not only of doubtful expediency, but from past and present expe*
rience, evidently dangerous and liable to shameful and destruc-
tive abuses, the policy of supplying ami regulating the circulating
medium, (a power which is incident to sovereignly, and should
never have been strrrendered,) by the establishment of a state in-
stitution, under the control of the state itself, is perfectly evident,*
and to this conclusion all the states seem rapidly approaching.
With this conviction, the Commissioners deem it not inconsis-
tent with the scope of their duties, earnestly to lecommend the
repeal of the general banking law, and to express an union of
sentiments, in the recommendation by the Executive of a state
institution, under the control of the state itself, to be subject at all
times to the most rigid scrutiny, and to the strictest guards against
the tendency of banks to lend too much, and put too many notes
in circulation, the fruitful source of so many evils. The proprie-
ty is respectfully suggested, of taking into consideration the abo-
lishing, either gradually or at once, of all issues under the deno-^
mination of at least five dollars. All experience proves that the
wages of labor are the first to suffer, and the last to benefit by
changes in the value of money. The laboring classes, therefore,
who, from various causes, are least able to protect themselves,
should, as far as practicable, be protected in the character of the
money they receive. The measures suggested would tend to>
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HOUW iXaCUMBNtrS. 9U
mwkBiiho wagti of Ihe daily hborar- payable in "rmi -mfxmf, and
Kleot the poor man from the losses \fhich so unequaUprawi
vily fail upon him, by tho' changes and fluctuations m the
vdoe of a paper currency^
Ail which is respectfully submitted.
K. PRITCHETTE.
A.PELCH,
D. V. BELU
Bank CcmmmimatM* '•
DOCUMENT^.
(A.)
Biqpofiof tie comtiiicn ^ the bamk* in the Jirst judicial dreuk,
July, 1838.
To bis Excellency, Stbtens T. Mii^soN, Chvemor'of Michigan,
The undersigned has the honor to report the condition of the
several institutions created under the general banking law, within
tlie limits of the first judicial circuit, in a tabular statement here-
unto annexed.
This opportunity is taken further to' report, that the Bank of
Gibraltar, and the Farmers* Bank of Oakland, having ncglecte|?l
and refused to furnish the securities required by the si:^m and
thirty-sixth sections of the amendatory act of December 30th,
1837, applications were made for iniunctions against the same.
The Chancellor has complied with the applications;. so far as to
restrain these institutions from all furihei' proceedinffs, Except such
as may be necessary in the redemption of their bills and the final
settlement of their aflTairs. The discretion exercised by the ChaQ^
cellor, relieves the undersigned from any further responsibility
touching these institutions.
Ir^unctions have also been obtained against the Bank of Ken*
sington, and the Farmers' and Mechanics' Bant of Pontmc. At
A previous examination of the first named institution, by A. Felcb,
£sq*9 the Commissioner was furnished with i^ false statement,
sworn to as accurate by the former ofiicers of the institution.
The books appear to have been kept with a vie W to this decen*
tion, by false or imperfect entries of the transactions of the banL
The undersigned found it impracticable to obtain any accurate
knowledge of the condition of its affairs, but sufficient Was de^
veloped to exhibit most shameful mismanagement, if not fraud,
and the entire insolvency of the bank. An loiunctien was accof-
dingly obtained, and Kinsley S. Binghann, Esq., appointed r^
ceiver.
81
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MS HOUSE DOCUMENTS.
