The Camden journal. [volume] (Camden, S.C.) 1836-1851, April 28, 1841, Image 1
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THE CAMDE1V JOURNAL.
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[HEW SERIES.] VOL. II. CAMDEN, SOUTH 04 ROLIIV A, .WEDNESDAY, APRIL 28, 1841. ; NOvM,
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REPORT OF THE INVESTIGATING
COMMITTEE.
The Committee appointed at a meeting
of the Stockholders of the Bank of the
United States, held January 4, 1841,
to examine the details of the statement,
then submitted by the President, respectfully
submit the following
report:
The Committee proceeded, in the first
-?* IP- hr* cf of omonf
instance, 10 vei ny m uetun, mv.
of the Assets and Liabilities of December
21, 1840. The securities and evidences
in the possession of the Bank at Philadelphia,
were accordingly produced, and on
comparison therewith, the same was
found to be correct. The cash was counted
out on the second of March, and corresponded
with the Ledger Balance of
that day. The returns from the several
offices and agencies were read, and found
to agree with the printed statement. The
accounts of the circulation and issues of
the late and present Bank were also exam;ned.
The Committee have prepared, and
herewith submit astill more detailed statement
of the Assets and Liabilities of the
Bank, 011 the twenty first day of December,
1840, than that heretofore presented;
exhibiting the particulars oi each item ot i
the original statement, in the same order:
and arrangement, as is therein pursued;!
omitting, however, the items ''Bank United I
States Stock, balance unsold," and the;
amount credited as "Bonus for Charter."
The next object proposed, was to make
a valuation of the Assets. With this
view, they proceeded to re-examine the
items of Active and Suspended Debt,
Stocks, Real Estates, Bonds and Mortgages,
Foreign Bills of Exchange, and
amounts due by State Banks. The President
of the Bank was also requested to
obtain an estimate of the probable loss on
the Assets at the different Offices and
Agencies; returns from all which have accordingly
been received. The estimates
thus made are presented in a column, add-1
ed to the detailed statement, now submit-j
ted and before referred to, (Appendix A.)
The attempt to make an estimate of
probable losses, was found to be attended
with considerable difficulty and embarrassment.
To adopt the present depressed
market value of the several stocks, and
loans held by the Bank, would not be a!
fair criterion of their actual worth, which,1
rather than their present availability, was
that at which the Committee endeavored
to arrive. Still they have been necessa-:
rily guided, in a great measure, by the
Prices Current of the day. Of the Ileal
Estate and Bonds and Mortgages, a very
imperfect judgment could be formed,
without inquiries as to title and incumbrances,
which the Committee had not
time to make. Many of the securities arc
of a character to render it almost imprac- i
ticable to form even a reasonable conjee- j
turc of their value. While, therefore, the
Committee bespeak for this portion of
their labors that regard which is due to an
honest effort from the best means within
their reach, to arrive at the truth, they
must be permitted to qualify it with the
remark, that it is necessarily only an approximation,
in which they cannot ask the
stockholders to place entire confidince.?
The ability of the Institution '.o realize
any thing like a fair equivalent for its Assets,
will depend much upon the course of
policy it may in future pursue, and upon
circumstances, which no one can be expected
to foresee. The estimate is pre-1
sentcd, however, with less reluctance, as
from the details, now given, each stockholder
will be able to form a judgment.
for himself.
It may be proper here to remark, that
it has been thought best by a majority of
the Committee, not to submit the lists in
detail of the active and suspended debt.
This injuiy which would result to the credit
of individuals by such an exposition,
might ultimately be detrimental to the interests
of the stockholders, while no benefit
of sufficient importance to counterbalp,
ance such a mischief, appeared to present
itself. In regard to these two lines, therefore,
the committee will content themselves
with remarking that but a small i
proportion consists of regular mercantile
discounts. On the Active Debt, December
21, 1840, are loans to seven incorporated
or other Companies of 1.211,193
dollars 22 cents, including one of 502,222
dollars 22 cents, to the Philadelphia, Wilmington,
and Baltimore Railroad Company.
