The friends of a National Bank desire to remove the Sub-Treasury scheme.United States Senate,
Mr. Wright said: Mr. President, I am not surprised or disappointed that our respected opponents leave exclusively to us the debate upon the final passage of this bill. I know that power is sometimes more anxious to execute its purposes than to give reasons for its course; to do execution than to offer arguments in justification of the act. I remember, too, that an eminent English judge is said to have advised a friend, about to enter upon the discharge of judicial duties, and not very confident of his qualifications, to decide, but to give no reasons in support of his opinions. I was prepared to expect that the repeal of the Independent Treasury law was a matter so well settled in the minds of the majority of the Senate, that the passage of this bill, and not the reasons for its passage, without any provision for a substitute, would occupy their attention and govern their action. Of this I have no right to complain, and do not complain; and I refer to the fact simply to lay the foundation for the apology I owe to the Senate for throwing myself upon its attention, and occupying its time, so plainly against the sense of a majority of the body, and when I know that majority will not debate the question; will not advance arguments in favor of the passage of the bill, or reply to those advanced against it.
It is painful for me to speak under such circumstances, and under the deep consciousness of the impatience which must be felt by those whose determination is simply to listen, and press the question; and could I make myself believe that my public duty upon the subject would be discharged by a silent vote, I certainly should not interfere to impede for a moment that result, which the majority of those I am to address so earnestly seek, and which I know must speedily be produced.
I am well aware that the general subject of discussion is an old acquaintance in this chamber, and that not the members of of the Senate simply but the people of the whole country, are supposed to be perfectly acquainted with it. Still I believe much remains to be said before the vital importance of this action be properly understood and justly appreciated in its necessary influences upon the most essential interests of the nation, even here, and much more by the people at large. Hence the imperious sense of duty which compels me to occupy the time and ask the attention of the Senate under circumstances at least as unpleasant to myself as to it.
I am deeply indebted to the honorable Senator from New Hampshire, [Mr. Woodbury] for the able speech with which he has opened this debate, as he has performed a duty which, upon repeated former occasions, has fallen upon me, that of showing what this Independent Treasury system really is, and has performed it in a manner better than I could hope to have done. I am thus saved the consumption of time equal to that which he has occupied, and the cause we advocate has received that aid from his powerful mind and practical experience, which it could not have received from any effort of mine.
In following that learned Senator, I shall repeat as little after him as possible, and keep the course I have marked out for myself; and I will promise to restrict my remarks within the narrowest limits of time consistent with a fair discharge of the duty which impels me to ask to be heard at all.
It is impossible to discuss the question presented in the manner in which I propose to discuss it, without direct reference to some substitute to be adopted, as a system of finance for the Government, in the place of the Independent Treasury system, now to be repealed. After what has taken place in the course of the action of the Senate as in committee of the whole upon this bill, I feel authorized to assume that that substitute, if any be adopted, will be a Bank of the United States of some character. Such is the frankly avowed opinion and wish of the honorable Senator from Kentucky, [Mr. Clay,] and the votes of the Senate upon propositions to modify the State bank deposite law of 1836, so as to make it again of practical force, seem to indicate that such is the preference of a majority of the body.
I shall, therefore, assume that the Independent Treasury law is to be repealed to give place to a National Bank, and shall base my argument upon that assumption. As to the peculiar powers and privileges to be conferred upon the Bank to be created, or the place of its location, I care nothing, if it be conceded that two provisions will be incorporated in the charter; neither of which, as I suppose, will be surrendered by the consent of any member of the Senate who intends to vote for a Bank at all. The provisions to which I allude are, first, the right and duty on the part of the Bank of collecting, keeping, and disbursing the public money; and, second, the making the notes of the Bank a legal tender in all payments to the public Treasury.
The first of these provisions is indispensible to constitute the Bank the fiscal agent of the Treasury, the ostensible purpose for which, it is to be chartered; and the second is the only effectual mode in which the credit of the country can be so blended with the credit of the Bank as to draw around it the requisite degree of public confidence to enable it to control all the local banking institutions. I will further assume, therefore, as a fact universally admitted by the friends of any form of a bank, that these two privileges will be conferred upon it, and if it possess them, it is a matter wholly immaterial to the argument I propose to offer, what other attributes may be given to the institution.
In the Course of the debate, when the bill was in Committee of the Whole House, some reasons were assigned for this speedy passage of it, and I propose, in the first place, to examine one or two of them, that we may see whether they have in fact the force which those who offered them seemed to suppose.
The honorable Senator from Kentucky [Mr. Clay] opened his argument with a metaphor, to illustrate the necessity of the passage of this bill, as the first step in the important proceedings of this important special session of Congress. He told us, in substance, that the wise architect always pulled down the old building, and cleared away the rubbish, to make room for the new edifice, and that, in like manner, the Senate should annihilate all existing fiscal agencies before they commenced to lay the foundations of his proposed new and more splendid agency, a Bank of the United States. I admit that this course is sometimes not only wise but necessary in architecture, but I appeal to the candor of the honorable Senator himself to say whether it is of universal application.
Suppose he should see the head of a family in this city turn his family out upon the pavement, and vigorously commence to tear down the mansion which was their only shelter from the weather and the storm, and, upon inquiry, that head of that family should tell him that the timber for his proposed new house was still growing in the forest; that the bricks which were to form its walls were yet resting in the bank of earth out of which they might be formed, and that the pecuniary means for the erection of the new edifice were yet to be earned by industry, accumulated by some untried enterprise, or obtained by a loan upon credit; would he consider that man a provident father and husband, or believe that he was following the directions of a wise architect ?
If this destructive operator should tell the honorable Senator that there were differences of opinion between himself and the members of his family, and between the individuals who composed the family, in relation to the expediency of building a new, and more especially in relation to the size and plan and description of the new building which they should erect, and that he had found it necessary to demolish the old house, and turn them out to the weather, without shelter from the heat or protection from the cold, to force them to unite with him in the erection of his proposed new edifice, the reasons of the man, for his apparently rash course, would be palpable; and still the Senator would be compelled to say that his appeal was to violent arguments to force harmony in his family to admit that his course savored more of resolution than wisdom, fairness, or justice. Suppose further, the members of the family should tell the honorable Senator that the new house was not, in any event, to occupy the site of the old; that the new site was not yet either secured or selected, and that the only point determined about it was that it should be upon a different lot, a different street, and in an entirely different quarter of the town from the old.
This would show the absence of all necessity for the demolition of the old building, and would not certainly relieve the act of the head of the family in tearing it down, and turning his family houseless into the public streets, from the character of rashness which it first assumed.
I will apply the Senator's metaphor, thus illustrated, to the case before the Senate. He insists upon a speedy repeal of the Independent Treasury law, to give place, as he says, to a National Bank, when he does not know, and no man yet knows, that a National Bank can be passed by Congress; when he does not know, and no man yet knows, in case a majority of the members of each House of Congress shall be able to agree upon a charter, that it will be such an one as can receive the approbation of the Executive. He does know, however, and we all know, that there are differences of opinion between members of the Senator's own political party, not only as to the description of Bank to be incorporated, the extent of the powers and privileges to be conferred upon it, and the location to be given to it, but upon the question whether a National Bank shall be chartered at all, or some other fiscal agent for the public treasury shall be constituted.
Does he not further know that the Bank or other fiscal agent proposed to be constituted by his party, whatever may be its form, and by whatever name it may be called, is not to occupy at all the site of the old building, the Independent Treasury ? Certainly he must know this. The Independent Treasury is erected upon solid constitutional ground. Its foundation walls are laid strong and deep in that sacred soil. This is a point beyond doubt or question; and I do not suppose any single individual whom I address, ever has held, or pretends now to hold a doubt as to the strict and express constitutionality of the Independent Treasury system as a fiscal agency for the Treasury.
Not so with the honorable Senator's proposed National Bank. It can only be reared upon the marshes of the constitutional land, if indeed it can occupy so tremulous and moveable a foundation within the boundaries of that consecrated territory. Its constitutionality is more than questionable, to use no stronger expression, and its site cannot approach that occupied by the treasury of the Constitution itself. Whence, then, the necessity for razing this old and plain and homely building with such haste, because a new edifice is to be attempted in another quarter ? The new edifice, I doubt not, if erected, will be more splendid in its architecture, more glittering and showy in its appearance, but the old house is not in the way, and need not be demolished to make room for the marble palace which is to succeed it.
Will not gentlemen consent to let this plain and homely building remain, useless though it may be and tenanted as it surely will be, if a splendid Bank is to become the treasury of the people ? Will they not in this instance follow the worthy example of many of the hardy yeomanry of our country, who, when industry, frugality and prosperity have enabled them to do so, erect new dwellings, enlarged and beautified, but suffer the old log cabin to remain, a memento of humbler circumstances, though perhaps not of less happy days or honest dealings ? Let the same course be pursued as to this Independent Treasury law, this old building about to be hastily demolished. It can do no harm, and will be a memorial of a period when the currency of the Constitution was the currency of the law; when money, and not credit, was collected into the public treasury, and paid out to the citizens who labored in the public service; when reality and intrinsic value, and not paper promises and confidence, were the standard of value for all our property.
This old building may indeed be offensive to the eyes of some of the occupants of the proposed new edifice, but surely we shall not, in that circumstance, find a necessity for tearing it down and obliterating its very foundations, before even the plan of the new building is formed, or its site selected. Let, I entreat gentlemen, the old house remain until the erection of the new building shall supersede its use, and then let it still remain, a monument of the wisdom, or the folly, as experience shall decide, of its constructors.
Another reason which has been repeatedly as signed for the early passage of this bill is the assumption that the decision of the people, at the last fall elections, was against the independent Treasury, and demands from their representatives the repeal of the law establishing it. It is said that resistance against the repeal is direct resistance against an express mandate of the people. Is this so ? I do not stand here to say that it is not so; but if gentlemen insist that the elections referred to were a decision of the people against the Independent Treasury, in favor of what system of finance did those same elections express the opinion of the people of the country ? In favor of the now proposed substitute, a National Bank ? No. So far as my acquaintance extends, that result, from those elections, cannot be established.
The Presidential elections of 1840 were, in the manner of conducting the canvass, new and singular to the country, and it is not easy to determine what was decided by them, beyond the choice of the successful candidates. It is insisted, however, by the dominant party, that a decision of the people against the Independent Treasury is one point clearly established by those elections. This may be so; but it does not follow that such decision was also in favor of a National Bank. This, however, is now assumed, and I will take this occasion to repeat, what I have once before expressed from my place here, that it may as well be urged, and upon much stronger evidence, that the decision of the people at those elections required of the distinguished individual elected to fill the Presidential chair, and of him who now fills it, that they should have declined to occupy the splendid mansion at the other end of this avenue, erected by the people for the use of their President, and should have erected for their official accommodation a hovel of slabs, or a log cabin, upon the beautiful public grounds which surround that proud dwelling of the people, or up on the pavements of the street adjacent; that these high functionaries and public servants should have discarded from the President's House and table the rich and gorgeous furniture which it has pleased the people to provide and supply for the use of their Chief Magistrate, and should have supplied me deficiencies thus produced, by stools and spoons and plates of wood.
Would any one now contend that absurdities such as these were decisions of the patriotic and intelligent freemen of this country at the elections referred to ? And yet these very subjects were made matters of grave debate in high places, and throughout the popular meetings of the dominant party, during that canvass, and I might add a hundred other topics equally novel and absurd, to which a leading prominence was given by the Whig orators pending that canvas.
No one will now stand up here, or elsewhere, and contend for the force and weight of favorable popular decisions upon these irrelevant, disgusting and disgraceful issues. All these extravagances of political effort are as revolting to my mind and feelings now as they were when being used as means of popular delusion; and I do not refer to them from any pleasure I take in bringing them back to the memories even of those who participated in the farce, much less these who did not, but simply for the purpose of showing gentlemen, who are now so fond of quoting the popular authority exhibited at these elections, in support of their proposed measures, that their issues, for that spirited and important controversy were formed much more with reference to success in the vote, than to measures of government, which should be consequent upon that success; and, as proof of this position, to remind them that evidences of popular decisions in favor of these absurd trifles, are much more abundant and strong than they are in favor of the establishment of a third National Bank.
Upon this point I speak from some personal acquaintance with the facts. During the canvass referred to, for the first time in my life, I followed the universal example and traversed a considerable portion of my State to meet and address assemblages of the people upon the political topics of the day. One of my almost invariable efforts in my addresses to the freemen of the State was to prove to them that the prominent object of the party opposed to me was the re-establishment of a National Bank in close connection with the National Treasury and the national credit; and it was almost as constantly as I discussed this point that my assumption of the fact was boldly and confidently denied by prominent members of the Whig party, in subsequent familiar conversations with me, and I was assured in the strongest and most earnest manner that I was mistaken as to what would be the policy and measures of the party, if successful at the elections.
These conversations were not political disputes, but friendly and familiar interviews, and the averments were strong and positive that a National Bank would not be a measure of the party. The gentlemen to whom I allude gave me credit for sincerity of belief in the position I attempted to establish, and I accorded to them then, as I do now, credit for perfect sincerity in the declarations they made to me. They honestly believed that their party was not the Bank party, and that the re-establishment of a National Bank would not be one of its party measures. They conscientiously believed I was laboring under a radical mistake upon this point, and had the frankness and candor to tell me so; but a very brief flight of time has shown them and me which was the mistaken party. So much for my personal information upon this point.
In addition to it, I have the universal and uncontradicted report of the day, that while few, very few, of the leading Whigs, who traversed the State, and addressed popular assemblies in reference to the pending contest, expressed themselves in favor of a Bank, or recognized the question as involved in the elections, many of them denied in that bold and public manner that a Bank was a measure which either they or their party favored, and denounced in the strongest terms their political opponents for charging for friendship for a National Bank upon them. And shall it be said, under such circumstances, that the popular decision, in a canvass so conducted, was in favor of such a Bank ? I repeat, the position cannot be sustained by facts or history.
