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S P E E C H
OF
MR.
R I V E S ,
OF
V I R G I N I A ,
IS
OPPOSITION
TO
T H E SUB-TREASURY BILL,
AND IN SUPPORT OF
HIS SUBSTITUTE.
DELIVERED
THK
gEWVl-E
O F
IK
THK'-U.
*Br
FEBRUARY C,,7, 1838.
PRINTED A T T H E MADISONIAN OFFICE.
1838.
SPEECH.
M R . P R E S I D E N T . — I t w o u l d h a v e b e e n v e r y g r a t i f y i n g to m e if I h a d found t h e
m e a s u r e n o w u . i d e r c o n s i d e r a t i o n s u c h an o n e as 1 c o u l d c o n s c i e n t i o u s l y s u p port.
T h e q u e s t i o n is o n e w h i c h e v e r y i n t e r e s t of t h e n a t i o n r e q u i r e s s h o u l d be
s e t t l e d — p r o m p t l y , but w i s e l y s e t t l e d .
It i s t i m e t h a t t h e c o u n t r y w e r e r e l i e v e d
from t h o s e a n x i e t i e s a n d a p p r e h e n s i o n s in r e g a r d to t h e future, w h i c h , a d d e d to
t h e e m b a r r a s s m e n t s of t h e p r e s e n t , w e i g h like an i n c u b u s upon t h e n a t i o n a l e n t e r p r i s e and p a l s y all its f a c u l t i e s .
I s h o u l d h a v e b e e n most h a p p y , t h e r e f o r e , if I
c o u l d h a v e s e e n in t h e m e a s u r e r e c o m m e n d e d b y t h e C o m m i t t e e of F i n a n c e , a n y
of t h o s e h e a t i n g a n d s a l u t a r y t e n d e n c i e s w h i c h t h e c i r c u m s t a n c e s of the t i m e s
a n d t h e s i t u a t i o n of t h e c o u n t r y so i m p e r i o u s l y d e m a n d .
I h a d h o p e d , i n d e e d , at
o n e t i m e , that s u c h a m e a s u r e w o u l d h a v e b e e n p r e s e n t e d to u s . T h e P r e s i d e n t ,
in h i s m e s s a g o to C o n g r e s s at t h e c o m m e n c e m e n t of t h e p r e s e n t s e s s i o n , w h i l e
r e n e w i n g t h e e x p r e s s i o n of h i s o w n o p i n i o n s in favor of t h e financial project of
t h e l a t e ° c a l l e d s e s s i o n , v e r y p r o p e r l y i n v i t e d t h e c o n s i d e r a t i o n of C o n g r e s s
to t h e m a n i f e s t a t i o n s of public s e n t i m e n t w h i c h h a d , s i n c e t h e n , t a k e n place°; a n d
r e c o g n i z i n g " t h e n a t i o n a l will a s t h e s u p r e m e l a w of t h e Republic-," p l a i n l y intimateTl t h a t a m e a s u r e w h i c h h a d p r o v e d u n a c c e p t a b l e to t h e p e o p l e o u g h t not to
b e ao-ain p r e s s e d on t h e i r a d o p t i o n .
I had h o p e d , t h a t t h e C o m m i t t e e of F i n a n c e ,
eoiicTurrin" m t h i s r e p u b l i c a n s e n t i m e n t of t h e C h i e f M a g i s t r a t e , a n d in t h e p r e s e n c e of^the m a n i f e s t a t i o n s w h i c h t h e r e c e n t e l e c t i o n s in t h e N o r t h a n d t h e
S o u t h t h e K a s t a n d t h e W e s t , h a d afforded of t h e n a t i o n a l r e p u g n a n c e to t h e
m e a s u r e of t h e late s e s s i o n , would, in t h e r e s o u r c e s of t h e i r w i s d o m a n d
a c k n o w l e d g e d a b i l i t i e s , h a v e p r e s e n t e d us s o m e o t h e r , on w h i c h w e m i g h t h a v e
rallied with more harmonious opinions.
L a m s o r r y to s a y t h a t , in t h e e x a m i n a t i o n <*f t h e bill on y o u r t a b l e , I h a v e found n o t h i n g to justify or s u s t a i n t h i s
hope.
It is, in e v e r y e s s e n t i a l r e s p e c t , a r e p r o d u c t i o n of t h e c o n d e m n e d m e a s u r e
of t h e late s e s s i o n , w i t h s o m e s u p e r a d d e d f e a t u r e s , w h i c h o n l y s e e m to a g g r a v a t e
its d e f o r m i t y a n d i n c r e a s e its d a n g e r s . It c o m m i t s , a s that did, t h e m i l l i o n s of
p u b l i c t r e a s u r e to t h e h a z a r d o u s a n d d e m o r a l i z i n g p o s s e s s i o n of e x e c u t i v e a g e n t s
.—it l e v i e s that t r e a s u r e from t h e p o c k e t s of t h e p e o p l e , after a s h o r t p e r i o d , in
gold and s i l v e r o n l y — i t t h e n d i s p o s e s t h e s e c o l l e c t i o n s in m a s s e s at a f e v i m p o r t a n t c o m m e r c i a l p o i n t s , to s e r ^ e as a b a s i s of o p e r a t i o n s , w h i c h m u s t i n e v i t a b l y t e r m i n a t e in a g r e a t Gm^rtimmU
Hunk—and
to t a k e c h a r g e of a n d m a n a g e
t h i s m a c h i n e r y , it i n s t i t u t e s a n e w c o r p s of e x e c u t i v e officers, w h o s e v e r y n a m e ,
(RecuiverH-creneral,) c a l l s u p b y an i n d i s s o l u b l e a s s o c i a t i o n , t h e e x t r a v a g a n c e ,
t h e peiudrition. t h e c l u m s y nvisrnirieeiico of t h a t b l o a t e d and u n w i e l d y s y s t e m
of F r e n c h finance, w h i c h is the a c k n o w l e d g e d p r o t o t y p e of this n e w s c h e m e .
I p r o p o s e , Mr. P r e s i d e n t , m a s brief a n d r a p i d a m i n n e r as p o s s i b l e , to p a s s
jn r e v i e w t h e p r i n c i p a l points of this n e w financial project.
Its fundamental and
vital p r i n c i p l e is to collect t h e public r e v e n u e in gold a n d s i l v e r o n l y , o u t of a
c i r c u l a t i o n c o n s i s t i n g e x c l u s i v e l y n o w , a n d m a i n l y at all t i m e s , of b a n k p a p e r
for t h e c o m m o n uscs^of t h e p e o p l e . Of this invidious d i s c r i m i n a t i o n b e t w e e n t h e
m o n e y of t h e g o v e r n m e n t and t h e m o n e y of t h e p o o p l e , a n d its a n t i - r e p u b l i c a n
a n d injurious t e n d e n c i e s . I h a d an o p p o r t u n i t y of s l a t i n g m y v i e w s v e r y fully d u r i n g t h e late s e s s i o n of C o n g r e s s .
It w a s t h e s u b j e c t of v e r y t h o r o u g h d i s c u s s i o n
4
on both sides, at that time ; and for one I am perfectly content to abide t h e
verdict of public opinion on the arguments, on the one side and the other, t h e n
presented. it was s h o w n , in my judgment, most conclusively that the effect of
thirt principle would be permanently to create two currencies in the country
one and that the "better"
one for the government, another and inferior one for
the people -that it would t h u s separate the interests oi' the governors from those
of the governed, destroying that bond of sympathy and common feeling b e t w e e n
t h e m w h i c h is t h e best, if not the only, security for a sound administration of
public affairs—that it would indefinitely protract the present d e r a n g e m e n t of t h e
c u r r e n c y and deliver it over finally to a state of hopeless and irremediable disorder and that its operation upon the institutions of the States would be of t h e
most hostile and destructive character. 1 should not now recur to those topics,
h a v i n g heretofore discussed them very fully, but that the Senator from N e w York*
(Mr. Wright,) h a s thought proper again to argue them, and 1 must say, with all
h i s ingenuity, has failed, in my estimation, to s h a k e a single position maintained
by the opponents of his bill. It h a s been fashionable to tiinvunce t h e s e objections
as mere ttd captandvm arguments ; but, sir, h a v e they been answered ? C a n t h e y
b e a n s w e r e d , otherwise than by returning epithets for arguments ?
T h a t the measure would establish a distinction, an odious distinction, b e t w e e n the currency of the government and the currency of the people, cannot
b e denied, for such is the positive provision of the bill. It expressly requires that,
after a certain time, the government shall receive, in discharge* of the public
d u e s , and pay to its officers and other creditors, nothing but gold "and silver or its
o w n paper, while the common currency, in which the people transact their dealings, would still remain bank paper. T h e fac/, then, is undeniable. lint it i s
intimated there is nothing w r o n g in t h i s ; and w e , who oppose it are a s k e d if
w e would have the government in the present condition of things, for example, to
receive its revenue in the various spurious substitutes for money, w h i c h now form
so lurge a portion of the actual circulation oi the country. T h e a n s w e r , sir, costs
m e no embarrassment. I say, no ; hut this is precisely a case in w h i c h the-earception proves the rule.
T h e present is a temporary and accidental state of
t h i n g s ; and the refusal of the government, under existing circumstances, to r e ceive the degraded currency of the times in payment of" the public r e v e n u e , so
far from being founded on any p e r m a n e n t distinction b e t w e e n the currency of
t h e government and the currency of the people, is intended to do a w a y that distinction, and to provide a sound convertible currency for the common use of both
government and people—for the joint resolution of 1816, which is still the l a w
of the land, expressly declares that w h e n the banks shall resume specie p a y m e n t s and thus provide ih-j people with a sound convertible currency, that curr e n c y shall be equally receivable by the government in discharge of its dues.
Hut the bill of the Honorable S e n a t o r contemplates no such thin". It rejects the
p a p e r of the banks inexorably, under all circumstances whatever even though
convertible instantly into specie.
It will have, for the government, nothing but
gold and silver, or its own paper. It demands, with Shylock severity, its " povnd
of flesh? and that, too, without the condition of humanity imposed on the Venitian
J e w " n o t to spill a drop of Christian blood" in the exaction.
T h e Honorable Senator from N e w York s e e m s , however, to h a v e p e r s u a d e d
himself that the requisition of gold and silver in pay mem of the public dues, would
improve the general currency by b u n g i n g into circulation a larger portion of t h e
precious rm-tals. Hut, sir, how can this be? It was s h o w n , in the discussions
of the late session of C o n g r e s s , that when (here are two currencies in a country,
o n e answering all the purposes of the other, and a valuable purpose besides, that
w h i c h answers the additional purpose, would be at a premium, and being so, would
no* enter into geueral circulation, but be bought and sold as an article of m e r c h a n d i s e . According to this law of currency, it would follow, under the operation of
5
t h e p r o p o s e d system, that gold and silver only, being applicable to r e v e n u e paym e n t s , t h e y would, in general, c o m m a n d a premium, and would c o n s e q u e n t l y be
w i t h d r a w n from general circulation. T h e y would be sold by the broker to the
public debtor, w h o would pay t h e m to the G o v e r n m e n t — b y the G o v e r n m e n t , t h e y
w o u l d he paid out to the public creditor, and the public creditor would go and sell
t h e m again to the broker. T h i s would be the n a r r o w and charmed circle of
t h e i r m o v e m e n t . T h e y could never enter into the general circulation, under s u c h
c i r c u m s t a n c e s ; nor, indeed, under any c i r c u m s t a n c e s , (as has been amply s h o w n
o n another occasion,) without a previous suppression of the smaller denominations of bank notes, for w h i c h this bill contains no provision.
T h e H o n o r a b l e S e n a t o r also a r g u e s , that this policy would tend to secure
s o u n d n e s s in the paper |K>rtion of the c u r r e n c y , by c h e e k i n g over-issues of the
b a n k s . But, instead of contributing to the s o u n d e s s of the paper currency, it
would n e c e s s a r i l y i n c r e a s e its insecurity. T h e great s o u r c e of insecurity in
t h e banking system at present, as is well k n o w n , is the d a n g e r of a suspension of
s p e c i e p a y m e n t s arising from a foreign drain of the p r e c i o u s metals. liut. this
m e a s u r e would superadd to the foreign an internal drain of s p e c i e , to be locked
up in the vaults of the G o v e r n m e n t ; and, from the nature of things, this internal
and external drain would occur at the s a m e moment, and exert together their
destructive influence upon the b a n k s . It would be in y e a r s of heavy importations
.that, the balance of trade turning against the country, the foreign drain would be
most sensibly felt, and it would be precisely, under such c i r c u m s t a n c e s , that the
d e m a n d for specie to pay the duties, on t h e s e importations being greatly augmented, the internal drain would operate also with most severity. H o w then c a n
t h e Honorable S e n a t o r imagine that the* security of the p a p e r c u r r e n c y , supplied
b y the banks, is to be i n c r e a s e d by exposing t h e m to a double p r e s s u r e , from
within and from without, at so critical a moment.
Iu regard to the hostile operation of this m e a s u r e on the S t a t e c u r r e n c i e s , a n d
the credit institutions of the states, the honorable Senator h a s t a k e n up the subj e c t in far too n a r r o w a point of view. H e spoke as if the whole matter of
complaint, in this respect, consisted iu withholding the doposites of the public
m o n e y from the banks. Hut, sir, the ifixt of the question does not lie h e r e . T h i s is
a matter in which the convenience and the safely of the government itself are conc e r n e d far more than a n y interest ot the B a n k s generally, or of the states by w h i c h
t h e y are created. T h e real grievance is iu the stern exclusion by law of the
Bound converUble currencies of the states from all transactions of the F e d e r a l
G o v e r n m e n t , (transactions in which they have been heretofore invariably admitted,
from" the origin of the government to the present day.) the official discredit and
protest, in a d v a n c e , thus stamped upon those c u r r e n c i e s by the unfriendly action
of this government, giving the signal for general distrust and want of confidence
in regard to them. Sir, it will be no difficult matter to show that, under the blight
of this legislative denunciation, and in the progressive working of the s y s t e m n o w
proposed, the state; currencies wtll be finally broken down, and a national governm e n t paper c u r r e n c y , resting on the s a m e principles as our old continental m o n e y ,
b e made to take their place. But the Senator from N e w York tells us that the
s t a t e currencies will enjoy as m u c h favor under the n e w policy, as t h e y did under
t h e regime of the U. S. H a n k — t h a t that institution very rarely received the n o t e s
of the State Banks in collection of the public revenue, and when it did so, it
promptly returned them for conversion into specie. I certainly had not e x p e c t e d ,
M r . P r e s i d e n t , that the Bank of the United Stales would he held up, from that
q u a r t e r , as a model for imitation, in regard to its policy toward the .state institutions. But the Senator is mistaken in what he says of the course of that institution, and it will appear that even its policy w a s one of far more liberality toward
t h e state institutions than that w h i c h the honorable Senator himself now proposes.
I t is officially stated in the triennial report of the P r e s i d e n t of that institution to
6
he s t o c k h o l d e r s in S e p t . , 1 8 3 1 , that the B a n k of the V. S . w a s in t h e p r a c t i c e o f
••receiving freely the n o t e s of t h e S t a t e B a n k s , within 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 this free reception of t h e notes of t h e S t a t e B a n k s
a n d periodical *' settlements of accounts" with them, w e r e the boasted m e a n s o n
w h i c h that institution r e l i e d to regulate and p r e s e r v e the s o u n d n e s s of t h e
o-eneral c u r r e n c y of the country. It is farther s h o w n by the a n s w e r of t h a t officer
to certain i n t e r r o g a t o r i e s propounded to him by the C o m m i t t e e on F i n a n c e , of thi»
body in M a r c h , 1 8 3 0 , that though frequent tfc sttthmtnts
of a c c o u n t s " w e r e m a d e
by t h e B a n k of the U . S . with the S t a l e B a n k s , they w e r e " r a r e l y forced to p a y
s p e c i e " to any c o n s i d e r a b l e a m o u n t for their n o t e s , but p a y m e n t w a s t a k e n in t h e i r
bills of e x c h a n g e , or b a l a n c e s permitted to lie over, 'till melted d o w n in t h e o r d i n a r y c o u r s e of their b u s i n e s s and mutual transactions. '1 his statement i s s u s t a i n e d , t h r o u g h a s e r i e s of y e a r s , b y the annual returns of ihe B a n k to C o n g r e s s ,
e x h i b i t i n g generally large b a l a n c e s due to it from the State B a n k s . But, sir, e v e n
t h o u g h the course of the U. S. Bank h a d b e e n as unfriendly toward the state i n s t i tutions, as the gentleman from JNew York s u p p o s e s , the law of the land, t h e l e g i s lation of C o n g r e s s , made no attack on t h e m , as is now proposed. On the c o n t r a r y ,
their credit w a s c h e r i s h e d and sustained by the law ; for the j o i n t resolution o f
1 8 1 6 e x p r e s s l y declared that their n o t e s , w h e n convertible on d e m a n d into s p e c i e , should be r e c e i v a b l e , equally with s p e c i e , in p a y m e n t of public d u e s . U h i s
i s t h e important consideration ; for in the lan\ in the policy and l a n g u a g e of t h e
government, abides mainly that principle of confidence * on w h i c h all p a p e r c u r r e n cy rests, and w h i c h is now proposed to be rudely w i t h d r a w n fjcni the c u r r e n c i e s
of the states, h o w e v e r unquestionable their s o u n d n e s s and value.
