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thousands, will follow wch will be your as well as my advantage, you may be informed of ye reason of this proposal more particularly by R. T. & T. H. if there be any need for it. Almighty God encline and direct you for ye best, and determine quickly, for else, my cours will be as you may hear by T. H. otherwise in solitudes. my sincere love salutes you and my wishes, in the will of God, are for your happiness, whether I see you any more, wch under God, depends much upon your compliance with my proposal, and those yt close with it shall ever be remembered by me and myn. So wth my love, farewell.

Your assured Friend,

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Loving frds,

LONDON, 20th 4mo. 95.

tender life keeps it down here and who keep to yt. will not be hurt therby, his rudeness to me has been beyond compare, after all my tonderness to him, more and more work my Cos. Markham into a good understanding with Frds. there and to extinguish heats and divisions. It is ye. Divils designe to ruine yt. Provinces great and unpresidented beginnings, my love to you and yours, and to frds. and ye. people in general, they yt. forgive most overcome most; mind yt.

Press ye. suppression of vice and disorder pray, and urge the Dept. a council to repeat and revive their care WM. PENN.

therein.

Directed

For Robert Turner
and Tho. Holmes or
either of them at Phila-
delphia in Pennsylvania.

REPORT.

In the Senate of Pennsylvania, January 29th 1820. The Committee appointed on the 10th ult. on the subject of the present distressed and embarrassed state of the commonwealth, made report, which was read as follows, to wit.

In the performance of a duty of such high importance as that which has been entrusted to your committee, they have felt it incumbent on them to enter at large into the investigation of the subject contemplated by their appointment, in order that the people of the present day may be correctly informed as to the extent and causes of the evils by which they are oppressed, and that the records of the house may be furnished with a document, which may afford evidence at a future day of the miseries which it is possible to inflict upon a people by errors in legislation, and by the bad administration of incorporated institutions.

Yours are with me, and I wish if God had pleased, you had been so too, yt. we might have been satisfied one in another; wch. if we live to meet Ian perswaded will be. I long to see you; but my Impediment you know, and if I cannot be assisted, I must do as I can. Known are all my desires, troubles and ways to ye. Lord God; and when we meet before him yt. shall judge the world, I shall stand clear in my heart and actions towards yt. Province. God has hedged up my way, but my prayer to him is, he would open it, for I am weary of the Delay; and I would have my frds. there pitty me and not censure me as to yt. Now for ye. commission, I tell you why I limitted it, because of such Collops as are cut out of my mannners; by wch. I am disseated and defeated. For Wm. Stockdale's, In ascertaining the extent of the public distress, your ye. vineyard, new england frds, G. Heathcotes graunts committee has had no difficulties to encounter. Memdo touch me sorely, for I know their value. I ain de- bers of the legislature from various quarters of the state termined to sell nothing taken up what ever is given have been consulted in relation to this subject, and their for it, but upon my consent to be had, and yt. the mo- written testimony in answer to interrogatories addressed ney remitted here before S. Jen. time much was reciv- to them by the committee, has agreed with scarcely an ed, for rents and lands; I never saw a penny of it. 1100lb. exception, upon all material points. With such a resor more in his receipts, I never saw a penny of it. and pectable weight of evidence added to that which has all run to rack at Pennsberry, pray lett me be consid- been derived from the prothonotaries, recorders and ered in these things. I take very kindly your care to sheriffs of the different counties, from an intercourse support my house, and gett Durrels Plantation for me; with numerous private citizens residing in different parts when got, sell it not, 'twill serve my poor younger Son of the state, as well as from the various petitions preAnd one thing more, I will never part with my Daugh- sented to the legislature, your committee can safely as ters Lott Land, for it is given to her, and is her accom-sert, that a distress unexampled in our country since the modation, what, will not people lett me have ye. same regard to my children yt. I have for ym. yt have at ye. least ye. same pretence. pray lett ye. Com.s. know my mind herein-and do all in love.

I hope long before this comes, you hear of my having my Governmt. and of a new and fuller Commission; but this I must say, I am confident yt. yt. was so much blamed was taken too narrowly by some there, I never could be author of such a senceless limitation as yt. was aggravated to; however wts. past I desire may be past by on all hands.

commonwealth. This distress exhibits itself under the period of its independence, prevails throughout the varied forms of

1. Ruinous sacrifices of landed property at sheriff's sales, whereby in many cases lands and houses have been sold at less than a half, a third, or a fourth of their former value, thereby depriving of their homes and of the fruits of laborious years, a vast number of our industrious farmers, some of whom have been driven to seek in the uncultivated forests of the west, that shelter of which they have been deprived in their native state.