Assume, for the sake of this argument, that the popular decision, at the elections of 1840, was against the Independent Treasury, and how will it stand, in this respect, by the side of the proposed substitute a National Bank ? This substitute does not rest under one popular condemnation simply. The old Bank of 1791 reached the termination of its charter in 1811. The subject of a recharter was agitated, and the popular voice controlled the action of the people's representatives; the recharter was refused; and the Bank suffered to expire. The second Bank of 1816 anticipated the limitation of its charter by the period of four years, and made its application to Congress for a recharter in 1832, pending an exciting Presidential election. The majority of the representatives of the people in both Houses of Congress favored the wishes of the Bank, and passed a bill for its recharter for a second period of twenty years. The then President of the United States, at the time a candidate for re-election to that high office, returned the bill with his veto, and its passage was thus defeated. He made his appeal against the Bank directly to the people of the country, and the Bank and its friends joined the issue with alacrity, and manifested no less reluctance than the President to go to trial before the grand inquest of the nation; the freemen, at the polls of election. Never was political issue more distinctly formed; more fully argued; more constantly kept before the eyes and the minds of the people, or more clearly and triumphantly decided; and never was the condemnation of the popular voice more unequivocally expressed than against this second Bank of the United States upon that occasion. This was the second distinct judgment of the people of the United States against a Bank of the United States.
There has been a third controversy, however, which elicited a third verdict of the same character and tendency. In October, 1833, General Jackson, then having entered upon his second Presidential term, ordered the deposites of the public money to be changed from the Bank of the United States to the State banks. This gave rise to the celebrated "panic session of Congress," so called, and to the exciting Congressional elections of 1834 and 1835. Again President Jackson and his Administration were engaged in the trial of a political issue before the people against the Bank of the United Sates, and its friends and supporters. The restoration of the deposites to the Bank was the form of the question, but all will remember, and all must admit, that the success of the Bank in the trial of that question would have been held and viewed by both the contending parties as equivalent to a recharter; as a step gained by the Bank which could not have failed to lead to that result.
Hence the desperate character of the contest, but again the Bank fell, as signally as in 1832, under the condemnation of the people, and fell to rise no more as a national institution. Indeed, so clear and conclusive were these double verdicts, that the friends of a National Bank have scarcely debated the subject, and have not invoked the action of Congress upon it since the last named trial, but on the contrary have frequently declared in these halls that they should not move again with reference to the establishment of another such institution, until there was evidence of a change of the public mind respecting it.
That time is now claimed to have arrived; and the movement is now to be made; but I trust that I have shown that, in my section of the Union at least, the elections of 1840 were not contested upon this ground, and do not furnish that evidence of a change of the popular will in reference to a National Bank, which authorizes the assumption that the change has been effected, or sanction the establishment of a Bank upon the strength of it.
If those elections condemned the Sub-Treasury, they did not relieve a National Bank, the now proposed substitute, from its triple condemnation, and it is a more manifest resistance of the expressed will of the people to urge upon them the charter of such a Bank, than it is to resist this hasty destruction of the Independent Treasury, while no substitute is proposed which has not met their more repeated and stronger disapprobation.
The State bank system has been twice tried; once from 1811 to 1816, and again from 1833 to 1837. I do not know as I can truly say, that this system has ever been distinctly submitted to the people and received their verdict. It was put into operation, by Executive authority upon both occasions, and, though recognised by Congress during the latter period, and made the system of the law, its utter failure upon both trials, and especially upon that ending in 1837, pressed the necessity of instant new legislation, and thus brought on the existing controversy between an Independent Treasury and a National Bank, almost without reference to a third system.
Yet the very small number of representatives in either branch of the National Legislature, who have, since the suspension of the banks in 1837, favored, the system of State bank deposites, authorize the inference that there is now but a comparatively small party in the country who adhere to that plan of managing the finances of the Government, as preferable to both of the others which have been considered; though there may be very many who consider it, unfortunate as it has hitherto been in practice, preferable to the one or the other of the different systems.
The present President, in his message, tells us, boldly and manfully tells us, that all these three systems of fiscal agency for the Treasury, have respectively met the condemnation and rejection of our common constituents, the people of the country. Can it be, then, that a necessity presses itself upon the Senate, growing out of the obligation to obey the popular voice, the public will, to sweep away one of those systems for the purpose of putting in its place either of the others, equally repudiated and equally condemned by the people ? But no. I ought not to say equally repudiated and condemned, for such is not the fact. A National Bank has been tried for the term of forty years, and, as the result of that thorough and patient trial, has met three distinct condemnations from the ballot boxes.
The State bank deposite system has had two separate trials, the one of five and the other of about four years, and has made, within those short periods, a perfect failure upon both occasions.
The Independent Treasury has not been tried. The law establishing it was passed on the 4th of July last, eleven months and five days from this day, a time insufficient to put the system into perfect operation, much less to give it a fair trial and test its merits and defects. The provisions of the law bring it into gradual operation in its principal bearing upon the currency, and time has not yet elapsed sufficient to make an advance of a single step in the progress of the law towards a sound and stable and uniform currency of intrinsic value.
It is not then under equal condemnations that these systems rest. The two former have repeatedly condemned themselves and been condemned by the people, after fair, full, and patient trial; and the latter, if condemned at all, has met that condemnation at the hands of political opposition, not as the consequence of experimental defects, or evil tendencies; and is to be cut off, repealed, destroyed, without trial and without a substitute.
What fault has been found with its operation hitherto ? Have the sound, solvent business merchants, complained from any thing but apprehension ? Has the short experience which they have had confirmed their apprehensions ? Not that I have learned, or heard, though I have heard much which goes to prove the reverse. Yet, sir, the old building must come down. A Bank palace is to be erected, and though the old site is not wanted, and cannot be occupied, the structure upon it will be unseemly to the tenants of the new mansion, and it must be razed to the ground and its foundations, which cannot be dug up and destroyed, must be covered over and ornamented, so as to conform in appearance at least to the new system.
So much for the reasons which have been offered for the speedy passage of this repeal bill, based upon the necessity of tearing down and clearing away, to make room for the new "fiscal agent," a Bank of the United States, as the honorable mover of the bill [Mr. Clay] tells us; and, upon that assumed command of the people, which requires at our hands the demolition of their Treasury, constructed upon constitutional principles, that such a Bank may be erected, not upon its ruins, for that can never be, but as its substitute and keeper of the people's treasure.
I will now examine, as briefly as I may, the action and tendencies of these two systems of finance for the nation, upon certain great and leading public interests, governmental and popular. And, first, the natural action and tendencies of the two systems upon the currency of the Treasury and the currency of the country.
The currency of the Independent Treasury, if it shall be permitted to go into full operation, is gold and silver, the currency of the Constitution alone, the standard of currency established by that instrument; it is a currency which cannot be raised in value at will, or depreciated; which cannot be expanded at pleasure, or contracted, to promote particular interests, or peculiar views; the graspings of private interests, or the objects of corporate or political ambition. It must constantly have the uniformity, both of value and quantity, which the trade of the world will allow. It must be regulated by those laws which regulate the trade of the world, and these are the laws which must govern our controlling markets, and the value of our property seeking a disposition in commercial channels.
The currency of a National Bank is the paper promises of the Bank to pay; manufactured by the Bank at pleasure; possessing no intrinsic value; subject to be expanded or contracted, and consequently to be raised in value, or depressed, at the pleasure of the Bank and its managers; is not necessarily governed by the laws of trade, either as to its quantity or value, and never can have the uniformity which those laws require for a safe and salutary medium of exchange.
The currency of the Independent Treasury system is a standard of money, of exchangeable value, as stable as the standard of weights and measures; established by this Government in conformity with the express requirements of the Constitution, like the standard of weights and measures, and furnishes a uniform measure of value, as well for the currency as the property of the people. The power given to Congress over the three standards is the same, and the grant is contained in the same clause of the Constitution. It is to be found in the 5th clause of the 8th section of the first article, and is in the following words:
"The Congress shall have power to coin money, regulate the value thereof, and of foreign coin, and fix the standard of weights and measures."
And is it less important to every great interest in a commercial country that the standard of value should be stable, uniform, and true, than that the standards of weight and measure should be ? The latter are measures of quantity, and the former is the measure of value; and why do we wish to be accurate in measuring the quantity but in reference to the value of the commodity measured ? Surely, then, if we measure quantities as a mere step towards valuation, the measure of value should be, of all things, accurate and true. And can that be a true measure of value, as an open exchangeable currency, passing from hand to hand by mere delivery and without reference to the responsibility of the payers, which has no value in itself, and simply purports to be the representative of value which is not present ? Such a currency cannot be a standard, but requires a true standard for the measurement of its own value.
How is it, then, with the currency of a National Bank, in this aspect of the case ? It is its own paper; its own promises to pay; a standard of value entirely artificial and arbitrary; unknown to the Constitution as money, and certainly as a standard of money; wholly destitute of intrinsic value, held, controlled, and regulated, not by the Government of the people, but by the interested officers of the Bank; can be expanded without comparative cost, and contracted without comparative loss; is subject to be raised and depressed in value, not by the laws of trade alone, but by the whims and interests of the managers of the Bank, and by panics and passions and prejudices in the public mind.
Such are some of the differences between the currency of the Independent Treasury system and the currency of a National Bank of issue and discount.
Again. The natural action and tendencies of the Independent Treasury system are opposed to the contraction and continuance of a public debt of any character. Its officers are paid by stipulated salaries, and their direct interests are to diminish, as far as may be in their power, their responsibilities and duties. Large collections of money to be received and kept and disbursed by them would increase both, while a debt would add to the necessary collections and payments in exact proportion to its amount. It would further add to the duties and responsibilities of these officers through the necessary process of management, such as the multiplication of accounts, the necessity of transfers, the complexity of calculations, and the like.
A large debt, too, would increase the necessity and the danger of accumulations of coin in the public vaults, as the sums to be paid for interest, or principal, would have to be accumulated against the day of payment, at the peril of the public credit, and serious evils might be visited upon business men and the local banks by the hoarding thus rendered imperiously necessary. Such a consequence, and even the apprehension of it, would array these interests against the contraction or continuance of a heavy debt, as would every natural tendency of this system.
Not so with a National Bank. Its natural tendencies would all be in favor of a national debt of a permanent character. The management of the debt, as the fiscal agent of the Treasury, would give it a hold upon the Government, and the country, strongly calculated to secure its own perpetuity. The stock which should compose the debt would present the most convenient and desirable investments, upon occasions, for its capital and surplus means. A trade in the stocks would frequently present greater inducements of profit for the employment of its extensive means, than ordinary bank loans; while its foreign operations, in exchange and otherwise, would be greatly facilitated by the ability to command a Government paper, which would answer its purposes for remittance abroad instead of the precious metals; for we must not delude ourselves with the idea that we can give to a National Bank, by our action, a credit which will make its notes current, as money, in a foreign country.
Another consideration which overrides all the rest, and which will ever make a National Bank in this country, if not in all others, favor the existence of a permanent national debt, is this: The Bank, as the fiscal agent of the Treasury, must manage the debt. Through that management, when the debt is large, it can control the public credit of the country, and by its command of the public credit it will be able to control the Government of the people, and even the people themselves, and in that way render its existence and its power secure and perpetual.
What gives to the National Bank of England its strength and durability ? Its power to command a recharter at pleasure, and to dictate the value of money and the measure of credit to the British nation itself ! Its hold upon the Government through their great national debt. The capital of the Bank is a part of that debt, and the management of the debt, and the delicacy and importance of the credit of the nation, by reason of its immense indebtedness, places the Government in the power of the Bank, and compels it to move in subserviency to its interest.
What is true in England will be true here, under like circumstances, and a National Bank in the United States will be just as much strengthened by a national debt, and be just as anxious for the existence and permanency of such a debt, as is the National Bank of England. Indeed, I have long been convinced that a National Bank cannot be long sustained in this country, and under our present institutions, without the aid and support of a large co-existing national debt.
The Independent Treasury will bear an equally favorable comparison with a National Bank as to the natural action and tendencies of each upon another point of great public interest. I refer to the subject of taxation. Every tendency of the Independent Treasury system must naturally be against excessive taxation of any description, and in any form. Any policy or course of measures calculated to accumulate a surplus revenue in the Treasury of the United Staten would render that system burdensome and oppressive upon the people, and upon every business interest of the country, because it would, to the extent of the surplus, withdraw the precious metals from use, to be hoarded in the public vaults. The system being preserved, therefore, such policy and such measures could not fail to attract the attention of the business community, and to become unpopular; the only consequence which, under our free representative institutions, need to be produced to insure their abandonment and repeal. This necessary and unavoidable tendency of the Independent Treasury system has ever appeared to me one of its greatest merits.
If continued in operation, it will be sure to relieve us forever hereafter from extravagant tariffs, excessive taxation, and surplus revenues; evils under which the country has suffered most severely within the last ten years, and which powerfully contributed to bring on the excesses in trade, in banking, in credit, and in speculations, which immediately preceded, and necessarily produced, the present revulsion, depression, and derangement in our trade, our commerce, and our currency.
A perfect defence and protection against these excesses for the future, and against the certainly consequent collapse, should be an object of the first importance with the statesman; and the fact that the Independent Treasury system must, if continued, prove to be this defence and protection, ought strongly to recommend it to every man of property, or business, and most especially to the great commercial interests.
Not so the bank system. Charged with the collection, keeping, and disbursement of the whole public revenue, for no other compensation than the profits to be made from the use of the money of the people while remaining in deposite, that a National Bank will favor precisely that course of policy, and those which will bring the greatest amount of money into its vaults, and consequently the greatest amount of benefit to its interests, must be just as true as that the officers of a Bank will consult their own interests, and the interests of those who employ and pay them, or that the stockholders of a bank will prefer large to small dividends upon their stock.
