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S P E E C H
OF
MR.
G A R L A N D ,
OF
V I R G I N I A ,
IN
OPPOSITION
TO
SUB-TREASURY
DELIVERED
HOUSE
OF
IX
THE
SCHEME.
THE
REPKESENTATIVES,
S E P T E M B E R 25, It"3"/
WASHINGTON
P R I N T E D A T T H E MADISONIAN OFFICE.
1837.
S P E E C H .
Mr. CHAIRMAN*—I am indebted to the kindness of the gentleman from T e n n e s s e e , (Mr. Williams) who was entitled to the floor, for the privilege of add r e s s i n g the Committee at this hour. T h i s privilege accorded by that gen*
tleman and the House under existing circumstances will command my lasting gratitude.
After three years or more of seeming unparalleled prosperity, the nation
h a s been overtaken by an adversity which has paralyzed its energy and prostrated all its branches of industry and enterprise. So vivid, and so real, were
the appearances that the late President of the United States in his farewell ad*dress to the American people, felicitated the country, and himself, upon its
unparallelled prosperity and happiness ; yet its most important interests, as if
this apparent prosperity were but a delusion, now lie prostrate, and bleed
at every pore. It has withered like the beautiful and verdant flowers of
spring, by the untimely nip of a premature frost. T h e blighting effects of this
unlooked for adversity upon the agriculture, Commerce and navigation of the
country, and the obstacles which it obtrudes to the pecuniary operations of
t h e government, has induced the President of the United States, in discharge
of his hicrh constitutional duties, to call together at this unpropitious season,
t h e representatives of the States and the people, with a view of applying as
far as legislation can do it, a remedy for the existing diseases of the country. In litod&fi, I w i l l remark, that legislation cannot afford that substantial, permanent relief which the distresses and embarrassments of the country require ;
that, can only be found in the industry, economy and elastic energy of the
people, which heretofore upon like trying occasions has so effectually availeuV
W i s e and judicious legislation may do much to mitigate the severity of the
present calamity and hasten the period of relief, but it cannot of itself be
effective ; it must be auxiliary—it cannot be primary.
Before I proceed to discuss the merits of the principal remedy proposed by
the President, for the relief of the government and the country, I ask the indulgence of the House, in making reference to the circumstances which place
m e in reference to that remedy, in a peculiar attitude—for no other consideration could induce me to obtrude upon the House any remark affecting mo
individually. T h e Journal of the Hou^gJjT the 23d Congress, exhibits the
fact that my immediate predecfiar*^, Gen. GprJoxt, of V a , (a gentleman of
w h o m I take pleasure in saymg that, hfe'is honest, talented, honorable, mag-
4
SPEECH OF M R , G A R L A N D ,
nanimous and liberal in an eminent degree, who stood so strong in the confidence and affections of the people of his district that nothing but substantial
differences of political opinion, could have brought me hither in his place,) offered a scheme embracing the very principles of the recommendations of themessa<*e. T h e principles of the bill, proposed by my predecessor in February, 1835, was opposed and denounced by the late administration, and all its
prominent friends in both Houses of Congress,/in no unmeasured terms. In
this denunciation and opposition, I united, and defended Gen. Jackson's administration for its opposition to this scbernc before the people of the congressional
district, which 1 now feel honored in representing—Now, Mr. Chairman, in
less than three years, I find myself compelled to defend the opinions I then
entertained and defended, not against my political opponents, but against the
attacks of the present administration and its friends, so completely have they
changed their position. Finding for a few months past, that my opinions upon
this subject were in collision with those of the administration and most of its
prominent friends, I carefully and deliberately reviewed my former opinions,
with a view to detect any fallacy, error, or delusion, under which I labored, if
there was any which had contributed to form those opinions. T h e result of *
this review has been to rivet my conviction of the truth of those opinions, and
an increased and more inflexible determination to adhere to them. Being satisfied that my opinions are correct, I dare not—I cannot—I will not vote, for
this recommendation of the message.
This determination to resist the recommendation of the President's message
upon this subject, and, as it may be called, my obstinate perseverance in maintaining my own honest and sincere opinions in the late election of printer
to this House, has brought upon me individually, and in connection with
many of my political friends, whose opinions and course have been in accordance with my own, severe and bitter denunciations from some presses professing democratic republicanism, in which we have been charged with traitor*
Lsra to our party, and humble I, have been dignified as the head of **a part y / ' God knows, Mr. Chairman, I never desired or dreamed of bein^ a party
leader; I have not upon this or upon any other occasion, since I have had
the honor of a seat on this floor, attempted to lead or control the opinions of
others, nor have I had any concern with any party arrangements, as every
member with whom I heretofore acted, or with whom I now act, well knows.
W h y then have I been so dignified ? As to the charge of traitorism, 1 shall
only say, that I have not deserted my political party ; but, upon this question, it
has deserted itself as well as me. I have no more to say now ; or shall I at
any time hereafter refer to these editorial attacks—I leave them M revel in
the glory of their achievements over the feelings of honorabje Ifrtfen, as the
Turks revelled amidst the ruins of bleeding and burning Mcssalon^hi- - It is
to be regretted that the selections of our law givers are not confined to the
editorial corps, who, from their course of remark, leave it to be inferred that
they regard themselves as having more wisdom, more information, and mor*y
patriotism, than every other class of citizens ; and, above all, that they possess the power of infallible scrutiny into the hearts and motives of others,
which enables them, unerringly, to expose the secret springs of every
man's action.
In discussing the recommendation of the message, presented in the form
of law by the Committee of Ways and Means, embracing the whole principle of the message, I shall not detain the committee by entering into a discussion of the comparative merits of a National Bank and State Banks, or the
S P E E C H OF MR. GARLAND.
5
expediency of establishing a National B a n k . — T h e r e is now no proposition
for the incorporation of a National Bank before the House, nor is it designed,
so far as I am informed, to present one during the present session. If such
a proposition were presented, and a National B a n k w e r e incorporated, it could
not be organized and put into operation in time to afford any relief to the present embarrassments of the country, even if it would have that effect, w h i c h I
by no means admit.
T h e incorporation of such an institution, writh such a
redundancy of bank capital and bank circulation, would, in increasing the demand upon the existing banks for specie, and diverting it from the course of
trade, do more to continue the present embarrassments of the country than
all other causes combined. In this state of things the question to he decided
is, whether the continuance of the present State Bank system of fiscal agency,
with the improvements and restrictions w h i c h experience h a s pointed out as
necessary and proper, or the " untried experiment" of excluding the State
B a n k s as depositories of the public money, and restricting the receipts of
the public revenue to gold and silver only, shall be adopted. T h i s is the
true issue, to the decision of which, us affects the future happiness and
prosperity of the nation, the most serious and deliberate attention of the
H o u s e should be directed. I need not h e r e repeat what I have before stated,
that whenever the question of a National Bank is presented, if I shall have
the honor of a seat upon this floor, that I shall oppose it, both upon the grounds
of the want of constitutional power, and its inexpediency. T h e opinions I
imbibed in my earliest youth, I learned from the state papers of Jefferson,
Madison, and their republican cotemporaries, and shall never surrender t h e m
until I become a tenant of the tomb.
Although the recommendation of the President's m e s s a g e , and the provisions
of the bill from the Committee of W a y s embraces in its immediate scope, an
exclusive metallic currency, for the operations of the F e d e r a l Government
alone, yet it is manifest that in its operation it must come in collision with
the " credit system," and wage a war of extermination against it, in every
form and shape, as a medium of circulation ; with what prospect of s u c c e s s
ii is not for me to undertake to determine.
T h i s presents to the American
people a question of momentous importance. In modern times b a n k i n g institutions have W e n adopted as the most saf^ and efficient agencies of credit,
by all the most enlightened and most commercial nations of the world.
They
had their origin in V e n i c e , in the days of her commercial prosperity, and have
been successively adopted by all commercial nations, particularly in Kngland
and Prance. E a r l y in the history of our own Government, they w e r e adopted, and have grown with our growth, strengthened with our strength, and
have been enlarged from time to time to meet the exigencies of our i n c r e a s e d
and widely extended commerce, until they have become so intimately interwoven with our commerce and connected with our local institutions, as to
make the separation difficult and dangerous in the extreme. T h i s s c h e m e
h o w e v e r presents the question, and it must be ultimately met and decided.
I n the conflict, this exclusive metallic system proposed for the G o v e r n m e n t
m u s t be abandoned, or all our banking institutions perish ; there is n o middle ground.
•%
L e t it be remembered, that under the vivifying jrifluence and salutary operations of our banking institutions, our country has flourished and prospered beyond parallel, in the history of nations.
W h e n we compare our condition!
at the close of the revolution, with what it is at the present day, w e perceive that in population, agriculture, commerce, manufactures^our improve-
6
SPEECH OF MR, GARLAND.
ment has been rapid beyond precedent.
Our villages, our towns, and our
systems of internal improvement, flourishing and improving beyond example,
bespeak an increase of wealth, power, and commercial facilities, which would
not exist without the healthful action of a sound system of credit.
The
secret of the system is, that by its operation, it throws into active circulation,
more than three times the amount of actual capital, and thereby supplies trade
and commerce with the means of successful operation in the absence of a n
adequate supply of the metallic medium. It is true, that these institutions,
like others, constructed and managed by frail human agency, have been m i s managed and abused. There is no perfection in human nature, and nothing1
perfect can be produced at its hands.
What estimate would be placed upon
the intelligence of the man who, because the boiler of the capacious and
majestic steamboat sometimes bursts, would recommend the destruction of
the steamboat, and the re-adoption of the canoe navigation ? Your Government, which my much esteemed friend from Virginia, (Mr. Jones,) says is
an experiment, has sometimes been abused. What estimate would you place
upon the intelligence of the man who, for this cause, would recommend t h e
entire destruction of our system, as the proper remedy ? So in reference
to the banking system, would it not be wiser to correct and cut off t h e
abuses, and preserve the system, than rashly and inconsiderately destroy it ?
If the question were now presented as an original one, whether we should
adopt the banking system, perhaps my own mind would be led to the adoption
of a system organized upon a quite different plan ; but we have the system,
and the question is, how we shall act in reference to it. T h e r e is no man
who really thinks that there is the slightest prospect that this system will
or can be eradicated for a length of time, if ever ; hence we must accommodate
our action as far as we can, to the state of things as they are, and seek
rather to aid and assist the State Governments in correcting the abuses of
the Banks, and restore them to health and soundness. Whether we shall
ultimately recur to an exclusive metallic system, and in anticipation prepare
for that event, deserves consideration of more than ordinary gravity, and the
exercise of extraordinary sagacity.
T h e system of deposites adopted from the foundation of the Government,
and which has prevailed to the present hour, wherever it was practicable, is
the Bank system. T h i s fact ^ a c c o m p a n i e d with the expressed opinions of
every incumbent of the Treasury department until the present time, proves conclusively to every reflecting mind, that it was regarded as the safest, most economical, and most convenient system ; without this means of keeping the public money, it must have been kept and distributed by individuals, and subject
to all the extravagance, insecurity and liability to defalcation which has ever attended individual receipts and disbursements. All preceding Secretaries aJ^1^
many of our most distinguished men of the old republican school, declared
their opinions in favor of the plan now proposed. It is remarkable, that a system so republican, so safe, and so innocent as that now proposed, should never
have been proposed for the adoption of Congress by any preceding administration, or any preceding treasury department, if it had been viewed in its present
favorable and superior light, it certainly would have been recommended, but
as it was not, I rAfrpt the omission to do it, as conclusive evidence that it was
not approved. T n e only difficulty which has ever prevailed, has been between
the selection of a National and State banks, some preferring the former, some
the latter. There being now no national bank, the question of preference is
directly presented between the State bank system aud the Sub-Treasury sys-
SPEECH OF MR. GARLAND.
7
tern, r e c o m m e n d e d by the E x e c u t i v e . T h e State b a n k s y s t e m s t a n d s preferr e d , not only by the practice of the G o v e r n m e n t , but the e x p r e s s e d opinions of
m a n y of our most able and distinguished patriots a n d s a g e s . I n the y e a r 1 7 9 1 ,
after the passage of t h e act incorporating the first B a n k of the United S t a t e ,
M r . Jefferson, in his official opinion to G e n e r a l W a s h i n g t o n , as a m e m b e r of
h i s cabinet, upon t h e constitutionality of that act, r e s i s t e d the argument of the
n e c e s s i t y of that bank as t h e fiscal agent of the G o v e r n m e n t , on the ground that
t h e s e facilities would be afforded b y the State institutions, in that opinion h e
e x p r e s s e d himself thus :
" Perhaps, indeed, bank bills may be a more convenient vehicle than treasury orders;" but a
little difference in the degree of convenience cannot constitute- the necessity, which the Constitution makes the ground for assuming any non-enumerated power.
" Besides, the existing bajiks will, without a doubt, enter into arrangements for lending their
agency ; and the more favorably, as there will be a competition among them for it ; whereas the
bill delivers us up bound to the national bank, who are free to refuse all arrangement, but on
their own terms, and the public not free, on such refusal, to employ any other bank."
M r . Madison in h i s able and u n a n s w e r a b l e s p e e c h in opposition to t h e c h a r ter of that bank said,
" B u t the proposed bank
it could be but convenient.
a little in advance ; by loans
would have equal command,
a free and irrevocable gift to
could not even be called necessary to the Government; at most,
Its uses to the Government could be supplied by keeping the taxes
from individuals ; by the other banks over which the Government
nay, greater, as it may grant or refuse to these the privilege, made
the proposed bank, of using their notes in the federal revenue."
T h e arguments urged in favor of the c h a r t e r of this b a n k w e r e principally
t h o s e of its safety, e c o n o m y and c o n v e n i e n c e as a depository and disburser of
the~ public m o n e y . T h i s w a s a most propitious period in our history to h a v e
adopted a system of individual a g e n c y , and w i t h h e l d all c o n n e x i o n with b a n k s
if it had been d e e m e d safe, economical and convenient. W h e n the question of
the renewal of the c h a r t e r of that bank w a s u n d e r consideration, a m e m o r i a l
w a s referred by the H o u s e of R e p r e s e n t a t i v e s , p r a y i n g the r e n e w a l of the
charter of that bank. I n his report upon that m e m o r i a l , in e n u m e r a t i n g the advantages of the b a n k to the G o v e r n m e n t , h e s p e a k s of t h e safe k e e p i n g of t h e
public moneys thus? : — " T h i s applies not only to m o n e y s a l r e a d y in t h e T r e a sury, but also to those in the h a n d s of the principal collectors, of the c o m m i s sioners of the loans, and of several other officers, and affords one of the best
securities avainst
delinquencies."
1. Safe keeping of the public moneys.—Tins applies not only to moneys already in the Treasury, but also to those in the hands o{ the principal collectors, of the commissioners of the
loans, and of several other officers, and afFords one of the best securities against delinquencies."
It is true that Mr. Gallatin w a s s p e a k i n g of a national bank, y e t t h e p r i n c i p l e
is the same in reference to the plan proposed, for that strikes at all b a n k s , national or state. B u t to prove that w h i l e this distinguished financier preferred a
National to State b a n k s , he preferred a State bank to an individual a g e n c y , I
h e r e quote from h i s report to a committee of the S e n a t e of t h e 30th. of J a n u ary, 1830, upon the s a m e s u b j e c t . — h e s a y s :
" The banking system is now firmly established ; and, in its ramifications, extends to every
part of the linked States. Under that system, the assistance of banks appears to me necessary
for the punctual collection of the revenue, and for the safe keeping and transmission of public
moneys. That punctuality of payments is principally due to banks, is a fact generally acknowledgedIt is, to a certain degree, enforced by the refusal of credit at the custom house, so
long as a former revenue bond, actually due, remains unpaid. But I think, nevertheless, that, i"
order to ensure that precision in the collection, on which depends a corresponding discharge of
the public engagements, it would, if no ueu was made of banks, be found necessary to abolish,
8
SPEECH OF MR- GARLAXD.
altogether, the credit now given on the payment of duties—a measure which would a f f e c t t h e
commercial capital, and fall heavily on the consumers. That the public moneys are safer, b y b e ing weekly deposited in banks, instead of accumulating in the hands of collectors, is s e l f - e v i d e n t .
And their transmission, whenever this may be wanted, for the purpose of making p a y m e n t s i n
other places than those of collection, cannot, with any convenience, be effected, on a l a r g e
scale, in an extensive country, except through the medium of banks, or of persons a c t i n g a s
bankers.
" T h e question, therefore, is, whether a bank, incorporated by the United S t a t e s , or a n u m b e r
of banks, incorporated by the several States, be most convenient for those purposes.
" State banks may be used, and must, in case of a non-renewal of the charter, be u s e d b y
the Treasury."
I n this paragraph is found the expressed and decided opinions of Mr. G a l l a tin not only that the banking system is firmly established, but that if there be
no national bank, the government MUST resort to State banks, and that the public
moneys are safer in banks than accumulating in the hands of individuals, the
opinion is entitled to great weight, as coming from a most able and experienced
financier.
In addition to these, I refer to the opinions of several distinguished republican members of this House, in the session of 1810, upon the same subject.
Mr. Burwell said,
" I said, sir, it must be shown that the bank is necessary to the operations of the Government ;
without its aid our fiscal concerns cannot be managed. S o far from subscribing to the n e c e s s i t y
of the bank, I believe the revenue would be equally safe in the State Banks, and could b e d i s tributed with inconsiderable difficulty ; the revenue received in most of the States is nearly
equal to the expenditure within them, and when a deficiency occurred in any one, it could be
supplied by arrangements with the different banks, by transportation or inland bills of exchange,
in the same manner that the public e n g a g e m e n t s are fulfiled abroad."
Mr* Eppes said,
" T h e creation of a bank with a capital of $ 1 0 , 0 0 0 , 0 0 0 , almost five times the capital of all
the existing banks of the Union, under the patronage of the General Government, was calculated
to produce and did produce a subserviency on the part of the stockholders, to the views of their
party. T h e influence of this powerful money capital w a s long felt. Nothing but the multiplication of State Banks, and the increase of capital from the peculiar and fortunate circumstances
under which the United States were placed, could have emancipated us from the shackles irapQaed
on us by a moneyed interest wielded by foreigners,"
Mr. Giles said,
" I cannot see how putting down this institution can materially affect the pecuniary abilities o f
the nation ; its actual funds for discounting will be nearly the same ; the position of thein o n l y
will be changed ; they will find their way into the State Banks, and their ability to discount will
be increased proportionably to the increase of their deposites. N o r am I at all alarmed at the
sugguestion that seven millions of dollars will be drawn out of the country by the British capitalists, because it will not be their interest to do so ; their dollars are worth more here than m
Great Britain; if drawn there, they would soon be melted down into their depreciated.paper
circulation. T h e v might a'so draw bills to advantage, so that I doubt whether au additional
dollar will be shipped from the country in consequence of the rejection of this bill. Certainly
they will not to any great e x t e n t / '
Mr, Clay said,
" U p o n the point of responsibility, I cannot subscribe to the opinion of the Secretary of^tho
Treasury, if it is meant that the ability to pay the amount of any deposites which the Government
may make, under any exigency, is greater than that of the State Banks, T h a t the
accountability
of a ramified institution, whose affairs are managed by a single head, responsible for all i t s
members, is more simple than that of a number of independent and unconnected establishments,
I shall not deny ; but, with regard to safety, I am strongly inclined to think it is on the side o f
the local banks. T h e corruption or misconduct of the parent, or any of its branches, m a y
bankrupt or destroy the whole system, and the loss of the Government, in that e v e n t , w i l l b e of
9
S P E E C H OF MR. G A R L A N D .
t h e deposites m a d e with each ; w h e r e a s , in t h e failure of o n e S t a t e B a n k , t h e loss will b e
c o n f i n e d to the deposite in ihc vaults of that b a n k . "
All t h e s e g e n t l e m e n r e s i s t e d t h e a r g u m e n t of n e c e s s i t y for the r e n e w a l of
t h e charter of t h e old b a n k , on the g r o u n d that t h e S t a t e B a n k s w e r e equally
s a f e , a n d equally c o n v e n i e n t , as t h e fiscal a g e n t s of t h e G o v e r n m e n t ; so t h a t
t h e whole force of t h e a r g u m e n t , a s applied in favor of a N a t i o n a l B a n k
o v e r t h e s y s t e m of individual a g e n c y , a p p l i e s w i t h full force in favor of the
S t a t e B a n k s . I n t h e debate upon t h e c h a r t e r of the late b a n k , t h e s a m e opinions
w e r e e x p r e s s e d in favor of S t a t e B a n k s , by m a n y able a n d d i s t i n g u i s h e d gent l e m e n . It is r e m a r k a b l e that in the w h o l e r a n g e of d e b a t e , at t h e t w « periods
r e f e r r e d to, no g e n t l e m e n , so far as I recollect, e x p r e s s e d t h e s l i g h t e s t inclinat i o n to resort to t h e S u b - T r c a s u r v s y s t e m .
T h e administration of G e n e r a l J a c k s o n exhibits still s t r o n g e r a n d m o r e conclusive proof of the superiority of t h e S t a t e B a n k D e p o s i t e s y s t e m over a n y
o t h e r w h i c h t h e " wit of man could devise.7'
I n d e e d , so little w a s t h e S u b t r e a s u r y s y s t e m in favor, that w h e n the r e m o v a l of t h e d e p o s i t e s w a s d e t e r m i n e d upon, it did not enter into consideration, as far as w e are informed ; but
t h e S t a t e B a n k s w e r e r e c o m m e n d e d a n d s e c l e c t e d , as beinu; in e v e r y p o i n t of
v i e w equal to the B a n k of t h e United S t a t e s , as iiscal a g e n c i e s , a n d , in a
political point of v i e w , infinitely s a f e r — t h e c o m p a r i s o n b e i n g instituted b e t w e e n a N a t i o n a l a n d S t a t e B a n k alone. I n G e n e r a l J a c k s o n ' s e x p o s e to h i s
c a b i n e t on t h e
d a y of S e p t e m b e r , after r e v i e w i n g t h e a d v a n t a g e s a n d
d i s a d v a n t a g e s of the U n i t e d S t a t e s a n d S t a t e B a n k s in c o n t r a s t , s a y s :
" The President
thinks^ these facts and circumstances
afford as strong a
guarantee as can he had in human affairs, for the saefty of the public funds,
and
the practihility
of a new system of collection and disbursement
through the agency
of State
Bajiks"
L a n g u a g e could not b e m o r e u n e q u i v o c a l of t h e p r e f e r e n c e of the S t a t e B a n k
s y s t e m over e v e r y o t h e r ; y e t t h e P r e s i d e n t s e e m s to b e a w a r e t h a t d a n g e r
l u r k s in all h u m a n s y s t e m s , a n d that this s y s t e m m i g h t be d i s o r d e r e d from
t h o s e c a u s e s w h i c h are incident to h u m a n frailty.
If t h e r e could be a linger ing doubt upon t h e m i n d of a n y m a n that t h e late P r e s i d e n t d e s i g n e d t h e
S t a t e B a n k s as t h e p e r m a n e n t s y s t e m of t h e G o v e r n m e n t , it will b e r e m o v e d
b y the following e x t r a c t s from h i s a n n u a l m e s s a g e , of D e c e m b e r , 1 8 3 4 :
" The attention
Banks."
of Congress
is earnestly
i?ivitcd to the regulation
of the Deposites
in the
State
I n the s a m e m e s s a g e h e e x p r e s s e s h i m s e l f t h u s :
" Happily it is already illustrated
that the agency of sack an institution
{the U. S. Bank) is
not necessary to the fiscal operations
of the Government.
The State Hanks are found
fully
adequate to the performance
of all services
which were required
of the Bank
of the
United
States, quite as promptly
and with the same cheapness.
