tures, and from the influx of visiters. This was not matter of assertion and guess, but of calculation and science. The amount of currency employable in any community was a matter of business, and not of legislation. It was governed by the laws of trade, and not by the laws of legislative bodies. It depended upon principles, and not upon arbitrary regulations; and it was in vain to give a community more currency than could be employed in their current business. The excess would go off; and if it was a mixed currency, the gold would go first, the silver next: bank notes only would remain. This was the immutable law of currency; and there were ascer tained principles in the science of political economy, which would enable any informed man to arrive at practical results, and to say, with sufficient precision, what amount of currency any community could use, and ought to possess. There are data by which to calculate this amount. One of these data is found in the total amount of the annual payments of the community; for it is known that the tenth part of the amount of the annual payments is sufficient for the amount of currency. Another of these data is found in the amount of population, and the extent and activity of their business; fourteen and fifteen dollars per head being found sufficient in England and in France, and four dollars per head being sufficient in Russia. Try the District of Columbia by either of these criterions, and the improvidence of these charters for two and one-quarter millions of currency will strike every imagination. First, its annual payments. They cannot amount to ten times the amount of these charters! inuch less to ten times that amount, with the amount put into circulation here by the Government, and by visiters into the bargain! Next, try it by the population. The census of the District gives forty thousand souls, slaves inclusive. This, upon the basis of the French and English supply, would require about six hundred thousand dollars; but the District of Columbia had not the commerce, manufactures, and agriculture of France and England, and could not employ as much currency. Four hundred thousand dollars would imply annual payments to the amount of four millions; and that by the population of the District is certainly beyond the amount of the payments made in these ten miles square, exclusively of the Government, and those who receive their supply of mo. ney from the Government. Be this as it may, assume it at what you please, and there is no need for banks of circulation here. The Government pays out above a million annually, and is now paying that in gold and silver; visiters are supposed to pay out near half a million more; so that here is nearly three times as much currency annually furnished to the District as it can use or employ; and hence results that there is not the slightest pretext for an increase from domestic banks. The District needs no banks of circulation! Banks of discount and deposite, to make loans, keep money, transfer credits, and deal in exchanges, with a law to exclude from the District bank notes of less than twenty dollars issued elsewhere, are wanted; but no banks to issue paper money are wanted. The District needs no such banks; and as for the Federal Government, it needs none here of any kind. The Treasurer ought to keep and pay out the public money here. Public money, at this place, should not be a fund for making loans.

Mr. B. said he had wished to have been on a select committee for the charter of these banks; he wished to have revived the idea of a bank without circulation, and to have disconnected the Government from the banking of the District. He had failed in his attempt to raise such a committee; and, as an individual member of the Senate, he could now do no more than mention in debate the ideas which he would have wished to have ripened into legislation through the instrumentality of a' committee.

[JUNE 7, 1836.

Mr. B. said he had demonstrated that no bank of circulation ought to be authorized in this District; and, he would add, that none to furnish currency, except of large notes, ought to be authorized any where; yet what are we doing? We are breeding six little corporations at a birth, to issue $2,250,000 of paper currency; and on what terms? No bonus; no tax on the capital; none on the circulation; no reduction of interest in lieu of bonus or tax; no specie but what the stockholders please to put in; and no liability on the part of the stockholders for a failure of these corporations to redeem their notes and pay their debts. This is what we are doing; and now let us see what burdens and taxes these six corporations will impose upon the business part of the community-the productive classes among which they are to be perpetuated. First, there is the support of these six corporation governments; for every bank must have a government, like a State or kingdom; and the persons who administer these corporation governments must be paid, and paid by the people, and that according to the rates fixed by themselves, and not by the people. Each of these six banks must have its president, cashier, clerks, and messengers; its notary public to protest notes; and its attorney to bring suits. The aggregate salaries, fees, and perquisites, of all these officers of the six banks will be the first tax on the people. Next comes the profits to the stockholders. The nett profits of banks are usually eight to ten per cent. at present; the gross profits are several per cent. more; and the gross profits are what the people pay. Assuming the gross profits to be twelve per cent., and the annual levy upon the commuuity will be about $270,000. The third loss to the community will be on the fluctuations of prices of labor and property, and the rise and fall of stocks, from the expansions and contractions of currency, produced by making money plenty or scarce, as it suits the interest of the bank managers. This item cannot be calcu lated, and depends entirely upon the moderation and consciences of the Neptunes who preside over the flux and reflux of the paper ocean, and to whom all tides, whether of ebb or flow, and all conditions of the sea, whether of calm or storm, are equally welcome, equally auspicious, and equally productive. Then come three other heads of less to the community and profit to the bank: loss of notes from wear and tear, counterfeits imposed upon the people for good notes, and good notes rejected by the banks for counterfeits; and then the loss to the holders from the stoppage and failure of banks, and the shaving in of notes and stocks. Such are the burdens and taxes to be imposed upon the people to give them a paper currency, when, if the paper currency were kept away, and only large notes used, as in France, they would have a gold and silver currency without paying a tax to any body for it, and without being subject to any of the frightful evils resulting from the paper system. On this point, Mr. B. wished to have the benefit of authority superadded to the weight of reason; he wished to have the voice of others added to his own; and for that purpose he would have recourse to the pages of our early history, and quote the opinions of those who made head against the paper system at its first introduction into our country, and whose predictions then have long since been converted into history. He spoke of the wise men who opposed the establishment of the Bank of the United States in 1791, and would use the summary of their argument on this head as he found it collected and imbodied in the Life of Washington, by the late Chief Justice Marshall. He read from vol. 4, page 346:

