September, about $53,000 more had been loaned to stockholders, that is to say, in about two months from the commencement of its business, the bank had loaned tal stock. Somewhat more than $36,000 of this sum to its stockholders nearly the whole amount of its capiwas, during the same period, loaned by the bank on a pledge of its own stock, which was generally pledged for the full amount of its par value. About $32,000 were loaned upon stock notes on the 19th and 20th of the last instalment of the capital stock was paid in. July, 1831, the two days succeeding that upon which It must thus appear to every unprejudiced | 6th, and the other half upon the 18th of the same mind that the president is not borne out by the last twenty-four days of the month of July, 1831, month. There was loaned to the stockholders during statistical facts in his assertion that there has about $90,000; and in the early part of the following been in England "an augmentation of the paper currency, as much in proportion to the real wants of trade, as in the United States," and consequently, so far as his theory of a simultaneous over-action in England was built upon an identity of causes, so far he has signally failed to establish it. The truth is, there was no simultaneous action about it. The embarrassments which have taken place in England and elsewhere, are clearly traceable to the speculative mania which was created in the United States, and had the Message been penned in strict accordance with the facts of the case, it would have run somewhat in this style The embarrassments of the country have grown out of over-trading and over-speculating. The over-trading and over-speculating have been the necessary and unavoidable consequences of over-banking. The over-banking was altogether engendered by the existence of a large surplus revenue, which enabled the deposite banks to lend forty millions of dollars more than they could have loaned had there been no surplus revenue. The surplus revenue was derived altogether from the extraordinary sales of public lands. The extraordinary sales of public lands were produced by the facilities originally placed in the hands of the western and southwestern speculators, by the deposite banks in those quarters, in the shape of loans of the public money. And these facilities were wholly due to the removal of the deposites of the public money from the Bank of the United States; so that turn the matter as we may, to this complexion must it come at last, that the commercial world has been turned upside down by General Jackson's "humble efforts to restore the constitutional currency." AN EXAMINEr. INVESTIGATION OF THE MIDDLE- From the Boston Courier of Feb. 5, 1838. The following is the report of the joint special committee of the legislature, in relation to the Middlesex Bank of Cambridge. The Middlesex Bank was incorporated on the 19th of March, 1811, and commenced its business operations upon the 8th of the following July. It appears, by the books of the bank and the testimony of the cashier, that one half of the capital stock was paid in on the The committee proceeded, on the day of their appointment, to the banking-house at East Cambridge, and took an account of the assets of the bank; and officers of the bank, and of other persons acquainted continued their examination of the doings and of the with its affairs, until the evening of the 30th of January, when the hearing was closed. The following statement, prepared and sworn to by its officers, exhibits the condition of that institution on the afternoon of the 17th of January last. Memo. checks &c.. $292,021 83 5,000 00 1,271 15 12,326 92 $332,850 46 discounted as above, the $204,000 to be good, 69,000 to be doubtful, 19,000 to be bad. and The committee, after a careful examination, are of opinion that the amount which will be ultimately realised from the notes discounted, will fall considerably short of that estimated by the officers of the bank; but they are unanimous in the belief that the bank possesses means sufficient, if prudently managed and fairly distributed, to meet all its engagements, so that the public need not sustain any loss whatever. Whether the stockholders will receive any thing, and if any thing, how much, must depend materially upon the prudence and skill with which their affairs shall hereafter be conducted. $83,500 00 This opinion is founded upon the following facts :- 28,500 00 60,000 00 4,779 58 $176,779 58 51,000 00-$88,486 32 To cover this amount of $88,293 26 of liabilities, the bank has a balance of notes which its officers consider good to the amount of $88,293 26 $176,779 58 vote passed in March, 1834, had established regular discount days, and had ordered that no loan or discount should be made except by the authority of the directors, which vote was repeated in 1835, and again in 1836, but in a short time was neglected. The directors also, and other persons and firms, were authorised to take on memorandum checks, without collateral security, considerable amounts of bills, for the purpose of putting them into circulation; and these checks were, in some instances, suffered to lie without any limitation of time, and the amount of interest, if any was paid, was, by direction of the president, left to the option of the borrowers; a practice which was continued until the bank closed its doors, and which extended its