THE debates and publications, concerning the Bank of North Ame­rica, have already been so numerous and extended, that, were the subject of less importance further investigation would be an inexcusea­ble trespass on the public time. But as these institutions were generally unknown among us before the revolution, and as they are universally admitted to be objects of the first consequence, it is confided, that a de­cent endeavour to bring before the government and people of Pennsyl­vania some matters connected with the subject, which are not yet suffi­ciently known and understood, will be favored with an indulgent recep­tion. As it will be seen that the writer of these reflexions has departed from the line, which those who are charged with party friendship or en­mity have chosen to pursue, he trusts it will be believed that it is only intended respectfully to attempt to contribute as far as may be in his power to that information, which will be necessary to enable the legisla­ture to place the bank upon so prudent and just a footing as to preclude hereafter all reasonable discontentment,

The existence of public banks in most trading countries and especi­ally in two of the most commercial and opulent nations of Europe, whose constitutions are as favorable to liberty as any but those of Ame­rica; the great majority of wise and honest statesmen, who have ap­proved of them from experience, and the benefits, which it has been proved, may be reasonably expected from one here, with many other reasons not necessary to be repealed at this time, appear to have convin­ced the greater part of the community, that a bank, wisely and justly constituted, would be a public good. How much soever, therefore, it might be argued, from the practice of legislatures, and the nature of free governments, that the Assembly of Pennsylvania did possess the power to restrain and terminate the bank, it appears, that it would have been most adviseable to regulate rather than to destroy it. The minds of many in the two parties were manifestly heated, and to strongly impressed with certain ideas, to which they were respectively attached, and thus we see one side determined to annul, and the other not to mo­dify. A repetition of these contentions is much to be deprecated. They are the bane of happiness at home, and credit abroad. The precau­tions, restrictions and regulations, which may be prescribed by the pre­sent legislature in the charter about to be granted, will prevent them, it is believed, in a great degree hereafter.

Though a part of the opposition to the bank of North America may have arisen from party spirit, "a consequential ill which freedom draws," yet an examination into the foundations of other institutions of the same kind, and a candid and dispassionate consideration of the constitution of that bank will convince us, that the necessities and na­ture of the times and the perfect novelty of the business occasioned se­veral extreme dangers to be overlooked in its formation.

BANKS had their origin in the Italian states, whose people have long been distinguished for their science in political oeconomy. They [Page 2] appear, in most of the great cases, to have arisen out of national di­stress. The funding of the public debts has generally given them birth, and we find their existence has often been originally restricted to the period when the public debt should be discharged. One of the oldest of these establishments was that of Genoa. Being too little re­strained in regard to the emission of paper▪ and incautiously taking a part in the politics of Europe, this bank soon involved itself in ruin. The injuries to public credit, and the melancholy interruptions of pri­vate happiness resulting from so lamentable a catastrophe need not be repeated. From such confusion and distress it behoves the guardians of the people carefully to secure them.

The bank of Venice, which arose some time after, was placed im­mediately in the hands of the state, and the republic was security for its conduct. It were to be wished that public credit were so far restor­ed amongst us as to render it prudent to put our bank on such a foot­ing The great litigated question concerning the want of checks in our state constitution, makes it adviseable at least at present rather to pursue some other mode: and were our public credit as perfect, at it is presumed it will be in a few years, it might not be proper to place the bank immediately in the hands of a government, whose form itself de­clares it to be only a seven years experiment

The bank of Hamburg presents its citizens and the government of the city, which is imperial, as securities to all who deal with it. The directors are chosen, like other officers of their government, by a majo­rity of the freemens' votes, out of the number of their most respectable citizens. Foreigners are not permitted to be interested in it, least the wealth, power, or ambition of their neighbours might interrupt their repose, or sap the foundations of their government. Though the use of the money of foreigners appears to be a sufficient reason for permit­ting them to be interested in our banks in this young country, yet a most important question is naturally suggested by the prudence of the Hamburgers, whether they ought to have a share in the government of those institutions. For, however respectable Pennsylvania finds herself in the American union, it is an inconsiderable state, as to numbers or wealth, compared with several of the nations of Europe; and the faci­lities of commerce bring Philadelphia as near to Paris, London, or Amsterdam, as Hamburg to Vienna or Berlin.