A surplus revenue is, to such an institution, a permanent deposite, a permanent increase of its banking capital; and the head of the institution can always tell, quite as accurately as the head of the Treasury Department, what rates of taxation will simply meet the appropriations of Congress, and what rates will be sure to leave a beneficial surplus of revenue for the uses of the Bank. Can any one doubt, then, which of these rates the influence of the Bank will be exerted to produce ?
The natural tendency will be towards the rates which will produce the surplus; and that will be the practical tendency so long as a money corporation shall be the agent to exert the influence. The conclusion is unavoidable. The business of the Bank is to make money for its officers, managers and stockholders. The desire to be connected with the Government, as its fiscal agent, springs solely from the expectation of profit to be derived from the extended powers conferred, the strong credit imparted, and from the use of the money of the people deposited; and it would be absurd to believe that the influences of the institution are to be so exerted as to defeat the very objects of the connection.
The Bank, therefore, must favor that system of taxation which will draw the greatest amount of money from the pockets of the people to its vaults, under the name of revenue to be collected, kept, and disbursed by it.
Other inducements, however, besides that of the mere profits of banking, increase this tendency of a National Bank to favor taxation. Next to the desire of immediate profits, is the desire for perpetual existence, on the part of these money corporations, and every thing which extends their power over debtors, their means to accommodate more borrowers, and to enlarge the limits of their money power, increases their security, strengthens their hold upon the people, and adds to the chances of the extension of a limited charter.
I will not say that a future Bank, now to be created, will indulge in such practices, but the daily developments of this present period are constantly showing to us that the late Bank of the United States has indulged in them; and more, that a main cause of its present ruin and prostration is the appropriation of the means in its hands, public and private, to break down the local banks of a single State. Such regulation of our banks and our currency ought not to be desired by any interest, or any party; and what security can we have that what has so recently been may not again be brought about, if we voluntarily reconstruct the same dangerous machinery ? We have seen what its natural tendencies are, and what its action has been, and have we any foundation for saying that either will be different in future ? It seems to me not.
I will now examine very briefly the action of these two systems of finance upon credit. Here the greatest benefit is promised, and seems to be expected, from a Bank of the United States; and the greatest injury apprehended and feared from the Independent Treasury. What must be the action, and what the tendencies of each ?
The Independent Treasury system must, from its nature and the necessity of the case, act as a restraint upon the excesses of credit, and therefore, in that sense, prove a salutary regulator of it. Using no credit itself, when it shall have reached its perfect operation, it must constantly hold up before the banks, the merchants, the brokers, the business men of all classes, a sound and uniform standard of currency of intrinsic value, a standard by which alone the value of all credits, as well as all property, ought to be, and must finally be, measured. It stands in the whole country as do the weigher, and gauger, and measurer, in the marts of commerce, and brings all commodities to their true standard of value, as do the latter to their true standard of quantity.
The apprehension is that it will prove too rigid and severe a regulator of credit, but no experience from its action has as yet confirmed this fear. Why should it continue ? The currency of this system is the standard of truth, and none but false credits need apprehend injury from a trial by it. If the credit be in fact, what every credit ought to be, a representative of intrinsic value existing anywhere, this standard of intrinsic value will strengthen and confirm it; but if it be a false credit, the mere representative of imaginary value, having no real existence, the standard will be precisely the one which every great interest of a commercial country requires; the regulator, and the only one which can preserve soundness and uniformity in trade, by distinguishing the sound credits from the false, and strengthening and confirming the former, while it discredits and drives out of the market the latter.
How is it with a National Bank in these respects ? Under the systems of banking which universally prevail in this country, a bank may be not inappropriately defined to be incorporated credit; and a National Bank may be as appropriately considered a monopoly of incorporated credit. I am aware that here rests one of the great merits of such an institution in the minds of those who favor its establishment, and that here I am to meet the strongest resistance from our talented and respected opponents. They consider the great value of a National Bank to consist in its power to regulate credit, and especially to regulate a currency of credit. I must tell the gentlemen that the power and the will to do are very different things, as well in a money corporation, as an individual. They may give great powers to a bank, and all great powers may be used for the accomplishment of great good, if the will and the wisdom exist and act with the power; but Congress cannot give the will or the wisdom, and the dear-bought experience of our country, with two former banks, proves that these properties are not naturally united, or likely to act together, in a money corporation.
I know that the late Bank has sometimes proved a severe regulator of the credit of weak institutions and single individuals, in small and ordinary transactions; and that it has been accustomed, in such cases, to take to itself the lion's share; to extend its profits by restraints imposed upon their business. These, however, have been, in a national sense, small matters. In the great floods and ebbs in the tides of trade and commerce and credit, where has that giant institution been found ? As a regulator of credits and a safeguard against excesses and revulsions ? No; but as the great leader and promoter of the expansions and over-tradings and speculations, and then of the consequent revulsions. Look at 1819, 1825, and 1834, for examples. In all great irregularities the Bank was usually the first to move, to expand, to practise excesses itself and promote them in others; and, when the gale had reached its height, it was usually the first also to sound the alarm, to countermand the course, to take in sail, and fly for the harbor; resting upon the strength of the credit of this Government and the revenues of this Government to keep it afloat and bring it to land; and entirely regardless of the wrecks and ruin and destruction of local banks and private merchants and traders left upon its trail, and which must strew its track towards self-security.
So long as that institution continued to hold the revenues of the United States and the credit of the United States, it could practice these irregularities in comparative safety; but when both were surrendered by compulsion, and, with the same name and same capital, under a State charter, it undertook these bold flights, it too fell among those which had formerly been its victims, and now remains dead and motionless, the worst wreck upon an over-burdened shore.
These irregularities and evils of the two former Banks of the United States, which I have pointed out, and from which the country has so severely suffered and is now suffering, are not mere incidents, the effects of particular times and circumstances. They are intrinsic, and their causes are to be found in the very nature of a moneyed corporation, managed by private cupidity, and having for its support the vast credit and revenues of this mighty nation.
The experience of the country is ample upon this point. The power and will of a National Bank to regulate our trade and credit and currency has been abundantly tried; and has the business world been free from expansions and contractions, excesses and revulsions, under such regulation ? Have there been no reckless speculations on the one hand, buoying men up with hope today, and no consequent revulsions and depressions on the other hand, sinking them in embarrassment and distress and bankruptcy to-morrow ? If such has been the experience of the past, what better can we expect from bank regulation, without any other standard for the future ?
If uniformity and stability, and soundness, and true value, have not been the fruits of the former banks, upon what principle are we to expect such fruits from another institution, organized upon the same principles, and holding in its very nature the same inherent evil tendencies.
And what, Mr. President, is the system now to be repealed to give place to this bank regulator ? A system which, so far as its action can go, will supply to all the business men of the country a currency of uniform and intrinsic value; a currency subject to no other fluctuations, either of quantity or value, than are incident to the trade of the world; a standard and touchstone by which the property and credit and business of every man in the nation may be tried, and must finally be governed, in spite of all our acts and devices to establish for our country alone an artificial and fictitious standard of value.
The standard now to be superseded is that of gold and silver, the money of the civilized world and the standard of value of the civilized world. The Independent Treasury uses those metals as money, at their intrinsic value in the markets of the world, and, thus used, they constitute a uniform standard of value for the banker, the merchant, the broker, the farmer, the day laborer, for every class and description of our citizens, wherever located, and whatever employment they may choose to pursue; and it is a standard held in the hands, and regulated by the will, of the Congress of the United States, composed of the representatives of the people, and in strict conformity with the Constitution of the United States.
Such is the currency and standard of value which the Senate is now called upon, to prefer, and for which we are to throw away one of inherent value, of permanent uniformity; the currency dictated by the fathers of the Constitution for the protection of every citizen, and the prosperity of their country.
Will gentlemen consent to destroy, at a single blow, a system of finance for the Government, premising results such as I have briefly and imperfectly described, possessing tendencies, inherent in its action, such I have pointed out, and trust themselves to darkness and doubt for a substitute ? Or will they exchange such a system, yet almost wholly untried, for one whose evils have been demonstrated by experience, and are already daily staring the whole country in the face ? Will they abolish a system established by the authority of law, and now in successful operation, when no man can say that such a substitute as I have anticipated, and attempted to describe, is within their reach ?
To return to the metaphor of the honorable Senator from Kentucky, will they insist upon tearing down the old house, for a berth upon the pavement, or in the fields ? To do so, in my judgment, is wholly unnecessary, and will be most unwise.
Another consideration connected with the speedy passage of this bill, for the avowed purpose of following its passage by the establishment of a new National Bank, is well worthy of the serious consideration of those who press it forward. Quiet and confidence in relation to the validity of the charter of a Bank, to its solvent condition, to the integrity of its management, and its fidelity to all its obligations, are indispensable to the success and prosperity of such an institution, organized upon the principles which characterize the banks of this country, and which doubtless will be the leading principles of the charter of any new Bank of the United States now to be proposed. It is a fact perfectly well known here, and every where, that a very large minority, not to say a majority, of the statesmen of this country, and of the people of this country, entertain a settled hostility against the creation, or existence, of any such institution under the authority of Congress. They all believe a National Bank calculated to bring evil rather than good upon the people and the country. They believe its tendencies, in a pecuniary sense, are rather to derangement and irregularity and rottenness, than to stability, uniformity and soundness. They believe that, in a political sense, it is the most dangerous power which can be connected with, or engrafted upon, this central and common Government. And a very large portion in their consciences believe that the Constitution of the United States does not confer upon Congress any power to charter such a Bank.
Now do gentlemen suppose, or hope, that the mere vote of a bare majority of the members of each House of Congress, and the signature of the President, if that should be yielded, in favor of such a charter, would put an end to this settled and long existing hostility, to these deep and fearful apprehensions so freshly and fully confirmed by the developments daily making as to the practices, financial, and political, the vices, the crimes and the utter insolvency of the late Bank of the United States ? Can they for a moment suppose that that numerous party, the members of which hold the constitutional opinion I have mentioned, will surrender that opinion upon the mere exhibition of a paper charter thus sanctioned ? That they will hold such hold a charter constitutionally valid, and not only free from their unceasing hostility, but justly calling for their support and confidence ?
I presume the minds of a majority of the members of the Senate are already made up to vote for a National Bank, and I certainly mean no disrespect towards such, when I entreat them to pause, before they sweep away a system of unquestioned constitutionality, to make room for one open to such broad constitutional doubts, and such wide spread and deeply settled hostility. I am sure, if they reflect, they cannot make themselves believe that a mere charter upon the statute book, having the ordinary forms of law can possess that talismanic power necessary to surmount these almost insurmountable obstacles, and to draw around it that broad mantle of public confidence, entirely indispensable to enable it to regulate the paper currency of this country, and sustain its notes as the standard of value in the trade of the nation. If any Senator possesses a faith in a bank charter so strong as this, such a faith is unknown to me.
Again, we are told that a new National Bank is to be that great healing measure, which is to relieve every distress in the pecuniary affairs of the whole country, to elevate the prices of property and labor, and to make money every where current and plenty. How is it to effect all this ? All men of all parties now agree that we have in the country a large excess of banks. The complaint is that they have been unfortunate, or improvident, are unable to meet their obligations, and have lost the public confidence. Can Congress remedy this state of things and restore confidence to these crippled and prostrate institutions, by adding another great Bank to the list ? For we must not forget that, except in so far as the national faith and credit may be embraced in the charter, and the national revenues shall be made capital for its use, such a Bank will be no better than those which now exist. There is no charm in a mere charter from Congress superior to that which a State Legislature may impart.
Suppose, however, the experiment must be made, and what must be the practical and immediate result ? Say it is to be a Bank with a capital of fifty millions of dollars, (the last amount I remember to have heard named in this chamber as a suitable sum for the object,) and the first step is to aggregate this fifty millions from the existing capital of the country. The instant effect of this movement, must be to double the existing pressure upon the already crippled local banks and their embarrassed customers. The valuable and most stable deposites must be withdrawn from these institutions, in the shape of gold and silver, or their equivalent, and their discount lines must be contracted, and their debtors made to pay in a currency equally valuable, that the capital of the new Bank may be realized. The effect of aggregating so vast a capital in coin, or its equivalent, at the present period of depression in our trade, and business, and banking, must be to bring every thing to a stand still; and for how long a time ?
What time do gentlemen suppose will be required to collect fifty millions of dollars of real money capital in times like the present ? I ask the question, because I will not presume that it is contemplated, at this advanced period in our experience in banking, to put a new Bank into operation without the previous payment of its entire capital. That mode of banking has been long since tried and exploded in my own State, and I trust is not now tolerated any where. The first step in the process, therefore, must be to obtain the entire capital of the new Bank in money. Here I may and probably shall, be told that foreign capital will seek the stock, and thus relieve our own banks and business men from the pressure I anticipate. This may be so; but I must think, if we are to wait until English or French capitalists part with their money for the stock of another Bank of the United States, we shall be compelled to wait until the vacuum produced in their pockets by investments in the stock of the late Bank has been more filled than it is at present, or is likely to be from the proceeds of their interest there.
Whether the same considerations will influence our own citizens who have money to invest, is a matter worthy of consideration by those who rely upon such a Bank for relief to the country, and a safe and practical fiscal agent for the Treasury. I do not wish to express an opinion upon it. It is enough for my purpose that, if they do take the stock, the immediate consequences to our banks and business men, which I have described, must follow, from the withdrawal from the current business of the country of their capital for the new investment.
