would suffer from otherwise supplying its place. Mr. Crittenden opposed the bill on the same ground. Kentucky, he said, had made provision for the expenditure of the money, and relied upon it, and could not expect the law to be lightly rescinded, or broken, on the faith of which she had anticipated its use. Other senators treated the deposit act as a contract, which the United States was bound to comply with by delivering all the instalments. In the progress of the bill Mr. Buchanan proposed an amendment, the effect of which would be to change the essential character of the so called, deposit act, and convert it into a real distribution measure. By the terms of the act, it was the duty of the Secretary of the Treasury to call upon the States for a return of the deposit when needed by the Federal Treasury: Mr. Buchanan proposed to release the Secretary from this duty, and devolve it upon Congress, by enacting that the three instalments already delivered, should remain on deposit with the States until called for by Congress. Mr. Niles saw the evil of the proposition, and thus opposed it: "He must ask for the yeas and nays on the amendment, and was sorry it had been offered. If it was to be fully considered, it would renew the debate on the deposit act, as it went to change the essential principles and terms of that act. A majority of those who voted for that act, about which there had been so much said, and so much misrepresentation, had professed to regard it and he could not doubt that at the time they did so regard it—as simply a deposit law; as merely changing the place of deposit from the banks to the States, so far as related to the surplus. The money was still to be in the Treasury, and liable to be drawn out, with certain limitations and restrictions, by the ordinary appropriation laws, without the direct action of Congress. The amendment, if adopted, will change the principles of the deposit act, and the condition of the money deposited with the States under it. It will no longer be a deposit; it will not be in the Treasury, even in point of legal effect or form: the deposit will be changed to a loan, or, perhaps more properly, a grant to the States. The rights of the United States will be changed to a mere claim, like that against the late Bank of the United States; and a claim without any means to enforce it. We were charged, at the time, of making a distribution of the public revenue to the States, in the disguise and form of a deposit; and this amendment, it appeared to him, would be a very bold step towards confirming the truth of that charge. He deemed the amendment an important one, and highly objectionable; but he saw that the Senate were prepared to adopt it, and he would with repeating his request for the ayes and not pursue the discussion, but content himself noes on the question." Mr. Buchanan expressed his belief that the substitution of Congress for the Secretary of the Treasury, would make no difference in the nature of the fund: and that remark of his, if understood as sarcasm, was undoubtedly true; for the deposit was intended as a distribution by its authors from the beginning, and this proposed substitution was only taking a step, and an effectual one, to make it so: for it was not to be expected that a Congress would ever be found to call for this money from the States, which they were so eager to give to the States. The proposition of Mr. Buchanan was carried by a large majority -33 to 12-all the opponents of the administration, and a division of its friends, voting for it. Thus, the whole principle, and the whole argument on which the deposit act had been passed, was reversed. It was passed to make the State treasuries the Treasury pro tanto of the United States-to substitute the States for the banks, for the keeping of this surplus until it was wanted-and it was placed within the call of a federal executive officer that it might be had for the public service when needed. All this was reversed. The recall of the money was taken from the federal executive, and referred to the federal legislative department to the Congress, composed of members representing the States-that is to say, from the payee to the payor, and was a virtual relinquishment of the payment. And thus the deposit was made a mockery and a cheat; and that by those who passed it. In the House of Representatives the disposition to treat the deposit as a contract, and to compel the government to deliver the money (although it would be compelled to raise by extraordinary means what was denominated a surplus), was still stronger than in the Senate, and gave rise to a protracted struggle, long and doubtful in its issue. Mr. Cushing laid down the doctrine of contract, and thus argued it: "The clauses of the deposit act, which appertain to the present question, seem to me to possess all the features of a contract. It provides that the whole surplus revenue of the United States, beyond a certain sum, which may be in the Treasury on a certain day, shall be deposited with the several States; which deposit the States are to keep safely, and to pay back to the United States, whenever the same shall be called for by the Secretary of the Treasury in a prescribed time and mode, and on the happening of a given contingency. Here, it seems to me, is a contract in honor; and, so far as there can be a contract between the United States and not mark such conduct for reprobation, and invoke a public judgment upon it. After a prolonged contest the vote was taken, and the bill carried, but by the smallest majority -119 to 117;—a difference of two votes, which was only a difference of one member. Bnt even that was a delusive victory. It was immediately seen that more than one had voted with the majority, not for the purpose of pass the several States, a contract in law; there being reciprocal engagements, for a valuable consideration, on both sides. It is, at any rate, a quasi-contract. They who impugn this viewing the bill, but to gain the privilege of a majorof the question argue on the supposition that ity member to move for a reconsideration. Mr. the act, performed or to be performed by the United States, is an inchoate gift of money Pickens, of South Carolina, immediately