But, Mr. P r e s i d e n t , without d w e l l i n g farther on t h e s e considerations, I b e g
leave to ask gentlemen w h o are so zealously patronising ihe policy of this m e a s u r e , if they can a d d u c e to u s , from a n c i e n t or modern t i m e s , from civilised o r
even barbarous communities, a solitary example of a g o v e r n m e n t d e m a n d i n g a n d
collecting its revenue in a c u r r e n c y different from the common, actual c u r r e n c y of
t h e country. If t h e r e be a n y s u c h , it h a s e s c a p e d m y r e s e a r c h e s . I n c o u n t r i e s
w h e r e the public r e v e n u e m a y h a v e b e e n , or m a y now be, collected in gold a n d
silver, it will be found that gold'and silver constitute the common, actual c u r r e n c y
of the people. E v e n in E n g l a n d and F r a n c e , w h e r e the circulation c o n s i s t s , i n
so large a proportion of the precious m e t a l s , the r e v e n u e p a y m e n t s are, by n o
m e a n s , confined IO gold and silver ; but bank notes are freelv r e c e i v e d in both, i n
d i s c h a r g e of the government d u e s . It is, indeed, a fundamental m a x i m of \ a x a t i o n t
laid down by all w r i t e r s on political economy,* and respected in the p r a c t i c e of
all governments, that the mode of p a y m e n t of the public contributions ought to h e
t h a t most consistent with the convenience of the p a y e r s the great body of t h e
community. Is it reserved for the government of the United S t a t e s , in its t h e o r y
t h e most popular on earth, and claiming 1 the merit of the closest s y m p a t h y w i t h t h e
w a n t s and interests of the people, to s e t the first example of & d e p a r t u r e from t h i s
j u s t and benignant rule of policy 1 and for w h a t reason—for w h a t purpose?
I
think I have s h o w n that n o n e of the great interests of the country aTe to be p r o moted by it.
It may, it is true, be quite agreeable to the office-holders, and o t h e r
recipients of the bounty of the g o v e r n m e n t , to obtain their emoluments in a " b e t ter" c u r r e n c y , than the common c u r r e n c y of the p e o p l e ; but surely this will b e
held no legitimate consideration for legislators and statesmen. W h a t end, t h e n ,
i s to bo a n s w e r e d 1 W h a t object to be promoted by the introduction of this a n o m a ly in the history of legislation ? I s it to carry out some theoretical d o g m a — s o m e
m e r e common place of party ? Is it, in short, to satisfy the notions c o u c h e d a n d
propagated under the well-sounding p h r a s e constitutional
currency.
1 ask, then, w h a t is m e a n t by this p h r a s e ? I s it m e a n t that no o t h e r currency
is constitutional but gold and s i l v e r ? If so, I d e n y the proposition. B a n k « o t e s r
•Smith's Wealth of Nations—Book V. chap. II.
7
as currency, are as constitutional as gold and silver. T h e constitution, if is true,
d e c l a r e s that '* no state shall make any thing but gold and silver coin a tender in
jiaymeni of debts." T h i s was intended to establish an ultimate standard of value
for the adjustment of contracts, where the parties chose to insist on the strictness
of legal rights, but not to prevent the states from authorizing convertible representatives of that value to be used as currency, or a common medium of exchange and
circulation,
in the ordinary business of life. On the contrary, those representatives in the shape of bank notes, were known and used as currency, at the time of
the adoption of the constitution, and nothing in that instrument prohibits t h e m —
the states have, constantly since, been in the habit of creating corporations, authorized to issue and circulate t h e m — t h e power,thus exercised by the states, has
b e e n invariably acquiesced in and recognised by the General Government—and
recently it has been determined by the solemn and unanimous judgment of the
highest judicial tribunal of the country, (in the case of Briscoe vs. the Commonwealth Bank of Kentucky,) that the states rightfully and constitutionally possess
the power. 1 say it was unanimously so decided by the S u p r e m e Court, because,
although n minority of that court w e r e of opinion that, w h e r e the state owned the
entire stock of the bank, the exercise of the power would be an infringement
of the constitutional prohibition on the states "to emit bills of credit," yet all the
Judges concurred, that the authority of the states^was unquestionable where the
stock of the banks was owned either by individuals entirely, or by them in common with the state as a partial stockholder. State Bank notes, then, being issued
in pursuance of an unquestionable constitutional authority, are a constitutional currency, as well as gold and silver. It is true, a creditor cannot be compelled to accept payment of his debt in bank notes, if he object to doing so ; but this does not
affect their character as currency} as n common medium of exchange and circulation^
or prevent, a payment in bank notes from being a final and complete discharge of
the debt, if accepted.
But, perhaps, by Jhis oft repeated phrase, it is meant to be implied that there is
some special constitutional obligation on the government to demand its dues in
gold and silver. T h e r e is as little foundation, however, for this notion as for that
which I have just exposed. T h e government is like every other creditor. It
has the power, as every individual creditor has, (if it chooses wantonly to exert
it, and to recur to the rigor of strict right,) to insist on the payment of its dues in
gold and silver ; but, as an individual creditor also, it may waive its strict right,
the sternness of the sutnmu?n jus, (which, we are told, is most frequently surnrna
injuria,) and receive its dues in the same medium which individuals and the people,
by common consent, use for the adjustment of their transactions. T h i s it has done,
from the adoption of the constitution to the present day, and never, heretofore,
with any question of the constitutionality of the procedure. It not only has tho
constitutional power which every other creditor has, to waive the strictness of its
right, in this respect, but it is especially incumbent on it, as the common agent of
the people, guided by that fundamental and benignant maxim of taxation, to which I
have already adverted, to waive an extreme right, which, in its exercise, would
so seriously affect the convenience of its constituents—the great body of the people.
W e must not, then, be led away, under the dominion of well-sounding phrases,
of plausible or pompous common places, to disregard the real interests of the
country. As legislators and statesmen, wo must emancipate our minds from tho
delusive authority of mere dogmas, and look to the consequences of our actions,
the practical effects of our measures. If we trace this requisition of specie for tho
public dues in its effects on the actual business of society, we shall find that it is
calculated to convulse the whole monetary system of the country, and to keep
it in a state of ceaseless and distressing commotion. Under the operation of the
B a n k i n g system as it exists in this country, specie is to be regarded not so much
a part of the currency, as the basis or source of a far larger portion. F o r every
8
dollar of hard money that is taken from the banks, four or five times its amount
is withdrawn in another form from the actual circulation of the country. Beari n g this in mind, let us see how the proposed system would work. In years of
abundant importation, the circulation of the seaports being insufficient to furnish the
requisite sums of specie to pay the duties, large amounts would be drawn from
the South and West to meet the demands of the custom house in the North
and the East. T h e sections, thus stript of their specie, would be, all at once, subjected to the greatest of all calamities in a pecuniary point of view—that of a deficient circulation, suddenly contracted, not in the ratio, merely, of the specie
removed, but of four or five times its amount; for to that extent would the banks bte
compelled to call in their circulation, in order to meet the drafts upon them for the
precious metals. Under this desolating process, the prices of property would be
struck down, the relation of debtor and creditor violently disturbed, and every branch
«f industry paralysed and withered. On the other hand, when the land sales became active, the current would be reversed, large masses of specie would be
drawn from the North and the East to the South and the West, attended with
the same distressing effects on the trade and industry of the country, and only
shifting the theatre of their disastrous operation. What could result from this
perpetual dragging, to and fro, of the specie of the country, contrary to the natural
l a w s of trade, and in obedience only to arbitrary governmental regulations, but incessant throes and convulsions in the whole system of its business and currency ?
It would be some compensation, in a national point of view, if the specie, of
which different portions of the country would, in their turn, be stript, under
the operation of this new system, were restored to active and beneficial use in
those sections to which it. would be transferred. But would this be the case ?
N o , sir. T h e whole surplus, beyond the current disbursement of the Government, would rest in barren and unproductive idleness, in the "vaults and iron
safes" of your Sub-treasuries. It would be an annihilation of so much of the
national capital, susceptible of multiplication, through conventional substitutes,
to four times its nominal amount, and capable of fructifying and sustaining the
national industry to a corresponding extent. I must confess, Mr. President, that
this monopoly and hoarding of the precious metals by the Government, does
s e e m to me unworthy of the age in which w e live. W e may find examples of
it among the nations of antiquity. But their circumstances were very different
trem ours. T h e y were engaged in frequent wars, and they accumulated their
treasure, in advance, as a provision for those national emergencies, always with
them more or less near at hand. It may also deserve consideration whether the
practice whxch prevailed among them of hoarding the public treasure was not the
cause fully as much as the effect, of the frequency of their wars ; for the relief
to industry from unlocking those vast hoards in time of war, may well be conceived to have rendered the occurrence of war no unwelcome event to their '
crowded populations. If we descend to modern times, we find no instance of
this national hoarding, but among rude and uncivilised communities—the Barbary powers or the Tartar tribes, for example. T h e D e y of Algiers is said
to have been the master of a large hoard of accumulated treasure, w h e n he w a s
expelled from his dominions by the French. So, also, was Mazeppa, the celebrated Cossack Chieftain, the untutored ally of Charles the X I I . But surely,
"we are not going to the banks of the Dnieper, or the shores of Africa, for l e s sons in policy and legislation. W e shall not thus, I humbly trust, dishonor the
spirit of the age, belie the genius of our free institutions, and mar the destinies
of our great and glorious country.
But there are other aspects of this measure even more dangerous and alarming.
I*1 "|*j r ^ m arks I had the honor to submit to the Senate, at the late session,
I said that this scheme had a squinting, " a n awful squinting" towards a T r e a sury Bank. It now has that character boldly planted on its front* It i s , to all
9
i n t e n t s and purposes, a great Government Bank ; and of this I p e r s u a d e mvself
I shall be able to satisfy every gentleman w h o will do me the honor to a c c o m p a n y me in the analysis 1 propose to m a k e of its composition. In %hc first p l a c e ,
t h e national r e v e n u e , collected in gold and silver, is to be disposed in m a s s e s
at certain leading points, designated by their importance in a commercial, financial, or political view. T h e bill directs that t h e r e shall be a great c e n t r a l
depot of it in the n e w treasury building h e r o — a n o t h e r depot in the mint at P h i l a d e l p h i a — a third in the branch mint at N e w O r l e a n s , and four otlier similar
d e p o t s of the national treasure in gold and silver, at N e w York, Boston, C h a r l e s ton, and St. L o u i s . Buildings are to be erected ( w h e r e t h e y do not already exist,)
for the reception and security of t h e s e funds, fitted up with vaults, safes, and all
t h e usual a p p e n d a g e s of a b a n k i n g establishment. T h e T r e a s u r e r and the S e c r e tary of the T r e a s u r y are to p r e s i d e , particularly, over the central establishment
h e r e — t h e T r e a s u r e r of t h e mint and the branch mint over the establishments in
P h i l a d e l p h i a and N e w O r l e a n s , and four R e c e i v e r s G e n e r a l , w i t h their clerks and
assistants, over those at N e w York, Boston, C h a r l e s t o n , and St. L o u i s .
Thus
y o u h a v e the funds or capital to operate on, placed in position at suitable points,
and a complete organization of officers to m a n a g e and administer those funds.
N o t h i n g but the plastic hand of the S e c r e t a r y of the T r e a s u r y will be w a n t i n g to
mould t h e s e materials into a bank, and TO give motion and direction to the mac h i n e . H o w will it be done ? T h e modus operandi will be perfectly natural
and simple. *
T h e G o v e r n m e n t funds, compared with the d i s b u r s e m e n t s to be m a d e , will bo
in e x c e s s in some p l a c e s , while they will he deficient in others. T h e y must
t h e n be transferred from one place of deposite to another. T h i s will h a r d l y
e v e r , it is to be p r e s u m e d , be done by an actual transportation of s p e c i e .
I t will, doubtless, be generally effected by the ordinary commercial m e a n s of drafts
and bills of e x c h a n g e .
T h e bill most sedulously gives to the S e c r e t a r y of the
T r e a s u r y an unlimited discretionary authority to m a k e and order t h e s e transfers
from one place of deposite to another, and from one individual depository to
another.
At a place, therefore, w h e r e the government funds are in e x c e s s , and h e
w i s h e s to transfer a portion of them to s o m e other place w h e r e they are deficient, he will naturally direct a draft, or bill of e x c h a n g e on the latter place to
be bought, p a y i n g for it out of the specie a c c u m u l a t e d in e x c e s s at the place
of t h e negotiation. On the other hand, w h e n he w i s h e s to draw funds from a distant place, w h e r e t h e y are in e x c e s s , to a place w h e r e t h e y arc deficient, a bill
on the former place will be sold, and the m o n e y received for it, added to the d e ficient funds at the place of t h e negotiation.
T h e officers of the G o v e r n m e n t , thus operating on the public funds u n d e r this s y s t e m , would b e c o m e
habitual dealers in e x c h a n g e — a regular and a c k n o w l e d g e d b r a n c h of the b u s i n e s s
of banking.
In the e x e r c i s e of t h e s e functions, the accommodation of individuals would come to be fully as m u c h consulted as the w a n t s of the G o v e r n m e n t .
T h e R e c e i v e r G e n e r a l at St. Louis, for e x a m p l e , having an e x c e s s of the public
m o n e y s in his h a n d s , and instructed to transfer that e x c e s s to the S u b - t r e a s u r y
at N e w York, would naturally do so by buying drafts of m e r c h a n t s or otlier individuals on the latter place. But in this application of the public m o n e y to the
p u r c h a s e of drafts, w h a t an endless field would there be for undue favors to
individuals, as well in discriminating a m o n g those w h o might have drafts to sell,
a s in adjusting the price and other t e r m s of the p u r c h a s e . S o , likewise, if w e
s u p p o s e the Receiver G e n e r a l at N e w York authorized to d r a w a surplus of publ i c moneys from St. Louis, he would do so by selling drafts on the R e c e i v e r
G e n e r a l at St. L o u i s ; and in this operation of selling, there would be p r e c i s e l y
t h e s a m e danger of abuse, and of the influence of personal c o n s i d e r a t i o n s , as I
h a v e just s h o w n to exist in that of b u y i n g e x c h a n g e .
I t ia also very e a s y to perceive that, under the forms of b u y i n g and selling
10
bills of exchange by Government officers, real loans to individuals m a y bo
couched. If I &buy, for example, a bill of e x c h a n g e w h i c h has sixty or n i n e t y
days to run, and pay for it in cash^ as I suppose to be done in the case, put a b o v e ,
of a R e c e i v e r General purchasing bills to transfer an e x c e s s of public m o n e y s in his hands, what is this in fact but a loan of m o n e y to be returned, at
the end of sixty or ninety days, at some other place where the Government
wants it.
It i s , indeed, except as to place, the ordinary form of discounting
mercantile paper. In like manner, the sale of a bill of e x c h a n g e , to be paid for
at a future day, is a very convenient medium of a real loan. T h e purchaser
immediately sells the bill he h a s bought, realizes it in money, the use o f
w h i c h he enjoys for the stipulated period, and then returns it with the rate o f
profit agreed upon in the nominal purchase. T h e transaction is, to
every
practical intent, a loan ; and professional gentlemen, conversant with the d e v i c e s
practised to evade the statutes against usury, will tell you that nothing is more
common than to make a real loan under this very form of selling a bill of e x change. W e s e e , then, that the officers of the Treasury, under the organization
provided by this bill," would not only be engaged in buying and selling bills of
exchange, but they would have the power of discounting mercantile paper a n d
making real loans. T h u s the bill creates, in efiect, a bank of discount.
It would, moreover, be a bank of depositee for the 27ih section of the bill e x pressly authorises individuals to deposite money in the ** Treasury, or at s u c h
other points as the Treasurer may designate," the receipts for w h i c h / i t is declared,
shall be current in the several land offices as cash. T h i s , I am aware, is but a
special and limited provision, confined at present to payments in advance for
public lands. But the principle being once introduced, will, from time to time,
be extended to other c a s e s . 1 shall hereafter have occasion to s h o w that president Jackson, w h e n he suggested the idea of a Government Bank, of w h i c h
this bill s e e m s to be the development, expressly recommended that it should be
based upon individual* as well as the public deposites.
T h e organization instituted by this bill would also be a bank of circulation*
for the drafts, receipts, and other paper authorized to be issued by the officers o f
the treasury, under the provisions of the bill, would form a part of the actual
currency and circulation of the country. That it is designed, through the medium
of this machinery, to issue permanently a government paper currency, under
s o m e form cr other, is sufficiently evinced by the alternative clause of the bill
relating to receipts and payments by the government, w h i c h requires that all
such receipts and payments, after a certain period, shall be in <rold or silver, ** or
in notes, bills, or paper issued under the authority of the United States." T h e
senator (mm South Carolina, (Mr. Calhoun,) the" patron and champion of this
bill, and the author of the provision just referred to, is known to advocate a paper currency of that description, issued and resting exclusively on the credit of
the Government. T h e Secretary of the Treasury too, in his report on the
finances, at the commencement of the present S e s s i o n , does not hesitate to ask
Congress for the permanent grant of an authority to issue Treasury
Notes, (at
his discretion, within u certain limit,) according to the varying wants of the
Treasury. But the design of supplying a paper medium, for general circulation,
through the fiscal action of the Government, is more fully developed in t h e
report of that officer at the last S e s s i o n , and from that document, I beg l e a v e
to read to the Senate a few significant extracts.