The banks of Holland, that is those of Amsterdam and Rotterdam, are immediately in the hands and under the direction of the re­gency of their respective cities, who are securities for their faithful and prudent administration, by which foreigners are of course, excluded from the management They do not issue any notes; and the opera­tions in general of these banks, are not of a nature to be very useful in such a country as this. Their caution as to foreigners however will deserve our attention, for the reasons stated under the foregoing head.

The bank of England is better worth our attention, than any which has ever existed▪ whether we consider it with regard to the prodigious aids it has afforded to the government, or its usefulness to the commer­cial and manufacturing interests and, through these, to the cultivators of the soil. In the reign of William III. that institution was produ­ced by the apprehensions of the nation for their public credit. It was a moment of as great danger and necessity as that wherein the bank of North America was established. The celebrated Bolingbroke declares, [Page 3] that the revenues of the nation, which could be applied to carry on the war, (which was at once civil and foreign,) were at that time insuffi­cient to pay a common guard. At this period too, when their affairs were in that miserable situation, James II. supported by great num­bers of the people of Britain and assisted by the most powerful na­tion in Europe, with a sagacious and enterprising prince at their head, was asserting his claim to the crown. [...]t that awful crisis when ne­cessity would have palliated almost any oversights, it is as pleasing as it is curious, to observe the deliberation caution and wisdom of the parlia­ment, in making their first experiment of a national bank. A short detail will instruct and serve us in our present situation, when we are about to organize a similar institution, under no circumstance of imme­diate danger, or momentuous difficulty.

They previously restrained the king, who could grant any charter, not a monopoly, from making this corporation, of an unlimited or ex­cessive duration, by confining him to eleven years This omission in our Assembly having been very judiciously and candidly pointed out by the committee of the present House, the contentions which have arisen from it will subside of course.

They also restrained the king from granting a charter, which ad­mitted too powerful a capital. Though the revenues of the kingdom were two millions of pounds sterling, exclusively of the land tax in that highly improved country, it was limited to twelve hundred thou­sand pounds. If we make an accurate comparison of wealth, numbers, and trade, between the two countries, we shall concur again with the committee of the present house, in thinking that the capital permitted by the charter was in effect unlimited. The feeds of danger contained in this article are not yet ripened. Had the matter continued as at first, it would have been difficult to remove the evil, when it should have been felt. It is not easy to overcome the influence of such mighty wealth.

They restrained the bank from contracting debts as a corporation, for more than the amount of their capital; an honest and judicious re­striction; and they enacted, that the private fortunes of the stockhold­ers should be liable to make good all such debts as were beyond the a­mount of their capital, or in other words, beyond the amount of what they were worth as a corporation. It has been truly affirmed, that it is highly dangerous in any government to issue bills of credit, but upon certain and substantial funds. The wisdom of the legislature will find the same danger in constituting a corporation with power to issue with­out controul, notes (or bills of credit) for sums beyond what they are able to pay, in case of the ruin of the institution. The banks of Paris, Genoa, and other places afford melancholy instances of the pos­sibility of these fatal events. The public happiness and common justice, which require that no man should be empowered to ruin his neighbour while he is safe, will recommend this article to the particular attention of government.

