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Oct. 11, 1837.]

Sub-Treasury Bill.

(H. OF R.

If the State Governments will have a paper currency,

of his labor, at least, and perhaps of more. It is manifest, this is undoubtedly the safest mode in which they can put then, that this operation, if beneficial to society, must be it forth. But a paper currency put forth by Government tounded upon real resources, and new capacities for proon any other principle, will always have the unfortunate ducing wealth. There is a certain amount of capital in effect of continually changing the measure of value by which the world, to which Government cannot add by any of its contracts are to be adjusted. Different Governments adopt regulations. This is all which can be distributed ; and if different rules of issue. The proportion of paper currency

the credit system exists in a sound condition, this capital to material wealth is different in each. A man contracts, will be distributed between the different parts of the world, expecting to deliver by one standard, and owing to its and amongst different individuals in society, in the relative change is forced to deliver by anoiher. He receives, per proportion of their comparative resources.

That country haps, in ounces, and is forced to return in pounds. This which can give most for the use of capital will be first supinjurious change in the relations between debtor and cred-plied, according to the laws of trade; and any community itor leads to disasters and sufferings so uften witnessed that which, directly or indirectly, gets possession of more capiI need not depict them. Other Governments have means of tal than its relative resources entitie it to enjoy, receives it palliating the evils of this sudden change in the measure of upon the terms of paying for the use of more capital than value, not witbin our reach. When a demand is made for it can advantageously employ. This, sir, could never be a sudden adjustment in specie, of contracts formed under the case if Government were not to interfero; but, unhapthe expectation that they are to be redeemed in paper, pily for mankind, it too often happens that a Government, these Governments can, and always do, interfere to prevent under the vain hope of benefiting its people, pursues a systhis cbange in the relations between debtor and creditor. tem of measures which disturbs the natural level of capital. They make the paper a legal tender between man and man. For an instance of this, I need only refer to the currency Indeed, the English Government seems to be well aware of operation of our banking system. I have shown, sir, the the necessity of making paper currency a tender, after it is operation of this system has a tendency to increase the curonce issued; it sees so clearly that contracts will always be rency of the country in which it exists, far beyond the made under the expectation of redeeming them in this pa- basis of the metallic, which is the currency of the world. per, and that it would be impossible to force their adjust- The nominal amount of money is increased, and its real ment in specie, that it has made the paper of the Bank of value diminished. Suppose, for instance, that two dollars England a legal tender by a standing law of the land. represent the same amount of the necessaries of lite which Here we can resort to no such expedient. Nothing but were formerly represented by one. The capital which is gold and silver can be made a legal tender; a point of dif- borrowed at this nominal rise in its money price, must be ference which no American statesman should lose sight of. returned when the nominal price falls, and the real value is What folly is it, then, to introduce by legislation a standard raised. In other words, the community which borrowed of measure in the formation of contracts, which can always in half dollars must return in dollars. The reason of this be altered by the creditor at his pleasure, in despite of our is obvious. The credit system of any country, when it is laws! How vast and complex is the fraud which we thus sound, rises or falls with its relative resources. This is practise upon our citizens, when we indirectly force them the true and single law of its valuation. But Governinent to contract by one standard, whilst the constitution requires interposes and alters the measure of value. It doubles, for them to pay by anotber! If a law were passed requiring instance, the proportion between the paper currency and every man who had contracted to deliver a bushel of corn

the material wealth of the country, by forcing every addi. to deliver two, the injustice would not be greater, nor the tion made to credit, through the banks, to produce a like mischief more, than our paper currency has often produced. addition in currency. The country, then, which bas fewSo much, Mr. Chairman, for the operation of our banking est resources in comparison with others, may have the system upon the currency; let us trace now its effects upon largest nominal credit system, on account of the inordicredit.

