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The Madisonian. [volume] (Washington City [i.e. Washington, D.C.]) 1837-1845, September 16, 1837, Image 2

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On the bill to regulate the depoeite of (bo public
money of ibe United SutM in certain local banka; In {
(be Houae of Rep*eeental??oa of tba Unitnd Statea,
February 1* 1W6
Mr. PATTON aaid be waa in favor of the principle
of tbe bill At tbe aaina tune be waa williufjand de
termined, ao far aa it depended on hiui, tbat ewy mem
ber of tbe Houae ahould bate ail opportunity of aubmit
tinff any aineudinent whieh be might deem calculate*
to perfect tbe detaila of the bill; wbetl*r these propo
sitions of amendment came from iImmc who were noa
tlie or thoae who were friendly to the principle lor
tbta purpose be waa willing to ait aa late every day aa
waa possible, conaiateut with tbe pbyaicai capacity of
ineinbera to remain in aeaaion, until the bill was finally
disposed of by the Houae; and it waa with Uu? view
be bad thai dav demoded a call of the Houae when the
previous question wss moved, in order to defeat that
mouon. Mr P took it for granted that aucb amend
ment. only would be proposal a. were ?'">
for no indirect and unavowed purpoae. It was probable
tbat be would agree to aomeof the ainendinenta which
nnuhl be otfereJ by ulbera, and be had it in view to pro
pose one or two himaelf, which, however, are not ul so
material a character aa U> induce linn to vote against
the bill in caae of tl?eir failure. Mr. P. proceeded to
say that he did not feel ao well informed ou the princi
ple of tbe banking ayatem, or the couree of trade as
connccted with the general question of currency, aa to i
enable bim now to apeak upon the aubject of tbe par- I
iicular amendinenta ottered by the gentleman from Penn- !
sylvania, [Mr. Biw??v,J and wlucb doubileaa bad been j
ottered by him under a full conviction that they were ;
proper and necessary for tbe perfection of tbe ayatem of
the bdl on the principles of Us fnenda Nor is it my
intention, aaid Mr. P, to enter into an elaborate discus- |
sion of the comparative advantages or diaadvaiiiagea of ,
carrying on tlio fiscal operations of the Government (
througli tbe iuatrumenUility of a Bank of the Umted
Stales, or by tbe employment of banks chartered by tbe
States. The time for that diacuasion has gone by. I
agree in tbe opinion juat expresssed by the gentleman
from Pennsylvania, with bis uaualcandor, that tbequee
tion of tbe renewal of the charter of the Bank of the
United Statea is settled. That battle has been fought
and won. [Mr. Bt**?v here aaid, in an under lone,
?' fought and loat."] Ay, air, fought and lost to the bank,
and fought and won to the country. But though it baa
been thus decided, and ia ao acknowledged to be by the
distinguished gentleman from Peniiaylvanta, yet I could
not listeu to the speech just delivered by hitn, without
being at ruck with the reeeinblaiice which existed be
tween the Bank of tbo United Statea, tbe redoubtable
champion in the contest, and another champion, whoec
exploits are recorded ia Hudibraa, and of whom it ia
aaid tbat,
"He fighting fell, and falling fought,
And being down, alill laid about."
It was impossible to aee that, while it waa confeaaed
that the question was settled, the honorable gentleman's
argument was mainly intended to show that there could
not be any aafe reliance upon any meana or conducting
the financial conceina of the Government, without the
aid of a Bank of the United Statea. Thta waa doubtleas
the conacientioua conviction of that gentleman, and now,
as formerly, avowed with his usual frankness, and main
tained with hia accustomed ability. But why discuaa
that proposition! It ia decided by that tribunal which
has juriadiction to decide it, (tho ropreeentatives of the
people,) and the deciaion has been sustained, and mora
than auatained, by the only earthly tribunal to which
they are responsible?their conaUtuenta, tbe people
themaelvea. The inouiry now presented, and which
must be decided, ia, what ia to bo done now that a Bank
of the United Statea ia out of the question 1 To that I
wiah to apeak; but before I do ao, it may be proper to
devote a few remarka to aome other topica which have
been introduced into thia debate, ami to which I con
sider it proper that aome reply ahould be made.
Another great battle, Mr. Speaker, (connected with
'or growing out of thia bank struggle,) has been fought?
fought and won for us?and fought and lost for our op
ponents : as to which, aoine of the combatant* seem un
willing to admit that they are beaten. Some gentlemen
seem not to bo satisfied with the triumphs they have
celebrated, and the jubilations they have enjoyed ! You
of course understand, Mr. Speaker, tbat I allude to the
questions arising and discuaacd here laat winter, upon
the removal of the public money from the Bank of the
United States. The clamor and outcry then ntade
againat the Executive, for having committed flagrant
encroachments on the legislative department, it aeema
to be the desire of some again to revivo, and again to
bring into diacuaaion. ,
Imputations upon the independence and integrity of
judgment by which thia House ?? governed in ita de
cisions upon these queationa, however common, and
however much to be expected and little to be regarded
elsewhere, it waa to be hoped would not have been in
dulged in here. I do not mean to enter upon the field j
of argument to vindicate myself, and those who agree
with me o? thoae queat ions, from auch imputationa. I
cannot, however, reconcile it to my own feelings to pasa
them over in ailence, and I will say, that wlicnever,
whereaoevcr, and by whomsoever, the issue may be
made upon the propriety of those decisions of the House,
I am ready to meet it. Whenever that ijlove is thrown
down, and the lints are regularly open for the trial of
conclusion*, I am ready if au abler and uiore skilful ad
vocate of the constitution will not do it, to take it up ;
and, armed with the panoply of truth and reaaon, with
out any vain and weak reliance upon my own powers, I
do not fear the conflict. I am ready to maintain that
the proceedings of the executive department of the Go
vernment, in relation to the removal of the de|>osites,
were not encroachments on tho legislative department
of the Government, or usurpations of power in violation
of the limitations of the constitution and the prescrip
tions of law. I defy any man to show, by any fair rea
aoning, that thoae proceedings were in opposition to the
principles of civil freedom, or that they placed the pub
lic revenues under the control of the Executive in any
other form, or to any greater extent, than they have been,
placed under the uniform interpretation of, and univer
sal practice under, the constitution and laws, from 1789 i
to the 1st. day of October, 1833; and that any iutima
tions that the decisions of thia House on these queationa
juatify the reflection that the representatives of the pco- |
pie .are prostrated at the feet of the Executively the
mfluenco of the power and patronage of the Govern
ment, is wholly unauthorired, and cannot be sustained.
