Full text of Official Documents, &c. in Relation to the Bank of the United States

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OFFICIAL.
IN

DOCUMENTS,

<fcc.

RELATION TO THE

House of Representatives of the United States,
April 13, 1830.
The Committee of Ways and Means, consisting of
The Honorable George M'Duffie, of S. Carolina, Chairman,
"
Gulian C. Verplanck, of New York,
"
John Gilmore, of Pennsylvania,
"
Walter H. Overton, of Louisiana,
ft
Henry W. Dwight, of Massachusetts,
"

Ralph 1. Ingersoll, of Connecticut.
Alexander Smyth, of Virginia,

#

.made the following

REPORT
?The Committee of

Ways and Means, to whpnk was referred

Message

of.

beg leave

to report:

the President, as relates to the

so mveh of the

Bank of the United

States,

That

they have bestowed upon the subject all the attention demanded bv
importance, and now respectfully submit the result of their deliberations to the consideration of the House.
There are few subjects, having reference to the policy of an established government, so vitally connected with the health of the body politic, or in which the pecuniary interests
of society are so extensively and deeply involved. No one of the attributes
of sovereignty carries with it a more solemn responsibility, or calls in requisition a higher degree of wisdom, than the power of regulating the common
currency, and thus fixing the general standard of value for a great commercial community, composed of confederated States.
S-ich being, in the opinion of the committee, the high and delicate trust
exclusively committed to Congress by the Federal constitution, they have
proceeded to discharge the duty assigned to them with a corresponding
sense of its magnitude and difficulty.
The most simple and obvious analysis of the subject, as it is presented
«i»v the message of the President, exhibits the following
questions for the
decision of the National Legislature.
1. Has Congress the constitutional power to incorporate a bank such
as
that of the United States?
2. Is it expedient to establish and maintain such an institution?
3. Js it expedient to establish " a National Bank, founded upon ihe credits intrinsic

i

J

it

of the Government and its revenues?"
If the concurrence of all the deptrtments of the Government, at

I.

A

difier-

ent periods of our history, under every administration, and during llie asecm
dencyofbotb the great political parlies, into which the country was divided,
soon after the adoption of the present constitution, shall be regarded as having the authority ascribed to such sanctions by the common consent of all
well regulated communities, the constitutional power of congress to incorporate a bank, may be assumed as a postulate no longer open to controversy.
In a little more than two years after the Government went into operation,'*
and at a period when most of the distinguished members of the Federal
Convention were either in the Executive or Legislative councils, the act, incorporating the first bank of the United States, passed both branches of
Congress by large majorities, and received the deliberate sanction of President Washington, who had then recently presided over the deliberations of
ibeConvention. The constitutional power of Congress to pass the act of
incorporation, was thoroughly investigated, bolh in the Executive Cabinet
and in Congress, under circumstances, in all respects, propitious to a dispassionate decision.
There was at that time, no organization of political
parties, and the question was, therefore, decided by those, who, from their
knowledge and experience, were peculiarly qualified to decide correctly;
and who were entirely free from the influence of that party excitement i nd
prejudice which would justly impair, in the estimation of posterity, the auNo perthority of a legislative interpretation of the constitutional charter.
sons can be more competent to give a just construction to the consiiiution,
than those who had a principal agency in framing it; and no administration
can claim a more perfect exemption from all those influences which, sometimes, pervert the judgments, even of the most wise and patriotic, than thaa^
of the Father of his country, during .the first term of his service.
Such were the circumstances, under which all the branches of the National Legislature solemnly determined that the power of creating a National
The bank thus created,
Bank was vested in Congress by the constitution
continued its operations for twenty years the period for which its charter
was granted during which time, public and private credit were raised,
froma prostrate to a very elevated condition, and the finances of the na*
tion were placed upon the most solid foundation.
When the charier expired, in 1811, Congress refused to renew it, principally owing, as the committee believe, to the then existing state of political
Soon after the bank was chartered, the two great parties that have
parties.
since divided the country, began to assume an organized existence. Mr. Jefferson and Mr. Madison, the former in the Executive Cabinet, and the latter
in Congress, had been opposed to the establishment of the bank, on conslitutional grounds, and being phced at the head of the party most unfavourable
to the extension of the powers of the Government, by implication, the bank
question came to be regarded as, in some degree, the test of political prin-

—

—

ciple.

When Mr.
litical

came into power, upon the strong tide of a great poodium of the Alien and Sedition laws was, in par^C
Bink of the United States; and, although he gave his

Jefferson

revolution, the

-communicated to the
official sanctiGntoan acL creating anew branch of that institution, at New
Orleans, and to another to punish the counterfeiting of its bills, yet, when
the question of renewing the charter came before Congress, it was discussed
And, though some of the most distinguished republi«iz a party question.
cans, including Mr. Gallatin, then Secretary of ihe Treasury, and Mr.
Crawford, then a member of the Senate, were decidedly in favor of the re-

—
measure by able arguments, the votes in both brandies
of Congress were distinctly marked as party votes. At no time, since the
commencement of the Government, has there existed a more violent party
ft was the
excitement, than that which marked the period under review,
period of the embargo, non-intercourse, and other commercial restrictions;
when the undiscriminating opposition of the leaders of the federal party to
'*the measures adopted by the administration, to vindicate our rights against
British aggression, had caused the great majority of the American people to
view these leaders as the apologists of a nation, aheady regarded in the light
When to these circumstances we add, that the stock of
of a public enemy.
the bank was principally held by British subjects, and Americans of the unpopular party, the House will readily perceive how great were the national
and party prejudices, which must have been arrayed against the proposition
It was stated by Mr. Clay, in a speech delivered in
to renew its charter.
the Senate, that seven-tenths of the stock belonged to British subjects, and
that certain English noblemen, and a late Lord Chancellor, were among the
very largest of the stockholders.
With all these difficulties to encounter,
the proposition for renewing the charter was lost only by the casting vote of
the President of the Senate, and by a majority of a single vote in the House
of Representatives.
In less than three yearsafter the expiration of the charter— the war with
Great Britain having taken place in the mean time the circulating medium
became so disordered, the public finances so deranged, and the public
liewal, sustaining the

I

—

credit so impaired, that the enlightened patriot,
f

Mr. Dallas, who then

pre-.

voided over + the Treasury Department, with the sanction of Mr. Madison,
and, as it is believed, every member of the cabinet, recommended to Congress the establishment of a National Bank, as the only measure by which
the public credit could be revived, and the fiscal resources of the Government redeemed from a ruinous, and otherwise incurable embarrassment:
and, such had been the impressive lesson taught, by a very brief, but fatal
experience, that the very institution, which had been so recently denounced,
and rejected by the republican party, being now recommended by a republican administration, was carried through both branches of Congress, as a
republican measure, by an overwhelming majority of the republican party.
It is true that Mr. Madison did not approve and sign the bill which passed
the two Houses, because it was not such a bill as had been recommended by
the Secretary of the Treasury, and because the bank it proposed to create,
was not calculated, in the opinion of the President, to relieve the necessities
of the country. But he premised his objections to the measure, by " waiving the question of the constitutional authority of the Legislature to establish, an incorporated bank, as being precluded, in his opinion, by repeated
recognitions, under varied circumstances, of the validity of such an institution in acts of the Legislative, Executive, and Judicial branches of the government, accompanied by indications, in different modes, of a concurrence
•T,f the general will of the nation."
Another bill was immediately intro
duced, and would, in all probability, have become a law, had not the news
of peace, by doing away the pressure of the emergency, induced Congress
to suspend further proceedings on the subject, until the ensuing session.
At the commencement of that session, Mr. Madison invited the attention
of Congress to the subject, and Mr. Dallas again urged the necessity of establishing a bank to restore the currency, and facilitate the collection and
disbursement of the public revenue; and so deep and solemn was the co»=
•

4
victionupon the minds of the public functionaries, that such an institution
was the only practicable means of restoring the circulating medium to a

of soundness, that, notwithstanding the decided opposition of all the
and their debtors, and, indeed, the whole debtor class of the
community, the act, incorporating the present Bank of the United States,
was passed by considerable majorities in both branches of Congress, and
*
approved by Mr. Madison.
This brief history of the former and present bank, forcibly suggests a few
practical reflections.
It is to be remarked, in the first place, that, since the
adoption of the Constitution, a bank has existed under the authority of the
Federal Government, for thirty-three out of forty yeais; during which time,
public and private credit have been maintained at an elevation fully equal to
what has existed in any nation in the world: whereas, in the two short intervals, during which no national bank existed, public and private credit were
greatly impaired, and in the latter instance, the fiscal operations of the Government were almost entirely arrested. In the second place, it is worthy of
special notice, that, in both the instances in which Congress has created a
bank, it has been done under circumstances calculated to give the highest
authority to the decision. The first instance, as has been already remarked,
was in the primitive days of the republic, when the patriots of the Revolution,
and the sages of the Federal Convention, were the leading members both of
the Executive and Legislative councils; and when General Washington, who,
at the head ol her armies, had conducied his country to independence, and,
as the head of the Convention, had presided over those deliberations which
resulted in the establishment of the present Constitution, was the acknowl-,*
edged President of a people, undistracted by party divisions. The second
instance was under circumstances of a very different, but equally decisive
We find the very party which had so recently defeated the propcharacter.
osition to renew the charter of the old bank, severely schooled both by adversity and experience, magnanimously sacrificing the pride of consistency,
and the prejudices of party, at the shrine of patriotism. It may be said
without disparagement, that an assembly of higher talent and purer patriotism has never existed since the days of the Revolution, than the Congress
If ever a political party exisby which the present bank was incorporated.
ted, of which it might be truly said, that "all the ends they aimed at were
They had just
their country's," it was the republican party of that day.
conducted the country through the perils of a war, waged in defence of her
rights and honour, and, elevating their views far above the narrow and miserable ends of party strife, sought only to advance the permanent happiness
of the people, it was to this great end that they established the present bank.
In this review, it will be no less instructive than curious, to notice some
of the changes made in the opinions of prominent men, yielding to the auMr. Madison, who was the leading opponent of the
thority of experience.
bank created in 1791, recommended and sanctioned the bank created in ,
1816; and Mr. Clay, who strenuously opposed the renewal of the charter in***
181 1, as strenuously supported the proposition to grant the charter in 1816.
That may be said of the bank charter, which can be said of few contested
questions of constitutional law. Both the great political parties that have so
long divided the country, have solemnly pronounced it to be constitutional,
and there are but very few of the prominent men of either party, who do not
When, to this imposing array of authorities,
stand committed in its favour.
the committee add the solemn and unanimous decision of the Supreme court,

state

state banks

*.

5
distinctly submitted the constitutional question fo
they not ask, in the language of Mr. Dallas, " can it
be deemed a violation of the right of private opinion to consider the constitutionality of a national bank as a question forever settled and at rest?"
And here the committee beg to be distinctly understood, as utterly disclaiming the idea of ascribing to the decision ofanyorof all the departments
%( the Government upon a great constitutional question, the binding authority which belongs to judicial precedents, in cases of mere private right, depending upon the construction of the ordinary acts of the Legislature. No

in a case which fully
their cognizance,

and

may

length of prescription, or concurrence of authority, can consecrate the usurpation of powers subversive of public liberty, and destructive of public
But, where the power exercised is clearly conducive to the
happiness.
public welfare, and its constitutionality is merely doubtful, it would seem to
be one of the most obvious dictates of practical wisdom, to regard the decision of those who had the best means of ascertaining the intention of the
Constitution, and who were actuated by the most undoubted purity and
disinterestedness of motive, as of sufficient authority at least to overruto
theoretical objections and silence individual scruples.
The committee will now submit a few remarks, with the design of showing, that, viewing the constitutionality of the bank as an original question,
the arguments in its favour are at least as strong as those against it.
The earliest, and the principal objection urged against the constitutionality of a national bank, was, that Congress had not the power to create corpoThat Congress has a distinct and substantive power to create corrations.
porations, without reference to the objects entrusted to its jurisdiction, is a
proposition which never has been maintained, within the knowledge of the
Committee; but, that any one of the powers expressly conferred upon Congress, is subject to the limitation, that it shall not be carried into effect by
the agency of a corporation, is a proposition which cannot be maintained, in
the opinion of the committee.
If congress, under the authority to pass all laics, necessary and proper for
carrying into effect the powers vested in all or any of the departments of th«
government, may rightfully pass a law inflicting Ihe punishment of death,
without any other authority, it is difficult to conceive why it may not pass a
law, under the same authority, for the more humble purpose of creating a corporation. The power of creating a corporation is one of the lowest attributes,
or, more properly speaking, incidents of sovereign power. The chartering of
a bank, for example, does not authorize the corporation to do any thing,
which the individuals composing it might not do without the charter. It is
the right of every individual of the union to give credit to whom he choosesand to obtain credit where he can get it. It is not the policy of any corrrmercial country to restrict the free circulation of credit, whether in the form
of promissory notes, bills of exchange, or bank notes. The charter of the
^Bank of the United States, therefore, merely enables the corporation to do, in
•fin artificial capacity, and with more convenience, what it would be lawful for
the individual corporators to do without incorporation. Mr. Girard established a bank in Philadelphia without a charter, which was in very high credit
within the sphere of its circulation; and it cannot be doubted, that he might
have formed a banking co-partnership with the principal capitalists in the
other commercial cities of the Union, of which the bills would have had a general credit in every part of the country, particularly if the Federal Government had provided that these bills should be received in discharge of its dues.

A

2

6
The

only material particular in which the charter of the Bank of the United
States confers a privilege upon the'.'cbrporation, apparently inconsistent with
the state laws, is, the exemption of the individual property of the corporators

from responsibility

for the debts of the corporation.
But, if the community
dealwi.ii the bank, knowing that the capital subscribed is alone liable for its
d^bts, no one can complain either of imposition or injury ; and, in point of

no one ever Ins complained on that score, or ever will. The real com- 1*
plaint against the bank, is not. that it has not a sufficient basis for its credit,
but that its credit is too extensive. The objection lies, therefore, not against

fact,

the artificial character communicated to the stockholders by the charter, but
against the pecuniary operations of the bank itself.
Now, these operations
consist in the use of its own capital
a faculty not surely derived from the

—

government, but, in the exercise of which, the government imposes many
useful restrictions for the benefit of itself and the community.
The committee have presented this brief analysis of a bank corporation,
with the view of shewing that there is nothing in the nature of the thing,
which renders it unfit to be an instrument in the hands of a government admitted to be sovereign in its appropriate sphere, for carrying into effect
ers expressly delegated.

pow-

now remains

for the committee to show that the Bank of the United
" necessary and proper," or in other words, a natural and appropriate means of executing the powers ves*ed in the Federal Government. In
the discussion of 1791, and also in thar before the Supreme Court, the
powers of raising, collecting, and disbursing the public revenue, of borrowing money on the credit of the United States, and paying the public debt,^
frere those which were supposed most clearly to carry with them ihe incidental right of incorporating a bank to facilitate these operations.
There can
be no doubt, that these fiscal operations are greatly facilitated by a bank,
and it is confidently believed that no person has presided twelve months over
the treasury, from its first organization to the present time, without coming
to the conclusion, that such an institution is exceedingly useful to the public
finances in time of peace, but indispensable in time of war.
But as this
view of the question has been fully unfolded in former discussions, familiar to the house, the committee will proceed to examine
the relation
which the Bank of the United States bears to another of the powers of the
Federal Government, but slightly adverted to in former discussions of the
It

States

is a

subject.

" coin money and fix thefplue thereof," is expressly and exThis grant was evidently intended to invest
Congress with the power of regulating the circulating medium. "Coin"
was regarded, at the period of framing the constitution, as synonymous with
" currency;" as it was then generally believed that bank notes could only be
maintained in circulation by being the true representative of the precious
metals. The word " coin," therefore, must be regarded as a particular term,
standing as the representative of a general idea. No principle of sound construction will justify a rigid adherence to the letter, in opposition to the plain
intention of the clause.
If, for example, the gold bars of Jticardo should
be substituted for our present coins, by the general consent of.the commercial world, could it be maintained that Congress would not have the power
to male* such money, and fix its value, because it is not "coined?" This would
be sacrificing sense to sound, and substance to mere form. This clause of
the Constitution is analogous to that which gives Congress the power " to

The power

to

clusively vested in Congress.

*-

—
Giving to the word " establish" its restricted interestablish post roads."
pretation, as being equivalent to "fix," or "prescribe," can it be doubted
that Congress has the power to establish a can.d, or a river, as a post route,
Roads were the ordinary channels of conveyance,' and
as well as a road?
the term was, therefore, used as synonymous with " routes" whatever might
be the channel of transportation, and, in like manner, " coin," being the or*dinary and most known form of a circulating medium, that term was used as

synonymous with currency.

An argument in favor of the view just taken, may be fairly deduced from
the fct,that the states are expressly prohibited from "coming money, or
emitting bills of Credii," and from making any thing but "gold nd silver a
;

This strongly confirms the idea, that
lawful tender in payment of debts."
'the subject of regulating the circulating medium, whether consisting of coin
from the contiol of the
o'- paper, was, at the same time that, it was taken
States, vested in the only depository in which it could be placed, consistently with the obvious design of having a common measure of value throughout
the Union.

But, even

if

it

should be conceded, that the grantof power to" coin

money

the value thereof," dees not, in its terms, give Congress the power of
regulating any other than the " coined " currency of the Union, may not the

and

fix

power of regulating any substituted currency, and especialfy one which is the
professed representative of coin, be fairly claimed as an incidental power
as an essential means of carrying into effect the plain intention of the ConThis power was
stitution, in clotlrng Congress with the principal power?
Lrranted in (he same clause with that to regulate weights and measures, and

The one was designed

to ensure a uniform measure of
designed to ensure a uniform measure of quantity.
The former is decidedly the more important, and belongs essentially to the
General Government, according to every just conception of our system.
currency ofuni form value is esseniial to what every one will admit to be of
cardinal importance: the equal action-of our revenue system, upon the difThe state of things which existed when the bank
ferent pat ts of the Union.
was incorporated, furnished a most pregnant commentary on this clause of
The currency of the country consisted of the paper of lothe constitution.
At one of the principal sea-ports the local
cal banks, variously depiecia'ed.
currency was 20 percent, below par. Now i! was in vain for Congress to regulate the value of coin, when the actual currency, professing to be its equivalent, bore no fixed relation to it. .This great and essential power of fixing
the standard of value, was, in point of fact, Taken from Congress, and exercised by some hundreds of irresponsible banking corporations, with the strongest human motives to abuse it, because their enormous profits resulted from
The power of laying and collecting imposts and excises, is exthe abuse.
pressly subject to the condition that they " slrdl be uniform throughout the
United States;" and it is also provided, that "no preference shall be given, by
tiny regulation of commerce, or revenue, to the ports of one state over 'hose
of another." Now, when it is known that the circulating medium of Baltimore was 20 per cent, below the Vdlue of the circulating medium of Boston,
is it not apparent that an impost duty, though nominally uniform, would in
effect, make a discrimination in favor of Baltimore, proportioned :o the depreciation of the local currency?
Congress, therefore, not onlv had the
power, but as it seems to the committee, were under the most solemn con
stitutional obligations to restore the disordered currency ; and the bank of the
for similar reasons.

value, as the other

vr:>s

A

8
United States was not only an appropriate means

for the

accomplishment of

that end, but in the opinion of the committee, the only safe and effectual
means that could have been used. This view of the subject is in full accordance with the opinion of Mr. Madison, as expressed in his Message of De-

cember, 1816. " But," saya he, " for the interest of the community at large,
as well as for the purposes of the Treasury, it is essential that the nation
*
should possess a currency of equal value, credit, and use, wherever it may
The Constitution has entrusted Congress, exclusively, with the
circulate.
power of creating and regulating a currency of that description, and the
measures which were taken, during the last session, in execution of the
power, give every promise of success. The bank of the United States,
under auspices the most favourable, cannot fail to be an important auxiliary.'"
Such are the authorities and such the arguments which have brought the
committee to the conclusion, that the power to incorporate a bank is incidental to the powers of collecting and disbursing the public revenue; of borrowing money on the credit of the United States; of paying the public debt;
and, above all, of fixing and regulating the standard of value, and thereby insuring, at least so far as the
and equality of taxation.
II.

