and to employ the requisite clerks, the expense of which shall be
audited and allowed by the Committee of Accounts, and paid out
of the contingent fund of the House.

In obedience to the foregoing resolution, the Committee ap*
pointed under the same, proceeded to the city of Philadelphia,
and commenced the inspection of the books, and the examination
of the proceedings of the Bank, on the 23d of March last; and,
after the most attentive and laborious investigation which their
limited time would allow, the majority have prepared the following Report, which they beg leave to submit to the House of Representatives.
They believed, that, as the House wished information more for
the purpose of enlightening their minds, and assisting their judgments as to the expediency of again renewing its charter, than to
abridge it of the small remnant of time left for its operation, a
liberal construction of the resolution would not be deemed a departure from their trust; consequently they have directed their
inquiries to two general objects.
1st Whether the provisions of the charter had been violated.
2d. Whether there have been any circumstances of mismanagement, against which future legislation might guard, or which
should destroy its claims to further confidence.




12

Reports on the

On the first point, following the example of a former committee, making a similar investigation, without expressing any opinion on such cases as have been subjects of imputation against
the Bank.
These cases they conceive to be six in number, and are as follow:—
1st. In relation to usury.
2d. In relation to the issuing of branch orders, as a circulation.
3d. The selling coin, and particularly American coin.
4th. The sale of stock obtained from government under special
acts of Congress.
5th. Making donations for roads and canals, and other objects.
6th, Building houses to rent or sell, and erecting other structures in aid of that object.
On the first ground, the president of the Bank refers us to a
statement marked G, and says it will u explain the only cases to
which this description might be considered applicable,' two ot
them being cases in which the Board repaid the amount considered overcharged, and in regard to the third, no application has
been made for any change in the form of the original loan." See
said statement marked Not 1.
. To a question asked the president, whether any cases of disguised loans, and domestic bills of exchange, had come to the
knowledge of the parent Bank, in which the branches had received usurious interest? He replied he had never heard of any,
but made a further statement, marked No. 2, in which he states
that the usual custom is to charge upon domestic bills of exchange, the rate of interest and the rate of exchange, and if the
sums united should exceed six per cent., it is not usury; and gives
an explanation in said statement.
On the second ground, the Committee will submit document
No. 3, and its inclosures, in which the cause and origin of branch
drafts will be fully seen. The president states " t h e inability of
the Bank to furnish the amount of circulating medium, which it
was created to supply, became apparent at an early period. In a
year after its organization, the directors presented a memorial to
Congress, dated 9th* January, 1818, requesting that an alteration
might be made in the charter, so as to authorize the presidents and
cashiers of the several branches^ to sign the notes issued by those
branches.'* See copy of the memorial marked 3 A, in which it
is stated " t h a t , inasmuch as the ' a c t to incorporate the subscribers to the Bank of the United States,' requires that the bills
or notes which may be issued by order of the said corporation,
shall be signed by the president, and countersigned by the principal cashier, it has been found impracticable to supply, in any reasonable degree, the required circulation from the Bank, and its numerous offices of discount and deposite," it is, therefore, asked of
Congress to permit the presidents and cashiers of branch banks to
sign and issue bills. The application was not granted- The




Sank of the United States*

13

president states " t h e subject was resumed by another memorial,
dated November 24th, 1820." See copy of the memorial marked
3, 6, in which it is stated, "under the charter it has been doubted
whether the Bank has power to authorize the issuing of notes not
signed by the president, and countersigned by the cashier. The
labour and the time necessary to sign notes for the Bank and all
its branches, are much greater than either of those officers can
bestow upon that object; and hence the Bank has been unable to
put in circulation a sufficient amount of notes of the smaller denominations, which the public most want, and which are best calculated to serve the interest of the Bank." It then requests that
power be given to the parent Bank to appoint one or more persons to. sign notes of the smaller denomination, which was not
acted upon.
The president states, the " application was again renewed, and
a select committee of the House of Representatives, reported in
favour of allowing the appointment of signers, on the 27th of February, ,i823$ but there was no action of the House upon it.'* And
he refers us to "pamphlet, vol. viii* No. u . "
On the first of December, 1826, the president was instructed to
endeavour to procure the necessary change. He says, " he reported on the 27th February, 1827, that no action on the subject
would take place at that session of Congress, and, accordingly,
the matter was referred to the committee on the offices." See
Doc. 3. c.
He-adds, " t h e opinion of Mr. Binney, Mr. Webster, and Mr.
Wirt, the Attorney General, was taken on the subject of issuing
branch drafts." See Doc. 3, c.
On the 6th of April, 1827, the following communication was
made to the board of directors:—"The committee on the offices,
to whom was referred, on the 23d of February last, the report of
the president of the Bank, stating the unsuccessful result of the
application to Congress for an alteration of the charter, which
would authorize the signature of notes by other persons than the
president and cashier, report that, in various parts of the Union,
but more especially in the southern and western sections, there is
a constant and'unceasing demand at the offices for the smaller denominations of notes, which it is impossible to supply." They
therefore suggest that the " discount officers should be instructed
to draw checks on the cashier of the Bank for smaller sums than
they have hitherto been in the habit of furnishing. In order to
save the labour of preparing such checks at the offices, as well as
for the greater security of the Bank and the community, it has
been deemed best to, prepare the blank forms of a uniform appearance, and to distribute them from the parent Bank. Such forms
have been accordingly devised * and are now submitted to the
board with the recommendation of the committee, that the experiment be tried, and, if found useful to the community, be permanently adopted." See Doc. 3 c.
The document marked 4, d, is a correspondence between the




14

Reports on the

President of the Bank, and the Secretary of the Treasury, on the
character of these Bank drafts, which has already been printed
and submitted to Congress.
The paper marked 5, E, contains instructions to the branch
Banks as to the issue of branch orders. On the 21st of April,
1827, the cashier of the parent Bank writes a circular to the re­
spective branches, informing them, among other things, that the
Directors have " deemed it best that blank forms of an uniform
appearance should be prepared with skill and cart at the parent
Bank, and thence distributed to such of the southern and western
offices as seem to stand most in need of them, or to be able best
to employ them usefully. Enclosed I send you a specimen of the
g5 and glO blank drafts adopted. After being numbered, regis­
tered, and appropriated here to certain offices, a supply of them
will be forwarded as soon as possible, with instructions to the
Cashier of each office to have every four hundred drafts in suc­
cession, and as they may be wanted, filled in the order of some
one officer of the branch, by whom they must be endorsed length­
wise, and about the middle of the draft, payable to bearer, before
they be signed by the President and Cashier, When completed,
they are to be furnished to the customers of the Bank, or other
persons who may wish to procure them. The entries respecting
them, both here and at the branches, are intended for convenience
sake, to be analogous.to those of branch notes. Their receipt un­
der the denomination of branch drafts/is to be similarly acknow­
ledged by the Cashier, and in duplicate through the respective
Presidents. They are besides to be reported on the weekly state
of the office, as branch draft paper received, used, and on hand.
And whenever they may be transiter between the offices, must be
so noticed at the foot of the statement like other packages."
On the 7th of January, 1831, a resolution passed the Board to
issue drafts of the denomination of twenty dollars. These branch
orders, when discharged by the parent Bank, are again reissued
by that Bank when it has no small notes of its own. The paper
marked 6 F, contains a statement of the amount of branch drafts
issued, on hand, in circulation, and the offices from whence issued.
By this table it will be perceived that 810,781,635 have issued?
83,371,544 are on hand; and 87,410,090 are in circulation.
The foregoing is a succinct history of the issue of branch
drafts. Whether it can be justified under the charter of the
Bank, the Committee will leave to the better judgment of Con­
gress.
The third case is the selling coin, and particularly American
coin. The attention of the Committee was drawn to the subject
by the fact that the general Gpvernment had, on one occasion, to
pay the Bank two per cent, on ten thousand Spanish dollars, which
it wanted for the benefit of the navy in South America. To an
interrogatory put to the President on this subject, he replied,
" The Bank is authorized to deal in bullion. It buys and sells
bullion. All foreign coins are bullion. Their being a legal




Bank of the United States.

15

tender does not make them the less bullion, and the Bank having
bought them at a premium, sells them at a premium. The obli­
gation of the Bank is, to pay the claims on it in coin, American
coin, or legalized coin, and if the foreign coin is worth, intrinsi­
cally, or commercially, more than the American coin,- the differ­
ence in value must be worth the difference in specie, and there
seems no reason why the Bank should sell its bullion any more
than its bills of exchange, at less than their value." He then, re­
fers the Committee to a correspondence, marked No. 4.
Although the Bank acted under legal advice, it may be well
questioned whether foreign coin is bullion. The constitution
gives to Congress the right to regulate its own and foreign coinj
when, therefore, the latter has a value prefixed to it by law, and
is suffered tp be used with that regulated value, in like manner
with our own coin, it would seem not to have lost the name and
character of coin, and is made by force of law what it would be,
if carried through the mint and subjected tp the condition of our
own coin; and, therefore, to deal in it as a commodity, is calcu­
lated to disturb its legal value, and render at least that portion of
the metallic currency uncertain and fluctuating.
If, however, the Committee have taken a wrong view of this
subject, so far as foreign coin is concerned, it seems by the state­
ment of the President of the Bank, to be virtually admitted that
our own coin is not bullion, and, therefore, does not come within
the objects of trade allowed to the Bank by the 9th fundamental
rule of the charter. By reference to the statement of specie sold
by the Bank, marked No. 24, it will be found that the sum of
884,734 44 of American gold coin has been parted with.
The 4th case is, selling stock obtained from Government un­
der special acts of Congress. They have thought it their duty
to present the subject to the consideration of Congress.
It is necessary here to observe, that the charter must have in­
tended some meaning in prohibiting the Bank from dealing in
stocks. There is, perhaps, no subject so fruitful in speculations
as stocks, and none which is so fluctuating and liable to be influ­
enced by the slightest .causes, often producing ruin or immense
fortunes in the most sudden manner. To *prevent such a great
moneyed institution then as the Bank, from dealing in this arti­
cle, which its vast means could raise and depress at pleasure,
seems to have been a wise provision in the charter. The right of
the Bank to acquire or sell stocks, is a special one; it must be
done by virtue of a law of Congress. The charter itself provided
that a part of its capital might be paid in the stock of the Go­
vernment, and such stock, particularly, might be disposed of.
But the. Committee suggests whether this will apply to other
stocks obtained by virtue of a subsequent law of Congress, unless
that law specially confers the power to dispose of it. In two im­
portant loans obtained from the Government since the charter
was granted, the Bank has parted with a valuable stock, and these
cases will illustrate the point now submitted to Congress. While




16

Reports on the

the Committee refer to the transactions of the Bank in the funded
debt of the United States, for the purpose abovementioned, they
also have in view the presentation of the subject, to show not
only the manner of disposing of that stock, but whether it was
not contrary to the express understanding with the Government
at the time of obtaining the stocks. For the loan of 84,000,000
of 5 per cents* made in 1821, and the 85,000,000 of 4i per cents,
made in December, 1824, there was a strong individual competition, at a premium for a part or the whole, against the Bank; yet,
the Bank had a preference over the individual offers, upon the
principle that it would be more advantageous to give it to the
Bank at a reduced rate, and participate as a partner, than to give
it to individuals at a premium. This was confirmed at the Treasury. T h e President of the Bank, in a letter dated 15th December, 1824, which will be found among the documentary testimony,
after saying that he had taken the whole of the $5,000,000 loan at
par, says, " and since we have taken the loan at par, on the distinct ground of our having the means of doing it, it would be advisable, in every point of view, not to sell any of the Florida loan
in Boston."
By a statement of the amount of funded debt sold by the Bank,
marked No. 6, it will be seen that, as early as June and July,
1825, the year after it was taken, the Bank began to sell this stock,
and continued to do so, sometimes at a premium and sometimes
at a loss, up to the 27th day of November, 1829, on which day
they had disposed of all but 893,925 92, and that too at a loss of
84,443 34, notwithstanding offers were made by individuals for a
large amount, at a premium, and rejected by the Government,
upon the principle before stated. The same document shows that
there was, between February, 1829, and October of the same year,
sold of the 85,000,000 Florida loan, 81,742,261, at a loss of 17,661
dolls. 9 cts. For this loan, the Committee are not aware of there
being any offers by individuals at a premium. T h e same document shows that, between February, 1826, and February, 1832,
the whole of the 84,000,000 loan of 5 per cents, of 1821, has been
disposed of at a premium of 8136,789 25. The premium paid
for which, at the time it was taken, was provided for in a semiannual appropriation of 860,000, in the report of the 1st July,
1821, before adverted to. By these operations, it will be obviously perceived that, if the Bank is allowed to sell stocks acquired
by special agreements with the Government, it can secure, by
speculations, all the advantage which the Government might possess, in putting up its loans to the highest bidder. It not only
destroys competition, but takes the loan of the Government from
other individuals, who would have given a premium for it, and
which the Government refuses, because it expects to derive a
greater profit in another way, but in which it may be defeated, by
an immediate sale of the loan, and which, if the right to sell by
the Bank is acknowledged, might have been made directly to
those very individuals who had just offered a premium. In rela-




Bank of the United States.

\7

tion to the four million loan of 5 per cents, of 1821, Mr. Cheves,
in his report on the 1st of October, 1822, says: " The four mil­
lion loan of 5 per cents, are longer irredeemable than any other
stock of the Government of the United States, and hence probably
this stock is more valuable than any other stock of the United
States." He also says, " the more the Bank can retain of this
stock, the better for the institution." In the whole of which the
Committee most fully concur^ for, it may be mentioned with feel­
ings of pride, that such is the high credit of the Government, its
stock is better than specie, and would be to the Bank, in any emer­
gency, precisely the same*
The Committee proceed to mention the 5th case, which is
making donations for roads, canals, and other objects, the amount
of which is 84,620 00, as will appear by document No. 7. Two
of the largest of these items, amounting to three thousand dollars,
are for turnpike roads, made, tod, after the general Government
had declined to make appropriations for similar objects.*
A question would naturally arise, whether the public funds in
the Bank, for that institution is expressly founded upon the prin­
ciple that it is necessary to, and constitutes a part of the Treasury
of the United States, can be appropriated to objects indirectly, by
the officers of that institution, when the Government directly re­
fuses to expend its revenues on the very same objects. The Com­
mittee have looked in vain for any authority in the charter to give
away the money of the stockholders. If the charter contains the
powers by which the Bank is to act, and they are to be strictly
pursued, there is then no grant to make gratuities for any object
whatever.
The consequences of the exercise of such a right, might be
fraught with very great injury to the stockholders5 certainly of
dangerous interference in the rival trade of different sections of
the country, and of pernicious influence upon the operations of Go­
vernment.
The Committee approach the last ground, which is the build­
ing houses to rent or sell, and erecting other structures in aid of
that object. They will merely present the fact and the law, and
leave the House to place their own construction upon the case.
By an extract from the minutes of the Board of Directors, com­
municated to the Senate on the 12th day of March last, the follow­
ing facts appear, viz.
" The committee on the offices, to whom was, this day, referred
a letter to the President, from George W . Jones, agent, dated May
23d, recommending to the Bank the construction of two canal
basins, and the erection of warehouses around one of them, ac­
cording to the plan submitted by him, recommend to the board
the adoption of the following resolution: ,
" Resolved, That the board approve of the formation of two ca­
nal basins at Cincinnati, proposed by Mr. Jones, one of them to^be
* The President furnished this statement without explaining the grounds of
these donations, no explanation having been particularly required of Him.
C



18

Reports on the

on square number fifty-five, (55,) and the other to be on the square
of ground between Walnut and Vine streets, and Canal and Su
Clair on Court streets; and that he be authorised to erect forth­
with, warehouses on the margin of this last mentioned basin, not
exceeding six in number, either in one block, or separately, as he
may deem most expedient for the interests of the Bank."
These six warehouses were built. It is also understood, says the
same extract, that several other houses have been built by the
agent at Cincinnati; but as they were erected in part by contribu­
tions in labour and materials, by debtors to the Bank, who had
no other means of payment, and, in part, by direct disbursement,
no accurate statement of their number or cost is on file. The agent
has been instructed to specify these details in order to complete
this return*
In reference to the foregoing, the Committee believe it enough
merely to quote the following provision of the charter, to wit:
" The land, tenements, and hereditaments, which it shall be law­
ful for the said corporation to hold, shall be only such as shall be
requisite for its immediate accommodation, in relation to the convenient transaction of its business, and such as shall have been bonajide
mortgaged to it, by way of security, or conveyed to it in satisfaction of debts previously contracted in the course of its dealings^ or
purchased at sales upon judgments which shall have been obtained
for such debts."
It is possible that the improvements were in the neighbourhood
of the real estate of the Bank, and are made upon the ground that
said donations would increase the value of that real estate.
This closes the view of the Committee on the subject of the vio­
lations of the charter.
In considering the second general head, as to any circumstances
of mismanagement of the Bank, your Committee have fully appre­
ciated the delicate character of some of the duties assigned them,
and the high responsibility of the office of inspecting the books
and examining into the proceedings of the Bank of the United
States.
In discharging that trust, they have not felt themselves at liber­
ty to inquire into the private concerns of any individuals, of any
denomination, unless the public interest was involved in their
transactions with the President and Directors of the Bank. The
investigation was ordered by the House under peculiar circum­
stances, and in anticipation of a debate on a renewal of a charter
of a national bank, whose annual operations amount to two or
three hundred millions of money, whose influence extends to the
remotest parts of the Union, and whose connexion with the fede­
ral government gives it a public character. Impressed with the
importance of the great variety of interests involved, your Com­
mittee have executed the office assigned them, by inquiring gene­
rally, into the proceedings of the Bank, not only for the purpose
of ascertaining whether its powers had been violated or abused,
to the injury of the private or public interest of the country, but,
with a view to obtain information for the use of the House, and to




Bank of the United States.

19

suggest, should Congress determine to continue a national bank,
such modifications as the proceedings of the existing institution
would have rendered necessary.
Adhering to these rules, the Committee believed it entirely
within their province to inquire whether the influence of the
Bank, acknowledged by all to be of vast control, and, if impro­
perly directed, of dangerous tendency, had insinuated itself either
into the management of the press or the direction of the Govern­
ment. This could only be done by an examination of the transac­
tions of the Bank with editors and public functionaries. And here
the Committee wish it to be distinctly understood, that they do
not pretend to set up the absurd idea, that editors or officers are
excluded from the right common to the rest of the citizens, of
borrowing money when and where they please, from banks or in­
dividuals, without being answerable, in the slightest degree, to any
person whatever. But while this admission is demanded by the
clear rights of the parties to whom it relates, it will not be denied,
that if they obtain more favours than the rest of their fellow citi­
zens, it is, at least, a just cause of complaint against the Bank, and
however they may be innocent of any improper or sinister con­
nexion with that institution, it does not, by any means, disprove
the fact, that some other influence may have been intended to ope­
rate upon their minds, wholly unsuspected by them at the time.
If, therefore, it should appear that these individuals received
larger loans than those who are its usual customers—that they re­
ceived these loans without the security usually required under cir­
cumstances not known in any other case, it would seem to the
Committee, that instead of a complaint from those whose transac­
tions with the Bank have thus been investigated, the grievance is
entirely on the other side.—Whether such cases do exist, the Com­
mittee will leave to the better judgment of the House, to decideupon
the facts which they have collected, and now respectfully submit.
It had been repeatedly alleged that the Bank had employed its
funds for the purpose of subsidizing the Press, and the charge was
reiterated during the debate upon the resolution authorizing this
inquiry. The attention of your Committee was particularly drawn
to this subject, at an early period of their exam&atioii, by a com­
munication from an editor of a New York-paper, who had been
accused to a member of the Committee, through the President of
the Bank. The evidence relating to this case will be found in pa­
pers marked 8 and 9, and in which are presented. the following
facts:—On the 26th of March, 1831, a Mr. Silas E. Burrows ap­
plied to the President of the Bank, and informed him, to use the
words of the President," that he was desirous of befriending Mr.
Noah, and assisting him in the purchase of a share in a newspaper$ and he asked if the Bank would discount the notes of these
parties^ adding, that although as a merchant he did not wish to
appear as a borrower, or to put his name on paper not mercantile,
yet he would, at any time, do so, whenever it might be necessary
to secure the Bank. I do not recollect (says the witness) whether
he then mentioned the time which thenotes would have to run. The




so

Reports on the

Committee being authorized to discount any paper, the security of
which they might approve,agreed to do them. As Mr.Burrows was
going out of town, I (the President and witness) gave him the money
out of my own funds, and the notes were afterwards put into my
possession. They remained with me a long time, as I had no oc­
casion to use the funds, nor was it till the close of the year that
my attention was called to them by the circumstance that a new
board of directors and a new committee of exchange would be ap­
pointed; the same committee which made the loan should consum­
mate it. I had seen also, in the public prints, many reproaches
against the Bank for lending money to printers and editors, and I
Was unwilling that any loan made by the Bank should seem to be
a private loan from one of its officers. Having no use for the mo­
ney, it would have been perfectly convenient to let the loan remain
as it was, but I thought it right that every thing done by the Bank
•hould always be distinctly known and avowed, and, therefore,
gave the notes to the chairman of the Committee, Mr. Thomas P,
Cope, who entered them on the books."
This is the account given by the President himself of the trans­
action in its origin. The money, §15,000, was advanced on the
26th of March, the notes bear date on the 1st of April thereafter,
and were ten in number for fifteen hundred dollars each, with the
interest, added on as they respectively became due, which was on
the 1st of April and October of the years 1832, '33, '34, '35, '36,
and amounted with the interest thus added, to g 17,975. At the
time they were entered on the books of the Bank, on the 2d Jan.
last, the President received the money for them.—These notes
were placed on the books of the Bank at this time, and it will be
seen, on the 2d of March they were withdrawn, as will appear
hereafter. On the 9th of August last, after the foregoing transac­
tion had taken place, J. W . Webb and M. M. Noah made an ap­
plication to the Bank for a loan of 820,000, accompanied by a
letter from a gentleman formerly a director of the Bank of the
United States, to the President of the Bank, in the following
words: " I cheerfully forward the enclosed, as requested. I see no
reastfh against this application being treated as a fair business
transaction." This was accompanied by sundry letters of Webb
and Noah, and the depositions of persons in their service as to
their solvency and ability to pay the loan requested, all of which
will be found marked No. 9. This loan, at six months, was grant­
ed, with no other security but that which is just mentioned, the
largest loan made onthat day. On the 16th of December follow­
ing, another application was made, by these.same parties, for a
loan of g 16,000, whichj was granted, for six months, by the ex­
change committee, without an additional security or recommen­
dation. At this time, there was a considerable pressure in the mo­
ney market, and many notes of the citizens of Philadelphia were
rejected. It was one among the largest loans of the day. These
loans, together with the loan made in March to Burrows, amount­
ed to the sum of 852,975, which consisted of notes drawn attd'endorsed by the editora only.




Bank of the United States.

2t

The Committee will now submit the facts in relation to the
manner in which this loan has been disposed of, first premis­
ing that the resolution for inquiring into the affairs of the Bank
was introduced into the House on or about the 17th of February.
The loan of August was reduced 2,000 at its maturity, on the
10th of February last. On the 2d of March last, Mr. Silas E.
Burrows obtained from the Exchange Committee, discounts to
the amount of thirty-two thousand four hundred and forty-six
dollars, being the largest sum loaned on that day, and while many
notes of citizens of Philadelphia were rejected. That the notes
for l/,975 dollars, payable in 1832, '33, '34, '35, and 36, were paid
and withdrawn by him on the 2d March, without the knowledge
of Webb and Noah, as they state. On the 14th of the said month,
Burrows obtained another discount from the Bank, of 14,150 dol­
lars, and on the 15th of the same month, the note of Webb and
Noah for 15,000 dollars, loaned them on the 16th of December
previously, and not due till June next, was paid off by two drafts
from Webb, obtained at the United States Branch Bank at New
York, accompanied with the following remarks, contained in a
letter to the President of the Bank, dated New York, March 11th,
1832, and found in No. 9, viz: " Although the loans to us by the
Bank of the U. States are purely of a business character, and
made upon statements showing the necessity of the accommoda­
tion to our establishment, and of our ability to meet our pay­
ments, there can be no doubt but that the enemies of the Bank,
as also our political opponents, will endeavour to give a false co­
louring to the whole transaction. The loan, though strictly de­
fensible, is a large one, and the amount may give rise to the
charge of indiscretion on the part of the Directors* This, it is
not Only our duty, but our desire to prevent, if possible; and,
therefore, with some little inconvenience to ourselves, we have
made arrangements to pay the note of 15,000 dollars in the course
of a few days."
The evidence of the President of the Bank explains the charac­
ter of these various loans, and the circumstances which induced
him to be satisfied with the security, and to make these advances;
which, together with all the testimony and correspondence on this
subject, will be found in the papers marked No. 9.
In that evidence it is stated by the testimony of Webb and
Noah, that they knew nothing of the first 15,000 dollar loan made
by the President of the Bank to Burrows; that Burrows made
them believe the §15,000 were loaned to Noah by his father, and
that he had his father present to carry on that transaction, and
for which Noah allowed Burrows 2h per cent., and did not receive
it all for some months after giving his notes; that the notes were
discounted by the Bank, in their name, without their knowledge,
find paid off in the same way. It will appear by the testimony of
Mr. Webb, that the paper of which he is the editor, made two
publications in the latter part of 1829, favourable to the establish­
ment of branches; that shortly thereafter it commenced its oppo­
sition to the Bank, and was, for sixteen months, warmly opposed




82

Reports on the

to it; and that, on or about the 8th of April, 1831, it changed Its
course in favour of the Bank. Connected with this fact, is an ad­
mission on the part of one of the editors, that before the first loan
was negotiated he held a conversation with a gentleman, through
whom the loan was then negotiating, (whom the Committee know
to be Burrows,) in which he, Burrows, urged the editors, one of
whom, Webb, had expressed himself in favour of a modified recharter, to advocate an unconditional renewal, "but expressed
great satisfaction at learning that [one] was in favour of a charter
under any circumstances."
The Committee will state they were anxious to obtain the tes­
timony of Burrows, but were unable to do it. A subpoena was
issued for him and sent to New York, to which the marshal re­
turned he was not to be found. It was then sent to Washington city,
and the Sergeant-at-Arms made the same return. The marshal
of Pennsylvania was directed by the chairman to make and con­
tinue a search for the witness in Philadelphia, having heard of his
expected arrival in that place; that the marshal reported to the
chairman that he ascertained that the witness had arrived in that
place on Thursday, the 5th instant; but he was not able to serve
the process because he could not be found.
To an inquiry whether there were any other instances of notes
being discounted for the accomodation of any merchant and
trader at 1,2,3, 4, and 5 year's credit, unless to secure a debt in
jeopardy, there was presented to the Committee four other cases.
•On the 3d of April the Committee, by resolution, called for the
following statements to assist them in the elucidation of certain
facts which had appeared in other documents, viz:
1. A tabular statement, showing the aggregate amount of
notes discounted and still due the Bank, drawn and endorsed by
non-residents of Philadelphia; which will be found marked A.
2. The aggregate amount of good notes offered for discount, and
rejected by the Board; drawn and endorsed by residents of Phi­
ladelphia, on the following days respectively: 9th of August, 16th
December, 1831; 2d January, 1 Oth February, 2d and 14th of March,
18S2; 24th September, and 14th October, 1830. That statement,
marked B, will show the amount of notes discounted, but the offi­
cers of the Bank state their inability to discriminate between those
that are good or otherwise.
3. The aggregate amount of notes discounted on personal secu­
rity, and made payable more than six months after date, which
appear to be only four in number, besides the case of J. W. Webb
and M. M. Noah.
4. The aggregate of notes now due to the Bank, discounted for
a firm or the partners of a firm, without the name of some person
not belonging to the firm, as drawer or endorser, distinguishing
in each of the above statements the amount loaned to members of
Congress, editors of newspapers, or persons holding offices under
the General Government. To this last resolution were added the
following amendments, viz: " 1st. A statement of the loans made
by the Bank and its branches to members of Congress, editors of




Bank of the United States,

23

newspapers, and officers of the General Government, and the
terms of such loans." " 2d. And the names and amounts of payments to members of Congress, in anticipation of their pay as members before the passage of the general Appropriation Bill." " 3d.
And the amount of money due the United States, and on deposite
in the Bank, after deducting therefrom the sum thus advanced to
those to whom the United States are indebted." " And lastly, a
statement in detail of the amounts paid to those who are now, or
have been, members of Congress or officers of Government since
1816, for services rendered to the Bank, stating the nature of the
service." For the information sought by these inquiries, see
papers marked C. Besides these, there were furnished the statements of loans made to five editors or publishers of newspapers^
by which it will appear, that the accommodations to those five
editors were upwards of g 110,000, previous to the institution of
this inquiry.
The various reports which have, for a long period past, charged
the Bank with too frequent intercourse with brokers, and also of
undue favouritism to certain individuals, as well as the large transactions which exhibited themselves upon many documents called
for by the Committee, induced them to examine particularly the
accounts of the firms of which Mr. Thomas Biddle was and is the
chief partner with the Bank as a broker.
Four subjects of investigation presented themselves in relation
to their transactions with the Bank.
1st. The allowing and paying interest to them on deposites.
2d. Relates to certain loans upon the pledge of stock, and the discounting of notes made to T. Biddle by the President or others, without the knowledge of the Board; and on part of them, the pledge of
, stock, without interest.—The Committee would refer for the particulars of these two charges to the papers marked No. 13.
The third subject is the amount of discounts made T. Biddle,
and the rate of interest. The document marked No. 14, will show
the amount on the 15th of each* month, from the 15th day of September, 1830, to the 15th of February, 1832. By this, it appears,
that on the 15th of October, 1830, he had discounted upwards of
1,120,000 dolls, and has at no time since been less than 400,000
dolls. T h e Committee doubt the policy of such large accommodations to individuals or firms, at any time, as it deprives the Bank
of the power of fulfilling one of the great objects of its institution,
which is to facilitate trade by loans in time of pressure^ and it
may be proper to add, that these large loans, at a low rate of interest, in times when money is plenty, are usually followed by
over-trading, which produces pecuniary embarrassment and general distress.
By a statement entitled " Remittances to Europe," marked N o .
16, it appears that the foreign purchase of foreign bills were made
of Thomas Biddle fie Co. drawn by them, viz:




24

Reports on the

1831.
.
Oct, 14, 1 bill 60 days sight, and at a premium of
10* per cent.
832,399 68
Oct. 14, 3 bills at 75 to — and 105 days, and at a
premium of 10J per cent.
115,451 11
Oct. 22, 13 bills at 40 to 125 days, and at a premium
of 11 per cent.
592,000 00
Dec. 10, 9 bills at 40 to 110 days, and at a premium
of 10 per cent.
506,250 00
1832.
Feb. 14,14 bills at 40 to 105 days, and at a premium
of lo£ per cent.
400,000 00
Feb, 14, 3 bills at 50 to 70 days, and at a premium
of 11 percent.
148,000 00
81,794,060 79
By the foregoing statement, it appears that the Bank purchased,
between the 14th of October 1831, and the 14th of February,
1832, of Thomas Biddle & Co., foreign bills to the amount of
81,794,060 79.
With regard to these large loans, the committee refer to the
statement marked No, 19, by which it appears that, on the 9th of
April, 1832, the total amount of discounts on bills and notes at
the Bank in Philadelphia, was 87,939,679 52. Of that sum more
than two-thirds were loaned to ninety-nine persons, to wit:—
85,434,111. More than 3,000,000 dollars were in the hands of
twenty-seven individuals; and nearly one seventeenth part in the
hands of one person. The Committee have already expressed
their conviction that these large accommodations, to a few indi­
viduals, are injurious to trade generally, and they will add, that
they ought always to be made by either the board of directors, or
the committees empowered by them for that purpose. For an
explanation of this subject, see papers numbered 13 and 18.
Properly connected with this subject is the accommodation
extended by the Bank to individuals on the pledge of stock. In
all the monthly statements of the condition of the Bank, prior to
the 1st of March last, there was ho column showing these loans.
In that month, for the first time, so far as the committee caii dis­
cover, a new column is exhibited, entitled "loans on other
stocks," and which appeared at that time, to have been transferred
from the line called " bills discounted on personal security." This
change was made in consequence of a call for stock Joans, by the
House of Representatives. A statement of the same was called
for, marked No. 20, which exhibits a list of stocks pledged, con­
sisting of Theatre shares, Museum stock, Arcade stock, Rail-road
and Canal stocks, Coal Company stock, real estate in Louisiana,
&c. &c. amounting to the sum of 1,713,297 34 dollars.
The various transactions in specie, by the Bank, have been a sub­
ject of special notice by the Committee, and various statements
called for, show the magnitude of them.




