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 specie, as intended to prohibit to individuals the right of paying in any thing 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 specie. * 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* 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."

ernment.

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 over the country, and a corresponding general and grad ual 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 notes 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 currency; and the result is too well known in the ten years' convulsions of the paper system which ensued. The effect of the whole was the speedy resort to another national bank. This bank came to its conclusion under the administration of President Jackson; and he, avoiding the error into which President Madison's administration had fallen in 1811, resolved to re-establish the constitutional 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 had increased in the same brief space from less than thirty millions to about sixty millions, and both against the determined opposition of a powerful political and moneyed party. The success of the experiment was es tablished, and it was clear that the party opposed to gold and silver could no longer effect any thing by direct opposition. A new mode of making head against it was then fallen upon, and that new mode was to expand the paper 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,

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It

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. 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 credited it 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 resolu tion. 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

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 currency 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 movement for the rescision of that order, and for the continuation of local paper in the receipts, and consequently in the expenditures, of the Federal 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 thus receives and pays out becomes the currency of the country also; for the people, single-handed, cannot make head against the action of the Government.

[DEC. 19, 1836.

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 cur. rency, 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 banks, 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

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 specie 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 country, so that, when needed, it could be had. The reputed 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 circulation, 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 work 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 representatives of that school are now convinced of their error, 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 Britain 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 issue 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 unsafe 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. 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 suppression 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,

Her

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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 di rect 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 securityship 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 effectual barriers 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 established their perfect idea of a paper system, and brought into general use those banks of issue on which they lavished 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 politi cal 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. B. 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