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23d CONGRESS,
[ Doc.
No.
L
Id Session.
27. 1
'
J
Ho. OF REPP.
Treas. Dept.
PUBLIC MONEY.
REPORT
FBOM TBS
SECRETARY OF THE TREASURY,
On the present system of keeping and disbursing the Public Montjf.
D E C E M B E R 15, 1834.
Referred to the Committee of Ways an I >Iian-
TREASURY DEPARTMr.NT,
December 12, 1834.In conformity with a suggestion made in the annual report from this
department, the undersigned now proceeds to submit to Congress some
further considerations on the prese nt system of keeping and disbursing
the public money.
It is one of his general duties to present annually a \ iew of the condition of our finances. An essential part of that condition is the manner
in which the revenue is kept, from the time it is collected until it is disbursed. Another of his duties is to digest and prepare, plans for Us
management; and he is elpressly required to "give information to
the Legislature respecting all matters which »h*U appertain to his
office."
Considering the unusual excitement that bus attended tin measures
and discussions of the past year, connected with the above subjects, it
would, probably, be deemed a neglect or an evasion of proper responsibility, if the undersigned did not submit full information concerning tht
places where our revenue is now deposited and kept; the principlewhich the selection of them by this department is justified ; the mode
in which the existing system for the preservation and disbursement of
the public money has been found to operate ; and the advantages, or disadvantages, which are likely to result from a return to any former one,
or from the adoption of any proposed improvements in the existing system. He will, therefore, proceed to the performance of this delicate
and difficult task with an unfeigned distrust of his competency to treat
those subjects in a manner becoming their great importance, but ui the
same time with a firm resolution to endeavor to discharge the duty, so far
as in his power, with fearlessness, impartiality, and fidelity to the public,
[Gales & S atop, print.]
2
[ Doc. No. 27. J
In regard to the places for keeping the funds of the United States,
it is believed that, under our first organization of a common treasury,
no such places were ever designated by law, unless sometimes the loan
offices, and unless, for such funds as were wanted in the field, the
military chests accompanying the army may be so considered. The
residue of the funds is supposed to have generally been deposited
for safe keeping, as the Committee of Congress, when having charge of
them, or the Treasury officers, when such had been created, were pleased
to direct; and it is well known that by them banks were selected for
this purpose as soon as any were incorporated in convenient places, under either State or Federal authority.
After the present constitution was adopted, the usage continued the
same until 1809 ; no law having ever been previously passed, which required the deposited of public money to be made in the first United States
or any State bank. But, from I"i89 to 1791, it appears that the Bank of
North America, in Pennsylvania, by which State as well as by Congress
it had been incorporated, continued to be employed by the officers of the
Treasury under the direction of the Secretary, and in the exercise of
his supposed legal power over this subject.
The three Bank.- of Massachusetts, New York, and"Maryland, incorporated in those States, under those respective names, were also in the
same way ne,xt selected and used. After HOI the former United States
Bank was, by this department, voluntarily added to the number. In
1809, by the act of March iJOtn, the first express legislation took place
as to the use of any banks whatsoever as plums for the. public deposites,
and that extended only to u the public moneys in the hands" of disbursing officers, and required them to be kept, "wherever practicable," in
some "incorporated bank," and that bank to be selected or "designated
for the purpose by the President of the United Slates." The deposites
by collecting officers were left untouched, they having been already, as
before named, usually placed in banks, and those banks selected, not by
the Treasurer, or Congress, or the President, but by the Secretary of
this department, or 1» his direction, under the power, confided to him by
acts of Congress, of supervising the finances and the doings of the subordinate officers in th
uy. A committee of the House ot Representatives, May Zl, Hiti, made a very able report on the condition of the
Treasury, in which, on this point, they remark, that " t h e Treasurer,
pursuant to general direct inns from tit.
rt/ (>/ th< Treasury, keeps
.the public moneys under his control in the several banks,' 1 &.e. In February, 1811, before the charter of the old Bank expired, but after its renewal had been refused, Mr. dnllatin, by his own act, and not by orders
to the Treasurer, and without consulting Congress, then in session, proceeded to select other banks, incorporated by the several States, and to
remove to them the deposites of the public money. As appears in his
report to the House of Representatives, January 8, 1812, he entered
into arrangements with them in many respects similar to those now in
operation.
After this change, the usage and law on this subject continued unaltered till 1816, when it was provided in the charter of the present Bank
of the Unite'd States, " that the deposites of the money of the United
States, in places in which the said Bank and branches thereof may be
[ Doc No. 2? ]
3
established, shall be made in said Bank or branches thereof, unless the
Secretary of the Treasury shall at any time otherwise order and direct;
in which case the Secretary of the Treasury shall immediately lay before
Congress, if in session, and, if not, immediately alter the- commencement
of the next session, the reason* for such order or direction."
Whether this was or was not intended to include the deposite of money in the hands of disbursing as well as collecting officers, all difficulty
was avoided on that point by the President, in giving directions, as has
lately been done, to have the same banks used by the former as were
used by the latter class of officers.
In the discussions of 1814, which led to that charter and the above
reservation, it was distinctly aVerred to be necessary that such a reservation or power should be retained, in order to ensure to the Government some further control over the Bank in case of the adoption of the
provision in the bill, giving to the former only five out of twenty-five
directors. Because, in a case like that which has been witnessed during the past year, a distinguished advocate of the present charter, with
the spirit almost of prophecy, declared, "twenty directors would always
vote down the five proposed to be appointed by the Executive, if there
should arise a contest between the Government and the Bank. But
there was another means of protecting the Government against the Bank,
more potent and certain than any such provisions: let the United States
retain the power over its deposites, and over the receipt of bank notes
in payment of duties and debts to the Government, and it would possess
a sufficient control over the Bank."
The power to remove the deposited from the Bank, thus reserved to
the Secretary of the Treasury in the charter, was exercised in repeated
instances, to a limited extent, within the first three years after the reservation was made, as well as to a larger extent on a more recent o>
sion. But the power reserved to Congress in the charter, to withdraw
from the notes of the Bank the credit given by the Government's receipt
of them in payment of all its dues, has never yet been exercised, though
Still possessed in full force, and originally intended ;<- • i« ^itimate weapon to counteract or punish any improper conduct on the part of the
Bank towards the Government. It is .veil known that, about the 1st of
October, 1333, in the manner provided by the charter in the clause just
quoted, a change in the places of dep<
made from the United
States Bank and most of its branches to certain State banks, by the direction of the Secretary of the Treasury, and under the controlling power
on this subject exercised by that officer from the first organization of this
department; repeatedly recognised and approved by Congress before
1816, and at that time expressly reserved to him by Congress in the
charter to the present Bank. In consequence of the above-named
change in the place of deposite, the general accounts of the Treasurer
and most of the public officers have, since" last October, been gradually
brought to a close with the United States Bank and most of its branches;
and arrangements are in progress to dispense with the services of all of
them on general subjects before the charter shall expire, and soon, if
practicable, without great inconvenience or expense to the public.
For certain special objects, such as the payment of the debt and of
pensioners, (the last not construed to include the persons provided for
4
[ Doc. No. 27. ]
by the acts of Congress of May, 1828, and of June, 1832,) the Bank and
all its branches have yet been retained as depositorfes and agents, under
an impression that it had, by previous acts of Congress, a right to perform these duties, until relinquished by its own consent, or until the acts
were repealed.
After the charter shall expire, no difficulty is anticipated in having
any of these duties, which may then remain, discharged by State banks.
But if any should occur, it will become necessary to devolve these duties on some responsible receiver or collector already in office, or on
some safe agent not now in office, as has been the practice for years in
this country in paying pensions at convenient places, near which there
was no State bank or branch of the United States Bank, and as has long
been the usage in some countries of Europe, by having the public revenue in certain districts chiefly received, kept, and transmitted through
private agents and brokers. This kind of personal agency, however, is,
in the opinion of the undersigned, to be avoided, in all practicable and
safe cases, under our present system of selected banks ; because it
would render the system less convenient, less secure, and more complex,
if not more expensive. Hence, it has not jet been resorted to.
But it was considered proper to mention this contingency, in order
that its effects, if ever anticipated, may beforehand be duly weighed in
the examination of the whole subject; and to add, that if this contingency be extended to the whole establishment of State banks, as well as of
the United States Bank, on the possibility that they may all cease to exist,
or may refuse to receive and manage the public deposites, (however
improbable the occurrence of such an event may be,) the fiscal operations of the Government could undoubtedly still proceed, through the
personal agencies before mentioned. It is admitted, however, that it
would be at some inconvenience, and some increase of expense, unless
remedied in a manner that may hereafter be developed, and would not,
in the opinion of this department, and in the present condition of things,
be so eligible a system as the present one. Because banks, though exposed to some dangers and evils, and though not believed to be necessary for the fiscal purposes of any Government, and much less of one in
the present happy financial situation of ours, are frankly acknowledged
to be, in many respects, a ckss of agents economical, convenient, and
useful.
A document is annexed, giving, first, a schedule of such State banks,
amounting to thirteen in number, as had previously, to about the 1st of
October, 1833, been selected and retained in connexion with the United
States Bank ; another list, of twenty-six in number, of such as were then,
and have since been, selected under the general arrangements adopted
for the chief deposite banks ; and a third list, of three in number, of State
banks, since selected for limited purposes, and with limited duties, like
many of those before 1833. (A.)
Some of these selections, and the consequent changes in deposite, it
will be seen, have been made since the last session of Congress. But
as the reasons to jusliiy the general removal of the public deposites from
the United "States Bank were assigned to Congress at the proper time by
the proper officer, it is not deemed either necessary or pertinent to offer
any new ones in justification of the changes made since, merely to complete the measures previously arranged, commenced, and vindicated.
[ Doc. No. 27. j
5
But the power of removal being distinct from the reasons assigned for
the act of removal, and, having been exercised subsequently, wherever
the new .banks before named have, in suitable places, and in fulfilment of
the system then adopted, and for the reasons then stated, been selected,
it has been considered proper to suggest the usage and laws under which
this power of removal or selection has been exercised hy the Secretary
of the Treasury on the last occasions, and probably on all previous ones.
The same usage and laws will doubtless be considered a sufficient justification for a continuance of the exercise of the same power by this department, under a due sense of its duties and responsibilities, until Congress, the body conferring the power, becomes convinced that it is liable to
be used for reasons not satisfactory, and should therefore be withdrawn,
and either confided elsewhere, as, in the case of disbursing officers, it is
now confided to the President, or be reserved to be used only by Congress itself, whenever a case arises in which it deems the exercise of
such a power proper. The laws passed by Congress, and thefiscalregulations made in conformity to them, now in truth govern the whole
subject. The money itself is rather in the virtual control of those laws
and of Congress, the body making them, than in the control of any one
officer, or any number of officers. No executive officers of any kind
have even the possession or custody of that money, except as mere ministerial agents, and then they have it in pursuance of those laws and regulations ; and, when those are constitutional, are bound, and have a right
to exercise it in the due and necessary administration of them.
Their possession and custody of it exist generally in that way, though
thus becoming in almost every case a constructive, and not an actual
possession or custody, unless they are collecting or disbursing officers,
who hold the money "before or after it goes into the Treasury. But even
then they usually deposite the money early in some bank, as before explained.
While the money is considered to be in the Treasury, whether by
construction of law, or in point of fact,, it is ordinarily in the actual possession or custody of some third person, in most cases a bank corporation :
and the Treasurer himself, or the Secretary of the Treasury, or any other
officer, however they may, in the manner before named, have the custody of the money, or may alter the mere places of its deposite, are no
more empowered to take money out, or remove it from, the Treasury itself, than any stranger, except to discharge an appropriation made by
Congress, and on a warrant having the sanction of all the officers required in ordinary cases by the laws and the established regulations. A
copy of such a warrant, in the form invariably used, the last four years,
is annexed for the information of Congress. (B.)
Having described the places where our revenue is now deposited and
kept, and the principles on which the selection of them, by this department, is justified, the undersigned will proceed to offer some considerations on the other topics proposed, as to the mode in which the existing
system for the preservation and disbursement of the public money has
been found to operate, and the advantages and disadvantages which are
likely to result from a return to any former one, or from an adoption of
any supposed improvements in the existing system. On this occasion, and
in the present financial condition of the country, these are believed to be.
6 -
[ Doc. No. 27. ]
not only legitimate subjects of inquiry, but such as require that all the
information in the possession of this department, tending to elucidate
them, should be promptly and.unreservedly communicated to Congress.
To discharge that duty with any degree of clearness or satisfaction, it
will become indispensable, at the risk of being considered tedious, to
enter into an analysis of the subject, and to submit such remarks as are
deemed appropriate—
On the convenience of the location of the selected State banks, when
compared with any other system for the accommodation of the public
officers as well as of the public creditors ;
Their safety as depositories;
Their comparative ability to transfer the public funds to the places
where they are wanted, and to perform any other services properly required of a fiscal agent;
Their commercial utility in respect to exchanges ;
The goodness of the money in which their payments are made ;
Their comparative aid as bearing on commerce and political economy
in the regulation of the currency of the country at large ; and, in connexion with these several topics,
The advantages or propriety of resorting to some other system instead
of the present one, improved as it may be, and which other shall resemble that recently in operation under the United States Bank ; and, in
order to secure the supposed superiority of such a one in any respect,
to provide for a new incorporation of some National Bank, either with or
without an amendment of our present constitution.
1. In regard to the convenient situation of the selected banks, whether
looking to the accommodation of the public officers or of the public creditors, it is believed to be fully equal to that of the United States Bank
and its branches. Some banks have been chosen in places in which
none were before employed, and in this respect facilities for deposites
and payments have been furnished nearer to some points where our collections and disbursements are very considerable. In this way, as it is
now an established rule, long practised, in most cases, by this department, and revised and republished in 1S27, to make payments generally
at the banks nearest to the residence of the public officer or creditor to
be paid, or to the place where his services were performed, the payments
under the present system have been made equally near, and sometimes
nearer than formerly. The departures from this usual course never
occur without the consent, and, indeed, the request of the persons interested. So far as these departures may in any cases be deemed favors
to those persons, they were formerly granted on application to the department, under such circumstances as the public interests, on the assignment of satisfactory reasons, appeared to permit. The same course of indulgence is now pursued; it is that most convenient to the public in general,
as well as to the Treasury, and the only one feasible under any system,
without incurring the unnecessary and inconvenient expense of furnishing funds enough at every different point of collection and disbursement
to meet, not merely the ordinary and usual expenditures in the neighborhood of each point, but all the drafts which caprice, speculation, or a
high rate of exchange, might induce officers or creditors to draw on places
greatly remote from their residence, or from the theatre of their public
services.
[ Doc. No. 27. ]
7
2. The safety of the newly selected banks is the next subject of inquiry.
The chief change in this respect under the present system has been in
procuring the separate responsibility of several institutions for separate
and smaller sums of money, instead of the single** responsibility of one
institution for a very large sum, and in having the guaranty of State
laws and State supervision over the conduct and solvency of these separate institutions, combined with the information and cognizance of this
department and Congress as to their condition and prospects, by means
of their weekly returns and other general sources of intelligenee,-instead
of the guaranty of the acts of Congress, and the supervision of the United
States Government over the single institution formerly and chiefly employed. Considering these differences, coupled with the fact that the
selected banks, without disparagement to others, are, or ought to be,
chosen from the most flourishing and secure : that they can be changed
whenever any circumstance may indicate a change to be prudent; and
that collateral security can be required whenever the deposite is so
large as to seem to render it judicious ; that the Government possesses
superior advantages in case of their embarrassment, and that the whole
capital stock must be lost before the deposite debt will become desperate;
there certainly can be no very disadvantageous comparison in theory between the safety to the Government under the present rather than the
former system.
In practice, thus far, no loss whatever has been sustained by any of the
newly selected banks, nor does any particular reason exist for anticipating a loss. It is due to them to remark, without derogating from the reputation of other banking institutions whose condition is less accurately
known to the department, that the weekly returns of the selected banks
show all of them to be in a secure, and most of them in a very flourishing condition; and that the whole of them united, on the 1st of July
last, possessed specie, in proportion to their notes in circulation, greater
than did the Bank of the United States, or the Bank of England on the
1st of January last; and that their immediate available means to meet
all the immediate demands upon them, including the whole of their large
public and private deposites, have since been constantly improving, and
are quite equal to those of most banking institutions in existence, and to
what is required by the most approved banking principl'
A table illustrating this subject has been prepared from the latest returns and estimates accessible to the department, and is annexed. (A A.)
The losses which have formerly been sustained by the General Government through the failure of certain State banks, selected, according
to the impressions of many persons, principally, if not entirely, between
1811 and 1816, or between the expiration of the old and the passage of
the new charter of the United States Bank, have been frequently adduced as objections to the safety of the present system, and, without some
detailed examination and careful discrimination, are, it is freely admitted,
calculated to awaken some doubt as to its ultimate practical security.
But it is a memorable fact, connected with this inquiry, though often
represented otherwise, that not a single selected State bank failed between the expiration of the old charter and the grant of the new one;
and that none of our losses included in our unavailable funds happened
until some time in 1817, after the United States Bank was in operation.
8
f Doc. No. 27. J
Then, whether " destroyed by an exertion of the power of the Bank"
alone, or, as is more probable, by numerous causes combined, it appears,
from a careful analysis of the unavailable funds which we have now,
and formerly had on hand, that some of the selected State banks became
embarrassed.
From the course of public collections and disbursements, and the balance of trade, having both been in favor of the East against the West,
and from a desire to sustain the new operations of the United States Bank,
a transfer of funds through its agency, and a consequent drain of specie
from the Western deposite banks, then took place. Then the Government
stocks, acquired by the patriotic loans of some of the State banks during
the late war, were in some degree sacrificed in several instances, to enable them too early and suddenly to resume and support specie payments;
and, by means of these and other causes united, seven out of about sixty
selected banks proved unable to meet all the demands on them with
promptitude. Had the change to specie payments been less sudden, and
further time been given to transfer deposites which had long been accumulating in the paper of various banks, and which w ere large in amount,
and very inconvenient and expensive at once to convert into specie and
remove to a distance, it has been conceded by an officer of the United
States Bank itself, that no failures of the selected banks, at that time,
would probably have happened. As it was, the whole indebtedness of
the seven, as deposite banks, when they failed, was only $139,010; and
t h y have since paid to the Government $133,169, on that and bills of
theirs held by the Government elsewhere. These payments, if all applied in the gross to discharge their whole deposite liabilities, would leave
due, independent of some interest, only the small sum of about $6,000;
or, if applied to each bank respectively, only about $17,000, as can be
seen more fully in the tabular statement. Whether the Government, or
the United States Bank, whichever had most agency in the course adopted, acted with indiscretion in pressing them so suddenly, severely, and in
a manner so different from that pursued in England two years after, in
the resumption of specie payments there, it is not now difficult to decide,
especially when we find that, under all the calamities from that course,
and other causes, those seven banks have since adjusted so nearly their
whole liabilities as depositories, and that one of them has adjusted every
liability of every kind. A statement annexed shows the sum, without
interest, now due on any account, from each of these and another embarrassed banks, and the year of both their failure and selection, and distinguishes those which were debtors, but not depositories, of this department. (B B.) Notwithstanding the continued operation of some of the
former causes, the low prices of produce, the high rate of exchange
against the West in favor of the East, in 1SI7, '18, and '19, and the widespread commercial distress in the latter year, bringing the United States
Bank itself to the brink of stopping specie payments, if not of bankruptcy, it will be seen that only four more deposite banks suspended payment between 1817 and '21, and of these four within those three disastrous years, one only was in 1818, which has since paid all its debt;
another in 1819, which owed only about $17,000, as a deposite bank ; and
two in 1820, both of which have settled every thing originally due.
Thus the truth on this much misunderstood and misrepresented subject
[ Doc. No. 27. J
9
appears to be, not only that one failure of a selected bank did not occur
nvithin the period while no United States Bank was in operation, but that
of those which afterwards stopped payment within three or four years,
chiefly from the causes before mentioned, and a part of which causes
produced eight or ten-fold as many failures in England, under the full
control and influence of a National Bank there as well as here, four of the
number have since discharged all their liabilities; and the residue of the
liabilities of all the others, as deposite banks, in the manner before estimated, is less than #35,000. This is not the tithe of the sum which has
frequently been lost to the Treasury by the failure of individual merchants to discharge only their obligations for imposts; not equal to the
sum frequently lost by the failure of many single disbursing agents connected with the different departments of the Government, and under large
bonds for security; not a sixtieth part of the three or four millions lost
by the United States Bank in that period of severe trial, and a large portion of it on the seaboard, near the close supervision of its principal officers; nor, indeed, but a small fraction of the loss sustained by the Government through the United States Bank itself, during the same period,
by the failure of the latter to pay to the former the same amount of dividends which otherwise would have accrued, or to pay dividends equal to
the interest the Government was then paying the Bank on the seven
millions of funded debt subscribed to its capital stock ; or, by its failure
during even the past summer, to pay over the recent dividends on that
stock which actually accrued, and have been unfaithfully withheld from
the United States, to an amount exceeding more than four times all the
above losses by those State banks. Without reference to the indirect injury and embarrassment caused to our fiscal concerns, as well as to the
community, at the time of the short suspension of specie payments by
some of the State banks, it appears that our greatest losses by public depositories, and by unavailable funds of any kind, occurred among the
State banks selected, not between 1811 and 1816, bujt before or afterwards, and in aid of the United States Bank. They occurred, likewise,
not between 1811 and 1816, but in 1821, 1824, and 1825, some years
after the latter Bank had been in full operation, and had exercised all the
functions in its power and inclination, either to furnish a sound currency,
or to regulate it, by improving the condition of the State banks.
