Thursday, September 14, 1837,
Independent Treasury bill introduced in the Senate for the first time
Senator Wright, October 2, 1837, Independent Treasury (and divorce) debate
divorce in the House
Calhoun's proposed amendment on
Monday, September 18, 1837.
And be it further enacted, that from and after the 1st day of January, 1838, ¾ of the amount due to the Government, for duties, taxes, sales of public lands, or other debts, may be paid in the notes of specie-paying banks; and that from and after the 1st day of January, 1839, one half may be so paid; and from and after the first day of January, 1840, one-fourth; and from and after the 1st day of January 1841, all sums due, for duties, sales of public lands, or other debts to the Government, shall be paid only in the legal currency of the United States, or in such notes, bills, or paper issued under the authority of the same, as may be directed to be received by law.
Calhoun's amendment as it was introduced in the Senate on
Wednesday, September 20, 1837.
Sec. And be it further enacted, That from and after the 1st day of January, 1838, three-fourths of the amount due to the Government, for duties, taxes, sales of public lands, or other debts, may be received in the notes of specie-paying banks; and that from and after the 1st day of January, 1839, one-half may be so received; and from and after the 1st day of January, 1840, one-fourth; and from and after the 1st day of January, 1841, all sums due for duties, sales of public lands, or other debts to the Government, and all payments to the General Post Office, shall be paid only in gold and silver, or in such notes, bills, or paper, issued under the authority of the same, as may be directed to be received by law; and from and after the said first day of January, in the year 1840, every officer or agent engaged in making disbursements on account of the United States, or of the General Post Office, shall make all payments in gold and silver coin only, or in such notes, bills, or paper, issued as aforesaid, when authorized by law. And any receiving or disbursing officer or agent who shall neglect, evade, or violate, the provisions of this section, shall be dismissed the service, and shall forfeit all compensation which may then be due.
Mr. Niles rose and spoke at great length; his speech embracing answers to the views of Mr. Rives and others in relation to the causes of distress, the means of relief, &c. One party, he said, and that, a very respectable one, were of opinion that a national bank was the only panacea, the "sovereignest thing" on the earth for the wound, while others supposed that by extending confidence to the State institutions, we should derive the like result; but in his humble opinion, neither were to be trusted. Both had been weighed in the balance and found wanting: they abused their trusts, and proved false to the Government and the people.
Divorce of Bank and State
Senator Benton's Speech
Mr. Benton rose to offer the aid of his voice in favor of the amendment, and in favor of the bill to which it was proposed to be attached. He considered the amendment and the bill as one measure, indissolubly connected in their nature; and that the bill would be of little value, unless the amendment was made. There might have been some difference of opinion as to the time and mode of adopting the provisions contained in the amendment -- whether it should be done at this session, or at the next; and whether it should be effected by an amendatory clause, or by a separate bill. There might have been room for difference of opinion on these points a few days ago; but, since the amendment is offered, and opposed, it must be carryed, or the bill itself considered lost. He held the vote upon the amendment to be a vote upon the life and death of the bill; for it will decide whether the principle of the amendment is to become law; and if it is not, the bill becomes nugatory; for what advantage can there be in having separate keepers of the public moneys if they are only to keep the paper promises of the banks ? The banks themselves, who hold the thing promised, will still be the real keepers. They will still be the treasurers. They will hold the substance, and our officers will have the shadow. They will have the money, and our officers will have the promise. They can break the promise at any time, and our officers cannot help themselves. State Legislatures may interpose, and the Federal Government cannot help itself. To make this more clear, let it be supposed that this bill, without the amendment, had been the law of the land heretofore, and had been in force in May last, when the banks stopped payment. There were thirty-two millions of public money in deposite with the banks at that time, and not a dollar of real money, could be got for it. Now, suppose these thirty-two millions had bean received by our own officers in the notes of the banks; the result would have been precisely the same; the banks would not have paid the notes; and the acts of State Legislatures would have sanctioned the refusal; for they were just as applicable to notes as to deposites. Not a dollar could have been got upon them. The banks stopped payment on their notes as well as on their deposites. The holder of their notes, and the depositor, were alike repulsed; and thus our treasurers, holding thirty-two millions of their notes, would have been penniless.
The bill is to divorce the government from the banks, or rather is to declare the divorce, for the separation has already taken place by the operation of law and by the delinquency of the banks. The bill is to declare the divorce; the amendment is to exclude their notes from revenue payments, not all at once, but gradually, and to be accomplished by the first day of January, 1841. Until then the notes of specie-paying banks may be received, diminishing one-fourth annually; and after that day, all payments to and from the federal government are to be made in hard money. Until that day, payments from the United States will be governed by existing laws. The amendment does not affect the Post Office Department until January, 1841; until then, the fiscal operations of that Department remain under the present laws; after that day they fall under the principle of the bill, and all payments to and from that Department will be made in hard money. The effect of the whole amendment will be to restore the currency of the Constitution to the Federal Government --to re-establish the great acts of 1789 and of 1800-- declaring that the revenues should be collected in gold and silver coin only; those early statutes which were enacted by the hard money men who made the Constitution, who had seen and felt the evils of that paper money, and intended to guard against these evils in future by creating, not a paper, but a hard-money Government.
I am for this restoration. I am for restoring to the Federal Treasury the currency of the Constitution. I am for carrying back this government to the solidity projected by its founders. This is a great object --in itself a reform of the first magnitude, a reformation with healing on its wings, bringing safety to the government and blessings to the people. The currency is a thing which reaches every individual, and every institution. From the government to the washer-woman, all are reached by it, and all concerned in it; and, what seems parodoxical, all are concerned to the same degree --for all are concerned to the whole extent of their property and dealings; and all is all, whether it be much or little. The government with its many ten millions of revenue, suffers no more in proportion than the humble and meritorious laborer who works from sun to sun for the shillings which give food and raiment to his family. The Federal Government has deteriorated the currency, and carried mischief to the whole community, and lost its own revenues, and subjected itself to be trampled upon by corporations, by departing from the Constitution, and converting this government from a hard-money to a paper-money government. The object of the amendment and the bill is to reform these abuses, and it is a reform worthy to be called a reformation, worthy to engage the labor of patriots, worthy to unite the exertions of different parties, worthy to fix the attention of the age, worthy to excite the hopes of the people, and to invoke upon its success the blessings of heaven.
Great are the evils, political, pecuniary, and moral, which have flowed from this departure from our Constitution. Through the Federal Government alone --through it, not by it-- two millions and a half of money have been lost in the last four months. Thirty-two millions of public money was the amount in the deposit banks when they stopped payment; of this sum twenty-five millions have been paid over to Government creditors, or transferred to the States. But how paid, and how transferred ? In what ? In real money, or its equivalent ? Not at all ! But in the notes of suspended banks --in notes depreciated, on an average, ten per cent. Here then were two and a half millions lost. Who bore the loss ? The public creditors and the States. Who gained it ? --for where there is a loss to one, there must be a gain to another. Who gained the two and a half millions, thus sunk upon the hands of the creditors and the States ? The banks were the gainers; they gained it; the public creditors and the States lost it; and to the creditors it was a forced loss. It is in vain to say that they consented to take it. They had no alternative. It was that or nothing. The banks forced it upon the Government; the Government forced it upon the creditor. Consent was out of the question. Power ruled, and that power was in the banks; and they gained the two and a half millions which the States and the public creditors lost.