The next

medium of payment is concerned,

question proposed for consideration,

is

the uniformity

the expediency of es-

tablishing an incorporated bank, with a view to promote thegreatends already indicated. In discussing the constitutionality of such a measure, some

of the considerations which render it expedient have been slightly unfolded.
But these require a more full and complete developement, while others remain to be presented.
It must be assumed as the basis of all sound reasoning on this subject,
that the existence of a paper currency, issued by banks deriving their char-

,.

from the state governments, cannot be prohibited by Congress. Indeed,
are so extensively interwoven with the commercial operations of society, that even if Congress had the constitutional power, it would be utterly impossible to produce so entire a change in the monetary system of the country, as to abolish the agency of banks of discount, without involving the community in all the distressing embarrassments usually attendant on great political revolutions, subverting the titles
The sudden withdrawal of some hundred millions
to private property.
of bank credit, would be equivalent, in its effects, to the arbitrary and despotic transfer of the property of one portion of the community to another, to
Whatever, therefore, may be
the extent, probably, of half that amount.
the advantages of a purely metallic currency, and whatever the objections to a circulating medium partly composed of bank paper, the committee consider that they are precluded, by the existing state of things,,
from instituting a comparison between them, with a view to any practical reters

bank credit and bank paper

sult.
If they

were not thus precluded, and

it

were submitted

to

them as an

ori-

ginal question, whether the acknowledged and manifest facilities of bank
credit and bank paper, are more than counterbalanced by the distressing vicissitudes in trade incident to their use, they are by no means prepared to
say, that they would not give a decided preference to the more costly and

cumbersome medium.
But the question really presented for

their determination, is not between
a metallic and a paper currency, but between a paper currency of uniform
value, and subject to the control of the only power competent to its regula-

"

—

.

and a paper currency of varying and fluctuating value, and "subject to
no common or adequate control whatever. On this question it would seem
that there could scircely exist a difference of opinion; and that this is substantially the question involved in considering the expediency of a national
bank, will satisfactorily appear by the comparison of a state of the currency
previous 10 the establishment of the present bank, and its condition for the
tton,

fast ten years

Soon

of the charter of the first bank of the United
local banks sprung up under the pecuniary
exigencies produced by the withdrawal of so large an amount of bank credit,
as necessarily resulted from the winding up of its concerns
an amount falling very little shon of fifteen millions of dollars.
These banks being entirely free from the salutary control winch the hank of the United States hud
recently exercised over the local institutions, commenced that system of imprudent trading and excessive issues, which speedily involved the country
in all the embarrassments of a disordered currency.
The extraordinary
stimulus of a heavy war expenditure, derived principally from loans, and a
corresponding multiplication of local banks, chartered by the double score
in some of the States, hastened the catastrophe which must have occurred,
at no distant period, without these extraordinary causes.
The last year of
the war presemed the singular and melancholy spectacle of a nation abounding in resources, a people abounding in self-devoting patriotism, and a
government reduced to the very brink of avowed bankruptcy, solely for the
want of a national institution, which at the same time that it would have facilitated the government loans and other treasury operations, would have furnished a circulating medium of general credit in every part of the Union.
In this view of the subject, the committee are fully sustained by the opinion of Mr. Dallas, then Secretary of the Treasury, and by the concurring and
almost unanimous opinion of all parties in Congress: for, whatever diversity of opinion prevailed, as to the proper basis and organization of a
bank, almost every one agreed that a national bank, of some sort, was indispensably necessary to rescue the country from the greatest of financial caafter die expiration

States, an

immense number of

—

lamities.

The committee will now present a brief exposition of the state of the currency at the close of the war, of the injury which resulted from it, as well to
the government as to the community, and their reasons for believing that it
eould not have been restored to a sound condition, and cannot now be preserved in that condition, without the agency of such an institution as the
Dink of the United States.
The price current appended to this report will exhibit a scale of depreciation in the local currency, ranging through various degrees to 20, and even
to 25 per cent.
Among the princip.il easiern cities, Washington and Baltimore were the points

at which the depreciation was greatest.
The paper of
the bnnks in these places, was from 20 to 22 percent, below par.
At Philadelphia, the depreciation was considerably less, though even there it was 17

New York

and Chileston, it was from 7 to 10 per cent.
where banks were established, the depreciation was even greater than at Washington and B dtimore. In the western
part of Pennsylvania, and particularly at Pittsburgh, it was 25 per cent.—
These statements, however, of the relative depreciation of bank poper at various places, as compared with specie, give a very inadequate idea of the e
normous evils inflicted upon the community, by the excessive issues of bank
to 18 per cent.

But

In

in the interior of the country,

10
paper.

No proposition

whether

it

is

better established than that the value

of inonejv

consists of specie or paper, is depreciated in exact proportion to
the increase of ks quantity, in uny given state of the demand for it.
If,

example, the banks, in 1816, doubled the quantity of the circulating metheir excessive issues, they produced a general degradation of the
entire mass of the currency, including gold and silver, proportioned to the
redundancy of the iss tes, and wholly independent of the relative deprecia*
tion of bank p iper at different pi tees, as compared with specie.
The nominal money prlceof every article was of course one hundred percent, higher
than it would have been, but for the duplication of the quantity of the circulating medium.
Money is nothing more nor less than the measure by which
the relative value of all articles of merchandise is ascertained.
If, when the
circulating medium is fifty millions, an article should cost one dollar, it
would certainly cost two, if, without any increase of the uses of a circulating
medium, its quantity should be increased to one hundred millions. This rise
in the price of commodities, or depreciation in the value of money, as compared with them, would not be owing to the want of credit in the bank bills,
of which the currency happened to be composed.
It would exist, though
these bills were of undoubted credit, &. convertible into specie at the pleasure of the holder, and would result simply from the redundancy of their
quantiry.
It is important to a just understanding of the subject, that the
relative depreciation of bank paper at different places, as compared with
specie, should not be confounded with this general depreciation of the
entire mass of the circulating medium, including specie.
Though closely allied, both in their causes and effects, they deserve to be separately con^
for

dium by

sidered.

The

evils resulting

places, are

more

from the

rel itive

depreciation of bank paper at different
more palpable in their nature,

easily traced to their causes,

and consequently more "enendly understood by the community.

much

Though

ruinous than the evils resulting from the general depreciation of
the whole currency, they are yet of sufficient magnitude to demand a full
less

exposition,

A

very serious evil, already hinted at, which grew out of the relative de?
preciation of bank paper, at the different points of importation, was its inevitable tendency to draw all the importations of foreign merchandise to
the cities where the depreciation was greatest, and divert them from those
where the currency was comparatively sound. If the bank of the United
States had not been established, and the government had been left without
any alternative but to receive the depreciated local currency, it is difficult
to imagine the extent.lo which the evasion of the revenue laws would have
feeen carried.
Every state would have had an interest to encourage the ex«essive issues of its banks and increase the degradation of its currency,
with a view to attract foreign commerce. Even in the condition which the

currency had reached in 1816, Boston, and New York, and Charleston, would
have found it advantageous to derive their supplies of foreign merchandisethrough Baltimore; and commerce would undoubtedly have taken that direction had not the currency been corrected.
To avoid this injurious diversion of foreign imporis, Massachusetts, and New Fork, and South Carolina,
would have been driven, by all motives of self-defence and self-interest, to
degrade their respective currencies at least to a par with the currency of Baltimore; and thus a rivalry in the career of depreciation would have sprjng
up, to which no limit can be assigned.
As the tendency of this state of

—
11
things would have been to cause the largest portion of the revenue to be collected at a few places, and in (he most depreciated of the local currency, it
would have followed that a very small part of that revenue would have been
The government would
disbursed at the poinis where it was collected.
consequently have been compelled to sustain a heavy loss upon the transfer
The annual loss which would
of its funds to the points of expenditure.
Aave resulted from these causes alone, cannot be estimated at a less sum

than two millions of dollars.

But

the principal loss which resulted from

bad paper

at different places,

the relative depreciation of
want of general credit, was that susthe great operations of commercial exchange.

and

its

tained by the community in
extent of these opei ations annually, maybe safely estimated at sixty
millions of dollars. Upon this sum, the loss sustained by the merchants, and

The

plaiite*sand farsaers, and manufacturer, was not probably less than an average of 10 percent, being the excess of the rate of exchange beyond its natural rue in a sound state of the currency, and beyond the rate to which it has

been actually reduced by the operations of die Bank of the United States.
be thus perceived that an annual tax of six millions of dollars was levied
from the industrious and productive classes, by the large monied capitalists in our commercial cities, who were engaged in the business of brokerage.
A variously depreciated currency, and a fluctuating state of the exchanges,
open a wide and abundant harvest to the money brokers; and it is not,
therefore,
surprising, that they should be opposed to an institution,
which, at the same time that it h;s relieved the community from the enormous tax just stated, lias deprived them of the enormous profits which they
derived from speculating in the business of exchange.
In addition to the
losses sustained by the community, in the great operations of exchange,
extensive losses were suffered throughout the interior of the country, in
all the smaller operations of trade, as well as by the failure of the numerous
paperbmks, puffed into a factitious credit by fraudulent artifices, and having no substantial basis of capital to insure the redemption of their bills.
But no adequate conception can be formed of the evils of a depreciated
eurrency, without looking beyond the relative depreciation, at. different
places, to the general depreciation of the entire mass.
It appears from the
report of Mr. Crawford, the Secretary of the Treasury in 1820, that during
the general suspension of specie payments, by the local baniis, in the years
1815 and 1816, the circulating medium of the United Sta.es hid reached
the aggregate amount ofone hundred and ten millions of dollars, and that,
in the year 1819, it had been reduced to forty-five millions of dollars, being a
reduction of fifty-nine percent, in the short period of four yens.
The committee are inclined to the opinion, that the severe and distressing operation
of restoring a vicious currency to a sound state, by the calling in of bank
paper, and the curtailment of bank discounts, had carried the reduction of
the currency, in 1819, to a point somewhat lower than was consistent with
*«the just requirements of the community for a circulating medium, and that
the bank discounts have been gradually enlarged since that time, so as to
satisfy those requirements.
It willbe assumed, therefore, that the circulating medium of the United States has been fifty-five millions of dollars for
Jt will

the last ten years, taking the average.

Even upon this assumption it will follow, that the national currency has
been one hundred per cent, more valuable for the last ten years, than it was
In other words, two dollars would purchase no more of any conv
in 1816.

12
modity in 1816, than one dollar Ins been capable of purchasing at any time
that the depreciation of the paper of
ft is obvious, therefore,
since 1819,
particular banks, at any particular time, as compared with specie, furnishes
no criterion by which to ascertain the general depreciation of the whole currency, including specie, as compared with the value of that currency at a
A specie dollar in 1816, would purchase no more than
different period.
half as

much

as a paper dollar will purchase at present.

*

the general depreciation resulting from a redundant currency, the committee will now proceed to point
out some of the injurious consequences which have resulted from those

Having endeavoured

to explain, thus briefly,

great changes in the standard of value, which have been unavoidably produced by the correction of the redundancy.
An individual who borrowed asum of money in 1816, and paid it in 1820,

evidently returned to the lender double the value received from him; and
in 1820, which he had contracted in 1816, is evidently
paid double the value he had stipulated to pay, though nominally the same
amount in money. It is in this way that fluctuations in the quantity and
value of the currency interfere, in the. most unjust and injurious manner, be-

one who paid a debt

tween debtor and creditor
And when banks have the power of suspending specie payments, and of
arbitrarily contracting and expanding their issues, without any general control, they exercise a more dangerous and despotic power over the property
of the community, than was ever exercised by the most absolute government. In such a state of things, every man in the community holds his
property at the mercy of money making corporations, which have a decided
interest to abuse their power.
By a course of liberal discounts and excessive issues for a few years, followed by a sudden calling in of their .debts and contraction -of their issues,
they would have the power of transferring the property of their debtors to
Debts contracted, when their discounts
themselves, almost without limit.
were liberal, and the currency of course depreciated, would be collected when
their discounts were almost suspended, and the currency of course unnaturally appreciated ; and in this way the property of the community might pass
under the hammer, from its righiful owners to the banks, for less than one
If the committee have not greatly mistaken the
half its intrinsic value.
matter, there is more of history than of speculation in what they have here
presented to the consideration of the House.
It is impossible to form any thing like an accurate estimate of the injuries
and losses sustained by the community, in various ways, by the disorders
and fluctuations of the currency, in the period which intervened between
the expiration of the old bank charter, and the establishment of the present
bank. But some tolerable notion may be formed of the losses sustained by the

government, in its fiscal operations, during the w ir.
The committee have given this part of the subject an attentive and careful
examination, and they cannot estimate the pecuniary losses of the govern-*?
ment, sustained exclusively for the want of a sound currency, and an effiIf
cient system of finance, at a sum less than forty-six millions of dollars.
they shall make this apparent, the House will have something like a standard for estimating the individual losses of the community.
The government borrowed, during the short period of the war, eighty millions of dollars, at an average discount of fifteen per cent, giving certificates of stock, amounting to eighty millions of dollars, in exchange for sixty

13
of dollars, in such bank paper as could be obtained.
In this
statement, treasury notes are considered as stock, at twenty per cent, disUpon the very face of the transaction, therefore, there was a loss of
count.
twelve millions of dollars, which would, in all probability, have been saved,

-eight millions

if the Treasury had been aided by such an institution as the Bank of the UBut the sum of sixty-eight millions of dollars, received by the
nited States.
.government, was in a depreciated currency, not more than half as valuable
as that in which the stock given in exchange for it, has been and will be re-

deemed. Here, then, is another loss of thirty-four millions, resulting, incontestibly and exclusively, from the depreciation of the currency, and making, with the sum lost by the discount, forty-six millions of dollars. While,
then, the government sustained this great pecuniary loss in less than three
years of war, amounting annually to more than the current expenses of the
government in time of peace, it is worth while to inquire., who were the
persons who profited to this enormous amount by the derangement of the
currency? It will be found that the whole benefit of this speculation upon
the necessities of the government was realized by stockjobbers and money
brokers, the very same class of persons who profited so largely by the business of commercial exchanges, in consequence of the disorders tf the currency, and who have the same interest in the recurrence of those disorders
as lawyers have in litigation, or physicians in the diseases of the human
frame.
Having presented these general views of the evils which existed
previous to the establishment of the Bank of the United States, it remains

committee
of those evils.

for the

to

enquire how far

this institution Jias effected a

remedy

The first great question which arises under this branch of the inquiry is
whether or no the bank has corrected the disorders of the circulating medi»
um, by ..providing a paper currency, convertible into specie at the pleasure
of the holder, and of equal value wilb specie at all points of the Union?
The Chief Magistrate, in that part of his first message which relates loathe Bank of the United States, expresses the opinion, that " it has failed in
the great end of establishing a uniform and sound currency."
After living to this opinion all the consideration to which it is so justly entitled,
from the eminent station and high character of the citizen by whom it is
entertained, the committee are constrained to express their respectful but
decided dissent from it. It is true, that the bank does not, in all cases,
redeem the bills issued by any one of its branches, indiscriminately at all
the other branches; and it is in reference to this fact, as the committee presume, that the President expresses the opinion that the institution has failed to establish "a uniform and sound currency."
It is confidently believed, that ho one of the persons who were principally
instrumental in establishing the bank, ever entertained an idea that it
would attempt to redeem its bills at -any of its offices, other than those br
which they should be respectively issued. The .charter certainly contains
/ap such requirement, and it would have been highly inexpedient if it had, to
say nothing of its obvious injustice. The inevitable effect of such a requirement, would have been to compel the bank to perform the whole of
the commercial exchanges of the country, without any compensation.
It
would not be more unjust to require a Rail Road Company to transport all
the productions of the country without compensation. No institution could
stand such an operation; and it was the injudicious attempt of the first direction of the bank to do it, that principally contributed to the embarrass**

14
ments of 1819.

A committee was appointed by

tives, in that year, to investigate the

the House of Representamanagement of the bank and in tire
;

report of that committee, as well as in the discussions to which it gave rise
instituisi the House, this attempt of the direction to redeem the bills of the
tion, indiscriminately, at all its branches, was indicated as one of the causes
No one who participated in the debate,
.of the existing embarrassment.
pretended to allege that the bank was bound to redeem its bills indiscrimiit was expedient ,that it should do so. The most that any one
was to apologise for the unwise attempt.
But it yet remains for the committee to show that this indiscriminate re-

nately, or that
did,

deemability of the bills of all the branches of the bank, is not necessary to
" the establishment of a uniform and sound currency."
Human wisdom has never effected, in any other country, a nearer approach to uniformity in the currency, than that which is made by the use of,
If, therefore, it can be shown that the bills of the
the precious metals.
United States Bank, are of equal value with silver at all points of the Union,
it would seem that the proposition is clearly made out, that the bank has
accomplished " the great end of establishing a uniform and sound currency."
Jt is not denied that the bills of the mother bank, and of all its branches^
are invariably and promptly redeemed in specie, whenever presented at the
offices by which they have been respectively issued, and at which, upon
Nor is it denied that the bills of
their face, they purport to be payable.
the bank, and of all the branches, are equal to specie in their respective
Bills, for example, issued by the mother bank, are
sphere? of circulation.
admitted to be equal to silver in Pennsylvania, and all those parts of the adBut it is contendtfu
jacent states of which Philadelphia is the market.
that these bills, not being redeemable at Charleston and New Orleans, are
not of equal value with silver to the merchant who wishes to purchase cotton
with them, in those cities.
Now, if the Philadelphia merchant had silver,
instead of bank bills, he certainly could not effect his purchases with it in
Charleston or New Orleans, without having the silver conveyed to thosa
places; and it is equally certain that he could not have it conveyed there,
without paying for its transportation and insurance. These expenses constitute the natural rate of exchange between those cities, and indicate the
exact sum which the merchant would give as a premium for a bill of exchange, to avoid the trouble and delay of transporting his specie. It is
obvious, therefore, that even for these distant operations of commerce, silver would be no more valuable than the bills of the bank for these would
purchase a bill of exchange on either of the cities mentioned, precisely as
Jf the operation should be reversed, and the planter of
well as silver.
Louisiana or South Carolina should desire to place his funds in Philadelphia with a view to purchase merchandise, he would find the bills of tho
branch bank in either of those States, entirely equivalent to silver in effecting his object.
Even, therefore, if the bank had not reduced the rate of
the exchanges, it might be safely asserted, that its bills would be of equal
value with silver at every point in the Union, and for every purpose,
;

whether

But it

"local

or general.

impossible to exhibit any thing like a just view of the beneficial
operations of the bank, without adverting to the great reduction it has
jeffected, and the steadiness it has superinduced, in the rate of the comme»>
Though this branch of the business of the
,eial exchanges of the country.
bank has been the subject of more complaint, perhaps, than any other, th©
is

15
Committee hate no

it has been productive of the most
community, and deserves the highest commendation.

hesitation in saying,

signal benefits to the

has been already stated that it has saved the community from the imlosses resulting from a high and fluctuating state of the exchanges.
In this resIt now remains to show its effect in equalizing the currency.
.^pect, it has been productive of results more salutary than were anticipated
by the most sanguine advocates of the policy of establishing the bank. It
has actually furnished a circulating medium more uniform than specie.—
This proposition is susceptible of the clearest demonstration. If the whole
circulating medium were specie, a planter of Louisiana, who should desire
to purchase merchandise in Philadelphia, would be obliged to pay one per
cent, either for a bill of exchange on this latter place, or for the transportation and insurance of his specie.
His specie at New Orleans, where he had
no present use for it, would be worth one per cent, less to him than it would
be in Philadelphia, where he had a demand for it. But, by the aid of the
bank of the United States, one half of the expense of transporting specie is
now saved to him. The bank, for one half of one per cent, will give him a
draft upon the mother bank of Philadelphia, with which he can draw either
In like manner, the bank
the bills of tint bank, or specie, at his pleasure.
and its branches will give draughts from any point of the Union to any other
where offices exist, at a per centage greatly less than it would cost to
It

mense

transport specie, and in

many

instances at par.

