SENATE.] Bank of the United States. [JUNE 5, 1832. of the country. He would vote against the gentleman's who are in the least want of them; and I, therefore, hope proposition. that the amendment will not prevail. Mr. BUCKNER also opposed the measure; and the question was not decided, when The Senate adjourned. TUESDAY, JUNE 5. Mr. CLAY said that, if he thought this reduction of interest would have the effect of producing a general reduction of interest throughout the Union, he might perhaps be induced to vote for it; but still he should hesitate to reduce it so much as one per cent., a reduction which would greatly exceed the bonus required from the bank. A reduction from six per cent. to five per cent. on thirty-five millions of capital, would only be a reduction on about day, I think it my duty, Mr. President, to move that the Mr. TAZEWELL said, after what occurred the other one-tenth of the whole banking capital of the country. It Senate now proceed to the consideration of executive was a benefit which would only result to borrowers from the bank, and not to the people generally; and this constituted his greatest objection to the amendment of his colleague. Mr. WHITE would give it his partial consent, as better than exacting a bonus, on the selling of privileges; and he thought that the bank would now have more emolument at five per cent. than under the last charter limiting them to six per cent., when all the expenses, risk, &c. of bringing the bank into operation had to be incurred. business. 20. The motion was decided in the negative-yeas 18, naye BANK OF THE UNITED STATES. The Senate resumed the consideration of the bill to mo dify and continue the act to incorporate the subscribers to the Bank of the United States. The question pending being on the motion to strike out the clause providing for the bonus, and to insert a provi sion that the interest on loans and discounts made by the bank should not exceed five per cent., Mr. MANGUM expressed his opinion that the bonus was too low; he thought $200,000 a year would be little enough. Mr. CLAYTON gave the reasons which induced him to Mr. FRELINGHUYSEN said that, if the proposition vote against the provision to amend. His own opinion was, contained in the amendment of the honorable Senator from that, if the amendment prevailed, it would prove inju Kentucky [Mr. BIBB] was the result of a general re-rious to the bank, to the State banks, and to the people of view of our fiscal and commercial condition and relations, the country. Some gentlemen seemed to think that the and if the ascertained state of our money market called for reduction of the rate of interest would be highly benefi or justified the proposed reduction of interest, the ques-cial to the bank, by increasing its profits. The bank had tion would present itself under more favorable circum- always had the ability to discount at five per cent.; and, stances than we are now to consider it. For, sir, said Mr. always having the ability, if it was so advantageous, why F., in the place of its growing out of the actual state of had not the directors resorted to the practice of making business in the country, we are, in this collateral manner, loans and discounts at five per cent.? The astuteness of and aside from most of those considerations that should those who administered the affairs of the bank had never prompt to a measure so important, called upon to interfere discovered what seemed to have been so suddenly found with a delicate question in economy, as a ready way of re- out here. He thought that those whose duty it was to ceiving a bonus from this bank for the extension of its protect the interests of the stockholders, had taken this privileges. Now it seems, in my judgment, to be objec-subject into consideration before now, and had given to tionable, under any view of it. If it could accomplish a it a proper examination. He was not disposed to legislate general reduction of the rate of interest in the States, as on this bill, merely for the benefit of the bank, but he its sanguine friends promise for it, why, then, sir, I re- still thought that the institution was entitled to some congard it as of very questionable expediency: for it will be sideration, because it was the instrument of the Govern indirectly, and, I fear, offensively, interfering with a point ment for great national objects, which would be defeated of State policy, and where the State Legislatures are much if its interests were entirely overlooked. If the Senate, the best judges of the value of money amongst their citi- however, looked to the interests of the bank alone, the Why should Congress, without any necessary or present motion could not be sustained. It would go to urgent inducement, move in this delicate matter, and pro- change the whole system of the banking operations, and bably lead to unhappy collisions in feeling, at least, be- such change was not required by public opinion. In not tween general and State jurisdiction? one of all the numerous memorials which had been pre zens. But, in the next place, the proposed measure would fail sented to the Senate, was there any request to reduce the to produce this predicted result. The capital of the Bank rate of interest. Neither in any of the memorials from of the United States forms, to the whole banking capital the State banks, nor in those from the people, had the employed in this country, a proportion of less than one-subject been touched. There had not been a single indi third. It stood, at the close of 1829, as $35,000,000 to cation of public opinion that such a change was desired; $110,192,268; and when we take into the