THE STORY OF A BANK An Account of the Fortunes and Misfortunes of the Second Bank of the United States, with a preliminary Sketch of the First Bank WILLIAM HORACE BROWN Including an Introduction by GEORGE E. ROBERTS Director of the United States Mint RICHARD G. BADGER THE GORHAM PRESS BOSTON Copyright 1912 by Richard G. Badger All rights reserved The Gorham Press, Boston, U. S. A. THE STORY OF A BANK 2003155 INTRODUCTION BY GEORGE E. ROBERTS THE agitation now going on in the United States for important changes in the bank- ing and currency system gives especial interest at this time to a study of our early financial history. It is instructive to know when and how we were switched off the course followed by nearly all other countries in their banking develop- ment, and how our system differs in organization and efficiency from the systems of other countries. When Alexander Hamilton faced the problem of providing the young republic with a currency system, and also with a fiscal agency that would be a right arm to the Treasury, he naturally turned for a model to the Bank of England which had demonstrated the usefulness of a great bank of issue, both to the government and to the public. Since then all of the other countries of Europe, one by one, have followed Hamilton in the establishment of similar institutions. They differ in some details of organization and policy, but the general scheme of a great banking institution, handling all of the financial transactions of the government, serving as a correlating link V VI INTRODUCTION between the Treasury and the banking and business community, and supplying in its notes the paper currency of the country, has won its way from country to country on its practical merits, until it has been adopted almost everywhere. In the exercise of the functions referred to, these institutions act as government agencies, performing public services which Treasury officials by the very limitations of their positions are unable to perform so well. It is the general banking relations which these institutions hold with the public, and with the banking systems of their countries, that enable them to discharge these functions with superior efficiency, but these relations afforded the basis for an attack upon Hamilton's plan on constitutional grounds. Congress had no authority, it was urged, to charter a bank to carry on a banking business. This was the principal argument against the first bank of the United States. The proposal carried, however, and the bank was chartered for twenty years. When the charter expired in 1811, Hamilton was dead, and the Federalist party had gone out of power. Albert Gallatin, Secretary of the Treasury, and the ablest financier of the time, although wholly out of sympathy with Hamilton's political views, recog- nized the usefulness of the Bank and earnestly advocated a new charter, with some changes in the organization. The vote on the charter in the House was 65 to 64 in favor of indefinite postponement; in the Senate it was a tie and the vice-president cast INTRODUCTION VII his vote against the Bank. Five years of disastrous experience without the Bank effected such a change in the attitude of Congress that the charter for the second Bank was granted in 1816 with but little serious opposition. After the second Bank had been made a political issue and forced out of existence, the custody of public funds was given over to the state banks, and their notes became the only paper currency. They soon afterward suspended specie payments and many of them went into bankruptcy, with heavy losses to the Treasury. Resort was then had to the inde- pendent treasury system, since maintained with some modifications. Daniel Webster said it was modelled after the treasury of Darius, King of Persia, 500 B. C., the theory of the system being that the government should collect all income in cash and guard the cash in a strong-box until it was paid out in the regular course of expenditures. It is needless to say that this policy was totally at variance with modern customs and at times proved to be wholly impracticable. The paper currency, issued entirely by state and private banks, without any supervision by the national government, soon fell into a deplorable state of disorder, and in many sections remained so until the national banking system was established in 1863. The leading argument for the national banking system was that it would provide the country with a uniform and safe currency, good in VIII INTRODUCTION all sections. Judge Alphonzo Taft, father of William Howard Taft, writing from Cincinnati to Secretary Chase of the pending bill, expressed the opinion that if Congress would adopt his recommendations for a national currency, "that in itself would be no incon- siderable compensation for the War." And the fact is that the fulfillment of this promise as to the character of the currency has so fortified the national banking system in the confidence of the public that its defects have been disregarded. The independent treasury system proved to be a serious handicap to the government in all large financial transactions. So long as income and outgo were closely balanced the inconvenience was not serious, but when at the outbreak of the Civil War it became necessary to make large loans, the require- ment that the proceeds should be transferred physi- cally to the Treasury became an almost insuperable obstacle. If the Treasury could have accepted bank credit in payment for bonds and drawn against this credit in making payments, it is probable that the greenbacks need never have been issued, that the country would have remained on a specie basis and that the cost of the war would have been very much less. The country was rich enough to buy the bonds, but it was impracticable to pay for them in specie when the specie was to be withdrawn from the channels of trade and locked up in the Treasury. The government was attempting to do business by a method which, applied to all payments, would bring INTRODUCTION IX the whole civilized world to a standstill at any time. A similar effect, although not so suddenly produced, was experienced when the revenues of the govern- ment for any considerable period ran in excess of expenditures. There was a steady drain of money out of current use into an idle hoard in the Treasury. An enormous economy is accomplished in the business world by the use of banking machinery, and it is highly desirable to have the government conform to the general practice. Its receipts and disburse- ments are so large that unless they are handled in the usual manner they may at times seriously disturb the money market. The authors of the national bank act recognized this by providing that national banks might be used by the Treasury as depositories or fiscal agents. The Secretary of the Treasury may now deposit surplus funds in national banks, thus returning them to commercial use, but he is not allowed to keep disbursing accounts in banks in any city where there is an office of the Treasury, and as there are offices in ten of the principal cities of the country this is a serious limitation upon the use of banking facilities. During the suspension of cash payments by the banks in 1907 it was difficult for the public to obtain money for payments to the Treasury and the public revenues fell off rapidly in consequence. The Treasury was nearly empty of cash; it had $250,000,000 in banks but hesitated to call for any part of it in cash, for fear of increasing the popular alarm. If the Treasury could have X INTRODUCTION received cheques on solvent banks (as has since been authorized) and made its own payments by drawing cheques on the same banks, the Treasury would not have been a disturbing factor in that situation, as it was. There are obvious difficulties about having the Treasury use seven thousand banks as depositories instead of one large institution. It is impracticable to use all local banks and experience has shown that it is impossible to prefer some over others without causing complaints of favoritism. The fact is that the Secretary of the Treasury is subjected to con- stant importunity from banks and the influential friends of banks, asking for favors of this kind. In the hands of an unscrupulous administration, the distribution of Treasury deposits might easily be- come a national scandal. But the chief defect in the National Banking system, contrary to popular opinion, is in its note- issuing machinery. The objection is not that the