With the causes of these last and most important failures, happening
from time to time, as the table shows, to the very last year, this branch of
our inquiry has no particular concern except to discriminate them from
others, and from any special connexion with the system that prevailed
from 1811 to 1816. Whether they arose from an unsound policy pursued by the United States Bank, or from circumstances which, under the
paper system, neither legislation nor caution can always avert, or from less
justifiable reasons, and in spite of all the salutary influence the National .
Bank could exercise, it is a singular fact, in praise of this description of
public debtors, the selected banks, that there is not now due on deposites,
from the whole of them which have ever stopped payment from the establishment of the constitution to the present moment, a sum much beyond
what is now due to the United States from one mercantile firm that
stopped payment in 1825 or 1826, and of whom ample security was required and supposed to be taken under the responsibility of an oath.
10
[ Doc. No. 27. ]
If we include the whole present dues to the Government from discredited
banks, at all times and of all kinds, whether as depositories or not, and,
embrace even counterfeit bills, and every other species of unavailable
funds in the Treasury, they will not exceed what is due from two such
firms. Of almost one hundred banks, not depositories, which, during all
our wars and commercial embarrassments, have heretofore failed in any
part of the Union, in debt to the Government on their bills or otherwise,
it will be seen, by the above table, that the whole of them, except
seventeen, have adjusted every thing which they owed, and that the
balance due from those, without interest, is less than $82,000. Justice
to the State banking institutions, as a body, whose conduct in particular
cases has certainly been objectionable, but whose injuries to the Government have been almost incredibly exaggerated, and whose great benefits
to it, both during the existence of our two National Banks, and while
neither of them existed, have been almost entirely overlooked, has led
me to make this scrutiny, and submit its results, under a^hope that it will,
in some degree, not only vindicate them from much unmerited censure,
but justify this department for the confidence it formerly, and, in the
great improvement of their condition and of the financial affairs of the Government, has recently reposed in them. Under these circumstances,
so very favorable, with the new security and examinations provided for,
if our former small losses by them, in keeping and paying over the public revenue, under circumstances so very adverse, are compared with our
large losses, either in collecting or disbursing that revenue, their present
safety seems to be as great as is consistent with the usual operations of
the paper system, or with the credit which must always be entrusted by
Government, in some way or other, to agents of some kind in keeping
the public money. In considering their safety, it should be constantly
recollected that the owners and. managers of banks, when properly regulated by legislative provisions, in their charters, are, like other individuals, interested to transact business securely; are desirous of making and
not losing money; and that these circumstances, with the preference in
case of failure belonging to depositors and holders of their bills over the
stockholders, united with the security, if not priority, given to the Government, render them, in point of safety, generally much superior to
individual agents of the United States. It is to be further remembered
that many of the former losses occurred indirectly and remotely from
war and embarrassments, affecting deeply the whole community as well
as banking institutions, and from the injurious influence of which calamities, banks, whether of State or United States origin, can never
claim a full exemption; that the correct principles of banking were, at
that time, less generally understood and practised than at the present
time; that the selected banks, by the course of our expenditures and
collections, were then exposed to more onerous duties and hazards ; and
that less full information of their true condition was then possessed by
this department.
In the next place, the great increase in banking capital, from about
fifty-three millions, in 1811, to seventy millions, in 1814, and eighty-five millions, in 181G, and the still greater increase in bank note circulation, from about twenty-eight millions at the first period, to seventy
millions in the second, and one hundred and ten millions in the third
[ Doc. No. 27. J
11
sriod, with the sudden and great reduction in that circulation in 1817
and 1818 to about sixty millions, produced a fluctuation sufficient, standing alone, to disturb or derange all the moneyed operations of society;
and which, so far from being attributable in a great degree to the mismanagement of the State banks, though some of them unquestionably
acted with indiscretion, arose, as before suggested, chiefly from the
miseries and misfortunes incident to war; from the suspension of specie
payments south of the Hudson in the autumn of 1814, beginning with
the invasion of the enemy in this quarter of the country, and the consequent necessity of removing the specie into the interior for safety; from
the over-issues of paper, which naturally followed that suspension, and
from the large and sudden contractions produced by the general and hurried resumption of specie payments in 1817.
Some of these circumstances, rather than the want of a United States
Bank, caused most of t!;e small number of failures among the State banks
which occurred between 1811 and 1816; and, combined with a few
other circumstances, produced the more numerous and calamitous failures
of 1817 and 1819, which here, like those in England, at the same period,
spread from customers and debtors to some of the local banks themselves;
notwithstanding any favorable influence exercised there or here, respectively, by the two national banking institutions then in operation. Indeed, theirs and all their private banks were still compelled, during that
distressing period, to refrain from specie payments; and our National
Bank became so embarrassed as to be on the verge of suspending them.
3. The next inquiry relates to the comparative ability of the State banks
to transfer the public funds to the points where they may be needed, and
to perform such other services as are usually required by the Government of a mere fiscal agent. Under the former system adopted with these
banks in 1811, Mr. Gallatin, when reporting on its success in these particulars, remarked, " No difficulty has been experienced in the transmission of public moneys, and, with the exception of Norfolk and Savannah,
the revenue has generally been as well collected as heretofore." Those
exceptions soon ceased, and none now exist at any point of our widely
extended country. The embarrassments which afterwards occurred
were principally connected with the currency, rather than with the mere
transfers of the revenue, and will, hereafter, be considered. These last
continued to be regular and efficient, considering the belligerent state of
the country, and the slowness of communication, and greater want of experience in such operations, which then existed, compared with the present period. It is conceded, however, that the use of the State banks as
fiscal agents has always caused some more detail and complexity in the
accounts kept by this department, and that more attention is requisite,
than would be with a single bank and its branches to distribute the funds
seasonably and proraptly to the particular places where they will be
needed for disbursements. But these are rather increased inconveniences and labor to the head of this department and its clerks, than serious
obstructions to the due operations of the fiscal agent in actually making
transfers and disbursements. On a careful examination, these operations
are now, when compared with some former periods, ascertained to have
become greatly simplified, easy, and economical, in consequence of the
important and fortunate changes which have occurred of late years in the
12
[ Doc. No. 27. J
places where our collections and expenditures happen to be principally
made. From a tabular statement annexed, (C,) which has been prepared with much care, it will be seen, nearly, what has been, for the present
year, the amount of expenditure and collection in each State and Territory. Though the ratio between them is not found to be in every State
precisely the same, yet they approach each other more closely in more
cases than is generally supposed, and, in the four great sections of the
country, the East and the West, the Middle and the South, are so equal
as to require only very small transfers, not over three millions in all, to
be made to any considerable distance. Besides this consideration, all
the surplus collections beyond the expenditures, it will be seen, are now
in the Eastern and Middle, and not in the Southern or Western States.
Hence the transfers, which may be required at a distance, are chiefly
from the city of New York to the South and West, and in favor of which
city the course of trade is so fully established that the transfers are now
effected usually by a mere warrant without expense to the Government,
and without the risk and cost to any person of transporting either paper
money or specie. This warrant, in favor of any bank or creditor, in the
West or South, on a selected bank in New York, is generally
preferred
to the best of bank notes, or to specie : and in all cases wrhei e money has
been required to be transferred to either a great or small distance, and
could not, from the course of trade, be transferred in a similar mode, the
connexions in business of the principal selected banks, are now so extensive ; the location of safe State banks at important points has become so
general; their knowledge of banking principles, and the restrictions
guarantying their security, have so much increased ; roads, canals, and the
facilities of intercourse by steam and stages, and the augmented speed and
frequency of mails, have so greatly improved, that the selected banks
have, in genera), been enabled to transfer any surplus, seasonably and
without expense to the Treasury, to any other State or quarter of the
Union where this department has found the public convenience or public wants required it. This salutary change from the condition of our
affairs in some former periods, when the debt to be paid on the seaboard
and abroad was so very large, must in many particulars be permanent or
increasing, and not temporary; and is very fortunate for the interests
and harmony of our Union, as well as for the easy, prompt, and efficient
operations of the Treasury. It removes any just ground of complaint or
apprehension, however well founded once, that, under our present reduced tariff, and our present restricted expenditures, as to subjects of internal improvement, either the West or the South will be in danger of
losing a due and useful portion of the public expenditure, or of being
drained of the public money there first collected, whenever, and in whatever proportions the duties on foreign merchandise may, In the end, be
actually paid.
As will be noticed more fully hereafter, the present state of things in
relation to these transfers and our other fiscal operations is most strikingly different from what it was in 1791 or 1816, when the two National
Banks were incorporated under the strongest representations of their being necessary to effect the very great, costly, and extensive transfers then
required, and to aid in the prompt, but then much more difficult collection and disbursement of the revenue. Even at and after the last named
f Doc. No. 27. ]
13
period, these delays and difficulties were such, that from two to four
months' previous notice was often given before a distant transfer could be
effected; and from 1816 to 1826, those transfers so drained the West of
its funds, and chiefly its specie, as, before mentioned, to constitute the
principal cause of embarrassment to some of the selected banks there
during that period. The present state of things in relation to those subjects here is also very unlike their condition in some other countries,
where a National Bank may be a very useful, if not in some degree necessary agent, (especially in the absence of well regulated private banks,)
to gather and transfer almost the whole revenue from remote points to
some common centre, and then to disburse it in large expenditures, either
abroad, or at places very distant from those in which it was collected.
But such is not our condition at present, though formerly more resembling
the largely indebted monarchies of Europe in this particular ; and such, it
is hoped, may never become our condition, while the general welfare can
be as well promoted, the constitution preserved inviolate, and the union
of the States strengthened, by an increased regard from the General Government to the interest and prosperity of each great section of country,
so as to make it participate in a nearly equal degree, if practicable, in the
immediate benefits of the expenditures of such sums as it has borne the
immediate burden of contributing to the common Treasury. Under this
view of our present collections and expenditures, and of the balance of
trade between the Atlantic seaboard and the West, it is manifest that the
distant transfers of our funds, so far as they become necessary, would, if
confided to a single individual or bank, be probably made profitable rather
than burdensome.
The benefits supposed to have been derived by this department from
the United States Bank for performing that operation, were at one time
considerable, but, for some years past, have been not only overrated, but,
in trutb, have been most of the time a source of profit to that institution,
by its previous knowledge obtained from this department of the probable
amounts required to be transferred to particular points, and by providing
for them through the purchase of bills of exchange and the sale of draft9
at and on the appropriate places.
4. This consideration leads us to the next inquiry, concerning the commercial benefits of the present system, in regard to exchanges, compared
with the use of a National Bank in regulating and facilitating those exchanges. This, it will readily be perceived, though a point most strongly
urged in favor of that, and against the present system, has little, if any,
concern with the correct discharge of duty by any bank as a mere fiscal
agent of the Government. The Bank of England seldom or never did
any business of that kind till of late years, and now, through her new
branches, to a very limited extent. This dealing in exchange here by
the National Bank is also an incidental business, usually belonging tvi
shippers and exporters, to brokers and private bankers, and connected
with the commercial interest of the country, rather than with any financial object in the Treasury Department to justify the incorporation of a
bank by Congress. But as a mere incident, and one somewhat valuablo
to the mercantile community, the aid of any fiscal system in favor of the
domestic exchanges of the country is an argument more or less connected with its expediency; and in that point of view it is acknowledged
14
[ Doc. No. 27. ]
,
that the apparent usefulness of the National Bank has at times contrasted
very favorably with the State banks. By means of its possession of the
public funds, by the favorable course of many of the transfers of them,
with its numerous branches and extensive correspondence, and with the
high credit given to it by the confidence and great privileges the Government has bestowed, that institution certainly increased its business in
domestic exchanges from about four and a half millions, which it never
had exceeded at any one time previous to 1827, to more than an average
of twenty-two millions at the several periods of its returns in 1832. Under these circumstances, this business was performed, doubtless, with some
advantages to the public, and with great profit to the Bank. But the
State banks, as well as individuals, perceived that this kind of business
would jield them a fair profit at the same rates, although their facilities
for it were in some respects less ; and hence, though they had always
been competitors for it to a certain extent, yet they did not prove highly
successful in their efforts till since 1832. From that time, the number,
enterprise, credit, and extensive connexions of some of the State banks
in the West and Southwest, have enabled them to perform a large portion "
of this business in those sections of country, being the sections where "*
this kind of business is greatest, and where, alone, it is usually difficult,
expensive, or fluctuating. At the same time, they have performed it on
terms equally moderate and satisfactory to the community, or they would
not have been resorted to for its performance. A statement is annexed,
(D,) which shows the amount of exchanges field by the Bank of the United
States and its branches, running to maturity on the 1st September, 1832,
1833, and 1834. From this the remarkable fact appears, that this branch
of its business, within a period of two years, has fallen from about nineteen millions to little more than twelve ; and that, in the West and South,
it fell from near fourteen millions to about six, or considerably more than
one-half in only those two years. Nor is it supposed that the whole
dealings in domestic exchanges, by all institutions and persons in those
quarters, have in that period diminished. On the contrary, this department has evidence, in the returns on its files, that only three of the selected banks in the West and Southwest were performing a business in
domestic exchanges, early in September last, of nearly a million more (
than all the seven branches of the United States Bank situated in that
quarter of the country. ( E . )
Whether the United States Bunk
much of this employment by
either caprice, unnecessary contraction, or the fair competition of others;
whether this course, exaggerated by rumor or not, has shown, by the
embarrassments and evils it caused, and which no detached Shite banks
are able to produce, that the dealing in inland bills ought to have been
limited in the charter to the small amount usual during the first years ot
the existence of the Bank, or placed under certain restrictions, causing
this great and dangerous power to be used chiefly for public purposes, to
equalize, or render uniform and low, the rate of exchange, and, as Mr.
Crawford frankly informed the Bank, not " with a view to increase its
profits," the undersigned will not pause here to investigate. Because, I
in any event, strong evidence is furnished that a National Bank is not
now necessary, even for the performance of this incidental operation,
since in the West and Southwest, and it is believed, if the inquiry was
[ Doc. No. 27, |
,15
made, in other quarters, the State banks have, by actual experiment, been
recently found to be competent and willing for the satisfactoiy discharge
of it. In reviewing the conduct of ;he Bank on this subject, and especially
during the last year, it may be well to remember that its officers were
distinctly admonished, as early as July 3, 1817, that it ought not to deal
in internal exchanges " with a view to the pecuniary emoluments of the
Bank;" and, whether the rate was one-fourth, one-half, or-one, or even
ten per cent., the principle of profit on this subject was not the true one
for this public institution, and did not comport with the intentions of
Congress, in this respect, in chartering it. On this subject of profit from
the domestic exchanges, said Mr. Crawford, " it is the establishment of
the principle, and not the amount of the exaction, which will exhibit the
power of the Bank to lay contributions on the commerce of the nation
ad libitum."
The high merit claimed for the United wStates Bank, in a
commercial point of view, is sometimes extended to the foreign as well
as domestic exchanges.
It has been asserted that the Bank, by engaging in the purchase of foreign bills at the South, and in the sale of them at the North, has raised
the price obtained for them by the planters and merchants at the South,
and lowered the price given by the buyers and importers at the North.
This, if correct, would assuredly be a fortunate result to the planters and
importers. But, on a careful examination of the prices for many years,
given in the southern quarter of the country, and demanded and received
in the northern one, it appears that the purchases by the Bank at the former have generally been much below the premium which it has exacted,
and for which it has sold at the latter: consequently, either too little has
been given at the former place, or too much asked at the latter; and the
Bank, by these operations, instead of acting disinterestedly, or oa public
principles, is supposed to have made large profits, at the expense of both
sellers and buyers—equal, it is believed, if not superior, to any made in
the like business by others, either before or since its incorporation. Nor
is it perceived that the Bank, independent of the exclusive privileges derived from the Government by the universal receipt of its notes for public dues, possesses any advantages for this «pecies of business over citibanks or bankers, unless in a correspondence perhaps more extensive,
or larger funds abroad, which, so Far as used in connexion with the exchanges, are, for aught which appears to the contrary, oftener employed,
if the Bank is selling, to increase the premium, and to draw upon when
the premium is highest, than to lower it; or, if the Bank is buying, to depress the premium still lower which is given to shippers and exporters.
The business, in this description of exchanges, therefore, it is presumed,
will be carried on with as great, if not greater, benefits to the community, under the new system of fiscal agency growing out of the increased
competition of those engaged and engaging in it, unless the National
Bank, as would seem to be claimed, but which it is somewhat difficult to
believe, has performed it more from kindness and liberality, or public
spirit, than for pecuniary profit. At the same time, under a system of only
detached and independent State banks, the community will be relieved
from the dangers and injuries to which it is exposed under a great, combined, and consolidated power of a single institution, with numerous
branches extended into every section of the country, seeking often to
16
[ Doc. No. 27. J
control and monopolize, it is feared, solely for its own enhanced emoluments, the whole business of exchanges, both foreign and domestic.
5. The comparative goodness of the money in which the payments are
made under the present system, is another topic of inquiry possessing
much interest. The kind of money in which the revenue is collected,
or the deposites made, continues by law to be the same as heretofore,
and consists of specie, or the bills of the United States Bank ; and, by
usage, authorized by the resolution of Congress, in 1816, of such other
bills on specie-paying banks as the depositories are willing to receive at par, and credit as cash. No bills are now received on special deposite, as was sometimes practised between 1814 and 1818 ; and
hence, in making payments to the public creditors, there is no temptation
to make those payments otherwise than has been the custom for some
years past, which is either in specie or specie funds, such as the bills of
the United States Bank, or the bills of other specie-paying banks. It is
not known to this department, therefore, that any change has occurred
in the kind of money in which payments are now made, except that the
collections being probably effected somewhat less in bills of the United
States Bank, and more in specie, and the bills of the selected State banks,
it happens that the latter bills, not being like the former, by an act of
Congress, a tender for all public dues, are not so current and useful for
all purposes, and hence are not so often delivered in payments to the
public creditors. But, at the same time, more specie is now paid to
them ; and it may, in all cases, be now, as heretofore, demanded and received instead of bills—not any particular kinds of specie, such as pillared dollars, for instance, preferred and wanted, from strongly settled
prejudices, sometimes in the navy, for particular foreign stations, and in
the army for particular payments to Indians, (because these kinds must
now, as heretofore, be obtained through comity, or bought in the large
cities, and transported to the places of disbursement,) but such specie as
is by law a tender in all cases. Indeed, not a single instance has come
to the knowledge of the department where a deposite bank has attempted
to pay a public creditor or officer in paper not there at par, or (unless
preferred) redeemable at a distance, or has refused to pay him specie, if
requested. Many of them, much to their credit for liberality, and greatly
to the public accommodation, have, in furtherance of the views of Congress in passing the late acts regulating the gold coinage, incurred expense and inconvenience to procure and pay out considerable quantities
of the new gold coin to pensioners and the public creditors.
The effects of these changes have been to increase the quantity of
specie in the vaults of the selected banks, for the purpose of meeting the
increased demands for it, and to throw more specie, instead of United
States Bank bills, into general circulation.
While this has operated favorably to the security of the paper system
in this country, by enlarging the specie basis on which it partly rests,
the admission is freely made, that it has deprived travellers and merchants, to some extent, of the ujual quantity of United States Bank bill?,
which, for purposes of travelling and transmission to a distance, bare, by
the privileges hereafter specified, acquired a general and high credit.
