21ST CONG. 1ST SESS.] Bank of the United States. [H. OF R. 11. The next question proposed for consideration, is solely for the want of a national institution, which, at the the expediency of establishing an incorporated bank, same time that it would have facilitated the Government with a view to promote the great ends already indicated. loans and other Treasury operations, would have furnished In discussing the constitutionality of such a measure, a circulating medium of general credit in every part of the some of the considerations which render it expedient Union. In this view of the subject, the Committee are have been slightly unfolded. But these require a more fully sustained by the opinion of Mr. Dallas, then Secrefull and complete development, while others remain to be tary of the Treasury, and by the concurring and almost presented. unanimous opinions of all parties in Congress: for, whatIt must be assumed as the basis of all sound reasoning ever diversity of opinion prevailed, as to the proper basis on this subject, that the existence of a paper currency, is- and organization of a bank, almost every one agreed, that sued by banks deriving their charters from the State Gov-a national bank, of some sort, was indispensably necessary ernments, cannot be prohibited by Congress. Indeed, to rescue the country from the greatest of financial calabank credit and bank paper, are so extensively intermities. woven with the commercial operations of society, that The Committee will now present a brief exposition of even if Congress had the constitutional power, it would be the state of the currency at the close of the war, of the utterly impossible to produce so entire a change in the injury which resulted from it, as well to the Government monetary system of the country, so as to abolish the as to the community, and their reasons for believing that it agency of banks of discount, without involving the com- could not have been restored to a sound condition, and munity in all the distressing embarrassments usually at cannot now be preserved in that condition, without the tendant on great political revolutions, subverting the titles agency of such an institution as the Bank of the United to private property. The sudden withdrawal of some States. hundred millions of bank credit would be equivalent, in its effects, to the arbitrary and despotic transfer of the property of one portion of the community to another, to the extent, probably, of half that amount. Whatever, therefore, may be the advantages of a purely metallic currency, and whatever the objections to a circulating medium, partly composed of bank paper, the committee consider that they are precluded, by the existing state of things, from instituting a comparison between them, with a view to any practical result. If they were not thus precluded, and it were submitted to them as an original question, whether the acknowledged and manifold facilities of bank credit and bank paper, are not more than counterbalanced by the distressing vicissitudes in trade incident to their use, they are by no means prepared to say, that they would not give a decided preference to the more costly and cumbersome medium. The price current appended to this report will exhibit a scale of depreciation in the local currency, ranging through various degress to twenty, and even to twenty-five per cent. Among the principal Eastern cities, Washington and Baltimore were the points at which the depreciation was greatest. The paper of the banks in these places, was from 20 to 22 per cent. below par. At Philadelphia the depreciation was considerably less, though even there it was from 17 to 18 per cent. In New York and Charleston, it was from 7 to 10 per cent. But in the interior of the country, where banks were established, the depreciation was even greater than at Washington and Baltimore. In the Western part of Pennsylvania, and particularly at Pittsburg, it was 25 per cent. These statements, however, of the relative depreciation of bank paper at various places, as compared with specie, give a very inadequate idea of the enormous evils inflicted upon the community, by the excessive isBut the question really presented for their determina- sues of bank paper. No proposition is better established tion, is not between a metallic and a paper currency, but than that the value of money, whether it consists of spebetween a paper currency of uniform value, and subject cie or paper, is depreciated in exact proportion to the into the control of the only power competent to its regu-crease of its quantity, in any given state of the demand lation, and a paper currency of varying and fluctuating for it. If, for example, the banks, in 1816, doubled the value, aud subject to no common or adequate control what quantity of the circulating medium by their excessive isever. On this question it would seem that there could sues, they produced a general degradation of the entire scarcely exist a difference of opinion; and that this is sub-mass of the currency, including gold and silver, propor stantially the question involved in considering the expeditioned to the redundancy of the issues, and wholly indeency of a National Bank, will satisfactorily appear by a pendent of the relative depreciation of bank paper at comparison of the state of the currency previous to the different places, as compared with specie. The nominal establishment of the present bank, and its condition for the last ten years. money price of every article was of course one hundred per cent. higher than it would have been, but for the duSoon after the expiration of the charter of the first Bank plication of the quantity of the circulating