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Dec. 19, 1836.]

Treasury Circular.

[SENATE.

issued to the collectors of the revenue corresponded with it. At the ensuing session of Congress, he justified this construction in an argumentative report; and a few extracts from this report will show how the plain meaning of a law can be turned upside down by construction, and will reveal the source of the first imposition of paper money upon the Federal Government, and the reasons for that imposition. " This section [30th of the revenue act of 1789) provides for the receipt of the duties in gold and silver coin only. The Secretary has considered this provision as having for its object the exclusion of payments in the paper emissions of the particular states, and the securing the immediate or ultimate collection of the duties in specit, as intended to prohibit to individuals the right of paying in anything except gold or silver coin; but not to hinder the Treasury from making such arrangements as its exigencies, the speedy command of the public resources, and the convenience of the community, might dictate; these arrangements being compatible with the eventual receipt of the duties in spécie. * * * Such were the reflections of the Secretary with regard to the authority to permit bank notes to be taken in payment of the duties. The expediency of doing it appeared to him to be still less questionable. The extension of their circulation by the measure is calculated to increase both the ability and inclination of the banks to aid the Gov. ernment. * * * Bank notes being a convenient species of money, whatever increases their circulation increases the quantity of current money. * * * But, convinced as the Secretary is of the usefulness of the regulation, yet, considering the nature of the clause upon which these remarks arise, he thought it his duty to bring the subject under the eye of the House. The measure is understood by all concerned to be temporary. Indeed, whenever a national bank shall be instituted, some new disposition of the thing will be a matter of course.” Such was the argument, and such was the object for departing from the act of 1789, and from the constitution, of which it was the faithful expositor, the effect was the gradual and general diffusion of a paper currency ***, the country, and a corresponding general and grad* disappearance and banishment of gold and silver, so that when the first national bank charter expired, in 1811, the Federal Government was left without a national currency, having neither the United States Bank ** nor gold, and but little silver in the country. Mr. Madison’s administration was then driven to the deplorable necessity of using state bank paper for a national °urrency; and the result is too well known in the ten .*' convulsions of the paper system which ensued. The effect of the whole was the speedy resort to another atonal bank. This bank came to its conclusion under he administration of President Jackson; and he, avoiding the error into which President Madison's administration had fallen in 1811, resolved to re-establish the constitu. "onal currency, and especially to revive the circulation of gold, which had ceased for more than twenty years. The success of this great plan was truly flattering. The gold currency, in three years, had risen from nothing to about fifteen millions of dollars, and the silver currency * increased in the same brief space from less to thirty millions to about sixty millions, and both against the determined opposition of a powerful political and *yed party. The success of the experiment was established, and it was clear that the party opposed to gold and silver could no longer effect any thing by direct op*** A new mode of making head against it was then fallen upon, and that new mode was to expand the Poper system until it bursted, and thus to ruin the party in power by ruining the finances and the currency. The general receivability of local paper for public lands,