I have already shown, and can show more fully and
conclusively hereafter, whenever it maybe proper and
necessary for me to do ao. that the principles maintained
here last winter, by mvaelf and othera who agreed with
me, and which we understood to have received the sanc
tion of a majority of this body, aro in conformity with
thoso recognised at the foundation of the government,
admitted ever aince, and acted on by all parties, and
were, by many of the enlightened statesmen who were
instrumental in establishing the constitution, then and
ever since deemed consistent with, and even essential
to, the preservation of liberty and the public good.
I have no more to aay on these topica. I recur to the |
question. The Bank of the United Statea having ceased ;
to be the depository of the public money, and this House
having decided that they shall not bo restored to that
institution, what shall we do? Is it necessary and ex
pedient that the present condition of the public money,
deposited in the Slate banks, should be permitted to
remain! Whether we shall define inoro precisely tho
extent of the executive authority in relation to it, and
limit and reatrain the discretion now confided to that
department, under the existing laws and the long-set
tled interpretation of those laws! And by what provi
sions, and under what conditions, the public money may
be deposited in certain State hanks! Or whether we
can dispense with the use of tho State banks, and resort
to some other expedient!
The employment of the State banks as depositories
of the public money is called an experiment, and no
little ingenuity has been displayed in ringing the changca
on this word, with a view of ridiculing the idea of inak- j
ing an experiment on tlus aubject! I am surprised that
eveo some of tbe opponents of the Bank of the United j
Siatea should speak of the employment of the Slate
banks aa depositories of, and as agents to collect, keep,
and disburse, tbe public money, as an experiment. I I
deny that it can, with any propriety, be called an expc- j
riment It has been going on from the time of the |
establishment of the first State bank to the present day.
State banks have been acleeted and employed, as they |
are now selected and employed, by the Secretary of the |
Treasury, as fiscal agents of the Government, in col- |
lectmg and disbursing the public money, during the >
whole period from the adoption of the constitution to j
the present-moment; and tnis embraces periods when a
Bank of tbe Uuited Slates existed, and when it did not j
exist. Let me recall the recollection of the House to |
the history of the country on this subject. In tbe year j
1811, when the old Baek of the United States had been
in existence twenty years, and when judgment of death
was about being pronounced upon it by the Congress of
that time, a re|?ort made by the then Secretary of the
Treaaury showed that a large proportion, upwards, I
believe, of one-third of the whole of the public money
fn the treasury, was deposited in the State banks ; and
that, pf twenty-one depositories, eleven of them were
State banks, and nine consisted of the Bank of the
United Statea and ita branches It ia, moreover, a fact
that, in all the New England Statea, during that wholo
time, there ?u but on* b*t?cb wi the United States
Bank located, (in Doaton,) MM?MMUudiog lit* number
of tbe collection diatrwla, the h*Mlredsof |H>r?9?f ?ntry,
the vaat amount of murcantfe capital and Mmuiercul
enterprise employed toi theaa Stataa. lit OtfuiMscUcut
these waa no branch of the II luted S la lea Bank ; none
in Rhode I aland, winch, though Muall in tern lory, haa
always been extensively engaged in foreign trade, and
possessed ? large amount ofcapital. Mo that, even after
the first Bank of the United Mtatea had been in operation
twenty years, the Slate banks ware luore fiequeully
used aa plsces for the depoaite of tbe public money than
the Bank of the United Statea and ita branchea ; and
the focal concern* of the Treasury, in reference to the
collection, safe-keeping, transfer, and diatourseiufcut, of
the public money depoaited in these bank*, were aa well
and conveniently managed aa in reference to that depo
sited in the Bank of tbe United Statea. When the
Beuk of the United Statea expired, iu 1811, tbe aame
ayatem of employing tbe State banks waa continued and
extended, and the whole revenue waa collected through
the State banka, and derailed iu thein, or auch of them
aa were selected by the Secretary nf the Treasury, and
employed on auch tertna aa were agreed on between the
Treasury Department and the banka, reapecuvely ; and
we have the authority of Mr. Gallatin, iu a letter written
in 18IS, that " no difficulty haa been experienced in tbe
transmission of the public money ; and, with the ex
ception of Norfolk anu Savannah, the revenue baa gene
rally been aa well collected aa heretofore." What waa
the cauae or extent of the difficulty in the excepted
placea I am uot informed, but I presume they were tem
porary and inconaiderable.
I hold in my hand extracts which I have taken from
the speeches made by gentlemen belonging to each of
the great political partita which divided the country iu
1811, and bad lutended to refer tbe House to them.
Under present circumstances, however, I will not read
thein. They prove that the opinion waa universal, at
that time, that when the Bank of the United State*
ceased to exiat, the employment of Stale bank* muat be
extended to thoae places where heretofore the Bank of
tlie United State* and ita branchea had been uaed aa
depositories. All admitted that aa tbe only alternative.