medium. of the United States, an immense number of local banks Money is nothing more nor less than the measure by sprung up under the pecuniary exigencies produced by which the relative value of all articles of merchandise is the withdrawal of so large an amount of bank credit, as ascertained. If, when the circulating medium is fifty necessarily resulted from the winding up of its concerns; millions, an article should cost one dollar, it would ceran amount falling very little short of fifteen millions of tainly cost two, if, without any increase of the uses of a dollars. These banks being entirely free from the salu- circulating medium, its quantity should be increased to tary control which the Bank of the United States had re- one hundred millions. This rise in the price of comcently exercised over the local institutions, commenced modities, or depreciation in the value of money, as comthat system of imprudent trading and excessive issues, pared with them, would not be owing to the want of which speedily involved the country in all the embarrass- credit in the bank bills, of which the currency happened ments of a disordered currency. The extraordinary stim-to be composed. It would exist though these bills were ulus of a heavy war expenditure, derived principally from of undoubted credit, and convertible into specie at the loans, and a corresponding multiplication of local banks, pleasure of the holder, and would result simply from the chartered by the double score in some of the States, has redundancy of their quantity. It is important to a just tened the catastrophe which must have occurred, at no understanding of the subject, that the relative depreciadistant period, without these extraordinary causes. The tion of bank paper at different places, as compared with last year of the war presented the singular and melan- specie, should not be confounded with this general des choly spectacle of a nation abounding in resources, a peo-preciation of the entire mass of the circulating medium, ple abounding in self-devoting patriotism, and a Govern- including specie. Though closely allied, both in their caument reduced to the very brink of avowed bankruptcy,ses and effects, they deserve to be separately considered, H. OF R.] Bank of the United States. [21ST CONG. 1ST SESS. smaller operations of trade, as well as by the failure of the numerous paper banks, puffed into a factitious credit by fraudulent artifices, and having no substantial basis of capital to ensure the redemption of their bills. The evils resulting from the relative depreciation of bank paper at different places, are more easily traced to their cause, more palpable in their nature, and consequently more generally understood by the community. Though much less ruinous than the evils resulting from But no adequate conception can be formed of the evils the general depreciation of the whole currency, they of a depreciated currency, without looking beyond the reare yet of sufficient magnitude to demand a full exposi-lative depreciation, at different places, to the general tion. depreciation of the entire mass. It appears from the reA very serious evil, already hinted at, which grew out Port of Mr. Crawford, the Secretary of the Treasury in of the relative depreciation of bank paper, at the differ- 1820, that during the general suspension of specie payent points of importation, was its inevitable tendency to ments, by the local banks, in the years 1815 and 1816, draw all the importations of foreign merchandise to the the aggregate amount of one hundred and ten millions the circulating medium of the United States had reached cities where the depreciation was greatest, and divert of dollars, and that, in the year 1819, it had been reduthem from those where the currency was comparatively ced to forty-five millions of dollars, being a reduction of sound. If the Bank of the United States had not been established, and the Government had been left without fifty-nine per cent. in the short period of four years. The any alternative but to receive the depreciated local cur- and distressing operation of restoring a vicious currency committee fare inclined to the opinion, that the severe rency, it is difficult to imagine the extent to which the to a sound state, by the calling in of bank paper, and the evasion of the revenue laws would have been carried. curtailment of bank discounts, had carried the reduction of Every State would have had an interest to encourage the the currency, in 1819, to a point somewhat lower than was excessive issues of its bank, and increase the degradation consistent with the just requirements of the community of its currency, with a view to attract foreign commerce. for a circulating medium, and that the bank discounts Even in the condition which the currency had reached in have been gradually enlarged since that time, so as to 1816, Boston, and New York, and Charleston, would have found it advantageous to derive their supplies of satisfy those requirements. It will be assumed, thereforeign merchandise through Baltimore; and commerce been fifty-five millions of dollars for the last ten years, fore, that the circulating medium of the United States bas would undoubtedly have taken that direction had not the currency been corrected. To avoid this injurious divertaking the average. sion of foreign imports, Massachusetts, and New York, and South Carolina, would have been driven, by all the motives of self-defence and self-interest, to degrade their respective currencies at least to a par with the currency of Baltimore; and thus, a rivalry in the career of depreciation would have sprung up, to which no limit can be assigned. As the