Imagens das páginas

JAN. 27, 1837.] Treasury

Circular. [SENATE.

the United States Bank—and to fasten, for a time, the Adam Smith system upon the Federal Government and the whole Union. Mr. B. then inquired, emphatically, what was the system of Adam Smith and then said that Dr. Smith should answer this question himself, and that he would read the extracts from his works which would exhibit his response. This inquiry was rendered the more necessary, because, having named Dr. Smith as the founder of the paper system in England, the Senator from Virginia [Mr. Rives] had thought him mistaken, and maintained the contrary. He then read the following extracts: “The substitution of paper in the room of gold and silver money replaces a very expensive instrument of commerce with one much less costly, and sometimes equally convenient. Circulation comes to be carried on by a new wheel, which it costs less to erect and maintain than the old one. There are several different sorts of paper money; but the circulating notes of banks and bankers are the species which is best known, and which seems best adapted for this purpose. When the people of any particular country have such confidence in the fortune, probity, and prudence, of a particular banker, as to believe that he is always ready to pay, upon demand, such of his promissory notes as are likely to be presented to him, those notes come to have the same currency as gold and silver money, from the confidence that such money can at any time be had for them. A particular banker lends among his customers his own promissory notes, to the extent we shall suppose of £100,000. As these notes serve all the purposes of money, his debtors pay him the same interest as if he had lent them so much money. This interest is the source of his gain. Though some of these notes are continually coming back upon him, part of them continue to circulate for months and years together. Though he has generally in circulation, therefore, notes to the extent of £100,000, yet £20,000 in gold and silver may frequently be a sufficient provision for answering occasional demands. By this operation, therefore, £20,000 in gold and silver perform all the functions which £100,000 could otherwise have performed; £80,000 of gold and silver, therefore, can, in this manner, be spared from the circulation of the country; and if different operations of the same kind should, at the same time, be carried on by different banks and bankers, the whole circulation may thus be conducted with a fifth part only of the gold and silver which would otherwise have been requisite. Four fifths, therefore, of a full circulation of gold and silver may be exported. But though so great a quantity of gold and silver is thus sent abroad, we must not imagine that it is sent abroad for nothing, or that its proprietors make a present of it to foreign nations. They will exchange it for foreign goods of some kind or anothér, in order to supply the $onsumption either of some other foreign country, as their own.”—Vol. 1, pages 434, '5, '6, ’7. “A paper money consisting in bank notes, issued by People of undoubted credit, payable upon demand with. out any condition, and in fact always readily paid as soon * Presented, is, in every respect, equal to gold and silver noy; since gold and silver money can at any time be had for it. Whatever is either bought or sold for such Paper, must necessarily be bought or sold as cheap as it could have been for gold and silver, the increase of P.Perooney, it has been said, by augmenting the quan. toy, and consequently diminishing "the value of the whole coroney, necessarily augments the money price of commodities. But as the quantity of gold and silver which is taken from the currency is always equal to the i..."...o.o.o.o.o. no Increas * A currency.”—Pol. 1, p. o the quantity of the whole

“The Bank of England is the greatest bank of circu.