Tbe frienda of the Bank of the United Statea inaisted
there waa no other ; and. aa that would fail to ans wer
the purpose, the Bank of the United States ought to be
rechartcred ; and, on the other hand, the opponenla of
the Bank of the United States, contending that the
State banka had already been, to a great extent, em
ployed ; that they were entirely competent to constitute
a safe, cheap, arid convenient agency iu enabling the
Treasury to collect, aafely keep, aud conveniently dis
burae, the public money. Tlirough all this time, then,
froin 1789 to 1816, through all administrations, and by
all political parties, and eapecially by that party which
waa called " republican," thta " infernal agency of Slate
banka," aa it haa been characterised by one of iny hono
rable colleaguo*, [Mr. Kobkktson,] has been employed,
under the superintendence of tho Secretary of the Trea
aury, and, aa it would aeetn, approved and admitted by
all to be the beat in the abaeuce of a Bank of the United
It ia, then, (aaid Mr. P..) a misapplication of term* to
call the agency of Stale -banka, aa placea of depoaite for
the public money, an experiment. It might have been
called ao in 1789. But aurely ita having been tcated by
experience of ita succeaaful operation from that time
down to 1816, without the losa of a dollar to the Trea
sury, justifies me in saving that it is no longer proper to
call it an experiment, tf any thing has occurred aince to
ahow that it cannot be depended on, undoubtedly it
ought to be candidly considered and duly weighed. It
i* accordingly insisted that it has signally failed aince
1816, and that thia ia proved by the atate of the cur
rency at that time, and by the one million of dollara of
unavailable funda, now in the treaaury, which we have
regularly and catentatiously paraded before ua a* the
proof of the inability of the State banka to furnish aafe,
cheap, and convenient depoaitoriea. These unavailable
funds conaist of tbe notea of aome insolvent Stale banks,
which failed some- years after the close of the war, and
the notes of which, to the amount above mentioned,
were in the treaaury, and have not been redeemed ; and
of balancea due from aome State bank depoaitoriea.?
But do gentlemen auppoae that we are ao blind, or that
we can be so blinded, aa not to be able to trace thia loss
to its true cauae ? Do we not all know that the de
ranged and unaound state of our currency, the depre
ciation of the paper of some of the State banks, and the
insolvency of others, at that time, grew out of the atate
of war ! That all the resources of the eountry, public
and private, wore put in requisition to furniah the means
of currying on a war which, after all, left us with a bur
den of one hundred and twenty millions of dfebt ? Can
thore be any man who supposes that there is something
so magical tn the name of the Bank of the United States,
or so efficacious in the fact that it ia created by the Go
vernment, instead of by the State Govcrnineuta, as to
believe that, if the Bank of the United State* had been
in full operation during the war, the aame derangement
of the currency would not have occurred?the same
suspension of specie payments, the same depreciation of
paper, and that of other banks 1 Tho necessities of the
country compelled all the State banks to stretch their
credit to the utmost, to assist the Government, until it
failed and was exhausted. All institutions of this kind,
which did not close their vaults, ceaao all active busi
ncss, snd refuse all aid to the Government, were in
volved in the common calamities of the war, which
affected tho value of every species of property, snd
visited with its inflections all the receases of trade, and
every ramification of society. It was in the inidst of
this state of things that it was suggested to Congress,
through the Treasury Department, to aid the resources
of the country by establishing a Bank of tho United
States, which ahould he compelled to loan to the Go
vernment, when required, thirty million* dollars; and
was authorized to diapense with specie payments, with
the consent of the President. This project failed in
Congress. It was demonstrated by Mr. Webster, then
a member of this House?and of whom I may say, how
ever erroneous and objectionable are many of his politi
cal opinions, that he challenges the aduiiratiou of all for
his profound sagacity and consummate ability?it was
demonstrated by him that it was perfectly idle to ests
blish a bank on such principles?that it would begin in
insolvency, snd thst the whole scheme was little better
than a sort of legalized bankruptcy ; ami yet such were
the necessities of the Government, and the peculiar
exigency of the times, that it seemed, by many of our
most patriotic statesmen, to be demanded and justified.
Congress, however, rejected it, and passed a sort of
compromise bill, by a vote of 120 to 37, by which the
bank was not required to loan money to the Govern
ment, and was bound to redeem its notes in specie.
The veto was applied to this bill by Mr. Madison be
cause of these features, which rendered the bill wholly
useless in relieving the country during the exigencies of
war. Who that looks back upon these historicsl remi
niscences, as to the pecuniary condition and necessi
ties of the country, and the cause of that condition, can
be so visionary as to suppose that a Bank of the United
States could have prevented the deranged state of the
currency 1 could have protected its own notes from de
preciating 1 could have avoided the suspension of specio
payments ! have relieved tho government from the ne
cessity of receiving ita revenue in the notes of local
banks ? and, consequently, being ex|>oscd to and suffer
ing the very loss which is iiow, with so much boldness,
charged to the account of the State Banks, asevidence of
their unfitness to be the fiscal agents of the government 1
A Bank of the United States, like nil other banks, must
be affected by convulsions in the political world and re
vu'sion iu the world of trade. Treasury notes, issued
upon the credit of the government, aud for the redemp
tion of which all the resources of the country were pledg
ed, we know were at a depreciation of more than 20 per
cent, iu the market about the close of the war, and even
the Bank of tho United Stales itself, three years after it
went into operation, so far froin having corrected the
evils of a deranged currency, under the influence of the
same causes which affected Statu Bonks, was itself, as is
notorious, upon tho verge of insolvency. That, m 1819,
the amount of speciu iu its vaults was reduced to about
#75,000, and but for the extraordinary forbearance of
Congress, in permitting it to retain the public deposites
under such circumstances, and in failing to resort to a
tctre facias to repeal its charier, notwithstanding the nu
merous instances of violations of charter reported by the
committee of the House, the bank muat have stopped
payment, and we would have had to bewail the exist
ence of a much larger amount of unavailable funds in
the Treasury than is now so frequently relied on to prove
the Slate Banks to lie unsafe.
I maintain, then, Mr Speaker, that the State Bank
system, as to the deposites, is not unsafe; that it has
not failed ; but has been, and is now, iu the " full tide
of successful'' prosecution.
