Newspapers / Newbern Sentinel (New Bern, … / Feb. 21, 1829, edition 1 / Page 1
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5 , . . f t . - A-. -u:,t. I . . . ' .- . .. . . ; ' 4 ' I ' UNION OUR WATCIRVORDhTRVTH OUR GUIDE. I'K'Wi NBBBER;SATURDAiFEBRlJJEtY 21, 189. VOIi. XI. EDITED BV SAMUEL F. WILSOy. PUBLISHED EVERY SATURDAY, THOMAS WATSOX. BY jerms Three Dollars per annum, payable in advance. No gubscription will be received for a 'less period than one year ; and no paper will be discontinued, until all arrearages are paid, unless Ht ihe option of the publisher. . SPEECH OF MR. GASTON ON THE BANK QUESTION. nr.. Chairman ; When the Speaker of .ur- ir.,.P Hid me the honor to name me rtnp of the members of the Committee of Investigation, T requited to.be eico ed from that service, and the House had the goodness to grant mv request. I had re cenffy been called, at a enttcal moment, and under circumstances which made ir mv duty not to dcline. the invitation, to preside over the affairs of one of the Banks of the State. As enquiries were to be made, which, in their result might implicate that Iristitu'ion, obvious cnnsider-li'ns of deli cacy forbade "e from desiring to be one of the inquest. That examination has been made the evidence is before us and we are now called upon to act. It is my boun den duy as one of the members of this bo dy, o decide upon the course which ought to be pursued. I should be a traitor to the dearest interests of those bv whose unsoli cited suffrage I stand here, I should desert my :ouniry at the moment of her need, if I did not now perform the part which my conscience and judgment pronounce to be right. ( On a subject so important as that before the Committee, it is necess ry that we should discard all orepossession and preju dice, examine calmly and -judge without pissir.n. Would that the enquiry had been thus conducted Much would 'have been saved of legislative dignity and State cha racter. Many unfounded charges would have been instantly dismissed many mis representations of facts mHch absurdity of reasoning and not a little of unbecoming invective would have been spared. As far at depends on me, the evil already too great shall not be increased. I shall anx iously avoid that angry tone of discussion which is so unfavorable, to the discernment cf truth. ( At the head of the list of accusations sub flrrihfd by seven gentlemen of the Commit tee, stands the. charge against the Banks of Cape Fear and Newbern, of not having re quired gold and silver from the subscribers of ihe addition! stock authorised by the act of 1814 These Banjos are accused of hav ing matuTaciUrPd'-thi8 stock of havinp thrown put millions of additional notes upon penned SDecie navrnpntc. anrl thie Hicronnrft I certain hnw the tact ""vas. it is assert- mg specie payments. They had possession wduld not permit them to notice. It will be of most of ihe paper currency. They had seen, Sir, that the President of the Bank ot by law a right to use it, and they did use if Cape Fear informed the Committee (see as a shield for 'heir specie. The period his answer to the 2d interrogatory) that the was approaching when their charters were largest amount of paper which that Bank to expire. The stockholders wished for an ewer had in circulation was in the year 1819, extension.of the time, and the State could nnd that it a little exceeded.' $700,000 not establish a new Bank. " wtvJ "y e l-egisiaiure all impor vuuimunuy. I he Legislature -uencea Dy the cr.es of the prop! e importunate for monev. more r oas atipusly desirous to increase """King capital. When therefore th tear &nrl t..i . r -v. iicnuriu uuiiHs itppiiea ior Jlend vour charters tothe day when the naiter of the Slate Bank shall expire, anu ln we shall be at liberty to establish al for fair rhamrter. for UDriehtness and I10 cept the boon on these terraV or decline it altogether rand they didaccept. In all the preceding charters of the Banks of the State, the shares subscribed for, stock were required to be paid u in gold or silver" but in the extended and enlarged charters of 1814, these words sire purposely omitted. In these last, the State had allotted to her one hundred thousand dollars of the new stock ir) each of the Banks -and how was this additiori to its capital to be made For 18,000 dollars the State was to pay noth ing; (r 41,000 it was to pay in certain Treasury notes thereafter to be issued, which had no mark, character or semblance of value, but that they were receivable at the Public Treasury in payment of public dues; and