Bank of the United States.

25

The first statement, marked No. 21, shows the amount of spe­
cie exported by the Bank of the United States during the year
1831:—
To London, in Mexican coin,
8255,000 00,
To Paris, in Mexican coin,
620,000
To Paris, in gold,
247,000
Do.
in mixed bullion, 180,000
1,047,000 00
$1,302,000 00
2d* The amount of specie exported since 1819, will be found in
the statement marked No. 22.
To England,
2,598,357 00
To France,
2,257,398 50
$4,855,755 50
Of this amount there was in gold,
In bullion,
In silver,

-

2,387,927 50
596,717 00
1,871,111 00
$4,855,755 50

3d. The amount purchased since 1824, marked No. 23, shows:
Of silver,605,850 00
Of gold coin,
17,596 00
Of gold bullion,
„ . - , . - 438,000 00
$1,061,446 00
4th. The amount of specie sold since 1817, marked No. 24,
shows it to be,
$5,184,910 29
Of which there was, American gold,
84,834 44
British, French, and Spanish,
48,291 35
Silver,
5,051,784 50
$5,184,910 29
5th. The amount of specie drawn from each of the southern
and western offices, since 1820, to the Bank of the United States
and New York, marked No. 25, shows the total amount to be
$22,523,387 94
Of which $20,925,990 07 has been drawn to those
places since the first of January, 1823,
20,925,990 07
6th. The amount of specie, (in the same statement,) sent to the
southern and western branches, since 1819, is
896,472 10
The premium received on the specie sold,, is
The premium paid on the specie purchased, is




97,140 56
19,171 85
$77,968 H

D

26

Reports on the

W h a t profits were made on the specie exported, the committee
did not call for documents to enable them to ascertain; it must,
however, from the great quantity sent away, have been considerable.
The committee called for a statement of all the specie imported
by the Bank from abroad since 1819; but, as none was returned,
they presume none was imported.
, What proportion of the gold exported was American coin,
the committee have not before them the means to determine; it
was expected to have been given in the statements, but in looking
into them the gold exported is without a designatory name; it is
believed, however, the amount is considerable.
In examining this subject minutely, the committee find that
large amounts of the specie have been drawn from the office at
New Orleans. Of this there can be no complaint; it is the principal depot for returns of goods shipped to Mexico, which are
almost exclusively paid for in specie, and it cannot be expected
that it will remain there. But the committee suggest whether
the Svithdrawal of the specie from most of the other ports of the
country, and substituting paper in its stead, might not be highly
injurious to those sections of the country subject to its operation.
*
The subject of the Bank furnishing bills of exchange for the
trade of India, China, and South America, has been brought to
the attention of the committee by document marked No. 26; and
liaving been so strongly described as affording great advantages
to the country, in the triennial report of September last, as " economising" the specie of the country, the committee have felt it
STduty to examine and present the subject to the consideration
of Congress and the commercial community, believing, as they
doy that there is something delusive in the operation. The result
of their examination has led them to the conviction that this new
method of dealing in bills of exchange does n o t " economise*' the
specie of the country at all. It is a universal law of drawing, that
funds must either go before or follow after the draft to honour it
at maturity; and whether it goes directly or circuitously, the funds
to discharge it must, sooner or later, arrive at the place of payment. These bills are to be paid in England; but they go round
the Cape of Good Hope before they reacji their place of destination. Instead, therefore, of sending the specie directly to* India
and China, as formerly, who does not perceive that it must now
be sent to England, the country upon which these bills are drawn,
there to meet them upon their arrival at the place where they are
to be .paid? The Bank consequently becomes the shipper of the
hpecie, to pay its bills, in place of the merchant to purchase his
merchandise in the East Indies. It is simply and purely nothing
but a change of the destination of the specie, with only the advantage of its going to London.
^J? e m ° d e in which these bills are dratvn and disposed of to
the purchasers, having twelve months to run, as will be seen by
a copy of the obligation taken by the Bank, marked No. 27, the



Bank of the United Slates.

27

committee consider of doubtful utility to the country. -The legitimate object of banks, the committee believe to be, thegrariting
facilities, not loaning capital. The supplying o f bills appears
even much more objectionable than loaning capital, for it encourages an operation which commences and ends without the employment of any capital whatever, and"is similar in their character to respondentia securities. The buye,r is enabled, within the
term of credit, to make the voyage, dispose of his goods,"arid
obtain from the proceeds the funds to meet his obligation, and the
.Bank to transmit the same to the place upon which their bills arc
drawn, (which are at six months sight,) long before they become
due. It would seem to produce a greater export of specie eventually, than would otherwise take place, if the operations we're
commenced with specie, and not with bills' purchased in the manner described; for the merchant, relying upon his immediate resources, would not engage to such an extent in the business, and
would combine in the operation much of the produce of the country; whereas, relying upon an extensive credit, he hazards every
thing on the success of the enterprise. It is a species of speculation in trade leading to great risks, and certainly terminating in
overtrading—the evils of which the country is now'solely experiencing. By loans of a similar character by insurance companies
providing funds for traders to China, Government has sustained
more loss than in any other branches of trade.
The increase of the number of branches established since i822,
cannot be passed over in silence by the committee, and deserves,
as a source of extended influence of the Bank, the most s.erious
consideration.
In some few instances, where new branches have been established, perhaps they may have been called for by the community,* and
may have been useful to them and profitable to the Bank; but, in
most of the cases, the committee doubt whether they were called
for from public utility; and their establishment will, in the end,
not only prove unprofitable to the Bank, but very injurious ,to the
communities among which they are located. Mr. Cheves, in a
letter of the 27th of May, 1819, to Mr. Crawford, then Secretary
of the Treasury, says, " I am perfectly satisfied that, with the
present organization of the Bank, it can never be managed well.
W e have too many branches, and the directors "are frequently
governed by individual and local interests and feelings. For a
time we must bear with the branches, b u t ! hope they will be
reduced.'*
(
Again, in the same letter, he observes, " the .real and original
evil under which the country is suffering, is over-banking. This
leads to excess in trading, manufacturing, building; and the history of the ill-judged enterprises which have been undertaken in
these several concerns, would give a full history of all the distresses of this country, excepting a little agricultural distress
growing out of the inordinate expectations which the others excited." These opinions fully accord with the views of the committer, and they consider them as peculiarly applicable to the




28

Reports on the

present time, as exhibiting similar causes now operating witli
extended force, from which similar effects must follow, augmented
in proportion to the increase of its branches.
The stockholders, at the triennial meeting on the 1st of Octo^,
ber, 1822, recommended, a withdrawal of some of the branches
then existing, in these words: "In taking into view the business
of the Bank, as connected with its offices, the committee think it
right to recommend to the continued attention of the president
and directors the necessity of withdrawing those branches which
are found to be unprofitable, and transferring their funds to the
offices which shall seem to require additional capital." Since this
period two have been discontinued, and "nine others have been
established, as per triennial report of ld3K These opinions of
Mr. Cheves, in which the committee have concurred, were ap­
proved by the stockholders, as will appear by the following extract
from the same report in 1822. They say, "they take great plea­
sure in unanimously declaring that the circumstances of the Bank
fully realize their anticipations as expressed at their last meeting
in regard to the president, (Mr. Cheves,) who, by his talents, dis­
interestedness, and assiduity, has placed its affairs in an attitude
BO safe and prosperous as that the burthen of duty devolving upon
his successor will be comparatively light."
The committee cannot but think that, had the succeeding di­
rection of the Bank been guided more by the opinions and wishes
of the stockholders, as then expressed, and gone on gradually
growing with the growth, and increasing with the natural wants
of the country, great sufferings to the community would have
been avoided.
In the year 1819, great abuses existed in the branches, of which
Mr. Cheves speaks without reserve, in his last report to the stock*
holders, as well as in his correspondence with Mr. Crawford, and
upon casting the eye over the monthly statements, it is remarkable
to observe what losses have taken place at the branches compared
with the mother Bank. For instance: on the 1st of January last,
the loss of the mother Bank, on a capital of sixteen millions and
a half was, in round numbers, 328,000 dollars; that of the Balti­
more branch was 1,662,000, on a capital of one million and a
halfj so that it lost more than its capital. That of the Norfolk
branch was 229,000 dollars, on a capital of 500,000 dollars, losing
nearly one-half of its capital* and so with all the rest of the
branches, their losses are out of all proportion to their capital,
and ten times greater than the mother Bank, according to the
amount of their respective capitals. These losses, however, were
principally incurred prior to 1819. The proper inference to be
drawn from these facts is, that the worst of mismanagement has
existed in the branches.
The «Contingent Fund" has claimed the attention of the
Committee. The object for which it was originally created, and
the original amount provided, together with the additional appro*
priations which have been made to it, and the manner in which




Bank of the United States.

29

the same have been applied at different periods, will all be ex­
plained in the following documents.
The report of the board of directors, hi July, 1821, published in
the gazettes at that time, marked No. 28$ the report of the stock­
holders at ttie triennial meeting in October, 1822; the report of
the dividend committee, on the 16th January, 1823, marked No.
29$ a statement of the particulars of the debts," considered lost,"
marked No. 30; a statement of the suspended debt and real estate,
with the probable loss thereon, marked No. 31$ the statement head­
ed, " Contingent Mind," marked No. 32$ the sales of the forfeited
bank stock, marked No. 33$ and the dividend reports for July,
1829, January and July, 1830, January and July, 1831, marked No.
34. To these the Committee refer for the particulars of the sub*
jects to which they relate, in connexion with the " Contingent FundJ*
The Committee feel it their duty now to give their views as to
the causes of the present distress in the trading community, and
which they fear may greatly increase. It is an acknowledged
principle, that like causes, in all cases, produce like effects$ and
as in 1819, contraction followed the expansion of 1817 and 1818,
so by the same rule must contraction follow the immense expan­
sion of 1830 and 1831, and like effects and consequences succeed.
To illustrate more clearly the position, and bring it home to the
minds of every one, the following table of the state of the Bank
during some of the months of 1818 and '19, and 1831 and '32, are
here exhibited, embracing items from which direct calls upon the
vaults proceed, and the immediate means which remain to meet
them, viz: The first are the deposites, circulation and debts abroad,
not on permanent loan. The second, the specie, the funded debt,
and notes of other banks$ the amount of each will be found under
their proper heads at the various periods mentioned. [The Table
will be-given hereafter.]
The preceding table shows that, at no period in 1819, when the
Bank was very near suspending payment, was it less able to ex­
tend relief to a suffering community as at the present month. In
April of that year, the month in which its difficulties were the
greatest, its means of specie, notes of other banks, and funded debt,
(which could have been turned into specie or notes of other banks)
amounted to upwards of ten millions of dollars; and the whole
demands, which could come against it in the same month, of cir­
culation, deposites, and debts owing abroad, amounted only to
about fourteen millions. But the Committee feel bound, in can­
dour, to state, that this was after a number of months of constant
contraction, not only by the Bank of the United States, but also by
most of the other banking institutions of the country, where a gene­
ral exhaustion had been produced. It was on the 6th of April, 1819,
that Mr. Crawford, then Secretary of the Treasury, writes to Mr.
Cheves thus: "It is even doubtful whether it is practicable, with
all the exertions which it is in your power to make, to continue
specie payments throughout the year/' Under the same date he
says: " My impression is, that the safety of the Bank can only be
effected by withdrawing nearly the whole of its paper in circula-




30

Reports on the

tion. If the Bank does this, all other solvent banks will be compelled
to do the same. When this is effected, gold and silver will be introduced into the country, and make a substantial part of the circulation, and enable the banking institutions gradually to resume their
accustomed operations. Whilst this is effecting, the community, in
all its relations, will be greatly distressed. Considering the extent
of the suffering, it is greatly to be desired that some good may result from it."
The Committee believe that the course of operations by the
Bank, during the years 1830 and 1831, have been nearly of a similar character to those of the years 1817 and 1818. Drafts and
notes, payable at distant offices, were then freely discounted at the
Bank of the-United States, and the different offices. Bank notes
were issued by the Bank, without regard to the wants of the community, or the effect upon the circulating medium, ;which became
depreciated, driving the precious metals from the country; and,
until the reaction had operated to check them, led to extravagant
speculations, .which ended in ruin; and relief was not obtained
until the circulation of the Bank of the 'United States had been
reduced to about 4,000,000 of dollars. Before this was accomplished, the expedient was resorted to, of curtailing loans; and,
while they were doing that, they continued the issue of Bank .
notes, thereby continuing .the evil which they were striving to
avert.
W h a t is the state of the Bank now?
On the 1st of March, (see monthly statement marked No. 35)
the Bank had 86,800,000 specie, 82,840,000 notes of other banks,
and of funded debt none!I making an aggregate of §9,640,000,
to meet its circulation of 823,717,000; deposites, 817,050,000;
and foreign debts owing, 81,876,000, making an aggregate of
842,643,000; and this evil exists while a reaction or contraction
is operating to a considerable extent.
This contraction commenced on the 7th of October last, and is
evidenced by the following circular, which indicates, beyond all
doubt, that the Bank had overtraded.
CIRCULAR.
Bank United States, Oct 7, 1831.
Sir,—The unusually heavy reimbursements of six .millions of
funded debt, which was, on the lstinst., advertised by the Government to take place on the 1st and 2d days of January next, but
which, according to subsequent notice from the Treasury Department, under yesterday's date, may, it appears, be demanded of the
Bank, by the public creditors, at any period of the present quarter, is calculated to press very inconveniently upon the parent
Bank, and upon the office at New York; the more so, from our
uncertainty as to the time when the necessary provision must be
made, and from the prevailing active.demand for-money. Be
pleased, therefore, so to shape your business immediately, as that
without denying reasonable accommodation to your own custom


Bank of the United States.

SI

ers, or sacrificing the interest of your office, you may throw, as
early as possible, a large amount of available means into our
hands in Philadelphia and New York, and at the same time ab­
stain, as far as practicable, from drawing upon either of those
points; checks and short drafts on the local banks, and on indivi­
duals, will prove particularly acceptable for several months to
come; and whenever direct claims of that kind, on those two
places, are not to be procured, you might materially aid us, by
taking drafts upon the large cities nearest to-them.
I am, respectfully, your obedient servant,
W. M'lLVAINE, Cashier.
Addressed to the cashiers of all the offices.
Since the 1st of September last, the Bank has diminished its
means to meet the demands which may come upon it—
1st. The whole of the funded debt which it then
held 83,497,681 06
2d. The difference between the specie it then
held
And the amount it possessed on the 1st April

11,545,116 51
5,799,753 63

85,745,362 88
Making an aggregate diminution of its means to meet its momen­
tary demands, since the 1st of September, of 88,243,043 94, whilst,
during the same period those demands have in creased 84,197,871 51
viz. the circulation, deposites, and foreign debt, the aggregate of
which was, on the 1st September, 838,452,758 67, and on the 1st
April, 842,650,630 18. The measures and the effect appear to be
similar to those preceding 1819. The extensive discounting of
domestic bills and drafts, payable at-distant branches, the amount
being on the 1st of April, per monthly statement, 820,354,748 79.
The orders for curtailing at the western branches, and the cur­
tailing at the principal offices in tho Atlantic cities, and at the
Bank of the United States, the amount of which, at the Bank of
the United States, between the 5th day of January and the 29th
day of March, is 81}810,408 37; at the office of New York, be­
tween the 4th day of January and the 28th day of March, is
8259,305 43; at the office of Boston, between the 5th day of Janu­
ary and the 29th day of March, is 8167,860 85; (and that too, on
a discount line of less than two and a half millions of dollars;) at
the office of Baltimore, between the 16th of January and the 2d
day of April, 8123,741 63, and on a discount line of more than
two millions of dollars, as will be seen by the weekly statement of
those offices and the Bank of the United States, marked No. 36.
The most remarkable feature which presents itself to the view
of the Committee, connected with the present situation of the
Bank, and the course of operations upon it since the 1st of Sep­
tember last, is the increase in the circulation of its notes, which
amounted on the 1st September to 822,399,447 52, and on the 1st
April to 823,717,441 14, making the increase of 81,317,993. 62.



32

Reports on the

During this period the Bank undertook to check the exportation
of specie, by supplying bills at such a rate as left no inducement
for individuals to ship it; to do which they exhausted all the funds
which they could procure from every source. Over 85,000,000
were remitted, as per statement marked No. 16, and still left them
with a debt of more than g 1,700,000 in Europe at this period.
The cause which led to this necessity still yet exists, with an in­
crease to the extent of the increase of circulation, and but for a
decline in the price of specie in Europe, it would still continue to
be exported.
The Committee would present another striking analogy be­
tween the situation of the Bank in April, 1819, and its present
condition. At the first mentioned period, Mr. Cheves informed
the Secretary of the Treasury that the Bank would not pay the
Louisiana debt of three millions, without negotiating a loan in
Europe, and two millions were actually borrowed in Europe, the
indulgence of the Government being obtained to that effect. The
Bank at this time is precisely in the same situation; it has asked
the Government to postpone the redemption of the 3 per cents,
from 1st of July to 1st of October, and has assumed the payment
of one quarter's interest on these stocks, being substantially equi­
valent to borrowing seven millions of the Government's money for
three months.
The supplying of exchange by the Bank, as has been done for
the last five months, and the curtailing of discounts, are but mere
palliatives, as the Committee fully believe; and they are persuaded
that no measure can be invented to restore a sound currency, and
a regular state of things generally, and give a solid and perma­
nent value to property, but the withdrawal of a large portion of
notes now in circulation, by the Bank, which will compel other
banks to do the same.
The Committee will here introduce a quotation from Mr. Rush,
in his Treasury Report in 1828, which fully accords with their
sentiments. " It is the preservation of a good currency which
can alone impart stability to property, and prevent those fluctua­
tions in its value, hurtful alike to individual and national wealth."
Again, he says, "This advantage the Bank has secured to the
community, by confining within prudent limits its issues of paper,
whereby a restraint has been imposed upon excessive importations,
which are thus kept more within the true wants and capacities of
the country." According to the triennial report of the directors
to the stockholders on the 1st of August, 1828, the amount of cir­
culation then was 813,044,768 71; and on the 1st of April last, as
before stated, it was 823,717,441 14; presenting the astonishing
difference of 810,671,780 43, in. less than four years. Can this be
considered, according to the sound doctrine of Mr. Rush, con­
fining its issues of paper within prudent limits, whereby a re­
straint has been imposed upon excessive importations? That
great contractions are injurious, the Committee consider they
have adduced an authority that cannot well be doubted, and that
a great one is now in operation there are too many general evi-




Bank of the United States.

33

dences in confirmation of the fact, to be refuted. A particular
one will suffice, which is taken from the documents called for by
the Senate, and presented to that body by the Secretary of the
Treasury, on the 12th of March last; in which will be found a
communication from the President of the Bank, stating that the
amount of the branch notes redeemed by the Bank of the United
States at Philadelphia, during the month of February last, only to
be 8726,000; and the amount redeemed in 1831, during the^ame
month, was only g368,9 io. '
In a letter under date of the 26th of March last, to the Chair­
man of the Committee, the President of the Bank says " that the
amount of branch notes redeemed at the New York office during
the year 1831, was g 13,219,635, vand at Philadelphia g5,398,SOO,
making a total of g l 8,618,435; with an increase of circulation be­
tween the 2d of February, 1831, and the 2d of January, 1832, of
more than six millions of dollars, as per monthly statements, and
decrease of its means, between the 2d of February, 1831, and 1st
of April, 1832, to meet immediate demands of more than twelve
millions of dollars, viz.—
In specie, funded debt, and notes of other banks,
which at first named date, amounted, as per
monthly statements, to
- 821,756,668 10
And the last to 9,640,000 00
812,115,668 10
Making, as just stated, a diminution in the active means imme­
diately applied to the extinguishment of its debts, of considerably
more than half of its former capacity, to effect the same object.
With such an increase of issues, and the influence of a most
powerful reaction now operating upon the fiscal energies of the
country, as is exhibited by the difference of the redemption of
branch notes at the periods and places abovemcntioned, together
with such a reduction of its means, to meet its engagements,
must, we fear, compel them still further to curtail their accom­
modations.
It is evident, from the circulars addressed to the branches, and
correspondence with them since October last, that the chief ob­
ject of the Bank has been to sustain itself—the statements accom­
panying this Report, clearly proving that the Bank has not in­
creased its facilities to the trading community, in any part of the
Union.
The Bank of the United States, among other conditions of its
charter, is bound to make collections of the public revenue, to
transfer the same, or any part thereof, from one point to another,
that may be required; and to make any and all payments for the
account of the Government, whether for principal, interest, civil list,
army, navy, pensions, or for any other purpose whatever, free of
all and any charges for such services.
For performing this duty, the Bank has claimed, and has re­
ceived, from the Treasury Department, and the country gene


54

Reports on the

rally, for some years past, merit to an extent that could not have
been surpassed, even if all those services it performs were gratui­
tous. This and other circumstances have led the Committee to an
investigation of the subject, as far as the limited time would allow,
before closing their labours, to see how far the Bank is entitled to
the credit bestowed upon it, and to what extent the Bank has aided
the Government in its fiscal operations beyond the obligation im­
posed in obedience to its charter.
The Government, in its collections through the Bank of the
United States, receives nothing but specie, or notes of the United
States Bank, and makes its payments in nothing else. If the notes
of State banks are received by the Bank in place of its own, it is a
private matter between such banks and the Bank of the United
States, and one with which the Government does not concern it­
self, and it is to be presumed that the Bank of the United States
is too watchful and vigilant in the protection of its own interests,
not to see that it obtains from the State banks, for the notes thus
taken, specie or its equivalent, or its own notes, in exchange, and
thereby be provided with a fund from the collection of the revenue,
equal in value to that in which they are required to pay.
The largest portion of the revenue, particularly from im­
ports, as is universally known, is collected in the Atlantic cities
north of the Potomac. Those cities being the great marts of sup­
ply to nearly the whole of the United States, and places to which
remittances centre from almost every part of the country, create
a demand for funds upon them from nearly every quarter, con­
stantly and generally at a premium. Therefore, so far as the
Bank is called upon to transfer funds from those cities to other
places, it becomes a matter of profit and not of expense to it, and
the greater the distance the greater the premium; and the larger
the amount thus required to be transferred by the Government and
the greater the distance, the greater the profit and advantage to the
Bank.
That the Bank has aided, the Government thus far, the Commit­
tee are unable to discover, or that they are under any obligations
to the Bank for those services, they are at a loss to imagine. How
far the Bank has aided the Government in its fiscal operations, as
it claims to have done, will be seen by a communication from the
President of the Bank to this Committee, hereafter adverted to in
another part of this Report; and also in a report of the committee
of the stockholders, at the triennial meeting on the 1st of Septem­
ber, 1831, in the following words: " That the Bank, through the
whole course of its operations, has effectually assisted the Treasury
in the collection and distribution of the public revenue, and that,
of late years, it has been signally efficient in preventing the dis­
charge of the public debt from disturbing the operations of com­
merce or the value of pecuniary investments/'
Now, the Committee are not able to discover upon what princi­
ples the foregoing declaration is made. By referring to the cor­
respondence, in 1819; between the then President of the Bank and
the then Secretary of the Treasury, the Committee discover that



Bank of the United States.

35

the Bank was then applying to the Treasury Department, to aid it
in its operations, and was receiving all that it could promise.
On the 20th of March, 1819, the President of the Bank closes a
communication to the then Secretary, Mr. Crawford, thus: "I
have ventured to trouble you with those views with the hope that
you will pardon the liberty, and with the conviction that ijf you
can serve this institution in any of them which you shall deem
consistent with the public good, you will feel a pleasure in doing
so." The Secretary of the Treasury, in closing his answer, uhder
date of the 27th of March, 1819, says," every facility which it is
in the power of this Department to afford the Bank, in its efforts
to support specie payments, and restore the currency to a natural
state, may be confidently relied upon.*'
By a reference to a statement of the public deposites in the Bank
of the United States each month, from March, 1818, to March,
'1832, inclusive, marked No. 37, it will be seen that from the 1 st of
January, 1823, up to the month of tylarch, 1832, there has been
only one period, (November, 1825,) when the public deposites did
not exceed four millions of dollars in the hands of the Bank, and
they frequently amounted to eight, nine, ten, and eleven, and on
one occasion, to twelve millions of dollars.
^ By reference to document marked No. 38, it will be found that
since the month of March, 1824, at all the different periods imme­
diately following the redemption by the Government of portions
of its funded debt, there is nojone time when the Bank was not left
with more than one million and a half of dollars of public depo­
sites, and in many instances with four and five millions, which sums
were, immediately after, increasing, by the constant accumulated
collection of the public revenue.
The Bank, as it collects the revenue, knows, or ought to know,
that it will be called upon by the Government to reimburse it, and
in all cases of redemption of the funded debt, three months notice
is given by the Treasury of such intention. With such notice, and
with proper management on the part of the Bank, the Committee
cannot see that either the Government requires any aid, or that
the community can be affected by the course of the operation. ,.
The Bank has its legitimate banking capital with which to do
its regular business and accommodate the community. As it col­
lects the public revenue, it is enabled both to avail itself of the ad­
vantage of employing it to its own benefit, and the accommoda­
tion of the community who principally contribute to its payment,
by commencing the discounting of business paper, payable with­
in or about the time they know they will be called upon to make
the payments on account of the Government* and, as they gradu­
ally approach that period, they must also shorten the period which
the business paper has to run, until they arrive at the time the
call from,Government is made upon them, when the business pa­
per will have been paid offj the Bank then pays the Government,
and the Government immediately again circulates it among the
community.
The operation, as thus described, appears to the Committee too



$6

Rqtorts on the

plain and simple to require any further illustration; and if the
principle is sound, and has been acted upon by the Bank, they can­
not discover in what manner the operations of commerce could
have been disturbed, or the value of pecuniary movements have
been affected by the payment of the public debt by the Government.
But if the Bank has, as the public revenue has accumulated to
the credit of the Treasury Department, gone on discounting upon
it, or loaning it out, disregarding the period when they would be
called upon to reimburse it, the Committee can readily perceive
that, when that order arrived, they would be found hot only defi­
cient in preparation, but in a state of surprise, and that the pay­
ments would first embarrass the Bank, and then lead it to press
and embarrass the commercial community.
From the observations made, and the examination of documents
during the course of this investigation, the Committee have strong
reasons to apprehend' that the course pursued by the Bank has
been upon this latter principle. If so, the Bank has incurred a high
responsibility.
The Committee believing the subject of the late postponement
of a portion of the three per cent, stocks, intended, as they under­
stood, to have been paid on the 1st of July by the Government, to
be within the province of their inquiries; and believing, also, that
it had a strong connexion with the present state and situation of
the aifairs of the Batik, and for the purpose of enabling them to
form a correct and true opinion upon that subject, they made a
call upon the President of the Bank for the correspondence in re­
lation to the postponement of that payment, in the following words:
"Will you please give a copy of the correspondence connected
with your application in March last, requesting a suspension by
the Government of the payment of a portion of its debt intended.to
have been made on the 1st of July next, or a statement of the ar­
rangement made in relation to that subject." Which correspond­
ence was communicated by the President of the Bank, with the
following remarks:
" I have made no application to the Government, nor have I re­
quested any suspension of the payment of any portion of the public
debt."
" The inquiry, I suppose, relates to this circumstance; ' I re­
ceived a letter from the acting Secretary of the Treasury, dated
the 24th March, 1832, informing me that Government was about
to issue a notice on the 1st of April, of their intention to pay, on
the 1st of July next, one-half of the three per cent, stock, and to do
it by paying to each stockholder one-half of the amount of his cer­
tificate.' " He added,
* If any objection occurs to you either as to the amount or mode
of payment, I will thank you to suggest it.'
" Thus invited by the Government to a communication marked
c
confidential,' to give my opinions on a measure contemplated by
the Government, I felt it my duty to express my views of its pro­
bable operation: in my reply, therefore, dated 29th of March,,!
stated * that so far as the Bank is concerned, no objection occurs



Bank of the United States.