They guarded against unlimited votes being in the hands of one man▪ or set of men, by giving each proprietor of five hundred pounds a vote, and by not permitting any man to have more. How incautious was our charter, when it allowed every man to have as many votes as he holds shares. Let us examine this important article. It is urged that every person should have an influence, according to what he has at [Page 4] stake. But mere property is not the measure of fitness in these cases. The free but wary spirit of that time rejected that idea, and, it is be­lieved, that it is equally disapproved now. It does not agree with the nature of any government, wherein there is a principle of liberty. It is absolutely opposed to the spirit of every constitution in the union. The great corporations in England, such as the bank, whose stock is now above eleven millions sterling, the East-India Company, which is immensely rich, and powerful in several ways, and indeed all others that we know of, are founded in opposite principles. We alone, the members of a free and equal government, have endowed a wealthy cor­poration with powers and privileges opposed to freedom and equality, and to all examples among ourselves and in other nations. The bank of Paris, established under an absolute monarchy, was founded in a small degree in the same mistake, but it went to ruin, miserably distracted the nation, and annihilated the public credit. Our habits in private busi­ness of the utmost consequence, oppose this regulation. It must have crept in from want of attention in the founders of the institution, and it is confided, that they will not on consideration urge its continuance. When mercantile houses are established, many of which in Europe con­tinue longer than the limitation of the bank of North America will pro­bably be extended, and some of which are more wealthy than our bank, no article of this nature is ever entered into Young men, with little property, are often joined to persons of great estates and extensive con­nections, and have the entire management of the business. In cases where three are connected, we find no stipulation, that the richest partner shall govern. Since then it is, and has been an almost invari­able fact, that corporations instituted for purposes of religion, policy or gain, have been founded in principles of equality, let us be careful how we depart from a practice out of which no evil has resulted, and adopt another from which dangers are apprehended and indeed are evi­dent, discontents have arisen, and which is opposed by the experience of all former times and the prudence of the wisest nations.

We see that the regencies of Venice, Hamburg, Rotterdam and Am­sterdam, have not permitted the influences arising from these institu­tions to be in the hands even of their private citizens. They have considered them as branches of political oeconomy, so interwoven with the safety and administration of government, that they have kept them in their own hands. These suggestions are not novelties. They have occurred before. The friends of the bank of England brought them forward in the infancy of that corporation, and admitting the possibility of influence▪ they urged that their institution could not be dangerous to the people on account of the equality of its constitution. A publication, written by Michael Godfrey▪ esquire, one of the founders of the En­glish bank, to remove the fears of the people about the commercial and political advantages, which the gentlemen who ruled it might derive in consequence, tells the nation, that "though it cannot be imagin­ed, but that those, who established the bank, intended to be largely concerned, yet it is so settled, that those who have but five hundred pounds, have one vote, and those who have never so much can have no more; and any nine members having each five hundred pounds stock, may call a general court, (or meeting) and turn out the gov­ernor and deputy governor and all or any of the directors, (but by a majority of the stock holders votes in course) and choose others in their [Page 5] places; which are provisions so wise and effectual to prevent fraud in some to the prejudice of the rest, that it hardly leaves room for any doubt of that nature." It appears however that the parliament was still apprehensive of some disadvantages from so momentous and untri­ed a business, and therefore, a few years after, and before the expi­ration of the eleven years grant, restrained one third of the twenty-four directors of every year from serving for the next, though the gov­ernor and deputy governor might always be re-elected, for the sake of keeping up the train of information necessary in so important and extensive a scene of business, both public and private. Though the dis­cretion and candour of the members of our bank led them to reduce the unlimited right of voting for directors to twenty, so that still some have one and some have twenty votes in the business of elections, this is very different from the footing on which the precedents of all other nations and corporations, appear to recommend its being placed. By the original constitution of the bank of North-America, the right of voting for all purposes, but the election of directors, was equal in all the members, notwithstanding any inequality in the numbers of their respective shares. This regulation was done away by general consent, apparently without due consideration, and has made a very material al­teration in the institution, rendering it still more unlike all other banks, still more unsafe than it was at first. Great mistakes have a­risen on this subject from considering the bank as a mere trading com­pany. Though it is in a great degree of that nature, it is most an ob­ject of legislative attention as a branch of the political oeconomy, im­portant in its magnitude and in its operations and effects. All writers have viewed the subject in that light, and facts shew their ideas to be just. Incorporated banks, as before observed, arose from the public occasions, and have been instituted to answer public ends. Private men and private property have been used as the means, as must of necessity be the case in all the arrangements of civil society. The bank of North-America is itself an happy example. It was established to ena­ble government to prosecute the war against Britain, and had a great share in the merit of completing the revolution. It has been proposed since the peace to centre in it the funds of the state; and its capital is worth more than the amount of all the annual imposts excise, land tax, and other revenues of Pennsylvania summed up together It is a mighty machine, and by its present constitution all its powers are vest­ed in a few hands. Were it not for great public purposes, a number of private banks with moderate capitals, would perhaps be as useful. There are no less than fifty-one of them in the city of London, the a­mount of whose capitals must be greater than that of the bank of En­gland. These form an excellent and powerful check, which, from the situation of this country, we may be long without. The English legislature have given an unequivocal proof of their viewing the direc­tion of the bank in the light of a public employment, for they required by their act that the directors should be regularly sworn into office, and permitted them to serve in parliament by a special dispensation, which on account of the statute against placemen, it was thought they could not otherwise have done.