lation in Europe. It was incorporated, in pursuance of an act of Parliament, by a charter under the great seal, dated the 27th of July, 1694. It at that time advanced to Government £1,200,000 for an annuity of £100,000, or for an annuity of £96,000 a year interest, at the rate of 8 per cent., and £4,000 a year for the expense of management. The stability of the Bank of England is equal to that of the British Government. All that it has advanced to the Government must be lost before its creditors can sustain any loss.”— Vol. 1, p. 479. The bank has lent its whole capital, now about fourteen and a half millions sterling, to the Government; so that the Government stands security for the bank to that amount, being near seventy millions of dollars. “Joint stock companies are well adapted to carry on the trade of banking. The constitution of joint stock companies renders them in general more tenacious of established rules than any private copartnery. Such companies, therefore, seem extremely well fitted for this trade. The principal banking companies in Europe, accordingly, are joint stock companies, many of which manage their trade very successfully, without any exclusive privilege.”—Pages 146, 148, vol. 3. “If bankers are restrained from issuing any circulating bank notes, or notes payable to the bearer, for less than a certain sum, (£5 sterling,) and if they are subjected to the obligation of an immediate and unconditional payment of such bank notes as soon as presented, their trade may, with safety to the public, be rendered, in all respects, perfectly free. The late multiplication of banking companies, in both parts of the United Kingdom, an event by which many people have been much alarmed, instead of diminishing, increases the security of the public. In general, if any branch or any division of labor be advantageous to the public, the freer and more general the competition, it will always be the more so.”—Pol. 1, pages 498, '9. This, said Mr. B., is the answer of Dr. Smith; and if it does not constitute him a paper-system man, there is certainly no virtue in language, and no power in words. He is for the Bank of England, he is for joint stock banks, he is for individual bankers, and he is for making the banking trade, on condition of issuing no notes under £5, and promising to pay them on demand, as free as any other trade in the country; and he thinks the greater the number of banks, the greater the security of the public. He is for a currency, four parts paper and one part gold; and he is in favor of exporting every four guineas out of five, and of supplying the place of the exported gold by paper money issued by the Bank of England, by joint stock companies, by individual bankers, and by any person that chooses to issue paper, and promises to pay it on demand in gold, and agrees not to issue any note below £5. This is his system; a paper system out and out, and without one mitigating feature in it except the £5 limit, which to us looks like a restriction, but was in reality an enlargement of the banking privilege; for at the time that Dr. Smith wrote, above fifty years ago, the Bank of England issued no note of less denomination than £10. This is the sytsem of Dr. Smith; a system that has blown up in England three times in twenty-five years; which is now upon the eve of another catastrophe, and requiring and receiving the interposition of the British Government to save it; which is now in all that concerns banks of issue, except the issues of the Bank of England, condemned even by his own political school in England; and which system, brought into our country by General Hamilton, above forty years ago, maintaining a struggle with our institutions ever since, it is now proposed to fasten upon the Federal Government by law. Mr. B. proceeded to other objections to the committee's bill. It gave the Secretary of the Treasury, in the SENATE.] first section, a boundless discretion to do what he thought necessary to effect the collection of the revenues in the currencies specified in the section; and it gave him, in the second section, a supervisory power and control over the receivability of all local bank paper; and it gave him, in the proviso to that section, a power to punish any deposite bank which should refuse to receive and pass, as cash, to the credit of the United States, the notes “receivable” under that act, and received in the ordinary course of its business, on general deposite. This was a power which he did not wish to see any Secretary of the Treasury possess. He did not wish to see any one vested with power to operate upon the hopes and fears of a thousand banks; nor did he wish to see a thousand banks investcd with claims, and placed in a position to operate upon the hopes and fears of any Secretary. He did not wish to see the members of Congress, who possessed an interest or took an interest in local banks, marching in columns upon the Treasury secretary, and soliciting him to admit the banks which they represented to be admitted to the favor of surnishing a national currency for the Federal Government. such things gave a Secretary too much power over banks and members, or they might give the banks and the members too much power over him. . Mr. B. was the fricnd of the new administration; had assisted to create it, and, of course, had confidence in it; but he objected to vesting it with this extraordinary power. He wanted law, and not executive or departmental grace or discretion, for the tenure of his rights. Wherever law could be applied, he wanted it applied. This was a case in which it could be applied. It was a case in which it was easy to apply it. It was only to let the old statues, and the constitution, remain in force, and follow out the policy of President Jackson, and gold and silver would remain the sole currency for the receipts and expenditures of the Federal Government. Besides his objections to the power which this bill would give to the Secretary, he should be sorry personally to see any friend of his subjected to the exercise of that power. He had seen Mr. Crawford subjected to the exercise of a small part of it; and he had seen him assailed, defamed, vilified and persecuted, on account of the manner in which he had exercised that power, when he was certain that no man could act with more honesty, impartrality, and patriotism, than he had done. Mr. B. objected to the bill, for want of certainty in the kind of money which was to be received in the land offices. The whole question was left afloat. Nothing was fixed; nothing was stationary. What was land-office money to-day might not be so to-morrow. The orders for the reception and rejection of different paper, or the same paper, might vary from day to day. A farmer hears that the notes of a particular bank are receiva