nale expansion of the standard by which its value is measWhat is credit ? and what is the real law which regulates ured. its expansion and contraction ? Credit, sir, is the contri- The credit system being thus expanded, let us look for vance by which we translate future resources to our present a moment into the mode of redeeming the obligations thus use and employment; or, in other words, it affords the incurred. This debt can only be di-charged by a system means by which we obtain the present use of capital by a of exchange, under which one debt is made to offset anothpledge of future resources of resources which exist either er, so as to save the necessity for currency; or else by rein mind or matter of resources to be found, sir, either in deeming the obligations in money. So far as the exour skill and industry, or in capacities yet to be developed changes adjust the balances due on a certain day throughin our material possessions. The fabric of credit to endure, out the country, the operation is beneficial; and the relasir, must rest on the solid rock of responsibility, and not tions between debtor and creditor are not ruinously aflectupon the fleeting sands of mere confidence: or, sir, if Ied, notwithstanding the inflation of the currency. But in may change the figure, credit is the venous systení through this diseased state of affairs, the operation of the converwhich the streain of capital flows, to visit every part of the sion of that portion of the credit system which must be rebody politic with its life-dispensing power. Disturb for a deemed by money is terrible. The obligations were conmoment the free and natural course of its circulation, and tracted upon the paper standard, but they must be reyou derange every function of social life. Leave it to fol- deemed in specie, if the creditor chooses to demand it, and low its natural courses, and it will quicken anew the spirit this he will do, if the paper currency exceeds its just proof enterprise, impart more vigor to the arm of industry, portions, because then it will be to his interest to exact and dispense health and freshness to the fraine and spirit ibis mode of adjusting contracıs. So far, then, Mr. Chairwhich it supports and vivifies.

man, I have endeavored to prove to this committee tbat I have said, sir, that it was the pledge of future resour- our banking systein produces, first, an unjust distribution ces for the present use of existing capital. To make the of capital between the different sections of the same counoperation beneficial, this pledge must be upon real resour- try and the different classes of the same society; and, secces; so that the borrower may not only return the princi-ondly, that the connexion which it instituted between curpal and interest of the capital employed, but also retain a rency and credit caused them both to expand and contract, profit for bimself. If his employment returns him an according to laws different from those which nature had amount just equal to, or a less amount than, the principal prescribed for their regulation. If I have been successful and interest of this capital, there is a clear loss to society in my effort, I have shown that there effects must flow

H, of R.]

Sub-Treasury Bill.

(Oct. 11, 1837.

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from the very laws of their creation, and that this was the people were tasking themselves to their utmost upon the original sin of them both.

finest theatre for exertion which any people ever enjoyed, I know, sir, that some advantages have also resulted we have seen their career suddenly stayed, and the arm of from their operation, but none, in my opinion, which com- enterprise itself folded in the mournful contemplation of pensate for these evils. The advantage of adjusting the the ruins of the prostrate system of credit; a fabric which balances due under the credit system, by exchange or off- fell, sir, as I before observed, because it was founded, not set, so as to avoid a direct result to currency, is immense ; on the solid rock of responsibility, but upon the fleeting and it is true that a large capital is necessary for this busi- sands of a mere confidence-a false confidence~engender

It is necessary, because the greater the variety of ed, sir, by those very institutions which were relied upon exchanges commanded by any one institution, the greater as the pillars of the edifice. the facility for offsetting the one debt against another. And here, Mr. Chairman, let me not be misunderstood. The limit to this advantage is only to be found when the I do not war upon existing institutions, but with the policy amount of capital employed in this way, by any one insti- which gave them birth. I would be the last man in this tution, is so great as to preclude competition. It was the community to encourage a violation of these vested rights. opinion of Mr. Baring, however, one of the most intelli- Neither do I blame individuals, sir, for entering into emgent of English merchants, when examined before a com- ployments to which the policy of their State Government mittee of the House Commons on this subject, that the invited them. I have no desire either to return suddenly important business of exchange could be effected more from one measure of value to another, so as to disturb the readily through private dealers than loy banking institu- relations between debtor and creditor. I go for reform, tions; and there seem to exist strong reasons for his opin- sir, not for revolution. I wish to see a change of policy, ion. Be this as it may, however, and let us suppose, for it is true; I care not how gradual it be, so the prospect of argument's sake, that in a young country like ours we can reform be certain. As one of the means of effecting this only raise capital enough to deal in exchanges, domestic gradual reform, I propose a divorce between this Governand foreign, by means of corporations, still I maintain, sir, ment and all banks. I propose it, sir, as a measure rethat those corporations should be single in their end and quired by public interest, and ultimately beneficial to the aim. They should be confined to the business of dealing banks themselves. The deposites of public money, upon in exchanges, and all power of issue should be denied which these institutions trarle, and the credit given to their thein. If the banking system of this country is ever re- paper by means of its receipt in public dues, only serves formed, the change must be conducted in that spirit of an- to stimulate an action alrcady false in its nature, and tends alysis wbich bas effected most of the modern reforms in but to hasten the round of expansion and contraction which science. If currency be the object of the constitution, I they are ever performing. In that point of view the conhave already intimated the model upon which I think it nexion is injurious alike to the Government, the people, should be moulded. If the regulation of exchange and and the banks. Upon every occasion in which this conthe diffusion of loanable capital be the object, the institu- nexion has existed with the State banks, we have seen it tion should be confined to this end alone. A currency result in a general explosion of the credit system. I bobank should exist for currency alone, without the power lieve no one doubts but that this connexion hastened the to discount; and a bank of discount should be confined to late catastrophe, which furnished the occasion for the late that purpose without the power to issue. The true secret, call of Congress. The receipt of bank paper in payment I believe, sir, of regulating the machinery of corporations of public dues increases its credit, and extends its circulaso that it shall work the precise end intended for it, and tion. The amount of paper currency necessary for makno other, is to create them with a single purpose, upon ing all the payments required in collecting and disbursing which they will then be sure to move. But, sir, unite in the public revenue, is added to the natural circulation of them incompatible functions, and you are apt to introduce the banks, and has no other basis than the confidence that a complexity into their operations, which will often pro. it will be received in payment of Government dues. As duce results entirely unexpected at their creation, and con- this revenue expands and contracts, so this portion of the trary to the public good.