The sum of 740,056 dollars 33 cents,
are on obligations, having on that day
mnM tl.an CIV mnnlhc /-. - Tkn nun
11IVS1C IUUII ?MV??I lid IU IUII? 1 1IU OUIII
of 279,888 dollars 41 cents, a part of this
line entered as "Bills Receivable," being
nominally payable on demand, though
really composed of permanent accommodations,
is not included in either of these
1 amounts. Nor is the sum of 66,800 dollars
86 cents, "Bills receivable for sale of
offices." A considerable part of it is in
large amounts as will sufficiently appear
from the fact, that forty eight individuals.
*
firms and companies, have discounts exceeding
20,000 dollars each, of whom
twenty 9even discounts exceeding 50,000
dollars each; and nine exceeding 100,000
dollars each. A similar examination of
the suspended debt exhibits as the result
of fifty two individuals, firms and companies,
standing charged on the books of
that department, with more than 20,000
dollars each, twenty nine with more than
50,000 dollars, and eighteen with more than
100,000 dollars each. There are six individuals
and firms whose debts amount to
2,314,000 dollars, two of which are over .
650,000 dollars each, a large amount of
which will be lost; and four others, who
have loans amounting to 569,000 dollars.
Eleven Joint Stock Companies are indebtpA
nn this list 807.582 dollars 23 cents, of
which the Philadelphia and Germantown I
Railroad Company is 129,902 dollars 76
cents.
The whole result of the valuation made
by the Committee, may be thus stated in
short:
The assets of the Bank, amounting on the twcnty
first day of December, 1840, according to the
stntemont of the Committee, to 69,531,842 dollars
46 cents, have been estimated at $51,779,795 46
From which deduct liabilities, 36,959,539 63,
Leaves tho sum of $14,820,256 11
To represent the capital of ?35,000,000 00
Less amount of Bank United States
slock on hand, 2,471,400 00
832,528,600 00
To this may be added the sum of four
or five hundred thousand dollars, for that
part of the circulation amounting on the
twenty first of December, 1840, to 9,336,- [
000 dollars 90 cents, which is probably
lost oi* destroyed.
The committee submit also herewith,
condensed General Statements of the
condition of the Bank, on the first day of
February. 1836, on the first day of April,
1839, and on the first dayof March, 1841;
with a comparative Table of Assets and
Liabilities, for these three periods, and also
a General Statement of April 1, 1841.?
(Appendix B. C. D. E. and F.)
The general statement of the condition
of the Bank February 1, 1836, is a copy
of that submitted to the stockholders convened
at the Bank, upon the nineteenth
day of that month, for the purpose of
consideriag the propriety of-accepting the
charter, then recently granted by the legislature
of Pennsylvania. By that statement,
showing the condition of the Institution.
after a period of active business
extending over twenty years, and including
more than one period of serious commercial
difficulty, there appeared to the
I credit of
Discount, exchange and interest, $423,875 15
Profit and loss, 3,765,399 54
Contingent fund, exceeding the losses
chargacble thereto, by the sum of 1,436,561 65
Foreign exchange account, 847,871 03
Fund for extinguishing cost of Bankiiig
Houses, 1,104,223 09
Contingent interest, 440,854 14
$8,018,784 60
These sums after deducting the amount
of deficiencies and expenses,
217,194 22
Formed tho surplus funds of the Institution
$7,801,590 38
from which, it will be recollected, it was
strongly urged upon the stockholders as
the main argument in favor of accepting
the charter then offered, that, after making
the most liberal allowance for proba
ble losses on the suspended debt and real
estate, the entire Bonus could be paid,
without in the least degree impairing the
capital.