Tbe Fmnn^Tf/ ftnd Meebanics' Bank of Poniiaer preMMitsi «
more favorable exhibit in point of solTency, but the uadenigiiad
iiaving tatisfaclarily inrormed himself that a largo profx>rtkm of
the specie exhibited to the Commissioners, at a prerioQ» exanniDi*
tion, as the bona fide propertjr of the bank, under tbe oatk of the
cashier, had been borrowed for the purpose of exhibition and de-
ception ; that the sum of (en thousand dollars, which had been
issued for " exdhange purposes/' had not been entered on the
books of thetHink, reckoned among its circulation, or explained
to the Commissioners ; and likewise, that a considerable debt due
to the state, through a loan made by the Commissioner of internal
improvement, James B. Hunt, Esq., was denied by the bank to
be due from it, but insisted upon as the debt of the cashier, to-
gether with other circumstances oalculated to impair all confidence
in its statements, it was considered by the undersigned due to the
public interest to close the doot' against further violations of hiww
An application for an injunction Was made, which was grantedi
and WiHiam Draper, Esq., appointed receiver.
An injunction was granted, some time since, against the Wayne
county bank. This bank had gone into operation in direct vio-
lation of law ; the per centage on the capital slock, as required by
the statute, having never been paid in according to law. The
considerable issues, which it could not
(solvent. The service of this injunctioa
Itorney General in the exercise of his dia-
;n served, and A. H. Buel, £sq., appointed
to express his regret at being competed to
al securities, required by the act of De-
not all been perfected. Everjr exertion
commissioner to efTect a com pKance with
)n of the law. Considerable embarrasa-
e undoubtedly been incident to the perform
quirement, but when it is reflected that more than
nd the period allowed by law has elapsed, the
sable. Nevertheless, the spirit of the law hav-
;d with, in the majority of instances, the principal
liities, arising from a difference ofopinion between
le Commissioner, upon the mode and evidence of
it required by law, and every disposition beinj^
[iplying with the wishes of the Commissioner, no
y to result to the public.
k in operation whose securities have not yet been
nds of the Auditor General, ane those of the Ds-
The Commissioner has, however, beeo repeat-
the caishier of that institution that they are in
process of speedy completion.
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KOUSB DOCUKBNTa »!•
a»tt»tiopad» to stale that they imve made Tery oommendaUo «x^
ertiomU> witbdNiw aU exoHs i£ isauea fron oirctdalioo* «od it
radoee tbeir liabtliiies to the utaiost of their ability. The pay%
ment of specie, without an exception, it is believed, was resumad
«t the dato lequh^ by law, and is, m most, insiaooeiw oontioaed,
ooiwitfafltaoditig the dastnadiTe drain tifKm their vaults, growiM
cot of the embarFassftientB of the times, and the imperfect eonfr
deoce ia bank< hiils.
- kishoped«howerer> that a pnidentr course on the part of these
tBStitotioDS^ wiH restore the public iaith^ and jurtfy the expeota>>
tioM of the frieoda of the systeni
AH which la respectfully 'sabmitted
KINTZING PRITCHETTE, Batik Ommimumer.
Btprt cfibe^4^airs tmd cvnditkn of tie severtd banJm wiMn ds
brnks of the msend judkial drcttU «f Michigunf Sq4eiiAetf
1838.
*ro his Excellency StBVBNs T. Mason, Governor ofMuAigan.
The undersifi[ned having.again, aflreeably (o the requisitiob$ of
law»-corapIetedhlsexan)ination of all the banks more immediately
under his supervision, takes occasion to report to your excellency
the result of the same.
In a tabular statement hereto append^, will be found an exhi-
bit of the condition of the several banks now in operation in the
second judicial circuit of (his state. . The date of the last exanuna-
lion, when the statements were made by the ofScers of the seve-
ral institutions respectively, is therein ^iven. From repeated in^
vestigations, and from the answ^rk given by such oSi(:ers, at differ-
ent times, to interrogatories propounded to them by the Commis-
sioners, it is believed that reliance may be placed in the informal
tion contained in the exhibit
The Merchants' and Mechanics' bank of the city of Monroe;
the Miller's bank of Washtenaw ; the Huron river bank ; the De-
troit apd St Joseph railroad bank, and the Merchants' bank of
Jackson county, have respectively complied with the provision of
law reqpiring them to execute and file bonds and mortgages on
uaiooumbered real esj^a^e for the final security of all the creditors
of iha institution. The Bank of Manchester and the Bank of Supe-
rior have not yet completed their securities, although property
has been appraised by the regular officers, to an aioount suiuciept
for the purpose, and papers have beea executed, and recorded to
an amount amply sufficient to cover all present responsibilites.
