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than the debt itself. It must be some very novel invention, which makes the superstructure keep its place, after the foundation has fallen. The argument seems to stand thus: The public funds, it is admitted, have little credit; the bank will have no credit which it does not borrow of the funds; but the bank will be in full credit.
If, sir, we were in a temper to learn wisdom from experience, the history of most of the banks on the continent of Europe might teach us the futility of all these contrivances. Those were, like this before us, established for the purposes of finance, not purposes of commerce. The same fortune has happened to them all. Their credit has sunk. Their respective governments go to them for money when they can get it nowhere else; and the banks can relieve their wants, only by new issues of their own paper. As this is not redeemed, the invariable consequence of depreciation follows; and this has sometimes led to the miserable and destructive expedient of depreciation of the coin itself.
Such are the banks of Petersburg, Copenhagen, Vienna, and other cities of Europe; and while the paper of these government banks has been thus depressed, that of other banks existing in their neighbourhood, unconnected with government, and conducting their business on the basis of commercial credit, has retained a value equivalent to that of coin.
Excessive issues of paper and a close connexion with government, are the circumstances which of all others are the most certain to destroy the credit of bank paper. If there were no excessive issues, or, in other words, if the bank paid its notes in specie, on demand, its connexion with goveinment and its interest in the funds would not, perhaps, materially affect the circulation of its paper, although they would naturally diminish the value of its stock. But when these two circumstances exist in the condition of any bank, that it does not pay its notes and that its funds are in public stocks, and all its operations intimately blended with the operations of government, nothing further need be known, to be quite sure that its paper will not answer the purpose of a creditable circulating medium.
I look upon it, therefore, sir, as certain, that a very considerable discount will attach itself to the notes of this bank, the first day of their appearance; that this discount will continue to increase; and unless Congress should be able to furnish some remedy, which is not certain, the paper, in the end, will be worth nothing. If this happens, not only will no one of the benefits proposed be obtained, but evils of the most alarming magnitude will follow. All the horrors of a paper-money system are before us. If we venture on the present expedient, we shall hardly be able to avoid them. The ruin of public affairs and the wreck of private property will ensue.
I would ask, sir, whether the friends of this measure have well considered what effect it will produce on the revenue of the country? By the provisions of this bill, the notes of this bank are to be received in payment of all taxes and other dues to government. They cannot be refused on account of the depreciation of their value. Government binds itself to receive them at par; although it should be obliged immediately to pay them out, at a discount of a handred per cent. It is certain, then, that a loss in the revenue will
be sustained, equal to any depreciation which may take place in this paper; and when the paper shall come to nothing, the revenue of the country will come to nothing along with it. This has happened to other countries, where this wretched system has been adopted, and it will happen here.
The Austrian government resorted to a similar experiment, in a very critical period of its affairs, in 1809, the year of the last campaign between that country and France, previous to the coalition. Pressed by the necessities of the occasion, the government caused a large quantity of paper to be issued, which was to be received in imposts and taxes. The paper immediately fell to a depreciation of four for one. The consequence was, that the government lost its revenue, and, with it, the means of supplying its armies and defending its empire.
Is this government now ready, sir, to put its resources all at hazard, by pursuing a similar course? Is it ready to sacrifice its whole substantial revenue and permanent supplies to an ill-contrived, illconsidered, dangerous and ruinous project, adopted only as the means of obtaining a little present and momentary relief?
It ought to be considered, also, what effects this bank will produce on other banking institutions already existing, and on the paper which they have issued. The aggregate capital of these institutions is large. The amount of their notes is large, and these notes constitute, at present, in a great portion of the country, the only circulating medium, if they can be called a circulating medium. Whatever affects this paper, either to raise it, or depress it lower than it is, affects the interests of every man in the community..
It is sufficient on this point to refer to the memorial from the banks of New York. That assures us that it must be the operation of such a bank, as this bill would establish, to increase the difficulties and distress, which the existing banks now experience, and to render it nearly impossible for them to resume the payment of their notes. This is what every man would naturally expect. Paper already depreciated, will necessarily be sunk still lower, when another flood of depreciated paper is forced into circulation.
Very recently this government refused to extend the charter of the bank of the United States, upon the ground, that it was unconstitutional for Congress to create banks. Many of the state banks owe their existence to this decision. It was an invitation to the states to incorporate as much banking capital as would answer all the purposes of the country. Notwithstanding what we may now see and hear, it would then have been deemed a gross imputation on the consistency of government, if any man had expressed an expectation, that in five years all these constitutional scruples would be forgotten, all the dangers to political liberty from moneyed institutions disregarded, and a bank proposed upon the most extraordinary principles, with an unprecedented amount of capital, and with no obligation to fulfil its contracts.
The state banks have not forced themselves in the way of gor. ernment. They were established, many of them at least, when government had declared its purpose to have no bank of its own. They deserve some regard on their own account, and on account of those particularly concerned in them. But they deserve much more consideration, on account of the quantity of paper which is in circulation, and the interest which the whole community has in it.