37

to me,-it being sufficient that the Government has the necessary
amount of funds in the Bank to make the contemplated payments.'
I then proceeded to observe, that in the present situation of the
commercial community, and with a very large amount of revenue,
(amounting to nine millions,) to be paid before the 1st of July, the
debtors of the Government would require all the forbearance and
ail the aid that could be given them; and that the payment pro­
posed, by creating a demand for the remittance of several millions
of dollars to European stockholders, would tend to diminish the
usual facilities afforded to the debtors of the Government, and
might endanger the punctual payment. For this reason I thought
it for the interest of the Government, to postpone the payment till
the next quarter. I further stated, that the plan of paying to each
stockholder only one-half of his loan, would not be so acceptable
as if his whole loan were repaid at once.
" Having thus performed my duty in giving the opinion asked,
I left it, of course, to the Government to decide. On the part of
the Bank, I sought nothing, I requested nothing. After weigh­
ing the circumstances, the Government were desirous of adopting
the measure, but the difficulty I understood to be this, that the
sinking fund would lose the quarter's interest, from July to Octo­
ber, of the sum intended to be paid in July; and that the Govern­
ment did not feel itself justified in making the postponement un­
less that interest could be saved, but that it would be made, pro­
vided the Bank would make the sinking fund whole on the 1st Oc­
tober. To this I said, that as the Bank would have the use of the
fund, during the three months, it would consent to save the sink­
ing fund harmless, by paying the three months interest itself; as
the matter stands.
" Now, it will be seen, that the Bank, in all this, has had not the
least agency, except to offer its opinion, when it was asked, in re­
gard to a measure proposed by the Government; and then to offer
its aid in carrying that measure into operation."
The Committee cannot discover any ability which the Bank
possesses or will possess, to give increased aid to public debtors
in the payment of nine millions of dollars falling due (as is said)
in the quarter ending with the 1st of July; but, on the contrary,
they believe that such is the situation of the Bank now, and such
will be the demands which it will be called upon to meet, that it
will require the aid of all the accumulated collections for the Go­
vernment, to sustain itself.
The Committee are fully of opinion, that though the Bank
neither "sought" for, nor "requested" a postponement of the
payment by the Government, as stated in the declaration of the
President, yet if such postponement had not been made, the Bank
would not, on the 1st of July, have possessed the ability to have
met the demand, without causing a scene of great distress in the
commercial community.
The Committee are unable to discover in what manner the
Bank could afford aid to the Government, in carrying into effect
the measure thfry proposed, which the President of the Bank, in



33

Reports on the

his remarks, speaks of having proffered to them. All that the
Government could ask of the Bank on the 1 st of July, or at any other
time, would be, to pay over to them the amount it had collected
for their account when they wished it—the same as a principal
would call upon its agent to pay to him'moneys which he had
collected for his benefit.
By document marked No. 30, it would appear, that, on the 13th
day of March last, the Bank was aware of the intention of the Go­
vernment to pay off during the year, a great portion of the 3 per
cent, stock; and the subject of making an arrangement with the
holders, was, on that day, referred by a resolution of the Board, as
follows:—
Resolved, That the subject of the communication just made by
the President, be referred to the committee of exchange,^ with
authority to make, on behalf of the Bank, whatever arrrangements
with the holders of the 3 per cent, stock of the United States may,
in their opinion, best promote the convenience of the public, and
the interest of this institution.
This proceeding on the part of the board, nearly two weeks
before they were officially informed of the intention by the Go­
vernment to make the proposed payment on the 1 st of July, de­
monstrates fully, to the minds of the Committee, an acknowledg­
ment on the part of the administration of the Bank, of its inability
to meet the demands which the contemplated payments of the Go­
vernment 3 per cents, would bring upon it, without producing the
distress before alluded to.
In a letter to the Secretary of the Treasury, from the President
of the Bank, dated the 29th March, 1832, marked No. 40, is the
following:
" Owing to a variety of causes, but mainly to the great amount
of duties payable for the last few months, there has been a pres­
sure upon the mercantile classes, who have been obliged to make
very great efforts to comply with their engagements to the Go­
vernment. That pressure still continues, and it may be prolonged
by the same cause—the amount of duties still payable during the
next three months. This state of things seems to recommend all
the forbearance and indulgence to the debtors which can be safely
conceded. The inconvenience, then, of the proposed measure is,
that the repayment of six or seven millions of dollars, more than
half of which is held in Europe, may create a demand for the re­
mittance of these funds, which would operate injuriously on the
community, and, by abridging the facilities which the debtors of
the Government are in the habit of receiving from the Bank, may
endanger the punctual payment of the revenue, as the Bank would
necessarily be obliged to commence early its preparations for the
reimbursement of so large an amount of public debt.
" My impression, therefore, is, that with a view "to the safe and
punctual payment of the public revenue, the Government would be
benefitted by postponing the proposed payment of the public debt
to another quarter, by which time the country will sustain less
inconvenience from demands on foreign account."



Bank of the United States.

39

The Committee are obliged to dissent from the views expressed
by the President in the foregoing extract. The Committee can­
not believe that the pressure which has, and which continues to
exist since October last, is attributable mainly u to the great
amount of duties payable for the last few months" The Committee
believe the operations of the Bank of the United States in Phila­
delphia, and the offices in Baltimore, New York, and Boston, (the
four principal places where bonds are payable,) during the last
quarter, furnish evidence to the contrary. By a reference to the
weekly statements of the Bank of the United States, the offices at
Baltimore, New York, and Boston, from July, 1831, to April,
1832, marked No. 36, it will be seen that the amount of reductions
on discounts and loans at those four largest commercial cities,
during the last quarter, taking the maximum amount in January
last? and ending on the 1st of April, is 82,498,489 76, or in round
numbers, two millions and a half of dollars^ this reduction by the
Bank and its branches, has probably compelled a similar reduction
on the part of the state institutions, in proportion to the amount
of their loans in each of those places. In this, and in this alone,
the Committee are fully persuaded is to be found the true secret of
the pressure which has existed, and does still exist, operating
upon the commercial community.
That this pressure will continue for some time to come, the
Committee fearj fop the expansion has been so great^ that the
contraction which is now in operation cannot, in the opinion of the
Committee, be effectually checked or controlled, without a ne­
cessary curtailment of discounts.
If the Bank possessed the ability to sustain itself without cur­
tailing its discounts, the revenue falling due the present quarter,
might be collected, and facilities granted during the time, upon
the principle before pointed out, to the commercial community^
and disbursed again by the Government, without any inconveni­
ence being caused by the operation. But such ability, the Com­
mittee are well satisfied the Bank does not possess, nor can it at
present command. Besides the diminished means of the Bank
previously alluded to, through the loss of five millions of its spe­
cie, its foreign exchange and other resources, one of the great
difficulties under which it now labours, in paying the public debt,
is its being compelled to receive the public revenue, in the At­
lantic ports, in a currency, to wit, branch notes and drafts of the
western offices, not promptly convertible, and to pay the public
debt in current money.
Without a large abridgment of the usual accommodations,
which will, of course, greatly distress the community, the Com­
mittee are under the strongest conviction that it will be little
better able to meet the pressure the Government payments will
cause, on the 1st of October, than they would have been on the
1st of July. The words of Mr. Crawford, in a letter dated 6th of
April, 1819, to the President of the Bank, the Committee consider
peculiarly appropriate here to introduce. " Palliations may pro­
long the existing embarrassments, and by exciting the hopes and



40

Reports on the

fears of the community, aggravate the existing evils, but cannot
influence the final result.'*
In another letter, dated the 9th of April, 1819, to the same gentleman, he says, " Banks, in order to secure specie payments, must
approximate their circulation and individual deposites, to a sum
justly proportioned to the amount of specie in their vaults. Any
thing short of this, will keep them in a precarious state, and postpone the period when banking operations can be safely prosecuted
upon ordinary principles."
When an institution, with investments amounting to seventyfive millions, commanding the foreign and domestic exchange of
the country, monopolizing the Government deposites, cannot, at
the moment when we are exporting our annual crop of cotton,
amounting, by the admission of the President of the Bank, to
twenty millions of dollars, (but really near thirty,) transfer a few
millions of its funds abroad, to pay the Government debt without
embarrassing its operations, and seriously distressing traders, is
there not reason to believe that its business has been too much
and too rapidly extended?
In the late letter of the President of the Bank to the Secretary
of the Treasury, of the 29 th March last, there is the following
postscript: " A s an illustration of the effect of the measures I
have suggested, I may mention, that in the month of February
last, the collector of New York, with a laudable ajixiety4to protect
.the public revenue, applied to the Bank to authorize an extension
of loans in that city, in order to assist the debtors to the Government. This was promptly donej this I should desire to dp again,
as the payment to the Government during the next quarter, will
be very large."
Upon a reference to the weekly statement of the office at New
York, from July, 1831, to April, 1832, before alluded to, the Committee find no aggregate increase of loans; but, on the contrary,
they find that there has been a reduction in the amount, viz: the
amount on the 29th February, being less than on the 2d and the
8th days of the same month, and §140,000 less on the 28th day of
March, than on the 29th of February previous. l
By examining the statement No. 36, it will be seen that the
total amount of discounts at the New York branch, between the
4th of October, 1831, and the 28th of March, 1832, were actually
diminished 8468,447 17, while during the same time, the bonds
paid at that port, amounted to between nine and ten millions of
dollars.
T h e Committee, in order to ascertain the precise mariner in
which the annual election of directors has been conducted, called
at an early period of the investigation, for the following docu^
ment, viz.: " A statement of the number of votes given,at each
annual election of directors since that of 1823, the whole number
of votes given, the number given in person, and the number given
by proxy, and in the latter case, by whom," which statement was
not furnished the Committee, but the statement, marked No. 41,
was furnished. This shows the whole number of proxies to be



Bank of the United States.

41

4,5S3, of which the President holds, exclusively, 1,436, and as a
trustee, in conjunction with others, 1,684, which gives him, with­
out intending to impugn the exercise of the power, decidedly a
preponderating control in the election of directors, a power which
was never contemplated by the 'charter; so far from it, that in­
strument, as well as subsequent laws passed by Congress, have
studiously endeavoured to prevent the very mischief which this
accumulation of proxies in the hands of one person is most ob­
viously calculated to produce. The charter has limited the votes
of the largest stockholder, no matter what may be the number of
shares, to the number of thirty, clearly with a view to prevent the
whole affairs of the Bank from falling into the hands of a few in­
dividuals. It is too powerful an engine to be controlled by one
man alone, and this must be apparent to the good sense of every
one; yet, notwithstanding this restriction, by the use of proxies,
individuals, with little or no immediate interest, can perform what
those possessing a direct and deep interest are prohibited from
doing. Connected with this subject, there is one which ought
not to go unnoticed. The charter positively requires twenty-five
directors; for some years past, as appears by the list of directors,
marked No. 42, there have been but twenty-four. The President
of the Bank holding the appointment from the Government and
the stockholders at the same time.
The Committee cannot pass over mentioning the subject of the
sums paid for printing. By reference to a statement furnished
the Senate in March last, it will be seen that, from the period of
the establishment of the Bank, after the year 1817, up to the year
1829, the sum paid for printing, in any one year, has not exceeded
8867 19; and in some years, it has been reduced as low as 8124
and 8165 50. But in 1830, the amount is swelled to the sum of
86,762 54; and in 1831, to 89,187 94. In the year 1817,theyear
in which the Bank was established and went into operation, and.
consequently a greater expense was incurred, the expense of
printing was 83,226 15.
What circumstances occurred or existed during the years 1830
and 31, to require such an unusual increase in this branch of ex­
pense over the preceding years, in the ordinary course of its busi­
ness, the Committee have been unable to discover, though they
called for the accounts under this head of expenditure, but have
not yet received them. In the same document is contained the
sums paid to "attorneys," annually, since the establishment of the
Bank. This subject, owing to their limited time, the Committee
were unable to investigate. Sufficient, however, came to their
knowledge, to justify the belief that the sums returned as having
been paid to " attorneys," embrace only what was paid to them in
that distinct character; that the sums paid to solicitors and counsellors for the Bank are not in the amount given.
The Committee addressed the following inquiry to the Presi­
dent of the Bank, believing that it involved a fact which will be
useful to Congress in its future legislation on the subject of its
charter:—
F



42

Reports on the

" Did Mr, Ellsworth, or any one else of the State of Connecticuty as assessors of taxes of that State, write to request you to
give him a list of stockholders belonging to that State, for the
purpose of taxing them according to a law thereof?'*
The President replied: " I n December, 1829, Henry L. Ellsworth, of Hartford, in Connecticut, addressed a letter to me, requesting to be furnished with a list of the stockholders of the
Bank residing in Connecticut, for the purpose of taxing the stock.
The request was declined, for reasons which will appear in" the
correspondence hereunto annexed," to which the Committee refer,
marked No. 43.
The Committee, in calling for various statements, have collected a number of useful documents, not referable to any particular head, but as containing a mass of useful information, they present them to the House, subject to their future order, and, if found
necessary, to be appended to this Report, when it, together with
the papers to which it refers, shall be published.
The majority of the Committee feel authorized to state that
they have not been able to give even the present Bank that investigation which its extensive operations deserve, much less the
branches—in some of which there have been subjects of complaint, but which they have been, compelled to abandon for the
want of time.
The Committee that investigated the affairs of the Bank in
1819,* when it had been but two years in operation, with its business'much less extended than at present, were engaged, as it
would seem from the records of that day, from the 30th of November to the 16th of January, before they reported, and then they
had not made as thorough an examination as the transactions of
the institution seemed to require. At the present time, with a
greatly enlarged business of sixteen years' accumulation, and
twenty-five branches, whose operations have been charged with
signal instances of irregularity, the Bank requires a much more
minute examination than the Committee have been able to give it.
There have been many statements called for which the business
of the Bank, and the shortness of the time allowed for the investigation, would not admit to be furnished. The Committee were
particularly desirous of ascertaining how far the payment of the
public debt, and throughout the whole term of the existence of
the Bank, affected its operations, and called for all the resolutions
and correspondence relating* to that subject since 1817, but have
only received such as related to the three per cent, loan, and the
circular of the 7th of October last.
On the subject of specie payments, domestic and foreign exchange, investments in public debt, by the Bank, in 1824 and 1825,
and its ability to make loans to the Government—the influence of
the operations of the Bank upon trade—on the increase of the
paper circulation of the Bank—its agency in diminishing or enlarging the circulation, of local banks, and the means of permanently regulating our general circulation, so as to prevent its
injurious effects upon the trade and currency of the country* all




Sank of the United States,

43

matters of vital importance in the reorganization of the Bank;
concerning which, the Committee submitted a number of inqui­
ries to the president of the Bank,, who has not been able, from the
press of other indispensable duties, to answer; and which queries
are appended to this Report. The investigations, however, which
have been made, imperfect as they were, fully justify the Com­
mittee in saying, that the Bank ought not, at present, to be rechartered.
It is obvious, from the statements submitted, and the corres­
pondence with the Treasury concerning the public debt, and the
fluctuations of the revenue of Government, that these have hitherto
essentially affected the general circulation and operations of the
Bank of the United States. It would, therefore, seem to your
Committee to be most judicious not to act upon the question of
rechartering that institution, or of chartering any other national
bank, until the public debt shall have been paid off, and the public
revenue shall have been adjusted to the measure of our federal
expenditures.




lteports on the

44

MR- M'DUFFIE'S REPORT.
HOUSE OF REPRESENTATIVES,
Friday, May 11, 1832.

Mr.M'DuFFiE, from the Select Committee appointed to examine
the books and proceedings of the Bank of the United States, submitted the following, as the views of the minority of the said
Committee.
The minority of the Committee appointed to examine the books
and proceedings of the Bank of the United States, dissenting from
the Report of the majority, beg leave to present the grounds of
their dissent, for the consideration, of the House.
The majority of the Committee have submitted, without expressing any decided opinion on them, six cases which they allege
to have become subjects of imputation against the Bank, touching
the violation of its charter.
The first of these cases relates to usurious loans, and occurred
as far back as 1822, during the presidency of Mr. Cheves. The
branch bank at Lexington had received a large amount of the
notes of the bank of Kentucky, a portion of them as Government
deposites. These notes were considerably depreciated. The
branch having declined issuing any of its own notes, in obedience
to orders of the mother Bank, an individual applied for a loan of
these depreciated bank notes, alleging that he wanted them to
pay a debt, and that they would answer his purpose as well as any
other bills. The loan was granted. T h e bank of Kentucky was,
at the time, regularly paying to the branch interest on these notes,
and finally redeemed all that remained, a few months after the
loan in question. It thus appears that these bills were as good as
cash to the Bank, and the borrower alleged that they were of
equal value to him. It is difficult to conceive any solid ground
for considering this a case of usury. I t would be as reasonable to
say that it would have been usury for the bank of Kentucky itself,
to make a loan of its own depreciated notes. The utmost fairness was exhibited by the branch bank, in this transactions the
loan was made with reluctance, after repeated applications, and
yet the directors of the mother Bank, many years afterwards, and
since Mr. Biddle has been at the head of the institution, refunded
to the borrower of the Kentucky notes, the full amount of the dif, ference between their nominal and their real value at the time of
the loan, with interest. This has been also done in another similar case; so that, in the only two cases which have been brought to
the view of the directors at Philadelphia, for the purpose of having
the amount of the depreciation refunded, the application has been



Bank of the United States.

45

granted with a promptness and liberality highly creditable to the
institution.
The minority of the Committee will barely remark, upon these
transactions, that being free from all imputation of intentional
usury, and never having been sanctioned by the directors of the
mother Bank, but, on the contrary, corrected, they cannot fur­
nish the slightest ground for alleging that the charter has been
violated.
The second ground of imputation noticed by the majority of
the Committee is, a the. issuing of branch orders as circulation."
On this point the minority deem it sufficient to remark, that a
branch order is nothing more nor less than a draft or bill of ex­
change drawn by a branch upon the mother Bankj and that the
charter expressly authorizes, as one of the primary operations of
the Bank, the buying and selling of bills of exchange. If the
Bank has a right to issue these drafts at all, it cannot, surely, be
made a ground of just complaint against it, that they are used as
circulation. That is exclusively the affair of the community.
The Bank cannot be justly made responsible for the use which
the public may choose to make of these drafts. It is the high
credit of the Bank that gives the character of circulation to this
papery and it is the voluntary act of the community receiving it
as such.
In fact, there is no part of the Bank circulation -which has been
so beneficial to the public. It has, in practice, furnished the
Southern and Western States with the means of effecting their
exchanges with the North, without any expense whatever.
It may be well doubted, however, whether an extensive and per­
manent issue of these drafts might not prove very inconvenient to
the Bank itself, in a certain state of the domestic exchanges, and
it would be, therefore, a judicious measure to supersede the ne­
cessity in which these drafts originated, by authorizing other
officers than the President and Cashier of the mother Bank, to
sign notes for circulation.
The third ground of imputation, as relates to "the violation of
the charter, is, " the selling of coin, particularly American coin."
The minority would respectfully suggest that the majority
have entirely overlooked the nature and essential purposes of the
Bank, It may be well defined to be " an institution established
for the purpose of dealing in money." Now money is a current
coinj yet, a Committee of Congress very gravely bring it forward
as a charge, touching the violation of its charter, too, that it has
been guilty of dealing in current coins, and particularly American
coins, the very end fdr which it was created.
As relates to dealing in current coin, the right to do so is in­
volved in the right of lending money and of receiving it back.
The authority to deal in bullion is expressly granted in the char­
ter, because bullion is not current coin, and, of course, the right
to deal in it is not necessarily involved in the right of carrying on
banking operations.
The fourth ground of imputation is " the sale of stock, obtained
from government, under special acts of Congress."



46

Reports on the

This charge is, if possible, more extraordinary than the last*
If the acts of Congress, which expressly authorized the Bank to
subscribe for Government stock, had any meaning at all, they
certainly meant to authorize the Bank to acquire the right of
property in the stock for which it was authorized to subscribe.
The right to sell this stock at pleasure, is of the very essence of
the Hght of property, and is as clearly conveyed to the corpora­
tion by the act authorizing a subscription, as the right to receive
the interest.
The right to sell, therefore, is indisputable.
But the majority of the Committee seem to suppose that the
policy which forbids the Bank to speculate in stocks, with its
immense resources, by which the price might be " raised and de­
pressed at pleasure,'* equally forbade the Bank to sell the stock
for which it had subscribed by the express authority of the Go­
vernment. Now it is apparent that the evil of dealing in stocks,
by such an institution, can only exist in cases of buying and selling
stocks at the pleasure of the Bank* To raise and depress prices,
the Bank must have the right, both to buy and to sell alternately,
as may suit its purposes of speculation. But it has never pretend­
ed to claim, much less to exercise the right of buying Govern­
ment stocks, except under the express authority of Congress, and
by an express stipulation with the Treasury Department, And
after it has obtained a large amount of Government stocks in this
mode, it is difficult to conceive how it could raise the price of
these stocks by coming into the market as a setter, or how it could
promote the purposes of a stock-jobbing speculation, by depressing the price, the only effect which could result from offering for
sale. When these stocks were sold in 1825, there was an extra­
ordinary pressure upon the money market of the whole commer­
cial world. They constituted the very resource which the Bank
most required in such an emergency; and it is now matter of
history, that it was partly by the wise, judicious, and timely use
of this resource, that the Bank of the United States averted from
this country the calamity of a general failure of the banks, and a
widely extended scene of commercial bankruptcy.
The majority of the Committee seem to regard it as a matter
of complaint that the Government permitted the Bank to sub­
scribe for these stocksj in preference to individuals. If this is
indeed, a just cause of complaint, it should be made against the
Government, and not against the Bank. When Congress express­
ly authorizes the Secretary of the Treasury to obtain a loan from
the Bank, and the Secretary stipulates the terms of that loan, it is
impossible to conceive how any blame can belmputed to the Bank,
if it faithfully performs its engagements.
The fifth ground of imputation presented in the Report of the
majority, is. u making, donations for roads, canals, and other ob­
jects."
In two instances, the directors subscribed small sums to certain
internal improvements in the vicinity of the real estate of the Bank.
This they did in the exercise of the proprietary right, and with a



Bank of the United States.

47

view to the improvement of the value of their property. For this
exercise of power, they are responsible to the stockholders alone;
and the question is, whether they have, or have not, made a proper
application of the funds of the corporation, with a view to the pro­
motion of its interests? To what extent the value of the real es­
tate of the Bank has been increased, by the internal improvements
in question, has not been ascertained; but it may be well supposed
that it exceeds the sum appropriated by the directors to aid in the
construction of these improvements.
The other <c donations" to which the Report refers, consist of
small sums contributed to fire insurance companies, for the safety
of the Bank property, and against which it is not pretended that any
objection can be fairly raised.
The last ground of imputation, as touching the violation of the
charter, i s , " building houses to rent or sell, and erecting other
structures in aid of that object.'*
The Bank is expressly authorized to purchase real estate, which
has been mortgaged to secure debts previously contracted, and
also such as may be sold under judgments and executions in its own
favour. In the exercise of this right, the debtors of the Bank are
as much interested as me Bank itself. For it must be apparent,
that if the Bank were not permitted to bid at these sales, the pro­
perty of its debtors would be frequently sacrificed, at a sum
greatly below its value. It has been only for the purpose of saving
itself from loss, and the property of its debtors from being thus
sacrificed, that the Bank.has ever purchased any real estate, ex­
cept what has been necessary for its banking-houses. There is
no description of property which a banking institution is so unwil­
ling to own as real estate. Such an institution is entirely unsuited
to the management of such property, as much so as a farmer would
be to manage the discounts of a bank.
Owing to the extensive failures of the persons indebted to the
Bank, in the western country, prior to 1819, the directors were
unavoidably compelled to take a very large quantity of real estate,
' as the only means of avoiding still greater losses than they have
actually sustained. They have disposed of this estate as rapidly
as they could, consistently with the interests of the institution.
On a portion of it they have erected improvements, to prepare it
- for sale, and by means, of which they will save the stockholders
from a great portion of the loss which would have otherwise oc­
curred, and will recover a large amount of the debts which were
some years ago set down as desperate. If, for this course of con­
duct, the directors are rendered obnoxious to censure, then will
they be condemned for the very faithfulness of their stewardship.
It is too obvious to require, or to justify the use of argument,
that the right of the Bank to improve its real estate, is insepara­
bly connected with the right to purchase—to hold, or to own it.
On this subject, the House is referred to the exposition of the
President, marked A.
The next subject to which the report of the majority adverts, is
the loan to James Watson Webb and Company. Itjs proper to



48

Reports on the

remark,in the first place, that the only sums ever loaned to this
copartnership, were the sums of twenty thousand, and of fifteen
thousand dollars, the former in August, and the latter in December,
1831. It is also proper to remark, that the first sum was reduced to 818,000, at the maturity of the note given for it$ and that
the latter sum was entirely paid off in March last, by Mr. Webb;
and, as he expressly states on oath, without being requested by the
Bank to do so. The whole amount of the accommodations ever
obtained from the Bank by Messrs. Webb and Noah, was 835,000$
and the whole amount now due by them is 818,000.
The grounds and securities upon which these accommodations
were granted, will now be stated. Mr. Webb produced to the directors a full statement of the affairs of the copartnership, setting
forth the value of their property, and the annual income derived
from their paper. From this statement, which was authenticated
by the oath of their book-keepers, it appeared that the nett annual
income of the paper from advertisements and subscriptions, was
825,750, after deducting ten per cent, for bad debts, and defraying
all the expenses of the establishment. Upon the whole, it appeared
that this was one of the most profitable, as it is certainly the largest
commercial newspaper in the Union, witlran immense advertising
patronage, and a large and rapidly increasing subscription list.
W i t h these exhibits, Mr. Webb produced the letter of Mr.
Walter Bowne, Mayor of the City of New York, and formerly a
director of the Bank of the United States, a man of wealth and
high character, enclosing the application for the'loan, and stating
that " he did so with pleasure, and saw no reason against this being
treated as a. fair business transaction." Several of the directors, as
well as the President of the Bank, were examined on oath in relation to this transaction, and as the clearest mode of exhibiting
its true character to the House, extracts from these examinations
will be given.
The following is the testimony of Mr. Biddle, relative to these
loans.
Ques.—" Did you consider the loans made to James Watson
Webb and Co. fair business transactions, such as you could not
refuse without subjecting the Bank to the imputation of indulging
political partiality? State fully the views and considerations on
which you voted in favour of those loans."
&ns>—" f certainly considered them as fair business transactions, or'I should not have consented to them. At the request of
the Committee I will explain the reasons of that opinion.
" If in making loans every transaction was perfectly safe, and
every borrower perfectly good, banking would be an easy office:
but as men generally borrew to employ the funds in some profitable pursuit, subject, of course, to vicissitudes, all that can be
expected in making loans is a fair and reasonable caution as to the
situation and prospects of the borrower. Tried by these, the only
tests, I think the loans in question are unexceptionable. The first
was done by a board of directors, consisting, beside the presiding
officer, of six gentlemen, Mr. Lippincott, Mr. Fisher, Mr.- Bohlen,



Bank of the United States*

49

Mr. Neff, Mr, Piatt, and Mr. Willing, merchants and men of business, with no partialities towards the* applicants, with whom
none of them had the least acquaintance. The grounds of their
judgment may be thus stated. In making ordinary loans, the
board judge by the general standing of parties, without any examination of their affairs. But in this case the parties began by
an exposition of their whole situation. This was forwarded by
Walter Bowne, Esq. Mayor of the City of New York, where the
applicants resided, who, in addition to his being personally known
and respected by all the members, had been one of the oldest
directors of the Bank of the United States, and for many years sat
at the board around which the directors were then assembled.
In this letter he says," I cheerfully forward ' the papers* and I see
no reason against this application being treated as a fair business
transaction." He does not expressly say it ought to be granted,
because he transmits at the same time some of the materials-on
which the directors were to form their own judgment, to which
others were added by Mr. Webb. But when an old director of
the Bank forwards * cheerfully' an application to his ancient colleagues, which he says should be treated as c a fair business transaction' it implies certainly no responsibility, but it may be well regarded as a declaration that were he still a member of the board,
he would sanction it. Under these auspices the board proceeded
to consider i t
" One of the parties had been appointed by the President and
Senate of the United States to a confidential and lucrative post
under the Government^ the other had already invested 833,000
in the paper, and his father-in : law, Mr. Stewart, whose letter accompanied the application, was known to be a wealthy man. Both
were considered men of talents and peculiar aptitude for the business in which they were engaged. Then what was that business?
" It was the conducting of the largest newspaper in the country,
requiring, of course, considerable means, and giving employment
to a great mass of active industry. Its situation was represented
to be this:
Mr. Webb declared that there were then 3300 daily
subscribers at g 10 833,000
2300 others at an average of 84:50
10,350
275 yearly advertisers at 830 8,250
310 days advertising a t 855 per day 17,050
Making
Deducting from this, 10 per cent, on the daily subscriptions and advertisements, (of which about one-sixth
is paid in advance,) say
85,830
and 20 per cent, on the other subscribers, say 2,070

68,650

There remains a gross income of
The annual expenses were stated at

60,750
35,000

Leaving a nett annual income of
G



-

-

7,900

825,750

Reports on the

50

This statement is confirmed by the affidavits of the book-keep­
ers and pressmen of the establishment.
The total value of the paper was thus stated:—
James Watson Webb had invested in it 833,000, for which
840,000 had been offered, provided the other half could be had
for 825,000. This he declined, but it is mentioned to prove that
the whole might have been sold for
- 865,000
Then it was an improving establishment.
It had owed a debt to the Banks of
15,000
which it had paid off in April and May, 1831, out of
the collections of the last six months, which had
amounted to
20,000
It had, in 1829, owed a total debt of
29,000
which it had since paid off.
An<l at the present moment its outstanding claims were
more than its debts by
10,000
for its responsibilities and means stood thus—Outstanding debts in the country more than 25,000
of which could be collected on presentation of bills
10,000
Due in New York, more than four months' subscrip­
tion, which, with the unpaid arrears of the last six
months, may be safely estimated at
*
20,000
And the property owned by the applicants amounted to
8,000
Making
While the whole amount of debt was
Leaving an excess of

-

-

-

38,000
28,000
810,000

That they had been deemed worthy of credit in New York, ap­
peared from two facts.
1. That the banks of New York had lent them 815,000, which
they had repaid.
2. That the respectable mercantile house of J. L. and J. Joseph
& Co., a firm well known to the directors, had lent them 820,000,
which had been repaid out of the profits of the establishment, as
those gentlemen themselves certify in a document accompanying
the papers.
Finally, they had no accommodation, direct or indirect, out of
any bank.
The case then stood thus: Here are two persons of skill in
their profession, engaged in an establishment of which the capi­
tal is
.
865,000
The gross income 60,750
The expenditures
35,p00
And the nett income
25,750
"In conducting such a business, where the receipts are semi­
annual, the payments daily and weekly, they naturally require,
like other men in business, some credit. They accordingly apply
to borrow 820,000. They wish to borrow it, not to pay previous
debts, not to spend it on objects unconnected with their business,



Sank qflhe United States.

