SENATE.] Treasury Circular. months ago, and all subsequent events confirmed him in their correctness? Some of our deposite banks have got into far worse condition since that time; many of them were running a wild and mad career, when the Treasury circular checked their course. There are many whose condition is good, having a large amount of specie; several above half a million; some above a million; one a million and a half. On the other hand, there are some whose specie demonstration makes, indeed, a sorry figure; there were above a dozen of them whose specie, even in November, ranged downwards through a regular and gradual descent, from the small sum of twenty-five thousand dollars, to the far smaller sum of two thousand five hundred and ninety-six dollars and ninety-two cents! The Treasury order was intended to improve this condition of things, and has improved them; and if let alone, or, still better, if specie payments are made universal in all the receipts and disbursements of the Federal Govcrnment, they will go on to improve, and may be able to ride out the storm which every discerning mind must see ahead. Mr. B. thought not only the condition of many of the deposite banks needed improvement, but that the deposite act itself needed amendment. He was for limiting the deposites to banks of strength and character; such as kept, at least, average supplies of a quarter of a million of specie; he was for prescribing the conditions proposed by the President of the Manhattan Bank, for the suppression of notes under twenty dollars; he was in favor of fixing the proportion between their specie on hand and their liabilities in circulation and deposites, and fixing it at the proportion required at the Bank of England; he was for requiring from them weekly settlements, at least, with all the banks whose paper they received, and the prompt liquidation of all balances in specie, and a part payment of all demands in gold. In return for these requisitions, he would be willing to be as liberal as the public interest wou'd admit, and to remit the interest which was now exacted on deposites. Mr. B. said a question had been raised on this floor as to the honor of originating the first movements against the small-note currency; and the Senator from Kentuc ky [Mr. CLAY] who had moved that question here, had claimed it for the Senator from Massachusetts, [Mr. WEBSTER] and this was in conformity to Mr. Biddle's letter of November last, who claimed the same honor for the Bank of the United States and its friends. Mr. B. should never have thought it worth the time of the Senate to examine into the paternity of this little honor; he had not, in his former speech, stopped the current of debate to examine into the justice of the same claim, as set up by the President of the Bank of the United States; but since the question had been raised on this floor, it might be as well to devote a moment to the settlement of the affair, according to the right of the case and the evidence of the record. Suum cuique tribuito-let every one have his own--was a fair maxim at all times, and might find a fair occasion for its application at the present time. He remembered the whole history of the movements against the small-note currency, and in looking over the journals of the Senate and the Register of Debates, he found his recollection confirmed in every particular. The first speech made in the Senate upon the subject was made by himself; it was on the 20th of January, 1832, and on his resolution to suppress the issue of the branch bank drafts issued by the branches of the Bank of the United States. Among other objections to those drafts were these: that they were mostly issued for small sums, five and ten dollars, and thus usurped the place of gold and silver, which was carried off from the States to Philadelphia, and thence exported to foreign countries; and also that they filled the country with counterfeits; the five and ten dollar drafts being [JAN. 27, 1837. those which offered the greatest inducements for coun- The Register then goes on: "Mr. Webster said a few words in defence of his second amendment, which imposed no restriction until after the expiration of the present charter. The effect of his proposition would be to introduce more specie into circulation, and to banish the small notes, with which the country is inundated. He moved to fill the blank with ten dollars; but expressed his willingness to vote for a higher restriction, if any Senator should move it. He Mr. Benton would propose twenty dollars. wished the basis of circulation throughout the country to be in hard money. Farmers, laborers, and market people, ought to receive their payments in hard money. They ought not to be put to the risk of receiving bank notes in all their small dealings. They are no judges of good or bad notes. Counterfeits are sure to fall upon their hands; and the whole business of counterfeiting was mainly directed to such notes as they handle--those under twenty dollars." Mr. B. said the Register further showed that Messrs. Foot, Smith of Maryland, Clay, and Chambers, expressed their sentiments on the proposition, and against the twenty-dollar limit; but that, on taking the question, the blank was filled with twenty dollars, and the amendment proposed by the Senator from Massachusetts, thus shaped, was concurred in. Mr. B. said