A Compilation of the Messages and Papers of the Presidents. Volume 3, part 1: Andrew Jackson (Second Term)

by Unknown

The reports are made in obedience to my official directions, and I herewith transmit copies of my letters calling for information of the proceedings of the bank. Were they bound to disregard the call? Was it their duty to remain silent while abuses of the most injurious and dangerous character were daily practiced? Were they bound to conceal from the constituted authorities a course of measures destructive to the best interests of the country and intended gradually and secretly to subvert the foundations of our Government and to transfer its powers from the hands of the people to a great moneyed corporation? Was it their duty to sit in silence at the board and witness all these abuses without an attempt to correct them, or, in case of failure there, not to appeal to higher authority? The eighth fundamental rule authorizes any one of the directors, whether elected or appointed, who may have been absent when an excess of debt was created, or who may have dissented from the act, to exonerate himself from personal responsibility by giving notice of the fact to the President of the United States, thus recognizing the propriety of communicating to that officer the proceedings of the board in such cases. But independently of any argument to be derived from the principle recognized in the rule referred to, I can not doubt for a moment that it is the right and the duty of every director at the board to attempt to correct all illegal proceedings, and, in case of failure, to disclose them, and that every one of them, whether elected by the stockholders or appointed by the Government, who had knowledge of the facts and concealed them, would be justly amenable to the severest censure.

But in the case of the public director it was their peculiar and official duty to make the disclosures, and the call upon them for information could not have been disregarded without a flagrant breach of their trust. The directors appointed by the United States can not be regarded in the light of the ordinary directors of a bank appointed by the stockholders and charged with the care of their pecuniary interests in the corporation. They have higher and more important duties. They are public officers. They are placed at the board not merely to represent the stock held by the United States, but to observe the conduct of the corporation and to watch over the public interests. It was foreseen that this great moneyed monopoly might be so managed as to endanger the interests of the country, and it was therefore deemed necessary as a measure of precaution to place at the board watchful sentinels, who should observe its conduct and stand ready to report to the proper officers of the Government every act of the board which might affect injuriously the interests of the people.

The whole frame of the charter, as well as the manner of their appointment, proves this to be their true character. The United States are not represented at the board by these directors merely on account of the stock held by the Government. The right of the United States to appoint directors and the number appointed do not depend upon the amount of the stock, for if every share should be sold and the United States cease to be a stockholder altogether, yet under the charter the right to appoint five directors would still remain. In such a case what would be the character of the directors? They would represent no stock and be chosen by no stockholders. Yet they would have a right to sit at the board, to vote on all questions submitted to it, and to be made acquainted with all the proceedings of the corporation. They would not in such a case be ordinary directors chosen by the stockholders in proportion to their stock, but they would be public officers, appointed to guard the public interest, and their duties must conform to their office. They are not the duties of an ordinary director chosen by a stockholder, but they are the peculiar duties of a public officer who is bound on all occasions to protect to the utmost of his lawful means the public interests, and, where his own authority is not sufficient to prevent injury, to inform those to whom the law has confided the necessary power. Such, then, is the character and such are the duties of the directors appointed by the United States, whether the public be stockholders or not. They are officers of the United States, and not the mere representatives of a stockholder.

The mode of their appointment and their tenure of office confirm this position. They are appointed like other officers of the Government and by the same authority. They do not hold their offices irrevocably a year after their appointment; on the contrary, by the express terms of the law, they are liable to be removed from office at any time by the President when in his judgment the public interest shall require it. In every aspect, therefore, in which the subject can be considered it is evident that the five directors appointed by the United States are to be regarded as public officers who are placed there in order to observe the conduct of the corporation and to prevent abuses which might otherwise be committed.

Such being the character of the directors appointed on behalf of the United States, it is obviously their duty to resist, and in case of failure to report to the President or to the Secretary of the Treasury, any proceedings of the board by which the public interests may be injuriously affected. The President may order a scire facias against the bank for a violation of its charter, and the Secretary of the Treasury is empowered to direct the money of the United States to be deposited elsewhere when in his judgment the public interest requires it to be done. The directors of this bank, like all others, are accustomed to sit with closed doors, and do not report their proceedings to any department of the Government.

The monthly return which the charter requires to be made to the Treasury Department gives nothing more than a general statement of its pecuniary condition, and of that but an imperfect one; for although it shows the amount loaned at the bank and its different branches, it does not show the condition of its debtors nor the circumstances under which the loans were made. It does not show whether they were in truth accommodations granted in the regular and ordinary course of business upon fair banking principles or from other motives. Under the name of loans advances may be made to persons notoriously insolvent for the most corrupt and improper purposes, and a course of proceeding may be adopted in violation of its charter, while upon the face of its monthly statement everything would appear to be fair and correct.

How, then, is the executive branch of the Government to become acquainted with the official conduct of the public directors or the abuses practiced by the corporation for its private ends and in violation of its duty to the public? The power of displacing the public directors and that of issuing a scire facias and of removing the deposits were not intended to be idle and nugatory provisions without the means of enforcement. Yet they must be wholly inoperative and useless unless there be some means by which the official conduct of the public directors and the abuses of power on the part of the corporation may be brought to the knowledge of the executive department of the Government.

Will it be said that the power is given to the Secretary of the Treasury to examine himself, or by his authorized agent, into the conduct and condition of the bank? The answer is obvious. It could not have been expected or intended that he would make an examination unless information was first given to him which excited his suspicions; and if he did make such a general examination without previous information of misconduct, it is most probable that in the complex concerns and accounts of a bank it would result in nothing, whatever abuses might have been practiced.

It is, indeed, the duty of every director to give information of such misconduct on the part of the board. But the power to issue a scire facias and to remove the deposits presupposes that the directors elected by the stockholders might abuse their power, and it can not be presumed that Congress intended to rely on these same directors to give information of their own misconduct. The Government is not accustomed to rely on the offending party to disclose his offense. It was intended that the power to issue a scire facias and remove the deposits be real and effective. The necessary means of information were therefore provided in the charter, and five officers of the Government, appointed in the usual manner, responsible to the public and not to the stockholders, were placed as sentinels at the board, and are bound by the nature and character of their office to resist, and if unsuccessful to report to the proper authority, every infraction of the charter and every abuse of power, in order that due measures should be taken to punish or correct it; and in like manner it is their duty to give, when called upon, any explanation of their own official conduct touching the management of the institution.

It was perhaps scarcely necessary to present to the Senate these views of the power of the Executive and of the duties of the five directors appointed by the United States. But the bank is believed to be now striving to obtain for itself the government of the country, and is seeking by new and strained constructions to wrest from the hands of the constituted authorities the salutary control reserved by the charter; and as misrepresentation is one of its most usual weapons of attack, I have deemed it my duty to put before the Senate in a manner not to be misunderstood the principles on which I have acted.