The Senator from New York, [Mr. Tallmadge] who has just spoken with so much ability, and who is opposed both to this bill and this amendment, has predicated an argument in favor of the local banks on account of the small amount of the public money which has been lost in their hands; but here is 2,500,000 in a single operation, and without going back to the period of bank stoppages in 1819 and 1814. He confines himself to direct losses, but that is a most imperfect view of the question. The full view embraces, besides direct losses, all that are incidental to the use of depreciated paper money; increased prices --disappointed operations by sea and land in time of war-- and embarrassed operations in time of peace; per centums shaved off at every step; the ignorant, the helpless, the necessitous, imposed upon; and one vast scene of pushing off bad paper on each other exhibited all over the country.
I do not pretend to estimate the moneyed losses, direct and indirect, to the Government alone, from the use of local bank notes in the last twenty-five years, including the war, and covering three general suspensions. Leaving the people out of view, as a field of losses beyond calculation, I confine myself to the Federal Government, and say, its losses have been enormous, prodigious, and incalculable. We have had three general stoppages of the local banks in the short space, of twenty-two years. It is at the average rate of one in seven years; and who is to guaranty us from another, and from the consequent losses, if we continue to receive their bills in payment of public dues ? Another stoppage must come, and that, reasoning from all analogies, in less than seven years after the resumption. Many must perish in the attempt to resume, and would do better to wind up at once, without attempting to go on, without adequate means, and against appalling obstacles. Another revulsion must come. Thus it was after the last resumption. The banks recommenced payments in 1817 --in two years, the failures were more disastrous than ever. Thus it was in England after the long suspension of twenty-six years. Payments recommenced in 1823 --in 1825 the most desolating crash of banks took place which had ever been known in the kingdom, although the Bank of England had imported, in less than four years, twenty millions sterling in gold, about one hundred millions of dollars, to recommence upon. Its effects reached this country, crushed the cotton houses in New Orleans, depressed the money market, and injured all business.
Why was this ? Why was it that, within two years after resumption, both in England and in our America, these disastrous revulsions ensued ? Loss of confidence was the cause; and that loss resulting, not from the act of Government, but from the conduct of the banks themselves. The banks had failed, and, therefore, could fail. The people had seen them fail, and, therefore, feared they might do so again. There was no confidence in them; no more than the coachman places in the balking horse when he comes to the hill. The gentleman from Virginia [Mr. Rives] wishes the Government to do something to re-animate confidence in these banks. Could a law of Congress inspire confidence into his coachman, and give him faith in the balking horse ? No more can it be done in relation to these banks. They have stopped, universally and simultaneously, in a season of profound peace and general prosperity --no war, no pestilence, no famine-- with four times as much specie in the country as ever was in it before; and this stoppage has killed confidence. It is dead by the act of the banks, and cannot be legislated into existence again by act of Congress. Confidence is a plant of voluntary, and not of forced existence. It is said by an eminent man to be a plant of slow growth. We all know it to be so; and we know, besides, that when this plant is once pulled up by the roots, it rarely takes root again in the same place.
The senators from New York and Virginia [Messrs. Tallmadge and Rives] push this point of confidence a little further; they address a question to me, and ask if I would lose confidence in all steamboats, and have them all discarded, if one or two blew up in the Mississippi ? I answer the question in all frankness, and say, that I should not. But if, instead of one or two in the Mississippi, all the steamboats in the Union should blow up at once --in every creek, river and bay-- while all the passengers were sleeping in confidence, and the pilots crying out 'all is well'; if the whole should blow up from one end of the Union to the other just as fast as they could hear each other's explosions; then, indeed, I should lose confidence in them, and never again trust wife, or child, or my own foot, or any thing not intended for destruction, on board such sympathetic and contagious engines of death. I answer further, and tell the gentlemen, that if only one or two banks had stopped last May in New York, I should not have lost all confidence in the remaining nine hundred and ninety-nine; but when the whole thousand stopped at once; tumbled down together --fell in a lump--lie there-- and when ONE of their number, by a sign with the little finger, can make the whole lie still, then, indeed, confidence is gone ! And this is the case with the banks. They have not only stopped altogether, but in a season of profound peace, with eighty millions of specie in the country, and just after the annual examinations by commissioners and legislative committees, and when all was reported well. With eighty millions in the country, they stop even for change ! It did not take a national calamity --a war-- to stop them ! They fell in time of peace and prosperity !
We read of people in the West Indies, and in South America, who rebuild their cities on the same spot where earthquakes had overthrown them; we are astonished at their fatuity; we wonder that they will build again on the same perilous foundations. But these people have a reason for their conduct; it is, that their cities are only destroyed by earthquakes; it takes an earthquake to destroy them; and when there is no earthquake, they are safe. But suppose their cities fell down without any commotion in the earth, or the air --fell in a season of perfect calm and serenity-- and after that the survivors should go to building again in the same place; would not all the world say that they were demented, and were doomed to destruction ? So of the government of the United States by these banks. If it continues to use them, and to receive their notes for revenue, after what has happened, and in the face of what now exists, it argues fatuity, and a doom to destruction.
Resume when they will, or when they shall, and the longer it is delayed the worse for themselves, the epoch of resumption is to be a perilous crisis to many. This stopping and resuming by banks, is the realization of the poetical description of the descent into hell, and the return from it. Facilis descensus Averni--sed revocare gradum--hic opus, hic labor est. Easy is the descent into the regions below, but to return ! this is work, this is labor indeed ! Our banks have made the descent; they have gone down with ease; but to return --to ascend the rugged steps, and behold again the light above, how many will falter, and fall back into the gloomy regions below.
The day of resumption will be a day of peril and of death to many. It is a penalty which their extraordinary stoppage has imposed. Many must fail in the trial; probably a new panic and pressure take place; and those who must attribute every calamity to the misrule, the ignorance, and the misgovernment of the republican party, has as well be preparing their accusations in advance, for the contingency will come, and a cause for it must be found in the misconduct of the Government. Let them prophetize in advance, and show their capacity for political divination by vaticinating beforehand, and exhibiting now a political cause for an event to arise hereafter out of the natural progress of banking.
Banks of circulation are banks of hazard and of failure. It is an incident of their nature. Those without circulation rarely fail. That of Venice has stood seven hundred years; those of Hamburgh, Amsterdam, and others, have stood for centuries. The Bank of England, the great mother of banks of circulation, besides an actual stoppage of a quarter of a century, has had her crisis and convulsion in average periods of seven or eight years, for the last half century --in 1783, '93, '97, 1814, '19, '25, '36-- and has only been saved from repeated failure by the powerful support of the British government, and profuse supplies of exchequer bills. Her numerous progeny of private and joint stock banks of circulation have had the same convulsions; and not being supported by the government, have sunk by hundreds at a time. All the banks of the United States are banks of circulation; they are all subject to the inherent dangers of that class of banks, and are, besides, subject to new dangers peculiar to themselves. From the quantity of their stock held by foreigners, the quantity of other stocks in their hands, and the current foreign balance against the United States, our paper system has become an appendage to that of England. As such, it suffers from sympathy when the English system suffers. In addition to this, a new doctrine is now broached-- that our first duty is to foreigners! and, upon this principle, when the banks of the two countries are in peril, ours are to be sacrificed to save those of England !
The power of a few banks over the whole presents a new feature of danger in our system. It consolidates the banks of the whole Union into one mass, and subjects them to one fate, and that fate to be decided by a few, without even the knowledge of the rest. An unknown divan of bankers sends forth an edict which sweeps over the empire, crosses the lines of States with the facility of a Turkish firman, prostrating all State institutions, breaking up all engagements, and levelling all law before it. This is consolidation of a kind which the genius of Patrick Henry had not even conceived. But while this firman is this potent and irresistible for prostration, it is impotent and powerless for resurrection. It goes out in vain, bidding the prostrate banks to rise. A veto power intervenes. One voice is sufficient to keep all down; and thus we have seen one word from Philadelphia annihilate the New York proposition for resumption, and condemn the many solvent banks to the continuation of a condition as mortifying to their feelings as it is injurious to their future interests.