I will trouble the House with a reference to an ex
tract from the report of Mr. Gallatin to a Committee of
the Senate, in 1811, in which, after showing that, in the
present stale of tbe banking system, being now firmly
established, aRd extending to every part of the United
State*, he proceeds lo sav ihnl " Slate Banks may l>e
used, and must, in case of a non-renewal of the clisr
tor, [of the Bank of the United Slate*,] be used by the
It i* iu conformity with this opinion, from whieh. in
1811, there were no dissenliunts, that the present bill ha*
been brought forward. I will also refer to some re
mark* made at that time by a gentleman who theh, and
ever sinfce, has occupied a large space in the public eye,
and who then had no little influence over-public opi
nion?I mean Mr. Clay?who said : " About the com
mencement of this year, (1911,) ihcre appears, by the
nuort of <J? Secretary of Treasury of die 7ih Janu
ary. U? have faMfi a liUta Npwaeda of t?o miNion* fo?*
2?ndr?d thowaand dolla* i> ihiXrewnjF ?fthe Umla*
??tea ; xmI mor# than (Mf-lbn* of thfc whole auiu mm
is ilit) vault* of |Jm local Hliiilf
? la eevenl m-Unce*. where .n opportunity nmUd
of ttlecuiix iba bank, a preference baa been given to
the Sum Dank, or at leaat a portion of the depowle* baa
been inatle wiik itand thia, in aome mauucee, where
a branch of the Umled Stale* Bank we* located in the
Mlllt' blltCt)- . .
And again ; 44 I cannot auhacribe to the opinion of the
Secretary of the Treasury, if it ia meant that the ability
to pay the amount of any depositee which the govern
ment may make, under any eiigency. ia greater than
that of the Stale Banka," Ac ; " with regard to aafety
( aiu strongly inclined to tlunk it ia on the aide of the
local banka."
The Bank of the United Statu, it ia conceded, ia to be
diapenaed with, and it ia believed that there are inaupera
ble objection* attending the only other acheme which haa
been brought into competition with the employment of
the Stale Bank*. The very deciaive vole by which that
echeine (Mr. Gordun'a amendment,) haa been rejected
by the House, ahowa eoncluaively that it ia not likely to
receive the aanction of the Houae or of the people?
However plausible it may be ou it* face, however capti
vating to the fancy of thoao who have prejudicra againat
all banka, and who think any connection between the
Treaaury and banka dangeroua in a political point of
view, it ia eaaily to be pcrceived that theae objects are
not to be accompliahed by the plan proposed. It ia in
theae reapecta wholly deluaive. Admitting the exia
tcnce of the deprecated evil* under the bank ayatein, the
acheme, aa proposed, for disconnecting the government
and banka doe* not go one ioia toward* the accompliah
nient of the object. The whole effect of it would be to
tranafer the power of aelectmg the depoaile banka from
the Secretary of the Treaaury, and confer it upon the
aubordinate officera of the Treaaury. The money will
atill be deposited in the bank*; for it ia not proposed to
compel the collector* and receivera to keep the public
money in specie in their own houae* ; and, if it were,
il would render ihe acheme more indefensible ; and the
whole matter, therefore, enda in changing the person in
whoin you will re|>oae confidence?whether in a high
officer of the government, the elevation of whoae posi
tion, placing Uie eye* of the whole country upon hun,
furniabea a guarantee againat any improper uae of hia
discretion, or whether you will devolve thi* discretion ou
a mere aubordinate, or upon an artny of subordinate*,
whoae livelihood depend* upon their retaining their of
ficea, who are leas ex|ioaed to the public gaze, and per
hapa leaa under the reatraint of high moral considera
tion* ; who may be atimulated by a desire to propitiate
the powera that bo, to abuse their diacretion ; and whose
lailuation ia such that they may give the worst effect to
this kind of influence when they choose to exert it; and
all this is to be accompliahed at a vaat increase of ex
pense, a considerable multiplication of officer*, and a
great addition to the patronage of the Executive. This
scheme, then, in ihe present state of thing*, cannot lie
approved. And, in tiuth, in whatever aspect this mat
ter can be regarded, whether aa a political question or
aa a mere financial one, it must enu in a choice between
tho Bank of the United Slates and the State Banks.
Great objection is made to the employment of tho
State Banka, on the score of the dangerous political in
fluence which would be created. This objection ia
made, not only from the friends of a United States Bank,
who can see no such danger in a Bank of-the United
States, but with more reason by the opponenta of a Bank
of the United State*. With great apparent consistency
they aay they consider the Bank of the United States
dangoroua to the liberties of the country, and lhat all the
objection* apply with equal force to the Slate Banka.
But, Mr. Speaker, it must be recollected that the danger
apprehended from the United Statea Bank never waa
supposed lo arise from the incidental financial connec
tion between it and the government. The power it
possesses, and which is regarded by those who do so
regard it as dangeroua, is derived from other sources ;
from it* immense capital, wilh numerous branches lo
cated in diffe'ent parts of the couutry, all wielded by
one directory, and governed by one will; making it,
like tho fabled Briareus, with a hundred arms, obe
dient to one mind and supported by one immense body.
Thus constituted, it ia a giant holding the public credit
in ita hand like a.bird, which it can control or crush at
' The developmcnta of the laat year or two have given
awful force to the apprehensions which had been previ
ously indulged, of the dangerous power of such an insti
tution, whenever it became ita interest to uae lhat power
to control public opinion, or in any other way affect di*
a*trou*ly the credit and currency of the country. Theae
evil* are not, I think, to be apprehended from the State
Banks. They will derive ver\ little aid, in point of po
litical power and influence, from the inconsiderable pro
portion of the public revenue derived from the depo
sitee, distributed as they must be among a great many of
them. They are scattered all over the country, exist by
distinct and unnconnected charter* of incorporation*, do
rive their existence from tho State Governments, and
are themselves watched by and muat keep watch upon
other and rival institutions ; and each and all of thein
having very limited capital. Under these circumstances,
I muat regard all that ia said about tho danger of a
league of Slate Banka, and tho tremendous political in
fluence and controlling patronage which ia to be de
rived from uaing the Stale Bank* a* places for ihe de
l>osites of the public money, as entirely fanciful and do
No little hostility is displayed againat the State Bank
system, becauae, somehow or other, it sceins to be im
agined that it ia calculaied very greatly to enhance the
prosperity of New York, and to work in some way or
other injuriously to other parts of the country ; and it
is vehemently a?s*ilod here and elsewhere in this spirit.
Now I am entirely at a loss to coinptehend all this.?
The city of New York, being the great commercial em
porium of the Uniied State*, the entrepot of a very
large portion of our commerce, is, and must necessarily
be, the place for the collection of an equivalent propor
tion of the revenue. But I do not see how that well
should be a cause of envy, jealousy, or distrust, against
New York, or against ihe State Bank system It is the
city which feels the benefit, not the Slate of New
York particularly ; not tho interior of New York, any
more than the interior of Pennsylvania, or Virginia ?
Much revenue is received there, because much com
merce comes there. But no more is received than
would bo received if the revenue was collected by a
United States Bank, or by collectors and receivers.?
Now York will be just as much benefited by one ay?
tein as the other. We ought not if we could, and we
could not if we would, deprive the city of New York of
ihe commercial advantages derived from her natural po
sition, and from the concentration of capital there, in
rmnuit of the most profitable investment of it. You
have neither legislative authority nor moral power to
do it.
Mr. Jefferson once said that it was idle for a Legis
lature to say, by law, lhat there should be towns where
God and nature had said there should not be towns.?
In the same sense, I say thai any effort* you can make,
by your legislation, to check the growth or to arrest the
prosperity of New York, will be as vain as the efforts
of an infant to fetter the limbs of a giant. You cannot
do it, unless you can command the winds and tho
waves, and vainly arrogate ihe power which the cour
tiers of Canute persuaded him he jiossessed, and say to
the waters of the sea, thus far shalt thou come, and no
farther. All those allusions, then, on this subject, and
in this debate, to the particular interest whicti New
York feel* in thia question, and ihe no les* insignificant
and equally pertinent references and sneers at the safe
ty and system of that Slate, I cannot regard but as mis
placed, and having very much the appearance of un
worthy appeals to prejudices of the very lowest kind.
I stated in the beginning of my remark* that I was
in favor of the principle of the bill. I am not only wil
ling but desirous that some law should lie passed ou
this subject, with *uch provisions as may bo calculated,
in the wisdom of ihe House, to increase the security of
ihe public money, and restrain, define and limit, the dis
cretion now confided to the Executive department, un
der ihe existing laws, so far a3 that discretion can be
nafcly restrained. But I do not feel so much solicitudo
on this subject as some gentlemen display ; nor do my
anxieties proceed from the motives assigned by some
others. Happening to be one of those who consider
the present arrangement made by the Treasury Depart
ment for the employment of Stale Banks as tho deposi
tories of the public money, as authorised by law, and the
long settled interpretation of that law, frequently sanc
tioned by Congress, who say that the public money is
now wider the unlimited control of the Executive ; lhat
the President has seized the money of the country, and
holds it without law and against law. Neither the Presi
dent nor the Secretary of the Treasury have, or claim
to have, any thing more to do with the money than lo
take care that ft i* deposited for safe keeping in proper
places, and that it is faithfully and scrupulously and
promptly applied to the satisfaction of the appropriation#
made by law, and that none of it is paid away but to sa
tisfy such appropriations. For this purpose, the Secre
tary of the Treasury now, as every Secretary before
him has done, has selected State Banks as depositories,
and upon such term* aa he supposed beneficial to the
public interests.
The stale of thing*, in this respect, which exists now,
has existed ever since the foundation of the Republic.
If the Secretary of ihe Treasury now errs as to his au
thority under the law to do *o, he errs in company with
all the Secretaries who have gone before him, through
the *lj""irHr*'l"n* ?f W%ahingtyp? A4mm. Jefferson,
Ma4???i M?d Monro* Wheutht?ld !J*nl Wi lli down,
11% mil, lit iboaa pafcBV day* of f?inia? republicanism
of the ol4 *:booi, ii| which terUi* politicians are in the
habit uf l*ferring ?ttli enullatiou, and eoq|ra?tiiig Willi
what they deem the |?>litir?l degeneracy of the preaant
day?during the presidency of tbe mild aud viriuou*
Madison?the then Secretary of the Traaaury, Mr Gal
latin, made arrangement* with the Stale Bank* to keep
the public money, they had not the perepicacity to per
ceive that they were committing ? flagrant encroach
ment on the powcra of the Legislature ; that they were
seizing the public treaaure, ana might be suspected of a
deaign to eslaliliah a league of banks for political pur
pose*. endangering thellbertiea of the people These
are all discoveries of modern Uiaea. hi li 13, on tbe
0th of January, Mr. Gallatiu, in obedience to ? resolu
tion of thia House, made a report to tbe Houae, allow
ing all the detail* of tlie proceaa by which he had con
auniinated thia grievoua invasion of tbe lawa, and thia
enormoua outrage upon tlie principles of civil liberty,
via that a Secretary of tlie Treasury abould presume to
direct ill which banks tbe treasure should be placed
for aafe keeping, until it waa wauled ; and atrauge to
say, the Congress of 1(112, like all other Congresses be
fore aud since, until the lat day of October, MHO, were
so dull in comprehending the lawa aa they are, or so
indifferent to the discharge of their public duty, receiv
ed and printed this report, without any exhibition of ap
prehension for the safety of the public money, the su
premacy of the lawa, or tbe liberties of lha people.?