51

but for the purpose of employing it all in a way to increase the
profits of the concern itself, by procuring a new press, and en­
larging their means of obtaining early commercial information,
and thus make the paper more valuable.
" Now the statements may be presumed to present the most fa­
vourable aspect of the case, from the sanguine temper in which
men are prone to estimate their own professions and prospects,
and yet unless they were wholly fallacious, the board saw enough
to warrant the loan. It was further justified by the event; for
when the note fell due, 82Q00 were paid off at a time when the
demand for money induced many other debtors to ask for a re­
newal of their botes.
u
So much for the loan of 820,000.
" The other loan rested on the same principles as the first, with
this addition. The parties stated, that owing to the part which
they had taken in regard to the Bank, they had been deprived of
their usual accommodations in their business. Whatever might
be the reason, the fact of an abridgment of these facilities fur­
nished a reason for extending the loan in addition to the belief of
its safety—which was, that by so doing, any hazard to the origi­
nal loan might be prevented; and the best evidence of its security
is, that the parties have since repaid the loan.
" In regard to the other loans, which appear in their names,
tfoey were given without any knowledge of their being discounted at
Hie Bunk* They were done at the request of a person of un­
doubted solidity, which has been proved in the most decisive way
—by the actual payment of the notes* That they were intended
to aid Mr. Noah, the drawer of the notes, in purchasing a share
in a newspaper, was stated at the time. .But that formed no ob­
jection. He borrowed money as thousands borrow money every
day, to employ it in his active business. If Mr. Noah himself
applied to the Bank for a loan to buy a share in a newspaper, and
the security was satisfactory, the purpose of the loan would have
made no difference. Nine-tenths of the loans made of the Bank,
probably are made to persons to buy something, or to pay for
something already bought. Men borrow money to buy a share
in a ship—a share in a cargo—a share in a bank—a share in a
canal—why not a share in a newspaper ? , The Bank had no diffi­
culty about the loan, because it was thought secure, nor about the
object, because that was not the concern of the Bank* It does not
inquire, and does not care, where its money goes—its onty anxiety
is, that it should come safely back; and whether, in the interval,
it is employed by a merchant, or a farmer, or a lawyer, or an edi­
tor, is a matter of which it takes no cognizance.
"In respect to loans generally to editors of newspapers, the
Bank proceeds on the principle of knowing no class of citizens,
and proscribing none. Even with this rule, its situation in regard
to such loans is a little peculiar. From the nature of their occu­
pations, editors engaged in the discussion of matters of national
concern, have generally expressed opinions in regard to the Bank:
and their dealings wi{h the Bank render it difficult to escape cen-




52

Eeports on the

sure. When an editor friendly to the Bank applies for a loan, if
it is granted, it is ascribed to favoritism^ if it is refused, the party
naturally thinks it ingratitude. When an editor opposed to the
Bank applies for a loan, if it is granted, it is deemed an attempt
to influence him, while, if it is refused, it is called a persecution
on account of his free opinions. The Bank has endeavoured in
these matters rather not to deserve reproach than to ^escape it.
In reply to that part of the question which relates to politics, I
believe that if, in granting the loans in question, there was insen­
sibly blended with the mere business considerations any political
feeling, it was probably this: that charged, as the Bank habitually
is, with hostility to the present administration, it was due to the
interest of the stockholders to correct so unfounded an impres­
sion, when a fair opportunity occurred of giving accommodation
to those who were considered as the. most strenuous and efficient
supporters of that administration. The directors of the Bank un­
derstand too little of the subject to attempt to adjust the balance
of accommodation to political parties, nor have I myself ever had
even curiosity sufficient to notice it, until the inquiry of the Com­
mittee has suggested it. But, undoubtedly, as the Committee can­
not fail to perceive, by far the greatest amount of loans to editors
is to the friends of the present administration, and a large portion
of that to the decided opponents of the Bank."
All the directors who were examined, testified that they granted
these loans under the full belief that they were safe loans, and Mr.
Cope, a gentleman of intelligence and high character, gave the
following explanation of the views and motives by which he was
governed in voting for the second loan of Si5,000.
x
"Documents/' said he,"were exhibited to the committee, con­
taining a statement of the names of the parties to the note, by
which they^ appeared to be worth about 830,000, with a pros­
perous business, and a large subscription list. The loan was
made, as all other loans are made, without any regard to the po­
litics or business of the parties, but solely because it was the busi­
ness of the Bank to lend on adequate security.
" I was well aware, at the time, that they were partisan prin­
ters, and I knew that if we made the loan it might be ascribed to
improper motives^ and that if we rejected it, it might be said we
persecuted the individuals on account of their politics."
Such are the grounds upon which the directors granted these
loans to James Watson Webb £c Co.
It will be readily perceived that the directors of the Bank were
placed in very peculiar circumstances by this application. They
had been accused in various quarters of having brought the power
of the institution to bear upon the politics of the country, and par­
ticularly with having taken sides against the present administra­
tion. Having invariably pursued a course in their transactions
which recognized no distinction of political parties, it was very,
natural that, while labouring under the imputation just stated,
they should have been scrupulous to avoid giving any colour of
foundation for it.



Bank of the United States*

53

^ As the evidence and recommendation produced, satisfied all the
directors of the safety of the loan, they could not but feel that, if
they refused to grant it, they would give countenance to an impu­
tation which they were laudably anxious to avoid.
It is proper to add, that James Watson Webb 8c Co., in their
paper, the Courier and Enquirer, had declared themselves in fa­
vour of renewing the charter of the Bank some months before the
application for their first loan; and that they stated to the Direc­
tors, on making application for the first loan, that the bank of
New York had cut them off from their accustomed facilities,- as
they believed, in consequence of their espousing the cause of the
Bank of the United States.
It is also proper to add, in this place, that the loan of Si7,975
which was made in March, 1831, was not a loan to Webb and
Noah, or to either of them. The money was borrowed by Silas
E. Burrows, a man of large fortune, upon his own responsibility,
without the knowledge of either Webb or Noah. They both tes­
tify that they had never been apprised that Mr. Burrows had ob­
tained this loan from the Bank, until a very short time previous
to the visit of this Committee to Philadelphia. They had, until
that time, been under the impression that the money was obtained
for them of Mr. Silas E. Burrows, in Connecticut. The following
extract from the testimony of Mr. Biddle will exhibit a clear view
of this transaction.
"These notes were discounted by the exchange committee,
under the resolutions just referred to. They were done at the
request of Mr. Silas E. Burrows, of New York. Mr. Burrows
had, some time before, brought me a particular letter of introduc­
tion from an old friend, Mr. Monroe, the Ex-President. Mr. Bur­
rows had been very liberal to Mr. Monroe in his pecuniary mis­
fortunes; and he had recently received from the President of the
United States particular thanks and commendations for his gene­
rous conduct towards a Russian ship of war. I understood him
to be a very rich merchant, of kind and benevolent disposition,
and constantly engaged in doing acts of liberality. In one of his
visits to Philadelphia, he said he was desirous of befriending Mr.
Noah, and assisting him in the purchase of a share in a newspa­
per, and he asked if the Bank would discount the notes of these
parties, adding that, although, as a merchant, he did not wish to
appear as a borrower, or put his name on a paper not mercantile,
yet he would at any time do so whenever it might be necessary
to secure the Bank.
" The committee being authorised to discount any paper, the
security for which they might approve, agreed to do them. A s
Mr. Burrows was going out of town, I gave him the money out
of my own funds, and the notes were afterwards put in my pos­
session. They, remained with me for a long time, as I had no
occasion to use the funds, nor was it till the close of the year that
my attention was called to them by the-circumstance that, as a
new board of directors and a new committee of exchange would




54

Reports on the

soon be appointed, the same committee which made the loan
should consummate it.
" I had seen, also, in the public prints, many reproaches against
the Bank for lending money to printers and editors, and I was
unwilling that any loan made by the Bank should seem to be a
private loan from one of its officers. Having no use for the mo­
ney, it would have been perfectly convenient to let the loan remain
as it was, but I thought it right that every thing done by the
Batik should always be distinctly known and avowed, and I there­
fore gave the notes to the chairman of the committee, Mr. Thomas
P. Cope, who entered them on the books. On the 2d day of March,
Mr. Burrows called at the Bank and paid the notes. I ought to
add that the loan was made at the request of Mr. Burrows, and
that neither I nor any of the committee had ever seen Mr. Noah
or Mr. Webb, or had any communication with them, direct or
indirect, about the loan. It was made on the credit of Mr. Bur­
rows, who afterwards paid it."
It appears that Messrs. Webb and Noah avowed themselves in
favour of a renewal of the charter of the Bank of the United
States on the 8th of April, 1831* It is difficult, therefore, to con­
ceive what possible influence could have been produced upon their
cause by a loan to Mr. Burrows, of which they had no knowledge.
It is equally difficult to perceive how the loans of August and De­
cember, 1831, could have had any possible agency in producing*
the change which it is alleged took place in the course of these
editors, upwards of four months before.
Under all the circumstances of this case the minority of the
Committee declare, without any reserve, that there is nothing in
these transactions calculated to induce them to doubt the honour
and integrity of the directors, and this, they feel authorized to
say, is the opinion of a majority of the Committee, from the opi­
nion already publicly expressed of one of its members.* They
also deem it to be due to the occasion, and to their own sense of
justice, that they should add, that they do not believe there exists
in the United States a bank direction composed of more upright,
independent, and honest men, than that which granted the loans
in question.
Most, if not all of them are men of independent fortunes, having
no connexion with politics, and being entirely independent of
banks. They are generally men who are engaged in a safe and
successful business, with fortunes, which they have made, not by
adventurous speculations, but by steady industry and moderate
but certain profits. This is, indeed, the general character of the
merchants and capitalists of Philadelphia, a circumstance which
renders the location of the Bank in that city peculiarly fortunate
for the stockholders and for the country.
The next subject brought to the view of the House by the Re­
port of the majority, which it is now deemed necessary to notice,




* Col. R. M. Johnson.

Bank of the United States*

55

is that of the transactions of the Bank with Thomas Biddle
&Co.
Mr. Thomas Biddle, the principal member of the firm, is a dis­
tant relation of the President of the Bank, and it was owing to this
circumstance, probably, that his accounts underwent a most pry­
ing, not to say inquisitorial, examination.
The first thing that struck the attention of a part of the Com­
mittee, as worthy of scrutiny, was the fact, that this house had
obtained from the Bank, in August, llB3I, loans to the amount of
upwards of a million of dollars, on a pledge of stocks,—a sum
which had been gradually reduced, however, to about six hundred
thousand dollars.
On examination it was found that this loan had been made at
the special instance and urgent solicitation of the directors of the
Bank; and that the Bank, and not Thomas Biddle & Co, was the
party accommodated. The Government having then recently
paid off several millions of its stock, which the Bank had owned,
the consequence was, that a large portion of the money capital of
the institution was rendered unproductive, and it became a matter
of great importance to have it invested. In this state of things,
the directors adopted a resolution, authorizing a loan of a large
sum at less than the legal interest, upon the security of any good
stocks. It is to be here remarked, that this was that portion of
the capital of the Bank which had never been invested, and which
it was not deemed expedient to invest, in the routine business of
discounts. The loan to Thomas Biddle & Co., on the pledge of
stocks, was analogous to a loan to the Government. The stocks
could, on any emergency, be sold and converted into cash; so that
this investment had, in some sort, the twofold attribute of money
in the vaults of the Bank, to meet any pressing demands against
it, and money, at the same time, drawing interest.
All the directors, who were examined on the subject, stated
that they considered this transaction more for the benefit and ac­
commodation of the Bank than for Thomas Biddle & Co.; and
the President of the Bank of Pennsylvania stated, on oath, that
the bank over which he was president, would have been very glad
to have made large loans to Thomas Biddle & Co. at the same
time, and upon the same terms—the board of directors of that
bank having authorised such loans at 4£ per cent.
There was one occurrence during the examination of the trans­
actions of Thomas Biddle & Co. with the Bank, which merits
particular notice.
An informer and witness, by the name of Whitney, who had
formerly been a director of the Bank, was produced, who declared
upon oath, that, in May, 1824, two of the cashiers of the Bank, and
one of the discount clerks, had informed him that Thomas Biddle
& Co. had been in the habit of drawing money out of the Bank, on
a deposite of stock in the teller's drawer, toithout paying interest}
arid that the President of the Bank had discounted two notes, one
for Thomas Biddle & Co. and one for Charles Biddle, without the
authority of the directors. This witness stated, that he went with



56

Reports on thb

these officers of the Bank, and examined the teller's drawer and
the discount book, and found the facts which had been stated to
him, verified by the examination. He also stated, to give addi­
tional certainty to his averments, that he made a memorandum at
the time, with the dates of the transactions, which memorandum
he produced to the Committee. Having thus unalterably fixed the
date of the transaction, as if by some fatality, he went on to say,
that he immediately proceeded into the room of Mr. Biddle, the
President, and remonstrated with him against these irregular proceedingsj and that Mr. Biddie promised him that they should not
occur again.
Mr. Biddle was present during the examination of this witness*
On that day, being on oath, he said that he was utterly astonished
at the testimony of the witness, and could only oppose to it his so­
lemn declaration, that there was not one word of truth in it from
the beginning to the end. He added, that. from the relation in
which the witness stood to him, he would have sunk into the
earth, sooner than he would have dared to come to him with such
a remonstrance as he pretended to have made. The officers of the
Bank, from whom the witness alleged that he derived this infor­
mation, were examined, and all of them positively contradicted
him. They testified and demonstrated from the books, that Thomas
Biddle & Co. had never obtained money in any instance without
paying interest^ and that the two notes which Whitney asserted to
have been discounted by the President alone, had been discounted
regularly by the directors.
In the interval between the adjournment of the Committee that
day, and its meeting the next, a member of the board of directors
suggested to Mr. Biddle, that he was about the time of this al­
leged transaction, in the city of Washington. On examining the
journals of the board and the letter book, it was found by entries
and letters, that for several days previous to the alleged interview
between the President and Whitney, and for several days after­
wards, the President was absent on a visit to this city, on the bu*
siness of the Bank, and General Cadwalader was acting as presi­
dent in his place!
.
Thus was this artfully devised story, which was intended to
blast the reputation of a'high-minded and honourable man, through
one of those extraordinary interpositions by which Providence
sometimes confounds the contrivances of the wicked, made to re­
coil upon the head of its inventor, who must forever stand forth as a
blasted monument of the speedy and retributive justice of heaven.
It is important, here, to add, that'the President was.in this city,
not only at the time of the alleged interview, but at the very time
when the notes of Thomas Biddle 8c Co. and Charles Biddle, were
discounted, which Whitney swore were discounted by the Presi­
dent alone.
The minority of the Committee will avail themselves of this
occasion to say, that they have the most conclusive evidence, that
in all the transactions of the Bank with Thomas Biddle & Co. and
Charles Biddle, the President has been not. only free from the



Bank of the United States.

'57

slightest imputation of partiality or favouritism, but that his conduct has been invariably governed by a nice and scrupulous sense
of delicacy and propriety. And this they feel authorized to say, is
the opinion of a majority of the Committee. The following resolution was unanimously adopted by the Committee:
Resolved^ That the charge brought against the President, of
lending money to Thomas Biddle & Co. without interest, and of
discounting notes for that house, and for Charles Biddle, without
the sanction of the directors, are without foundation; and that there
does not exist any ground for charging the President with having
shown, or manifested a disposition to show, any partiality to these
individuals, in their transactions with the Bank.
The Report of the majority, adverting to the withdrawal of specie
from the southern and western branches, and the substitution of
paper in its stead, suggests a doubt whether their operation may
not be highly injurious to the southern and western States. So far
from concurring in this doubt, the minority are of the opinion,
that there are no portions of the Union so much benefitted by the
general operations of the Bank as the south-western and western
States, and that the change produced by the Bank in this system,
and in the rates of domestic exchange, has been particularly beneficial to the whole of the southern and western States. Connected
with the exchange operations of the Bank, the transmission of
specie from New Orleans to the northern Atlantic cities,' is nothing more than a natural operation of trade, carrying the specie
imported at New Orleans to its appropriate markets. This operation is carried on by the Bank instead of being left to individuals,
to the undoubted advantage of the community.
With a view to connect itself more completely with the commercial operations of the country, the Bank has also deemed it
expedient to deal freely in foreign exchange. It is obvious that
this branch of its business is as important to the foreign commerce
of the country, as dealing in domestic exchange is to our internal
commerce.
Having heretofore had large funds in Europe, and having still
extensive credits there, it has been, and still is, the policy of the
Bank to afford to the mercantile community every facility for carrying on foreign commerce. A t the south, where the staples of exportation are produced, it is constantly in the market as a purchaser of bills on Europe, to the great benefit of the planter; and
at the north, where foreign merchandise is imported, it is as constantly in the market as a seller, to the like benefit of the importing merchant. In this way the price of foreign bills is kept uniform and steady, and those injurious fluctuations are prevented,
which would otherwise operate as heavy taxes upon the business
classes of the community for the benefit only of private dealers in
exchange.
The majority of the Committee have selected for commentary
a particular hranch of the foreign exchange business of the B a n k that which is connected with the trade of India and South America. This subject has been already explained in another form, and
H



58

Reports on the

it will be sufficient to remark here, that it has almost entirely arrested the direct exportation of specie from this country to China,
and that it saves to this branch of our trade the whole of the interest upon the entire amount of every commercial adventure, for at
least six months out of twelve. On the subject of the general facilities which the Bank has afforded to the country^ in the operations of foreign commerce, the minority of the Committee will refer the House to the perspicuous exposition furnished by the President, of the general operations of the institution, which is herewith submitted, and marked A.
It will be seen from this document that during the recent pressure upon the commercial community, produced by the excessive
importations of the last two years, the Bank furnished, since September last, " from its own accumulations and credits in Europe,
the means of remittances in its own bills, to the amount of
85,295,746, and parted with its surplus specie to the amount of
five millions, making an aggregate contribution to our commerce
of 810,295,746."
The extent to which these operations of the Bank must have
relieved the country, are too obvious to require comment. Without this temporary relief—and it was only temporary relief that
the community required—the greatest commercial distress would
have probably ensued. The crisis is now nearly passed. The
pressure on the money market has, in a great measure, ceased;,
commerce has had time to correct its own excesses; importations
have been diminished, the unfavourable state of the foreign exchanges no longer exists; specie has ceased to flow from the
country, and has begun to flow into it. Since March last, the
specie in the Bank has increased more than a million of dollars,
and every thing is rapidly assuming a sound and healthy condition.
The majority, in the concluding part of their Report, intimate
the opinion that the Bank, by its imprudent and excessive issues,
has had a considerable agency in producing the overtrading and
excessive importations of the last year.
Whatever show of plausibility there may be in this opinion,
facts demonstrate that it is entirely erroneous. It will be seen •
from the statements herewith exhibited, that the domestic discounts of the Bank had not increased perceptibly, from March,
1829, to March, 1831; but that they maintained an almost uniform
level during the whole of the intervening period. The excessive
importations, however, commenced in March and April, 1831,
and must have had their origin in causes some months anterior.
It is apparent, therefore, that these excessive importations were
not produced by the excessive issues of the Bank, and must have
originated in other causes connected with the state of Europe.
The more correct view of the subject is, to consider the excessive
importations as producing a state of things which rendered it
necessary for the Bank to extend its discounts, with a view to relieve the community from the temporary pressure to which it
was thus exposed.



Hank of the United States.

59

It so happened, that at the very time the country stood most in
need of bank accommodations, the Bank had increased means and
inducements to extend those accommodations. The Government
having paid off, within the last eighteen months, ten millions of
its stock, which was held by the Bank, the directors found that
if they did not increase their discounts considerably, some mil­
lions of their capital must be idle and unproductive. It thus hap­
pened that the wants of the community, the means of the Bank,
and, it may be added, the obligation of the directors to the stock­
holders and to the community, all co-operated to call for that
extension of bank accomodations, which, so far from having pro­
duced over-trading and excessive importations, has been the means
of correcting and mitigating the temporary evils and embarrass­
ments which these irregularities of trade would otherwise have
unavoidably produced.
The minority of the Committee deem it to be their indispensa­
ble duty to notice that part of the Report of the majority, which
institutes a comparison between the resources of the Bank and
the condition of the country in 1819, and at the present time.
They cannot but regard the comparison thus presented by the
Report, as unfair and pantial, and calculated to produce impres­
sions on the public mind as absolutely erroneous as they would
be positively pernicious.
If it had been the design of the majority to produce a scene of
general embarrassment and distress in the commercial commu­
nity, in the absence of any natural causes for such a state of
things, they could not have adopted a more effectual means of ac­
complishing such an object than they have done in this part of
their Report.
Fortunately, however, for the country, the commercial commu­
nity of the United States have too much intelligence to be thrown
into a panic by the loose, disjointed, and garbled statements, the
crude speculations, and the random ponjectures, in which a part
of the community have thought it expedient to indulge. If a
general alarm has not ensued, producing a run upon the banks,
or curtailment of discounts, and a general scene of failure and
distress, particularly among the Government debtors in our prin­
cipal importing cities, it is because the community understand
the subject better than a portion of the Committee, and haveplaced a proper estimate on their statements and speculations.
There are no two periods of our commercial history so utterly
dissimilar as those which have been selected for the comparison
instituted by a part of the Committee. In 1819 the Bank was
engaged in the painful but necessary office of correcting a redun­
dant and depreciated currency, produced by political causes, and
having scarcely any connexion with the state of trade.
At this moment, whatever may be said to the contrary, our cur­
rency is in as sound a state as that of any country in the world?
and this is conclusively proved by the state of our foreign ex­
changes, and the relative value of bank paper and coin in our own
markets. The foreign exchange is an infallible barometer to in


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Reports on the

dicate the soundness or unsoundness of our currency. A reference to the state of the exchange between this country and Great
Britain at this time, will furnish a conclusive reply to the charge
brought against the Bank, of having encouraged over-trading by
excessive issues, and a depreciated currency. In fact, specie is
now flowing into the country,.by the natural course of trade, a
phenomenon which is utterly inconsistent with the alleged depreciation of our currency.
After making a partial and imperfect statement of the relative
resources and responsibility of the Bank in 1819, and at the present time, the Report expresses the*opinion that " at no period in
1819, when the Bank was very near suspending payment, was it
less able to extend relief to a suffering community, as [than?] at
the present moment.
Now, the very complaint urged by a part of the Committee
against the Bank is, that it has been too liberal in its discounts,
or, in other words, that it has granted too* much relief to a suffering community alreadyj and yet it is here set down, as a subject
of lamentation, that the Bank is not able to extend this relief still
further! The country has just been labouring under a considerable, but temporary pressure upon the money market, during which
the fiank, with as much liberality as judgment, has put forth all
its resources to sustain and relieve the commercial community.
The crisis of this pressure has already passed by, and the necessities of the merchant for bank accommodations are gradually
diminishing; and it is precisely at this point that a part of the
Committee, having complained that the Bank went too far in its
accommodations when they were necessary, complain, also, that it
cannot go still further, now that the emergency is passing away.
The actual resources of the Bank will now be stated, with a
view to show its perfect ability to meet all its engagements.
The specie in its vaults on the first of the present month, was
87,890,347, being upwards of a million more than it was in
March last.
There was.due, then, from the State banks, 8726,196. The
domestic bills of exchange held by the Bank on the 1st of May,
amounted to 823,052,972, ten millions of which will be paid in
the course of a month, and none of which have a longer period to
run than ninety days. These sums united make 831,669,515, a
fund, the greater part of which may be considered as available for
any probable emergency of the Bank, as so much specie in its
vaults. These domestic bills of exchange are founded upon the
actual operations of our internal trade, and are in fact drawn in
anticipation of the southern and southwestern crops, which regularly arrive in the northern and eastern cities in time to pay them.
They are uniformly and promptly paid at their maturity, without
any expectation of a renewed accommodation from the Bank, asN
in the case of discounted notes. In addition to the sum already
stated, the Bank has good notes discounted on payment, and other
security, amounting to 847,375,078, and real estate and foreign
bills, amounting to 83,012,825.



Bank of the United States.

61

The whole of the available resources of the Bank will be thus
seen to amount to §82,057,438, at least one half of which could,
on any emergency, be converted into cash, in the course of a few
months. On the other hand, the whole amount of the responsibilities of the Bank, including the circulation, foreign debt, and
public and private deposites, amount to only §43,685,603.
So that, instead of being reduced to the frightful predicament
of having only " an aggregate of §9,640,000 to meet an aggregate
responsibility of §42,643,000," which the author of the Report
might well set down with two notes of admiration, the Bank has
undoubted resources amounting to §82,057,438, to meet a responsibility of §43,685,603.
In the actual state of the country it is visionary in the extreme
to imagine the Bank is in the slightest danger of being reduced
to the necessity of " suspending payment." The whole amount
of its circulation is now only §22,000,000, and this is the only
portion of its responsibility which can be properly taken into the
estimate, in the view now under consideration. The deposites,
except in periods when all commercial confidence is lost, so far
from being properly regarded as a debt for which the Bank
should make provision, as for its circulation, are universally considered by all banks, as a fund upon the faith of which they may
safely issue their paper to an equal amount. Whatever may be
the amount of the deposites, at any given time, it is a fair calculation, founded on actual experience, that it will be equally as great
at any future time.
If this were not the case, the Government deposites, about which
so much has been said, would be of no value to the Bank, but on
the contrary, a very great incumbrance.
Upon the whole, then, the Bank is not only fully able to meet
all its engagements, but is in a state of the highest prosperity.
And it is but bare justice here to remark, that its general operations have been conducted with singular judgment and ability, in
those very particulars which a part of the Committee have selected
as topics of disapprobation and censure.
The minority of the Committee will barely advert to some of
the other topics introduced into the Report.
It is alleged that the Bank has given an undue extension to its
branches, and *by some process of reasoning, difficult to comprehend, it seems to be inferred, that the alleged excess of the circulating medium is owing, in part, to that cause. It is sufficient to
remark, on this point, that the greatest improvement which has
been made in the administration of the Bank, and that which
gives it its true federal character, has been effected by the establishment of branches wherever the commerce of the country required them; and by the system of exchange operations, which
these branches have enabled the Bank to carry into effect.
The whole business of dealing in domestic bills of exchange, so
essential to the internal commerce of the country, has been almost
entirely brought about within the last eight years. In June ? J 819,
the Bank did not own a single dollar of domestic bills; and in De


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Reports oh the

cember, 1824, it owned only to the amount of g2,378,9BO$ whereas
it now owns to the amount of 823,052,972.
The opinion of Mr. Cheves, in 1819, is adverted to in the report, to prove the impolicy of increasing the number of branches;
and the fact is stated, that a large proportion of the losses sustained by the Bank has been owing to the mismanagement of the
branches.
The opinion of Mr. Cheves was founded on the peculiar state
of things which existed at the time. He felt the difficulty of controlling these branches, of which, as he stated," the directors were
frequently governed by individual and local interests and feelings;"
and he came into the administration at a time when immense
losses had been suffered by their maladministration. But it is
very important, to remark—what the Report does not bring to view
—that almost all the disproportionate losses incurred by the
branches were previous to 1819; and that, since the extension of
the branches, of which the Report complains, they have not sustained greater losses, in proportion, than the mother Bank; while
nine-tenths of the commercial facilities afforded to the country,
and nine-tenths of the profits secured for the stockholders, have
resulted from the operations of these branches.
The Report makes reference to the obligation of the Bank to
transfer the funds of the Government, to any point where they may
be wanted for disbursement, and seems to have made the extraordinary discovery, that this operation is no burden at all, but an
actual benefit to the Bank! For the satisfaction of those who
might be sceptical, the words of the Report will be given:
" The largest portion of the revenue, particularly from imports,
as is universally known, is collected in the Atlantic cities north
of the Potomac. These cities being the great marts of supply to
nearly the whole of the United States, and places to which remittances centre from almost every part of the country, creates a demand for funds upon them from nearly every quarter, constantly,
and generally at a premium. Therefore, so far as the Bank is
called upon to transfer funds from those cities to other places, it
becomes a matter ofprofit and not of expense to it; and the greater
the distance, the greater the premium; and the larger the amount they
required to be transferred by the Government, and the greater the distance, the greater the profit and advantage to the Bank''
If these views of the Report be correct, the Bank is certainly an
invaluable institution. It has not only annihilated' time and space,
but it has done something more. It has produced such a state of
the exchanges, that it is much easier for a man in New York to
pay a thousand dollars in St. Louis than to pay it in Wall Street;
and in which, consequently, the New York debtor actually makes
a profit by being required to pay his debt a thousand miles off, instead of paying it at his own door! If this be a correct view of
the subject, it is undoubtedly one of the greatest of the modern
discoveries in finance and commerce.
But the minority are still incredulous. They cannot understand
how it is possible for the Bank to make a profit by transferring



Bank of the United States.

63

funds, when il is expressly stipulated that they shall transfer them
for nothing. Nor can they well conceive how the loss which the
Bank sustains by the operation of transferring funds for the Government, can be less than the difference between the "nothing"
which it receives from the Government, and the profit which it
would derive from the same operation, if performed for individuals.
If the Government collected its revenues in specie at New York,
and had occasion to expend it at St. Louis, it would certainly cost
it something to transport the specie from the one place to the
other. If, in the absence of a federal bank, it collected its revenues in the bills 6f state banks, as it would be obliged to do, the
operation of transferring these funds to distant places would involve a still greater expense. But under the existing system, the
Bank is responsible for the safe custody of the Government funds,
and for placing them wherever they may be required, without any
expense whatever to the Government.
If then, the Bank has n o t " aided the fiscal operations of the Government/' as the Report seems to intimate, a uniform currency
and a revenue safely kept, and universally transferred at the risk
of the Bank and without expense to the Government, affords no aid
to its financial operations.
The Report, adverting to a letter from the President of the
Bank, of the 29th March last, in which he informs the Secretary
of the Treasury, that the collector of New York had requested the
" Bank to authorize an extension of loans in that city, in order
to assist the debtors of the Government/ 5 and that this had been
promptly done, gives a view of the discounts of the office at that
place, calculated to make the impression that no extension of
loans had taken place. This is an error. It proceeds from confounding notes discounted with bills of exchange purchased by the
Bank. It will be seen by the weekly statement of the New York
board, that the amount of notes discounted on the 1st of September, 1831, was 84,103,134, and that on the 21st of March, 1832,
a few days before the date of the President's letter, the amount
was 84,834,917, exhibiting an increase of £731,782, in a little
more than six months.
If the amount of domestic bills falling due at a distance, during
the same period, was larger than the amount purchased by the
Bank—this fact has nothing to do with the extent of the accommodation afforded by the Bank to the merchants of New York.
The true measure of that accommodation is the amount of domestic notes discounted, and not the amount of these notes united
to that of the domestic bills purchased.
That the Bank has relieved the commercial community of New
York, during the recent pressure, is a fact well understood and
practically felt by the merchants there; and il will be difficult to
reason them out of the convictions of their own experience by artificial statements and conjectural inferences. Upon a review of
the whole ground occupied in the examination they have made,
the minority are of the opinion that the affairs of the Bank have



64

Reports on the

been administered by the President and Directors with very great
ability, and with perfect fidelity to all their obligations to the
stockholders, to the government, and to the country. They regard the Bank as an institution indispensable to the preservation
of a sound currency, and to the financial operations of the Government, and should consider the refusal of Congress to renew the
charter as a great national calamity.
They will add, in conclusion, that they are equally decided in
the opinion that Congress is called upon by the most weighty and
urgent considerations to decide this important question during the
present session. The uncertainty which prevails on this subject,
is calculated to exert a very pernicious influence over the industry,
enterprise, and trade of the country. If the charter of the Bank
is not to be renewed^ if the tremendous operation of withdrawing
from the community fifty millions of Bank accommodations, and
twenty-two millions of its circulating medium, must take place,
it is full time that it should be distinctly known, that the shock of
this operation may be mitigated by timely arrangements on the
part of the Bank; and that the community may have time to provide the necessary substitutes. Considering the immense extent
of the operations of this institution, the time which its charter
has yet to run will be scarcely sufficient for winding up its affairs.
T o the Report of the majority is appended a great number of
questions, proposed to the President of the Bank by a member of
the Committee on the general subjects of banking and currency.
As the questions alone throw very little light on these matters,
the answers are herewith submitted for the information of the
House.
GEO. M'DUFFIE,
J. Q. ADAMS,
J, G. W A T M O U G H .