They have maintained
themselves
and discharged
all their duties* while the Hank of the United States
was still powerful,
and in
the field as an open enemy ; and it is not possible to conceive that they w ill find greater
difficulties -when that enemy shall cease to exist."
I n h i s annual m e s s a g e to C o n g r e s s in D e c e m b e r , 1 8 3 5 , G e n e r a l J a c k s o n
e x p r e s s e s himself t h u s :
" By the use of the State
ment^
and are not
Banks* which
do not clarm their charter
from
the General
C O N T R O L L E D BY I T S A U T H O R I T Y , it i* ASCKIITAINKD that
the
moneys
Governof
the
United States can he COLLEUTETI and D I S B U R S E D without
LOSS or i N c o s v K N i K N c t , and that all
the wants of the community
in relation to exchange and currency,
are supplied Ujt zcell as they
ever have been
before"
I n t h e annual m e s s a g e of D e c e m b e r , 183G, w h i c h w a s t h e last G e n . J a c k s o n
SPEECH OF MR. GARLAND.
10
delivered after the emanation of the Treasury circular, requiring gold and silver
for the purchases of the public lands, and a full knowledge of the facts upon
which that order was deemed necessary in the following strong and emphatic
terms, he expressed his unabated confidence in the State Bank system,
" Experience continues to realize the expectations entertained as to the capacity of the State
Banks to perform the duties of fiscal agents for the government, at the time of the removal of
the deposirea. It was alleged by the advocates of the Bank of the United States that the State
Hanks, whatever" might be the regulations of the Treasury Department, could not make the
transfers required by the government, or negotiate the domestic exchanges of the counntry. It
is now well ascertained that the real domestic exchanges performed, through discounts, by the
United States Bank and its twenty-five branches, were at least one-third less than those of the
deposite banks for an equal period of time ; and if a comparison be instituted between the
amounts of service rendered by these institutions, on the broader basis which has been used by
the advocates of the United States Bank in estimating what they consider the domestic exchanges transacted by it, the result will be still more favorable to the deposite banks."
Thus we have the unequivocal evidence that the late President of the
United States, preferred the State Bank to any other system ; as to the Subtreasury scheme, he did not in a single expression in any of the messages referred to, or in any other state paper emanating from him, intimate a desire to
resort to it.
T h e evidences from which the preference for the State Bank system by the
late administration is to be derived, is not confined to the quotations which I
have made from Gen, Jackson's messages. Mr. Taney the Secretary of the
Treasury, who directed the discontinuance of the Bank of the United States,
and adopted the State Banks as the depositories of the public money in his
annual report of the 3d December, 1833, after contrasting the advantages and
disadvantages of both agencies, decidedly recommends the State Banks, he
said :
11
For no one of these corporations will possess that absolute and almost unlimited dominion
over the property of the citizens of the United States which the present bank holds, and which
enables it at any moment, at its own pleasure, to bring distress upon any portion of the community, whenever it may deem it useful to its interest to make its power felt. The influence of
each of the .Slate batiks is necessarily limited to i u own immediate neighborhood, and they wlil
bo kept iti check by the other local banks. They will not, therefore be tempted bv the consciousness of power to aspire to political influence, nor likely to interfere in the elections of the
public servants. They will, moreover, be managed by persons who reside in the midst of the
people who are to be immediately affected by their measures ; and they cannot be insensible
or indifferent to the opinions and peculiar interests of those by whom they are daily surrounded,
arid with whom they arc constantly associated. These circumstances always furnish strong
s;ifemiards against an oppressive exercise of power, and forcibly recommend the employ men * o f
State banks m preference to a Bank of the United States, with its numerous and distant
branches. 1 '
Mr Taney did not in this or any of his reports hint at the propriety of adopting the Snbtreasury scheme.
T h e present Secretary of the Treasury, in his supplementary report of D e cember, 1834, discussed at length and with more than ordinary ability, the two
systems of individual and hank agency. In relation to individual agency he came
to the following conclusion : *' Individual agents will probably be found less
RESPONSIBLE, SAVE, CONVENIKNT, and ECONOMICAL." In the same report the
Secretary of the Treasury, referring to the possible contingency of the Government being compelled to resort to individual agencies, and that the Government could get on with these agencies, expressed his decided opinion,
that these agencies should be avoided, if possible, and the Bank system
adopted. H i s opinion is thus expressed :
SPEECH OF MR. GARLAND.
11
«c After the charter shall expire, no difficulty is anticipated in having any of these duties, which
m a y then remain, discharged by state banks. But, if any should occur, ft will become necessary
t o d e v o l v e these duties on some responsible R e c e i v e r or Collector already in office, or on some
s a f e agent, not now in office, as has been the practice for years in this country in paying pens i o n s at convenient places, near which there was no State bank, or branch of the United States*
B a n k ; and, as has long been the usage in sonic countries in Europe, by having the public reven u e 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 under signctCto
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,
Hcjice,
it has not yet been resorted to.
" But, it was considered proper to mention this contingency, in order that its effect, 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
aa of the United States' Bank, on the possibility they may all cease to exist, or may refuse to
l e c e i v e and manage the public deposites, [however improbable the occurrence of such an event
may b e ] the fiscal operations of the Government could, undoubtedly, still proceed, through the
personal agencies before mentioned.
It is admitted, however, that it would he 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. B e c a u s e banks, though exposed to some dangers and evils,
ana though not believed to be necessary for the fiscal purposes of any government, and much less
one in the present happy financial situation of ours, are frankly acknowledged to be in many
respects a class of agents, economical, convenient and useful.
In the same document he points out, in forcible terras, the advantages of
the State Bank system. H e says :
1. " I n regard to the convenient situation of the selected banks, whether looking to the a c commodation of the public orficcrs, or of the public creditors, it is believed to be fully equal
t o that of the United States' Bank, and its branches.
S o m e banks have been chosen in places
in which none were before employed, and in this respect facilities for deposites and payment*
have been furnished nearer to some points, where our collections and disbursements arc wry
considerable. In this way, as it is now an established rule, long practised in most c a s e s 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
s e r v i c e s were performed ; the payments under the present system have been made equally near
and sometimes nearer than formerly. T h e 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 favr-s to those persons, they worn formerly granted on application to the
department, under such circumstances as the public interests, on the assignment of satisfactory
r e a s o n s , appeared to permit. T h e same course of indulgence is now pursued—it is that, most
c o n v e n i e n t to the public in general as well as to the Treasury, and the only OTIC, feasible under
any system, without incurring the unnecessary and inconvenient expenses of furnishing funds
e n o u g h , 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 greatiy
r e m o t e from their residence, or from the theatre of their public services.
2 . ** T h e aafety of the uewly selected banks, is the next subject of inquiry. T h e chief change
i n t h i s respect, under the present system, has been in procuring the separate responsihifty of
s e v e r a l mstitunons for separate and smaller sums of money, instead of the single responsibility
o f arte institution for a very large sum ; and in having the guarantie of State laws and State
supervision over the conduct and solvency of these separate institutions, combined with the
information and cognizance of the department and Congress as to their condition and prospect*.
b y m e a n s of their weekly returns and other general" sources of intelligence, instead of the
miarantic of the acts of Congress and the supervision of the United States' Government
o v e r 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
t h e y may be changed, whenever any circumstance may indicate a change to be prudent, and that
collateral security can be required whenever the deponitc is so large ns to s e e m to render it
iudLcioufl ; that the Government possesses advantages superior in case of their embarrassment
i n d lhat the whole capital stock must be lost before the deposit* debt will become desperate ;
there certainly c a » he no very disadvantageous comparison, in theory, between the- safet to ihe
G o v e m i n e n t under the present rather than the former system.
12
SPEECH OF MR, GARLAND*
<* In practice, thus far, no loss whatever has been sustained by any of the newly selected
banks, nor doesany particular reason exist for anticipating a loss, It is due to them to xemark*
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 to be in a Tery 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 July 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 principles-"
In his annual report of the 8th of December, 1835, h e expresses himself in
the following terms : t4 T h e department takes pleasure in stating that t h e
public money continues to be collected and deposited under the present system
of selected Banks, with great case and economy in all cases, and with greater
in some than at any former period. T h e transfers of it to every quarter of
the country, where it is needed for disbursement, have never been effected
with more promptitude, and have been made entirely free of expense to the
Treasury.'* In his annual report of December last, upcaking <>n *he same
subject he says : * T h e money in the Treasury has been safely kept during
*
the year 1836. Until July last, as during the two previous years, it was placed
in the State Banks, selected according to the discretion of this department,
on account of their high standing and favorable position for fiscal purposes,
and regulated in a manner considered most secure to the Treasury, and
convenient to the community as well as useful to all concerned. It is a
source of high, gratification to be able to add, that while so selected and employed,
not a single dollar was lost to the Government by any of them, nor a single failure
occurred to transmit promptly, and pay out satisfactorily^ the public money en~
trusted to their care" * * " Nor is it believed\ that the domestic exchanges of the
country were ever lower or more regular than during that period?*
T h e s e assurances in favor of the state bank system were made to the
country near the close of the late administration, and in the last annual communications of its high functionaries after the practical effects of more than
three years experience had tested their truth, which gives as much force to
the opinions expressed as can be imparted.
This is not all-—The committee of W a y s and Means, during the session
of 1834-5, consisting of Messrs. Polk, (now s p e a k e r ) ' WildeT Cambreleng,
Gorham, Mr Kim, Binney, Loyally McKinley, and Hubbard, six of them decided
friends of the administration, in their report upon this very subject, evidenced
their decided preference for the State bank system in the 2d and 3d resolutions
which they reported-
2d. " Keseolved, That the public deposites ought not to be restored to the Bank of the United
States."
3d. " Resolved^ That the State banks ought to be continued as the place of deposit© of the
public moneys; and that it is expedient for Congress to make further provisions by law* pre*
scribing the mode of selection, the securities to be taken, and the manner and terms on which
they are to be employed/'
T h e s e resolutions were sustained by a very able, and, to my mind, unanswerable argument.
It is true the committee did not enter into a comparisoit
between this and the subtreasury system, which has suddenly grown into
such high favor, because then it had not merit enough to command the favorable consideration of the friends of the administration as was proved at the
next session of Congress, by a unanimous vote (save one) w h e n the scKem^
was presented by Mr. Gordon-
S P E E C H OF MR. GARLAXD.
13
M r . Benton, a Senator from Missouri, and distinguished friend of the late
and present administration, in a speech delivered by him in the Senate of the
United States on the 2d of June, 1831, on the subject of the restoration of the
deposites to the Bank of the United States, abl\ vindicated the State Hank system,
and defended the State hanks against the various attacks of the opposition.
I h e r e quote his remarks upon that occasion.
" M r . B E N T O N proceeded to state several reasons, and to urge many considerations in favor of
a d o p t i n g it.
H e deprecated the spirit which seemed to have broken out against. State Hunks,
a n d said that it augured badly for the rights of the States. T h e strongest current of consolidation
w h i c h was now observable in the Lnion, was that which sat in favor of the Federal bank and
a g a i n s t the S t a t e banks, and threatened to consolidate all moneyed power, and with it all political
p o w e r , in favor of a great central institution, independent of" "the S t a t e s , and able, by its own
a v o w a l , to crush the State institutions at its pleasure. H e said this spirit against the State banks
w a s an impulsion of modern origin—unknown to the fathers of the republic, and to the early
history of the country—and strongest now where the spirit of consolidation was strongest, and •
w h e r e the defence of State rights was weakest. A t the commencement of this Federal Governm e n t , said M r . B-, there was no Federal hank, and all the public moneys were kept in State banks,
o r drawn direct, and as fast as UK,y w m , r ( ; C L i V l ^ ! 0 l u of the hands of receivers and collectors.
Greneral H a m i l t o n , when Secretary of the T r e a s u r y , kept the public moneys, for the first year of
hitj administration, in these banks, and kept them "safely there. W h e n the Federal bank was
proposed in 1 7 9 1 , and the keeping of the public- moneys was one of the services attributed to it,
Mr. Jefferson, then a member of President W a s h i n g t o n ' s cabinet, denied the necessity of a
F e d e r a l bank for any such purpose, and openly declared himself in favor of the State hanks.
He
eakJ that these banks had already done tins business for the G o v e r n m e n t , and done it well, and
would no doubt enter into arrangements with the T r e a s u r y for doing it permanently, and on
better t e r m s than it could be done by the Federal bank. Mr. B. read an extract from Mr. Jefferson's cabinet opinion, delivered to General W a s h i n g t o n at the creation of the first F e d e r a l
bank, to sustain what ho paid of his opinions. T h e extract was in these words :
** * T h e existing banks will, without a doubt, enter into arrangements for lending their agency ;
and t h e more favorably, as there will bo a competition among them for it ; whereas, the bill delivers
us up bound to the national bank, who are free to refuse all arrangement, but on their own terms,
and the public not free, on such refusal, to employ any other bank.
T h a t of Philadelphia, I believe, n o w does this business by their post notes, winch, by an arrangement with the T r e a s u r y ,
are paid by any other S t a t e collector to whom they arc presented. This expedient alone suflices
to p r e v e n t the existence of that necessity which may justify the assumption of a non-enumerated
p o w e r as a means for carrying into effect an enumerated one. T h e thing may be done, and has
been d o n e , and well done, without this assumption ; therefore, it does not stand in that degree
of n e c e s s i t y , which can honestly justify it."
" M r . B . said, that what Mr. Jefferson affirmed in 1791, was aftewards proved under his own
administration, and that of Mr. Madison. During the whole of their administrations, a large portion of the public moneys was kept in the State banks, and safely kept there. Mr. Gallatin, in
a n s w e r to a call made by the House of Representatives, sometime before the expiration of the charter of t h e first bank, showed that the public moneys were then kept in twenty different banks, of
M<Jch n i n e were t l l c United States Bank and its branches, and eleven were S t a t e banks I
Mr.
B. t h o u g h t this point so material, that he would read an exfract from Mr. Gallatin'* report, To show
that h e neither overstated nor mistook the facts.
H e then read the names of the State banks
employed by Mr. Gallatin, and the amount of public money in each. T h e y were : the Bank of
C o l u m b i a , $ 1 1 5 , 1 9 2 ; the Bank of Alexandria, 8 6 1 , 9 1 7 ; the Bank of Newport, Rhode Island
S 3 5 7 8 S ; the Bank of Pittsburg, $ 1 3 7 , 4 6 2 ; R o g e r Williams's Bank, 8 5 3 , 8 8 2 ; the Bank of
P e n n s y l v a n i a , 8 9 2 , 6 2 8 ; the Bank of Saco, © 2 8 , 5 2 8 ; the Manhattan Bank, 3 1 8 8 , 6 7 0 ; the
B a n k of Maine, $ 5 0 , 7 4 7 ; the Marietta Bank, S 19,601 ; and the Bank of Kentucky, $ 9 1 , 0 6 1 .
S u c h , fiaid Mr B . , was the distribution of the deposites of the punlic moneys m the time of
M t Oallatin ; more State banks employed than the whole number of branches and the mother
B a n k of the United States put together ! In several instances, a State bank was employed in
t h e s a m e place in which a branch of the Federal bank was situated, and some of those employed
t h e « a r e employed now. Of this class, Mr. B . instanced the Manhattan Bank of N e w Y o r k ,
a n d s t a t e d that the stock of thi» bank was, at this day, about twenty dollars m the hundred
"-f?
14
SPEECH OF MR. GARLAND.
deposite bank for forty-five years, and the Government had lost nothing by it, n o t w i t h s t a n d i n g
the attempt lately made to delude the public with a belief that it had just been selected by M r .
T a n e y , and had immediately failed, with an immense loss to the United States.
Mr. B . said T it was thus proved, by an experience of twenty years—an experience running
through the whole of the administrations of Jefferson and Madison, and a part of their p r e d e cessors—that the public moneys may be safely kept in the State b a n k s ; and that Mr. Jefferson
was right, in his cabinet opinion of 1 7 9 1 , when he gave it as his solemn opinion to President
"Washington, that there w a s no necessity for chartering a Federal bank to act as the fiscal a g e n t
of the f e d e r a l Treasury, and that the State banks would enter into arrangements for that purpose, and do the business w e l l !
Mr. 13. said it was true that the Federal Government had since lost about a million and a half
of dollars by State banks ; but that loss took place in a season of universal embarrassment,
growing out of a state of war and general stagnation of trade and commerce ; a season which
cannot be made the rule for judging State banks, without extending it to the Federal bank also ;
and then it would be fatal to that bank, for the United States lost about eleven millions of dollars
in sustaining the present Federal bank in the same season of embarrassment, and saving that
bank from sharing the general fate of the State institutions. T h i s statement, Mr. B. said, w a s
one of those facts which it wag good to prove, and as the proof w a s in the documents of t h e
Senate, be would use it, and extinguish at once this delusive and deceptive comparison b e t w e e n
State banks and the Federal banks.
Mr. Benton Avas sustained in his preference for the State banks by M r ,
Wright, of New York, T h e present Speaker of the House, in a speech
delivered by him on this subject, on the 20th of June, 1834, ably vindicated
the State bank system, in the course of which he made the following remarks:—
" T h e State banks, then, are to be employed, either under our law as it exists, or under the
law as Congress may modify it. T h e bill before us proposes modiiicacations, limiting and d e fining, with more precision than has heretofore been done, the executive discretion and power.
It is tendered to the H o u s e , and especially to those who have raised the cry of a union in the
President of the sword and the purse, when in fact he possesses neither. T h e present Executive
does not desire, and never has desired, to retain any discretionary power in the execution of the
laws, which, from its nature, is susceptible of being defined by law. T h e Executive, and his
friends upon this floor who sustain him in the recent executive measure of the removal of tho
depositee, desire to see him, and not only him, but his successors in the executive office, relieved
from the responsibility of exercising discretionary power in relation to the s a f e k e e p i n g , management, and disbursement of the public money, as far as, by legislative provisions, it can be done.
T h e bill which has been presented contains provisions suited, m the opinion of the committee
w h o prepared and brought it forward, to attain this end. I have invited srentlemen who may
thmk its provisions inadequate, or who may suppose that too much power is still left in the
hands of the Executive, to come forward with their modifications, still further limiting and c o n fining his power. If they will neither accept this hill, nor propose to amend and make it more
perfect, the conclusion must be, that they prefer the law as it is to any n e w legislative provision.
If they do not co-operate with us in perfecting and passing this bill, the conclusion will be iiresisfibJc that the charge which has been made against tho President, of a desire to seize upon
powers which do not belong to him, was designed to produce an erroneous impression upon the
public mind, and is wholly unfounded in f a c t ; that they prefer the existing laws t o a r , v a m e n d ments which can be made ; and, in a word, that the real purpose to be effected by a ^ ^ e violent
and impassioned appeals which have been made, charging him with usurpation was to operate
upon the public, with a v i e w to procure a continuance of the present odious bank monopoly.'*
In a speech delivered by him on the 10th of February, 1835, he said—
" T h e State banks are not only competent to furnish all the domestic exchange required for
the convenience of trade, but they furnish it at cheaper rates, in many parts of the U n i o n ,
than the Bank of the United States has heretofore done the same business.*'
In relation to the sub-treasury scheme, offered by Mr. Gordon, which seem»
to bo the pioneer of the present, in the same speech, Mr. Polk said—
J
* A s regards the s e c o n d objection, ^te alleged/inc<tapet en c y of these banks as focal agents,
tho manner in which t h e ^ h a v o Jfcrfo%aed an/& are TfcrfornJfng these duties must remove all
doubts which may have exisK^d dn thaMWinjiT It is ^ > \m\gcr a question of doubt whether
they can, with facility and proWptness, trilrfer the pubrm^funds to the moat distant points foe
disbursement, and perform ari\ot,her d u t i ^ which, as ^ft^al agents, they may be required top e rform."
^
/U*^~ &S
5
SPEECH OF MR. GARLAND.
15
|
T h e s e evidences, added to the fact, that upon the question of adopting theX^
sub-treasury plan proposed by Mr. Gordon, every friend of the administration,
save one (Mr. Beale, of Virginia) voted against it, as did a majority of the op-positior^L It has been said that the friends of the administration voted against
this scheme with a view of trying the sufficiency of the State bank system,
that is to make an experiment ; but General" Jackson's, Mr. Woodbury's, Mr.
Benton's, and Mr. Polk's assertions are at war with this imputation. E a c k ^ J 1 ^N
of them attested that the State bank system had been well tried, and found J
^
amply sufficient for all the purposes of fiscal agency, domestic exchanges, and
sound surrency.
I cannot believe that the friends of the administration
would thus have experimented upon such an important and delicate subject as
the currency, when there was presented for their adoption a scheme so constitutional, so republican, so wise, and so efficie?it, as the Treasury scheme is now
thought to be.
But, Mr. Chairman, I am not without further evidence from very high
authority, although the President of the United States, in his message to this
Congress, represents that this is the third fiscal connection between the State
banks and the Government which has failed, yet he certainly did not regard
the two previous failures as constituting any serious objection to the system,
for in August, J-^^^f^?c^tHng..ih^Jiwit^p]i^si*iential election, in a letter to the
honorable Shcrod Williams, of Kentucky, he ably sustained the State bank
system. In that letter he used the following language :—
" A l t h o u g h I have always been opposed to the increase of b a n k s , I w o u l d n e v e r t h e l e s s
p u r s u e towards the existing institutions a j u s t and liberal course — p r o t e c t i n g t h e m in the rightful e n j o y m e n t of the principles which have been g r a n t e d to them, and e x t e n d i n g to t h e m t h e
good will of the c o m m u n i t y , so long as they discharge with fidelity the d e l i c a t e and i m p o r t a n t
public trusts with which they h a v e been i n v e s t e d . "
T h e s e , Mr. Chairman^Awhich have been afforded from the foundation of
the Government to the present hour of the value of the state banks as fiscal
agents, mainly offered by those who now seek to destroy that fiscal agency,
and refuse their notes in the receipts of the public dues. This system which
w a s sound democracy in 1835 is bank rag aristocracy in 1837. While defending this system in 1835 I was a. good democrat; but in 1837, for still defending the same system, I have become a hank aristocrat; from this it would
8eem that democratic principles, like deranged currency, is somewhat fluctuating.
jVlr- Chairman experience, which ie the most unerring* of all human guides,
one truth tested bv which is worth a thousand theories, has taught us that
credit is a plant of delicate character, and cannot, with safety, be rudely
handled ; it must he touched as cautiously as you would touch the sensitive
plant. Often has the soundest credit, with the most ample, although not immediately available means, withered and sunk beneath the breath of unjust
and unwarranted suspicion. No credit, and no credit system can be sustained without confidence—confidence is its very essence, and whenever withdrawn, whether justly or not, seriously affects it. T h e banking institutions of
the country are sustained entirely by confidence, without it their notes would
h a v e no circulation, and they would not be able to conduct their business profitably.
Want of confidence, then, or withdrawal of existing confidence, must,
in the natureof things, greatly prejudice these institutions, and derange and
e m b a r r a s s their operations.
T h e recommendation of the President and the Secretary of the Treasury to
discontinue the present deposite system, and the receipt of the notes of the
16
S P E E C H OF M R .
GARLAND.
bankincr institutions, is based upon the allegation that these institutions have
been unfaithful to their high obligations, and therefore not worthy of continued
confidence.