notes in themselves are a poor currency, but that the conditions under which they are issued are so arbitrary that the system is not responsive, or in any respect related, to the needs of the country. It is related to nothing but the public debt. If we should have a period of peace and prosperity and want to pay off the debt, that policy would involve the retirement of the entire volume of bank currency. The only element in our monetary stock that is responsive to the changing needs of the business INTRODUCTION XI community is gold. The only way the business community can provide itself with a larger supply of money is by the importation or production of gold. The needs of the country for an authorized currency are growing and variable. They vary from year to year, with the seasons of the year, and with the volume of trade. Nobody can foretell the demands for currency, but it is of the highest importance that there shall exist somewhere the power to issue all that may be legitimately wanted. A country where that power exists is immune from bank panics, while a country without such a system is never safe from them. The banks of the United States hold over $16,000,000,000 of bank deposits, practically all payable on demand, but there is only about $3,500,- 000,000 of money in the United States, all told, in the banks and out. These figures should be enough to convince the most skeptical that some means should exist for providing an additional supply of lawful money when it may be called for. The national banking system is wanting in organi- zation. It is a "system" only in the sense that the individual banks are organized and operated under one general statute, subject to supervision by the same public officials. There is little provision for relationship between the units and no agency through which the Treasury may deal at once with them all. The currency provisions, as we have seen, are so foreign to commercial banking as to be quite inade- quate to serve the needs of the country. XII INTRODUCTION But, although the policy toward the United States Bank, which is the subject of this review, was a grave mistake at the time and entailed great losses upon the country, and although the national banking system has serious defects, it does not follow that the United States Bank, if it had survived the attacks of Jackson, would have proved equal to all that is required of a national banking system for a country of such vast extent and interest as the United States. At best it could only have served as the keystone of the structure and, with the enormous development of banking that has followed, it could hardly have maintained its dominant position, or fully answered to the requirements of that posi- tion without important changes in its constitution. It would have had to become more ultimately re- lated with the local banks of the country and more dis- tinctly a public institution. The line of development which banking has followed in this country, by which every community has been supplied with thoroughly local banking institutions, in which, as a rule, the most substantial people of the neighborhood are interested, is in many respects highly satisfactory. Whatever the weakness of the system may be, it has the merit of bringing the banking service more closely home to the people than any branch banking system could, and it may be accepted as settled that the banking business of this country will always be done with the public through locally-owned institutions. The problem of those who desire to INTRODUCTION XIII strengthen the system is to combine with this feature of independent local ownership certain powers which will enable the system as a whole to protect any of its individual parts, and to manage all of those public functions which the experience of the world has shown can be most capably performed by a banking agency. They desire to make the system something more than an aggregation of unrelated banks, and to overcome the tendency among them to pull apart and act solely for self protection in every time of strain. Unfortunately, whenever an attempt is made to remedy this fundamental weakness, the same old antagonism must be met. There is a vague and suspicious fear of anything like organization or co- operation among the banks. The public knows the disastrous consequences that result from a collapse of bank credit, but when it is proposed to allow the banks to co-operate lawfully for mutual support, an alarm is given that a bankers' "trust" is proposed. A considerable number of people apparently prefer that the banking system shall be weak rather than strong, because they fear strength will be misused. This amounts to a deliberate choice of poor and ineffective methods on the ground that the American people are not capable of using or controlling more scientific methods which are in use and giving satis- faction elsewhere. Our 25,000 banks cannot stand individually and alone in a crisis. The weakest will go first, but as XIV INTRODUCTION they fail the public alarm will increase until the strongest are closed, unless they stand together in a policy which now involves a violation of law. Un- less they suspend cash payments by agreement the entire fabric of credit will be wrecked, and surely nobody can accept the policy of suspension at will as a permanent feature of banking in this country. There is no disguising or evading the issue. Our entire industrial and commercial system must remain subject to these recurring periods of disorganization and distress or our banking system must be more closely and effectively organized. There must be a central authority to act in certain matters for the whole system. This, of course, means a degree of centralization, but all organization involves central- ization; the very purpose of organization is to provide in an orderly manner for leadership and authority and to determine under what conditions and re- straints power shall be exercised. A tendency to centralization is apparent in the banking business now, a movement toward voluntary association and consolidation, and it will go on under our present banking laws unless the support and protection which the individual banks are seeking may be secured in some other way. Is it better that this movement should go on or that a degree of co-operation shall be provided for in another way? Whatever central- ization shall occur, under a general plan which in- cludes all of the banks, will be public in character and all would have a voice in its control. It would INTRODUCTION XV exist in a delegation of authority, in part from the banks and in part from the government, to an ad- ministrative body for specific purposes, with ample supervisory powers reserved to the government. All of the institutions of society rest upon a similar basis. There can be no industrial or social progress without organization, and as population increases and presses upon the natural resources it becomes necessary, not only that organization shall be more highly developed, but that it shall be stable and reliable. In a sparsely settled country where everybody has access to the woods and the soil, there can be no very serious industrial crisis, but with a dense population of specialized industrial workers, dependent upon steady employment in their particu- lar industries, any interruption in the flow of the exchanges is calamitous in results. Nothing is more important to this modern industrial organiza- tion than the protection of credit, and unless the American people have means as effective to that end as those of other countries they will be under serious disadvantage. In any plan for reorganizing the banking system, the local banks will undoubtedly be left free to con- duct their ordinary operations in their own way, subject only to such general regulations as must always be enforced for the common good. The business will still be open to all who wish to enter it and are able to get together the necessary capital. The conditions do not favor monopoly. There is no XVI INTRODUCTION control of nati*!