Though these facilities to those classes of persons are here, and in other
countries, chiefly obtained by the use of gold or bills of exchange, the
' Doc. No. 27. J
17
last furnished by banks or private bankers on their correspondents in
distant cities, yet bank notes are sometimes, when in high credit, at remote places, employed for similar purposes, though at much greater risk
from accidents and losses, than bills of exchange. But it is to be remembered, in the estimate of what may, in any commercial view, be
deemed preferable, in the payment to public creditors of the United
States Bank notes over other bank notes or specie, that the superiority
of. the former is derived principally, if not wholly, from the increased
credit imparted to them, by the legislative monopoly which they enjoy
in being a tender for all public dues at places however remote from those
where issued, and which Congress has not yet deemed it proper to withdraw, or to confer on any State banks, and by the striking guaranty
which Congress has given for the security and due management of the
United States Bank. This last has been done, not only by conferring
the privileges before named, but by risking seven millions of dollars in
its capital stock; trusting formerly large amounts of nearly twenty-five
millions a year of public deposites to its conditional custody ; bestowing
on it what are, in some respects, the benefits of certain agencies connected with the public debt and pensions ; and undertaking by law,
through its committees, and this department, to watch its business and
proceedings, and to hare it prosecuted, or the deposites, and the privileges as to its bills, withdrawn'from it in the event of such misfeasances as
may be supposed to warrant either measure in the opinion of those to
whom the power is entrusted, or to whom it is reserved by the provisions
of the charter.
Take away the monopoly, the privileges, and the guaranty, which are
conferred in exclusion and at the expense of the notes of State banks,
and little reason is discoverable why the notes of the former should circulate wider, or with more credit than those of other banks of established
reputation. But, in that event, it is conceded both kinds of notes
would probably fail to perform so well very distant functions, as they are
now sometimes performed by United States Bank bills, unless arrangements were made, to which either is competent, to have a portion of their
bills redeemable at distant places as well as at their own counters. Such
an arrangement has often been found successful in Europe, prevails now
as to the five dollar notes issued by the United States Bank, and has already been commenced by some of the selected State banks. As the
notes of the former must retire still more from circulation at the close of
its charter, such an arrangement, though by no means necessary, could,
without doubt, at the points where the course of travel and trade might
indicate it to be convenient and useful, be beneficially for the banks, if
not for the public, so extended, as to answer all the travelling and commercial wants properly noticeable under this branch of our inquiry. But
gold coin and bills of exchange are, in the opinion of the undersigned,far
preferable for those purposes. The new coinage of gold, at a nominal
value slightly exceeding what it is worth in the market as bullion, has
been a measure required for twelve yeairs past, to secure its circulation in
this country, and to prevent its being hoarded or exported ; and, as shown
and urged by my predecessor last winter, was highly necessary, and has
very opportunely occurred to aid the present system, not only in other
respects, which need not be discussed he.re, but as a safe and convenient
2
18
[ Doc, No. 27. ]
currency, instead of any kind of bank bills, for travellers at all distances
beyond which bills of exchange would not be superior to either of them.
But whatever small gain, in a commercial view, is derived from the
sanction to the goodness of notes of banks incorporated with exclusive
privileges and guaranties, and watched over by the General Government
rather than by the State Governments, it would hardly be contended that
such a gain was ever deemed a justifiable ground for incorporating the
present Bank with all its monopolies, or could be considered justifiable for
incorporating any other similar to it, at the present, when all the advantages of a paper of high and general credit for travellers and merchants
could, perhaps, be obtained, if deemed necessary and desirable by Congress, by merely authorizing the issue of Exchequer bills, or Treasury
notes, in public payments, when requested by the public creditors, and
by providing for their general credit and redemption, by specie on hand
i derived from the revenue, and by the receipt of them for all dues to the
Government, as is the case now with the notes of the United States
Bank. As they would not, in such case, be issued in the form of loans,
but only in payments, no partiality or corruption could grow out of their
employment, and every object, deemed valuable as to a paper currency
for distant purposes, could be obtained as a revenue measure constitutionally. But the details of such a measure will not now be examined,,
as no occasion appears to exist at present £pr its adoption; and as the
safety or security of the public, in respect to the specie on hand for their
redemption, would at all times render it inexpedient unless found by
Congress to be very necessary.
6. In connexion with the next inquiry as to the benefit of the present
system, compared with a National Bank, in regulating our currency.,
either by supplying a portion of it of improved quality, or by controlling,
and aiding the State banks in their issues, this same question will incidentally be examined in one other view. It is not admitted that Congress, according to the views of any large class of politicians, can possess
the constitutional power to incorporate a bank merely to regulate the
currency, when there is no such express grant, and when it can hardly
be deemed a legitimate auxiliary to any other express grant. " To coin
money, and regulate the value thereof," the other express grant most frequently cited to support it, is a power evidently referring to specie, and
not to paper, as the latter is not coined, nor its value regulated by law ;
and it is a power to be performed under the immediate control of Congress, and is not to be delegated to a corporation, to be called, as has
been significantly said, " the paper money department." In relation to
another power, sometimes supposed to apply to this point, viz. " to regulate commerce with foreign nations, and among the several States," no
person, acquainted with the history of the age in which the constitution
was adopted, when commerce, in its common acceptation of " t r a d e , " or
"exchange in articles of produce and merchandise," so much required
regulation as to be one chief cause for forming the constitution, and
when only three or four banks existed in the whole United States, and
those already appeared to be we'll regulated, can suppose for a moment
that this clause was intended to be applied to a paper currency. Indeed,
without deeming it necessary, in the present communication, to enter
largely into the constitutional argument connected with any of the in-
I Doc. No. 27. ]
19
quiries under consideration, it may be noticed as an historical fact, that
in 1816, though specie payments were generally suspended, and paper
money, in many parts of the country, was in a very depreciated condition, a number of the ablest advocates, then and now, of a National Bank,
disclaimed any idea that one was then needed to regulate the currency.
The currency, it was justly observed, was already regulated, and well
regulated, " by the constitution," " to be gold and silver." A National
Bank was not needed to reform it, nor had such a bank the power to re
medy the evils under which the country then suffered. But the great
panacea was a return to specie payments in such places as had yielded
to their suspension. That return, it is well known, long since took place,
and still continues ; and is supposed to have been effected chiefly by a
cessation of many of the embarrassments connected with the war; by
the force of public sentiment, requiring that such a return, after a peace
of two years, should at least be commenced; and by the passage of a joint
resolution in Congress, in April, 1816, substantially declaring that the
revenue ought soon to be collected as formerly, and, as the act of
1789 required, in specie alone, or, as the construction of that act had
always permitted, in the notes of specie-paying banks. Though it is
admitted that some negotiations for the early and general resumption
of specie payments had not succeeded before the United States
Bank commenced business, in January, 1817, yet there can exist little
doubt that the above resolution, as it was not to take effect till February, 1817, might, and would, ere long, have gradually been enforced;
and that the payments of specie, without the assistance of the Bank,
would, generally, though more slowly, have been resumed. Fortunate,
indeed, would it have proved for the country, and the State banks,
had such a course, either in the terms of the resolution, been prescribed, or, in the practice under it, been pursued, resembling that adopted in England, under like circumstances, in a more careful preparation,
and more moderate progress, in respect to the full resumption of specie
payments, and thus producing there neither embarrassment nor losses,
instead of the more sudden and general resumption eiTected here in January, 1817, for a few months, partly through the agency of the United
States Bank—a resumption which, whether caused by the bad advice
and errors of the Bank, or, as has been alleged by some of its officers,
caused through the mistaken policy of the Treasury and the Government,
soon terminated in stoppages of payment and consequent disasters among
some of the State banks, which those officers themselves have conceded would, by a different policy, have probably been averted. From a
conviction that the United States Bank was not needed to restore specie
payments, nor likely to be useful in regulating the currency, a number of
its most distinguished supporters, then and now on the stage of political
life, insisted in Congress that it ought to be established, chiefly if not
solely, for the purpose of acting as a fiscal agent to the Government; and
hence, as there already existed banking capital enough for all commercial objects, they strenuously argued that the capital of the present Bank
should not exceed twenty millions, the amount deemed sufficient for
mere fiscal objects. As a further illustration on this subject, and on the
striking differences in the condition of the country and of the Govern
20
f Doc. No. 27. J
,
ment at that period and the present one, bearing on the necessity of a
National Bank at this time for any purpose, the dt-bates of that day are
full of the supposed importance of having a fiscal agent, more general,
able, and efficient to disburse the principal and interest of our then accumulated debt of more than one hundred and twenty millions of dollars—
a debt which has now virtually ceased to exist. Of having an institution
of enlarged means to be resorted to, in case of necessity, for new and
sudden loans then deemed probable—loans for which a necessity neither
exists now, nor is anticipated as likely soon to occur again ; and for which,
if not small or temporary, even a national institution has more limited
means than is generally supposed. And of organizing a Bank, whose
notes should at once be paid in specie, and should, among other favors
and guaranties, have the privilege of being receivable as a tender for all
public dues, and thus, by aid of these favors and guaranties, becoming,
in the language of the committee, " the most certain means of restoring
a specie circulation," and thus, in the mean time, furnishing a paper medium more uniform for the payment of imposts, lands, and
taxes, than the greatly depreciated currency which existed at that period in parts of the country where specie payments did not then prevail—a depreciation in the currency and a suspension of specie payments which do not now exist in any quarter, nor is either apprehended
as likely soon to recur, so as to injure any portion of the currency in
which the revenue is now collected, or essentially to diminish our present great quantity of about fifty-five millions of specie. Of this amount,
exceeding about thirty-three millions what was in the country in 1816,
nearly one-half has within fifteen months been obtained, independent, if
not exclusive of any policy pursued by the United States Bank. Our
first National Bank was also advocated, not only on some of these grounds,
but, among others, on that of an institution want«d for loans to the Goxernment, strongly urged under the example of the Bank of England,
originally created to effect merely such loans, and whose whole increased capital of about seventy millions of dollars is at this day a loan,
and perhaps thirty millions more of its securities are vested in public
stocks or loans. The additional reasons were urged, and doubtless
possessed great influence, that its operations would essentially aid the
community in procuring means to pay the large taxes necessary to discharge our revolutionary debt of bver seventy-five millions, and furnish facilities as a fiscal agent in collecting those taxes and paying out
that debt which the only three State banks then existing, with only about
three or four millions capital, were not deemed competent, either in number or means, to accomplish—a deficiency of State banks and capital,
which can hardly be considered as existing at this time, when we have
over five hundred and forty State banks situated, more or less, in almost
every State in the Union, and possessing an aggregate capital equal to
more than one hundred and seventy millions. Another argument urged
at both periods, rather than the regulation of the currency, was the necessity of a National Bank to make large and difficult transfers of money in the collection and disbursement of the revenue, and which has
operated strongly in favor of the continuance of the Bank of England,
for receiving from distant points and aiding to transmit her vast revenue
over the whole British empire. But this argument has previously been
shown to have no foundation on which to rest here at this time.
[ Doc. No. 27. J
21
With these great changes in our financial condition, it is difficult to
discover why the General Government should now exercise doubtful powers to prolong the existence of a fiscal agent in the United States Bank,
when it has been suffered to live out the term originally allotted for its
existence; the term then deemed necessary and proper, and the term
during which experience has shown it has already outlived most of
the legitimate grounds of expediency ever urged at any former period
in favor of its creation. Much less does it seem judicious to extend this
term for a purpose, the regulation of the currency, for which such an institution is confessedly less needed than in 1816, was then advocated b j
many as only a temporary instrument until specie payments were restored,
and even for that purpose was declared by some of its ablest supporters
to be neither required nor competent.
In a prospective view, which it is not the part of sound political wisdom
to overlook, if a state of things, though not at this moment existing, appeared nearly and rapidly advancing, in which as strong reasons seemed to
prevail as in 1791 and in 1816, for deeming a National Bank of some kind
a necessary and proper instrument for the execution of some express
grant in the constitution, then, and then only, might it become urgent, on
the score of precedent, to decide how far doubts, otherwise solid and constitutional, were removed by the close approach of a state of facts, or a
condition of public affairs, without which the great mass of any school of
politicians, or even, we may venture to say, the Judiciary in this country ^
have never deemed any kind of a National Bank constitutional. One of
the most decided opponents of the renewal of the old charter in 1811,
and who became one of the most decided advocates of a new one in 1816,
vindicated his change of opinion to his constituents on the very grounds
that his views of the constitution itself remained the same, but that the
facts which might render a bank " necessary and proper" under the constitution, had entirely changed between 1811 and 1816. He remarked,
" that when the application was made to renew the old charter of the
Bank of the United States, such an institution did not appear to him to
be so necessary to the fulfilment of any of the objects specifically enumerated in the constitution as to justify Congress in assuming by construction a power to establish it; it was supported mainly upon the ground
that it was indispensable to the Treasury operations. But the local institutions in the several States were at that time in prosperous existence,
confided in by the community, having a confidence in each other, and
maintaining an intercourse and connexion the most intimate. Many of
them were actually employed by the Treasury to aid that department in
part of its fiscal arrangements, and they appeared to him to be fully capable of affording to it all the facility that it ought to desire in all of them.
They superseded, in his judgment, the necessity of a national institution. But how stood the case in 1816, when he was called upon again to examine the power of the General Government to incorporate a National
Bank ? A total change of circumstances was presented—events of the
utmost magnitude had intervened. A general suspension of specie payments had taken place, and this had led to a train of consequences of the
most alarming nature."
Though these may be unexceptionable views, into one aspect of the
constitution, yet they do not by any means meet the great force of other
22
I" Doc. No. 27. ]
constitutional objections, which need not here be examined ; nor do they
touch the still more absorbing question of the inexpediency of any National Bank, on account of high political considerations connected
with the relative and proper distribution of power between the States
and the General Government. If all the deplorable facts which existed
in 1816, in respect to our currency and other kindred subjects, should
again occur, a National Bank could not then, in the opinion of the undersigned, be vindicated as constitutional by those relying on the hypothesis
just quoted, except so far as its form, powers, and privileges were
moulded and adapted to effect those objects alone of a public character,
which might render its agency both necessary and proper to execute
some clear and express grant in the constitution. But its unconstitutionality when exceeding these limits, as well as in various other
respects, and its inexpediency even to that extent, would still be controverted questions, and to discuss which does not appear to be required or
pertinent in the present condition of things; because, if looking to this
condition, as in some respects, has already been done, and will soon be
done more particularly in respect to the currency, it has been found, as
the undersigned believes, that a due liberality is not able to concede the
existence of a case rendering a National Bank necessary, either to regulate the currency, or for any other legitimate object. Still less would
such a case be found by looking to the future condition of things, as it is
likely to prevail for many years. Grounds less favorable for any necessity of a National Bank, on any account, are likely to appear annually, as
the State banks are so rapidly improving, and their specie basis is becoming so greatly extended. In the event that hereafter the calamity of
war should unexpectedly befall us, and render immediate and large loans
indispensable, the superior ability of such a bank, by the great and accumulated funds at its disposal, to make temporary loans, is conceded.
But it is due to the occasion and the subject to remark that, unless by its
charter, placed in this respect under the control of the Legislative or Executive Departments, it would possess also the power to refuse or delay
to make loans; and, adverting to the attitude in which some banks and
many of their wealthy proprietors, foreign or domestic, have sometimes,
during high party excitement and war, stood towards some branches of
the Government, the public can easily decide whether, in certain exigencies rendering pecuniary relief necessary, they would be most likely, by
prompt and large loans, to furnish voluntary aid to the operations of the
Government, or, like the Bank of England in 1796 and 1797, to retard
them by.refusals or delays, till overcome, as there, by large premiums,
and the very profitable indulgence of a suspension of specie payments
almost a quarter of a century. The sagacity of Mr. Madison, in January,
.1815, before the news of peace arrived, led him to put his veto on the
National Bank bill, which had then passed both Houses of Congress,
assigning, among other reasons for his veto, that " the full aid and
co-operation of the institution was not secured to the Government during
the war, and during the period of its fiscal embarrassments." On the
contrary, in the severe contest and great wants of that war, when no
capital was in this country concentrated in any National Bank, the political opinions influencing many individuals and State banks did not prevent
.them, in many parts of the Union, from coming forward by loans, with
[ Doc. No. 27. '
23
patriotic promptitude and enlarged liberality, to assist in enforcing the
measures of the Government. Without the aid of such an institution, for
Ihis or any other purpose, that perilous struggle was in this way, and
through the bravery of our armies and navies, and the sustaining spirit
and firmness of the great mass of the people, brought to a triumphant
close, and with much less derangement to the currency of this country
than happened to that of England in the same and other contests, though
assisted by the immense capital and power of a National Bank, whose
influence for good or evil, in all respects, had existed permanently for
more than a century. .
The singular contrast between this country on that occasion, with no
Buch bank, and its antagonist, with a large and powerful one, so far as regards the longer suspension of specie payments there, and the much larger
number of failures there among their private and local banks, leads us to
the consideration of the actual influence exercised by, and often adduced
in favor of, a National Bank in respect to the currency, without reference
to the unconstitutionality or inexpediency of such an institution for either
that or other purposes, in either the existing or any anticipated condition
of things. Many profess to believe that the present United States Bank, .
if not chartered expressly to regulate the currency, exercises in fact, incidentally, a very salutary influence in its regulation ; insomuch that, when
this influence shall cease, the present system of State banks will inevitably sink into ruin, and our circulating medium become, in a great measure, deranged and impotent. An earnest desire is felt to examine fairly,
and as far as may be practicable within any reasonable limits fora report
to Congress, every important suggestion bearing materially on the present complicated subject; and if, by the salutary influence of the present
National Bank, in regulating the currency of the country, it is meant that
the Bank supplies a part of it equal to the amount of its bills in circulation, and which part is of a safe and useful character, then, as before, all
the benefits which it thus confers are readily admitted, though, it must
be remembered, they exist at the expense and by the advantages of a
monopoly, and a public indemnity or partnership entered into by the
Government to increase the confidence to be placed in its bills. When
it is recollected that the whole paper issues of bank notes in this Country
on the 1st of January last are estimated to have been about ninety-four
millions of dollars, and the bills of the United States Bank constituted
only about sixteen millions, or little over one-sixth of the whole, it becomes obvious that the small superior importance for certain commercial
purposes of the small proportion it then furnished, cannot, amidst the
whole, be of very material consequence ; and much less can it be so,
when we reflect, further, that this sixteen millions of paper, now reduced
to about fifteen, is furnished to the public at this time by withdrawing
from circulation over fifteen millions of specie and almost two millions of
State bank notes. The former of these, at least, would be deemed by
many, if less convenient for some purposes, yet quite equal, as a circulating medium, for all purposes combined, to a like quantity of United States
Bank notes.
It may be useful to observe, further, from the table annexed, ( F , ) howvery inefficient our National Bank has been in this respect, when compared with that of England, which supplies by its own notes more than
24
[ Doc. No. 27. ]
double the whole of the other paper currency of England and Wales, or
about eighteen millions of pounds sterling out of about twenty-five and a
half millions, or twelve times as large a proportion as our National Bank
does. The document referred to exhibits the computed paper and specie
circulations of this country and some others at various periods, and is
calculated to throw some light on this subject, as it has been compiled
from the most authentic sources; and where accurate returns could not
be obtained, its estimates are believed to be entitled to safe reliance for
the general and comparative purposes intended. Indeed, so little aid is
conferred on our whole currency by the United States Bank, that the entire
withdrawal of all its fifteen millions of bills and drafts afloat, and, as
would be natural in the operation, the substitution for them of its specie
now on hand, could hardly be perceptible in its influence in any injurious way on our whole circulation. From the 1st of August, 1833, when
the removal of the deposites became probable, till the 1 st of August, 1834,
when the policy of the Bank, though professed to be changed, had not
stopped its contracting operation, it withdrew about three millions of its
bills, and about three and a half millions more of specie, from our general circulation ; and yet that first operation alone would not have caused
much, if any, special inconvenience ; provided that, while calling in its
hills, either three millions of specie, instead of them, had been issued, as
its public duty in relation to the country and the currency would seem to
have required, or had it not, at the same time, performed a second operation, and withdrawn, beside the bills, three and a half millions more of
specie to add to the former large quantity already in its vaults. In effecting this change as to the whole amount of the currency, reducing it so
rapidly, over six and a half millions, the Bank within the same period
curtailed its discounts about seventeen millions, or over one-fourth of
their whole amount; and thus, by both courses, undoubtedly produced
some temporary embarrassments among its customers. These continued
till the extended accommodations by many of the State banks, and the
great importations of specie, not only sustained the community, wanting
credit from new quarters, but replaced, by notes of the State banks and
by coin, the amount of notes of the United States Bank called in, and of
the additional specie withdrawn from circulation and hoarded in its vaults.
Those importations, also, united with the real prosperity of the country,
and the large balance of over ten millions on deposite from the Treasury,
enabled the State banks, and especially the selected ones, to discount in
many places freely, and to support a sound paper currency in their own
neighborhoods, and to survive the shock of those sudden reductions in
the circulating medium, and those great curtailments in discounts and indulgencies on the part of the United States Bank, aggravated by one of
the most extraordinary political panics that ever occurred in this or any
other country.