Digitized by VjOOQ IC
M4 HOUSE DOCUMENTS.
ISM^Iabotorexatmiiitig ftiid peifeetiog title deacbthui neeettarily
erased much delay. It is believed, however, that in a fevrdaye
tfte iostituiiom last named wiU have their securities filed in the Ao*
ditor's office, io strict and literal cocnpliaoce with the provistoDS
of the statute.
. Sudi, during the last few months, has been the conditioQ of omr
exchange.', and such the want of confidence in the monejred instil
tHtions of the west, that (he notes of our banks have been con*
stantly flowing in for redemption. Unable, under existing cir-
cumstances, to extend their business, or to afford facilities to busi*
ness men, they have been <U>mpelied to use every exertion to pre*
serve their credit, by meeting promptly every demand of the biH*
holder and creditor. It affords pleasure to the ijindersigned to be
able 4o stale that the baobsof the seoond circuit of this state, (a list
of which is given in the statement above referred to,) meet prompt-
ly their paper, when presented at-thcir counters, in specie or some
satisfactory equivalent The bank of Washtenaw is an excep-
tion to this remark. The undersigned has, however, reason to
bdieve that a loan has been efieeted by that insdtttfion* which wiB
enable them, within a few days, to redeem their paper agreeably
to the provisions of their charten
The Bank of Manchester, for some time past, has been engaged
/K>lely in redeeming its circulation. By the statement made by
the former cashier, A. G. Irwin, previous to the last report of the
condition of the bank, it appeared that the circulation was •34,-
000. It was, however, afterwards ascertained that there were in
the hands of certain individuals, without security, bills of the bank
tQ the amount of $78,334, making a total amount of bills out
$107,334.
Security was promptly obtained for the amount thus improp*
erly advanced by the cashier, and that officer removed from the
bank. Much credit is due to the Messrs. Fargo, of Manchester,
for their exertions and promptness in seconding the endeavors of
the public officers in securing the interest of community, who
held the bills of the bank. The circulation is now reduced to
f 45,334. Under the management of its present officers, the in*
stitution is believed to be, in every respect, entitled to public con-
fidence,
In accordance with the provisions of an amendment to the ge-
neral banking law, passed December 30th, 1837, the undersigned
has endorsed, officially, bills of the following banks, to wit:
Merchants' and Mechanics' bank of the city of Monroe, 4700
Millers' bank of Washtenaw, 4,000
Huron river bank, 700
Detroit and St. Joseph railroad bank, 2,090
]Merchants' bank of Jackson county, 4,^1
Digitized by VjOOQ IC
HOUSE documents; 945
A mall portkm only of the bills tbos eodorsedt have been put
is circnlatioD.
The issue of eodorsed bills, cooftemplated by the banks above
meotioned, was intended to supply, to a small extent, the circula-
ting medium for transacting the flouring business of the state du-
ring the present autumn. The banks would receive therefor, east-
ern drafts and acceptances, which the miller and the merchant
were enabled, upon (he shipment of their flour, to give, and thus
be able to sustain then* circulation by obviating, to a certain ex-
tent, the difficulty arising from a constant demand for specie. Du-
ring the severe pressure of the times for the last few months, the
banks of the interior have sufiered little from the demand for gold
and silver, when eastern fiinds were at their command.
