35th Congress, 1st Session.
December 7, 1857 June 14, 1858
IN THE SENATE OF THE UNITED STATES,
December 17, 1857.
Mr. Hunter, from the Committee on Finance, reported the following bill; which was read and passed to a second reading.
To authorize the issue of treasury notes.
Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That the President of the United States is hereby authorized to cause treasury notes for such sum or sums as the exigencies of the public service may require, but not to exceed, at any time, the amount of twenty millions of dollars, and of denominations not less than fifty dollars for any such note, to be prepared, signed, and issued in the manner hereinafter provided.
Sec. 2. And be it further enacted, That such treasury notes shall be paid and redeemed by the United States at the treasury thereof after the expiration of one year from the dates of said notes, from which dates, until they shall be respectively paid and redeemed, they shall bear such rate of interest as shall be expressed in said notes, which rate of interest upon the first issue, which shall not exceed six millions of dollars, of such notes shall be fixed by the Secretary of the Treasury, with the approbation of the President, but shall in no case exceed the rate of six per centum per annum. The residue shall be raised, in whole or in part, after public advertisement of not less than thirty days, as the Secretary of the Treasury may direct, by exchanging them at their par value for specie to the bidder or bidders who shall agree to make such exchange at the lowest rate of interest, not exceeding six per centum, upon the said notes: Provided, That after the maturity of any of said notes, interest thereon shall cease at the expiration of sixty days' notice of readiness to pay and redeem the same, which may at any time or times be given by the Secretary of the Treasury in one or more newspapers published at the seat of government. The payment or redemption of said notes herein provided shall be made to the lawful holders thereof, respectively, upon presentment at the treasury, and shall include the principal of each note and the interest which shall be due thereon. And for such payment and redemption, at the time or times herein specified, the faith of the United States is hereby solemnly pledged.
Sec. 3. And be it further enacted, That such treasury notes shall he prepared under the direction of the Secretary of the Treasury, and shall be signed in behalf of the United States by the Treasurer thereof, and countersigned by the Register of the Treasury. Each of these officers shall keep in a book or books provided for that purpose separate, full, and accurate accounts, showing the number, date, amount, and rate of interest of each treasury note signed and countersigned by them, respectively; and also, similar accounts showing all such notes as may be paid, redeemed, and cancelled as the same may be returned, all which accounts shall be carefully preserved in the Treasury Department. And the Treasurer shall account quarterly for all such treasury notes as shall have been countersigned by the Register and delivered to the Treasurer for issue.
Sec 4. And be it further enacted, That the Secretary of the Treasury is hereby authorized, with the approbation of the President, to cause such portion of said treasury notes as may be deemed expedient to be issued by the Treasurer in payment of warrants in favor of public creditors, or other persons lawfully entitled to such payment, who may choose to receive such notes in payment at par. And the Secretary of the Treasury is further authorized, with the approbation of the President, to borrow, from time to time, such sums of money upon the credit of such notes as the President may deem expedient: Provided, That no treasury notes shall be pledged, hypothecated, sold, or disposed of in any way, for any purpose whatever, either directly or indirectly, for any sum less than the amount of such notes, including the principal and interest thereof.
Sec. 5. And be it further enacted, That said treasury notes shall be transferable, by assignment endorsed thereon by the permit to whose order the same shall be made payable, accompanied together with the delivery of the notes so assigned.
Sec. 6. And be it further enacted, That said treasury notes shall be received by the proper officers in payment of all duties and taxes laid by the authority of the United States, of all public lands sold by said authority, and of all debts to the United States of any character whatever, which may be due and payable at the time when said treasury notes may be offered in payment thereof; and upon every such payment credit shall be given for the amount of principal and interest due on the note or notes received in payment on the day when the same shall have been received by such officer.
Sec. 7. And be it further enacted, That every collector of the customs, receiver of public moneys, or other officer or agent of the United States who shall receive any treasury note or notes in payment on account of the United States, shall take from the holder of such note or notes a receipt, upon the back of each, stating distinctly the date of such payment and the amount allowed upon such note; and every such officer or agent shall keep regular and specific entries of all treasury notes received in payment, showing the person from whom received, the number, date, and amount of principal and interest allowed on each and every treasury note received in payment; which entries shall be delivered to the treasury with the treasury note or notes mentioned therein, and, if found correct, such officer or agent shall receive credit for the amount, as provided in the last section of this act.
Sec. 8. And be it further enacted, That the Secretary of the Treasury be, and he hereby is, authorized to make and issue, from time to time, such instructions, rules, and regulations to the several collectors, receivers, depositaries, and all others who may be required to receive such treasury notes in behalf of, and as agents in any capacity for, the United States, as to the custody, disposal, cancelling, and return of any such notes as may be paid to and received by them, respectively, and as to the accounts and returns to be made to the Treasury Department of such receipts as he shall deem best calculated to promote the public convenience and security, and to protect the United States as well as individuals from fraud and loss.
Sec. 9. And be it further enacted, That the Secretary of the Treasury be, and he hereby is, authorized and directed to cause to be paid the principal and interest of such treasury notes as may be issued under this act at the time and times when, according to its provisions, the same should be paid. And the said Secretary is further authorized to purchase said notes at par for the amount of principal and interest due at the time of the purchase on such notes. And so much of any unappropriated money in the treasury as may be necessary for the purpose is hereby appropriated to the payment of the principal and interest of said notes.
Sec. 10. And be it further enacted, That in place of such treasury notes as may have been paid and redeemed, other treasury notes to the same amount may be issued: Provided, That the aggregate sum outstanding, under the authority of this act, shall at no time exceed twenty millions of dollars.
Sec. 11. And be it further enacted, That to defray the expenses of engraving, printing, preparing, and issuing the treasury notes herein authorized, the sum of twenty thousand dollars is hereby appropriated, to be paid out of any unappropriated money in the treasury: Provided, That no compensation shall be made to any officer whose salary is fixed by law for preparing, signing, or issuing treasury notes.
Sec. 12. And be it further enacted, That if any person shall falsely make, forge, or counterfeit, or cause or procure to be falsely made, forged, or counterfeited, or willingly aid or assist in falsely making, forging, or counterfeiting, any note in imitation of, or purporting to be, a treasury note, issued as aforesaid, or shall pass, utter, or publish, or attempt to pass, utter, or publish as true any false, forged, or counterfeited note, purporting to be a treasury note as aforesaid, knowing the same to be falsely forged or counterfeited, or shell pass, utter, or publish as true any falsely altered treasury note, issued as aforesaid, knowing the same to be falsely altered, every such person shall be deemed and adjudged guilty of felony; and being thereof convicted by due course of law, shall be sentenced to be imprisoned and kept at hard labor for a period not less than three years, nor more than ten years, and to be fined in a sum not exceeding five thousand dollars.
Sec. 13. And be et further enacted, That if any person shall make or engrave, or cause or procure to be made or engraved, or shall have in his custody and possession any metallic plate engraved after the similitude of any plate from which any notes issued as aforesaid shall have been printed, with intent to use such plate, or cause or suffer the same to be used in forging or counterfeiting any of the notes issued as aforesaid, or shall have in his custody or possession any blank note or notes engraved and printed after the similitude of any notes issued as aforesaid, with intent to use such blanks, or cause or suffer the same to be used in forging or counterfeiting any of the notes issued as aforesaid, or shall have in his custody or possession any paper adapted to the making of such notes, and similar to the paper upon which any such notes shall have been issued, with intent to use such paper, or cause or suffer the same to be used, in forging or counterfeiting any of the notes issued as aforesaid, every such person, being thereof convicted by due course of law, shall be sentenced to be imprisoned and kept to hard labor for a term not less than three nor more than ten years, and fined in a sum not exceeding five thousand dollars.
Sec. 14. And be it further enacted, That it shall be the duty of the Secretary of the Treasury to cause a statement to be published monthly of the amount of treasury notes issued, and paid and redeemed, under the provisions of this act, showing the balance outstanding each month.
Mr. HUNTER. I am directed by the Committee on Finance, to whom was referred the annual report of the Secretary of the Treasury, to report a bill (S. No. 13) to authorize the issue of Treasury notes. I ask the Senate, by unanimous consent, to proceed to the consideration of this bill now. There is great necessity for its prompt passage. If any Senator doubts the propriety of having it considered at once, I should like to have a letter which has been addressed to me by the Secretary of the Treasury read.
The Secretary read the following letter:
December 15, 1857.
Sir: In my annual report to Congress of the 8th instant, an explanation of the causes which would lead to the necessity of supplying the Treasury with the means of promptly meeting the lawful claims upon it was given. I stated that "such provision should be made at the earliest practicable period, as a failure of sufficient means in the Treasury may occur at an early day."
At the time I prepared that statement, the weekly expenditures were exceeding the receipts to an extent that induced the opinion thus given. While the estimated amount of importations justified the conclusion that the revenue for the present year might be sufficient to meet the wants of the Government, yet the actual receipts into the Treasury in time to provide for the wants of the public service were dependent, not on the amount of merchandise imported, but the portion entered for consumption. At this time there is held in warehouse, in the city of New York alone, merchandise subject to duty exceeding twenty-eight million dollars in value, on which, when entered for consumption, duties must be paid to the amount of more than six million dollars.
The period when such payment of duty will be made may be influenced by so many circumstances, that the public credit should not be hazarded upon the contingency of its happening in time to meet the liabilities which we know must be provided for at an early day.
The amount now in the Treasury subject to draft is considerably less than six million dollars. When we reflect that balances must be kept in the hands of public officers in every part of the United States, by whom drafts are required to be paid, it will be readily perceived that the fiscal operations of the Government cannot be carried on with convenience and security with a less sum in the Treasury. The excess of the expenditures over the receipts is daily reducing this balance. I have been compelled to withdraw from the Mint and its branches the amount usually kept there for the purpose of facilitating the conversion of bullion into coin for the benefit of depositors. Such withdrawal necessarily occasions an inconvenience to the commercial community which should be obviated whenever it shall become practicable to do so.
It is proper to state that, in addition to the ordinary current demands on the Treasury, the sum of $722,652.29 must be paid on the 1st of January next for interest on the public debt.
In view of this state of things, I have the honor to ask your attention to the recommendation in my annual report that authority be given by law to issue Treasury notes. I think it important that Congress should act at once on the subject, that the necessary arrangements may be made by the 1st day of January to meet such public liabilities as become payable at and before that time, and which cannot be longer postponed.
Though the amount of $20,000 000 will not, in all probability, be needed at an early day, if at all, yet it is deemed best that the Department be authorized to issue and keep out that sum, should it be required by the public service. The rate of interest, for manifest reasons, should be left discretionary with the Department, subject to the approval of the President; but not to exceed six per centum per annum.
Very respectfully, your obedient servant,Hon. R.M.T. HUNTER,
Secretary of the Treasury.
Chairman of Committee on Finance, Senate of the United States.
Mr. ALLEN. Yesterday the Senate determined that they would, at one o'clock to-day, proceed to the election of a Public Printer. I hope that will be done previous to the consideration of this bill.
Mr. HUNTER. I suggest to my friend from Rhode Island that, if we take up this bill, we can, at one o'clock, suspend its consideration, in order to execute that order; but I should like, if it be the pleasure of the Senate, to get the bill before them, because we must have action on it before Monday. I hope we may act on it to-day; but certainly we should do so before Monday.
Mr. SIMMONS. Has the bill been printed ?
Mr. HUNTER. No, sir; it was only reported to-day.
Mr. SIMMONS. I hope it will be printed before being acted upon. I think it is a very important bill.
Mr. HUNTER. I admit it is a very important bill. Of course, if any Senator insists on its going over, for the purpose of being printed, it must lie over and be printed. I will only say that, if we postpone it, in order to have it printed, we must sit to-morrow or the next day, so as to pass it, because it is indispensable that it should be acted on at an early day.
Mr. SEWARD. I hope we shall hear the bill read, and then we can judge of it.
Mr. HUNTER. It corresponds with the bill of 1847, with the exception of two provisions, which I can state briefly.
Mr. SEWARD. Then I can see no necessity for printing it.
Mr. KING. It would be better to have it printed.
Mr. SIMMONS. I should like to see it printed. I do not want to vote for the issue of $20,000,000 of Treasury notes, to be kept in circulation as long as the Executive may think proper, without knowing exactly what I am doing. I should like to have the bill printed, so that we can read and understand it.
Mr. HUNTER. Of course, if the Senator insists on having it printed, it must go over.
Mr. SIMMONS. I have no objection to hearing it read.
Mr. HUNTER. Let it be read; but before the Secretary reads it, I will state the two points of difference between this bill and that of 1847. In the act of 1847 there was a provision for funding the Treasury notes. That provision is not in this bill. The impression is, that if it were put there they would be funded, and not perform the office desired. The other difference is as to the mode of putting them out. With the exception of $6 ,000,000, which will probably be wanted between now and the 1st of January, it is proposed that the residue shall be put out on public advertisement to the bidder, who will agree to take them at specie at the lowest rate of interest, so as to preserve the precise specie par between the notes and specie. These are the only two points of difference between this bill and the act of 1847. Perhaps the bill had better be read for the information of Senators.
The PRESIDENT pro tempore. The bill will be read.
Mr. TRUMBULL. Do I understand the bill to be taken up for consideration ?
The PRESIDENT pro tempore. No, sir. It is only on its first reading.
Mr. Trumbull. Is it before the Senate ?
The PRESIDENT pro tempore. It is not.
Mr. TRUMBULL. I have no objection to hearing the bill read; but I shall certainly object to taking up for action a measure authorizing a debt of $20,000,000 to be incurred without any consideration. I think it altogether too important a matter to be treated in that way.
Mr. HUNTER. I do not desire to consume time. Any Senator, if he chooses, can have it laid over. Will the Senate agree to make it the special order for to-morrow, at one o'clock, and let us come here and dispose of it then ? Of course it will be printed, under the rules of the Senate. Can we take it up for the purpose of making it the special order to-morrow, at one o'clock, and have it printed in the mean time ?
Mr. SIMMONS. I hope no order will be made in regard to the bill until we have had an opportunity to read it. I think it very singular that when, on the 8th day of the month, there was a report from the Secretary of the Treasury, telling us that he had sufficient means within his control to last until the 30th of June next, and leave a balance of half a million at that time, he should, in seven days after, come in, without anything intervening that I know of, and ask for a loan of $20,000,000.
Mr. HUNTER. If the Senator from Rhode Island will look at the annual report of the Secretary of the Treasury, he will find that the Secretary said he should ask for the issue of $20,000,000 of Treasury notes.
Mr. Simmons. I have not read the report all through, and that is the reason why I desire to read it and this bill before I act; but I have read the report as far as the figures go. I know that the Secretary of the Treasury reports that he had a balance in his hands, on the 1st of October, of about fourteen or fifteen million dollars. I know, also, that two thirds, or nearly three fourths, of the quarter in which he estimated that he should receive $12,250,000, had already passed before this report came in; and the amount received in that time, with the $15,000,000 he had on hand, would reach $27,000,000. I do not know how much he has expended: I do not profess to know, because I have not read the report. But he estimated the expenditures for the last nine months at fifty-one million dollars about seventeen millions for three months. If the estimates that he made last week are right, he must have $10,000,000 to-day; but there may have been some extraordinary demands upon the Treasury. I know, from what I see in the newspapers, that he has purchased some two or three millions of the funded debt I should think nearly three millions. That would leave six or seven millions. Now, I should like to make some inquiries; but I do not wish to be forced to place myself before the Senate in the position of catechising the chairman of the Committee on Finance on a subject of this kind until I have read the bill. I want to know what it is.