Again, from the mode of doing business among our banks --using each other's paper to bank upon, instead of holding each other to weekly settlements, and liquidation of balances in specie; and from the fatal practice of issuing notes at one place, payable at another-- our banks have all become links of one chain, the strength of the whole being dependent on the strength of each. A few govern all. Whether it is to fail, or to resume, the few govern; and not only the few, but the weak. A few weak banks fail; a panic ensues, and the rest shut up; many strong ones are ready to resume; the weak are not ready, and the strong must wait. Thus the principles of safety, and the rules of Government, are reversed. The weak govern the strong; the bad govern the good; and the insolvent govern the solvent. This is our system, if system it can be called, which has no feature of consistency, no principle of safety, and which is nothing but the floating appendage of a foreign and overpowering system.
The federal government and its creditors have suffered great pecuniary losses from the use of these banks and their paper; they must continue to sustain such losses if they continue to use such depositories and to receive such paper. The pecuniary losses have been, now are, and must be hereafter great; but, great as they have been, now are, and may be hereafter, all that loss is nothing compared to the political dangers which flow from the same source. These dangers affect the life of the government. They go to its existence. They involve anarchy, confusion, violence, dissolution ! They go to deprive the government of support of the means of living; they strip it in an instant of every shilling of revenue, and leave it penniless, helpless, lifeless.
The late stoppage might have broken up the government, had it not been for the fidelity and affection of the people to their institutions and the eighty millions of specie which General Jackson had accumulated in the country. That stoppage presented a peculiar feature of peril which has not been brought to the notice of the public; it was the stoppage of the sums standing in the names of disbursing officers, and wanted for daily payments in all the branches of the public service. These sums amounted to about five millions of dollars. They had been drawn from the Treasury, they were no longer standing to the credit of the United States; they had gone into the hands of innumerable officers and agents, in all parts of the Union, and were temporarily, and for mere safe-keeping from day to day, lodged with these deposit banks, to be incessantly paid out to those who were doing work and labor, performing contracts, or rendering service, civil or military, to the country. These five millions were stopped with the rest ! In an instant, as if by enchantment, every disbursing officer, in every part of the Union, was stripped of the money which he was going to pay out ! All officers of the government, high and low, the whole army and navy, all the laborers and contractors, post-offices and all, were suddenly, instantaneously, left without pay, and consequently without subsistence. It was tantamount to a disbandment of the entire government. It was like a decree for the dissolution of the body politic. It was celebrated as a victory --as a conquest-- as a triumph, over the government. The least that was expected was an immediate civil revolution --the overthrow of the democratic party, the change of administration, the re-ascension of the federal party to power, and the re-establishment of the condemned Bank of the United States. These consequences were counted upon; and that they did not happen was solely owing to the eighty millions of hard money which kept up a standard of value in the country, and prevented the dishonored bank notes from sinking too low to be used by the community.
But it is not merely stoppage of the banks that we have to fear; collisions with the States may ensue. State legislatures may sanction the stoppage, withhold the poor right of suing, and thus interpose their authority between the Federal Government and its revenues. This has already happened, not in hostility to the Government, but in protection of themselves; and the consequence was the same as if the intention had been hostile. It was interposition between the Federal Government and its depositories; it was deprivation of revenue; it was an act the recurrence of which should be carefully guarded against in future.
This is what we have seen; this is a danger which we have just escaped; and if these banks shall be continued as depositories of public money, or, which is just the same thing, if the government shall continue to receive their "paper promises to pay," the same danger may be seen again, and under far more critical circumstances. A similar stoppage of the banks may take place again --will inevitably take place again-- and it may be when there is little specie in the country, or when war prevails. All history is full of examples of armies and navies revolting for want of pay; all history is full of examples of military and naval operations miscarried for want of money; all history is full of instances of governments overturned from deficits of revenue and derangements of finances. And are we to expose ourselves recklessly, and with our eyes open, to such dangers ? And are we to stake the life and death of this government upon the hazards and contingencies of banking and of such banking as exists in these United States ? Are we to subject the existence of this government to the stoppages of the banks, whether those stoppages result from misfortune, improvidence, or bad faith ? Are we to subject this great and glorious political fabric, the work of so many wise and patriotic heads, to be demolished in an instant, and by an unseen hand ? Are we to suffer the machinery and the working of our boasted Constitution to be arrested by a spring catch, applied in the dark ? Are men, with pens sticking behind their ears, to be allowed to put an end to this republic ? No, sir! never. If we are to perish prematurely, let us at least have a death worthy of a great nation; let us at least have a field covered with the bodies of heroes and of patriots, and consecrated forever to the memory of a subverted empire. Rome had her Pharsalia --Greece her Chseronea-- and many barbarian kingdoms have given immortality to the spot on which they expired; and shall this great republic be subjected to extinction on the contingencies of trade and banking !
But what excuse, what apology, what justification have we for surrendering, abandoning, and losing the precise advantage for which the present Constitution was formed ? What was that advantage --what the leading and governing object, which led to the abandonment of the old confederation, and induced the adoption of the present form of government ? It was revenue! independent revenue! a revenue under the absolute control of this government, and free from the action of the States. This was the motive the leading and the governing motive which led to the formation of this government. The reason was, that the old confederation, being dependent upon the States, was often left without money. This state of being was incompatible with its existence; it deprived it of all power; its imbecility was a proverb. To extricate it from that condition was the design, and the cardinal design, of the new Constitution. An independent revenue was given to it --independent, even, of the States. Is it not suicidal to surrender that independence, and to surrender it, not to States, but to money corporations ? What does history record of the penury and moneyed destitution of the old confederation, comparable to the annihilation of the revenues of this government in May last? when the banks shut down, in one night, upon a revenue, in hand, of thirty-two millions; even upon that which was in the names of disbursing officers, and refuse a nine-pence, or a picaillon in money, from that day to this ? What is there in the history of the old confederation comparable to this ? The old confederation was often reduced low --often near empty-handed-- but never saw itself stripped in an instant, as if by enchantment, of tens of millions, and heard the shout of triumph thundered over its head, and the notes of exultation sung over its supposed destruction ! Yet, this is what we have seen --what we now see-- from having surrendered to corporations our moneyed independence, and unwisely abandoned the precise advantage which led to the formation of this Federal Government.
I do not go into the moral view of this question. It is too obvious, too impressive, too grave, to escape the observation of any one. Demoralization follows in the train of an unconvertible paper money. The whole community becomes exposed to a moral pestilence. Every individual becomes the victim of some imposition; and, in self-defence, imposes upon some one else. The weak, the ignorant, the uninformed, the necessitous, are the sufferers; the crafty and the opulent are the gainers. The evil augments until the moral sense of the community, revolting at the frightful accumulation of fraud and misery, applies the radical remedy of total reform.
Thus, pecuniary, political, and moral considerations require the Government to retrace its steps, to return to first principles, and to restore its fiscal action to the safe and solid path of the Constitution. Reform is demanded. It is called for by every public and by every private consideration. Now is the time to make it. The connection between Bank and State is actually dissolved. It is dissolved by operation of law, and by the delinquency of these institutions. They have forfeited the right to the deposits, and lost the privilege of paying the revenue in their notes, by ceasing to pay specie. The Government is now going on without them, and all that is wanting is the appropriate legislation to perpetuate the divorce which, in point of fact, has already taken place. Now is the time to act; this the moment to restore the constitutional currency to the Federal Government; to restore the custody of the public moneys to national keepers; and to avoid, in time to come, the calamitous revulsions and perilous catastrophes of 1814, 1819, and 1837.
