114

SUPPLEMENTARY BILL.

HOUSE OF REPRESENTATIVES, February 9, 1791.

Ordered, That a committee be appointed to prepare and bring in a bill or bills supplementary to the foregoing act, and that Mr. Smith, of S. C. Mr. Williamson, and Mr. Vining, be the said committee.

On the 10th, Mr. SMITH, from the said committee, presented a bill, which on the 23d of February, passed the House, and afterwards the Senate, and was approved by the President on the 2d of March, 1791.

It regulated the time of subscription to the stock of the bank, the amount of specie to be paid, &c.

[See the act in 1st vol. U. S. Laws, p. 177, Story's edition.]

SUPPLEMENTS TO THE ACT OF 1791, INCORPORATING THE UNITED STATES BANK.

The first supplementary act upon this subject which was passed, was that of the 2d of March, 1791, heretofore referred to, varying the time of subscriptions, and the amount of specie payments, &c.

On the 27th of June, 1798, an act was passed" to punish frauds committed on the Bank of the United States," by which the forging or uttering of counterfeit bills, notes, orders, or checks, by or upon the bank, subjected the offender to imprisonment at hard labor, for a period not less than three, nor more than ten years. [See Laws of U. S. of 1798, chap. 78.]

By an act passed the 23d of March, 1804, power was given to the Presisident and Directors of the Bank, to establish offices of discount and deposite "in any part of the territories or dependencies of the United States," in the manner and on the terms prescribed by the original act. [See U. S. laws, 1804, chap. 32.]

An additional act, "to punish frauds committed on the bank," was passed on the 24th of February, 1807. [See chap. 75, in Story's edition of U. S. laws vol. 2d, p. 1048.]

CHAPTER III.

PROCEEDINGS ON THE MEMORIAL OF THE STOCKHOLDERS OF THE BANK FOR A RENEWAL OF THE CHARTER OF 1791.

By the limit fixed in the original act of incorporation, the legal existence of the bank, as a corporate body, was to cease on the 4th of March, 1811. In anticipation of that event, its directors thought it advisable, at an early period, to apply to Congress for a renewal of their powers. The circumstances connected with its origin, and its relation to the political parties, by whom the Government, at different periods of its existence, had been administered, might have suggested a doubt whether an extension of the charter would be granted. In its enactment, a large majority of Congress had, indeed, concurred, and it had enjoyed, in the outset, the entire confidence of the Executive Government of the Union; but a political revolution had been effected, and those who had given it being, were themselves, by the will of the People, divested of a controlling power. Two, among the early opposers of the bank, had successively filled the Executive chair. How far these changes in the aspect and relative condition of parties, affected the destinies of this institution, it is not for the editors to determine; but, doubtless, they were not without their influence.

The following proceedings and debates, which took place, both in the House and the Senate, on the bill to renew the charter, are of a highly interesting and instructive character, and may enable the reader to decide questions upon which the editors will not presume to speculate.

10TH CONGRESS,

1st Session.

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HOUSE OF REPRESENTATIVES, March 26, 1808.

A memorial of the stockholders of the Bank of the United States, praying a renewal of their charter, was presented and read: whereupon,

A motion was made, by Mr. JOSEPH CLAY, "that it be referred to the Secretary of the Treasury, with instruction to him to examine the matter thereof, and report his opinion thereupon to the House."

Mr. RANDOLPH moved to postpone the consideration of the reference of the memorial, till Monday following, which motion the SPEAKER decided, was not in order.

A motion was then made by Mr. DAVID R. WILLIAMS, that the memorial be referred to a Committee of the Whole House, which, superseding the motion for a reference to the Secretary of the Treasury, the question was taken thereon, and decided in the affirmative.

Resolved, That the said memorial be the order of the day for Monday next. The subject, however, was not further acted on in this House during the session.

IN SENATE, April 20, 1808.

Mr. GREGG presented the memorial of the stockholders of the Bank of the United States, praying a renewal of their charter, for reasons stated at large in their memorial, which was read.

Ordered, That it be referred to the Secretary of the Treasury, to consider and report thereon at the next session of Congress.

10TH CONGRESS, 2

2d Session.

MARCH 3, 1809.

The President of the Senate communicated the report of the Secretary of the Treasury, on the memorial of the stockholders of the Bank of the United States, referred to him on the 20th of April last, which is as follows:

Report of the Secretary of the Treasury on the subject of a National Bank, made to the Senate, March 2, 1809.