** resources; no costly equipment is required; the amount of capital necessary can be easily raised in any locality and if the business is properly conducted can be readily withdrawn if desired. FThe lending power of the banks exists for the most part in the credits left with them by their customers, subject to withdrawal at their pleasure. It is a mistake to suppose that these credits, temporary and shifting as they usually are, may be used by bankers at will. Bank patrons, as a rule, are both depositors and borrowers and no bank can hold its business unless it meets their legitimate wants. One class of customers will be borrowing in one season, other classes at different times, and the banker adjusts his affairs as best he can to meet all of their requirements. The degree of his success in satisfying them, at the same time maintaining sound principles of banking, is the measure of his success as a banker. His business grows as their business grows and as the community thrives. The more credits they accumulate on his books the better for him; his prosperity is indissolubly linked with theirs. The idea that the bankers of any locality may enter into a conspiracy with bankers elsewhere by which their own locality will be placed at a disadvantage, or that bankers as a class may conspire against the rest of the community, is based upon a total mis- conception of how bankers derive profits and where their interests lie. INTRODUCTION XVII This book treats of one of the most notable con- troversies of American politics and the story is impressive for the warning it gives of the danger in having grave and intricate economic questions settled by the kind of discussion which characterizes a political campaign. As population increases and becomes more and more highly organized, economic problems will multiply and government will have more and more to do with business 1 . Questions vitally affecting the progress of industry and the general prosperity will be frequently before the electorate. Many of them will call for a high degree of intelligence and practical judgment, some of them for the advice of experts, and all must be approached in a spirit of inquiry and co-operation if they are to be successfully handled. Unfortunately, in politics there is suspicion and antagonism from the outset, a grouping into hostile camps, and a rivalry of leader- ship that make a fair consideration of economic questions at present impossible. Political discussion has little resemblance to economic inquiry. The latter proceeds by analysis and patient examination of details; the former deals in generalities and is nine-tenths declamation and denunciation. The clever politician finds that he can awaken a response more readily by imputing bad motives to his adver- saries, and by appealing to the prejudices and pas- sions of the voters, than by patient discussion of the questions before them, and he is after immediate results. XVIII INTRODUCTION The capacity of a people for organization and co- operation develops as they throw off these influences. In order to act together effectively men must be able to depend on each other, and that implies not only mutual esteem and confidence but recognition of a real community of interests. The instinct of sus- picion and antagonism, the fear of treachery and conspiracies, are destructive of co-operative effort. Society, under their influence, tends to disorganize and lapse back into the primitive state. The instinct of suspicion is a sign and survival of an early period of the race, when warfare and ex- ploitation was the common business of mankind, before men had learned, first, that they could gain more by trading with a neighbor than by killing him ; and, second, that a neighbor was worth more free and prosperous than as a slave. The supreme truth that the genuine interests of men are not conflicting but harmonious has been slowly dawning upon the world and steadily modifies the relations between nations and classes, but even now is only faintly appreciated. It is still supposed to belong to some distant idealistic state, although every year sees new recognition of it in practical affairs. The rule is general and fundamental; the exceptions are personal and temporary. It is still true that one man may get the better of another in a horse trade, but in every important and legitimate sense the com- merce of the world is based upon mutual benefits. The interests which the people of all nations and all INTRODUCTION XIX classes have in common are so much more import- ant than those which conflict that they constantly gain with enlightened opinion. It is not very many years since statesmen of world renown believed that their own people might be benefited by misfortunes which befell neighboring countries, but the inter- dependence of the modern world has become so apparent that no one of repute would venture that opinion today. A single producer, or the group composing a single industry, might gain a price advantage at the expense of consumers, but the interest of producers as a class cannot be separated from the interests of consumers as a class, because everybody belongs to both classes. A single employer may have an im- mediate interest in keeping down the wages of his own employees but this would be a poor country for employers as a class if all employees were reduced to starvation wages. A single "trust" may be interested in extortionate prices, or a single capitalist in usurious returns, but any general combination to curtail the purchasing power of the masses would bring factories and railways to a standstill and shrink the value of all the investments in the United States. Capital in the mass can only thrive by the prosperity of the entire population. The real gams of every class are not obtained at the expense of other classes, but through that constant progress in the arts and industries by which the sum total of wealth is increased. When this essential unity of XX INTRODUCTION interests is understood there will be no more such controversies as we have seen in this country over money and banking, and the way will be opened for a general advance along all lines of collective and co-operative effort. Washington, May 1912. PREFACE THE preparation of this brief history of the Bank of the United States was prompt- ed by the feeling that the remarkable events which it covers are not familiar to as many of the average readers of the country, nor to the large class of busy men of affairs, as they deserve to be. This is believed to be owing to the fact that, although the record of the bank is given more or less fully in the general histories and some works on finance, it has with one exception been in separated fragments, and scattered through several decades of our history. The purpose, therefore, is to present in concise form a connected story-like account of the institution, with just sufficient details to make it satisfactory to the ordinary business man and reader, rather than to attempt to offer any new material. It is a page of history so unusual in its several phases that it is considered worth putting in convenient form, so that every citizen may have easy access to it. For the purpose of completeness, the first chapter is devoted to a sketch of the first Bank of the United States. The great Bank was for years the very heart of the American financial system. Its fortunes were XXI XXII PREFACE intricately involved with both the financial and political life of the nation. It is of a period more distinctly marked by empiricism and partisan rancor than almost any other, save only that of the Civil War. And, besides, the results were of such tremen- dous consequences, so vitally affecting the entire commonweal, that no reader is likely to peruse the simple chronicle of it without feeling the force of the moral. We have not yet reached perfection in our fiscal system. No one contends that we have, while a good many among those whose training lend weight to their opinions, think we are a long way from that goal. There is a smart diversity of ideas, now as always, as to what changes are most desirable to make our cur- rency system more adequate to the demands of the nation. A central bank has been advocated by a number of sound financiers, but they are not a unit as to the exact plan on which it should be erected; and others are adverse to the scheme altogether. But there is an increasing demand for a change, which has renewed interest in the banking and currency systems with which the American people experi- mented in the past. The Monetary Commission appointed under an Act of Congress, and which has been studying the banking systems of the world, as well as the condi- tions and peculiar needs of the business of this country, is confronted not only with a most difficult task, requiring the highest wisdom and knowledge, PREFACE XXIII but also with the problem of overcoming or placating traditions that