of a new National bank. It was questionable if, on the downfall of this institution, any one, either foreigners or citizens, would invest in a new national organization. The fall of this will throw most of the banking capital into the banks of the great commercial States whose hostility will be increased against any new national institution.

Mr. Smith, of Maryland, was against the recharter.

Mr. Brent was in favor of the bill. He began with some diffidence, but made one of the longest speeches in the debate.

Mr. Taylor believed in the constitutionality and expediency of the recharter.

Mr. Pickering stated he had received an instruction in the form of a request from the House of Representatives of the State of Massachusetts to vote against the bill. He went on to show that such instructions were not obligatory, as they interfered with the independence of representatives and violated the Constitution of the United States.

When the vote on the question to strike out the first section was taken, it stood seventeen to seventeen, and George Clinton, of New York, the presiding officer, cast the deciding vote in favor of rejecting the bill. In casting the deciding vote he said that the power to create corporations is not expressly granted; "it is a high attribute of sovereignty, and in its nature not accessorial or derivative by implication, but primary and independent. He thought this interpretation of the Constitution safer than the other, which had an inevitable tendency to consolidation."

LIQUIDATION OF THE BANK.

After the final rejection of the bill for the recharter the bank presented a further memorial to both the House and Senate asking for a temporary extension of its powers for two years to enable it to close up its affairs. In each case the memorial was referred to a committee, and both committees reported adversely to granting the prayer of the memorialists.

The trustees of the Bank of the United States applied for charters for new banks to succeed to the business, to the Legislatures of New York and Pennsylvania. The charter of the Bank of America was finally granted by the State of New York after some exciting episodes in the Legislature of that State, continuing for a year or two, the history of which is included in that of the Bank of America, of New York. The Bank of Commerce was the name desired in the application of the trustees to the State of Pennsylvania. It was reported upon favorably by a grand committee of thirty-one members. The bill provided for a bank with a capital of $7,500,000, to continue till 1832.

The banking house and most of the assets of the Bank of the United States, including over five millions of dollars in specie, were purchased by Stephen Girard, of Philadelphia, who at once started the Girard Bank, which, converted to a National bank in 1865, continues to this

day. The purchase and transfer came about in this way. In 1810 Girard had large balances with the Barings, amounting to £116,701. In 1811 the indebtedness of that firm to him was nearly £200,000. The difficulties in trade with the Continent were great and the Barings were in danger. Mr. Girard sent two agents to London to do what they could to withdraw the amount due and transmit it to America. Part of the funds were invested in goods and part in American six per cent. stocks and United States Bank shares, then at about $430 (£98 10s.) per share. The Barings, it will be remembered, had purchased a large amount of the bank stock from the United States Government in 1804. The stock Girard had purchased gave him a large interest in the bank; and, in the spring of 1812, he found by consultation with George Simpson, the Cashier of the old institution, that the bank building and Cashier's house could be purchased for $120,000, less than one-third of its cost. The purchase was made, the property was transferred to Girard, and his new bank commenced operations on May 12, 1812, with $1,200,000 capital, which was afterward increased to $1,300,000.

Much of the business of the Bank of the United States was transferred to Girard's bank, together with $5,000,000 in specie. The officers and employees of the old bank were retained at the same salaries. Girard bought the stock expecting the charter of the Bank of the United States to be renewed. If this had occurred he would have made a fortune by the rise in stock. But, as it was, he saved himself by the purchase of the old bank. He did not use the old circulating notes, but paid out notes of State banks till his own were printed, which bore the device of a ship under full sail and an American eagle.

The stockholders of the Bank of the United States received, on the final winding up of the institution, $434 per share, which, with dividends averaging about eight per cent. per annum, made it no bad investment.* Many, however, had bought and sold at much higher rates some years previous to the expiration of its charter. The United States Government sold to the Barings for a premium of forty-five per cent. in 1802, or $580 per share.

CONDITION OF STATE BANKS.

The State banks, which the opponents of the recharter believed adequate to the fiscal requirements of the Government and to the monetary necessities of trade and industry, failed in the trial to which the exigencies of the War of 1812 subjected them. In September, 1814, all of them which were south of New England suspended specie payments. Nearly one hundred of them in different sections of the country had been of necessity, in the absence of a National bank, selected as depos itories of Government funds. The check on the redemption of their notes being removed, an expansion of their issues followed; its amount, * Parton, "Life Eminent Americans," p. 227.

which was estimated in 1811 at $28,100,000, being in succeeding years according to Mr. Crawford, as follows: * In 1813, from $62,000,000 to $70,000,000; in 1815, from $99,000,000 to $110,000,000, and in 1819, from $45,000,000 to $53,000,000.

During the year 1816 the banks continued to issue largely, and, in addition to this, floods of unchartered currency were poured out in notes of all denominations from six cents upward. Great distress resulted to the country from the depreciation of the currency and from the failures of banks in 1818, 1819 and 1820. The root of the evil lay in the attempt of the Government to carry on an expensive war by means of bank loans and the notes of State corporations over which it had no control, thereby converting an irredeemable paper issued by irresponsible institutions into a national currency by assisting in its circulation and encouraging its expansion. In 1814 Treasury funds to the amount of nearly nine millions of dollars were in the suspended banks; and the correspondence of Secretary Crawford with the deposit banks from January 1, 1817, to May 8, 1822, fills two volumes, comprising 1,237 pages.† The loans of the Government in 1815 amounted to $35,220,671. Treasury notes were not redeemed, and general distrust prevailed.

