Bonds of United States Bank.In the United States Senate,
The report of the Secretary of the Treasury of the 27th of December, 1838, and the message of the President [Mr. Van Buren] of the 11th of January last, both in answer to calls for information in relation to the recent transactions between the Government and the Bank of the United States, chartered by the State of Pennsylvania, being under consideration
Mr. President: I rise to perform a task from which I had hoped to be discharged. I had hoped that some other member of the Senate, more capable, and less likely to be suspected of partiality, upon the one side, and of prejudice upon the other, would have relieved me from it. Hence, to some extent, the long delay, on my part, to ask the Senate to bring the subject of these reports again to its attention. And hence, too, the extreme reluctance I have felt, and some of which I have manifested to this body, to seem to court a continuance of debate upon it. The clearest convictions of duty, however, to myself, to the hitherto tried and faithful public officers whose conduct is brought under suspicion, and, above all, to that great public, whose servants we all are, to whom we are all responsible, and whose full and clear and perfect understanding of the truth, in reference to every public act of every public servant, ought to be an object of primary interest with us all, impel me to the course I pursue.
The recent business transactions between certain executive officers of the Government and the Bank of the United States chartered by the State of Pennsylvania, has justly excited some interest throughout the country. That interest has been materially increased and strengthened by the manner in which the chief officer of that banking institution has felt himself authorized to speak to the public of these transactions. It was not, therefore, to have been expected, much less hoped, that Congress would fail to make the whole subject one of inquiry and examination. The Senate has not disappointed this reasonable expectation. On the contrary, a lively and pervading interest, in this body, has been given to the whole matter, by the particular care with which the calls for information have evidently been drawn, and by the anticipatory debates which accompanied those calls.
The resolutions were passed without objection, and, when I remember their particularity and precision, I feel authorized to assume that all the facts are now before us, embodied in the reports under consideration. A fair and full examination of those facts, and of the conclusions properly and naturally to be drawn from them, is my present purpose; and I take great pleasure, Mr. President, in promising you that the duty shall be discharged with as little consumption of the time, and as light a tax upon the patience, of the Senate as shall be possible.
Inasmuch, however, as the preëxisting relations between the Government of the United States and the Bank of the United States have given foundation for the transactions complained of, a very brief notice of those relations will, in my estimation, contribute essentially to a full and clear understanding of the matters under discussion.
The first of these relations was that of a partnership in banking, and the second was that of creditor and debtor; and out of both have grown the proceedings which form the subject of this debate.
The Bank of the United States, as a national institution, commenced its chartered existence on the 4th day of March, 1816. By the terms of the charter, the United States were to hold the one-fifth part of its whole stock an amount equal to $7,000,000. That stock was taken, and, with very trifling exceptions comparatively, was held throughout the term of twenty years which the charter had to run. I believe that some transfers of stock from the general Treasury to the Navy pension fund had varied, very limitedly, the amount of that direct interest; but the variation is immaterial to the purposes of this argument; and, as the transfer was made to a trust fund, in the safety and protection of which an interest was felt, and actually existed, equal to that for the safety and protection of any other equal portion of the public treasure, the real public interest was not at all changed.
Upon the expiration of the charter of the bank as a national institution, in March, 1836, this great interest was left subject to the management of the directors and other officers of the bank during the two years allowed by the charter for the winding up of its affairs, and left, almost necessarily, in an unproductive state. Hence, the early interest felt and manifested, as well in Congress as by the chief fiscal officer of the Government, to give prompt and efficient attention to this portion of the public treasure.
The charter of the bank expired during the session of Congress; and before its adjournment a law was passed constituting the Secretary of the Treasury the agent of the United States to superintend this interest, with full power to liquidate the amount, to receive payment, or to take security, for payment at a future day, submitting to his sole discretion the forbearance to be extended and the sufficiency of the security to be offered.
In the meantime, and at about the period, if not upon the very day, of the expiration of the charter, a proceeding was had by the board of directors of the bank, which I must be permitted to call singular, at the least, and especially so, as it was a proceeding to which the Government was in no sense a party. The whole bank, its stock, debts, credits, and effects, of every name and character, were sold and transferred to a banking institution chartered by the State of Pennsylvania. This transfer took place in March, and the law of Congress last referred to did not pass until the 23d of June after. The transfer was to an institution in which, upon the face of its charter, the United States were prohibited from holding stock, so that the Government could take nothing in the new bank by this sale of its property in the old. Such was the condition of this public interest at the time Congress adjourned in 1836.
It is proper to pause here and see what was the state of the public Treasury at this period, that we may estimate the willingness, on the part of all the public functionaries, to accept security for the payment of this debt, at a future day, instead of payment in hand, and consequently the willingness of Congress to submit the time of payment to the Secretary of the Treasury alone. The Treasury was, at the time referred to, full to overflowing; and statesmen of the greatest experience and deepest reflection considered the abundance of our revenues, and the surplus of our treasure, as one of the severest evils which then did, or which ever had, threatened the purity and permanency of our institutions.
So great was the desire to discharge the country from the corrupting and demoralizing influences of this flood of money, that, on the very day on which this agency over our interest in the bank was given to the Secretary of the Treasury, a law was passed to set apart from the general and ordinary uses of the Treasury, and distribute to the States, in the form of a deposit, more than thirty-seven million dollars of the public money. This law stands upon the statute book next before that which authorizes the Secretary to extend a credit upon the debt due from the bank.
I will now pass to the next session of Congress, the annual session of 1836-37. On the 1st day of January, 1837, the balance was to be struck, and all the money found in the Treasury, deducting $5,000,000 to meet outstanding appropriations, was to be laid aside, and deposited with the States, in the ratio of their representation in the two Houses of Congress; the one quarter on that day, one other quarter on the 1st day of the April, the third quarter on the 1st day of July, and remaining quarter on the 1st day of October, of that year. This left the Treasury with $5,000,000 of means, and something more than $14,000,000 of outstanding appropriations. The current revenue of the year, therefore, must meet the balance of outstanding appropriations beyond the $5,000,000 left in the Treasury, and also the current appropriations of the year, or the money placed in deposit with the States must be called back to pay the deficiency. This, I think, was about the state of facts, and the condition of the Treasury, on the 1st day of January, 1837, though I have not looked at the figures for this occasion, and, speaking from memory, may not be precisely accurate. During this session of Congress, a report was received from the Secretary of the Treasury, detailing the efforts which had been made under the law of 1836 to liquidate, settle, and secure the bank debt; giving the then state of the negotiation, and showing that no definite or satisfactory result had been reached. It appeared, however, that examinations had been made, facts ascertained, and conclusions formed, as to the fair value of the interest of the United States arising from their stock, and that distinct offers to sell the claim to the new Pennsylvania Bank, at a given price, and upon specified terms, as to time and interest, had been made by the commissioners appointed by the Secretary, but that no answers had been obtained to their propositions.
After this report was laid before Congress and the public, the board of directors of this Pennsylvania bank, through their president, addressed a memorial to Congress, giving their acceptance of one of the offers which had been made to them; and Congress, on the 3d of March, 1837, passed a concurrent resolution, directing the Secretary of the Treasury to take the security offered, and close the business.
The whole value of the claim, as liquidated by the offer and acceptance, was $7,946,356.16. This was the amount conceded to have been due to the United States on the day after the expiration of the charter of the bank as a national institution the 4th day of March, 1836; and, by the terms of the bargain, payment was to be made in four equal installments of $1,986,589.04 each, the first to be paid in the month of September, 1837, and the remaining three installments in one, two, and three years from that time, with interest up on the whole amount from and after the 3d day of March, 1836, until paid, at the rate of six per centum per annum.
The Secretary proceeded to carry into effect the resolution of Congress, to ascertain the amounts as above stated, and to take the bonds of the United States Bank of Pennsylvania to secure the payments, that being the security agreed to be given by the terms of the acceptance.
In this way the claim of the United States was transferred from the Bank of the United States chartered by Congress, to that chartered by the State of Pennsylvania; and thus the bonds against the latter institution, which have given rise to the transactions principally complained of, came into existence. These bonds were each for the same amount, ($1,986,589.04). Each bear an interest of six per centum per annum from the 3d day of March, 1836; and the first was payable in all the month of September, 1837, the second in 1838, the third in 1839, and the fourth in 1840. All these bonds bear date on the 10th day of May, 1837; and it is impossible not to mark singular coincidence of dates between the conclusion of this negotiation, which postponed the payment, and placed beyond the power and control of the Treasury this almost eight million dollars, and that universal suspension of specie payments by the banks of the country, which instantly deprived the Treasury of means to pay the public creditors, and compelled an extra call of Congress.
I have stated that the bonds ware dated on the 10th day of May, 1837. They were, therefore, executed on that day, either at Washington or Philadelphia, while at New York, on the very same day, specie payments were suspended. I speak from recollection upon this point, but feel sure that the suspension took place at New York on the 10th of May 1837; and it was certainly followed, almost instantly, where it had not been preceded, by nearly every banking institution in the whole Union. A consequence of this was to render unavailable, for legal payments, all the balances in the deposit banks, and to throw back upon the Treasury, thus deprived of its means, masses of outstanding drafts which had been drawn upon these deposits, but which had not reached their places of destination, and been presented for payment, when the suspension was proclaimed.
At this crisis the bank debt would have been a most timely and important aid, if it could have been realized in cash; but the consummation, on the very day of the suspension by the banks, of the terms of compromise, tendered on the part of the Government when the Treasury was more than full, and accepted by the bank several months after it was tendered, had postponed payment upon this debt for one, two, three, and four years.
Under circumstances like these, the proclamation of the President was issued, bearing date on the 15th of May, 1837, and calling a special meeting of Congress for September of that year. The deposits with the States, to be made on the 1st of January and 1st of April, of between nine and ten million dollars each, had been nearly completed, and drafts had been issued for the principal part, if not for the whole, of the deposit of like amount to be made on the 1st of July, when the suspension of specie payments by the banks placed the very moneys out of which these deposits were to be made beyond the control of the law, or of the fiscal officers of the Government.
The consequence was, that many of the outstanding drafts for the July deposit, and some few of those for the previous installments, were dishonored by the banks upon which they were drawn, and returned upon the Treasury for payment, while the whole means of the Treasury to meet these and other payments were looked up in the banks. Hence the aid of Congress was invoiced at the earliest practicable period, and the ability of the Treasury to get on until the commencement of the extra session was rendered extremely doubtful. So rapid was our transition, in a public sense, from superabundant wealth to extreme poverty, from plethoric fullness in the public Treasury to extreme want and almost perfect destitution !
It will now be proper to see what legislation was adapted by Congress affecting the public Treasury, at the extra session of September and October, 1837. In the way of supply, a bill was passed, on the 12th day of October, authorizing the Secretary of the Treasury to issue paper, upon the credit of the Government, in the shape of Treasury notes, as the wants of the Treasury should require, not to exceed, in all, the amount of ten million dollars, but with such restrictions in the law as to prohibit the reissue of any single note which should fall into the hands of an officer of the Government, in payment to the United States, while all the notes were made a legal tender for all such payments.
On the other hand, nearly every ordinary resource of the Treasury was cut off, for a period, by a law which suspended, for the space of nine months after maturity, all payments upon all outstanding duty bonds, and gave a credit of three and six months upon such cash duties as had become due and were unpaid, or should become due upon importations to be made previous to the month of November, 1837; and by another law, which, at the option of the deposit banks, suspended payment upon the balances due from them for previous deposits, for periods of eight, fourteen, and twenty months, and required that the bonds of the institutions for payment, at the expiration of those periods, of equal third parts of their respective debts, satisfactorily secured, should be received in lieu of payments in hand.
Another law was also passed at this extra session, materially affecting the Treasury in both directions. I allude to the law "postponing the payment of the fourth installment of deposits with the States." This law relieved the Treasury from this call of between nine and ten million dollars, until the 1st day of January, 1839; but it, at the same time, prohibited the Treasurer from drawing, under any circumstances or for any purpose, upon the $28,000,000 which had been previously deposited with the States in obedience to the provisions of the deposit law of 1836. Its effect, therefore, was to deprive the Treasury of three dollars of means for every dollar of demand from which it was relieved.
With the exception of the necessary appropriations made at the extra session, no other legislation materially affecting the public Treasury has been discovered.
I will now pass on to the annual session of Congress of 1837-38, and see in what manner the legislation of that session was made to influence the operations of the Treasury. On the 21st of May, 1838, a law passed giving to the Secretary of the Treasury the power to issue new Treasury notes in the place of all those which, having been issued under the law of the extra session, had been paid in and canceled, or should be so paid in and canceled under the provisions of that law. The same prohibition, however, against a reissue of the new notes was retained in the law of 1838, while these notes also were made a legal tender in all public payments.
The only other legislation of this session, intended for the supply of the Treasury, was the law of the 7th of July, 1838, authorizing a sale, in the market, of the two bonds against the Bank of the United States of Pennsylvania, which were to become due and payable in September, 1833 and 1840, being the third and fourth of the four bonds taken, in the manner before related, to secure the debt due to the United States from the late Bank of the United States, chartered by Congress, for the stock held by the United States in that institution at the time of the expiration of its charter.
It will be remembered that the first bond was made payable in September, 1837, which time had passed, and that bond had been paid and canceled. The second bond, made payable in September, 1838, would fall due so soon after the passage of the law, that it was not thought advisable to include in it a provision for its sale, as the money might be received upon it from its maturity, before a negotiation for the sale could be brought to a successful termination. Hence the law provided for the sale of the two last bonds only; and this law it is, and the practical execution of it by the Secretary, which has given rise to this discussion, and now compels me to obtrude myself upon the attention of the Senate.
The law made the Secretary of the Treasury the agent of the Government for the sale of the bonds; limited him to the par value of each bond in the market, "calculated according to the rules for estimating the par value of securities upon which interest has run for a time, but which securities have not reached maturity;" opened to him the markets of our own and foreign countries, and directed that the sale should be made "for money in hand."
This brings me to an examination of the facts in relation to the execution of this law; and for them I must refer to the reports under consideration, and to the documents accompanying them. From this time forward I shall, as far as practicable, let the reports and the correspondence speak for themselves; as, notwithstanding the tediousness to myself and the Senate of reading documents here, I prefer that the facts themselves, and the language of the parties, rather than my understanding of either, should guide the judgment of this body and the country upon the issue presented.
It will be proper here to remark that but one of the bonds authorized to be sold has as yet been sold under the law, the bond to become due in September of the present year; that to fall due in September, 1840, being yet held by the Treasury as the property of the United States. It will, however, be seen that various negotiations, all at the instance of the bank, have been carried on between that institution and the Secretary of the Treasury, the object of which was to arrange the mode and manner of payment of the second bond, to fall due in September, 1838, and, as an inducement to the officers of the Treasury to yield to the mode and manner desired by the bank, offering, on its part, to anticipate portions of that payment at times which should be most desirable to the Government, in reference to the calls for public disbursement.
It is indispensable to a perfect understanding of the transactions, that the negotiations for this object, and those for the sale of the third bond under the law before referred to, should not be confounded, while the dates and order and manner of the correspondence upon the two subjects, and the similarity of the propositions from the bank in both cases, require some care to preserve the separation perfectly, and at the same time to comprehend the whole force of the facts as applicable to each transaction. Hence I propose to examine all the facts in relation to the time, mode, and manner of payment of the second bond, due in September, 1838, and which was not sold, before I refer to the facts attending the sale of the third bond, which was sold to the bank.
The first question which arises in this course of inquiry is, was the state of the Treasury, at the time the negotiation was concluded for an anticipation of the payment of two thirds of this bond, and a postponement for the period of fifteen days only of the remaining third, such as to warrant the arrangement on the part of the Secretary of the Treasury, as one calculated to promote the public interests, and to secure more certainly the payment of the public creditors ? This question the Secretary of the Treasury himself shall answer.
And as the same question will necessarily arise in reference to the sale of the third bond, and as the report of the Secretary, in answer to the call of the Senate, frequently speaks of the condition and necessities of the Treasury in reference to both of these negotiations in the same sentence, his answer as to both shall be given here. I read first from page 4 of the report, which relates more particularly to the payment of the second bond, to fall due in September, 1838, though clauses of the extract allude also to the sale of the third bond. The Secretary says:
"To avoid the payment of the bond that was to fall due on the 1st of October, being made in new Treasury notes, not re-issuable, nor available in any way to discharge appropriations, and which event was apprehended by the Department, the written agreement was made with the bank, which will be found among the documents, stipulating, among other things, for the payment of that bond on drafts to the public creditors, and in specie or its equivalent. This, though collateral to the sale of the other bond, was a part of the same negotiation.
"It was very clear at the time, and has been confirmed by subsequent events, that the payment by the bank of its bond in such Treasury notes, and a failure to make that arrangement, the only practicable one for the sale of the third bond, would render either a special call of Congress or a suspension of payment of some of the demands upon the Treasury inevitable. The Department did not feel itself at liberty to hesitate in deciding between an exposure of the public service to either of those extremities, by insisting upon having the whole of these large sums of money paid at one time, and placed elsewhere in other suitable depositories, if any could be found in the present imperfect state of the law, or a consent to leave them in the hands of the public debtor until they were actually wanted, and then to draw for them, in specie or its equivalent, when and where the public service required. Especially could the Department not hesitate, when this course was not injurious to that service, and it was unable at that time to withdraw those funds except by the debtor's voluntary consent."
Again, on page 5, with more exclusive reference to the arrangements in relation to the second bond, and to the places and manner of disbursement required by the wants of the public service, he says:
"In relation to another inquiry, concerning 'the period when the sum of $1,600,000, in part payment of the second bond of the Bank of the United States, was placed to the credit of the Treasury,' I state that $800,000 was placed to his credit on the 15th day of August, and $800,000 more on the 15th September, 1838. As to the 'nature of the' whole agreement on that subject, I reply that it will be found in the correspondence annexed.
"The substance of it was that about one third of the amount of the bond should be paid in the middle of August, one third in the middle of September, and the other third in the middle of October, as these periods and amounts of payment were deemed likely to promote the convenience of the Treasury, if not of both parties, better than to pay the whole large sum of near two and a half millions at once at the close of the month of September. It was further stipulated that interest should cease on each of the installments thus paid on the day they were placed to the credit of the Treasurer, and made subject to his draft. As the money was wanted at different points to meet the public expenditures near them, the drafts of the Treasurer on the bank, payable at those several points, were engaged to be met there with promptitude, and in specie or its equivalent."
Here is a condensed, but full and clear, statement of the result of the negotiations as to the mode and manner and times of payment of the second bond, with suggestions as to the convenience to the Treasury of this manner of payment, over that of the receipt of the whole sum of about two million four hundred thousand dollars, in a single payment, on the 1st day of October, while the extract closes with showing that the payments, at the times and places stipulated, were to be made "in specie or its equivalent."
Again, upon pages 2 and 3 of the report, and referring principally to the sale of the third bond, the Secretary goes more fully into the state of the Treasury, and shows most clearly the [....] of 1838, which, he says, "proved to be unusually great." It need scarcely be said that, if such was the condition of the Treasury, and the anticipated wants of the public service, in July, as to prove the necessity for the sale of the third bond before the close of that fiscal year, the same facts must have proved more clearly the necessity of anticipating, so far as that could be done, the payments upon the second bond, the whole of which was to fall due on the 1st day of October. The language of the Secretary is:
"The appropriations actually made having proved to be unusually great, and the expenditures anticipated during the two next ensuing months being much larger in amount than the immediate means which the Department could expect to derive in money from other sources within those months, I at once addressed letters to the bankers of the United States at London, and to our Minister at Paris, requesting that measures might be taken, without delay, to obtain offers for those bonds, if possible, from capitalists in Europe. To these letters answers were received in due season, stating that, from the short time the bonds had to run, the absence of the guarantee of the United States for their eventual payment, and other causes, no sale could probably be effected of them either in London or Paris within the limits fixed bylaw. In the meantime, however, finding that the demands for the public service during the month of June had exceeded four and a half millions, and expecting, as the fact turned out to be, that they would equal about seven millions in July and August, and finding, also, that the available balance in the Treasury, applicable to general purposes, and subject to draft, fell below $1,000,000, and that payments were making at times in new Treasury notes, which could not be rendered at all available, I considered it necessary to effect a sale of at least one of the bonds at an earlier day than advices could be received and any proceeds realized from Europe. Particular inquiry was, therefore, instituted in the city of New York, and elsewhere, concerning the probability of selling soon one or more of the bonds, and also a public advertisement was issued, inviting proposals generally for their purchase.
"The result was, that from the abundance of State stocks in the market, at very reduced prices, the lower rate at which other securities of the bank were selling, and the want of a guarantee by the United States, sale was found, with the exception hereafter stated, to be wholly impracticable in this country, and was expected to be so abroad, under the conditions prescribed in the act. Indeed, no bids were at any time made for either of the bonds, in conformity to those conditions, except that of Charles Macalester, Esq., of Philadelphia, who offered to purchase both of them within the terms of the law."
Here is the most full and clear answer to the question. The expenditures for June had been more than "four and a half millions;" those for July and August were expected to be "about seven millions;" which expectation was realized by the fact, and the "balance in the Treasury applicable to general purposes, and subject to draft, fell below one million." Hence, the Secretary "considered it necessary to effect a sale of at least one of the bonds at an earlier day than advices could be received, and any proceeds realized from Europe."
I will now proceed to notice the correspondence; and first, that in relation to the payment of the second bond. And here it will be interesting, if not useful, to notice dates and coincidences between the proceedings in Congress towards a sale of the bonds, and the efforts on the part of the bank to gain possession of them, or make arrangement for their payment.
On the 5th of April, 1838, the Senate by a resolution instructed the Committee on Finance to inquire into the state of the Treasury, and in case there should be a prospect that more means would be wanted than had been provided by Congress, further to inquire into the expediency of raising those means by a sale of the bank bonds.
On the 21st of the same month, Mr. Macalester addressed to the Secretary of the Treasury a note making distinct propositions for anticipating the payment of the second bond, to fall due in September, 1838, and inviting a correspondence. The documents exhibiting this negotiation will be found appended to the report of the Secretary of the Treasury, now under consideration, commencing at page 11, and are marked A 1 to 7, inclusive. The negotiation was unsuccessful, because the parties could not agree as to the medium in which the proposed payments should be made; but there are certain points in this correspondence which I consider it important to notice, for future reference, and will, therefore, read to the Senate a few short extracts. The Secretary, in his reply to Mr. Macalester's first note,
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directly by the bank, its authorized agent, might be liable to misconstruction, and lead to no useful result, you will see the necessity, before my replying fully, that any arrangement desired should be made in that form."
In reply to this part of the Secretary's note, Mr. Macalester, under date of the 2d of May, says:
"Sir: I have the honor to acknowledge the receipt of your letter of 28th ultimo. In answer to which, I have to state that I am authorized by the Bank of the United States chartered by Pennsylvania to enter into the arrangements proposed in my letter of 21st ultimo."
This establishes the fact that Mr. Macalester was here acting as the agent of the bank, with full power to make the arrangement he proposed, and as he continues, throughout all the negotiations as to both bonds, to act as the principal agent and instrument of the institution, without anything further appearing upon the face of the papers, as to his character or powers; the above inquiry and answer were, doubtless, considered by both parties sufficient upon that point.
In the answer of the Secretary to Mr. Macalester's note of the 2d of May, from which the above is extracted, and in which he makes formal propositions as to the times, places, and manner of payment of the second bond, is the following paragraph, which closes the letter:
"To prevent misapprehension, it should be distinctly understood that, with the exception of Treasury notes, the general course has been to accept no credit, unless the deposit is made in specie or its equivalent; or, unless the deposit has been received by some public claimant as equivalent to specie. The right of every claimant to be paid in the legal currency of the United States is fully recognized by this Department; and, considering the opinion entertained by the Executive and at least one branch of the Legislature, the idea must be expressly excluded that the notes of the second Bank of the United States, chartered in 1816, can be permitted to be employed in any of the transactions growing out of this arrangement."
This letter bears date on the 3d of May, and, under date of the 5th of May, Mr. Macalester replied, which terminated that negotiation. Among other things, he says:
"I did not and could not have intended to propose a negotiation on the basis of a specie payment."
These are the only references to this correspondence necessary to my purpose, and they are necessary because they establish the character of Mr. Macalester as agent of the bank, and the further fact that the Secretary of the Treasury, in the negotiation, adhered to "the basis of a specie payment, or a payment equivalent to specie."
This correspondence covered the time from the 21st April to the 5th of May. We have before seen that, on the 5th of April, the Committee on Finance was instructed to inquire as to the expediency of a sale of the bonds, and the inquiry was general, relating as well to the second as to the third and fourth bonds, all of which remained unpaid. On the 2d of May, the committee reported a bill providing for the sale of the third and fourth bonds, but not affecting the second; and on the 5th of the same month, the negotiation as to anticipating the payment of this latter bond was terminated by the agent of the bank, unless some other than a specie basis for the payment could be acceded to. On the 11th of May, the bill for the sale of the third and fourth bonds passed the Senate, and on the 7th of July after it became a law.
On the 23d of July, a second negotiation was opened by Mr. Macalester, by inviting the Secretary of the Treasury to make specific propositions for the payment of the second bond in three installments, to be paid on the 15th days of August, September, and October, 1838, the bond being payable, by its terms, on the 1st day of October of that year. To this invitation the Secretary answered, under date of the 24th of July, consenting to the times of payment proposed, and naming the places of payment, and the sums to be paid at each place, and closing with the following language:
"In all cases, however, it is of course understood that payments will be made in specie or its equivalent."
These terms Mr. Macalester accepted by a note dated 25th July, merely requesting that the negotiation might be considered open in relation to the places of payment, and the sums to be paid at each, so far as the convenience of the Treasury and the wants of the public [....] would
made without material inconvenience to the Department. This correspondence will be found annexed to the report of the Secretary, commencing at page 34, and marked inclosures No. 1 to 4, inclusive.
On the 13th of August, the negotiation in relation to the payments upon the second bond was renewed by a letter from Mr. Biddle, the President of the bank, to the Secretary of the Treasury, suggesting such changes in the places of payment, and in the amounts to be paid at each place, as he desired to have made, and referring to the correspondence, above detailed, with Mr. Macalester, as the basis of the arrangement in relation to this bond. This correspondence, thus reopened, was continued between the officers of the bank and those of the Treasury up to the 18th of August, when all the places of payment, and the sums payable at each, were mutually agreed upon, and the negotiation was completed; but in the mean time, and on the 15th of August, a certificate of deposit, to the credit of the Treasurer of the United States, was issued by the bank, and transmitted for the first installment of$800,000, payable on that day, towards the second bond. These documents will be found appended to the report of the Secretary of the Treasury, now under consideration, commencing at page 37, and marked F 8, 10, 11, 12.
This gives a distinct and separate view of all the material negotiations in relation to the payment of the second bond, the times of payment, the places of payment, and the manner of payment. From the facts detailed it will be seen that the bond was to be paid, and was paid in three equal installments of about eight hundred thousand each, on the 15th days of August, September, and October, 1838, which would occasion the first installment to be paid forty five days before the bond became due and payable, the second installment fifteen days before, and the third installment fifteen days after that time; that each installment, on the day it became payable by the arrangement, was to be, and was, deposited in the bank to the credit of the Treasurer of the United States; that upon the strength of these deposits, the Treasurer was to draw his drafts upon the bank, payable at the several places named, and for the several sums agreed upon in the arrangement; that those drafts were to be paid by the bank at the places at which they were made payable, without being first presented at the bank, or returned to it for payment; and that interest was to cease upon the two installments anticipated, when the money was placed to the credit of the Treasurer in the bank, and was to continue upon the third installment until that, also, was so placed to his credit.---[But this little arrangement made the notes of the bank currency; and the government was not paid in coin but in bank credit.]
This is the arrangement which the Secretary of the Treasury did make for the payment of the second bond, which, upon its face, became due and payable on the 1st of October, 1838. That the state of the Treasury required the anticipated payments secured by the arrangement, seems to be made certain by the report of the Secretary, and that the places and manner of payment were such as best suited the public wants and the convenience of the Department is shown by the whole correspondence.
If, then, there be fault on the part of the Secretary, in consenting to the arrangement, it must be because it was wrong to enter into a negotiation with the Bank of the United States, chartered by the State of Pennsylvania, and to conclude an arrangement for the anticipated payment of a debt which the wants of the Public Treasury required, upon terms not only convenient and advantageous to the public interests and the public service, but upon which alone payments could be anticipated; and because it was wrong, by such an arrangement, to secure those payments in money, which otherwise might be made in Treasury notes, and thus rendered wholly unavailable to supply the wants of a reduced Treasury. Deep as my feelings of hostility have been, and still are, against this bank, both as a national and State institution, I cannot carry those feelings so far as to censure a faithful public officer for acts like these; nor, when by our legislation we have driven him to these resorts to supply our Treasury placed under his charge, can I suspect him of improper motives for having consented to negotiate with a dangerous banking institution, when it was the only alternative left to him to preserve the public faith, carry on the business of the nation, and maintain its credit, or condemn him for having accomplished these great results by such means.
I pass now to the sale or the third bond, and the negotiations which preceded and accomplished that object. The law authorizing that sale, as has been before remarked, was introduced into the Senate on the 2d of May, and the resolution of inquiry on the 5th of April previous. With his accustomed vigilance, the Secretary of the Treasury [Mr. Woodbury] anticipated the action of Congress by opening, on the 8th of May, a correspondence with an intelligent banker in each of the cities of New York and Philadelphia, to inform himself whether, in case of the passage of a law like that proposed, a sale could probably be made of one or both of the bonds, either in the markets of our own or a foreign country. Copies of the bill were transmitted to each of these gentlemen, and their early opinions solicited. Answers to these letters were returned within a very few days, and both expressed opinions wholly unfavorable as to the prospect of a sale in this country, unless to the bank itself, without the guarantee of the Government for the payment of the bonds; while one of the writers supposed that a sale might be effected in Europe upon advantageous terms, and that the agent of the bank in London might be induced, "by weighty considerations, to enter the field as a purchaser;" and the other said: "the bonds have too short a time to run to warrant any reasonable expectation of a sale of them in Europe, on favorable terms, during the present rate of exchange." These letters will be found accompanying the report of the Secretary, marked B, 1, 2, 3.
The bill became a law, without any alteration of form, on the 7th of July. Under date of the 9th, the Secretary wrote to N.M. de Rothschild & Sons, bankers, of London, sending them a copy of one of the bonds, and requesting them to negotiate a sale in England if possible. A copy of the law was also transmitted. On the 11th, similar communications were addressed to the American Minister at Paris, with a request that he would consult certain bankers named, and such other persons as he might think proper, and learn if a sale of the bonds could be effected in France within the terms of the law. On the 17th of July, a gentleman of Baltimore, [J.I. Cohen, jr. & Brothers ?] of known and approved qualifications for such a service, was addressed by the Secretary, to learn if he would consent, for the compensation of eight dollars per day and the payment of his expenses, to go to Europe as the agent of the Department, to make sale of the bonds.
From the Bank's accounts it is clear that by the end of the 1830s substantial and wide-ranging investments had been made in municipal and State stock, in canal and mining shares and in finance houses. The main activities carried on through the agents were in the fields of bullion and bills of exchange.
In the following year, 1834, [Andrew Jackson President, Levi Woodbury Treasury Secretary] NMR succeeded in obtaining the business of undertaking the United States Government's banking interests in Europe, hitherto in the hands of Barings. The Rothschilds represented the U.S. Government until 1843, when John Tyler became President and Barings' ally Daniel Webster was appointed Secretary of State. Webster promptly restored the accounts from Rothschilds to Barings.
In the mean time, and on the 9th of July, letters were addressed to the president of one of the leading banks in each of the cities of New York and Boston, and to a gentleman in New York, known as the resident agent there of the banking houses of the Rothschilds in London and Paris ---[J.L.&S. Joseph & Co. ?], invoking the advice and aid of these individuals as to the sale of the bonds in this country, or in any foreign market.
Such were the efforts promptly made by the Secretary to secure a sale of these bonds in conformity with the provisions of the act of Congress and upon the most favorable terms which could be obtained. The condition of the Treasury, and the consequent necessity for the sale of one or both of the bonds, has been already seen in the extracts from the report of the Secretary before given.
Under date of the 23d of July, the gentleman applied to to act as agent for the sale of the bonds abroad, replied to the Secretary's request, expressing an opinion that, as the state of the money market in Europe was peculiarly favorable, the bonds might probably be sold there within the limitations prescribed in the law, and possibly upon terms more favorable "if the agency is judiciously executed;" but, characterizing the bonds as "a less current or salable description of securities" than are ordinarily "tendered for sale in any market," and declining the agency at the compensation proposed, but offering to undertake it for a commission of one fourth of one per cent. upon the amount of the bonds, if sold, and for the pay and mileage of a member of Congress, in case of a failure to effect a sale. (See documents C 6 and 7.)
The letters of the Secretary to the gentlemen in New York and Boston were promptly answered; the one from the agent of the foreign banking houses, containing an offer for the bonds, which did not come within the limitations of the law; and the two others holding out no prospect of a sale of either bond in this country, within the terms of the law. The correspondence with the two New York gentlemen was continued to great length, covering the time from the 9th to the 27th of July, and embracing efforts to effect a sale as well abroad as at home, but without any prospect of success.
Inasmuch as the Secretary is now charged with a willingness, if not a desire, to be driven to make the sale of these bonds to the bank itself, it will be but just to him to make one or two references to his correspondence with these gentlemen, as indicative of his feelings upon this point. I will read from his letter of the 16th of July, written to George Newbald, Esq., President of the Bank of America, New York. It will be found on pages 23 and 24 of the report under consideration, and is marked D 6. The first paragraph of this letter is in the following words:
"Sir: I have to acknowledge the receipt of your letter of the 14th instant. I wrote you on yesterday in consequence of observing in the Philadelphia newspapers some intimations affecting the credit of the bonds of the Bank of the United States in the market. It seems to be evident that the maker of these bonds intends that no other corporation or individual shall purchase them. So many suggestions injurious to their value have been made, and, what is more remarkable, considering their obvious origin and motive, have been listened to, that I shall probably be compelled either to sell the bonds to Mr. Biddle, who is expected here in the course of the present week, or to send them abroad for sale."
Does this language, I ask, Mr. President, does this look like a desire, or even a willingness, to make the sale to the bank ? Does it look like a wish to be compelled to make the negotiation with Mr. Biddle ? Do you believe, sir, that the President of the Pennsylvania bank will look upon this language as conveying such a kindly feeling towards himself and his institution ? I will read the last paragraph of this same letter. It is in these words:
"Any bank which coöperates in the purchase of these bonds, at a point like New York, cannot fail to derive great advantage from the operation. The money will probably be required to be drawn for at the rate of about half a million monthly. The drafts will be mostly sent to the South and Southwest, and the greater portion of them will be out thirty, sixty, and ninety days before presented at bank."
Here are the very benefits which the charge presupposes it was the desire and intention of the Secretary of the Treasury to confer upon the Pennsylvania bank, specifically pointed out and earnestly urged upon the Bank of America in New York, and which, be it remembered, that bank would not accept. It cannot be necessary that I should trouble the Senate with further extracts from this correspondence to rebut so groundless and improbable a charge.
The correspondence to which I have hitherto alluded, in relation to the sale of these bonds, will be found among the documents appended to the Secretary's report, commencing at page 20, and marked D, 1 to 17 inclusive.
This brings me, in point of time, to the negotiations which did take place between the bank and the Secretary of the Treasury, and resulted in the sale of one of the bonds upon the terms prescribed in the law. The first step in this negotiation is a letter under date of the 21st of July, written by Mr. Macalester to the Secretary of the Treasury, and is in the following words:
Washington, July 21, 1838.
Sir: I have the honor to submit to you the following proposition for the purchase of two bonds of the Bank of the United States chartered by Pennsylvania, referred to in your advertisement of the 18th instant.
I will give for one or both of them the par value, calculated according to the rules for estimating the par value of securities upon which interest has run for a time, but which securities have not reached maturity; the settlement to be made on the 1st of August next, on which day I will deposit the amount thereof, to the credit of the Treasurer of the United States, in special deposit in the Bank of the United States in n Philadelphia, in specie or its equivalent; this being done, you will then execute to me an assignment of the bonds.
I am, very respectfully, your obedient servant,
Hon. Levi Woodbury, Secretary of the Treasury.
The reply of the Secretary to this proposition is under date of the 30th of July, and is an acceptance only so far as relates to the one bond to fall due in September, 1839. The following is the letter:
Treasury Department, July 30,1838.
Sir: Your offer of the 21st instant, to purchase one or both of the bonds of the Pennsylvania Bank of the United States, at the par value, as limited in the act of Congress, is accepted for the bond due in September, 1839.
The proposal being to deposit the money to the credit of the Treasurer, in special deposit in said bank, on the 1st day of August next, I have caused a computation to be made of the amount then payable by you. It is supposed to be $2,254,871.38, and is ascertained in the mode of calculation explained in the letter annexed.
That sum can be deposited; and if any error is found in the calculation, it will be corrected. On receiving the certificates of deposit, I will execute to you an assignment of the bond. It is understood that the bank is to keep this money safely till drawn out by the Treasurer, without making any charge to the United States for keeping or paying it over on his drafts.
I am, very respectfully, your obedient servant,
Levi Woodbury, Secretary of the Treasury.
Charles Macalester, Esq., Philadelphia.
In conformity with this proposition and acceptance, the President of the bank writes to the Secretary, under date of the 1st August, as follows:
Bank of the United States, August 1, 1838.
"Sir: You will be informed by Mr. Macalester of his having this day deposited in this bank the sum of $1,254,871.38 to the credit of the Treasurer of the United States.
In your letter to Mr. Macalester of the 30th ultimo, directing that the money should be deposited in the bank, you add:
"It is understood that the bank is to keep this money safely till drawn out by the Treasurer, without making any charge to the United States for keeping or for paying it over on his drafts."
On the part of the bank, I confirm that understanding.
With great respect, yours,
N. Biddle, President.
Hon. Levi Woodbury,
Secretary of the Treasury, Washington, D.C.
Of the same date the cashier of the bank transmits to the Secretary of the Treasury, or to the Treasurer of the United States, the following certificate of deposit, being for the precise amount mentioned in the Secretary's letter of acceptance, above given:
Bank of the United States, August 1, 1838.
I hereby certify that Charles Macalester, Esq., has this day deposited to the credit of the Treasurer or the United States, in special deposit, the sum of $2,254,871.38, subject to the drafts of the said Treasurer.J. Cowperthwait, Cashier.
This presents the negotiation, the sale, and the payment of the third bond, in the language and acts of the parties, and from it a few inferences are to be drawn.
First. The negotiation proceeds from the bank, and not from the Secretary of the Treasury. He does not solicit the bank to purchase, but the bank solicits him to sell, and offers its terms.
Second. Although the proposition from the bank is before the correspondence between the Secretary and the President of the Bank of America was closed, and on the same day on which the agent of the foreign banking houses closed the correspondence between him and the Secretary, by a letter written at New York, yet the Secretary does not accept that proposition until nine days after its date, and three days after the final close of every other negotiation for the sale of the bonds in this country, without the least prospect of success.
Third. It was the only for the purchase of the bonds coming within the limitations of the law, which he had been able to obtain, or was likely to obtain, in this country.
Fourth. The proposition was accepted as to one bond only, although it was an offer to purchase both upon the same terms, and those the terms prescribed in the law.
Is it possible, then, that the Secretary was desirous of a connection with this bank, and to benefit it by a sale of these bonds to it ? If so, why did he not invite this bank to purchase during the ten or twelve days upon which be was so faithfully soliciting offers from other banking institutions, and from individuals ? Why did he not accept at once the proposition of this bank when made on the 21st of July, and not wait till the 30th, and until all prospect of obtaining an offer from any other quarter was put entirely at rest by the final close of two separate negotiations, both of which were open, so far as his knowledge extended, when this offer was received ? Why did he not accept the proposition as to both bonds, and thus confer upon the bank double the benefits which were conferred, if benefits they were, by his partial acceptance ? Until these questions are answered, the charge that the Secretary sought this transaction with the bank, or sought the advantage of the bank in the sale of these bonds, should cease to be made.
But the Secretary had not heard from the negotiations opened by him in England and France for the sale of these bonds, and how, it may be asked, did he know that favorable propositions might not come from those quarters ? Or why did he not wait to be informed upon those points, before he closed the transaction with the bank, by the sale of the third bond ? This inquiry has already been answered in the extracts read from the report of the Secretary now under consideration. He says, at page 3 of the report:
"In the mean time, however, finding that the demands for the public service during the month of June had exceeded $4,500,000, and expecting as the fact turned out to be, that they would equal about $7,000,000 in July and August, and finding, also, that the available balance in the Treasury applicable to general purposes, and subject to draft, fell below $1,000,000, and that payments were making at at times in new Treasury notes, which could not be rendered at all available, I considered it necessary to effect a sale of at least one of the bonds at an earlier day than advices could be received, and any proceeds realized from Europe."
This is the answer of the officer himself, made upon his official responsibility, in reply to the inquiry abode anticipated, made by the Senate itself. What is it ? That the state of the Treasury would not permit him to wait for a sale of both of the bonds; that it was, in his opinion, "necessary to effect a sale of at least one of the bonds, at an earlier day than advices could be received, and any proceeds realized from Europe." Is this answer true ? Does any one here doubt it ? Will any one here attempt to impeach it ? Then the inquiry is answered; and here is the reason why the Secretary, in July, and before he had received returns from his foreign correspondents, accepted the offer of the bank as to one, and not as to both bonds.
These correspondents abroad, however, were heard from in due time; and what were their answers ? That the bonds were too large, and could not be divided into smaller sums for the market; that they had too short a time to run to make them an object for the investment of such heavy sums; and that their final payment was not to be guarantied by the United States; that, for these reasons principally, they could not be sold in England or France, within the terms of the law. I will not trouble the Senate with reading this correspondence. It will be found among the documents appended to the report, marked C, 1 to 5 inclusive.---[Without the guaranty of the United States, no one would buy the bonds of the Bank of the United States !!! What an admission !]
It is further complained that the Secretary of War took a part in this negotiation with the bank. He did so; and what was it ? He shall answer for himself, as his language upon the subject will convey the truth more clearly, concisely, and intelligibly, than any I can employ will do it. I read from the documents appended to the message of the President of the 11th instant, in answer to the call made by the Senate upon him for all the information upon this point, being the report of the Secretary of War in reply to the interrogatories propounded. At pages 1 and 2 of the document, the Secretary says:
"I have the honor to state that, some time in July last, in order to facilitate the speedy and successful termination of a negotiation at that time pending between the Secretary of the Treasury and Mr. Macalester, I acceded to the proposition of the latter that, in the event of the sale of the bond being perfected, the amount of the purchase money should be absorbed by the expenditure of this Department, and the funds to be placed by the bank at such points and in such amounts as they might be required, not to exceed $500,000 a month from this source; and gave him an assurance that this arrangement should be, carried into effect, provided no objection were made to it by the Secretary of the Treasury.
Mr. Macalester was accordingly furnished with a statement, showing at what places and periods, and in what amounts, these funds would be wanted, a copy of which is herewith furnished, marked A. This arrangement was, on proper explanation, subsequently concurred in by the Secretary of the Treasury, and its details have been carried into effect through his office; and I have reason to believe that it aided essentially to produce the favorable issue of the negotiation. It has been carried into effect in a manner perfectly satisfactory to this Department; the public creditor having been paid in such funds as he preferred to receive.
I think it proper to mention that, while Mr. Macalester was conducting his correspondence with the Secretary of the Treasury in April, be applied to me to know the probable requirements of this Department for the residue of the year; and finding that in all probability they would be very heavy, be expressed a desire, which was subsequently reiterated by the bank, that the purchase of the bond should be negotiated by me, and the bond be transferred to the use of the War Department; to which I replied as stated by Mr. Biddle in his published letter to the Secretary of the 13th of August, that such an arrangement could not legally be made. That subsequently entered into by this Department with Mr. Macalester, on which, in a great measure, depended the success of the negotiation for raising the necessary funds to carry on the operations of the Government, and which was afterwards sanctioned by the Secretary of the Treasury, being both legal and advantageous to the interests of the United States.
I deem it unnecessary to say more than to repeat the opinion expressed by the Secretary of the Treasury in his report on this subject, that the agreement finally concluded with the bank was forced upon the Government by the conditions imposed upon the sale of the bonds, and was entered into upon the fullest conviction (which subsequent events have proved to be well grounded) that it was not only the most advantageous which could be made for the interests of the Government, but presented at that time, in connection with the arrangement for the mode of paying the bond due in September, 1838, the only means by which a failure to meet the pecuniary engagements of the United States, or the alternative of another call of Congress by the President, could be avoided.
Under these circumstances, and with these convictions, I regarded it to be my duty to use my best endeavors to assist in bringing the negotiation for the sale of the bond to the bank to a successful issue, especially as these funds were required to carry on the important operations of this Department, on which, at that particular period, the peace and the character of the country so essentially depended."
From the facts here stated, we learn that the bank, in making its propositions for anticipating the payment of the second bond, to become due in September, 1838, as well as to purchase the two bonds which did not fall due till September, 1839, and 1840, kept steadily in view the disbursements of the War Department, and constantly manifested the intention of making the payments by meeting those disbursements.
Hence in April, when Mr. Macalester was holding his correspondence with the Secretary of the Treasury, and making his propositions, as the agent of the bank, for anticipating the payments upon the second bond, which correspondence has been before particularly referred to, he applied to the Secretary of War, as is here stated, to ascertain the requirements of that Department for the residue of the year 1838; and, finding that they would be large, urged that the bank bonds should be assigned to that Department, so that the negotiations of the bank might be carried on with it.
Being informed that such an assignment could not be legally made, the negotiation was prosecuted to its unsuccessful termination with the Secretary of the Treasury, as has been before seen. On the 21st of July, and after the law had passed for the sale of the third and fourth bonds, a negotiation was opened by the bank with the Secretary of the Treasury for the sale of those bonds, and again, as appears by the above statement of the Secretary of War, the same appeals were made to him and the same desire expressed that the payments by the bank might be made in the disbursements of his Department.
Being convinced that payments in that manner would, by the bank, be made an essential condition in the negotiation, the Secretary expressed his willingness to accept the payments as desired, provided such an arrangement should meet disapprobation of the Secretary of the Treasury.
On the 3d day of July Mr. Macalester re-opened the negotiation with the Secretary of the Treasury, for an arrangement as to the payments upon the second bond, which negotiation was continued open until the 15th of August, when it was closed, by an agreement that that bond should be paid in three monthly installments of equal amounts, and that the drafts of the Treasurer, for the money, should be met by the bank, at the places where they should be made payable, which places, and the amount of drafts to be drawn upon each, constituted a material part of the treaty.
If, now, we bear in mind that the same mode of payment of the purchase money for the third bond was the object of the collateral negotiation carried on with the Secretary of War, anterior to the purchase of that bond by the bank, we shell be able to understand the facts, without the danger of be coming confused by blending the two distinct transactions. The Secretary of War tells us that, being convinced it was necessary to a favorable issue of the pending negotiation for the sale of this third bond, he entered into the stipulation to have the proceeds of this bond devoted to the disbursements of the War Department; to have the payments made at stipulated places in the South and West, in stipulated amounts at each place, and to draw but about five hundred thousand dollars monthly from this source, upon the condition that the Secretary of the Treasury should consent to the arrangement; that he supposed the matter was subsequently submitted to the Secretary of the Treasury, and concurred in by him; and he now thinks the agent of the bank closed the contract for the purchase of the bond with this understanding, and that the successful termination of that negotiation, in a great measure, depended upon that collateral arrangement. He also expresses his full conviction of the necessity of the sale of this bond for the successful prosecution of the affairs of Government intrusted to his charge, "on which, at that particular period, the peace and character of the country so essentially depended."
Not a Senator in these seats can, for a moment, mistake the important and delicate interests to which the Secretary of war refers, in using this language. None here can forget the intense interest felt throughout the whole country in the successful removal of the numerous and powerful tribes of Indians from the South and Southwestern States. None here are ignorant of the vast sums of money the Government had stipulated to pay to extinguish the title of these Indians to their lands within the States, to pay the expenses of their removal, and to subsist them at their new homes; and none, anywhere, who know any thing of the Indian character, can be ignorant of the necessity of having, at the moment, the money stipulated to be paid to or for him. If money is due to the Indian, he must have money; and he must have it when you have stipulated to pay it, or your business transactions with him are at an end. You cannot tell him of embarrassments or disappointments. You cannot talk to him of credit, beyond the letter of your bond, and retain his confidence.
Who, then, will be surprised at the anxiety manifested, and the responsibility assumed by the Secretary of War to secure, by the sale of this bond, the requisite funds in the Treasury to accomplish that complete removal of these great tribes which has been accomplished during the past year, and which does, and will, reflect so much honor upon that capable and persevering public servant ?
I am aware that some of the correspondence would seem to imply some misunderstanding between the Secretaries of the Treasury and of War, in relation to this collateral arrangement as applied to the proceeds of the third bond, and the correspondence renders it more than probable that the one or the other had labored under a misapprehension, and had interpreted verbal conversations, intended to be applied to the mode and manner of payment of the third bond, as relating to the mode and manner of making the anticipated payments upon the second bond.
Still the facts show that the agent of the bank made these stipulations essential to the closing of his contract in both cases, and that he was authorized to believe that they were understood by all the parties to constitute a component part of that contract. The facts also show that the money to be derived from both negotiations was indispensable to the healthful operations of the public Treasury, while national interests of the gravest character depended upon the ability of the Treasury to redeem the plighted faith of the country.
What, then, I ask, Mr. President, with some confidence, is the judgment to be rendered upon these transactions ? Are the executive officers of the country to be censured and condemned for having entered into any negotiations with this bank in relation to the payment of these bonds, and the supply of an exhausted Treasury from that source ? And, if so, upon what ground ? Had Mr. Woodbury said to Mr. Biddle, "I, sir, am opposed to your bank; the political party to which I belong, and with which I act and feel, are strongly opposed to it, and I will not, therefore, negotiate with you about your bonds. I will not sell to you upon any terms, be the consequences what they may. My political hostility, and the hostility of my political party, forbid that I should have any business transaction with you" had our Secretary of the Treasury taken this course, and failed to realize the money upon the bonds in time to meet the calls upon the Treasury, as in that event he must; and had we returned here and found the Creeks and Cherokees, not removed from Georgia, Alabama, and Tennessee; the military force withdrawn from Florida for want of subsistence; the western and northern frontiers unguarded, and the public works abandoned, what would have been the public judgment upon the conduct of the Secretary then ? What would have been the judgment of this body ? Who then would have stood up here to defend the conduct of the Secretary of the Treasury, and who to accuse and condemn him ?
Sir, so broad and untenable ground as this will not be assumed; but it may be said that the informal and collateral understanding to which the Secretary of War was a party, has vitiated the transactions, and gives cause for censure. Let us, for a moment, look at the facts. The money could be realized upon the bonds, in time to meet the wants of the Treasury, from no other quarter than this bank. It could not be realized from the bank but by consenting to these collateral arrangements as to the times, places, and manner of payment. The money was to be placed in the bank, "in special deposit," to the credit of the Treasurer; and it was so placed. Upon the strength of this deposit the Treasurer was to draw his drafts for the public disbursements, in stipulated amounts, and make them payable at stipulated places; and, without presentment at the bank, it was to pay them at those places "in specie or its equivalent;" and there is no allegation that they were not so paid. The places of payment were named by the heads of the Departments which had the superintendence of the disbursements, as were also the sums to be paid at each, and both with a strict reference to the wants and convenience of the public service; and it has not been asserted that inconvenience or loss arose to that service from either, while the contrary is positively shown by both the reports under consideration.
The negotiation for the sale of the third bond was closed, and the money paid, on the 1st of August; and that for the payment of the second bond, and the first installment paid, on the 75th of the same month. On the 13th, two days before the last payment mentioned, the bank resumed specie payments, so that, however much these negotiations may have contributed to that highly desirable result, the bank became a specie-paying bank before a single draft upon the money in deposit to the credit of the Treasurer could have passed from the hands of the officers and agents of the Government, if any such drafts had been drawn at that period.
These are the facts, and would they have justified the Secretary of the Treasury, even supposing him to have known and assented to the collateral stipulations as to the manner of payment for the bond sold, in refusing to accept the terms offered by the bank, and thus to have incurred the consequences to which I have before alluded ? I think not, Mr. President.
But, as my task in reference to this part of the connection between the Government and the Pennsylvania bank is performed, as I have recounted the facts and the history of the transactions, I know tediously but I hope faithfully, I cheerfully leave the Secretary of the Treasury, and all the other actors in them, to the judgment of the Senate and the country. If condemnation is to follow, I only desire that the judgment may rest upon the truth, and that I have attempted to exhibit.
Another connection has been formed between the Government and this bank, which is represented as still more alarming and ominous than the one from which we have just passed. I congratulate the Senate, and certainly myself, that the facts, in this latter case, are concise, simple, and plain. I propose, therefore, to read them all to the Senate; first seeing out of what relations they have arisen.
The Bank of Kentucky was one of the deposit banks, under the law of 1836, "to regulate the deposits of the public money." It, with almost all the banking institutions of the country, suspended specie payments in May, 1837, then having a very large amount of the public money in its hands, for which it could not account according to law. This bank availed itself of the provisions of the law of the extra session of Congress of 1837, granting time for payment to the deposit banks at their option, and gave bonds to secure the payment of the amount due from it to the Treasury in three equal installments; the first to be paid on the 1st day of July, 1838, the second on the 1st day of January, 1839, and the third on the 1st day of July, 1839, with six per cent. interest. The installment due in July, 1838, was paid, and nothing more was due upon the bonds until the 1st day of the present month. Still, under date of the 5th day of September, 1838, the President of the bank wrote to the Secretary of the Treasury, as follows:
"I shall, during the course of the present week, remit to you a check on Philadelphia for $300,000, in part payment of the debt due by this bank."
Under date of the 10th September, the President of the bank again writes from Louisville, Kentucky, to the Secretary, in the following words:
"Sir: I hand you, inclosed herewith, a check on the Bank of the United States, Philadelphia, in your favor, for $300,000, intended as a payment on the amount due the Treasurer of the United States by this bank."
On the 17th day of September, McClintock Young, the chief clerk in the Treasury Department, and, at the time, acting as Secretary of the Treasury, during a temporary absence of the Secretary, acknowledges the receipt of the check mentioned in the above note from the President of the Bank of Kentucky, in the following language:
"Sir: I have to acknowledge the receipt of your letter of the 10th, with its inclosure. I have specially directed the check for $300,000, drawn by your cashier upon the Bank of the United States, in favor of Levi Woodbury, Secretary of the Treasury, to be placed to the special credit of the Treasurer of the United States, with whom all accounts are kept, and to whom all payments or transfers of balances of that kind should be made. Whether the bank will consider my indorsement sufficient for that purpose, remains to be seen."
On the same day Mr. Young, acting in the same character, writes to the cashier of the Bank of the United States of Pennsylvania, at Philadelphia, as follows:
"Sir: The inclosed check has this day been received from the Bank of Kentucky; and I will thank you to place the amount ($300,000) to the special credit of the Treasurer, and acknowledge the receipt of the sum to him."
The request of Mr. Young was complied with by the bank, and the amount of the check placed to the special credit of the Treasurer of the United States upon its books. These are all the facts in this case; and from them some see a most dangerous and alarming evidence of a disposition on the part of the executive officers of the Government to reunite the Treasury of the country to this banking institution, in its new character of a State bank. Is such a conclusion fairly deducible from the premises ? The Bank of Kentucky was, at this period, indebted to the United States in the sum of about six hundred thousand dollars. No part of the amount was due until the 1st of January, 1839, and therefore the officers of the Treasury were not authorized to expect remittances from that quarter, until the receipt of the notice from the President of the bank of the 5th September. In five days from the date of that note, the draft followed, which must have been before the notice could have reached the Treasury Department. On the 17th of September the draft comes, in the absence of the Secretary of the Treasury. It is drawn payable to him in his individual and official name, and is upon the Pennsylvania bank. Was it wrong in Mr. Young to take a draft upon that bank in payment of a debt due to the Treasury, provided it should be duly honored ? Much as I have and do dislike that institution, I am not prepared to say that the officers of the Government would be justified in visiting it with that measure of proscription, and I do not suppose any one will pass censure upon that act.
Mr. Young took the check and acknowledged its receipt in the language above quoted, informing the President of the Bank of Kentucky that it ought to have been made payable to the Treasurer, not to "Levi Woodbury, Secretary of the Treasury," and that he did not know whether the Pennsylvania bank would consider his indorsement sufficient to warrant the payment of the amount to the Treasurer. He must send the check to the bank to determine this point, and he must send it there for collection. The bank was then holding a large sum on deposit to the credit of the Treasurer, as the proceeds of the bonds, and was meeting the drafts of the Treasurer for disbursements at a greater number of points, and for larger amounts, than any other banking institution in the country.
The money to be realized as the proceeds of this draft would be as valuable at Philadelphia as at any point in the country, and more valuable than at any other points except New York and Boston; and for disbursements in the South and Southwest, it would be even more valuable at Philadelphia than at the latter place. There were no general deposit banks holding public money under the deposit law of 1836, to which the proceeds of this draft, could have been transferred without depreciating the funds and placing them more inconveniently for public use. By what obligation of duty, then, was the Secretary of the Treasury called upon to transfer this amount at all, for the mere purpose of safe-keeping ? Will it be pretended that the money was unsafe in the Pennsylvania bank ? I presume not. Little as is my confidence in the institution, in any sense, it is not yet so perfectly impaired as to enable me to believe that this money is not secure, for the short time it may remain in its vaults, before it is called out for the use of the public creditors. I cannot as yet, by my public acts, express such an opinion of this bank.
Why, then, I again ask, was the Secretary to withdraw the money from that resting place but for purposes of public disbursement ? That bank was, at the time, a depository of public money, of a special character, and for a temporary purpose and period; but it was making disbursements, and meeting the drafts of the Treasurer, and was therefore a convenient location, so far as the public service was concerned, for this money. If the Secretary had transferred it, he must either have placed it in some other bank which was also a depository of a special character, holding the trust, like this bank, by the selection and at the pleasure of the Secretary, and not under the law of 1836, or to a general deposit bank inconveniently located, and where the money would be less valuable. Was it his duty to do either? and if so, upon what ground ? Not to secure the safety of the funds, because they were as safe where they were as in any place it was in his power to place them. Not to make the money more valuable, because it was at a point were it was as valuable for public disbursement as any point which the country presented. Not to promote the convenience of the public service, because that convenience was best consulted by leaving the money where it was. He did not put the money in this bank. It was to be paid to the Treasurer there; it was paid to the Treasurer there; and there the Secretary of the Treasury, acting through his chief clerk, Mr. Young, left it in safe-keeping until the wants of the Treasury should call it thence. This is his fault, if fault he has committed.
Was he, then, bound to transfer this money merely to show his hostility against this particular banking institution ? If transferred at all, it must have been transferred to some other bank; for neither the laws of Congress nor the practice of the Department authorized the Secretary to transfer the proceeds of this draft to any public officer of the country, simply for the purpose of safe-keeping. Was the Secretary of the Treasury, then, bound to transfer these funds to a general deposit bank, where their value to the public would be diminished, or to some other special deposit bank of his own selection, not for any purpose of public utility, but merely to show the hostility of himself and his friends towards this particular bank ? This is the plain, direct, and simple question presented, and this the issue formed in relation to this deposit in the Pennsylvania bank.
It may be, Mr. President, that blame to the Secretary of the Treasury, and blame to other executive officers of the country, should proceed from this transaction. It is not my province, nor is it my desire, to pronounce the judgment which the Senate or the people will form. It is enough for me that I have exhibited the facts fully, and presented these consequences, which were unavoidable, in any course the Secretary might have chosen to take. That being done, I leave the matter to this body and the country, with a respectful confidence that the motives of that officer will be spared, in any event, who has had the magnanimity to sacrifice his personal feelings, and strong hostilities, to the profit and convenience of that branch of the public service committed to his charge.
I now pass, sir, to a very different branch of the facts presented in the case before us. I refer to the published letter of Mr. Biddle, the President of the Pennsylvania bank, which has been adduced to the Senate as evidence of the improper connection between the Government and his bank. The paragraph of that letter to which I particularly allude is in the following words:
"In the month of July, the Government agreed to receive an anticipated payment of the bonds of the bank to the amount of between four and five million dollars, in a credit to the Treasurer on the books of the bank; and arrangements were made for the more distant public disbursements in the notes of the bank. These arrangements, as honorable to the executive officers as they were beneficial to the public service, brought the Government into efficient co-operation for the reëstablishment of the currency, and opened the way to a resumption of specie payments. The resumption accordingly took place throughout the middle States on the 13th of August, and in many of the southern and western States soon after."
If I have been at all successful in my exertions hitherto, the Senate now fully understands the whole affair of the "anticipated payment of the bonds," and is able clearly to judge how far this brief and easy mention of a compliance, on the part of the officers of the Government, with the repeated and untiring solicitations of this bank to arrange the payment of one of these bonds, partly by anticipation, and to sell another of them to the institution, from an utter inability to find another purchaser in the markets of the whole world; makes a true representation of the facts of the ease to the mind of the reader. How far would the public, to whom this letter is given by its author, be likely to be impressed with the truth, from this assumed representation of it ? An agreement to make payment in a "special deposit" to the credit of the Treasurer, is converted into an agreement to anticipate the payment of the bonds "in a credit to the Treasurer on the books of the bank;" while the certificate of the bank, of the special deposit, is a matter of record in the Treasury Department. An agreement to pay "in specie or its equivalent," an invariable qualification to all the stipulations, is converted into "arrangements" "for the more distant public disbursements in the notes of the bank."
This is the evidence from this source, and such is the witness upon whose testimony before the country, voluntarily given, our highest executive officers are to be condemned unheard. How far this witness is supported by the facts, I most cheerfully leave the Senate to determine, but I must, on behalf of the officers concerned, protest against the compliment so confidently and so injuriously forced upon them by the President of the bank. They may bear the hostility of this institution, but they cannot bear its praise; and most certainly not when that praise is shaped, as it is in this part of the letter from which I have read, to suit the views of a malignant opponent.
To give to the writer of the letter, however, all the foundation which possibly can be claimed for his statement of the facts, I will detain the Senate to make a few references to another document. I refer to the message of the President of the 9th instant, in answer to a call from the Senate for all orders and instructions issued by heads of Departments, heads of bureaus, and the Postmaster General, relative to the kind of money and bank notes which might be paid out on account of the United States, since the 14th day of April, 1836. The message communicates answers to the call from all the heads of all the Departments and bureaus who have issued any such orders or instructions within the period mentioned; but the present purpose does not require that I should refer to any other than those from the Secretary of War and the heads of bureaus in that Department. Those references shall be as brief as the occasion will permit; and it is here also my intention to let these officers speak, principally, for themselves.
The Secretary of War, in submitting to the President the answers to the call from his Department, says:
"In submitting these reports, it is proper to remark that the circulars from the pay, quartermaster's, engineer, and Indian departments, in October, were issued at a period which required the exercise of great forbearance and discretion in the management of the fiscal operations of this Department, in order to avoid, as far as practicable, embarrassing the money concerns of the country. I had been informed, from credible sources, that a rigid exaction of specie, to meet all our disbursements in the South and West, would retard the resumption of specie payments, embarrass the operations of those banks that had resumed, and prove seriously prejudicial to the interests of commerce in that portion of the country.
"Influenced by these impressions and acting under these views, which I had urged upon all branches of the Department, these circulars were issued, and, in some respects exceed what was intended; and upon befog brought to the notice of the present chiefs of bureaus, they have modified them so as to render the instructions more strictly and distinctly conformable to existing enactments. At the same time, it must be borne in mind that the Bank of the United States was, at the period of issuing the circulars, a specie paying bank; and that to have exacted specie from the banks in the South and West which were indebted to that institution, or in which it had deposited funds to meet the drafts of the Treasury for war warrants, would not only have been of no aid to the public service, but would have inflicted injury alone upon those banks, and been prejudicial only to the trade of the South and West."
Here we have the views of the Secretary, and the motives and policy by which he intended to be governed, in the administration of the affairs of his Department. The time was one of great difficulty. The banks of the North and middle States had resumed specie payments, and those of the South and West were struggling to reach that desirable point. The disbursements of his Department were to be principally made in the South and West; and the drafts of the Treasurer for that purpose were, by the arrangement with the Bank of the United States in relation to the payment of two of its bonds, to be met, to much the greatest extent, by that institution.
The supposition of the Secretary was natural and necessary that those drafts would be met by calls upon its debtor banks in those sections of the Union where the payments were to be made, and by deposits of funds in the banks them. Hence his proper and laudable anxiety, so far as an observance of the law, and of the unquestioned rights of the public creditors would permit, to make those heavy disbursements in a manner the least injurious to the banking institutions, the trade and commerce, and the business generally of those sections, and so as, in the least possible degree, to "retard the resumption of specie payments" in the South and West; and hence, too, he urged these views and this policy "upon all the branches of the Department." Still he tells us that the orders and instructions issued by some of the heads of bureaus in the Department, "in some respects exceed what was intended."
Satisfied that the motives of the Secretary, as avowed by himself, must be universally approved, and that the policy he adopted for the government of his Department was proper and right, so far as it was wisely pursued and properly carried out, I now proceed to refer to such of these "orders and instructions" as, if any, must be considered exceptionable. The first, in the order of time, is a direction given by the Secretary himself in relation to the payment of pensioners. The date of this circular is May, 1837, the month in which all the banks of the country, comparatively speaking, suspended specie payments, and is in the following language:
"In the present state of the currency, and during the general suspension of specie payments, it would be unjust to the pensioners to withhold from them the means of purchasing the necessaries of life, by a rigid adherence to the letter of the law. The agents, therefore, will be authorized to pay them in such currency as the receivers demand and are willing to consider an equivalent for specie."
This order furnishes, upon its face, the best justification or which it is susceptible, and, therefore, without a single other remark, I pass to the circular of the chief engineer, which bears date 6th October, 1838, and is in the following words:
"Sir: It will conform with the understanding existing between the Department and the depository banks, that whenever your payments on the public account cannot be made by checks on the banks, a tender of the notes of the bank on which the Treasury draft was drawn will be made, and that in no case specie be exclusively exacted, unless the note, of said bank will not be received by the public creditor.
"The observance of this rule will be of general accommodation, and be sustained by the Department."
This is one of the "orders" to which the Secretary expressly applies the remark in his report, above quoted, that they "in some respects exceed what was intended." It will be proper here to add that, under date of the 20th October, 1838, the head of the Indian bureau issued a circular in the precise language of this one, and that the present heads of both these bureaus, when the existence of these directions from their respective branches of the Department were made known to them, instantly so modified them as to bring them within the express and unquestioned terms of the existing laws in reference to the disbursement of bank notes.
A circular from the office of the Paymaster General was issued, under date of the 8th October, 1838, which is as follows:
"Sir: Arrangements having been made with the United States Bank to pay the Treasurer's drafts to a certain amount, at different places, and it being probable the notes of that bank will be as acceptable to claimants, and in some cases more convenient than specie, you will, should you receive drafts on that bank or its agents, make as many of your payments by check as you can, which will give the receiver the option of taking paper or specie; and the Department has no objection to your using the paper of that bank in all your payments, so far as it can be done legally."---[So, the Government pays out notes of the Bank, thereby making the notes of the Bank tender and currency !! That is how we weave a tangled web, and dig a hole for ourselves.]
The only other of these "orders and directions," to which I propose to refer, was issued from the office of the Quartermaster General, and bears date October 31, 1838. The language is:
"Whenever remittances on the public account are made to you by the Treasurer of the United States in notes of the United States Bank of Pennsylvania, or by drafts of that institution on local banks or agents, it is desirable that, in stead of demanding specie from the local banks or agents, you receive from them, and disburse, the bills of said 'Bank of the United States,' in all cases when such bills may be entirely satisfactory to the individuals to whom payment may be made."
The Quartermaster General states that this circular was sent to but eight officers of that Department, and that, understanding a construction had been given to it to authorize the payment out of notes of less denominations than those allowed by the law of the 14th of April, 1836, those officers were immediately instructed that the direction was to be construed in conformity with that law, and not otherwise.
The number of orders and directions transmitted with the message of the President is very great; but upon a careful perusal of them all, I consider those referred to above the only ones which have material reference to the disbursements to be made under the arrangements with the bank, and all which go a step to show that the bills of the bank were agreed to be disbursed, as a part of these arrangements.
And now, Mr. President, permit me to ask how far any of these orders authorize the assertion of the president of that institution that "arrangements were made for the more distant public disbursements in the notes of the bank ?" We have seen that the arrangements between the Secretary of the Treasury and the bank, in fact, were that the payments should be made "in specie or its equivalent," and so far as the collateral stipulation with the Secretary of War may be considered a part of those arrangements, that the same medium of payment was required and agreed to be made by that also.---[What is equivalent to specie ? Notes of the Bank ? How did the notes of the Bank become equivalent to gold and silver ? The Secretary was simply bullshitting the audience with this language: they always had more notes in circulation then coin to redeem them; so this arrangement made the paper (a false promise to pay coin) equivalent to gold. Was the Secretary of War, the Paymaster general, the Quartermaster General, the head of the Indian Bureau, perhaps, friend of Nicholas Biddle ?]
In these negotiations, then, there were no "arrangements made for the more distant public disbursements in the notes of the bank," or for any disbursements, near or distant, in those notes, any further than they might be considered embraced in the terms equivalent to specie; and how far that might be, would, of course, in all cases, depend upon the will and choice and estimation of the public creditor to whom payment was to be made.
It will certainly not be pretended that orders from the head of a department or a bureau, containing simply directions for the government of the subordinates of that branch of the service, can change the terms of these contracts, or give to either party rights which were not conferred by the contracts themselves. If "arrangements were made" between the executive officers and the bank "for the more distant public disbursements in the notes of the bank," the right was conferred upon the latter to make those disbursements in such notes, independent of any relations, or rights, between the Government and its creditors, and a tender of the notes would be good payment as between the Government and the bank. Is such a right pretended or claimed by the bank, growing out of the arrangements for the sale and payment of its bonds ? It has not been, and is not. On the contrary, if no such "arrangements" were made, or right conferred, by the contracts, then nothing in the "orders and directions" from the heads of Departments and bureaus to the disbursing officers could make the one or confer the other. In this aspect of the case, therefore, the president of the bank was not authorized by the facts to say that "arrangements were made for the more distant public disbursements in the notes of the bank."
While upon this part of the case, another inquiry should be made. Did these "orders and directions" assume to confer upon the bank the right to make disbursements in its notes ? I here most freely express my dissent from the policy and practice indicated by some of these circulars. The Secretary tells us that some of them "in some respects exceed what was intended" by him; and I think some of them go beyond a sound and safe rule. I cordially concur in the views and policy upon which the Secretary acted, as expressed by himself; but I think some of the circulars go much further; and, instead of adopting a policy which was calculated to hasten the resumption of specie payments in the South and West, and to restore the currency to a sound state in those sections of the Union, must, if continued in force and acted upon, have had a strong tendency in the opposite direction.
Did they, however, assume to confer the right to make public disbursements in bank notes ? Not one not even the broadest of them. They urged the policy of making disbursements in that medium "so far as it can be legally done;" "in all cases where such bills may be entirely satisfactory to the individuals to whom payment may be made;" "unless the notes of said bank will not be received by the public creditor," &c. Thus in all cases deferring to the option of the public creditor, and to his legal rights, the question of making disbursements in bank paper. The orders, therefore, did not assume to confer the right to make "public disbursements in the notes of the bank;" and even they, broad and indefensible as some of them seem to me to be, do not bear out the president of the bank in the declaration referred to: yet this individual goes on to say, "these arrangements, as honorable to the executive officers as they were beneficial to the public service, I brought the Government into efficient cooperation for the reestablishment of the currency, and opened the way for the resumption of specie payments."
What "arrangements" are here referred to ? Evidently those spoken of in the previous sentence of the letter, "for the more distant public disbursements in the notes of the bank." Having shown that no such "arrangements" had been made between "the executive officers" and the bank, I may be permitted to hope that those worthy officers will not be made to suffer in the public estimation under the blighting influence of the compliment so gratuitously bestowed upon them.
Here, Mr. President, suffer me to ask, why do you think this letter of Mr. Biddle was given to the public ? Was it, do you believe, to bestow credit upon the executive officers of this Government, or to manifest his connection with and attachment to this Administration ? If this was the motive, some of his able and sagacious friends upon my right must feel surprise at his want of sagacity. They tell us, almost daily, that the cause of this Administration is a sinking cause; that ours is a falling house; and they must deeply regret that this sagacious banker should now conclude to join his fortunes, and those of his institution, to such an interest.
Sir, these gentlemen will tell you that no such desires and objects have given this letter to the light. Was it, then, to speak of the negotiations between those executive officers and the bank, and to do them justice in that particular ? No; in my opinion, no such negotiations prompted this letter, but certain negotiations which the sagacious writer foresaw were about to take place at Harrisburg, in his own State, were the moving causes to this public address, in the shape of a letter to an individual correspondent.
The bank had been too deeply concerned in the singular political transactions which were agitating a great State. Success began to be doubtful, and a change of position, in advance, was found to be advisable. Hence these quiet and peaceful declarations, and these amicable appearances towards ancient enemies. Hence this abandonment of mercantile speculations, and this neutrality of posture in reference to future events. From considerations like these, sir, I believe this letter was written, and not from any change of feeling or spirit on the part of the writer, or the institution over which he presides.
I must ask a little more of your time, Mr. President, upon this letter. The writer says the transactions between the Government and the bank, of which I have spoken so elaborately, "brought the Government into efficient cooperation for the reestablishment of the currency, and opened the way to a resumption of specie payments." The arrogance of this expression is so excessive as to excite no other emotion than that of ridicule. That the Government had been, from May, 1837, not cooperating with the bank, but efficiently operating against the irredeemable policy and declarations of the bank and its president, "for the reestablishment of the currency," is now matter of history; that the "arrangements" to which the letter refers, and which the wants of the public Treasury, occasioned by the suspension of the banks, and the legislation of Congress consequent thereupon, compelled, were calculated to enable the bank the more easily to pay its debts to the Government, and thus to abandon its irredeemable doctrines and policy, when, by the action of other State institutions, they had become no longer sustainable with a preservation of credit, and to place itself upon the list of resuming banks, is most likely.
Mark dates and facts. The negotiation for the sale of the bond of 1839 was completed and closed on the 1st of August, 1838. The definitive offer of the Secretary of the Treasury for the anticipations, and mode and manner of payment upon the bond of 1838, was dated on the 25th of July, 1838, and the broad acceptance of that offer by the agent of the bank, was of the day following. By this offer and acceptance, the first installment of $800,000 was to be paid on the 15th day of August, and all the payments upon both "arrangements" were, by the terms of the same, to be made "in specie or its equivalent."
How, then, were the notes of the bank to be made applicable to these payments ? Could it be done short of a resumption of specie payments by the bank so as to make its notes, in form at least, "equivalent to specie ?" What do the acts of the bank show to have been its sense of its own course and policy under these circumstances ? It resumed specie payments on the 13th of August, thirteen days after the payment was made at the bank for the bond of 1839, but before the drafts upon that deposit would be returned upon it in any considerable amounts, and two days before the payment of the first installment upon the bond of 1838.
Did these transactions authorize the president of the bank to say, that by them the Government was brought into efficient "cooperation" for the reestablishment of the currency ? Into efficient cooperation with whom, or with what ? With an institution that had resisted, with all its immense power, the resumption of specie payments the only measure by which the currency could be reestablished; which was a debtor to the Government to nearly eight million dollars, and which was compelled to ask time for payment, of one, two, three, and four years; which found its extended obligations falling due so near the period when specie payments must be resumed, or its credit destroyed, that it was driven to the "executive officers" to seek terms of payment which would enable it to perform that high duty ? Efficient cooperation with such an institution, and by such means ? Need I say, sir, that the arrogance of the assumption is only equaled by the closing sentence of the paragraph ?
Let me read it to you, Mr. President. Here it is: "The resumption accordingly took place" where do you suppose, sir ? The banks of the whole Union had suspended specie payments in May, 1837. This immeasurable calamity was visited upon the whole country, and now the president of the largest and most powerful bank in the Union is telling us of the resumption, of the return of the banks to their legal and moral obligations. He has before given us his exposition of the causes which brought about this great and good result, and now he says "the resumption accordingly took place."
Again I ask you, sir, where do you think it took place, and when ? He shall tell you: "Throughout the middle States on the 13th of August; in many of the southern and western States soon after." What, let me ask you, as one of the representatives of that section of the Union, what became of the humble northern and eastern States in this happy annunciation to the American people ? Were they not worth the notice of the president of the bank ? Or did he not know that this same glorious work of resumption, for which he says the way was opened in August, had taken place in those States, and was triumphantly sustained against his power, and the power of the giant institution over which he presided, from one to three months before the period of which he speaks? before that "way" was opened which enabled the State national bank to come in, by a forbearance of its debts and an accommodating compromise as to the manner of their payment.
Sir, I am ready to relieve you from this course of remark, and to dismiss from my consideration such testimony, coming from such a source.
I am also most happy, Mr. President, to be able to assure you that I will very soon relieve the Senate from a continuance of any remarks upon this subject. One or two brief topics remain to be considered, and I have done, at least for the present.
In the course of the debate which the subjects under consideration have excited my peculiar personal attention has been called to the language used in the law authorizing the sale of the bonds of this bank. That language is, that the bonds shall be sold for "money in hand," and I believe I was the draughtsman of that law. I have, upon a previous occasion, and when thus called upon, stated to the Senate my best recollections as to my intention in the use of the terms quoted. I had not then made a recent examination of the law, and I spoke from memory wholly. I now find no cause to change what I then said, that it was my intention the bonds should be sold for cash, if sold at all, but I find that the disposition of that "cash," intended by the committee, was fully explained on the face of the bill, and that I am now only called upon to read to the Senate the second section of that law, as it was reported and passed, to make this point perfectly intelligible to all who hear me. That section is in these words:
"And be it further enacted, That all money received upon the sale of the said bonds shall be immediately paid into the Treasury of the United States, or placed to the credit of the Treasurer thereof, in some proper depository, in the same manner that other moneys, received from dues to the Government, are, by law, directed to be paid into the Treasury."
It will be recollected that but one bond was sold, and, in reference to that, how was the money paid ? I have already read to the Senate, from the documents appended to the report of the Secretary of the Treasury, the certificate of the bank, showing that the proceeds of this bond were placed in that institution, "in special deposit," to the credit of the Treasurer of the United States. Was that bank, then, a "proper depository" in a legal sense, and within the meaning of the law above quoted ?
We have seen that there were no general deposit banks under the law of 1836, or banks which could be selected under that law, to answer the purposes of the Treasury. We have also seen that neither the law nor the practice of the Treasury Department authorized the Secretary to transfer money to the hands of individual officers of the Government for the mere purpose of safe keeping. Hence the Secretary has been compelled to select banks as special depositories, without reference to the deposit law, in cases where money comes into the Treasury, as in the case under consideration, not in the ordinary course of collection, but without passing through the hands of an authorized collecting officer.
The authority of the Secretary to select and use these banks for these purposes, is the same which authorized the use of banks by the Treasury Department from the commencement of the Government, under the Constitution, and the organization of such Department, up to the charter of the late Bank of the United States in 1816, and from the removal of the public deposits from that bank in 1833, until the passage of the deposit law in 1836. In his selections, under this authority, there are no restrictions of law upon the officer; and if, therefore, depositories so selected are, in a legal sense, "proper depositories," then I am unable to discover why this bank was not as proper a depository of the proceeds of these bonds, within the meaning of the second section of the law for their sale, above quoted, as any other bank which the Secretary could have selected would have been.