it was apparent, from this history of the first attempt made in the Senate to introduce the twenty-dollar limit on the minimum is sues of bank, that he himself was the mover of it; but lie was free to say that, without the aid of the Senator from Massachusetts, [Mr. WEBSTER,] the limit would not have been introduced. He remembered the gentle. man's speech very well, and his quotation from Mr. Canning, and could repeat the whole now from memory, much more fully and correctly than he now found it in the Register. So far so good, said Mr. B. The Senator from Missouri and the Senator from Massachusetts were for once found together in a vote which concerned the Bank of the United States; but they did not long remain together! It was in quasi committee that the twenty-dollar limit was proposed and adopted. When the amendment came to be considered in the Senate, the Senator from Massachusetts dissented! and the pro hibition to issue notes below twenty dollars was diluted into an authority, reserved by Congress, to impose a re striction to that effect, after the 3d day of March, in the year 1836! and thus it now stands on the journal of the Senate, in the bill of recharter vetoed by the President! The restriction voted on the 28th of May was, a few days thereafter, metamorphosed into a reservation of authority to impose a future restriction-a change which Mr. B. considered as defeat and mockery-for he knew full well that wherever a bank was strong enough beforehand to prevent a limitation upon its issues from being prescribed as a condition, it will be sure to be strong enough, after it gets the charter, to prevent the same limitation from being imposed as a restriction. [SENATE. lars; and, also, to promote the circulation of gold, by paying all the currency issued by it in gold and silver; the proportion of each at present according to the best ability of the bank, and eventually one half of each, the demander to have the option of one half of either metal, and the bank the other half." Laid on the table, on the motion of Mr. Mangum. He also read from the journal of the session of 1835-'6 a set of instructions for amending the charters for the banks in the District of Columbia, of which the fourth instruction was this: "The banks to issue no notes of less denomination than twenty dollars; and all notes below that denomination, issued by other banks, to be prohibited from circulation within the District;" which was rejected by the Senate-10 yeas, 28 nays. He also referred to the twenty-dollar limit on payments from the Government, which he moved at the last session, and which, in a modified form, was adopted; and he referred to a bill which he had introduced at the last session of Congress, to re-establish the currency of the constitution for the Federal Government;" and alluded to his constant efforts to limit, restrain, and circumscribe, the circle of paper circulation, and to extend and increase that of the gold and silver circulation. Mr. B. had thus corrected the error of the Senator from Kentucky, [Mr. CLAY,] in claiming the paternity of the first movement for the twenty-dollar limit on the floor. In the correction of that error, he had to exhibit himself as the author of the movement; but he attached but little consequence to priority of movement on such a subject, or on any subject. It was the gift of continuance which he valued. It was the faculty of holding on which he loved. It was the Cynegiras stick-to-it which he admired; that sticking to it which lays hold with the right hand, and when that is cut off, lays hold with the left; and when that is cut off, lays hold with the teeth, and hangs on by the teeth until the head is cut off. This is what he called the gift of continuance, and which he valued above all gifts. The Senator from MassachuBetts (Mr. WEBSTER] did not seem to have been endow ed with this gift in respect to this twenty-dollar limit. His speech, indeed, was good; his first vote was good; but his second was bad, for it nullified the first; and his speech had never been backed by another. On the other hand, he (Mr. B.) must be allowed to say that be had himself shown a little of the Cynegiras blood in relation to this limit. He began it five years ago, and had been sticking to it ever since. In Congress and out of Congress, in season and out of season, he had been still harping upon these small notes. Not to worry the Senate with tedious recitals, and yet to vindicate his adhe sion, and to make good, at least, a continued claim to this work, he would refer to a few of the evidences which attested the fidelity of his exertions to accomplish this object. Mr. B. then read from the Senate journal, as follows: Wednesday, April 9, 1834, the following motion, sub-currency; 2. To make gold and silver the common curmitted by Mr. Benton, was considered: "Resolved, That a committee be appointed on the part of the Senate, jointly with such committee as may be appointed on the part of the House of Representatives, to consider and report to the Senate and to the House, respectively, what alterations, if any, are necessary to be made: "1. In the value of the gold coined at the mint of the United States, so as to check the exportation of that coin, and to restore it to circulation in the United States. "2. In the laws relative to foreign coins, so as to restore the gold and silver coin of foreign nations to their former circulation within the United States. 