Bank of the United States.

65

MR. ADAMS'S REPORT-

HOUSE OP REPRESENTATIVES.
Monday, May I4th} 1832.

MR. ADAMS, of the Committee appointed on the 15th of March,
1832, to examine and report on the books and proceedings of the
Bank of the United States, submitted the following
REPORT:
The subscriber, one of the members of the Committee appointed
on the 15th of March last to proceed to Philadelphia to inspect
the books, and to examine the proceedings of the President and
Directors of the Bank of the United States, and report thereon—
and particularly to report whether the charter of the Bank has
been violated or not, dissenting from the report agreed upon by
the majority of the Committee, deems it his duty to submit to the
House the considerations upon which his own conduct in the pro­
ceedings of the Committee has been governed, and the conclu­
sion to which they have brought his mind in relation to this
subject.
It will be recollected by the House that the appointment of the
Committee was made upon a resolution offered by the subscriber
as an amendment to a resolution previously offered by the Chair­
man of the Committee. The amended resolution adopted by the
House, was predicated on the principle avowed by the proposer
of the amendment, that the original resolution presented objects
of inquiry, not authorized by the charter of the Bank, nor within*
the legitimate powers of the House—particularly that it looked
to investigations which must necessarily implicate not only the
President and Directors of the Bank and their proceedings, but
the rights, the interests, the fortunes, and the reputation of individuals not responsible for those proceedings, and whom neither
the Committee nor the House had the power to try, or even to ac­
cuse before any other tribunal. In the examination of the books
and proceedings of the Bank, the pecuniary transactions of mul­
titudes of individuals with it, must necessarily be disclosed to £he
Committee, and the proceedings of the President and Directors
of the Bank, in relation thereto, formed just and proper subject
of inquiry—not, however, in the opinion of the subscriber to any,
extent, which would authorize them to criminate any individual
other than the President, Directors, and Officers of the Bank or
its branches—nor them, otherwise than as forming part of their
official proceedings. The subscriber believed that the authority




66

Reports oh the

of the Committee, and of the House itself, did not extend, under
colour of examining into the books and proceedings of the Bank,
to scrutinize, for animadversion or censure, the religious or poli­
tical opinions even of the President and Directors of the Bank—
nor their domestic or family concerns—nor their private lives or
characters—nor their moral or political, or pecuniary standing in
society—still less could he believe the Committee invested with a
power to, embrace in their sphere of investigation, researches
so invidious and inquisitorial over multitudes of individuals hav­
ing no connexion with the Bank other than that of dealing with
them in their appropriate business of discounts, deposites, and
exchange.
In these Views he felt himself the more confirmed, because he
perceived no other course of inquiry that could be pursued, with­
out invading the sanctuary of private life, and committing outrage
upon the most precious of social rights. ^ The transactions of the
Bank with their customers, are in the ordinary course of their
business, highly confidential; an examination into them by
strangers, so far;as,it implicates the. individuals with whom the
Bank has dealings, bears all the exceptionable and bdious proper­
ties of general warrants and domiciliary visits.' The principle of
this protection.to individual rights is recognized in the charter of
the Bank itself, and in its by-laws..; By the fifteenth fundamental
article of the charter, a limited power is given to the officer at
the head.of the Treasury Department to inspect the general ac­
counts and books of the Bank, with an express exception of. the
account of any individual, and in the by-laws of the Bank, there is
a provision that no stockholder shall be permitted to. inspect
any account of any person with the Bank, other than his own.
The same restriction is not indeed applied to the authority given
in the 23d section of the charter to the Committees of either House
of Congress; appointed .to inspect the books, and examine the
proceedings of the corporation,; but that section neither gave nor
could give powers,of judicial authority to be exercised over any
■ i n d i v i d u a l ^ purposes of crimination or of trial. The Commit­
tee are to inspect the books and examine the proceedings of the
corporation, and to report thereon. But they are not authorized
*o examine or report upon the accounts or proceedings of indivi­
duals. The examinations by Committees authorized by the char­
ter, are from the context of the sections, evidently given as preli­
minary, means, for bringing the corporation, in the event of mal­
practice, on their part, real or suspected, before a judicial tribunal
for trial—Whenever a Committee so appointed reports that the
charter has been violated, the final action of Congress in the case
is limited to the discretionary power of directing that a scire facias
should be sued out from the Circuit Court of the United States,
lor the district of Pennsylvania, requiring the corporation to show
cause;why their charter should not be declared forfeited. But so
justly and-so wisely tender was the Congress .which constituted
the corporation to reserve to the President and Directors of the
iJankthe%enjqyment of their civil rights, that the same section
wnicn gives to Congress this control over them, expressly pro


Hank of the United States*

€T

vides that for the trial of the facts at issue between them and the
United States, upon the return of the scire facias, they shall be
entitled to the benefit of a^wry. The corporation therefore can­
not ultimately suffer by deprivation of their rights upon the un­
favourable report of any Committee of Congress, nor even by the
order of Congress itself that a scire facias should be sued out.
The protective shield of the constitution, trial by jury, is extended
over them; the sacred trust of their franchises is expressly placed
under the guardianship of that power conservative of all indivi­
dual rights—the verdict of their peers.
In the present case, the resolution originally offered by the
Chairman of this Committee, was avowedly presented for another
purpose—not with a view that the final action of the House upon
the result of the examination should be the direction that a scire
facias should be sued out to give the corporation the benefit pro­
vided for them by the law itself, of a fair trial by jury, but that by
ransacking all the books and proceedings of the corporation from
its first organization to the present day, some latent fraud, loose­
ness, or irregularity, might be detected in the proceedings of the
President and Directors, present or past of the Company, which
might be elaborated and wrought up into an argument against
the renewal of the charter of the Institution. This was the avowed
purpose of a member claiming the right of being considered as a
perfectly fair, cool, and impartial investigator of those proceed­
ings, and, at the- same time^ that if the-result of them should be
to exonerate from all blame the responsible officers of the Com­
pany, the inquisitor should still be at liberty to vote and speak'
against the renewal of the charter upon the ground of constitu­
tional scruples.
It was only by virtue of the 23d section of the act of incorpora­
tion of the Bank, that the House possessed the power of appoint­
ing a Committee with authority to examine the books and pro*
ceedings of the corporation; and that section distinctly indicates
the purposes for which this power was reserved. It was to fur­
nish the means in the event of the commission of gross abuses on
the part of the President and Directors, to put them upon trial.
The right of trying them is not reserved to the House itself—nor
can it by the House be conferred upon any Committee. It be­
longs exclusively to the Judicial Courts. It is a familiar argu­
ment to many expounders of the Constitution of the United
States, that no power granted to Congress can be exercised for
any other purpose than that for which it was granted. The im­
portance of this principle may be seen in the consideration that
it is the only foundation of the argument against the constitu­
tionality of a protective tariff. It is contended that a grant of
power to levy taxes, duties, and imposts, to pay the debts and
provide for the common defence and general welfare, cannot justly
be construed into a power to levy the same duties, taxes, imposts,
and excises, for the protection of manufactures. If there be any
soundness in this principle, apply it to this reservation of power
in either House of Congress to appoint investigating and examin­
ing Committees on the books and proceedings of the Bank. The



68

Reports on the4

power is reserved for the purpose of enabling either House of
Congress to put the President and Directors upon trial for delin­
quency—upon trial by the judges of the land—upon trial by a
jury of the vicinage. It, is not reserved for the purpose of ena­
bling a Committee of the House to ruin the President and Di­
rectors in fortune or reputation, by a partial, prejudiced, election­
eering reports condemning them as victims of political rancour,
without law or justice—without judge or jury-r-nor is it reserved
even to enable the House to determine the expediency of renew­
ing the charter of the Bank. The power is not reserved for that
purpose; nor, if there be any soundness in the argument against
the constitutionality of the protective tariff, can it be exercised
for that purpose. In this view of the, subject, the House would
not even have possessed the lawful power of appointing the Com­
mittee. The Committee was appointed not for the purpose of
putting the President and Directors of the Bank upon trial; nor
was it intended by the mover of the resolution that .they should
have the benefit of a trial by jury.
It is not the intention of the subscriber to press this course of
reasoning; to which, in its application to the.tariff, he. does not
yield his. assent. -To those who. hold the doctrine that the pur­
pose for which a power is granted forms an; indispensable con­
dition for the lawfulness of its exercise, he leaves the argument to
bear with its proper weight. . But if under* a power to appoint
investigating Committees, to. ascertain by the verdict of a jury
whether the charter has been violated or not, a constructive power
is given to sport with the feelings, and fortunes, and ^reputation
of honest and honourable men, because they happen J o hold the
offices of President and Directors of the Bank of the United
States, there is surely nor authority given in the Bank charter, to
pry into the accounts and pecuniary transactions, and to scrutinize
the fortunes and characters of thousands of individual citizens of
the Union, merely because they have an account in Bank, which,
in the examination of the books and proceedings of the corpora­
tion, must incidentally be disclosed. The subscriber is under a
deep and indelible impression that no such power is given to Con­
gress by the charter of the Bank, nor does he believe that such a
power can be exercised, without a flagrant violation of the prin­
ciples upon which the freedom of this people has been founded.
It was under this impression that he moved the amendment,
which received the sanction of the House, to the resolution origi­
nally offered for the appointment of an investigating Committee.
That amendment was carried by a considerable majority of votes
in the House. The course of investigation pursued by the majo­
rity of the Committee has, however, been not conformable to. the
principles of the resolution adopted by the House, but to those of
the original resolution, which the House did not accept; a con­
sequence which was naturally to be expected, from the circum­
stance that a majority of the Committee was appointed from the
minority of the House—that is, from those who had voted against
the amendment adopted by the House.
The question of the principles upon which the examination



Bank of the United States.

69

was to be conducted, occurred immediately after the arrival of
the Committee at Philadelphia, and it was determined conforma­
bly to the views of a majority of the Committee, representing, so
far as the views of the House had been manifested, a minority of
the House.
There was accordingly no restriction to the latitude of investi­
gation, as it had been proposed in the original motion of the
Chairman of the Committee. No objection was made on the part
of the President and Directors of the Bank, excepting that the
President didrremind the Committee of the confidential nature ,of
the transactions between tfre Bank and its customers, with the as :
surance of his reliance that it would be considered and respected.
All their books, and all the accounts of individuals with the Bank,
called for by any member of the Committee, were exhibited to
them. Had there been a member of the Committee thirsting for
the ruin of a personal enemy, or a political adversary, and who,
by this inquisition into the accounts of all who had dealt with,the
Bank, could have been put in possession of facts, the disclosure of
which might have destroyed his peace, his fortune, or his fame,
the opportunity aiforded him by this course of proceeding, would
have been too inviting to have been resisted. That there was
such a member upon the Committee, the subscriber does not af­
firm. The eagerness with which private accounts were sought for,
and in an especial manner, those of editors of newspapers, mem­
bers of Congress, officers of Government, and all indeed possess­
ing political influence themselves, or likely to suffer in public es­
timation by exposure of their private and pecuniary concerns,
flowed, it is to be presumed, altogether from patriotic principles,
and a stern abhorrence of corruption. The natural and irresisti­
ble tendency of all investigations conducted on such principles,
must be to substitute Dassion in the place of justice, and political
rancour in the place of impartiality. In all times of party excite­
ment, the members of the Legislative Assembly are placed in at­
titudes of keen and ardent opposition to each other. We have
constant experience of the personal animosities into which all de­
bates on questions of deep public interest are continually running* An individual member of this House, who presents him­
self in the attitude of an accuser, not only calls for the investment
in himself of an extraordinary power, but if he prosecute himself,
the accusation claims the exercise of powers which in no general
system for the administration of equal justice can ever be united.
The spirit of the prosecutor, is not the spirit of the judge. Who­
ever voluntarily assumes the former capacity, disqualifies himself
for the unimpeachable performance of the latter.
During the present session of Congress two instances have oc­
curred of inquiries instituted into the conduct of Executive Offi­
cers of this Government—one bearing upon the second Auditor of
the Treasury, and the other upon the Commissioner of the Gene­
ral Land Office. In each of those cases the member instituting the
inquiry, moved its reference to a committee of which he was not
himself a member. There was no law, nor even any rule of the
House which imperatively required this; but the members them


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Reports on the

selves felt the delicacy of their situations, and of their own accord
divested themselves of that invidious combination of character
which unites the prosecutor and the judge. -The prosecution of
the Bank has been the only exception to this course of proceeding. The Chairman of the Committee commenced his career as a
prosecutor, by exhibiting an indictment, so called by himself, of
twenty-two charges against the Bank. The Bank is a Corporation
consisting of a President, Directors, and Company of Stockholders. The bill of indictment, therefore, being ostensibly against the
Bank, seemed to be divested of personal animosity, and this, perhaps, may have induced the Chairman ib 'lose the consciousness of
incongruity in the exercise at once of pfexecuting and of judicial
powers. These observations are deemed indispensably necessary
to elucidate the spirit in which the examination was conducted—
partaking throughout of this unusual union of the prosecuting and
of the judicial character. Among the charges exhibited by the indictment, not ostensibly against any individual, but against the
Bank, was one of subsidizing the press, by special favours and accommodations to editors of newspapers—another for special favours and accommodations to members of Congress. In all this
the Chairman of the Committee appears to have entertained the
opinion that because the charges were in form against the Bank,
they were not at all to be considered as affecting the integrity of
the persons upon whom they might chance to fall.' He frequently
disclaimed all intention of putting upon trial the character of the
President of the Bank, and he appears to have been quite unaware
upon whom his denunciations might eventually be found to descend.
The subscriber believed that there was a great want of precision
in the definitions by the Chairman of the Committee in his original motion, of the crimes which he denounced. Take, for example, the charge of subsidizing the press. If a violation of law be an
essential ingredient in the composition of crime, there was no law
which prohibited the Bank from subsidizing the press^-nor was
there any law which prohibited the President and Directors of the
Bank from affording facilities and accommodations to editors
of newspapers. On the other hand, there is, perhaps, no class of
citizens in the community, who, by the nature of their profession
may more frequently need the aid of bank facilities, or to whom
they may be more signally useful, and in proportion to the extensiveness of a printing establishment, will, of course, be the amount
of the accommodations which they may require. W h y then should
the Bank be laid under an interdict for subsidizing the press? Why
should the President and Directors of the Bank be chargeable
with gross and palpable corruption,because large accommodations
and facilities, in the regular course of banking operations, have
been afforded to editors of newspapers? There appears to the subscriber to be included in the principle of this charge, a very dangerous assault upon the freedom of the press. A principle prescriptive in its nature, and the application of which, if once assumed by the authority of the Legislature, could be successful only
in reducing the press to servile subserviency to whatever party
might command & momentary majority in the two Houses of Con


Bank of the United States.

71

gress. The editors of newspapers are not responsible to Congress
for the political principles which they may advocate or oppose.
Nor can the Legislature take cognizance either of their consist­
ency or of their political purity. They are responsible for^ their
opinions'to their subscribers and to the public opinion of their
country. To hold them to this responsibility, their rivals, and
competitors, and political adversaries, are sufficiently watchful and
sufficiently armed. The opinions and interests of majorities in
Congress will never lack for presses to sustain themselves. But if
in addition to that common interest of the majority and of their
favourite presses in the competition for public favour, they are to
assume a censorial power to punish or to stigmatize the editors
who support the opinions or interests of the minority, in what
does this differ from an imprimatur in the hands of the governing
power—an engine for the suppression of all freedom of the press,
as well as for the oppression of every editor, whom it may suit the
purposes of the predominant party to discredit or destroy.
Entertaining these opinions, and. believing that the principle on
which they were founded had been sanctioned by the House itself,
in the resolution, as adopted, for the appointment of the Commit­
tee, the subscriber did earnestly, though ineffectually, resist and op­
pose the call by the Committee for the accounts with the Bank of
editors of newspapers. To all persons of that highly respectable and
important profession, their accounts in Bank were, as well, as ;to
other members of the community, their private and domestic con­
cerns, which no power to examine the books and proceedings of
the Bank could authorize a committee of this House to expose to
public gaze. To single out the editors of newspapers for this
invidious exposure was, in the opinion of the subscriber, to dis­
franchise them of their rights as citizens and as men, and was to
assail them in their reputation, their interest, and their credit.
Not for the purpose of bringing them to trial by jury, where they
might defend themselves, their fortunes, and their characters, in
presence of their peers, but to hold them up as accomplices in
corruption with the Bank. To accomplish two objects by one ope­
ration—to defame the Bank by colourable charges of corruption,
which it would never have an opportunity to repel by a fair trial,
according to the laws of the land—and to defame any editor of a
newspaper having an account in Bank, whose politics might be
obnoxious to a majority of the Committee, instigated by the ri­
valry and hatred of antagonist editors of other newspapers, in the
same city or neighbourhood.
The majority of the Committee did, the subscriber doubts not,
with pure intentions, otherwise decide, and the accounts of editors
of newspapers with the Bank were called for. In reviewing this
decision, and the proceedings of the Committee subsequent upon
it, he deems it his duty to declare, that none of his objections to it
have, in his judgment, been removed. He views it as a precedent
of portentous evilj as an unjustifiable encroachment of arbitrary
authority upon the freedom of the pressj as an odious persecu­
tion of individual citizens, to prostrate the influence of personal
or political adversaries by the hand of power.



n

.Reports on the

Of this class of accounts thus produced, those of one newspaper
establishment only underwent the investigation of the Committee.
Those of James Watson Webb and Mordecai M. Noah, editors of
the New York Courier and Enquirer, one of the most distinguished and extensively circulated journals,of the Union. Mr. Webb
was examined upon oath by the Committee, at his own request.
Mr. Noah transmitted to the Committee his own affidavit, made
before a magistrate of the city of New York. Mr. Silas E. Burrows, a private citizen, not an editor of a newspaper, but connected with the responsibilities of Messrs. Webb and Noah in the
Bank, was subpoenaed to appear before the Committee, but as the
subscriber believes, with a just estimate of his own rights, did not
give his attendance. No proposal was made in the Committee to
issue a compulsory process against him. As editors of a public
journal, and in that character as guardians and protectors of the
freedom of the press, the subscriber is of opinion that neither
Mr. Webb nor Mr. Noah ought to have appeared in person or by
affidavit before the Committee. If in their transactions with the
Bank they had committed any violation of law, they could not be
examined as witnesses to criminate themselves: if they had committed no'violation of law, the inquisitorial powers of the Committee did not extend to them. Their transactions with the Bank,
unforbidden by the law of the land, were no more within the lawful scrutiny of the Committee, than the dwelling-house, the fireside, or the_bedchamber of any one of them. These, even in the
darkness of heathen antiquity, were the altars of the household
gods. To touch them with the, hand of power is profanation. Assailed, however, in reputation, as they already were, and had been,
on account of these transactions, by their political enemies and
the enemies of the Bank, from false and exaggerated rumours concerning-them, which had crept into public notice, it was certainly
not unnatural, and perhaps not improper in them, to state in full
candour and sincerity what their transactions with the Bank had
been.
From these it appeared that in August, 1831, James Watson
Webb obtained at the Bank of the United States a loan of twenty
thousand dollars upon his own note endorsed by Mordecai M.
Noah. The application for this loan, made in person by Mr. Webb,
was sustained by a letter from Mr. Noah, and sundry statements
relating to the pecuniary condition and credit of the New York
Courier and Enquirer. The letter from Mr. Noah was enclosed to
the President of the Bank by Walter Bowne, Mayor of the city of
New York, who had been one of the earliest directors of the Bank,
with a recommendation of the application itself, to be considered as
a business transaction. It was so considered by the board of directors, who acceded to the loan desired. But the editors of the Courier and Enquirer had long been, as they still are, ardent and active political partisans, and their newspaper has been and continues deeply immersed in that portion of political affairs immediately connected with elections. The peculiar character sustained
by the paper and its editors, at the time when this application for
a loan was made, was that of devoted friends to the present admi-




Bank of the United States.

73

lustration, and particularly to the eminent citizen at its head.
This character they and their paper still retain. They have, of
course, numerous adversaries of the opposing party, and numerous
rivals in their own. Some time before this application for a loan
from the Bank of the United States, there had been between them
and some of their competitors for party and public favour, a news­
paper war with regard to the conduct of their journal, and the
opinions of its editors with reference to the Bank of the United
States. In all this the interests' of rival printing offices, and rival
banks, may without breach of charity, be presumed to have been
very willing auxiliaries to editorial virtue and the unsullied purity
of the public press. The politics of the paper had been, or were
thought to have been, successively hostile and friendly to the Bank
of the United States. In this state of things, it is stated by Messrs.
Webb and Noah, that two or three of the banks in the city of
New York denied them the accommodation of loans which they
had previously yielded, and refused to discount for them paper of
unquestionable credit. They affirm that these city banks, in pun­
ishment for their friendliness to the Bank of the United States,
withdrew from them facilities previously extended to them, and
required the repayment of a large accommodation loan for which
they'were indebted. To discredit these imputations, re-affirmed by
Messrs. Webb and Noah in their testimony upon oath before the
Committee, a majority of the Committee deemed themselves au­
thorized to send a commission and request the Presidents of the
two city banks in New York to make affidavits before a magis­
trate, giving notice thereof to Messrs. Webb and Noah, and to
transmit those affidavits1 to the Chairman of the Committee at
Washington. The depositions of Isaac Wright, President of the
City Bank, and of Albert Gallatin, President of the National Bank,
at New York, were accordingly taken and transmitted to the
Chairman of the Committee. They did not in the slightest degree
impair the testimony of either Mr. Webb or Mr. Noah. On the
contrary, they confirmed, so far as they could confirm, that part of
their evidence which it had been the purpose, in requiring the af­
fidavits from the two New York banks, to invalidate. They proved
that at both of those banks, in July, 1831, notes offered for discount
by James Watson Webb, with an endorser of unquestionable
credit, were rejected. The reasons of those rejections, both the
Presidents of the Banks^ with great propriety, declined to give.
They state that at one of the banks, no note is discounted, if ob­
jected to by any one member of the board of directors. At the
other bank, any note is rejected to which two of the directors con­
cur in objecting, and that no director is required to assign any rea­
son for his objecting to any discount. In these answers of the two
Presidents, the subscriber cannot forbear to remark a demonstra­
tion of the impropriety of the call by the Committee upon those
gentlemen for their testimony in this case. The object of the call
was to impeach the truth of testimony given by the two witnesses,
Webb and Noah, upon oath before the Committee—witnesses
whose veracity stood as fair before the Committee as that of any
K



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Reports on the

other citizen of the community and who, in the opinion of the sub­
scriber, could consider the call itself on the Presidents of the New
York banks to contradict them, in no other light than that of a
gratuitous and wanton insult upon themselves. Of the fact that
notes offered by Webb had been rejected at the New York banks,
no doubt was or could be entertained. The^reasons of the rejec­
tion were avowedly inferences of Mr. Webb and Mr. Noah, which
might even have been incorrectly drawn by them, without im­
peachment of their veracity. The Committee could not, in the
opinion of the subscriber, possess the right of calling upon the Pre­
sidents of the New York banks for the reasons of their refusing
discounts to James Watson Webb, or to any other man. The call
itself was a violation of individual right, and the refusal to answer
it, though in terms entirely respectful and dispassionate, carries
with itself a censure upon usurped authority, not undeserved.
To this call upon the Presidents of the New York banks, the
subscriber had'another objection. The Chairman of the Commit­
tee had, by an act of Congress, authority to administer oaths to
witnesses, and the Committee had received from the House autho­
rity to send for persons and papers. But the subscriber did not
consider the Committee as possessing the power of delegating to
other men authority to take depositions from persons, whom the
Committee were authorized to call before themselves, and to hear
in person. No member even of the Committee, other than the
Chairman, was authorized to administer an oath. To administer
oaths to witnesses was in the competency of the Chairman spe­
cially authorized by statute. To send for the persons and papers
existing, was in the competency of the Committee, authorized by
the House. But to direct to be taken, and to receive as testimony,
depositions of persons whom the Committee might have summon­
ed to appear and testify before themselves, was, as the subscriber
believed, to transcend their lawful authority, and to set a prece­
dent which would lead to most pernicious abuses. This encroach­
ment of power could not be justified by the request of the Chair­
man of the Committee to the deponents, that James Watson Webb
and Mordecai M. Noah, the persons whose testimony it was sup­
posed these depositions would discredit, should have notice of the
time and place, when and where they should be taken. To give
notice of a deposition to be taken to impeach the testimony of an­
other, is the duty of a party to a cause, and not of the deponent
himself. The witness whose testimony is to be discredited cannot
be bound to receive a notification from the witness called to dis­
credit him. The volunteering of a committee to send forth man­
dates in search of contradictory evidence, to fasten imputations of
perjury upon witnesses of veracity, before them unimpeached, has,
in the view of the subscriber, an aspect too unjust and odious in
itself, to be legitimated by any notice given to the witnesses thus
outraged in their feelings and their rights. The whole procedure
was in the opinion of the subscriber, unlawful and unjust. He re­
corded against it his vote upon the journal of the Committee?
and he deems it his duty to repeat his protestation against it in
this Reporju



Bank of the United States.

75

But whatever may have been the true state of the relations be­
tween Messrs. Webb and Noah, and the local banks of New York>
it was with these statements and allegations that Mr. Webb, in
August, 1831, applied to the President and Board of Directors of
the Bank of the United States, for an accommodation loan of
twenty thousand dollars. The President and Directors considered
it as it had been viewed in the recommendation of the Mayor of
New York—as a business transaction. Yet, it did not escape their
attention that a political colouring might, and probably would, be
given to it by the inveterate enemies of the Bank. They were
aware that if the loan was granted, it would be liable to the charge
of a favour dispensed, to purchase the aid and support of the
newspaper, in behalf of the Bank; and if it should be denied, it
.would be charged as proof of hostility to the administration of
the General Government and its Chief. Sure that they could in no
event escape the censure of enemies predisposed to blame, they
granted the loan, to which, afterwards, in December, an addition
of fifteen thousand dollars was made. Notes of Mr. Webb, en­
dorsed by Mr. Noah, and payable to Silas E. Burrows, had been
previously discounted for Mr. Burrows, but without the knowledge
of Webb or Noah, as they testify, to the amount of seventeen
thousand dollars. Of these sums so much has been paid, that there
now remains due from Messrs. Webb and Noah, to the Bank, a
sum of about eighteen thousand dollars, payable in semi-annual
instalments, and from the statements laid before the Committee,
believed by the subscriber to be as safe as any other debt upon
the books of the Bank.
The transactions of James Watson Webb and of Mordecai M.
Noah, with the Bank of the United States, formed, in the opinion
of the subscriber, no proper subject of examination by the Com­
mittee, or of investigation to the House, further than to ascertain,
whether, in those transactions, there had been any violation of the
law of the land. Within the pale of the law, if this be a Govern­
ment of laws and not of men, Webb and Noah were not amenable
for their conduct, or their opinions, to the House of Representa­
tives of the United States^ or to any Committee by them appointed.
In behalf of the United States, as large stockholders in the Bank,
a general superintendence over the proceedings of the President
and Directors of the Bank, is, no doubt, vested in the Congress.
But the subscriber does not believe that the President, or any Di­
rectors of the Bank, is, or can be accountable, to a committee of
either House of Congress, or to the House itself, for the motives or
reasons upon which he acceded or objected to any. one discount.
The practice of all well regulated banks is, and must be, that de­
clared by the testimony of the Presidents of the two banks in New
York to be theirs. The reasons or motives for accepting or rejecting
a note offered for discount, are not subjects of inquiry at the board
itself. The reasons of each director are in his own breast. His
own colleagues at the board have no right to inquire into them.
They are in his own discretion.
It is indeed within the bounds of possibility that this discretion
should be abused to the injury and damage of the stockholders.