The banishment of coin would be completed by ten millions of paper money in the form of bank bills, which were then issuing into circulation. Nor would this be the only mischief resulting from the institution of the

bank. The ten or twelve per cent. annual profit paid to the lenders of this paper medium would be taken out of the pockets of the people, who would have had, without interest, the coin it was banishing."

Mr. B. wished that this brief paragraph could reach the eyes and the ears of every citizen of the United States. He wished it was printed in letters of gold, and framed, and hung up in every citizen's house. More than that: he wised it was planted in the heart, and engraven on the memory, of every voter and of every law-maker in the Union. The single view that is here presented, independent of all other evils of a paper currency, the single view of paper money expelling hard money, and then costing the people ten or twelve per cent. per annum, while hard money would have cost them nothing, would certainly open the eyes of all disinterested persons, and induce them to unite with one voice to limit and restrict a currency unknown to the constitution, injurious in so many ways, and crowning its evils by banishing specie, and taxing the community to support itself.

Mr. B. said that he was thoroughly opposed to the banking system, especially as carried on in the United States, where every bank was an issuer of paper currency. But the evil had become too large; banks of circulation were too firmly fixed upon the people; "they were too securely seated in the saddle, booted and spurred," to be successfully met at present by direct oppo sition. Palliatives, ameliorations, restrictions, limitations, safe-guards, something to lighten the burden and to lessen the danger to the people, and to check the onward march of the paper power, was all that could now be attempted; and in that view he had offered some amendments to the bill when it was first under consideration, and would state them again, and offer some rea sons in their favor, in the hope that they might yet find favor before the bill was finally disposed of.

Mr. B. then read his proposed amendments, modified in the two particulars suggested by the Senator from New York, [Mr. WRIGHT,] and contained in his motion to recommit the bill with instructions:

"To report a bill to wind up the affairs of all the banks now existing in the District of Columbia, and to allow them to use their corporate name and faculties for two years for that purpose:

"To report separate bills for the incorporation of

new banks, with small capitals, adapted to the capacity of the District to sustain specie banks, and strictly limited to the business of the place; the said corporations to contain, among other provisions, the following principles:

1. The capital to consist of gold and silver, one half of each; stock, stock notes, notes of other banks, and every thing but gold and silver, to be excluded from the capital.

"2. The banks to pay no bonus; but the stock to be subject to taxation, like any other property in the District. The notes issued by the banks to be subject to taxation.

"3. Every stockholder to be liable to the creditors of the bank, for the debts of the institution, to the amount of his stock, in the event of the failure of the bank to pay gold and silver; with summary process for the recovery; and all alienations of stock to avoid this liability, to be void.

"4. The banks to issue no notes of less denomination than twenty dollars; and all notes of less denomination than twenty dollars, issued by other banks, to be hibited from circulation within the District.

pro

"5. All the notes and paper currency issued by said banks to be paid in gold and silver; one half of either at the option of the demander, the other half at the option of the bank.

[SENATE.

"6. The banks to own no real estate, except for their immediate accommodation.

