make loans. But a contraction of the paper currency had long before commenced; and that contraction must necessarily produce a curtailment in the loans and discounts of banks. The Treasury order only co-operated with other causes in producing results which were inev itable. To regard the Treasury order as the efficient cause of the present crisis would be like an attempt to find one's way by a taper, and close his eyes to the sun, which was enlightening the world. The real cause of the existing pressure is much broader and deeper than the Treasury order; it is a cause which is inherent in the banking system, and in that paper currency which we have just heard commended as preferable to gold and silver. There are laws which act upon and control the paper system of currency, supplied by banks, which are as immutable as those that govern the physical universe. One of these laws is, that a sudden expansion of the cur rency, even to an inconsiderable amount, gives an undue stimulus to enterprise, that occasions over-trading and speculation, which will continue to increase, until they are checked by a reaction in the money market, when a contraction of the currency ensues, by the banks being obliged to curtail their discounts. This occasions a scarcity of money. But it seems to be denied that there has been any dangerous or essential enlargement of the paper currency. The Senator from Massachusetts admits that there has been a great augmentation of banking capital within the last two or three years, but attributes it to the rapid and unparalleled advance in the value of real estate and other property. It appeared to him this was taking the effect for the cause. What has occasioned the rapid rise in the price of real estate and other property? Is it not the flood of paper money with which the country has been inundated for the last few years, and the wide-spread and extravagant speculations to which it has given rise? If this was not the cause, he would like to know what it was. Has there not been an alarming increase of bank capital, and, of course, bank circulation, the last few years? The bank capital of the State banks was estimated by Mr. Gallatin, in 1830, at ninety-five millions of dollars, and the bank circulation at thirty-nine millions. The annual report of the Secretary of the Treasury, a year ago, contained returns from nearly all the State banks; according to which, the capital of the State banks, on the 1st January, 1835, amounted to about ninety-six millions, their circulation to about eighty-six millions. Since that period, the increase of bank capital has been astonishingly rapid. It is thought to have exceeded one bundred millions, and the circulation to have been increased fifty millions. But in addition to this, the Bank of the United States has been rechartered the year past, with a capital of thirty-five millions, and has the possession of seven millions belonging to the United States; making a capital of forty-two millions. During the past year, there has also been a sum of from thirty to forty millions of dollars of the public revenue in the deposite banks, which bas been used for banking purposes, and constituted a part of their capital. The whole addition to the banking capital of the country, since January, 1835, must considerably exceed one hundred and fifty millions of dollars, and the addition to the circulation fifty millions. In his report, the present session, the Secretary estimates the circulation of bank paper, on the first of the present month, at one hundred and twenty millions; but thinks that in July it considerably exceeded that sum. Mr. N. thought this estimate below the truth, because it was found that the issues of banks would bear a certain proportion to their capitals. If it was true, as was supposed by Adam Smith, who wrote at a time when the subject of banking was very imperfectly understood, that no more paper money could be circulated than would supply the specie which it forced out of circula VOL. XIII.-8 [SENATE. tion, the creation of banking capital would not add to The That the flood of paper money, and the great extension of bank credits, were the original and efficient cause of the embarrassments and difficulties which had prevailed for nearly one year, was clear beyond any reasonable doubt. Even a very small addition to the currency excites to over-trading and speculation, and an advance of prices. This has been found to be invariably the case in England, and in this country since the establishment of the Bank of the United States. All periods of excitement and speculation, in both countries, have been preceded by an increase of money or credit, or both. year 1835 and the first half of the year 1836, have been distinguished for speculation in stocks, real estate, and every kind of property, and for the unprecedented multiplication of joint stock companies, for almost every conceivable object. A reaction has ensued, and there is now great distress in that country for money, as well as in this. This spirit of speculation and gambling is there attributed to an expansion of the paper currency, although the increase of paper appears to be