circulation, and added to a burthen already insupportable a considerable amount of bad debts. It also appeared that the president had been in the habit of taking notes in Boston and paying the amouut discounted on them in Middlesex Bank bills, at the Commonwealth Bank in Boston, where the Middlesex bills were received, and substituting his memorandum checks for the same, which checks were received by the cashier of the Middlesex Bank as so much cash, in the first instance, and were afterwards given up to the president on receiving the notes discounted, which were not endorsed by him to the bank. 143,000 00 Leaving an excess of $54,706 74 to cover any losses which may be sustained on the demands considered by the officers to be good; to which is to be added the $88,000 of bad and doubtful debts, a considerable portion of which can undoubtedly be collected; and when to this we add the fact that $58,000 of the stock is owned by persons abundantly able to respond to any claims which the law may give against them as stockholders, it will appear extremely improbable that the creditors of this institution will eventually sustain any loss by it. This transaction the committee consider to be only a circuitous mode of making discounts in Boston in contravention of the provisions of the law requiring them to be made only at the bank. It was likewise proved that the bank had been indebted to more than twice the amount of its capital, and that it had refused to pay its own notes in specie, or even in the current bills of other banks. This bank was established at East Cambridge, but it appears to have been used more for the accommodation of persons residing in Boston, and places more remote, than for that of the people of Cambridge and In the spring of 1835, no dividend was made by this its vicinity. There was evidence before the committee, bank, and the directors, by a vote passed on the 2d of that customers, depositors, and even stockholders of the April in the same year, were authorised to purchase any bank, living in its immediate vicinity, and of good shares of the bank which might be offered in the marcredit, had been refused loans of moderate amount, ket, at a price not exceeding its par value. Two days which they needed for the prosecution of their busi-after, the president transferred to himself, as president, ness, when persons living in Boston, or at a distance from the bank, and not usually doing business there, had been accommodated. If the bank had been employed only to facilitate the business transactions of the people among whom it was located, there can hardly be a doubt that it would still have continued to be both useful and prosperous. William Parmenter, Esq., was chosen the first president of the bank, and continued to hold that office until the 20th of July, 1837, when Mr. Eben Jones was elected as his successor; Mr. Parmenter continued to be a director until the 28th of December last. Several practices were early introduced into the management of this institution, which the committee believe are not justified either by correct and approved principles of banking, or by the practice of other well conducted banks. In the first place, the president, from the very establishment of the bank, has exercised an almost unlimited control over its operations; and the directors, from their confidence in the president, appear to have abandoned all active interference in the management of its affairs, and to have held their offices for little, if any thing more, than a mere formal compliance with the requisitions of the law, By a vote of the directors, passed July 9th, 1831, the president was authorised to discount such paper as he thought fit; and from that time to his retirement from office in July, 1837, the late president made loans and discounts at such times and in such sums as suited his own or his friends' convenience, without previously consulting the directors, and in some instances against the individual remonstrances of at least one of the directors and of the cashier, and this, notwithstanding a thirty-four shares of the stock, which he previously held in his individual capacity, and his own obligations to the bank, for $3,400, were given up to him. The same gentleman on his retiring from the office of president on the 20th of July, 1837, transferred twenty shares in the capital stock of the bank, which he held in his individual capacity, and on which he had received a loan of $2000, to his successor in office, as president, and Mr. Jones testified that he received this transfer at his predecessor's suggestion and under a belief that it was a mere change of papers made ne. cessary by his being elected president, and that he was not, at the time, aware of the fact that Mr. Parmenter thereby extinguished his own liability to the bank to the amount of $2000. At this time the stock of the Middlesex Bank was selling in the market at about 20 per cent. discount. The same gentleman on the 17th of August, 1837, then a principal director of the bank, transferred twenty-nine shares in the stock on which he had re. ceived a loan of $2,690, his personal obligation for which sum was given up to him, to an individual well known at the time to be insolvent, and that individual's note was taken for $2,690, secured by a pledge of the before named shares, which note is still unpaid, and is among the paper considered