for the remaining $41,000 the State was to pay at any time before the ex pirattdn of the charter. The shares to be subscribed by individuals were to be paid one-tettfn..!down, and -the remainder Tnde fef red "payments of f $f0 each; eWry sixty days thereafter ; and by express enactment it was declared that after the year 18l6lhe old paper currency should cease to be a tender to or from the Banks. Where then is to be found the pretext for the assertion that the new subscribers were bound to pay Wgold and silver ? If a sub scriber, owed an instalment of $100 on bis subscription, and at the time prescribed for paymentjtendered to the Bank its own notes for that sum, could the Bank have refused the tender ? If it had dared to refuse,would not the law have compelled it to accept ? It it had said, you, Sir, must pay in money the lawful tender of the country and not in these notes ; his answer was irresistible, then pay me these same notes in money the lawful tender of the country, and I am ready to return the same money to you. Need more be said to shew that this charge is beneath notice? But these same virulent accusers of the Banks add that a few favoured indivi duals paid in their own notes. Sir, Straus show which way the wind blows.1 How do these gentlemen learn that these were "fa voured" individuals ? The Bank was in full operation. Its main business was the discounting of good paper and with the application of. the proceeds it had no con cern. anu over inera u naa no controui. it . w the borrower chose to apply the proceeds to the Davin? of the deferred instalments on his shares, he had a right to do so, and the t- Bank was precisely in the same state as it would have been in had tbe stockholder act ually paid for his stock, and the Bank had lent to a stranger. Gentlemen seem to sup pose that it is a very easy matter to put a note into the Batik and thus pay for stock. It is, sir, easy to but a note in, but the mis- chief is how to git it our. Thence you do not come until y?u have paid the uttermost farthing. If, thn, there was any manufac lure ot stock, ii was such as the State or- firw;rtU0 ;ra.Bo r,f niiai onnf hnv. dered to be manufactured.and its materials, ;n it,.,J r.af ih.-nDAnl. rtf 9no ooo dnl. texlure.workmattshiD and fashion were lass annullv, under the pretext of law. cisely such as tbe Legislature had willed. What are the grounds on which this sccus But,Sir, the part of this accusation which tinr tanH ? ThP Ranb haH hpn rrpat next follows, is of a more erave character, ed in 1804. and there is not a nretence that These investigators , who had an unlimited their 'orirfna cabilals were not Daid in cold authority to send for persons and papers, time the money of the country consisted oH Banks of Cape Fear and Newbern " mast gold and silver, and also of the naper cur have put in circulation between three and rency emitted hy the State in the years four millions of notes"; and thence con 1783 and 1785, which was bv law a tender cluie, that by a " foul and illegal extor- in payment of all debts. In the vear 1810 tion," they have drawn from the people, by the State chartered the S?ate Bank, and way of interest, something like 200,000 pledged its faith that during the continuance annually" ! ! I cannot believe that any one of that charter no new Bank should be es- of the individuals who advance this charge iahliliPd Ro Ko f.,r,rt .0r,ii I ivmd , h ha- Piinnoh tn flasprr it knowing of that charter the paper currency was not it, to be untrue. But yet, sir, it is untrue. It w. ...... J iiiuuaiiitiiiai I h" " I to be a tender in payment of debts due to is asserted without a particle of evi- or from that romoratinn. n.,r; rl. vQr denro tn snnnort it. It is asserted with ill the Banks south of New F.noland Sn.. lout oains having been taken to as- vvvvvvbwbb V Ul IIIC UI J - - w l ' I presume of legal obligation was acquiesced in univer- ed in direct contradiction to evidence which " scribbling process," which I find a diffi- and labor, had taken place 01 an extrava sally. The Banks of Cape Fear and New they have themselves reported, but which 1 culty in understanding. Thse gentlemen gant and unnatural rise would have spread bern rnrtniittpd nn hrpk r :n ,iAt: mom nrof..n, ihpir 7.pnt for mnripmnatinn surelv mistake the meaning of Mr.Seawell's dismay through the State. I he public sen- Thp Nnii.i.. not pm;n amnnntbv 4t00.000 to its !. v I. the Banks of Cape Fear and Newbern were capital stock-instead of being, as these together; but .5.nn nnn .u ,1.!