tendency of this state of things would have been to cause the largest portion of the revenue to be collected at a few places, and in the most depreciated of the local currency, it would have followed that a very small part of that revenue would have been disbursed at the points where it was collected. The Government would consequently have been compelled to sustain a heavy loss upon the transfer of its funds to the points of expenditure. The annual loss which would have resulted from these causes alone, cannot be estimated at a less sum than two millions of dollars. But the principal loss which resulted from the relative depreciation of bank paper at different places, and its want of general credit, was that sustained by the community in the great operations of commercial exchange. The extent of these operations annually, may be safely estimated at sixty millions of dollars. Upon this sum the loss sustained by the merchants, and planters, and farmers, and manufacturers, was not probably less than an average of ten per cent., being the excess of the rate of exchange beyond its natural rate in a sound state of the currency, and beyond the rate to which it has been actually reduced by the operations of the Bank of the United States. It will be thus perceived that an annual tax of six millions of dollars was levied from the industrious and productive classes, by the large moneyed capitalists in our commercial cities, who were engaged in the business of brokerage. A variously depreciated currency, and a fluctuating state of the exchanges, open a wide and abundant harvest to the money brokers; and it is not, therefore, surprising, that they should be opposed to an institution, which, at the same time that it has relieved the community from the enormous tax just stated, has deprived them of the enormous profits which they derived from speculating in the business of exchange. In addition to the losses sustained by the community, in the great operations of exchange, extensive losses were suffered throughout the interior of the country, in all the VOL. VL-H tional currency has been one hundred per cent. more valuEven upon this assumption, it will follow that the naable for the last ten years, than it was in 1816. In other words, two dollars would purchase no more of any commodity in 1816, than one dollar has been capable of purchasing at any time since 1819. It is obvious, therefore, that the depreciation of the paper of particular banks, nishes no criterion by which to ascertain the general deat any particular time, as compared with specie, fur preciation of the whole currency, including specie, as compared with the value of that currency at a different period. A specie dollar in 1816, would purchase no more than half as much as a paper dollar will purchase at pre sent. Having endeavored to explain, thus briefly, the geneCommittee will now proceed to point out some of the inral depreciation resulting from a redundant currency, the jurious consequences which have resulted from those great changes in the standard of value, which have been unavoidably produced by the correction of the redundancy. An individual who borrowed a sum of money in 1816 and paid it in 1820, evidently returned to the lender double the value received from him; and one who paid a debt in 1820, which he had contracted in 1816, as evidently paid double the value he had stipulated to pay, though nominally the same amount in money. It is in this way that fluctuations in the quantity and value of the currency interfere, in the most unjust and injurious manner, between debtor and creditor. And when banks have the power of suspending specie payments, and of arbitarrily contracting and expanding their issues, without any general control, they exercise a more dangerous and despotic power over the property of the community, than was ever exercised by the most ab solute government. In such a state of things, every man in the community holds his property at the mercy of money-making corporations, which have a decided interest to abuse their power. By a course of liberal discounts and excessive issues for a few years, followed by a sudden calling in of their debts and contraction of their issues, they would have the power of transferring the property of their debtors to themselves, almost without limit. Debts contracted when their discounts were liberal, and the currency of 21ST CONG. 1ST SESS.] Bank of the United States. [H. or R. course depreciated, would be collected when their dis entitled, from the eminent station and high character of counts were almost suspended, and the currency of the citizen by whom it is entertained, the committee are course unnaturally appreciated; and in this way the pro- constrained to express their respectful but decided dissent perty of the community might pass under the hammer, from it. It is true, that the bank does not, in all cases, refrom its rightful owners to the banks, for less than one half deem the bills issued by one of its branches indiscriminately its intrinsic value. If the committee have not greatly at all the other branches; and it is in reference to this mistaken the matter, there is more of history than of fact, as the committee presume, that the President exspeculation in what they have here presented to the con- presses the opinion that the institution has failed to estabsideration of the House. lish "a uniform and sound currency." It is impossible to form any thing like an accurate estimate of the injuries and losses sustained by the community, in various ways, by the disorders and fluctuations of the currency, in the period which intervened between the expiration of the old bank charter and the