2. Forced sales of merchandize, household goods, farming stock, and utensils at prices far below the costs of production, by which numerous families have been deprived of the common necessaries of life, and of the implements of their trade.

3. Numerous bankruptcies and pecuniary embarrasments of every description, as well among the agricultural and manufacturing, as the mercantile classes.

Now for Sr. Mat. Vin. he payed me upon account, so mnch money is in my hands, as near pays it, but Doct. Cox's is not and so major Thomson, I intend yt. for Bille; Entalements in Eng. and Ireland rendering his portion short, my face is now turned towards Ireland, when yt. Journy is over (for I have not seen my Estate since I had it 24 years and an) I bend towards you, with divers famelys, I may say many, and some considerable; and some persons you will be glad to see there, 4. A general scarcity of money throughout the counI beseech you endeavour concord. G. K. is disowned by try, which renders it almost impossible for the husbandye. yearly meeting, man by man; and under yt. Judg- man or other owners of real estate to borrow even at a ment is, as before, most passionate, rude, and outragious.usurious interest, and where landed security of the most Licks up the very vomit of T. H— and J. T—————, and never did one go from us yt. carried fewer with him, wherefore touch not with yt. Spt, nor countenance thos hurt by it there, for bow they must or be lost; a weighty

indubitable character is offered as a pledge. A similar difficulty of procuring on loan had existed in the metropolis previous to October last, but has since then been partially removed.

1829.]

REPORT ON THE STATE OF THE COMMONWEALTH.

5. A general suspension of labor, the only legitimate source of wealth, in our cities and towns, by which thousands of our most useful citizens are rendered destitute of the means of support, and are reduced to the extremity of poverty and despair.

6. An almost entire cessation of the usual circulation of commodities, and a consequent stagnation of business, which is limited to the mere purchase and sale of the necessaries of life, and of such_articles of consumption as are absolutely required by the season.

7. An universal suspension of all large manufacturing operations, by which in addition to the dismissal of the numerous productive laborers heretofore engaged therein, who can find no other employment, the public loses the revenue of the capital invested in machinery and buildings.

8. Usurious extortions, whereby corporations institut ed for banking, insurance and other purposes, in violation of law, possess themselves of the products of industry without granting an equivalent.

9. The overflowing of our prisons with insolvent debtors, most of whom are confined for trifling sums, whereby the community loses a portion of its effective labor, and is compelled to support families by charity, who have thus been deprived of their protectors.

137

on a capital paid in of $ 400,000, and as its credit stood high, and the union was deficient in a circulating medium, it was enabled to extend its issues vastly beyond the amount of its capital. The extent of its loans may be inferred from the rate of its dividends, which were as high as 12 and even 16 per cent per annum. The extensive and distant circulation of the notes of this bank occasioned by the disbursments of the general government which was a heavy borrower, emboldened its directors, and led them to overstep the bounds of discretion. The channels of circulation becoming overcharged with paper, and the public beginning to doubt the ability of the bank to redeem its notes on demand, naturally led to the consequences, which with the unerring certainty of fate, will sooner or later result from an extravagant emission of paper. The notes returned for payment, and with the diminution of its speice means the bank to sustain its credit, was compelled to resort to the measure of calling upon its debtors for payment. This reduction of bank loans operated in its day, in precisely the same manner that we have seen it in ours.— A general pressure for money, bankruptcies, usurious extortions, the disappearance of specie, and an impossibility of procuring loans at legal interest, were among the evils attendant upon it. For the truth of this assertion, your committee beg leave to refer to the journals of the House of Representatives of the 21st and 23d days of March, 1785, by which it will appear, that so great were the evils which resulted from the operations of this bank, that a petition from a number of the inhabitants of Philadelphia and of the counties of Chester and Bucks 12. A general inability in the community to meet with were presented to the legislature, praying for a repeal punctuality, the payment of their debts even for family of its charter. These petitions were referred to the expenses, which is experienced as well by those who committee, who, on the 25th of the same month reportare wealthy in property as those who have hitherto rei-ed that a bill should be brought in to repeal the chared upon their current receipts to discharge their cur- ter, "which was accordingly done at the ensuing session, rent engagements. on the thirteenth day of September, 1785." The bank however claiming the right of prosecuting its business under the charter which it held from congress, continued its operations, and the legislature at a subsequent date, viz. on the 17th day of March, 1787, revived its charter, limiting its capital to 2,000,000 of dollars, (of which about 830,800 only were raised,) and its duration to fourteen years. This charter has been since extended for two successive periods of fourteen and ten years, on the twenty-ninth of March, 1799, and the 28th of March 1814, and will expire on the 17th day of March,' 1825.