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ble; he supplies himself with those notes, and goes to

the office. When he gets there, he may meet an order to exclude them; and then be turned over to a money dealer to furnish himself with other notes, no better than those he had, but at a cost of five, ten, or fifteen per cent. to him to effect the exchange. Far better would it be for the farmers and settlers to have the permanency and uniformity of gold and silver only for land-office payments; then they would always know what they had to rely upon, and would be free from disappointments and impositions. Mr. B, further objected to the receivability of paper money at the land offices, on account of the advantages which it gave to bankers and their favorites Over the rest of the community. To a banker, or his favorite, it was pretly immaterial whether he gave a quire or a ream-a handfull, or an armfull–of his paper, for a parcel of land; and whether this paper was speckled over with figures for five dollars of fifty dollar.'.

Treasury Circular.

[JAN. 27, 1837. hundred dollars. It was all pretty much the same thing to him. To a farmer, however, who had to give labor, or produce, or property, for every dollar he obtained, it was quite another affair; and it was impossible for him to stand the competition with the man of quires, with his machine to impress letters and figures, for as many dollars as he pleased, on the little oblong slips of paper which constituted bank notes. It was a shame in the Government to put the farmer in competition with such wholesale manufacturers of paper dollars. Mr. B. further objected to this bill, because its tendency was to inundate the new States with strange and unknown bank paper. In the new States, whatever was land-office money was current money. It was current, not only at the land office, but in every place, and all over the State. It was a Government endorsement, which gave credit to the whole issue of the bank. Taking advantage of this, it was quite usual for enterprising banks to get their paper made receivable in the land offices; then go to the new States, and lay out immense quantities of it in the purchase of produce, or property; and then leave it to be shaved out of the hands of the people when it ceased to be land-office money, or when specie was wanted for it. Finally, Mr. B. objected, totally, to the idea of continuing to receive paper money for the dues of the Federal Government. This bill was intended to be a permanent law; there was no limitation of time in it. It was intended to continue paper money forever as the currency of the Federal Government. There was no longer any plea of necessity to justify such a gross departure from the constitution. it is not now as it was in 1816, when the joint resolution of that year was passed. Then there was less specie in the country than ever was known; now there is more than ever was known. The joint resolution of 1816 was a great advance upon the existing state of things at that time; the same resolution would be a retrograde movement, and a great falling back, at the present day. We have now near eighty millions of specie. The Secretary of the Treasury computed it at seventy-three millions two months ago, and it has been increasing ever since. A New Orleans paper computes it at eighty millions. Say the amount is seventy: five millions; that sum is far beyond any possible demand that the collection of the revenues in specie could create: On this point, Mr. B. spoke with data in his hand, and could demonstrate and prove up what he said. He had two different data to go upon, either of which would be sufficient, and both of which, together, would be conclusive. First, as to the amount of money which it requires to effect a given amount of payments in transacting the business of the country. Every body knows that it does not require an amount of money e qual to the whole amount of annual payments, to make those payments. This might be the case if every creditor ate all the money which he received; but as he does not eat it, but pays it over to somebody else, it follows that the same piece of money performs many payments in the course of the year; and, consequently, that a sum far below the amount of annual payments will be sufficient to effect all those payments. A proportionate sus:ply, then, is all that is wanted; and that proportion is fixed by political economists at the one tenth. Thus, annual payments to the amount of ten millions may be effected by means of one million; and so on in the same proportion, for any amount. Upon this data it would require but a small part of our seventy odd mil: lions to effect all the annual payments to the Federal Government. Then, try another data. Take the experience of the Bank of the United States. During the time that that bank was the fiscal agent of the Government, nothing was received by the Federal Government but its own notes and silver, for there was then no gold

Jas. 27, 1837.]

