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SPEECH
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Ma. CALHOUN, OP SOUTH CAROLINA.
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SCIM'UEASlfttY BILL)
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fit TBS UUIAT* OF TU& CKITSD aTATtth
FBBMIASV 16, ltd*
WASHINGTON
II
SPEECH
OF
MR. CALHOUN, OF SOUTH CAROLINA.
I regard this measure, which has been so much denounced, as very little
more than an attempt to carry out the provisions of the joint resolution of
1816, and the deposite act of 1836. The former provides that no notes
but those of specie paying banks shall be received in the dues of the Go
vernment, and the latter that such banks only shall be the depositories of
the public revenues and fiscal agents of the Government; but it omitted to
make provisions for the contingency of a general suspension of specie pay
ments, such as is the present. It followed, accordingly, on the suspension in
May last, which totally separated the Government and the banks, that
the revenues were thrown in the hands of the Executive, where i$ hafl
since remained under its exclusive control, without any legal pro vision f«r
its safe-keeping. The object of this bill is to supply this omission; *•
take the public money out of the hands of the Executive and place it under
the custody of the laws, ami to prevent the renewal of a connexion which
has proved so unfortunate to both the Government and the banks. B u t it
is this measure, originating in an exigency caused by our own actSj and
that seeks to make the most of a change effected by operation of law,
instead of attempting to innovate, or to make another experiment, as hat
been erroneously represented, which has been denounced under the nam*
of the Sub-treasury with such unexampled bitterness.
In lieu of this bill, an amendment has been offered, as a subf-titute, bj
the Senator from Virginia, furthest from the chair, [Mr. RIVET-,] which hi
informs us is the first choice of himself and those who agree with hint, ani
the second choice of those with whom he is allied on this question.
If]
may judge from appearances, which can hardly deceive, he might have said
their first choice, under existing circumstances; and have added, that dea
pairing of a National Bank, the object of their preference, they have adoptoi
bis substitute, as the only practical alternative at present. We have, then
the question thus narrowed down to this bill and the proposed substitute
It is agreed on all sides, that one or the other must br rrlected, and t h i
to adopt or reject the one, is to reject or adopt the otl;< r. The single quea
tion then is, whieh shall we choose ? A deeply momentous question, w h t *
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' we are now called on to decide in behalf of the States ot this Union, and
■on our decision their future destiny must, in a great degree, depend, ss>
long as their Union endures.
In e m p a l i n g the relative merit; of the two measures, preparatory to a
decision, I shall touch very briefly on*th > principles and details of the biH.
The former is well understood by th • Senate and the country at large, and
the latter has been so ably an J lucidly explained by the Chairman of th*
Committee in his opening speech, a> ti supercede the necessity of further
remarks on them at this stage of the discussion. I propose, then, to limit
' myself to .» mere general summary, accompanied by a few brief observations.
The object of the bilf, as 1 have a'ready stated, is to take the public
funds out of the hands of the Cxecutive, where they have been thrown by
operation of our acts, and to place the.n unJer the custody of law; and to
provide for a gradual and slow, but a perpetual separation between the
Government and the banks. It proposes to extend the process of separating
$o the year 1845, receiving during the first year of the series the notes of
such banks as may pay specie, and re.lucing thereafter the amount receiva
ble in nott-s one-sixth annually, till the separation shall be finally consoranuited at the period mentioned.
The provisions of the bill are th? most simple and effectual that an able ■
committee could devise. Four principal receivers, a few clerks, and a suffi- '
cient number of agents to examine the state of the public funds, in order to
see that all is right, at an annual charge, not exceeding forty of fifty thou
sand dollars at most, constitute the additional officers and expenditures
required, to perform all the functions heretofore discharged by the banks,
as depositories of the public money and fiscal agents of the Treasury. Th'*
simple apparatus will place ]he public Treasury on an independent footing,
and give to the Government, at all times, a certain command of its funaai
to meet its engagements, and preserve its honor and faith inviolate. If it
be desirable to separate from the banks, the Government must have some
independent agency of its own to keep and disburse the public revenue;
and if it must have such an agency, none, in my opinion, can be devised
more simple, more economical, more effectual and safe than that provided
by this bill. It is the necessary result of the separation, and to reject it,
without proposing a better, (if, indeed, a better can be,) is to reject the sepa
ration itself.
I turn now to the substitute. Its object is directly the reverse of that «f
the bill. It proposes to revive the league of State banks, and to renew our
connexion with them, and which all ac -'nowledge has contributed so much
to cdrrupt the community, and to create a spirit for speculation, heretofore
,unexampled in our history.
The Senator in offering it, whether wisely or not, has at least acted con
sistently. He was its advocate at first in 1334, when the alternative w w
between it and the recharter of the late Bank of the United States. He the*
defended it zealously and manfully, against the fierce assaults of his present
allies, as he now defends it, when those, who then sustained him, have aban
doned the measure.
Whether wisely or not, there is something heroic hi
.bis adherence, and I commend him for it; but, I fear I cannst sar as ttodb
for his wisdom and discretion. He acknowledged, wiih all Others, the disas
ters that have followed the first experiment, but attributes the failure to in
auspicious circumstances, and insists that the measure has not had a fair
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trial. 1 grant that a second experiment may succeed, after the first hn»
feiled; but the SenatOT roust concede, in return, that every failure i.uist
necessarily weaken confidence, both in the experiment and the experimenter.
!rie cannot be more confident in making this second trial, than he was in the
fast; and, if I doubted the success then, and preferred the Sub-treasury to his
league of banks, he must excuse me. for still adhering to my opinion, and
<toubting the success of his second trial. Nor ought he to be surprised, that
those who joined him in the first should be rather i Iiy of trying the expert'
ment again, after having been blown into the air, ^nil burnt and scalded by
the explosion. But, if the Senator has been unfortunate in failing to secure
the co-operation of those who aide'd him in th»- first trial, he has been com
pensated by securing the support of those who were then opposed to him.
They are now his zealous supporters. In contrasting their course then and
now, I intend nothing personal. I make no charge of inconsistency, nor do
I intend to imply it. My object is truth, and not to wound the feelings of
any one, or any party. 1 know that to make out a charge of inconsisten
cy, not only the question, but all the material circumstances must be the
same. A change in either, may make a change of vote necessary ; and,
with a material variation in circumstances, we are often compelled to vary
our course, in order to preserve our principles. In this case, I conceive,
that circumstances as far as the present allies of the Senator are concern
ed, have materially changed. Then the option was between a recharter ol
tire late bank, and a league of State banks; but now the former is out of
the question, and the option is between such a league and a total separation
xrem.the banks. This being the alternative, they may well take that, which
•hey rejected in 1834, without! subjecting themselves to the charge of incon
sistency, or justly exposing themselves to the imputation of change of prin
ciple, or opinio*. I acquit them, then, of all such charges. They doubt
less think now, as they formerly did, of the measure; which they then de
nounced and rejected, but which a change of circumstances now compel them
ta support. But in thus acquitting them of the charge of inconsisten
cy^ they must excuse me, if I should avail myself of the fact, that their
eptaion remains unchanged, as an argument in favor of the bill—against
the substitute. > The choice is between them. They, are in the opposite
scales. To take from the one is, in effect, to add to the other; and any ob
jection against the one, is an argument equally strong in favor of the other. I
ibesi do avail myself of their many powerful objections in '34 against the mea
sure, which this substitute proposes now to revive. I call to my aid, and
press into my service every denunciation they then uttered, and every argu
ment they then so successfully urged against it. They, no, we (for I was then,
as,now, irreconcileably opposed to the measure,) charged against it, and
reved what we charged, that it placed the nurse and the sword in the same
ends; that it would be the source of boundless patronage and corruption,
and fatal in its consequences to the currency of the country; and I now avail
SByseif of these, and all other objections, then urged by us, in as full force
against this substitute, as if you were again to rise in.your places and repeat
*•*•* «KW ; and of course, as so many arguments, in effect, in, favor of the bill;
androa their strength I c'aim your vote in its favor, unless, indeed, still sti ongc:
objections can be urged against it. I say stronger, because time has provea
Ute, truth of »1] that was then said against the measure how pioposcd to be
evived by this i * stUvfe. .Whtt was then prediction is[riow fact. »But
I
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whatever objections have been, or may be urged »g«inst the bill, however*
strong they may appear in argument, remain yet to be tested by the unerring'
test of time and experience. Whether they shall ever be realized must be
admitted even by those who may have the greatest confidence in them, to be
at least uncertain; and it is the part of wisdom and prudence, where objeetions are equally strong agiinst two measures, to prefer that which is yet
untried, to that which has been tried and failed. Against this conclusion,
there is but one escape.