To duly appreciate the remarkable course of conduct on the part of
that institution, whether as affecting the regulation of the currency, or
any other subject, it must be remembered, that whatever may have been
the unfavorable opinion it entertained of the conduct of this department,
in changing the place of most of the deposites, under the power reserved to it by the charter, the Bank was still left in the enjoyment of some
millions of deposites of the public money ; was still the fiscal agent of
[ Doc. No. 27. ]
25
the Government for all purposes in a number of the States ; was in all
of them its commissioner of loans as to the public debt, and the agent for
paying all the pensions granted before 1832; still retained the exclusive
privileges of having its notes, and, by indulgence, ever* its drafts or
checks received every where in payment of all public dues ; was still a
public corporation, under various.public and charter duties to the Go^
vernment and the country unimpaired ; and still held the monopoly
of banking under the General Government in full force, and the benefit
of that Government as a partner in its capital, to the extent of seven
millions of dollars, with the dividends on that capital in its possession, as
from time to time declared, exposed to be seized, and retained under
any plea of satisfying any doubtful claim it might choose to present.
In the dreariest excitements in England, from pressures and panics of
all kinds, their National Bank has never so conducted as to raise a suspicion, whether well or ill founded, that its object, whatever may sometimes have been the effect of its measures, was to increase the public
embarrassments, or derange still further the whole currency of the country. To be sure, in conducting often as a mere commercial body, on
private more than public principles, it has at times waited to be acted on
by the community, rather than acting from its own promptings, or by the
importunities of the ministry, in aid of the currency. But, in the greatest moneyed convulsions, as in 1797, its discounts, or investments in
private and public loans, did not materially vary in amount, instead of
curtailing them one-fourth ; and its circulation was reduced only oner
twentieth, instead of one-sixth; as, in 1819, its discounts increased quite
one-fifth, instead of being contracted one-fourth, and its circulation was
lessened only about one-tenth, instead of one-sixth ; and as, in 1825, its
discounts also increased one-third, instead of falling one-fourth, and its
circulation was not on the whole lessened at all, instead of one-sixth.
The contrast appears still greater when it is seen that the specie of the
latter at each period was reduced one-half, and sometimes over that
amount, instead of being increased three millions, so that, on mere private and banking principles, a great reduction in both its discounts and
circulation would have been defensible.
During the period before mentioned, the United States Bank, by thus
calling in its bills, increasing its specie, and remitting abroad fordeposite
something like two millions of its collections, probably caused a much
greater vacuum and derangement in our currency than would result from
the natural arid ordinary operation of closing up its whole concerns within
two years after March, 1836. Then, it ought not, and doubtless will not,
either hoard, or deposite abroad, what is withdrawn from the whole circulating medium, by collections, but pay them out to its stockholders
almost as rapidly as received, and in that way, like the former Bank,
notwithstanding many predictions to the contrary, can easily and judiciously perform the operation of a final adjustment of its affairs, without
producing any shock to the currency, or any serious distress in the community. It is thus that all the banks in the Union, every sixty or ninety
days, collect, and pay out, without excitement or embarrassment, a sum
probably five or six times larger than the whole capital of the United
States Bank, and three or four times larger than its whole amount of discounts or loans. The distress during the last winter and spring, so far
26
[ Doc. No. 27. ]
as real, arose not so much from the large collections of the Bank, though
unexampled in amount in ordinary banking operations, as from their suddenness, and the permanent abstraction, in the manner before stated, of
six and a half millions from the whole currency of the country, and from
the further facts, that an unusually early demand among merchants, for
money to discharge a new portion of the duties in cash, and the shorter
credits for others, allowed by the Government, both occurred at the
same moment. To these were added, in the West, the sudden vacillation and increased rates in domestic exchanges, adopted by the Bank in
that portion of the country, where it had previously monopolized so great
a portion of that kind of business. The additions made to all these
causes by the mere panic, chiefly confined to the seaboard, and chiefly
political rather than commercial in its origin, cannot be easily computed;
but it evidently prevented many of the State banks from extending their
discounts and loans so much and so quickly as they otherwise would
have done, and compelled others to curtail theirs with injurious rapidity.
But the great quantities of specie imported during the winter and spring;
the increased strength and confidence of the State banks, by means of the
possession of ten or eleven millions of deposites; the gradual adjustment of
mercantile dealings to the new system of paying duties, and the principal cessation of the panic in June, removed all serious difficulties in the
money market, and supplied all deficiencies in the whole amount of the
. currency with State bank notes and specie, before the United States
Bank increased its circulation, or enlarged its discounts; and, indeed,
while it continued to diminish both.
In this instance the currency, so far from being regulated by the Bank
in a salutary manner, was somewhat deranged by the withdrawals and
contractions to which it resorted, and much more so by the political panic
accompanying them. The result has fortunately demonstrated, that
whenever the pressure ivould be renewed, the energies of the community
and of the State banks, not only without the aid, but perhaps with the
opposition of the United States Bank, are competent to produce a thorough correction of the evil. Although the Bank had not been rechartered, the deposites restored, or its discounts and circulation increased,
yet a little reflection convinced most of the community that no money was
in fact withdrawn from the country, or even from circulation, by a mere
change in the place of the deposites, or by the refusal of a new charter.
It is admitted that, in some cases, the alarms which were at first excited
impaired mutual confidence, and either suspended or rendered more
sluggish, for a time, the moneyed operations of society. But as the community became satisfied that no specie had gone abroad to meet an unfavorable balance of trade, or rate of exchange ; that no foreign distrust of
the stability of our institutions, and the pecuniary ability of our people,
had arisen so as to prevent capitalists from continuing former, or making
new investments in this country ; and that no actual deficiency existed in
the power to raise money from the occurrence of short crops, very low
prices, war, or pestilence, our whole pecuniary difficulties appeared to
have vanished even before the political panic entirely subsided.
Whether this panic was at all necessary, whether it was right and patriotic to inflame and extend it by the extraordinary means adopted, and
who ought to be held responsible to such unfortunate individuals, chiefly
I Doc. No. 27. J
27
among the commercial community, as may have suffered from its ravages,
and from the Bank's disproportionate curtailment of sixteen or seventeen
millions of discounts, apparently to meet the reduction of only five millions in its deposites, and from its permanent withdrawal of about six and
a half millions in specie and bills from the whole currency of the courttry, while its monopolies, and most of its privileges and high duties to
the Government and the country, remained entirely unimpaired, are
questions not deemed proper for discussion in this communication, but
on which the public, in due time, will doubtless form a just and decisive
judgment. On the inherent and inevitable evils, however, which are
inflicted upon the community, as well as the currency, by such great and
sudden fluctuations in the whole quantity of the currency, whether
springing from wanton or accidental contractions and expansions in discounts, or from other causes, there can be but one opinion, as these fluctuations tend unavoidably to produce changes in prices of all kinds, to
alter the value of debts as well as property, and to influence, more or
less sensibly, the fulfilment of most contracts, and the ordinary operations
-of the whole system of wages, salaries, labor, rent, interest, and income, .
of almost every description. It is a further remarkable fact, without reference to theories or expectations of any kind, that the condition of our
whole currency, or circulating medium, which terms it is convenient to
use throughout this report as synonymous, was not, when the present
fiscal system was adopted the last year, in so eligible and sound a state,
after the full influence of the United States Bank had been exerted seventeen years, as that in which it was previous to the last war, before its incorporation, and under the more limited powers, capital, and connexion
with the government of the former Bank. The whole specie in the
country, compared with the whole paper in circulation, was, in 1811,
from twenty-eight to thirty millions of the former to only from twentythree to twenty-eight millions of the latter, while, in 1833, the specie in
the country was about forty-two millions to about seventy-seven millions
of paper in circulation, or a proportion nearly one-half less. During the
existence of the present Bank, so far from its increasing our specie, so as
to have it constitute a sum equal to our whole paper circulation, as was
the case before A. D. 1811, and was again expected to become the case
by many who voted for its charter; so far from making it approach the
ratio of about 170 to 140, which it bears in England under their National
Bank, or of about 520 to 30, which it bears in France under theirs, our
specie has never, since 1816, until the removal of the deposites, and the
passage of the new coin bills, constituted a sum whose proportion was more
than about 42 to 77 of our whole paper currency, and has sometimes been
as low as about 25 to 1(50 of it.. This does not include what is in the vaults
of our banks, whatever may be the practice of computing in England; but
the table (F,) in order that any proper corrections may be made, shows
the amount in their vaults during the same period. Notwithstanding this
hazardous condition of the currency, our own coinage of gold and silver
during the last thirteen years before 1834, amounting, in all, to about
thirty-two millions, has entirely, except seven or eight millions, been allowed to quit the country, and in several instances, to a considerable
amount, has been exported directly to Europe by the Bank itself. All
the manufacture of coin at our own mint, and all the expenses of it, have
28
[ Doc. No. 27. J
thus been wholly lost to us, except what would be equal to the result of
its operations for only two or three years. The imports of specie, averaging, also, from six to seven millions annually, have all been suffered
with the detention of small amounts for coin and manufactures, to depart
without any successful efforts on the part of the Bank to restore the
much sounder condition of the currency which existed under the former
institution. On the contrary, howr far the present Bank may have
been instrumental in preventing such a restoration, will be seen, when
we advert to the fact that, instead of issuing bills like the former
institution, no lower than ten dollars, and thus, so far as the Bank itself
was concerned, leaving room for specie to remain in the country, and
circulate for all smaller sums, it has put forth not only a large amount of
five dollar bills, but, since 1827, a still larger amount of five dollar checks
or drafts, not supposed by many to be warranted by its charter, for purposes of circulation as a currency, and certainly any thing but useful in
extending the specie basis of our paper to its former desirable and safe
proportions. The permission once given by this department to receive
these checks in payment of the public dues, has recently been with- *
drawn, in the manner and for the reasons stated in the circular annexed,
(G.) The notes and checks of this denomination, issued by the present
United States Bank, and, in imitation of its example, the five dollar notes
issued by the State banks, are estimated to equal in amount from onefifth to one-fourth of our whole paper currency ; and the drafts or checks
of the United States Bank, of all denominations, used as a currency, are
computed to equal quite one-half of its whole circulation. In these particulars it has not only departed from the salutary precedent of the old
Bank, but it has departed from the precedents of the National Bank of
England, which, except during the suspension of specie payments, has
not issued (unless for a few years, within more than a century) any nofes
less that £ 5 , or somewhat over $23, in amount; and the National Bank
of France has never issued any less than 500 francs, or near $100, in
amount. It is not contended that the present Bank, or the former one,
ever possessed any chartered right to prevent the circulation, by State
banks, of notes under ten dollars; but they both possessed the right to
issue no such notes themselves, and to induce others, by their example,
by encouraging sounder views and a more commendable usage on this
point, to issue few or none of them; and the first Bank did, in this respect,
conduct in a manner highly beneficial to the country, while the other has
entirely disregarded the salutary precedent. There is one higher and
more difficult task in the due regulation of the currency, or circulating
medium of any country, where it is composed of both paper and specie.
This task consists in the preservation of the whole amount of the currency at any one time, not essentially reduced or increased beyond the
natural and average wants of the community, in order to prevent a ruinous reduction in prices of all kinds if the whole currency be greatly
reduced, and to prevent an injurious and artificial increase of those prices
if the whole currency be greatly increased. The evils from either
change (supposed by many to be much aggravated under any paper money system, and less likely to happen under a metallic one, from the
greater difficulty in obtaining or making an excess, and from the diminished contraction in case of an export of specie, or a panic) are toa
[ Doc. No. 27. J
29
palpable and well understood in-political economy to require, on this occasion, any illustration.
It is equally clear that this kind of regulation of the currency, if performed
at all, beyond what is effected by the mere course of trade, and the operation of private interest in the State banks, and other ways, must, whenever
the object is deemed of sufficient importance, and the means to accomplish it lawful and expedient, receive attention from the Government.
But the Government can generally operate on this subject only through
the issue and withdrawal of Treasury notes, in such form and under such
circumstances as will meet particular exigencies, or by some large banking institution created for this, among other public purposes.
The difficulties and advantages, though both exist, connected with resorting to Treasury notes in such exigencies, need not now be considered;
but what influence the present Bank of the United States has exercised
in averting or correcting those evils, compared with the State banks, or
with other systems, or other national banks that are or might be created,
is considered an inquiry very necessary and pertinent. Whatever
elevated claims may have been presented in favor of the utility of the
present Bank in thus regulating the currency, it would be somewhat difficult to designate the period and the extent of it in any instance, beyond
self-defence, or beyond what seemed requisite to save its own specie.
In the three modes by which the amount of the currency usually becomes deranged, that is, by excessive issues of paper in times of extraordinary prosperity or speculation, by great exports of specie, and by
hoarding it in a panic, it is not known that this Bank, with all its public
privileges, public objects, and public claims, has generally pursued any
system to remedy the evils, different from that of all or most of the State
banks. Thus, in a demand for specie for export abroad, instead of attempting to check it by the sales of bills of exchange at a lower rate,
which it might draw on some fund providently and patriotically placed
abroad for relief of the community in such an emergency, it has sometimes joined in the export of specie, and is supposed seldom to have
drawn on a fund abroad, except when the market was such as to yield an
enhanced price, or, on one or two occasions, with a view to its immediate
safety, to lessen or avert a severe run upon its own diminished specie.
If the demand for specie increased so as to press hard on its own
vaults and those of the State banks, how often has it been known during
such a crisis, under any limitations, to become more liberal in its discounts
to a distressed community, and to fill up with more paper or specie the
vacuum caused by the withdrawal abroad of the specie ? On the contrary, has it not, though claimed to be a public regulator o£the currency,
almost constantly and dangerously aggravated the evil ofepecie being
withdrawn by acting as a mere private commercial bank, and by refraining to put into circulation, during a drain, more specie or still more
paper, and even by withdrawing two or three times as much paper as
there was specie exported ? Again, when little or no specie was exported or hoarded, and there was no vacuum to supply by paper, has it
not then usually been more profuse in its discounts, and, instead of contracting or regulating steadily, has it not expanded injudiciously the
whole amount of paper in circulation ? It is admitted that a bank, conducted on mere private principles, is generally not only no aid to the
30
[ Doc. No. 27. J
currency on such occasions, but it often becomes, as just shown, and must
become, unless acting on public principles, one of the greatest enemies
to the currency. As its specie is drawn out largely to export or hoard,
such a bank, unless taking due precautions beforehand, from public considerations, must contract at least two or three fold the amount of specie
withdrawn, and is utterly unable to expand its paper issues so as to keep
up the whole gross amount of the whole circulation of all kinds in the
community; and, without such precautions, if attempting in such a crisis
so to expand, it would speedily be exposed to have no specie left to
suspend the payments of it, and thus not only weaken public confidence
in the whole paper system, but derogate from the character and value of
all the paper abroad which could not be promptly redeemed in specie.
No complaint is therefore made of the United States Bank, so far as a
private institution, for acting on such occasions as a mere private and
commercial institution should, and in the only manner calculated, tinder
its present charter and our present laws, to secure its own credit and
that of its bills, as a mere private banking corporation. But it is
blamed, as a public institution endowed with numerous and very valuable
public powers and privileges, and making lofty claims in that character
as a regulator of the currency of the whole country, for not having
oftener, by a credit abroad, used it in a manner to prevent the large export of specie, and for not trying with more public views to reduce and
not increase the rate of foreign exchange, so as to render the large export
of specie unprofitable, and the currency, which it should aid, free from
much further danger when any particular exigency of that description
occurred. Again, in the case of a drain of specie, to hoard during a
panic like that of last winter, for instance, it is blamed for not having
come forward with public spirit and for public purposes suitable to its
high public privileges; and, when the panic had not extended in so great
a degree to itself as to some of the State institutions, known to be entirely solvent, for not having supplied by its own increased loans, instead
of enlarging by its curtailments, the vacuum made not only by the withdrawal and hoarding of specie, but by the withdrawal also of those parts
of the paper currency which on such occasions are forced back on the
State banks, both in payments and for redemption.
The Bank of England has Obtained the credit on two or three memorable occurrences of this kind, if not oftener, of having evinced something of this public spirit, greatly to the relief of the community,
however late in adopting its course, and however strongly pressed to it
by the ministry before it was commenced, and however decisive pledges
of co-operation it first obtained. The evidence of its favorable course
towards the community at times has already been stated, in describing
its small curtailments in discounts and in circulation during a few such
crises, compared with those large ones made by the United States Bank
during the past year. But it is quite certain that the latter institution, if
not the former one, has forborne generally to render to the community
all that'benefit in preserving the equal quantity or equilibrium of our
whole national currency, which the public had a right to expect of it as
a public institution.
There has been a double mistake on this subject, first, in claiming for
any National Bank under the usual organization of one so little differing
Doc. No. 27. ]
31
from a private and mere commercial establishment, a greater power and performance in this particular than that to which it ever was entirely competent. And, secondly, in its not exercising in some instances, for public purposes, a foresight, precaution, and forbearance, to which it was clearly competent by its great privileges and monopolies, and which a strong sense of
public duty and public spirit required, and which would have proved eminently useful to the public in preserving more uniformity in the whole
amount of the currency. It is freely acknowledged that this would have
been effected occasionally at some sacrifice of private profit, and sometimes, perhaps, as now constituted, at a small risk of private safety ; yet
it was an imperative portion of its official duty towards the Government
and the public to bestow due attention and expense on this vital subject.
Mr. Dallas, in December, 1815, very properly observed, " the National
Bank ought not to be regarded simply as a commercial bank. It will not
operate on the funds of the stockholders alone, but much more upon the
funds of the nation. Its conduct, good or bad, will not affect the corporate
credit and resources alone, but much more the credit and resources of the
Government. In fine, it is not an institution created for the purposes of
commerce and profit alone, but much more for the purposes of national
policy as an auxiliary in some of the highest powers of the Government."
The chief extent of the beneficial influence which the United States Bank
appears really to have exercised in regulating the whole amount of the
currency, and the goodness or security of that issued by the State banks,
has consisted in the check it sometimes, from rivalship and self-interest,
has imposed on other banks, by watching over and returning their excessive issues, and in which influence it acts on the same principle, though,
perhaps, with less public benefit than the same amount of banking capital
divided, as in Scotland and New England, into many separate banking
institutions. But this influence is limited principally to the larger cities
and to their banks, as the United States Bank and most of its branches
are there situated; and these pursue a practice generally of refusing to
receive at par the notes of most country banks, and hence, by not returning those notes promptly for specie, or requiring deposites or security to
meet them, cease to exercise over them but little of the salutary check
against excessive issues usually wielded by one bank over another. It
has probably gone no further than this for benefit or injury, except as 35
millions of capital concentrated can be more beneficial or injurious ; as the
power is exercised on liberal or mere selfish principles, than that amount
of capital divided among numerous institutions; and as one bank with
that capital, and with the monopolies and benefits derived from Congress
to re-enforce it, could control more widely than it could control without
them. Private interest being the source and measure of this kind of regulation over the currency, it becomes highly probable that a great corporation, less amenable to public opinion than smaller ones, less inclined
to conform to it, as supposed to be more able to set it at defiance with im-.
punity; more tempted, as possessing greater authority, " to feel power
and forget right;" with fewer hands and hearts^connected with itsimmediate management to be open to the promptings of patriotism, liberality 1
and public accommodation, than the same amount of capital among several
smaller institutions, might push its control over the weak much further at
82
[ Doc. No. 27. ]
times than an enlightened and honorable self-interest could justify, and
might occasionally exercise it from other and less legitimate motives than
the salutary enforcement of correct banking principles. It has been admitted by one of its officers that " there are very few [State] banks which
might not have been destroyed by an exertion of the power of the Bank,"
(of the United States.) Among small local or private institutions, as in
Scotland, mutual vigilance over each other has always proved a most
useful check on their issues, and a most excellent regulator of the safety
and amount of the paper currency, without the help of a National Bank
of any kind ; and the same vigilance in New England, combined with a
similar foresight and shrewdness in moneyed concerns among the mass of
her population, has prevented the general suspension of specie payments
there at all times, as well when no National Bank existed as when it did
exist, and has reduced the failures of banks there, as in Scotland, to a
very small number, compared with what have occurred at sundry times
in other quarters of the Union. The small extent and benefits of this kind
of influence by a National Bank do not depend upon mere speculative
reasoning, but can, in some degree, be computed. A few recorded facts
throw much light on the question whether it has been more beneficial
than that of State or local banks left to their own intelligence, competition,
and sagacity, under the restrictions imposed on them by self-interest, by
usage, and the State Legislatures. Before the first National Bank was
incorporated here, among the three or four State banks then in existence
no failure whatever occurred ; but under, and notwithstanding the influence of that Bank, though much better regulated as to its issues, and its
management in general, than the present one, probably fifteen or twenty
failures of State banks happened previous to the expiration of its charter
in 1811. From that time to 1816, during which period no National Bank
was in being here, the whole number of failures did not amount to more
than five or six, though the whole number of the banks had increased
from three or four in 1791, to eighty-four in 1811, and to two hundred
and forty-two in 1816.