- u.. ,h. n" c. o ' i uic cdpuai 01 Bucuc. ...y S3u,uc, w.v. ...... he State -Bank alone ws a million six I amount. In the answers which I gave to hundred thousand. To have some coun I the written questions propounded to me tetbalance to this dreaded monopoly was! w'th respect to the Bank of Newbern,! prof-1 iani 10 icreu w procure ior 1 .c Yuu.m.v "f "r i u'a 'nno hv the assertion, that the also in- tailed information which they m.ghtdes.re, :s a limitation on the issues oteacn branch- iT;h: t&hAi in lh' e insli. e, who and had the least intimation been given me, and that each constituent part or the corPo- rinnpv.l that information was needed on this point, ration was to have no more paper in circa- lu.u.ons wu",u 7. . ,. 1 . l the itshould have been procured. Here I have hation than bore a defined proportion-say --. the torce o, F ? - e CaDe it not.exceot that on recurrence to the Jour- three for one, to the part of the capita stock "c """" -e ... .ln.l. nf.h. on;Ba,.,ro for 1S1Q.1 find it stat- .Wri to and snhscribpd at it. This is. a the correcmew u, ......Wv Ration of thpir fWtpt !.a,Jr..- H hth.(Umit,nf IvpSii3atinn.that the Hpar mistake. Th onlv limital on on the recoiiec - , y tJ'-M ivji a uiu .... w, ...i-uv u'au. v. - - - 3 - 1 1 7 - I tl-. . I. . .4. .nMiinxiifinn rtl lha r.(v. fd ihe request, unless these Banks would notes in circulation of the Bank ofCapeFear a issues of the Bank is to be found in the luon aedR eeto an enlargement of their capitals little exceed $700,000, and those of the clause prescribing that the total amount fu"?P grease, said they, your capital stocks to Bank of Newbern are not quite $600,000. of the debt which they'd corporation aha 11 ""VkTE S00,COO dollars each, so that together you What ought to be the angu.sh-the self-re- at any time owe shall not exceed $4,800,- 10 form a check to the State Bak, admit proach of every honorable man whose 000." This has no application to the rela- .O lsargely imo the companv.iand we. will name is sub8cribedto that accusation, for tive issues of the Parent Bank and its seve- of the Committee ind. rec i;.:PJ ' I l ' .1 -it- 1 . ) .. I P n,v,g n raw, . u "u,j v.. TZ J I lin " IOUI ana Illegal cxioruoii, imu,-" nay new Bankses We please. The term J nor. will nnt shrink from a comparison with hrd. The stockholders knew full- an equal number chosen from this body or Pe'l that a smal efficient capitalyielded a any other? f lfproportionate profit than a large one The next charge respects, tbe mode in ally efficiem. They knew too that this which the. capital stock of Uhe Slate Bank Ccrea& would add nothing to theirJfcaVw was paid for. The charter for this iristitu- a?,la, There was no specie In the State tion directed that its capital stock should Jhat ihe Banks hefd and the Banks consist of .1,600,000, divided into shares ,(1 no specie. But tbev must either ac- of 100 eachthat three-fourths of the amount of each share subscribed should be paid in gold and silver, nd the remaining fourth either hi gold or silffef or the paper currency emitted in 3 783. and 1785; that one-fourth of the amount of each share shouM be paid at the time of subscription, the second fourth within sixty davs after the Bank should go into operation third instalment within one hundred and twenty days, and the last fourth' within twelve month thereafter; .The act further requir ed that as soon as twelve thousand five hun dred dollars should be actually paid in at each of the places namedthe stockholders should proceed to choosa Directors and forthwith commence the .operation of a Bank in ach of the enumerated towns. It was also enacted (with sorre exceptions not necessary now to be considered) that the paper currency before mentioned should not be a tender to or from the said Bank. The "evidence establishes that' the two first in sralments were all paid in gold or silver, and that the third and fourth uista(ments,or a part of them, were paid in the notes of the Bank. This receipt by the Bank, of its own notes, in payment of the instalments which became due after it wenj into opera tion, is said to be illegal. There is, to mv mind, such an obvious absurdity in this charge, that 1 scarcely know how to make it more evident by any explanations. The Bank was compelled to gointo operation, and at seven different towps, in the State, before it could call for anyjdeferred instal ment. The operation alluded to, was th making of loans and the discounting of bills and notes. It could makepo loans nor dis counts without throwing mo circulation its own paper, this paper mi t was