Mr. HUNTER. I am not asking the Senator to act on it now. I merely propose that we make it the special order for to-morrow at one o'clock, and have it printed. We can take it into consideration then. If the Senator from Rhode Island should think it proper to oppose the bill he can be heard, and the Senate can, if they choose, refuse to pass it.
Mr. Simmons. I am not willing to consent to anything until I can read the bill. I am ready to hear the bill read now for the information of Senators, but I do not like to have what a worthy Senator from Missouri [Mr. Benton] used to say was a "snap judgment," in the Senate. I desire a little time to read a bill of this magnitude. I want to know what is meant by continuing the issue of these $20,000,000 of Treasury notes. I do not know what that is yet.
Mr. SEWARD. I suppose that, unless by unanimous consent it be waived, every bill which is introduced must be read when it is first presented. I desire to hear this bill before we decide whether to take it up or otherwise.
The PRESIDENT pro tempore. Of course any Senator has a right to call for the reading of the bill. It will be read.
The Secretary read the bill; and it was ordered to a second reading.
Mr. HUNTER. If the Senator from Rhode Island objects to the bill being read a second time to-day, it must be laid over until to-morrow. I do not know that it is necessary to make it the special order, as, I presume, if I make a motion to-morrow to take it up, a majority of the Senate can take it up.
The President pro tempore. Certainly.
Mr. HUNTER. That being the rule, I give notice that I shall move at one o'clock to-morrow, or as soon as the morning business may be disposed of, to take up this bill for consideration. In the mean time, it will be printed under the rule.
On motion of Mr. HUNTER, the bill (S. No. 13) to authorize the issue of Treasury notes was read a second time, and considered as in Committee of the Whole.
Mr. HUNTER. [Robert Mercer Taliaferro Hunter (1809-1887) Virginia (D)] I remarked yesterday that this bill corresponded with the bill of 1847, which is similar in its main provisions with all the Treasury note bills passed since 1837, with two exceptions: One exception consists in striking out the funding provision which existed in the bill of 1847. That is not to be found in this bill for the reason that if put in, it was apprehended the notes would he funded and converted into a loan, and for the further reason that an inconvenience was found lately when we were redeeming the public stock from that clause which existed in the bill of 1847. The holder of the note, instead of claiming what the law designed only to give him what was due on its face first funded it into stock under that provision, and then claimed a premium on the stock.
There is yet another difference. According to the laws which have been heretofore passed, the Secretary of the Treasury, with the approbation of the President, has been allowed to fix, at his own discretion, a rate of interest not exceeding six per cent., thus leaving it to his sagacity to determine note, when issued, should be equivalent to specie at par. This bill provides that he may raise $6,000,000 in the old method, because about that sum will probably be wanted between now and the 1st of January; but, in regard to the residue, he is to advertise, upon notice of not less than thirty days, for bidders, who will agree to exchange specie at par for these notes at the lowest rate of interest thus taking the most certain method within his power to ascertain precisely what will be the specie par of the note, and thus accomplish exactly the purpose which he has in view that is, not to make the interest so high that the notes will be hoarded as an investment, and not to make it so low that they will be below their par value as specie, and thus come into the Treasury in payment of the revenue.
These are the only points of essential difference between this bill and the bill of 1847. The bill of 1837, as well as I can recollect, did not contain a funding provision. I think the bill of 1847 was peculiar in that regard. However, I will not be positive as to that matter.
In regard to the necessity for this measure, we know that the Secretary of the Treasury in his annual report informed us that he should require $20,000,000; and although be estimated that in addition to the balance in the Treasury, he might receive money enough from the existing sources of revenue to meet the demands on him, yet he did not believe we should receive that money in time to meet those demands. Experience is showing us daily that we shall not do so. It seems to be supposed that if there should be a revival of trade, the full tide and flow will not come in until the last of April or the first of May. Although his estimates maybe right in the whole, when we reach the commencement of the next fiscal year, yet experience shows that we shall be probably in want of this money to relieve the Treasury before that time. In other words, it is enabling him to use those means which the British Treasury have found so useful, issuing notes called exchequer notes, which enable them to anticipate their revenue. If, on the other hand, it should turnout that he is mistaken, and will not receive as much revenue as he supposes still greater will be the necessity for an issue of something like this amount; that is, for using the credit of the Government for a limited amount, for the purpose of supplying its temporary wants. If, however, it should turn out that the want is not temporary but permanent, then will be the time, if ever, to discuss whether there should be other means used in order to replenish the Treasury.
Mr. Seward. Mr. President, that, owing to the derangement of commercial affairs and the collection of the revenues consequent upon it, there is a necessity for an issue of Treasury notes to relieve the Treasury, I think is clear enough; that it is commercially desirable that such an issue of Treasury notes should be made in this conjuncture, I believe is also true; but, on looking over this bill, during what little time I have had to bestow on it this morning, it strikes me that it ought to be guarded in two or three particulars, to which I wish to call the attention of the Committee on Finance.
In the first place, it is not proposed, and it is not necessary to create a permanent debt. If it were, this mode of issuing Treasury notes is not the way to create such a debt. The way to do that is to raise a loan. I assume, therefore, that it is the expectation of the Treasury, and the intention of the committee, and will be the purpose of Congress, merely to make a temporary issue of these notes for this immediate occasion only. Now, this bill has no limitation as to time, if I read it correctly. It will stand forever when it is passed, or until the whole amount of twenty millions shall have been issued by the Secretary of the Treasury, though the period of ten years should have elapsed. In other words, if the Treasury should be filled up in April, or May, or June, with the proceeds of the revenues, still this act will stand in force on the statute-book. It seems to me, therefore, that it ought to have a limitation of time. The question then is, what time ? For myself, as well as I can understand the present signs of the times, I expect that the revenues to be collected during the present year will meet all the demands of the year; and, therefore, I should think it expedient to limit the bill to that period; but this may be a mistake. No one can make any sure calculation on that subject. But it is very certain that there will be a Congress here next year as there is now, and it would seem to me, therefore, that there is no necessity for anticipating the continuance of the present difficulty beyond the beginning of the next session of Congress. I would suggest, therefore, that this bill be limited, so far as relates to the issue of the Treasury notes, until the beginning of the next session of Congress, when Congress will be here, and can decide on it, and continue it in force if it shall be necessary.
In the second place, in regard to the amount: we want $6,000,000 now, but we are unable to I say that we shall want $20,000,000 in all. We shall be here for a period of four or five months, and can test the extent of this want. I should think it would be quite sufficient to authorize an issue of $10,000,000 instead of $20,000,000. I suppose all will agree that the smallest issue ought to be made which can be made, because it is to inaugurate a feature in the fiscal system of the Country which must not be permanent, and ought to be indulged in as sparingly as possible.
I am not so tenacious about the amount as I am about another matter, and that is, that this bill contemplates allowing too high a rate of interest. It contemplates that the Treasury notes, in order to raise the money, may require to bear an interest of six per cent. I do not think the credit of the United States will, at any time within the next year, be any less strong than it is now. The United States six per cent. stocks payable in 1867 sell at $112 in the market to-day. The interest is six per cent. for one year, and it sells for $112. If I understand it, you may take off the six per cent. interest, and then sell the note at par. The stock is redeemable in 1867, but that makes no difference, because the notes would enter more readily into exchange than stock redeemable in ten years. It is very certain that if the rate of interest shall be such as to render it at all desirable for investment, this money will immediately go into investments, instead of going into commercial circulation, and the great object which the commercial world has in the issue of the notes at all now is that they may be used for the purpose of exchange, while the exchanges of the country are deranged, owing to the fact that the resumption of specie payments is not yet universally and firmly established.
I suggest, therefore, that it would be safe to limit this rate of interest to four per cent. I have no doubt that that rate would command all the money of which the Government has need. Although it is true that the bill contemplates in both cases that the rate shall be fixed at less in the first instance by the decision of the President of the United States or the Secretary of the Treasury on examination of the market, and as regards the subsequent issues by sale in market overt, yet the offering of a loan of six per cent. when a four per cent. loan would answer the same purpose, will have a tendency to increase the prices which will be determined on in either case. I am not aware that I am right in these suggestions, but I throw them out for the consideration of the chairman of the Committee on Finance, and the Senate.
Mr. HUNTER. I shall say but a few words as to the objections of the Senator from New York. First, he objects because there is not some limitation of time as to when the notes shall be called in.
Mr. SEWARD. No, sir; what I spoke of was the time in which they may be issued. The bill has no limitation in that respect.
Mr. HUNTER. If all he wishes to attain is to limit the time within which they shall be issued, and he will give until the next meeting of Congress, I will agree to it. I will only say that no such limitation has over been imposed in a Treasury note bill before; because if they were not issued Congress could at any time stop the issue, and if they were issued it has the privilege, within one year, of redeeming them. But still I have no objection to limiting the time within which they shall be issued, if that is what the Senator desires.
Mr. SEWARD. Yes, sir.
Mr. Hunter. Next in regard to the amount: the Senator thinks the amount is too large, and that $10,000,000 will be enough. I will suggest to him experience has shown that in the operations of our Treasury we require a surplus of at least $6,000,000. We require also, as a Mint fund, $6,000,000; making altogether $12,000,000. The difference between $12,000,000 and $20,000,000, is only $8,000,000, which sum is to be used in the payment of our debts. We have already exhausted the surplus usually kept to work the Treasury Department, and are now operating on the Mint fund, very much to the detriment of the coinage operations and some of the great interests of the country. It inconveniences the Mint very much.
We have, in addition to this, the experience of the Secretary of the Treasury who am sure would not desire to issue a dollar more than was necessary, and who will not use his power beyond what is needful, to the extent of a dollar to justify us in the belief that it will be safe to issue this amount. We know that the surplus has been rapidly diminishing. Ever since the suspension of specie payments by the banks, the expenditures have exceeded the receipts so largely as to diminish the surplus to a sum I believe now not much exceeding $5,000,000. We have large payments to meet by the 1st of January. It will require, we are inclined to think, something like $6,000,000 to meet the payments which will fall due between now and the 1st of January. We have, then, to replace the fund required for the operation of the Mint, and also the surplus that is necessary to enable us to work the Treasury Department safely and easily. It is not a creditable state of things for the Treasury to be forced to have the requisitions delayed; to delay the time of payment to those employed by it, on account of its being cramped by the want of means. By the use of our credit, to a limited extent, which will enable us to anticipate receipts that are to come into the Treasury, we may be enabled to avoid all these inconveniences.
Next as to the rate of interest. This bill corresponds in that respect with all the bills which have been passed since 1837. I have no idea that the Secretary of the Treasury will find it necessary to issue any note at the rate of six per cent. I think, according to the best information which he has received, he will try the market with the notes at three per cent. But, sir, in regard to the first $6,000,000, we have, as I said before, to depend on the sagacity of the Secretary of the Treasury to ascertain what interest will make the notes equal with specie. With regard to the residue, we have a more certain and sure means: we try the market, and we give each note to the man who will give specie for it at the lowest rate of interest. We thus give the note precisely that character which the Senator from New York desires we place it in a condition in which it will probably be equal to specie. We place it in a position in which, at the same time that we obtain the money for the Government at the lowest rate of interest, we offer incidentally to the merchant and to the banks a great advantage in Treasury paper of this sort, which is equivalent to specie. Especially is it an advantage at this time, when the banks are engaged in the laudable effort to resume specie payments; because, if any fluctuation of commercial affairs should take place, so as to make the exchanges play on the specie fund of the country, they will be enabled to resort, to a certain extent, to this paper, and, so far as the Treasury is concerned, to pay the dues, and thus have an easier and a speedier use of the specie resources of the country.
This mode, which ascertains as precisely and accurately as is within our power the precise rate of interest which will keep the note at a par with specie, commends itself to our consideration for two reasons: first, that it is the cheapest mode by which the Government can raise the money; that is, it raises it at the lowest rate of interest; and in the next place, while we thus benefit the Government, we afford incidentally the best aid we can afford to commerce, and to those banks which are attempting to resume specie payments; because, if you adopt such a rate of interest as will keep these notes at par with specie, they will circulate along with specie, having the same value. They will neither be hoarded for investment, nor paid, in preference to specie, into the Treasury of the United States, except in certain cases where it may be found to afford great relief. As I said before, if the exchanges shall play on the specie fund of this country, and cause its exportation, it will be then that these notes will be used in payment of the revenue. I learn that there have been at least three instances in which six per cent. Treasury notes have been paid into the Treasury in payment of Government revenue, showing the assistance and advantage which a measure like this afforded to commerce in times of trouble. I say, therefore, that, when the banks are engaged in a laudable effort to resume specie payment, this form of Treasury note is that which will be more likely to aid them, at the same time that it is best for the United States, looking only to the interest of the Treasury itself.
In regard to the rate of interest, I have thought it better to follow the old precedents. It is exactly the mode prescribed in all the Treasury note bills since 1837. I find, in reference to the practical operation of the law, that, since that period, double as many notes have been issued at six per cent. as at any other rate, and that they have been at par at all rates of interest from six per cent. down to a mill, at various times. It seems to me, then, that it is better, in this instance, to stand by the precedents not that I believe it will be necessary to put on them a larger rate of interest than three per cent., nor that any larger rate will be put on the first $6,000,000; and in regard to the rest, the bill itself affords the best means of ascertaining the precise rate of interest which should be put on them, that is by advertising and putting them out to the lowest bidder.
Mr. Seward. I am very happy indeed to find that there is no substantial disagreement between the honorable Senator from Virginia and myself in regard to the questions which have been discussed between us, and that our views of the operation of the bill are precisely alike. Now, in regard to the question of time to which this issue of Treasury notes shall be limited, the honorable Senator certainly agrees that it ought to be limited to the exigency of the case. There is no reason for anticipating a necessity for the continued issue of these notes beyond the meeting of the next session of Congress. Some time must be limited, for it will not do, I think, to place on the statute-book an authority which the Secretary of the Treasury may use hereafter to issue Treasury notes at his pleasure, without the knowledge and consent of Congress. I will, therefore, adhere to the suggestion I made to limit the time for issuing notes until the next meeting of Congress.
Mr. HUNTER. Say the 1st of January, 1859.
Mr. SEWARD. Very well. We do not substantially differ in principle in regard to the amount, though the Senator thinks my suggestion of limiting the amount to $10,000,000 will be inexpedient. We shall certainly know during the present session of Congress whether we are to require an issue of $20,000,000, and I incline to think it is enough to limit the issue to the amount of $10,000,000, which will probably cover all the wants of the Treasury during the present session of Congress, about which, however, I am willing to be further advised.
In regard to the rate of interest, I think these Treasury notes might be sold at par in the market, if they bear an interest of four per cent. The honorable Senator thinks (and his information is more likely to be accurate than mine) that they will sell at par with an interest of only three per cent. I still think, with deference to him, that placing them at an interest so much above what is probable will be the rate at which they can be sold, will have a tendency to increase the rate of interest which will be exacted by the purchaser. I therefore incline to think that it will be as well to limit the rate of interest to four per cent., and to give notice to the financiers of the country, and to the public at large, that the United States will not pay more than four per cent. per annum for money which is to be repayable in notes of fifty dollars each, and within one year from the date of issue.
To all these amendments the honorable Senator interposes a general objection that this is a departure from the bills which have been previously passed on similar occasions; but then the honorable Senator will agree at once that there has never been a time when the Government of the United States has resorted to these measures under circumstances so peculiar as this. It has resorted to the measure heretofore as a measure of revenue.