in circulation. The amount of United States Bank notes in circulation, though pushed up a few times to twenty odd millions, were generally below twenty; but take that for the average, and add the silver, which was computed in 1832, by the Senator from Massachusetts, [Mr. Websten, lin the debate on the renewal of the bank charter, at from twenty to twenty-two millions; put these two sums together, and you have about forty millions, or little more than half the gold and silver now in the country. Here, again, the result is satisfactory, and shows that we have more than enough for this purpose. But there is still a third way to arrive at the same result. It is by looking to the actual amount that will be required for the great sources of Government demand—iands, customs, and Post office. The lands, whether sales are restricted to settlers, or limited to hard-money payments, which would itself be a restriction of sales to settlers, it is certain not more than five or six millions of dollars' worth would be sold; and, as the Government would not eat these five or six millions, but pay them back as fast * received, it would follow that a part only of it would be sufficient to make the whole payment. Then, as to the customs; they may amount to about twenty millions, but would, in reality, require but little specie; for the payments through the customs are seldom made by counting money, but by a transfer of credit on the books of a bank. An order to pay the customs in hard money would make very little difference in the payments as now made. This, every merchant and business man fully understands. Next, as to the Post office; here the *ceipts are upwards of four millions per annum; but the Postmaster General does not eat the money, but pays it out immediately, and sends it back into the mass of circulation, in payment for services rendered to the DePartment by contractors, agents, deputy postmasters, &c., who immediately disburse it among the community.

Finally, Mr. B. had positive proof that, so far as the lands were concerned, and that was the main point, there was specie enough to answer the demand. He would read a letter from the chief clerk in a land office which is selling more land than any office in the Union, and which would be conclusive on the wisdom, Justice, and necessity, of the Treasury circular. It *me to him yesterday, unsolicited by him, and was delivered through the hands of the Senator from Michigan who sits farthest on the other side of the chamber, [Mr. Pro*,] and who, as well as his colleague, [Mr. Nonvill,) |. rejoiced to see in the seats to which they had been so ; entitled, and from which they had been so long de.." He rejoiced that Michigan was at last released jo the position of a stranger at the gate, cooling her o o the door of the Capitol, while she had a right o ;: within it. As a Missourian, he could feel to i. o: for it was the fortune of Missouri to have whole .." cool her heels, in the same manner, for a th winter, before she could be admitted. Mr. B.

*" read the following extract from the letter:

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i. am chief clerk in the land office at Kalamazoo, where land, during the year 1836, has been sold to the *"ount of $3,050,000, being one tenth of the aggregate o: of all the land offices in the United States—sixty{.. #:'." in number. The great business done at "... . o afforded signal opportunities for observaur . i. e expediency and consequences of the Treaslo. ircular. we are all convinced of the wisdom of ****ure, and it is but just that we should endeavor to on its propriety by our testimony. The public lands were fast falling into the hands of speculating bankers. We have seen a president of one of the banks in Massachusetts Visit Rajoth blook ** in the sheet; and we have seen that same president Vol. XIII.—33

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were taken as equivalent. This instance was merely e pluribus. This wholesale speculation has been estopped by the specie circular. The land is sought after with the same avidity since as before the issue of that order, but by a very different set of purchasers. The actual cultivators of the soil are now selecting farms, which, so soon as entered, they begin to clear, fence, and improve. I am writing this on the 10th of January, 1837; and, at this very time, the office is thronged with hardhanded yeomen from the far East, who have come to settle amongst us in the far West. Nine tenths of the lots now entered are for those who intend to work thern; and the ‘accustomed’ faces of land speculators, which continually haunted the office, have vanished. It is not my business, when so many sagacious statesmen are cogitating it, to offer any opinion as to the constitutionality or unconstitutionality of the specie circular, but I merely venture to set forth its consequences, as daily exhibited to our eyes. “REGISTER’s Office, Kalamazoo, Mich., Jan. 10, 1837.