currency increases or diminishes.

Whilst the surplus I believe, sir, that the history of our system of paper revenue was collecting, this circulation increased upon that currency connected with credit, as we have instituted that credit: it increased, too, from the use of the deposites upconnexion, would illustrate the truth of my views, if there on which they traded; and when the surplus and annual were time to enter into this inquiry. I will not raise an revenues of the Government were being distributed, and issue of fact, however, when my purpose is satisfied by diminished, a portion of this currency was drawn from the dealing with first principles. I will not enter into the his- | field of circulation ; and, being no longer useful, its contory of that early struggle between the colonies of Massa- version was sought in specie. Here is the unhappy and chusetts and Rhode Island, for the field of circulation fruitful cause of fluctuation in credit and currency, which which euch was endeavoring exclusively to occupy with must always exist under a connexion between Government its paper issues; a contest which waxed so warm as to and bank. There were doubtless other causes growing make a reference of their disputes to the Crown necessary out of that connexion, which tended to hasten the suspenfor the preservation of peace. Neither will I occupy the sion of specie payments. I throw them out of consideracoinmittee with the history of that continental money, tion, however, because they do not enter irto the general whose improvident issue was said by one who both felt question, and take only those consequences which necesand knew its consequences, to have caused more real suf- sarily flow from a connexion between bank and Governfering than all the complicated horrors of the war of the ment under any circumstances; and, having shown the Revolution. Did time permit, I might well pause, for the injury which they work to the bank, I turn to their operpurpose of tracing to the inevitable tendencies of our bank- ations upon the fiscal concerns of the Government: when ing system, the wide-spread derangement of our currency this violent rupture of the ties which bind them together and credit, from the suspension of specie payments during takes place, the Government is forced either to take deprethe war, until 1819, when the Bank of the United States ciated paper, or to demand specie. If they take the first itself was perhaps only saved from a like catastrophe by alternative, they give a bounty to each State to depreciate the suspension of a Treasury drast. Yes, sir, and for con- its paper, to lower its taxes, and duties become no longer firmation almost as strong as proof of holy writ itself, I uniform. If they choose the latter alternative, they find might turn from that period to this. In a time of pro- that its operation is to raise the taxes upon the people prefound peace, when the mighty energies of the American cisely at the time when they are least able to encounter an

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Oct. 11, 1837.)

Sub-Treasury Bill.

[H. OF R.

sounder currency:

increase of expenditure. If, on the other hand, this con- pression is not silent upon this subject. You may place nexion had never existed, the banks would have been better the worst of men in authority, and he will have some touch able to meet their engagements, because their circulation of human feeling. Not so with a moneyed corporation. would have been more limited and more justly proportioned It deliberates in secret; it moves by the power of a majorto the wants of trade. The operation, too, would have ity, with no sense of personal and individual responsibility kept enough of specie in circulation to have met the de. ut the bar of public opinion; and it is governed by the sinmands of Government, and to have afforded a rallying gle impulse of interest. You cannot move it to pity for point to the banks when any sudden emergency created an the present, or to remorse for the past; for its action is unexpected demand for specie. If I have shown, Mr. mechanical, and not under the influence of feeling or of Chairman, that this connexion injures both bank and State, soul. I protest, then, sir, against any attempt to bind the I need not state the obvious consequence, that whatever moneyed corporations to one government, and by one cominjures either the banks or the Government, injures the mon political purpose. I have given my reasons for obpeople alsı). But my colleague seems to suppose that this jecting to any connexion between bank and State, and, Government can find the means of regulating the opera- perhaps it may be reasonably required of me to suggest tions of these banks, and of producing, through them, a some better plan for the custody of the public treasure. It