bouod bT and silver ; and law to redeem withTgold the offence charged is, in . ubstance, that it did so redeem .its paper For when the stockholder came forwardwith the notes o! tne Bank and offered therrjin payment of a deferred instalment thajis to say, of a debt for which the Bank cold claim gold or silver, if the Bank refuse), it would hive been to all intents and ptposes, a refusal to pay specie for its notejon demand. Ii was me amy oi me oan&o give specie lor them and it was the due of the reci iver i 4 . . i i . c i i l" rciuru mc uiuney m pamcni ior nis in stalment : and because trt idle ceremony M first paving the money br the notes, and I : - : I (hen taking it back, was ni the omission of a nugatorj complied with,) form is alleged as a-breach of charter. As to the charge of a flirant violation of charter, by opening bpoksln the yea'r 18181 I to receive subscriptions for tVie 4240 shares of stock not subscribed foiin the first in- stance, it is at least equally destitute ' oH foundation as that which Iihave last consi dered. By the act of 1811, ci. 806, sect, 3, the Legislature directed that the State Bank should at such time at mght be con- venient to the Directors, open books to re nre-lceive subscriptions for this, stock and il they did not do so before the first of Janu- ary, 1820, the Legislature commanded that it should then be done- forthwith. The ses- sion of 1817 arrived, and thk books had not yet been opened. Tlie Legislature then that it should no longer be delayed and in compliance wun mis resolution, the Liirect ors opened the books accofdingiy. No what is the complaint t i hM they opened the books to receive such subscription f They had unquestionable authority to do so, and the Legislature requested them to use the authority, that their dwn notes and the notes ot the lianks ot theibtate were re . J . . ceived in payment r. 1 he Lanks then all payed specie, the notes all represented spe- cie, and were to the Mate Uank, to all in W i tents, specie. Something is said, by ihose a -I ' . 1 1 I vno criminate mis proceeumg. aDout a testimony. It is perlectly perspicuous, how ever. I nis gentleman (ens you, that the Bank was aware that it would acquire by this additional subscription tio kicrease ot ability to issue more paper, and that it had no desire to issue more. The only-benefi, to be obtained from the subscription, and thus letting new partners into a jsbare ot the , .lt profits of the institution, would be a retire meni fas it is termed of a Dart of the notes of the Bank and a consequent diminution of vn, s r ; its debt. An idea seems to have been taken up, ..I t? . nU. I. ....a tYtit in nrpcrrihinor I " :p";Z Principal Bank,the law directs that in the or- ........ - - - ders which they shall give to theBranches in j the making of discounts,they shall pay " due regard to the amount of capit&l actually pos- sessed by the several establishments" It is not a little difficult to define precisely what is meant by these words-rbut no meaning can be assigned which should preclude the Directors of tbe institution from giving such orrs to those of the subordinate ranches i t . t -s. 1 ct. . r . 1 rmnPitrnavB. as nrght make their respective issues corres- pond with their, ability to meet ibem. And, permit me, to say. sir, for I find many crude notions prevailing on the sub ject of Hanks, that this ability does not de pend on observing a .given ratio between ihe cash subscribed, or the cash in bank x ind the notes issued. It depends principally on the proportion between the demand and the supply. If a bank issues rpore paper than is required for the advantageous trans action of business, the redundant issues will be returned, and the spe cie must.be drawn out. If it never issues more than is needed for this purpose,a small , amount of specie is sufficient to meet all the calls upon -it In a community where half a million is required for the purposes of circulation, a solvent bank with a hundred thousand dollars in its vaults, can more safely discount life times the amount of this efficient capital, than one with a million' of dollars in actual gold and silver, can issue twice that sum;- Theonly mode by which it is practicable to ascertain what issues are needed, and how to appor tion the supply to the demand, is to be fjund in the redemption of paper whenever it is presented for payment. Unfortunately, soon afier. the amount of notes in North Carolina was suddenly and extensively in creased by the establishment of the State Bank, the war came on, and during the war