I have BTvorn upon the AltHr-of-Cod, eternal hostility to every form of Tyranny over the Mind of Man" Thomas Jefferson,
PRINTED AND FUBLISIIED BY II. WEBB
Volume MI.
BLOOMSBPKO COLUMBIA COUNTY, PA. SATURDAY, JTANtTAUY ,25 1840
ttmhfoer &t
Hit
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MESSAGE
From the uovcrnnr of Pennsylvania, to
both houses of the legislature, at the coin-
Roncomsnt, ot the session, January
1840.
( Continued.)
The first object to ho gained, hy any re
aommendaiion I may make, orbv any meas
'titers you may adopt, no doulit, is to secure
on early resumption of specie payments by
the banks, and to guard against a like bus
pension in future. This desirable end must
be attained, on a judicious consideration of
tho subject, and due regain to us practma
bility, as well as to the wrongs and incon
veniences the peolpc endure.
As I have already stated, the New Yoik
banks continue to pay specie, as well as the
banks ot several other states; indeed, some
banks that had suspended, have recently re
timed. I believe the condition of most of
ur own banks is as sound in reality, as
thpsc of other states. They have as much
specie in their vaults, as good debtors, and
and I know not why they should be less
r able and willing to meet all demands upon
them in coin. It is alleged that the notes
issued by authority of law, in somo of the
states, of a less denomination than five dol
lars, have supplied the banks with a substi
tute for specie, ami that this has enabled
them to hold out against suspension. Per
haps this opinion is to some extent well
founded, and it is certainly countenanced by
the fact, noticed by all who arc conversant
with the matter, that although the banks of
Pennsylvania have suspended specie pay
ments since the 10th day of October last,
yet we now find in actual circulation among
our citizens, more specin than in these states
where small notes are allowed to bo issued,
and their banks continue to pay specie I'oi
their notes. This is a most conclusive
proof of the utility of our own law prohib
iting the issue and circulation of notes of a
less denomination than five dollars. Its ten
dency hat been, as I believe, to place in the
vaults of the banks, and in the hands of
private citizens of Pennsylvania, a greater
. amount of gold and silver coin than is to
bo found in any other state in the union. I
do not think it would be expedient to repeal
that law; on the contrary, I think provisions
ahould be made to render its enforcement
xaore effectual, and by which we should
drive back, whenco they came, the small
notes of tho neighboring state. They are
debasing our calculation they usurp the
place of our own specie and they trans
fer to the issuers ol them, latgc profits aris
ing from their circulation in desphe of our
law. If we force them back upon those
who put them forth, either banks or other
corporations, which are solvent, we shall
get, qr we ought to get, specie in return for
them. Let those states whose legislatures
choof o to authorize the issues of small notes
enjoy the benefit of such currency. Penn
sylvania prefers gold and silver as small
change for her ciizens.
While the banks of other stages enjoy the
advantage of small notes as a substitute for
"specie, we should doubtless alio v our banks
that are deprived of it, some indulgence in
resuming tho payment of specie for their
notes and liabilities, and this indulgence
ahonld be extended, not so much on account
the haul s themselves, is of tho people
fj Pennsylvania and their business, which
would bo most deeply affected by imprudent
legislation on this subject, It Is apparent
to the most casual observer from the foie
.going statements of tho income of our pub
iio improvements, the resources of the com
monwealth, and tke vast amount of the state
4eb falling due, and tho interrst annually
accruing on the whole debt, that Pennsyl
vania has a deep stake in sustaining the bu
alnees and credit of this stato and her citi
zens. Whatever measures cripple our gen
eral business operations and prostrate our
(credit, force upon us tho Inevitable necessi
ty of restoring to taxation, or to a sale of
our public improvements, or further state
loans at a heavy sacrifice. Auatnst all
these measures, I feel a degree of repug
nance that cannot be easily overcome. The
yearly income ot the people is already heav
ily burthencd with taxes their permanent
property is in effects mortgaged with an c
uormuus state debt. In this state of things
it behoves the legislature to weigh well the
policy of adopting any measures that will
curtail the avails of the' people's industry,
or diminish the resources of the common
wealth to meet its engagements. It should
not be forgotten, that, in the case of debts
already contracted, the direct effect of re
ducing the means of tho debtor, is to in
crease the lclativc amount of his debt.