Mr. HUNTER. Will the Senator allow me to give him the fact ? I adverted to the history of the issue of Treasury notes. I have here a list of all the Treasury note issues made since 1837, and the rate of interest. I find that since that time the amount of Treasury notes at six per cent. is upwards of fifty million dollars. Of the issue of five per cent. Treasury notes, the amount has been $5,000,000. Next to that are the notes issued at an interest of one mill. I find, therefore, that, in point of fact, experience has shown that much the larger quantity of notes issued have borne the rate of six per cent. For that reason it seems to me safe to keep within the limit heretofore prescribed, although I do not believe that there will be a note issued now for more than three per cent.
Mr. SEWARD. I do not think, on reflection, that there will be a note issued at three per cent. It is my impression that the notes will go off at the rate of one or two per cent. interest, and I should not be surprised if they were to go at half of one percent.
But why shall we conform our practice now to precedents set on former occasions ? Those were times when the whole commercial business of the country, as well as the revenues of the Government were disordered and deranged, and these measures were resorted to, not to anticipate collections expected to bring money immediately into the Treasury, but for the purposes of revenue; they were in fact, if not in form, permanent loans. But this is a convulsion in the commercial business of the country that is without precedent. Here we have had the banks within the United States suspend specie payment, according to the general conviction of this country and of Europe, without any necessity whatever, except the occurrence of a panic, unreasonable and blind. We have had, during the time of the entire period of the suspension of specie payments, in not a day when specie was worth more than one half of one per cent. above the depreciated and dishonored notes of the suspended banks themselves, and we have had that suspension of specie payment limited and wound up and payments resumed again within sixty days from the time of the suspension. This is but a temporary interruption in the business of the Government. It is but a temporary shock to the credit of the country. Let us frame our bill, then, according to the actual exigencies of the case. I do not know that it will be very material on this occasion, but what we do to-day will be referred to as a precedent on future occasions, just as we are to-day consulting the forms in which the same relief was given on former occasions.
Since, then, we agree in the first place, that there is no necessity for anticipating a continuance of this system beyond the next session of Congress, I will adhere to my motion to limit the time for the issue of Treasury notes to the 1st day of January, 1859; and in the second place to the proposition to reduce the amount to $10,000,000; and in the third place to reduce the highest rate of interest payable, to four per cent. I am of opinion that the honorable Senator will find that with these amendments his bill will more readily pass, and that it will answer all the exigencies of the Treasury, and satisfy the public mind. I make the motion, in the first place, on the proposition as to time. My amendment is to add to the first section:
Provided, That no such Treasury notes shall be issued after the 1st day of January, 1859.
Mr. HUNTER. It ought to contain a further provision, "that nothing herein contained shall prevent the reissue of those notes already issued."
Mr. SEWARD. I accept that.
Mr. Fessenden. I hope the Senator from New York will not accept that amendment, because it will defeat the very object which I understand him to have in view. If there is power remaining to issue the Treasury notes as fast as may be found convenient by the Government, they may keep the $20,000,000 out for an indefinite period of time. I take it for granted that the object of the Senator from New York in moving the amendment, about which we conversed early this morning, was to prevent both the issue and the reissue after a given length of time. If in fact this measure is to meet a temporary want of the Government, and if it is true that the necessity is to cease by the ordinary course of revenue, in a certain period, there can surely be no necessity for retaining in the bill a power to reissue these notes for an indefinite time.
The Senator from Virginia, the chairman of the Committee on Finance, will observe that in the bill which was passed in 1847, and which was strictly a loan bill to meet the then exigencies of the Government, the power of the President to issue the notes was limited to six months after the close of the Mexican war. That met my attention after this bill was read; and I saw at once, as I thought, that unless it was designed to make this a permanent system, and to give power to the Government to have a permanent loan of $20,000,000, and keep it out just as long as might suit its convenience and to meet all contingencies, it it would be necessary to fix some limitation. The only question in my mind was, what ought that limitation to be ? That depends upon the necessity of the case, on the principle assumed. The Secretary of the Treasury calls for the power to issue these notes on the ground that this is a temporary expedient, and he says the revenues of the Government will be sufficient to meet all the wants of the Government in a very short time.
Mr. HUNTER. I do not wish a permanent authority given; I am willing to limit it. I will agree that it shall be limited to the 1st of January, provided the reissue of the notes is not to be prevented within that time.
Mr. Fessenden. I have no objection to that. I prepared an amendment to meet this object, and wished to add it to the tenth section of the bill. That section now reads:
That in place of such Treasury notes as may have been paid and redeemed, other Treasury notes to the same amount may be issued: Provided, That the aggregate sum outstanding, under the authority of this act, shall at no time exceed $20,000,000.
My amendment is to add the words:
And provided further, That the power to issue Treasury notes, conferred on the President of the United States by this act, shall cease and determine on the 1st day of January, 1859.
The first section provides for the redemption within the year, and this section, the tenth, gives express power to reissue; and, consequently, as the amendment only provides against the power to issue them after a given period, the power to reissue exists during that period, and there will be no need of the modification which the Senator from Virginia suggests.
Mr. Hunter. I think that would be the best place to put it.
Mr. SEWARD. Very well; I withdraw my amendment, and accept the substitute offered by the Senator from Maine.
Mr. Simmons. [James Fowler Simmons (September 10, 1795 July 10, 1864) Rhode Island (R)] Before the question is taken on the amendment, I should like, as I intimated yesterday, to state some of the objections I have to this form of relieving the Treasury. I said yesterday, that I felt great reluctance in addressing the Senate on a subject of this importance without preparation. It necessarily involves a review of the suggestions and recommendations of the President's message, and of the Treasury report two documents prepared with great care, written in an admirable spirit, and for which I hold both parties in profound respect. But I think they contain provisions and recommendations unsound in their nature, and ill adapted to the business of this country; recommendations that I believe will lead to further complications and embarrassments instead of relief; and therefore I propose, and am obliged to examine these recommendations, in order to present to the Senate any tolerable view of my own opinions upon I them.
I know of no questions that can be presented to the consideration of a body like this more delicate in their nature and more extensive in their consequences than the relations of men as debtor and creditor. These relations extend throughout civilized society, and they are various in their character, and require extreme caution in their examination. The President of the United States has suggested with great propriety, and brought our attention to the consideration of the state of the times; he laments, as we all do, the embarrassments of business, the prostration of labor in the departments of mechanics and manufactures, and their utter destitution and want; and he says, for the first time that I have ever heard so great a catastrophe attributed to such a cause, that it is solely occasioned by our vicious system of paper currency. Well, now, sir, I have lived in the walks of business, in an humble sphere, for a great many years; I have seen many revulsions; but I have seen none so wide sweeping and destructive as that through which we are now passing. In this I entirely disagree with the honorable Senator from New York. This results from no foolish, unfounded notion it lies at the foundation of wealth and prosperity among men. I know that the English journals attribute the disaster and distress in this country to a mere idle panic; I know they considered themselves altogether beyond its reach and influence; and they said the Americans would soon be over it; but in a very few days I found that our "cousins" abroad began to share of the same cup of which we had been drinking.
Mr. President, as I understand the condition of our Government, it is similar to the condition of individuals and States and communities. We have bought more than we have been able to pay for. Now, I am going to examine with the utmost attention that I am able to bestow in the short space of time allowed me, the foundations on which the President of the United States has, in his message, based the opinion that the present disastrous revulsion has been caused by the vicious expansion and contraction of the currency of this country by the banks. If he has been misled or mistaken as to the cause of the evil, we are bound to believe that he would not have suggested the remedy which is proposed. If we find that the causes are to be found in elements entirely opposite to those suggested by him, we are bound in fairness to conclude that an entirely opposite remedy from that which he has proposed should be applied. I shall not now examine the immediate operation of this bill; for I will say to the Senator from Virginia that I do not believe in holding public officers too strictly to their estimates. If the state of the Treasury, no matter from what cause, requires something of this kind, and if the Senator will so arrange the bill as to make it a temporary measure, to carry us over a hard place, I have no objection to it; but if it is to be made part and parcel of a system of measures, such as have been suggested, ignoring all the means of improvement and redress to which, during the whole history of this Government, we have been in the habit of looking, I must object to it at the outset.
I have adverted to the great importance of the relation of debtor and creditor. I shall say nothing as to the delicate relations of debtor and creditor existing between private individuals, and I suppose the President did not mean to allude to them. There are other instances of this relation which it is for us to consider the relation of debtor and creditor between communities, between States, and between nations. I would here suggest to Senators an old, unanswered maxim, said to have been given by the wisest man of our race, that the borrower is always the servant of the lender. In my experience, having generally been the servant of the capitalist in this respect, so far as I know, a creditor is a hard master. I believe that this nation is now suffering under the lash of such a master by reason of a vicious policy. We have bought more than we have sold, and the action of the Government has tended to produce this result.
When we come to consider the sources of wealth, the means of extricating ourselves from difficulty, every statesman looks to labor productive labor. No ingenuity in framing Treasury notes or bank notes will liquidate our debts. We must look to that exhaustless source of wealth, the labor of the people, extracting it from the bowels of the earth, and fabricating it into forms essential for society. What we save over and above that which is consumed by this labor is aggregated from century to century, and forms the wealth of the world. There is no other means of wealth. Commerce is not a source of wealth. It is an instrument to transmit the productions of one country to others, for consumption. Trade is not a source of wealth. Look at our society, and you find that three fourths of the population of the United States is engaged in productive labor. The other fourth is engaged in exchanging the products of this labor, in keeping the accounts of these exchanges, and in foreign commerce, which, so far as navigation is concerned, adds to our wealth by the freights earned, by carrying the productions to the consumer. The statistics show, in the aggregate, that three fourths of our people are engaged in agriculture, manufactures, and the mechanic arts in fact, in providing food and clothing and shelter for man. These are necessaries, and these are all the employments that make a man's labor more productive to himself and to the world. The others are employed in exchanges, in keeping accounts, and instructing men in the ordinary branches of education and in piety and morals all useful. You must, however, look for your source of wealth only to those engaged in productive labor. The others promote the comfort and happiness of the world in matters not necessaries. I do not mean to exclude them from the benefits they enjoy, but I wish to speak in behalf of the laboring men of this country. In a time like this I dislike to see these expedients about paper resorted to for the purpose of relieving us from a calamity that makes honest, willing labor seek your tables for bread. I have a right to ask Senators to consider the condition of this labor, and to consider what it has done for the other classes of society, and what it would now do if the opportunity were afforded. If you look to the consumption of all that is produced by the efforts of men in the United States of America, I venture to assert that the one fourth of the people engaged in active pursuits, who do not produce anything for the sustenance of society, consume more annually than the whole three fourths of the people engaged in producing the means of subsistence.
I think, then, that the people who do the labor of the country have a right to claim our deliberate attention when we are providing measures to escape from the present condition of things; and I am sure they will have this attention on the part of the Senate. I make no appeal to what is called the popular current of public sentiment. I mean to speak candidly and frankly what I believe; and whether it be popular or unpopular, I care not the weight of one feather; but I wish to have imputed to me nothing but an honest purpose in what I say.
Sir, I do not believe there is any great mystery in political economy. I never did believe there was any great mystery in the affairs of human government. I have been in the habit of reading from one of the fathers of the Republic, Mr. Jefferson. In the first movements of this people to be rid of the dominion of the British Crown, an address was drawn up by Mr. Jefferson to be presented to George III., and in the body of that petition, as it was called, this sentence was found:
"The true art of governing is the art of being honest, and to acquire that does not need the advice of many counselors."
That is my notion. I do not wish to read a great many books about government, or to take much counsel as to how men shall get their living. I have been in the habit of getting my living by the plow, which is as honest a way as any I know; and I have done something in other pursuits.
The President of the United States, as I have said, attributes the present financial distress to the action of the banks. I have before me the bank returns so far as they are to be found in the archives of the Senate, and I ask the attention of Senators to what these returns disclose; for I suppose they are precisely those on which the President has formed his opinion. I am astonished that, on such data, any officer of the United States Government should propose to change the policy of the country, and to overturn a system of measures which I regard as more essential to our advancement to wealth and distinction now, than at any period of our history. The President has also alluded to the operation of the Bank of England in 1825, to illustrate his position that national banks cannot regulate the currency. When I come to that point I shall call attention to a little piece of English history to show how England acted when she undertook to review her system; but I wish now to see whether there has, within the last year, been any alarming increase of the paper currency of our fourteen hundred "irresponsible" banks, as they are called by the President.
He tells us that this calamity has come upon us because the currency of the country is in the control of fourteen hundred "irresponsible" banks. I should like to know in what sense the President uses this term. If he means that the banks chartered by the States are "irresponsible" to this Government, I admit it; for they were not created by this Government, and have nothing to do with it. If he means that the fourteen thousand persons who control them there being, on an average, ten directors to each bank are irresponsible men, I take issue with him. In my deliberate judgment, these fourteen thousand directors, controlling the affairs of these fourteen hundred institutions, are as responsible and reliable as any fourteen thousand men who can be found in the country, so far as their pecuniary condition or their position in society is concerned.
In the first place, I desire the Senate to understand what I suppose to be the relation of the banks to society. So far as they are banks of issue, they are responsible to the public; they are public institutions affecting the interests and business of the country. Every Legislature in the land holds them to a strict account for the manner in which they exercise this public function of furnishing a currency for the community in which they are located, and I believe they generally exercise this power with a view to the general good of the community for whose benefit the have been created. The aggregate number of banks in the several States, according to the returns before us, was, in 1856, thirteen hundred and ninety-eight near enough, for all practical purposes, to the President's fourteen hundred. The aggregate circulation of our banks in 1854, was $204,689,207; in 1855, $186,952,223; in 1856, $195,747,950. The circulation last year was less than it was three years ago. Surely there is no inflation here. The circulation in each of these years was so nearly uniform that it can hardly be considered that any change has taken place since 1854. A deduction, however, must be made from the figures that I have given, for bank notes held by the banks themselves. This leaves the actual amount of currency furnished by the banks to the people in 1854, $182,030,141; in 1855, $163,522,705; in 1856, $170,968,903. This was the actual amount of currency furnished by these fourteen hundred institutions for the transfer of the products of labor from the producer to the, consumer. The President suggests that the banks should be required to have in their vaults specie to the amount of one third their circulation to make the currency reliable. The returns show that the actual coin held by the banks was, in 1854, $59,410,253; in 1855, $53,944,546; in 1856, $59,314,063. Add to these sums the amount of specie funds held by the banks, consisting of drafts on the sub-Treasury and other assets equivalent to specie, and we have the actual quantity of specie and specie funds held by the banks to be, in 1854, $84,989,506; in 1855, 875,880,284; in 1856, $79,250,773; showing that they had specie to the amount of nearly half their currency all the time on hand for the redemption of their bills.---[are banks public utility ? only banks can furnish this currency ? are they doing a service ? is issuing two notes for every one coin a honest business ? is this the only way to furnish currency ? The banks are sitting on the coins even though they have them, because if redeemed (honoured) their promises to pay, their coin would disappear and they would have nothing to bank on. Fourteen thousand fine upstanding citizens, who controll the currency, therefore the business activity. As the bankers' spokesman, Mr. Garfield --, objecting to the notion that "all currency, whether metallic or paper, necessary for the use, and convenience of the people should be issued and its volume controlled by the government, and not by or through the bank corporations of the country," -- decades later noted: whoever controls the supply of currency would control the business and activities of the people. 14,000 businessmen who, because it suited their business interests, openly declared that their promises to pay are false promises, and threw the nation into an economic convulsion ! In your life-time bankers suspended honouring of their promises to pay, how many times, Sir ? And the furnishing of the nation's economic life-blood should be entrusted them ? is that what your opinion is ?]