account the and no one but the mover of the proposition attached the amount of capital loaned by individuals on landed and other slightest importance to the idea. Most of the State banks, securities, we must perceive that the power of regulating and especially those which stood on the most solid bases, the value of money and rate of loans is attributed to this had presented themselves to the Senate in favor of the bank, under great misapprehensions of its ability. This bank. Let this amendment prevail, and twenty days amendment would only augment the privileges of the would not elapse before the same banks would send on wealthy. The bank, compelled to discount at five per memorials against the passage of the bill. The operation cent., would have the choice of paper. Those dealers of of the measure must, in some measure, be to reduce their best standing and soundest capital, and who least needed profits, and compel them to curtail their business. The the helping hand of the institution, would of course be pre-hostility of all these institutions would be enlisted against ferred; and thus distinctions of an odious character would the bank, and that hostility would be felt on some future be cherished. occasion. The banks would still continue to lend money So that, under whatever aspect the amendment pre- at an interest of six per cent., and favorite borrowers sents itself, it is liable to just exceptions. If it could pro- would obtain loans at five per cent., and lend them out duce a universal abatement of interest, we should not again at six or seven per cent. There could not be a legislate for such an object, but leave it with the States: worse proposition than to fix the interest at five per if it cannot achieve such a reduction, as I believe it cannot, cent., since it would array all the State banks against the why, then, it will shed its benefits only or chiefly upon those institution. JUNE 5, 1832.] Bank of the United States. [SENATE. In reference to the Government, what would be the not loan money. It merely exchanges credit. It gives effect? It would cripple the institution, and disable the its notes of hand for the notes of hand of individuals, and, agent of the Government from collecting the public re-paying no premium in the form of interest itself, requires venue, and performing its other obligations to the people. a premium of the individuals with whom it deals. Its Would this be wise? Would it be politic? The bank credit is founded on the confidence of the public in its would thus be compelled either to create new notes, in capacity, which confidence is the result of the governorder to sustain itself, and yield a proper dividend to the mental action in its creation. This remark applies to all stockholders, or it must change the course of its business, incorporated banks; but another circumstance exists in and make profits in its exchange. One of the objects of regard to this bank, which extends its control throughout the institution was to equalize the exchange, and there is the mercantile world--the fact of its notes being made now no perceptible burden on exchanges. There is no receivable every where in payment of the Government country where so many facilities are given to exchange; dues. However solvent an individual may be, his notes and all these facilities owe their existence to the bank. To will not pass currently beyond a small neighborhood sustain the stockholders, the bank would be compelled to circle. He is, therefore, under frequent necessity of go to the exchanges, and to burden them for the purpose adopting the bank credit or notes for his own credit or of making its dividends. The effect of the amendment notes, and of giving a premium in the form of interest, would be to destroy all the advantages which now result when, in fact, his solvency is as perfect, his responsibility is from the bank, and to make the institution less worthy of as entire, to the extent of his undertaking, as that of the the public confidence. Much more advantage, however, bank, to the extent of its engagements. True, the bank had resulted from the bank than the mere facility of ex- is liable to be called upon to redeem its notes daily; but change; since, by means of this institution, there has been the fact that its issues exceed its capital twice or thrice, established a standard of value for money, the same at all shows that that responsibility is remote and inconsiderable. places, and almost at all times. In this respect, the Is then five per cent. enough to compensate the bank for greatest advantages had resulted from the bank. What this exchange of its credit for the credit of individuals? would be the effect of the proposition in regard to this? Can any one doubt it? Take a beggar in the streets, and The bank would be constrained to increase its issues be- let the Government announce its determination to receive yond what it had previously done, in order to make up his notes in the payment of its dues, amounting as they the deficiency in its profits. The State banks would also do to from 25 to $30,000,000 annually, and who doubts be obliged to add to their issues; and thus an immense but that the credit of the beggar would be sought after accumulation of paper would be thrown into circulation, with avidity, and that he would speedily be enriched if and a depreciation in its value would necessarily follow. he was permitted to receive a premium greatly below five Relying on the ability and patriotism of the administra- per cent. Who can doubt but that five per cent. is an tion of the bank, some might reply that they would not ample allowance? The stock is