10. Numerous law suits upon the dockets of our courts and of our justices of the peace, which lead to extravagant costs and the loss of a great portion of valuable time. 11. Vexatious losses arising from the depreciation and fluctuation in the value of bank notes, the impositions of brokers and the frauds of counterfeiters.

With such a mass of evils to oppress them; it cannot be wondered at that the people should be dispirited, and that they should look to their representatives for relief. Their patient endurance of sufferings, which can only be imagined by those who have habitually intermingled with them at their homes and by theirfire-sides, merits the commendation of the legislature, and profers a powerful claim to their interference.

On the 25th day of February 1791, the first bank of the United States was chartered by congress with a capital of ten millions of dollars, and located at Philadelphia. Its charter expired without renewal on the 4th day of March, 1811.

Having thus enumerated the most prominent features of the general distress, your committe will proceed to point out the cause which in their opinion has occasioned it. That cause is to be found chiefly in the abuses of the banking system, which abuses consist first in the excessive number of banks, and secondly in their universal had administration. For the first of these abuses the people have to reproach themselves, for having urged the legislature to depart from that truly republican On the 30th day of March, 1793, the Bank of Penndoctrine, which influenced the deliberations of our ear-sylvania was incorporated for twenty years: The charter ly assemblies, and which taught "that the incorporation was renewed on the 14th of February, 1810, for twenty of the monied interest already sufficiently powerful of years longer, with an increase of capital which is now itself, was but the creation of odious aristocracies, hos- $2,500,000, and will expire the 4th of March, 1833.tile to the spirit of free government, and subversive of This bank was authorised to have branches, of which it the rights and liberties of the people." The second a- established four, viz. at Lancaster, Reading, Easton and buse, the mismanagement of banks, is to be ascribed to Pittsburg, the last of which has been discontinued. a general ignorance of the true theory of currency and Danking, and to the avarice of speculators, desirous of acquiring the property of others, by an artificial rise in the nominal value of stock, and by the sharing of usuri ous dividends.

On the 5th of March, 1804, the Philadelphia bank was chartered, after having been some time in operation without a charter, to continue until 1st May, 1814, with a capital not to exceed two millions of dollars; of which 1,800,000 were raised. On the 1st day of March, 1806, it was renewed for 10 years, and will expire on the 1st day of May, 1824. It was authorized by an act of 3d March, 1809, to institute branches, of which it established four, viz. at Wilkesbarre, Washington, Columbia and Harrisburg, the two last of which have been withdrawn.

In order that this subject may be clearly understood, your committee have thought the following concise history of banking in Pennsylvania, would be acceptable. The first bank which was established in the state, and indeed in the United States, was the bank of North America, which was chartered by Congress on the 31st day of December 1781, with a capital not to exceed ten millions of dollars, and without any limits being assigned as to its duration. This charter was confirmed by the state of Pennsylvania, on the 1st day of April, 1782.This bank commenced and continued its operations up- | March, 1785, VOL. IV.

18

On the 16th, March, 1809, the Farmers and Mechan ics bank was incorporated, with a capital of $ 1,250,000, to continue until the 1st May, 1824.

See the report at full length in Journal of 28th

Some two or three years prior to the expiration of the charter of the bank of the United States, application was made to congress for its renewal; which having failed, overtures were made to the legislature of Pennsylvania, but without success. The anxiety displayed by the stockholders of this bank to continue their business, and the successful appearance of their dividends added to the locating of branches by the Pennsylvania bank in the country, very naturally excited the attention of the public, and particularly of the inhabitants of some of the interior counties of the state, who fancied that much of the prosperity of cities was to be traced to the establishment of banks, and that if that were the case, there was no reason why the country should not participate in their advantages Such considerations as these, urged on by the desire of accumulating wealth without the dull exercise of labor, engendered a spirit of speculation. It was supposed

that the mere establishment of banks would of itself create capital, that a bare promise to pay money, was money itself, and that a nominal rise in the price of land and commodities, ever attendant upon a plenty of money, was a real increase of substantial wealth. The theory was plausible, and too well succeeded. The Farmers bank, with a capital of $300,000 dollars, was established in the county of Lancaster, in the beginning of the year 1810, and was accompanied by several others in the city, as well as in other parts of the state.