His projet supposes a system of re- the selection were left to me, sir, I should adopt the plan wards aud punishments, through the fiscal action of this of special deposites. The General Government should be Government, which is so to control the banks as to effect independent of the banks as to the medium in which its this salutary end. I will not revert to those views which revenues are collected, and banks would be independent I have just given, to show that this expectation is false in of the Government when they were no longer exposed to theory ; nor will I pause to cite to him the opinion of the power of its rewards through the privilege of trading Secretary Dallas, who, after a long experience, in 1816, upon the public deposites. If such an arrangement could pronounced this hope to be impracticable; much less would be effected by giving the banks a fair compensation for I cite to him as authority my own opinion upon this subject. keeping the public money, at the same time that they were I will take his position as true, for argument's sake; and effectually restrained from using it, I should much prefer then I would ask my honorable colleague how it is that, it to the scheme proposed by the Committee of Ways and thinking with me that this Governirent cannot charter an Means. The pecuniary responsibility would be greater institution for the purpose of controlling currency, still he than that of individual collectors, and its custody of the will maintain its right to buy up the corporations of the public revenue would, perhaps, be safer.

But the chief States, and regulate their chartered functions so as to con- recommendation would be in the means which this plan trol the currency and the exchanges of this country? would afford the representatives of the people to ascertain

But, Mr. Chairman, much as I object to the connexion the state of the public money, if at any time there was between this Government and the banks, on account of the cause to suspect either the ability or the honesty of the Secdisturbing causes which I think it introduces into the ac- retary of the Treasury. I shall not fatigue the committee, tion of the currency and credit systems of the countıy, I however

, with the detoils of a scheme which I shall not have another objection still more powerful. I never wish propose by way of amendment, as there would be no reato see the banks converted into political engines again. Of sonable prospect of its adoption at present. I should greatly all the enormous additions which have been made to Ex-prefer a bill carefully framed upon this basis to the one ecutive patronage, in late years, I regarded its connexion now before us; but I give to that the decided preference with the State banks as the most fearful. The army of over the other alternatives, of a United States Bank, or the officeholders, though you should count them as 100,000 connexion between the Government and the Stare banks. strong, would confer not half the power upon the Execu- Doubtless, there will be difficulties attendant upon any live which the possession of the State banks would give to scheme for regulating the custody of the public revenue. hiin. Convert them into political engines to be worked The money power, in all its combinations, presents the most by his hands ; give him the control over the exchanges and difficult problem to be solved in the science of Government. currency of the country; give him the dispensation of bank But we must choose the best plan within our reach. It favors, and if he were disposed to use ihem for personal is idle to expect perfection in a system of finance. I go, advancement, he would scorn your title of king, and your sir, for the great principle of divorce, without committing gewgaw of a crown, as if the offer intimated a doubt of his myself to the specific details of this bill further than by the absolute authority without them. If the choice of means expression of a preference for them over the connexion bewere given to a wise king, who wished to maintain his tween bank and State. In that comparison, I have satispower, he would not choose a nobility, said to be the nat- fied myself that it does not increase Executive patronage, ural support of the crown, but he would ask for some hun- as its opponents maintain; nor do I believe that its tendreds of corporations, wielding the money power of the dency will be to retard the resumption of specie payments. whole country. He would ask for those whose delibera- It, in fact, diminishes the Executive patronage by a larger tions might be secret, whose agents might be invisible, and amount than any other reform ever proposed under this whose march upon their purpose could only be diverted by Government. It subtracts the entire amount of bank patthat impulse of interest which he alone could regulate. ronage fiom the Executive, and, in comparison with this, Give him these, sir, and he would despise your standing the few additional officers to be created are as nothing. armies and your orders of nobility as cumbrous devices, un- How is this bill, sir, to retard the resumption of specio worthy of the retinemerit of the spirit of modern despotisın. payments by the banks ? They will be afraid, it is said, Mr. Chairman, I have always regarded the connexion be- of runs upon them for specie to be paid for public dues. Iween bank and State in this country as a conjuncture This objection, sir, is more specious than valid. The quarmost ominous to our liberties. Use the public money to terly receipts of this (iovernment will range from six to buy up the State banks for the use of this Government, or eight millions. The greatest possible amount of the adof its Executive branch, and you at once convert them into dition to be made to the legal currency, under this bill, political engines, you deprive the States of the control of would be six or eight millions, and, in point of fact, I amn their own institutions, and you place the people vnder the informed that a far less sum would suffice, as the public dominion of a league of corporate influences. Endow a money is paid out nearly as fast as it comes in. Is it to moneyed corporation with the functions of Government, he supposed, sir, that the eight hundred banks of this counand you behold at once the most ruthless of all despotisms; try could not meet such a requisition, if they were ready and the history of human suffering and of East Indian op- in other respects for the resumption of specie payments ?