Mr. B. said this letter had been written nearly a month after the order had gone into effect for the total exclusion of paper money from the land offices. , it annihilated all the speeches against that order, made and to be made on this floor. It vindicated the Treasury order in all its practical bearings, and under all its practical as: pects. He wished to have had answers from all the land affices on these points; and the Senate, at his motion, had instructed the Committee on Public Lands to address to them the proper interrogatories. The committee chose to report a bili without seeking the information. They did more; they chose to send to a committee, of which he was a member, the same motion for interrogatories, after they had reported. This might look like a good joke. It was like saying, “We will report the bill, and pass it, and he may carry on the examinations afterwards;” a sort of of ea post facto or post mortem examination not common in legislation. Very well, said Mr. B. The examinations will go on; and although the proofs will not be here in time to prevent the passage of this bill, yet they may come in time to convince the country that it ought never to have been passed! Mr. B. returned to the amount of specie in the country, and its sufficiency to meet the collections of the Federal Government. He said it was more than sufficient, far more. Put all the collections together, lands, customs, and Post Office, and the whole will not amount to one half of the specie in the country. Where, then, is the pretext for saying there is not specie enough for the receipts and expenditures of the Federal Goyernment? The fact is that this Government will not require enough to exercise a sufficient influence over the moneyed system of the Union. Auxiliary means, as the suppression of notes under twenty dollars through the deposite banks, a supervision over the amount of their specie, and prompt settlements with all the banks whose notes they take, will have to be resorted to. The federal collections alone will not be sufficient; and in this the Senator from Kentucky [Mr. Clay) was perfectly right, a few days ago, when he took this very point as an objection to the ability of the Federal Government to regulate the currency through its collections of revenue. He was right in the objection, and Mr. Gallatin, who made it before him, was right in the same objection! Specie collections alone will not be sufficient; but they will do a great deal towards it, and, with the aid of auxiliary measures, will accomplish it. Let it not be forgotof that the whole skill and the whole power of the Bank of the United States, in her boasted services of

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regulating the local banks, were limited to two simple and obvious measures: first, to receive the notes of no bank in payment of federal dues, unless it was situated in the same town or city which contained her branch; second, to return the notes of all the local banks which she received, for immediate settlement and payment. This is what the Bank of the United States did. Let us also exclude local paper, require prompt settlements between our deposite banks and other banks, enforce the provision in the deposite act, which is a supervision over the amount of specie in the deposite banks, and suppress notes under twenty dollars. Mr. B. said now was the time for the Government to act as the Senator from Massachusetts [Mr. W E B stris) urged it to act in 1816. This was his language at that time: “If Congress were to pass forty statutes on the subject, he said, they would not make the law more conclusive than it now was, that nothing should be received in payment of duties to the Government but specie; and yet no regard was paid to the imperative injunctions of the law in this respect. Government, he was of opinion, ought to be put forth to compel the payment of the duties and taxes to the Government in the legal currency of the country.” Mr. B. was free to declare that he concurred fully in the sentiments just quoted, that forty statutes could not make the law in favor of specie payments stronger than it was, and that the whole power of the Government ought to be exerted, to compel the collection of the revenues in the constitutional currency. The commencement of operations by the three new branch mints was the latest moment, in his opinion, at which universal hardmoney payments to and from the Federal Government ought to be delayed. He concurred in the sentiments quoted, and would now quote other sentiments delivered by the same gentleman, at the same time, and, without fully concurring in them, he would claim the advantage of them on this occasion, when the whole tenor of the bill before us, and especially the proviso, goes to change this Federal Government from a hard-money to a papermoney Government, and to surrender the federal Treasury to the general reception of State and local bank notes. “Congress can alone coin money; Congress can alone fix the value of foreign coins. No State can coin money; no State can fix the value of foreign coins; no State, not even Congress itself, can make any thing a tender but gold and silver in the payment of debts; no state can emit bills of credit. The exclusive power of regulating the metallic currency of the country would seem to imply, or, more properly, to include, as part of itself, a power to decide how far that currency should be exclusive, how far any substitute should interfere with it, and what that substitute should be. The generality and extent of the power granted to Congress, and the clear and well-defined prohibitions on the States, leave little doubt of an intent to rescue the whole subject of currency from the hands of local legislation, and to confer it on the General Government. But, notwithstanding this apparent purpose in the constitution, the truth is that the currency of the country is now, to a very great extent, practically and effectually, under the control of the several State Governments; if it be not more correct to say that it is under the control of the banking institutions created by the States; for the States seem first to have taken possession of the power, and then to bave delegated it, Whether the States can constitutionally exercise this power, or delegate it to others, is a point which I do not intend, at present, either to concede or to argue. It is much to be hoped that no coorsy on the point may ever become necessary.” Mr. B: quoted these sentiments for the purpose of invoking the aid of their author in rescuing the currency of

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the federal constitution from the control which this bill, and especially the proviso to the second section, gives to the banking institutions of the several States over it; a control which will enable them to expel that currency from the country, and to enthrone their own in its place.