The employment of the Slate lianka lias not heretofore,
i? not nuw, and I ho|>e never will be, uaed aa an instru
ment of political power. If it waa desired so to use
them, I do not think the attempt would be auccessful
to any material extent. ,
The power of Congress, however, to select the place
of deposite by law, and to prescribe the terms of em
ployment of the depositories, u not questioned by any
body ; and we may aafely rely on their wisdom, and the
intelligence and virtue of the people, to provide a rem
edy for any political evil which inay be seen. B.it, al
though I do not feel so much anxiety as others profess
on this subject, I am willing, arid even desirous, for llio
purpose of satisfying all, that some bill should be adopt
ed, regulating the deposited of the public money in
the State Banks, with such provisions aa may lie thought
best calculated to promote the safety of the public mo
ney, its convenient disbursement, and to guard against
any abuse of the executive department in its superin
I propose to offer, at a suitable time, an amendment
to the bill, m that part of it which provides that, in
1838, no bank ahall be employed aa a depoaitory which
issues notes under the suin of f 10 ; and the nntes of no
bank which iasuea such notes ahall be receivable in pay
ment of government dues While I agree to the pro
vision aa tu banks issuing notes under fS, which ia to
be immediately operative, I object to the prospective le
? station Ik: fore referrad to. Thia ia an experiment how
r we can, by regulations of this description, suppress
the issue of amalT notes, and increase the amouty of
specie which shall be kept in actual circulation. The
object is an exceedingly desirable one, and I am willing
to co-operate in effecting it, ao far aa w? can by Icgiala
tion. Its aucceasful accomplishment, however, re
quires the united efforts of the atates, and inav be frua
trated by a variety of circumatancea over which we have
no rontrol. It cannot possibly be known beforehand
whether the subiect will be effectual, and it ia better to
wait and see the operation of the bill as to the notes
under 95. If it be successful, it can hereafter be car
ried further by a new law. Our aucceaaors will be much
better able than we are to decide how far it can be car
ried ; and whether the atate of things in 1838 will autho
rize it. This legislation in anticipation is alwaya injudi
cious, when no very strong motives for it exist. It waa
precisely out of a apecies of prospective legislation,
aomewhat of this kina, that much of the difficulty of the
contest about the deposite* arose. The bank charter
contained a provision by which it was declared that tlie
deposites of the public money should be made iu the
Bank of the United States, with certain qualifications. It
was contended that this was a contract by which all fu
ture Congresses were bound for twenty years Whether
this was truly a contract, or not, I have never given my
self the trouble to discuss ; for it is wholly immaterial to
the* question of the legality of the removal of the de
posite*. But, admitting it to have been of the nature
of a contract, it wss exceedingly unwiae thus to restrain
the legislative authority, even if it was not unconstitu
tional, as I think it was. In relation to the provision of
the bill now under consideration, directing what de
nomination of notes should be receivable iu 1838, and
prescribing a rule of this sort, by which the qualification
of a bank to be a depoaitory of the government is
made, three years in advance, although not unconstitu
tional, it ia certainly inoperative, uuless to control our
successors, whom we ought not thus to restrain It may
happen that Congress, in 1838, would not be willing to
pass such a provision, and vet it might be impracticable
to get a majority of both House* to repeal that which
we now make. For these reasons I shall propose to
strike out this provision from the bill, when it is in order
to do so, unless I hear some satisfactory reason why it
should not be done
I do not mean to discuss the propriety of the several
amendments offered by the gentleman from Pennsyl
vania ; they will, no doubt, be examined by the mem
bers of the Committee of Waya and Means, in which
I presume they have been submitted, and by them con
Tho most interesting questions, in the pre*
sent troubled condition of things, which are
raised by the Message, are, whether the notes
of the late deposite bunks, at this time, or of
the state banks, at any future time, ought to
be allowed by law to he taken in payment of
public dues. The Message siys ;
" Should Congress sanction this condition of things,
by making irredeemable pajier money receivable in pay
ment of public dues, a temporary check to a wise and
salutary policy will, in all probability, be converted into
its absolute destruction."
It requires but a very slim stock of intelli
gence and firmness to discover and to decide
that it would be madness and folly to adopt or
to recommend as a permanent measure, the
taking of inconvertible paper in payment of
the public dues. The madness and folly of
thus taking the notes of all the state banks,
at this time, would be equally evident. But
in what particular would it be pernicious,
thus to take, for a short and specified time,
(say up to the 1st of January, 1838,) the notes
of the late deposite banks ? Would it not so
strengthen these banks as to enable them soon
to comply with their engagements with the
government ? Would it not be a strong in
centive to a speedy return by them to specie
payments ? Would it not have a sensible agen
cy in augmenting their specio fund ? And
last, though not least, would not this tempo
rary measure become an effective weapon in
the wholesome work of reducing the number
of the state banks T If these are important
questions, the temporary measure would be a
wise one.
It was federal legislation that tempted tho
state institutions into the hazards of over
action. When tho national funds were di
rected by law to be placed with them for safe
keeping from the time of collection to the
time of transfer or disbursement, they were
invited to enlarge their loans and discounts
on the strength of those funds. Is it just, or
wise, or proper, that tho government having
tempted and invited the deposite banks into
the disastrous error of over-action, shall now
discredit, by rejecting their notes in circula
tion, when it can sustain no injury in receiv
ing them, and when too the beneficent privi
lege of receiving them is clearly within tho
scope of its constitutional authority ? That
the government would sustain no injury, incur
no loss, by thus giving credit to the notes of
tho deposite banks, is as evident as that the
banks would be strengthened by this pruden
tial measure of favor, if indeed it be not an
act of justice, on the part of tho government.
Do the deposite banks deserve this severe
denial ? Let the Secretary of tho Treasury's
Report give the answer ! It follows :
" As a whole, their specie, compared with their cir
culation, continued to be almost as large in May a* in
November, h ?*?raged u*re than one to three, or
int?Q more ihM haa Wen cd#touNV> With th? bank* m
Ihn Country, ?fxi w*f over 4u,.tik (N reUtive quantity
fcv all thft t>ank??ifi Eugi*ai at tbe Mine fx-nod,
?n4 m a froportfeu ooe-loit> Urger than thai in
the Bank of England itself "
? ???????