We moreover see, that the parliament of England restrained any per­son from subscribing more than twenty thousand pounds, that is, the six­tieth part of the allowed capital, and for a certain time did not permit [Page 6] more than ten thousand pounds, or the one hundred and twentieth part, to be subscribed. The entire sum being taken before that period the re­striction operated to prevent any person from holding more than the one hundred and twentieth part of the whole stock. Our bank stock is 870,000 dollars, and there are several stockholders that hold from 100 to 130 shares; so that some individuals hold a twenty-second part, and some even a seventeenth part of its capital

The bank of England was likewise restrained from trading in any thing, but bills of exchange or bullion, but the ch [...]ter from the assem­bly of Pennsylvania did not prohibit a trade in any thing whatever.

The subscriptions to the bank of England were to be taken by no persons whatever, but certain commissioners appointed by the crown under the authority of the parliament, to whom a return was to be made of all persons, whether natives or foreigners, and of all bodies politic and corporate, which should subscribe any part of the stock, that the government might know all things, which the secrecy or de­licacy, necessary in regard to private affairs, did not make it proper to reserve This was very useful, in order to be forewarned in due time of the dangers, which might arise from too large subscriptions of the wealthy corporations and of foreigners, or from any other cause.

The parliament of England granted its charter for eleven years: ours, as above observed, was in effect unlimited. The last regulation which will be mentioned is very important—It is that whereby the parliament provided that all future elections of governors, deputy go­vernors and directors should be made by a majority of the members actually assembled. By the operation of this rule, the management of the bank was completely and not indelicately kept out of the hands of foreigners, who would seldom be there, but who might be if they chose. The most respectable natural born subject and the foreigner, in case of absence, were equally prevented from voting by proxy. The dangers arising from foreigners having a share in the direction of so important a part of the internal oeconomy of the state are too obvious to require any arguments. As they confide to us the largest sums by way of consignment, and employ us otherwise in the most important agen­cies, so it is not to be doubted that they will acquiesce in a regulation from us, which they meet every where in Europe. The government of England alone gives them opportunity of voting, if they chuse to at­tend, but those of Amsterdam Rotterdam, Hamburg, Venice and of all other places and countries, of which we know, either prevent their even holding a share of the stock, or restrain them from voting for those who are to govern an institution, which may be considered as the reservoir of the vital blood of their civil constitutions.

This paper has already been extended to a greater length than it was originally proposed. Wherefore, though a few more observations oc­cur, which appear of some weight, they will be at present omitted. What has been said, is submitted with the most respectful deference, to the wisdom and virtue of our representatives, in full confidence, that from their hands we shall receive nothing which can give occasion to disturb the public tranquility, or abridge the rights of the people.

December 6th, 1786.

IN the close of the former publication, it was mentioned, that al­though a few more observations, apparently of some weight, had oc­curred at that time, it seemed best to defer them. It is intended to of­fer them in this paper, with some other things, which have presented since.

The approbation of the principles contained in that essay, which se­veral judicious and worthy men have expressed, have a tendency to strengthen the opinions, that a bank, wisely and justly constituted, would be a public good—that it would have been beneficial to Pennsylvania, if the late honorable House had determined to regulate rather than de­stroy the institution—and that good men of all descriptions and parties will think themselves and their property perfectly secure, if the wisdom of the present House should adopt a plan for our bank substantially the same as that of the bank of England It will however be proper to mention, that there are two more regulations of the bank of England, hitherto unnoticed, which are of consequence to the prudent and fair administration of its affairs. The first requires, that a director shall be possessed of four shares of stock, and the governor and deputy gover­nor of more The other prevents any person from voting as a stock­holder, if he has not held his shares six months.