The creditor gains in proportion as the debt
tftr loses, and no man can foresee the extent
of tho impending convulsion. The com
monwealth of Pennsylvania ia in no situa
tion to augment her state debt, either abso
lutely or relatively. Untried expedients
should be considered well.
I respectfully suggest the propriety of
immediately injuring into the condition ol
the banks of this commonwealth, and of
fixing the earliest period for the resumption
of specie payments that their affairs and the
public wants and expectations justify. It
would, perhaps be expedient to graduate
tJ.is resumption, either by the denomination
of notes or amounts to be paid so as to make
one or nmre, payable forthwith, end the
residue at such respective periods as in the
nudum of the legislature might seem to be
advisable, provided the time be not long pro
tracted. I recommend the appointment of three
bank commission, to hold their ofliccis re
spectively for one, two, and three years, so
ibat one shall be appointed unnually, here
after, wiih the same powers to examine as
all times, into the accounts and condition of
the banks as ate possessed by a joint com
mittee of the legislature: and if any bank
shall violato its charter, to institute proceed
ings to bring it to justice, without delay;
or if any bank now in existence be found
unsound, to take the proper measurers im
mediately to wind up its concerns. A prop
er and prudent snperdsion of this kind, In
competent and experienced commissioners
selected tor lltcir personal weight ot char
acter and knowledge of tho system, would
operate as salutary restraint in the manage
ment of our banks, independent of the
means which such a commission would af
ford for correcting abuses
I also recommend the passage of a law
compelling all the banks in the common
wealth to receive each others tiotcs at par,
so long as the respective banks continue to
redeem their notes in specie; and on failure
at any time of any bank so to ledtcin its
notes, that tho hank commisioiiers bo re
quired, forthwith, to take charge of it and
close ils operations, and that each bank be
permitted lo pay out at its own counter notli
inn but its own notes or niucie, unless at
the option of those who have demanded up
on it. I am clearly of the opinion that such
a law would exert a most salutary influence
on our banking system. The rate of ex
change between the western and eastern
parts of the state is, at times, a serious bur
den on the community : the banks create
that burden then, on whom could it be
placed with more justice and proptiety !
They can make those exchan is with much
less inconvenience, and with much less ex
pense, than individual;. It would assist to
restore confidence, as each hank would be,
to some extent, (ho. surety for the notes of
the would introduce a wholefoine system
of checks, long wanted, hy inducing each
to keep watch over the other; and in rase of
excessive issues beyond their ability to re
deem, their notes would be returned upon
them, ani the bank be forthwith closscd.
Self interrst is the ruling nimivo with banks,
and by this law we should enlist in it the
(support of the public good. It is manifest
that this would be an essential improvement
of tho present system, and would render
our banks, and "our currency, sounder and
belter than those of any other state.
1 also rccomend, that provisions be made
by law effectually to prevent any ban', or
banks, in tins commonweaitu irom purcuas
in? and holdinir hank stock, or any other
stock excent their own, and the slock of
this stale, or of the United States; and then
onlv to such an amount as shall meiely fur
nish a fund for immediate resort in case of
a pressure, 01 under peculiar circumstances
when loans to commonwealth are authoriz
ed. Tho direct operations of the existing law
has been, and must be, to induce hanks to
engage in wild speculatioivs, foreign to their
objects and nature, and to divert their cap
itals from the legiiimale purposes for which
lliey were chartered. Nothing short of the
repeal of tho present law will arrest this in
ordinate cupidity, which may be fairly re
garded as one of the principal authors ol
their present cmbarrassmeBis, Uaak. offi
cers should not, under any circumstances,
be permitted to dabble in slocks, mid a law
heavily taxing brokers, and permitting none
to follow the business, directly or indirect
ly, but such as may bo specially licensed
greatly to check many of the evils of which
our city population complains.
I also t e co in in end, an unconditional re
peal of the law authorizing stockholders to
vote by proxies; or if you should be of the
opinion that this would be going too far,
then, at least so far, as to prevent proxies
from being given by stockholders residing
in the county whcic the bank is located, and
piohibiiiug bona fide stockholders, residing
out ot me county, irom giving proxies la
any officer, director or agent of the banks.