made it easy to inundate the Treasury, through the land offices, with local bank paper; and the spirit of speculation, co-operating with this political design, turned an immense flood of paper upon the national domain. It was easy to see that this mass of paper, though credited to the Government on the books of the deposite banks as specie, was not cash, but only promises to pay cash; and that, in fact, it was destined to become a new and second accumulation of unavailable funds. A crisis in the federal finances was evidently approaching, and there was every reason to believe—the floors of the two Houses of Congress daily attested the fact—that swarms of speculators, loaded with paper money, were to alight upon the public lands immediately after the rise of Congress. It was probable that many tens of millions of paper would thus have been converted into land, and that the banks which issued it, being unable to redeem it, and the deposite banks which had improvidently creditedit as cash, being unable to cash it, the whole would have sunk upon the hands of the Federal Government. The evil of such a state of things is too obvious to be depicted. Not only the Federal Government would have lost its land, and lost its revenues, but the whole community would have suffered. But here the energy and foresight of President Jackson was again victorious over the designs of enemies and the imprudence of friends. He determined to arrest the floods of paper which were ready to inundate the Treasury. The specie order was issued, and the country was saved. The wrath which the miscarriage of so many fine schemes occasioned burst forth upon the President’s head; the speculator for the loss of his myriad of acres; the politician for the escape of the Government from the danger that menaced it; the local banks for the loss of the national domain to bank upon; and the Bank of the United States for the loss of its anticipated opportunity of proving that a national bank was indispensable to the safe collection of the federal revenues. To make distress in the country, and charge it upon the Treasury order, was now the resort of all the disappointed parties. The Kentucky speech, and the Philadelphia letter, were the signal guns for a new panic; and the old drama of 1833 was immediately put in rehearsal for performance on the Washington boards as soon as Congress met. In every respect this second panic was a servile copy of the former; the same plot, the same scenes, the same incidents, the same performers. No fertility of invention characterized any part of it; no touch of genius enlivened the dull copy with the novelty even of a single new conception or new phrase. Here we have it now, more like a starved wolf at the door, than a roaring lion; and lending its feeble aid to the cause of this rescinding resolution. That resolution is to open the doors of the Treasury again to the inundation of paper money, that the catastrophe averted last summer may be produced next spring; and the question now is, shall, Congress give up the public lands to spoil, and the public Treasury to inconvertible paper, after President Jackson has saved the country from both evils? This is the point we are now at; and if any one wishes proof of the design to overthrow the constitutional currency and to impose paper money upon the Government, let him look at the universality of the abuse now lavished upon gold and silver, and the applause bestowed upon paper money, by all that great party now palpably discriminated by the distinctive features of the Hamiltonian school. Here is a specimen, taken from the Philadelphia letter, the force and beauty of which will be fully comprehended by the boatmen of the Mississippi river. “But this miserable foolery about an exclusive metallic currency is quite as absurd as to discard the steamboats and go back to poling up the Mississippi.” this is the manner in which this great party speak of SENATE.]

Treasury Circular.

[Dec. 19, 1836.

the currency of the constitution. “Miserable foolery”— as much behind paper money as a keel is behind a steamboat. But why lose time to prove their hatred of gold and their adoration of paper? They would be ashamed to have it thought otherwise. They take care that nobody shall think otherwise by their ostentatious abuse, in season and out of season, of the gold currency; and by their ostentatious praise, without rhyme or reason, of paper money It is incontestable, then, that the imposition of the paper system upon the Federal Government is the second great object of this resolution; and that for the avowed reasons mentioned by General Hamilton in his argument of 1790, in favor of substituting paper for gold and silver. Mr. B. envied not the vocation of any men, or of any party, who employed themselves in the habitual vituperation of any part of the constitution of the country, and especially that part of it which was considered by its framers as among the most important and valuable. Gold and silver is the currency of the constitution. Those who attack that currency attack the constitution, and that in one of its most valuable parts, and the very part which most universally concerns the people. Every citizen is concerned in the currency, and to attack that money which the constitution guaranties, is to attack at once his rights and the sacred instrument by which he holds them. Mr. B. had shown the origin of this war of paper against gold; he had shown it to lie at the origin of the great political parties which, under whatsoever names, have existed for near fifty years in this country; and it was perfectly clear that, from the time of General Hamilton to the present day, a preference of paper to gold and silver has been the distinctive tenet of one party, and constitutes the essential and radical distinction between the two. Mr. B. said it was incontestable that every nation must have a national currency. It must have such a currency not only in name but in fact; and nothing can answer for a national currency but that which combines two properties: first, uniformity of value all over the country; secondly, convenient portability. Silver possesses one of these qualities, but it lacks the other; gold possesses both, and the constitution of the United States guaranties its use. Gold is then the constitutional national cur. rency of the United States, and Mr. B. held all attempts to substitute paper in its place to be unconstitutional and pernicious. Two national banks had been chartered to furnish a national paper currency; they have both been put down, after twenty years' trial of each, by the power of the people. When the first was put down, a fatal error was committed by those who did it in not restoring gold; and that error was doubled by falling back upon local State paper, and adopting it for the currency of the Federal Government. Profiting by that great error, those who put down the second national bank made it a part of their plan, and the part upon the success of which every thing was to depend, that gold, and not local bank paper, should become the national currency of the Union. This was the plan, and, in pursuance of it, many steps have been taken towards excluding local bank paper from the receipts and expenditures of the Federal Government, and introducing gold in its place. The largest, and most essential of these steps was the Treasury order of July last; and now the present move. ment for the rescision of that order, and for the continuation of local Paper in the receipts, and consequently in the expenditures, of the Federai Government, brings up the question, whether gold or local paper is to be made the national currency?'' It brings up the question, for what the Government receives as cash it must pay out as cash; and what the Government hus receives and pays out become: the currency of the country also; for the

people, single-handed, cannot make head against the ac. tion of the Government.

