These enormous loans were chiefly in the year 1837, at the time when the bank stopped payment on account of the "specie circular," the "removal of the deposits," and other alleged misdoings of the democratic administrations: and this is only a sample of the way that the institution went on during that period of fictitious distress, and real oppression—millions to brokers and favorites, not a dollar to the man of business.
Two agencies were established in London—one for the bank, under Mr. Jaudon, to borrow money; the other for a private firm, of which Mr. Biddle was partner, and his young son the London head—its business being to sell cotton, bought with the dead notes of the old bank. Of the expenses and doings of these agencies, all bottomed upon the money of the stockholders (so far as it was left), the committee gave this account:
"When Mr. Jaudon was elected to the place of foreign agent, he was the principal cashier, at a salary of 7,000 dollars per annum. The bank paid the loss on the sale of his furniture, 5,074 dollars, and the passage of himself and family to London, a further sum of 1,015 dollars. He was to devote himself exclusively to the business of the bank, to negotiate an uncovered credit in England, to provide for the then existing debt in Europe, to receive its funds, to pay its bills and dividends, to effect sales of stocks, and generally to protect the interests of the bank and 'the country at large.' For these services he was to receive the commission theretofore charged and allowed to Baring Brothers & Company, equal to about 28,000 dollars per annum. In addition to which, the expenses of the agency were allowed him, including a salary of 1,000 pounds sterling to his brother, Mr. Charles B. Jaudon, as his principal clerk. From the increase of money operations, arising from facilities afforded by the agency, the amount upon which commissions were charged was greatly augmented, so that the sums paid him for his country services up to January, 1841, amounted at nine per cent. exchange to 178,044 dollars 47 cents, and the expenses of the agency to 35,166 dollars 99 cents. In addition to these sums, he was allowed by the exchange committee, an extra commission of one per cent. upon a loan effected in October, 1839, of 800,000 pounds, say $38,755 56; and upon his claim for a similar commission, upon subsequent loans in France and Holland, to the amount of $8,337,141 90, the board of directors, under the sanction of a legal opinion, from counsel of high standing, and the views of the former president, by whom the agreement with Mr. Jaudon was made, that the case of extraordinary loans was not anticipated, nor meant to be included in the original arrangement, allowed the further charge of $83,970 37. These several sums amount to $335,937, 39, as before stated."
A pretty expensive agency, although the agent was to devote himself exclusively to the business of the bank, protecting its interests, and those of "the country at large"—an addition to his mission, this protection of the country at large, which illustrates the insolent pretensions of this imperious corporation. Protect the country at large! while plundering its own stockholders of their last dollar. And that furniture of this bank clerk! the loss on the sale of which was $5,074! and which loss the stockholders made up: while but few of them had that much in their houses. The whole amount of loans effected by this agency was twenty-three millions of dollars; of which a considerable part was raised upon fictitious bills, drawn in Philadelphia without funds to meet them, and to raise money to make runs upon the New York banks, compel them to close again: and so cover her own insolvency in another general suspension: for all these operations took place after the suspension of 1837. The committee thus report upon these loans, and the gambling in stock speculations at home:
"Such were some of the results of the resolution of March, 1835, though it cannot be questioned, that much may be fairly attributed to the unhappy situation of the business and exchanges of the country, concurring with the unfortunate policy pursued by the administration of the bank. Thus the institution has gone on to increase its indebtedness abroad, until it has now more money borrowed in Europe, than it has on loan on its list of active debt in America. To this has been superadded, extensive dealing in stocks, and a continuation of the policy of loaning upon stock securities, though it was evidently proper upon the recharter, that such a policy should be at once and entirely abandoned. Such indeed was its avowed purpose, yet one year afterwards, in March, 1837, its loans on stocks and other than personal security had increased $7,821,541, while the bills discounted on personal security, and domestic exchange had suffered a diminution of $9,516,463 78. It seems to have been sufficient, to obtain money on loan, to pledge the stock of an 'incorporated company,' however remote its operation or uncertain its prospects. Many large loans originally made on a pledge of stocks, were paid for in the same kind of property, and that too at par, when in many instances they had become depreciated in value. It is very evident to the committee, that several of the officers of the bank were themselves engaged in large operations in stocks and speculations, of a similar character, with funds obtained of the bank, and at the same time loans were made to the companies in which they were interested, and to others engaged in the same kind of operations, in amounts greatly disproportionate to the means of the parties, or to their proper and legitimate wants and dealings. The effect of this system, was to monopolize the active means of the institution, and disable it from aiding and accommodating men engaged in business really productive and useful to the community; and as might have been anticipated, a large part of the sums thus loaned were ultimately lost, or the bank compelled, on disadvantageous terms as to price, to take in payment stocks, back lands and other fragments of the estates of great speculators."
