APPENDIX.

REPORT OF THE JOINT COMMITTEE ON BANKS.

The joint standing committee on Banks have had the various bills, reports, and resolutions referred to them under consideration; and in audition to the special reports heretofore made, beg leave respectively to submit the following general

REPORT.

As most of the measures of the present session having relation to the several banks have already been acted on, or are still pending before one or the other of the branches of the General Assembly, your committee have deemed it proper, in making this report, to confine themselves almost exclusively to an exhibition of the actual condition of the Bank of the State of Tennessee, and of the Union, Planters and Memphis Banks, according to official reports, and the actual information of the affairs of said institutions, as far as the same has been practicable.

instant.

The surplus revenue debt, which the Union and Planters' Banks owed to the State, and which fell due on the first day of January 1840, payable to the Bank of Tennessee, has been settled and adjusted according to the terms of a joint resolution passed by the General Assembly on the The Memphis Bank, your committee learn at the Bank of Tennessee, has paid over the full amount of said debt due from that institution. The terms of these several adjustments, believed to be highly advantageous to the State, were heretofore reported with the approbation of your committee. That report and the correspondence in relation to the same, consisting of communications for the Presidents of the Union and Planters' Bank, are spread upon the journal of the Senate.

In relation to certain interrogatories addressed by your committee to the Union, Planters' and Memphis Banks, which have been answered as appears on the oaths of the Presidents of said banks respectively, your committee do not deem it necessary to swell the present report by embodying or appending the whole of said interrogations and answers. The answer of the President of the Planters' Bank, dated Nov. 30th, 1839, and sworn to on the 11th of December, 1839, in answer to the 14th interrogatory, as to the time when said bank can resume specie payments, is as follows:

"I am of opinion that the 1st of June or first of July next, is the earliest period at which this bank may resume specie payments for all its liabilities, consistent with the interest of the country and the bank to maintain specie payments successfully. The above period is proposed because the present crop will then have been realized."

The answer of the President and Cashier of the Union Bank, to the same interrogatory, sworn to on the 13th of December, 1839, is as follows:

"It is the opinion of the undersigned that this bank can resume specie

payments as soon as the avails of the present crop are realized, say by June or July next. This opinion is predicated upon the supposition that the present abundant crop will enable its debtors to make large payments. It will be perceived from the statement marked A. that the bank has in suit a larger amount than it has in circulation. A considerable portion of this is already in judgments and will be collected in the course of the spring.Should the banks in Tennessee, however, resume in advance of those in Kentucky, Philadelphia and New Orleans, such is the state of trade with those points (being heavily in their favor,) that drains of specie to a heavy amount may be anticipated. To make the resumption here, under these circumstances, certainly safe and successful, will require an amount of specie on hand nearly equal to the notes in circulation-which would of course circumscribe the business of the bank to the narrowest limits."

The answer of the President and Cashier of the Memphis Bank, in answer to the same interrogatory, is as follows:

"This bank being one of small capital and in a more exposed situation, we are of opinion that it cannot safely lead in a resumption, but from our arrangements we believe we can at any time commence with the three larger institutions at Nashville and their branches."

The condition of the bank of Tennessee on the 1st of January, 1840, has been ascertained by the investigations and report of a sub-committee, and the report, and exhibits accompanying the same, will be found appended. to this report and marked Appendix A.

The condition of the institution as shown, on the first day of the present month, by the report of the sub-committee compared with the condition of the same, as presented in reports made to the General Assembly, of the 1st of October, and 2nd of November last, shows a continual improvement in the means and resources of the bank.

The total amount of the expense account of the bank of Tennessee at Nashville, including engravings for notes, travelling expenses of agents, salaries of officers, &c. from 30th of June, 1838, to 1st July, 1839, as per account reported to the General Assembly, amounted to the sum of $35,

479 45 cents.

In regard to the expenses of said bank, accruing on account of salaries, your committee have had before them the two reports of the officers of said bank, appended hereto and marked Appendix B. and C. As the General Assembly has passed an act, during the present session, equalizing and regulating all the salaries to be paid at the Principal Bank and branches, your committee will add no further remarks on the subject, except to express a hope, that neither the amount of salary as now limited by law, or any other cause, will induce the Cashier of the Principal Bank to withdraw from the public service. His great capacity as a man of business, his untiring industry, and the universal confidence which is deservedly reposed in his honor and integrity, would render his withdrawal a source of general regret. Without reference to the opinions expressed in the report of the subcommittee before referred to, your committee, in regard to the business operations of the Bank of Tennessee, as well as the two principal chartered banks, are decidedly of opinion, whether the policy is adopted at the principal banks or branches, that extending accommodations, either on notes or bills of exchange, in unequally large sums to particular individuals, firms, or companies of all kinds, is bad policy; and they regret to find, from official returns before them, that it is a policy which has hitherto prevailed to too great an extent in nearly all the banks and branches in the State. Such pol

icy, in the end, invariably leads to the accumulation of doubtful and suspended debts.

The Bank of Tennessee at Nashville has not gone into the expensive purchase or improvement of real estate for banking purposes. The branch bank at Clarksville has prudently and commendably pursued the same course; but all the other branches have pursued a policy, in the infancy of the institution, when the expenses of putting it in operation were greatest, of buying lots of ground in the towns where lacated, and of building and commencing the erection of banking houses, ranging in cost when completed, according to estimates, from five to twelve thousand dollars each. This policy, unwise and unjust to the institution, and which has been without any direction or authority of the President and directors of the principal bank, as your committee are informed, meets with their decided disapprobation. A law, however, passed at the present session, will put an end to this abuse in time to

come.