made to the States. Not so. It is a contract of that motion, and it was carried by a majority of deposit; and that contract is consummated, and 70! Mr. Pickens then proposed an amendmade perfect, on the formal reception of any in- ment, which was to substitute definite for instalment of the deposit by the States. Now, definite postponement-to postpone to a day entertaining this view of the transaction, I am asked by the administration to come forward certain instead of the pleasure of Congress: and and break this contract. True, a contract made the first day of January, 1839, was the day by the government of the United States cannot proposed; and that without reference to the be enforced in law. Does that make it either condition of the Treasury (which might not then honest or honorable for the United States to take advantage of its power and violate its have any surplus), for the transfer of this fourth pledged faith? I refuse to participate in any instalment of a deposit to the States. The vote such breach of faith. But further. The admin- being taken on this proposed amendment, it was istration solicits Congress to step in between carried by a majority of 40: and that amendthe United States and the States as a volunteer, and to violate a contract, as the means of help- ment being concurred in by the Senate, the bill ing the administration out of difficulties, into in that form became a law, and a virtual legaliwhich its own madness and folly have wilfully zation of the deposit into a donation of forty sunk it, and which press equally upon the gov- millions to the States. And this was done by ernment and the people. The object of the measure is to relieve the Secretary of the Trea- the votes of members who had voted for a desury from the responsibility of acting in this posit with the States; because a donation to matter as he has the power to do. Let him act. the States was unconstitutional. The three inI will not go out of my way to interpose in stalments already delivered were not to be rethis between the Executive and the several called until Congress should so order; and it States, until the administration appeals to me in the right spirit. This it has not done. The was quite certain that it never would so order. Executive comes to us with a new doctrine, At the same time the nominal discretion of which is echoed by his friends in this House, Congress over the deposit of the remainder was namely, that the American government is not to exert itself for the relief of the American denied, and the duty of the Secretary made pepeople. Very well. If this be your policy, I, remptory to deliver it in the brief space of one as representing the people, will not exert myself year and a quarter from that time. But events for the relief of your administration." frustrated that order. The Treasury was in no condition on the first day of January, 1839, to deliver that amount of money. It was penniless itself. Such was the chicanery, unworthy of a piepoudre court-with which a statute of the federal Congress, stamped with every word, invested with every form, hung with every attribute, to define it a deposit-not even a loanwas to be pettifogged into a gift! and a contract for a gift! and the federal Treasury required to stand and deliver! and all that, not in a low law court, where attorneys congregate, but in the high national legislature, where candor and firmness alone should appear. History would be faithless to her mission if she did The compromise act of 1833, making periodical reductions in the tariff, until the whole duty was reduced to an ad valorem of twenty per cent., had nearly run its course, and left the Treasury in the condition of a borrower, instead of that of a donor or lender of money. This fourth instalment could not be delivered at the time appointed, nor subsequently ;—and was finally relinquished, the States retaining the amount they had received: which was so much clear gain through the legislative fraud of making a distribution under the name of a deposit. CHAPTER XI. INDEPENDENT TREASURY AND HARD MONEY This was the end of one of the distribution schemes which had so long afflicted and disturbed Congress and the country. Those schemes began now to be known by their consequences-evil to those they were intended to benefit, and of no service to those whose popularity they were to augment. To the States the deposit proved to be an evil, in the contentions and combinations to which their disposition gave rise in the general assemblies-in the objects to which they were applied—and the futility of the help which they afforded. Popularity hunting, on a national scale, gave birth to the schemes in Congress: the same spirit, on a smaller and local scale, took them up in the States. All sorts of plans were proposed for the employment of the money, and combinations more or less interested, or designing, generally carried the point in the universal scramble. In some States a pro rata division of the money, per capite, was made; and the distributive share of each individual being but a few shillings, was received with contempt by some, and rejected with scorn by others. In other States it was divided among the counties, and gave rise to disjointed undertakings of no general benefit. Others, again, were stimulated by the unexpected acquisition of a large sum, to engage in large and premature works of internal improvement, embarrassing the State with debt, and commencing works which could not be finished. Other States again, looking upon the deposit act as a legis-points of collection and disbursement. lative fraud to cover an unconstitutional and demoralizing distribution of public money to the people, refused for a long time to receive their proffered dividend, and passed resolutions of censure upon the authors of the act. And thus the whole policy worked out differently from what had been expected. The States and the people were not grateful for the favor: the authors of the act gained no presidential election by it: and the gratifying fact became evident that the American people were not the degenerate Romans, or the volatile Greeks, to be seduced with their own money-to give their votes to men who lavished the public moneys on their