I bis system ot proxies is susceptible of
the grossest abuses. It has been used to
keep in office directors, presidents and cash
iers ol banks, who were not the free choice
of the stockholders. It prevents those who
ate interested in banks from invesiigniinc
their management, and enabling dishonest
officers, not onlv to defraud the banks, but
the banks to del rami the public. It is an
unnecessary exception to the plain rule of
common sense, fiat where majorities gov
ern, the voters should attend in prrsun,
1 also recommend tho prohibition, by
law, of the pernicious practice of issuing.
what is denominated nosl notes, bv the
banks, or notes payable at a future day.
This is a violation of the spirit and princi
ples oi all judicious bank ; it in a danger
ous power to be exercised bv the banks, and
it will, ultimately, enable them to evade
most of our penal 'laws. It calls for effectu
al exiiipation.
I also recommend that the power contain.'
cd in tho amended constitution, of repeal
ing bank charters, reserved to the legist
turo on the creation of all such corporations
shall be made a fundamental article of eve
ry bank charter in the state. This will
bring every bank charter directly within the
reach of the people, at all times, and will
enable them to rid themselves of any ban!
ing institution by repeal, the conduct, or
power ol which, renders it obnoxious.
1 also recommend, that the time given to
the batiks, after the presentation of their
notes ami rclusal lo pay Ihein in rpccic, as
well as to make application to a judge by
the holdets thereof, to exhibit proof of the
fact, for thv purpose of proceeding lo have
their charlers forfeited, shall be restricted
from three months, to thirtii daiis. This
will afford a strong guarantee ocainst all fu
ture suspensions, and place a more speedy
remedy in the hands of die people should
such occur.
I also recommend that the directors of
the banks of the commonwealth shall b
rendered personally lnblc lor lite payment
of all notes issued hy Ihe banks respective
ly under tbeii direction, if at any time the
same in circulation, and the money due to
depositors shall exceed the ratio of three
dollars for one of the specie in their
vaults.
I also recommend that from and afler a
certain period, perhaps of one year, no
banks in this commonwealth shall be allow
ed to issue any tiotcs of a less denomina
nun man ten dollars. J Ins will insure as
a larger amount of specio in general circu
laliun, and add greatly to the stability of
the cut miry and Hie banks. Our experi
ence in relation to excluding from circula
tion notes undi't five dollars, fully confirms
tho policy of litis recommendation.
I also recommend that the banks be pro
hibited from making dividends exceeding
set en per cent, per ant'iim, and that the
law prohibiting the declaring of dividends
liming the suspension of specie payments,
be rendeied more effectual. It is under
stood tint several banks in this common
wealth, have wantonly and needlessly vio
lated tbi' law since their suspension in Oc
tober, last. If this be fonud to be so, on
examination, I recommend, fuither, the
passage of a law icpcaling their charters,
on such conditions as may seem expedient
to maintain the laws in violate and lo pro
tect the tights of the community. The idea
of a set ol' associated individuals publhly
declaring r division of profits among them
selves, and refusing at the same time (o pay
their just debts, is tevolting to every princi
ple of common honesty and good morals,
If the laws of this commonwealth arc thus
cuntemtuously trampled on, without even
the poor pretext of necessity urgrd in be
halt uf the act of suspension, I think it is
time an example was made of of Ihe offen
ders, to vindicate the law, and to punish
their temerity.
It also recommend that more effectual
provision be made to compel the hanks to
furnish full statements of their condition to
the auditor general, or to the bank com
missioners, should the legislature enact a
law for their appointment.
The principal of making the stockhol
ders liable 111 their personal capacity, for
the notes of the banks, in case the corpo
rate fundi be inadequate, appears just and
equitable ; and if the legislature can devise
a practicable mode of bringing it into opera-
l ...:n . -i r..ir.. . . -.i
nun, i win inusi ciiccuuiiy co-opcraic wiin
them. Those who share the profits of
loaning their credit, should be willing lo
share the responsibility of making that cre
dit good.
ihe foregoing recommendations and
suggestions, if adopted, would, in my opin
ion, tend to correct most of the abuses and
cv Is of our banking system ( strengthen
the banks themselves in tho conhdenee of
the people, and secure the public against
loss and imposition. I will add, that I
think a totul separation between the stale
and banking institutions ought to take plare.