Those who approve these general ideas on this interesting subject, must feel an earnest desire to remove any improper opinions and im­pressions, which may prevent a harmony of measures. One great cir­cumstance, which has embittered this contest, is an idea prevailing a­mong many, that the interference of the legislature in the business of existing corporations is totally unprecedented, and unwarrantable. I acknowledge myself to have formerly entertained this idea, and there­fore think it the more my duty to say something to remove an error which I have assisted, in whatever degree, to promote. If we can shew that this opinion, however sincerely entertained by many sensible and honest men, is really erroneous, it must produce the happiest ef­fects in every candid and dispassionate mind. Let us remember how­ever, that although it should be proved from legislative practice and the nature of free governments, that the assembly did possess the power to restrain and terminate the bank, we shall continue at liberty to believe, that it might have been most adviseable to regulate rather than to de­stroy it.

As the origin of corporations in Great-Britain has been already shewn in the debates and publications concerning the bank, we may pass on from that point after a single observation, which may keep in our minds, the principles and causes from which they took their rise. They were actually devised to restore to those, who were, and those who should become members, their equal natural rights, and not to destroy them. We cannot therefore apprehend, that the guardians of our equal rights forgetting the generous and wise design of these institutions, and the practice of all other nations, will repeat the deviation from a fundamen­tal principle of our free government, by reviving the charter of the bank in its original form.

[Page 8]An inspection into the history of bodies corporate in Britain, will shew us the powers actually exercised by parliament to extinguish and restrain them.

In the reign of James I. we find that the people of England had be­come extremely dissatisfied with the very numerous charters and letters patent, which had been granted to particular men and bodies of men, from time to time. The parliament, judging that the public good re­quired their interference, and that it was within their constitutional powers and duties to interpose, passed an act, (21 James I. ch. 3,) the first section of which takes away from all bodies politic or corporate whatsoever, the various monopolies to which they were entitled by their respective charters. It then proceeds to save to certain corporations, a continuance of the rights and privileges, which they had before the passing of that act, and of which such corporations would have been de­prived, if the saving clause had been omitted. This statute appears to have originated with the House of Commons.

On the restoration of Charles II. to the throne of England, it was again thought, though for a different reason (the confusion of those times) that the interference of parliament in these matters was proper and ne­cessary. We therefore see that they passed an act (13 Charles II. st. 2 c. 1.) entitled an act for the well governing and regulating of corpora­tions. By this statute, officers of all corporations, who should omit or refuse to qualify themselves by a day therein mentioned, were to be removed from their offices by commissioners to be appointed under the authority of the legislature, and their places were to be filled by such persons as the commissioners should chuse, although they might have been duly elected in the first instance, and the charters generally re­quired that all officers should be elected by the members of the respec­tive corporations: and further, the commissioners were empowered to remove from offices, places and trusts in corporations, all such as in their opinions, the public safety should require to be removed, although such persons were interested in the stock, and had duly qualified them­selves, or should offer so to do.

In the 4th or 5th year of William and Mary, a new charter was granted to the East-India Company, with the exclusive privilege of trading in and to those countries, which they had enjoyed for a very long time. It was to continue for twenty years, that is till the year 1715. We find however, that the parliament again judged themselves authorized to interfere in the business of corporations, for by an act passed in 1698, seventeen years before the exclusive privilege expired, they erected another East-India Company, and prohibited that which was chartered for the exclusive trade in 1694, from trading at all in 1701.

The case of the South Sea Company affords us a remarkable instance of the interference of the parliament in the regulation of corporations. That great national bubble called for the attention of every honest and humane member of the legislature, and gave rise to many statutes. One of the acts (7th George I. c. 2) restrained the three corporations (the bank, the East-India Company and the South Sea Company) from re-electing the sub and deputy governors and directors of the South Sea Company of that time into any office, place or employment in those in­stitutions, although by their respective charters it might have been done before. It also restrained the same persons from exercising their right [Page 13] of voting at the elections of the South Sea Company, although they were of course stock-holders and members of the corporation. Some time after, the South Sea company differed among themselves about the divi­sion of a part of their funds. Then again the parliament exercised their right to interfere and by their act (7 George I. st. 2) made the neces­sary distribution. There are several other instances of parliamentary interposition, but a further detail might be tedious, and these may be sufficient to remove the misconceptions that have taken place. Though we must be sensible of the delicate nature of this power of the legisla­ture, and though we must exceedingly condemn a wanton or even an inconsiderate exercise of it, yet it is necessary to make great allowances for those, who transported by the jealous but honest spirit of republic­ans, and alarmed by the extreme dangers existing on its constitution, thought there was no safety, but in withdrawing the charter of the bank So far, however, as the measure proceeded from the mere spi­rit of party, all good men will join to reprobate it. Perhaps, in order to form a just opinion on the subject, it may be necessary to compare the conduct of the house that granted this unprecedented charter, with that of the house, who took it away. The various errors of human nature are a sort of apology for each other.