at this moment, when throw an excessive issue of paper into the market. It there hangs over the institution some doubt as to the conmight be so. But how long would this reliance continue? tinuance of its existence, twenty-five per cent. above par; A new president, new directors, would come in; and and the very day after its new charter shall have passed, these, to gain the object of large dividends, would increase the calculation is that the stock will run to from $150 to the issues. The standard of money, which is now nearly $200 per share. What is more conclusive than this, to uniform, would then be no longer so, and all the advan- show the immensity of its profits? And this, too, although tages of a national bank would be lost. it has to sustain out of its profits countless numbers of On the people, the effect would be to establish an ex-officers and dependents. This regulation, then, cannot be tensive system of brokerage. The people would only be considered unjust to the bank. able to borrow at six or seven per cent. The favorites Its effects on the community would be decidedly benefiwould obtain loans at the national bank at the reduced cial, as I shall attempt presently to show, and would, rate of five per cent., and would immediately loan out therefore, tend greatly to increase the popularity of the the money at six or seven per cent. The advantages institution; an effect of the highest importance to the inwould thus be confined to a few, who would be able to stitution. A suggestion has been made, that it would obtain loans at the national bank, but could not be felt concentre its loans in the hands of the few. All that 1 by individuals who, possessing less facility of raising money, would be obliged to resort to State banks, or to the brokers. These are the considerations which had brought him to the conclusion that the amendment of the Senator from Kentucky would be productive of the most disastrous consequences to the bank itself, to the State banks, and to the country. can say in reply is, that, if it did so, it would act injudiciously. In my opinion, it should diffuse its loans as much as possible, consistently with a just regard to its interests. Extravagant loans to a few would weaken it in the estimation of the public, and abridge its usefulness. What would be the effect of this measure on the community? This is the important inquiry, since the institution should be created for the public interest, and not the Mr. TYLER said the more he had reflected on the pro- good of a few, exclusively. The first effect would be to position now before the Senate, the more he had been lead the State banks to adopt a similar regulation; in no impressed with its importance and magnitude. He would other way could they move on harmoniously with this go so far as to say that, in his opinion, it was second to bank. The argument ventured in this debate, that this but one which had engaged the attention of Congress regulation would place this bank at the mercy of the during the present session. He believed that while the State banks, is ideal. The State banks, on the contrary, adoption of the proposed amendment would inflict no hold their existence but at the pleasure of this; and who injury upon the bank, it would confer the greatest benefit can doubt but that an arrangement would readily be forc upon society. Would it impose an unjust limitation on ed upon those banks to receive, in the settlement of the bank? If it would, he would abandon it altogether; balances with this bank, the same interest which it would for while he could not vote for rechartering the institu- receive of them? tron, he would not infuse a secret poison into its vitals, which would affect its capacity to do good. It asked a prolongation of its existence, and Congress should take care to engraft upon its charter such provisions as would benefit the community. The first reflection which occurs, is, that the bank does The next effect would be to induce the Legislatures of the different States to reduce the rate of legal interest to five per cent.; of this I have no doubt. I have not had time to trace out the causes of the change in the rate of interest which occurred in Virginia, but I incline to believe that it was consequent upon the chartering of the SENATE.] Bank of the United States. [JUNE 5, 1832. first United States' Bank. Before that, it was at five per restricting an individual corporation? You propose to make cent., it was changed to six per cent., and the first bank was authorized to receive that amount; and now we come to the important influence which a reduction in the rate of interest would have upon the great interests of the community. one body subject to this reduction, but you do not say all shall do so, because you cannot control the State banks, and they can charge according to their own regulations. Let the interest be lowered by this individual company, and it will not alter the price with others. A change can only be produced by a change in the supply; and will this restriction on the bank increase the money in the market? No; it must grow out of other causes. The gentleman from Virginia [Mr. TYLER] had alluded to the regulation of Moses regarding usury, and he had reprobated the making of this a nation of usurers. But he [Mr. S.] thought there was a wrong application of the argument on the part of the gentleman. The Jews, under the restriction of Moses, had become usurers--here, in the absence of restriction, we are to become usurers. It is this view which imparts to this subject its greatest interest; and it rests upon plain principles of political economy. Where money