"I will now make a fuller statement; and I think I am authorized to say that there are gentlemen in this House from the West, and under my eye at present, who will confirm every word I say. A person has a note in one of the Western branch banks, and if the bank determines to extend no further credit, its custom is, when it sends out the usual notice of the time the note falls due, to write across the notice, in red ink, these three fatal words—well understood in that country—'Payment is expected.' This notice, thus rubricated, becomes a death-warrant to the credit of that customer, unless he can raise the wind, as it is called, to pay it off, or can discount a domestic bill of exchange. This last is done in one of two ways. If he has a factor in New Orleans who is in the habit of receiving and selling his produce, he draws upon him to pay it off at maturity. The bank charges two per centum for two months, the factor two and a half, and thus, if the draft is at sixty days, he pays at the rate of twenty-seven per centum. If, however, he has no factor, he is obliged to get some friend who has one to make the arrangement to get his draft accepted. For this accommodation he pays his friend one and a half per cent., besides the two per cent. to the bank, and the two and a half per cent. to the acceptor; making, in this mode of arrangement, thirty-six per cent. which he pays before he can get out of the clutches of the bank for that time, twelve per cent. of which, in either case, goes to the bank; and so little conscience have they, in order to make this, they will subject a poor and unfortunate debtor to the other enormous burdens, and consequently to absolute beggary. For it must be obvious to every one that such a per cent. for money, under the melancholy depreciation of produce every where in the South and West, will soon wind up the affairs of such a borrower. No people under the heavens can bear it; and unless a stop is put to it, in some way or other, I predict the Western people will be in the most deplorable situation it is possible to conceive. There is another great hardship to which this debtor is liable, if he should not be able to furnish the produce; or, which is sometimes the case, if it is sacrificed in the sale of it at the time the draft becomes due, whereby it is protested for want of funds, it returns upon him with the additional cost of ten per cent. for non-payment. Now, sir, that is what is meant by domestic bills of exchange, disguised as loans, to take more than six per cent.; for, mark, Mr. Speaker, the bank does not purchase a bill of exchange by paying out cash for it, and receiving the usual rate of exchange, which varies from one-quarter to one per cent.; but it merely delivers up the poor debtor's note which was previously in bank, and, what is worse, just as well secured as the domestic bill of exchange which they thus extort from him in lieu thereof. And while they are thus exacting this per cent. from him, they are discounting bills for others not in debt to them at the usual premium of one per cent. The whole scene seems to present the picture of a helpless sufferer in the hands of a ruffian, who claims the merit of charity for discharging his victim alive, after having torn away half his limbs from his body."
The second mode was to make the loan take the form of a domestic bill from the beginning; and this soon came to be the most general practice. The borrowers finding that their notes were to be metamorphosed into bills payable in a distant city, readily fell into the more convenient mode of giving a bill in the first instance payable in some village hard by, where they could go to redeem it without giving commissions to intermediate agents in the shape of endorsers and brokers. The profit to the bank in this operation was to get six per centum interest, and two per cent. exchange; which, on a sixty days' bill, was twelve per cent. per annum; and, added to the interest, eighteen per cent. per annum; with the addition of ten per centum damages if the bill was protested; and of this character were the mass of the loans in the West—a most scandalous abuse, but cut off, with a multitude of others, from investigation from the restrictions placed upon the powers of the committee.
The supporters of the institution carried their point in the House, and had the investigation in their own way; but with the country it was different. The bank stood condemned upon its own conduct, and badly crippled by the attacks upon her. More than a dozen speakers assailed her: Clayton, Wayne, Foster of Georgia; J. M. Patton, Archer, and Mark Alexander of Virginia; James K. Polk of Tennessee; Cambreleng, Beardsley, Hoffman and Angel of New-York; Mitchell and Blair of South Carolina; Carson of North Carolina; Leavitt of Ohio. The speakers on the other side were: McDuffie and Drayton of South Carolina; Denny, Crawford, Coulter, Watmough, of Pennsylvania; Daniel of Kentucky; Jenifer of Maryland; Huntington of Connecticut; Root and Collins of New-York; Evans of Maine; Mercer of Virginia; Wilde of Georgia. Pretty equally matched both in numbers and ability; but the difference between attack and defence—between bold accusation and shrinking palliation—the conduct of the bank friends, first in resisting all investigation, then in trying to put it into the hands of friends, then restricting the examination, and the noise and confusion with which many of the anti-bank speeches were saluted—gave to the assailants the appearance of right, and the tone of victory throughout the contest; and created a strong suspicion against the bank. Certainly its conduct was injudicious, except upon the hypothesis of a guilt, the worst suspicion of which would be preferable to open detection and such, eventually, was found to be the fact. In justice to Mr. McDuffie, the leading advocate of the bank, it must be remembered that the attempts to stifle, or evade inquiry, did not come from him but from the immediate representative of the bank neighborhood—that he twice discountenanced and stopped such attempts, requesting them to be withdrawn; and no doubt all the defenders of the bank at the time believed in its integrity and utility, and only followed the lead of its immediate friends in the course which they pursued. For myself I became convinced that the bank was insolvent, as well as criminal; and that, to her, examination was death; and therefore she could not face it.