This is no imaginary picture. It must be the first result of this measure of relief. There is no man at all acquainted with the subject who does not know that the location of a new State bank in any of our trading towns, produces an immediate and temporary pressure upon all the banks and business men of the vicinity. The capital of the new bank must be accumulated, and that can only be done by a change of the amount of money required, from old to new channels, from the customers of the existing banks, principally, to those who shall become the customers of the new bank. This, however, in the case supposed, is a local and limited operation; but the establishment of a new National Bank must affect, in the same way, to the extent of its capital, the whole Union; and if that capital be fifty millions, the local banks of the Union must curtail their accommodations to about that extent, unless the credit of this Government shall be resorted to, and a debt imposed upon the whole people, to raise the money, and thus avoid this unpleasant consequence.
Suppose, however, the capital of the new Bank, aggregated by whatever means, and at whatever sacrifice to the business interests of the people, or the credit of the country. Then comes the second step in the process. The great National Bank of fifty millions is ready to commence its operations of banking, and wants customers. All the local banks are restricted to the utmost of their power, from the necessity of parting with the capital for the new National Bank, and from the fear of its power when put in operation. They too, therefore, want customers. The National Bank leads off with free issues and liberal discounts. The local banks feel the impulse, and follow the example. A general expansion of the paper currency ensues. Money becomes plenty and cheap, and property and labor dear, and foreign property and foreign labor rush in upon us to restore the equilibrium; taking from us in exchange for both, not our expanded and cheapened bank paper, but our gold and silver, equally cheapened in our markets by our legal establishment of the paper standard.
This state of things will continue for a short period, deluding us with the idea of unexampled prosperity, and the excesses may even reach those of 1835 and 1836, though I sincerely hope not.
Then must come the third step in the natural action of this great credit system. The National Bank, having got out its vast capital, and extended sufficiently its issues, will commence the counter march, and, leaning upon the credit of the nation and the public revenues, it may sustain the consequent revulsion. The local banks must follow without such aids, and the scenes of 1819, of 1825, of 1834, and of 1837, must again be visited upon them and their customers, perhaps with increased severity.
Such is the promise which experience holds out to us from the establishment of a new National Bank, as a measure of relief to the Treasury of the people, and to the people themselves; while repetitions of these fluctuations is all the uniformity to be hoped for from a system of currency based upon a paper standard, held and controlled by the managers of a Bank.
Another suggestion could not fail to strike the minds of all, when viewing this hasty action. One of the most constant and universal complaints against the two last Administrations, by their opponents, was that of eternal agitation and constant change in our financial system, and under that complaint those Administrations suffered severely, though I believe unjustly. This complaint commenced with the veto upon the Bank in 1832. It was redoubled upon the change of the deposites in 1833; and the agitations in relation to the adoption of some system by which the public moneys might be brought more immediately within the custody of the law, between that time and the passage of the deposite law of 1836 extended and confirmed it. That law had not been in operation one year when the system of finance organized under it broke down, apparently by its own weight, and again change and agitation became indispensable.
The Independent Treasury system was recommended by the President and the fiscal officer of the the Government, and, not meeting the approbation of the then Congress, constituted the subject of continual and heated discussion before the country until its adoption in July, 1840. During all this period every obstruction was thrown in the way of any other settlement of the difficulties than by the recharter of the old National Bank, or the establishment of a new one, by all those who favored the existence of such a Bank; and yet they were among the loudest in their complaints of agitation, confusion, absence of law, and eternal change.
What do these same gentlemen now propose to do ? The Independent Treasury law was passed on the 4th of July, 1840. It is going into gradual operation without any particular hardship upon any interest, but has not yet reached its complete effect, much less been allowed time for a fair and reasonable trial; and already the system must be changed by the action of the very men who have complained so much and so long of change, change. Not only so, but this law must be instantly repealed, without even an attempt to adopt a substitute, thus again throwing the public moneys upon Executive discretion, and opening again the whole vast field of national finance for a repetition of the agitations which prevailed from 1833 to 1836, and again from 1837 to 1840.
And why is this proposed to be done ? Gentlemen do not leave us in doubt as to the answer to this question. They show us that it is to force Congress and the country back upon that old system which has been most patiently and effectually tried, and most clearly and unequivocal condemned by the people a National Bank, connected with, and resting upon, the credit and revenues of the country. This may be reform, but to my mind it seems very much like reform in a circle.
Will gentlemen look back to 1832, see what was then the state of the public mind as to a Bank of the United States, and carefully weigh every manifestation of popular feeling touching such an establishment, from that day to the present ? They will find at every step a great and powerful interest struggling earnestly, but struggling hopelessly, for the attainment of this result; so hopelessly, that even at the elections of 1840, the then Opposition, now Administration party, dare not avow before the people that the establishment of a Bank was a settled and favorite measure of their party. Will they turn their minds to what have been their constant complaints, and the constant complaints of almost all business men, during the long period referred to ?
These complaints have uniformly been of agitation and change. The emphatic language of the business community has been, "Give us any settled system, but let us not be harassed by these perpetual changes. We will conform ourselves and our business to any system you may devise, if you will only allow us time to try its merits and understand its action." And yet now, before a new and untried system has been in operation a twelve month, the very party which led this complaint of constant and eternal change, upon still another change upon the instant repeal of this new system and upon going back to the point of departure in 1833, to start round the circle again. If gentlemen can see stability, uniformity, quiet, upon this path, I confess they can see what I am not able even to hope.
A few words more, Mr. President, and I will relieve the Senate for the present occasion. So much has been already said upon the point I am about to touch; it has been so distinctly presented and argued by the honorable Senator from Illinois, [Mr. McRoberts] in his resolutions for recommitment with instructions, and the sense of a majority of the Senate has been so unequivocally expressed in the vote upon those resolutions, that, but for a most imperious sense of duty, I should pass it over altogether.
The point is this: In what situation will the repeal of the Independent Treasury law, in the form proposed in this bill, leave one portion of the public money, the instant the bill shall be approved and signed by the President ? I refer to that portion of the money in the hands, and to come into the hands, of the Receivers General at Boston, New York, Charleston, and St. Louis. I take these officers, because I can make the argument I wish to present, clearer by so doing, as they hold no other offices, and are charged with no other duties than those of receivers, keepers, and disbursers of the public revenue. In their cases, therefore, I get rid of the contusion of ideas which seem to me to have embarrassed the former debate, by coupling the collectors of the customs, receivers of money for lands, treasurers of the mints, and the like, who hold other offices, have other duties to perform, and give other official bonds, under other and different laws.
I ask, then, what will be the condition of the money in the hands of these four "Receivers General," the moment after this bill shall have received the signature of the President and become the law of the land ? There can be neither doubt nor question, that the moment the law creating their offices is repealed, the offices they hold will drop from them, and they will become, in fact and in law, private citizens, entirely discharged from all future official responsibility. What, then, I repeat, will be the condition of the money in their hands, or which shall come into them, before notice of this law can reach them ?
I will take the Receiver General at New York, the nearest point, for an illustration. That officer must be daily receiving very large sums, say twenty, thirty, fifty thousand dollars, and on some days vastly more than the highest sum mentioned. The persons required to pay over to him are numerous, and the collections of some of them immense. The balance in the hands of that officer, too, must always be considerable. I have made inquiry upon this point, and find there is seldom less than one or two hundred thousand dollars, and sometimes half a million. Two business days, at the least, must elapse, after this bill shall become a law, before notice of the fact can reach him, and those whose duty it now is to pay money to him. For those two days he continues to receive and pay money, ignorant of the fact that he is a mere private citizen, without rights or obligations as a public officer. The notice of the repeal of the law reaches him, and finds him in the possession and occupancy of an office rented by the Government for the use of a public officer who has not, and has not had for two days, any existence. He, therefore, has no further right there. His strong box is in the vault and the keys in his pocket. He makes an examination, and finds that the balance of money in his charge at the moment his office ceased was, if you please, one hundred thousand dollars; that he has received, since that period, and before the notice of the repeal reached him, one hundred thousand dollars more; and that he has paid upon the drafts of the Treasurer of the United States, within the two days of his action without office, fifty thousand dollars; leaving, a net balance of money in his keeping of one hundred and fifty thousand dollars. What is he to do ? No man is now, or has been for two days, responsible, as his surety, for his conduct; his office is gone; his salary gone; and this money is in his hands as a private citizen, without fault on his part. If he be an honest man he will lock the box, and lock the vault, and keep carefully the keys, and the money, until the Secretary of the Treasury shall tell him what disposition to make of all; but if he be willing to help himself, and be flush of money, without any other liability than that of a civil suit in the name of the United States against him as a private individual, for money had and received, he may put the money in his pocket and go where he please, and make what disposition of it he please.
So at Boston, Charleston, and St. Louis, with the important and much stronger exception as to time. The notice, I suppose, might reach Boston in three days, Charleston in four or five days, and St. Louis in from ten to fourteen days, previous to which several periods, these individuals, at these respective places, would be discharging the duties of offices not in existence.
It has indeed been suggested to me since I came into my seat, that their acts would be void, and that payments of money to them would not discharge the payor from his liability to the Government. This is, no doubt, technically true in the law, but would it afford any beneficial security to the public Treasury ? Would anybody, anywhere, attempt to enforce such a liability against a faithful officer in favor of the Government; a liability incurred through no fault of his, but through a voluntary act of the Government, which he could not by possibility have received notice of ? I am sure not. It cannot be that we have yet come to the conclusion to imitate the example of the tyrant of Rome, and post our laws so high upon the columns of the Capitol that they cannot be read, and then punish their violation.
Such then would be the condition into which the country and the public treasure would be thrown by this hasty passage of this repeal bill, in its present form; while the question as to any substitute was a mere contingency. Some substitute may or may not pass at the present session; but until that is done, and until a National Bank can be put in operation, if that shall be the substitute, the miserable remnant of the deposite law of 1836, which has not been made inoperative by the action of the banks themselves, is all which is to prevent the whole public revenue from falling within Executive discretion, exactly where it was after the removal of the deposites from the Bank of the United States in 1833, when the honorable Senator from Kentucky [Mr. Clay] declaimed with so much farce and eloquence against the union of the purse and the sword in the single hand of the President.
Now, if the gentlemen will have a little patience, and endure the sight of the old house a short time longer, they may avoid these consequence which they have so recently considered of extreme danger, and have the further benefit of being able to learn whether they can build a new or, in case of the destruction of the old edifice, will be compelled to remain upon the pavement, or seek shelter for our treasure in the Executive mansion.[end of speech]
In the House of Representatives,August 7, 1841.
Mr. Speaker: I cannot permit an occasion like the present, although so unexpected to me, to pass by without availing myself of the opportunity it affords to submit to the consideration of the House the reflections that have occurred to my mind upon a subject affecting so deeply the institutions and interests of the country.
On yesterday, when the bill to establish the Fiscal Bank of the United States passed this House; it seemed to be the general understanding, without exception, (so far as I knew,) that there would be no attempt to take up the bill under consideration until some period during the coming week to be designated with reference to the convenience of members generally many of whom are now absent, and most of whom desire some little time for relaxation. The conclave deliberation of the night, however, have decreed otherwise; and I was not a little surprised a few moments since, when, after having been absent during the morning hour with a view to give some attention to the numerous matters of private interest committed to my charge by a portion of my constituents, I found that, under a resolution adopted by the House this morning, the bill under consideration had been taken out of the Committee of the Whole, and brought here for immediate action.
With all the time and opportunity I could desire to qualify myself for the task of addressing this House, I should have abundant cause for hesitation in the attempt. Much more, sir, under such circumstances as exist at this moment, do I feel that hesitation, and the embarrassment growing out of it.
The bill under consideration proposes to abrogate the Independent Treasury system, or, as it is more commonly denominated, the Sub-Treasury system.
I consider it unfortunate for the country, as I have done from the commencement of the discussion of this great measure of reform, that it is its fate to be decided upon and disposed of by a Legislature acting under the influence of strongly excited partly feelings feelings which seem to me to have had their origin more in circumstances growing out of the ambition and contentions of aspirants to power, than in deep and sincere convictions of public interest.
Separate it from the party excitements of the day, and permit it to address itself in the sober sense, the justice, and patriotism of all parties of the whole country and I doubt most sincerely whether there would be found a solitary thinking man, with justice and patriotism in his heart, who, under a full comprehension of its merits, would deny either the wisdom of its principles, or the justice of its purposes.
The great purpose and aim of the Independent Treasury system was to reassert and establish the principles of the Constitution; principles whose strict conformity with the Constitution ay, sir, whose composite essence with that instrument has never been denied, and is undeniable. The fiscal action of the Federal Government from the period when it first connected itself with and adopted the banking system, in the establishment of the first Bank of the United States in 1791, and of the State Governments in following out, and indeed going to the greatest excesses beyond, the example of that Government had been at war with those principles. The disastrous evils which afflicted the country at many memorable periods in its history, and the certainty of a never ending recurrence of those evils, were regarded as the natural and unavoidable results of such departure from the principles of the Constitution. And who will deny that the misfortunes of the country at this time the heavy embarrassments of both the people and Government are consequences to be attributed to the same source ?
It was, therefore, deemed the duty of the Government to recur to the principles of the Constitution; and, through the instrumentality of the Independent Treasury system, to bring the whole weight and influence of its fiscal action to bear in their re-establishment.
The distinctive, essential principles of this system are
First. The separation of the pecuniary transactions of the Government from the pecuniary transactions of banks and individuals.
Secondly. The recognition and maintenance of the gold and silver standard of value, designed to be established and perpetuated by the Constitution.
Third. The protection, by severe penalties and ample guarantees, of the funds of the Government from peculation and embezzlement.
These are the elements of the system; in their nature, simple, just, and constitutional.
