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prize and industry. The people of California are peculiarly a laboring people—they are miners, sir, who live by the pick and shovel, and by the sweat of their brow, earn their bread.” But, we have another large class of citizens, I mean those engaged in commercial pursuits, who are characterized by the greatest enterpize, and who also require this constitutional restriction to prevent what I am so much opposed to under sanction of law, the raising up of any priviledged class, or set of men, that may consolidate capital, and thereby monopolize individual capital, which I fear may be done under this section of the report of the Committee. Our people, sir, will be most happy and most content to abide by the laws of trade, and quire false credit or artificial regulation. In short, sir, I believe the broad doctrine of free trade and free banking as most applicable to their condition. I am an advocate of this great principle, and it is my highest ambition to see the government we are now establishing for this country put in motion by this enlightened lever, which will raise us to the highest pinnacle of power.
I shall move the amendment necessary to carry out these views at the proper time. Of the two propositions before the House, I greatly prefer the substitute, or minority report, to the report of the majority.
Mr. Hastings. I find that the proposition to amend is so complicated, and pre. sented in such manner, as to confuse and distract the whole matter. It appears at one time to amend one section, and at another all the sections at once. The gentleman introduces his proposition in this form to give a wide scope to the discussion. That is one of the objections I have to it--the scope is too wide. Let us narrow it down. I am not disposed to encourage the introduction of any amendment which will bring up at once the entire report of the committee on the subject. If I could see the whole thing in a few words, I would be willing to vote upon it
, but we find in many words in the amendment the same thing set forth precisely that we find in one section of the report of the committee. In the 34th article we find that the committee have distinctly and positively prohibited banking, and in three short lines, which would not exceed a line and a half in print, These are the words : " The Legislature shall have no power to pass any act granting any charter for banking purposes." We find in the proposed amendment six, and perhaps more lines, all amounting to the same thing. It appears that there is no rule of the House on this subject, but when this portion of the report of the committee was brought before the House, it was moved to be received and taken up article by article. This is not taking it up article by article. It is taking up the entire report, so far as relates to corporations, altogether.
· Mr. Gwin said that if his motion to insert a substitute for the 31st section pre. vailed, the other sections, as they came up, would be stricken out as a matter of course—the whole ground being covered by his substitute.
Mr. LIPPETT quoted the usages of parliamentary bodies, in regard to amend.. ments, and explained their application to the question under consideration.
Mr. JONES. I have no desire to exhaust the patience of the House by saying anything more on this question ; but I conceive it to be so important a subject that I would be willing, and I wish, that the gentlemen who favor the majority report should have every opportunity to discuss it fully and thoroughly. I cannot well conceive how the question can come up on striking out this single section (the 31st) without bringing up those very points embodied in the succeeding sec. tions. The clause upon which this webate has principally turned is in the 31st section. I conceive that it gives to the Legislature the power of passing all spe. cial acts, which in their judgment may seem proper. Gentlemen who sustain the majority report say there is no difference between the two. I can see a very ma. terial difference. In the 31st section they say the Legislature shall have power to create, by special act, corporations for municipal purposes, when, in their judg. ment, the object cannot be attained under general law. In the 32d section they say: " Dues from corporations shall be secured by such individual liability of the corporators and other means as may be prescribed by law.” In the 33d: “The term corporations, as used in this article, shall be construed to include all associations and joint-stock companies having any of the powers or privileges of corpo. rations, not possessed by individuals or partnerships ; and all corporations shall have the right to sue and shall be subject to be sued, in all courts, in like cases
as natural persons.” In the 34th section : “ The Legislature shall have no power to pass any act granting any charter for banking purposes; but associations may be forined under general laws for the deposit of gold and silver.” Now, compare the two and see the difference. The minority report says:
Sec. 1. No corporate body shall be created, renewed, or extended, with the privilege of maka ing, issuing, or putting in circulation, any bill, check, ticket, certificate, promissory note, or other paper, or the paper of any bank, to circulate as money. The Legislature of this State shall prohibit by law, any person or persons, association, company, or corporation, from exercising the privileges of banking, or creating paper to circulate as money.