It may be said, that we are sometimes compelled, in the midst of the
many extraordinary circumstances in which we may be placed, to prefer
t h a t , which is of itself the more objectionable, to that which is less s o ; be
c a u s e the former may more probably lead, in the endj to some desired result,
than the latter. T o apply the principle to this case. It may be said that the
substitute, though of itself objectionable, is to be preferred, because it would
more probably lead to the establishment of a National Bank, than the hill
which you believe to be the only certain remedy for all the disorders that
affect the currency. I admit the positidn to be sound in principle, but it is
One exceedingly bold and mil of danger in practice, and ought never to he
a c t e d on, but in extreme cases, and where there is a rational prospect of
accomplishing the object ultimately aimed at. T h e application, in this case,
I must think, would be rashness itself. It may be safely assumed, that the
success of either, whichever may be adopted, the bill, or the substitute, would
be fatal to the establishment of a National Bank. It can never put down a
successful measure to take its p l a c e ; and, of course, that which is most
fikely to fail, and re-plunge the country irito all the disasters of a disordered
currency, i* that which would most probably lead to the restoration of a
Rational B a n k ; and to prefer the substitute on that account is, in fact, to
prefer it because it is the worst of the two. But are you certain that an
other explosion would be followed by a bank ? W e have already had two ;
i n d it is far more probable, that the third would impress, uni\ ersally and
indefibry, on ,!i the public mind, that theie Was something radically and
. incurably wrong in the system which would blow up the whole concern,
.■^Cational Bank and all.
~ Jf I mny' be permitted to cypress an opinion, I would spy, you havo pur
sued a course on this subject unfortunate both for yourselves and country.
Vou are opposed both to the league of banks, and the Sub-treasury. You
prefer a National Bank; and regard it as the' only safe and certain regulator
of t h e Currency, but consider it, for the present, out of the question, and
are therefore compelled to choose between the other two. By supporting
ffce substitute, you will be held responsible for all the mischief and disasters
that may follow the revival of ihe pet bank system, as it has been called,
%nth t h e almost certain defeat of your first and cherished choice ; and those
you appose will reap all the benefits of the power, patronage and influence,
■which it may place in their hands, without incurring any portion of the
•responsibility. But that is not all. The success of the substitute would be
*Jk< defeat of the bill, which would, in like manner, place on you the respon
sibility of its defeat, and give those you oppose, all the advantage of having
supported it -without any of the responsibility, that would have belonged to
ft, had it been adopted.
Had a different course been taken—had yo*
' Jbioed in aiding to extend the custody of the laws over the public reve
ts m*e, in t h e hands of the Executive, where your own acts have plaeed .
6
it, and for which you, of course, are responsible, throwing the blame at tire
same time on those, to whom you attribute the present disordered state « f
the currency, the burthen of the responsibility, you would have stood W ^ J
to profit by events. ]f the Sub-treasury, contrary; to your anticipaWNi,
Succeeded, as patriots, you would have cause io rejoice in the unexpected
goo I. If it failed, you would have the credit of having anticipated i » e
result, and might then afteT a double triumph of sagacity and foresight, harv*
brought forward your favorite measure, with a fair prospect of success, wife* ,
ever" other had failed. By not taking this course, you have lost the amy
vl
prospect of establishing a National Bank.
'
j
Nor has your course, in my opinion, been fortunate for the co'untry. H a d
•it been different, the currency question would have been decided' at t h e
called session; and had it been decided then, (he country would this d&y
have been in a much belter condition : at least the manufacturing and couftmer.'i.il section to the North, where the derangement of-the currency is felt
the .nost seveiely. The South is o n i p natively in an easy condition.
Such are the difficulties that stand in tin- way of the substitute at tBe
•ve;-/ threshh'nld. Those bt yond are vastly gieater, as I shall now proceed
to show. Its object, as I have staled, is to revive the league of State
b i n k s , and thafir.it question presented for consideration is, how is this t o
Ins done—-how is the league to be formed ? Siow stimulated into life whenfor ned ; and \vh<.i after it has been vevittd, would be the true cLarrcter of
tlie lear.ie or combination? To answer these questions we must turn to its
pro/isions.
It provides, that the Secretary,of the Treasury shall select twenty-fiv&
specie paying banks, as Uie fiscal agents of the Government, all to be
f'Di-clable and substantial, and that the .-.election shall be confirmed by t h e
j:>'nt vote of the two Houses. It also prov ii.'es, that they shall be made t h e
depositories of the public money, and that- t.'.oir notes shall be receivable
in ilie dues of the Government.; a'nd that in turn, for these advantages, they
BII ill s'j]>'ilnte to perform certain duties, and comply with various conditions,
he object, of which is, to give to the Secretary of the Treasury full know^ ed ;c of their condition and busine.-s, with the view to supervise and control
their acts, us far as the interest of the Government is concerned. In addi
tion to these, it contains other and important provisions, whxh I shall not
{.numerate, because they do not fall within the scope of the objections, that
I propose to urge against the measure.
Now J ask what does all this amount to ? What but a proposal on the
i*rt ol the Government, to enter into a contract, or bargain, with certain se(■clel St;;lc b ; n ! ) , on the terns a;:J <: uiiuous contained. H a v e we the
right to make such a bargain is the iir.-t qi!e>- : en; and to that, I give a decidtd negative,, which ! hope to pine.- o<( constitutional grounds, that c.-.nnot
be shaken. I intend to discuss it, with ; flier questions growing out of the
connection of the Government with the b inks, as a new question for the
first time presented ibr consideration KIMI decision. Strange as it may seem,
l i e questions growingout of it, as long as it has existed, have never yet beer*
I .resented nor investigated in reference to their constitutionality. How this
1<»s h inpened, I Khali now proceed to explain, preparatory to the examina
tion of the question, which I have proposed.
The union of the Government an 1 the banks wn"? never legally solemni
sed. It originated shortly after the Government v e it into o\ eration, nat in>
any legal enactment, but in a short order of the Treasury Department of not
i-lHWch more than a half a dozen of lines, as if it were a mere matter of course.
f W e tlius glided imperceptibly into a connection, which was never recogniz
ed, by law till 1816, (if my memory serves,) but which has produeed, more
, important after consequences, and has had a greater control over the desti
ny of this country, than any one of the mighty questions, which have s o
, often and deeply agitated the country. To it may be traced, as their sem
inal principle, the vast and extraordinary expansion of our banking system,
our excessive import duties, unconstitutional and profuse disbursements, t h e
, protective Tariff, and its associated system for spending what it threw into
.the Treasury, followed in time by a vast vurulus which the utmost extrava
gance of the Government could not dissipate, and finally, by a sort of retri
butive justice, the explosion of the enlire banking system, and the pre
sent prostrated condition of the currency, now the subject of our deliberation.
How a measure, fraught with such important consequences should at first,
and for so long a time should have escaped the attention and the invesiigalion of the public, deserves a pnssin x notice. It is to be explained by the
false conception of the entire subject of banking, which at that early perio'd
universally prevailed in the community. So erronous was it, that a bunk
note was then identified in the mind of (he public with gold and silver, and-a
tleposite in bank was regarded, as under the most safe and sacred custody, that
could be devised. The original impression,derived from the bank of Amster
dam, where every note, or certificate in circulation, was honestly lepresented
by an equal and specific quantity of gold or silver in bank, and where every
depo'site, was kept, as a sacied trust, to be safely returned to the depository,
when demanded, was extended to banks of discount, down to the time of
■ the formation of our Government, with b.,t slight modifications. With this
impression, it is not at all extraordinaiy, that the deposite of the revenue in
banks for safe keeping,and the receipt of their notes in the public dues,
should be considered, a matter of course, requiring no higher authority than
n Treasury order; and hence a connection, with all the important questions
. belonging to it and now considered of vasl magnitude,received so lillle nolice, till public attention was directed to it by its recent rupture. This total
separation from the system, in which we now find ourselves placed, for the,
first time, authorises and demands, that we shall investigate freely and fully,
not only the consequences of the oonneclicn, but all the questions growing
out of it, more especially those of a constitutional character; and I shalfiii
obedience to this deinuud return to the question from which this digression
has carried me so far.
Have we then the right to make the bargain proposed? Have we the
right to bestow the high privileges, 1 might say, prerogatives, on I hem of
being made the depositories of the public revenue, and of having their notes
received and treated as gold and silver in the dues of the Government ami
in all its fiscal transactions? Have we the right to do all this in order to be
stow confidence in the banks, with the view to enable them to resume specie
payments? What is the state oi' the case? The banks are deeply indebted
to the country, and are unable to pay ; and we are asked to give them Ihesoadvantages, in order to enable them to pay their debts. Can we grant the
boon? In answering this important question, 1 begin with the fact, that
< our Government is one of limited powers. It cen exercise no right but
v h a t is specifically granted; nor pass any law, but what is necessary ami
8
proper to carry such power into effect This small pamphlet (holdaf tit
«p) contains the Constitution. Its grants of power are few and plain }■«*«!