And what is the obstacle to the adoption of this course, so imperiously demanded by the safety of the Republic and the welfare of the people, and so earnestly recommended to us by the chief magistrate ? What is the obstacle --what the power that countervails the Executive recommendation, paralyzes the action of Congress, and stays the march of reform ? The banks --the banks-- the banks, are this obstacle, and this power. They set up the pretension to force their paper into the Federal Treasury, and to force themselves to be constituted that Treasury. Though now bankrupt, their paper dishonored, their doors closed against creditors, every public and every private obligation violated, still they arrogate a supremacy over this Federal Government; they demand the guardianship of the public moneys, and the privilege of furnishing a federal currency; and, though too weak to pay their debts, they are strong enough to throttle this government, and to hold in doubtful suspense the issue of their vast pretensions.
And what new power is this, so formidable, and so daring, and the name of which is not seen in our Constitution ? Whence its origin, its progress, and its present pretensions ? Sir, its origin is humble; its first progress slow; its vast pretensions of recent date. In the year 1780, the first pretension was presented to the Congress of the Confederation for the establishment of a bank; ten years afterwards there were only a few dozen; now nearly a thousand, and constantly multiplying. The first petition was bottomed solely upon patriotism, without the least design of pecuniary advantage to the projectors, and intended wholly to aid in furnishing supplies to a detachment of the revolutionary army. I will read the report of the committee of Congress upon that petition, that the Senate may see the progress which banks have made since that day, and the change which has since taken place in their character and views.
Congress of the Confederation, June 0, 1780.
Report of a Committee.
"Whereas, a number of the patriotic citizens of Pennsylvania have communicated to Congress a liberal offer, on their own credit, and by their own exertions, to supply and transport three millions of rations, and three hundred hogsheads of rum, for the use of the army, and have established a bank for the sole purpose of obtaining and transporting the said supplies with the greater facility and despatch; and whereas, on the one hand, the associators, animated to this laudable exertion by a desire to relieve the public necessities, mean not to derive from it the least pecuniary advantage, so, on the other, it is just and reasonable that they should be fully reimbursed and indemnified; Therefore, Resolved, That Congress entertain a high sense of the liberal offer of the said associators to raise and transport the before-mentioned supplies for the army, and do accept the same as a distinguished proof of their patriotism. Resolved, further, That the faith of the United States be, and the same hereby is, pledged, to the subscribers to the said bank, for their effectual reimbursement in the premises."
Such is the recent and humble origin of banking in this country. How gigantic has been its progress since that day ! It is now the predominating power in our America. Great as it now is, what must it be in a few years more, if it continues growing and expanding at the same rate ? What must it it be in a few years, if it succeeds now in this contest with the Federal Government, and imposes its paper currency upon the Federal Treasury, and continues to be the keeper of the public moneys ?
The administration is accused of making war upon the local banks. Was it war to give them forty millions of money to keep ? Was it war to receive their notes in payment of revenue ? Is it war now to give them time for the payment of balances ? Is it war upon them to ask to be separated from them ? Is divorce war ? Is it war to decline receiving their paper promises instead of the gold and silver of the Constitution, and to decline the further deposites of public money with them ? Is this war ? No, sir, it is peace, and the means of preserving peace. It is concord and amity that this Government wants, and is taking the safest way to secure, by declining to have any more causes of collision with them. It is the local banks, and especially the miscalled Bank of the United States, which are pursuing the Federal Government, refusing to let her alone, offering their notes for currency, and their vaults for depositories, and laboring to force these favors upon us.
This is the state of the contest. The local banks are the actors, the pursuers, the assailants; the Federal Government is on the defence. All she asks is to be exempted from future causes of collision with them. They have incurred the penalties of separation. They have incurred the penalties. The very act which created them depositories, and made their notes receivable, denounced the loss of both in the event of failing to meet their liabilities in specie. That act is but little more than one year old; it was not a year old when the condition was violated, and which remains yet violated. Separation has resulted from their own conduct; separation now exists; cause for separation still continues; the Government says, let it be perpetual; the banks say, no ! Receive us again; receive us before we reform, before we repent, before we make amends; and if you do not, it is war upon us. This is the state of the contest between the Government and the banks. It is attack, or, at all events, forcible embrace and conjunction on their part; it is defence and refusal on ours.
The President, in his message, recommends four things: first, to discontinue the reception of local bank paper in payment of federal dues; secondly, to discontinue the same banks as depositories of the public moneys; thirdly, to make the future collection and disbursement of the public moneys in gold and silver; fourthly, to take the keeping of the public moneys into the hands of our own officers.
What is there in this but a return to the words and meaning of the constitution, and a conformity to the practice of the Government in the first years of President Washington's administration ? When this Federal Government was first formed, there was no Bank of the United States, and no local banks, except three north of the Potomac. By the act of 1789, the revenues were directed to be collected in gold and silver coin only; and it was usually drawn out of the hands of collectors by drafts drawn upon them, payable at sight. It was a most effectual way of drawing money out of their hands; far more so than an order to deposit in banks; for the drafts must be paid, or protested, at sight, while the order to deposit may be eluded under various pretexts.
The right and the obligation of the Government to keep its own moneys in its own hands, results from first principles, and from the great law of self-preservation. Every thing else that belongs to her, she keeps herself; and why not keep that also, without which every thing else is nothing ? Arms and ships --provisions, munitions, and supplies of every kind-- are kept in the hands of government officers; money is the sinew of war, and why leave this sinew exposed to be cut by any careless or faithless hand ? Money is the support and existence of the government the breath of its nostrils, and why leave this support, this breath to the custody of those over whom we have no control ? How absurd to place our ships, our arms, our military and naval supplies in the hands of those who could refuse to deliver them when requested, and put the government to a suit at law to recover their possession ! Every body sees the absurdity of this; but to place our money in the same condition, and, moreover, to subject it to the vicissitudes of trade and the perils of banking, is still more absurd; for it is the life blood, without which the government cannot live --the oil, without which no part of its machinery can move.
England, with all her banks, trusts none of them with the collection, keeping, and disbursement of her public moneys. The Bank of England is paid a specific sum to manage the public debt; but the revenue is collected and disbursed through subordinate collectors and receivers general; and these receivers general are not subject to the bankrupt laws, because the government will not suffer its revenue to be operated upon by any law except its own will. In France, subordinate collectors and receivers general collect, keep, and disburse the public moneys. If they deposit any thing in banks, it is at their own risk. It is the same thing in England. A bank deposit by an officer is at the risk of himself and his securities. Too much of the perils and vicissitudes of banking is known in these countries to permit the government ever to jeopard its revenues in their keeping. All this is shown, fully and at large, in a public document now on our tables. And who does not recognize in these collectors and receivers general of France and England, the ancient Roman officers of quæstors and pro-quæstors ? These fiscal officers of France and England are derivations from the Roman institutions; and the same are found in all the modern kingdoms of Europe which were formerly, like France and Britain, provinces of the Roman empire. The measure before the Senate is to enable us to provide for our future safety, by complying with our own constitution, and conforming to the practice of all nations, great or small, ancient or modern.
Coming nearer home, and looking into our own early history, what were the "Continental Treasurers" of the Confederation, and the "provincial Treasurers and Collectors," provided for as early as July, 1775, but an imitation of the French and English systems, and very near the plan which we propose now to re-establish ? These Continental Treasurers, and there were two of them at first, though afterwards reduced to one, were the Receivers General; the provincial treasurers and collectors were their subordinates. By these officers the public moneys were collected, kept, and disbursed; for there were no banks then! and all government drafts were drawn directly upon these officers. This simple plan worked well during the Revolution, and afterwards, until the new government was formed; and continued to work, with a mere change of names and forms, during the first years of Washington's administration, and until General Hamilton's bank machinery got into play. This bill only proposes to re-establish, in substance, the system of the Revolution, of the Congress of the Confederation, and of the first years of Washington's administration.