Some objections have been made that the Secretary of the Treasury has, in his annual report, confounded, by the use of language, the character of the deposits made in the various banks, on public account, and rendered it difficult to tell in what condition the public money is, or how it is, in fact, kept. I have taken some pains to inform myself upon these points, and the inferences which had drawn from the reading of the annual report, have been confirmed by the explanations of the Secretary. The terms "general deposit" are used by him in reference to those moneys deposited in banks selected under the deposit law of 1836. The terms "special deposit" are mostly used in their technical sense, as a deposit of the specific thing, the identical money, or currency, delivered to the bank for safe-keeping; and the terms "deposit to the special credit of the Treasurer," are used to denote such deposits as are neither "general" nor "special," within the technical meaning of the other terms, but as are made in banks selected by the Secretary, under his general powers, before referred to, and are placed there subject to the drafts of the Treasurer, with a notice, and distinct understanding, that they are to be drawn for at an early day, and are not, therefore, to be used by the institution holding them for the general purposes of banking.
The remarks of the Secretary upon these points, in the report under consideration, give substantially these explanations. They areas follows:
"The arrangements made with the banks that hold special deposits, or deposits to the special credit of the Treasurer, have been regarded as temporary in their nature or character, and have, in most cases, therefore, been informal. It having been expected that Congress would, at an early day, adopt some general system, that could be carried into practical effect, on the subject of keeping the public money, and comparatively few collections having been made, except in Treasury notes and Treasury drafts, since the suspension of specie payments, till within the last three months, the Department has deemed it most respectful to Congress to abstain from adopting any uniform and permanent arrangement on the subject of deposits in bank, not selected under the general deposit act, but to use them, for the present at least, only as necessity should require."
"In cases of deposits in bank, made specialty, the money has, in some instances, been placed in specie, in boxes, fastened up, and not to be withdrawn by the receiver or others without the draft of the Treasurer on him, payable at the bank where the special deposit was made. In other cases, it has been placed in specie, or bills of specie-paying banks, to the credit of the Treasurer, sometimes as in 'special deposit,' and sometimes as 'in deposit to his special credit,' and allowing the bank to have entire charge of it afterwards."
From this language of the Secretary, as well as from the facts in the case of the bonds, it is inferrable that deposits, in their inception special, in the bank sense of that term, have been subsequently changed in their character, by making such deposits the basis of drafts by the Treasurer, which were paid by the bank on presentment as drafts upon general deposits are usually paid. Indeed, the Secretary tells us in his annual report that "this system of special deposits, or of deposits to the credit of the Treasurer, has, from convenience, and indeed almost from necessity, not generally corresponded with the usual forms of special deposits."
It is quite possible that the Secretary of the Treasury has not, upon all occasions, in reference to these matters, used the language technically appropriate to the occasion; and it is equally possible that he may have committed errors of judgment in the multiplicity of his arduous and most perplexing duties, but when the trying period through which the country has passed under his administration of the Treasury Department shall be remembered and appreciated, I desire to be no more confident of anything than I am of the fact that he will have no cause to complain of the verdict which an intelligent and patriotic and grateful people will render upon his public services. None of us here, Mr. President, can have failed to see that it is much easier to find fault than so to act, in a responsible public trust, as not to deserve censure, much more so as not to receive it, whether deserved or not.
It now seems to be fashionable to complain of the Secretary of the Treasury; but we should be willing to do justice even to a political adversary; and none will, none can, deny that Mr. Woodbury has managed the finances of the country through one of the most difficult periods in our national existence, with a degree of success before altogether unknown under similar embarrassments.
Sir, we have had similar embarrassments before, and with what result ? We had a suspension of specie payments by the banks in 1814, not as general as that of 1837, and when and how were specie payments restored ? After a continuance of three years, by the aid of a national bank. When and how have these payments now been restored ? After a continuance of one single year, and principally, as I verily believe, by a sound and firm administration of the national finances; by a rigid and unyielding adherence, in all national receipts and payments, to that standard of value erected by our glorious Constitution, and which, if not scrupulously observed by the Government in times of pecuniary trouble, cannot be continued as a standard of value for the country.
I know, Mr. President, there have been many patriotic and good men who have sincerely believed, during the late derangements in our currency, that specie payments could never be resumed by the State banking institutions, and the currency re-established at the proper constitutional standard, without the aid of another national bank. I have been one of those who have uniformly believed that, if the operations of the national Treasury were not suffered to be brought down by the general depreciation, but were kept up to the standard of gold and silver, the whole circulating medium would speedily be raised to that level; while I have as firmly believed, if that standard for the public Treasury was surrendered, there would be an end of anything like a fixed and permanent standard of value, until financial embarrassment, commercial suffering, and universal derangement in every department of business, should drive the whole people to call in the aid of some artificial power to assist in erecting it.
The soundness of the former opinion is now demonstrated. The standard of currency for the Treasury has been preserved at the constitutional elevation through the whole of our late troubles; and the consequence has been that, without any other aid, a universal resumption of specie payments has taken place within little more than one year, and business is reviving, at least as rapidly as can consist with firm and enduring health. For all these great and good results, as well as for the great success with which the Treasury has been managed and its wants supplied, during these severe embarrassments, I speak the solemn convictions of my judgment when I say that no man in the country deserves more credit than the present Secretary of the Treasury; and when the political prejudices and party conflicts of the day shall have passed away, I verily believe that history will accord to that faithful and laborious officer even greater praise than I attempt to bestow upon him.
Mr. Wright having concluded, Mr. Rives replied at length; after which,
Mr. Wright said: Before I proceed to notice the arguments of the honorable Senator, you must permit me, Mr. President, to make a single allusion to his opening observations, and it is the only remark of its character which I intend to make in the course of my brief reply. I heard with unfeigned pleasure the declaration of the Senator, that it would give him sincere gratification if the conduct of the Executive officers, in the transactions alluded to, could be fully justified. But for that remark I should have been constrained, from the matter and manner of the argument, to suppose that the honorable gentleman entertained a real desire to convict them of impropriety of intention and action. His declaration, however, deserves full credit, and such are not his feelings.
He complains that I have not answered his arguments, or met the issues tendered by him upon former occasions. I supposed I had said all which I could usefully say upon the whole matter, but I will now reply to some of his positions of to-day, even at the risk of repeating, substantially, what I have already said; and I take this occasion to promise the Senate, after its extended indulgence to me already, I will not be tedious in the performance of this undertaking.
The gentleman's first and principal point is, that the sale of the bond of 1839 to the bank was illegal, because it was practically sold upon credit, when the law authorizing the sale required, in express terms, that it should be made for "money in hand."
To this I have simply to reply that we have seen what were the terms and conditions of the sale, and that one of them was the payment of the whole purchase-money on the 1st day of August, by placing the amount in special deposit in the bank to the credit of the Treasurer of the United States. We have also seen among the documents, appended to the report of the Secretary of the Treasury, one from the cashier of the bank, in the following words:
Bank of the United States, August 1, 1838.---[Question: was this 2 million in coin, or in Ledger Credit Page Entry ?]
I hereby certify that Charles Macalester, Esq., has this day deposited to the credit of the Treasurer of the United States, in special deposit, the sum of two million two hundred and fifty four thousand eight hundred and seventy-one dollars and thirty-eight cents, subject to the drafts of the said Treasurer.J. Cowperthwait,
Now this paper is either true or false. If true, then the payment was made according to the terms of the agreement for the sale of the bond, was made in "money in hand," which money was, by the very act of payment, disposed of as the second section of the act referred to required. Does any one doubt the truth of the certificate ? Does the gentleman himself doubt that this amount of money was in the bank, as its property, and subject to its disposition, at the time the certificate was given ?---[It is a perfectly legitimate question. Was there 2 million coins in the bank where this deposit was made ? Knowing how banks are established, how banks operate; knowing Mr. Biddle's reputation, doubt is the first thing that comes to mind. (In February 1832, Nicholas Biddle reported that the Bank held, altogether, in its braches 7million in coin.) Would the bank have purchased the bonds for coin only, without "its equivalent" ?]
Bad, Mr. President as is the authority of this bank and its officers, with me, upon most subjects, I do not believe that one of them would issue a false official and responsible paper of this character, nor do I believe that the cashier was ignorant of the nature of a "special deposit," or of the import of the facts to which he certified. Any collateral understanding, existing at the time, as to the manner in which the Treasurer should dispose of this money, or in which the bank might, by making certain other payments, discharge itself from its liability thus incurred for this deposit, could neither destroy the fact of the payment, nor alter the character of the deposit at the time when the certificate was given.
But suppose, sir, that this certificate was false at the time it was given. Then the whole transaction was void, from the fraud practiced upon the Secretary, and the legal property in the bond did not pass to the bank by the delivery, as that delivery was in consideration of the certificate, and it was the only evidence of the value received. Upon this supposition, therefore, the bond was not sold, and that could not be an illegal sale, which was not a sale at all.
The honorable Senator next takes the position that the transaction was a disadvantageous one to the Government, because that, out of the proceeds of the bond deposited, as we have seen, the bank was to answer drafts of the Treasurer for the use of the War Department to the amount of but $500,000 monthly, while the statements from that Department show that its wants were equal to $1,000,000 per month.
This position is susceptible of several answers. First, the bank would agree to no more favorable arrangement, and the Secretary of the Treasury must consent to withdraw the deposit at the rate of $500,000 monthly, or he must forego the sale of the bond altogether, and thus get nothing from this bond in aid of the Treasury, as no other purchaser could be found who would pay the price fixed by the law.
Second, the gentleman has overlooked the fact that payments were making, at the same time, upon the bond of 1838, at the rate of $00,000 per month, so that from both sources, the bank would more than meet what he says were the necessities of the War Department.
Third, the proceeds of these bonds were not all the means of the Treasury. The whole current revenue remained, besides other deferred debts, and what the War Department should require, which the bank was not to pay, it would be the duty of the Secretary of the Treasury to supply from these other sources.
Another ground assumed by the honorable gentleman is, that the bonds might have been, and should have been, sold abroad, and that a special agent should have been sent abroad to negotiate the sale; and then he infers that the Secretary of the Treasury was not driven to make the sale to the bank, had he pursued properly the course which the law pointed out.
I have before shown, generally, what the Secretary did do, by way of effecting a sale of these bonds abroad, and, from the results of those efforts, had he any encouragement to pursue them further ? This is the fair question, when we are discussing the faith and intentions of the officer. In May pending the passage of the law, and almost immediately upon its introduction before Congress, the Secretary wrote to a banker of high standing in each of the cities of Philadelphia and New York, to inquire as to the prospect of a sale of the bonds, at home or abroad, within the terms proposed to be prescribed. They both answer him, substantially, that, upon the terms of the bill and without a guarantee, no sale could probably be effected in this country, unless to the bank itself.
Mr. Solms, the President of the Moyamensing bank of Philadelphia, gave it as his opinion that a favorable sale of the bonds might be made in England, and seems to rest that opinion upon the then state of the English money market, and the fact that the agent of the bank in London would, he thought, be induced, "by weighty considerations," to become a purchaser. This is the only direct opinion favorable to the sale of those bonds abroad, which I have found among the papers; and this seems to have been formed at least as much upon the expectation that the bank itself would be the purchaser as upon any other consideration. This gentleman did not propose to free the Secretary from a sale to the bank by sending him to London for a market.
Mr. Newbold, the President of the Bank of America, New York, says:
"The bonds have too short a time to run to warrant any reasonable expectation of a sale of them in Europe on favorable terms, during the present rate of exchange."
After the passage of the law, the Secretary immediately wrote to the house of N.M. de Rothschild & Sons, bankers of London, and requested them, if possible, within the restrictions of the law, to make sale of the bonds. They declined to purchase, for the reasons which I have before stated, and say that a sale upon the terms prescribed, cannot be effected in London. I cannot speak from personal acquaintance as to the propriety of the Secretary's selection of his English correspondents for this object, but I understand the house to be among the first banking houses in London, and suppose it will be conceded by all that there is no fault in the course of the Secretary in this respect.
He also wrote, without delay, to our Minister at Paris, and requested him to consult the best bankers in France, and effect a sale of the bonds there, if it could be done within the limits of his authority. As the gentleman has commented upon the unsatisfactory character of the reply from this quarter, will read a part of Governor Cass's answer. He says:
"But Mr. Welles sought information from the bankers, and his views may be depended on. He states, that after examination, he found it impossible to obtain an acceptable proposition, because, in the first place, the bonds are too large, and because, in the second place, bankers who made an offer would necessarily be compelled to hold themselves in readiness to comply, after information of the result should be obtained from the United States; and would thus be bound, for many weeks, to have the money within their control, while, in the meantime, some event might occur to change the state of the money market, and thus to embarrass them. Mr. Welles was decidedly of opinion that a better arrangement might be made in the United States than here. Under these circumstances, and placing confidence in his representations, I do not think that the object could be effected in Paris, upon such terms as you would approve."
Could the Secretary, after such an opinion, coming from such a source, and based upon such authority, longer hope to find in France a market for these bonds, within the limitations of the law ? Can his motives be suspected, because he relied and acted upon such evidence ?
The Secretary further, immediately after the passage of the law, opened a correspondence with a Mr. Belmont of New York, an agent, resident there, of extensive banking houses in London and Paris. This correspondence was continued from the 9th to the 21st of July, and resulted in an entire declination to purchase the bonds within the restrictions of the law, either for himself, or for account of his principals in Europe.
But, says the honorable Senator, the Secretary ought to have sent an agent to Europe to negotiate a sale of the bonds, and not to have depended upon the uncertainty of correspondence. I have shown that an effort was made by the Secretary to employ an agent, soon after the passage of the law; but that the person applied to, conceded by the gentleman to be qualified and competent, declined to accept the compensation offered by the Secretary -- eight dollars per day and necessary expenses -- and demanded a commission of one fourth of one per cent. upon the amount of the bonds, if a sale was effected, and the pay and mileage of a member of Congress if he should fail in the mission. I have made upon my table a hasty casting of the amount of this commission demanded by the agent, and, if I am not mistaken, it is, upon both bonds, a trifling fraction below $10,000.