have constantly had their influence on our financial legislation. The Reserve Associa- tion plan recommended by the commission is sub- ject to less objection than a central bank, although some profess to foresee danger in it. The situation is one of extreme gravity. It calls for the steadiest judgment, the greatest equanimity of the busi- ness community, and the least emotionalism by the people collectively. Necessarily there will be much discussion, and a keen public eye for special theories; but with it all, the wise ones are aware that immense peril lies in any clamor calculated to sway mature judgment based on experience and learning. This consideration also had something to do with the production in this form of the story of the Bank. As time goes on, the motives that impelled its mis- fortunes, and the policies identical therewith that tended to lower ideals regarding public life, are more generally reprobated, and it is hoped the recital may tend to quicken this feeling. The sources of this volume are those of recognized authority. The material was gleaned mainly from a few standard works, the reliability of which, either as to facts or deductions, has been fully recognized. The work referred to in the first paragraph is Catter- all's History of the Second United States Bank, perhaps the most searching investigation of the subject that has been made; but this is a volume for students rather than for the man who looks askance XXIV PREFACE on a technical work of that bulk. Principal among the others are: Summer's admirable work, Banking in the United States, being the first volume in the great symposium, History of Banking in all Nations; the Documentary History of the United States Bank, including a record of all the legislation relating to the bank up to 1832; Schouler's version in his Constitu- tional History; Knox's History of Banking in the United States, and a few lesser works. It is worthy of remark that all of these authorities, with others that could be named, arrive at the same opinion, varying only in relation to minor questions, that there was no reasonable warrant for the war that was made on the Bank, and as little justification of the political hostility to either the first or second Bank. Chicago, May 1912 THE STORY OF A BANK THE STORY OF A BANK CHAPTER I THE most conspicuous part of our financial history prior to the Civil War is that relating to the second United States Bank. It is a story of dramatic interest, containing an element of tragedy, and giving an occasional glimpse of farce-comedy. Taken in con- nection with a brief survey of the methods of banking in vogue in the various states and territories at the time, and a few preliminary pages on the first bank, and also with a recollection of the spirit that ruled and moved the people, there is hardly a more instruc- tive chapter in any department of American history nor one the lesson of which is worthy of wider application. The first United States Bank was happy in not making so much history as the second of that name. It is well, however, to remember the main facts about it, as they lead directly to the larger story. It was, like the second, the offspring of necessity an insti- tution organized to assist in bringing order out of the financial chaos that existed under the Confederation, and as an aid to the new -formed Federal Government in conducting its fiscal business. There was so much difficulty in conducting the financial operations of the 21 22 THE STORY OF A BANK Government that the national credit continued to lan- guish. Facilities for collecting and disbursing the pub- lic revenues were an imperative need. Private credit was in as sad a state as that of the nation, punctuality in payments was something hardly expected by any one, and the ablest minds seem to have agreed that some form of a national bank was the only instrumen- tality through which improvement was possible. Hamilton was the most influential if not the first advocate of such a bank. His first ideas were embod- ied in a paper to Robert Morris under date of April 30, 1781, while the War was yet going on. His plan would have made the United States and the States partners in the shares, both being permitted to own the stock, but not for more than one-half the total capital. One of his ideas was to make it a land- speculating bank, at least to give it power to buy and sell land. The author of the project believed there would be rare opportunities for profits in this way, as there would be a large number of Tories who, for obvious reasons, would emigrate after the close of the war, and be under the necessity of selling at any price. Morris did not give this part of the outline his approval, although he and Hamilton and Governeur Morris had many ideas in common as to what a national bank should be. Some three years later, Hamilton opposed a scheme to found a bank of the state of New York, subscribers to the shares of which were to be permitted to pay one-third in cash and two-thirds in mortgages on land in New York and THE STORY OF A BANK 23 New Jersey at not more than two-thirds of its value. A bank was organized which became the Bank of New York, and which began business before securing its charter. It is illustrative of the business condi- tions and the temper of the times, that this bank had difficulty in getting a charter, because of its great unpopularity growing out of its endeavor to enforce some punctuality in dealings with it. Hamilton's celebrated paper to Congress, Decem- ber 13, 1790, gave the outline on which the first Bank of the United States was organized. This paper has been considered by some as the acme of financial wisdom, while by others it has been criticised as a jumble of good and bad ideas, his approval of paper issues two or three times in excess of its specie basis being regarded as the encouragement of a dangerous heresy, although his idea was to limit it to a Federal bank. He distrusted State issues. But on other points he did not err. He pointed out the advantages to the people of a sound bank of deposit, where small sums of many depositers having no immediate use for them would make up a fund that would be available for borrowers who could make profitable use of the money. Among his arguments for a national bank, Hamilton said that it would be able to make loans to the Government in times of financial stringency, and that its operations would assist taxpayers to pay their taxes, besides cultivating punctuality. He declared against two schemes that were already becoming prevalent and which grew 24 THE STORY OF A BANK into pet devices throughout the country, one being paper issues on land security, and the other, banking by a State for profit with the view of providing for public improvements without taxation. In spite of the extreme necessities of the situation, Congress at once began to wrangle over the plan. The mere historic fact is not of much consequence except that it shows the critics and objectors arguing most hotly on questions, not whether the proposed bank would be safe and helpful, not whether it would strengthen public and private credit, not whether it was the best that could be devised. On the contrary, the debate turned on questions springing from prejudice and social and sectional antagonisms. The opposition professed a dread of the growing money power, and held that a great bank was not in harmony with the doctrine of equality, as it would benefit only the rich. Then, too, it would benefit the cities at the expense of the agricultural sections; and in this was the germ of the argument against the constitutionality of the measure, as the real animus lay in the assumption that the Bank would symbolize Federal sovereignty as against that of the States. It may fairly be said that from this time was formulated the issues on which grew the warfare between the conservative class and the masses, between those who have nothing or little and those who have more, the fear and hatred of vested interests. Advocating equality and the noisy denun- THE STORY OF A BANK 25 elation of social rank, bred the most bitter class hatred, which became a political shiboleth, and which has been at the bottom of most of the errors and evils of American financial legislation. It did not seem to occur to those who declared the Bank would benefit only capitalists that almost everybody was seeking to borrow to conduct business, to develop industries, to improve lands, to make for themselves profits and to furnish employment. They professed to see only danger in men being able to improve a condition otherwise almost hopeless by securing credit, provided they secured it from the rich, that is, the only ones who had to lend. Hamilton answered the objections to foreign stock- holders, and that payment of dividends to them would be a tax on the community, with the statement that if foreign money was employed by citizens it must be at a greater profit than the cost in dividends, and therefore it was a gain to the borrower. The debates on the Bank foreshadowed the sec- tional antagonism between the North and the South. The North had cities and commerce. The South had its agricultural interests and partiality for State sovereignty, while the States were not to be per- mitted to subscribe for the shares and the Federal Government was. Madison led the opposition on constitutional grounds, his high card being the fact that the consti- tutional convention had voted down a provision specifically giving Congress the power to incorporate. 