ihis test was not applied. No Banks south of the Hudson pa'd specie. Such was the exes sive demand for money ,as it was termed, that ihe bank notes of this Stale were called f r more rapidly than they could be supplied, and were most extensively diffused over the southern and south-western States. Yet ho depreciation ensued. The supply did not exceed did not equal, the then unnatural demand. And for two years after the war, a state of extravagant mercantile enterprise, of unbounded speculation, of what was false ly supposed, unprecedented prosperity, sucr ceeded a state quite as unnatural and as unfavorable to ffir banking experiments, as the state of war.. The .issues of the Banks ere by no means disproportionate to th specie in their vaults; They had collected and treasured up large sums and perhaps there were few banks in the Union which i as umui jjci.ic, uumpareu wiui mei. ii i ..r. i : u i notes in circulation, as the banks of North Carolina. Uut their issues exceeded what the business of the country required what I its circulation could absorb and employ. I he whole paper money which can fairly I circulate in a country never can much ex- ceed the gold and silver of which it supplies the place, and wiirch, but for tirat v'Pri would probably be there lound in circula lion. If more be thrown out, what is not needed for effecting the necessary exchan jjes, will be reiurned for redemption. It redeem,ed, the Banks are drained of specie if not ledeemed, the paper must depre ciate,; The year 1818, brought back upon the Banks their redundant issues. I hey were punctually and faithfully redeemed, until the money in meir vaults was almost exhausted. Still the drain continued, and it was perfectly evident that unless it could be stopped, or the leservo.r replenished b I timelv suDDlies' the last dollar would be drawn out. mere i.iuucuuuui ui is me cou.se u... . ..-. sued. The Banks ought to haye called upon tneir ueoior ior p-jih u, , instalments. 4 u. wuu.u uc v..cCu w.r current, as well as furnished the supply. But, sir, let none ot us Dtame 100 narsniy those who auopieu a uiuercm policy. easy to piage aner me em i uvci . " . ' .1 1 C . t have demanaea large p-y i.e.,, ,ro,u u,e debtors to the UanKs at .mat time at tne moment wnen conapse iwu ucceeoeu 10 excitement when a mosi oistressing oe- pressiun m . inc pi pi , ptw... ii,. nl nrnriorlu nrndiira timent tne puouc iwimg u.u nui enaureo 11. mc ucuiui.. .vw loans in unproductive capital, fay men t was not to be made, out at me roosi ruinous sacrifices. And who were me oeoiorsx They were the stockholders the directors their friends tneir neignoors mcir low-cuizens. n ic4u.. I MiPdl mnra lli&n sfm fortitude to send out against them the edict which was to cover the land with mourning; . t. alrm .ht indignation ex- UUU31UCI lilt .. O , Dressed now, at the recent resolution 01 me State Bank, to collect by ten instalments-at Had it been attempted men, IV, Sancili cciulted on .bis subject before the rewlu s arjo pieo, an u ur u .uy u . . . .,j ..,, ,.n.,,H mv M. ed opposuion o i n. uu ex cuse for refusing specie, was my opinion, while vou have a dollar to pay with. But men whose views were at least as pure as mine, and whose practic 1! wisdom was en titled to higher respect 'than I could pre sume to claim, decided otherwise. "Let the Brokers refuse our notes; " They will circulate in the State, and answer there all 1 - 1 Ulllllg IUC 0WI i M. nui iuuiiiuumii the puspses of mojiey. Wcshall be spared ihe odip and ourcountry the rrtiscflieisr; of a prcure upon, the .debtors. . The spe,' cie w nil we have shall be kept to answer., he occi ohal exigencies of our citizens,, and not e bestowed to reward those who, depreck ; our paper, for the purposes of a gainful i d wicked speculation," Unfortu; nately, fc Urokers would not -refuse our. notes. hev knew that the lianks were. solvent, knd that the laws compelled them. to pay. The business was profitable, and the Cods of Justice secured its gains. The. delay in he receipt of these gains was Cora pensatec by interest on their amount. ' The brokers ontrnued, therefore), to drain the? specie f not in a steady stream, yet quite as eiTtfctaaliy as before. The Banks were less liable to meet the calls of their regular customers, and the depreciation increased, wnjen at once emoarr assert tne community, iand enrichedNlhe speculator: - Th object of tiw,rolwtion were entirely frustrated. Sir, the State Bank, and the Bank of Newbern, are charged in the most aggrava ted terms, with foul Usury, in granting. ac