Now, sir, in all candor and sincerity, permit me to ask, is there a man upon this floor who advocates the doctrine that the money of the Government, raised from the taxes levied upon the people, should be used to provide banks with capital to bank upon, or individuals with facilities to trade upon ? Separating the subject from the party topics and associations of the day, and guided by the impartial dictates of conscience and patriotism, will any man can any man contend that the money of the Government, the proceeds of the labor of the people, levied by taxation to defray the expenses and afford them the protection of Government, should, by any policy, or under any system, be involved in the hazards of individual enterprise and speculation, or made a fund for bank loans and bank issues ? Will any one aver, after all that has occurred within our knowledge, that the individual appointed to take care of the public money should be permitted nay, encouraged to employ it in his private transactions, or in loans to others ? and, if not individuals, that banks should be permitted to enjoy a privilege so dangerous, so unjust, and unconstitutional ?
Apart from the prejudices of party, which, unhappily, so often influence the conduct of men against their judgments, I do not believe there are those here sure I am that there is no considerable portion of the mass of the people who would sanction such a doctrine. And yet, sir, to deny to individuals and banks this privilege, and to adopt the necessary guards for the protection of the country from the consequences of its exercise, were amongst the leading purposes of the Independent Treasury system, and the strongest considerations that contributed to its adoption.
May we not hope that, when the violence of party strife subsides, and reason resumes its wonted sway over the public mind, the advancing intelligence of the age, the increasing power of truth and justice, will rescue a policy so evidently just, from the prejudice and persecution which ambition, cupidity, and partisan fanaticism have engendered against it ? To doubt it, would be to doubt the ultimate triumph of moral virtue and free institutions.
The financial policy of the Government is intimately connected with the currency, or money of the country; and it is from this connection that the subject derives the very great and deep interest with which it seems to be universally regarded. Let us advert, for a moment, to the doctrines of the Constitution upon this interesting part of the subject.
The fifth clause of the 8th section of the 1st article reads as follows:
"The Congress shall have power to coin money, regulate the value thereof, and of foreign coin, and fix the standard of weights and measures."
I was forcibly struck, a few days since, by the interpretation put upon this clause by a gentleman from Virginia, [Mr. Botts] in his speech upon the bill to establish the Fiscal Bank. From language so intelligible, terms so explicit, he deduced conclusions which, of all "abstractions" I have ever before heard or read, seemed to me to be the most absurd the most supremely ridiculous. I quote from the remarks made by him, as follows:
"But I pass on to the fifth clause, which gives the power 'to coin money, and regulate the value thereof, and of foreign coin.' Upon this power I wish to dwell a while; and, first, I desire to call attention to the peculiar phraseology of this clause: it its not to stamp coin, and regulate the value thereof; but 'to coin money, and regulate the value thereof and of foreign coin.'
"Let us, in the first place, ascertain what money is. I maintain that whatever receives the stamp or impress of Government as money, and is received in payment of public dues, and passes from hand to hand as money whatever composes the circulating medium of a country is money, to all interests and purposes; and upon this subject I propose to introduce some authority.
"In Rees's Encyclopaedia, it will be found that 'money, in commerce, is a general term for coin, paper, or any other measure of value, or representative of property, that passes, current from hand to hand as a circulating medium.'
"Again: 'By real money is understood coin, or any other circulating medium.' 'Seneca observes there was anciently stamped money of leather.' 'The Hollanders, we know,' says the same work, 'coined great quantities of pasteboard in the year 1574.'
"The Encyclopedia Britannica says: 'The term money is used to designate whatever commodity the inhabitants of any particular country, enter voluntarily or by compulsion, accept as an equivalent for their labor, or for all the commodities they have to dispose of.'
"Authorities on this subject could be multiplied to any extent. We have now seen what money is; and we have also seen that the term of the verb to coin is applicable to other money than metals; and that money is whatever constitutes the currency of a country.
"Now let us see what is meant by the power to coin; and I wish particularly to call the attention of the committee to the difference between the substantive coin, as 'foreign coin,' spoken of in the Constitution, and the verb to coin. The substantive 'coin' undoubtedly relates to metals; but the verb has a very different signification. Although it will apply to metals, it is by no means confined to them.
"Webster says. 'To coin, is to stamp a metal and convert it into money; to make, to forge, to fabricate.' 'Coining,' 'the act, art, or practice of stamping money.' Then Congress has power to coin, to stamp, to make, to forge, to fabricate money, and regulate the value hereof; and what Congress is authorized to do, it can empower an agent to do."
From the terms "to coin money, and regulate the value thereof and of foreign coin," he deduces, through the aid of learned definitions, an unlimited power, on the part of this Government, to adopt and legalize any substance whatever, as the money of the country. An impress or stamp of the Government's authority upon such substance is all that is necessary to give it the character of, and make it pass as money.
Sir, to advocate a doctrine of this sort implies a want of information, or a degree of indifference as to the history of the States in their colonial condition; of their proceedings in the formation and final ratification of the Constitution; and as to the palpable import of the Constitution itself, truly astonishing "passing strange." Waiving all other facts and considerations to be derived from these sources affecting the question, does the gentleman not known that the Constitution itself furnishes a definition of the word "money" of far higher authority, and more solemn sanction, than all the encyclopaedias or lexicographic compilations of ancient or modern times ?
The first clause of the 10th section of the 1st article of the Constitution is in the following language:
"No State shall enter into any treaty, alliance, or confederation; grant letters of marque and reprisal; coin money; emit bills of credit; make any thing but gold and silver coin a tender in payment of debts; pass any bill of attainder, ex post facto law, or law impairing the obligation of contracts; or grant any title of nobility."
"No State shall make any thing but gold and silver coin a tender in payment of debts." And pray, sir, what is the peculiar office, the purpose the use of money ? Confessedly to serve as a medium for the payment of debts debts contracted in the purchase and sale of property; as a medium to effect the exchanges of property, and by which all the transactions of trade, commerce, and speculation, are, to a greater or less degree, conducted. The amount of a debt is the amount of the value of the property bought or sold, measured in money gold and silver money; and no State can make or enforce any thing as money, or a legal tender in payment of such debt, but gold and silver coin. Here, then, is a clear explicit, and imperative definition of "money," furnished by the highest of all authority with American statesmen the Constitution. It is the "gold and silver coin" of the Government alone legalized to pay debts.
Can the Federal Government make any thing but "gold and silver coin" a legal tender in the payment of debts ? It would not be all surprising if the reasoning of the gentleman from Virginia upon the learned definitions quoted by him were to lead him to such a conclusion. Indeed, if the Federal Government has the constitutional authority to enact that "stamped pieces of pasteboard," or "leather," shall be the money of the country, does it not follow that the power to maintain such a currency to enforce the use of such substances as money must necessarily result; and that therefore the Government can further enact that the payment of a debt, or a tender in payment of a debt, of such "stamped pieces of pasteboard or leather," shall entitle the debtor to discharge from his obligation ? Can the gentleman avoid such a conclusion from the premises he has laid down ? But I will leave him in the labyrinth, to grope his way out the best he can.
The 10th article of amendments to the Constitution reads thus:
"The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people."
We have seen that the power to make any thing but gold and silver coin a tender in the payment of debts is expressly withheld from the States; nor is it anywhere enumerated amongst those delegated to the Federal Government. It is not a "necessary and proper means" to carry into effect any of the "delegated" powers; it is not incidental or auxiliary in its nature to any of those powers. The right of the individual citizen to the payment of his debt in gold and silver coin secured, as it is, by an imperative prohibition upon the power of the States to infringe upon or invade it, and the withholding all power to do so from the Federal Government, with the declaration that all powers not granted to that Government "are reserved to the States respectively, or to the people" can never be made the subject of hostile legislation on the part of this Government, consistently with the Constitution.
The States may make gold and silver a tender in payment of debts, when the same is coined into money under the authority of the Federal Government, and the value thereof definitely fixed by such coinage; or, if in the form of foreign coin, by an act of the Government, fixing the rate of value at which the same shall pass as money.
Beyond this, the powers of the Federal Government are limited to such means as are necessary and proper to protect the purity and genuineness of its coins; to encourage their retention, and use in the business of the country, and prevent the substitution of any other substance as a standard of value, or legally authorized medium for the payment of debts.
But I am told that Congress has the power to regulate the commerce, currency, and exchanges of the country. It is true that Congress has power, and is under a constitutional obligation to regulate the commerce, both foreign and domestic, of the country; to pass all laws necessary to the protection, safety, and promotion of that commerce. But the terms "currency and exchanges" are nowhere to be found in the Constitution; nor are there any delegations of authority respecting the same, except such as have already been alluded to. The idea of the power of the Government "to regulate the currency" is so prevalent throughout the country, that I have often met with gentlemen, otherwise well-informed, who were really of opinion that the Constitution contained a distinct clause, in so many words, conferring upon the Government power "to regulate the currency." But, sir, the word "currency" is a term unknown to the Constitution an exotic term not found in any clause or part of that instrument.
The power to regulate a "pasteboard" currency, or a "leather" currency, or a "paper" currency, is equally foreign to that instrument. Nor can it be deduced from any of its terms, except through the astute abstractions of a "sky scraping" class of politicians, drawn from the antique definitions and learned synonyms of "Seneca" and "Webster," of "Rees's Encyclopaedia," or the "Encyclopaedia Britannica," or other such authority, whose mention indicates more of pedantry than of sound, constitutional doctrine or good sense, as I humbly conceive. When, therefore, the power of the Federal Government "to regulate the currency" is considered, the term must be limited in its sense to what may be justly called the constitutional currency gold and silver coin.
I readily admit and recognise the constitutional power nay, sir, the constitutional duty of the Government to regulate such a currency; to pass all laws "necessary and proper" to guard its soundness and to promote its use and circulate on to a degree co-extensive with the increasing demands of trade and commerce. Such I take to have been the character of the power exercised in the establishment of the Independent Treasury system, and such the purpose and tendency of its practical operations. Restraint upon the power or right of the States to employ all constitutional means for the encouragement and support of credit, public or private, constitutes no part of the framework or intendment of the system. So far as credit and currency are concerned, its effect is simply to confine the Federal Government, in the collection and disbursement of its revenue, exclusively to the use of gold and silver. The effect of an exclusive use of the precious metals by the Government, in the collection and disbursement of its revenue, must necessarily be to increase the demand for those metals at home; to cause a much greater proportion of them to remain here after they are imported, in exchange for the productions of the labor of the country, and find employment in the various channels of business, and thus enlarge and render more solid and worthy of confidence the basis of credit, currency, and commerce.
To maintain a gold and silver standard of value, and practically a gold and silver medium for the payment of debts, so far as the effects and influence of the fiscal action of the Government will tend to such a result, is, in short, the purpose and the modus operandi of the Independent Treasury system. And, sir, who will deny that a policy leading to such results is not rigidly enjoined upon the Government by the whole spirit, tenor, and letter of the Constitution ? A denial of the proposition is indeed matter of surprise.
Turn your attention for a moment to the monetary condition of the country. What are the facts ? We have indeed but little money, or of that which is a true representative of money, in circulation in the country. We have a currency consisting almost exclusively of promissory notes, or "bills of credit," issued by banking corporations, which are employed in the business transactions of the country, to the exclusion of the money of the Constitution; its exclusion, not only from those business transactions, but even from a local habitation in the country.
I find in document No. 111, reported by the Secretary of the Treasury to the House of Representatives on the 3d of March last, the following table, which gives a "comparative view of the condition of all the banks in the United States, near the commencement of each year, from 1834 to 1840, inclusive." The information contained in this table, and in the voluminous document from which it is taken, is of great value and utility, and should be the subject of reflection and investigation by every individual who desires to acquire an accurate knowledge of the present condition of the currency and banking institutions of the country, and of the causes which have brought about that condition.
It appears from this table that the whole number "of banks and branches in operation" throughout the country amounts to 901; the amount of their "capital paid in," $353,442,692; "the aggregate of debts due them, or of investments supposed to yield income," $559,082,772. Estimating the average rate of interest throughout the country at seven per cent. the profits realized by the banks at that rate, upon this aggregate of debts due them, amount to $39,135,793.
This vast sum ($39,135,793) largely exceeds the whole amount of taxes paid by the whole amount of taxes paid by the people to defray the expenses of the General Government; and, upon an accurate calculation, I have no doubt will be found to exceed the whole aggregate of the taxes paid by the people to defray the expenses of both the General and State Governments.
This yield of profit upon "the capital paid in," (to wit, $358,442,692) shows the rate of interest actually realized or charged upon the country by the banks to be a fraction within eleven per cent.
Now, sir, will any man deny that, under this aspect of the subject, the whole system of bank-machinery, as as here exhibited, is hostile to the interests of the producing classes of those who earn their bread and their wealth by the sweat of their face, in whatever calling they may be engaged ?
In what branch of honest industry and regular business can a man afford to borrow and employ capital at the rate of eleven per cent. per annum ? Can the planter or the farmer at this rate afford to borrow the capital which he invests in his lands, stock, provisions, and implements ? or the mechanic the capital which he invests in his tools, his lumber, his iron, his cloth ? or the merchant the capital he invests in his trade ? No, sir. Who, then, can afford to employ money at this rate ? No one but gamblers at the faro bank or the roulette table, or some other branch of their vocation speculators and stockjobbers, money-shavers and note-shavers, whose business grows out of the embarrassments and sufferings of their fellow men, brought about by the seductive influences of this system.
Such is the tax levied by the banking system in all the various forms of its influence and operations upon the country; or, rather, upon the producing classes of the country, upon whom all the burdens of society rest. Its tendency is to increase the number of gamblers, of speculators, and stock jobbers, of money-shavers and note-shavers, and of idlers and drones, throughout society, wherever it operates; to render the human heart callous and indifferent to human suffering, covetous and avaricious; to distract the mind with sudden, and often ruinous changes of fortune; to breed discontent and misery, demoralize society, and counteract the holy influences of religion. And pray what are the advantages claimed for society, in compensation for the foul suppurations issuing from this fungus upon its body ? Why, sir, the poor, miserable nay, I mistake, according to modern philosophy the very great and inappreciable advantage of using the uncertain and fluctuating paper credits of banks as the currency of the country, instead of the gold and silver coins of the Constitution, which would rapidly fill up and occupy the channels of circulation, if they were not expelled and kept out of the country by the circulation of bank paper and the errors of bank financiering.