H. OF R.]

Sub-Treasury Bill.

(Oct. 11, 1837.

enues.

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But, sir, in point of fact, the requisition for specie upon otherwise ; intelligence, reason, and sound judgment, are the banks, or upon the country, under this bill, cannot alike hostile to entire unanimity; nor would our represenamount to a dollar if these Treasury drafts be issued for tative Government be any thing more than a mere formal circulation, as I presume will be the case. They furnish acquiescence in the will of some ordained superior, if the more than enough of medium for the collection of our rev. doctrine were allowed to hold, that party discipline exacts

The banks, Mr. Chairman, cannot resume specie an unconsidered sanction to every measure, which brings a payments generally until the foreign debt is nearly or recommendation from the Executive chair. wholly liquidated. When that is done, if they will ele- Such is certainly not the spirit of our institutions; nor vate the value of their currency to the par of specie, partly should it be the spirit of any party that would act safely and by curtailing their circulation gradually, and within the wisely, or even successfully, in whe administration of the limit of the present discount upon their paper, and partly Government committed to their charge. by a judicious command of exchanges for converting their Having thus premised, I will proceed at once to state my own obligations, they may then safely resume specie pay- objections to the bill under consideration. ments.. Whenever their paper will command its par in Those who have brought it in, address its claims to our specie in the market, they may safely undertake to give favor, as a measure simply intended to provide for the safe. specie for it themselves. This I believe to be the only true keeping of the public money. It is said that the former mode of effecting the resumption, and this operation is en- depositories, the State banks, baving proved either inadetirely independent of the fiscal action of the Government. quate to the duties required, or unfaithful to the trust reRely upon it, sir, that a speedy resumption of specie pay-posed in them in this branch of the public service, it is nements by any other means would be impracticable, with-cessary that Government now should take care of its own out producing more distress than we have yet seen in the interests; and that this will be most effectually done by a community. To take their depreciated paper in payment

return to what is called the legal currency of the country, of the public dues, would rob theni of all inducement to and by constituting certain fiscal officers of the Governresume, as the Government credit would thus be worth ment the keepers as well as the disbursers of the public more to them than it would be if their paper was convert- money. ible.

The machinery is certainly very simple, and is the only Mr. Chairman, I know that I have this day presented end to be attained were, in truth, the safe-keeping of the views which, if true, will disturb the dream of those who public money, however I might dissent from the expectabelieve that an infusion of banking medium, like the fabled tions of those who have planned its operation, I could not juice of Medea, will renovate the body politic, an

see in it those insuperable objections which impel me now to age the vigor and freshness of youth. I know, sir, that to remonstrate against it. there are many who will view my opinions as wild and ex- The evils, sir, which we are expected to remedy hy some travagant. But I am willing to leave the issue lietween us adequate law, lie far deeper in the public mind' than any to the arbitration of time and future experience. I am alleged insecurity of the public money-evils for which no aware, too, that you cannot touch a fibre of one of the remedy is provided by this bill, but which will, in my cords imposed upon trade, by the restrictive system, with judgment, be fastened upon the community by its pasout exciting a host in opposition. But, sir, in a contest sage-I mean the present degenerate condition of the curupon the great principles of free trade, I am willing to en- rency. list for the war. I feel that they must succeed, because I What is now the currency of the country? I ask not trust to the power of truth. Its pace may be hobbled, but what ought to be, but what actually now is the sole curits march will still be onward. Yes, sir, it will be onward rency ; the only medium having exchangeable value, by and onward, until the people awake to a sense of the injus- which the business of the country is carried on? It contice which imposed fetters upon the free spirit of American sists entirely, from one end of che confederacy to the other, enterprise. I hope, yet, sir, to see the day when the captive of irredeemable bank paper ; every payment that is made, will throw its bands loose from their bonds, and proclaim in every debt that is collected, every transaction of every kind, joyful exultation to the world that it is free--free to pur- whether large or small, into which money enters, is carried sue the impulses of its own genius, free to take the di- on and effected hy paper that has been issued by the State rection of its own interest, and ready to put forth the whole banks, and which they no longer redeem with gold or silof its mighty energies to the fulfilment of the proud destiny These metals have passed entirely out of circulation ; which will then await it.

they form no longer any portion of the money of the comMr. MASON, of Virginia, next took the floor, and ad-munity; treating money as that only, which, for the time dressed the House, until the hour of recess, in opposition being, serves as the symbol of exchange, of things having to the bill, as calculated to blast the hopes which had in- merchantable value. spired the course of the late administration, that the coun- This condition of the currency, is the true and great evil try would enjoy the advantages of a sound currency. of the times; it affects the people in their business, precisely EVENING Session.

and in the same manner as it affects the Government in

the conduct of its affairs; and there can be no remedy, at Mr. MASON, of Virginia, resumed the course of his re- all adequate to relieve the Government from its embarrassmarks, the whole of which are given below,

ments, which shall not, at the same time, and to the same Mr. Mason said : Agreeing, I as most cordially do, in the extent, relieve the people from theirs. sereral measures which have so far been presented by the In considering this suliject as I propose to do, it is unCommittee of Ways and Means, for the consideration of necessary to go at large into an examination of the causes this House, it is with the utmost reluctance that I am which have operated to bring about this state of things. I now brought to differ with those with whom I have hereto- | do not know that I am, nor do I at all proless to be, equal foré acted.

to this duty. And yet, were I to attempt it, I should cerThis difference, however, I am pleased to consider, is at tainly differ very widely from those who trace these causes least but one of mere expediency, and in itself contains no farther than to a redundant issue of bank paper. That nothing which should sever those who are united other each issue has been to a great extent auxiliary to the preswise in the preservation and support of those great and ent embarrassments, there can be doubt. But it has been leading principles which actuate political parties,

auxiliary only; and I freely admit that, in my very humDifferences of opinion necessarily pertain to deliberation ; ble judgment, a well-founded objection to our banking it is against the constitution of our nature that it should be 'system lies in this very thing: that banks of discount, or

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Oct. 11, 1837. ]

Sub - Treasury Bill.

(H. of R.

ers.

ganized as our American banks are, yield the facilities of and thus they have fallen back, and are entirely merged in credit too readily and amply to the demands of trade, with the common and general mass of merchandise. Specie, out a power of discrimination between such as arise from whether in coin or in bullion, is now merchandise, and not the extension or accidental vigor of healthful commerce, money; and those who require it for any purpose must go and such as have their origin in a wild and gambling spirit into the market and buy it at market rates, as they would or speculation.

any kind of merchandise whatever. How long, then, is Commerce requires credit. From the day that men this state of things to continue? How long will this passed in their dealings beyond the first simple stages of marketable value attach, which detains the coin from its barter, credit, in some form, entered into the affairs of most appropriate function as current money? And hy trade. Its agency soon came to be understood; and the what process can it be restored to circulation ? winds are not more active in circulating the common air, The answer to the two first inquiries is very simple. than credit now is, all over the world, in circulating Specie will continue to be merchandise, so long as there through every land the productions of every soil.

exists any demand for it greater than that which would Trade and commerce, then, becoming drunk with pros- invite or retain it in circulation. It was driven out of cirperity, bave drawn too lavishly upon the credit offered culation by the demand for exportation, after the business them through the banks; or, if you will have it otherwise of the country had realized the fact that our exports were expressed, the expansible character of bank credit has insufficient to pay for our imports. The balance must be offered too great temptations to commercial enterprise, and met, and the precious metals were called out of circulation we are now suffering under the consequences of over- to answer this new demand. It is a necessary and fundaaction, as well on the part of those who used this credit as mental law of currency, that where you have two media, of those who gave it.