T h e present suspension of specie payments and its consequences, is the ground upon which this recommendation is founded. I propose, Mr. Chairman, briefly to examine whether the present conditi<A^>f the
hanks, both as relates to their ability to meet all their liabilities, and uie propriety of the suspension of specie papments, justify this charge, and the
entire withdrawal of public confidence. That the deposite banks will be able
to redeem all their liabilities, and that at no very distant period, is very
manifest, not only from the report of the Secretary of the Treasury, but from
their actual condition as ascertained and reported to this House. After the
cautious and rigid scrutiny instituted into the condition of the State Banks
Iwhen they were about to be selected, I suppose it will not be doubted, that
the selected banks were entirely responsible, and in high credit, I have selected eighteen of the principal banks in which the public money was deposited, and three others selected in 1835. T h e following comparison of their
aggregate condition in relation to circulation and specie, when they were at
first selected, and now according to the last returns, proves most conclusively,
that in relation to specie and circulation, their condition is materially improved.
C o n d i t i o n o f 18 of t h e p r i n c i p a l B a n k s w h e n first s e l e c t e d , a n d u p t o A u g u s t 1 5 t h , 1837, i n c l u d i n g t h r e e of t h e p r i n c i p a l s e l e c t e d R-inl"vimri Wjtbn<nrrri|^f J ft?J] jj^
^JS%$\*~%
Specie.
Capital.
C cu
C iirrc u ll a t i o n .
3,825,298
W h e n first s e l e c t e d ,
30,725,070
14,550,075
A b o u t Aug. 15th last,
44,970,960
5,457,556
18,505,739
11,245,290
T h e c i r c u l a t i o n riot q u i t e 3 t o 1 o f s p e c i e .
1,632,258
3,955,664
T h e annexed table shows their individual condition
WHEN FIRST
Hanks.
Boston,
Com rnonwralth
do
Merchant's,
New York,
America,
do
Mechanic's,
do
Manhattan,
Philadelphia,
Gerard,
Baltimore,
Tin i o n ,
Washington,
Metropolis,
Savannah,
Planter's,
S l a t e B u n k , Ala.: M o b i l e ,
Natehi'z,
Planter's,
JNushville,
Union,
N e w Orleans
Union,
Commercial
do
Michigan
Detroit,
F a r m e r ' s &, M e c h a n i c ' ^ , d o
B a n k of V i r g i n i a ,
St Ire ted hi ] RZ5.
Plant, & Mechanic's, Charleston
State Bank N. Carolina,
State Bank Indiana,
SELKCTED.
Circu7tion '
105,700!
174,100'
375,750
603,000
345,000
360,000
362,000
105,400
103,655
1,145,600
1,510,430
1,747,000
021,000
370,950
228,600
<23T33oi
141,9001
4 0 6 , 8 8 0 2,741,600
Spec
•41,507
50,470
2] 2,770
2f54,040
257,202
66,480
92,890
17,050
200,2001
425,560
113,220j
60,211
320,275
75,5011
40,3401
1 5 T H AUGUST,
Capi tah 0 ,
Specie,
CircuCtion
3 0 0i,ooqJK 4 0 , 1 7 0
203,960
750.
>,oooff 1 6 3 , 0 8 0 2 1 1 , 2 7 0
2,100,000
425,420
613,9301
2,050,000
43,200
417,200
2,050,000
200,370
426,660
1,500,000
777,4701
230,700
1,840,000
75,710|
237,640|
!
500,000
44,420
364,920
535,000
293,5501
260,140
1,000,000
1 3 8 , 6 0 0 1,855,230
2,320,000
3 0 3 , 2 3 0 | 1,521,760
1,213,800
1 9 9 , 1 0 0 1,307,480
5,500,000
8 0 , 5 8 0 1,305,470
1,812,890
402,340!
118,305
84,850|
330,460
350,000
103,QR0
169,9001
83,670]
2,740,000
426,430 2,872,090
2 3 7 , 3 5 0 2,073,200' 1,030,000
167,600
953,070 1,080,000
637,102
944,200
800,000
244,837,
731,325
50O 7 48O| 1,299,550
999,894 2,476,076
1837.
Capital.
500,000
1,500,000
3,100,000
2,000,000
2,050,000
5,000,000
1,845,560
500,000
535,400
2,300,000
4,205,000
2,000,000
7,000,000
3,000,000
450,000
400,000
3,240,000
1,000,000
1,500,000
1,845,000
$ 3 , 8 2 5 , 2 0 8 14,550,075 30,725,670 15,457,556 1 8 , 5 0 5 , 7 3 9 4 4 , 9 2 0 , 0 6 0
C o m p a r i s o n of E x c h a n g e s .
I n lft34, E x c h a n g e s of t h e B a n k o f t h e U n i t e d S t a t e s ,
i n 1830, h y D e p o s i t e B a n k s ,
-
#225,617,910
420,463,211
All other liabilities and responsibilities are improved in nearly the same ratio.
I refer to the last returns from the Treasury Department, and those officially ,
published by the different and most important banks, to prove that there has
SPEECH OF MR. GARLAND.
17
b e e n a g e n e r a l improvement in the condition of n e a r l y all the b a n k i n g institut i o n s . 1 have before m e an official statement of t h e condition of the b a n k s
o f Virginia, exhibiting an improved, and improving condition, and entire solv e n c y . I might refer to o t h e r s , but time will not admit. T h e T r e a s u r y rep o r t s prove that notwithstanding the suspension of s p e c i e p a y m e n t s , the dcp o s i t e banks have rapidly r e d u c e d , and have n e a r l y e x t i n g u i s h e d their debt to
t h e government. On the first day of J a n u a r y last," t h e r e w a s in the deposite
b a n k s to the credit of the T r e a s u r y , $ 4 2 , 4 6 8 , 8 5 9 9 j » t f this sum t h e r e h a s b e e n
t r a n s f e r r e d and paid to the S t a t e s , under the d e ^ s i t e act, # 2 7 , 0 6 3 , 4 3 0 8 0 r
l e a v i n g a b a l a n c e of $ 1 5 , 4 0 5 , 4 2 9 17 ; of that b a l a n c e and of all the depositee
m a d e s i n c e , there now r e m a i n s only the sum of S12,41 8,041 due to the governm e n t , of this t h e r e only r e m a i n s $8,166,192 85 subject to draft, drafts-shaving
b e e n issued for the r e m a i n d e r ; and I do not doubt the amount is n o w m u c h
less.
Of this amount, there is due less than 8 1 , 0 0 0 , 0 0 0 from the b a n k s in t h e
Atlantic S t a t e s . S i n c e the 1st of M a y , about the time specie p a y m e n t s w e r e
s u s p e n d e d , according to the report of the S e c r e t a r y of the T r e a s u r y , the d e posite b a n k s have reduced their discounts $ 2 0 , 3 8 8 , 7 7 6 , their circulation
8 4 , 9 9 1 , 7 9 1 , their public deposites £15,607,3*16, while their s p e c i e h a s diminishe d l e s s t h a n $ 3 , 0 0 0 , 0 0 0 . T h e ^Secretary further informs us that, " of the
n u m b e r of eighty-six banks employed at the time of the suspension, ten or
e l e v e n are supposed to have paid over all the public m o n e y , w h i c h was. then
i n t h e i r possession, to the credit of the T r e a s u r e r - I n the custody of more
than half of the others, an aggregate of less than $ 7 0 0 , 0 0 0 r e m a i n s \ m a d j u s t ~
e d . Several of the rest, still possess large sums ; but m a n y of t h e m h a v e cont i n u e d promptly to furnish such p a y m e n t s from time to lime, for m e e t i n g t h e
public ruiccssiues." Mr. C h a i r m a n , these p a y m e n t s and these e x e r t i o n s afford
m o s t conclusively, evidences of the frauds and insolvency of the local b a n k s ;
w o u l d to God, all fraudulent and insolvent m e n would furnish a little more evid e n c e of dishonesty and insolvency s u c h as this, sir. TTie S e c r e t a r y of the
T r e a s u r y from his report, does not expect to lose a single dollar of the public
m o n e y , so that the disconnection r e c o m m e n d e d , cannot have a n y foundation on
t h i s ground. But, sir, the T r e a s u r y D e p a r t m e n t affords us another important
fact, in its circular to the banks of the 3d of July last, upon the subject of the
s u s p e n s i o n of s p e c i e p a y m e n t s , and additiaivil security for the public d u e s , he
says :
**It affords me much gratification to find, so far as regards the inquiry concerning the payment
and security, a tjreat willingness expressed to make the United States amply nafe for the eventual payment of all that is due, and a strong convictiow entertained by the bank* that na-low will
bo ultimateTy sustained by the Government.**
Again he says,
• ' A n o t h e r portion of that circular communicated information concerning the lenient mode
w h i c h , under the severe losses experienced by many of the banks from mercantile failure* am!
under the embarrassments to others, caused by panic and want of confidence, was contemplated
t o be adapted in recalling the public funds. That mode was by euch moderate drafts and transfers aa the public necessities should from time to time demand ; and an earnest request having
b e e n made for a satisfactory compliance with it on the part of the banks, assurance* have generally been given of a readiness to answer those calla with promptitude, arid in an acceptable man-
Again he says,
M
T h e returns of the condition of the selected banks, which were requested to be continued,
have generally been made'with promptitude and regularity
But white it is very satisfactory to
s e e , in r^ost cases, & reduction in discounts and circulation, and which course is the moat effic i e n t to cfcj-o one of the existing evils in banking, and to enable the institutions which have sua-
2
18
SPEECH OF MR, GAjiLAND.
pended specie payments to resume them at an early day, and with much greater safety, it is regretted that, in a few instances, this course has not been adopted. But whenever departed from
jo such a crisis, the error has tended, and must tend hereafter, to impair the confidence of the D e partment in the sound management of the institution, and to justify such steps as may lead to a
more speedy withdrawal of tiae public money, or to the procurement of increased security/*
Froiirthese evidences, I take it for granted, that the deposite banks are solvent, and that the government will not lose a single dollar by them.
T h i s i s not the only evidence afforded by the Secretary of the Treasury
of the solvency of tifl^™any of the deposite banks, and the reliance placed
upon them to aid in redeeming the country from its present embarrassed condition—on the 13th of the present month, while the bill authorizing the issue
of Treasury notes was depending, the Secretary addressed the following letter
to several of these institutions, proposing to them to purchase the Treasury notes
w h i c h shall be authorized, and to pass the proceeds to the credit of the T r e a sury as specie to be paid as the wants of the government may require—this is
the letter:
44
TREASURY DEPARTMENT, )
September I9th, 1S37.
J
" S I B : A bill is now before Congress to authorize the President of the United States to caase
the issue of Treasury notes for such sum or sums as he may think expedient; but not exceeding in the whole amount of notes issued, the sum of twelve millions of dollars, and of denominations of not less than one hundred dollars for any one note, to be reimbursed at the Treasury
o f the United States, after the expiration of one year from the dates of the said notes respectively.
** 1 will thank you to state whether, in the event of the passage of this bit], you will agree' to
take the said notes from the government, and give the Treasurer of the United States a credit
for the amount ; to be drawn lor ns may be necessary, and payable in specie if required, and,
if so, to state what amount you will receive, and the lowesL rate of interest to be borne by said
notes. _
I am, very respectfully,
Your obedient servant,
LEVI WOODBURY.
Y e s , sir, some of these faithless and unworthy institutions are appealed to,
to purchase Treasury notes, and pass the proceeds to the credit of the government, and hold it until it w a s wanting by the government.
Judging from the generally admitted principle, that the soundness of a bank
i s to be determined by the proportion of its actual specie capital to its circulation, the deposite banks are sounder than the Bank-of England, or the English
Joint Stock banks. Up to the 25th July last, the relative proportion between
the specie capital and its circulation was as follows :
*
Specie.
Circulation.
Bank of England
Private and Joint Stock Banks
26,150,000
00,000.000
Bank of England
•91,305,000
Private and Joint Stock Banks
6,062,165
$26,150,000
Specie.
United States Deposite*Banks '
$11,429,012
096,667,165
'
United States Deposite Banks
Circulation31,779,804
From this comparison it is manifest that the deposite banks in the United
States, were in a condition better to sustain a sound currency and specie payments than the English banks, unless some other cause should operate -a
different effect. Yet, although the same causes which embarrassed the commerce
and credit of the United States existed in England, the Bank of England
continued specie payments, and the Bnnk of the United States s u s p e n d e d W h y ? f our causes are manifest: 1. the Government of England continued
their confidence in their institutions, ours withdrew its ; 2 . a large debt w a *
due from the American to the foreign merchants, and a Necessity for large
SPEECH O ? MR, GARLAND.
19
s p e c i e e x p o r t a t i o n s p r o d u c e d ; 3 . t h e c o n t i n u a n c e of t h e s p e c i e c i r c u l a r ; a n d
4 . t h e e x e c u t i o n of t h e d e p o s i t e a c t of t h e 2 3 d J u n e , 1 8 3 6 .
F r o m the connection w h i c h existed between the G o v e r n m e n t and the State
B a n k s , g r o w i n g o u t of t h e i r a d o p t i o n a s fiscal a g e n t s , a n d t h e g e n e r a l i m p r e s s i o n w h i c h it p r o d u c e d , t h a t t h e G o v e r n m e n t w a s d i s p o s e d to c h e r i s h a n d
s u s t a i n t h e m , t h e s l i g h t e s t m a n i f e s t a t i o n of t h e w a n t of c o n f i d e n c e on t h e p a r t
o f t h e G o v e r n m e n t , w a s c a l c u l a t e d to p r o d u c e t h e m o s t d i s a s t r o u s effects u p o n
t h e i r c r e d i t , a n d c r i p p l e Lheir opt r a t i o n s .
It w a s c a l c u l a t e d to i m p a i r g e n e r a l
c o n f i d e n c e , a n d p r o d u c e a r u s h for s p e c i e , s o s u d d e n a n d v i o l e n t , t h a t b u t f e w
b a n k i n g i n s t i t u t i o n s c o u l d be p r e p a r e d to w i t h s t a n d it.
This want of
confidence
was clearly manifested
in the Treasury
Circular
of July, 1 8 3 6 , in which
danger
was distinctly
announced
to the country.
T h i s m e a s u r e of itself, h o w e v e r , c o u l d
n o t h a v e e x e r t e d a n y v e r y d e l e t e r i o u s i n f l u e n c e , u p o n t h e c r e d i t of t h e b a n k s ;
b u t , o p e r a t i n g in c o n j u n c t i o n w i t h o t h e r c a u s e s , w a s c a l c u l a t e d s e r i o u s l y to i m p a i r p u b l i c c o n f i d e n c e , a n d t o * p r o d u c e s e r i o u s e m b a r r a s s m e n t s in t h e m o n e t a r y
s y s t e m of t h e c o u n t r y .
T h e T r e a s u r y c i r c u l a r , w h i c h r e q u i r e d s p e c i e for t h e p a y m e n t of t h e p u b l i c
l a n d s , p r o d u c e d a n u n u s u a l a n d u n n e c e s s a r y d r a i n of s p e c i e from t h e A t l a n t i c
t o t h e W e s t e r n b a n k s , a n d of c o u r s e , it w a s i n c u m b e n t o n t h e K a s t e r n
b a n k s , to u s e t h e u s u a l p r e c a u t i o n of c o n t r a c t i o n to m e e t t h e d e m a n d , w h a t e v e r
it m i g h t b e .
i n d e p e n d e n t of t h i s d i r e c t o p e r a t i o n , e m i g r a n t s , w h o w e r e n u m e r o u s f r o m t h e E a s t e r n to t h e W e s t e r n S t a t e s , s o u g h t t h a t k i n d of c u r r e n c y
w h i c h w a s r e c e i v a b l e a t t h e L a n d Offices.
H e n c e , specie being^only rec e i v a b l e t h e r e , t h e y d e m a n d e d s p e c i e for t h e i r n o t e s , w h i c h b e i n g p r i n c i p a l l y
E a s t e r n , t h e E a s t e r n b a n k s w e r e bound to p a y .
T h e s e drafts for s p e c i e w e r e
c a l c u l a t e d to p r o d u c e a c o r r e s p o n d i n g c u r t a i l m e n t of t h e c i r c u l a t i o n a n d l o a n s
o f t h e b a n k s , w h i c h w e r e a m o n g t h e p r o f e s s e d o b j e c t s of t h e o r d e r .
T h e gold
a n d s i l v e r t h u s d r a w n from t h e E a s t e r n , w a s d e p o s i t e d in t h e W e s t e r n b a n k s ,
a n d t h e r e k e p t e n t i r e l y u n e m p l o y e d , to t h e g r e a t d e t r i m e n t of t r a d e , a w a i t i n g
t h e d r a f t s of t h e G o v e r n m e n t .
\i\ a d d i t i o n to t h e o p e r a t i o n of t h e s p e c i e c i r c u l a r , a n d a b o u t t h e t i m e of i t s u t m o s t s e v e r i t y , t h e p r e s s u r e of a h e a v y f o r e i g n
d e b t c r e a t e d a n a d d i t i o n a l h e a v y d e m a n d for s p e c i e , w h i c h w a s p r i n c i p a l l y to
be d r a w n from t h e v a u l t s of t h e b a n k s .
T h e effect of t h i s d e m a n d for s p e c i e
to p a y t h e f o r e i g n d e b t , n e c e s s a r i l y p r o d u c e d a c o n t r a c t i o n of l o a n s a n d c i r c u l a t i o n , c o r r e s p o n d i n g w i t h t h e e x t e n t of t h e d e m a n d .
W e all r e m e m b e r t h e
g l o o m y p e r i o d of 1 8 1 9 , w h e n d i s t r e s s a n d r u i n p e r v a d e d t h e w h o l e c o m m u n i t y ,
a n d filled it w i t h d i s m a y , a n d a s it is fair to j u d g e of t h e p r e s e n t b y t h e p a s t , I
h a v e s e l e c t e d t h e four y e a r s p r e c e d i n g 1 8 1 9 , a n d t h e p r e s e n t p r e c e d i n g four
y e a r s , w i t h a v i e w to c o n t r a s t t h e s t a t e of t r a d e t h e n , w i r h its p r e s e n t s t a t e • i n
o r d e r , i n p a r t , to a c c o u n t for t h e p r e s e n t r e v u l s i o n a n d d e r a n g e m e n t of c o m m e r c e , a n d t h e effects n o w , a s t h e n , p r o d u c e d .
I n t h e y e a r s 1 8 1 5 , 181G, 1 8 1 7
a n d 1 8 1 8 , t h e s t a t e of f o r e i g n t r a d e w a s a s f o l l o w s ;
EXPORT*.
1815
1816
1817
1818
IMPORTS.
$52,557,753
81,920,45-2
S2 fill Jim
93,281,133
#310,430,907
9113,041,274
147,103000
99,250,000
121,730,000
«481,144,274
310,430,907
*
Excess of importations over exports
S170,713,3G5
W h i c h , after p r o p e r a l l o w a n c e for t o n n a g e a n d o t h e r e x p e n s e s , left a h e a v y
balance.
T h e effect w a s , t h a t a h a n k c i r c u l a t i o n i n 1 8 1 6 , of $ 1 1 0 , 0 0 0 , 0 0 0 , w a s
20
S P E K C f t OF MR. GAKTLAND.
reduced in 1819* to $ 4 5 , 0 0 0 , 0 0 0 ; w e nil recollect during this y e a r , &
i m m e n s e deduction which property, produce and labor underwent. T h e foreii
trade for 1 8 3 3 , 1834, 1 8 3 5 a?jd 1&36, is a* follows ;
EX^mTP-
1833
1834
1835
1830
«
IMPORTS.
$108,118,311
126,521,33©
151,030,368
189,980,035
&575fG50,04<>
442,095,090
T h e excess of importations,.
$133,554,350
L e a v e s a l a r g e foreign d e b t ; a n d a l t h o u g h t h e b a l a n c e ROW i s $37,©00,<ffl
l e s s t h a n in 1 8 1 9 . y e t it is sufficiently l a r g e to r e n d e r a heavy reduction in bei
loans and circulation,
n e c e s s a r y to m e e t i t « r - h e c a u s e e x c h a n g e s , b e i n g mafl
r i a l l y r e d u c e d , it could he met in nothing hut sjweie.
' J l i e h e a v y importation
of s p e c i e from E n g l a n d , t h r o u g h t h e i n s t r u m e n t a l i t y of a c c e p t a n c e s ©f Amet
c a n d r a f t s , a l a r m e d t h e B a n k of E n g l a n d for its o w n s a f e t y ; a n d to c o u n t e n j
t h i s d r a i n , it r e f u s e d to d i s c o u n t for a n y m e r c h a n t w h o a c c e p t e d A m e r k J
b i l l s , t h u s m a k i n g it n e c e s s a r y to d e m a n d m o r e s p e c i e for t h e p a y m e n t of 1^
foreign d e b t , t h a n w o u l d o t h e r w i s e h a v e b e e n r e q u i r e d .
T h i s policy w a s moj
r i g i d l y p u r s u e d t h a n p e r h a p s h o t h e r w i s e w o u l d h a v e b e e n , h a d it n o t bej
s u p p o s e d from t h e d e c l a r a t i o n s of a g r e a t p o r t i o n of t h e A m e r i c a n p r e s s , tbj
it w a s a p a r t of t h e p o l i c y of our G o v e r n m e n t t o p r e v e n t t h e e x p o r t a t i o n of sj*
c i e e n t i r e l y , a n d c o n t i n u e , a s far a s p o s s i b l e , t h e d r a i n from E u r o p e .
Col
b i n e d w i t h t h e s e causes-, w a s t h e e x e c u t i o n of t h e D e p o s i t e Act of J u n e , l#fl
I t h a v i n g b e e n a s c e r t a i n e d front t h e r a p i d i n c r e a s e of t h e r e v e n u e from tl
s a l e s of t h e p u b l i c l a n d s , a n d t h e d u t i e s on foreign i m p o r t a t i o n s , t h a t ih«j
w o u l d b e a l a r g e s u r p l u s in t h e T r e a s u r y o n t h e 1st of J a * m a r y , 1 8 3 7 , it *j
d e t e r m i n e d t o w i t h d r a w it from t h e c o n t r o l of t h ^ F e d e r a l G o v e r n m e n t , ?
w h i c h its p o s s e s s i o n offered s o m a n y s t r o n g a n d d a n g e r o u s t e m p t a t i o n s , ) A
from t h e c u s t o d y of t h e d e p o s i t e b a n k s , to p r e v e n t its* b e i n ^ m a d e t h e founfl
tion of d a n g e r o u s a n d e x c e s s i v e i s s u e s of b a n k p a p e r ; a n d to p l a c e it in A
c u s t o d y of t h e S t a t e G o v e r n m e n t s , t h u s t o r e m a i n t o b e e m p l o y e d for t h e \ok
benefit of t h e p e o p l e , (from w h e r e it h a d b e e n u n c o n s t i t u t i o n a l l y and improjtffl
d r a w n , ) until n e e d e d for t h e l e g i t i m a t e p u r p o s e s of t h e G o v e r n m e n t , a fl
p o s i t i o n , in m y h u m b l e o p i n i o n , b n t h w i s e a n d s a l u t a r y , b o t h a s r e g s a d M
currency
a n d t h e p u r i t y of t h e G o v e r n m e n t .
F o r t h e p u r p o s e s of g i v i n g ^
b a n k s t i m e l y n o t i c e , a n d to e n a b l e t h e m to m e e t t h e d e m a n d s of t h i s law trfl
out d e t r i m e n t to t h e m s e l v e s o r t h e p u b l i c , t h e o p e r a t i o n of t h e a « t w a s non
c o m m e n c e u n t i l t h e 1st d a y of J a n u a r y after its p a s s a g e , a p e r i o d of *
m o n t h s , a n d t h e n to b e m e t in four e q u a l q u a r t e r l y i n s t a l m e n t s . T i n s w a s 4
p i e t i m e to p r e v e n t a n y s e r i o u s d e r a n g e m e n t of t h e a flairs of t h e banks*]
t h e c o m m e r c e of t h e c o u n t r y .
