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make them, in the highest practicable degree, safe to the Government and useful to the country.
To this end, I am of opinion that the first step is, to increase their numbers. At present their number, especially in the large cities, is too small. They have too large sums in deposit, in proportion to their capital and their legal limits of discount. By this means the public money is locked up. It is hoarded. It is withdrawn, to a considerable extent, from the general mass of commercial means, and is suffered to accumulate, with no possible benefit to Government, and with great inconvenience and injury to the general business of the country. On this point there seems little diversity of opinion. All appear to agree that the number of deposit banks should be so far increased, that each may regard that portion of the public treasure which it may receive, as an increase of its effective deposits, to be used, like other moneys in deposit, as a basis of discount, to a just and proper extent.
I regard this modification of the present system as indispensable.
I think, too, that, for the use of these deposits, the banks should pay a moderate interest. They can well afford it. The best banks in the States will be ready, I do not doubt, to receive the deposits, on that condition among others. What the rate of interest should be, depends very much on what we may do with the surplus revenue. If we leave that surplus undistributed, the banks ought to pay a large interest. If we provide for distributing the surplus, thus leaving but a small amount in the banks, and making it their duty, at the same time, to transfer the public funds from place to place when requested, without charge, the rate of interest should of course be less.
I agree, too, to what has been suggested, respecting the authority to change those banks. They ought not to be changed, but for plain and specific cause, set down and provided for in the law itself. Any restriction less than this, will place a discretion in the hands of the Executive, which will be very capable of being abused.
Nor should the Secretary be at liberty to order funds from one bank to another, for any other reason than the exigencies of the public service. He should not be at liberty to use the public treasures for the purpose of upholding the credit, or increasing the means, of any State institution.
The bill proposes that all the deposit banks shall be bound to keep, at all times, an amount of specie in their vaults bearing a certain proportion to their debts and liabilities. I approve of this, not so much from any belief that the solidity of the banks can be secured by any such provisions, as because a regulation of this kind may tend, in some measure, to retain a certain quantity of specie in the country, and by that means to secure, in some small degree, the general circulation against violent shocks. But I do not attach great importance to this.
In my opinion, Mr. President, if the bill pass with these modifications, a considerable benefit will be conferred on the community. Confidence will be, in some measure at least, restored; the banks will possess the power of useful action, and the distressing uncertainty which now hangs over every thing being dispelled, the commercial community will find its way out of its present embarrassment.
Still, Sir, I am bound to say that the present system, in my opinion, can never be perfect. It can never be the best system. It can never be a safe regulator of the currency of the country, nor furnish solid security against derangement. It can never give to the mercantile world the cheapest, safest, and best means of facilitating domestic exchanges. The State banks were not made for these general purposes; they ire not fitted for them; they have not the unity and comprehensiveness of plan and of operation which the successful accomplishment of such purposes requires. They are subject to various limitations by their charters, and it may even be doubtful, in some cases, whether they can legally bind themselves in such stipulations and contracts as we propose to submit to them. They were established for local, not for general objects. They did not expect to receive Government deposits; and it might possibly be thought important to their stockholders and customers to be informed whether, in case of failure or insolvency, the priority of the United States would prevail, as in other cases, to the postponement of all other debts and claims. It is certainly my opinion, Sir, that we are running great hazards with the currency of the country. I see no well-assured reliance for its safety in this system of deposit banks, regulated as well as they may be. Nevertheless, regulation is necessary, nay, it is indispensable; and some present benefit at least would arise, I am persuaded, from the passage of a proper law.
I come now, Sir, to the other important object of this bill — the reduction of the amount of money in the Treasury.
And here the first question is. whether there will be any surplus revenue. Will there be any thing to divide at the end of this year? On this point opinions are not agreed, but I think there will be a surplus, and a large surplus. I do not see any probability either of such a falling off of income, on the one hand, or such an increase of expenditure on the other, as shall leave the Treasury exhausted at the end of this year. I speak of this year only, because the measure which I shall propose will be limited to the end of this year. My plan is to provide for the surplus which may be on hand at the end of this year, and to stop there. As to the probable state of the Treasury at that time, I agree it is matter of opinion and estimate; but we know what sum is on hand now, and we are drawing the session to a close, when appropriations will cease; and the year itself is already half expired. It would seem, then, that we ought to be able to judge of the state of the Treasury six months hence, without risk of great and wide mistake. I proceed on the following general estimate and calculation:
January 1, 1836. Amount of money in the Treasury, $25,000,000
Deduct unexpended balances of appropriations, 8,000,000
$ 17,000,000 Revenue of the first quarter of 1836, . . 11,000,000
Estimate for the three last quarters of 1836, . 25,000,000 Stock in late Bank of the United States, including
$61,000,000 Appropriations in 1836, estimated
Deduct what will remain as unexpend-
This estimate, Sir, does not rest solely on my own judgment. I find others acquainted with the subject, and competent to judge, coming to conclusions not far different from my own. It is true this rests in opinion. It cannot be mathematically proved that we shall have a surplus in the Treasury at the end of the year; but the practical question is, whether that result is not so highly probable that it is our duty to make some provision for it, and to make that provision now. I propose only to divide the surplus. If it shall happen, after all, that there shall be no surplus, then the measure will have done no harm. But if the surplus shall not be forty millions, but only thirty-five, thirty, twenty-five, or even twenty, still, if it be now probable that it will reach even the lowest of these" sums, is it not our duty to provide for it?