26 THE STORY OF A BANK This continued to be the cornerstone of the anti- Bank constitutionalists so long as there was the shadow of a national bank left for them to fight. The Confederation had chartered the Bank of North America, and it could not be controverted that the new Government had powers equal to its predecessor. This was one of the readiest arguments in favor of the Bank. The charter passed the House, February 25, 1791, 39 to 20, to run for twenty years. The Bank was to be located at Philadelphia. It was to issue no notes under $10. There were twenty -five directors; none could be foreigners; seven constituted a quorum. Only stockholders resident in the United States might vote by proxy (this to forestall foreign control). The president to be elected by the directors. Capital $10,000,000 in shares of $400 each, of which $8,000,- 000 was to be by private subscription and $2,000,000 by the United States, no private subscriptions to be over 1000 shares. The bank could loan the Govern- ment not over $100,000 unless by act of Congress, nor any State over $50,000, nor any foreign potentate anything. It established branches at New York, Boston, Baltimore, Washington, Norfolk, Charles- ton, Savannah and New Orleans. It was to report to the Secretary of the Treasury at his call, but not oftener than once a week, and that official might inspect it any time. The Bank's notes were receiva- ble for dues to the Treasury. It could own no land or buildings, except for its own use, or by foreclosure; THE STORY OF A BANK 27 it might sell, but not buy public stock; its interest rate limited to six per cent. It should be noted that, in contrast with the next United States Bank, it paid no bonus to the Government. This was Madison's second objection. This, the first Bank of the United States, was modeled largely on the Bank of England. Hamilton explained the object of the Government taking shares was to aid in forming a specie fund, then a difficult thing to do; but it has been shown that the Government did not put in specie, and claimed that its subscription gave no particular advantage. The shares were greatly oversubscribed in two hours after the subscription opened, and the Bank began business December 12, 1791. The subscriptions were payable in four instalments, one-fourth of each to be in gold and silver,but it was said that no more than the specie part of the first instalment ever was paid in in specie. An active speculation in the shares sprang up, and is said to have contributed to the commerical crisis that occurred the following year. Recovery was rapid, but over-expansion, caused by many local banks starting up and issuing notes almost without restriction, culminated in another panic in 1796, the year of the great financial crisis in Europe, and in which the Bank of England suspended specie payments. The Bank and its branches were not the exclusive Government depositories, and other banks success- fully competed with it in this respect, particularly 28 THE STORY OF A BANK during Jefferson's Administration, when the local banks were mostly of his party. In January, prior to the expiration of the charter, a Treasury report showed one-third of the Government deposits in eleven State banks, only three of which were west of the Alleghanies. During its career the first United States Bank was controlled by Federalists. This is worth bearing in mind. It explains much of the opposition to the renewal of its charter; as the fol- lowing extract from a letter of Jefferson to Gallatin, his Secretary of the Treasury, dated July 12, 1803, shows something of the quality of patriotism that animated the party which overthrew the Federalists, and whose slogan was simplicity and honesty in government. "As to the patronage of the republican (anti-Federalist) bank at Providence, I am decided- ly in favor of making all the banks Republican by sharing the deposits amongst them according to the dispositions they show." Whatever ugly methods for making party adherents this seems to advise, it had the merit at least of being more straight-spoken than any of the recorded utterances of the man who destroyed the Second Bank. There is no evidence that the Bank did not well serve the purpose for which it was created, and its operation appears to have aroused few complaints, even among the faction that objected to its charter. In fact, it was argued that when Jefferson signed the bill passed by Congress to enable it to establish a branch at New Orleans (in the newly acquired Terri- THE STORY OF A BANK 29 tory), he and his followers signified that their scruples about its constitutionality had been overcome. When the time approached for the Bank's charter to expire March 4, 1811, the spirit that had opposed it was aroused anew. At the time the Bank was orga- nized there was no party cleavage political parties had not yet formed. But the elements of popular distrust, that associated capitalism with "British interests"; that hated centralization of Government, or for that matter, much government of any kind; that were jealous of Federal power; that declaimed against aristocracy, and professed to see in the Bank and its adherents a menace to the liberties of the people, all these were now rallied and organized into a party, and that party was dominant. It had taken all the antagonisms and class prejudices and popular notions about equality and liberty and made of them a party creed. Its principles were repugnant to those underlying the Bank, and it was never for a moment a question of whether its usefulness and conduct were such as to merit a renewal of its charter. The Secretary of the Treasury appealed to reason, by showing how important its services to the Govern- ment were in providing a safe deposit for the greatly increased public funds, its prompt transmission of them to and from all points, and the excellent facil- ities it afforded for collecting the revenues. He also declared his distrust of the small banks, which were now numerous. But Gallatin was whistling against the wind. The 30 THE STORY OF A BANK contention over the subject became acrimonious. Popular feeling was largely with the opposition. Its chief organ was the "Aurora " which, in its issue of November 8, 1810, offered twenty "reasons" why the Bank should not be rechartered. The one most often urged, and which formed the pith of most of the others, was that the shares were mainly owned by foreigners. Another was that it was a political engine, designed to subvert popular government; that it was in the service of England; that it was creating a moneyed interest contrary to the prin- ciples of the Declaration of Independence. (Sumner) The fact that foreign shareholders could not vote did not allay this dread, nor was it worth while to point out that the Declaration did not enjoin poverty. Those who have made the most searching investiga- tions have discovered nothing in the history of the Bank to warrant the violent declamation against it. The most definite charge was that the manager of the Charleston branch went out on an election day and threatened to curtail discounts of those voters "hostile to English domination," an obvious fabri- cation. Gallatin was even denounced as a traitor for defending the Bank. Duane and his notorious newspaper followed the idea then dear to the people, that in mere numbers there was virtue better many small banks than one large one; and land-banking was especially popular "to any bank not founded on landed