I n a s h o r t t i m e after t h e p a s s a g e of this *J
a n d l o n g b e f o r e it w a s a s c e r t a i n e d w h a t w o u l d b e t h e a m o u n t t o b e distribu**
a n d of " c o u r s e t h e first i n s t a l m e n t , t h e S e c r e t a r y of t h e T r e a s u r y i s s u e d !
o r d e r s to t h e d e p o s i t e b a n k s , d i r e c t i n g t h e m , b y a fixed p e r i o d , t o transff]
s p e c i f i e d p o i n t s , a b o u t 6 1 3 , 0 0 0 , 0 0 0 , ( a s w e l l a s I r e e o J l e c t , ) i n s t e a d ofg***
drafts to ike States for their several quotas an the most convenient banhs^ t&f^
the amount an the day it was due; w h i c h m i g h t h a v e b e e n m e t , a c c o r d i n g
t h e u s u a l m o d e of c o m m e r c i a l e x c h a n g e , b e t w e e n creditor and d e b t o r *****
a n d m e r c h a n t s ; a n d b y w h i c h t h e y w o u l d h a v e b e e n p e r f o r m i n g b u t t h e *>**
c o m m e r c i a l f u n c t i o n s ; w h e r e a s , by the operation of the orders of the Tree**
890.140,438
104,330,1)73
118,955/239
128,063,010
45442,095.690
S P E E C H OF MR. G A R L A N D .
fe
23
tpar(ment, the amount
to be transferred,
iras abstracted from commercial
cmuymenti from the time of the transfer till the payment ; a n d c r e a t e d a d e m a n d .
\ some i n s t a n c e s , for s p e c i e , w h i c h m i g h t h a v e b e e n a v o i d e d .
T h u s was incted u p o n c o m m e r c e an injury from t h e i/tjudictotiv execution nf the tan:, w h i c h
d e x t e n o u s l y a s c r i b e d to t h e p r o v i s i o n s of t h e l a w i t s e l f ! T h i s o p e r a t i o n w a s
•rticularly s e v e r e upon t h e N e w Y o r k H a n k s , w h i c h h e l d in t h e n e i g h b o r h o o d
'f $ 2 0 , 0 0 0 , 0 0 0 of t h e public d e p o s i t e e .
T h e d e p o s i t e a c t in itself did not
^ c e s s a r i l y d e c r e a s e , or t e n d to d e c r e a s e , the a c t i v e c a p i t a l of t h e c o u n t r y ;
twas t a k e n from b a n k s to be a g a i n put into b a n k s .
W h i l e it r e d u c e d t h e a c t i v e
£ e a n s o f s o m e , it i n c r e a s e d t h a t of o t h e r s .
In many instances the credit
^as o n l y p a s s e d from t h e F e d e r a l to t h e S t a t e G o v e r n m e n t s .
There was
M h i n g in it to e m b a r r a s s t h e t r a d e a n d c o m m e r c e of t h e c o u n t r y .
T h e effect
pas p r o d u c e d by its u n w i s e e x e c u t i o n , c o m i n g in aid of o t h e r c a u s e s ttf an em-,
parrassing c h a r a c t e r .
I n t h i s o p i n i o n 1 a m s u s t a i n e d by t h e m o s t a b l e ami
Milful financiers of t h e c o u n t r y .
L At a b o u t t h e t i m e of t h e s u s p e n s i o n of s p e c i e p a y m e n t s , t h e r e w e r e in t h e
Nnks, (if m y e s t i m a t e be c o r r e c t , ) a b o u t S l o 5 , 0 0 0 , 0 0 0 of private d e p o s i t e e .
Bnese p r i v a t e d e p o s i t e e w e r e g e n e r a l l y m a d e in b a n k n o t e s ; y e t t h e d e p o s i t s h a d t h e r i g h t to d e m a n d s p e c i e for t h e m .
W h e n t h e o p e r a t i o n of t h e s e
Kuses w e r e p e r c e i v e d , a n d t h e d i m i n u t i o n of c o n f i d e n c e on t h e p a r t of t h e
g o v e r n m e n t m a n i f e s t , t h e p r i v a t e d e p o s i t o r s , in p l a c e of t h e i r d e p o s i t e d n o t e s ,
Ngan t o d e m a n d s p e c i e .
B r o k e r s alsv b e g a n tu d e m a n d s p e c i e for all tho
tes w h i c h t h e y h e l d , or c o u l d p u r c h a s e , and t h i s w n s n o s m a l l nrnount.
T h e b a n k s in t h e city of N e w Y o r k , w h e r e the s t o r m first b e g a n to r a g e
f d to p r o d u c e m o s t s e r i o u s effects, a l t h o u g h u l t i m a t e l y r e s p o n s i b l e for all
l e i r o b l i g a t i o n s , could not m e e t t h i s s u d d e n r u s h upon t h e i r v a u l t s w i t h o u t
Mn to t h e m s e l v e s a n d tlie p e o p l e ; t h e y t h e r e f o r e s u s p e n d e d s p e c i e p a y m e n t s .
fkis s u s p e n s i o n , t h e c a u s e s ol w h i c h w e r e not u n d e r s t o o d by the c o u n t r y ,
Foduced a l a r m t h r o u g h o u t t h e whole; c o m m u n i t y ; and a g e n e r a l s u s p e n s i o n of
Specie p a y m e n t s w a s t h e r e s u l t .
By t h i s s u s p e n s i o n I do not d o u b t that t h e
j*nk« h a v e n o t o n l y s a v e d t h e m s e l v e s but t h e c o u n t r y from utter r u i n a n d
K»tructionI confidently b e l i e v e that t h e w i t h d r a w a l of t h e c o n f i d e n c e of
f« G o v e r n m e n t , s o s t r e n g t h e n e d t h e o p e r a t i o n of all t h e c a u s e s to w h i c h I
Rve a d v e r t e d , t h a t it c o m p e l l e d t h e h a n k s to a c o u r s e , w h i c h w i t h t h e fosterFg care a n d c o n t i n u e d c o n f i d e n c e of t h e G o v e r n m e n t , could ami w o u l d h a v e
fcfcen a v o i d e d : hjr t h e h a n k s h a v e no i n t e r e s t , w h a t e v e r , lo e m b a r r a s s t h e i r
^ a o p e r a t i o n s b y an act so d e s t r u c t i v e of that c r e d i t w h i c h is so n e c e s s a r y to
™ s u c c e s s f u l e x t e n s i o n of t h e i r b u s i n e s s — f o r s o u n d u n s u s p e c t e d c r e d i t is
ks very s o u l of t h e i r o p e r a t i o n s , a n d t h e foundation of t h e i r profits.
T h e t r u t h of t h i s a r g u m e n t is fully s u s t a i n e d by r e c u r r e n c e to t h o h i s t o r y of
he B a n k of Ungd&rid, a V w e l l as o u r ' o w n b a n k i n g i n s t i t u t i o n s .
On many ocean s t h e B a n k of E n g l a n d h a s b e e n sorely p r e s s e d , yet it rth.ita
thtcontdence, aud was aided by the Government,
and" w a s e n a b l e d t h e r e b y to s u r m o u n t
* e m b a r r a s s m e n t , a n d r e c o v e r from its difuculties.
>
I*1 1 7 9 3 p a r t i c u l a r l y ,
t» o p e r a t i o n s w e r e so e m b a r r a s s e d , a n d t h e r u s h for s p e c i e so g r e a t , tbrit
kwas c o m p e l l e d t o s u s p e n d s p e c i e p a y m e n t s ; a n d c o n t i n u e d t h e s u s p e n s i o n ,
Without i n t e r m i s s i o n , from t h a t time till 1 8 2 9 , u i a n y of iho c a u s e s w h i c h
f o d u c e d t h e s u s p e n s i o n , c o n t i n u i n g to «xist d u r i n g the w h o l e t u n e . I n t h i s
fele of e m b a r r a s s m e n t , its c o u r s e w a s justified b y the H n t i s h G o v e r n m e n t ,
•Kose c o n f i d e n c e , a n d t h a t of tho m e r c a n t i l e coin n u i u t y c o n t i n u e d , a n d its
* a p m s i o n w a s l e g a l i z e d , until finally, hy a p r u d e n t i a l c o u r s e of m e a s u r e s ,
Mopted to its true c o n d i t i o n , it t r i u m p h e d over all difficulties; a n d , in 1 8 2 9 ,
r
22
SPEECH OF MR- GARLAND,
resumed s p e c i e payments, w h i c h it still continues.
The confidence of the
Government and merchants enabled the bank thus to sustain itself; to maintain
its solvency and its credit ; and to perform, with s u c c e s s , its commercial and
fiscal duties.
In 1 8 1 5 , the State Banks, from the operation of many causes, suspended
specie, payments, yet the confidence of the Government w a s not withdrawn.'
Mr. Dallas and Mr. Crawford, both able and patriotic men, as Secretaries
of the Treasury, having sustained their credit by all the means in their powerMr. Crawford, particularly, made large deposites of public money in many of
them ; and thereby enabled them to indulge the people, maintain their o w n
credit, redeem their debt to the public, and finally, in 1 8 1 7 , to resume specie
payment. 1 believe if the same benevolent and patriotic policy had been pufsued
towards the State Banks, at the present period, the existing suspension would not
have continued to this time,, if it had taken place at alL Mr. Dallas nor MrCrawford, however, had not conceived the idea of a total seperation
between
the Government
and the banking institutions
of the country as fiscal agents;
and, therefore, felt some inducement to sustain and preserve them ; but a different feeling s e e m s to prevail with the present Secretary of the Treasury, who
can only e x p e c t to s u c c e e d in his v i e w s by the embarrassments and difficultiesof the banks. W h i l e I do not ascribe to him any design to produce the e m barrassment w h i c h has overtaken the banks, and, with them the commerce
of the country, yet I am well satisfied, that he has withheld from them that confidence, w h i c h might justly have been extended; and wbich would, before this,
h a v e redeemed them from their embarrassing difficulties, and have afforded
salutary relief to the people, and the commerce of the country.
T h e charge made by the President, and those w h o now favor a total separation between the fiscal operations of the Government and the Hanks, " that
they have been guilty of an e x c e s s i v e issue and circulation of their paper," ifr
true—lamentably true. Y e t I cnnnot perceive in all the facts and circumstances, connected with the charge, that they have been actuated by any improper or irtipufe motives. T h e s e institutions are conducted by men w h o are
liable to be misled by the same impulses w h i c h betray the most prudent and
the most cautious of mankind into occasional error. A spirit of speculation
had extensively spread itself throughout the country ;*acted and re-acted from
the people to the banks, and from the banks to the people, until all, absorbed
by brilliant prospects of immeasurable wealth, were led beyond t h e b o u n d s of
prudence and discretion ; and ruin, to many, has been the penalty
These
impulses have occasionally produced like effects through all periods and resulted in like catastrophes, whether their currency w a s exclusively* metallic
or not.
All these evils carry with them, however, sure antidotes. T h e current of
money a l w a y s has its l e v e l ; and w h e n e v e r it e x c e e d s that level, the redundancy runs off q,nd leaves the current at its proper level. In its reduction,
serious and distressing injury is often inflicied ; yet the return is gradual and
sure. But a question arises, whether the hanks are entirely in fault in t h i s
matter? Is not the Government itself much in fault? And shall the banks
bo compelled to take the w h o l e responsibility for an error in w h i c h the
Government has largely participated ? At the time the public deposites w e r e
removed from the Bank of the United States, the then Secretary of the T r e a sury, acting under the impression, that the charter of the Bank of the United
States was not to be renewed, and that its extensive circulation and discounts
w e r e to be called in, in order that no shock to the business of the country might
23
SPEECH OF MR. GARLAND.
b e s u s t a i n e d , urged upon the S t a t e B a n k s , in the following note, the duty
w h i c h would devolve upon them to supply the vacuum w h i c h would be created
b y t h i s w i t h d r a w a l , growing out of their fiscal connection with the Government.
T h i s the banks attempted to do, and gradually i n c r e a s e d their a c c o m m o d a t i o n s and enlarged their circulation. H e s a y s ,
TREASURY DEPARTMENT,
September 2fi, 1833.
SIR : T h e Girard Bank has been selected by this Department as the depository of the
public money collected in Philadelphia and its Vicinity, and the collector at Philadelphia,
will hand to you the form of a contract proposed to be executed, with a copy of his instructions from this Department.
In selecting your institution as one of the fiscal agents of the Government, I not only
rely on its solidity and established character, as affording a sufficient guarantee for the
-safety of the public money intrusted to its keeping, but 1 confide, also, in its disposition
to adopt the most liberal course which circumstances will admit towards our moneyed
institutions generally, and particularly to those in the city of Philadelphia.
T h e deposites of the public money will enable you to afford increased facilities to eom^
merce, and to extend your accommodation to individuals. And as the duties which are
payable to the Government arises from the business and enterprise of the merchants engaged in foreign trade, it is but reasonable that they should be preferred, in the additional
accommodation which the public deposites will enable your institution to give, whenever
it can be done without injustice to the claims of other classes of the community.
I am, very respectfully, your obedient servant,
R. B. T A N E Y ,
Secretary of tfic treasury.
T o the PRESIDENT of the Girard Bank* Philadelphia.
T h i s r e c o m m e n d a t i o n was r e p e a t e d by the late P r e s i d e n t in his s u c c e e d i n g
annual Message.
B y the deposite act of J u n e , 1836, for proportions of the
p u b l i c m o n e y beyond a specific amount, the Deposite Banks were required to
pay interest, w h i c h m a d e it a principle of self-defence, that t h e y should extend
their loans and increase their circulation ; b e c a u s e it w a s not to be e x p e c t e d
l h a t t h e y would lock up, and keep unemployed ^ the public money, on which they
were hound to pay ineress!
T h e s e two causes combined, certainly produced
a n excess" in the bank discounts and circulation of the country. T h i s e x c e s s
h a s b e e n i n c r e a s e d by another c a u s e , w h i c h Mr. T a n e y nor C o n g r e s s did not,
o r could not, h a v e anticipated. T h e vacuum w h i c h w a s anticipated by the
refusal to r e n e w the charter of the Bajik of the United States, w a s n e v e r prod u c e d ; for, contrary to all expectation, the capital and stockholders of that
b a n k w e r e subsequently incorporated by the State of P e n n s y l v a n i a , w h i c h cont i n u e d in circulation its notes, and prevented any material diminution in its discounts.
I a p p e a l , then, to the good s e n s e of this H o u s e to say, w h e t h e r the e x c e s sive i s s u e s complained of, have not b e e n produced by cause*, calculated in
t h e i r v e r y nature to mislead, and produce the e x c e s s complained of, without
t h e slightest imputation of fraud or corruption against the b a n k s ?
M r . C h a i r m a n , t h e connection w h i c h now exists b e t w e e n the finances of
t h e G o v e r n m e n t and the Deposite B a n k s , w a s produced by the solicitations of
t h e G o v e r n m e n t itself. T h e G o v e r n m e n t found itself engaged in a severe
a n d dubious conflict with the B a n k of the United States, which it had determ i n e d to overthrow. T o do this, it was n e c e s s a r y so to conduct its operations,
t h a t t h e c o m m e r c e and business of the country might not be materially s h o c k e d ,
a n d t h e sensibilities of the people excited. T o effect this, it sought the aid,
a n d p r o c u r e d t h e operation, of the late Deposite B a n k s , without w h o s e aid
a n d co-operation, I have no hesitation in believing, the B a n k of the U n i t e d
S t a t e s Would h a v e triumphed.
Y e s , Sir, I believe that it would have s u c c e s s fully resisted even A n d r e w J a c k s o n , w i t h all his popularity, his a c k n o w l e d g e d
firmness and courage. The State Banks came to the aid of the Government,
and
24
S P E E C H OF MR. G A R L A N D .
the Government triumphed.
F o r this t h e y i n c u r r e d t h e u n d y i n g hostility of t h e
B a n k of t h e U n i t e d S t a t e s , w h i c h still p u r s u e s t h e m . T h e y i n c u r r e d t h e
d e n u n c i a t i o n s a n d p r o p h e c i e s of evils of the Opposition, w h o o p e n e d Tipon
t h e m all t h e i r b a t t e r i e s . T h i s t h e y w i t h s t o o d ; but in t h e h o u r of victory,
w h i c h t h e y so signally contributed to a c h i e v e , in t h e very first hour of t h e i r
difficulties and p e r i l s , t h e very friends w h o m t h e y r e s c u e d from defeat, h a v e
t a k e n p o s s e s s i o n of t h e b a t t e r i e s of t h e e n e m y , a n d now pour thick vollies upon
their d e v o t e d h e a d s ! I s this g e n e r o u s 1 I s it m a g n a n i m o u s ? I s it liberal ?
1 l e a v e y o u , sir, to give t h e a n s w e r . I l e a v e y o u to d e t e r m i n e w h e t h e r , for
c a u s e s w h i c h m a k e s the act not only e x c u s a b l e , but justifiable. T h e s e institutions a r e to b e utterly annihilated for t h e i r late s u s p e n s i o n of s p e c i e p a y m e n t s , w h e n t h e y h a v e , upon t r y i n g o c c a s i o n s , afforded s e a s o n a b l e relief t o
t h e c o u n t r y , a n d a r e entirely solvent.
T h a t t h e S t a t e B a n k s a r e s u s c e p t i b l e of s u c h regulations as will s e c u r e
to t h e c o u n t r y a sound c u r r e n c y , I do not doubt ; for this is clearly proved b y
e x p e r i e n c e ; and that the r e v e n u e of this G o v e r n m e n t m a y b e so employed a s
to be a m o s t potent e n g i n e in t h e a c c o m p l i s h m e n t of s u c h a d e s i r a b l e object,
b y t h e force w i t h w h i c h e i t h e r t h e i r h o p e s or t h e i r fears m a y be addressed*
c a n n o t b e r e a s o n a b l y doubted. I n 1 8 1 6 , w h e n specie* p a y m e n t s w e r e sus^
p e n d e d , a n d t h e evils of a r e d u n d a n t a n d d e r a n g e d c u r r e n c y afflicted the
c o u n t r y m u c h m o r e s e v e r e l y t h a n n o w , Mr. W e b s t e r , in a s p e e c h delivered
in this H o u s e on 3 0 t h April, 1 8 1 6 . e x p r e s s e d h i m s e l f t h u s : ki T h a t if t h e s e
b a n k s , ( m e a n i n g the S t a t e B a n k s , ) w h a t e n g i n e , h e a s k e d , w a s Congress~to
u s e for r e m e d y i n g the existing evil ? T h e i r only ligitimate p o w e r , h e said, w a s
to interdict t h e p a p e r of s u c h b a n k s as do not p a y s p e c i e from b e i n g r e c e i v e d
at t h e c u s t o m - h o u s e .
W i t h a r e c e i p t of forty millions a y e a r , h e said, if the
G o v e r n m e n t w e r e faithful to itself a n d t h e i n t e r e s t s of t h e p e o p l e , t h e y could
control t h e evil, and it w a s their duty to m a k e the effort. T h e y should have
m a d e it long ago, and t h e y ought n o w to m a k e i t ; t h e evil g r o w s w o r s e by ind u l g e n c e . If C o n g r e s s did not n o w m a k e a s t a n d , and stop t h e c u r r e n t whilst
t h e y m i g h t , w o u l d t h e y w h e n t h e c u r r e n t g r e w stronger a n d stronger, h e r e after d o i t ? If this C o n g r e s s should adjourn without a t t e m p t i n g a r e m e d y , h o
said, it would d e s e r t its duty.**
If then, h o w m u c h m o r e potently could C o n g r e s s now o p e r a t e w i t h t h e
e n l a r g e d r e v e n u e s of t h e G o v e r n m e n t 1 Y e t Mr. W e b s t e r did not hold over the
h e a d s of t h e b a n k s t h e t e r r o r s of a final and eternal separation.
Mr. Biddle,
the P r e s i d e n t of t h e B a n k of t h e -United S t a t e s , in h i s triennial report to
the s t o c k h o l d e r s , in 183 I, s a y s : " And t h e y (the B a n k of t h e United S t a t e s
and b r a n c h e s , ) r e c e i v e d freely the n o t e s of' solvent S t a t e B a n k s , w i t h w h o m
periodical and convenient, but c e r t a i n , s e t t l e m e n t s of a c c o u n t s w e r e made/*
** B y r e c e i v i n g freely the n o t e s of t h e S t a t e B a n k s , w i t h i n convenient r e a c h
of t h e b a n k and its b r a n c h e s , and by frequent
settlements
w i t h them* t h e s e
institutions a r e k e p t in t h e h a b i t u a l p r e s e n c e of an accountability, w h i e h n a t u rally i n d u c e s t h e m so to apportion their i s s u e s to t h e i r m e a n s a s to s e c u r e t h o
soundness of the currency "
1 do not doubt the s o u n d n e s s of a n opinion, so t h o r o u g h l y d e m o n s t r a t e d b y
the practice w h i c h fell u n d e r t h e observation of h i m w h o e x p r e s s e d it ; a n d
I do not doubt that t h e G o v e r n m e n t in the e m p l o y m e n t of its r e v e n u e s , and t h e
o b s e r v a n c e of t h e s a m e r u l e s , m a y , t h r o u g h t h e i n s t r u m e n t a l i t y of t h e s t a t e
institutions, p r e s e r v e a sound c u r r e n c y , with m u c h m o r e s u c c e s s t h a n t h e United,
S t a t e s B a n k did. Frequent periodical, and certain s e t t l e m e n t s a r e t h e efficient
i n s t r u m e n t s by w h i c h e x c e s s i v e i s s u e s m a y be avoided* a n d sound c u r r e n c y
preserved.
S P E E C H OF
MR. G A R L A N D .
25
Mr. Chairman, if existing l a w s , w h i c h prohibit the continuance of any d e p o site bank as a fiscal agent of the Government, and the refusal of their notes in
p a y m e n t of the public revenue, had not sufficient terror to prevent the susp e n s i o n of specie payment, how much more efficacious do you suppose the
adoption of this m e a s u r e as the p e r m a n e n t law of the land, will be in restoring
s p e c i e p a y m e n t s — s o much to be desired, and so n e c e s s a r y to the prosperity
and tranquility of the country ? Sir, it will not only not "hasten, but greatly
prolong that important event. During the suspension of 1816, Mr. Dallas,
t h e n S e c r e t a r y of the T r e a s u r y , in his annual report to Congress of the 3d of
D e c e m b e r , 1816, expressing his opinion upon this identical subject, and t h e
propriety of exercising the power of such restriction, said : " T h e successive
a t t e m p t s made by this department to relieve the administration of the finances
from its embarrassments, have been ineffectual. T h e r e was no magic in a
m e r e T r e a s u r y instruction to the collectors of the revenue, which could by its
virtue, c h a r m gold and silver into circulation. T H E PEOPLK, IJVOIVIDUAI.LV,
DID NOT P O S S E S S A METALLIC MEDIUM, and could not be expected to procure
it throughout the country, as well as in cities, by any exertion unaided by the
b a n k s . And the banks tot) timid or too interested, declined every overture to
a co-operation for reinstating the lawful currency. In this state of things, the
T r e a s u r y , nay the Legislature, remained passive. T h e power of coercing the
banks was limited to the rejection of their notes in the p a y m e n t s of dues and
t a x e s , and to the exclusion of their agency in the custody and distribution of
the revenue ; but the exercise of that power could not G E N E R A T E A COIN C U R R E N C Y , although it would certainly A C T O P P U ^ I V K L Y UPO.V T H E P E O P L E , and
put at hazard every sum of money w h i c h w a H u e to the Government. Until,
therefore, a substitute w a s proposed for the paper of the Bank, it would h a v e
b e e n a measure of IMPOLITIC and useless S E V E R I T Y towards the community
to insist, that all contributions to the e x p e n s e s of the Government, should bo
p a i d in a medium w h i c h , it is repeated, the community DID NOT P O S S E S S and
COULD NOT P R O C U R E . "
In addition to these strong views of Mr. Dallas w h i c h apply with irresistible
force to the present state of things, I add those of the able, the patriotic and
p r a c t i c e d statesman, William H . Crawford, who succeeded him in the office
of S e c r e t a r y of the T r e a s u r y . In a letter dated Nov. 2 9 t 1816 addressed
to W m . Jones, then P r e s i d e n t of the B a n k of the United States, he says :
Extract of a letter o{ William H. Crawford, to William Jones, President of the Bank of the
United States, dated Nov. 29, 1 8 1 6 :
" From this view of the subject, us weil as from a gonoral knowledge of the means with
which the Bank of the United Statea will have to commence its operations, and of tho difficulties
which it will have to surmount if the Sfate Banks do not make a simultaneous effort, it is
manifest that, without their co-operation a national currency equal to the indispensable demands
of the community cannot he obtained by the 20th of February next, from the efforts of the
bank and Treasury, under the existing legal provisions."