establishment of the present bank. But some tolerable notion may be formed of the losses sustained by the Government, in its fiscal operations, during the war. The committee have given this part of the subject an attentive and careful examination, and they cannot estimate the pecuniary losses of the Government, sustained exclusively for the want of a sound currency, and an efficient system of finance, at a sum less than forty-six millions of dollars. If they shall make this apparent, the House will have something like a standard for estimating the individual losses of the community. It is confidently believed, that no one of the persons who were principally instrumental in establishing the bank, ever entertained an idea that it would attempt to redeem its bills at any of its offices, other than those by which they should be respectively issued. The charter certainly contains no such requirement, and it would have been highly inexpedient if it had, to say nothing of its obvious injustice. The inevitable effect of such a requirement would have been to compel the bank to perform the whole of the commercial exchanges of the country, without any compensation. It would not be more unjust to require a Rail Road Company to transport all the productions of the country without compensation. No institution could stand such an operation; and it was the injudicious attempt of the first direction of the bank to do it, that principally contributed to the embarrassments of 1819. A committee was appointed by the House of Representatives, in that year, to investigate the management of the bank; and, in the report of that committee, as well as in the discussions to which it gave rise in the House, this attempt of the direction to redeem the bills of the institution indiscriminately at all its branches was indicated as one of the causes of the existing embarrassment. No one who participated in the debate, pretended to allege that the bank was bound to redeem its bills indiscriminately, or that it was expedient that it should do so. The most that any one did was to apologize for the unwise attempt. But it yet remains for the committee to show that this indiscriminate redeemability of the bills of all the branches of the bank, is not necessary to "the establishment of a The Government borrowed, during the short period of the war, eighty millions of dollars, at an average discount of fifteen per cent., giving certificates of stock, amounting to eighty millions of dollars, in exchange for sixty-eight millions of dollars, in such bank paper as could be obtained. In this statement, Treasury notes are considered as stock, at twenty per cent. discount. Upon the very face of the transaction, therefore, there was a loss of twelve millions of dollars, which would in all probability have been saved, if the Treasury had been aided by such an institution as the Bank of the United States. But the sum of sixty-eight millions of dollars received by the Government, was in a depreciated currency, not more than half as valuable as that in which the stock given in exchange for it has been and will be redeemed. Here, then, is another loss of thirty-four millions, resulting, in-uniform and sound currency." contestibly and exclusively, from the depreciation of the currency, and making, with the sum lost by the discount, forty-six millions of dollars. While, then, the Government sustained this great pecuniary loss in less than three years of war, amounting annually to more than the current expenses of the Government in time of peace, it is worth while to inquire who were the persons who profited to this enormous amount by the derangement of the currency? It will be found that the whole benefit of this speculation upon the necessities of the Government, was realized by stockjobbers and money brokers, the very same class of persons who profited so largely by the busi ness of commercial exchanges, in consequence of the disorders of the currency, and who have the same interest in the recurrence of those disorders as lawyers have in litigation, or physicians in the diseases of the human frame. Having presented these general views of the evils which existed previous to the establishment of the Bank of the United States, it remains for the committee to inquire how far this institution has effected a remedy of those evils. Human wisdom has never effected, in any other country a nearer approach to uniformity in the currency, than that which is made by the use of the precious metals. If therefore, it can be shown that the bills of the United States' Bank are of equal value with silver at all points of the Union, it would seem that the proposition is clearly made out, that the bank has accomplished "the great end of establishing a uniform and sound currency." It is not denied that the bills of the mother bank, and of all its brauches, are invariably and promptly redeemed in specie, whenever presented at the offices by which they have been respectively issued, and at which, upon their face they purport to be payable. Nor is it denied that the bills of the bank, and of all the branches, are equal to specie in their respective spheres of circulation. Bills, for example, issued by the mother bank, are admitted to be equal to silver in Pennsylvania, and all those parts of the adjacent States of which Philadelphia is the market. But it is contended that these bills not being redeemable at Charleston and New Orleans, are not of equal value with silver to the merchant who wishes to purchase cotton with them in those cities. Now, if the Philadelphia merchant had silver, instead of bank bills, he certainly could not effect his purchase with it in Charleston or