security of the United States we are hostile." The legislature of Virginia instructed their senators THE STORY OF A BANK 31 and requested their representatives to vote against renewal because it was unconstitutional, "an encroach- ment on the sovereignty of the States." Pennsyl- vania through its legislature gave similar instructions. All showed deep social and political animosity, and if there was any better reason we have the word of those who have examined the records closely, that it is not there disclosed. It seems strange that the question of its utility was hardly touched upon. The most absurd fears were alleged. In Congress it was urged that Napoleon might buy up the shares and so control America. Another thought that if a war with England should come the prime minister might cripple our finances by English holdings. Yet no foreign stockholder had a vote in the management. Professor Sumner candidly says, "The destruction of the Bank was a part of the program of the young democrats who wanted a war with England in order to conquer Canada." As a matter of fact, the 5,000 shares of stock owned by the Government were sold between 1796 and 1802, at a considerable premium. The friends of the Bank argued that it was really no longer a national Bank, and therefore not dangerous in any way; and that it would disgrace American credit not to grant a new charter after the Government had unloaded its stock on purchasers abroad; but that did not count in Congress, and the bill to recharter failed. The stock was liquidated at 109 . 01^ for $100 paid in. The skillful management of the Bank is attested by 32 THE STORY OF A BANK the fact that the average loss per annum by bad debts during its twenty years of existence was but 61-100 of 1 per cent, which, considering conditions of busi- ness at that time, may be regarded as a most excellent showing. The dividends averaged something over 8 per cent. Between March and September, 1811, the Bank paid out in liquidation $5,700,000 in public and private deposits and redeemed $3,500,000 of its notes. In the first year of its liquidation it paid out $11,600,000, and its specie stock increased $1,200,000. We have Gallatin's word that the pub- lic deposits were removed within a week before the expiration of the charter without any harmful effect. In 1823 there was $205,000 of its notes still out, and a court order released the commissioners from liability, $5,000 being reserved for mishaps. Was it really anything more than unreasoning prejudice that decreed the termination of the first United States BankP One searches through the voluminous record of the speeches and debates to discover something that appears to justify Congress in its refusal to renew the charter. The result is not satisfying. The arguments that appeal to common sense, that appear in consonance with sound prin- ciples, were made by advocates of the Bank. Those of the opposition are long, flatulent, revolving around the question of constitutionality, and reitera- ting the dangers of fostering a moneyed monopoly owned largely by foreigners. As an example that should have been a valuable lesson at a later date, THE STORY OP A BANK 33 it is worth while to look closely into the motives that actuated both parties. In a speech in support of the Bank, Fisk of New York said : "Put down this bank, and how are your revenues to be collected? Through the medium of the State banks? You do what no prudent man in his indi- vidual concerns would think of doing. You discard a faithful, honest, responsible agent, whose integrity and fidelity you have known for twenty years and you place your estate in the hands and at the disposal of 20 or 30 entire strangers of whose character and responsibility you know nothing, nor have the means of acquiring any knowledge, and over whose conduct you have no control. Should an individual act thus with his property he would be deemed to have lost all regard for it, if not considered a madman. In resorting to the State banks we are offering the amount of our revenue as a bounty for intrigues, cabals, and factions, throughout the country. In almost every State there are a number of banks, and each will endeavor to get the revenue collected in that State to keep and trade with. It must be given to one or divided among them all. If one is selected as the favorite, all the rest become jealous, dissatis- fied, and exert their capital and influence against the favorite bank and its patron, the Government. This will awaken the spirit of faction in every State, yet unknown in this country. If all are to be gratified in their request for the deposits, the Government must open separate accounts with all the different banks 34 THE STORY OF A BANK in the country, to the amount of 50 or 60, and new companies will be formed, and new applicants will request to divide the business and share the profits. Indeed, there will be no end to the scene of specula- tion and intrigue which will soon appear if this course is adopted by the Government." * Mr. Fisk estimated that the cost of collecting and distributing the public funds would then amount to $600,000 a year, this in twenty years, the term for which the renewal act provided, making a charge on the Government of $12,000,000. The Government had a gain of $721,000 besides saving this enormous expense, under the present charter. One would think this was practical talk, which it would take strong reasoning to overcome. Yet on the other hand we find a good deal of this sort, the quotation from a speech by Desha of Kentucky : "This is a question whether we will foster a viper in the bosom of our country that will spread its deadly venom over the land, and finally affect the vitals of our republican institutions; or whether we will, as it is our duty, apply the proper antidote by a refusal to renew the charter, thereby checking the cankering poison, the importation and dissemination of foreign influence that has already brought our Government to the brink of ruin It would further the views of Federalism by increasing their power and assist them in overturning the present *Hist. Doc., p. 154. THE STORY OF A BANK 35 system of Government, on the ruins of which they will count upon raising one more congenial to their purposes." Yet the latter argument, if so it may be called, prevailed as a monument to the statesmanship of the time; and Fisk's prophesies were in the next few years verified to the letter. The House voted Jan- uary 24, 1811, to postpone indefinitely the renewal of the charter. The vote in the Senate, February 20, was a tie, and the Vice-President, George Clinton, cast the deciding vote against it. CHAPTER II IT was not long after the closing of the first Bank until the country began to experience again the distress of unsettled financial condi- tions. Where there had been fair uniformity of the currency, there was now none. Only a few of the local banks maintained their notes at par, and the notes of each bank were at a different rate of discount. It was well known that only the notes of the Bank of the United States had been current everywhere, and now it was said that one could out- ride in twenty-four hours the credit of any local bank, which meant, of course, that beyond its immediate neighborhood its issues were not known, and there- fore distrusted. "The varieties were so great and the badness of all so extreme, that there was no money of account. The Government suffered the greatest loss and embarrassment from the derangement of the currency . ' ' (Sumner) The second War with England coming on had some- thing to do with increasing the trouble, the Govern- ment being unprepared, both from lack of income and facilities foi disbursements, to meet its expenses. Before its close, many of those who had opposed the renewal of the charter of the first Bank were 36 THE STORY OF A BANK 37 favoring the creation of a second National Bank. They found as early as 1813 that their claims that the fiscal affairs of the Government could be carried on just as well by the local banks were erroneous. Yet whenever any definite proposition was advanced in Congress it aroused the old political antagonism and only the most embarrassing necessities made another bank possible. When one considers party antagonisms at this time, and in connection with the public finances, one of the causes of increasing party hostilities is seen in the attitude and actions of the Federalists in New England. That their opposition to the second War was carried to the extent of trying to cripple the Government in its finances, there can be little doubt. Mathew Carey made the charge that the Boston banks entered into a conspiracy "to stop the wheels of Government by draining the banks in the Middle and Southern States of their specie, thus producing an utter disability to fill the loans" needed to conduct the war. Carey made out a pretty strong case, too, by giving specie statistics; not only that, but he made a telling charge that specie to the extent of seven or eight millions was drawn into the British Provinces to pay for Government bills and smuggled goods. It was known that in Boston, men of means not only refrained from subscribing to the Government loans, but the loans were so unpopular that advertisements were placed in Boston papers promising that names of subscribers would not be made public. 