Again-—In the same letter ho says :
**
.
"It is, however most ardently desired by tho Government that the necessity of resorting to
the issue of Government paper may be avoided, by the resumption of specie payments by the
S t a t e Banks on or before tho 20Lh (if February next. As an inducement to this incasnri?, the
Government can only aid their operations by withholding from circulation as much of their paper
now in the Treasury, or which may hereafter be received, as the demands upon the Treasury
during tho ensuing year will permit : as tho sum which it will be in the power of the Governm e n t to retain in the Treasury, will be considerate, it may present a sufficient inducement to
chancre their determination not to resume specie payments before tho 1st day of July next."
Again, he says :
"* How far the discrediting of their paper, Hy refusing to receive it in discharge of dues and
taxes, todl influence their conduct y can only be axcerlaxiicd by the E X P E R I M E N T . ' 1
26
S P E E C H OF MR. G A R L A N D .
T h e s e v i e w s of t h e s e t w o able and distinguished m e n , e x p r e s s e d in the
midst of a pressure more severe and infinitely more alarming than the present,
are entitled to the greatest weight.
It w a s then, s o it m a y n o w be truly
said, that this bill will not legislate a coin currency into existence, nor put gold
and silver into the pockets of the people f Its only effect w i l l be to prolong the
resumption of s p e c i e payments ; reduce and depreciate the already reduced
currency of the country, and ruin and o p p f e s s the people. Sir, if y o u would
s e c u r e t h e resumption of s p e c i e p a y m e n t s within a short time, fristead of crippling y o u must encourage and support the banks in their exertions to resume r
w h i c h w e have good reason to b e l i e v e t h e y are honestly exerting t h e m s e l v e s to
do.
T h e y n 6 w only n e e d a little further reduction of the foreign debt, (whicl>
p r e s s e s on them so s e v e r e l y , but w h i c h is rapidly b e i n g reduced,) and the restoration of the confidence of the Government, to resume s p e c i e p a y m e n t s . T h i s I
d o not doubt they will be able to do by the 1st of April. L e t us only imitate
the e x a m p l e s , and practise the l e s s o n s of Crawford and Dallas, and all will
be w e l l ; confidence will be restored and c o m m e r c e resume its usual activity.
E v e n if the s c h e m e proposed b y tbe committee of W a y s and M e a n s w e r e
w i s e and practicable, it cannot be carried into e x e c u t i o n at this time, without
ruin to the w h o l e mercantile community. Until the vaults of the banks are
u n l o c k e d by the resumption of s p e c i e p a y m e n t s , s p e c i e in sufficient quantities
cannot be procured. T h e attempt to enforce this l a w in the present state of
the metallic currency, would produce unparalleled distress. T h e maximum
e x c h a n g e s of the United States Bank in 1 8 3 2 , amounted to $ 2 5 4 , 0 0 0 , 0 0 0 ;
that of the State B a n k s in 1 8 3 6 to S ^ p f c n i l l i o n s w h i c h proves the capacity of the
State B a n k s , to conduct the e x c h a n g e s of the country, beyond doubt.
From
the foregoing considerations I conclude that there is no reason for discontinuing the State B a n k s as fiscal agents of the Government, that did not
equally exist against their employment.
Notwithstanding the fact, that the S t a t e s from the foundation of the Government, have chartered, and continue to charter banking institutions, and this
government h a s b e e n in the uniform practice of employing them * as fiscal
agents, it is n o w gravely contended b y s o m e that t h e s e institutions are unconstitutional. T h i s argument is derived from the constitutional prohibition
Upon the States to emit « bills of credit.91
If the States had made the note*
of the banks w h i c h t h e y h a v e incorporated, a legal tender, then the argument
would h?,ve been good ; but s o long as they are not made a legal tender, and
e v e r y man is at liberty to r e c e i v e t h e m or not, at his pleasure, then the prohibition of the constitution d o e s not apply.
I n e e d not detain the committee
by any argument of mine. T h i s question w a s determined directly by the S u premeOourt of the United States, at its last s e s s i o n — a democratic Supreme Court*
of w h i c h R o g e r B . T a n e y i s C h i e f Justice. I will s i m p l y refer to the ablp,
lucid, and unanswerable arguments of the j u d g e ^ j h e opinion of the court, in
the c a s e of Briscoe vs. the Commonwealth
of Kemuc&y.
But it is contended
by some that it is equally unconstitutional to employ State B a n k s as fiscal
agents, as to charter a National Bank. I cannot s e e the force of this very
recent objection; there is a material difference b e t w e e n creating an institution
w h i c h is not authorised b y the constitution, and entering into compacts w i t h
corporations w h i c h are created by governments, h a v i n g the constitutional p o w er to create them, and imparting to them the e x p r e s s p o w e r of contracting. I
do not perceive that, b e c a u s e the Government of the United S t a t e s cannot,
b y authority of the constitution, incorporate a National Bank, that it therefore
cannot enter into a contract w i t h individuals, w h i c h it i s daily in the habit o f
SPEECH OF MR. GARLAND.
27
doing. T h e State B a n k s , being constitutionally incorporated and having t h e
p o w e r to contract, stand to the Government p r e c i s e l y in the s a m e relation as
individuals, w h o have the p o w e r , and m a y contract wiih the G o v e r n m e n t .
Sir, 1 have been much surprised to h e a r an a r g u m e n t so fallacious, so gravely,
a n d so earnestly urged.
I will now, Mr. C h a i r m a n , call the attention of the Committee to t h e s c h e m e
p r e s e n t e d to the consideration of C o n g r e s s by the E x e c u t i v e , and offer to its
consideration as briefly as I c a n , m y objections to it.
The first objection is, that it will be trying an e x p e r i m e n t , to say the least of
it, of very doubtful results.
M y friend" from Virginia, (Mr. Jones,) in a very
able s p e e c h a few days past, s e e m s to justify e m b a r k i n g on this experiment, as
h e admits it to be, cm the ground that the G o v e r n m e n t itself is but an e x p e r i m e n t . It is true^ that our system of G o v e r n m e n t when it w a s entered upon,
w a s but an experiment, y e t it w a s a necessary onet and in its progress h a s d e veloped the wisdom of its adoption. But surely m y friend would not a r g u e
that because the system w a s originally an experiment, that it would be prudent to abandon that part of the system w h i c h h a s w o r k e d well, and adopt
one which h a s no practical result to r e c o m m e n d it. I regard it. as the part of
wisdom to adhere to every system w h i c h e x p e r i e n c e h a s taught to be w i s e and
salutary. I am sure m y honorable friend would not be willing to s u r r e n d e r our
admirable system of government and adopt another w h i c h had nothing more to
r e c o m m e n d it than that it w a s an experiment.
T h e s y s t e m of bank depositee*
h a s been tried, and although there have occasionally been some disorder a n d
d e r a n g e m e n t , as there h a s been in all h u m a n affairs, h a s generally w o r k e d
w e l l — s o far as the experiment n o w proposed h a s had a n y practice, it h a s b e e n
unsuccessful, and proved its utter insufficiency.
T h e second objection w h i c h I present is, that the public m o n e y will be
unsafe and its effects demoralizing. T h e safety of the public funds is an i m portant matter, and should enter deeply into the consideration of C o n g r e s s in
the ndoption of any s y s t e m w h i c h m a y be proposed. W e all know that t h e r e
is no s y s t e m w h i c h h u m a n ingenuity and sagacity can devise, that would be
entirely safe. Y e t reason and e x p e r i e n c e teach us that there are some more
safe, than o t h e r s , and that w h i c h reason and e x p e r i e n c e t e a c h e s to be the
most safe, should be adopted. In view of this question of greater safety, let
the present and the system proposed be contrasted.
P l a c e , if you please, the
estate of any individual who might be selected as t h e depositor and k e e p e r of
the public m o n e y , by the side qf the capital of any bank which would in the
exercise of a sound discretion, be selected, and how vast the difference in
favor of the b a n k — c o m p a r e the i n d u c e m e n t w h i c h th& bank h a s to p r e s e r v e
its ^ood faith and credit, in a m e r e pecuniary point of view, with that of an
individual, and h o w great the disparity in favor of the b a n k — c o m p a r e the
force of the moral obligation on the part of the bank with that of the individual,
all the officers of the bank, the directors and the stockholders are d e e p l y interested in preserving its faith with the Government and all other d e p o s i t o r s .
U n d e r the proposed system a single individual is i n t e r e s t e d — c o n t r a s t , if V ou
p l e a s e , the m e a n s of detecting fraud, peculation, and defalcation.
I n "the
b a n k s th© officers are in daily w a t c h and c h e c k upon e a c h other.
The
directory hold weekly sessions and superintend the officers, and t h e stockh o l d e r s hold annual meetings and examine and scrutinize into the conduct and
m a n a g e m e n t of the w h o l e — a s to the individual depositor, t h e r e would be only
t h e S e c r e t a r y of the T r e a s u r y , who residing at the seat of C o v e r n m e n t , would
h a v e but little opportunity to detect defalcation and other malversations.
But
28
SPEECH OF MR. GARLAND.
it is urged by the President.that ample security may be taken w h i c h will
remove all these objections. Sir, whatever collateral security you can take of
individuals, y o u can also take of the banks, w h i c h leaves the question of
safety still decidedly in favor of the banks, the best security w h i c h can be
had is in the adequte responsibility of the depositor, and that in every- s e n s e
of the word is w i t h the banks. T h e President s e e m s to be under the impression that the h i g h obligations of official duty w h i c h the public officers will
feel, will afford strong security against abuses. Sir, h o w e v e r honestly the
President may entertain this opinion, I regard it entirely illusory.
Official
parchment never yet made a man honest w h o w a s naturaly dishonest ; nor
did it ever y e t protect against the seductive influences of temptation, w h e r e
without it they would have been yielded to. Nothing, no' nothing, Sir, will
resist temptation but the stern and inflexible principles of integrity w h i c h are
implanted in the heart of man by the God of nature. Mr. Chairman, w e are
not without that most unerring of all guides, E X P E R I E N C E , upon this subject,
and the result of that experience is decidedly favorable to the banks.
There
h a s been, since the formation of the Government, deposited with and disbursed by the banks about $ 6 5 0 , 0 0 0 , 0 0 0 , with but little or no loss, according
to Mr. Crawford's estimate about the 45th part of one per cent., w h i l e of the
m o n e y whiAh has been kept by individuals, w h i c h is infinitely l e s s , much
greater loss has been sustained. Let the Treasury department open to the
inspection of the American people, all its outstanding balances against collectors and receivers, and I do not doubt that it will exhibit such decided
e v i d e n c e s in favor of the bank deposite system as to decide this question How
and forever.
H e r e , Mr. Chairman, I cannot but recur to the experience of
m y o w n state upon this subject, although I do it with much regret.
Sir,
there was a man many years ago at the head of the Treasury department
of Virginia, w h o w a s connected with a family of the highest standing and
respectability of the state, in w h o s e integrity every man who k n e w him had
the most entire confidence—he w a s proverbial for his honesty. T h i s man,
under the influence of those kind and benevolent feelings w h i c h sometimes
dignify and ennoble frail human nature, but yet mislead it, w a s tempted to
divert to his individual use larger sums of the public money than he was
afterwards able to restore, and thus became recorded a public defaulter.
Although he was a defaulter, he honestly surrendered to the government and his
securities his whole estate, but it w a s not sufficient to meet the whole defalcation. T h i s man was John Preston, w h o s e fate affords a melancholy proof
of the power of temptation over the human heart, for I feel confident in the
assertion, that in life as in death, he was an honest man. W h e n this man's
defalcation was discovered, the man w h o became his successor w a s a member of the state legislature, and was one of the most ardent denouncers of
the defalcation, and untiring investigators of its e x t e n t — h i s constant cry was
crucify htm, crucify him.
T h i s man too, who stood high in public confid e n c e , w a s also overtaken by the same irresistible teinpation, and fell a
victim to the same fate. H e also w a s at heart an honest man I do not
doubt.—I do not doubt that the fiscal history of many of the states affords
s o m e melancholy examples of this kind.
If w e d e s c e n d from high state
officers to the collectors in the counties, w e find many memorable and melanc h o l y instances of defalcations in collector^ and keepers of the revenue.
W i t h so many examples, Mr. Chairman, * before our e y e s , will Congress
plunge into a system where the inducements will be greater, and the temptations necessarily stronger on account of the i m m e n s e sums of money w h i c h
will be placed within the reach of individual depositors. I trust not, I hope
SPEECH OF MR. GARLAND.
29
we shall be warned by the dangers of the past, and avoid them for the future.
T h e collateral security w h i c h may be taken by the Government will afford
little or no relief from the eflecis of defalcation, because if the collecting officer fails,- the Government cannot r e a c h the securities except by a tedious
course of litigation, and then it very often fails to recover the money, for it
is now generally regarded as a sort of moral pri?iciple, for a man to secure
his estate against liability for security debts, particularly to Government; and
it very often happens that before judgment is recovered the securities have,
by conveyances and settlements of one description or other, placed their pro*
perty beyond the r e a c h of execution. Another strong argument in favor of
the State Bank system is, that if the public money be plundered from the
vaults of the hanks, the loss falls upon the banks ; if from individual depositors, the loss falls upon the Government. T h i s fact increases the vigilance
and watchfulness of the banks, and relaxes that of the individual agent. Although I feel very great respect fof the opinions of the President, yet I cannot agree with him, that this is a question between the strength of a Treasury
and a hank v a u l t ; neither of these vaults of themselves would ever, h o w e v e r
w e a k or however strong, plunder the public money. T h e y are incapable of
that ; but the question is between those who hold the keys of the vaults, bet w e e n the inducements and opportunities of the one or the other to plunder
the public treasure, between their liability to be plundered by one or a hundred
hands.
T h i s system, if adopted, will also exercise a very demoralising influence
upon society. Nothing is so well calculated to engender corruption in individuals or government, as to place within their reach the m e a n s of corruption.
L e t every man inquire of himself, how strong the temptation to plunder, or to
speculate upon the immense masses of public money which the operation of
the proposed system will necessarily throw into the immediate possession and
control of individuals. If lesser sums have produced the melancholy catastrophes to w h i c h I have referred, how many more may be expected ^when
the inducements shall be so largely increased. Sir, I do not know, you do
not know, this House does not know, who it is that has so much inflexible
integrity and firmness of character as to be safely trusted with this immense
amount. David is said to have been a man after God's own heart, yet even
h e was overcome by the power of temptation, and w a s plunged into crimes
of the deepest die. I might here inquire, who is it that has a proper regard
for his own character and that of his posterity, that will trust himself in a
situation so seductive, w h e n he has before his eyes so many melancholy instances of human infirmity—few, very few, who are trustworthy.
T h e third objection which 1 urge is, that it will increase the difficulty, risk,
and expense of transporting the public money, and subject the rfTihlic debtors
to great inconvenience. I regard it entirely unnecessary to detain the committee to prove that which experience has so well ascertained. If the public
monev is to be transported from point to point, throughout our immense territory
in gold and silver, its bulk creates inconvenience—its exposure to public gaze
begets risk, and the n e c e s s a r y employment of a sufficient guard to protect it
against robbery, will incur heavy expenses ; all this is avoided by the aid of
the banks, for they now transfer public money, to any point directed by the
T r e a s u r y department, at their own risk and charge. T h e T r e a s u r y Department, which has had the superintendence of this operation from the foundation
of the Government, and which can therefore, afford the most satisfactory evidence upon this point is uniform and undeviating in its testimony in favor of the
30
SPEECH OF MR.
GARLAND.
bank system, which I should regard as conclusive. But what substitute are
w e to have for this convenience, safety, and destitution of expense under the
proposed system. Nothing sir, but T r e a s u r y drafts that 1 can perceive.
T h e s e will not answer the purpose unless a sufficient amount of money can
always be found at every point where it is wanted. T h i s , in the nature of
things cannot be so, and to supply the amount necessary, specie must be
transported, or Treasury drafts employed as a medium of circulation, which
would introduce a system of government paper circulation incapable of adequate restriction, liable to abuse, and at war with the genius of our institutions. T h i s system in the course of time might be perverted to the most
dangerous purposes, and become an engine of most potent influence. Sound
policy is opposed to the creation of Government paper of any kind as a
permanent circulating medium, liable to the catastrophe of the old continental
paper system. It would in effect, become a Government Bank, which legislation might be found totally incapable of regulating or controlling.
If the
Government receives and pays out nothing but specie, the inevitable result will
be, that its drafts must become not only a medium of transfer, but of circulation also.
T h e fourth objection which I urge is, that it will indefinitely postpone the
resumption of specie payments by the banks. I do not profess, Mr. Chairman, to be skilled in matters of finunce, or versed in banking operations, but I
am clearly convinced that this increased and continual demand for specie, must
operate a heavy drain upon the vaults of the banks, the very moment they
resume specie payments. T h e merchants who have duties to pay, can only
rely upon the banks to supply them, for they have it not themselves. T h e
banks already suffering under a pressure which was well nigh exhausting
them, foreseeing the effect of this new demand would forbear to resume, and
this would not only seriously embarrass the merchants and the people* but
the Government itself; for as 1 before remarked, the passage of the bill'will
neither coin money, or put it into the pockets of the merchants or the people,
I then, emphatically ask how is this demand to be met. Sir you may call
spirits from the vasty deep, but calling will not bring them. You may pass
n 0 t col n
* •? * c ^ i1
S ° l d a n d * i l v e r - Connected with this objection
r
is that of the derangement of the exchanges, and the general confusion of busin e s s which this system will produce. T h e r e is no United States Bank in
existence which can regulate and supply the exchange demand. Individual
sources have been almost entirely destroyed by the banking system. T h e State
Banks then afford the only certain reliance to the community for the supply
and regulation of commercial exchanges. I need not urge upon the committee, that which every man's observation and experience must have taught him,
that neitt to the means of commerce, the facility of a sound, well regulated,
uniform system of exchanges is essential to its successful operation? T h e
demand for such a system for the accommodation of our widely extended, and
constantly increasing commerce, both foreign and domestic, must be manifest
to every one. If, then, the policy of the Government shall compel the banks,
an
~ ^ i s system must necessarily do so, still further to curtail their circulation
and loans, and restrict their exchange accommodations, is it not most manifest
that the effect will be still more to embarrass commercial intercourse, and
paralyse the industry and business of the whole country. Bv curtailing the
already too limited exchange accommodations with a deranged, unsteady, fluctuating system of exchanges, commerce becomes embarrassed, and with it the
whole business of the country.
SPEECH
OF MR.
GARLAND.
31
T h e limitation of e x c h a n g e s b e l o w t h e d e m a n d s of c o m m e r c e , t h e still
further r e d u c t i o n of b a n k circulation, c o n n e c t e d with the c o n t i n u e d s u s p e n s i o n of s p e c i e p a y m e n t s , will force u p o n the i m p o r t i n g m e r c h a n t s the n e c e s s i t y
of p u r c h a s i n g s p e c i e at h e a v y and e x o r b i t a n t p r e m i u m s , to m e e t t h e c l a i m s
of t h e G o v e r n m e n t a n d t h e i r foreign c r e d i t o r s , if e v e n t h e y can procure it
in sufficient a m o u n t s at a n y p r e m i u m .
T h e s e profits although they are at
first paid by t h e m e r c h a n t s , a r e g e n e r a l l y e x a c t e d from the agricultural and
m e c h a n i c a l portions of the c o m m u n i t y , w h o p r i n c i p a l l y c o n s u m e foreign g o o d s ,
in t h e s h a p e of profits; and in this w a y a h e a v y tax is i m p o s e d upon t h e m .
T h u s while t h e apparent-' operation is upon t h e m e r c h a n t , u n d e r the guise of
a n i n d i r e c t s y s t e m of t a x a t i o n , y e t the real o p e r a t i o n is u p o n the laboring c l a s s ,
a n d t h u s a s y s t e m p r o p o s e d for the good of the people, will o p e r a t e to t h e i r
s e r i o u s injury.
F o r sir, he a s s u r e d t h a t t h e p e o p l e w h o p u r c h a s e , are a l w a y s
t a x e d w i t h t h e s e e x a c t i o n s upon t h e m e r c h a n t s . T h i s s y s t e m will also e x e r t
a very d e l e t e r i o u s influence u p o n the c o m m e r c e of t h e c o u n t r y , by d i v e r t i n g
from the o r d i n a r y c h a n n e l s of t r a d e , t h e a m o u n t of s p e c i e w h i c h will be in
a c t i v e requisition to m e e t the d e m a n d s of the G o v e r n m e n t , w h i c h I t h i n k
is e s t i m a t e d by the S e c r e t a r y of the T r e a s u r y greatly b e l o w t h e real a m o u n t ,
for I am confident five millions will be g r e a t l y i n a d e q u a t e . T h e almost daily
a r r i v a l of foreign goods, and p u r c h a s e s of public l a n d s , w i l l r e s t r i c t t h e circulation of the G o v e r n m e n t funds to v e r y n a r r o w b o u n d s , so n a r r o w that t h e y
will be of no value to t h e g e n e r a l c o m m e r c e of t h e c o u n t r y .
T h e fifth objection w h i c h p r e s e n t s itself to m y m i n d is, that this s y s t e m will
c r e a t e a substantial distinction b e t w e e n t h e c u r r e n c y of the Government
and
t h e c u r r e n c y of the people.
1 h a v e w e i g h e d w i t h g r e a t d e l i b e r a t i o n , a n d I trust
i m p a r t i a l l y , the a r g u m e n t of the P r e s i d e n t a g a i n s t the truth of this p r o p o s i tion, as well on a c c o u n t of the s o u r c e from w h i c h it e m a n a t e s , as t h e i n t r i n s i c
i m p o r t a n c e of the subject itself, and I am d e c i d e d l y c o n v i n c e d that the p r o p o sition is literally and substantially
true. T h e v e r y fact that the E x e c u i i v e
d e s i r e s to s e p a r a t e itself e n t i r e l y from the b a n k i n g institutions of the c o u n t r y ,
a n d to restrict t h e i r n o t e s from being r e c e i v e d in p a y m e n t of t h e public d u e s ,
n o t w i t h s t a n d i n g t h e y constitute t h e g e n e r a l c i r c u l a t i n g m e d i u m of t h e c o u n t r y , p r o v e s t h a t the E x e c u t i v e r e g a r d s the metallic as a m u c h s o u n d e r and
safer c u r r e n c y t h a n b a n k p a p e r , a l t h o u g h it m a y p o s s e s s the essential quality
of convertibility into s p e c i e . I n t h e p r o p o s e d s c h e m e , t h e b a n k note circulation will be left e x c l u s i v e l y to the people ; and if it be not so safe or sound
a s t h e m e t a l l i c , t h e n it follows that the c u r r e n c y l e s s s o u n d and l e s s safe, is
confined to the p e o p l e . T a k e this fact in c o n n e c t i o n with t h e fact, that the
major part of the circulation is n o w , and likely will be, b a n k p a p e r , and u p o n
t h e principle of the distinction d r a w n in the M e s s a g e , the conclusion is i r r e sistible that t h e r e will be a n e x c l u s i v e metallic m e d i u m for the G o v e r n m e n t a n d
its officers, a n d a m e d i u m m a i n l y p a p e r for t h e p e o p l e . T h e bill now u n d e r
c o n s i d e r a t i o n , as d o e s t h e M e s s a g e , d r a w s the distinction, and its c o n s e q u e n c e s
m u s t follow.