"7. To deal in nothing but gold and silver bullion, and in foreign and domestic bills of exchange. The charters to be forfeited for selling any coin made current by the laws of the United States.

"8. The charters to be limited to moderate terms of years, and to expire at different periods from each other.

9. The charters to be alterable, amenadable, and repealable, at the will of Congress, and not renewable under any terms whatever."

Mr. B. gave his reasons for proposing each of those ameliorations; and, first, as to the improvement in forming the capital of the banks. This was a point at which all banks, old and new, needed attention. Three hundred millions of banking capital within the United States were reported to be paid in, and this payment could only be made in specie, or in what is called "specie funds." At the same time it is well known that the whole amount of specie in the United States is between sixty and seventy millions of dollars, and that the banks have not got the half of this in their vaults. It results then that if the banks possessed every hard dollar that there is in the United States, it would not form more than one fifth part of the capitals paid in; so that the other four fifths must consist of what is called "specie funds." This is a most indefinite phrase, having no fixed meaning, or any limitation upon the extent of its comprehensive grasp; it is generally, however, conceded to comprehend all the varieties of stocks, fancy inclusive, which can be sold in the market for money; all the notes of all the banks which, for the time being, pay specie; the stock notes of all the stockholders; the notes of the bank itself, after the first instalment, which can be lent to the stokholders on stock notes, and paid in for capital; all bills of exchange, real or fictitious, which are drawn in legal form, so as to present the names of drawers, payers, and endorsers; and, finally, all sorts of paper securities which it is assumed can be sold for specie. Out of such "specie funds" as these, it may be conjectured that near four fifths of the capitals of the banks in the United States must be now composed; and, consequently, that the banking system of the United States is resting upon paper foundations, and that there is not specie enough in the whole Union by five to one to convert these paper foundations into gold and silver foundations! And these banks issue nearly all the currency which the people, the State Governments, and the Federal Government use!

Such

is the state of the currency under a constitution which recognises nothing but gold and silver for currency, and one of whose main objects was to save the people from the curse of paper money. To correct, in some degree, this enormous and alarming evil, to provide at least a specie basis for the banks which Congress creates at the seat of Government, Mr. B. was in favor of limiting the capital to gold and silver, and that in equal proportion of each, in order to ensure a gold currency, as well as a silver currency to the people. The advantages to the country would be great from this improvement in the formation of bank capital. It would limit the number of the banks, keep their capitals within some bounds, make their foundations more solid, prevent them banking on each other, and make gold, as well as silver, a part of the capital of every bank.

The next improvement which Mr. B. proposed was the taxation of the capital, and also of the circulation of the bank, in lieu of the composition usually given under the name of bonus. Such compositions were always a deception and illusion; for no bank would give a bonus except to get it back, with a profit upon it; and, therefore, the larger the bonus the larger the profits of

the bank, and the burdens of the people. In the charters now proposed, the bonus is dropped, which would be right if any thing was substituted, but nothing is substituted for it! and thereby, the great privileges and advantages which these charters vest in the corporators are a mere gift and gratuity, freely bestowed by the munificence, or improvidence, of Congress, and that upon individuals who had already enjoyed these privileges for twenty and thirty years. That bank capital should pay taxes like any other property, is a proposition too self-evidently just to admit of argument. Bank capital is more able to pay taxes than any other kind of property, because it is a moneyed property, and produces money, and that more readily and largely than any other kind of property. The compositions made by banks in the form of bonuses, is the acknowledgment of their obligation to pay a tax; but it is unjust to the community to exempt these corporations from taxes in exchange for an inadequate and illusory bonus, which is always got back with usurious inEvery State should tax its bank capital, not by composition before hand, but by annual levy; in many States the proceeds of that tax would form a large item in the annual income, and would lessen the burden upon the rest of the community. In this District, the District authorities should have power to tax the two millions and a quarter of bank capital proposed to be created; it should stand at the head of the list of its taxable property, and at the present rate of taxation in the District, which he believed was above a cent on the dollar's worth of property, the income from this item would be most sensibly and beneficially felt,

terest.