3. In the joint resolution of 1816, (for the better collection of the revenues,) so as to exclude all bank notes under twenty dollars from revenue payments after a given period, and to make the revenue system of the United States instrumental in the gradual suppression of the small-note circulation, and the introduction of gold and silver for the common currency of the country. "On motion of Mr. King of Alabama, "Ordered, That the said resolution be laid on the table" Mr. B. also read from the journal of the same session a resolution submitted by him, as follows: "That the President of the United States be requested to cause inquiries to be made of the deposite banks, and of other banks of good credit, to ascertain when any of said banks, in consideration of being made or continued depositories of the public money, will agree to enter into arrangements to discontinue the use and circulation of all paper currency of less denomination than twenty dol Mr. B. said there were many other motions on the journals to the same effect; but he would not consume time in reading them. Much less would he read from his speeches, running through a period of five years, and dwelling so much on this particular point. He would only refer to one of these speeches, the one on the District banks, of the last session, in which the reasons for suppressing the small-note currency were largely gone into. He would read a paragraph only, to show the heads of the argument which he then used: "Mr. B. said that the proposed limit of twenty dollars for the minimum size of bank notes was not an arbitrary assumption, or a fanciful designation, but was a limit ascertained by experience, and proven by results, to be the lowest that would suffice to accomplish the ends intended. These ends are: 1. To re-establish the gold rency for all the small dealings of the country; 3. To extend and enlarge the specie basis of the paper circulation; 4. To save the laboring and small dealing part of the community from the effects of contractions and expansions from bank issues; 5. To save them from the impositions of counterfeiters, from losses when banks fail, and from bearing the whole burden of the wear and tear of small notes; 6. To save hard money enongh in the country to make it safe to have such paper currency as commerce and large dealings may require. These are the objects to be accomplished, and less than twenty dollars will have no adequate effect; far better would be the limit of $100, as it is nearly in France, and where that limit insures a circulation of nine tenths gold and silver, and one tenth paper; namely, upwards of five hundred millions of dollars of one, and fifty millions of the other." From this brief but authentic history of the movements in this chamber against the small note currency, Mr. B. said it would be seen how fallacious was the claim set up by Mr. Biddle, in his panic letter of November last, to the honor of commencing these movements. So far from it, it was now established that it was the conduct of the Bank of the United States, in deluging the country with a small-note currency, and eviscerating the States of their specie, and exporting it to Europe, that caused him to move first upon the subject; and that that movement, after being apparently acquiesced in by the bank, to aid in getting the renewed charter, was defeated and made ridiculous by being diluted into a reserved authority to do afterwards what the bank would not permit to be done then, Mr. B. averred that it was the conduct of the Bank of the United States in inundating the States with small trash, in the shape of branch drafts, that first put him upon the idea of suppressing small notes. It showed him the evils of that circulation, and subsequent inquiries proved its extent. Subsequent inquiries showed that the Bank of the United States had abducted about forty-two millions of specie from the States, and exported it to foreign countries, leaving in the whole Union, at the time of the application for a recharter, in 1832, no more than twenty or twenty-two millions of specie. This was her conduct; and what has been the conduct of President Jackson's administration? It has been to increase that twenty millions, in about four years, to about eighty millions; and to do this against the constant and strenuous opposition of the Bank of the United States and all its friends. After this, what a power of face it requires in the president of the Bank of the United States to clain for that institution, and its friends, the honor of fighting down small notes, and fighting up gold and silver! But why go back to past events? The present are sufficient. Did not that bank obtain from Pennsylvania a charter to issue notes below twenty dol lars, namely: notes of ten dollars? And does she not daily and openly violate even this limitation by issuing notes and drafts of five dollars? ago. Mr. B. had felt himself forced into this episode upon the suppression of the small-note currency. It was the first time that he had troubled the Senate with a detail personal to himself, and hoped it would be the last. The suppression of small notes, though a novelty here, is an old operation elsewhere. In France, where paper money during the revolution was reduced to its smallest