"Should Congress," says the Secretary, " determine that it is proper to furnish by its own
authority, and for the purpose? before mentioned, some vaper medium of higher character,
and other than what now exists in private bills of exchange, or notes of State Banks, no doubt
exists, that any benefits which may occasionally be derived from its employment can be readily secured, without treading on the debateable ground of either the power or the policy of
chartering a National Bank* Certificates, not on interest, but payable in specie to bearer or
11
order, as well as being: receivable for all public dues, could be authorized to be given in
p a y m e n t to the public creditor, whenever preferred by him, and sufficient specie existed in
the T r e a s u r y . T h i s kind of paper would be very convenient in form, and would differ
little from the drafts now in use on banks, except being drawn on a known specie fund
and expressing"~on its face not only this, but its being receivable, in Lhe first instance, Jor all
public dues. It wuuld possess the highest credit attainable in society." " T h e common drafts
of this Department, in the present convenient form, possess one ndvantage, which could be
imparted to the certificates. W h e n used at places against which the balance of trade exists,
but drawn on places in whose favor it is, the former do now, and may hereafter, not on]y
facilitate essentially the domestic exchanges, but at the same lime, supersede numerous bank
transfers, and the more expensive transportation of specie itself."
" T h e Mill, certificates, heretofore given on the deposite of bullion and specie for coinage,
might be canity made naming
to beanr or ord<er, and receivable for all public dues; and, in
that way, would contribute to the same desirable ends."
" It must be obvious that the paper of any bank would be less safe and useful in being
received for public dues, in proportion
as if may want sucli solid securities and foundations
as the certificates before described. 1 '
M y p u r p o s e is n o t n o w to d i s c u s s t h e s u p p o s e d a d v a n t a g e s of t h i s G o v e r n m e n t
p a p e r c u r r e n c y , so m u c h l a u d e d b y t h e S e c r e t a r y .
T h e great recommendation
of it, in h i s e y e s , is t h a i it w o u l d r e s t u p o n a s p e c i e b a s i s c o - e x t e n s i v e , w i t h t h e
issues.
B u t a s t h e c e r t i f i c a t e s w o u l d be r a r e l y r e t u r n e d for r e d e m p t i o n , n o t h i n g
w o u l d b e m o r e l i k e l y to h a p p e n t h a n w h a t o c c u r r e d in t h e c a s e of t h e b a n k of
A m s t e r d a m — t h a t , in t h e m e a n t i m e , l a r g e p o r t i o n s of t h e s p e c i e w o u l d b e
w i t h d r a w n a n d d i v e r t e d to o t h e r p u r p o s e s . B u t m y i n t e n t i o n w a s s i m p l y to s h o w
t h a t a n i s s u e of a g o v e r n m e n t p a p e r c u r r e n c y , in s o m e form or o t h e r , is o n e of
t h e main o b j e c t s of t h i s n e w financial s c h e m e .
I n l o o k i n g at t h e p a s s a g e s a b o v e
q u o t e d , a n d o t h e r s of s i m i l a r i m p o r t in t h e R e p o r t of t h e S e c r e t a r y of t h e T r e a s u r y , it is i m p o s s i b l e to w i n k s o h a r d a s n o t to s e e t h a t t h e d e s i g n is to s u p p l y a
paper
medium^
t h r o u g h t h e fiscal o p e r a t i o n s of t h i s g o v e r n m e n t , w h i c h , it is
h o p e d , w o u l d u l t i m a t e l y s u p e r s e d e t h e state currencies ; a n d t h e o r g a n i z a t i o n
p r o p o s e d , in t h i s bill, is t h e i n s t r u m e n t b y w h i c h t h a t d e s i g n is to be a c c o m plished.
T h a t it w o u l d b e a b a n k of circulation
is u n q u e s t i o n a b l e ; a n d I h a v e
a l r e a d y s h o w n t h a t it w o u l d he a b a n k b o t h of discount and
drpnsite.
T h e S e c r e t a r y of t h e T r e a s u r y , h o w e v e r , s e e m s to t h i n k t h e r e w o u l d b e n o
Bank in all t h i s , " b e c a u s e t h e r e w o u l d be no incorporation.
H u t i n c o r p o r a t i o n is
n o t n e c e s s a r y t o c o n s t i t u t e a b a n k , w h i c h d e r i v e s its c h a r a c t e r w h o l l y from t h e
n a t u r e of its b u s i n e s s a n d f u n c t i o n s .
T h e G o v e r n m e n t B a n k of R u s s i a is n o t
incorporated.—Neither
is t h e G o v e r n m e n t B a n k of A u s t r i a .
T h e y are both
' c o n s t i t u t e d of, a n d m a n a g e d b y , officers of t h e G o v e r n m e n t , p r e c i s e l y a s t h e
m a c h i n e r y c r e a t e d b y t h i s hill is p r o p o s e d to h e m a n a g e d a n d d i r e c t e d .
So
i n r e g a r d to t h e p r i v a t e a n d j o i n t s t o c k h a n k s of E n g l a n d ,
T h e y a r e not i n c o r p o r a t e d ; but n o b o d y e v e r s u p p o s e d t h e m to b e t h e l e s s b a n k s on t h a t a c c o u n t .
S o m e t h i r t e e n or f o u r t e e n y e a r s a g o , t h e c e l e b r a t e d M r . R i c a r d o p r o p o s e d t h e
' p l a n of ** a National
Bank** in K n g l a n d , w h i c h , a m o n g o t h e r t h i n g s , w a s to h a v e
t h e e x c l u s i v e p r i v i l e g e of i s s u i n g t h e w h o l e p a p e r c u r r e n c y of t h e k i n g d o m .
It
- w a s to be a G o v e r n m e n t i n s t i t u t i o n , c o n s i s t i n g of five c o m m i s s i o n e r s , r e s i d i n g i n
- ' L o n d o n , to b e a p p o i n t e d by t h e c r o w n a n d r e m o v a b l e by P a r l i a m e n t , a n d to
b e a s s i s t e d b y a g e n t s a n d officers e s t a b l i s h e d in t h e l e a d i n g c o u n t r y t o w n s . T h e
p l a n of this bill b e a r s , in s o m e r e s p e c t s , so c l o s e a r e s e m b l a n c e to t h a t of M r .
R i c a r d o , t h a t it is difficult to r e s i s t t h e i m p r e s s i o n t h a t t h e o n e m u s t h a v e s u g gested the other.
T h e o r g a n i z a t i o n p r o p o s e d by M r . R i c a r d o , c o n s i s t e d , l i k e
t h a t of t h i s bill, of p u b l i c officers, h a v i n g c e r t a i n d u t i e s a n d f u n c t i o n s a s s i g n e d t o
t h e m , c o n n e c t e d w i t h t h e c o l l e c t i o n a n d m a n a g e m e n t of t h e p u b l i c r e v e n u e , a s
w e l l a s w i t h t h e i s s u e of a p a p e r c u r r e n c y .
N o act of i n c o r p o r a t i o n w a s p r o p o s e d or d e e m e d n e c e s s a r y ; but ho did n o t , o n t h a t a c c o u n t , t h e l e s s c o n s i d e r h i s
s c h e m e a 4t N a t i o n a l B a n k , " u n d e r w h i c h n a m e it w a s e x p r e s s l y p r e s e n t e d to
his countrymen.
But there is another authority on this head still more in point.
It remounts to
12
the first suggestion ever made in this country of a Government or Treasury
Bank. I aTlude, of course, to President Jackson, who in his first annual message to Congress, (1829,) threw out the idea of a bank, founded on the •* credit
and resources of the United States." This suggestion became the subject of
very able and elaborate examination by the Committees on Finance, in this
and the other House, by both of which, though consisting of warm friends of
the President, the suggestion was repudiated and exploded. The President,
in his message at the commencement of the following Session of Congress,
(December, 1830,) thought proper to recur to the subject, and to define more precisely what he meant by a bank founded on 4* the credit and resources of the
United States/* The scheme he then brought forward was identical, in every
respect, with that contained in the present bill ; and yet, with the soldierly frankness which characterised him, he did not hesitate to call it by its proper
name—" a Bank of the United States."
I..et us see what he said on that
occasion.
11
In the spirit of compromise and improvement which distinguishes our country and its
institutions, it becomes us to enquire whether it be not possible to secure the advantages
afforded by the present Bank, through the agency of a Brink of the United States, so modified
in its principles and structure, as to obviate constitutional and other objections. It is thought
practicable to organize such a l$aiiky with the necessary oflicers, as a branch of the T r e a s u r y
Department, based on the public a n d individual depositees, (without power to m a k e loan's
or purchase property,) which shall reynit the funds of the Government, and the expenses of
which may be paid, if thought advisable, by allowing its officers to sell dills of exchange to
private individuals, at a moderate premium, & c , & c , &c. In times of public emergency,
the capacities of such an institution might be enlarged by Legislative
provisions"
The Bank which Gen. Jackson proposed, was to be organized, with the necessary oflicers, as a branch of the Treasury Department, to be based on the public
and individual deposites, to remit the funds of the Government, and to deal in bills of
exchange. The organization, provided by the bill under consideration, is to possess every one of theso attributes, and to perform other banking functions in addition, such as the issue of paper, which was not then contemplated. Yet, while
t h e f o r m e r p l a n w a s b o l d l y avowed t o b e a Bank, t h i s i s denied t o b e one. Gen.
Jackson, with all his popularity and energy of purpose, was not able to commend
his plan to the favor of the country, and even his volonte defer, (iron wilh) as it
was called by a foreign representative, on a memorable occasion, obeying the
great law of Republicanism, bent beneath the force of public opinion, and abandoned the scheme. Yet the same scheme is now reproduced, amid the confusion of the times, in an aggravated form, but without the name.
It is a remarkable circumstance, Mr. President, that the most ancient and
celebrated Banking Institutions of Europe have grown up from precisely such
beginnings as are contained in this bill. The Bank of Venice, for example, the
oldest and most celebrated bank in Europe, commenced as a fiscal institution.
The Republic, pressed by its foreign wars, was compelled lo resort to a forced
loan* In order to secure the payment of the interest on this loan, it set apart certain branches of the public revenue, and instituted a board of commissioners, called the Chamber of Loans, who were charged with the collection and management of those branches of the revenue, and the application of their proceeds to
the punctual payment of the interest on the loan. In the transaction of the business eonrided to them, they had occasion sometimes, to buy and sell Bills of
Exchange, as I have shown the officers of the Treasury, under the organization
of this bill, would do. Having frequently surplus funds on hand, they hegan at
length to employ them more extensively in the operation of buying and selling
exchange, and under this power, actually advanced money on mercantile paper, or
in other words, became a Bank of discount. The credit and responsibility of the
institution being established, the merchants of Venice began to make use of it
for the safe-keeping of their funds, and so it became a bank of deposit*
13
a l s o . Finally, a credit on the books of the institution for money deposited, being
equivalent to cash, payments in the course of trade, came to he made by transfers
of t h e s e credits from /me to another, or by what are now called chc;/csy w h i c h
performed the office, and preceded the introduction of ?iotes, and so the chamber
of loans became also a bank o/arni/u/jori.
W e see, in this example, by what
natural and easy gradations the most celebrated banking institution in Europe,
that which has been the model of all the rest, grew out of the simple function of
collecting and applying the public revenue, associating to itself a collateral and
incidental action on the commerce and currency of the country, all of which functions, 1 have shown, are to be vested by the n e w financial scheme in the officers
of the T r e a s u r y Department.
T h e same in every material respect, were the origin and progress of the Hank
of G e n o a ; which, next to that of V enice, was the oldest, and in its day, the most
accredited banking institution in Kurope. In England, too, the mint, at one time,
in being made the depository of the funds of individuals, as the Secretary of the
T r e a s u r y proposes that our mint and its branches should be, became virtually
a bank—" the great centre of money transactions and remittances for Kn»land
and foreign nations 1 '—till Charles the 1st, in 1640, impelled by his necessities, violated the private funds deposited there, and ib happily," as Burke says, put an
end to boih hs credit and use as a banking establishment.
T h e testimony of history then, as well as the nature of things, proves that
the organization instituted by this bill, would work as a great government bank—
buying and selling exchange—under
that form, at least, i\tscuuntin$r mercantile
paper,—receiving dtposittis, public and private,—and circulating a paper money
of its own, Now, I would appeal to every friend of the liberties of his country,
and ask him if he would willingly see so formidable an union of the moneyed
and political power consummated in the hands of the government.
Will he put
so potent an engine, an instrument so efficacious of operating on the hopes and
fears of men, of enlisting their interests, of controling their fortunes, into the hands
of a Department of the government, already armed with a patronage and power
of fearful extern- 'I
T h e honorable Senator from N e w York, (Mr. Wright) in a portion of his remarks which seemed to be intended specially for the benefit of those of us who are
stiU for employing the State; Banks as depositories, and whom he described as
a very small traction, said that the real and only alternative before the country
is the Sub-treasury scheme or a National Bank. N o w , air, unless the observations I have made on the practical operation of the Sub-treasury s c h e m e aro
founded in the grossest delusion, that scheme, instead of being aatagonistieal to a
National Bank, is, in every respect, identical with it. It would be a National
B«iuk under the worst possible form. A National Bank in the hands of the E x e cutive, controled and managed exclusively by Kxecutive agents. If, then, the honorable Senator will insist upon making up an issue, to which the ghosf of that
thrice slain monster, the Bank of the United States must bo a party, he must
amend his pleadings according to the real fctato of the ruse, and submit to the
country tins question—Will you have a great government bank in the hands and
u n d e r the control of Kxecutive officers, or will yon have an incorporated National
Bank, designed to be a business concern and not a political engine ? W h e n
this issue sTiall be presented, if indeed, it ever shall bi?f let me tell the honorable
Senator that there are those whose opposition to a National Hank is as true as his
or that of any other man, who would pause long, before they would permit the terror ol" any alternative to drive them mlo the support of a scheme, like that of the
honorable Senator, which they believe to be fraught with the most serious danger
to the liberties, and certain destruction to the best interests of their country. I
shall hereafter endeavor to show that the true and only means of averting either
a n incorporated National JJauk or a great government liank is to sustain the state
14
institutions, and to employ their agency, with such modifications and securities as
experience may have s h o w n to be either necessary or desirable.
I wish however, for the present 10 pursue the remarks which the honorable
Senator with *' so much charity," to use his own expression, addressed to that
small fraction of erring and obstinate brethren, sometimes 'ycleped conservatives*
T h e name, 1 believe, sir, has not been of their own choosing ; but gentlemen w h o
are well read in the history of parties will not fail to remember that the most
odious and reproachtul designations applied to them by their adversaries have
become endeared by the persecutions of political intolerance, and those who at
first felt injured and insulted by the application of a political nick-name, have at
last proudly appropriated it, and come to glory in it as a memorial of their struggles and a symbol of their principles. N o w , sir, 1 do not know that there i s
any thing in this name of conservative* as applied to American Institutions, w h i c h
an American patriot ought to wish to disown* it implies devotion to the existing
institutions of his country—a desire to preserve and defend them—a willingn e s s , and even zeal to reform* as the only effectual means of -preserving——bvX
an unconquerable resistance to s c h e m e s of wild innovation and
destruction.—If
this is what is meant by a conservative, (and such is the true and proper import
of the term,) then, sir, 1 proudly avow myself a conservative—a
conservative of
Republican institutions, of Republican principles, of Republican practices, a s illustrated and interpreted by the great champions of the Republican faith.
But, sir, to pursue the remarks of the honorable Senator, addressed to this
small fraction of his political brethren.—He tells them that their plan has very few
supporters in either Hou3e of Congress—that there are two great parties in Congress, one for the Sub-treasury scheme, and the other for a National Bank—and
he sees, therefore, no prospect of s u c c e s s for any middle ground. He then as*
smites that the state of public sentiment among the people corresponds to this
division of opinion in Congress. I must say, with all my respect for the gentleman's knowledge and skill in the statistics of party, that this assumption is not
warranted under the circumstances of the case, nor does it seem to me sound
in principle. It implies that the organization and array of parties here is to give
law to public opinion, and that public opinion is not to shape and control the action
of parties here. Sir, I go for the voice of the people ; and the people have
spoken for themselves. T h e y have not left us to infer their sentiments from any
accidental or temporary relation of parties here. T h e y have pronounced judgment
on the gentleman's scheme ; and 1 should like to know where the honorable gen*
tlernan iinds, in these expressions of public opinion, any evidence that there is
a great party in this country in fu^or of the Sub-treasury project. Never before
has any proposition been so signally rebuked and condemned by the voice of the
people, i refer to these things, Mr. President, with no pleasure. I contributed
my best exertions to the election of the present Chief Magistrate, honestly anticipating from his prudence, his abilities, and his patriotism, a wise and s u c c e s s ful adr Ministration of the public affairs. N o one has felt a more sincere desire for
his success than I have done.
The unfavorable manifestations of public semi*
ment, therefore, upon the first leading measure of his administration, (though I
foresaw and foretold them, from the first moment that that measure Avas suggested,)
have been to me the source of any thing rather than pleasure. T h e y have n o w ,
however, become matters of public history; and as the Senator from N e w York
seems disposed to confine our view here for second-hand proofs of public opinion
on the merits of the different financial measures which have been proposed, I must
beg leave to invite his attention to those more majestic displays of public sentiment which have been presented on the great theatre of the nation. Let h i m
look at the elections which have taken place in the several States, since this
fatal measure was first broached in the official journal, and say h o w many o f
them have eventuated in favor of the administration. With one or two e x c e p t
15
lions, they have all terminated against i t ; and mainly, there is reason to believe,
o n account of this very measure.