Taxing the circulation of banks was another improve ment which went hand in hand with taxing the capital, and might be used for two distinct and beneficial purposes: first, to raise revenue; and, next, to suppress small notes. The United States did not need revenue at present, and, therefore, might not resort to the taxation of bank notes for either object; but in 1813 and 1814, she did need revenue, and did tax all the bank notes issued in the United States. It was done by a stamp duty; with the privilege to each bank of campounding for the tax in detail, by paying a sum in gross. In England, bank notes are taxed, and have been for many years, and now yield a handsome sum. He (Mr. B.) had a note of the taxes paid by the Bank of England on its circulation, for half a century, some parts of which he would state, premising that acts of Parliament imposed a stamp duty on the notes, with the privilege of compounding for a gross sum. In 1791, the composition was £12,000 sterling per annum; in 1799, the composition was £20,000 for notes of £5 and upwards, and £4,000 for notes less than £5; in 1804, the composition was £32,000; in 1808, it was £42,000; and in 1815 it was £94,500, or nearly half a million of dollars. The mode of composition in England was by paying so much (£3,500 after 1815) per million on the average circulation of the preceding year. The separate tax, and separate composition, for notes under £5, was a happy expedient for restricting and keeping under that species of circulation, and if adopted in the United States, might effectually suppress all notes under $20, or, what is better, under $100. The States may do it at once, for they all need revenue; and the United States can do it, without question, whenever she may need it; and that will be much sooner than persons now suppose. The imposition of a tax for the suppression of small notes has been expressly recommended by Mr. Gallatin; and Mr. B. would read a paragraph from his Essay on Banks and Currency (1830) to that effect.

"Congress has power to lay stamp duties on notes, on bank notes, and on any description of bank notes. That power has already been exercised; and the duties may be laid to such an amount, and in such a manner, as may

[JUNE 7, 1836.

be necessary to effect the object intended. This object is not merely to provide generally for the general welfare, but to carry into effect, in conformity with the last paragraph of the 8th section of the first article, those several and express provisions of the constitution which vest in Congress exclusively, the control over the monetary system of the United States, and more particularly those which imply the necessity of a uniform currency. The exercise of the power for that object is free of any constitutional objection, provided the duties thus laid shall be uniform, and applied to the Bank of the United States as well as to the State banks. The act of laying and collecting the duties, which is expressly granted, is alone sufficient to effect the object. Congress may,

if it deems it proper, lay a stamp duty on small notes, which will entirely put an end to their circulation. It may lay such a duty on all bank notes as would convert all the banks into banks of discount and deposite only, annihilate the paper currency, and render a bank of the United States unnecessary in reference to that object."

Mr. B. said that these were most important and most cheering suggestions. They showed that it was in the power of Congress to regulate the paper system of the whole Union, to hold all the banks in check, to suppress what notes they pleased; and he for one would wish to suppress all under $100, but must limit his exertions, for want of co-laborers, not for want of will, to $20. Mr. B. took a pleasure in reminding the Senate that a Senator from Virginia, now again a member of this body, [Mr. RIVES,] had some years ago pointed to this taxing power of Congress as the means by which small notes could be suppressed, and the paper currency of all the States completely regulated; and he should be happy to follow the head of that gentleman in carrying into effect his wise and patriotic suggestion.

A third improvement, which Mr. B. had proposed upon these charters, was to make the stockholders liable, each to the amount of his stock, for the debts of the institution, on its failure to pay specie. The reasons for this liability were strong and palpable. A man that owes should pay while he has property to pay with; and it is iniquitous and unjustifiable that a bank director, or stockholder, should riot in wealth while the business part of the community should hold the bank notes which they have put into circulation, and be able to get nothing for them after the bank had closed its doors. Such exemptions are contrary to the rights of the community, and one of the great causes of the failure of banks. A liability in the stockholders is one of the best securities which the public can have for the correct management and solvency of the institution. The famous Scottish banks, which, in upwards of one hundred years' operations, had neither once convulsed the country with contractions and expansions, nor once stopped payment, were constituted upon this principle. All the country banks in England, and all the bankers on the continent of Europe, were liable to a still greater degree; for in them each stockholder, or partner, was liable, individually, for the whole amount of the debts of the bank. The principle proposed to be incorporated in these charters strikes the just medium between the common law principle, which makes each partner liable for the whole debts of the firm, and the corporation principle in the United States, which absolves each from all liability, and leaves the penny less and soulless carcase of a defunct and eviscerated bank alone responsible to the community. Liability to the amount of the stock was an equitable principle, and with a summary process for the recovery of the amounts of notes and deposites, and the invalidity of transfers of stock to avoid this liability, would be found a good remedy for a great evil. If the stockholders in the three banks which stopped payment