denominations, even to ten sous, he believed, all had been suppressed, as far back as the consulship of Bonaparte, under five hundred francs. In England, where one and two pound notes prevailed for above twenty years, a general suppression took place years About the year 1819 was the commencement of the great movement in E gland. It was then Mr. Canning cited the letter which Mr. Burke had written to him twenty years before, and from his deathbed. It was then also he delivered that sentiment, which was among the few which ever produced, in the British House of Commons, an expression of applause in the galleries; an applause which was elicited, not by the theatrical exhi bition of the orator, but by the sentiment of the statesman; and which was followed by a national effect all over the British empire. It was that sentiment in which Mr. Canning hoped that the day was at hand when every laborer, returning from his work at the end of the week, would feel the weight and bear the jingle of his wages in his breeches pocket; and it was this sentiment, taken up by the body of the people, and acted upon by them, which led to the immediate suppression of the one and two pound notes in several parts of England, and to their eventual suppression all over the empire. Mr. B. wished to point out to the Senate the great similitude which existed between the present state of things in our country, and that which existed about twenty years ago. There was instruction to be derived from the retrospect, and he would use the highest authority for the fidelity of the picture which he proposed to recall. He would have recourse to the highest offi. cial papers the messages of Presidents to Congress; and would read the parts which were applicable to his purpose. He read: Extract from President Madison's annual message at the meeting of Congress, the first Monday of December, 1816. "It has been estimated that, during the year 1816, the actual receipts of revenue at the Treasury, including [JAN. 27, 1837. the balance at the commencement of the year, and excluding the proceeds of loans and Treasury notes, will amount to about the sum of $47,000,000; that during the same year, the actual payments at the Treasury, including the payment of the arrearages of the War Department, as well as the payment of a considerable excess beyond the annual appropriations, will amount to about the sum of $38,000,000; and that, consequently, at the close of the year, there will be a surplus in the Treasury of about $9,000,000." Extract from President Monroe's annual message, the first Monday of December, 1817. "A considerable and rapid augmentation in the value of all the public lands, proceeding from these and other obvious causes, may, henceforward, be expected. * The public lands are a public stock, which ought to be disposed of to the best advantage for the nation. The nation should, therefore, derive the profit from the continual rise in their value." Extract from President Monroe's annual message, the third Monday in November, 1818. "The sale of the public lands during the year has of any former year; and there is just reason to expect a also greatly exceeded, both in quantity and price, that progressive improvement in that source of revenue." This is the picture for 1816-'17-'18; and a glowing one it is. The Treasury full and overflowing; forty seven millions of revenue in one year; thirty eight mil. hions paid out; nine millions of surplus on hand, public lands selling with unprecedented rapidity; the sales for 1818 being seventeen millions of dollars; which, in pro portion to the population, were larger sales than those of the last year, when twenty-five millions were received. prosperity still augmenting, and the President so elated At the end of the year 1818, this gorgeous picture of with the prospect of income fron the lands, that he ad vises their price to be raised from two dollars per acre, which was then the minimum, to a sum not stated in his message, but understood to be five dollars; and concludes with expressing his opinion that there was just reason for expecting a progressive improvement in the sales of these lands. Now, said Mr. B., let us resume our readings, and see what manner of picture is presented by the same President in the ensuing messages. He read: Extract from President Monroe's annual message at the meeting of Congress, December, 1819. "Although the pecuniary embarrassments which af fected various parts of the Union, during the latter part of the preceding year, have, during the present, been considerably augmented, and still continue to exist, the receipts into the Treasury to the 30th of September last have amounted to $19,000,000. The causes which have tended to diminish the public receipts could not fail to have a corresponding effect upon the revenue which has accrued upon imposts and tonnage during the first three quarters of the present year. * * The great reduction in the price of the principal articles of domestic grow h, which has occurred during the present year, and the consequent fall in the price of labor, apparently so favorable to the success of domes tic manufactures, have not shielded them against other causes adverse to their prosperity. The pecuniary em barrassments which have so deeply affected the commercial interests of the nation have been no less adverse to our manufacturing