I ask gentlemen to turn to it, and point out the power, that authorintaa
to do what is proposed to be done, or to show that, to pass this substitafe»
is necessary to carry any of the granted powers into effect. ' If nettheffui
be shown, what is proposed, cannot be constitutionally done; and till&js ,
specifically pointed out, I am warranted in believing, that it cannot be sawNft.
Our reason is often confounded by a mere name. An act, in the matfa
of many, may become of doubtful constitutional authority, when applied taf a
bank) which none would, for a moment, hesitate to pronounce grossly uncon
stitutional, when applied to an individual. To free ourselves from (bar
illusion, I ask, could this Government constitutionally bestow on individu
als, or a private association, the advantages proposed to be bestowed on ta*
selected banks, in order to enable them to pay their debts ? Is there one
who hears me, who would venture to say, yes, even in the case of the most
extensive merchant or mercantile concern, such as some of those in Ntfw
York, or New Orleans, at the late suspension, whose embarrassments in
volved entire sections in distress ? But, if not, on what principle can * a"
discrimination be made in favor of the banks ? They are local institution*,
created by the States for local purposes, composed, like private associations,
of individual citizens, on whom the acts of the State cannot confer a parti
cle of constitutional rig'nt under this Constitution, that does not belongto
the humblest citizen. So far from it, if there be a distinction, it is agaufet
the banks.
They are removed further from the control of this Goirernmtmt thiintlie individual citizens, who, by the Constitution, ere expressly
subject to the direct action of this Government in many instances; while tlie
State banks, as constituting- a portion of the domestic institutions of t i e
States, and resting on their reserved rights, are entirely beyond our control;
FO much so, as not to be the subject of a bankrupt law, although the au
thority to pass one is expressly granted by the Constitution.
On what possible ground, then, can the rirrht in question be placed, naless, indeed, on the broad principle that these local institutions, intended
for State purposes, have been so extended and hive, so connected themselv*!
with the general circulation and business of the country, as to effect tie
interest of the whole community, so as to make it the right and duty of
Congress to regulate theru ; or,"in short, on the broad principle of the geftte
ral welfare? There is non- other, thnt I can perceive: b»t iliis would bete
adopt the old and exploded principle, at all ttra;s dangerous, but pre-emi
nently so at this lime, when such loose and dangerous conceptions of U»
Constitution are abroad in the land. If the argument is good, in one case,
it is good in all similar cases. If this Government may interfere with adf
one of the domestic institutions of the States, on the ground of promotiag
the genera] welfare, it may witii others. If it may bestow privileges to con
trol them, it may also appropriate money for the same purpose ; and thut»n
door might be opened to an interference with State institutions, of whk0t
We of a certain section ought at this time to be not a little jealous.
><
The argument might be pushed much farther. We not only offer to «anfer great and important privileges on the banks to be selected, but, intern,
ask them to stipulate to comply with certain conditions, the object of whi«a
is to bring them under the supervision and control of this Government, it
might be asked, where is the right to purchase or assume such supervision,
9
or control ? It might be repeated, that thej are State institutions, incorpo
rated solely for State purposes, and to be entirely under State control, and
that all supervision on our part is in violation of the rights of the States.
Jl might be argued that such supervision or control, is .calculated to
weaken the control of the States over their own institutions, and to ren
der them less subservient to their peculiar and local interests, for the pror
motion of which they were established; and too subservient to other, and,
perhaps conflicting interests, which might feel but little sympathy with those
of the States. But I forbear. Other, and not less urgent objections claim
my* attention. To dilate too much on one, would necessarily sacrifice the
claim of others.
I next object, that whatever may be the right to enter into the proposed
bargain, the mode in which it is proposed to make it is clearly unconstitu
tional, if I rightly comprehend it. I am not certain that I do; but, if I
understand it rightly, the plan is, for the Secretary of the Treasury to select
twenty-five State banks, as described in the substitute, which are to be sub
mitted to the two Houses to be confirmed, or rejected, by their joint resolu
tions, without the approval of the President; in the same mode, as they
■would appoint a chaplain, or establish a joint rule for the government of their
proceedings.
In acting on the joint resolution, if what I suppose be intended, eaek
House would have the right, of course, to strike from it the name of any
bank and insert another, which would in fact vest in the two Houses the
uncontrollable right of making the selection. Now, if this be the mode
proposed, as I infer from the silence of the mover, it is a plain and
palpable violation of the Constition. The obvious intention is, to evade the
veto power of the Executive, which cannot be, without an infraction of an
express provision of the Constitution, drawn up with the utmost care, and
intended to prevent the possibility of evasion. It is contained in the 1st
article, 7th section, and the last clause, which I ask the Secretary to read:
[" Every order, resolution, or vote, to which the concurrence of the Se
nate and House of Representatives may be necessary, (except on a questjom
of adjournment) shall be presented to the President of the United States,
and before the same shall take effect, shall be approved by him, or being
disapproved by him, shall be repassed by two thirds of the Senate and
House of Representatives, according to the rules and limitations prescribed
in the case of a bill."]
Nothing can be more explicit, or full. It is no more possible to evade
the Executive veto, on any joint vote, thr.n in the passage of a bill. Tke
veto was vested in him'not only to protect his own powers, but as an addi
tional guard to the Constitution. I am not the advocate of Executive
power, which I have been often compelled to resist of late, when extended
beyond its proper limits, as I shall ever be prepared to do when it is. Nor
aJn I the advocate of Legislative or Judicial. I stand ready to protect all,
within the sphere assigned by the Constitution, and to resist them beyond.
To this explicit and comprehensive provision of the Constitution, in pro
tection of the veto, there is but a single exception, resulting, by necessary
implication, from another portion of the instrument, not less explicit, whick
authorizes each House to establish the rules of its proceedings. Under this
provision the two Houses have full and uncontrollable authority within, tke
limits of their respective walls, and over those lubjeet to their authority, is
10
their official character. To that extent, they may pass joint rotes and reso
lutions, without the approval of the Executive; but beyond that, without it,
they are powerless.
'ltiere is in this case special reasons why his approval should not b e '
evaded. The President is at the head of the Administrative Department
of the Government, and is especially responsible for its good management.
In order to hold him responsible, he ought to have due power in the selec
tion of its agents, and proper control over their conduct. These banks
would be by far the most powerful and influential of all the agents of the
Government, and ought not to be selected without the concurrence of the
Executive. If this substitute should be adopted, and the provision in
question be regarded such, as I consider it, there can be no doubt what
must be the fate of the measure. The Executive will be bound to protect,
by the intervention of its constitutional right, the portion df power clearlyallotted to that department by that instrument, which would make it im
possible for it to become a law, with the existing divisioa in the two
Houses.
I have not yet exhausted my constitutional objections. I rise to highec
and to brorder, applying directly to the very essence of this substi
tute. I deny your right to make a general deposite of the public revenue
in a bank. More than half of the errors of hie may be traced to fallacies
originating in an improper use of words; and among not the least mis
chievous is the application of this word to bank transactions, in a sense
wholly different irom its original meaning. Originally it meant a tiling
placed in Irust, or pledged to be. safely and sacrtdly kept, till returned 1o the
depositor, without being used by the depository, while in his possession.
All this is changed when applied to a deposite in bank. Instead of return
ing the identical thing, the bank is understood to be bound to return only
an equal value ; and instead of not having the use, it is understood to have
the right to loan it out on interest, or to dispose of it as it pleases, with the
single condition, that an equal amount be returned, when demanded, which
experience has taught is not always done. To pl.ice, then, the public money
in deposite, in bank, without restriction, is to give the free use of it, and to
allow them to make as much as they can out of it, between the time of de
posite and disbursement. Have we such a rip lit ? The money belongs to
the people,— collected from them for specific purposes,—in which they have a
general interest,—and for that only ; and what possible right can we have to
give such use of it to certain selected corporations ? 1 ask for the provi
sion of the Constitution, that authorizes it. I ask, if we could grant the
use, for similar purposes, to private associations or individuals? Or if not
to them, to individual officers of the Government; for instance, to the four
principal receivers under this bill, should it pass? And if this cannot be
done, tf at the distinction be pointed out.