bad. This was done, according to the testimony of the other directors, without their knowledge or consent; and the gentleman who made the transfer immediately afterwards, used his influence to have the person to whom the shares were transferred chosen a director of the bank. On the whole, the committee believe that the operations of this bank, so far as they were confined to the MEETING OF THE COMMITTEE OF THE ASSOCIATED BANKS. business transactions of the community in which it was placed, have been safe and successful with a single exception, occasioned by the accumulation of an unjustifiably large debt by a manufacturing corporation, in the neighbourhood, of which the president was the agent, and at a time when he was receiving a salary from the bank, and also from the corporation contracting the debt. The principal causes of the embarrassments of this institution appear to have been its intimate connection with, and dependence upon the Commonwealth Bank; its having made large loans to persons connected with that institution, and instead of having seasonably called in its debts, having accepted a large deposite from that bank, and having paid off a large balance subsequently accumulated against it by the Commonwealth Bank by an issue of post notes. Both which operations, although at the time they seemed favourable to the Middlesex Bank, by giving it some advantage in the rate of interest, have nevertheless extended its circulation, and are now a heavy burthen upon its resources, by having increased its liabilities to the amount of $88,500, and have operated as guaranty of the paper of others to that amount, the loss upon which must be sustained by the stockholders of the bank. It is but justice to Mr. Parmenter to state that he was not present at any of the hearings by the committee, and they were consequently deprived of the advantage of any explanations which, from his iong and intimate acquaintance with the affairs of this bank, he might have been able to make. But they have felt bound to express their decided disapprobation of prac tices, which have a tendency to impair the soundness of the currency, and thereby injuriously affect the most essential interests of the whole community. The committee take pleasure in bearing testimony to the prompt and full disclosures of the cashier and other officers of the bank, by which their own labours have been materially assisted. Having heard the bank by its officers and counsel, and among other things, upon the question of the forfeiture of its charter, and believing that the interests of the stockholders, as well as of the public, require that the affairs of this institution should be brought to a close, and that the legislature may do it with the most scrupulous regard to its legal rights, the committee recommend that its charter be declared forfeited and void, and that the following bill be passed for that pur AN ACT to repeal the charter of the Middlesex Bank. Be it enacted by the senate and house of representa tives, in general court assembled, and by the authority of the same, as follows:-Section 1. The act incorporating the President, Directors, and Company of the Middlesex Bank, passed March 19th, in the year one thousand eight hundred and thirty one, is hereby repealed. This act shall take effect from and after its passage; provided, that nothing herein contained shall be so construed as to absolve said corporation, or any director or stockholder thereof, from any liability cre. ated by the act hereby repealed. 279 give currency to the bills of one of its members whose demands may be unavailable and whose condition un. sound? Answer by Mr. Marett.-I think not-at least not beyond what would occur were there no association. In the case of the Commonwealth Bank for instance. That bank, had it not been for the association, might have gone on expanding, till it had issued an amount sufficient to have supplied the entire demand of the city, and its failure would have been proportionably disastrous to the community. Question. In addition to the weekly returns of the associated banks, what further examination has been made into their condition? Answer by same.-A meeting of the commissioners of the associated banks was held last Friday evening, and it was unanimously resolved to institute a rigid and simultaneous examination into the affairs of each bank. The committees for this purpose were appointed on Monday and immediately proceeded to the execution of their duty. From all but two, reports have already been received, and in every instance the committees, in whose judgment the association places the most implicit confidence, have given their perfcct assurance that the public is perfectly safe as to the liabilities of the banks. In most cases the committees have gone still further, and expressed their opinion that the capital of the banks will be saved entire. Question.-Would the suspension of the law inposing an interest of 24 per cent. on all bills for which specie is refused, be expedient? Answer by same.