These early symptoms of a mania for banking induced the legislature, on the 19th of March, 1810, to enact a law prohibiting unincorporated associations from issuing notes, or pursuing any of the operations of banks, but in defiance of its provisions, the system was persevered in, and even companies incorporated for the pur pose of constructing bridges, departed from the spirit of their charters, converted themselves into banks, and

emitted notes for circulation.

and to accommodate its stockholders with loans to double the amount of their stock, had a powerful influence upon the public mind. A bank by many was no longer regarded as an instrument by which the surplus wealth of capitalists could be conveniently loaned to their industrious fellow citizens, but as a mint in which money could be coined at pleasure, for those who did not possess it before. Under these delusive impressions, associations of individuals sprang up in every quarter, holding out inducements to the farmer, the merchant, the manufacturer and mechanic, to abandon the dull pursuits of a laborious life, for the golden dreams of an artificial fortune.

The liability however to individual ruin, attendant the banking mania, and impelled the projectors to apupon unchartered copartnerships, restrained in a degree, ply for a legislative sanction. During the session of 1812-13, a bill to incorporate twenty-five institutions, the capitals of which amounted to 9,525,000 dollars, was passed by both houses of the Legislature by a bare majority of one vote in each. The bill was returned by the governor with his objections, which were sensible and cogent, and on a reconsideration the votes were 38 to 40. At the following session the subject was renewed with increased ardour, and a bill authorizing the incorporation of forty-one banking institutions with capitals amounting to upwards of 17,000,000 of dollars, was passed by a large majority. This bill was also returned by the governor with additional objections, but twothirds of both houses (many members of which were pledged to their constituents to that effect) agreeing 1814, and thus was inflicted upon the commonwealth on its passage, it became a law on the 21st of March, an evil of a more disastrous nature than has ever been

experienced by its citizens. Under this law thirty-seven banks, four of which were established in Philadelphia, actually went into operation, the charters of which will expire on the 1st of April, 1825.

The evils, however, which would have flowed from this banking spirit, would soon have been checked, by the usual corrective viz. the return of the notes for payment, had not the war which was declared in June, 1812, interposed. Prior to that period, the emissions of our banks were regulated with a constant regard to their liability to be called upon for the payment of their notes in coin. The periodical demand for dollars for the China and India trade, which regularly occurred every spring, was a check upon the overtrading spirit, which has always characterized corporations exempt from individual responsibility. The merchants at that day, were not afraid to demand their rights, and those who held claims upon the banks in the nature of notes or deposits, would make a demand for an hundred thou-alty of 12 per cent. per annum for the non-payment of sand dollars, with less hesitation than they now display in asking for a single thousand. Banks were then, what they should always be, the servants of the public, and until they are again reduced to the proper relation in which they ought to stand to the community, their operations must ever continue to be injurious. Without liability to prompt payment, uninfluenced by any considerations of fear, forbearance, ar delicacy, on the part of the public, the community has no guarantee against a depreciated and fluctuating currency.

The war as might naturally be expected, put a temporary stop to the exportation of specie, and thereby removed the old sure check against inordinate issues of paper, which can possibly exist. This cessation of the returning of notes for payment, had the effect of inviting the banks to enlarge their issues. Loans were made to government to an immense amount, and to individuals vastly beyond what the absence of foreign commerce justified, and a gradual depreciation of the currency was the result. The increase of dividends and the facility with which they appeared to be made, extended throughout the whole commonwealth the spirit of speculation, already introduced into some counties. The apparent success of the Farmers Bank of Lancaster, which from the enormous extent of its issues, was enabled to divide upwards of twelve per cent. per annum;