In estimating the injury, or rather the injustice done to the bank, by withdrawing the charter, it seems necessary to be very careful; for the abolition of its franchises, so far as they interfered with the peace, liberty or safety of the community, was surely a duty and not a crime. The happiness of the people being the end of all society, any thing that interferes with it should be restrained or prohibited. The sanctity of charters can therefore mean only, that it is dangerous and wicked to trifle with them, not that they are to remain in their original form in all events, at the expence of the more sacred natural rights of man­kind, which, we have seen, they were invented to promote. The continual duration of bodies corporate, was to enable them to receive property, and exercise their respective functions, as long as the public good might require, or permit

Let us for a moment suppose a charter in exist, in which there were extreme acknowledged evils. The courts of law could not afford any remedy, because they can only take cognizance of transgressions of charters. The legislature, it is affirmed by some cannot interfere, and their constituents, if that doctrine be admitted, must foresee im­pending ruin and meet it without the hope of relief. Can then the temporary representatives of a free people erect a corporation within the body of a state to continue an irremediable evil through all future ages? No: those, who have been called for their wisdom and virtue, to dispense through a single year the blessings of government, can­not have a right to misapply their transitory powers to destroy it for ever. Such a doctrine would render our frequent elections vain, and goes to invest the assembly with powers to legislate in every matter, that can be wrought into a corporation, for all times to come, contrary to the letter and spirit of our constitution, and the peace and dignity of the commonwealth.

In the preceding part of this paper, it was observed that the ma­jority of the late house should be judged of, with allowance for the ex­cess, [Page 14] which, it is thought by many, they were led into by the jealous but honest spirit of republicans. The serious part of the community must have recourse to some such extraordinary cause to account for their mea­sures in regard to the penal law relating to the bank. It is the peculiar duty of government to guard the morals of the people from temptations to vices and crimes, especially such as are extensively injurious to socie­ty. In the warmth of the moment, matters were left on such a footing, that the dangerous crimes of forgery, and counterfeiting, to which the wicked are allured by extraordinary profit, may be committed almost without punishment.

And now, having before us the examples of other nations, and hav­ing taken a free, though it is hoped a respectful view of the conduct of our own governors, let us collect into a narrower compass the result of the whole. It appears then, that a former assembly, influenced by wise and patriotic considerations, did, from the nature and necessity of the times and the novelty of the subject, grant a charter to the bank of North America, differing from all precedents—that it contained many extreme dangers—that however, the institution so constituted, retained its monopoly, (with all its other privileges) during the time for which the Assembly had granted it—that another Assembly, discovering the dangers it contained, determined to destroy it when the public good would, perhaps, have been better consulted in restraining it;—that how­ever clear it may be that they had a lawful power so to do, it is equally true, that measures taken for the public happiness, should not be carried so far as to produce opposite effects:—that a part of the same house which annulled the charter of the bank, promoted the evil by declining any modification:—that on a presumption, that the public interests will be served by a bank, an equality of votes, an exclusion of foreign proxies, an actual limitation of capital, and of duration, and greater circumspec­tion as to the foundation on which notes (or bank bills of credit) shall be hereafter emitted, seem to be indispensibly necessary:—that all the benefits which have been derived from the most flourishing and useful institutions of this nature in other countries having been attended with these cautions regulations, a charter on different principles cannot be desired from any views of public good, and lastly, that a prudent, wise and faithful legislature cannot expect to give satisfaction to a free and intelligent people by an unnecessary departure from all precedent, and from the essential principles of our republican constitutions.

December 13th, 1786.