W h e r e , then, does the Honorable Senator find the evidence that there is a n y
great body of poptrrar sentiment in this country in favor of his scheme ? T h e
e v i d e n c e is all the other way, and of the most verwhelming force. So, as to the
other great alternative of which the Honorable Senator speaks, (a National Bank,)
a large majority of the people have repeatedly declared against it, and without imputing to them a degree of fickleness, of which 1, at least, do not suspect them,
they must still be opposed to it. What plan, then, will they rally to, as a safe and
practical substitute for the Sub-treasury on the one hand, or a National Hank on
the other I It is the employment of the State Banks, institutions intimately
connected with their domestic interests, responsible to, and supervised by, their
domestic authorities, and exempt from all danger of political combination — the
employment of these institutions under regulations which shall, at the same
time, secure their elliciency and guard against abuse. Such, 1 am firmly persuaded, would be, at this moment, the unbiassed decision of a large majority of
the American people. And even if we appeal to the criteriun set up by the
honorable Senator from New York—the state of parlies in C o n g r e s s — I think we
may deduce from that, conclusions far more favorable to the State Bank deposite system than he has drawn. If there be but a small party in Congress, with
w h o m the State Bank deposite system is a first choice, he must admit that it is
t h e second choice of a large majority. T h e Sub-treasury party would, 1 presume, prefer it to a National Bank, nnd the National Bank party would prefer
it to the Sub-treasury.
N o w , sir, the honorable gentleman will permit me to
refresh his early reading, by reminding him of an incident related by } J lutarch.
After the battle of Salamis. in which the power of the Pershin monarch wan
crushed by the combined Grecian ileet, the different commanders of the squadron
repaired to the altar of Neptune, and according to a custom of the country and the
times, each one put on a ticket the names of those who had rendered the most
important service in the action. Kvery officer put upon his ticket his own name
first, but all put the name of Themistocles next. T h i s has been held, in all
future times, as conclusive proof of the superiority of T h e m i s t o c l e s above ;ill his
competitors; and the State Bank deposite system may adduce the same evidence
of its merit in being the second choice of both of the parties which respectively
advocate the Sub-treasury and a National Bank. 'The Jractitm, therefore, in
Congress, who still adhere to that system, however small they may appear in the
e y e s of the honorable Senator, can see nothing in this state of things, which
calls upon either their patriotism or their prudence to abandon a policy w h i c h
they believe to be sanctioned by the sentiments, and demanded by the interests,
of the great body of the people.
But, sir, to return from this digression, let us see what additions are made to
the official as well as pecuniary patronage of the Executive, by the provisions of
this bill. W h e n I had the honor of addressing the Senate at the last session, I
spoke of the bill then under consideration, as the " grain of mustard seed," which
would grow up into a large tree and cover the land with its branches. liut I was
told by the honorable Senator from N e w York and others, that the bill did
not create a single new officer, and my friend from Connecticut, ( Ur. Miles)
complimented rue, a3 well as 1 remember, for my vivid imagination, LO the account
of which alone he set down the apprehensions 1 had expressed.
Hut wlmt do
w e now sec? In three short months, the tree, which has already grown u p from
this grain of mustard seed, has thrown out four lar^e branches in the form of
Receivers Gencnd, each of which will have its dependent ramifications in the
form of cashiers, tellers, clerks, & c . T h e rcasurer also is to have his " assistants ;" and an indefinite hrood of clerks is provided for all the oflicera made depositaries of the public moneys under the bill, to assist in the discharge of ihe uevr
16
duties devolved on them* Finally, a number of missionaries are to be appointed
from time to time, at the discretion of the Secretary of the t r e a s u r y , to visit a n d
inspect the various fiscal agencies created by the bill. N o w , here is a cloud
of n e w executive officers, at once, which bids defiance to calculation. But if their
present number could be estimated,-(as the Senator from N e w York has attempted*
to do,) it would be altogether useless, for they must, from the nature of things,
be constantly and rapidly multiplying. Would the honorable Senator attempt to
measure the rising cloud, which threatens, to overspread and blacken the w h o l e
face of the heavens, by the speck, i4 no bigger than a man's hand," w h i c h h a s
just appeared on the edge of the horizon l T h i s is but the beginning ; and w e
all know with what vigor and fruitfulness every thing grows on American soil.
R e c e i v e r s General are allowed by the bill, at present, only to Massachusetts,
N e w York, South Carolina, and Missouri.
But will not Maine, N e w H a m p shire, Connecticut, demand their Receivers General as well as Massachusetts,—
Virginia, North Carolina, and Georgia, as well as South Carolina,—Kentucky,
Ohio, and T e n n e s s e e , as well as Missouri ; and so in regard to all the other
States that are now pretermitted in the bill. If we have Receivers General, w e
must finally have Payers General ; for this is an integral part of the system i n
France, from which w e borrow the scheme proposed by the bill. In adopting a
system, it is fair to presume w e mean to adopt its usual and ordinary concomitants."
Indeed, an honorable member of the other House, who is well skilled in questions
of finance, expressed the opinion to me, only the, other day, that the functions of
paying and receiving ought to be separated, so as to form c h e c k s on e a c h •
other; and thus w e shall have the French system, in both its branches, at o n c e ,
On the question of introducing a new system of policy, w e ought never to forget
the old adage, which w e derive from France also—e'est le premier pas' qui coute
— I t is the first step which is decisive, and that taken, all the rest follow.
T h e Senator from N e w York (Mr. Wright) has likewise attempted an estimate
of the expense oi this new system.
But this, also, in my opinion, is a vain .
thing. T h e first modest beginnings of a system furnish no standard by w h i c h
its ultimate expense can be measured. T h e Senator's estimate makes the annual
expense, (exclusive ol what may be called the outfit, in the cost of buildings,
&c.) somewhere about $ 2 0 , 0 0 0 , (twenty thousand dollars.) But this is greatly
below the estimate of the Secretary of the Treasury, in his report at the laat
s e s s i o n ; and m recommending a favorite scheme, the author of it is rarely
found to over-estimate its expense. That officer set down the annual expense
at $ 0 0 , 0 0 0 (sixty thousand dollars.) This, in my opmion, is,very far below-the
ultimate permanent expense.
An able and experienced gentleman in my o w n
State, practically versed in these questions, and a zealous and decided advocate
withal of the new system, in stilting forth its advantages, and defending it from the
objections which had been urged against it, met this very one of* expense bygiving it as his opinion, formed upon deliberate and careful reflection, that the an*
mud expense would not exceed $600 T 000, (six hundred thousand dollars.)
Now,
sir, when I arrived here, at the extra sees-ion of Congress, and read the estimate
of the Secretary of the Treasury, I could not but suppose, at first, that there '
was an accidental mistake in his figures, hy the omission of a cypher, and that
he intended to have put down the expense at $000,000, (at six hundred thousand dollars,) instead of $ 6 0 , 0 0 0 , (sixty thousand dollars.)
But, however, this may he, nothing can be more certain than that the e x p e n s e
of this* system, when fully developed, must, from its complexity, and the number o f
officers it will call for, be very great. W e have a standard to appeal to, on this
question, which is worth far more than any a priori reasonings. T h e system h a s
been long established and fully tried in France, and we know its actual results
there. On the other hand, in England the agency of banks has been extensively
used in the collection and disbursement of the public revenue, instead of the indi-
17
vidunl agencies which are employed in F r a n c e , and are contemplated by this bill.
I t will be n good test therefore, of this question, to look at the relative expenses
of the revenue systems of F r a n c e and F i n l a n d . I will read to the Senate a
comparative statement on the subject, which 1 have taken from the work of a
highly respectable American traveller, vouched by original authorities, to which
he refers. F r o m this statement it appears that the cost of collecting the revenue in
E n g l a n d is, under the respective heads of taxation, as follows : Customs, 7 per
c e n t . — e x c i s e , 4 per c e n t — r e c o r d i n g and stamps, 7 per c e n t . — P o s t Office 11
p e r c e n t . — a n d direct taxes, 2 per cent.—averaging, upon the whole, 6 1-5 p e r c e n t .
I n F r a n c e , under the same heads, the cost of collecting the revenue is as follows : Customs, 33 per c e n t . — e x c i s e , 20 per cent.—recording and stamps, 9
per cent.—Post-office, 45 per cent. —direct taxes, 15 per cent.—averaging, upon
the whole, 24 2-5 per cent ! I am well aware that divers circumstances are to be
taken into consideration, in explaining this e n o r m o u s difference of expense between the F r e n c h and English fiscal s y s t e m s ; but one of the principal causes of
that difference, (and it is so considered by the writer, to whom 1 have referred,)
will, at last, be found in the fact of the extensive use of banking agency in the
collection of the revenue in England, and the exclusive employment of individual
agency, for that purpose, in F r a n c e .
Iiut it is not merely by the multiplication of officers and the increase of expenditure, that the influence of the Executive branch of the Government is fearfully extended by this bill- T h a t influence is greatly augmented by certain new
regulations it introduces in regard to the tenure of office—the compensation of
officers, and the forms and usages of fiseal administration.
In the fir^t place,
the Treasurer, the Receivers-Genera), and all the other officers, from the highest
to the lowest, employed in the tiscal service, may be required a! any time, at the
discretion of the Secretary of the T r e a s u r y , to give new official bonds, in increased siim^, to be fixed by the Secretary of the T r e a s u r y , " any Jaw in reference to
•any'of the official bonds of any oY the said officers to the contrary notwithstanding ;V and in default of giving such new bond, the officer would, of course, be d e prived of his office. N o w , it is evident, that under such a power possessed by
the Secretary of the Treasury, all the officer^connected with the operations of the
T r e a s u r y , would be converted into the trembling vassals of the i n c e n t i v e .
A
direct removal from office is a measure of more than ordinary energy, and involves
responsibility. Cases might exist in which the Secretary of the T r e a s u r y would
•be unwilling to take the responsibility of a direct removal from office, and yet
would accomplish the same object by a vexatious requisition of a new bond in
so large a sum, that the officer could not, or would not find sureties to the
increased amount. W h o does nut see that, under such a regulation, the officers
of the T r e a s u r y would lose all sense of independence ; and that those who
could consent to hold office on such terms, must be prepared to become the passive and unresisting touls of power. Heretofore it has been the wise policy of our
legislation to fix by law the sum in which official bunds are to be given, and to
leave nothing in that respect, or iis little as possible, to Executive discretion.
Again, it will be seen from an examination of the bill, that the compensation of
several of the officers to be appointed under it, such as visiting agents, clerks, &,c.
is to be fixed by the Secretary, at his discretion, and not by law. H e r e is another
source of servile dependence on the o r e hand, and of increased Executive influence on the other, which is not in harmony witii the general spirit and maxims of
our legislation.
My attention has also been attracted by a provision of the bill which s e e m s to
m e to introduce a most dangerous innovation in the established forms and usages
of the Treasury. It has heretofore been a fixed principle of fiscal responsibility,
that no money should be drawn from the T r e a s u r y , but upon a warrant of the
S e c r e t a r y drawn on the Treasurer, countersigned by the Comptroller, and re-
18
c o r d e d by the R e g i s t e r , a n d upon that w a r r a n t , w h e n it r e a c h e s t h e h a n d s of t h e
T r e a s u r e r t h u s a u t h e n t i c a t e d , t h e T r e a s u r e r d r a w s his draft on the d e p o s i t o r y o f
t h e public m o n e y for p a y m e n t . T h e s e forms h a v e a l w a y s been h e l d to be v e r y
important c h e c k s , and indispensable preliminaries to a n y m o n e y b e i n g d r a w n o u t
of the T r e a s u r y , or in other w o r d s , paid by t h e depositary of t h e public m o n e y s . T h e S e c r e t a r y d r a w s his w a r r a n t upon the T r e a s u r e r , subject to t h e
c h e c k s before mentioned, and then the T r e a s u r e r d r a w s upon the d e p o s i t a r y w h o
is to m a k e t h e p a y m e n t . But, in no i n s t a n c e , d o e s t h e S e c r e t a r y d r a w d i r e c t l y
upon the depository, b e c a u s e that would be to lose t h e s e c u r i t y of the i n t e r m e d i a t e
c h e c k s of t h e Comptroller and t h e R e g i s t e r . B y t h e 10th section of this b i l l ,
h o w e v e r , in contravention of t h e s e established principles and c h e c k s , it is e x p r e s s l y provided, that " for the purpose of payments on the public account, it shall b e
lawful for t h e said S e c r e t a r y to draw upon any of the said depositaries, as h e m a y
t h i n k most conducive to the public interest, or to the c o n v e n i e n c e of t h e p u b l i c
c r e d i t o r s or both." U n d e r this provision t h e S e c r e t a r y of the T r e a s u r y c o u l d
d r a w out all the m o n e y in t h e T r e a s u r y , or, w h i c h is the s a m e thing, in t h e
h a n d s of t h e depositaries, without a n y c h e c k whatsoever.
T h e effect of i t ,
w h e t h e r so intended or not, is to p l a c e the whole public t r e a s u r e at his u n c h e c k e d
a n d absolute disposal.
N o w , sir, is not the effect of t h e s e various provisions, and of the w h o l e s c o p e
a n d tenor of t h i s bill, to c o n c e n t r a t e , at last, the entire control of t h e p u b l i c
m o n e y s , in t h e h a n d s of the P r e s i d e n t ; for the S e c r e t a r y of the T r e a s u r y , and all
t h e o t h e r fiscal officers are but his a g e n t s , appointed by him, and r e m o v a b l e at
h i s p l e a s u r e ? But the S e n a t o r from N e w York, (Mr, Wright,) c o n t e n d s that t h e
P r e s i d e n t would h a v e n o m o r e control over the public m o n e y s u n d e r the p r o p o s e d s y s t e m , than if t h e y w e r e deposited in b a n k s — t h a t the s a m e legal formalit i e s must be gone through to touch the public moneys, in the o n e c a s e , as in t h e
o t h e r . It m a y be true, that the P r e s i d e n t h a s no more le^al control over the p u b lic m o n e y in t h e o n e c a s e than in the other ; but h a s h e not a g r e a t e r
practical
control. I n the o n e c a s e , the depositaries of the public m o n e y would, be h i s
a g e n t s , subject to his authority, the creatures of his will, d e p e n d e n t upon h i s pleas u r e for their continuance in office, and made by t h e peculiar provisions of t h i s
bill, a s I h a v e a l r e a d y s h o w n , especially and habitually scnsihle of that d e p e n d e n c e . In p o s s e s s i n g so complete a control over the k e e p e r s of the public m o n e y , h e would possess virtually a control over the public m o n e y itself. But, in t h e
c a s e of t h e e m p l o y m e n t of b a n k s , the depositories of the public money are institutions not created by the P r e s i d e n t — n o t d e p e n d e n t on h i m for their continu e d e x i s t e n c e :—on the contrary, t h e y hold their c h a r t e r s , and the advantages
t h e y confer, from a distinct authority, to w h i c h t h e y are at all times responsible
and are t h u s guarded against a n y u n d u e influences from other quarters, w h i c h
m i g h t w a r p them from their integrity and their duties.
]n m a k i n g t h e s e r e m a r k s , Sir, I speak in no spirit of captious j e a l o u s y , a s to
t h e h i g h e s t E x e c u t i v e trust of t h e O o v e r n m e n t , or of its actual i n c u m b e n t : but
I s p e a k in the spirit of t h e constitution, w h i c h anticipates the d a n g e r , and s u p p o s e s the possibility of the abuse of power, and inculcates t h e n e c e s s i t y of g u a r d i n g against it. T h e s y s t e m organized by this bill is one of the most thorough
centralization.
It ride? over the institutions of the S t a t e s , prostrates their c r e d i t
and usefulness, brings patronnge and p o w e r to the General G o v e r n m e n t , c o n c e n trates them in tho h a n d s of t h e E x e c u t i v e , to whom it gives an unlimited c o n trol over the public montiys, and through the b a n k i n g operations to be founded
on them, an extensive and p a r a m o u n t influence upon the m o n e y e d c o n c e r n s of t h e
w h o l e country. It is fitting that s u c h a s y s t e m should be borrowed from F r a n c e ,
t h o country w h o s e institutions exhibit t h e most unqualified e x a m p l e extant of
centralization—under
w h i c h tho capital h a s s w a l l o w e d u p the p r o v i n c e s , an-i P a r i s h a s become s y n o n i m o u s w i t h F r a n c e . B u t it is equally fating that s::ch a
19
s y s t e m should be resisted, to the last e x t r e m i t y , in this land of R e p u b l i c a n freed o m , by all who are attached to the rights of the S t a t e s — b y all who are opposed
to t h e e n l a r g e m e n t of F e d e r a l and E x e c u t i v e p o w e r — a n d , by all who waLch with
j e a l o u s y , and view with alarm, every t e n d e n c y to
consolidation,
I will n o w , Mr. President, follow the S e n a t o r from N e w York, (Mr. W r i g h t , ) in
t h e r e m a r k s he made on the comparative safety of t h e two s y s t e m s proposed,
for k e e p i n g and disbursing the public m o n e y s . A l t h o u g h e x p e r i e n c e , the only
safe arbiter, h a s long since settled this question, t h e honorable Senator argued
it as if it w e r e still open to doubt, and m a d e , I am free to admit, an e x c e e d i n g l y
i n g e n i o u s and plausible a r g u m e n t .
H e instituted a parallel b e t w e e n the t w §
s y s t e m s , in regard to the great leading points on w h i c h their safety is supposed to
d e p e n d , and in each instance brought ouL a substantial equality. First, as to oj/icer&\ he said it would be fair to p r e s u m e that the ofiieers of the g o v e r n m e n t and the
officers of the BanUs would be equally t r u s t - w o r t h y — T h e n , as to surrtivs, he
said both the banks and the g o v e r n m e n t ofiieers are equally required to give sureties,
if d e e m e d n e c e s s a r y . S o , l i k e w i s e , as to vaults, the g o v e r n m e n t officers, he said,
are to be provided with vaults, as well as the b a n k s . T h e only particular, t h e n ,
in w h i c h the b a n k s , as he alledged, could be s u p p o s e d to present a better g u a r a n t e e for the safety of the public funds, is that their capital stock is p l e d g e d for the
r e i m b u r s e m e n t of the public m o n e y s committed to t h e m ; but this a d v a n t a g e in
favor of the b a n k s , he very adroitly balanced by w h a t he r e p r e s e n t e d to be the
risk of mingling the G o v e r n m e n t funds with those of trading corporations.