Mr. B. said that this bill, though in its terms a general measure, and professing to act only on coming events, yet was, in reality, a measure rescinding the Treasury order of July last; and, as such, was greeted and saluted by the friends of the recision on this floor. They openly celebrate the advent of the bill as the triumph of their movement, and announce its passage as a welcome victory. This may be. They may carry the bill, but they cannot carry the argument. They may rescind the or. der, but they cannot verify Mr. Biddle's prediction of the distress it was to create, nor invalidate President Jackson's statement of the good it had produced. In the month of November, Mr. Biddle predicted a world of wo—all to take place by the time that Congress met, and all to result from the Treasury order, and the man. ner of executing the deposite act—“intense pecuniary distress; derangement of exchanges; loss of confidence; destruction of the public prosperity; scarcity of money; fall of prices; ruin of the currency;” and he averred that the instant repeal of the Treasiry order, under the command of Congress, if the Secretary would not do it voluntarily, would restore confidence in twenty-four hours, and put an end to all this mass of wo in twenty: four days. On the other hand, the President informed us, in his annual message, that the same Treasury order had produced many salutary consequences. He says it has checked the career of the Western banks, and given them additional strength to meet approaching difficulties; that it has cut off the means of speculation in the public lands; that it has saved the new States from the evils of a non-resident proprietorship; that it has kept open the public lands to the entry of cultivators, and saved them from competition with those who are favored with bank facilities; that it has caused gold and silver to flow into the new States, and placed the business of the whole country on a safer and more solid basis. This is the representation of the President; and which is the true picture? his statement, or Mr. Biddle's prediction’ Surely the state of the country will answer the question! Certainly the personal knowledge of every individual will enable him to answer it! The whole prediction for the panic and pressure has failed! the edict for the distress has failed! It was to no purpose that the distress was commenced at several places; that many presses, and several speakers on this floor, announced and proclaimed it. The seventy odd millions of hard money which had been brought into the country was death to the operation; and, after a few vain efforts to renew the scenes of 1833, after a few abortive demonstrations to alarm the public, the whole contrivance was abandoned, or, rather, the performance was postponed; for it is nev. er to be forgotten that panic and pressure is part of the permanent system of the denationalized national bank, and will be brought to bear, whenever opportunity will permit, until it shall be proved to the people that they cannot live without a national bank. The edict for the distress, then, has failed; and the failure of that scheme is itself the proof of the truth of President Jackson's statement of the good effects of the order. That order has been attended by every good effect which he has mentioned, and this is universally known in the West, and is proved negatively by the total absence of all com: plaint from that quarter. Nobody in the new States complains to us; no one in the new States sends here to demand the recision of the order. That demand comes from Philadelphia, where there are no public lands from Kentucky, where there are none; from Ohio, where there are next to none; and from members on The letter from the clerk in the land office at Kalamazoo covers the whole ground, and proves the wisdom, the beneficence, and the necessity, of that order. The diminution of the sales after the issuing of the order is a further proof to the same effect. Before the sales, that is to say, in the months of May and June, two months in which the amount of sales should have been least, they amounted to the sum of six millions and a quarter; the months of October and November, the two months in which the sales should have been greatest, the amount was three millions one hundred thousand. The month of December, though the returns are not complete, shows a still further decline; and if gentlemen bad patience to wait for the returns of January, the first month in which the order had full effect, they would, no doubt, find it bringing down the sales to a moderate amount, and effecting a diminution of income, from that source of revenue, to as small a degree as could be desired, and in a manner the most simple, the most regular, the most effectual, and the most satisfactory that can be devised by the wit of man. Every good consequence stated by the President had resulted from the operation of the order; and the evidence of this was too public and notorious to require illustration, or to admit of enumeration. But there was one point of his statement which was an exception to this remark, and on which it would be profitable to go into some detail; for it concerned not only the lands, but the far more important subject of the currency itself; he alluded to that part of the President's message in which he stated that this order had checked the career of the Western banks, and compelled them to strengthen themselves against the revulsions consequent upon every expansion of the bank issues. This was true to a degree of which no one had a conception but those who had access to a knowledge of the condition of all the barks, and who availed themselves of that right of access to examine into the condition of these banks, and to compare that condition with the approved principles of what is considered safe and sound banking. Mr. B. said that, among those things which were considered as settled in the science and mystery of banking, there was one principle which required the immediate means of the bank to bear a certain proportion to its immediate liabilities; below which proportion it was not safe for the bank to descend. The immediate means of the bank are its specie on hand; its immediate liabilities are the circulation and the deposites; and the proportion which these ought to bear to each other has been fixed, at the Bank of England, after an experience of one hundred and forty years, at the one third, Mr. B. deemed the verification of this principle so material that * deserved to be proved as well as stated. He would therefore produce the sworn testimony on this point taken, before Lord Althorp's committee in 1832, and should confine himself to the evidence of the governor of the bank and one of its directors. The testimony of Mr. Horsley Palmer, the governor of the bank, is this: “The average proportion, as already observed, of coin and bullion which the bank thinks it prudent to keep on hand, is at the rate of a third of the total amount of all or liabilities, including deposites as well as issues.” Mr. George Ward Noeman, a director of the bank, *tates the same thing in a different form of words. He says: “For a full state of the circulation and the de