If these questions be satisfactorily answered, I shall propound others still
more difficult. 1 shall then ask, if the substitute should become a law, and
the twenty-five banks be selected, whether they would not in fact be the
Treasury ? And if not, I would ask, where would be the Treasury ? But
if the Treasury, 1 would ask, if public money in b:.nk would not be in the
Treasury ? And if so, how can it be drawn fi«m it to be lent for the puipo?e of trat'e, speculation, or any other use wha'ever, against an express
provision of the Constitution? Yes, as express as words can make it. I
11
isk the Secretary to read the 1st article, 9th section, and the clause next to
the last.
"No money shall be drawn from the Treasury, but in ceneeqncnccof appropriations mail* \>j
" law; and a regular statement and account of the receipts and expenditures of all public mont y
fthail bs published from time to time."
How clear! How explicit! No money to be drawn from the Treasury
but in consequence of appropriations made by law ;—that is, the object on
•^Kihich the expenditure is to be made, to be designated by law, and the stijn
-allotted to effect it, specified ; and yet we have li?td in the daily and habitual
Yiolation of this great fundamental provision, from almost the beginning fif
our political existence to this day. Hehold the consequences ' It has pros
trated and engulphed the very institutions, which have enjoyed this illicit
fevor, and tainted, above all other causes, the morals and politics of the,
whole country. Yes, to this must be traced, as one of the main causes, the
whole, system of excessive revenue, excessive expenditure, and excessive
mrplusses; and to them, especially the last, the disasterous overthrow of
the banks and the currency, and the unexampled degeneracy of public and
private morals, which have followed. We have suffered the, affliction, inny
the ble.-sing, which follows chastisement, when its justice is confessed, como
in due season.
,_
But 1 take a-still higher ground. I strike at the root of the mischief. I
deny the right of this Government to treat ba:ik notes as money in its fis
cal transactions. On this great question, 1 never have before committed
myself, though not generally disposed In abstain from forming or expressing
opinions. In all instances, in which a National Hank has come in question,
I have invariably taken my ground, thai if the Government has the right
t o receive and treat bank notes as moii'iy, it had the right, and was bound,
under the Constitution, to regulate them, so as lo make them uniform and sta
ble as a currency. The reasons for this opinion are obvious, and have been
■o often and fully expressed on former occasions, that it would be useless
to repeat them now : but I never examined fully the right of receiving, or
made up my-mind on it, till since the catastrophe in May last, which, as I
have-said, enlirely separated the Government from the banks. Pievinus to
•that period/it was an abstract question, with no practical bearing; as much
so as is now the constitutional right of admitting Louisiana into the Wnioii..
[Things are now altered. The connexion is dissolved ; and it has become
a practical question of (be first magnitude.
The mover of the substitute assumed as a postulate, that this Government
had a right to receive in its dues, whatever it might Ihink proper. I deny
the position in toto. It is one, that ought not to he assumed, and cannot bo
proved, and whiuh is opposed by powerful objections. T h e genius of our
Constitution is opposed to the assumption of power. Whatever power it
gives is expressly granted; and if proof were w a n t e d , t h e numerous grants
of powers far more obvious and apparently much more safe to be assumed
than the one in question, would afford it. I shall cite a few striking instances.
If any powers might be assumed, one would suppose, that of applying
money to pay the debts of the Government, and borrowing it to carry on
its operations would b s among them ;—yet both are expressly provided lor
by the Constitution. Again, to Congress is granted the power to declare
war and raise armies and navies; yet the power to grant letters of marque
■ad reprisal and to raake rules for tha regulation of the Army aad Navy
IS
•re not left to assumption, as-obvious as they are, but are given by expmit
grant. With these and other instances not less striking, which ungbtM
added, it is a bold step to assume, without proof, the far Jess obvious powtt
of. the Government receiving whatever it pleases in its dues as money*
Such an assumption would be in direct conflict with the great principle
Which the State Rights party, with which the Senator (Mr. Hives) clasaea
himself, have ever adopted in the construction of the Constitution. Bufy
if the former cannot be assumed, it would be in vain to attempt to prajMf
that it has been granted, or that it is necessary and proper to carry any <*tf
the granted poweis into effect. No such attempt has been made, nor cap..
be, with success. On the contrary, there are strong objections to the power,
which, in my opinion cannot be surmounted.
If once admitted, it would lead by consequence to a necessary inter
ference with individual and State concerns never contemplated by the Con**
stitution. Let us,.for instance, suppose that, acting on the assumption 0#
the Senator, the Government should choose to select tobacco as an articb*;
to be received in payment of its dues, which would be as well' entitled to i*
es any other product, arid in which the Senator's constituents are so much
interested. ]Joes he not see the consequences ? In order to make its taxe»uniform, which it is bound to do by the Constitution, and which cannot
be done unless ihe medium in which it is paid is so, the Government would;
Lave' to assume a general control over the great staple in question; to*
regulate the weight of the hogshead or package; to establish inspection*under its own officers in order to determine the quality, and whatever «lte
might be necessary to m:ike the payments into the Treasury uniform. ■ S61
likewise, if the still - ;aUr staple, cotton, be selected. The weight of the.
bale, the quality of the cotton, and its inspection would all necessarily Mb
under the control of the Government; and does not the Senator see tints
the exercise of a power that must lead to such consequences—consequent
ccsxso far beyond the sphere assigned to this Government by the Constat**1
lion, must be unconstitutional? Nor does the objection exten,! Only $»«
these and other staple articles. It applies with equal, if not greater forea,*
to receiving the notes of Slate banks, as proposed by the substitute, in tbftj
dues of the Government and the management of its fi-cal concerns. It mutt*
involve the Government in the necessity of controlling and regulating State <
banks, as this substitute abundantly proves, as well as thv; whole histwj"
of our connection with thorn ; and it has been shown that banks are, nt'leaaV
as far removed from the control of this Government as the cultivators «f»
the soil, or .my other class of citizens. To this I might add anotherobjection-, not less strong, that for the Government to receive and treats*
bank notes as money in its flues, would be in direct conflict, in its effeefcj**
with the important power conferred expressly on Congress of coining money *
find regulating the value U ere.nl': but as this will come in with more pro* *
l>riely in answer to an argument advanced by the Senator from Massac
thusetts, (Mr. WKBSTER,) I shall now state his argument and reply to it. i
He asserted again and again, both now and at the extra session, that k*j
is the tluly of the Government not only to regulate, but to furnish a sound >
currency. Indeed it is tho principal argument relied on by the Senator in
opposition to the bill, which he says abandons this great duty. Now, if
by currency be meant gold and silver coins, there will be but little differ-ence between him and myself. To that extent the Government has a clear
13
and unquestionable right by express grant; but if he goes farther, and
intends to assert that the Government hap the right to make hank notes a
ttirrency, which it is bound to regulate, then his proposition is identical n> >
effect, though differently expressed, with that of the Senator from Virginia,
(Mr. RIVES,) and all the arguments I have urged against it are equally ,
applicable to his. I hold, on my part, that the power of the Government '■
90 this subject is limited to coining money and regulating its value, and .
punishing the counterfeiting of the current coins;—that is, ot the coins made
Current by law, the only money known to fhe Constitution. It is time to make
a distinction between money, or currency, if you please—between that which
•will legally pay debts, and mere circulation, which has its value from its pro
mise tobe paid in theformer,and under which classification, bank notes as well
as bills or promisory notes of individuals fall. These are all in their nature
private and local, and cannot be elevated to the level of currency, or money, JA
the fiscal transactions of Government, without coming into conflict, more or
less, with theobjectofthe Constitution in vesting the very power in Congress,
which! shall now proceed to show.
It will hardly be questioned, that the object was to fix a standard in or
der to furnish to the Union a currency of uniform and steady value, and
was therefore united in the same sentence with the relative power, to fix the
standard of wpights and measures,—the objects being similar. Now, tf
our experience has proved any thing, it has amply .shown .that so long
as the Government is connected with the banks, and their notes received
in its transactions, as money, so long it is impossible to give any thing
Kke stability to the standard of value; and that -the power of coinings
and regulating the coins, becomes in a great measure a mere nullity.
Every dollar issued in bank notes, when it is made the substitute .»r
money drives out of circulation more or less of the precious metals;
and when the issue becomes exorbitant, gold and silver almost entire^,
disappears, M o u r experience at this time proves. The effects are ana
logous to alloying or clipping the coin, as far as stability of standard is
•oncerned; and it would be not leaa rational to suppose, that such a
power on the part of individuals, would be consistent with a uniform and
Stable currency, than to suppose the receiving and treating bank notes a« a.
sapetitute for money by the Government, would be. The only check or
remedy is to restrict them to their proper sphere, to circulate in common
with bills of exchange or other private and local paper, for the convenience
of business and trade. So far from such a course operating injuriously on
the people, or from being liable to the charge of forming one currency for
the people and another for the Government, as has been so often and
with such effect repeated,—it is the very reverse. Government by refusing
to receive back notes, as it is bound t» do, would in fact furnish a choice <•
the people, to. take either money or notes at their pleasure. The demand of
the Government will always keep a plentiful supply of tha former in the
eountry, so as to afford the people a choice, while the opposite would ex
pel the money and leave no option to them but to take bank notes or worse,
as at present
1 have now shown how it is pro;iosed to form the league of banks, and
have presented the constitutional impediments that stand in the way. These
are numerous and strong; so much so, that they ought to be irresistible
wrih all, except toe latitudmom in construction; but I a&nnot expert
4
.