Nowall this is very fair and plausible on the surface. B u t w h a t is the
fact—what
i s the testimony of experience ?
W h i l e the honorable g e n t l e m a n w a s running this parallel in theory b e t w e e n t h e
t w o s y s t e m s , there was a document lying on t h e table of the other H o u s e ,
w h i c h had run the s a m e parallel on the surer foundations of practice.
I allude
to a recent report of the S e c r e t a r y of ihe T r e a s u r y , in a n s w e r to a call of that
H o u s e , at the E x t r a S e s s i o n , m a d e on the motion of an honorable friend of mine,
(Mr. Garland, of Virginia,) containing a list of all " t h e r e c e i v e r s , collectors, or
depositories of the public money, who are in default to the G o v e r n m e n t , w i t h t h e
amount of their r e s p e c t i v e defaults, & o . " W h a t , Sir, does this d o c u m e n t , w h i c h
I now have before me, show ? T h a t the whole amount of b a l a n c e s due from
b a n k s , w h i c h are d e e m e d unavailable, is a little more than one million of dollars,
( 1 , 0 4 6 , 6 ± 9 ) ; and t h e s e b a l a n c e s go b a c k to a period long past, w h e n t h e extraordinary e m b a r r a s s m e n t s c o n s e q u e n t on the war involved b a n k s a n d individuals in difficulties, beyond any former or s u b s e q u e n t e x a m p l e . I n relation
to th« b a n k s , w h i c h have been r e c e n t l y e m p l o y e d as depositories, it a p p e a r s
t h a t t h e y have either paid up all they o w e d the G o v e r n m e n t , or aro in the course
of p a y i n g it up as called for by the wants of the public s e r v i c e , without a n y
a p p r e h e n s i o n of default on th^ir part, or availing t h e m s e l v e s of the i n d u l g e n c e
of the act p a s s e d at the late S e s s i o n of C o n g r e s s , h a v e e i t h e r s e c u r e d , or a r e
e x p e c t e d LO s e c u r e , satisfactorily, the p a y m e n t of t h e w h o l e b a l a n c e s duo from
t h e m , a c c o r d i n g to thu t e r n s of that act. O n l y eleven of t h e m , it a p p e a r s ,
out of n e a r ninety e m p l o y e d as depositories, h a v e even a s k e d i n d u l g e n c e , u n d e r
t h e act here referred to, and but a single one of t h e m h a s b e e n ordered to be
sued.
Mow, Sir, w h e n we look to the list of individual collectors and r e c e i v e r s —
w h a t do we SP.- ? An a g g r e g a t e default of about, three millions ! and though s o m o
of th'j more recent b a l a n c e s a p p e a r i n g on that list, may be r e d u c e d by future
collection*, yet from the long s t a n d i n g of most of them, t h e r e is no r e a s o n to
believe t i n t the aggregate amount of the entire list will be affected, m a n y s e n s i b l e
d e c r e e , ».V t h ^ s e ' p a r t i a l r e c o v e r i e s . It U to lie r e m a r k e d too, that this list does
not 5 include disbursing
officers, " w h o s e i n d e b t e d n e s s " is stated by the S e c r e t a r y
" to b e v - r y great," and the actual losses by w h o m , 1 s h o w e d , d u r i n g the late S e s sion of C o i i g ^ s s , from a report of Mr. Crawford, to have " g r e a t l y e x c e e d e d " a
20
million and a half of dollars, from 1789 to 1819, and by this time, have grown
up, in all probability, to another aggregate sum of three millions! Neither
does this list include officers of the Post Office department, among whom it
was shown by official documents, at the last annual Session of Congress that
there were as many as eighteen hundrjd and thirty-two defaulters ! It is to be
observed also, that this list is confined to public agents, " who were out vf office on
the 12th day of October, 1837."
Now, sir, if the Honorable Senator from New York had taken ihe trouble to
look at this document, before he made his speech, he might have saved himself
the labor of a great deal of superfluous ingenuity.
In contrasting the ingenuity of*
his argument with the blunt contradiction of facts which this documenf presents,
1 was strongly reminded of an anecdote I have often heard of the late venerable Bishop Madison, of Virginia. That excellent prelate was also a profound
philosopher, and much addicted to philosophizing. On one occasion, he undertook to explain why the shade of a lamp, almost in contact with the flame of- the
candle beneath, was not, in any degree, heated by it. This he did by a learned
dissertation on the laws of caloric, and all the other scientific data which could
be brought to bear on the subject.
Having completely satisfied himself, and the
admiring audience which surrounded him, of she truth of his theory he conld not
avoid in the consciousness of his triumph, putting his hand on the' lamp shade,
which had been the subject of his disquisition, when an exclamation of acute
pain disclosed the fact that his hand had been severely burnt in the application.
Nature, thus, contradicted the philosopher, and «o, stubborn fads will sometimes
confute the most astute logician
1 cannot but think that if the Honorable Senator
from New \ o r k at ihe close of his very ingenious argument, had laid his hand
upon this document, he must have felt his fingers, at least, a little scorched
Has the Honorable Senator forgotten the emphatic testimony, deduced from
a careful collation of facts, borne by the present Secretary of the Treasury only
three years ago, to ihe superior safety of banks as depositories of the public
money?
Let me then, refresh his recollection by reading to him and the
Senate, an extract from the able report of that officer, made to Congress, in December 1834 on the system of keeping and disbursing the public money. " It
is a singular fact 'says the Secretary, "in praise of this description of public
2? » W . t S t f
'
/
7 1 S n 0 t IWWr d u o m d e p o s e s , from the whole
of them which have now stopped payment, from the establishment, of the Cony/«Sl°/%/°/ Wr P r e B O n l n i o m c . n l \ " V T m«(h
kyond nhat is now *n to the
United State* from on* mercantile Jirm that stopped payment>. in 1825 or 1826, and
ZlZ ?;;> a m {! l u 8 e c , ; " t y *"» ^ " " e d f
supposed to be taken under the res p o n s i b l y of an oath. If we include the whole present dues to the government from discredited banks, at. all times and of all kinds, whether as depositories
or not «nd embrace even counterfeit bills and every other species of unavailable
funds in the 1 reasury, they will not exceed what xs dvc from
firntS»
(v0
syc/t
He then continues, " If our former small losses bv them, (the banks ) in keeping
and paying over the public revenue, under circumstances so very adverse, are com"
pared with our large losses either in co'.hctivg or disbursing that rtvtnue, their
present safety seems to be as great as is consistent with the usual operations
of the paper system, or with the credit which must always be entrusted by
government, in some way or other, to agents, of some kind in keeping the
public money. In considering their safety, it should be constantly recollected
that the owners and managers of banks, when properly regulated by legislative
provisions ir, their charters, are, like other individuals, interested to transact
business securely ; are desirous of making and not losing money ; and that
these circnmstanccs, with the preference, in ease of failure, belonging to depositors and holders of their bills over the stockholders, united with the security,
if not priority, given to the government, render them, in point ofsafetyt generalby,
much superior to individual agents of the United States"
21
I f t h e r e b e a n y fact, i n c o n t e s t i b l y e s t a b l i s h e d in o u r h i s t o r y , a n d b y t h e e x p e r i e n c e of all o t h e r g o v e r n m e n t s , it is t h e s u p e r i o r s a f e t y of b a n k s a s d e p o s i t o r i e s
o v e r any individual custody.
T h e r e a s o n of it is o b v i o u s T h e more complex
o r g a n i z a t i o n of h a n k s , t h e n u m b e r of t h e i r officers a c t i n g as mutual
c h e c k s on
e a c h o t h e r , t h e daily s u p e r v i s i o n to w h i c h t h e } ' a r e s u b j e c t e d , t h e i r f o r m s o f doinrr
b u s i n e s s , all, furnish s e c u r i t i e s , w h i c h c a n n e v e r b e h a d in c a s e of t h e i s o l a t e d
p o s s e s s i o n o f m o n e y by an i n d i v i d u a l , w h a t e v e r r e s p o n s i b i l i t i e s he m a y b e b o u n d
byA n d if a l o s s of t h e m o n e y s c o m m i t t e d to t h e m s h o u l d o c c u r e i t h e r by a c c i d e n t , fraud, or v i o l e n c e , t h e c a p i t a l of t h e b a n k s t a n d s p l e d g e d for t h e s e c u r i t y
of the depositor.
T h i s i s , a f t e r all, t h e o n l y k i n d of s e c u r i t y t h a t c a n b e r e l i e d o n
with confidence.
I f a n y g e n t l e m a n will" t a k e t h e t r o u b l e to r e a d t h e n o t e s
a n d r e m a r k s a n n e x e d to t h e v a r i o u s c a s e s of d e f a u l t , p r e s e n t e d iti t h e d o c u m e n t
f r o m t h e H o u s e o f R e p r e s e n t a t i v e s t o w h i c h I h a v e r e f e r r e d , h e will s e e h o w
u t t e r l y w o r t h l e s s a n d i l l u s o r y is t h e p e r s o n a l s e c u r i t y on w h i c h w e h a v e h e r e t o fore reliedT h e i n s t a n c e s in w h i c h a n y t h i n g h a s b e e n o b t a i n e d from s u r e t i e s , to
m a k e g o o d t h e default o f t h e i r p r i n c i p a l , a r e l i k e a n g e l ' s v i s i t s — l t few a n d far
between."
T h e g e n e r a l r e t u r n is, " t h e s e c u r i t i e s i n s o l v e n t , " " c o n v e y e d a w a y
their p r o p e r t y , " " not found," " r e s i d e n c e s not k n o w n , " or s o m e other e q u a l l y
unavailable
return.
I n E n g l a n d a n d F r a n c e , a s w e l l a s h e r e , this s p e c i e s of s e c u r i t y h a s b e e n
f o u n d e i t h e r n o m i n a l or m i s c h i e v o u s ; and in F r a n c e it h a s for m a n y y e a r s , b e e n
wholly given up.
T h e o n l y kind of s e c u r i t y , t h a t is r e c o g n i z e d t h e r e , is l i k e t h a t
w h i c h t h e b a n k s g i v e in t h e r e s p o n s i b i l i t y of t h e i r s t o c k .
E v e r y person who
r e c e i v e s a n a p p o i n t m e n t , c o n n e c t e d with t h e c o l l e c t i o n o r d i s b u r s e m e n t o f t h e
r e v e n u e , is r e q u i r e d , b e f o r e h e e n t e r s on t h e d u t i e s o f h i s office, to d e p o s i t e w i t h
t h e g o v e r n m e n t , a s s e c u r i t y , a n a m o u n t of m o n e y , p r o p o r t i o n e d t o t h e p r o b a b l e
a m o u n t of t h e p u b l i c t r e a s u r e t h a t will p a s s t h r o u g h h i s h a n d s T h i s m o n e y is
h e l d by t h e g o v e r n m e n t a s a g u a r a n t e e for t h e faithful a d m i n i s t r a t i o n of t h e t r u s t
c o n f e r r e d , a n d f o r m s , at the s a m e t i m e , a p a r t o f its f i n a n c i a l r e s o u r c e s on w h i c h
it p a y s a n i n t e r e s t o f 4 p e r c e n t , till r e s t o r e d to t h e officer o n h i s s a t i s f a c t o r i l y
a c q u i t t i n g h i m s e l f o f hi^ r e s p o n s i b i l i t i e s , o r till it b e o t h e r w i s e forfeited by his
default.
T h e m o n e y s t h u s d e p o s i t e d w i t h t h e g o v e r n m e n t , by p u b l i c officers,
a s g u a r a n t i e s for t h e faithful p e r f o r m a n c e of t h e i r d u t i e s , a r e d e n o m i n a t e d
Cautionnemens,
a n d a m o u n t to a v e r y l a r g e s u m .
I h a p p e n t o h a v e in m y p o s s e s s i o n , t h e r e p o r t m a d s by t h e F r e n c h M i n i s t e r o f F i n a n c e , C o u n t C h a b r o l , t o t h e
k i n g iti M a r c h I S ' 3 0 , from w h i c h it a p p e a r s t h a t t h e Canfinnneiiiens
on t h e 1st d a y
o f J a n u a r y o f t h a t y e a r a m o u n t e d to t h e e n o r m o u s s u m of frs. 12*^6.4 8 3 , 9 7 3
( t w o h u n d r e d a n d t w e n t y - s i x m i l l i o n - , four h u n d r e d a n d e i g h t y - t h r e e t h o u s a n d ,
n i n e h u n d r e d a n d s e v e n t y - t h r e e f r a n c s , ) at a t i m e w h e n t h e w h o l e r e v e n u e o f
t h e k i n g d o m did n o t e x c e e d f r s . 9 0 0 , 0 0 0 , 0 0 0 , ( n i n e h u n d r e d m i l l i o n s o f f r a n c s . )
N o w , sir, if g e n t l e m e n m e n n t o i n t r o d u c e h e r e t h e s y s t e m o f i n d i v i d u a l d e p o s i t a r i e s ot t h e p u b l i c m o n e y s , let t h e m be w a r n e d by t h e e x p e r i e n c e o f t h e c o u n t r y from w h i c h t h e v b o r r o w " t h a t s y s t e m t h a t it cttn b e m a d e safe rmly by t h e p r e c a u t i o n a r y d e v i c e of Cautionnemens,
t h e effect of w h i c h w o u l d he to g i v e t o t h e
million (tires of o u r c i t i e s t h e m o n o p o l y of all fiscal e m p l o y m e n t s .
B u t , sir, g r e a t a s i s t h e d a n g e r of h e a v y p e c u n i a r y l o s s e s t o t h e g o v e r n m e n t
u n d e r t h i s s y s t e m , 1 r e g a r d e v e n t h a t a s a t r i n e c o m p a r e d w i t h t h e e x t e n s i v e rfrmoralizution
it w o u l d p r o d u c e in t h e c o u n t r y — h y t h e t e m p t a t i o n h e l d o u t to p e c u l a t i o n , to p r i v a t e c u p i d i t y , to p o l i t i c a l c o r r u p t i o n , i n t h e l a r g e s u m s of p u b l i c m o n e y
l y i n g i d l e in t h e h a n d s of t h e p u b l i c officers.
.
I h a v e n o w , M r . P r e s i d e n t , g o n e t h r o u g n m y o b j e c t i o n s to t h i s l u l l o n a c c o u n t
o f w h a t it c o n t a i n s .
I object to it a l s o , arid not l e s s e a r n e s t l y , on a c c o u n t of w h a t
it J o e s n o t c o n t a i n .
It c o n t a i n s n o p r o v i s i o n for t h e r e l i e f of t h e c o u n t r y .
It
11
t a k e s n o t h o u g h t " for t h e p u b l i c . It l o o k s o n l y to t h e e a s e a n d c o m f o r t of t h e
crovernmeiit.
T h e m o s t u r g e n t w a n t of t h e c o u n t r y , t h e h i g h e s t i n t e r e s t of a l l ,
22
is a speedy restoration of specie p a y m e n t s by the b a n k s . N o w , too, is the critical
and decisive moment. T h e b a n k s have been, hitherto, diligently and steadily
curtailing their discounts and circulation, with a view to that resumption, 'till t h e y
have brought their business within such safe limits, that they might now easily
resume with a little encouragement. But if they are once again ]et loose from
these salutary hounds,—if, despairing of a general resumption, and yielding to
the strong temptations of irredeemable issues, they should again expand, all h o p e
will be lost of recalling them to a specie standard, and the disastrous reign of an
inconvertible paper currency will be indefinitely prolonged. N o w , then, is the mom e n t to join in this great work of effecting a restoration of specie p a y m e n t s .
But does this liill do a n y t h i n g toward its accomplishment? On the contrary,
it does every thing it can to retard and obstruct it. In the run it would create
on the hanks for specie, both by the demand it m a k e s of it for the u s e s of t h e
government, and by the general discredit w h i c h the high example of the governm e n t would stamp on bank paper, it throws n e w and insurmountable obstacles in
the way of resumption.
Hut the? Honorable Senator from N e w York s a y s that the resumption of specie
p a y m e n t s by the banks is no concern of this government—that it is exclusively
an affair of the stales and of the banks t h e m s e l v e s — a n d w e , w h o urge the n e c e s sity of promoting by every proper and practicable m e a n s , the accomplishment of
this great object, are reproached with using an argument, w h i c h , lie tells u s , b e longs l o t h e friends of a National B a n k . N o w , sir, I beg leave to say to the
honorable Senator that both reason and experience prove that the only effectual
m e a n s of preventing a National Bank is to bring about a resumption of specie
p a y m e n t s by the State B a n k s , and that nothing is more directly calculated to lead
to the re-establishment of a Bank of the U. S., than the course of those w h o would
do nothing toward effecting that resumption. L e t the honorable Senator look
back to that most instructive period, rich in lessons for the present t i m e s — t h e
former suspension of specie payments by the banks from 1814 to 1 8 1 7 — a n d h e
will see that it w a s the unwillingness or the inability of the State B a n k s then to
resume specie p a y m e n t s , w h i c h alone led to the establishment of a National B a n k .
L e t him read the official correspondence of Mr. D a l l a s — t h e n u m e r o u s reports
and communications of that able and patriotic man, worthy of him and of the
country—and he will find through out, an explicit recognition of, and unvarying
testimony to this great truth—that if the State B a n k s could h a v e been induced
more promptly to resume specie payments at that time, there would have b e e n
no occasion for a National B a n k , and that that institution would not have existed. T h e true means of preventing its re-establishment now is bv the instrumentality of the State Ba nks, under the lead and encouragement of the *rovernnicnt, to restore to the country a sound, convertible currency.