76

Beports on the

But in the transactions of the Bank with Webb and Noah, no loss
or damage has occurred to the stockholders, nor is any to be ap­
prehended. In the original charges presented to the House by
the Chairman of the Committee, there was one of subsidizing the
press; and these_accommodations to Messrs. Webb and Noah
were understood to be among the most prominent exemplifications
of that nameless crime which an investigation of the affairs of the
Bank would disclose to the world. It would happily be a fruit­
less search to find in the criminal code of this Union, or of any
one of its constituent States, such a crime as subsidizing the press.
When the charge was first brought forward by the Chairman of
the Committee, in the House, it was impossible to ascertain of
what overt or covert acts this offence, thus novel and undefined,
consistedj nor, except in the proceedings of a majority of the
Committee can the subscriber yet comprehend what are the ele­
ments of this new and still undefined offence. The majority of the
Committee, immediately after entering upon the discharge of their
duties at Philadelphia, commenced a search into all the accounts
with the Bank of editors of newspapers. Jn the returns to this
demand it was found that Webb and Noah, far from being soli­
tary culprits in this unheard of transgression, were in the very re­
spectable company of the editors of the National Intelligencer, of
the National Gazette, of the United States Telegraph, of the Globe,
and of the Richmond Enquirer. This information was scarcely
in the possession of the Committee before it found its way into
the public journals, and thus all the editors of those well known
prints stand, by an exhibition of their private accounts, charged
before the public as conductors of presses subsidized by the Bank,
The Committee did in no other instance than that of the New
York Courier and Enquirer, go into an investigation of the rea­
sons or motives for which the discounts or the loans had been
granted. Political motives were unequivocally and explicitly dis­
claimed by the President and Directors, who assented to the loans;
and while in this, as in all other banks, the practice is uniform of
never assigning the reasons either for discounts or rejection, they
are not and cannot be made subjects of testimony. Every mem­
ber of the board has his own reasons, which may not be known
to any other member. One member, therefore, is hot responsible
for the reasons of any other member, nor is the board responsible
for the reasons of any one of its members. ^ Motives can then be
made a subject of scrutiny only upon suspicions—political suspi­
cions, sharpened by the collisions of personal pecuniary interests.
The.subscriber believes all inquiry into the motives of Bank
facilities or accommodations to he not only pregnant with injus­
tice to individuals, but utterly beneath the dignity of the Legisla­
ture. Their rights of inquiry are commensurate with the law.
For actions within the bounds of law, to scrutinize motives, is tan­
tamount to an inquisition of religious opinions—a species of moral
and intellectual torture, fitted more to the age of Tiberius Csesar
at Rome, than to the liberal spirit of the present time. The dis­
count of notes, at a bank, whether to a large or a small amount,
can in no case be considered as donations or gratuities. They are



Bank of the United States*

77

contracts of mutual equivalents for the benefit of both parties, in
which the bank is no more the benefactor of the customer than
the customer of the bank.
As the period of time is approximating at which the pre­
sent charter x>f the Bank of the United States is to expire, the
question, with regard to the renewal of its charter, has become
an object of great and increasing public interest. The duties of
the President and Directors of the Bank to protect and promote
the interests of the stockholders naturally make it an object of in­
tense and earnest desire to them. Independent of all personal and
individual interests of their own, these obligations to the company
require of them to use all fair and lawful means to obtain a renewal
of the charter. Were it even true that under these circumstances
they should indulge a disposition to the utmost bounds of liberality
consistent with justice and discretion to one or more eminent edi­
tors of public journals, but extending only to discounts of their
papers at the regular remunerating interest at the rate of six per
cent, interest by the year, is this to be construed into corruption
or converted into a bribe? - In every State in the Union there is a
large capital of its citizens invested in stocks of multiplied State
banks. Most of these are rivals in business with the Bank of the
United States, and they have all boards of directors, and.most of
them are colleagued with newspapers, all eager for the destruction
of the Bank of the United States. An institution doubly obnoxious
to the system of safety fund banks in the State of N e w York;
inasmuch as their discounts, at the rate of six per cent, a year,
,curtail one percent, of the dividends which otherwise, by the laws
of New York they would be enabled to levy upon the community.
It is, therefore, not surprising, that in the City, and even in the
State of New York, that animosity against the Bank of the United
States of almost all the local banks should have been so great as
even to spread its influence into the Legislature of the State. The
same operation is active under feebler excitements in many other
States. These are not bribes. But the concert of opposition from
State banks in almost every quarter of the Union organized with
harmonious energy, in concert with public journals perhaps as nu­
merous, and constantly operating upon the public mind unfavoura­
bly by means of the press, made it indispensably necessary for
those to whom the welfare of the Corporation was entrusted, to
defend themselves occasionally, and from time to time, in the same
manner*
If, while hundreds and thousands of the conductors of State
banks, impelled by private and personal interests, are filling the
popular public journals under their influence by means of dis­
counts and facilities granted or withdrawn, with every charge that
suspicion can conceive, or imagination can invent, to invoke po­
pular resentment and indignation against the Bank of the United
States, to prevent the renewal of their charter, the President and
Directors of the Bank of the United States are forbidden all use
of the public press, for the defence and vindication of their own
institution, they stand indeed .in fearful inequality of condition
with their adversaries before the tribunal of public opinion. The



78

Reports on the

local banks of New York, for example, grant, with lavish hand,
bank accommodations and facilities to the editor of a daily news­
paper, who fills his columns with all the common places of vituperation against the Bank of the United States. They deny all
facility and accommodation to another editor, who admits into his
papers essays or communications favourable to that Bank. Does
the editorial votary of State banks, and seven per cent, interest,
slacken in his fervour? his discounts at the State banks are cur­
tailed. Does he falter in his zeal? a pressure for money comes
upon the State banks, and his notes are called in. Does he dare
to admit into his paper a communication favourable to the mam­
moth bank? he loses all credit with his old bankers. Does he
presume to hint, in an editorial article, that, after all, a bank bound
to discount at the rate of six per cent, interest may be of some
advantage to borrowers in a community where the established
legal rate of interest is seven? he becomes at once, in the estima­
tion of the local bank directors, insolvent, and blasted in credit;
and, if he offers for discount a note of a hundred dollars, with
the best endorser in the city, it is rejected by the silent vote of
one or two directors, because the editor's newspaper did formerly
oppose, and now ceases to oppose, the re-chartering of the Bank
of the United States. And then if the editor, cramped and crip­
pled in his business by the screw thus put upon his press, to save
himself and his establishment from ruin, applies to the President
and Directors of the Bank of the United States for an accommo­
dation loan? No—they too must regard him as insolvent, and
blasted in credit—they too must wkhhojd all banking accommo­
dation and facility from him, though recommended by the Chief
Magistrate of the city of New York himself, or they will be guilty
of the atrocious offence of subsidizing the press.
This statement of facts is here hypothetically put—it is not in­
tended to charge the presidents and directors of the New York
city banks with any such motives for granting or for withholding
their discounts. The subscriber not only approves, but was grati­
fied, at their refusal to assign their reasons for declining to dis­
count the notes offered by Mr. Webb. Had the question been
asked them why they had discounted the notes of the same person
before, their answer must have been the same. The acceptance
of an offered note is by unanimous and tacit assent, without as­
signment of reasons, and for which the reasons of one director
are not necessarily the reasons of another. They are not proper
subjects of inquiry, so long as the discount is in violation of no
law. And this principle is equally applicable to the President
and Directors of the Bank of the United States. They are ame­
nable to authority only for conformity to the law. To the stock­
holders they are further accountable for the prudent and discreet
employment of their funds. But, while the result of that manage­
ment has been, for a series of years, to yield to the stockholders
half-yearly dividends of three and a half per cent, upon their in­
vestments, while the stock of the Bank is at twenty-five per cent,
advance upon its original cost in the market; and whilst the
heaviest of &1 the complaints against the Bank is the extensiveJ



Bank of the United States.

79

ness and universality of its credit, the subscriber believes that
the stockholders, and the most vigilant guardians of their inte­
rest, may wait until an actual loss shall have happened upon any
one loan or discount, before they shall be justified in imputing
either thriftless improvidence or sordid corruption to the Presi­
dent and Directors of the Bank for having granted it.
The Constitution of the United States denies to Congress itself
the power of passing any bill of attainder, ex post facto law, or
law abridging the freedom of the press. But here is a new fangled
offence created ex post facto, under the denomination of subsidiz­
ing the press to operate as a bill of attainder upon the Bank, and
as a disfranchisement to every editor of a public journal who may
happen to be obnoxious to a political party in power. The fact
constituting this most extraordinary crime, is the mere existence
of a loan, or discount of the proscribed editor at the Bank: a
transaction entirely warranted by law, but in the consummation
of which a Committee of one branch of the Legislature first as­
sumes the right of scrutinizing, and then of passing sentence of
condemnation upon the motives of both parties to the contract.
As there is no law constituting the offence, the degree of its ma­
lignity has no rule of proportion but that of the temper by which
it is prosecuted—it will be aggravated by every stimulant of pri­
vate pique, of clashing interest, of political prejudice, or of mor­
bid suspicion, which can be enlisted in the prosecution. A Com­
mittee man, being a large stockholder in a State bank, to be deeply
benefitted by the extinguishment of the Bank of the United States^
another, linked in connexion with a newspaper establishment in
competition with the editor to be attainted^ a profound political
economost, wedded to a system of coin, currency, and credit, pro­
pitious to one banking interest, and unfavourable to another^ a
mere partizan, hanging upon the skirts of a political candidate,
and following the camp to sharean the spoils 01 the victory, might
all club their inventive faculties to swell this imaginary trespass into
a felony—and seldom would there lack as an ingredient in the com­
position, the corrosive sublimate of a malicious temper, with in­
stinctive hatred of all honour and integrity, prone always to infer
actual fraud and villany from the mere possibility of its existence,
and even to insinuate corruption, without daring openly to affirm
it. These are consequences which must and would follow from
the sanction by Congress, or either of its Houses, of the princi­
ple that the accounts of editors of newspapers, as a separate class
of men, with the Bank, are to be scrutinized by a committee of
Congress as tests of the political opinions or doctrines of their
editorial columns—or indications of the candidate for the Presi­
dency to whose banners they adhere—or to defeat the re-charter­
ing of the Bank by deducing from the same naked fact of existing
loans, large or small, the dishonourable conclusion, that the motives
of the President and Directors of the Bank, for granting these
loans, were to purchase the support of the borrowers, by bribery
and corruption.
But let it, for argument sake, be admitted, that the accommo­
dation of a Joan to the editor of a public newspaper, by the Pre


80

Jteports on the

sident and Directors of the Bank of the United States is, on their
part, an act of corruption of which the Congress of the United
States, without doing injustice, and without derogation from the
dignity of their duties, can take cognizance\ the subscriber be­
lieves that it cannot justly have any bearing whatever upon the
•question whether the Bank of the United States shall or shall not
be rechartered.
Admit that, in a country where the freedom of the press is
among the first elements of the liberty of the people, a Committee
of one House of Congress has a right to constitute, ex post facto,
a crime under the name of subsidizing the press, of that, which,
in the eye of the law of the land, is, and always has been, innocent--*
admit that they have power to search into the hearts of the Presi­
dent and Directors of the Bank, for dishonest motives to lawful
actions—admit that they have a right to interrogate them for rea­
sons which no director of any bank is ever bound to give—admit,
that after the president and directors have submitted to these in­
sulting interrogatories, and assigned the reasons by which they
were actuated, the Committee should still feel themselves justified
in groping, day after day, for circumstantial evidence to falsify the
frank and explicit declarations of men without a slur upon their
fame—that piles of folio volumes, of Bank accounts, should be
rummaged over, nights and days, for a variety in the colour of ink,
in entries made by different clerks, with different ink-stands, for
errors in the spelling of a name, for interlineations and erasures
in a waste-book or a tickler, and all to substitute trifles light as
air, of suspicion, in the place of fact, and to impute fraud, forgery^
and perjury, where they cannot be proved—admit that the unsul­
lied characters of men long known among their fellow citizens,
for lives without fear and without reproach, niay thus be breathed
and whispered into disgrace—what has all this to do with the
question whether the Bank of the United States shall receive a
new charter or not? If the President and any number of the Di­
rectors have been guilty of malversation in their offices, the reme­
dy for their offence is removal from office. They may be further
responsible to the stockholders in their persons and property.
The directors, appointed by the President and Senate, are, at ail
times, removeable by the President of the United States alone.
The President of the Bank, is, every year, liable to removal, both
as president, and as director, by failure of re-election as a director,
by the stockholders, or as president by the directors. No other
director can be re-elected more than three successive years in
four. If the board of directors have been guilty of neglect or
violation of their duties, the punishment of their delinquency is,
to appoint another set of directors in their place; not to punish
the innocent and injured stockholders by refusal to renew the
charter. By the rotation prescribed in the charter itself, not one
of the present board of directors can remain in office at the time
of the expiration of the charter, nor can the present president of
the board ever be president of the Bank under the renewed char­
ter, but by the suffrages of the stockholders, according to their
respective privileges of voting. If, therefore, any misconduct had



Bank of the United States*

81

been discoverable in the official conduct of the President of the
Bank, the proper punishment for it would have been his removal
from office; and the same may be said of any other of the direc­
tors. But for their faults, to punish the stockholders who had no
communion or privity with them—for their errors, to deprive the
great mass of the community of the benefits and advantages se­
cured to them, and enjoyed by them, through the instrumentality
of this great institution" over this whole Union, would proceed from
a theory of crimes and punishments unrivalled by the political in­
quisition of Venice, or the religious inquisition of Spain; A theo­
ry by which the crime would be committed by one set of persons,
and the punishment inflicted upon another—a theory by which the
stockholders would be mulcted in their property, because the di­
rectors had been faithless to their trust, and the people bereft of
public blessings because their confidence in the integrity of their
agents had been betrayed.
At the close of the long commentary of the majority Report,
upon the transactions between the editors of the New York Cou­
rier and Enquirer, it is observed, that among the documents ex­
hibited to the Committee, and reported to the House, are four other
cases of loans at long credit, made by the Bank. The report
neither mentions the names of the individuals, parties to these con­
tracts, nor the correspondence and testimony relating to them,
which were laid before the Committee. The subscriber, approving
the discretion of the majority in this particular, will not deviate
from the example set in the Report. He will barely take occasion
from it to remark, that the names of those individuals, and of their
accounts and transactions with the Bank cannot be brought before
the public by the Committee without gross injustice. Those trans­
actions, he is bound to believe, were perfectly justifiable in all the par­
ties to the contract; but he was under a full conviction that neither
he nor the Committee had the right to inquire into them, whether
for justification or for censure. The objection of the subscriber
is to all inquisition into motives, for actions unforbidden by law.
But in each of these four cases—in those of the accounts of every
editor of a newspaper, of every member of Congress, and of every
person connected with the Executive Government—if the fact of
the individual account is exhibited to the public, it is, upon the
plainest principle of justice, the right of the individual to have
alike exhibited to the public, all the circumstances connected with
the transactions which he may deem essential to his justification.
But what is that justification? Is it justification limited by the
boundaries of the law? No: that is not sufficient. The account
in Bank must be coupled with the conduct and opinions of the
individual, to point the finger at him and at the Bankas for dis­
honourable conduct and corrupt purposes. So it was in the case
of James Watson Webb and of Mordeica M. Noah. Why was it
not so in other cases? Why are the names of other printers, and
the amount and the aspect of their debts to the Bank, as principals
or as endorsers withheld? Why are other editors, having large ac­
commodations in the Bank, the names of their endorsers, the cha-




82

Reports on the

racter of their settlements, the present state of their engagements,
and a contemporaneous exposition of their editorial friendship or
hostility to the Bank, not set forth in all the developments of the
Bank debts and editorial speculations of James Watson Webb and
Mordecai M- Noah? Why are not the day of an editorial discount
and the day of an editorial puff of panegyric, or blast of abuse upon
the Bank brought in juxta-position to each other, so that suspicion may yoke them together in the relation of cause and effect in
any other case than theirs? The subscriber believed that there
were other accounts of editors and printers with the Bank, exhi­
bited to the Committee, which, compared with editorial lucubra­
tions in the newspapers of the same editors, at the same times
with the discounts, or at the present day, would suggest reflec­
tions quite as edifying to the spirit of reform, as the debts and
dissertations of James Watson Webb and Mordecai M. Noah.
The majority Report has buried them in oblivion. There let them
remain. The subscriber will not disturb their repose. But he
asks of the candour of the community and of the self-respect of the
House, representing the feelings of the people, that no more le­
gislative investigations may be instituted at.the expense of the
nation, under colour of an examination into the books and proceed­
ings of the Bank of the United States; into the political purity
and undeviating consistency of the conductors of the public press.
It is, with great satisfaction that the subscriber declares his
entire and undoubting conviction, as the result of all the examina­
tion which, under the resolution of the House, and the unbound­
ed range of inquiry, sanctioned by the majority of the Committee,
he was able to give the books and proceedings of the Bank, that
no misconduct whatever is imputable to the President, or to any
of the present Directors of the Bank. That, in the management
of the affairs of this immense institution, now for a series of near­
ly ten years, occasional errors of judgment, and possibly of inad­
vertence have been committed, is doubtless true—in the vast mul­
titude of relations of the Bank with the property of the whole
community, the board of directors of the parent Bank, or of some
of its branches, have sometimes mistaken the law, and sometimes
have suffered by misplaced confidence. A spirit of predetermined
hostility, uncontrolled by a liberal sense of justice, prying for
flaws, and hunting for exceptions, may gratify itself, and swell
with exultation at its own sagacity, in discovering an error or ar­
guing a misconstruction of powers. In the conduct of the present
President and Directors of the Bank of the United States, no in­
tentional wrong and no important or voluntary error has been
committed. He deems this declaration due from him to those
worthy and respectable citizens, in the face of this House, and of
this nation, willing as he is to abide upon it the deliberate judg­
ment of after times. He deems it the more imperiously required
of him as a signal vindication of the honour and integrity of in­
jured and persecuted.men. It has been impossible for him to ob­
serve, without deep concern, the spirit and temper with which
this investigation has been prosecuted*, particularly with regard
to the President of the Bank* As one example of which, he would



Bank of the United States.

83

call the attention of the House to the testimony of Reuben M.
Whitney—to the manner in which it was produced, and to the
catastrophe in which it terminated.
On the 2d of April, the Chairman of the Committee asked of
them, authority to issue a subpoena to summon the attendance
before them of, Thomas Wilson, heretofore, in the year 1824, a
cashier of the Bank, to testify as a witness. The subscriber in­
quired what it was expected Mr. Wilson would prove, which ques­
tion the Chairman declined to answer. The subscriber objected
therefore to the issuing of the subpoena, and the motion for it was
For that day withdrawn.
The next day it was renewed, with a statement in writing by
the Chairman of several allegations, as the subscriber conceived,
amounting to charges against the President of the Bank, of em­
bezzlement of the moneys of the institution. The subscriber in­
quired from whom these charges had been received, which the
Chairman declined to state. The subscriber moved that a copy
of the charges should be furnished to the President of the Bank.
But the paper was withdrawn by the Chairman and a resolution
was substituted in its place, which was entered upon the Journal
,of the Committee. The objection of the subscriber to this course
of proceeding was, at his request, entered upon the Journal, and
at the request of the Chairman an entry was also made of the
grounds upon which he deemed his own course in this respect
justifiable. The objection of the subscriber was, not that the
Chairman had thought proper to listen privately to secret in­
formers, but that he required the action of the Committee for a
call of testimony deeply affecting the moral character of the Pre­
sident of the Bank, and yet withheld from the Committee the
name of, his informant. The subpoena to Mr. Thomas Wilson
was, nevertheless, issued. The charges against the President of
the Bank were, that Thomas Biddle, a distant relative of his, and
one of the most eminent brokers of Philadelphia, had been in the
habit, by permission of the President, of taking money out of the
first teller's drawer, leaving in its place certificates■ of stock? of
keeping the money an indefinite number of days, and then re­
placing the money, and taking back his certificate of stock, without payment of interest upon the moneys of which he had had the
use. The quintessence of the charge was, the use by Mr. Thomas
Biddle of the moneys of the Bank without interest. ^ And there
was another charge, that the President had also been in the^ habit
of making large discounts upon notes of Thomas Biddle without
consulting the directors, between the discount days, and that the
notes were entered as of the previous discount day.
Mr. Wilson's testimony completely disproved, so far as his
knowledge went, both these charges. He had never known a single
instance in which Mr. Thomas Biddle, or any other person, had
ever been permitted by the President of the Bank to use the mo­
neys of the Bank, without payment of interest. He had never
known a discount of a note of Thomas Biddle by order of the
President of the Bank, without consulting the board of directors
or the committee duly authorized to discount. Mr. Wilson had



84

Reports on the

been removed in a manner as inoffensive to his feelings as possi­
ble, from his office of cashier of the parent Bank in 1824, by
being first transferred to the branch at New Orleans, from which
he was also afterwards removed. Previous to his removal from
the Bank at Philadelphia, the personal intercourse between the
President of the Bank and him had not been altogether harmo­
nious. He had hinted to Mr. Reuben M. Whitney, a director
then secretly unfriendly to the President, and to Mr. Paul Beck,
a director particularly friendly to himself, that he thought the
President had too much influence over the board of directors,
and had spoken with disapprobation of the fact that Mr. Thomas
Biddle had occasionally received discounts upon transferred
stocks, with checks, which, at the end of an indefinite number of
days, were- taken up and the cash returned, with regular payment
of interest, as upon discounted notes. The checks being entered
in the books under the head of bills receivable. Several cases of
this kind had occurred in the months of May and June, 1824. Mr.
Wilson*s testimony was very clear and explicit to the integrity of
the President of the Bank, and it was totally contradictory to the
statements which the Chairman had framed into charges from the
private information which he had received, and the name of the
informer of which he had declined giving to the Committee. But
Mr. Wilson had named Mr- Paul Beck and Mr. Reuben M. Whit­
ney, two of the directors of the Bank in 1824, and to whom he
had incidentally communicated his slight discontents at the period
immediately before his removal.
Mr. Beck and Mr. Whitney were summoned to appear and tes­
tify. .The character and respectability of Mr. Beck are so uni­
versally known at Philadelphia, that all remark upon them would
be superfluous. He had been a director of the Bank in the years
1824, '25, and '26, and again in the years 1828, '29, and '30, and of
course, not only at the time alluded to by Mr. Wilson, but for five
of the years which have elapsed since then, and till within less than
two years past. Mr. Beck remembered the communications made
to him by Mr. Wilson, shortly before his removal, and had thought
them to procjeed from irritation.
He had seen no cause to doubt the correctness of the official
conduct of the President, and has retained his perfect confidence
in it unimpaired to the present day.
The testimony of Mr. Whitney was of a different character.
This person had been a director of the Bank in the years 1822-23
and 24, and a very active member of the board. He was a native
American^but from the year 1808 to 1816, had been a resident in
Montreal, in Canada*—during the war, by permission of the Bri­
tish Government, on his taking an oath to obey the laws of the
country, which he did not consider as an oath of allegiance—but
he had not asked or received permission to remain in Canada from
his own Government. About a year after the expiration of his
service as a director of the Bank, he failed in business. Of his
present standing in the community, no evidence was taken by the
Committee.
The story that Mr. Whitney told on his first examination was,



Bank of the United States.

85

that some time in 1824, Mr. Wilson and Mr. Andrews, then
cashiers of the Bank, had mentioned to him certain transactions inthe Bank, in which T. and J. G. Biddle were concerned, which
they were not willing should exist without some member of the
board being informed of them. Upon his inquiring what they
were, they replied that T. & J. G. Biddle had been in the habit of
coming to the Bank and getting money, and leaving certificates of
stock, which represented it, in the firs^ teller's drawer, without
paying interest, and without being entered on the books. That
they had also stated that the Messrs. Biddies had had notes dis­
counted for them by the President, which were entered on the
books of the preceding discount day; that upon Mr. Whitney's ask­
ing them what sums there were of the kind in existence at that
time, they went with him to the first teller's drawer, and found
one sum of 45,000 dollars, dated 25th May, and one for 24,000,
dated 26th May; that they then went to the discount clerk's desk,
and found one note at 15 days dated 13th May, for 20,000 dollars,
of T. Biddle's, and one note of Charles Biddle's, dated 21st May,
at sixteen days, for 838,3195 that the two former sums represent­
ed cash, and the two latter were notes which the two cashiers
stated to him had been discounted by order of the President. Of
all this, Mr. Whitney declared, a memorandum at the time had
been taken by him. Such a memorandum he produced, and 'left
with the Committee on a small slip of paper, worn out and torn,
and it is among the papers reported by the Committee; and as it
formed the main stay of Mr. Whitney's first testimony, a copy of
the whole of it is here subjoined:
"May
«
May
"

25,45,000.
26,24,000.
13, 15 days g20,000 collateral.
21, C.'Biddle, 38,319, 16 days 5—8 June.*'

Of the two first notes, Mr. Whitney declared, in answer to a lead­
ing question from the Chairman, that no entry had been made
upon the books; that he took his note of them from a memorandum
in the teller's drawer, and that on making the discovery, he directed the officers of the Bank, one or both the cashiers, to enter this
money upon the books; that it was done—that he did not see it
done, but subsequently saw on the books>the entry of "bills re­
ceivable," which he knew was the entry made by his order.
He further stated, that, immediately after making this discove­
ry, and giving this order, he had gone into the President's room,,
where he found him alone; that he told him what he had disco­
vered and done, and requested that no such transaction should be
repeated while he was a director of the institution. That the
President did not deny the facts as he had stated them—that he
coloured up very much and promised that no such thing should
happen again.
This testimony appeared to be in all respects so extraordinary,
and so deeply to affect the moral character of the President of the
Bank, in which the subscriber had been long accustomed to re­
pose the most unbounded confidence, that he deemed it proper to .



86

Reports on the

trace its introduction, so far as possible, to its origin. As the ques­
tion of the Chairman of the Committee which drew forth this testi­
mony, indicated that he had previously been made acquainted with
it in detail, and as he had, on first stating his expectation to prove
these charges, declined naming the witness by whom he expected
to prove them, the subscriber resorted, by interrogation of the
witness, to ascertain that which the Chairman had declined com­
municating to the Committee. He inquired of Mr. Whitney
whether he had had previous communication on the subject with
any member of the Committee? What had been his motive for
giving the testimony? Whether it had been voluntary or solicited?
To these questions he answered that he had made previous com­
munications to the Chairman at his apartment, in the presence of
another member of the Committees that he had no particular, but
general motives for giving the testimony; that he did not recol­
lect whether it had been voluntary or asked of him; but upon
being pressed by a further question, he answered that Judge Clay­
ton had been recommended to him by a letter from Mr. Benton.
This disclosure was then confirmed by the Chairman.
The subscriber requested that his objections to the admission of
this evidence, while anonymous, should be entered on the journals
of the Committee, and an explanatory entry was also made, at the
request of the Chairman.
Mr. Whitney appealed with great confidence to his memoran­
dum, and to the books of the Bank corresponding with it, to con­
firm his story; but there was nothing in the memorandum to show
that it had not been taken from the books of the Bank. There
was internal evidence in the memorandum that it could not have
been taken before the 26 th of May; and there was evidence on the
books of the Bank that it was probably taken from them on the
27th of May—that was the only day on which one of the books of
the Bank corresponded with the memorandum of Mr. Whitney. *
But Mr. Whitney testified that no entries had been made of the
certificates of stock in the teller's drawer, of the two sums of
45,000 and 24,000 dollars, minuted on his memorandum, on the
books, until after he had ordered the entries to be made; while
the books of the Bank proved that entries of both those sums had
been regularly made on those respective days, the 25th and 26th
of May; Mr. Whitney's own testimony showed that he had seen
the books after the entries were made, and there was nothing ex­
cept his own declaration, to show that he had not taken his me­
morandum from them.
Mr. Andrews and Mr, Wilson, the two Cashiers from whom.
Mr. Whitney alleged that he had received the first information of
this embezzlement of the moneys of the Bank, denied, in the most
explicit and unqualified terms that any such transaction had ever
taken place—denied not only that they had eVer given to Mr.
Whitney such information as he had aflirmed to have received
from them, but the existence, at any time, of any facts which
would have justified them in giving such informationMr. Burtis, the first teller, and Mr. Patterson, the discount
clerk, at whose drawers Mr. Whitney's narrative represented



Bank of the United States.

S7

him as having made his discoveries, and given his orders for
making the entries, with equally earnest asseveration, denied that
any such transaction had ever taken place, so far as they were
concernedThe President of the Bank, confronted with Whitney, declared,
upon oath, that there was not one word of truth in his statement
of his. interview with him. And Mr. Whitney was left with his
ragged memorandum, and his oath, falsified by the concurring
oaths of the five individuals who, with certainty of knowledge,
could contradict him.
Nor was this all. Mr. Whitney's statement was confined, by
the purport of his memorandum, and the context of the books of
the Bank, to a date of time of no wider range than the 26th or
27th of May, 1824. The President of the Bank, on a subsequent
day, proved, by the correspondence of the Bank, that from the
22d to the last day of that month, he was not at Philadelphia, but
on a visit to the City of Washington, on the business of the Bank.
For these discrepancies from the testimony of Mr. Whitney, as
upon his examination he termed them, he did not attempt to ac­
count. He withdrew, however, the statement that he had ordered
the entries of the two sums of 45,000 and 24,000 dollars to be
made upon the books, and placed the affirmance in an alternative
position to meet the evidence as it appeared in fact upon the booksHe now said he had ordered the entries to be made, OR had found
them already made, and confirmed them. But he never attempt­
ed to show to the Committte whence or how he, as a single di­
rector, had derived the authority of ordering the keepers of the re­
spective books to make any entry upon the books whatever^ an
authority which all the keepers of the books denied to belong to a
director.
The question was put to Mr. Whitney, whether, upon his
making his discoveries, he had considered himself as having fully
discharged his own duty, as a director, by a mere private expos­
tulation with the President, without making known the transaction
to the board of directors at all: to which he answered that he
had not considered the subject in that point of view.
. Mr. Whitney, to sustain his character, produced evidence that
he hdd been very extensively engaged in business^ had paid large
sums for duties on imported articles to the Government of the
United States^ that, while a director of the Bank, he had been
a very active and industrious member of the board, and that he
had been employed by the board in confidential trusts, which he
had faithfully executed. As a last resort to sustain his charge of
embezzlement against the President of the Bank, although he ad­
mitted he had never mentioned it to the board of directors, he
insisted that he had, soon after it happened, spoken freely of it to
others, and particularly to Mr. Wilson Hunt, who, he requested,
might be called, and who accordingly was called, as a witness, be­
fore the Committee*
Had there remained a fragment of doubt upon the mind of the
subscriber with regard to the character of the testimony of Mr.
Whitney before the examination of Mr. Hunt, it would have va



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Reports on the

lushed upon hearing what he testified. It was, that Mr. Whitney,
some years since, at the time when he was a director of the Bank,
had confidentially shown him a memorandum of some loans on
stocks, which he said had been made to Mr. Thomas Biddle, by
the President without the knowledge of the directors, Mr. Hunt
thought that Mr. Whitney had further averred that these loans had
not been entered on the books of the Bank, but he did not recol­
lect that he had told him that he had ordered them to be entered
on the books, and he was very sure he never had told him that
the loans were without payment of interest. Mr. Hunt had been
impressed with the idea, derived from Mr. Whitney's communi­
cations to him, that he was not friendly to the President of the
Bank* and he said he had thought them serious enough. -But Mr.
Hunt manifested astonishment at the very question, whether Whit­
ney had told him that the loans were made without payment of interesL He not only, denied that fact, but with a very natural asse­
veration, that if it 'had been so stated to him it was impossible
he should have forgotten it.
The subscriber, in charity to the infirmities of human nature, •
would willingly believe that the testimony of Mr. Whitney, upon
his first examination, was the result of self-delusions, produced
by long cherished and pampered suspicions of trivial error, till
imagination, supplying the place of memory, had swoln them into
imputations of embezzlement and fraud. Mr. Whitney had been
stimulated to bear testimony against the Bank from abroad. The
-.more aggravated the charges which he could bring to bear on
public opinion against the President of the Bank, the fairer would
be the prospect of success in defeating the renewal of the charter,
and the more acceptable to the spirit of party would be the ser­
vice he might render by the testimony he should give. The de­
faced and tattered memorandum, taken in years long past from the
books, would give a sort of mysterious pre-emption right of cre­
dibility to any colourable detail of circumstantial narrative to be
connected with it. The instinct of calumny is inventive of details,
precisely because details make their way most easily to the credit
of the hearer, and it has long been remarked by keen observers of
human action, that he who accustoms himself to make a truant of
his memory is often times the first to credit his own lie. Whether
it was so with Mr. Whitney, the subscriber cannot undertake to
say with certainty* but certain it is, that an affirmation most ma­
terial, and most confidently made, in the first examination of Mr.
Whitney, that the notes which he had discovered in the teller's
drawer had not been entered on the books when he discovered
them, and that they were so entered by his direction, was retracted
by himself after it had been blasted by the production of the entries
upon the face of the books themselves. Yet the retractation itself
was not frank and candid. It was by assuming an alternative,
which, while it abandoned all pretence of sustaining the fact, was
yet unwilling.to abandon the offensive imputation. When the im­
possibility of his pretended interview with the President, of re
buke on the part of Whitney, and of tacit confession and blush­
ing promise of future amendment on the part of Mr. Biddle, was



Bank of the United States.