New Or leans, without having the silver conveyed to those pla ces; and it is equally certain that he could not have it conveyed there, without paying for its transportation and The Chief Magistrate, in that part of his first message insurance. These expenses constitute the natural rate which relates to the Bank of the United States, expresses of exchange between those cities, and indicate the exact the opinion, that "it has failed in the great end of estab-sum which the merchant would give as a premium for a lishing a uniform and sound currency." After giving to bill of exchange, to avoid the trouble and delay of transthis opinion all the consideration to which it is so justly porting his specie. It is obvious, therefore, that, even The first great question which arises under this branch of the inquiry is, whether or no the bank has corrected the disorders of the circulating medium, by providing a papr currency, convertible into specie at the pleasure of the holder, and of equal value with specie at all points of the Union. H. OF R.] Bank of the United States. [21ST CONG. 1ST SESS. for these distant operations of commerce, silver would be scrupulous punctuality, the stipulation to transfer the no more valuable than the bills of the bank: for these funds of the Government to any point where they may be would purchase a bill of exchange on either of the cities wanted, free of expense, it must be apparent that the mentioned, precisely as well as silver. If the operation committee are correct, to the very letter, in stating that could be reversed and the planter of Louisiana or South the bank has furnished, both to the Government and to Carolina should desire to place his funds in Philadelphia, the people, a currency of absolutely uniform value in all with a view to purchase merchandise, he would find the places, for all the purposes of paying the public contribubills of the branch bank in either of those States, entirely tions, and disbursing the public revenue. And when it equivalent to silver in effecting his object. Even there is recollected that the Government annually collects and fore, if the bank had not reduced the rate of the exchan disburses more than twenty three millions of dollars, ges, it might be safely asserted, that its bills would be of those who are at all familiar with the subject, will at equal value with silver at every point in the Union, and once perceive that bills, which are of absolutely uniform for every purpose, whether local or general. value for this vast operation, must be very nearly so for all the purposes of general commerce. But it is impossible to exhibit anything like a just view of the beneficial operations of the bank, without advert- Upon the whole, then, it may be confidently asserted, ing to the great reduction it has effected, and the steadi- that no country in the world has a circulating medium of ness it has superinduced, in the rate of the commercial greater uniformity than the United States; and that no exchanges of the country. Though this branch of the country of any thing like the same geographical extent business of the bank has been the subject of more com- has a currency at all comparable to that of the United plaint, perhaps, than any other, the committee have no States on the score of uniformity. The committee have besitation in saying, it has been productive of the most seen the statement of an intelligent traveller, who has signal benefits to the community, and deserves the high-visited almost every part of Europe, exhibiting the great est commendation. It has been already stated that it has variations of the currency in different parts of the same saved the community from the immense losses resulting empire or kingdom. In Russia, the bills of the Bank of from a high and fluctuating state of the exchanges. It St. Petersburgh have a very limited circulation. At now remains to show its effect in equalizing the curren Riga, and throughout Courland, Livonia, and all the ey. In this respect, it has been productive of results Southern parts of the empire, the currency is exclusivemore salutary than were anticipated by the most sanguine ly of silver coins. In Denmark, the notes of the Bank advocates of the policy of establishing the bank. It has of Copenhagen are current only in Zealand, the other actually furnished a circulating medium more uniform than islands, and Jutland, but will not pass at all in Sleswic specie. This proposition is susceptible of the clearest de- and Holstein, which constitute the best portion of the monstration: If the whole circulating medium were spe- kingdom. Since the Congress of Vienna, Germany is cie, planters of Louisiana, who should desire to purchase divided into thirty-nine separate States, each having a dismerchandise in Philadelphia, would be obliged to pay tinct currency, though represented in the Diet at Frankone per cent. either for a bill of exchange on this latter fort. Out of the territory in which these several curplace, or for transportation and insurance of his spe- rencies are issued, they are mere articles of merchandise: cie. His specie at New Orleans, where he had pre which circumstance has given rise in every town to a nusent use for it, would be worth one per cent. less to him merous and distinet class of tradesmen, called money than it would be in Philadelphia, where he had a demand changers. How far these separate and unconnected curfor it. But, by the ad of the Bank of the United States rencies have a tendency to embarrass commerce, may be one half of the expense of transporting specie is now sav-inferred from the fact, that a traveller going from St. Peved to him. The bank, for one half of one per