On October 6, 1814, Mr. Dallas was appointed Secretary of the Treasury; and on the 14th of the same month, in response to a communication from the Committee on Ways and Means, he transmitted a report strongly recommending the organization of a National bank. In that report he says: "The multiplication of State banks in the several States has so increased the quantity of paper currency that it would be difficult to calculate its amount and still more difficult to ascertain its value. ** There exists, at this time, no adequate circulating medium common to the citizens of the United States. The moneyed transactions of private life are at a stand, and the fiscal operations of the Government labor with extreme inconvenience. * Under favorable circumstances, and to a limited extent, an emission of Treasury notes would probably afford relief; but Treasury notes are an expensive and precarious substitute either for coin or bank notes, charged as they are with a growing interest, productive of no countervailing profit or emolument, and exposed to every breath of popular prejudice or alarm. The establishment of a National institution, operating upon credit, combined with capital, and regulated by prudence and good faith, is, after all, the only efficient remedy for the disordered condition of our circulating medium. The establishment of a National bank will not only be useful in promoting the general welfare, but it is necessary and proper for carrying into execution some of the most important powers constitutionally vested in the Government."

Alexander J. Dallas, like Mr. Gallatin, his predecessor in office, was

*Finance Report, Vol. XII, p. 59.

+ Eighteenth Congress, first session, No. 140.

not a native of the United States. He came to this country from Jamaica when twenty-four years of age. He was a Jeffersonian Democrat, and one of Mr. Gallatin's most intimate friends. When the latter retired from the Treasury Mr. Dallas was called by President Madison to the position. He afterwards became Secretary of War, and died suddenly in 1817.

After 1811, in place of one United States bank acting as its fiscal agent, the Government accounts were distributed among a large number of State banks scattered all over the Union. Such was the state of the public credit in 1813 and 1814 that in those two years $42,269,776 of six per cent. stocks issued by the Government and running for twelve years were sold at a discount of nearly fifteen per cent., the Government realizing from their sale but $35,987,762. On February 24, 1815, a loan of $8,856,960, running for nine years, but with interest increased to seven per cent., was negotiated at par; and, on March 3 following, another loan of $9,745,745 for nine months at six per cent. interest brought into the Treasury but $9,284,044, the discount in this instance being nearly five per cent. In addition to these losses the money received for the loans was at a heavy discount for specie-the depreciation in the local currency at the close of the war ranging to twenty and even twenty-five per cent., and the Government supplies being obtained only at a proportionate rise in price. Such were some of the results of a State bank system during the period that followed the expiration of the charter of the bank on March 4, 1811, and until its re-establishment on January 7, 1817.

SKETCH OF STEPHEN GIRARD.

Stephen Girard was born May 20, 1750, near Bordeaux, France. His father was the owner of several vessels and an ex-officer in the Royal Navy of France, and was knighted by Louis XV for saving a burning vessel at sea. The son also became a mariner, and soon after his arrival at New York, in 1774, he engaged in trade with New Orleans and the West Indies. In 1776 he went into mercantile business at Philadelphia. His enterprises were highly prosperous. During the yellow fever epidemic in 1793, and subsequently, he was active in relieving the poor and afflicted. He purchased the assets of the United States Bank and founded the Stephen Girard Bank, which sustained the Government in the War of 1812, taking an entire loan of $5,000,000. The bank continues in business as the Girard National Bank, occupying what is believed to be the oldest bank building in the United States, its construction having been commenced in 1795. Mr. Girard died December 26, 1831, bequeathing his large fortune principally to Girard College. The value of the residuary fund is now over $15,000,000, and is constantly growing, only the income being used. Stephen Girard was one of the most successful bankers this country has known, while his benevolences insure him a permanent place among the world's great philanthropists.

IV

BANKING UNDER FEDERAL CONSTITUTION CONTINUED— SECOND BANK OF THE UNITED STATES, 1817-1829.

Petition from New York city for National bank-Secretary Dallas recommends National bank and furnishes plan-Action upon it unfavorable - Amended by Senate Committee - Vote analyzed - Veto of President Madison-Recommendations of Madison-Report of Dallas' plan presented to House - Bill passes House and Senate-Synopsis of law for second Bank of the United StatesOperations of Bank in 1817-1818-Speculation in its stocks-Influence on State banks - Causes of dissatisfaction-Investigation by Congress - Mismanagement shown-Change of officers - Great success of bank from 1820 to 1829 - Nicholas Biddle becomes President-Sketch of Biddle and other Presidents - Beginning of attack by Jackson-Message of 1829 — Jackson's position - Report of House Committee-Amos Kendall Kitchen cabinet.

PETITION FOR BANK FROM NEW YORK.

On January 4, 1814, a petition was presented in the House of Representatives by Mr. Lefferts, signed by 150 inhabitants of New York city, praying that an act be passed incorporating a National bank with a capital of $30,000,000, and was referred to the Committee of Ways. and Means. This committee reported that the power to create corporations within the territorial limits of States was not delegated by the Constitution, nor was it essentially necessary to carry into effect any of the delegated powers.

Mr. Calhoun asked that the committee be instructed to inquire into the expediency of establishing a National bank in the District of Columbia, which was agreed to. On February 19, 1814, a bill was introduced for the purpose of creating a National bank in the District with a capital of $30,000,000. The bill was opposed chiefly upon the ground that it would antagonize a Government loan of $25,000,000 then authorized; and opposition was also manifested to its location. It was not again taken up. On April 2, 1814, Mr. Grening moved that a committee be appointed to inquire into the expediency of establishing a National bank. After some debate a motion to indefinitely postpone was lost by a vote of eighty to seventy-one. A committee was appointed, but, on April 8, discharged and the subject was not again taken up at this session.