The bill reported by the chairman of the Committee on Finance [Mr. Wright of New York] presents the details of the plan for accomplishing this great result. That bill has been printed and read. Its simplicity, economy, and efficiency strike the sense of all who hear it, and annihilate without argument, the most formidable arguments of expense and patronage, which had been conceived against it. The present officers, the present mints, and one or two more mints in the South, in the West, and in the North, complete the plan. There will be no necessity to carry masses of hard money from one quarter of the Union to another. Government drafts will make the transfer without moving a dollar. A government draft upon a national mint, will be the highest order of bills of exchange. Money wanted by the government in one place, will be exchanged, through merchants, for money in another place. Thus it has been for thousands of years, and will for ever be. We read in Cicero's letters that, when he was Governor of Cilicia, in Asia Minor, he directed his Quæstor to deposit the tribute of the province in Antioch, and exchange it for money in Rome with merchants engaged in the Oriental trade, of which Antioch was one of the emporiums. This is the natural course of things, and is too obvious to require explanation, or to admit of comment.
The Senator from Virginia, who sits over the way, [Mr. Rives] to whose very able speech I listened with great attention, and certainly with instruction on several points, has brought in a bill, antagonistical to the plan of the Government, and going to continue the receivability of local bank paper, and the deposite of the public moneys with the local banks. It is the same bill, with some modifications, which he brought in last winter; and which it was my fortune then to oppose. To speak against the bill of that Senator now, would be to repeat the numerous speeches which I then made, reinforced by the experience of the last four months; an experience compressing into a few months, the events of an age; an experience surpassing all that I then dreaded; an experience transcending all argument, and throwing the public mind a century ahead. I do not design to repeat what I then said on the Senator's plan, wherein it remains unaltered; but there is a feature in it to which I much objected then, and which I find more objectionable now, from the modification it has undergone. I allude to the conditions on which the notes of the local banks were to be received, and which, in my opinion, amounted to a compact with the banks, and a compact of the most disadvantageous kind to the Government. That feature is continued, and aggravated by taking the form which may enable a few strong banks to monopolize the business of furnishing paper currency to the Federal Government. This is what I then said:
"In the next place, he (Mr. Benton) objected to the committee's bill, because it proposed to make a bargain with each of the thousand banks now in the United States, and the hundreds more which will soon be born, and to give them a right --a right by law-- to have their notes received at the Federal Treasury. He was against such a bargain. He had no idea of making a contract with these thousand banks for the reception of their notes. He had no idea of contracting with them, and giving them a right to plead the contract clause of the Constitution against us, if, at any time, after having agreed to receive their notes upon condition that they would give up their small circulation, they should choose to say we had impaired the contract by not continuing to receive them; and so, either relapse into the issue of this small trash, or have recourse to judicial process to compel the United States to abide the contract, and to continue the reception of all their notes. Mr. Benton had no idea of letting down this Federal Government to such petty and inconvenient bargains with a thousand moneyed corporations. The Government of the United States ought to act as a Government, and not as a contractor. It should prescribe conditions, and not make, bargains. It should give the law."
What I objected to then was the contract, and the paper currency; what I object to now is the same contract, the same currency, and the monopoly which may be given of it to a few strong banks --to the miscalled Bank of the United States, for example, and a favorite selection of its affiliated institutions. This privilege of supplying paper money to the Federal Government, is to be limited to those banks which shall resume specie payments within a given day. The design is to encourage a resumption of payments; but what will be the effect ? The effect will be, that the strong will resume, and take the prize ! The English connections of the Bank of the United States would throw it tens of millions to enable it to clutch the prize, and to crush competitors. The Senator from South Carolina [Mr. Calhoun] has presented the view of this danger; the Senator from Virginia [Mr. Rives] has disclaimed all intention of aiding that institution, miscalled Bank of the United States. Certainly he needs no disclaimer, neither on this floor, or to the country; his inexorable opposition to that institution, or to any similar one, is universally known. Still his personal intentions cannot control the effect of his bill, if it becomes law; and that effect will go to give a monopoly of the right to supply the Federal Government with paper money to the strongest, or a few of the strongest, of the institutions. The miscalled Bank of the United States will be the monopolizer; for, though the most encumbered with debt of all the institutions, yet her English backers and stockholders, for such a prize as would be presented, would throw in the millions necessary to carry it. The Senator from Virginia (Mr. Rives) cannot see this effect of his bill; but let him look over his right shoulder, and he will see those who do. He will there see the phalanx which supports the Pennsylvania Bank of the United States, all anxiously watching the progress of his bill, and ready to give their votes for it, as the certain means of aiding their great and cardinal objet.
"Mr. Rives replied to this allusion, the next day, as if Mr. Benton had said that, by looking over his right shoulder, he would see his guides and leaders. Mr. B. disclaimed both the expression and the thought. Mr. Rives answered that he had not heard distinctly what was said; but was informed that such were the expressions. Mr. B. denied them, and said that he only spoke of the effect of the bill, and referred to the support which the friends of the Bank of the United states were giving it, as evidence that they understood its effect as he did.]
Objections are taken to the capacity of the country to furnish the quantity of gold and silver necessary to pay the revenues of the Government in coin. It is supposed there is not hard money enough for that purpose. This objection induces two inquiries. First. How much specie will be required for that purpose ? Secondly, what is the present amount in the country, and what the prospect of increase ? In reply to the first of these inquiries, it is to be remembered that the President, in his Message, supposes ten millions will be enough; and the Secretary of the Treasury, in his report upon the finances, supposes that eight or ten millions will do. Having paid some attention to this point, I have come to the conclusion that the one-fourth part of the amount of the annual revenue will be sufficient to pay the whole; and this opinion is formed upon an observation of the fact, that in a regular state of the finances, when no more revenue is raised than the Government needs, about one-fourth of the whole is always on hand; of course that not more than one-fourth is taken out of circulation. Upon this data, a revenue of twenty millions would require but five millions to pay it; and a revenue of twenty-five millions would require but six and a quarter millions to meet it. A reduction of revenue to the wants of the Treasury is the policy of the administration; no more surpluses is the language of the republican party. About twenty-five millions may, therefore, be the maximum; and the payment of this sum, it is shown, will not employ above six or seven millions.
Now, what is the capacity of the country to furnish this amount ? How much specie have we, and what is the prospect for more ? It is well remembered that eighty millions was the computed supply at the end of the last fiscal year; to that amount we have to add the increase of the present fiscal year, being about five millions; namely, an excess of imports over exports of above four millions, and the coinage of near a million of gold. The future prospect is most encouraging. The export of specie is over; it is a drug in London; it can be borrowed there at 2¾ per cent per annum, and three per cent. is a common interest. What has been forced out is ready to flow back. A large import must be expected; and if this bill passes to increase the demand for it at home, and if the suspending banks are made to resume payment, not less than fifteen or twenty millions of dollars may be expected within the ensuing year. This, then, is our condition; upwards of eighty millions now in the country, and the means in our power to increase it largely. Now, cannot a revenue of twenty-five millions, which will never require a greater amount than six or seven millions to be taken out of circulation at any one time --cannot such a revenue be met from these resources ? I say it can; and I say this upon data, and will exhibit that data to the Senate, that they may judge of the correctness of my opinion.