If the

merchant or planter,

however, does not choose to purchase a draught from the bank, but prefers
transmitting the bills of the office where he resides to any distant point, for
Commercial purposes, although these bills are not strictly redeemable at the
point to which they are transmitted, yet, as they are receivable in payment
of all dues to the government, persons will be generally found willing to
take them at par; and if thej. should not, the bank will receive them frequently at par, and always at a discount much less than would pay the expense of transporting specie. The fact that the bills of the bank and its
branches are indiscriminately receivable at the custom-houses and land offices, in payment of duties, and for the public lands, has an effect in giving
uniformity to the value of these bills, which merits a more full and distinct
explanation.
For all the purposes of the revenue, it gives to the national currency
that perfect uniformity, that ideal perfection, to which a currency of gold
and silver, in so extensive a country, could have no pretensions.
bill
issued at Missouri is of equal value with specie at Boston, in payment of
duties ; and the same is true of all other places, however distant, where the
bank issues bills, and the government collects its revenue. When it is,
moreover, considered, that the bank performs with the most scrupulous
punctuality, the stipulation to transfer the funds of the government to any
point where they may be wanted, free of expense, it must be apparent that
Jhe committee are correct, to the very letter, in stating that the bank has
furnished, both to the government and to the people, a currency of absolutely uniform value in all places, for all the purposes of paying the public
contributions, and disbursing the public revenue.
And when it is recollected that the government annually collects and disburses more than twentythree millions of dollars, those who are at all familiar with the subject will
at once perceive that bills which are of absolutely uniform value for this
vast operation, must be very nearly so for all the purposes of general com-

A

merce.

—
16
Upon the whole, then, il
the world has a circulating

may be confidently asserted, that no country iff
medium of greater uniformity than the United

no country of any thing like the same geographical extent
a currency at all comparable to that of the United States on the score of
uniformity.
The committee have seen the statement of an intelligent traveller, who has visited almost every part of Europe, exhibiting the great vari,
ations of the currency in different parts of the same empire or kingdom. In
Russia, the bills of the bank of St. Petersburgh have a very limited circulation.
At -Riga, and throughout Cuurland, Livonia, and all the Southern •
In Denmark,
parts of the empire, the currency is exclusively of silver coins.
the notes of the bank of Copenhagen are current only in Zealand, the other
islands, and Jutland, but will not pass at all in Slcswick and Ilolst.cin, which
Since the Congress of Vienna,
constitute the best portion of the kingdom.
Germany is divided into thirty-nine separate States, each having a distinct
Out of the territory
currency, though represented in the! Diet at Frankfort.
in which these several currencies arc issued, they are mere articles of merchandise; which circumstance has given rise in every town toga numerous
and distinct class of tradesmen, called money changers. How far those
separate and unconnected currencies* have a tendency to embarrass commerce, maybe inferred from the fact, that a traveller going from St. Petersburgh to Calais will lose upon the unavoidable changes of money an
average of six per cent. In France, the bills of the bank are of such large
denominations as to be adapted only to the greater operations of commerce,
and are principally confined to the Bankers and extensive traders in Paris.
The general currency is silver; and to avoid the trouble of carrying this t£
distant parts of the kingdom, gqld pieces, or bills of exchange, which are
preferable, are purchased at a premium of from one and a half to four per
cent.
After this brief review of the currencies of Europe,' the committee
will barely state, as a conclusive vindication of our currency from the-imputation of unsoundness, that there is no point in the Union, at which a bill
of the United States Bank, issued, at the opposite extremity of the country,
States; and that
lias

,

discount of more than One-fourth of one per cent.
In confirmation of the views here presented, as to the comparative uniformity of the currency furnished by the bank, and, also, as to the obligation of the bank to redeem its bills, indiscriminately, at all the offiees, the
committee will present a few brief extracts from the speech of a statesman,
whose opinions have every title to auihority on these important subjects.
Mr. Lowndes, in discussing the question, how far the bank had performed
the great duty for which it was created, used the following decided language in 1819^ when the currency had not reached the point of uniformity it
is at a

has

now

"The

attained by one half of one per cent.
great object of the government in chartering

trie

bank, was topro-

vide a currency which should have that degree of stability and unifornrity-in
and re^=.
its value which is required by the interests both of our commerce
currency, equally valuable at every place and every time-, c&rrnot
enue.
be provided by human wisdom. The nearest approach to this object has
been generally supposed to be afforded by the employment of gold and silThe 14th Congress did not aim at ideal perver as the measures of value.
fection; they wished to combine with the conveniences of bank circulation
an uniformity of value equal to that which was possessed by the precious
metals; and the means which they employed to secure this uniformity were
simple and effectual, by enjoining, under a heavy penalty, the payment of all

A

'

'

.

—
17
In the report, indeed, the notes of the nanotes in coin upon demand.
bank are said to be now ' on the same footing with those of local
banks.'
Of the footing on which local bank notes stood, he should speak
hereafter; but the price current upon his table informed him, that the greatest
discount on branch notes of the United States, was three fourths of one per
This was a value much more uniform than that which coin could be
cent.
its

tional

expected to have in so extensive a country. He had been lately looking into
a book on political economy, which had been published here, with high, and
the
in respect to its clearness and precision, with just commendations
work of Mr. Traey. He inferred from one of his chapters, that the difference of exchange between Marseilles and Paris was often from two to three
percent. If, with all the facilities afforded by the internal, improvements
in which France is so rich, with a currency- consisting almost exclusively of
gold and silver, the variation in the value of money is three times greater in
her territory than on our continent, can it be said-j that, in this respect, the
bank has not fulfilled the objects of its institution? Before its establishment, the ^alue of bank notes, even in the commercial States, had varied
twenty percent, from each other; and, as hone of them bore a fixed proportion to the precious metals, or to any natural standard, it was impossible to
You have required that the currency
assign any limit to their depreciation.
furnislied by the national bank should be every where convertible into silver, and it is so.
You have expected that it should be as' uniform as coin,
and it is more so. He would not detain the committee by reading a paper,
which he had prepared with that intention, containing the state of exchange,
Since the establishment of the bank, with England, France, and Holland,
for he found himself occupying much more of their time than he had expecBut he believed that any. member, who should turn his attention to
ted.
He thought
the subject, would remark its steadiness during that period.
himselfjustified in drawing from this fact a conclusion highly favorable to
the bank."
In reference to the great depreciation of the paper of the local banks, previous- to the establishment of that of the United States, he said:
" Did the interests or duty of the government of the United States permit that this currency should be received by it? Some dissatisfaction was
expressed because the branch notes of the United States Bank were at a
He read from a price current the
discount of three-fourths of one per cent.
state of the market for banknotes, by which it appeared that notes, which
were insisted to be in very good credit, varied from a discount of two and a
half to one of seven, fifteen, twenty-five, and even thirty percent.
Was our
revenue to be received in these notes? How were they to be employed?
They might be expended in the district in which they were issued. B»t
was the expenditure of every district to be exactly limited to its revenue?
What became of the Union'if it were so? He spoke of the thing, and not the
aame. Our Union might dissolve in imbecility as well as to be destroyed
by violence. Did not union imply, that the resources of one state, its
money as well as its men, might be employed for the defence of another?
But, if the government were willing to bear the loss of a depreciated and
unequal .currency, it must neglect the plainest principle of the Constitution
The committee must ' well remember,
in doing so: equality of taxation.
that, before the establishment of the national bank, such was the unequal value of currency in the different states, that the merchants paid duties, varying fifteen percent, from each other on the same articles. 1 "
B 2

—

k

-

—

.

18

On

the question, whether the bank was bound to redeem, indiscriminate*
the bills of all its branches, he said:
" He should not argue that the bank was not bound to pay its notes, indis*
criminately, at all its offices. He believed that nobody now contended that
*
*
*
" It was no unfair account of the practical
it was."
operation of the system of which he was speaking, to say that it gave to the P

ly,

branches where the exchange was unfavorable, the entire disposition of
the specie of those branches where the exchange was favorable. Upwards of
six millions of specie have been sent to the branch of New York, besides the
amount which has been paid by the subscribers of the bank there; but, in issuing notes which the bank of New York has been obliged to redeem, every
branch throughout the country has drawn upon a fund, with whose condition at the time it could not be acquainted."
" Such a system might be expected to produce inconvenient changes in
the distribution of bank capital, an extreme facility of obtaining loans at
*
*
*
one time, and expected contractions of discount at another."
" Whenever the state of exchange is unfavorable, whenever the just principles of banking require a reduction of discounts, then, under this system of
indiscriminate payment of its notes, the bank has nothing to fear from a
draught of specie, and is encouraged to lend to every applicant. Wherever
the exchange is favorable, and on the sound principles of banking, an enthere the flow
larged accommodation might be given to the community
of notes from every state whose exchange is unfavorable, contracts or suspends all the operations of the bank. Thus, wherever discounts should be
1
enlarged, the tendency of this system is to reduce them, and to enlarge
them wherever they should be reduced."
Independently of the gross injustice of requiring the bank to perform all
the exchanges of this extensive confederacy without any compensation,
these enlightened views show most conclusively its inexpediency and injusIt would inevitably
tice, as it regards the different sections of the Union.
render those parts of the Union where the bank issues were prudent and moderate, tributary to those where the issues were injudicious and excessive.
In this way, the very inequality in the currency, which the bank was designed to correct, would be perpetuated by the vain attempt to make it perform
The power of annihilating space, of transporting money
impossibilities.
or any other article to the most distant points, without the loss of time or
the application of labor, belongs to no human institution.
But the salutary agency of the Bank of the United States, in furnishing
a sound and uniform currency, is not confined to that portion of the curOne of the most important purposes
rency which consists of its own bills.
which the bank was designed to accomplish, and which, it is confidently
believed, no other human agency could have effected, under our federative
system of government, was the enforcement of specie payments on the part
of numerous local banks, deriving their charters from the several states, andr
whose paper, irredeemable in specie, and illimitable in its quantity, constiAmidst a combination of
tuted the almost entire currency of the country.
the greatest difficulties, the bank has almost completely succeeded in the
performance of this arduous, delicate, and painful duty. With exceptions too inconsiderable to merit notice, all the State banks in the Union
have resumed specie payments. Their bills, in the respective spheres of
their circulation, are of equal value with gold and silver; while, for all the
operations of commerce, beyond that sphere, the bills or the checks of the

*****
—

^

—
19
bank of the United States are even more valuable than specie. And even
in the very few instances in which the paper of state banks is depreciated,
those banks are winding up their concerns; and it may be safely said, that
no citizen of the Union is under the necessity of taking depreciated paper,
because a sound currency cannot be obtained. North Carolina is believed
,to be the only state where paper of the local banks is irredeemable in speEven there, the depreciation is only
cie, and consequently depreciated.
one or two per cent., and what is more important, the paper of the Bank of
the United States can be obtained by all those who desire it, and have an
equivalent to give for it.
The committee are aware, that the opinion is
entertained by some, that the local banks would, at some time or other, either voluntarily, or by the coercion of the state legislatures, have resumed
specie payments.
In the very nature of things this would seem to be an
impossibility.
Ii must be remembered, that no banks ever made such large
dividends as were realized by the local institutions, during the suspension
of specie payments.
rich and abundant harvest of profit was opened to
them, which the resumption of specie payments must inevitably blast.
While permitted to give their own notes, bearing no interest, and not redeemable in specie, in exchange for better notes bearing interest, it is obvious,
that the more paper they issued, the higher would be their profits.
The
most powerful motive that can operate upon monied corporations, would
have existed, to prevent the state banks from putting an end to the very
state of things, from which their excessive profits proceeded.
Their very
nature must have been changed, therefore, before they could have been induced to co-operate, voluntarily, in the restoration of the currency. It is
quite as improbable that the state legislatures would have compelled the
banks to do their duty. It has already been stated that the tendency of a
depreciated currency to attract importations to the points of greatest depreciation, and to lighten the relative burthens of federal taxation, would naturally produce, among the states, a rivalry in the business of excessive bank
But there remains to be stated a cause, of more general operation,
issues.
which would have prevented the interposition of the state legislatures to
correct those issues.
The banks were, directly and indirectly, the creditors of the whole community, and the resumption of specie payments necessarily involved a general curtailment of discounts, and withdrawal of credit, which would produce a general and distressing pressure upon the entire class of debtors.
These constituted the largest portion of the population of all the states
where specie payments were suspended, and bank issues excessive. Those,
therefore, who controlled public opinion in the states, where the depreciation of the local paper was greatest, were interested in the perpetuation of

A

Deep and deleterious, therefore, as the disease evidently was,
in many of the states, their Legislatures could not have been expected to ap-ply a remedy, so painful as the compulsion of specie payments would have
been, without the aid of the Bank of the United States.
And here it is
worthy of special remark, that, while that bank has compelled the local banks
to resume specie payments, it has most materially contributed, by its direct
the evil.

aid and liberal arrangements, to enable them to do so, and that with the least
possible embarrassment to themselves, and distress to the community.
If

the State Legislatures had been ever so anxious to compel the banks to resume specie payments, and the banks ever so willing 1o make the effort, tl»e

committee are decidedly of the opinion that they could not have done

it,

—
so
unaided by the Bank of the United States, without producing a degree of
They
distress incomparably greater than has been actually experienced.
will conclude their remarks on this branch of the subject by the obvious reflection, that, if Congress, at the close of the war, had left it to the states
to restore the disordered currency, this important function of sovereignty

would have been left with those from whom the Constitution has expressly r
taken it, and by whom it could not be beneficially or effectually exercised.
But another idea, of considerable plausibility, is not without its advocates.
It is said that this government, by making the resumption and continuance
of specie payments the condition upon which the state banks should receive
the government deposites, might have restored the currency to a state of
Without stopping to give their reasons for believing that spepayments could not have been restored in this way, and that, even if they
could, a uniform currency of general credit, throughout the Union, would
not have been provided, the committee will proceed to give their reasons
for thinking that such a connexion between the Federal Government and
the State banks would be exceedingly dangerous to the purity of both.
While there is a National Bank, bound by its charter to perform certain stipulated duties, and entitled to receive the government deposites as a compensation, fixed by the law creating the charter, and only to be forfeited by
the failure to perform those duties, there is nothing in the connexion at all
inconsistent with the independence of the bank, and the purity of the gov
ernment. The country has a deep interest that the bank should maintain
specie payments; and the government an additional interest that it should
keep the public funds safely, and transfer them, free of expense, wherever 1
they may be wanted.
The government, therefore, has no power over the
bank, but the salutary power of enforcing a compliance with the terms of
its charter.
Every thing is fixed by the law, and nothing left to arbitrary
uniformity.
cie

'

discretion.
It is true that the Secretary of the Treasury, with the sanction
of Congress, would have the power to prevent the bank from using its power unjustly and oppressively, and to punish any attempt, on the part of the
Directors, to bring the pecuniary influence of the institution to bear upon
the politics of the country, by withdrawing the government deposites from
But this power would not be lightly exercised by
the offending branches.
the treasury, as its exercise would necessarily be subject to be reviewed by
Congress. It is, in its nature, a salutary corrective, creating no undue dependence on the part of the bank.
But the state of things would be widely different, if there was no National bank, and it was left to the discretion of the Secretary of the Treasury to
select the local banks in which the government deposites should be made.
All the State banks would, in that case, be competitors for the favor of the
treasury,- and no one, who will duly consider the nature of this sort of patronage, can fail to perceive, that, in the hands of an ambitious man, not possessed of perfect purity and unbending integrity, it would be imminently r
dangerous to the public liberty. The State banks would enter the lists of
political controversy, with a view to obtain this patronage; and very little
sagacity is required to foresee, that, if there should ever happen to be an
administration disposed to use its patronage to perpetuate its power, the
public funds would be put in jeopardy by being deposited in banks unworthy of confidence, and the most extensive corruption brought to bear upon
state of things more adverse to the
the elections throughout the Union.
a power more liable to be abused can scarcely
purity of the government

—

A

—

—
21
be imagined. If five millions of dollars were annually placed in the hands
of the Secretary of the Treasury, to be distributed at his discretion, for the
purpose of internal improvement, it would not invest him with a more dangerous and corrupting power.
In connexion with this branch of the subject, the committee will briefly
,examine the grounds of a complaint, sometimes made against the bank of
It is alleged that this bank, availing itself of the govthe United States.
ernment deposites, consisting in some places principally of local paper,
makes heavy and oppressive draughts on the local banks for specie, and thus
compels them to curtail their discounts, to the great injury of the community.
In the first place, it is to be remarked, that one of the highest duties
was to prevent
the great object for which it was established
of the bank
the excessive issues of local paper; and this duty can only be performed,
by enforcing upon the State banks the payment of specie for any excess in
their issues.
But the committee are induced to believe, that this complaint

—

—

is principally owing, so far as it now exists, to the fact, that the operations
of the Federal Treasury are mistaken for the operations of the bank, because the bank is the agent, by whom those operations are performed.
This institution receives the government deposites in the paper of the local
banks, certainly in no spirit of hostility to those banks. On the contrary, it
tends to give them credit, and is designed to have that effect. But the bank
of the United States is not only bound to pay in specie, or its own bills,
what it receives for the government in local paper, but to transfer the funds
to any part of the Union, where they may be required for disbursement.
it be assumed, that the government collects annually, at. the custom
house in Charleston, one million of dollars in local bank notes, and disburses in South Carolina only one hundred thousand, it would result from this
that the government would have nine hundred thousand dollars of local bank
papet deposited in the Charleston branch, which the bank would be bound
by its charter, and for the national benefit, to transfer perhaps to Washington
As this paper would not answer the purposes of the governor Norfolk.
ment at those places, the bank would be, of course, compelled to provide

>Let

It is obvious,
specie, or bills that will command specie at those places.
tien, that it is the inequality in the collection and disbursement of the revenue, that produces the evil in question. If all the revenue collected in

Charleston were disbursed in the State, no draughts would be made upon
The bank of the United States, so far from
the local banks for specie.
being justly obnoxious to any complaint on this score, has greatly mitigated
the action of the Treasury upon the local banks, by me-ns of the liberal
arrangements which its large capital and numerous branches have enabled
The degree in which that institution lias reduced
it to make with them.
the rate of exchange, may be fairly assumed as that in which it has mitigaIf, for example, there
ted the action of the Treasury upon the State banks.
^existed no national bank, and the deposites of the revenue collected in
Charleston were made in one of the local banks, what would be the effect

of transferring, annually, nine hundred thousand dollars to Washington or
Norfolk? The local banks, having no branches at either of those places,
instead of transmitting draughts, as is now generally done, would be com-

The bank in which the government deposites
were made, would consequently be under the necessity of demanding specie from all the other banks, in a manner, and to an extent, much more oppressive than any thing that can be imputed to the bank of the United

pelled to transmit specie.

S3
avoid these specie draughts, the local banks should purchase
or Norfolk, they would probably cost five or six per
cent, even in a tolerable state of the currency, which would be a loss to the
banks almost to the full extent of the premium.
Although the expediency of renewing the charter of the present bank is
not a question now submitted for the decision of Congress, the Committer
consider it so far involved in the matter referred to them, as to render it their
duty to present some considerations bearing on that question, in addition to

States.
bills

If, to

on Washington

what they have said on the general expediency of maintaining such an instiJf a national bank, similar to the present, be a necessary and proper
agent for the accomplishment of the great purposes heretofore indicated, the
only remaining question would seem to be, whether the charter of the present
stockholders should be renewed, or a new set of stockholders incorporated.
In considering this question, Congress will, of course, be governed in
some degree, by the terms on which the present stockholders will agree to
But, as the committee have satisfactory
accept a renewal of their charter.
reasons for believing that terms eminently advantageous to the government
What then
can be obtained, they will proceed to some other inquiries.
would be the effect of refusing to renew the present charter? And, in the
first place, what are the inducements for pursuing that course?
It is sometimes alleged that the present stockholders are large capitalists,
and, as the stock of the bank is some 20 per cent, above par, that a renewal
of the charter would be equivalent to a grant to them of 20 per cent, upon
their capital.
It is true that a small proportion of the capital of the company belongs to very wealthy men. Something more than two millions of
that owned in the United Stales belongs to persons holding upwards of one
hundred thousand dollars each. It is also true that foreigners own seven
But, on the other hctnd, it is to be remillions, or one fifth of the capital.
marked, that the government, in trust for the people of the United States,
holds seven millions; and that persons owning less than five thousand dollars each, hold four millions six hundred and eighty-two thousand; and
that persons owning between five and ten thousand dollars each, hold
upwards of three millions. It is also worthy of remark, that a very convery nearly six millions
siderable portion of the stock
is held by females, by trustees and guardians for the use of females and orphan chilOf the twenty-eight millions
dren, and by charitable and other institutions.
of the stock which is owned by individuals, only three millions four hundred and fifty-three thousand is now held by the original subscribers. All
a large portion of it,
the rest has been purchased at the market prices
Most of the inprobably, when those prices were higher than at present.
vestments made by wills, and deeds, and decrees in equity, for the use of
females and minors, are believed to have been made when the stock was
From this brief analysis, it will appear that there is
greatly above par.
nothing in the character or situation of the stockholders, which should mak^
it desirable to deprive them of the advantage which they have fairly gained,
by an application of their capital to purposes highly beneficial, as the committee have attempted to show, to the government and people of the United
tution,

—

—

—

States.

If foreigners

own seven

millions of the stock of the bank, our

own

government owns as much if wealthy men own more than two millions, men
in moderate circumstances own between seven and eight millions; and females, orphans, and institutions, devoted to charitable and other purposes,
;

own

nearly six millions.

23
But the objection that the stock is owned by men of large capital, would
apply witli equal, if not greater force, to any bank that could be organized.
In the very nature of things men who have large surplus capitals are the
principal subscribers at the first organization of a bank.
Farmers and planters, merchants and manufacturers, having an active employment for their
capitals, do not choose to be the first adventurers in a bank project.
Accordingly, when the present bank went into operation, it is believed that most
of the capital was owned by large capitalists, and under a much more unequal distribution than exists at present. The large amount of stock now
held in trust for females and. minors, has been principally, if not entirely,
purchased since the bank went into operation ; and the same remark is generally applicable to the stock in the hands of small holders. It is only when
the character of a bank is fully established, and when its stock assumes a
steady value, that these descriptions of persons make investments in it.
It is morally certain, therefore, that, if another distinct institution were
created, on the expiration of the present charter, there would be a much
greater portion of its capital subscribed by men of large fortunes, than is
now owned by persons of this description, of the stock of the United States
Bank. Indeed, it might be confidently predicted, that the large capitalists
who now hold stock in that bank, would, from their local position and other
advantages, be the first to forestall the subscriptions to the new bank, while
the small stockholders, scatteiedover the country, would be probably excluded, and the females and minors, and others interested in trust investments
made by decrees in equity, would be almost necessarily excluded, as the
sanction of a court could scarcely be obtained, after the passage of the new
net of incorporation, in time to authorise a subscription.
To destroy the existing bank, therefore, after it has rendered such signal
services to the country, merely with a view to incorporate another, would
be an act rather of cruelty and caprice, than of justice and wisdom, as it regards the present stockholders. It is no light matter to depreciate the property of individuals, honestly obtained, and usefully employed, to the extent of five millions six hundred thousand dollars, and the property of the
government, to the extent of one million four hundred thousand dollars,
purely for the sake of change. It would indicate a fondness for experiment,
which a wise government will not indulge upon slight considerations.
But the great injury which would result from the refusal of Congress to
renew the charter of the present bank, would, beyond all question, be that
which would result to the community at large. It would he difficult to estimate the extent of the distress which would naturally and necessarily result
from the sudden withdrawal of more than forty millions of credit, which
the community now enjoys from the hank.
But this would not be the full
extent of the operation.
The Bank of the United States, in winding up its
concerns, would not only withdraw its own paper from circulation, and call
in its debts, but would unavoidably make such heavy draughts on the local
institutions for specie, as very greatly to curtail their discounts.
The pressure upon the active, industrious, and enterprising classes, who depend mosi
upon the facilities of bank credit, would be tremendous.
vast amounl
of property would change hands at half its value, passing under the han>
mer, from the merchants, manufacturers, and farmers, to the large monied
capitalists, who always stand ready to avail themselves of the pecuniary emThe largest stockholders of the present
barrassments of the community.
bank, the very persons whose present lawful gains it would be the object of

A

—
24
to cut off, having a large surplus money capital thrown upon their
hands, would be the very first to speculate upon the distresses of the community, and build up princely fortunes upon the ruins of the industrious
and active classes. On the other hand, the females and minors, and persons
in moderate circumstances, who hold stock in the institution, would sustain an injury, in no degree mitigated by the general distress of the commu-

some

nity.

A

very grave and solemn question will be presented to Congress^ when
the expediency of renewing the charter of the present bank. That institution has succeeded in carrying the country through
the painful process necessary to cure a deep seated disease in the national
The nation, after having suffered the almost convulsive agonies
currency.
of this necessary remedy, is now restored to perfect health. In this state of
things it will be for Congress to decide, whether it is the part of wisdom
to expose the country to a degree of suffering almost equal to that which it
has already suffered, for the purpose of bringing back that very derangement
of the currency, which has been remedied by a process, as necessary as it
they

come to decide upon

was

distressing.

If the bank of the United States were destroyed, and the local institutions left without its restraining influence, the currency would almost cerThe very pressure which the
tainly relapse into a state of unsoundness.
present bank, in winding up its concerns, would make upon the local insti-

would compel them either to curtail their discounts when most
needed, or to suspend specie payments. It is not difficult to predict which
of these alternatives they would adopt, under the circumstances in which
they would be placed. The imperious wants of a suffering community would
The pubcall for discounts, in language which could not be disregarded.
lic necessities would demand, and public opinion would sanction, the suspension, or at least an evasion, of specie payments.
But, even if this desperate resort could be avoided in a period of peace
and general prosperity, neitherreason nor experience will permit us to doubt^
that a state of war would speedily bring about all the evils which so fatally
affected the credit of the government and the national currency, during the
We should be again driven to the same mislate war with Great Britain.
erable round of financial expedients, which, in little more than two year\
brought a wealthy community almost to the very brink of a declared national
bankruptcy, and placed the government completely at the mercy of speculatutions,

ting stockjobbers.

The committee feel warranted, by the past experience of the country, in
expressing it as their deliberate opinion, that, in a period of war, the financial
resources of the country could not be drawn into efficient operation without
the aid of a national bank, and that the local banks would certainly resort
The maxim is eminently true in modto a suspension of specie payments.
ern times that money is the sinew of military power. In this view of the
subject, it does appear to the committee, that no one of the institutions of>
the country, not excepting the army or navy, is of more vital importance
than a national bank. It has this decided advantage over the army and navy: while they are of scarcely any value except in war, the bank is not less
useful than either of them in war, and is also eminently useful in peace.
It has another advantage, still greater.
If, like the army or navy, it should
cost the nation millions annually to sustain it, the expediency of the expenditure might be doubted. But, when it actually saves to the governmeni

25
and to the country, as the committee have heretofore attempted to show,
more millions annually than are expended in supporting both the army
and navy, it would seem that, if there was one measure of national policy,
upon which all the political parties of the country should be brought to
unite, by the impressive lessons of experience, it is that of maintaining a

1

national bank.
It is due to the persons, who, for the last ten years, have been concerned
in the administration of the bank, to state, that they have performed the
delicate and difficult trust committed to them, in such a manner as, at the
time, to accomplish the great national ends for which it was established, and promote the permanent interest of the stockholders, with the

same

least practicable pressure upon the local banks.
As far as the committee
are enabled to form an opinion, from careful inquiry, the bank has been
liberal and indulgent in its dealings with these institutions, and, with
scarcely an exception, now stands in the most amicable relation to them.

Some of those institutions have borne the most disinterested and unequivocal testimony in favor of the bank.
It is but strict justice also to remark, that the direction of the mother
bank appears to have abstained, with scrupulous care, from brinaino- the
power and influence of the bank to bear upon political questions, and to
have selected, for the direction of the various branches, business men in no
way connected with party politics. The committee advert to this part of
the conduct of the directors, not only with a view to its commendation but
for the purpose of expressing their strong and decided conviction, "that the
usefulness and stability of such an institution will materially depend upon
a steady and undeviating adherence to the policy of excluding party politics and political partizans from all participation in its management.
It is
gratifying to conclude this branch of the subject by stating, that the affairs
of the present bank, under the able, efficient, and faithful Guidance of its
two last presidents and their associates, have been brought from a state of
great embarrassment into a condition of the highest prosperity.
Having
succeeded in restoring the paper of the local banks to a sound state its
ro^
sources are now such as to justify the directors in extending the issue
and
circulation of this paper so as to satisfy the wants of the community
both
as it regards bank accommodations and a circulating medium.
Upon the
soundest principles of banking, the very ample resources of the
institution
would justify the directors in granting accommodations to a much greater
extent than they have yet done; and though they have increased the
circulation of their paper from four and a half to fourteen
millions since
January, 1823, they are ready and willing to increase it stillfurther
'by discounting bills of exchange and otiher business paper. It is
believed that
the discounts and issues of the institution are now actually limited
by the
want of applications resting upon these, the only substantial and
safe foundations of bank credit and circulation.
III. Having said thus much on the constitutionality
and expediency of
-an incorporated National Bank, the only question which remains to
be ex
amined by the committee is, the expediency of establishing «
a Na*
tional Bank founded upon the credit of the Government
and its reve"
."
nues
It is presumed to have been the intention of the President,
in su^sestina
the inquiry as to a bank founded upon the credit and revenues
of the Gov*
ernment, to be understood as having allusion to a bank of discount
and de-

—
26
posite.

Such a bank,

it is

taken for grarited, would have brandies estab-

lished in various parts of the Union, similar to those now established by the
Bank of the United States, and co-extensive with them. The great object

of furnishing a national currency could not be accomplished, with an approach to uniformity, without the agency of such branches; and another
object, second only in importance to the one just stated, the extension of
the commercial facilities of bank accommodations to the different parts of
the Union, could not be at all effected without such agency. If there should
be simply a great central bank established at the seat of Government, without branches to connect its operations with the various points of the commerce of the Union, the promise to pay specie for its notes, whenever presented, would be almost purely nominal. Of what consequence would it beto a
merchant or planter of Louisiana, or a manufacturer or farmer of Maine,
that he could obtain specie for bills of the National Bank, on presenting
them at the City of Washington a place wholly unconnected either with
Louisiana or Maine by any sort of commercial intercourse, and where, consequently, these bills would never come in the regular course of trade? A
promise to pay specie at a place so remote from the place of circulation, and
where the bills would never come but at a great expense, and for the sole
purpose of being presented for payment, would neither give credit to the
Whatever
notes, nor operate as an effective check upon excessive issues.
credit such notes might have, at a distance from the place of issue, would
not be because they were redeemable at the pleasure of the holder for
such would not be the fact; but principally because of the ultimate responsibility of the Government, and of their being receivable in payment of all
dues to the Treasury. They would rest, therefore, upon almost preciselythe same basis of credit as the paper money of our Revolution, the assignats of Revolutionary France, and the Treasury notes of the late war.
These were receivable in discharge of debts due to the Treasury, and Government was of course ultimately responsible for their payment; yet the
two former depreciated almost to noihing, and the latter, though bearing
But the notes of a central
interest, sunk to twenty per cent, below par.
Government Bank, without branches, would be subject to depreciation from
a cause which constitutes a conclusive objection to such an institution.
There xcould be nothing to limit excessive issues but the discretion and prudence of the Government or of the direction. Human wisdom has never
devised any adequate security against the excessive issues, and, consequently, the depreciation of bank paper, but its actual, and easy, and prompt conExperience has
vertibility into specie at the pleasure of the holder.
shown that, where the paper of a bank is, by any means, habitually circulated at places remote from the point where it is issued, and not connected
with it by a regular commercial intercourse, there will not exist that easy
and prompt convertibility which is so essential to the credit of bank paper.
When bank bills are confined to their appropriate sphere of circulation, a
redundant issue is certainly and immediately followed by a rim upon the,
bank for specie. This timely admonition is as useful to the bank as it is
with unfailing certo the community, for it enables the directors to avoid,
tainty, an excess equally injurious to both, and which no human sagacity
could anticipate or prevent, by calculation merely. Whatever, therefore,
in a system of bank circulation, prevents the reflux of redundant issues, ne*
cessarily destroys the only adequate security against these injurious and ru-

—

—

inous excesses,

S7
But a Government Bank without branches, would be obnoxious to anothIts loans would be confined to
er objection which could not be obviated.
the District of Columbia; or, il* extended to the various parts of the Union,
to say nothing of the inconvenience to which it would expose those at a
they would be unavoidably grandistance wiio obtained accommodations
ted without any knowledge of the circumstances of the persons upon whose

—

Government would depend for re-payment. Jt would, in fact,
mere District Bank.
These views of the subject have brought the committee to the conclusion, that, if a Government Bank should be established, it would have at
least as many branches as the Bank of the United States, and probably a
much greater number. Few administrations would have the firmness to
resist an application to establish a branch, coming from any quarter of the
Union, however injudicious the location might be, upon correct principles
of commerce and banking.
The Bank of the United States now employs five hundred agents, in tlie
From this fact
various parts of the Union where its offices are established.
some idea may be formed of the very gieat addition which would be made
to the patronage of the Executive Government by the establishment of such
a bank as the one under consideration.
But the patronage resulting from the appointment the annual appointment of these agents, great as it would doubtless be, would be insignificant and harmless, when compared with that which would result from the
dispensation of bank accommodations to the standing amount of at least
fifty millions of dollars! The mind almost instinctively shrinks from the
contemplation of an idea so ominous to the purity of the Government and
the liberties of the people.
No government of which the committee have
any knowledge, except perhaps, the despotism of Russia, was ever invested with a patronage at once so prodigious in its influence and so dangerous in its character. In the most desperate financial extremities, no other
European Government has ever ventured upon an experiment so perilous.
If the whole patronage of the English monarchy were concentrated in the
hands of the American Executive, it may be well doubted whether the public liberty would be so much endangered by it as it would by this vast pecuniary machine, which would place in the hands of every administration
credit the

be, for all useful purposes, a

—

—

fifty

.

millions of dollars, as a fund for rewarding political partizans.

Without assuming that a corrupt use would be made of this new species
of government patronage, a very slight acquaintance with the practice of all
political parties, whatever may be their professions, will be sufficient to satisfy any reflecting mind, that all the evil consequences of corruption would
flow from its exercise.
Have not our political contests too frequently degenerated into a selfish scramble for the offices of the country? Are there
not those who sincerely and honestly believe that these offices are legitimate
objects of political welfare, and the rightful reward of the victorious party?
And disinterested and patriotic as the great body of every political party is
admitted to be, the fact is no less true than it is lamentable, that the most
devoted and active partizans are very often mere soldiers of fortune, who
watch the political signs, and enlist, at the eleventh hour, under the banners of the party most likely to prove successful. Such being, more or less,
the composition of all political parties, what would be the probable use
made of fifty millions of bank patronage, by a political party which conscientiously held the doctrine that

all

the offices in the gift of the executive

——
28
should be divided among the pavtizans of a successful political leader?
not the same principle be even more applicable to bank loans? And
would not the Treasury of the United States, under the sanctifying influence of parly delusion and party infatuation, be literally plundered, by
mercenary retainers, bankrupts in fortune, and adventurers in politics?
Even if the administration should be ever so much disposed to restrain
the abuse of this patronage, it would be utterly impracticable to exercise
any efficient control over the great number of bank directors who would be
scattered over the Union, and who, upon all the known principles of human
nature, it may be confidently predicted, would principally consist of busy

Would

tmd officious political partizans.
Such would be the depositaries acting, not under the public eye, but
under the protecting mystery of a sort of concealment and secrecy deemed
iudispensable in banking operations— to whom not only the whole Treasury
of the Union would be confided, to be squandered, perhaps, in profligate favoritism, but the tremendous power of putting the whole property of the

—

nation under mortgage, for the redemption of the bills issued at their discretion.
To say nothing of the utter insecurity of the public revenues under
such a system, anew species of legislative power, unknown to the Constitution, would be committed to these irresponsible bank directors, of which no
human sagacity can predict the consequences.
just analysis of the operation of granting loans by this government
bank, in exchange for the notes of private individuals, will show, that it involves the exercise, on the part of the directors, of the two fold power of apdiscrepropriating the public revenue in the most dangerous of all forms
tionary loans
and of pledging the responsibility of the Government to an
unlimited extent, for the payment of the debts at the same time created
against it.
These are among the highest functions of legislative power,
and have been expressly and exclusively vested in Congress. Unless,
therefore, it be assumed, that Congress may rightfully transfer the powers
with which it is invested to these bank directors, it will be difficult to find
any warrant, either in the letter or spirit of the Constitution, for the creation
of this tremendous engine of pecuniary influence. It may, indeed, be
doubted, whether all the branches of the legislative authority united, have
any constitutional power to lend the public revenue, either to individuals,
corporations or states, without reference to the objects to which it shall be
But, whatever may be the power of Congress on this subject, it
applied.
appears to the Committee to be inexpedient, in every view of the question,
that the Government should be converted into a great money lender.
There is no species of trade in which it would be wise for the Government
to embark; but of all the variety of pursuits known to human enterprise,
that of lending money by the Government to the citizens of the country,
would be fraught with the most pernicious consequences.
In the first place, it is a business to which, in the very nature of things,
no Government is adapted, and, least of all, a popular Government. There
is no employment of capital that requires a more vigilant and skilful superNothing but the ever active motive of individual interest can
intendence.
sapply the watchfulness necessary to secure a banking institution against
In pecuniary transactions, few men
the grossest frauds and impositions.
are to be found who will serve others, in cases involving the exercise of
discretionary power, with the same fidelity that they would serve themselves; and, when we consider the strong motives, both of private friendship

A

—

—

29
attachment, which would operate on the directors of a Governbestow its favours without impartiality or prudence, it requires but little sagacity to foresee that enormous losses would be annually
sustained i>y the insolvency of the Government debtors.
All Governments have found it expedient to place the public Treasury

and

political

ment bank,

•

jj

to

under the guardianship of a high and confidential officer, aided, in the enforcement of a rigid responsibility, by a system of checks and counterchecks,
operating upon all the subordinate officers concerned in collecting and disbursing the public revenue.
Such is our own system. No discretion is
vested in the chief officer of the Treasury, much less in those that are subor" No
dinate, in the appropriation of a single dollar of the public money.
money can be drawn from the Treasury but in consequence of appropriations made by law."
How far these wise and provident safeguards, and
this constitutional barrier, would be prostrated by placing not only the public revenue, but the public credit, at the disposal of some hundreds of bank
directors in various parts of the Union,

is

a very grave question for the con-

sideration of the House.

Our own experience has demonstrated the great danger of having large
masses of the community indebted to the Government. It was a deep conviction of this danger that induced Congress to abolish the system of credit
Congress has been compelled to
sales in the disposition of public lands.
yield to the pressing importunities of the purchasers of these lands, by
granting them not only repeated indigencies, but by remitting some millions of the debt.
What then, would be the situation of the Government,
tfjtb a debt of fifty millions diffused throughout the country, and due to it
from the most active, enterprising, and influential classes of the community ?
Nothing that has not happened can be more certain, than that every unfavourable vicissitude in trade, every period of commercial distress and embarrassment, would give rise to importunate and clamorous calls for indulgence, and for an injudicious extension of discounts, which no administraEvery one who has witnessed the
tion would have the firmness to resist.
urgency and unanimity with which the representatives of the states, indebted for public lands, have pressed the claims of their citizens for indulgence and remission, must be satisfied, that, if the citizens of all the states
should become indebted much more largely for bank loans, the government
would have scarcely any faculty of resistance, when appeals for indulgence
should come from all quarters of the Union, sustained by the strong plea
of public distress and embarrassment.
The policy of extending indulgence to the public debtors, and of granting more liberal loans to the community, would, in the natural course of
things, become the favourite theme of those who aspire to popular favour.
Political parties would come to be divided upon the question of observing
towards the public debtors a strict banking policy, indispensable to the
imintenance of specie payments, on the one hand, or a liberal government
policy, necessarily involving a suspension of specie payments, on the other.
And when it is considered that the whole class of debtors, always the most
numerous and active portion of the community, would be naturally in favour of increasing bank issues, and extending bank indulgences, it can
scarcely be doubted that specie payments would be suspended in the first
great pecuniary exigency, growing out of the embarrassments in our commerce, or deficiences in our revenue.
C 2

—
;

30
The Government, therefore, which is under the most sacred obligations to
constrain all the banks to maintain specie payments, with a view to the uniformity and soundness of the currency, would, by its own example, perpetuate the great national evil of a fluctuating and depreciated circulating
n.edium.

These

which would be so highly probable

time of peace, would
to supply the Federal Treasury by the easy process of bank issues, rather than resort to the
unpopular process of internal taxation, would be too fascinating to be resisWe should thus experience, what every nation has experienced in
ted.
like circumstances, the manifold evils of a mere paper currency, having no
relation to any standard of intrinsic value.
In these views the committee
are fully sustained by the opinion of Mr. Lowndes, expressed in 1819.
These are his words: "That the destruction of the (United States) Bank
would be followed by the establishment of paper money, he firmly believed
lie might almost, say, he knew.
It was an extremity from which the house
would recoil, if now proposed; but if the resolutions on the table were
passed, it would very soon be proposed.
The subject was too large for an
incidental discussion.
Gentlemen thought the amount of government
paper might be limited, and depreciation prevented, by the rate of interest
whichshould be exacted. Inadequate every where, the security was particularly ineffectual in the United States."
But the inevitable tendency of a government bank to involve the country
in a paper system, is not, in the opinion of the committee, the greatest
objection to it.
The powerful, and in the hands of a bad administration,
the irresistible and corrupting influence which it would exercise over the
elections of the country, constitutes an objection more imposing than all
others united.
No matter by what means an administration might get into
power, with such a tremendous engine in their hands, it would be almost
impossible to displace them without some miraculous interposition of Prov-

be

evils,

almost, certain in the event of war.

in

The temptation

idence.

Deeply impressed with the conviclion, that the weak point of a free government is the absorbing tendency of executive patronage, and sincerely
believing that the proposed bank would invest that branch of the government with a weight of monied influence more dangerous in its character,
and more powerful in its operation, than the entire mass of its present patronage, the Committee have felt that they were imperiously called upon,
by the highest considerations of public duty, to express the views they have
presented, with a frankness and freedom demanded by the occasion.
It is,
at the same time, due to their own feelings, that they should state unequivocally their conviction, that the suggestion of the Chief Magistrate,
which they have thus freely examined, proceeded from motives of the most
disinterested patriotism, and
fare of the country.

This

was exclusively designed to promote the welnot the mere formal and heartless homage,

is

up to official station, either from courtesy or interest, but
eminently due, and cheerfully rendered, to the exalted
character of the distinguished individual on whom it is bestowed.

sometimes

offered

a tribute which

is

—
31

an intelligent merchant in Charleston, South
the Committee of Ways and Means,
illustrating the exchange operations of the Bank of the United

Extract of a
Carolina,

t

letter from

to the

Chairman of

States.

" This effect of diminishing the vast difference of exchange between the
various points of 'the country, was evidently produced by the bank.
The
advantages produced by this institution, in the intercourse between the
Western and Atlantic States, can be duly appreciated only by one who sees
passing before him, the actual operation of the system of exchange it has
created.

For example: Lexington, in Kentucky, annually accumulates a

large surplus of funds to her credit in Charleston, derived from the sale of
horses, hogs, and other live stock, driven to that as well as to other South-

ern markets by her citizens.
Philadelphia is indebted to Charleston for
exchange remitted, dividends on bank stock, &x. and Lexington is indebted
to Philadelphia for merchandise.
Without the transportation of a single
piece of coin, Lexington draws on Charleston, and remits the check to
Philadelphia in payment of her debt there; which operation adjusts the
balance between the three points of the triangle almost without expense or
trouble.
Could such facilities be obtained from any other than an institution having brandies in different parts of the Union, acting as co-partners in
one concern? Local banks, whatever might be their willingness, could not
*
*
*
accommodate in the same manner and to a like extent,"
" The discounting of bills on the low terms established by the Branch
Bank at this place, is a great benefit to the agricultural interest, particularly in enhancing the price of cotton and rice; and were the bank to stop its
operations, there is no saying how far these staples would be depressed.
The private dealers in exchange would take the place of the bank in that
business, and their profits on bills would be taken out of the pockets of the
planters, as the merchants would always regulate the price they would give
for an agricultural production, by the high or low rate at which they could
negotiate their bills.
On account of its connexion with all parts of the
Union, the bank affords this important advantage to the public: it is always a purchaser and always a seller of exchange at fixed and low rates,
*
*
*
*
and thus prevents extortion by private dealers."
*
"Before this bank went into operation, exchange was from 8
to 10 per cent, either for or against Charleston, which was a loss to the
planter to that amount on all the produce of Georgia and South Carolina,
and indeed you might say all the produce of the Southern and Western
*
*
*
*
States."
"If the Bank of the United States were destroyed, the local banks would
Magain issue their paper to an excessive amounl; and while a few adventurous speculators would be much benefitted by such an issue, the honest and
unsuspecting citizens of our country would, finally, be the losers.
If we
look back to what took place in New York, Pennsylvania, the Western
States, and even in our own state, we shall see the grossest impositions
committed by banks, commencing with a few thousand dollars in specie,
buying up newspapers to puff them as specie-paying banks, in order to delude the public, and, after getting their bills in circulation, blowing up,
and leaving the unsuspecting planter and farmer, victims of a fraud, by

,

33
which they were deprived of the hard earnings of years of honest industry.
But, sir, I believe the bank owes a great deal of the opposition which exists,
and has existed, to the fact that it has put down these fraudulent institutions, got up by combinations and conspiracies of speculators; and who,
after receiving large dividends, managed to destroy the credit of their own
paper, and, by the agency of brokers, bought it up at half its nominal value.
" Since I last wrote you, I had a conversation with a gentleman in the
confidence of some of the monied men of the North, and he says they are
determined to break up the United States Bank, to enable them to use
their money to advantage; as that institution gives so many facilities to
the community, as to deprive them of their former profits."
*
*
" There is another consideration: the distress would be immense, which
a refusal to renew the charter would produce among those who are indebted
to the institution: for I find that, to this branch, the planters owe upwards
of a million of dollars; and [ have no hesitation in saying, as safe a debt as
is owing to any bank in the Union.
But if the bank should wind up its
affairs, these planters could not get credit from other institutions; and as
the bank can sue in the United States' Court, where judgment is obtained
almost at once, property would be greatly depressed, and monied men

would buy

up for half its

Throughout the Union all classes would
money to go into the brokerage business, or buy property at a sacrifice. If I were sure the bank would
not be rechartered, I would convert my property into money, with a view to
suffer,

it

except those

dealing in exchange.

State of the

value.

who should

1

could

Bank of

hold up their

make

the

Notes discounted,
Domestic bdls discounted,
Funded debt held by the bank,
Real estate,
Funds in Europe, equal to specie,
Specie,
Public deposits,
Private deposits,
Circulation,

a vast fortune by it."

United States, Jlyril

-

...
-

-

1,

1830.

89
54
90
75
54
97
8,905,501 87
7,704,256 87

32,138,270
10,506,882
11,122,530
2,891,890
2,789,498
9,043,748

* 16,083,894 00

We

* This is the circulation from the office returns.
know, however,
that a part of it is received at other offices, and is in passage from one to
the other. So that the nett circulation is gl4,176,927.

APPENDIX,

No. 1. —List of Transfers directed by the Secretary of the
Treasury from and to Bank U. S. and Offices, from June 6 to Dec. 14, 1829.
NO.

APPENDIX No. II.
No~es

PRICES CURRENT, Exhibiting a Comparative View of the relative value of Banlc
in 1816 and in

. ' ..,'1

.

Boston.

18~9,

at 'various places.
Baltimore.

P hiladclp.ltia.

New York.

\

. ,

1816.
July 1.

S pani~h D~i;;-J-parA mencan
par
"

1829.
Dec'r. 5.

1816.
July 1.

1829.
Dec'r. 5.

-

1829.
Dec'r. 5.

1816.
Jllly 1.

1829.
Dec'r. 5 .

---- ---- ---- --.----=-.-.----- ---_.18 adv~
ad.v. par a ~ adv.
par
41 ·adv . .
"
12 a 14 adv.
'par
"
:8* (to 9 adv.
9~
par
2! adv.
par
11 disc.
4~
par
"
10 "
i disc.
/! adv.
4 adv.
~ a i dis.
7 disc.
i "
4 adv.
21
7 a 81 ndv.
14 "
61 "
do
18~

par

-

G old
- B oston
Notes
par
7 adv.
N ew York "
n a 8 dis. i dis.oa par
P hiladelphia "
17 a 18 dis.
do.
17 dis.
par
P ennsylvania "
B altimore
19! a20 dis. :! dis. a pal' 20 a 21 dis. :! dis. a par
"
1\iaryland
V irginia
\""
13 dis.
1 disc.
Dist. Columbo "
21 a 22 dis. 2 dis. a par
N . Carolina
1 disc.
13 dis.
' s. Carolina ""
10 a 12 dis.
t disc.
Georgia
1 disc.
do.
"

-

1816.
July 1.

-

-

~

-

-

-

17
17'
17

-

-

"

-

--r) ~ ~
- ...
--

-

"

-

' -

-

-

-

L

-

-

J

~

.l

..\PPENDIX No.

II-cONTINUED. '

PRICES CURRENT, Exhibiting a Comparative View oj' the' 'relative value of Bank Notes
in i8H) and in 18:29, at var-io'us places.
.
'.
.~
..
lifTasltillgton.
1816.
July 1.

I

1829.
Dec'r. 5.

-------- ---- ---

par
Spamsh Dollars 20 a 22adv.
par
do
American
Gold
~ dis.
Notes 20 a 22 adv.
Boston
par
15 a 1G adv.
New York
par
6 a 7 adv.
Philadelphia "
par
G a 7 adv.
Pennsylvania"
par
2 adv.
Baltimore
1\la r yland
par
par
Virginia
Dist.Colurnb. "
par a:3 di~c. paral dis.
N. Carolina
do
do
S. Carolina "
Georgia

-

"-

-

-

"

"
"
"
"
"

_.
-

-

-

Riclmzond.

Nor/ollt.

Charleston.

1816. 18~9.
July L Dec. 5.

1829.
1816.
July 1. Dec'r.5.

1816. 1829.
July 1. Dec.5.

"
Savannah.
1816.
July 1.

1829:0Dec'r. 5.

-- ----- -_.
- -- ' --- - - - --

-

-

-

-

-

-

.
~

-

--

-

-

9 alOadv.
do

8 adv.
5 adv.
4 dis.

7 a 9 dis.
-

par
par

6 a 8 adv.

par

8udv.
2 adv.
5a 6~ dis.

par
par
par

-

- ,

par
par
par
par
par

-

-

9a10dis. 1 dis.
5 dis. laB dis.
do
2a2adis.
do
do

8

a

9 dis.

-

-

-

par
- -

-

5 a 9 disc.
do
do
do
do
do
do

-

-

-

H disc.

H disc.

U disc.
~

dis.

3~ dis,
par a 1-8 adv.

--

APPENDIX No. II-cONCI.. UDED.
PRICES CURRENT, Exhibiting a Comparativ8 Vie.w of the relative value of I1ank Notes
in 18J 6 and in 1829, at 'L'arious places.
"lew Orleans.

_____0_

1816.
July 1.

"
"
"
"
"

Lexington.

1829.
Dec'r. 1.

1816.
July 1.

18<Z9.
Dec'r. 5.

..

10 adv.

par

---- ------.. ---par
..

Spanish Dollar~ 1<z a 15 adv.
American
..
Gold
o.
Boston
Notes
New York ."
..
Philadelphia "
Pennsylvania"
Baltimore
..
Maryland
Virginia
Dlst.Columb. "
No Carolina
'0
I
S. Carolina "
Georgia
,.

- "-

Louisville.

..

..

..

..
..
..
.

..

..
~

..

..

~.

..
..
..
..
..
..

..

..
..

4 adv .
3 adv.

..
..

..

..

par
par
par

..

par

..

4 adv.

1 dISC.

4 adv.

..
..

..

..

..

..

..

1816.
July 1.

Cincinnati.

Piltsburglt.

I 1816.

1829.
1829.
1816. 1829'1
Dec'r. 5. July 1. Dec. 5. July 1. Dec. 5

_0.._- -----_. --..
1 18a25'ad~ --..
..

..
..

Q adv.

p~r

2 aov.
2 adv.

par
par

..
..
..
..
..
..
..
"

..
..
..
..
..

..

..

..

..

..
..

..

..
..

..
..

..
..
..
..
..

..
..
..
..
..
..
..

..
..

..

..
..

.)

par

..
..
..

..
..
..
..

..

10 aov

.,

9 adv.

..

..

....
.«

0

par

..

par

..
..

....
..
'0

.I

1

SENATE OF THE UNITED STATES,
MARCH

The Committee

29,

1

830.

of Finance, consisting of

The Honourable Samuel Smith, of Maryland, Chairman,
"
Nathaniel Silsbee, of Massachusetts,
u
William Smith, of South Carolina,
H
William It. King, of Alabama,
"

made

Josiah S. Johnston, of Louisiana,

the following

REPORT

S

•s

The Committee on Finance,

to which was referred a resolution of the 30th
December, 1829, directing the Committee to inquire into the expediency
of establishing an uniform National currency for the United States and
to report thereon to the

Senate, report:

THAT

nothing short of the imperative order of the Senate could induce
the committee to enter on a subject so surrounded with difficulty.
They
undertake it with diffidence and a distrust of their capacity to elucidate a
subject that has engaged many nations, and the pens of the ablest writers
without, as yet, coming to any definite conclusion. It still remains to be determined, What is the soundest and most uniform currency? One nation
assumes one system, another a different plan. In one nation, a plan is de-

and succeeds for a time by prudent and restrictive emissions. Elated
with success, larger and more extensive emissions are risqued; a rapid nominal rise of all property takes place; the people are not aware that such
nominal rise is the effect of depreciation; the bubble bursts, and ruin to the
All history shows such a result in sevunsuspecting, is the consequence.
eral nations, and particularly in that of the United States.
The committee
ftigaged on a variety of subjects, cannot devote so much time on the resolution as the mover must believe would be necessary to develope fully the
sound and uniform National Currency.
question before them, to wit:
Presuming, from the tenor of the resolution, that the uniform National currency proposed, must be prepared by the National Government, circulated
under its authority, and maintained by its credit, the committee have complied with the instruction of the Senate, by endeavoring to devise some

vised,

A

—
38
plan, through which the agency of the Government, in such a measure
could be safe, or useful but, after giving to it all the consideration they
could bestow, their reflections have resulted in a belief that any such measure must resolve itself, at last, into a mere system of paper money, issued
by the Government. The resort to the issue of a paper money has been
It has then found
often the desperate expedient of the wants of a nation.
its justification only in the necessity which created it: yet. such are its inevitable evils, that every prudent Government has, the moment its pressing
exigencies permitted, returned to the only safe basis of a circulating medium, the precious metals, and the private credits attached to the use of
them. Such were the expedients of the Government of the United States
during its two wars; such its immediate abandonment of them at the return
of peace. But, in the present condition of the Treasury of the United
Stales, with a revenue far beyond its wants, with a debt almost nominal,
and hastening to its entire extinguishment, such a measure is not needed
by the interests of the Government, nor is there the slightest indication of
Of such an issue of paits being demanded by the wants of the country.
per money, the Executive at Washington would be the natural fountain,
The individuals, and
the agents of the Executive, the natural channels.
corporations, and States, who borrowed it, must become debtors to the
Government; and the inevitable consequence would be, the creation of a
monied engine ofdirect dependence on the officers of Government, at vaThe limit to which
riance with the whole scheme of our institutions.
this currency should be issued, ihe persons to whom it should be lent, the
securities taken for its repayment, the places where it should be redeemed,
involve great complication and great hazard, regarding it merely in a fina?
cial point of view, while, on more enlarged considerations of political expediency, the objections to it are, in the opinion of the committee, insupe;

rable

and

fatal.

Believing such a scheme to be impracticable, the committee were consoled with the reflection that it is unnecessary, as they are satisfied that the
country is in the enjoyment of an uniform National currency, not only
sound and uniform in itself, and perfectly adapted to all the purposes of
the Government and the community, but more sound and uniform than
The importance of this truth will
tint possessed by any other country.
justify the

committee

in stating

some details

to establish

it.

currency of the United States, the only legal currency, is gold and
All debts to the Government, and all debts to individuals, being
silver.
received in that medium, and in no other. As, however, the amount of coin
requisite for these purposes would be unmanageable and inconvenient, the
United States, like other commercial countries, have adopted the system of
making credit supply many of the uses of coin: and numerous banking
companies have been established, issuing notes, promising to pay on demand, gold and silver. The Government of the United States has established one of a similar character; and for the convenience .of the community, the public revenue is collected in gold and silver, the notes of the
Bank of the United States, and the notes of such solvent State banks as the
Bank of the United States and its branches will receive as cash.
The currency, therefore, of the United States, in its relation to the Government of the United States, consists of gold and silver, and of notes
And the inquiry which naturally presents
equivalent to gold and silver.
itself, is, whether this mixed mass of currency is sound and uniform for all

The

—
89
the practical purposes of the Government, and the trade of the Union.
it is so, will appear from the following facts,:
1st. The Government receives its revenue from

Tint

343 Custom Houses,
42 Land Offices,
8,004 Post Offices,
134 Receivers of Internal Revenue,

I

37 Marshals,
33 Clerks of Courts.
|

These-, with other receiving officers, which need not be specified, compose an aggregate of more than 9,000 persons, dispersed through the whole
of the Union, who collect the public revenue. From these persons, tl»e
Government has, for the ten years preceding the 1st of January, 1830, received two hundred and thirty millions, sixty eight-thousand, eight hundred and fifty five dollars and seventeen cents, ($230,068,855 17.) This
sum has been collected in every section of this widely extended country.
It has been disbursed at other points, many thousand miles distant from
the places where it was collected and yet it has been so collected and distributed, without the loss, as far as the committee can learn, of a singledollar, and without the expense of a single dollar to the government. That
a currency, by which the Government has been thus enabled to collect and
transfer such an amount of revenue to pay its army and navy, and all its
expenses, and the national debt, is unsafe and unsound, cannot readily bo
believed: for there can be no surer test of its sufficiency, than the simple
ftct that every dollar received in the form of a bank note, in the remotest
parts of the interior, is, without charge, converted into a silver dollar, at
every one of the vast number of places where the service of the Government requires its disbursement. The Secretary of the Treasury, in his
report of the 6th of December, 1828, declares that, during the four years
preceding, the receipts of the Government had amounted to more than
ninety-seven millions of dollars, and that " all payments on account of the
public debt, whether for interest or principal; all on account of pensions;
all for the civil list; for the army; for the navy; or for whatever purpose
wanted, in any part of the Union, have been punctually met." The same
officer states, that " it is the preservation of a good currency that can alone
impart stability to property, and prevent those fluctuations in its value,
This advantage, the
hurtful alike to individuals, and to national wealth.
Bank has secured to the community, by confining within prudent limits its
issues of paper," &z.c. &c.
2d. If this currency is thus sound and uniform for the Government, it is
;

so to the community.
good currency, should be the precious metals, gold and
silver; and in a mixed currency of paper circulating with gold or silver, and
convertible into it, the great object to be attained is, that the paper should
alWays be equal to gold or silver; that is, it should always be exchangeable
Sue!) a currency is perfect, uniting the convenience of
for gold or silver.
a portable material with the safety of a metallic medium.
Now it cannot
be doubted, that throughout this whole country, the circulating bank notes
are equal to specie, and convertible into specie.
There may be, and probably are, exceptions; because among banks, as among men, there are some
who make a show of unreal strength. But it is a fact, so familiar to the
experience of every citizen in the community, as to be undeniable, that, in

not

less;

The

basis of all

40
the Atlantic and commercial cities, and generally speaking, throughout
the whole country, the notes of the State banks are equal to gold or silver.
The committee do not mean to say that there may not be too many banks,
or tliat insolvencies do not occasionally occur among them; but as every
all

bank which desires to maintain its character, must be ready to make settlements with the Bank of the United States, as the agent of the Government,
or be immediately discredited, and must therefore keep its notes equal to
gold or silver, there can be little danger to the community, while the issues
of the banks are restrained from running to excess, by the salutary control of
the Bank of the United States, whose own circulation is extremely moderate, compared with the amount of its capital.
Accordingly, the fact is,
that the general credit of the banks is good, and that their paper is always
convertible into gold or silver, and for all local purposes forms a local currency equivalent to gold and silver. There is, however, superadded to
this currency, a general currency more known, more trusted; and more
valuable than the local currency, which is employed in the exchanges between different parts of the country. These are the notes of the national
bank. These notes are receivable for the government, by the 9,000 receivers, scattered throughout every part of the country.

They are

in fact, in

of business, paid in gold or silver, though they are not legally,
or necessarily so paid, by the branches of the bank in every section of the
Union. In all commercial places they are received, in all transactions,
without any reduction in value, and never, under any circumstances, does
the paper, from the remotest branches, vary beyond a quarter of one per
cent, in its actual exchange for silver.
Here, then, is a currency as safe q&
silver; more convenient, and more valuable than silver, which, through the
whole Western and Southern, and interior parts of the Union, is eagerly
sought in exchange for silver; which, in those sections, often bears a premium paid in silver; which is throughout the Union equal to silver in payment to the Government and payments to individuals in business, and
which, whenever silver is needed in any part of the country, will command
By
it, without the charge of more than a slight fraction of a per centage.
means of this currency, funds are transmitted at an expence less than in
any other country. In no other country, can a merchant do what every cideposite, for instance, his silver at St.
tizen of the United States can do
Louis, or Nashville, or New Orleans, and receive notes, which he can carry
with him 1,0C0 or 1,500 miles, to the Atlantic cities, and there receive for
them an equivalent amount of silver, without any expense whatever; and in
If, howno possible event, an expense beyond a quarter of one per cent.

the course

—

ever, a citizen does not wish to incur the anxiety of carrying these notes
with him, or to run the hazard of the mail, he may, instead of them, receive
a draft, payable to himself or his agent alone, so as to ensure the receipt

of an equal amount, at an expense of not one-half, and often not one fourth,
of the actual cost of carrying the silver. The owner of funds, for instance,
at St. Louis or Nashville, can transfer them to Philadelphia for one-halt
at most,
per cent. from New Orleans, generally, without any charge at all
one half percent.; from Mobile, from par to one-half per cent.; from Savannah, at one-half per cent.; and from Charleston, at from par to one-quarter

—

;

per cent.

This seems to present a state of currency approaching as near to perfecfor here is a currency issued at twenty-four different parts of the Union, obtainable by any citizen who has money or credit.

tion as could be desired

:

41

When in his possession, it is equivalent to silver in all his dealings with all
the 9,000 agents of the Government, throughout the Union. In all his dealings with the interior, it is better than silver; in all his dealings with the
cities, equal to silver; and it", for any purpose, he desires tbe
which he bought it, it is at his disposal, almost universally,
without any diminution, and never more than a diminution of one quarter
per cent.
It is not easy to imagine, it is scarcely necessary to desire, any
currency better than this.

commercial
silver witli

It is

not

among

its least

advantages, that

it

bears a proper relation to the

and exchanges of the country being issued only to those
whose credit entitles them to it, increasing with the wants of the active operations of society, and diminishing, as these subside, into comparative inactivity; while it is the radical vice of all government paper to be issued
without regard to the business of the community, and to be governed wholly by considerations of convenience to the government.
After escaping so recently from the degradation of a depreciated paper
currency, the committee would abstain from every thing which might, however remotely, revive it.
The period is not remote when, in the language
of the late Secretary of the Treasury, the country was oppressed by a " currency without any basis of coin, or other effective check, and of no value,
as a medium of remittance or exchange, beyond the jurisdiction of the
State whence it had been issued
a currency that not unfrequenlly imposed upon the Treasury the necessity of meeting, by extravagant premiums,
the mere act of transferring the revenue, collected at one point, to defrny
unavoidable expense at another." It is still within the recolleciion of the
Senate, when, at the seat of Government itself, specie could only be had at
20 or 22 per cent, in exchange for the bank paper promises to pay specie;
that for bank notes of Baltimore, 2 per cent, were paid for those of Philadelphia, 6 to 7 per cent.; for those of New York, 15 to 16 per cent.; and
for those of Boston, 20 to 22 per cent.; ruinous inequalities, which have now
real business

;

—

;

happily disappeared.
3d. The soundness of the currency may be further illustrated by tl>«
present condition of the foreign exchanges.
Exchange on England is, at the present moment, more than 1 percent,
under par; that is, more than one per cent, in favor of the United Slates.
This being the real fact, disguised by the common forms of quoting exchange on England at between 8 and 9 per cent, premium.
It would lead the committee too far from its present purpose to explain
that the original estimate of the American dollar, as being worth four shillings and sixpence, and that, therefore, the English pound sterling is worth
$4 44, is wholly erroneous, and occasions a constant misapprehension of
the real state of our intercourse with Great Britain.
The Spanish dollar
his not, for a century, been worth four and sixpence; the American dollar
never was: and whatever artificial value we may assign lo our coins, is
wholly unavailing to them in the crucibles of London or Paris. According to the latest accounts from London, at the close of December last, the
Spanish dollar, instead of being worth four shillings and sixpence, or .54
pence, was worth only 49i pence; the American dollar at least one fourth
per cent, less; so that, to produce one hundred times four and sixpence, it
would be necessary to send to England, not 103 dollars, but 109 1-16'
Spanish dollars, or 1091 of the United States' dollar. If to this be added
the expenses and charges of sending the money and converting it into E*i-

D2

43
gtish gold,

it will cost 111; so that 11 1 is, at this moment, the real par of
exchange between the United States and England. If, therefore, a bill at
sight can be procured for less than this sum, or a bill at sixty days for one

per cent, less, say 110 per cent, it is cheaper than sending silver; that is to
say: he who has silver to send to England, can purchase a bill on London
lor a greater amount than he would get if he shipped the silver itself, and

of course exchange would be in favor of the United States against England.
Now, such bills can be bought at a less rate, by more than one per cent, in
every city in the United States.
This fact is conclusive as to the state of the currency. If the bank note*
of the country ^ere not equal to specie, specie would be at a premium,
which it no where is at present. If the currency were unsound, more must
bs paid of that currency in order to produce an equal amount of coin in
another country, where these bank notes do not circulate. But if, as is
the case at present, the bank notes are convertible into specie: if you
cun buy with bank notes as much as you can buy with silver; and if, in' the
transactions of the country abroad, the merchants, who, if the notes were
not equal to coin, would go to the bank and ship the coin, can pay as much
debt in foreign countries with the notes as by sending the coin there seema
nothing wanting to complete the evidence of the soundness and uniformity
of the currency.
On the whole, the committee are of opinion that the present state of the
currency is safe for the community, and eminently useful to the Government; that, for some years past, it has been improving by the infusion into
the circulating medium of a larger portion of coin, and the substitution of
tiie paper of more solvent banks in lieu of those of inferior credit; and th&C.'
if/left to the progress of existing laws and institutions, the partial inconveniences, which still remain, of the paper currency of the last war, will be
wholly and insensibly remedied.
Under these circumstances, they deem
it prudent to abstain from all legislation; to abide by the practical good
which the country enjoys, and to put nothing to hazard by doubtful experi;

ments.

The committee

submit, for the information of the Senate, certain questo the President of the Bank of the United States, together with his answers thereto, and a document furnished by that officer,
shewing the rales of exchange at which drafts are drawn by the Bank of the
United States and its offices of discount and deposile; and ask to be discharged from the further consideration of the subject.
tions

propounded

—

FROM THE HEW YORK AMERICA*.

„

TO THE MEMBERS OF THE STATE
LEGISLATURES OF THE U. STATES.
Gentlemen: The President of the United States has offered to you a
He has invited you to hreak down an Institution estabgreat temptation.
lished by Congress, to regulate the currency, and thus to possess yourselves
of the uncontrolled privilege of issuing paper money.
If, therefore, you

immediately instruct the .Representatives in Congress from your state, to
destroy the Bank of the United States; you will, in all probability, influence so large a portion of that body, as to succeed in the design of prostrating the General Government, by placing the revenues and the currency of
the country at your mercy.
Whether this shall or shall not be, now depends wholly on yourselves.
It is a question of fearful importance, and you will, therefore, 1 am sure,
bear with me while I examine whether it is for the real interest of our country that you should venture on this assumption of power.
Let us first state the question plainly. Soon after the General Government was formed by the people, in order to repair the effects of the paper
^j*3ues of the revolutionary war, and to administer safely the finances of the
Union, Congress established the Bank of the United States. Its agency
in contributing to the general prosperity, is matter of historical notoriety;
but, at the expiration of its charter, in consequence of the state of political
parties, a bill for re-chartering it failed in the House of Representatives by
one vote, and was lost in the Senate by the casting vote of the Vice PresiThe consequence was, that the State Governments, considering
dent.
that Congress had renounced the power, proceeded to the establishment of
several hundred banks, whose operations at last brought themselves and the
country to such a state of insolvency, that in order to extricate both, Congress again established the present bank.
That institution was calmly pursuing its way, with one third of its existence unexpired injuring none, offending none, fulfilling all its duties to
fiie Government, as the President himself acknowledged in the very message denouncing it when, to the surprise of the whole country, the Chief
Magistrate undertook to declare that its constitutionality had been well
questioned that it had failed to accomplish the object of its establishment,
and that if any bank were necessary, it should be a Government Bank.
All these assertions were immediately and decisively put down by both
Houses of Congress, whose decision was re-echoed by the People in every
There it should have ended. But unfortunately he
"Section of the Union.
has resumed the subject; and appealing from Congress to the State Legislatures, endeavors to induce their interference by exciting at once their
He tells you that by destroying
fears of danger and iheir hopes of power.
this bank, " the States would be strengthened by having in their hands" the
"means of furnishing the local paper currency ibrough their own banks ;*
end that a bank, " as a branch of the Treasury Department," with a " few
officers," engaged in buying and selling bills of exchange, would accon>

—

—

;

—

—
4*

plish all the objects of the present
*

makes

The
1st.

that

Bank

Bank " shorn of

the influence which

formidable. 1 '

questions, therefore, are:

What

strength will

be gained by the States in prostrating the

Bank?

What dangers must be incurred in order to obtain that advantage,
be one? and
What will be the effect of the contemplated substitute?
3d.
You will readily perceive that this question has no connexion whatever
It is not a question about the tariff
with the ordinary topics of party.
about internal improvement about nullification about party leaders of
any side. It is a question about much higher things the rights of property
and the stability of our social system; a question between the curse of paper money, and the safety of a sound currency; and every man who has
made any property, or hopes to make any by his industry, is deeply concer2d.

if it

—

—

:

.

ned in settling it.
Let us then ask

What strength is to be gained by the States in destroying the Bank f
cannot be to enable the State Governments to make more Banks, for
that power they exercise already, by making as many Banks as they please;
to enable the State Banks to take the place of
but simply and solely this
Now, as the State
the United States Bank, and thus issue more notes.
Governments certainly do noi wish their Banks to issue more notes than are
now issued by their Banks and the Bank of the United States jointly, of
course all that the State Governments would wish their Banks to do, is to,
increase their issues to the amount of the present issues of the United States
Bank. The inquiry therefore is, what would be the amount of these increased issues, and what the advantage of it to the State Legislatures and their
1

.

It

—

constituents.

Let us see. According to the latest published statements and estimates, the State of New York has thirty seven Banks, issuing about eight
The issues of the branches of the Bank of the
or nine millions of dollars.
United States in that State amount to less than $800,000; so that the gain
to New York would be an ability to issue about nine or ten per cent, more
notes.

The Banks of Pennsylvania have in circulation $7,308,000; the issues
of the Bank of the United States in that State are $1,584,000, so that the
gain would be an issue of one-fifth more notes.
The Banks of Massachusetts have in circulation $4,747,784; the issues
of the Bank of the United States there are $270,000, so that the gain
would be about six per cent.
The Banks of Virginia have in circulation, $3,847,000; -the issues of
the Bank of the United States there are $903,000, furnishing a gain oi
not one-fourth.
So that the utmost gain by those four States would be, that their banksf
which now issue about twenty-five millions of dollars, would be able to issue about three millions and a half more that is to say, to substituJe
three millions and a half of State Bank paper, for that much United States
Bank paper. Now, whom does this benefit? To the Banks themselves, it
To the State Governments, as a source of increased
is obviously a trifle.
revenue from the dividends of the Banks, it is not worth a moment's consideration; and as to the community, I appeal to you, as men of business,

—

45
whether there is any of your constituents who would not prefer the notes of
the United States' Bank to those of the State Banks?
The very first step
of reform, therefore, is a positive loss.
You will not let your constituents
borrow from their neighbors, forming a board of directors of a branch bank^
who give them notes circulating every where; and you force them to borrow from the same neighbors, forming a board of directors of a State banky
who give them notes not circulating twenty miles from his residence.—
Your constituents will scarcely be grateful for this misguided tenderness
to their interests.
You see, then, that the issues of the Bank, restricted
i

as they are, in order to restrain others, while they are sufficient to purify
the mass of the circulation, are not so large as to interfere with the free
issues of the State Banks; and that the Bank of the United States is, in
fact, the mere sentinel over the issues of the Stale Banks, to prevent their
excesses.
It occupies, in regard to the State Banks, the same federal relation which the General Government bears to the State Governments;
and as the General Government, in the exercise of its controlling powers,
operates only by State means, employing Judges and Juries belonging to
the State, so the National Bank acts only by employing certain citizens of
the State to lend money to other citizens of the State— its directors and

customers being all citizens of the State, and its directors being alterSo that the
nately directors of the National Bank and of the State Banks.
proposed change will be this: The citizens of your State now borrow money from the Bank of the United States, for which they receive the very
best notes in the woild.
You are going to force them to pay up their
la^ns, and oblige them to borrow from other banks, who give them notes
of far inferior value. Now, of two things, one: These Banks will either
limit themselves to filling up the void created by the destruction of the National Bank, or they will not. If they do not, the question is at once surrendered; for then the Bank is necessary to prevent their excesses. But
if they do as they ought to, issue only as much as is withdrawn, the utmost
gain which, in the best possible view of it, the State Governments can expect from the change, is the profit to be derived by the substitution of a
few millions of variable and doubtful currency, for that amount of a currency of unexampled value. What is this but to destroy the only efficient
check on those institutions, which, though created by the States, the States
have never been able to control. Let us now see,
2d. At what hazards this advantage is to be earned.
The first danger is this: that in attempting to widen your own authority,
you break down the constitution of your country. Recollect, that although
you are now members of the State Legislatures, the honorable ambition and
talents which have placed you there, will soon transfer you to the higher
sphere of the general Government, where you will be called upon to defend
Take
those very institutions, on which you are now exhorted to trample
care, then, that you do not weaken your means of serving the nation, by an
unnecessary committal of yourselves now, in regard to the very powers
which you may be called upon to exercise hereafter. Is it prudent for you,
.

as statesmen, to declare that when you go to Congress you will never, under
any circumstances of national distress, resort to the means of relieving it
which former Congresses have found the most effectual? Why bind yourWhy forestal your own judgment as you grow
selves for life in this way?
older and wiser, and advance in your country's service?
The President declares
JPor, listen calmly lo what I am going to say.

§

:

:

46
you may strengthen the State Governments by having the exclusive
power of issuing paper money? Now what right have the State Governments
to the exclusive issue of paper money. One of the most important causes which
occasioned the creation of the General Government, was, that the issue of
paper money by the States, was a grievance so intolerable, that the general
Government alone could stop it. The people, therefore, in establishing the,
constitution, declared that the State Governments should not be allowed
to issue paper money; but that the whole power of coining money and regulating its value, and of making the taxes payable in some uniform currency, should belong exclusively to the general Government. In the commentary on that subject, in the u Federalist," Mr. Madison, our highest constithat

tutional authority, declares as follows:
" The right of coining money, which is here taken from the States, was
" left in their hands by the Confederation, as a concurrent right with that

"of Congress, under an

exception in favor of the exclusive right of Conand value. The extension of the prohibition
"to bills of credit must give pleasure to every citizen in proportion to his
" love of justice, and his knowledge of the true springs of public prosperity.
" The loss which America has sustained since the peace, from the pestilent
" effects of paper money, on the necessary confidence between man and
" man; on the necessary confidence in the public councils; on the industry
"and morals of the people, and on the character of Republican Govern" ment, constitutes an enormous debt against the Slates chargeable with
" this unadvised measure, which must long remain unsatisfied or rather an
* accumulation of guilt, which can be expiated no otherwise, than by a vol***
i:
Uriiary sacrifice on the altar of justice, of the power which has been the
" instrument of it. Tn addition to these persuasive considerations, it may
" be observed, that the same reasons which shew the necessity of denying
" to the States the power of regulating coin, prove with equal force that
" theyou^ht not to be at liberty to substitute a paper medium in the place
" of coin."

egress

to regulate the alloy

;

And again, after thirty years experience, Mr. Madison, when President
of the United States, in his Message of 1 816
" But for the interest of the community at large, as well as for the pur" poses of the Treasury, it is essential that the Nation should possess a cur" rency of equal value, credit and use, wherever it may circulate. The
" Constitution has entrusted Congress exclusively with the power of crea11
ting and regulating a currency of that description, and the measures
" which were taken during the last session, in execution of the power, give
" every promise of success. The Bank of the United States, under auspi* ces the most favorable, cannot fail to be an important auxiliary."
In the same spirit, the Supreme Court of the United States, in January,
.
1830, while annulling a law of the State of Missouri, which authorised the
issue of paper money, declares as follows
r
" At a very early period of our Colonial history, the attempt to supply
" the want of the precious metals by a paper medium, was made to a con" siderable extent; and the bills emitted for this purpose ha veieen frequent" ly denominated bills of credit.
"During the war of Gur revolution, we were driven to this expedient;
" and necessity compelled us to use it to a most fearful extent. The
" term has acquired an appropriate meaning, and " Bills of Credit" signify
" a paper medium, intended to circulate between individuals, and between

.

—

:

47
Government and individuals, for the ordinary purposes of society. Such
" a medium has been always liable to considerable fluctuation. Its value
* is continually changing, and these changes, often great and sudden, exu pose individuals to immense loss, are the sources of ruinous speculations
** and destroy all confidence between man and man.
To cut up this mis" chief by the roots, a mischief which was felt through the United States,
11
and which deeply affected the interest and prosperity of all
the people
* declared in their Constitution, that no States should emit bills of
credit.
" If the prohibition means any thing, if the words are not empty sounds, it
" must comprehend the emission of any paper medium, by a State Govern*•

:

—

" ment, for the purpose of common circulation."
Nor is Mr. Jefferson less explicit. During the last war, in 1813, he addressed to his son-in-law, Mr. Eppes, then in Congress, two letters on the
financial situation of the country.
lie saw and deplored the worthless state
of the circulating medium issued by the State Banks, and his plan was,
that the General Government should obtain, either by voluntary cession
from the States, or by theforced destrvction of the State Banks, the exclusive power over the currency and exercise it by the issue of Go vernment paper.
" By the insolvency of these banks," he says, B a sum is thus swindled
"from our citizens of seven times the amount of the real debt, and four
¥ times that of the factitious one, of the United States, at the close of the
"war. All this they ni\\ justly charge on their Legislatures, but this will
" be poor satisfaction for the two or three hundred millions they will have
" lost. It is time, then, for the public functionaries to look to this. Perhaps,
" it may not be too late. Perhaps, by giving time to the banks, they may
Tallin and pay off their paper by degrees. But no remedy is ever to be
" expected while it rests with the State Legislatures. Personal motives
" can be exerted through so many avenues to their will, that, in their hands,
" it will continue to go on, through bad to worse, until the catastrophe over" whelms us. I still believe, however, that, on proper representations of
" the subject, a great proportion of these Legislatures would cede to Con** gress their power of establishing banks, saving the charter rights already
,

u granted."
Again
" 1 believe that every State west and south of Connecticut river, except
" Delaware, would immediately do it, and the others would follow
*' in
Congress would, of course, begin by obliging unchartime.
¥ tered banks to wind up their affairs within a short time, and

u the others as their charters expired, forbidding the subsequent circulation of their paper. This they would supply with their own bottomu ing every emission on an adequate tax, and bearing or not bearing interu est, as the state of the public pulse should indicate. Even in the non-comu plying States, these bills would make their way and supplant the unfun-

—

u ded paper of their banks, by their solidity, by the universality of their cur" rency, and by their receivability for customs and taxes. It would be in
"\heir power, too, to curtail those banks to the amount of their actual
" specie, by gathering up their paper and running it constantly on them.
u The national paper might thus take place even in the non-complying

«

States."

From

view of the Constitution, by the great expounders of it, you
were never designed to be
the exclusive suppliers of the National currency ; and in regard to the pow*this

will readily perceive that the State Legislatures

:

:

48
er of the General Government, there is one simple decisive fact which
ought to settle that matter. It is this that long before any State had a
bank, and long before nearly one-half of the Stales were even in existence,
the Rerolutionary Congress established a National Bank, and to that bank
was greatly due our safety during the most gloomy period of the RevoluThe following act of Congress, passed on the 31st of December,
tion.

—

1701, proves both the power of that body, and the usefulness of the bank
created by it
" Whereas Congress, on the twenty-sixth day of May last, did, from a
conviction of the support which the finances of the United States would receive from the establishment of a National Bank, approve a planfor such
an institution, submitted to their consideration by Robert Morris, Esq. and
now lodged among the archives of Congress, and did engage to promote
the same by the most effectual means: and whereas the subscription thereto is now filled from an expectation of a charter of incorporation from Congress, the directors and president are chosen, and application hath been
made to Congress by the said president and directors, for an act of incorporation: and whereas the exigencies of the United States render it indispensably necessary that such an act be immediately passed
" Be it therefore ordained, and it is hereby ordained by the United States
in Congress assembled, That those who are, and those who shall become,
subscribers to the said bank, be, and forever after shall be, a corporation
and body politic, to all intents and purposes, by the name and style of The
President, Directors, and Company of the Bank of Norili America?''
Sinee that day there has been an unbroken succession of concurring
«<*
judgments in favor of ihe constitutional exercise of this power.
" If, 1 ' observes the Committee of Ways and Means of the House of Representatives in 1830, " the concurrence of all the departments of the Gov';
ernment, at different periods of our history under every administration, and
" during the ascendancy of both the great political parties into which the
" country was divided, soon after the adoption of the present Constitution,
" shall be regarded as having the authority ascribed to such sanctions by
" the common consent of all well regulated communities, the constitutional
" power of Congress to incorporate a bank may be assumed as a postulate
" no longer open to controversy."
It would be a waste of words to say more on this point.
The second danger is, that yOu would not only break down the Constitution, but vitally impair the ordinaryfunctions of the Government ; for this
bank is highly expedient as well as constitutional.
As far as you of the State Legislature are concerned, it is enough for you
that it is constitutional; since, in that case, its expediency becomes, of
But that nothcourse, a question for the exclusive decision of Congress.
ing may be unanswered, look at that point!
As vouchers for its expediency in the financial operations of the Government, you have the Congress of 1781, you have the Congress of 1791, with
General Washington at their head, who made the second Bank, and tiJe
Congress of 1816, with Mr. Madison at their head, who made the third

Bank.

You have the guarantee of all the Secretaries of the Treasury, from the
foundation of the Government.
Of Robert Morris, the financier of the Revolution, who declared, of the
Bank established by Congress, that, " without that Bank, imperfect as was
*" its organization, the business of finance could not have been performed."

49
Of Alexander

Hamilton, who declared that " a National Bank is an instito the prosperous administration of the

" tution of primary importance

" finances."
Of Mr. Gallatin, who says, " experience has, however, since confirmed
" the great utility and importance of a Bank of the United States, in its
" connexion with the Treasury.
* " To insist that the operations of the Treasury may he carried on with
" equal facility and safety through the aid of the State Banks, without th*
" interposition of a Bank of the United States, would be contrary to fact
" and experience."
Of Mr. Crawford, who snpported the renewal of the old charter, and on
every occasion bore testimony to the services of the Bank.
Of Mr. Dallas, who " regarded the establishment of a National Bank as
" the best and perhaps the only adequate resource to relieve the country
" and the Government" from their embarrassments.
Of Mr. Rush, who- stated 'that the " capacity in the Treasury to apply
" the public funds at .the proper moment, in every part of a country of such
" wide extent, bus been essentially augmentedoby the Bank of the U, States.
" The department feels -an obligation of duty to bear its testimony, foun" ded on constant experience,. to the useful instrumentality of this institu" tion,in all the- most important fiscal operations of the nation."
Of the Committee of Ways and Means of the House of Representatives,
in 1830, who say—
" There can be no doubt that these fiscal operations are greatly facilitated by a Bank, and,it is confidently believed that no person has presided
" twelve months over the l^easury, from its first organization to the pres" ent time, without coming to the conclusion, that such an institution js
" exceedingly useful. to the public finances- in time of peace, but indispen" sable in time of war."
Of the Committee of Finance in the Senate, who say " that from about
u nine thousand collectors of the public revenue, the Government has r
p
" the ten years preceding the 1st of January, 1330, received two hundred
" and thirty millions sixty eight thousand, eight hundred and fifty-five dol" lars and seventeen cents ($230,068,855 17.)
This sum has been col" lected in every section of this widely extended country. It has been dis" bursed at other points, many thousand miles distant from the places where
" it was collected and yet it has been so collected and distributed, without
" the loss, as far as the Committee can learn, of a single dollar to the Gov^
" ernment. That a currency, by which the Government has thus been en" abled to collect and transfer such an amount of revenue to pay its Army
" and Navy, and all its expenses, and the National debt, is unsafe and tin" sound, cannot readily be believed; for there can be no surer test of its
" sufficiency than the simple fact, that every dollar received in the form
of
" a bank note, in the remotest parts of the interior, is without charge conver"^cedinto a silver dollar, at every one of the vast number of places where
" the service of the Government requires its disbursement."
It is doubtless to be regretted that these views in regard to Banks, entertained by the Congress of 1781, by the Congressof 1791, and the Conoresg
of 1816, and the Supreme Court of the United States, and Gen. Washington, and Mr. Hamilton, and Mr. Adams, and Mr. Jefferson, and Mr. Madison, and Mr. Monroe, and Mr. John Quincy Adams, and Mr. Morris, and
Mr. Gallatin } and Mr. Dallas, and Mr. Crawford, and Mr. Rush, and Mr
•
i
e
;

—

—

50
Lowndes, and Mr. Calhoun, and Mr. Clay, and Mr. Smith, of Maryland,
and Mr. M'Duffie, should lose so much of their influence by not being in
accordance with those of the present worthy Chief Magistrate: but if, notwithstanding this difference, any weight be given to their concurring opinions, reflect on the nature of the opposition to the Government which you
are desired to make.
You, members of the State Legislatures, with a direct prohibition agains-*
your issuing paper money, create banks to issue it.
Be it so. You do this
because you think it of advantage to the finances and the trade of your
Now, on what principle can you deny to the General Government
State.
the right of employing the very same machinery for the finances and the
trade of the Union
that General Government which has no such prohibition against it, which has the exclusive power of regulating the coinage,
which has the exclusive power of regulating commerce, and the exclusive
power of making the taxesand duties receivable in something of uniform
value throughout the Union? To say that you have the right of employing
this machinery yourselves is one thing; but to claim a patent for it, to say
that nobody else shall use it, seems to be pushing the pretension to an
extraordinary length.
So much for its constitutionality and expediency.
The third danger is, that you not only violate the Constitution, and embarrass the Government, but inflict on the community the curse of a paper
For what has been the operation of the Bank on the State banks
currency.
and the community? The answer is simple and decisive.
It has produced and now maintains for the benefit of the country one of the greatest
blessings which any country can enjoy
a sound and uniform currency.

—

—

No man in the
"

u
u

"
"

United States, excqit one, doubts

this:

has actually furnished," says the Committee of Ways and Means,
circulating medium more uniform than specie."
And again
"It may be confidently asserted that no country in the world has a circulating medium of greater uniformity than the United States; and that
no country of any thing like the same geographical extent, has a currency at all comparable to that of the United States on the score of uniIt

" formity."
" It has produced," says the Committee of the Senate, " a state of cur" rency approaching as near to perfection as could be desired for here is
>' a currency issued at twenty-four different parts of the Union, obtainable
*< by any citizen who has money or credit.
When in his possession, it is
;

."

equivalent to silver in

all his

dealings with

all

the

9000 agents of the

" Government throughout the Union.
>'

In all his dealings with the interior,

it is

better than silver; in all his

" dealings with the commercial cities, equal to silver; and if, for any pur*' pose, he desires the silver with which he bought it, it is at his disposal, al» most universally without any diminution, and never more than a dimin"'
It is not easy to imagine
it is scarcely
ution of one quarter per cent.
f* necessary to desire any currency better than this."
It would have prevented the suspension of specie payments during ths
So says Mr. Gallatin.
last war.
" It is our deliberate opinion, that the suspension might have been pre" vented, and would not have happened at the time when it took place,
« had the former Bank of the United States been still in existence."
It, and it alone, occasioned the resumption of specie payments.
So says

—

Mr. Gallatin,

——

—

—

51
Aftor explaining the arrangements proposed by the Bank of the United
States to a Convention of State Banks, he adds
" To that compact, which was carried into complete effect, and to the
*•
importation of more than seven millions of dollars in specie from abroad,
a by the Bank of the United States, the community is indebted for the uni* versal restoration of specie payments, and for their having been sustained

r

*

during the period of great difficulty, and of unexampled exportation of
to China, which immediately ensued."
So says the Committee of Ways and Means "The Committee are a
**
ware that the opinion is entertained by some, that the local Banks would
" at some time or other, either voluntarily, or by the coercion of the State
" Legislatures, have resumed specie payments.
In the very nature ot
" things, this would seem to be an impossibility."
And again " Deep and deleterious, therefore, as the disease evidently
*- was,
in many of the States, their Legislatures could not have been ex" pected to apply a remedy so painful as the compulsion of specie payments
" would have been, without the aid of the Bank of the United States."
And how was this accomplished? By any harsh pressure upon them?
By no means. In the appendix to the Report of the Committee of Finance,
it is stated by the President of the Bank, that after its organization, more
than ten millions of dollars were turned over from the local banks to the
Bank of the United Slates, which gave to that institution such a command
over them, that in their exhausted condition it would have been easy to
crush them.
So far, however, from abusing that superiority, he adds, that
s^hough " there are very few banks which might not have been destroyed by
" the exertion of the power of the bank, none have ever been injured, many
u have been saved, and more have been and are constantly relieved when
" it is found that they are solvent, and suffering under temporary difficulty.'
To the same effect the Committee of Ways and Means declare
u And here it is worthy of special remark, that, while that bank has
u compelled the local banks to resume specie payments, it has most materi" ally contributed, by its direct and liberal arrangements, to enable them to
u do so, and that with the least possible embarrassment to themselves, and
" distress to the community." And again
* It is due to the persons who for the last ten years have been concerned
41
in the administration of the bank, to siate that they have performed the
" delicate and difficult trust committed to them in such a manner as, at
'
the same time, to accomplish the great national end<s for which it was es" tablished and promote the permanent interest of the stockholders, with the
" least practicable pressure upon the local banks. As far as the Committee
" are enabled to form an opinion from careful inquiry, the bank has been
" liberal and indulgent in its dealings with these institutions, and, with

" specie

.

—

—

;

<
scarcely an exception, now stands in the most amicable relation to them.
u Some of those institutions have borne the most disinterested and uneqmvocal testimony in favor of the bank."
After this review of the nature and the benefits of the bank, even supposing you possessed the constitutional power to destroy it, consider whether
You see that, after the Revolutionary war, the
it would be wise to use it.
States who issued paper money were totally unable to regulate it.
You
know that, during the last war, the States again attempted it, and again
What reason is there to hope that a new experiment will be more
failed.
Trace out the operation of it. If the present Bank is desuccessful?
f gtroyed, after the inconvenience and trouble of its demolition pass, the
:

»•'

52
State Banks, Laving no longer any control, will proceed to issue as many
notes as they can. .Remark that, by their charters, they are generally allowed
to issue notes to twice the amount of their capitals, a most wide discretion,
and that nothing at this moment prevents it but the presence of the Bank
of the United States. There are twenty-four States, with about five hundred banks, of which about three hundred 'and forty are in full operation;
and, as there are four States who have no State Banks in operation, and*-there soon will probably be three more States, when the charter of the
Bank of the United States expires, there will be three new and four old
States who must begin the trade of banking.
Here, then, will be twentyseven State Legislatures who will add to the three hundred and forty banks

now existing,

an indefinite number of banks with an unlimited power of issuing paper money. Now let me ask you, as men of integrity, men of
property,, as men having the interests of your constituents at stake, can you
look forward without horror to the consequences of such a state of things?
With all these banks issuing paper money, straining their credit in the
competition for increasing their circulation, would not there soon come a
confusion of local currencies degenerating into a mass of worthless paper,
and bringing back the demoralizing scenes which have already so deeply
afflicted our country?
Is it not belter for you to abstain from all attempts
to embarrass the Government, of the Union by urging doubtful pretensions?
Is it not better to acquiesce in the will of the people, which has delegated
to the Union the powers over the currency, and go on as you now do, in
the concurrent exercise of this power, making as many banks as you
please, while the General Government applies the only efficient correciive
by the gentle restraint it imposes on institutions, which all experience
proves cannot be controlled by the State Legislature? You think, perhaps,
that reliance can be placed on the discretion of your legislature; but can
you rely on the discretion of the twenty-six other Legislatures? and if in
one only, a depreciated currency takes root, is it not utterly impossible to
prevent the contagion from reaching you? Besides, if the currency is depreciated in some of the States, and not in yours, what great injustice
your citizens will sustain. If the currency is depreciated among your
neighbors, the citizens of that State pay all their taxes in what is less valuable than is paid by your citizens; and is not this an intolerable grievance?
If yon mean to preserve your currency sound, and to pay the taxes of the
Government in what is equivalent to gold and silver, what guarantee have

you

that the other States will

do the same?

And,

if they

do not, why

should you wish to prevent the General Government from enforcing that
duty upon them and why take from the national authorities the power of so
regulating the national currency as to make the citizens of other states pay
a salutary, and, to you, a most proas much tax as your own citizens do
It remains-tective power?
3. To examine the effect of the proposed substitute, which, we shall see,
like most other temptations, will end by destroying the very interests it
professes to advance.
The President proposes a Bank on his own model; of course he thinks
This at once demolishes his own
that a bank of some sort is inevitable.
constitutional objections, and renders the comparison between his bank
and the bank established by your representatives in Congress a question
of mere expediency. Let us make the comparison.
The new bank is to be " a Branch of the Treasury, 11 it is to have public
and private deposites; it has to transmit the public funds, and besides
•

—

03
purchasing

bills for

the Government,

it is

to sell bills

of exchange at a pre-

mium, and it is to be managed by a '« few officers," but no Directors. The
new bank, therefore, has to do the same things as the present bank, that is,
it has to receive and to transfer the public funds,
and to sell bills of Exchange; so that the only difference in that respect will be, that its Loans

_ present
the public monies deposited with it.
The " few officers" of the Treasury, who are to be the depositories of
twenty four millions of revenue, will not be safe; and if they are in default, the country loses the money.
Jn transmitting the public fundsfrom
one end of the country to the other, if any loss occurs on bills, the Bank
bears it.
In similar purchases, the few officers will not have the same
means of knowing the bill drawers as the Bank has; they will be much
tempted to lend money on the bills of political friends; and if any loss happens, they ought scarcely to bear it, since it may be, or it may be made
to
seem, a mere error of judgment. Then, again, the loans and the operations
of the present bank, in every state, are made by Boards of Directors of
the most respectable citizens of that State
men of business of all political
parties, selected for their especial competency for that trust.
By the substitute, all Boards and all Directors are at once abolished: no citizen
of the
State is to have any concern in it.
The whole is to be managed by a few
officers appointed by the President.
What sort of officers these would
Sobably be whether they would be respectable, responsible citizens, not
liticians, or whether they would be insolvent partisans, you may
,
comecture from the past.
Look round you at the officers of that description
and see whether there is any very encouraging prospect that these « few
officers" would be people to whom the management of twenty-four
millions of dollars a year, paid by YorR constituents, might be prudent!"
trusted.
The proposal is far more dangerous than if the President were to
ask of Congress to abolish, in the United States' Courts, all the judges and
juries of citizens of the states, and to allow him to appoint a few officers
removable, of course, at pleasure, who should administer justice in the
States, without the troublesome intervention of independent judges and
unmanageable jurymen. These officers, too, are to sell bills " at a moderate premium ;" so that, after all his reproaches against the Bank that it
has not equalized the currency, his own few officers are to sell bills not at
The last and most essential difference is this.
par, but at a premium.
By the present plan, the revenue, as it accrues, is lent out to the citizens
of the States by the Bank of the United States, whose notes can thus be
obtained; the notes of the State banks paid in for revenue return to the
circulation, and the State banks have it always in their power to protect
themselves against the National bank. By the substitute, except when
tH&'purchase of bills of exchange restores them to circulation, thev are
hoarded by these u few officers" of the Treasury so that the best notes
must be wholly withdrawn from the public, and the solvent State Banks,
from whom the masses of their notes may be at any moment demanded
by the Government, can no longer continue their discounts or their issues.
The place of their issues must then be supplied by notes of less solvent
Banks, which are under no control: so that if the plan were put in execu-

bank

is

responsible for

all

—

—

:

E2

54
Banks would be crippled and rendered useless in a
few months, and the whole mass of the currency become worthless.
This the State Banks know perfectly well. The solvent State Banks
are deeply interested in the preservation of a sound currency, and they
know from experience that however disposed to restrict their own issues
tney have no security for the general purity of the currency except the
general authority of the Union exercised by the National Bank.
Put that
question to the State Banks.
Ask them whether they think it I will
not say natural nor probable but ask them if they think it possible that
the general soundness and uniformity of the currency can be preserved
in any way less injurious to them, than by the operations of this Bank. If
the mild, and friendly control which it exercises, sometimes appears to interfere with the more abundant profits they might reap from larger issues,
they should remember, as good citizens, that this very restraint is the price
ofsecurity.
And, above all, they should examine the alternative which
must be substituted for it. Mr. Jefferson, you perceive, saw no safety but
in the absolute annihilation of the State Banks. The plan of the present
Chief Magistrate is more decisively ruinous, because it would place thern
entirely under the command of a few officers of the Treasury, who would
he possessed of all their notes and might at any moment crush them.
Such, gentiernen, are a few of the many considerations which should
warn you against any hasly interference with the powers of the Government over the currency. Think of them soberly and calmly and if, hereafter, any one of your young or old politicians, desirous of distinction or
favor out of your State, should call upon you to instruct your Representatives in Congress on this subject, expostulategenlly with him. If he shouljjp
say the Bank is against the Constitution, tell him that the very same statesmen who made the Constitution, made the Bank; and that if this question
be not settled, we have nothing settled in our institutions. If he should

tion, the solvent State

—

—

;

him that it is a question not for the State Legislaand that it would be hard indeed to deny to Congress the same facilities for its finances, which the Legislature claims for
its own.
If he tells you that your banks will be able to issue more paper
if the National Bank is destroyed, ask him if the paper will be probably
safer and better, and more liked by your constituents?
and further, ask
him what security there is, that these four or five hundred hanks will not
issue far too much paper, and that we shall not be brought back to the very
point from which this bank relieved us, an irredeemable paper money? Say
to him that you and your children have made your fortune, or hope to make it,
by honest industry,
not by gambling that the present state of things is good
enough; and that it is better to stand by what we have, without trying
any more experiments. If, finally, he should reserve for the last, what yon
may depend upon it was the first in his thoughts, and tell you that the piesent Chief Magistrate was opposed to it, and that his party
stop him
and say that you have every fitting respect for the Chief Magistrate; but
say

it is

inexpedient,

tell

tures, but for Congress,

—

&

;

,

that this is a country of institutions, not of men; that in your State things
are decided by reason, not by authorily ; and that a leader of a party has no

right to expect that his followers will blindly injure their country,
to please him.

Say, too, that

if this

be

merely

made a

chiefs of the party are against the President

;

party question, all the great
and that to yield to the wishes

or ihe prejudices of any man, against the interests of your country, is to
betray your trust, and to surrender that personal independence, which 13
the proudest ornament of a representative of the People,

MR. GAULATIN'S OPINIONS.
[The important question of the renewal of the charter of the Bank of
United States, having been thus early agitated, and it being a matter
of deep if not vital interest 1o a community so widely extended as that of
the United States, to become acquainted with every argument which can
be adduced to elucidate the subject, the publisher subjoins several interesting extracts from an essay in a late number of the Quarterly Review, written by Albert Gallatin, Esq. (formerly secretary of the Treasury)
whose talents and experience give a weight to his opinion that must entitle

^ he

it

to the dispassionate consideration

of every individual in our country:]

1st. Mr. Gallatin considers the Bank of the United States of thevtmost
importance to the financial operations of the Government.
Experience, however, has since confirmed the great utility and importance ofa Bank of the United States, in its connection with the Treasury.
The first great advantage derived from it, consists in the safe keeping of
the public monies, securing, in the first instance, the immediate payment
of those received by the principal collectors, and affording a constant check
on all their transactions; and, afterwards, rendering a defalcation in the
munies once paid, and whilst nominally in the Treasury, absolutely im^pssible.
The next and not less important, is to be found in the perfect
facility with which all the public payments are made by checks, or treasury
drafts, payable at any place where the Bank has an office; all those who
have demands against government, are paid in the place most convenient
to them and the public monies are transferred through our extensive territory at a moment's warning, without any risk or expense, to the places most
remote from those of collection, and wherever public exigencies may reFrom the year 1791 to this day, the operations of the Treasury
quire.
have, without interruption, been carried on through the medium of the
Banks; during the years 1811 to 1816 through the State Banks; before
and since, through the Bank of the United States. Every individual who
has been at the head of that department, and, we believe, every officer connected with it, has been made sensible of the great difficulties that must be
encountered without the assistance of those institutions, and of the comparative ease and great additional security to the public, with which their
public duties are performed through the means of ihe Banks.
To insitt
that thljoperations of the Treasury may be carried on with equal facility
and safety, through the aid of the State Banks, without the interposition of
a Bank of the United States, would be contrary to fact and experience.
That great assistance was received from the State Banks, while there was
But it is
^rto other, has always been freely and cheerfully acknowledged.
impossible, in the nature of tilings, that the necessary concert could be
j

:

to exist between thirty different institutions; and in some instances
heavy pecuniary losses, well known at the seat of government, have been

made

experienced.
2d. He thinks, had it been in existence, it would have prevented the susThe causes of that suspension he
pension of specie payments in 1814.
examines in much detail^ and concludes ihe enquiry thus;

68

We

have stated all the immediate and remote causes within our knowledge, which concurred in producing that event; and although the effects
of a longer continuance of the war cannot be conjectured, it is our deliberate opinion, that the suspension might have been prevented, and would
not have happened at the time when it took place, had the former Bank of
the United States been still in existence.
The exaggerated increase of
State Banks, occasioned by the dissolution of that institution, would not

w

have occurred. That Bank would, as before, have restrained within proper bounds, and checked their issues, and, through the means of its offices,
it would have been in possession of the earliest symptoms of the approach
of danger. It would have put the Treasury Department on its guard boih
acting in concert, would certainly have been able at least to retard the
eventj and, as the treaty of peace was ratified within less than six months
after the suspension took place, that catastrophe would have been altoge;

ther avoided.

3d. He thinks it teas the direct and immediate agent in producing the
resumption of specie payments.
It will be found, by reference to the Report of the Secretary of the Treasury, of December 1815, that his recommendation to establish a National
Bank, was, in express terms, called " a proposition relating to the national
circulating medium," and was exclusively founded on the necessity of

and the national currency.
He states it as a
Banks could not at that time be
successfully employed to furnish an uniform national currency.
He mentions the failure of one attempt to associate them with that view; that another attempt, by their agency in circulating Treasury Notes, to overconjdMB
restoring specie payments

fact incontestibly proved, that the Slate

the inequalities of the exchange, has only been partially successful; that a
plan recently proposed with the design to curtail the issues of bank notes,
to fix the public confidence in the administration of the affairs of the bank,
and to give each bank a legitimate share in the circulation, is not likely to
receive the general sanction of the banks; and that a recurrence to the
national authority is indispensable for the restoration of a national currency.
Such was the cotemporaneous and deliberate opinion of the officer of the
government, who had to struggle against the difficulties of a paper currency, not only depreciated, but varying in value from day to day and from
place to place.
It was not till after the organization of the Bank of the United States,
in the latter part of January, 1817, that delegates from the Banks of NewYork, Philadelphia, Baltimore, and Virginia, assembled in Philadelphia,
for the purpose of agreeing to a general and simultaneous resumption of
specie payments.
compact proposed by the Bank of the United States,
acceded to by the State Banks, and ratified by the Secretary of the^Treasury, was the result of that convention. The State Banks engaged to commence and continue specie payments, on various conditions, relative to the
transfer and payment of the public balances on their books, to the Bank o r
the United States, and to the sum which it engaged previously to discount
for individuals, or under certain contingencies for said Banks, and also with
the express stipulation, that the Bank of the United States, upon any emergency which might menace the credit of any of the said banks, would contribute its resources to any reasonable extent in support thereof, confiding in
the justice and discretion of the Banks respectively, to circumscribe their

A

affairs

within the just limits indicated by their respective capitals, as soon

,

57
as the interest and convenience of the community would admit.
To that
compact, which was carried into complete effect, and to the importation of

more than seven millions of dollars in specie from abroad by the Bank of
the United States, the community is indebted for the universal restoration
of specie payments, and for their having been sustained, during the period
of great difficulty and of unexampled exportation of specie to China, which
immediately ensued.

He

has established and maintains a uniform currency.
value of a paper currency
should, in the United States, be always the same as that of the gold and silver coins, of which it takes the place.
It is impossible to fulfil that condition better, than by making that currency payable on demand in specie and
at par.
This cannot be done but at certain places designated for that pur4lh.

thinks that

it

In order to attain perfect uniformity, the

pose.

Those notes, vs 3rever made payable, are by the charter, receivable in all
payments to the United States: and as the Bank is obliged, without any
allowance on acv'
v of deference of exchange, to transfer the public
funds from place
States, any loss arising from
j within the United
that cause falls en
For that purpose, therefore, all the
e institution
notes issued by the Bank constitute but one uniform currency, with which
'

Not only the conthe duties, ta
s, :nd excises, may be paid.
dition of uniformi
imposed by the Constitution is strictly fulfilled, but by
far the greater pat; of tire notes which may happen to circulate out of the
States in which the) are m ide payable, is also absorbed by that operation.

all

•

^5fh. He thinks that its operations in exchange, and cheap transfer of
fnnds ichlch it is thus enabled to make, are of great advantage to the whole
country.

A similar objection has been made with

respect to the dealings in domesexchange of the bank. These consist of two correlative but distinct
operations.
The bank purchases at Philadelphia, and at every one of its
offices, bills of exchange payable at different, dates, aad oa all parts of the
United States where there are such offices; and the bank and its offices sell
their drafts on each other, payable at sight.
The amount of both has been
That of
progressivelv increasing, to the great convenience of the public.
bills of exchange was 29,335,254, and that of bank drafts 24,384,232 dollars, during the year 1 829.
In the same year the transfers of public moneys,
which are effected by treasury drafts, analogous to bills of exchange at
sight, have amounted to 9,066,000 dollars. The three items together make
a total of 62,785,486 dollars, transmitted by the bank in one year through
the medium of bills and drafts, which are thus substituted to the transportation of specie to ihe same amount.
The purchase of bills of exchange is an operation similar, as relates to
interest, to the discounting of notes.
The interest accruing, from the time
tic

of purchase or discount,

to that

when they become due,

is

equally allowed

Deducting this, the gross profit, on the purchase of bills,
arising from the rate of exchange at which they were purchased, amounted
in the year 1829 to 227,224 dollars, or less than three fourths per cent.
The premiums on the sale of bank drafts amounted to 42,826 dollars; but
to this must be added the interests accruing on the drafts actually in circulation, and which, estimating as before stated, the time during which, on
an average, they remain so, at fifteen days, amount to near sixty-one thousand dollars. The profit on those drafts is therefore near one hundred and
frrloth cases.

"

08
four thousand dollars, or about three-sevenths per cent.
The interest lost
by the bank on the treasury drafts, is from fifteen to twenty thousand dollars; and the charges for transportation of specie, postage, and incidental

expenses, amounted, in the year 1829, to 49.847 dollars. The nett profit
of the bank, on the aggregate of those transactions, is, therefore, about two
hundred and sixty-four thousand dollars, or a fraction more than two-fifths
*
per cent, on the whole amount.
,

There is not, it is believed, a single country,
that respect, served with less risk or expense.

where the community

is,

in

6th. He thinks that it maintains the general soundness of the currency,
and without injuring the State Banks.
Those statements also show that the Bank of the United States, wher-

ever its operations have been extended, has effectually checked excessive
issues on the part of the State banks, if not in every instance, certainly in
the aggregate.
They had been reduced before the year 1820, from sixty
six to less than forty millions.
At that time those of the Bank of the United States fell short of four millions.
The increased amount required by
the increase of population and wealth during the ten ensuing years, has
been supplied in a much greater proportion by that bank than by those of
the states.
With a treble capital, they have added little more than eight
millions to their issues.
Those of the Bank of the United States were nominally twelve, in reality abouteleven millions greater in November, 1829,

than in November, 1819.
The whole amount of the paper currency has,
during those ten years, increased about forty-five, and that portion which
is issued by the state banks, only twenty-two and a half per cent.
\Y<fy
have indeed a proof, not very acceptable, perhaps, to the banks, but conclusive of the fact, that, it has performed the office required of it in that respect.
The general complaints, on the part of many of the State banks, that they
are checked and controlled in their operations by the Bank of the United
Slates, that to use a common expression, it operates as a screw, is the best

evidence that its general operation is such as had been intended. It was
for that very purpose that the bank was established.
We are not, however,
aware that a single solvent bank has been injured by that of the United
States, though many have undoubtedly been restrained in the extent of
their operations, much more than was desirable to them.
This is certainly
inconvenient to some of the banks, but in its general effects is a public

community.
to judge whether, in performing that unpopular duty,
the Bank of the United States has checked the operations of the state banks
more than was necessary, and has abused, in order to enrich itself at their
expense, the power which was given for another purpose, is to compare
benefit to the

The

best

way

their respective situations in the aggregate.
In order to avoid any erroneous inference, we will put out of question those banks of which we
could only make an estimate, and compare, with that of the United States.,
those only of which we had actual returns.
The profit of banks, beyond the interest on their own capital, consists in
that which they receive on the difference between the aggregate of their
deposites and notes in circulation, and the amount of specie in their vaults.
We have given the aggregate situation for the end of the year 1829, of 281
banks, with a capital of 94,245,650 dollars, the deposites and circulating
notesof which amounted together to $71,275,504, from which deducting
the specie in their vaults, $11,919,353, leaves for the said difference
#59,356,151, or 64i per cent, on their capital.

—
59
The notes in circulation of the Bank of the United States (deducting two
millions for those in transitu, and adding one million for its drafts in circulation) amounted in Nov. 1829, to $ 14, 844,984, and together with the deposites, to $29,623,793, from which deducting the specie in its vauhs,
$7, 175,274, leaves for the difference, $22,448,5 19, or 64 1-7 on its capital.
It is clear that those state banks, taken in the aggregate, have no just
^reason to complain, since that of the Uniteu States imposes no greater reIt will also be perceived that it had in
straints on them than on itself.
specie, more than one-fifth part of the aggregate of its notes in circulation
and deposites; whilst the State Banks had little more than one-eighth; and
the Bank of the United States had, in addition, a fundofabout one million
of dollars in Europe. The difference would have been more striking, had
we taken a view of the situation of all the State banks, including those on
estimate; for the difference between the aggregate of their notes and de-

and their specie, is 67^ on their capital.
This view of the subject applies to the present time, when the Bank of
the United States has surmounted the difficulties which it had, in its origin,
It did not go
to encounter, and has reached a high degree of prosperity.
into operation till the commencement of the year 1817, and such were the
losses which it first experienced, that its dividends, during the first six
The dividend has
years of its existence, fell short of 3J percent, a year.
since gradually increased from 5 to 7 per cent., but the average, during the
thirteen years and a half ending on the first of July, 1830, has been but
4 88-100 percent, a year. An annual dividend of about 9 per cent, du^ring the residue of the time to which the charter is limited, would be neceswary, in order that the stockholders should then have received, on an average, six percent, a year on their capital.
The dividends of the State
banks vary too much, and our returns are too imperfect in that respect to
enable us to estimate the average; but it has certainly far exceeded that of
the Bank of the United States.
The manner in which the bank checks the issues of the State banks is
equally simple and obvious.
It consists in receiving the notes of all those
which are solvent, and requiring payment from time to time, without suffering the balance due by any one to become too large.
Those notes on
hand, taking the average of the three and a half last years, amount always to
about a million and a half of dollars; and the balances due by the banks in
account current (deducting balances due to some) to about nine hundred
We think that we may say, that, on this operation, which rethousand.
quires particular attention and vigilance, and must be carried on with great
firmness and due forbearance, depends almost exclusively the stability of
the currency of the country."
The whole judgment is recapitulated in these icords:
The principal advantages derived from the Bank of the United States,
which no State bank, and, as it appears to us, no bank established on dif^rent principles could afford, are, therefore: First and principally, securing with certainly a uniform, and, as far as paper can, a sound currency;
Secondly, the complete security and great facility it affords to government
in its fiscal operations; Thirdly, the great convenience and benefit accruing
to the community, from its extensive transactions in domestic bills of exchange and inland drafts. We have not adverted to the aid which may be
expected from that institution in time of war, and which should, we think,
be confined to two objects.
posites,

60
The experience of the last war has sufficiently proved, that an efrevenue must be provided, before, or immediately after that event
Resort must be had, for that purpose, to a system of internal
takes place.
taxation, not engrafted on taxes previously existing, but which must be at
once created. The utmost diligence and skill cannot render such new taxThe estimated amount
es productive before twelve or eighteen months.
must be anticipated; and advances to that extent, including at leaft the*
estimated proceeds of one year of all the additional taxes laid during the
war, may justly be expected from the Bank of the United States.
Secondly. It will also be expected, that it will powerfully assist in raising
the necessary loans, not by taking up, on its own account, any sum beyond
what may be entirely convenient and consistent with the safety and primary object of the institution, but by affording facilities to ibe money lenders.
Those, who, in the first instance, subscribe lo a public loan, do not intend
to keep the whole, but expect to distribute it gradually with a reasonable
The greatest inducement, in order to obtain loans on moderate
profit.
terms, consists in the probability that, if that distribution proceeds slower
than had been anticipated, the subscribers will not be compelled, in order
to pay their instalments, to sell the stock, and, by glutting the market, to
sell it at a loss; and the assistance expected from the bank is to advance,
on a deposit of the scrip, after the two first instalments have been paid,
such portions of each succeeding payment, as. may enable the subscribers
As this operation may be
to hold the stock a reasonable length of time.
renewed annually, on each successive loan, whilst the war continues,
First.

ficient

the aid afforded in that manner is far more useful than large direct adva'i*
ees to government, which always cripple the resources, ana may endangei*
the safety of the bank.

LEGISLATURE OF PENNSYLVANIA.
The

following resolution was passed unanimously, in the Senate of Penn-

m

1830-1) and
the House of. Representatives by a vote of seventy-Jive to eleven. Of the 1 1 who composed the
minority, " it is understood," says the National Gazette (a paper of highly
respectable standing, in Philadelphia) that nearly all of them— perhaps the
sylvania, at the last session (that of

— were friends of the Bank, whoso

only objection to the
did not propose a renewal -entirely without reference
to any restrictions. 1 '
The resolution is no doubt app:ovedof, with equal
unanimity, by the people of that respectable and patriotic state.
RESOLUTION'.
" That whereas the bank of the U. States has tended in so great a degree
to maintain a sound and uniform currency, to facilitate the financial opera-

whole except three

resolution was, that

it

tions of the government, to regulate foreign and domestic exchange, anu
has been so conducive to commercial prosperity, that the Legislature of

Pennsylvania recommend a renewal of its charter, under such regulations
restrictions as to the power of the respective states, as Congress may
doom right and proper. 1 '

and

STKUBENVILLE

— PBXNfBD BY SUBSCHIPTIOK,
By Jas.

I/.JCO?

Wilson.

0S<(.

O0 75