I know that it is an easy matter to excite a feeling of aversion to the banking institutions, because, as banks of issue, they sustain the relation of debtors to the community; they owe the people more than they have the immediate means of paying, but their operations in another capacity as banks of discount, where the community is debtor to them present another aspect.
The amount due to the banks, by their individual debtors, including the stocks held by them, was, in 1854, $601,748,109; in 1855, $628,871,840; in 1856, $683,668,495. During the same period, all the indebtedness of the banks, including their deposits and the remainder of their circulation, amounted, in 1854, to $285,229,379; in 1855, to $278,042,763; in 1856, to $304,422,790. This shows that the community owe to the banks more than the banks owe to them. In considering the conduct of the banks, the question is, whether they have pursued their debtors far enough to make their circulation sound ? They can only redeem their circulation by calling in their debts, and this they have done. By calling in their debts, and thus contracting their accommodations, they create ill feeling among those who are their debtors. It is easy for any one operating on public sentiment, to give force to this ill feeling towards these institutions. The President speaks of them only as banks of issue; but he must know, and every man must know, that they can only pay coin for the demands on them by further contracting their accommodations to the community. But I shall not dwell longer on this point. I know that there is nothing in the figures which will justify anybody in concluding that the banks have improperly inflated or contracted the currency, except, perhaps, during the present troubles, and in regard to them we have no returns. Then this particular feature, to which the President has attributed the present revulsion, fails him.
It is a question which has much exercised the attention of men, how far the issues of banks and the currency of a country affect its general business and the prices of productions. In 1832, the charter of the Bank of England being about to expire, a committee of secrecy was appointed to examine the affairs of that institution, with a view of making any new provisions that might be necessary in the constitution of the bank. The committee consisted of Lord Viscount Althorp, Sir Robert Peel, Baronet, Lord John Russell, Mr. Goulburn, Sir James Graham, Baronet, Mr. Herries, Mr. Poulett Thomson, Mr. Courtenay, Colonel Maberly, Sir Henry Parnell, Baronet, Mr. Vernon Smith, Mr. John Smith, Mr. Robarts, Sir Matthew Ridley, Baronet, Mr. Attwood, Sir John Newport, Baronet, Mr. Baring, Mr. Irving, Mr. Warburton, Mr. George Philips, Mr. James Morrison, Lord Viscount Morpeth, Mr. Lawley, Sir John Wrottesley, Baronet, Lord Cavendish, Mr. Alderman Wood, Mr. Strutt, Mr. Bonham Carter, Mr. Edward John Stanley, and Mr. Alderman Thompson. The committee examined the officers of the Bank of England, and the presidents of the local banks, and the private bankers, and the whole examination is contained in a folio volume of six hundred and seventy pages. This volume contains information as to the effect of the currency on the prices of every leading article of produce, and the effect of the Bank of England on all the relations of society, so far as could be ascertained. The result was the recharter of the bank, without any material alteration in its former constitution or charter, I believe.---[everything you know about banking and money, you learned from the Bank of England and its experts ?!?
The President tells us that a national bank can do nothing towards regulating the currency and keeping it uniform, because we had two such national institutions and they did not do it. Everybody must recollect, however, that for the forty years we had a national institution, with a view of regulating the currency, we had no suspension of specie payments. He further says, that the Bank of England, in 1825, in its effort to contract the paper circulation of the country banks, utterly failed, and that as fast as the Bank of England contracted its own issues, the country banks issued their own notes to supply the vacuum. When this part of the message was read, it struck me as one of the most singular statements I had ever heard. I happened to be in business that year, and profess to be acquainted with some of the causes which led to the revulsion in England then, and they are precisely the causes which have led to the present revulsion here. The difference between the cases is, that England was then our debtor, now we are debtors to her. The English speculated to a large extent in our great staples. I recollect that at that time I bought on speculation, the only cotton which I ever bought to sell. Knowing that I was engaged in purchasing sea island cotton for my own use, a cautious merchant, knowing the effect of appearing in the market as a speculator, offered me half the profits of the transaction if I would go into the market in Providence, and buy all the sea island cotton there. I bought in the month of December, 1824, on his statement to me that it was lower than he had ever known it to be, in comparison with the short cotton, and there was news that the sea island crop was cut off by storms. I paid twenty-seven cents a pound for the best of that cotton, and it was sold to a Savannah cotton factor to go back to Savannah, at seventy cents a pound, and he resold it to English speculators. We made more than one hundred and thirty dollars a bale on it, and it went to England with a further profit added to that. If anybody can find wilder speculation than this, I should like to see the instance. England then bought more than she could pay for, and was in debt to us, but we did not experience any great trouble from that revulsion. There is no trouble in any revulsion, except that you may lose part of your profits, if you are yourself out of debt.
I have examined the condition of the Bank of England in 1825, to see whether the President was not misled as to the efforts of that bank during those troubles. I was surprised to hear the assertion that an institution like the Bank of England, under a charter, and with powers from the English nation from the foundation of their constitutional Government, was not able to regulate the currency. The constitutional privileges and powers of the British Government were embodied into form in the reign of William III., in 1688, and the charter of the Bank of England was granted in 1693. I suppose that to be one of the reasons why our forefathers, being descended from England, soon after making our Constitution, established a national bank, in conformity with the usages of their ancestors. That is my notion; but, whatever may be its origin, every man who has read the history of the last sixty or seventy years knows, that in the struggle through which England went from 1797 (when she ordered the issue of pound notes, passed a restriction act to prevent her bank from paying coin, and resolved on a paper currency to carry on her internal trade and sustain her finances, in conjunction with her policy of protection for her national industry a system of measures which excited the jealousy of nearly all Europe) to 1815 the end of this struggle her system of banking and currency, and her system of protection to labor, carried her successfully through a war with an embattled continent, an achievement the world had never seen for magnitude. He will not talk about the Bank of England being unable, in time of peace, to control the circulation of the country banks. With a system of currency, and finance, and protection, such as no other nation had then enjoyed, England triumphed, although her enemies were led by a captain such as the world had never seen. I do not say he was the greatest general, for I believe we have had one greater, but, as a captain, the world never witnessed a man like Napoleon Bonaparte; yet the British, from their little island but a speck, as it were, in the ocean went through this war, against the combined Powers of the continent, and carried their commercial system as triumphantly as they did their arms. It appears to me singular that a man who has read her history can say that an institution which has accomplished wonders like these was not able to control the issues of the country banks of England.
Mr. President, I have no great partiality for England, but if there is anything that makes me proud of being descended from Englishmen, it is the spirit they manifested in this apparently unequal contest. Sir, I glory in being descended from Old England. Those who fought, at Agincourt and Cressy, at Trafalgar and the Nile not this modern kind of England, not this shop-keeping, cent-per-cent kind of England, that they have now-a-days. Look at the recent orders of the First Lord of the Treasury Lord Palmerston. He says to the Bank of England, "you may transcend the law, you may issue more than you have a right to do under the charter, and we will bring in an act of indemnity; but do not issue at less than ten per cent., and the Government and bank will agree on a division of the spoils." That is the kind of England that I do not like note-shaving England. I shall not, however, comment on England. I suppose we are no way concerned about them, except to pay what we owe them and avoid getting in their debt again. That is my doctrine.
If I am not mistaken, any man who will read the book to which I have alluded, containing the testimony obtained by the English committee of secrecy, will have an utter detestation of these little modern notions about regulating currency and trade by exacting usurious rates of interest. The Bank of England year commences on the 1st of March, and ends on the 28th of February. The returns are made up semi-annually, on the 28th of February and 31st of August; but in 1825, there being an unusual condition of things, there were three returns during the year. On the 28th of February, 1855, the circulation of the bank was £20,753,760, and the deposits £10,168,780. The securities held by the bank, or, as we call them, the loans and discounts, were, to the Government, £19,447,588; and to individuals, £5,503,742; and the amount of coin, £8,779,100. Multiply these figures by five and you reduce them to our currency. The bank had about forty million dollars of coin and over one hundred million of notes in circulation, and it held the paper of private individuals to the amount of $25,000,000, and of Government to the amount of $100,000,000. The President, on another point, has fallen into as great an error in regard to the present law as he has in regard to the conduct of the bank in 1825; but, perhaps, it is of no consequence for me to advert to it. He says there is a prevailing sentiment in England that the bank must have coin to the amount at least of one third its immediate liabilities, including deposits. That is a mistake. There never was any such restriction on banking institutions that I ever heard of, except those in Louisiana, and I never heard of that until the President alluded to it in his message.
On the 31st of August, 1825, the circulation of the Bank of England was £19,398,840, very nearly the same as it was six months before. The loans were to the Government, £17,414,566; and to individuals, £7,691,464. The Bank of England disposed of its government stock and loaned the money to the people. That is the way they help the people.
In December, 1825, the revulsion had almost attained its culminating point. In the beginning of the year, the immediate liabilities of the bank were £30,922,540, and the coin on hand to meet them was £8,779,100. In August, the immediate liabilities were £25,809,400, and the coin on hand £3,634,320. These figures are plain enough, and they show how the bank was acting. You will see by examining this book that the country banks were pressed for coin, and the Bank of England sent it to them, and asked them to send the bills home, and they would pay them with coin. By and by, a severer pressure came. In August, as I have said, the liabilities were over £25,000,000, and the coin between £3,000,000 and £4,000,000. In December, 1825, the liabilities increased to £32,403,000, and the coin had been reduced to £1,027,000. Thus, instead of having one pound in specie for three pounds in liabilities, they had but one pound for thirty-two pounds.
When the crisis came to such a pass that England was experiencing pretty much the revulsion which we have had for the last three months, the Government interposed. At no period during that revulsion did the Bank of England ask more than five per cent.; but the Government interposed because credit had become so prostrated that the people could find no merchants to give them acceptances on their produce. You will see how the Government applied to the bank to relieve the public, and you will see the replies of the directors when the Secretary reads from the appendix of this book what I have marked.
The Secretary read:
Appendix No. 4.
The following are the only communications received from Government in 1825-6, proposing any guarantee for advances made by the bank upon any securities whatever:
At a Court of Directors at the Bank,
Tuesday, December 13, 1825.
The Governor laid before the court the following note from the First Lord of the Treasury and the Chancellor of the Exchequer, viz:
In order to relieve the present distress in the money market, the First Lord of the Treasury and Chancellor of the Exchequer are prepared to give immediate directions for the purchase of £300,000 Exchequer bills; in addition to the £200,000 which, they understand, the bank directed to be purchased yesterday.
If it should be thought, however, more advisable that the whole £500,000 should be purchased by the bank on their own account, the First Lord of the Treasury and the Chancellor of the Exchequer will be prepared, if the bank should require it, immediately to redeem the same.Liverpool,
Frederick John Robinson.
Treasury Chambers, December 13, 1825.
Resolved, That the Governor be authorized to order the purchase of Exchequer bills to the amount of £500,000 upon the conditions specified therein.
At a Court of Directors at the Bank,
Thursday, February 16, 1826.
The Governor laid before the court the following letter from the First Lord of the Treasury and the Chancellor of the Exchequer, viz :
Fife House, February 14, 1826.
Gentlemen: Under all the circumstances of the present distress in the city and country, it appears to us that it would be advantageous, with a view to public and private credit, if the bank were to give directions for the purchase of Exchequer bills to the amount of £2,000,000.
If the bank shall agree to this proposal, we engage to submit to Parliament the necessary measures for the repayment of the same between this period and the 14th of June next. We have the honor to be, gentlemen, your most obedient servants,Liverpool,
Frederick John Robinson.
To the Governor and Deputy Governor of the Bank of England.
Resolved, That the Governor be authorized to purchase Exchequer bills to an amount not exceeding £2,000,000, on condition that the repayment be made within four months.
At a Court of Directors at the Bank.
Tuesday, February 28, 1826.
The Governor laid before the court the following letter and memorandum from Lord Liverpool and the Chancellor of the Exchequer, viz:Fife House, February 28, 1826.
Gentlemen: In order to prevent any misapprehension upon the subject of our discussion yesterday, we think it right to transmit to you the inclosed memorandum, explanatory of the several points which we then brought under your consideration.
We have the honor to be, gentlemen, your most obedient, humble servants,Liverpool.
The Governor and Deputy Governor of the Bank.
1. In the even event of the bank consenting to advance money upon the security of goods, under the present circumstances of the country, it is understood that these advances should not exceed the sum of three millions in the whole.
2. That, assimilating the principle of these advances to advances made in the ordinary course of discount upon bills of exchange, they shall be subject to repayment in three months.
3. The Government to propose to Parliament that the provisions of the act respecting merchant and factor, which will be in force in October next, shall be brought into immediate operation, in respect to any goods which may be pledged to the bank under the proposed arrangement.
4. If the bank should think proper to make advances in conformity to these suggestions, the Government engage to submit to Parliament the necessary measures for enabling them to reduce the present amount of the advances of the bank to the Government, by a repayment of six millions; such repayment to be made as soon as may be practicable, and, at all events, before the close of the present session of Parliament.
Resolved, That this court, having distinctly understood the determination of his Majesty's Government not to make any advances for the relief or the commercial distress now prevailing, reluctantly consent to undertake the measure proposed, to an extent not exceeding three millions, upon the terms and conditions expressed in the communication of the First Lord of the Treaury and the Chancellor of the Exchequer.
Note. All other advances made by the bank, either upon purchase of Exchequer bills, or by discount of commercial bills, were exclusively upon the responsibility of the bank.John Knight, Secretary.
Bank of England, June 9, 1832.
Mr. Simmons. During the whole time when the President says the Bank of England was trying to contract the issues of the country banks, and was not able to do it, you will find that the issues of the country banks did not exceed their circulation in 1818 seven years before this time by the amount of more than two per cent. It will thus be seen that the only effort of the Bank of England was to relieve the community from impending distress. The returns show that on the 28th of February, 1826, the loans by the bank to the Government were £20,573,258, and to private individuals, £12,345,322; while a year before that time the loans to the public were £19,447,588, and to private individuals, £5,503,742. Here, during that year, was an increase to private borrowers of nearly £7,000,000, or $35,000,000 for their relief during this pressure, and at the end of that year their coin was only £2,459,510, while their whole liabilities were £32,403,850.---[As you just shown, based on 2 million coins 32 million notes were issued, to circulate as currency; so you have no (and cannot have) objection to issuing notes promising to pay what we don't have, and don't even exists !; your objection to this $20 million is that it is the Treasury and not some private corporation that is issuing these notes. The Treasury is attempting to do what you said the Bank of England (a private, for profit, corporation) did, to relieve the shortage of currency in the country.]
I say that the President has been misled in supposing that any such effort as that of which he speaks was made by the Bank of England. He has been misled, also, in supposing that the catastrophe here has been caused by any expansion or contraction of our banks. It is as clear as the noonday sun, if the papers which I have presented prove anything, that a national bank is entirely efficient to correct those disasters and get over them in the best possible manner. I am bound to believe, that if the President of the United States had supposed the cause of the present revulsion was not a diseased condition of the monetary system of the country, he would have looked somewhere else for it.---[A "national bank" oh yeah, a joint-stock company, in charge of the nation's money supply and furnishing the nation's currency, that is what is eating your liver, that is why you are so indignant over Mr. Buchanan's remarks. Don't even have to ask, but, if the President suggested the setting up of a government-owned, in truth "national" not just nation-wide bank, would you support it ?]