converted into public stocks or individual loans yields a higher profit than the same money invested in lands, ships, or machinery, agriculture, commerce, and manufactures necessarily become neglected. If money put at usance breeds higher profits than the loom, the ship, or the land, then capital is withdrawn from these less profitable employments, and seeks investments in the public stocks or individual loans. This can admit of no doubt. In this, then, consists the true secret of giv- [Mr. TYLER explained. The Jewish law said, "thou ing activity to the industry of a community. If the profits shalt not take usury of thy brother," but it did not restrict from agriculture, commerce, and manufactures, be equal them from charging what they would of strangers; the into the profits on loans, then do these employments invite tercourse with other nations was then but small, which the attention of mankind, and each in its turn puts forth probably was the cause of the inhibition not having exall its energies. Commerce takes new wings, agriculture tended to themselves.] develops all her beneficent faculties, and the arts are Mr. SPRAGUE still was of opinion that the application made to flourish. Hence the vital importance of laws re- went against the gentleman's own argument. At all events gulating the rate of interest; without them a nation soon he did not think the motion of the Senator from Kentucky becomes a nation of money lenders; and that winch was would prove conclusive to the benefit of the country, and designed as a mere medium through which agriculture, it was for the community we should legislate; the indicommerce, and manufactures should carry on their ex-vidual interests of the stockholders had no claim on us. changes, is converted into the instrument of their greatest Mr. FORSYTH called for a division of the question, so oppression. as to take the question first on striking out. He wished The great lawgiver of the Jews understood this most to move an amendment, and he should therefore vote perfectly. The Israelites had just entered upon the against striking out. He thought five per cent. would be possession of the promised land. It was every way de- an ample compensation to the bank, because it was equal sirable that the land should be reclaimed, and its faculties to six per cent. in 1816, when the bank was rechartered; developed, and hence the regulation that no Israelite so that it would be giving as much. Another reason was, should take usance of an Israelite. Capital could thereby the bank stock is now at 120 to 130, so that it was enough be profitably invested, both in the culture of the earth above par to justify the reduction of interest. A proposi and in commerce, and the land of Galilee repaid most tion from Boston was before Congress, offering to give abundantly the laborer. But when these influences had more favorable terms for a bank; they offer to reduce ceased to operate, and the tribes were scattered over the their interest to five per cent., and he saw no reason to face of the earth, the Mosaic regulation which permitted allow the present institution six per cent. usance to be taken of strangers, aided by the oppressions The mind of Hamilton fluctuated between five and six under which they labored, converted the Jews into a na-per cent.; and he read extracts from his report, to show tion of money lenders. I mention not this to their dis-that the only fear of Hamilton was, that a limitation of credit. They are like all the rest of the human family, the interest to five per cent. would prevent capitalists no better and no worse-devoting themselves to the ac- from embarking their capital in the bank. He had none quisition of money, and seeking for their money such of the fears which now affect Senators who oppose the investment as yields the greatest return. Into the same reduction. It was apprehended that the change would condition may the people of any country be changed. be injurious to the State banks and the community. He Only make the profits on loans high enough; if six per referred to the history of the banks of Georgia, to show cent. would not do, take ten; and if ten will not do, take that this was not likely to be the result. twenty; in other words, make it more profitable to the the bank capital being so large, the effect of the reduction capitalists to loan out their money, than to invest it in of interest on that capital would be felt throughout the lands, ships, or machinery, and the work is accomplished. country. He denied the applicability of the statement of Government will have converted the community into a the Senator from Delaware that the State banks would nation of money lenders. be compelled to increase the amount of their issues. He stated that the interest on loans by State banks was, in many cases, now higher than that on loans by the United States' Bank. The United States' Bank has now the power to reduce the interest to favor any particular institutions or individuals, and had reduced it in some instances. He would vote against the striking out, and would afterwards move to add a provision reducing the rate of interest to The amount of These considerations led him to oppose his vote to all moneyed corporations; but while he felt himself constrained to vote against the rechartering of this bank, if it is to pass, he wished to protect the other interests of the community against evil. The per centage proposed to be allowed is greater than that derived from agriculture, but the contemplated reduction will relieve it in some small degree of its burdens, and should therefore have five per cent. his support; and its reasonableness