The origin of the course of policy,
which has conducted to the present situation
of the affairs of the Institution, dates
however beyond the period of the re-charter
by the State. When it was perceived
that the charter of the late Bank of the
United States, would not be renewed or
extended by Congress, the President and
Directors commenced winding up its concerns,
and among the first measures taken
to that end, was to sell or dispose of, so
far and as speedily as could be effected,
the assets of its several branches. This
was generally done to the State Banks,
who gave for them their obligations, payable
by instalments at distant periods. At
the same time the policy was adopted of
converting the active debt into loans upon
the security of stocks, by which permanent
investments might be provided for
the capital of the Bank during the long
period of its anticipated liquidation. On
the 6th of March, 1835, "the President
submitted to the Board, a general view of
the situation of the Bank, its means and !
liabilities, its circulation and deposits, and
the probable future demands upon it. i
showing its ample resources and power of 1
expansion: whereupon" the committee of 1
Exchange, which was composed of three <
Directors, appointed by the President, 1
were authorized by the Board "to mak;
loans on the security of the stock of th
Bank, or other approved security, and, i
uecessary, at a lower rate than six, bu
not less than five per cent, per annum."?
This delegation of power to the Exchang
Committee, was neyer expressly and for
mally renewed under the new charter
unless it be considered as included, undei
a general resolution of the new Board
adopting "The By-Lawe," Rules and Re
gulations" of the former Bank. By the
statement of the condition of the Ban!
upon the 2nd of March, 1835. the whole
amount of loans upon Bank, stock, anc
other than personal security, was 84,797,
936 25 cents, while that by that of'Marcl
3, 1836, these loans had increased to the
sum ol $20,440,307 88. Under sucl
circumstances, the active means of the
Bank were comparatively small, to pa)
the immediate demand of the State foi
the Bonus, to settle with the governtneni
of the United States for its stock, and tc
meet its circulation of 820,114,227 56
which, contrary to the anticipation^ ex
pressed at the period of its re-charter
soon began to be rapidly presented for re>
demption. The Bank was of necessit)
driven into the market as borrowers, anc
very soon the first step was taken to ob
tain loans abroad, by sending the Cashiei
to Europe for that purpose. Two loani
were accordingly negotiated by him; on<
in England, of ?1,000,000 sterling; anc
another in France, of 12,500,000 francs
on favorable terms.
in oraer 10 provide lor tne payment o
these loans, and to negotiate others, anr
in general to superintend the interests o
the Institution abroad, it was determine!
by the Board to have a General Agent re
siding in London, and on the twenty se
cond of September, Mr. Samuel Jaudon
then Cashier, was elected to that post
and his agency there commenced accord
ingly, November 8, 1837.
At the same time, the Bank entered th<
Foreign and Domestic Markets as bor
rowers, upon their Post Notes and Bond
payable in Europe: the whole amount ob
tained in this way at different periods uj
to July 1840, being more than twenty
three millions.
From these causes, as well as from tin
general derangement of affairs, the sus
pension of specie payments, and the dis
credit consequently thrown upon Ameri
can securities, and more particularly fron
the course of the Bank's dealing in Fo
reign Exchange, by drawing Bills to i
large amount without having prcviousl;
provided the funds for their payment, am
thus subjecting their agent in London, t
the necessity of obtaining money in haste
in order to maintain the credit of tlr
Bank: it was no longer found possible t<
command funds there upon the same fa
vorable terms as before. And according
ly, upon Mr. Jaudon's subsequent nego
tiations for loans to the amount altogethe
of 812,212,697 46, there is chargeable t
Losses, the sum of 81,149,907 04, beinj
for Discount, Commissions to Foreigi
Bankers, and other charges; not includ
ing Mr. Jaudon's own Commissions, an
the expenses of the Agency in Londoi
amounting up to January 1, 1841, to th
sum of 69,344 pounds 17 shillings 6 penc
sterling, which at nine per cent, exchang
is equal to 8335,937 39.