The cotton agency seemed to be an ambidextrous concern—both individual and corporation—its American office in the Bank of the United States—the purchases made upon ten millions of its defunct notes—the profits going to the private firm—the losses to the bank. The committee give this history:
"In the course of the investigation the attention of the committee has been directed to certain accounts, which appear on the books as 'advances on merchandise,' but which were, in fact, payments for cotton, tobacco and other produce, purchased by the direction of the then President, Mr. Nicholas Biddle, and shipped to Europe on account of himself and others. These accounts were kept by a clerk in the foreign exchange department, this department being under the charge of Mr. Cowperthwaite, until September 22, 1837, when he was elected cashier, and of Mr. Thomas Dunlap, until March 20, 1840, when he was chosen president. The original documents, necessary to enable the committee to arrive at all the facts in relation to these transactions, were not accessible, having been retained, as was supposed, by the parties interested, as private papers. A succinct view of the whole matter, sufficient to convey to the stockholders a general idea of its character, may be drawn from the report of a committee of the board of directors, appointed on the 21st of July, 1840, for the purpose of adjusting and settling these accounts, and who reported on the 21st of December, 1840, which report with the accompanying accounts, is spread at large upon the minutes. The first transactions were in July, 1837, and appear as advances, to A. G. Jaudon, to purchase cotton for shipment to Baring Brothers & Co. of Liverpool, the proceeds to be remitted to their house in London, then acting as the agents of the bank. The amount of these shipments was 2,182,998 dollars 28 cents. The proceeds were passed to the credit of the bank, and the account appears to be balanced. The results, as to the profit and loss, do not appear, and the committee had no means of ascertaining them, nor the names of the parties interested. In the autumn of 1837, when the second of these transactions commenced, it will be recollected, that Mr. Samuel Jaudon had been appointed the agent of the bank to reside in London. About the same time, a co-partnership was formed between Mr. May Humphreys, then a director of the bank, and a son of Mr. Nicholas Biddle, under the firm of Biddle & Humphreys. This house was established at Liverpool, and thenceforward acted as agents for the sale of the produce shipped to that place which comprised a large proportion of the whole amount. In explanation of these proceedings, the committee annex to their report a copy of a letter dated Philadelphia, December 28, 1840, to the president and directors of the bank, from Mr. Joseph Cabot, one of the firm of Bevan & Humphreys, and who became a director at the election in January, 1838. This letter was read to the board, December 29, 1840, but was not inserted on the minutes.
"This arrangement continued during the years 1837, 1838 and 1839, the transactions of which amounted to 8,969,450 dollars 95 cents. The shipments were made principally to Biddle and Humphreys, were paid for by drafts on Bevan and Humphreys—the funds advanced by the bank, and the proceeds remitted to Mr. Samuel Jaudon, agent of the bank in London. It appears that there was paid to Messrs. Bevan and Humphreys by the bank in Philadelphia during the months of March, April, and May, 1839, the sum of eight hundred thousand dollars, and the account was thus balanced. The committee have reason to believe, that this sum constituted a part or perhaps the whole of the profits derived from the second series of shipments. How, and among whom, it was distributed, they have not been informed, but from the terms of the final settlement, to be adverted to presently, each one will be at liberty to make his own inferences. The third and last account, amounting to 3,241,042 dollars 83 cents, appears on the books, as 'bills on London, advances S. V. S. W.' These letters stand for the name of S. V. S. Wilder, of New York.—Messrs. Humphreys and Biddle, to whom these consignments were made, continued their accounts in the name of Bevan and Humphreys, but without the knowledge of that firm, as appears by Mr. Cabot's letter of December 28, 1840. The result of these last shipments, was a loss of 962,524 dollars 13 cents. Of this amount the sum of 553,908 dollars 57 cents was for excess of payments by Messrs. Humphreys and Biddle to the London agency, beyond the proceeds of sale, with interest thereon. The parties interested, claimed and were allowed a deduction for loss on 526,000 dollars of southern funds, used in the purchase of cotton, when at a discount, the sum of 310,071 dollars 30 cents; and also this sum, being banker's commission to Messrs. Humphreys and Biddle on advances to Samuel Jaudon, agent, 21,061 dollars 86 cents, making 331,133 dollars 16 cents, and leaving to be settled by the parties the sum of 631,390 dollars 97 cents."
Thus, the profit of eight hundred thousand dollars on the first shipments of cotton went to this private firm, though not shown on the books to whom; and the loss of nine hundred and sixty-two thousand five hundred and twenty-four dollars and thirteen cents on the last shipments went to the bank; but this being objected to by some of the directors, it was settled by Mr. Biddle and the rest—the bank taking from them stocks, chiefly of Texas, at par—the sales of the same being slow at a tithe of their face. The bank had also a way of guaranteeing the individual contracts of Mr. Biddle for millions; of which the report gives this account:
"Upon the eighteenth day of August, 1838, the bank guaranteed a contract made by Mr. Nicholas Biddle in his individual capacity, for the purchase of two thousand five hundred bonds of the State of Mississippi, of two thousand dollars each, amounting in the whole to 5,000,000 dollars. The signature of Mr. Thomas Dunlap, then second assistant cashier, was affixed to the guarantee, in behalf of the bank, upon the verbal authority of the president. Upon the 29th of January, 1839, the bank guaranteed to the State of Michigan, the punctual fulfilment of the obligations of the Morris canal and banking company, for the purchase of bonds of that state, to the extent of 3,145,687 dollars 50 cents. for 2,700,000 taken at par, and including interest on the instalments payable every three months up to January, 1843. On the 29th of April, 1839, the bank guaranteed a contract entered into by Mr. Thomas Dunlap in his individual capacity for the purchase of one million of dollars of the 'Illinois and Michigan canal stock.' In regard to these transactions, the committee can find no authority on the minutes of the board, and have been referred to none, by the president, upon whom they called for information."
Unintelligible accounts of large amounts appeared in the profit and loss side of the bank ledger; which, not explaining themselves, the parties named as receiving the money, were called upon for explanations—which they refused to give. Thus: