SENATE.] Treasury Circular. tion. But here, panics are the regular work of banks and politicians, and are now looked for whenever an important election is depending, or Congress is to be excited. 4. The expense of the paper system. --This was probably greater at present than the expenses of the Federal Government, and the whole a tax upon the productive classes. The number of banks was about one thousand; each bank had its officers, and they their salaries; each had its stockholders, and they their profits. Then came losses for broken banks, counterfeits, and depreciated paper, and changes in the value of property from expansions and contractions of the currency. These expenses and losses were the price paid by the people for a paper currency, when they can get constitutional currency from the mints, without paying salaries, furnishing profits, or sustaining losses, if paper was checked and confined to large notes. 5. Stock gambling, forgeries, banishment of all gold and silver, were all great evils inherent in the paper system, and too obvious to need, or even endure, commentary. Mr. B., therefore, barely named them, and left every one's knowledge and memory to do the rest. Mr. B. approached the conclusion of his remarks on this great subject. It was, indeed, a great subject, involving that momentous question, the national currency. The Treasury order was a measure of regulation upon the State banks, intended to save the finances and the currency, as well as the public lands. The bank of the United States regulated the State banks by the simple process of excluding their paper from the Federal receipts and expenditures; and this was effected by the 24th and 25th articles of the by-laws of the corporation a'ready read. She excluded them to make room for her own notes; and this was the extent of her skill and of her merit in all this boasted regulation of local currencies of which we hear so much. The Federal Government has only to do the same, and the State bank issues are repelled upon their sources, and become comparatively harmless. It is receivability for federal dues, it is receivability at the land offices, custom-houses, and post offices, which gives them wings to fly over the continent, and enables them to pass, without regard to the credit or solvency of the bank from which they come. It is the Federal Government endorsement which does the mischief; and this endorsement, for all the purposes of false credit and want of responsibility, is given to the whole issue of every bank whose paper is made receiv able for public dues. The experiment has been tried, and local paper has failed as a national currency, and out of that failure arose the second United States Bank. It will fail again, and again, and forever! There is no safety for the federal revenues but in the total exclusion of local paper, and that from every branch of the revenue--customs, lands, and post office. There is no safety for the national finances but in the constitutional medium of gold and silver. After forty years of wandering in the wilderness of paper money, we have approached the confines of the constitutional medium. Seventy-five millions of specie in the country, with the prospect of annual increase of ten or twelve millions for the next four years, three branch mints to commence next spring, and the complete restoration of the gold currency, announce the success of President Jackson's great measures for the reform of the currency, and vindicate the constitution from the libel of having prescribed an im practicable currency. The success is complete; and there is no way to thwart it, but to put down the Treas ury order, and to reopen the public lands to the inundation of paper money. Of this, it is not to be dissembled, there is great danger. Four deeply interested classes are at work to do it-speculators, local banks, United States Bank, and politicians out of power. They [DEC. 19, 1836. may succeed, but he (Mr. B.) would not despair. The darkest hour of night is just before the break of day; and, through the gloom ahead, he saw the bright vision of the constitutional currency erect, radiant, and victorious. Through regulation or explosion success must eventually come. If reform measures go on, gold and silver will be gradually and temperately restored; if reform measures are stopped, then the paper system runs riot, and explodes from its own expansion. Then the Bank of the United States will exult in the catastrophe, and claim its own re-establishment, as the only adequate regulator of the local banks. Then it will be said the specie experiment has failed! But no, the contrary will be known, that the specie experiment has not failed, but it was put down by the voice and power of the interested classes, and must be put up again by the voice and power of the disinterested community. Appendix to Mr. BENTON's speech on the rescinding resolution, containing proofs of several things stated in the speech. 1. That the banks themselves, by contractions and expansions of the currency, lead to fluctuations which affect the prices of produce and property, and beget panics. 