But since the incorporation of the present Bank in the last named year,
the failures of the State banks, whatever salutary power the former has
exercised, have much increased, and they have been estimated in part,
and in part ascertained to have exceeded one hundred and fifty previous
to 1830. In England, where the full benefits of a National Bank have
been enjoyed, and have been improving, so far as there deemed practicable, more than a century and a quarter, its influence in presenting overissues and failures among the local and private banks has proved to be
very inconsiderable. During the same years, from 1816 to 1830, inclusive,
the commissions of bankruptcy actually taken out against them there Were
two hundred and six ; and the stoppages of payment in a portion of that
time having been ascertained to be more than'double the number of actual bankruptcies, it is probable that, during the above period, over four
hundred and twenty occurred there of what would be considered here
bank failures. While the whole number here in that period was only
about one hundred and fifty, and judging from the account before given of
our unavailable funds, nearly one hundred of those last have redeemed their
bills, and many of them resumed business. Indeed, in only four particular years since 1813, two hundred and eighty-eight bank failures occur-
" Doc. No. 27. '
33
red there, computing, as before, all the stoppages at double the number of
actual bankruptcies, and which two hundred and eighty-eight is probably
one hundred beyond the number of all such failures in all the United
States from the commencement of our banking system, in 1781, to the
present moment. The undersigned is aware that formerly the number
of private banks there was considerably larger than here, but it is now
less than double the number of State banks in operation here. Again,
from 1811 to 1816, inclusive, with a National Bank, there the failures
were, on the above mode of computing, over two hundred and twenty,
while here, without any such bank, they were only five or six ; and in
Scotland, without any such bank, they have not for a century exceeded
three or four, and some of these three or four in the end paid twenty
shillings in the pound.
Parallel years in many cases have been selected, in order that the relative operation of great causes in the commercial world, affecting in some
degree both countries, might not produce any difference in the comparative results, and that political economists might truly assign to them all
the influence in these failures which they doubtless exercised, in defiance
of any power of either National Bank as at present organized and administered. One or two other circumstances are very striking, such as that
here, though without a National Bank, specie payments were not suspended till after the occurrence of war and actual invasion, though there,
with a National Bank, after war and the mere threat of invasion, they
were suspended. They spread there over the whole country, but never
extended here into New England ;and they continued there over aquarter of a century, though they lasted here, in general, short of three
years.
These differences may in part be owing to the more severe and protracted wars in that country, and (in consequence,'of its vast debt, and
a large portion of it being owned on the Continent, and its distant and extensive operations on land and ocean, requiring great funds and subsidies
abroad) may, in part, be owins; to^jnoney market somewhat more sensitive and fluctuating than ours in the rate•«£exchange, and demand of
specie for export. But another essential difference has existed between
the condition of the private and local banks here and there. Ours have
generally been subject to rigid regulations as joint stock companies, under many salutary legislative restrictions on their issues, and great publicity of late years in the condition of most of them. Theirs, till the last
year, were left very much to the sole direction of the proprietors, and with
no publicity of their condition ; and with little check over them, except the
competition of each other, and the small indirect influence of their national institution. It is not, therefore, believed to be arrogant or inconsiderate to suppose that the banking system in most of the United States
has been quite as carefully, if not more judiciously, regulated by law than
in England, and has in practice here, whether with or without a National.
Bank, been attended with fewer and less calamitous losses to the community, or injuries to the currency. In further proof of this, during the
last year, public opinion gave rise there to some new legislative regulations, resembling some of ours, and especially as to greater publicity
about the condition of the Bank of England. In fine, without this and
certain other legislative regulations, united with some provisions incorpo 8
34
[ Doc. No. 27. J
«ated into bank charters, which may be enumerated hereafter, it is in vain
io expect that either National or State banks will ever be likely to perform much beyond what is merely incidental, and neither expensive nor
Siottblesonie, in regulating the currency of the country.
7. In respect to the only proposed inquiry which remains, and which
relates to any increased security needed for the present paper system, and
any desirable improvements in the present deposite system, the underued entertains an opinion that they can and ought to be obtained, not
tfrftm the continuance of a National Bank, whose influence has been so
trifling on the currency, and whose power, as a fiscal agent, is now so
little needed, but by alterations in respect to the State banks by the States
themselves, in various particulars heretofore and hereafter suggested-, in
.nexion with such regulations and laws, bearing on the general currency of both coin and paper, as it is competent for the General Government to adopt. Or if, contrary to the expectations of the undersigned,
in the present condition of the country, or any condition soon anticipated,
Jtfaese alterations should be found ineffectual for all necessary and proper
purposes, confided to the General Government, the increased security
imist arise from a still further abandonment and restriction of paper, than
is now contemplated by this department, rendering the currency, if possible, in still larger proportions metallic. Or, in the last resort, if that,
•and all other remedial measures, considered lawful, should prove unsuccessful, any further securities, improvements, or powers, then deemed
indispensable, and not attainable, consistently with our present constitution, must of course be sought from what is not recommended, and what
is not believed to be feasible or judicious—an amendment of the constitution in relation to banks.
But the mischief justly to be apprehended from a large and powerful
moneyed corporation^ connected in any way with the General Government, the strong operations of which are already, and always have been,
proper subjects of constant vigilance and wholesome jealousy on the part
of the people and the States, is so great, that it will be time enough,
whenever the people and the States shall consent to such an amendment,
and to the establishment of such an institution, to discuss the proper powers, and restrictions of powers, for it. It w ill then be time enough to
discuss, also, whether it should be a bank of mere deposite, or one of
deposite and discount, and of paper issues; whether a single and central
institution, or divided into three or four separate establishments for the
great sections of our common country, with branches to each ; whether
it be wholly public, and founded on public revenue and "public credit, or
be only in part public; whether, in fine, it be with some effective governmental control, and, if any, to what specific extent, and by what
-body, public commissioners, some department, or Congress itself; or that,
;hin the limits of our free and happy institutions, there shall be erected
-;me institution, of a public character, and of a moneyed dominion, independent of all others—the creature superior to the creator—and a
-servant, on public matters, entrusted with power to affect the value of all
property, and the fulfilment of all contracts, and yet be placed in an attitude to set the whole public authprities at defiance. If a National Bank
of any efficient character be tolerated, either before or after an amendment of the constitution, it must be obvious that one of two evils will
I Doc. No. 27. J
35
occur—either a great moneyed power will exist, independent, uncontrolled, and then in fact uncontrollable ; or such a power will exist, with a
due control by the Government, and thus enlarge greatly the present
central influence of the latter, without any increase of the present restraints on it by the people and the States. Both are dangerous; and,
after all these and similar considerations, too numerous for recital here,
the question will still recur, whether so much is probably to be gained
by such a National Bank, as will justify this indirect abolition of most of
the State banks, and this condensation, to almost a single point, of all
large pecuniary favors, indulgencies, and powers, and as will counterbalance the strong constitutional doubts which now exist against such an
institution, and those other doubts, of enlightened and far-sighted expediency, which, in the present condition of our virtual exemption from all
debt, our prosperous finances, flourishing commerce, improving currency,
and easy fiscal operations, will always spring up on every side against a
grant either to or by the General Government of any further great, exclusive, and concentrated power over " associated wealth." The undersigned wishes to be distinctly understood as not favorable to a national
banking institution, and this being his opinion, with or without an amendment of the constitution, he does not therefore recommend any such
amendment.
Under existing circumstances, he trusts there is a. large class of the
community who do not consider it prudent to renew exclusive privileges,
already in their opinion become odious, to extend monopolies, already
abused, or to confer increased capital and power where the exercise of
those now enjoyed has been concealed, and withheld from a full examination by the public directors, and by Congress, through a committee
whose authority was disregarded and contemned ; or to grant to any
new institution what has always been doubted by many to be expedient
in any state of things, and is much more doubted in a state of things now so
essentially different from that which existed at the time of conferring the
former charter; and, in fine, tt>-4u££gase indirectly, if not directly, the
great strength of the General Government ot'lhe Union, when not clearly
necessary to execute, in a due manner, the express powers entrusted to
its charge. Much of what is expected to be gained by such an institution
whether enlarged or otherwise modified, it must be remembered, before
one shall in any way be attempted, is rather founded on speculation than
experience, and may never be realized ; while some of the expected
gain as well as most of the advantages derived from the present Bank
could, without any constitutional difficulty, be probably realized from the
State banks under their present organization, with merely a few additional provisions.. These are such as can properly be made by Congress
in respect to banks which are public depositories, and others, whose
notes are received for public dues. Similar ones, without doubt, wilF
seasonably be adopted by most of the States themselves. To these maybe added such other provisions as it is competent for the General Government to make, in relation to all the banks situated within the District of
Columbia.
The character of those new legal provisions which might tend to improve the present system of selected State banks, an<f which come within
the competency of the General Government, is next to be considered.
36
[ Doc. No. 27. J
One of them relates to some essential changes connected with the circulation of small notes, and is, in the first place, to refuse to continue the
use of any banks as public depositories, which after one year shall issue
any notes of a smaller denomination than five dollars, or, after three or
four years, of a smaller denomination than ten dollars, and subsequently
to extend this restriction further or not, as experience may require.
Another provision is, after those respective periods, not to receive in
payment of any public dues the notes of any bank not conforming in its
issues to. the same regulations ; and another is to prohibit the circulation
or issue of all such small notes in the District of Columbia.
Some have supposed it would become necessary to impose a general
tax or stamp, as suggested by Mr. Gallatin, on the issues of small notes
in any part of the United States, and which tax would be of a size effectually to prevent the injurious effects of such issues. But this last
measure is not recommended by the undersigned, for various reasons, that
need not here be detailed, nor is it believed that such a measure will
ever become necessary, should it be deemed lawful, as it must be manifest, on a little inquiry and reflection, that the banks themselves, in regard to their own safety, credit, and consequent emoluments, will in the
end find no less benefit than the community will, in the disuse of small
notes. The salutary influence has before been alluded to, which, in
respect to the improvement of the currency, was exercised by the old
rather than the present Bank, in the issue of no notes smaller than ten
dollars, and which last denomination is lower than any bank notes now
in circulation in England, France, or Germany, and, it is believed, many
part of the Continent of Europe. This disuse in any country where the
paper system prevails, is well ascertained to be the only easy mode of
retaining a full supply of specie, so that it may come to the relief and
security of the community during severe wars and great commercial embarrassments, and may help to sustain promptly banks themselves when
Jbard pressed by a demand lor specie, to hoard during a panic, or to export
during an unfavorable rate of exchange.
A consciousness of the dangers attending the paper system in England,
with a specie circulation not sufficiently enlarged, induced their National
Bank, when the resumption of specie payments was contemplated, at
once to acquiesce in the proposition of Parliament to call in the small
notes then abroad, though the least denomination was almost five dollars,
or one pound sterling, and after four years to issue none less than five
pounds, or nearly twenty-five dollars. The same limitation was subsequently attached to the private and country banks, to take effect in 1829,
and as to one and two pound notes, except in Scotland and Ireland,
after 1825. In these last countries, however, it is understood the smallest
denomination of paper usually circulated at any time has "not been less
than one pound ; and the currency of Scotland, without further restriction in this respect, could never probably, with so little specie, have
continued so safe, and its banks in such high repute, had it not beem
that her great distance from London, the centre for exporting specie^,
and of favorable exchange against the interior, rendered it preferable to
the holders of bills on Scotch banks, in times of pressure or a panic, to
receive what they always make previous arrangements to give—a draft
on some respectable bank or banker in London. Situated like most 6f
[Doc. No. 27. ]
37
the banks in the interior of New England and New York as to Boston
and New York city, such a draft, instead of specie, has generally been
preferred to be received from the Scotch banks, as it would be of more
value in the exchange market, and would not expose the holder to the
expense and inconvenience of transporting the specie three or four hundred miles to London. But the paper system has not only been greatly
strengthened for all purposes, and the foundations of 6pecie, on which
confidence in it generally and chiefly rests, have been much enlarged
wherever the withdrawal of small notes has occurred, but a most dangerous weapon has been taken from the hands of that class of the community most easily excited in a mere political panic, to embarrass a bank,
whose credit with the commercial world may at the same moment be
entirely sound, and with whom, by means of the large bills, or large
amounts of them in their possession, no run would at first be attempted.
A run on banks in all countries, when arising from political considerations alone, has uniformly commenced with small bank notes, and by
persons who, from their education, pursuits, and pecuniary condition, are
most readily influenced by the designing, and most likely to be misled
on any sudden and exciting occasion. Not so frequent illustrations on
this subject have occurred in this country, where the great mass of the
community are believed to be more intelligent; but we have not been
wholly free from them, and, when occurring here, their operation has
always been similar, and to be much deprecated. Thus, during the last
winter and spring, had the political panic extended to the great mass of
society, so as to have rendered them hostile and distrustful, instead of
being generally friendly towards the State banks, it must be obvious to
all, that a scene of infinitely greater embarrassment and ruin would,
probably, have occurred with so many small notes, so widely, distributed
in some States among all classes, and without a broader basis of specie
in the community or in the banks to sustain a severe run. Wherever
there was added to this, or occurred, instead of it, any commercial panic
or discredit about any particular banks, it would, in most of those e.i
, inevitably lead to a stoppage of specTe
uless some immediate
relief was interposed to meet it, like additional security for the ultimate
solvency of such banks, furnished or tendered in some form or other by
individual stockholders and directors, or by a State, or by the General
Government. Such relief and security were then offered in some parts
of Virginia in the first mode, in New York in the second mode, and to
all the deposite banks in the third mode, through the confidence reposed
in them, by their selection, and the large funds entrusted by the Treasury
to their custody for safe keeping. It was only by the last of these
modes that the United States Bank itself was probably relieved
from the stoppage of specie payment early in 1819, when its cie on hand at the close of the previous year, in the mother* bank
and all its branches, was only about two and a half millions of dollars, to
redeem a circulation of about seven antl one-third millions, and to I
a liability for more than nine millions of deposites. The confidence
given directly and indirectly to the Bank of England, by the Government, in similar ways, contributed much to save it from commercial di>credit, and to keep its bills nearly at par, in the opinion of some wri
for more than ten years after it actually stopped specie payment in 1797,
38
[ Doc. No. 27. ]
and at a moment when its specie had become reduced to only £1,086,170,
with a circulation to be redeemed of £9,674,780. The same confidence,
probably, prevented another stoppage in 1825-'6, when its specie had
fallen to £1,260,000, with a circulation of over £25,000,000 to be redeemed. But the withdrawal of small notes required by Parliament, to
prevent in some degree the recurrence of such dangers, and to take the
possession of these means from those most likely to use them unnecessarily, in a political panic, for purposes of embarrassment, has since had
the beneficial effect of strengthening, in a pressure, the banks themselves,
by increasing the specie circulation of that country, on which the paper
in some degree rests, to an amount more than equalling its whole paper
circulation ; while here, the last yetir, and before this change was
strongly recommended by this department, the specie circulation was
computed to be only about one-seventh the amount of the whole paper,
and all the specie in the country was only about half the amount of
the paper in actual circulation.
This withdrawal has there, also, not only in a great measure disarmed
the worst enemies of the banking system in the period of a political panic,
as before explained, but it has rescued the poorer classes of persons from
almost the whole inconveniences to which they chiefly were exposed
by the discredit of bank notes, and from most of the losses they suffered
by counterfeits. Thus, if no notes circulate of such small denominations as are usually required in money to effect the purchases and payments by those classes, but they are furnished with silver and gold to
effect such objects, it must be manifest that they at once become relieved
from any considerable apprehension about the business and credit of
banks, and the apprehension is properly devolved on the wealthier and
more commercial classes, for whose benefit chiefly banking institutions
are incorporated. If losses, then, occur by the failure of banks, or the
depreciation of their notes, those losses reach, in only a small degree,
persons who seldom own the stock, or keep in their possession large
notes, but fall, as they should, on the more opulent, whb not only own
most of the stock in banks, but reap the chief profit and accommodation
connected with their establishment. In respect to counterfeits, these
were so much confined to the small notes in England, as to furnish an
additional reason there for prohibiting the issue of such notes ; and they
are in this country probably in a ratio of ten to one among the smaller
notes. The reason will, on a little reflection, be obvious, as the less
informed and less affluent, to whom the small bills are most frequently
passed, are less qualified to detect impositions, while they are less able
to bear the losses from them, than the more wealthy, who rarely are deceived by counterfeit bills.
The withdrawal of the smaller notes will, therefore, not only relieve,
'in some degree, all, but in a great degree the most exposed portion of
the community, from frauds and injuries by counterfeit bills ; but it will not
at the same time subject them to losses, in an equal degree, from counterfeit coin. The weight of coin, independent of other tests, is a ready,
easy, and almost certain mode for all classes of detecting counterfeits of
any great value, since the specific gravity of gold nearly exceeds twice
that of any other metal, except one, and which one is expensive, rare, and
unprofitable as a counterfeit.
[ Doc. No. 27. J
.
The next essential change, to that connected with the withdrawal oF
small notes from circulation, and which this department would recommend as an improvement in the present fiscal system of employing Stater
banks, is to require the fullest returns to be made by thase employed,in
relation to their actual capital paid in ; their discounts, circulation, specie, and other circumstances, throwing light on their probable safety and.
intelligent mode of conducting business. This, coupled with the pov.
through committees or commissioners, to verify the correctness of such.
returns, by actual examination in cases of suspicion, will prove a highh
conservative and useful measure to both the public and the banks as vre.il.
as the Government. It will not only furnish to the latter a salutary facility in discovering and revising any errors in its depositories, arising from
inadvertence or misapprehension, but will increase its security, and, if
the banks really merit confidence, will justly ensure to them all that in*proved standing and augmented trust with the community, which, in the
end, must prove so advantageous, in a pecuniary view, to their proprietors. The-late examinations, in England, of the most intelligent bankand skilful financiers, led to a parliamentary provision, for the first time.,
in favor of minute reports from the Bank of England to the Government^
and the average results of which, quarterly, are required to be made public. In 1820 Mr. Crawford went so far on this subject as, in some cato request of a bank a confidential "list of its debtors, showing theamount due by each." All mystery on the subject of banking should
cease. It is unworthy the age in which we live, and the form of Government we support: and the real condition of all banking institutions, whieh
claim public confidence and credit, should be shown far and wide, to alt
interested, fully to deserve that confidence and credit. The next chat _
of much importance recommended, have been considered in detail in my/
annual report, under the remarks there offered in respect to the rec
alterations in our gold coinage, and the further improvements suggested in>
that, and in the operations of the Mint.
The new coinage, and increased rapidity in manufacturing it, constitutean invaluable part of the present awd^iroposed system for gradually w i
drawing small notes, and substituting g>
silver. This will incn
the quantity of silver in circulation, as well as introduce with it sold a
that shall be of convenient denominations for general use, and that sh.il/
possess a nominal value, so clearly equal, if not superior, to its tnai
value for bullion, for ornamental manufactures, and for export.i':
foreign markets, as to be likely to preserve it in common emplo\ i
an essential and large portion of the circulating medium. The ex
of no small notes, and a similar mint and tender system in France to
what prevails here has introduced and preserved in their circulation ne&r
170 millions of dollars in gold coin ; while in England, with a mint system less favorable, and a tender system more favorable to gold, it tl
constitutes quite four-fifths of the specie part of thtir currency, and
increased from less than 20 millions of dollars in 1818, to more tl
200 millions in 1829. It constitutes very large portions of the cum
oi many other European Governments, under various regulations, oi
less encouraging than ours to its circulation ; and in a number of the Spanish American Republics, as well as Brazil, it h?.s a strong tendency
come into more general use, under a change of taste, a conviction oi
40
[ Doc. IVo. 27. ]
benefits for larger and more distant payments, and under the increased
production of it from the mines, compared with that of silver, both there
and in this country. Here, the production of gold has, in ten years, augmented from about $2,000 yearly, to one and a half millions, or one-fifth
of all the annsal produce in gold of Europe and America. The ratio of
increase in the production of gold has been, in all America, more than
treble, since 1819, what it was the ten previous years, when it had been
quite one-fifth beyond its former amount; while silver has decreased
in about the same ratio since 1819 as since 1809, and which ratio was
nearly one-half.
Another change might be useful, at some future period, in point of
economy, and, at the same time, conducive to the prevention of too frequent fluctuation in any system of imports and incidental protection to
domestic manufactures. It is one suggested in my annual report, whenever a large balance of money shall be on hand hereafter in permanent
deposite, that either a small interest should be required on it, under certain circumstances, or that a temporary investment of all above a specified
amount in the Treasury should be made in some stocks, sound and saleable, with an authority to dispose of them whenever their proceeds may
be needed for public use. The particulars on this subject need Dot be
repeated here; though some provision in relation to them, applicable to
any large surplus or deficiency which may hereafter at any time unexpectedly happen, might prove prudent and profitable.