The Secretary of the Treasury, to whom was referred the memorial of the stockholders of the Bank of the United States, praying for a renewal of their charter, which will expire on the 4th day of March, 1811, respectfully submits the following report:

The Bank of the United States was incorporated by act of March 2d, 1791, with a capital of ten millions of dollars, divided into 25,000 shares, of 400 dollars each. Two millions of dollars were subscribed by the United States, and paid in ten equal annual instalments. Of the eight millions of dollars subscribed by individuals, two millions were paid in specie, and six millions in six per cent. stock of the United States. Two thousand four hundred and ninety-three of the shares belonging to Government, were sold in the years 1796 and 1797, at an advance of 25 per cent.; two hundred and eighty-seven were sold in the year 1797, at an advance of 20 per cent.; and the other two thousand two hundred and twenty shares, in the year 1802, at an advance of 45 per cent.; making, together, exclusively of the dividends, a profit of 671,860 dollars to the United States. The greater part of the six per cent. stock originally paid by the stockholders, has since been sold by the bank; a portion has been redeemed by Government, by the operation of the annual reimbursement, and the bank retains at present only a sum of $2,231,598 in six per cent. stock.

About eighteen thousand shares of the bank stock, are held by persons residing abroad, who are, by the charter, excluded from the right of voting. The stockholders resident within the United States, and who have the exclusive control over the institution, hold only seven thousand shares, or little more than one-fourth part of its capital. They appoint, annually, twenty-five directors of the bank itself, which is established at Philadelphia; and those directors have the entire management of the discounts and other transactions of the institution in that city, and the general superintendence and appointment of the directors and cashiers of the offices of discount and deposite, established in other places. There are at present eight of those offices, viz: at Boston, New York, Baltimore, Norfolk, Charleston, Savannah, the City of Washington, and New Orleans. The two last were established at the request of the Secretary of the Treasury.

The profits of a bank arise from the interest received on the loans made either to Government or to individuals; and they exceed six per cent. or the rate of interest at which the loans are made, because every bank lends not only the whole of its capital, but also a portion of the moneys deposited for safe keeping in its vaults, either by Government or by individuals. For every sum of money thus deposited, the party making that deposite, either receives the amount in bank notes, or obtains a credit on the books of the bank. In either case, he has the same right at any time to withdraw his deposite; in the first case, on presentation and surrender of the bank notes; in the other case, by drawing on the bank for the amount. Bank notes and credits on the books of the bank, arise, therefore, equally from deposites, although the credits alone are, in common parlance, called deposites; and the aggregate of those credits, and of the bank notes issued, constitutes the circulating medium substituted by the banking operations to money; for payments from one individual to another are equally made by drafts on the bank, or by the delivery of bank notes. Experience has taught the directors what portion of the money thus deposited, they may lend; or, in other words, how far they may, with safety, extend their discounts beyond the capital of the bank, and what amount of specie it is necessary they should keep in their vaults. The profits, and, therefore, the dividends of a bank, will increase in proportion as the directors will increase loans of the moneys deposited, and suffer the amount of specie on hand to diminish. Moderate dividends, when not produced by some particular cause, which checks the circulation of bank paper, are the best evidence of the safety of the institution, and of the wisdom of its direction.

The annexed table of all the dividends made by the Bank of the United States since its establishment, shows that they have, on an average, been at the rate of 83 (precisely 8) per cent. a year, and proves that the bank has not, in any considerable degree, used the public deposites for the purpose of extending its discounts.

From what has been premised, it appears that the property of a bank in full operation, consists of three general items, viz: 1st, outstanding debts, consisting principally of the notes payable at sixty days, which have been discounted at the bank: 2dly, specie in the vaults: 3dly, buildings necessary for the institution. On the other hand, the bank owes, 1st, to the stockholders, the amount of the capital stock originally subscribed, payable only in case of the dissolution of the institution: 2dly, to Government or individuals, the whole amount of moneys deposited, payable on demand, and including both the credits on the bank books, commonly called deposites, and the bank notes in circulation. The account is balanced by the amount of undivided profits and accruing discounts, which constitute the fund for defraying current expenses, for paying subsequent dividends, and for covering contingent losses. The following statement of the situation of the Bank of the United States, including its branches, exhibits the true amount of public stock which is still held by the institution, of the cost of its buildings and lots of ground, and of the undivided surplus or contingent fund subsequent to the dividend made in January last. But the amount of loans to individuals or discounts, of specie in the vaults, and of moneys deposited, including both the credits on the bank books, commonly called deposites, and the bank notes in circulation, is taken on a medium; and, so far as relates, on the credit side of the account, to specie on hand, and, on the debit side, to deposites, is several millions of dollars less than it happens to be at this moment; both having been swelled much beyond the average by the embargo, and by the unusually large balance in the treasury, which is principally deposited in the bank. Some minor items, arising from accidental circumstances, are omitted for the sake of perspicuity. CR.

