Friday, June 7, 2013

Jun 7 (2013) Banker embraces past/future in Philly; James Madison:"I would ask whether it be consistent with the views of the Bank to give me a credit"

A Note to Banker's Notes Readers: 

June 6-13 I will be in Philadelphia, PA at the ABA's Stonier Graduate School in Banking. While I'm travelling Banker's Notes may look a little different.  Look forward to photos, poetry from bankers of yore, and other odds and ends. Comments? Questions? Suggestions? Email me!

On this day in 2013, I ran to the steps on the Second Bank of the United States.

For most of the Second Bank's twenty year tenure (seeprevious post for more on the history of the Second Bank), Nicholas Biddle served as its President. Mr. Biddle was a prominent Philadelphia lawyer, and child prodigy. He entered the University of Pennsylvania at age 10.

Notwithstanding his prominence, Mr. Biddle still had to do things that a bank president needs to do, such as denying a loan request when the borrower cannot meet credit terms.  Even when that request comes from the former President of of the United States.

The below letter was written in April 1825 by James Madison to Nicholas Biddle, and comes courtesy of the Library of Congress.

"Dear Sir, 

Such has been of late years the unfavorableness of the seasons for the staple productions in this quarter, and of the markets also for the main one, and such the disappointment in collecting debts on which I counted, that I find it necessary to resort either to a moderate loan or to a sale of property, which at the present juncture would be made to great disadvantage. The first alternative is of course preferable, the rather as the last, if not finally avoided, is more likely to be alleviated than made worse by delay. 

On the ground thus explained, I would ask the favor of you to say whether it be consistent with the views of the Bank of the U. S. to give me a credit for a sum not exceeding six thousand dollars, at the lowest allowable rate of interest; and if so, with what indulgence as to the period or periods for repaying the principal. It is proper to add that for making the Bank secure, real estate of ample amount and without flaw or incumbrance of any sort will be pledged in whatever form may be prescribed.

Should this application be successful may I ask as a further favor that your answer may be accompanied or followed by the documents to be executed on my part, prepared according to the requites of the Bank. I may find it convenient to draw for a part of the fund as soon as the arrangements will permit. 

[Note: Biddle replied on April 26th that the bank had adopted a rule forbidding the advance of money on real estate for indeterminate periods.]"

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Flannery O'Connor

You shall know the truth and the truth shall make you odd.