Should a regular increase or deficiency occur for a few years, the
remedy would of course be otherwise attained by a change in the tariff,
as this proposition is intended to apply only to excesses or deficiencies,
occasional, temporary, and unexpected. The only remaining change
that will be now adverted to, consists in an improvement of the currency
and of the banking system within the District of Columbia.
To prevent misapprehension, it may be proper to add that, by any remarks on this subject, it is not intended to recommend that any banking
institution should be organized here, with any power whatever beyond
the limits of this District, or with any peculiar power, over any other
bank in the country, connected with this department, or with any power
not properly adapted to objects belonging to the business and wants of
the District alone. But the system and operations of banking here have
"been generally very unfortunate: and it does not appear "to be very
sound philosophy to complain of the State banks, of their deficient organization, and their insecurity or failures, when, of the banks incorporated by Congress, whether in this District or in the United States at large,
being, it is believed, fifteen in all, at least six, or over one-third of the
whole number, have, at different times, failed, and all of them which
were in existence in 1814 then suspended specie payments, as will be
seen in the document annexed, £H.)
Our whole probable losses, as yet appearing by all of them, in all
ways, though likely to be hereafter somewhat further reduced, exceed
one-third of a million, or a sum equal to one-fourth of the whole amount
of all our unavailable funds. These results, under the former legislation
by Congress, incorporating banks, are certainly not very flattering,
though the mode of doing business in this District, and the peculiar position of it and its banks, may have increased greatly and necessarily their
[ Doc. No. 27. ]
41
risks and misfortunes. But the lesson taught by all this seems to be that
greater caution would be useful and necessary hereafter in legislating as
to banks in this District; and, in that event, little doubt is cherished by
this department that, as most of the old charters are about expiring, the
opportunity to introduce more numerous restrictions and securities into
any renewed ones can be advantageously improved, and some general
legislation adopted for the currency of the whole District, which may
prove highly useful. It might be suggested here, in detail, what, in the
opinion of the undersigned,^those restrictions and securities ought to be,
in order to ensure the continuance of specie payments, whether by high
penalties or otherwise, such as to restrain excessive issues over the
amount of specie on hand, to render individuals liable to the extent of
their .subscribed capital not paid in; to check discounts on too long
credits, and without ample security, to prevent hazardous loans to their
own directors, or on pledges of their own stock; and several other important and more doubtful considerations, like the requirement of security
to the public, by stock or property, or the personal liability of the proprietors. But, as the details on these and similar points might not be
deemed pertinent, unless applications were actually pending for new
charters, the further consideration of the whole of them will be deferred.
The undersigned would now only urge the early adoption of the general
provisions which seem equally proper, and well adapted to the present
as the future, and under the old as the new charters; that small notes,
in the manner lately mentioned, should not be allowed to circulate at all
in the District after a limited period ; and that monthly if not weekly returns of the condition of all the District banks should be communicated
to Congress or this department, actual examination be made yearly into
their accuracy, and entire publicity given to the results whenever the
public interests appear to require it.
The present system of State banks for deposite, with the changes and
regulations as to them and the currency, which the undersigned has had
the honor to suggest iu this report, is respectfully recommended to Congress for adoption, by a specific act of legislation. He cherishes great
confidence, that the system of fiscal agency now recommended for die
Treasury, so far as regards the safe preservation and convenient disbursement of public money, will continue to prove successful; and if not, in
every respect, equally so with the system preceding it, or with any other
that could be substituted in the form of a National Bank, yet that in
some material respects it is superior, and in others so little inferior, as not
to justify an abandonment of it for any other beset with such grave questions of general expediency and constitutional power. Public confide
in the correctness of this conclusion may justly be strengthened by our
experience during the past year, when the newly selected State banks,
though in the infancy of the trial, with many novel difficulties to encounter, and assailed by a panic unexampled in this country, surrounded by
extraordinary distress, real or imaginary, without the aid of the powerful
means of the Bank of the United States, if not with those means in some
places, and with its general course «f policy in all plades, in direct hostility, have yet passed through the fiery ordeal in perfect safety, without
the failure of one of them, and without the loss of a single dollar to the Government. Besides this, the operations of the Treasury, chiefly con
42
.
[ Doc. No. 27. J
ducted through the agency of these banks, have proceeded, generally,
with ease, promptitude, and fidelity, even in the remotest sections of the
Union ; and the general currency of the country has, in the mean time,
greatly improved, instead of deteriorated. Over twenty millions of dollars have probably been added to the specie portion of it. The entries
at the custom-house, from the 1st of October, 1833, which have been received, to 4th December, 1834, exhibit an excess of importations over the
exports of coin and bullion, amounting to $17,736,901, and the amount
arrived but not there entered, in the same period, has probably exceeded
two and a half millions. It is gratifying to see by the statement annexed,
(I,) that, of those importations, gold has constituted about four millions,
and that they have thus greatly, and very opportunely, aided the efl'orts of
Congress to enlarge that portion of our currency, by giving a new nominal
value to our gold coins, calculated to retain and increase them as a permanent and very useful part of our general circulation. In the continuance of the measures now in operation, with the changes proposed, it
is anticipated that the metallic basis of our paper currency will be still
further, though slowly, extended, by importations and the rich produce of
our mines, until it rests on nearly as broad and solid a basis as in many
countries of Europe ; and that this will happen in due season, without
abandoning the use of banks, and of paper for their appropriate duties.
The withdrawal of notes under five dollars would diminish the paper circulation, where they exist, about one-fifth or one-fourth, and of notes of
five dollars about one-fourth more, leaving gradually a vacuum to be filled
by the additional specie, amounting to near twenty-five millions, or equal
to about one-third of our whole paper circulation in 1833. The State
banks would still find useful employment for much of their present capital
and present amount of circulation, and the requisite quantity of specie in
the place of their small notes could be easily introduced if the thirty-five
millions capital of the United States Bank, after the charter expires, be
diverted into other employment; because its circulation of about fifteen
millions in paper would, in that event, be withdrawn ; and by the notes
of the State banks, and by a substitution of its own specie, aided by the
large importations of specie lately made, the vacuum thus created, and
the increased wants of our increasing population, would both be well supplied. If, as the present and past prosperity of our fortunate country
seems to justify, a calculation be formed that an addition of at least 400,000
persons is yearly made to its whole population, it will, by computing eight
dollars per head as the average amount of our circulation, require ah annual
addition to it, in specie and paper, of between three and four millions. The
amount of bank capital now in the States, and of specie now in and about
entering the whole country, may be amply sufficient at the present for all
these objects and changes. Nor is it perceived that any strong probability exists of their soon becoming deficient. The rate of exchange, which,
when very unfavorable, is almost the only cause that can lead to any considerable export or withdrawal of our specie, has been, during most of the past
year, much below real par, which is near seven per cent, nominal advance.
During that year it has never been, nor is it likely soon to be, so much
above real par as to render the export of specie profitable, and which, it
is understood, must be from two to two and a half per cent, real, or somewhere between nine and ten per cent, nominal advance. As the rate
[ Doc. No. 27. ]
43
of exchange depends chiefly on the balance of our foreign trade and debts,
and on the remittances which are obliged to be made lor meeting them,
it will be seen, that while foreign goods undergo no considerable nominal
increase in price, or in the quantity wanted for consumption, (and it is to
be hoped domestic manufactures, by their present protection, by improved
experience and skill, and the indefatigable enterprise and industry of our
people, are augmenting nearly in the ratio of our population,) the sum
to be paid abroad cannot much increase, unless our debt to be paid there,
or the foreign capital invested here, has become larger, or the latter has
become more likely to be withdrawn. But, so far from our public debt,
owned abroad, being greater, and thus continuing on our resources a
drain of either specie or domestic produce, to pay the interest and principal, as it has injuriously done during the last forty years, we can justly
rejoice over its entire extinguishment. It is also believed that the investments of foreign capital here in private stocks of various kinds have not
altered in any considerable ratio. They were about the game amount in
the two United States Banks, though, from the difference in the size of
their capitals, seven-tenths of the former were owned in Europe, and
probably about one-fourth of the latter. From the rate of interest here
and abroad, and the estimated stability and security of our institutions
and Governments, compared with their own, it is not apprehended that
any great withdrawal of foreign capital is likely to take place from any
private investment here, so as to increase essentially the amount obliged
to be paid there. On the contrary, the means to meet the reduced foreign
demands are believed to be much enlarged, by a rapidly extending cultivation of our new and fertile soils, and a consequent production of.a
greater surplus for exportation, at fair, if not high prices; and by the
other great conservative circumstances which exist in the present state
of our country, such as an augmenting population, an entire freedom
from national debt, a. large reduction in the public taxes, r.nd a condition.
as to education, skill, industry, and sound morals, judicious enterprise, and
almost every element of national prosperity, advancing yearly, it is hoped,
higher and onward. It is not, then, presumptuous to anticipate'that the
balance of trade, or rate of exchange, is not likeiy again, very soon, to
become so unfavorable as to cause any great export of" specie. Another
large drain of it from this country to India, during the last fifteen years,
and which, from the nature of our trade there, seemed inevitable and permanent, has been chiefly stopped, in its direct course, by exports of domestic manufactures in its place, and by bills of exchange ; but which
last, it is conceded, must still be met in Europe, though, after a useful
delay and in consequence of the sale there of part of the return cargoes,
and of our increased surplus abroad from exported produce, they will be
met by a diminished withdrawal of specie from this country. As Hattering a prospect is therefore opened to the condition of our currency hereafter, as could exist under the present form of our constitution, construed,
as it is, to render the propriety of a charter to any kind of a bank w ithout the limits of this District very doubtful, and not to prohibit the incorporation of banks by the States, unless organized in such a form as to be
tantamount to a mere emission of bills of credit, founded (as was doubtless contemplated in the prohibition in the constitution, that " no State
shall emit bills of credit") on mere credit, and that the credit of the State
alone.
44
[ Doc. No. 27. ]
Taking our system of a currency, then, as it is supposed to be established by the constitution, being, as regards the General Government, a
purely metallic currency, but leaving banks with paper issues, founded on
a capital paid in, and not on the mere ,credit of a State, to be incorporated for local purposes, within the States and this District, whenever
considered expedient, it is believed that the present fiscal arrangements,
with the modifications previously mentioned, will continue to be as prosperous as the nature of the paper system, when it furnishes any considerable portion of the currency, will ever permit. By a change of our constitution, or by an entire change in the legislation of the States and of
Congress, it is admitted that this country might adopt a purely metallic
system throughout, without the use of any kinds of banks or bank paper,
and thus avoid mo3t of the injurious fluctuations in the whole amount of
the currency so generally incident to the paper system, and remove
chiefly the dangers and disasters, always more or less attendant on the
credit involved in the paper, but which do not and cannot so much attach
to coin, when made, as it is here, of materials whose inherent value* for
purposes of ornament and manufacture is nearly equal to its nominal
value as coin. Yet, until these events shall occur, it is the part of sound
philosophy and true political wisdom to improve to the utmost, consistently with constitutional difficulties, our present mixed currency. When
it is remembered that, after long experience, almost every nation of Europe, and especially the most enlightened and commercial ones, have,
though possessing full power to abolish wholly the paper system, deemed
it good economy and a great convenience to retain it to a certain extent,
for the larger and more distant operations in commerce and finance;
when it is considered that the paper system is generally supposed to
increase the activity of the surplus moneyed capital of a country, by collecting it into banks, and distributing it speedily, as needed, and to make
a less quantity of circulating medium, employed in this way, answer the
same purposes of society with a larger quantity otherwise employed ; and
when it is computed by many, whether justly and wisely need not here
be discussed, that, through the issues of paper over the amount of specie
in the vaults of banks, the public is enabled to obtain a temporary use of
so much more money, as if to that extent, and for that purpose, it were a
real addition to the specie capital, and at the same time to realize a saving
in the wear and loss of the specie in the vaults, which it would otherwise sustain in actual use, the question becomes very doubtful whether,
in this commercial and widely extended country, the anticipation can be
justified, that the States or the people will soon, if ever, consent to the
total disuse of banks of paper issues. But it is more probable that the
discussion and increased interest attending this subject will terminate
here, as in England, not in abolishing all country or local banks, though
Parliament, like the States, possess undisputed power to do it; but, for
the present at least, in only exercising greater care in the regulation of
these banks by the States, and in creating, by both State and United
States legislation, a broader basis of specie in circulation, for the increased
security as well of the banks as of the community, and for the great and
•desirable improvement of the currency of the country. The undersigned, however,'would not be understood as inculcating an opinion that
even by such increased security, or by any guards and restrictions of any
[ Doc. No. 27. ]
45
kind, the State banks, or banks of any description, can be placed entirely beyond the possibility of embarrassment and failure. Besides revulsions in trade and prices, springing from ordinary causes, or extraordinary discoveries and improvements in the numerous arts and labors of life,,
and which, while civilization and liberty shall last, must frequently create changes in values of all kinds, and especially in the worth of the precious metals, all banks, like individuals, either directly or indirectly, by
various accidents to themselves or their customers, such as robbery, fire,
tempests, and wars, are exposed to occasional and severe losses. In fine,,
the mere credit involved so deeply in the whole paper system as a system, is a circumstance, from the evils of which, granting its benefits in
other respects, it is not in the power of human ingenuity wholly to escape.
The vice or danger is inherent in credit itself when so extensive ; credit, that the bills will be redeemed, and this credit depending not oikff
on the faithful conduct of the directors and officers of the bank, and the
exemption of its property on hand from inevitable casualties, but on the
solvency and punctuality of the great mass of its customers, exposed in
their persons and fortunes to those thousand accidents by flood and field,
from which nothing mortal is secure, and against which Governments
the most rigid and vigilant, any more than individuals, cannot effectually
guard. Governments cannot be administered without giving some credit
to debtors, and to collecting, keeping, and disbursing officers. Changing
the name of the debtor, or the debtor himself, from an individual to a
bank or corporation, does*not produce any charm on the nature of the
transaction, and does not prevent it from still resting on credit, and being,
in some degree, liable to all its dangers and disasters.
But the consequent embarrassments, though often inevitable, are in
a greater degree inseparable from a paper than a metallic system ; and it
is therefore desirable either to avoid the former, whenever it can be legally effected, and without an exposure to equal injuries of a different
character, or to restrict it, in the safest forms practicable, to its original
and most useful purposes. It is gratkying to reflect, however, that the
credit given by the Government, whether to bank paper or bank agents,
has been accompanied by smaller losses in the experience under the system of State banks in this country at their worst periods, and under
their severest calamities, than any other kind of credit the Government
has ever given in relation to its pecuniary transactions. Hence, unless
the States, and the United States, should both deem it proper, gradually,
and in the end entirely, to dispense with the paper system, and which
event is not anticipated, the Government cannot escape occasional losses
from that quarter; and can never hope to escape all losses from banks
as fiscal agents, except by the employment in their place of other and
individual agents, who will probably be found less responsible, safe, convenient, and economical.
All which is respectfully submitted.
LEVI WOODBURY,
Secretary of the Ti'easury*
The Hon.
the SPEAKER
of the House of Representatives.
[ Doc. No. 27. ]
46
SCHEDULE
of Documents accompanying the supplemental report of
the Secretary of the Treasury.
A. List of selected State banks used as depositories of the public money, and times of selection.
A A. Statement of the immediate means of selected State banks to meet
demands on them.
B. Form of Treasury warrant now in use.
B B. List of old deposite banks that stopped payment, and of others indebted to the Government, with the amounts due to the United States,
times of selection and failure, &c.
C. Statement of appropriations, expenditures, and collections in each
State in 1834.
D. Amount of domestic exchanges on the 1st of September, 1832, '33,
and '34, by branches of the Bank of the United States.
E. Amount of domestic exchanges by three of the selected State banks,
about the 1st September, 1834.
F. Table of the circulation in specie and paper of the United States and
several other countries, at several different periods.
G. Circular relative to the receipt of Branch drafts or checks of the
United States Bank for public dues.
H. List of banks incorporated by Congress in the District of Columbia
and in the United States ; when incorporated; when selected as depositories of the Government; when stopped payment; and the amount
then due to the United States.
I. Statement of amount of imports and exports of specie from 1st October, 1833, to 30th September, 1834, with statement annexed of imports and exports of specie since 30th September, 1834, as per returns
received at the Treasury Department to the 4th of December, 1834.
47
[ Doc. No. 27. ]
A.
LIST
of selected State Banks.
Names of banks.
Dates of selection
prior to 26th September, 1833.
1. Merchants'Bank of Salem,
Bank of New London, Bank of Newport,
Bank of Bristol, Farmers' and Mechanics' Bank of
Albany,
Bank of Harrisburg,
Branch of Farmers' Bank of Delaware, New Castle,
Bank of Virginia, branch at Petersburg,
Bank of Virginia, branch at Fredericksburg, Bank of Virginia, branch at Lynchburg,
.
Bank of Michigan,
Bank of Middletown,
Mechanics' Bank, New Haven,
Prior to
"
"
"
On usual
terms.
it
a
a
1819
1820
1819
1819
4i
«
"
1829
1819
ti
"
1820
Si
"
1829
it
"
1829
a
"
1831
"
1824
April 21,1824
Feb. 26, 1830
a
ti
it
a
a
SELECTED.
2. Merchants' Bank, Boston,
Commonwealth Bank, Boston,
Manhattan Company, New York,
Bank of America, New York,
Mechanics' Bank, New York,
Girard Bank, Philadelphia,
Union Bank of Maryland,
For depote and payment only.
Sept. 26, 1833
a
a
a
a
cc
a
ti
U
M
a
(C
U
and again August 18,1834
Sept. 26, 1833
u
tt
a
ti
[ Doc. Xo. 27. ]
48
LIST—Continued.
Names of banks.
Maine Bank, Portland, Commercial Bank, Portsmouth, Bank of Burlington,
Farmers' and Mechanics' Bank,
Hartford,
Arcade Bank, Providence,
Bank of the Metropolis, Planters' Bank, Savannah,
Branch Bank of Alabama, Mobile,
Union Bank of Louisiana, New
Orleans,
Commercial Bank, New Orleans,
Franklin Bank, Cincinnati,
Union Bank, Tennessee, Nashville,
Planters' Bank of Mississippi, Natchez, Moyamensing Bank, Philadelphia,
Louisville Savings Institution,
Branch Bank of Mississippi, Columbus,
Farmers' and Mechanics' Bank of
Michigan,
Commercial Bank, Cincinnati,
Merchants' & Manufacturers' Bank,
Pittsburg
.
.
.
Dates of selection
between 1st of Oct.
and 31st Dec. 1833.
u
u
Oct. 9, 1833
u
u
ic
28, "
u
Nov. 4, "
a
a
u
"
u
u
ii
t<
tt
a
u
Oct. 9,
Nov. 4,
a
Oct. 9,
,«,
H
a
u
a
a
"
t<
"
" •
u
M
Subsequent to 1st
January, 1834.
July 22, 1834
Aug. 13, «
(I
Feb. 12,
«
K
Julv 7,
Aug. 18,
"
"
a
u
Oct. 6,
"
a
SELECTED.
u
.
Oct. 9,1833, and
July 15, 1834
Branch Bank of Virginia, Norfolk, July 9, 1833
Bank of Augusta, Georgia,
Aug. 20,1834
3. Bank of Virginia, Richmond,
On usual For depoterms. site and payment only.
M
It
CC
CONDITION,
A A:
in certain respects, of selected Deposite Banks.
1st January, 1834.
Notes in circulation,
Public deposites,
Other deposites.
Due to banks,
Due from banks,
Notes of other banks,
Specie,
$8,183,373
12,586,506
7,655,050
4,232,351
$7,797,714
9,363,162
7,826,112
3,969,647
$3,114,471
3,880,254
2,921,361
$28,956,635
1st July, 1834.
1st April, 1834.
$4,721,891
4,251,240
3,627,777
1st October, 1834.
$8,073,944
12,000,245
7,513;548
1,960,635
$5,847,554
12,261,580
6,380,466
4,336,000
$5,058,773
3,297,346
5,820,023
$3,413,769
3,840,626
4,572,753
$9,916,086 $32,657,280 $12,600,908 $28,825,600 $11,827,148 $31,548,372 $14,176,142
NoTF..—With a view to aid in a comparison of the condition of these banks with that of some others, the returns of a few are given below as near to the
1st of January, 1834, as they can be obtained.
All State Banks about the beginning of1834, Bank of the United States, January 1,1834. Bank of England, near January 1, 1834.
being the last return and estimate obtained.