First, I take the evidence furnished by the history of our own country. The first revenue act of 1789 prescribed "gold and silver coin only" for the payment of the federal revenue; the revenue was then about four and a half millions of dollars; and the whole amount of specie in the Union was estimated at ten millions of dollars. Here then was a revenue, nearly half the amount of the specie in the country, ordered to be collected in specie. I speak of the law which ordered it to be so collected, and to which there was no objection, on account of the inadequacy of specie; either in Congress or out of Congress. The revenue was paid without complaint, and without difficulty, and, in all probability, did not abstract, at one time, a million of dollars from circulation. But General Hamilton, the Secretary of the Treasury, permitted notes of banks to be received. Certainly he did, and, just as certainly, for no reason founded on the inadequacy of the specie circulation to meet the demands of the Government. His reasons, as seen in his report to Congress, were altogether of a different class; they were to enable the banks to increase their paper circulation --to increase paper money-- and to diffuse it generally over the Union. There were then but three banks in the United States, and those three to the north of the Potomac; they issued no small notes; their aggregate circulation was inconsiderable; and it was the plan of General Hamilton to increase their number, and diffuse their paper. This was his reason for admitting bank paper to be received; and to do so, he had to nullify, by construction, the clear enactment of positive law.
The next piece of evidence I furnish is drawn from the history of England, in the reign of William III, immediately preceding the establishment of the Bank of England, and the introduction of the paper system, and the funding system, into that kingdom. The taxes were then four millions, and the specie of the kingdom sixteen millions. These taxes were paid without difficulty; for they probably did not abstract one million sterling from circulation.
The last data I shall produce is from the history of France, during the first administration of Necker, which about covered the period of our Revolution. I speak of the first administration of Necker, and when the finances of France were in a regular state, and not of his subsequent administration, when the extravagances of the day and the subservience of the ministers Calonne and Brienne had involved those finances in a ruin from which the talents of Necker could not extricate them. What was the revenue and the specie circulation of France at that time ? I say specie circulation, for the Mississippi scheme of John Law had cured the nation of paper money, until the assignats of the revolution came upon the stage, and lived their brief day. What was the revenue, and the specie circulation out of which it was paid, in the prosperous period of the French finances to which I have alluded ? Twenty-two millions sterling of revenue --about 110 millions of dollars-- and ninety millions sterling of circulation --about 450 millions of dollars. This vast revenue, equal to one-fourth of the whole circulation, was regularly paid; and this establishes the only point for which I refer to it.
Now to apply this historical experience to our own country, and to the present times. Our revenue may be about 25 millions; one-fourth of that sum will pay it; we have upwards of eighty millions of specie in the country, annually increasing, and certain to increase to the utmost extent of our wants, if we create a demand for it. One hundred millions of exportable productions will bring back just as much specie as the country wants. The objection, then, to the inadequacy of the specie in the country falls to the ground. We have more than enough for that purpose. We have but two branches of revenue-- the lands and the customs, and both voluntary sources of income; for no person is under compulsion to purchase the public lands, and no one is under compulsion to import foreign goods. These are the sources of our revenues. Their payment is voluntary; and even during this summer, since the suspension of specie payments, the income from one of these sources --the lands-- has been equal to the best years before the two great years of speculation. I will answer for this branch of revenue. Bring the new lands into market, and reduce the price of the old lands, and the Government will get ten or twelve millions of gold and silver from them in the next year.
I am free to admit that the whole of this eighty millions is not now in the hands of the people -- that much of it is locked up in the vaults of the banks. But this is temporary; it cannot last much longer. Public opinion is omnipotent, and must prevail. That opinion is against the conduct of the banks; and in the progress of it they must see their own doom. Their vaults are shut, but their eyes must be opening; and with these eyes they must begin to see what the public is beginning to think of a BANKING SYSTEM which, in a season of peace, tranquillity, and general prosperity, and with a hundred millions of exports, and four times as much specie as ever was in the country before, are either unable, or unwilling, to meet any part of their obligations in specie --even to pay out picayunes!-- and have driven the people to the use of irredeemable paper, and shin-plasters, and the Federal Government itself to an issue of Treasury notes.
We are taunted with these Treasury notes; it seems to be matter of triumph that the government is reduced to the necessity of issuing them; but with what justice ? And how soon can any government that wishes it, emerge from the wretchedness of depreciated paper, and stand erect on the solid foundations of gold and silver ? How long will it take any respectable government, that so wills it, to accomplish this great change ? Our own history, at the close of the Revolution, answers the question; and more recently, and more strikingly, the history of France answers it also. I speak of the French finances from 1800 to 1807; from the commencement of the Consulate to the peace of Tilsit. This wonderful period is replete with instruction on the subject of finance and currency. The whole period is full of instruction; but I can only seize two views --the beginning and the end-- and, for the sake of precision, will read what I propose to present. I read from Bignon, author of the civil and diplomatic history of France during the Consulate and the first years of the Empire; written at the testamentary request of the Emperor himself.
After stating that the expenditures of the Republic were six hundred millions of francs --about one hundred and ten millions of dollars-- when Bonaparte became First Consul, the historian proceeds :
"At his arrival at power, a sum of 160,000 francs in money [about $32,000] was all that the public chests contained. In the impossibility of meeting the current service by the ordinary receipts, the Directorial Government had resorted to ruinous expedients, and had thrown into circulation bills of various values, and which sunk upon the spot fifty to eighty per cent. A part of the arrearages had been discharged in bills two-thirds on credit, payable to the bearer, but which, in fact, the Treasury was not able to pay when due. The remaining third had been inscribed in the great book, under the name of consolidated third. For the payment of the forced requisitions to which they had been obliged to have recourse, there had been issued bills receivable in payment of the revenues. Finally, the Government, in order to satisfy the most imperious wants, gave orders upon the Receivers General, delivered in advance to contractors, which they negotiated before they began to furnish the supplies for which they were the payment"
This, resumed Mr. Benton, was the condition of the French finances when Bonaparte became First Consul at the close of the year 1799. The currency was in the same condition: no specie, a degraded currency of assignats, ruinously depreciated, and issued as low as ten sous. That great man immediately began to restore order to the finances, and solidity to the currency. Happily a peace of three years enabled him to complete the great work, before he was called to celebrate the immortal campaigns ending at Austerlitz, Jena, and Friedland. At the end of three years before the rupture of the peace of Amiens, the finances and the currency were restored to order and to solidity; and, at the end of six years, when the vast establishments, and the internal ameliorations of the imperial government, had carried the annual expenses to eight hundred millions of francs, about one hundred and sixty millions of dollars, the same historian, copying the words of the Minister of Finance, thus speaks of the treasury, and the currency:
"The resources of the State have increased beyond its wants; the public chests are full; all payments are made at the day named; the orders upon the public treasury have become the most approved bills of exchange. The finances are in the most happy condition; France alone, among all the States of Europe, has no paper money."
What a picture! how simply, how powerfully drawn! and what a change in six years ! Public chests full, payments made to the day, orders on the treasury the best bills of exchange, France alone, of all Europe, having no paper money; meaning no government paper money, for there were bank notes of five hundred francs, and one thousand francs. A government revenue of one hundred and sixty millions of dollars was paid in gold and silver; a hard money currency, of five hundred and fifty millions of dollars, saturated all parts of France with specie, and made gold and silver the every day currency of every man, woman and child, in the empire. These great results were the work of six years, and were accomplished by the simple process of gradually requiring hard money payments, gradually calling in the assignats, increasing the branch mints to fourteen, and limiting the Bank of France to an issue of large notes: five hundred francs and upwards. This simple process produced these results, and thus stands the French currency at this day; for the nation has had the wisdom to leave untouched the financial system of Bonaparte.