While hirge amounts have been due from our citizens to the
merchants o( the eastern cities, our resources and our industry
have hitherto afforded limited means for the discharge of the res-
ponsibilities. The abundant crop which has the present season
crowned the labors of the husbandman, has opened upon us a more
cheering prospect in this regard. Extensive arrangeniertts are
made in almost every part of the state for the exportation of the
surplus produce. It will be found sufficient to afford much imme-
diate relief in pecuniary matters, and is an earnest of the time, we
hope not far distant, when the debts due to the east will be dis-
charged, and the exports of our state will exceed our imports ;
when increased activity will be given to the industry and pro-
ductive labor of our citizens, and our banking institutions, founded
on a permanent basis, and affording a safe circulating medium,
for business purposes, will enjoy the confidence of community and
facilitate their business operations.
Annexed is a table marked C, which exhibits the amount of
circulation of the several banks in said circuit, as reported by the
Commissioners on the 6tli day of April last, and the amount on the
day of the last examination. It shows a diminution of the circu-
htion in the twelve banks now in operation .in that circuit* of
9191,437. The table also exhibits the amount of specie in the
several banks at the times above mentioned. The amount of bills
in circulation is still constantly decreasing.
In a report inade to the House of Representatives of this state,
on the 6th day of April last, it was stated thalt upon the applica-
tion of the Bank Commissioners, injunctions had been issued
agaiost the Farmers' bank of Sandstone, and the Jackson county
bank, both located within the second circuit. Since that time»
Amasi Gibson, Esq., of Jackson, has been duly appointed recei-
-ver, and is actively engaged in settling the concerns of those insti*
futions under the direction of the Chancellor.
The undersigned has found it his painful duty, since the report
last mentioned, after repented visits and examinations, to apply to
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M6 HOUSE DOCUMENTS.
tb9 Gbaooeilor for injuDCtioiis against the firilowiiig bank% in iaid
circuit, viz :
The Lenawee coanty bank,
The Bank of Brest, *
The Bank of Clinton,
The Bank of Saline, and
The Farmers' bank of Sharon.
Lenawkb Couimr Bank*
Immediately after the organization of this bank, on or about the
30th day of December last, the sum of •30»000, which was paid
in on the capital stcck, was refunded, and the promissoiy note of
one of the stockholders, residing in the state of Ohio, with endors-
ers, was taken for the amount ; bills cttbe bank were at the same
time put into circulation.
At an examination made on the 16th day of April last, the
statement of the officers of the bank, and the entries upon the
books, exhibited a circulation of 918,210 ; but upon strict inquiry
and investigation, it was ascertained tliat the sum of six thousand
two hundred dollars, or thereabout, was in the hands of two in*
dividuals for exchange purposes, which was not entered on tlie
books of the bank, among the issues, and for which no charge of
indebtedness was made to any individual, nor security taken.
The cashier expressly denied that any other amount had thus
been advanced to individuals.
By an act of the legislature, at the last session, this bank was per«
mitted to reduce its capital stock from one hundred thousand to fifty
diousand dollars. After the passage of this act* and without a vote
of the directors, or other formal proceeding, so far as could be ascer-
tained on examinatipQ, his promissory notes, to the amount of fif-
teen thousand dollars, were given up to Edward Bissell, a debtor
of the bank and one of the stockholders. This was intended, as'
it was explained by the cashier, to be a withdrawal of that
amount from the thirty per cent paid in on the original capital
stock, making a deduction corresponding with the reduced capi-
tal. No entries corresponding with this chan£:e and withdrawal
were however made on the books of the Lank. The whole
amount of specie in bank on the day of the last examination, was
ninety-two dollars and seventy-five cents.
At another examination by the undersigned, pn the day of the
service of the injunction, to wit, on the 21st of June last, it ap-
peared that there had been for some time in the hands of Edward
Bissed, of Toledo, for exchange purposes, bills of the bank to the
amount of 918,000, and in the hands of Charles H. McClure,
bills amounting to 86,500. No minutes of these transactionf
appeared upon the books, nor among the papers of the bank, at
any previous examination* It appeared that receipts bad beea
Digitized by VjOOQ IC
B017SB DOOUM&NTSL
Mf
taken ftr the amouots, by the cashier, Frederick R WhttiDg, but
the w^Ie transaction had been concealed from the knowleqc^e of
the Commissioner. It is due to the president to say that he
denied all knowledge of the transaction. Promissory notes have
been obtained for £e two last menlianed sums. Specie in bank
was only 934 20.