1. Extract from the testimony of Joseph C. Dyer, Esq, director of the Bank of Manchester, taken before Lord Althorpe's committee: panics.""The bank has been the cause of the panics. "The Bank of England, the cause of fluctuations and Their manner of issuing and withdrawing the Bank of England paper produces those continued fluctuations, at short periods, which affect the prices in the market, and thereby affect trade. Those issues, sometimes in a single week, vary three or four millions. The bank may be necessitated to do so, but such a necessity is that of inflicting a great evil on the country. The returns of the weekly issues from the 28th of December, 1819, to the 4th of February, 1826, prove witness's statement. "The reason why it is necessary to make an alteration in the banking system of Lancashire, is that the circulation by the Bank of England subjects the trade to fluctuations, and exercises a pernicious influence over the destinies of commerce. This expansion and contraction of the circulation induce similar effects to a ruinous extent. All the periods of panic may be attributed to that power exercised in secret, and of which the public can have no knowledge, until it has accomplished its results. It stimulates over-issues in the country, raises and lowers the value of money capriciously, and erects its own security on the insecurity of country bankers. Such a company, possessing such influence so exercised, is a dangerous company; and plans can be devised to procure a better circulation than the present, in which there is neither stability nor steadiness." 2. Extract from the preface to the digest of evidence taken before Lord Althorpe's committee in 1832: "The records of past history have invariably desig nated a time of peace as one of prosperity and happiBut, ever since the last war, the different great interests of this country have been in a continued state of fluctuation between the extremes of prosperity and adversity; though the latter has unfortunately predom inated. ness. In the beginning of that year, (1825,) every class of the community was doing well, if not in a state of great prosperity. But a change took place in the currency, by the Bank of England contracting their issues. The general prosperity, without any other visible cause, immediately received a ch.ck; and as the bank continued to contract their issues, matters became worse, until they ended in the panic. By this a total derangement of the monetary DEC. 19, 1836.] Treasury Circular. system was occasioned, and every class of the community was thrown into a state of embarrassment, the injurious and depressing effects of which continued for some years, and this without any other apparent cause than the monetary derangement which had occurred." "An undue issue of four or five millions by the Bank [of England] would eventually make an extraordinary derangement in the value of all the property in the kingdom, and be productive of infinite mischief in a variety of ways." 3. Further extract from the testimony of J. C. Dyer, Esq. "I think the banks, so far from having saved the country from the effects of those panics, have been the cause of those panics; and that they have been the cause of a constant succession of little panics, continually annoying the commerce of the country, by monthly and weekly fluctuations." 4. Extract from the testimony of Benjamin J. Smith, Esq., a director of the Bank of Manchester, before Lord Althorpe's committee: "The supply of the circulation by the Bank of England subjects our trade to great and injurious fluctuations, owing to what is called a scarcity of money, arising from causes of which the public, who are deeply interested in that question, can have no knowledge. The objections to the existing system are, that the Bank of England has a secret and despotic influence and control over the destinies of our commerce, which we feel to be a most pernicious one." II. No local banks of issue in the great county of Lancashire, including Liverpool and Manchester. Inland bills of exchange used in large dealings; gold in the common transactions. 1. Extract from the evidence of J. C. Dyer, Esq., a director of the Bank of Manchester, before Lord A!. thorpe's committee: "The bankers in Manchester who can, do not, issue notes, in consequence of the strong feeling that prevails in Lancashire againt local paper. There were two ocCasions when that feeling was publicly expressed; first, in 1834, and next when the Bank of Manchester was formed. Bankers who intended to issue notes abandoned their intention, from a conviction that they could not, under any such circumstances, derive any profit from the issue." 