The effect of the present movement, then, is to overturn the plan of those who put down the Bank of the United States; and to substitute for the national gold currency, which they promised the country, the actual paper currencies of all the States and Territories of the Union. This is the effect of the movement; and the question now is, will the Senate put down gold—for gold can never live in such company—and adopt all these currencies? Passing by the constitutional objection, as too obvious to need enforcement, and too often invoked without effect, Mr. B. would endeavor to address himself practically to the sense of the Senate, by showing them the mass of the evil which it was proposed to assume. Here it is, said he, (holding up a copy of Bicknell's Counterfeit Detector.) Here it is; a little volume of 32 pages, the first six containing twelve columns of the names of bank", alphabetically arranged by States and Territories, (Missouri and Arkansas the only names not in the list,) and each column containing about eighty names. The remaining 26 pages are filled with the description of the illegitimate progeny of these banks; that is to say, with a frightful and sickening exhibition of forgeries. Here, then, is near one thousand banks—probably upwards of a thousand by this time—whose promissory notes are to be put on an equal footing with gold and silver at the land offices, custom-houses, and post offices, of the United States; and which, being on an equal footing, will soon have the upper hand, and have all the customhouses, land offices, and post offices, to themselves; for gold and silver will never go where they go, and will never abide where they sojourn.

We are called upon (said Mr. B. ) to adopt this wilderness of banks as furnishers of currency to the Federal Government, to accept their paper promises to pay gold and silver, in lieu of gold and silver; and thus to make them the coiners, not of money, but of paper, for the Federal Government, and to enable them to supersede the constitutional coinage of the United States. He did not enter into the question how far the States, each for itself, might authorize paper currency; that is not the question now, but whether the Federal Government shall adopt as its own all the paper currencies of all the States and Territories? This is what we are called upon to do; and by whom? Certainly there may be some very disinterested and very patriotic men so calling; but, more certainly, there are four deeply interested classes so calling, and visibly seen at the head of the movement. These classes were, 1. The speculators, who want bank loans and bank facilities, to enable them to outbid the settlers, and to monopolize the choicest lands. 2. The local banks, who want the national domain as a capital to bank upon, and to give credit and circulation to their notes in all the new States. 3. Politicians out of power, who foresee, in the reception of this local paper, the ruin of the finances; and in that ruin foresee, also, the downfall of those now in power, and the elevation of themselves. 4. The Bank of the United States, which foresees likewise, in the same ruin, its own resuscitation; and which, pending that event, has gone into abeyance under a State charter, to be ready for the occasion. These were the classes whose clamors against the Treasury order had stunned the public ear; these were the classes who denounced the President; these were the classes who demand the instant rescision of that order. As one of those who had contributed to put down the Bank of the United States, and who had promised a restoration of the gold currency, Mr. B. must be permitted to make head against this movement, which goes to re-establish that bank, and to suppress that golden currency.

Having stated the number of the banks of the United States, he would say a word as to their reputed capitals and circulation. The chartered capital was computed at near one thousand millions of dollars; the paid-up capital Dec. 19, 1836.]

Treasury Circular.

[SENATE.