The last item in the statement before alluded to represents the nett circulation of the banks which means, I suppose, the actual amount of paper circulating in the hands of the people to be $86,170,680.
To this we must add the item of deposites, which in all of the commercial cities constitutes the most effective part of bank circulation, being represented by checks and transfers of credit on the books of banks .....75,696,857.
The whole amount of bank circulation thus being .....161,867,537.
In addition to this, there is estimated to be in the country partially circulating, but mainly hoarded up, an amount of the precious metals somewhere between forty and fifty millions say ....$45,000,000.
But it is the paper part of the currency that I am now considering, and to which I shall confine my remarks.
From a hasty examination of the document to which I have referred, (No. 111,) I came to the conclusion that something near two thirds (600) of all the banks in the Union, wielding about the same proportion of the aggregate banking capital, are now in a state of suspension, and that something over two thirds of the whole aggregate of the bank currency of the country consists in their paper and credits. The proportion, then, of bank circulation not convertible into specie, and now used by the people as the major part of their currency, may be estimated at something near $110,000,000. The different kinds and classes of paper comprising this mass are variously depreciated below specie par throughout the Union, varying from three per cent. as the minimum, to fifty per cent. as the maximum rates of depreciation; and this, sir, the privilege of using the paper credits of banks as currency, liable, in whatever form the system may exist, with or without a National Bank, to such depreciation, fluctuation, and instability in value is the great advantage realized by the people in consideration of the heavy tax annually levied upon them to sustain the expensive machinery and usurious profits of the banking system. And here, sir, I beg to call your attention to a most interesting part of the subject, which constitutes the ground of daily and unceasing complaint here and throughout the country. I allude to what is generally termed "the derangement of the exchanges," growing out of this disordered condition of the currency. The evils growing out of the inequalities in the value of bank notes, and the consequent apparent difference in the rates of exchange, are numerous and very perplexing. But I must further say, that in reference to few subjects within my knowledge does a greater degree of misapprehension and error pervade the public mind, and the minds of many gentlemen here, whom I have heard speak upon the subject.
The depreciation, of bank paper, and the inequality of that depreciation, are often, and indeed generally, characterized as "the derangement of the exchanges;" and the degree of the depreciation of bank paper below specie par is held and regarded as the degree of "the derangement of the exchanges; as exhibiting the degree of the difference or inequality in the rates of exchange. This view of the subject is totally incorrect and untenable.
The exchanges between any two points as, for instance, between Mobile and New York may be entirely equal, whilst the local currencies of the two places may be greatly unequal in value, and when exchanged one for the other, would exhibit that inequality in a striking manner, as do the local currencies most generally throughout the Union at this time. During the last winter, the notes of the Bank of Mobile and of the Planters and Merchants Bank, (both specie paying banks,) at Mobile, bought checks and bills of exchange on New York at par, or within a fraction of par; whilst, at the same time, the notes of a non specie paying bank on another street in the same city, (to wit, the branch bank at Mobile,) with a capital paid in of four millions of dollars, could not buy a check or bill on New York short of a premium of ten or twelve per cent. Now, in this case, the premium of ten or twelve per cent. paid for a check on New York in the notes of the branch bank, shoved the degree of the depreciation of the paper of that bank below the specie standard. It did not show any difference or inequality in exchange; for the fact that the notes of the other two specie paying banks would buy exchange on New York at par, proved the exchanges to be equal. By exchange, we mean the exchange of value in one place for value in another; not the nominal amount of bank notes in one place for the same amount of bank notes in another; but the value of said amount of bank notes in specie in one place, for the same value in specie in another.
The depreciation of bank notes below specie par does not arise from any inequality or "derangement of the exchanges," but from the failure of the bank or banks issuing them to redeem them in specie. Whenever bank paper is not convertible into specie, its value must necessarily fall below specie par the rate of depreciation being regulated or controlled by a variety of circumstances; as, for instance, the quantity in circulation in proportion to the demands of business for a circulating medium; the indebtedness of the community in which it circulates to distant or foreign communities, growing out of their commercial intercourse; the prospect or probability of its early or ultimate redemption in specie; and other circumstances that influence the condition and use of credit and currency. It is, indeed, possible that paper not convertible into specie may be kept at par with specie; but such a state can only result from the force or especial policy of law, attended with a rigid limitation of the quantity of such paper in circulation to a scanty supply of the demand that may exist for a circulating medium.
And, on the other hard, whenever bank paper is readily convertible into specie, it is at once and thereupon at par with specie sometimes, indeed, a shade above specie par, (especially silver par,) in consequence of its greater portability and convenience for heavy business transactions. It is only when the bank note currency of a place is in such a condition, that its exchangeable value can be regarded as indicating accurately the true rates of exchange. And when the local currency of a place is in such a condition that is, when it is convertible into specie the rates of exchange with other places having the same sort of a currency a specie paying currency are regulated exclusively by the action of trade, and the cost of transporting specie from one point to another. At neither of such points will the depreciation of bank paper below specie par exist, and consequently afford cause for misleading and bewildering the mind in regard to the true rates of exchange.
A merchant of Mobile or New Orleans, for example, will not pay five, ten, or fifteen per cent. premium for a check or bill of exchange on New York, when by calling at the counter of the bank he can exchange his Alabama or New Orleans banknotes for specie, which in a very few days he can ship or transmit to New York at a trifling cost, not exceeding from one to two and a half (1 to 2½) per cent. It is the circumstance that he has it in his power to withdraw the specie from the vaults of the Bank, and transmit it so cheaply to the desired point, and the certainty that he will do so rather than pay a high rate of exchange, that places the Bank in his power, and compels it to furnish him with Northern funds, or such funds as his necessities require, at a low rate of exchange.
The merchants at the commercial points in the South, and, indeed, throughout the world, are by these means enabled to command the exchanges; to fix their rates within just limits; and at such rates, thus established at the commercial points by the mercantile operations of those points, the whole surrounding country is accommodated, and all foreign payments and distant monetary transactions performed. Specie-paying banks are compelled to keep on hand an abundant supply of exchange to accommodate the commercial wants of the country; otherwise, their specie will be drawn from their vaults; and, finally, a suspension of specie payments rendered unavoidable.
And I will take occasion here to remark, as I pass on, that it should ever be an invariable, unalterable rule of conduct for every bank, at every commercial point in the Union, never to issue a solitary dollar of its paper for circulation; except upon a basis composed of the specie in its vaults, and available bona fide bills of exchange, drawn upon the transfer or sale of the commodities of commerce. The amount of its notes in circulation should never exceed the aggregate amount of its specie in vault, and of real business bills of exchange, drawn upon the products of the labor of the country. A bank should never discount even the genuine business notes, representing the real substantial business transactions of the community in which it is located, except with its actual capital. Capital alone should be the basis or means of such discounts; and never should a bank venture to issue a dollar of its paper upon credit except in the discount of genuine available bills of exchange, which, within a reasonably short period, will yield a return in specie or specie funds.
Under a rigid adherence to this rule, the evils which have afflicted the country heretofore, and which now weigh so heavily upon it, from a blending of the functions of issue and discount in banks, would be averted; order and uniformity restored to the currency; equality to the exchanges; soundness and health to trade and credit. A sound specie-paying currency, adequate to the just demands of business, would be the result of such action of the banks; and this is what the country wants, and all that the country wants.
We have seen, however, that $110,000,000, or two-thirds of the whole bank currency of the country, are not convertible into specie; and consequently are depreciated variously depreciated below specie par in different quarters of the Union. This depreciation, and the varied degrees of it, raising from three and five per cent, to as low as fifty per cent. do not at all show, as we have also seen, any inequality or derangement of the exchanges; but exclusively the degree of credit, or rather of discredit, attached to each description of bank paper, of which the whole mass is composed. Whenever gold and silver coin is the standard of value, as in the United States and throughout the commercial world, the exchanges serve as a barometer to test the value and credit of the local currencies of the different states and nations trading with each other.
It is plain, that if all the non-specie-paying banks of the Union were to resume and continue the payment of specie upon their notes, the inequalities that now characterize the comparative value of their paper would immediately disappear, and, in common phrase, the exchanges become regulated. And it necessarily results from this, that the existing suspension of specie payments by the banks is the direct and immediate cause of all the disorders of the currency and "derangement of exchanges" complained of.
Why, then, do the banks not resume specie payments, and restore soundness and uniformity to the currency, and equality to the exchanges ? Ah, sir, this is a pregnant question. It is easily answered; but the answer discloses the latent cause, the real root of all the ills that afflict us. Some there may be that will not resume, from the want of inclination; but few there are, I take it, that can resume, because of the want of ability.
In the document already quoted, we find the aggregate of loans and discounts due the banks stated to be $462,896,523; and it will be not far from correct to suppose two-thirds of this sum to be due to the banks now in a state of suspension. Now, sir, the unfortunate individuals who bear the relation of debtors to these banks are unable to pay this immense mass, this usurious accumulation of debt. The sum of $308,587,682 (two-thirds of the above aggregate) due them from insolvent and embarrassed debtors, does not present a description or character of resources immediately available of debts so easily collectable.
The indebtedness of individuals to one another of the people among themselves if we are to pay any respect to what is said here in favor of the passage of a bankrupt law, is immense indeed, incalculable.
To what source are the debtor classes to appeal for relief from the galling bondage that oppresses them ? The enactment of a bankrupt law may relieve such as are hopelessly insolvent; but the effect of such a law is the annihilation, not the payment, of debt. And under its operations an immense proportion of the debts due the banks may be annihilated, but not paid. The banks may, and in all probability will, be greatly weakened. A great deal of property held by bankrupts will be disposed of at forced sales, with a view to the distribution of the proceeds amongst creditors, under the operations of the law. The consequence of this must be a very great decline in the prices of property; and a further unavoidable consequence of such decline will be, the bankruptcy of a vast number of embarrassed debtors, who, at the present prices of property, by the sale of a part of their effects, and hard labor, economy, and industry, would be enabled finally to relieve themselves.
The true and only means of relief with that class of debtors who are not insolvent, but still oppressed with debt, are to be found in a resort to labor, economy, and persevering industry. By the employment of such means alone, debts to the banks and debts to one another can be discharged. The payment of debts to the banks will enable them to realize their assets, and resume specie payments; and the resumption of specie payments will restore the currency, "equalize the exchanges," and relieve the country from innumerable evils. To accomplish this great work, time, patience, perseverance, and prudence, are indispensable requisites. The country requires, repose freedom from political agitation and party strife. Men must learn to rely upon their own individual resources as the only sure means of relief from debt and of the attainment of wealth.
Government should do its duty in maintaining, with rigid fidelity, as far as its constitutional powers will enable it, the gold and silver standard of value ordained by the Constitution; its influences will be to encourage labor, industry, economy, and all the virtues that make the good man and patriotic citizen; to coerce banks in a strict line of duty, purify the currency, and support sound credit.
These, and these only, are efficient means of relief for the debtor classes, the banks, and the country, as time, the unerring test of the efficiency of all human expedients, will abundantly prove.
Debt is the disease of the country, the source of oppression to individuals, and of embarrassment and discredit to the banks; the cause of want of uniformity in the currency, of the derangement of the exchanges, and of the general prostration of credit. Time, labor, and economy, are the only remedies for this disease.
But we are told that this process of restoration and relief is too dilatory, if not uncertain; that there is a nearer and more approved way for the pursuit and accomplishment of these great objects. The bill which passed this House on yesterday, incorporating a Bank with enlarged and national powers, is presented to the country as being calculated to afford an infallible remedy for the evils we complain of. Is it true that the country is to be relieved by such means ? Let us reason the case.
Will this Bank, when established, grant indulgent loans and accommodations to the debtors to the local banks ? If so, the time would not be far distant when, to the thousand instances we have already had, there would be added another on a grand scale of bank failure. The late Bank of the United States attempted, in the commencement of its operations, to pursue this policy; and by it was brought to the very verge of bankruptcy and ruin. Instead of being relieved, the country was plunged still deeper in debt, and the evils that were attempted to be remedied aggravated a hundred fold. If this Bank is to be managed in a way to accomplish the purposes contemplated in its institution, (which, permit me to remark, are as far above its power to accomplish as heaven is above earth,) it will be the studious object of its care to avoid all connection with the debtor classes.
Loans to the debtor classes will prove unavailable in a time of need; they will be so much of the capital of the Bank sunk for the time being, for the accommodation of the borrowers; and such a policy would be wholly incompatible with the duties of the Bank in keeping itself always in a Condition to redeem its paper and preserve the soundness of its credit. Managed with a view to sustain its own credit and supremacy, the result of its practical operations must be to aggravate the embarrassments of the debtor classes; to circumscribe the credit and operations of the State banks; to diminish the amount of the circulating medium of the country, and reduce the wages of labor and prices of property even below the specie standard. The effects of such a policy, connected with the effects of the bankrupt law which it is proposed to pass at this session, may be attended with the most disastrous consequences; may convulse the country, under mine the interests, and blight the hopes, of thousands of unsuspecting men.
And yet, sir, if the Bank should pursue a contrary policy should exercise liberality and indulgence in its discounts to individuals, and in its relations with local banks, in the present uncertain condition of credit and of individual and corporate responsibility it could scarcely avoid a catastrophe fatal to itself, and the very interests it might endeavor to sustain. In almost any event, be it ever so wise, ever so pure, so unlike all other creatures of its kind, all other examplars which have gone before it, and gone the way of all flesh, it will fail, signally fail, in the accomplishment of the great purposes contemplated in its establishment.