I have repeatedly given it as my opinion --many of my speeches declare it-- that the French currency is the best in the world. It has hard money for the government; hard money for the common dealings of the people; and large notes for large transactions. This currency has enabled France to stand two invasions, the ravaging of 300,000 men, two changes of dynasty, and the payment of a milliard of contributions; and all without any commotion or revulsion in trade. It has saved her from the revulsions which have afflicted England and our America for so many years. It has saved her from expansions, contractions, and ruinous fluctuations of price. It has saved her, for near forty years, from a debate on currency. It has saved her even from the knowledge of our sweet-scented phrases: "sound currency--unsound currency; plethoric, dropsical, inflated, bloated; the money market tight to-day--a little easier this morning;" and all such verbiage, which the haberdashers' boys repeat. It has saved France from even a discussion on currency; while in England, and with us, it is banks! banks! banks! morning, noon, and night; breakfast, dinner, and supper; levant, and couchant; sitting, or standing; at home, or abroad; steamboat, or railroad car; in Congress, or out of Congress, it is all the same thing: banks banks banks; currency currency currency; meaning, all the while, paper money and shin-plasters; until our very brains seem as if they would be converted into lampblack and rags.
The Senator from New York, [Mr. Tallmadge,] in his very able speech, has referred to the overthrow of Bonaparte, effected by the paper system of England. Without going into the question of the causes of that overthrow --without looking to the ice of Russia and the non-arrival of Grouchy on the field of Waterloo, and without considering the numerous incidents, often trivial in themselves, on which the fate of battles and of empires depend-- it will be sufficient to consider what would have been the fate of this paper system of England, if, like the system of France, it had been exposed to the shocks of invasions, conquest, and changes of dynasty; and, leaving out this supposed view, it will still be sufficient to look at it under its real aspect, and to see its present effects on the condition of the British empire. What are those effects ? They are, in brief, an increase of taxes from 1694, when the Bank of England was chartered, from four millions sterling (twenty millions of dollars) to forty-five millions sterling, (two hundred and twenty-five millions of dollars;) an increase of the public debt from twenty-one millions five hundred and fifteen thousand seven hundred and forty-two pounds, thirteen shillings, eight pence, and two farthings, (to be precise,) in round numbers about one hundred millions of dollars, to near nine hundred millions sterling, or four thousand five hundred millions of dollars; and the increase of pauperism, until three millions of people grace the list. These are some, for I omit, as too well known, the average septennial convulsions of that system: these are some of the evils of the paper system in England.
But take another view --take some points of comparison between the national expenditures of France and England, when contending together, and see how the account, in point of economy between paper money and hard money will stand. Let us take the year 1806, when England was subsidizing Russia and other powers against France, and when the Great Emperor frustrated the effect of all these subsidies, and consolidated his power by the victory of Friedland, and the peace of Tilsit. What were the expenses of the two contending empires for that year ? They were these: For England one thousand seven hundred and seventy-two millions of francs, (about three hundred and sixty millions of dollars;) for France, seven hundred and seventy-eight millions of francs, (about one hundred and sixty millions of dollars:) in other words, the expenses of England exceeded those of France by about one thousand millions of francs, or two hundred millions of dollars. Such was the difference between the economy of paper money and hard money; and the same proportion holds good in every station in life, from the Emperor and his empire, to the washerwoman and her household.
The amendment now depending, on the motion of the Senator from South Carolina, [Mr. Calhoun] is the same in substance with the bill which I Ibrought in upwards of a year ago, to re-establish the currency of the Constitution for the Federal Government. That bill was in these words:
"That bank notes and paper currency of every description shall cease to be received, or offered in payment, on account of the United States, or of the Post Office, or in fees in the courts of the United States, as follows: of less denomination than twenty dollars, none shall be so offered after the third day of March, eighteen hundred and thirty-seven; of less denomination than fifty dollars, none after the third day of March, eighteen hundred and thirty-eight; of less denomination than one hundred dollars, none after the third day of March, eighteen hundred and thirty-nine; of less denomination than five hundred dollars, none after the third day of March, eighteen hundred and forty; of less denomination than one thousand dollars, none after the third day of March, eighteen hundred and forty-one; and none of any denomination from and after the third day of March, eighteen hundred and forty-two.
Sec. 2. And be it further enacted, That any person holding an appointment under the laws of the United States, and any bank employed to keep public moneys, which person or bank shall neglect, evade, violate, contravene, or in any way elude, or attempt to elude, the provisions of this act, shall be guilty of an offence against the laws; and the person so offending shall be liable to be dismissed from the service, and the bank so offending shall, on satisfactory information, be discontinued as a depository of public moneys."
The only direct action of this bill would have been on the receipts of the Federal Treasury. It has been extensively represented as a bill to impose hard money upon the States, but such is not its character, but the reverse; it was to prevent the local paper of the States from being imposed on the Federal Government. Its indirect and consequential action have been to increase the specie circulation of the whole Union, by creating a demand for it. The present amendment will operate the same way: it will increase the quantity of hard money every where. Yet two objections, neither of them well founded, and each inconsistent with the other, have been taken to it: one is, that it proposes to take the better currency for the Government, and leave the baser to the people; the other is, that it is going to impose this better currency upon the people also; and so destroy all paper money at once, reduce every thing to the specie standard, and ruin all debtors. Each of these objections are equally unfounded. Taken singly, they are each erroneous; taken together, as we often find them in the same speech, and they belong that class of arguments which the logicians call the argumentum ad ignorantiam; that is to say, an argument addressed to the supposed ignorance of the hearers. This class of arguments has been freely used by gentlemen of the opposition for a long time; with what effect the issue of the elections has often told. It is time to quit it, and to address the intelligence of the community. Take the better currency to itself ! Why, the Government does not eat the money, but pays it back again the next day to the people. Impose hard money upon the States ! The mere reading of the amendment, or my bill, which is the same in substance, disproves the assertion. No, the effect of the measure will be to increase the gold and silver circulation for the whole country. Thus it has been already. Five years ago, we began our system of measures to revive the gold currency, and to increase the specie circulation. There was then twenty millions of silver in the country, and no gold; there is now upwards of eighty millions, of which fifteen is in gold. True, the banks have suppressed all this circulation for the present; they have shut down the batches upon the whole of it; but this suppression cannot continue much longer. The law of the land, or of public opinion, will soon prevail, and these institutions will have to submit.
The bill before the Senate dispenses with the further use of banks as depositories of the public moneys. In that it has my hearty concurrence. Four times heretofore, and on four different occasions, I have made propositions to accomplish a part of the same purpose. First, in proposing an amendment to the deposit bill of 1836, by which the mint, and the branch mints, were to be included in the list of depositories; secondly, in proposing that the public moneys here, at the seat of Government, should be kept and paid out by the Treasurer; thirdly, by proposing that a preference, in receiving the deposits, should be given to such banks as should cease to be banks of circulation; fourthly, in opposing the establishment of a bank agency in Missouri, and proposing that the moneys there should be drawn direct from the hands of the receivers. Three of these propositions are now included in the bill before the Senate; and the whole object at which they partially aimed is fully embraced. I am for the measure --fully, cordially, earnestly for it.
Some Senators suppose that it will be a great injury to the local banks to refuse their notes in revenue payments; I think otherwise, and that it will be a great injury to receive them; for they will be taken out of circulation, and returned in masses on the banks for redemption. They cannot be paid out by the Government, and, therefore, will have to be presented for redemption to the banks. The act of 1836 cuts them off from all payments from the Federal Government, or the post offices. That act contains three limitations upon the payment of these notes: first, no note under twenty dollars is to be paid out; and that cuts off the greater number: secondly, no note is to be paid out which is issued at one place, and made payable at another; thirdly, no note of any kind is to be paid out, unless it is equal to gold and silver at the place where offered, and convertible into specie upon the spot, at the will of the holder, and without loss or delay to him. This is the strongest limitation, and cuts off all payments in notes unless where the bank itself is situated. The three limitations taken together, and they are all in full force, cut off bank paper from nearly every payment to be made, either by the United States or by the Post Office Department.