Let me ask the distinguished Senator from Virginia [Mr. HUNTER] what change has taken place in our relations to foreign countries within the past year, except the change in the tariff made in March last ? Did we not then take off on an average one fourth of the duties that operated as a barrier against excessive importations ? It was believed then, and urged in the debates at the time, that if we did not reduce the duties, the accumulations in the sub-Treasury would be so great as to produce a monetary revulsion. When a proposition is presented to me for action, I desire to know what is intended to be relieved by it, and what is intended to be produced by it, and then, if I find it adapted to the purpose, I most cordially approve it. This is no party question; no platform is interfered with by regulating the business and exchanges of the country, to get them into the best shape we can. I say, that on the plea of preventing a monetary revulsion, the Government of the United States changed its commercial system in a night. The change was hurried through without examination. The consequences were not considered. That was the addition of the last feather which breaks the camel's back. To avoid a revulsion, we opened the flood-gates to importations, and in sixty or ninety days afterwards we were bankrupt, and now the Treasury is bankrupt, according to its own showing. I thought yesterday the Secretary of the Treasury had made out a pretty good showing but it seems that he is not going to come out right, and I shall not criticise his figures.
Mr. President, the only way to correct the evils under which we are laboring, so far as this Government is concerned, is to put your commercial system on such a basis that it shall be reciprocal between this and other countries. I am so much a free trader as to agree to any system that will produce reciprocal commerce and exchanges of products, but when we import a hundred million a year more than we export we are in a bad condition. You may, by issuing Treasury notes and railroad bonds and State bonds and Government stocks, postpone the day of payment, but the result is inevitable, and it is your destruction, and subserviency to the power to which you are indebted.
England has given up the notion of obtaining an ascendency over us by arms. She tried that for some time, but we have some trophies at the navy-yard here, which I looked at twenty-five years ago, that satisfied me then that she would change her course. The British lion, with his paw on the globe, is a trophy to the frigate United States and to the Government and people of the United States. I thought, when I first saw this, England would take some other course than fighting with us. She means to have the commercial ascendency in the world, and every effort we have made since she has undertaken that policy has been playing into her hands so as to give her the advantage over us. I hope we are not to persist forever in this fatal course.
The Secretary of the Treasury, in a letter which was read yesterday, says, as a sort of excuse for this issuing of Treasury notes, that he has funds in abeyance, duties to be received from goods now in warehouse. Twenty-six or thirty million dollars' worth of goods are now in warehouse, on which six millions or more of duties ought to be paid. Then why not say at once, in a joint resolution, that foreign goods in warehouse shall be entered and the duties paid, or else the goods shall be shipped abroad within sixty days. Is not that the simple way of meeting the case ? Why should we go to borrow money in order to give credit to those foreign producers ? When the tariff was altered last March, you were very careful to insert a provision, that although goods might have been imported and warehoused under the former tariff, they could be entered at the reduced rates after July 1.
Every provision you have made during the last ten years has had the effect of throwing your gates wide open for the sale of foreign goods to embarrass your own producers. I have not seen one of our tariff bills passed in that time which has not contained such provisions. You value the goods abroad; you will not value them at home. There is some constitutional difficulty in the way of valuing them where you can see them; and in order to value them you must go where you cannot see them. [Laughter.] That is the doctrine preached here as if it were holy writ. How do you value the goods abroad ? For that purpose you fix the legal value of the pound sterling at $4.80. If you look at any of the prices current for years past you will find that an eagle brings in England thirty-nine shillings and six pence, or about that.
In England a half eagle will bring within three pence, or six cents, of a pound sterling. Why not say that the goods shall be valued at what they cost in American coin ? Your valuation is five or six per cent. below that, but it would not be altered if it were forty per cent. below; but if it were made one per cent. too high, you would have all the German Jews in the country memorializing you to interpose and alter it.
During the last ten years, you have made no effort to counteract the policy of England, which is, to obtain the commercial ascendency of the world. People think now that we are going to get coin from England, and they withhold their crops. England has been distressed the last three years about staples for textile fabrics. They have tried to colonize Africa, and have been looking for cotton all over the world. It is my judgment that a portion of this effort on their part has been with a view of commanding that great staple cotton, for it had got too high, as everybody knows. Our planters have become rich, and have held their cotton, and they are holding it now, for coin to came from England to buy it; but you cannot get a remittance of gold from England to this country, but they will turn the screws, and take twice as much back within three weeks. I venture to say there is not an American merchant doing business in London or Liverpool who can negotiate a bill at their banks, if there is a probability, or even a possibility, of coin being sent to the United States. Every return says there is no difficulty in getting money, except, perhaps, for the purpose of sending it to America. France has had more wisdom than the United States, and she has been reaping a harvest the last five years. She has not gone into free trade; and if there were no other recommendation for Louis Napoleon, this would go far towards covering up some defects that I do not think it proper to mention in the Senate.
Now, Mr. President, I say, in all soberness and earnestness, that I think we ought to make a temporary measure of this bill. I dislike the manner in which it has originated. If it be a loan, it ought to contain a provision for the redemption of the loan. If I were now to offer an amendment that would look first to raising a sinking fund for the redemption of these notes, and next to keeping out some of these gewgaws that have got us into debt, gentlemen would say that it was unconstitutional, for such a measure could not originate in the Senate. You cannot amend this bill as it ought to be amended, if it originates here. This is another objection.
Then I have doubts as to the propriety of issuing Government paper as a currency. I do not pretend to say that it is clearly unconstitutional; but, if any faith is to be placed in the reasoning of the President, it is one of the most objectionable forms of providing a currency much more objectionable than that which he proposes to correct, and which he intimates is not constitutional, on account of that provision which prohibits a State from emitting bills of credit. I think anybody who has read the history of our country may know what the fathers of the Republic meant when they prohibited the States from issuing bills of credit, or making anything but gold and silver coin a tender for the payment of debts. We know that during the revolutionary war, and the period anterior to the formation of the Constitution, this country was cursed with an irredeemable paper currency, issued by the States and by Congress, called continental money, and made a tender for the payment of debts. Why did the framers of the Constitution mean to prevent this ? They did not mean that anything should circulate as money, the payment of which could not be enforced by the individual holding it in the legal tribunals of the country. Can you enforce the payment of one of these Treasury notes ? No more than you could enforce the payment of a bond from this Government. You cannot enforce the payment of a note issued by a State. You cannot sue a State. Rhode Island, which was one of the last States to adopt the Constitution, and one of the most lavish in paper money, because she used it to pay her soldiers, and had more soldiers, in proportion to territory, than any other State, adopted the Constitution in 1790 or 1791; and one of the first acts of the General Assembly, immediately afterwards, was to create a bank to issue paper money. That bank is in existence to-day. It is one of those "irresponsible" institutions of which the President speaks. Its first board of directors contained three or four men who spilled the first blood of the Revolution; for, say what you will, the beginning of the Revolution was the capture and burning of the Gaspee, and the contest in which Lieutenant Duddington was wounded.
What do we mean when we say anything is unconstitutional ? We construe the Constitution in two ways. We do not say that this Government must be prohibited from doing a thing in order to make it unconstitutional, because we construe the Constitution as a delegation of power, and we are bound by what it delegates to us. If it does not delegate the power to issue paper money, we have not that power. The Constitution restricts the States because they act in an independent capacity. It is clear to me that this measure is hardly constitutional. But suppose it is not so; what then ?
The President and Secretary of the Treasury tell us they are going to correct this paper money evil by having a bankrupt law applied to these corporations. I should like to see them frame such an act, consistently with the Constitution of the United States. I agree you have a general power to make a uniform system of bankruptcy; but I desire to know whether gentlemen here, who construe the Constitution as I have been in the habit of hearing it construed in this Chamber by those who profess to understand it, mean to put institutions created by your State and by my State within the power and under the control of this General Government. I believe that when the head of this Government addresses Kentucky on that subject, and says, "take care, Kentucky!" she will say, in the quaint language of her early settler, "Let those take care who are afraid." If she should rise, as I believe old Daniel Boon is represented, with a rifle on his arm, and if this Government should say, "lay down your arms," she would reply, "come and take them." Much of a Union man as I am, I would sympathize with the States that had thus replied to such menacing orders, and not with those who gave them.
Mr. President, you may talk as you choose about new fashioned modes of construing the Constitution and the doctrines which it contains; but I think the old rule, laid down by that brilliant light in the judiciary, Judge Marshall, will never be bettered. He says that "the jurisdiction of a State" (meaning the jurisdiction of individual States, and of the United States, as a nation,) "extends over everything within its limits, that exists by its authority, or is introduced by its permission." Whether this be controverted in the Dred Scott decision or in a bank decision, I say that whatever exists within the limits of the United States, from the Aroostook to the Rio Grande, and from the Atlantic to the Pacific, if it exists by the authority of the United States, under the Constitution of the United States, it is under the jurisdiction of the Government of the United States, and I do not care whether it be slavery or a bank. In my deliberate judgment, when you undertake to say that slavery goes anywhere by virtue of this Government or its Constitution, you inevitably place it within the jurisdiction of this Government. My notion is, that slavery exists, wherever it exists at all, not by the authority of the Constitution or Government of the United States, and that it is not introduced, wherever it exists, by permission of that Constitution; and for that reason I can conscientiously say to those States who do establish it, and within whose jurisdiction it is, "Take care of it yourselves. If you do anything else you will complicate the question, and it will get to be worse than the web which Penelope undertook to unravel every night, and nobody will know where or when it will end."
When the President undertakes to put any of the institutions of South Carolina under his order of bankruptcy, he will find himself brought up with a short turn. A bankrupt law has no more to do with an institution of a State than it has to do with anything in Venice. It can act upon persons, and it may possibly act upon legal persons; but it cannot be made special; it must be uniform in its operation. I believe that I read in 1841 the sentence of Judge Marshall to which I have referred, and I have never seen the book since. It occurred in a decision on a conflict of jurisdiction between the State of Maryland and the Bank of the United States. All I read of it was that single sentence, and I shall never forget it. That is the only decision, or part of one, that I ever read in my life, except the recent Dred Scott decision. I satisfied myself how the case was decided, without reading the whole opinion of Judge Marshall. I knew the result would be that the Bank of the United States, established in Maryland, did not exist there by the authority of Maryland; was not introduced there by the permission of Maryland; and that, therefore, Maryland had nothing to do with it. So it ought to be in regard to the complicated questions we are discussing at this time. If slavery exists in Kansas, or anywhere else, by virtue of the Constitution of the United States, we can control it; but I say it does not exist anywhere by the proper vigor of that instrument. It existed in some of the States when that instrument was made, and it has been extended under the jurisdiction of different States, and we have nothing to do with it.
I say that the bankrupt law suggested by the President, and the other measures which he has intimated as the means of extricating us from our present difficulties, are entirely inadequate, and rather calculated to do evil than good. I have no kind of doubt that a bank funded as the Bank of England is, and as many banks in this country are a national institution, with Government securities as the basis of the circulation, to a certain extent, and coin for the remainder could be made without any constitutional objection, and without affecting anybody's feelings, or his past opinions.
As reference has been made to the new charter of the Bank of England, it may not be improper for me to say that the new feature of that charter, requiring a certain proportion of coin, came from a distinguished American statesman who has often graced the halls of the Senate, and who prepared a plan of currency while he was in another department of the Government.
When I was told this feature would be ingrafted, I expressed the opinion, and it has turned out since to be true, that the first time England lacked corn the bank would break, for hunger will go through a stone wall; no matter how many regulations you may have in bank charters, you cannot stop it. That was the cause of the bank suspension here in 1837. It is a remarkable fact, which I suppose will hardly be believed twenty years hence, that in 1837 our wheat crop failed, and we imported ten million dollars worth of wheat to feed us. That, with other causes of drain on the bank vaults, produced the suspension. There were other reasons for it. The Government that year had forty-five or fifty million dollars deposited in the deposit banks. After allowing any bank to take the deposits on giving a little interest for them, a law was passed distributing the money of the Treasury among the States. Both these measures were operating together; and just before, we were importing grain. If this was not enough to break the banks, I do not know what could do it. It was not the tariff, as my friend from New York might suppose; but the cause was over importation. I know that the compromise tariff of 1833 created great division of sentiment among friends; but from the time of its inception and passage here until it expired, I was always its advocate. I never believed we wanted very high rates of duty. The revulsion which took place in 1834 had no more to do with the tariff of 1832 than the Doge has to do with what is going on in Venice to-day. That revulsion was produced by a quarrel between the Bank of the United States and the Government. The adjustment created by the compromise tariff of 1833 did not take effect till January 1, 1834, and it did not cause the revulsion of 1834. I have known a great many of the tariff presses and speakers of the country attribute all our disasters to that abominable bill which reduced the duties so low; but I have never yet seen the man who could tell me what were the duties on the leading articles of imports protected by the tariff of 1832 and reduced by the compromise in the years when we had the revulsions.
I know that the Senator from New York will not imagine that I am saying anything against him, for I do not believe there is any man living who has done more than he to exalt the just fame of the author of that tariff, [Henry Clay.] He loved him as I did. When this Administration shall have wasted all these husks of party, which can give no relief to the country, I hope they will do as the prodigal did of old when he had spent all return to the house of their fathers. Let them do this, and we will welcome them. Let us go back to the point whence we started when we commenced the contest for the preservation of our own industry against the pauper labor of Europe. I do not ask that you shall do this by high duties. I will say to the Chancellor of the Exchequer, (if the distinguished Senator from Virginia is entitled to that appellation here,) that, if he will ascertain the probable amount of exports and imports of the United States for the next five or six years, and tell us the amount of revenue he desires to raise, and if he will spread the duties uniformly over such articles as compete with our own productions, I will go for such a bill, provided it has a clause in it to prevent frauds on the revenue. I believe that since the author of the tariff of 1846 left the Treasury Department, no man has filled it who has not called the attention of Congress to the almost invariable practice of fraud in the importations. Mr. Guthrie, in every report of his, I believe, called the attention of Congress to the necessity of some measure to prevent fraudulent under valuations of imports. This is an important matter for honest merchants, and every patriotic man ought to desire some improvement for the sake of the morals of the country. Do we not know that the business of importing textile fabrics, in the valuation of which the most fraud can be practiced upon the Government, is now in the hands of foreigners, who have driven from the trade the honest American importer ?
If the Senator from Virginia had, two years ago, devoted as much industry to the perfection of measures to protect this Government from fraud, as he devotes now to getting us over this hard place in the finances, he would never have had any revulsion; there would have been no suspension of specie payment; he would have had no cause to call on us to resort to this doubtful mode of replenishing the Treasury. I am told that the last Secretary of the Treasury said that the English and German manufacturers of the fooleries which our people buy to such an extent, import them at about half the legal rate of duties. We now export about $300,000,000 worth of produce, and import $400,000,000. They get $300,000,000 worth of raw materials from us, such as they want. They send us $400,000,000 worth of goods, and we must pay them the difference. They take $50,000,000 in gold and silver, the products of our mines. They take $25,000,000 in pretty good State stocks, and they take the further $25,000,000 in anything we may have to offer railroad bonds, mortgages, or anything else. For they defraud the Government to about the amount of this last $25,000,000. I lament this condition of things.
If I had time I would illustrate my views as to the relation of debtor and creditor, to which I have already alluded. The principal importing city in the country is the center of its monetary system. That is the place where the exchanges are carried on between this country and foreign countries. Necessarily, in its ambition to be the sole point for exchanges, it is always tending to increase the facilities for importation and exportation. Railroads are built, from New York, Philadelphia, Baltimore, and Boston, as rivals for the foreign trade. The people of these cities pay a good deal of money towards making the roads, the western people pay a little, and the rest is obtained by making a parcel of paper kites for Wall street to buffet about and make money out of. There are fifty-eight banks in New York city, and they are called upon to furnish the means necessary to carry on the importations. If I were a manufacturer in England or Germany, and shipped $1,000,000 worth of goods to New York in the year, I would take in return $750,000 in produce, as much as I could get in coin, which would be about one eighth, as much as I could get in State stocks, and then I would take the balance in shinplasters. I would not break down the market, because I should wish to make a profit. The only reason why an honest man cannot be an importer now is, that he will be cut under in the valuation by the German Jews.