was stated at three hundred and twenty-five millions; the chartered right to issue paper money exceeded one thousand millions; and the actual circulation was computed at one hundred and thirty millions. Now, all the *pecie in the country is computed at seventy-five millions, and all in the banks at forty-five millions; so that the reputed paid-up capital is four times greater than all the specie in the country, and seven times greater than all the specie the banks possess. Mr. B. did not pretend that the banks should always have all their capital in their hands; but he did insist that it must be in the couno, so that, when needed, it could be had. The reputo paid-up capital is not in the country, by a difference of four to one; so that the fact stands revealed that a great proportion of these banks are banking on stock notes and on each other's notes; and the stockholders not being liable, the foundations of a great number of these banks must be unsolid and delusive; entirely unsafe for the community to rely upon; and that it would be a cruel thing for the Federal Government, by increasing their credit, to extend the sphere of their cir*tion, and to enlarge the vortex of their mischief when the day comes to which all unsolid banks are daily liable. Mr. B. said that we had borrowed the paper system from England, and from the Adam Smith school, whose **k on political economy had appeared about the close of the American Revolution, and created that passion for banking which has since prevailed in Great Britain and our America. He would show that the English repre*ntatives of that school are now convinced of their ero, and are endeavoring to extricate the country from all banks of issue except that of the Bank of England, for the solvency of which the Government of Great Briton stands security to the whole amount of it capital. Repeating that we had borrowed the paper system from Great Britain, Mr. B. had two remarks to make upon it: first, that banking with us was on a far more unsafe footing than in Great Britain; secondly, that the banks of is*ue were found to be too unsafe to be longer tolerated There. He proceeded to show the foundations on which he made these assertions, and afterwards to make a Practical application of his remarks to the question before the Senate. First, that banking in the United States was on a more "nsafe footing than in Great Britain. There was a fundamental difference, he said, between classes of banks. In Great Britain there were two classes: one of discount, deposite, and exchange; another of circulation. This latter class was the only one existing in the United States, and it was from it that all the public evils of banking flowed. Here, then, was a radical difference between the systems of banking in the two countries; the British system having the two species of banks, and the American system having but one, and that the dangerous one. Confining his remarks, then, to the class common to the two countries, (banks of issue,) he would show that this class is on a far more unsafe footing in the United States than in Great Britain. The Bank of England, he said, was backed by the Government of Great Britain for its debts and capital. The notes of the institution were a legal tender to the Government; and in a Government whose annual taxes are two hundred and fifty millions of dollars, the legal receivability of notes to this amount is a fund for the redemption of more notes than the Bank of England ever had in circulation. Her highest issue, during the suspension of specie payments and issue of one and two-pound notes, was twenty-nine millions and a half pounds sterling, say $146,000,000. Her issues since the resumption of specie payments and soppression of one and two-pound notes, has, in a period of six years, anterior to 1832, ranged from 18,000,000 to £23,000,000 sterling, being about 100,000,000 of dollars. The taxes to the Government, then, would absorb them,

though at a loss to all holders who did not owe to the Government the amount of what they held. This was some security for the notes of the bank; but there was another and a greater security, and this lay in the direct responsibility of the Government for the whole amount of the capital of the bank. The capital of that bank consisted of successive loans to the Government, commencing in 1694 in a loan of £1,200,000 sterling, and continued by additional loans, at different periods, until it amounts to £14,686,000, and bearing an interest all the time at three per cent. per annum. This is now the capital of the bank, and the debt of the Government to the bank, and the amount of the Government's direct security ship for the liabilities of the institution. No such Government security as this has existed, or can exist, in our country; and even with it the Bank of England has twice suspended specic payments, and once for twenty years, besides inflicting the ordinary evils of banking upon the Government and the country. Proceeding to what are called the country banks in England, Mr. B. showed that they were on a safer footing than the local banks of the United States. In the first place, the partners and stockholders were each liable, in his person and property, for the whole amount of the debts of the institution; and this liability continued in the case of joint-stock partnerships until three years after a partner had ceased to belong to the institution, for every thing done while he was a member of it. . In the next place, the English banks issue no note under £5, which is both a check upon their circulation, and a diminution of the danger of losses to the community. In England, every note bore a Government stamp, and paid a tax, which was also some restraint on issues. The mode of payment was another, as silver was only a tender to the amount of forty shillings; so that country bank notes could only be paid in gold or bank of England notes, and these latter could only be paid in gold; so that, directly or indirectly, gold was the fund of redemption for the whole English circulation, which was a far greater check upon bank issues than silver. In the last place, forgeries could be punished and restrained in England, and can hardly be punished or restrained in the United states. The extent of our country, and the independence of the states and their judiciaries, interpose effectualbarriers against the punishment of forgeries in one State upon the paper of other and distant States. These differences, continued Mr. B., show that banking is on a less dangerous footing in Great Britain than in the United States; and, now, what is the result of experience there it is fifty years since the Adam Smith school es: tablished their perfect idea of a paper system, and brought into general use those banks of issue on which they'iavished all the holiday phrases still in vogue in the United states: “well regulated specie-paying banksproperly constructed specie-paying banks—duly restricted specie-paying banks—safe and solid specie:paying banks.” It is fifty years since these phrases ruled, the legislation of Great Britain; and what is the lesson which fifty years' experience has taught? Mr. B. would not answer this question from the writings of the anti-paper school, nor even from the bullion school of England; he would answer it from the Adam Smith school itself— from the writings of Mr. McCulloch, professor of political economy in the University of London, and the present head of the Adam Smith school, whose work he has recently edited, with a volume of notes, to show what has happened since the time of Dr. Smith, and what improvements the paper system required in England. Mr. is. read the title of one of his chapters, and some passages from the chapter itself. This is the title or index to the contents of the chapter: “quantity of Bank of England paper afloat at different periods; effects produced on the country banks by SENATE.]

a contraction of the issues of the Bank of England; destruction of country bank paper in 1814, 1815, 1816, also in 1825 and 1826; measures proposed in 1826 for improving the state of the currency; remarks on those measures; proposals for taking security from country banks; advantages that would result from carrying this proposal into effect; objections to it examined and answered.” Mr. B. then read some passages from the chapter itself, regretting the necessity which limited him to few and brief extracts: 1. Panic of 1793.—“The extended transactions of the country required fresh facilities for carrying them on; and, in consequence, a bank was erected in every market town, and in almost every village. To force their paper into circulation was the object of all. The catastrophe which followed was such as might have been foreseen. The currency having become redundant, the exchanges took an unsavorable turn in the early part of 1792; and the Bank of England having been, in consequence, obliged to narrow her issues, a most violent revulsion took place in the end of that year and beginning of 1793. The failure of one or two great houses excited a panic, which proved fatal to myriads more. When this revulsion began, there were, it is supposed, about 350 country banks in England and Wales; of which about 100 were compelled to stop payment, and upwards of 50 more were totally destroyed, producing by their fall an extent of misery and bankruptcy that had been, until then, unknown in England.” 2. Panic of 1813. –“ Up to 1813 there were banks in almost all parts of England, forcing their paper into circulation at an enormous expense to themselves. The price of corn had risen to an extraordinary height in 1813, and fell in the beginning of 1814. This fall produced a want of confidence, and an alarm among the country bankers and their customers; and such a destruction of country paper took place as has not been paralleled, except only by the revulsion in 1825. By 1816, no fewer than 240 country banks had stopped payments, and 92 commissions of bankruptcy were issued by these establishments. The failures that then occurred were the more distressing as they chiefly affected the industrious and poorer classes, and frequently swallowed up, in an instant, the fruits of a long life of laborious exertion. Thousands upon thousands, who had considered themselves affluent, found they were destitute of all real property, and sunk, as if by enchantment, and without any fault of their own, into the abyss of poverty. The universality of the wretchedness and misery had never, been equalled, perhaps, except by the breaking up of the Mississippi scheme in France.” 3. Panic of 1825.-‘‘Nations are slow and reluctant learners; and it seems as if additional experience had been necessary to convince the Parliament and people of England that there was any thing defective in a system which had, in two previous instances, deluged the country with bankruptcy; and which enables every individual, however poor and unprincipled, who chooses to open a money shop, to issue notes to serve as currency in the ordinary transactions of society! A rise of prices and a rage for speculation took place in 1824–25. Many of the country bankers seemed to have no other object than to get themselves indebted to the public; and such was the vigor and success of their efforts to get their paper into circulation, that the amount of it afloat in 1825 was estimated to be near fifty per cent. greater than the amount afloat in 1823. The consequence of this extravagant and unprincipled conduct is well known. The currency became redundant, exchange began to decline, and a heavy drain for bullion compelled the Bank of England to lessen her issues. This was the signal for the repetition of the tragedy of 1793, but on a much

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larger and more magnificent scale, and with more destructive consequences. Sauve qui peut! Save himself who can! was the universal cry. And the destruction of country paper was so sudden and excessive that in less than six weeks above 70 banking establishments were swept off.” This (said Mr. B.) is Mr. McCulloch's account of the three per cent. system earthquakes which have taken place since the time of Adam Smith, maugre all his fine phrases about specie-paying banks, and bank notes equivalent to gold, and convertible into gold at the will of the holder. Three times in twenty-five years has the whole blown up! to say nothing of the crisis of 1797, and the numerous small panics and individual explosions which have filled up the intervals between the large ones. The result is a conviction that banks of issue must be suppressed, directly or indirectly, all over Ergland. The mode proposed, is to require security from them in addition to their individual liability, and that not the personal security of men, but the real security of lands mortgaged or Government stock pledged. Here is an extract from McCulloch on this point: “Whatever bank notes may be in law, they are prac: tically, and in fact, a legal tender. The great mass of the people are totally without the power to refuse them. The currency of many extensive districts consists almost entirely of country notes; and such small farmers, tradesmen, or laborers, as should refuse to take them, would be obliged to migrate elsewhere. There cannot, therefore, as it appears to me, be the shadow of a doubt that this is a case in which Government is imperiously called upon to interfere. We have sustained incomparably more mischief from the issue of spurious paper than from that of base coin; and in order to obviate such mischief in suture, and to give that security to the public which is so essential, we have, as was observed before, no alternative, but either to suppress country notes altogether, or to require security from the issuers.” “* * “In the case of Bank of England notes, a guarantee is taken by the Government for the notes which the bank issues; and the whole capital of the bank must be lost before the holders of the notes can be sufferers. Why is not the same principle followed with respect to country banks? What objection can there be against requiring of those who take upon themselves the office of furnishing the country with a circulating medium, to deposite with Government an adequate security for the performance of their engagements? In the use of money every one is a trader; those whose habits and pursuits are little suited to explore the mechanism of trade, are obliged to make use of money, and are no way qualified to ascertain the solidity of the different banks whose paper is in circulation; accordingly, we find that men living on limited incomes, women, laborers, and mechanics of all descriptions, are often severe sufferers by the failure of the country banks, which have lately become frequent beyond example. Against this mischief the public should be protected by requiring of every country bank (that is to say, exery bank except the Bank of England, for which the Government is security to the whole amount of its capital) to deposite with Government, or with commissioners appointed for that purpose, funded property, or other Government security, in some proportion to the amount of their issues. No establishment for the issue of notes could then exist, unless it had been set on foot by individuals possessed of adequate capital. And adventurers, speculating on the funds of others, and sharpers, anxious to get themselves indebted to the public, would find that banking was no longer a field on which they could advantageously enter.” Mr. B. would economize time and words, and proceed to the practical application of these extracts from the present head of the paper system school in England. Dic. 19, 1836.]

Treasury Circular.

[SENATE.

It is a surrender and proposed suppression of all banks of issue except the Bank of England, for which the British Government is the security and the responsible backer. This is what the original of our paper system, and a far safer system than ours, has come to in England! Given up and proscribed by the school that founded it, and that school more seriously engaged now in putting down their system than they were fifty years ago in founding it. And what is the state of things with us? Not only an appalling extension of the paper system through the annual bank incorporations of nearly thirty Legislatures, State and Territorial, but this attempt now made in the Senate of the United States to compel the idoption of all the State and Territorial paper systems, existing or to exis', by the Federal Government, and thus to make out of this multifarious mass a national paper currency. This is the effect; and, without disturbing the States in the use of this paper themselves, Mr. B. confined himself to the question before the Senate, namely, the adoption of the whole of it for the currency of the Federal Government. To this he had insuperable and inexorable objections, founded, first, upon the constitution of the United States, and, next, upon the unspeakable mischiefs of the scheme. On the constitutional point he would be brief, limiting himself to the words of the instrument, and to Mr. Madison's commentary. The constitution says: Congress shall have power“To coin money, regulate the value thereof, and of o coin, and fix the standard of weights and measres. “To provide for the punishment of counterfeiting the securities and current coin of the United States.” “No State shall coin money; emit bills of credit; make look but gold and silver coin a tender in payment of s. Mr. Madison, in No. 44 of the Federalist, says: “The loss which America has sustained since the Peace, from the pestilent effects of paper money on the necessary confidence between man and man; on the necessary confidence in the public councils; on the industry and morals of the people, and on the character of rePublican government, constitutes an enormous debt against the States, chargeable with this unadvised meas. ure, which must long remain unsatisfied; or, rather, an accumulation of guilt, which can be expiated no other. wise than by a voluntary sacrifice on the altar of justice of the power which has been the instrument of it. In addition to these persuasive considerations, it may be observed that the same reasons which show the necessity of denying to the States the power of regulating coin, prove, with equal force, that they ought not to be at libfr; so substitute a paper medium in the place of coin. The power to make anything but gold and silYer a tender in payment of debts is withdrawn from the States, on the same principle with that of issuing a paper currency.” Resting the constitutional objection to this adoption of the State paper currencies for the currency of the Federal Government where the constitution and Mr. Madison had put it, and merely referring to the great revenue acts of 1789 and 1800, for the correct exposition of the Constitution, in limiting the receipts for the customs and the lands to “gold and silver coin only,” and “to specie 97 evidences of the public debt,” Mr. B. would state the heads, and the heads only, of the objections to the ex. Pediency of the , measure. Premising that what the Government received, as cash, would have to be paid out as cash, and that, if local paper was received at all "would soon be received totally, and to the exclusion of *Pccie, and that local. paper would thus become the *coal currency of the Government and the country, until relieved from it by a general explosion, Mr. B. went on to enumerate the practical evils of such an unconstitutional currency.