The immediate commencement of a number of these banks, with scarcely a bona fide capital equal to the first instalment, for the convenient mode of discounting stock notes to meet the subsequent payments was soon discovered, increased the mass of paper credits already too redundant, and depreciated the whole circulating me. dium so far below a specie value, as to excite a want of confidence into its convertibility. In the absence of a foreign demand for specie, a domestic one arose. The laws of the New England states had been so rigorous upon the subject of banks which were liable to a pentheir notes, that no depreciation of their currency took place. The consequence thereof was, that the difference between the New England prices of commodities, stocks and foreign bills of exchange, and those of Pennsylvania was equal to the extent of the depreciation of the currency of the latter, and as our bank notes were at that time redeemable on demand, the most profitable remittance which could be made to New England in exchange for her commodities was specie, and this demand created a run upon the banks, which they were not able to withstand. The situation of the southern and of the western banks was precisely similar to that of our own. All had over issued, and a general depre ciation had ensued. The same causes produced the same effects, and a general stoppage of payment of all the banks in the United States, except those of New England, took place in August and September, 1814. The New England demand, it is true, was increased by two causes, viz: first by facilities in foreign trade thro' neutral vessels, which were afforded them by an exemption from the blockade of the enemy, and secondly, by a well grounded apprehension, that the southern banks from their extensive emissions would necessarily become embarrassed. Certain it is, however, that all these causes combined, could not have produced a general suspension of payment, had our banks observed

1829.]

REPORT ON THE STATE OF THE COMMONWEALTH.

139

the same caution in their issues as that which character was about to be effected. Petitions in favor of the ized the banks of the Eastern states.

measure were presented to congress, and the general government, weary of the embarrassments to which its fiscal concerns had been subjected, from a currency varying not only in every state but in almost every village, (for the banking system had by this time extended itself through the middle, southern and western states) chartered the present bank of the United States with a capital of thirty-five millions of dollars, on the 10th day of April, 1816, with corporate powers which will expire on the 3d of March 1836.

No sooner was this measure adopted, than the nume rous city banks, alarmed for their safety, resolved upon a retrograde movement, and with the reduction of their loans, commenced a reaction, which was accompanied by great mercantile distress. The result of this procedure, however, was a gradual amelioration of the currency, insomuch that by the month of July of that year, the depreciation of the notes of the banks in Philadel phia was brought to 7 or 8 per cent. and by the month of December to considerably less.

At the time of the suspension of our city banks a public meeting of merchants and others was held, who publicly sanctioned the measure, under a pledge given by the banks that as soon as the war was terminated, specie payments would be resumed, That this measure was intended, is evident from the curtailment of loans immediately, consequent upon the suspension. But unhappily the redemption of the pledge was not demanded by the public at the stipulated time, and the banks urged on by cupidity, and losing sight of moral obligation in their lust for profit, launched out into an extent of issues, unexampled in the annals of folly. The fulfilling of a promise to pay money by tendering another promise equally false, sanctioned by the public acquiescence, led to the organization of additional banks under the act of March 1814, which had not until then been attempted to be formed, and a scene of indiscretion in the loaning of bank credits was every where exhibited, which realized the anticipations of those who had foretold the ruinous effects of the paper system. Money lost its value. The notes of the city banks became depreciated 20 per cent. and those of the country banks from 25 to 50, and specie so entirely disappeared from circulation, that even the fractional parts of a dollar were substituted by small notes and tickets, issued by banks, corporations, and individuals. The depreciation of money enhancing the prices of every species of property and commodity, appeared like a real rise in value, and led to all the consequences which are ever attendant upon a gradual advance of prices. The false delusions of artificial wealth increased the demand of the farmer for foreign productions, and led him to consume in anticipation of his crops. The country trader seduced by a demand for more than his ordinary supply of merchandise, was tempted to the exten-posed to them to enter into an agreement to resume sion of his credit, and filled his store at the most extravagant prices with goods vastly beyond what the actual resources of his customers could pay for, whilst the importing merchant having no guide to ascertain the real wants of the community but the eagerness of retailers to purchase his commodities, sent orders abroad for a supply of manufactures wholly disproportioned to the effective demand of the country. Individuals of every profession were tempted to embark in speculation, and the whole community was literally plunged into debt. The plenty of money, as it was called, was so profuse, that the managers of the banks were fearful they could not find a demand for all they could fabricate, and it was no unfrequent occurrence to hear solicitations used to individuals to become borrowers, under promises as to indulgence, the most tempting.