-I have not the slightest hesitation in saying, apart from all interested motives as concerned in a bank, that it would be in the hig est degree expedient and advantageous-and for this reason. It is well known that public confidence has to some extent, been shaken in some of the banks; the community have a decided preference for a kind of currency, which, in their estimation, though not perhaps in reality, is better than the one now afloat. This currency consists of the bills of banks of long standing. But such banks will not put out their bills, so long as they are liable to the present penalty if not redeemed on demand. The object of the law undoubtedly was to prevent excessive issues, to keep the banks in a sound and healthy condition, and not to furnish cupidity with a penal provision by virtue of which it may take advantage of the distress of the community. And in the present state of things, the good of the country imperiously demands a different and a better currency, but a currency which cannot be obtained so long as the present law exists. Question.-Would not the repeal of this law tend to increase the circulation of the banks? Answer by same.--I do not think it would. It is not an increase of circulation which is required, but only a change in its character. Question. What is the present operation of this law? Answer by Mr. Sprague.-In the utmost degree injurious. The banks of Boston, so far as their own interest is concerned, are willing to throw themselves into the gap, to afford a circulating medium which shall command the confidence of the public; but how can they do it with the present frightful penalty harg ing over their heads. They are willing, in the present state of affairs, to pay the usual and legal interest on their bills, to give up all the profits they may receivebut how can they be expected or desired to subject themselves to the demand of four times the usual interest on every bill they issue? A man comes ixto a bank with a note for $1000, which is discounted and paid in the bills of the bank. If he is dissatisfied the bank will give him what they receive for the bills, or put | cent. per annum. Money is undoubtedly abundant, but them on legal interest. And shall he be encouraged to there is a great deal of paper in the market which is demand 24 per cent.-shall such an enormous premium offered at high rates. A return to specie payments in be offered on usury? As soon as he gets his money, the present state of excitement and distress, we pre the man is incited by this law to turn round and de- sume, is out of the question. Confidence in the banks mand specie; and, if it be not given him, to put the must prevail in the community before a general rebills on interest at 24 per cent. Can the banks sub-sumption can with safety be carried into effect. We mit to this? I say it respectfully, but it is my firm trust that the worst of the difficulty with the banks is belief that every bank in the city would rather close past. An opinion has gone abroad that all the Boston its doors and wait for better times, than go on as is banks are in an unsafe condition. Nothing can be farther asked, in such a state of things. We will give you all from the truth. A large proportion of the banks of this you give us we charge 6 per cent. and we are willing city are among the most solid and healthy in the to pay it but we cannot consent to improve the cur- United States: this is true beyond all doubt, and the rency at the present time, at the enormous expense or result will prove it so. Our merchants, those we mean, risk-and this expense may soon be fact-24 per cent. who have confined themselves to their legitimate trade, on our issues. The stockholders of every bank would were never more entitled to credit than at this moment. rather say to their directors, call in your accounts, pay The Commonwealth Bank of this city, the oldest of your debts, and wind up your affairs. And who would the deposit banks of New England, failed on the 12th then be the sufferers? The merchants, the traders, ultimo. Its capital is $500,000; bills in circulation, the farmers. And is it possible that the representa- $358,925; balances due to other banks; $180,000; tives of these great classes would drive us to wind up deposites, (principally by the United States Treasury) all the business of the community at such a time as $328,914 85 cents; notes payable, unpaid dividend, &c. this, and for a thing too, which we could not help? $18,078 73 cents; Total, $1,415,945 58 cents. Assels We suspended specie payments because the country-specie, $28,684; due from other banks, including the had suspended. We might have continued them forty- Middlesex, $114,058 36 cents. eight hours, but no longer; that time would have suf ficed to drain us of our coin, and instead of now hav. ing over a million in specie as a basis for future operations, we should not have had a dollar. And would you have thought any better of us for so doing? Gentlemen need not fear a too great increase of the currency should the law be repealed; the banks have no desire of themselves to put out a dollar of their bills, but they are willing to do it in order to furnish you a currency with which you can go to market, without fearing that before you reach the market house the bills in your pocket will be worthless. There will be no redundancy in the circulation. The bills of some ten or fifteen banks will be issued and take the place of the suspected and doubtful bills now in the market. The latter will be called in by the banks, and the public thus secured. Gentlemen talk of the weak and feeble banks belonging to the association. I know of none such-there is not a feeble bank now among its members. And when the reports of the examining committees shall be laid before the public, there is not one institution, among the whole twenty-eight, which will be looked on with suspicion. They are all perfectly safe, and, provided this law be repealed, capable of furnishing to the city a currency equal to what it ever enjoyed. After numerous other enquiries and answers-which want of time and space compels us to omit-the committec adjourned. It is understood that the reports of the committees of investigation appointed by the association, will be submitted to the committee on Saturday afternoon. From Clarke's Boston Bank Note List of Feb. 1. MONEY MARKET.