T h i s government can and ought to aid in this great work. Its vast revenue
power, and its pervading action, coextensive with the whole Union, give it
m e a n s and iniluences which the states do not possess. It holds, indeed, through
that power, a lever of the greatest efficacy, fnr controling the entire c u r r e n c y of
the country. T h r o u g h its collections and disbursements, it (ran hold out inducements of the most influential character to s w a y the course of the banks. In t h e
mode of conducting its receipts and p a y m e n t s , it has it in its p o w e r to set an examples tho most persuasive influence toward the restoration of general
confidence.—
In a disturbed state of the currency like t h e present, these are p o w e r s to be exercised in a spirit of liberality and benignity—not of m e n a c e , denunciation or
vengeance* T h e occasion demands the language of encouragement and s u p p o r t —
not of severity and sternness. L o o k at the communications of Mr. D a l l a s and
M r . Crawford with the b a n k s during the former suspension of specie p a y m e n t s ,
and it will be seen in what spirit the influence of the government w a s t h e n e x erted, and effectually exerted, in the end, to accomplish a return to s p e c i e p a y -
23
ments.
T h e banks were not then outlawed by the official p r e s s — t h e y w e r e not
t h e n put under ihe bm of the government—they were not then pursued as conspiruLors,
but were treated as institutions having themselves a stake in The comm o n weal, and with which the common interests of the whole country were identified.
It will be edifying, lor a moment, to look back to the manner in w h i c h
t h e government thenconducted its relations with the b a n k s ; and I must say that
i f t h e exertions of the banks, generally, since the recent suspension of specie
p a y m e n t s , to prepare themselves for a resumption by a steady and persevering
c u r t a i l m e n t of their business and profits, be compared with the course of the banks,
o n the former occasion, in taking advantage of the suspension to enlarge their
i s s u e s to a most extravagant extent, and in obstinately refusing to apply the
v a l u a b l e public stocks held by them to acquiring the ability to resume, the
b a n k s now are entitled, at least, to as much liberality and favor as were shown
t o t h e m then.
B y the joint resolution of April, 1816, which has been so often referred to, it was
m a d e the duty of the Secretary of the T r e a s u r y to take such m e a s u r e s as he should
d e e m necessary to effect a collection of the revenue in gold and silver, T r e a s u r y
n o t e s or the notes of specie paying banks. In the discharge of this duty, Mr.
D a l l a s very soon opened a correspondence with the State Banks to induce them
t o return to specie payments. In a circular which he addressed to them on the
2 2 d of July 1818, he used this language :
" F r o m the SLatc Banks, a sincere and effectual exertion, in the common cause nf restoring the
legal cnrr«;ncv, is certainly expecLcd and ruqnireri ; hut in return they will merit and receive the
confidence of the Treasury and of the JVational Bank ; the transferor" the public funds from the
S t a t e Banks to the National Bank and its branches will he gradual^ and the notes of the State
I$a?iks will be freely circulated by the Treasury and the National
Bank."
I n a preceding part of the same letter, he s a y s —
" T h e present opportunity is embraced to repent the assurances which have been uniformly given
and maintained, that this Department feels the fiscal interests of the i*-ovcrnment, and the successful operations of the Bank of the U. States, to be ultimately connected with the credit and 'prosperity of the State Hanks."*
H e r e , we s e e t h e language of the government toward the hanks w a s that of
e n c o u r a g e m e n t and confidence. T h e y were assured, in advance, of the friends h i p , and even of the support of the government, if they would faithfully co-operate
i n the common cause of restoring the le«"al currency.
T h e communications of Mr. Crawford, the ahle and distinguished successor of
M r . Dallas, were in the same spirit. You, Air. President, and those who acted
w i t h you in those difficult times, will recollect that, although the joint resolution of
A p r i l , 1816, indicated the t^Oth of F e b . following, as the day for a <reneral resumption of specie payments, the hanks determined, in a convention held by thorn for
t h e purpose of deliberating on the subject, not to resume till the 1st of July, 1817.
I n order to induce them to change that determination, Mr. Crawford made a
formal proposition to tbem that if they would resume on the 20th of February, the
public money then in their vaults should not he transferred, at all, to the Rank
of the United States, (constituted by its charier the general depository of the national funds) and that between that day and the 1st of July, no portion of the public money should be drawn from them for any purpose whatever, unless the n e c e s s i t i e s of the public service imperiously required it. 1 beg leave to read to the
S e n a t e the following extracts from his circular to the banks oi 20th D e c . 181G,
submitting that proposition :
" The mrjRiisof the Trensnryto aid the operations of the b^nks in effecting a revolution in
the stale of the currency, so imperiously nucessary to the public iiUeruist, are eonsiderud ample nnd the strongest disposition exists to apply them, su as to produce the most, beneficial resuit*-
24
" I n making the above proposition to the State Banks, the strongest reliance is placed in
their disposition to join in the effort necessary to relieve the cornnrmnity from the evils to
which it has been subjected, by the disordered state of the circulating medium. It is confidently believed that the interesis of the banks and of rhe community are not in opposition to
each "other, and that any sacrifice, which the effort may cost them, wiJl be compensated by tte
advantages
and facilities which it is in the power of the Treasury to afford them."
<(
The deep interest vhi eh the 7\easvnj has in the ssivppart o)r bank credit, and the connection
it has with the Bank of the United States, would, independent of the known disposition of
that institution to conciliate the State Banks, be sufficient to protect ihem against an illiberal
policy on its part."
I n this communication, it will be perceived, that M r . Crawford felt and avowed
t h a t the m e a n s of the T r e a s u r y , to aid in the restoration of specie payments were
ample.
H e freely proffered that aid to the State B a n k s — h e not only made them
the most liberal propositions for their own advantage, but he gave them a specific
pledge of protection and support against any illiberal policy on the part of the B a n k
of the United States* A n appeal thus urged to both the interests and patriotism
of the State B a n k s , could not fail to be effectual. It accomplished its object.
T h e banks changed their original determination, and did resume specie payments
on the 20th of F e b . , I S 17.
N o w , Sir, can any one doubt that if the same spirit had actuated the T r e a s u r y
Department in its relations with the banks recently : if, especially, w h e n a majority of the banks, represented in the Bank Convention, assembled in N e w York,
in November last, manifested a strong desire to fix an early day for the resumption of specie payments, and w e r e prevented from doing so only by the influence
of a powerful and overshadowing institution—if, I say, Sir, the T r e a s u r y Department hnd shown, on that occasion, the same dispositions w h i c h animated M r .
Crawford in 1810, and had come forward and given, a s s u r a n c e s of support tor
that portion of the banks, who were anxious to return to specie p a y m e n t s ,
against the " illiberal policy" of the Bank of the United States, can there be
a doubt that at this moment, w e should be in sight ot a fixed period for the termination of the present calamitous and disordered state of the currency* But*
unfortunately, the policy h a s been to stand entirely aloof from the banks, after
having contributed, it is admitted on all hands, by the m e a s u r e s of the Government, in some one or other of its b r a n c h e s , to the embarrassments by w h i c h t h e y
w e r e overthrown. N o aid, no encouragement has been given—not even a voice
of cheering has been uttered amid the general distress. On the contrary, odium and prejudice have been extensively invoked through the press at least, to
render more complete that, want of confidence, which is the sole obstacle to the
re-estabhslnnent of both the credit and ability of the banks. And now, in the
sequel, comes tins fatal S u b - T r e a s u r y bill to deal them the last blow in their
prostrate condition. T h e great interests of the country, connected with the restoration of the credit of the banks, and of the currency which they supply, have been
overlooked or unappreciated ; and the whole object s e e m s to have been to d e vise some plan by which the Government couid, in future, get along in the
siuootlust w a y — b y w h i c h it could be relieved from those responsibilities, and protected from that "shower of imputations"
in the discharge of its duties w h i c h ,
the honorable Senator from N e w York, (Mr. Wright,) so pathetically d e p r e c a t e s .
W h a t , then, I would ask, are governments instituted for, if it is not to meet
difficulties, in the public c a u s e — t o meet and overcome t h e m — t o encounter r e sponsibilities—to endure a shower of imputations, y e a " the pelting of the pitiless
storm**, if duty to the country demand. And an able man and a patriot need not
repine a t these trials of his virtue and talents. T h e ultimate gratitude of h i s
country will ever be in proportion to the temporary injustice h e may sustain b y
the bitterness of enemies or the persecutions of faction. H o w enviable, at this
moment, the fame of Mr. Crawford, than whom no man, in his d a y , e n c o u n t e r e d
more responsibilities by the bold and fearless manner in w h i c h h e met the d u t i e s
25
of h i s s t a t i o n , or s u s t a i n e d m o r e unfounded i m p u t a t i o n s . B u t truth h a s t r i u m p h e d
o v e r p r e j u d i c e a n d error, and h e n o w lives a n d will forever live in t h e grateful m e m o r y of h i s c o u n t r y . T h i s desire to avoid difficulties and their a t t e n d a n t r e s p o n s i b i l i t i e s , founded, as I think I h a v e s h o w n it to b e , in m i s t a k e as to t h e true i n t e r e s t s of p u b l i c m e n , is the s o u r c e of still g r e a t e r c a l a m i t i e s to the c o u n t r y .
It
i s t h e n a t u r a l p a r e n t , s t r a n g e as it m a y s e e m at first sight, of all s c h e m e s of
strong
government
; and is not unsuitably a v o w e d by i h e honorable S e n a t o r from
N e w Y o r k , a s a consideration in favor of a m e a s u r e , the effect of w h i c h , in m y
h u m b l e j u d g m e n t , would be to r e n d e r this R e p u b l i c a n g o v e r n m e n t of ours one of
t h e strongest
on the face of the e a r t b . O n this subject, sir, 1 beg leave to r e a d
t o t h e S e n a t e the r e m a r k s of the profoundest o b s e r v e r , p e r h a p s , of h u m a n affairs
t h a t e v e r lived. T h e y are full of instruction, and c a n n o t be too w e l l w e i g h e d b y
p u b l i c m e n . I n s p e a k i n g of the N a t i o n a l A s s e m b l y of F r a n c e , l i u r k e m a k e s
u s e of t h e s e w o r d s :
*' T h e i r purpose every w h e r e seems to h a v e been to evade and s]ip aside from
difficulty.
T h i s it h a s been the ^lory of the great masters, in all the arts, to confront and o v e r c o m e ;
a n d w h e n they had overcomeM ihe
first difficulty, to turn it into an i n s t r u m e n t for n e w contL
q u e s t s over new di(HcuUics.
T
h i s a m i c a b l e conilict with difficulty obliges us to a n
i n t i m a t e acquaintance 1 with o u r object, and compels us to consider iL in all its relations. It
w i l l not suffer us to bn superficial. It is the want of nerves for such a task ; it is the fondness
for s h o r t cuts *nd falacious facilities,
that has, in so m a n y parts of the world, created go remL
rrvents with, arbitrary pincers"
' It is this u n w i l l i n g n e s s to wresLle with difficulty w h i c h
h a s obliged the National Assembly of F r a n c e to c o m m e n c e their schemes of reform icith
\ abolition and. total
destruction."
T h e disposition to evade difficulty, the policy of short cuts, w e are told by this
g r e a t m a s t e r of political w i s d o m , h a s in every p a r t of the w o r l d , " created
governments with arbitrary powers >•" a n d was what in F r a n c o led the N a t i o n a l A s s e m b l y fcl to c o m m e n c e their schemes of reform with abolition and total
destruction,"
N o W , sir, if this h a d b e e n specially written for our warning, a n d with e x p r e s s
r e f e r e n c e to the q u e s t i o n before us T it could n o t h a v e b e e n m o r e a p p o s i t e o r
m o r e instructive.
Kvery s u m m a r y invention, in a free c o u n t r y , s u g g e s t e d by t h e
ease of government,
h o w e v e r i n t e n d e d , will be found, at last, to carry with it the
d e e p e s t d a n g e r s to the liberties and h a p p i n e s s of the p e o p l e .
T h e honorable
S e n a t o r from TVew Y o r k , t o o , should r e m e m b e r that it w a s to h i m who should
untie, and not to him w h o should cut the G o r d i a n k n o t , t h a t the a n c i e n t o r a c l e
p r o m i s e d the glories of e m p i r e .
T h e first is the nchievinent of skill a n d industry,
a n d its fruits a r e p e a c e , liberty and h a p p i n e s s . T h e s e c o n d is the a c h i e v m e n t of
p o w e r , a n d its r e s u l t is t h e e s t a b l i s h m e n t of p o w e r .
L e t the h o n o r a b l e S e n a t o r
f r o m N e w Y o r k untie the k n o t , by leading t h e b a n k s to a r e s u m p t i o n of s p e c i e
p a y m e n t s , (as t I a m s u r e , by proper m e a n s , h e could easily do,) a n d not cat it
b y t h e S u b - t r e a s u r y s c h e m e , and I will b e a m o n g the first to a w a r d him t h e civic
wreath.
W i t h M r . J e f f e r s o n , in his m e m o r a b l e letter to M r . M a d i s o n , while
t h e F e d e r a l Constitution was u n d e r c o n s i d e r a t i o n , I say, " I a m no friend to s t r o n g
government.
It is a l w a y s oppressive. It puts the. Governors at their ease, but at
the expense of the people.''
H e r e lies the fatal objection to the S u b - t r e a s u r y
s c h e m e . I t p u t s the " G o v e r n o r s at their e a s e , " but is d a n g e r o u s and " o p p r e s s i v e , " to t h e p e o p l e .
W h a t s y s t e m of policy, t h e n , it will be a s k e d , would I pursvic ? T h e s a m e g r e a t
a u t h o r i t y , w h o s e w o r d s I h a v e a l r e a d y quoted, s a y s , " a good patriot a n d a t r u e
p o l i t i c i a n will a l w a y s c o n s i d e r h o w to m a k e the most of the existing m a t e r i a l s of
h i s c o u n t r y . " T h i s is t h e foundation principle on w h i c h I would build.
Exper i e n c e has" s h o w n , in the l a n g u a g e u s e d by t h e p r e s e n t S e c r e t a r y of t h e T r e a s u r y
in 1 8 3 4 , that b a n k s are the most " r e s p o n s i b l e , safe, c o n v e n i e n t a n d e c o n o m i c a l " fiscal a g e n t s for the g o v e r n m e n t .
T h e State B a n k s are institutions n o w
existing.
I would '* make the most"' of t h e m for the public s e r v i c e . T h e r e is no
n a t i o n a l b a n k i n g institution in e x i s t e n c e ; and the condition of the c o u n t r y , a l r e a d y
26
surcharged with banks, the state of public opinion, the k n o w n sentiments a n d
pledo-es°of those charged with the public administration, all conspire to r e n d e r it
very°unlikely that there will be any such institution at least for y e a r s to come.
I
say farther in my humble opinion, there ought to be no such institution ; first,
because there is no constitutional authority to create it, and secondly, b e c a u s e its
political dangers, in any form in which it h a s heretofore existed, have been found
to more than counterbalance its supposed advantages, in other r e s p e c t s .
Then,
as to the Sub-treasury s c h e m e , it is a novelty utterly unknown to our l a w s a n d
u s a g e s , w h i c h could not be brought into existence without violating all the h a bitudes of our people, deranging the operations of business, and hazarding t h e
most cherished principles of our political institutions.
W h a t , then, ought to b e
done ? R e c u r to the " existing materials of the country," the State B a n k s , —
" make the most" of them for the convenience of the government, as well as for
the general good—reform their abuses, correct their defects and adopt every p r e caution w h i c h may be n e c e s s a r y to ensure their fidelity and efficiency.
T h e s e institutions, it is true, have recently, in common with every other interest
in the country and with the whole commercial world, been subjected to serious
embarrassments. All agree, however, though differing as to the particular c a u s e s
w h i c h produced them, that those embarrassments have been the result of very
peculiar and extraordinary circumstances. T h e banks, too, which w e r e employed
as the depositorids and fiscal agents of the government, have, for the most part,
amid circumstances of the greatest difficulty, actually discharged all their e n g a g e ments to the government, enormously heavy, as they were, in consequence of t h e
large surplus r e v e n u e ; or the few who have not yet done so, have satisfactorily
secured the comparatively small balances due from them, to be paid at short p e riods, according to an indulgence voluntarily granted to them by C o n g r e s s .
The
past, therefore, candidly considered, furnishes no ground against the r e n e w e d
employment of the State B a n k s as fiscal agents of the government.
Experience may have, and doubtless, h a s , disclosed delects and e r r o r s in the particular
plan upon which they have been heretofore employed- Correct, then, those e r r o r s —
supply those defects—but do not reject their employment altogether* T h i s , sir,
is the general principle on which I have bottomed the proposition I have submitted
as a substitute for the bill reported by the honorable Senator from N e w York ;
and I will now proceed to explain, in detail, those provisions of the substitute
which distinguish it from the state bank deposite system a s heretofore organizedIt is now generally acknowledged that one of the principal circumstances which
contributed to embarrass the operations of the late Deposite system, w a s the large
n u r n b e r W banks employed as depositories,—amounting, in the end, I believe, to
near ninety. T h i s increase of number, in part, w a s rendered necessary by that
provision ia the act of J u n e , 1836, which required that, where the amount of
public depositee in any bank e x c e e d s threefourths of its capital actually paid in,
the surplus should be transferred to some other bank. In the execution of the net*
however, (from considerations which 1 arn not able to explain) there was a still far*
ther increase in the number of depositories, not called for by the requirements of
this provision. It is obvious how the whole play of the machinery must have
been weakened and obstructed by this needless complexity of its parts. I a m
satisfied that twenty banks, judiciously selected and properly located, would be
competent to do the whole business of the T r e a s u r y D e p a r t m e n t , with m u c h
less danger of embarrassment to the B a n k s , and a far more easy and effectual
supervision on the part of the Secretary* T h e substitute, therefore, provides that
the number of B a n k s to be employed as public depositories shall, in no case, e*eeed tioe*fy-jive^ to be chosen from among the most solid and respectable banks
in the respective States, and their location, as well a s number, to be determined
solely with reference to the wants and convenience of the T r e a s u r y in conducting
its fiscal operations.
