To Benjamin Bourne, William Channing,
John S. Dexter, and Jeremiah Olney
October 22. 1792
A report has reached this place, through a channel so respectable as to claim notice, that the affairs of the Bank of Providence are in considerable disorder. On this occasion I take the liberty to commit to your care the interests of the United States and to request your aid.
It is probably known to all of you that the Bank of Providence has been made a place of deposit for all the public monies arising within the State of Rhode Island. At the date of the last return, there was a sum of about 25000 Dollars in Bank on account of the United States; for 10000 Dollars of which the Treasurer has been Directed to Draw. But further accessions have probably accrued since, by payments from the respective officers.
Aware that a sudden order to withold the public deposits and withdraw the public money might contribute to render any partial derangement, which may exist, a total one, to the great prejudice of all concerned, I forbear to take such a step.
I prefer to rest a discretionary power in persons who will combine a regard to the public interest with a disposition friendly to the Bank and to the Trade, to act as upon examination circumstances may appear to render prudent and adviseable; in which view, I ask your particular and immediate attention to the matter.
I request you therefore to inquire carefully into the facts represented; and for this purpose, to use this letter as a commission from me to the Directors, and either to continue things in their present state or to withdraw the public monies if practicable and stop further deposits; for which last purpose, your instructions are hereby made obligatory upon the Supervisor of the Revenue & the Collectors of the respective districts.
Perhaps affairs may be so circumstanced as to render it most adviseable to observe a medium between the two modes of proceeding. Or perhaps it may be found expedient and practicable to obtain security from persons of competent responsibility in the direction of the Bank, to indemnify the Government for a limited period, on the condition of a continuance of its countenance and support for such period.
These you will consider as merely hints. Your own judgments on the state of things before you must guide.
I wish nothing to be precipitated, and yet a due caution to be observed.1
With much esteem & consideration I have the honor to be Gentlemen Your Obedient Servant
The Honorable Mr. Bourne Representative
The Attorney of the District
The Supervisor of the Revenue
The Collector of Providence
ALS, Rhode Island Historical Society, Providence; copy, RG 56, Letters to the Collector at Providence, National Archives; copy, RG 56, Letters to Collectors at Small Ports, “Set G,” National Archives.
1. Moses Brown’s biographer describes this incident as follows:
“The bank was scarcely a year old when a crisis developed in its affairs that demonstrated the need for a watchdog. In October 1792 the Secretary of the Treasury heard a rumor, whether maliciously circulated or not, that the public funds in the Providence Bank were not secure. Hamilton immediately ordered the customs officers to investigate and to remove the customs receipts, if the rumor were true. The federal officers … came to Providence and requested permission from John Brown to examine the bank’s books. Since they would not permit him to read Hamilton’s order, however, he indignantly refused, and wrote to Moses for advice. The request, he added, ‘of course gave me a little alarm.’
“John was more than a ‘little’ alarmed. His refusal to give the customs officers any satisfaction and the tone of his letter to Moses suggests that the bank’s books could not stand examination. If that had been the case the examiners would probably have recommended that the customs receipts be withdrawn, thereby creating public distrust of the bank’s soundness. The consequences of such action were not pleasant to contemplate. Fortunately, after prolonged argument, Hamilton’s examiners told John that they would be content to deal with Moses, in whose impartiality and honesty they apparently had the utmost confidence—he was the only member of the Board to whom they would show Hamilton’s letter ordering the examination. What passed between Moses and the customs officers is not known but he apparently convinced them that the bank was sound, for later Hamilton wrote to Providence saying that he had been misinformed about the bank’s condition.” (Mack Thompson, Moses Brown, Reluctant Reformer [Chapel Hill, 1962], 253–54.)
For H’s letter stating that he had been misinformed about the bank’s condition, see H to Bourne, Channing, Dexter, and Olney, October 25, 1792.