establishments in several sections of the banks have been constrained to make in order to the Union. The great reduction of the currency, which continue specie payments, and the vitiated character of it where such reductions have not been attempted, instead of placing within the reach of these establishments the pecuniary aid necessary to avail themselves of the JAN. 27, 1837.] Treasury Circular. [SENATE. ceptive, the illusive, the treacherous part, of this picture? and must not the other part, the sad and real sequel, inev advantages resulting from the reduction in the prices of the raw materials and labor, have compelled the banks to withdraw from them a portion of the capital bereto-itably follow? Mr. B. said it must follow, and went over fore advanced to them. That aid which has been refused by the banks has not been obtained from other sources, owing to the loss of individual confidence, from the frequent failures which have recently occurred in some of our principal commercial cities." And recommends encouragement to manufactures. Extract from President Monroe's annual message at the meeting of Congress, December, 1820. "The receipts into the Treasury from every source (including a loan of three millions) to the 30th of Sep-banking is now carried on in a more complex and crititember last, amount to $16,794,107; whilst the public expenditures to the same period amount to $16,871,534. The sum of three millions, authorized to be raised by loan, by act of the last session of Congress, has been ob tained on terms advantageous to the Government. It is proper to add, that there is now due to the Treasury, for the sale of the public lands, $22,996,545. In bring ing this subject to view, I consider it my duty to submit to Congress whether it may not be advisable to extend to the purchasers of these lands, in consideration of the unfavorable change which has occurred since the sales, a reasonable indulgence. It is known that the purchases were made when the price of every article had risen to its greatest height, and that the instalments are becoming due at a period of great depression. It is presumed that some plan may be devised by the wisdom of Congress, compatible with the public interest, which would afford great relief to these purchasers." What a change of language, (said Mr. B.) It looks like enchantment! and all to take place between the meeting of one session of Congress and the meeting of the next. What a change! No more forty-seven millions of income; no more surpluses; no more seventeen millions from public lands; no more propositions to raise their price; no more of all this glowing picture! But the income from customs fallen down to thirteen millions; the income from lands to less than one million; a loan of three millions authorized to carry on the Government; all the public expenditures cut down to the lowest point; universal distress; banks failing; currency deranged; prices depressed; manufactures sinking, and calling for a new tariff; relief to them recommended; the purchasers of the public lands twenty-three millions in debt to the Government, unable to pay, calling for relief, and relief recommended, and granted; the twenty-three millions of debt for lands either released, or payment deferred on extended credit; and the minimum price, instead of being raised to five dollars per acre, reduced to one dollar and twenty-five cents. Such was the change of picture which it was the fate of the same President to present in the short interval which elapsed between two sessions of Congress! and what is the instruction which we should derive from it? Certainly, that similar effects follow similar causes; and that the past should be a lesson and a warning for the future. We are now in the circumstances of 1816, '17, '18; over flowing Treasury, large surpluses, great sales of the public lands, the price of every thing high. And what made that state of things? Bank issues, bank expansions, bank loans, bank facilities! And what made the cruel reverse which took place in 1818-19 Contraction of bank issues, contraction of expansions, curtailment of loans, withdrawal of facilities, and the explosion of innumerable banks! The paper system, the paper system was the real and sole cause of the illusive and several reasons to show it to be more certain now than in 1818-'19. In the first place, there were three times more banks now than then, and increasing much faster now than they did then, and dealing in millions now for hundreds of thousands then. In the next place, there is now a great political party, confederated with a powerful moneyed institution, to produce derangements of the currency, and pecuniary distress in the country, and to lay it upon the Government, when no such party existed in 1816, 17, 18. In the third place, the business of cal form than formerly, by institutions using each other's notes as cash; issuing notes at one place payable at an o'her and a distant place, and entering into temporary and voluntary arrangements for keeping up the credit and circulation of their notes at places where payments which the present trade of banking is more dangerously of them are not exigible by law. These are points in exposed, and more critically situated, than it was twenty years ago. On the other hand, there are some safeguards now which did not exist then; first, the great