,
■■■"
«MM»
tteywiH produce their full effijet. I know too well the force of to*|«
eatertained impressions, however erroneous, to be sanguine—-how strongm^,.
th«>mind rebels against the expulsion of .the old and the admission of ne#*
opinions. Yet, in this case, where we clearly Be* how gradually and •&}
lentfy error crept in under the disguise of words, applied to new and totalW*'
different ideas,without exciting notice or alarm*, and when we have expend .
eaced such deep disasters in consequence of patting from the plain intefetf
and meaning of the Constitution, I cannot but hope that all who believe °th£H
Utfc'BMCcess of the Government depends on a rigid adherence to the Constat?
tutfon, will lay aside all previous impressions, taken up without reflectidsi,vV#,
a*d give to the objections their due weight.
;*
1 come now to the next point, to show how this league is to be revived'qr*8
stimulated into life. Till this can be done, the substitute, should it become *41,;
lawrv would be a dead letter. The selection is to be made from specie paying* ,
banks. None but such can receive the public deposites, or have their not*!*'* (
received in the dues of the Government. There are none such now. The".,
whole banking system lies inanimate; and must be vivified before it can f .
be reunited-with the Government. No one is bold enough to propose' ah* ♦.
union with this lifeless mass. How then is the vital spark to be revrvefff* <
hdw the breath of life, the Promethean fire, to be breathed into the system^,.
aijew, w the question ? This is the task.
*
. ' V'*»
'The mover tells us, that it must be the work of the Government. ' He*«
Bay* that it is bound to aid the banks to resume payments; and for thai pu*-^*
pose ought to held out to them some adequate inducement. He fells UBj<thnlP
they have been long preparing and had made great efforts, but can g»i nH«*
farther; have rolled the round, huge rock almost to the summit, but 'uiiiest**
the Government put- forth its giant arm, and give the kst push, U'wiRSMMr*
cofl and rush <lown the steep to the bottom, and all past labor be'lostg*
Nowfwhat is this adequate inducement? What this powerful eHitlhSH^k
w**ch it is proposed the Government should apply, in order to1 enanleutl|D*
i.'*i "
batik* to accomplish this herculean task? The substitute shall answerv"
Hft proposes to fix the 1st of July next for the period of resumption',
n» the inducement to resume, it proposes to select twenty-five, of the"1 .
respectable and solid, out of the resuming banks to be the depositories'
(he public moneys, and the fiscal agent of the Government, as'haslif*
already stated. It also proposes^ and thiB is the stimulus, the essence of'...
whole,—to make the notes of such banks as may resume on or before' ttuu**
*lay exclusively receivable in the public dues. Here is a quid pro' ft^'^K
something proposed to be done, for which something is to be given. 'vV*^*
tctt the banks plainly, if you resume, we, on our part, stipulate to taalpWj
twenty-five of you our fiscal agents and depositories of the revenue; and wfe*C
further stipulate that those who resume by the time fixed, shall have the exe)%8#
aive privilege^w «>«• of having their note* receivable in the' dues of'tlMr*
Qsvernruent, ut common with gold and silver, if the banks perfdrm theflP*
part}-we shall be bound in honor and good raith to perform ours: ■,ItwoukP'£L
be a complete contract, as obligatory as if signed, sealed, and-"deliverefcL^!
!
,s l
SuteMs tie inducement
' • ' •
'.
.
'fbe »ext qoestkm is, will it be adequate? Yfes, abundairtiy adequate".'* '
Tlt^ battery ig«trong enough to awaken the dead to life5; the cdhsrderatibfl ■{.
fufBcient to wcMnentte the (banksfor-whatever sacrifice the*y m a / be 'com* *
gelled tojstake, in order to resume payment It is difficult to estimate
15
th% value of these high privileges, or prerogatives, as I might jufttlj'
«3p6rem. They are worth millions. If you were to enter into a similar
cofrtract with an individual, I doubt not, that he could sell out in opeo.
nrareet for at least thirty, i'otty, or fifty millions of dollars. I do then themover the justice1 to say, that his means are ample to effect what he pro
poses. As difficult as is the work of resumption,—and difficult it will turit
©n't'to be when tried,—the inducement will prove all sufficient. But the re
sumption,, however desirable, may be purchased too dearly ; and such would
prdve to be the case, should the project Succeed. Not only is the offer too
great, but the mode of effecting it is highly objectionable. Its operation
wbuld prove not less disastrous than the bargain has been shown to be un
constitutional, which I shall now proceed to establish.
The offer will have a double effect. It will act as a powerful stimulus to
presumption, but will act at the same time with equal force to excite a strug
gle among the banks, not only to resume themselves, but to' prevent other*
fjowl.'resuming. The reason is clear. The advantage to each will increase,
as the number of the resuming banks decreases; and of course, the great'
.pqiht of contest among the strong will be to restrict the proffered prize to
the smallest number. The closer UK: monopoly the greater the profits. In'
this struggle, a combination of a Jew powerful and wealthy banks, the moil
^respectable and solid, as designated in the substitute, will overthrow and
trimple down the residue. Their full will spread desolation over the land.
Whatever may be the fate of others in this desperate contest, there is &n#3'
in>reratton to which no doubt can be entertained: I refer t» the Unhed Stsresr'
Bdnlc of Pennsylvania, a long name and a misnomer; and which, fbrthe sSW5ofbYevity, but with BO personal disrespect to the distinguished irrdivirinst MP
tbelfcad, I shall call Mr. Bicldle's batik. That, at least,1 wiM- be one(dfltt*i
wfttflers—ofte of the twenty-fwe to whom the priaewil! be assigned. Its-v***
resources, rts wealth ami influential connexion*, both at home and abroiufJk
thf'skill and"ability of the officer at ite head, ami, what is lew honorable, thr
grtaTrespuTce H helds, in the notes of the late United State Bank, of which
mar^?than sixtoiHronshave been put into'circulation, in violation, to say tke1
le^jt,.bf a trust, constituting more than five-sixths of all its circulation;*'
ano"'<(rtiich it is not bound to pay,—with the still greater amount O*"1
haftiJ'^1 making in the whole more than twenty-six millions, and whicV
may be used the same way, if not prevented, would place it beyond alt'
doirtt among the victors. He starts without proper weights, a»<f wW!
leefxf the way from the first. Who the others may be is uncertain; tJtfs1
wifl'depend mainly npon his good will and pleasure. It may be put do*r&%
ascertain, whoever they may be, that they will be powerful and infraentt*^
and riot unfavorable to his interest or aggrandizement. But the raischterou*'effect will not be limited to this death-like struggle, in which so m**f'
nnrst;fall and be crushed, that might otherwise weather the storm. Thar
forced resumption, for such it will be in effect, would be followed by wide
spread desolation!. It is easy to sink to suspension, but hard to return to
resumfrtion. Under the most favorable circumstances, aad when coaducted
most leisurely and cautiously, the pressure must be severe; hurf, if coerced of
precipitated by bankrupt laws or temptations such as this, it will be ruinous:
To make it safe and easy must be the work of tint*. (akrvemment can tfe
hut litfle. The disease originates in excessive indebtedness, and the ortrjr
remedy is payment or' reduction of debts It is estimated, that when the
16
suspended payments, the community was indebted to them the enor«
saoussum of $476,000,000. To reduce thus within die proper liniita, is<JM$f
the work of a few days* and can be but little aided by us. The industcy^sjA.
the vast resources of the country, with time, are the only remedies to bere^M*.
«B for the reduction; and to these, "with the State Legislatures, and..tMfc,
public opinion, the resumption must-be left. To understand the subject feu$»,,
ire mutt look a little more into the real cause of the difficulty.
, . ;-.