I do not pretend to exhaust this subject; I only touch the leading objections to the further use of bank notes by the Government, and the future use of banks as depositories of public moneys. It is a practice fraught with mischief to both parties, and has been so proved by repeated experience. To receive the notes of banks for revenue, if they are to be paid in good faith, is merely to take them out of circulation, and to return them in masses for redemption, to the great peril and alarm of the bank; if they are not to be paid, their receipt is a fraud upon the Government. So said Mr. Crawford when he was Secretary of the Treasury, and when members of Congress, marching in column upon him, backed by legislative petitions, were demanding this privilege for so many local banks. Importunity and legislative interference most usually prevailed; and in almost every instance to the injury of the bank, and to the loss of the Government. So will it be again, if the practice is resumed.
Again: It is tempting the banks into ruinous expansions thus to give them the credit and the domain of the United States to bank upon. They put out floods of notes, because receivability at the custom-house, the land office, and the post office, gives them credit and circulation. After some months, pay-day comes. Federal credit, which got the notes into circulation, will not pay them; the bank stops; depreciation ensues; the loss falls upon the Government, and upon the uninformed holders of the notes.
Again: It is a false credit given by the Government to the whole issues of any bank whose paper is so received. It is indorsement without responsibility. People take it, because the Government takes it; and when the bank fails, the Government does not indemnify those who have been deceived by an indorsement, valid for deception, and invalid for responsibility.
Again: This Government receivability enables notes to stray from their known orbit of circulation; to go off into distant parts, where they are unknown; to live there a while in the sun-shine of federal favor; to circulate awhile on land office and custom house credit; and, finally, to sink as insolvents upon the hands of strangers.
Again: There must be selection of banks, or universality of reception. If selection, then favoritism, patronage, caprice --refusal to-day, reception to-morrow--imposition on some, undue advantage to others-- come into play. If receivability is universal, then a thousand banks now in existence, and thousands more to be created, all become furnishers of federal currency; and in a few years the public lands are changed into paper --the custom-house revenue becomes a bale of paper-- and this paper worth as little as it would be if it was decomposed, and restored to its original state of lampblack and rags.
Again: To take the promissory notes of the banks for lands, customs, and postages, is to extend a credit to the banks which is denied to the community. The farmer is required to pay ready money for the public lands; but if the note of the bank is received, this is a credit to the bank --a credit to a barren moneyed corporation, which is denied to a productive, meritorious citizen. The same of postages; and the same is, in some degree, the case at the custom-houses now, and will be fully, when ready money payments are required there, as another bill before the Senate now proposes.
Again: To make the banks depositories of our moneys, involves the use, or the prohibition of the use, of these moneys. If the former, then the revenues are as much jeoparded as ever; if the latter, then the bank has no benefit from the deposite.
Again: To continue these banks as depositories, is to create an interest --a powerful, active, concentrated interest, in Congress and out of Congress-- in favor of high taxes, and low appropriations. The late Bank of the United States was such an interest during the whole time of its existence. It was the ally of high tariffs, and the enemy of appropriation bills. Its principle of action was-- take from the people, and leave with us! and so it will be with a league of local depository banks. Their presidents, and directors; their stockholders and attorneys, with all their friends and debtors will be a unit, to keep up taxes, and to keep down appropriations. The Government should not create, for itself and for the people, so formidable an antagonist.
The friends of the banks treat it as their ruin, as a grievous outrage and indignity, for the Government of the United States to refuse to take their notes, and to refuse to use them as depositories; yet this was their condition during the whole time of the existence of the Bank of the United States, and yet they made no objection to it then. This is strange! but what is more so is, that while thus struggling against the Government, they are, many of them, in favor of re-establishing a national bank; the first act of which will be to strip them of Government deposites, and exclude their paper from Government receivability !
Congress has a sacred duty to perform in reforming the finances, and the currency; for the ruin of both has resulted from federal legislation, and federal administration. The States at the formation of the Constitution, delivered a solid currency --I will not say sound, for that word implies subject to unsoundness, to rottenness, and to death-- but they delivered a solid currency, one not liable to disease, to this federal government. They started the new government fair upon gold and silver. The first act of Congress attested this great fact; for it made the revenues payable in gold and silver coin only. Thus the States delivered a solid currency to this government, and they reserved the same currency for themselves; and they provided constitutional sanctions to guard both. The thing to be saved, and the power to save it, was given to this government by the States; and in the hands of this government it became deteriorated.
The first great error was General Hamilton's construction of the act of 1789, by which he nullified that act, and overturned the statute and the Constitution together. The next great error was the establishment of a national bank of circulation, with authority to pay all the public dues in its own paper. This confirmed the overthrow of the constitution, and of the statute of 1789; and it set the fatal example to the States to make banks, and to receive their paper for public dues, as the United States had done. This was the origin of the evil --this the origin of the overthrow of the solid currency which the States had delivered to the federal government. It was the Hamiltonian policy that did the mischief; and the state of things in 1837, is the natural fruit of that policy. It is time for us to quit it --to return to the constitution and the statute of 1789, and to confine the federal Treasury to the hard money which was intended for it.
I repeat, this is a measure of reform, worthy to be called a reformation. It goes back to a fundamental abuse, nearly coeval with the foundation of the government. Two epochs have occurred for the reformation of this abuse; one was lost, the other is now in jeopardy. Mr. Madison's administration committed a great error at the expiration of the charter of the first Bank of the United States, in not reviving the currency of the Constitution for the federal Treasury, and especially the gold currency. That error threw the Treasury back upon the local bank paper. This paper quickly failed, and out of that failure grew the second United States Bank. Those who put down the second United States Bank, warned by the calamity, determined to avoid the error of Mr. Madison's administration: they determined to increase the stock of specie, and to revive the GOLD circulation, which had been dead for thirty years. The accumulation of EIGHTY millions in the brief space of five years, FIFTEEN millions of it in GOLD, attest the sincerity of their design, and the facility of its execution. The country was going on at the rate of an average increase of TWELVE millions of specie per annum, when the general stoppages of the banks in May last, the exportation of specie, and the imposition of irredeemable paper upon the government and the people, seemed to announce the total failure of the plan. But it was a seeming only.
The impetus given to the specie policy still prevails, and FIVE millions are added to the stock during the present fiscal year. So far, then, as the counteraction of the government policy, and the suppression of the constitutional currency, might have been expected to result from that stoppage, the calculation seems to be in a fair way to be disappointed. The spirit of the people, and our hundred millions of exportable produce, are giving the victory to the glorious policy of our late illustrious President.
The other great consequences expected to result from that stoppage, namely, the recharter of the Bank of the United States, the change of administration, the overthrow of the republican party, and the restoration of the federal dynasty, all seem to be in the same fair way to total miscarriage; but the objects are too dazzling to be abandoned by the party interested, and the destruction of the finances and the currency is still the cherished road to success. The miscalled Bank of the United States, the soul of the federal dynasty, and the anchor of its hopes --believed by many to have been at the bottom of the stoppages in May, and known by all to be at the head of non-resumption-- now displays her policy on this floor; it is to compel the repetition of the error of Mr. Madison's administration ! Knowing that from the repetition of this error must come the repetition of the catastrophes of 1814, 1819, and 1837; and out of these catastrophes to extract a new clamor for the revivification of herself. This is her line of conduct; and to this line, the conduct of all her friends conforms. With one heart, one mind, one voice, they labor to cut off gold and silver from the federal government, and to impose paper upon it! they labor to deprive it of the keeping of its own revenues, and to place them again where they have been so often lost ! This is the conduct of that bank and its friends. Let us imitate their zeal, their unanimity, and their perseverance. The amendment and the bill now before the Senate, embodies our policy. Let us carry them, and the republic is safe.