Circulation,
- $77,738,782
Public and private
deposites,
- 66,365,027
Due to other banks, 25,888,395
$24,887,420
Due from banks, 30,829,907
Notes of other banks,
17,081,704
Specie, -
Circulation,
- $19,208,379
Public deposites, - 4,230,508
Private deposites, - 6,734,866
Due to other banks, 1,535,709
$3,058,870
Due from other banks,
1,982,640
Notes of other banks,
10,031,237
Specie,
$169,992,205 72,799,031
$31,709,462 15,072,747
Circulation,
- $98,199,600
Average deposites,
public and private, 67,592,800
Specie,
$41,779,200*
$155,792,400
41,779,200
* Securities, $115,880,600; but as these are stocks chiefly, and those in our banks are not computed, they are inserted in a note; they are, however,
in England a surer and larger resource than here.
o
p
p
^
[ Doc. No. 27. ]
50
B.
TREASURY DEPARTMENT.
WARRANT.
To John Campbell, Treasurer of the United States,
Greeting :
TREASURY.
No. 105.
APPROPRIATION.
of
and marshals."
$50.
Recorded,
T. L.
Pay to A. B., marshal of the district of
1—, or
order, out of the appropriation named in the margin,
fifty dollars, on account of his salary for the quarter
ending the 30th of September, 1834. Agreeably to
a certificate of the Comptroller of the Treasury, No.
2,012, dated 1st October, 1834, recorded by the Re[ gister. For so doing this shall be your warrant.
Given under my hand and the seal of the Treasury,
•
"
s this first day of October, in the year
one thousand eight hundred and thirtyT e
e four, and of independence the fiftyp artmen? '
ninth.
LEVI WOODBURY,
Secretary of the Treasury.
Countersigned,
JOS. ANDERSON,
Comptroller.
SMITH,
Register.
The cashier of the Bank of C. D. will pay the above warrant agreeably to its tenor.
JOHN CAMPBELL,
Treasurer of the United States.
Received payment of the above warrant from the cashier of the Bank
ofC. D.
A. B.
Marshal of District of
.
139,018 76 133,169 70
Bank of Muskingum, -
1818
Farmers and Mechanics' B'k, Cincinnati,
1819
Bank of Kentucky and branches,
Planters and Merchants' B'k, Iluntsville,
1820
1820
•
125,322 00 125,322 00
17,182 43
-
131,906 61 131,906 61
63,893 51 63,960 36
4,050 00
3,200 00
6,071 00
1,176 61
2,484 57
55,273 41
8,791 00
D
17,217 61 63,828 98
-
-
17,182 43 19,783 58
-
Amount due 10th
November, 1834,
on all accounts.
A
4,050 00
13,815 00 10,615 32
5,023 77
4,50000
5,263 39
6,440 00
13,804
46
3,060 00
97,522
76
106,213 76
940 00
940 00
Amount now due
from them, not as
depositories, but
on their notes.
1817
1817
1817
1817
1817
1817
1817
Amount now due
as depositories,
deducting whole
payments.
Amount to credit
of the Treasurer,
as deposite bank
when it stopped.
Virginia Saline Bank, Juniatta Bank, Pennsylvania, Bank of Washington, Pennsylvania,
Cumberland Bank, Alleghany,
Somerset Bank,
.
.
.
Miami Imp. and Ex. Company,
Bank of Wilmington and Brandywine,
Amount paid before
and since February 27, 1823, on
all accounts.
Deposite banks, stopping payments.
When stopped specie payments.
BB.
When selected.
10,021 00 Be fore
3,200 00
•
2,481 57
•
1,176 61
•
55,273 41
'
1
8,791 00
'
In whose hands for
settlement.
1817
1815
1815
1815
1816
1815
1817
Solicitor.
Do.
Do.
Ag'tBk Columbia.
Solicitor.
Do.
Paid.
o
81,046 59
_
3
"
1815
Paid.
36,966 01 After Jan. 1, 1818 Solicitor.
Before 1815
Paid.
B. Principal After Jan. 1, 1818 Paid, except an
overpaid
amount equal to
$66 85
interest.
195,80012 195,866 97
A. Actual payments, which, being deducted from the amount originally due, leave the sums now due by these banks respectively,
B, This arises from the amount of interest paid by the bank.
P, Tjje balance due would be only $3,413 15, deducting the wbole payment in the case of the Somerset Bank from the >yhole.
to
O*
03
o
H- tO
to oo
O3
Ol
to
03
•u.
,086
181 ,620
4,1
00
O3
3 3
g>2
gent r.S. Bank,
r!
>•
ri- 3" M
a o
o
O 00
o to
©
c oo
*•
"oto
*>•
ctober, .819
co
•
cc cc en
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attorney.
[cRol Tts, D. A.
ilicitc , (secured)
prob
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•
3
Amount due 10th
November, 1834,
on all accounts.
Amount now due
from them, not as
depositories, but
on their notes.
Amount now due
as depositories,
deducting whole
payments.
Amount paid before
and since February 27, 1823, on
all accounts.
Amount to credit
of the Treasurer,
as deposite bank
when it stopped.
When stopped specie payments.
3
3"
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,148
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,367
,165
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to
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Ot Ox
So
Ol
00 00
iiana,
to to
Columbia,
to
-,
Bank of Woost
00
I
re
pay ents.
to
.3
^*
2 . •<
5' M
3 r*
83
Jank of Pennsyl
Bank, Alexand
3 2
F 3
2,
a
Vincennes,
Missouri,
Fidwardsville, -
t d <»
2o
=»
32. w
3
pr
Steubenville, -
o
» V
Illinois, Shawtie
and Mechanics'
ta
ite banks, stopp
hands for
ment.
Bank of Tombeckbee,
- I 1827
Bank of Nashville,
1828
Bath Bank of Maine, -
1831
Bank of Alexandria,
1834
Grand total dollars, -
138,754 00 79,981 36 | 58,772 64 25,138 00
6,267 00
83,910 64 | After Jan. 1818
6,267 00
6,267 00 Before 1815
35,769 65 15,146 60 20,623 05
20,623 05 Before 1815
| Solicitor.
Solicitor.
Solicitor, (secured,
probably.)
21,200 30 Feb. 1799, and Oct. District attorney,
(secured, proba1818.
bi)
1,764,235 05 855,410 29 920,260 16 155,794 84 1,076,055 00
27,500 30
6,300 00 21,200 30
r The second column shows the amount due from each bank as a depository when it stopped; but the bills of some were on hand in other banks,
as speciaTdepTtes, when "hey ^ S or £ thehands of officers of the Government. The banks were indebted for them as well as the.r deposits, and
have made payments on account of the whole.
papers on this subject ha'
not vary much from $1,150,000.—(November 21, 1834.)
soon,
it is presumed, will
O
p
3
o
to
ei
B-—Continued
Banks not depositories of public money, b u t their
bills in possession in F e b r u a r y , 1823.
Amount per Per statement Per statement Paid since Due November
When
10, 1834.
stopped statement Feb. of 8th March, of Dec. 14, Dec. 14,1832,
and not
payment. 27, 1823, re- 1830, unpaid. 1832, unpaid.
credited.
tnaining unpaid.
E l k t o n B a n k , Maryland,
Alexandria Society, Granville, Owl C r e e k ,
.
.
.
.
W e s t e r n B a n k of Virginia, P a r k c r s b u r g ,
F a r m e r ' s B a n k , N e w Salem,
F a r m e r s and Mechanics' B a n k , Cireencastle,
Commercial B a n k , L a k e E r i e , Bank of Somerset and W o o s t e r ,
M e r c h a n t s ' Bank of Alexandria,
Huntingdon Bank, Pennsylvania,
L e b a n o n and Miami Banking- Company,
F a r m e r s and Mechanics' Bank, Pittsburg,
U r b a n a Banking 1 Company,
.
.
B e d f o r d B a n k , Pennsylvania,
.
.
K e n t u c k y Insurance Company,
.
.
F a r m e r s ' B a n k , Canton,
.
.
.
-o
V
Ml
5P.N
c "
•> a
a '"
in l i
.
.
.
.
sz&
S
1 §
§j
£!
19,865
2,463
64
198
1,835
595
10,900
1,375
3,217
2,380
9,575
1,311
2,839
4,059
797
6,598
00
00
00
00
00
00
00
00
00
00
00
00
00
57
00
06
9,865
2,463
64
198
_
595
10,900
_
3,217
2,380
9,575
1,311
2,839
4,059
797
6,598
9,758
1,360
23,905
3,846
796
927
4108,664
00
00
00
00
00
22
10
9,758
1,360
23,905
3,846
927
$94,657
00
00
00
00
00
00
00
00
00
00
00
57
00
06
9,865
2,463
_
198
_
595
_
_
3,217
2,380
9,575
1,311
2,839
4,059
797
6,598
00
00
9,758
1,360
23,905
3,846
927
^83,693
00
00
00
00
00
00
00
00
00
00
00
57
00
06
64 00
1,835 00
_
10,900 00
_
_
—
—'
9,865
2,463
198
—
595
—
3,217
2,380
9,575
1,311
2,839
4,059
797
6,598
£a mo
Union B a n k , Pennsylvania,
Marietta and Susquehannah T r a d i n g Company,
F a r m e r s and Manufacturers' B a n k , Chilicothe,
Bank of Cincinnati,
.
.
.
Susquehannah B r i d g e and B a n k i n g Company,
Sundry small notes and counterfeits,
CB •&
.
-
w a
•SS
l
n pj
V
<a
V
• h
In whose
charge.
00
00
00
00
22
22
1,858 00
—
796 00
$15,453 00
85
85
G
A d d t h e sum now d u e from the old deposite banks, on all accounts,
Unavailable funds of all kinds, without interest, N o v e m b e r 10, 1834,
7,900
1,360
23,905
3,846
927
81,835
1,076,055
$1,157,890
00
00
00
00
00
00
00
00
00
57
00
06
Solicitor.
Solicitor.
Paid.
Solicitor.
Paid.
Solicitor.
Paid.
Paid.
Solicitor.
Solicitor.
Dist. attorney.
Paid to Bank of
Steubenville,
it is believed.
00 Dist. attorney.
00
00
00
Paid.
22
85
00
85
G. The original amount was larger by perhaps half a million, and was mostly in small sums, on about one hundred different banks; but all was paid
before 1823, except the above sum. See list in report from Secretary of the Treasury to House of Representatives, February 27, 1823.
o
p
3
o
to
Doc. No. 27.
A
55
C.
TABLE
of the whole appropriations for the year 1834, of the expenditures
from them, and of the collections during that i/ear in the several States and
Territories.
"Whole appropriations for Expenditures from them
1834.*
in 1834.
Collections in 1834.
VERMONT.
Special,!
$20,000
Pensions,
200,000
Army,
2,000
Miscellaneous, 10,000
232,000
Deduct 20 per ct.
not expended
this year.t
46,400
Balance,
$185,600
Customs,
$179
Balance,
278,400
Customs,
174,754
MAINE.
Special,
38,000
Pensions,
180,000
Army and fortifications,
60,000
Miscellaneous, 30,000
Public debt,
20,000
348,000
Deduct as above, 69,600
NEW HAMPSHIRE.
Special,
Pensions,
42,000
160,000
* Besides tlie appropriations made for the year 1834, there was a balance of/)ld appropriations unexpended of about six millions; and, besides the collections made in 1834, there was an
available balance in the Treasury on the 1st January, 1834, of about ten millions, being more
than enough to pay the old appropriations then outstanding. The actual expenditures in
1834, out of the appropriations for that year, correspond so nearly with the collections in
1834, that they illustrate the objects proposed in this table, without extending it to the old
appropriations or collections made before January, 1834, and then remaining unexpended.
f The apportionment of the several appropriations among the States and Territories has
been made in conformity to what was specified in the acts of Cangress, and the estimates for
the year, and are termed ** special" whenever the person or object, such as a creditor, fort,
officer, navy yard, &c. was known#to be within any State. The other designations need no explanation, except that under army, navy, &c, are not included such sums in connexion
with them as were before included under the word "special;" and that our expenditures
abroad are arranged to the States whence the remittances are made; and that the payments
required to be made in particular States for public convenience, though the objects of expenditure are situated elsewhere, have been charged to those States. The word "army"
includes every thing under the administration of the War Department, except what is otherwise enumerated.
* It is estimated that about five millions of the appropriations made for 1834 will not be expended within that year, and hence the deduction has been made of twenty per cent., or
about the sum of five millions, for the present year. The amount of collections is made up
from actual returns for the first three quarters of this year, and from estimates for the fourth
quarter, which will probably prove very near the true result.
[ Doc. No. 27. ]
TABLE—Continued.
Whole appropriations for Expenditures from them
1834.
in 1834.
Collections in 1834.
Array,
$16,000
Miscellaneous, 10,000
Navy,
140,000
Public debt,
50,000
418,000
Deduct 20 per ct.
not expended
this year,
83,600
Balance,
$334,400
Customs,
$16,373
Balance,
1,572,800
Customs,
2,590,572
Balance,
304,800
Customs,
119,140
Balance,
244,000
Customs,
47,890
MASSACHUSETTS.
Specjal,
Pensions,
Army,
Miscellaneous,
Public debt,
Navy,
496,000
350,000
370,000
100,000
300,000
350,000
1,966,000
Ded. as above, 393,200
RHODE ISLAND.
Special,
116,000
Pensions,
75,000
Army,
110,000
Miscellaneous, 40,000
Public debt,
30,000
Navy,
10,000
381,000
Deduct as above, 76,200
CONNECTICUT.
Special,
15,000
200,000
Pensions,
60,000
Army,
Miscellaneous, 10,000
20,000
Public debt,
305,000
Deduct as above, 61,000
Eastern, $2,920,000
$2,948,908
[ Doc. No. 27. ]
57
TABLE—Continued.
Whole appropriations for Expenditures from them
1834.
in 1834.
Collections in 1834.
NEW YORK.
$662,000
Special,
Pensions,
700,000
Array,
500,000
Miscellaneous, 100,000
Navy,
500,000
Public debt, I J, 000,000
Foreign intercourse,
100,000
1,562,000
Ded. 20 per ct.
not expended
this year,
912,400
•
Balance, $3,649,600
Customs,
-
- $9,021,491
Balance,
108,000
Customs,
Balance,
2,795,200
Customs,
-
- 2,058,641
160 800
Customs,
-
-
NEW JERSEY.
6,000
Special,
110,000
Pensions,
Miscellaneous, 20,000
136,000
Deduct as above, 2
-
-
8,653
PENNSYLVANIA.
424,000
Special,
250,000
Pensions,
Miscellaneous, 60,000
700,000
Army,
160,000
Navy,
Public debt, 1,800,000
Foreign intercourse,
100,000
3,494,000
Ded. as above, 698,800
DELAWARE.
36,000
Special,
Pensions,
5,000
Army,
150,000
Miscellaneous , 10,000
201,000
Deduct as above. 40.200
"Rfllinrp
JJdliLlll'C)
MARYLAND.
Special,
Pensions,
48,000
40,000
* WjUvv
13,261
f Doc. No. 27. J
58
TABLE—Continued.
Whole appropriations for Expenditures from them
1834.
in 1834.
Collections in 1834.
Army,
$1,300,000
Navy,
80,000
Miscellaneous, 50,000
Public debt,
200,000
1,718,000
Ded. 20perct.
not expended
this year,
343,600
Balance,
1,374,400
$589,778
Customs,
DISTRICT OF COLUMBIA.
Spec. & civil, 2,013,000
Pensions,
11,000
Navy,
400,000
Army,& Indians,550,000
Debt,
250,000
Miscellaneous, 500,000
Foreign intercourse,
100,000
3,824,000
Ded. as above, 764,800
Balance,
3,059,200
Customs,
$33,473
Miscellaneous, 550,000
583,473
$12,275,297
Middle, $11,148,000
VIRGINIA.
Special,
$500,000
Pensions,
200,000
Miscellaneous, 50,000
Army,
1,075,000
Navy,
1,000,000
2,825,000
Ded. as above, 565,000
Balance, $2,260,000
Customs,
Balance,
Customs,
-
$140,161
NORTH CAROLINA.
Special,
37,000
Pensions,
100,000
Army,
20,000
Miscellaneous, 20,000
177,000
Deduct as above, 35,400
SOUTH CAROLINA.
Special,
Pensions,
51,000
50,000
141,600
34,884t
[ Doc. No. 27. ]
59
TABLE—Continued.
Whole appropriations for Expenditures from them
1834.
in 1834.
Public debt,
$50,000
Navy,
30,000
Miscellaneous, 50,000
Army,
200,000
Collections in 1834.
-
431,000
Deduct 20 per ct.
not expended
this year,
86,200
Balance,
$344,800
Customs,
Balance,
336,000
Customs,
-
$303,835
GEORGIA.
Special,
180,000
Pensions,
40,000*
Army,
140,000
Miscellaneous, 20,000
Navy,
20,000
Indians,
20,000
420,000
Deduct as above, 84,000
48,260
LOUISIANA.
Special.
120.000
Pensions.
6,000
Army &Indians,180,000
Miscellaneous, 40,000
•
Customs,
Lands,
346,000
Deduct as above, 69,200
Balance,
276,800
Balance,
252,800
$817,230
187,727
1,004,957
MISSISSIPPI.
Special,
12,000
Pensions,
2,000
Army & Indians,292.000
Miscellaneous, 10,000
316,000
Deduct as above, 63,200
1,021,785
Lands,
ALABAMA.
Special,
18,000
Pensions,
20,000
Army &Indians,316,000
Miscellaneous, 20,000
374,000
"educt as above, 74,800
Lands,
Customs,
Balance,
299,200
$674,641
46,659
721,300
[ Doc. No. 27. ]
60
TABLE—Continued.
Whole appropriations for Expenditures from them
in 1834.
1834.
Collections in 1834.
FLORIDA.
Special,
Navy,
Army,
$205,000
150,000
50,000
405,000
Deduct 20 per ct.
not expended
this year,
81,000
Balance,
$324,000
Customs,
Lands,
$1,800
1,000
$2,800
South and 7 4335300
Southwest 5
$3,277,982
TENNESSEE.
Special,
Pensions,
Army,
Indians,
$500
110,000
24,000
250,000
384,500
Deduct as above, 76,900
Balance,
$307,600
Balance,
296,000
KENTUCKY.
30,000
Special,
180,000
Pensions,
150,000
Army,
Miscellaneous, 10,000
370,000
Deduct as above, 74,000
OHIO.
Special,
Pensions,
Miscellaneous,
Army,
Indians,
282,000
125,000
40,000
145,000
120,000
Customs,
Lands,
712,000
Deduct as above, 142,400
Balance,
569,600
Balance,
176,800
11,985
431,448
433,433
INDIANA.
Special,
163,000
Pensions,
48,000
Miscellaneous, 10,000
221,000
Deduct as above, 44,200
Lands,
667,16?
[ Doc. No. 27.
61
TABLE-Continued.
Whole appropriations for Expenditures from them
1834.
in 1834.
Collections in 1834.
ILLINOIS.
Special,
$140,000
Pensions,
18,000
Army,
10,000
Miscellaneous, 10,000
178,000
Deduct 20 per ct.
not expended
this year,
35,600
Balance,
$142,400
Lands,
-
-
$248,374
Balance,
654,400
Lands,
-
-
231,696
MISSOURI.
Special,
80,000
Pensions,
18,000
Army,
450,000
Indians,
250,000
Miscellaneous, 20,000
818,000
Ded. as above, 163,600
MICHIGAN.
Special,
110,000
Pensions,
8,000
Army,
584,000
Indians,
200,000
Miscellaneous, 20,000
Ded. as above,
Lands,
Customs,
922,000
184,400
Balance,
737,600
Balance,
105,600
$469,188
2,114
471,302
ARKANSAS.
Special,
20,000
Pensions,
2,000
"Army & I ndians, 110,000
$132,000
Deduct as above, 26,400
Lands,
-
-
Western, $2,990,000
70,558
$2,122,530
The whole expenditures of appropriations for 1834,
fne whole collections in 1834,
-
-
-
$21,293,200
20,624,717
|xpenditures less than collections in Eastern States,
Expenditures less than collections in Middle States,
-
-
$28,908
1,127,297
$1,156,205
Expenditures more than collections in South and Southwestern States,
Expenditures more than collections in Western States,
- .
$957,218
867,470
" $1,824,688
" Doc. No. 27.
62
DISCOUNTS
D.
on domestic bills of exchange by United States Bank.
1st September, 1832. 1st September, 1833. 1st September, 1834.