Tbi*enormous debt was incurred in prosperous times. The abundant,,
means of the banks, from the surplus revenue and a combination of.©jibs*,,
causes, induced them to discount ireely. This increased the circulatiflai*
> and with its increase, its value depreciated, and prices rose proportionajfedev
3#ith this rise, enterprise and speculation seized ihe whole community, iai&,
every one expected to make a fortune at once; and this in turn gave anew .
impulse to discounts and circulation, till the swelling tide bursted its barriers
and deluged the land. Then began the opposite process of absorbing the-'
excess. If it had been possible to return it back to the banks, the sources1
from which it flowed, through its debtors, the speculating, enterprisiag^
and business portion of the community, the mischief would have been m a.
great measure avoided. But circulation had flowed off into other reservoirs } '
those of the moneyed men and bankers, who hoard when prices are high, and
buy when they are low. The portion thus drawn off and held in deposi'*,
eiuter in banks or the chests of individuals, was as effectually lost, as far a* the
, debtors of the hanks were concerned, as if it had been burnt. The means,of
payment was thus diminished ; prices fell in proportion, and the prtsauw ..
lacreased, as they fell. Though the amount in circulatioa be greatly reduced,
yet .the bank* are afraid to discount, lest on resumption, the hoarded naae^f
depositee held by individuals or other banks, should be let loose, and, *t ad4Maoo to what might be put into circulation should discounts be made, WS*W[
. enuse another inundation to be followed by another suspension. How iswt*
ditijeuhy to be safely surmounted, but by unlocking the hoarded saemsyf
444.how is that to be done, without deciding the currency question? > Thia
i l ft* iraj and necessary step, that done, all will be able to cakuUto* ***.
dstaajnewhat to do. ■ The perkd of inaction and uncertainty would «•*•»
and that of business revi»e. Fuads that are now locked up, would W
•taught again into operation, and the channels of circulation be replenished
tt,tbe only mode that can be done with safety. Thus thinking, I a » MW
aoj) have been from the first in favor of an early decision, and averse to aft.
•oercion, or holding out temptation to resume; leaving the disease to'***'
gradual and safe operation of time, with as little tampering as possible* -'■ X*
the mean time, I hold it to be unwise to cease discounting, and to adopt-a#
■•discriminate system of curtailment. Its effects are ruinous to the business*
ef.the country, and calculated to retard, rather than to accelerate a resunip-.
tiap. lite true system, I would say, would be to discount with busuwfsapaper as freely as usual, and curtail gradually on permanent debts.'* l$n".
Jbcmer would revive business, and would increase the debts to the banks lee*
*haa ijt would increase the ability of the community to pay them.
ftlttiagaow shown how this league, or combination of banks is to_ be,
fc«JMd and revived, with the.diflkulties in the way, it remains to determine,..
what will be the true character and nature of the combination when, formed.
It prill Consist of State banks retaining their origirud powers,,that »f dis
counting and all, without being in the slightest degree impaired.- To thepe,,:
17
the tubstitute proposes to add important additions ; to receive their notes M
gold and silver in the public dues; to give them the use of the public
deposites, and to organize and blena the whole into one, as the fiscal agent
of .the Government, to be placed under the immediate supervision, .ajid, con
trol of the Secretary of the Treasury. Now what does all ttys amount to ?
Shall I name the wcrd—be not startled; A BANK—a Government fyaak,—
the most extensive, powerful and dangerous, that ever existed. This .substi
tute would be the act of incorporation; and the privileges it conferVso
much additional banking capital, increasing immensely its powtnL^nd
giving it an unlimited control over the business, and exchanges « the
country.
The Senator from Virginia (Mr. Rives) was right in supposing that this
new trial of the experiment would be made under very different circumstan
ces from the first, and would have a different termination. That too,, like
this, was a bank—a Government bank, as distinguished from the late bank,
to which it was set up, as a rival, and was a"t the time constantly So cjlesignated in debate. But the circumstances now are indeed differejjt-r-vjerjr
different, and so would be the result of the experiment. This bank would
not be the same rickety concern as the former. That ended in anarchy,
and this would in despotism. I will explain.
' •'
The former failed not so much in consequence of the adverse circum
stances'of the times, or any essential defect in the system, as from the want
of a head—a common sensorium, to think,—to will,—and decide,—for the
whole, which was indispensably necessary to ensure concert and gire, unity
of design and execution. A head will .not be wanting now. M^. laddie's
bank will supply the defect. His would be not only one of. the rewMning
banks, as I have showr, but would also be one of the 25 to.be s e i z e d .
If there should be the temerity to omit it, the present project would.sjjara.the
fate of its predecessor. Mr. Biddle's bank at the head of those efffhwjed,
would be an overmatch for the selected, in skill, capital and pqwe£| v and
the whole league would inevitably be overthrown. But if selected,, the
position of his bank in the league would be certain. Its vast capitaL Jta
extensive connections, its superior authority, and his skill, abilities and influ
ence, would place it at the head, to think and act for the whole. The otheri
would be as dependent on his, as the branches of the late bank were on the
mother institution. The whole would form one entire machine, impelled by
a single impulse, and making a perfect contrast with its predecessor, in. the
unity and energy of its operations.
■_
•
Nor would its fate be less dissimilar. Anarchy was inscribed on the first
from the beginning. Its deficiency in the great and essential element, to
ensure concert, was radical and could not be remedied. Its union w.ith.the
Government could not supply it, nor avert its destiny. But very different
■would be the case of the present. Add its intimate union with the Govern
ment, for which the substitute provides, to its other sources of power, and
it would become irresistible. The two, Government and bank, would unite,
and constitute a single power; but which would gain, the ascendency ;—
whether the Government would become the bank, or the bank the Govern
ment, is neither certain nor material; for whichever it might be, it would
form a despotic money-cracy, (if I may be permitted to unite an English and
a Greek word,) altogether irresistible.
It is not a uttla surprising;, that the Senator from Virginia (Mr. JUvw)
2
-" 1
IS
Vhose -watchful jealousy ceuld detect, as he supposed, the embryo of a Go
vernment bank in the bill, should overlook this regular incorporation of ©ne
by his own substitute. Out of the slender materials of Treasury warrants
and drafts to pay public creditors, or transfer funds from place to place, as *
the public service might require, and four principal receivers to keep the
' public money, he has conjured up, with the aid of a vivid imagination, a fu
ture Government bank, which he told us; with the utmost confidence, would
rise like a cloud, at first as big as a hand, but which would soon darken,all
the horizon. Now, it is not a little unfortunate for his confident predictions,
that these seminal principles from which the bank is to spring, have all ex
isted from the commencement of our Government in full force, except the
-four receivers, without showing the least tendency to produce the result-he
* anticipates. Not only ours, but every civilized Government hat the power
to draw Treasury warrants, and transfer drafts; nor has the power in a single
instance terminated in a bank. Nor can the fact, that the "money is to De
kept by receivers, contribute in the least to produce one. The public funds
in tbeir hands will be as much beyond the control of the Executive, as it was
in the vaults of the banks. But, to shorten discussion, I would ask, how
can there be a bank without the power to discount or to use the deposite* ?
and out of which of the provisions of the bill could the Treasury, by any
easibility obtain either, under'the severe penalties of the bill, which proibits the touching of the public money, except on warrants or drafts, drawn
by those having authority, in due form, and for the public service. >
But the danger which an excited imagination anticipates hereafter from
the bill would exist in sober reality under the" substitute. There it would
require neither fancy nor conjecture to create one. It would exist with all
its faculties and endowments complete; discount, deposites, and all;-—with
which immense means, guided by a central and directing head, and blended
and united with the Government, so as to form one great mass of power.
What a contrast with the bill! How simple and harratass the one, wifh it*
ftur principal receivers, twice as many clerks, and five inspectors, com
pared with this complex and mighty engine of power! And yet there are
many, both intelligent and patriotic, who oppose the bill and support the
substitute, on the ground that the former would giv% more patronage and
ower than the latter! How strange and wonderful the diversity of -the
uman mind!
So far from being true, the very fact of the separation of the Government
from the banks, provided for in the bill, would, of itself, be the most deci
sive blow that could be given against Government patronage, and the union
of the two, the most decisive in its favor. When their notes are received in
the public dues, as cash, and the public money deposited in their vaults, the
banks become the allies of the Government on all questions connected with
its fiscal action. The higher its taxes and duties, the greater its revenue
and expenditure; and the larger its surplus, the more their circulation and
business, and, of course, the greater their profit; and hence on all question*
of taxation and disbursements, and the accumulations of funds in the Trea
sury, Jbeir interest would throw them on the side of the Government mad
against the people.
All this' ii reversed, when separated. The higher the taxation and dis
bursements, and the larger the surplus, the less would be their profit; and
their interest in that case, would throw them with the people, and. against the
f
J
19 »
Government. The reasen is obvious. (Speaie is the basis of banking
operations; and the greater amount they ean command, the greater will be
their business and profits; but when the Government is separated from
them and collects and pays away its dues in specie instead of their note*,
it is clear that the higher the taxes and disbursements, and the greater the
surplus in the Treasury, the more specie will be drawn from the use of the
banks and the less will be left as the basis of their operations ; arfd, conse
quently, the less their profit. Every dollar withdrawn from them woujd .
diminish their business four-fold at least; and hence a regard to, their o-wp.,,
interest -would inevitably place them on the side to which I have assigned«
them.