wants or their pleasures-in grain to feed them, or in shows and games to delight and amuse them. THESE were the crowning measures of the session, and of Mr. Van Buren's administration,— not entirely consummated at that time, but partly, and the rest assured;-and constitute in fact an era in our financial history. They were the most strenuously contested measures of the session, and made the issue completely between the hard money and the paper money systems. They triumphed-have maintained their supremacy ever since-and vindicated their excellence on trial. Vehemently opposed at the time, and the greatest evil predicted, opposition has died away, and given place to support; and the predicted evils have been seen only in blessings. No attempt has been made to disturb these great measures since their final adoption, and it would seem that none need now be apprehended; but the history of their adoption presents one of the most instructive lessons in our financial legislation, and must have its interest with future ages as well as with the present generation. The bills which were brought in for the purpose were clear in principle-simple in detail: the government to receive nothing but gold and silver for its revenues, and its own officers to keep itthe Treasury being at the seat of government, with branches, or sub-treasuries at the principal And these treasuries to be real, not constructivestrong buildings to hold the public moneys, and special officers to keep the keys. The capacious, strong-walled and well-guarded custom houses and mints, furnished in the great cities the rooms that were wanted: the Treasury building at Washington was ready, and in the right place. This proposed total separation of the federal government from all banks-called at the time in the popular language of the day, the divorce of Bank and State-naturally arrayed the whole bank power against it, from a feeling of interest; and all (or nearly so) acted in conjunction with the once dominant, and still potent, Bank of the United States. In the Senate, Mr. Webster headed one interest-Mr. Rives, of Virginia, the heard to express in common conversation. He said: "In supporting the bank of 1816, I openly declared that, as a question de noro, I would be decidedly against the bank, and would be the last to give it my support. I also stated that, necessity of the case, growing out of the then exin supporting the bank then, I yielded to the other; and Mr. Calhoun, who had long acted with the opposition, now came back to the support of the democracy, and gave the aid without which these great measures of the session could not have been carried. His temperament required him to have a lead; and it was readily vielded to him in the debate in all cases where he went with the recommendations of the mes-isting and long-established connection between sage; and hence he appeared, in the debate on these measures, as the principal antagonist of Mr. Webster and Mr. Rives. The present attitude of Mr. Calhoun gave rise to some taunts in relation to his former support of a national bank, and on his present political associations, which gave him the opportunity to set himself right in relation to that institution and his support of it in 1816 and 1834. In this vein Mr. Rives said: "It does seem to me, Mr. President, that this perpetual and gratuitous introduction of the Bank of the United States into this debate, with which it has no connection, as if to alarm the imaginations of grave senators, is but a poor evidence of the intrinsic strength of the gentleman's cause. Much has been said of argument ad captandum in the course of this discussion. I have heard none that can compare with this solemn stalking of the ghost of the Bank of the United States through this hall, to 'frighten senators from their propriety.' 'I am as much opposed to that institution as the gentleman or any one else is, or can be. I think I may say I have given some proofs of it. The gentleman himself acquits me of any design to favor the interest of that institution, while he says such is the necessary consequence of my proposition. The suggestion is advanced for effect, and then retracted in form. Whatever be the new-born zeal of the senator from South Carolina against the Bank of the United States, I flatter myself that I stand in a position that places me, at least, as much above suspicion of an undue leaning in favor of that institution as the honorable gentleman. If I mistake not, it was the senator from South Carolina who introduced and supported the bill for the charter of the United States Bank in 1816; it was he, also, who brought in a bill in 1834, to extend the charter of that institution for a term of twelve years; and none were more conspicuous than he in the well-remembered scenes of that day, in urging the restoration of the government deposits to this same institution." The reply of Mr. Calhoun to those taunts, which impeached his consistency-a point at which he was always sensitive-was quiet and ready, and the same that he had often been the government and the banking system. I took the ground, even at that early period, that so long as the connection existed, so long as the government received and paid away bank notes as money, they were bound to regulate their vale, and had no alternative but the establishment of a national bank. I found the connecand over which I could have no control. I tion in existence and established before my time, yielded to the necessity, in order to correct the disordered state of the currency, which had fallen exclusively under the control of the States. I yielded to what I could not reverse, just as any member of the Senate now would, who might believe that Louisiana was unconstitutionally admitted into the Union, but who would, nevertheless, feel compelled to vote to extend the laws to that State, as one of its members, on the ground that its admission was an act, whether constitutional or unconstitutional, which he could not reverse. In 1834, I acted in conformity to the same principle, in proposing the renewal of the bank charter for a short period. My object, as expressly avowed, was to use the bank to break the connection between the government and the banking system