trifling compared to what has taken place in this country. In 1833, there were but thirty-four joint stock banks in England, and in July, 1836, they had increased to seventy-seven. Their issues in 1834 were £1,783,600, and in 1836, £3,094,025, being an increase of less than a million and In the mean time, the private banks had not increased, but to a small amount had contracted their is sues. So small an addition to the paper currency as this is considered as the cause of the rage of speculation and gambling which has prevailed, and of the distress that has followed. a half. Mr. N. said that, in support and corroboration of these views, he would ask the Secretary to read some short extracts from two recent writers in that country, which he had copied: Extract from Mushet. "In 1819, the Bank of England and the country banks curtailed their issues about 15 per cent., and consols fell about 14 per cent.; in 1820, the country banks curtailed 32 per cent.; in 1821, 28 per cent. A fall of prices and scarcity of money followed; and 1819, '20, and '21, were years of great distress in England. One of the great evils from the great fluctuation in the amount of the currency, is the spirit of gambling which it engenders. It is the sudden abundance of money, which is the main-spring of all gambling transactions in our funds, and in articles of general consumption; and the rise in prices is forced by speculative buying and selling, con. siderably beyond the actual increase of the currency. It is to this cause alone, and under every circumstance which, as a nation, we can be placed, that I attribute the whole of the speculations, now and heretofore, that have appeared to begin in prosperity, and to end in the distress and ruin of thousands. "The speculative rise probably exceeds the addition to the squares added. If 2 per cent. is added, prices will rise 8; if 8, 32 per cent. If, on the other hand, there is a contraction of 8 per cent. it will be attended with a fall of publ c credit and confidence in buying and selling. These are the evils, and they are evils of great magnitude, that attend the use of the paper currency. There is a range of contraction and expansion in the use of paper, that does not belong to a metallic currency, and which, perhaps, does more than counterbalance all the advantages to a nation from the use of paper." [DEC. 22, 1839. In confirmation of these facts and views, he would beg leave to read a letter which has been published; it is from no visionary theorist, or anti-bank man, but from a responsible officer, the cashier of the Branch of the United States Bank in Baltimore, in 1830, and was addressed to the Secretary of the Treasury. It bears date February 15, 1830. "Looking back to the peace, a short period, fresh in the memory of every man, the wretched state of the currency for the two succeeding years cannot be overlooked. The disasters of 1819, which seriously affected the circumstances, property, and industry, of every district in the United States, will long be recollected. A sudden and pressing scarcity of money prevailed in 1822; numerous and very extensive failures took place in New York, Savannah, Charleston, and New Orleans, in 1825. There was a great convulsion among banks and other moneyed institutions, in 1826. The scarcity of money among traders in that State and eastward, in the winter of 1827-'8, was distressing and alarming. Failures of banks in North Carolina and Rhode Island, and amongst the manufacturers of New England and this State, (Maryland,) characterized the last year, (1829;) and intelligence is just received of the refusal of some of the principal banks of Georgia to redeem their notes with specie-a lamentable and rapid succession of evil and untoward events, prejudicial to the progress of productive inment, insolvency, litigation, and dishonesty, alike subversive of social happiness and morals. Every intelligent mind must express regret and astonishment at the recurrence of these disasters in tranquil times and bountiful seasons, amongst an enlightened, industrious, and enterprising people, comparatively free from taxation, unrestrained in their pursuits, possessing abundance of fertile lands and valuable minerals, with capital and capacity to improve, and an ardent disposition to avail ourselves of these great bounties. Extract from the Edinburgh Review, vol. 4, No. 2. "in a country so opulent as this, and so rapidly increasing in wealth and population, the too great ardor of speculation, and the miscalculation of producers, must necessarily sometimes occasion over-trading, and consequently gluts and depresses of the market. But were the currency in a perfectly sound state, the excitement arising from such causes would alinost necessarily be confined to one or a very few businesses, and would be very far indeed from being either general or universal. Industry, and causing a baleful extension of embarrasspoint of fact, all periods of general excitement, or periods marked by a general tendency to speculation, and by a general rise of prices, have, both in this and other countries, been uniformly distinguished by some extraordinary facilities in obtaining supplies of money or of credit, or of both. We are bold to say, that no single instance to the contrary can be pointed out in the history of industry in modern times." Mr. N. said that the opinions of these two enlightened writers, in pointing out the evils of a paper currency, contained a satisfactory explanation of the true origin of "Calamities of an injurious and demoralizing nature, the pecuniary difficulties which now exist in this coun-occurring with singular frequency amidst a profusion of try. There was no Treasury order in England, no tam- the elements of wealth, are well calculated to inspire pering with the currency, so far as the Government was and enforce the conviction, that there is something radi concerned, yet the same evils had been experienced cally erroneous in cur monetary system, were it not that the judgment hesitates to yield assent, when grave, nounced to the public, in a recent report, that our system of money is in the main excellent, and that, in most of its great principles, no innovation can be made to advantage." there. Mr. N. said that the letter which he had just read contained more truth and honesty than all the communica tions which had ever appeared from the head of that banking institution, of which the writer of this letter was an officer. It presented a faithful but melancholy picture of the operations of our banking and credit system. A paper currency was, from the very nature of it, un-enlightened and patriotic Senators have deliberately anstable, and subject to constant fluctuations. Such bad been its character in England, and in this country particularly. Since the establishment of the late Bank of the United States, it had been more unstable. Those who suppose that reactions and periods of distress were only occasional, and the result of extraordinary causes, were entirely mistaken. They are evils inherent in the system, and inseparable from it. Whoever will look back to the period of the establishment of the Bank of the United States, will find that such has been the case in this country. The severe and universal distress which prevailed throughout the Union in 1819 and '20, will long be remembered. In 1822, money again became scarce, and in 1825 there was great distress in the United States, as well as in England, where the pressure was universal and desolating in its consequences. So great was the calamity, that it was found necessary to take away, in part, the monopoly of the Bank of England, and authorize the establishment of joint stock banks, as a means of relief. In 1826, money was scarce in New York; and in the winter of 1827-'8, in the Middle and Eastern States. In 1829, many banks failed, and there was great distress among the manufacturers in the Eastern States. In the latter part of 1832, money again became scarce; and nearly the entire year of 1834 was distinguished, not only for a pressure, but for a panic, unexampled in this country. The evils of this period are too fresh in the memory of every one, to render it necessary to enlarge upon them. With such facts as these, and the experience of the last twenty years before us, he thought it was trifling with common sense to talk about the Treasury order being the cause of the existing difficulties. Sir, (said Mr. N.,) the cause of these evils lies deeper and broader; it exists in your paper currency and banking system. The order has, no doubt, in some small degree, contributed to increase the pressure; and this is also true of the deposite act. They have served to bring on the crisis a little sooner than it might otherwise have come, but the disease was upon us, and must have its course. If we were to look to any secondary causes, that of a wild spirit of speculation stands pre-eminent, and particularly speculation in public lands. But speculation is stimulated by our system of currency and credit. The immense purchases of the public lands during the last two years have filled your Treasury to overflowing; more than forty millions had been received from the sales of the public domain. This immense capital had been withdrawn from its accustomed employment. This, of itself, was sufficient to derange the whole business of the country. The period of distress to which he had particularly referred, was also distinguished by speculations in the public lands. They commenced in 1818, the sales that year exceeded seven millions of dollars; in 1819, they were more than seventeen millions, and the first two quarters of 1820 amounted to the enormous sum of twenty-seven millions. In July the law went into operation, requiring cash payments; and so entirely did the sales depend on credit, that they were almost entirely suspended, and the last half of that year, amounted to only about four hundred thousand dollars; and, for the four succeeding, did not average one million a year. Speculations in the public lands again commenced in 1834, when the sales amounted to about eight millions; in 1835, to fifteen millions, and the present year to more than twenty-four millions, including the sales of the Chickasaw lands, which do not go into the Treasury. That a reaction should follow this reckless spirit of speculation was inevitable. [SENATE. something to increase the use and circulation of specie, and discountenance bills of small denominations. With regard to this important object, Congress had, perhaps, done all that it could by direct legislation. It has superseded the act of 1819, and legalized foreign coin; it has raised the standard of gold coin; it has established additional mints and greatly increased the annual coinage, and particularly that of gold, which has already become a new and important part of our metallic currency. The amount of specie in the country is greatly increased the last three years, for which this administration is entitled to great credit. Mr. N. said that he could not assent to the proposition of the Senator from Massachusetts, who, if he understood him, contended that it was the right and the duty of Congress to regulate the whole currency of the country. By this, he understood the Senator to mean, that Congress had the power to regulate the paper issues of the State banks. If he did not refer to this description of currency, it was difficult for him to conceive to what his remarks were intended to apply. But whilst we were so emphatically informed that this was the duty of Congress, we were not told how it was to be done. what way can Congress regulate the paper currency supplied by the State banks? The gentleman did not inform us: he seemed to have a studied caution and reserve on this point, and thereby hangs a tale. Mr. N. thought, however, there was no secret in the case. The views of the Senator have been heretofore disclosed. Sir, said Mr. N., the Senator would regulate the paper In He was Mr. N. said he thought that the attempt to charge the embarrassments and pressure for money upon the Treasury order had entirely failed. He believed the order to be legal, and was satisfied that it had had but little agency in causing the existing crisis. Still it was, in his mind, a question whether the principle of that order ought to be maintained. He considered it as a tempo-currency of the States by a paper currency of the Fedrary measure, well calculated to remedy existing evils of the most alarming magnitude. But he was not prepared to say that it would do as a permanent regulation. The strongest reason for its adoption was to guard against the flood of paper money which was flowing with a swelling tide into the deposite banks from the sales of the public lands. This evil he hoped would be corrected by legislation before Congress adjourned, which, so far as that object was concerned, would supersede the Treasury order. But still the question is before us, and may have to be decided, in what currency shall the public revenue be collected' This was a question of great delicacy and magnitude. Great as he considered the evils of our paper system of money and credit, he did not see how this Government could provide a remedy. It certainly could not do it by any direct legislation; it had no power over the State banks, The only power it could exercise upon the paper currency of the State banks was indirectly in the collection and disbursement of the revenue; and this was no small power, especially at a time like the present, when the revenues amounted to more than forty millions. A large portion of the whole currency of the country passes through your Treasury annually. or their issues. Mr. N. said he was not prepared to say to what extent this power could safely be exercised. He was satisfied, however, that it would not do at this time to collect the revenue in specie, exclusively. Congress had, no doubt, a right to do this; but, in the collection of so large an amount of revenue, we must have some regard to the business of the country, and to the ordinary currency used in commercial and other transactions. It is evident that we might adopt a rule which would occasion great inconvenience, and perhaps injustice, because the large sums of money received into the Treasury cannot well be collected in a currency not in general use. Whatever principle is adopted as a permanent regulation, ought to be uniform, and applicable to the Customs as well as the lands. That, in the collection and disbursement of the public revenue, it will be proper to attempt to remedy some of the evils of the paper system, he had no doubt. We may, by our regulations, do eral Government; he would regulate the banking institu- When it curtails its discounts and its issues, the State banks are compelled to do the same; so that the result of this mode of regulating the paper currency of the country, through the agency of a national bank, is, to place in the hands of a few individuals the power to make money plenty or scarce at their pleasure. The currency of the country is made to depend on the interest, the caprice, or the passions, of one or more individuals. This is a power greater than that possessed by your Executive; and its terrible effects were experienced during the memorable year of the panic. Mr. N. said that the present high prices of provisions and the necessaries of life were supposed to be inconsistent with the existing scarcity of money. There was nothing, however, extraordinary in this state of things; it was the case in 1819. The reaction was felt first upon SENATE.] Treasury Circular. stocks, and those kinds of property which had a more intimate connexion with the money market; whilst the products of labor were less easily or immediately affected. When the prices of the necessaries of life are once raised, by an undue expansion of currency and credit, and consequent speculation, it takes a long time, osten years, to bring them down. Labor is the last thing that is raised in price; but when it is, all the products of labor will of course be advanced, and may remain high for years; but the reaction which is going on must bring them down to their proper value. The Senator from Ohio [Mr. EWING] has given a very novel explanation of the present high prices of breadstuffs. He says that this country will no longer export wheat or flour; that there is but a small belt of three or four degrees of latitude suitable for grain; and that, from the establishment of manufactures, the demand at home is greatly increased; so that hereafter we can do no more than supply the domestic demand. We are told, also, that Europe is a great grain country. But the Senator seems to overlook the great and im portant fact of the difference in the population of the two continents. The whole population of the United States is less than that of the British isles, which for several years have supplied the entire breadstuff for their whole population. At the time of the union, in 1750, England and Scotland had a population of seven millions and a half, and the agriculture of the country produced barely a supply of grain equal to the consumption; and since that time the population had more than doubled, yet the last two or three years no wheat had been imported. The production, by the improve. ment of agriculture, had increased considerably above one hundred per cent. and to what extent it might be increased remained to be known. Comparing this country to England, he did not doubt that its resources for grain, when properly developed, would be found sufficient to sustain a population of two hundred millions. The Senator's own State, and one adjoining, could produce grain sufficient for the present population of the whole Union. [DEC. 22, 1836. the principle of distribution unpopular. Sir, said Mr. N., the opponents of that principle do not desire the aid of any stratagem or artifice; they will not even take advantage of embarrassments and difficulties which the execution of that law has occasioned. These were tem¦ porary evils; they were foreseen at the time. He was one, and perhaps the last, who had come into the support of that measure; but he did it with the full belief that its immediate effect would be to increase the existing difficulties. In supporting the act, he did not consider that he sanctioned the principle of distribution. Had the Senate then been told, as it had now, by the Senator from South Carolina, [Mr. CALHOUN,] that in passing that act they would establish the principle of distributing surpluses from year to year, the bill could not have passed the Senate. Deeply and forcibly as many of us felt the condition of your Treasury; unwilling as we were that forty millions of the public money should remain, for several years at least, in the deposite banks, to be used as a capital, multiplying all the evils of our inflated paper system; anxiously and deeply as we were impressed with these evils, we should not entertain even a thought of relieving the country from them by sanctioning the principle of distribution. No, (said Mr. N.,) that principle has not yet received the sanction of this body; but, it seems, it is to be pressed upon us the present session; and he trusted the opponents of the measure would be prepared to meet it, here and else where, before the tribunal of public sentiment, where all questions affecting the great interests of the country and the safety of our institutions must ultimately come, and where the decision is not only final, but always safe, and usually correct. The opponents of this scheme want no extrinsic circumstances, or even temporary considerations, to bear on the question; all they ask is, to meet the principle in free, open, and fair discussion, upon its own intrinsic merits. If it is a sound and safe principle, in accordance with the constitution, consistent with the rights of the States, and conducive to the general prosperity, it will doubtless be sustained; but if it shall appear to be in conflict with the spirit of the constitution, fraught with mischief, tending to corruption, and dangerous to the rights and independence of the States, it could not stand, either here or before the popular tribunal of the country. Mr. N. said he would conclude what he had to say, by noticing one observation of the Senator from Ohio, [Mr. EWING.] That Senator did not seem to be satisfied with condemning the Treasury order as unconstitutional and illegal, and as the cause of the distress which has prevailed, Mr. N. said he had concluded what he had to say, and but he seemed to think it necessary to assail the motives had detained the Senate much longer than he intended. of its authors. He more than insinuated that the measure Mr. RIVES said he thought the observations just made did not originate with the President or the Secretary of by his friend from Connecticut [Mr. NILES] showed conthe Treasury. He seemed to allude to a power behind clusively that there were insuperable objections to the the throne, greater than the throne itself; but with whom adoption of the resolution proposed by the honorable Senthat power existed, we were not informed. He expect-ator from Ohio, [Mr. EwING,] for rescinding the Treasury ed every moment to hear that it was the "Kitchen Cabinet;" but the Senator had not expressly alluded to that famous council, which once exercised such potent influence over public affairs. He thought that common justice required that the motives of the President should have been spared. This, however, had not been done. The Senator appeared to think that there was some wicked motive in the Treasury order; that the object of its authors was not what it imported, or what had been assigned. He says, the real object was to create embarrassment and distress throughout the country, and to charge the same to the operation of the deposite act of last session, and thereby render that measure unpopular with the people. This was the deep-laid plot which the Senator has discovered. Mr. N. said he would only say, in reply, that if any such purpose had any influence on the issuing of the Treasury order, it was the silliest scheme that ever originated from the fatuity of man. It could not be supposed that the act of last session was to be repealed, and, of course, there could be no other object but to render But the order of 11th July last. In the first place, the form of Indeed, it is difficult to conceive what reason there can be for giving the particular form proposed to the action of Congress in this case, unless it be to imply a censure on the act to be rescinded. But however unprepared I may be at present, said Mr. R., to make the provisions of the Treasury circular the permanent policy of the Government, I will not concur in any proceeding which shall cast a censure on the Executive for issuing it. Whatever may have been, or may still be, its actual operation, (and on this point the diversity of testimony and opinion among those far better informed than I have DEC. 22, 1836.] Treasury Circular. any means of being, is so great as to render any judgment I might be able to form of but little weight,) of one thing I am well persuaded, that the motives which induced the Chief Magistrate to direct it to be issued were of the most honorable and patriotic character. I must say, also, that notwithstanding the ability and talent displayed on this, as on all other occasions, by the learned gentleman from Massachusetts, [Mr. WEBSTER,] he has not, in my humble judgment, succeeded in establishing any want of legality in the measure adopted by the Executive. Whatever rule, therefore, Congress may deem it necessary and expedient to establish for the future collection of the public revenue, I shall, for one, be opposed to any mode of action on the subject, which ahall imply a censure for the past. The honorable Senator from Connecticut [Mr. NILES] has, in my judgment, presented the executive order of July last in its true light, as a temporary and occasional act, growing out of an extraordinary state of things then existing. It was designed to meet that state of things, and may have been wise and salutary as a temporary act, to operate until the meeting of Congress, while its continuance as a permanent legislative rule would be inexpedient. The President himself evidently regards it in this light. In his message, at the commencement of the session, he submits the whole subject for the consideration of Congress; and while he recommends to them earnestly the adoption of some measure for limiting the sales of the public lands, he attaches but little impor. tance to the future requisition of specie in payment for them. Now, sir, I beg leave to say, in advance, that any practicable and equal measure, which shall be digested by the gentlemen of the West, to prevent the great evil of a monopoly of the public domain in the hands of speculators, shall meet with my hearty concurrence. A bill for that purpose is already before us, and, without hav ing examined, or being prepared to express an opinion of its details, I hope it will receive the prompt consideration and action of Congress. the revenue. But to return to the Treasury order. The President has done what he deemed his duty, under the peculiar and extraordinary circumstances of the emergency. We are now called upon to do ours, in establishing some definite and permanent rule for the future collection of An indispensable characteristic of any permanent system must be its uniformity. The genius of our constitution demands equality in the laws, and especially in the fiscal operations of the Government. It does not allow, as a permanent regulation, that specie shall be required in pay ment of one branch of the revenue, while bank notes are received for another-that one rule of collection