The effects on the politics of the country would be great and salutary.
The weight of the banks would be taken from the side of the tax conswtrwt,
where it has been from the commencement of the Government, and placed
on the side of the tax payers. This great division of the community necessarily grows out of the fiscal action of the Government. Take taxation and
disbursement together, and it will always be found that one portion of the
community pays into the Treasury, in the shape of taxes, more than it,
receives back in that of disbursements, and that another receives back more
than it pays. The former are the taxpayers, and the latter the consumers,— .
making the great, essential, and controlling division in all civilized comoiu-'
nities. If, with us, the Government has been thrown on the side of the con*
Burners, as it has, it must be attributed to its alliance with the banks, whose
influence has been, in consequence, at all times steadily and powerfully on
that gide. It is to this mischievous and unholy alliance that may be traced
almost all the disasters that have befallen us, and the great political degen
eracy of the country. Hence the protective system ; hence its associated'
and monstrous system of disbursements ; hence the collection of more ms>ney from the people than the Government could require; hence the vast
and corrupting surpluses ; hence legislative and Executive usurpations j and
finally, hence the prostration of the currency and the disasters which give
rise to our present deliberations. Revive this fatal connection ; adopt this
substitute, arid all this train of evils will again follow with redoubled dis
asters and corruption. Refuse the connection; adopt this bill, and all willbe reversed, and we shall have some prospect of restoring the Constitution
and country to their primitive simplicity and purity. The effect of the re
fusal on the patronage of the Government would be great and decisive.,
Burke has wisely said, that the "revenue is the State in modern times."—Violence and coercion are no longer the instruments of Government in. civi
lized communities. Their reign is past. Every thing is now done p /
money. It is not only the sinew of war, but of politics ; over which, in the
form of patronage, it exereises almost unlimited control. Just as the revenue
increases or diminishes, almost in the same proportion, is patronage increas
ed or diminished.
But admit for a moment, that neither the separation nor the connection
■would have any sensible effect to increase or diminish the revenue ; and that
it would be of the. same amount, whether the bill or substitute should be
adopted ; yet, even on that supposition, the patronage of the latter would
be an hundred fold greater than the former. In estimating the amount of
patronage of any measure, three particulars must be taken into the'calcula
tion ; the number of persons who may be effected by it; their influence is;
so
& • iammttnity, and the extent of the control exercised over them. It "will. -.
h»46\i«A on comparison, that the substitute combines all these elements in a
fur greater degree, than the bill, as 1 shall now proceed to show. I begin
wrra the number.
The Wtf provides, as has been stated, for four principal receivers, eight or '
tea elefkt,lttftd * suitable number of agents to act as inspectors, making in .
tfc* whole, say 96 individuals. These would constitute the only additional ..
•meets to keep and disburse the public money. The substitute, in addition
to the officers now in service, provides for the selection of 25 banks, to be .
taken from the most powerful and influential, and which would have, on an
avenge, at the least, 100 officers and stockholders each, making in the ag
gregate, 2,500 persons, who would be directly interested in the banks, and
of course, under the influence of the Government.
At to the relative influence of the officers and the selected banks over the
community, every impartial man must acknowledge, that the preponderance
would be greater on the side of the latter. Admitting the respectability of
tike" receivers and other officers provided for in the bill, and the officers and
stockholders of the banks to be individually the same, still the means of
•tfntrol at the disposition of the former, would be as nothing compared to that
of the latter. They could not toucb a cent of public money. Their meant
would be limited to their salary, which would be too small to be felt in the,,
community. Very different would be the case with the officers and stock*
holder* 6f the banks. They, of all persons, are by far the most influential
idtikecommunity. A greater number depend on them for accommodation
fttfd favor and the success of their business and prospects in life, than any
ether class in society; and this would be especially true of the banks con
sented with the Government.
It only remains now to compare the extent of the control that may be eXeftised by the Government over the two, in order to complete the comparison;
aOM here again the preponderance will be found to be strikingly on the same
•Ml* . T h * whole amount of expenditure under the bill would not exceed
$»Q,000 ©T $40,000 annually at the very farthest; and this constitutes the
the1 whole amount of control which the Government can exercise. There
would be no perquisites, no contracts, jobs or incidental gains. The offices
•lid salaries would be all. To that extent, those who may hold them would be
dependent on the Government, and thus far they may be controlled. How
stands the account on the other side ? What A alue skill be put on the public
deposjtes in the banks ? What on the receivability of their notes, as cash, by
the Government ? What on their connection with the Government, as their
fiscal agent, which would give so great ;i control over the exchanges and
business of the country ? How many millions shall these be estimated at,
mad how insignificant must the paltry sum of $30,000 or $40,000 appear to
fte«e countless millions held under the provisions of the substitute at the
pWs*jitti of the Government!
\ , Having now finished the comparison as to the relative patronage of the
two measures, I shall next compare them as fiscal agents of the Government;
tap'ftere'tet me say, at the outset, that the discussion has corrected an error,,
wbkh I tthce entertained. I had supposed, that the hazard of keeping the
£Uhl& money under the custody of officers of the Government, would be
eater, than in bank. The Senators from New Hampshire and Connecticut,
lemrs. Hubbard and Niles) have proved from the record, that the hazard is
5
21
on the other side ; and that -we have lost more by the hanks, than by the col
lecting and disbursing officers combined. What can be done to increase
the security by judicious selection or" officers, and proper organization, is
strongly.illustrated by the fact stated by the chairman (Mr. Wright,) in his
opening speech ; that in the War Department, there has been no loss for 15
years,—from '21 to '36,—on an expenditure certainly not less than
$100,000,000. I take some pride in this result of an organization, which
I originated and established when Secietary of War against the most formi
dable opposition.
A s to the relative expense of the two agencies, that of the bill, as small
as it is, if we are to judge by appearances, is the greatest; but if by facts,
the substitute would be much the most so, provided we charge it with
all the advantages, which the banks would derive from their connection with
the Government, as ought in fairness to be done, as the whole ultimately
comes out of the pockets of the people.
I n a single particular the banks have the advantage as fiscal agents. They
would be the more convenient. To this they are entitled, and I wish to
withhold from them no credit, which they may justly claim.
T h e Senator from Virginia (Mr. R h e s ) appeared to have great apprehen
sion, that the collection of the public dues in specie might lead to hoarding.
H e may dismiss his fears on that head. It is not the genius of modern and
civilized Governments to h o a r d ; and if it wenr, the banks will take care,
that there shall be no extraordinary accumulation at' rash in the Treasury.
P a s s the bill, and I under-write, that we shall never have again to complain
of a surplus. It would rarely, if ever in peace and settled times, exceed
three or four millions at the outside. Nor is his apprehension that hoarding
of specie would lead to war, less groundless. The danger is in another
uarter.
War is the harvest of banks, when they are connected with
rovernment. The vast increase of revenue and expenditures, and the
enormous public loans, which necessarily enure mainly to their advantage,
swell their profits in war to the utmost limits. But separate them from
Government, and war would then be to them, a state of famine, for reasons
which must be apparent after what has been said, which would throw their
weight on the side of peace and againtt war; just as certainly, as I have
shown, that the separa'""" 1 would throw it on the side of tax payers, and
against the tax consumers.
I come now to the comparison of the effect? of the twomensures on the cur
rency of the countory. In this respect, the Senator from Virginia (Vfr. Rives)
seemed to think, that his substitute would have a >-re.it superiority over the
bill; hut his reasons were to me wholly u i ^ l i ' - f a c t n y . If we fire to judge
from experience, it ought to be pronounced to be the woi ' possible mea
sure., It has been in operation*but twice (each for but a few years) since
the commencement of the Government ; and it has so happened,"that the
only two explosions of the currency occurred during those periods. But,
without relying on these disastrous occurrence'-, we have seen enough to
satisfy the most incredulous that there are areat and radical defects in our
bnnk circulation, which no remedy heretofore applied, has been able to re
move. It originates in the excels of paper, compared to specie, and the
only effective cure is to increase the latter and reduce the fanner: and this
the substitute itself impliedly acknowledges, by proposing a remedy that
would prove wholly inoperative. It proposes diat, after a certain period
J
mentioned, none of the banks to be selected, should iwue notes under tea
dollars. The effeets would clearly be, not a diminution of the eirculaticto
of small notes, but a new division of the banking business, in which th<
issue of large notes would fall to the lot of the selected b,anks and the small
to the others, without restricting, in the least,,the aggregate amount of paper
t
circulation.