The committee appointed were: Messrs. Clayton, Richard M. Johnson of Kentucky, Francis Thomas of Maryland, and Mr. Cambreleng of New-York, opposed to the recharter of the Bank; Messrs. McDuffie, John Quincy Adams, and Watmough, in favor of it. The committee was composed according to the parliamentary rule—the majority in favor of the object—but one of them (Colonel Johnson of Kentucky), was disqualified by his charitable and indulgent disposition for the invidious task of criminal inquisition; and who frankly told the House, after he returned, that he had never looked at a bank-book, or asked a question while he was at Philadelphia; and, Mr. Adams in invalidating the report of the majority against the bank, disputed the reality of the majority, saying that the good nature of Colonel Johnson had merely licensed it. On the other hand, the committee was as favorably composed for the bank—Mr. Adams and Mr. McDuffie both able writers and speakers, of national reputation, investigating minds, ardent temperaments, firm believers in the integrity and usefulness of the corporation; and of character and position to be friendly to the institution without the imputation of an undue motive. Mr. Watmough was a new member, but acceptable to the bank as its immediate representative, as the member that had made the motions to baffle investigation; and as being from his personal as well as political and social relations, in the category to form, if necessary, its channel of confidential communication with the committee.
The committee made three reports—one by the majority, one by the minority, and one by Mr. Adams alone. The first was a severe recrimination of the bank on many points—usury, issuing branch bank orders as a currency, selling coin, selling stock obtained from government under special acts of Congress, donations for roads and canals, building houses to rent or sell, loans unduly made to editors, brokers, and members of Congress. The adversary reports were a defence of the bank on all these points, and the highest encomiums upon the excellence of its management, and the universality of its utility; but too much in the spirit of the advocate to retain the character of legislative reports—which admit of nothing but facts stated, inductions drawn, and opinions expressed. Both, or rather all three sets of reports, were received as veracious, and lauded as victorious, by the respective parties which they favored; and quoted, as settling for ever the bank question, each way. But, alas, for the effect of the progress of events! In a few brief years all this attack and defence—all this elaboration of accusation, and refinement of vindication—all this zeal and animosity, for and against the bank—the whole contest—was eclipsed and superseded by the actualities of the times the majority report, as being behind the facts: the minority, as resting upon vanished illusions. And the great bank itself, antagonist of Jackson, called imperial by its friends, and actually constituting a power in the State—prostrate in dust and ashes—and invoking from the community, through the mouth of the greatest of its advocates (Mr. Webster), the oblivion and amnesty of an "obsolete idea."
It is not the design of this View to explore these reports for the names of persons implicated (some perhaps unjustly), in the criminating statements of the majority. The object proposed in this work does not require that interference with individuals. The conduct of the institution is the point of inquiry; and in that conduct will be found the warning voice against the dangers and abuses of such an establishment in all time to come.
CHAPTER LXV.
THE THREE PER CENT. DEBT, AND LOSS IN NOT PAYING IT WHEN THE RATE WAS LOW, AND THE MONEY IN THE BANK OF THE UNITED STATES WITHOUT INTEREST.
There was a part of the revolutionary debt, incurred by the States and assumed by Congress, amounting to thirteen and a quarter millions of dollars, on which an interest of only three per centum was allowed. Of course, the stock of this debt could be but little over fifty cents in the dollar in a country where legal interest was six per centum, and actual interest often more. In 1817, when the Bank of the United States went into operation, the price of that stock was sixty-four per centum—the money was in bank, more than enough to pay it—a gratuitous deposit, bringing no interest—and which was contained in her vaults—her situation soon requiring the aid of the federal government to enable her to keep her doors open. I had submitted a resolve early in my term of service to have this stock purchased at its market value; and for that purpose to enlarge the power of the commissioners of the sinking fund, then limited to a price a little below the current rate: a motion which was resisted and defeated by the friends of the bank. I then moved a resolve that the bank pay interest on the deposits: which was opposed and defeated in like manner. Eventually, and when the rest of the public debt should be paid off, and the payment of these thirteen and a quarter millions would become obligatory under a policy which eschewed all debt—a consummation then rapidly approaching, under General Jackson's administration—it was clear that the treasury would pay one hundred cents on the dollar on what could be then purchased for sixty-odd, losing in the mean time the interest on the money with which it could be paid. It made a case against the bank, which it felt itself bound to answer, and did so through senator Johnson, of Louisiana: who showed that the bank paid the debt which the commissioners of the sinking fund required. This was true; but it was not the point in the case. The point was that the money was kept in deposit to sustain the bank, and the enlargement of the powers of the commissioners resisted to prevent them from purchasing this stock at a low rate, in view of its rise to par: which soon took place; and made palpable the loss to the United States. At the time of the solicited renewal of the charter, this non-payment of the three per cents was brought up as an instance of loss incurred on account of the bank; and gave rise to the defence from Mr. Johnson; to which I replied: