How small bank notes; and what has been the result? No, sir; no man has a higher opinion of the patriotism of the country than I have. There is no one who entertains a higher opinion of the patriotism of the States, or is more disposed to place a due and proper degree of reliance upon it; but I consider it sound policy not exclusively to depend upon it, but to add to that security the salutary vigor of the law. Hence we supposed that it had been demonstrated by all experience in this country that a national bank, created by, and under the proper control of, this Government, was a fit and necessary instrument to guard the paper system of the country against its tendency to run into excessive issues, and ultimately into utter disorder; that such a bank would at least retard that deplorable state of things; and that, if it could not finally prevent it, when the notes of the local banks had lost all confidence, and ceased to be a secure circulation, the notes of the national bank would remain a safe medium, in which the revenue of the country could be collected and disbur-ed. From the moment that the Bank of the United States ceased to exist, you gave up the rudder of the national currency, and I greatly fear that it will get into such a state of confusion that we shall see it go on, from worse to worse, until all shall unite in totally withdrawing from it the public confidence. [JAN. 11, 1837. thority?" He told us that the money transactions in one single city, the city of New York, were estimated several years ago, and that by a man than whom none is better acquainted with all such matters, at 1,500 millions annuually; and at this day the amount is probably double that. Now, if, in one single city, the course of business requires the employment of 1,500 millions of dollars annually, what must be the aggregate amount of the transactions in all the other cities and parts of the Union? The amount baffles all human calculation; and do you sup. pose that, by wielding a revenue of only thirty millions, you can overawe, coerce, and control banks whose business amounts, perhaps, to a thousand times as much? What proportion does the number of your deposite banks bear to that of the whole of the banks of the Union? Before the passage of the deposite act they amounted, if I remember, to less than forty; they are now, perhaps, eighty; and we are told by a secret authority, which seems to be high and controlling, that their number, when the deposite act is executed, is again to be reduced down to forty; but say it is eighty, and then by your operation on these eighty banks you are to bring about an effect so important as to deprive the remaining nine hundred and twenty banks of that which, in many instances, constitutes the most important part of their circulation. Can we not see that the thing is perfectly chimerical? Suppose you prevail with one bank to give up the issue of its small notes. What is the immediate effect? The vacuum produced by the withdrawal of the small notes of that bank is instantly filled by the small notes of other banks; and even if you could go a step further, and prohibit your deposite banks from receiving in de |posite the notes of any bank which issues bills below five dollars, what would be the further effect? There would be an instant collision between the deposite banks and the other banks of the country; and, as the other banks are so much more numerous, the necessary result would be, the utter destruction of the deposite banks themselves. We have already seen some of the effects resulting from these requirements. We passed an act at the last session prohibiting the use of notes below $10 in the disbursements of the United States. Well, sir, we have a disbursing bark in this city; and how was the rule observed? All the Senators who hear me are personal witnesses to its violation in payment to themselves of their daily allowance. I do not mention this to complain of it. It is possible, if you had ordered the officers of the Senate to receive either specie or notes over $10, it would have been complied with. But the bank still goes on, and it would still continue its course, notwithstanding any voluntary restriction which your wisdom may suggest. Is it not too much to expect that, when you, to whom the task belongs, have abandoned the care of the currency of the country, the States or the banks shall take upon themselves the duty of remedying the defects or the neglect of your legislation? The parties will take care of themselves, and will look no further. They will leave to the whole to provide for the interests of the whole. What interest have the banks in Maine, for example, so to shape their course as to suit the exigencies of the community in Louisiana? We, on the But the plan of the honorable Senator, to effect a re- contrary, contended for one currency, which should be striction on bank issues, does not consist exclusively in a general throughout the Union, consisting of the notes of reliance on the patriotism of the banks or the States. the bank of the General Government, and for a local curHe would appeal to the interest of the banks, and would rency, consisting of the bills of local institutions; so that hold over them the threat that, unless they cease the is- there might be a general currency, to be employed in pursue of small notes, the public deposites shall be with- poses of a general nature, while the local currency would drawn from their custody; in other words, it is by employ-subserve all local purposes. Our wish was to have the ing the revenue of the United States that he would ef fect the restriction he seeks. Now, sir, what is the amount of this revenue? Twenty-five or thirty millions And what did he tell us from very high auper annum. But if it were even possible that you could succeed, by appeals to the States and to the banks, in bringing about the restoration of a sound currency, how long would it last? Supposing a general pressure to be produced by the withdrawal of specie from the country, would not the banks instantly be prompted by the States themselves to supply the wants of the community by furnishing the desired medium? Trace back your own history; look to that period which preceded the Revolution, when the colonies were compelled to resort to bills of credit, and even to tobacco, as a circulating medium. I believe that in Virginia, the law to that effect remains still on the statute book, and that fee bills of some public officers are yet made out at the rate of so many pounds of tobacco for each item. If altered, the law has not been very long changed. The necessity of a circulating medium of some kind is indispensable. Society cannot exist without it. It cannot revert to the primitive state of barter. The representative of property must be had, even if it be in the form of peltries, tobacco, uncoined bars, paper money, or small bank notes. And this great social want is paramount to all law. general currency every where receivable in payment of the public dues, while we relied on the local banks for the medium of local circulation. But you have given up a bank whose credit was coextensive with the commer cial world, which supplied a currency never surpassed, and regulated exchanges with an economy unexampled in this or any other country. And do you expect these local institutions can be an adequate substitute? Do you cherish the vain expectation that the States will come to your relief, and rectify your incompetency? No, sir, no. Each State will say, it is not our affair to provide a general currency for the United States; we must leave that to be managed by the General Government. And does not all experience demonstrate that, while local Governments constitute the safest depository of local interests, the General Government alone can provide for the welfare of the whole? What is the present actual condition of the banking capital of the country? We told you that the moment you destroyed a Bank of the United States there would immediately spring up innumerable local banks; that banking capital would then be greatly extended, and that the change might lead to the destruction of all confidence in the circulating paper medium. And are not these predictions in a rapid progress of fulfilment? We are informed by the Secretary of the Treasury that the amount of bank capital has increased, since the veto on the bank charter, from 200 millions to 300 millions--an increase of fifty per cent.; and that the circulation has increased in the same ratio, viz: from 80 millions to 120 millions. I concur with the Senator from Virginia in the position that no state of things is more calamitous than that which accompanies a decline in the circulating medium of a Country; and the degree of distress is in proportion to the rapidity of such decrease; while, on the other hand, the prosperity of a country is never at least apparently greater than while the amount of its currency is on the increase. But does any man suppose that this can continue? Can any reflecting man persuade himself that twenty-six distinct and independent States, looking each one to its own separate interest, will exercise such for bearance as not to add bank to bank, and increase the paper circulation within its limits, till the country will be involved in the danger of some great calamity! I greatly fear it. When or how it shall come, no one can exactly foresee; but we can all imagine that, if there should occur a great failure, or a great reduction in the price of the Southern staple, or (what is now actually threatened) a general return of American stocks which, have been sent to Europe on foreign demand, from any cause, of a large amount of the specie in the United States, the necessary consequence would be such a run upon the banks as may cause a general suspension of pecie payments, if not the bankruptcy of many of the banks. What is their present condition? They are without concert, co-operation, or mutual confidence. The moment there is a great and sudden demand, to meet a corresponding demand abroad, there must ensue a general panic throughout the country. Each bank, being necessarily unable to measure the exact extent of the demand, will, of course, call on its own debtors, and the same thing, for a similar reason, taking place in all the other banks, there will probably be a general stoppage of payments and universal bankruptcy. Was not all this foreseen? Was it not foretold' Were gentlemen not warned, again and again, not to destroy the only means on which we could with safety rely? Between the system of the gentleman from Virginia and the hard-money system, I am far from being sure that the latter is not a more efficacious remedy than any voluntary action of the States and of the banks. The hard-money system proposes that, in all collections and disbursements of the revenues of the Government, specie alone shall be received, and all paper, of every description, entirely excluded. The object of both systems is to retain a certain amount of specie within the nation, by the creation of a necessity for its use, and thus to pre [SENATE. vent its exportation: for if the Government shall decide to receive nothing but specie in payment of its dues, the consequence would be the necessity of retaining a suf ficient amount of the hard metals for the collection and disbursement of the revenue. It might not, indeed, be necessary to retain the whole amount of 30 millions, assuming that to be the annual revenue, since one dollar in specie might be made to pay two dollars in revenue. But a certain amount, bearing a considerable proportion to the revenue, would be retained in the country. The process of getting at such a result is of necessity extremely difficult, and would create much practical inconvenience. If specie should become very scarce, the collectors of the Government might, from recessity, be forced to receive a portion of the revenue in notes of good banks; but if you received this revenue in specie only, you immediately and unavoidably elevate the relative value of specie above other parts of the currency, because, while hard money would perform all the offices of other media of circulation, it would then discharge one other office, which they could not. The result must be to create a demand for specie, and thereby to render it a marketable commodity. A man would not then, as now, be as ready to receive a debt in good notes as in specie. He will always want the specie, because it would command a premium. Does not the Senator perceive that gold and silver must then cease to be a circulating medium, and be converted into merchandise? It would be sold at an advance, and would be hoarded for that end. Yet I am far from being certain, if the object in view be to retain a certain amount of hard money in the country, that the remedy which suggests the exclusive use of specie has not a certainty of success which cannot be produced by relying on the patriotism or the voluntary action of a thousand banks and twenty-six independent State sovereignties. My word for it, in fifteen or twenty years after the system of the Senator from Virginia shall have gone into effect, although the same identical banks may not continue to issue notes of a small denomination, yet the aggregate amount of such notes in actual circulation will not be less than it was at the commencement of the experiment. But we were told by the honorable Senator that Great Britain and several other countries of Europe, having become enlightened by the example of America, are disposed to imitate it. He told us, further, that the people of Great Britian are becoming sensible of the impolicy of monopolies, and opposed to the continuance of the Bank of England, and that the present policy of that Government aims at the establishment of joint stock companies, in addition to the large number of private bankers, and by this means ultimately to get rid of the Bank of England altogether. On that subject all I can say is, that such is not the state of my information. I know, indeed, that they have lately passed a law for the creation, under certain restrictions, of joint stock companies; but what is the state of public opinion in regard to those local banking institutions, which so closely, as the Senator thinks, resemble our own? It is distrust, uncertainty, and fear. We are all aware that a committee of the House of Commons, at the head of which is the Chancel lor of the Exchequer, was required to examine into the condition of these local banks. I have before me a report of that committee, rendered as late as August last. The joint stock companies in that country are established by what they denominate deeds of settlement, which specify the conditions under which they are erected. After presenting an analysis of a variety of these deeds of settlement, the committee enumerate thirteen different defective provisions in the laws, which may require the interposition of Parliament, and they conclude by urging the necessity of the greatest possible prudence and caution in the management of those banks. SENATE.] Treasury Circular. While the language of the report shows very clearly that there is great apprehension felt as to the safety and solidity of these institutions, yet it is so constructed as prudently to avoid the excitement of unnecessary alarm. But supposing it to be true that, in a Government constituted as is Great Britain, it were possible to dispense with a national bank, and to rely on local joint stock companies and on private banks, let me ask the honorable Senator if the condition of England and America is not totally different? You there see a power asserted for Parliament to legislate with plenary authority, both for the future and for existing institutions. Have we any such power? Theirs is a consolidated Government; ours is a confederacy. They have power by their legis lation to guard against malepractices in all the banking institutions in the kingdom. But here there is no such authority. There, there is not an institution which does not perpetually act under the control of a general law, extending throughout the empire. But here we have one thousand banks, scattered over our immense territory, and in twenty-six States, on which the General Government can exercise no effective control whatever. So that, even were it true that the British Government could dispense with the Bank of England, it would be far from proving that we could imitate her, when we consider that the local banks in this country are subject to twenty-six separate and independent Governments, over which we have no power to act. We were told, and the country was promised, that on the destruction of the Bank of the United States we should be furnished with a better currency than we then enjoyed; a currency unrivalled on the face of the globe, which was under better regulation, and by which exchanges were effected at a cheaper rate than in any part of the earth. The paper of that bank had its credit established throughout the world. It was received in Asia; it was received all over Europe, and throughout this entire continent. Our exchanges were managed with an economy which we must all remember with regret at the change which has since taken place; for what is the state of our exchanges now? When they take place between distant places, the premium at the one end of the course ought to be met by the discount at the other end. But is that so? When a merchant at New York sells a bill on New Orleans at a discount, is that discount counterbalanced by the premium on a similar bill at New Orleans? No. A discount is charged at both ends of the line. And it often happens that at neither can you dispose of your bill without great difficulty and sacrifice I too, sir, am aware that we are surrounded with difficulties. In that I concur entirely with the Senator from Virginia; but my friends are not responsible for this state of things. You all know the reason of it. You all feel it every day. You know that we are in the midst of a dark and dense wilderness. Who is to be the Moses, whether from this side or the other of the Senate, (looking at the positions of the Senators from Virginia and Missouri,) that shall lead us to the promised land, is among those unknown things which the future alone can disclose. And now I turn to the questions really before the Senate. I beg pardon for the digression into which I have been led in noticing the able and interesting speech of the Senator from Virginia; the gratification of hearing which I shared in common with the rest of the Senate. If, in noticing the few points with respect to which I differ from that honorable Senator, I have departed from the rigid regularity of debate, I must plead his example as my apology. What are the questions which we have to consider? In 1816, the condition of the country in regard to the currency was this: throughout all the country south of New England there was a general sus [JAN. 11, 1837. pension of specie payments, and the bank notes in circu- Can any man look at that resolution at this day, and seriously entertain any doubt as to its true interpreta tion? The Secretary of the Treasury was immediately called upon to expound it; and an uninterrupted usage of twenty years, under succeeding Secretaries, has uniformly given to it the interpretation which it then received. It never was for a moment believed that it vested him with authority to require only specie, or to exclude entirely any of the four specified funds in payments to Government; that exposition was not interrupted for a moment by the act of 1820. I shall not repeat the argument in regard to it. It accomplished, and was designed to accomplish, but one purpose, which was the abolition of the credit system in the purchase of the public lands, and the substitution therefor of payment in band. It did not interrupt for a moment the continuous interpretation of the resolution of 1816-an interpretation which extended into three successive administrations, and through seven years of a fourth. Is it not too late, after this long adherence to one interpre tation, to say that Congress has misunderstood it; that all the Secretaries have misunderstood it; and that your usage for such a course of years is at this late day to be surrendered as without a true foundation? It has been said that the resolution was restrictive. It was so in so far as it rejected the notes of non-specie-paying banks, but it was mandatory so far as it went to enumerate and specify the different media in which payment might be made. It was restrictive so far as bad notes were concerned, but it conferred a legal right on the payer to make, and a legal obligation on the receiver to accept, payment in one of the four several ways which the law provided. But if the Secretary of the Treasury had authority to select some and to reject others of these modes, then his rejection and selection must be applied universally. He has no right to discriminate between citizen and citizen. He has no right to say to the citizen of Boston, from you I will receive notes of the banks in Boston, but not of the Bank of the United States. Or to a citizen of New York, from you I will receive United States Bank bills, but not bills of the banks in Boston. No. If he had a right to say that either of the four kinds should be received in preference to the rest, he is bound to make that rule and that preference to reach every where throughout the country. But what does he do? He not only discriminates between different branches of the revenue, making regulations to apply to one branch which do not apply to the others, but, in reference to that one branch which is the subject of his order, he discriminates between different classes of individuals. I heard it contended by the Senator from North Carolina [Mr. STRANGE] that the exception in relation to actual settlers has now expired by its own limitation. True, sir; but if Congress rises and leaves this vast power in the hands of the Executive, how soon may the discrimination be revived? Unless this order shall be rescinded, will not the Executive draw his conclusions, from the silence of Congress, that it approves what he has done? And may he not suppose that he is authorized even to go farther, and carry down his principle of discrimination from classes to individuals? I speak now of the question of power. Suppose the Secretary had reversed his rule-suppose he had said that the citizens of the States in which the land lies should have a right to purchase only with specie, while those who came from a distance might make their payment in notes. If he has absolute power over the subject, he might as well have made the one discrimination as the other. And he may not only discriminate between different classes of individuals, but between different places. I have been, indeed, informed that at one of the land offices specie, under the order, was not required. Where is this dispensing power? Where did the Secretary get it? Not from the words of the order, for that applies equally to all. Sir, I have heard it contended for, again and again, and votes have been given recording such as the opinion of the majority of this chamber, that payment for the public lands is a tax on the community. I do not myself think so. But I put the question to those gentlemen who do, and I ask them how this order can be justified, if all taxes are required to be uniform? I come to the conclusion that its legality cannot be established, either under the joint resolution of 1816 or the law of 1820. VOL. XIII.-24 [SENATE. It wants legal authority. It has on its very face all the air of executive legislation. It has a preamble setting forth the reasons which have led to its enactment. The Secretary who put it forth seems strongly to have felt the necessity of sheltering himself under the invulnerable name of his chief. But were there even authority for the order in the letter of the law, I should still argue against its gross injustice in practice. And this brings me now to inquire, what has been the effect of this order, in its actual operation on the commu. nity? The order professes to proceed on the principle that the public lands are sold for a valuable consideration, if payment be made in bank notes, and that specie alone can constitute a just equivalent for their value. And I admit that if the Secretary had gone on to provide that the specie thus received should be the property of the Government, there would at least have been consistency in the course he adopted. But the moment the order appeared, there was an instant pressure for speeie, especially in the West and Southwest. The banks were called upon, and specie in all quarters was put in requisition, for the purpose of paying for the public lands. The pressure upon the banks in Kentucky was great. Gentlemen talk to us about the inconsiderable amount that has been received, which is stated at $1,800,000, exclusive of $300,000 more, which was placed on deposite at Washington, and the certificates of which were received as cash; say, in round numbers, two millions of dollars. It is very true that this amount was not great, but the argument drawn from it is not a fair one. We must recollect that when the operation commenced no one knew what was to be its extent. No individual bank could possibly tell, and each was left in total uncertainty as to what would be required of them. The banks could not foresee that no more than two millions of dollars would thus be drawn from them. If they had known this beforehand, they might have made their arrangements to meet it. But on all the banks of the West and of the Southwest daily demands were made for specie. There was, at once, not only a cessation of discounts, and the purchase of bills of exchange, but the banks made heavy calls upon their debtors. This state of things operated with peculiar severity on the West. It happened just about the time when our people begin to carry their live stock to market. The ordinary course of the trade is this: They draw bills upon themselves, or on their friends, at the markets to which they are destined, which are discounted by the bank, and with the proceeds of which they purchase their stock, and meet their engagements. No business with us is more beneficial to all parties. The purchaser of stock diffuses money through the community, and on reaching the market he makes his sales, and is thus enabled to pay the bills which he had drawn. All this was immediately interrupted, in consequence of this Treasury order; for how could the banks venture to discount, with such an order hanging over their heads? If they purchased bills, the operation was equivalent to a disburse ment of so much specie; for if they paid in these notes, they immediately returned upon them for specie. The Senator from Virginia has told us about the effect of the course pursued by certain collectors in Ireland, in refu sing to receive in payment the notes of Irish banks. What was that consequence? The stoppage of the Bank of Dublin and its branches. Nor could that gentleman have pronounced a more severe condemnation of the order than by the example which he quoted from the kingdom of Ireland. The banks, as I have said, were run upon. Individuals who possessed specie were unwil ling to part from it, and reserved it for investment in the public lands. And there was a general accumulation, for the purpose of paying it into the land offices. Well, sir, it was carried to the land offices; and when it got SENATE.] there, whose was it? What became of it? it? Treasury Circular. Was it the property of the Government? No, sir. Did you get No, sir. It was carried to the deposite banks, and there it was credited as so much money to the Government. The whole transaction, therefore, amounted to this: you forced all the purchasers of the public land to become collectors of specie for the deposite banks. The money was not collected for the Government. You cannot call for it. It is the property of those banks, to be used as they please. You have refused to credit banks for the notes they issued; you have occasioned all this vast inconvenience; and, finally, instead of getting the specie which you have been at so much trouble to collect, you get nothing but bank credits. The money was transported from the seaboard, from the Western and Southwestern banks, from the theatres of business, where it might have been constantly and advantageously used, and taken into the interior, to banks of very limited business. And even there they were afraid to use it, lest it might be suddenly called for. The difference of the two operations, before and after the order, is this: Before the order, purchasers of the public lands paid for them in bank notes, convertible into specie; after the order, they paid for them in specie, converted into bank credits. It was just reversing the order of things. You began with paper, and obtained specie if you wished it; but under the order you began with specie, and obtained only bank credits. The practical effect throughout all the Western and Southwestern States has been to make all the interests of society collectors of specie for the benefit of the deposite banks, without the least benefit whatever to the Government; for these banks were not required to preserve the specific specie, and pay it over to the Government. was the demand for specie under this order, that I have heard of as much as 40 per cent. being given for gold to carry to the land office, and in some instances specie has been transported to the land offices, to be sold there as a marketable commodity. The order had a double effect. It withdraws specie both from circulation and from the banks that could use it for the benefit of the community, that it may perform the unprofitable circuit of being taken to the land offices, and thence back to the banks, when it becomes their property. Such Sir, what offence have the Western and Southwestern States committed, that they are to be subjected to an indignity which is not inflicted on the rest of the community? Why are we to pay our dues to the Government in specie, while the rest of our fellow-citizens are allow. ed to pay in bank notes? Even if there were authority for it in the law, the requisition would not be according to justice or equity. And all sentiments of fraternal regard, as well as all principles of equality, cry aloud against snch revolting distinctions. Why are our banks and our people alone to be be subjected to this rule? I protest, most solemnly, on behalf of my constituents, against so disgraceful an inequality; and I call upon the Government either to carry out their hard-money system every where, at the custom-houses as well as the land offices, or efface from its records a discrimination which cannot continue a day or an hour without dishonor and degradation. The honorable Senator from Virginia tells us that the measure is temporary. I wish he had made it out, or could do so now. How is it temporary? On its face? No, sir. It has just began its wide-sweeping ruin. It began on the 15th of August, and it tolerated for a time the exercise of some indulgence. Its full operation only commenced on the 15th of December, 1836, and there is nothing in its terms that looks like a temporary provis. ion. There is nothing in the President's message, or in the report of the Secretary, which announces to a suffering community that the heavy burden imposed upon (JAN. 11, 1837. them will not continue long. It may suit the purposes My friend from Ohio, who sits near me, [Mr. EWING,] has offered this resolution, which abolishes this odious distinction, and places all parts of the community, and every branch of the revenue, upon a footing of perfect equality. But it is said we ought not to do this; and if we do it it will imply censure. And the Senator from North Carolina, [Mr. STRANGE,] at a loss to make out a censorious charge from the words of the resolution itself, resorts to the language of a Senator to supply the deficiency. Sir, if we repeal the statute of a Legislature, does it imply censure on the Legislature? May we not repeal a statute of our own, and yet fix no stigma on our former deed? May we not, then, rescind an order or edict of executive authority, without any such implication? Has it come to this, that a mere difference of opinion is censure? Are we to be afraid to express our sentiments of a public measure, lest, peradventure, we wound the feelings of the Chief Magistrate or the Secretary of the Treasury? Sir, I have been struggling, associated with my friends, for a long time, against the complete ascendency of executive power; and we have sometimes been encouraged by a momentary hope of being able to arrest its lawless career. But, sir, its march has been steady, onward, and, I lament to say, triumphant. It is now practically the supreme power in the State. Every branch of the Government bends beneath its sway. The doctrine of unity in the executive administration, recently introduced; the obedience which, in pursuance of it, is exacted from all executive officers, from the bighest to the lowest; the practice of proscription of all who do not conform to the prevailing creed, with the kindred usage of profuse official and other rewards to all who do, often without regard to character, integrity, or merit, and the exercise of boundless power over the public treasure, and by means of a concealed, mysterious, and irresponsible agency over the banks in which it is deposited, have stamped a totally new character upon the Government. It has become a vast organized machinery, controlled by the will of one man, and moved by a single hand. It is a monarchy in disguise, with fewer privileges practically enjoyed than are exercised in some monarchies. There, acts of the Crown may be exposed, censured, denounced, corrected, by the power of Parliament. But here we are not to complain of or remonstrate against executive acts. must not presume to censure them. We must bear, in silent and dutiful submission, whatever ills the acts of the Executive may bring on the country. Or, if we attempt any corrective, we must graciously suppose that we are not going counter to the executive will, and by a fiction convert a permanent measure into a temporary order! We |