Such continued to be the state of things until towards the close of the year 1815. At that time the doctrine so generally taught and so generally received by the great mass of the community, that the paper currency was not depreciated, but that specie had risen in value, began to be abandoned. The intelligent part of the people became convinced, that although the nominal prices of property and commodities had been advanced, the substantial wealth of society had absolutely diminished, and the evils attendant upon a depreciated and a perpetually fluctuating currency were universally acknowledged. Each city, town and county, had its own local currency, bearing no equivalency with, or a fixed proportion to any other; the consequence of which was, that a new and extensive class of brokers sprang into existence, who have ever since been supported at the expense of those who have been defrauded by the banks of their just and indisputable rights. Counterfeiters also added to the mass of paper in circulation, and the difficulty of detection where so many signatures were current, invited to an increase of their numbers.

The plan about this time projected of establishing a national bank with a commanding capital, held forth an expectation, that the desired restoration of the currency

The Bank of the United States, the subscriptions to which were opened on the 1st Monday of July, 1816, commenced its operations about the 1st of January, 1817, and had it been conducted with the discretion and wisdom which were essential to so powerful a machine, its influence might have been productive of the most happy results. The public was aware that the currency of the state banks was still depreciated from excess, and that nothing but a further reduction of their issues could remove its unsoundness; and yet with this fact, evident to the most limited capacity, the directors of the new bank fancied, that if they could only persuade the city banks to call that a sound currency which was in reality an unsound one, the evil of depreciation would be cured, and they accordingly prospecie payments on the 21st of February following. The city banks, sensible that their power over the community was so great, that few individuals would have the boldness to make large demands upon them for coin, and relying upon that forbearance which had hitherto been extended to them by an injured public, who had been for two years and an half paying them 6 per cent. per annum for the use of their dishonoured bills, consented to the arrangement, and specie payments were accordingly nominally resumed on the appointed day. We say nominally, because in point of fact, a bona fide resumption did not take place, as is evident from the well known circumstance, that for a long time after that period, American as well as foreign coins would command on the spot a price in city bank notes above their nominal value. Depreciation can as well result from the forbearance of the public to demand their rights, as from the refusal of the banks to pay their engagements; and the arrangement alluded to, was not any real resumption of cash payments, but a mere change of one species of inconvertibility for another. No sooner, however, had the directors of the national bank succeeded in the desirable object of rendering depreciated paper an equivalent for their own convertible notes, than, instead of reflecting from an acquaintance with general principles, and from the experience of the past, that the channels of circulation could contain without depreciation, but a limited amount of paper credits, and that that amount was already in those channels, they began to add to the mass already redundant, by emissions of their own notes; and in the course of a few months added to the mass of bank loans an amount greatly beyond the reductions which had been made. By this means the currency, although nominally convertible, was depreciated below its former low state, and was thrown back, instead of being advanced on the road of restoration; and thus was rendered nugatory all the pain and embarrassment which the public had suffered from the former curtailments of the state banks.

This unwise procedure of replunging the people into the debts from which they had been partially extricated, and of involving others who had hitherto escaped, was continued for a time; but the dreadful day of retribution at length arrived. The bank discovered almost too late, that its issues had been extended beyond the limits of safety, and that it was completely in the power of its creditors. It also foresaw that the payment of that portion of the Louisiana debt, redeemable on the 21st of October, 1818, which was held by foreigners, might occasion a demand for a considerable amount of coin, that the enhanced prices of China, India, and other goods, occasioned by the depreciation of the currency from the over issues of itself and the state banks, would lead to a demand for specie, and that as it was professedly a specie bank, liable, under a penalty of 12 per cent. per annum to pay its notes on demand, the same delicacy and forbearance would not be extended towards it as to the state banks. These considerations impelled it to seek its own safety, and from that moment a system of reduction commenced. This reduction operating upon the state banks, which had not profited by the opportunity afforded them of contracting their loans whilst the other was extending, obliged them also to | diminish their transactions, and a general curtailment ensued, which has not yet had its consummation. The severity of the second pressure commenced in the city in October, 1814, and was continued without intermission for a year; at the expiration of which time it is said that the reductions made there by the national bank alone have exceeded seven millions of dollars, and those by the other banks probably two or four more. The reductions of the country banks during the three last years may be inferred from the following statement, which exhibits the amount of their notes in circulation at four different periods.