C a n t h i s be s o u n d p o l i c y ? I s not the distinction invidious 1
D o e s it not m a k e t h e G o v e r n m e n t s u p r e m e ? w h e r e a s t h e people s h o u l d b e ,
and a r e s u p r e m e ?
Sir, in my h u m b l e opinion, it s t r i k e s at t h e v e r y foundation
of our s y s t e m ; it m a k e s the p e o p l e subordinate to the G o v e r n m e n t , w h e r e a s t h e
G o v e r n m e n t is subordinate to t h e p e o p l e . I k n o w , sir, this is not d e s i g n e d
b y t h e P r e s i d e n t , but it is the inevitable result of the distinction.
Mr. Chairm a n , t h e r e is no sound r e a s o n for this distinction, none w h a t e v e r , the b u s i n e s s
t r a n s a c t i o n s gf the p e o p l e are infinitely g r e a t e r and m o r e e x t e n d e d , and t h e r e fore of g r e a t e r interest, t h a n that ot the G o v e r n m e n t , a n d d e m a n d s t h e s o u n d e s t
32
SPEECH
OF MR.
GARLAND.
medium for their operation. If then, the metallic be the only safe and sound
medium for the Government, it is necessarily more important for the people ;
if tlie paper medium be safe and sound for the people, there is no reason
whv it is not equally so for the Government ; and instead of the Government
disparaging and discrediting the medium necessarily belonging to the people, it
should by the judicious employment of its immense revenues aid in preserving its safety and soundness, and extending its credit. T h i s Government
is charged by the Constitution with the regulation, the encouragement and
protection of commerce ; it could not more successfully perform that duty
than by giving full credit to the general circulating medium of the country, so
long as it is worthy. Sir, the conviction that the proposed system, contains
this unjust, and anomalous, and invidious distinction between the Government
and the people, is fast riveted in my mind, and if true, ought on that account,
if no other, to be repudiated.
T h e sixth objection which I urge to the present system is, that it will
oreatly aid, if not render indispensably necessary a National Bank. I assume
ft as a fact, which the experience of the past well justifies, that unless this
Nation and the States of this. Union, shall abandon its commerce, their systems
of internal improvement, so flourishing and*so rapidly increasing, and their
literary institutions, that the banking system in some form will be maintained ;
they have increased, and will continue to increase as the wealth, population,
manufactures, agriculture and commerce of the country increases. T h e P r e sident himself expresses the opinion, in his Message, that the States will
not abandon their systems of banking. T h e power of the States to incorporate these institutions, and the want of harmony in the exercise of this power,
has rendered it difficult even with the aid of the national revenues, and the
advantages of national credit to preserve a sound medium of circulation, and
perform the fiscal and commercial duties which have devolved upon them. K
then, they are farther discredited by the passage of this bill, and their operations reduced to narrower bounds, it is manifest that thev will not be able,
and will not have sufficient credits to supply the country with a safe, sound
and ample commercial medium; for without credit, they are totally inefficientIt is admitted on all hands, that while gold aud silver are safe and sound,
they are not ample and convenient, hence the country will demand some
other medium to keep pace with its rapid improvement^ and that will be a
National Bank medium. In the necessity of the demand all constitutional
scruples will be overlooked, and a National institution incorporated.. SiT, I
shall not, if here, vote for it, but be assured that the overwhelming influence
of public discontent will, as in 1816, drive to this resource, and*when again
established, it will obtain a hbld which nothing can break, and will with all
its obnoxious and fatal tendencies be the permanent policy of the country- T h i s
brings me to consider whether the passage of this bill will not discredit t h e
bank paper, and impair its value as a circulating medium. If the course
already taken by the Treasury Department toward these institutions, the calling of Congress together on account of the suspension of specie payments, the
recommendation of the Message to discontinue them as depositories, and the
receipt of their notes in payment of the public revenue, if the charge of the
Executive that they have been faithless fiscal agents, more so than the B a n k
of England under like circumstances, and the sanction of these charges by
passing the present bill, be not sufficient to discredit and cripple these institutions, then there is no cause whatever but absolute unqualified bankruptcy that
wouid discredit them. W e already see the blighting influence which the
SPEECH
OF ^TR.
GARLAND.
33
w i t h d r a w a l of the confidence of the G o v e r n m e n t h a s e x e r t e d upon the b a n k s ,
a n d w e m a y well anticipate the fatal effects w h i c h a blow from the r e p r e s e n t a t i v e s of t h e people will p r o d u c e , all of w h i c h will ultimately act upon t h e
p e o p l e , in the great s c a r c i t y of m o n e y a n d r e d u c t i o n in the value of their property.
T h i s is not all, Mr. C h a i r m a n , this m e a s u r e I fear, if adopted, will e x e r t a
still more fatal influence upon the brinks t h a n a n y w h i c h I h a v e attempted to
p r e d i c t , I fear it will ultimately, if not i m m e d i a t e l y , utterly d e s t r o y t h e m ,
and* p r o d u c e a state of ruin and desolation, w h i c h it is a p p a l l i n g to c o n t e m p l a t e . T h e c o n n e c t i o n and union b e t w e e n a g r i c u l t u r e , m a n u f a c t u r e s , and
c o m m e r c e is so intimate, that o n e c a n n o t be affected without, at the s a m e time,
affecting the o t h e r ; w h a t e v e r c a u s e therefore that i m p a i r s the credit of t h e
c o m m e r c i a l m e d i u m of the c o u n t r y n e c e s s a r i l y inflicts a serious injury upon
a g r i c u l t u r e and m a n u f a c t u r e s , particularly a g r i c u l t u r e , for that is the foundation
of c o m m e r c e and m a n u f a c t u r e s .
T h e s e b a n k s are an e s s e n t i a l and n e c e s s a r y
part of t h e c o m m e r c i a l c o m m u n i t y , and w h a t e v e r e m b a r r a s s e s t h e m , e m b a r r a s s e s
t h e w h o l e c o m m e r c i a l c o m m u n i t y . T h i s idea is very forcibly e x p r e s s e d b y
M r . C a l h o u n in a s p e e c h d e l i v e r e d in 1816 in this H o u s e on the b a n k c h a r t e r ,
s p e a k i n g of the c o m m e r c i a l qualities of the t h e n p r o p o s e d Bank of the United
S t a t e s , h e s a y s , i4 T h i s b a n k is no m o r e t h a n a part of t h e c o m m e r c i a l comm u n i t y in w h i c h it is e s t a b l i s h e d , and a n y e m b a r r a s s m e n t of t h e b a n k must
p r e s s , also, on the w h o l e c o m m e r c i a l c o m m u n i t y , that community would be the
first to give way in such a case, and this would p r o d u c e a r u n on the b a n k ,
a n d c o m p e l t h e stoppage of p a y m e n t . " . 1 c a n n o t i m a g i n e to m y s e l f a m o r e
d e c i s i v e step, in the p r e s e n t e m b a r r a s s e d condition of t h e c o u n t r y and t h e
b a n k s , t h a n the p a s s a g e of this bill, to force the b a n k s to continue t h e s t o p p a g e
of p a y m e n t s , a n d finally to wind up their b u s i n e s s . If s u c h would be the
effect w h a t would be the c o n s e q u e n c e s to the p e o p l e . I let the P r e s i d e n t of
t h e U n i t e d S t a t e s , w h e n h e w a s G o v e r n o r of N e w Y o r k , a n s w e r .
In his
a n n u a l m e s s a g e to t h e L e g i s l a t u r e of N e w York, Mr. V a n B u r e n s p e a k i n g
u p o n the e x p e d i e n c y of r e n e w i n g the c h a r t e r s of m a n y of the N e w Y o r k b a n k s ,
w h i c h w e r e about to e x p i r e , p o r t r a y e d the ruinous effects w h i c h their discont i n u a n c e would p r o d u c e upon the S t a t e a n d the p e o p l e , e x p r e s s e d himself in
t h e s e forcible a n d conclusive t e r m s :
" But w e cannot close our eyes to the difficulties and pecuniary embarrassments that must
result from suddenly stopping the operations of so many and auch long established institution*
O f the* thirty million* that are owing to them, the principal part in probably due from merchants, manufacturers, and other large dealers in their vicinity ; but they in turn kmms their
- demands against persons pursuing- similar business in the country* and those again must look
to their customers, thus embracing alt classes of society* in the liability
to contribute
towards
a g'.neral settlement.
T h e amount due from the banks, especially all that portion whtch consists
in bills issued by them, would be found scattered through the whole community.
From even
this (superficial view of the subject, it must be evident to all reflecting minds, that the pecuniary convulsion that must result from & compulsory close of these extensive concern*, would
b e neither SLIGHT in its degree, nor TEANSIKNT in its duration.
Y o u will, I am convinced,
concur with me m the sentiment, that a responsibility of so serious a character, and so fearful
in its possible consequences, should not he incurred on slight grounds, or from motive* of expediency in the least degree questionable."
M r . C a l h o u n , in a s p e e c h in the S e n a t e , in 1 8 3 4 , s p e a k i n g upon t h e subject
of t h e b a n k s a n d the effects of thoir s u d d e n s u p p r e s s i o n , t h u s e x p r e s s e s h i m self, " T o s u p p r e s s t h e m (the b a n k s ) at onco would, if it w e r e possible, w o r k
a greater revolution^ a greater change in the relative condition of the various
c l a s s y of the c o m m u n i t y , t h a n would the c o n q u e s t of t h e country by a
s a v a g p ^ n e r n y " T h i s s e n t i m e n t is true, inevitably tru^e, a n d b y it I p r o p o s e
34
SPEECH
OF MR.
GARLAKD.
to test the effects w h i c h the destruction of the banks would at this time produce upon the people. In 1834, the people were indebted to the h a n k s
$ 3 2 4 , 0 0 0 , 0 0 0 ; in 1837, $ 5 9 1 , 0 0 0 , 0 0 0 , if then the suppression of the banks in
1 8 3 4 would have produced such distressing effects, what would it do n o w ?
Ruin the whole community. W h e n the banks are pressed, they press in t u r n ^
the mercantile community, and that presses the people who are the victims,
for they have no debtors to resort to, they must resort to their property.
Again. If the Government demands specie in payment of the public revenue,
the merchants must in turn demand specie of their debtors, T H E PEOPLE, w h i c h ,
if they cannot procure, will lead to the most destructive sacrifices in t h e
s a l e s of their property. N o creditor is boun'd to receive any thing but s p e c i e ,
and this system will afford a pretext for such a demand ; for the creditor m a y
well refuse to receive discredited, depreciated bank paper, and therefore
cause immense sacrifices of property.
Mr* Chairman, the bank circulation is already reduced from about 160 to
100 millions dollars, as i s also the active specie circulation greatly reduced ;
the present circulation is founded upon an adequate specie basis, and cannot,
with due regard to the interest of the people, be further reduced. T h i s s y s t e m
will render a further reduction inevitable, and produce a corresponding inability
on the part of the people to pay debts, and a fearful depreciation in the value
of property, and in this point of view will operate most injuriously upon the
debtor c l a s s o f the community.
T h e eighth objection which I have to the proposed s y s t e m is, that it will
greatly enlarge the Executive patronage, and fearfully increase its power.
Upon this point, Mr. Chapman, I am brought into direct collision with the
opinion o f the President, w h o s e e m s to be of the opinion that this measure will
not only not increase but actually diminish Executive patronage
I am not
satisfied with the reasoning of the message, and find nothing in it although
ably urged, to change the opinion w h i c h I took up in 1 8 3 4 , as to the effect
i L * ™ ? t m e a s t u r e : / r h e Secretary of the Treasury s e e m s to think that * »
^rPffS5?7ii
" i i ^ T " , ! ° ? C e r S a n d « increased expenditure o f
about 60,000 dollars, will enable that department to conduct this System with
success
In this opinion Mr. Chairman, I differ widely wit*i the^Secretary,
although I do not doubt his sincerity. All propositions for the creation of
n e w systems are accompanied with the most rigid regard to economy, but after
their organization their wants gradually develope themselves till finally, by
legislation after legislation, the officers and the expenses are fearfully increased. All the departments of the Government had small and economical
beginnings, yet in the progress of lime the number of their officers and the
amount of their salaries, and other expenses, have greatly increased, s u c h
will be the course of this system T h i s will be but the germ, and your ten additional officers and $ 6 0 , 0 0 0 additional e x p e n s e , will s w e l l into hundreds of
officers, and hundreds of thousands of increased expenditure. T o tell me that
all the increase of clerks, house-rent, stationary, and other incidental-expenses
which this system will require can be met with $GO,000, is to tax my credulity with the belief of an utter impossibility. Sir, the Secretary of the T r e a *£?y-K!T^ find himself utterly mistaken is his estimate, if, by the passage of •
*
this bill, he shall be authorized to put this system into practice.
In considering this question it should be borne in mind that our country is rapidly i n creasing in population, wealth, power, and commerce, and that necessarily
as these progress, increased duties on the part of the Government in all its
departments will be unquestionable, and on no department of the Government
SPEECH
OF
MR.
GARLAND.
35
w i l l t h e s e increased duties devolve so materially as on the Treasury Departm e n t . • H e n c e , sir, I l o o k to the adoption of this s y s t e m a s l a y i n g the foundat i o n o f an i m m e n s e i n c r e a s e of the p a t r o n a g e of the E x e c u t i v e in the a p p o i n t i n g and d i s b u r s i n g p o w e r ,
Mr. C h a i r m a n , t h e p a t r o n a g e of t h e E x e c u t i v e i s
t h e m o s t d a n g e r o u s of all its p o w e r s , and the m o s t l i k e l y to e n d in t h e o v e r t h r o w o f the l i b e r t i e s of t h e country ; b y t h e e x e r c i s e of t h i s p o w e r , t h e E x e c u t i v e r a m i f i e s in e v e r y s e c t i o n of this w i d e l y e x t e n d e d e m p i r e , its officers
i n d e b t e d to t h e E x e c u t i v e for their a p p o i n t m e n t , ?ind h o l d i n g t h e m at its w i l l .
W h e n w e c o n s i d e r their n u m b e r , the i n f l u e n c e w h i c h t h e y e x e r c i s e , and, t h e
p o s i t i o n s w h i c h t h e y o c c u p y , w e c a n n o t but feel s e n s i b l y - a l i v e to t h e m i s c h i e f s
w h i c h they may produce.
T h e i r number already e x c e e d s one hundred thous a n d , and i s c o n s t a n t l y i n c r e a s i n g — a d d to this i m m e n s e array of p u b l i c officers
ramified into e v e r y s e c t i o n o f t h e c o u n t r y , the amount o f m o n e y w h i c h i s a n n u a l l y d i s b u r s e d by the E x e c u t i v e , and w e m a y form s o m e i d e a of t h e a l r e a d y
fearful p o w e r of *he E x e c u t i v e pairom>ge.
Hut, sir, p a s s t h i s bill, and t h i s
p o w e r b e c o m e s t e n fold s t r o n g e r and more d a n g e r o u s .
N o w the E x e c u t i v e
h a s not. the a c t u a l but the l e g a l c u s t o d y o n l y of t h e p u b l i c purse ; barriers h i t h erto safe h a v e b e e n i n t e r p o s e d .
T h i s bill not o n l y p l a c e s t h e public r e v e n u e s
in t h e l e g a l but t h e actual c u s t o d y of t h e E x e c u t i v e ; it r e m o v e s all
burners,
all restrictions
; iWjla«»e the c u s t o d y o f rho p u b l i c purse in t h e h a n d s of t h o s e
w h o wMl h o l d t h e n ^ u S B e at t h e will of t h e P r e s i d e n t , w h o h a s t h e p o w e r ' t o
r e m o v e at p l e a s u r e .
Sir, w i l l an A m e r i c a n C o n g r e s s p l a c e t h i s fearful p o w e r
in t h e h a n d s of t h e E x e c u t i v e ?
W i l l t h e y p l a c e in the h a n d s o f t h e P r e s i d e n t , a l r e a d y h a v i n g tfcfftpower o f the " sword"—the
p o w e r of the
"purse"
also?
F o r "this • bilT OThpletely i n v e s t s h i m w i t h t h e p o w e r o f t h e
"purse"
H e w i l l h o l d it in actual k e e p i n g . W i l l t h e y c o m m i t their l i b e r t i e s to the k e e p i n g o f a n y m a n ? W i l l t h e y Trust s u c h i m m e n s e a n d s u c h fearful m e a n s o f
m i s c h i e f in the h a n d s of a n y E x e c u t i v e M a g i s t r a t e ?
M r . C h a i r m a n , I s h a l l m a k e no p r o f e s s i o n s of u n b o u n d e d c o n f i d e n c e in a n y
man.
I w i l l not s a y that I h a v e m o r e , or that I h a v e l e s s c o n f i d e n c e in M r .
V a n B u r e n than in o t h e r m e n ; but, sir, t h i s is a p o w e r w h i c h 1 w o u l d not h a v e
c o m m i t t e d to G e o r g e W a s h i n g t o n h i m s e l f , or a n y m a n that e v e r l i v e d , or n o w
lives.
S i r , I w i l l not c o m m i t m y liberty to t h e k e e p i n g of a n y m a n . 1 fear all.
If t h e p e o p l e i n t e n d to p r e s e r v e their l i b e r t i e s , t h e y s h o u l d not c o m m i t t h e m to
the k e e p i n g of a n y m a n ; but k e e p t h e m u n d e r t h e i r o w n i m m e d i a t e enre a n d
protection.
A w i s e m a n s a i d , 4fc eternal
watchfulness
is the price w h i c h the
p e o p l e p a y for liberty."
S i r , I w a r n t h e m to w a t c h , and that i n c e s s a n t l y ; if
t h e y d o not. fearful w i l l be the c o n s e q u e n c e s .
Mr. C h a i r m a n , t h e p a t r o n a g e o f
the E x e c u t i v e is a l r e a d y sufficiently large for t h e safety of our free i n s t i t u t i o n s ,
and I anl not w i l l i n g to e n l a r g e it.
W h i l e o n t h i s part of the s u b j e c t , I c a n n o t
refrain from r e c u r r i n g to the fact, that w h e n G e n e r a l J a c k s o n ' s p r o t e s t to th«
r e s o l u t i o n of t h e S e n a t e , chargijnnr h i m w i t h a violation of the constitution a n d
t h e l a w , in t h e r e m o v a l of t h e public d e p o s i t e e front t h e Hank of the U m t e d
S t a t e s , w a s c o n s t r u e d into a c l a i m for the E x e c u t i v e of the actual c u s t o d y o f
t h e p u b l i c m o n e y , h e i m m e d i a t e l y and i n d i g n a n t l y r e p e l l e d it in a short e x p l a n atory m e s s a g e
T h i s bill g i ^ e s that v e r y c u s t o d y w h i c h G e n e r a l J a c k s o n in*
Aigriantly r e p e l l e d , a s d e s i r e d by h i m . Mr. C h a i r m a n , I trust 1 s h a l l be e x c u s e d
for r e c u r r i n g to m y o w n S t a t e , for I a s s u r e the H o u s e I do n o t m e a n it a s in
the slightest degree invidious.
JJut, sir, V i r g i n i a h a s a l w a y s b e e n j e a l o u s o f
t h e e x e r c i s e of t h e p o w e r s of t h i s G o v e r n m e n t , and of j h e i n c r e a s e of E x e c u tive p o w e r .
F r o m t i m e to t i m e , s h e h a s r a i s e d h e r v o i c e H g a i n s t it.
Even
w h i l e t h i s constitution w a s under d i s c u s s i o n i n h e r c o n v e n t i o n , m a n y of her
33
SPEECH
OF MR.
GARLAND-
patriotic an£ ^distinguished sons resisted its adoption from jealousy of t h e overw h e l m i n g power and influence w h i c h it would impart to this Government, and
t h e E x e c u t i v e b r a n c h of it. H e n r y , with the thunders of his eloquence, denounced the constitution as tending to absorb all power into this central Government. P a s s this bill, and you take the most important step t o w a r d s the
fulfilment of his predictions. You at once, to use his language, arm t h e Government with the power of the * svord mid the purse;" which, I fear, will
*
ultimately prove too strong for the liberties of the people. W h a t might n o t an
ambitious aspirant for despotic, uncontrolled, and unlimited power, not d o with
such means in his hands? Sir, if h e w a n t s money, h e h a s only to d e m a n d it
at the h a n d s of its k e e p e r s . If they refuse, he has nothing to do but to exercise his constitutional power of removal, and then every obstacle is withdrawn, And what security h a v e we, that, in the course of time, some such
man may not, in the hour of popular infatuation and delusion, be elevated to
the E x e c u t i v e chair ? N o n e sir, for history affords t h e important lesson, that
every tyrant, w h o h a s ever overthrown t h e liberties of h i s country, h a s done
it under the hollow professions of t h e good of the people, and have often made
the people the deluded victims of their own destruction. It is enough for me
to see that this bill places in the h a n d s of the Executive, p o w e r s which may be
easily perverted to the most dangerous purposes j £ r ^ £ oppose it, although
those who propose and those who advocate it, m a y not h a v e , and I am sure entertain no such design- But, sir, one of the p a n a c e a s held out for the dangers
w h i c h I have adverted to, is the reduction of t h e expenditures of the Government to its actual economical w a n t s . Sir, this m A ^ r e h a s been often read to
this body ; yet, as often as it h a s been read, the expenditures of the Govern*
ment have as often departed from the true principle of economy.
From some
cause or other imr expenditures constantly increase. F o r t h e s e extravagancies in expenditures, I do not hold the E x e c u t i v e responsible. I hold Con ores*
responsible- It h a s almost uniformly appropriated largely b e y o n d the Executive recommendations. Upon the subject of appropriations, a lar<*e number of
the friends of the late administration voted for appropriations at °war with its
opinions ; but whether sanctioned by the Executive or not, t h e s e appropriation*
have been, and will, I fear, continue to be made; and the expenditure, of course,
placed in the hands of the E x e c u t i v e , so that the effect is the same, a s far as
the question of patronage is concerned.
Mr. Chairman, I conclude this part of m y argument, by referring to t h e following extract from Gen, J a c k s o n ' s M e s s a g e of D e c e m b e r , 1834, in w h i c h be
says,
** Ijtf THE RJGOUIMTIOXS WHICH CONGRESS MAT PRESCRIBE RESPECTING Till! CtT3TOj>V OF TH*
PUBLIC MONEY, IT IS DESIRABLF THAT AS LITTLE DISCRETION AS MAY BE DKKMfiD CONSISTENT Wfflj
THEIR SAFE KEF.PINCI, sHotri.n BE GIVEN TO EXBCUTIVE AOKNTS.
N o one can be m o r e d e e p l y ii**'
pressed than I a m w i t h the soundness of the doctrine, w h i c h restrains and l i m i t s , ny spe-j
c i n e provisions, Executive discretion, as far a s it rtin be done consistently with the preserva-1
tion o f its constitutional character.