coraroodatiens to those who exchanged,. or promised to exchange, specie or northern funds for Heir paper. It would have shewn, a spirit nf Jiscrimination and of calm en quiry, bad ;he accusers stated, as was un . questionaby proved by the testimony of Mr. Sherwood Haywood, that no rule re quiring sudi exchanges had ever been im posed by tie Directors of the Bank of New bem that the Dtactice existed but to & small extent, for a short time, and at one only of id agencies that there the ex change was never made the condition on which tbe accommodation was granted and that a failure to make the promised exchange never subjected the borrower to any other terms of renewal than those most indulgent terms accorded to all others. It is a matter nut very important in the. present discussion, whether the charge cf Usury can be truly predicated on these practices. For if Usury has been commits ted by the Banks, the punUhment, as well as tbe means of redress, are precisely the s.ime as if it had been committed by indivi duals. The debt tainted with Usury can oot be enforced at law. : Twice the amount of the moneys uscriously lent are forfeited and the Courts of Equity will protect every debtor from paying and cause to be return ed to. every debtor who has paid more thanthe principal and interest of his loan. Tb Banks are no more privileged 10 com mil Usury than individuals. Neither are ments for the act. But it is always right, if passible, that things should be, designated by. their appropriate names. That the practice alluded to has been oppressive to the borrowers, and in my humble judg ment, injurious to the Institutions, is abun dantly plain. In a community where there prevailed a rage lor borrowing, such a practice enabled the applicant to gratify a ratal propensity, on most ruinous terms. The Banks themselves derived no benefit from the transaction. The very paper given out in exchange ' ior specie, added to that advanced on the ioan, was immediately returned upon them increased the drain and, from the diffi culty of.supplying it, increased also the de preciation. 1 have never hesitated to con demn the practice as at once foolish and pernicious. But, Sir, I know not .how it can be stigmatised as Usury. If, indeed, the design of the contract was to obtain a greater premium on the loan! than the legal rate of interest, and the exchange was re sorted tolas a cover for that design, a Court of Justice 'would strip-tbe transaction of the cover, and pronounce upon the act accord ing to the intent of the parties. The law will rit lie cheated by an evasion, eluded by a shift, nor defeated by a contrivance. An exchange of notes for paper, may be resorted to as a stratagem to conceal a bar gain for a usurious. loan. If it be, of course it is to be regarded as a stratagem. -But apart from such-an intent, there is -not; there cannot .be any usury in pro mising to pay a debt in the legal currency of the country. ; or in giving money for a valid engagement to return the same on de mand. I am not hazarding my own crude speculations on the subject, but am com pletely borne out by an adjudication in the Supreme Court of Massachusetts, In the case of Portland Bank vs. ,Storer. ( 7 Mas sachusetts Reports. 433. And the profes sional pan of this Committee know and fee) the respect which is due to the decision of a Tribunal, of which Theophilus Parsons was the presiding Magistrate. It appears from the Report, that the State Bank has purchased Cotton in order to fur nish itself with specie or Iorifcern funds: to meet its engagements, and that this Bank and the Bank of Cape Fear with the same motives and for the same purposes purchas ed stock in the Bank of the United States. Sir, I can have no hesitation in saying that if the first mentioned, act should be estab lished in a Court of Justice, and brought home to the Directors of that Institution, it is a clear-violation of the charter : and 1 in cline to the belief that the purchase of stoclc is also a trading in prohibited articlei, and may be pronounced a violation of charter. There is no. doubt, if reliance 'can be placed on human testimony, that the. views of the managers, of these institutions in making bese purchases were pure, and as mil doubt that ihe" acts considered in themselvej , "." L ' r... i.-. .... were injurious 10 no uhc. tu u uvttwj If ''i & St LI;
Newbern Sentinel (New Bern, N.C.)
Standardized title groups preceding, succeeding, and alternate titles together.
Feb. 21, 1829, edition 1
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