This expense the Secretary did not feel willing to incur in any event, while the prospect of a sale did not seem to him to authorize the pay and mileage of a member of Congress for a journey from this country to England and France, and the return, simply to make the experiment. He did not, therefore, send the agent. In this he may have erred, for it is not my purpose to prove that the Secretary is perfect, or exempt from error. This point I cheerfully leave to the decision of this body and the public. My only anxiety is, that the whole truth shall appear before the decision is pronounced; that it shall be distinctly known that the bond was sold at the par value; as fixed in the law, and that every dollar of the proceeds has paid a dollar of debt against the public Treasury; without any deduction of $10,000, or any other sum, for the expenses of negotiating that sale.
If, then, the conclusion shall be that the Secretary has brought the Government into improper connection with a hostile bank, by the negotiation, it must be admitted that he has saved this $10,000 to the Treasury of his country by the operation.
The Senator next says, there is no evidence of the necessity of the sale of this bond at all, and indicates an opinion that it is the duty of the Secretary, and of those who are willing to apologize for his acts, to show that necessity before they attempt to justify the sale he made. To the Senator's arguments upon this position I have several answers.
First, the Secretary has himself stated that the calls upon the Treasury for the month of June "had exceeded four and a half millions;" that he anticipated, "as the fact turned out to be," that those calls would equal about seven millions for the two following months of July and August; "that the available balance in the Treasury, applicable to general purposes, and subject to draft, fell below one million; that payments were making, at times, in new Treasury notes, which could not be rendered at all available;" and that, therefore, he considered it "necessary to effect a sale of at least one of the bonds, at an earlier day than advices could be received and any proceeds realized from Europe."
This is a state of the Treasury, and the exhibition of its necessities, from the head of that Department; and I, sir, have been accustomed to place confidence in statements upon that point, from that authority.
Second, the law authorizing the Secretary to issue Treasury notes for the supply of the Treasury, expressly limits that power to its necessities, after all the other lawful means of supply have been exhausted. Hence the sale of the bonds became a duty, before the credit of the Government, in the shape of these notes, was resorted to; while the only power existing to issue notes, at the period of these transactions, was the power to issue new notes, under the law of 1838, in the place of those paid in and canceled under the law of 1837; and it was, in the nature of things, impossible for human foresight to say how rapidly the old notes would come in, and, consequently, what might be the extent of the power, within any given period, to issue new notes.
Third. The apparent balances of money on deposit in bank, to the credit of the Treasurer, afford no standard by which to form a judgment as to the amount of available means of the Treasury on any given day, because those balances were constantly made the basis of drafts by the Treasurer, which, the Secretary tells us in the correspondence, would necessarily be out from thirty to ninety days, before they would come round to the bank to be there debited to the Treasurer, and deducted from the amount standing to his credit upon the books of the bank.
These are believed to be full and perfect answers to the positions taken by the Senator to show that a necessity for the sale of the bond did not exist. The condition of the Treasury, therefore, at the time the sale was made, appears from the statement of the Secretary above given, unimpeached by the considerations to which the Senator has referred, and which he seemed to suppose inconsistent with it. Is, then, the officer having charge of the Treasury Department to be taken as authority for the state of the Treasury, its wants, and its necessities, at any given period ? With me, sir, he is. The honorable gentleman has made repeated appeals to me upon this point, as chairman of the Committee on Finance of this body, and I cheerfully admit that the vigilance of his researches, and the minuteness of his inquiries may have shown him much better qualified for the head of that committee than myself; but I candidly tell him and the Senate, that in the discharge of my duties in the position I hold the statements of the proper officers of the Government, as to the condition of the Treasury, have been authority to me, so far as facts and figures are concerned. Until the facts and figures, therefore, coming from that quarter, shall be shown to be erroneous, I recognize no right to call upon me to sustain their accuracy.
The Senator further says the issues of Treasury notes were not made by the Secretary in the most advantageous manner, that a rate of interest might have been given to them which would have enabled the Department to command specie for them in the market, and would have induced capitalists to hold them as investments until they became redeemable by the law, and, therefore, ceased to bear interest; and he contends that the Secretary ought not, therefore, to be permitted to urge his apprehension that the new Treasury notes would come in for redemption, in the way of payments upon the public dues, as causing a necessity for the sale of this bond.
It is not for me to contend that the Secretary of the Treasury is all-wise as a financier, or that the issue of these Treasury notes in some other form and manner might not have afforded to the Treasury greater temporary relief. It is enough for my purpose, that the Secretary acted in good faith and according to his best judgment, and issued the notes in the manner which he believed best calculated to afford to the Treasury and to the country the relief intended by the law; that they were issued, were out, and were returning upon the Treasury for redemption, in the shape of payments of the revenue, at the time the law passed authorizing the sale of these bonds. The necessity from this quarter did, therefore, in fact exist, and the experience of the Department, by the payment by the bank of the first bond, paid in 1837, almost wholly in Treasury drafts and other like Government liabilities, enabled the Secretary to judge, with certainty of the extent of the necessity growing out of this consideration.
Had he then rested quietly until these bonds reached maturity depending upon their proceeds for money to meet the public disbursements, and then met payments in unavailable Treasury notes, notes which could not be reissued for any purpose, what would have been thought and said of his financial skill or official faithfulness ? Or, if he had sat down and mourned over the fact that the notes had not been originally issued in some different manner, would that have supplied his exhausted Treasury ?
A further complaint of the honorable Senator is, that the proceeds of the draft upon the Pennsylvania bank for $300,000, transmitted by the Bank of Kentucky, in part payment of its debt to the Government, were permitted to remain on deposit in the former institution, until they were required for disbursement; and he asks, with great emphasis, why was not this sum transferred to some other depository ? Why not to the Bank of America, at New York ? Why not to any place other than this bank, to which the Secretary and his political friends had been so hostile ?
I am not aware, Mr. President, that I can say anything which I have not already said upon this subject. I have already shown that this money was as valuable to the Treasury, as convenient for its use, and as safe, where it was left, as it could have been made in any other depository; and, in the face of these facts, if it were perfectly respectful, I would answer the gentleman's queries by asking him, why should the Secretary have transferred this money, until required for disbursement ? For what public interest or object ? Had he transferred it, was there any possible reason he could have assigned for the act other than his own hostility and that of his political party to this bank ? And would the Senator from Virginia have advised the Secretary to put himself upon such a defense, for such an act, either before this body or the country ?
I am here compelled, Mr. President, to make a remark in self-explanation and justification, and I am sorry to find that, in this debate especially, the most precise and clear definitions are rendered constantly necessary. The gentleman says in my former remarks I termed this Pennsylvania bank "a proper depository," and he repeats the phrase with an evident design to carry the implication that its use by me was the manifestation of a change of feeling on my part towards the institution.
Sir, the gentleman could not have failed to notice that I was speaking of the second section of the law authorizing the sale of these bonds, in which the terms "proper depository" are used; that I was examining the legal power and right of the Secretary of the Treasury, in the present state of the law in relation to the public deposits, to select this institution as a depository for the proceeds of these bonds, that I came to the conclusion that the Secretary possessed the legal power and right to make this selection, as much as that of any other banking institution not a general deposit bank under the deposit law of 1836; and that this bank, therefore, in a legal sense, within the powers of the Secretary and the meaning of the second section of the act for the sale of the bonds, was, when so selected, "as proper a depository for that especial purpose as any other which could have been so selected." These were my words, or their substance, and I used the phrase, which the Senator has so frequently repeated, in no other sense or connection. If he was not before aware of my meaning, in the use of these terms, I now offer him this explanation and definition of it.
A further objection brought by the honorable gentleman against the Secretary of the Treasury is, that the public interests were disregarded by depositing this $300,000 in this bank; inasmuch as, had the deposit been made in a general deposit bank, under the deposit law of 1836, of suitable capital, an interest might have been obtained upon the deposit for the time it remained in bank. If this objection, Mr. President, is to be considered as developing the policy of the deposit law of 1836, I am bound to say that it will make that measure more objectionable to me than it has ever before been, unfavorably as I have ever viewed it. What is the provision of that law referred to ? That the bank shall pay an interest at the rate of two per centum per annum upon all money remaining on deposit with it, for one whole quarter of the year, over and above an amount equal to the one fourth part of the capital of the bank actually paid in.
Now, sir, to have placed this $300,000 upon this investment of two per cent. a bank of the very smallest capital must have been selected, so that the largest possible excess might have existed, upon which interest would be payable; while that part of the deposit which equaled one fourth of the capital of the bank, actually paid in, must have been suffered to remain three full months to entitle the Treasury to a recurring interest of two per cent. upon the average excess. I have ever thought, sir, that to make a bank pay interest upon public deposits was the most direct mode to stimulate those institutions to use the public money for banking purposes; and, therefore, the worst possible policy which any Government, State or national, could possibly adopt; but if, in addition to this insurmountable objection, the consideration of capital paid in, as a security for the deposit, is to be abandoned, and the Secretary of the Treasury is to be required to select the banks of the smallest real capital, that the largest amount of the public money upon deposit may be drawing interest, the tendency of the system of State bank deposits, as adopted and established by the deposit law of 1836, is infinitely worse than I have heretofore considered it to be. And if the Secretary of the Treasury is to receive public censure, here or elsewhere, for not acting upon this dangerous principle, I must stand closely by him and share in the condemnation.
The Senator has considered it to be his duty to make very especial and marked reference to the letter of Mr. Biddle to the Secretary of the Treasury, written under date of the 13th of August, 1838, to be found among the documents, at pages 36 and 37 of the report of the Secretary, marked F 7, and infers from it that some correspondence between the Secretary of War and the bank, not communicated to Congress, must have taken place, in reference to the arrangement for paying the bank bonds in disbursements for the War Department. The honorable gentleman has called upon me, in my seat here, to answer to any knowledge I may possess as to such a correspondence, and I frankly stated to him and the Senate, that I neither know anything of it, nor do I find the least reason, from this, or any of the documents, to suppose that any such correspondence ever took place. If he, and the Senate, will have the goodness to look to the letter from the Secretary of War to Major Cooper, the then acting Secretary, written from the Virginia Springs, and to be found with the documents appended to the President's message, in answer to the last call of the Senator, it will be seen that all the arrangement upon this subject which the bank has claimed, or which even suspicion has alleged to have been attempted, is there fully avowed by the honorable Secretary, and its prompt and honorable fulfillment is respectfully urged upon the Treasury officers.
I cannot, therefore, possibly see what motive is left for concealment, or why any correspondence of a private character should be supposed to have been wrongfully withheld, in relation to an arrangement completed, avowed, and carried into full execution.
The gentleman seems further to apprehend that I, and those with whom I act here, have changed our views and feelings in relation to the dangers of a national bank, and the dangerous character of a State institution so powerful as that of which we speak. Mr. President, he mistakes us utterly. We have experienced no change of feeling or opinion upon either of these points. I say willingly and cheerfully that I listened to some of the remarks of the honorable gentleman, in relation to the danger of institutions of either character, with unmixed delight. I rejoiced to hear him refer to the former expressions of opinion of the Senator from South Carolina [Mr. Calhoun] upon these subjects, and to declare his increasing convictions in their justice and truth. Let him continue to be governed by these opinions and feelings, in reference to these matters, and he need not make himself more sure of anything, in the whole course of his life, than he may now be of the fact that I, and those who think and act with me here, will be found with him, side by side and shoulder to shoulder, rendering him our feeble aid and support in any war in which he may be engaged in the prosecution of such principles.
I have but a single other remark, Mr. President. The Senator has made repeated allusion to the time I have taken to prepare for the debate of this day. Sir, I pretend to no extraordinary powers of intuition. I require preparation to address this body, and my great fault is that I do not sufficiently prepare for so responsible a duty. Yet I must be permitted to think that such remarks, coming from that gentleman, should not have been made without qualification. He may not have known that the deep interest of a large number of the members of the Senate, in a measure depending before the body, (the land graduation bill,) at the time when this debate was introduced by himself, induced me and others to consent to postpone the further consideration of this matter until that measure could be definitively disposed of; but such was the fact. The Senator did know, however, upon whose request the postponement, for the last week, had taken place, and I thought I had a right to expect that he would not have made remarks calculated to charge that delay upon me.
Charles Jared Ingersoll to Biddle]
Washington 21 February 1832
Thus stands the cabinet The Secretary of State [Edward Livingston] with us with all his heart & all his head, anxious to be the author of the President's [Andrew Jackson] conversion, who, he says, ought to be fixed if any thing can fix him by Tibbit's Scheme. Mr. Livingston is confident of succeeding, but has done nothing since my last, not having had an opportunity of bringing the subject before all the members of the cabinet together, not, in the first instance, in form, nor till after he has secured a majority of them he says he is constantly and hard at work for us; but the bad weather and other interruptions have put him back, but he promises every thing. The Secretary of the Treasury [Louis McLane] with us, but so variable in his moods, so much cooler at times than at others that Mr. Livingston says he is at a loss what to think of him, after said Mr. Livingston all the pains I have taken with him.
The Secretary of War [Lewis Cass] with us entirely
The Secretary of the Navy [Levi Woodbury] with us
The Atty Genl [Roger Taney] against us but Mr. Livingston hopes to convert him I found him just now closetted with Kendall, of whom and Lewis I do not despair. My good understanding with the Editor of the Globe is well settled. The Bank has not a warmer or more active friend than Judge Wilkins.