It may be proper to explain in passing
how this large sum for the expenses o
the Agency at London arises. When Mi
Jaudon was elected to the place of foreigi
agent, he was the principal cashier, at i
salary of 87000 per annum. The Batil
paid the loss on the sale of his furniture
5074 dollars, and the passage of himsel
and family to London, a further sum o
1015 dollars. He was to devote himsel
exclusively to the business of the Bank, t
negotiate an uncovered credit in England
to provide for the then existing debt ii
Europe, to receive its funds, to pay its bill
and dividends, to effect sales of stocks, ant
generally to protect the interests of th<
Bank, arid "the country at large." Fo
these services he was to receive the com
mission theretofore charged, and allowet
to Baring, Brothers & Company, equal t<
about 28,000 dollars per annum. In ad
dition to,which, the expenses of the agenct
were allowed him, including a salary o
1000 pounds sterling to his brother, Mr
Charles Br Jaudon, as his principal clerk
Fr>m the increase of money operations
arising from facilities afforded by the
agency, the amount upon which conimis
sions were charged was so greatly aug
mented, so that the sums paid him for hit
ordinary services up to January, 1841
amounted at nine per cent, exchange tr
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 Uommittee,
an extra commission of one' per cent
upon a loan effected in October, 1839, oj
800,000 pounds, say 38,755 dollars 56
cents* and upon his claim for a similai
commission upon subsequent loans ir
i France and Holland, to the amcfrint dl
s 8,337,141 dollars, 90 cents, the board of
f, directors, under the sanction of a legn
t'opinion, from counsel of high standing,
- and the views of the former President, by
whom the agreement WithJVIr. Jaudon
- was made, that the case of extraordinary
, loans wa3 not anticipated, not meant to be
r included in the original arrangement, al,
lowed the further charge of 83,97ft dol
lars, 37 cents. These several.- sums a:
mount to 335,937 dollars, 39 cents, as be:
fore stated.
i I Such were some of the results of the
I resolution of March, 1835, though it can
not be questioned, that much may be fairly
l attributed to the unhappy situation of the
i business and exchanges of the country,
i concurring with the unfortunate policy
5 pursued by the administration of |he Bank.
r Thus the Institution has gone on, to in
crease its indebtedness abroad, until it has
t 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
, [ dealings in stocks, and a continuation of
-. the policy of loaning upon stock securir
ties, though it was evidently proper upon
I the re-charter, that such a policy should be
- at once entirely abandoned. Such indeed
r was Its avowed purpose, yet one vearaf3
tcrwards, in March, 1837, it3 loans upon
} I stocks and other than personal security
I'had increased 7,821,541 dollars, while the
/Bills discounted on personal security, and
I Domestic Exchange, had suffered a dimi
f nution of 9,516,463',clollar3, 78 cents. It
1 seems to have been sufficient to obtain
f money on loan, to pledge the stock of an
1 "Incorporated Company," however remote
- its operations 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 *ery evident
3 to the Committee, that several of the of
ficers of the Banks were themselves cns
gaged in large operations in stocks and
- Speculations, of a similar character, with
3 funds obtained of the Bank, and at the
y same time Loans were made to the Companies
in which they were interested, and
3 to others engaged in the same kind of oc
cupations, in amounts greatly dispropor
tionate to the means of the parties, and to
- their proper and legitimate wants and
i dealings. The effect of this system was
- to monopolize the active means of the Ina
stittition, and disable it from aiding and acy
commodating men engaged in business
i really productive and useful to the com
a munity; and as might have been antici
1 ? -I At
!, patea, a large part or me sums mus iumi.
e ed were ultimately lost, or the Bank coma
pelled on disadvantageous terms as to
- price, to take in payment stocks, back
lands, and other fragments of the estates
i- of great speculators,
r The loose and irregular manner, in
3 which the business of loaning money was
? conducted, tended greatly to produce this
a result, and deserves particular notice and
- explanation. From March, 1835, the peI
riod of the passage of the Resolution
a above referred to, the chief control and
e management of the affairs of the Institue
tion appears to have passed from the
e hands of the Directors. The mode in
which the Committee of Exchange transr,
acted their business, shows that there realf
ly existed no check whatever upon the
\ officers, and that the funds of the Bank
ii weie almost entirely at their disposition,
a That Committee met daily, and were atlc
tended by the Cashier, and at times by
s, the President They exercised the power
f of making loans and settlements, to full
f as great an extent as the Board itself.?