27
T h e s u b s t i t u t e a l s o p r o p o s e s a n i m p o r t a n t c h a n g e in t h e m o d e o f s e l e c t i n g
the deposite banks.
H e r e t o f o r e t h e y w e r e c h o s e n by t h e S e c r e t a r y of t h e T r e a s u r y , a t his will a n d p l e a s u r e a l o n e .
T h i s s o l e a g e n c y o f the E x e c u t i v e will, in
d e s i g n a t i n g t h e d e p o s i t o r i e s of t h e p u b l i c m o n e y , e x p o s e d t h e l a t e s y s t e m to a s u s p i c i o n of f a v o r i t i s m a n d a w a n t o f c o n f i d e n c e in g e n e r a l , w h i c h g r e a t l y i m p a i r e d
i t s m o r a l force, a n d a d m i t t e d a p o s s i b i l i t y of a b u s e s , w h i c h , it is c e r t a i n l y p r o p e r , s h o u l d be g u a r d e d a g a i n s t .
I t w a s this w h i c h c a u s e d it t o b e c h a r a c t e r i s e d a s
t h e pet-bank
system.
I p r o p o s e t o d i v e s t it of t h i s c h a r a c t e r by s u b j e c t i n g the s e l e c t i o n o f t h e S e c r e t a r y of t h e T r e a s u r y , in e v e r y c a s e , to t h e s u p e r v i s i o n a n d
c o n t r o l of C o n g r e s s .
I f t h e s e l e c t i o n b e m a d e d u r i n g t h e s e s s i o n of C o n g r e s s , it
is to b e i m m e d i a t e l y s u b m i t t e d for t h e a p p r o v a l of t h e t w o H o u s e s — i f , d u r i n g t h e
r e c e s s , it is to be laid b e f o r e t h e m at t h e c o m m e n c e m e n t of t h e n e x t s e s s i o n , t o
b e in like m a n n e r c o n f i r m e d or a n n u l l e d b y t h e m .
T h e effect of this p r o v i s i o n
will b e to b r i n g every thing-, r e l a t i n g to t h e p u b l i c m o n e y s , u n d e r t h e d i r e c t a n d
efficient c o n t r o l uf t h e r e p r e s e n t a t i v e s of the p e o p l e a n d t h e S t a t e s , a n d in s o
d e l i c a t e a n d i m p o r t a n t a m a t t e r , t o l e a v e a s little a s p o s s i b l e to . E x e c u t i v e d i s cretion.
A n o t h e r l e a d i n g p r o v i s i o n in t h e s u b s t i t u t e is o n e w h i c h r e q u i r e s t h e d e p o s i t e
b a n k s t o h a v e w e e k l y s e t t l e m e n t s w i t h t h e b a n k s , in t h e i r v i c i n i t y , with w h i c h
t h e y h a v e b u s i n e s s t r a n s a c t i o n s , a n d t o call for b a l a n c e s in s p e c i e , whenever
and
t o whatever extent it m a y be n e c e s s a r y t o c h e c k o v e r - i s s u e s a n d to p r e s e r v e t h e
s o u n d n e s s of the c u r r e n c y .
I n t h e a d o p t i o n of this p r a c t i c e by t h e l a t e B a n k o f
t h e U n i t e d S t a t e s , c o n s i s t e d its b o a s t e d p o w e r a n d i n f l u e n c e a s a r e g u l a t o r of t h e
currency.
T h e r e is n o r e a s o n w h y t h e s a m e s a l u t a r y c o n t r o l s h o u l d n o t b e
e x e r c i s e d b y t h e d e p o s i t e b a n k s , a n d w i t h e v e n g r e a t e r effect, i n a s m u c h a s t h e i r
a g g r e g a t e c a p i t a l a n d p r e s u m e d a m o u n t of t r a n s a c t i o n s w i t h o t h e r b a n k s , w o u l d ,
n o d o u b t , e x c e e d t h o s e of t h e late N a t i o n a l B a n k .
I t will be p e r c e i v e d from t h e
t e r m s of this p r o v i s i o n in t h e s u b s t i t u t e , t h a t it is n o t c o n t e m p l a t e d to e n j o i n on t h e
d e p o s i t e b a n k s a fixed a n d inexorable
requisition
of b a l a n c e s f r o m t h e o t h e r b a n k s
i n s p e c i e , u n d e r all c i r c u m s t a n c e s w h a t e v e r ; for c o n s i d e r i n g t h e l a r g e b a l a n c e s
t h a t w o u l d b e h a b i t u a l l y a c c u m u l a t e d by t h e m a g a i n s t t h e o t h e r b a n k s in t h e p r o c e s s o f c o l l e c t i n g t h e p u b l i c r e v e n u e , s u c h a r e q u i s i t i o n w o u l d b e d e s t r u c t i v e in
m a n y c a s e s , to i n s t i t u t i o n s of u n q u e s t i o n a b l e s o u n d n e s s .
I t is c o n t e m p l a t e d ,
t h e r e f o r e , t h a t t h i s p o w e r s h o u l d b e e x e r c i s e d u n d e r p r o p e r s a f e - g u a r d s , a n d only
to the extent t h a t m a y b e n e c e s s a r y t o r e s t r a i n i m p r u d e n c e s o r e x c e s s e s , e n d a n gering the general currency.
I t w a s t o t h i s e x t e n t o n l y , a s 1 h a v e s h o w n in a
p r e v i o u s p i r t of t h e s e r e m a r k s , t h a t t h e p o w e r w a s e x e r c i s e d b y t h e l a t e B a n k
o f the United S t a t e s .
T h e s u b s t i t u t e l i k e w i s e m a k e s it t h e d u t y o f t h e S e c r e t a r y o f t h e T r e a s u r y t o
u s e h i s i n f l u e n c e to b r i n g a b o u t an a r r a n g e m e n t , ( a s n o d o u b t is e n t e r t a i n e d h e
c o u l d d o , ) a m o n g t h e s e v e r a l d e p o s i t e b a n k s to r e c e i v e a n d c r e d i t a s c a s h t h e
n o t e s of e a c h o t h e r in p a y m e n t of the p u b l i c r e v e n u e , wherever
so t e n d e r e d .
The
effect of this a r r a n g e m e n t w o u l d b e t o p u t t h e n o t e s of t h e d e p o s i t e b a n k s practically o n t h e s a m e footing a s t h e b r a n c h n o t e s of t h e late B a n k of t h e U n i t e d
S t a t e s — e v e r y w h e r e r e c e i v a b l e in p a y m e n t of p u b l i c d u e s , a n d e n j o y i n g , c o n s e q u e n t l y , a general credit a n d circulation t h r o u g h o u t the U n i o n .
It would give
t o t h e c o u n t r y , t o a ^ r e n t e x t e n t , t h e a d v a n t a g e s of a n uniform
paper currency,
a s t h e p r e c e d i n g p r o v i s i o n w o u l d s e c u r e to it a sound o n e ; a n d t h e t w o t o g e t h e r ,
in s u p p l y i n g , practically,
t h e b e n e f i t s p r o m i s e d by a N a t i o n a l B a n k , w o u l d s u p e r s e d e t h e s t r o n g e s t a r g u m e n t s n o w u r g e d in favor of s u c h a n i n s t i t u t i o n .
I n r e g a r d to t h e k i n d s of m o n e y , in w h i c h t h e p u b l i c r e v e n u e is to b e c o l l e c t e d ,
t h e s u b s t i t u t e a d o p t s , w i t h s l i g h t m o d i f i c a t i o n s , the p r o v i s i o n ot the c u r r e n c y bill
o f t h e last s e s s i o n of C o n g r e s s .
I t d e c l a r e r t h a t t h e p u b l i c d u e s , of every
descrijytion, for lands a s w e l l a s c u s t o m s , s h a l l be r e c e i v e d in g o l d a n d s i l v e r , o r T r e a s u r y n n t e ^ , or s u c h n o t e s of s p e c i e - p a y i n g b a n k s , ( u n d e r c e r t a i n r e s t r i c t i o n s
i n t e n d e d to p r o m o t e t h e s u p p r e s s i o n of s m a l l n o t e s , ) a s t h e d e p o s i t e b a n k s , s u b -
28
j e c t to the supervision and control of the S e c r e t a r y of the T r e a s u r y , shall a g r e e t o
credit to the United States a s cash.
I t will be perceived that in the proposition
now submitted, 1 have postponed for one year the exclusion of the notes of b a n k s
which issue bills or notes under five dollars. I t is k n o w n that m a n y of the S t a t e s
authorize notes under that denomination ; and s o m e , \Nho have heretofore prohibited them, will, it is supposed, authorize the issuing of them under existing circ u m s t a n c e s , and for a limited period. I t is evident that the use of this description of notes, in supplying the place of, and consequently diminishing the d e m a n d
for specie in small dealings, would tend materially to facilitate the resumption o f
specie p a y m e n t s by the banks- T h i s consideration has induced m e , under t h e
peculiar circumstances of the times, to adjourn for one y e a r the period for excluding the notes of banks issing bills or notes under five dollars ; and the same c o n sideration has prevailed with me, for the present, to limit the farther exclusion of
bank notes to the issues of such b a n k s as shall, after the expiration of two y e a r s ,
continue to issue bills or notes under ten dollars. In doing this, u n d e r the exigencies of the times, I wish to he understood as not abandoning my original opinions, (which remain unchanged,) in favor of extending the prohibition of small
notes ultimately to all under the denomination of twenty dojlars.
Finally, the substitute, in furtherance of the great policy of fixing a period to the
present disastrous reign of irredeemable paper, provides that after the 1st day of
July next, the notes of no b a n k which shall not then have bona fide r e s u m e d
specie payments, shall, at any time thereafter, be received in payment of the public
dues. T h i s , in connection with the liberal provisions made by the Substitute, in
other respects, for re-establishing the credit of convertible b a n k paper, will, I am
persuaded, bring about a general resumption of specie payments at the time designated. T h e mere fixation of a day by Congress will exercise a powerful moral
influence ; and not the less so, as the day fixed corresponds with that indicated by
a majority of the banks in the B a n k Convention held in JNew York in N o v e m b e r
last.
T h e s e , Mr* P r e s i d e n t , are the leading provisions of the m e a s u r e I have submitted, which distinguish it from the system heretofore adopted for the employment of
State Bank:; as depositories of the public money. I n many respects, they m a k e
of it a new system, obviating s o m e of the strongest objections which have been
hitherto urged against it, providing new guards against abuses and containing n e w
provisions tor extending its usefulness and efficiency.
U n d e r an able and notunJnendfy direction, I feel every confidence that it would meet both the w a n t s of the
government and the wishes of the c o u n t r y .
I shall, doubtless, be asked what arrangement I propose in regard to the
b a n k s discounting on the public depositee- T h e r e is no absolute interdiction of
their doing s o , in the measure I propose, (for to this, I think, I shall be able t o
s h o w there are insuperable obstacles,) but it carefully withdraws the siimuhts t o
the use of that power which has heretofore been applied, and it moreover furnishes
a positive security, of an important character, against the excessive u s e of it. I t
will be recollected by the S e n a t e that the law of J u n e , 1836, which organized t h e
late deposito s y s t e m , (besides requiring of the banks very important and o n e r o u s
services,) required them to pay an interest of two per cent, on ail the public d e posites in their possession exceeding one-fourth of their capital actually paid i n . —
N o w , this not merely authorized, but compelled the b a n k s to discount on the
public moneys, whether they willed it or not, in order to enable them to pay the
interest charged. It was a stimulus administered by the government to the use of
the power.
T h i s stimulus, this compulsion rather, I propose to withdraw by r e pealing thut clause of the law of 183fi which charged the banks interest on t h e
public moneys ; for the important services to be rendered by them a s fiscal a g e n t s
of the government, are the fair and p r o p e r equivalent of any legitimate
advantage
to be incidentally derived by them from the custody of the public m o n e y s .
I n the limitation of the number of deposite b a n k s to twenty-five, as proposed b y
29
t h e m e a s u r e T h a v e had the h o n o r to s u b m i t , t h e r e is an i m p o r t a n t s e c u r i t y a g a i n s t
t h e p u b l i c d e p o s i t e s b e i n g m a d e t h e b a s i s of b a n k d i s c o u n t s , to any g r e a t e x t e n t .
I t m u s t n o t be forgotten that the c h a r t e r s of all the M a t e B a n k s fix a g e n e r a l
l i m i t b e y o n d w h i c h t h e y a r e not p e r m i t t e d to e x t e n d their d i s c o u n t s .
T h a t limit
i s , I b e l i e v e , ordinarily t w i c e , or t w i c e a n d a half, t h e a m o u n t of their c a p i t a l s
p a i d in- A s the public d e p o s i t e s , u n d e r the m e a s u r e I p r o p o s e , would be confined
t o t w e n t y - f i v e b a n k s , it is e v i d e n t that t h e y c o u l d n o t be used, to a n y g r e a t
e x t e n t , (relatively to their a r n o u n t , ) h y t h o s e b a n k s t o e n l a r g e their d i s c o u n t s , b e f o r e t h e y would e n c o u n t e r an i m p a s s a b l e barrier in the limit of their c h a r t e r s . M his,
it is well k n o w n , o c c u r r e d in s e v e r a l c a s e s , ( p a r t i c u l a r l y in N e w Y o r k , ) u n d e r
t h e o p e r a t i o n of t h e late s y s t e m , n o t w i t h s t a n d i n g t h e g r e a t e r n u m b e r of
b a n k s t h e n e m p l o y e d a s d e p o s i t o r i e s ; and in t h o s e c a s e s , a u t h o r i t y w a s
g i v e n to t h e b a n k s which had t h u s e x h a u s t e d their c h a r t e r e d p o w e r of
d i s c o u n t i n g on t h e public d e p o s i t e s , to turn over t h e s u r p l u s , o n which t h e y
c o u l d n o l o n g e r d i s c o u n t u n d e r the limitations of their c h a r t e r s , to o t h e r b a n k s ,
t h a t t h e y m i g h t discount u p o n t h e m . T o any a r r a n g e m e n t of this sort fur m u l t i p l y i n g b a n k d i s c o u n t s on t h e public d e p o s i t e s , the m e a s u r e I h a v e s u b m i t t e d would
o p p o s e an i n s u p e r a b l e o b s t a c l e , as it inflexibly fixes, u n d e r all c i r c u m s t a n c e s
w h a t e v e r , t h e n u m b e r of b a n k s to be e m p l o y e d as d e p o s i t o r i e s of the public m o n e y s • and in fixing that n u m b e r at twenty-five, the s a l u t a r y c h a r t e r limitation
u p o n t h e p o w e r of d i s c o u n t i n g , w o u l d , a s I h a v e j u s t s h o w n , s o o n b e b r o u g h t
i n t o action to p r e v e n t e x c e s s by t h e m .
I t h i n k , t h e r e f o r e , M r . P r e s i d e n t , that u n d e r t h e p r o v i s i o n s of t h e S u b s t i t u t e I
h a v e p r o p o s e d for the c o n s i d e r a t i o n of the S e n a t e , t h e r e would b e no d a n g e r
o f a n y u n r e a s o n a b l e e x t e n s i o n of d i s c o u n t s on t h e public d e p o s i t e s - I k n o w , h o w e v e r , t h e r e are g e n t l e m e n of g r e a t i n t e l l i g e n c e and p a t r i o t i s m , w h o a r e for an a b s o l u t e prohibition of t h e b a n k s d i s c o u n t i n g , to a n y e x t e n t , h o w e v e r m o d e r a t e , on the
p u b l i c d e p o s i t e s , and w h o favor, as the m e a n s of c a r r y i n g out that p r o h i b i t i o n , a
s y s t e m of special d e p o s i t e s .
T h e high r e s p e c t I e n t e r t a i n ihr the o p i n i o n s o f
t h o s e g e n t l e m e n h a s i n d u c e d m e to c o n s i d e r their s u g g e s t i o n , with m o r e t h a n
o r d i n a r y a n x i e t y to c o m e to t h e s a m e c o n c l u s i o n s ; but after t h o r o u g h e x a m i n a t i o n a n d reflection, a c c o r d i n g to the best lights of m y u n d e r s t a n d i n g , I a m s a t i s fied that no s y s t e m of special d e p o s i t e s , h o w e v e r s p e c i o u s in t h e o r y , could b e
w o r k e d out in p r a c t i c e , w i t h o u t involving c o n s e q u e n c e s which they t h e m s e l v e s ,
( o r at least, a l a r ^ e majority of t h e m , ) would p r o m p t l y r e p u d i a t e .
in the first
p l a c e , it is d e m o n s t r a b l e , I h u m b l y c o n c e i v e , that a n y s y s t e m of special d e p o s i t e e , to be practical a n d efficient, m u s t lead to a collection of t h e r e v e n u e ,
directly or indirectly,
in s p e c i e ; and this they o p p o s e as e a r n e s t l y as I d o .
The
G o v e r n m e n t m u s t a l w a y s hold itself r e a d y to p a y its c r e d i t o r s in the I air Jul
currency of the c o u n t r y , if demanded.