2. Corporations shall not be created in this State by special laws, except for political or municipal purposes, but the Legislature shall provide, by general laws, for the organization of all other corporations, except corporations with banking privileges, the creation of which is prohibited. The stockholders of every corporation or joint stock association, shall be personally and jointly responsible for all its debts and liabilities of every kind. The State shall not, directly or indirectly, become a stockolder in any corporation. All general laws and special acts passed pursuant to this section, may be altered from time to time or repealed; and all corporations shall have the right to sue and shall be subject to be sued in all courts in like cases as natural persons.
Now, associations mean corporations. We say that no such corporations shall be formed. There is not a single article where the difference is not direct and positive. I dislike to be obliged to get up here and discuss these articles one by one, to show that they are distinct and separate. I wish the chairman of the committee would explain to this House the reasons why these articles should be adopted, and show where the restrictions are, show us why we should allow the Legislature to pass these special acts. I am sorry the gentleman did not think proper to take advantage of the opportunity which was afforded when these arti. cles came up, to say something definite in their defence, in order that we who
oppose the indecisive and dangerous words, and still more dangerous principles, should not have been compelled to open this debate, and bring forward our objections in the first place. Now, I must bring forward here, because it cannot be done in any other place, one or two of these objections to the provision allowing these corporate associations. I ask the gentleman whether the section providing for the incorporation of associations, for the deposit of gold and silver, would not permit these associations to issue paper eertificates of deposit
. I say if they can enter into any speculation, and take this money deposited in their hands and use it for the purpose of trade, and issue certificates of deposit, probably at par, it is, to all intents and purposes, a bank, and the worst sort of bank. Where is their stock? What are the individual speculators liable for? You bind them by a bond? What is a bond? Cannot any lawyer pick a flaw in a bond ? Give me private and individual responsibility. The whole system is different from the mi. nority report. I am prepared to go to any extent against banks in this country. The inbabitants are against them ; public opinion everywhere is against them. We have a metallic currency here, which is worth all the banks in the world.
Mr. Gwin. It seems to be the determination of the gentlemen who compose the Select Committee, and by whom the majority report was made, not to discuss this question. It is proper, sir, that I should give the reasons that actuated me in making the minority report, and show why it should be adopted by this House. I believed that public sentiment was such as to render it impracticable for any provision to be introduced in this Constitution, which would countenance, in the remotest degree, the banking system.
Mr. Norton. I rise to a question of order. I insist upon it that the Commit. tee have introduced no article in favor of banking, or giving the power to the Le. gislature to create banks in any form.
Mr. Gwin. If I do not prove it, then my argument is worth nothing. I do not intend to consume the time of this House, by going into a discussion of the bank question. That question, sir, has been settled. Public opinion throughout the United States is against the banking system. AU I want to show is that there are dangerous provisions in these articles granting privileges to corporations of this character.
It is useless, Mr. Chairman, to fight shy any longer on this question, which has no other effect than to waste the time of the House. The whole question of corporations and banking, is open
for discussion by my motion. It is to strike out and insert what? An article in which is inserted all that will, if it is adopted, appear in the Constitution on the subject of corporations and banking.
I was somewhat surprised, Mr. Chairman, that the Chairman of the Committee did not put this construction on my motion, and proceed to defend the position of the majority of the Committee, as embodied in the report on the subject of corporations ; this is the usual course in all parliamentary bodies with which I am acquainted. The Chairman of a Committee, making a majority report upon an important subject, opens the debate, giving the reasons why the Committee came to the conclusion that induced them to present the subject in the shape it appeared before the House. The minority then have the privilege of reply, and presenting their reasons for differing with the majority. I had a right to expect that the Chairman would pursue this course, but I waive it, with a single remark in reply to his assertion, that the difference between the majority and minority reports are merely verbal. There never was a greater mistake; they are as widely separated as if the Pacific lay between, as I will proceed to show.