If They kept no minutes of their proceedo
ings?no book in which loans made, and
I, business done, were entered,"T>ut their de'
J- imvkoL
11 cisions ana aireuuuiis, vyuic giv^u i^uais
ly to the officers, to be by them carried
1 into execution. The established course
2 of business seems to have been, for the
r First Teller to pay, on presentation at the
- counter, all checks, notes, or due bills,
I having endorsed the order or the initials
> of one of the cashiers, and to place these
- as vouchers in his drawef, for so much
r cash, where they remained, until just bef
fore the regular periodical counting of the
. cash, by the Standing Committee of the
. Board on the state of the Bank. These
, vouchers were then taken out, and enter;
ed as "Bills Receivable," in a small mcmo.
randum book, under the charge of one of
- the clerks. These bills were not discount5
ed, but bore interest payable semi-an,
nually, and were secured by a r ledge of
> stock, or some other kind of property. It
. is evidently impossible, upder such cir,
cumstances, to ascertain, or be assured,
:???-J ?nii f-?oi-?ii-ii)nr loan or settle
; in l ugaiu iu uuj pui nv??-. ?
ment, that it was sanctioned by a majori.
ty of the Exchange Committee. It can
f be said, however, with entire certainty,
> that the very large business transacted
r in this way, does not appear upon the face
i of the Discount Books, was never sub
mitted to tiic examination o* the member* crff'tho
Board, at its regular meetings, nor is it any whpre
entered on the minutes, as .having be err reported, to
that body, for their information or approbation, ' ^Xs
illustrative of the extent of"these transactions,'it
incy be proper to stuto, that tiirs sum total o? utyiFla
RsceiyaC.'c"?
On the 4th of March, 183G, was $6,221,660 85
h ' .1837, 8,183445 tyl
; " 1833, 25
1,33?,. r/ 6,772,731 30
<? 18.10, 4,041,705 04
The amount outstanding. on ?f this Department,
on the ,4Ua uf March,. 1841, had become
j reduced to the sum of 176,954 do;, a."" 12 .Tljo
accounts have been.Bottled in various or trans.
I ferred to othar heads, the Directors, having" rtioly^i
! to abolish altogether a eoursn of proceedings*: *>
pregnant with mischief and 1ms,; pnd to pfobihtt entirely,
all loans oxccptrjrysthe Board itself. - >
Thore stands now upon the booty of the Suspend
ed Debt Department, transferred thereto fruor "Bill#
Receivable," still unsettled. 1,470,651 -dojlsre, -77
cents. A portion is on the list of Active Debt, bav.
ing been changed into Bills Discounted, at d^trssd
periods of maturity.; -i ,r
! These loans, were generally in largo amounts. Ia
tht! I .lilt of DnKtr\nt ,.n nD'.ll. ??^?u-" ? -
- ? vu vuui ncucivAure un Ulf
1st January 1837, twenty one individual!, firms and
companies, stand charged, each with an amount of
one hundred thousand dollars and upwards. One
firm of this city received aoooonnodationa of'this
kind betweetr August 1835, and November 1837, to
the extent of 4,213,878 dolloiB 30 Cents, more than
half of which was obtained in 1837. The ofpesri
of the Bank themselves received in this way loans io
a large amount. In March 1836, when .tho Bank
wont into operation, under its new chatter, Mr.
Samuel Jaudon, then elected its Principal Cashier,
was indebted to it 100,500 dollars. When he resigned
the situation of Cashier, and was appointed
Foreign Agent, ho was in debt 408,389 dollars 25
cents, and on the^st of March 1841, he still stood
charved with an mdehtadnaM of 117-500 dAlkn
Mr. John Andrews, First Assistant Cashier, Was in.
dobtcd to the Bank in March 1836, 104,000 dollars.