From the imperfod OMumer io which the bodis and papers of
llie bank had been kept, and the fact that little confidence could
be piaoed in the entries there made, it was found difficult to ascer-
tattt the actual amount of the assets and liabilities of the institu-
tion. The books exhibited, at the time last mentioned, the circu-
fetion of ibebank at §22,6^. The amount actually io circulation^
bowwer^ must have been about 94fJ^9* Discounted paper m
bank amounts to about the same sum as the circulation. Them
ted aha been violations of the provisions of law in other paiti*
dttlars, not above mentioned.
Securities by bonds and mortgages on real estate, were given
l» an asoooBt Io entire, it is coi^ently believed, the final dis-
dmfgb of all the liabiiities. is appointed receiver^
Bank of Brest.
This bank was examined by the undersigned, on llbe second
day of Ai^ust last, when the following statement of the resour*
pea and liabilities was given under oath, by one its officers.
JResocirces«
J^scounted h9Hn,
♦T0,5a7 68
Loans on bonds, &c.,
IMOO 00
Bank stock,
10,000 00
Due from other banks,
6,702 76
Eastern exchange.
8.150 00
Notes of other banks,
6,816 00
Cash items, and overdraftsi
3,198 74
Banking-housei
1,711 68
Personal property.
402 26
Expenve,
C,880 m
State tax and safety ibnd,
150 00
Bills in transitu,
516 00
Specie,
^,000 92
•
1H38,023 78
LMUUiui.
Capital slockf
•66,000 00
OrottlatieiK
89,41S5 00
28,384 as
Deparitei,
11,263 66
Digitized by CjOOQIC
^46 HOUSE DOCUMENTS.
payable on time, 8,882 09
Profit and loss, 5,009 22
•138,023 78
For the specie specified in said statement, there was exhibited
an individual's receipt for 82,000 00
An accepted check on the Farmers' and Mechanic^
bank, 1|146 09
Gold and niver, 9,754 92
812J900 92
Of this amount, it was stated by the cashier, that the sum of
two thousand dollars, in silver, had been in the bank about six
weeks, and that the sum of 87,497 in gold, was received .the day
before said examination. It was paid in by Lewis Gk)dard» uad
was passed to his credit on a small book containing an entry te
said GrOilard's name of an ''exchange account*"
On the eleventh day of August last, another examination was
made by the undersigned at the banking house of said instiiutioii.
The specie of the bank was found reduced to the sum of 8138 89.
The accepted check above mentioned had also been disposed of.
It appeared by a reference to the records of the proceedings
of the board of directors, that at a meeting of the board, held on the
fourth day of August, a resolution was adopted authorizing a
loan to Lewis Godard of $7,500, and on the same day, his note,
at ninety days, with endorsers, was accordingly discounted, and
the amount given in bills of said bank* Immediately after the
discount was made, the bills thus paid out were presented by
another individual at the counter of the bank and redeemed in
specie. It was admitted by the president that, at the time g[
making the discount, he did understand that said bills were to be
presented for the specie.
The amount of specie disposed of between the examination"on
the 2d and that on the 11th August, including the accepted check,
was as follows :
In the redemption of bills as aforesaidi 87,600
Taken to Detroit by cashier, 1,000
To Lewis Godard» on certificate of specie deposite, 3,000
Total, 10,600
which, with some small amounts paid in redeeming bills, reduced
the amount of specie to said sum of 8138 89.