It is with most unaffected reluctance, Mr. Chairman, that I engage in the discussion of this question at all. I did hope that it had been completely settled by the advancing spirit of the age, and that no member of this body would bring forward any proposition which could in any form introduce the banking system into this country, and insist upon its insertion in the Constitution which we are about to adopt. But I am mistaken, and am called on most reluctantly to buckle on my armor, worn in many a hard-fought battle on this subject, and which I hoped was laid aside forever, and battle for the rights of the people, against monopoly and the legalized association of wealth to appropriate the labor of the many for the benefit of the few.
I will waste but little time on those sections of the report granting the power to create corporations, and leave the discussion that will no doubt take place on them, to the members of the legal profession, who will participate in this debate, and point out their defects. Yet I cannot permit the occasion to pass without entering my protest against the discretion given to the Legislature on this subject. The Legislature is to be the sole judge of the necessity of passing special acts for incorporations. Constitutional restrictions are not worth a straw, if they can be set aside in this way, I hope and believe that portion of the section will be stricken out, and what I propose in the minority report may be adopted in its stead. Nor am I satisfied with the section making stockholders liable only for the amount of stock they may hold in the corporation. I have so altered my substitute as to make them liable for the whole of its debts, in proportion to the amount of stock held by each party. If one man hold a hundred shares, he shall be liable for ten times the amount of the debts of the concern as the man who holds but ten shares; but there shall be a direct liability for all the debts. Without this there is no safeguard for the people against fraud. Precautions should also be taken against the fraudulent transfer of stock to irresponsible persons.
A man familiar with the affairs of a corporation, aware of its approaching bankruptcy to which he may have contributed and been enriched by it, may go scot free if no guards are placed upon transfers.
But I will not go into the detail of the New York system of corporations proposed to be incorporated in our Constitution, but must declare my opposition to it as unsuited to this country. There is no similarity in the positions and conditions of New York and California. In the former, corporations are the institutions of ages, and have become an indivisible portion of its system of government. What has been incorporated in the Constitution of that State is not to lay the basis of a system of corporations suited to a new country like ours, but to restrict and restrain what has existed for more than half a century. Do you suppose we should find any thing of the kind in the New York Constitution, if her condition had been as ours is. Never, sir! The object of the framers of that Constitution was to correct and restrain a system that could not be eradicated with safety to the State.
In what respect does our position assimilate to that of New York, that we should so closely adhere to her fundamental law in forming our Constitution. In none whatever. We are a new people, creating from chaos a government; left free as air to select what is good, from all republi. can forms of government. Our country is like a blank sheet of paper, upon which we are required to write a system of fundamental laws. Let the rights of the people be guarded in every line we write, or they will apply the sponge to our work.
I now come to what I conceive to be the banking system, to be established by these sections of the Committee's report. Sir, the Committee speaks out in the boldest language when it places some restrictions upon banking; it is then the bank shall not do this, and the bank shall not do that; but when they wish to steal from the people the nucleus around which a monied oligarchy may be built up in the country, the subject is approached - let me say with all due respect to the Committee, whose motives I in no wise impugn-in real petit larceny style; aye, with the cringing sycophancy of the beggar asking alms while filching your purse from your pocket.
The word bank never appears once, no, not even corporation; that might alarm the people. Association is the magic word that is to remove every objection, and do away with every scruple. Sir, it is a shallow device, and will deceive no one. It reminds me of the celebrated exchequer brought before Congress after John Tyler had vetoed the United States Bank Bill. Mr. Sargeant, the Chairman of the Committee of Ways and Means, of the House of Representatives, in introducing the bill, announced with great form and ceremony that the word bunk could not be found in it; that it was no bank, but simply an exchequer, for the convenience of the Government in managing its finances, and where the people might safely make their deposits; in other words, an association for the deposit of gold and silver. Sir, if that exchequer had become a law, we would now have in full operation, a mammoth National Bank, and if the power there granted is incorpo. rated in our Constitution, in its present unrestricted state, we may soon look for a mammoth State exchequer, more dangerous to the liberties of the people than any foreign enemy that can approach our shores.