This is a contingent measure, not a positive one. It is intended to apply to a case, in my judgment, very likely to arise; indeed, I may say a case which, in all probability, will arise; but if it should not, then the proposed measure will have no operation.
I have already observed that, in my opinion, the measure should be limited to one single division — one distribution of the surplus money in the Treasury. In that respect, my proposition differs Vol. m. 11
from the bill of the honorable member from Carolina, and it differs, too, from the amendment proposed by the member from New York. I think it safest to treat the present state of things as extraordinary, as being the result of accidental causes, or causes, the recurrence of which, hereafter, we cannot calculate upon with certainty.
There would be insuperable objections, in my opinion, to a settled practice of distributing revenue among the States. It would be a strange operation of things, and its effects on our system of government might well be feared. I cannot reconcile myself to the spectacle of the States receiving their revenues, their means even of supporting their own Governments, from the Treasury of the United States. If, indeed, the land bill could pass, and we could act on the policy, which I think the true policy, of regarding the public lands as a fund, belonging to the People of all the States, i should cheerfully concur in that policy, and be willing to make an annual distribution of the proceeds of the lands, for some years at least. But if we cannot separate the proceeds of the lands from other revenue, if all must go into the Treasury together, and there remain together, then I have no hesitation in declaring, now, that the income from customs mutt be reduced. It must be reduced, even at the hazard of injury to some branches of manufacturing industry: because this, in my opinion, would be a less evil than that extraordinary and dangerous state of things, in which the United States should be fbund laying and collecting taxes, for the purpose of distributing them, when collected, among the States of the Union.
I do not think it difficult to account for the present overflowing condition of the Treasury. The Treasury enjoys two sources of income — the custom-house and the public lands. The income from the customs has been large, because the commerce of the country has been greatly extended, and its prosperity has been remarkable. The exports of the country have continued to increase. While the cotton crop has grown larger and larger from year to year, the price of cotton has still kept up. Notwithstanding all the apprehensions entertained by prudent and sagacious men to the contrary, the world has not become overstocked with this article. The increase of consumption seems to keep pace with the increase of supply. The consequence is, a vast and increasing export by us, and an import corresponding with this export, and with the amount of earnings in the carrying trade; since the general rule undoubtedly is, taking a number of years together, that the amount of imports, and the earnings of freights, are about equal to the amount of exports. The cotton-fields of the South most unquestionably form a great part of the basis of our commerce, and the earnings of our navigation another.
The honorable member from South Carolina has referred to the tariff act of 1t3-£?, as the true cause of the swollen state of the Treysury. I agree that there were many things in the act of 1828 unnecessarily put there. But we know they were not put there by the friends of the act. That act is a remarkable instance, I hope never to be repeated, of unnatural, violent, angry legislation. Those who introduced it designed, originally, nothing more than to meet the new condition of things which had been brought about by the altered policy of Great Britain in relation to taxes on wool. A bill with the same end in view had passed the House of Representatives in 1827, but was lost in the Senate. The act of 1828, however, objectionable though it certainly was in many respects, has not been, in my opinion, the chief cause of the over-product of the customs. I think the act of 1832, confirmed by the act of 1833, commonly called the compromise act, has had much more to do in producing that result. Up to the time of the passing of the act of 1832, the minimum principle had been preserved in laying duties on certain manufactures, especially woollen cloths. This illunderstood and much-reviled principle appears to me, nevertheless, and always has appeared to me, to be a just, proper, effectual, and strictly philosophical mode of laying protecting duties. It is exactly conformable, as I think, with the soundest and most accurate principles of political economy. It is, in the most rigid sense, what all such enactments, so far as practicable, should be; that is to say, a mode of laying specific duty. It lays the impost exactly where it will do good, and leaves the rest free. It is an intelligent, discerning, discriminating principle; not a blind, headlong, generalizing, uncalculating operation. Simplicity, undoubtedly, is a great beauty in acts of legislation, as well as in the works of art; but in both it must be a simplicity, the result of congruity of parts, and adaptation to the end designed; not a rude generalization, which either leaves the particular object unaccomplished, or, in accomplishing it, accomplishes a dozen others also, which were not desired. It is a simplicity which is wrought out by knowledge and skill; not the rough product of an undistinguishing, sweeping, general principle. Let us suppose that the gradations in woollen cloths be represented by a line. At one end of this line are those of the highest price, and let the scale descend to the other end, where, of course, will be those of the lowest price. Now, with the two ends of this line our manufacturers have not much to do; that is to say, they have not much to do with the production of the very highest, or the very lowest, of these articles. Generally speaking, they work in the intermediate space. It was along this space, along this part of the line of work, that the minimum principle, as it has been usually called, operated. It struck just where the great object of protection required it to strike, and it struck nowhere else. All the rest it left free. It wasted no power. It accomplished its object by the least possible expenditure of means. Its aim was levelled at a distinct