The drafts on the profits of the Bank of Tennessee, to meet the appropriations that have been made by pást legislation for purposes of Internal Improvements and education, are already very heavy, and will continue to increase. It can only be by a course of the most prudent and safe policy that the bank can be enabled to meet these engagements, especially as the General Assembly, at the present session, has thought proper to diminish the prospective capital of the institution one million and a half by the withdrawal of that amount of State bonds from its control or future use. The document marked Appendix D. as a part of this report, furnished by the Cashier of the bank in obedience to a legislative call, shows the accumulated and accumulating liabilities which are pending over the bank in the form of principal and interest on only a portion of the State debt.

The Union Bank, since making its last report of the condition of its af fairs to the General Assembly, has, as has been before observed, adjusted the federal surplus revenue debt with the State. To show the condition of said bank, your committee refer to the several statements appended to this report, and marked Appendices E. F. G. and H. From each succeeding re'port made from said bank, during the session, the condition and affairs of said bank have been shown to be in a progressive state of improvement.A belief is indulged by the committee, that said institution is entirely solvent and entitled to public confidence.

The Planters' Bank is also believed to be in a solvent condition, and entitled to the confidence of the public and the holders of all its outstanding liabilities. A report from said bank of the condition of its affairs, on the 1st day of October last, and again, by a report of the condition of said bank on the 1st day of November, 1839, which statements are hereto appended, and marked Appendixes 1. K. L. These statements show that the affairs of the said institution are in a state of improvement, and that it has been considerably increased in its means and resources, since the date of its first report to this General Assembly.

The condition of the affairs of the Bank of Memphis, as reported to the General Assembly, under date of the 27th of November, 1839, will be found in the statement annexed to this report, marked Appendix M.

Your committee having heretofore reported and recommended measures in relation to the resumption of specie payments, and to enforce the same, which have received the final action of the General Assembly, will now add nothing more on that subject. In the conclusion of this roport, they submit the following resolution, and respectfully ask the adoption of the same:-

Resolved by the General Assembly of the State of Tennessee, That the public Printer be instructed to print the foregoing report, and cause to be attached a copy of the same to each copy of the Journals of the Senate and of the House of Representatives by way of appendices to the same.

All of which is respectfully submitted.

S. H. LAUGHLIN, Chairman.

(APPENDIX A.)

The sub-committee on banks, to whom, by a resolution of the joint standing committee of both houses of the General Assembly on banks, was referred the resolution of the General Assembly, directing the committee to examine the list of debtors to the Bank of Tennessee and branches, with their accounts, and report whether any undue favoritism had been practiced, or injustice done, in granting accommodations by said bank and branches, or any other mal-practice, which, in their opinion, may require correction; Also, that they report the amount loaned to each county and the number of borrowers in each separately, and the situation of the debtors as to pecuniary responsibility, beg leave to report, that in conjunction with a committee of the Directors of banks, they entered upon the discharge of the duties assigned them in said resolutions, and after a diligent and careful investigation of the documentary evidence furnished from the records and books of the bank, and a personal examination of the condition and means of the bank policy pursued by the Directory, afforded from the inspection of the notes discounted, the residence and conditions of the makers and endorsers, as far as the means in the power of your committee could enable them, submit the following report as the result of their labors and investigation.

Your committee, feeling the responsibility of the trust committed to them, conscious of the bearing and effect the character of the report made by them upon some or all the propositions couched in the resolution would have upon the stability and perhaps security of the bank, and also sharing the lively interest felt by the citizens of the State in the condition and ability of her bank, and a corresponding solicitude and attention, impartially examined and investigated the facts and testimony ascertainable relative to each distinct subject or proposition contained in the resolution of the General Assembly.

Aware that not unfrequently duties similar to those assigned the committee were considered performed from the mere examination of official statements, and that from such discharge of duty, existing derelictions and malpractices were undiscovered and permitted to increase without dotection, until they become apparent by the ruin and bankruptcy of the institution, your committee, however high and beyond suspicion they estimated the private and public character and worth of the officers of the bank, felt themselves bound to resort to and examine all the proof from official statements which could be acquired, and in no case did they adopt,as the basis of their opinion the isolated statements of the offices but when no other testimony could be had; and then they cheerfully accorded to the statement of their acting under the regulations of the duties of office; the same veracity the committee claim to themselves, acting now under similar responsibility.

Fearful, from rumor and insinuation, that the bank, in the exercise of the power bestowed by law, had extended its accommodations to one particular denomination of the community more considerably and extensively than to, others, and that some particular vocations only had been sustained with great partiality, to the exclusion of others, your committee, with the de

termination to ferret out the truth and 'ascertain the conduct of the bank, in the line of accommodation, with great scrutiny and circumspection, so far as the means in their power would permit, examined every note, described the political complexion of the parties to the note, and their vocations in life. The committee find the pecuniary condition and liability of the bank to be as follows:

(EXHIBIT.-A.)

State of the Bank of Tennessee, January 1st, 1840.

Discounted Notes,

573,490 65