1. The destruction of the standard or measure of value. Paper money neither is, ever was, or ever can be, a standard of value. Its quantity varies at the will of man, or rather at the will of each of the thousand Neptunes who preside over the ocean of paper; and not only at their will, but without their will, in the mere imprudence or folly of those who direct paper issues, and the thousand causes which operate upon the expansion and contraction of banks. The standard, or measure of value, is at this moment materially altered in the United States. This is seen in the increased price of every article which depends for its price upon the domestic market; and it is proved by the stationary or reduced price of every article which depended for its price on foreign markets. Cotton and tobacco were in this latter class, and had not risen, but rather fallen; all articles of home use and consumption were in the former, and all had risen, some one half, some double. The precious metals, from their uniformity of production, difficulty of suddenly and violently changing the quantity and intrinsic value all over the world, can alone make a standard or measure of value. Our constitution has guarantied that standard to us; and it is our sacred duty to preserve it. Mr. B. finished his remarks on this point with a quotation from Mr. McCulloch, preferring his authority to others, because he was of the paper system school, though now limiting his system to the Bank of England only: “No doubt has ever been insinuated with respect to the expediency of the regulations by which all weights and measures of the same denomination are rendered equal. But money is not a commodity merely; it is also the standard or measure, adopted by society, by which to estimate and compare the value of every thing else that is bought and sold; and if it be, as it most undoubtedly is, the duty of Government, to adopt every practicable means for rendering all foot-rules of the same length, and all bushels of the same capacity, it must be still more incumbent upon it to omit nothing to render money, or the measure of value, a measure which is, beyond all question, the most important of any used in society, uniform or steady in its value.” 2. Usury. This, he said, was a direct effect of paper money. The more banks of issue, the higher the rate of interest. Common bank interest in the United States is seven per cent. or more, which is double the rate of interest in Holland, where there is no paper. But common interest is nothing compared to the usury which ensues great banking, and which becomes enormous when banks, from necessity or mischief, stop discounts, and throw borrowers upon money dealers. Three per cent. discount per month is then the order of things; and this may now be seen in Philadelphia, where the United States Bank, with its thirty-five millios capital, on becoming a State institution, was to fill the State with money, and reduce interest to five percent. But that bank does lend to some borrowers at five per cent, or less. The correspondence of the commissioners employed in examining the state of the bank, preparatory. to the settlement of the value of the United States slot k, shows a mass of loans, to the amount of twenty-three millions of dollars, on extended or indefinite time, and it rates from 44, 5, 5}, to 6 per cent. per annum. No doubt many of the three per cent per nonth borrowers get their supplies from a part of these loans. 3. I’amics, convulsions, and siappages.--These (said Mr. B.) are inherent, in the paper system. They take place in England in defiance of all power in the Govern. inent and the banks themselves to keep the in down. There, no panics are porpetrated to scourge the country or to overset the Government, save and except the two political oncs lately seen.--Mr. Q'Connor's, and the one during the interregnum of Lord Grey's administra

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