is fully evidenced by Mr. HOLMES stated that, if the object be a general re the fact that the capitalists of other countries send their duction of the rate of the interest, the two questions which funds here to be invested in stocks yielding no greater interest than five per cent. presented themselves were, "Will you, if you can?" and the second," Can you, if you will" He stated that in Mr. SPRAGUE said the object of the proposition was, one State there was no legal regulation of interest. It he presumed, to make the reduction of interest through was left to regulate itself. Money is a medium of exchange out the country general, but he would ask if the price of of capital, and paper a representation of money. He the commodity did not depend upon the supply and the quoted from an ingenious author on the considerations demand. Then, how could this object be attained by which ought to enter into view when a reduction of inte UNE 5, 1832.] Bank of the United States. [SENATE. rest was proposed. When there are more borrowers than lated by the State Legislatures. He argued that this was lenders, the rate of interest will be high; when lenders an important question-so important that he could not outnumber borrowers, it will be low. He referred to venture to change what had been the experience of the the history of other countries on the subject of the rates country for the last forty years. Again, he insisted that of interest, at different periods. In reference to the Jews, after the bank, on its part, had fulfilled every purpose he stated that there were many of their practices which which it had contracted to fulfil, had regulated exchange, we should be reluctant to adopt as a rule of action. They and purified the currency, collected and distributed the would not eat the animals which died of themselves, but public revenue, it should then be coerced to lend its mothey might sell them to strangers: so they would not take ney at less than its real value. The bank, left to itself, usury of each other, but they would of strangers. It was would be carried on upon its own responsibility. If contheir policy to take care of themselves. If such a bank as ducted skilfully, it would come out well; if unskilfully, it ours had been proposed to Moses, he would have put his would come out ill. The reduction of the interest does veto on it, as unfit for the Jewish population. He wished not enable a borrower more easily to obtain his loan. If to know if the gentleman from Virginia intended that we he cannot get his loan of the United States' Bank at five should follow out the Jewish feeling and policy. If the per cent., he is obliged to cross to the opposite bank, and effect of a reduction of the rate of interest would be to borrow at six per cent.; and as he is lender as well as reduce it every where, the banks which had memorializ- borrower, he makes the borrower of him pay the addied Congress for the renewal of the charter of the United tional interest which he has himself paid. He stated that States' Bank have prayed for a diminution of their own he did with reluctance oppose the motion. profits. He stated that, by a regulation of loans of property under the ordinary rate, lenders would have so many borrowers, and there would be such an overtrading in consequence of the increase of money that evil effects might be expected. Mr. MANGUM stated that he had probably overrated the beneficial consequences which he expected to result from the adoption of the amendment. But he could not but express his gratification that the sentiments of Mr. Hamilton had received such respect from the Senate. He But he denied that Congress could, if they would, by stated that every State in the Union, except Mississippi, reducing the rate of interest on United States' Bank loans had regulated the rate of interest, and therefore all which and discounts, compel the State banks to reduce their rate had been said on the inexpediency of any interference with of interest. He reiterated the statement that the banks the subject was inapplicable. His reflections, he said, and other favorites of the United States' Bank could, in had led him to the conviction that every bank would be the event of the reduction of interest, reinvest it at six or coerced, by the example of the United States' Bank, to a seven per cent., and thus the bank might be made a politi- reduction of interest, or they would lose the confidence cal engine. He believed the proposition to be one of the of the people. He had no apprehension that the State worst features which could be introduced into the bill. banks could keep up this discrimination in the rate of inAs to the Boston offer, he considered it extravagant; and terest. If they did so, all the best business would go into as the present bank had been tried for twenty years, and the United States' Bank. He was not alarmed by the fear had always paid its bills, and fulfilled all the great objects of of any over-issues of the United States' Bank. Any excess its constitution, he did not think it would be politic to of circulation would merely fill up the deficiencies in the compel it to give way to any substitute. He laid it down State currency. While he expressed his determination that while we had a bank which could issue and keep in to go as far as any in checking any excesses of feeling in circulation twice the amount of its gold and silver, of reference to the dissolution of the Union, he still thought sound currency, we had all the benefits which could be desired. that something ought to be done to soothe dissatisfaction and discontent where they were found to exist. And he