of which either answers all the purposes of excbange, and In this reasoning, I am borne out by the message of the one of them, besides those purposes, will answer another President: he says that “our present condition is chiefly purpose as a subject of trade, the latter will fly at once to to be attributed to over-action in all the departments of meet the new demand, and leave the duties of currency business; an over-action deriving, perhaps, its first impul- exclusively to its fellow. ses from antecedent causes, but stimulated to its destruc- So it was between the paper and the specie, when, by tive consequences by excessive issues of bank paper, and the exigencies of trade, the latter was suddenly called o A* by other facilities for the acquisition and enlargement of to meet the new demand created by the necessity in comcredit.”

merce, of extinguishing the balances against our importI have entered into the subject thus far, only that I may There is no mystery in all this. Imports are to be invite you to a more enlarged view of the difficulties to be paid for from those two sources alone : by the produce met than are presented when our inquiry is confined simply and labor of the importing nation, or by gold and silver ; to a consideration of the safest custody that we can provide and whenever the former is found inadequate, the precious for that portion of the people's money which is to pass into metals must make up the deficiency. the public coffers.

Thus stood the country when the banks suspended the My great objections to the measures proposed in this bill payment of specie. They had an agency, and a large are, that they are not at all commensurate with the exigen- agency, I grant you, in bringing that necessity about; cies of the times; they do not meet the real difficulty. pampering, as they did, the pride of commerce. They The bill simply ordains that the Government, after a limi- met all its demands, honored all its drafts, as well in the ted time, will receive nothing but gold and silver in pay- rage for importation, as in those extravagant speculations ment of public dues, and will intrust its keeping to its own to which the apparent prosperity of the age gave birth. officers alone. Now, if there were a creative power in our

But the banks are not alone to blame in this. It is due law; if, by this simple enactment, the bank paper could to the occasion, and will aid us in searching out the true be driven out of circulation, back whence it came, and the remedy against a recurrence, to admit, candidly and fairly, precious metals substituted in sufficient quantities to meet that the Government itself saw as little the mischiefs that the wants of society, as well as the demands of the reve- would follow from the extension of their credit, as the nue, the chief ground of my opposition would be at once banks did themselves. It is a part of the history of the removed. I can well see, from the experience we have times, and should be recorded on the same page, that when bad of the evil tendencies of the banks to excessive issues, the deposites were given to the State banks, they were (and such, at present, are my decided impressions,) that, expressly instructed to make them the basis of new incenwhenever the currency is placed in a condition to bear the tives to commercial enterprise. tribute, the true policy of Government may be found to be I do not speak this at all, sir, in the spirit of rebuke ; to exact its dues altogether in coin, and to withhold its far, very far from it. I adduce it only to show that the revenue, while resting between its collection and its dis- Government itself, against whom, as some have said, the burseinent, from the use of banks, as a fund to increase banks have committed the unpardonable sin, was itself actheir discounts. My reasons for this I will give hereafter, tively instigating them to that very extension, now so zealwhen treating of the proper positions which the Govern- ously condemned. How far the banks might have gone in ment may ultimately assume toward the State banks. extending their discounts, upon the immense deposite thus

The bill is to operate upon the currency as it now is; cast upon then, without this authoritative hint none can for we have not only no guarantee that it will be found in easily tell. But it is fair and reasonable to infer, that this an improved condition at the end of twelve months, (the license in advance did not pass unimproved. limited time,) but it is susceptible almost of demonstration Having stated thus the actual condition of the currency, that one necessary consequence from the proposed law will and briefly traced the causes which have led to it, let us be to continue the currency in its present de based condition. inquire next what will be the probable operation of a law

The precious metals, all will agree, are now banished that takes no account of its enfeebled stale, but perfrom circulation. They are in the country, I grant you, emptorily demands, after a given day, that the entire and in sufficient quantities, perhaps, to answer their accus. revenue, amounting to some twenty millions of dollars lomed duty of circulating in those channels below the per annum, shall be paid up in gold and silver. One reach of bank paper; but they no longer pass from hand to necessary consequence, in my apprehension, would be, hand as a medium of exchange. Their former exchange- ellectually to place it out of the power of the banks to reable value has been converted, by the course of trade to sume the payment of specie within any reasonable time. which I have alluded, to a value cxclusively marketable; ' How can it be otherwise ? They suspended payment,

VOL, XIV.--89

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