-The failure of several of our banks has thrown confusion and want of confidence into all money transactions. The disposition manifested by the legislature to look into those banks which have failed, and also those which have made themselves liable to public censure, has had the effect to make them all do their utmost to put their affairs in a snug and safe condition. Many of the banks are not in a situation to make new discounts, and their customers are compelled to look to some other quarter for accommodation usually extended to them. It can hardly be said that there is any rate for money in the street, though when unquestionable security is offered it can be obtained at moderate rates, say 8 to 10 per The Middlesex Bank at East Cambridge was also a deposit bank; its capital is $150,000; circulation in October, when returns were made for the legislature, $53,826; deposits and balances due to other banks, $121,144 10 cents. Specie on hand, $2796 02 cents; real estate, bills of other banks, and due from other banks, $30,801 07. FULTON BANK.-At a meeting of the stockholders of this institution on the 18th Jan. it was voted to surrender the charter to the legislature and to wind up the affairs of the bank. The capital is $500,000, and it is presumed that 90 per cent. or $450,000 of this sum will prove a total loss to the stockholders. The India Fire and Marine Insurance Company owns $96,200 of this stock. The bills of the bank are received by all the banks belonging to the "Association," and will doubtless all be redeemed. COMMONWEALTH INSURANCE COMPANY.-The Commonwealth Insurance Company of this city has become bankrupt. Its capital, $300,000, is all invested in banks, which have failed; $250,000 in the Common. wealth Bank, and $50,000 in the Middlesex Bank at East Cambridge. BASE COIN.-Counterfeit sovereigns have recently been circulated to some extent in New York. Mexican dollars, made of base metal, and washed with silver, are also extensively circulated in all parts of the country. They are a good imitation, and would be taken by the unwary without suspicion. From the Boston Courier of Feb. 5. THE COMMONWEALTH BANK.. VERY MYSTERIOUS.-A debate of a very interesting character took place in the house of representatives on Saturday, created by an order presented by Mr. Dwight of Springfield, relating to the investigation of the affairs of the Commonwealth Bank. During this discussion, the following facts were elicited from the committee who conduct that investigation :-In the course of the examination into the affairs of the bank, the committce ascertained that there was a debt of $240,000 due to the bank, from the Warren Association-a company not incorporated, but a Joint Stock Company, holding a large property in real estate at South Boston. It became a question with the committee (or it was a question submitted to them by one of the directors of the Commonwealth Bank) whether the holders of stock in this company were liable in their individual capacity for the payment of this debt. The committee had no doubt that they were thus liable, and it was then, of course, a matter of some importance to ascertain who the individuals were, that composed the association. The evidences of the debt were produced, but the names of the associates and their evidences of copartnership were not so easily obtained. It was stated to the committee that all the papers relating to this subject were contained in a trunk or box, which was deposited in the office of an eminent counsellor of this city. At the request of the director above mentioned, the trunk was sent for, and when opened was found to contain none of the papers which were wanted. When or by whom they had been abstracted therefrom, was not known. The committee had no means of getting possession of the facts which were wanted, but by the testimony of witnesses. Mr. Henshaw, (the ex-collector of the port,) appeared as a witness and was sworn. A question was put to him by the director. He enquired whether the interrogation was to be considered as coming from the committee? The committee stated that it was not their question, but that of the bank. The witness then refused to answer, on the ground that the question was not proposed by the authority of a majority of the directors of the bank. committee on banks and banking be instructed to enquire into the expediency of establishing a bank, with a capital of ten or fifteen millions of dollars, to be called the State Bank of Massachusetts, and of establishing a bank from the same in each of the several counties of the state; also, of the propriety of the state owning a part of the capital stock of each bank; and of controlling the direction of the same; and that they be further instructed to report what, if any alterations, are necessary to be made in our present system of banking. THE PHOENIX BANK OF NEW YORK. From the Journal of Commerce of Feb. 6. BANK DIVIDEND.