During this revulsion, I have seen some very patronizing letters from the President of the Bank of Commerce, in New York, to a Boston banker, trying to get the Boston banks to shorten the time which the securities have to run on which they make their loans. The true secret of the ability of banks to meet their engagements, is to have everything which they hold as securities of a marketable value. If their loans are based on securities having a market value, they are sure to meet their engagements. Coin always has a market value. Railroad stocks and State bonds have a market value as remittances. If they loan to a broker $500,000 on call, with railroad stocks as collateral, as soon as a demand comes from England they give him notice that the stocks are to be sold if he does not pay, or the banks will make a bargain for them with the foreign merchant. This often results in the bank and the broker fixing a price, and letting them go across the water to pay for importations. These call loans are no loans at all for business. A man cannot sail a ship with them. They would not enable him to carry on any kind of business that required any considerable time in waiting for the return of his labor. This making call loans is one reason why the banks of New York city have had such great control over the entire currency of the country. They make a scarcity of money that puts everybody else tributary to them. It is their interest to do so. It is the interest of the city of New York to continue its commercial ascendency in this country. If you want institutions to regulate your currency, you must have an institution under the government of men having no such local rivalry or jealousy, but would as soon discount in Wisconsin to get a crop to market, as in New York to pay for a cargo of British goods. It should be the purpose of a bank to aid in carrying the products of labor from the place of production to the place of consumption; and the banks would do that if they had no local interest to sustain, and there was no rivalship between different cities. I would prefer to have forty cities than one to do the commercial business of the country, because I believe it is a great vice to have very large cities.---[well, sir, you are describing a network of sub-Treasury branches operating as savings offices, too; or a government-owned national bank/credit union; or State-owned state banks with branches (circulating State notes);
I would make an institution into which I should allow the producing classes to put their small mites, and become mutual aiders and helpers of each, leaving your commercial men and traders to manage as they may. I would have what is now called in the States, a saving's institution, connected with the Treasury of the United States, and let the business of the Government be kept in the channel of the business of the producers, widening and deepening them, and increasing your facilities, and I would let anybody who pleased, deposit fifty dollars, and make the permanent depositors retire from the institution when they had been in fifteen years. I was familiar with the origin of the last Bank of the United States, and it was the most popular institution in the world, while it was open to everybody to subscribe. But when you have let in the present generation to an institution whose benefits are large, and shut the door against their successors, it will become unpopular from that day, and by the time it has run twenty years it will have no sympathies with the public, and the public will have no feeling for it but hatred. You should have an institution into which you would let people come, as they grow into active business life, and make their deposits and share in the benefits of the institution. Then you will have no monopolies. When a man has been there the period of his common business life, let him retire; he has no further use for a bank; he may as well put his money in stocks, as a permanent investment. The advantages of such an institution should be for the active business men engaged in the transport of the products of the country, and should be for the benefit of the producers, to enable them to wait for the distant return of the rewards of their labor. ---[a decade later, another senator from Rhode Island, Mr. Sprague, also suggested the setting up an institution like that]
Make such an institution as this, and in less than one year you will have $50,000,000, now in old stockings and pocket-books, doing nobody any good. Such an institution would furnish a good currency to the country, and could let money out at six per cent., and make large dividends. Your national finances would be conducted without producing these revulsions, without abstracting coin from the banks, and undermining the currency. Your people would know what they were about. There would be no risk in exchanges. The expenses of doing business would be lessened fourfold. I have read, within a week, an extract from the money article of a New Orleans paper, the Delta, I believe, which stated that the first week of this month was a week of promise, as compared with the former condition of the money market in that city a week of ease and improvement. It said there was a considerable stir of merchandise, and money was comparatively easy. It was stated that some transactions had been made at one and a half per cent. a month, but the major part at two and a half per cent. Thirty per cent, a year was a relief to the money market ! Sir, business cannot be carried on at such a rate of interest. A man had better put his securities in the fire, than to undertake to carry on business when paying such rates of interest.
It is wonderful how our people will bear a pressure. Extortion by usurers is one of the most powerful means of extracting the bread from the laborer's mouth and putting it where it will do no good to society. Some people talk about the natural instincts of men for money; but, sir, nature never formed a man with any instinct for extortion. Men never get such a feeling until the natural heart is gone, and a horse leech put in its stead, that cries "Give, give." That is the way with money lenders. I have known one of them carry it on until he would steal oats from his own horse. [Laughter.] I wish to take society away from the grasp of these men, let them be where they will, acting as individuals or in banks; and I am afraid some of our banks want a little castigation for bad practices. I have heard some rather bad stories in regard to a few of our banks. I have read the returns of the banks of the city of New York, which are the controlling banks of the country as to business. They have generally, in ordinary times, from twelve to seventeen million dollars of coin, and about six or eight millions of circulation. The business of the clearing house, which is a place for exchanging notes and checks, and paying balances, is, in ordinary times, more than twenty million dollars a day. All this great operation of business is to be performed on a currency in bills of $8,000,000 in those fifty-eight banks. They have more than two dollars of coin for one dollar of paper, and yet it is called inflation ! It seems to me to be about the nearest approach to hard money I ever saw. This clearing house is a good thing for misers; but it clears out effectually every feature of legitimate banking. Banking is founded on confidence and credit. The clearing house system is founded on this idea: "we will go to bed, with an institution owing us a dollar." They settle their balances in coin every day. There is not a bank officer in New York who has gone to bed on any night during the last three years trusting another institution with a paper dollar. Everything is settled nightly. If you want anything faster than that you ought to pay coin in advance. If that is not hard money, what is ? I want a bank that will trust not only the Government but the people. The President says that the credit of the United States is so high that this is an admirable time for the Government to negotiate. I admit that the banks will jump at this offer. They will not trust anybody who labors; they have bled them so long that they are unworthy of credit. The banks in New York, since their suspension, have greatly increased their stock of coin. Nobody who produces a dollar's worth can go there and negotiate a bill of exchange so as to bring a cargo of wheat from Chicago. I saw in the Journal of Commerce, which is pretty good authority on some sides of this Chamber, a statement that it was remarkable that when there was a clear margin of thirty cents a bushel on wheat, there was not money enough to buy and ship a cargo. That was six weeks ago. I saw letters from merchants in England to merchants in Providence, asking them to unite with them in shipping wheat; and no doubt a large profit would be realized. I asked them why they did not engage in it. They said they had their money out, and that between breaking their neighbors and making twenty or thirty cents a bushel on wheat, they had no doubt which to choose; and they did not want to see anybody breaking. These men were bank directors; those "irresponsible" men who would not turn the screws on a debtor in order to make thirty cents a bushel by shipping wheat.
Mr. President, I think I have demonstrated the propriety of the request which I yesterday made to the Senator from Virginia, to wait before he pressed this bill, until I could have time to read it and concentrate my thoughts somewhat. I am ashamed to address a body like the Senate of the United States without first thinking over every question that I mean to present to them, and marshaling my points in my own mind by a little reflection. I was certain when the message was read, that the President was totally mistaken in regard to the Bank of England, although the subject had not been on my mind for thirty years; and I am sure of it now, when I have looked at the book to which I have already called the attention of the Senate. I know something about our own banks, and I have been in favor of granting banking facilities ever since I have been acquainted with private money-lenders and usurers. When I see a proposition to establish a bank coming from responsible men, who have been in the habit of lending under the modern free-trade notions about money, I am glad to take their capital, and put it together under a charter which will enable the Legislature to watch them and fix the rate of interest they shall charge, and have some control over them. I say that under the Magna Charta of this Government, you have no right to investigate the affairs of private individuals, and therefore you cannot put State banks under the operation of a bankrupt law which you may pass. But get money into a bank under the authority of a law of your own, and you can control its issues, you can control the rate of interest at which it shall make loans, and there will be some sort of a fair chance between debtor and creditor. The debtor will be enough of a servant any way, in the most benignant position you can place him.
I have alluded to the movement in England as to cotton. They expect to bring down the price of cotton. I have known that experiment to be tried in England before, and I never knew it tried that it did not succeed. Once, when cotton was very high, there was a current rumor, and I have no doubt a true one, that the banks of England would not discount paper for any man who dealt in cotton, and it was not many weeks before cotton was offered at a less price. There was a combination on this side to exact an enormous price; and a combination on the other side to prevent it. I do not believe in these combinations on either side. I believe in letting trade take a fair, natural, and honest course; and I desire to see the productions of labor, and the wages of labor, at a high price. If you undertake to give large wages, and to sell the products low, it is easy to see where the end will be.
Now, sir, I hope the Senator from Virginia will permit me, and those who think with me, to have this bill put in such a form as to enable us to make an amendment fixing some mode of redeeming this money, or that he will give us assurances that he himself will introduce a bill to prevent frauds on the revenue. If he will do that, I can guaranty him that as soon as we dispose of the goods in his warehouses, that stand between the producer and the market, as the great dragon in the Apocalypse, ready to devour the first dawnings of a remunerative market, as soon as we can see a market in which to sell our own products, the industry of this country will shake off its lethargy and gloom, and you will see it bound forward in its ordinary march to success. It is impossible to get credit on such a market as we have now; and a man would be a fool to take it if he could get it, and produce for a market that is in the hands and under the control of foreigners. I tell our friends of the cotton-growing region that they will rue the day when they established this free-trade system, as it is called; but it is not truly so called. It is a one-sided system, that brings us in debt all the time, and prostrates the consumers of their staples within the limits of the United States, and gives them Europe as their only customer. The result will be the same to them as if they were in the hands of a private money lender. There is no end to their exactions. You want competitors in the market for purchasing your goods, and the best competitors are those nearest to you. I have never been in the Senate when a treaty came here that would take off a halfpenny a pound from tobacco, but persons were ready to overturn the Constitution and make a tariff under a treaty, though it was never designed that we should have a revenue law which did not originate in the other House. So it was when any new market was opened for cotton. Does not everybody hail the news when it comes, that Russia is beginning to manufacture, and make a market for our staples ? Our own country, ten years ago, furnished a market for six hundred thousand bales of cotton annually, and it has not increased a bale since. If you had allowed a tariff which protected your revenues from fraud to stand, the consumption in this country, to-day, would have been one million two hundred thousand bales annually.
There is not an honest importer who can live by the side of these Germans. It is a national degradation to see the quotation of exchanges in this country. Three weeks ago, I saw it stated that there were in New York some bills on the market, drawn by a factor in Charleston, and indorsed by the Bank of Charleston or the Bank of the State of South Carolina, I forget which, with bills of lading annexed, predicated on a purchase of cotton at about twelve cents a pound, when cotton in England was quoted at eighteen cents, were offered at one hundred and two, and there were no buyers; but a bill drawn by a German on an English banker sold for one hundred and ten. A German drawing on an English banker has decided preference in our market over an American bank, whose draft is based on produce that will bring fifty per cent. advance on its cost.
A short time ago the English papers said we were laboring under a panic for which there was no reason, and that it would not reach England, for they were doing a profitable business. I admit they have done a business which has taken all the gold we got from California, and they boast that they have a hundred millions sterling in our State stocks and railroad bonds. When the tariff of 1846 went into operation we had taken from them near every dollar of stocks. Under the act which gave our industry protection they retained scarce any of our stocks but old Massachusetts fives, which was always above par there. Adopt a system that will make England ship coin, and they will send back our stocks which they hold. England is the hardest country to get coin out of, and the easiest to get it into, that I ever heard of.
I began by endeavoring to induce the members of the Senate to consider the condition of the labor of this country, of the active business men, and to try to do something at this session that shall give them relief and vigor. This Treasury note business is directly against them. If you want only a few millions of Treasury notes, I shall not object to their issue; but now the Senator from Virginia says they will be a good thing for the banks because they can be paid out in the place of coin. The Senator from Virginia told us that the law required six millions of coin to be in the Mint, and that it was impossible to carry on the Government without six millions in the sub-Treasury, making twelve millions required for these two purposes. He said the Government was now reduced to five millions, but still these notes would be used as a currency and would relieve the banks from paying coin. If there is a necessity for these notes, it is to supply this deficiency of coin, and it will all come from the vaults of the banks which are trying to resume.
I would not object to a limited issue, but see no reason for twenty millions.
I would prefer that this should take the form of a loan, and then I think it would get into the hands of the savings banks, or some where else, where it would not disturb the currency. Tell us just what you want, and I am willing to vote it. I only ask that you will not make a bank out of this. That is the worst and the most unconstitutional form of paper money ever devised by the wit of man; it will corrupt the Government and corrupt the people.
I do not believe we should have had any suspension this fall if there had not been a rivalry between New York and Boston, which should hold out the longest and be regarded in England as the best city for the foreign trade.
I hope the Senator from Virginia will let this matter lie over until we can think more about it. I will not detain the Senate longer. I am greatly obliged to Senators for having listened to these rambling remarks; and I promise, if they will give me reasonable time, never to trouble them again. I am opposed to borrowing money in order to enable importers to delay the payment of duties as a system of permanent relief.
Mr. HUNTER. It is not my purpose, Mr. President, to follow the Senator from Rhode Island into the field of inquiry to which he has invited us. These are interesting subjects, and he certainly manages them ably, and in an interesting manner; but the immediate necessities of the Government press us to action. He said, if I understood him, that if I would agree to make this a temporary measure he would go for it. I have agreed to accept the amendment of the Senator from New York.
Mr. Simmons. But I want the whole issue reduced to about six or eight million dollars in amount.
Mr. HUNTER. I will go as far as I can to accommodate gentlemen. I have agreed to make it a temporary measure.
Mr. SIMMONS. I am willing to say ten million dollars.
Mr. HUNTER. I cannot agree to a reduction of the amount. I am willing to make some concession on the point of interest. The Senator from New York wishes it not to exceed four per cent. If he will say four and a half per cent., I will agree to it.
Mr. Seward. I agree to that.
Mr. HUNTER. I believe if we were to restrict the issue to $10,000,000, we should in January be called on for another bill. I think that is the impression of the Department; and under these circumstances I believe we had better give this authority now. I am no more in favor of a permanent issue of Treasury notes than the Senator from Rhode Island. I design only to provide for the present exigency provide for the temporary wants of the Government until the times shall become easier, and the machinery of commerce shall be once more restored, and we shall be able to derive from the ordinary sources, as I believe we can, revenue enough to carry on this Government economically.