By subsequent loans and advances made during the
noxt three years, he rccoivcd in all, the sum of 438*.
930 dollars 67 cents. Mr. Joseph Cowperthikiife,
then Second Assistant Cashier, was in debt to the
Bank in March 1836,115,000 dollare; when he Was
appointed Cashier in September 1837, 336,382 dol. ^
lars 50 oents, when he resigned, and was elected%
Director by tho Board, in June, 1840, 72,960 dollars,
and ho stands charged March 3. 1841, bn the Books
with the sum of 55,081 dollars 95 cents It appears
on the Books of the Bank, that these three gentle,
men wore engaged in making investments On their
joint account, in the Stock and Loan of the Cam.
den and Woodbury Railroad Company Philadelphia,
Wilmington and Baltimore Railroad Company, Dau.
1 phin and Lycoming Coal Lands, and Grand Gulf
' Railroad and Banking Company '
The various settlements effected with the officers
I and other debtors for these irrbgntar 'loarls, most'hot
be suffered to pass without notice. These settle.
. m'ents were without the knowledge or approbation of
>i n i _? i?. ? / __ ? ?: r-?"
? buu jjuaiu, ub itaoi ou IUI as appcao iiuui urcu
. minutes. The large loan to a firm in this city, be.
i fore adverted to, was settled by tho receipt in pay*
ment of the various stocks and real estate, except
I 247,264 dollars, 50 cents, in cash. Another large
amount of loans to a single individual of 1,014,977
dollars, 80 cents, was settled in like anner. Then
, was taken in settlement of debt from JHessre. Bevan
& Humphreys, (Mr. Jpseph Cabot, one of Utat firm,
being at the lime a director of the Bank,) one thousand
one hundred and fifty shares of United States
Bank stock, in 1838, viz:?On the 2d of August,
two hundred and fifty shares, at 123 dollars, tho
Bank selling on the same day 120 do'lars, less
brokerage: on the 22d of August, five hundred shares,
and on tho 231 of August, four hundred shares at
125 dollars, the market price, on those two days being
123 dollars, 25 cents, the bank selling the day
after at 123, less brokerage. Settlements of a siinu
lar character with debtors for smaller, amounts, were,
of frequent recurrence.
The first instance in which an officer paid hisdksbt
to the bank, in other than money which the con.
mittee can find, was in March, 1838, when Mr,
Sainucl Jaudon, (then in London as the agent of
the bank, (Mr. Joseph Cowperthwaite, (then cashier,)
and Mr. John Andrews, (then first assistant cashier,)
paid a debt of 269,600 dollars, which they owed the
Bank on joint account, in Danville and Pottsvillo
Railroad Company, five per cent, loan, ?70,000
Union Canal, 6 per cent, loan, 10,000
Philadelphia and Reading R. R. Co.
1 stock 3590 shares, 179,500
West Feliciana R. R. Co, stock 100
shares, 10,000
?269,500
i
i Of course, the committee cannot say, that the Exl
change Committee did or did not authorise or sanction
this settlement. The paper which constitute*
the only evidence of it, and which the Committee
have seen, exhibits no siyn of such authority or approbation,
oilier than the initials of Mr. Andrews
himself
Of the residue of the large debt of Mr. Andrews
of 463,104 dollars, 88 cents, which includes his one
third proportion of the foregoing sum of 269,500
dollars, all except 32,3X1 dollars, 55 cents, was settled
by the transfer of Stocks and JL^ans.
[concluded next week.]
We reasoned with an inebriate a few days since en
the vile habit he had of drinking spirits. "Why,"
ho said in reply, "water is dangerous, very, danger.
ou8?it drowns people; gets in their chests, and into
their heads, and then, too, it nukes that infcraul
steam, that's always blowing a fellow up,"
Political matters of fact arc the (bundation or
^rh'oh our civil and natural knowledge is built,