.
,
.
,
But what the substitute would fail to do, the bill would effectually remedy.
None doubt, but the separation from the banks would greatly increase ttye
proportion of specie to paper; but the Senator from Virginia (Mr. Riv**j
apprehends, that its operation would be too powerful; so much so, in faet^
as to destroy the banks. His argument is, that specie would be always at a pijs*
mium, and that it would be impossible lor the banks to do business, so long
as that was the case. His fears are groundless. What he dreads would be
but a temporary evil. The very fact, that specie would bear a premium
would have the double effect, to diminish paper circulation, and increase tjk*
importation of specie, till an equilibrium between the two would be restored^,
when they would be at par. At what point this would be effected,,is M
little uncertain; but the fear is, that with our decreasing revenue, instead M
the specie being increased to excess, it would not be increased sufficiently
t6 give the desired stability to the currency.
-.
In this connection, the Senator urged an objection against the o|H,
which I regard as wholly groundless. He said, that the payment' of
the dues of the Government in specie, would create a double demand } a.
domestic, as well as a foreign; the effects of which would be to incwiuie,
greatly, its fluctuations ; and so deeply was he impressed with the idea, ti»av
he drew a vivid picture of its alternate flow from the coast to the interior],
and from North to South, and back again. All this is the work'of.iinaguisjr',
tion. The effect would be directly the reverse. The more numerous t i t
demands, the less the fluctuation ; so much so, that the greatest staoJB^tjf'
would be, where it exclusively performed the function of circulation*;jja$
where each individual must keep a portion to meet his daily demand*,
This is so obvious, that I shall not undertake to illustrate it.
, .^ L
Butthe superiority of the bill over the substitute would not be limitedJMttfy
to a more favorable proportion between specie and paper. It would «*t*
another important advantage' that cannot be well over-estimated ; it w.euia'
make a practical distinction between currency and circulation,—betweentni
currency of tin; country, and private and local circulation, under which head
bank paper would be comprehended. The effects' would be, to render*
general explosion of the circulation almost impossible. Whatever derange^
ments might occur, would be local and confined to some one particular
commercial sphere; and even, within its limits, there would he a sound eiir;
rency to fall back on, not partaking of the shock, and which would g&Ctlf
diminish the intensity and duration of the distress. In the mean tin*, tW
general business and finances of the country would proceed^ a l m o s t ^ t f l
out feeling the derangement.
'£
vWith a few remarks on the comparative effects of the 'two measur|ft jp^
the industry and business of the country, I shall conclude their eompwl«Oj|'
What has been said on their relative effects on the currency, goes far to u ^
cjde the question of their relative effects on business and industry.
f
I'.hold a sound and stable currency to be among the greatest encourage
jaaents Uj industry and business generally; and an unsound and fluctuat'
98
now expanding and -now contracting, so that no honest man can tell what to
do, as among the greatest discouragements. The dollar and the eagle are
the measure of value, as the yard and the bushel are of quantity ; and what
would we think of the incorporation of companies to regulate the latter—to
expand or contract, or shorten or lengthen them at pleasure, with the privilege
to sell by the contracted or shortened, and buy by the expanded or length
ened ? Is it not seen that it would place the whole industry and business
of the country under the control of .such companies ? But it would not more
certainly effect it, than a similar control possessed by the monej institutions
of the country, over the moasure of value. But 1 go further, and assert
confidently, that the excess of paper currency, as well as its unsteadiness is
unfavorable to the industry and business of the country. It raises the price
of every thing, and consequently increases the price of production and con
sumption ; and is, in the end, hostile to every branch of industry.
1 hold that specie and paper have each their proper sphere ; the latter for
large and distant transactions, and the former for all others ; and that the near
er our circulation approaches gold and silver, consistently with convenience,
the better for the industry and the business of the country. The more specie
the better, till that point is reached. When attained, it would combine in
the greatest possible degree, soundness and facility, and would be favorable
to the productive classes universally; I mean men of business, planters, mer
chants, and manufacturers, as well as operatives, ft would be particularly
favorable to the South. Our great staples are cash articles every where; and
it was well remarked by the Senator from Mississippi, (Mr. W T ALKER,) at the
extra session, that we sold at cash prices and bought at paper prices ; that
is, sold low and bought high. The manufacturing, commercial and navigat
ing interests would also feel its beneficial effects. It would cheapen produc
tions and be to manufacturers in lieu of a protective tariff. Its effects would
be to enable them to meet foreign competition, not by raising prices by high
duties, but by enabling them to sell as cheap or cheaper than the foreigner,
which would harmonize every interest, and place our manufactures on the
most solid basis. It is the only mode by which the foreign market can ever
be commanded ; and commanded it would be, with a sound and moderately
expanded currency. Our ingenuity, invention, and industry are equal to any
people; and all our manufacturers want, is a sound currency and an even
chance, to meet competition with success any where, at home or abroad.
But with-a bloated and fluctuating paper circulation, this will be impossi
ble. Among its many drawbacks, it levies an enormous tax on the com
munity.
I have already stated, that the community is estimated to have been in
debted to the banks $475,000,000 at the suspension of specie payments.
The interest on this sum, estimated at six per cent, (it ought to be higher,)
would give an annual income to those institutions of upwards of thirty milBoos; and this is the sum yearly paid by the community for bank accommo
dations, to the excess of which we owe our bloated and unstable circulation.
Uever was a circulation so worthless, furnished at so dear a rate. How much
of this vast income may be considered as interest on real capital, it is diffi
cult to estimate ; but it would, I suppose, be ample to set down ten millions
to that head, which would leave upwards of twenty millions annually, as the
profits derived from banking privileges over and above a fair compensation
for the capital invested, which some body must pay, and which must ulti
mately fall on the industry and business of the country. But this enormous
94
expansion of the system is not astonishing; so great is the stimulus applied
to its growth. Ingenious men of other ages, devoted themselves in vain to
discover the art of converting the baser metals into gold and silver; but we
have conferred on a portion of the community, an art still higher,—of convert
ing paper to all intents and purposes, into the precious metals ; and ought
we to be surprised, that an article so cheap to the manufacturers, and so dear
to the rest of the community, should be so greatly over supplied, and without
any reference to the interest, or to the wants of the community?
If we are to believe the Senator from Virginia, and others on the same side,
we owe almost all our improvements and prosperity to the banking system;—
and if it should fail, the age of barbarism would again return. I had
supposed that the bases of our prosperity were our free iusti I utions ; the wide
spread and fertile region we occupy, Mid the hereditary intelligence and ener
gy of the stock, from which we are deeended; but it serins, that all these
go for nothing, and that the banks are every thing. I nr.ike no war on them.
AH I insist on is, that the Government shall separate from them, which I
believe to be indispensable, for the reasons I have assigned, both now and
formerly. But I cannot concur in attributing to them our improvements and
prosperity. That they contributed to give a strong impiilsoto industry and
enterprise in the early stages of their operation, I doubt not. Nothing is
more stimulating than an expanding and depreciating currency. It creates
a delusive appearance of prosperity, which puts every thing in motion.
Everyone feels as if he was growing richer, as prices rise, and that he has
it in his power, by foresight and exertion, to make his fortune. But it is the
nature of stimulus, moral as well as physical, to excite at hist, and to depress
afterwards. The draught, which at first causes unnatural excitement and
energy is sure to terminate in corresponding depression and weakness; nor is
it less certain that the stimulus of a currency, expanding beyond its proper
limits, follows the same law. "We have hod the exhileration. and the depres
sion has succeeded. We have had the pleasure of getting drunk, and now
experience the pain of becoming sober. The good is gone and the evil has
succeeded; and on a fair calculation, the latter will be found to be greater
than the former. Whatever impulse the banking system was calculated to
give to our improvement and prosperity, has already been ghen; and the re
verse effects will hereafter follow, unless the system should undergo great
and radical changes; the first step towards which, would be the adoption of
the measure proposed by this bill.
I have, Mr. President, finished what I intended to say. I have long
anticipated the present crisis, but did not expect its arrival in my time. When I
haw its approach, I resolved to do my i1 dy be llie consequences to me what
they might, and I oifer my thanks to the Author of my being, that he. has
given me the. resolution and opportunity to discharge, what I honestly believe
to be that duty on this groat subject.
How the question will be decided, is acknowledged to he doubtful, so
nearly are the two Houses sep-,osed to be divided; but whatever may be its
fate now, 1 have the most perfect confidence in its_/?>in/triumph. The pub
lic attention is roused. The subject will be thoroughly investigated, and
I have no fears but the side I support, will prove to be the side of truth,
justice, liberty, civilization, and moral and intellectual excellence.
@FedFRASER