89

demonstrated by the President's absence from Philadelphia at the
time, Mr. Whitney was not prepared with any substituted inven­
tion of details to supply its place. He admitted that there was a
discrepancy between this demonstration and his previous asseverance, but he neither attempted to reconcile them, nor to fortify
his own statement by explanation or commutation of its terms.
His ^dishonoured memorandum found no endorsement for the ho­
nour of the drawer.
Other charges of partiality by the President of the Bank, in be­
half of his distant relatives, Thos. Biddle 8c Co. had also been scat­
tered abroad upon no better foundation than the fact that T. Biddle
& Co. are, and have for years, been among the brokers of the first
eminence and most extensive business at Philadelphia, or in the
Union. That their transactions of business have been, and are every
year, to the amount of many millions. That their deposites in Bank
have been to similar amount, and that they have occasionally been
responsible to the Bank for more than a million of dollars at once*
Brokers of this description are, to all essential purposes, bankers
themselves, as a bank, in the plenitude of its power and opera­
tions, is but a broker upon a large scale. Among the transactions
of Messrs. Thomas Bididle & Co.-with the Bank, there was a deposite made by them to a considerable amount, Upon which, by
agreement, an allowance was once for a short time made to them
for interest. It appeared upon explanation, that the money thus
deposited was in the possession of Thomas Biddle & Co. as agents
of a certain foreign government, and that the pressure on the
money market was very great. That the use of the money for
the time during which the interest was allowed, would have been
of more value to them than that interest, and the Bank having ur­
gent occasion for the use of the money, the interest upon it for a
few weeks was allowed, as a consideration for its being left in
Bank for employment theret instead of being withdrawn for the
use of the depositors. It was substantially a loan for a time, the
principal profit of which was on the side of the Bank, and in
which the allowance of interest was not equivalent to the profit
which Thomas Biddle 8c Co. would have realized from the same
money by withdrawing it. As in the cases of moneys paid out to
them from the teller's drawerj upon equivalent deposites of stocks,
transferred, it was done for transactions in which the Biddies were
purchasing bills for the Bank, acting, not for themselves, but as
agents for the Bank. In such cases, the cash was wanted to pay
for the bills purchased. The brokers not having the cash on hand,
received it from the Bank itself, leaving United States' stocks of
equal value in its place, for a few days, until the brokers, agents
for the Bank, restored the cash, took back their certificates of
stock, and paid interest for the cash they had received, for every
day during which it had been withdrawn..
This complicated character of the pecuniary operations between
the house of Thomas Biddle & Co. as brokers, and the Bank, must
also be remembered in considering the very large amount of their
notes discounted at the Bank. They might appear on the books
M



90

Heports on the

of the Bank indebted to it for the amount of a million, when their
real debt might not amount to a thousand dollars—the money for
which they appeared indebted being only the sums requisite to
pay for the bills purchased for the Bank itself*
In reviewing the whole investigation by the Committee of the
transactions between the Bank of the United States and the bro­
kers, there is one consideration which most forcibly struck the
mind of the subscriber, and which he thinks pre-eminently-worthy
of the consideration of Congress and of the nation. The charge of
favouritism to certain brokers, of connivance with theni, to specu­
late and prey upon the public interests for purposes of usury and
extortion, formed a very prominent item in the original resolu­
tions of the Chairman of the Committee upon which this investi­
gation was instituted. It was one of those charges, which, in .its
essential nature, imported not simple inadvertence, indiscretion,
error of judgment, or mismanagement, in the President and Di­
rectors of the Bank, but the sordid peculations of a swindler. It
was impossible that those charges should be true, if the President
of the Bank of the United States was a man of common honesty.
There was no sparing of commentary upon the scanty coincidence
of facts which the proposer of the resolution was willing to con­
sider as giving sufficient colour to the charge to entitle it to the
honour of an inquiry. That there had been, and still were, large
dealings between the brokers and the Bank, was sufficiently noto­
rious. That the Bank and the brokers had competitors, rivals, and
enemies, whose rancour was sharpened by all the stimulants of
avarice and ambition, was not less apparent. These passions never
fail to have watchful observers in their train. Whispers, it now
appears, had been in circulation even from the year 1824, ripening
for a term of seven years, into rumours of combined and concerted
frauds and embezzlement pf the funds of the Bank, to the private
purposes of the President of the Bank, and the principal brokers,
of Philadelphia. What was their foundation ? Extensive dealings
between the Bank and the brokers—of course very large discounts
to the brokers. Interest to the amount of a few hundred dollars
once or twice allowed for the use of money by the Bank to the
brokers. Cash taken out of the Bank by the brokers for a few days
upon deposite of stock left in its place. Enormous loans to the
brokers, sometimes even at a rate of interest less than six per
cent, a year. Superadded to all which the name of the President
of the Bank was Biddle. The name of the supposed accomplice
broker was Biddle, and they were descended from one great
grandfather. To the suspicions of awakened jealousy, here were
abundant elements for the most nauseous compound of fraud and
corruption. Secret communications are accordingly made to the
proposer of the resolution for inquiry, and with a predisposition
of hostility to the Bank, a plausible denunciation of guilt and dis­
honour on the part of the President of the Bank, assumes the for­
midable aspect of a public accusation, and invokes the sanction of
a legislative investigation. Had the reflection once occurred, that
to all these great operations between the brokers and the Bank,
the Government itself was a party, though unseen, the mystery



Bank of the United States.

91

would havfe been explained, without needing a report to the inju­
rious suspicion, that a man honoured annually by a series of reelections to a station of high trust and confidence, was reducing
himself to the level of a common counterfeiter of coins. The sub­
scriber believes, that suspicion, though a necessary auxiliary to the
faithful discharge of a public trust, should itself be trusted with
great reserve. A man conscious himself of integrity of purpose,
should not readily admit into his mind the belief that others are
reckless and unprincipled. Above all, does he believe that a man
of honest and candid mind, who has been induced by false Repre­
sentations to admit and to countenance imputations upon, the ho­
nour of another, owes him, when disabused by the evidence of un­
questionable testimony, the signal reparation of a candid acknow­
ledgment of error. He never for a single instant believed that
those dishonourable imputations upon the President of the Bank
were founded in truths but when he found them embodied in the
positive declarations of a witness upon oath, and fortified by a bold
exhibition of a contemporaneous memorandum, and a confident
appeal to the books of the Bank, he scarcely dared to indulge the
expectation that this desperate lunge against a citizen of unsullied
honour could have met so immediate and so total a discomfiture.
The exploration of the accounts of members of Congress and
officers of the Government with the Bank, came, in the opinion of
the subscriber, under the same category as those of editors of
newspapers* The resolutions of the House of Representatives au­
thorized the examination by the Committee of the books, only as
evidences of the proceedings of the corporation*
The questions for the Committee were: Had they violated the
charter ? Had they violated any law of the land ? To these inqui­
ries they were limited^ and upon these alone could they with pro­
priety report. ,
As an exemplification of the odious nature of further inquisi­
tions, the subscriber will only mention'the case of the members of
Congress, who, during the present session, have received the com­
pensation for their public service from the branch bank at Wash­
ington, in advance of the passage of the general appropriation act.
This is one of the favours to menfbers of Congress, equivalent to
a loan without interest to each member, of the amount of money
which he thus receives from the time of his receiving it until the
appropriation act shall have become a law. Its aggregate amount
from the commencement of the session to this day, in payments to
members of Congress, and the executive officers, falls little short
of four hundred thousand dollars. The amount of interest that
would have accrued to the Bank* had interest been, paid by each
individual member, would have exceeded three thousand dollars.
The subscriber himself *is not without doubts of the propriety of
this indulgence, and confidently avers that nothing which the in­
vestigation of the Committee has discovered in the proceedings of
the President and Directors of the Bank is of a more questionable
character. The member, who receives his pay in advance of the
appropriation, does not indeed receive it in advance of the ser­
vice which entitles him to it. But where is the law authorizing



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Reports on the

the Bank to make the payment. The member who receives the
money is only accessary to the payment by the Bank, and there is
many a member of this House, who, in voting for this investiga­
tion, little imagined that his own name would be returned among
the members of Congress, receivers of special favours from the
Bank. Many a member, who, perhaps, has received the favour
without knowing it, yet is obnoxious in principle to the charge
in the original resolution offered by the Chairman of the Commit­
tee; quite as obnoxious to the imputation of impure motives in the
Bank?as the Bank can be made by all their transactions with editors
of newspapers orprinters, James Watson Webb and MordecaiM*
Noah included,
One great and insurmountable objection to the right and justice
of entering into a scrutiny of motives for proceedings not forbidden
by any law, was, that the Committee could exercise no censorial
power of that nature, over the President, Directors, and officers of
the Bank, or, at all events, over individuals having dealings with
that institution, which those individuals had not an equal right to
exercise over the Committee and every one of its members in re­
turn. What motive, for example, could impel a member of the
Committee to call in exercise all the power of Congress to suppress the publication of essays or speculations favourable to the
Bank in newspapers ? Would not the editor of a newspaper thus
inculpated have the same right to inquire into the motives of the
committee-man ? If, peradventure, he should have been in the habit
of making free use of the press to assail and discredit the Bank,
would not this struggle to deprive the Bank of self-defence through
the medium of the press, be attributed to the desire of having the
monopoly of that powerful engine to himself? Would it not argue
a consciousness of weakness in the appeals to public opinion against
the Bank, if, to sustain the charges against it, there should be an
attempt to suppress all the means of self-defence? The freedom
of the press, in the language of party spirit, means the unlicensed
use^ of that instrument for itself to assail, and a total interdiction
of its use to the adversary for defence. And singular, indeed,
would be the,section of a "charter to a bank which would leave it
open to every shaft of slander, and deprive it of all possible means
of repelling the assault.
Among the useless, and worse than useless inquisitions into
which the majority of the Committee-thought themselves justified
in descending, were imputations of political misconduct in certain
officers of the brancji bank at Norfolk, in Virginia. Articles of
complaint as grievous and perhaps as numerous as those of the
Chairman of this Committee against the President and Directors
at Philadelphia, had been laid before that board against the Presi­
dent and Cashier at Norfolk, by a person who had been one of the
directors of that branch. A long aud patient investigation of those
charges had been made by the board at Philadelphia, and one of
their cashiers had been sent to make a thorough examination of
all the facts of the case upon the spot itself* The charges had
been found totally destitute of foundation, and there was among
the archives of the Bank a voluminous correspondence, which was



Bank of the United States.

93

all submitted to the examination of the Committee. To give the
House a faint idea of the extent of this inquiry, it may be sufficient
to. say that the whole controversy respecting- the accounts of a
late Navy Agent at Norfolk, and the pamphleteering and newspa­
per war between that officer and one of the Auditors of the Trea­
sury, were among the simplest of its elements. After plunging for
a series of days into these mysteries, almost deep enough for every
member of the Committee to take his side upon two or three by­
gone contested elections at Norfolk; after plodding over manu­
script volumes of acrimonious bitterness from the most pertina­
cious of complainants; after examining the long protracted cor­
respondence both of that complainant and of the inculpated offi­
cers of the Norfolk branch, with the board at Philadelphia,*and
the cashier who had made the investigation at Norfolk; after giving
the complainant himself the trouble of repairing to Philadelphia
to sustain his charges, and try over again criminations and recri­
minations, which a judicial tribunal, after summoning half the
inhabitants of the borough of Norfolk, and subjecting them to an
endless list of interrogatories and cross-examinations, would
scarcely have been competent to solve—after the consumption of
several days in these inquiries, the last result of which, must, un­
der any possible termination of their investigation, have left them
precisely where they began, the majority of the Committee con­
cluded to desist from what the subscriber believed tl\e Committee
ought never to have undertaken, and what the Chairman reports
" they have been compelled to abandon for want of time."
The complaints made against the President of the Bank at Ports?
mouth, New Hampshire, in the summer of 1829, and the corres­
pondence between the board at Philadelphia, and the late Secre­
taries of the Treasury and of War^ form a portion of the docu­
ments relating to the books and proceedings of the Bank, called for
by the Committee, and communicated to them. They are not no­
ticed in the Report of the Chairman, but, in the opinion of the
subscriber, are more deserving of the attention of Congress, and
of the nation, than any other part of the papers commented upon
in the Report. An effort, very thinly veiled, on the part of two of
the executive departments of the General Government to exercise
a control, political and pecuniary, over the proceedings of tlje
Bank and its branches, a control highly exceptionable in principle,
and even contrary to law, appears to him to be fully disclosed in
those papers. He will not permit himself to inquire into the mo­
tives of the* agents in those transactions. It is sufficient for the
protection of the public interest that the projected encroachments
of power were disconcerted and laid aside.
Among the objects of investigation authorized by the majority
of the Committee, transcending, in the opinion of the subscriber,
the powers delegated to them by the resolution of the House, and
therefore unwarranted and improper, were six sets of interroga­
tories, amounting in all to one hundred and sixty-one questions,
addressed by one member of the Committee to the President of
the Bank, never submitted to the Committee for their considera­
tion, but drawn up, a large portion of .them, after the Committee



94

Reports on the

had closed their examinations at Philadelphia, and after the subscri­
ber had returned to Washington, and resumed his seat in the House.
They reminded him of certain popular works of instruction for
children, in which universal or particular histories, or abstruse and
profound sciences are taught by question and answer. The sub­
scriber has found many of them, upon perusal, passing his-powers
of comprehension, but they appear to comprise a compendium of
political economy,and the skeleton of a profound dissertation upon
coins, currency,paper credit, circulation, and banking. The subscri­
ber cannot withhold his admiration from the comprehensive views
and profound knowledge of the subject discovered in those inquiries,
and believes that satisfactory answers to them might form a very
useful second, though somewhat larger volume, to the Legislative
and Documentary History of the Bank of the United States, com-,
piled by the indefatigable research and industry of the Clerk of
the House of Representatives, and his associate. But a large por­
tion of the questions might, with more propriety, be addressed in
a circular to the presidents of all the banks in the four quarters of
the globe, than to the President of the Bank of the United States.
And it may be doubted whether of many ot the inquiries, a con­
vention of all the bankers in the world would not be reduced to
the necessity of leaving them as they found them—to be solved
only by the ingenuity or sagacity of their author. The subscriber
objected to tjiem as they were presented in clusters^ not but that
some of the questions might be within the compass of the powers
and duties of the Committee, but that they were buried in such a
mass of heterogeneous matter, that it would have occupied the
Committee to the last moment of their happily limited time, to
extract the pertinent matter from its incasement. The subscriber
believed it quite unjustifiable; under the authority of the Commit­
tee, to make of this inquiry a general disputation upon banking.
Upon the mass of documents and tabular statements collected
by the Committee, and reported to the House, the subscriber has
so imperfect a knowledge that he can form no distinctive opinion.
He has never had access to the greater part of them. They were
called for by resolutions submitted by the Chairman and one or two
other members of the Committee, without disclosing the objects
\$hich it was expected they would elucidate. Most of the time,
while the Committee were at Philadelphia, was consumed in the
compilation of them by the officers of the Bank. When collected,
they remained in the possession of the Chairman of the Committee
to enable him to prepare his Report, and the subscriber has not
even seen a considerable portion of them. He will confine himself,
therefore, to those which have been noticed in the Report of the
Chairman and majority of the Committee.
1. The charge of usury, as having been taken some ten years
since by the branch bank; at Lexington, as set forth in the. case of
the Corporation against Owens, and others, reported in the second
volume of Peters' Reports of Cases argued and adjudged in the
Supreme Court of the United States^ was one of those upon which
the Chairman of the Committee had largely expatiated in his
speeches, at the time when he brought forward his resolution of



Bank of the United States.

95

investigation. No information varying the state of the facts as
they were then explained, was obtained by the Committee. It was
then sufficiently shown, that in all the transactions of this case
there had been neither usury, nor any thing resembling usury, on
the part of the Bank. That it was a case in which the Bank had
not done, but had suffered, grievous wrong. A transaction in which
the subscriber has no hesitation in saying, that if the parties had
been on both sides individuals, the plea upon which the defend­
ants extricated themselves from the engagements which they had
contracted, would have been in no wise creditable to them.
The Bank had discounted a promissory note of Owens for five
thousand dollars, upon which the other defendants were joint sign­
ers with him.
For this note Owens received the sum of five thousand dollars in
notes of the Bank of Kentucky, promising to pay the same sum in
specie in three years from the date of the note. At that time, the
notes of the Bank of Kentucky were depreciated, and purchasable
in market, at a discount of 54 per cent. Owens received them at
their nominal value, and promised payment for them in specie
three years after date. The notes had been received by the Lexing­
ton branch at their nominal value, and partly for Government deposites. To them they were equivalent to specie. Within six months
after the transaction, they recovered their nominal value. Had the
Lexington branch retained them, they would have been repaid at
their lull value, with lawful interest, till the time of payment.
They never received one dollar of usurious interest upon them~never one dollar more than was actually paid to the holder of them
by the bank of Kentucky, from which they had issued. The mo­
ney was equivalent to specie to Owens himself at the time when
he received it, and he paid with it debts of his own at their nomi­
nal value.
But the branch at Lexington, in the case before the court, was
as many a suitor besides has been, made the victim of a special
plea and demurrer. The plea set up by the defendants to escape
the payment of an honest debt, set forth, not that the notes of
the Kentucky bank were of less value than specie, to the branch
at Lexington, the loaner; not that they were of less value than
specie to Owens, the borrower and receiver; not that at the time
when the note was made payable, they were of less value than
specie even in the open market, but, that at the time ivhen the note
ofOivens was discounted, the notes of the Kentucky Bank were GENE­
RALLY DEPRECIATED—so that 100 dollars thereof nominally were
of the CURRENT VALUE of only 54 dollars. To this plea of general
depreciation, and current value, there was, perhaps incautiously,
what the lawyers call a demurrer on the part of the Bank; which
demurrer, according to the practice of judicial courts, precludes
the party from the benefit of any other facts than those specially
set forth in the plea. Special pleading has long been known
among the practitioners of the law, as the science of spreading
snares for the unwary; and so odious has it become from the fre­
quency with which.it is thereby made to operate injustice, that
in many States of this Union, legislative acts have abolished it



96

Reports on the

altogether by providing that in. all cases whatever, a defendant
shall be at liberty to take the general issue, and give all special
matter in evidence under it. In this case, however, the general
issue did not suit the purposes of the defendants. They could
not aver that they had not made the promise to pay the money
for which they were sued by the Bank. They could not deny that
the Kentucky bank notes had been to the borrower and to the
lenders equivalent to so much silver. They could not deny that
long before the note became payable, the Kentucky bank notes
had recovered their full value. Owens himself had not the face
to join in the plea, but the joint signers of his note, finding it
more convenient to charge the Bank with usury, than to fulfil
their engagements, screened themselves from performance by this
plea of general depreciation, and current value, and by averring in
their special plea, contrary to the fact, that there had been a tor*
rupt and unlawful agreement between the Bank and themselves,
that the Bank should receive more than lawful interest upon the
loan to Owens. It was no such thing. There had been no such
corrupt agreement; but. the Bank, by demurring to tfye plea, de­
prived itself of the means of disproving that allegation, and upon
that state of things, the decision of the case, by a bare and doubt­
i n g majority of the Judges of the Supreme Court, was against the
Bank. With the utmost deference for the opinions' of that Court,
the subscriber believes they never gave a judgment of less autho­
rity than in this identical case* The Judges of the Circuit Court
for the District of Kentucky had differed in opinion upon the
case. The judgment of the Supreme Court was delivered by
Judge Johnson, who declared himself to have entertained very
setious doubts of the sufficiency of the averments in the plea.
After slating those doubts, he adds^" J am content however to unite
with the THREE of my brethren, who make up the MAJORITY on this
point, in holding the averments to be sufficient, because in a considerable dearth of authorities on this subject, I find it decided in the case
of Bolton vs. Durham, in Croke's Reports, Cro. Eliz> 642, that THE
CONFESSION OF THE quo ANIMO IMPLIED IN A DEMURRER will affect

a case with usury, when A VERY SIMILAR CASE in the same book, in
which the plaintiff had traversed the plea, was left to tfie jury with a
favourable charge. Benningfield vs. Jlshley, Cro. Eliz. 741. Here
then Judge Johnson declares that after very serious doubts he
was content to unite with his three brothers to make up a majori­
ty against the Bank, because he found in an old reporter of the
time of Queen Elizabeth that the confession of the quo animo,
(that is, of the alleged but fictitious corrupt agreement) implied in
a demurrer, made that usury, which, by the authority of the very
same book would not have been usury, if the plaintiff had traversed
the plea, that is, had denied and tendered in issue the pretended
corrupt agreement. If, then, the branch at Lexington, instead of
demurring had traversed the plea of the defendants, that is, if
they had denied the existence of the corrupt agreement, averred
by the defendant, but which had never existed, the Supreme
Court would have decided that there was no usury in the case,
and the defendants would have been compelled to perform their



Bank of the United States*

97

lawful engagement instead of evading it by stigmatizing them­
selves with corruption.
The subscriber will pursue no further this analysis of the deci­
sion of a majority of the Judges of the Supreme Court of the
United States. In cases where that venerable tribunal is at liber­
ty to harmonize in judgment with the awit-d of moral sensibility,
there is none to whose discernment and ^discrimination he would
bow with more respectful deference. Burin the review of judi­
cial decisions upon contracts avoided by pleas of usury or statutes
of limitation, there would be always found " a considerable dearth
of authorities" in the English reporters, traced back even to the
age of Elizabeth, in which the fiat of the law has been in unison
with the dictate of justice.
In one of the precedents cited by Judge Johnson, the court is
said to have observed " there is nothing immoral in this transaction,
but it is against a prohibitory statute." This remark was not
wholly applicable to the case of the Bank of the United States
against Owens and others. Of that transaction it could not be
said there was nothing in it immoral. There was something in
it profoundly immoral, though not on the part of the Bank. Even
the violation of the prohibitory statute was an inference against
the fact, from the confession implied in a demurrer. The Bank
was first debarred from the recovery of a just debt, and then
branded with usury upon the plea of general depreciation and current value of the notes of the bank of Kentucky, when in fact
there was not a cent of usury taken or even reserved.
The subscriber, however, cannot suppress his surprise that this
case should have been selected and should now be persisted in, as
the head and front of the offences of the Bank of the United
States. Not alone, because, upon a thorough examination of the
facts, as they appear upon the face of the Report, it is the settled
conviction of his mind that, throughout the whole of this transac­
tion, the Bank was the innocent and deeply injured party—not
alone, because he deems it would be the summit of injustice to'
hold the Bank of the United States responsible in its charter for
an unlucky demurrer pleaded seven years ago, in a suit brought
by the branch at Lexington, against delinquent debtors. ^ But be­
cause, setting aside all those considerations, and supposing even
the President and Directors of the parent Bank culpable of all
the mistakes in pleading of the branch at Lexington, this trans­
action is of ten years standing. If usury there were, it was the
usury not of Nicholas Biddle and the Directors of 1832, but of
Langdon Cheves and the Directors of 1822. The contract was
made in May of that year. From the endorsement upon the note
then made by an illustrious citizen of Kentucky, and one of the
most distinguished lawyers of the Union, (Mr. Clay,) it is clear
that there was nothing in his opinion, in the transaction which
could expose it to the charge of usury. The subscriber sees
nothing in it of that nature now. It was undoubtedly considered
in the same light by the then President of the Bank, Mr. Cheves,
to whose opinions upon other points regarding the administra-




98

Reports on the

tion of the affairs of the Bank, so much deference is shown in the
Report of the majority of the Committee, that the subscriber
thinks he might well have been spared this imputation of being
accessary to an usurious contract of t^ie branch at Lexington, and
of having permitted it to } be consummated without censure or
animadversion.
,
The next charge upon which the,majority of the Committee
have, deemed it within their competency to report is that relating
to the issuing of the branch draits or notes. Upon this subject,
there was nothing of any moment for the investigation of the
Committee to discover. Their existence, the causes in which
they originated, and the purposes which they were intended to
answer, had all been disclosed upon returns already made by the
President of the Bank to inquiries instituted by this, and the other
House of Congress. They had been issued, not hastily, but after
deliberate advisement with regard to their legality, sanctioned by
the wrkteu opinions of three of the most eminent counsel, learned
in the,law, in the United States. All the facts leading to a just
estimate of their expediency were well known. They were sub­
stituted for small notes, signed by the President and Cashier of
the parent Bank, of which it was impossible for them to supply
sufficient numbers for the necessary circulation of the country.
The Report of the majority of the Committee states, much in
detail, the repeated and earnest applications of the President and
Directors of the Bank to Congress for an additional authority to
the presidents and cashiers of the several branches, to sign the
notes issued by those branches. It does not appear that this re­
quest was ever denied by Congress, after deliberation. In one
instance, at least, there ,was a report of a select committee of
the House of Representatives,'in favour of the appointment of
signers to the notes of the Bank; but,the spirit which, in the halls
of legislative power, so'often defeats by procrastination'that
which it cannot reasonably reject, Jiad always succeeded in arrest^
ing the'action of Congress upon this proposal. ,J3ut the power
which was adequate to withhold the means of furnishing, in this^
form, uniform currency for circulation, could neither supply.its
place,,nor suppress the constantly recurring want of it, in the in­
tercourse of, business between the different parts^of the country.
The solicited power was never denied, but it was never granted^
and the omission to grant it had the effect ,of denial.' The want
of circulating currency, equivalent to specie, continued with in­
creasing pressure upon the people, and especially at the locations,
of the southern and western branches of the Bank. A n expe*
dient was(fat last resorted to, which, without (transcending the,
limits' of the charter, effected thei sanie purposes which' wouldj
havet been accomplished by notes payable at the branches, under
the; signature of their presidents and cashiers. It was, that they
should.be authorized by the directors of the parent Bank to draw',
notes orTdrafts upon the Bank, payable only there. ',That this ex­
pedient } was warranted by law, has been settled by solemn deci­
sion m^he Circuit Court of the United States.'* It had previously
received the sanction of the Secretary of the Treasury. An ob


Bank ojthc United States,

99

viousremark upon it is, that its successdepended upon theextensiveness and universality of the credit of the Bank. The drafts,
though payable only at the Bank in Philadelphia, circulated as
specie in every part of the country. But for that credit they could
not have circulated at all, or only as depreciated currency. They
have answered an exceedingly useful purpose, and proved a great
public convenience in the transaction of "business, and the circu­
lation of exchanges throughout the Union. Under management
always prudent and cautious, no serious inconvenience would be
anticipated from them. But it is not to be disguised, that they
*offer facilities and temptations for improvident and excessive
issues.- The bill-reported by the Committee of Ways and Means,
for re-chartering the Bank of the United States, proposes to pro­
hibit the issuing of these' branch drafts, but to authorize the
presidents and cashiers of the branches to sign bills payable at
their respective offices only. The want of a circulating currency
will not be so effectually supplied by this process, asbythat now
in use; but it will be more invariably safe to the Bank itself: ■ It
is understood to be more acceptable to the President and Direc­
tors^ and the subscriber is willing that it-should be substituted
for the practice now established, £rom which, however, he per­
ceives not that any serious public injury has yet resulted. ' That
it is justifiable under the charter, he has no doubts
' The next charge adopted by the majority of the Committee,
from the bill of indictment of the chairman, is, that theTreisident
'and Directors of the Bank have been guilty of the crimeof-re­
ceiving and paying Spanish dollars, and even r our1 bwtt gold cbiris
at their intrinsic'value, which is higher than that conferred-upon
them by statute/ The objection is, that these are not technically call­
ed bullion; and there seems to be an argument in the Report, that tb
give or receive more for foreign coin, or for domestic coined gold,
than their value, as established by law, is unlawful. This argu­
ment, the subscriber believes, has the merit of novelty—to him *at
least it is new. So long as the proportional value, in the market
of gold to silver, whether bullion or coin, shall be seven'or eight
per cent, higher than the relative value assigned to them by sta­
tute, while both shall be legal tenders—so long'as*JSpanish^or
Mexican dollars shall contain more pure silver than the'coinage
of our own mint, so long will the coin of highest intrinsic value
be bought and sold as commodities, in spite of all human legisla­
tion. Nothing-is more clearly established by the universal expe­
rience of mankind, than the impotence of despotism itself, to con­
trol the value of the precious metals. Every attempt to exercise
such authority bears upon its face the stamp of injustice. Charles
XII. of Sweden, once transmitted a message t6 the Senate of the
kingdom, that he Would isend to govern them one of his boots.
The same monarch successively issued eight or ten copper coun­
ters, each of about the weight of half a cent,'and decreed'tlmt they
should pass for Swedish silver dollars. His own creditors wcie
compelled to receive them; but to pass them off upon others, at
the same rate, was beyond his power. With two metallic legal
tenders of different intrinsic value, the Bank, like every other cor


100

Reports on the

poration or individual, has the option, and always will make the
option, to pay in the tender of lowest value. Their debtors hay­
ing the same option, will, as universally, pay the corporation in
the same tender of lowest value. To forbid the Bank from re­
ceiving foreign silver or domestic gold coins at an advance, would
be to expel them, unless as special deposites, forever from their
vaults. To forbid the Bank from paying them at an advance
•would be prohibition ever to issue them at all. They are com­
modities in the market which will be bought and sold, by all the
brokers and State banks in the Union, whether bought and sold
by the Bank of the United States or not; The participation of
that Bank in the traffic, far from tending to disturb the legal va­
lue of the coin, and render that portion of the metallic currency
uncertain and fluctuating, has a tendency directly the. reverse.
To prohibit the Bank from making an allowance of advance upon
Spanish dollars, would be a prohibition to import specie, consist­
ing of that coin, at all. Then, either it would be imported to the
same extent by other institutions and individual traders, or there
would be a deficiency in the supply of specie. -In the former
case the fluctuation in the value of that kind of specie would be
neither more nor less than it is, and in the latter, it would be
much greater.
The fourth charge reported by the majority of the Committee,
is that of selling " stock obtained from government, under special
acts of Congress."
In this, as in many other parts of the Report, the subscriber has
had occasion to regret the want of precision in the statement of
the charge. Here almost every word in which the charge is
conveyed is remarkable for its looseness and indefiniteness of mean­
ing. Who, for example, under denominatiou of " stock obtained
from government" would naturally understand the evidences of a
loan made to the government by the Bank itself? In the contract
of loan there must be a debtor and creditor, neither of whom can
with propriety be said to obtain any thing from the other. In the
use of ambiguous language, there is always danger of ambiguity
of conception. In this case, if the Bank obtained stock from the
Government, it was because the Government obtained money from
the Bank. The loans could not have been made without special
authority by act of Congress, and that authority was expressly
given. The Bank is prohibited from purchasing any public debt
whatsoever, but it is not prohibited from selling any certificate of
public debt, which it may lawfully possess. With regard to the
loans to which the Report of the majority of the Committee re­
fers, the stock which represented the moneys borrowed, was made
transferable by the very acts of Congress which authorized the
loans. The Bank received the certificates transferable upon their
face, and neither that act, nor the charter of the Bank, nor any
other law of the land, prohibited the Bank from selling them. If
the object of the argument of the majority Report upon this charge
be, to urge that, in the new charter which may be granted to the
Bank a clause should be introduced to prohibit the Bank from
selling the certificates of the stock of authorized loans by the Bank



Bank of the United States.