" The policy wire pursued by inoet of them 1ms beeu
fivorsblr to an early discharge of their engagements to
??? 1 reaaury, and to ? resumption of specie payments.
Ma ay havu gradually reduced liteif discounts aitii circu
lation, as well aa paid over much of the public deoo
lites." r 1
' ^U8 much, for the present, in relation to
the opinion of the President, "that the re
ceipt into the I reasury, of bmk note* not re
deemed in specie on demand," ought not to
be sanctioned, by Congress, in this emergen
I h? other interesting question alluded to
an being raised by the Message, is, whether
the notes of specie paying state banks ou?ht
in future to be allowed by law to be taken by
the federal officers in collecting the national
revenues. Respecting litis, the Message
says :
" ft is true that bank notes actually convertible into
specie may be received in payment of the revenue,
without being liable to all these objections, and that such
a course may, to some extent, promote individual con
venience, an object always to be considered where it
doe a not conflict' with the principles of our government,
or the general welfare of the country. If such notes
only were received, and always under circumstances al
lowing their early presentation for payment, and if, at
short and fixed period*, they were couverted into spe
cie. to lie kept by the officers of the Treasury, some of
the most serious ohstscles to their leception would per
haps be removed. To retain the notes in the Treasury
would be to renew, under anotlier form, the losris of
public money to the banks, and the evils consequent
If the receipt of bank notes convertible
into coin on demand, be liable to no serious
objections, and would be promotive of indi
vidual convenience, why should the nation in
cur the ridicule of innovating, and the ex
pense ol tho scheme of fiscal agency recom
mended by the President ? Will it be pre
tended that state banks whose notes are re
deemed in specie on demand, and allowed by
law to be taken in payments of the revenue,
may not be trusted with the safe keeping of
that revenue collected and subsisting in its
own convertible notes !!! As to the evils of
over action consequent upon loans of public
money to state banks, let the general govern
ment be pure and wise enough never again to
invite them, altd the states guard against them,
no less, surely, for the sake of their own ho
nor and tranquility, than for the mere safety
of the national revenue.
Should it not be a primary object of every
government to provide that kind of money in
which an industrious citizen may invest his
earnings with the greatest degree of security ?
Has not the existence of such money a ten
dency to improve the character of tho opera
tive or laborer, by facilitating the ascent of
the steep and rugged path which leads to opu
lence, and thus make it their interest to sus
tain tho on which the security of their
earnings must be dependent ? Are not the
wealthy interested in promoting such a state
of things, and would it not be economical as
well as benevolent and humane in them to
submit to any contribution which it might re
quire ? By many persons, and among others
our late President, it has been supposed that
the objects to which I have alluded may be
best attained by the employment of hard mo
ney. However desirable such a currency
may be, evidently in our country, its intro
duction is impracticable, since for every hard
dollar imported in obedience to the measures
of the late administration, at least seven pa
per dollars have been added to our circulation
by banks chartered by legislatures, professing
for the most part to be friendly to its policy.
It appears from documentary evidence, fur
nished by the report of the Secretary of the
I reasury in December last, that during the
seven years in which the efforts of our late
President were especially directed to the im
provement of the currency, the number of
banks in the United States have increased
from three hundred and twenty, to five hun
dred and sixty-seven, the Bank capital from
one hundred and forty-five millions to two
hundred and fifty-one millions, the circulation
from sixty-one millions to one hundred and
forty millions, and the loans and discounts
from two hundred to four huudred and fifty
seven millions.
It has been the custom of our bankers to
consider specie as the financial barometer by
which to regulate bank issues.
Experience has shown that one dollar of
specie in the vaults of a bank will make seven
in the form of bank notes and bank credits.
Thus the importation of specie, instead of
diminishing the amount of bank notes in cir
culation, has caused the increase above stated.
In our country hard money acts only as the
seed of bank notes, and the conduct of those
who strive to expel the paper currency by
tho distribution of coin, appears to me no
wiser than that of a farmer who should
through error sow the seed of a weed which
it should be his object to eradicate ; and who,
although the weeds should be seen to multi
ply yearly, should continue season after sea
son industriously to scatter the false seed.
But it may be inquired, if not favorable to
an exclusively metallic currency, nor yet to
the" present accumulation of paper money,
what would I have. The currency left to us
by tho great and good Washington I reply.
Paper for largo sums, and silver for small.
An effort to prove that as the principal source oj
the value of gold and stiver is the ostentation
of aristocrats, tnonarchs and despots, it is
both anti-democratic and irreligious to found
our prosperity upon their value further than
is needful.
It has been proved that gold and silver
have two foundations for their value, the one
original, created by their utility in the arts,
the other adventitious, being dependent on
their usefulness as money. Also that the last
mentioned basis was evidently built upou the
other, since if not an objcct of desire for the
purposes of the arts, these metals could never
have become competent to act as money.*
Let us then inquire into the nature of that
original foundation for value, oil which the
power of these metals to convulse tho world
is founded.
* It is evident that the market price of the nvtala em
ployed as money, is regulated by the ratio of the demand
lo the supply, as in the caae of all merchandise. The de
mand for them, and of oourse their value, was originally
dependent ?n their utility in the arts, Subsequently, on
account of their auponor value in proportion to their hulk,
indestructibility, and their susceptibility of Subdivision,
witliout loss ; (old and silver wen- found of all eoinimxli
ties, those which could be most tidvsntageoualy set aside
to be used as money, or in other words at the mesns of
Excepting the service which they perform
as money, bow very .mall is tliat minority of
! my fellow citizens, whose comfort would be
materially affected by the annihilation of gold
I and silver ?
Those who, agreeable to the proverb, have
been born to a silver spoon, might be an
noyed at the necessity of using bom, iron,
j or pewter, or even the new German alloy of
' nickel and copper, but could such annoyance
be deemed a matter in which the majority
i need sympathize. These remarks respect
ing the inutility of silver, otherwise than as
money, to the great mass of society, apply
with greater force in the case of gold, which
excepting as a material for the trinkets of the
wealthy, is of no uae whatever in our demo
cratic Kepublic. Were all the good that
gold and silver do the laboring class through
out the world, the only basis of their value,
. obv iously there is no metal which would be
in less estimation.