I. Debts due to the bank, viz:

1. Six per cent. stock of the United States, being the residue of that part of the original subscription paid in public stocks, which is still held by the bank,

- $2,230,000

2. Loans to individuals, consisting chiefly of discounted notes, payable at sixty days, and, in some instances, of bonds and mortgages taken, in order to secure doubtful debts,

3. Due by banks incorporated by the States,

II. Specie in the vaults,

III Cost of lots of ground, and buildings erected,

Total Cr.

- 15,000,000

800,000

18,030,000

5,000,000

480,000

$23,510,000

DR.

I. Capital stock of the bank, payable to the stockhold

ers whenever the institution may be dissolved, $10,000,000

II. Moneys deposited, viz:

1. Credits on the bank books, commonly called deposites, including the deposites

both by Government and by individuals,

2. Bank notes in circulation,

- 8,500,000

- 4,500,000

Total Dr.

13,000,000

$23,000,000

Balance, being the amount of undivided profits, commonly called the "contingent fund," and applicable to cover losses which may arise from bad debts or other contingencies, and to extra dividends,

$510,000

It sufficiently appears from that general view, that the affairs of the Bank of the United States, considered as a moneyed institution, have been wisely and skilfully managed.

The advantages derived by Government from the bank, are nearly of the same nature with those obtained by individuals, who transact business with similar institutions, and may be reduced to the following heads:

1. Safe keeping of the public moneys. This applies not only to moneys already in the treasury, but also to those in the hands of the principal collectors, of the commissioners of the loans, and of several other officers, and affords one of the best securities against delinquencies.

2. Transmission of public moneys. As the collections will always, in various quarters of the extensive territory of the Union, either exceed or fall short of the expenditures in the same places, a perpetual transmission of money, or purchase of remittances at the risk and expense of the United States, would become necessary, in order to meet those demands; but this is done by the bank at its own risk and expense, for every place where one of its branches is established, which embraces all payments of any importance.

3. Collection of the revenue. The punctuality of payments introduced by the banking system, and the facilities afforded by the bank to the importers indebted for revenue bonds, are amongst the causes which have enabled the United States to collect with so great facility, and with so few losses, the large revenue derived from the impost.

4. Loans. Although the prosperity of past years has enabled Government, during the present administration, to meet all the public demands, without recurring to loans, the bank had, heretofore, been eminently useful in making the advances, which, under different circumstances, were necessary. There was a time when, exclusively of the six per cent. stock held by the institution as part of the original subscription, the loans obtained by Government from the bank, amounted to 6,200,000 dollars. And a similar disposition has been repeatedly evinced, whenever the aspect of public affairs has rendered it proper to ascertain whether new loans might, if wanted, be obtained.

The numerous banks now established, under the authority of the several States, might, it is true, afford considerable assistance to Government in its fiscal operations. There is none, however, which could effect the transmission of public moneys with the same facility, and to the same extent, as the Bank of the United States is enabled to do, through its several branches. The superior capital of that institution offers, also, a greater security against any possible losses, and greater resources in relation to loans. Nor is it eligible, that the General Government should, in respect to its own operations, be entirely dependent on institutions over which it has no control whatever. A national bank, deriving its charter from the National Legislature, will, at all times, and under every emergency, feel stronger inducements, both from interest and from a sense of duty, to afford to the Union every assistance within its power.

The strongest objection against the renewal of the charter seems to arise from the great portion of the bank stock held by foreigners-not on account of any influence it gives them over the institution, since they have no vote-but of the high rate of interest payable by America to foreign countries, on the portion thus held. If the charter is not renewed, the principal of that portion, amounting to about 7,200,000 dollars, must, at once, be remitted abroad; but, if the charter is renewed, dividends, equal to an interest of about 8 per cent. a year, must be annually remitted in the same manner. The renewal of the charter will, in that respect, operate, in a national point of view, as a foreign loan, bearing an interest of 8 per cent. a year.