Let it be recollected also, sir, that the present condition of the banks is principally owing to their advances to government. The treasury has borrowed of the banks, or of those who themselves borrowed of the banks, till the banks have become as poor, and almost as much discredited, as the treasury itself. They have depreciated their paper, nearly ruined themselves, and brought the sorest distress on the country, by doing that on a small scale, which this bank is to perform on a scale vastly larger.
It is almost unpardonable in the conductors of these institutions, not to have foreseen the consequences which have resulted from the course pursued by them. They were all plain and visible. If they have any apology, it is, that they were no blinder than the government, and that they yielded to those who would take no denial. It will be altogether unpardonable in us, if with this, as well as all other experience before us, we continue to pursue a system which must inevitably lead us through depreciation of currency, paper-money, tender-laws, and all the contemptible and miserable contrivances of disordered finance and national insolvency, to complete and entire bankruptcy in the end.
I hope the House will recommit the bill for amendment.
ON A RESOLUTION RELATIVE TO THE MORE EFFECTUAL COLLEC
TION OF THE PUBLIC REVENUE, DELIVERED IN THE HOUSE OF REPRESENTATIVES OF THE UNITED STATES, 1816.
The disordered state, in which the Currency of the country was left by the late war, is well known. With a view to correct the evil, Mr. Webster moved the following Resolution, in the House of Representatives. It passed both Houses, and was attended with complete success, in its operation.
Resolved by the Senate and House of Representatives of the United States of America in Congress assembled, That the Secretary of Treasury be, and he hereby is, required and directed to adopt such measures as he may deem necessary, to cause, as soon as may be, all duties, taxes, debts, or sums of money, accruing or becoming payable to the United States, to be collected and paid in the legal currency of the United States, or Treasury notes, or notes of the Bank of the United States, as by law provided and declared, or in notes of Banks which are payable and paid on demand, in the said legal currency of the United States; and that, from and after the twentieth day of February next, no such duties, taxes, debts, or sums of money, accruing or becoming payable to the United States, as aforesaid, ought to be collected or received otherwise than in the legal currency of the United States, or Treasury notes, or notes of the Bank of the United State, or in notes of Banks which are payable and paid on demand, in the said legal currency of the United States.Approved, April 30, 1816.
The Resolution was introduced by the following Speech.
Mr. Webster said, that he had felt it to be his duty to call the attention of the House once more to the subject of the collection of the revenue, and to present the resolutions which had been submitted. He had been the more inclined to do this from an apprehension that the rejection, yesterday, of the bill which had been introduced, might be construed into an abandonment, on the part of the House, of all hope of remedying the existing evil. He had had, it was true, some objections against proceeding by way of bill; because the case was not one in which the law was deficient, but one in which the execution of the law was deficient. The great object, however, was to obtain a decision of this and the other House, that the present mode of receiving the revenue should not be continued; and as this might be substantially effected by the bill, he had hoped that it might pass. This hope had been disappointed. The bill had been rejected. The House had put its negative upon the only propos sition which had been submitted to it, for correcting a state of things, which everybody knows to exist in plain violation of the constitution, and in open defiance of the written letter of the law. For one, he could never consent to adjourn, leaving this implied sanction of the House upon all that had taken place, and all that might hereafter take place. He hoped not to hear again that there was not now time to act on this question. If other gentlemen considered the question as important as he did, they would not forbear to act on it from any desire, however strong, to bring the session to an early close.
The situation of the country, said Mr. Webster, in regard to collection of its revenues is most deplorable. With a perfectly sound legal currency, the national revenues are not collected in this currency, but in paper of various sorts, and various degrees of value. The origin and progress of this evil is distinctly known, but it is not easy to see its duration or its future extent, if an adequate remedy be not soon found. Before the war, the business of the country was conducted principally by means of the paper of the different state banks, As these were in good credit, and paid their notes in gold and silver on demand, no great evil was experienced from the circulation of their paper. Not being, however, a part of the legal money of the country, it could not, by law, be received in the payment of duties, taxes or other debts to government. But being payable, and hitherto, regularly paid, on demand, the collectors and agents of government had generally received it as cash; it had been deposited as cash in the banks which received the deposits of government, and from them it had been drawn as cash, and paid off to creditors of the public. .
During the war, this state of things changed. Many of the banks had been induced to make loans to a very great amount to government. These loans were made by an issue of their own bills. This proceeding threw into circulation an immense quantity of bank paper, in no degree corresponding with the mercantile business of the country, and resting on nothing for its payment and redemption, but the government stocks, which were holden by the banks. The consequence immediately followed, which it would be imputing a great degree of blindness both to the government and to the banks to suggest that they had not foreseen. The excess of paper which was found everywhere, created alarm. Demands began to be made on the banks, and they all stopped payment. No contrivance to get money without inconvenience to the people, ever had a shorter course of experiment, or a' more unequivocal termination. The depreciation of bank notes was the necessary consequence of a neglect or refusal on the part of those who issued them to pay them. It took place immediately, and has continued, with occasional Auctuations in the depression, to the present moment. What still farther increases the evil is, that this bank paper being the issue of very many institutions, situated in different parts of the country, and possessing different degrees of credit, the depreciation has not been, and is not now, uniform throughout the United States. It is not the same at Baltimore as at Philadelphia, nor the same at Philadelphia as at New York. In New England, the banks havo not stop