2. Extract from Mr. McCulloch's notes on Adam Smith's work: "The principal distinction between notes and bills of exchange is, that every individual passing a bill of exchange has to endorse it, and by so doing makes himself responsible for its contents. Nothing can be more inaccurate than to represent bank notes and bills of exchange under the same point of view. The note is payable on the instant, without deduction--the bill not until some future period. The note may be passed to another, without incurring any risk or responsibility, while every endorser of the bill makes himself liable for the value of it. Bank notes form the currency of all classes; of those who are not engaged in business, of women, children, Jaborers, &c, who are all, as we have seen, without the power to refuse them, and without the means of forming any correct conclusion as to the selvency of the issuers. Bills of exchange, on the other hand, pass only, with very few exceptions, between persons engaged in business, and who are fully aware of the risk they run in taking them." 3. Further extract from McCulloch's notes: "The effects produced by the employment of internal bills of exchange, have not certainly excited that attention, on the part of most of those who have speculated on the subject of currency, that might reasonably have VOL. XIII.-5 [SENATE. been expected; but this seems to have arisen chiefly from their having been but very imperfectly aware of the vast magnitude of the transactions settled by their intervention, and of the extent to which they are employed. In the great manufacturing county of Lancashire, and in part of Yorkshire, a bill on London at three months is reckoned a money payment; and by far the largest proportion of the currency consists either of the bills of bankers drawn on their correspondents, or of those of the merchants and dealers scattered up and down the country. The following extracts from the evidence given before the committee of the House of Lords on Scotch and Irish currency, in the session of 1826, show the great extent to which internal bills are now employed. Mr. Gladstone, an eminent merchant of Liverpool, informed the committee that we sell our goods, not for payments in cash, such as are usual in other places, but generally at credits from ten days to three months' date; these bills we pay to our bankers, and receive from them bills or cash. We have a considerable portion of large Bank of England notes in circulation; these are generally used for the payment of duties, and also for the purpose of remittance; but the great mass of our circulation is in bills of exchange. Sovereigns and smaller bank notes are only required for such objects as charges of merchandise, with duties, freights, and other items.' Lewis Lloyd, Esq. 'The wages of workmen are paid in gold or Bank of England notes; the manufacturer is chiefly paid in bills of exchange. When a bill is drawn in favor of a manufacturer, he endorses it to the person to whom he pays it, and the person to whom he pays it pays it again to another; and it goes on often till it is covered with endorsements. Mr. Henry Burgess, a manufacturer at Leeds. The great mass of the circulating medium of Lancashire, as in all the manufacturing districts in the North, is bills of exchange: a part of the circulation is in gold and silver and Bank of England notes.' III. Suppression of all banks of issue in England, except the Bank of England, directly by law, or indirectly, by compelling them to give security for their issues. 1. Extract from Mr. McCulloch's notes on Adam Sinith: "It seems, therefore, to be indispensable, either that the country banks should be compelled, as has been previously proposed, to give full security for their issues, or that their paper should be suppressed altogether, and the paper of the Bank of England substituted in its place. * * Now, it is obvious, and is indeed universally admitted, that the only measure that can be adopted for guarding completely against the misconduct as well as the bad faith of the country bankers is to compel them to give full security for the payment of their notes. This, and this alone, can afford a sufficient guarantee to the public that the country paper in circulation will be returned when presented for payment, and that it is really equivalent to gold. "Every country banker, on applying for stamps, should be required and obliged, previously to obtaining them, to lodge in the hands of Government securities, in stocks or landed estates, fully equivalent to the amount of the stamps issued to him." 2. Extract from the testimony of Henry Burgess, Esq., secretary of the committee of country banks, representing seven eighths of the bankers in England, who have resolved to relinquish their circulation rather than give security for it: The only strong opinion to which the committee have come is, that if securities for their issues were demanded, they would relinquish their issues altogether. That resolution was imbodied in a petition to Parliament. * The chief reason why country bankers * IV. Extract from the report of the commissioners appointed on the part of the United States to examine into the debts and affairs of the Bank of the United States, to ascertain the value of the stock, showing above twen ty millions of loans at low interest for long terms, or indefinite terms, and explaining the reason why borrowers in Philadelphia are thrown upon brokers at two and three per cent. discount per month. 1. Statement of the debts of the Bank of the United States, &c. on the 3d March, 1836: [EC. 20, 1836. 