shall prevail in the West, and another in the East. Whatever medium of payment, therefore, Congress shall prescribe for one portion of the public dues, ought to be extended to every other. Shall that medium, in public receipts and disbursement, be specie exclusively? Even if this should be the ultimate policy of the Government, the country is, in my opinion, not yet ripe for its adoption. Specie must first diffuse itself more generally through the ordinary business of society, the common channels of circulation must be better filled with the metallic currency, before the Government can, with justice to the public debtor, sternly demand payment of its dues in gold and silver exclusively. The only effectual means by which a larger circulation of gold and silver in the general trade and business of the community can be obtained, is the suppression of bank notes of the smaller denominations. This is that practical reform of the currency which has been held steadily in view by the present administration and its friends; and in preparing for which, much has already been accomplished in the important steps of putting down the Bank of the United States; correcting by law [SENATE. the under-valuation of the gold coins; in the largely increased coinage and importation of both gold and silver; in the salutary influence exerted by the Treasury, through the collection and disbursement of the public revenue, over the leading State banks, and in the enlightened policy adopted by a majority of the States, in beginning a suppression of the smaller notes. It can be carried fully into execution only by a continued co-operation of the General and State Governments, on the same sound and practical views. Like every other great reform, it must be gradual and progressive. In unduly precipitating the process, there will be danger of inauspicious reactions; and in the view of the great body of the community, whose material interests are always liable to be bruised and shocked by sudden and violent changes, the remedy might unfortunately come to be looked upon as worse than the disease. While, therefore, I would steadily persevere in the wise policy of enlarging the specie circulation of the country, (the first efficient commencement of which has been made under the present administration,) I would carefully abstain from compromising the success of so important a reform by any premature or precipitate experiment, which might endanger reaction. The present occasion may, with great propriety, be embraced, to make another safe advance in the prosecution of that reform, by laying a restriction on the receipt, in public collections, of the notes of all banks issuing bills under certain denominations. The joint resolution of 1816 ought to be remodelled, and adapted to the present condition of things. Some of its provisions have become obsolete. Of the four media of payment, in the collection of the public dues, recognised by it, two no longer exist, to wit: Treasury notes, and notes of the Bank of the United States, as a national currency. Of the remaining two, specie and the notes of specie-paying banks, the latter ought in my opinion to be subjected to additional restrictions, especially such as may have a tendency to promote the great practical reform of a suppression of the small notes. But, while the notes of specie-paying banks are treated by all the world, in pri. vate transactions, as equivalent to specie, I do not think the Government would be justified in refusing them in public collections altogether, until gold and silver shall, by the previous suppression of small notes, have taken the place more generally of a paper currency. What has appeared to me best to be done, under existing circumstances, is a revision and modification of the joint resolution of 1816, adapting it to the present condition of things, and providing that all sums of money accruing to the United States, whether from customs, public lands, or otherwise, shall be received only in gold and silver, or in notes of banks paid on demand in gold and silver, but with the following restriction as to such notes, with a view to encourage the disuse and suppression of the smaller bank issues, and thereby enlarge the specie circulation; that is, from the passage of the law, no notes to be received in public collections of any bank, though a specie-paying bank, which shall issue bills or notes of a less denomination than five dollars, and the like prohi bition to be gradually extended, (allowing due time for the change,) first to the paper of banks issuing bills of a less denomination than ten dollars; and, finally, to that of banks issuing bills or notes of a less denomination than twenty dollars. I would add also this farther limitation: that not even the notes of specie-paying banks of the above descriptions sbould be received, unless they were such as the banks in which they were to be deposited, should agree to pass to the credit of the United States as cash; obtaining thus a double guarantee for the soundness and safety of the public collections, and making the whole transaction, to every practical purpose, equiva lent to a payment in specie. |