I he association ol private individuals with
the (tale, in banking institutions, results al
most entirely to Ihe udvaniagc of the form
er. Whatever hopes micht have been
founded on such association, by the lecisla-
ture that the banks thus owned would be at
all times ready to aid the commonwealth,
liuvo been illusurv. Although tho state
owns 3700 shares of Block in the I'entisU
vatiin Dank ; 5233 shares in the Philadel
phia Hank, and 1708 shares in the Farm
ers' and Mechanics' Hank, ycl she has nut
such a share in the diicction of either as to
control anyof the proceedings, and derives
no benefit Irom the partnership, iler cniu
tal is used by her individual associates fur
purposes ol private gain and speculation,
and the commonwealth, when she wauls
monev, is compelled to look elsewhere.
therefore recommend the passage of a law
authorizing the sale of the state's stock in
said banks, at such lime, and in such
manner, us will yield tho greatest amount
to the state, or it it be found that such sale
cannot be made without too great a sacri
fice; owing to adverse circumstances oroth
cr causes, that authority to be given lo
declare their charlers annulled and to divide
the assets among tho slate and the private
stockholders. The opinion is rapidly gain
ing ground in this country, that direct as
sociations, between governments and banks
is neither advantageous to the parties con
ccrned, nor sale to the public, Our banks
so essentially depend on tho fluctuations of
trade and commcrco with foreign nations
and arc so liablo to bo influenced bv those
monetary convulsions and cmli.irassmcnls
in Europe, which operate with increased
foice since the relations of business have
become so intimate, ami the cumuiutiica
lion is rendered so easy by modern improve
ments on the ocean, as to form very im
proper depositories for the money of tin
people, and a very insecure basis for ill
public treasury.
The measure of estalilisliinff an Indepcn
dent treasury for the general government
with such multiplied securities and guards
for the keening of tho public monev, as
will render it safe and conenicnt for tit
use of tho government, has been impara
lively called for, and jii3tilicd, by recent e
venls. 1'ublic sentiment is Felling in its
favor with unprecedented strength, ani
(hero is every rea3on to believe, that the l.nt
dablo efforts of tha President of the United
Stales on behalf of it, will be fiuccssful
Among oilier reforms of our present bank
in' system, I do not ennsisder this as the
least. It will remove from the banks mativ
temptations to extend their business to an
unreasonable degree ; it will check foreign
importations ; it will gave tho community
from the manifold evils heretofore suffered
in consequence of the governments with
diawin! from the banks largo amounts of
its funds therein deposited ; and will place
all flic banks on nti equal footing, by pre
venting the exercise of ihat partiality or in
dulgence, which may ery readily be used
to strengthen and uphold particular banks,
at the hazard of crippling and breaking up
others. Under whatever aspect we view
it, it seems to be a incisure, both of wisdom
and necessity, which sooner or later will
meet with universal assent.
I also recommend that thorough investi
gation be made into the f icls, whether or
not any ot tne oaiiKs oi mis common wcaiin
have charged .iud taken illegal and usuri-
ous interest, either directly or thtongh the
ficiion of bills of exchange, or by setting a
pail portions of then- Iiiuds, lo be used by
counniilces or other person for such pur
poses. I have reason to believe that all, or
some of these things hava been done by cer
tain banics in the city of Philadelphia, And
if it should bo ascertained on investigation,
that such is the case, I recommend that the
charters of those banks, which have so ac
ted be repeated, for this gross and unjustifi
able! violation of this salutary law. I have
also been informed, that certain banks in
the city of Philadelphia have neglected or
refreshed to observe the provisions of the
42d section of the act of 10th April, 18.18,
relative to the rotation and election of bank
directors. This law, I regard as wise and
salutary, and if it should appear or inquiry
that it has been wilfully disregarded by a
ny bank or bank subject to ils operation, I
respectfully suggest the propriety, of pass-
Ing euch a law on tho subject, as will eft
fcctually prevent future violations, and pun1
I6ti past transgression.
bavinc Institutions ami loan companies
!nvc increased greatly in number and im1
portance nt tins commonwealth, within a.