By reference to the above statement, there will be seen an
item of 816,000 for a ''loan on bond and mortgage." At the ex-
amination, on the 2d day of August, it appeared that a loan of
that amount had been made to the trustees of the town of Brest,
to secure which the bank received an assignment of two bonds
Digitized by VjOOQ IC
Otdmrnd bf Le^^GodafdyibMhe sum 6f 995,400i paiyablef m
biM, twa wid rtFraeyeairst und ahb of mortgages of one hundrecl
trtdeighteed viilflge tots in'Bfe^> ftecotnpanjir^ said bonds. At
Itte mSs^g of the directors febove nrjentibn^, tlie follovrtng tcso-
Imion, in r0fer(Mce to one of said mortgages, was adopted, viz :
• ' M&khtidi lihki a mortgage bj^ring dote I5th June, 1898, a^
signed bV the Brest company, to the Bank of Brest, on the 26lh
dsy oft /aoe,'.19M, thp amount bt Mrhich '^ il9,200, the sanrie td
be assigned to the Brest company, by the Banit of Brest, as thej^
imve reicebMls DdthfiAg ^$m the bank ^t= the sufme:
1 The re-'assignmettt wits gratciifously executed by the bank M
lu^oordanoe wrai MtM resolution. '
' TIhi circidation of the brink, as appears by *e abohre stat^^netat,
tras^ on th6 second day of August, 989,425^. It appelrred, how^
emr^ by eXMfiitnitkm of Ah entiry, on a smalt ka^ck, frmtther^had
keeir omooed to Lewis Gk)d^, oat "^exchiflin^ adcoont,"^ at thre^
several times, bills of sard' bank to the amount of VlfT,^^%
' â– There was credited to him the specie above mentioned, 7,497
.. • - . i
• Ldavifig^iwifemceln hislwrtidsi ' 019,81(1
■Th«na hlid also been KMUed by the bafnk and' sent to Lytn^n A.
Spdding; of Loofcporf, *in the state of Nft^ York, biUs to th6
ffmoum of t85,000* Ah arrilngement was entered into whh Mr.
Soaldiiigf 16 accept drafts of the banH to that aritount, a Ad th^
bHls ab^e mentiolled were plac^ in his hands, it was stated bt
die cashjetv as (H)llateral secnrity to him. It was, moreoverr de^
clffr^ that they wePe liot to* be put into C!reulati6n by hxrti.
h farther appeared that the bank had df^wil<!m said'Bpaldmg to
aiiwnoutC nearly eqtial to^the sum in his hands. Some of the
drafts upon him have been paid, and others protested. ' Thes^
bitto-of the bank, in the hands of Mr. SpaMing, and also those
to the hands of Mr. Godard, Were -not it^ldded In the statement
of'thc oil-eolation.
Ttie wi>oi6 amount of bills of the bank, outonth^ llifa Augost,
arag, tfaefrefore, as follows : '
Circulation, as per statement, 989,496
In possession of L, A. 'Spisilding^ - 25,000
• Advat^aAr^achang^ lo L« Oodard, 19,816
•84v241
• ' At ia tftifeefing of th^ dtrdctors; hefd lis afei^asakK on the 4tb of
Aoi!USC' ti(k fbllowiDg^ resolution was adopted r -
ktsdved. That the president and cashier be authorized to issue
post Wte# of thb bank, payable twelve month* af\fer date, at the
PhcB^ batik, Sn the city of New Yo/ft, ftwrtrig mtere^'at seven
per cem 'pm Imnum, for the purpose of raising tbnds \6 pay drafta
wtiicfrliM Been drawn by the bank. " '
32
Digitized by VjOOQ IC
m H099B DQCUMSNTSi
la ftccordmioe wkb said retoNioiv post iK)tof xrete
the wipe day.. They w^a sent te Lookport, «8 the pretidmH
declared, for the purpose of having them exchaoged for the pole*
of the haokt ia his haodi; as befi;re atated They were to reoeiftt
the endorsement of certain individuals, ai a guaranty for thttT
final payment The issuing of post notes by banks subjed U>
the provisions of ^ an act to create a fund for. the beaefil of eei^