Bank notes are prohibited with great parade, but not a word is said against bank certificates of deposit, with which the country may become flooded, and will be, if this section is not stricken out.
Sir, no one familiar with the banking system as it existed in the United States from 1836 to 1840, can have forgotten how the country was flooded with post notes, corporation and individual tickets, and in many instances, certificates of deposit, precisely similar to those which these associations are authorized to issue.
It would be a curious spectacle to exhibit before this Convention the various kinds of paper in circulation, as money, during that memorable period. I have seen collected, as a matter of curi. osity and amusement, upwards of one hundred, and if I had them here, they would be the only argument required to nip this whole system in its bud. The devices to gull and deceive the people were so many and varied that none could be so blind as not to see that the slightest authority or countenance given in this Constitution, to associations which can assume banking privileges of any kind, will, in times of high speculative excitement, lead to enormous abuses, alike destructive to the happiness and prosperity of the country,
The Committee have not even attempted to restrict the power to issue certificates of deposit, thus in effect expressly sanctioning it. In this cunningly devised bill, this was no omission or oversight, for the whole scheme bears evidence on its face of having been got up carefully, emasculating the section in the New York Constitution, by striking out all that might alarm the members of this body
It may be said that no danger can result from the passage of this section; that the restrictions upon banking are so great that it will be impossible to abuse the power granted. Believe it not. How do they expect to make money to put the expensive machinery into operation? How is the costly lot in the centre of the city—the fine fire proof houses-fire-proof vaults—fire proof safes, to be paid for? The President, Cashier, Teller, Book-keepers, Messengers, &c. &c., to be support. ed simply upon the per centage charged upon the gold and silver deposit, for you will be gravely told that these associations will charge a per centage upon deposits, and thus make money to sustain themselves. Nothing can be more fallacious. Banks, bankers, and merchants, the world over, never charge for deposits; in fact, they seek them, and in many instances, if the amount is large, pay an interest upon them. My friend and colleague near me, Mr. Hobson, has at times on deposit in his commercial establishment in San Francisco, upwards of one hundred thousand dollars in gold dust, and the gentleman from Monterey, Mr. Dent, says he has had from thirty to forty thousand dollars on deposit, in his store in the mines, and all without expense to the owners. Some difficulties have doubtless heretofore existed, but they are lessening daily, and very soon deposits of gold dust and coin will be eagerly desired by safe and responsible persons.
But the great depository for California must be the Mint, which will no doubt, next winter, be located at some commercial point, probably with branches in the mines. It is the true policy of the United States to coin every dollar of gold taken from the mines, and one of the first acts of Congress in legislating for this country, will be the establishment of a Mint. It is solly to associations for the deposit of gold and silver in California; the chief, if not the only product of the country is gold in its uncoined state; it is like asking for associations to receive wheat, corn, and hogs in Ohio. The thousands and tens of thousands engaged in gold digging, want no such associations. It will benefit those only who live by their wits, and not the hard-handed gold digger, who by his labor, enriches the country. Let us guard against infringing on the rights of the people, by legalizing the association of capital to war npon labor. This is the only country on the globe where labor has the complete control of capital. Let it remain so if we would be free, independent, and prosperous. If there are to be banks in the country, let us have private bankers, who, if they abuse the confidence of the people, can be punished by the law, indicted, and put in the penitentiary. The safest banking we ever had in the United States was that of Stephen Girard. Who ever lost a dollar by depositing with him? while thousands were beggard by the bankruptcy of the United States Bank. Look at the great bankers of Europe, the Rothschild's, the Baring's, the Brown's, and others who control the finances of the world—do they ask for the privilege of corporate powers to receive on deposit gold and silver? But why say more? We certainly cannot retrogade on this subject. States may continue to tolerate the system of banking from necessity; it is so mixed with their systems of government, they cannot eradicate it without danger to the body politic; but no new country should, for a moment, entertain the proposition of incorporating it in her fundamental lawit would be folly and madness to do so. The plea of necessity will not avail. Look at Havana, with a commerce of millions annually, that never has had a bank or paper money. Look at New Orleans, the largest exporting city in the Union, where banks are prohibited in the State Constitution, and as the charters of those now in existence expire, the system will be eradi. cated for ever. Look at the exchanges of the world carried on by private individuals, and can any man have the hardihood to say we want such associations in this country as this section of the bill tolerates? I hope not. Sir, I have seen our countrymen as wild on the subject of banking, as they now are about our gold mines. I have seen the people going by thousands to get loans from the banks, as they are now rushing to our banks of gold. Misery, ruin, and destruction to the citizens, and prostration of the public credit follows the banking era of 1834, '35, '36, and '37. The private wealth and public prosperity which it was predicted would result from the system, like dead sea fruit, burned to ashes on the lips, while our banks of gold, if left unrestricted by improper legislation, will yield a rich reward to the laborer for his toil, and ensure to the country a permanent prosperity.