Whenever the day of final relief arrives, the day which will bring with it the blessings of a sound currency, a uniform stable standard of value, and disenthrallment from the bondage of debt, there will remain not the shadow of a doubt as to what the true means of relief may have been. Time will prove those means to have been a happy change in the moral habits s of the people a change of habits of extravagance, prodigality, luxury, and their great attendant levers, financial quackery and fraud, for the simple, but high and noble, virtues of economy, honest labor, frugality, and industry.
This Bank, if it may not itself have foundered upon the shallows and rocks that lie athwart its path, and thus postponed the period of final deliverance and liberty, will still be regarded as having performed an in considerable, if not unworthy, part in the great reform. The productive energies of the country, liquidating debt at home and abroad, pouring into foreign markets the rich fruits of our labor, and yielding in return a full stock of the precious metals, by which alone the currency can be restored and the regular operations of trade and business promoted to prosperous action, will be acknowledged and regarded as having afforded the only substantial means of relief.
But, sir, let us take a little nearer view of the operations of this Bank, as regards their connection with and bearing upon the currency. The history of the late Bank of the United States, whose capital was $35,000,000, will materially aid us in this view. I find in the same document to which I have already referred, the following table, exhibiting annual statements of the condition of that Bank from the year 1817 to the year 1840; the three last of which were years embraced within the period of its recharter by the State of Pennsylvania:
Notes. The statements are for February, in 1817; for March, in 1818; and for January in each succeeding year.
In addition to the assets mentioned above, the United States Bank appears to have had "other investments" of the amount of $10,809,232, on the 1st of January, 1838; of $10,872,734 in January, balances 1839; and of $239,864 in January 1840; these being the nett balances due to it at those dates by its officers and State bank agencies.
Under the head of "other liabilities" are included "post notes," "bonds to the United States," and "interest on bonds to the United States."
From this table we perceive that the annual average amount of paper which this Bank was enabled to keep in circulation during the five years ending with the year 1821, which was the first five years or quarter of its existence, amounted to ....$4,994,186.40
Annual average amount for the five years ending with 1826, the second quarter .....6,026,059.60.
Annual average amount during the five years ending with 1831, the third quarter ....11,896,430.80.
Annual average amount during the five years terminating with its national charter in 1836, the last quarter of its existence ....19,699,507.80.
It is due to the country, and most especially to that large and respectable proportion of the people who honestly believe that a National Bank ought to be established, with a view to the regulation of the currency, that the manner in which the powers of this institution were exercised to that end, as exhibited by this table, should be thoroughly understood. The different items of this table were taken from the quarterly returns made by the Bank to the Treasury Department, under the requisitions of its charter; and from it we perceive that the annual average amount of the notes issued and kept in circulation during the last quarter of its existence under its national charter, was more than four hundred per cent. greater than the annual average amount issued and kept in circulation during the first quarter, or in the proportion of $19,699,507 to $4,934,186; and that the same amount was more than three hundred per cent. greater than the annual average amount during the second quarter, or in the proportion of $19,699,507 to $6,026,059; and nearly one hundred per cent. greater than the annual average of the third quarter, or in the proportion of $19,699,507 to $11,896,430.
In order that a full view of the whole truth may be taken, I beg leave to refer to another table in the same document, headed "A condensed statement of the condition, at different periods, of all the banks of the United States."
In this table the amount of bank paper in circulation in 1830 is represented to have been
In 1836 ......140,301,038
In 1837 ......149,185,890
The increase of the paper circulation from 1830 to 1837, (which period includes the last five years of the operations of the United States Bank under its charter by Congress,) was within a fraction of one hundred and fifty per cent.
Will it be pretended that the population, business, trade, industry, or the real business wants of the country for money, increased in such a ratio during this period ? No, sir. Why, then, this extraordinary increase in the amount of bank paper in circulation ? Could it have resulted from any other than motives of speculation, cupidity, avarice, ambition, and recklessness ? And was it not under the authority, under the lead ay, sir, under the influence of the example of the Bank of the United States, that the currency was thus bloated; the prices of property enormously increased; speculation and overtrading engendered in all branches of business, domestic and foreign; debts and credits accumulated indefinitely at home and abroad; and the fatal seeds of all the ruin and embarrassment with which the country has been afflicted since the year 1837, sown broadcast throughout the land ?
And, during the whole of this period of artificial excitement and intoxication, was this Bank not under the direction of a president and board of directors lauded by politicians, from the highest to the lowest, in Congress and out of Congress; by the newspaper press and partisan leaders from one end of the country to the other, as affording, by the bright example of their course, eclipsing evidences of the highest order of wisdom, moral virtue, and patriotism ?
Sir, let the stubborn truths exhibited in the tables to which I have referred, and called up by the recollections of all who hear me, answer these painful interrogatories. And be it remembered, too, that the stock of this Bank, which, during the period of artificial excitement, engendered by its own operations, commanded regularly, at the board of stock-holders, from 125 to 130 cents on the dollar, is now a drug upon the market at from 8 to 10 cents on the dollar; and that its notes, which enjoyed such high credit, and sold at such heavy premiums for remittances from South to North, are now at a discount of from thirty to forty per cent. below New York currency. He will prove a false prophet who predicts the total loss to the stockholders of the whole capital (amounting to thirty five millions of dollars) invested in the stock of this Bank, and a loss to the holders of its notes of at least 40 per cent. upon their nominal value, whenever the day arrives for the liquidation and final settlement of its affairs.
But, sir, to return to the bill under consideration. What is the proportion of the whole paper currency of the whole aggregate amount of bank note circulation, which this Bank, when in successful operation, will be capable of furnishing to the country, with safety to itself ? From the data furnished in the table CC, we find that the average amount of the circulation of the late Bank during the first ten years of its existence, was but a fraction above $5,500,000 per annum; and I infer from the data to be found in another table, (GG) as well as other sources, that this sum constituted about the one-twelfth part of the whole bank note circulation of the country.
During the latter ten years of its operations under its charter by Congress, including its disastrous expansions through the series of years from 1832 to 1836, both inclusive, I have estimated, from the data to be found in these tables, and other sources, the proportion of the whole circulation furnished by the bank at double the amount furnished by it during the first ten years, or at one-sixth part of the whole. The annual average of the circulation of the bank during this period was $15,797,969, which, at the rate estimated, would yield an average aggregate circulation per annum for the whole country, during the same period, of $94,787,814.
The results of these estimates brought together, are an average annual circulation from 1817 to 1826, both inclusive, of .....$60,000,000
The proportion furnished by the United States Bank, being one-twelfth of the whole amount .....5,500,000
Average annual circulation from 1816 to 1836, the latter included ....94,787,814
Proportion furnished by the United States bank, being one sixth of the whole amount ....15,797,969
From the fate which has befallen it, it is plain that the late Bank overreached itself in endeavoring to furnish so great a proportion of the aggregate circulation as it did in the latter stages of its existence; and it is equally plain that the Bank proposed to be established by the bill which passed this House on yesterday will be still less able to furnish an equal amount.
In the first place, its capital is less by five millions.
In the second, the competition which it must meet with from the State banks will be nearly treble that which the late Bank had to contend with from the same source. By reference to the tables already alluded to, it will be seen that, both in respect to the number and capital, the State banks are well-nigh three times greater or more powerful than at the most prosperous period of the existence of the late Bank; and it will be a natural and unavoidable consequence that they will share in a corresponding degree the business of bank loans, discounts, and issues.
And last, though not least, the Bank now about to be established is confessedly a party machine an Executive bank. It springs into existence from a spirit of party vindictiveness; it was forced through this House by a degree of party violence, of disregard to parliamentary usage, and all the time-honored forms of legislation, which, I venture to say, was never before witnessed in the deliberations of an American Congress. Yes, sir, it is the offspring of party exultation the trophy of a miserably achieved party victory the monument of pride and power on one side, and defeat and proscription on the other. In its organization it presents a most extraordinary and shameless union between the money and political power.
The Government is to own one-third, and in a certain contingency more than one-half of its capital. It is to be governed by nine directors, one third of whom are to be appointed by the Executive. These directors are to be salaried officers, residing in the corrupt political atmosphere of the city of Washington, separated from the business and commerce of the country, in habits of daily association with the Executive, heads of Departments, officers of Government, members of Congress, and hungry, selfish, and corrupt politicians.
Splendid public edifices are to be the objects of their daily admiration; the groves of the Capitol their places of daily resort. In a word, sir, these bank directors are to be politicians party politicians; and who can fail to foresee that, in their subserviency to "the powers that be," they will poison the sources of suborn politicians, prostitute the press, and demoralize the country ? And it is inconvertibly true, that, to the extent that it is subjected to the blasting influence of party, will its ability be diminished to furnish to the country a sound circulating medium.
In view, then, of these of three important considerations to wit: a diminished capital; the greater competition arising from the increased numbers and capital of the State banks; and the necessary appropriation of a portion of its means to the support of a corps of party adherents it is plain, beyond the shadow of doubt, that this Bank can never furnish, with safety to itself or the country, as large a proportion of the currency of the country as the late Bank did, even in its bes.
But, sir, for the sake of argument, let us suppose that, with the aid and countenance of the Government, it will be able to furnish an amount equal to the average circulation of the late Bank, during the whole period of its national existence, which was a fraction above $11,000,000. We may safely estimate the whole amount of bank paper currency to be employed hereafter in the business operations of the country at something near $110,000,000; of this, the sum of $11,000,000 is the one-tenth part. Thus it appears that the one-tenth part only of the currency of the country is to be furnished by this Bank; that is, every tenth man may have his money in United States Bank paper; or every man may have one-tenth of his money in such paper, after paying the necessary premium for it; or (what will most certainly be the case) a few men a small class of men, comparatively will monopolize the whole amount, and the mass of the people be left, as they are now, to use the local paper of the local banks.
And, sir, will this be a fulfilment of your oft repeated promises of "a plenty of money," and "of good money too," to the people ? And do you not further see that, in as much as all Government payments will be made in the paper of this Bank, (which will also diminish the amount for circulation amongst the people,) you expose yourselves to the old hackneyed objection, so often unjustly urged against the Independent Treasury system that of providing one currency for office holder's and another for the people; United States Bank paper for the office holders, and State bank paper for the laboring classes ?
It must be apparent, too, to all who have bestowed the slightest reflection upon the subject, and who have the least knowledge of the nature and operations of currency, that it will be utterly impossible for this Bank to keep in circulation any portion whatever of its paper in those sections of the Union where the State banks are in a state of suspension. The depreciated paper of those banks, so long as the degree of their depreciation should not be so great as to amount to entire discredit, will continue to occupy the channels of circulation, to the exclusion of the more valuable paper of a national institution. The very same law of currency that drove out of circulation silver change, when the miserable shinplaster trash that is now scattered through the country was permitted to be issued, will effectually drive from circulation, as rapidly as it may be issued, the paper of any specie paying bank, National or State, so long as non specie paying banks are permitted to flood the country with their paper.
The amount of bank paper in circulation at this time ranges somewhere between one hundred and one hundred and ten millions, which, whether we consider the actual value of the mass, or its nominal amount, is abundantly sufficient for all the business uses of the country. The demand for currency is a demand for so much exchangeable value, without reference to the nominal amount of the substance of which the medium of circulation may be composed. If the country require ore hundred millions of sound specie-par currency, and its bank paper be depreciated fifty per cent. below specie par, it is plain that two hundred millions of such depreciated paper will be required to answer the business demands for money; and if the value of such depreciated paper should be restored to a level with specie, by the resumption of specie payments by the banks issuing it, it is equally plain that one half of it, in that event, would leave the channels of circulation, and find employment somewhere else; thus leaving in circulation one hundred millions of sound currency, the amount required by the business wants of the country.
The amount of currency employed in the business of a country is regulated and controlled by laws of trade, as certain and inexorable in their operation as the laws that govern the physical world. There cannot remain for any considerable length of time, in any community, a greater amount of circulating money, in proportion to the trade and business of that community, than circulates in other communities in proportion to their business and trade. A greater amount of money in one community, in proportion to its business wants, than exists in others, in proportion to their business wants, will have the effect of raising prices of property in such community, above the level of prices in the other communities. The effect of this will be to invite excessive importations of foreign commodities into the community where prices are highest, to be exchanged directly or indirectly for specie, which will be exported to those countries where it can be exchanged for the largest amount of commercial commodities, (or where those commodities are at the lowest price;) to be again imported and sold for specie, in the community where money is most abundant and prices highest. The effect of such natural, unavoidable, and certain operations of trade, will be to withdraw the excess of currency or money from the community where there is the greatest supply, and distribute it amongst those communities where there is the greatest deficiency; untill, finally, a just proportion of circulating money, in relation to the business wants of each community, will be obtained by each, and prices brought as near to a level amongst all as a beneficial exchange of their commodities will admit of.
Under these wise, beneficent, and just laws of trade, how vain and fruitless will be the efforts of Congress and State Legislatures, through the multiplication of banks, State or National, to make money more abundant, and thus relieve what is called the distress of the country. Every such attempt will be like the act of pouring an additional quantity of water in a vessel already full and overflowing; all that you pour in will run over, and, in a great measure, be wasted. Sir, you may convert the Federal Government into a vast system of federal banking; you may make your vast public domain, your custom-house revenue, and all other sources of revenue, the foundation of an immense public debt an immense mass of public stocks, to be exchanged for banking capital; the State Legislatures may do the same with the State Governments, and the resources of their people; until, finally, the whole spirit and mind of the people shall become engrossed and absorbed by bank influence, and the spectacle presented to the world of a stupendous system of government and popular bank-machinery unequalled and unknown heretofore: still the wise man will laugh at your folly, the irresistible operations of trade will undermine your edifice, and the eternal principles of justice and equity do away the work of your hands.
It is a wise provision of the moral law, that no man shall be entitled to the goods of another, unless by the exchange of an equivalent; and to get this equivalent, the energies of labor and industry must be brought into requisition. The amount of money to which each member of society is entitled, is to be determined by the amount of the products of his labor and industry. The pursuit of labor and industry makes valuable members of society, ameliorates the condition of man, makes man the friend of man, and elevates him, in the eyes of his Maker.