3. Further extract from Mr. Clayton's report of 1832, to illustrate the conduct of the Bank of the United States in loaning much to the few, and little to the many, and explanatory of the present condition of the money market in Philadelphia, where small borrowers for short terms pay three per cent. per month discount for money, which may have come from the Bank of the United States to a large borrower on a term of years, or indefinitely, or on immateriality of time: April, 1832, loan to 72 persons, $2,404,278 1,274,882 Of which to 99 persons To all other persons 5,434,111 $529,974 Whole amount of loans discounted at the same time, Total as above These are the loans of the National Bank at Phila 1,294,800 00 delphia, April, 1832. 466,300 00 1,324,100 00 1,000,000 00 355,500.00 474,600 00 1,296,678 00 3,317,605 09 20,337,136 80 The length of time for which some of these loans are made is thus stated in the report: 5 per cent. C, due 24th August, 1837. 6 per cent. D, "when due inmaterial."* 4 per cent. E, due 21st November 1810. 4 per cent. F, due 1st April, 1838. 5 per cent. G, due 15th March, 1838. 5 per cent. H, due 8th October, 1838. 5 per cent. I, due 1st December, 1855. 5 per cent. K, "time of payment indefinite.) 54 per cent. L, due 12th January, 1838. 6 per cent. M," when due immaterial."* 6 per cent. N," when due immaterial."* 2. Statement of loans from the Bank of the United States to Thomas Biddle & Co., in the years 1830, 31, and '32, taken from the report of Mr. Clayton's committee of 1832, and now to be referred, as illustrative of some of the above loans on stocks or personal security: TUESDAY, DECEMBER, 20. THE DEPOSITE BANKS. Mr. WEBSTER offered the following resolutions, and asked the unanimous consent of the Senate to their im mediate consideration: Resolved, That the Secretary of the Treasury communicate to the Senate the latest statement made at or for the Treasury of the condition of the deposite banks; exhibiting, among other particulars, the names and places of all deposite banks appointed since the 23d June last; their capitals, and the amounts of public moneys actually transferred, or ordered to be transferred, to those banks, respectively. Resolved, That the Secretary of the Treasury communicate to the Senate a detailed statement of all transfers of public moneys ordered since the 23d June last, for the purpose of executing the act of that date for regulating the deposites of the public money; showing the dates and amounts of such transfers; from what place to allowed for such transfers, other than such as were made what place; from what bank to what bank, and the time in execution of the aforesaid act. Mr. WEBSTER said that the honorable member from Missouri [Mr. BENTON] had, in his speech yester day, read statements which had been obtained at the Treasury, for the purpose of showing that sundry banks had enlarged their issues since the publication of the Treasury order of the 11th of July. This information (said Mr. WEBSTER) is neither new nor surprising. That fact has been well undestood. But what banks are these which have thus increased their loans? Are they the banks of the country generally, or the banks in the principal commercial cities, or a majority of them? No, sir. The gentleman's statement was confined to the deposite banks, or some of them. All those deposite banks were seventy or eighty perhaps in number, while it has been stated that the whole number of banks in the country is near a thousand. Now, as I understand the subject, one of the strongest grounds of complaint against the order of the 11th of July, and against the manner of executing the deposite law, is, that by those measures many of these deposite banks, in places where the wants of business did not call for more money, have had large and entirely unnecessary sums of money nevertheless thrown into them, drawn from places in which it was wanted, to the great prejudice of other banks, and of the commercial community generally. I understand this to be one of the prominent objections If to the course which the Treasury has pursued. By the provisions of the deposite law, the deposite banks pay interest on sums deposited beyond a certain amount. they receive money, therefore, beyond such amount, they are naturally tempted to put it out on loans, however little real occasion there may be for such loans; for otherwise the deposite would be a heavy charge to them. An answer to these resolutions will give us light on this part of the case. It will probably be in the power of the Secretary to answer the first resolution without any delay. I hope we can have the answer to that so soon as to be before us before the conclusion of this debate. Nor do I suppose that any great time will be necessary to prepare an answer to the second resolution. Mr. WRIGHT inquired of the mover whether the resolution was intended to ask for any more than the last statement rendered at the Treasury. Mr. WEBSTER replied that he had no wish that the inquiry should go back and call for a voluminous amount of documents; all he wished was the last statement received. Mr. WRIGHT made no objection; and the resolution was thereupon agreed to. REDUCTION OF DUTIES. Mr. NILES observed that, on a former sitting, the Senator from South Carolina [Mr. CALHOUN] had taken the ground that the whole subject of revenue belonged to the Committee on Finance; but if that doctrine was a sound one, the Committee on Manufactures would be