In the mean time there is a pressing necessity for money, and I believe (I confess I defer very much to the judgment of the Secretary of the Treasury in regard to the amount) he will require the amount he has asked for; and I believe farther, that if he does not require it, he will not issue one dollar's worth beyond what is necessary to carry on the Government. He can have no interest to do so. His reputation as a financier would induce him to carry on the Government with the emission of as small an amount of Treasury notes as possible. I think I can see how it is that he will require this amount. We all know that our surplus is diminishing not merely weekly, but daily. We know, as I said before not that the law requires it, but that practice shows that about $6,000,000 surplus is necessary to administer the affairs of the Treasury. We know, too, that about $6,000,000 has been considered necessary as a Mint fund not so necessary, I admit, as the $6,000,000 surplus to carry on the affairs of the Treasury. I believe these two funds ought to be made good. I believe the additional $8,000,000 will not prove to be more than necessary to meet the temporary wants of the Government. It will be necessary, even though the estimates of the Secretary of the Treasury in regard to our probable revenue turn out to be correct; because, no one supposes, even if there should be a revival of trade and business, that there will be a large increase on the present receipts into the Treasury from imposts until the month of April or May. It may be, and probably will be, that towards the close of the fiscal year, money will flow into the Treasury more rapidly; and, if it shall do so, in that way it may make good the estimate of the Secretary of the Treasury, which estimate, by the way, allow me to observe here, was not merely conjectural. He said he calculated for a diminution of one fourth on the dutiable imports for the remaining three quarters of a year. On reference to the leading port New York, the only one from which we have returns if you take the goods that went into warehouse and those which went into consumption together, the imports have diminished one fourth. But a larger proportion have gone into warehouse than have been entered for consumption, His presumption is legitimate, that when the times are easier the goods will come out of warehouse and enter into consumption; and should they do so, they may, in that way, make up his estimates; but that there will be a temporary deficiency which will have to be met in this way, I have no doubt. I believe he will want $6,000,000 by the 1st of January, or very soon after; and I think it very probable that the rest will be called for to make good the Mint and surplus funds by the 1st of March.
I have no idea that before that time we can draw much more from the Treasury than we are now drawing. I know that we are paying out more than we are receiving. I think, inasmuch as the appropriations have been made and requisitions have been issued, we ought to prepare and provide the means for meeting those requisitions, and not have to resort to the expedient of having them held up here and there until we can manage to get the means. It is better to provide the Secretary with what will be sufficient, with what will make it certain that he can administer this Department safely and creditably to the Government, than to cut him down so closely that it may be necessary to pass a bill in haste again in the month of January.
It will be observed, too, that if money shall be wanted by the 1st of March, and we require him to advertise and put the Treasury notes out on a notice of thirty days, the bill ought to be passed now. I believe it is a very important thing to advertise them in the manner proposed in this bill. I believe that it offers the best and most practicable method of putting them out for their par value in specie, which is the mode in which, in my opinion, they ought to be issued.
For these reasons, I hope very much that we may be able to get action on this bill to-day or to-morrow, at the pleasure of the Senate; but I hope that by to-morrow night we shall act on it in some way, for I believe there is a pressing necessity for part of it at any rate.
Mr. Crittenden. I do not rise to continue this debate. I shall vote, with whatever reluctance, for this bill. I think these expedients of such a character that they ought to be resorted to with the utmost degree of caution and jealousy on the part of Congress. It is so easy a mode of supplying necessities, it is so easy to make necessities, that it is an extremely dangerous mode of supplying the public Treasury. It has always been regarded so, I believe, in this Hall, and always ought to be so regarded. I suppose, however, in the present instance, we have no alternative. The pressing necessities and the exigencies of the moment are such as to leave us scarcely any option.
Whether the interest is not to exceed six per cent., or four and a half per cent., seems to me a matter of very little consequence. Of course, the Secretary of the Treasury will use these notes to the greatest advantage and greatest interest of the country; but I should not anticipate that any interest would be necessary to give a perfect currency to these notes. I am certain that one very great and large portion of this country one whose trade is now suffering very much by the great inequality of exchange under which it is laboring would give a premium for them. When I left home, a few weeks ago, I obtained exchange at one of our banks paying specie now paying specie, always paying specie upon a bank of New York that was not paying specie, and I had to pay two per cent. for the exchange. With such a currency as that now proposed distributed in that country, all this expense would have been saved. It should be worth a premium. My calculation is that the Secretary will not have to pay anything as interest. Indeed, it seems to me that, to incumber these notes with any appreciable rate of interest will be to check, in some degree, their utility. What farmer, what man in the country, with a Treasury note for fifty or one hundred dollars, will stop to make a calculation of two or three mouths' interest at four and a half per cent.? It will go from his hands without such a calculation on his part, assimilated in his thoughts and dealings to bank notes; and the interest, when paid, will be paid to some more calculating man, into whose hands it has fallen, and who has hoarded it up for the purpose of presenting it in large sums and making money by it. I wish we were agreed that no interest is necessary. I do not believe that it will be necessary; but yet, as it seems to be contemplated that this money shall not be used by the Government as an immediate currency to the whole extent of it, but that they shall give it out as securities for gold and silver, and use that, then it may be necessary for them, when bargaining for money, for all I know, to give a little interest. I will say nothing at all, therefore, about the interest; but express my hope that the Secretary of the Treasury will put a mere nominal rate of interest, if any, on these notes.
As I said, I shall vote for this bill, and for the whole amount of it. We are told it may all be necessary. As I said before, I think it a very delusive and dangerous and tempting sort of supply. It presents a very singular spectacle, that after the great commercial and monetary crisis through which we have passed, just at the moment when the banks everywhere are resuming specie payment, the Government is suspending specie payment. But, sir, there is no arguing with the necessities of the case. The Government must go on, and we must supply the means. It is under this sense of obligation and necessity that I shall give my vote for this bill and for the whole amount asked. They will not use it if they have revenue derived from the regular sources sufficient to meet the expenses of the Government. It would be a criminal abuse of the confidence of the public to have money lying in the Treasury, and yet use Treasury notes in the place of the money. I do not fear the abuse of the trust, for there can be no motive and no inducement to abuse it. I therefore vote without question for the whole issue now proposed.
I give this vote in the further confidence and I was prepared to offer an amendment to that effect to this bill, but of course the amendment would be objectionable, as originating measures for raising revenue in the Senate, and therefore I cannot offer it that, at a suitable and proper time, this measure will be followed up by a proposition to increase the revenue so as to meet, under all contingencies, the demand these notes will create on the Government, and to supply a fund for their payment. When we go into debt, let us make, simultaneously, provision for the redemption of the debt. We can only excuse ourselves for not doing so upon the supposition that the ordinary revenue, when this little moment of obstruction is passed, will supply ample means I do not believe any such thing; it is a dream. Nothing can recall the past; and in the past, according to your showing, millions have been lost by the diminution of the revenue. Does anybody promise himself that, in the balance of the present fiscal year, or from March next, more than enough will be received, or even that enough will be received, to pay all the expenses of the year ending the 30th of June ? I think it will be an over-sanguine calculation altogether; and provision will have to be made for the payment of these notes hereafter by some increase of revenue, or by a loan, or funding this debt, as certain as we sit here; at least, such is my anticipation. It is a safe course; it guards against the accumulation of debt, that we should now at once impose whatever duties or taxes are necessary in order to supply the fund for the extinction of this paper currency which we are to issue.
It seems to me the time is altogether propitious for it. One of the circumstances which invite, at this time, to the issue of a paper currency by the Government, is the case and alleviation it may give to the commercial and pecuniary distresses and wants of the country. I confess that that has its reconciling effect on me. If, at the same time you can provide for the payment of it by a measure that will press on no American citizen, but, by a proper adjustment of the increased duties on articles of foreign commerce which enter into competition with the industry of our own country, we not only can aid the man who wants money, but aid the man who wants labor, then indeed we shall be doing something that is benignant, and something that is to alleviate the condition of the country. I desire to see both. While supply the Government with money, I want, at the same time, by a corresponding measure, to pay that money, by a duty which shall give the laborer labor. That, as the Senator from Rhode Island has said, is the source of all wealth; but, now, in the present condition of the country, we are not required so much to look at it as a source of wealth; we are obliged to bring down our calculations; we are obliged to calculate what is a necessary provision for the poor, now out of employment by thousands ! a fact which we know.
If these laborers can be brought to work and made comfortable during this long winter; or made comfortable more permanently than they have been and the means of subsistence supplied, will no that be a great recommendation to a measure which shall afford them some protection and some encouragement to their labor ? We want it for revenue. It would not be a measure for protection, but a measure essentially for revenue. No gentleman here, on any constitutional ground, can have any objection so to apply and adjust the duties, as to afford to the suffering manufacturer and mechanics of our country all the protection which a proper adjustment of the tariff on the articles that ought to be protected, would give them.
These are my views, Mr. President. I mean to vote for the bill, and shall not protract the debate further.
Mr. BELL. Mr. President, if I had the confidence of the honorable Senator from Kentucky, in what he supposes will, almost as a matter of course, follow after the granting of this relief, I would express the same sentiment he has done, and give my support cheerfully to this bill; but I have not the smallest confidence that, if we pass this bill, allowing this amount of notes to be issued by the Treasury, any such thing will follow. As far as I can gather anything from the expression of the Executive, (and I fear very much that it is responded to fully by a majority in this body,) there is no other measure of relief to be proposed except that adverted to by the honorable Senator from Rhode Island an act of bankruptcy to operate on the fourteen hundred banks of the various States. No, sir; it is not contemplated by those in whose power we are, to relieve the people. If I could anticipate or suppose that, when we authorize the issue of these $20,000,000 of Treasury notes, they will be thrown into circulation and afford a temporary relief to the distresses in every section of the country, and particularly in that section which is now most suffering perhaps, that would be an inducement to me to support this bill, and I should be willing to forego, to some extent, my apprehensions as to the policy of the Executive, backed, as I presume it to be, by a majority in both Houses of Congress. I am not as well versed in these subjects as the Senator from Rhode Island, and have scarcely a tithe of the knowledge he has on these questions; but I fear very much that very little relief to the country will come from authority to issue these $20,000,000 of Treasury notes, now, or in the course of a year.
I have already heard it suggested (and it had struck my mind) that one of the means by which the Treasury is to be aided in its ordinary, natural, legitimate way, is by obtaining the duties on the $26,000,000 or $28,000,000 worth of foreign goods now in warehouse at New York. These notes, however, are to go in some direction to facilitate the operation of keeping them in warehouse until a rise in the market takes place. These Treasury notes, as I understand and anticipate, from what I have heard from both sides of the Chamber, as to the rate of interest, will go into the New York city banks, which have had no sympathy with the condition of the country. I am sure they have not had any for the condition of the interior and West. The major part of these notes, I apprehend, will find their lodgment there. Some small modicum of relief may find its way to the West. In regard to the state of exchanges which is now grinding down the South and Southwest, I, too, could tell a tale, as well as my honorable friend from Kentucky; but I will not detain the Senate by doing so. I apprehend there will be very little relief on that point.
What is the proposition ? To relieve the Government from bankruptcy; to provide for the Government in the true spirit, and according to the original theory of that sublime invention, the sub-Treasury ! It is to take care of the Government at all hazards. In the execution of that policy, and the favorite doctrine of free trade avowed by the honorable Senator from Virginia on the night of the passage of the last tariff bill, that bill was pressed through this House when we scarcely had time, and, indeed, did not have time, to comprehend fully the nature of the amendments which were adopted. That bill was not wholly to the taste of the honorable Senator from Virginia, even in the shape in which it finally passed and received the sanction of a majority of both Houses. It was not satisfactory to him; but he said that he took it because it was the furthest advance to free trade that he hoped to get on that occasion. I consider that that idea lies at the bottom of the policy of the Government on this occasion, in asking for $20,000,000 of Treasury notes.
The honorable Senator from New York [Mr. Seward] supposes he has sufficiently limited the bill in its extent to prevent a deleterious operation on interests that he would desire, and perhaps does desire, to maintain and advocate. He has got a provision inserted that this bill shall be limited in its operation to the 1st of January, 1859, when Congress will be again in session, and can then act upon the subject. Perhaps I misunderstand the effect of that provision, and I should like the honorable Senator from Virginia to instruct me if I am in error on that point; but as I construe the provision, the bill, as proposed to be amended, will authorize an issue of $20,000,000 within the closing month of next year, so that there will be $20,000,000 of debt redeemable, according to the other provisions of this bill, in twelve months from that time. The Government will thus be able to get along smoothly, easily, and without any embarrassment, until the 1st of January, 1859, and then it will be in the power of the Government to apply to Congress, and state an exigency in the future, precisely like the present, as a reason for giving them further authority to issue notes, or to continue the $20,000,000 outstanding for another twelve months, extending to the 1st January, 1860.
I state these facts to show that even with that limitation, up to the 1st of January, 1859, the Government will be in a condition to meet all its responsibilities, whatever may be the income derived from the ordinary revenues between this and that time, even if they should fall short one third or one half of what they are now estimated at. The Government is making provision, in asking for these $20,000,000, that will leave them perfectly free from all embarrassment, or apprehension of embarrassment, for one year; and they will smile at the application of that portion of Congress who think that something more permanent ought to be done for the relief of the industry of the country, or for providing a legitimate and proper revenue for the support of the Government. They can smile and disregard, as they will disregard, in my opinion, the applications of those gentlemen, who, like my friend from Kentucky, anticipate, with confidence, that they surely will not fail within that time to offer some provision or the permanent relief of the country.
Sir, the honorable Senator from Rhode Island [Mr. Simmons] has given us information on another point; and the statement comes from a source for which I think no member of the Senate can fail to have due respect who has heard his sentiments, and who has noticed the experience and the knowledge evinced by that Senator to-day on all questions connected with this subject. Every Senator must have due respect for the probable truth of the announcement of that Senator on that point. What is it ? That the Government is defrauded out of one half the amount of revenue provided by the existing tariff, by foreign traders and their agents in this country, on all textile fabrics. As that honorable Senator stated, Congress have been advised, since 1846, again and again, by each successive Secretary of the Treasury, that these frauds were enormous, and called for correction. Has the honorable Senator from Virginia, or any gentleman holding his opinions on the subject of free trade, ever made a proposition for the correction of these abuses, that promised to be adequate, or to have any decided effect, one way or the other ? Not one of them. They have gone unheeded from session to session, and from Congress to Congress, to this day. The honorable Senator from Rhode Island announces to you that not more than one half of the revenue provided for by that act has ever been collected; the Government has been defrauded of it. That honorable Senator also tells you that every honest American importer has been driven out of the trade by these frauds, and that it is in the hands of foreigners, or the factors and agents of foreigners. I have had no reason to doubt it.
Some three or four years ago (I do not know upon what impulse, or how was brought about) a committee was appointed to go to the principal cities and investigate the truth or falsehood of the allegations made on this subject, for the protection of the honest American importing merchant, and as a means of affording information on which these abuses could be corrected. The Senate saw proper to appoint me certainly I had nothing to do with it as one member of that committee. I was deputed, by a sub-committee of that committee, to go to New Orleans. I did go there, and gave as much time to the investigation of the subject as I could. I found the fact there to be, that some men, who were reputed to be honest, engaged in the foreign trade, had been driven from it by the grossness of the frauds practiced by the importers in that city. By comparing notes with gentlemen who went to other cities, I was informed of, and I believe I have the papers yet in my possession showing, enormous frauds of a similar description. I ascertained that a very extraordinary state of things existed in New York, and that it became its interest, or was supposed to be its interest, to encourage the frauds that were practiced on the custom-house in that city, for the purpose of concentrating the foreign trade of the country there. I found the astonishing fact to exist, that some few of the honest importing merchants of New Orleans continued in the trade who were unwilling to make the sacrifice of personal honor and character by making importations under circumstances which would justify them in fair and honorable competition and they found it cheaper and more reconcilable to their conscience to import their goods into New York, have them valued there, and then reshipped to New Orleans, at the additional cost of transportation and insurance and commissions to New York, rather than import them into the city of New Orleans directly, where they would have to give a statement of the true invoice price abroad. Even such a fact as that came within my knowledge by the statements of others, but it had no effect here.