The same rule is equally applicable to nations or communities. One community is not entitled to the money or property of another, without the exchange of an equivalent. To get that equivalent, the productive energies of such community must be brought into requisition; and thus it appears that the amount of money which communities are entitled to, must depend upon the amount of the aggregate product of their labor and industry, and not upon banking systems or bank financiering. It is, indeed, a happy and wise law, that nations, as well as individuals, should pay such a price for money. The encouragement and practice of labor and industry tend to make Sates wealthy, powerful, and prosperous to elevate them in the scale of nations and wield an ameliorating influence upon all communities with which they maintain social or commercial intercourse.
If the currency of a country consist in the paper of specie-paying banks, and its amount be excessive, a reduction will take place by a return of the paper upon the banks for redemption in specie, which will be exported abroad. If it consist in the paper of non-specie paying banks, and be excessive in amount, the reduction will take place by a depreciation in the value of such paper. It is plain, then, that trade will, in spite of legislation and bank financiering, limit and determine the amount and value of the currency employed in the business of every community. Banks may for a while, and often do, by their mismanagement, stimulate, confuse, or embarrass the operations of trade; but finally they are compelled to yield obedience to its laws.
It may be supposed that the Bank which it is now proposed to establish, in consequence of the greater value and higher credit of the paper it may issue, will be enabled to force the paper of the State banks out of circulation, and substitute its own. But, sir, it will be precisely for that reason that the Bank will fail in its attempt. If its paper be more valuable than the notes of State banks in the South and West, it will be bought up as rapidly as it may be issued, just as bills of exchange are, by merchants, brokers traders, and country banks, for purposes of remittance to the North and East, in payment of the commercial debts and bank balances due in those sections of the Union. It can never circulate among the mass of the people in the South or West, or any other section of the Union, until the solvent local banks in those sections resume specie payments. When they resume specie payments, their paper will be at par, or nearly at par, with the paper of the National Bank; and then both will circulate through the same channels, untill some change takes place rendering the one more valuable than the other; in which event, the circulation of the more valuable of the two will diminish, whilst that of the other will increase.
And now, Mr. Speaker, permit me to ask the question Is it not true, beyond dispute, that there can be no restoration of the currency of the country until the State banks, whose paper now fills the channels of circulation, resume specie payments, or finally wind up their affairs, and make room for a better currency to flow in ? Surely, sir, surely such is the truth. But the State banks cannot resume specie payments until their debtors are able to pay the debts due them. Those debtors cannot pay the immense mass of debt due the banks, until by dint of labor, industry, and economy, and the collection of debts due themselves from others, they are enabled to realize the means of liquidation. Thus we recur again to the only available remedy for all the evils of the day to wit, time, labor, industry, and economy. The rigid exercise of these pains is the price of our redemption from the curse of a spurious currency and the humiliating bondage of debt.
But, sir, we need a guide, a standard, around which the honesty, the moral virtue, the frugality, labor, economy, and sound credit of the country, may rally in conducting the great work of deliverance. Where shall we find it ? Where shall we plant it ? Whose duty is it to rear up and maintain the specie standard of value to fly the specie flag ? Is it not the peculiar constitutional duty of this Government to recognise nothing as currency but gold and silver ? Gold and silver is made by the Constitution the currency of the people; it is the only legal tender in the payment of debts. Who can deny the duty of this Government to protect, preserve, and defend it, by all the means within the constitutional limits of its power ? And how else, permit me to to ask, can this duty be better discharged than by an exclusive use, in all of its fiscal operations, of the thing itself ? Sir, it is idle to dispute upon this point; it is time that we should lay aside the mawkish sensibility, the feminine fears and hesitation with which politicians have approached, and the public mind heretofore been alarmed in relation to this subject. Let the truth be told, and firmly told, without concealment or disguise.
It is impossible that the Government can discharge itself from the responsibility imposed by the Constitution, by transferring to bank directors the high sovereign authority of making currency for the people, of expelling the gold and silver coins of the Constitution from circulation, and substituting in their stead a frail and uncertain paper standard. A direct and positive adoption of those coins as the exclusive medium of all its fiscal dealings as the preferred and better currency is required by the injunctions of the Constitution and the interests of the country. The effect of such a policy will be to increase the stock of the precious metals retained in the country for permanent use, to enlarge the basis of sound credit, and increase the solidity of solvent banks.
The requisition of specie from the wealthy importing merchant, in payment of duties, will cause him to reject all paper from the wholesale merchant, in payment of goods sold to him, but such as may be equivalent to and convertible into specie. This will cause the wholesale merchant to refuse the receipt of all but the paper of sound specie-paying banks from the jobber or retail merchant, and, in turn, cause him to refuse all but the same kind of paper from the country merchant. Finally, the country merchant will receive nothing but the paper of sound specie-paying banks from his customers; and those customers, composed of the mass of the people, will soon find it to their interest to discriminate between good money and bad money, between solvent banks and insolvent banks.
Such, sir, is the tendency of things at this moment. The difference in value between the paper of specie paying banks and non-specie-paying banks, is already established in the market-places of the country. The producing classes will soon ascertain that it is of no advantage to them to receive high nominal prices in the depreciated paper of non-specie-paying banks, for the products of their labor, when they are under the necessity of paying in the same sort of paper, the same sort of prices, for every thing they buy.
It is true that the depreciation of the currency has operated heretofore, and perhaps at this time operates, as a very considerable relief to the debtor classes in many parts of the Union, and especially in the State which I have she honor in part to represent here. The cotton planter in Alabama who has $10,000 worth of cotton for sale in Mobile is enabled to sell it for $11,000, in consequence of the ten or twelve per cent. depreciation of the paper which he receives in payment; and this paper will pay his debts in bank, and, for the most part, amongst his neighbors at par. His means of pay in his debts are thus increased ten per cent or to the extent of the depreciation of the paper received by him for his cotton. The same may be said in regard to tobacco planters, sugar growers, grain growers, and all others similarly situated. But these old debts will soon be liquidated, and then there will cease to be a motive for the further continuation or countenance of this condition of the currency.
Indeed, it may now be said that there are but few sections of the Union in which the depreciated condition of the currency at this time operates as a relief or benefit in anywise to any portion of the community except the banks; and therefore, before the contracts or trade of the community are entered into, or predicated upon the basis of a depreciated currency or debased standard of value, it behooves all parties to unite in one grand universal effort to restore and maintain the soundness of the currency.
But it is said that the practical operations of the Independent Treasury system will create a demand for the precious metals to supply Government purposes, and administer to individual wants and uses, produced and encouraged by such a policy on the part of Government, which the existing stock of precious metals throughout the world would not be sufficient to supply. And, the adroitness and perseverance with which this view of the subject has been pressed, has not failed to make a deep impression upon the public mind. The truth has not been told; proper efforts for the diffusion of information, of matters of common statistical knowledge, have not been made by the press, or any class of the politicians of the country enlisted in favor of the system, to disabuse the public mind, and counteract the effects of such an error.
With a view to the commencement merely of the discussion of this branch of the subject, and with the hope that those with whom it has been my pride to act upon this great question, may discover what has heretofore been an error of omission on their part, and, as I verily believe, the most potent cause of their failure to enlist the support of an overwhelming majority of the people in favor of the Independent Treasury system, I propose to submit to the consideration of the country an exposé of facts drawn from sources of undoubted authenticity, which I dare believe cannot fail to interest deeply and convince the minds of thousands who have heretofore been the victims of the most astonishing imposture and delusion.
These facts are drawn from McCulloch's Dictionary of Commerce and Commercial Navigation, the great standard authority of the day for correct information upon all subjects connected with the commerce, exchanges, navigation, trade, and productive industry of the world. In relation to the supply of the precious metals, he remarks (at pages 941 and 942, second London edition, A.D. 1835) as follows:
1. Supply of the precious metals. Since the discovery of America, the far greater part of the supplies of gold and silver have been derived from that continent. Previously to the publication of Humboldt's great work, Essai Politique sur la Nouvelle Espagne, several estimates, some of them framed by individuals of great intelligence, were in circulation, of the quantities of gold and silver imported from America. They, however, differed widely from each other, and were all framed from comparatively limited sources of information. But these have been wholly superseded by the more extensive and laborious investigations of Humboldt. This illustrious traveller, besides being acquainted with all that had been written on the subject, and having ready access to official sources of information unknown to the writers already alluded to, was well versed in the theory and practice of mining, and critically examined several of the most celebrated mines. He was, therefore, incomparably better qualified for forming correct conclusions as to the past and present productiveness of the mines, than any of those who had hitherto speculated on the subject.
The long-continued struggle which resulted in a separation of Spain from the American colonies, caused a very great reduction in the product of the mines for many years. According to "the returns obtained by the British consuls in South America, of the produce of the mines at different periods," their aggregate yield, exclusive of the mines of Brazil and Peru, during the twenty years ending with 1829, was £65,372,615; which, estimating the pound sterling at $4.84, amounts in dollars to 316,403,456.
According to this result the annual average product for that period was $15,820,172, which is believed to have been greatly under the true amount. The returns of the consuls were deficient in respect to several of the provinces, and present a result far below the estimates of Mr. Jacob for the same period, which amounted to the sum of $390,765,918, or at the rate of $19,538,295 per annum. After alluding to the increase in the annual products of these mines, and to "the considerable quantities" afforded by other mines throughout the world, including the Hungarian and Saxon mines, the Russian and other European mines, and the mines of the United States, the writer remarks: "We may safely estimate the entire annual produce of the American, European, and Russo-Asiatic mines as amounting, at this moment, (1834,) to about £6,000,000 a year;" which, in dollars, amounts to the sum of $29,040,000 per annum. At this rate, the whole aggregate of the produce of the mines of the world, (exclusive of the African gold dust, and other sources not mentioned in this work,) from the year 1829 to the present year, (1841) amounts to ....319,440,000.
The aggregate of all these items amounts to sum of ......6,234,743,456.
(No allowance has been made for the quantities retained by Mexico and the South American States prior to 1803, for their own use, which, according to Mr. Gallatin's article on Banks and Currency, published in the American Quarterly Review in 1830, wherein he quotes the estimates of Humboldt, must have amounted to something near $200,000,000)
To this sum there must be added the following items, taken from Mr. Gallatin's article on Banks and Currency, in the Quarterly Review of 1830, page 445:
"The ascertained product of the mines of Siberia, up to the year 1830 ....100,000,000
"The product of the mines of Europe, and of the African gold dust, from the discovery of America to the year 1830 .....450,000,000
"The amount existing in Europe prior to the discovery of America .....300,000,000
The grand ascertained aggregate supply of the precious metals at this time in the world, appropriated to the uses of man $7,084,743,456.
Seven thousand and eighty four millions seven hundred and forty-three thousand four hundred and fifty-six dollars ! And this vast sum, sir, is considerably more than one hundred millions short of the aggregate estimate of Mr. Gallatin in the article alluded to. In that article he estimates the whole stock of precious metals on hand as seven thousand two hundred millions.
But I may be told that a portion of this immense sum has been lost by shipwreck and fire, by wear and tear, and burying, or secreting in the earth during the wars and revolutions of Europe. Admit it; and then, on the other hand, you will find that, in all probability, equally great contributions have been made, and are daily being made, to the stock of the precious metals, of which no account has been taken. There are gold and silver mines in China of no inconsiderable importance; and supplies of these metals are received from "Borneo, Celebes, and the Malay peninsula," and other sources, of which no statistical accounts are given.
The precious metals are not subject to canker or rust; they are indestructible in their nature, and, from their great value, the subjects the of great care and solicitude. Any less of them, therefore, in proportion to their quantity, must be inconsiderable.
The consumption of the precious metals in the manufacture of plate, jewellery, ornaments, and for all the purposes of luxury and extravagance to which they are devoted, is the result of the vast supply of those metals existing in the world. The quantity estimated to be employed in administering to these vain desires and luxurious propensities of the human heart, in Europe and America, is one hundred and fifty per cent. greater than the whole amount of currency, including both paper and coin, used in those two sections of the world. It is plain, then, that a demand for gold and silver for purposes of currency and exchange in the United States would be supplied to any possible extent, with the utmost facility and certainly. The whole amount obtained would finally be withdrawn from these luxurious uses, without any effect upon the commerce and trade of the world, and, indeed, with little or no effect upon them.
If the thirty-three millions of coin in the vaults of the banks of this Union on the 1st day of January last were thrown into circulation, and every bank note in the Union burnt up or banished from circulation, it would require but the one hundredth part of the stock of gold and silver now in use in the world to supply the country with an amount of metallic money equal to the whole amount of paper then or now in circulation. To have made such an allegation as this a short time since, would have served but to excite the ridicule and derision of those who though they were very wise; and yet, sir, it is true beyond the possibility of doubt or cavil.
There are other important inquiries connected with this branch of the subject, which I would gladly pursue if permitted by the limitation of time prescribed by the rules of this House. The practical condition of the currency of each of the civilized nations of the world; its proportion in amount to their trade and population; the proportion of that population engaged in active pursuits, and having use; for currency the proportion of the population of the world that is uncivilized, not engaged in the pursuits of commerce or trade, and that have no use for money or currency, and the consequently greater supply of the precious metals for that part of the population of the world that is civilized and so engaged together with a view of the vast aggregate of the annual products of the labor of the people of the United States, internal and external, showing an ability, under the influence of a proper, constitutional policy on the part of the Federal and State Governments, to command the use of a greater amount of the precious metals, in proportion to population, than exists in any other nation of the universe constitute subjects of inquiry of the deepest interest, and should engage the thoughts of all who are sincere in their desires for reform.
But, sir, the hand of the clerk, under the rules of the House, admonishes me that I can proceed no further in the vindication of what I conceive to be the interests of my constituents on these great questions.