left almost without any appropriate duty. He apprehended, however, that the honorable Senator was mistaken in the principle he had laid down. The compromise act recognised the principle that a reduction was to be made on the tariff of duties: the principle existed in the statutes of the country. Whatever committee it might be who should undertake the very difficult and delicate duty of devising the mode and measure of a reduction of the revenue, would find that the chief difficulty in the way was not of a financial character, but had to do with the matter of protection, not of revenue. If the subject of reduction affected very exclusively the great interests of the country, ought it not to be sent to the Committee on Manufactures? In order to test the sense of the Senate, he would make the motion that so much of the President's message as related to the reduction and repeal of duties be referred to the Committee on Manufactures. Mr. CALHOUN observed that the question was not open to a motion; the reference had been made. If the gentleman wished to move a reconsideration, he could not do so unless he had voted in the affirmative. Mr. NILES had supposed it in order to refer the same subject to two different committees, who might view it under different aspects. However, to avoid difficulty, he would confine his motion to so much of the message as related to the repeal of duties only. Mr. CALHOUN said that this was included in his mo tion as much as the other. Whatever went to reduce the revenue he meant to refer to the Committee on Finance, as appropriately belonging to that committee. And he must be permitted to say that no committee in that body could represent more fully all the great interests concerned in such a subject. The chairman was connected extensively with one branch of Manufactures; the Senator from New York with another; and the Senator from Louisiana represented the great sugar interest of the South; while he from Missouri represented that of lead. As to the difficulty of the task, none could be more sensible of it than himself; none had felt it more deeply. The reduction, thus far, had been effected only by exertions such as he should be sorry to repeat. [SENATE. On motion of Mr. EWING, the subject was then laid on the table. TREASURY CIRCULAR. The Senate proceeded to the further consideration of the joint resolution introduced by Mr. EwING, of Ohio, rescinding the Treasury order of July 11, 1836, and prohibiting the Secretary of the Treasury from delegating the power to designate the kind of funds to be received in payment for the public lands. Mr. CRITTENDEN, who had the floor, having moved the adjournment yesterday, yielded it to Mr. BENTON, who read several extracts, to which he had referred in his speech of yesterday. Having concluded, be restored the floor to Mr. CRITTENDEN. The opening of Mr. C's speech was in so low a tone as to be totally inaudible to our reporter. As soon as he was distinctly heard, he was ob serving that the Senate had been complained of by the Senator from Missouri, not only for having been tardy in its appropriations of money for the public service, at its last session, but for not having appropriated enough. The Senate had voted appropriations to the amount of thirty-eight millions, but this was complained of as scanty measure, and the Chamber had been gravely rebuked for not having done much more. Now, Mr. C. was very ready to take his share, and the share of any other gentleman who was tired of it, in the reproofs of the honorable Senator for an open opposition to a portion of this appropriation, and he should have considered himself fortunate had he and his friends been so far successful as to have defeated them. So far from regretting or being ashamed of the opposition he had made to this lavish expenditure of money, he took it to himself as a merit; so that, if the design of the honorable Senator, in his exhortation and reproof, had been to excite repentance, the homily had entirely failed. But the more immediate subject before the Senate was the Treasury order, which it was proposed by his friend from Ohio to rescind, and to this be should endeavor to confine himself. The subject had been de bated by the Senator from Missouri with all that zeal and ability which usually characterized the efforts of that gentleman. Nor had Mr. C. any difficulty in readily excusing even a more than ordinary measure of zeal in that Senator on this occasion; for he thought, from a variety of facts, pregnant with circumstantial evidence, that be could very clearly see the true and genuine paternity of the order in question. He could not but believe that its descent from the honorable Senator might be as correctly traced as could be done in any other case of genealogy. On the 22d of April last, the honorable Senator had submitted a resolution that from and after the of day nothing but gold and silver should be received in payment for the public lands; and that the appropriate committee should report a bill to that effect. The subject was resumed on the following day, and by a vote of the Senate was laid upon the table. In that inglori. ous repose it had remained by general consent. It was permitted to sleep