Mr. Sherwood. I am in favor of the report of the Select Committee, althougb the articles reported by that Committee are rather longer than the amendment offered by the gentleman from San Francisco (Mr. Gwin.) I consider them more explicit in regard to what is meant by corporations, and the mode of forming them, their powers, and the restrictions thrown around them. In regard to banks, I perfectly agree with him that this country does not need the banking system. I have not the horror, however, of a well regulated banking system, as it exists in the State of New York, which the gentleman seems to entertain towards banks of every description. The gentleman was raised in a part of the country where, un. fortunately, sufficient guards were not thrown around corporations of this character, and private individuals, by hundreds and thousands, have suffered in conse. quence. In the State of New York the later laws organizing banks have been general laws. Now no bank is formed there unless its whole capital is paid in, in the stocks of the State, or of the United States, dollar for dollar; and these stocks, which are as good as the faith of the State of New York or the people of the United States can make them, are deposited with the Comptroller of the State. Dollar for dollar in bank bills is issued to the corporator. Such is the foundation of the present banking system in New York. Nearly all of the charters of the old safety fund banks have expired. The existing system has been found to work well in that State ; but, as I have said before, there is no necessity for a banking system in this country. I trust there never will be ; and with that view of the subject, I would of course go against any provision in the Constitution which, by possibility, could be construed as a grant of power to the Legislature to introduce any such system. The gentleman says that the Constitution of New York may do very well for New York, but that the system of banking there is an entirely different thing from what we need here. That is true ; perfectly agree with him; but I think he is unfair in using that argument on the assumption that the Committee reported in favor of banks. We have examined different Constitutions in committee, and from the latest, or about the latest Constitution of one of the oldest States of the Union a State which has had sad experience on the subject of banking-we have selected a clause in regard to corporations. The Conven. tion that assembled three years since in the State of New York, was got together by the voice of the people, on the subject of corporations and the dangers attend. ing them. The result was, that the most stringent restrictions were thrown around the Legislature on this subject, The powers of the Legislature were strictly confined to the passage of general laws of incorportion, except for municipal purposes, and then only when the object could not be attained under general law. The Legislature, under this limitation, has faithfully complied with the require. ments of the Constitution. A precise definition of what is meant by corporation is given. It is every association with powers granted by the Legislature not possessed by individuals or common partnerships. We, in the same manner, have introduced a provision defining what shall be considered corporations, and how they shall be created, saying that the Legislature shall have no power to create banks. We then go on, and, in another provision, say that the Legislature shall create no institution which shall issue bank bills of any description. Can the gentleman then find any room for the man of straw which he has pictured to the House? In this country, it is true, we have what is coin all over the world-gold and silver. This is and always will be our circulating medium. But the gentleman knows-merchants know—every man knows-that wherever there is a large