38 THE STORY OF A BANK Government loans had sold as low as 80, and at that brought a various assortment of bank-note currency, depreciated from 20 to 30 per cent, and in some instances as much as 60 per cent. Some of the loans were downright failures . The banks suspended specie payments August and September, 1814, and the Government had to take any sort of paper. Besides, the public finances had been poorly managed. Albert Gallatin, an able Secretary of the Treasury, resigned under popular clamor, and in 1811 William Jones became Acting Secretary of the Treasury. He was entirely unequal to the task, and in February, 1814, gave way to George W. Campbell, who was equally inefficient. These men first had an idea that the War could be financed from the ordinary rev- enues with the help of Treasury notes, and were dis- appointed when loans were not subscribed for because they were unauthorized by Congress, and no meas- ures taken for their repayment. When A. J. Dallas succeeded to the Treasury portfolio late in 1814, the Government defaulted on interest on the Nation- al debt, held in New England, failed to redeem Treasury notes on demand, and paid soldiers in bank notes which were of so doubtful value that they were not receivable for taxes. In fact the Treasury at one time was unable to meet payment of small current bills.* Even when the Treasury had money,it was difficult *Catterall, p. 1 et seq. THE STORY OF A BANK 39 for it to meet its disbursements at different places. "One of the chief reasons for winding up the old Bank of the United States was to find out whether it had been useful or not. In 1815 it was almost universally believed that this question had been fully answered by experience and that the experience had been costly," says Sumner; and it cannot be denied that the local banks had failed completely as fiscal agents of the Government. They had refused to make necessary transfers, had failed to provide adequately for public deposits, and finally had refused to pay the balances due by them except in the ordi- nary course of public expenditures at the place in which they were located. The reader is hardly likely to need a reminder that the opposition to a national bank during all the years of controversy over the subject, from the first agitation for the recharter of the first Bank of the United States to the final overthrow of the second, was strengthened and encouraged by the local bank interest. As will appear, banks under State charters and private banks as well, viewed the national institution as an unwarranted restriction on the license which they would otherwise enjoy of doing business practically as they pleased. They resented the regulation which the great Bank imposed on them, their favorite charge being that it was a "monster monopoly," even when five hundred of them were doing business as its competitors, and in reality being benefited by its steadying power. It reduced their excessive 40 THE STORY OF A BANK note issues, and in some places the rate of interest and the public gained thereby. But above all they had the feeling strong in that era that any corporation that enjoyed any special advantage from the Government, no matter what benefits it gave in return, was a public vampire; and this feeling was stronger with respect to the Govern- ment funds than anything else. They assumed a natural right to these deposits, and never allowed the consideration of safety or convenience to the Government to count against the benefits which "the people" would derive from the use of the public revenues. A glance at the record* shows that it required repeated efforts before another bank was chartered. January 4, 1814, a petition signed by 150 business men of New York, praying that an act be passed to incorporate a United States Bank with $30,000,000 capital, was presented in the House by Mr. Leferts. It was referred to the Committee on Ways and Means which reported that Congress had no power to pass such an act. Calhoun suggested that a Bank of the United States within the District of Columbia would be as useful for all practical purposes, he believed, as any other, and the power of Congress to charter such a bank could not be doubted. Taylor of the Ways and Means Committee reported such a bill, providing for a bank with a capital of $30,000,000, but it failed to pass. *Doc. Hist, of the United States Bank THE STORY OF A BANK 41 A Southern member made the next move for a national bank, Felix Grundy of Tennessee submitting a resolution for one April 2, 1814. The Committee failed to report before adjournment; and on the reassembling of Congress in extra session in Septem- ber, Fisk of New York presented another petition from business men of that State, praying for the establishment of a Bank of the United States. It went to the Committee on Ways and Means, which apparently lost sight of it, for it returned a report on the Finances of the Government containing five resolutions, in none of which was there any proposi- tion respecting a Bank. Dallas, now Secretary of the Treasury, recommended the establishment of a national bank, declaring it to be the only remedy for the shocking condition of the Government finances. A bill after the Dallas plan was drawn up, but it was strongly opposed, for providing that the Govern- ment might suspend specie payments whenever it found necessary in fact it was a scheme for a non- specie paying bank. A plan without this defect was recommended by Calhoun, and substituted for the Dallas bill, but there was so much disagreement that it failed. The House blocked the proposal by its wrangling. In December, 1814, theSenate report- ed and passed a bill similar to that recommended by Dallas. It was lost in the House by the casting vote of the speaker, Cheves. Then the House tried again, and passed a bill, 128 to 38, providing for no suspen- sion and no Government partnership. The Senate 42 THE STORY OF A BANK finally acceded to it, and the bill went to the President who returned it with a veto, because, as he said, "such a Bank cannot be relied on during the war to provide a circulating medium or loans or anticipation of revenue." In this he appears to have waived the question of constitutionality. February 6, 1815, another bill was introduced in the Senate, where it passed February 15, and on the 17th came news of the treaty of Ghent which ended the war. The House joined in the general exultation and indefinitely postponed action on the bill, appar- ently assuming that the financial troubles of the nation would now right themselves, which Calhoun at the next session very plainly told them was impossible, and that no remedy could be found except through a national bank.* In his message for 1815 the President urged Con- gress to provide for a uniform currency, either by a National Bank or by Government issues. In response to a request from the Committee on Currency, Dallas gave another plan for a Bank which he recommended, at the same time arguing for its constitutionality. It did not arouse the objections of the previous one. Calhoun reported a bfll for a charter in accordance therewith, January 8, 1816, and gave it his support. It passed the House April 10, 1816, 80 to 71, and afterwards passed the Senate, 22 to 12, the result of the seventh attempt to secure a bank. It was immediately approved by the Presi- *C*tterlI, p. 18 THE STORY OF A BANK 43 dent .This bill wasopposed by the Federalists^ headed by Webster, who objected to the Government holding stock in it, and also to the size of the capital. It is worthy of note that now the political opposi- tion to the Bank came largely from the Federalist element. The reasons were not far to seek. They had opposed the war, had impeded measures necessary for financing it, and a new bank if established would be under the control of their political opponents. It will be interesting, however, to watch the uses these opponents made of their opportunites in managing the new Bank, and to contrast the results of the first few years of its operations with the record of the first Bank. The charter of the second United States Bank was for twenty years, with a capital of $35,000,000, of which $7,000,000 was to be in specie, and $7,000,000 contributed by the United States in 5% stock, subscriptions to be paid in three installments. The remaining $21,000,000 of public subscriptions was payable in Government stock.