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From the foregoing history it will be seen, what influence has been produced upon the affairs of the community by the operations of the banking system. Real property has been raised in nominal value, and thousands of individuals have been led into speculations, who, without the facility of bank loans would never have been thus seduced. The gradual nominal rise in the price of land, has produced an artificial appearance of increasing wealth, which has led to the indulgence of extravagance and luxury, and to the neglect of productive industry. Foreign importation and domestic consumption have thus been carried to an extent, far beyond what the actual resources of the country and people would justify, and in pursuing a shadow the community has lost sight of the substance.

wealth, who can perceive in the banking institutions
the immediate causes of their embarrassments. Never-
theless your committee are of opinion, that in the pre-
sent circumstances of the world, it is the policy of the
general government to assist the rising manufactures of
the nation, by such public aid, as will prevent their
prostration by the jealous rivalry of foreign states.
Your committee is sensibly impressed with the dap-
gers which may hereafter arise from the renewal and
creation of bank charters, and as they have deemed it
to be within the limits embraced by the resolution under
which they act, they take the liberty of giving to the
Senate their ideas of the provisions which should be in-
corporated in every charter of a bank hereafter sanc-
tioned by the legislature. They are as follows:

First. A penalty of 12 per cent. per annum in addition to a forfeiture of the charter, should be imposed upon the amount of all notes and deposits not redeemed in specie on demand.

Secondly. No bank should be allowed at any time to loan more than fifty per cent. beyond the amount of its capital.

Thirdly. All profits above six per cent. should be equally divided between the stockholders and the state, the amount accruing to the latter to be specifically appropriated to internal improvements. The justice of this provision is founded upon the consideration, that, although high dividends have been made, yet none but the original subscribers get the benefit of them, for all subsequent purchasers are compelled to pay for the stock a speculative advance upon its par value, at least equivalent to the extraordinary interest.

Fourthly. No director except the president should be re-eligible for more than three years, in any period of six, and none should be entitled to loans beyond a lim

ited amount.

Fifthly. The affairs of the bank and the private accounts of the directors should at all times be open to the inspection of the legislature.

Sixthly. No note for less than five dollars should be issued, inasmuch as no solid system of paper credits can any where exist, unless the minor channels of circulation are exclusively supplied with coin.

Without such provisions as these, the propriety of which has been established by the dear bought expe rience of the past, your committee conceive, that it will be impossible to guard the public in future, against the evils of excessive issues, which, whenever they are made, must sooner or later re-act upon the community, with effects in a greater or less degree, similar to those which our fellow citizens, now so unhappily, experience,

Having thus performed a part of the duties assigned them, your committee will now touch upon the most important and most difficult branch confided to their charge, viz. a remedy for the existing distresses.

Your committee is aware of the arguments advanced At a period of extreme suffering, it is natural for by some, that the general pacification of Europe has those who are writhing under the lash of affliction, to had a sensible effect upon the domestic relations of the appeal for assistance to those whom they supposed to United States, and that the neglect of the general go- be possessed of the power to relieve, and remedies are vernment to afford adequate protection to domestic often suggested, which it would not be practicable, or manufactures, has been instrumental in a high degree, which it would not be consistent with the honor of a in producing the present distresses. There can be no state, to adopt. Among these latter the measures of doubt, but that the former occurrence has sensibly di- compelling creditors to take property at a certain valuminished the prices of our agricultural produce, and as ation for their claims, and of extending the stay of exefar as that has had an influence upon the affairs of indi- cutions to a period beyond that which is at present viduals, it is entitled to consideration; but your commit- established by law, are prominent. Petitions to that tee must observe, that that fall has been accompanied effect have been presented to the legislature, and if the by one nearly corresponding in the prices of foreign prayers of the petitioners could be accorded, without productions, and that were it not for the debts into compromitting the high standing which Pennsylvania which the community has been plunged by bank facili- maintains amongst the states of the union, your comties, the difficulties resulting therefrom would have been mittee would be amongst the first to fly to the relief of easily surmounted.—In relation to the second argument, their suffering fellow citizens. But the solemn nature viz. The want of protection to domestic manufactures, of the obligation of contracts, independent of constialthough it may apply in a great degree to the opera- tutional objections, must impel them to withhold their tions of manufacturing towns, yet it is not valid as re-recommendation of projects, which would entail upon lates to the great mass of the people of the common- the commonwealth a stigma as imperishable as time.

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