Mr. DALLAS then stated that he had been much im- argued that the reduction of the rate of interest would have pressed by some views which had been thrown out by the a beneficial effect. If it should fail to produce the benefits Senator from North Carolina on a preceding day, but he which he expected, it would be easy to apply a correcthad not been able to bring himself to the conclusion that ive. Public opinion would apply such a corrective. the change now proposed would be beneficial. He re- He invited a review of the subject, and suggested that a plied to the various objections which had been taken to provision should be inserted, retaining the power to rethe present rate of interest, and deprecated any interfer- store the present rate of interest whenever the reduced ence with the rate at which money might be loaned, the rate should be found to fail in producing any benefit. He effect of which interference would be to produce over- would view the adoption of the amendment as a concession trading, which would tend to public injury. The princi- to allay public excitement in the South, of more power ple thus introduced would be one which ought to be than any which had been exhibited during twenty years. discouraged. An injurious effect might also be produced Mr. TAZEWELL made some observations in favor of on the State banks. If they would come down to five the reduction of interest, and in reply to the Senator from per cent. there would be an inducement to overtrade. Pennsylvania. That Senator had asked why the Govern The United States' Bank is not the only source from which ment should compel the bank to lend money for less than borrowers obtain loans; it is surrounded by other institu- its value. If the chartering of the bank was advantageous tions of a similar character, and the same consequences to the Government, it was advantageous to the stockholdwere to be expected in the latter as would exhibit them-ers. Like the Senator from Maine, he knew of no obliselves in the former. But suppose the United States' gation which the Government owed to the stockholders. Bank would not overtrade to make up the difference be- At the same time, however, that he did not desire to let tween six and five per cent. interest, it would be compel- them have this charter at any thing less than it was worth, led to resort to another mode of increasing its profits, and he had no disposition to extort one cent more. The legal making up for the deficiency of interest, and that mode rate of interest would always be more than the actual value would be by operating on the exchange. of money. It had been fixed at six per cent. by the law He did not believe that this reduction of interest would of 1791, because such was the average rate of interest in be beneficial to the community. Not one tenth, one hun-most of the States of the Union. It varied from seven to dredth part of the people would be benefited by the five, and six per cent. was taken as the mean rate of inchange in the rate of interest. He attached weight to terest. Since 1791, there has been some change in the the argument of the Senator from New Jersey, that, if value of money. If money was worth six per cent. then, this is to act on all the people of the United States, it it must be worth more or less now. He contended that ought not to be an act of Congress, but should be regu- it would not require an argument to prove that the value SENATE.] Bank of the United States. [JUNE 5, 1832. Every bank of money is much less now than it was in 1791. He in- discount of a note beforehand, and the charge of interest stanced the terms on which the United States' Bank took for sixty-four days instead of sixty-three, he also differed. the loans of the United States at an interest below six per Any individual could discount on the same terms; the cent., and even paid a premium to obtain them. The four privilege was not exclusive to a bank. and a half per cent. stock at this moment, when about to stands on the footing of a public banker, or of an indiviexpire, is selling at more than par. The bank took the dual who discounts a note. They stand on the same footloans on these terms, and then carried them into the mar- ing. The gentleman asked why stocks about to expire ket, and made a profit upon them. The bank had divided commanded a price above par. It was because of the su about seven per cent. after appropriating a considerable perior credit and security of the Government. As to the sum as a surplus fund to cover the effects of former mis- matter of the four days, he did not know that banks are management, and paying all its expenses. Consequently, entitled to charge interest for the fourth day. If they the stockholders were doing a profitable business at the violated the law, they were liable to the penalties of usury. present rate of interest. The practice of paying interest If they were loans at four or five per cent., there were at the moment of making the loan, brought it to the cha- often loans at nine, ten, and up to twenty per cent. He racter of discount, and not interest, interest being demanda- stated that the bank had never made any large dividend, ble at the end of the term of the loan, instead of at the com- nor could it, unless it was more fortunate than it had been. mencement, and here the bank enjoyed an advantage. The old bank had never paid more than one hundred per There was also an advantage arising from the practice of cent. counting both the day on which a note was dated, and the The Senator from Virginia had said that where State day on which it was due. Suppose the interest was re- banks had discounted at different