OF DEBATES IN CONG Iti.S.S. 598 Jas. 27, 1837.) Treasury Circular. [SENATE. this floor, who are backed by no memorials from home. largest, and amongst the oldest in the world. It might

Posites, say twenty-one millions of notes and six millions

of deposites, making in the whole twenty-seven millions of liabilities, the proper sum in coin and bullion for the bank to retain is nine millions.” Thus, the average Proportion of one third between the specie on hand and the circulotion and deposites, must be considered as an

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be well also to remark that the same proportion, very nearly, prevailed in the Bank of the United States at the time of the removal of the deposites in October, 1833; it was, of specie on hand, $10,663,441; of circulation and deposites, $37,105,465; being at the rate of between one third and one fourth of specie in hand for immediate liabilities. The proportion of about one third being then established as the principle of safety in banking, let us apply that principle to some of our Western deposite banks in July last, to sée what was their condition at that time; and in November, to see whether that condition was improved, as stated by the President.

Branch of the State Bank of Alabama, at Mobile.

Specie, Circulation and deposites. July, - $278,761 - $4,984,210 November, - 282,915 - 4,343,680

Commercial Bank of New Orleans.

July, - $207,698 - $3,306,105
November, - 389,192 - 2,770,435
..?gricultural Bank of Mississippi.
July, - $107,951 - $3,476,000
November, - 462,896 - 2,752,000
Union Bank of Tennessee and branches.
July, - $87,106 - $3,520,000
November, - 121,054 - 3,106,000
Franklin Bank of Cincinnati.
July, - $179,558 - $1,627,000
November, - 246,570 - 1,272,000
Bank of Michigan, at Detroit.
July, - $78,214 - $3,461,000
November, - 326,635 - 2,336,000
Farmers and Mechanics' Bank, Michigan.
July, - $67, 184 - $1,954,000
November, - 69,954 . . 713,000

Mr. B. said such was the condition of some of the Western deposite banks in July last, and such their condition in November; very far below the Bank of England standard at both periods, but greatly improved by the operation of the specie order, and doubtless much more improved by its continued operation to this time. There were many others of these banks also salling far below the Bank of England standard in July and No. vember, and still below it. Mr. B. was ready to admit, what every business man must understand, that all these banks have a list of debts, and of bills of exchange, falling due from day to day, and amounting in the aggregate to more than all their liabilities; but he must be permitted to remark, that the Bank of England also has her list of debtors, and that nearly the whole of these debtors are in the city of London, within thirty minutes' run of the bank; that she is situated in the moneyed metropolis of the universe; that she is supported by the richest and most numerous body of merchants upon the earth, and backed by the whole power of the British Government, which stands her security for seventy millions of dollars, and lends her exchequer bills to the amount of millions, and increases their interest to facili. tate their sale when necessary; and that, with all these resources, such as no bank in our America can pretend to, she yet deems it necessary to have always on hand, in coin and bullion, the one third of the amount of her circulation and deposites. Wha', then, must be thought of the condition of some of the banks referred to, and others which might be referred to, in July last? Instead of one third specie in hand to meet their immediate lia. bilities, the actual proportion in hand was the one twentieth, the one thirtieth, the one fortieth, and the

established Principle at that bank, which is quite the one fiftieth! Mr. B. said it was beyond all human doubt,

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