The honorable Senator from Rhode Island thinks that, at all events, we ought to have a pledge that such gross enormity, such a slur, such a stain on the national honor, or, at least, on the character of our importing merchants, ought to be wiped out. He thinks that something of that kind ought to be provided for by this bill. I do not think it would be very incongruous; but I do not suppose it is practicable to have such a thing effected under the present state of the sentiment which exists on this subject. I shall not, therefore, offer any such proposition. I have no hope, no expectation, that any such effort will be made, because I have seen attempts to make this correction before; I have seen too many sessions pass without any attention being given to it on the part of those who had the power in the Senate and in the Executive Department. Then, sir, I cannot, on any ground that has been alleged here, vote with the honorable Senator from Kentucky for this bill as it stands, and I will not. I think no sufficient pretext has been urged why we should give authority to issue the entire $20,000,000. I am willing to vote whatever amount is supposed to be necessary at the present moment to answer the present exigency. It is said by the honorable Senator from Virginia that we must have six or eight million dollars to make our payments in January. Give it. And he wants this bill passed to-day, or to-morrow. Pass it for that sum to-day, or to-morrow if you please. I will vote for it this moment. Or, if you choose to say that $10,000,000 may be required in January, let it be $10,000,000.
As for the argument that we ought to have a surplus in the Treasury, I admit, as a general rule, and as a measure of general policy, it is proper; but we can suffer one or two months to elapse before we resort to keeping that much surplus in the Treasury. In regard to the $6,000,000 kept for the use of the Mint, according to our policy, we can wait a month or two before we return that to the Mint. What I mean to say is, let us pass what is necessary for the present moment. We cannot wait another week; we cannot wait two weeks before we ought to have the means of paying the debts of the Government, or what may be demanded of the Government within the present month. Let us vote it at once, freely; but let us keep a hold on the Government for the benefit of the country, not for ourselves. Let us keep some hold on the Government until we can see whether they mean to make any permanent change for deriving the revenue legitimately and safely for the country. Then, when they come in the middle or end of the month of January, for example, and say, "those $8,000,000 or $10,000,000 you have given are about to be exhausted, we want authority to issue $20,000,000, or any other amount in addition," we may have more time to consider the subject. I do not object so much to the amount as to the avoidance of responsibility for doing that for the permanent relief and benefit of the country which they ought to do now.
I think we ought to limit them to the amount they now need. If they say it is necessary to have $10,000,000, I will vote it at four and a half, or six, or seven per cent., or whatever rate may be necessary. But I do not wish the Government to escape from the necessity of applying again to Congress during the present session, when the necessity will not be so exigent or so pressing, but that a few days may be allowed to provide for the correction of the abuse to which I have alluded, if nothing further, so that we may extend that protection to the domestic interests of this country which the law now prescribes, by collecting duties honestly and fairly; and protect the character and employment of the American importer against the fraudulent conduct of foreign manufacturers, and the agents and brokers of foreign houses.
I cannot vote for this bill as it now stands, and for the simple reason I have stated. I do not deny that this is a proper means to support the Government. It has been resorted to heretofore. We should resort to it with caution; but we are sufficiently advised that there is a necessity for something to be done at present. We have a knowledge of the causes which have led to this state of affairs, in some part. Let us go now to the extent that is necessary, and no further; and when they want more, let us apply some remedy that will provide effectually for a sufficient supply to the Treasury of the means of carrying on the Government not by Treasury notes or bills of credit, but by a revenue derived in the ordinary way, by duties, or direct taxes, if you please. Let us know how it is to be raised.
I shall not detain the Senate longer. I meant merely to express the grounds on which I could not give my vote for the issue of $20,000,000 of Treasury notes now, though I may go even further, if it be found to be necessary, hereafter. But now, in this hurried manner, when we have no opportunity of attaching any provision to this bill that might be constitutionally in our power, to produce some permanent relief to the country, I want to go no further than do just what is expedient at the present moment; and when the Administration come to make an application for more, let them come under circumstances which will enable us to devote more time to the subject.
Mr. WILSON. I move that the Senate adjourn.
Mr. HUNTER. I hope it will be with the understanding that to-morrow we shall finish the bill. ["Certainly."]
The motion was agreed to, and the Senate adjourned.
35th United States Congress
March 4, 1857 March 4, 1859
James Buchanan, President of the United States
John C. Breckinridge (D) Vice-President of U.S., President of the Senate
James M. Mason (D) President pro tempore of the Senate
3. Benjamin Fitzpatrick (D) 2. Clement C. Clay, Jr. (D)
2. William K. Sebastian (D) 3. Robert W. Johnson (D)
3. William M. Gwin (D) 1. David C. Broderick (D)
Connecticut 3. La Fayette S. Foster (R) 1. James Dixon (R)
1. James A. Bayard, Jr. (D) 2. Martin W. Bates (D)
Florida 1. Stephen Mallory (D) 3. David Levy Yulee (D)
Georgia 2. Robert Toombs (D) 3. Alfred Iverson, Sr. (D)
2. Stephen A. Douglas (D)
DOUGLAS, Stephen Arnold (1813-1861),
Affectionately known as the "Little Giant." He is remembered for his debates with Abraham Lincoln in the Illinois Senate elections (1858) which brought Lincoln to national attention. He was a Democratic congressman from Illinois 1843-47, and senator 1847-61. Involved in the issue of slavery in the new states, he helped draft the COMPROMISE of 1850, based on SQUATTER SOVEREIGNTY, and the KANSAS-NEBRASKA ACT (1854). In 1860 he was the unsuccessful Democratic presidential candidate, but later supported Lincoln and the Union.
3. Lyman Trumbull (R)
Indiana 1. Jesse D. Bright (D) 3. Graham N. Fitch (D)
Iowa 2. George W. Jones (D) 3. James Harlan (R)
2. John B. Thompson (A) 3. John J. Crittenden (A)
2. Judah P. Benjamin (D)
BENJAMIN, Judah Philip (1811-1884),
West Indian-born US politician and lawyer, called the "brains of the Confederacy." As US senator from Louisiana (1853-61), he proved an able advocate of the Southern cause. After secession, Jefferson Davis, his personal friend, appointed him successively attorney general, secretary of war, and finally secretary of state (1862-65) in the Confederate government. On the collapse of the Confederacy Benjamin fled to England, where he became a highly successful barrister.
3. John Slidell (D)
2. William Pitt Fessenden (R) (October 16, 1806 -- September 8, 1869)
born in Boscawen, Merrimack County, N.H.; attended the common schools; graduated from Bowdoin College, Brunswick, Maine, in 1827; studied law; admitted to the bar in 1827 and practiced in Bridgeton, Bangor, and Portland, Maine; member, State house of representatives in 1832 and 1840; elected as a Whig to the 27th Congress (March 4, 1841 - March 3, 1843); declined to be a candidate for reelection in 1842; member, State house of representatives 1845-1846; unsuccessful Whig candidate for election to the 32nd Congress; member, State house of representatives 1853-1854; elected as a Whig to the United States Senate to fill the vacancy in the term beginning March 4, 1853, caused by the failure of the legislature to elect; reelected in 1859 as a Republican and served from February 10, 1854, to July 1, 1864, when he resigned to accept Secretary of the Treasury appointment (1864-1865); chairman, Committee on Finance (37th through 39th Congresses); member of the peace convention of 1861 held in Washington, D.C., in an effort to devise means to prevent the impending war; again elected to the United States Senate as a Republican and served from March 4, 1865, until his death in Portland, Maine, September 8, 1869; chairman, Committee on Public Buildings and Grounds (Fortieth Congress), Committee on Appropriations (41st Congress), Committee on the Library (41st Congress);
1. Hannibal Hamlin (R)
Maryland 3. James Pearce (D) 1. Anthony Kennedy (A)
1. Charles Sumner (R) ---future radical reconstructionist, voted for the 1862 legal-tender clause
2. Henry Wilson (R) ---voted for the 1862 legal-tender clause
2. Charles E. Stuart (D)
1. Zachariah Chandler (R) ---voted for the 1862 legal-tender clause
Minnesota 1. Henry M. Rice (D), from May 11, 1858 2. James Shields (D), from May 11, 1858
2. Albert G. Brown (D)
1. Jefferson Davis (D)
DAVIS, Jefferson (1808-1889),
president of the Confederate States of America during the Civil War, born in Fairview, Kentucky. He represented Mississippi in the US Senate (1847-51 and 1857-61) and was a leading defender of slavery and states' rights. He was a nationalist secretary of war, 1853-57, but when the Southern states began their secession Davis resigned from the Senate in January 1861, when Mississippi withdrew from the Union. His peace delegation to Lincoln was rebuffed and he ordered the attack on Fort Sumter, S.C., which opened the war.
On February 18, 1861, he became provisional president of the Confederacy and was elected for a six-year term. Although his leadership was criticized, he made the best of inferior numbers and poor industrial resources. In 1865 Davis was captured, and after two years in prison was released on bail.
3. James S. Green (D)
1. Trusten Polk (D)
3. James Bell (R) Daniel Clark (R) 2. John P. Hale (R)
New Jersey 1. John R. Thomson (D) 2. William Wright (D)
William Henry Seward (R) (1801-1872); future Secretary of State under Lincoln and Johnson; purchased Alaska in 1867
studied law at Union College, graduating in 1820 with highest honors, and as a member of Phi Beta Kappa. He was admitted to the New York State Bar in 1821.
In 1830, was elected to the state senate as an Anti-Masonic candidate, and served for four years.
As a State Senator, on January 31, 1832, made an elaborate defense of the Bank of the United States in reply to a legislative resolution declaring that its charter ought not be renewed. Seward was counsel for Erastus Corning, a large capitalist of Albany who was the head of the projectors of the Minnesota and Northwestern Railroad Company which, in 1854, by fraud and corruption obtained from Congress an extensive land grant of 900,000 acres.
In 1838 was elected Governor of New York (in that year, the concept and practice of Free-Banking, which in 1863 became the National currency Bank System, commenced in New York State). He was re-elected to a second two-year term in 1840.
Preston King (R)
2. David S. Reid (D) 3. Asa Biggs (D) Thomas L. Clingman (D)
Ohio 1. Benjamin Wade (R) 3. George E. Pugh (D)
Oregon 3. Joseph Lane (D), from February 14, 1859 2. Delazon Smith (D), from February 14, 1859
Pennsylvania 3. William Bigler (D) 1. Simon Cameron (R)
Philip Allen (D)
James F. Simmons (R)
SIMMONS, James Fowler, a Senator from Rhode Island; born on a farm near Little Compton, Newport County, R.I., September 10, 1795; attended a private school in Newport; moved to Providence in 1812; employed in various manufacturing concerns in Rhode Island and Massachusetts; engaged in the manufacture of yarn at Simmonsville, N.H., in 1822; moved to Johnston, R.I., in 1827 and resumed the manufacture of yarns and engaged in agricultural pursuits;
member, State house of representatives 1828-1841; elected as a Whig to the United States Senate and served from March 4, 1841, to March 3, 1847; unsuccessful candidate for reelection in 1846 and for election in 1850 to the United States Senate;
chairman, Committee on Manufactures (27th and 28th Congresses), Committee on Printing (27th and 28th Congresses); returned to Johnston and resumed his former pursuits; again elected to the United States Senate as a Republican and served from March 4, 1857, to September 5, 1862, when he resigned; chairman, Committee on Patents and the Patent Office (37th Congress); resumed his former manufacturing pursuits; died in Johnston, July 10, 1864; interment in North End Cemetery, Providence, R.I.
South Carolina 3. Andrew Butler (D) James H. Hammond (D) 2. Josiah J. Evans (D) Arthur P. Hayne (D) James Chesnut, Jr. (D)
2. John Bell (A)
1. Andrew Johnson (1808-1875) (D), from October 8, 1857
17th president of the US. He was born in Raleigh, N.C., of a poor family and at 10 apprenticed to a tailor. In 1826 he moved to Greenville, Tenn., where in 1827 he married Eliza McCardle; she taught him writing and arithmetic. He took an active part in public life, and after becoming mayor was elected to the Tennessee house of representatives and then the state senate.
US congressman for 10 years. Governor of Tennessee 1853-57, he was then elected to the Senate. Though supporting some measures by the pro-slavery South he introduced a Homesteading bill which was opposed by slave owners and most Southern congressmen. After Lincoln became president in 1860, Tennessee seceded; Johnson, the only Southern senator not to join the Confederate cause, was made military governor of Tennessee, establishing a working basis for civilian rule. In 1864 he was elected vice-president, but five months later became president when Lincoln was assassinated. He inherited the problems of RECONSTRUCTION. On May 29, 1865, with Congress adjourned, he issued a proclamation of amnesty, allowing Southern states the right to adopt new constitutions and elect governments. His policy offended radical Republicans because it threatened their absolute control of Congress and robbed them of the chance of holding office in the South. In a mid-term election characterized by a vicious and emotive campaign by Johnson's opponents, they were returned with a two-thirds majority.
On March 2, 1867, the first radical reconstruction act was passed. To further restrict Johnson, Congress passed, over his veto, the Tenure of Office Act, forbidding the dismissal of certain federal office-holders. Despite this he dismissed the secretary of war, Edwin Stanton. In March 1868 Johnson was impeached. The vindictiveness of the radical attack won him sympathy and he escaped conviction by one vote. He failed to capture the Democratic nomination, and attempts to re-enter Congress failed until he was elected senator from Tennessee in 1874. He served a short session in 1875 and died of a stroke soon after.
2. Samuel Houston (A)
HOUSTON, Samuel (1793-1863),
frontiersman and politician, leader in the struggle against Mexico to establish an independent Texas (1835-36). He commanded a force of fewer than 800 settlers in a decisive battle at San Jacinto (1836) and went on to become the first president of the Republic of Texas 1836-38. During a second term as president 1841-44 he worked to bring Texas into the Union (1845). Houston served as US senator 1846-59 and was governor of Texas 1859-61. He was deposed after refusing to support the Confederacy.
1. Thomas J. Rusk (D) J. Pinckney Henderson (D) Matthias Ward (D)
Vermont 1. Solomon Foot (R) 3. Jacob Collamer (R)
1. James M. Mason (D)
2. Robert Mercer Taliaferro Hunter (D)
born at "Mount Pleasant," near Loretto, Essex County, Va., April 21, 1809; tutored at home; graduated from the University of Virginia at Charlottesville in 1828; studied law; admitted to the bar in 1830 and commenced practice at Lloyds; member, State general assembly 1834-1837; elected as a States-Rights Whig to the 25th, 26th, and 27th Congresses (March 4, 1837 - March 3, 1843); Speaker of the House of Representatives in the 26th Congress; unsuccessful candidate for reelection to the 28th Congress; elected to the 29th Congress (March 4, 1845 - March 3, 1847); chairman, Committee on the District of Columbia (29th Congress); elected to the United States Senate in 1846; reelected in 1852 and 1858 and served from March 4, 1847, to March 28, 1861, when he withdrew; expelled from the Senate in 1861 for support of the rebellion; chairman, Committee on Public Buildings (30th through 32nd Congresses), Committee on Finance (31st through 36th Congresses); delegate from Virginia to the Confederate Provincial Congress at Richmond; Confederate Secretary of State 1861-1862; served in the Confederate Senate from Virginia in the First and Second Congresses 1862-1865 and was President pro tempore on various occasions; was one of the peace commissioners that met with President Abraham Lincoln in Hampton Roads in February 1865; briefly imprisoned at the end of the Civil War; State treasurer of Virginia 1874-1880; collector for the port of Tappahannock, Va. 1885; died on his estate "Fonthill," near Lloyds, Va., on July 18, 1887
Wisconsin 3. Charles Durkee (R) 1. James R. Doolittle (R)