In respect to the control over the public money, this doctrine is peculiarly atpplicable"—Gen.
Jackson's M e s s a g e , Dec.^ 1835.
In every word and every sentiment of w h i c h I most heartily concur, a n d shaft
give earnest of my concurrence by voting against this s c h e m e , w h i c h is direct*
ly at war with it.
B u t v M r , C h a i r m a n , in the Message of the President, and t h e R e p o r t of d»e
Secretary of the T r e a s u r y , the dangerous political influence w h i c h a connection
h e t w e e u the Government and t h e banks m a y exert upon the integrity tfi»
liberties of the country* is urged as a reason for discontinuing t h e connection 1
which has existed from t h e foundation of the Government to the p r e s e n t hour
SPEECH
OF MR.
GARLAND.
37
Sir, I am not only surprised at this reason r but the source from which it
c o m e s ; for, sir, practice disproves the danger, and it is directly at war with the
opinions of the laie Administration, and those previously expresjjecLhy these
high public officers. T h i s argument is directly at war with thff^l^mieiU of
Gen. Jackson's Message of Dfsecmber, 183 4, upon this subject, in which he
says,
*• T h e attention of Congress is earnestly invittul to the regulation of the deposites in the State
Banks, by law. Although the power now exercised by the Executive department in this behiilf, ,
is only such as was uniformly exerted through every administration from ihe origin of the Governnmerit up to the establishment of the present Bank, yet, it is one which is susceptible of regulation b y l a w , ami, therefore, ourrlit eo to be recrnlated. The power of Congress to direct in
what placed the treasurer shall keep the moneys in the treasury, and to impose restrictions upon
thfi E x e c u t i u e authority, in relation to llieir "custody and removal, is unlimited, and its exercise
will rather be courted than discouraged by those public utlicers and agents on whom rests the
responsibility for their safety. It is desirable that as little power as possible should be left to the
President or Secr^ary of the Treasury over those institutions—which, beings thus freed front
executive in[fluenee\ and without d cornman head to direct their operutiuiis, would huve neither
the temptation nor the ability to interfere in the political conflicts nf the country.
Not deriving
their charter* from the nat tonal authorities, they icon Id never Jure e those inducements to meddle
in general elections, zchich hnve led the Bank of the United' states to agitate and convulse the
country for uptcards of two years.*'*
A l s o , h i s M e s s a g e of D e c e m b e r , 1 8 3 5 , in w h i c h h e s a y s ,
" B y the use of the Sratc B a n k s , w h i c h do not d e r i v e t h e i r charters from the general
g o v e r n m e n t and are not controlled by its authority, it is arccrtai-nxd tJutt the money* <>f the
*hnd£ed Sl/ztci can be collected and disbursed without toss or t,ru:o7ivcnie?Lcei and that all the
* N " 0 f the c o m m u n i t y , in relation to e x c h a n g e and currency, are supplied as w e l l a s
t h t y e v e r h a v e been hater* »-****«#*
of / * * . , 1*35.
r ^ j i e s o s e a t i m e n t s were concurred in by the lute Secretary of the Treasury,
/ M r T a n e y , ) by the committer* of ways "and means of 183 4, in their able reDorts * »*icl b V t h o P T e s c n t Secretary of the Treasury. I would now inquire what
**| developments have transpired, to change these decided and unequivocal
new
o o i n i o n s ? What political intrigue has the banks been engaged in ? what elections have they interfered with ? what political influence have they attempted
tQ e x e r c i s e ? and when ? and has it been since the last session of Congress ? I
k n o w of none, and L have heard of none. If the opinion is merely speculative,
then experience leads to an opposite conclusion, Mr. Chairman, let us simply
refer to facts, and draw from them the most rational and direct conclusions ;
and every man must be convinced that this retisun is not sufficient to justify
a resort to the system now under consideration—the officers of the hanks
hold their place, at the hands of the directory*; the directory, of the stockholders, aud the stockholders at the hands of the State Governments.
The
bank officers, directors, and stockholders, none of them, hold their place at
the discretion of the federal Axcculivt*.
T h e only influence, then, which the
E x e c u t i v e can exercise over these institutions, will arise out of the profit.
w h i c h may be derived from the use of the public money, which may, from
time to time, be deposited in their vaults : this profit, with but one or two
exceptions, will not bo sufficient to benefit the hanks to hazard the displeasure
Of the State Governments—always overlooking their operations—and to draw
them into any of the corrupt purposes of this Government. Under the system
proposed, the tenure of all tho officers holding the public money, will he at tho
discretion of the President, without any counteracting influence whatever.
L e t any man, then, judge where there is most danger of Executive influence*
with the banks or the executive officers. T h e response is not doubtful.
T h e next objection which occurs, to my mind, is, that the system proposed
38
SPEECH OF MR. GARLAND.
will exert a hostile influence upon State institutions, and be subversive of State
rights, Mr, Chairman, no member h a s intimated the idea, that for a long period
of3 time « f l M 0 t the country can divest itself of a paper circulation, if the
soundness of the circulatitm i s preserved, there must be some harmony of
action. T h e natural war which papei; w a g e s against s p e c i e , and specie against
paper, must be avoided. T h i s bill, w h i c h strikes at the credit of the banks,
b y excluding their notes from payment of public dues, and thereby necessarily
ilarrows the boundary of their circulation and l e s s e n s their profits will n e c e s sarily produce a counteracting policy on the part of the banks; that policy
will be the resort to small note issues, for in this way alone can they drive
s p e c i e out of circulation to enlarge their o w n , and thus add to the embarrassment of the country. But, Mr. Chairman, this is not the most serious objection
to this bill: it will engender jealousy and hostility on the part of ihe States
towards the federal Government; a state of things greatly t o i e deprecated,
and pregnant with great evils to our institutions. Mr. Chairman, do "you think
that the States will be passive under the operation of a system which is s o
blighting to institutions created, nourished, and matured by them ; and to w h i c h
they are so much indebted for their present flourishing condition, and their
rapid march in s c i e n c e , wealth, internal improvements and general prosperity.
W i l l they s e e these means of their future prosperity sapped and destroyed. I
think not. P a s s this bill, and then arm this Government with the power of a
bankrupt law, in relation to these banks, by w h i c h a board of commissioners,
appointed by federal authority, may discontinue any of these institutions, and
you at once place them at the mercy of this Government. T h i s , sir, I cannot
consent to do.
Mr. Chairman, every State of the Union, I do not doubt, has some interest
in the preservation of the credit of its banks. T h e state of Virginia has invested in stock, in her various banks, one million six hundred and
seventy-two
thousand dollars.
T h e y are the depositories of her internal improvement fund,
and her fund for the education of the poor. Think you, Mr. Chairman, s h e
will stand quietly by and s e e these banks discredited and impaired to the hazard
of these immense funds and their successful employment, and surrender her
s y s t e m s of improvement and education. 1 think not. H o w gentlemen have
arnyofl at the conclusion that the people generally are o p p o s e d \ o the banking
institutions of the country, I am at a loss to discern. T h e s e institutions w e r e
all chartered by the representatives of the people in their respective state
legislatures—representatives who are annually elected, and w h o s e conduct i s
strictly scrutinized. H o w many have been repudiated by the people for incorporating banks ? F e w , very few.
H o w many would obtain re-election after
voting for their destruction ? Not one, I dare believe. T h i s fact alone, air,
conclusively proves, that the people sustain these institutions, however much
they may be disposed to correct, and no doubt will correct, abuses. Mr*
Chairman, there is another aspect in w h i c h i view this subject as highly important, and w h i c h I am bound to consider.
Sir, none of us can so far look
into the vista of time as to s e e what even to-morrow may bring forth, although
every feeling of our hearts may linger around this Union with the deepest filial
^regard and solicitude, y e t on the tide of time, and amidst the storm of events
it may be shivered into atoms. It is prudent at all times to be prepared for
events which w e most ardently deprecate, but w h i c h may by possibility occur*
T o meet any contingency, then, w h i c h coming events may produce, should not
the states strengthen their internal resources, improve their strength, Mid
cherish those institutions w h i c h might in coming events be indispensable to
SPEECH
OF
MR.
GARLAND.
39
t h e i r safety ? T h e s t a t e s e n t e r t a i n i n g t h e s e views,, will not be d i s p o s e d to
s u b m i t to a n y , s y s t e m w h i c h m a y i m p a i r t h e i r s t r e n g t h a n d dry up t h e i r r e sources.
M r . C h a i r m a n , w h e n in t h e p r o g r e s s of our history 1 s a w t h i s
G o v e r n m e n t c l a i m i n g t h e c o n s t i t u t i o n a l p o w e r to c h a r t e r a N a t i o n a l B a n k ,
t o c o n s t r u c t a s y s t e m of i n t e r n a l i m p r o v e m e n t s w i t h i n t h e j u r i s d i c t i o n of t h e
s t a t e s , a n d the p o w e r of t a x i n g t h e c o u n t r y for t h e p r o t e c t i o n of d o m e s t i c m a n u f a c t u r e s , m y fears t h a t all t h e p o w e r s of g o v e r n m e n t w o u l d be c o n c e n t r a t e d
into this great central power, were greatly aroused.
But, Mr. C h a i r m a n , w h e n
t h e G o v e r n m e n t not only s e e k s to d i s c o n n e c t itself from t h e s e b a n k s , a n d t h e n
i n t h e form of a b a n k r u p t l a w h o l d over t h e m a p o w e r w h i c h in its e x e r c i s e m a y
d e s t r o y e v e r y o n e of t h e m , m y j e a l o u s y is i n c r e a s e d .
N o w , Mr. C h a i r m a n , I
d e n y to t h i s G o v e r n m e n t t h e p o w e r in t h i s w a y to interfere w i t h institutions
c h a r t e r e d b y the s t a t e s , h a v i n g t h e c l e a r and d e c i d e d constitutional a u t h o r i t y lo
do so.
S i r ^ r s a n it be t h a t t h i s G o v e r n m e n t is i n v e s t e d w i t h p o w e r to i m p a i r
o r in a v P H B P ) e m b a r r a s s the o p e r a t i o n s of t h e c l e a r c o n s t i t u t i o n a l p o w e r s
r e s e r v e d t o t n e s t a t e s ? If it h a s , w h e r e is the limitation ? W h a t institution
m a y it not r e a c h ? w h a t p o w e r m a y not be i m p a i r e d ? T h e s e v i e w s , M r .
C h a i r m a n , h a v e b r o u g h t m y mind to the c o n c l u s i o n , w h i c h m a n y of t h e d i s t i n g u i s h e d friends of t h e a d m i n i s t r a t i o n formerly e n t e r t a i n e d , that t h i s w a r
u p o n the S t a t e B a n k s is a w a r u p o n State rights.
1 s p e a k of it as the t e n d e n c y , not as t h e d e s i g n of this proposition.
M r . C h a i r m a n , t h e C o m m i t t e e of W a y s a n d M e a n s h a v e r e f e r r e d u s to t h e
e x a m p l e s of F r a n c e a n d E n g l a r u W s w o r t h y of imitation in t h e r e c e i p t s , s a f e k e e p i n g ' , a n d d i s b u r s e m e n t s of mieir r e v e n u e s , a n d to e n l i g h t e n u s upon t h i s
s u b j e c t , h a v e h a d a v i e w of t h e i r s y s t e m s p r i n t e d a n d laid u p o n our d e s k s . S i r ,
t h e i r s y s t e m s are e s s e n t i a l l y o u r s / for in t h e i r whole fiscal o p e r a t i o n s t h e b a n k s
a r e t h e p r i n c i p a l a g e n t s . But, sir, I shall not look to t h e m o n a r c h i e s a n d d e s p o t i s m s of E u r o p e "for e x a m p l e s in so r e g u l a t i n g the fiscal a g e n c y of t h i s G o v e r n m e n t as to s e c u r e the l i b e r t i e s of the people a n d our free institutions.
S i r , t h e actual c u s t o d y of t h e public m o n e y in E u r o p e by t h e g o v e r n m e n t s ,
i s a c c o m p a n i e d w i t h t h e e m p l o y m e n t . of i m m e n s e s t a n d i n g a r m i e s , w h o s u p p r e s s a n d k e e p d o w n liberal s e n t i m e n t s , a n d k e e p u n b r o k e n t h e fetters w i t h
w h i c h the o p p r e s s e d p e o p l e a r e bound d o w n .
Sir, it w a s left for r e p u b l i c a n
A m e r i c a , for a free p e o p l e , to d e v i s e a plan b y w h i c h t h e public p u r s e c a n
b e s o k e p t as to be a c c e s s a b l e to the E x e c u t i v e for all l e g a l d i s b u r s e m e n t s ,
a n d y e t so w i t h h e l d from its actual c u s t o d y as to p l a c e it b e y o n d t h e p o w e r of
a b u s e . S u c h h a s b e e n t h e effect of t h e s y s t e m h e r e t o f o r e — s u c h , 1 fear, will
n o t b e the effect of t h e p r o p o s e d s y s t e m if a d o p t e d .
I h a v e t h u s , M r . S p e a k e r , p r e s e n t e d m y objections o p e n l y a n d fearlessl}",
a n d u p o n m y r e s p o n s i b i l i t y to m y c o n s t i t u e n t s .
I m a y be m i s t a k e n , a n d t i m e
m a y e x p o s e t h e e r r o r ; y e t , sir, "until the fallacy of t h e s e objections a r e m a d e
m a n i f e s t , 1 must r e s p e c t f u l l y to all with w h o m I'differ, but firmly a n d d e c i d e d l y
o p p o s e t h e plan r e c o m m e n d e d by t h e E x e c u t i v e .
H : i v i n g thus, M r . C h a i r m a n , attempted to p r o v e the safety a n d capacity of the State
B a n k s as fiscal a n d c o m m e r c i a l agenfs, .shown their present solvency, vindicated the prop r i e t y and necessity of t h e i r course in s u s p e n d i n g specie payments, and u r g e d m y objec
Tions to the Svb-Treasury
scheme, I will n o w offer to the committee a few brief r e m a r k s
i n support of the proposition w h i c h , by the kind indulgence of the H o u s e , I h a v e h a d the
h o n o r of l a y i n g before it.
T h e s c h e m e w h i c h I have presented is substantially the " c u r r e n c y bill" w h i c h passed
b o t h H o u s e s of Congress at the late session of Congress, a n d w h i c h w a s r e t a i n e d by the
l a t e P r e s i d e n t u n d e r the a p p r e h e n s i o n that its construction m i g h t r e q u i r e the intervention
of the J u d i c i a r y , on account of some supposed ambiguity in its l a n g u a g e .
T h e substantial features of this bill, r e q u i r e s the notes of all specie paying h a n k s to be received in
p a y m e n t of the public r e v e n u e s , w h e t h e r d e r i v e d from foreign i m p o r t a t i o n s , public lands,
40
SPEECH
OF MR- G A R L A N D .
or any other source, and restricts any distinction between different branches of the revenue,
and for the purpose of enlarging the specie circulation of the country, by such a gradual
process as *o prevent any shook in the business and commerce of the country. It provides that the notes of no specie paying banks shall be received which shall iyt immedi*
ately discontinue the issue and circulation of all notes under five dollars, and at given.periods thereafter, all notes under ten and twenty dollars. It also provides for the continuance of such of the present deposite banks as are sound and in good credit, as depositories
of the public money, upon the condition of affording such collateral security as the Secretary or the Treasury, in the exercise of a sound discretion, may prescribe/ This bill only
presents the general features of a scheme which may be matured by amendments adapted
to the present embarrassed and emergent condition of the country,
This bill also proposes a restriction of the number of State Banks to be continued as depositories of the public money within such bounds as to make it their interest to adopt the
measures of reform in the currency which experience has proved to be necessary lor its
extension, its credit, and its soundness. This number will be in the discretion of Congress.
This plan had the countenance, and was recommended by the late administration, as well
as by the present Secretary of the Treasury. It was earnestly and repeatedlvurged,and
many of the states have adapted their legislation to its principles, and M H f t is now
no just cause for its abandonment—nor has the present state of things strl^ffoWt of any
of its advantages or benefits. I think I have satisfactorily proved, unless it be necessary
to the correctness of the system that banking: institutions should be infallible and conducted
by infaUible men, which is unattainable.
Iii presenting this scheme, I have done it under the impression which seems generally to
prevail, that the banking institutions of the country would not be abandoned, and thai
their notes under those modifications and restrictions which experience might from time to
lime prove to be necessary, would constitute a material part of the currency of the country.
If this impression be true, and notes of banks shall continue to constitute a material part
of thtfccurrency of the country, I regard it as strictl^proper, and indeed necessary, that the
federal Government should so regulate its actioflllin reference to the currency, TVbich
the states, in the exercise of their sovereign right^have thrown into circulation, as to
course the interharmonious, more
.,
. L ,
.,
-™
+ ,
b , ^ „«s no constitutional
power to legitamize bank notes so far as to compel the Government to receive them. Sir,
this notion is of modern origin, and is opposed to the principles upon which this Government has acted from almost its foundation. It is true this Government has no power to
emit paper money, it can make nothing but metal lt momy^ for that is the standard of
value of the world. But there is a material distinction between coining money and receivmp pubhc dues. I do not see any constitutional restriction upon th*? Government in
receiving a promise to pay in a bank note, or in a merchants' bond. I do not doubt the
power oi the Government to receive its dues in any thing it may deem most expedient, and
such has been its constant and undeviating practice.
The bill which 1 have submitted, proposes also to enlarge the specie circulation of the
country, by gradually retirintr the noiesof smaller denomination, and introducing in their
stead, a metallic circulation, This, sir, 1 propose step by step to do, until the met&lHc circulation shall be so enlarged, as to confine the material paper circulation to their legitimate
sphere, commercial transactions. And until the metallic basis shall assume such a relation
to the. paper circulation as to secure, without difficulty, the convertibility of the psp^ r i*1*0
specie. Jf is an admitted principle, that notes and eoin of the same denomination will not
circulate together. The superior value of the coin makes it a subject of commerce, ^nd it
always seeks distant employment, when there Is a local and less valuable currency to supply its local circulation. The plan which I propose, seeks to prevent this effect by restricting the circulation of notes to an amount above the denomination of any coin in circulation, so as to that amount, to render coin indispensable; and if by the operation of this
'plan it shall be found expedient still farther to restrict bank notes, it can be done by the
aid of that experience, which the progress of the plan will unfold, which will be a sure
guide to truth. In the discussion of this subject* I shall not find it necessary to do much
more than ref r to the experience of two of the most commercial nations of the world*
Great Britain and France, and the opinions of some of the most distinguished statesmen
and financiers of Great Britian and the United States. The Bank of Englandin 1793,became seriously and alarmingly embarrassed, on account of the immense reduction of her
bullion, and the heavy demands of depositors, the result of which was a suspension of
specie payments; up to this time, the bank was not authorized to issue notes of less dene•urination that 5 pounds, to prevent driving- from circulation coin of small denominations.
The suspension was legalized by Aet of Parliament, and the bank to supply the vacuum
created by the withdrawal from circulation of small coin, which had been exported to the
continent* ^ v a s authorized to issue notes of £1 and £2 denominations. These notes were
SPEECH
OF MR.
GARLAND.
41
i s s u e d to a l a r g e a m o u n t , a n d c i r c u l a t e d to a g r e a t extent, t h e r e s u l t w a s , w h a t a l w a y s w i l l
b e , t h e e x p u l s i o n from c i r c u l a t i o n of n e a r l y all c o i n s of t h e s a m e d e n o m i n a t i o n s . S u c h
w e r e the effects of this act in e n l a r g i n g the issues of t h e p a p e r m e d i u m of E n g l a n d , a n d
e x p e l l i n g its b u l l i o n , that after m a n y efforts, in 18-26 this l a w w a s r e p e a l e d , a n d the b a n k
r e q u i r e d in 1829, to restrict its p a p e r to the issue of £ 5 notes a n d o v e r . T h e effect of this
r e p e a l , h a s been so to e n l a r g e t h e s p e c i e , a s to s e c u r e t h e c o n v e r t i b i l i t y of the p a p e r q i r c u lation.
T h e B a n k of F r a n c e is p r o h i b i t e d from i s s u i n g notes b e l o w five h u n d r e d f r a n c s ,
a b o u t $ 9 3 of o u r m o n e y . T h i s b a n k w a s c h a r t e r e d i n 1800, a n d the r e t r i c t i o n i m p o s e d i n
1804. F r o m that t i m e to the p r e s e n t , n o t w i t h s t a n d i n g , t h e c a l a m i t i e s of w a r , t w o i n v a s i o n s , a n d s e v e r a l c o m m e r c i a l r e v u l s i o n s , t h e c u r r e n c y of F r a n c e h a s r e m a i n e d s o u n d
* n d u n i f o r m , a n d the p a p e r of the b a n k in good c r e d i t . A u s t r i a a n d R u s s i a , w h o a r e
m a k i n g v i g o r o u s e x e r t i o n s to e n l a r g e t h e i r c o m m e r c e , h a v e adopted t h e B a n k of F r a n c e
a s a m o d e l for t h e i r i m i t a t i o n , a n d h a v e i n c o r p o r a t e d , b a n k s u p o n t h e s a m e p r i n c i p l e . It
w o u l d s e e m to m e , that w i t h s u c h e x a m p l e s before us, t h e r e c o u l d be little doubt of t h e
c o r r e c t n e s s of the p r i n c i p l e of t h e bill, w h i c h 1 p r o p o s e . B u t , sir, I w i l l a d d to t h i s e v i d e n c e , by c i t i n g of the o p i n i o n s of s o m e of the most d i s t i n g u i s h e d s t a t e s m e n a n d
financiers
of G r e a t B r i t a i n , w h o w e r e w i t n e s s e s of the o p e r a t i o n of the b a n k r e s t r i c t i o n in E n g l a n d ,
a n d its iiijurf&us effects u p o n t h e -currency of the c o u n t r y . T h e c e l e b r a t e d E d m u n d B u r k t
a m o n g t h e l a s t letters w h i c h -he e v e r w r o t e , in o n e a d d r e s s e d to M r . C a n n i n g , u p o n t h e
subject of t h e i s s u i n g of s m a l l notes, s a i d : " Tell M r . P i t t , that if h e c o n s e n t s t o t h e i s s u e
of ONE P O P N D VOTES, he irill never see a guinea again."
T h i s propheey was well nigh
b e i n g fulfilled, a n d w a s p r o b a b l y o n l y p r e v e n t e d from fulfillment by t h e r e p e a l of t h e r e s t r i c t i o n . M r . H u s k i s s o n , o n e of t h e p u r e s t a n d one of t h e ablest of s t a t e s m e n , a n d o n e of
the most s k i l f u l f i n a n c i e r s of this or a n y o t h e r a g e , in a s p e e c h d e l i v e r e d in P a r l i a m e n t ,
on t h e 15th d a y of F e b r u a r y , 1822, u p o n t h e a g r i c u l t u r a l d i s t r e s s e s of G r e a t B r i t a i n , s a i d :
14
In England it still formed a considerable part of our circulation, there being then no circulating paper under five, and only to a small extent, under ten pounds. T h e firat effect of this
restriction was, to add to the paper circulation by enlarged issues, not only from the national
banks of England and Ireland, hut also from all the country banks. T h i s addition continued
gradually to increase, and especially in the notes under five pounds. Every increase for the first
t w o or three years was a diminution
in the value of money, but not a depreciatian.
W/iy!.,
B e c a u s e the gold left the country, as the paper became its substitute, and by this process, the
exchanges were kept at or near par.
T h e effect of this exportation of our coin was everywhere
to lower the value of money, and by so doing, to keep it upon a level with its diminished value
in this country.