amount of specie, now near eighty millions of dollars, which the wisdom of President Jackson's administration has accumulated in the country; secondly, the avoid. ance, thus far, of the error of former administrations in using local paper for a national currency; thirdly, the Treasury order of 11th July, 1836, which saved the Western banks last fall, and which it is the object of this bill to rescind and supersede. Two of these safeguards are in danger of being removed by law-the second and the third of them. The first will remove itself whenever the premium on foreign exchange rises to 104, (at which point it is profitable to export specie,) and that premium is now at near 10, and rising, and it will remove itself whenever the Federal Government, relapsing into the fatal error of receiving and paying out paper money, shall cease to create a home demand for the employment of gold and silver. The day of revulsion (said Mr. B.) may come sooner or later, and its effects may be more or less disastrous; but come it must, and disastrous, to some degree, it must be. The present bloat in the paper system cannot continue; the present depreciation of money, exemplified in the high price of every thing dependent upon the home market, cannot last. The revulsion will come, as surely as it did in 1819-'20. But it will come with force if the Treasury order is maintained, and if paper money shall be excluded from the federal Treasury. But, let these things go as they may, and let reckless or mischievous banks do what they please, there is still a refuge for the wise and good; there is still an ark of safety for every honest bank and for every prudent man; it is in the mass of gold and silver now in the country-the seventy odd millions which the wisdom of President Jackson's administration has accumulated--and by getting their share of which, all who are so disposed can take care of them selves. Sir, (said Mr. B.,) I have performed a duty to myself, not pleasant, but necessary. This bill is to be an era in our legislation and in our political history. It is to be a point upon which the future age will be thrown back, and from which future consequences will be traced. I separate myself from it; I wash my hands of it; I oppose it. I am one of those who promised gold, not paper. I promised the currency of the constitution, not the currency of corporations. I did not join in putdeceptive prosperity which, for a while, smiled treacher- ting down the Bank of the United States, to put up a ously upon the country, and was so suddenly followed by wilderness of local banks. I did not join in putting a sad and real distress. And are we not at this moment, down the paper currency of a national bank, to put and from the same cause, realizing the first part, the de-up a national paper currency of a thousand local banks. VOL. XIII.-39 SENATE.] Treasury Circular. [JAN. 27, 1837. I did not strike Cæsar, to make Anthony master of Parliament to authorize the Bank of England to issue Rome. APPENDIX. No. 1.-Extract from Debates in Congress. But, Mr. President, so important is this object, that I think that, far from diminishing, we ought rather to increase and multiply, our securities; and I am not prepared to say that, even with the continuance of the bank charter, and under its wisest administration, I regard the state of our currency as entirely safe. It is evident to me that the general paper circulation has been extended too far for the specie basis on which it rests. Our system, as a system, dispenses too far, in my judgment, with the use of gold and silver. Having learned the use of paper as a substitute, we use that substitute, I fear, too freely. It is true that our circulating paper is all redeemable in gold or silver. Legally speaking, it is all convertible into specie at the will of the holder. But a mere legal convertibility is not sufficient. There must be an actual, practical, never-ceasing convertibil ty. This, I think, is not, at present, sufficiently secured; and it is a matter that well deserves the serious consideration of the Senate. The paper circulation of the country is, at this time, probably 75 or 80,000,000 of dollars. Of specie we may have 20 or 22,000,000, and this, principally, in masses in the vaults of the banks. A circulation, consisting in so great a degree of paper, is casily expanded, to furnish temporary capital to such as wish to adventure on new enterprises in trade; and the collection in the banks of most of what specie there is in the country affords all possible facility for its exportatation. Hence, over-trading does frequently occur, and is always followed by an inconvenient, sometimes by a dangerous, reduction of specie. It is in vain that we look to the prudence of banks for an effectual security against over-trading. The directors of such institutions will generally go the length of their means in cashing good notes, and leave the borrower to judge for himself of the useful employment of his money. Nor would a competent security exist against over-trading, if the banks were to confine their discounts strictly to business paper, so denominated; that is, to notes and bills which represent real transactions, having been given and received on the actual purchase and sale of merchandise, because these transactions themselves may be too far extended. Men naturally have a good