rates of interest, no evil duced to five per cent. with all the advantages of the pre-had occurred. He did not know of any case where these vious payment of the interest, and the practice of counting banks had come into collision. Money was always cheaper sixty-four days for sixty-three, the interest would be in cities than any where else; and there was force in brought up nearly to six per cent., as it now is to seven the observation of the Senator from Delaware, that comper cent. He put the question how it has happened that mercial men will have the benefits of the reduced interest, the four and a half per cent. stock was above par, and and no others. He could not agree that the value of mo. the stock of the bank so greatly above par. The stock ney was less now than in 1791. of the bank was high, on account of the amount of profit- Mr. SMITH said the Government could not, in 1791, able discounts made by the bank on its own notes. He borrow money for less than six per cent. Now, Govern was against allowing the bank to take more than an indivi- ment could borrow at four and a half per cent. On bank dual was permitted to take. But it was said that, if the stock now, money could be borrowed at five per cent., interest were reduced, the bank would over-issue. The while on other security it could not be got for less than bank may now do so; but the bank will not extend its six per cent. issues beyond the line of security, and as far as that, for Mr. BIBB made some observations to sustain his prothe sake of the profits, it doubtless extends them now. It position to amend, and in reply to the objections which is said the States will make over-issues. The same argu- had been urged against it. He contended that Congress ment applies. There is no danger while one institution is was necessarily called on now to regulate the rate of inwatching another as jealously as they do now. Every bank terest. He viewed the question in two lights, as to the will go as far as they safely can, at whatever rate the in-effect of the reduction on the community, and whether terest may be fixed. it would so cripple the bank itself, as to prevent an ac He did not exactly understand the distinction between ceptance of the charter. He cited Adam Smith and Alexordinary discounts and the buying of domestic bills of ex-ander Hamilton, and all the intermediate writers, to supchange. When gentlemen said that the bank would be port his position, that the community would be benefited obliged to enlarge their profits on exchange, he did not by the reduction of the rate of interest. The benefit exactly understand their meaning; and as to foreign bills of would be felt first by the borrowers, and thence would exchange, he had no fear that the bank would ever deal extend itself to all classes of the people. He ascribed in these for the sake of profit, or from any cause but ne- the alleged profits of the bank to a variety of causes, cessity, or for the accommodation of the Government, among which was the undrawn deposite which the Govern He considered that the bank ought not to be placed in ament always had in the bank, varying from one million to better situation than an individual. three millions. He insisted that the bank would be willing to take the charter with the reduced interest. On the call of Mr. BIBB, the yeas and nays were or dered. The question was then taken on the motion to strike out, and decided as follows: YEAS.--Messrs. Benton, Bibb, Brown, Dudley, Ellis, Grundy, Hayne, Hill, King, Mangum, Marcy, Miller, Robinson, Smith, Tazewell, Troup, Tyler, White.--18. NAYS.-Messrs. Bell, Buckner, Chambers, Clay, Clay Mr. WEBSTER said he differed entirely from the Senator from Virginia as to that which forms the basis of his argument. This is still matter of opinion. The basis was, that, as six per cent. was the rate of interest paid in 1791, it ought to be less now, because the value of money was less now than in 1791. He denied that the value of money was less now than in 1791. The money of the country had not outstripped the enterprise of the country. He would compare the value of the money with what was proposed. He knew no place where the value of com-ton, Dallas, Ewing, Foot, Forsyth, Frelinghuysen, Henmercial notes was not six per cent. He believed the rate of interest had been raised in Virginia since 1791; and throughout the United States there was no State where the interest was less than six per cent.; consequently, if So the motion to strike out was negatived. the lowest rate be six per cent., six per cent. cannot be The question then being on concurrence with the taken as the average, It was also argued that the Go- amendment of the Committee of the Whole, providing vernment stock was above par. He asked the Senator for a bonus of 150,000 dollars per annum during the fif if Government bonds, and bonds and mortgage on good teen years for which the charter is continued by the bill, estate, did not always bring a lower interest than any com- Mr. SPRAGUE rose to move the substitution of a larger mercial responsibility. This is because of the uncertainty sum for the bonus. He was of the opinion that, if any of all commercial security. The Senator, if executor of bonus at all was to be given, it ought to be adequate to an estate, would not invest money in commercial security, the benefit received by the bank, in proportion to the proon account of its uncertainty. As to the exacting of the fits of the stockholders. If the stock was to receive a dricks, Holmes, Johnston, Knight, Moore, Naudain, Poindexter, Prentiss, Robbins, Seymour, Silsbee, Sprague, Tipton, Tomlinson, Webster, Wilkins.--26. |