'l'he great basis of value which those me
tals have, is to gratify the ostentation of the
rich, tu enable the nobleman, the king, the
pacha, nabob or sultan to appear tn that splen
dor which they consider as necessary to their
rank; by which, while actually inferior in
virtue, they may to the eye appear before
them in worldly splendor. The royal coach,
and the liveries ol its coachmen and laqueys,
groan under the tawdry exhibition of the
moM precious of the metals. In the palaces
of the no'iility may be seen ornaments of
massive silver or gold ; and the table furni
ture frequently made of silver, and in some
instances of gold. That a minority of man
kind may gratify their pride and their vanity
by glittering and expensive trinkets which
the majority cannot afford, is then the princi
pal source of the value of gold and silver.
Can any thing be more anti?Christiiw, or
less consistent with the true spirit of demo
cracy than this species of gratification ? And
shall we, the democratic republicans of North
America, allow our country to be dependent
for its prosperity on such a basis. Can those
who believe in Christianity, conceive that
while teaching through the Messiah, that
worldly ostentation should be avoided as in
imical to morality and the will of God, that
the Deity would render a value of two metals
founded on that basis indispensable thereto!
But it may be alleged that however it may
be contrary to tli? principles of genuine de
mocracy, or Christianity, to found human pros
perity on a value attached to gold and silver,
by the vices of aristocrats, the monarchist, and
the despots of the irorld, yet that experience
has proved the necessity of this basis. This
is the argument used in favor of monarchical
and aristocratical government. At the outset
of our republic, melancholy predictions were
founded on the lessons of experience. It was
shown that* in the old world, democratic re
publicans had never succeeded for any length
01 time; and thence the inference that we
could not have a free republic. But did our
ancestors on that account hesitate to make the
grand, and 1 will still hope, successful experi
ment of our republican constitution T Those
who reason from Europe to America, found
their arguments on inadmissible premises.
They would reason as if America bore the
same relation to Europe, as a young tree to an
old one ; as if one country in the old world
ever was as ours'now is, or our country ever
could be what Europe is at present. Though
in some respects young, in others our country
is more mature than Europe.
How many proscriptive abuses are adhered
to in that part of the world, which we have
remedied ? In how many improvements have
we already taken the lead ?
1 deny that gold and silver arc indispensa
ble to human prosperity, though 1 admit that
so long as pride, vanity, and ostentation, are
inseparable from human nature, these articles
will, of all other merchandise, be most con
venient as the medium of commercial inter- ?
change between those who will not, or can
not, resort to paper credit. Moreover, as a
received standard of value, they are highly
important, and the ability to pay specie will
always be beneficial as one of the sourccs of
pecuniary credit. They are usually spoken
of as the basis of our currency in bank notes,
and yet every man of common sense must
know that they constitute only a small fraction
of the means which our banks have to meet
their obligations.
When it is seen that a piece of coin may
wear in circulation until condemned as too
light, and that during the century in which
this result has been effected, it has produced,
nothing more than a sentimental impression of
its possible utility upon the minds of its pos
sessors ; that meanwhile its cost has been
many times sunk by the accumulation of lost
interest ; can any one be surprised that hu
man ingenuity should devise less costly means
of exciting a similar sentiment: and should
those means be devised, can it be imagined that
they mil be disused. Evidently both reason
and said experience demoTistrates that they are
vastly more liable to be abused.
From ike Atw York Tinut.
We have already spoken at some length of the mes
sage. That it is a paper of great importance, distin
guished by consummate ability and force, that its posi
tions are sustained with unrivalled Uct and skill, and
that it is dignified in manner, and elevated in style, will
b? conceded by every candid and unprejudiced mind ?
In tracing the history of the present financial revulsion,
President Van Burcn has unquestionably pointed out
the most prominent cauaes whirh produced it, bat we
are of opinion that he has omitted to notice an clement,
which, if not originally entering into its formation, has,
without doubt, tended to accclcratc its progress and ag
gravate it* evil*.
Our readers will, no doubt, anticipate u? when we re
fer to the radical spirit which haa endeavored to wield
ihe public calamities to its own base uses?and, under
the guise of exclusive democracy, hurled ita anathema
against the institutions of the country, scattering dis
trust and suspicion of their solvency, preferring unjust
and unbounded charges against their officers and stock
holdera, and ministering to the vilest appetites of tho
most restless and dissolute members of the community.
That the?e efforts, and the countenance that has been
afforded their authors by the aid and co-operation of a
few presses whose position gavo consequence to their
opinions, have tended to increase the difficulties under
which the community labors, cannot be doubted ; ami
before the. country ran successfully emerge from Hi pre
sent embarrassment*, the wise, and Ihe intelligent, and
virtuous must consent for a season to iratve all es
trangements, ami mate in resisting the incendiary ef
forts of anarchists?tn cherishing Ihe first reappear
ance of cotijidcnce?in densing practical methods of re
lief, and in abandoning fur a season those topics of dis
cussion which interfere with that harmony so essential to
the future welfare of the whole people.
barter for hII other marketable articles. Hence the quan
tity of tlie mrtnls in question employed as money, became
irreaterthan that otherwise employed; and consequently
the demand for them resulted more from their usefulness
as money, th in the qualities which caused them at first to
become objects of cupidity,
Com has therefore * double foundation for Its tsIiic,
one may be called the original, the other the adrentitioil s
basis. Yet the original basis is never inefficient; since
it is by Ins confidence in the intrinsic-value of the metal,
i that the owner conceives himself safe in retaining it til 1 he
may have occasion to use it as inoncv.?Essay on the
question whether there be any addition made lo the capital of
i a community by Banking.

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