opinion of their own sagacity. He who believes merchandise is about to rise in price will purchase merchandise if he has money or can obtain credit. The fact of actual purchase, therefore, is not a proof of really subsisting want; and of course the amount of all purchases does not correspond always with the entire wants of the community. Too frequently it very much exceeds that measure. If, then, the discretion of the banks, exercised in deciding the amount of their dis counts, is not a proper security against overtrading; if facility in obtaining bank credits naturally fosters that spirit; if the desire of gain and love of enterprise constantly cherish it; and if it finds specie collected in the banks, inciting exportation, what is the remedy suited and adequate to Now, I think, sir, that a closer inquiry into the direct source of the evil will suggest a remedy. Why have we so small an amount of specie in circulation? Certainly the reason is, we do not require more. We have but to ask its presence, and it would return. But we voluntarily banish it, by the great amount of small bank notes. In most of the States, the banks issue notes of all low denominations, down even to a single dollar. How is it possible, under such circumstances, to retain specie in currency? All experience shows it to be impossible. The paper will take the place of the gold and silver. When Mr. Pitt, in the year 1797, proposed in the case? one-pound notes, Mr. Burke lay sick at Bath, of an illness from which he never recovered; and he is said to have written to the late Mr. Canning, "Tell Mr. Pitt, if he consents to the issuing of one-pound notes, he must never expect to see a guinea again." The one-pound notes were issued, and the guineas disappeared. A similar cause is now producing a precisely similar effect with us. Small notes have expelled | dollars and half dollars from circulation in all the States in which such notes are issued. On the other hand, dollars and half dollars abound in those States which have adopted a wiser policy. Virginia, Pennsylvania, Maryland, Louisiana, and some others, I think seven in all, do not allow their banks to issue notes under five dollars. Every traveller notices the difference, when he passes from one of these States into one where small notes are allowed. The evil, then, is the issuing of small notes by State banks. Of these notes, that is to say, notes under five dollars, the amount now in circulation is eight or ten millions of dollars. Can these notes be with. drawn? If they can, their place will be immediately supplied by a specie circulation of equal amount. The object is a great one, as it is connected with the safety and stability of the currency, and may well justify a serious reflection on the means of accomplishing it. May not Congress and the State Governments, acting, not unitedly, but severally, to the same end, easily and quietly attain it? I think they may. It is but for other States to follow the good example of those which I have mentioned, and the work is done. As an inducement to the States to do this, I propose, in the present bill, to reserve to Congress a power of withdrawing from circulation a pretty large part of the issues of the United States Bank. I propose this, so that the State banks may withdraw their small notes, and find their compensation in a lar ger circulation of a higher denomination. My proposi tion will be, that, at any time after the expiration of the existing charter of the bank, that is, after 1836, Congress may, if it see fit, restrain the bank from issuing for circulation notes or bills under a certain sum-say ten or twenty dollars. This will diminish the circulation, and consequently the profits of the bank; but it is of less importance to make a bank a highly profitable institution to stockholders, than that it should be safe and useful to the community. It ought not, certainly, to be restrained from the enjoyment of all the fair advantages to be derived from the discreet use of its capi tal, in banking transactions; but the leading object, after all, in its continuance, is, and ought to be, not private emolument, but public benefit. It may perhaps strike some gentlemen that the circu lation of small notes might be effectually discouraged, by refusing to receive all such small notes, and all notes of such banks as issued them, at the custom-houses, land offices, post offices, and other places of public receipt, and by causing them to be refused, also, either in payment or deposite at the Bank of the United States. But the effect of such refusal may be doubtful. It would certainly in some degree discredit such notes, but probably it would not drive them out of circulation altogether; and if it did not do this, it might increase their circulation. If in some degree they become discredited, they would become cheaper than other notes; and experience proves that of two things which may be current, the cheaper will always expel the other. Thus silver, because it is proportionally cheaper with us than gold, has driven the gold out of the country. Thus, as we can pay our debts cheaper in silver than in gold, we use nothing but silver, and the gold goes where it is more highly valued. The same thing always happens between two sorts of paper which are found at the same time in circulation. That which is cheapest, or of less value |