few years, (Ireat complaints have been
made, especially in the city of Philadelphia
against their mode uf doing business Jl is
said that tlicy, or some of theuii have taken
illegal and usurious rates of inierestr'-that
they have dealt oppressively, and illegally
with llieir debtors and customers and
that they have contributed, in bohio meas
lire, to uggravate the evils slid elnburass
incuts produced by the conduct of tha
banks' I recommend strict inquiry into)
those and other allegations against therm
und if found to be well grounded, lhaitlid
charters of all that have thus acted bo re
pealed. It is not to be tolerated, that thoso
creatures of legislation, thould set the laws
ut defiance'
I also recommend tho passage of law fof
the more adequate prevention and punish'
ment of frauds and fraudulent breaches of
trust by officers ofbanks, collectors of pub
ic tulls, and all oilier receivers and uisbur
scrs of public moneys, Iieccnt cxpeiiencd
bus shown, that civil liabilities are altogeth
er insufficient lo protect the public irom
fraud and imposition by these scl eral class
rs of officers' I am not, in gcnerul, in fa
vor of multiplying penal Inwsi but the pc
cular temptations ullbrded to these officers
to transgtess their duty, und the hope ot
impunity, arising from the mere civil re
sponsibility to which they tile subjected,
cull for the special interposition of the le
gislator. Instances of delinquencies havd
occuricd within a short period, in which
not only has the commonwealth mostproba
bly sustained considerable losses, but nu
menus private persons, little able to bear:
the eonsequncrs, huve been deeply affected,
and in sumo cases entirely ruinddi Thd
perpetrators ct these deeds s'lonld be latiglit,
thai our penitentiaries were constructed for?
the reception of inmates like themselves.
Considering the various banks Id this
commonwealth, incorporated at ditl'erent,
times, on different principlcsmd of wide!
different amounts of capital, it might per'
haps seem expedient to some, that I should
recommend discriminating legislation ap
plinable in its penal consequences to soma
and not lo all tho banks alike' It Will bo
seen that several of my recommendations
though expressed in general terms, will
opeiato on paiticular banks only. 1 hava
not been able to perceive any good reason
for making discriminating recommenda
tions. 1 iMnk on the contrary, all banks
in a sound condition should stand on tho
same basis, and be "subject to the same gen
oral regulations. Ouch of my rccommen
datio:is,as ere applicable to paiticular banksi
arc iu'.cnded lo hi ing all within the opera
lion of the same rules end restrictions.
The laws should be made strong enough to
rontrol tho must powerful, they will then
be euro to be strong enough to control tho
weaker ones. Tho principle of banking
on a large or a small capital, is precisely
the same in its influence, except the differ
ence in degree, upon the human character.
The greatest gain, nt the least expense, is
the ruling moiivo of action in both, and
sways with the same power, the bunk of
one hundred thousand dollars Capital in a
country village, as the one of so many mil
lions in a great commercial metropolis.
The wholo difference consists in the influ
euro und power of ihcso respective institu
tions. 1 think the recommendations I have
made, if incorporated into tho charted of
the moil powciftil banks in the common
wealth, will biing ihnn within the immedi
ale reach of the legislature and the law, lit
tlut condition, thi-y will bo humbled in their
lawless preteiuimis, and stripped of their"
ability lo set at naught, as they have done,
the w ill of tho people,
As wo c.mtwi get lid of iho banks alto
gether, without the most serious losses,
. ami inconveniences oi tue public the cx
lent of v, hich can be but imperfectly com
puled, wlun we consider that it would
iiio-l certainly reduce our e irculaling medi
um very considerably, and that Ihe inevita
ble consequence of such reduction must bo
lo depreciate our farm lands to one half
perhaps of their present value, and all oth
er property in the same proportion; Increaso
in effect, our siatu debt in a corresponding
ratio, and individual debts in a like relaiivo
degree ; 1 find in these things motives of
no slight weight to my mind for urging
steadfastly upon tho legislature, Ihe adop
tion of the suggestions and measures which
I havo supposed; Or at lejsl, if other
measures should seem lo them preferable,
that they should be those of a kindred
bearing.
I dismiss tho further consideration of our
banking system, fully convinced of its man
ifold imperfections, and abuses ; and reiter
ating the hope and the assurance, thai this
legislature will uot separate, till thorough
1
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