cent. will tersburgh to Calais, will lose upon the unavoidable give him a draft upon the mother bank at Philadel- changes of money, an average of six per cent. In France phia, with which he can draw either the bills of that bank the bills of the bank are of such large denominations as or specie at his pleasure. In like manner, the bank and to be adapted only to the greater operations of commerce its branches will give draughts from any point of the Union and are principally confined to the bankers and extensive to any other where offices exist, at a per centage greatly traders in Paris. The general currency is silver; and, to less than it would cost to transport specie, and in many avoid the trouble of carrying this to distant parts of the instances at par. If the merchant or planter, however, kingdom, gold pieces, or bills of exchange, which are does not choose to purchase a draught from the bank, but preferable, are purchased at a premium of from one and prefers transmitting the bills of the office where he re- a half to four per cent. After this brief review of the sides to any distant point, for commercial purposes, al- currencies of Europe, the committee will barely state, as though these bills are not strictly redeemable at the point a conclusive vindication of our currency from the imputo which they are transmitted, yet, as they are receivable tation of unsoundness, that there is no point in the Union in payment of all dues to the Government, persons will at which a bill of the United States' Bank, issued at the be generally found willing to take them at par; and if opposite extremity of the country, is at a discount of more they should not, the bank will receive them frequently at than one-fourth of one per cent. par, and always at a discount much less than would pay In confirmation of the views here presented, as to the the expense of transporting specie. The fact that the comparative uniformity of the currency furnished by the bills of the bank and its branches are indiscriminately re- bank, and, also, as to the obligation of the bank to redeem ceivable at the custom-houses and land offices, in pay-its bills, indiscriminately, at all the offices, he commitment of duties, and for the public lands, has an effect in giving uniformity to the value of these bills, which merits a more full and distinct explanation. tee will present a few brief extracts from the speech of a statesman, whose opinions have every title to authority on these important subjects. Mr. Lowndes, in discussing For all the purposes of the revenue, it gives to the na- the question, how far the bank had performed the great tional currency that perfect uniformity, that ideal perfec- duty for which it was created, used the following decided tion, to which a currency of gold and silver, in so exten-language in 1819, when the currency had not reached the sive a country, could have no pretensions. A bill issued point of uniformity it has now attained by half of one per at Missouri is of equal value with specie at Boston, in cent. payment of duties; and the same is true of all other placee, however distant, where the bank issues bills, and the Government collects its revenue. When it is more over considered, that the bank performs, with the most "The great object of the Government in chartering the bank, was to provide a currency which should have that degree of stability and uniformity in its value which is required by the interests both of our commerce and 21ST CONG. 1ST SESS.] Bank of the United States. [H, or R. revenue. A currency, equally valuable at every place of a depreciated and unequal currency, it must neglect and every time, cannot be provided by human wisdom. the plainest principle of the Constitution in doing soThe nearest approach to this object has been generally equality of taxation. The committee must "well rememsupposed to be afforded by the employment of gold and ber, that, before the establishment of the National Bank, silver as the measures of value. The 14th Congress did such was the unequal value of currency in the different not aim at ideal perfection; they wished to combine with States, that the merchants paid duties, varying fifteen per the conveniences of bank circulation, an uniformity of cent. from each other, on the same articles." value equal to that which was possessed by the precious On the question, whether the bank was bound to remetals; and the means which they employed to secure deem, indiscriminately, the bills of all its branches, he this uniformity were simple and effectual, by enjoining, said: * * * * * * * 46 under a heavy penalty, the payment of all its notes in "He should not argue that the bank was not bound to coin, upon demand. In the report, indeed, the notes of pay its notes, indiscriminately, at all its offices. He bethe national bank, are said to be now on the same foot-lieved that nobody now contended that it was," * * * ing with those of local banks. Of the footing on which "It was no unfair account of the practical operation of local bank notes stood, he should speak hereafter; but the system of which he was speaking, to say that it gave the price current upon his table informed him, that the to the branches where the exchange was unavoidable, greatest discount on branch notes of the United States the entire disposition of the specie of those branches was three fourths of one per cent. This was a value much where the exchange was favorable. Upwards of six milmore uniform than that which coin could be expected lions of specie have been sent to the branch of New York, to have in so extensive a country. He had been lately besides the amount which has been paid by the subscrilooking