gradually, in order to avert the catastrophe which has now befallen us, and which I then clearly perceived. But the connection, which I believed to be irreversible in 1816, has now been broken by operation of law. It is now an open question. I feel myself free, for the first time, to choose my course on this important subject; and, in opposing a bank, I act in conformity to principles which I have entertained ever since I have fully investigated the subject.” Going on with his lead in support of the President's recommendations, Mr. Calhoun brought forward the proposition to discontinue the use of bank paper in the receipts and disbursements of the federal government, and supported his motion as a measure as necessary to the welfare of the banks themselves as to the safety of the government. In this sense he said: "We have reached a new era with regard to these institutions. He who would judge of the future by the past, in reference to them, will be wholly mistaken. The year 1833 marks the commencement of this era. That extraordinary man, who had the power of imprinting his own vants. If the government sternly reject, for its uses, the general medium of exchange adopted by the community, is it not thereby isolated from the general wants and business of the country, in relation to this great concern of the currency? Do you not give it a separate, if not hostile, interest, and thus, in effect, produce a divorce between government and people?-a result, of all others, to be most deprecated in a republican system." feelings on the community, then commenced his hostile attacks, which have left such effects behind, that the war then commenced against the banks, I clearly see, will not terminate, unless there be a separation between them and the government,-until one or the other triumphs-till the government becomes the bank, or the bank the government. In resisting their union, I act as the friend of both. I have, as I have said, no unkind feeling toward the banks. I am neither a bank man, nor an anti-bank man. I have had little connection with them. Many Mr. Webster's main argument in favor of the of my best friends, for whom I have the high-re-establishment of the National Bank (which est esteem, have a deep interest in their prosperity, and, as far as friendship or personal atwas the consummation he kept steadily in his tachment extends, my inclination would be eye) was, as a regulator of currency, and of the strongly in their favor. But I stand up here as domestic exchanges. The answer to this was, the representative of no particular interest. I that these arguments, now relied on as the look to the whole, and to the future, as well as the present; and I shall steadily pursue that main ones for the continuance of the institution, course which, under the most enlarged view, I were not even thought of at its commencement believe to be my duty. In 1834 I saw the-that no such reasons were hinted at by Genpresent crisis. I in vain raised a warning voice, and endeavored to avert it. I now see, with equal certainty, one far more portentous. If this struggle is to go on-if the banks will insist upon a reunion with the government, against the sense of a large and influential portion of the community-and, above all, if they should succeed in effecting it-a reflux flood will inevitably sweep away the whole system. A deep popular excitement is never without some reason, and ought ever to be treated with respect; and it is the part of wisdom to look timely into the cause, and correct it before the excitement shall become so great as to demolish the object, with all its good and evil, against which it is directed." Mr. Rives treated the divorce of bank and eral Hamilton and the advocates of the first bank-that they were new-fangled, and had not been brought forward by others until after the paper system had deranged both currency and exchanges;-and that it was contradictory to look for the cure of the evil in the source of the evil. It was denied that the regulation of exchanges was a government concern, or that the federal government was created for any such purpose. The buying and selling of bills of exchange was a business pursuit-a commercial business, open to any citizen or bank; and the loss or profit was an individual, and not a government concern. It was denied that there State as the divorce, of the government from was any derangement of currency in the only the people, and said: "Much reliance, Mr. President, has been placed on the popular catch-word of divorcing the government from all connection with banks. Nothing is more delusive and treacherous than catch-words. How often has the revered name of liberty been invoked, in every quarter of the globe, and every age of the world, to disguise and sanctify the most heartless despotisms. Let us beware that, in attempting to divorce the government from all connection with banks, we do not end with divorcing the government from the people. As long as the people shall be satisfied in their transactions with each other, with a sound convertible paper medium, with a due proportion of the precious metals forming the basis of that medium, and mingled in the current of circulation, why should the government reject altogether this currency of the people, in the operations of the public Treasury? If this currency be good enough for the masters it ought to be so for the ser currency which the constitution recognizedthat of gold and silver. Whoever had this currency to be exchanged-that is, given in exchange at one place for the same in another place-now had the exchange effected on fair terms, and on the just commercial principlethat of paying a difference equal to the freight and insurance of the money: and, on that principle, gold was the best regulator of exchanges; for its small bulk and little weight in proportion to its value, made it easy and cheap of transportation; and brought down the exchange to the minimum cost of such transportation (even when necessary to be made), and to the uniformity of a permanent business. That was the principle of exchange; but, ordinarily, there was no transportation in the case: the exchange dealer in one city had his correspondent in another: a letter often did the business. The |