in silence, which amounted to the most unequivocal condemnation of the measure. This body then did condemn, as far as it could in such a mode, the very thing contained in this Treasury order; the author of the resolution being among the few, the very few, advocates who voted in its favor. But no sooner had Congress adjourned, than, on the 11th of July, the very measure, in regard to which the Senate had expressed its most decided opinion in the negative, was wrought up into the form of a Treasury order, surrounded, indeed, and embellished with sundry arguments directed against land speculators, and in favor of occupants or squatters. The very proposition which was rejected by Congress in April was enforced as a Treasury order in In July. Who could have any difficulty in tracing the ori. [DEC. 20, 1836. did possess the right, and considered it good policy to make a discrimination in favor of settlers, by yielding them a priority in the purchase of the tracts they had cultivated, how far would this go in advancing the gentleman's conclusion? Because Congress had power to do this, did it follow that the Executive had power to do it? Who ever heard of the Executive setting up a claim of authority to fix the price of the public lands, or, what was equivalent, to determine in what species of currency the land should be paid for? In what sense could this be regarded as an executive power? It was his place to exccute the laws, but it belonged to Congress to judge what the laws should be. Mr. C. said it had been argued that the laws authori zed the receivers at the land offices to receive nothing but gold and silver, and that this order only carried the law into effect. Such an argument did, indeed, admit the authority of the law; but how did it bear upon the order? If the law required payment in gold and silver for the public land, how could it be dispensed with, as it was, by the order, in regard to citizens residing within the States wherein the land lay? There was no dispensing power confided to the Executive to set aside the law, and no discretionary authority to make a difference between citizens equal before the law. The public lands were common property, which all had a right to buy on the equal terms prescribed by law, and the Secretary of the Treasury had no more right to assign different modes of payment to different classes of citizens, than he had to give more lands to one, and less to another, for the same money. In this view the order was altogether illegal. But again: On what principle of justice was one class of debtors required to pay their debts in gold and silver, and another class in what was deemed by the Government less valuable? With accuracy enough for the purposes of the present argument, the revenue may be sta ted at forty millions of dollars; one half paid in the West, for the purchase of public lands; the other half in the East, for duties an imposts. What right had the Executive to declare that the Western half should be exacted in gold and silver, but that the Eastern half might be paid in bank paper? The arbitrary inequality and injustice of such a regulation would be clear to every understanding. Mr. C. could not be content under a disBut there were other more decided objections to a crimination so invidious and offensive. What must be measure of this character, two of which he would dis- the effect upon the West of continuing such an order in tinctly specify. The first was, that it made an unlawful force? The money was collected by the land offices, discrimination between different classes of American cit- and thence poured into the banks, but it was not expendizens; and, secondly, it made an equally unjust discrimmed in the West. The great objects of public expendi ination between debtors for the public lands and all other debtors to the Government. First, it made a personal distinction between citizens of the United States; gold and silver was demanded of all purchasers of the public domain, unless they were actual settlers of the land they wished to purchase, or bona fue residents of the State within which the lands lay. Here was a personal distinction, grounded merely on place of residence. A particular species of currency was exacted from the one class, while another less valued species was accepted from the other class. Could this be done? consistent with equity? With equal rights of American citizens? The public domain was the common property of the whole people; and how did the resident of Filinois, or Ohio, or of Indiana, become possessed of higher rights in the purchase of it than you or I? Why was he entitled to easement in the manner of making his pay- | ments? Where was the law or the constitution giving him such a right? Where could it be found? Nowhere. But it had been said that the discrimination was the same which had been made by various acts of Congress in favor of actual settlers; and Mr. C. would not contest that fact. But suppose it to be conceded that Congress Was it ture, as every one knew, were on the Atlantic seaboard. When the knowledge of this order first reached the place of Mr. C's residence, the objections which he had stated had suggested themselves to his mind on the first |