into a book on political economy, which had bers of the bank there; but, in issuing notes which the been published here, with high, and, in respect to its bank of New York has been obliged to redeem, every clearness and precision, with just commendations-the branch throughout the country has drawn upon a fund, work of Mr. Tracy. He inferred from one of his chap- with whose condition at the time it could not be acters, that the difference of exchange between Marseilles quainted." Such a system might and Paris, was often from two to three per cent. If, with be expected to produce inconvenient changes in the disall the facilities afforded by the internal improvements in tribution of bank capital, an extreme facility of obtaining which France is so rich, with a currency consisting almost loans at one time, and unexpected contractions of discount exclusively of gold and silver, the variation in the value at another." * "Whenever the state of of money is three times greater in her territory than on exchange is unfavorable, whenever the just principles of our continent, can it be said, that, in this respect, the banking require a reduction of discounts, then, under this bank has not yet fulfilled the objects of its institution system of indiscriminate payment of its notes, the bank Before its establishment, the value of bank notes, even in has nothing to fear from a draught of specie, and is encouthe commercial States, had varied twenty per cent. from raged to lend to every applicant. Wherever the exchange each other; and, as none of them bore a fixed proportion is favorable, and on the sound principles of banking, an to the precious metals, or to any natural standard, it was enlarged accommodation might be given to the comimpossible to assign any limit to their depreciation. You munity-there the flow of notes from every State whose have required that the currency furnished by the nation-exchange is unfavorable, contracts or suspends all the al bank should be every where convertible into silver, and operations of the bank. Thus, wherever discounts it is so. You have expected that it should be as uniform should be enlarged, the tendency of this system is to reas coin, and it is more so. He would not detain the com-duce them, and to enlarge them wherever they should be mittee by reading a paper, which he had prepared with reduced." that intention, containing the state of exchange, since the establishment of the bank, with England, France, and Holland; for he found himself occupying much more of their time than he had expected. But he believed that any member who should turn his attention to the subject, would remark its steadiness during that period. He thought himself justified in drawing from this fact a conclusion highly favorable to the bank." In reference to the great depreciation of the paper of the local banks, previous to the establishment of that of the United States, he said: Independently of the gross injustice of requiring the bank to perform all the exchanges of this extensive confederacy without any compensation, these enlightened views show most conclusively its inexpediency and injustice, as it regards the different sections of the Union. It would inevitably render those parts of the Union where the bank issues were prudent and moderate, tributary to those where the issues were injudicious and excessive. In this way, the very inequality in the currency, which the bank was designed to correct, would be perpetuated by the vain attempt to make it perform impossibilities. The "Did the interests or duty of the Government of the power of annihilating space, of transporting money, or any United States permit that this currency should be receiv-other article to the most distant points, without the loss ed by it? Some dissatisfaction was expressed, because of time or the application of labor, belongs to no human the branch notes of the United States' Bank were at a institution. discount of three fourths of one per cent. He read from But the salutary agency of the Bank of the United a price current the state of the market for bank notes, by States, in furnishing a sound and uniform currency, is which it appeared that notes, which were insisted to be not confined to that portion of the currency, which conin very good credit, varied from a discount of two and a sists of its own bills. One of the most important purpohalf to one of seven, fifteen, twenty-five, and even thir-ses which the bank was designed to accomplish, and ty per cent. Was our revenue to be received in these notes? How were they to be employed? They might be expended in the district in which they were issued.But was the expenditure of every district to be exactly limited to its revenue? What became of the Union if it were so He spoke of the thing and not the name. Our Union might dissolve in imbecility, as well as be destroyed by violence. Did not union imply, that the resources of one State, its money as well as its men, might be em ployed for the defence of another? 64 But, if the Government were willing to bear the loss which, it is confidently believed, no other human agency could have effeeted, under our federative system of government, was the enforcement of specie payments on the part of numerous local banks, deriving their charters from the several States, and whose paper, irredeemable in specie, and illimitable in its quantity, constituted the almost entire currency of the country. Amidst a combination of the greatest difficulties, the bank has almost completely succeeded in the performance of this arduous, delicate, and painful duty. With exceptions, too inconsiderable to merit notice, all the State banks in the Union |