* In the progress of this operation the United Kingdom was drained of all its gold.
*
There
would, however, have been no real depreciation of the paper substituted in its stead, if, by imposing proper limits upon the issues of that paper, the par of exchange with foreign countries
(which is necessarily equivalent with the standard of the gold coin in this country) had been made
the criterion of its value. B u t the issues of paper not being confined within those limits, depreciation took place.
<
•
" T h e consequence, therefore, of the hank restriction was two-fold ;—first, a diminution in the
value of money generally, but without depreciation ; and secondly, a depreciation specially supera d d e d in this country, the degree of which at any particular period was the dirTeicnce between
the standard and the market price of gold. By the first result, the price of commodities, 1 ! * c l u *r
ing of course all the raw productions of the soil, was raised generally. By the second, Una
general rise of prices was carried still further in tfhis country, in proportion to the depreciation.
T h e actual depreciation, therefore, as it was not ihe solo cause of the ri*e of prices (speaking
now of that rise only in as far as it was influenced by changes in the value of money) during
the war, so it cannot be taken as the measure of the fall of prices since 1819, unless we could
have got nd of the depreciation without recalling into our own use a part of the yold which
had been exported, or in any degree diminishing the extent in which credit had hecome & substitute for actual payments. T h a t fall must be still greater, iff instead of importing; gold foreirculation here, the greatest part of it has been withdrawn from circulation in other countries, to be
buried in the vaults and cellars of the bank. T h e proportion of the rise of prices generally during
the war, and of fall since the peace, not in England only, but m all other countries, from these
alternate operations, may be difficult to e s t i m a t e ; but it must be considerable ; a n d the more
KG, as other countries, as well as England, had also a depreciated paper, and have smce endeavored
to replace it by a metallic currency."
I n a s p e e c h d e l i v e r e d by h i m on t h e 10th d a y of F e b r u a r y , o n t h e B a n k c h a r t e r bill, h e
said ;
" I f they wished for a proof of the value of *• steady, unchangeable currency, they had it in the
example of France, T h a t country had b*en twice invaded ; twice had her capital been taken
possession of; and she had been compelled, in 1816 and 1817, to pay large sums to foreign courv-
42
SPEECH
OF MR.
GARLAND,
tries for" corn.
But she had a steady metallic currency; and however such visitations might
have affected the great—however the extensive contractor might have been injured or ruined—
the great body of the population remained unmolested. The storm which uprooted the forest
treefhad passed over without injuring the humble reed ; and this was mainly to be attributed to
the permanent footing 6pon which the currency of the country had been placed.
* If the plan of his right honourable friend was carried into execution, he was satisfied it would
*
have the effect of rnaking the country banker as sensitive on the subject of the exchanges, and
as watchful of any unfavorable turn which might take place in them, as the Bank of England
now was. He would carefully watch the circumstances which were calculated to biing gold intot
or send it out of, the country ; and this caution being timely impressed upon him, the danger
would, in a measure, be passed. There would then be no fear of any agitation or convulsion iw
the country, as the interest of every banker would compell him to provide himself for any coming
emergency; 1n other words, every country banker would feel an equal interest with the Bank of
England, in watching the state of the currency, and guarding against its fluctuations.
* If, then, it was necessary, for the best interests of the country, that the currency should be
*
established on a sound and solid foundation, and that the country banks should be prevented
from drawing the metallic currency out of the kingdom, by the issue of these small notes, the
next question was—-whether this was a proper time for carrying the measure into Aecution 1—
But before he touched upon this, perhaps it would be proper that he should make one preliminary
observation respecting the country banks. He was far from being hostile to these banks. On
the contrary, he thought they would bo of great service to the country, provided they were placed
under proper regulations. He wished to save these banks themselves from the consequences of
their own proceedings—from the liability jof each *o be ruined by the failure of the others. But,
to effect this, they must be prevented from issuing paper, as low as the highest denomination of
the metallic currency of the country. They must not be permitted to issue their one-pound
notes—corresponding with the sovereign—the highest denomination of metallic currency. T o
give them the pri\ilege of making such issues was, in fact, to permit them to assume the power*
of the prerogative. Let them continue to issue paper, and to extend an act upon their credit;
but let them not issue their small notes, and thereby trench upon the prerogative,'*
** J*l the same debates these opinions were concurred in by m a n y other distinguished
men, and finally prevailed- T h i s bill as I before remarked, is in strict accordance with
the recommendations of the late « - - * - "
~
-1
—
- ~
uiaii i am t a j w m e o i urging, 1 quote lrom C^en. Jackson's Message of December, 1834.—
Speaking upon this subject, he says t " Those institutions,
(the State Banks,) have already shown themselves competent to purchase, and fujrnish domestic exchange for the convenience of trade, at reasonable rates, and not a doubt ts entertained that in a short period, ALL
THE WANTS OF THE
Actrc/u* owtto .W*M av %naucca graauauy to reform tfietr bankrng systems and prohibit „
of ALL SMALL NOTES, we shall in a few years, have a currency as sound and as little liable to
fluctuations, as any other commercial country"
'
In his annual message of December, 1835, Gen, Jackson s a i d :
" It is also ascertained, thai instead of being Ttecessarily made to promote the evils of tin unchecked paper system,, the management of the %revenue can be made auxiliary
to the reform
which the legislatures
of several of the States have already commenced in regard to to the suppression of small bills ; and v^hich has only to be fostered by proper regulations on the part of
Congress, to secure a practical retnirn, to the extent required'for
the security of the currencyt
to the constitutional medium.
Severed from the Government as political engines, and not
susceptible of dangerous extension and combination, the State Hanks will not be tempted* nor
will they have the potver which wc have seen exercised, to divert the public funds front the legitimate purposes o) the Government.
The collection and custody of the revenue 'being, on th*
contrriry^ a source of credit to them, will increase the security which the States provide for
a faithful execution of their irusts7 by multiplying tka scrutinies to which their operations
and accounts will be subjected.
Thus disposed, as well from interest as the obligations of
their charters, it cannot be doubted that such conditions as Congress may see fit to adopt respecting the deposites in these institutions, with a view to the gradual disuse of the small bills,
will be cheerfully complied with ; and that we shall soon gain, in place of the Bauk of the
United States, a, practical reform in the whole paper system of the country.
If, bp this policy,
we can ultimately witness the suppression of all bank bills below twenty dollars^ xt is apparent
that gold and silver toill take their place, and become the principal circulating
medium in the
common business of the farmers and mechanics of the country.
T h e ATTAINMENT of s u c h a
RESULT WILL FORM an era in the history of our country which w i l l be dwelt upon w i t h DK~
LI6HT BY EVERY true friend of its liberty and INDEPENDENCE.
It will lighten the great tax
SPEECH
OF MR.
GARLAND.
43
w h i c h our p a p e r system has so long- collected from the e a r n i n g s of labor, and do m o r e
to revive and perpetuate those habits of economy a n d simplicity which a r e so c o n g e n i a l
to the c h a r a c t e r of republicans, t h a n all the legislation w h i c h has yet been attempted."
T h i s plan will so imperceptibly retrieve the p a p e r and introduce the metallic circulat i o n as to produce not the slightest shock or e m b a r r a s s m e n t in the c o m m e r c e and business
of the country, or reduction in the value of property. P r o p e r t y , the value of w h i c h has
been regulated by the present c u r r e n c y , will retain* its existing standard, and the country
g r a d u a l l y recover from its depressed and r u i n o u s condition.
It may be a r g u e d that the full excess of paper circulation will be kept u p by the enlarged
issues of notes of the l a r g e r denomination—this cannot be so. T h e commerce and business of the country can only bear a fixed a m o u n t of circulation—all excesses must and will
be r e d u c e d — a fixed a m o u n t of m o n e y can only be necessary to the c o m m e r c e and business of the country. Of that fixed amount, as specie is enlarged so must paper be reduced,
a n d as specie is reduced so must paper be enlarged, as t h e j d a n w h i c h I propose requires a
m i x e d circulation of metal and paper ; I propose to reach such a proportion of the metallic, as will m a k e certain the convertibilitv of paper into specie, w h i c h will a l w a v s sec u r e a sound c u r r e n c y . T h e s e a r e the objects w h i c h I h a v e in view, a n d I confidently
believe the scheme w h i c h I have offered, will effect itM r . C h a i r m a n , this bill I firmly believe, with the aid of some provisions w h i c h m a y
be attached to it, adapted to the present e m e r g e n c y , is well calculated speedily to r e m o v e
the embarrassments of the country. Sir, as I have a r g u e d , confidence is all that is necessary to enable the banks in a short t i m e , to resume specie payments, this bill extends that
confidence, holds out to t h e m a strong i n d u c e m e n t to resume, and promises a restoration
of their fiscal a g e n c y on that resumption. T h i s , sir, is better than all y o u r penalties a n d
all your divorces.
M r . C h a i r m a n , I well k n o w that to effect \he objects of reform w h i c h all desire, the aid
of the State G o v e r n m e n t s must be invoked. T h i s aid I do not doubt will be afforded, not
only from considerations of patriotism, but of interest; for e v e r y State is deeply and i m portantly interested in s e c u r i n g a sound c u r r e n c y , both as relates to their own domestic
concerns, and their c o m m e r c i a l connection with the other States. T h e y cannot flourish—
tttfey cannot prosper without it, and this is a g u a r a n t e e that as the e r r o r s in their systems
develope themselves they will correct them. Sir, 1 do not doubt that they will perform
their duty to themselves and to the nation.
flMM
M r . C h a i r m a n , I have heard much play, and m u c h emphasis upon the t e r m
divoWcov
B a n k and State. It is calculated to call up those feelings of a b h o r r e n c e against the u n i o n
of C h u r c h and State, out of w h i c h so m u c h m i s c h i e f to the lives and liberties of m a n k i n d
h a s grown, w h i c h the people of the U n i t e d States so justly entertain. Sir, a r e not these
institutions the very creation of G o v e r n m e n t I Did not G o v e r n m e n t impart to them form,
substance, and action; and now we are to divorce the G o v e r n m e n t from thern ! I k n o w ,
sir, that these institutions w e r e created by the State G o v e r n m e n t s ; yet, sir, unless all their
p o w e r s are buried in the powers of this G o v e r n m e n t : they w e r e created by G o v e r n ments h a v i n g the power to do so. T h i s political connection, so m u c h desecrated and abh o r r e d in these latter days, is as d a n g e r o u s to the State G o v e r n m e n t s as to this, yet the
States do not find it necessary to destroy their b a n k i n g institutions ; and I a m sure, will defend them against the reckless w a r now waged against them. Sir, this term divorce will
not take—you h a d as well talk of a divorce between m a n a n d w r ife, while they are indisposed to it.
One word m o r e iii relation to the suspension of specie p a y m e n t s by the b a n k s , to show
t h e propriet}^ a n c ^ wisdom of the m e a s u r e . 'When the suspension took place, it -was supposed by m a n y , p e r h a p s by most persons, that upon its ncing k n o w n in Kngland, t h e r e
-would be an immediate prostration of the c o m m e r c i a l credit of the United States, and, a s
a consequence, the destruction of the houses in Kngland, commonly known by th n a m e
of the A m e r i c a n Houses. But no such thing happened. Confidence w a s not d i m i n i s h e d ,
but improved.
T h e y saw the thing at once in Us true light—they saw it w a s a m e a s u r e
of relief to the m e r c h a n t s of the U n i t e d States, w h i c h would give thern time to g a t h e r
in their resources, and finally m a k e #ood their payments in_ E n g l a n d : W h e r e a s , if the
severe pressure necessary to continue the p a y m e n t of specie by the b a n k s , had been
kept on, they must have been ruined, and through t h e m the people w h o w e r e in debt.—
T h i s ' w a s a sound view of the subject. In addition to this, the States c o n t i n u e to use
t h e m as depositories, and to receive their notes in payment of their tuxes. W h y , then,
should there be so m u c h a l a r m here 1
M r . C h a i r m a n , I admit that there are serious evils connected with our b a n k i n g system,
I a d m i t that there are c r y i n g and grievous abuses, w h i c h r e q u i r e to be c o r r e c t e d ; and I
will go as far as any man in applying the knife and cutting these abuses off. Nor, sir, a m
I disposed, in the slightest degree, to countenance the refusal of the banks to resun&e specie p a y m e n t s in a reasonable length of time. W h i l e the country m a y b e disposed to end u r e this state of things as long as it is necessary a n d proper, it will not—it ought not to
44
SPEECH
OF MR.
GARLAND.
bear a wanton and unnecessary delay. T h e foreign debt is rapidly e x t i n g u i s h i n g ; the
elastic energy of the country is rapidly increasing, and overcoming all embarrassments:
soon, very soon, all pretext will be removed for continuing the suspension, and the banks
will merit the stern and withering rebuke of every patriot, if they persist in their refusal.
Sir, my course upon the present occasion is not dictated by any interest w h i c h I take for
the banks, separate and apart from the people : 1 only look to their interest and their security, as connected with that of the people, so deeply involved with them. I consider the
interest and welfare of the people as deeply and materially concerned, and their prosperity endangered.
I have thus, Mr. Chairman, presented tp the committee m y v i e w s of this deep, this vital,
this interesting question to this nation. I have exhibited the opinions entertained by the
late Administration, and the prominent friends of the present; and having done so, confidently and fearlessly appeal to the A m e r i c a n people, to determine whether I deserve to
be stigmatized as a traitor, or shQt as a deserter. Sir, if an adherence to the opinions heretofore entertained by the friends of the Administration, notwithstanding they have abandoned them, is desertion, I am guilty, and w i l l meet the fate w h i c h awaits me without
murmur. M y opinions are unchanged, and no fear of personal consequences shall change
them. M y constituents are unchanged, so far as I have learned; at any event, they have
not instructed me to vote contrary to m y former opinions, and until they do, I will vote
against \your Sub-Treasury scheme, in spite of denunciation, or any other consequence
w h i c h m a y f o l l o w . I regard that scheme as containing the elements of destruction to
the purity of the Government, the rights of the States, and the liberties of the p e o p l e . ^
Sir, so obnoxious is it to me, that although there is no constitutional objection in the way,
I would infinitely prefer resigning m y seat here, to voting for it. I do not call into the
question the sincerity of gentlemen w h o have changed, but I protest that because I cannot
change also, I should be denounced.
Mr. Chairman, if I a m to be tried on a charge of desertion, the administration shall not
judge me ; its friends on this floor, shall not judge m e — / wiU be tried by my constituents alone
—they know what opinions they sent me here to sustain—they know w h i c h I have deserted, and w h i c h I have maintained. I will meet them and let them pronounce the judgment; and if that judgment shall be^-guilty,
they alone shall be my executioners-—**
them- by their confidence, I came here—by their command I a m ready to retire. T o
4 q p ^ n d their justice I commit myself. I will say to them, that
Bound by no party's arbitrary sway;
I'll follow TRUTH, wher'er it leads the wary*
APPENDIX.
Comparative'Statementof
tte condition of the Farmer's Bank of Virginia and Branches,
the 1st and 8th days of Jun\ 183 >, and on the 1st day of September 1837.
on
1st June.
#2,540,804
.848,705
(502,299
497,8<>5
520,877
419,999
402,3314
1st Sept.
82,360,796
767,091
526,576
536,318
588,123
409,502
2p0,029
5,849,763
Bills dis. at Richmond
Norfolk,
Petersburg,
Fredericksburg,
Lvnchburs
Winchester,
Danville
5,477,283
Showing a n aggregate decrease of 8372,380, in the outstanding bills discounted between
the 1st day of June, and the 1st day of September, 1837.
T h e specie on hand on the 1st Sept. 1837, w a s
$425,234
Ott the 8t hday of June, it w a s „ . „.
412,672
Showing an increase of specie
T h e notes of other Banks on hand on 1st September, 1837, was
O n the 8th of June, 1837, they amounted to
S h o w i n g an increase of
12,562
:
$218,841
-_-137,843
90,999
SPEECH
OF MR. OAKLAND-
45
T h e aggregate balances due by the other Banks, was, on 1st September,
On the 8th June, they amounted to
'.
Showing" an increase of
&45,074
20,267
;
24.807
T h e notes in circulation on 1st Sept. 1837, were
*
2,196,604
T h e deposite money at same time was,
Individuals,
Treasurer of the United States,
_ . ..
900,833
118,173
t
83/215,610
The liablities on 8th June, 1837, were,
Notes in circulation,
Individual deposites,
Treasurer of U. States
•
¥
$1,963,942
1,500,076
3971047
3,761,065
Showing a diminished liability equal to
545,455
T h e contingent fund, to cover losses was on 1st September, •
It was on the 8th June,
Increase,
-
-
$369,771
,277,412
92,369
The whole bad and doubtful debts on 1st September, 1837, were estimated as follows:
At Richmond,
Norfolk,
Petersburg,
Lynchburg,.
Fredericksburg,
Winchester,
Danville,
In all,
ile
Whil the contingent fund is as above stated
?^2'39B
r'*?%t
" nVwi
$<**>
:^7*;
i'r£n
••••1,000
334,003
3G9.771
,
From the foregoing, the following statement may be made, showing- tine increased active
means, and the diminished liabilities of the Bank, viz:
Increase of specie,
Do.
of notes of other Banks,
J)o.
of debts due by other Banks,
T>u. of contingent fund,
Decrease of notes in circulation, Soc.7
Making in all,
,
-
-
#12,562
90,999
. . . , . . 247H07
92,366
545,455
776,192
Against which, the loan from the Commonwealth, under the act of 24th June, 1R37; may
be made an offset.
Condition of the Boston Banks, omitting Massachusetts, Franklin, and Lafayette Banks at
the close of business, Sept. 16, 1837, agreeably to returns made to the standing Committees :
Capital.
Circulation
Individual deposites
Specie
Real estate
Amount of loan
$24,400,000
1,938,326
6,327,561
* _ . l^J^'MH
653,523
33,359,510
00
00
17
00
15
93
SPEECH OF MR* GARLAND.
46
General
state of the Bank of Virginia
Loans and discounts, Stocks, . *
R e a l Estate,
Due from other Banks,
Specie,
*
Other investments, (balances due from offices,
Expenses,
on the 15/A day of August,
1837.
$3,240,000 00
Capital Stock,
590,387 40
Contingent Fund,
65,696 47
Discounts received, profit and loss, &c.
Deposite money, Treasurer
U. States,
$395,066 64
Treasurer Commonwealth, 181,908 33
399,710 60
1,950,854 52
Other Deposites,
1,373,879 55
9,780 85 Due other Banks,
393,308 77
Circulation,
2,812,088 31
Other liabilities, notes payable to Bank U. S.,
8279,252 88
Bond to Commonwealth,
325,000 00
Balances due to offices,
437,967 29
1,042,220 17
7,764,9G8
368,181
303,565
821,918
426,429
77
56
25]
76
76
|$10,094,55&64
#10,094,555 64
Variations.
Loans and Discounts,
Circulation,
- r Deposites, Specie,
Due to other Banks,
Due from other Banks,
Contingent fund, discounts received,
and profit and loss,
On 1st June, 1837 <On 15th Aug., 1837.
$7,764,968 77 299,173 45redc*d
$8,064,142 22
2,912,088 31
76,217 71 incrs'd
2,735,870 60|
1,950,854 52 410,860 08 rede'd
2,361,714 60
426,429 76
23,353 57 rede'd
449,783 33
18,083 61
I 44n,693 G incrs'd
O
428,609 99
706,509 591
65G,082 47 | 50,427 12 red'ed
besides paying the dividend of July last, #97,200
I D 5 Since the statement of the 1st June, so far as the President and Cashier are informed, nothing
has been added to the bad and doubtful debt. T h e greater part of the increased suspended debt haa
been satisfactorily secured, and the residue is in a train of adjustment.
*
A. R O B I N S O N , Jr., Cashier.
City of Richmond^ to wit :
On this second day of September, 1837, Anthony Robinson, Jr., Cashier o( the Bank of Virginia,
personally appeared before me, a Justice of the P e a c e for the said city, and made oath that the foregoing statement is truly compiled from the several statements returned from lthe different departments of the said Bank, according to the best of his knowledge.
UiKerent aeparx
Given under my hand on the day and year aforesaid.
E D W D . B A I L E Y , J. P.
At bottom of page
44
14, dele the extract
ERRATA.
made from Mr. PoWs
from Ovc sa?tie:
Speecht and insert the
following
*Unlrss the S t a t e s / a n d the United States, should both deem it proper gradually, and in the
end entirely, to dispense with the paper system, and which result is not anticipated, the Government camtot escape occasional losses from that quaiter, and can never hope to escape all losses from hanks as fiscal agents, except by the employment, in their place, of o+her and individual
agents, who will probably he found less responsible, safe, convenient, or ecouornical '
H e concedes that it would be practicable to employ such agents, hut docs not recommend
it, for the reasons stated in the paragraphs of the report which I have read, and because it
would not, * in the present condition of things, be s o eligible a system as the present one-T*
A corporation may be safer than any individual agent, however, responsible he may be, because
it consists of an association of individuals who have thrown together their aggregate wealth,
and who are bound in their corporate character, to the extent of their whole capital stucki for
the deposit*. I n addition to this, the Secretary of the Treasury may require as heavy collateral
security, in addition to their capital paid in, from such a corporation, as he could from an individual collector or receiver, which makes the Government depositeB safer in the hands of a bank
than it could be with an individual.
It may be well questioned whether the heaviest security which the most wealthy individual
could give, could make the public depoaite safe at the point of large collection. In the city of
SPEECH OF MR. GARLAND.
47
N e w York half the revenue is collected. Several millions of the public money may be in the
hands of a receiver at one time ; and if he be corrupt, and shall emratre i n speculation or trade,
and meet with a reverse of fortune, the loss sustained by Government would be inevitable.—
With ample security, as it was supposed, the Government lost a million or more in the tea case
a few years ago. The losses in three cases alone, as already stated, in 1827 and 1928, when it
was supposed ample care had been taken to secure the debt, amounted to near two millions.
A s , then, between the responsibility of a public receiver and bank corporations, as banks do exist,
and are likely to exist, under State authority, the latter upon the ground of safety to the public,
are to be preferred.
Banks, when they are safe, recommend themselves to the service of lhe Treasury for other
reasons.
1. The increased facility they possess over individual collectors or receivers, in making .transfers of public money to distant points for disbursement, without charge to the public.—
Indeed, thi« is a service which individuals, to the extent of our large revenues, could not perform.
2. It may ^happen in the fluctuation of the amount of revenue and expenditures, that there
will be at some times a considerable surplus in the treasury ; which, though it may bn temporary, jf it be withdrawn from circulation, and placed in the strong box of a receiver, thn amount of
circulation will be injuriously disturbed, by hoarding the deposite, by which t;hff value of every
article of merchandise and property would be affected. So that, inasmuch as we cannot aniicicipate or estimate what the exact amount of revenue or expenditure may be from year to year,
there may occur an exese of revenue in the treasury, not immediately called for to be disbursed,
which \t would be very inconvenient to abstract from trade and circulation.
Whilst the deposits i* in a bank, the bank may use it, keeping itself at the same time ready to pay when demanded, and it is not withdrawn from the general circulation, as so much money hoarded and
withdrawn from the use of the community.
If in the hands of receivers, they must either hoard it, by keeping it locked up in a strong
box, or use it at their own risk in private speculation or trade, or they must for their own security,
or on their own responsibility, place it at last on deposite in banks for safe-keeping, until they
ate called on by the Government for it.
•
This temporary use of the money on deposite in a bank constitutes the only compensation
which the bank receives for the risk of keeping it, and for tha service it perforins. Jf receivers
be employed, they cannot perform any other service than to keep the money, and must be paid
a compensation from the treasury."
THE END.