§
S
a
•s
o
i»
•+->
S3
O
cc
-•^
00
•
Of Portland
Portsmouth Boston
Burlington Hartford
Providence Buffalo
Utica
New York Philadelphia
Baltimore Washington
Richmond Norfolk
Fayetteville
Charleston Savannah Mobile
New Orleans
Pittsburg
Cincinnati
Lexington
Louisville
Nashville
St. Louis
Natchez
-
$113,622
83,709
1,031,290
251,505
54,768
456,512
287,263
168,200
498,202
1,727,913
291,324
115,340
64
00
15
59
62
29
38
62
91
57
15
08
43
09
30
60
34
72
84
70
97
60
21
54
$361,089
108,061
1,753,334
177,784
70,997
721,546
240,231
51,619
1,138,033
1,256,208
241,625
26,483
40
00
58
01
00
01
30
00
07
43
G7
28
5,079,653 00
8,945,171 34
6,146,968 85
285,429
278,239
138,007
376,435
469,609
784,424
6,014,243
188,938
328,720
228,424
202,653
231,620
243,755
4,278,375
642,888
94,992
116,079
290,624
143,638
582,044
1,595,151
23
39
69
91
37
03
80
17
78
89
48
86
16
44
50
08
70
G5
92
92
3G
8,346,389 52
5,702,488 78
3,465,420 19
540,450
660,513
587,350
1,283,694
573,957
152,770
1,758,695
408,574
332,739
306,086
880,478
293,030
79,312
2,439,193
16,210
94,622
112,003
139,264
36,383
68,959
2,116,338
34
00
74
69
69
75
83
5,557,433 04
Total
$230,490
162,535
3,975,569
397,667
89,491
646,332
326,128
333,549
759,635
1,608,883
207,196
207,690
45
77
62
12
05
02
29
4,739,414 32
22
82
67
67
60
22
86
2,583,783 00
$18,983,475 46 $19,287,174 44 $12,196,172 10
DISCOUNTS
on domestic bills of exchange by the folloiving selected
State Banks, running to maturity early in September, 1834.
Franklin Bank, Cincinnati, September 6, 1834,
$529,664 49
Planters'Bank, Natchez,
"
1, «
1,655,327 07
Union Bank, Nashville,
"
16, "
1,155,552 63
$3,340,544 19
United States, 1775
1790
1792
1804
1808
1811
1813
1814
1815
1816
1819
1819
1820
1829
1830
1830
1833
1833
1834
England;
1700
l?50
1763
1786
1796
1799
1810
Billsof credit.
$5 mil ion]
lm
2m
2
5
•8
5
18
22|
52 m
46 m
44£ m
67-110 52
40
54 m
m
60
20
16
77 m
57to60 19*
—
_
-
115} m
220£ m
12 m
in m
14 m
15 m
8m
7m
_
_
—
_
_
_
_
m
8m
m
n
_
39£
57to68
Bo th.
4 to 9£m
7 to 16m
-
7
—
10
_
8
12 m
4m
4
16
_
—
_
115 m
101 m
96
$llm
2£m
16
19
4
4*
30£
6
36|
43
60
53
_
95
70$
70}
64
85
89§
84
98
7
_
_
62^
91}
114
_
_
-
211}
n
n
8
$5
4
5
5}
6
7$
6|-
_
Si
9
12
13
_
13^
14
H
6h
7
_
_
9
10m
11
n
—
6
5
6i
04
64
7
11
144
16"
_
23}
3m
5
12
24
15
28
10
17
—
_
_
_
_
-
6D i
.5 3
—
_
-
$30m
_
37
o
Whole ci:
medium in 1
try, per he
•*•*
All specie
coun
Specie in bsinks.
h
Active ciri
per h(
o
h
Populatior
A. D.
Gold.
Dates.
Private and
State bank
notes.
National &
U. States
bank notes.
Country.
Silver.
Specie.
Paper.
Paper in o ther
banks.
Not circulating
CIRCULATIONS.
All paper is sued and
in the coi:mtry
F—-CIRCULATIONS.
—
_
—
_
_
_
- 15to 19
29
10
$12
$72m
154 of this 3 i nU.S.
19}
—
—
—
22$
31
16
9
75
23
64
33
10
8
15
_
23
8
77
30^
80
20
9
42$
25
—
—
_
35
96
55
10
18}
_
_
_
—
_
36
_
—
_
_
_
_
_
_
_
_
_
—
_
_
_
AUTHORITIES.
Anonymous.
Blodget.
Estimate.
Anonymous.
Estimate and report to Congress.
Gallatin.
Crawford and estimates.
Gallatin.
Gallatin.
Crawford, estimates, and Gallatin.
Crawford.
Reports to Congress.
Gallatin.
Anonymous and estimates.
Gallatin.
Sandford.
Report to Congress.
Taney.
Estimate, December 1.
Anonymous.
Ditto.
Chalmers and A. Smith.
Chalmers.
Tooke.
Report to Congress, 1832.
Gallatin.
2
p
to
Ci
1789
1829
1833
1834
Gallatin.
Gallatin.
Necker.
Peuchet.
Gallatin.
Estimate
Estimate
M- tO
o o
to to to
O 4»- tO
•-* to to
00 03 N3
1 11
1 1 1
1 1 1
1 11
! 11
1 1 1
1 1 1
1 1 1
****** 3
4»- 03 tO
WMO
1 1 1
P 3
etu
Mar sha
Fre nch
3to
tr
s.
1 1
n'
•a
n
CO
!4
to
>•
3
£
c
p<
a
o5
M
a
n
y
All specie in the
country.
Whole circulating
medium in the country, per head.
All paper issued and
in the country.
Specie in banks.
Paper in other
banks.
Active circulation
per head.
Population.
1 4^ 03
3
tn 1 tn
*+-
l-> 03 tO
Total.
Silver.
Gold.
Private and
State bank
notes..
-0
National &. n>
U. States
bank notes.
00 03*2
tO O3 00
00 «O
3
t n >-• •-•
3
3 <o to
4^"*" 3
03 4x
oc oo oo
03 to (-i
1
HIT
P
OO
tO O3 03
ooot A
03
03 4»- 4>-
to -^» ->*
tn 4^ to
o> oo o
o
&oc to o
03 4>> tO
4* #»• 03
ao
§
3
Hopkins
Marshall
White's
ande
Anonym
Ditto.
Marshall
f iz
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
to
1
1
1
1
1
tn
to
<o
Gallatin.
I
1
1
1
1
to
>-l
03
1—»
tn
3
o>
3
Marshall
1
1
1
1
•
1
to
s
to
to
00
00
to
00
00
03
1
to
1
03
00
I
o
o
o
3
_.
to
to
to
to
Marshall
1 1 1 1
1 1 1 1
1 1 1 1
1 tn I (
1 1 1 1
tn
>-i
to
tn
to to to
«O to 1 tn
03
M >-*K$- HI
432
tn tn tn 03
tn tn O tn
o
00,33 3 3
tn tn 4>- 03 £
^1 O tn O t o
1
1
L811
3
>_,
00
1
1
1
•
L832
i
i
P
3
• P-
•
L832
03 03 tn
OO O 1
I
1789
I
L829
I
3
P-
3
o
o
CO
.. D.
I
fland, W ales,
Ireland,
P
jland, Scotland,
Ireland,
•
3
jland and Scotia
-
ince,
inued,
•
3
W
Ire!and,
•
W
3
tland,
ates.
iSOl
Count
atii
1831,
pera.
.
.
1812
1815
B:lls of credit,
113 m
13o th.
19m 132m
35i m
54 •
48 m
1824
1830
-
Prussia,
1805
1830
-
Holland,
1830
-
5
-
1782
-
-
86£ m
1824
-
-
1829
575 m
Austria,
Spurt,
.
.
.
Kurope,
Kuropc and America,
-
48m
96
43 m
9
1,111} in
1,725 m
-
-
•
$4
_
-
-
_
j Whole circulating
medium in the countryv per head.
-
All specie in the
countrj'.
Population.
35m
All paper issued and
in the country.
.
Specie in banks.
Hus^ia,
Total.
A. D.
Gold.
Dates.
Country.
Private and
State bank
notes.
National &
U. States
bank notes.
01
Silver.
Specie.
Paper.
Not circulating
Paper in other
banks.
CIBCULATIOWS.
Active circulation
per head.
F—CIRCULATIONS—Continued.
ACTH0I1ITIB9.
-
Gallatin.
Storch.
-
Sup. Encyclopedia Britt.
McCulloch.
ii
_
5 to 7 6 to 8
10*
-
-
-
-
-
-
-
-
-
McCulloch.
2
o
to
21
5|
_
-
Sup. Encyclopedia Britt.
McCulloch.
-
11
8
-
-
-
-
-
Sup. Encyclopedia Britt.
-
-
-
-
-
-
-
-
Do.
-
2,300
-
-
-
-
-
-
Gallatin.
1
do.
do.
1. Drpo&ites in banks, half of which should, probably, be deemed circulation, are, as not being generally so computed, omitted in this comparative statement, as well as any portion of ordinary drafts and bills of exchange, which enter into real circulation. It is apprehended that the specie in Europe
in banks is, in some cases, computed as in actual circulation, and that no deduction is made from actual circulation, in consequence of notes or bills on
hand. Hence the 11th, 12th, and 13th columns are not filled up as regards Europe.
2. Humboldt thinks that In rich and commercial countries, if circulation be specie, there is needed over $12 per head, e. g. in France, over $10 in England
and Holland, and about $5 in less commercial and rich countries. But McCulloch thinks England would need$960m if all specie, or over $60 per head.
3. All denominations of money are, in the above table, reduced to dollars, without attention to small fractions ; the pound sterling at $4 80 ; and where the
kind of paper or specie was unknown, the sums are entered across the dividing line. Some of those entered as estimates are compiled in part from actual
i eturns ; and some of those considered anonymous arc from writers of authority, but the names have not been recollected with certainty. The sums
stated, it will be seen, are in millions and large fractions, which were considered near enough for the purposes of comparison.
o
p
66
[ Doc. No. 27. ]
G.
Circular to the Collectors of the Customs and all Receivers of Public
Money.
Whereas, by the act of Congress passed 31st July, 1789, it is provided
that the duties and fees to be collected by virtue of this act shall be
received in gold and silver coin only;" and, by a usage under that act,
and a similar one as to the payment for public lands, it was customary
to receive only specie, and the notes or bills of banks redeemable in specie, until 1814 ; and after a different practice, adopted in 1814, Congress,
on the 30th April, 1816, resolved, " that, from and after the 20th day of
February next, no such duties, taxes, debts, or sums of money accruing
or becoming payable to the United States," ought to " be collected or received otherwise than in the legal currency of the United States, or
Treasury notes, or notes of the Bank of the United States, or in notes of
banks which are payable and paid on demand in the said legal currency
of the United States:" And whereas the practice under that resolution conformed to its provisions till January 21st, 1828, when permission
by this department, under certain assurances from the Bank of the United
States, was given that draft6 or checks of that Bank and its branches
should be received for the public dues, though said drafts or checks
were not notes of the Bank, not being, like notes, signed by the president and cashier thereof, nor originally made payable to bearer, nor,
according to the subsequent decision of the Supreme Court, coming
within the description of a note or bill: And whereas Congress have
never authorized the issuing of such drafts for the purpose of circulation
as currency, and have refused, though urgently and repeatedly requested, to permit the issuing even of notes of the Bank of the smaller denominations, so signed; and the great extent to which the said drafts of
small denominations have been put in circulation, as currency, seeming
to be directly repugnant to the spirit of the act incorporating the Bank,
and of the subsequent proceedings of Congres3 ; and doubts having arisen
as to the legal liability of the Bank to redeem the said drafts in specie,
under the penalty provided in the charter for the non-payment of" u its
bills, notes, or obligations;" and the counterfeits of the said drafts having
become very numerous, and difficult of detection, and those who sell or
utter them being likely to escape punishment, in consequence of questions which arise in prosecuting them under the said charter, it is, therefore, deemed proper, in order that the clearly expressed views of Congress should be enforced, and the agents of the department protected
from risks and losses by said drafts, to revoke the permission granted in
1828, but, with a view to give due notice to the community and Bank
of the contemplated change, not to allow the revocation to take effect till
the period hereafter mentioned.
11
[ Doc. No. 27. ]
67
Hence, in conformity to the requirements of the aforesaid acts and
joint resolution of Congress, all collectors of the customs, and all receivers of public money, are hereby enjoined, that, after the 1st day of
January next, they shall not receive, in payment of duties or of public
lands, any coin or paper except such as is described in said resolution,
viz. "the legal currency of the United States, or Treasury notes, or
notes of the Bank of the United States, or notes of banks which are payable and paid on demand in the said legal currency of the United States."
LEVI WOODBURY.
Secretary of the Treasury*
TREASURY DEPARTMENT,
November 5, 1834.
H.—LIST of Banks incorporated by Congress.
Such banks in the Dist. of Columbia.
When chartered.
When selected as pub- When stopped payment.
lic depositories.
When resumed.
Amount Government dcposites and Government
stock, when stopped.
00
Bank of Alexandria
By Va. 1792,
Renewed Feb.
18, 1811
Feb.l799&inl818 April, 1834
Bank of Potomac
Feb. 16, 1811
Mechanics'Bk. of Alexandria March 3, 1817
Union Bank of Alexandria
Do.
Franklin Bank of Alexandria
1823
October, 1819
Do.
Farmers' Bank of Alexandria Feb. 16, 1811
Bank of Washington
April, 1834
Feb. 15, 1811 1811 and 1817
Bank of the Metropolis
March 3, 1817 October, 1833
Patriotic Bank
Do.
Central Bank of Georgetown
and Washington
Do.
Fanners & Mechanics' Bank,
Do.
Georgetown
Union Bank, Georgetown - Feb. 18,1811
Bk. of Columbia, Georgetown Md. 1793
1800
$27,500 30
48,000 00
14,000 00
Nov. 13, 1834
Stock owned by pension funds, bought in
1811 and 1817.
April, 1834
July, 1834
April, 1834
October, 1834
284,870 70
1824
Deposite, and
99,502 60
Stock owned by pension funds, and bought
in 1809 and 1819.
The two United States Banks.
1st United States Bank
2d United States Bank
Feb. 25, 1791
April 10, 1816 January 1, 1817
NOTE—All of the above, which were in operation in September, 1814, suspended specie payments till 1817.
O
I.
STATEMENT
exhibiting the quarterly imports and exports of gold and silver bullion and specie, from the 1st October,
1833, to 30th September, 1834.
IMPORTS.
4th Quarter, 1833.
1st Quarter, 1834.
2d Quarter, 1834.
DISTRICTS.
Bullion.
Specie-
Specie.
Bullion.
Gold.
Silver.
Gold.
Styer.
2,053
92,434
6,130
180
62,466
70,522
45
36,661
38,864
2,400
B6,308
171,764
j&57,780
' 1,663
1,800
858,614
216,916
9,640
2,435
11,875
57,364
1,117
25,251
103,958 135,445 116,841 1,544,845
13,192
Boston, New York,
Philadelphia,
Baltimore,
Charleston,
New Orleans,
All other districts,
3,600
3,161
2,412
35,316
Gold.
Silver.
94,490
Bullion.
Gold.
Silver.
4,768
176,342
300
10
710
5,372
92,246
24,232
639,363
15,511
106,159
16,059
9,732
37,087
20,641
3,5j63
34,093
1,490,127
92,849
24,023
2,416
279,748
2,368,241
53,357
94,237
Gold.
Silver.
CO
STATEMENT I-Co»tinued.
IMPORTS.
2d Quarter, 1834—Continued.
3d Quarter, 1834.
Total.
DISTRICTS.
Specie.
Boston,
- '
*
New York,
Philadelphia,
Baltimore,
Charleston,
New Orleans,
All other districts,
Bullion.
Gold.
Silver.
26,856
208,183
9,466
2,860
840
52,400
41,989
76,254
3,753,353
127,790
41,051
57,961
2,049,107
393,055
342,594
6,498,571
Gold.
156,842
2,959
159,801
Silver.
Specie.
Gold.
Silver.
Bullion.
Gold.
Silver.
Specie.
Gold.
Aggregate.
Specie.
477
13,785 114,858 27,732 111,905
82,070
251,652
473,359
94,615 2,299,299 2,057,662 261,443 243,142 2,722,688 6,622,142 9,849,415
5,065
22,459
45
17,231
9,089
423,540
449,905
8,098 118,953
10,968
4,860 59,344
267,826
342,998
5,150
59,761
64,911
736 1,198,865 24,023
58,508 5,596,713 8,681,660
2,416
81,633 163,985
3,161
866,805 1,123,562
2,412 251,184
95,092 2,408,616 3,676,782 330,308 419,264 3,147,799 14,088,439 17,985,810
2
o
to
STATEMENT I—Continued.
EXPORTS.
1st Quarter, 1834.
4th Quarter, 1833.
2d Quarter, 1834.
DISTRICTS.
Specie-
Bullion.
Gold.
Boston,
N e w York,
.
.
Philadelphia,
Baltimore,
Charleston,
New Orleans,
All other districts,
Silver.
.
9,570
)
963
-
Gold.
Silver.
18,100
19,093
242,500
23,923
72,156
36,445
958
8,331
1,260
364,775
46,482
741,059
Bullion.
Gold.
3,111
Specie.
Silver.
1,628
Gold.
500
6,722
11,680
Bullion.
Silver.
93,700
6,000
1,000
800
I
9,570
963
3,111
1,628
18,902
101,500
Gold.
Silver.
b
o
o
o
to
STATEMENT I—Continued.
EXPORTS.
3d Quarter, 1834.
2d Quarter, 1834—Continued.
Total.
DISTRICTS.
Specie.
Gold.
Boston,
New York,
Philadelphia,
RaltiuuH-c,
Charleston,
Now Orleans,
All other districts,
Bullion.
Silver.
Gold.
Specie.
Silver.
70,738
37,155
9,163
3,050
2,400
—
65,842
61,008
156,750
_
8,000
1,000
84,000
_
_
_
-
_
122,506
376,600
-
-
-
Gold.
Silver.
51,080
34,146
-
Gold.
Silver.
Silver.
436,188
364,861
232,666
37,445
14,000
3,260
639,575
5*5,606
450,488
255,094
40,745
14,000
6,618
647,906
1,727,995
1,991,457
3,760
1,000
_
_
190,000
_
-
_
-
140,418
70,355
22,428
3,300
_
3,358
8,331
12,681
2,591
248,190
60,300 508,836
12,681
Aggregate.
Gold.
2,591
_
_
7,385 279,930
1,585
250
_
Specie.
Bullion.
NOTE.—The above statement is compiled from the Collectors' quarterly returns, except for the third quarter of 1834, and the returns for New Orleans for the second quarter of 1834, which were taken from the weekly returns made to the Secretary's office.
TREASURY DEPARTMENT,
Register's OJfice, October 31, 1834.
T. L. SMITH, Register.
STATEMENT I—Continued.
IMPORTS and Exports of Specie from the 30th September, 1834, as per returns received from Collectors of the Customs,
to the 4th of December, 1834.
IMPORTS.
DISTRICTS.
Bullion.
Gold.
Gold.
1,829 560,505 1,873,991 2,463,485
TREASURY DEPARTMENT,
249,149
Aggregate.
Silver.
4,780 425,792
17,327 110,240
10,158 14,982
4,000
1
27,160
217,293
Gold.
1 1 1
31,851
40,991
41,800
996,893 1,515,131
44,623
69,862
14,886
27,983
559,300 559,560
Silver.
5,758 127,900
-
-
1
309
491,078
65 25,174
1,264 11,833
260
Gold.
1
500
Silver.
Coin.
1 1 1
27,160
Silver.
Bullion.
Aggregate.
Coin.
1
Boston,
New York,
Philadelphia, Baltimore,
New Orleans, Charleston,
Other ports,
EXPORTS.
430,572
127,567
25,140
4,000
133,658
38,023 682,914
720,937
December 4, 1834.
00
RECAPITULATION.
IMPORTS and Exports of fyecie from SOth September, 1833, to 4th December, 1834, as appear on the custom-house returns received to that day.
EXPORTS.
IMPORTS.
Bullion.
Gold.
Silver.
Coin.
Gold.
Silver.
Aggregate.
Bullion.
Gold,
i Silver.
Coir.
Gold.
Silver.
For the year ending
30th Sept., 1834, 330,308 419,264 3,147,799 14,088,43917,985,810 12,681 2,591 248,190 1,727,995
From 30th September, 1834, to 4th
Dec, 1831,
27,160 1,829 560,505 1,873,991 2,463,485
38,023 682,914
357,468 J421,093 J3,708,304 15,962,43020,449,295 12,681
Aggregate excess of imports over exports,
Aggregate.
2,591 286,213 2,410,909
1,991,457
720,937
2,712,394
$17,736,901
TREASURY DEPARTMENT, December 4, 1834.
ESTIMATE
of the amount of Specie entering the country, within the above periods, beyond what has been carried out,
and which does not appear on the custom-house books.
Specie,
.
.
.
.
$2,500,000
Add excess from former statement, 17,736,901
Total, $20,236^901
TREASURY
DEPARTMENT, December 4, 1834.
*
t*
r
@FedFRASER