* It was to pay a bonus to the Government of $1,500,000 in three installments, two, three and four years, was not to issue notes under $5, and not to suspend specie pay- ments under penalty of 12%. There were to be twenty directors chosen by the stockholders, and five (stockholders) appointed by the President of the United States. No person might subscribe for over *Probably few readers fail to note thatfthe'word "bonds" is now generally used with reference to Government securities. 44 THE STORY OF A BANK 3,000 shares unless the total subscription should be less than $28,000,000. The Secretary of the Treas- ury might at any time redeem the public stocks in the capital of the Bank at the rates at which it was provided they should be received in subscriptions, namely: 6% at par, 3% at 65, 7% at 106.51 and accrued interest. He might also redeem the 5% stock given by the Government for its subscription. The directors were to be chosen annually, and no one of them might be a director in any other bank. No stockholder not residing in the United States might vote by proxy. Five of the elected directors and one of the appointed directors were to retire each year, and no director could serve more than three years out of four except the president. The Bank was prohibited from buying public stock, and its interest rate was limited to 6%. It might not loan the United States more than $500,000, or any state more than $50,000, and could make no loans whatever to any foreign prince or state. It was bound to transfer public funds from place to place at the demand of the Secretary of the Treasury without charge, and was to give the Secretary reports of its condition as often as he should call for them, not exceeding once a week. Congress was to charter no other bank during the period of this charter. It was allowed to issue post-notes in denominations of not less than $100, having not more than sixty days to run. The directors were to appoint the officers of the branches, affix their compensation and THE STORY OF A BANK 45 establish by-laws for them. The Bank was not allowed to pay more than 3/ of 1% for deposits of specie. It was required to keep in separate books accounts of the Government, and the total amount of its debts exclusive of cash deposits was limited to the amount of its capital unless Congress should otherwise allow. Of the twenty elected directors, ten were Federalists and ten Republicans, but no such bi-partizanship was observed by the President in appointing the five Government directors, all of whom were named from his own party. William Jones, recently Secretary of the Navy, and the incompetent Secretary of the Treasury pro tempore, was elected president, being a Republican politician backed by Madison and Dallas. An important provision of the charter was that governing the votes of the stockholders. One share and not more than two shares had one vote; for every two shares above two and not above ten, one vote; for every four shares above ten and not exceeding thirty, one vote; for every six shares above thirty and not exceeding sixty, one vote; for every eight shares above sixty and not exceeding one hun- dred one vote; and for every ten shares above one hundred, one vote; but no person, co-partnership or body politic could cast over thirty votes. This ar- rangement, intended to prevent control of the man- agement by a few, left a large loophole, as will pres- ently be seen, for much harmful manipulation. By comparison it will be seen that exclusive of the 46 THE STORY OF A BANK bonus this charter did not depart farfrom that of 'the first Bank organized on Hamilton s plan. We finoTTT hinted that this was one of the objections urged against it snmpthing that hart r>een furbished upjrom theTSWalist. scrap heap. BuUn^any^event^ the administration was well pleased with it. While" Webster had headed the Federalist wing of the oppo- sition to the charter, he introduced a joint resolution April 30, 1816, requiring that after the 20th of the succeeding February all payments to the United States should be made either in specie "or in Treasury notes, or in the notes of the Bank of the United States, or in notes of banks payable and paid on demand in specie;" this being adopted. It was the authority bestowed by this legislation that enabled the Government to bring the necessary pressure to bear on the local banks to bring about a resumption of specie payments, which those banks were resisting. Subscriptions to the stock of the Bank were received at various points July 1, 1816. When the subscrip- tions were opened it was found that the aggregate fell short of the $28,000,000 allotted to the public by the sum of $3,038,300. Stephen Girard immediately came forward and took the whole amount. The bank organized November 1, 1816; and February 20, 1817, was the date fixed upon by the Secretary of the Treasury for the resumption of specie payments which had long been suspended. At this time irre- deemable paper currency was in use nearly all over Europe, except in France, and its depreciation made THE STORY OF A BANK 47 it easier now to draw specie to America. The Secretary of the Treasury was able in 1817, to redeem from increased revenues $13,000,000 of the public debt. But at the same time the Bank became credi- tor of the local banks for the large amount of their notes with which the Secretary made payments. This is how the Bank acquired that power to regulate the currency by exerting pressure as it saw fit on the State banks, and for exercising which in a needless degree it could not long escape censure. It could force them toward a resumption of specie payments, which after all, was part of the work it had been incorporated to do. But it was nothing new for the local banks to cry oppression they always did so whenever their reckless and even lawless methods were interfered with. As has been indicated, it was they, more than any others, who furnished dema- gogues then and years later with the pretext for de- nouncing the Bank as an oppressor of the people. Secretary Dallas had proposed resumption of specie payments as early as March, 1816, but the banks resisted. The National Bank began business the following month, and in July, Dallas proposed that specie payments begin in October, first with all notes smaller than $5. The banks again refused, and wanted till July 1, 1817, which caused a good deal of apprehension to the administration. No doubt the local banks were actuated largely by their jealousy of their new competitor. When W. H. Crawford became Secretary of the 48 THE STORY OF A BANK Treasury, October 22, 1816, there were 89 State banks of deposit with $11,000,000 in them of United States funds. The transfers from them, previously noted, took from the Secretary the power, after a nominal resumption of specie payments, to reject the notes of those banks which pretended to pay in specie. Qawford urged the local banks to join with the Bank of the United States in efforts toward resumption, offering to dra"w from them only^ gradur_ ally and not in favor of the new Bank. Thqfmnpepof theflocal bankjp was ^ggalu 51iuw5^in ^geir r n51tnrt^ ^rPfusaTj^^ateftd, t.heyoallftd a. Bankers' Convention in August, 1816, at Philadelphia, which was attended by representatives of New York, Philadelphia and Baltimore banks, who coolly rebuked the Secretary for his entirely reasonable request, and voted a non- approval of his policy of resumption. One is led to wonder what would have happened to tneBank of the United Slates IrTJackson's time, or any previous time, if it had shown any such militant opposition to a fair and reasonable Government policy. But there wasCpo talk of* these banks trying Tft "fiiih'veFt- its rliffip^li;]^ flip Bank was harassed from ttift start by tW */