101

to the Government, it is obvious that such a clause would be pre­
cisely equivalent to _a provision that the Bank should never loan
to the Government at all, for it is clear that Congress could layno other competitor with the Bank for the loan under the same
restriction; nor could the Bank, under such a restriction, ever en­
ter into competition with other proposers for the loan not so re­
stricted. Among the great public benefits of a National Bank,
with a capital proportioned to the extent of its operations, the
subscriber considers this very facility Jurnished to the Govern­
ment of contracting loans upon moderate terms, as the exigencies
of the public interest may require, holds a conspicuous rank. He
believes those very loans to which the majority Report refers, to
be signal examples of the benefit of the Bank to the nation. He is
well assured, that if at the time when those loans were^contracted,
there had been no National Bank, the loans must have been made
upon terms much more burdensome to the borrowers, while the
public Treasury would have lost: all the profit of the participa­
tion in the loan to the nation as stockholders of one-fifth of the
capital of the Bank.
The fifth and sixth subjects of charges, considered by the ma­
jority Report as amounting to violations of the charter, come
within the purview of one and the same principle. They consist
of expenditures made by authority of the President and Directors
of the Bank for the purpose of improving and of adding value to
the real estate, of which, in the course of their business, they
have become lawfully possessed. There are two, donations of
1,500 dollars each to turnpike road companies—some appropria­
tions for canal basins—for building of six warehouses, and per­
haps some other houses. There appears to be in the principle of
these charges something of an instinctive aversion to internal im­
provements—a sentiment with which the subscriber must disclaim
all sympathy whatever. The majority Report presents the dona­
tions to the two turnpike road companies as offences highly ag­
gravated by the circumstance that the General Government had
declined making appropriations for similar objects—which declining
for similar objects, becomes, in the very next sentence of the Re­
port, a direct refusal of the Government to expend its revenues
on the very same objects.
But this assertion, in either of its forms, is liable to much con­
troversy, and must be received with much qualification. It is ad­
mitted, in a note to the Report, to be possible that the improve­
ments were in the neighbourhood of the real estate of the Bank,
and upon the ground that such donations would increase the value
of that real estate; and this possibility the majority would have
found to be positive fact, if they had thought proper to ask for an
explanation of it before passing, censure upon the transaction.
The assertion is therefore altogether gratuitous, that the Go­
vernment had declined to make appropriations for similar objects.
The Government has made many and very large appropriations
for the construction of roads, because they would give additional
value to the public lands, through or near which the road was to
pass. It was the main argument upon which the first very ex


im

Heporls on the

pensive work of internal improvement, the Cumberland road,
was undertaken. It has silenced many a stubborn objection, sa­
tisfied many a timid scruple, subduing many a constitutional ob­
stacle. So decisive has been its effect, that it would be difficult
to name a single instance of the refusal of Congress to make an
appropriation to assist in the construction of a road when it has
been made apparent to Congress that it would raise the value of
the public lands. If, therefore, the proceedings of the Bank were
to be influenced by the example of the Government, they had the
full sanction of their authority for their appropriations for these
turnpike roads. Nor is it just to consider them in the light of
donations or gratuities, wasteful of the property of the stockhold­
ers. For such expenditures, the board of directors at Philadel­
phia could have no imaginable, motive other than that of pro­
moting the interest of their stockholders, and making their funds
more available. With regard to the building of houses, the major­
ity Report quotes the restriction in the charter upon the holding
of real estate by the* Bank. 1The Corporation is permitted to hold
lands, tenements, and hereditaments, bona fide mortgaged to it by
way of security, or conveyed to it in satisfaction of debts pre­
viously contracted in the course of its dealings, or purchased at
sales upon judgments obtained for such debts. It is not alleged
that the Bank holds one acre more of land than is thus allowed by
la\v. But the majority Report seems to consider the restriction
as affecting not only the quantity of lands which they might hold,
but the right of improving that which was their own—the com­
mon proprietary right. If there had been any manifestation of a
desire on the part of the corporation to increase the quantity of
their lands, tenements, and hereditaments, permanently held, the
subscriber would have been among the first to censure their de­
sign, and the readiest to restrain them from the indulgence of
such a desire by law. But almost all these lands were held in one
place—Cincinnati in the State of Ohio. They had, according to
the declaration of the President of the Bank, come into their pos­
session strongly against their own inclinations. He stated, and it
appears to be perfectly natural, that all the lands which came into
their hands were considered by them as incumbrances^ that their
design was to dispose of them as speedily as they possibly could.
That for this purpose they had erected a small number of houses,
to make both the land on which, they stood, and the adjoining
lands, more easily and more freely saleable. The buildings were
also erected, partly by contributions, in labour and materials, by
debtors to the Bank, who had no other means of payment. The
advantage of all this was principally to the stockholders of the
Bank, and the subscriber believes that the solicitude for their in­
terests, so warmly manifested in the majority Report, when deny­
ing the right of the President and Directors to spend their money
in donations and gratuities, wilt find no responsive voice amongst
the stockholders themselves. It was indeed the unfortunate con­
dition of those to whom the management of the affairs of the cor­
poration were entrusted, that, whatever they have done, must be
made a subject of censure. If they increase their business and



Bank of the United States.

10S

their profits by branch drafts upon the Bank, it is a heinous*
offence, because Congress had neglected to give a power to sign
the bank bills to any other officers than the President and Cashier.
If they increase the value of their real estate by contributing to a
turnpike road, it is wasting the property of the stockholders in
gratuities and donations. If they enlarge their discounts and ac­
commodations, they supply temptations to over-trading, and bring
the Bank to the verge of ruin. If they contract their issues, they
produce unheard-of distress in the trading community. Do they
trade in foreign silver and domestic gold coins? They are acces­
sary to the pernicious exportation of the precious metals. Do
they substitute bills of exchange for silver dollars in the exporta­
tion to China? Who does not see that they must send to London
the coin which formerly went round the Cape of Good Hope?
And, besides, the transaction looks very like respondentia securi­
ties. The most perfect parallel to the majority Report known^to
the subscriber, is the lively lady in " Much Ado about Nothing:"
" who never yet saw man,
" How wise, how noble, young, how rarely featured,
" But she would spell him bacfiward"

Thus, when the administration of Mr. Cheves can be exhibited
in favourable contrast with that of the present President, it is pre­
sented with'high and earnest commendation: but when a charge
of usury can be brought to bear upon the Bank, upon the credit
of a confession implied in a demurrer, the occasion to stigmatize the
Bank cannot be passed over, though ten long years have slumbered
over the sin, and though Langdon Cheves himself must be branded
as the usurer.
The subscriber will no longer tax the time and patience of the
House by pursuing into their microscopic details a series of in­
culpations and criminations, not one of which, in his deliberate opi­
nion, has a shadow of reasonable foundation. How could he consi­
der otherwise than a waste of time a prying scrutiny into the ques­
tion—Who of the stockholders have usually voted at the election
of the directors? Who were the voters present? And who held the
proxies of the absent? When it is notorious that in this, as in all si­
milar institutions, whose stockholders liave confidence in their pre­
siding officer, the great difficulty is to prevail upon the stockholders
to, attend and vote at the elections at all? How could he consider as
a grievance to be probed to the quick, and reported upon to the
House, that whereas the charter provides that there shall be twentyfive, directors/ there, are at this very'hour'only twenty-four, because
the^stockholders at their annual meeting did elect Nicholas Biddle
one of their Erectors, and the President of the United States did no­
minate, and, by and with the advice of the Senate, did appoint the
same NicholasBiddle one of the five directors on the part of the Go­
vernment. .'' Such has for several years been the fact, and the1 con­
clusion naturally and justly to be drawn from it is, that Mr. Biddie has enjoyed the unquestioning and entire confidence, both of
the Government and,of the individual stockholders. The reason
of the'double election has been this: the President of the Bank* is,
electee! by the directors on the firsi Monday in January, ana none



104

Heports on the

but a director is eligible to the office of President. The nomina*
tion of Government directors sometimes lingers in the Senate
until after the first Monday of January. The stockholders, there­
fore, elect Mr. Biddle as one of their directors, that he may with
certainty be re-eligible as President. When the nomination of
Mr. Biddle, as a Government director, has been completed in
time to be known to the stockholders at their election, they have
not chosen him$ when it has not, he has been appointed and
elected. And thus there are only twenty-four instead of twentyfive directors. In all former years, however, Mr. Biddle has de­
clined accepting the appointment as a Government director, and
his place has been supplied. So that, until the present year, the
board of directors has been full. The effect of his not declining
the appointment from Government the present year is, that he is
removable from office at the pleasure of the President of the
United States.
Ten years long has this confidence been enjoyed and justified
by that distinguished citizen and honourable man. No question
had ever been insidiously started, how many proxies he held?
The more he held, the more extensive was the confidence of the
stockholders in him. No scruple had ever crossed the mind of
any President of th£ United States, to deter him from nominating
him year after year as a Government director. Not a voice had
ever been raised in the Senate to cause their hesitation to confirm
his appointment, and so perfectly in harmony with this confidence
has been that of the public, that not a rumour has ever been raised
of a prospect or even of a project for the election of any other per­
son as President in his place. After ten years of fair fame thus
sustained without an adverse whisper being heard, it has been a
source of deep mortification to the subscriber to see the character
and feelings of such a citizen treated by a Committee of the House
of Representatives as if he had been an inmate fresh issued from a
penitentiary to preside over the Bank of the United States. As
an exemplification of this fact, it might be sufficient to refer to
the tone of the majority Report from beginning to end; to the
consciousness of authoritative power which pervades all its pages,
unmingled with that courtesy which arrays even authority itself
in the ornaments of a meek and quiet spirit—to the continual
contestation even of facts stated by the President of the Bank upon
oath—to expressions so divested of all semblance of delicacy as
thesej that u the Bank as it collects the revenue, knows, or ought
to know, that it will be called upon by the Government to reim­
burse it." The subscriber forbears, for he finds it difficult to ex­
press his sensations without using terms obnoxious to the same
criticism which he is compelled to apply to these.
A large portion of the same Report, and that with which it
closes, consists of an elaborate argumentative parallel between
the condition of the Bank in 1819, when it is stated to have been
upon the verge of bankruptcy, and its present condition. With­
out entering into the particulars of this disquisition, the subscri­
ber will close this his own Report, with a few general remarks
concerning it.



Bank of the United States.

i05

And in the first place he observes, that the Bank cannot, with
any propriety be said to have been upon the verge of bankruptcy
in 1819. It did not suspend specie payments for an hour—it had
met with heavy losses*—its capital had not been punctually paid
in, conformably to its charter. Imprudent and irregular, if not
fraudulent speculations in its stock had been allowed and shared
by one or more of its directors. It had failed in the indiscreet
attempts to make all its bills payable at all its branches. Had a
severe pressure come upon it, a short interval might have ensued
during which it might have suspended cash payments, and that
would greatly, perhaps permanently, have affected its credit. But
the Bank.was never near the verge of bankruptcy. The majority
Report itself states, that in April, ,1819, when its difficulties were
the greatest, its means of specie, notes of other banks, and funded
debt, amounted to upwards of ten millions of dollars, while the
whole demands which could come against it in the same month,
amounted to only about 14 millions. There is nothing like an
approach to bankruptcy in this. But the pressure on the Bank in
1819 did not proceed from the errors or imprudencies of the cor­
poration itself only* There is an ebbing and flowing of the tides of
commerce almost, though irregularly, periodical throughout the
world, and tnere is a sort of galvanic sympathy in the contrac­
tions .and expansions of the great moneyed institutions in both
hemispheres. The restoration of specie payments by the Bank of
England in 1817 and 1818, undoubtedly produced an immense
pressure upon the circulation, and of course, upon the commerce
of the world. All paper circulation beyond the amount represent­
ing the precious metals, is fictitious capital, or rather, it is credit.
The question whether the balance of moral influence upon the
condition of men, arising from circulating credit and banking,
be a blessing or a curse, is a speculation for the closet. Money
has long, and upon divine authority, been pronounced* the " root
* of all evil," and paper money shares in its full proportion the
character of its prototype. Power for good, is power for evil,
even in the hands of Omnipotence. Had there been in 1819, no
Bank of the United States, the pressure must have been incompa­
rably greater, and the ruin far more widely spread than it was.
The opinions exhibited in this portion of the majority Report are
reproduced in the interrogatories of the member of the committee
to the President of the Bank appended to it. The subscriber will
barely refer to the answers by the President of Uie Bank, which \
render all further discussion of them superfluous.
But if it were true that the condition of the Bank in 1819, was
upon the verge of bankruptcy^ and if.it were also true that the
present condition of the Bank were of exact resemblance to its
deplorable state at that time, the discretion, the patriotism, and
the humanity of the Committee could scarcely have sanctioned
the disclosure of so disastrous a secret to the world. ^ The market
price of the Bank stock at the time when this inquisition into the
affairs of the Bank was instituted, was at an advance of at least
25 per cent, upon its nominal value. In spite of all the denuncia-




106

Reports on the

tion against it, in spite of all the learned arguments, all the arith­
metical calculations, all the statistical theorems, corollaries, and
demonstrations, with which it had been for years assailed in and
out of Congress, the price current of bank stock, the thermome­
ter of public confidence, was still at 25 percent, advance upon the
shares. If the majority of the Committee had really made the
discovery that the affairs of this Bank were in such a desperate
state, from the extraordinary pressure upon the money market
and the depression of trade, considering the large stake which
the nation holds in the stock of the Bank, it would have been but
prudent forecast in the majority of the Committee, and would
have manifested a tender regard for the public interest, to have
reserved the exposure of this crisis of terror and dismay until it
should have exploded or passed away. In such emergencies, the
most formidable of all dangers to banking institutions, is the
spreading of a panic among its creditors. The issues and circu­
lation of the Bank paper are undoubtedly large, and there has
been for some months a severe pressure, though not a universal
one on the money market. The President and Directors of the
Bank became aware of this pressure on its first approach, and
took measures of precaution as early as October last, to prepare
for meeting it, and breaking its force. On the 7th of that month
a circular was issued to the cashiers of all the branches, noticing
the pressure which was to be expected, particularly upon the of­
fices at Philadelphia and New York$ instructing them so to shape
their business as to furnish them so far as might be practicable
with the means which were likely to be required. At that time
the Government had given notice of a payment of six millions of
funded debt to be paid on the first of January then next. But it
had gone further, and authorized the creditors thus to be paid off
in January, to claim their payments even at any time of the pre­
ceding quarter, although the Government had in deposite scarce­
ly half the sum required for that anticipated payment. The Bank
made no complaint, but took this measure of precaution. The
same vigilant and restrictive policy was pursued through the
winter and spring, except when mollified by the dispensations of
Providence in the overflowings of the Ohio at Cincinnati and at
Louisville.
At these places the credits of the Bank had been very largej
yet, immediately upon being informed of this visitation of cala­
mity, every facility was again extended, by direction of the Pre­
sident and Directors at Philadelphia, to those who had suffered
by the floods. Shortly after, the Secretary of the Treasury makes
a confidential intimation of a wish to pay off six millions of three
per cent, stocks on the first of July -next. To ease the pressure
upon the commerce of New York, and to save the Bank from the
necessity of curtailing the discounts of the merchants—debts to
Government for duties—the President proceeds to Washington,
and, in a conference with the Secretary of the Treasury, suggests
the expediency of postponing, until the first of October, the pay­
ment of the six millions of three per cent, stock* The Secretary
accedes to the arrangement, the Bank stipulating to pay the quar


Bank of the United States*

107

ter's interest, in consideration of having-, during the interval, the
use of the moneys and this adjustment, so advantageous to the
Government, so provident of the interests of the stockholders, so
beneficent to the debtors, both of the Government and of the Bank,
and so facilitating to the collection of the revenue at a time of
considerable commercial embarrassment, is seized upon in the
majority Report, as if the dearth of reasonable cause of complaint
had bred a famine, and harped upon, as if it had been the convul­
sive gasp of the Bank in the very agonies of bankruptcy.
Now all this had led the mind of the subscriber, reflecting upon
it with all the anxious intensity of which it is capable, to a directly
opposite conclusion. That there was over-trading to considerable
extent in the course of the last two years, he has no doubt. That
the issues of Bank credit and circulation unusually large, partly
furnished the means to this over-energy of enterprise, he is not
prepared to deny. That in the earnest and proper anxiety to
re-invest in productive funds the mass of capital thrown back
upon their hands by the payment of J.he seven millions of the
Government's debt for the stock of the nation in the Bank, the
President and Directors may have for a moment overstepped the
line where that prudence, which includes all the attributes of the
Divinity, might have stopped, is possible. The subscriber is far
from affirming that they did. If they did, he is sure that it was
from motives pure as rectitude itself, and from infirmities of judg­
ment incident to all the labours of man.
The President of the Bank very forcibly stated to the Commit­
tee, the extremely delicate position in which the institution stands
towards the commercial community in this 'respect. So long as
the Bank keeps within the line of safe operations upon its own
funds, it leaves those of commerce to regulate themselves. It nei­
ther seeks to increase nor diminish them. When, from whatever
cause, there is among the merchants a tendency to over-trading,
it is not the province of the Bank, directly, to interpose against
it; for that would be to exercise an invidious and improper con­
trol over business with which it has but a remote concern. Its
general [duty is to grant facilities while it has disposable funds
uninvested. The point at which it ought to stay its hand is a
matter of difficulty to determine, and upon which the soundest
discretion may come to different results in different men. From
the first appearance of the impending pressure, the measures of
the President and Directors of the Bank appear to the subscriber
to have been marked with great judgment, and to have been con­
tinued and modified, according to the progress of events, with
equal steadiness of purpose, and benevolence of intention.
But, whether the Corporation issues its circulation with liberali­
ty, or curtails it with provident caution, it equally meets the cen­
sure of the majority Report. After quoting two passages from
a report of Mr. Rush, commending the Bank for its prudence in
limiting the amount of its circulation, it gives two statements, show­
ing that between August, 1828, and the first of April last, the cir­
culation had been augmented to what it calls the astonishing in­
crease of upwards of ten millions in less than four years. But it



108

Beports on the

emits all notice of two facts, which, if duly considered, would
have taken off all the edge of astonishment. The first is, that
during that same interval, that seven millions of stock held by the
Government, were repaid. The second, that upwards of three
millions of the public debt, held by the Bank, were paid off; so that
the astonishing increase of circulation is a mere reinvestment of
capital, which had been returned upon the hands of the Bank, and
only the substitution of one species of productive property for
another. And scarcely has this sentence of censure been express­
ed in the Report, but it turns and complains, and appeals to the
circular addressed to the branches, and correspondence with them
since October last, that the chief object of the Bank has been bare­
ly to sustain itself; and that, since that time, the Bank has not increased its facilities to the trading community, in any part of the
Union.
The subscriber believes that nothing can be more delusive than
the parallel drawn, in the majority Report, between the state and
condition of the Bank in 1819 and in 1832, but that Report has
subjected itself to one test which is already disclosing the true
character of its reasoning. It has ventured upon the field of pro­
phecy, and the failure of its predictions is already brightening
into demonstration.
In the anticipation that there will be a curtailment of discounts
for several months to come, the foresight of the majority Report
is probably correct. This, of course, must occasionally happen
in all banking establishments. It is incidental to all the unavoida­
ble fluctuations of trade, and is believed to be at this time indis­
pensable, not only to the Bank, but to the whole commercial com­
munity. This operation has, indeed, been quietly proceeding
in the Bank of the United States ever since the circular of 7th
October, 1831$ which the majority Report turns to so large ac­
count for its purposes. It has been in progress, while, at the same
time, the direction of the Bank has been reserving and husbanding
and prudently applying the means to the commercial portion of
our fellow citizens, of jneeting and passing through this critical,
emergency, with as little detriment to the public and to indivi­
duals as possible. This would explain, one would think, very sa­
tisfactorily, the fact stated in the letter of the President of the Bank
to the Secretary of the Treasury, of the 59th March last, that, in
compliance with an intimation from the Collector at New York,
an extension of loans had been promptly acceded to, in the pre­
ceding month of February, to assist the mercantile debtors of the
Government, in the punctual payment of their bonds; without
needing an argument, such as that of the majority Report against
this plain and direct assertion of a very notorious and unquestion­
able fact. The author of the Report finds, by reference to the
weekly statement of the office at New York, from July, 1831, to
April, 1832, no aggregate increase of loans; but, on the contrary,
a reduction of the amount. He finds that the total amount of dis­
counts at the New York branch, between the 4th of October, 1831,
and the 28th of March, 1832, was actually diminished 8468,447 17,
while, during the same time, the bonds paid at that port amounted



Bank of the Uuited States.

109

to between nine and ten millions of dollars. Can it be imagined
that he discovers in this statement, compared with that in the let­
ter from the President of the Bank, to which he refers, not an un­
answerable demonstration of the prudence, as well as of the libe­
rality which the affairs of the Bank have, in this respect, been
conducted, but an occasion of contesting, by unavoidable implica­
tion, the veracity of the President of the Bank?—and this in a Re­
port which, upon an immediately preceding page, charges the
Bank with u the loss of Jive millions of its specie"
On the first perusal of the Report "the subscriber was himself
greatly at a loss to know what was meant by this " loss of five
millions of its specie," of which he was very sure that no evidence
had been given to the Committees and it was only after a repeated
examination of the paragraph in comparison with another part of
the Report, that he found this form of expression was only an in­
genious mode of accusing the Bank of a loss of five millions of
specie between the first of September and the first of April, be­
cause there was nearly that amount more of specie in the funds
of the Bank at the former period than at the latter. This con­
struction, by which payment of debts is converted into loss of
specie, may serve as a consolation for the disappointment arising
from the inability to convict the Bank of any other serious loss
since 1819.
With regard to the increase of the number of the branches,
to the precise manner in which the annual election of directors
has been conducted, to the alarming magnitude of the sums re­
cently paid for printing, to the sums paid to the solicitors and
counsellors, distinct from those paid to attorneys^ to the number of
useful documents not referrible to any particular head, and to the
many statements called for, which the business of the Bank and
the shortness of the time allowed for the investigation would not
admit to be furnished, the subscriber will pass over all these sub­
jects as they are passed over by the majority of the Committee,
with the expression of his satisfaction that the labours of the
Committee upon them were abridged by the march of time, and
of his hope that no Committee of Congress will ever again be
called to an investigation upon a plan of such interminable out­
line.- He is convinced, that to fill it up according to the compre­
hensiveness of its conception and the multifarious complication
of its details, a Committee appointed at this time which should
sit the year round, and he might safely add night and day, would
at the expiration of the charter of the present Bank, be left, like
the present Committee, with a multitude of subjects of complaint,
which they would be " compelled to abandon for the want of time.9'
With regard to the numerous matters of vital importance in
the reorganization of the Bank, specie payments, domestic and
foreign exchanges, investments in public debt by the Bank in
1824 and 1825, and its ability to make loans to the Government,*
the influence of the operations of the Bank upon trade, on the in­
crease of the paper circulation of the Bank, its agency in dimi­
nishing or enlarging the circulation of local Banks, and the means
of permanently regulating our general circulation so as to pre


110

Reports on the

vent its injurious effects upon the trade and currency of the coun­
try, concerning which the Committee, or rather one of its mem­
bers, submitted a number of inquiries to the President of the
Bank: a copy of the answers of the President of the Bank to these
inquiries, has already been submitted to the House. It is hoped
they will be satisfactory to the House, and that they will contri­
bute, with other considerations, to the conclusion, that the Bank
of the United States ought, with such modifications as may be
deemed expedient by the Legislature, to be immediately re-char­
tered.
The subscriber has long entertained the opinion, that the exist­
ence of a National Bank is indissolubly connected with the con­
tinuance of our national Union. The fiscal operations of the Go­
vernment, in all its branches, he believes, cannot, without the aid
of such an institution, be conducted, he will not say well, but at
all. He does not say that the present Bank of the United States is
indispensable, and his mind has sometimes hesitated upon the
question, whether, at the expiration of the present charter of the
Bank, the establishment of another, though similar institution,
might not be more expedient than the renewal of the charter. In­
clining rather to the latter of these measures before the institu­
tion of this inquiry, he has been very strongly confirmed in that
opinion, by the result of the investigation in which he has shared.
•The management of the affairs of the corporation during the
administration of the present President, not exempt from human
error and infirmity, has yet appeared to him marked with all the
characters of sound judgment, of liberal spirit, of benevolent feel­
ing, and of irreproachable integrity. A large proportion of its
officers in subordinate trust are of the Society of Friends, a class
of citizens peculiarly qualified for the performance of duties, and
the exercise of qualities appropriate to the successful manage­
ment of moneyed establishments—industry, punctuality, tempe­
rance, and a conscientious discharge of all moral obligations.
In considering the numerous and important public services, and
the large contributions of the present Bank to the government
and people of the United States, he thinks the least return which
they are justly authorized to expect from the equity of the nation,
is the renewal of their charter. The benefits and profits of the
Bank have been enjoyed by the nation far beyond those shared by
the individual stockholders. Besides the bonus of a million and
a half of dollars paid to the public treasury for the charter—be­
sides the saving of the expense of loan offices for the payment of
the public debt, principal and interest—besides the obligation of
transferring the Government funds to and from every part of the
Union, as the public exigencies require—the nation has held onefifth part of the stock from the commencement of the institution
to this time, without payment of one dollar to its capital, until the
last two years. It has received the dividends in common with
the other stockholders5 has exercised the exclusive right of ap­
pointing one-fifth of the directors; has been supplied with loans
whenever the occasions of the Government have needed them,
upon terms more advantageous to the public than could have been



Bank of the United States.

Ill

secured from any other institution or company of individuals:
while .the Bank, by its salutary control, and its universally ex­
tended credit, has compelled the restoration of cash payments,
and furnished a currency equivalent, in substantial value, to specie
throughout the Union. These have been the advantages of the
Bank to the nation, while the individual stockholders have real­
ized, upon their invested capitals, scarcely more than a yearly in­
terest of six per cent., even including the advance of the stock at
this time in the market. This circumstance has afforded proof,
nothing short of demonstration, of the rashness and folly of all
those projects for the establishment of a new Bank, which have
been presented to Congress, with a lure of enormous premiums
for the grant of a charter. The subscriber has no doubt that the
destruction of such an >establishment would be speedy and inevi­
table, either by the absorption of all its profits to pay the pre­
mium, or, by forcing its direction into a wild and reckless extent
of business, ruinous to the commerce of the country, not less than
to the Bank itself.
In considering the expediency of renewing the charter, the sub­
scriber discards all consideration of the interests or wishes—not
only of the President and Directors of the Bank, but of all the in­
dividual stockholders of the corporation. In the question be­
tween chartering a new corporation, and rechartering the old one,
if the interests of the individual adventurers are to be considered
at all, like opposite quantities in algebra, they annul each other.
It is the public interest alone that can determine the question, and
in that view alone, the subscriber would prefer the renewal of this
institution to the establishment of another. The present esta­
blishment has the advantage of long experience, and of a.system
matured by the acquired knowledge of many years, and by the
correction of its own errors. That knowledge has been pur­
chased at-no inconsiderable cost, and a set of new undertakers
would most probably have to pass through a similar noviciate.
The result of his examination has been an entire conviction, that,
with a view to the public interest alone, the charter of the Bank
of the United States ought forthwith to be renewed.
In the free and unreserved animadversion upon the course of
proceedings pursued in this investigation by the majority of the
Committee, and upon the consequences to which they necessarily
lead, which he has felt it his duty to indulge, he trusts it will not
be- understood as his intention to speak in censure of any indivi­
dual member of the Committee. He imputes no injustice of in­
tention to any one, even where .he sees it most flagrant in the re­
sult of measures. If, in the examination of the books and pro­
ceedings of the Bank, a penetrating and severe scrutiny into the
official conduct of the President and Directors of that institution
was within the scope of the labours of the Committee, and he has
no doubt it was, he was equally clear in the conviction that the
resolution of the House gave them no right, and that the first
principle of natural justice denied them the right, to bring before
themselves for censure or vindication the persons or the concerns
of any other individual. The majority of the Committee thought



112

Reports on the Bank of the United States.

otherwise. Editors of newspapers, printers, attorneys, counsel­
lors, solicitors, brokers, members of Congress, and officers of go­
vernment, they thought game fairly to be hunted down, ifthey had
an account in Bank, because the Committee v/ere authorized to
examine the books and the prbceedings of the corporation. They
thought this a liberal construction of their, powers. Differing
from them in their definition of liberality, he has seen no cause to
question the liberality of disposition of any one of them, accord­
ing to their sense of the term. * He does all possible, justice to
their intentions, though often and essentially dissenting from their
reasoning, and from their philology. ' Liberality, in his vocabu­
lary, is a word of very different import, and as unintelligible to
them, as in theirs it is to him. From this remark, he deems it a
tribute of candour to except the member of the Committee who
constituted the majority,1 and the generosity of whose nature li­
censed the Report made by the Chairman of the Committee to the
House. That same generosity of his nature impelled him, when
the Report was presented, to rise in his place, and declare, that, in
the whole course of this investigation, he had seen in the conduct
of the President and Directors of the Bank, nothing inconsistent
with the purest honour and integrity. Had that same candid and
explicit declaration, due, as the subscriber believes, to the most
rigorous justice, been made by the other members who sanctioned
the majority Report, many a painful remark in the paper now sub­
mitted, perhaps the whole paper itself, would have been sup­
pressed. But to vindicate the honour of injured worth, is, in his
opinion, among the Erst of moral obligations; and, in concluding
these observations, he would say to every individual of the House,
and to every fellow citizen of the nation, inquisitive of the cause
of any over-anxious sensibility to imputations upon the good name
of other men which they may here find—
"When troth or virtuo an affront endures,
" The affront is mine, my friend, and should be yours."
JOHN QUINCY ADAMS.
I concur fully in all the statements made, and principles deve­
loped, in the above Report.
J. G. WATMOUGHUthMay, 1832.