-This is a new sound for our state since the suspension, but the directors of the Phoenix Bank have declared a dividend of ten per cent., as we is no doubt quite able to make this dividend, for we are see by an advertisement sent us yesterday. The bank told that it has lost nothing of any amount, during the grand revulsion, so that it has a good and substantial surplus beyond the amount of this dividend. Its returns show that it has some $70,000 of bills in circulation and specie to the amount of $240,000. We presume, too, that the directors have looked well into the legal question growing out of the suspension law, while it refuses to pay any of its "notes or evidences which enacts that no bank shall make any dividend of debt" in specie. The question is of importance to our banking institutions generally; for we trust most or all of them will have very soon, if they have not already, as much right to declare dividends as the Phoenix. The object of the section referred to, was to prevent the banks from dividing their resources among their stockholders, so as to lessen the security of their creditors, and by withholding from the stockholders any remuneration for their capital, to bring their personal convenience in, to urge the resumption of specie payments. The bank, by declaring a dividend, of course declares its readiness to pay all its notes and evidences of debt in specie. But if it has done as the other banks in the street have done, it has only taken deposits of bank bills, payable in the same, so that its deposits are not debts payable in specie. All the intentions of the law are therefore complied with, and for It appeared, in the course of the discussion, that the counsellor in whose office the trunk was deposited, was John Pickering, Esq.; that the trunk was always subject to the inspection of the directors and other officers of the Warren Association; and that they, or some of them, had daily access to it, and had actually had possession of it within a short time previous to the call from the committee. This statement is the substance of the disclosures made by Mr. Chapman of Greenfield, and admitted to be essentially accurate by Mr. Rantoul of Gloucester-both members of the investigating committee. From a number of incidental remarks, which fell from these gentlemen, during the debate, it appears that the Hon. David Henshaw, the ex-collector, and the Hon. John Mills, the United States District Attorney, maintain some differences of opinion in regard to this mysterious disappearance of papers, and we infer, likewise, that the district attorney is by no means a match for the ex-collector in matters where skill in manage-aught we see, the proper construction of its letter; and ment and adroitness in execution are available attri butes. We learn, from another source, that the stockholders of the Warren Association-the same men, who are directors of the Commonwealth Bank-have voted to give up the joint property of the association to the bank, as security for the debt of $240,000, and that as bank directors, they voted to accept the proposition. Whether these gentlemen, as associates, will escape from their liability as individuals, remains to be seen. The public and the creditors of the Commonwealth bank have some interest in the question. MASSACHUSETTS LEGISLATURE. Saturday, Feb. 3. SENATE.-On motion of Mr. Quincy of Suffolk, Ordered, that the committee on banks consider the expediency of adopting a scheme of banking for this commonwealth, to go into operation at a future period, and resulting in a final substitution of a state bank, with branches, for the present system. HOUSE OF REPRESENTATIVES.-On motion of Mr. Brimmer of Boston, Ordered, That the committee on a memorial of Eliphalet Williams and others enquire into the expediency of providing by law that cashiers of banks shall be ineligible as directors thereof: also, on motion of the same gentleman, Ordered, That the this, we know, is the opinion of some of the most that the banks should make dividends if they can; for eminent lawyers of the city. It is no doubt desirable much of their stock is owned by persons who depend on it for their living. They will undoubtedly all resume the payment of their notes in specie before long, and when that is done throughout the state, the effect will be resumption in its broadest sense; for when all the banks pay specie for their bills, the reserved right to pay in bills will cease to be of value. INVESTIGATION OF THE LUMBERMEN'S From the Journal of Commerce. A meeting of the citizens of Jamestown, Chautauque Co. N. Y. was held in that town on the 20th ult. in consequence of the failure of the Lumbermen's Bank at Warren, Pa. It was appointed to be held at Shaw's tavern; but on account of the concourse of people, it was adjourned to the Presbyterian meeting house. The Hon. Abner Hazeltine presided. From a report made to the meeting by the committee, (two of whose members had been at Warren during the previous week, and had acted on a committee appointed by the citizens of that place to investigate the affairs of said bank,) it appeared in substance, says the official sketch of the proceedings, as published in the Fredonia Censor : |