T h i s the b a n k s a r e bound to d o , on behalf of
t h e G o v e r n m e n t , u n d e r the general d e p o s i t s s y s t e m . H u t if you a d o p t the sjjcacil
d e p o s i t e s y s t e m a n d c o l l e c t t h e r e v e n u e , at the s a m e t i m e , in b a n k noh-s, the
b a n k s would be b o u n d to pay out to t h e public c r e d i t o r only the identical no ten
d e p o s i t e d with t h e m ; for this is t h e f u n d a m e n t a l and i m m u t a b l e idea of a s p e c i a l
deposits.
H o w , then, w o u l d s u c h a s y s t e m work ? T h e public c r e d i t o r w o u l d
p r e s e n t his w a r r a n t to a depattite b a n k — t h e hunk would offer h i m , in p a y m e n t ,
first this n o t e and then that, which had b e e n specialty d e p o s i t e d with it : hut norm
o f t h e s e n o t e s suiting the c o n v e n i e n c e of t h e c r e d i t o r , and the h a n k bein£ b o u n d
t o p a y n o other, the public c l a i m a n t would g o u n p a i d , and the e n g a g e m e n t s of
the Government be dishonored.
T o avoid the d a n g e r of s u c h a result, the G o v e r n m e n t , if it a d o p t e d a s y s t e m of special d e p o s i t e s , w o u l d be d r i v e n , of n e c e s s i t y , to a collection of t h e r e v e n u e in gold nnd s i l v e r ; orT o t h e r w i s e receiviu"- t h e
n o t e s of specie-paying- b a n k s pro forma,
collect t h e s p e c i e for t h e m from t h e
b a n k s by which they w e r e i s s u e d , a id p l u c e that s p e c i e on special d e p o s i t e - B u t
w h e r e w o u l d be t h e difference, in the practical effects on the h a n k s and the b u s i n e s s
a n d i n t e r e s t s of the c o m m u n i t y c o n n e c t e d with t h e m , b e t w e e n c o l l e c t i n g the r e v e n u e , in t h e first i n s t a n c e , in gold and silver, a n d c o l l e c t i n g it in t h e notetTof s p e c i e -
30
paying b a n k s , to b e converted into gold a n d silver by d e m a n d upon the b a n k s T *
T h e honorable Senator from N e w Y o r k ( M r . W r i g h t ) e x p r e s s e d t h e opinion, t h a t
the latter mode of operation would be the h a r s h e s t ; and when it is considered t h a t
this periodical conversion of bank notes would be in large masses, and a t t e n d e d ,
consequently 9 with periodical and distressing contractions
of the currency, I c a n n o t
but a ^ r e e with him. At all events, there are but t h e s e t w o m o d e s of w o r k i n g
out a Special deposite system in p r a c t i c e , a n d neither the one nor the o t h e r , it s e e m s
to m e , c a n be m a d e acceptable to those who oppose the Sub-treasury s c h e m e ,
on a c c o u n t of its tendency to c r e a t e two c u r r e n c i e s in t h e c o u n t r y — g o l d a n d
silver for the G o v e r n m e n t — p a p e r for the people.
T h e r e are subsidiary objections to this special deposite system* which, a l t h o u g h not of so m u c h weight as that which I have j u s t stated, c a n n o t be o v e r l o o k e d in a j u s t and c o m p r e h e n s i v e estimate of it. If you adopt it, you r e n o u n c e , at once, all means of engaging the interests and enlisting the c o - o p e r a t i o n
of the b a n k s to carry out any of those reforms in the paper c u r r e n c y , which h a v e
heretofore been so favorite a n object of the policy of the country. You must a l s o
pay them, and pay them, too, no inconsiderable s u m for their services to t h e
G o v e r n m e n t , and thus abandon one of the strong grounds (that of economy,) o n
which bank a g e n c y has heretofore been preferred to individual a g e n c y , in c o n d u c t i n g the operations of the T r e a s u r y .
B u t , to take up the subject in a m o r e enlarged view, is there any valid r e a son why b a n k s should not be permitted to discount, to a moderate extent, on a v e r a g e b a l a n c e s of public money in their possession, as well as on individual d e p o sites? W h e r e v e r banks exist, to receive deposites, public or private, is a r e g u l a r
branch of their business ; and to discount upon the average balances oj those deposites, which experience shows a r e not likely to be drawn out by the depositors,
is as legitimate and acknowledged an operation of banking as to discount upon t h e i r
capitals.
Is it not for the interest of all that this should be done that no p o r t i o n
of the national capital should be annihilated by being locked up from u s e , b u t
that the whole should be m a d e tributary, in some way or other, to the invigoraiion and support of the national industry? N o j u s t distinction can be s h o w n ,
in this r e s p e c t , between public and private deposites.
Accordingly, in all c o u n tries where b a n k s exist, and where the public moneys are deposited in those i n stitutions, deposites of that kind h a v e been invariably recognised, within p r o p e r
limits, a s a perfectly legitimate s o u r c e of discounts and a c c o m m o d a t i o n to the c o m munity. It is admitted that it has been uniformly the case in this country, in r e gard to the public tunds both of the general government and of the States, from
the adoption ot the Constitution down to the p r e s e n t day.
W h a t n e w li^ht, t h e n ,
h a s broken m upon us, that we are, all at once, grown so m u c h wiser "than o u r
fathers t In England, the practice is, and has been invariably the s a m e ; and h e r e
I take upon mo to confront a statement which I have repeatedly seen m a d e
to the c o n t r a r y — t o wit, that the balances of the public m o n e y s in the hands of t h e
B u n k of E n g l a n d were not discounted upon, but were regularly and habitually a p plied to the purchase of E x c h e q u e r Bills, on behalf of the g o v e r n m e n t . T h e fact
is o t h e r w i s e — t h e B a n k of E n g l a n d has the use of these balances, for b a n k i n g
purposes ; and thts use of thorn is so well understood and avowed that in s o m e i n s t a n c e s , where th i balances have risen to a very great a m o u n t , (us, for a series of
years after 1806, they did to b e t w e e n £ l 1,000,000 and . £ 1 2 , 0 0 0 , 0 0 0 , equal t o
near $ 6 0 , 0 0 0 , 0 0 0 of our money,) the bank has been required to pay a special c o m pensation to the g o v e r n m e n t for that u s e . But the ordinary b a l a n c e s of public m o ney in the B a n k of E n g l a n d r a n g e from £ 4 , 0 0 0 , 0 0 0 to £ 5 , 0 0 0 , 0 0 0 p o u n d s sterling—about twenty millions of dollars of our m o n e y — t h e use of which is p e r m i t ted to the bank without any compensation.
In like m a n n e r , the b a l a n c e s of p u b lic money in F r a n c e , which are occasionally transferred to the B a n k of F r a n c e ,
a r e permitted to be used as a s o u r c e of extended discounts, and I a m informed b y
31
a n e n l i g h t e n e d correspondent in that country, were actually so used to the great
r e l i e f of industry and trade, during the late commercial crisisS h a l l a lead beneficent use be made of the public moneys, not called for by the
n e c e s s i t i e s of the G o v e r n m e n t , in this Republic of ours, than in the monarchies of
Europe?
Shall we alone, of all the #reat family of modern civilized c o m m u n i t i e s , revert to the barbarous practice of hoarding* (and that, too, in specie^) the occ a s i o n a l surpluses, which, from the nature of mir revenue system, can neither
b e foreseen nor guarded against 1 A most able and eloquent "friend in the other
H o u s e , ( M r . Legare) has justly characterised the process of taxation as a species
of confiscation.
It is so, sir. Is it not incumbent upon us, then, when by so
h a r s h a process, we have undesignedly levied upon the people more than is nec e s s a r y for the wants of the G o v e r n m e n t , to mitigate the exaction as much as
p o s s i b l e by restoring the overplus to their use through the channels of business
a n d c o m m e r c e . Why should the Government play the dog in t}iG manger, neither
u s i n g its idle hoards itself, nor permitting any body else to use them.
J.iTorts
h a v e been made to render the practice of discounting upon the public deposites
odious, by representing it as a tiling for the benefit of the banks alone.
But
is it so ? D o e s not every class of the community experience the benefit, and none.
m o r e so than the great agricultural class, the price of whose products depends
mainly on the facilities of sound credit, and the abundnnce of active capital diffused limonjT the m e r c h a n t s — t h e more immediate customers of the banks t
I t has been sometimes said, also, that the practice of discounting on the public
deposites adds to the fluctuations of the currency. But the reverse is demonstrably irue. When a large amount of revenue is collected by the G o v e r n m e n t ,
and is neither disbursed in the public service, nor returned to the community
through the medium of discounts, a sudden and distressing contraction of the c u r r e n c y necessarily ensues. If, however, that portion of the public money, not required for the public service, is permitted to be used in the way of discounts for
short p e r i o d s by the banks, the circulation, through the double process of G o vernment disbursements and bank issues, is maintained at an uniform level, without sensible contraction or expansion. T h e banks being enabled to foresee at
w h a t periods the funds issued by them will be required lor occasions of public
expenditure, call them in as they are wanted for disbursement—what is drawn in
by the hand of the hanks, is immediately let out by the hand of the G o v e r n m e n t —
nnd thus the current of circulation is kept steady and full.
T h e s e truths have, until lately, been universally felt and acknowledged ; and
by none more emphatically, or with greater weight of authority than the distinguished individual "in whose footsteps" the present administration was expected
to tread. It is, doubtless, recollected by the Senate, that, on the occasion of the
removal of the deposites from the B a n k of the United States, President J a c k s o n ,
in the able ami memorable paper which he presented to his cabinet, stated that
t h e funds thus removed were not to he " annihilated"—-that
they u would be
again issued for the benefit of trade," by the institutions to which they were transferred.
T i n s was, then, considered a trait of liberal, beneficent, and statesmanlike policy, on which the Chief Magistrate and his act were triumphantly sustained and vindicated by his friends before the people. T h e same distinguished individual, in his very last message to C o n g r e s s , declared kl it was contrary to the
genius of our i're^ institutions to lock up in vaults the treasure of the nation."
N o w me highest ambition of statesmanship seems to be to contrive these selfs a m e *' vaiUls," in which the funds of the nation arc to be sent to their *• long repose, 37 as *• d(-:id men's b o n e s ; " for once there, all that remain, beyond the
w a n t s of the O .jvernmnnt, are to be buried, nnnibihited, destroyed, 'tu ovt^ry
p u r p o s e of useful existence. What hag produced these sudden and Mnmiinr revolutions of policy and doctrine '? Is it brr-.auso an extraordinary and accidental
s t a t e of things, the result of peculiar and anomalous causey, has involved the
b a n k s , individuals, and the (Government, in temporary emhai i a.ssment 7 T h e n
32
I s a y n o t h i n g is m o r e u n s a f e t h a n for s t a t e s m e n to found g e n e r a l a n d p e r m a n e n t
r u l e s of policy o n i s o l a t e d a n d e x c e p t i o n a l c a s e s . W e m u s t l o o k t o t h e h a b i i u a l
a n d o r d i n a r y c o u r s e of h u m a n affairs, c o l l e c t from t h e m t h e a v e r a g e r e s u l t s o f
e x p e r i e n c e a n d o b s e r v a t i o n , a n d g u i d e o u r a c t i o n by t h o s e r e s u l t s .
Because the
C o m m o n w e a l t h ' s B a n k o f M a s s a c h u s e t t s h a s failed, b e c a u s e it s u i t s t h e p u r p o s e
e v e n of g r a v e S e n a t o r s t o u s e it daily a s a s t a l k i n g - h o r s e on t h i s floor,.are w e t o
be "frighted from our propriety," and, therefore, distrust and d e n o u n c e the w h o l e
b a n kin?'1 s y s t e m of t h e c o u n t r y ? A r e w e t o t a k e a d v a n t a g e of t e m p o r a r y a n t l
factitious e x c i t e m e n t s , to g e t u p and foster a popular prejudice a g a i n s t b a n k s a s
a fund for political s p e c u l a t i o n , a t t h e e x p e n s e of all t h e * ' s o b e r r e a l i t i e s o f l i f e "
a n d t h e p r a c t i c a l , p e r v a d i n g , h o m e - b r e d , i n t e r e s t s of t h e c o u n t r y .
A s I s a i d , on a f o r m e r o c c a s i o n , M r , P r e s i d e n t , I s t a n d h e r e a s n o a d v o c a t e of
the b a n k s . I have not the slightest interest in, nor conection with, t h e m , direct o r
i n d i r e c t , p r e s e n t or p r o s p e c t i v e .
I a m a s s e n s i b l e as a n y m a n of t h e d a n g e r s a n d
a b u s e s to w h i c h t h e y a r e liable, a n d I will g o , h a n d in h a n d , w i t h a n y m a n in
d e v i s i n g s e c u r i t i e s a g a i n s t the o n e , a n d a p p l y i n g c o r r e c t i v e s t o t h e o t h e r .
lijt as
a p r a c t i c a l l e g i s l a t o r a n d a patriot, 1 a m b o u n d t o l o o k to t h e a c t u a l i n t e r e s t < s o c i e t y ; a n d in t h a t v i e w , I c a n n o t fail t o s e e t h a t a n y violent s h o c k £ v e ^ t o
t h e e s t a b l i s h e d s y s t e m of b u s i n e s s a n d c r e d i t in the c o u n t r y m u s t p r o d u c e > w i d e s p r e a d s c e n e of confusion a n d d i s t r e s s , i n v o l v i n g , in its d e s t r u c t i v e v i s i t a t i o n
wury c l a s s of t h e c o m m u n i t y ,
i n offering t h e m e a s u r e I h a v e s u b m i t t e d to t h e S e n a t e , I h a v e disc 4 rged w h r
I c o n s i d e r to be m y d u t y t o t h e c o u n t r y .
T h a t c o u n t r y is n o w in a s U u v V s u f i e .
i n g a n d d i s t r e s s , a g g r a v a t e d by d e e p a n x i e t i e s a n d a p p r e h e n s i o n s in r e g rd *< ti. —
future.
T h e m e a s u r e 1 p r o p o s e w o u l d , I firmly b e l i e v e , g i v e r e l i e f foi ?.ho pit » .
a n d h o p e for t h e future.
It c o u l d n o t fail t o r e s t o r e c o n f i d e n c e , a n d i d m g ^ . d
t o r e v i v e t h e l a n g u i s h i n g e n e r g i e s of t r a d e , t o q u i c k e n t h e l a b o r s t
t h - hbpv
o f t h e h u s b a n d m a n , t h e m a n u f a c t u r e r a n d t h e m e c h a n i c , t o r a i s e c n t e i ^ i - K agai
u p o n its feet, a n d a b o v e all, to p u t a n end to that u n n a t u r a l a n d s u i c i d e «
w h i c h , for t h e last e i g h t e e n m o n t h s , h a s g r o w n u p b e t w e e n t h e gov* rumen* —
of t h e c o u n t r y , a n d its b u s i n e s s a n d i n d u s t r y .
I n p r e s e n t i n g s u c h a measui* 1 ,
I c a n n o t but r e g r e t t h a t I shall b e d e p r i v e d of t h e s u p p o r t of m a n y m e m b e r s o f
t i n s body with w h o m I h a v e l a t e l y s t o o d , side b y s i d e , in u p h o l d i n g a n d d e f e n d i n g *-t h e p r i n c i p l e s on w h i c h it r e s t s
M y c o n s o l a t i o n , h o w e v e r , is t h a t J stand n^u
where I stood then.
O n t h e o l h e r h a n d , t h e m e a s u r e t h e v brim* f o r w a r d a n d
p a t r o n i s e is o n e w h i c h , t h r e e y e a r s a g o , w e all united in opp<i<ing,°and v> 1 ch w a s t h e n d e n o u n c e d , in t h e n a m e of t h e a d m i n i s t r a t i o n a n d its friends, *as a " t'ai <\crou>
e n l a r g e m e n t of K x e m t i v e p o w e r , a n d p u t t i n g into its h a n d s t h e ' m e a n ? f <' ^up
tion."
T h i s m e a s u r e c a n n o t h a v e c h a n g e d its c h a r a c t e r by m e r e efflf - of t i m e
a n d t h i n k i n g o f it n o w a s I t h o u g h t of it t h e n , I still oppose it.
*
I n t a k i n g t h i s c o u r s e , I k n o w full well, M r . P r e s i d e n t , I a m
m< tu **'»'•
r
;
a n a t h e m a s of party.
H u t I c a n n e v e r forget t h a t 1 h a v e a c o u n t r y U
"
7
well a s a party to o b e y .
" ' T i s R o m e d e m a n d s o u r h e l p ;' a n d for c i c -•:•» Si,.o>
h a v e m i n t s -according to t h e h u m b l e m e a s u r e of m y abilities a n d the IK *
^ °* •
my understanding.
T h e z e a l o t s of b o t h p a r t i e s m a y d e n o u n c e a n d cori'^-ui* m e ,
a s t h e y h a v e h e r e t o f o r e d e n o u n c e d a n d c o n d e m n e d m e ; but s u s t a i n e d b y t h e
c o n s c i o u s n e s s of u p r i g h t i n t e n t i o n s a n d a faithful d e v o t i o n t o t h e i n t e r e s t s o f m y :
c o u n t r y , I shall hold my c o u r s e u n f a l t e r i n g ; a n d e v e n with t h e t e r r o r before my
e y e s of si i k i n g i n t o that small minority of w h i c h the h o n o r a b l e S e n a t o r from N e w
Y o r k , ( M r . W r i g h t , ) s o charitably
w a r n e d u s , 1 shall y e t , tiruinated b y a s e n s e o f
d u t y , '* find to my s o u l o n e d r o p of p a t i e n c e . "
@FedFRASER